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[2021] ZAMPMBHC 42
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Freedom Stationary (Pty) Ltd v Palm Stationary Manufacturers (Pty) Ltd and Mveli Data Matrix Solutions (Pty) Ltd (Joint Venture) and Others (1023/2021) [2021] ZAMPMBHC 42 (15 September 2021)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA,
MPUMALANGA
DIVISION (MAIN SEAT)
Case
Number: 1023/2021
REPORTABLE:
YES
OF
INTEREST TO OTHER JUDGES: YES
REVISED.
15
September 2021
In
the matter between:
FREEDOM
STATIONARY (PTY) LTD
Applicant
and
PALM
STATIONARY MANUFACTURERS (PTY)
First Respondent
LTD
and MVELI DATA MATRIX SOLUTIONS
(PTY)
LTD (JOINT VENTURE)
ACTING
HEAD OF DEPARTMENT:
Second Respondent
MPUMALANGA
DEPARTMENT OF ECUCATION
MEMBER
OF THE EXECUTIVE COUNCIL,
MPUMALANGA
DEPARTMENT OF EDUCATION
Third Respondent
MINISTER
OF JUSTICE AND CORRECTIONAL
Fourth Respondent
SERVICES
This
judgment will be handed down virtually over the Zoom platform at
09:00 on 15 September 2021. The parties will be furnished
with a copy
of the judgment by email and the judgment will be published on the
SAFLII website.
JUDGMENT
Roelofse
AJ:
Introduction
[1]
The applicant (“
Freedom”
)
challenges the provisions of Rule 49(13)(a) of the Uniform Rules
(“
the Rule”
)
The Rule provides for the furnishing of security for costs by an
appellant unless the respondent waives his/her right to security
or
the court exempts the appellant from furnishing security.
[2]
Freedom says that the Rule is
ultra
vires
and unconstitutional. Freedom
seeks to confine the obligation and right in respect of security for
costs to the substantive law
and therefore, the Rule, which is part
of the procedural law, so Freedom contends, cannot make security for
costs a requirement
for an appeal and it is consequently
ultra
vires
. The second leg to Freedom’s
challenge to the Rule is founded upon section 34 of the Constitution
of the Republic of South
Africa, 1996 (“
the
Constitution”
) which guarantees
everyone access to the court.
Procedural
(or adjective law) and substantive law – the evasive divide
[3]
Jeremy
Bentham (1747 – 1842) was an English philosopher, jurist, and
social reformer.
[1]
Bentham has
left a legacy (or shall I call it a curse), which still haunts
jurists to this day when he pronounced that:
“
By
procedure, is meant the course taken for the execution of the laws
.... Laws prescribing, the course of procedure have on a former
occasion been characterized by the term Adjective Laws. This is in
contradiction to those other laws, the execution of which they
have
in view, and which for this same purpose have been characterized by
the correspondent opposite term, Substantive Laws”
The
distinction between the substantive law and procedural law (also
referred to as adjective law) saw the light.
[4]
More
than a century after the death of Bentham, CENTLIVRES, C.J
[2]
said as follows when confronted with the question whether the
Separate Representation of Voters Act 46 of 1951 was
ultra
vires
section
152 of the South Africa Act:
“
In
Dixon v Harrison,
[1823] EngR 161
;
124 E.R. 958
at p. 964, it was stated that the
greatest absurdity imaginable in law is:
'that a man hath a
right to a thing for which the law gives him no remedy; which is in
truth as great an absurdity, as to say, the
having of right, in law,
and having no right, are in effect the same.'
There is, in my
opinion, no warrant for the use sought to be made by Mr. Beyers of
the distinction between substantive law and adjective
or procedural
law. That distinction or basis of classification is indeed not a very
clear one. Salmond in his Jurisprudence (3rd
ed. at pp. 443 and 445)
says:
'It is no easy task to
state with precision the exact nature of the distinction between
substantive law and the law of procedure
. . . So far as the
administration of justice is concerned with the application of
remedies to violated rights, we may say that
the substantive law
defines the remedy and the right, while the law of procedure defines
the modes and conditions of the application
of the one to the other.'
A writer in the
Harvard Law Review (Vol. 45 at p. 643) says much the same as Salmond:
'no one has ever been
able to formulate any test which will distinguish between procedural
and substantive law in any particular
case. Substantive law remains
the 'law' which we enforce, procedure the practical rules by which we
enforce it.'
[5]
I
gave this short introduction because this court is still, almost 50
years after CENTLIVRES C.J was confronted with the effect
of
Bentham’s pronouncement, still ceased with the evasive divide
between the substantive law and the law of procedure because
the
applicant contends that the provisions of Rule 49(13) of the Uniform
Rules (“
the
Rule”
)
is
ultra
vires
section 6(1)(m) of the Rules Board for Courts of Law Act, 1985 (“
the
Act”
)
for the Rule seeks to make substantive law in terms whereof security
is required in appeals emanating from the Superior Court.
[3]
[6]
What the applicant in essence
contends is that security is governed by the substantive law. It is
therefore necessary to determine
if the Rule seeks to make
substantive law or if the Rule is procedural. The answer to this
question must determine the ultimate
outcome of this matter. I say,
perhaps the answer lies not so much in determining whether a
particular right or obligation is substantive
or procedural but
rather the source of the right or obligation and the realm within
which that right or obligation operates.
Litigation
background
[7]
On
15 May 2019, the Department of Education (“
the
department”
)
[4]
awarded a tender to Freedom for the
manufacture,
packaging and delivery of scholastic stationary to all public
educational institutions in the Mpumalanga province for
a period of
three academic years.
