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[2013] ZAGPJHC 395
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Nel N.O and Another v Independent Trustees (Pty) Ltd and Others (21570/2012) [2013] ZAGPJHC 395 (20 November 2013)
REPUBLIC
OF
SOUTH AFRICA
SOUTH
GAUTENG HIGH COURT, JOHANNESBURG
CASE
NO: 21570/2012
DATE:
20 NOVEMBER 2013
In the matter
between -
JAN
HENDRIK NEL
N.O
......................................................................
First
Applicant
CHARMAINE
NEL
N.O
....................................................................
Second
Applicant
And
INDEPENDENT
TRUSTEES (PTY) LTD
............................................
First
Respondent
LIEBENBERG,
DAWID RYK VAN DER MERWE
.........................
Second
Respondent
ASSET
AUCTIONS (PTY)
LTD
.........................................................
Third
Respondent
FIRSTRAND
BANK LTD t/a
FNB
...................................................
Fourth
Respondent
TREVOR
PAYNE
................................................................................
Fifth
Respondent
THE
REGISTRAR OF DEEDS,
PRETORIA
......................................
Sixth
Respondent
THE COMPANY &
INTELLECTUAL PROPERTY
COMMISSION
OF THE
RSA
........................................................
Seventh
Respondent
PANAMO
PROPERTIES (PTY)
LTD
...............................................
Eighth
Respondent
(In business
rescue)
PINK
PARROT INVESTMENT (PTY)
LTD
........................................
Ninth
Respondent
(Registration
No. 2012/081958/07)
CHRISTOPHER
JOHN ALLANSON
.................................................
Tenth
Respondent
JUDGMENT
SHAKOANE, AJ
1
During
October 2012 the Applicants instituted application proceedings in
their capacities as trustees of the Jan Nel Trust No. 660/86
against
the Respondents. The application was, as it appears from the notes on
the Court file, first set down for hearing on 22
January 2013. It
then came before Wepener J on 12 February 2013 and an order was made
that it be removed from the roll and that
the costs incurred in
relation to the hearing are disallowed and may not be recovered from
either the Applicants or the Respondents.
[1]
2
It
appears that the matter again came before Rautenbach AJ on 20
February 2013 when an order was made in terms of a draft order
which
is stated to have been marked “X”.
[2]
3
Then that application later came before me
on 18 March 2013, and after hearing Counsel for the parties I
reserved judgment. The
argument by Counsel started off on some points
in limine
by the Fourth Respondent, but was later limited to the issue of costs
and the scale thereof. I deal briefly below with what I regard
as the
relevant events and background for purposes of this judgment.
4
In the Notice of Motion in terms of which
the application proceedings were initiated the Applicants sought the
following relief:-
“
1.
That pending the finalisation of the action instituted by the first
and second applicants against the abovenamed Respondents
under the
above case number, the First, Second, Third, Fourth, Fifth, Sixth,
Ninth and Tenth Respondents be interdicted from effecting
transfer
and/or alienating the property known as The Remaining extent of
Portion 502 (a portion of Portion 109) of the Farm Boschkop
199,
registration division I.Q., Province of Gauteng, measuring 2.5688
hectares and held by Deed of Transfer No. T155635/2000,
which
property is situated at Blueberry Street, Honeydew, Roodepoort,
Johannesburg (“the property”);
2.
That the Second Respondent, and
insofar as he acts through it, the First Respondent be removed as
Business Rescue Practitioners
of the Eighth Respondent;
3.
That in the event of this
application being unopposed, the costs hereof be costs in the action;
4.
That in the event of any of the
respondents opposing this application, that such Respondents be
ordered to pay the costs hereof;
5.
That such further and/or alternative
relief be granted to the Applicants as the above Honourable Court may
deem meet
”
.
5
The said Notice of Motion is dated 29
October 2012 and appears to have been served on all the Respondents,
bar the Third Respondent,
on 30 October 2012. The Third Respondent
was served on 31 October 2012.
6
Before me, the First, Second, Fourth and
Eighth Respondents opposed the application and relief sought by the
Applicants. The First,
Second and Eighth Respondents gave notice of
their opposition on 7 November 2012, whilst the Fourth Respondent
gave its notice
on the following day, 8 November 2012. Then on 28
November 2012 the First, Second and Eighth Respondents lodged their
Answering
Affidavit, and the Fourth Respondent lodged its Answering
Affidavit on 4 December 2012.
7
The Applicants, replied to the First,
Second and Eighth Respondents’ Answering Affidavit on 15
January 2013, in which reply
they included the Ninth and Tenth
Respondents, although they do not seem to have lodged any answering
affidavits. To the Fourth
Respondent, they replied on 21 January
2013.
8
For the Applicants, Mr Kloek appeared.
