About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: North Gauteng High Court, Pretoria
SAFLII
>>
Databases
>>
South Africa: North Gauteng High Court, Pretoria
>>
2008
>>
[2008] ZAGPPHC 3
|
|
Karee Roads (Pty) Ltd v Standard Bank SA Ltd and Others (32000/06) [2008] ZAGPPHC 3 (19 November 2008)
IN
THE HIGH COURT OF SOUTH AFRICA
(
NORTH
GAUTENG HIGH COURT. PRETORIA)
CASE
NO: 32000/06
DATE:
2008-11-19
In
the matter between:
KAREE
ROADS (PTY) LIMITED
Applicant
And
STANDARD
BANK SA LIMITED
1
st
Respondent
GEO
COMPACTION DYNAMICS CC
2
nd
Respondent
LYNNCON
CONSTRUCTION (PTY) LIMITED
3
rd
Respondent
JUDGMENT
LEGODI
J
:
Before me, it is an application for a postponement of the hearing of
the main application. The application is being brought on
the same
day of the enrolment of the main action. In the main application, the
applicant was granted an interim order in terms
whereof the Standard
Bank was prohibited from paying the second respondent an amount of R1
803 250 in terms of a guarantee in favour
of the second respondent,
pending finalisation of the main application. The interim order was
granted on 3 October 2006 in an urgent
motion court.
The
answering affidavit in die main application was delivered on 12 June
2007. Subsequent thereto, an application for a joinder
of Lynncon
Construction (Pty) Limited as the third respondent was launched by
the applicant.
As
a further background, during or about July 2006 the applicant and the
third respondent entered into a written agreement, (hereinafter
referred to as the 'third agreement'), in terms whereof the applicant
as a contractor undertook to do certain bulk excavations,
including
certain excavations and lateral support work for the third respondent
regarding a project at Absa Highveld Gardens.
The
applicant, on the other hand, approached the second respondent to
tender on certain lateral support work to be done at the site,
as a
subcontractor to the applicant. The applicant accepted a quotation
from the second respondent in the sum of R1 581 800, excluding
VAT On
or about 11 July 2006 the applicant and the second respondent entered
into an oral agreement in terms whereof the applicant
was to arrange
for a demand guarantee with Standard Bank in favour of the second
respondent for the sum of R1 803 252, being R1
581 800 plus VAT. This
guarantee was duly issued by Standard Bank on 15 August 2006. I deal
with this guarantee later in the judgment.
On
the 4 September 2006, the applicant made payment to the second
respondent in the sum of R270 607,50, being R300 675 less 10%
retention. This was referred to during the discussion as the first
invoice.
On
18 August 2006 in what was referred to as second invoice, the second
respondent demanded payment in the amount of R1 386 867
from the
applicant. This amount would have become due and payable on 18
September 2006, as the invoice, once submitted, was supposed
to-be
settled within 30 days.
On
29 September 2006 the third respondent queried the work done on site
and in particular it was indicated that the required thickness
of the
retaining walls could not be achieved due to the excavation and
lateral support work not being correctly done. Remember
that
excavation was to be done by the applicant, the second respondent was
subcontracted to the applicant to do the lateral support
work.
This
complaint by the third respondent was brought to the attention of the
second respondent by the applicant to whom the complaint
was
addressed. Based on the complaint, the second respondent was
apparently told that he would not be paid on the second invoice.
This
then resulted in the second respondent demanding the guarantee in the
sum of R1 803 252. I deal later in this judgment with
the said
demand.
This
demand then led to the institution of an urgent application which was
heard on 3 October 2006 when the interim order referred
to earlier in
this judgment, was made. On 2 June 2008, by agreement, the main
application was removed from the roll. As on that
day, the replying
affidavit in the main application was not delivered yet. A notice of
reinstatement of the main application was
delivered by the second
respondent on 9 October 2008, having set the matter down for hearing
for
17 November 2008.
On
31 October 2008 the applicant in a letter to the second respondent's
attorneys requested a postponement of the main application
pending
the application to join the third respondent to the main application.
On 7 November 2008 the second respondent indicated
its unwillingness
to have the main application postponed. On 13 November 2008 formal
application for a postponement was delivered
and set down for hearing
on 17 November 2008.
