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[2016] ZAKZPHC 11
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Credit Europe Bank N.V v Sheriff, Durban Coastal (AR154/2015, A87/2014) [2016] ZAKZPHC 11 (12 February 2016)
IN THE HIGH COURT OF
SOUTH AFRICA
KWAZULU-NATAL DIVISION,
PIETERMARITZBURG
CASE NO.: AR154/2015
CASE NO.: A87/2014
DATE: 12 FEBRUARY 2016
NAME OF SHIP: MV “TARIK III”
In the matter between:
CREDIT EUROPE BANK
N.V
.........................................................................................
APPELLANT
And
THE SHERIFF, DURBAN
COASTAL
.........................................................................
RESPONDENT
JUDGMENT
Delivered on: FRIDAY, 12 FEBRUARY
2016
OLSEN J (KOEN J et HENRIQUES J
concurring)
[1] On 24 October 2014 Mokgohloa J,
sitting at Durban and exercising admiralty jurisdiction, granted an
order declaring the appellant,
Credit Europe Bank N.V., liable for
the reasonable costs incurred by the respondent, the Sheriff, Durban
Coastal, in preserving
the MV “Tarik III” which was under
arrest at the instance of, inter alia, the appellant. The learned
Judge directed
the appellant to pay expenses incurred to date in the
sum of USD85,049 as well as projected expenses of USD297,215, within
five
days of the date of her order. One or two ancillary orders were
also made, and in particular an order that the appellant should
pay
the costs of the application on the scale as between attorney and
client.
[2] With the leave of the court a quo
the appellant appeals against the order which directed it to pay the
projected expenses of
preservation of the vessel, and the costs of
the application; and in particular, as it turns out, the order that
such costs should
be on the scale as between attorney and client.
[3] Only the appellant delivered heads
of argument. A little less than a week before the appeal was to be
heard the respondent’s
attorney delivered a letter recording
that the dispute between the parties had long since been resolved
because the costs of preservation
had been paid and the vessel indeed
sold. The letter went on to say, in effect, that to the extent that
there might be a concern
that the judgment of the court a quo would
stand as a precedent for the proposition that a Sheriff may claim
preservation costs
in advance of expenditure of the sums in question,
the respondent abandoned that portion of the judgment. Otherwise the
respondent
abides the decision of this court. On receipt of this
letter the Judge presiding in this appeal notified the appellant that
it
should prepare to address the court fully on
s16
(2) of the
Superior Courts Act, 2013
, and the appropriate order as to the costs
of the appeal should it be dismissed for being moot; and invited the
respondent’s
attorneys to make any submissions considered
necessary on the question of the costs of the appeal, which had not
been dealt with
in the letter which brought to our attention that the
issue as between the parties had become moot. The response from both
parties
is that if the appeal should be dismissed for being moot,
there should be no order as to the costs of the appeal.
[4]
Section 16
(2) (a) of the
Superior
Courts Act, 2013
provides as follows.
“(i) When at the hearing of an
appeal the issues are of such a nature that the decision sought will
have no practical effect
or result, the appeal may be dismissed on
this ground alone.
(i) Save under exceptional
circumstances, the question whether the decision would have no
practical effect or result is to be determined
without reference to
any consideration of costs.”
[5] The principal issue in this appeal
is the order made by the court a quo that preservation expenses which
were then prospective
should be paid. The respondent asserted and
the appellant denied the latter’s liability to make that
payment. A decision
made now on appeal either to uphold or set aside
that order would have no practical effect or result as all
preservation costs
have long since been paid and refunded. The issue
has become academic. There is no longer any lis between the parties
as to the
appellant’s liability to pay the amounts in question.
[6] To borrow words from paragraph 18
of the judgment of Ponnan JA in Legal Aid South Africa v Magidiwana
and Others
2015 (2) SA 568
(SCA), costs aside, the outcome of the
appeal on the merits would be a matter of “complete
indifference” to both parties.
