About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Eastern Cape High Court, Gqeberha
SAFLII
>>
Databases
>>
South Africa: Eastern Cape High Court, Gqeberha
>>
2024
>>
[2024] ZAECQBHC 24
|
|
Homely Property and BB (Pty) Ltd v Timber Shavings CC (3357/2022) [2024] ZAECQBHC 24 (7 February 2024)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE DIVISION, GQEBERHA)
Case
No. 3357/2022
In
the matter between:-
HOMELY
PROPERTY AND BB (PTY) LTD
Applicant/Defendant
and
TIMBER
SHAVINGS CC
Respondent/Plaintiff
JUDGMENT
BANDS
J:
[1]
Pursuant
to pending trial proceedings instituted under case number 3357/2022,
the defendant, as applicant in this application, seeks
an order
directing the plaintiff, as respondent, to furnish security for the
defendant’s costs in the trial action in accordance
with the
provisions of section 8 of the Close Corporations Act 69 of 1984
(“
the Act
”).
Applicable
legal principles
[2]
Section
8 of the Act reads as follows:
"
When a corporation in any legal proceedings is a plaintiff or applicant or brings a
counterclaim or counterapplication, the court concerned may at
any time during the proceedings if it appears that there is
reason to
believe that the corporation or, if it is being wound up, the
liquidator thereof, will be unable to pay
the costs of
the defendant
or respondent, or the defendant or respondent in reconvention, if he
is successful in his defence, require security to be given for those
costs, and may stay all proceedings till the security is given.
”
[3]
The
provisions of section 8 of the Act have been interpreted in
accordance with the principles which developed in relation to the,
now repealed, corresponding provision in the Companies Act, 61 of
1973; section 13. Notwithstanding the omission of a counterpart
from the new
Companies Act, 71 of 2008
, the jurisprudence, insofar as
it relates to section 8 of the Act, remains applicable.
[4]
Ultimately,
section 8 of the Act creates a statutory exception to the ordinary
common-law rule that a plaintiff who resides in South
Africa, may
institute legal proceedings in our courts without furnishing
security,
[1]
as laid down in
Witham
v Venables
.
[2]
[5]
The
Constitutional Court, in
Giddey
NO v JC Barnard and Partners
,
[3]
in considering the purpose of section 13 of Act 61 of 1973, with the
view to clarify the proper application of the statutory provision,
stated as follows:
“
A
salutary effect of the ordinary rule of costs – that
unsuccessful litigants must pay the costs of their opponents –
is to deter would-be plaintiffs from instituting proceedings
vexatiously or in circumstances where their prospects of success are
poor. Where a limited liability company will be unable to pay its
debts, that salutary effect may well be attenuated. Thus the
main
purpose of section 13 is 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 their opponents unnecessary and irrecoverable
legal expense.
”
[6]
The
court, when approaching an application of this nature, adopts a
two-stage enquiry. In the initial stage, the applicant
bears
the onus of establishing that there is reason to believe that the
corporation, if unsuccessful, would be unable to satisfy
an adverse
costs order.
[4]
Whilst the
onus that an applicant bears is not to establish that the respondent
will, as a fact, be unable to pay its/his/her
costs,
[5]
such reason to believe must be constituted by facts giving rise to
such belief as highlighted by the court in
Vumba
Intertrade CC v Geometric Intertrade CC
,
[6]
with reference to
London Estates (Pty) Ltd v Nair.
[7]
A blind belief
[8]
or a belief
which has its foundation in “
hearsay
evidence as a reasonable man ought or could not give credence to,
does not suffice.
”
During this stage, there exists no onus on the corporation to adduce
facts for the purposes of satisfying the court
of the converse,
namely, that it will be able to meet such an order against it.
Where an applicant is unable to discharge
the onus on it/him/her, the
enquiry comes to an end and the application must fail. However,
if the court is satisfied that
the applicant has successfully
discharged the onus, the court, during the second stage of the
enquiry must decide, in the exercise
of its discretion, whether or
not to order the corporation to furnish security.
[9]
[7]
Simply
put, once the requirements of section 8 of the Act have been met, the
granting of the relief is discretionary.