[8]
The first respondent (“
Palm”
),
dissatisfied with the award of the tender to Freedom, launched an
application in this court for orders directed at reviewing
and
setting aside the award of the tender to Freedom and for
consequential relief.
[9]
On 15 November 2019, his Lordship Mr
justice Legodi JP ordered that Freedom disclose its bid documents to
Palm. Dissatisfied with
this order, Freedom applied for leave to
appeal which was refused. Dissatisfied with the refusal of leave to
appeal, Freedom petitioned
the Supreme Court of appeal for leave to
appeal. On 21 May 2020, the Supreme Court of appeal granted leave to
appeal to Freedom
to the Full Court of this Division.
The appeal and its
shortcomings
[10]
Rule 49 of the Uniform Rules set out
the procedure for appeals emanating from the Superior Courts.
[11]
It is common cause that Freedom
complied with the following provisions of Rule 49 in that it:
delivered its notice of appeal timeously
in accordance with Rule
49(2); made application for a date for the hearing of the appeal in
accordance with Rule 49(6)(a); and
lodges and served copies of the
record with the register and the first to third respondents in terms
of Rule 49(7)(a).
[12]
What Freedom failed to do was to
lodge security as required by the Rule. The Rule reads:
“
(a)
Unless the respondent waives his or her right to security or the
court in granting leave to appeal or subsequently on application
to
it, has released the appellant wholly or partially from that
obligation, the appellant shall, before lodging copies of the record
on appeal with the registrar, enter into good and sufficient security
for the respondent’s costs of appeal.
(b)
In the event of failure by the parties to agree on the amount of
security, the registrar shall fix the amount and the appellant
shall
enter into security in the amount so fixed or such percentage thereof
as the court has determined, as the case
may
be.”
[13]
Palm
(and not Freedom being the appellant) prosecuted the appeal by
obtaining, of its own accord, three dates in November 2020 from
the
Appeal Registrar of this court and set the matter down in November
2020 and proposed to Freedom’s attorneys that Form
D be
completed.
[5]
Ultimately the
appeal was enrolled for hearing on 26 February 2021.
The appeal panel’s
response to the shortcomings of the appeal
[14]
On 23 February 2021, the Appeal
Panel sent an email to the parties drawing their attention to certain
instances of non-compliance
regarding the appeal, the foremost for
purposes of this judgment being that Freedom has filed security for
costs as required by
the Rule. The appeal panel concluded that in its
view the appeal is not properly enrolled and as such not before the
court. The
appeal panel furthermore strongly recommended that the
appeal be removed from the roll of 26 February 2021 so that the
parties
can attend to the shortcomings and re-enroll the matter for
hearing on another date in the future.
The parties’
response to the appeal panel’s views
[15]
Freedom's response to the appeal
panel's view was as follows:
“
3.4.1
The requirement for the Appellant to enter into good and sufficient
security for the Respondent's costs of appeal was held
to be
unconstitutional. In this regard, we refer to the case of Shepherd v
O'Neill and Others, and the commentary thereon by Erasmus,
Superior
Courts Practice at D1-680. See also the commentary by Harms, Civil
Procedure in the Superior Courts at B49.29.
3.4.2
I
n
any event, the first respondent (Palm stationary), has waived
security for costs, which with the knowledge that the Appellant
has
the resources to meet any adverse costs order.
3.4.3 Furthermore, the
First Respondent (Palm Stationary) did not call for security for
costs in terms of rule 47(1), nor did the
First Respondent issue a
Rule 30 notice alleging that the set down constituted an “irregular
step”.
Further
debate with the appeal panel
[16]
On 24 February 2021, the Appeal
Panel told the parties as follows:
“
The
panel notes that the KZN High Court has found the provision
concerning filing of security inconsistent with the Constitution.
For
the panel that is how far it goes. The panel cannot necessarily
accept the views of the KZN High Court without any confirmation
by
the Constitutional Court. If
you
have authority for the confirmation, the panel would be glad to have
it. For now, it suffices to state that the panel does not
regard
itself as bound by the authorities provided by you."
"Security
in terms of Rule 49(13) cannot be confused with the general security
in terms of Rule 47(1). Rule 49(13)(a) deals
specifically with
security when appealing a matter and for convenience it is reproduced
below:
‘
Unless
the respondent waives his or her right to security or the court in
granting leave to appeal or subsequently on application
to it, has
released the appellant wholly or partially from that obligation, the
appellant shall, before lodging copies of the record
on appeal with
the registrar, enter into good and sufficient security for the
respondent’s costs of appeal.’
The view of the panel
is still that the matter is not properly before Court and that it
should be removed. The main problem, as
the panel understands it, is
the failure to file security. The appellant having been the party who
failed to observe the Rule must
bear the costs.”
[17]
In response Palm’s attorneys
proceeded to inform the appeal panel and Freedom that it had waived
compliance with Rule 49(13)
in relation to security for costs of the
appeal and sought confirmation that the appeal would proceed.
[18]
In response Freedom’s
attorneys wrote to the appeal panel. They contended that
there
was no obligation on the part of Freedom, in terms of SCA Rule 9(1),
to file security for costs. Freedom reiterated that the
requirement
for security for costs had, in any event, been waived by the first
respondent and that Freedom is not liable for the
costs because it
had acted in accordance with the directions of the Appeal Registrar.
