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[2015] ZAGPPHC 340
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Lumeka Mining (Pty) Limited v Optimum Coal Holdings Limited and Others (75356/2013) [2015] ZAGPPHC 340 (6 March 2015)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION. PRETORIA)
CASE NO: 75356/2013
DATE: 6 March 2015
IN THE MATTER
BETWEEN
LUMEKA MINING (PTY)
LIMITED
................................................................................
Respondent/Plaintiff
and
OPTIMUM COAL
HOLDINGS
LIMITED
................................................................
First
Defendant/Applicant
WARRIOR COAL
INVESTMENTS (PTY)
LTD
.................................................
Second
Defendant/Applicant
ELIPHUS
MOKOE
....................................................................................................
Third
Defendant/Applicant
CRIMSON KING 303
(PTY)
LTD
...........................................................................................
Fourth
Defendant
JUDGMENT
LEGODI
J
INTRODUCTION
[1] Three
interlocutory applications were simultaneously heard before me. The
first two applications were launched by Warrior Coal
Investments
(Pty) Ltd (Warrior Coal) and Eliphus Monkoe. The other application
was launched by first defendant Optimum Coal Holdings
Ltd (Optimum).
Optimum is the first defendant in the main action launched by the
plaintiff, Lumeka Mining (Pty) Ltd (Lumeka). On
the other hand,
Warrior Coal and Monkoe are the second and third defendants in the
main action.
[2] The
interlocutory application by Optimum is an exception to Lumeka’s
particulars of claim. Optimum is also having an interest
in the
application for security for costs by Warrior Coal and Monkoe which
application is an alternative to its main application.
The main
application by Warrior Coal and Monkoe is that they want Lumeka to be
declared a vexatious litigant.
BACKGROUND
[3] On the 29
November 2007, Lumeka instituted motion proceedings in the South
Gauteng High Court. It was motion proceedings against
many
people/entities including Warrior Coal, Mokoe and Optimum. In the
proceedings a relief was sought as follows:
“
1.
Ordering the ninth respondent and/or the second respondent to take
steps forthwith:
1.1 to cause 90%
(ninety percent) of the shares in the first respondent be transferred
to the applicant and 10% (ten percent) of
the shares in the first
respondent to be transferred to the fifth respondent; and
1.2 that would
result in the resignation of the ninth respondent as director of the
first respondent
2. Declaring
that:
2.1 the
shareholders agreement in respect of the fourth respondent, a copy of
which is Annexure “IRM2” to the founding
papers, has not
lapsed and is of full force and effect amongst the parties thereto;
and
2.2
the first
respondent is entitled to 30% (thirty percent) of the issued share
capital of the fourth respondent.
3. Pending the
issue to the first respondent of 30% (thirty percent) of the issued
share capital of the first respondent, the second,
third, fifth,
seventh, eighth, ninth, tenth, eleventh and twelfth respondents be
interdicted from alienating, encumbering or otherwise
dealing with
shares in the fourth respondent,
4. Ordering the
second respondent and such other respondents who oppose the
application to pay the costs thereof.
5. Granting the
applicants such further or alternative relief as this court deems
meet”.
[4] The ninth and
the second respondents referred to in paragraph 1 quoted above were
Warrior Coal and one Thomas Ignatius Bosman
respectively. Monkoe and
Optimum were cited as the third and fourth respondents respectively.
On the 27 March 2008 Sapire AJ dismissed
the application with costs.
[5] On the 24
February 2010 Lumeka instituted action proceedings against Optimum,
Warrior Coal and Mokoe as the first, second and
third defendants
respectively In the action, Lumeka claimed the amount of R5 940 000
000 centered around a shareholding agreement
concluded between
Warrior Coal, Liberty Lane Trading 25 (Pty) Ltd, (now Optimum),
Monkoe, and a company known as Chrinson King
Property 303 (Pty) Ltd
(CKP), ‘confidentiality undertaking concluded on the 22
November 2006 with BHP Billiton Energy Coal
(BECSA) and the envisaged
signing of the memorandum of understanding (MOU). The MOU was to be
concluded by 19 March 2007 in accordance
with the alleged
shareholders agreement concluded on 19 November 2006.
[6] On the 8 April
2010, Warrior Coal and Mokoe filed notices in terms of Rule 23(1) and
30 of the Uniform Rules. In the notice,
Lumeka was informed that its
particulars of claim disclosed no cause of action and that they were
vague and embarrassing. Lumeka
was called upon to remove the
embarrassment within 15 days. When Lumeka failed to heed to the
notice, Warrior Coal and Mokoe on
the 14 May 2010 filed an exception
to the particulars of claim. On the 8 April 2010, Warrior Coal and
Monkoe also filed notice
in terms of Rule 47 calling on Lumeka to
furnish security for costs in the amount of R250 000.
[7] The exception
and security for costs application were heard on the 8 October 2010.
Classen J upheld the exception and granted
Lumeka leave to amend its
particulars of claim within 10 days failing which its claim was
automatically to be struck out. Lumeka
was further ordered to give
security for costs. Costs order was granted against Lumeka.
[8] On the 8
December 2010 Warrior Coal and Monkoe caused bill of costs for the
exception and application for security to be taxed.
The bill was
allowed in the amount of R210 794.04 which amount was paid to Warrior
and Monkoe’s attorneys and thus leaving
a balance of R39 205.96
to the credit of Lumeka.