[8]
The
discretion with which the court is vested, in applications for
security for costs, is a strict or true discretion, and accordingly
there is no
numerus
clausus
of factors to which the court may have regard, in arriving at a
decision it considers to be just in the circumstances of each
case.
[10]
Such
discretion should be unfettered and accordingly, an application for
security of costs should not be approached with
any predisposition
towards the grant or refusal of the relief. Hefer JA, in coming
to this conclusion in
Shepstone
& Wylie and Others v Geyser N.O.
,
[11]
which concerned an application in terms of section 13 of the
Companies Act 61 of 1973, endorsed the approach articulated in
Keary
Developments Ltd v Tarmac Construction Ltd and Another
as follows:
[12]
“
The
court must carry out a balancing exercise. On the one hand it
must weigh the injustice to the plaintiff if prevented from
pursuing
a proper claim by an order for security. Against that, it must
weigh the injustice to the defendant if no security
is ordered and at
the trial the plaintiff’s claim fails and the defendant finds
himself unable to recover from the plaintiff
the costs which have
been incurred by him in defence of the claim.
”
[9]
The
aforesaid dictum was later cited with approval by the Constitutional
Court in
Giddey
N.O. v J.C. Barnard and Partners
,
[13]
which further acknowledged the need for the court to bear in mind a
claimant’s right in terms of section 34 of the Constitution.
O’Regan J, writing for the Constitutional Court stated, at
paragraph [30], that:
“
In
my view, there can be no doubt that in exercising its discretion in
terms of section 13, a court must bear in mind the provisions
of
section 34 and weigh them in the light of other factors laid before
it. The balancing exercise proposed by the Supreme Court
of Appeal
in Shepstone & Wylie’s case (adopted from the English
case Keary Developments Ltd v Tarmac Construction
Ltd and
Another
[30]
) acknowledges
this (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.
”
[10]
More
recently, the Supreme Court of Appeal in
Fusion
Properties 233 CC v Stellenbosch Municipality
,
[14]
following a consideration of the dicta in
Shepstone
& Wylie and Others v Geyser N.O.
and
Giddey
N.O. v J.C. Barnard and Partners
,
distilled the following three principles:
“
First,
a court seized with an application to compel a plaintiff or applicant
to furnish security for costs retains an unfettered
discretion.
Second, the court needs to 'balance the potential injustice to a
plaintiff if it is prevented from pursuing a legitimate
claim as a
result of an order requiring it to pay security for costs, on the one
hand, against the potential injustice to a defendant
who successfully
defends the claim, and yet may well have to pay all its costs in the
litigation'. Third, the salutary purpose
of s 13 is 'to deter
would-be plaintiffs from instituting proceedings vexatiously or in
circumstances where their prospects are
poor'
.”
[11]
Insofar
as the merits of the plaintiff’s case is concerned, it is
sufficient for the court, in an application for security
for costs,
to have a fair sense of the strength and weaknesses of the parties’
respective cases. It is neither required
nor expected to
“
undertake
an in-depth analysis as a trial court would at
the end of a trial
”,
[15]
or to attempt to resolve the dispute between the parties.
[16]
[12]
I
accordingly proceed to adjudicate this matter on the basis set out
above.
Factual
background
[13]
During
May 2021, the parties entered into a written service agreement in
terms of which the defendant, property developer, engaged
the
services of the plaintiff, on site, at the Wedgewood Golf Estate
development. The contracted services included
inter
alia
the removal of grass and rubble from 361 designated plots; the
digging of foundations, inclusive of trenches;
[17]
and the performance of rock breaking services.
[18]
The fees payable and the manner in which payment was to be effected
for services rendered, is recorded in clause 3.1 of the
agreement,
read together with clauses 1 to 4 of the addendum thereto, under the
heading “RATES”.
[14]
To
properly contextualise the dispute between the parties, the
respective clauses bear repetition.
“
3.
