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[2016] ZAGPPHC 1105
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Berrange N.O. and Others v Vorster and Others (37718/2006) [2016] ZAGPPHC 1105 (3 November 2016)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE
NO.: 37718/2006
DATE:
3/11/2016
In
the matter between:
PIERRE
DE VILLIERS BERRANGE
N.O. FIRST
PLAINTIFF
RANJITH
CHOONILAL
N.O.
SECOND PLAINTIFF
PREETHA
DABIDEEN
N.O.
THIRD PLAINTIFF
NICOLA
CRONJE
N.O. FOURTH
PLAINTIFF
and
HENRY
VOSSIE
VORSTER
FIRST
DEFENDANT
DALLAS
GOULDEN MASON-JONES
SECOND
DEFENDANT
MICHAEL
GLEN
BURRELL
THIRD
DEFENDANT
JONATHAN
GILBERT SCOTT
FOURTH
DEFENDANT
VORSTER
PEREIRA
INC
FIFTH DEFENDANT
LAURENCE
FRANCISCO PEREIRA
SIXTH DEFENDANT
VPM
INVESTMENTS (PTY) LTD
SEVENTH DEFENDANT
ROZAN
INVESTMENTS (PTY)
LTD
EIGHT DEFENDANT
Heard:
4 August 2015
Delivered
3 November 2016
JUDGMENT
A.A.LOUW
J
Introduction
[1]
The defendants ask that the plaintiffs' action be dismissed for want
of prosecution. The plaintiffs' alleged cause of action
arose in
1999, some seven years prior to the issue of summons. Pleadings
closed during the first half of 2007 and in August
2008 the
defendants served a request for further particulars for trial. The
plaintiffs never answered the request and did not take
a single step
to advance the litigation, until March 2014 when the defendants were
advised that the plaintiffs would be
"resuming"
the action and when they filed their reply to the request for
further particulars.
[2]
They further argue that the delay in advancing the action is
inexcusable and constitutes an abuse of process. They contend
that on Mr Berrange's own version the plaintiffs elected years ago
not to proceed with the action and that they cannot go back
on that
election now.
[3]
It is further the argued that the merits of the claim do not enter
the picture now but the relief sought is on the ground of
want of
prosecution only.
[4]
The plaintiff is Pierre de Villiers Berrange who: -
4.1.
is cited in his capacity as the liquidator of
NRB Holdings
Limited (formerly The New Republic Bank
Limited) ("Holdings" or "NRBH");
4.2.
is an attorney of the High Court of South Africa (Natal
Provincial
Division) and a professional liquidator and
practises as such as a director of Berrange
&
Wood Inc at Suite 1, The Mews, Redlands Estate, 1
George Macfarlane Lane, Pietermaritzburg;
4.3.
was appointed as the provisional liquidator
of
Holdings on 18 November 2003 and its
liquidator on 12 February 2004.
[5]
This was the position when summons was issued. Three
further liquidators have since been appointed.
[6]
The first defendant is Henry Vassie Vorster ("Vorster"), a
male attorney who practises as such with the firm
Vorster
Pereira from 6 Sandown Valley Crescent, Sandton, Gauteng.
[7]
The second defendant is Dallas Goulden Mason-Jones ("Mason-Jones"),
a male attorney who practises
as such with the firm
Vorster Pereira from 6 Sandown Valley Crescent, Sandton, Gauteng.
[8]
The third defendant is Michael Glen Burrell ("Burrell"), a
businessman who resides at [...] R. R., Parkwood.
[9]
The fourth defendant is Jonathan Gilbert Scott ("Scott"),
a businessman who resides
at 12 Portland Place,
Durban North, KwaZulu-Natal.
[10]
The fifth defendant is Vorster Pereira Inc, a company duly
incorporated according to law and in terms of sub-sections 49(4)
and
53(b) of the Companies Act No. 61 of 1973 which has its registered
office at 6 Sandown Valley Crescent, Sandton, Gauteng.
[11]
The sixth defendant is Laurence Francisco Pereira ("Pereira"),
a male attorney, who practises as such with the firm
Vorster Pereira
from 6 Sandown Valley Crescent, Sandton, Gauteng, who is joined in
these proceedings by virtue of the fact that
he was a director of the
fifth defendant and is liable jointly and severally with the fifth
defendant for its debts and liabilities.
[12]
The seventh defendant is VPM Investments (Pty) Limited, ("VPM")
a company duly registered and incorporated
according to law which has
its registered office at 2 Eglin Road,
Sunninghill, Gauteng.
[13]
The eight defendant is Rozan Investments (Pty) Limited, (''Rozan")
a company duly registered and incorporated according
to law which has
its registered office at Second Floor, 72 Grayston
Drive, Sandton, Gauteng.
[14]
The defendants save for the sixth defendant formed a consortium for
the purpose of the execution of a scheme in relation to
New Republic
Bank ("The Bank" or "NRB").
[15]
The plaintiff's claim is for the recovery of R15 million plus VAT.
This sum is the price Saambou Bank Limited ("Saambou")
was prepared to pay for the shares in New Republic Bank ("the
Bank" or "NRB") owned by Holdings, which
price was
paid not to Holdings but to the consortium as a result of a scheme
devised and implemented by the consortium.
[16]
In respect of the sixth defendant, the plaintiff's claim is based on
sub-section 53(b) of the Companies Act, No 61 of 1973
("the
Companies Act") by virtue of his directorship of Vorster Pereira
Inc.
[17]
The bank was placed under curatorship on 29 January 1999.
[18]
At the date of curatorship of the bank: -
18.1.
