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[2013] ZASCA 182
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Guardrisk Insurance Company Ltd and Others v Kentz (Pty) Ltd (94/2013) [2013] ZASCA 182; [2014] 1 All SA 307 (SCA) (14 November 2013)
THE SUPREME COURT OF
APPEAL OF SOUTH AFRICA
JUDGMENT
Case no: 94/2013
Reportable
In the matter between:
GUARDRISK
INSURANCE COMPANY LTD
.........................................
First
Appellant
BROSEAL
PROPERTIES (PTY) LTD
……………………......………...
Second
Appellant
KAIROS
INDUSTRIAL HOLDINGS (PTY) LTD
…………..........………...
Third
Appellant
THEODOR WILHELM VAN DEN
HEEVER NNO
…………...........……
Fourth
Appellant
& OTHERS
and
KENTZ (PTY)
LTD
……………………………………………….........……….
Respondent
Neutral
citation
:
Guardrisk
Insurance Company Ltd
v
Kentz
(Pty) Ltd
(94/2013)
[2013] ZASCA
182
(29 November 2013)
Coram
:
Navsa ADP, Shongwe, Theron, Saldulker JJA and Meyer AJA
Heard
:
14 November 2013
Delivered
:
29 November 2013
Summary
:
Construction
guarantee - similar to letter of credit – obligation
independent of underlying contract - payment to be made
if conditions
in guarantee met - guarantor can only escape liability on proof of
fraud on part of beneficiary.
ORDER
On appeal from: South
Gauteng High Court, Johannesburg (De Wet AJ sitting as court of first
instance):
The appeal is dismissed
with costs, including the costs of two counsel, which costs are to be
paid jointly and severally by the
appellants, the one paying the
others to be absolved.
JUDGMENT
THERON JA (NAVSA ADP,
SHONGWE, SALDULKER JJA and MEYER AJA concurring):
[1]
This
appeal, with the leave of the court below, turns on the
interpretation and application of two construction guarantees that
were issued by the first appellant, Guardrisk Insurance Company Ltd
(Guardrisk), in favour of the respondent, Kentz (Pty) Ltd (Kentz),
at
the behest of Brokrew Industrial (Pty) Ltd (Brokrew). The factual
background to the dispute between the parties is set out hereafter.
[2]
Kentz
was one of the contractors involved in the construction of a new
power generation plant, the Medupi Power Station, for Eskom,
a
state-owned electricity public utility company. During September
2008, Kentz entered into a written construction contract (the
construction contract) with Brokrew (the contractor) relating to the
supply of ducting at Medupi. In terms of clause 4.2 of the
construction contract, Brokrew was obliged, at its own cost, to
secure ‘an irrevocable, on demand bank guarantee or a demand
guarantee from a
recognised
financial institution’ for proper performance. This guarantee
was referred to as the performance guarantee. Clause
14.2 of the
construction contract, which relates to the advance payment
guarantee, contains words almost identical to that of clause
4.2
already referred to. It was common cause that Kentz had paid Brokrew
an amount of R17 million after the advance payment guarantee
had been
issued by Guardrisk and submitted to Kentz. The advance payment was
to facilitate commencement of the works by Brokrew,
under the
contract. This is typical of what is commonly referred to as
construction guarantees.
[3]
It
was common cause that Brokrew experienced severe financial
difficulties which impacted on its ability to perform its obligations
under the construction contract. As at 31 January 2010, Brokrew’s
liabilities exceeded its assets by more than R44 million.
On 5 March
2010, Brokrew advised Kentz that unless the terms of the contract
were renegotiated, it would not be in a position to
perform its
obligations in terms thereof.
[4]
On 24 February 2010
Kentz addressed a letter to Brokrew, relevant portions of which read:
‘
1. You have plainly
demonstrated your intention not to continue with performance of your
obligations under the Contract and/or your
intention to abandon the
Contract and have admitted that you have become insolvent ....
Alternatively, by your conduct, you have
repudiated the contract and
we are entitled to accept same and cancel the Contract
.
Our
rights in this regard are reserved.
2. Furthermore in clauses 4.1(a) and
(
b
)
of the Contract you warranted that you have the finances to perform
the work and that you have a sufficient number of appropriately
qualified [staff] .... You are insolvent by your own admission, are
clearly unable to finance the performance of the Works, are
in the
process of reducing the personnel that are necessary for the
execution of the Works in accordance with the contract and
within the
date of completion and have advised that you intend ceasing
production.