Immediately after Mr Kloek rose to address me on the merits of the
application, Mr de Villiers
who appeared for the Fourth Respondent
addressed me, pointing out that the Fourth Respondent will not be
persisting with its argument
pursuant to an application to strike out
certain averments in the Founding Affidavit of the Applicants
inter
alia
in that same are irrelevant,
scandalous and prejudicial to the Fourth Respondent, and consequently
inadmissible. He, however, indicated
that the Fourth Respondent would
be persisting with its first
in limine
point founded on the basis that “
no
case [had been] made out for an interim interdict
”
by the Applicants in their founding papers.
9
While Mr de Villiers was dealing with the
introductory part of his argument on that aspect, Mr Kloek for the
Applicants interjected
requesting for a short adjournment, which I
granted.
10
When the hearing resumed, Mr Kloek rose to
address me when he informed me that the Applicants were withdrawing
their application
and tendering the costs on party and party scale.
In turn Mr de Villiers informed me that his client, the Fourth
Respondent would
seek punitive costs against the Applicants. Then in
his address to me, Mr Gilbert for the First, Second and Eighth
Respondents
informed me that he held similar instructions from his
clients. It became inevitable therefore that the issue of costs,
particularly
the scale on which the Applicants had to pay the costs
of the application had to be fully argued before me for my decision.
I turn
to deal with the relevant argument on this issue by Counsel
for each of the disputing parties.
11The
starting point is on the principle that in special cases the Court
may award a litigant costs against an adversary on an
attorney-and-client basis. In that event, the successful litigant
becomes entitled to recover from the unsuccessful party all the
costs
that on taxation, are due by him to his attorney.
[3]
An award of costs in such cases is based on special considerations
arising either from the circumstances which give rise to the
action
or from the conduct of the losing party.
[4]
12
The
leading case on the award of cost on an attorney-and-client basis his
Nel v Waterberg Landbowers Ko-operatiewe Vereeniging
[5]
,
interpreted in Mudzimu v Chinhoyi Municipality & Another.
[6]
In the Nel case Tindall JA (two other Judges concurring) stated that,
by reason of special considerations arising either from the
circumstances which give rise to the action or from the conduct of
the losing party, the Court in a particular case may consider
it
just, by means of such an order, to ensure more effectually than it
can do by means of a judgment for party-and-party costs
that a
successful party will not be out of pocket in respect of the expense
caused by the litigation.
[7]
13
In
considering a punitive costs order, a Court should warn itself
against using hindsight in assessing the conduct of a party.
[8]
Also, an award of attorney-and-client costs will not be granted
lightly, as the Court looks upon such orders with disfavour and
is
loathe to penalise a person who has exercised a right to obtain a
judicial decision on any complaint such party may have.
[9]
14
It is against the backdrop of the
aforegoing cardinal principles that I have to confront the issue at
hand. In that process, I am
necessarily required to examine the
relevant facts and conduct of the parties as emerge from the
affidavits and covered in argument
before me by Counsel for the
parties.
15
Mr Kloek for the Applicants contended that
the party and party scale on which his clients tendered the costs of
the application
following their withdrawal thereof, was an
appropriate scale, in the circumstances of the matter.
16
In substantiation of his contention in this
regard, Mr Kloek argued in essence that insofar as concerns the
Fourth Respondent, the
Applicants have succeeded in setting out and
satisfying the requirement of a
prima
facie
right pursuant to the
interdictory relief they sought in this matter. What is not dealt
with by the Applicants however, so continued
Mr Kloek, is the
requirement of balance of convenience. That being the case, Mr Kloek
argued, the Fourth Respondent’s argument
based on alleged
vexatiouness on the part of the Applicants is unwarranted. I agree
with the last statement by Mr Kloek, but for
the reasons I mention
later below.
17
Turning
to the First, Second and Eighth Respondents’ request for
punitive costs, the nub of Mr Kloek’s submission was
that the
Applicants were, in the circumstances, justified in exercising their
rights to obtain a judicial decision on the complaint
they had as
against these respondents. That, so contended Mr Kloek, was so mainly
in that the First and Second Respondents had
failed in their
obligations pursuant to the business rescue plan, to deliver a report
in terms of Section 132 of the Companies
Act.
[10]
This, Mr Kloek contended is so because where there is such
non-compliance or failure on the part of the said respondents, the
Applicants were entitled in terms of Section 139 of the Act to move
for the removal and replacement of the First and Second Respondents.
He argued further that this is particularly so in that the report
which the First and Second Respondents were required to provide
in
terms of the provisions of Section 132 appeared for the first time in
the Answering Affidavit of the First, Second and Eighth
Respondents.
[11]
18
It
appears to me to be common cause that the Answering Affidavit of the
said respondents to which the report is annexed
[12]
was lodged on 28 November 2012.
[13]
The relevant allegations in the First, Second and Eighth Respondents’
Answering Affidavit
[14]
run
thus:-
“
61.
