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[2021] ZAECPEHC 9
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Wesseloo v Bham Tayob Khan Matunda Inc (1453/2017) [2021] ZAECPEHC 9 (16 February 2021)
IN THE HIGH COURT OF
SOUTH AFRICA
(EASTERN
CAPE LOCAL DIVISION, PORT ELIZABETH)
CASE
NO: 1453/2017
Heard
on: 21 October 2020
Delivered
on: 16 February 2021
In
the matter between:
JAN
JACOBUS WESSELOO
APPLICANT
and
BHAM TAYOB KHAN
MATUNDA INC
RESPONDENT
REGISTRATION
NO. 1993/006339/23
JUDGMENT
IN RESPECT OF COSTS
GQAMANA
J:
[1]
The overall function of the court is to carry out justice, resolve
disputes between litigants expeditiously
as possible, ensure access
to courts and uphold the law. On the other hand, legal
practitioners have the responsibility of
assisting and advising their
clients promptly and to ensure that their clients are not drained
financially by protracted litigation.
The opposite happened in
this case. It has a protracted and deplorable history as
evident below. However, this judgment
is only in respect of
costs, as the main liquidation application was dismissed on 10
September 2020. On the request of counsel
for both parties, the
issue of costs was reserved for further determination later as both
of them hankered to file additional heads
of argument addressing
specifically the issue of costs occasioned by no less than six
postponements and four interlocutory applications.
[1]
[2]
The Applicant, Mr Wesseloo was a former employee of the Respondent
(BTKM). Such employment relationship
was terminated on 22 November
2016, by a mutual separation agreement. In terms of such
agreement, the parties agreed that
the Applicant would be remunerated
for all his unused leave days, but the number of leave days due to
him and the quantification
thereof is not set out therein. When
no payments was received for his alleged unused leave days, the
Applicant caused a letter
of demand to be issued in terms of s 345
(1)(a) of the Companies Act 61 of 1973, (as amended) against
BTKM.
[2]
Such notice was
served by Sheriff at BTKM’s registered office at 30 Bird
Street, Central, Port Elizabeth.
[3]
[3]
After three weeks period from the date of service of the aforesaid
notice and with no payment forth
coming from BTKM, the Applicant
issued a liquidation application against the former on 25 April
2017. In the notice of motion,
BTKM was called upon to serve
its notice to oppose and its answering affidavit, if any, within 5
days and 15 days of service respectively.
Failing such notice
to oppose, the application was to be heard on 30 May 2017.
[4]
The liquidation application was served on BTKM main place of business
at 84 Cape Road, Mill Park, Port
Elizabeth and also at its registered
address at 30 Bird Street, Central, Port Elizabeth, on 11 May and 15
May 2017.
[4]
Subsequent
thereto, a notice of opposition in compliance with Rule 6 (5)(d) of
the Uniform Rules was filed on behalf of BTKM
on 12 May 2017.
[5]
[5]
On the 24 May 2017, the Applicant’s attorneys addressed a
letter to the Registrar of this court
notifying her that the
application has become opposed and accordingly it would have to be
removed from the unopposed roll and be
placed on the opposed motion
court roll. As indicated in paragraph 3 above, the liquidation
application was set down on 30
March 2017, and upon filing of the
notice to oppose it had to be removed from the roll.
Accordingly on the said date it was
postponed
sine
die
,
with costs reserved.
[6]
I
now turn on to set out the legal principles on costs before dealing
with all the postponements and interlocutory applications
that
cropped up in this matter.
[6]
The general rule is that costs follow the event, meaning the
successful party should be awarded its
costs. However this is
subject to an overriding principle that the court has a discretion
and such discretion must be exercised
judicially upon a consideration
of the facts of each case.
[7]
[7]
A court may deprive the successful party of its costs wholly or
partly and order it to pay the costs
of its opponent in circumstances
where, for example, a litigant failed to limit or curtail
proceedings and caused another
party to incur unnecessarily costs
through its failure to take proper steps or, if a party adopted a
wrong procedure altogether,
a court may visit the successful party
with adverse costs order.
[8]
In
Niewoudt
v Joubert
,
[9]
Mullins J (then) reiterated the principle that a successful party may
be deprived of his costs if he has misled the unsuccessful
party into
litigation and the latter acted reasonably in either instituting or
defending the proceedings. Also a party may
be deprived of its
costs where its conduct has unnecessarily prolonged the
proceedings.
