Court name
High Court of eSwatini
Case number
Civil Case 2233 of 2003

Cargo Carriers Swaziland (Pty) Ltd v USA Distillers (Pty) Ltd (Civil Case 2233 of 2003) [2003] SZHC 120 (16 December 2003);

Law report citations
Media neutral citation
[2003] SZHC 120
Coram
Maphalala, J









1


THE
HIGH COURT OF SWAZILAND


CARGO
CARRIERS SWAZILAND (PTY) LTD


Applicant


And


USA
DISTILLERS (PTY) LIMITED


Respondent


Civil
Case No. 2233/2003


Coram S.B.
MAPHALALA - J


For
the Applicant Advocate J.M. Van Der


Walt
(Instructed by Millin & Currie)


For
the Respondent Mr. Z. Magagula


JUDGMENT


(16/12/2003)


Introduction


This
is an ex parte application for an interdict in securitatem debiti to
restrain the Respondent from dissipating its assets for the purposes
of avoiding due execution of a possible judgment for up to E839,
246-41, which amount the Applicant expects to obtain against the
Respondent in due course.


2


On
the 18th September 2002 the application brought under a certificate
of urgency appeared before me where I issued the following interim
order:


1. That
the Applicant's non-compliance with the rules relating to forms and
service be and hereby is condoned.


2. That
a rule nisi issues, with interim and immediate effect, in the
following terms: Pending the finalisation of action proceedings to be
instituted by the Applicant against the Respondent that;


2.1 The
Respondent be and hereby is interdicted from directly or indirectly
in any manner whatsoever, dealing in any way with, disposing of or
removing from Swaziland any of the assets owned or controlled by it.


2.2 The
Respondent be and hereby is directed to pay the Applicant's costs,
including the costs of counsel as certified in terms of High Court
Rule 68 (2).


2.3 The
Applicant is directed to institute action proceedings against the
Respondent within two weeks of date of this order.


3. That
2.1 operates with full and immediate effect.


4. That
the Applicant be and hereby is directed to serve a copy of the notice
of motion and

order
herein on the Respondent.


5. That
the Respondent be and hereby is called upon to show cause on the 25th
September 2003 why the order in terms of 2.1, 2.2 and 2.3 should not
be made final.


6. Costs
reserved.


The
matter appeared again before me in the contested motion of the 24th
October 2003, for the confirmation of the rule nisi issued on the
18th September 2003.


The
application is founded on the affidavit of one David Thomas Mennie
who is the Operations Manager of the Applicant. Various annexures
pertinent to the application are filed thereto.


The
Respondent opposes the confirmation of the rule nisi and to that end
the answering affidavit of its Operations Director one Luis
Borrageiro is filed of record. Various annexures are filed in support
of the affidavit.


The
Applicant in turn filed a replying affidavit with pertinent
annexures.


3


The
facts.


During
March, 2001 and at Big Bend, Swaziland the Applicant represented by
its authorised representative Mr. David Thomas Mennie and the
Respondent being represented by its authorised representative and
Executive Director Joe Calderia, entered into an oral agreement of
carriage (hereinafter referred to as the "agreement"), the
material terms of which included the following:


7.1 The
Applicant would from time to time and at the specific instance and
request of the Respondent, carry and convey goods in the form of
portable alcohol to destinations stipulated by the Respondent;


7.2 The
Respondent shall pay the Applicant for such services at agreed prices
alternatively at the Applicant's usual price from time to time
further alternatively at reasonable prices.


7.3 The
Respondent shall make payment to the Applicant within 14 days after
date to statement of account. This was, some months later, converted
to a normal 30 days

account
i.e. payment within 30 days of date of account.


According
to the Applicant during the period March 2001, to the 10th September
2003 and in Swaziland and/or the Republic of South Africa the
Applicant, pursuant to the agreement and at the specific instance and
request of the Respondent, on several occasions conveyed goods from
Big Bend to destinations stipulated by the Respondent.


The
Applicant duly rendered a statement of account to the Respondent on
or before the last day of each month in respect of such carriage by
the Applicant.


