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[2016] ZAGPPHC 217
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Firstrand Ltd v Spitz and Another; Firstrand Bank Ltd and Others v Spitz (24584.2016; 88714.2014) [2016] ZAGPPHC 217 (15 April 2016)
IN THE HIGH COURT
OF SOUTH AFRICA
(GAUTENG DIVISION,
PRETORIA)
Case Number: 24584/16
15/4/2016
Not reportable
Not of interest to other
judges
Revised.
In the matter between:
FIRSTRAND
LTD
Applicant
and
BARRY KUPER
SPITZ
First
Respondent
INTERNATIONAL LAW &
TAX INSTITUTE (PTY) LTD
Second
Respondent
Case No: 88714/2014
In the application
between:
FIRSTRAND BANK
LTD
First
Applicant
LAURITZ LANSER
DIPPENAAR
Second
Applicant
FIRSTRAND
LTD
Third
Applicant
and
BARRY KUPER
SPITZ
Respondent
JUDGMENT
POTTERILL J
[1] The applicant is on
an urgent basis applying that the action instituted by the first
respondent against the applicant in the
Gauteng Local Division under
case number 43390/2014 be stayed pending the adjudication of the
vexatious litigant application instituted
against the first
respondent by the applicant in this court under case number
87714/2014.
[2] This application is
opposed by first and second respondents.
[3] The first issue that
this court is to determine is whether the application is indeed an
urgent one. I find it necessary to set
out the background facts
before reaching a decision hereon:
Background facts
For ease of reference I
continue to throughout refer to the applicant and respondents as
in
casu.
3.1. On 23 February 2001
the second respondent concluded a consultancy service agreement with
Henry Ansbacher Trust Services ("HATS"),
a Division of
Firstrand Bank. Firstrand Bank is a wholly owned subsidiary of the
applicant.
3.2. In terms of this
agreement the second respondent through the endevours of the first
respondent was to provide certain services
to the HATS' Division of
Firstrand Bank. For these services the second respondent was entitled
to an annual basic fee of R1 million
and to payment of commission if
certain targets were met.
3.3. The agreement was
for a fixed period of three years. Firstrand Bank however had the
right to terminate the agreement earlier
if defined performance
targets were not met. Firstrand Bank on 2 3 February 2002 formally
cancelled the agreement on the basis
that the gross revenue threshold
had not been attained.
3.4. The respondents
instituted an action against Firstrand Bank in this court under case
number 32230/2001 ("Bertelsmann J
action"). The action was
based thereon that the respondents disputed the validity of Firstrand
Bank's cancellation.
3.5. Bertelsmann J made
the following orders:
"1.
The first plaintiff's action is dismissed.
2. The first and
second plaintiffs must pay the defendant's costs, jointly and
severally, the one to pay the other to be absolved,
such costs to
include:
(i)
The costs of two senior and one junior counsel,·
(ii)
The preparation and qualifying fees of defendant's expert
witnesses Strydom and Breytenbach;
(iii)
The fees for the preparation of the Ernst
&
Young
report;
(iv)
Costs on the scale of an attorney and client for seventeen court
days; and
(v)
Costs on the party and party scale for the balance of the
proceedings.”
3.6. The respondents
applied for leave to appeal against Bertelsmann J's judgment and the
leave to appeal was refused. They petitioned
to the Supreme Court of
Appeal and as well as the Constitutional Court and both petitions
were dismissed with costs.
3.7. On 28 November 2014
the respondents herein issued as plaintiffs summons in case number
43390/2014 against Firstrand Bank Ltd
in the Gauteng Local Division
("the main action"). The respondents claim
inter alia
the following against the applicant as claim 1:
1.
Payment of the sum
of R100 million in respect of delictual fraud.
2.
Payment of the sum
of R1 billion in respect of contractual fraud. JI
3.8. The contractual
claim again relates to the contract that served before Bertelsmann J.
3.9. The respondents
herein also instituted action against Mr. Dippenaar (Bank Manager)
under case number 32635/2004.
