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LINDEQUE, COULETTE SIXTH RESPONDENT
LINDEQUE, MICHEAL SEVENTH RESPONDENT
_________________________________________________________________
J U D G M E N T
_________________________________________________________________
RATSHIBVUMO DJP:
Delivered: This judgment was handed down electronically by circulation to the
parties' representatives by email. The date and time for hand-down is deemed to be
10H00 on 17 December 2024.
[1] Introduction
This is an application in which the Applicant seeks an order in the following
terms:
1.1 Payments of the sum of R2 770 029.30 (two million, seven hundred and
seventy thousand and twenty-nine rand and thirty cents).
1.2 Interests thereon at the prescribed prime interest rate of 10% from the
22nd of August 2019 until repayment in full.
1.3 Costs of suit on the attorney and client scale.
1.4 Further and alternative relief.
[2] The Applicant already secured a judgment against the Second, Third and
Fourth Respondents who did not oppose the application. The current
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application is therefore against the First, Fifth, Sixth and Seventh Respondents
(the Respondents). The application is opposed by the Respondents.
[3] Background.
The facts giving rise to this claim are largely common cause. The Applicant is
in the business of, inter alia , issuing guarantee policies, in which the
performance of debtors in respect of their credit policies is guaranteed. It does
this in respect of suppliers and distributors within the fuel procurement industry
and secure such obligations under the guarantees by obtaining indemnities,
suretyships and other tangible security in its favour.
[4] One such guarantee was issued following a contract entered into between the
Applicant and the First Respondent on 07 September 2015, when the First
Respondent, represented by the Seventh Respondent, executed a counter
indemnity (the Indemnity), in favour of the Applicant, in terms of which: -
4.1 The Applican t agreed to enter into certain guarantees and taking
suretyships in favour of certain persons, companies, local, provincial and
government authorities or other bodies for the due payment by the First
Respondent of any monies now or from time to time, hereafter owing by
the First Respondent for the due performance by the First Respondent’s
obligations under any contracts which it may have entered into or may
hereafter enter into.
4.2 The First Respondent further undertook and agreed to indemnify and
keep indemnified the Applicant and to hold it harmless from and against
all claims, losses, liabilities, demands, cost and expenses of whatsoever
nature which the Applicant may sustain at any time or incur by reason or
in consequence of having executed or hereafter executing any guarantees
on behalf of the First Respondent.
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4.3 The First Respondent further undertook and agreed to pay the Applicant,
on demand any sum or sums of money which the Applicant may be called
upon to pay under the guarantees, irrespective of whether the Applicant
at such date shall have made such payment or not, and whether or not,
the First Respondent admits the amount of such claim against the
Applicant.
4.4 The First Respondent further agreed that it is liable to the Applicant for
payment of interest on any sums of money which the Applicant may pay
under the guarantee s from date of payment by the Applicant, until
repayment at a rate equal to the prime overdraft rate of ABSA Bank
Limited, plus 2%.1
[5] On the same date in which the Indemnity was signed (in respect of the Second
to the Fourth Respondents) and on 16 September 2016 (in respect of the Fifth
to Seventh Respondents), the Second to Seventh Respondents (the sureties) and
their spouses where applicable, signed and executed Deeds of Suretyship and
Indemnity in favour of the Applicant. In terms of the Deeds of Suretyship, the
sureties agreed to bind themselves as sureties and co-principal debtors, jointly
and severally with the First Respondent in solidium for the due payment by the
First Respondent to the Applicant on demand of any amounts which the First
Respondent may be liable to pay the Applicant under the indemnity.
[6] The sureties further indemnified the Applicant against all and any claims,
losses, demands, liabilities, costs and expenses of whatsoever nature which the
Applicant may sustain or incur by reason or in consequence of having executed
or hereafter executing any guarantees. The sureties further undertook and
agreed to pay the Applicant on demand any sum or sums of money which the
Applicant may be called upon to pay under the guarantees, irrespective of
1 See paragraph 15 of the founding affidavit on p. 10-11 and p. 16-20 of the paginated bundle.
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whether the Applicant at such date shall have made such payment or not, and
whether or not, the sureties admit the validity of such claim against the
Applicant under the guarantee.2
[7] On 22 August 2019, the Applicant issued the aforementi oned guarantee in
favour of Sasol Mining (Pty) Ltd (the beneficiary or Sasol) on behalf of the
First Respondent, in the amount of R2 770 029.30. Subsequent to the issue of
this guarantee, and on 20 December 2021, the Applicant received a written
demand from the beneficiary under the guarantee, for payment of
R2 770 029.30. The Applicant obliged and made a payment in the amount of
R2 770 029.30 to the beneficiary on 07 January 2022.
[8] The Respondents failed or neglected to make the payment of the amount paid
to the beneficiary, plus interest, despite demands made by the Applicant. It is
for this reason that this application was launched.
[9] Respondents’ defence.
As indicated above, the Respondents are opposing the application . In an
answering affidavit deposed on their behalf, they raise a point in limine
questioning the authority of the deponent to the founding affidavit, given the
fact that he did not acquire confirmatory affidavit from the parties who signed
the indemnity and deeds of suretyship, on behalf of the Applicant, and from
their instructing attorneys.
[10] Over and above the point in limine raised, the Respondents raise a defence
on merits being the impossibility in project performance. According to the
answering affidavit, the First Respondent was awarded a contract by Sasol for
the project of construction of a water pipeline known as Charl Cilliers water
2 See paragraph 16 of the founding affidavit on p. 11-12 of the paginated bundle.
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pipeline 450602408 at Charl Cillier community. The project was commenced
with, but the First Respondent was forced to abandon after members of the
local community hampered their efforts. This they did after they were unhappy
at the co ntract being awarded to the First Respondent and/or the First
Respondent’s failure to employ members of the local community whom they
demanded should be hired, for the project.
