An appeal to prevent the South African National Roads Agency Limited (Sanral) from claiming guarantees from the joint venture (JV) that stopped work on the Mtentu bridge project in 2019 has been dismissed by the Supreme Court of Appeals (SCA).
The judgment in the matter between the JV of Aveng-Strabag (Africa) and Strabag International (ASJV) vs Sanral was handed down electronically by circulation to the parties’ representatives on November 13.
“We are happy that the court has dismissed the appeal with costs. Our position that there was no force majeure, and as the contractor refused to return to site after the suspension of works was lifted we had no option but to terminate for abandonment of the project,” Sanral N2 Wild Coast Road (N2WCR) lead project manager Craig Mc Lachlan said in a statement issued on November 18.
Sanral said it would now proceed with calling in both the performance and retention guarantees to help cover the additional costs that will be incurred to complete the project with a new contractor.
“The contractor and not the taxpayer should be held liable for all additional costs,” said McLachlan.
Sanral had advertised the re-tender for the construction of the Mtentu river bridge and associated roads on the N2WCR project.
The re-tender will close on Friday, February 19, 2021.
According to court documents, at the heart of this appeal was whether Sanral was restricted by the underlying contract between it and the ASJV from demanding payment in terms of a performance guarantee issued in its favour by the second respondent, Lombard Insurance Company.
The guarantee was issued pursuant to a written construction contract, concluded between Sanral and the ASJV in August 2017, for the construction of the Mtentu river bridge on the N2WCR.
In 2019, both Sanral and ASJV purported to terminate the contract.
In court papers, Judge TM Magoka said the ASJV had failed to show that Sanral was not entitled to payment of the guarantee before any underlying dispute between them is determined.
The appeal was dismissed with costs, including the costs of two counsel.