Exxaro Coal Mpumalanga (Pty) Ltd v ABSA Bank Limited (2023/028000) [2025] ZAGPJHC 499 (27 May 2025)

Key Facts

Transaction Type

Issues

• The court considered whether Exxaro's second demand on the guarantee was a separate act from the first, or part of a continuous demand. ABSA argued that rejecting the first demand also rejected the second, but the court found they were separate.
• ABSA contended that Exxaro's demands were unconscionable, but the court found no evidence of unreasonable or excessive conduct by Exxaro to support this claim.
• The court evaluated whether the second demand, made on 19 June 2020, was valid despite being on the guarantee's expiration date. The judge ruled that the demand was made before the guarantee lapsed.
• The court examined if Exxaro's demands met the requirements under the URDG, particularly the need for supporting statements. Both demands were found non-compliant, but ABSA's failure to reject the second within five days precluded them from using this defense.

Holdings

• The court rejected ABSA's issue estoppel claim, concluding that equity required reconsideration of Lamont J's findings on the validity of the demands due to the Supreme Court of Appeal's overturning of the interdict judgment.
• ABSA's unconscionability argument was dismissed, as the court found no evidence of unreasonable or excessive conduct by Exxaro in making the demands.
• The court found that the first and second demands were separate acts under the guarantee, and the rejection of the first demand did not preclude Exxaro from making a second, distinct demand.
• The court determined that Exxaro's second demand must be honored by ABSA despite non-compliance with the guarantee's terms because ABSA failed to reject it within five business days as required by article 24(f) of the URDG.
• The court rejected ABSA's argument that the second demand was made after the guarantee's expiration date, ruling that the demand was validly made on 19 June 2020, the day the guarantee expired, under ordinary contract principles.

Remedies

• ABSA is directed to pay interest on the R22,165,055.66 at the prescribed rate, calculated from 27 June 2020 to the date of final payment.
• ABSA must pay the costs of the application on scale 'C', including one senior counsel's fees which may be taxed.
• The court ordered ABSA to pay Exxaro the sum of R22,165,055.66 (twenty-two million, one hundred and sixty-five thousand and fifty-five rand and sixty-six cents) within fifteen days of the judgment date.

Monetary Damages

Legal Principles

• The court emphasized that the URDG provisions, as part of the contractual guarantee, must be strictly honored. This principle underscores that validly formed agreements are binding and must be performed in good faith.
• The court held that ABSA was estopped from arguing the second demand was non-compliant because it failed to reject it within five days as required by the URDG. This equitable principle prevents a party from reasserting a claim or defense that contradicts their prior conduct or statements.

Precedent Name

• TDS Projects Construction and Newrak Mining JV (PTY) Ltd vs Exxaro Coal Mpumalanga (Pty) Ltd
• Exxaro Coal Mpumalanga (Pty) Ltd v TDS Projects Construction and Newrak Mining JV (Pty) Ltd
• Coface South Africa Insurance Co Ltd v East London Own Haven
• Minister of Transport and Public Works Western Cape v Zandbuild
• Guardrisk Insurance Company v Kentz (Pty) Ltd

Key Disputed Contract Clauses

• The guarantee clause requiring written demands to be signed by a person who warrants their authority was central to the dispute. ABSA rejected the first demand due to uncertainty about the signatory's authority, and the court analyzed whether this provision was met in both demands.
• The guarantee's expiration clause, which stated that demands must be received before the expiry date, was contested. The court ruled the second demand was validly made on the expiration date, rejecting ABSA's hyper-literal interpretation of the receipt deadline.
• The guarantee incorporated URDG article 15(a), requiring a statement indicating the respects in which TDS was in breach. Neither demand provided a clear statement, leading to disputes over compliance and the court's evaluation of this clause's satisfaction.

Judge Name

Passage Text

• The respondent is directed to pay the applicant the sum of R22 165 055.66 within fifteen days of the date of this order.
• In my view, ABSA was entitled to reject the first demand, but it was not entitled to treat the second demand as no more than a renewal of the first. There were two separate demands, to each of which ABSA was required to respond as distinct attempts to call up the guarantee.
• However, ABSA did not reject the second demand, and was accordingly precluded, under article 24 (f), from claiming that the second demand was non-compliant.

Damages / Relief Type

• Costs awarded on scale C to Exxaro, including senior counsel fees.
• Compensatory Damages: R22,165,055.66 ordered to be paid by ABSA to Exxaro within 15 days, plus interest from 27 June 2020.