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[2016] ZASCA 131
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Dobsa Services CC v Dlamini Advisory Services (Pty) Ltd and Another; Dlamini Advisory Services (Pty) Ltd and Another v Dobsa Services CC (050/2016) [2016] ZASCA 131 (28 September 2016)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not Reportable
Case
No: 050/2016
In
the matters between:
DOBSA
SERVICES CC
APPELLANT
and
DLAMINI
ADVISORY SERVICES (PTY) LTD
FIRST
RESPONDENT
ZOLILE
ABEL
DLAMINI
SECOND RESPONDENT
DLAMINI
ADVISORY SERVICES (PTY) LTD
FIRST APPELLANT
ZOLILE
ABEL
DLAMINI
SECOND
APPELLANT
and
DOBSA
SERVICES CC
RESPONDENT
Neutral
citation:
Dobsa
v Dlamini Advisory Services
;
Dlamini
Advisory Services v Dobsa
(050/2016)
[2016] ZASCA 131
(28 September 2016)
Coram:
Bosielo,
Petse, Mathopo and Mocumie JJA and Schoeman AJA
Heard:
6
September 2016
Delivered:
28
September 2016
Summary:
Civil
Procedure ─ Costs ─ Award of costs is at the discretion
of the court of first instance ─ Power of appellate
court to
interfere with the exercise of such judicial discretion
circumscribed.
ORDER
On
appeal from:
Gauteng
Local Division of the High Court, Johannesburg (Reyneke AJ sitting as
court of first instance):
Both
appeals are dismissed with costs.
JUDGMENT
Petse
JA (
Bosielo,
Mathopo and Mocumie JJA and Schoeman AJA
concurring):
[1]
These two appeals are concerned with two costs orders granted in the
Gauteng Local Division of the High Court, Johannesburg
(Reyneke AJ)
in two interrelated applications. The appellant in the first appeal
is Dobsa Services CC (Dobsa), a close corporation
which carries on
business as, inter alia, an auditing and accounting corporation in
Braamfontein, Johannesburg. The first respondent
is Dlamini Advisory
Services (Pty) Limited (the company) which is a private company
conducting business as business advisory and
consulting services
provider in Parktown of which the second respondent, Mr Zolile Abel
Dlamini (Dlamini), is the managing director.
In the second appeal the
company and Dlamini are the appellants and Dobsa is the respondent.
For the sake of convenience, I will
henceforth refer to the company
and Dlamini collectively as the company unless the context dictates
otherwise.
[2]
In the first appeal the court a quo awarded costs against Dobsa which
had unsuccessfully opposed an application for an interdict
to stay
enforcement of the judgment granted by default in its favour. The
company against which the default judgment had been granted
sought an
order staying the enforcement of such judgment pending the outcome of
an application to rescind the default judgment.
The second appeal
raises the question whether the company which had applied for
rescission of the default judgment sought an indulgence
from the
court a quo and must therefore bear the costs of such application
even though it was successful in its application as
the court a quo
found. These issues arise against the following backdrop.
[3]
During November and December 2010 Dobsa, on the one hand, and the
company and Dlamini as the administrator of Bakubung Ba-Ratheo
Traditional Community (Bakubung Ba-Ratheo), on the other hand,
concluded a written contract in terms of which Dobsa undertook to
render certain forensic investigation services to Bakubung Ba-Ratheo
on behalf of the company and Dlamini at an agreed remuneration
rate
of R1 350 per hour subject to the terms and conditions spelt out in
the parties’ written contract. Initially all had
proceeded well
between the parties. It appears that some work was done and Dobsa was
paid for such work.
[4]
During March to May 2011, a dispute arose between the parties in
relation to payments that Dobsa claimed were overdue. So as
to induce
the company to settle the alleged overdue amounts, Dobsa withheld its
forensic report and insisted that it would not
release it to the
company without payment upfront. On its part, the company asserted
that it would not be possible to pay without
it being provided with
the forensic report first. The respective positions taken by the
parties became entrenched and this resulted
in a stalemate. This led
to what appears to have been an irretrievable breakdown of the
parties’ contractual relationship.
[5]
As indicated, Dobsa asserted that there were further moneys owing to
it. On 6 June 2013 it instituted an action against
the company
in the Gauteng Local Division of the High Court, Johannesburg
comprising four claims (styled Claims A, B, C and D).
Claim A was for
payment of R191 085.87 being the balance of the amount owing in
respect of services rendered in January 2011.
Claim B was for payment
of R213 034.10 in respect of services rendered in February 2011.
