IN THE HIGH COURT OF SOUTH AFRICA,
GAUTENG DIVISION, PRETORIA
Case No: 52933/2025
Reportable: No
Of interest to other Judges: No
Revised: No
__________________________
SIGNATURE
Date: 6 May 2025
In the matter between:
EPCM CONSULTANTS SA (PTY) LTD 1st Applicant
EPCM TANZANIA SA (PTY) LTD 2nd Applicant
and
GUARDRISK INSURANCE CO LTD 1st Respondent
STANDARD CHARTERED BANK SOUTH AFRICA (PTY) LTD 2nd Respondent
STANDARD CHARTERED BANK TAN ZANIA LTD 3rd Respondent
TSK TANZANIA COMPANY LTD 4th Respondent
2
JUDGEMENT
_____________________________________________________________________________________________
MOOKI J
1 The applicants seek to interdict the first respondent, Guardrisk, fro m
making a payment to the second respondent (SCB SA) or to the third
respondent (SCB Tanzania) of amounts guaranteed in terms of a
performance counter -guarantee or making a payment in terms of an
advance payment counter -guarantee. The interdict is sought pending
finalisation of a dispute between the second applicant (EPCM Tanzania)
and the fourth respondent (TSK). The applicants sought relief on an urgent
basis.
2 The applicants sought leave to amend their notice of motion when the
matter was called for a hea ring. The application was made from the bar.
Guardrisk, SCB SA and SCB Tanzania opposed the amendment. The court
refused the application .
3 The first applicant (EPCM SA) and Guardrisk concluded an indemnity
agreement in terms of which Guardrisk would issue guarantees upon EPCM
SA’s request . EPCM SA became obliged, as part of the arrangement , to
furnish Guardrisk with security in the form of an indemnity and
suretyships.
4 The applicants are associate corporations. EPCM SA is a South African
registered company. EPCM Tanzania is registered in Tanzania. SCB
3
Tanzania and SCB SA (the SCB parties) are also associate corporations. SCB
Tanzania is registered in Tanzania.
5 EPCM Tanzania and TSK entered an agreement for the construction of two
bagasse boilers in Tanzania . EPCM SA requested Guardrisk to issue
guarantees to TSK in connection with the construction contract . Guardrisk
was unable to provide the guarantees because it is not licensed to furnish
that type of security outside South Africa. It was then arranged tha t SCB
Tanzania would provide TSK with the guarantees.
6 Guardrisk issued a performance counter -guarantee and an advance
payment counter -guarantee to SCB SA on 9 January 2024. SCB Tanzania
issued an advance payment guarantee to TSK for USD 652, 907,31 on 15
January 2024. SCB Tanzania also issued a performance guarantee on the
same date for USD 435, 271,54. The guarantees were payable on first
demand. Both guarantees expired on 31 January 2025. The SCB parties
concluded back -to-back guarantees in respect of the two guarantees.
7 The obligations under the guarantees were , generally, to be triggered as
follows . TSK would make a demand on SCB Tanzania. SCB Tanzania would
then make a demand on SCB SA. SCB SA would make a demand on
Guardrisk. Guardrisk in turn wou ld look to EPCM SA .
8 EPCM SA has no privity of contract with SCB SA, SCB Tanzania, or TSK.
EPCM Tanzania only has privity of contract with TSK. EPCM SA does not
contend for a privity of contract between it and EPCM Tanzania for
purposes of the relief sought in this application.
4
9 TSK made a demand on SCB Tanzania for payment on 27 March 2025. It
sought payment in the amount of USD 425, 735.07 in respect of the advance
payment guarantee and the amount of USD 435, 271. 54 in respect of the
performance guarantee . The deman d triggered the chain of obligations ,
with SCB Tanzania making a demand on SCB SA on the same day. SCB SA
made a demand on Guardrisk on 31 March 2025 in terms of the advance
payment counter -guarantee.
10 Guardrisk wrote to EPCM Tanzania on 3 April 2025, informing them of the
demand by TSK. Guardrisk advised that the demands appeared to be
enforceable and that Guardrisk intended to pay pursuant to the counter -
guarantees. Guardrisk requested EPCM Tanzania’s feedback in relation to
the demands .
