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[2010] ZAWCHC 509
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Talmera Trading CC v Aquandro NO and Others (14184/10) [2010] ZAWCHC 509 (22 October 2010)
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE HIGH COURT, CAPE TOWN)
Case
Number: 14184/10
In
the matter between:
Talmera
Trading CC
….............................................................................................
Applicant
and
Glen
Ira Aquadro N.O.
….............................................................................
First
Respondent
Catherine
Elaine Aquadro N.O.
….........................................................
Second
Respondent
Glen
Ira Aquadro
…....................................................................................
Third
Respondent
ABSA
Bank Limited N.O.
…....................................................................
Fourth
Respondent
JUDGMENT
DELIVERED ON 22 OCTOBER 2010
Baartman
J
[1]
This is an application for security for costs by the first, second
and fourth respondents in this matter. The proceedings
against the
third respondent had earlier been withdrawn. I deal with that
withdrawal below.
[2]
On 22 June 2010, Desai J granted an order brought ex
parte
by
the ABSA Bank N
.O.
as
sole trustee of the Fountainhead Property Trust Scheme
(the
fourth respondent)
for
the eviction of the first and second respondents, in their capacity
as trustees of the G & E Trust
(the
Trust),
and
those holding under them from Shop 71 at Kenilworth Centre
(the
premises).
The
applicant was the sub-tenant of the Trust. The applicant instituted
proceedings for the rescission of that judgment and further
ancillary relief.
[3]
The first and second respondents in the rescission application are
the trustees of the Trust in their nominative capacities.
The third
respondent was Glen Aquadro in his personal capacity; he is also the
first respondent in his capacity as trustee of
the Trust. ABSA Bank
N.O. is the fourth respondent.
[4]
The fourth respondent tooK the eviction order with the consent of
the Trust. The eviction order provided as follows:
"It
is hereby ordered that -
1.
Compliance with the forms and service provided for in the uniform
rules be dispensed with and that the matter be heard as one
of
urgency in terms of Uniform Rule 6(12)(A);
2.
The cancellation of the written agreement of lease concluded between
the Fountain Head Property Trust (formerly Allan Gray
Property
Trust) and the G&E Trust (TMP 2178) on 1 December 2004 (as
amended by the written addendum concluded between those
parties on
or about May 2009) in respect of the premises: Shop No. 71, an
outside seating area and store room to, Kenilworth
Centre ("the
Premises"), is hereby confirmed;
3.
The G&E Trust (and all persons occupying under it) is ejected
from the premises with effect from the date of this order;
4.
Failing the vacation of the G&E Trust (or any persons occupying
under it) from the premises by close of business by 22
June 2010,
the Sheriff of this Honourable Court (or any deputy) is hereby
authorised and directed forthwith to take all steps
as may be
necessary to eject any and all those persons in occupation of the
premises;
5.
The costs of this application shall be borne by the respondents
jointly and severally as a scale between attorney and own client."
[5]
Terence Pollock
(Pollock)
attested
to the founding affidavit in the eviction application and said that:
(a)
The Allan Gray Property Trust let and the G & E Trust hired the
premises in terms of
a
lease
that commenced on the 1 July 2004 and terminated on 30 June 2009.
(b)
In terms of the lease, the G&E Trust enjoyed an option to renew
the lease for a further period of 5 years on the same
terms and
conditions as applicable to the initial period of the lease.
(c)
In due course, the Fountain Head Property Trust Scheme succeeded the
Allan Gray Property Trust as successor in title. In these
proceedings, the applicant, that is ABSA Bank Limited, acted in its
capacity as sole trustee of the Fountain Head Property Trust
scheme.
It follows that the applicant had replaced Allan Gray as the lessee
in respect of the lease with the G&E Trust. The
first and second
respondents were cited in these proceedings, referring to the
eviction proceedings, in their capacities as trustees
of the G&E
Trust.
(d)
In May 2009, the parties concluded an agreement in terms whereof the
G&E Trust exercised its option to renew the lease
for a further
period of 5 years. The new lease period commenced on 1 July 2009 and
was to terminate on 30 June 2014.