Two
applications are therefore before me, the main application and an
application for a postponement. Before I can hear or deal
with the
main application, I have to make a decision on the application for a
postponement.
The
principle applicable in regard to consideration of an application for
a postponement, can be summed up as follows: The court
has a
discretion as to whether an application for a postponement should be
granted or refused. The court has a discretion to refuse
a
postponement even when wasted costs are tendered, or even when the
parties have agreed to postpone the matter. The discretion
must be
exercised in a judicial manner. It should not be exercised
capriciously or upon any wrong principle, but for substantial
reasons.
An
applicant for a postponement seeks an indulgence. The applicant must
show good and strong reasons. The applicant must furnish
a full and
satisfactory explanation of the circumstances that give rise to the
application. A court should be slow to refuse a
postponement where
the true reason for a party's nonpreparedness has been fully
explained. Where his unreadiness to proceed is
not due to delaying
tactics and where justice demands that he should have further time
for the purpose of presenting his case,
an application for a
postponement must be granted. It must be made timeously a soon as the
circumstances which might justify such
an application become known to
the applicant.
Where,
however, fundamental fairness and justice, justify a postponement,
the court may in appropriate cases allow such an application
for a
postponement, even if the application was not timeously made.
Perhaps
I must pause for a moment to deal with the delay in this matter, both
with regard to the filing of an answering affidavit
to the main
application, the launching of a joinder application and lastly, the
application for a postponement.
The
refusal to pay the second respondent was as a result of the letter of
29 September 2006 in terms of which the work done by both
the second
respondent and the applicant was questioned by the third respondent,
Lynncon Construction (Pty) Limited. The applicant,
therefore, knew as
in September 2006 that the third respondent's substantiation of his
complaint about the work done was important
and therefore one might
be tempted to say that the joinder application should long have been
launched.
However,
the explanation by the applicant is that it tried to resolve the
matter amicably with the third respondent on its complaint
regarding
the defective work. Although it was contended that the applicant had
failed to produce documentary proof that it so attempted
to resolve
the matter amicably with the respondent, I have no reason to doubt
that some sort of discussion must have ensued between
the applicant
and the third respondent. Remember, the applicant has an interest in
the finalisation of the matter as the third
respondent would not pay
the applicant for its services. It was therefore in the best interest
of the applicant to ensure finalisation
of the complaint by the third
respondent.
The
application for a joinder was launched only in October 2008. This
was, of course, after a long time regard being had to the
fact that a
complaint by the third respondent regarding the defective work was
raised in September 2006. This delay should, however,
be seen in the
light of the answering affidavit in the main application. The
answering affidavit was only delivered in June 2007.
Secondly,
allegations made in the answering affidavit made it even more
convinced that the third respondent has to be joined to
the main
application. The delay from June 2007 until October 2008 is also
attributable to efforts taken to try and convince the
respondent
otherwise.
Similarly,
the second respondent delayed in the delivery of its answering
affidavit to the main application. This was despite the
order which
was made on 3 October 2006 in terms of which the second respondent
was required to deliver its answering affidavit
within 15 days from 3
October 2006. It too, that is, the second respondent, did not file
the answering affidavit in time because
it had hoped that the matter
would be resolved after the applicant had agreed not to insist on the
time limit set out in the order
of the court, which was made on 3
October 2006.
Fundamental
fairness and justice should therefore be found to justify the delay,
although a too long delay should be of concern
to this court.
An
application for a postponement must always be bona fide and not used
simply as a tactical manoeuvre for the purpose of obtaining
an
advantage to which the applicant is not legitimately entitled.
Consideration of prejudice will ordinarily constitute the dominant
component of the total structure in terms of which the discretion of
the court will be exercised. The court has to consider whether
any
prejudice caused by a postponement can fairly be compensated by an
appropriate order for cost or any ancillary mechanism. The
balance of
convenience or inconvenience to both parties should be considered.
The court should waive prejudice which will be caused
to the
respondent in such an application if the postponement is granted
against the prejudice which will be caused to the applicant
if it is
not granted.
