Drilltec (Proprietary) Limited v E and M Tshwragano Joint Venture (Proprietary) Limited and Another (UM157/2023) [2023] ZANWHC 220 (31 July 2023)

SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document in compliance with the law and SAFLII Policy

IN THE HIGH COURT OF SOUTH AFRICA

NORTH WEST DIVISION, MAHIKENG

CASE NUMBER: UM157/2023

Reportable: YES/NO

Circulate to Judges: YES/NO

Circulate to Magistrates: YES/NO

Circulate to Regional Magistrates: YES/NO

In the matter between:-

DRILLTEC (PROPRIETARY) LIMITED Applicant and E & M TSHWRAGANO JOINT VENTURE (PROPRIETARY) LIMITED First Respondent FIRST NATIONAL BANK OF SOUTH AFRICA LIMITED (Registration Number 1929/001225/06) Second Respondent

This judgment is handed down electronically and the date that it is deemed to be distributed is 31 JULY 2023 AT 14H30

JUDGMENT

FMM REID, J:

Introduction:

[1] The applicant requests an interdict on an urgent basis to the effect that the applicant’s money that was erroneously paid to the first respondent by the applicant, be paid back to the applicant by

the second respondent on instruction of the first respondent.

[2] The following relief is sought:

“1. That the matter be treated as one of urgency in terms of Rule 6(12) of the Rules of this Honourable Court;

2. The first respondent is directed to forthwith authorise the second respondent to repay the sum of R1,126,189.36 to the applicant by transferring the aforesaid sum from the first respondent’s bank account with account number 6[...] in the applicant’s bank account with number 6[...].

3. In the event that the first respondent fails to comply with the order in 2 above by close of business on Friday 28 July 2023, the second respondent is, upon service of this order, authorised to repay the sum of R1,126,189.36 to the applicant by transferring the aforesaid sum from the first respondent’s bank account with account number 6[...] into the applicant’s bank account with number 6[...].

4. The first respondent and Maré Attorneys (RF) Inc pay the cost of this application, de bonis propriis, jointly and severally, the one paying the other to be absolved on the scale as between attorney and client.

5. Further and alternative relief.”

[3] The applicant is a services company that provides drilling services to, inter alia, mines. From time to time the applicant subcontracts other drilling companies to provide services on their behalf.

[4] The first respondent (E&M Tshwaragono Joint Venture Proprietary Limited (“E&M”)) is the beneficiary of the amount that was erroneously paid by the applicant, as set out in paragraph [9] hereunder.

Factual matrix

[5] Most of the facts are common cause between the parties.

[6] A company named Engineered Mining Solutions Propriety Limited (“EMS”)

provided drilling services to the applicant and on 31 May 2023 rendered an invoice in the amount of R1,126,189.36 (One Million One Hundred Twenty-Six Thousand One Hundred and Eighty-Nine Rand and Thirty-Six Cents) for work done by EMS to the benefit of the

applicant. EMS is not part of the proceedings before this Court.

[7] The applicant and other associated companies use the banking services of the second respondent, First National Bank (FNB). For purposes of convenience to their clients, there is a single FNB online electronic platform profile utilised to make payments to creditors and to creditors of associated companies.

[8] There is a historical relationship between EMS and EM&T and both of them are loaded on the FNB banking online electronic platform. Due to the similarities in their names, the companies are loaded one above the other on the online platform. It serves to mention that a director of the applicant, Mr Khourie, is also a director of EMS. For purposes of this application, the directorship is irrelevant as the two different companies, namely the applicant and EMS are two separate entities.

[9] On 3 July 2023 at approximately 14h15 a director of the applicant, Mr PJ Khourie, attended to pay the invoice of R1,126,189.36 to EMS, but he made an erroneous electronic funds transfer (EFT) payment to the first respondent EM&T’s bank account in the amount of R1,126,189.36 (“the erroneous payment). Directly after the payment and on realising the mistake, he contacted FNB but he was informed that the payment could not be reversed. The payment already reflected in EM&T’s banking account. FNB was prepared to place a “block” on the money to not be appropriated or dispersed by E&MT. On 6 July 2023 FNB confirmed that a hold is placed on E&MT’s account, and this remains to be the position.

[10] It is common cause that the applicant’s intention was to pay the amount to Engineered Mining Solutions (Proprietary) Limited (“EMS”), for services that EMS rendered to the applicant, and that the amount was erroneously paid to E&MT.

