Lombard Insurance Company Ltd. v City of Cape Town (411/06) [2007] ZASCA 112; [2007] SCA 112 (RSA); [2008] 2 All SA 400 (SCA); 2008 (2) SA 423 (SCA) (21 September 2007)

Lombard Insurance Company Ltd. v City of Cape Town (411/06) [2007] ZASCA 112; [2007] SCA 112 (RSA); [2008] 2 All SA 400 (SCA); 2008 (2) SA 423 (SCA) (21 September 2007)

The Supreme Court of Appeal held that the guarantee issued by the appellant was clear and unambiguous in its terms, covering only the obligations of Labor as a sole contractor and not those of the joint venture. The guarantee defined 'the contractor' as Labor and envisaged that only Labor would complete the works under contract no WW38/99. The contract in question was concluded between CMC and a joint venture, not Labor alone. The intention of the parties to the guarantee did not extend to covering Labor's obligations as a partner in a joint venture. Therefore, the appellant cannot be held liable for the obligations of the joint venture, and the action against the appellant must be...

Citation
[2007] SCA 112 (RSA)
Parties
Appellant: Lombard Insurance Company Limited; Respondent: City of Cape Town
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
21 September 2007
Case Number
411/06
Procedural Posture
Civil Appeal / Appeal From the Cape High Court
Outcome
Appeal upheld; action dismissed with costs.
Judges
Howie, Mthiyane, Cloete, Combrinck, Mhlantla
Legal Topics
Contractual Guarantees, Interpretation of Contracts, Joint Venture Liability
Commercial and Corporate Civil Procedure Contractual Guarantees Interpretation of Contracts Joint Venture Liability

Case Brief

Summary, issues, holding and outcome

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Parties

Lombard Insurance Company Limited

Appellant

City of Cape Town

Respondent

Procedural Posture

Civil Appeal / Appeal From the Cape High Court

Legal Issues

  1. 1 Whether the guarantee issued by the appellant covered the obligations of Labor as a sole contractor or extended to the joint venture.
  2. 2 Whether the appellant is liable under the guarantee when the contract was concluded with a joint venture and not Labor alone.
  3. 3 Whether the intention of the parties to the guarantee included coverage for Labor's obligations as a partner in a joint venture.

Ratio Decidendi

The Supreme Court of Appeal held that the guarantee issued by the appellant was clear and unambiguous in its terms, covering only the obligations of Labor as a sole contractor and not those of the joint venture. The guarantee defined 'the contractor' as Labor and envisaged that only Labor would complete the works under contract no WW38/99. The contract in question was concluded between CMC and a joint venture, not Labor alone. The intention of the parties to the guarantee did not extend to covering Labor's obligations as a partner in a joint venture. Therefore, the appellant cannot be held liable for the obligations of the joint venture, and the action against the appellant must be...

Court Disposition

Appeal upheld; action dismissed with costs.

Orders

  • The appeal is upheld with costs, including the costs consequent upon the employment of two counsel.
  • The order of the court a quo is set aside and substituted with: 'The action is dismissed with costs.'