(e)
Pollock further indicated that since the execution of the extension
to the new lease, the fourth respondent:
"...has
procured the development of plans to effect substantial alterations
and renovations to the Kenilworth Centre, and
in an effort to
improve the conditions and appearance of the shopping centre
facility in general, to modernise and uplift the
facility and to
improve access to and thoroughfare in and around the centre."
(f)
Pollock indicated that the proposed renovations would alter the
floor plan of existing shops He said that part of the premises
let
to the Trust would be used as a thoroughfare. In order to
accommodate the proposed renovations, the parties had cancelled
the
old lease and entered into a new one.
(g)
Pollock described the relevant terms of the new lease as follows:
"24.1
The lease premises comprised: shop 71 and 71 A, their extended spill
out area in front of shop 71 A, storeroom 1 and
storeroom 2
(collectively "the second premises");
24.2.
The second lease commences on 10 June 2010 and terminates on 30 June
2014;
24.3.
In terms of annexure "G" to the second lease, the trust
will provide the lessee with a relocation allowance of
R300 000.00
including VAT, or the actual costs of relocation incurred by the
lessee."
(h)
Pollock further indicated that:
"..
.as far as I am aware there is an occupant in the first premises.
However, as far as I am aware there is a dispute between
the G&E
Trust and that occupant in as much as the occupant does not have the
consent or permission of the G&E Trust to
be in the premises.
For
what it is worth, I say that the trust has no dealings with the
occupant and has not given the said occupant permission to
remain in
the premises. Moreover, I am advised and verily believe that there
is in any event no relationship in law between the
trust and any
occupant of the premises other than its own lessee, the G&E
Trust."
[6]
In these proceedings, it was common cause that the applicant was the
occupant to which Pollock referred. Pursuant to the eviction
order,
the applicant was evicted from the premises.
[7]
In these proceedings the applicant sought the following relief: ( I
quote from the Notice of Motion)
"2.
That
a Rule Nisi do issue calling upon respondents, and all interested
parties, to show cause, if any, on a date to be determined
by the
Honourable Court why the following orders should not be made final:
2.1.
Setting aside the Court order of His Lordship Mr Justice Desai of 22
June 2010 under case number 13466/2010;
2.2.
Declaring that the sublease between applicant and first and second
respondents on behalf of the G&E Trust of 9/6/07 providing
inter
alia
for
the parties thereto showing "the utmost good faith to each
other in deciding when to renew the existing lease" (annexure
"ST4"
hereto)
constitutes a binding sublease agreement between applicant and the
G&E Trust;
2.3.
Irrespective of whether "ST4" or "ST5"
constitutes the sublease between the parties, declaring that the
rights, benefits and obligations negotiated by the F&R Trust
with fourth respondent in terms of the renewed main lease between
them
("ST2
read
with
"ST10")
and
which resulted in annexure
"ST26"
being
concluded, all apply mutatis mutandis to applicant;
2.4.
An order that first and second respondents comply with those
provisions of annexure
"ST26"
which
apply to applicant by inter alia:
2.4.1
.
permitting
applicant to occupy the premises at shop 71, shop 71S, the spill out
area in from of shop 71S and storerooms 1 and
2 situate in the
Kenilworth Centre against payment by applicant of the rental
provided for therein;
2.4.2.
granting applicant occupation and undisturbed possession of the
aforesaid premises on the terms set out therein;
2.4.3.
paying the relocation allowance the G&R Trust received in terms
thereof from fourth respondent to applicant.
3.
That, pending the return day of the Rule Nisi, the orders in
subparagraphs 2.1 and 2.4 above shall operate as an interim
interdict;
4.
That, in the event of there being a dispute of fact incapable of
being resolved on the pape
r
s,
interim relief in the aforegoing terms, which is to similarly
operate with immediate effect, be granted pending the final
determination of any such dispute by way of oral evidence;
5.
Costs of the application against the respondents jointly and
severally the one paying the others to be absolved.
6.
Further and/or alternative relief."