[9] On the 20
October 2010 Lumeka served a notice of intention to amend its
particulars of claim. On the 9 November 2010, Warrior
Coal and Monkoe
objected to the proposed amendment on the basis that if it were
allowed, Lumeka’s particulars of claim would
remain to be
exciapible, vague and embarrassing and disclosing no cause of action.
Having been served with notice of objection
on the 9 November 2010,
Lumeka was supposed to have filed an application for leave to amend
by not later than the 23 November 2011.
It did not.
[10] On the 4 March
2011, Lumeka’s attention was drawn to the fact that in terms of
Classen J’s order of the 6 October
2010, its claim had been
struck out and dismissed. Lumeka was further called upon to pay costs
associated with its failure to proceed
with the matter. When no
response was forthcoming and in order to obtain finality and
certainty regarding Lumeka’s claim
being struck out, Warrior
Coal and Monkoe instituted an application on the 30 May 2011. In the
application, they sought a declaratory
order to the effect that
Lumeka’s claim had been struck out in terms of Classen J’s
order.
[11] Lumeka opposed
the application. On the 5 July 2011 it filed the answering affidavit.
At the same time, it filed notice of intention
to amend its
particulars of claim in terms of Rule 28. Warrior Coal and Monkoe saw
the latter move as irregular because as at that
time, Lumeka’s
claim had automatically been struck out or dismissed and that there
was therefore nothing to amend. On the
20 July 2011, they filed
notice in terms of Rule 30(2)(b) calling on Lumeka to remove the
purported notice to amend the particulars
of claim. Lumeka did not
respond. Warrior Coal and Monkoe brought an application to declare
the intended amendment irregular. On
the 20 September 2011, the
application was granted on an unopposed basis. Lumeka however still
sought to pursue the matter. On
the 16 November 2011 it filed
supplementary papers putting up new grounds on which it claimed it
should be granted the opportunity
to amend its particulars of claim.
The move was opposed by Warrior Coal and Monkoe. At the hearing on
the 24 November 2011, Lumeka
abandoned the supplementary affidavit,
but continued to oppose the declaratory proceedings regarding the
dismissal of its claim
as per the order of Classen J.
[12] On the 25
November 2011, a declaratory order confirming the striking out of
Lumeka’s claim was granted. Warrior Coal
and Monkoe incurred
significant costs. The bill of costs on the Rule 30 application was
taxed at R15 216.21. Bill of costs for
the declaratory proceedings
was allowed at R208 412.77. As on the 20 May 2014, being the date the
founding affidavit was deposed
to in the present proceedings the
taxed costs were not paid.
[13] On the 15
December 2011, Lumeka applied for leave to appeal against the order
granted on 25 November 2011. The application
was set down for hearing
on the 15 April 2013. Lumeka failed to attend. The application was
accordingly dismissed by default with
costs. Bill of costs was taxed
in the amount of R47 139.89. These costs too were not paid and they
remain unpaid.
[14] On the 5 June
2012 payment for taxed costs in respect of Rule 30 application was
demanded. The issue of costs was later suspended
in the light of
Lumeka’s leave to appeal. On the 9 December 2013 a further
demand was made on Lumeka to pay the cumulative
taxed costs for the
Rule 30 application, the declaratory proceedings, and the leave to
appeal in the amount of R270 768.87. No
response was forthcoming.
[15] Instead, the
present action was instituted against Optimum, Warrior Coal, Monkoe
and Crimson King Property 3030 (PTY) Ltd (CKP).
Lumeka’s cause
of action is based on the alleged oral agreement concluded during
November 2007, Shareholder’s Agreement
concluded on the 19
November 2006 and referred to earlier this judgment, CKP Shareholders
Agreement concluded on the 11 January
2007 and confidentially
undertaking with BKP Billiton Energy Coal mentioned earlier in this
judgement.
[16] On the 19
February 2014, in a letter addressed to Lumeka’s new attorneys
of record, historical background to the dispute
was alluded to. A
demand was made for payment of outstanding amount of costs owed to
Warrior Coal and Monkoe. The furnishing of
security for costs in the
present action, in an amount of R500 000 was also demanded. On 24
February 2014, Lumeka’s new attorneys
responded by suggesting
that R230 000 as a security for costs should be sufficient and that a
greater amount would be prejudicial
to Lumeka’s ability to
pursue its claim. They also suggested that an amount of taxed costs
should be deducted from the security
for costs previously furnished
in the amount of R250 000. On the 5 March 2014 it was explained to
Lumeka’s attorneys that
the amount had been used to settle
costs associated with successful exception and that only R42 379.17
remained to the credit of
Lumeka and that, that was insufficient to
settle R220 768.87 outstanding in respect of the Rule 30 application,
the declaratory
proceedings and application for leave to appeal.
[17] On the 7 March
2014, Lumeka attorneys requested for a meeting to discuss the issue
of payment of costs and security for costs.
