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Spectra Botswana (Pty) Ltd v First National Bank of Botswana Ltd (Civil Appeal No. 17 of 1994) [1995] BWCA 20; [1995] B.L.R. 210 (CA) (31 January 1995)

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IN THE COURT OF APPEAL OF BOTSWANA HELD AT LOBATSE
CIVIL APPEAL NO. 17 OF 1994 HIGH COURT MISCELLANEOUS CASE NO. 266/93
In the matter between:
SPECTRA BOTSWANA [PTY] LTD       Appellant
and
FIRST NATIONAL BANK OF BOTSWANA LTD      1st Respondent
BOTSWANA HOUSING CORPORATION     2nd Respondent
Mr. Advocate W.H. Klevansky S.C. for the Appellant
Mr. Advocate S. Du Toit S.C and Mr. Advocate Dr. H. Lever [with
them Mr. M. Dibotelo] for 2nd Respondent
JUDGMENT
CORAM;   T.A. AGUDA J.A.
LORD N. WYLIE J.A. P.H. TEBBUTT J.A.
TEBBUTT J.A.;
The refusal of the High Court to grant an interdict restraining the first respondent, to whom I shall refer as the Bank, from paying to the second respondent, to whom I shall refer as B.H.C., an amount of P5, 3 00, 000 has led the appellant, to whom I shall refer as Spectra, to come to this Court in an appeal against that refusal.
The background to this appeal is the following: On 12 December, 1991, B.H.C. entered into a written agreement with Spectra under which Spectra was to carry out the design, supervision and construction of B.H.C.'s head office complex at Gaborone. The agreement provided that -

2
"the contract shall be on a fixed price basis of P53,000,000 being a lump sum price
It is common cause that Spectra was required to provide a
"deed of suretyship" in the sum of 10% of the overall fixed
contract price i.e. of P5,3 million in one or other of several
forms, including a "bond" by a "Bank duly empowered." In
pursuance of this requirement, the Bank on 26 June, 1992
furnished a guarantee in which the bank advised B.H.C. and
Spectra
"that we hold at your disposal the sum of P5,300.000.00 being 10% of the contract sum for the due fulfilment of the contract."
The document went on to read as follows:-
"We hereby renounce the benefits of the exceptions non numeratae pecuniae, non causa debiti; excussionis et divisionis with the meaning and effect whereof we declare ourselves to be conversant, and undertake to pay you the said amount of P5,300,000.00 on receipt of a written demand from you to do so and which demand may be made by you if [in your opinion and sole discretion] the said contractor fails or neglects to commence with the works on the date prescribed in the Contract, or if he fails to proceed therewith or if he for any reason fails or neglects to complete the service in accordance with the terms and conditions of the Contract or the insolvency laws in force within Botswana. Subject to the above, but without in any way detracting from your right to adopt any of the procedures provided for in the Contract, the said demand can be made by you at any stage."
Spectra commenced its operations and within a month
payments were made to it totalling P12 million, purportedly in
terms of the agreement. Early in 1992, the general manager of
B.H.C, one Letsholo, was killed in a motor accident and the
board of B.H.C. was reconstituted. On 4 June, 1992 the acting
general manager of B.H.C, one Busang, wrote to Spectra. That
letter is important and reads thus:-

3
"The reconstituted Corporation considered the purported agreement between the Corporation and yourself in regard to the design and erection of a building on Lot 507762, portion of Lot 1, situated in the Gaborone Administration District.
The Corporation has been advised that the project in question is ultra vires its functions as set out in Chapter 74:08 being the Act establishing the Corporation, and that the Corporation was not able lawfully to enter into a contract in respect of that project. The purported contract was therefore invalid and is without any force and effect.
Certain advance payments amounting to P12 Million [Twelve Million Pula] were paid to you. The Corporation requires repayment of that amount forthwith.
Alternatively to the above and only in the event that it be held that a valid and enforceable contract was lawfully entered into by the Corporation, the Corporation exercises its right of cancellation and hereby cancels the aforesaid contract in terms of Clause 47 of the standard conditions of contract of the Corporation. A "bribe, gift, loan or advantage" was "given or offered" by you or on your behalf to Mr. M TSHIPINARE, the former Assistant Minister of Local Government, Lands and Housing in relation to the obtaining of the contract by yourselves."
On the same day Busang wrote to the Bank as follows:-
"We refer to your guarantee No. 47/91 dated 19th February 1992.
In terms thereof, we hereby demand payment of P5,3 Million thereunder.
We enclose a copy of a letter addressed to SPECTRA BOTSWANA [PTY] LIMITED for your information."
The enclosed copy was that of the letter of 4 June 1992 that I have quoted above.
It remains only to add to the above recital of background facts that there is an action pending in which B.H.C. is claiming repayment from Spectra of the amount of P12 million paid to it by B.H.C. and that by September, 1992, all work by Spectra on the site had ceased and all equipment and plant had been removed