[19]
On 25 February 2021, the appeal
panel responded to the parties’ contentions. It stated:
"The
panel holds the view that the failure by both parties is in fact
fatal as it cannot be rectified if the Rule is read in
its proper
perspective. The Rule envisages that both the filing of security or
the waiver thereof would occur prior to the appellant
lodging copies
of the record on appeal with the Registrar. It is common cause that
the respondent in this matter did not waive
its right to security
before the appellant could file the copies of
the record. As a result the
non-compliance, in the opinion of the panel, persists.
"
[20]
In addition to the foregoing, the
appeal panel stated that reliance on SCA
Rule 9(1) is not helpful in this case. In
this regard, the appeal panel stated:
"The
SCA granted leave as the SCA and not as a High Court. As such, the
Rule cannot
be
utilised
to justify
the
parties’
omission
to file
or waive security, as the case may
be. The granting of leave by the SCA did not excuse the parties from
observance of Rule 49(13)(a).
The contravention therefore stands and
the order of the SCA is for present purposes irrelevant.''
[21]
With regards to who should be held
responsible for the costs, the appeal panel stated as follows:
“
3
.
One issue on which the parties may want
to address the panel is who should bear the costs. This is
notwithstanding that the panel
had previously expressed a view
thereon. The parties can accept that the views put forward by the
panel were never cast in stone
and therefore it remains open to
persuasion.
4.
In consequence of the panel's attitude, it is not necessary for the
parties to present oral
argument physically or virtually tomorrow but
can simply forward their written submissions on the issue. The
parties can expect
to hear from the court shortly after receipt of
their written submissions.
5.
I look forward to receiving your written submissions as directed."
[22]
Freedom furnished the appeal panel
with its written submissions on the issue of costs. It referred the
appeal panel to
Kama and Others v Kama
and Another (1357/2005)
[2007] ZAECHC 115
(6 September 2007)
,
where the court condoned the failure to put up security in terms of
rule 49(13).
[23]
Palm’s attorneys responded by
alleging that Palm did not tacitly waive security for costs at the
time of the filing of the
record. Freedom’s attorneys
maintained that Palm had at all relevant times waived security for
costs. It informed Palm’s
attorneys as follows:
“
It
is common cause that your client had, at all material times, waived
security for the costs of the appeal. On the 1
st
September 2020, when the appeal record was filed, your client raised
no objection, and with full knowledge of its rights, tacitly
waived
its right to call for security, and knowingly took further
substantive and procedural steps in the prosecution of the appeal,
by
inter alia procuring dates for the hearing of the appeal, agreeing
thereon, and filing heads of argument. On the 25
th
February 2021, your client reiterated its unconditional waiver by
expressly stating " ... the first respondent waives the
requirement for security in terms of rule 49(13 ).”
[24]
The appeal panel proceeded to strike
the appeal from the roll.
This
application
[25]
Freedom seeks the following relief
in this application:
“
1.
an order declaring that the provisions of rule 49(13) of the Uniform
Rules of Court are ultra vires and
inconsistent with section 6(1)(m)
of the Rules Board for Courts of Law Act, 1985, are inconsistent with
section 34 of the Constitution,
and are accordingly invalid and
unenforceable.
2.
Alternatively, to paragraph 1 above, an order declaring that the
first respondent has waived
compliance with security for its costs of
appeal in the High Court, Mpumalanga Division, Mbombela (“High
Court”), alternatively,
an order releasing the applicant from
providing security for the first respondent's costs of appeal in the
High Court, and directing
that non-compliance with rule 49(13) is
hereby condoned.
3.
In the further alternative to paragraph 2 above, an order directing
the applicant to lodge
security for the first respondent's costs of
appeal in the High Court, within 30 days, in an amount to be
determined by the Registrar
of this Court, and directing that
non-compliance with rule 49(13) is hereby condoned.
4.
An order directing that the costs of this application be paid by the
first respondent, and,
should any of the further respondents oppose
the relief sought in this application, such further respondents and
the first respondent
shall be liable jointly and severally for the
costs of this application.
5.
Further, other, and/or alternative relief.
[26]
Palm and the fourth respondent (“
the
Minister”
) delivered notices of
intention to oppose the application. The second and third respondents
abide the court’s decision. The
matter was case managed in
terms of this Court’s Directive. The Minister was directed by
the case management order to deliver
his answering affidavit on 11
June 2021 and his heads of argument on 3 August 2021. The Minister
failed to do so. Upon allocation
of the matter to me and on 24 August
2021, I sent a letter to the State Attorney setting out as follows:
“
1.
The above application is allocated to this court for hearing on 2
September 2021.
2.
The Minister of Justice and Constitutional Development delivered his
notice of intention
to oppose the application on 30 April 2021 and
was directed by this court to deliver his answering affidavit by no
later than 11
June 2021 and his heads of argument by no later than 3
August 2021.
3.
The papers before me does not include the Minister’s answering
affidavit nor has the
Minister delivered his heads of argument.
4.
The Minister is required to file a notice by no later than 16:00 on
27 August 2021, indicating
whether the Minister still intends to
participate in the matter and if so, in what manner the Minister’s
intends to participate.”
On
2 September 2021, the Minister delivered a notice withdrawing its
opposition in the application and the Minister furnished this
court
with his written submissions.
[27]
After hearing the parties on 2
September 2021, I proposed to the parties that they discuss amongst
themselves an appropriate order
for in my view, the sooner the appeal
proceed the better for both parties. The parties furnished me with a
draft order which I
made and order of court. The order reads:
“
Having
heard counsel for the Applicant, First Respondent and Fourth
Respondent and having read the papers, the Court makes the following
order:
1.
