Basil Read (Pty) Ltd v Nedbank Ltd and Another

• Jurisdiction: South Africa

Basil Read (Pty) Ltd v Nedbank Ltd and Another
2012 (6) SA 514 (GSJ)

2012 (6) SA p514

Citation	2012 (6) SA 514 (GSJ)
Case No	8283/12
Court	South Gauteng High Court, Johannesburg
Judge	Saldulker J
Heard	April 9, 2012
Judgment	April 13, 2012
Counsel	K Ioulianou for the applicant.; I Miltz SC (with T Molokomme) for the respondents.

Flynote : Sleutelwoorde E

Practice — Applications and motions — Urgent application — Application for reconsideration of order granted in person's absence — Applicant for urgent order may not supplement its original founding affidavit with F additional matter when faced with application for reconsideration — Party seeking reconsideration entitled to reconsideration on original application, without reference to anything else — Uniform Rules of Court, rule 6(12)(c).

Banker — Irrevocable documentary credit — Generally — Interdict against making payment in terms of advance payment guarantee — In absence of fraud, payment of demand on guarantee valid, enforceable and lawful — G Applicant for such interdict having to make out case of fraud on part of beneficiary of guarantee.

Headnote : Kopnota

Rule 12(6)(c) of the Uniform Rules of Court provides that '(a) person against whom an order was granted in his absence in an urgent application may by notice set down the matter for reconsideration of the order'.

H In refusing the applicant's interlocutory application to file a supplementary affidavit in response to second respondent's rule 12(6)(c) application for reconsideration of an ex parte interim order granted in applicant's favour, the court held that, while an applicant for reconsideration was entitled to present facts on affidavit which a court may take into account in reconsidering the order, an applicant for an urgent order may not supplement its I original founding affidavit with additional matter when faced with an application for reconsideration under rule 6(12)(c). A party in the position of the opposing party (second respondent) was entitled to seek reconsideration on the original application without reference to anything else. (Paragraph [22] at 520B – D.)

In reconsidering the order — a temporary interdict prohibiting first respondent J from making payment in terms of certain advance payment guarantees it

2012 (6) SA p515

had issued in favour of second respondent — the court held that the payment A of a demand on guarantee, in the absence of fraud, is valid, enforceable and, most importantly, lawful. The applicant clearly had not made out a case of fraud on the part of the opposing party (second respondent). Accordingly, the interim order must be reconsidered and the rule nisi discharged. (Paragraphs [34] and [39] at 523F – H and 524F – G.) B

Cases Considered

Annotations:

Case law

ISDN Solutions (Pty) Ltd v CSDN Solutions CC and Others 1996 (4) SA 484 (W) ([1996] 4 All SA 58): referred to

Lombard Insurance Co Ltd v City of Cape Town 2008 (2) SA 423 (SCA): distinguished C

Loomcraft Fabrics CC v Nedbank Ltd and Another 1996 (1) SA 812 (A) ([1996] 1 All SA 51): dicta at 815G – J and 816D – F applied

National Director of Public Prosecutions v Braun and Another 2007 (1) SA 189 (C) (2007 (1) SACR 326; [2007] 1 All SA 211): referred to

Oosthuizen v Mijs 2009 (6) SA 266 (W): dicta at 267E and 269I – J distinguished D

Phillips and Another v Standard Bank of South Africa Ltd and Others 1985 (3) SA 301 (W): dicta at 302 – 304 applied

Rhino Hotel & Resort (Pty) Ltd v Forbes and Others 2000 (1) SA 1180 (W): dictum at 1182B – E applied

The Reclamation Group (Pty) Ltd v Smit and Others 2004 (1) SA 215 (SE): dictum at 218D – F distinguished. E

Rules Considered

Rules of court

The Uniform Rules of Court, rule 6(12)(c) : see The Supreme Court Act and the Magistrates' Courts Act and Rules 10 ed (Juta, 2012) at 38. F

Case Information

An application for reconsideration of an urgent interim order; and an interlocutory application in opposition thereto for permission to file a supplementary affidavit.

K Ioulianou for the applicant.

I Miltz SC (with T Molokomme) for the respondents. G

Cur adv vult.

Postea (April 13).

Judgment

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

2012 (6) SA p516

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:

•

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

•

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

2012 (6) SA p517

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...