Kopano Procurement & Services (Pty) Ltd t/a Kopano Petroleum v Standard Bank of South Africa Limited and Another (2352/2021) [2021] ZAFSHC 213 (17 August 2021)

IN THE HIGH COURT OF SOUTH AFRICA

FREE STATE DIVISION, BLOEMFONTEIN

Reportable: YES/NOOf Interest to other Judges: YES/NO

Circulate to Magistrate: YES/NO

Case no. 2352/2021

In the matter between:

KOPANO PROCUREMENT & SERVICES

(PTY) LTD t/a KOPANO PETROLEUM Applicant

and

STANDARD BANK OF SOUTH AFRICA LIMITED First Respondent

BENGUELA PETROLEUM SUPPLIES CC Second Respondent

CORAM: I VAN RHYN, AJ

HEARD ON: 29 JULY 2021

DELIVERED: 17 AUGUST 2021

1. INTRODUCTION.

[1] This is the return day of an urgent application brought by the applicant to restrain the first respondent from effecting payment or releasing funds claimed against a Performance Guarantee issued by the applicant in favour of the second respondent. A rule nisi was issued on 26th May 2021 whereby the respondents were called upon to show cause why the order should not be made final. By agreement between the applicant and the second respondent the rule nisi was extended on more than one occasion, inter alia as a result of the delays caused by the Covid-19 pandemic. The first respondent did not oppose the application. The matter was eventually heard on 29 July 2021. The second respondent opposed the confirmation of the rule nisi.

2. THE PARTIES.

[2] The applicant, Kopano Procurement & Services (PTY) Ltd t/a Kopano Petroleum, is a company with its principal place of business in Bloemfontein and herein duly represented by its managing director. The first respondent is Standard Bank of South Africa Limited, a company with limited liability with its principal place of business in the Free State Province in Bloemfontein. The second respondent is Benguela Petroleum Supplies CC, a company registered in terms of the statutes of Namibia and registered address in Walvis Bay, Namibia. The second respondent is represented by its director so authorised. The applicant holds its bank account with the first respondent at the Brandwag branch in Bloemfontein.

3. BACKGROUND FACTS.

[3] In order to understand the application and the role of the first respondent, it is necessary to briefly set out the facts which precipitated this application. The applicant and the second respondent entered into a written Fuel Supply Agreement (“agreement”) on 3 February 2021 at Johannesburg. The second respondent is a supplier of fuel and petroleum products including petrol, diesel and paraffin (“the products”) and conducts its business from an address in Walvisbay, Namibia. The applicant, a distributor and consumer of fuel and diesel, desirous of purchasing fuel from the second respondent, contracted to place individual purchase orders with the second respondent whereafter confirmation of the required availability will be done by the issuing of a pro forma invoice. The second respondent is neither domiciled nor resident in any division of the High Court of South Africa and is therefore a foreign peregrinus.

[4] In terms of the provisions of the agreement, the applicant was required to raise a bank guarantee in favour of the second respondent for the amount of each such load ordered. To avoid the cumbersome process of applying for multiple guarantees subsequent to each tax invoice received from the second respondent, the applicant secured an amount of R1 million in its money market account held at the first respondent. On 19 February 2021 the applicant caused a Performance Guarantee to be issued by the first respondent’s branch at Brandwag, Bloemfontein, in favour of the second respondent up to the amount of R1million (“the Performance Guarantee”).

[5] In terms of the provisions of clause 8 of the agreement, payment in cash or payment via electronic funds transfer (“EFT”) for the actual volumes delivered in accordance with the tax invoice, had to be paid within a period of two days. In the event of payment not being effected within a period of thirty days after delivery of the products, the funds will be drawn against the Performance Guarantee held in favour of the second respondent. The business relationship commenced on 1 February 2021 for an initial period of one year with the option of a further extension. The business relationship however, soon soured which led to the present application. On 26 May 2021 a rule nisi was granted to the applicant in the following terms:

“ 2.1 First Respondent is interdicted and restrained from effecting any payment or releasing any funds claimed against the Performance Guarantee issued by the applicant on account number 240347537.

3. The orders contained in paragraph 2.1 shall operate as an interim interdict with immediate effect, pending finalization of this application.”