The meeting was held on
25 March 2014. During that meeting, parties agreed to suspend the
litigation instituted in January 2014
until 3 April 2014. Lumeka's
attorneys were promised to be provided with reconciliation of
outstanding taxed costs. Upon receipt
thereof, Lumeka’s
attorneys were to revert with proposals thereto. On the 28 March
2014, Lumeka’s attorneys were provided
with reconciliation of
all outstanding costs. An amount of R336 143.44 was reflected
outstanding as on the 28 March 2014. Lumeka’s
attorneys’
responded on the 3 April 2014. They requested more detail account of
the outstanding costs which they claimed
were exorbitant. These costs
were already taxed. An amount of R500 000 as a security for costs was
said to be unreasonable. It
was stated in the respondent’s that
when taking into account Lumeka’s circumstances, it was not
practically implementable
and that Lumeka did not have that kind of
amount for security. On the 4 April 2014 complete copies of the taxed
bill of costs were
provided to Lumeka’s attorneys. They were
also informed that Warrior Coal and Monkoe had instructed that legal
steps be taken
to ensure that the taxed costs were recovered. There
was no response to the demand.
[18] On the 7 April
2014 the Sheriff attended at the office of Lumeka’s attorneys
to execute the writs in respect of judgment
on taxed costs. The
sheriff was sent there because during the meeting of the 25 March
2014, Lumeka’s attorney Mr Gugulethu
Oscar Madlanga allegedly
confirmed that an amount of R500 000 was held in trust for Lumeka
with a view to meeting Lumeka’s
obligations regarding costs.
When the Sheriff arrived at the attorney’s offices, he was
allegedly told that Lumeka was not
known to them and that no funds
were held on behalf of Lumeka. However, on the same date, Lumeka’s
attorneys in question
delivered notices in terms of Rules 26 and
35(14). On the 10 April 2014 Lumeka’s attorneys addressed a
letter to Warrior
Coal and Monkoe’s attorneys complaining about
service of the writs on them. On the 9 April 2014, the sheriff was
sent again
to deliver notice of attachment. In the attachment, the
sheriff sought to have attached an amount standing to credit of
Lumeka
in its attorneys’ trust account. The present
interlocutory application declaring Lumeka as vexatious litigant was
instituted
on the 23 May 2014.
VEXATIOUS
LITIGANT
[19] In
their notice of motion for vexatious proceedings, a relief is sought
in the following terms:
“
1.
Striking out the first respondent’s claims against the
applicants, on the basis that they are frivolous and vexatious;
2. declaring that
the first respondent is a vexatious litigant;
3. Ordering that
the first respondent shall institute no further legal proceedings
against the applicants unless it has first obtained
the leave of this
Honourable Court to do so;
4. Alternative to
prayers 1, 2 and 3 above, staying the action instituted under case
number 75356/2013 until the first respondent
has paid all outstanding
taxed costs that it owes to the applicants, and further until it has
provided security for costs in an
amount of R500 000.00, or such
alternative amount as may be directed by the Registrar of the above
Honourable Court in respect
of the action;
5. Costs of suit;
6. Further and/or
alternative relief”.
[20] In simple
terms, a vexatious litigation in a legal action is initiated without
probable cause by an individual who is not acting
in good faith for
the purpose of annoying or embarrassing an opponent. A legal action
that is not likely to lead to any procedural
result is classified as
vexatious litigation. Such litigation is regarded as frivolous and
will in appropriate cases result in
the dismissal of vexatious
litigant’s action.
[21] The provisions
under Vexatious Proceedings Act 3 of 1956 are relevant to the present
proceedings. Section 2(1 )(b) thereof
provides:
"(b) If, on
an application made by any person against whom legal proceedings have
been instituted by any other person who has
reason to believe that
the institution of legal proceedings against him is contemplated by
any other person, the court is satisfied
that the said person has
persistently and without any reasonable ground instituted legal
proceedings in any court or in any inferior
court, whether against
the same person or against different persons, the court may, after
hearing that person or giving him an
opportunity of being heard,
order that no legal proceedings shall be instituted by him against
any person in any court or any inferior
court without the leave of
the court, or any judge thereof, or that inferior court, as the case
may be, and such leave shall not
be granted unless the court or judge
or the inferior court, as the case may be, is satisfied that the
proceedings are not an abuse
of the process of the court and that
there is prima facie ground for the proceedings”.
[22] In paragraphs
60, 61 and 62 of Warrior Coal and Monkoe’s heads of argument,
is submitted as follows:
“
60.
An order can be granted in terms of that provision wherever a
litigant has persistently and without legal ground instituted
legal
proceedings against a party (or several parties).
61. We
submit that Lumeka’s conduct plainly warrants the grant of an
order. As we have set out above, it
has repeatedly pursued the
applicants (among others) for the same or substantially similar
relief - each time without success.
Its conduct is clearly vexatious.
62. Moreover,
Lumeka has itself recorded that it intends to keep instituting
similar proceedings. Its deponent
states that:
“
It
[Lumeka] will continue to engage with the courts regarding this
matter for the court to determine the merits of the case”.
In the absence of
an order from this Court, then, Lumeka will continue to bring
proceedings notwithstanding the fact that any purported
claim it may
have had, has long since prescribed”.
[23] However, on
behalf of Lumeka, it was contended that it would be inappropriate for
this court to grant an order in terms of
section 2(1) of Act 3 of
1956. Lumeka was entitled to be heard on merits and that is
constitutionally entitled to do so. In paragraph
33.2 of Lumeka’s
answering affidavit the point is raised as follows:
“
It
is unfortunate that the Respondent’s/Plaintiff’s exercise
of its rights is seen as a distraction. The merits of the
case were
never argued in any court of law. It is the Respondent / Plaintiff’s
constitutional right to seek justice, and,
to that extent, it will
continue to engage with the courts regarding this matter for the
court to determine the merits of the case...”