Dato's Samsudin ("Samsudin") held 100% of the issued share
capital of Redbridge assets Limited
("Redbridge") a company
registered in the British Virgin Islands;
18.2.
Redbridge held 73.4% of the issued share capital of SMG
Holdings Limited ("SMG"),
a public company registered and
incorporated in South Africa;
18.3.
SMG held 74% of the issued share capital of Holdings, a company
registered and incorporated in South
Africa;
18.4.
Holdings held 100% of the issued share capital of the Bank.
[19]
In paragraphs 20 - 22 hereunder I set out the plaintiffs'
allegations.
[20]
At all times material hereto: -
20.1.
Samsudin: -
20.1.1
was the Chairman, a director, and controlled the affairs of Holdings
by virtue of his shareholding set out in paragraph
17.1 above; and
20.1.2
was also a director of the Bank until 23 February 1999 and of SMG;
20.2.
Scott: -
20.2.1
had been the Chief Executive Officer of
the Bank until date
of
curatorship; and
20.2.2
was a director and the Executive Deputy Chairman of Holdings; and
20.2.3
had been a director of SMG until 22 January 1999;
20.3
Burrell: -
20.3.1
was employed by Holdings and the Bank
as Executive Director responsible
for corporate and
merchant banking until 31 August 1999;
20.3.2
had been a director of SMG until 22 January 1999;
20.3.3
had been a director of Holdings until 14 May 1999;
20.3.4
was a director of Rozan and Brenston;
20.4
Vorster, Mason-Jones and Pereira were attorneys and directors of
Vorster Pereira Inc and are
liable jointly and severally, together
with Vorster Pereira Inc for the debts and liabilities of Vorster
Pereira Inc in terms of
sub-section 53(b) of the Companies Act.
20.5
Vorster, Mason-Jones and Vorster Pereira Inc represented as attorneys
Holdings, the Bank (until
curatorship), Brenston, Rozan, VPM,
Samsudin, SMG, and Saambou;
20.6
the controlling mind and the directors of Brenston Trading (Pty)
Limited ("Brenston")
were Scott, Burrell, Vorster and
Mason-Jones;
20.7
the controlling mind and the directors of VPM were Vorster,
Mason-Jones and
Pereira;
20.8
the controlling mind and directors of Rozan were Scott and Burrell;
20.9
Scott, Burrell, Mason-Jones and Samsudin were directors of SMG.
[21]
In the period between 29 January 1999 (the date of curatorship) and
28 June 1999, the date upon which Saambou resolved to propose
a
scheme of arrangement in terms of section 311 of the Companies Act,
Vorster, Mason-Jones, Scott and Burrell knew that: -
21.1
a proposal in terms of section 311 of the Companies Act was likely;
21.2
in order to gain control of the Bank any proposer would need to
acquire the issued share capital
of the Bank ("the shares")
from Holdings before a scheme of arrangement was sanctioned;
[22]
In order to give effect to the abovementioned scheme, Brenston which
was incorporated on 18 March 1999 and is now in the process
of being
deregistered, was utilised for the sole purpose of purchasing the
shares from Holdings at a nominal price and disposing
of those shares
for the benefit of the consortium.
[23]
The Brenston scheme was duly executed and the R15 million divided.
[24]
It is not necessary for this judgment to refer to the number of
agreements in terms of which it was done.
[25]
Suffice it to say in a series of complicated
agreements the Brenston object
was
achieved.
The
law of dismissal for want of prosecution
[26]
It
is well
settled
at
common
law
that
the
court
has
an
inherent
power
to
prevent
an abuse of
its process by
frivolous
or
vexatious
litigation.
[1]
An action
may be held
to be
vexatious
if
it is
"obviously
unsustainable"
[2]
or
"frivolous,
improper,
instituted
without
sufficient
ground,
to
serve
solely
as
an
annoyance
to
the
defendant”
.
[3]
In terms
of
section
173
of
the
Constitution
the
High
Court
has
the
inherent
power
to
protect
and
regulate
its own
process
and to
develop
the
common
law, taking
into
account
the
interests
of justice.
[27]
In
Cass
i
m
jee
[4]
the SCA said that an inordinate or unreasonable delay in prosecuting
an action may constitute an abuse of process and warrant the
dismissal of the action.
[5]
The
court's
inherent
jurisdiction
to control its own proceedings includes the power to dismiss an
action on account of delay in or want of prosecution.
[6]
The
SCA held that,
"there
are no hard and fast rules
as
to the
manner in which the discretion
to
d
i
s
m
i
ss
an
action for want of prosecution
s
to
be exercised. But the following
requirements
have
been
recognised.
First,
there
should
be
a
delay
in
the
prosecution
of
the action; second, the delay must be inexcusable;
and
third, the
defendant
must
be
seriously
prejudiced
thereby.
Ultimately,
the
enquiry
will involve
a
close
and
careful
examination
of
all
the
relevant
circumstances,
including
the
period
of
delay,
the
reasons
therefore
and
the
prejudice, if
any,
caused
to
the defendant. There may
be
instances
in
which
the delay
i
s
relatively
slight
but
serious
prejudice
i
s
caused
to
the
defendant,
and
in
other
cases
the
delay
may
be
inordinate
but
prejudice
to
the
defendant
i
s
slight.
The court
should
also
have
regard
to
the
reasons,
if
any,
for
the
defendant's
inactivity
and
failure
to
avail
itself
of
the
remedies
which
it
might
reasonably
have
been
expected
to
use in order
to
bring
the
action
expeditiously
to
trial."