11 Repres entatives of Guardrisk and of EPCM SA met on the same day .
Attorneys for Guardrisk were informed on that day that TSK’s demands
were invalid for being made pursuant to expired guarantees. The demand
were also said to be invalid for being fraudulent. EPCM SA wrote to
Guardrisk on 3 April 2025, recording that TSK acted fraudulently.
Guardrisk was advised that Guardrisk was not obliged to pay SCB SA. EPCM
SA also informed Guardrisk that EPCM Tanzania would approach a court
for relief. Guardrisk informed EPCM S A that Guardrisk would not pay SCB
SA pending the outcome of such litigation.
12 EPCM Tanzania wrote to Guardrisk on 4 April 2025, repeating and
elaborating on the contention that TSK’s demands were invalid. EPCM
Tanzania wrote that the demands referenced guarantees that were
5
extended to 31 May 2025, instead of guarantees issued on 5 February 2025
in terms of which the performance guarantee was extended to 30 June
2027 and the advance payment guarantee was extended to 30 June 2025.
EPCM Tanzania urged the gua rantor to reject TSK’s demand .
13 Guardrisk wrote to SCB SA o n 4 April 2025, recording the allegations
concerning TSK. Guardrisk requested confirmation that SCB SA would not
require Guardrisk to pay in terms of the counter -guarantees pending the
intended li tigation and that no interest would be charged. Guardrisk’s
attorneys informed the applicants’ attorneys on 7 April 2025 that
Guardrisk would not pay SCB SA pending the hearing of the urgent
application .
14 The applicants say TSK’s demands were fraudulent b ecause, to the
knowledge of TSK, EPCM Tanzania had executed 90% of the works
allocated to it by TSK an d, in doing so, had repaid the advance payment
guarantee. The further basis to the stated fraud was that TSK knew that
EPCM Tanzania had not breached the contract and there were no
outstanding works that EPCM Tanzania failed to execute and for which
EPCM Tanzania could be held liable.
15 EPCM Tanzania approached the court in Tanzania on 8 April 2025 to
restrain SCB Tanzania from honouring TSK’s demand for paym ent. EPCM
Tanzania sought relief pending the hearing of the petition inter parte . SCB
Tanzania was cited as the second respondent in the proceedings.
6
16 Guardrisk sent SCB Tanzania an e -mail at 12:27 on 8 April 2025, advising
SCB Tanzania that the applicants were in court for an interdict. SCB
Tanzania replied to Guardri sk at 13:22, stating that SCB Tanzania were
obliged to pay TSK on demand absent a court order stopping SCB Tanzania
from making the payment. SCB Tanzania continued that the process for
obtaini ng an injunction was not sufficient justification for SCB Tanzania to
delay making the payment.
17 SCB Tanzania paid TSK the amount of USD 861 006.61 on the guarantees at
about 14:30 on 8 April 2025 . There was no court order by that time. SCB SA
in turn paid SCB Tanzania the same amount on the same date. This was
consequ ent to the SCB parties’ back -to-back guarantees.
18 Guardrisk wrote to EPCM SA on 12 April 2025, advising that SCB SA’s
demands under the counter -guarantees were compliant demands and that
Guardr isk intended to pay SCB SA on 14 April 2025. Guardrisk also
demanded payment by EPCM SA and by the sureties pursuant to the
indemnity and the deeds of suretyship.
19 Guardrisk made its case as follows. It contended that the applicants do not
allege that SCB S A’s demand on Guardrisk was fraudulent or defective. The
allegat ion is that TSK’s demand to SCB Tanzania was fraudulent. There was
no basis to interdict Guardrisk absent SCB SA’s demand being defective.
Guardrisk also contended that it was impermissible fo r the applicants to
interpose the quarrel between EPCM Tanzania and TSK as a reason for
Guardrisk not paying SCB SA pursuant to the counter -guarantees.