[24] True, whilst in
terms of section 34 of the Constitution everyone has a right to have
any dispute that can be resolved by the
application of the law,
decided in a fair public hearing before court of law, such a right
does not entitle a litigant to annoy,
embarrass his or her opponent
and or persistently pursue a litigation that is likely to have no
practical result.
[25] In the current
action proceedings, instituted during January 2014, Lumeka has come
back against Warrior Coal, Monkoe and Optimum.
It seeks to enforce
its alleged right in terms of the oral agreement of November 2006,
Liberty Lane Trading 251 (Pty) Ltd (Optimum)
Shareholders’
agreement concluded on 19 November 2006, CKP Shareholder’s
Agreement concluded on the 11 January 2007,
confidentially
undertaking allegedly concluded on the 22 November 2006. The main
relief is framed as follows:
“
1.
A Declaratory Order to the effect that Plaintiff is a direct
shareholder of CKP with corresponding rights and obligations;
2. A Declaratory
Order that the CKP Shareholder’s Agreement is valid and
enforceable at law:
3. A Declaratory
Order to the effect that Plaintiff is a lawful shareholder of Liberty
Lane Trading (PTY) Ltd with effect from the
19 November 2006 with all
the corresponding rights and obligations;
4. A Declaratory
Order that the Shareholder’s Agreement between Plaintiff and
Liberty Lane Trading (PTY) is valid and enforceable
at law;
5. A costs of
suit;
6. Further and/or
alternative relief’.
[26] Then in
paragraph 10 of the particulars of claim, Lumeka pleaded a breach of
contract and that as a result, Lumeka has suffered
damages. It
further pleaded that had it not have been for the breach, Optimum
Coal would have been obliged to declare a semi-annual
dividend of at
least 50% of the free cash flow of the company after provision has
been made for capital expenditure and working
capital in accordance
with the approved company budget and that 80% of such dividends would
have accrued to Lumeka for the financial
years, 2008, 2009, 2010,
2011 and 2012. It is said Lumeka is unable to calculate its damages
without the relevant company records
of Optimum, Warrior Coal and
CKP. As a result, Lumeka further seeks a relief as follows:
“
1
.
That the plaintiff
be given access to the audited and financial statements (income
statement, balance sheets, sales records for
both export and local)
of the first, second and fourth defendants for the year 2008, 2009,
2010, 2011, 2012 and 2013.
2. Costs of
suit”.
[27] Counsel for
Warrior Coal and Monkoe has proposed an order which this court can
make. It reads as follows:
“
1.
The first
respondent’s/plaintiff’s (“Lumeka’s”)
claims brought under case number 75356/2013 are struck
out.
2. Lumeka is
declared a vexatious litigant
3. Lumeka is
ordered to institute no further proceedings against all or any of the
defendants cited in case number 75356/2013 (that
is, Warrior, Monkoe,
Optimum Coal (PTY) Ltd and Crimson King (Pty) Ltd), whether for
declaratory relief, damages or any other type
of relief, concerning
its alleged rights to participate, directly or indirectly, in the
Optimum Coal Mine Complex, unless it first
obtains the leave of this
honourable Court to do so.
4. Lumeka and
Madlanga and Partners Inc (MPI) are ordered (with MPI being ordered
de bonis propriis) jointly and severally, to pay
Warriror’s and
Monkoe’s costs such costs to include to two counsel.”.
[28] The first three
prayers if they were to be granted, in particular prayers 1 and 3,
would make it unnecessary to deal with the
other applications. The
submission on behalf of Warrior Coal and Monkoe was that all the
failed proceedings were on the same purported
cause of action. I have
been asked to see those proceedings as frivolous and vexatious and
intended to harass, embarrass and or
to disadvantage all defendants
at a huge legal costs. I tend to agree.
[29]
Motion proceedings which were instituted in November 2007 ended up no
way. But when it did, it was at huge costs. It was conducted
in a
manner which suggested that Lumeka was not serious. The relief sought
in that application is quoted in paragraph 3 of this
judgment. The
application was dismissed by Sapire AJ in a very short judgment. In
the founding affidavit relating to present interlocutory
proceedings,
it was suggested that the dismissal was amongst others, on the
finding that Lumeka did not have
locus
standi.
I
can find no such finding in the judgment by Sapire AJ. The
application however resulted in the taxed costs of R162 727.25.
[30] Two years after
the dismissal of the first legal proceedings, Lumeka instituted
action proceedings, amongst others, against
Lumeka, Monkoe, Optimum
and CKP. Those were action proceedings instituted on the 24 February
2010 in terms of which an amount of
R5 940 000 000 was claimed in
damages based on the same transactions and or agreements relied upon
in the proceedings of November
2007. That is, its cause of action was
centered on its exclusion from Optimum Coal transactions. The
particulars of claim in the
second litigation were found wanting by
the defendants in particular Warrior Coal, Monkoe and Optimum. An
exception was noted.
The exception was upheld by Classen J on the 8
October 2010. Lumeka having been directed to amend its particulars of
claim within
a certain period, failed to do so. As a result, its
claim was automatically dismissed as per the order of Classen J. The
exception
came at huge costs. Warrior Coal’s bill of costs was
allowed and taxed at an amount of R210 794.04. The amount was paid
out
of security for costs given by Lumeka. The amount of security so
held was R250 000 and therefore a balance of R39 205.90 was left
to
the credit of Lumeka.
