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[2017] ZAKZDHC 30
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Arnold and Another v Bird (3171/2016) [2017] ZAKZDHC 30 (31 July 2017)
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IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
LOCAL DIVISION, DURBAN
CASE
NO: 3171/2016
In
the matter between:
GARETH
IAN
ARNOLD
First
Applicant
ISIGIDI
TRADING 413
CC
Second
Applicant
and
COLIN
BIRD
Respondent
ORDER
[1]
In respect of the first applicant’s application for
condonation for the late filing of his heads and practice note, there
will be no order as to costs. The applicants’ attorneys of
record are not entitled to levy a fee payable by the applicants
in
respect of the heads of argument, practice note and application for
condonation. Such order does not extend to counsel.
The
respondent’s application for contempt dated 4 July 2017
[2]
The first applicant is declared to be in contempt of the order
granted by his Lordship Mr Justice Gorven on 21 June 2016.
[3]
The first applicant is directed to comply with the order of
Gorven J of 21 June 2016 forthwith, pending the finalisation of this
application and the action instituted under case no: 3805/2016.
[4]
A rule nisi do issue calling upon the first applicant to show
cause on affidavit and on the
30
th
day of
August 2017
at 09h30 am or so soon thereafter as the matter
may be heard, why, having being found to be in contempt of the court
order of 21
June 2016:
[4.1] he should not be committed to
prison for a period of six (6) months or such other sanction as this
Honourable Court deems
appropriate;
[4.2] the sanction in paragraph 4.1.
is wholly suspended on condition that pending the finalisation of
this application, and the
action instituted under case no: 3805/2016,
he complies with the order of Gorven J of 21 June 2016.
[5]
The first applicant is directed to pay the costs occasioned by
the contempt application including any reserved costs on an attorney
/ client scale.
The
first applicant’s counter-application dated 6 July 2017
[6]
In respect of the first applicant’s counter-application
there will be no order as to costs.
The
first applicant’s contempt application dated 19 July 2017
[7]
In respect of the first applicant’s contempt of court
application, the application is dismissed with costs.
JUDGMENT
HENRIQUES
J
Introduction
[1]
This matter concerns applications for contempt by the
respondent and first applicant and a counter-application for contempt
of court
by the first applicant.
Respondent’s
application for contempt
[2]
On 4 July 2016 the respondent, Colin Bird (“Bird”)
issued an urgent application to be heard on 7 July 2016. The relief
as set out in the notice of motion was in the following terms,
namely:
‘
1.
The forms and service provided in the Uniform Rules of Court are
dispensed with, and this matter is heard as one of urgency in
terms
of rule 6(12).
2.
Pending finalisation of the action instituted by the first and second
applicants under case no. 3805/16:
2.1
with immediate effect the first applicant is prohibited from
exercising any transactional powers or authority at all over account
number 6202179708 in his name trading as Steak and Ale held at First
National Bank (the FNB account);
2.2
the Sheriff of Verulam is hereby authorised and empowered to exercise
the sole transactional powers and authority over the FNB
account;
2.3
pursuant to 2.1 and 2.2 the Sheriff of Verulam is directed and
ordered, immediately this order is served on First National Bank,
to
transfer the total amount standing to the credit of the FNB account,
less the minimum amount required to keep the FNB account
open, to the
account of the second applicant no. […] held at Standard Bank
(the Standard account);
2.4
every five Court days after the service of this order on First
National Bank, the Sheriff of Verulam is ordered and directed
to
transfer all amounts standing to the credit of the FNB account, less
the minimum amount required to keep the FNB account open,
to the
Standard account.
2.5
with immediate effect the Standard account credit card machines are
to be activated, so that all credit card receipts at the
Steak &
Ale business are credited to the said account to the exclusion of any
other account including the FNB account;
2.6
with immediate effect the Sheriff of Verulam is to take possession
and retain possession of the credit card machines which credit
the
FNB account with any of the credit card receipts at the Steak &
Ale business, and the first applicant is ordered and directed
to hand
these credit card machines to the Sheriff;
2.7
with immediate effect the first applicant is prohibited from
receiving or in any way handling or dealing with any of the cash
received from customers of the Steak & Ale business, or giving
instructions to any person in connection with or related thereto;
2.8
with immediate effect all cash received from customers of the Steak &
Ale business is to be received by a person/s nominated
by the
respondent, which person will be in attendance at the business during
all opening hours, and will be deposited the next
business day into
the Standard account. The costs of the persons who will be in
attendance will be borne by the second applicant.
2.9
the first applicant is ordered and directed to immediately this order
is granted, to call on his attorneys Maharaj Attorneys
to account to
him for all money received by them from 1 April 2016 to date of this
order, and for all fees and disbursements, and
to instruct that firm
to pay the surplus into the Standard account.
3.
The first applicant is committed to jail for a period of six months
for his contempt of this Court.
’
[3]
Abridged time limits were provided in the notice of motion for
the delivery of the notice to oppose and filing of any answering and
replying affidavits.
First
applicant’s counter application for contempt
[4]
On 6 July 2016, the first applicant in response to such
application instituted a counter-application for contempt, enrolled
for
hearing simultaneously with the respondent’s contempt
application. The order foreshadowed in the counter-application was
the following:
‘
1.
That a Rule
Nisi
do hereby issue calling upon the Respondent to show cause, if any, on
the _______ day of July 2016 at 09h30 or so soon thereafter
as the
matter may be heard, why an Order in the following terms should not
be made:
1.1
Pending the finalisation of the action instituted by the First and
Second Applicants under Case No: 3805/2016:
1.1.1
the Respondent is directed to forthwith provide the First Applicant
with the login details and transactional access to the
Standard Bank
Account of the business Steak & Ale under Account No. […]
(“the Standard Bank account”) in
order for the First
Applicant to transact on the Standard Bank Account for ordinary
legitimate business of the business of Steak
& Ale of the Second
Applicant;
1.1.2
upon the First Applicant obtaining transactional access to the
Standard Bank Account as aforesaid, the First Applicant is
directed
to close the First National Bank Account of Steak & Ale under
Account No. […], and to transfer the balance
standing to the
credit of that account to the Standard Bank Account.