The
Applicant avers in its founding affidavit that in the premises the
Applicant duly performed all its obligations in terms of the
agreement.


Since
October 2001 the Respondent started to default in payment within 30
days of statement, by only paying after 60 days, and since November
2003, by paying after 190 days or more.


4


Three
of the Respondent's cheques, drawn on the Respondent's Standard bank,
Big Bend branch in favour of the Applicant, and in payment of the
Respondent's obligations to the Applicant, were dishonoured by the
Respondent's bankers endorsed "refer to drawer". The note
by the drawer bank "refer to drawer", means that the
Respondent had insufficient funds with the drawer to meet payment of
the said cheques.


At
paragraphs 13, 13.1, 13.2, 13.3, 14 and 15 the Applicant list the
particulars of the various cheques and the amounts for each payment.


Following
the dishonouring of cheque no. 2677 and on the 23rd August 2003, the
Applicant instructed its Big Bend branch to immediately cease all
services to the Respondent. The Operations Director of the
Respondent, Mr. Borrageiro, then organized a bank guarantee for the
amount of the said cheque, within two hours. This led the Applicant
to suspect that the Respondent's solvency and probity does not bear
close scrutiny.


As
at the 18th September 2003, an amount of E309, 709-78 for services in
July 2003 which was due to be paid at the end of August 2003 by the
Respondent to the Applicant, as well as the sum of E274, 242-08 in
respect of the dishonoured cheque, remain unpaid. This constitute a
current total outstanding overdue balance of E583, 951-81.


On
or about the 4th September 2003, the said Luis Borrageiro as well as
the Respondent's executive Director, Rob Wurdeman, informed the
Applicant the Illovo Group in the Republic of South Africa are busy
negotiating with the Respondent for the sale of the Respondent's
alcohol plant in Big Bend to the best of the Applicant's knowledge,
this Plant constitutes the only significant asset of the Respondent
in Swaziland.


Should
the Respondent's plant be sold to a third party, the Respondent will
no longer have any assets within the Kingdom, thereby making it
impossible to recover any monies in the future.


5


The
Applicant avers that the prospective purchaser is South African, and
there is no guarantee that the purchase price paid would end up
within the jurisdiction of this court, thereby further putting the
Respondent's creditors at risk.


At
paragraphs 24, 24.1, 24.2, 24.3 the Applicant alleges that the
Respondent is now querying its indebtedness to the Applicant.


Most
importantly, on the evening of the 16th September 2003, a person from
Illovo, who understandably does not want to have his identity
disclosed to Mr. Mennie that the proposed sale to Illovo will be
concluded this Friday, the 19th September 2003.


At
paragraph 24.5, 24.5.1, 24.5.2, 24.5.3, 24.5.4, 24.6, 25, 26, 26.1
and 26.2 the Applicant outlines the Respondent's actions in stalling
the Applicant and spinning out payment until the sale to Illovo is
done, and that it has no bona fide defence to the Applicant's claim.
The Respondent has the intention to defeat the Applicant's claim or
render it hollow, by contriving to create the situation where the
Respondent will have no executable assets in Swaziland.


At
paragraph 29 the Applicant avers that it has not only prima facie
rights, but also clear rights inter alia.


29.1 To
be paid for the services rendered by it to the Respondent.


29.2 Payment
of the indisputable claim in respect of the dishonoured cheque which
has not been settled yet, be it by way of provisional sentence
proceedings or otherwise.


29.3 To
execute against the Respondent's assets once it obtains judgement in
the action proceedings.


29.4 That
the Respondent should not dissipate any of its assets to the
prejudice of the Applicant's right to payment.


At
paragraph 30, 31, 32, 33, 34 and 35 the Applicant makes averments to
show actual irreparable harm or a well-grounded apprehension of such
harm.


At
paragraph 36, 37, 38 the Applicant alleges that it has no other
satisfactory remedy.


6


The
Applicant makes averments to show that the balance of convenience is
in its favour at paragraphs 39, 40, 41 and 42.