[31] Lumeka was
however not deterred by the apparent huge costs which were still to
be taxed. I say so, because on the 20 October
2010, it sought to
revive its claim which was automatically dismissed as per the order
of Classen J on 6 October 2010. It was automatically
dismissed
because Lumeka failed to meet the deadline to amend its particulars
of claim to which an exception was upheld. Lumeka
gave its intention
to amend the particulars of claim only on 20 October 2010. The notice
was objected to, as according to the defendants,
the proposed
amendment would still make the particulars of claim objectionable.
Notice of objection was served on Lumeka on the
9 November 2010. In
terms of Rule 28(5) it was supposed to respond thereto by 23 November
2010. However, Lumeka did not. It took
its time. As a result, on 30
May 2011 Warrior Coal delivered an application to declare Lumeka’s
claim automatically dismissed
as per the order of Classen J. It
became necessary to have certainty regarding the status of Lumeka’s
claim seen in the light
of Lumeka’s attempt to amend its
particulars of claim.
[32] The latter
application by Warrior Coal was of course opposed by Lumeka. At the
same time, Lumeka gave notice in terms of Rule
28 seeking to amend
its particulars of claim. That was construed as irregular step by
Warrior Coal. Rule 30 notice was as a result
delivered. There was no
response to Warrior Coal’s notice in terms of Rule 30. On the
20 September 2011 an order was granted
in terms of which Lumeka's
claim was finally declared to have been dismissed or struck out. That
again came at huge costs. For
example, Warrior Coal’s costs
were taxed at R15 216.21 in respect of Rule 30 notice and R208 412.77
in respect of declaratory
proceedings.
[33] One would have
thought Lumeka would give up. But, that was not to be. On the 15
December 2011 it launched appeal proceedings
against the dismissal of
its claim. The leave to appeal was set down on 15 April 2013, but
Lumeka failed to pitch up for court
and as a result its application
for leave to appeal was dismissed by default. One wonders why Lumeka
noted an appeal in the first
place. Probably it wanted to avert
payment of taxed costs. The application for leave to appeal did not
fail without costs. The
taxed costs came up to R47 139.89. By that
time, the previous costs taxed in the amount of R15 216.21 and R208
412.77 still remained
unpaid despite demands.
[34] Two years after
the last attempt by Lumeka to salvage itself, the present main
application was instituted against Optimum,
Warrior Coal, Monkoe and
CKP. The last action by Lumeka was on the 15 December 2011 when it
delivered an application for leave
to appeal against the dismissal of
its claim. The current action proceedings were instituted on 14
January 2014, more than two
years after the 15 December 2011. It is
also worth noting that the application for leave to appeal having
been noted on the 11
December 2011 more than a year passed before the
application could be enrolled for hearing. It was only enrolled on
the 15 April
2013 and by Warrior Coal. Lumeka gave no explanation for
all the delays. The current action proceedings remain objectionable.
I
deal later in brief with the exception noted by Optimum. It
suffices to mention that the same commercial transactions/agreements
as in the previous proceedings remain to be the basis for Lumeka’s
cause of action in the present proceedings.
[35] The main relief
sought is quoted in paragraph [26] of this judgment. The question
that comes to one’s mind is when did
Lumeka’s cause of
action arise? It wants damages from the defendants. When did the
intended amount of damages become due
and payable? The dispute with
regards to the commercial transactions arose as early as
April 2007 when the
suspensive conditions were not fulfilled. In November 2007 Lumeka
attempted to enforce the transactions and
when it failed, it tried
again in February 2010 when it sought damages in the amount of over 5
billion rand. The current action
is a complete u-turn to the 5
billion rand that was originally claimed. In its second claim, it
seeks an order in terms of which
certain information and or documents
should be provided. The information and or documents so required are
mentioned in paragraph
26 of this judgment.
[36]
Counsel for Lumeka suggested that the relief sought as quoted in
paragraph [26] above was meant to enable Lumeka to quantify
its
damages. On the other hand, the relief sought as quoted in paragraph
[25] as I see it, is to justify Lumeka’s
locus
standi.
The
effect of the current litigation if it was to be in favour of Lumeka,
would mean that at a later stage, Lumeka would institute
another
action proceedings in terms of which a claim for damages is made.
This would drag the defendants into another protracted
litigation.
The possibility of prescription in whatever claim or some of the
claims Lumeka might have against the defendants, is
not
inconsequential to the relief which is been sought by Warrior Coal
and Monkoe. Put this way, the alleged breach or breaches
which are
alleged in the present particulars of claim, were known to Lumeka as
far back as April 2007. Whatever damages Lumeka
might want to claim
from the defendants, would still be the basis for Lumeka alleged
cause of action. Therefore, the cause of action
based on the alleged
breaches would have arisen from the date of the breaches or from the
date Lumeka became aware thereof. Legal
proceedings which were
launched in November 2007 and February 2010 referred to earlier in
paragraphs 3 and 5 respectively attest
to such knowledge. The
defendants would therefore be entitled to raise a defence of
prescription and the intended action by Lumeka
would have no
practical effect.
[37] Having regard
to all of the above, I am satisfied that the relief sought by Warrior
Coal and Monkoe with regards to vexatious
litigations is justified.