FEES
3.1
The
Service Provider shall be paid for its services as determined by
agreement between the parties and at such intervals as applicable,
as
set out in
Addendum ‘A’
attached hereto and as read
as if specifically incorporated herein. The parties
specifically record that any delivery of service
in accordance with
this agreement is subject to the parties entering into a separate
deed of sale in terms of which the Company
undertakes to transfer a
(sic) erf no 317 to be nominated by the Service Provider, situated on
the Wedgewood Estate on such terms
as will be set out in the Deed of
Sale and to construct a dwelling on the plot on such plan as to be
determined by the Service
Provider.
”
[15]
What
is apparent is that the agreement specifically incorporates the terms
of the addendum, and accordingly, the two documents are
inextricably
bound and must be read together. Further apparent, is that the
delivery of services in accordance with the agreement
was made
subject to the parties concluding a separate deed of sale in respect
of the transfer of erf 317. Notwithstanding
the express
reference to the transfer of erf 317 in clause 3.1 of the agreement,
clause 1 of the addendum conversely refers to
the transfer of a plot,
the identity of which is to be nominated by the plaintiff, to the
latter’s nominated entity.
Neither the plot nor the
entity is defined. The relevant clause reads as follows:
“
RATES
1.
The
Company, or its nominated agent, undertakes to transfer a plot in the
Wedgewood Estate to the nominated entity of the Service
Provider in
lieu of part payment for the rendering of services as set out herein
which plot is to be nominated by the Service Provider.
In the
event that the Company does not transfer the plot to the nominated
entity of the Service Provider in terms of the agreement
between the
parties or in the event that the Company fails to build a dwelling as
set out below the parties agree that the Company
will pay the Service
Provider an amount of R2,600.00 per plot that has been so cleared
upon presentation of invoice.
[16]
The
remaining related clauses in the addendum specify that:
“
2
.
The
Company will pay to the Service Provider, in addition to the transfer
of the plot and the building of the house, an amount of
R24,000.00
per month as and for running costs which amount equates to a 60%/40%
split of the running costs and also includes the
use of a TLB and 5
ton tip truck.
3.
The
Company, or its nominated agent, undertakes to build a dwelling on
the plot set out in paragraph 1 above in accordance with
an agreed
plan which dwelling shall be built in accordance with the
specifications of the Service Provider which value of the dwelling
shall not be less than R938,600.00.
3.1
…
4.
The
parties agree that:
a.
The
transfer of the plot shall be effected after the clearing of 100
erven or by no later than September 2021, whichever is the
soonest;
b.
The
construction of the home as (sic) specified to commence after
clearing rubble from 150 erven and having the foundations dug
thereon
or no later than the next financial year June 2022, whichever is the
soonest.
”
[17]
It
is common cause that the intended deed of sale has not been concluded
between the parties. It is further undisputed that:
(i) the
plaintiff has cleared 100 plots, of which 37 have been trenched; (ii)
the plaintiff has not been remunerated for the services
rendered to
the defendant (either by way of the transfer of a plot or by way of a
payment sounding in money); and (iii) that the
defendant remains
liable for the payment for such services in terms of the agreement.
[18]
The
parties’ disagreement lies in the manner in which the
defendant’s admitted liability is to be discharged.
On
the one hand, the plaintiff contends that same falls to be discharged
by way of a monetary payment, whilst on the other hand,
the defendant
is of the view that its liability is limited to the transfer of erf
317 to the plaintiff
in
lieu
of
a payment sounding in money.
[19]
Following
the breakdown of settlement negotiations, during which the defendant
tendered transfer of erf 317 to the plaintiff; alternatively,
erf
342, the plaintiff issued summons during November 2022. The
plaintiff claims rectification of the agreement to include
payment of
15% VAT on all amounts invoiced by the plaintiff, and payment of the
amount of R270,020.00, being R2,200.00 per plot
cleared and R400.00
per plot trenched on the basis that: (i) the envisaged deed of sale
was not forthcoming
at the time of
execution of the agreement
; (ii) the
terms of transfer have not been agreed upon; and (ii) absent an
agreement which complies with the
Alienation of Land Act, 68 of 1981
,
the plaintiff is unable to claim transfer of a plot
in
lieu
of the works completed, hence
its claim sounding in money.