Without
prejudice to our right to cancel
as
aforesaid, unless you remedy these material breaches of clause 4.1 of
the contract within 7 (seven) calendar days we intend exercising
our
right to cancel in terms of clause 15.2 (g)
....
4. In terms of clause 4.1 of the
Contract you are required to execute and complete the Works in
accordance with the Contract. You
advised us on 23 February 2010 that
you intend suspending deliveries pending the finalisation of an
audit. You have now suspended
deliveries which constitutes a further
material breach of the Contract.
Without
prejudice to our rights to cancel
as
aforesaid, unless you remedy this material breach of clause 4.1 of
the Contract within 7 calendar days, we intend exercising
our right
to cancel in terms of clause 15.2(g)....’ [Emphasis added.]
[5]
On
9 March 2010 Kentz addressed a further letter to Brokrew in terms
whereof it cancelled the contract, with immediate effect. On
11 March
2010 Brokrew’s attorneys addressed a letter to Kentz, in which
it disputed Kentz’s entitlement to cancel the
contract,
recorded its contention that Kentz thereby repudiated the contract
and accepted Kentz’s repudiation of the contract
whereupon it
purported to cancel the
contract. It also alleged that Kentz’s call on the guarantees
was fraudulent given the latter’s
knowledge that it was not
entitled to cancel the contract.
[6]
On
3 and 9 March 2010, respectively, Kentz made demand for payment in
terms of the guarantees. Guardrisk resisted Kentz’s
claims on
the basis that the claims were fraudulent. In April 2010, and in
consequence of the nonpayment, Kentz instituted
motion
proceedings against Guardrisk in the South Gauteng High Court,
Johannesburg, in which it claimed payment in terms of the
guarantees.
In May 2010, Brokrew applied for and was granted leave to intervene
as a second respondent in the proceedings in the
high court.
Guardrisk subsequently issued third party notices against Brokrew and
the second and third appellants, Broseal Properties
(Pty) Ltd
(Broseal) and Kairos Industrial Holdings (Pty) Ltd (Kairos),
respectively. Guardrisk relied upon a counter indemnity
in its favour
executed by Brokrew for its claim against the latter and an indemnity
and deed of surety for its claim against Broseal
and Kairos. The
third party notices were not opposed and Broseal and Kairos were
subsequently joined as third parties in the proceedings
in the high
court.
[7]
Prior
to the hearing of the matter in the high court, Brokrew was finally
liquidated and at the hearing it was represented by its
liquidators.
The high court (De Wet AJ) found that the evidence had failed to
establish that Kentz, in making demand for payment
under the
guarantees, had acted fraudulently. It further found that Guardrisk
was obliged to make payment in terms of the guarantees
and
accordingly granted judgment in favour of Kentz. It also made an
order in favour of Guardrisk in terms of the indemnities and
deed of
suretyship. It is that order that is before us.
[8]
Shortly
before the hearing of this appeal, the liquidators of Brokrew applied
to this court, in terms of SCA rule 11(1), for an
order, inter alia,
that they be joined as the fourth appellant in these proceedings.
That application was not opposed and was granted.
[9]
It
was contended on behalf of the second, third and fourth appellants
that the guarantees were in the nature of payment guarantees
rather
than performance guarantees. It was argued that what Guardrisk had
secured was payment of the amounts payable to Kentz by
Brokrew under
the construction contract and that the guarantees were thus
inextricably linked to the construction contract. For
this reason, so
the argument went, the guarantees required an allegation of liability
on the part of Kentz. The nub of the argument
was that the guarantees
were ‘conditional’ rather than ‘on demand’
guarantees. English authorities refer
to unconditional guarantees as
‘on demand’ bonds and our courts have sometimes used the
same terminology.
[1]
Guardrisk did not associate itself with these arguments.
[10]
The essential
difference between these two types of bonds was described by Brand JA
in
Minister
of Transport and Public Works, Western Cape & another
v Zanbuild
Construction (Pty) Ltd & another
as
follows:
‘
...
[A]
claimant under a conditional bond is required at least to allege and
- depending on the terms of the bond - sometimes also to
establish
liability on the part of the contractor for the same amount. An “on
demand” bond, also referred to as a “call
bond”, on
the other hand, requires no allegation of liability on the part of
the contractor under the construction contracts.