One is mindful of not denying Lumeka’s constitutional right to
litigate in the present case. Limitation
of such right in the
circumstances of the case cannot be said to be unconstitutional. In
any event, the order as proposed and quoted
earlier in paragraph [27]
of this judgment, in my view, is conscious of Lumeka’s
constitutional rights. It is not a total
bar from the courts, but,
instead the exercise of such a right would be under judicial
oversight. I now turn to deal with the second
application.
SECURITY FOR
COSTS
[38] The application
for security for costs is supported by both Warrior Coal and Optimum.
I do not find it necessary to say much
about the application for
security for costs. Much has already been said in this judgment. The
following are taxed costs which
remain unpaid:
37.1 R15 216.21
being in respect of irregular proceedings in terms of Rule 30;
37.2 R208 412.77
being in respect of declaratory order regarding the striking out of
Lumeka’s claim;
37.3 R47 139.89
being in respect of the application for leave to appeal against the
striking out of Lumeka’s claim.
[39] Counsel for
Lumeka argued that the amount was not paid as Warrior Coal failed to
furnish a breakdown of the costs. Of course
this cannot be correct.
On the 28 March 2014, Lumeka’s attorneys were provided with
reconciliation of all outstanding costs.
On the 3 April 2014,
Lumeka’s attorneys requested yet more details on the
outstanding costs, claiming that the costs provided
were exorbitant.
That was despite the fact that those costs were taxed. The
outstanding amount as on the 28 March 2014 was indicated
as R336
143.44. The amount included interest.
[40] Lumeka sought
to question the right to claim security for costs. For example, in
paragraphs 29 and 30 of its heads of argument,
is argued as follows:
“
29.
Plaintiff / Respondent is an incola company. Previously under the old
Companies Act No. 61 of 1973 (the old “Act”)
security for
costs for incola companies was governed by section 13 of the old Act.
The new
Companies Act No. 71 of 2008
does not contain a similar
clause to
section 13
of the old Act.
30. In the
absence of a provision similar to section 13 of the old
Companies Act
in
the new
Companies Act, an
applicant in an application for security
for costs must found its entitlement to security for costs in the
principle of common
law. The matter is therefore governed by common
law. ”
[41] The Warrior
Coal and Monkoe are of course relying on their common law rights. I
do not see such a right as being curbed by
the provision of
section
34
of the Constitution referred to earlier in paragraph [24] of this
judgment. Fairness to all the parties should be a guiding factor.
It
cannot be fair to bombard an opponent with litigations and fail to
pay costs when such costs are granted and taxed. Lumeka in
the
present case and throughout the previous proceedings had shown a
tendency to be reluctant to pay costs. It still owes costs
in the
amount of over R300 000. Warrior Coal and Monkoe’ rights in
common law should therefore prevail. Even if I was to
be wrong with
regard to vexatious proceedings, the current action proceedings were
destined to be stayed pending payment of the
outstanding taxed costs
and secondly pending furnishing of security for costs. I now turn to
deal with the last application.
EXCEPTION
[42] Optimum
vigorously pursued the exception in the present interlocutory
proceedings. As I said earlier, my findings for Warrior
Coal and
Monkoe with regard to the vexatious proceedings and or security for
costs application, make it unnecessary to deal with
the exception.
But, because of the history of this matter, I find it necessary to do
so for whatever is worth.
[43] Dealing with
the exception, was a very tedious process. One had to dissect the
particulars of claim against ten grounds of
exception which consisted
of about 18 pages. It is not my intention to get into the details of
any of these grounds. It suffices
to mention that the particulars of
claim are said to be vague and embarrassing and that they disclose no
cause of action. For example:
43.1 Lumeka in
paragraph 5 of the particulars of claim alleges an oral agreement
concluded during November 2006. Optimum, Warrior
Coal and Monkoe are
cited as the parties to the agreement, including Lumeka. It is stated
that the parties agreed on a shareholding.
It is averred that in
terms of the alleged oral shareholding agreement, Optimum would be
used to acquire mine complex referred
to as Optimum Coal Mine
Complex. That Lumeka will acquire the entire shareholding in Crimson
King Property 303 (Pty) Ltd (CKP),
being the fourth defendant. That
CKP will acquire 30% of the shares in Optimum and that the agreement
was subject to the suspensive
conditions that Optimum Acquisition
Memorandum of understanding was to be concluded and become
unconditional in accordance with
the terms within 120 days. The
difficulty with these averments is that the parties to the alleged
oral agreement are cited in paragraphs
5.2 to 5.5 of the particulars
of claim as Lumeka, Optimum, Warrior Coal and Monkoe. CKP is one of
the parties. Yet in the particulars
of claim, is alleged that CKP was
to acquire 30% of the shares in Optimum. This renders the particulars
of claim vague and embarrassing
and disclosing no cause of action
insofar as Lumeka might want to suggest that it has acquired shares
in Optimum as it is allegedly
owning all shares in CKP. It is also
not alleged in the particulars of claim that suspensive conditions
referred to in paragraph
5.7.5 of the particulars of claim had been
fulfilled and or that all the parties to the alleged oral agreement
failed to use ‘all
commercially reasonable endeavors' to
procure the fulfillment of the suspensive conditions as so required
in terms of clause 5.7.6.
