Stocks Building Gauteng (Pty) Ltd v Federated Insurance Guarantee Brokers (Pty) Ltd (10406/2006) [2009] ZAKZDHC 7 (3 April 2009)
The court held that the present matter was not materially distinguishable from the Full Bench decision in Federated Insurance Guarantee Brokers (Pty) Ltd v Johannesburg Development Agency (Pty) Ltd. The guarantee issued by the respondent was payable upon written demand following cancellation of the subcontract due...
Source-derived case information.
- Citation
- [2009] ZAKZDHC 7
- Parties
- Applicant: Stocks Building Gauteng (Pty) Limited; Respondent: Federated Insurance Guarantee Brokers (Pty) Limited
- Court
- Kwazulu-Natal High Court, Durban
- Jurisdiction
- South Africa
- Case Number
- 10406/2006
- Procedural Posture
- Civil Application / Judgment After Hearing and Receipt of Full Bench Decision
- Outcome
- Application granted in favour of the applicant.
- Judges
- Van der Reyden
- Legal Topics
- Construction Guarantee, Jbcc Subcontract Agreement, Payment on Demand, Interpretation of Contract, Interest a Tempore Morae
Source-derived case record
Summary, issues, holding and outcome
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Parties
Stocks Building Gauteng (Pty) Limited
Applicant
Federated Insurance Guarantee Brokers (Pty) Limited
Respondent
Procedural Posture
Civil Application / Judgment After Hearing and Receipt of Full Bench Decision
Legal Issues
- 1 Whether the respondent is liable to pay the applicant under the construction guarantee upon written demand following cancellation of the subcontract due to default.
- 2 Whether the present matter is distinguishable from the Full Bench decision in Federated Insurance Guarantee Brokers (Pty) Ltd v Johannesburg Development Agency (Pty) Ltd.
Ratio Decidendi
The court held that the present matter was not materially distinguishable from the Full Bench decision in Federated Insurance Guarantee Brokers (Pty) Ltd v Johannesburg Development Agency (Pty) Ltd. The guarantee issued by the respondent was payable upon written demand following cancellation of the subcontract due to default, as stipulated in clause 5 of the JBCC agreement. The respondent's liability was triggered by the applicant's compliance with the contractual requirements for demand and cancellation. The respondent's initial defence regarding non-compliance was abandoned, and its counsel conceded that the Full Bench judgment favoured the applicant's interpretation. Accordingly, the...
Court Disposition
Application granted in favour of the applicant.
Orders
- The respondent is ordered to pay the applicant the sum of R338,237.23.
- The respondent is ordered to pay interest on the aforesaid amount at 15.5% a tempore morae.
Full Case Text
Judgment text and source record
37 paragraphs
IN THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL DURBAN
Case No: 10406/2006
In the matter between:
STOCKS BUILDING GAUTENG (PTY) LIMITED
Applicant
and
FEDERATED INSURANCE GUARANTEE BROKERS
(PTY) LIMITED
Respondent
J U D G M E N T
VAN DER REYDEN J:
Judgment in this case was kept in abeyance pending the judgment of the KwaZulu-Natal Full Bench in Federated Insurance Guarantee Brokers (Pty) Ltd v Johannesburg Development Agency (Pty) Ltd.
After the Full Bench judgment was handed down I called for supplementary heads of argument dealing with the question whether the present matter is distinguishable from the matter before the Full Bench.
I was not favoured with the requested heads. Instead I was requested to deliver the judgment which is succinctly set out hereunder.
The Applicant in its capacity as a construction company concluded a contract with Megohm Engineering CC a sub-contractor for the installation of electrical work to the Splice Apartments at Killarney, Johannesburg.
The terms of the contract were the standard terms contained in the JBCC Series 2000 Nominated/Selected Subcontract Agreement
In terms of this agreement Megohm Engineering CC provided the Applicant with a written construction guarantee issued by the Respondent in respect of the contract concluded between the Applicant and Megohm Engineering CC.
The guarantee was a variable guarantee limited to diminishing amounts over a specified period of time.
The Applicant contends that in terms of clause 5 of the Guarantee, the Respondent's liability become due and payable within seven days of the receipt of a written demand, certifying that the subcontract had been cancelled by the Applicant due to Megohm Engineering CC's default.
The only difference between the present dispute and the case on appeal before the Full Bench is that the present dispute involved a construction company and a sub-contractor whereas the case before the Full Bench involved a development company (employer) and a construction company.
In the light of the Full Bench Judgment and Mr Kemp's concession, during argument before me, on behalf of the Respondent, that the judgment of Niles-Dunér, J in the court a quo favoured the Applicant's interpretation in the present matter, it would be an exercise in futility to consider Mr Kemp's submissions which did not find favour with the Full Bench (supra). Furthermore the defence raised by the Respondent, concerning the non-compliance with the cancellation of the sub-contract and notices, was not persisted in during argument before me.
I am bound by the Full Bench judgment.
In the result the Respondent is ordered to make payment to the Applicant of:
1. The sum of R338,237-23.
2. Interest on the aforesaid amount calculated at 15,5 % a tempore morae.
3. Costs of the application.
DATE OF HEARING: 22/4/08
DATE OF DELIVERY: 3/4/09
(Pending receipt of Full Bench judgment on 10/3/09)
APPLICANT'S COUNSEL: Adv. PHJ VAN VUUREN
APPLICANT'S ATTORNEYS:Tiefenthaler Inc.
Ref. df/ma/8116
RESPONDENT'S COUNSEL: Adv. KJ KEMP SC
RESPONDENT'S ATTORNEYS: COX YEATS
Tel.: 031-304 2851
Ref.: Mr A I Hay/TJM