Consortium Comprising: KC Cottrell Co (Pty) Ltd and Another v Santam Limited and Others (Appeal) (2023/009986) [2023] ZAGPJHC 331 (17 April 2023)

Consortium Comprising: KC Cottrell Co (Pty) Ltd and Another v Santam Limited and Others (Appeal) (2023/009986) [2023] ZAGPJHC 331 (17 April 2023)

The application for leave to appeal was dismissed because the applicants failed to demonstrate any reasonable prospect of success on appeal. The guarantee's text and purpose clearly permit the beneficiary to call up the full guaranteed sum upon an honest allegation of breach, and the applicants' interpretation was untenable. The alleged fraud was not established, as disputes regarding payment milestones relate to the underlying contract, not the guarantee. The novel argument for restraining unconscionable calls was not raised or substantiated at first instance, and there is no prospect that an appellate court would develop the law in this manner without a proper factual basis. The cited...

Citation
[2023] ZAGPJHC 331
Parties
Applicant: KC Cottrell Co. Ltd; Applicant: ELB Engineering Services (Pty) Ltd (in liquidation); Applicant: ELB Educational Trust for Black South Africans; Respondent: Santam Limited; Respondent: Ngodwana Energy RF Ltd; Respondent: Nedbank Limited c/o Nedbank Incorporated
Court
South Gauteng High Court, Johannesburg
Jurisdiction
South Africa
Judgment Date
17 April 2023
Case Number
2023/009986
Procedural Posture
Leave to Appeal / Application for Leave to Appeal Following Dismissal of Interim Interdict
Outcome
Application for leave to appeal dismissed with costs, including costs of two counsel.
Judges
S D J Wilson
Legal Topics
Demand Guarantee, Interim Interdict, Fraudulent Call on Guarantee, Unconscionability, Construction Contract, Leave to Appeal
Commercial and Corporate Civil Procedure Demand Guarantee Interim Interdict Fraudulent Call on Guarantee Unconscionability Construction Contract Leave to Appeal

Case Brief

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Parties

KC Cottrell Co. Ltd

Applicant

ELB Engineering Services (Pty) Ltd (in liquidation)

Applicant

ELB Educational Trust for Black South Africans

Applicant

Santam Limited

Respondent

Ngodwana Energy RF Ltd

Respondent

Nedbank Limited c/o Nedbank Incorporated

Respondent

Procedural Posture

Leave to Appeal / Application for Leave to Appeal Following Dismissal of Interim Interdict

Legal Issues

  1. 1 Whether the applicants have reasonable prospects of success on appeal against the dismissal of their application for an interim interdict restraining a call on a demand guarantee.
  2. 2 Whether the guarantee permits a call based solely on an honest allegation of breach.
  3. 3 Whether the alleged conduct of the respondent constituted fraud or unconscionability justifying restraint of the guarantee call.

Ratio Decidendi

The application for leave to appeal was dismissed because the applicants failed to demonstrate any reasonable prospect of success on appeal. The guarantee's text and purpose clearly permit the beneficiary to call up the full guaranteed sum upon an honest allegation of breach, and the applicants' interpretation was untenable. The alleged fraud was not established, as disputes regarding payment milestones relate to the underlying contract, not the guarantee. The novel argument for restraining unconscionable calls was not raised or substantiated at first instance, and there is no prospect that an appellate court would develop the law in this manner without a proper factual basis. The cited...

Court Disposition

Application for leave to appeal dismissed with costs, including costs of two counsel.

Orders

  • The application for leave to appeal is dismissed.
  • The applicants are ordered to pay the costs of the application, including the costs of two counsel.