7
20 It was denied on behalf of Guardrisk that the guarantees had expired. It was
pointed out that TSK indica ted on 14 January 2025 that the guarantees
needed to be extended and that TSK would call on the guarantees absent
their extension within 15 days before the expiry date of 31 January 2025.
21 Guardrisk contends that clause 3 of the deed of indemnity obliges E PCM SA
to pay on first written demand of any amount of money which Guardrisk
may be called upon to pay. EPCM SA was obliged to pay notwithstanding
whether EPCM SA admitted the validity of a claim against Guardrisk.
22 Guardrisk also says the applicants do not meet the requirements for an
interdict. It contended that EPCM Tanzania will not suffer prejudice, as
EPCM Tanzania was neither a surety nor had to indemnify any party.
Guardrisk had already called on EPCM SA to perform, with the result that
Guardrisk nee d only institute collections proceedings, during which EPMC
SA would raise any defence available to it.
23 The SCB parties raised several defences, including the following. They
attacked the applicants’ standing , pointing out that the applicants have no
lega l interest in the contract between Guardrisk and SCB SA. The cou rt was
referred to the decision in United Watch & Diamond Co (Pty) Ltd and
Others v Disa Hotels Ltd and Another1 in this regard. The applicants were
also said not to have met the requirements for the grant of an interdict ,
including on account of the applicants having an alternative remedy which
1 1972 (4) SA 409 ( C) at 416H to 417D
8
EPCM Tanzania had already invoked; namely referring its dispute with TSK
to arbitration .
Analysis
24 The applicants contend that TSK’s demand was invalid on two bases. First,
the guarantees had expired when TSK made the demand on 27 March 2025 .
Second, TSK’s demand was fraudulent . The fraud barred Guardrisk from
paying SCB SA . The fraud also barred Guardrisk from having to look to
EPCM SA pursuant to the i ndemnity and suretyship agreements.
25 The applicants alleged fraud on the following bases. TSK raised “back
charges” equal to amounts that had been certified for payment to EPCM
Tanzania . The appl icants contended that TSK was not entitled to raise
“back cha rges .” The applicants also contended that EPCM Tanzania had
repaid the advance payments made to it because EPCM Tanzania had
completed 90% of the allocated work .
26 EPCM Tanzania had, before TSK’s demand on 27 March 2025, referred a
dispute against TSK to ar bitration in terms of the dispute procedure
provided for in the parties’ contract. EPCM Tanzania is claiming some USD
10 million in those proceedings.
27 The applicants say they are entitled to rel ief because TSK was paid under
the guarantees despite Guardri sk and the SCB parties being aware of the
allegations of invalidity of the guarantees and of fraud concerning TSK.
Guardrisk and the SCB parties deny that the applicants are entitled to relief.
They put up various defences in this regard , including as deta iled above .
9
28 SCB Tanzania issued an amendment to the performance guarantee and the
advance payment guarantee on 22 January 2025 , extending their respective
expiry dates to 31 May 2025. The quantu m of the advance payment
guarantee was amended to USD 425, 73 5.05.
29 TSK made a demand on the guarantees on 28 January 2025. The demand
was made pursuant to guarantees set to expire on 31 January 2025. EPCM
SA applied to Guardrisk on 29 January 2025 for Guardrisk to procure a
further extension of the guarantees and a n increase of the quantum of the
advance payment guarantee. Guardrisk advised TSK in writing on 30
January 2025 that EPCM SA had requested an extension of the performance
guarantee to June 2027 a nd that of the advance payment guarantee to June
2025. TSK ad vised SCB Tanzania that TSK had withdrawn its demand made
on 28 January 2025. The advise was made on 30 January 2025. The
withdrawal letter is dated 29 January 2025.
30 SCB Tanzania issued an amendment to the performance guarantee and the
advance payment guar antee on 5 February 2025. The expiry date of the
performance guarantee was extended to 30 June 2027. The expiry date of
the advance payment bond was extended to 30 June 2025. SCB Tanzania,
also o n 5 February 2025, instructed TSK to ignore the amendment of 22
January 225 amending the value and that the value of the advance payment
guarantee remained USD 652, 907.31.