The
Applicant is released from providing security for the First
Respondent’s costs of appeal to the Full Court in respect
of
case number A34/2020 (the appeal against the order and judgment of
Legodi JP of 15 November 2019), and the First Respondent’s
[Sic]
[6]
non-compliance with Rule 49(13) is hereby condoned.
2.
Costs are reserved for determination in the judgment of this
Court.”
[28]
Although the parties are now entitled by virtue of the order
to proceed with the appeal, the declaratory relief in prayers 1 and
2
of the notice of motion as well as the issue of costs must still be
pronounced upon for the order that was granted is owed to
its own
reasons despite that the order was granted by agreement. Prayer 3 of
the notice of motion needs no further attention because
the order
given absolves Freedom from furnishing security.
[29]
I therefore proceed to set out the parties’ contentions
that are relevant for purposes of deciding the relief sought in
prayers
1 and 2 of the notice of motion as well as costs.
[30]
As stating point, there is no doubt that the parties proceeded
with the appeal apparently totally oblivious of the Rule’s
requirement regarding security. Only when the appeal panel raised the
issue, the parties set fourth their views. Freedom and Palm’s
views are aimed at preventing a cost order as a result of the appeal
being struck, the one blaming the other for non-observance
with the
Rule.
[31]
Freedom goes strides further by challenging the legality and
constitutionality of the Rule. Obviously if Freedom succeeds, Freedom
was entitled to disregard the Rule (only to the extent that Palm
ostensibly tacitly waived security) and the appeal panel was wrong
in
striking the appeal. For Freedom, if the relief it seeks is granted
(the declaratory orders), a cost order could be avoided,
and Palm may
well be saddled therewith. In terms of the order that was granted,
costs remain to be determined.
[32]
Despite
that the appeal now to proceed, I consider in the exercise of my
discretion, that the challenge to the Rule is not hypothetical,
abstract or academic. It is one which affects not only Freedom and
Palm (insofar as costs are concerned) but also other litigants
who
wish to take judgments on appeal. The issue of security for costs on
appeal should be considered and resolved. That issue is
not moot and
remains a live controversy in view of the decision in
First
Rand Bank Ltd v Van der Merwe
[7]
where Froneman J declared the Rule do not fall with the limits set by
section 6(1)(m) of the Act. This, in my view allows this
court to
pronounce upon the challenge. I am fortified in my view by what was
said in
Afriforum
NPC and others v Eskom Holdings Soc Ltd and others:
[8]
“
[111]
But even where there has been permanent acquiescence or cessation,
there may still remain a public interest in having the
legality of
the practice settled. Courts retain a discretion to hear matters
where there is no live controversy when it is in the
interests of
justice to do so. The onus rests on the party seeking to have the
matter heard to show that there are sufficiently
exceptional
circumstances for the exercise of this discretion.
[112] A prerequisite
for deciding an issue despite the fact that it is moot is that any
order the court may make must have some
practical effect on the
parties or someone else. Relevant factors include the nature and
extent of the practical effect that any
possible order might have,
the importance of the issue, its complexity and the fullness or
otherwise of the argument that has been
advanced by the parties.
[113] Where there is a
compelling public interest that the constitutionality of a statutory
provision be determined, the doctrine
of mootness should be less
strictly applied. Continuing uncertainty about the meaning of a
statutory provision may prejudice the
general administration of
justice. Where a manifestly unconstitutional provision continues to
be applied with potentially adverse
consequences, such considerations
should override the mootness of the issue, especially if there are
conflicting first-instance
decisions. However, the court should
always keep in mind: (i) the delicacy of the function of judicial
review in matters of public
interest; (ii) the comparative finality
of its consequences; (iii) the consideration due to the judgment of
the other repositories
of constitutional power; and (iv) the inherent
limitations of the judicial process, arising from its largely
negative character
and limited resources of enforcement.
[114] In Independent
Electoral Commission v Langeberg Municipality the Constitutional
Court observed that if a court decides to
determine one moot issue
arising in a case it is not obliged to determine all other moot
issues in the same case. It may elect
to determine one moot issue
because it is in the interests of justice to do so, but may decide
that it would serve no purpose to
resolve other moot issues, or to
grant the relief sought in relation to them, as future cases might
present different factual matrixes.”
The
parties’, contentions
Freedom:
Declaring
the Rule ultra vires and inconsistent with section 6(1)(m) of the Act
and inconsistent with section 34 of the Constitution,
therefore
invalid and unenforceable
[33]
In
my view, a convenient place to start is to set out the procedural
area within which section 6(1)(m) of the Act operates.
Section
6(1)(m) is one of the powers of the Rules Board established in terms
of the Act. In terms of the provisions of
section 54
of the
Superior
Courts Act 10 of 2013
[9]
:
“
The
rules applicable to the Constitutional Court, Supreme Court of Appeal
and the various High Courts immediately before the commencement
of
this section remain in force to the extent that they are not
inconsistent with this Act, until repealed or amended.
[34]
The rules applicable to the Supreme Court in force immediately
before the commencement of the
Superior Courts Act is
the Uniform
Rules of Court: Rules Regulating the Conduct of the Proceedings of
the Several Provincial and Local Divisions of the
High Court of South
Africa under GNR.48 of 1965 in GG 999 of 12-01-1965 (“
the
Uniform Rules”
). The Rule is located in the Uniform Rules.
In
terms of
section 1
of the
Superior Courts Act, “rules
”
and “Rules Board” are defined as follows:
“
rules”
means the applicable rules of court;
“
Rules Board”
means the Rules Board for Courts of Law, established by the Rules
Board for Courts of Law Act, 1985 (Act No.
