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[2011] ZAGPJHC 210
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Excellent Petroleum (Pty) Ltd v Synchrony Logistics (Pty) Ltd t/a Imperial Bulk Services (2008/32155) [2011] ZAGPJHC 210 (8 September 2011)
SOUTH GAUTENG HIGH COURT,
JOHANNESBURG
Case No: 2008/32155
DATE:08/11/2011
In
the matter between:
EXCELLENT
PETROLEUM (PTY) LTD (IN LIQUIDATION)
(Represented
by its duly appointed liquidators,
Trevor
Philip Glaum and Peter
Carolus)
.................................................................
Plaintiff
and
SYNCHRONY
LOGISTICS (PTY) LTD
t/a
IMPERIAL BULK
SERVICES
........................................................................
Defendant
JUDGMENT ON COSTS
___________________________________________________________________
MEYER, J
[1] In this action the joint
liquidators of Excellent Petroleum (Pty) Ltd (in liquidation)
(‘Excellent Petroleum’) had
sought the setting aside in
terms of s 29(1) of the Insolvency Act
1
read with s 340 of the Companies Act
2
of payments adding up to an amount of R4, 860, 000.00, which
Excellent Petroleum had made to the defendant company, Synchrony
Logistics (Pty) Ltd t/a Imperial Bulk Services (‘Imperial’)
during the period 30 October 2005 until 8 March 2006. Payment
of an
amount of R3, 500, 000.00 was made on 31 October 2005, of an amount
of R250, 000.00 on 11 November 2005, of an amount of
R100, 000.00 on
16 November 2005, of an amount of R800, 000.00 on 8 November 2005, of
an amount of R50, 000.00 on 23 November 2005,
of an amount of R20,
000.00 on 22 December 2005, of an amount of R100, 000.00 on 9 January
2006, of an amount of R20, 000.00 on
9 February 2006, and of an
amount of R20, 000.00 on 8 March 2006. The plaintiff only succeeded
in having the payments that were
made during the period December 2005
until March 2006 set aside, which payments constituted an amount of
R160, 000.00 of the plaintiff’s
claim of R4, 860, 000.00. The
plaintiff was accordingly successful in claiming the setting aside as
voidable preferences of five
of the nine payments, which constitutes
just below 50% of the payments while in monetary terms the plaintiff
was awarded a mere
3.29% of the total amount claimed.
[2] I was not addressed in
argument on the matter of costs in the event of the plaintiff only
being successful in having the payments
that were made during the
period December 2005 until March 2006 set aside. I accordingly
reserved the matter of costs and required
the parties to address me
thereon. They agreed to make written submissions only. I am
grateful to the plaintiff’s counsel,
Adv J Muller SC, and to
the defendant’s counsel, Adv PF Rossouw SC, for their heads of
argument, which were of great value
in determining the question of
how the discretionary power in regard to an award of costs, which
must of course be exercised judicially,
should be exercised in the
present case.
[3] The general rule
applicable in ordinary trial actions is that, in the absence of
special circumstances, a successful litigant
should be awarded its
costs.
3
In
Joubert
t/a Wilcon v Beacham and Another,
4
Traverso J held ‘[t]hat there is no fixed definition of what
‘special circumstances’ will justify a departure
from the
general rule, but it is well recognised that the fact that a
plaintiff succeeds in a lesser amount than his claim does
not in
itself justify a departure from the general rule.’ Where a
plaintiff succeeds in a lesser amount than its claim a
defendant
could always have safeguarded itself against being held liable for
all the plaintiff’s costs by having made a timeous
and an
appropriate tender with costs.
5
A departure from the general rule may be justified where several
points of dispute have been raised and the successful party succeeds
only in respect of some of them.
6
In
Union
Share Agency & Investment Ltd. v Green
,
7
Gardiner J said this at p 141:
‘
Generally
speaking, the party in whose favour judgment is given should get the
costs of the case. But where a party, though he
has succeeded in
obtaining judgment, has failed on certain substantial issues, for the
raising of which he was responsible, then,
if the costs of those
issues are severable from the general costs of the case, he should be
ordered to pay the costs of those issues.
The victor had no right to
make defeat unnecessarily expensive for the vanquished, and if he has
not been content to rely on a
good point, but has added to the
expense by raising weak issues, he should bear the additional expense
to which his adversary has
been put.’