4 from the site. The work that had been done by June, 1992, according to an affidavit filed on behalf of B.H.C. by one Kille, a chartered quantity surveyor, was an excavation of about 40 000 cubic metres, part of which has been concreted, the value of which he estimated at no more than PI,969,270.00.
It is common cause that pursuant to B.H.C.'s demand for payment, the Bank was prepared to pay. Spectra thereupon, on 27 August, 1992, launched an urgent application for a final interdict restraining the Bank from making any payment under the guarantee to B.H.C. or, alternatively, for a temporary interdict against the Bank restraining it from making such payment pending an action by applicant that the Bank not pay the amount of the guarantee to B.H.C.
Horwitz J. refused the application, with costs.
Before Horwitz J. . the argument centred around whether the deed of suretyship was a mere suretyship or an independent guarantee. The learned Judge came to the conclusion that the deed created an independent guarantee and was an unconditional promise to pay. That being so, according to the learned Judge, the Bank was obliged to pay on B.H.C.'s demand unless it was fraudulently made and as, in his view, B.H.C. was entitled to cancel the agreement in terms of clause 47, there was no fraud on the part of B.H.C. Spectra therefore had no right to an order interdicting the Bank from making payment to B.H.C. The application for both a final and a temporary interdict was therfore refused.
When the appeal was heard by this Court, Mr. Klevansky for the appellant did not press for a final interdict but

5 confined his attack on the judgment of the Court a quo to its failure to grant the appellant a temporary interdict.
Before considering whether the learned Judge in the Court a quo was correct or not in refusing a temporary interdict, it is well to remind oneself of the requisites of such an interdict. An interdict in the South African legal context has been described as "an unusual, extraordinary and discretionary remedy". It is not available to a litigant who is possessed of another or alternative remedy [see Prest: Interlocutory Interdicts p 4 and cases there cited; ERIKSEN MOTORS [WELKOM] LTD. V PROTEA MOTORS, WARRENTON AND ANOTHER 1973 [31 S.A. 685 [A] AT 691 CI. The requisites for an interim interdict are in general [a] a right which, though prima facie established, is open to some doubt; [b] a well grounded apprehension of irreparable injury; [c] the absence of ordinary remedy [see SETLOGELO V SETLOGELO 1914 AD 221 AT 227; ERIKSEN MOTORS CASE. SUPRA, AT 691 D-E.
In regard to a temporary interdict, Corbett J.. as he then
was, in LF BOSHOFF INVESTMENTS [PTYl LTD V CAPE TOWN
MUNICIPALITY: CAPE TOWN MUNICIPALITY V LF BOSHOFF INVESTMENTS
[PTY] LTD 1969 [21 S.A. 256 [CI AT 267 set out in somewhat more
detail the requisites in the following terms:-
"Briefly these requisites are that the applicant for such temporary relief must show
[a]    
that the right which is the subject-matter of the main action and which he seeks to protect by means of interim relief is clear or, if not clear, is prima facie established though open to some doubt;
[b]    
that, if the right is only prima facie established, there is a well grounded apprehension of irreparable harm to the

6
applicant if the interim relief is not granted and he ultimately succeeds in establishing his right;
 [c]    
that the balance of convenience favours the granting of interim relief, and
 [d]     that the applicant has no other satisfactory remedy."
The law in Botswana is the same as in South Africa [see
MAKOLABA V NWAKA AND ANOTHER 1968 BLR 25: MOISAKAMO V MOISAKAMO
1979 BLR 131; PLUMSTEAD FURNISHERS CPTYl LTD V MODERN HOME tPTYl
LTD 1983 BLR 122 AT 124 C-Dl
The onus rests on the applicant for a temporary interdict to show that the requisite requirements have been met.
Has the appellant, i.e. Spectra, done so in casu? B.H.C. contended that Spectra had not established even the first of the requirements. The right, so the argument went, was one to interfere in the contractual relations between the Bank and B.H.C. Spectra had not shown from the terms of that contract that it was entitled to prevent the Bank from paying if the Bank deemed fit. Spectra countered by saying that it had established at least a prima facie right. Apart from its right based on the guarantee, it contended that the Bank, if it paid B.H.C. the P5,3 million, could debit its, Spectra's, account with the Bank with the P5,3 million. Its right to a temporary interdict was also a right to prevent that occurring.
The issue of Spectra's right gave rise to much debate by Counsel on whether the document which the Bank supplied to Spectra and B.H.C. constituted a suretyship or a performance guarantee i.e. a primary obligation on the part of the Bank to pay on the happening of an event viz the demand by B.H.C. which

