Aveng says it will respond to Sanral's statements following Supreme Court decision

20th November 2020 By: Tasneem Bulbulia - Creamer Media Reporter

JSE-listed Aveng says it has taken note of the South African National Roads Agency Limited's (Sanral's) statement on November 18 that the Supreme Court of Appeals (SCA) had dismissed an appeal to prevent the agency from claiming guarantees from the Aveng-Strabag Joint Venture (JV) in relation to the Mtentu river bridge project.

Aveng points out that the ASJV has, over the past 18 months, been engaged in two separate litigious matters against Sanral, emerging from the termination of the contract for the construction of the Mtentu river bridge.

This followed disruption to the works by local communities, resulting in a dispute between Sanral and the ASJV as to whether the ASJV or Sanral had validly terminated the contract.

“The ASJV remains confident that its decision to terminate the contract was both contractually valid and also the right thing to do in the circumstances faced at Mtentu, particularly in light of the well-publicised and persistent indications (including in the reissued request for tenders for the bridge works) that the underlying issues that brought about the unrest, as well as the communities’ resolve in relation to their grievances, had not abated at the time of termination,” Aveng says.

It highlights that Sanral's statement does not mention that, in dismissing the ASJV's interdict application, the SCA “overruled the factual findings that were erroneously and improperly made by Makhuvele J, sitting as the court of first instance (which incorrectly held that the nature of the disruptions on site did not constitute force majeure within the meaning of that term under the contract and that the ASJV had repudiated the contract)".

Moreover, Aveng says it does not mention that, in dismissing the ASJV's interdict application, the SCA "confirmed a vital aspect of the contract, namely, that Sanral has assumed the absolute risk, through a comprehensive indemnification of the ASJV, for the validity and correctness of any demand that it may make".

"The SCA judgment is clear that although there is no contractual bar requiring Sanral to establish its entitlement before making a call, Sanral will be liable to the ASJV for the full extent of any damages, losses or expenses that it suffers as a result of the wrongful demand,” Aveng states

It adds that any demand made by Sanral is made at the risk that the roads agency may have to repay it to the ASJV with interest and all associated costs and damages.

"We look forward to challenging [Sanral's] statements in due course in the appropriate legal forum,” Aveng said.

For completeness, Aveng also noted  that, on September 1, a unanimous full bench of the Mthatha High Court upheld the ASJV’s appeal against an order obtained by Sanral in 2019 against the ASJV, whereby Sanral had attempted to prevent the removal of plant and equipment from the construction site by the ASJV and other contractors.

“Ultimately, the ASJV was vindicated on appeal, with the full bench of the Mthatha High Court finding that in light of the uncontested evidence presented by the ASJV, the order that Sanral had sought against the ASJV was not appropriate,” Aveng said.