As to what is meant by that, I
can do no better than to refer to the cases cited, and the passages
quoted from them, in paragraph
18 of the judgment in Legal Aid South
Africa.
[7] Counsel for the appellant seeks to
distinguish this case upon the basis that it raises a “discreet
legal issue of public
importance” which would affect matters in
the future. These words are found in paragraph 5 of the judgment of
Wallis JA
in Qoboshiyane NO and Others v Avusa Publishing Eastern
Cape (Pty) Limited and Others
2013 (3) SA 315
(SCA). The appeal in
that case concerned the disclosure of a report ordered under the
provisions of PAIA. The report was disclosed
in compliance with the
order, as a result of which, like here, as between the parties the
appeal would have no practical effect
or result. Paragraph 5 of the
judgment in Qoboshiyane continues as follows.
“In the circumstances this court
may dismiss the appeal on that ground alone. The court has a
discretion in that regard and
there are a number of cases where,
notwithstanding the mootness of the issue as between the parties to
the litigation, it has dealt
with the merits of an appeal. With
those cases must be contrasted a number where the court has refused
to deal with the merits.
The broad distinction between the two
classes is that in the former a discreet legal issue of public
importance arose that would
affect matters in the future and on which
the adjudication of this court was required, whilst in the latter no
such issue arose.
In exercising its discretion the court is always
mindful of the wise words of Innes CJ in Geldenhuys and Neethling v
Beuthin
[1918 AD 426
at 441] that :
‘After all, Courts of Law exist
for the settlement of concrete controversies and actual infringements
of rights, not to pronounce
upon abstract questions, or to advise
upon different contentions, however important.’”
[8] The example which the appellant
would have us follow is The Merak S : Sea Melody Enterprises SA v
Bulktrans (Europe) Corporation
2002 (4) SA 273
(SCA). In that matter
the appellant’s vessel had been arrested as security for claims
which the respondent intended pursuing
in arbitration. The appellant
had provided a bank guarantee to secure the release of the vessel and
subsequently applied for a
reduction in the amount of the bank
guarantee. That application was dismissed. As it turned out the
respondent decided not to
proceed with the arbitration and, in the
result, after leave to appeal had been granted, the appellant
obtained an order for the
return of the guarantee. The principal
question in the dismissed application for a reduction in the amount
of the guarantee was
as to whether a bank guarantee was to be
regarded as “security” that might be reduced in terms of
s5 (2) (d) of the
Admiralty Jurisdiction Regulation Act, 1983. The
judgment of the appeal court was sought, notwithstanding that as
between the
parties the issue had become moot, as it would resolve a
discreet legal question as to whether such a guarantee could be
classified
as “security” as contemplated by the Act. The
court entertained the appeal. The reason for doing so was explained
in paragraph 4 of the judgment as follows.
“In view of the importance of the
questions of law which arise in this matter, the frequency with which
they arise and the
fact that at the time of the decision in the court
a quo and of the granting of leave to appeal those questions were, as
Mr Shaw
for the appellant put it, “live issues”, I am
satisfied that this is an appropriate matter for the exercise of this
court’s discretion to allow the appeal to proceed:: …”
[9] The application made in this case
by the respondent was one in terms of s5 (2) (c) of the Admiralty
Jurisdiction Regulation
Act, which provides as follows.
“A court may in the exercise of
its Admiralty Jurisdiction –
…
(c) order that any arrest or attachment
made or to be made or that anything done or to be done in terms of
this Act or any order
of the court be subject to such conditions as
to the court appears just, whether as to the furnishing of security
or the liability
for costs, expenses, loss or damage caused or likely
to be caused, or otherwise;”.
[10] The principle submission of the
appellant in support of the proposition that this appeal raises a
discreet legal issue is that
the respondent is erroneously of the
view that a claim for projected costs of preservation is a logical
extension of the orders
made (against arresting creditors to make
good expenses incurred by the sheriff) in the MT Argun
2001 (3) SA
1230
(SCA). It is suggested that it can be expected that, in the
light of the judgment of the court a quo, similar claims will be made
by sheriffs in the future.