[20]
Whilst
the defendant accepts that the agreement, read together with the
addendum thereto, falls foul of the provisions of Act 68
of 1981, it
contends that the agreement was never intended to be a deed, as
envisaged in section 1 of Act 68 of 1981. It
further argues
that on a proper construction of the agreement, the parties would
conclude a deed of sale in compliance with Act
68 of 1981
as
soon as the plaintiff became eligible to receive transfer of erf
317
.
[21]
Immediately
apparent is that the defendant’s contention regarding the
timing for the conclusion of the deed of sale, in addition
to being
at variance with the stance adopted by the plaintiff, contradicts the
clear wording of clause 3.1 of the agreement.
This is one of
the various issues on which the parties disagree.
[22]
The
defendant holds the view that given its tender to pass transfer of
erf 317; alternatively, erf 342, to the plaintiff, there
no longer
exists a
lis
between
the parties and accordingly concludes that the plaintiff’s
claim is vexatious in nature.
[23]
The
applicant relies on the affidavit of Lambros Georghio Lambrou
(“
Lambrou
”),
a co-director of the defendant, to support its contention in respect
of the plaintiff’s impecuniosity, and the effect
that this will
have on the plaintiff’s ability to pay the defendant’s
legal costs, should it be ordered to do so.
[24]
Lambrou
records that at the time of the conclusion of the agreement, the
plaintiff was earning approximately R60,000.00 to R70,000.00
per
month for services rendered to the defendant by the plaintiff in
terms of various, unrelated agreements. When approaching
the
plaintiff in respect of the Wedgewood Estate development, the
plaintiff’s managing member, Eugene Ras (“
Ras
”),
indicated on behalf of the plaintiff that in
lieu
of payment for services rendered, he would prefer the defendant to
transfer a plot to the plaintiff, on which the defendant would
construct a dwelling.
[25]
Lambrou
sets out as follows under the heading “
Plaintiff’s
Financial Situation
”:
“
10.
I
had regular contact with Ras and it became apparent that he was
experiencing financial difficulties. Such financial
difficulties
clearly was (sic) also experienced by plaintiff.
11.
Defendant
was ready to transfer the plot to plaintiff and gave BLC Attorneys
the instruction to do so. However, Ras approached
me and asked
me not to proceed with the transfer at that stage. He was
concerned about the transfer fees to be paid, as well
as the fact
that he would have to start paying the monthly levy to the Home
Owners Association, at that stage just more that R2,000.00
per
month. I therefore instructed BLC Attorneys not to continue
with the transfer of the plot.
12.
Defendant is still willing and able to transfer the plot to
plaintiff, however, plaintiff refuses to
accept transfer.
[26]
Apart
from the apparent confusion in the defendant’s version as to
whether a plot was to be transferred to the plaintiff or
to Ras
personally, which confusion is exacerbated if regard is had to
paragraphs 35.1 and 35.2 of the replying affidavit; the plaintiff,
in
its answering affidavit, denied that: (i) an agreement was reached in
respect of the transfer of a property; (ii) it was discussed,
agreed
or intended that the plaintiff would take transfer of a property and
be responsible for the payment of transfer fees and
conveyancing
costs, particularly since the agreement did not envisage the transfer
of a plot to the plaintiff but rather to an
entity to be nominated by
it; and (iii) that conveyancing documents were prepared by BLC
Attorneys, given the absence of a deed
of sale. No evidence of
such documentation was produced by the defendant in its replying
affidavit, despite being called
upon, expressly, by the plaintiff to
do so.
[27]
Lambrou
goes on further to state that:
13.
Sometime
thereafter Ras approached me and asked whether or not defendant would
be interested in purchasing plaintiff’s TLB
and tipper-truck.
We were not interested and I informed Ras thereof. Shortly
thereafter, plaintiff abandoned the site
at Wedgewood Estate.
At that stage he had only cleared 100 of the 361 designated plots and
only trenched 37 of the 100 plots.
14.
Prior
to that the Homeowners Association of Wedgewood asked whether or not
I would be interested in clearing a fire-break of 50m
around the
perimeter of the estate. I approached Ras to enquire whether or
not plaintiff would be interested in doing the
clearing work.