3.10. A second defamation
action was also instituted by the respondents also against Mr.
Dippenaar under case number 37422/2014.
3.11. It is common cause
that both these defamation actions are still pending.
3.12. On 12 December 2014
the attorneys on behalf of the applicant sent by e- mail a letter to
the first respondent setting out
that they are in view of the relief
sought in the vexatious litigant proceedings not taking any further
steps in the litigation
under case number 43390/2014 ("the main
action") until the outcome of the vexatious litigant
proceedings.
3.13. On 23 January 2015
the first respondent requested the applicant to file its plea on or
before the 30
th
of January 2015 failing which a notice of
bar will be served and filed.
3.14. On
27
January
2015 the applicant's attorney responded to the first respondent's
e-mail of 2 3 January 2015 inviting the respondents to
retract the
demand for the applicant's plea failing which the applicant reserved
its rights to bring an urgent application.
3.15. On 28 January 2015
the first respondent reacted to this letter as follows:
"We
are advised as follows:
1.
Opposition in law is correct.
2.
However, no benefit can accrue to any of the parties from a
dispute on the issue raised by you.
3.
Hence I am willing to accept on my own behalf and on behalf of the
International Law and Tax Institute (Pty) Ltd, the
invitation
contained in the final paragraph of your letter which acceptance
takes place with effect hereof.
Kindly
acknowledge receipt hereof by yourselves.
"
The last paragraph
referred to is the invitation to retract the demand for the
applicant's plea.
3.16. On the 28
th
of January 2015 the applicant's attorneys addressed an e-mail to the
respondent acknowledging and confirming that the respondents
would
not proceed with the notice of bar.
3.17. On 1 September 2015
a notice of bar was delivered in this matter on behalf of the
respondents.
3.18. On 1 September 2015
the applicant' s attorneys addressed an e-mail to Zwiegers Attorneys
inviting them to withdraw the notice
of bar. This e-mail was not
responded to.
3.19. The applicant then
filed a plea.
3.20. In reaction to the
plea the respondent filed an application for joinder.
3.21. On 1 February 2016
the applicant's attorney addressed an e-mail to the respondents'
wherein they pointed out the deficiency
in the joinder application
but was willing to consent to joinder as the second defendant with
the proviso that the consent was
provided in the interests of
avoiding unnecessary interlocutory applications. They also reserved
their right to urgently seek a
stay of the Johannesburg action if the
plaintiff indicated an intention to advance that litigation.
3.22. On 11 February 2016
the attorney on behalf of the respondents again advised that he was
hoping to hear from his client regarding
the draft order for the
joinder application. As nothing was heard the applicant duly filed a
notice to oppose the joinder application
to protect its rights.
Applicant's case
[4] The applicant thus
brought this urgent application to stay the proceedings as it is
their submission that the respondents reneged
on its agreement, at
the very least as far as the notice of bar was concerned, to not
proceed with the litigation in the main action.
The matter is
accordingly urgent as the respondents' conduct will result in
significant irreparable harm to the applicant's reputation
as well as
the reputation of entities and individuals associated with it if the
vexatious litigation application is not heard prior
to the main
action.
[5] The irreparable harm
flows from the respondents' serving of a discovery affidavit. It was
conceded by counsel for second respondent
in this court that the
discovery affidavit does not correspond to a discovery affidavit in
terms of the Uniform Rules of Court
in that for the following is set
out:
5.1.
C. Documents
''A.
Re: Money
Laundering, Tax Evasion, Fraud, etc by Ansbacher Group (Published
Documents)
B. Re: Money
Laundering, Tax Evasion, Exchange Control Breaches by Defendant and/
or Ansbacher Group (Unpublished Documents)
C.
Re: Instructions to Second Plaintiff from Ansbacher in London
D. Re: Issues of Fraud
in connection with the Defendant's Duisberg Scheme for Discovery
Health Executives and/ or Others
E. Re: ''Round
Tripping" Breaches of Exchange Control Regulations
F.
Re: Confusion in Ansbacher Trust Services
G.