[7]
[28]
The
SCA
[8]
also
commended
the
approach
of
Salmon
J
in the
English
case
of
Allen
v
Sir
Alfred
McAlpine
and
Sons
Limited:
Bostick
v
Bermondsey
and
Southwark
Group
Hospital
Management
Committee;
Sternberg
v
Hammond
[9]
where
the
Court
of Appeal
said:
"A
defendant may apply to have an action dismissed for want of
prosecution either (a) because of the plaintiff's failure to
comply
with the Rules of the Supreme Court or (b) under the court's inherent
jurisdiction. In my view it matters not whether the
application comes
under limb (a) or (b), the same principles apply. They are as
follows: in order for such an application to succeed,
the defendant
must show:
(i)
that there has been an inordinate delay. It would be highly
undesirable indeed impossible to lay down
a
tariff
-
so
many years or more on one side
of
the
line
and
a
lessor
period
on
the
other.
What
is
or
is
not
inordinate delay must depend on the facts of each particular
case. These vary infinitely from case to case, but it should not be
too difficult to recognise inordinate delay when it occurs.
(ii)
that
this
inordinate
delay
is
inexcusable.
As
a
rule,
until
a
credible
excuse is
made out, the natural inference would be that it is inexcusable.
(iii)
that the defendants
are likely
to
be seriously prejudiced
by the delay. This may be
prejudiced
at the trial of issues between
themselves and the plaintiff,
or between
each
other,
or between
themselves
and
the third
parties. In
addition
to
any
inference
that
may
properly
be
drawn from
the delay
itself
,
·
prejudice
can
sometimes
be
directly proved.
As
a
rule, the
longer the
delay, the
greater the
likelihood of
serious prejudice
at
the trial."
[29]
In a separate judgment
in
Allen
[10]
Diplock LJ
said:
"
What
then
are
the
principles which
the
Court
should
apply
in
exercising
its discretion
to dismiss
an
action
for
want of prosecution
on
a
defendant's application? The application
is
not
usually
made
until
the
period
of
limitation
for
the plaintiff's
cause
of
action
has
expired.
It
is
then
a
Draconian
order
and will not
be lightly
made.
It should
not
in
any
event
be
exercised
without
giving the plaintiff
an
opportunity
to
remedy
his
default,
unless
the
court
is
satisfied either
that
the
default
has
been
intention
and
contumelious,
or
that
the inexcusable
delay
for
which
the plaintiff
or
his
lawyers
have
been
responsible has
been
such
as
to give
rise
to
a
substantial
risk
that
a
fair
trial of
the issues in the litigation
will not be possible
at the earliest date at
which, as
a
result of the delay,
the action
would
come
to
trial
if it
were allowed
to
continue.
It is
for the
defendant
to
satisfy
the
court
that
one
or
other
of
these
two
conditions
is
fulfilled.
Disobedience
to
a
peremptory order
of
the
court
would
be
sufficient to satisfy
the
first
condition.
Whether the second
alternative
condition
is satisfied
will depend
on
the circumstances
of the
particular
case; but the
length of the delay may of itself suffice to satisfy this
condition if the relevant issues would depend on the recollection of
witnesses
of events which happened long ago. Since the power to
dismiss an action for want of prosecution is only
exercisable
on the application of
the defendant his previous conduct in the action is
always
relevant. So far as he himself has been responsible for any
unnecessary delay, he obviously cannot rely on it . . ."
[30]
The House
of Lords
approved
the principles laid
down by
the
Court
of
Appeal in
Allen
in
Birkett
v
J
ames
[11]
and
again
in
Department
of
Transport
v
Chris
Smaller.
[12]
The
delay
[31]
The plaintiffs' delay in prosecuting the action is extreme. After the
proceedings had closed during the first half of 2007
it took from
August 2008 until March 2014 for the plaintiffs to answer the
defendants' request for further particulars for trial.
This is
a period of five and a half years. Not only was the request not
answered during that period but literally nothing happened
in that
period. There was no communication of any kind between the attorneys
acting for the parties.
[32]
In such circumstances the defendants had good reason to believe that
the action against them was not going to proceed with
at all but had
died a natural death.
[33]
Mr Berrange must partially have held the same view for in March 2014
he advised the defendants that the plaintiffs would be
"resuming"
the action. This statement must be seen in the context thereof that
there is no evidence that there ever was
any agreement to "hold
over" this litigation between the parties.
[34]
What Mr Berrange and the other liquidators actually did in the
meantime was to pursue the other debtors of NRB in an attempt
to
restore NRB to solvency. There were claims of hundreds of millions of
rand against auditors as well as newspaper publishers
and owners who
as, it seems, spread rumours that NRB did not have sufficient
reserves and thus caused a run on the deposits that
NRB held.
[35]
Prior to instituting the Brenston action, the receivers of NRB and
liquidators of Holdings instituted legal proceedings
against Dato' Samsudin and others, Mr Seabrooke and
others, and the auditors of NRB and Holdings which have since been
settled as follows:
35.1
the Samsudin matters on the basis that NRB and Holdings were paid
R191,5 million in June 2007;
35.2
the Seabrooke matters on the basis that NRB and Holdings were paid
R28,5 million in August 2008;
and
35.3
the auditors matters on the basis that NRB was paid R20 million in
June 2013.
[36]
The picture is clear - the receivers of NRB and the plaintiffs first
litigated against the entities in the above paragraph
and had the
recovery been successful, the litigation against the defendants would
not have been resumed.