[6] On behalf of the applicant a substantive application for condonation for the late filing of the replying affidavit was filed subsequent to its managing director falling victim to the raging Covid -19 pandemic. At the hearing of the matter, the application for condonation was not opposed by the second respondent who, in any event, failed to comply with the time periods set by the court for the filing of affidavits and heads of argument. The application for condonation was granted.

4. POINT IN LIMINE

[7] The respondent has, in the answering affidavit raised the preliminary point regarding the lack of jurisdiction of this court to hear this matter on the basis that the second respondent is a peregrinus of this court. On behalf of the second respondent it was argued that, due to the failure of the applicant to attach any property of the second respondent to found or confirm jurisdiction and on the grounds that the agreement between the parties expressly provides that any dispute shall be adjudicated by a Namibian arbitrator or court, this court lacks jurisdiction to hear the application.

[8] Clause 16.1 of the agreement provides for the resolution of disputes between the parties to be resolved by negotiation and, if unsuccessful, be referred to arbitration as envisaged in clause 20, unless the parties agree to refer the dispute to the High Court of Namibia. The parties to the agreement are defined as the applicant and the second respondent. The second respondent’s argument is furthermore that as “the cause is against the second respondent’s claims” the court lacks the necessary jurisdiction. In Kibe v Mphoko and another[1] De Wet AJ held that where the respondent is a peregrinus, the court has jurisdiction if, in the case of a mandatory interdict, the act of drawing money from a bank account is to be carried out within the jurisdiction of the court, or in the case of a prohibitory interdict if the act prohibited is about to be executed in such area.

[9] The relief sought by the applicant is a prohibitory as well as a mandatory interdict against the first respondent, a commercial bank where the applicant held its account and where the applicant concluded a separate written agreement for the Performance Guarantee to be issued to the applicant for the benefit of the second respondent. The Performance Guarantee agreement was concluded on 19 February 2021 and a copy of the Performance Agreement is appended to the applicant’s founding affidavit. The second respondent is the beneficiary of the Performance Guarantee. The second respondent is not a party to the separate agreement concluded between the applicant and the first Respondent in Bloemfontein for the issuing of the Performance Guarantee.

[10] For a prohibitory interdict, a court will have the same jurisdiction in respect of parties and causes of action as it does in any other civil proceedings. If the requirements for the granting of an interdict are satisfied by the facts within the territorial jurisdiction of a particular High Court, it will possess territorial jurisdiction to decide the matter.[2] The provisions of section 19 (1)(a) of the Supreme Court Act, 59 of 1959 assign the jurisdiction of the court to residence within that court`s area of jurisdiction. It provides that a provincial or local division shall have jurisdiction over all persons residing or being in and in relation to all causes arising and all offences triable within its area of jurisdiction.

[11] However, the test is not one of domicile. The court may have jurisdiction in relation to the matter even though the cause had not arisen within its area of jurisdiction, provided it has jurisdiction over the person of the defendant, or as in this application, the first respondent. As to whether a court has jurisdiction or not in a matter, depends on the nature of the proceedings and the nature of the relief claimed or both. The principle is based on the power of the court, not only to grant the relief claimed, but also to effectively enforce its order in the area of its jurisdiction.[3] A domestic corporation or legal person is resident both at the place where its registered office is located and where its principal place of business is. The first respondent’s principal place of business, within the jurisdiction of this court, is situated at Bloemfontein. In the present application the applicant moved for an interdict to prohibit the first respondent from releasing any funds from the applicants account to be paid to the second respondent in Namibia. In Metlika Trading Ltd and Others v Commissioner South African Revenue Service,[4] Streicher JA held that if the respondent is an incola, the court may assume jurisdiction to grant an interdict (whether mandatory of prohibitory) in personam no matter if the act in question is to be performed or restrained outside the court’s area of jurisdiction. I am of the view that the applicant has satisfied the requirement of jurisdiction and that this court will be able to enforce its order concerning the first respondent.