107 of 1985);
[35]
The long title of the Act reads:
“
To provide for
the making of rules for the efficient, expeditious and uniform
administration of justice in the Supreme Court of
Appeal, High Courts
and lower courts; for that purpose to make provision for the
establishment of the Rules Board for Courts of
Law; and to provide
for matters connected therewith.
[36]
Section 6(1) of the Act, empowers the Board established in
terms of the Act, to:
“
Powers
of Board.
—
(1)
The Board may, with a view to the efficient, expeditious and uniform
administration of justice in the Supreme Court of Appeal,
the High
Court of South Africa and the Lower Courts, from time to time on a
regular basis review existing rules of court and, subject
to the
approval of the Minister, make, amend or repeal rules for the Supreme
Court of Appeal, the High Court of South Africa and
the Lower Courts
regulating—
(a)
the practice and procedure in connection with litigation, including
the time within
which and the manner in which appeal shall be noted;
(b)
the form, contents and use of process;
(c)
the practice and procedure in connection with the service of process
or other documents,
including the issue of interrogatories;
(d)
the practice and procedure in connection with the execution of
process, including
writs and warrants;
(e)
the practice and procedure in connection with the reference of any
matter to a referee
under
section 38
of the
Superior Courts Act,
2013
, and the remuneration payable to any such referee;
( f )
the compulsory examination by one or more registered medical
practitioners of any
party to proceedings in which damages or
compensation in respect of alleged bodily injury is claimed and whose
state of health
is relevant for the determination of such damages or
compensation, as well as the manner, time, place and responsibility
for the
cost of the examination, and the making available to the
opposing party of any documentary report on the examination;
(g)
the procedure at or in connection with any enquiry as to the mental
state of any person,
and the findings or orders which may be made or
issued at any such enquiry;
(h)
the appointment and admission of commissioners to take evidence and
examine witnesses;
(i)
the manner in which documents executed outside the Republic may be
authenticated
to permit of their being produced or used in any court
or produced or lodged in any public office in the Republic;
( j)
the appointment and admission of sworn translators;
(k)
the duties of sheriffs and other officers of court;
(l)
fees and costs, including the fees payable in respect of the service
or execution
of process (except subpoenas or warrants issued at the
request of the State in criminal matters) or in respect of the
summoning
of persons to answer interrogatories;
(m)
the manner of determing the amount of security in any case where it
is required that security
shall be given, and the form and manner in
which such security may be given;
(n)
the hours during which the offices of registrars and clerks of the
court shall be
open for official purposes;
(o)
the manner of recording or noting evidence and proceedings;
(p)
the custody and disposal of records or minutes of evidence and
proceedings in the
Supreme Court of Appeal and the High Court of
South Africa;
(q)
the appointment of assessors in proceedings in lower courts;
(r)
the tariff of fees chargeable by advocates, attorneys and notaries;
(s)
the taxation of bills of costs and the recovery of costs;
(t)
generally any matter which may be necessary or useful to be
prescribed for the
proper despatch and conduct of the functions of
the Supreme Court of Appeal, the High Court of South Africa and the
Lower Courts
in civil as well as in criminal proceedings.
[37]
Section 6 of the Act makes it clear that the powers of the
Board are focussed upon making, reviewing, amending and repealing
rules
for one purpose and that purpose is for the
efficient,
expeditious and uniform administration of justice
. The proper
administration of justice is pivotal for the enforcement and
ventilation existing individual rights and obligations
and for the
creation of new rights and obligations either through legislation or
the common law. The rules of procedure, through
which individual
rights and obligations belonging in the realm of the substantive law
are indispensable for: “……
.'that a man hath a
right to a thing for which the law gives him no remedy; which is in
truth as great an absurdity, as to say,
the having of right, in law,
and having no right, are in effect the same.'
Substantive law is
the source of rights and obligations and the procedural law provides
the manner in which a remedy is obtained.
[38]
Not
only the substantive law creates rights and obligations. So does the
procedural law too. The Uniform Rules (and also the rules
of other
courts), which operates within the realm of the procedural or
adjective law, are abound with rights and obligations, albeit
procedural. Rules of procedure are important and indispensable for
the proper administration of justice. This is what was said
by
O’Regan in
Giddey
NO v JC Barnard and Partners
[10]
“
But for courts
to function fairly, they must have rules that regulate their
proceedings. Those rules will often require parties
to take certain
steps on pain of being prevented from proceeding with a claim or
defence. A common example is the rule regulating
the notice of bar in
terms of which defendants may be called upon to lodge their plea
within a certain time failing which they
will lose the right to raise
their defence. Many of the rules of court require compliance with
fixed time limits, and a failure
to observe those time limits may
result, in the absence of good cause shown, in a plaintiff or
defendant being prevented from pursuing
their claim or defence. Of
course, all these rules must be compliant with the Constitution. To
the extent that they do constitute
a limitation on a right of access
to court, that limitation must be justifiable in terms of section 36
of the Constitution. If
the limitation caused by the rule is
justifiable, then as long as the rules are properly applied, there
can be no cause for constitutional
complaint. The rules may well
contemplate that at times the right of access to court will be
limited. A challenge to the legitimacy
of that effect, however, would
require a challenge to the rule itself. In the absence of such a
challenge, a litigant’s only
complaint can be that the rule was
not properly applied by the court. Very often the interpretation and
application of the rule
will require consideration of the provisions
of the Constitution, as section 39(2) of the Constitution instructs.
A court that
fails to adequately consider the relevant constitutional
provisions will not have properly applied the rules at all.”
