The significance of the JBCC Payment Certificate being a liquid document

A payment certificate is defined as follows in the JBCC PBA 6.2 as “PAYMENT CERTIFICATE: A certificate issued at regular agreed intervals [CD] by the principal agent to the parties certifying the amount due and payable in terms of the JBCC® Payment Certificate format”.

The JBCC NSSA 6.2 defines a subcontract payment advice as “SUBCONTRACT PAYMENT ADVICE: A document issued at regular intervals [CD] by the contractor stating the amount due and payable by the contractor to the subcontractor or vice versa using the JBCC® Subcontract Payment Advice format”.

Clause 25.17 of the JBCC PBA ed 6.2 and 25.17 stipulates the following: “For the purposes of provisional sentence in relation to a payment certificate only, the parties consent to the jurisdiction of any court of law of the country [CD]”.

Similarly, clause 25.17 of the JBCC NSSA ed 6.2 stipulates as follows: “For the purposes of provisional sentence in relation to subcontract payment advice only, the parties consent to the jurisdiction of any court of law of the country [CD]”.

In order to fully understand the implications of the above extracts of the respective contracts, it is necessary to answer the following key questions:

1. What is a liquid document?
2. What is provisional sentence proceeding?

A liquid document is a document which on presentation demonstrates an express undertaking to pay an amount specified in it and does not require any other evidence to prove the indebtedness of the person who signed it. In terms of the JBCC, a document which complies with the definition of the payment certificate or subcontract payment advice and is based on the JBCC format, will be a liquid document, in that it represents an obligation on the party certifying the payment to pay the amount reflected in the payment certificate or subcontract payment advice. It should however be borne in mind that any document that complies with the requirements of a liquid document could be subject to provisional sentence proceedings.

Provisional sentence proceedings have their origins in Roman-Dutch Law in South Africa. Provisional sentence proceedings are used where the defaulting party cannot deny liability. It is used where a claim is based on a liquid document, a liquidated sum of money, a claim for ejectment, or a claim for the delivery of specified immovable property. It is meant for use in instances where the plaintiff has prima facie evidence of their claim, and it is aimed at providing a speedy resolution. Where a provisional sentence is granted and a defendant wishes to defend the main case, the defendant must provide security for payment of the provisional sentence summons. In practice, there are other considerations that apply which include defences that may be raised against provisional sentence summons as well as the development of provisional sentence summons, since the constitutional era through court decisions.

The significance of the JBCC payment certificate being a liquid document or complying with the requirements of a liquid document and the references to provisional sentence in clause 25.17 of both the JBCC PBA ed 6.2 and JBCC NSSA ed 6.2, is that disputes around non-payment of certified payment certificates are not arbitrable for reasons relating to the consideration that there is no dispute and that the payment certificate or subcontractor payment advice constitutes an acknowledgement of debt. In instances where there is nonpayment of a payment certificate or a subcontract payment advice, it is recommended to be referred to provisional sentence proceedings.

An alternative to provisional sentence proceedings is an application in motion court for payment based on a liquid document.

Please contact the Association if you require any further clarity.

Bilaal Dawood

Head: Membership Services