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[2018] ZAKZDHC 34
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Bidvest Bank Limited v Jacobs Capital (Pty) Limited (11890/2015) [2018] ZAKZDHC 34 (29 June 2018)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
LOCAL DIVISION, DURBAN
Not
Reportable
Case
No: 11890/2015
In
the matter between:
BIDVEST
BANK
LIMITED
PLAINTIFF
and
JACOBS
CAPITAL (PTY)
LIMITED
DEFENDANT
JUDGMENT
Delivered on: 29 June 2018
Gorven
J
[1]
The plaintiff sued out a provisional sentence
summons. It relied on what it said were liquid documents. These it
alleged were bills
of exchange issued at Lausanne, Switzerland, drawn
by Tradeflow on the defendant and endorsed to the plaintiff. The
defendant opposed
the grant of provisional sentence. The plaintiff
thereafter sought to withdraw the provisional sentence summons and
tendered the
costs of the provisional sentence proceedings on a party
and party scale. It then proceeded by way of action.
[2]
The defendant was prepared to consent to the
matter being withdrawn only on condition that the plaintiff tendered
costs on the attorney
and client scale. This stance of the defendant
necessitated the present application under Rule 41(1)
(a)
of the Uniform Rules of Court. In it the plaintiff seeks leave to
withdraw the provisional sentence summons and repeats its tender
of
costs on the party and party scale. It also tenders to pay the costs
of the application if unopposed. If opposed, it seeks the
costs of
the application on a scale as between attorney and client.
[3]
The withdrawal is not in issue. The only issue on
which the parties are at odds is the scale of the costs which the
plaintiff must
pay. This is one of two matters with identical issues.
I have been informed by counsel that the parties agree that only one
judgment
is necessary. The applicant is the plaintiff and will be
referred to as such. The respondent is the defendant and will be
referred
to as such.
[4]
Many of the facts are common cause. The
application runs to 71 pages. This is most unfortunate since courts
do not encourage the
exchange of papers when only the issue of costs
arises. The normal approach is that, unless matters outside the realm
of the papers
are relevant, the question of costs is argued on the
papers. A robust approach is warranted so as to reserve court time
for substantive
matters. However, both parties felt the need to put
up evidence in support of their position in the light of the disputes
on the
issue.
[5]
The provisional sentence summons allowed the
defendant 15 January 2016 to file an affidavit. The
defendant filed an affidavit
that day. This raised the defence that
the documents did not meet the legal requirements of bills of
exchange under s 2 of
the Bills of Exchange Act 34 of 1964 (the
Act). It contended further that they were subject to Swiss law,
having been issued in
Switzerland and also did not meet the
requirements of Swiss law. This prompted the plaintiff to obtain an
opinion from an expert
in Swiss law. The plaintiff took the view
thereafter that the documents should have been embodied in one
composite document, and
that it was not possible to have the original
document executed and endorsed to the plaintiff in one composite
document. This step
would be permissible in both Swiss and South
African law but, since it could not be done, it was thought advisable
to withdraw
the provisional sentence summons and to institute action
on the underlying cause of action.
[6]
In correspondence, the basis of opposition to the
notice of withdrawal was that it was fatally defective since it was
issued after
the provisional sentence matter had been set down. As
such, it was not competent to issue a notice, even if it contained a
tender
for costs. It was further contended that the provisional
sentence summons amounted to ‘entirely frivolous if not
vexatious
proceedings’ warranting a punitive scale of costs.
This because, submitted the defendant, ‘it was glaring that
[the
provisional sentence proceedings] had absolutely no prospects of
success.’ In the affidavit opposing the costs order in this
application, the defendant supported this contention by claiming that
the plaintiff knew in advance that the bills of exchange
relied upon
did not meet the criteria required in the Act. Since the launch of
the application, the defendant added a third ground
for the scale of
costs contended for. This is that an order for costs on the party and
party scale would mean that it would be
precluded from recovering the
bulk of its costs. It is worth setting out the basis fully:
‘In this regard it is apposite to mention that in order to
overcome the Plaintiff’s abusive litigation the Defendant
was
compelled to engage the services of a Swiss law-firm in order to
obtain an expert opinion on the Swiss legal position for reasons
fully set out in the Rule 8(5) Affidavit. The expert in Swiss
law, apart from commanding a substantial fee in Euro was also
not
prepared to travel to South Africa in order to discharge his mandate
and insisted on having the Defendant’s Attorney
at hand in
Geneve to consult with him over several days. As a result the
Defendant incurred the costs of business-class airfare
and costly
hotel charges to have its Attorney travel to Switzerland to consult
with and draft the expert report. Those unavoidable
costs, which
stand in the sum of several hundreds of thousands of Rand, are
entirely irrecoverable on the Party-Party scale.’