AD PARAGRAPHS 58.9, 58.11 &
58.14 TO 58.18 & 58.20
61.1
In fact I did submit a written
report to CIPC before the expiry of the three month period elapsed.
On 12 January 2012 I furnished
a written report to Ms Amanda
Lotheringen, the head of the Business Rescue division of CIPC, on a
number of Business Rescue matters
I was attending to, including that
of the Eighth respondent. A copy of that report is attached marked
“AA23”.
61.2
I admit that I did not furnish a
formal report to creditors. Instead, I regularly by way of either
e-mail or telephone conversations
kept all the interested creditors
informed of what was transpiring. By way of example, I refer to the
notification or update to
creditors dated 30 May 2012 annexed as “LL”
to the Founding Affidavit.
61.3
As set out above, the creditors and
the applicants as shareholders were involved in the adoption of the
business rescue plan. As
far as I was aware the company had no
employees. I have since published to all affected parties a report as
is required, a copy
of which is annexed as “AA24”.
62.
AD
PARAGRAPHS 58.10
I admit that the
Trust and the applicants contend that they are creditors of the
company. I do not concede the veracity of their
claims.
……
64.
AD
PARAGRAPHS 58.19 & 58.21
64.1
I admit that the Business Rescue
proceedings have taken longer than anticipated. This is because the
Applicants have rendered no
assistance at all in implementing the
Business Rescue plan which they adopted together with the other
creditors but instead have
embarked upon litigation to frustrate the
implementation of the Business Rescue Plan.
64.2
My attempts to give effect to
registration of transfer of the property to the purchaser have also
been delayed by various misrepresentations
made by the Applicants and
their conduct as directors of the company whilst under their
directorship. For example, the Blueberry
property does not appear on
the City of Johannesburg’s Municipal valuation roll and remains
as unrated agricultural land.
What this means is that at no stage has
the company paid any Municipal rates to the City of Johannesburg,
with the result that
the conveyancers have been unable to obtain a
clearance certificate in order to effect registration of the transfer
of the property.
64.3
Our conveyancers are presently
engaged with the City of Johannesburg in an attempt to obtain the
clearance and which in turn involves
having the Blueberry property
valued and placed on the Municipal valuation roll.
64.4
Further, the Blueberry property is
not connected to the Municipal electrical, water or sewerage
reticulation system. Instead, the
property makes use of borehole
water and obtains electricity direct from Eskom.
64.5
What this means is that not only is
transfer of the property delayed, but the value of the property is
significantly deflated.
64.6
The applicants have had no qualms
for years to operate the company “below the radar” and so
avoid making payment of
the usual municipal rates and consumption
charges that would otherwise have been payable.
64.7
It does not suit the creditors, the
bank or me as business rescue practitioner to delay the
implementation of the business plan
”
.
19
The
Applicants lodged their Replying Affidavit to the First, Second and
Eighth Respondent’s Answering Affidavit on 15 January
2013
[15]
,
just over a month after receipt of the Answering Affidavit, in which
they replied to the excerpt above as follows
[16]
:-
“
175.
AD PARAGRAPH 61 (Ad paragraphs
58.9, 58.11 & 58.14 to 58.18, and 58.20)
Ad
paragraph 61.1 – 61.2
175.1
I deny these allegations strongly.
175.2
The Second Respondent did not file a
report as claimed in paragraph 61.1 of his Answering Affidavit.
175.3
The “report” referred to
by the Second Respondent marked as “AA23” is a merely a
letter concerning various
matters and this is a blatant and flagrant
lie.
175.4
The following should be noticed from
the so-called report marked “AA23”:
175.4.1
in paragraph 1 the Second Respondent
states:
“
Towards
the end of last year your Ms Lothering requested that we furnish you
with
some form of a report
on the matters in which the writer had been appointed as Business
Rescue Practitioner”.
175.4.2
In paragraph 2 the Second Respondent
states:
“
We
understood the request not as a
formal request
, but
simply
to assist
the Commission
in
assessing the practical impact
Business Rescue (“BR”) has had, it[s] successes and its
shortcomings”.
175.4.3
In paragraph 3 the Second Respondent
states:
“
Accordingly
this report has been compiled with
the view of assisting
the Commission
by supplying information and reporting on each matter as follows”.
175.4.4
The above information clearly states
that the Second Respondent understands the request not as formal,
that it is simply to assist
the Commission in assessing the practical
impact of Business Rescue and that the report has been compiled with
the view of assisting
the Commission.
175.5
I respectfully submit that the above
letter marked “AA23” is not a report as required by CIPC
or as envisaged by Section
132 and 141 of the Act read with
Regulation 125.
175.6
I further submit that the report has
to be completed on a CoR 125.1 form as annexed hereto as “REP33”
which clearly
states that this form is issued in terms of Section 132
and 141 of the Act 2008 and Regulation 125.
