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[2022] ZAKZPHC 1
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Flame Lily Investments (Pty) Ltd v Solomon and Another (3581/2019P) [2022] ZAKZPHC 1 (3 February 2022)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
CASE
No:
3581/2019P
In
the matter between:
FLAME
LILY INVESTMENTS (PTY)
LTD PLAINTIFF
and
EDWARD
PHILIP WALTER
SOLOMON 1
ST
DEFENDANT
J
LESLIE SMITH & COMPANY
INC. 2
ND
DEFENDANT
ORDER
1.
The trial set down for ten (10) consecutive days from 31 January 2022
is adjourned sine die.
2.
The first defendant is ordered to pay the plaintiff’s and
second defendant’s wasted costs occasioned
by the adjournment
including costs of two counsel where so employed on party and party
scale.
3.
The first defendant is ordered to pay the plaintiff’ and the
second defendant’s costs of the application
including costs of
two counsel where so employed.
JUDGMENT
Delivered on:
Mngadi
J:
[1] This
judgment relates to wasted costs occasioned by the adjournment of the
matter enrolled for
hearing.
[2]
The plaintiff is Flame Lily Investments (Pty) Ltd a
company with limited liability incorporated in terms of
the company
laws of the Republic of South Africa. The first Defendant is
Edward Philip Walter Solomon a farmer and businessperson.
The
second Defendant is J Leslie Smith & Company an incorporated
professional firm of attorneys.
[3]
The plaintiff instituted action against both Defendants. The
action is based in that the plaintiff in a sale
agreement dated 6
February 2018 prepared by the second defendant bought an immovable
property from the first defendant. In
anticipation of the
property transferred to it, the plaintiff incurred substantial
expenses in the form of improvements and maintenance
of the
property. The second defendant in its capacity as
conveyancers was appointed to attend to the transfer of the
registration of the property to the plaintiff. The second
defendant withdrew his mandate to the second defendant to transfer
the registration of the property. Both the defendants failed to
advise the plaintiff of the withdrawal of the mandate as
it continued
with the improvement and maintenance of the property, and it later
turned out that the sale was unenforceable.
As a result, the
plaintiff suffered damages for which it held the defendants liable.
[4]
On 11 August 2021 after the pleadings closed, the matter was
enrolled for hearing from 31 January 2022 to
11 February 2022.
On 25 January 2022 the plaintiff launched this application seeking
the adjournment of the matter and the
order for the first defendant
to pay wasted costs occasioned by the adjournment on attorney and own
client scale as well as the
costs of the application on an attorney
and own client scale. The first defendant opposed the
application. The application
when it was heard no party opposed
the adjournment of the matter. The first defendant before the
plaintiff launched the substantive
application for an adjournment
had advised the plaintiff that although he did not agree with the
reasons for seeking an adjournment
he would not oppose the
adjournment if certain conditions it stipulated were agreed to. The
first defendant argued
that wasted costs occasioned by the
adjournment be reserved for determination by the trial court.
[5]
The plaintiff in the supporting affidavit stated that the
pleadings in the matter closed early in March 2021.
The
plaintiff filed its discovery affidavit on 26 March 2021. The
first defendant filed his discovery affidavit on 31 March
2021 and
the second defendant filed its discovery affidavit on 12 May 2021.
[6]
The plaintiff stated that on 17 January 2022 the second defendant
filed a supplementary discovery affidavit discovering a lease
on the
property in favour of Voigts (Pty) Ltd (second lease). This
lease was first referred to in the second defendant’s
expert’s
valuation report dated 5 January 2022. The plaintiff stated the first
defendant had not advised it of the existence
of the said lease and
he had not discovered it. The other experts in their valuation
reports had not considered the said
lease because they were not aware
of it. The second lease was a material factor in the
determination of the value of the
property at the date of the sale
and on the date the property was evaluated with the improvements.
[7]
The plaintiff stated that in addition, nine (9) days before the date
of trial a lease extension of a lease on the
property for a period of
ten (10) years was furnished to the plaintiff. The plaintiff
was not aware of the existence of the
extension of the lease.
The first defendant was a party to the lease extension but he did not
advise the plaintiff of it
and he did not disclose it in the
discovery. The experts on the valuation of the property had not
considered the lease extension
because they were not advised on it.