[11] One can but speculate on the
question as to whether in the future arresting creditors are likely
to be confronted with claims
for payment in advance for preservation
expenses. One would think that hitherto, and in the future,
reasonable decisions have
been and will be customarily made by
arresting creditors, given their obligations with regard to the costs
of preservation of arrested
property, which avoid the need for any
proceedings of the kind which served before the court a quo. The
decision made in this
case was very much fact based. The respondent
(the Sheriff) set out a full account of how and over what period his
requests for
assistance with regard to preservation costs had been
met with diversionary tactics. The respondent had already incurred
preservation
costs of some USD85 000, and was required urgently to
replace the crew of the vessel and supply bunkers, the cost of which
constituted
the lion’s share of the prospective expenses which
the respondent sought to have paid. Those expenses had to be
incurred
as a matter of urgency. Assuming a discretion on the part
of the court a quo to order the payment of such prospective expenses,
given the facts of the case one cannot help but have sympathy for the
decision to make the order.
[12] I struggle to find the discreet
legal issue in all of this. Section 5 (2) of the Admiralty
Jurisdiction Regulation Act confers
a discretion on the court to
impose conditions which appear to be just, whether as to certain
identified matters “or otherwise”.
Amongst the matters
mentioned are the furnishing of security or liability for costs and
expenses. The court in the Argun did
not seek to define the ambit of
that discretion insofar as it relates to prospective expenses. (It
did note, in paragraph 16 of
the judgment, that in the United States
of America and Australia an arresting party is obliged to pay the
marshal in advance, or
furnish the marshal with an undertaking to pay
expenses on demand. The same position apparently obtained in New
Zealand.) In
my view there is no similarity between the discreet
legal question which was considered in the Merak S, and the
invitation which
the appellant would like us to accept, that we
should consider the question as to whether the discretion given to
the court under
s5 (2) (c) of the Act does not extend so far as to
permit of an order for payment of expenses about to be, but not yet
actually
incurred, despite the fact that a court may consider it just
to make such an order. As said by Friedman AJP in Pienaar v Thusano
Foundation and Another
1992 (2) SA 552
(BGD) at 580, the word “just”
means, inter alia, “correct, appropriate, fair-minded, sound,
deserved, fitting,
reasonable, justified…”. That
signifies the range of orders which might fall within the section. A
contention that
a claim for future preservation expenses lies beyond
the wide reach of the section can hardly be classified as a discreet
legal
issue.
[13] The appellant advances an
alternative argument in support of its contention that the appeal is
not moot. In terms of
s16
(2) (a) (ii) of the
Superior Courts Act
the
court may have regard to considerations of costs in determining
whether an appeal is moot where exceptional circumstances justify
that approach. It is argued that the learned Judge in the court a
quo failed to exercise a judicial discretion in making the order
that
the appellant should pay the costs of the application on the attorney
and client basis. The appellant relies on the following
passage in
the judgment of Cloete JA in Naylor and Another v Jansen
2007 (1) SA
16
(SCA) at para 10.
“I had occasion in Logistic
Technologies (Pty) Ltd v Coetzee and Others
[1998 (3) SA 1071
(WLD)]
to express the view that a failure to exercise a judicial discretion
would (at least, usually) constitute an exceptional
circumstance. I
still adhere to that view – for, if the position were
otherwise, a litigant adversely affected by a costs
order would not
be able to escape the consequences of even the most egregious
misdirection which resulted in the order simply because
an appeal
would be concerned only with costs; and that, obviously, cannot be
the effect of this section.”
[14] The order made in the court a quo
was the same order as that of which the appellant was given notice in
the founding papers.