The
plaintiff's inordinate delay
[37]
The plaintiffs' inordinate delay is apparent from the following
chronology:
37.1
5 August 1999: conclusion of Brenston Agreement;
37.2
9 November 1999: Brenston Agreement amended;
37.3
22 November 1999: Consideration and Nomination Agreements entered
into;
37.4
14 November 2003: NRBH placed in provisional liquidation;
37.5
18 November 2003: Mr Berrange appointed as provisional liquidator;
37.6
12 February 2004: Mr Berrange appointed as liquidator of NRBH;
37.7
August 2004: interrogation of Mr Vorster and Mr Mason-Jones (first
and second defendants);
37.8
14 November 2006: action against the defendants instituted by Mr
Berrange (only);
37.9
first half 2007: pleadings close in action;
37.10
16 August 2007: second to fifth plaintiffs are added as
co-plaintiffs;
37.11
7 December 2007: Mr Berrange serves requests for further particulars
to the third defendant's plea
and to the
first, second, fifth, sixth and seventh
defendants' pleas and to fourth
and eighth defendants' pleas;
37.12
25 March 2008: second to fifth plaintiffs serve a notice in terms of
Rule 15(2) adding themselves as co-plaintiffs
in the proceedings;
37.13
8 August 2008: first, second, fifth, sixth and seventh defendants
deliver their further particulars and a request
for further
particulars for trial on the plaintiff;
37.14
18 March 2014: letter received from the plaintiffs' attorneys
advising that they had
"been
instructed
to resume proceedings"
;
37.15
24 March 2014: the plaintiffs file their reply to the request for
further particulars for trial served on
8 August 2008;
37.16
4 April 2014: the defendants' attorneys write to the plaintiffs'
attorneys advising them that the action has superannuated;
37.17
23 April 2014: the plaintiffs' attorneys advise the defendants'
attorneys that they would apply for
a
declarator that the plaintiffs' conduct
in delaying prosecution of the action
would not
constitute an abuse of process;
37.18
24 April 2014: the plaintiff's discovery affidavit filed;
37.19
7 July 2014: defendants launch current application.
[38]
The chronology reveals that there was a very substantial period -
i.e. that between 8 August 2008 and 18 March 2014, a period
of almost
six years, during which Mr Berrange took no steps whatsoever to
advance the action against any of the defendants. It
subsequently
emerged that this was as a result of a clear and reasoned choice not
to proceed with the action because its prospects
and recovery was
uncertain, and the merits of the action against the auditors far
better.
[39]
Mr Berrange subsequently however changed his mind, apparently because
the recovery against NRB's auditors was far less than
he had
anticipated.
[40]
In the plaintiffs' attorneys' letter to the defendants' attorneys
dated 23 April 2014, Mr Berrange says that NRB was paid R20
million
in June 2013. There was another ten month delay before Mr Berrange
decided to resume the action. This delay is not explained
either.
[41]
Mr Berrange does not deny that there has been an inordinate delay in
the prosecution of the action and does not contend that
the delay is
not lengthy nor reasonable or acceptable. On the contrary, he
accepted in his attorney's letter of 23 April 2014 (annexure
"HV4")
that the plaintiffs had been
"inactive"
and even
threatened to apply to court for an order declaring that the
plaintiffs' conduct in delaying prosecution of the action
did not
amount to an abuse of process. His explanation in his affidavit under
the heading
"Approach
of
the
Liquidators"
is premised on an acceptance of delay.
[42]
No steps in the action against the Messrs Vorster, Mason-Jones, VPI
and VPM were taken for six years - almost double the ordinary
prescription period in respect of debts being extinguished. In
respect of Messrs Burrell and Scott the period of inactivity is
over
six years - they filed their replies to the plaintiffs' request for
further particulars in January and March 2008.
[43]
In
Krakauer
v
Katz
[13]
the
English
Court
of Appeal
held as
follows:
"
There
was
no
difficulty
in
proceeding with
the
action. The defendant's solicitors
were on
the record
all
the
time.
Even if
the plaintiff
could
not proceed with
the
claim
during
the
war
owing
to
various
difficulties,
there
was no
reason why
he
should
not
have
pursued
it
during
the
8 years
since
that time.
I
am
disposed
to
agree
with
what
counsel
for
the
defendant
suggested, namely that,
by
analogy
with
the
Limitation
Act
1939,
if
a
plaintiff
allows
an action
to go
to
sleep
for
6 years,
the
court
in
its
discretion
will usually
dismiss the
case
for
want
of
prosecution,
unless the
plaintiff can
show some
good reason why
he
should
be
allowed to
go
on
with
it.
In
this
case,
it
is
not 6
years, but 12 years,
and
I
am
quite
clear
that
after
this
length of
time
the
plaintiff
ought not
to be
allowed
to go
on
with the action."
[44]
In
Hunt
v
Engers
[14]
the
cause
of
action was
based
on
a
money
claim.
The
summons
was
six
years
old.
The
court
dismissed
the
action. In
Commercial
Bank
of
South
Africa
v Schreiner
[15]
the
court
dismissed
the
claim for
money
because the
summons
was
five
years.
In
Golden
International Navigation
SA
v
Zeba
Maritime
Co
Limited;
Zeba
Maritime
Co
Limited
v
MV
Visvliet
[16]
the
plaintiff's
cause
of
action
had
arisen
more
than
a
decade
earlier,
but for five years the plaintiff had not taken any steps to bring the
matter to finality. The court ordered that the plaintiff's
action be
struck out.
[45]
In
Molala
v Minister of Law and Order and Another,
[17]
summons
had been
issued in March
1987
and
a
request
for
further
particulars
delivered
a
month
later.
