01 March 2003 | Construction, Engineering and Infrastructure Law
It frequently occurs that a contractor exercises a lien over construction works because of non-payment by an employer.
The court has a discretion, if it considers that it is equitable to do so, to compel the contractor to deliver the works provided that the contractor’s rights are safeguarded by means of adequate security being provided for payment of his claim.
Employers in this scenario have no right to possession as against a tender of security. In deciding whether or not it is appropriate to give an employer possession, the court will look at the balance of prejudice.
Other relevant principles are:
Subcontractors often find themselves in the unenviable position of having performed their subcontract works but not having received payment from the main contractor. This despite the main contractor having itself received payment from the client inter alia for the subcontract works.
Just such a case arose in the Free State recently. A paving subcontractor who had performed paving works was not paid although the main contractor had been paid for the paving works and had received all but 1% of the full main contract price from the client.
Fearful that, if the client paid the final balance of the main contract price to the contractor, the main contractor would dissipate the money on unworthy causes rather than the worthy cause of paying the subcontractor, the
subcontractor applied to court for relief. The subcontractor applied for an interim interdict restraining the client from making any further payments to the main contractor pending the outcome of an action to be instituted by the subcontractor against the main contractor for payment.
The legal requirements for an interim interdict are:
The main contractor contended that the application should not be granted because:
The court came to the subcontractor’s rescue. It granted an order in favour of the subcontractor interdicting the client from making any further payments to the main contractor pending the outcome of the action to be instituted against the main contractor. The court held that:
It bears noting that the main contractor did not put up any evidence to the effect that the client had complained about or condemned the subcontractor’s work and/or had not paid for that work.