Ras indicated that he is interested as he would be able to sell the
timber so cleared and that he would do
so in lieu of remuneration.
I thereafter managed to convince the Home Owners Association to clear
a fire-break of 100m.
15.
Plaintiff
started clearing the fire-break by cutting down the vegetation,
however failed to remove the vegetation. When plaintiff
abandoned the site the firebreak was not cleared as agreed. It
would cost defendant approximately R400,000.00 just to remove
the
vegetation already cut to clear the rest of the fire-break.
”
[28]
The
plaintiff’s managing member, in respect of the TLB and
tipper-truck, pointed out that there is nothing unusual about a
company seeking to sell a piece of earthmoving equipment. I
agree. Whilst this aspect was conceded by the defendant
in its
replying affidavit, Lambrou asserted that it was strange that Ras
sought to sell the equipment to the defendant. No
reasons were
advanced why the offer was strange, nor is it apparent to me on what
basis it could possibly be so, given the industry
in which the
parties are actively involved and, more particularly, in light of the
fact that the defendant, in terms of clause
2 of the addendum, was
liable for the payment of fees for the use of the plaintiff’s
TLB and tipper-truck.
[29]
I
am further unable to agree with the defendant that the plaintiff’s
decision to abandon the site is indicative of financial
distress.
There exists insufficient evidence, on the facts of this matter, to
justify such an inference. The plaintiff
explains that it
vacated the site due to non-payment by the defendant for the services
rendered. Given the stage of completion
of the project (that
the plaintiff had cleared 100 plots); the defendant’s admitted
liability towards the plaintiff; and
the parties’ diametrically
opposed views on how payment was/is to be effected, I have no reason
to question the version of
the plaintiff.
[30]
Quite
clearly, the plaintiff, at the time of the conclusion of the
agreement on 1 June 2021, had no cash flow problems, having agreed
to
acquire property in
lieu
of payment for services rendered. The plaintiff pertinently
dealt with this in its answering affidavit. The defendant,
in
response, conceded that: (i) the plaintiff was financially stable at
the time that the agreement was concluded; and (ii) in
addition to
the Wedgewood Estate contract (as well as the unrelated contracts to
which I have referred in paragraph [24]), the
plaintiff was, at that
stage, engaged with the performance of services under various other
contracts, unrelated to the defendant.
The defendant, at no
stage contends that it was or is the plaintiff’s only source of
revenue.
[31]
More
telling perhaps is that at some stage between the conclusion of the
agreement on 1 June 2021 and the date on which the plaintiff
vacated
the site during April 2022, the plaintiff agreed to the performance
of additional lucrative services on site in relation
to the clearing
of a fire-break. Once again, the plaintiff did not seek payment
in cash, instead offering to sell the timber
so cleared in
lieu
thereof. I say that the services were lucrative, given the
defendant’s contention that it would cost approximately
R400,000.00 to remove the vegetation already cut and to clear the
remainder of the fire-break. The inescapable conclusion
is that
the plaintiff, at that later stage, was not experiencing financial
difficulties. The defendant is decidedly vague
on the timeline,
and more particularly, the date on which the fire-break clearing
services agreement was entered into, and fails
to state, apart from
what is set out above and which amounts to no more than an opinion,
what it contends occurred in the intervening
period to result in a
change in the plaintiff’s financial position, rendering it
impecunious.
[32]
Faced
with the plaintiff’s denial of financial difficulties, the
defendant, having been emphatic regarding the plaintiff’s
financial position in its founding affidavit was seemingly less
resolute in reply, stating that whilst the plaintiff may have been
financially stable at the time of entering into the agreement, “
it
later seemed that plaintiff started encountering financial
difficulties
”. According
to Lambrou, this impression was created by the conduct of Ras and the
plaintiff. He however qualified
this by stating that as the
defendant did not have access to the plaintiff’s financial
information, he (on behalf of the
defendant) was unable to provide
further details regarding the plaintiff’s financial position.
He went on to assert
that nothing prevented the plaintiff from
producing its financial records and/or bank statements to demonstrate
its financial viability.
I pause to mention that the defendant
had at no stage requested such documentation from the plaintiff.