175.7
I therefore respectfully submit that
the so-called written report is again an attempt to mislead the above
Honourable Court.
176
AD PARAGRAPH 61.3
176.1
I note the contents hereof.
176.2
I respectfully submit that the
Second Respondent had to submit his reports on a CoR 125.1 form which
“AA24”, significantly
dated 26 November 2012, one day
before the signature of his answering affidavit, is however December
2012.
176.3
No report was received for December
2012.
176.4
The Second Respondent clearly did
not and does not comply with the Act and Regulations.
176.5
Further legal argument will be
submitted in this regard.
176.6
I further submit that the remark
with relation to any employees is also incorrect and it is clear that
the Second Respondent is
evasive in this regard.
176.7
I however respectfully and with all
due respect submit that the above CoR 125.1 (AA24) is the 1
st
report filed and further submit that:
176.7.1
the Second Respondent failed to
firstly approach the Court as required in Section 3 of the Act; and
176.7.2
the Second Respondent in any event
has failed to file 9 (NINE) previous CoR 125.1 documents as required
by the Act and Regulation
125 and 1 subsequent report for December
2012.
……
178.
AD PARAGRAPH 62 (Ad paragraphs
58.10)
178.1
I note the contents hereof.
178.2
The Second Respondent disingenuously
refuses to admit the veracity of the Applicant’s claims which
he should have dealt with
in terms of Section 141(1).
178.3
I reiterate that the shareholders
claims are valid and enforceable and the statement another attempt to
try to mislead the above
Honourable Court.
…
..
180.
AD
PARAGRAPH 64 (Ad paragraphs 58.19 & 58.21)
AD PARAGRAPH
64.1 – 64.7
180.1
I deny these allegations.
180.2
The Second Respondent once again
attempts to mislead this Honourable Court by not replying to my
statements chronologically and
fully.
180.3
I further submit that the Second
Respondent fails to reply to various statements at all which I have
been advised stands as admitted.
180.4
Further legal argument will be
submitted in this regard.
180.5
I deny that the legal proceedings
are to frustrate the process.
180.6
The property was on the City
Municipal Valuation roll before a portion was sold to African Brick
before the rescue proceedings the
Local Authority has ceased to
render accounts to the Company.
180.7
The property has borehole water and
a French drain sewerage system.
180.8
The electricity is supplied by City
Power who has since the sub-division and transfer to African Brick
also not rendered any accounts.
180.9
The Company was therefore not
operated below the radar as alleged and its value is not inflated
”
.
20
In
advancing the First, Second and Eighth Respondents claim for a
punitive cost order against the Applicants, Mr Gilbert moved from
the
premise that the Applicants were aware of the issue taken
in
limine
in respect of the failure to deal with and meet the requirement of
balance of convenience pursuant to the interdictory relief sought
by
the Applicants in their application before me. In substantiation
thereof Mr Gilbert referred to the Answering Affidavit of the
Fourth
Respondent.
[17]
The said
Answering Affidavit appears to have been lodged on 4 December
2012
[18]
, also just over a
month after the lodging of the application by the Applicants.
21
The
Applicants replied to the Fourth Respondent’s point
in
limine
aforesaid on 21 January 2013,
[19]
and in their relevant Replying Affidavit they deal with the
allegations in paragraph 6.1 of the Fourth Respondent’s
Answering
Affidavit as follows
[20]
:-
“
9.
AD PARAGRAPH 6 (Ad paragraph 6.1)
9.1
I deny these allegations.
9.2
I respectfully submit that the
Applicants have made out a clear case for the relief claimed.
9.3
Further legal argument will be
submitted in this regard.
10
AD PARAGRAPH 6.1.1
I
deny the contents hereof. Further legal argument will be submitted in
this regard.
11
AD PARAGRAPH 6.1.2
11.1
I deny the contents hereof.
11.2
Further legal argument will be
submitted in this regard.
12
AD PARAGRAPH 6.1.3
12.1
I deny the contents hereof.
12.2
Further legal argument will be
submitted in this regard.
13
AD PARAGRAPH 6.1.4
13.1
I deny the contents hereof.
13.2
Further legal argument will be
submitted in this regard
”
.
22
Regarding
the submissions made by Mr Kloek on behalf of the Applicants in
explaining the Applicants’ move to withdraw the
application and
tender the costs on the party and party scale
[21]
,
Mr Gilbert contended that the Applicants do not, in light thereof,
provide a satisfactory explanation or at all why they are withdrawing
the application. I must say when considering Mr Kloek’s
submission based on the Applicants’ failure to deal with the
requirement of balance of convenience as being the underlying reason
for their withdrawal of the application,
[22]
juxtaposed with the Applicants’ reply in paragraph 9.2 of the
excerpt quoted above from their Replying Affidavit,
[23]
I am inclined to agree with Mr Gilbert’s submission.