At
paragraph 42, 43 and 44 the Applicant makes averments on urgency.


The
Respondent has filed an answering affidavit per contra. At paragraph
5.1, 5.2 and 5.3 the Respondent avers that it denies that the
Applicant was entitled to approach this court on an ex

parte
basis, and to, obtain the relief that it has obtained. Where an
Applicant approaches the court on an ex

parte
basis, it must make a full disclosure of all facts and information
that is at its disposal and should not in any way mislead the court
on the factual position regarding the matter.

At
paragraph 6, 6.1, 6.2, 7, 7.1, 7.2, 7.3, 7.4 and 8 of its answering
affidavit the Respondent sought to demonstrate that the Applicant has
made a number of unsubstantiated allegation in its founding affidavit
and has in fact not been candid with the court on a number of
material facts and as such is making an application to the court for
the discharge of the interim order that has been granted in this
matter with the appropriate order as to costs.


The
Respondent avers that the reasons for the delays in the payments and
also for the cheques not being met at the bank were adequately
explained to Mr. Minnie. The Respondent did encounter certain cash
flow problems caused by a refusal by a major debtor to pay its
account, which was in excess of four million emalangeni (E4,
000,000-00) that there are presently legal proceedings between the
Respondent and that debtor in respect of the outstanding amount.


The
Respondent further avers that even if such a sale were to take place,
and in the ordinary course of a commercial transaction of this
magnitude a creditor such as the Applicant would be catered for. In
any event there is no imminent sale as yet. Furthermore, the
Applicant would have a number of remedies available to it.


The
Respondent urged the court to be loath in accepting hearsay evidence
of a person whose identity has not been disclosed. It is not correct
that the sale was due to be concluded on the 19th September 2003, nor
has in fact any sale been concluded. The


7


matter
has not as yet reached the stage wherein it could be described as a
sale, but rather negotiations are still ongoing. From a business
perspective, one would say that the negotiations are still in their
infancy.


The
Respondent avers that the Applicant has not established a clear right
to the relief sought in that it has not demonstrated that there is an
imminent sale or that there is no dispute on the amounts that it says
are due. With respect to the amounts that Respondent concedes are
due, payment will be made no later than the 10th October 2003.


The
Respondent further denies that the Applicant will suffer irreparable
harm and point out that if the Respondent (and if one were to follow
the Applicant's version) were due a sum in excess of one hundred and
forty million Emalangeni) (El40, 000, 000-00); it would allow such a
transaction to be jeopardised by a debt of less than a million
Emalangeni. This would not make business sense and such demonstrates
the

fallacy
of the Applicant's argument.


The
arguments


Both
parties filed very comprehensive Heads of Argument in support of
their positions in this matter.


The
Applicant's case is premised on a dicta in the case of Ericksen
Motors (Welkom) Ltd vs Protea Motors, Warrenton and another 1973 (3)
S.A. 685 (A) which outlines the requirements to be met for the
granting of an interdict in securitatem debiti Holmes J

A
at 691C stated the following, and I quote:


"(The)
granting of an interim interdict pending an action is an extra
ordinary remedy within the discretion of the court".


The
learned Judge then (at 691 D

-
E)
set out the requisites for such interim interdict on the authority of
Setlogelo vs Setlogelo 1914 A.D. 221 at 227 as follows:


"a) A
right which, though prima facie established, is open to some doubt;


8


b) A
well grounded apprehension of irreparable injury, and


c) An
absence of ordinary remedy".


According
to Mcitiki and another vs Maweni 1913 C.

P.
D.
684 at 687 approved by the Full Bench of the South African Appellate
Division in the case of Knox D'arcy Ltd vs Jamieson and others 1996
(4) S.A. 348 (A) it was held that the purpose of the grant of such an
interdict is based on the court's desire that the Plaintiff in an
action for damages should not suffer the injustice of the debtor
being left in possession of sufficient funds to satisfy the claim
when circumstances should either that the debtor was wasting or
dissipating such funds in order to defeat his creditors or that he
was likely to do so and that, although it was not necessary for an
Applicant for such an interdict to show that the Respondent had no
bona fide defence to the claim for damages, an Applicant would have
to show a particular state of mind on the part of the Respondent,
namely that the Respondent was getting rid of the funds, or was
likely to do so, with the intention of defeating the claims of
creditors.