2.
That the Orders contained in paragraph 1.1 above operate with
immediate effect pending the return day of the Rule or any further
extension thereof.
3.
That the Respondent pay the costs of this counter-application.’
[5]
It is necessary to set out a brief history of the matter which
resulted in the issuing of the orders which form the subject matter
of the contempt applications. The various court orders issued are as
a result of a dispute between the parties which is the subject
matter
of a pending action instituted under case no: 3085/2016.
[6]
The action concerned whether or not the first applicant and
the respondent were partners in a business, the Steak & Ale, or
whether the first applicant held the business as a nominee for the
respondent, alternatively whether or not the first applicant
was an
employee and manager of the business.
[7]
To set out what precipitated the initial order in the
litigation between the parties, and in light of the fact that this
forms the
subject matter of the action, I borrow freely from the
respondent’s heads of argument cognisant of the fact that these
allegations
are disputed by the first applicant. The respondent
alleges that he purchased a restaurant and bar in Umhlanga known as
the Steak
& Ale and employed the first applicant as manager
thereof, it being common cause that the respondent was the sole
member of
the second applicant. Ownership of the Steak & Ale was
acquired using the identity of the second applicant.
[8]
The respondent subsequently transferred one hundred per cent
of his share in the second applicant to the first applicant and
required
the first applicant to conclude a lease for the premises on
which the Steak & Ale is situated in his name as well as to
acquire
the liquor license in his name to comply with the
KwaZulu-Natal Liquor Licensing laws. The reason for doing so was as
the respondent
was a citizen of the United Kingdom and a non-resident
of South Africa. As far as the respondent is concerned, he remained
the
sole beneficial owner of the members’ interest in the
second applicant and all financial affairs were managed by him.
[9]
The respondent alleges that unbeknown to him, the first
applicant siphoned off a significant amount of cash generated by the
business
in excess of R 100 000, as a consequence of which the
respondent is intent on removing the first applicant from the
business
and also recovering monies due to the second applicant.
[10]
The first applicant in an attempt to thwart such removal by
the respondent instituted an urgent application and obtained an
ex
parte
order on Saturday, 2 April 2016 before his Lordship Mr
Justice Lopes. The effect of the order was to interdict the
respondent from
taking control of the business and removing the first
applicant therefrom on the basis of an alleged
en commandite
partnership in respect of the Steak & Ale.
[11]
Lopes J granted a rule nisi returnable on 22 April 2016 in
terms of which the first applicant was vested with the sole
management
and control of the business of the second applicant being
the Steak & Ale, and Bird was prohibited from doing anything
which
directly or indirectly intruded on the management and control
of the Steak & Ale.
[12]
Among the allegations contained in the answering affidavit
filed by the respondent related to the first applicant opening a new
bank account into which monies of the second applicant and income
derived from the Steak & Ale were diverted. The respondent
averring that the internet access authority which the first applicant
had to the second applicant’s bank account at Standard
Bank was
limited to R 100 000 prior to the alleged diversion of funds to
a First National Bank account. Simultaneously, with
filing an
answering affidavit anticipating the return date of the rule nisi of
2 April 2016, the respondent filed a counter-application
together
with a founding affidavit.
[13]
On 13 April 2016, the application and counter-application were
adjourned to 20 April 2016. The court order further records that the
first applicant provided an undertaking to the respondent which was
to provide the respondent with immediate, unlimited non-transactional
access to the account Gareth I. Arnold t/a Steak & Ale held with
First National Bank under account no: […] from inception.
In
addition he was to procure the bank statements in respect of the bank
account of Kingston House B and B in which the credit
card
transactions are reflected and all merchant receipts for the period
29 March 2016 to 11 April 2016.
[14]
Having regard to the correspondence annexed to the papers, it
would appear that immediate online access was not granted and
appeared
to have been delayed. After the further exchange of
pleadings, the application and counter-application together with the
anticipation
application served as an opposed motion before Gorven J
on 21 June 2016.
[15]
On 21 June 2016, after hearing argument in the matter, Gorven
J issued an order by consent, the effect of which was to discharge
the order granted by Lopes J on 2 April 2016 and issue new orders
pendente lite
.
[16]
The order of Gorven J issued on 21 June 2016 reads as follows:
‘
It
is ordered:
1.
Pending the final determination of the action in case number
3085/2016:
1.1
All cash received by the
business Steak & Ale (“Steak & Ale”) will be
deposited into the Standard Bank Account:
[…] (“the
Standard Bank account”) on each working day that Standard Bank
is open.
1.2
Within 14 working days
the Standard Bank speed point credit card machines used by Steak &
Ale on 31 March 2016 for credit card
transactions will be activated
and will thereafter be the only credit card machines used.
1.3
Pending implementation of
2
all payments received into the First National Bank Account will be
transferred to the Standard Bank account only (subject to the
minimum
balance of First National Bank) on each day both Banks are
electronically functional.
1.4
No payment from the
Standard Bank account may be made by any party with withdrawal
authority except for ordinary legitimate business
of the business
Steak and Ale of the Second Applicant.
1.5
The balance standing to
the credit of the First National Bank account at close of business
the day after the date of this order
less the minimum balance
required by the First National Bank will be transferred by the First
Applicant to the Standard Bank Account.
2.
The rule nisi granted on 2 April 2016 is discharged.
3.
All
questions of cost are reserved for decision by the Court determining
the action.
’
[17]
The order issued by Gorven J appears to have been necessitated
by the fact that after hearing argument and submissions on 21 June
2016, and having regard to the papers filed, it was apparent that the
first applicant had opened a new bank account at First National
Bank,
and all credit card receipts and a very small portion of the cash was
being paid into this account as the first applicant
was the only one
with transactional powers on the account. This is despite the
undertaking of 13 April 2016 provided by the first
applicant.
