Brief Summary

Costs — Punitive costs — Applicant withdrew application for interdictory relief after respondents filed answering affidavits — Respondents sought punitive costs on attorney and client scale — Court found that while the applicant had reason to institute the application based on the perceived unlawful activities of the first respondent, his subsequent failure to respond to the answering affidavits and to withdraw the application in light of the final approval of the rezoning constituted unreasonable dilatory conduct — Court held that punitive costs were warranted due to the applicant's unreasonable actions post-filing of the answering affidavits, resulting in unnecessary expenses for the respondents.

Comprehensive Summary

Summary of Judgment

1. Introduction

This judgment concerns a costs dispute arising after the withdrawal of an earlier (main) application for interdictory relief. The central question before the Gauteng Division, Pretoria was whether the respondents were entitled to a punitive costs order on the attorney-and-client scale, and if so, for what period and on what basis.

The applicant was Hendrik Francois van Niekerk (Mr van Niekerk). The first respondent was FA Coetzee (Mr Coetzee), the owner/occupier of the neighbouring property implicated in the dispute. The second respondent was the City Council of Matlosana (the City Council), the local authority involved in land-use and related approvals.

The dispute originated in the main application brought by Mr van Niekerk seeking to interdict Mr Coetzee from hosting functions (including weddings) and conducting a catering business and other alleged illegal uses on his property, pending the obtaining of necessary land-use rights and the removal of restrictive title deed conditions. Both respondents opposed that application and delivered answering affidavits in July 2016. Mr van Niekerk did not file a replying affidavit and did not prosecute the application to finality. After the respondents took steps over several years to enrol the matter, Mr van Niekerk ultimately filed a notice of withdrawal on 25 March 2021, tendering party-and-party costs. The respondents rejected that tender and sought attorney-and-client costs, leading to the present proceedings which were argued on 28 July 2022 and decided on 10 August 2022.

The subject-matter of the underlying dispute related to land use rights, the removal of restrictive title deed conditions, and whether Mr Coetzee was entitled to conduct certain business and function-related activities on his property. In this judgment, however, the court’s focus was confined to whether punitive costs were justified, and if so, to what extent.

2. Material Facts

Mr van Niekerk and Mr Coetzee were neighbours. Mr van Niekerk alleged that Mr Coetzee’s property was being used for functions such as weddings and for a catering business, causing disturbance including loud music and the serving of alcohol without the prescribed liquor licence. Mr van Niekerk asserted that after earlier complaints the activities ceased for a period, but later resumed, prompting the main application for an interdict.

It was common cause that the City Council had addressed correspondence relevant to the status of the land-use restrictions. A City Council letter (dated 9 May 2016) indicated that the removal of restrictive title conditions was approved, but the correspondence also stated that the new land use rights could only be exercised after approval by the relevant provincial authority (the North-West Department of Local Government and Traditional Affairs) in terms of the Removal of Restrictions Act, 1967. This correspondence, including a further letter addressed to the applicant’s attorneys dated 13 May 2016 with the City Council approval attached, was communicated to Mr van Niekerk. The court treated it as undisputed that Mr van Niekerk was aware, by virtue of this correspondence, of the City Council’s position and its conditional nature.

The court also treated as undisputed that at a time when provincial approval had not yet been brought to Mr van Niekerk’s attention, Mr Coetzee held events on the property without the rezoning certificate having been issued (as described in the judgment). The applicant’s case, as accepted for purposes of the costs enquiry, was that the land use rights were not finally in place to his knowledge when he launched the main application, because the restrictive title deed conditions still required formal removal through provincial approval.

A further key fact was the respondents’ concession during argument in the present costs proceedings: Mr van Niekerk was not aware, at the time he deposed to the founding affidavit (attested on 24 May 2016), that the provincial authority had in fact already formally approved the removal of restrictions. The provincial approval letter (dated 13 April 2016) granting the MEC’s written consent for the rezoning/use described in the letter had not been brought to his attention at that stage.

However, once answering affidavits were delivered (the second respondent’s answering affidavit on 15 July 2016 and the first respondent’s answering affidavit on 19 July 2016), Mr van Niekerk was informed that final approval existed. The answering papers attached and referred to the rezoning certificate and conveyed that the restriction had been removed by the MEC, and that the property was zoned for a range of business-related uses (including guesthouse and other specified uses). The second respondent’s papers further stated that the area had been designated for mixed-use land development in the City Council’s spatial planning framework, and that Mr Coetzee’s rezoning application aligned with that designation.

Despite receiving these answering papers, Mr van Niekerk did not deliver a replying affidavit, did not withdraw the application promptly, and did not respond to subsequent steps taken by the respondents to progress the matter. The respondents took the initiative to enrol the application for hearing, and over a period described as five years, the applicant remained silent. Mr van Niekerk withdrew only on 25 March 2021, after learning the application had been enrolled for hearing on 12 April 2021, and he tendered party-and-party costs.

The court also recorded that Mr van Niekerk instituted a further review application in another court on 2 May 2018 relating to the same subject matter (as described in the judgment), a fact considered in evaluating the reasonableness of his conduct.

3. Legal Issues

The principal legal issue was whether the respondents had established grounds for a punitive costs order (attorney-and-client scale) against Mr van Niekerk, and if so, from what stage such an order should operate given the chronology and the parties’ conduct.

This dispute primarily concerned the application of legal principles governing costs—including the exercise of a judicial discretion—to a largely common-cause factual sequence concerning what the applicant knew at different times, what steps he took (or failed to take) after receiving the answering affidavits, and the reasonableness of the delay in withdrawing the proceedings.

The judgment therefore turned on a mixed enquiry: factual evaluation of the applicant’s conduct and knowledge over time, coupled with a discretionary, evaluative judgment about whether that conduct reached the threshold that justifies punitive costs, as opposed to ordinary party-and-party costs.

