Last week in commercial law: not in the business of error correction, a half-built trailer, and a Prince joke

Dines Gihwala and Karim Mawji met over golf in Portugal. Golf was enjoyed. A friendship blossomed. Business was done. Then everything fell apart and they spent almost 20 years litigating up and down the country. The SCA previously found that Mr Gihwala got up to all sorts of shenanigans, including treating Mr Mawji’s money (through Grancy, his investment vehicle) as Mr Gihwala’s “personal piggy bank”. Mr Gihwala denies that one of the dodgy investments, called the Cape Gannet investment, amounts to a secret profit. For another, called the Scharrig investment, Mr Gihwala argues that the in duplum rule applies to Grancy’s claim for an account. The SCA agrees with Mr Gihwala on both points. Constitutional Court [making its debut in this newsletter]: Grancy’s appeal on the secret profit issue and the in duplum issue amounts to a complaint that the SCA misapplied settled law, which does not engage the Court’s jurisdiction [or as the American say, an apex court is not an error-correction court]. Grancy also argues that the in duplum rule should be developed so that it does not apply to a statement and debatement of an account. Constitutional Court: Grancy never pleaded a development of the common law along those lines in the High Court, and the Court operates best as a court of review, not first view (and that aside, there are no good reasons for developing the in duplum rule for this type of claim).

And in related fiduciary duty news, the Court of Appeal finds that there is no independent fiduciary duty of disclosure under English law.

A company went into business rescue and post-commencement creditors were allowed to vote on the business rescue plan [let your summarist’s attention to facts never be doubted]. Constitutional Court: the Companies Act doesn’t define “creditor” but our diligent parliamentarians don’t write laws on a clean slate and the established meaning of creditor excludes post-commencement creditors [plus a scolding for the SCA for not doing more comparative law, with a Cook’s tour of restructuring in the United States, Japan, Singapore, India, and the United Kingdom].

Crossmoor ordered three trailers from Ilcor. The contracts say that Crossmoor must pay deposits before Ilcor starts building the trailers. Ilcor, being a diligent trailer builder, starts building the trailers before Crossmoor pays the deposits. Crossmoor has still not paid the deposits by the time Ilcor has built two trailers and started building the third. Ilcor cancels the contracts [your summarist laments that courts continue to say parties “accept” repudiation despite the SCA saying we shouldn’t use that English way of speaking]. Ilcor sells one of the trailers to mitigate its damages. Ilcor sues Crossmoor for the price of the other already-built trailer and for the costs it incurred building the half-built trailer and its lost profit on the sale of that trailer [it is unclear to your summarist why Ilcor would have a claim for damages for both its manufacture costs and its lost profit]. Crossmoor argues that Ilcor should not have started manufacturing until Crossmoor paid the deposit. SCA: the clause in the contracts about the deposit is for Ilcor’s benefit, so Ilcor was entitled to start building before Crossmoor paid (and the clause cannot be interpreted to be a suspensive condition) [a bonus question is whether, under South African law, Ilcor would be entitled to ignore Crossmoor’s repudiation, push on with building the third trailer, and then sue for specific performance—continuing to build the trailer is wasteful if Crossmoor doesn’t want it, so maybe the law should effectively leave Ilcor with just one option: stop work, terminate the contract, and sue for damages, which can happen in English law under an exception recognised in White & Carter, but which seems to have been rejected as a matter of Roman-Dutch law, based on a journal article by the great Peet Nienaber, in Unibank Savings and Loans Limited v Absa Bank Limited2000 (4) SA 191 (W) at para 14.2].

Habib Overseas Bank loans money to Crestar. Mr Omar and Ghousbibi Arifullah CC stand surety [what did your summarist tell you about suretyships?]. Mr Omar and Ghousbibi Arifullah have bank accounts with the Bank. Crestar defaults on its loan and the Bank looks to Mr Omar and Ghousbibi Arifullah as sureties. They say death comes in threes: Mr Omar dies, Crestar is liquidated, and the Bank is placed under curatorship. Mr Omar’s executor and Ghousbibi Arifullah argue that before the Bank went into curatorship, set off operated: they owed the bank and the bank owed them [which, your summarist notes, is all that a positive bank balance means—the bank owes you money, represented by electronic entries in some computer system—despite historical depictions to the contrary]. SCA: under common law, set off happens automatically unless the parties agree otherwise, and nothing in the bank’s terms says otherwise (except for one of Ghousbibi Arifullah’s accounts because the terms of that account precludes set off) [and, incidentally, your summarist’s controversial legal writing take for the week is that “terms” of a contract is singular, not plural, because we are talking about a single set of terms—so terms precludes, not terms preclude].

Purple Rain Properties sold a car to Ms Dean [your summarist laments the judicial attachment to “vehicle”]. Purple Rain Properties didn’t get the memo about not wanting to cause her any sorrow [that’s a Prince joke]. Within three months, the car suffers various spectacular failures. Purple Rain Properties argues that Ms Dean is somehow at fault for driving the car a lot. Western Cape Division: this is exactly why the Consumer Protection Act is a thing.

Altitude Pinnacle gets an anti-dissipation interdict in the form of a rule nisi over a bank account of Noeskom Operations. The rule nisi is anticipated. Altitude Pinnacle asks for the rule nisi to be confirmed and challenges the authority of the deponent to the answering affidavit. Gauteng Division, Pretoria: how many times must we tell you all that a deponent to an affidavit does not need to be authorised [for a bit of a thrill, your summarist sometimes omits “I am authorised to depose to this affidavit” from draft affidavits and so far the sky has not, in fact, fallen], and Altitude Pinnacle has no evidence of an intention to dissipate.

And finally some exciting news for fans of unjust enrichment. Rasmala, a trade finance outfit, pays Trafigura, a commodities broker, about $20 million over a few payments by mistake. Trafigura thinks the payments are from one of its clients, Farlin (but it turns out Farlin duped Rasmala and Trafigura based on fraudulent invoices). Everyone agrees that Rasmala made a mistake [which is an unjust factor in the English unjust enrichment lingo] and that Trafigura was enriched. Trafigura argues that it can rely on the change of position defence [in a famous case called Lipkin Gorman, the House of Lords recognised that a claim for restitution can be denied if an innocent defendant’s position has changed so that he will suffer an injustice if called upon to repay or to repay in full]. Trafigura argues that it changed its position because on the strength of the payments from Rasmala (which, recall, Trafigura thought were for Farlin’s debts), Trafigura concluded a series of new contracts with fraudster Farlin, and Trafigura ended up making a loss on those (also fraudulent) contracts. Court of Appeal: Trafigura acted in good faith and is entitled to a change of position defence [and a case about a mistake in unjust[ified] enrichment is a good opportunity for your summarist to remind readers that the requirement under South African law that a mistake must be excusable is not part of English law; Helen Scott has written that the requirement is alien to the condictio indebiti and probably the result of confusion with the iustus error requirement for mistakes in contract].