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
>>
2020
>>
[2020] ZAGPJHC 217
|
|
Meyersdal Nature Estate Homeowners Association NOC and Another v Farrar and Others (2019/17644) [2020] ZAGPJHC 217 (4 September 2020)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
and
SAFLII
Policy
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: 2019/17644
In
the matter between:
MEYERSDAL
NATURE ESTATE HOMEOWNERS
ASSOCIATION
NPC
First Applicant
MARQUISOL
PROPERTY INVESTMENTS (PTY) LTD
Second Applicant
and
FARRAR,
ADRIAN
MITCHELL
First Respondent
FARRAR,
RYNETTE
Second Respondent
NHLABATHI,
GYS LOUW
INC.
Third Respondent
JUDGMENT
HEARD
REMOTELY VIA ZOOM PLATFORM 2 SEPTEMBER 2020
FA
SNYCKERS AJ:
INTRODUCTION
1
This is an
application for anti-dissipatory relief (a so-called “
Knox
D’Arcy”
order).
[1]
It is an
interdict aimed at restraining someone from disposing of his own
property with an intention to thwart a legitimate
claim, or rather,
to make it impossible for the applicant to execute against such
property in due course in enforcement of its
claim.
2
The claim in question comprises a number of debts, all relating to
liability for legal costs on the part of the first and second
respondents (“the Farrars”) to the applicants.
There are three categories of cost liability at issue:
2.1 taxed bills of costs;
2.2 cost awards that are
yet to be taxed;
2.3 anticipated cost
awards not yet handed down.
3
All of the costs awards, and the whole of this application, can be
traced to proceedings the Farrars instituted against the applicants
relating to building work constructed by the second applicant in a
residential estate. This building work occurred close to the
property
of the Farrars in the same estate. The first applicant is the
Homeowners Association of the estate. The Farrars had adopted
the
attitude that the building work was illegal and contrary to the rules
of the estate, and when their objections were rejected
by the
Homeowners Association, they resorted to legal action.
4
The action became an arbitration after the Homeowners Association
contended that the matter was arbitrable in terms of its articles,
to
which the Farrars were bound. An unbelievable flood of proceedings,
relating to this arbitration process, then ensued.
The Farrars
withdrew their arbitration claim and a cost award was made against
them in the arbitration. The applicants did not
seek any substantive
relief against the Farrars in the application. Attempts to enforce
this cost award yielded a series of proceedings
entailing various
ways of challenging the arbitration process, revolving around the
notion that there was never a validly signed
written arbitration
agreement. These proceedings included an application by the Farrars
enrolled on the unopposed roll, setting
aside the arbitration, in the
teeth of a parallel application that had been brought by the
applicants to make the arbitration (costs)
award an order of court.
The order that had been obtained by the Farrars in this way then
needed to be set aside by the applicants,
and this occurred with a
concomitant punitive cost order against the Farrars. Attempts
to tax various bills of costs that
issued forth from this process
were resisted by the Farrars on the basis that all bills of costs
that issued from this process
were illegitimate, as the arbitration
process itself was illegitimate.
5
By the time the matter came before me, almost ten years had passed
since the institution of the original action. The process
of
seeking to obtain execution on some of the cost awards yielded
nulla
bona
returns against both Farrars in 2016. In the meantime,
a bank obtained judgment against the first respondent on a mortgage
bond held against the property that had been the site of grievance
with respect to the construction work executed close to it.
This eventually led to an aborted attempt to sell the property in
execution. Acts of insolvency on the part of the Farrars abound,
including statements made in the affidavit resisting summary judgment
in the bank’s foreclosure application.
6
In 2017 both Farrars gave notice of an intention to apply for
voluntary surrender of their estates and in February 2018 the first
respondent once again gave such notice. Steps were never taken
to complete any voluntary surrender processes.
7
The sale in execution of the Farrars’ property at the instance
of the bank was not implemented. Instead, in March
2019, the
Farrars managed to sell their property for a purchase price in excess
of R6 million. The bank debt was settled
and an amount of some
R3 million in free residue was held in the trust account of the third
respondent (attorneys). Attempts
to elicit undertakings from
the Farrars and their attorneys to retain sufficient funds in the
trust account to cover the various
cost awards that had been made
against the Farrars met with refusals.