Affidavits had been filed confirming that as at 3 June 2016, there
had not been compliance with the undertaking given
by the first
applicant to allow the respondent access to the transactional
history.
[18]
Gorven J expressed a concern about monies of the business
owned by the second applicant being under the sole control of the
first
applicant. There was concern that the status quo which existed
prior to the order of 2 April 2016 should be maintained. The order
was varied as a consequence of negotiations between the parties’
legal representatives and by agreement and with the consent
of the
first applicant and respondent. The papers contain the allegation,
which is not disputed by the first applicant, that every
paragraph of
the order of 21 June 2016 was approved and consented to by him prior
to the order being granted.
[19]
It is the first applicant’s alleged non-compliance with
the order of Gorven J which formed the subject matter of the contempt
application. The respondent alleged that the first applicant had not
complied with the contents of paragraphs 1.1 to 1.5 of the
order.
Correspondence, marked annexure “D”, was addressed to the
first applicant’s attorneys on 24 June 2016
referring to the
breach of the court order of 21 June 2016. The first applicant
initially denied on affidavit that the letter was
sent to and
received by his attorney’s offices, specifically the attorney
dealing with the matter, Mr Maharaj. Subsequently,
after confirmation
was provided on affidavit by the respondent’s attorneys that
the letter was in fact sent and received,
his response was that as
the respondent’s legal representative did not call for a
response thereto, his legal representatives
did not deem it necessary
to respond thereto.
[20]
The first applicant in addition indicates that the order of
Gorven J only called upon him to comply with such order within 14
days
of its issue. He was unable to comply with such order as he had
not been given access to the Standard Bank account despite numerous
requests to the respondent for such login access. The first applicant
indicates that he is only able to comply with the order once
such
transactional access is granted, hence the order sought in the
counter-application. Unless login access is provided and his
transactional access reinstated to the Standard Bank account, he will
not be able to pay suppliers of the business, rental, salaries
and
wages or any other business expenses. As a consequence, he is not in
contempt of the order, as his failure to comply is not
wilful or
mala
fide.
[21]
On 7 July 2016, an order was granted by consent by Moodley J,
relating to the respondent’s contempt application and the first
applicants’ counter-application of 6 July 2016 which reads as
follows:
‘
It
is recorded that without prejudice to the First Applicant’s and
the Respondent’s contentions in their affidavits
and
applications dated 4 July 2016 and 6 July 2016 respectively:
1.
Pending the outcome of the application and counter-application:
1.1
The Respondent is directed to forthwith provide the First Applicant
with the login details and transactional access to the Standard
Bank
account of the business of the Second Applicant (Steak & Ale)
under account no: […] to enable the First Applicant
to
transact on that account to pay ordinary legitimate business expenses
of the Second Applicant, up to and including a maximum
of R
100 000.00 (one hundred thousand rand) per day.
1.2
The application and counter-application are adjourned
sine
die
.
1.3
The costs of today are reserved.
1.4
It is recorded that the First Applicant and the Respondent undertake
to abide by the order of Gorven J on 21 June 2016
.’
First
applicant’s application for contempt
[22]
On 19 July 2016, the first applicant instituted the contempt
application enrolled for hearing on 21 July 2016 in terms of which he
sought an order against the respondent as follows:
‘
1.
That
a Rule
Nisi
do hereby issue calling upon the Respondent to
show cause, if any, on the _____ day of _________ 2016, at 09H30 or
so soon thereafter
as the matter may be heard, why an Order in the
following terms should not be made:
1.1
An Order declaring that the Respondent is in contempt of paragraph
1.1 of the Order granted by her Ladyship Madam Justice Moodley
on 7
July 2016;
1.2
An Order directing the Respondent to forthwith comply with paragraph
1.1 of the Order granted by her Ladyship Madam Justice
Moodley on 07
July 2016;
1.3
An Order that the First Applicant is authorised to use the First
National Bank (FNB) account of the Second Applicant for the
purposes
of depositing all cash and credit card sales of the business, Steak &
Ale by using the speed point credit card machines
of FNB for all
credit card transactions, and to pay all ordinary legitimate business
expenses of the business from the FNB account
until such time as the
Respondent compiles with paragraph 1.1 of the Order granted by her
Ladyship Madam Justice Moodley on 7 July
2016,
alternatively
,
until such time as the First Applicant is given transactional access
to the Standard Bank account (account no: […]) to
transact on
that account to pay ordinary legitimate business expenses up to and
including a maximum limit on that account of R
100 000.00 (one
hundred thousand rand) per day.
1.4
That the Respondent be committed to jail for a period of six (6)
months or such other period as this Honourable Court deems
appropriate or such other sanction as this Honourable Court deems
appropriate is imposed upon the Respondent for his contempt of
the
Order granted by her Ladyship Madam Justice Moodley as aforesaid.
1.5
That the Respondent pay the costs of this application on an attorney
and client scale.
2.
That
paragraph 1.2 and 1.3. hereof operate with immediate effect pending
the return day of the Rule or any further extension thereof.’
[23]
The first applicant sought interim relief pending the return
date of the rule nisi.
[24]
The basis for the contempt application was as a consequence of
the respondent’s alleged failure to provide the first applicant
with access to the Standard Bank account despite a request for same
to Karina De Beer, the respondent’s representative. The
first
applicant indicates that he made a request for login details for the
Standard Bank account on 8 July 2016, requesting he
be provided with
same by the latest 11 July 2016 in order for him to comply with the
order of Moodley J. In addition, he indicated
that he would transfer
funds from the FNB account to the Standard Bank account less the
minimum balance required to cover the cost
of commission on card
transactions. This was only once his access was confirmed.
