About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: South Gauteng High Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: South Gauteng High Court, Johannesburg
>>
2012
>>
[2012] ZAGPJHC 264
|
|
Genesis on Fairmount Joint Venture v KNS Construction (Pty) Ltd and Others (36204/12) [2012] ZAGPJHC 264 (28 November 2012)
IN THE HIGH COURT OF SOUTH AFRICA (
SOUTH
GAUTENG
)
JOHANNESBURG
CASE NO: 36204/12
DATE: 28.11.2
012
In
the matter between
GENESIS
ON FAIRMOUNT JOINT
VENTURE
........................................................................
Applicant
and
KNS
CONSTRUCTION (Pty) Ltd AND
OTHERS
...............................................................
Respondents
J U D G M E N T
WILLIS,
J:
[1] The applicant applies for security for costs in arbitration
proceedings brought against the applicant by KNS Construction (Pty)
Limited now in liquidation (“KNS”). The appointed
liquidators are cited as the 2
nd
to 4
th
respondents. The application has been brought under Section 21 (1)
(a) of the Arbitration Act 42 of 1964 read with uniform rule
of
court, 47 (1).
Notice in terms of Rule 47 (1) was given on 21 May 2012
(simultaneously with the delivery of the statement of defence). The
respondents
dispute liability for security for costs.
[2] The claim arises from a building contract concluded between the
applicant and KNS prior to its liquidation during November
2006, in
terms of which KNS was to perform certain construction work for the
applicant as an employer. In terms of that building
contract KNS was
required to put up a construction guarantee in favour of the
applicant.
[3] During the course of the contract on 12 September 2008 the
applicant cancelled the building contract. On the same date it called
for a payment under the guarantee. This demand prompted KNS to launch
application proceedings to interdict the guarantor, Lombard
Insurance
Company, from paying under the guarantee. That application was
dismissed in this court.
[4] KNS then sought and was granted leave to appeal to the Supreme
Court of Appeal but at a later stage abandoned the appeal.
[5] The applicant bases its claim for security on the fact that KNS
is not only in liquidation but clearly also hopelessly insolvent.
It
also alleges that neither KNS nor the joint liquidators enjoys
locus
standi
to pursue the relief claimed in the arbitration, the
underlying claim having been ceded to another party and also that KNS
enjoys
no reasonable prospects of success in the arbitration in that
the underlying issue has already been determined by KNS, by this
court and that the appeal was
abandoned.
[6] KNS seeks clarity in the arbitration proceedings. It is true that
it is now seeking an amendment, which is somewhat flimsy
with due
respect. It is alleged: - “in terms of the claim and its final
account, sent to the defendant on or about 1 October
2012 the
defendant is liable to the claim in the amount of R61 175 185.00. A
copy of the claim and its final account summary is
annexed hereto as
SOC24.”
[7] The applicant in these proceedings has objected to that
amendment.
[8] I have been referred to two cases that have been quoted quite
often in this particular court, the first is the one of
Haitas and
Others v Port Wild Props 12 (Pty) Limited
2011 (5) SA 562
(GSJ)
decided by my brother Tsoka J and the other is the case of
Ngwenda
Gold (Pty) Limited and Others v Precious Prospect Trading 80 (Pty)
Limited and Others
case number 2011/31664 decided by LJ van der
Merwe, AJ in this court as well on 14 December 2012.
[9] I have also been referred to a very interesting article by DE Van
Loggerenberg and J Malan with which we have been confronted
on a few
occasions in this court: “Security for costs by local
companies: Back to 1909 in the Transvaal or not?”
(2012) 75
THRHR 609-621.
[10] In Section 13 of the Old Companies Act 61 of 1973 there was
provision expressly made for security for costs against corporate
litigants. It is well known and indeed obvious that the new Companies
Act contains no such provision. There is a debate that is
raging as
to whether this omission was a lacuna or not. I would rather not
express any opinion on this matter. It is in my nature
to avoid
controversy in delivering judgments.
[11] Be that as it may, it is quite clear then that this matter has
to be decided at common law. In this regard the judgment of
the
Supreme Court of Appeal in the case, sorry the judgment of Brand, JA
in the Supreme Court of Appeal decided unanimously in
MTN Service
Provided (Pty) Limited v Afro Call (Pty) Limited
2007 (6) SA 620
(SCA) is significant. In paragraph [15] of his judgment, Brand, JA
refers to the common law relating to an insolvent natural person
who
is an
incola
, and providing that security for costs will only
be ordered in exceptional circumstances.
[12] Brand JA says, however, that in regard to companies there is no
reason why only in exceptional circumstances security for
costs
should be provided.
[13] It is perfectly understandable why at common law there would be
a reluctance to slam the doors of justice in the face of a
poor
litigant but I see no reason why the common law should be confined to
preventing corporate litigants from litigating only
in vexatious
and/or reckless and/or frivolous circumstances. There is no reason
why the common law principle against slamming the
doors of justice
against widow and orphans should extend to purely commercial matters
such as this.
[14] What, then, is the common law? It seems to me
that we have a ready answer in the well-established principles of the
exercise
of a judicial discretion set out for example in the
Constitutional Court in
National
Coalition for Gay and Lesbian Equality & others v the Minister of
Home Affairs
&
others
2000 (2) SA 1
(CC) at paragraph [11]. In other
words the court has a judicial discretion, which must be
appropriately exercised, having regard
to all the relevant facts and
circumstances.
[12] When I have regard to all the relevant facts
and circumstances in this particular case it seems to me that this is
indeed an
appropriate matter to order security for costs.
[13] Relief has been sought along these lines in
prayers 1, 2, 3, 4 and 5 of the notice in motion, dated 21 September
2012. My only
difficulty is that paragraph 2 provides for the said
security to be fixed at R1 million (or such other amount as may be
determined
by the registrar). In my view it is appropriate to limit
the security to an amount as may be determined by the registrar.
[14] There is an order in terms of prayers 1, 2,
3, 4 and 5 of the notion of motion, dated 21 September 2010 except
that the sum
of the said security shall be the amount as may be
determined by the registrar of the court.
---oOo---
Counsel
for the applicant: Adv AO Cook SC
Counsel
for the respondent Adv P van der Berg
Attorneys
for the applicant: Norton Rose
Attorneys
for the respondents TLI Incorporated.