[33]
Relying
on
Henry
v RE Designs CC
[19]
it was argued on behalf of the defendant that the normal method to be
adopted by a close corporation, in endeavouring to resist
an
application of this nature is to furnish its balance sheet;
alternatively, a basic set of accounts, to show that it will be
able
to meet an adverse cost order. Insofar as the defendant sought
to rely on the plaintiff’s alleged failure to justify
an order
for security for costs, I disagree.
[34]
As
stated, in the assessment of the initial stage of the enquiry, it is
the defendant that bears the onus of establishing that there
is
reason to believe that the plaintiff, if unsuccessful, would be
unable to satisfy an adverse costs order. There exists
no onus
on the plaintiff to adduce facts for the purposes of satisfying the
court of the converse. The plaintiff’s
alleged failure
does not assist the defendant in the present matter. An
examination and consideration of the context in which
the dicta was
made in
Henry
,
as well as in cases such as
Equitable
Trust and Insurance Co of SA Ltd v Registrar of Banks
[20]
and
Petz
Products (Pty) v Commercial Electrical Contractors (Pty) Ltd
,
[21]
is required. Whilst the aforesaid cases are often cited as
authority (incorrectly so) for the proposition that a defendant
is
permitted, on demand, to require a plaintiff close corporation to
disclose its financial statements, failing which, it will
be ordered
to furnish security for the defendant’s costs, no such general
rule exists.
[22]
[35]
As
succinctly set out by the court in
Vumba
Intertrade CC
at paragraph [10] of
the court’s judgment:
“
In
Milne Sadowa Minerals (Pty) Ltd, supra, the respondent company did
not dispute the allegations that it had no banking account
and a
share capital of only £300. It endeavoured to make out
the case that it did in fact possess sufficient assets
to pay the
costs of any action but it disclosed no liabilities and the Court
found that the value it placed on some of its assets,
about which it
refused to provide particularity, could not be accepted at face
value.
In
Equitable Trust and Insurance Co v Registrar of Banks, supra, an
adverse inference was drawn as a result of the respondent’s
determined withholding of its financial information despite
legitimate criticism of the information it had provided, and “more
particularly in view of its insolvent condition in June, 1955”
(at 691F).
In
Petz Products v Commerical Electrical Contractors, supra, the
application was one for the furnishing of additional security,
the
respondent not previously having contested liability to furnish
security on the grounds of its provisional liquidation and
the
subsequent restriction of its business activities.
In
Henry v RE Designs CC, supra, the court took into account various
factors including the fact that the respondent had been in
existence
for less than a year and its financial affairs could not have been
very complex or extensive, that there was a number
of indications
that the respondent was being less than candid with the court as
regards the state of its finances, and the respondent’s
own
admission that only a few months previously, it had been unable to
pay the applicant’s costs.
”
[36]
In
the present matter, there exists: (i) no history of financial
distress; (ii) no previous liability to furnish security for costs
for any reason; (iii) no indication that the plaintiff is being less
than candid with this court; and (iv) no request calling upon
the
plaintiff to provide financial documents, this aspect having being
raised in the defendant’s replying affidavit for the
first
time. Whilst in an appropriate case, the failure by a
respondent to produce its balance sheet; alternatively, a basic
set
of books, may lead to a negative inference; on the facts of this
matter, there exists no basis upon which such an inference
can be
drawn.
[37]
Moreover,
and on its own decisive of the present matter, not only does the
defendant admit being liable to the plaintiff to the
value of at
least R260,000.00, the defendant does not take issue with the
valuation placed on the TLB and tipper truck owned by
the plaintiff,
valued in excess of R1,000,000.00. In light thereof, it hardly
behoves the defendant to contend that the plaintiff,
if unsuccessful,
will be unable to satisfy an adverse cost order where the plaintiff
is possessed of sufficient exigible assets.
[38]
For
the above reasons, the defendant has failed to discharge the onus
upon it during the first stage of the two-staged enquiry and
the
application must fail. The question relating to whether the
proceedings are vexatious in nature is not a stand-alone
enquiry but
is to be properly considered as one of many factors in the exercise
of the court’s discretion during the second
stage of the
enquiry,
[23]
to which stage,
this court does not arrive.