[25]
De Beer responded indicating that he could not retain the
amounts for commission on card transactions, and in addition that the
activation of his access to the Standard Bank account was finalised
on Friday 8 July 2016 and that he should contact the Standard
Bank
call centre to ask for his activation token. E-mails are annexed
dealing with the exchange of correspondence between De Beer,
the
first applicant and employees of Standard Bank in relation to his
transactional access. The first applicant alleging that he
was unable
to comply with the order as he had not been granted transactional
access and he could therefore not comply with the
order of Moodley J.
[26]
The respondent opposed the first applicant’s contempt
application issued for 21 July 2016. In answer to the allegations,
the
respondent indicates and relies on the affidavit of De Beer
indicating that as at 8 July 2016, the respondent had complied with
the order of Moodley J dated 7 July 2016. The basis upon which the
first applicant was not granted immediate access was due to
the fact
that his identity document did not timeously reach the bank as he
needed to comply with FICA. The delay in ensuring access
was placed
squarely at the door of the first applicant. In addition, the
respondent makes the point that it was Gorven J’s
order of 21
June 2016 which dictated that the first applicant comply and that he
had failed to do so despite consenting to the
order and having
knowledge of what it stipulated.
[27]
Furthermore, having regard to the annexure to De Beer’s
affidavit, it would appear that respondent had complied with Moodley
J’s order of 7 July 2016 and the first applicant had
transactional access up to R 100 000 per day. Standard Bank’s
requirement for the first applicant to submit his identity document
was not a requirement that the respondent had imposed resulting
in
the first applicant not having access with effect from 8 July 2016.
Contempt
proceedings
[28]
Despite the fact that
wilful disobedience of a court order in civil proceedings constitutes
a criminal offence, a practice exists
in the high court in terms of
which proceedings are instituted by way of an application on notice
of motion for committal of a
respondent for contempt of court. In
Erasmus Superior Court
Practice
(2 ed) vol 1 the
authors summarise the position as follows:
[1]
‘
(a)
The civil contempt procedure is a valuable and important mechanism
for securing compliance with court orders, and survives
constitutional
scrutiny in the form of a motion court application
adapted to constitutional requirements.
(b)
The respondent in such
proceedings is not an “accused person”, but is entitled
to analogous protections as are appropriate
to motion proceedings.
(c)
In particular, the applicant
must prove the requisites of contempt (the order; service or notice;
noncompliance; and wilfulness
and
mala
fides
) beyond
reasonable doubt.
(d)
But, once the applicant has
proved the order, service or notice, and non-compliance, the
respondent bears an evidential burden in
relation to wilfulness and
mala fides
:
Should the respondent fail to advance evidence that establishes a
reasonable doubt as to whether non-compliance was wilful and
mala
fide
, contempt will
have been established beyond reasonable doubt.
.
. .
Contempt
of court, in the present context, has been defined as “the
deliberate, intentional (i.e. wilful) disobedience of
an order
granted by a court of competent jurisdiction.”’
(Footnote
omitted)
[29]
The
locus
classicus
in respect of
contempt of court is the decision in
Fakie
NO v CCII Systems (Pty) Ltd.
[2]
It is useful to refer to certain passages from such case as these are
relevant to this matter. The court, per Cameron JA indicated
the
following:
At
para 6:
‘
.
. .the essence of [contempt of court]. . .lies in violating the
dignity, repute or authority of the court. The offence has, in
general terms, received a constitutional “stamp of approval”,
since the rule of law - a founding value of the Constitution
–
“requires that the dignity and authority of the courts, as well
as their capacity to carry out their functions, should
always be
maintained”.’
[3]
(Footnotes
omitted)
At
para 9:
‘
The
test for when disobedience of a civil order constitutes contempt has
come to be stated as whether the breach was committed “deliberately
and
mala fide
”.
A deliberate disregard is not enough, since the non-complier may
genuinely, albeit mistakenly, believe him or herself entitled
to act
in the way claimed to constitute the contempt. In such a case, good
faith avoids the infraction. Even a refusal to comply
that is
objectively unreasonable may be
bona
fide
(though
unreasonableness could evidence lack of good faith).’
(Footnotes
omitted)
At
para 10:
‘
These
requirements – that the refusal to obey should be both wilful
and
mala fide
,
and that unreasonable non-compliance, provided it is
bona
fide
, does not
constitute contempt – accord with the broader definition of the
crime, of which non-compliance with civil orders
is a manifestation.
They show that the offence is committed not by mere disregard of a
court order, but by the deliberate and intentional
violation of the
court’s dignity, repute or authority that this evinces.
Honest belief that non-compliance is justified
or proper is
incompatible with that intent.’
(Footnote
omitted)
At
para 19:
‘
The
onus is that of the criminal standard of proof being proof beyond
reasonable doubt.’
At
para 42:
‘
In
particular, the applicant must prove the requisites of contempt (the
order; service or notice; non-compliance; and wilfulness
and
mala
fides
) beyond
reasonable doubt.
But,
once the applicant has proved the order, service or notice, and
non-compliance, the respondent bears an evidential burden in
relation
to wilfulness and
mala
fides
: Should the
respondent fail to advance evidence that establishes a reasonable
doubt as to whether non-compliance was wilful and
mala
fide
, contempt will
have been established beyond reasonable doubt.’
[30]
A respondent can escape liability if he/she can show he was
bona fide
in his disobedience of such court order, that he
genuinely though mistakenly believed he was entitled to commit the
act or omission
alleged to be in contempt of such court order. In
deciding this, an element of reasonableness enters the arena
specifically in
relation to determining the absence of
bona fides
.
There are degrees of reasonableness and the mere fact that such
conduct was unreasonable is not tantamount to an absence of
bona
fides
.
[31]
Fakie
’s case also deals with disputes of fact in
contempt proceedings. A party is entitled where a dispute of fact
exists to ask
for the matter to be referred for oral evidence.
Similarly, a party is entitled to argue on the affidavit that the
requisites for
contempt of court have been fulfilled.