[4] The plaintiff, in order to
succeed in respect of the setting aside of each payment, had to prove
that immediately after the
making of each such disposition the
liabilities of Excellent Petroleum exceeded the value of its assets.
The plaintiff called
Mr Johan Andre Gerber as an expert witness to
give evidence of an expert nature on the financial position and
solvency of Excellent
Petroleum as at 30 September 2003, 30 September
2004, 30 September 2005, and 31 October 2005. A substantial amount
of time during
the trial was spent on the evidence of Mr Gerber. The
plaintiff, through the evidence and opinions of Mr Gerber, attempted
to
establish that Excellent Petroleum was uninterruptedly insolvent
since the year 2003 until the commencement of its winding up on
3
April 2006, and that its insolvency had been increasing throughout
this period until it was ultimately wound up. Mr Gerber did
not
investigate and was unable to express any opinion on the solvency of
Excellent Petroleum after 31 October 2005. The plaintiff,
however,
had failed to discharge the
onus
in proving on a preponderance of probabilities that Excellent
Petroleum’s liabilities exceeded the value of its assets
immediately
after the making of the payment of R3, 500, 000.00 on 31
October 2005, or immediately after the making of each payment that
had
been made during the month November 2005.
[5] It was recently pointed
out by the Supreme Court of Appeal in
Transnet
Ltd t/a Metrorail v Witter
8
that an
expert’s ‘qualifying fees’ are now referred to as
‘preparation fees’.
9
The Supreme Court of Appeal held that whether the preparation fees
for an expert should be claimable on taxation
‘
depends on
whether they were reasonably necessary; and that question is to be
answered not with the benefit of hindsight, but when
the fee or
expenses were incurred:
Stauffer
Chemical Co & Another v Safsan Marketing & Distribution Co
(Pty) Ltd & Others
10
.
If, therefore, it appears to the Court (in the case of preparation
fees of an expert) ... that it was reasonable for the legal
representatives
of
the successful party
to incur such expenses when they did so, the expenses should be
allowed. The consequence is that the qualifying fees and witness
allowances may be allowed on taxation, even though the witness
concerned did not, in the event, testify.’
11
Emphasis added.
[6] The caution expressed in
The
Government v The Oceana Consolidated Co.
12
is apposite. Smith J said this:
‘
In my opinion
such orders should not be lightly made, and the Court should only
grant them where it is quite satisfied that the
payment of qualifying
fees was reasonably necessary; in cases of doubt the order should be
refused. As a rule qualifying fees
would be paid to professional men
for giving expert evidence, and the costs of litigation might be
seriously increased if the payment
of qualifying fees became a matter
of course.’
[7] The plaintiff was not the
successful party in respect of the claims for which the expenses of
the expert witness, Mr Gerber,
were incurred. The evidence and
expert opinions of Mr Gerber related to the claims for the setting
aside of payments that had
been made during the period until 31
October 2005 and at best for the plaintiff also those that had been
made until the end of
November 2005. The issues pertaining to the
setting aside of those payments were ‘substantial issues’
for the raising
of which the plaintiff was responsible. The costs of
those issues are severable from the general costs of the case and the
defendant
should not, in my judgment, be held liable for them.
[8] In the result the
following order is made:
The defendant is ordered to
pay the plaintiff’s costs of suit, except the preparation fees
of the witness Gerber and the trial
costs for the duration of the
evidence of the witness Gerber, which fees and costs shall be
disallowed on taxation.
P.A. MEYER
JUDGE OF THE HIGH COURT
8 September 2011
1
Act No 24 of 1936.
2
Act No 61 of 1973.
3
See:
Kathrada v Arbitration
Tribunal and Another
1975 (2)
SA 673
(A), at p 679A – C;
Fripp
v Gibbon and Company
1913 AD
354
, at p 357.
4
1996 (1) SA 500
(C), at p 502E.
5
See:
Van Vuuren v Jonker
1910
TS 686.
6
Mouton v Die Mynwerkersunie
1977 (1) SA 119
(A), at p 149A
– E.
7
1926 CPD 129.
8
[2008] ZASCA 95
;
2008 (6) SA 549
(SCA).
9
Para [15].
10
1987 (2) SA 331
(A), at p 354I – 355H.
11
Para [18].
12
1908 TS 43
, at p 48.