[11] It is further common cause that no legal relationship (lis) exists between the applicant and E&MT, and as such there exists no reason for the applicant to make any payment to E&MT. It is accepted by E&MT that the payment was made erroneously.

Liquidation proceedings and correspondence

[12] The defence of E&MT against this application, is that it would act against a court order that was issued on 6 February 2023 in the High Court of South Africa, Gauteng Division, Johannesburg, under case number 2023/006516. This order is an anti-dissipation order.

[13] The anti-dissipation order came as a result after EMS successfully launched an urgent application against E&MT and two other parties. An order was granted against E&MT in terms of which E&MT was interdicted and restrained, pending the finalisation of action / arbitration proceedings between the parties, to:

“Utilizing, transferring and/or disposing of funds in the E&MT JV Payment account held at FNB in account number 6[...].”

[14] On 1 June 2023 EMS launched an urgent application in this Court under case number UM119/2023, in which E&MT is placed under final liquidation. The winding-up (liquidation) of E&MT was argued on 4 July 2023 and judgment has been reserved.

[15] EMS also issued summons against E&MT on 14 March 2023 in the High Court, Gauteng Division, Johannesburg, in which an amount of R10,817,393.45 plus interest is claimed. This matter is also pending.

[16] As mentioned in paragraph [8] above, there is no relation between the applicant and E&MT. The only “link” between the three parties: namely the applicant, E&MT and EMS is that Mr Khourie is a director of both the applicant and EMS. The three companies are three individual and separate entities.

[17] Correspondence between the attorneys of the applicant and E&MT ensued on 8 July 2023, when the applicant requested a reversal of the erroneously paid amount. Correspondence continued between the attorneys by whats-app messages on 14 and 17 July 2023.

[18] E-mail correspondence from the attorneys of E&MT on 17 July 2023 reads as follows:

“The principle of an erroneous transaction is not the issue as a point of departure. It will not be necessary to approach a court. It is the manner in which your client transacted with the accounts and executed the court order which is an issue.”

[19] The crux of the defence in the opposition of this application, is that E&MT will not consent to a refund of the erroneously paid money in the absence of complete settlement of the actions and applications between E&MT and EMS, as referred to above.

[20] At 18 July 2023 it was clear to the applicant that the amount paid would not be paid back, and this application was launched.

Legal matrix

[21] The applicant seeks a final interdict.

[22] The definition of a final interdict has been set out as follows in Minister of Law & Order, Bophuthatswana v Committee of the Church Summit of Bophuthatswana 1994 4 All SA 448 (BG):

“An interdict is final if the court order is based upon a final determination of the rights of the parties to the litigation.”

[23] A final interdict would normally be granted by way of the action procedure, but where no bona fide factual disputes exist, an interdict may be granted on application. See: Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd [1984] ZASCA 51; 1984 2 All SA 366 (A).

[24] The requirements for the right to claim a final interdict has been settled in our common law, by matters such as Setlogelo v Setlogelo 1914 AD 221 at 227 and Primedia (Pty) Ltd t/a Primedia Instore v Radio Retail (Pty) Ltd 2012 JOL 29109 (SCA) at paragraph 13.

[25] The requirements for a final interdict are the following:

25.1. The applicant must have a clear right to the relief sought;

25.2. The applicant must illustrate an injury actually committed or reasonably apprehended; and

25.3. The applicant must prove the absence of similar protection by any other remedy ordinarily obtainable.

[26] It was found by the Supreme Court of Appeal in Hotz v University of Cape Town 2016 4 All SA 723 (SCA), that the discretion of a court to refuse a final interdict, provided the above-mentioned three requisites are present, is very limited.

Analysis

Clear right:

[27] It is argued on behalf of the applicant that a clear right exists that the money as erroneously paid to E&MT, and it should be paid back to it.

[28] The right of the applicant to the relief sought, extends to the right of the applicant to have possession of its funds.

[29] The intention of the applicant to have transferred the money to EMS and not to E&MT, is not disputed. It is also not disputed that there is no lis between the applicant and E&MT.

[30] The applicant is not a party to the dispute between EMS and E&MT and the money erroneously paid into the account of EMS, cannot be used by E&MT to leverage a settlement between EMS and EM&T. The refusal of E&MT to authorise FNB to release the money to the applicant, has nothing to do with the applicant, but everything with the anti-dissipation order. In the answering affidavit, E&MT alleges that release of the erroneously paid money will result in contempt of the anti-dissipation order. It is stated as follows:

“15.4 The applicant’s “sister” company, EMS, of which the deponent to the founding affidavit is also a director, maintained that version in the liquidation application, that the anti-dissipation order is still in force and effect

…

and further

15.6 The power lies with the deponent of the founding affidavit to authorise that EMS concedes that the anti-dissipation order has lapsed, or that a declaratory be obtained. He has the sole and full transactional capacity on the account.”