[32]
In paragraphs 55 and 56 of the
Fakie
judgment, Cameron
JA deals with disputes of fact in contempt proceedings as follows:
‘
[55]
That conflicting affidavits are not a suitable means for
determining disputes of fact has been doctrine in this court
for more
than 80 years. Yet motion proceedings are quicker and cheaper than
trial proceedings and, in the interests of justice,
courts have been
at pains not to permit unvirtuous respondents to shelter behind
patently implausible affidavit versions or bald
denials. More than 60
years ago, this Court determined that a Judge should not allow a
respondent to raise ‘fictitious’
disputes of fact to
delay the hearing of the matter or to deny the applicant its order.
There had to be ‘a
bona
fide
dispute of fact
on a material matter’. This means that an uncreditworthy
denial, or a palpably implausible version, can be
rejected out of
hand, without recourse to oral evidence. In
Plascon-Evans
Paints Ltd v van Riebeeck Paints (Pty) Ltd
,
this Court extended the ambit of uncreditworthy denials. They now
encompassed not merely those that failed to raise a real, genuine
or
bona fide
dispute of fact but also allegations or denials that are so
far-fetched or clearly untenable that the Court is justified in
rejecting
them merely on the papers.
[56]
Practice in this regard has become considerably more robust, and
rightly so. If it were otherwise, most of the busy motion
courts in
the country might cease functioning. But the limits remain, and
however robust a court may be inclined to be, a respondent’s
version can be rejected in motion proceedings only if it is
‘fictitious’ or so far-fetched and clearly untenable that
it can confidently be said, on the papers alone, that it is
demonstrably and clearly unworthy of credence.’
(Footnotes
omitted)
[33]
In these applications neither of the parties relies on any
disputes of fact.
Issues
[34]
In respect of the respondent’s application for contempt,
the question to be decided is whether or not, having regard to the
instances of contravention which the respondent alleges, the first
applicant was in breach of the orders of Gorven J of 21 June
2016,
and whether such non-compliance can be said to be wilful and
mala
fide
beyond reasonable doubt?
[35]
In respect of the first applicant’s counter-application
for contempt, the question to be decided is whether the respondent
was in breach of the order of Gorven J requiring him to provide the
first applicant with transactional access to the Standard Bank
account and whether such non-compliance can be said to be wilful and
mala fide
beyond reasonable doubt?
[36]
In respect of the first applicant’s application for
contempt, the issue to be decided is whether or not the respondent is
in breach of the order of Moodley J of 7 July 2016, and whether such
non-compliance can be said to be wilful and
mala fide
beyond
reasonable doubt?
[37]
I propose to firstly deal with the respondent’s
application for contempt. It is common cause that the first applicant
was
party to the negotiations of the terms of the order of 21 June
2016. The affidavits filed indicate that the orders were discussed
telephonically with the first applicant and he agreed to every term
thereof. In addition, the first applicant had knowledge of
the order
on 21 June 2016, alternatively by the latest 24 June 2016. It is also
common cause and as was conceded by Mr Quinlan,
who appeared for the
first applicant, that the first applicant concedes, albeit for a
limited period of time that he had not complied
with the order. His
defence is that such non-compliance was not wilful and
mala fide
.
[38]
The explanation proffered by the first applicant was the
following:
[38.1] His failure to deposit
all the monies into the Standard Bank account was because he did not
have transactional access
to same. He was unable to comply with the
order as had he done so, he would not be able to pay service
providers.
[38.2] In addition he indicates
that annexure “D” which was the letter from the
respondent’s attorneys to
his attorney dated 24 June 2016 which
brought the non-compliance with Gorven J’s court order to his
attention, was not sent
to the attorney who was dealing with the
matter. In addition, an attorney who was assisting Maharaj then
looked for the e-mail
on his former attorney, Ms Janse Van Vuuren’s
e-mail. When it was pointed out by the respondent’s attorneys
that the
e-mail of 24 June 2016 was in fact sent to Maharaj’s
e-mail, his response was that his attorney did not deem it necessary
to respond to annexure “D” as such letter did not call
for a response from his legal representatives.
[38.3] In addition Mr Quinlan
submits that the fact that it was only after thirteen days that the
first applicant directed
enquiries to the respondent does not mean
that his conduct was wilful and
mala fide
.
[39]
I have considered the affidavits filed in these pleadings and
have had regard to the submissions of Mr Jorgensen who appeared on
behalf of the respondent. The following is clear:
[39.1] The first applicant had
knowledge of the order of 21 June 2016 on the day when it was
granted. His non-compliance with
such order necessitated the contempt
application which was issued on 4 July 2016.
[39.2] Having regard to the
affidavits and the accounting exercise done by the respondent’s
attorneys of record, it
is clear and it is conceded by the first
applicant that he failed to deposit all monies into the Standard Bank
account. His explanation
is that he did not have access to the
account. The difficulty is that he also did not deposit all of the
cash deposits into the
Standard Bank account and there is no
explanation therefore. There are no invoices attached to his
affidavit to indicate payments
made to service providers in cash,
alternatively, he does not in any way in his affidavit allude to the
service providers whom
he made payment in cash to.
[39.3] A further difficulty lies
in the explanation proffered in relation to the letter sent to the
first applicant’s
attorneys on 24 June 2016. It is clear that
annexure “D” was sent to the attorney dealing with the
matter on his behalf.
The explanation for the lack of response to
annexure “D” is not satisfactory nor is it reasonable,
and creates more
questions than answers. I agree with the submission
of Mr Jorgensen that if Maharaj’s view was that he did not
receive the
letter, what does not make sense is why would an attorney
assisting him look for an e-mail on Janse Van Vuuren’s e-mail
if
they were not expecting it?
[39.4] In addition, the first
applicant knew he had to comply with the order of 21 June 2016 within
fourteen days. If on his
version he was paying suppliers he would
have known on the 21
st
, at the latest 3 July 2016, that he
did not have access and would require access to pay service
providers. Yet he chose to keep
quiet about his lack of access to the
account and if he forgot about it or did not realise the necessity of
having access at the
time the order of 21 June 2016 was agreed to, he
did not explain why it took him thirteen days to realise it, the day
before he
had to comply. The impression that one gets is that the
first applicant is trying
ex post facto
to explain his
deliberate disregard for the orders of 21 June 2016.