All that is required
for payment is a demand by the claimant, stated to be on the basis of
the event specified in the bond.’
[2]
[11]
In
order to determine the nature of the guarantees in this matter,
regard must be had to their terms
[3]
.
I therefore turn now to that enquiry. In terms of both guarantees,
Guardrisk bound itself as principal in favour of the employer
(Kentz). It confirmed that it held the guaranteed sums ‘at the
disposal of the Employer, as security for the proper performance
by
the Contractor of all its obligations in terms of and arising from
the contract’. Guardrisk undertook to pay to Kentz
the
guaranteed sums, upon demand from the latter. Such demand had to be
in writing and contain a statement that the demand amount
was payable
to the employer in terms of the contract and that the contractor was
in breach of its obligations under the contract.
Further relevant
terms of the guarantees are the following:
‘
4. Notwithstanding the
reference herein to the Contract the liability of the Financial
Institution in terms hereof is [as] principal
and not as surety and
the Financial Institution’s obligations to make payment:
a)
Is and shall be absolute
and unconditional in all circumstances; and
b) Is not, and shall not be construed
to be, accessory or collateral on any basis whatsoever.’
[12]
Clause
5(c) is of importance as it provides that compliance by the Financial
Institution with any demand for payment made in terms
of the
guarantee ‘shall not be delayed, by the fact that a dispute may
exist between the Contractor and the Employer’.
The two
guarantees are identical in their material provisions.
[13]
The
terms of the guarantees are clear. They create an obligation on the
part of the guarantor (Guardrisk) to pay Kentz (the employer)
on the
happening of a specified event.
[4]
It was recorded in the guarantees that notwithstanding the reference
to the construction contract, the liability of the bank as
principal
is absolute and unconditional, and should not be construed to create
an accessory or collateral obligation. The guarantees
go further and
specifically state that the bank may not delay making payment in
terms of the guarantees by reason of a dispute
between the contractor
and the employer. The purpose of the guarantees was to protect Kentz
in the event that Brokrew could not
perform its obligations in terms
of the construction contract.
[14]
In
Lombard Insurance Co Ltd
v
Landmark Holdings (Pty) Ltd & others, Navsa
JA described a guarantee very similar to the performance guarantee in
this matter as:
‘
...
not
unlike irrevocable letters of credit issued by banks and used in
international trade, the essential feature of which is the
establishment of a contractual obligation on the part of a bank to
pay the beneficiary (seller). This obligation is wholly independent
of the underlying contract of sale and assures the seller of payment
of the purchase price before he or she parts with the goods
being
sold. Whatever disputes may subsequently arise between buyer and
seller is of no moment insofar as the bank's obligation
is concerned.
The bank's liability to the seller is to honour the credit. The bank
undertakes to pay provided only that the conditions
specified in the
credit are met.’
[5]
[15]
In
the circumstances, the argument advanced by Broseal and Kairos
regarding the conditional nature of the guarantees must fail.
The
guarantees in this matter are unconditional and must be paid
according to their terms. The only basis upon which Guardrisk
can
escape liability is to show proof of fraud on the part of Kentz.
[16]
The
argument presented on behalf of Guardrisk, can be summarised as
follows. Each of the guarantees relied upon by Kentz requires
the
latter to, inter alia, state that the amount claimed was payable to
the employer in terms of the contract and that the contractor
was in
breach of its obligations under the contract. Guardrisk argued that
the statements by Kentz in each of its demands to Guardrisk,
to the
effect that the amount claimed was payable to Kentz in terms of the
construction contract with Brokrew, were material, knowingly
false
and constituted a fraud on both Kentz and Brokrew.
[17]
It would be useful
to briefly consider the legal position in relation to the fraud
exception. It is trite that where a beneficiary
who makes a call on a
guarantee does so with knowledge that it is not entitled to payment,
our courts will step in to protect the
bank and decline enforcement
of the guarantee in question. This fraud exception falls within a
narrow compass and applies where:
‘
... the seller, for the
purpose of drawing on the credit, fraudulently presents to the
confirming bank documents that contain, expressly
or by implication,
material representations of fact that to his (the seller’s)
knowledge are untrue.’
