Basil Read (Pty) Ltd v Nedbank Ltd and Another

• Jurisdiction: South Africa
• Judge: Saldulker J
• Judgment Date: 13 April 2012
• Citation: 2012 (6) SA 514 (GSJ)
• Docket Number: 8283/12
• Hearing Date: 09 April 2012
• Counsel: K Ioulianou for the applicant. I Miltz SC (with T Molokomme) for the respondents.
• Court: South Gauteng High Court, Johannesburg

Saldulker J: H

[1] This is an application in terms of rule 6(12)(c) for the reconsideration of an order granted in terms of rule 6(12) of the Uniform Rules of Court on 30 March 2012 in the urgent court, where the applicant sought and was granted an urgent interim interdict.

[2] The terms of the urgent interim order were, inter alia, as follows: I

'Interdicting and prohibiting the first respondent from making payment to the second respondent, the opposing party, of any sum or sums which are referred to in the following advance payment guarantees, until 31 May 2012, viz: (1) 30657105 in the sum of USD 7 800 000 and (2) 30361818 in the sum of USD 5 000 000.' J

Saldulker J

A [3] The opposing party has not filed any affidavits in this application and contends that this court must reconsider the application on its own on the basis of the original application before Monama J. However, at the outset of this reconsideration application, the applicant lodged a substantive interlocutory application in terms of which it sought, inter alia, B the following relief:

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condoning the failure of the applicant to cite the second respondent, the opposing party in the urgent application, and joining the second respondent to this application with leave to sue it by edictal citation; and

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permitting the applicant to supplement its founding affidavit by the C averments contained in the affidavit in support of the substantive application.

[4] In its founding papers the applicant averred that an associated company of the applicant, Basil Read Construction (SL) Ltd (BRC), D incorporated in Sierra Leone, was contracted to construct a railway line in Sierra Leone on behalf of African Minerals Ltd (AML/the opposing party). Pursuant to the contract between BRC and the opposing party, the applicant provided two advance payment guarantees to the opposing party.

[5] These advance payment guarantees were issued by the first respondent. E In terms of the guarantees, the relevant employer is African Minerals Ltd, the opposing party in this matter, and the applicant is the contractor. According to the applicant, the Basil Read Group, which incorporates the applicant and BRC, has been involved in negotiations with the opposing party over a long period of time to resolve moneys owing to the F Basil Read Group pursuant to work performed by it for and on behalf of the opposing party. As a result of these negotiations, the advance payment guarantees have been extended on many occasions — the last when the opposing party requested the first respondent to extend it to 31 May 2012.

G [6] However, on the morning of 30 March 2012 the applicant was informed by the first respondent that a representative of the opposing party had purported to present the advance payment guarantees to the first respondent for payment. By presenting the advance payment guarantees for payment, 'knowing full well that it owes far in excess of H these amounts to BRC', the applicant states that the opposing party was 'devious'. It was this 'devious' conduct that the applicant sought to interdict in the urgent application. The applicant averred that it would suffer irreparable harm if the first respondent paid the opposing party pursuant to the advance payment guarantees.

I [7] In the urgent application the opposing party was not joined as a respondent, nor was the application served on it. No provision was made for the order to be served on the opposing party, despite the fact that the opposing party contends that its rights to payment in terms of the guarantees were directly affected by the order that was granted. Although the order is not directed against the opposing party, in form and in J substance, clearly it is an order that was granted against it, as is

Saldulker J

evidenced from its terms. It's the applicant's case that the guarantees A were issued pursuant to an agreement between Basil Read Construction (SL) (not the applicant) and the opposing party.

[8] In terms of rule 6(12)(c):

'A person against whom an order was granted in his absence in an urgent application may by notice set down the matter for reconsideration B of the order.'

[9] In this application the opposing party requests this court, in terms of rule 6(12)(c), to reconsider and set aside the urgent interim order that was granted by Monama J on 30 March 2012. According to the opposing party the effect of the order is to prohibit the first respondent from paying C the guaranteed amounts to the opposing party until after the guarantees have expired.

[10] In essence, the opposing party's contentions are that the applicant's failure to join the opposing party, and to provide for service of the application and the order on it, renders the application that was granted D fatally defective. Furthermore, the application to supplement the founding affidavit must also be refused, as it is clear that the supplementary affidavit is being used by the applicant to bolster the facts in the founding affidavit used in support of the original application. This application must be reconsidered on the papers filed in the original application before Monama J. E

[11] The applicant contends that the order was sought as a result of the opposing party's conduct, namely that the opposing party sought an extension of the guarantees on the one hand, while negotiating disputes on the other hand. Such conduct, so contends the applicant, was devious, surreptitious and fraudulent. F

The urgent application was launched by the applicant on an 'extremely' urgent basis by virtue of the following situation which presented itself on 30 March 2012, which was that, as a result of the protracted negotiations in terms of which a final account to BRC was being debated from G September 2011, the opposing party, in whose favour the advance payment guarantees were issued, addressed a letter dated 27 February 2012 to Nedbank in terms of which it recorded the following:

'Please note African Minerals Limited would like to extend the Bank Guarantees to 31 May 2012. Can you please make the necessary arrangements and let me know if you need anything further from us.' H

[12] Pursuant thereto and on 28 March 2012 the applicant also addressed a letter to the first respondent instructing it to extend the advance bank guarantees to 31 May 2012. Although the applicant had no contractual duty to accept the extension of the advance payment I guarantees, it agreed to do so on the strict understanding that the final account would be finalised before the presentation of the advance payment guarantees.

[13] The applicant contends that it was as a result of the second respondent's letter as aforestated that the applicant was 'lulled into a sense of comfort' and had valid reason to believe that, until the issues J

Saldulker J

A relating to the final account were finalised — which was at least by 31 May 2012 — the guarantees would not be presented by the second respondent for payment. Despite this, however, during the course of the morning of 30 March 2012 the first respondent...