4. Court’s Reasoning

The court began from the premise that costs are discretionary and must be determined in a manner that is fair and just between the parties, having regard to both conduct and the facts of the case. It reiterated that litigants are not barred from approaching court for relief, but may be penalised where they abuse the time and processes of the courts.

In approaching punitive costs, the court referred to guidance given in the Constitutional Court matter of Public Protector v South African Reserve Bank, 2019 (6) SA 253 (CC), highlighting that punitive costs may be warranted where there is fraudulent, dishonest and/or vexatious conduct. The court treated this as part of the broader framework governing when attorney-and-client costs may be awarded, stressing that such awards are not made lightly and are reserved for exceptional circumstances, where “special consideration” arises either from the circumstances giving rise to litigation or from the conduct of the losing party.

Applying those principles to the pre-litigation and institution stage, the court distinguished between (i) what Mr van Niekerk might ideally have done and (ii) whether his conduct was sufficiently blameworthy to justify punitive costs. The court accepted that Mr van Niekerk ought to have made enquiries of the City Council before launching the application and that, had he done so, he would have learned that final provincial approval had been obtained (and in any event was imminent). Nonetheless, the court placed weight on the applicant’s position at the time: based on his knowledge, the City Council correspondence suggested that new rights could only be exercised after provincial approval, and there was evidence that Mr Coetzee was continuing the activities while approval processes were still being finalised. Importantly, the respondents conceded that Mr van Niekerk did not know of the provincial approval letter when he attested to his founding affidavit. On that basis, the court concluded that punitive costs were not warranted for the institution of the main application, because the applicant had “reason” to have instituted it given what he believed the approval status to be.

The court then adopted a markedly different approach to the period after the answering affidavits were filed. It reasoned that once the answering papers were delivered in July 2016, Mr van Niekerk was directly informed that final approval existed, and supporting documentation (including the rezoning certificate) was attached and explained. In the court’s view, a reasonable litigant in those circumstances should have withdrawn the application promptly after perusing the answering papers.

Instead, Mr van Niekerk did not file a replying affidavit, did not withdraw, did not persist to finality, and did not meaningfully engage with steps taken by the respondents to enrol the matter. The respondents were compelled to take further procedural steps, including preparing for hearing, engaging in associated processes, and ultimately enrolling the matter. The court treated the five-year delay before withdrawal as unreasonable and as having caused unnecessary expense.

In evaluating whether punitive costs were justified for this later period, the court recognised that the applicant’s conduct was not necessarily fraudulent or dishonest, but considered it not in good faith, characterising the litigation in that period as unnecessary and frivolous. The absence of any explanation for the prolonged delay and the lack of responsiveness to communications and notices were treated as aggravating factors. The court concluded that these features constituted the “special considerations” and exceptional circumstances warranting a punitive costs order for steps taken after the filing of the answering affidavits.

Finally, the court explained the general purpose of costs and described attorney-and-client costs as those recoverable between attorney and client for disbursements and professional services, reinforcing why such costs may be used punitively to mark serious disapproval of unreasonable litigation conduct.

5. Outcome and Relief

The court granted leave for the withdrawal of the application and made a split costs order reflecting the distinction between the institution phase and the later, dilatory phase.

The operative order recorded that the applicant’s application was withdrawn in terms of Rule 45(1)(a) with the leave of the court. The applicant was ordered to pay costs in the main application from July 2016 on a party-and-party scale, and also to pay the first and second respondents’ costs incurred post the filing of the answering affidavits on an attorney-and-client scale.

The court thus refused punitive costs for the initial launching of the application but granted punitive costs for the period after the answering affidavits, due to the applicant’s unreasonable delay and failure to withdraw earlier once the true approval position was disclosed.

Cases Cited

Public Protector v South African Reserve Bank, 2019 (6) SA 253 (CC)

Legislation Cited

Removal of Restrictions Act, 1967

Rules of Court Cited

Rule 45(1)(a)

Held

The court held that punitive costs on an attorney-and-client scale were not justified for the institution of the main application, because on the applicant’s knowledge at the time final approval of the relevant land-use position had not been brought to his attention, and there was a basis to seek relief given the conditional nature of the City Council’s correspondence and the continuation of activities complained of.

The court further held that punitive costs were justified for the period after the respondents delivered answering affidavits in July 2016, because the applicant was then informed that final approval existed, yet failed to file a replying affidavit, failed to withdraw promptly, remained inactive for approximately five years, and only withdrew when the matter was enrolled for hearing, thereby causing unnecessary costs.

LEGAL PRINCIPLES

A costs order is a matter of judicial discretion which must be exercised with regard to what is fair and just between the parties, having regard to both the factual circumstances and the parties’ conduct.

An award of attorney-and-client costs is an exceptional, punitive measure that is not granted lightly. It may be justified where special considerations exist arising from the circumstances giving rise to the litigation or from the conduct of the party against whom the order is sought.

Punitive costs may be warranted where litigation conduct is fraudulent, dishonest, vexatious, or otherwise constitutes an abuse of court processes. Even where dishonesty is not established, prolonged, unexplained, and unreasonable persistence in litigation, or failure to withdraw when the basis for the claim has fallen away, may constitute conduct warranting a punitive costs order for the period affected by that conduct.

Where a litigant’s conduct changes over time—particularly where initial institution of proceedings is reasonably explicable on the litigant’s knowledge, but subsequent persistence becomes unreasonable once material facts are disclosed—the court may craft a differentiated costs order that allocates different costs scales to different phases of the litigation.

Van Niekerk v Coeztee and Another (41880/16) [2022] ZAGPPHC 566 (10 August 2022)