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[2021] ZAGPJHC 103
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Fuelex (Pty) Limited v SP Attorney Incorporated and Others (42546/2020) [2021] ZAGPJHC 103 (23 July 2021)
REPUBLIC OF
SOUTH AFRICA
IN THE HIGH
COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
(1)
REPORTABLE:
NO
(2)
OF INTEREST TO OTHER
JUDGES:
NO
(3)
REVISED:
CASE
NO
:
42546/2020
DATE
:
23
rd
JULY 2021
In the matter between:
FUELEX (PTY)
LIMITED
Applicant
and
S
P ATTORNEYS
INCORPORATED
First Respondent
LOPDALE
SERVICES & INVESTMENTS (PTY) LIMITED
Second Respondent
THE
LEGAL PRACTICE
COUNCIL
Third Respondent
Coram:
Adams
J
Heard
:
20 July 2021 – The ‘virtual hearing’ of the
application was conducted as a videoconference on the
Microsoft
Teams
digital platform.
Delivered:
23 July 2021 – This judgment was handed down electronically
by circulation to the parties' representatives by email, by being
uploaded to the
CaseLines
system of the GLD and by release to
SAFLII. The date and time for hand-down is deemed to be 14:00 on 23
July 2020.
Summary:
Costs order – always within the
discretion of the court – discretion to be judicially exercised
and punitive costs order
should be warranted – the general rule
is that the successful party should be awarded costs – punitive
costs order
– insufficient reasons furnished for the granting
of such order.
ORDER
(1)
The applicant’s application for the
liquidation of the first respondent is dismissed.
(2)
The applicant shall pay the first
respondent’s costs of the said application, including the costs
consequent upon the employment
of two Counsel, one being a Senior
Counsel.
JUDGMENT
Adams J:
[1].
In this
opposed application by the applicant for the liquidation of the first
respondent, I am required to adjudicate only the issue
of costs. The
applicant, after having proceeded with the application and after
having received the first respondent’s answering
affidavit, now
has a clear understanding of the true facts in the matter, which do
not support the applicant’s cause to have
the first respondent
liquidated. This, so the applicant contends, was as a result of the
first respondent playing ‘cat-and-mouse’
prior to the
applicant issuing the liquidation application, leaving the applicant
no choice but to base its legal action on inferential
reasoning.
[2].
In its
replying affidavit dated the 17
th
of December 2020, the applicant gave a clear and unequivocal
indication that it has no intention of prosecuting the application
further. The liquidation application has accordingly for all intents
and purposes been abandoned by the applicant, who is however
not
prepared to formally withdraw the application, as that would entail
it having to tender the costs of the application. The applicant
contends that the conduct of the first respondent was
mala
fide
and
unbecoming of a firm of attorneys and which conduct left the
applicant with no alternative but to take the legal action it
did.
Therefore, because of these special circumstances, so the applicant
submits, it should not be held liable for costs. In fact,
so the
argument on behalf of the applicant goes, the first respondent should
pay the applicant’s costs.
[3].
The first
respondent, on the other hand, contends that the applicant had no
business diving headfirst into an urgent application
for the
liquidation of the first respondent, before first establishing the
facts. The first respondent has been successful in opposing
the
application for its liquidation and therefore, so the argument on
behalf of the first respondent goes, applying the general
rule, the
applicant should be liable for the first respondent’s costs.
[4].
The trigger
for the liquidation application was an assumption by the applicant
that the first respondent had misappropriated about
R960 000 of
the applicant’s money, which it (the first respondent) had
received from the second respondent in settlement
of the latter’s
indebtedness to the applicant. This amount, so the applicant assumed,
had been stolen by the first respondent,
relying in that regard on a
communication from the second respondent. With the benefit of
hindsight, which, we know, is an exact
science, it can safely be said
that that that assumption was wrong. The applicant’s attorneys
therefore demanded payment
of the settlement amount of the R960 000
odd by 14:00 on the 23
rd
of November 2020, failing which, so the demand went, the applicant
would proceed with an urgent winding up application.
[5].
In its written
response on the 25
th
November 2020 to the aforesaid demand, the first respondent gave a
perfectly plausible explanation to the effect that at some point
it
(the first respondent) acted for both the applicant and the second
respondent. The latter during April 2020 instructed them
to make to
the applicant a settlement offer, but before the offer could be made,
the applicant terminated the first respondent’s
mandate. The
first respondent therefore, on instruction from the second
respondent, held on to the R960 000 and awaited further
instructions from the second respondent. Importantly, the claim by
the first respondent that the matter had not been settled was
corroborated by the objective documentary evidence, notably the fact
that the supposed settlement agreement had not been signed
by the
applicant. As already indicated, the indications were that the first
respondent’s explanation was viable especially
in view of the
fact that no settlement agreement had been concluded in relation to
the dispute between the applicant and the second
respondent.
[6].
Strangely, the
applicant, probably motivated by a deep-rooted suspicion of the first
respondent and some serious conspiracy theories
harboured by the
applicant, fuelled by an erroneous claim by second respondent that
the dispute had been settled between them,
opted not to accept the
first respondent’s explanation. In fact, what the applicant
then did was to ‘jump the gun’,
as it was put by the
first respondent in their papers, and to launch the urgent
application for the liquidation of the first respondent.