(Endnotes
omitted)
[39]
I proceed with the rule that is the subject of this dispute,
namely Rule 49(13)(a).
[40]
The
Board has amended Rule 49(13) in 1999
[11]
to provide that a court who grants leave to appeal or subsequently on
application to it, may release the appellant wholly or partially
from
that obligation of giving security. This amendment was probably made
as a result of the judgment in
Shepard
v O’Niell
[12]
which found the Rule before its amendment unconstitutional because:
“…
.As
matters stand at present in terms of Rule 49(13) the Court has no
power to either exempt an appellant from putting up security
or to
interfere with the amount fixed by the Registrar. There is much to be
said for protecting a respondent in an appeal from
an impecunious
appellant who drags him from one court to the other. On the other
hand to in effect bar access to a Court of appeal
because a deserving
litigant is unable to put up security appears to me to be unfair and
in conflict with the provisions of the
Constitution.”
[41]
For
its contention that the Rule is
ultra
vires
,
Freedom relies on
First
Rand Bank Ltd v Van der Merwe
[13]
,
where
Froneman J said:
“
It seems to me,
however, that there is a more fundamental problem relating to rule
49(13), one that ultimately favours the respondents,
namely that they
are not obliged at all to provide security in an appeal of this
nature.
Section 20(5)(b) of
the Act
[the now repealed Supreme Court Act]
explicitly vests
the court granting leave to appeal from civil appeals in the High
Court with the discretionary power to order the
furnishing of
security, but the Act contains no such a provision in respect of a
court granting leave to appeal from the High Court
as a court of
first instance in civil appeals (Klipriviersoog Properties (Edms) Bpk
v Gemeenskapsontwikkelingsraad 1987 (2) SA
117 (A) at 121G-122G).
The rules of court are
delegated legislation and if a rule does not fall within the scope of
its enabling legislation it is ultra
vires ( Harms, Civil Procedure
in the Superior Courts, A 2.2, 2002 ed.). The enabling statutory
provisions for the old Appellate
Division rules and the Uniform Rules
for the High Courts were the now repealed ss. 43(1) and 43(2)(a) of
the Act. These provisions
allowed for the making of rules ‘for
regulating the conduct of the proceedings’ in those courts in
broad, permissive
terms. Security for costs was seen as a matter of
practice and not of substantive law, with the result that an ultra
vires challenge
to the old AD rule 6(2) and the old High Court rule
49(13) (which dealt with security for costs on appeal) was unlikely
to have
met with any success.
Matters have changed
on two fronts.
The enabling
legislation is now to be found in the Rules Board for Courts of Law
Act 107 of 1985. Section 6(1)(m) of Act 107 of
1985 provides that the
Rules Board may make rules that regulate
“
the manner of
determining the amount of security in any case where it is required
that security shall be given, and the form and
manner in which
security may be given.” (my emphasis).
The rules may thus not
stipulate where security is required – the legal obligation to
provide security, or its obverse side,
the right to require security
from an opposing party, must be found elsewhere.
The second change is
the new constitutional context. An inflexible right to demand
security effectively infringes everyone’s
right of access to
justice under s.34 of the Constitution, as held in Shepherd v
O’Niell, above, at 1073C-D.
Section 20 of the Act
deals comprehensively with parties’ rights in the appeal
process from the High Courts. It provides for
a discretionary power
to order security in one case (appeals from appeals), but not in
another (appeals from the High Court of
first instance). The common
law cannot help either. The inherent power of the superior courts to
regulate their own process as
far as ordering security is concerned
is limited to controlling vexatious litigation – the kind of
litigation which is almost
by definition excluded where an order
granting leave to appeal is made.
The Supreme Court of
Appeal rules no longer contain a provision similar to the old AD rule
6(2) which provided for an inflexible
right to demand security. The
present rule 9 dealing with security refers only to the situation
where the court granting leave
to appeal has ordered the appellant to
provide security. It thus falls within the enabling provision of
s.6(1)(m) of Act 107 of
1985.
In my judgment the
provisions of rule 49(13) do not fall with the limits set by s.
6(1)(m).
In so far as the
provisions of the rule seeks to be the source of a right to security
it goes beyond the powers of regulation set
out in s.6(1)(m) of Act
107 of 1985. If its claim is more modest, namely that it merely
assumes the existence of such a right,
it still overreaches itself
because there is no other source of such a right.
If this reasoning is
correct rule 49(13), even in its amended form, is invalid. The cure,
if needed, lies in amending the Act, not
the rules. Although the
invalidity stems from reasoning thus far couched in terms of the
common law ultra vires doctrine, it in
effect amounts to a finding
that the rule is invalid under the Constitution according to the
doctrine of legality (Pharmaceutical
Manufacturers Association of SA
and another: In re ex parte President of the Republic of South Africa
and others 2000(2) SA 675
(CC), para [50], 698D-F).”
[42]
I
respectfully disagree with Froneman J’s dictum. The dictum
overlooks the wide power the Board has in terms of Section 6(1)(a)
to
review, amend, make and repeal rules regulating the practice and
procedure in connection with litigation. The Cambridge Dictionary
defines “litigation” as “
the
process of taking a case to a court of law so that a judgment can be
made
”.
The Collins Dictionary defines litigations as “
Litigation
is the process of fighting or defending a case in a civil court of
law
.
Therefore, appeals can be nothing else than also part of the process
of litigation. That is the reason for the existence of Rules
49 and
50. No one can argue that the Board does not have the power under
section 6(1)(a) of the Act to lay down the procedure for
Superior
Court appeals. In my view, section 6(1)(m) of the Act supports and
enhances Rule 49. The source of the power to regulate
the issue of
security on appeal does not lie in section 6(1)(m) of the Act.