The plaintiff stated that both the second lease and the lease
extension were material
factors in the action. The first
defendant’s failure to disclose both the second lease and the
lease extension constituted
misrepresentation amounting to fraud,
contending the plaintiff.
[8]
The plaintiff on 19 January 2022 wrote to the first defendant
and to the second defendant. It pointed out
the impact to it
and the consequences for the failure by the first defendant to
disclose the second lease and the lease extension.
It indicated
that it is necessary that the trial be adjourned for it to reconsider
its position. It stated that this was caused
by the first defendant’s
failure to discover material documents. It requested the first
defendant to tender the wasted
costs occasioned by the adjournment
incurred by the plaintiff and the second defendant including costs of
two counsel where so
employed in respect of the plaintiff and the
costs on a scale of attorney and own client.
[9]
The first defendant replied to the letter dated 19 January 2022
on 20 January 2022. He stated that the second
lease and the
lease extension were not material to the plaintiff’s case.
They were not relevant in determining the
value of the property.
The reports by the valuation experts, stated first defendant, did not
have to take into consideration
the second lease and the lease
extension. The letter advised that no tender of any wasted
costs occasioned by the adjournment
shall be tendered; there were no
grounds for adjourning the matter. The plaintiff, he claimed,
was on spurious grounds seeking
the adjournment to reformulate
claims, which had poor prospects of success. He suggested that
the parties hold a pre-trial
meeting to deal with the issues raised
by the plaintiff
[10]
The second defendant did not file any papers in the application for
adjournment. It adopted the view that
it was entitled to its
wasted costs occasioned by the adjournment. The costs to be
paid by the party the court finds was
at fault in causing the matter
to be adjourned. In the hearing counsel for the second
defendant argued that there was no
evidence that the second defendant
had been furnished with the second lease before it made it
available. The second defendant
should be commended, argued
counsel, for disclosing the second lease immediately it became aware
of it. Counsel contended
that the first defendant failed to
discover documents it was bound in terms of the rules of court to
discover and that the first
defendant was the primary cause of the
matter not proceeding.
[11]
The plaintiff’s counsel pointed out that the first
defendant has furnished no explanation for failing to
discover
material documents. He failed, argued counsel, to deal which
the averments paragraph by paragraph set out in the
founding
affidavit. He failed to do so, argued counsel, because he had
no answer to the averments.
[12]
The first defendant’s counsel argued that the
plaintiff’s case was not directed at the failure
to discover
material documents, which is a procedural matter, and therefore the
first defendant is not required to deal with a
case not made in the
papers. She argued that the plaintiff’s case relates to
the impact of the documents not discovered
on its case. Counsel
argued that this is the case first defendant dealt with in its papers
and in the letter dated 20 January
2022. The plaintiff’s
case raised issues to be dealt with in the trial. It follows,
argued counsel, that the
liability for wasted costs occasioned by the
adjournment must be reserved for determination by the trial court.
[13]
The first defendant’s counsel argued that
there are no basis to claim wasted costs occasioned
by the
adjournment on a scale of attorney and own client. She argued
that such costs are awarded on specific grounds or on
special
circumstances. She further argued that the plaintiff was not
entitled to the costs of the application because the
plaintiff rushed
to court. She said the first defendant proposed that a meeting
be held to sort out the issues raised by
the plaintiff but the
plaintiff did not respond to the proposal.
[14]
The first defendant in the answering affidavit stated that the
plaintiff brought the substantive application for adjournment
with
the sole purpose to obtain punitive costs order against them and to
obtain the adjournment without being held liable for the
wasted costs
of the defendants. He continued and he stated that his
opposition is confined to the punitive costs order sought
against
him. He said the significance of the documents not
disclosed can only be determined when all the other issues
are dealt
with in the trial. Therefore, he said, it would be premature to
make an order of costs at this stage against him.
In
Santam v
Segal
2010 (2) SAV 160
(N) at para 10 it was held that the assessment of
relevance is objective and not subjective; it is not for a party’s
legal
representative to decide what he thinks the issues are and what
documents are relevant to them; and that any document it is
reasonable to suppose that it contains information which may enable a
party applying for discovery either to advance his
own case or
to damage that of his adversary or which may fairly lead him to a
train of inquiry to such documents must be
discovered..