The
prospects of success on the merits are also a factor which has to be
considered in an application for a postponement. This is
what I am
being asked to do in this matter, that is, the main application
should be entertained on the merits without a reply to
the
allegations made in the answering affidavit, so it was contended on
behalf of the second respondent.
Remember,
three sets of affidavits are allowed in a motion proceeding, unless
specifically excluded. An applicant is entitled to
reply to the
answering affidavit in a third affidavit referred to as a replying
affidavit. The contention, as I understood it,
is that whilst the
applicant cleverly in its reply to the answering affidavit in the
postponement application failed to deal with
the allegations
contained in the second respondent's answering affidavit in the main
application, he should still be found to have
given a clue what is
intended to be alleged in such a reply in the main application.
This
should be seen in the light of the further contention on behalf of
the second respondent, that is, the applicant has no case
on the
fourth agreement, being a guarantee in favour of the second
respondent. This is said to be a matter between Standard Bank
and the
second respondent, which has nothing to do with any dispute between
the applicant and the second respondent, or the third
respondent.
Their submission went further to say, the applicant and third
respondent have no business of their own regarding the
guarantee. As
I understood their submission, once a demand is made on the
guarantee, the Standard Bank was under obligation to
pay. Whatever
dispute might be there between the applicant and the second
respondent or the third respondent or the three of them,
cannot have
a bearing on the second respondent's entitlement to the guarantee. I
will return later to this submission.
The
applicant in the present case is entitled to reply to the answering
affidavit. The real issue, as I see it, in this regard is
whether the
applicant would be prejudiced in the conduct of its case if it was to
be forced to proceed with the matter without
reply to the answering
affidavit in the main application. I understood the submission in
this regard to be there can never be an
answer or a reply to the
second respondent's demand on the written guarantee and that
therefore whatever evidence the applicant
wishes to present in the
form of replying affidavit and/or opposing affidavit by the third
respondent, would not be relevant to
the second respondent's
entitlement in terms of the guarantee.
In
dealing with all of this, one must have regard to the prospects of
success on merit as a factor which has to be considered in
an
application for a postponement. I need to caution whatever I might
express in this regard should not be seen as a final determination
on
the matter. I have been referred to a number of authorities dealing
with one's entitlement to a payment on the basis of a guarantee
made
in one's favour. I have had a look at these decisions, firstly, all
the decisions were not dealing with an application for
a
postponement. Secondly, in all the cases I was referred to, there was
no question of replying affidavit still outstanding. Decisions
in
those cases were made not on uncompleted set of evidence.
Coming
back to the contention on behalf of the second respondent, I was
asked to confine myself to a guarantee in determining whether
or not
there could ever be a defence to it. The first sentence of the
guarantee reads as follows, this is in a letter addressed
to the
second respondent by Standard Bank,
"We,
the Standard Bank of South Africa Limited, registration number
1962/000738/06 (The Bank) undertake to pay Geo Compaction
Dynamic cc
(The Beneficiary) the sum of R1 803 252 (Guaranteed Amount) on
receipt of a first written demand for payment from Beneficiary
stating that the amount is due and payable by Karee Roads (Pty)
Limited 1994/008330/07 (The Principal) in terms of an agreement
(The
Agreement) between the principal and the beneficiary."
Two
conditions are attached to this guarantee. First, there must be
written demand for payment from the second respondent. Secondly,
it
must be stated in the written demand for payment that the amount is
due and payable by the applicant in terms of the agreement
between
the applicant and the second respondent I need to emphasize
"beneficiary stating that the amount is due and payable
by Karee
Roads (Pty) Limited 1994/008330/07 in terms of an agreement between
the principal and the beneficiary."
Second
respondent in the letter of 2 October 2006 made a demand for payment
in terms of the guarantee as follows,
"I,
Eben Blom, being the sole member of Geo Compaction Dynamics cc hereby
request payment of the sum of R1 803 252 which is
due and payable by
Karee Roads (Pty) Limited 1994/008330/07 (The Principal) in terms of
the agreement between the principal and
the beneficiary."
Here,
it is conveyed to Standard Bank that the amount of R1 803 252 is due
and payable in terms of the agreement between the second
respondent
and the applicant.