Section 6(1)(m) of the Act empowers the Board to prescribe
the manner
of determining the amount of security in any case where it is
required that security shall be given, and the form and
manner in
which such security may be given and is not confined to appeals but
to any other rule which provides for security.
[14]
In
Boost
Sports Africa (Pty) Ltd v The South Africa Breweries (Pty) Ltd
[15]
,
the court said:
“
The rule [Rule
47], which deals with the procedure to be followed, applies to all
cases where security is sought in the high court.
It deals with
procedure and not with substantive law.”
[43]
In
any event, in
Systems
Applications Consultants (Pty) Ltd t/a Securinfo v Systems
Applications Products AG and Others
[16]
the following was said over
Giddey
NO v JC Barnard and Partners
[17]
“
It is of
significance that the Constitutional Court in Giddey NO v JC Barnard
and Partners (Giddey) made an illuminating observation
that ordering
security for costs is a procedural matter incidental to civil
proceedings and that when a court makes an order for
costs it
exercises its power to regulate its own process.” (Endnote
omitted).
[44]
At para. 23 of
Systems Applications Consultants (Pty) Ltd
it was held that:
“
Inasmuch as s
13 of the 1973 Companies Act granted a substantive right, this does
not detract from the fact that granting an order
for security for
costs has been held to be a procedural matter.”
[45]
Security is therefore an integral part of the procedural law.
As such, the Board, as part of its powers, may regulate procedural
issues pertaining to security in the process of litigation and
consequently the Rule is not
ultra vires
. Freedom would not
have succeeded in obtaining the declaratory relief it sought in
prayer 1 of its notice of motion.
The
Rule offends section 34 of the Constitution
[46]
Section 34 of the Constitution provides:
“
Everyone has
the right to have any dispute that can be resolved by the application
of law decided in a fair public hearing before
a court or, where
appropriate, another independent and impartial tribunal or forum.
[47]
Freedom contends that the Rule is unconstitutional
because, in its current peremptory form, it is inconsistent with
section
34 of the Constitution.
[48]
There
is no merit in this contention because, subsequent to the amendment
of the Rule in 1999, the court has to power to release
an appellant
from furnishing security. In any event, the furnishing of security or
not remains a function of the court’s
process over which the
court has its own control. In this manner, injustice is subverted
where need be in instances where security
is required, either through
the substantive law or the procedural law, but the court, in the
interest of fairness absolves a party
from the obligation to furnish
security. See:
Boost
Sports Africa (Pty) Ltd v The South Africa Breweries (Pty) Ltd
[18]
:
“
Until Shepstone
& Wylie and Others v Geyser NO
1998 (3) SA 1037
(SCA), the
approach adopted had been that although the court was not bound to
order security to be furnished, it should nevertheless
do so unless
special circumstances exist. Hefer JA rejected that approach. He
stated (at 1045I–1046A):
‘
In my judgment,
this is not how an application for security should be approached.
Because a Court should not fetter its own discretion
in any manner
and particularly not by adopting an approach which brooks of no
departure except in special circumstances, it must
decide each case
upon a consideration of the relevant features, without adopting a
predisposition either in favour of or against
granting security.’”
Waiver
by Palm
[49]
The next issue I consider is whether Palm has waived its
right to security and if it did, at what stage.
[50]
The Rule provides that the appellant shall, before lodging
copies of the record on appeal with the registrar, enter into good
and
sufficient security for the respondent’s costs of appeal.
[51]
Firstly, Freedom says that Palm has tacitly waived its
security for costs when it, with full knowledge of the provisions of
the
Rule neither insisted on the provisions of such security nor
objected to the appeal being enrolled for hearing. Secondly, Freedom
relies upon Palm’s express waiver of its right to security for
costs.
[52]
It is common cause that the issue of Freedom’s
obligation to furnish security for costs in terms of the Rule only
arose after
the appeal panel raised the issue. It also common cause
that it was Palm who took steps for the enrolment of the appeal.
Security
for costs was not waived either expressly or tacitly before
the appeal record was filed.
[53]
INNES,
C.J., stated in
Laws
v Rutherford
,
[19]
that the onus of proving waiver is strictly on the party alleging it
and he must show that the other party with full knowledge
of his
right decided to abandon it, whether expressly or by conduct plainly
inconsistent with an intention to enforce it. Palm
never raised the
issue of security for costs. Palm cannot say that it was unaware of
Freedom’s obligation to furnish security
under the Rule. I find
that Palm, while having full knowledge of its right to security never
demanded that Freedom furnish security,
therefore abandoning its
right by conduct. In any event, Palm also expressly waived its right
to security.
Palm:
[54]
Palm, in its answering affidavit, says as follows:
“
I
n
the present application, Freedom seeks wide ranging relief including
a declaration of constitutional invalidity in relation to
the Rules.
Astonishingly, Freedom seeks that the costs of this application be
paid by Palm.”
[20]
and
“
Palm
objects to being drawn into further unmeritorious litigation by
Freedom with the transparent aim of drawing out these proceedings
further such that Freedoms bid remains shielded from disclosure. I
point out that the three-year contract which is the subject
of the
main application expires in 2022.”
[21]
and
“
Palm
does not wish to get further embroiled in Freedoms misplaced
applications before this Court. In particular, Palm has no legal
interest in Freedoms primarily relief which aims to declare that Rule
49(13) of the Uniform Rules of Court is unconstitutional.
