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[2017] ZAWCHC 145
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Patel and Others v Fey NO and Others (9318/17) [2017] ZAWCHC 145 (27 November 2017)
IN
THE HIGH COURT OF SOUTH AFRICA
WESTERN
CAPE DIVISION, CAPE TOWN
REPORTABLE
CASE
NO: 9318/17
In
the matter between:
FATIMA
ISMAIL
PATEL
First
Applicant
MUHAMMAD
ALI
EBRAHIM
Second
Applicant
TARIQ
ISMAIL
PATEL
Third
Applicant
TAHIR
ISMAIL
PATEL
Fourth
Applicant
YUSUF
ISMAIL
Fifth
Applicant
and
EILEEN
MARGARET FEY
N.O.
First
Respondent
ABDURUMAN
MOOLLAJIE
N.O.
Second
Respondent
THE
MASTER OF THE HIGH
COURT
Third
Respondent
JUDGMENT
DELIVERED ON MONDAY 27 NOVEMBER 2017
GAMBLE,
J:
[1]
Mr Mohamed Ismail Patel (aka Patel Muhamed, aka Mohamed Ismail) was
formerly an attorney of this court who earned his keep both
as an
attorney and as a trustee of insolvent estates under the name and
style “Good Hope Trustees”. On 14 December
2016 Mr
Patel’s estate was provisionally sequestrated by order of this
court and on 18 April 2017 that order was made final.
In addition to
the order of sequestration, and on 24 March 2017, this court ordered
that the insolvent’s name be struck off
the roll of attorneys.
For the sake of convenience, and to avoid confusion with the other
parties to this litigation, I shall hereinafter
refer to Mr Mohamed
Patel as “the insolvent”.
[2]
Pursuant to the provisional order of sequestration the first and
second respondents herein, Ms. Fey and Mr. Moollajie, were
appointed
trustees in the estate of the insolvent on 22 December 2016. Pursuant
to that appointment, the trustees immediately set
about their work
which included the realisation of assets of the insolvent and, later,
the interrogation of various parties in
terms of s152(2) of the
Insolvency Act, 24 of 1936 (“the Act”) before the
Magistrate sitting at Wynberg.
[3]
The first to fifth applicants in this matter are respectively the
wife, brother and three sons of the insolvent. On 25 May 2017
they
launched the present application for the removal of the first and
second respondents as trustees in the estate of the insolvent.
The
application is specifically based on the provisions of s59(a) of the
Act.
[4]
In the founding affidavit the first applicant, Ms. Patel, states that
her husband, the insolvent, left South Africa during 2016
and is
currently in Dubai in the United Arab Emirates where she last saw him
in January 2017. He is accordingly beyond the jurisdiction
of this
court (and the Magistrates Court, for that matter) for purposes of
any insolvency interrogation. However, notwithstanding
the absence of
insolvent from the Republic, the trustees commenced interrogation of
the applicants during February and March 2017
in an attempt to locate
assets belonging to the insolvent. It appears from the record that
such interrogation proceeded in fits
and starts as witnesses were
absent for a variety of reasons.
[5]
Ms. Patel complains in the founding affidavit of aggressive, abusive
and oppressive behaviour on the part of, inter alia, Ms.
Fey and her
instructing attorney Mr. Kurz, prior to, and during the insolvency
interrogation before the Magistrate. However, although
such behaviour
may otherwise constitute a basis for the removal of a trustee
[1]
that is not the ground relied upon in the founding affidavit. Rather,
the applicants seek to persuade the court on a far narrower
basis -
that the trustees are in breach of the provisions of s59 (a) of the
Act.
“
s59. On
the application of any person interested the court may either before
or after the appointment of a trustee, declare that
the person
appointed or proposed is disqualified from holding the office of
trustee, and, if he has been appointed, may remove
him from office
and may in either case declare him incapable of being elected or
appointed trustee under this Act during the period
of his life or
such other period as it may determine, if-
(a)
he has accepted or expressed his
willingness to accept from any person engaged to perform any work on
behalf of the estate in question,
any benefit whatsoever in
connection with any matter relating to that estate;”
[6]
The gravamen of the complaint by the applicants is that the trustees
were receiving improper and unlawful commissions (loosely
referred to
as “kickbacks”) from certain parties responsible for the
auctioneering of assets belonging to the insolvent
estate. These
allegations are denied by the trustees.
