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Trencon Construction (Pty) Ltd v South African Airways (Pty) Ltd 2015 JDR 0090 (GJ)

10 October 2016

In September 2009, Trencon and SAA concluded a written agreement for the construction of a departure lounge at the OR Tambo International Airport.  The general conditions of contract were the JBCC Principal Building Agreement, (PBA), and Focus Project Management was appointed as the Principal Agent.

Trencon duly executed the works, however, SAA and Focus refused to issue a final certificate due to certain defects in the works. It was common cause between the parties, however, that these defects were caused by a previous contractor hired to execute the works, who had been liquidated prior to completion thereof.

Trencon, therefore, made application for payment from SAA in the sum of R 552 040.38 or that Focus be ordered to issue a final payment certificate in this amount.

SAA relied on Clause 8.2 of the PBA to argue that Trencon was not entitled to payment as it had not complied with its obligations.

Clause 8.2 of the PBA states:

“The contractor shall make good any physical loss and repair damage to the works, including clearing away and removing from site, all debris resulting therefrom, which occurs after the date on which the possession of the site is given and up to the issue or deemed issue of the certificate of final completion and resulting from…”

SAA also argued that the clear intention of SAA was to have the works completed and thus it could not have been intended by the parties that Trencon, despite its appointment to complete the works, could receive payment without the works having been completed.

In response, Trencon relied upon Clause 8.5 of the PBA which states:

“The contractor shall not be liable for the cost of making good physical loss and repairing damage to the works where this results from…

8.5.9      Design of the works where the contractor is not responsible in terms of 4.0”

It was common cause that Trencon was not responsible for the design of the defective works.

Trencon also relied on Clause 26.4 of the PBA, which states:

“Should the principal agent not issue a defects list, in terms of 26.2.2 or 26.3.2, within seven (7) calendar days from the end of the defects liability period, the contractor shall notify the employer and principal agent.  Should the principal agent not issue such defects list within seven (7) calendar days of receipt of such a notice, the certificate of final completion shall be deemed to have been issued on the date of expiry of the initial notice period and final completion shall be deemed to have been achieved on such date…”

In light of this clause, Trencon argued that, as no defects list had been issued, the certificate of final completion was deemed to have been issued.

The court found that:

1. Clause 8.2 of the PBA relates to loss or damage which occurs after the date on which possession is given to the contractor and, as such, was irrelevant to these proceedings;

2. There is no other provision of the agreement which renders Trencon liable to repair the defects, as such, it was not obliged to make good the loss or repair the damage and it did not matter whether it was aware of these defects or not;

3. SAA’s argument regarding the intention of the parties does not accord with the written terms of the agreement and the clause in question is ambiguous;

4. Final completion had been achieved as a consequence of the deeming provision contained in Clause 26.4 of the PBA.

SAA was ordered to pay Trencon the R 552 040.38 claimed, within 10 days of the date of the order, and pay Trencon’s costs of the application.