[6]
[18]
Insofar as the fraud
exception is concerned, the party alleging and relying on such
exception bears the onus of proving it. That
onus is an ordinary
civil one which has to be discharged on a balance of probabilities,
but will not lightly be inferred.
[7]
In Loomcraft Fabrics CC
v Nedbank Ltd &
another
[8]
it was pointed out that
in order to succeed in respect of the fraud exception, a party had to
prove that the beneficiary presented
the bills (documents) to the
bank knowing that they contained material misrepresentations of fact
upon which the bank would rely
and which they knew were untrue. Mere
error, misunderstanding or oversight, however unreasonable, would not
amount to fraud. Nor
was it enough to show that the beneficiary’s
contentions were incorrect. A party had to go further and show that
the beneficiary
knew it to be incorrect and that the contention was
advanced in bad faith.
[9]
[19]
This court was
referred to the remarks made by Lord Denning MR in Edward Owen
Engineering Ltd
v
Barclays Bank International Ltd
[10]
to the effect that
performance guarantees are virtually promissory notes payable on
demand, very similar to letters of credit. In
that case, Lord Denning
added:
‘
A
bank which gives a performance guarantee must honour that guarantee
according to its terms. It is not concerned in the least with
the
relations between the supplier and the customer; nor with the
question whether the supplier has performed his contracted obligation
or not; nor with the question whether the supplier is in default or
not. The bank must pay according to its guarantee, on demand
if so
stipulated, without proof or conditions. The only exception is when
there is a clear fraud of which the bank has notice.’
[11]
That this is the legal
position was restated by this court in Lombard Insurance
[12]
.
At the hearing of this matter, it was accepted by the respective
legal representatives, that our law and English law accord in
this
regard.
[20]
Guardrisk contended
that the demands under the guarantees were fraudulent as Kentz had
not given Brokrew adequate notice within
which to remedy the breaches
alleged by it. It was argued that Kentz had elected not to rely on
its right to summarily terminate
the construction contract. Instead,
and in terms of the letter dated 24 February 2010, it gave Brokrew
seven days written notice
to remedy its alleged breaches, when it
was, in terms of clause 15.2(d)
[13]
of the contract, obliged
to provide 28 days written notice to Brokrew. Furthermore, so the
argument went, Kentz had failed to comply
with the provisions of
clause 2.5
[14]
of the construction contract in that it had not given notice to
Brokrew of the clause it intended to rely upon and the amount that
was to be paid to it in terms of clause 2.5. For these reasons, it
was contended that the termination of the contract by Kentz
was
premature and unlawful.
[21]
It
was common cause that during March 2010, Brokrew had informed Kentz
that unless the terms of the building contract were renegotiated,
it
could not perform its obligations in terms of the building contract.
Clause 15 of the building contract regulates the termination
of the
contract by the employer. It also sets out different notice periods
in respect of various breaches. Clause 15.2(b) states
that the
employer shall be entitled to terminate the contract if, inter alia,
the contractor:
‘
abandons the Works or otherwise
plainly demonstrates the intention not to continue performance of his
obligations under the Contract
... the Employer may, on notice to the
Contractor, terminate the contract immediately.’
In my view, Brokrew had
clearly demonstrated its intention not to continue performing its
contractual obligations and Kentz was
entitled to cancel the building
contract immediately. That is exactly what it did on 9 March 2010 and
the letter of that date records
the following:
‘
... we [Kentz] hereby give you
[Brokrew] notice of the termination of the Contract in terms of
clause 15.2 thereof with immediate
effect.’
This letter makes
cancellation immediate. The earlier letter of 24 February 2010,
referred to in para 4 above, expressly records
that Kentz was
entitled summarily to cancel the building contract and that it
reserved its rights in that regard. The letter went
on to record
certain specific breaches which Brokrew was called upon to remedy
within seven days. It is clear from the terms of
the letter that in
respect of each breach enunciated therein, Kentz expressly recorded
that it was without prejudice to its right
to cancel the building
contract summarily.
[22]
In
my view, Guardrisk has not established the fraud exception. In fact,
what it has sought to do is to have this court determine
the rights
and obligations of the parties in relation to the construction
agreement, which on the authorities, this court is precluded
from
deciding. The finding by the high court that the appellants had not
discharged the onus resting on them to establish fraud
on the part of
Kentz cannot be faulted. I agree with the reasoning of the high court
that:
‘
The evidence before court
clearly demonstrates that Kentz held the view that it was entitled to
lawfully pursue its claims under
the guarantees. The mere fact that
it pressed its claims knowing that Brokrew held a contrary view about
the cancellation with
which it disagreed is not fraudulent.’
