Raubex Construction – contracted by Eskom to build an office – has won an appeal in the SCA against Bryte Insurance, which refused a payout during construction. A Cape Times report says in 2013, Raubex secured the contract and subcontracted a portion of the works to Dolphin Construction.

A dispute arose between Raubex and Dolphin relating to a list of incomplete and defective work, which Dolphin refused to remedy. Raubex then called on Bryte Insurance to make a R1.4m payment in terms of a retention guarantee, which Bryte declined.

Raubex successfully applied to the Gauteng High Court (Johannesburg) to implement the terms of the guarantee, but the order was set aside on appeal before a full Bench. The full court had held that retention money could be withheld only to remedy defects in the works which manifest after the completion of the contract, and that Raubex had fraudulently estimated the amount relating to defects which existed prior to the certificate of completion being issued.

However, Acting SCA Judge Johannes Eksteen found Raubex was entitled to payment in terms of the guarantee.

‘I consider that the court a quo erred in its understanding of the purpose of retention money and in its assessment of the purpose of the guarantee. No single expense in the estimation by Raubex annexed to its replying affidavit has been placed in dispute with the result that Raubex has not been afforded an opportunity to explain or justify the estimation,’ Eksteen found.

Full Cape Times report