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[2016] ZAGPPHC 135
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Siyaghopa Trading 233 (Pty) Ltd and Others v South African Revenue Services, In re: South African Revenue Services v Siyaghopa Trading (Pty) Ltd and Others (88980/2014) [2016] ZAGPPHC 135 (8 March 2016)
IN THE HIGH COURT OF
SOUTH AFRICA
GAUTENG DIVISION,
PRETORIA
CASE NO: 88980/2014
DATE OF HEARING: 5
November 2015
Not reportable
Not of interest to other
judges
DATE: 8/3/2016
In the
matter between:
SIYAGHOPA
TRADING 233 (PTY)
LTD
First
Applicant
JOHAN
CHRISTIAAN BEER
N.O.
Second
Applicant
JOHAN
CRISTIAAN BEER
Third
Applicant
and
THE
SOUTH AFRICAN REVENUE
SERVICES
Respondent
In re:
THE
SOUTH AFRICAN REVENUE
SERVICES
Applicant
and
SIYAGHOPA
TRADING 233 (PTY) LTD (IN LIQUIDATION)
First
respondent
JOHAN
CRISTIAAN BEER
N.O.
Second
respondent
JOHAN
CRISTIAAN
BEER
Third
respondent
SUKUYMANI
TELECOMMUNICATIONS (PTY) LTD
Fourth
respondent
ABE
DE
BEER
Fifth
respondent
C
H VAN
ZYL
Sixth
respondent
FRANK
S
MASUPYE
Seventh
respondent
JAPPIE
MOLEFE
Eighth
respondent
HENNOX
189
CC
Ninth
respondent
GERHARD
LOURENS STEYN DE WET
N.O.
Tenth
respondent
ADRIAAN
WILLEN VAN ROOYEN
N.O.
Eleventh
respondent
VIANTA
NAUDE
N.O.
Twelfth
respondent
MASTER
OF THE HIGH COURT,
PRETORIA
Thirteenth
respondent
THE COMPANIES AND
INTELLECTUAL PROPERTY
COMMISSION
Fourteenth
respondent
JUDGMENT
OLIVIER,
AJ
[1]
This is an interlocutory application brought in terms of Rule 30 of
the Uniform Rules of Court by the applicants (the first
to third
respondents in the main application) to strike out the notice of
motion of the respondent (the applicant in the main application).
The
applicants want the notice of motion of the applicant, dated 18
December 2014, to be declared an irregular step or proceeding
in
accordance with Rule 30, and to be struck out. It seeks a punitive
cost order against the respondent.
[2]
The respondent submits that the rule 30 application amounts to an
abuse of process, and is based on frivolous grounds. It seeks
dismissal of the interlocutory application, and a special costs order
against the applicants on an attorney-client scale.
[3]
The first applicant is Siyaghopa Trading 33 (Pty) Ltd, a private
company registered in terms in terms of the company laws of
South
Africa; the second applicant is Johan Christiaan Beer N.O. in his
capacity as the business rescue practicioner of the first
applicant;
the third applicant is Johan Christiaan Beer, in his personal
capacity. For convenience sake, I shall refer to them
collectively as
the applicants. The respondent is the South African Revenue Service,
an organ of state.
[4]
The main application was launched in terms of
section 133
of the
Companies Act 71 of 2008
. The applicant challenges the sanctioning of
business rescue proceedings on a number of grounds, including that
the application
for business rescue was an abuse of process. For
purposes of this interlocutory application, I need not consider the
main application.
[5]
The chronology of the events leading up to this application can be
summarised as follows. On 17 December 2014 the respondent
launched
the main application. On 6 January 2015, the first, second and third
applicants filed notices of intention to oppose the
main application.
A week or so later a notice was served on the respondent in terms of
rule 30(2)(b)
to remove the cause of the complaint on this date, but
the applicant failed to make the changes within the 10 (ten) day
period.
Respondent claims that on 16 January the applicants once
again filed exactly the same notices of intention to oppose the main
application
as before. On 18 February 2015, the first, second and
third applicants launched this interlocutory application. On 13 March
2015,
the Applicant filed notice of intention to oppose the
interlocutory application. On 31 March 2015 the respondent served its
answering
affidavit in the interlocutory application. The applicants
were required to file any replying affidavit within ten days after
receipt
of the answering affidavit. The ten day period expired on 16
April 2015. On 6 May 2015 the applicants belatedly field a replying
affidavit, almost three weeks after the time period for filing a
replying affidavit had lapsed. The applicants have requested that
the
late filing be condoned. I accept their reason for the late filing,
which is condoned.
[6]
The respondent also objects to the length of the replying affidavit,
which comprises 21 pages, compared to the 6 pages of the
founding
affidavit. It says that this is an abuse of motion proceedings and
that the replying affidavit should be disregarded.
I think it would
extreme to disregard the replying affidavit, even though it was filed
late and of unusual length.
[7] The respondent
contends that the applicants failed to disclose in its founding
affidavit such facts as are necessary to justify
the relief sought,
including that the founding affidavit contains no mention of
prejudice.
