Katz v Letseng Diamond (Pty) Ltd and Another (CIV/APN/22/2003 )

Case No: 
CIV/APN/22/2003
Media Neutral Citation: 
[2004] LSHC 77
Judgment Date: 
15 June, 2004

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CIV/APN/22/2003 IN THE HIGH COURT OF LESOTHO

In the matter between:-

GREGORY KATZ APPLICANT

and

LETSENG DIAMOND (PTY) LTD 1st RESPONDENT

WWW INTERNATIONAL DIAMOND

CONSULTANTS LTD 2nd RESPONDENT

JUDGMENT

Delivered by the Honourable Mrs Justice A.M. Hlajoane

on 15th June, 2004.

This Application was for an interim Interdict preventing the first Respondent from marketing its diamonds through the second Respondent, but instead to conduct its business through the Applicant. The Applicant sought an order in the following terms:-1. Interdicting and restraining the 1st Respondent from causing or

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permitting the 2nd Respondent to market the diamonds mined by the 1st Respondent.

2. Directing the 1st Respondent to honour its obligations to retain the Applicant as the diamond dealer to market the diamonds mined by the lst Respondent at minimum commercial rate of 1% of value.

3. Directing that the above order operate as an interim interdict pending the outcome of an action to be instituted within 30 days hereof, the costs of this application to be costs in the action.

4. Further and/or alternative relief.

TAKE NOTICE THAT the affidavit of Gregory Katz will be used in support hereof.

TAKE NOTICE FURTHER THAT if you intend opposing this application you are required:-

(a) to notify Applicant's Attorney in writing on or before the 8th April, 2003;

(b) and within 14 (fourteen) days after you have so given notice of your intention to oppose the application, to file your answering affidavits if any, and

(c) further that you are required to appoint in such notification an address at which you will accept notice and service of all documents

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in these proceedings.

If no such notice of intention to oppose be given, the application will be made on the 14th April, 2003 at 9.30 a.m.

This Application was filed before this Court on the 21st January, 2003 as borne out by the clerk of court's date stamp impression. Service of process was effected on the 6th March, 2003, after a notice of intention to opposed had already been filed on the 5th February 2003, having been served or received by the other side on the 4th February, 2003. The intention to oppose which is rather confusing as Harley & Morris filed this notice as 4th Respondent's Attorneys, when in fact there are only two Respondents.

Applicant's counsel filed his notice of set down on the 10th April, 2004 for the 14th April, 2003 as he had intimated in his founding papers. On the set date the matter was by consent postponed to 12th May, 2003 and further to 19th May, 2003 for enabling filing of answering papers. On that date the answering papers were filed after having been served on the Applicant's Counsel on the 12th May, 2003. The Replying papers were only filed on the 14th January, 2004 after having been served on the other side the same day. Heads of arguments were filed by the Applicant on the 17th May, 2004 and by the Respondents on the 14th May, 2004.

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I have drawn some attention to the filing of the papers in this case to show a picture of how the Applicant approached his case in which he was asking the court for an interim interdicting pending outcome of an action to be instituted within 30 days thereof (prayer 3 of the Notice of Motion).

The Applicant, a qualified and licenced rough diamond dealer employed at Suite 303, SA Jewellery Centre, Johannesburg based his case on the concept of a stipulatio alteri, or a contract for the benefit of a third party. According to the Applicant's case, he was in August 1995 approached by one Paul Main who was at the time putting together a tender for certain Mining rights in Lesotho. Main was the promoter of the company which was later to be formed, the first Respondent.

On the papers, Applicant indicated that Main proposed to him that if the tender which he was at the time busy putting together turned out to be the winning tender, then Applicant or the company through which he worked, at the time Gem Mining (Pty) Ltd, would be retained as the diamond dealer to market the diamonds that would be produced as a result of the winning tender. Applicant is saying he accepted the offer and even performed certain work for purposes of the tender. He did not hear, until recently what became of the tender. He had lost touch with developments relating to the tender due to a fall-out with a partner of his.

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Applicant's case is mainly based on a document attached to his founding papers and styled Annexure "A". This document is a memorandum addressed by Main to certain Keith Whitelock and Richard Bluett but copied to the Applicant. The memo concluded with these words, "Looking forward to discussing this with you both on Saturday."

This being an interim interdict based on some alleged contract, the Applicant ought to have shown the following in order for his claim to succeed:-

- a clear right

- a well grounded apprehension of irreparable harm

- that the balance of convenience favours him

- the absence of any other satisfactory remedy.

Applicant is relying on Annexure "A" as the basis on which he considered that there was a binding contract between him and the 1st Respondent whom he considered had been represented by Main. The opening statement of Annexure "A" reads thus, "I am only prepared to continue with the Letseng tender, structuring and financing if the following are implemented". Numerous activities were sequentially enumerated which included also remuneration of the Applicant. With the closing remarks which read as follows:

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"I look forward to discussing this with you both on Saturday." This was an indication that the memorandum Annexure "A" did not constitute any agreement between the parties, but only terms for their negotiations. It was a term of such negotiations that Letseng Diamonds Limited, the Guernsey Company would be owned by the Royal family of Bahrain or their nominee. It was Bluett who had to bring the Royal family on board, but his involvement terminated when it became clear that he would not be able to perform by bringing the Royal family on board. This was not denied by the Applicant as he said, "I admit that we had not by then formally agreed to any particular corporate structure."

