Raubex Construction (Pty) Ltd v Bryte Insurance Company Ltd

Raubex Construction (Pty) Ltd entered into a main construction contract with Eskom and subcontracted part of the works to Peak Star 133 (Pty) Ltd t/a Dolphin Construction. The subcontract provided for retention money, but Raubex waived retention against delivery of a retention money guarantee issued by Bryte Insurance Company Ltd. Dolphin reached practical completion in October 2014 and a certificate of completion was issued with an attached punch list of outstanding and defective work. Dolphin later refused to carry out further remedial work. Raubex called on Bryte to pay under the retention guarantee for the estimated cost of remedying the defects. Bryte refused, alleging that the guarantee only covered post-completion defects, that the estimate was incorrect, and that Raubex’s demand was fraudulent. Raubex succeeded in the High Court but lost on appeal to the Full Court, leading to a further appeal to the Supreme Court of Appeal.

The appeal was upheld with costs. The order of the Full Court was set aside and replaced with an order dismissing Bryte’s appeal, thereby restoring Raubex’s entitlement to payment under the retention guarantee.

The case clarifies the nature and interpretation of retention money guarantees in South African construction law, confirms that unconditional guarantees are enforceable according to their terms, and reaffirms the strict onus on a guarantor to prove fraud to resist payment. It also applies the Endumeni principles of contractual interpretation in the context of construction contracts.