GROUNDS
OF CHALLENGE
[8]
The applicants’ challenge is based on 3 grounds:
a. The “notice of
motion does not contain a date on which the application has been set
down on the unopposed court roll. The
space provided for such date is
left blank on paginated page 2 of 6.”
b. The first applicant is
not cited correctly. It is cited as being in liquidation when it is
in fact in business rescue.
c. The
tenth to twelfth respondents in the main application are joined
incorrectly, because of “the fact that the First Respondent
is
in business rescue, the previous liquidators of the first respondent
cannot be cited where the First respondent is no longer
in
liquidation.”
[9]
The applicants contend that they cannot take the matter any further
until such time as the irregular step has been addressed.
They cannot
file opposing affidavits until the court has ruled on this
interlocutory application.
[10] The respondent says
that the applicants’ contentions relate to a point of law and
that merits of the main application.
The issuing of a notice of
motion when launching an application cannot constitute an irregular
step. It claims the application
is an abuse of process as the issues
should have been raised as points in limine or points of law in the
applicants’ affidavits,
not in a separate
rule 30
application.
“
Omission”
of the date
[11]
The applicants say that the respondent should have remedied the cause
of the complaint – the omission of the date on
the notice of
motion – by providing a proper notice of enrolment or amending
the notice of motion in terms of the Rules.
It failed to do so. The
respondent failed to explain why the irregularity occurred or why it
wasn’t rectified. It has given
no grounds on which the court
can consider granting condonation.
[12]
The respondent contends that this was an inadvertent omission –
a “technical error” – by the respondent’s
former attorneys, the State Attorney, who was replaced with the
respondent’s current attorneys. It was not due to a flagrant
disregard of the rule, nor any wilful default on the part of the
applicant. In the answering affidavit, Mr Mcebisi Tulwana, Senior
Manager: Legal and Delivery Support, acknowledges that the omission
could be regarded as a non-adherence to the rules, but that
the court
should exercise its discretion to condone the respondent’s
failure to adhere to the rules due to lack of prejudice.
The
prejudice they allege is not “tangible”.
[13]
The respondent contends that it would have served no purpose to
attempt to cure the blank date after the motion had become
opposed:
“any attempt to amend or cure the omission after the matter had
become opposed, would be superfluous, unnecessary
and would be
academic”.
[1]
The
omission is thus of no effect, considering that the applicants are in
fact opposing the main application and have filed notices
to that
effect. The issue of the date has become moot. Had the matter
proceeded to the unopposed motion court, the omission of
the date
would have been relevant.
[14]
The applicants say that the mere fact that the application has become
opposed should not be regarded as a factual basis on
which the
irregular step by the respondent can be ignored. They say that under
circumstances where the matter is not correctly
placed before the
unopposed motion court, no basis exists on which the matter can
simply and automatically progress to the opposed
motion court.
[15]
The applicants claim that “a cost implication pertaining to the
unopposed motion court proceedings will exist" and
that they
will be prejudiced.
[2]
Incorrect
citation: first respondent in the main application
[16]
The respondent says that the
rule 30
procedure is inappropriate to
object to the manner or the capacity in which another litigant/party
to application proceedings has
been cited.
[17]
Regarding whether the first applicant was in fact in liquidation, the
respondent put the following to the court. A final winding
up order
was granted against the first applicant by this court on 4 February
2013. On 12 December 2013 the first applicant was
placed under
business rescue. The order putting the first applicant under business
rescue did not substitute and/or set aside the
winding up order. The
winding-up order has not been set aside and remains in effect. The
first applicant remains insolvent and
in liquidation, and its assets
are liable to be wound up in accordance with the court order.
[18]
The respondent says that it did not pursue any recovery steps against
the first applicant during the business rescue proceedings
on the
basis that the business rescue proceedings had the effect of
suspending legal proceedings. It argues that the question whether
or
not the first applicant is in fact in liquidation is a matter for
consideration in the main application, not the
rule 30
application.
[19] The applicants do
not deny the existence of a liquidation order, but say that the
status of the company is that of one in business
rescue. Liquidation
proceedings are stayed under these circumstances. See
S 131(6)
of the
Companies Act.
Incorrect
joinder: tenth to twelfth respondents
[20]
The applicants submit that if the liquidation proceedings are
suspended, the rights and obligations of the liquidators during
business rescue proceedings are also stayed. It considers the joinder
of the liquidators irregular. It is only when a liquidator
is an
affected party in business rescue proceedings that it should be
joined.
[21]
The respondent submits that they need to be joined in their
capacities as the liquidators of the first applicant. They have
a
substantial interest in the outcome of the main application,
considering the relief that is sought. The Master is cited as the
thirteenth respondent and the Companies and Intellectual Property
Commission as the fourteenth respondent. The respondent argues
that a
failure to join these parties to the application could make it
defective.
[22] The respondent says
that the joinder issue, similar to the citation issue, is a question
of law which can only be decided with
reference to the merits in the
main application.