Claim C was for payment of R253 360
in respect of services
rendered in March 2011. And Claim D was for payment of R467 856
which represented the amount that the
appellant alleged it would have
earned, but for the respondent’s repudiation, had the contract
been allowed to run its course,
ie until May 2011.
[6]
Dobsa’s summons was served on the company on 19 June 2013.
Despite having been served with the summons, the company, through
inadvertence, failed to defend the action. It bears mentioning that
upon service of the summons on the company, Dlamini transmitted
it by
email to his attorney with whom he had had an attorney and client
relationship for some 15 years for the latter to defend
the action.
It was uncontested that the email address to which the summons was
sent by Dlamini was incorrect and therefore the
summons did not reach
his attorney, hence the failure to defend the action. Upon the expiry
of the
dies
induciae
,
Dobsa applied for and obtained default judgment against the company
on 1 August 2013. On 28 October 2013 Dobsa caused to
be issued a
writ of execution against the company.
[7]
On 23 October 2013 the company ascertained that default judgment had
been granted against it. On 29 October 2013, and unbeknown
to them
that a writ of execution had already been issued on 28 October 2013,
the company’s attorneys addressed a letter to
Dobsa’s
attorneys proposing that they stay further action against the company
pending the outcome of a rescission application
that they were
instructed to launch, stating that:
‘
Given
that it [appeared] that the judgment was granted . . . some three
months ago, there [could] be little prejudice to [Dobsa]
in holding
off.’
They
went on to indicate that in the event that Dobsa was not prepared to
provide an undertaking to hold further enforcement of
the judgment in
abeyance, the company would bring an urgent court application for its
stay. Thereafter a series of letters were
addressed to Dobsa’s
attorneys which elicited no response. In the event, no undertaking
was given by Dobsa’s attorneys.
On 12 November 2013 the company
launched an application to rescind the judgment granted against it by
default.
[8]
But, Dobsa was unrelenting. It proceeded to instruct the sheriff to
remove the company’s goods pursuant to the attachment.
Consequently, on 28 November 2013, the company launched an urgent
application for an interdict restraining Dobsa from removing
the
company’s goods pursuant to the attachment effected on 26
November 2013 and ancillary relief. Dobsa opposed the application.
It
contested not only the issue of urgency but also questioned the
company’s bona fides in bringing such application, contending
that the application was a stratagem merely to delay and frustrate
Dobsa’s attempts to obtain satisfaction of its judgment.
It is
apparent from the record that Dobsa essentially adopted the attitude
that: (a) the company was indubitably indebted to it
in the amount of
the judgment; (b) the rescission application was contrived and that
the company had no bona fide defence to its
claim; and (c) it was
entitled to enforce the judgment that was properly granted in its
favour until and unless it was rescinded.
[9]
On 3 December 2013, the interdict application came before Victor J
whose judgment was delivered on 5 December 2013, granting
the
interdict sought. The learned judge reserved the costs of the
application for determination in the rescission application.
In the
course of her judgment the learned judge made the following
observations: (a) the company had done everything possible to
avoid
instituting the application; (b) it was clear that Dobsa was not
amenable to accommodate the company whilst its rescission
application
was pending; (c) the company had not been wilful in failing to defend
the action; (d) it appeared that the acrimony
between the parties had
spilt over to their attorneys; and (e) the company had a bona fide
defence to the claim particularly in
relation to the arbitration
clause as contained in the parties’ written contract.
[10]
In due course the application for rescission came before Reyneke AJ
who, on 9 June 2014, delivered a judgment rescinding
the
judgment. The learned judge ordered that the costs of the application
for rescission be paid by the company (as applicants).
And that the
costs of the application for the stay of the enforcement of the
judgment reserved by Victor J for determination in
the application
for rescission be borne by Dobsa.
[11]
The court a quo expressed similar views as those of Victor J in
relation to the conduct adopted by Dobsa. It also took note
of the
fact that the company had made out a case for rescission. Apropos the
costs relating to the interdict application, the court
a quo
considered various judgments dealing with the interpretation of rule
49(11)
[1]
of the Uniform Rules
of Court that are discordant. One view
[2]
was that to the extent that rule 49(11) provides that the
operation and execution of a judgment is automatically suspended
when, inter alia, an application for rescission is made it was ultra
vires and of no force and effect. The contrary view was that
the rule
was not ultra vires.
[3]
The
court a quo adopted the latter view. In the event, it took note of
the following: (a) that the writ was issued after the rescission
application had been launched (which is factually incorrect); (b) the
company could not be faulted for resorting to litigation
given
Dobsa’s unpreparedness to suspend its execution proceedings
against the company despite the pending rescission application
in the
face of the decisions in
Khoza
and
Peniel
.
