Cold Link Africa November / December 2019 | Page 37

CONTRIBUTORS
INCORPORATING COLD CHAIN
attention if not done by the contractor 7 .
See also comments under the
subheading guarantees and security
above.
There appears to be a degree of
conflict between the provisions of
clause 38.5.4 on the one hand which, by
reference to clause 34.0, places the final
account within the ambit of the normal
relationship between contractor and
subcontractor, and clauses 38.5.5 and
38.5.7 which provide for payment by
the employer to the subcontractor. The
following thoughts are submitted to deal
with the provisions of these clauses:
1. The challenge of excluding the
contractor is that there may be
matters as between the contractor
and the subcontractor that need
to be dealt with by the contractor
and in which the employer does
not wish to and should never
become involved. The continuation
of the construction and payment
guarantees up to the issue and
payment of the final payment
advice would generally cover any
adjustments that may occur after
the last payment advice statement
issued prior to termination.
2. The principal building agreement at
clause 36.0 Termination by employer
– contractor’s default provides that
the contractor is entitled only to nil
interim payment certificates until after
the final payment certificate is issued.
This would mean that by reference
to the provisions of clause 31 8 , the
subcontractor would similarly not be
entitled to any payments until the
issue of the final payment certificate
and an employer wishing to retain
a n/s subcontractor’s services to
complete the work would find itself
at a disadvantage by not being
contractually entitled to make
good at least the uncertified part
of the unpaid balance due to the
subcontractor, particularly where
liquidation supervenes.
3. PBA clause 38.0 Termination by
contractor – employer’s default
provides for ongoing interim
payments to the contractor similarly
to NSSA clause 38.0 and therefore
there would be no problem with
payments in the (unlikely) event the
employer does pay. However, the
subcontractor could be prejudiced
by issues between the contractor
and the employer that result in non-
certification or non-payment to the
contractor.
4. Therefore, the n/s final account for
work completed prior to termination
should be processed through the
contractor and in terms of all the
provisions of and referred to in
clause 34.0 with all its sub-clauses,
which include inter alia sub-
clause 34.7 providing for amounts
recoverable by the employer in
terms of a recovery statement. A
subcontractor when dealing with
an insolvent contractor will probably
only be entitled to recover payments
Subcontractors must understand what the law says and its relevance to the contract
established.
certified and paid by the employer
prior to termination in terms of the
distribution account from the insolvent
estate 9 . This may be a very good
reason for the exercise of any liens or
other defences and the removal from
site of any unpaid goods 10 .
5. The subcontractor can and should
immediately exercise a lien and/or
reservation of ownership over unpaid
materials and goods, even to the
point of including identifiable and
detachable and removable elements
which have been placed/fixed but
can be easily removed, in the lien 11 .
6. The difficulty of providing for defects
or overpayments to the subcontractor
before termination is a matter that
could be adjusted if the subcontractor
is appointed to complete the
n/s works. However, when the
subcontractor is not available to
continue after termination or where
the employer prefers to employ a new
subcontractor, it could but should not
create a challenge for the employer
if it pays directly and then tries to
deduct any sum for defective or
overpaid work from the contractor’s
final account, notwithstanding that
7. The subcontractor should receive a payment notification from the principal agent when any certificate including a final payment certificate is issued but there is no obligation on the principal agent to notify the
subcontractor when any of the various completion certificates are issued. Equally, there is nothing that prevents the principal agent from copying all n/s subcontractors in on any electronic issue of such completion
certificates and the subcontractor should make written request that this be done after the termination of the contractor.
8. Inter alia sub-clause 31.5.1
9. Hence the need for clause 38.5.5 and 38.5.7 providing for direct payment to the subcontractor as discussed under those provisions.
10. See inter alia Concor Holdings (Pty) Ltd v Potgieter (219/03), [2004] ZASCA (28 May 2004); Administrator General South West Africa v Trust Bank of Africa Ltd 1982 (1) SA 635 (SWA)
11. Legal opinion should be sought if the lien is disputed and a discussion on liens falls outside the scope of this paragraph. Suffice it to point out that the principles accessio inaedificatio (ownership through attachment of
goods to immobile property) do not fully preclude the availability of a lien on easily identifiable isolated and detachable goods (see inter alia Melcorp SA (Pty) Ltd v Joint Municipal Pension Fund (Transvaal) 1980 2 SA
214 (W).
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November/December 2019
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