APPLICANT'S
GROUNDS FOR RESCISSION
[8]
In the rescission application, the applicant alleged that the fourth
respondent had failed to disclose that the applicant
had entered
into a sublease agreement with the Trust. The applicant alleged
that the Trust colluded with the fourth respondent
to evict the
applicant so that the Trust could take over the business that the
applicant had conducted from the premises.
[9]
The applicant alleged that it had a legal interest in the
proceedings and that it should have been joined as a party in the
eviction application.
[10]
It was common cause in these proceedings that the fourth respondent
had consented to the sublease. Counsel for the fourth
respondent, Mr
Dickerson, in argument informed the court that in terms of the lease
between the fourth respondent and the Trust,
the fourth respondent
had to authorise or agree to the sub-lease of the premises. The
applicant sought to use the fourth respondent's
consent to the
sub-lease to advance the argument that it was a necessary party to
the eviction application.
[11]
The applicant further alleged that the fourth respondent's failure
to have given it notice of the eviction application was
in violation
of its rights in terms of section 34 of the Constitution. It
therefore argued that to the extent that the common
law did not
require a sub/lessee of the premises to receive notice of the
application, the common law stood to be developed in
light of the
constitutional imperative.
Reasons
for withdrawing against third respondent
[12]
The only relief sought against third respondent was a costs order.
However, the applicant withdrew the application against
him. The
reasons for the withdrawal appear from the record to be the
following:
(a)
On 7 July 2010, the first, second and third respondents, in terms of
Rule 47(1) and (3), gave notice to the applicant that
they required
it to put up R200 000 as security for their costs.
(b)
The applicant's attorney in correspondence to the first, second and
third respondents disputed the applicant's liability to
put up
security.
(c)
On 12 July 2010, the third respondent proceeded with his application
for security and indicated that he would accept R80 000
as security.
As indicated above, the only relief sought against the third
respondent in his personal capacity was a costs order.
(d)
In correspondence dated 9 July, the applicant's attorney confirmed
the withdrawal of the matter against the third respondent
as
follows:
"We
refer
to the third respondent's application for security for cost in terms
of Uniform Rule 47 in the above matter.
We
note therein that your client (third respondent) states that our
client (applicant) will be entitled to continue with the actual
or
effective relief it seeks against the remaining respondents, even if
it is unable to provide your client (third respondent)
with security
for its cost and is obliged to discontinue its application against
it.
Our
client's instructions are that it is unable to provide third
respondent with security for his cost.
In
the light of that which has been stated by your client in his
affidavit (referred to above) and in order to avoid an interlocutory
application, which will only delay the substantive relief our client
seeks, it is prepared to amend its notice of motion by substituting
all references to the respondent "in prayers 2 and
5
thereof
with reference to first, second and fourth respondents."
As
a result our client will not be seeking the cost of its application
nor any other relief currently contained in the notice
of motion
from your client (third respondent). It will be proceeding with such
relief against the remaining respondents.
Our
instructions are furthermore to tender your client's (third
respondent's) wasted costs occasioned by this amendment, which
would
include the abortive cost of the application for security by third
respondent, on the scale as between party and party,
as tax or
agreed.
We
look forward to receiving your client's confirmation that its
application for security is to be withdrawn on the above basis."
[13]
Subsequent to the withdrawal against the third respondent, the first
and second respondents pursued their application. They
indicated
that they did not continue with their applications earlier because
they required financial information in respect of
the applicant. The
fourth respondent later also applied for security for its costs.
The
applicable legal principles
[14]
I deal below with the applicable legal principles.
[15]
The first applicable legislation to this matter is Section 8 of the
Close Corporations Act 69 of 1984
(the
Act)
which
provides as follows:
"When
a corporation in any legal proceedings is a plaintiff or
applicant... the court concerned may at any time during the
proceedings if it appears that there is reason to believe that the
corporation ... will be unable to pay the costs of the defendant
or
respondent ...if he or she is successful in his or her defence,
require security to be given for those costs, and may stay
all
proceedings till security is given."
