Cold Link Africa November / December 2019 | Page 36

CONTRIBUTORS
INCORPORATING COLD CHAIN
This status report must be very detailed ability to use completed n/s works,
as it may serve as evidence for: all of which will acquire significance
if the contractor attempts to raise
penalties and ‘contra-charges’ in
the final payment advice it issues.
1. the subcontractor’s claim against
the contractor for work completed
where there is any dispute on
amounts certified to and payable
by the contractor in terms of all
elements of the payment advice
and recovery statements 6 ;
2. definition of the work to be carried
out after termination for the
employers account which in turn
could serve as a basis for proving its
damages;
3. a basis for establishing the amount
the employer will have to pay the
subcontractor to complete the n/s
works (a subcontractor may think
it disadvantageous to make all this
information available but proper
records are an important aid in
litigation);
4. evidence of the subcontractor’s
ability to execute n/s works which
are dependent on the contractor’s
prior completion of precedent
activities as well as the contractor’s
6.
The subcontractor should start working on
it as early as possible if it becomes aware
of the intended termination. It is not just
the normal progress report that can be
compiled by the site team as part of their
normal routine.
Clause 38.5.4
The principal agent shall timeously
commence and complete the n/s final
account [34.0].
The same comment as above applies
with regards to the subcontractor
taking the initiative. The final account
so prepared is essentially concerned
with work completed up to the date of
termination inclusive of any additional
sums which become payable in terms of
clauses 38.5.5 and 38.5.7.
The reference to clause 34.0 appears
to incorporate its provisions regarding
agreement and settlement of the
final account and the issue of the final
payment advice. However, given the
termination of the principal contract,
the contractor is no longer involved and
the relevance and application of some
of the sub-clauses of clause 34.0 could
become arguable.
Both the payment and the construction
guarantees are applicable as between
contractor and subcontractor and
the employer has no role to play other
than to ensure the issue of completion
certificates is brought to the terminated
contractor’s and the subcontractors’
It is important to understand your position, roles and responsibilities as a contractor when
drafting a contract.
It is submitted that the contractor and the subcontractor involved, are liable for the costs of making good any defects in the n/s works for which payment has been made i.e. the employer does not acquire liability
for the costs incurred by the new n/s subcontractor in making good defective work completed and paid for prior to termination even when certified by a specialist agent. Such costs become part of the employer’s
damages claim against the contractor who in turn would have a right of recovery against the subcontractor (see Minister of Public Works and Land Affairs v Group Five Building Ltd 1999 (4) SA 12 (AD) and dicta about
the principal agent’s obligations in Strijdom Park Extension 6 (Pty) Ltd v Abcon (Pty) Ltd 1998 (4) SA 844 (SCA)). This is particularly important in sophisticated specialist trades such as electronics and HVAC. There could be
a defense to such a claim in terms of NSSA clause 38.5.9 (termination of latent defects liability period) but it would probably be tenuous. The matter is discussed at bullet 9 hereunder. Therefore, the position seems to be
that damages are recoverable for defective work that is discovered prior to settlement of the final account but only to the extent it does not qualify as a latent defect. It is evident that this somewhat confusing situation
could result in litigation.
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COLD LINK AFRICA • November/December 2019