Contractor loses R1m security bid

Durban17092014Congestion around the new flyover intersection which is still under construction.Picture:Marilyn Bernard

Durban17092014Congestion around the new flyover intersection which is still under construction.Picture:Marilyn Bernard

Published Sep 26, 2014

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Pretoria - The contractor handling the R352 million upgrade of the N2/ Umgeni Road interchange, which alleges the project has been bedevilled by violence, has lost a high court bid to get about R1m more a month for increased security from the SA National Roads Agency (Sanral).

This was after the judge ruled that “industrial unrest” was foreseeable.

It also failed to get court sanction to walk away from the contract on the basis that the violent events which had dogged the project almost from the start constituted a force majeure (unanticipated or beyond control).

The joint venture - Rumdel Cape, EXR Holdings and Mazcon - launched the urgent Durban High Court application in July, alleging that constant “guerilla-warfare” attacks on its employees by the residents of two informal settlements had led to the site’s being “run like a military outpost behind enemy lines”.

In terms of an agreement, the joint venture had once sought its casual labour in the settlements, but there had been constant strikes and disruptions.

In May, the entire workforce had been dismissed after a wildcat strike and, since then, the project manager, Gary Williams, said, violent attacks had escalated, leading to the murder of a security guard, and an “anarchic situation”.

But Sanral opposed the application, saying the extent of the problem was being exaggerated and the joint venture should have provided for adequate security in its tender.

It raised a dispute of fact about the murder of the security guard, saying it was not linked to the communities, but to a row over money between two security guards.

When the matter was argued before Judge Graham Lopes last week, Kemp J Kemp, for the contractor, said it was not contractually obliged to expose its workers to threat and it was not in the interests of the community for the project to be completed as then there would be no chance of employment.

“Although a contractor bears an obligation to price all foreseeable items in its contract, the conduct of the communities was not foreseen,” he said.

Greg Harpur, for Sanral, said the contract dictated that the contractor should provide security and it had a special policy with Sasria (the state-owned company providing insurance cover for political risk) covering it for an amount of up to R300m in respect of “any riot, strike or public disorder”.

“There is no evidence of an impossibility to perform on the contract. With the provision of proper security it can be concluded and the obligation to pay for that rests on the contractor,” he said.

The judge agreed.

“The necessity to increase security cannot be laid at the door of Sanral. It is in no way responsible for the conduct of the communities and there was no obligation on Sanral to give some prior warning about the presence of the communities and the possibility they would demand jobs.

“All tenderers were required to attend a site inspection… this should have alerted a reasonable contractor to the existence of the communities and the probability of being able to secure unskilled labour there.

“That they may have ended up being somewhat demanding is not a surprising consequence of the unfortunate social conditions they find themselves. That they may have overstepped the boundaries of what is proper in seeking employment is also unsurprising.

“What is clear is that those who have overstepped the mark are in the minority.

“That these matters can be dealt with and the contract completed within the next nine months, is accepted by the contractor albeit on the basis that is required to provide additional security at an additional cost,” Judge Lopes said.

He said the contract had about nine months to run, so the extra security would cost R9m “a mere 2.5 percent” of the contract price.

“There are always unforeseen occurrences in projects as large as this one. Such are the vagaries of the civil construction industry.”

Attorney Alistair Hay, for the joint venture, said it might seek leave to appeal. “Naturally we are disappointed with the ruling,” he said.

Pretoria News

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