[7]
After the respondents had filed their answering affidavits on
Wednesday, 5 July 2017 (some 3 court days late) it became apparent
that no replying papers were likely to be filed. In those answering
papers the respondents sought punitive costs orders against
the
applicants jointly and severally. In any event, it is common cause
that the first, third and fourth applicants also fled South
Africa
for Dubai in July 2017 and have not taken any steps to advance the
application since then. It must therefore be assumed
that those
applicants have abandoned the application. Such abandonment has
obvious costs implications for those applicants and,
in the absence
of any appearance on their behalf or written submissions having been
made at the hearing of the matter it would
therefore be appropriate
to make an order holding the first, third and fourth applicants
jointly and severally liable for the costs
of the trustees in this
application.
[8]
The second applicant (Mr. Ebrahim) and the fifth applicant (Mr. Yusuf
Ismail) are said to still be in South Africa but it is
only the
former who has continued to participate in these proceedings.
Although the applicants were no longer actively advancing
the matter,
it was set down for hearing on the semi-urgent roll before this court
on 7 November 2017. The notice of set down issued
by the Registrar of
this court is dated 7 August 2017 and makes provision for the
customary service on the parties by way of registered
mail.
[9]
On 11 August 2017 the second applicant delivered an affidavit
entitled “
Second Applicant’s Provisional Answering
Affidavit
”. It is common cause that this is actually a
replying affidavit and I shall henceforth refer to it as such. It is
further
common cause that the affidavit was prepared for the second
applicant by an attorney, Mr. M.R. Khan, who, it seems, had attended
the insolvency enquiry from time to time on behalf of certain of the
applicants when they were still in the country.
[10]
In the second applicant’s replying affidavit an allegation is
made at the outset that the second applicant no longer
wishes to
participate in the application.
“
4. I have
decided to withdraw as the Second Applicant in this application by
virtue what of what is stated hereunder; hence I decided
that it
would be unnecessary and a waste of the Court’s time to deal
with each and every allegation of the First and Second
Respondent.
5. Whilst I
still firmly believe that there is merit in the application for the
removal of the First and Second Respondents, I nevertheless
decided
to withdraw by virtue of the recent telephone (sic) of the First
Respondent to me, which is set out hereunder.”
The
second applicant then goes on to allege threats made to him
telephonically by Ms. Fey which he claims had induced him to abandon
his participation in the application for removal of the trustees.
[11]
Notwithstanding the declared intention not to participate further in
the application, the second applicant spends another 32
pages (and
some 140 paragraphs) denigrating, and complaining about the conduct
of, Ms. Fey, Mr. Kurz and the Magistrate who initially
presided over
the insolvency enquiry, Mr. Grobbelaar. The affidavit concludes with
a prayer that “
the Honourable Court grant the relief set out
in the Notice of Motion.”
Mr. Ebrahim’s affidavit is
accompanied by a confirmatory affidavit deposed to by Mr. Khan.
[12]
Ms. Fey deposed to a supplementary affidavit on 26 October 2017 in
which she deals with a number of issues which need not be
considered
at this stage. Suffice it to say that her affidavit is intended to
inform the court of certain material developments
in the matter and,
further, to dispute various of the allegations of impropriety made by
the second applicant in the replying affidavit.
In that supplementary
affidavit Ms. Fey refers to a notice of withdrawal filed on the
trustees’ attorneys on behalf of the
second applicant on 14
August 2017 in which the second applicant notified all parties of his
withdrawal of the application and
tendered to pay the respondents’
costs of suit “
on a party and party basis, alternatively by
agreement.”
Prima facie
that tender complies
with the provisions of Rule 41(1)(a).