[23]
As
already pointed out, a valid demand on an unconditional performance
guarantee creates an obligation on the bank to make payment
in
accordance with the terms of the guarantee. Mindful of that
principle, the appellants nevertheless urged this court to have
regard to the decision of the majority in Dormell Properties 282 CC
v Renasa Insurance Co Ltd
& others NNO.
[15]
It was submitted that the
principles of practicality enunciated by the majority in that
decision ought to be applied to the present
matter and the issues
concerning the rights and obligations of the parties to the
construction contract should be determined as
all the parties are
before the court and the disputes between Kentz and Brokrew have been
crystallised and are capable of determination.
[24]
In
Dormell, this court considered whether or not Dormell was entitled to
persist in claiming payment of a guarantee notwithstanding
the fact
that it had subsequently been found (after the trial in the high
court) during an arbitration between it and the contractor
that it
had not been entitled to cancel the contract and that its
cancellation constituted a repudiation thereof. The majority
of this
court held that Dormell had lost the right to enforce the guarantee
and that there remained no legitimate purpose for which
the
guaranteed sum could be applied and that ordering Renasa (the
guarantor) to honour the guarantee in such circumstances would
amount
to an academic exercise without practical effect in as much as
Dormell would have to repay the full amount to Renasa immediately
thereafter.
[16]
[25]
This
court in FirstRand Bank Ltd
v
Brera Investments CC
[17]
stated
that the better approach is that of the minority in Dormell.
I agree. Malan JA,
writing for the court in Brera Investments, supported the reasoning
of Cloete JA who wrote the minority judgment,
and quoted the
following passage of that judgment with approval:
‘
Once the appellant [the
beneficiary] had complied with clause 5 of the guarantee, the first
respondent [the guarantor] had no defence
to a claim under the
guarantee. It still has no defence. The fact that an arbitrator has
determined that the appellant was not
entitled to cancel the
contract, binds the appellant - but only
vis-á-vis
the second respondent [the employer].
It is
res
inter alios acta
so far
as the first respondent is concerned. As the cases to which I have
referred above make abundantly clear, the appellant did
not have to
prove that it was entitled to cancel the building contract with the
second respondent as a precondition to enforcement
of the guarantee
given to it by the first respondent. Nor does it have to do so now.
(para 64)
For these reasons, it is not in my
view bad faith for an employer, who has made proper demand in terms
of a construction guarantee,
to continue to insist on payment of the
proceeds of the guarantee, when the basis upon which the guarantee
was called up has subsequently
been found in arbitration proceedings
between the building owner and the contractor to have been
unjustified. I would add that
the fact that the arbitrator’s
award is final as between the appellant and the second respondent
does not mean that it is
correct, or that the appellant would have to
set it aside before calling up the guarantee, much less that the
appellant is acting
in bad faith in seeking to enforce payment under
the guarantee against the first respondent, (para 65)’
[18]
[26]
The reasoning of the
majority in Dormell
is
flawed. In reaching the conclusion that ordering Renasa to honour the
guarantee would amount to an academic exercise without
practical
effect, the majority referred to and relied upon the following
passage from I N D Wallace Hudson's Building and Engineering
Contracts
11
ed (1994) vol 2 para 17.078, quoted in Cargill International SA &
another
v
Bangladesh Sugar and Food Industries Corp
[19]
which reads:
‘
It is generally assumed, and
there is no real reason to doubt, that the Courts will provide a
remedy by way of repayment to the
other contracting party
if
a beneficiary who has been paid
under
an unconditional bond is ultimately shown to have called on it
without justification. . . . In cases where there has been
no default
at all on the part of the contractor, there would additionally be a
total failure of consideration for the payment.’
[Emphasis
added.]
The majority misconstrued
the import of that passage and its relevance to the facts in Dormell.
