Scate Solar SA 163 (Pty) Ltd and Another v Terrafix Suedafrika (Pty) Ltd and Another (499/2014) [2014] ZAWCHC 24 (5 March 2014)

Scate Solar SA 163 (Pty) Ltd and Another v Terrafix Suedafrika (Pty) Ltd and Another (499/2014) [2014] ZAWCHC 24 (5 March 2014)

The court found that the probabilities regarding fraud in Terrafix's certification of demands under the letters of credit are evenly balanced and the issue remains open. Terrafix failed to provide cogent evidence of Reisch's state of mind when certifying the demands, and the applicants established a prima facie right to interim relief. The material non-disclosure of insolvency proceedings by Terrafix further justified apprehension of irreparable harm. Accordingly, the matter was referred to oral evidence, specifically for the cross-examination of Reisch on the fraud issue, and interim interdictory relief was extended pending final determination.

Citation
[2014] ZAWCHC 24
Parties
Applicant: Scatec Solar SA 163 (Pty) Ltd; Applicant: Itochu Corporation; Respondent: Terrafix Suedafrika (Pty) Ltd; Respondent: HSBC Bank PLC
Court
Western Cape High Court, Cape Town
Jurisdiction
South Africa
Judgment Date
5 March 2014
Case Number
499/2014
Procedural Posture
Urgent Application / Interlocutory Application for Interim and Final Interdictory Relief Pending Arbitration; Referral to Oral Evidence Ordered
Outcome
Application for interim interdictory relief granted; matter referred to oral evidence on the fraud issue; costs reserved.
Judges
J Cloete
Legal Topics
Letters of Credit, Fraud Exception, Interim Interdict, Referral to Oral Evidence, Balance of Convenience
Commercial and Corporate Civil Procedure Letters of Credit Fraud Exception Interim Interdict Referral to Oral Evidence Balance of Convenience

Case Brief

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Parties

Scatec Solar SA 163 (Pty) Ltd

Applicant

Itochu Corporation

Applicant

Terrafix Suedafrika (Pty) Ltd

Respondent

HSBC Bank PLC

Respondent

Procedural Posture

Urgent Application / Interlocutory Application for Interim and Final Interdictory Relief Pending Arbitration; Referral to Oral Evidence Ordered

Legal Issues

  1. 1 Whether Terrafix, through its representative Reisch, acted fraudulently in certifying demands for payment under the letters of credit.
  2. 2 Whether the application for interdictory relief should be dismissed on the papers alone or referred to oral evidence.
  3. 3 Whether the applicants have established a prima facie right to interim interdictory relief pending determination of the fraud issue.

Ratio Decidendi

The court found that the probabilities regarding fraud in Terrafix's certification of demands under the letters of credit are evenly balanced and the issue remains open. Terrafix failed to provide cogent evidence of Reisch's state of mind when certifying the demands, and the applicants established a prima facie right to interim relief. The material non-disclosure of insolvency proceedings by Terrafix further justified apprehension of irreparable harm. Accordingly, the matter was referred to oral evidence, specifically for the cross-examination of Reisch on the fraud issue, and interim interdictory relief was extended pending final determination.

Court Disposition

Application for interim interdictory relief granted; matter referred to oral evidence on the fraud issue; costs reserved.

Orders

  • Relief sought at prayers 2 and 3 of the applicants' amended notice of motion is postponed for determination at the hearing.
  • Stephan Reisch is ordered to appear personally on the postponed date to be cross-examined on the issue of whether the first respondent's written demands for payment made on Sumitomo Mitsui Banking Corporation of Japan pursuant to Irrevocable Standby Letters of Credit numbered 211LCJ-62055053 and 211LCJ-62055054 are...