In my view,
this cause was ill-advised and misguided. This is so simply because
of the quantum leap that need to be taken by the
applicant from the
point of the suspicion that the first respondent had stolen the money
– with no real objective facts to
support the suspicion –
to positive allegation that the first respondent owes the applicant
the said sum as a basis for a
liquidation of the first respondent.
[7].
The point is
that the applicant, faced with a plausible version of events by the
first respondent and the risk that that version
may very well be
true, truly jumped the gun by the institution of the urgent
application. What is instructive is that the same
version contained
in the first respondent’s answering affidavit was rejected by
the applicant before the application was
issued. The difference being
that the applicant now accepts that version.
[8].
In sum, I find
myself in agreement with the submissions on behalf of the first
respondent that the applicant, in launching into
an urgent
application in the reckless manner it did, ran the risk of falling at
the first hurdle. The applicant had no business
issuing an
application against the first respondent. On what basis did the
applicant reject the version of the first respondent
and opt to align
itself with conspiracies and inferences assuming that the first
respondent, a firm of attorneys, bound by high
ethical and
professional standards, had made itself guilty of theft? I ask this
question rhetorically. The point is that, viewed
objectively, there
was no reason for the applicant not to accept the perfectly plausible
explanation proffered by the first respondent.
[9].
I am therefore
satisfied that the applicant should, in terms of the general rule
that a successful party should be awarded costs,
pay the first
respondent’s costs of this application.
[10].
The next
question is whether a punitive costs order should be granted against
the applicant. It is trite that the rationale for
a punitive attorney
and client costs order is more than mere punishment of the losing
party. Tindall JA explained it as follows
in
Nel
v Waterberg Landbouwers v Ko-operatiewe Vereeniging
[1]
:
‘
[t]he
true explanation of awards of attorney and client costs not expressly
authorised by Statute seems to be that, by reason of
special
consideration 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 considers it just, by means of such an order, to
ensure more effectually than it can do by means
of a judgment for
party and party costs that the successful party will not be out of
pocket in respect of the expense caused to
him by the litigation.’
[11].
And see
further:
Swartbooi
v Brink
[2]
.
The issue of costs is a matter for the discretion of a trial court.
Smalberger JA elaborated on the nature of this discretion
as follows
(in the context of an agreement between parties that attorney client
costs be paid) in
Intercontinental
Exports (Pty) Ltd v Fowles
[3]
at para 25:
‘
The
court’s discretion is a wide, unfettered and equitable one. It
is a facet of the court’s control over the proceedings
before
it. It is to be exercised judicially with due regard to all relevant
consideration. These would include the nature of the
litigation being
conducted before it and the conduct before it and the conduct of the
parties (or their representatives). A court
may wish, in certain
circumstances, to deprive a party of costs, or a portion thereof, or
order lesser costs than it might otherwise
have done as a mark of its
displeasure at such party’s conduct in relation to the
litigation.’
[12].
SCA judgements
have indicated that a court should be disinclined to grant costs
orders on the scale as between attorney and client
until salient
argument and sufficient forensic debate have helped to establish the
appropriate judicial basis on which to make
them:
AA
Alloy Foundry (Pty) Ltd v Titaco Projects (Pty) Ltd
[4]
and
Thoroughbred
Breeders Association v Price Waterhouse
[5]
.
[13].
Applying these
principles
in
casu
, I am
not persuaded that a punitive costs order would be appropriate.
However, I am in agreement with the submissions made by Mr
Pillay SC,
who appeared on behalf of the first respondent with Mr Kisten, that
the matter was of such a serious nature –
especially for the
first respondent, an attorney of this this court, accused of serious
wrongdoings – that the employment
of two Counsel, one being a
Senior, was justified.
[14].
In the
premises, I am of the view that costs should be awarded in favour of
the first respondent against the applicant only on the
party and
party scale.
[15].
The parties
were also
ad
idem
that
the application should be dismissed and I will therefore grant an
order to that effect in addition to the costs order.
Order
Accordingly,
I make the following order: -
(1)
The applicant’s application for the
liquidation of the first respondent is dismissed.
(2)
The applicant shall pay the first
respondent’s costs of the said application, including the costs
consequent upon the employment
of two Counsel, one being a Senior
Counsel.
L R ADAMS
Judge of the High Court
Gauteng
Local Division, Johannesburg
HEARD ON:
20
th
July 2021 – in a ‘virtual hearing’
during a videoconference on the
Microsoft Teams
digital
platform
JUDGMENT DATE:
23
rd
July 2021 – judgment handed down
electronically
FOR THE APPLICANT:
Advocate W J Botha
INSTRUCTED BY:
Faber Goertz Ellis Austin Inc, Bryanston
FOR THE RESPONDENT:
Advocate Indhrasen Pillay SC, with Adv Reece Renae Kisten
INSTRUCTED BY:
SP Attorneys Incorporated, Sandton
[1]
Nel v Waterberg
Landbouwers v Ko-operatiewe Vereeniging
1946 (1) AD 597
at 607;
[2]
Swartbooi v Brink
2006 (1) SA 203
(CC) par 27;
[3]
Intercontinental Exports
(Pty) Ltd v Fowles
1999 (2) SA 1045 (SCA).
[4]
AA Alloy Foundry (Pty)
Ltd v Titaco Projects (Pty) Ltd
2000 (1) SA 639
(SCA) at 648 E-I;
[5]
Thoroughbred Breeders
Association v Price Waterhouse
2001 (4) SA 551
(SCA) at 596 D-I.