The plaintiff in Cargill
had successfully tendered
for the
supply
of sugar to the defendant. The tender offer was accepted subject to
the receipt of a performance bond covering ten per cent
of the total
cost and freight value. One of the clauses of the sugar contract
provided that the plaintiffs bond was liable to be
forfeited if they
failed to fulfil any of the terms of the sugar contract. In
consequence of an alleged breach by the plaintiff,
the defendant made
a call on the bond. The plaintiff thereafter applied for injunctive
relief against the defendant. The court
in Cargill identified one of
the issues before it as whether the defendant was entitled to make a
call for the full amount of the
performance bond, if the breach of
contract had caused it no loss. This question was answered in the
affirmative. The court in
essence held that the terms of the
guarantee had to be met pending the determination of contractual
disputes between the parties.
The court affirmed the principle that a
performance bond is as ‘valuable as a promissory note’
and its beneficiary
is entitled to payment pending the resolution of
any contractual disputes that may arise
[20]
.
An important distinction is that in Cargill the disputants before the
court were the parties to the sugar contract. It was not
a dispute
between the financial institution and the beneficiary in relation to
a guarantee.
[27]
The
court in Cargill
stated
that it is perhaps implicit in the nature of a guarantee, that where
its terms have been met, there may,
at
a later stage and
after the terms of the
guarantee have been met, be an ‘accounting’ between the
parties to finally
determine their rights and obligations.
[21]
It is important to note
that at the stage when demand is being made on the guarantee, all
other disputes between the beneficiary
and the seller (contractor)
are irrelevant. The court in Cargill
emphasised
this principle and found support for it in
State
Trading Corp of India Ltd v E D & F Man (Sugar) Ltd
(1981), where Lord
Denning MR said:
‘
I
may say that performance bonds fulfil a most useful role in
international trade. If the seller defaults in making delivery, the
buyer can operate the bond. He does not have to go to far away
countries and sue for damages, or go through a long arbitration.
He
can get the damages at once which are due to him for breach of
contract. The bond is given so that, on notice of default being
given, the buyer can have his money in hand to meet his claim for
damages for the seller’s non-performance of contract. If
he
receives too much, that can be rectified later at an arbitration. The
courts must see that these performance bonds are honoured.’
[22]
[28]
Our courts, in a
long line of cases and also relying on English authorities, have
strictly applied the principle that a bank faced
with a valid demand
in respect of a performance guarantee, is obliged to pay the
beneficiary without investigation of the contractual
position between
the beneficiary and the principal debtor
[23]
.
One of the main reasons why courts are ordinarily reluctant to
entertain the underlying contractual disputes between an employer
and
a contractor when faced with a demand based on an on demand or
unconditional performance guarantee, is because of the principle
that
to do so would
undermine
the efficacy of such guarantees
[24]
.
This court in Loomcraft referred to the fact that the autonomous
nature of the obligation owed by the bank to the beneficiary
under a
letter of credit ‘has been stressed by courts both in South
Africa and overseas’
[25]
.
The learned judge referred to a number of authorities, both local and
English to illustrate this point.
[26]
Similarly, this court in Lombard Insurance, confirmed that the
obligation on the part of the bank to make payment on a performance
guarantee is independent of the underlying contract and whatever
disputes may arise between the buyer and the seller are irrelevant
as
far as the bank’s obligation is concerned.
[27]
[29]
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.
[30]
For
these reasons, the appeal is dismissed with costs, including the
costs of two counsel, which costs are to be paid jointly and
severally by the appellants, the one paying the others to be
absolved.
L V THERON
JUDGE OF APPEAL
APPEARANCES
For First Appellant: MA
Chohan with MJA Costa
Instructed by:
Deneys Reitz
Incorporated, Johannesburg Webbers, Bloemfontein
For Second and Third
Appellants: CW Jordaan SC with TM Greef
Instructed by:
Smit Jones & Pratt,
Johannesburg Symington & De Kok, Bloemfontein
For Respondent: JG
Wasserman SC with CJ McAslin
Instructed by:
Bowes & Turner
Incorporated, Johannesburg
Honey Attorneys Inc,
Bloemfontein
[1]
Minister of Transport
and Public Works, Western Cape & another v Zanbuild Construction
(Pty) Ltd & another
2011
(5) SA 528
(SCA) para 14.
[2]
Ibid,
para 13.
[3]
Ibid,para
14
[4]
Lombard
Insurance Co Ltd v Landmark Holdings (Pty) Ltd & others
2010
(2) SA 86
(SCA) para 19.
[5]
Lombard
Insurance
,
supra, para 20.
