About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: South Gauteng High Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: South Gauteng High Court, Johannesburg
>>
2021
>>
[2021] ZAGPJHC 159
|
|
Cape Town 4 Properties (Pty) Ltd v Guardrisk Insurance Company Limited (2020/4130) [2021] ZAGPJHC 159 (26 May 2021)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, JOHANNESBURG
CASE
NO: 2020/4130
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
REVISED
DATE:
26 May 2021
In
the matter between:
CAPE
TOWN 4 PROPERTIES (PTY) LTD
Applicant
And
GUARDRISK
INSURANCE COMPANY LIMITED
Respondent
JUDGMENT
ALLY
AJ
INTRODUCTION
[1]
This is an opposed application for the payment of the amount of R 1
920 849.61, being
mora
interest of 10.5% in terms of the
Prescribed Rate of Interest Act, 1975
, calculated on the amount of R
13 041 482.67 (hereinafter referred to as the “
the
Guaranteed Sum
”) from 23 August 2018 to 17 January 2020.
[2]
Applicant alleges that on 13 September 2016, it entered into a
Principal Building
Agreement with TGP Building (Pty) Ltd (hereinafter
referred to as “
TGP
”) being a construction
contractor, in terms of whereof the Applicant engaged TGP to
construct a residential development of
310 flats in Observatory, Cape
Town.
[3]
Applicant alleges that on 8 February 2018, pursuant to the building
agreement between
the Applicant and TGP, TGP provided a performance
guarantee
[1]
that had been
issued by the Respondent under policy no. CG16/02680-02 in favour of
the Applicant.
[4]
According to Applicant, on 16 August 2018, it notified the Respondent
that it was
calling up the Guarantee in terms of clause 5.0 and 5.1
thereof.
[5]
Applicant alleges that despite lawful demand, the Respondent failed
and/or refused
to pay the Guaranteed Sum within 7 (seven) days and
only paid the amount of R 13 041 482.67 to the Applicant on 17
January 2019.
[6]
Applicant submits that the amount of R 1 920 849.61 being claimed by
the Applicant
constitutes
mora
interest that is due and
payable to the Applicant (calculated from 23 August 2018 to 17
January 2020 on at 10.5% on R 13 041 482.67),
resultant from the
Respondent’s failure and/or refusal to pay the Guaranteed Sum
to the Applicant within 7 (seven) days of
lawful demand.
[7]
The Respondent contends that it was prevented from paying the
Guaranteed Sum before
15 January 2019, due to the legal proceedings
brought by TGP prior to the seven days mentioned above expiring.
(Payment was made
on 17 January 2019; the Respondent has tendered
payment for the
mora
interest from 15 January 2019 to 17
January 2019).
[8]
The Respondent contends further that it is not liable to pay
mora
interest due to the maximum liability clause contained in the
Guarantee.
EVALUATION
AND ANALYSIS
[9]
This application brings to the fore the issue of performance
guarantees. However,
this application raises the issue of whether on
demand, an insurance company can refuse to pay only for the reason
that an application
interdicting them from paying has been launched.
Basically this is the crux of this case.
[10]
The Courts have expressed themselves on ‘performance
guarantees’ and their nature
and effect. I align myself with
the sentiments expressed in those cases.
[2]
In my view the Applicant complied with the terms of the performance
guarantee and in the circumstances expected to be paid following
the
expiry of the 7 (seven) days.
[11]
Our Courts have, however, mentioned that payment may be refused where
there is a fraud perpetrated
to the knowledge of the ‘finance
institution’.
[12]
The Respondent in this matter has not raised the ‘fraud
exception’ but raised in
argument, the public policy defence in
terms of which if Respondent had paid before the interdict
proceedings were finalised, it
would be contemptuous and against
public policy.
[13]
In my view, nothing stops a person in the shoes of the Respondent
from taking a course as was
taken by them in this matter, namely, by
not paying the amount claimed on demand. However, the Respondent must
then face the consequences
of that course of action.
[14]
I also align myself with the sentiments of Theron JA, as she then
was:
[3]
“
In
my view this principle is based on sound reason. It underscores the
commercial nature of performance guarantees. In determining
whether
payment should be made on such a guarantee, accessory obligations are
of no consequence. The very purpose of the guarantee
is so that the
beneficiary can call up the guarantee without having to wait for the
final determination of its rights in terms
of accessory obligations.
To find otherwise, would involve an unjustified paradigm shift and
defeat the commercial purpose of performance
guarantees.”
[15]
Whilst our Courts are jealous of the jurisdiction to adjudicate
matters unless good grounds exist
for an ouster, it is my view that
the intervening issue of an interdict application, does not avail the
Respondent in this case,
in the sense that, it must face the
consequences as stated above and that consequence is that they must
pay
mora
interest to the Applicant for the reason that they
did not pay within the timeframe demanded.
[16]
Respondent’s Counsel enjoined the Court to consider the issue
of the competence of the
Court to adjudicate applications and actions
lodged with it. In this regard, so the argument went, it would be
contemptuous of
a litigant to decide on its own before allowing the
Court to make a decision.