[31] In the opposing affidavit it is stated by the deponent that the application is not bona fide, and that “The applicant and EMS through their mutual director, have created their own unfortunate situation and misery.” It is stated in the opposing affidavit that E&MT will only consent to a reversal of the erroneous payment, once EMS agrees to an order that the anti-dissipation order has lapsed.

[32] It is disputed between the parties whether the amount erroneously paid would form part of a liquidated estate, should E&MT be liquidated. As such, it is stated in the opposing affidavit that “The applicant does not have any risk of loss of the amount. The amount will not form part of a liquidated estate, due to the first respondent cannot lay claim to the money.” The last sentence indicates that E&MS is aware there-of that they cannot deal with the erroneously paid money, and that

ownership of the erroneously paid money remains with the applicant.

[33] The relief sought by the applicant is not that E&MT should take any action in dealing with the erroneously paid amount, but that E&MT should permit FNB to correct the erroneous transaction which would result in the erroneously paid amount being transferred from the account of E&MT to the account of the applicant. In doing so, E&MT would not “utilise, transfer or dispose of funds in the E&MT JV payment account”, and would not be in contravention of the court order.

[34] On the abovementioned basis, I find that the applicant has established a clear right to the relief sought.

Injury committed or reasonably apprehended

[35] Whilst the erroneously paid money remains in the account of E&MT, the applicant cannot access it and do business with the money.

[36] The applicant states that the money is to be used to pay its creditors and without possession of the money, the applicant suffers in that it has to enter into loan agreements with steep interest rates, in order to pay salaries, wages and other debts.

[37] The applicant fears that, should this application not succeed, the erroneously paid amount will form part of the liquidated estate of E&M. This, in my view, is a reasonable fear.

[38] Even in the event that the applicant be favoured with a court order securing a refund of the erroneously paid amount, but the funds are not returned to the applicant, the applicant will form part of the concursus creditorum of the liquidated estate and will be regarded as a creditor. The court order entitling the applicant to the amount erroneously paid would rank the applicant as a preferential creditor. The harm that the applicant may suffer under these circumstances may result therein that the applicant should share in a dividend of the claims of the creditors of E&MT.

[39] It is argued that E&M has become unjustly enriched by the erroneous payment and will benefit from the erroneous payment as long as the amount is kept in their bank account at FNB.

[40] For the reasons set out above, I hold the view that the applicant has experienced an injury committed or reasonably apprehended.

Other remedy

[41] The applicant has to establish that it has no alternative suitable remedy available to it.

[42] It is stated in the opposing affidavit on behalf of E&MT that an alternative remedy is the settling of the liquidation proceedings between EMT and E&MT. This, however, is not a viable option as EMT and the applicant are two different entities.

[43] The applicant has commenced communication with FNB bank and with E&MT in relation to the release of the erroneously paid money as soon as it realised the error, which was shortly after the erroneous payment being made. The correspondence between the parties are steadfast proof that the applicant has attempted all possible avenues to settle this matter without approaching the court.

[44] Should the applicant have brought this application in the normal course of events, it would probably have only received relief after E&MT has been liquidated. Having regard to the acrimonious tone of correspondence between the parties’ respective attorneys, the money would not have been released in any manner other than to approach court for an order to that effect.

[45] I am of the view that the applicant has proven that it has no alternative or suitable remedy.

Conclusion

[46] Having found that the applicant has proven the three requirements for a final interdict, the applicant is entitled to an interdict.

[47] The applicant is entitled to a court order in which FNB is authorised by M&NT to release the sum of R1,126,189.36 to the applicant, by transferring the aforesaid sum from E&MT’s bank account with account number 6[...] in the applicant’s bank account with number 6[...].

Costs

[48] Both parties request cost on a de bonis propriis scale against each other. Both set of attorneys claimed that the other party is acting mala fide and not advising their clients correctly.

[49] A letter dated 18 July 2023 written by the attorneys of E&MT, reflects the following:

“1. The dispute as a whole refers.

2. Opportunism is defined as the practice of taking advantage of circumstances, with little regard for principles or what the consequences are for others. Opportunist actions are expedient actions guided primarily by self-interested motives (Please google it). This is your client personified.

