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Firm contracted by Eskom wins payout court battle against insurer

Cape Times logo Cape Times 2019-03-22 Francesca Villette

The newly constructed Medupi power station stands outside the northern South African town of Lephalale. The plant, operated by the state company Eskom will be the fourth largest in the world and is expected to produce electricity in early 2015. Medupi is touted as Africa's first 'supercritical' coal plant, using higher temperatures that produce more energy from less coal, while emitting less ash and carbon dioxide. South Africa, like China and India, has large domestic coal supplies. © Getty The newly constructed Medupi power station stands outside the northern South African town of Lephalale. The plant, operated by the state company Eskom will be the fourth largest in the world and is expected to produce electricity in early 2015. Medupi is touted as Africa's first 'supercritical' coal plant, using higher temperatures that produce more energy from less coal, while emitting less ash and carbon dioxide. South Africa, like China and India, has large domestic coal supplies. Cape Town – A civil construction company contracted by Eskom to build an office has won an appeal in the Supreme Court of Appeal against an insurer which refused a payout during construction.

During 2013, Raubex Construction secured a contract with Eskom for the construction of offices and a visitors centre, and it then subcontracted a portion of the works to Peak Star 133, trading as Dolphin Construction.

A dispute arose between Raubex and Dolphin relating to a list of incomplete and defective work, and by February 2015, Dolphin refused to perform any remedial work.

Raubex then called on Bryte Insurance to make a R1.4 million payment in terms of a retention guarantee, which Bryte declined.

Bryte had argued that Raubex had acted fraudulently in its estimation of the amount.

Raubex successfully applied to the South Gauteng High Court to implement the terms of the guarantee, but in an appeal to the full court the order was set aside.

The full court had held that retention money could be withheld only to remedy defects in the works which manifest after the completion of the contract, and that Raubex had fraudulently estimated the amount relating to defects which existed prior to the certificate of completion being issued.

Acting Judge of Appeal Johannes Eksteen found Raubex was entitled to payment in terms of the guarantee. “I consider that the court a quo erred in its understanding of the purpose of retention money and in its assessment of the purpose of the guarantee.

"Although Bryte has raised the issue of fraud, it has made no averment that could lead to a conclusion of fraud. 

"No single expense in the estimation by Raubex annexed to its replying affidavit has been placed in dispute with the result that Raubex has not been afforded an opportunity to explain or justify the estimation,” Judge Eksteen found.

Cape Times

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