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directly and then tries to deduct any sum for defective
or overpaid work from the contractor’s final account,
notwithstanding that the contractor remains the party
that is liable to the employer for defects in any part of the
works including any n/s works 5 . A direct payment for unpaid
materials and goods (and completed n/s work) should at
the very least be very specific as to what is being paid for
and the amount thereof as well as the specific terms on
which it is made so that the possibility for a later vindicatory
action by the employer against the subcontractor is at least
possible 6 on the basis of records.
It is therefore submitted that aside from a reconciliation
of the amount due to the subcontractor for materials and
goods on site and payment of any outstanding balance
directly to the subcontractor, the settlement of the amount
due on the n/s final account would have to be through the
office of the principal contractor and in terms of clause 34.0
which would, for those purposes, be deemed to survive the
termination as suggested by the wording of clause 38.5.4.
NSSA clause 34.5 very specifically provides that except
for terminations in terms of clauses 36 7 (subcontractor’s
9.
default) and 39 (vis major), the issue of the final completion
certificate is a pre-requisite for the issue of the final payment
certificate. Therefore, whilst the subcontractor is entitled
to interim payment of amounts for work and materials
not certified by the date of termination, the subcontractor
will not be entitled to a final payment advice before the
final payment certificate is issued to the contractor. This
potentially impinges the available security between the
contractor and subcontractor.
The principal agent should compile and issue a final account
for the n/s works as completed at date of termination
including materials and goods payable in terms of clause
38.5.5 and 38.5.7, reflecting the full amount due to the
subcontractor and adjust for direct payments in terms of
clause 38.5.5 and 38.5.7 by way of a recovery statement
item. Sadly, the principal building agreement at clause
33.2.8, whilst providing for direct payments in terms of
clauses 20.6 (failure to pay nominated subcontractors)
and 21.6 (failure to pay selected subcontractors) does not
include a specific provision for recovery of direct payments
in terms of NSSA clause 38.5. The conclusion can be made
5 See Minister of Public Works and Land Affairs v Group Five Building Ltd 1999 (4) SA 12 (AD)
6 Reliance on common law actions such as the actio quanti minoris, condictio indebiti and the like is subject to very strict application and there is no better than a mutually agreed
process and grounds for correction of an overpayment.
7 It is submitted that there is an error in this clause, and it should read 38 rather than 36.
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RACA Journal I February 2020
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