3. And when our client’s legal team gets time to scrutinise and dissect your client’s conduct between all the misleading urgent (expedient please google that as well) litigation launched, your client’s abuse of the contract and corporate governance becomes apparent.

4. We can litigate until kingdom come or settle, but it becomes clearer by the day that the longer the litigation continues your client’s misdeeds will be exposed and a definite pendulum shift in favour of

our client is becoming apparent. Your client’s conduct will certainly illicit interesting views from the Companies Tribunal.

5. It is against this background and perspective that we approach the dispute and your settlement proposal. Perhaps if your client with your assistance can discover the error of their ways a fair settlement can be negotiated and a deepening of disputes can be avoided. We as legal representatives have an opportunity to settle an exit strategy for these two parties and we implore your consideration on a sober approach.”

(own emphasis)

[50] It is expected in any litigation proceedings that opposing parties and opposing attorneys can become angry or dismayed with each other. What is not acceptable, is a personal attack and personal insults, as illustrated above. The legal profession is to be held in high esteem and the only pillars keeping the legal profession in high esteem, is the legal practitioners who are the face of the legal profession.

[51] The applicant states that the letter is utterly uncollegial, unprofessional and inappropriate. I agree with this statement. This court guards jealously against the professionalism of an esteemed profession that should be practiced by legal practitioners daily.

[52] The letter reflects the conflation of the two companies Dril Tec, and EMS on the basis of having the same director. This may be the author’s interpretation of the law, and this Court does not intend to venture outside the scope of this application. The author of the letter dated 18 July 2023 goes beyond his/her interpretation of the legal position, and reverts to insults and threats. This conduct is uncalled for and flies in the face of the elite profession to which the author belongs.

[53] This Court expresses its utter dismay for this conduct. Despite the letter being unprofessional, uncollegial and inappropriate, I do not agree with the submissions made on behalf of the applicant that the conduct of the attorneys of E&MT were mala fide in advising their clients as they did. On this basis, I will not make an order de bonis propriis against the attorneys.

[54] The normal rule is that the successful party is entitled to its cost. The normal scale of costs is between party and party. However, E&MT was aware that the transaction was erroneously made. E&MT was further aware that it has no claim on the money that was erroneously transferred to their account. The conduct of E&MT in opposing the application and refusing to give consent to return the money that was erroneously paid, was mala fide in my view. On this basis, I am of the view that a punitive cost order on the scale as between attorney and client is warranted.

Order:

[55] In the premise, I make the following order:

(i) That the matter be treated as one of urgency in terms of Rule 6(12)

of the Rules of this Court;

(ii) The first respondent is directed to forthwith authorise the second respondent to repay the sum of R1,126,189.36 to the applicant by transferring the aforesaid sum from the first respondent’s bank account with account number 6[...] in the applicant’s bank account with number 6[...].

(iii) In the event that the first respondent fails to comply with the order in (ii) above by close of business on Tuesday 1 August 2023, the second respondent is, upon service of this order, authorised to repay the sum of R1,126,189.36 to the applicant by transferring the aforesaid sum from the first respondent’s bank account with account number 6[...] into the applicant’s bank account with number 6[...].

(iv) The first respondent is ordered to pay the cost of the application on a scale as between attorney and client.

FMM REID

JUDGE OF THE HIGH COURT

NORTH WEST DIVISION MAHIKENG

DATE OF HEARING:

27 JULY 2023

DATE OF JUDGMENT: 31 JULY 2023

APPEARANCES:

FOR APPELLANT: ADV AW PULLINGER INSTRUCTED BY: VAN ZYL JOHNSON ATTORNEYS C/O OELOFSE ATTORNEYS 09 AERODOME CRESCENT MAHIKENG INDUSTRIAL TEL: 018 632 2744 EMAIL: mkh6@cjpo.co.za VAN ZYL JOHNSON ATTORNEYS TEL: 011 064 5000 EMAIL: cindy@vanzyljohnsonattorneys.co.za REF: C JOHNSON/tm/DR1001 FOR RESPONDENT: ADV B RILEY INSTRUCTED BY: MARE ATTORNEYS (RF) INC ATTORNEYS FOR 1ST RESPONDENT TEL: 012 653 7394/6 EMAIL: admin@mareattorneys.com C/O MAREE & MAREE ATTORNEYS RIVIERA PARK MAHIKENG EMAIL: lit1@maree-mareeattorneys.co.za AND TO: FIRST NATIONAL BANK SOUTH AFRICA EMAIL: Kylene.Phillips@firstrand.co.za Nokukhanya.Lanto@firstrand.co.za