[16]
It is so that the provisions of section 8 are almost identical to
that of section 13 of the Companies Act 61 of 1973
(the
Companies Act)
and
accordingly the principles applicable to Section 13 apply
mutatis
mutandi
to
the provisions of section 8 of the Act.
[17]
The Constitutional Court had in the matter of
Henry
v RE Designs CC
1998(2)
SA 502(C) at 507 F-G said the following:
"To
ensure that companies who are unlikely to be able to pay costs and
therefore not effectively at risk of an adverse costs
order if
unsuccessful, do not institute litigation vexatiously or in
circumstances where they have no prospects of success thus
causing
the opponents unnecessary and irrecoverable legal expenditure."
[18]
It is so that the court seized with an application for security for
costs engages in a two-stage process. At the first stage,
the court
is required to enquire whether there is reason to believe that the
applicant or the plaintiff as the case may be, will
be unable to
satisfy an adverse costs order made against it. In that enquiry, the
party seeking security for costs bears the
onus
and
if it fails to discharge that
onus,
that
is the end of the enquiry (see
MTN
Service Provider (Ply) Ltd v Afro Call (Pty) Ltd
2007(6)
SA 620 (SCA) at 622h and
Ferreira
v Arlinders Ltd
1964(1)
SA 630(0).)
[19]
If the applicant for security succeeds in discharging that
onus,
the
court enters the second stage of the enquiry, which involves a
balancing of factors and the exercise of a judicial discretion.
[20]
In the matter of
Giddey
N.O. v J C Barnard & Partners
2007(5)
SA 525(CC), the Constitutional Court described the court's
discretion as follows:
"There
can be no doubt thai in exercising its discretion in terms of S13
[and similarly Section 8], a court must bear in
mind the provisions
of S34 [of the constitution] and weigh them in light of the other
factors laid before it. The balancing exercise
proposed by the
Supreme Court of Appeal in Shepstone & Wylie ... acknowledges
that, albeit without express reference to the
constitution. On one
side of the scale must be weighed the potential injustice to the
plaintiff or applicant if it is prevented
from pursuing a legitimate
claim. This incorporates a recognition of the importance of the
right of access to courts. On the
other side of the scale must be
placed the potential injustice to the defendant if it succeeds in
its defence but cannot recover
its costs. Relevant considerations in
performing this balancing exercise will include the likelihood that
the effect of an order
to furnish security will be to terminate the
plaintiff's action; the attempts the plaintiff has made to find
financial assistance
from its shareholders or creditors; the
question whether it is the conduct of the defendant that has caused
the financial difficulties
of the plaintiff; as well as the nature
of the plaintiff's action".
[21]
The applicant contended that ordering it to pay security for the
cost of the respondents would lead to the termination of
the
rescission application. That is a factor which I have to consider in
the exercise of my discretion.
The
first stage of the enquiry
[22]
I,
for the reasons that follow, am of the view that there is reason to
believe that the applicant would be unable to satisfy a
costs order
made against it.
(a)
The applicant had operated a franchise from the premises. It has,
since the granting of the eviction order, ceased trading
and has
lost its source of income.
(b)
In its opposition to the first and second respondents' application
for security for costs, the applicant described its financial
situation as "penurious".
(c)
The applicant owned no immovable property and its movable assets
were subject to an instalment sale agreement with Stannic.
R240 000
was owed in terms of the instalment sale agreement.
(d)
According to the applicant, Stannic had in September valued the
immovable property at R600 000. However, 2 years later, in
September
2009, Stannic valued the same assets at R300 000.
(e)
The first and second respondents have attached a sworn valuation of
the equipment dated 26 June 2010, from which it appears
that the
movable property was valued at R64 550.
(f)
The applicant alleged that there existed a R60 000 surplus in the
immoveable property that could be used to settle at least
part of a
costs order. However, trie property is currently in the possession
of the Trust who is using it in its business. The
applicant and the
Trust are in dispute in respect of the property. It is not necessary
for purposes of this judgment to deal
with the merits of that
dispute.
(g)
The Trust is unable to fund this litigation. The applicant has two
members who also claim to be unable to fund the litigation
instead.
The members' husbands, to whom the two members are married in
community of property, are financing this litigation.