Miss
Van Der Walt for the Applicant attempted to relate the facts of this
matter to the dicta propounded in the above-mentioned legal
authorities.


Mr.
Magagula also filed very comprehensive Heads of Argument au
contraire. He relied heavily on what was enunciated in the case
Pohlman and others vs Van Schalk Wyk and others 2001 (1) S.A. 690
(EC) at 698 G -

I
)
where Froneman J stated the following:


"The
courts have devised at least three different and complementary
safeguards. The first is to be found in the substantive requirements
that must be met before any order is granted. These I have already
referred to in dealing with the facts of this case. These
requirements ensure the interest that an Applicant seeks to protect
is worthy of protection (there must be a proper cause of action) and
that these interest are really under threat (real apprehension of
harm and the like) the second kind of safeguard is aligned with these
aims, namely to ensure that the methods by which the Applicant's
interest are protected are not disproportionate to the interest being
protected". (my emphasis)


9


The
above-cited case dealt extensively with the use of what has become
known as Anton Pillar orders and Mareva injunctions, names that come
from the origins of these kind of orders in English Law.


Mr.
Magagula argued at great length to show that the requirements laid
down in Pohlman and others (supra) have not been met by the Applicant
in casu.


The
court's decision.


I
have read the papers filed in this matter and considered the
arguments advanced for and against the confirmation of the rule nisi
granted by the court on 18th September 2003. There are two issues for
determination in this case. The first issue concerns Applicant's non
disclosure of material facts and the second issue is whether the
Applicant has satisfied the requirement of an interdict in
securitatem debiti laid down in Eriksen Motors (supra) and Pohlman
and others (op cit).


I
shall address these issues ad seriatum: thus; 1. The issue of
non-disclosure.


Having
brought the proceedings ex parte, it is trite law that the applicant
had an obligation to the court to disclose fully the true
circumstances and facts pertaining to the application; Roper J in the
case of De Jager vs Heibrow and others 1947 (2) S.A. 419 (w) said the
following, and I quote:

"It
has been laid down, however, in numerous decisions of our court that
utmost good faith must be observed by litigants making ex parte
applications, and that all material facts must be placed before the
court (see Re: Leysdorp and Pieterburg Estates Ltd 1903 T.S. 254;
Crowley vs Crowley 1919 T.

P.
D.
426). If any order has been made upon an ex parte application, and it
appears that material facts have been kept back which might have
influenced the decision of court whether to make the order or not,
the court has a discretion to set aside the order on the ground of
non-disclosure (Venter vs Van Graan 1929 T.

P.
D.
435; Barclays Bank vs Gilfs 1931 T.

P.
D.
9; Hillman Bros vs Van Den Heuvel 1977 W.

L.
D.
41). It is not necessary that the suppression of the material fact
shall have been wilful or malafide" (my emphasis).


10


Margo
J in the case of Cometal Nometal vs Corlana Enterprises 1981 (2) S.A.
412

expressed
the same sentiments at page 414 (G - H) in the following terms; and I
quote:


"It
seems to me that, among the factors which the court will take into
account in the exercise of its discretion to grant or deny relief to
a litigant who has breached the uberima fides rule, are the extent to
which the rule has been breached, the reasons for the non-disclosure,
the extent to which the court might have been influenced by proper
disclosure in the ex parte application, the consequences, from the
point of doing justice between parties, of denying relief to the
applicant on the ex parte order, and the interest of innocent third
parties, such as minor children, for whom protection was sought in
the ex parte application".


