Millenium Aluminium and Glass Services CC and Others v Group Five Construction (Pty) Ltd and Another

Group Five Construction (Pty) Ltd was appointed as the main contractor on a construction project known as Pearls of Umhlanga – Pearl Sky. Millenium Aluminium and Glass Services CC was appointed as a nominated subcontractor under a JBCC Series 2000 subcontract and was required to furnish a performance (construction) guarantee. Constantia Insurance Company Ltd issued a construction guarantee in favour of Group Five Construction. Millenium failed to pay a certified payment amount reflected in a payment certificate issued by Group Five Coastal (later trading as Group Five KZN), acting as agent for Group Five Construction. After written demands in terms of the guarantee were made and not complied with, Group Five Construction called up the guarantee. Constantia refused payment, leading to High Court proceedings where Constantia was ordered to pay under the guarantee and the appellants were ordered to indemnify Constantia. Millenium and the other appellants appealed to the Supreme Court of Appeal.

The appeal was dismissed with costs, confirming the High Court order that Constantia was obliged to pay Group Five Construction under the guarantee and that the appellants were jointly and severally liable to indemnify Constantia.

The case reaffirms South African law on the nature of demand guarantees in construction contracts, confirming that such guarantees are independent obligations that must be honoured according to their terms. It clarifies that courts will focus on substantive compliance with the guarantee requirements rather than overly formalistic objections, particularly where agency relationships and name changes are involved.