The
second respondent sought to argue that there is no connection between
the guarantee agreement, or fourth agreement, as it was
referred to
during the submission and that the agreement between the applicant
and the second respondent. Remember, the fourth
agreement is being
seen as an agreement between the first and second respondent only,
with no reference to the applicant. I cannot
agree with this, again I
need to be cautious how 1 express myself in this regard. I do not
want an impression to be created that
I am making a final finding.
The
amount claimed on the basis of the written demand must be due and
payable in terms of the relationship between the applicant
and the
second respondent. This, in my view, makes reference to both the
applicant and the second respondent. For payment to be
forthcoming in
terms of the guarantee, the second respondent must be entitled to it.
Put
it this way, can the second respondent be entitled to call on the
guarantee in respect of amount which is not due and payable?
I do not
think so.
In
this case it is common cause that on 2 October 2006, when the demand
for payment in the amount of R1 803 252 was made, only R1
386 867, as
per the invoice of 18 August 2006, was due and payable. The
applicant's submission that the second respondent as on
2 October
2006 was not entitled to the whole amount as claimed in the demand,
in my view, cannot be construed as having no substance.
Final
determination in this regard must be deferred should a postponement
be granted in this matter.
Presentation
or submission of the first written demand for payment of the whole
amount as indicated in the demand in the face of
the knowledge that
only R1 386 867 was due and payable, is seen as fraud entitling the
applicant to obtain an interdict that the
first respondent should not
pay in terms of the guarantee. Indeed, if the second respondent was
to be found to have known that
at the time it submitted the demand
and that it was cautious of the fact that much more less than the
amount demanded was due and
payable, a finding of fraud could be made
against it. Again, this is an issue which should be deferred to be
determined in the
main application, should a postponement be granted
in this matter.
I
do not think that the papers, as they are before me, could justify a
final finding on the issue of fraud. However, a concession
by the
second respondent that less than what was demanded was due and
payable, cannot be seen as putting no substance to the applicant’s
allegation of fraud. This must be deferred to be fully ventilated in
the main application.
Having
said this, I do not think that it is necessary to go further in
dealing with the rest of the submissions made. It suffices
to say, it
will not be in the best interest of justice to deal with the main
application on merits, firstly, without the replying
affidavit and,
secondly; before application for a joinder is finalised. Whilst on
this point, I must say, third respondent appears
to have been the
cause of the dispute between the applicant and the second respondent.
The
application for a joinder was delayed, I do not think that it could
be seen as not having any relevance. This again would be
deferred for
ventilation in the application for joinder.
As
I said earlier in this judgment, an application for a postponement
seeks an indulgence. Generally when such indulgence is exercised
in
favour of an applicant for a postponement, the innocent party should
be compensated by way of an order for cost in its favour.
The request
for a postponement, having been made on 31 October 2008, was only
responded thereto on 7 November 2008. The suggestion
was that this
should justify the refusal of a cost order against the applicant
occasioned by the postponement.
The
applicant, however, only filed a substantive application for a
postponement on 15 November 2008, this leaving the second respondent
with not much time. As one would have expected, the second respondent
having reacted to the application on 14 November 2008, the
applicant
only managed to file its replying affidavit on Monday, 17 November
2008, that is on the date of the hearing of the main
application.
An
order for cost is an exercise of discretion which has to be
judicially exercised, having regard to what is fair to the parties.
It is the pending application for a joinder that has caused the
request for a postponement of the main application. This application
for joinder was brought late by the applicant. This should be seen as
a further factor to be considered regarding cost.
The
second respondent employed two counsel, senior and junior. The nature
of the dispute in the matter, particularly the main application,
is
such that the second respondent would have been entitled to employ
the services of two counsel.
ORDER
Consequently
an order is hereby made as follows,
1.
The application for a postponement is hereby granted.
2.
The main application is postponed sine die.
3.
The applicant to pay waste cost occasioned by the postponement, such
cost to include cost of two counsel.
ON
BEHALF OF APPLICANT
: ADV P M VAN
RYNEVELD
ON
BEHALF OF THE RESPONDENT
:
ADV P G ROBINSON