[15]
The plaintiff in the founding affidavit stated that the plaintiff’s
case in the action turns on the
value of the immovable property as at
the date of the sale agreement as well as the current value of the
property after the improvements
made by the plaintiff. The
parties engaged expert professional valuers in order to present
expert evidence in court on the
issue. Overall,
three experts were engaged and submitted expert reports. In a
valuation of an immovable
property, a long-term lease on the property
is a material factor. The period of the lease, the rent
payable and obligations
and responsibilities have a bearing on the
market value of an immovable property. The lease not
disclosed provides
that it is for a period of nine (9) years and 11
months commencing on the date of termination of the existing lease.
It is
between the first defendant and IR Voigts (Pty) Ltd and it was
concluded in March 2017.
[16]
The first defendant emailed the lease extension to the plaintiff on
17 January 2022 after a request from the plaintiff.
It is
between the first defendant and Msinsi Holdings (Propriety) Limited.
It was concluded on May 2021. It extends
an existing lease that
is due to expire on 30 June 2022 by a further period of nine (9)
years eleven (11) months.
The
object of discovery is to ensure that before trial both parties are
made aware of all the documentary evidence that is available.
This results in the narrowing of issues and the debate on points,
which are incontrovertible, is eliminated. The party in
possession or custody of documents is supposed to know the nature
thereof and carries the duty to put those documents in proper
order
for both the benefit of his adversary and the court in anticipation
of the trial action. It like cross-examination
is a mighty
engine to expose the truth. There is an obligation to make
discovery of documents, which may directly or indirectly
enable the
party requiring discovery either to advance his own case or to damage
the case of his adversary. A party may only
obtain inspection
of documents relevant to the issues on the pleadings and relevance
does not depends on the subjective view of
the party making
discovery.
[17]
In my view, the basis of the action of the plaintiff against
the defendants makes it clear that matters relevant
for the
determination of the market value of the property were subject to
discovery. The first defendant was obliged to discover
both the
second lease and the lease extension. It matters not that on
receipt thereof the plaintiff could amend the particulars
of claim.
The first defendant’s contention that the question of
wasted costs occasioned by the adjournment be
reserved for the trial
court would have had merit if the plaintiff intended only to use the
documents not disclosed to consider
reformulating its claim against
the defendants. However, the plaintiff has shown that the
documents not disclosed are relevant
in the issues in the action as
it stands. Therefore, the wasted costs occasioned by the
adjournment are the costs that
have been incurred and this court is
in a position to decide the liability of those costs.
[18]
The belated disclosure of the second lease and the lease extension
caused the plaintiff to be ill prepared for
trial. This was
entirely due to the fault of the first defendant. He failed to
properly and timeously carry out his
obligation to discover. It
follows that the first defendant is liable for wasted costs
occasioned by the adjournment.
The first defendant refused to
tender wasted costs occasioned by the adjournment. The
plaintiff was left with no option but
to launch an application for
adjournment and to seek an order that the first defendant pay the
wasted costs occasioned by the adjournment.
The belatedly
disclosed documents had an impact on plaintiff’s preparation
for trial, which could not be resolved in a pre-trial
meeting.
The first defendant in refusing to agree to an adjournment and to
tender wasted costs occasioned by the adjournment
was forcing the
plaintiff to launch a court application.
[19]
The plaintiff seeks costs on a punitive scale. The purpose of
an award of costs is to indemnify the
party entitled to costs for the
expense to which he has been put through. It is a refund of
expenses actually incurred.
Party and party costs are
those costs that have been incurred by a party and the other party is
ordered to pay. Those costs,
charges and expenses that appear
to the taxing master to have been necessary or properly incurred by
the party in the litigation.
[20]
Attorney and client costs are costs that an
attorney is entitled to recover from a client for the disbursements
made on behalf of a client and for professional services rendered.
It includes all costs that the attorney is entitled to
recover
against the client . Whereas attorney and own client scale of
costs is a scale higher than the attorney and client
scale although
this is not settled. The courts are reluctant to make an
award of costs on the very punitive attorney
and own client scale.
[21]
The award of costs is a matter wholly within the discretion of
the court but this a judicial discretion to be exercised
on
reasonable grounds. The court takes into consideration the
circumstances of the case, carefully weighing the various issues
in
the case, the conduct of the parties and any other circumstance which
may have a bearing upon the question of costs and then
make such
order as to costs as would be fair and just between the parties.