[12] The question whether parties may contract that a local court or all court’s jurisdiction is ousted was considered by the Supreme Court of Appeal in Foize Africa (Pty) Ltd v Foize Beheer BV and others.[5] The court held that when a foreign jurisdiction or arbitration clause is raised as an objection in limine to legal proceedings, such as an application for an interim interdict, the court should approach the matter on the basis that it enjoys a discretion whether or not to enforce the clause, taking into account all the relevant facts and circumstances pertaining to the matter. In the Foize case the court a quo found that by reason of the foreign jurisdiction and arbitration clause in terms whereof the courts in the country of Holland possessed jurisdiction, the parties were bound by its agreement to proceed to arbitration and the court a quo had no jurisdiction in respect of the parties’ dispute. Leach JA held as follows:

“In doing so, the court quo erred. It can now be regarded as well settled that a foreign jurisdiction or arbitration clause does not exclude the court’s jurisdiction. Parties to a contract cannot exclude the jurisdiction of a court by their own agreement, and where a party wishes to invoke the protection of a foreign jurisdiction or arbitration clause, it should do so by way of a special or dilatory plea seeking a stay of the proceedings. That having been done, the court will then be called on to exercise its discretion whether or not to enforce the clause in question ─ see eg Commissioner for Inland Revenue and another v Isaacs NO 1960 (1) SA 126 (A) at 134B-H, Yorigami Maritime Construction Co Ltd v Nissho- Iwai Co Ltd 1977 (4) SA 682 (C), Butler v Banimar Shipping Co SA 1978 (4) SA 753 (SE) and Universiteit van Stellenbosch v J A Louw (Edms) Bpk 1983 (4) SA 321 (A) at 333G-H.[6]

[13] The applicant sought an interdict against the first respondent and not as much against the second respondent. In its opposition of the application the second respondent failed to request for stay of the interdict to be granted pending a decision on arbitration or an action or proceedings still to be instituted whether in Namibia or in South Africa. Taking into consideration all the relevant facts pertaining to the application for a final interdict, I am satisfied that this court has the necessary jurisdiction to decide the matter.

5. THE REQUISITES FOR A FINAL INTERDICT.

[14] The salient facts pertaining to the matter are the following: The applicant placed two purchase orders with the second respondent. On 17 March 2021 the second respondent issued two separate pro forma invoices, tax invoice 245 for 39462 litres of 50 pp diesel and tax invoice 255 for 38 774 litres of 50 pp diesel. The issuing of the tax invoices confirmed availability of the orders placed by the applicant. The purchased product was received by the applicant on 17 March 2021 at Walvis Bay. In terms of tax invoice 245 the total amount due to the second respondent amounted to R 315 696.00. In respect of tax invoice 255 the amount due was R 310 190.00. On 26 March 2021 the applicant caused payment of both tax invoices by EFT. Payment of the two tax invoices was therefore effected within thirty days from delivery. Regarding these facts the applicant and the second respondent are ad idem and no dispute of facts appears on the papers. In terms of the provisions of clause 8.1 of the agreement, payment for the actual delivered volumes will be paid in cash or via EFT for each delivery within 2 days. Clause 8.3 provides that funds will be drawn against the Performance Guarantee within 30 days of delivery of the product unless paid by the purchaser via EFT before the 30-day window period.

[15] On 25 May 2021 the applicant was telephonically informed by the first respondent that the second respondent has issued a claim against the Performance Guarantee in the amount of R363 986.26. The applicant informed the first respondent that all tax invoices received from the second respondent had been settled and that no amount is due. The first respondent was requested not to authorize any payment against the Performance Guarantee in favour of the second respondent. The first respondent, however, remained bound by the guarantee and the claim received against the guarantee by the second respondent and as such was obliged to effect payment to the second respondent. The applicant had one day to obtain a court order to prohibit the first respondent from releasing funds to the second respondent which cumulated into the urgent application and order of this court on 26 May 2021, prohibiting the first respondent from releasing any funds to the second respondent. The second respondent supposedly claimed funds against the Performance Guarantee at the branch office of Standard Bank, Walvisbay. In terms of the interim order granted the first applicant, situated in Bloemfontein, did not release funds for payment to be made at Walvisbay.