[10]
[8]
Ms Veldsman, Applicant’s counsel, enthusiastically argued that
this is a typical case where the
court should exhibit its displeasure
on BTKM’s conduct by depriving it the costs despite its success
in the main liquidation
application. For that submission she
found solace in
Pilot Freight (Pty) Ltd
v Von Landsberg Trading (Pty) Ltd
2015
(2) SA 550
(GJ). In that matter the court deprived the
successful party of its costs on the basis that it had played its
cards very
close to its chest thereby causing the unsuccessful party
into instituting the legal proceedings which were unsuccessful.
The unsuccessful party was ordered to pay the costs of its opponent
from receipt of the answering affidavit and for the prior costs,
each
party was ordered to pay its own costs.
[9]
In the instant matter, as indicated in paragraph 5 above, the filing
of the notice to oppose necessitated
to the removal of the matter
from the roll on 30 May 2017. The
dies
for filing the answering affidavit had not expired. Therefore,
the application was set down prematurely. This postponement
was
therefore caused by the Applicant. However evident from the
court order there was no appearance on behalf of the BTKM
on the said
date and in such circumstances it will be fair for each party to pay
their own costs occasioned by such postponement.
[10]
Despite BTKM having filed its notice to oppose on 12 May 2017, but no
answering affidavit was filed and the Applicant
proceeded to set the
matter down on 18 July 2017 as uncontested opposed application in
accordance with Rule 15(k) of the Rules
regulating the conduct of
proceedings of the Eastern Cape Division. Sadly, it was again
postponed to 01 August 2017, and
nothing was said about the issue of
costs.
[11]
And the
reasons for such postponement are not apparent from the papers and
without evidence pointing fault on either party,
I am constrained to
order each party to bear their own costs for that day.
[11]
On 1 August 2017, it was again postponed to 15 August 2017, by
agreement between the parties and BTKM was ordered
to pay the wasted
costs occasioned by such postponement on an attorney and client
scale.
[12]
Furthermore
BTKM was directed to deliver its opposing affidavit by no later than
7 August 2017.
[12]
On 15 August 2017, it was again postponed to 22 August 2017,
[13]
with no order as to costs.
[13]
Instead of filing the answering affidavit as directed by the court
order as indicated in paragraph 11 above, out
of the blue, BTKM filed
on 22 August 2017, an urgent application to stay the
proceedings.
[14]
As a
consequence of such procedure adopted by BTKM the liquidation
application was postponed again to 12 October 2017, with
costs
reserved.
[15]
[14]
The urgent application was enrolled for hearing on 29 August
2017.
[16]
There is no
evidence of what happened to it on that day. However, the
notice to oppose it and the answering affidavit
thereto were filed by
the Applicant [Mr Wesseloo] on 1 September and 12 October 2017
respectively.
[17]
As a
result both the urgent and main liquidation applications were
postponed to the 23 November 2017.
[18]
Again BTKM neglected and failed to file its answering affidavit in
the liquidation application despite the order referred
to in
paragraph 11 above. Once again, the cause of the postponement
on 12 October 2017, lies squarely at the doors of BTKM
and as such it
must be held responsible for the Applicant’s costs occasioned
therein.
[15]
On the 23 November 2017, the matter was again postponed to 15
February 2018, with each party to pay their own costs.
[19]
[16]
On 6 February 2018, heads of argument were filed on behalf of the
Applicant and the liquidation application was
ripe for hearing from
the Applicant’s side. But from BTKM’s side, neither
the answering affidavit nor heads of
argument were filed.
Clearly from this evidence BTKM was not ready to argue the matter and
that then caused another postponement
at it instance. On 15
February 2018, Eksteen J, issued the following order:
“
1.
That the application dated 25 April 2017 is postponed sine die.
2.
That the application dated 21 August 2017 is postponed sine die.
3.
That the application dated 25 April 2017 and the application dated 21
August
2017
are
to be consolidated by agreement between the parties and to be heard
simultaneously.
4.
That
BTKM
is ordered to file its answering affidavit to the application dated
25 April 2017 on or before 2 March 2018 at 12h00.
5.
That
BTKM
is also ordered to file its condonation application for the late
filing of its answering to the application dated 25 April 2017
on or
before 2 March 2018 at 12h00.
6.
That
Wesseloo
is ordered to file his replying affidavit in the
application dated 25 April 2017 to the Respondent’s Answering
Affidavit
and condonation application on or before 16 March 2018 at
12h00.
7.