23
That
I say because the said excerpt from the Applicants’ Replying
Affidavit ostensibly shows that when the Applicants were
confronted
with the Fourth Respondent’s point
in
limine
alleging a failure on their part to meet the requirements for the
interdictory relief sought by them, they appeared to have been
adamant that they “
have
made out a clear case for the relief claimed
”
and that “
[f]urther
legal argument will be submitted in this regard
”
by them.
[24]
There was no
explanation before me advanced by the Applicants or Counsel on their
behalf as to why and when was this stance abandoned
by them.
24
It
seems to me that the Applicants only began to have second thoughts
and/or doubt about their stance aforesaid when they were at
the doors
of Court on the date of the hearing. However, Mr Gilbert had his
suggestions as to the reason behind the Applicants’
withdrawal
of the application. In that regard Mr Gilbert drew attention to the
Heads of Argument of the First, Second and Eighth
Respondents
[25]
and contended that the actual reason for the withdrawal is that the
application by the Applicants had as its purpose simply to
frustrate
the implementation of the business rescue plan by the first and
Second Respondents
[26]
, and in
that regard, Mr Gilbert sought to draw similarity with what
transpired in the case of Hudson & Others NN.O. v Wilkins
N.O. &
Others.
[27]
25
In
his further submissions in that regard Mr Gilbert argued that the
business integrity of a business person, being the Second Respondent
is being attacked by the Applicants in an unwarranted manner.
[28]
In elaborating on that submission Mr Gilbert referred to what he
termed “
scathing
attack
”
on the Second Respondent
[29]
,
as well as what he referred to as “
outbursts
”
[30]
and to alleged allegations of collusion which, he submitted, have not
been withdrawn by the Applicants.
[31]
Based on these, Mr Gilbert advanced the argument that the
dictum
in the Hudson case
[32]
remains
relevant and should be followed by this Court. He argued that
paragraph [20] of the Hudson judgment is in fact directly
relevant to
the present matter. I am not persuaded that this is so, and I state
my reasons in this regard later below.
26
Mr
de Villiers for the Fourth Respondent supported the argument by Mr
Gilbert regarding what he referred to as vexatious and blameworthy
allegations by the Applicants, which he also submitted should warrant
a punitive costs order on the attorney and client scale,
and in that
regard he placed reliance also on the Fourth Respondent’s
Answering Affidavit wherein it is
inter
alia
alleged that the Applicants have made “
unsubstantiated
aspersions about persons with no basis in fact or in law for such
aspersions
”.
[33]
27
Insofar
as the paragraph
[34]
relied
upon by Mr Gilbert in his reference to the Hudson case
[35]
,
it reads thus:-
“
[20]
Mr Brett persuasively argued that the applicants should bear the
costs of the application on the scale as between attorney
and client
for the following reasons:-
first,
the application was ill-conceived since Wilkins and Bowman were not
liquidators of Ranch International at the time of the
launching of
this application. Secondly, the applicants deliberately accused the
liquidators of being dishonest, deceitful and
incompetent. They are
accused of conspiring and colluding with creditors without any cogent
evidence to support such far-reaching
allegations. These allegations
are indeed too serious to be taken lightly. It was known to the
applicants prior to initiating the
application that the charges of
impropriety on the part of the liquidators would be strenuously
denied. The applicants’ persistence
in attacking the integrity
of both Wilkins and Bowman is tantamount to malice. Thirdly, the
applicants launched the proceedings
in terrorem; after the filing of
the application papers, the applicants took no further steps to bring
the matter to finality.
It is quite apparent that the delay in the
hearing of this application was caused exclusively by their refusal
or failure to deliver
their replying affidavit timeously.
Concomitantly, it has also delayed the finalisation of the winding-up
of the estate of Ranch
Transvaal. Therefore, under the circumstances,
counsel for the respondents rightly submitted that the applicants
should bear the
costs of the application on the scale as between
attorney and client, including the costs incurred by the employment
of two counsel.
There is certainly a justification for such an order
of costs
”
.
28
In
my view, when regard is had to the facts and evidence
[36]
in the present matter the considerations and sentiments expressed in
the excerpt from the Hudson decision above, cannot be said
to be so
relevant as to be the basis for this Court to justify the granting of
a punitive cost order. In fact, to my mind, it is
neither similar nor
relevant to the present matter. Rather, I am of the view that, if
this Court is to grant a costs order as sought
by the participating
respondents, it should be on other founded basis as may be justified
on the facts and evidence in the present
matter. I say this for the
following reasons, amongst others.