[39.5.] This is further exacerbated by
the fact that the respondent and Karina De Beer have indicated that
it has been the practice
that the respondent would manage the
finances of the business but more so that De Beer would pay the
service providers.
[39.6] Even if one were to
accept the first applicant’s version that the cash deposits
only averaged 20 per cent of
all takings then on his version, taking
into account the bank statements annexed to the papers, cash in the
sum of R 128 850
remains unaccounted for. The first applicant
merely responds to this accounting exercise done by the respondent’s
attorneys
as not being a proper accounting exercise.
[39.7] If one has regard to the
concerns expressed by Gorven J on 21 June 2016, the aim of the order
was to protect the interests
of the second applicant in and to the
business of the Steak & Ale. It was not to preserve the status
quo as indicated by the
first applicant in his affidavit.
[40]
I agree with the submission that it is the first applicant’s
state of mind that must be considered in deciding whether
his default
in not complying with the orders of Gorven J was wilful and
mala
fide
. His state of mind is a factor which is relevant to this and
which is relevant as to whether he has discharged the evidential
burden.
What is interesting is that a day prior to the order of
Gorven J, certain amounts were transferred. Whilst I accept the
submission
of Mr Quinlan that these transfers cannot be viewed as
being in contempt of the order of Gorven J, what they clearly show is
the
first applicant’s state of mind. In my view the respondent
has shown beyond reasonable doubt that the first applicant was
in
wilful and
mala fide
default of the orders of Gorven J. In
addition it cannot be said that the first applicant acted reasonably
in the circumstances
nor can one accept that his explanations are
reasonable and it must follow that he has not discharged the
evidential burden. In
addition, given the conduct of the first
applicant, and the manner in which he has opposed the contempt
application, a punitive
costs order is warranted.
[41]
That then brings me to the first applicant’s
counter-application. At paragraph 12 of the heads of argument
submitted by Mr
Quinlan on behalf of the first applicant he submits
the following:
‘
Given
Her Ladyship Madam Justice Moodley’s order of 7
th
July 2016 directing the Respondent to provide the First Applicant
forthwith with login details and transactional access to the
Standard
Bank account, it is no longer necessary to decide the First
Applicant’s counter-application at page 484 of the papers
as it
is now redundant
.’
[42]
There is thus no reason to issue any orders in this matter.
[43]
I now turn to the first applicant’s application for
contempt. The basis for this application is that the respondent is in
contempt of paragraph 1.1 of the order of Moodley J of 7 July 2016 as
he has not provided the first applicant with login details
and
transactional access to the Standard Bank account. The respondent
acknowledges that the order of 7 July 2016 was brought to
his
attention on the same day. Karina De Beer complied with such order
and the first applicant had transactional access to the
Standard Bank
account with effect from 8 July 2016.
[44]
In addition, he submitted that the first applicant had to
contact Standard Bank to obtain his login details and comply with
their
FICA requirements. If one has regard to the affidavit of Karina
De Beer deposed to on 20 July 2016 and annexure “CDB1”
annexed thereto, the respondent complied with the order of 7 July
2016. Annexure “CDB1” records that the first applicant’s
transactional access was up to R 100 000 per day. The first
applicant was required to contact the bank to activate his token
access and in addition the bank indicated that it required his
identity document before it would activate his access. This was
not a
requirement imposed by the respondent but rather a requirement
imposed by the bank. The Standard Bank mislaid the certified
copy of
the first applicant’s identity document. In addition the
Standard Bank had responded on 8 July 2016 confirming that
the first
applicant had transactional access but activations would take between
two to seven working days. This is clearly a requirement
beyond the
respondent’s control. Consequently, it must follow that I am of
the view that the respondent complied timeously
with the order of
Moodley J dated 7 July 2016 and he was not in wilful and
mala fide
default of the order.
[45]
That then brings me to the appropriate orders to grant in the
respective applications. In the first applicant’s
counter-application,
in light of the fact that Mr Quinlan has
indicated that there is no need for the court to issue orders as it
has been rendered
redundant, it is appropriate that there be no order
as to costs.
[46]
In respect of the first applicant’s contempt
application, the first applicant has been unsuccessful and there
appears to be
no reason why costs ought not to follow the result.
Consequently, the application is dismissed with costs.
[47]
The first difficulty which arises in respect of the
respondent’s contempt application is that the relief which the
respondent
sought was far wider than one would have anticipated in a
contempt application. In addition, having regard to the certificate
put
up by the respondent’s attorneys of record, it was only the
relief in paragraph 3 which was enrolled for hearing for
determination.
This specifically related to whether or not the first
applicant was in contempt of the order of 21 June 2016. The remainder
of
the relief set out in paragraphs 2.1 to 2.9 are strictly matters
which form the subject matter of the application and the
counter-application
and which appear to vary the order of Gorven J.
[48]
Mr Quinlan submitted that it was only the relief in paragraph
3 which was enrolled for hearing and the relief contained in the
other
paragraphs of the order was an attempt to vary the order of
Gorven J of 21 June 2016 and should not be granted. Subsequently,
after
raising with Mr Jorgensen the fact that in this division, even
though there is no practice directive which makes provision for it,
it is customary when one is seeking an order for contempt to do so in
the form of a rule nisi. It is clear that the respondent
has not
drafted the relief in respect of the contempt application in such
form as is the normal practice in this division.
[49]
After providing Mr Jorgensen with some time and after debating
the contents of an appropriate order with him, he drafted in
manuscript,
an amended order in terms of which the relief sought by
the respondent in the notice of motion of 4 July 2016 was drafted in
the
form of a rule nisi and the relief set out in paragraphs 2.1 to
2.9 of the original notice of motion was drafted as interim relief
operating with immediate effect. He further included an additional
paragraph being paragraph 7 in terms of which the first applicant
was
ordered to provide the respondent or his nominee with full access to
all documentation and records pertaining to the Steak
& Ale
including all records pertaining or relating in any way to the GAAP
computer and/or accounts or records held by GAAP
pertaining to the
Steak & Ale.