Nothing
then
happened until further
particulars
were delivered
in
September
1991 -
a delay of
four and a half years. The plaintiff's action was dismissed
pursuant to
a hearing held in November 1991.
[46]
The lengthy delay in prosecuting the action in the current matter is
exacerbated by the fact that the plaintiffs' alleged cause
of action
arose in 1999, some fifteen years ago and seven years prior to the
issue of summons.
[47]
Even after his appointment as provisional liquidator on 18 November
2003 and his appointment as liquidator on 24 February 2004,
Mr
Berrange waited just less than three years before issuing summons
against the defendants on 14 November 2006.
[48]
The plaintiffs' concession of inordinate delay aside, we submit that
it is clear that the delay has
been
inordinate
and
unreasonable and
falls
on
the
wrong side
of
the
line
referred to by Salmon LJ
in
Allen.
[18]
Prejudice
to the defendants
Their
right to a fair trial has been compromised
[49]
In their founding affidavit the defendants set out in detail
the prejudice they will suffer if the
plaintiffs
were allowed to continue with their action. Save limited arguments
(dealt with below), Mr Berrange and the other defendants
do not deny
and cannot gainsay the prejudice the defendants have suffered and
will suffer.
[50]
The sixth defendant, VPI, no longer conducts a legal practice with
three directors. Mr Vorster is the only director and occasionally
receives instructions he is able to accept. The defendants are of
advanced age and in differing states of health. Mr Mason-Jones
is 67
years of age, semi-retired and of fragile disposition. Mr Pereira is
84 years of age, frail and in recent years underwent
open-heart
surgery. The rigours of conducting a trial can only be adverse to the
health of elderly men, in particular where they
will be required to
be tested on events that took place many many years ago. It is
grossly unreasonable and untenable after such
an excessive delay to
subject the defendants to a trial at this stage - no fair trial can
take place.
[51]
Mr Scott is 60 years of age, is no longer in full time employment and
does not have a regular income. Mr Burrell is 50 years
old, has a
modest income, which is not sufficient to fund litigation against the
plaintiffs. The extensive passage of time has
resulted in the
financial position of most of the defendants changing adversely. None
of them still have the income they had fifteen
years ago when the
Brenston Agreement was concluded, or eight years ago when the action
was instituted, or seven years ago
when pleadings
closed, to fund commercial litigation against a liquidator not
personally liable for funding litigation
costs. The plethora of
issues in dispute between the parties, the serious allegations of
fraud, the number of defendants
with differing defences and
different facts applicable to them make it likely that a trial (if
the plaintiffs are permitted
to proceed with it) will be a lengthy
one. Just to answer the request for further particulars, the
plaintiffs say that they had
to review
"hundreds
of
thousands
of pages
of
documents" .
Self-evidently, the costs of
running such a trial will be enormous. The prejudice to those
defendants who will not have resources
to fund such a long trial are
manifest.
[52]
It is common knowledge amongst practitioners that trial dates
in this division are only being allocated
twelve to
eighteen months hence. A trial of the magnitude of the current one
will be designated a special trial as contemplated
in the practice
manual of this division. That requires a written application for a
special trial date to be made to the office
of the Judge President. A
special trial is likely to be allocated even further into the future
then the current twelve to eighteen
month delay. Thus to compound the
delay already experienced, it is anticipated that the defendants
would have to wait a further
two years before a trial date might be
allocated. The prejudice referred to will be exacerbated to a great
extent.
[53]
The inordinate and inexcusable delay by Mr Berrange in pursuing his
alleged claims has resulted in all relevant documents in
the
possession of VPI no longer being available to the defendants. When
the agreement which is the subject matter of the action
was concluded
VPI was located in offices in Fredman Drive, Sandton. Prior to the
issue of summons seven years later, VPI had relocated
to premises in
Sandown Valley Crescent. In that move, many of the documents relating
to matters initiated during or prior to 1999
were destroyed. In 2011
VPI again moved offices from Sandown Valley Crescent to Bryanston and
in that process all files and documents
older than five years were
destroyed. The result is that all files and documents that might be
or become relevant to the defendants
in the action are not available
- they have been destroyed. It would be extremely prejudicial to
force the defendants into a trial
after such a lengthy hiatus
(without warning that the hiatus might one day end) when all of their
documents which are relevant
or could possibly be relevant have been
destroyed: it is difficult to conceive of greater prejudice to a
defendant.
[54]
When the Brenston Agreement was concluded Mr Scott and Mr Burrell had
ready access to the books and records of NRBH. NRBH has
since then
been liquidated and as a consequence neither Messrs Scott nor Burrell
have access to the books and records of
NRBH relevant to the
Brenston transaction.
[55]
Neither of Messrs Scott nor Burrell has maintained contact with
the erstwhile directors of NRBH or the erstwhile
management team of NRB which benefited from the transaction
with Saambou. Two of the directors with whom Mr Scott had personally
discussed all the details of the Brenston transaction have died. Mr
Scott does not know the whereabouts of any of all the other
erstwhile
directors of NRBH. Material witnesses who would have been available
to the defendants are by reason of the inordinate
delay
no longer available. Thus the long passage of time prejudices
the defendants even further: leaving aside the
notorious inability of
witnesses to recollect detail (in particular after such a long period
of time), and also leaving aside whether
or not witnesses might be
able to located, witnesses who would have been able to assist the
defendants are dead.
[56]
Mr Berrange must, at the time of issue of summons, having regard to
the (already at that stage) seven year delay, been aware
that the
defendants would be increasingly prejudiced as time went by in
relation to the availability of documents and witnesses
- he was
reckless as to the ability of the defendants to one day be in a
position to fairly conduct a trial far in the future.
