About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: North Gauteng High Court, Pretoria
SAFLII
>>
Databases
>>
South Africa: North Gauteng High Court, Pretoria
>>
2013
>>
[2013] ZAGPPHC 356
|
|
Nielson v Rautenbach and Others (45629/2013) [2013] ZAGPPHC 356; 2014 (3) SA 17 (GNP) (15 November 2013)
IN
THE NORTH GAUTENG HIGH COURT, PRETORIA
(REPUBLIC
OF SOUTH AFRICA)
CASE
NUMBER: 45629/13
DATE:
15 November 2013
REPORTABLE
LEIGH-ANN
NIELSON
………………………………………………………………
APPLICANT
v
ELSJE
RAUTENBACH N.O.
(In
her capacity as Liquidator of the liquidated estate of
DREAMWORLD
INVESTMENTS 53 (PTY) LTD)
………………………
FIRST
RESPONDENT
EPHRAIM
MAKHESE N.O.
(In
his capacity as Liquidator of the liquidated estate of
DREAMWORLD
INVESTMENTS 53 (PTY) LTD)
…………………..
SECOND
RESPONDENT
CITY
OF JOHANNESBURG
………………………………………………
THIRD
RESPONDENT
JUDGMENT
MABUSE
J:
1.
This
is an application for an order to furnish security for costs. In this
application, the applicant seeks an order for security
for costs
against the respondents because of an inordinate delay in settling a
previous costs order which has recently been settled.
This
application is brought on the basis that the respondents’
second eviction application against the applicant is vexatious,
reckless and unmeritorious. Needless to say, the application is
opposed by the respondents on grounds that I will turn to later
in
this judgment.
2.The
applicant is an adult female who resides at 1819 Augustus Avenue,
Dainfern Valley, Johannesburg. She is the first respondent
in the
second eviction application. The first and second respondents are
joint liquidators of a company called Dreamworld 53 (Pty)
Ltd. They
were duly appointed as such by the Master of the High Court,
Johannesburg by virtue of a Certificate of Appointment dated
26 March
2009 under no.G1556/08. Respectively they are the joint applicants in
the second eviction application. The third respondent
is the City of
Johannesburg Municipality, a local municipality established and
promulgated as such by virtue of s 12 of the Local
Government
Municipal Structures No. 117 of 1998. Its principle place of business
is located at 158 Loveday Street, Braamfontein
in Johannesburg. No
order is sought against the third respondent in this application.
3.It is
contended by the applicant that on 20 October 2010 and under case no.
27158/2010, by notice of motion, the respondents initiated
eviction
proceedings in the South Gauteng High Court against the applicants
and furthermore that for numerous reasons those proceedings
were
fatally defective It is these proceedings that the applicant refers
to as the first eviction application. On realising such
defective
errors the then attorneys for the respondent withdrew the sac-
application and tendered costs.
4.Subsequently
the respondents commenced another application for the eviction of the
applicant. This is the application that the
applicant refers to as
the second eviction application. Its purpose is still to evict the
applicant and those who occupy through
her and others from the
property known as 1819 Dainfern Extent Township. Registration
Division IQ. in the province of Gauteng in
extent 1121one thousand
one hundred and twenty one) square meters as unlawful occupiers The
application for eviction is brought
under the provisions of the
Prevention of Illegal Eviction of And Unlawful Occupation of Land Act
19 of 1998 (PIE). The applicant
contends that the second application
is inflicted with defects or imperfections. The applicant has set out
numerous grounds on
the bases of which she contends that the second
application also has serious shortcomings. Both in respect of this
application
as well as the first one. I do not deem it necessary for
the purposes of this judgment to list such shortcomings. Based on
such
perceived defects the applicant referring to the second
application, contends that the respondents seemed to have, undertaken
vexatious,
reckless and unmeritorious litigation.