[16] When the orders were placed with the second respondent, the understanding was that the purchased product will be exported to South Africa. Clause 2.2.4 of the agreement provides the definition for “DAS” meaning: Duty at source which is representative of and comprises the Fuel Levy, Road Accident Fund Levy and Excise Duty as defined in the Customs Act, administered by the purchaser’s country’s revenue services. Clause 5 of the agreement provides for the pricing structure applicable to the agreement. The selling price is set by the second respondent and shall include all costs and is subject to variation (“the selling Price”). Subsequent to the two loads being received by the applicant at Walvisbay and while on their way to the border with South Africa on 19 March 2021, it appeared that certain amounts had to be paid before the trucks could pass through the border to South Africa. From the contents of the numerous emails appended to the second respondent’s answering affidavit it is apparent that payment of these amounts, calculated on the amount of fuel per load, had not been taken into consideration. Due to a shortage of funds, it was decided not to take the two loads through the border post, but rather search for a buyer in Namibia. It is furthermore evident that the second respondent assisted in the search for a buyer of the product within the borders of Namibia. A purchaser was eventually located in Otjiwarongo. The applicant contends that the second respondent was liable to pay for export taxes at the border and due to its failure to budget for these taxes and applicant’s inability to assist financially at the particular time, the decision was taken to sell the product in Namibia.

[17] The applicant paid the transport fees as well as the border clearance fees and presented proof of payment of these fees. On behalf of the second respondent, it was argued that due to the decision not to export the two loads to South Africa as initially quoted, but to sell the fuel in Namibia, a different price structure became applicable. The prices for fuel for the export market are different from the selling price of fuel when sold on the local market in Namibia (“sold on the grid in Namibia”). Products sold on the export market are exempted from certain taxes which resulted in the second respondent being taxed by the Namibian tax authority some unknown time later. It is not disputed that the second respondent did not issue an amended tax invoice to the applicant subsequent to the decision to sell the two loads in Namibia or, for that matter, after receiving a tax assessment from the Namibian tax authority. Therefore, the only two tax invoices issued in respect of the sale of fuel relevant to this application were settled by the applicant and payment of the said amounts are not disputed by the second respondent.

[18] The second respondent simply claimed the amount of R 363 986.26 against the Performance Guarantee during May 2021 without informing the applicant about the claim. Counsel on behalf of the second respondent argued that the second respondent is within its contractual rights to claim the price variant caused by the higher taxes from the Performance Guarantee without informing the applicant or issuing an amended or additional tax invoice. The basis for the second respondent’s contention is the provisions of the following clause in the fuel supply agreement:

“5. PRICING.

5.1 Benguela Petroleum Supplies CC selling price is set by Benguela Petroleum Supplies CC and shall include all costs and is subject to variation (‘the Selling Price’).”

[19] It is clear from the provisions in the agreement that the Performance Guarantee was implemented to secure payment within a period of thirty days of the amount reflected in the pro forma tax invoice only in the event of non-payment of the tax invoice. To avoid the administrative hassle of arranging for multiple performance guarantees subsequent to each tax invoice received, the applicant arranged a once off performance guarantee in the amount of R1million. Had the strict provisions of the agreement been followed by the applicant, the individual performance guarantees corresponding with the relevant two tax invoices would have lapsed on payment thereof. As such any further claims by the second respondent, whether due to variants in the price of fuel or disputes pertaining to taxes levied by the Namibian tax authority, would have been subjected to the normal dispute resolution and legal processes provided for in clause 14 of the agreement. A party failing to pay any amount due by due date and fails to remedy such breach within 14 days of written notice to do so or commits a material breach of any of the provisions of the agreement and fails to remedy such breach within a period of five days of written notice to do so, shall be in default which entitles the aggrieved party to terminate the agreement.

[20] Where a date for performance has been fixed the debtor may perform at any time before such time stipulated in the agreement. Should the debtor culpably fail to do so he/she/it automatically falls into mora since dies interpellat pro homine (the day demands on behalf of the man).[7] If the debtor does not fall into mora in spite of his/her/its failure to comply with a time clause, for instance because the debtor was not at fault in failing to perform timeously or because one or more of the prerequisites for mora have not been met, a demand would thereafter be necessary to put the debtor in mora.[8] The object of demand is thus to obtain performance, and a creditor must make demand in order to justify cancelling, claiming damages or interest or any of the other legal remedies flowing from the debtor’s mora. The agreement concluded between the applicant and the second respondent however, expressly requires demand or notice, the giving of which then becomes part of the second respondent’s cause of action in the event of legal process.