Further,
authority can be found in the following: Herbstein et al The Civil
Practice of the Supreme Court of South Africa (4th ED) at 367; Nathan
Burnett and Brink, Uniform Rules of Court, 1977 (2nd ED) at page 58;
Spieg vs Walker 1947 (3) S.A. 499 and Stanley Matsebula vs Aaron
Mavimbela Civil Appeal No. 54/1999. that if there are any material
facts that might have influenced the court's decision and such facts
are wilfully, negligently or in bad faith withheld, the court will as
a rule set aside or rescind its earlier order.


In
casu, it is my considered view, that on reading Applicant's founding
affidavit and the Respondent's answering affidavit it became apparent
that the Applicant has failed to make a full and frank disclosure of
all the relevant facts which were within its knowledge at the time
the application was launched on the 18th September 2003. At page 33
of the Book of Pleadings in the answering affidavit at paragraph 6
the following appears.


"I
am advised and humbly submit that for purposes of disclosure it is
necessary that I set out certain material facts which are known to
the Applicant but which have not been disclosed in Minnie's founding
affidavit and have not been put before court.


6.1 It
is correct that the Applicant and the Respondent have an agreement in
terms of which the former transports alcohol to various destinations
in the Republic of South Africa. The primary destination is Durban.
The Respondent pays for such service.


11


6.2 There
are however, instances wherein the Applicant collects alcohol on
behalf of third parties and the transport costs of such transactions
are borne by the third party. For example, the Applicant collects
alcohol on behalf of Kango Co-operative in the Eastern Cape. Some of
the invoices that have now been allocated to the Respondent are in
fact for the account of Kango. Details of these invoices will be set
out below".


Further
at paragraph 7.4 of the Respondent's answering affidavit the
following appears:


"Furthermore,
it is correct that I have personally advised Mr. Minnie about
negotiations relating to the possible sale and in so far as that is
concerned, believe that we have conducted ourselves above board with
respect to informing our creditors. It is important to put on record
that the Applicant came to know about the sale negotiations as a
result of information that has been freely and voluntarily given to
them by myself. Applicant did not stumble on these facts. If there
had been an intention to conceal this information or prejudice the
Applicant then I would not have made this disclosure.


Yet
the Applicant avers at paragraph 24.4 of its founding affidavit as
follows:

"Most
importantly, on the evening of the 16th September 2003, a person from
Illovo, who understandably does not want to have his identity
disclosed, to me that the proposed sale to Illovo will be concluded
this Friday the 19th September 2003".


It
would appear to me that from the above mentioned excerpts the
Applicant had been appraised by the Respondent as to the nature of
the negotiations taking place.


On
the basis of the authorities I have cited above the rule nisi issued
in this matter ought to be discharged, however for the sake of
completeness I shall proceed to consider the other outstanding issue
viz, whether the Applicant has satisfied the requirements of an
interdict in securitatem debiti.


2. Whether
the Applicant has satisfied the requirement of the interdict.

On
the basis of the evidence presented before me on affidavits it
appears to me that the method of protection in casu is
disproportionate to the Applicant's interest allegedly being
protected. The debt being protected is less than El million yet the


12


Manufacturing
Plant which is the subject matter of the rule nisi issued by this
court is in excess of El40 million Emalangeni in value. Further on
this point the Plant, which will remain intact in Swaziland, cannot
be removed overnight. I find on this point that the requirements
enunciated in Pohlman and others (supra) have not been met. If the
Respondent were due a sum in excess of one hundred and forty million
Emalangeni (E140, 000,000-00) it would not make any business sense to
allow such a transaction to be jeopardised by a debt of less than a
million Emalangeni.


Furthermore,
it has not been shown that the Respondent is dissipating its assets,
that it is wilfully scattering or consuming or squandering its
assets. It has not been shown that the Respondent intended to make
away with its assets in order to defeat the Applicant's claim.


All
in all I agree with the submissions made by Mr. Magagula for the
Respondent that the Applicant has failed to meet the requirements in
Pohlman (supra) and therefore, the rule nisi issued by the court on
the 18th September 2003 is accordingly discharged.


The
costs to follow the event.


S.B.
MAPHALALA


Judge