[39]
I
might however add that even if the defendant had discharged the onus
upon it, which it did not, I am in any event of the view
that the
litigation can hardly be said to have been embarked upon frivolously
or vexatiously by the plaintiff. Various complex
legal issues
fall to be determined by the trial court, for example: (i) whether or
not an agreement, prior to the launch of the
litigation, was reached
between the parties, compromising the plaintiff’s claim; (ii)
the nature and effect of clause 3.1
of the agreement, properly
interpreted; (iii) the nature of the service agreement entered into
between the parties and the effect,
if any, of its lack of compliance
with the
Alienation of Land Act; (iv
) the effect, if any, of the
contradictory clauses in the agreement and the addendum thereto; and
(v) ultimately, whether the plaintiff
is entitled to be compensated
for the defendant’s admitted liability in cash or whether it is
obliged to accept transfer
of a property (and in which case, the
identity of such property and on what terms).
[40]
There
exists no reason why the costs should not follow the event.
[41]
In
the result, the following order is issued:
1.
The
application is dismissed with costs.
I
BANDS
JUDGE
OF THE HIGH COURT
Date
heard:
10 August 2023
Date
of judgment:
7 February 2024
For
the defendant/applicant:
Mr du Toit
Instructed
by:
Britz Attorneys
c/o Lizelle
Pretorius
22 Bird Street
Central
Gqeberha
For
the plaintiff/respondent:
Mr Ferreira
Instructed
by:
Friedman Scheckter
75 Second Avenue
Newton Park
Gqeberha
[1]
Giddey
NO v JC Barnard and Partners
[2006] ZACC 13
;
2007
(5) SA 525
(CC) at para
[7]
.
[2]
(1828)
1
Menz
291
.
[3]
[2006] ZACC 13
;
2007
(5) SA 525
(CC) at para
[7]
.
[4]
Boost
Sports Africa (Pty) Ltd v The South Africa Breweries (Pty) Ltd
(20156/2014)
[2015] ZASCA 93
at para
[10]
.
[5]
Henry
v RE Designs CC
1998
(2) SA 502.
[6]
2001
(2) SA 1068 (W).
[7]
1957 (3) SA 591 (D) at para [8].
[8]
Including
a belief which stems therefrom.
[9]
Boost
Sports Africa (Pty) Ltd v The South Africa Breweries (Pty) Ltd
(20156/2014)
[2015] ZASCA 93
at para
[10]
.
[10]
Magida
v Minister of Police
1987
(1) SA 1
(A).
Giddey NO v JC
Barnard and Partners
[2006] ZACC 13
;
2007 (5) SA 525
(CC).
McHugh
N.O and Others v Wright
(5641/2020)
[2021]
ZAWCHC 205
(19 October 2021).
[11]
1998 (3) SA 1036
(SCA) a
t
1045G-1046C.
[12]
[1995]
3 All ER 534
(CA) at 540a-b.
[13]
[2006] ZACC 13
;
2007
(5) SA 525
(CC) at paras 20-22.
[14]
(932/2019)
[2021] ZASCA 10
(29 January 2021).
[15]
Fusion
Properties 233 CC v Stellenbosch Municipality
(932/2019)
[2021] ZASCA 10
(29 January 2021) at para [36].
[16]
Zietsman
v Electronic Media Network Ltd and Others
[2008]
ZASCA 4
;
2008
(4) SA 1
(SCA).
[17]
As
and where required.
[18]
As
and where required.
[19]
1998
(2) SA 502 (C).
[20]
1957
(1) SA 689 (T)
[21]
[1990]
3 All SA 452 (C).
[22]
Vumba
Intertrade CC v Geometric Intertrade CC (supra).
[23]
Whilst the application, on the papers before court, correctly
references
section 8
of the
Close Corporations Act 69 of 1984
; an
incongruence between the legal principals applicable to applications
for security for costs against close corporations, on
the one hand,
and those relevant to proceedings against natural persons and
companies, on the other, arose on the heads of argument
filed on
behalf of both parties.