Presumably,
this will be dealt with by the Minister and the Rules Board as
necessary.”
[55]
Palm therefore decided not to
get involved in the debate over the constitutionality of the Rule and
has contributed nothing in that
regard.
[56]
Palm focused its response on the
issue of costs. It objected to “Freedom’s gratious
prayer” that Palm pay the
costs of the application for Palm has
at all times adopted a reasonable approach to the litigation and that
there is no basis to
hold Palm responsible for the costs of the
application.
The
Minister
[57]
The Minister filed written
submissions on 24 August 2021. In short, the Minister argues that
where is nothing untoward about the
Rule. The Minister argues that
the Rule in its current form does not curtail or infringe the
litigants constitutional right to
access to court in terms of section
34 of the Constitution and that the Rule is not ultra vires, having
regard to the Act.
[58]
For the reasons above, I find that
the Rule is not
ultra vires
nor unconstitutional for: the origin of the obligation to furnish
security for costs security may be substantive or procedural;
the
empowering provision for the Rule is located in section 6(1)m of the
Act; and, to the extent that the Rule confers upon the
court a
discretion to absolve an appellant fully or in part from the
obligation to furnish security for costs does not offend section
34
of the Constitution.
Costs
[59]
Freedom seeks that the first
respondent and any other respondents who opposed the relief that is
sought in the application pay the
costs. Although Freedom was partly
successful in the application in view of the order that was granted
as set out above, I am of
the view that Freedom must pay the costs of
this application. After all, if Freedom complied with the provisions
of the rule by
either furnishing security as requested by or
approached the court two absolve it from the furnishing of security,
this application
would not have been necessary. On its part, Palm
proceeded to prosecute the appeal well knowing that Freedom has not
complied with
the provisions of Rule 49(13). To Palm’s credit,
Palm made a proposal which it thought would constitute a practical
solution
so that the litigation could proceed on the merits. Palm, on
12 April 2021, proposed an order as follows:
“…
..
that the applicant is released from providing security for the first
respondents costs of appeal in the High Court and directing
that non
dash compliance with rule 49(13) is hereby condoned.”
[60]
On 15 April 2021, Freedom
responded to Palm's proposal. Freedom rejected Palm’s proposal
on the basis that the offer that
was made “WITH PREJUDICE”
which, according to Freedom, was unacceptable in the context of the
pending litigation. Freedom’s
attorneys required that the offer
be made on a without prejudice basis before Freedom would consider
same failing which, the offer
would be deemed to be rejected. Palm’s
offer came to naught.
[61]
Having regard that Palm’s
offer was not unconditional yet that it was a practical solution and
the tender was the ultimate
order that was eventually granted, I am
of the view that it would be fair to order Freedom to pay the costs
in the application
incurred by Palm from 12 April 2021.
[62]
In the premises, in addition to the
order made on 2 September 2021, I make the following order:
(a)
Prayer 1 of the notice of motion is
dismissed;
(b)
The applicant shall pay the first respondent’s
costs in the application reconned from 12 April 2021.
Roelofse
AJ
Acting
Judge of the High Court
DATE
OF HEARING: 2
September 2021
DATE
OF JUDGMENT: 15 September 2021
APPEARANCES
FOR
THE APPLICANT:
Adv Shotlo-Douglas
INSTRUCTED
BY:
M.S Omar
& Associates
FOR
THE FIRST RESPONDENT:
Adv S Pudifin-Jones
INSTRUCTED
BY:
Tomlinson Mnguni
James
FOR
THE FOURTH RESPONDENT: Adv T Ntoane
INSTRUCTED
BY:
The State Attorney
1]
He
is regarded as the founder of modern utilitarianism. Indeed, he was
far ahead of his time. He advocated individual and economic
freedoms, the separation of church and state, freedom of expression,
equal rights for women, the right to divorce, and the
decriminalising of homosexual acts. He called for the abolition of
slavery, capital punishment and physical punishment, including
that
of children. He has also become known as an early advocate of animal
rights, all part of our present-day social contract.
[2]
In
MINISTER OF THE INTERIOR AND ANOTHER v HARRIS AND OTHERS
1952 (4) SA
769
(A) at 781B – E.
[3]
As
will appear from what is set out later in this judgment, the
applicant also challenges the constitutionality of the Rule being
offensive of section 34 of the Constitution of the Republic of South
Africa 1996.
[4]
Herein
cited as the second and third respondents.
[5]
Wh
ich
is a prerequisite to enroll the appeal for hearing in this Division.
[6]
Paragraph
of the order
was
later amended to replace “first respondent’s” with
“the applicant’s”.
[7]
(959/2002)
[2002] ZAECHC 23
(7 October 2002).
[8]
[2017]
3 All SA 663 (GP).
[9]
Which
commenced on 23 August 2013.
[10]
[2006] ZACC 13
;
2007
(5) SA 525
(CC) at para.16.
[11]
In
GNR.122 of 1999.
[12]
2000(2)
SA 1066 (N) at 1093 per Combrink J. The judgment was delivers on 30
August 1999.
[13]
Loc
cit.
[14]
For
instance, Rule 32(3)(a) and Rule 47.
[15]
(20156/2014)
[2015] ZASCA 93
(1 June 2015).
[16]
(1371/2018)
[2020] ZASCA 81
(2 July 2020) at para. 20.
[17]
Loc
cit.
[18]
(20156/2014)
[2015] ZASCA 93
(1 June 2015) at para. 11.
[19]
1924
AD 261
at p. 263.
[20]
Para.
11 of the answering affidavit.
[21]
Para.
12 of the answering affidavit.