[13]
The provisions of Rule 41(1)(a) are to the following effect:
“
41(1)(a)
A person instituting any proceedings may at any time before the
matter has been set down and thereafter by consent of the
parties or
leave of the court withdraw such proceedings, in any of which events
he shall deliver a notice of withdrawal and may
embody in such notice
a consent to pay costs; and the taxing master shall tax such costs on
the request of the other party.”
[14]
In argument before this court counsel for the trustees, Mr. Rogers,
sought to persuade the court that the notice of withdrawal
was filed
after receipt by the second applicant of the notice of set down dated
7 August 2017 and that therefore the application
could only be
withdrawn with the consent of the trustees, or the leave of the
court. The point is of relevance because the trustees
seek dismissal
of the application with a costs order on the punitive scale, whereas
the tender by the second applicant is for costs
on the party and
party scale. Mr. Rogers’ main argument therefore can only
succeed if the trustees are able to establish,
on a balance of
probabilities, that the second applicant indeed received the notice
of set down prior to 14 August 2017.
[15]
Having considered the matter, I am not persuaded that the trustees
have established that fact with the requisite degree of
proof. While
the suspicion lingers, in my view it is possible that service of the
affidavit and the notice of withdrawal predate
receipt of the notice
of set down. In the absence of reliable evidence as to when the
registered letter was collected (which is
readily accessible these
days through the “
Track and Trace”
facility
available online at the post office) the trustees cannot rely on the
proviso to Rule 41(1)(a) which requires the second
applicant to now
procure their consent (or the leave of the court) to withdraw the
application.
[16]
But Mr. Rogers had a second string to his bow. He submitted that the
replying affidavit created uncertainty in the minds of
the trustees
as to whether the application was in fact being withdrawn, given the
prayer contained in para 152 requesting that
the court should grant
the relief sought in the notice of motion. That stance, said counsel,
necessitated an appearance in court
to resist any attempts by the
second applicant to procure such relief. Mr. Rogers was supported in
this submission by the fact
that Mr. Khan represented the second
applicant at the hearing on 7 November 2017, addressed the court in
some detail and proceeded
to direct stinging criticism at the
trustees, their attorney and the Magistrate during that address,
while seeking to rely on a
valid notice of withdrawal by the second
respondent.
[17]
I suppose one might say that a fair minded attorney might have
directed a letter to his opponent after receipt of the replying
affidavit, enquiring about the obvious inconsistencies therein and
asking whether the application was indeed being prosecuted by
the
second applicant, in light of the earlier indication in the affidavit
that he was abandoning the application. After all Mr.
Kurz had no
difficulty in doing so on 7 July 2017 when he wrote to Mr. Khan
demanding the production of documents at the resumption
of the
insolvency interrogation. Furthermore, if the notice of withdrawal
did in fact postdate the notice of set down consideration
might have
been given to setting the notice aside as an irregular step under
Rule 30. Or, a letter might have been written to the
opposing
attorneys pointing this out and alluding to an intention to take such
steps.
[18]
But no such steps were taken and, given the level of acrimony which
apparently exists between the parties and their attorneys
in this
matter, an expectation of collegiality is perhaps supremely
optimistic rather than realistic. It is, however, common cause
that
on an occasion during August 2017 while the parties were busy with
the interrogation at Wynberg, Mr. Kurz informed the second
applicant
that his notice of withdrawal was not in order, but the second
applicant is a lay person and can hardly be blamed for
not
understanding the legal niceties suggested to him, particularly from
an attorney that he perceived to be unneccesarily hostile
to him.
[19]
In any event, to the extent that the trustees had asked for the
dismissal of the application together with a punitive costs
order
against all of the applicants from the outset, and given that the
tender by the second applicant did not go beyond party
and party
costs, the trustees were entitled to approach this court under Rule
41(1)(c) for a ruling on the scale of costs to which
they were
entitled in light of the limited tender by the second applicant.
[20]
At the hearing Mr. Khan handed up a formal application by the second
applicant for leave to withdraw as a party to these proceedings
in
the event that the court found that the notice of withdrawal was
found to be non-compliant with the Rules. The notice asked
for an
order directing the second applicant to bear the costs of the
application on the party and party scale up to 11 August 2017.