8
Papers were then drawn and delivered, founding and answering, in this
application. Before delivery of the replying affidavit,
the
applicants launched an
ex parte
interim application seeking
essentially the same relief as in, but pending the outcome of, this
application. Certain bouts
of litigation flowing from the
original arbitration litigation were still pending at the time this
application was launched but
had, by the time it was heard, in the
meantime been resolved in the applicants’ favour, yielding
further cost awards. On
15 July 2019 Mashile J granted an interim
anti-dissipation interdict against the funds held in the trust
account up to R1 million,
pending the outcome of this application.
9
By the time the application was ready to be heard by me, all the
legal proceedings pending the outcome of which the anti-dissipatery
relief was originally sought had been finalised, with cost awards
still needing to be taxed. An application for leave to
appeal
against the last outstanding order relating to the arbitration
proceedings (which also yielded a finding, a further cost
award,
against the Farrars) had been dismissed, but an application for leave
to appeal before the Supreme Court of Appeal was (and
is at the time
of this judgment) still pending.
ASSESSMENT
10
In the answering papers, the Farrars concede that two costs awards
that were spawned in the suite of proceedings flowing from
the
arbitration process founded undisputed debts (i.e. irrespective of
the outcome of the challenge to the whole arbitration process)
and
that these could be held in trust to the benefit of the applicants.
This comprised a taxed bill in favour of the second
applicant in the
amount of R53 816.39, together with admitted interest on that
bill of R16 959.15, and an amount of R150 000
towards an
untaxed bill for a cost award flowing from the order yielded against
the Farrars when their application to set aside
the arbitration
award, that had been enrolled on an unopposed basis, had to be
undone.
11
I confirmed with counsel for the Farrars in argument that this
amounted to consent to anti-dissipatery relief being granted in
the
total amount of R220 775.54, pending the final outcome of the
proceedings that are currently subject to the pending application
for
leave to appeal to the Supreme Court of Appeal and the final taxation
of all the outstanding bills of costs, and any ancillary
challenges
and/or appeal proceedings flowing from such taxations. This is
a rough paraphrase of the relief sought in the
application before me,
about which formulation I say more below.
12
It is useful to separate two questions:
12.1 the existence of a
debt owing to the applicants as “security” for which the
anti-dissipation relief is being sought;
and
12.2 the existence of a
well-founded apprehension that the funds in the trust account would
be dissipated to thwart the ability
of the applicants to obtain
execution against such debt.
13
The existence of a debt in an amount of just over R220 000 is
common cause.
14
The cost awards flowing from the arbitration and from the defeats
suffered by the Farrars in their attempts to challenge the
arbitration proceedings are all undeniable. An application for
leave to appeal against the order making the award an order
of court
was dismissed at first instance. Although a further application
for leave to appeal is pending before the Supreme
Court of Appeal,
unless cogent grounds were advanced as to why serious doubt could be
said to be cast on a
prima facie
entitlement to the benefits
of the cost awards to date, I would, on the principles of interim
relief, accept the existence of the
indebtedness established at on a
prima facie
basis, even if open to some doubt.
15
Far from casting serious doubt on the applicants’ entitlement
to these cost awards, the basis for the application for leave
to
appeal before the Supreme Court of Appeal, upon which the arbitration
process is challenged, appears to me to be seriously dubious.
The notion that the arbitration clause in the Articles of Association
of the Homeowners Association, on the strength of which the
arbitration was conducted, was not a sufficiently bespoke written
arbitration agreement for the requirements of the Arbitration
Act
strikes me as wholly untenable, as does the contention that the
nature of the proceedings originally instituted was not of
the kind
covered by such arbitration clause. It appears to me
overwhelmingly unlikely that, even if leave to appeal were
to be
granted by the Supreme Court of Appeal, an appeal would succeed.
At the very least, there cannot be said to be sufficient
material
before me (factual or legal) to cast serious doubt on the existence
of the debts, for purposes of establishing at least
a strong
prima
facie
right, flowing from all the cost awards.
16
The applicants’ costs from the arbitration proceedings alone
amounted to some R507 000. It was pointed out that
the
Farrars had themselves submitted a bill of costs for their
arbitration costs in an almost identical amount of some R511 000
in legal proceedings challenging the arbitration. Counsel for
the Farrars was constrained to concede that it appeared that
the
amount of R507 000 must be seen as reliably quantified for
purposes of the relevant cost award, and could not point to
any
cogent material or consideration to dispute this amount.