All of these must be found to be vague and
embarrassing and disclosing no cause of action.
43.2 Lumeka also
seeks to rely on an agreement concluded on the 19 November 2006. The
agreement is referred to in the particulars
of claim as “THE
LIBERTY LANE SHAREHOLDER’S AGREEMENT”. In paragraphs 6.2
to 6.5 Optimum, Lumeka, Monkoe and
CKP are cited as being parties to
the said shareholder’s agreement. Lumeka is not a party to the
agreement. The terms and
conditions of the agreement are briefly set
out in the particulars of claim as follows:
43.2.1 Optimum would
be used to acquire Optimum Coal Mine Complex from BHP Billiton Energy
Coal SA (Pty) Ltd (BBECSA), previously
known as Ingwe (Pty) Ltd;
43.2.2 Warrior Coal
would acquire the entire shareholding in Optimum (then Liberty Lane);
43.2.3 Optimum
shares would be distributed as follows:
-30 % to Warrior
Coal
-30% to CKP, and
-40% to Monkoe.
43.2.4 The
implementation of the agreement would be subject to the suspensive
conditions that Optimum acquisition memorandum of
understanding, is
concluded and become unconditional in accordance with its levies
within 120 days from the signature date. The
signature date is the 19
November 2006;
43.2.5 The parties
to the agreement would use all commercial reasonable endeavours to
procure the fulfillment of the suspensive
conditions stipulated in
clause 3.1 thereof within 120 days from the date of signature of the
agreement.
43.2.6 Lumeka having
set out what is said are the terms of the agreement, then in
paragraphs 6.6.6 to 6.6.8 of the particulars of
claim makes averments
as follows:
“
6.6.6
On the 13
th
February 2007 BHP Billton wrote a letter to the first defendant (then
still Liberty Lane (Pty) Ltd), and confirmed that the confidentiality
agreement signed with Liberty Lane remained in full force and effect.
6.6.7 On the same
letter BHP Billton further advised that the first defendant in
writing that it had agreed and irrevocably and
unconditionally
undertakes to continue negotiations and discussions with Liberty Lane
and not to enter into discussions and or
negotiations with and or to
treat with any other than Liberty Lane in respect of or in connection
with the possible disposal by
BECSA of the Business, for a period
commencing on the date of the letter and terminating by not later
than the 3CÏ
h
March 2007 or such later date as the
parties agreed in writing. The defendants accepted these conditions
and continued negotiations
accordingly.
6.6.8 The
tacit/alternatively expressed conduct of the parties amended the
original 120 days envisaged by the suspensive condition
in the
Liberty Lane Shareholder’s Agreement entered into on the 19
November 2006 which was envisaged as alleged in par
6.6.4 above”.
[44] Now, as I said,
the agreement makes no reference to Lumeka as a party. Therefore,
inasmuch as Lumeka wishes to rely on the
agreement to which it was
not a party and without averring more, it must be found that it
discloses no case of action. At one stage
during argument, counsel
for Lumeka suggested that Lumeka was a party to Optimum
Shareholding’s agreement. In making the
submission he wanted to
rely on what is pleaded in paragraph 6.6.8 of the particulars of
claim and that the word “parties”
therein should be seen
to include Lumeka. But of course this cannot be correct. Paragraph
6.6.8 of the particulars of claim must
read in the context of what is
pleaded in paragraph 6.6.7 as quoted above. Clearly, ‘the
defendants’ as having ‘accepted
the conditions and
continued negotiations accordingly’ as referred to in the last
sentence under paragraph 6.6.7 are “the
parties” referred
to in paragraph 6.6.8 and those are the defendants. This, in my view,
is the extent of the vagueness and
embarrassment in Lumeka’s
particulars of claim.
[45] The other
agreement which is pleaded is what is referred to in the particulars
of claim as “THE CKP SHAREHOLDER’S
AGREEMENT”. It
was concluded on the 11 January 2007. The parties to the agreement
are cited as Lumeka, CKP and Mobu Resources
(PTY) Ltd. The
defendants, that is, Optimum, Warrior Coal and Monkoe are not parties
to the agreement. The only reference to Optimum
is ‘the first
defendant’ and ‘All defendants’ pleaded in
paragraphs 7.5.5 and 7.5.6 of the particulars
of claim as follows:
“
7.5.5
By virtue of its
shares in CKP, Plaintiff was entitled to acquire a direct or indirect
shareholding in the First Defendant.
7.5.6 All the
defendants, by virtue of their responsibility in representing all the
members of the consortium had a corresponding
duty to ensure that
Plaintiff acquired the said shareholding as agreed”.
[46] The basis for
Lumeka, to be entitled to institute all previous litigations and the
present litigation appears to be founded
in what is averred in
paragraphs 7.5.1 to 7.5.3 of the particulars of claim. They read as
follows:
“
7.5.1
It was recorded
that the plaintiff had acquired the entire shareholding of CKP,
7.5.2 The shares
held by the plaintiff in CKP would be distributed amongst the
plaintiff (90%) and Mobu Resources (PTY) Ltd (10%).
7.5.3 The
implementation of the agreement would be subject to the suspensive
condition that the Optimum acquisition memorandum of
understanding be
concluded and becomes unconditional in accordance with its terms
within 120 days from the signature date”.