29
Firstly,
the Second Respondent makes some concession in his answering
affidavit which, to me, seem to support the Applicant’s
complaint of an imbalance in the implementation of the business
rescue plan, especially when viewed with the Second Respondent’s
attitude towards the Applicants and their attorneys as discussed in
paragraph 31 below. The concession by the Second Respondent
emerges
from the following paragraphs of his answering affidavit:-
[37]
“
47.3
At the meeting with the bank, the bank’s representatives were
particularly disgruntled that the applicants had placed
the company
under business rescue and accordingly prevented the bank from
foreclosing on its security. I was informed at the meeting
that the
bank was intent upon setting aside the resolution placing the company
under business rescue in terms of Section 130 of
the Companies Act
and sought to continue with execution proceedings or to place the
company under compulsory winding-up.
48.
48.1 I had formed
a view that the company may nonetheless have a reasonable prospect to
continue to exist on a solvent basis if
an appropriate business
rescue plan was adopted and implemented by only with the support of
FNB as the major creditor who enjoyed
security over all the company’s
properties. It was only after much negotiation and persuasion on my
part with the bank that
I was able to persuade the bank to give the
business rescue a chance and not to seek to set aside the business
rescue proceedings.
48.2 A notice to
all the creditors on 2 November 2011, I convened the first meeting of
creditors of the company in terms of Section
147 of the Companies
Act, on 11 November 2011. The meeting was attended by amongst others,
Louise Breet of FNB, and the first applicant.
48.3 This meeting
and further discussions culminated in a further meeting with FNB on
30 November 2011. At this meeting the bank
agreed in principle to a
plan to rescue the business.
48.4 After the
latter meeting I sent an e-mail to FNB’s representatives, which
was copied to the first applicant Mr Nel and
to his then attorney Mr
Krause, in which I set out the in-principal agreement reached with
FNB. A copy of my e-mail is attached
marked “AA7A”.
48.5 I verily
believed that the bank was only persuaded to afford the applicants
and the company an opportunity to undergo business
rescue proceedings
based upon my long-standing professional relationship with the bank.
I readily concede that over the years as
an experienced insolvency
practitioner and later as a business rescue practitioner I have
developed a good working relationship
with FNB as I had with the
other major banks. My contact with the banks is inevitable given that
I am an experienced insolvency
practitioner.
48.6 An
insolvency practitioner and business rescue practitioner, with
respect, can hardly participate in the industry without being
exposed
to and developing a professional relationship with the major banks.
48.7
It is because the bank respects my professionalism that they were
prepared to give the company an opportunity to rescue itself
through
business rescue proceedings
”
.
[emphasis added]
30
Secondly,
in his reply to the argument by the Respondents’ Counsel Mr
Kloek referred to certain common cause facts to the
effect that the
Second Respondent appointed BRP on 26 October 2011 and that BRP
assumed management control of the company in conjunction
with the
company’s management.
[38]
After having been appointed, the BRP instructed the valuator, to
provide him with an auction value of the immovable assets to enable
him to determine the liquidation scenario as contemplated in Section
150(2)(a)(iii) of the Act and to enable affected persons to
comply
with, if necessary, Section 153(1)(b)(ii) of the Act.
[39]
Mr Kloek decried this as precipitate and showing of undue haste on
the part of the Second Respondent. I agree. Mr Kloek also referred
to
further common cause information that the list of creditors included
the Applicants and the Jan Nel Trust, contrary to the denials
by the
Respondents, particularly the Second Respondent.
[40]
31
Thirdly,
Mr Gilbert has accepted in the course of his submissions that the
allegations against the Second Respondent as complained
of, started
after the Applicants’ attorneys have made a statement by e-mail
on 29 March 2012
inter
alia
that the “
Business
rescue are
(sic)
null
and void
”.
[41]
However, in my reading of the relevant e-mail I found nothing
offensive or amounting to vexatiousness as against the Second
Respondent.
In order to make this judgment self-contained I quote the
relevant contents of the e-mail which are as follow:-
“
Dear
Mr. van der Merwe
Your refusal to
answer to our letter is hereby noted.
We will however
place the following on record:
1.
Our firm represents the Jan Nel
Trust;
2.
Your Business rescue are null and
void
(sic)
;
3.
We hold sufficient funds on trust to
settle the main creditor, FNB, which will be disclosed, to the High
Court in the application;
4.
We hold further proof of development
finance for a project to follow.
We trust that you
find the above in order.
God Bless
Tienie Kapp
T.G.
Bosch-Badenhorst Attorneys
……”
.
[42]
[emphasis added]
32
Fourthly,
the complaints and statements or allegations made by the Applicants
appear to me to be also supported to a material extent
by the
contents of the affidavit and annexures, including the excerpts
quoted therefrom in this judgment
[43]
,
as well as a reading of the relevant provisions of the Companies
Act
[44]
referred to by the
Applicants and Mr Kloek on their behalf.
33
Lastly,
Mr Gilbert has also accepted, and correctly so in my view, in the
course of his submissions that there has been a “
show
of emotions and tempers flying”.