31 The applicants are required to demonstrate a prima facie right to succeed.
They made their case as follows in relation to this requirement. The y
contend that “SCB’s” demand for payment in terms of the counter -
10
guarantee is impermissible because the guarantees that informed the
demand had expired; that “SCB” could not have paid the demand s by TSK
given the serious allegations made by ECPM Tanzania; that SCB should not
benefit from its own unconscionable conduct, and that SCB was not entitled
to be reimbursed for satisfying fraudulent demands.
32 It is unclear what, precisely, is the “right” which the applicants invoke for
the relief being sought. Their pleaded case is a criticism of the SCB parties.
What is clear, however, is that whatever the right which the applicants
contend for, the vindication of such a right is not advanced with referenc e
to Guardrisk. The right which the applicants contend for is referenced in
relation to SCB , on account of the conduct of the SCB parties. The applicants
criticise the conduct of the SCB parties yet seek the court to interdict
Guardrisk from performing under the counter -guarantees .
33 The applicants have no privity of contract with SCB SA, the entity which
relationship with Guardrisk the applicants seek to disturb. The SCB parties
are correct that the applicants have not shown a legal interest as regards
dealings between Guardrisk and SCB SA.
34 The applicants do not alle ge any wrongdoing by Guardrisk. The applicants
have not shown a cogni sable right as between the applicants and Guardrisk
to warrant an interdict. The right being invoked as the basis for an interdict
must be in relation to a party which the court is asked to constrain . The
appli cants’ failure to establish a right as against Guardrisk for the grant of
the relief sought is fatal to the application.
11
35 The applicants d id not show that the balance of convenience favours the
grant of an interdict. The applicants’ pleaded case on this requirement is
that “SCB” will not suffer undue hardship or prejudice by having to await
the finalisation of arbitration proceedings between EPCM Tanzania and
TSK before SCB would become entitled to recoup its payments . The
applicants also say that SCB is a significant organisation with an
international footprint, and that SCB can easily absorb the inconvenience of
not sitting with the money pending the finalisation of the arbitration , in
contrast to “EPCM ” and its sureties. The applic ants then make plain that the
balance of convenience “favours EPCM (sic) as opposed to SCB.” The
applicants are required to show that the balance of convenience favours
them, as opposed to Guardrisk . That is because the applicants seek to
interdict Guardri sk. The applicants thus failed to establish that the balance
of convenience favours the grant of an interdict. This too is fatal to the ir
application.
36 The applicants’ pleaded case on the requirement for alternative relief and
that of irreparable harm are run together . There is no delineation as to
which averments are meant to support each of these requirements. Indeed,
they present this part of their case under the heading “No appropriate
alternative remedy and irreparable harm.”
37 They make their case as fo llows. They say that TS K is an empty vessel and
that EPCM Tanzania has very little chance of recovering the USD 10 million
in respect of submitted claims and the amounts paid by SCB to TSK. They
12
also say that TSK has the propensity for fraud and that there is little chance
of EPCM recovering its losses.
38 EPCM Tanzania has instituted arbitration proceedings in relation to its
dispute with TSK. The fact of TSK being an empty vessel, as claimed by the
applicants, does not establish either the absence of alterna tive relief or
show the presence of irreparable harm. The applicants cannot seek the
intervention of the court for having contracted with a man of straw, whom
the applicants now say has a propensity for fraud. The applicants failed to
establish the absence of an alternative remedy . They also did not show that
they stand to suffer irreparable harm absent an interdict.
39 The applicants raise fraud and the stated expiry of the guarantees as the
crux of their case. The substance of the fraud contended for is that TSK
raised “back charg es” contrary to the contract; that EPCM Tanzania had
repaid the advance payment , and that EPCM Tanzania had not breached the
contract with TSK.
40 The applicants do not impute fraud on the part of Guardrisk. They do not
suggest that Gu ardrisk, in making a demand on EPCM SA and in signifying
its intention to pay SCB SA under the counter -guarantees, did so
fraudulently or with knowledge of a ny fraud . The applicants , instead, say
“SCB” acted with knowledge of fraud by TSB.
