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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an option to a claim for damages open to him.

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)