[47] However, the
fulfillment of the suspensive conditions is not pleaded at all or is
not sufficiently pleaded. ‘All the
defendants;’ and
reference to Optimum without being parties to the agreement, in my
view, establishes no cause of action
against them. The particulars of
claim as pleaded should be found to be vague and embarrassing.
Therefore, even if I was to be
wrong with regard to the vexatious
proceedings and security for costs proceedings, I would uphold the
exception.
PUNITIVE COSTS
ORDER
[48]
On behalf of Warrior Coal, it was argued that regardless of the
outcome of these proceedings, this court should award costs
de
bonis propriis
against
Lumeka’s attorneys, Madlanga and Partners Inc as a mark of
displeasure at Mr Madlanga’s conduct in these proceedings.
The
submission was based on the following set of facts:
48.1 On or about 25
March 2014, Mr Madlanga is alleged to have told Warrior Coal and
Monkoe’s attorneys that there was R500
000 held in the trust
account on behalf of Lumeka;
48.2 As a result,
writ of execution was issued for the attachment of portion of the
said money in trust to defray outstanding taxed
costs;
48.3 On the 7 April
2014 the Sheriff attended at Lumeka’s attorneys office to serve
the writs. He was allegedly told by Mr
Madlanga that Lumeka was
unknown and that Madlanga and Partners Inc, did not represent Lumeka.
The averment was based on the sheriff’s
return of service.
Three days thereafter, Lumeka’s attorneys addressed a letter to
Warrior Coal’s attorneys. They complained
that the writs ought
not to have been issued. Based on this, it was argued that it was
clear that attorneys Madlanga and Partners
were acting on behalf of
Lumeka. The denial of Lumeka was branded as ‘patently false’
and Lumeka’s attorneys
were called upon to explain. The
deponent to Lumeka’s answering affidavit noted the allegations
made against Madlanga and
Partners without admitting the averments
thereof. Mr Madlanaga filed a confirmatory affidavit to the answering
affidavit. In paragraph
3 thereof he states as follows:
“
3
.
I have also read
the answering affidavit of Sulaiman Lawal and I confirm the contents
thereof insofar as they relate to me”.
[49]
Counsel for Lumeka argued that before a
de
bonis propriis
costs
order can be made against Mr Madlanga, the court needs to be
satisfied that Mr Madlanga conducted himself in the manner as
described in the founding affidavit. The deponent to the founding
affidavit relied on the sheriff’s return of service which
had
not been confirmed by the sheriff. Secondly, there is no clear cut
admission of the allegations. Mr Madlanga did not deal with
the
allegations made against him in the founding affidavit. However,
paragraph 3 of the confirmatory affidavit should be seen in
the
context of what is stated in paragraph 35.2 of the answering
affidavit wherein is stated as follows:
“
35.2
At the meeting of 25 March 2014, my attorney of record, Mr Madlanga
further advised me that they made proposals for the security
of costs
for the instant matter to the amount of R500 000,00 for both Baker
McKenzie and Norton Rose Fulbright Attorneys which
proposal
was
vehemently refused
by both representatives of these law firms’’.
I am therefore at
pains in awarding costs de bonis propriis against Lumeka's attorneys.
[50] Consequently I
make an order as follows:
50.1 The first
respondent/plaintiff’s (“Lumeka”)’s claims
brought under case number 75356/2013 are struck
out on the basis that
they are frivolous and vexatious;
50.2 Lumeka is
declared a vexatious litigant;
50.3 Lumeka is
ordered to institute no further proceedings against all or any of the
defendants cited in case number 75356/2013
(that is, Warrior Coal,
Monkoe, Optimum Coal (PTY) Ltd and Crimson King (PTY) Ltd), whether
for declaratory relief, damages or
any other type of relief,
concerning its alleged rights to participate, directly or indirectly,
in the Optimum Coal Mine Complex,
unless it first obtains the leave
of this Honourable Court to do so;
50.4 Lumeka is
ordered to pay the costs of the three applications including the
costs of two counsel, for both Warrior Coal and
Monkoe and Optimum
respectively.
M F LEGODI
JUDGE OF THE HIGH
COURT
FOR THE
RESPONDENT/PLAINTIFF: ADV. D B NTSEBEZA SC
ADV. S X MAPOMA
INSTRUCTED BY:
MADLANGA & PARTNERS
C/O NGENO & MTETO
ATTORNEYS
425 Standard Bank
Chambers
Church Square,
PRETORIA
Tel: 012 323 0154
Ref: MrTandoNgeno
Tel: 011 447
3720/012 323 0154
FOR THE FIRST
DEFENDANTS: ADV. C D A LOXTON SC
ADV W T ROWAN
INSTRUCTED BY:
NORTON ROSE FULBRIGHT SA
C/O FRIEDLAND HART
SOLOMON & NICOLSON
Suite 301, Block 4
79 Steenbok Avenue,
Monument Park
PRETORIA,
REF: Mr
Painter/lm319834
TEL: 012 424 0200
FOR
THE 2
nd
,
3
rd
& 4
TH
DEFENDANTS: ADV BHANA SC
INSTRUCTED BY: BAKER
& McKENZIE
C/O ADAMS & ADAMS
Adams & Adams
Place
Lynwood Bridge,
Lynwood Manor,
PRETORIA
REF: GWW/aj/LT 1573
TEL: 012 432 6000
Matter heard on: 10
February 2015
Judgment handed
down: 6 March 2015