Preservation
of documents and evidence
[57]
Mr Berrange contends that the defendants will not
be prejudiced by the unavailability
of
documents because they will have access to all the relevant documents
which his attorney has carefully preserved. He relies
in this regard
on Mr Vorster's letter of 5 July 2004, annexure R to the founding
affidavit, which said that Mr Vorster was preparing
a bundle of "all
such documents".
[58]
The defendants are most certainly prejudiced by the unavailability of
documents. Reliance on Mr Vorster's letter of 5 July
2004 is
misguided and the conclusion reached unjustified. Mr Vorster did not
suggest that the documents in his possession were
the only documents
relevant to the issues and in other parts of the letter (not quoted
in Mr Berrange's answering affidavit), Mr
Vorster specifically
recorded that he was not in possession of all relevant documents and
suggested he search for them elsewhere.
[59]
When Mr Vorster prepared the bundle of documents mentioned in his
letter of 5 July 2004, he was unaware of the causes of action
being
plotted; he and Mr Mason-Jones were summonsed to an interrogation in
August 2004 in the belief that their evidence was
required to
assist Mr Berrange in some or other cause unrelated to potential
claims against the defendants. They were not aware
that Mr Berrange
was in fact contemplating serious allegations of fraud, unethical
conduct and dishonest conspiracies
based solely on his
ex
post
facto
interpretation
of the transactions referred to
in the particulars of
claim.
Consequently he only searched for and disclosed documents relevant to
the Brenston transaction. He did not search
for, disclose or retain
any documents relevant to the refutation of the claims Mr Berrange
advanced much later.
[60]
None of the defendants was aware that Mr Berrange
was being selective in the witnesses
called for
interrogation at the enquiry.
60.1
He did not call all of the Brenston directors for interrogation in
his investigation of
the Brenston transaction and did not
ask all of them for the disclosure of relevant documents. Although
Mr Scott had
told Mr Vorster that he had discussed the
Brenston transaction individually with each
of the directors of NRBH he did not attempt to secure
copies of documents in possession of Mr Burrell or Mr Scott relevant
to the discussions which Mr Scott had with the directors of
NRBH. Mr Scott did not keep copies of his contemporaneous notes
of
discussions with his fellow NRBH directors, nor did he
make any effort to secure copies of the notes and records
which might
in 1999, some fifteen years ago, have been maintained by him or
any of those directors.
60.2
To the best of the defendants' knowledge, Mr Berrange did not call
any of the directors of NRBH
for interrogation, nor seek the
disclosure of relevant documents from any of them, nor did he ask any
of them, when he had the
opportunity to do so ten years ago, why they
approved and authorised the execution of the Brenston agreement
Similarly, Mr Berrange
did not seek disclosure of relevant documents
from Saambou nor did he call any of the directors of Saambou for
interrogation when
he had the opportunity to do so ten years ago.
60.3
Mr Berrange did not interrogate the Registrar of Banks (the person
who occupied that post
in 1999) on any topics mentioned in the
replying affidavit.
60.4
In addition, Mr Berrange did not interrogate the erstwhile Curator of
NRB ten years ago when
he had the opportunity to do so in the course
of his Inquiry.
[61]
It is clear that Mr Berrange's collection of evidence and
documents was purposely selective, self-serving and woefully
incomplete. Fifteen years after the event, the defendants can
no longer obtain all the relevant documents from the erstwhile
directors of NRBH (liquidated in 2003) or from any of the directors
of Saambou (liquidated over ten years ago in November 2003)
or from
the Registrar of Banks in office in 1999 or from the erstwhile
Curator of NRB. This prejudice is overwhelming.
No
fair trial can ever take place where one party is precluded by
the other's admitted gross inaction from presenting
all relevant
documents and evidence.
[62]
In addition, the majority of the directors of NRBH and Saambou at the
time of the Brenston transaction in 1999, have either
passed away or
are no longer capable of attesting to the allegations now made
by Mr Berrange. It is a matter of public knowledge
that the Registrar
of Banks in 1999, the then curator of NRB, and even the Receivers who
first took office in November 1999, have
all long since retired. The
defendants would thus be irremediably prejudice in the presentation
and conduct of their defence.
Mr
Berrange's excuses
[63]
The defendants annexed a letter from plaintiffs' attorneys dated
23 April 2014 wherein it argues that
the delay does
not amount to abuse of the process of the court.
[64]
To me, from the reading of the excuses as a whole, it is clear that
the real reason is that the plaintiffs first wanted to
pursue other
claims where it had good prospects of success. I quote that part of
the letter, annexure "HV4" to the founding
affidavit:
"Prospects
of success
3.
It
is,
in
our
view,
unconscionable
for
a
firm
of
attorneys
(Vorster Pereira Inc)
who
has acted for
a
client (Holdings)
and
other companies in
a
group
(
the
Samsudin
group)
over
a
period of
many years
and
for
which
they
charged
millions
of
rands
in
fees
to
conceal
the
fact
that
it
was
involved
in
a
fraudulent scheme
where
the purchase
price
of
R17,3
million
for
the
NRB
shares
was
diverted
to
a consortium comprising its own partners and the
former senior management of NRB"
4.
The defences
advanced
by your
client
and
others
include:
4.1.
they
did
not
act
for
Holdings
(Plea
-
para 12.2)
whereas
the documents
demonstrate
otherwise;
4.2.
they
owed
no
duty
to disclose
the
scheme
(Plea
-
para
41.2) whereas the documents
demonstrate
and the
law requires
otherwise.
5.
Mason-Jones and
Vorster gave
evidence
at
the
s
417
enquiry.