Analysis
[23]
The court has a wide discretion in the consideration of
rule 30
applications. This discretion must be exercised judicially with
consideration of the relevant circumstances of the case and what
is
fair to both parties.
The
court is entitled to overlook in proper cases any irregularity
especially where there is no evident substantial prejudice to
the
other party.
[24] Prejudice is thus a
requirement for an application in terms of
rule 30
to succeed
(Schreiner J in
Trans-African Insurance Co v Maluleka
1956 (2)
SA 271
(A) at 278F-G):
No
doubt parties and their legal advisers should not be encouraged to
become slack in the observance of the Rules, which are an
important
element in the machinery for the administration of justice. But on
the other hand technical objections to less than perfect
procedural
steps should not be permitted, in the absence of prejudice, to
interfere with the expeditious and, if possible, inexpensive
decision
of cases on their real merits.
And
more recently in this division, in
De Klerk v De Klerk
1986 (4) SA 424
(W) at 426I, it was said: “It must again be
emphasized that
Rule 30(1)
applications should succeed only if there
is prejudice related to proceeding with the litigation.”
[25] To determine whether
there was any prejudice, a comparison should be made between the
state of affairs which occurred due to
the irregular step, and the
state of affairs had the irregularity not occurred. See
Soundprops
1160 CC v Karishavn Farm Partnership
1996 (3) SA 1026
(N) at
1033. If this test is applied, it cannot be said that the applicants
had suffered prejudice resulting from the respondent’s
attorneys leaving the date blank. In so far as this amounts to an
irregularity, it is condoned.
[26] I
agree with the respondent that the question whether or not the first
applicant is in liquidation or business proceedings
is a substantive
question better suited for determination in the main application.
However, for purposes of this application, I
find that the first
applicant (first respondent in the main application) was not
incorrectly cited. In this division, in
Absa Bank Ltd v Makuna
Farm CC
2014 (3) SA 86
(GJ) at 87 Boruchowitz J ruled as
follows on the effect of business rescue proceedings on liquidation:
The
launch of business rescue proceedings does not alter the legal status
of the company in liquidation but merely stays the implementation
of
the winding up order. The manifest purpose of the
section 131(6)
suspension is to delay implementation of the winding up order pending
the outcome of the business rescue application, but the company
remains under winding up, whether finally or provisionally.
In
Absa Bank Ltd v Earthquake Investments
(case no 63190/2012)
decided in the Gauteng North High Court, a similar view was expressed
by Makgoba J.
[27]
Considering this finding, it was incumbent on the respondent to join
the liquidators of the first respondent.
[28] Overall, it cannot
be said that the applicants suffered any measurable prejudice. The
matter needs to move forward for a consideration
of the merits of the
main application.
Costs
[29]
Considering my findings, the respondent (applicant in the main
application) is entitled to costs. The question is whether that
costs
order should be punitive or not. The respondent contends that it
should be awarded costs on a scale as between attorney and
client,
including the costs occasioned by the employment of two counsel. It
argues that the reason for the applicants’
rule 30
was to delay
the main application. Also, there was a suggestion in the applicants’
replying affidavit that the applicant
would have acted dishonestly.
The applicants provided no factual basis for this claim, which
respondent says amounts to reckless
conduct. The respondent claims
that the
rule 30
application is an abuse of process, which in itself
can form the basis for a punitive cost order.
[3]
[30] I was referred to
the judgment of Roper J in
Reid N.O. v Royal Insurance Co Ltd
1951 (1) SA 713
(T):
In
Steinman v Dry
(T.P.D. 1/4/49, not reported), in dismissing an
exception, the full Court of this division ordered the excipient to
pay costs as
between attorney and client on the ground that the
exception was trifling and frivolous and had had the effect of
unnecessarily
delaying the trial of the action. In the present case
the application has been brought under a complete misconception as to
the
function of particulars, and it has also had the effect of
unnecessarily delaying the further prosecution of the action, and in
the circumstances I feel that the plaintiff ought to have his costs
as between attorney and client.
[31] A
punitive cost order should be the exception rather than the rule. It
should be reserved for extreme cases. I am not convinced
that this is
one of those cases.
[32] A
period of three weeks is ample time for the respondents to file their
answering affidavits.
[33] I accept the
respondent’s employment of two counsel.
ORDER
[34]
In the result I make the following order:
a.
The
rule 30
application launched by the First, Second and Third
Applicants (Respondents in the main application) is dismissed.
b.
The
First, Second and Third Applicants are ordered to pay the costs of
these proceedings jointly and severally, including the costs
occasioned by the employment of two counsel.
c.
The
First, Second and Third Applicants are ordered to serve and file
their Answering Affidavits (if any) within three weeks of the
date of
this order.
___________________________
OLIVIER, AJ
ACTING JUDGE OF THE
HIGH COURT
08/03/16
[1]
Par 2.5 of the affidavit of Mr Tulwana.
[2]
Para 5.6 of applicants’ replying affidavit in the
interlocutory application, p 72.
[3]
See A C Cilliers, The Law of Costs, Volume 1, p 4-22, par 4.13.