[11] When the First Respondent could not meet the demands of the local
community, its employees were intimidated, their equipment was stolen and/or
hijacked, while the installed pipelines were vandalised. The First Respondent
brought this predicament to the attention of Sasol’s project manager who
negotiated a truce with the local community, which truce was short -lived
before the unrests erupted again. Sasol deployed the security officers who were
just not capable to offer the First Respondent a lasting protection. The police
were also informed about the situation but could not stop it. It therefore became
impossible for the First Respondent to perform its task, forcing it to terminate
its contract with Sasol, which it did on 14 October 2021. For these reasons, the
Respondents ask that the application should be dismissed with costs.
[12] Point in limine.
The point in limine raised by the Respondents, suggests that it is only the
persons who signed the contract that can have the requisite personal knowledge
to initiate litigation. This assumption flies in the face of common practice when
it comes to corporate entities such as the banks when it relates to the requisite
personal knowledge of the facts upon which the plaintiff's claims are based.
First-hand knowledge of every fact which goes to make up the plaintiff's cause
of action is not required and where the plaintiff is a corporate entity, the
deponent may well legitimately rely for his or her personal knowledge of at
least certain of the relevant facts and his or her ability to swear positively to
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such facts, on records in the company's possession .3 As Herbstein and Van
Winsen put it, “where the plaintiff is a corporate entity the deponent may well
legitimately rely for his personal knowledge of at least certain of the relevant
facts and his ability to swear positively to such facts, on records in the
company's possession.”4
[13] The deponent to the founding affidavit averred that he is employed by the
Applicant in the capacity as Head of Guarantees. He further stated, “[I]n my
aforesaid capacity, I am duly authorised to represent the Applicant in these
proceedings and to depose to this affidavit on behalf of the Applicant. A copy
of the resolution by the Applicant evidencing the aforesaid is annexed hereto
as annexure FA1… The facts as set out herein fall within my personal
knowledge and belief, unless the contrary is indicated by the context thereof
and are both true and correct… In addition to my knowledge as stated above, I
have at my disposal all the records and document s in relation to the subject
matter hereof which I expound upon more fully below.”
[14] The Respondents could not and did not attempt to dispute the above
averments made by the Applicant, save to say that the deponent was not a
signatory to the contract. It is common cause that he did not sign the indemnity
himself as it’s almost always the case when it comes to deponents to founding
affidavits on behalf of the corporates such as the banks. The assertions to the
effect that evidence presented by the Applicant is hearsay, cannot be sustained.
I therefore accept that the deponent to the founding affidavit had personal
knowledge that he gathered by virtue of his position in the Applicant and
having read the records held by it. The factual background for which he alleged
3 Standard Bank of SA Ltd v Secatsa Investments (Pty) Ltd 1999 (4) SA 229 (C) at 235A-B.
4 Herbstein and Van Winsen, Civil Practice of the High Court 5th Ed, 2009 Ch 17 p. 525.
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to have personal knowledge is also confirmed by the Respondents in the
answering affidavit. As a result, the point in limine stands to be dismissed.
[15] Supervening impossibility.
At the time the matter was argued before the court, counsel for the Respondents
made a concession that the Applicant’s claim is based on a contract that is
independent from the contract that exist ed between the First Respondent and
the beneficiary. This concession is important and was wisely undertaken in my
view. It recognises that the terms of contract between the First Respondent and
Sasol / the beneficiary have no impact whatsoever to those between the
Applicant and the First Respondent. Should there be a claim in the future for
damages based on contractual non-performance between the First Respondent
and the beneficiary, the First Respondent would be within its rights to raise the
defence of supervening impossibility.5
[16] I agree with Adv Snyman, Applicant’s counsel responsible for
preparation of the heads of arguments, that the guarantee was issued in favour
of the beneficiary to secure performance by the First Respondent in the event
of default. The purpose thereof was to ensure that Sasol would be protected in
case the First Respondent failed to fulfil its contractual obligations for
whatever reason.
[17] The kind of contract between the Applicant and the First Respondent can
be best illustrated by quoting from Lombard Insurance Company Ltd v
Landmark Holdings (PTY) Ltd and Others6, where Navsa JA said,
5 See Peters Flamman and Co v Kokstad Municipality 1919 AD 427 where Solomon JA excused the Appellants
failure to perform owing to the break of the First World War.
6 2010 (2) SA 86 (SCA) at paragraph 20.
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“The guarantee by Lombard is 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). Th is 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 mome nt 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.
The only basis upon which the bank can escape liabil ity is proof of fraud on the
part of the beneficiary. This exception falls within a narrow compass and applies
where the seller, for the purpose of drawing on the credit, fraudulently presents
to the bank documents that to the seller’s knowledge misreprese nts the material
facts.”
[18] The Respondents do not aver any fraud on the part of the Applicant. There
isn’t even a suggestion by the Respondents that the Applicant had a hand in
obstructing the First Respondent from performing the task. They also do not
question the validity of the contract existing between them and the Applicant.
The obligation on the part of the Respondents is triggered upon confirmation
of whether the Applicant issued the guarantees in favour of the beneficiary,
whether the beneficiary made a claim and whether the First Respondent failed
to perform the task insured against. Upon confirmation of these, as in casu, the
claim must succeed.
[19] The indemnity signed between the Applicant and the First Respondent
provided for costs on attorney and client scale in case of enforcement through
judicial processes. No reasons were advanced as to why this clause should not
be implemented as agreed.
[20] For the aforesaid reasons, I make the following order.