[17]
Furthermore, the Respondent contended that non-payment was not the
legal cause of the damages
suffered by the Applicant but that it was
the actions of TGP by instituting interdict proceedings that caused
such damages.
[18]
The third contention on behalf of the Respondent was the public
policy issue which has been dealt
with above.
[19]
With regard to the argument by the Respondent relating to its
possible constructive contemptuous
conduct in paying prior to
adjudication by the Court, I am of the view that there is no
substance in the argument. I am in agreement
with Counsel for the
Applicant that, firstly, Respondent’s conduct paying the amount
in January 2020 before Part B of the
interdict proceedings having
been pronounced upon, belies their defence. In other words, are they
not in contempt of court, on
their argument, by paying the amount,
demanded, in January 2020, before a Court pronounced itself? This
clear contradiction works
against the Respondent.
[20]
In my view, the paying of the amount demanded, would not amount to an
intention to defeat the
course of justice by taking away the Court’s
competence of the Court as expressed in
Gauteng
Gambling Board & Another v MEC for Economic Development, Gauteng
Provincial Government
.
[4]
[21]
I further agree with the submission by Applicant’s Counsel that
the Respondent did not
make out a case on the papers that they knew
or reasonably believed that the interim order would be granted by the
Court which
is one of the requirements set out in the Gauteng
Gambling Board case and
City
of Tshwane Metropolitan Municipality v Afriforum
[5]
.
[22]
I turn now to the causation argument raised by the Respondent. As I
understand this submission,
it states that the non-payment by the
Respondent of the amount demanded in terms of the ‘performance
guarantee’ was
not the cause of any damages suffered by the
Applicant but that the application proceedings launched by the TGP
resulted in Respondent
not paying within the timeframe mentioned in
the demand letter. I am satisfied that the non-payment of the amount
as demanded is
the
causa
causans
of
the Applicant not being placed in a position it would have been had
the amount been paid on time and therefore entitles it to
mora
interest
as described in
Land
Agricultural Development Bank of South Africa v Reyton Estates (Pty)
Ltd & Others
[6]
where it was stated:
“
Mora interest,
on the other hand, is something fundamentally different. It is not
payable in terms of an agreement, but constitutes
compensation for
loss or damage resulting from a breach of contract, specifically mora
debitoris.”
[23]
The Respondent as part of their submission argued that if they were
liable for
mora
interest such
mora
interest must be
calculated from 15 January 2020 – 17 January 2020.
[24]
In my view the liability for
mora
interest arises from the
date of expiry of the 7 (seven) days given to the Respondent to pay
and in the amount as claimed by the
Applicant in accordance and
alignment with the view expressed above regarding placing the
Applicant in the same position it would
have been had the amount been
paid on time.
COSTS
[25]
There is no need to deviate from the norm that costs should follow
the result and none was argued.
Therefore, in my view, the Respondent
is liable for the costs of the Applicant.
[26]
Accordingly the Applicant is entitled to the relief claimed in the
Notice of Motion with costs.
In
the result the following Order shall issue:
1)
The Respondent shall pay the amount of R1,
920, 849, 61 to the Applicant;
2)
The Respondent shall pay interest on the
aforesaid amount calculated at 9.75%
a
tempore morae;
3)
Respondent to pay the costs of this
application
ACTING
JUDGE OF THE HIGH COURT
GAUTENG
DIVISION OF THE HIGH COURT, JOHANNESBURG
Electronically
submitted therefore unsigned
Delivered:
This judgement was prepared and authored by the Judge whose name is
reflected and is handed down electronically by circulation
to the
Parties/their legal representatives by email and by uploading it to
the electronic file of this matter on CaseLines. The
date for
hand-down is deemed to be 27 May 2021.
Date of hearing: 10
September 2020
Date
of judgment: 26 May 2021
Appearances:
Applicant
:
Mr T N Hamman
Du
Toit Sanchez Moodley Inc
Stonemill
Office Park, Ground Floor
Kiepersol
House No 2
300
Acacia Road
Randburg
jaco@hahnlaw.co.za
merilynn@hahnlaw.co.za
Respondent
:
Adv. A. Lamplough
ENSAFRICA
The
MARC, Tower 1
129
Rivonia Road
Sandton
rscott@ENSafrica.com
zsher@ENSafrica.com
[1]
Caselines:
001 - 053
[2]
Dormell
Properties 282 CC v Renasa Insurance Co Ltd & Ano
2011 (1) SA 70
(SCA) @ para 61 et seq
Lombard
Ins Co Ltd v Landmark Holdings (Pty) Ltd
2010 (2) SA 86
(SCA) @ para
20
Edward
Owen v Barclays Bank International
1978 (1) All ER 976
(CA) @ 983
b-d
First
Rand Bank v Brera 2013 SCA 25 @ para 2
State
Bank of India v Denel SOC Ltd
2014 SA 212
(SCA) @ para 8-9
[3]
Guardrisk
Insurance Co Ltd & Others v Kentz 2013 SCA 182 @ para 29
[4]
2013
(5) SA 24 (SCA)
[5]
2016
(6) SA 279 (CC)
[6]
2013 (6) SA 319
(SCA)
Bellairs
v Hodnett
1978 (1) SA 1109
(A) @1145 D-G and 1146H – 1147A