Insofar as costs were concerned the order
sought in the notice of motion was costs on the scale as between and
client. Nothing
was said in the founding affidavit specifically
about the scale of costs which had been claimed. (I would have
thought that it
would have been obvious to the appellant when
considering the founding papers that the sheriff sought a full
indemnity as to costs
at least on the ground that he was compelled to
approach the court in order to be placed in a position where he could
perform the
obligations imposed on him as an officer of the court by
reason of the appellant’s arrest of the vessel in question.)
The
application was launched as an urgent one on 21 October 2014. A
short answering affidavit was submitted on 23 October 2014. It
contained four paragraphs stating the basis upon which the appellant
contended that the application should not be granted.
Its final paragraph warned that if the
respondent persisted with the application the appellant would seek an
order of costs against
the respondent. The affidavit contained no
objection to the proposition that if costs were to be awarded to the
respondent, they
should be on the scale as between attorney and
client.
[15] The matter was then argued on 24
October 2014. As it turns out the transcript of the argument is part
of the appeal record.
No submission was made that the scale upon
which the respondent sought costs was inappropriate. The subject of
attorney and client
costs was not discussed at all. The only
submission on costs made by counsel then appearing for the appellant
was that they should
in fact be paid by the respondent, given the
appellant’s arguments (rejected by the court a quo) that
payment of future expenses
could not be ordered, and that the matter
was not urgent.
[16] As often happens in urgent
applications, the judgment was brief. The learned Judge expressed
her view that the matter was
indeed urgent and that the sheriff had
made out a case for the relief sought. She made no comment or
observation with regard to
the fact that the order she granted
included an order for costs on the scale as between attorney and
client.
[17] In my view there is no merit in
the appellant’s contention that the circumstances set out above
justify drawing a conclusion
that a judicial discretion was not
exercised on the question of the scale of costs. Costs on that scale
were claimed from the
outset. No objection to the scale was raised.
There was accordingly no need for the learned Judge to mention why
she thought the
scale appropriate. This is especially so when one
considers the circumstances in which she had to make her decision.
[18] As to the costs at stake if we
should consider them on appeal, the issue raised by the appellant is
as to the difference between
attorney and client costs and party and
party costs in an opposed application where all the affidavits
(excluding annexures) amount
to some 38 pages, and the transcribed
argument to some 17 pages. There is nothing exceptional, let alone
egregious, about the
order. (Cf. Oudebaaskraal (Edms) Bpk v Jansen
van Vuuren
2001 (2) SA 806
(HHA) at 812 D-F, where costs were brought
to account. They were incurred in a matter which generated a 35
volume appeal record.)
[19] I conclude, accordingly, that the
provisions of
s16
(2) (a) of the
Superior Courts Act apply
in this
case.
The following order is made.
1. The appeal is dismissed.
2. There is no order as to costs of the
appeal.
OLSEN J
KOEN J
HENRIQUES J
Date of Hearing: WEDNESDAY, 01
FEBRUARY 2016
Date of Judgment: : FRIDAY, 12
FEBRUARY 2016
For the Appellant :MR S R MULLINS SC
with MS S LINSCOTT
Instructed by:BOWMAN GILFILLAN INC.
APPELLANT’S ATTORNEYS
1ST FLOOR, COMPENDIUM HOUSE
5 THE CRESCENT, WESTWAY OFFICE PARK
HARRY GWALA ROAD,
WESTVILLE…..3629
(Ref.: JDP/NN/MBOW0062)
(Tel.: 031 – 265 0651)
c/o A K ESSACK, MORGAN NAIDOO &
CO
311 PIETERMARITZ STREET
PIETERMARITZBURG
(Tel.: 033 – 345 2304)
For the Respondent: NO APPEARANCE
Instructed by: MUNDELL INC
RESPONDENT’S ATTORNEYS
18 QUAIL PLACE
PINETOWN….3610
(Ref.: S R Mundell)
(Tel.: 031 – 709 0766)
c/o PATHER & PATHER
3RD FLOOR, LINCOLN HOUSE
30 DULLAH OMAR GROVE
DURBAN
(Tel.: 031 – 304 4212)