Exxaro Coal Mpumalanga (Pty) Ltd v TDS Projects Construction and Newrak Mining JV (Pty) Ltd and Another

Exxaro Coal Mpumalanga (Pty) Ltd and TDS Projects Construction and Newrak Mining JV (Pty) Ltd concluded a construction contract in July 2018. As required by the contract, TDS procured a performance (demand) guarantee from ABSA Bank Ltd in favour of Exxaro. Following alleged breaches by TDS, which TDS disputed, Exxaro terminated the contract in June 2020 and made demands on the guarantee shortly before its expiry. TDS approached the Gauteng High Court seeking an interdict preventing Exxaro from demanding payment and ABSA from honouring the guarantee, contending that the demands were non-compliant with the guarantee’s terms and fraudulent. The High Court granted relief in favour of TDS. Exxaro appealed to the Supreme Court of Appeal.

The appeal was upheld with costs. The High Court’s order was set aside and replaced with an order dismissing TDS’s application with costs.

The case reinforces South African jurisprudence on the autonomy of demand guarantees and the strict limits on judicial interference with their enforcement. It confirms that non-compliance with a demand, absent fraud, does not justify an interdict where no injury is shown and an adequate alternative remedy exists.