In
Nel
v Waterberg Landbouwers Ko-operatieve Vereeniging
1946 AD 597
the court stated ‘
that
by reason of special considerations arising either from the
circumstances which give rise to the action or from the conduct
of
the losing party, the court in a particular case may consider it
just, by means of such an order, to ensure more effectually
than it can do by means of a judgment and party and party costs that
a successful party will not be out of pocket in respect of
the
expense caused by the litigation by granting costs on a punitive
scale. An award of attorney and client costs cannot,
however,
be justified merely as a form of compensation for damage suffered’
.
It is trite that an award of attorney and client costs will not be
granted lightly, as the court looks upon such orders with disfavour
and is loath to penalise a person who has exercised a right to obtain
a judicial decision on any complaint a party may have.
The
grounds upon which the court may order a party to pay an opponent’s
attorney and client costs include the following;
that the party has
been guilty of dishonesty or fraud; or had vexatious, reckless and
malicious or frivolous motives; or committed
grave misconduct
either in the transaction under inquiry or in the conduct of the
case. The court’s discretion to order
the payment of
attorney and client costs is not, however, restricted to cases of
dishonesty, improper or fraudulent conduct.
It includes all
cases in which special circumstances or considerations justify
the granting of such an order, for example,
where a notice of
discovery in terms of the rules of court was ignored(not promptly
complied with) without convincing reasons for
the delay or as a mark
of the court’s disapproval of some conduct that should be
frowned upon. It is clear in
my view that of importance
is the degree of blameworthiness gleaned from a conduct of a
litigant.
[22]
The adjournment of the matter means that the determination of
the merits is still to be done in the trial.
The wasted costs
is not totally wasted in the event the plaintiff succeeds in its
action against the defendants. The first
defendant’s
failure to make full discovery is not explained. There
are no basis to conclude that it was based
on ulterior motives or
dishonesty. It shows a serious neglect of his obligations.
A party through his attorneys
attends to discovery. It is not known
whether it was the fault of the attorneys or of the first defendant.
It establishes
a disturbing degree of negligence on the part of the
first defendant. The attitude of the first defendant to cast
aspersions
to the plaintiff instead of tendering payment of wasted
costs occasioned by the adjournment shows a litigant not conscious of
his
obligations. The second defendant has not
sought costs on a punitive scale. One counsel each represents
the first defendant and the second defendant. In my view, it is
a relevant consideration to consider the costs the party
entitled to
costs would have been exposed to if it were the party paying the
costs.
[23]
The reasons mentioned above are all reasons, which justify that the
first defendant should be held liable
for wasted costs
occasioned by the adjournment as well as the costs of the
application. In my view, they fall short of justifying
the
first defendant mulcted with costs on the punitive scale. Mr
Combrink referred me to the case of
Ferreira
v Endly
1966 (3) SA 618
(ECD) and the case of T
aary
& Co Ltd v Matatiele Municipaity
1956 (3) SA 131
(ECD) both matters in many respects are similar to
this matter. However, in both matters the parties were represented by
one counsel,
the matter was set down for one day, and applications
for adjournment were lodged on the date of trial, which was found to
cause
some embarrassment to the court, the courts, in exercising
their discretion, awarded costs on attorney and client scale. I
am not persuaded to follow those decisions.
[24]
I ordered as follows.
1.
The trial set down for ten (10) consecutive days from 31 January 2022
is adjourned
sine
die.
2.
The first defendant is ordered to pay the plaintiff’s and
second defendant’s wasted costs occasioned
by the adjournment
including costs of two counsel where so employed on party and party
scale.
3.
The first defendant is ordered to pay the plaintiff’s and
the second defendant’s costs of the application
including costs
of two counsel where so employed.
_________________
Mngadi,
J
APPEARANCES
Case
Number :
3581/2019P
For
the Plaintiff :
Mr. Combrink SC
Instructed
by :
Redfern & Findlay Attorneys
PIETERMARITZBURG
For
the first Defendant :
Ms Vermeulen
Instructed
by :
Lester Hall, Fletcher Inc.
c/o PGPS Attorneys
PIETERMARITZBURG
For
the second Defendant : Mr Pillemer
Instructed
by :
Bowman Gilfillan Inc.
c/o J Leslie Smith &
Company Inc.
PIETERMARITZBURG
Heard
on
: 31 January 2022
Judgement
delivered
: 03 February 2022