Contract savvy
that the direct payments resort under PBA clause 33.2.6 (…
expense and loss … resulting from … the agreement being
terminated [36.0]) thereby defining the need to make direct
payment as a prejudice incurred by the employer as a
result of terms stipulated for in the termination provisions
of the subcontract which practically result in privity of
contract between employer and subcontractor because the
subcontractor acquires a direct entitlement to payment. This
would probably be the preferable route when insolvency
supervenes as the liquidator is only entitled to such funds
as may become available for the completed project after
deduction of all costs of bringing the works to completion.
10. Any direct payment of certified amounts in terms of PBA
clauses 20.6/21.6 based on certificates issued prior to
termination but after insolvency has supervened would
probably be capable of challenge by the liquidator 8 and
should be carefully considered. This does not preclude the
subcontractor from adding them as an effective premium
claimed by the subcontractor within its price for completion
of the n/s works thereby effectively rendering it an expense
and loss to the employer in terms of PBA clause 33.2.6.
CLAUSE 38.5.5
‘The employer shall be liable to the subcontractor for the cost
of materials and goods including those ordered before such
termination where the subcontractor is bound to accept and make
payment. The subcontractor shall deliver such materials and
goods to the employer in good order’.
As already raised above, materials and goods on site can
be the subject of a lien exercised by the subcontractor who can
then demand payment (or a guarantee for payment) before
relinquishing the lien and this matter has already been canvassed
in preceding bullets. A subcontractor wishing to exercise any lien
should issue notice thereof and mark all property over which the
lien is to be exercised. Records of such marks should be kept for
use in the event a party tries to remove them.
Materials and goods on site, including those ordered but not
yet delivered but which the subcontractor cannot cancel (or which
the employer does not want the subcontractor to cancel), must be
handed over to the employer who is liable for taking delivery and
paying the subcontractor for them. This means the subcontractor
must ensure there is a signed proof of delivery for them from the
employer or his designated agent - such designation must be in
writing from the authorised signatory for the employer e.g. the
principal agent. Where the employer refuses or fails to properly
take delivery of goods, the subcontractor should submit the
list of goods and declare its willingness to make delivery to the
employer and then issue a notice that the employer is in breach of
its contract and take necessary steps to protect its interests. This
may include removal to safe storage.
Normally the undelivered orders in question are related to
bespoke or special items not normally held in stock by the supplier
8 See Administrator, Natal v Magill, Grant & Nell (Pty) Ltd (in Liquidation) 1969 (1) SA 660
(A) 671H-672B.
www.hvacronline.co.za
RACA Journal I February 2020
61