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[2021] ZAWCHC 91
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Absa Bank Ltd v Anniciello and Another (8859/2018) [2021] ZAWCHC 91 (22 April 2021)
IN
THE HIGH COURT OF SOUTH AFRICA
WESTERN CAPE DIVISION, CAPE TOWN
Case number: 8859/2018
Before: The Hon. Mr Justice Binns-Ward
Hearing: 20-21 April 2021
Judgment: 22 April 2021
In the
matter between:
ABSA
BANK
LTD
Plaintiff
and
A.
ANNICIELLO
First Defendant
T.T.
ANNICIELLO
Second Defendant
JUDGMENT
(Delivered by email to the parties’ legal representatives
and by release to SAFLII.
The judgment shall be deemed to have been handed down at 14h15 on
22 April 2021.)
BINNS-WARD J:
[1]
In this matter the plaintiff bank sued the
first and second defendants in their capacities as trustees for the
time being of the
Anniciello Family Trust for payment of the amount
outstanding in terms of a loan that was secured by the mortgage of
the Trust’s
fixed property. The plaintiff also sought an
order declaring the mortgaged property directly executable. An
order was
taken by agreement on 21 April 2021, in terms of which
judgment as prayed in the summons was granted in favour of the bank.
This judgment is concerned with the issue of the costs of certain
interlocutory applications that were reserved for later determination
when the aforementioned order was made.
[2]
The first and second defendants are married
to one another. They are currently engaged in reportedly
acrimonious divorce proceedings.
The mortgaged property was
formerly the common home. It is currently occupied by the
second defendant, who alleges that she
would have nowhere else to
live should it be sold before the divorce action, including the
patrimonial consequences of the dissolution
of the marriage, is
determined. Both defendants, using separate firms of attorneys,
initially gave notice of intention to
defend the action against the
Trust. The first defendant thereafter withdrew his opposition,
but the second defendant purported
to persist on the Trust’s
behalf with the defence of the action.
[3]
It is trite that the Trust required to be
represented by the trustees acting jointly, and that it was therefore
not competent for
only one of them, acting alone, to represent it in
the pending legal proceedings. Astute to this, the plaintiff
served notice
in terms of Uniform Rule 7 on the attorneys
representing the second defendant in the proceedings to satisfy it
that they were duly
empowered to act on the Trust’s behalf in
the action. Unsurprisingly, the second defendant’s
attorneys were unable
to produce the necessary authority. In
tandem with the process in terms of Rule 7, the plaintiff also
brought an application
in terms of Rule 35(7) to compel discovery by
the trustees.
[4]
The plaintiff’s application in terms
of Rule 35 was set down to be heard on 20 April 2021 on the opposed
motion roll.
In its replying affidavit in that application the
plaintiff indicated its intention to apply for default judgment
against the Trust
on 20 April by reason that it had become apparent
that the action was not competently opposed. The second
defendant in the
meantime launched an application in her personal
capacity for leave to intervene as a defendant in the action. She
alleged
in support of that application that the trustees had never
resolved to conclude the transactions with the plaintiff bank that
were
the basis for the latter’s claim. The plaintiff
opposed the application and the acting judge presiding in the
unopposed
motion court on 25 March 2021 was persuaded to postpone it
for hearing on an opposed basis on the fourth division roll in late
October. It is not apparent why the learned acting judge did
not postpone the intervention application for hearing with the
related matters already set down for hearing on 20 April, which would
have been a more pragmatic course.
[5]
In the result, as might have been predicted
in the context of the date set for the hearing of the intervention
application, when
the plaintiff’s Rule 35(7) came up for
hearing before me on 20 April there was an application by the
second defendant
that it be postponed for hearing on a date after the
determination of her application for leave to intervene. The
application
for postponement was opposed by the plaintiff. The
basis for the opposition was that the second defendant had no legally
cognisable basis to intervene in the pending action in her personal
capacity and that the intervention application was a ploy to
keep the
bank out of the relief against the Trust to which it was clearly
entitled in the absence of any defence to the action
by the trustees
acting jointly.
[6]
It was obvious in the circumstances that
the bank’s applications set down for hearing on 20 April could
not proceed while
the second defendant’s application for leave
to intervene as a defendant in the action remained undecided.
It was also
clear that deferring the hearing of the intervention
application until much later in the year had been ill advised.
There
was no good reason why the intervention application could not
be heard at the same time as the bank’s application, which in
essence had become one for default judgment. There was an
obvious overlap of critical considerations in the respective
applications.
The efficient administration of justice dictated
that the second defendant’s application to intervene be
promoted on the
roll to be heard together with the plaintiff’s
application, thereby rendering her application for a postponement of
those
proceedings effectively redundant. I therefore made it
clear when the matters were called on 20 April that I intended to
direct that the hearing of all the applications together proceed
accordingly.
[7]
The second defendant’s counsel
indicated that it was intended to deliver a replying affidavit in the
intervention application
and time would be needed for such to be
drafted. The timetable included in the order made by the third
division judge had
given the second defendant until sometime in June
for that purpose. I accordingly indicated that I would hear all
the applications
together on 4 May 2021 and requested counsel to
provide me with a draft order incorporating an agreed timetable to
enable a consolidated
hearing to proceed on that date.
[8]
It was in the course of the exchanges
between the parties’ legal representatives to settle the draft
that I had asked them
to prepare that settlement was reached that the
plaintiff could take judgment against the Trust in the action.
Settlement
could not be reached, however, on the incidence of
liability for the costs of the second defendant’s intervention
and postponement
applications.