In that regard, Mr Gilbert referred again to the relevant contents in
the affidavits.
[45]
He
submitted that “
the
applicants stepped the bound
”,
and in substantiation thereof he referred to the matters which I
earlier stated he relied on in arguing that paragraph
[20] of the
Hudson case is particularly relevant to the present matter.
[46]
34
The
submissions of Mr Gilbert in this regard, in my view, are not
sustainable. That I say in that in my reading of the relevant
contents of the affidavits and the attached e-mail communication
before me,
[47]
it appears
therefrom that the Second Respondent fired the first salvo by
referring to the Applicants and their attorneys as “
a
bunch of clowns
”.
[48]
35
In
contrast, the approach and attitude of the Second Respondent to
requests or suggestions coming from other creditors or affected
parties, especially the Fourth Respondent, appear to have been
different and cordial.
[49]
Based on this and the other complaints and criticism as also
articulated on behalf of the Applicants during argument
[50]
before me, Mr Kloek argued that the Respondents’ contention
that the Applicants are vexatious is unwarranted and that, in
the
circumstances, the Applicants were justified in exercising their
rights to obtain a judicial decision on the complaint they
had
against the Respondents.
[51]
I
have had regard to the relevant facts and the relevant provisions of
the Companies Act,
[52]
as well
as those referred to by Mr Kloek in argument. It seems to me that,
bar the withdrawal of the application by the Applicants,
there may
have been merit in the submissions by Mr Kloek on behalf of the
Applicants.
36
Bearing
in mind the aforegoing, I am of the view, that the Applicants may
well have been justified to believe that they were being
attacked in
their personal honour and integrity and had to stand up for their
rights in the transaction involved. Indeed, to paraphrase
the words
of a renowned jurist, Caney J expressed more than a generation ago in
S v Tromp
[53]
, the Respondents
were, in this context the opponents to the Applicants in the
litigation and the Applicants were entitled, in the
circumstances, to
make their case without fear or favour.Thus, if the Applicants felt
that they were being ridden rough shod, as
it indeed appears to be so
from the facts, it was not for them to lie down to this, but to
exercise their rights to assert their
side of the case. The
Respondents, like any other litigant, must therefore submit to such
comments as came from their opponents,
being the Applicants. As aptly
put by Caney J, “
[h]e
[or she] who enters the lists must be prepared to take verbal
knocks
”.
[54]
37
Put
differently, it is my view that the Respondents, particularly the
Second Respondent, having fired the first salvo as aforesaid,
may not
at the same time be heard to complain that he is being subjected to
unwarranted attack by the Applicants, and then seek
to use that as
the basis to found and justify a punitive costs order in his favour.
I would on these grounds not have been inclined
to accede to the
Respondents’ application for a punitive costs order. However, I
did state earlier above
[55]
that there appear to be other bases in law on which this Court may,
nonetheless still find justification to award costs on the
attorney
and client scale against the Applicants. That, in my view, the
Applicants brought upon themselves by their own conduct
when they
suddenly decided to withdraw the application.
[56]
I elaborate further on this in the succeeding paragraphs below. Of
course, the further submissions of Mr de Villiers below become
relevant in that regard.
38
Mr
de Villiers, supported by Mr Gilbert submitted that in the present
case, the Applicants were forewarned regarding their alleged
failure
to meet the requirements for an interdict, including the requirement
of balance of convenience, especially when the Fourth
Respondent’s
Answering Affidavit was filed.
[57]
Further, Mr de Villiers submitted that, given the sudden manner in
which the Applicants withdrew the application at the doors of
Court,
the Fourth Respondent has been placed to unnecessary expense,
[58]
and that the Applicants “
should
not just institute proceedings for the sake of it
”.
He submitted that these all constitute grounds for censure and
punishment by way of a costs order on a higher scale, citing
the
decision in South African Bureau of Standards v GGS/AU (Pty) Ltd.
[59]
39
To
my mind, there is substance in the above submissions made by Mr de
Villiers for the Fourth Respondent. His submissions, in my
view, also
accord with the cardinal principles as adumbrated in the leading
cases I referred to earlier above.
[60]
It indeed also appears that a party, like the Applicants in this
matter, that is induced to withdraw his or its application as
a
result of statements appearing from the affidavit of the other party,
makes himself or itself liable to censure and may for that
reason, be
visited with an order of costs on a higher scale.
[61]
It seems to me therefore that an order for costs on the attorney and
client scale as sought by the Respondents is, on this basis,
justified.
40
In the event, I make the following order:-
40.1
the Applicants are ordered to pay the costs
of the application on the scale as between attorney and client;
40.2
this order shall not detract from the order
of Wepener J of 12 February 2013 and that of Rautenbach AJ of 20
February 2013.