17
The additional amount of some R220 000 is, as alluded to above,
admitted.
18
There is therefore at least a
prima facie
indebtedness in an
amount of some R730 000 in relation to which no serious doubt
has been established.
19
There are then three further undeniable cost awards:
19.1 that flowing from
the dismissal of the Farrars’ review application in relation to
the arbitration award;
19.2 that flowing from
the order making the award an order of court, an award of costs on
the attorney and client scale;
19.3 that flowing from
the order dismissing the application for leave to appeal in this
regard.
20
Cost awards would also attract costs for drafting bills and for
attending to taxation, even if one ignored any possible challenges
in
the process.
21
Counsel for the Farrars conceded that any realistic estimate of the
amount of these additional awards would quickly reach an
amount of
R270 000, and could not submit to me that such amount would be
in any way an inordinate estimate in relation to
these undeniable
awards.
22
This is to ignore cost awards against the Farrars that may emanate
from this application itself.
23
There is therefore a strong basis for finding on these papers that an
amount of at least R1 million is owing in cost awards (if
not yet due
and payable) by the Farrars to the applicants. This finding can
comfortably be reached without resort to the late supplementary
affidavit submitted by the applicants’ attorney substantiating
untaxed awards with reference to fee lists submitted in the
meantime,
an affidavit I allowed despite opposition.
24
In my view, the evidence is overwhelming that, without retaining the
anti-dissipatery relief in place against the funds in the
trust
account, the applicants’ allegation that attempts in due course
to execute on the cost awards would yield no fruit,
must be accepted,
at least for the purposes of a well-founded apprehension.
25
The conduct of the Farrars is akin to those who play insolvent or are
insolvent. The evidence is rife of non-payment, default,
evasion,
nulla bona
returns, attempts to initiate surrender,
and neglect to pay a single cost award at any point. This includes a
version from a pawnshop
owner that the Farrars had “pawned”
their household goods, yet these had not been sold off but had
instead been kept
on the Farrars’ property, against a version
by Mrs Farrar’s mother, when confronted with an execution
attempt, that
all the movables in the Farrars’ household
belonged to her. No evidence was put up to suggest that there was
anything to
the submission that the position of the Farrars had
changed for the better. There was certainly no evidence that there
would in
due course be anything to execute against if the
anti-dissipation relief that has been in place since July 2019 were
to be lifted.
I have little doubt that, but for such relief,
the amount of R1 million currently held subject to such relief would
have been dissipated.
26
I raised with counsel for the applicants the concern that the mere
fact that absent the relief there would be nothing to execute
against
was by itself not sufficient to establish the requisites for the
interdict sought, namely that the dissipation was being
done or
threatened with the intention to thwart payment of the applicants’
claim. My point was that it seemed as if
any creditor might be
in the position of the applicants and that the applicants did not
necessarily enjoy a peculiar or unique
position when it came to a
fear that dissipation of funds on the part of the Farrars would make
it impossible for them to enforce
their claims.
27
Counsel for
the applicants submitted that it might well be that other creditors,
should they be able to establish claims as cogently
as those of the
applicants, would similarly be entitled to relief of the kind sought
by the applicants, but that there was no suggestion
in the papers of
other creditors, nor did counsel for the Farrars suggest that there
were any. It is interesting that the
court in
Knox
D’Arcy
at
372E-F spoke of the requisite intention as “
the
intention of defeating the claims of creditors”
,
i.e. not necessarily requiring an intention specifically directed at
the applicant’s claim.
[2]
Furthermore, the history of the conduct of the Farrars in relation to
payment of any cost awards owing to the applicants is such
as to
raise at least a
prima
facie
justification for the proposition that the threatened removal of the
funds from the trust account would indeed be calculated specifically
to deny the applicants an ability to enforce their cost awards.
I certainly think there is enough on a
prima
facie
basis to establish this directed threatened conduct.
28
Counsel for
the applicants fairly pointed out that the interdict would be neutral
and negative in its operation; it would not create
any preference,
nor even earmarking of any funds as far as the applicants were
concerned, and it would in fact operate to the benefit
of creditors
as a whole were any to come forward.