[21] In West Rand Estates Ltd v New Zealand Insurance Co Ltd[9] Solomon JA held as follows:

“It is desirable that the practice on this subject should be made uniform, and in principle it is clear that after receipt of the letter of demand the defendant should be regarded to be in mora. His duty upon such receipt is to perform his obligation, and on failure so to do he places himself in mora. There is no satisfactory reason for following any other practice, and we think that we should now definitely lay down the rule that mora begins from the date of receipt of the letter of demand. It of course follows that, where there has been no letter of demand, there would be no mora until summons has been served on the defendant.” [10]

On behalf of the applicant, it is argued that it was irregular and unlawful for the second respondent to claim against the Performance Guarantee under the circumstances and any claim it may have will have to be instituted against the applicant directly.

[22] During argument Mr Sadike, counsel on behalf of the second respondent, conceded that the selling of the product on the local market in Namibia had not been foreseen when the agreement was concluded. The intention was that the product will be exported to South Africa. The decision taken at the spur of the moment on 19 March 2021 not to export the product, but to sell the product on the local market, caused complications for the second respondent, the consequences of which was only realized when the taxing authority knocked at its door. Mr Sadike’s contentions in this regard are at variance with the contents of the answering affidavit. In the answering affidavit it is contended that the applicant failed to pay the export duties and then opted to sell the product in Namibia. The failure to pay the local taxes was therefore the cause for default and thus giving the second respondent the right to claim from the Performance Guarantee.

[23] Counsel for the second respondent was not able to refer me to the clause in the agreement to substantiate his argument that the second respondent had a right to claim directly from the Performance Guarantee. Apart from clause 5.1 quoted above, no mention of any process to be followed when a variant in the fuel prices came into operation was specifically recorded in the agreement. The only inference is that the second respondent was obliged to issue an amended or rectified tax invoice subsequent to any variation in the price and to submit the same to the applicant for payment in terms of the provisions of the agreement. The provisions of clause 14 pertaining to any breach and failure to pay any amount due by the applicant by the due date and failure to remedy such breach within the stipulated time, then comes into play. It is not in dispute that the second respondent did not follow the process of demand as contemplated by the parties. The agreement did not contain an express or tacit stipulation with regard to the date when performance is due in respect of a variant in the price and therefore a demand was needed to place the applicant in mora, i.e., mora ex persona.[11]

[24] The applicant seeks a final interdict. An applicant seeking an order for a final interdict must show a clear right (in the sense of a right clearly established);[12] an injury actually committed or reasonably apprehended; and the absence of any other satisfactory remedy available to the applicant.[13] For the grant of a final order all three requisites must be present. Once the applicant has established the three requisites, the scope for refusing relief is limited.[14] Furthermore, in the case of a final interdict, any disputes of fact must be resolved on the basis of the test laid down in Plascon- Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd[15]

[25] The threatened invasion of applicant’s right is sought to be demonstrated by showing that the second respondent clandestinely, submitted a claim against the Performance Guarantee held in its favour at the first respondent without demanding payment from the applicant. The amount claimed against the Performance Guarantee has not been quantified or substantiated in any manner and remains denied and disputed by the applicant.

[26] The requisites for the right to claim a final interdict are denied by the second respondent. Interdict procedure is a remedy of a summary and extra-ordinary nature, and are allowed where an applicant requires protection against an unlawful interference or threatened interference with his/her/its rights. It is not a remedy for past invasion of rights, but is concerned with the present or the future[16]. The onus is on the applicant to establish on a balance of probabilities the facts and evidence which prove a clear and definite right in terms of the substantive law. The applicant has demonstrated a threatened invasion of its right that only when payment of issued invoices had not been effected within thirty days, may payment been drawn against the Performance Guarantee. The second respondent admits its attempt to draw against the Performance Guarantee. The applicant has a right to secure a permanent cessation thereof. The second respondent’s contention that it is entitled to claim against the Performance Guarantee even if no tax invoice had been issued, is rejected. The second respondent’s reliance on the provisions of the agreement in this regard is misplaced.