As to the costs in relation to the rescission application, the court
a quo relied on authorities such as
Meintjies
NO v Administrasieraad van Sentraal-Transvaal
1980
(1) SA 283
(T);
Iveta
Farms (Pty) Ltd v Murray
1976
(1) SA 939
(T) and
Zarug
v Parvathie NO
1962 (3) SA 872
(D). The first two of these decisions are to the
effect that in an application for rescission of default judgment the
applicant
seeks an indulgence and must therefore bear the costs
reasonably incurred in opposing the application. And the latter of
the three
decisions is to the effect that a party opposing a
rescission application ought not to be required to do so at their
peril even
if rescission is ultimately granted.
[12]
Motivated by the considerations outlined above (para 9 and 11), the
court a quo made the costs orders which are now the subject
of
present appeals. Both parties were aggrieved by the costs orders
granted against them by Reyneke AJ. Consequently, they sought
and
were granted leave to appeal against the respective costs orders to
this court. What is therefore before this court on appeal
are the
following orders: (a) the order awarding costs against Dobsa in the
application for an interdict staying execution; and
(b) the order
awarding costs against the company in relation to the rescission
application.
[13]
But counsel contended that the ambit of the appeal is much wider and
that Uniform rule 49(11) was the central issue on appeal.
Thus,
counsel argued, it was necessary for this court to settle the
controversy generated by the discordant judgments mentioned
earlier
(para 11) by interpreting Uniform rule 49(11) so as to offer guidance
for the future. I am not persuaded that there is
any justification in
embarking on such a course on the facts of this case. As already
indicated, Uniform rule 49(11) has since
been repealed. And in light
of the enactment of
s 18
of the
Superior Courts Act 10 of 2013
, I am
not persuaded, contrary to what counsel contended for, that the
controversy generated by Uniform
rule 49(11)
is likely to arise
again.
[14]
Accordingly, these being appeals in relation to awards of costs, it
is necessary to briefly set out the principles relating
to the nature
and proper exercise of the discretion vested in a judicial officer
when making an order as to costs and the circumstances
in which an
appellate court can interfere with the exercise of that discretion.
The discretion of the nature under consideration
in these appeals has
been described as ‘a discretion in the strict or narrow
sense’.
[4]
Accordingly,
the appellate court’s power to interfere on appeal is limited
to instances where it is found that the court
of first instance did
not exercise the discretion judicially, or acted upon a wrong
principle, or exercised its discretion capriciously,
or did not bring
its unbiased judgment to bear on the question or did not act for
substantial reasons.
[5]
And as
the Constitutional Court put it, albeit in a different context:
‘
.
. . the lower court had not exercised its discretion judicially, or
that it had been influenced by wrong principles or a misdirection
on
the facts, or that it had reached a decision which in the result
could not reasonably have been made by a court properly directing
itself to all the relevant facts and principles.’
[6]
That
the appellate court would probably have come to a different
conclusion had it sat as a court of first instance is of no moment.
The appellate court would still not be entitled to interfere solely
on that ground.
[7]
[15]
In the present appeals there was no suggestion that the learned judge
in the court a quo was not mindful of the parameters
of the
discretion vested in her. Counsel for Dobsa sniped at the judgment
[8]
of the court a quo in which the learned judge said that Dobsa had
heedlessly went ahead to issue a writ after the company had launched
its rescission application. Whilst this statement was clearly
incorrect, it was not the sole consideration that weighed in the
court a quo’s mind.
[16]
Before us, it was contended on behalf of the company that the court a
quo committed a misdirection or did not bring its unbiased
judgment
to bear on the question of costs in adopting the view that the
company was essentially seeking an indulgence. To my mind,
neither of
the contentions advanced by Dobsa and the company can be sustained.
That an applicant in a rescission application is
in essence seeking
an indulgence has often been affirmed in a number of decisions.
[9]
[17]
More importantly, in relation to Dobsa’s appeal, is the fact
that both in the application for an interdict and the application
for
rescission, the company explained how it came about that default
judgment was granted. Significantly, it asserted that it had
at the
outset intended to defend the action and to that end had instructed
attorneys to enter an appearance to defend. But, inadvertently,
the
summons was sent to an incorrect email address. This mishap was only
discovered when the company was informed of the default
judgment by
Dobsa on 23 October 2013. These assertions were not and could not be
seriously contested by Dobsa.
[18]
Whilst Dobsa was perfectly within its rights to enforce its judgment,
this does not, however, mean that in so doing it was
not at risk of
an adverse costs order in the event that its opposition to the
interdict was unsuccessful as it happened. In light
of the
circumstances of this case as outlined above (paras 9 and 11) its
stance was not only ill-conceived but also unreasonable.