41 The applicants say “SCB” was aware of the invalidity and fraudulent nature
of TSK’s demands before paying TSK , and that SCB’s conduct was
unconscionable because SCB paid whilst being aware that EPCM would be
13
approaching a court to pronounce on the legitimacy of TSK’s de mands. The
applicants say that SCB is not entitled to be re -imbursed for satisfying
fraudulent demands. The contentions regarding the SCB parties are of no
moment in this application. That is because the applicants do not seek to
interdict the SC B parties .
42 The applicants accept that the guarantees pursuant to which SCB Tanzania
paid TSK are demand guarantees. An inherent characteristic of these
guarantees is that a beneficiary is entitled to payment on demand. The law
recognises what is called the ‘fraud exception ’ as an instance where a
demand guarantee can be resisted.2 The applicants say the exception
applies to the present case.
43 It was submitted for the applicants that “fraud unravels all”, with the result
that Guardrisk is not to be allowed to act pu rsuant to the terms of the
counter -guarantee s and to pay SCB SA. This, according to the applicants, is
the effect of the fraud by TSK travelling up the chain of obligations. The
principle that fraud unravels all is part of our law. The applicants would
misapply the principle in these proceedings.
44 The exception to liability arising from fraud was laid out in United City
Merchants (Investments) Ltd and others v Royal Bank of Canada and
others3 in a speech by Lord Diplock that “’…fraud unravels all’. The cour ts
2See Loomcraft Fabrics CC v Nedbank Ltd and Another (70/94) [1995] ZASCA 127,
which details the law on the subject.
3 [1982] 2 All ER 720 (HL)
14
will not allow their process to be used by a dishonest person to carry out a
fraud.”4 This statement has been received as part of our law.5
45 The applicants seek to interdict Guardrisk. They disavow any fraud on the
part of Guardrisk . The case presented for adjudication by the applicants
does not entail this court having its process being used by a dishonest
person to carry out a fraud. The fraud exception is not applicable, given the
case as pleaded by the applicants.
46 The case for the applicants is that the fraud contended for came about
when TSK misrepresented facts to SCB Tanzania, leading to the latter
making payment to TSK under the guarantees. The issue of
misrepresentation of facts will apply as between TSK and SCB Tanzania. It
has no bearing on the relationship between SCB SA and Guardrisk . It also
has no bearing on the relationship between Guardrisk and EPCM SA. The
counter -guarantees that inform the relationship between Guardrisk and
EPCM SA are principal obligation s in relation to the performanc e of such
obligations .
47 There is no support for the submission on be half of the applicants that the
effect of the stated fraud travels up the chain of obligations . The applicants
did not cite any authority for their proposition. The established law on the
nature of demand guarantees is that the relationship entails irrevocable
obligations . It is only in clear cases of fraud of which banks have notice of
4 At 725 J
5 See Loomcraft Fabrics CC v Nedbank Ltd and Another.
15
fraud that courts may interfere.6 The applicants seek to interdict Guardrisk.
They do not allege fraud by Guardrisk, nor do they allege Guardrisk having
acted with knowledge of a fraud having been committed.
48 The applicants have not made -out a case for the application of the fraud
exception even if it were competent for the applicants to raise that defence
against Guardrisk. The evidence does not show the existence of “a clear
case of fraud.” This is borne by EPCM Tanzania ’s averments in its petition
before the court in Tanzania.
49 The petition in proceedings in the court in Tanzania shows parties in a
dispute about performance of obligations in terms of a contract. EPCM
Tanzan ia complained, among others, that it (i.e. EPCM Tanzania) performed
in terms of the contract , whereas TSK raised unsupported allegations of
non -compliance by EPCM Tanzania . EPCM Tanzania then pointed out that
TSK was, in fact, the party that failed to meet its obligations, including TSK
not paying in accordance with payment certificates. EPCM Tanzania also
referenced disagreements regarding whether equipment was used as
claimed.