G
SHAKOANE, AJ
Acting
Judge of the
South
Gauteng High Court
DATE OF HEARING :
18 MARCH 2013
DATE OF JUDGMENT
: 20 NOVEMBER 2013
FOR THE
APPLICANTS : MR J W KLOEK
INSTRUCTED BY :
T.G. BOSCH-BADENHORST
OF
HELDERKRUIN,
ROODEPOORT
FOR
1
ST
,
2
ND
& 8
TH
RESPONDENTS : MR
B M GILBERT
INSTRUCTED
BY : EVERSHEDS ATTORNEYS
OF
SANDOWN, SANDTON
FOR 4
TH
RESPONDENT : MR D P DE VILLIERS
INSTRUCTED BY :
A.D. HERTZBERG ATTORNEYS
OF 9 WALTERS AVE,
ROSEBANK
[1]
See:
White sticker on the face of Court file, with notes thereon
[2]
See:
Notes on face of Court file
[3]
See:
Herbstein & Van Winsen: “The Civil Practice of the High
Courts of South Africa” (5
th
Ed), Vol 2, pp 953 to 954 & footnote 18 therein
[4]
Gamevest
v Regional Land Claims Commissioner
[2001] 4 All SA 534
(LCC) at 561
g & footnote 30 therein; See also: Gamevest (Pty) Ltd v Regional
Land Claims Commissioner 2003(1) SA 373 (SCA)
at 388, para [35] &
[36]
[5]
1946
AD 597
[6]
1986(3)
SA 140 (ZH) at 143 D – I to 144
[7]
at
607
[8]
AA
Alloy Foundry (Pty) Ltd v Titaco Projects (Pty) Ltd 2000(1) SA 639
(SCA) at 648
[9]
Herbstein
& Van Winsen,
supra
p 971 & footnote 169 therein
[10]
No.
71 of 2008
[11]
See:
Bundle F, pp 501 to 503
[12]
as
Annexure “WA23”
[13]
See:
Bundle C, pp 259 to 261
[14]
See:
Bundle D, p 308, para 61 to p 310, para 64
[15]
Bundle
G, pp 670 to 672, especially the Registrar’s date stamp and
receipt signature therein
[16]
Bundle
H, p 776, para 175 to p 781, para 180
[17]
See:
Bundle F, p 561 to p 562, para 6.1
[18]
Ibid
,
p 558, especially the receipt date stamps therein
[19]
See:
Bundle I, pp 896 to 897, especially the dates of receipt and
signature therein
[20]
See:
Bundle J, p 905, para 9 to p 906, para 13
[21]
See:
paras 15 to 17
[22]
Ibid
[23]
Para
21,
supra
[24]
See:
Bundle J, p 905, para 9; para 21,
supra
[25]
P
35, para 93
[26]
Ibid
,
para 93.1
[27]
2003(6)
SA 234 (T) at para [4]; see also footnote 32,
infra
[28]
1st,
2
nd
& 8
th
Respondents’ Heads of Argument, p 35, para 93
[29]
Bundle
E, p 486
[30]
Ibid
,
p 488
[31]
Bundle
J, p 907, para 15.3 & p 947, para 44.2
[32]
At
243, para [20]
[33]
Bundle
F, pp 562 to 563, para 6.3
[34]
Para
[20]
[35]
At
243
[36]
Paras
18 to 19,
supra
[37]
Bundle
C, p 284, para 47.3 to p 285, para 48.7
[38]
Bundle
B, p 146, para 2.3
[39]
Ibid
,
p 147, para 2.4
[40]
Ibid
,
p 187
[41]
Bundle
D, p 377
[42]
Bundle
D, p 377
[43]
See
for example, paras 18 to 19, 29 and 31,
supra
[44]
No.
71 of 2008
[45]
Bundle
D, p 375
[46]
Paras
24 and 25,
supra
[47]
Bundle
C, p 292, para 48.32 to p 293, para 48.33; Bundle D, Annexure
“AA11”, p 373 to 379
et
seq
[48]
Bundle
D, p 375
[49]
Compare
:
para 29,
supra
[50]
Para
30,
supra
[51]
Paras
16 and 17,
supra
[52]
See:
Sections 132(2) and (3), 133, 134(2) and (3), 138(1) and (e),
139(2)(a), (b), (d) and (e), (3), 140 and 141, amongst others
[53]
1966(1)
SA 646 at 655 C and H
[54]
Ibid
,
at 655 H
[55]
See
paras 25 and 28,
supra
[56]
Paras
22 and 23,
supra
[57]
Bundle
F, p 561, para 6, especially p 562, para 6.1.3
[58]
4
th
Respondent’s Heads of Argument, p 20, para 34
[59]
2003(6)
SA 588 (T) at 592, para [8]
[60]
Paras
10 to 12,
supra
[61]
James
v Jockey Club of SA 1954(2) SA 44 (W)