Pagel Schulenburg Secures Victory in Case Against SANRAL

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

Case no: 89831/2018 | High Court of South Africa, Gauteng Division, Pretoria | Judgment 27 June 2023

SANRAL is a public company wholly owned by the State, established under the South African National Roads Agency Limited and National Roads Act 7 of 1998. 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, obtained a judgment against The South African National Roads Agency (SANRAL) in the High Court of South Africa, Gauteng Division, Pretoria, in relation to a dispute running 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 The legal question was whether, in the absence of a contractual provision that the Interim Payment Certificate may be withdrawn or cancelled by the engineer in order to correct mistakes or values, it could be withdrawn unilaterally.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.

The judgment is reported as Lonerock Construction v South African National Roads Agency (SOC Limited) (89831/2018) [2023] ZAGPPHC 527 (27 June 2023) and is available on SAFLII.

Why the principle still matters under GCC 2025

The decision turned on a point of contractual interpretation rather than on any particular edition of the standard-form contract: an engineer has no power to withdraw a certified Interim Payment Certificate unless the contract expressly gives them that power. Where it does not, the certificate stands and any correction must be made through a further Interim or Final Payment Certificate. That reasoning holds good regardless of which standard form the parties have adopted.

It does, however, need to be applied to the contract actually in front of you, and the standard form has since changed. On 2 September 2025 the South African Institution of Civil Engineering (SAICE) launched the General Conditions of Contract for Construction Works, Fourth Edition (GCC 2025), which replaces the GCC 2015 edition. It is endorsed by the Construction Industry Development Board and has been incorporated into the Standard for Uniformity in Engineering and Construction Works Contracts.

SAICE records 129 key changes in the new edition. Among them are new early warning provisions intended to surface risks before they become disputes, a shift from a “due completion date” to a “due practical completion date”, clearer procedures for variation orders and termination, and an expanded consultation role for the Employer’s Agent. Clauses have also been reworded and renumbered throughout.

That renumbering is the practical trap. Because the outcome in this case depended on what the contract did and did not expressly authorise, a contractor or employer working under GCC 2025 cannot simply carry across a clause number from a GCC 2015 precedent. The payment certification provisions should be read afresh in the new edition before any certificate is withdrawn, amended or disputed.

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 22 September 2026 – Added the neutral citation and SAFLII link for the judgment, and the Act establishing SANRAL. Set out what the GCC 2025 fourth edition, launched by SAICE on 2 September 2025 to replace GCC 2015, actually changes: 129 revisions including new early warning provisions, the move to a “due practical completion date”, clearer variation order and termination procedures, and the rewording and renumbering of clauses throughout. Explained why the principle in this case, that an engineer cannot unilaterally withdraw a certified Interim Payment Certificate without express contractual authority, survives the new edition but must be applied to the renumbered clauses rather than to a GCC 2015 precedent.