[9]
The plaintiff was, for obvious reasons,
content to take an order that the costs in issue be paid by the
Trust, but abided the court’s
decision whether the second
defendant should not rather be liable for them in her personal
capacity. The first defendant,
who was not an active party in
either of the applications, but who was represented at the hearings
before me on 20 and 21 April
by counsel with a watching brief,
instructed, so I was informed at the hearing on 20 April, to ensure
that he was not personally
mulcted in costs, was opposed to the Trust
being liable for the costs. It would appear that the first
defendant took up the
position during the settlement negotiations
that ensued after the matter was stood down on 20 April. His
counsel sought to
justify his ability to advance the first
defendant’s position, notwithstanding that he had not formally
entered the lists
in any of the proceedings, by invoking the
so-called ‘Beningfield exception’.
[10]
The exception, named after the Privy
Council’s Opinion in
Beningfield v
Baxter (Natal)
[1886] UKPC 49
(7
December
1886), (1887) LR 12
App Cas 167,
12 App Cas 167
,
8 NLR 81
,
manifests the principle that someone who has a vested interest in the
proper administration of a trust may sue in a representative
capacity
in the trust’s interests when the trustees are in delinquent
breach of their responsibilities towards the trust
and disabled from
litigating on the trust’s behalf. It constitutes an
exception to the rule that only the trustees
may litigate on a
trust’s behalf. As the late Appellate Division noted in
Gross and Others v Pentz
[1996] ZASCA 78
;
1996 (4) SA 617
(A) at 628G, ‘
the
rationale for the exception was identified as being the impossibility
of the delinquent trustee or executor suing himself
’.
[11]
I am uncertain whether the first
defendant’s informal intervention on the issue of costs falls
within the ambit of the exception
because he is a co-trustee with
access to a deadlock-breaking mechanism under the trust instrument,
but, for the reasons that follow,
it is unnecessary to reach a firm
conclusion one way or the other in that regard.
[12]
In my view, the result of the principal
case, exemplified by the judgment granted by agreement in favour of
the plaintiff, demonstrates
that the second defendant’s
abandoned application for leave to intervene in her personal capacity
was misconceived.
Certainly, the decision to abandon the
application accorded with my own prima facie view of its poor
prospects after I had read
the papers.
[13]
It was the intervention application, and
the postponement of the hearing thereof to later in the year, that
led to the application
for a postponement of the matters set down to
be heard on 20 April. The applications brought by the
second defendant
were instituted in her personal capacity. It
seems clear that she was motivated not by the interests of the Trust,
but by
her own position in the pending matrimonial proceedings with
the first defendant, in which she is reportedly contending that the
Trust is ‘an alter ego trust’ - by which she appears to
imply that the assets of the Trust should be taken into account
for
the purposes of determining the patrimonial consequences of the
dissolution of her marriage with the first defendant.
[14]
In the circumstances, and irrespective of
the argument advanced on behalf of the first defendant at the hearing
on 21 April, I consider
it appropriate that the second defendant
should bear the costs occasioned by her ill-advised interventions.
Had the second
defendant any intention to defend the action on behalf
of the Trust in the face of her co-trustee’s unwillingness to
join
her in that endeavour, there were deadlock-breaking mechanisms
available in terms of the trust deed that would have enabled her
to
do so if she were able to persuade an independently appointed counsel
that defending the action was well-advised. The
eventual
outcome of the action suggests that it is uncertain, if not unlikely,
that independent counsel would have considered it
well-advised for
the Trust to incur the expense of opposing the plaintiff’s
claim. I am unable in the circumstances
to identify a plausible
basis for lumbering the Trust with liability for the costs incurred
by the plaintiff in meeting the applications
launched by the second
defendant. I recognise the realism in the submission by the
second defendant’s counsel that
the upshot may be to introduce
or entrench a further source of acrimony between the first and second
defendants in the pending
matrimonial proceedings, which is
unfortunate, but that is not a properly cognisable consideration in
my judgment.
[15]
The plaintiff asked that it be awarded
costs in the intervention and postponement applications on the scale
as between attorney
and client, as provided in terms of its
contractual relationship with the Trust. In my judgment,
however, the costs
clauses in the contracts between the plaintiff and
the Trust are not applicable in respect of the interlocutory
litigation instituted
by the second defendant in her personal
capacity. I am also not persuaded that the second defendant’s
conduct, ill-advised
as it might have been, merits a punitive costs
order. The plaintiff will therefore be awarded its costs
against the second
defendant on the usual party and party scale.
[16]
In the result, the following orders are
made in respect of the issues reserved on costs:
1.
The second defendant shall be liable in her
personal capacity for the plaintiff’s costs of suit in the
second defendant’s
application for leave to intervene in the
action in her personal capacity, including the costs reserved on 25
March 2021 and in
her attendant application for the postponement of
the proceedings in the principal case set down for hearing on
20 April 2021.
2.
The second defendant shall also be liable
in her personal capacity for the plaintiff’s costs incurred in
respect of the hearing
on costs on 21 April 2021.
A.G. BINNS-WARD
Judge
of the High Court
APPEARANCES
Plaintiff’s counsel:
L.N. Wessels
Plaintiff’s attorneys:
Sandenbergh Nel Haggard
Bellville
First Defendant’s counsel:
F. Ferreira
First Defendant’s attorneys
Werkmans Attorneys
Cape Town
Second Defendant’s counsel:
R. Acton
Second Defendant’s attorneys:
De Abreu & Cohen Inc.
Cape Town