[21]
In seeking costs on the punitive scale the trustees complain that the
application is
mala fide
and nothing more than a transparent
attempt to hinder the trustees in the proper discharge of their
functions under the Act. That
may be so. However, in my view there is
a more fundamental consideration at play here. The applicants jointly
initiated proceedings
designed to remove the trustees on a specific
basis viz. for breach of the provisions of s59(a) of the Act. They
have not taken
that application to its logical conclusion but have
abandoned it mid-stream.
[22]
Fairness and equity demand that costs should follow the result in
this case where the trustees have been substantially successful
in
resisting the attack on their integrity and their office.
[2]
Were those costs to be limited to the party and party scale it would
mean that the attorney-client component of the respondents’
costs would have to be borne by the insolvent estate. Such a
situation would mean that monies that should be available for
creditors
are taken up with costs reasonably incurred by the trustees
to resist an application which has not succeeded. For that reason I
am of the view that the trustees should be fully indemnified for the
costs which they have incurred on behalf of the insolvent
estate.
[3]
[23]
In regard to the second applicant’s tender to pay costs on the
party and party scale, as per his original notice of withdrawal
filed
on 11 August 2017 and subsequent notice of motion dated 6 November
2017 seeking leave to withdraw, I am of the view that
there is no
reason to distinguish the scale of his costs from those payable by
the other applicants. For the reasons already stated,
if the trustees
are awarded their costs on the lower scale the insolvent estate will
have to make up the difference, to the
detriment of the general
body of creditors.
[24]
As to the costs incurred after the filing of the replying affidavit
and notice of withdrawal on 11 August 2017, I am of the
view that the
trustees were entitled to continue in their opposition to the
application for two reasons. Firstly, the replying
affidavit was
ambivalent in that it suggested persistence in the relief sought
while at the same time abandoning same. Secondly,
the second
applicant’s tender of costs did not offer the trustees a
complete indemnity for their costs and they were entitled
to persist
in their opposition to the application until an appropriate tender
had been made.
[25]
Thereafter, the second applicant persisted with his allegations of
improper conduct against the trustees – he did not
withdraw the
redundant allegations in the replying affidavit but instructed (or at
the very least permitted) his attorney to advance
argument in open
court on 7 November 2017 which was consistent with the attack on the
trustees made in the replying affidavit.
That attack was not
warranted in light of the second applicant’s withdrawal as a
party to the application to remove the trustees.
[26]
For the sake of good order (and for purposes of taxation) I shall
condone the respondent’s failure to file their answering
papers
timeously. The delay of 3 days is negligible in the overall context
of the case and did not occasion any prejudice to the
applicants.
Further, the respondents are granted leave to file the supplementary
answering affidavit of Ms. Fey dated 26 October
2017. They were
entitled to bring to the attention of the court the material
developments that had ensued and they were also entitled
to answer
the attack on them in the replying affidavit. Finally, the second
applicant’s formal request on 6 November 2017
for leave to
withdraw as a party has become redundant in light of the order I
intend making dismissing the application
.
ORDER
OF COURT
Accordingly
it is ordered that:
A.
The late filing of the respondents’
answering affidavit is condoned.
B.
The respondents are granted leave to file
their supplementary answering affidavit dated 26 October 2017.
C.
The application is dismissed.
D.
The costs of the application are to be paid
by the first to fifth applicants jointly and severally, the one
paying the others to
be absolved, on the scale as between attorney
and client.
E.
No order is made in respect of the second
applicant’s application dated 6 November 2017 to withdraw as a
party from these
proceedings.
__________________
GAMBLE,
J
[1]
Fey NO
and Whiteford NO v Serfontein and Another
1993 (3) SA 605
(A) at 614 C-F;
James
v Magistrate, Wynberg and Others
1995 (1) SA 1
(C) at 12-15.
[2]
Stander and Others v
Schwulst and Others
2008
(1) SA 81
(C) [36]
[3]
Katz and Another v Katz and
Others
[2004] 4 All SA 545
(C) at [125]