50 The appl icants did not make out a case that TSK relied on expired
guarantees when TSK made its demand on 27 March 2025 . SCB Tanzania
wrote to TSK on 22 January 2025 , confirming that the guarantees had been
amende d. The value of the advance payment guarantee was c hanged from
6 R D Harbottle (Mercantile) Ltd and another v National Westminster Bank Ltd and
others [1977] 2 All ER 862 (QB) at 870 b - d
16
USD 652, 907,31 to USD 425, 735.07. There was no change to the value of
the performance guarantee. The expiry dates for both guarantees was
extended to 31 May 2025. TSK made a demand in terms of the guarantees
advised on 22 January 2025.
51 TSK wr ote to SCB Tanzania on 25 January 2025, recording that it could not
allow the existing guarantees to expire and that TSK had no alternative but
to submit letters of demand. The existing guarantees were due to expire on
31 January 2025. TSK made a demand on 28 January 2025.
52 EPCM SA applied to Guardrisk on 29 January 2025 for Guardrisk to procure
the further extension of the guarantees and an increase of the quantum of
the advance payment guarantee. SCB Tanzania wrote to TSK on 29 January
2025, recording tha t the amended advance payment guarantee had been
presented to TSK for acceptance. EPCM Tanzania wrote to TSK on 29
January 2025, recording, among others, that:
Further in response to your points we would like to clarify that the
Guarant ees are indeed valid now until end of May, hence they remain in full
effect. […]. We therefore request that the call on the bonds be retracted, as
they remain in full effect while we are getting the extensions done as per the
above. We will respond shortly with the necessary proof that this is in action.
53 Guardrisk confirmed to TSK on 30 January 2025 that EPCM SA had
requested an extension of the performance guarantee to June 2027 and that
of the advance payment guarantee to June 2025. TSK advised SCB Tanzan ia
17
on 30 January 202 5 that TSK had withdrawn the demand it made on 28
January 2025. TSK’s withdrawal letter was dated 29 January 2025.
54 TSK was adamant on 25 January 2025 that it could not allow the
guarantees to lapse. TSK’s demand on 28 January 2025 was on guarantees
due to expire on 31 January 2025. Th e demand was clearly made to
preserve the currency of those guarantees, by making a demand within the
expiration period. TSK withdrew the demand on 30 January 2025, a day
before the scheduled expiry date of 31 January 2025.
55 TSK would not have notified withdrawal of its demands if the guarantees
were still to expire on 31 January 2025 . It would make no sense for TSK to
withdraw its demand if the dates of guarantees due to expire on 31 January
2025 had not been extended given TSK ’s expressed concern on 25 January
2025 that it could not allow the guarantees to lapse.
56 EPCM Tanzania wrote to TSK on 29 January 2025 , clarifying that
“Guarantees are indeed valid now until end of May .” TSK wrote on the same
day that it had withdrawn its demand. Thus TSK withdrew its demand on
an understanding that the guarantees were valid “until the end of May.”
57 I find that the guarantees had not expired when TSK made its demands on
27 March 2025. The applicants cannot succeed in this application even if
the court be in error in its finding that the guarantees had not expired. The
application must fail because the applicants did not meet the requirements
for an interdict, as detailed above. Guardrisk and the SCB parties raised
18
severa l other defences. It is unnecessary to address those defences in the
light of the court’s findings in this judgement.
58 I make the following order:
(1) The application is urgent.
(2) The application is dismissed.
(3) The applicants are ordered to pay costs :
58.3.1 Costs in relation to the first respondent includes costs for
engaging senior counsel, on scale C.
58.3.2 Costs in relation to the second and third respondents include
costs for engaging two counsel, including senior counsel; such
costs to be on scale C in relation to seni or counsel and scale B
in relation to junior counsel.
___________ __________
O MOOKI
JUDGE OF THE HIGH COURT
GAUTENG DIVISION , PRETORIA
Heard: 28 April 2025
Decided: 6 May 2025
Counsel for the applicant s: P L Uys
Instructed by: Gildenhuys Malatji Inc.
Couns el for the first respondent: I Green SC
Instructed by: Clyde & Co Attorneys
19
Counsel for the second and third respondents: J P V McNally SC (together with M J
Cooke)
Instructed by: Webber Wentzel