Phenix Construction Technologies (Pty) Ltd and Another v Hollard Insurance Company Limited (10995/2015) [2017] ZAGPJHC 174 (4 May 2017)

Parties

Procedural Posture

Civil Application / Judgment After Referral for Oral Evidence on Fraud

Legal Issues

1. 1 Whether the demand for payment under the guarantee was fraudulent.
2. 2 Whether Hollard is excused from payment under the guarantee due to fraud.
3. 3 Whether the recoupment reflected in payment advice no 7 related to the guaranteed advance payment.

Ratio Decidendi

The court found that the demand made by Phenix for payment under the guarantee was fraudulent. Payment advice no 7 and the recovery statement, both signed by Phenix's director, certified a recoupment of R3.4 million against the advance payment, reducing the amount that could be claimed under the guarantee. Phenix failed to call its director to testify and relied on evidence from an employee who was not the author of the relevant documents and whose testimony was inadmissible and not credible. The court held that Phenix knew it was not entitled to the full guaranteed amount when making the demand, and that the demand was made with fraudulent intent. The alternative interpretation advanced...

Court Disposition

Application dismissed with costs, including costs of two counsel for the respondent and costs reserved from the previous order.

Orders

• The applicants’ application is dismissed with costs, including the costs reserved in paragraph 36.8 of the Order granted on 10 December 2015 and includes the costs of two counsel in respect of the respondent.
• The applicants are directed to pay the Respondent’s and the Third Parties’ costs incurred in the application, jointly and severally, the one paying the other to be absolved.