[50]
Having regard to the certificate and practice note it is clear
that the only relief which was enrolled for hearing was the order
for
contempt as contained in paragraph 3 of the respondent’s notice
of motion dated 4 July 2016. Paragraph 7 of the amended
draft order
in manuscript was not relief sought in such original notice of
motion. In addition, were I to grant any of the relief
as contained
in paragraphs 2.1 to 2.9 of the notice of motion, I would in effect
be re-visiting the order of Gorven J of 21 June
2016. In my view, to
some extent, this relief is foreshadowed in the counter-application
which would have to be argued and the
issues in the
counter-application determined on another day. It is quite apparent
that this relief ought to be strictly speaking
either dealt with in
the pending action, alternatively can only be dealt with when the
application and the counter-application
are enrolled for hearing.
[51]
I further raised with Mr Jorgensen during the hearing of the
matter, the fact that apart from the sheriff not having notice of the
relief sought, I could not find any authority which authorised me to
provide certain of the relief directing the sheriff to do
certain
things. In the time available Mr Jorgensen also could not refer me to
authority authorising me to do so and subsequently
conceded that the
form of the orders sought directing the sheriff to do so were not
competent.
[52]
In the premises the most appropriate order which I must issue
in this application is to deal with the contempt application. I am
of
the view that the first applicant is in contempt of the order of
Gorven J of 21 June 2016. I am reluctant to grant a final order
in
respect of the sentence to be imposed, in light of the fact that the
respondent did not comply with the practice in this division
and seek
a rule nisi. I believe it will be in the interests of justice and it
will only be appropriate to issue a rule nisi for
the sentence to be
imposed and to provide the first applicant with an opportunity to
make submissions in relation thereto on the
appropriateness or
otherwise of the proposed sanction or an alternative.
[53]
In the draft order prepared by Mr Jorgensen, orders were
sought directing that the sheriff be authorised to supervise the
execution
of the order. At the hearing of the application the
following difficulty arose in regard thereto. Firstly, the papers had
not been
served on the sheriff to enable the sheriff to comment on
the order sought. In the time available in preparation for the
opposed
hearing, I was not able to find anything in the Sheriffs Act
90 of 1986 which authorised him to do so. What also was not canvassed
in the order was who would pay the costs occasioned by the sheriff’s
daily monitoring of the situation.
[54]
In addition, what posed further difficulties is the fact that
all I would be required to do was issue an order for contempt. I
requested
Mr Jorgensen to find some authority for the proposed order,
but he was unable to do so. His submission in this regard was that he
knows of no authority which says that I cannot and this was the basis
upon which he submitted the respondent was entitled to the
order
sought.
[55]
The order is in the form of what has been referred to as a
supervisory order. The application before me is essentially a
contempt
application. The rationale behind seeking such an order,
according to Mr Jorgensen, was the fact that the first applicant has
been
in continual breach of the order and appears to not take court
orders seriously. The order sought was designed to prevent further
breaches of the order. In my view the remedy which the respondent has
for any further breaches of the order is to bring further
contempt
applications. I know this may be cold comfort for the respondent in
light of the first applicant’s continual breach
of the order.
However, the rule nisi and the effect thereof would be to have a
sword, so to speak, hanging over the head of the
first applicant
which I hope will deter him from further breaches of the order.
Conclusion
[56]
Certain matters warrant mentioning. These relate to an
application made at the hearing of the matter for the first applicant
to
be granted leave to deliver a supplementary affidavit. Such
application was served on 20 March 2017 and filed in court on the
same
day. Initially when the matter was argued Mr Quinlan sought to
proceed with the application. When, however, it became apparent that
the application was being opposed, his instructions were to withdraw
the application which he duly did. The costs order which I
issued in
relation to the withdrawal of such application are a matter of
record.
[57]
In addition, the first applicant also attempted to file a two
page affidavit deposed to on 23 March 2017 dealing with the current
state of compliance with the court order of 21 June 2016 of Gorven J.
Such affidavit was provided to the court and the respondent
a few
minutes before the matter was to be argued as an opposed application.
No explanation was provided on oath as to why the affidavit
was being
tendered so late and why it was not possible for the first applicant
to file such affidavit prior to the hearing of the
matter. I was
advised by Mr Quinlan that as a consequence of him being briefed
late, the affidavit was prepared on 23 March 2017
after consultation
with the first applicant at his request.
[58]
I did not allow the first applicant to admit the affidavit and
issued an order to that effect. The reasons for doing so were as the
first applicant did not provide any proper explanation on oath as to
why the affidavit was being tendered so late in light of the
fact
that there was a contempt application and a counter-application for
contempt. The basis for both applications was the alleged
non-compliance with the order of Gorven of 21 June 2016 and the
subsequent order of Moodley J of 7 July 2016.
[59]
The failure to explain the delay in filing the affidavit so
late was also exacerbated by the fact that the affidavit contained
broad
allegations of compliance. It contains no specificity in
relation to the dates upon which there was supposed compliance.
Consequently,
it served no purpose to admit the affidavit.
[60]
The last matter which requires mentioning relates to the
conduct of the applicant’s attorney of record Ms. Sewbuckus and
the
late filing of the application for condonation as well as the
late filing of the heads of argument and practice note.
[61]
It is common cause that the notice of set down in this matter
was served on the applicants attorneys on 1 September 2016. Counsel
dealing with the matter held a brief from July of 2016. On 20
February 2017, the registrar e-mailed Ms. Sewbuckus regarding the
applicants’ compliance with the new practice directive relating
to the filing of heads of argument and a practice note. Based
on
submissions from the Bar, I was advised by Mr Quinlan that such
e-mail did not come to Ms. Sewbuckus’ attention and despite
it
being received at a reception e-mail of Maharaj Attorneys, such
e-mail was not forwarded to Ms. Sewbuckus.