The husbands
are unwilling to put up the security for the respondents' costs.
(h)
The
applicant failed, when called upon by the fourth respondent, to
furnish the following financials:
"1.
The applicant's tax returns for the years 2009 and 2010;
2.
The applicant's bank statements from January 2010 until July 2010;
3.
The applicant's audited financial statements for the years 2009 and
2010."
(i)
The fourth respondent s counsel referred me to the matter of
Petz
Products v Commercial Electrical Contractors
1990(4)
SA 196 CPD as authority for the proposition that the applicant's
failure to produce the financials justified an inference
that the
information would have revealed that the applicant would be unable
to pay its costs in the rescission application and
that the
applicant was in dire financial straits from a date predating even
the launch of the present application. Rose-Innes
J in the Petz
matter said the following at 206 F-G on the subject:
"The
normal method to be adopted by a company endeavouring to resist an
application for security is to furnish its balance
sheet so that the
party requiring security and, if need be, the court can see how far
the assets of the company exceed its liabilities.
Equitable
Trust and Insurance
Co
of SA
Ltd
v Registrar of Banks
1957(1)
SA 689(T) at 691. Precisely the same applies to a company resisting
a demand for an increase of security. The probable
inference to be
drawn from respondent's failure to produce its financial records is
that, were they revealed, they would afford
respondent no answer to
the demand for additional security for costs."
(j)
I agree that the Petz matter is authority for that proposition. In
my view, in the light of the applicant's financial situation,
set
out above, its failure to have produced its financial records
justifies the inference that the applicant would be unable
to
satisfy an adverse costs order against it.
(k)
In the light of the objective facts set out above, I am of the view
that there is reason to believe that the applicant would
be unable
to satisfy an adverse costs order if such an order was made against
it.
The
second stage of the enquiry
[23]
Based on the above, I now enter the second stage of the enquiry; the
principles applicable to this stage appear from paragraphs
14-20
above.
[24]
I deal below with the factors that I have considered in the exercise
of my discretion to ascertain whether the applicant
should be
directed to put up security. I have balanced those factors in order
to determine what would be equitable and fair to
all the parties
concerned.
[25]
I have taken into consideration the applicant's current inability to
finance these proceedings as well as its members' alleged
inabilities. The reluctance of the members husbands to put up
security was taken into account.
[26]
I have further taken into account the circumstances surrounding
applicant's withdrawal of the application against the third
respondent. The applicant's counsel conceded that it was not
apparent that the third respondent had the authority to bind the
fourth respondent, its landlord at the time.
[27]
It is likely that the third respondent as trustee had authority to
bind the Trust. However, the third respondent has denied
that he
purported to bind any of the respondents. I do, however, consider
that the applicant on the correspondence quoted above
clearly acted
on that understanding. The applicant's counsel argued that the
applicant acted to its detriment on that understanding.
He argued
that the applicant would not have withdrawn the application against
the third respondent had it realised that the other
respondents
would require the applicant to put up security for their costs.
[28]
I have also considered the relief sought in the eviction
application. It is so that the applicant as sub lessee had no
locus
standi
to
intervene in the proceedings for an order confirming the
cancellation of a contract to which it was not a party. (See
United
Watch and Diamond Co. v Disa Hotels
1972(4)
SA 409(C) at 417 and
Vandenhende
v Minister of Agriculture, Planning and Tourism, Western Cape &
Others
2000(4)
SA 681).
[29]
In the Vandenhende matter, Thring J dealt with an application from a
prospective buyer to set aside review proceedings. The
proceedings
involved the relevant authority's refusal to grant a rezoning
application by the owner of the property. On the facts
of that
matter, the court found that a prospective buyer had no
locus
standi
to
bring an application for review of that refusal. Thring J accepted
that the applicant as prospective purchaser had a commercial
or
financial interest but found that it was not sufficient to give him
locus
standi
in
that matter. He referred to among others the matter of
Henri
Viijoen (Pty) Ltd
v
Awerbuch
Brothers
1953(2)
SA 151(0) and quoted the following passage from that judgment with
approval.
