Maykent (Pty) Ltd, a franchisee of Kentucky Fried Chicken stores, entered into a construction contract with Trackstar Trading 20 (Pty) Ltd in February 2006 for alterations and additions to premises for a new store in New Town, Johannesburg. Tertius Rabe Property Services CC (TRE) was appointed as principal agent. The completion date was extended to 15 September 2006 due to variation orders. The total contract amount was approximately R1,282,922. Trackstar completed the works and issued a final invoice for R985,423. Despite Trackstar's demands, Maykent did not make payment. Trackstar instituted action on 5 September 2008. Maykent defended on the basis that no final certificate of completion had been issued by TRE as allegedly required under the standard JBCC 2000 Principal Building Agreement. TRE only issued a final payment certificate for R963,475 on 14 August 2013, shortly before trial. Maykent also counterclaimed for damages of R2,122,206 for alleged loss of income and additional costs, claiming Trackstar failed to complete work timeously.
The appeal was dismissed with costs. The high court's order that Maykent pay Trackstar R963,475 plus interest at the prescribed rate of 15.5% from the date of summons (5 September 2008) to date of payment was upheld, and the counterclaim was dismissed.
A construction contract concluded partly orally, partly by conduct, and partly on the basis of standard terms used in the industry does not necessarily oblige the principal agent to issue a certificate of completion before issuing a final payment certificate where the parties' conduct demonstrates they did not intend to be bound by such procedural requirements. Where standard form contract terms (such as JBCC 2000) are referenced but the parties do not conduct themselves in accordance with those terms, and the principal agent is unaware that those terms apply, the contract will be interpreted according to the parties' actual intentions as demonstrated by their conduct. An employer cannot avoid liability for interest on amounts due to a contractor from the date of legal demand merely because its own agent delayed issuing administrative certificates, where the employer was aware through its agent of the amount owing from the date the contractor submitted its final account.
The court treated the claim for a final payment certificate and payment as analogous to a claim for statement and debatement of account followed by payment. The court noted that TRE and Maykent were represented by the same attorneys throughout the litigation, which supported the finding that Maykent was fully aware of its liability. The court observed that there was no doubt that Maykent was aware of its liability to pay the amount due at the date of service of summons, and that Trackstar was entitled to a final payment certificate and should have been paid upon submission of its final account on 17 January 2007. The five-year delay between service of summons and issuance of the final payment certificate was implicitly criticized as unjustified.
This case is significant in South African construction law as it establishes that standard form contracts such as the JBCC 2000 Principal Building Agreement will not automatically govern the parties' relationship if their conduct demonstrates that they did not intend to be bound by those terms. The case emphasizes the importance of looking at the parties' actual conduct and understanding rather than merely the documents they may have referenced. It also confirms that where a contractor has completed work and submitted a final account, and the employer (through its agent) is aware of the amount due, interest will run from the date of legal demand (summons) even if administrative steps such as issuing certificates are delayed by the employer's own agent. The case protects contractors from employers who use technicalities around certification procedures to delay payment when the substantive work has been completed and the debt is known.