That
Wesseloo
is
ordered to file his condonation application for the late filing of
his answering affidavit in the application dated 21 August
2017 on or
before 2 March 2018 at 12h00.
8.
That
BTKM
is ordered to file its replying affidavit in the application dated 21
August 2017 to the applicant’s answering affidavit
and
condonation application on or before 16 March 2018 at 12h00.
9.
That the wasted costs occasioned by the postponement on 15 February
2018 are
reserved.
”
[17]
Ms Veldsman argued for punitive costs occasioned by the postponement
on 15 February 2018 as against BTKM.
I am not persuaded that
BTKM’s conduct warrants a costs order on an attorney and client
scale. Both parties were ordered
by Eksteen J to file their
respective affidavits either on the liquidation application or the
urgent application to stay the proceedings.
From that, one can
infer that there were also other affidavits that the Applicant needed
to file especially if one has regard to
paragraphs 6 and 7 of the
aforesaid order by Eksteen J. However, and having said that,
BTKM was at least the cause of the
postponement and therefore it must
bear the costs occasioned by such postponement on a party and party
scale.
[18]
Neither of the parties complied with the time frames as ordered by
Eksteen J. The Applicant filed on 8 October
2019, his
explanatory affidavit for the late filing of his answering affidavit
in the urgent application. During November
2019, a request was
made to the Registrar to set down the liquidation application, but
the earliest available dates for allocation
of opposed matters was
from February 2020.
[19]
Both the liquidation and the urgent applications were set down on 25
June 2020. Still no answering affidavit
in the liquidation
application was filed by BTKM. On the eve of the hearing, on 24
June 2020, suddenly BTKM filed an opposition
to the Applicant’s
condonation application for the late filing of the answering
affidavit in the urgent application.
As indicated in paragraph
14 above, the aforesaid answering affidavit was filed by the
Applicant on 12 October 2017. BTKM
waited for thirty two months
before opposing the Applicant’s condonation application.
Due to the stance adopted by
BTKM, both applications were postponed
sine die
by Makaula J, with BTKM to pay the wasted costs.
[20]
After the aforesaid postponement, the Applicant again proceeded to
set down both applications on 13 August 2020.
On 3 August 2020,
Van Zyl DJP, issued a directive calling,
inter
alia
, BTKM to indicate by not later
than 5 August 2020 whether it intends to file heads of argument and
appear at the hearing on 13
August 2020 and if so, to file its heads
of argument by not later than 7 August 2020.
[21]
Instead of complying with aforesaid directive issued by Van Zyl DJP,
BTKM filed a Rule 30 application on 6 August
2020.
[22] On 13
August 2020, Rugunanan J, issued the following order:
“
1.
That the hearing of the Rule 30
application served under the Rule 30 Notice dated 6 August 2020 is
postponed to 10
th
September 2020.
2.
The the costs occasioned by the postponement of the hearing of the
Rule 30 application
are reserved for hearing on 10
th
September 2020.
3.
That the consolidated application is postponed to 10
th
September 2020.
4.
That the costs occasioned by the postponement of the consolidated
application
are reserved for hearing on 10
th
September 2020.
5.
That the Respondent is ordered to file its Rule 30 application on or
before 28
th
August 2020 at 12h00.
6.
That the Respondent is to file its Heads of Argument and Rule 15A
practise note
on the Rule 30 application and the consolidated
application on or before 4 September 2020 at 12h00.
”
[23]
BTKM once again was the sole cause of the postponement on 13 August
2020. At long last BTKM’s answering
affidavit in the
liquidation application surfaced for the first time on 4 September
2020. Bear in mind, Eksteen J had issued
an order as far back
as on 15 February 2018, that BTKM must file its answering affidavit
on or before 2 March 2018. It took
BTKM a period of
approximately thirty months to comply with Eksteen J’s order.
For the first time BTKM’s defence
in the liquidation
application was disclosed. The Applicant then conceded that in
the light of the allegations and evidence
disclosed in the answering
affidavit, the liquidation application had to fail. An order
dismissing the liquidation application
was issued on 10 September
2020. It was evident from annexure “BTKM 10”, that
BTKM had the ability to pay its
debts and therefore the Applicant
would not have been able to meet the threshold test set out in s 345
(1) of the Companies Act.
[24]
Viewed holistically and based on the evidence at my disposal, not
only BTKM caused the numerous postponements because
its house was in
disarray but, it also played its cards close to its chest thereby
causing unnecessary delay and protracted the
proceedings.
