AOA BREAKING NEWS – JUNE 2021

KWAZULU-NATAL BRANCH PRESENTATION

On 30 March 2021 the KZN Branch of the Association put on a Mini Construction Conundrums presentation via the Zoom platform.

The presenters were Alastair Hay, the branch chairman, and Richard Hoal, one of the branch committee members.

Their respective topics were:

• Performance Guarantees and Force Majeure; and
• The Latest on Setting Aside an Adjudication Award.

In presenting on the first topic, Alastair delved into the nature of a demand guarantee and reviewed the various court decisions which have provided insight into that subject.

Alastair concluded with an analysis of the case between Aveng Strabag JV and SANRAL relating to the Mtentu River Bridge Contract where force majeure featured in a setting involving the calling up of a demand performance guarantee.

The conclusion reached was that force majeure of itself does not provide a ground for a contractor to prevent a call on a performance guarantee.  Fraud remains the only clear‑cut basis to stop a call.

In his topic Richard dealt with the adjudication and framework provided under the JBCC contracting regime.

He then looked at various relevant cases including the Stefanutti Stocks v S Property case, the Esor Franki JV v Bombela Civils case, the Ekurhuleni West College v Segal case, the Frese N.O. v Steve Biko case and, lastly, the Enza Construction v Paarl Tissue case.

The upshot is that our courts remain committed to enforcing adjudicators’ determinations and will not be deflected from doing so on account of economic hardship, business rescue or the risk of future non‑reimbursement.  Our courts have also held that the legal review of an adjudication award is not competent where the dispute is proceeding to arbitration.