Re: Advice and/ or Encouragement by Defendant to Clients to Commit
Criminal Acts
H.
Re: Advices and/ or Encouragement by Defendant to Clients to Set up
Invalid Trusts
..."
5.2. Under Schedule A
furthermore the following is
inter alia
stated:
"SCHEDULE A:
Documents 1-281 of Annexure - First Part, C
RE: MONEY LAUNDERING.
TAX EVASION, FRAUD, ETC BY
ANSBACHER GROUP (published
documents)
Copies of published
documents, including affidavits by government officials and/ or news
reports and/ or law reports and/ or government
journals and/ or
comptrollers ' reports and/ or auditor generals' reports and/ or
official government publications and/ or publications
of the United
Nations, supporting Plaintiffs' allegations that the instructions by
Michael Mayhew-Arnold, a director and/ or officer
and/ or employee of
Ansbacher
&
Co Limited, to Second Plaintiff in his
capacity as independent advisor to Defendant in terms of the
agreement dated 2Yd February 2000, under the authority of
Defendant, requiring Second Plaintiff to engage in money laundering
activities on behalf of Defendant and/ or the Ansbacher Group,
were part of a course of conduct, by and/ or on the part of Defendant
and/ or of Ansbacher
&
Co Limited and/ or of one or
more of their
subsidiaries and/ or related companies and/ or
divisions and/ or certain officers and/ or officials of Defendant
and/ or Ansbacher
&
Co Limited and/ or of their
subsidiaries and/ or related companies and/ or
divisions,
involving acts of:
-
money laundering;
and/ or tax evasion; and/ or
-
breaches of company
law; and/ or
-
carrying on banking
business without a banking licence; and/ or defrauding its own
creditors; and/ or
-
defrauding creditors
of third party individuals and companies with whom it dealt; and/ or
-
holding accounts
with intent to defraud creditors of other persons and/ or for
fraudulent purposes; and/ or
-
facilitating
breaches of exchange control regulations; and/ or
-
unlawfully failing
to comply with the requirements of an authorised government officer
to produce to him specified books and documents;
and/ or
unlawfully destroying and/ or mutilating and/ or being privy to
the destructions and/ or mutilation of books and documents; and/
or
-
holding unlawful
payments to politicians in offshore accounts of Ansbacher
&
Co Limited and/ or of its subsidiaries and/ or of related
companies and/ or of divisions ..."
5.3.
"SCHEDULE B:
Documents 282-285 of Annexure - First Part, C
RE: MONEY LAUNDERING,
TAX EVASION, EXCHANGE CONTROL BREACHES BY DEFENDANT AND/ OR ASNBACHER
GROPU
(unpublished
documents)
Unpublished documents
and/ or copies of unpublished documents in support of Plaintiff's
allegations that Defendant and/ or Henry
Ansbacher
&
Co
Limited and/ or one or more of their subsidiaries and/ or related
companies and/ or divisions and/ or certain officers and/ or
officials and/ or employees of Defendant and/ or of Ansbacher
&
Co Limited and/ or of their subsidiaries and/ or of related
companies and/ or divisions, were involved in unlawful and/ or
illegal
acts, including acts of:
-
money laundering;
and/ or
-
tax evasion; and/ or
-
facilitating
breaches of the Exchange Control Regulations.
"
5.4. SCHEDULE E:
Documents 311-3 24 of Anenxure - First Part C
RE: "ROUND TRIPPING"
BREACHES OF EXCHANGE CONTROL REGULATIONS
5.5. Under Schedule G the
heading is "RE: ADVICE AND/ OR ENCOURAGEMENT BY DEFENDANT TO
CLIENTS TO COMMIT CRIMINAL ACTS"
5.6. Schedule V
Proofs
by South African Reserve Bank and by the Financial Intelligence
Centre Concerning Unlawful Activities of FirstRand Group
“
1836
Announcements by the South African Reserve Bank 16 April 2014
1837
Announcements by the Financial Intelligence Centre 16 April 2014”
This despite the true
announcement reading as follows:
“
Stemming from
the findings of the inspections, the SARB has imposed administrative
sanctions, including the ordering of certain
remedial action on the
respective banks.