Annexure “BTKM 10” is its audited financial statement for
the financial year end February 2018,
and it was signed of on its
behalf on 3 December 2018. No reasons were advanced by BTKM why
its answering affidavit and annexure
“BTKM 10” were not
be filed earlier. Had that occurred, these proceedings would
have been curtailed and unnecessary
additional costs would have been
avoided. Although BTKM was successful in the liquidation
application, it will be fair and
it is in the interest of justice to
deprive it the costs of the liquidation application.
[25]
In so far as the costs for the interlocutory applications, namely,
the condonation applications and the Rule 30
applications, in
exercising of my discretion and having regard to the conspectus of
all the facts and evidence in this case, the
appropriate order would
be for each party to bear his/its own costs. In respect of the
costs for the urgent application to
stay the proceedings, it would
also be appropriate to make a similar order.
[26]
Ms Veldman also argued for the costs of the liquidation application
until 4 September 2020 when BTKM’s answering
affidavit was
delivered. In response to such argument, Mr Mhlanga, BTKM’s
counsel, argued that the procedure adopted
by the Applicant to move
for the liquidation of BTKM instead of the normal action proceedings
and execution process, was deployed
merely to embarrass BTKM and it
was an abuse of the court process.
[27]
The Applicant in my view must have been aware or at the very least
anticipated that the monies allegedly due to
him for unused leave
days were disputed. The separation agreement which is the
source of BTKM’s alleged indebtedness
is not unequivocal that
there were unused leave days due to the Applicant. The
provision made in the aforesaid agreement
was that, he would receive
remuneration for all his unused leave days calculated until date of
signature. The exercise for
the quantification of the unused
leave days was still necessary. In attempt to ascertain the
exact methodology for purposes
of such calculation, the Applicant
engaged services of individuals who had no authority to bind BTKM.
In any event, when
the urgent application to stay the proceedings
were filed, the Applicant was apprised of the fact that the number of
his unused
leave days were disputed. In my view the Applicant’s
case as formulated in his founding affidavit in the liquidation
application would not have passed the threshold test set out in s 345
(1) of the Companies. On his own founding papers, I
would not
have been satisfied that he is a “creditor” to BTKM and
that the latter was unable to pay its debt.
Therefore, the
Applicant has not made out a case for the costs of the liquidation
application issued on 25 April 2017 until 4 September
2020.
[28]
In the circumstances the following order is issued:
1.
The Respondent is ordered to pay the
Applicant the reserved costs in the liquidation application
occasioned by the postponements
on 22 August 2017, 12 October 2017,
15 February 2018 and 13 August 2020 on a party and party scale.
2.
In respect of the urgent application to
stay the proceedings, the condonation applications and the Rule 30
applications, each party
to pay their own costs.
________________________
N GQAMANA
JUDGE
OF THE HIGH COURT
APPEARANCES:
Counsel for the
Applicant : M Veldsman
Instructed
by : Serfontein
Viljoen
& Swart Attorneys
C/O Van Zyl’s Inc.
PORT
ELIZABETH
Counsel for the
Respondent
:
P M Mhlanga
Instructed
by
: McDonalds &
Associates Inc.
C/O
Zolile Ngqeza Attorneys
PORT
ELIZABETH
[1]
The
urgent application to stay the proceedings, the Rule 30 application,
the second Rule 30 application filed on 13 August 2020
and the
condonation application for the late filing of the answering
affidavit in the urgent application.
[2]
Index;
pp 26-27.
[3]
Index;
p 28.
[4]
Index
B; pp 7 and 8.
[5]
Index
B; pp 1-3.
[6]
Index
D; p 1.
[7]
City
of Cape Town v Rudolph
2004 (5) SA 39
(C) at 89C.
[8]
Scheepers
and Nolte v Pate
1909 TS 353
at 356; King Pie Holdings Pty Ltd v
King Pie (Durban) Pty Ltd
1998 (4) SA 1240
(D) at 1250.
[9]
1988(3)
SA 84 (SE) at 90F
[10]
Van
Vuuren v Agricura Laboratoria (Edms) Bpk 1974 (2) SA 324 (NC).
[11]
Index
D; p2.
[12]
Index
D; p3.
[13]
Index
D; p 4.
[14]
Index
C; pp1-40
[15]
Index
D; p5.
[16]
Index
C; p3; para2.
[17]
Index
C; p85; paras 18 and 19.
[18]
Index
C; p85 para 19.
[19]
Index
D; p6.