"The
sub/tenants' right to, and interest in, the continued occupancy of
the premises sub/leased is inhe
r
ently
a derivative one depending vitally upon the validity and continued
existence of the right of the tenant to such occupancy.
The
sub/tenant, in effect, hires a defeasible interest. ...He can
consequently have no direct legal interest in proceedings in
which
the tenant's continued right of occupation is in issue, however much
the termination of that right may affect him commercially
and
financially. Consequently, if the proceedings in issue in the
present case were for ejectment or relief similar thereto,
there can
be no question that applicants as sub/tenants, would be neither
necessary parties whose joinder could be demanded nor
parties
entitled as of right to intervene."
[30]
The applicant's counsel argued that the applicant was not a
sub-tenant as that term is commonly understood. Instead he argued
that:
"...
the sublease concluded between the applicant, the first and second
respondents as well as the sale agreement and franchise
agreement
concluded between applicant and the third respondent contain tacit,
alternatively implied, warranties against eviction
from the
premises. First and second respondent's participation in the
eviction application was in breach of the aforesaid warranty
and the
order so obtained should therefore be set aside on this ground
alone."
[31]
The fourth respondent opposed the application for the rescission of
the eviction order but not the ancillary relief sought.
The fourth
respondent's counsel indicated that the fourth respondent did not
object to the applicant entering into a sub-lease
with the Trust.
However, due to the applicant's financial position, the fourth
respondent was not prepared to replace the applicant
as lessee of
the premises. I have already indicated that the objective facts
indicate that the applicant's financial position
is precarious and
that there is reason to believe that the applicant would not be able
to satisfy an adverse costs order if made
against it.
[32]
It appears that the applicant will have to convince a court that it
had
locus
standi
in
the rescission application. In this judgment, I do not have to
determine the merits of that application but I do take into
consideration whether the applicant has made out a
prima
facie
case.
[33]
The applicant's counsel referred me to the matter of
Waste/Tech
(Pty) Ltd v Van Zyl & Glanville NNO
2000(2)
SA 200 SECLD, as authority for the proposition that I should enquire
into "the conduct of the party which has reduced
the other to
penury". Counsel alleged that the applicant was in a sound
financial position at the time of its eviction.
In support of this
allegation, counsel relied on a document annexed to these papers. It
appears from the document that the "applicant's
business bank
accounts were rated as "good for business".
[34]
The first and second respondents alleged that between November 2007
and October 2008, the applicant enjoyed a net profit
of R795 493,
which was apparently extracted from the business by member's
drawings. The respondents annexed a management account
in support of
that allegation and indicated that that report: had been prepared by
the applicant.
[35]
However, in its opposing affidavit, the applicant said the following
about the management account:
"It
is denied that the management account shows that the applicant
enjoyed a net profit of R795 493.00. The management account
was
prepared by the applicant's accountant together with Mr Chambers, a
business broker of Cape Business Bureau, in order to
establish a
selling price of the applicant's business. The management account
was based on the assumption that the new owner
would manage the
business itself thereby eliminating two managers salaries of about
R15 000.00 each which equates to R390 000.00
per annum.... The
applicant further denied that its members extracted an amount of
R795 493.00 or any other amount from the business
by means of
members' drawings.
[36]
Although the respondents placed the applicant's financial position
in issue, it failed to put up its financial records when
called upon
by the fourth respondent to do so.
[37]
I have also considered that it appeared from the papers that the
landlord, being the fourth respondent, had in 2009 decided
to
renovate the premises. The renovations would have involved the
demolition or part thereof of the premises. The fourth respondent
commenced the renovation immediately after the applicant's eviction.
The applicant did not dispute these allegations on the papers
before
me.
Alternative
sources of funding
[38]
I next considered whether the applicant was able to obtain funds
from its members or other sources in order to put up security.
As
indicated above, the members' husbands are funding this litigation.
[39]
The current members of the applicant are Mrs Faeeza Coovadia
(Coovadia)
and
Mrs Salma Tayob
(Tayob)
and
they each hold 50% of the membership in the applicant. Mrs Coovadia
has been a member of the applicant since November 2007,
while Mrs
Tayob has been a member since June 2007.