The administrative
sanctions are not an indication that the banks in question have in
any way facilitated transactions involving
money laundering and the
financing of terrorism.”
[6] This discovery
affidavit persists with the submissions that the applicant was part
and parcel of money laundering, tax evasion,
exchange control
breaches etc. This was also the assertion before Bertelsmann J.
Bertelsmann J found in paragraph 82 of his judgment
as follows:
“
As will be
dealt with in greater detail in the relevant section of this
judgment, there is absolutely no evidence of whatever nature
that
supports the repeated attacks upon the defendant or the Firstrand
Group by the plaintiffs, accusing the former of being involved
in
Exchange Control violations, money laundering, dealing in embezzled
funds, fraud, unlawful destruction of statutory records
or
maintaining bogus accounts. The gratuitous accusations levelled at
the defendants ' clients and the defendant itself, intended
to
tarnish captains of industry and defendant's employees and directors
with the brush of dishonesty, were and remain baseless
and
unsubstantiated. The excuse that such conduct was the reason not to
call essential and available witnesses must be rejected
as false.”
[7] The matter is thus
urgent to stop the defamatory allegations that have previously been
dealt with by Bertelsmann J and were
either abandoned or found to be
false. Notwithstanding this the respondents persist in making the
same false, scurrilous and vexatious
allegations in the main action.
[8] A further ground of
the stay of the main action is that the respondents will simply
continue abusing the Rules of Court to harass
and defame the
applicant. The respondents are persisting in taking further steps.
The lengthy discovery affidavit filed by the
first respondent on 18
March 2016 is a copy and paste version of the lengthy discovery
affidavit delivered by the respondents in
June 2002 in the
Bertelsmann J matter. It is clear from the judgment of Bertelsmann J
that the respondents abused the discovery
rules in the main action.
The applicant thus has a reasonable apprehension that the respondents
will continue to abuse the Rules
of Court including
inter alia
the
discovery provisions of Rule 3 5.
[9] The relief sought is
interim in nature as the vexatious litigant application is to be
enrolled for hearing eminently. It is
common cause that the Deputy
Judge President of this Division was approached to provide a
preferential date.
[10] The respondents'
conduct causes significant irreparable harm to the applicant's
reputation as well as the reputation of entities
and individuals
associated with it and will leave the applicant with an impossibility
to quantify the extent of such damages to
recover such damages from
the respondents.
[11] The applicant
requested that the costs of this application, although interim, be
entertained by this court on the application
before it. In the
answering affidavit the respondents persisted with its vexatious
averments against the applicant.
Inter alia:
·
"FICA
fraud by appellants on Reserve Bank and Financial Intelligence
Centre;
·
Mr. Botha 's
(attorney for the applicant) abuse of constitutional rights;
·
Unprofessional
conduct and perjury by Mr. Botha;
·
Mr. Botha has
engaged in doctoring a document
..."
Respondent's case
[12] On behalf of the
first respondent Mr. Spitz himself argued that the matter is not
urgent. The discovery affidavit is simply
a list of documents in his
possession and he has made no accusations. He further argued that the
court could never find him to
be a vexatious litigant as he has not
persistently litigated. This is the first time since the main action
that he has instituted
action. Furthermore there are reasonable
grounds for bringing the main action in Johannesburg. He also raised
the fact that the
applicant is forum shopping and although it is not
a big point it is still a point that affects the costs. He further
submitted
that he is a human being with a right to be heard. The
applicant is acting in anger against him as he assisted in criminal
investigations
against the applicant.
[13] Mr. O' Donovan
argued on behalf of the second respondent that bringing the
application was a gross abuse of the Rules and in
fact opportunistic.
