Scatec Solar SA 163 (Pty) Ltd and Another v Terrafix Suedafrika (Pty) Ltd and Another (499/2014) [2014] ZAWCHC 63 (25 April 2014)

Scatec Solar SA 163 (Pty) Ltd and Another v Terrafix Suedafrika (Pty) Ltd and Another (499/2014) [2014] ZAWCHC 63 (25 April 2014)

The court found that, although Reisch made misrepresentations when certifying that payment milestones had been achieved under the Linde letter of credit, the applicants failed to prove on a balance of probabilities that such misrepresentations were fraudulent. The evidence showed that Reisch relied on information from project staff and believed, based on communications and conduct between the parties, that there was an agreement to deviate from the strict milestone schedule due to site conditions. The court held that carelessness or negligence does not equate to intentional fraud or fraudulent diligence in ignorance. In respect of both the Linde and Dreunberg letters of credit, the...

Citation
[2014] ZAWCHC 63
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
25 April 2014
Case Number
499/2014
Procedural Posture
Civil Application / Judgment After Oral Evidence
Outcome
Application dismissed with costs.
Judges
J Cloete
Legal Topics
Standby Letter of Credit, Fraud in Commercial Transactions, Interim Interdict, Misrepresentation, Onus of Proof
Commercial and Corporate Civil Procedure Standby Letter of Credit Fraud in Commercial Transactions Interim Interdict Misrepresentation Onus of Proof

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

Civil Application / Judgment After Oral Evidence

Legal Issues

  1. 1 Whether Terrafix, through its director Reisch, made intentional misrepresentations when certifying payment milestones under the standby letters of credit.
  2. 2 Whether such misrepresentations, if made, constituted fraud sufficient to invalidate the demands under the letters of credit.
  3. 3 Whether the applicants discharged the onus to establish fraud on a balance of probabilities.

Ratio Decidendi

The court found that, although Reisch made misrepresentations when certifying that payment milestones had been achieved under the Linde letter of credit, the applicants failed to prove on a balance of probabilities that such misrepresentations were fraudulent. The evidence showed that Reisch relied on information from project staff and believed, based on communications and conduct between the parties, that there was an agreement to deviate from the strict milestone schedule due to site conditions. The court held that carelessness or negligence does not equate to intentional fraud or fraudulent diligence in ignorance. In respect of both the Linde and Dreunberg letters of credit, the...

Court Disposition

Application dismissed with costs.

Orders

  • The application is dismissed with costs, including all reserved costs orders and the costs of two counsel where employed.