They made
it plain
that
they
owed
no
fiduciary
duty
to
Holdings
in
regard
to the
Brenston
transaction.
6.
Your
clients' lengthy request for
further
particulars
necessitated
our having to
review documentation
in
regard to
a
wide
range
of
issue, including:
6.
1. "when,
in
relation to
what
matters and what
purpose"
your clients
represented Holdings, NRB,
Brenston, Rozan, VPM, Samsudin, SMG
and
Saambou,
facts
perculiarly within
your clients'
knowledge
(request
for
further
particulars
-
para 13); and
6.2.
requiring
details
of
the
remaining
liabilities
of
Holdings
which
included the R207
million claim (request for further particulars
-
paras
71
&
72).
7.
The approach
adopted
by
your
clients,
which
is
legitimate,
resulted
in our having
to review
hundreds
of
thousands
of pages
of
documents.
8.
The documents
have
exposed
the true substance
of the relationship between
Vorster
and Mason-Jason and their clients.
9.
Despite
the
fact
that
cases
against
professional
men,
particularly
for fraud or
breach of
a
fiduciary duty, are
notoriously
difficult to
prove and
are
notoriously
expensive
to
run, we
have
advised the
receivers
that
the
liquidators of
Holdings
have
good
prospects of
success
against
your
clients
and,
as
a
consequence, NRB
should
continue
to fund
the
Brenston
action."
[65]
The "wait and see" approach by the plaintiffs is best set
out in paragraph 14 of that same letter where it is stated
that
"if
the
action
against
the
auditors
had proceeded to
trial
and
been
successful,
then
the
claim
by NRB against Holdings
would
have
been extinguished.
In
that
event,
there
would
have
been
no
reason
for
the
receivers
of
NRB
to fund
the Brenston
action".
[66]
Whilst the plaintiffs had these other claims to pursue and elected to
do so this case was purely put on the back-burner without
any
communication about that to the opposing attorneys. I cannot think of
two more important considerations in deciding to pursue
litigation
than the merits and the costs of litigation i.e. proving the case
against the would be defendants. That the plaintiff
went through
this exercise is clear from paragraph 9 of "HV4":
"9.
Despite
the
fact
that
cases
against
professional men,
particularly
for fraud or
breach
of
a
fiduciary
duty, are
notoriously
difficult to
prove and
are
notoriously
expensive to
run, we
have
advised the
receivers that the liquidators
of Holdings
have good prospects
of
success against your
clients and, as
a
consequences,
NRB should continue to fund the
Brenston action."
[67]
The other excuses offered by Mr Berrange are so weak that I do not
deem it necessary to discuss these.
The
role of the
courts
[68]
It is important to bear in mind that a decision about undue delay not
only involves the interests of the litigating parties
but also that
of the court and in a broader sense, the general public.
[69]
The rule about undue delay is not only a rule of practice but a rule
of law especially in the field of reviews and in a case
like the
present.
[70]
The following is stated in Hiemstra & Gonin
Trilingual Legal
Dictionary,
2nd edition, (1986):
"interest
reipublicae ut
sit
finis litium
(cf.
Dig. 41.10.5; et infra
ne
dominia)
dit
is
in die
staatsbelang
dat
daar
'n einde
aan
gedingvoering
kom //
it is in
the interest of the state that litigation be
finalized."
[19]
[71]
As it appears in the Digesta it has been part of our legal system for
over 1000 years.
[72]
In the context of a review it was referred to by the Appellate
Division as follows:
"Dit
is
wenslik
en
van belang
dat
finaliteit in
verband
met geregtelike
en
administratiewe
beslissings
of
handelinge
binne
redelike
tyd
bereik
word.
Dit
kan
teen
die
regspleging
en
die
openbare
belang
strek
om
toe
te
laat
dat
sodanige
beslissings
of
handelinge
na
tydsverloop
van
onredelike
fang
duur
tersyde
gestel
word
-
interest
reipublicae
ut sit
finis
litium,
(Sien
Sampson
v SA
Railways &
Harbours,
1933
K.P.A.
335 op
bl.
338.) Oorwegings
van
hierdie
aard
vorm
ongetwyfeld
'n
deel
van
die
onderliggende
redes
vir
die
bestaan van die reel.
"
[20]
[73]
Indications are that this rule will be much more strictly enforced in
future. There is a judicial case flow management committee
under the
leadership of the Chief Justice. This committee has drafted a rule
about superannuation. It is to be inserted in either
the Uniform
Rules of Court or in the Superior Courts Act. The full text reads as
follows:
"DRAFT
RULE RE SUPERANNUATION FOR INSERTION IN UNIFORN RULES OF COURT;
ALTERNATIVELY, IN THE SUPERIOR COURTS ACT 10 OF 2013
(1)
Subject
to
the
further
provisions
of
this
rule,
if
an
application
in
writing has
not
been
made
to
the
registrar
by
any
party to
a
case
within
two years
of
the
date
of
the
issue
of
the
summons
or
notice
of
motion
for the setdown
of
the
case
for
hearing,
or if
the matter
is
not
ready
at
the expiry
of
that
period
for
reference
by
the
registrar
to
case management
in
terms
of
rule
37A,
as
the case might
be
-
(i)
the
initiating process
in
the
action or
the
application shall be deemed
to
have
become
superannuated; and
(ii)
the
registrar
shall,
after
giving
the parties 15 days'
written
notice,
archive
the court
file
and remove
the case from
the
administrative
record
of pending
matters.