[27] The applicant also prays for a mandatory interdict requiring the first respondent to cancel the Performance Guarantee. The expiry date of the Performance Guarantee is 28 February 2022. The applicant contends that no further tax invoices had since been issued by the second respondent, and it is therefore appropriate to grant an order for the cancellation of the Performance Guarantee. The applicant indicated that due to the second respondent’s inability to deliver or entertain any further orders submitted by the applicant in terms of the provisions of the agreement, the second respondent has been notified of the cancellation of the agreement. The second respondent’s response to these averments is a denial. The applicant has not elaborated on the contention that the agreement has been cancelled. The agreement provides that if a party is in default, the aggrieved party shall be entitled to terminate the agreement. Neither the date of the alleged cancellation nor any indication that the applicant has complied with the provisions regarding notice to remedy such breech has been alleged or proved. I am not convinced that the applicant has made out a case for an order in terms of prayer 2 of the Notice of Motion. In any event, the applicant will have satisfactory remedies available to obtain adequate redress in the event of a further attempt by the second respondent to claim from the performance Guarantee when no tax invoice had been issued.

[28] Mr Sadike argued that the second respondent did not anticipate the additional taxes claimed by the taxing authorities in Namibia. It appears as if the second respondent attempted to claim damages or some form of enrichment from the applicant by way of a claim against the Performance Guarantee without following the provisions agreed to regarding dispute resolution. This judgment does not concern the second respondent’s rights to claim any form of damages or enrichment from the applicant. It is evident that the rights of the applicant pertaining to the second respondent’s claim against the Performance Guarantee cannot be protected by any other ordinary remedy than confirmation of the rule nisi. Up until the hearing of this matter the second respondent has not instituted any claim, action or arbitration process either in Namibia or in South Africa for payment of the disputed amount of R 363 986.26 and may still issue a claim for payment of the alleged amount in Namibia as contemplated in the agreement. The applicant however, cannot obtain adequate redress in some other form of ordinary relief. It seems clear that the applicant has in any event decided not to order any further products from the second respondent. I am satisfied that the applicant has shown the requisites for obtaining final relief as claimed.

[29] The general rule is that the successful party is entitled to its costs. The applicant was partially successful. There is however, no reason to deviate from the general rule.

In the result the following orders are granted;

ORDER

1. The first respondent is interdicted and restrained from effecting any payment or releasing any funds claimed against the Performance Guarantee issued by the applicant on account number 240347536.

2. The second respondent is ordered to pay the costs of this application.

I VAN RHYN AJ

On behalf of the Applicant: Adv. F F JACOBS

Instructed by: NOORDMAN’S ATTORNEYS

On behalf of the Second Respondent: Adv. T M SADIKE

Instructed by: MHLOKONYA ATTORNEYS

[1] 1958 (1) SA 364 (O) at 367 C-E.

[2] Mtshali v Mtambo 1962 (3) SA 469 (G) at 473-474; Kibe v Mphoko and another 1958(1) SA 364 (O).

[3] Veneta Mineraria Spa v Carolina Collieries (Pty) Ltd (in liquidation) 1987 (4) SA 883 (AD) at 893E-F.

[4] 2005 (3) SA 1 (SCA) at [49].

[5] 2013 (3) SA 91 (SCA).

[6] At [22].

[7] Trustees, Mitchell’s Plain Islamic Trust v Weeder and another [2001] 2 All SA 629 (C) 644 – 645.

[8] Venter v Venter 1949 (1) SA 768 (A) at 784.

[9] 1926 AD 173

[10] At 182-183.

[11] Mokala Beleggings) (Pty) Ltd and another v Minister of Rural Development and Land Reform and others [2012] 3 All SA 130 (SCA).

[12] Edrei Investments 9 Ltd (In liquidation) v Dis-Chem Pharmacies (Pty) Ltd 2012 (2) SA 553 (ECP) at 556 C- D.

[13] Setlogelo v Setlogelo 1914 AD 221 at p 227.

[14] Hotz and others v University of Cape Town 2017 (2) SA 485 (SCA) at 496H-497B.

[15] [1984] ZASCA 51; 1984 (3) SA 623 (A) at 634E-G.

[16] LAWSA, vol 11, para [390].