Italtrafo Spa v Electricity Supply Commission

• Jurisdiction: South Africa
• Judge: King AJ
• Judgment Date: 24 February 1978
• Citation: 1978 (2) SA 705 (W)
• Hearing Date: 15 February 1978
• Court: Witwatersrand Local Division

King AJ:

On 16 November 1976 the respondent obtained an order from this Court authorising the deputy-sheriff to attach ad fundandam jurisdictionem all the applicant's right, title and interest in the applicant's claim A against the respondent in an amount of R9 480 arising from the supply and erection by the applicant of a 180 MVA 275/88 KV transformer bearing serial number 14624 at the request of the respondent. The purpose of the attachment was to enable the respondent to institute an action out of this Court against the applicant for payment of the sum of R319 073 in respect B of damages and costs. The respondent was also authorised to serve process out of this Court on the applicant by edictal citation.

In applying for the aforesaid order one Oosthuizen, being the administrative manager of the respondent, filed an affidavit. On 14 August 1970 and 27 November 1970 and at Johannesburg the respondent and Anaaldo C San Giorgio-Compagna Generale SpA (Asgen), an Italian company, entered into written agreements for the supply to the respondent and the erection thereof at Spitskop Distribution Station of four 180 MVA auto transformers. In terms of each of the aforesaid agreements Asgen undertook to manufacture, supply, deliver, offload and erect the transformers in accordance with certain specifications and drawings. The contract works D were to include the testing of the plant. For a period of 12 months after the respondent had taken over the contract works Asgen was to be responsible for any defects in the plant or in respect of any faulty workmanship. Asgen was obliged, when called upon to do so by the respondent, to remedy any such defects within a reasonable time after having been advised thereof by the respondent in writing.

E In or about March 1971 the applicant obtained all of Asgen's rights and assumed its obligations in terms of the said agreements. The contract works were, as a result of this takeover of rights and assumption of obligations, completed by the applicant in or about July 1973.

F On 23 October 1973 one of the transformers supplied and erected by the applicant bearing serial number 14722 failed and on 7 December 1973 another one bearing serial number 14704 also failed. The respondent contended that the failure of the two transformers was due to defects in the plant and material; faulty workmanship; and that the two transformers did not conform to the agreed specifications.

G In terms of the aforesaid agreements, the respondent called upon the applicant in writing to remedy the defects. The applicant did not do so. In order to have the transformers repaired as expeditiously as possible the respondent, without admitting liability, agreed with the applicant to have the repairs done at its expense, subject to the delivery to the respondent of a bank guarantee by the applicant, in terms of which the H respondent was guaranteed the repayment of the amount disbursed by it in respect of such repairs, in the event of the respondent being successful in proving that the applicant was liable for the repair work. The cost of having the repairs done was the aforesaid sum of R319 073 in respect of which a bank guarantee was issued by Banco Nazionale del Lavoro of Naples, Italy (the Naples bank) in terms of the aforesaid agreement between the applicant and the respondent. This guarantee was issued on 3 March 1975.

In or about December 1974 the applicant supplied to the respondent and erected yet another 180 MVA transformer with serial number 14624

King AJ

at the Spitskop Distribution Station. At the time of the application for attachment ad confirmandam jurisdictionem the respondent was still indebted to the applicant in the sum of R9 480 in respect of the supply and erection of the said transformer with serial number 14624. In consequence, the respondent contended that the applicant's claim against A the respondent in this amount was an asset within the jurisdiction of this Court and was capable of attachment to found jurisdiction.

In the aforesaid application it was pointed out that the agreements had been concluded within the jurisdiction of the Court. In consequence, B therefore, the respondent only needed an order ad fundandam jurisdictionem. Notwithstanding, an order was issued for the attachment of the aforesaid claim ad fundandam jurisdictionem.

On 21 July 1977 the applicant launched the present application for an order setting aside the aforesaid attachment order and the attachment C which had consequently been made by the deputy-sheriff.

In support of this application the deponent on behalf of the applicant said that the applicant had taken Asgen's rights and assumed its obligations. It was said on behalf of the applicant that the respondent had concluded agreements with South African General Electric Company (Pty) D Ltd (Sage) for the manufacture, supply, delivery, offloading, erection and commissioning of the aforesaid four transformers. In support thereof the applicant annexed two of the respondent's orders which were made out to Sage. In turn Sage had placed orders with Asgen for the manufacture, testing, supply and delivery of the said four transformers to a South African port. These orders by Sage on Asgen were also annexed. The E applicant drew attention to the fact that the prices set out in the orders by Sage were for delivery free on board and Sage undertook the cost of the sea freight of the transformers from Italy to South Africa. The applicant took over Asgen's obligations in respect of the orders placed on Asgen by Sage. The applicant, therefore, contended that there was no privity of F contract between the respondent and it. It was further stated on behalf of the applicant that certain letters by the respondent to Ente Finanziario Interbancario (Efibanca) indicated that the respondent was at all times G aware of the fact that Sage had sub-contracted the manufacture of the four transformers to Asgen. These letters were annexed to the applicant's founding affidavit. In addition, the applicant claimed that it did not erect and commission the four transformers and that the four transformers were erected by Roberts Construction as sub-contractors to Sage. The applicant said that the failure of the transformers was due to faulty workmanship in the erection of the transformers.

In regard to the claim which had been attached, the applicant's case was H that at the date of the respondent's application for attachment the claim was not the applicant's property as the applicant had on 26 February 1976 ceded all its right, title and interest in the payment of these amounts to the Naples bank. A copy of the deed of cession of that date and a...