Lonerock Construction (Pty) Limited v The South African National Roads Agency (SOC Limited)

Case no: 89831/2018

SANRAL is a state-owned company established under the South African National Roads Agency Limited and National Roads Act. For more on the legal structure of state-owned companies, see our article on the corporate veil in South Africa’s Companies Act.

Pagel Schulenburg, assisted by Adv Conrad Acker, recently obtained a judgment against The South African National Roads Agency (SANRAL) in the High Court of South Africa, Gauteng Division, Pretoria, in relation to an ongoing dispute since 2015. The dispute has its origin in a contract entered into between the parties, which flowed from the award of a tender to our client pursuant to an open bid process. Government contracts of this nature carry significant compliance obligations for all parties involved.

In essence, the bid was in respect of the upgrade of 2km of road of the R61 through Tombo in the Eastern Cape. Our client overran the contract period by approximately 11 months and did not apply for a further extension of the agreed time for completion. SANRAL not only charged our client penalties for the 11 months, but it also refused to pay Preliminaries and Generals (P&Gs) and contract price adjustment (CPA).

This refusal formed part of the main dispute, which centred around an Interim Payment Certificate 36 that was issued by the engineer under the contract and included an amount of R4 585 549 in respect of P&Gs. SANRAL submitted that the engineer incorrectly interpreted the outcome of a Contracts Committee decision when allowing P&Gs and insisted on the withdrawal and amendment of the Interim Payment Certificate.

Upon amendment of the issued certificate, our client raised a dispute. The legal question was whether, in the absence of a contractual provision that the Interim Payment certificate may be withdrawn or cancelled by the engineer in order to correct mistakes or values, it could be withdrawn unilaterally. Our client submitted that this was not possible, and the only manner in which a certified IPC can be amended is in the form of a further Interim or Final Payment Certificate. The Honourable Judge Neukircher agreed with us and ordered SANRAL to pay our client the P&Gs certified in the original Interim Payment Certificate 36.

This case underscores the importance of understanding contractual rights in government procurement. Businesses entering into public-sector contracts should ensure they are familiar with the legal requirements for operating a business in South Africa.

Pagel Schulenburg Team: Zané Hartman and Hugo Johnston

JUDGMENT DATED 27 JUNE 2023 – LONEROCK CONSTRUCTION v SA NATIONAL ROADS AGENCY – 89831_2018[61]

Updated 14 April 2026 — The South African Institution of Civil Engineering published the GCC 2025, replacing the GCC 2015 edition, with updated provisions for payment certification and dispute resolution in construction contracts. The principle established in this case — that an Interim Payment Certificate cannot be unilaterally withdrawn by the engineer without express contractual authority — remains good law.