THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not reportable

Case No: 1036/2013
In the matter between:
Maykent (Pty ) Ltd

Appellant
and
Trackstar Trading 20 (Pty) Ltd

Respondent
Neutral Citation: Maykent v Trackstar  (1036/2013) [2015] ZASCA 14 (17 March
2015)
Coram: Lewis, Maya, Bosielo, Majiedt and Pillay JJA
Heard: 27 February 2015
Delivered: 17 March 2015
Summary:  Construction contract concluded partly orally, partly by conduct and
partly on  basis of standard terms used in industry did not oblige the principal agent
to issue a certificate of completion before issuing final payment certificate:
employer’s failure to pay the contractor on this basis over a period of five years
unjustified.

__________________________________________________________________

ORDER

On appeal from:  High Court, Gauteng Division, Pretoria (Hiemstra AJ sitting as
court of first instance)
The appeal is dismissed with costs.

__________________________________________________________________
JUDGMENT

Lewis JA (Maya, Bosielo, Majiedt and Pillay JJA concurring)
[1] The appellant, Maykent (Pty) Ltd (Maykent), is a franchisee in respect of
Kentucky Fried Chicken fast food stores. It entered into a contract with the
respondent, Trackstar Trading 20 (Pty) Ltd (Trackstar), a building contractor, in
February 2006 for the alteration and addition to premises for a new store in New
Town, Johannesburg. In concluding the contract, Maykent was represented by
Tertius Rabe Property Services CC (TRE), a close corporation, appointed as the
principal agent, which was the second defendant in the trial court.

[2] The agreed completion date was 30 June 2006 and the site was handed over
to Trackstar on 30 March 2006. The completion date was extended to 15 September
2006 because of variation orders causing delay. Trackstar effected the works, and
interim payments to it were made. The total agreed amount due in terms of the
contract was some R1 282 922. Its final invoice was for R985 423. Payment was not
made despite demand and Trackstar instituted action for payment of the amount it
alleged was owing in the Gauteng Division of the High Court. The summons was
served on 5 September 2008.

[3] TRE was cited as the second defendant, and as against it, Trackstar claimed
a final account supported by vouchers. Maykent raised several defences, including
one that amounted to a plea that nothing was yet due to Trackstar as a certificate of
final completion had not been issued by TRE, as was required by the contract on
which it relied – the standard JBCC 2000 Principal Building Agreement used in the
construction industry. There was thus no cause of action, it asserted. It also
counterclaimed for damages in the amount of R2 122 206 for alleged loss of income
arising from Trackstar’s failure to complete the work timeously, and additional
amounts it had had to pay TRE for completing the work.

[4] On 14 August 2013, shortly before the trial started, TRE issued a final
payment certificate for the sum of R963 475. The action against it was withdrawn.
The high court (Hiemstra AJ) found that Trackstar was entitled to payment of the
amount in the final certificate, and dismissed the counterclaim on the basis that no
evidence had been led to show that any loss suffered was caused by Trackstar’s
alleged breach of contract. The high court also ordered that Maykent pay interest at
the prescribed rate of 15.5 per cent from the date of summons to date of payment.
The appeal against these orders lies with its leave.

[5] The principal argument of Maykent in the high court was that TRE had not
issued a certificate of completion or a final certificate of payment when summons
was served: there was thus no cause of action, the summons being premature. It
relied in this regard on the 2000 JBCC standard agreement which it claimed was the
basis of the contract between it and Trackstar. Indeed, Trackstar had also alleged
that this was the contract that they had concluded, and attached it to its particulars of
claim. The contract consists of standard terms and a schedule headed ‘Contract
Variables’. The schedule reflected the parties’ details as well as those of TRE.
However, much of the schedule was not completed by the parties, and did not reflect
dates of signature.

[6] The particular clause of the JBCC contract relied on by Maykent (34.5)
provided that a final certificate of payment would be issued by the principal agent
only after a certificate of final completion had been issued by it. No final certificate of
final completion had ever been issued, and indeed, TRE had prepared snag lists for
remedial works to be done. These had not been attended to, Maykent contended,
before Trackstar left the site on 8 November 2006.

[7] The evidence of TRE’s representative, a Mr Stears, who had overseen the
building work, and attended site meetings on behalf of TRE, was that he had not
worked according to the standard terms of the JBCC contract and did not know that
it formed the basis of the parties’ agreement. The high court found that all the parties
had proceeded as if the terms of the JBCC contract were not applicable, and thus
that the provision in the JBCC contract requiring a certificate of completion, and then
a final certificate of payment, was not required. The claim for a final payment
certificate, and then payment, was akin to a claim for a statement and debatement of
account, followed by payment, and that the summons was in the circumstances not
premature.

[8] Although the heads of argument filed for Maykent on appeal continued to rely
on this argument, and contended that the JBCC contract terms were binding, and
that the high court had erred in this regard, at the hearing counsel did not persist with
either argument. It was also conceded that no evidence had been led to establish
that Maykent had suffered damages as a result of Trackstar’s breach.

[9] However, counsel did argue that it was inappropriate that interest should run
from the date of summons when the final payment certificate had been issued by
TRE only five years after the litigation commenced. The summons was served, as I
have said, on 5 September 2008, and the final payment certificate was issued on 14
August 2013. However, as argued by Trackstar, TRE was Maykent’s agent, and it
had known from the date when Trackstar issued its final account – 17 January 2007
– that the sum claimed was payable. TRE and Maykent were represented by the

same attorneys throughout the litigation. There was no doubt that Maykent was
aware of its liability to pay the amount due at the date of service of the summons.

[10] Trackstar was entitled to a final payment certificate and should have been
paid on the submission of its final account. There is no reason to deny it interest on
that sum at the prescribed rate from the date of summons.

[11] Accordingly the appeal is dismissed with costs.

_______________________
C H Lewis
Judge of Appeal

APPEARANCES
For Appellant:

M P van der Merwe SC
Instructed by:

Saunders Venter Van der Watt c/o
Louis Benn Attorneys, Pretoria

Lovius Block, Bloemfontein

For Respondent:

N A D Maritz SC, A A Botha

Instructed by:

Van Heerden & Krugel, Pretoria
Kramer
Weihmann
&
Joubert
Inc
Bloemfontein