[40]
The first and second respondents alleged that the members of the
applicant had an interest in a Dodger City Diner outlet
at Canal
Walk. That diner is trading as Salfay Trading CO
(Salfay).
[41]
They alleged that Mrs Tayob is a 20% member of Salfay and Mrs
Coovadia's husband, to whom she is married in community of
property,
holds 40% of the members' interest in Salfay. The remaining 40% is
owned by Mr Yasiem Tayob, Mrs Tayob's brother. The
first and second
respondents alleged that MrsTayob had been a member of Salfay since
May 2007 and Mrs Coovadia's husband had
been a member since May
2007.
[42]
Mr Tayob owned Erf 108108 situated in Plumstead, which Erf was
purchased for R1 080 000 in 2007. Three separate bonds are
registered over the property in the amounts of R220 000, R900 000
and R430 000.
[43]
According to the first and second respondents, the Coovadia couple
owned two properties in Johannesburg.
[44]
Mrs Tayob deposed to an affidavit and said that her husband and she
each owned an undivided half share in the property. They
had an
outstanding bond of R1 515 996.07 in respect of their immoveable
property. She said that her husband had at all times
relevant paid
the full bond instalment and that she had never utilised any of her
own income received from the applicant to pay
any of the bond
instalments due.
[45]
Mrs Coodavia also admitted the ownership of the immovable property
as set out by the respondents. In addition, she indicated
that Mr
Coodavia had made the bond payments in respect of the property.
[46]
The members of the applicant alleged that they would not be able to
obtain approval from any financial institution for the
registration
of a further bond over any of their properties.
[47]
Mrs Tayob remarked as follows:
"We
enjoy average lifestyles which are funded by our spouses / certainly
not by the income we received from the applicant's
business."
[48]
O'Regan
J
in
the matter of
Giddey
N.O. v J C Barnard & Partners
2007(5)
SA at 525 CC said the following at record 577 paragraph 29:
"Section
13 contemplates that an order for security for costs will be made
where a plaintiff or applicant company is in financial
difficulties.
The sharp commercial reality of such an order is that at times where
the plaintiff or applicant cannot find security
for costs it will
not be able to pursue its action. This seems an inevitable and
intended result of S13. In my view this section
is not reasonably
capable of being read as contended for by the applicant. The
applicant did not challenge the constitutionality
of the section,
and in my view it is not capable of being read, in light of the
Constitution or otherwise, to mean that a court
has no discretion to
order security to be furnished where effect of that order will be to
terminate the litigation. The provision
states the contrary quite
clearly and the applicant's submission in this regard must be
rejected."
[49]
I considered the above in the balancing of the factors that I have
mentioned and I have also considered the judgment, by
Chetty J in
the Waste Tech matter at page 404 para C in which the court is
called upon to "have regard to considerations
of equity and
fairness to both parties."
[50]
I have considered that there might be alternate sources from which
the applicant might find funding. I have accepted that
the reality
of this decision might be that this is the end of the road for the
applicant.
[51]
In my view, in the circumstances of this matter, it is just and
equitable to order the applicant to put up security for the
costs of
the respondents.
[52]
On 7 October 2010, Louw J directed the manner in which security, if
ordered in respect of the fourth respondent, should be
determined.
The relevant portions of that order provided for the following:
"By
agreement between the parties it is ordered that -
...
6. Without concession by the applicant that it is obliged to furnish
security
for cost to any of the respondents ...
6.1.
the forum and quantum of any security to be furnished shall be
determined by the registrar as a matter of urgency (and this
may be
done prior to the hearing on 14 October 2010). and
6.2.
in the event that the court determines that the applicant is liable
to furnish security for cost
...
6.2.3 there shall be an immediate stay of proceedings until security
is furnished...".
ORDER
[53]
I for the reasons stated above make the following order:
(a)
The applicant is directed to furnish security for the costs of the
first, second and fourth respondent.
(b)
The proceedings in the main application are stayed until the
applicant
BAARTMAN,
J