[7]
As to the first point, the notice of withdrawal
amounted to a request that the defendant consent to the withdrawal.
It contained
a tender for costs and, if the scale of costs was not
objectionable to the defendant, would have been accepted. Had the
defendant
done so, this application would not have been necessary.
The only basis on which the defendant claimed that the notice was
defective
was that the scale of costs tendered was inadequate. The
defectiveness or otherwise therefore rests on the outcome of this
application
which deals with that issue.
[8]
The second point is that the provisional sentence
proceedings were frivolous or vexatious. The defendant’s
affidavit in this
matter claimed that the plaintiff was aware of the
flaws in the documents relied on as bills of exchange prior to issue
of the
provisional sentence summons. This is the only particularity
supplied in support of the contention expressed in correspondence
that it was ‘glaring’ that there were no prospects of
success. The affidavit in this application claims that the plaintiff
was aware of this based on a communication to the defendant that the
process followed by the plaintiff’s trading desk was
flawed.
The communication was annexed to the defendant’s affidavit
opposing provisional sentence. There is no reference or
admission in
this communication that the documents were not bills of exchange. The
plaintiff testified that it was only after receiving
the affidavit of
the defendant in opposition to the provisional sentence summons that
it sought an opinion from an expert in Swiss
law and reached the
conclusion that it would be best to withdraw the provisional sentence
summons. There is nothing before me to
gainsay that evidence. The
defendant took precisely that step so as to arrive at its conclusion.
If it was not ‘glaring’
to the defendant, I cannot see
how it can be contended that it was ‘glaring’ to the
plaintiff that there were no prospects.
I see no basis for concluding
that the provisional sentence proceedings were frivolous or
vexatious.
[9]
This leaves the third basis on which the
defendant relies for a costs order on the attorney and client scale.
In the first place,
this was raised only in the present application.
No mention was made of this in correspondence save for an unfocussed
assertion
that the defendant was ‘burdened with exorbitant
costs that are irrecoverable under the party-party scale’.
Secondly,
this is not a traditional basis for the award of attorney
and client costs. In some instances, a case along those lines may be
made out. But it cannot by any stretch of the imagination be
contended that there was only one expert in Swiss law from which the
defendant could obtain an opinion. It can also not be contended that
it was necessary to fund a face to face consultation, with
the
attendant expenses of an airfare (in whatever class of travel) and
hotel accommodation. The defendant has said nothing about
whether
attempts were made to secure the opinion of a different expert and
whether any travel would have been necessary had it
done so. This is
the only remaining basis for requiring costs to be paid on the
attorney and client scale. I do not consider that
there is sufficient
evidence before me to warrant the grant of such an order on this
evidence.
[10]
The plaintiff tendered costs of this application
if unopposed. That was generous in the light of what I have found was
the defendant’s
baseless refusal to accede to the withdrawal by
consent and costs on the party and party scale. The plaintiff
requests that the
defendant be ordered to pay the costs of the
application on an attorney and client scale if it is unsuccessfully
opposed. Despite
the outcome of this application, in my view the
conduct of the defendant falls short of warranting a punitive costs
order. Both
parties employed two counsel to argue the matter and
agreed that any costs order should include the costs occasioned by
such employment
where it was done.
In
the result, the following order is granted:
1 The plaintiff is given leave to withdraw the
provisional sentence summons.
2 The plaintiff is directed to pay the wasted costs
occasioned in the provisional sentence proceedings.
3 The defendant is directed to pay the costs of this
application, such costs to include those consequent upon the
employment of
two counsel where this was done.
_________________
Gorven
J
Date of Hearing: 21 June 2018
Date of Judgment: 29 June 2018
Appearances
For the Plaintiff: LN Harris SC (with him D Ramdhani),
instructed by Norton Rose Fulbright South Africa Incorporated
For the Respondents: AWM Harcourt SC (with him SK
Dayal),
Instructed
by Maharaj Attorneys