[3]
29
It is
well established that “
[t]
here
is an inverse relationship in interim interdicts between the
requirements of a prima facie right and the balance of convenience:
the stronger the one, the weaker the other is permitted to be.”
[4]
In the instant case, the
prima
facie
right
is strong enough to have the balance of convenience pale into
insignificance. But in any event, the Farrars want to use the
R1m to
invest in a business venture in the Congo, perhaps conveniently
outside the jurisdiction of these courts. Against this,
the
applicants would have nothing to execute against if the money were to
fly. The balance of convenience favours the applicants.
30
In the circumstances I am of the view that the requirements of an
anti-dissipation order have been sufficiently fulfilled to
warrant
such an order.
31
The draft order in the form proposed by the applicants would,
however, have remained in place pending any appeals or challenges
in
relation to proceedings that may be spawned, whether ancillary as a
tributary or more directly, from the pending leave to appeal
application and the anticipated taxation proceedings in relation to
the outstanding cost awards. I do not think it appropriate
to
put the applicants in a position, by themselves reviewing or
appealing any orders, to extend the operation of any anti-dissipation
order I may grant. I have therefore adapted the relief somewhat
to remove this possibility.
32
I do not believe that it is appropriate to “
confirm”
the order of Mashile J of 15 July 2019, as it operated pending the
outcome of this application so that, if it be not discharged
as a
result of the failure of this application, then it would be
automatically discharged and subsumed by this application.
33
I grant an order in the following terms:
1. The order of Mashile J
of 15 July 2019 is discharged.
2. The third respondent
is interdicted from paying to the first and/or second respondent the
free residue amount, up to a maximum
of R1 million, currently held in
trust, which forms part of the proceeds of the sale of the property
known as […], Meyersdal
Nature Estate, Alberton, pending:
1.1
the finalisation of any leave to appeal applications or appeals,
initiated by the first and/or second respondent, in relation
to the
order of Hartzenberg AJ of 7 February 2020 in the High Court, Gauteng
Division, Pretoria (Case No. 88605/2016);
1.2
the taxation by the applicants of any cost awards made in their
favour, and the levying of execution in respect of any taxed
costs,
in respect of the following matters:
1.2.1 the application and
counter-application in Case No. 88605/2016 referred to above,
yielding the order of Hartzenberg AJ on
7 February 2020, and the
application for leave to appeal under Case No. 88605/2016, dismissed
by Hartzenberg AJ on 17 July 2020,
and any further unsuccessful
applications for leave to appeal against the order of Hartzenberg AJ
issued on 7 February 2020;
1.2.2 the final
determination of any appeal for which the respondents may be granted
leave to appeal against the order of Hartzenberg
AJ issued on 7
February 2020;
1.2.3 the application
brought by the first and second respondents in the High Court of
South Africa, Gauteng Local Division, Johannesburg
under Case No.
9036/2018, to rescind the arbitration award;
1.2.4 the costs flowing
from this application as ordered, and from any application for leave
to appeal or appeals that may be initiated
by the respondents against
this application or its costs awards.
2. The first and second
respondents jointly and severally are directed to pay the costs of
this application and of the application
that yielded the order of
Mashile J on 15 July 2019.
FA
SNYCKERS AJ
ACTING
JUDGE OF THE HIGH COURT
4
September 2020
Date
of Hearing: 2 September 2020
Judgment
Delivered: 4 September 2020
APPEARANCES:
On
Behalf of the Applicants: LW de Koning SC
Instructed
By: Mills & Groenewald
Vereeniging
On
Behalf of the Respondents: C Grant
Instructed
By: Mncube Attorneys
Johannesburg
[1]
Knox
D’Arcy Ltd & Others v Jamieson & Others
1996 (4) SA 348 (A).
[2]
Metlika
Trading Ltd & Others v Commissioner, South African Revenue
Services
2005
(3) SA 1
(SCA) at para 35 employs a similar formulation in
paraphrasing and referring to
Knox
D’Arcy
.
[3]
In
Knox
D’Arcy
at
372A it is pointed out that the remedy does not create any security
in the true sense for the applicant’s claim, as there
is no
preferential right created in respect of the interdicted funds.
[4]
Van der Linde J in
Resilient
Properties (Pty) Ltd v Eskom Holdings SOC Ltd & Others
2019
(2) SA 577
(GJ), para 49.