This is further so as in law the applicant is barred from bringing an
application for vexatious litigation
proceedings because the
pleadings have already closed. I was referred to
Ryklof
Beleggings (Edms) Bpk and Another v Du Plessis
[2006] 4
All SA 474
(C)
wherein the court found that because the matters
had reached the
litis contestation
stage the result was that
the parties had agreed to leave the disputes in the hands of the
court and the matter could not be stayed.
The court also emphasised
that persistence was not only the factor which was important for a
proceeding to qualify under the Vexatious
Proceedings Act, Act 3 of
1956, but there was also to be no basis for the actions instituted.
The court found that this was not
in that matter the case as the
court found that there was a basis for the actions to be instituted.
[14] It was further
argued that the discovery affidavit may be offensive, but it is in
public interest that this matter proceeds
otherwise the applicant has
a subtext to hide documents. The discovery document although a public
document, was not provided to
the press and is not publicised.
[15] On behalf of the
second respondent
lis pendens
was also raised as in the
vexatious litigation application prayer 6 also requests stay of the
main action. This matter can thus
not be argued in this court.
[16] The court must look
to the prospects of success of the vexatious litigation process.
Because there are new facts pursuant to
the finding of the Reserve
Bank there are no prospects of success in that the main action
differs from that from Bertelsmann' s
matter and there is thus not a
persistence in bringing this action. There are no other pending
actions between the applicant and
the respondents.
[17] There is no basis
for the applicant to ask for costs on an attorney and client scale.
This application should be dismissed
with costs. An interim court
order should not be followed by a costs order as it cannot be
reversed.
[18] As a last resort Mr.
O'Donovan also raised the point that the deponent to the founding
affidavit, being the attorney of the
applicant has no
locus standi
and everything contained therein is hearsay evidence.
[19] It was his
submission that the applicant is trying to
"muzzle an old
man':
Reasons for decision
[20] This application to
stay proceedings until an application for vexatious litigation
proceedings is adjudicated is premised upon
an interlocutory
interdict staying any further procedures in the main action until the
proceedings in terms of the Act has been
adjudicated. Under our
constitutional dispensation a stay of proceedings due to vexatious
litigation is confirmed in
Benash and Another v Ernst
&
Young and Others
1999 (2) SA 116
(CC)
. It is
common cause that the hearing of this application is eminent, due to
the Deputy Judge President in this court granting a
preferential
court date. This also addresses the argument that the stay would
prejudice the first respondent who is 83 years old;
justice is to be
delivered speedily.
[21] I find the matter to
be urgent in that although a date has not been allocated for the
hearing of the matter any further procedural
steps need to be stayed
pending the application. This is so because the discovery affidavit
of the respondents
ex facie
the document, admittedly so by the
second respondent, contain at the very least irrelevant,
inappropriate and shocking comments.
Despite this being admitted the
respondents did not tender to remove the comments. Despite counsel
for the second respondent and
the first respondent being invited to
apologise for the incorrect "verbatim quoting of the finding of
the Reserve Bank"
none was forthcoming. The applicant thus has a
well-grounded apprehension that this conduct will continue.
[22] A High Court has the
inherent power at common law to stay vexatious, frivolous or
oppressive proceedings. In addition it has
the power to stay under
the Act. The reason for the stay of the main action is thus not bad
in law.
[23] Courts also possess
the inherent jurisdiction to prevent the abuse of court processes.
One of the means to prevent abuse is
to stay the proceedings.
[24] In both instances
referred to above the power to stay must be exercised sparely since
the courts of the land are open to all
and the doors will only be
closed in exceptional circumstances. This principle however must be
considered in the vexatious proceedings
application itself.
[25] The application
before me, i.e. a stay of the proceedings pending the hearing of
another matter is a matter of discretion -
Fisheries Development
Corporation v Jorgensen and Another
1979 (3) SA 1331
(WLD) at 133
98-C. This discretion is exercised upon the applicant fulfilling the
requirements for an interlocutory interdict.