(2)
Any
party
to
a
case
in
which
notice
has
been
given
by
the
registrar
in terms
of
sub-rule (1)
may apply
to
a
judge
in
chambers
on
notice
to the
other
parties
to
the
case,
within
15 days
of
the
date
[of]
the
notice
by the
registrar, and on good cause shown, for an extension of time within
which to render the matter ready for an application to
be made to the
registrar for the setdown of the case for hearing
(3)
A
judge
seized of an application
in terms of sub-rule (2) may
-
(a)
grant the application
on such terms as he or she
may consider meet, or
(b)
refer
the
application
for
argument
in
open
court
on
appropriate directions,
or
(c)
refuse the application, and
(d)
make such order as to costs as may be meet.
(4)
Any order
made
in
terms
of
sub-rule (3)(a)
granting an
application
in terms
of
sub-rule
(2) must
incorporate
a
timetable
for
the
further
conduct
of
the
matter
that
must
include
provisions
for
a
date
by
which application must have been made
in writing to the
registrar
for the
setdown of the case for
hearing.
(5)
Any matter
in
which
an
application in
terms
of
sub-rule (2)
has
been granted must
be
referred by the
registrar to
a
judge
for
case management,
in
which
event the
provisions
of rule 37A shall apply
mutatis mutandis."
[74]
I emphasise that it is a draft rule subject to further debate but
refer to it to show the tendency to regulate delay in an
even
stricter and, importantly, a formal fashion.
[75]
Earlier in the judgment I described the delay as "extreme".
Other synonyms that will do are "very great",
"exceptional", "very severe", "serious"
and "far from moderate". Litigation in this fashion
cannot
be tolerated. The defendants are entitled to dismissal of the action
on account of the serious and inexcusable delay of
prosecution.
Order
1.
The defendants' stay application is upheld.
2.
The plaintiffs' action is dismissed with costs.
3.
All costs include costs of two counsel.
_____________________
A.
A. LOUW
Judge
of the High Court
[1]
Western
Assurance Co v Caldwells's Trustee
1
918
AD 262
at
271;
Corderoy
v Union Government (Minister
o
f
Finance)
1
918
(512) at 519;
Fisheries
Development Corporation
o
f
SA Limited v Jorgensen and Another; Fisheries Development
Corporation
o
f
SA v AWJ Investments (Pty) Limited and Others
1
979
(3) SA 1331
(W) at
1338F to G;
Beinash
and Another
v
Ernst and Young and Others
1
999
(2) SA
1
1
6
(CC) at paras 10
and
1
7;
Cassimjee
v Minister
o
f
Finance
2014
(3) SA
1
98
at para
8
[2]
Ravden
v Beeten
1
935
(CPD) 269 at 276;
African
Farms and Townships Limited v Cape Town Municipality
1
963
(2) SA 555A
at 565D to D;
Golden
International Navigation SA v Zeba Maritime
2008
(3) SA 10
at para 9
[3]
Fisheries
Development
Corporation
v
Jorgensen
and
Another
1979
(3) SA 1331
(W)
at
1339E to
F;
Bisset
and
Others
v
Boland
Bank
Limited
and
Others
1
991
(4) SA
603
(D) at
6080 to
E
[4]
Cassimjee
v Minister of Finance
20
1
4
(3) SA
1
98
(SCA) at para
1
0
[5]
See
in this
regard
Verkouteren
v
Savage
1
9
1
8
AD
1
43
at
1
44;
Schoeman
en
Andere
v
Van
Tonder
1
979
(
1
)
SA
301
(O) at 305C to
E;
Kuiper
and
Others
v
Benson
1
984
(
1
)
SA 474
(W)
at 476H
to 4778;
Mola/a
v
Minister
o
f
Law
and
Order and Another
1
993
(
1
)
SA
673
(W)
at 6768 to
6791;
Bisset
and
Others
v
Boland
Bank
Limited
and Others
1
991
(4) SA 603
(D) at 608C to
E;
Sanford
v Haley
NO
2004
(3) SA 296C
at
para 8;
Gopaul
v
Subbamah
2002
(6)
SA
5510
at
558F to J;
Golden
International
Navigation
SA
v
Zeba
Maritime
Co
Limited; Zeba Maritime Co Limited
v
MV
Visvliet
2008
(3) SA
10
(C); Zakade
v
Government
of the
RSA [2010]
JOL
25868
(ECB)
[6]
Sanford
v
Hayley
NO
2004
(3) SA 296
at
para 8
[7]
2014 (3) SA
1
98
(SCA) at para
1
1
[8]
In
Cassimjee
v Minister
o
f
Finance
20
1
4
(3) SA
1
98
(SCA)
a
t
pa
ra
1
2
[9]
[
1
968]
1All
ER 543
(CA)
at
561E to
H
[10]
Allen
v
Sir Alfred
McAlpine
&
Sons
Ltd
[
1
968]
1ALL
ER 543
(CA) at 555 in fine -
to 5560
[11]
[
1
978]
AC 297 (HL)
[12]
(
1
989)
1AC
1
1
97
(HL)
1
203
[13]
[
1
954]
1All
ER
244 at 246
[14]
1
921
CPD 754
[15]
1
929
SWA 38
[16]
2008 (3) SA 10 (C)
[17]
1
993
(
1
)
SA 673
(W)
at 676B to 6791;
[18]
Allen v
Sir
Alfred
McAlpine and
Sons
Ltd
[
1
968]
1All ER 543
(CA)
at 561E
[19]
At p216
[20]
Wolfgroeiers
Afslaers
vM
unisipaliteit
van
Ka
a
pstad
1
978(1)
SA 13 (AA) at p 41 E-F