[62]
On 15 March 2017, the respondent’s attorneys e-mailed
correspondence to Maharaj Attorneys confirming that the matter would
be proceeding as an opposed motion. On 8 March 2017, the respondent’s
heads of argument was served on the applicants attorneys.
When the
applicants had not complied with the practice directive, the
registrar allocated to me at the time contacted Ms. Sewbuckus
regarding same. The response received was that it was the applicants’
intention to file heads of argument and a practice
note but same
would be late as the date for the opposed motion had not been
arranged with counsel who was on brief.
[63]
Counsel who was on brief was not available and consequently an
alternative counsel had to be briefed to draft the heads of argument
and practice note and deal with the matter on 24 March 2017. The
e-mail further recorded that given the voluminous nature of the
papers, a delay would be experienced in relation to the filing
thereof. No indication was given in response as to an anticipated
date on which the heads of argument and practice note would be filed
nor was there any indication as to whether an application
for
condonation would accompany same.
[64]
An application for condonation was handed up at the hearing of
the matter and Mr Quinlan tendered an apology as a consequence of
the
conduct of Ms. Sewbuckus. He indicated that despite the fact that she
was an attorney of this court and had handled the matter
together
with Mr Maharaj, she was overwhelmed and consequently there was a
delay in the filing of the heads of argument and practice
note. As a
consequence of this, she did not take any adequate steps to notify
the court or the respondent that the heads of argument
and practice
note would be late.
[65]
At the hearing of the matter, Mr Quinlan indicated that should
I be disposed to granting a punitive cost order, I should issue a
rule and provide the applicants’ attorneys an opportunity to
deal with the delay on oath. The reason for this can only be
as no
proper explanation was contained in the condonation application and
Mr Quinlan supplemented the explanation with submissions
from the
Bar.
[66]
The conduct of the applicants’ attorney of record is to
be deprecated. Given the nature of the matter, an appropriate cost
order would not alleviate any prejudice that the respondent was
suffering should the court have been disposed to adjourning the
matter. More often than not, this appears to be the conduct of
attorneys when heads of argument and practice notes are filed late.
As one does not want to prejudice the other party, one is always
forced into a position of having to deal with the matter without
the
benefit of considering heads of argument and practice note and / or
any authorities referred to by the party in preparation
of the
matter.
[67]
Given the already over-burdened court rolls, this conduct is
to be discouraged and a caution sounded to the applicants’
attorneys
to refrain from this conduct in future. So as not to delay
matters any further by the issuing of a rule nisi, an order will
issue
directing that the applicants’ attorneys of record are
not entitled to levy a fee payable by the applicants in respect of
the heads of argument and practice note. Such order does not extend
to counsel.
In
the premises the following orders do issue:
[68]
In respect of the first applicant’s application for
condonation for the late filing of its heads of argument and practice
note, there will be no order as to costs. The applicants’
attorneys of record are not entitled to levy a fee payable by the
applicants in respect of the heads of argument, practice note and
application for condonation. Such order does not extend to counsel.
The
respondent’s application for contempt dated 4 July 2017
[69]
The first applicant is declared to be in contempt of the order
granted by his Lordship Mr Justice Gorven on 21 June 2016.
[70]
The first applicant is directed to comply with the order of
Gorven J of 21 June 2016 forthwith, pending the finalisation of this
application and the action instituted under case no: 3805/2016.
[71]
A rule nisi do issue calling upon the first applicant to show
cause on affidavit and on the
30
th
day of
August 2017
at 09h30 am or so soon thereafter as the matter
may be heard, why, having being found to be in contempt of the court
order of 21
June 2016:
[71.1.] he should not be committed to
prison for a period of six (6) months or such other period as
this Honourable Court
deems appropriate;
[71.2] the sanction in paragraph
71.1.is wholly suspended on condition that pending the finalisation
of this application,
and the action instituted under case no:
3805/2016, he complies with the order of Gorven J of 21 June 2016.
[72]
The first applicant is directed to pay the costs occasioned by
the contempt application including any reserved costs on an attorney
/ client scale.
The
first applicant’s counter-application dated 6 July 2017
[73]
In respect of the first applicant’s counter-application
there will be no order as to costs.
The
first applicant’s contempt application dated 19 July 2017
[74]
In respect of the first applicant’s contempt of court
application, the application is dismissed with costs.
______________
HENRIQUES
J
Case
Information
Date
of hearing
:
24
March 2017
Date
of judgment
:
31
July 2017
Appearances
Counsel
for Applicants
:
Advocate
P.D. Quinlan
Instructed
by
:
Maharaj
Attorneys
3
Rydall Vale Crescent
Rydall
Vale Park
La
Lucia Ridge, Durban
Ref:
MH Stamp/A287
(E)
melissa@maharajattorneys.co.za /
CC:
yuthika@maharajattorneys.co.za
(T)
031-566 2177
(F)
031 566 2400
Counsel
for Respondent
:
Advocate
P. Jorgensen
Instructed
by
:
Eiser
& Kantor Attorneys
c/o
Atkinson, Turner & De Wet
478
Lilian Ngoyi (Windermere) Road
Morningside,
Durban
Ref:
Mr Atkinson/gr06/B1894
(T)
031-312 1303
(F)
031-312 0175
(E)
atkinsonturner@atdw.co.za
[1]
A2-169 to A2-170.
[2]
[2006] ZASCA 52
;
2006 (4) SA 326
(SCA) para 42.
[3]
S v Mamabolo (E TV &
others intervening)
[2001] ZACC 17
;
2001
(3) SA 409
(CC) para 14;
Coetzee
v Government of the Republic of South Africa; Matiso & others v
Commanding Officer, Port Elizabeth Prison, & others
[1995] ZACC 7
;
1995 (4) SA 631
(CC).