[26] For interim relief
the court has to use the following test,
Reckitt
&
Coleman SA (Pty) Ltd v S C Johnson
&
Son
(SA)(Pty) Ltd
1995 (1) SA 725
on 730B:
"When the
applicant cannot show a clear right, and more particularly where
there are disputes of fact relevant to a determination
of the issues,
the Court's approach in determining whether the applicant's right is
prima facie established, though open to some
doubt, is to take the
facts set out by the respondent which the applicant cannot dispute
,
and to consider whether, having regard to the inherent
probabilities, the applicant should (not could) on those facts,
obtain final
relief at the trial in the main action. The facts set
out in contradiction by the respondent must then be considered and if
serious
doubt is thrown upon the case of the applicant it cannot
succeed.
"
There is accordingly no
serious doubt thrown upon the case of the applicant.
[27] Such conduct of the
respondents will result in significant irreparable harm to the
applicant's reputation -
Absa Bank ltd v Olivia Properties
1999
(4) SA 554
(T) at p555.
[28] The balance of
convenience favours the applicant. On the one hand the respondent's
argue that they are not defaming or making
accusations, yet in the
same breath they argued that they must proceed with the main action
to bring the actions of the applicant
in the public domain as it is a
matter of public interest. The only prejudice the respondents suffer
is that the main action is
stayed for a short period. The balance of
convenience thus favours the applicant.
[29] The issue of forum
shopping was raised. There was no response thereto from the
applicant's counsel. It is true that one would
assume that while the
main action is pending in Johannesburg this application would be
brought in Johannesburg. However, as the
Local Division and this
Court has concurrent jurisdiction this court cannot chase the
applicant away. Nothing further rides on
this submission.
[30] The respondents
lastly argued that the deponent could not depose to the affidavit as
he was the attorney for the plaintiff
and did not have the necessary
locus standi
and that his assertions in the affidavit are
accordingly hearsay. In
Gaines v Telecom Namibia ltd
2004
(3) SA 615
(SCA)
at 6 24G-H the court found that the deponent to
the affidavit need not be authorised by the party concerned to depose
thereto.
It is the institution of the proceedings and the prosecution
thereof which must be authorised. If the required allegations of the
authorisation are made in their founding affidavit proof of
authorisation and/ or ratification can be annexed to the replying
affidavit.
[31] I am satisfied that
on the facts of this matter I can entertain a costs order. Although
it is an interim order I can grant
costs on the application as it
stands before me. The reason for this is that the respondents are
persisting with a pattern of abusing
the court process to insult,
defame and malign the applicant and its attorney. This process
started before Bertelsmann J, was proceeded
with by the comments in
the discovery affidavit as well as in the answering affidavit before
me. The next question to be answered
is whether the costs must be on
a punitive scale. For a court to grant a punitive costs order special
grounds must exist. I find
the special grounds in this matter to be
that the conduct of the litigant is reprehensible, reckless and
vexatious. Under those
circumstances a court can grant a punitive
costs order
-
Wrypex (Pty) Ltd
v Barnes
2011 (3) SA 205
(GNP)
at 2051- 207G.
[32] I accordingly make
the following order:
32.1 The action
instituted by the first respondent against the applicant in the High
Court of South Africa, Gauteng Local Division,
Johannesburg under
case number 43 3 90/ 2014 is stayed pending the adjudication of the
vexatious litigant application instituted
against the first
respondent by the applicant in this court under case number 87714/
2014.
32.2 The respondents are
to pay the costs of this application on an attorney and own client
scale, jointly and severally, the one
paying the other to be
absolved, such costs to include the costs consequent upon the
employment of two counsel where applicable.
________________________
S. POTTERILL
JUDGE OF THE HIGH COURT
CASE NO: 24584/ 2016
HEARD ON: 12 April 2016
FOR THE APPLICANT: ADV.
B. SWART SC
INSTRUCTED BY: Norton
Rose Fulbright South Africa Inc.
FOR THE 1
st
RESPONDENT: IN PERSON
FOR THE 2
nd
RESPONDENT: MR O'DONOVAN
INSTRUCTED BY: Zwiegers
Attorneys
DATE OF JUDGMENT: 15
April 2016