7 it could make in its opinion and sole discretion if Spectra had, to put it in summary, failed and neglected to perform its obligations under the agreement.
The Court, so it was argued, could not go behind the demand unless Spectra could establish that it was fraudulently made, and also to the Bank's knowledge.
Spectra contested that the Court could not go behind the demand but submitted that in any event the facts established that B.H.C. had been mala fide and fraudulent in making its demand for payment and that the Bank, who had been sent a copy of B.H.C.'s letter of 4 June, 1992 to Spectra, thereby knew of such mala fides and fraud.
Interesting though these questions - and the full and able arguments of counsel in regard to them - are, in the light of the view which this Court takes of the interdict issue, it is not necessary for the Court to express any opinion, or make any finding, in respect of them. Indeed, because of any future action which Spectra may or may not be advised to take with regard to the payment, it would, in my opinion, be inadvisable for the Court to do so. Nor is it necessary or advisable for the Court to make any finding in so far as Spectra's claim to a prima facie right to seek an interdict based on the debiting of its account, is concerned.
I shall accordingly assume, without so finding, that in respect of the first requirement, Spectra has a right which is not clear but is prima facie established, though open to some doubt or that, as explained by Lord Diplock in AMERICAN CYNAMID CO. V ETHICON LTD [19751 ALL E.R. 504 [H.L] , he has a good

8 arguable claim to the right he seeks to protect
What, however, of the other requirements? Counsel for B.H.C. submitted that the Court should find that Spectra was not entitled to a temporary interdict in that it had not satisfied those requirements. It had not, so went the submission, established, as the onus rested on it to do, that it would suffer irreparable injury were the interdict not granted and that it had no other satisfactory remedy. The balance of convenience, too, lay with B.H.C. and favoured a refusal of the interdict.
It is correct that the onus to establish irreparable harm
lies on the appellant for an interdict. However, the acceptable
approach to all the requisites appears to be not to consider each
one in isolation but to view them on an inter-related basis [see
ERIKSEN MOTORS CASE. SUPRA AT 691 E-G; Prest op cit p 701. That
does not relieve the applicant from setting out fully the facts
on which he relies for his averment that he will suffer
irreparable harm. As Prest points out at page 72:-
"It is of considerable importance that the matter of irreparable harm be carefully dealt with in the papers
before the Court         It is not sufficient for an
applicant merely to allege that he fears that, unless an interdict is granted, he will suffer irreparable loss."
The founding affidavit in support of Spectra's application
and the affidavit in reply to B.H.C.'s opposing affidavits were
made by one Gordon Utian, a director of Spectra Trading [Pty]
Ltd., the holding share-holder of Spectra. He averred that
Spectra would suffer -
"considerable and irreparable harm, as payment will be made under the guarantee by the first respondent [the Bank] to second respondent [BHC] and first respondent will then immediately debit applicant's [Spectra's] current account with [the Bank] in the amount paid

9
under the guarantee i.e. P5,3 million"
If that occurred, so Utian averred
"applicant will not be able to pay sub-contractors employed on the project, or to pay wages or to discharge any of the obligations and liabilities incurred by it in relation to the contract."
Apart from repeating that Spectra would suffer irreparable
harm no further facts were alleged in the founding affidavit.
Nor in his replying affidavit did Utian add to what he said
would happen were Spectra's account to be debited with the P5,3
million, save to say that
"this would almost certainly lead to the liquidation of applicant, as applicant would be unable to pay its debts"
In my opinion these are bald allegations which do not
suffice to discharge the onus on Spectra to have satisfied the
Court that it would suffer irreparable harm if the interdict were
not granted. Utian does not say what sub-contractors would have
to be paid; to what employees, in respect of the contract with
B.H.C., Spectra would have to pay wages, and what obligations and
liabilities, in relation to the contract with B.H.C., it would
have to discharge. In my opinion these defects are fatal.
Utian's founding affidavit was sworn to on 25 August, 1992, and
his affidavit in reply to B.H.C.'s opposition on 7 April, 1993.
According to Kille, all work on the site had stopped by about
July, 1992 and certainly by September 1992, by which time, too,
all equipment and plant had been removed from the site. Utian
does not deny that. He said that Spectra had not performed
further work on the site because B.H.C. had not complied with its
obligations under the contract. In the absence of any detail as
to the sub-contractors, employees and obligations requiring