[6]
Per
Lord Diplock in
United
City Merchants (Investments) Ltd & others v Royal Bank of Canada
& others
[1982]
2 All ER 720
(HL) at 725g. See also
Lombard
Insurance Co Ltd v Landmark Holdings (Pty) Ltd & others
2010
(2) SA 86
(SCA) para 20.
[7]
Loomcraft
Fabrics CC v Nedbank Ltd & aonth
er
[1995] ZASCA 127
;
1996 (1) SA 812
(A) at 817E-F.
[8]
Ibid
at 815G-816G
[9]
Loomcraft
at
822G - 823C.
[10]
Edward
Owen Engineering Ltd
v
Barclays
Bank International Ltd
[1978]
1 All ER 976
(CA).
[11]
At
983.
[12]
Para
20
[13]
Clause
15.2(d) provides that the employer shall be entitled to terminate
the contract if the contractor:
‘
commits
a material breach of the Contract and fails to remedy same within 28
days after the Employer giving
written
notice requiring it to be remedied
[14]
Clause
2.5:
‘
If
the Employer considers himself to be entitled to any payment under
any Clause of these Conditions or otherwise in connection
with the
Contract, the Employer or the Engineer shall give notice and
particulars to the Contractor. However, notice is not required
for
payments due under Sub-Clause 4.19 [Electricity, Water and Gas],
under Sub-Clause 4.20 [Employer’s Equipment and Free-Issue
Material] or for other services requested by the Contractor.
The
particulars shall specify the Clause or other basis of the claim,
and shall include substantiation of the amount to which
the Employer
considers himself to be entitled in connection with the Contract.’
[15]
Dormell
Properties 282 CC v Renasa Insurance Co Ltd & others NNO
2011
(1) SA 70 (SCA).
[16]
Dormell
Properties 282 CC v Renasa Insurance Co Ltd
,
paras 41 and 45.
[17]
FirstRand
Bank Ltd v Brera Investments CC
2013 (5) SA 556
(SCA) para 10.
[19]
Cargill
International SA & another v Bangladesh Sugar and Food
Industries Corp
[1996] 4 All ER 563
(QB) at 570ft-/
[20]
Cargill
International SA v Bangladesh Sugar and Food Industries Corp, supra
at 569d-e.
[21]
Ibid at 568h-569f
[22]
Cargill
International SA v Bangladesh Sugar and Food Industries Corp, supra
at 569d-e.
[23]
Loomcraft
Fabrics CC v Nedbank Ltd & another
[1995] ZASCA 127
;
1996
(1) SA 812
(A);
Lombard
Insurance Co Ltd v
Landmark
Holdings (Pty) Ltd & others
2010
(2) SA 86
(SCA);
Minister
of Transport and Public Works,
Western
Cape & another v Zanbuild Construction (Pty) Ltd & another
2011
(5) SA 528
(SCA);
Compass
Insurance
Co Ltd v Hospitality Hotel Developments (Pty) Ltd
2012
(2) SA 537
(SCA);
FirstRand
Bank Ltd v
Brera
Investments CC
2013
(5) SA 556
(SCA);
Casey
& another v Firstrand Bank Ltd
(608/2012)
[2013]
ZASCA
131
;
Eskom Holdings Soc Ltd v Hitachi Power Africa (Pty) Ltd &
another
(139/2013) [2013] ZASCA
101.
[24]
Loomcraft
supra
at 817B;
Lombard
Insurance
,
supra
,
para
20.
[25]
At
816B-C.
[26]
These
authorities, cited at 816B-H of the judgment include:
Phillips
& another v Standard Bank of South Africa Ltd & others
1985
(3) SA 301
(W);
Ex
parte Sapan Trading (Pty) Ltd
1995
(1) SA 218
(W) at 2241- 225G;
R
D Harbottle (Mercantile) Ltd & another v National Westminster
Bank Ltd & others
[1977]
2 All ER 862
(QB) at 870b-d;
Edward
Owen Engineering Ltd v Barclays Bank International Ltd
[1978]
1 All ER 976
(CA) at 983.
Intraco
Ltd v Notts Shipping Corporation (The Bhoja Trader)
[1981]
2 Lloyd's Rep 256 (CA) at 257;
Power
Curber International Ltd v National Bank ofKuwait SAK
[1981]
3 All ER 607 (CA)at613b.
[27]
Lombard
Insurance
,
supra, para 20.