Schoeman and Others v Lombard Insurance Company Limited (1299/2017) [2019] ZASCA 66; 2019 (5) SA 557 (SCA) (29 May 2019)

Schoeman and Others v Lombard Insurance Company Limited (1299/2017) [2019] ZASCA 66; 2019 (5) SA 557 (SCA) (29 May 2019)

The Supreme Court of Appeal held that the requirement in the demand guarantee for the demand to be made at the beneficiary's address was directory and not mandatory. The effective presentation and receipt of the demand at the guarantor's address sufficed to trigger Lombard Insurance's obligation to pay. The court found that the appellants' interpretation of the premium clause was untenable, as the facility distinguished between guarantee fees and minimum premiums, and the parties had acted in accordance with the higher periodic premium payments. Consequently, the demands were valid, and the appellants were liable for the amounts claimed, including the full premium.

Citation
[2019] ZASCA 66
Parties
Appellant: Alida Schoeman; Appellant: Cornelius Jacobus Schoeman; Appellant: Alida Schoeman NO; Appellant: Claude Stanley Barnes NO; Respondent: Lombard Insurance Company Limited
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
29 May 2019
Case Number
1299/2017
Procedural Posture
Civil Appeal / Appeal From Gauteng Division of the High Court, Johannesburg
Outcome
Appeal dismissed with costs.
Judges
Tshiqi, Swain, Mathopo, Makgoka, Plasket
Legal Topics
Demand Guarantee, Suretyship Liability, Contractual Interpretation, Premium Calculation
Commercial and Corporate Civil Procedure Demand Guarantee Suretyship Liability Contractual Interpretation Premium Calculation

Case Brief

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Parties

Alida Schoeman

Appellant

Cornelius Jacobus Schoeman

Appellant

Alida Schoeman NO

Appellant

Claude Stanley Barnes NO

Appellant

Lombard Insurance Company Limited

Respondent

Procedural Posture

Civil Appeal / Appeal From Gauteng Division of the High Court, Johannesburg

Legal Issues

  1. 1 Whether the demands for payment made by Sasol to Lombard Insurance complied with the terms of the demand guarantee.
  2. 2 Whether the requirement that the demand be made at the beneficiary's address is mandatory or directory.
  3. 3 Whether the appellants are liable for the full premium claimed or only the minimum premium stipulated in the facility.

Ratio Decidendi

The Supreme Court of Appeal held that the requirement in the demand guarantee for the demand to be made at the beneficiary's address was directory and not mandatory. The effective presentation and receipt of the demand at the guarantor's address sufficed to trigger Lombard Insurance's obligation to pay. The court found that the appellants' interpretation of the premium clause was untenable, as the facility distinguished between guarantee fees and minimum premiums, and the parties had acted in accordance with the higher periodic premium payments. Consequently, the demands were valid, and the appellants were liable for the amounts claimed, including the full premium.

Court Disposition

Appeal dismissed with costs.

Orders

  • The appeal is dismissed with costs.