It was therefore a condition precedent that the requirements as set out by Main in his Memorandum, Annexure "A" be satisfied before considering any contractual obligations. The negotiations lead to Bluett and the Royal family disappearing from the picture, and the new informal consortium coming into play and Koppel, not the Royal family, securing the financial guarantees.

On the papers it has not been shown as to how and when the Applicant accepted the offer that was made to him by Main, except the proposals on Annexure "A" which were still subject to discussion. Applicant had thus failed on the papers to show us the agreement which was intended to be binding between him and the Applicant except the proposals by one Main.

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It could therefore be seen that what was reached or intended by the Applicant and Main was not anything on its own intended to be legally binding, but rather, merely some preliminary proposals made while the two were in the process of negotiating and feeling their way towards a more precise and comprehensive agreement Pitout v North Cape Livestock Co­operative Ltd 1977 (4) S.A. 850 (F).

The Applicant relied mainly on Annexure "A" for his case, which was copied to him. The memorandum had some conditions which were going to determine whether or not Main was going to remunerate the Applicant or carry on with the company as was proposed. One of those conditions being that Letseng Diamonds Limited, the Guernsey Company will be owned by the Royal family of Bahrain, or their nominee. But the Royal family together with Bluett failed to perform as was expected or proposed and they both disappeared from the picture. It was a completely new informal consortium that was negotiated which caused the first Respondent to come into the picture.

The applicant only came up with the stipulatio alteri principle in his replying papers. He failed to establish that important principle in his founding papers, but chose to bring it up as an after thought. John Craig (Pty) Ltd v Dupa Clothing Industries 1977 (3) S.A. 144. This case did

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not at all establish any stipulatio alteri. Even if it could be said that he was acting on behalf of a company yet to be formed, there ought to have been some compliance with the provisions of Section 33 (a) of the Companies Act 25 of 1967 for ratification of such contracts. The Applicant has thus failed to establish any clear right.

Could it then be said that Applicant has shown any grounded apprehension of irreparable harm if not granted the relief sought? To be able to get an answer to this kind of concern, it would be important to look at the manner of approach by the. Applicant to this case. In his founding affidavit Applicant said that he had performed some work for purposes of the tender and continued further to show that he did not until recently hear what became of the tender. Further that due to a fall-out with a partner, he lost touch with developments relating to tender.

Applicant did not wish to make it know as to when and how he then learned of the winning of the tender in relation to the time of the bringing of this Application to Court. He later pointed out that on or about 4 June 2002 he extracted certain relevant information from a circular issued by Consolidated African Mine Ltd. The information revealed that it was true that the first Respondent was truly in operation and had also entered into a 3 year diamond marketing contract with the second Respondent in May

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2001. But the Applicant only filed papers with this Court in January of 2003 according to the date stamp impressions on the papers, which papers were only served on the 20th March, 2003.

From the above, it would be clear that the applicant had been so dilatory in the conduct of this litigation. His unexplained delays should not in the least work in his favour but rather disqualifies him from obtaining the relief claimed. Applicant did not only delay in bringing the Application for interim relief, but also in the filing of his papers. He filed the papers on the 21st January, 2003, only to be served on Respondents on the 6th March, 2003, calling for notice of opposition to be filed in April 2003. After the opposition was filed, he waited for months before filing his Replying papers, which he only filed on the 14th January, 2004.

The Court would always exercise its discretion against an Applicant for an interim relief where that Applicant has delayed unreasonably in prosecuting application for interim relief, Juta & Co Ltd v Legal Financial Publishing Co. Ltd 1969 (4) S.A 445. Also in considering whether or not to grant a temporary interdict, the Court would consider issues like prospects of success in an action and whether a party would be adequately compensated by an award of damages at a trial, Beecham Group Ltd v B-M Group (Pty) Ltd 1977 (1) S.A. 50. The Applicant still

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Applicant has alleged both a financial loss and an opportunity to enhance his reputation in the diamond industry, which both were his expectations that could be rectified or made good by a claim or action for damages suffered. But even there the Applicant would be still expected to prove the contract alleged.

In the absence of any clear right having been proven I don't see any prospects of success. The proposal or negotiations by Main which applicant relied upon were not intended to be legally binding but were just preliminary proposals whilst still in the process of negotiation. The acceptance by the Applicant if any, of an offer made to his company never gave rise or would not give rise to any binding contract. Levin v Drieprok Properties (Pty)Ltd 1975 (2) S.A. 397 (A). Applicant's conduct according to his Annexure "RA19" of his replying affidavit showed that there was no agreement reached. He was according to Annexure "RA19" requesting for a written agreement. Even as Main wrote to him (Applicant) in "RA20" he still talked about proposed agreements on Letseng. The Applicant himself in Annexure "RA21" of the Replying affidavit still, referred to proposed agreements.

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I did not take the trouble of going into the question of matters to be struck out once I had decided that there was no contract agreed upon by the parties or any stipulatio alteri established. The requirements for an interim interdict have also not been established.

Applicant has thus failed to show a prima facie case for the relief sought to be pursued in the main action, nor has he shown any real apprehension of irreparable harm. The balance of convenience has not been in his favour but against him. His application therefore fails. It is accordingly dismissed with costs,

A. M. HLAJOANE JUDGE

For Applicant: Mr Segal (Mr Buys)

For Respondents: Mr Chaskalson (Harley & Morris)