It ought to
have reflected dispassionately on the merits of the rescission
application. But, lo and behold, it allowed its better
judgment to be
clouded by the obdurate attitude it adopted that the company had no
triable defence to its claim. In these circumstances,
it cannot be
said, by any stretch of the imagination, that the court a quo did not
exercise the discretion vested in it properly.
[19]
Before concluding there is another issue that requires mention. As
indicated, these appeals are essentially about the costs
orders made
by the court a quo. That being so, I cannot discern why it was
thought necessary to grant leave to this court as the
appeals could
have been dealt with by the full court. Hence the company belatedly
attempted to have the appeals withdrawn from
this court and
determined in the full court. This court has on occasions lamented
the frequency with which leave is granted to
this court in respect of
matters not deserving of its attention.
[10]
The unfortunate consequence of this tendency is that complex cases
deserving of the attention of this court wait longer for enrolment
than would otherwise have been the case as they have to compete with
cases that are not.
[20]
For all the aforegoing reasons, therefore, there is no basis to
interfere with the costs awards made by the court a quo. Thus,
both
appeals cannot succeed.
[21]
In the result the following order is made:
Both
appeals are dismissed with costs.
_________________
X M PETSE
JUDGE
OF APPEAL
APPEARANCES:
For
the appellant in the Dobsa appeal: R Ram
(with
him I Monnahela)
Instructed
by:
DMS
Attorneys, Sandton
Molefi
Thoabala Attorneys, Bloemfontein
For
the respondents:
G G M Quixley
Instructed
by:
Barry
Aaron & Associates, Johannesburg
Honey
Inc, Bloemfontein
For
the appellants in the Dlamini
Advisory
Services appeal:
G G M Quixley
Instructed
by:
Barry
Aaron & Associates, Johannesburg
Honey
Inc, Bloemfontein
For
the respondent:
R Ram
(with
him I Monnahela)
Instructed
by:
DMS
Attorneys, Sandton
Molefi
Thoabala Attorneys, Bloemfontein
[1]
Since repealed by
Department of Justice and Constitutional Development Regulations, GN
R317,
GG
38694,
17 April 2015, with effect from 22 May 2015. Presumably Uniform rule
49(11) was repealed because it was inconsistent with
s 18
of the
Superior Courts Act 10 of 2013
which in essence provides that the
operation and execution of a decision which is the subject of an
application for leave to
appeal or an appeal is suspended pending
the decision of the application or appeal. An application for
rescission is not mentioned
in this section.
[2]
See in this
regard:
United
Reflective Converters (Pty) Ltd v Levine
1988
(4) SA 460
(W) at 463J-464C; see also
Nel
v Le Roux NO & others
2006 (3) SA 56
(SE) at 59I-J.
[3]
Khoza &
others v Body Corporate of Ella Court
2014 (2) SA 112
(GSJ);
Peniel
Development (Pty) Ltd & another v Pietersen & others
2014
(2) SA 503 (GJ).
[4]
Ganes &
another v Telecom Namibia Ltd
2004 (3) SA 615
(SCA) para 21;
Beinash
v Wixely
[1997] ZASCA 32
;
1997
(3) SA 721
(SCA) at 739G-I.
[5]
See for eg:
Benson
v SA Mutual Life Assurance Society
1986
(1) SA 776
(A) at 781I-782B and the authorities therein cited;
Kruger
v Le Roux
1987 (1) SA 866
(A) at 871F-G;
Cronje
v Pelser
1967 (2) SA 589
(A) at 592H-593C.
[6]
National
Coalition for Gay and Lesbian Equality & others v Minister of
Home Affairs & others
2000 (2) SA 1
(CC) para 11.
[7]
Penny v Walker
1936 AD 241
at 260;
Molteno
Bros v South African Railways
1936
AD 408
at 417;
Cronje
v Pelser
at
592H-593A.
[8]
Para 26.
[9]
Phillips t/a
Southern Cross Optical v SA Vision Care (Pty) Ltd
2000 (2) SA 1007
(C) at 1015G-H;
Greeff
v Firstrand Bank Ltd
2012
(3) SA 157
(NCK) para 49;
Minnaar
v Van Rooyen NO
[2015]
ZASCA 114
;
2016 (1) SA 117
(SCA) para 20.
[10]
Shoprite
Checkers (Pty) Ltd v Bumpers Schwarmas CC & others
2003
(5) SA 354
(SCA);
[2003] 3 All SA 123
para 23;
MTN
Service Provider (Pty) Ltd v Afro Call (Pty) Ltd
[2007] ZASCA 97
;
2007 (6) SA 620
(SCA) para 24.