10 payment, it is clear that no such payments were necessary after September, 1992. Kille calculated the value of the work up to then at Pi, 969,270, which calculations, he said, were on the generous side. Utian has not dealt with these averments by Kille. All he has said in reply to them is that he had been advised not to deal with them "as they are entirely irrelevant in the present proceedings". In my opinion, on the contrary, there are highly relevant. It is undisputed that by June 1992 Spectra had already been paid an amount of P12 million by B.H.C. Utian has attached to his replying affidavit a document listing "all the costs incurred on the above contract up to and including 4th August, 1992" totalling P4,644,598.88 and a list of expenses "we expect to pay out during August and later" totalling P3,963,854.84.
The costs "incurred" up to and including 4 August 1992 are obviously those up to the time when work on the site stopped. Kille had observed that the work had stopped in July and certainly by September, an observation which is borne out by Utian's lists, the list of expenses after August including an amount of P50,000 for "site de-establishment". Utian gives no explanation as to why any amounts had to be paid after the work had stopped in August, 1992. In any event, apart from listing the costs incurred up to August, 1992 [which by his use of the word "incurred" apparently implies that they have been paid] he does not say whether any of these have been recovered from B.H.C, nor, as I have said, does he deal with Kille's averment that such costs would have been just under P2 million and not over P4,6 million as he says they were. In any event, if Spectra

11 has paid these amounts it obviously has a claim for them against B.H.C. No evidence has been advanced as to why such a claim has not been pursued. Be that as it may, it is in my view clear from these facts that Spectra will not suffer irreparable harm if its account were debited with P5,3 million. If its claims for P4,644,598 and P3,96,854 are valid, these will, on recovery of them, offset any debit which might reduce by P5,3 million the P12 million which Spectra received early in 1992. There is no vestige of evidence to suggest that Spectra is not still in possession of it. If only P4,644,598 has been paid, an adequate balance would remain to meet any debit of P5,3 million and even if the total of the amounts listed i.e. P8,608,453,72 is deducted, the balance remaining, although it would not completely cover the debit of P5,3 million would not leave such a deficit as would be likely to plunge Spectra into insolvency, particularly in the light of its claims for the amounts listed against B.H.C. if they were incurred on the contract with the latter. I find, therefore that Spectra has not established that it will suffer irreparable harm.
Inter-related therewith is the fact that Spectra, in my judgment, has alternative remedies. If, as it avers, B.H.C. made its demand to the Bank wrongly and male fide and the Bank has since debited Spectra's account - a circumstance which seems likely as the Court was informed from the Bar that the Bank has in fact made payment of the P5,3 million to B.H.C. - Spectra would clearly have a right to claim from B.H.C. not only the P5,3 million but any damages it may have suffered. Similarly if, as it appears to aver, the Bank knowingly wrongly paid on the

12 guarantee, an action for damages may lie against the Bank. There is no suggestion that either the Bank, which is one of the leading Banks not only in Botswana but also in South Africa, or B.H.C., which, according to the papers, has fixed assets in the region of P635 million, would be unable to satisfy any judgment against either of them. There was, therefore, in my opinion, no "absence of ordinary remedy" or "no other satisfactory remedy" available to Spectra.
Spectra, therefore, failed to satisfy two of the requirements for a temporary interdict. It, therefore, is really unnecessary to consider the balance of convenience. A temporary interdict is, it must be remembered, a discretionary remedy, [see ERIKSEN MOTORS CASE, SUPRA, AT 691] and while the exercise of that discretion often turns on the balance of convenience, the court will exercise its discretion on a consideration of all the circumstance of the case. In the present case, as I am of the view that Spectra did not show that it would suffer irreparable harm if a temporary interdict were not granted in its favour and as it has satisfactory alternative remedies, the Court a quo would have been correct in refusing to exercise its discretion in favour of granting it an interdict, even of only a temporary nature.
I am therefore of the view, albeit for different reasons, that the Court a quo correctly refused Spectra's application. The appeal is therefore dismissed with costs, such costs to include the costs of two counsel.

13 DELIVERED IN OPEN COURT AT LOBATSE THIS 31ST OF JANUARY, 1995


\

P.H. TEBBUTT JUDGE OF APPEAL

I agree
T- A. AGUDA JUDGE OF APPEAL



I agree
LORD N. WYLIE JUDGE OF APPEAL

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