5.A
further reason furnished by the applicant for launching this
application for security for costs arises from the inordinately
long
delay in settling the taxed costs arising from the aborted first
application. Although such costs were eventually paid, the
applicant
contends that the fact that the costs order was satisfied only after
she had launched this application in terms of Rule
47(1) of the
Uniform Rules of Court is emphatic of the obstructive nature of the
respondents. She contends furthermore that it
provides evidence of
the fact that the first and second respondents are prepared to
proceed to Court on a defective application.
The applicant regards
the inordinate delay to satisfy a costs order as indicative of
vexatious and reckless conduct.
6.The
applicant’s application for security which had been scheduled
to be heard on 10 March 2013 was postponed sine die by
agreement
between the parties as they were trying to resolve the matter. The
respondents were then ordered to pay the costs of
such postponement.
7.On 8
March 2013, the respondents had, by way of a letter under the heading
of “Security in terms of Rule 47”, attempted
to provide
security for the costs. The applicant was dissatisfied with this form
of security and consequently expressed her dissatisfaction
to the
respondents. In direct contrast, the respondents then delivered their
opposing affidavit in which they made it clear that
they would not
provide security and furthermore that legally they were not obliged
to do so.
8.The
respondent’s view with regard to the applicant’s
contention that the application for eviction is defective is
that the
points raised by the applicant are merely of a technical nature; that
they do not influence the merit of the application
at all and
furthermore that they do not constitute a valid defence against the
eviction application. They contend furthermore that
they have
effectively dealt with them in their replying affidavit. It is for
the Court that will deal with the second application
for eviction,
and not for this Court, to decide whether or not such defences are in
any manner meritorious. On those bases they
deny that the said
application is vexatious. With regard to the delay to pay the taxed
costs they contend that the applicant has
not suffered any prejudice
as a result.
9.In her
submissions that the respondents should be ordered to furnish
security for the applicant’s costs of the second application,
counsel for the applicant placed reliance on the following
authorities,
Ecker v Dean
1938 AD 102
at page 110; Western
Assurance Co v. Caldwell’s Trustees
1918 AD 262
at page 274;
Haitas and Three Others v. Port Wild Props 12 (Pty) Ltd 2011(5) SA
562 (GSJ)
.
10.The
law with regards to the furnishing of security was, until 1 May 2011,
determined by the provisions of s. 13 of the Companies
Act 61 of
1973( “the 1973 Companies Act”) and by the principles of
common law. In terms of the provisions of the said
s. 13 of the 1973
Companies Act where a limited company was the plaintiff or applicant
in any legal proceedings, a Court could
at any stage order it to
furnish security for costs if there was reason to belief that the
company, or, if the company was being
wound up, its liquidator would
be unable to pay the costs of the defendant or respondent if
successful in its defence, and could
stay all proceedings until
security was given. The 1973 Companies Act or some substantial
portions of it have since been repealed
by the new
Companies Act 71
of 2008
(“the 2008
Companies Act&rdquo
;).
In terms
of the provisions of s.13 of the 1973
Companies Act, the
respondents
would have been required to furnish security for the applicant’s
costs of this second eviction application. But
s 13 of the 1973
Companies Act has
now been repealed with the repeal of the said Act
and nothing was legislated in its place.
11.In
the absence of any legislative provisions that deal with the
furnishing of security for costs, the principles of common law
reign
supreme in that regard. The general rule of our law with regards to
furnishing security for the costs of an action was set
out in the old
authority of Witham v Venables Mez 291. In this authority the rule
was stated as follows:
“
No
person, who is either a civis municeps or incola of this colony, can,
as a plaintiff, be compelled to give security for costs,
whether he
be rich or poor, solvent or insolvent; and, on the other hand, that
every person, who is neither civis municeps, nec
incola, may, as
plaintiff be called on to give security for costs, unless he prove
that he is possessed of immovable property situated
within the
colony.”
This
system was developed under Roman law in terms of which litigants were
classified as either a Roman citizen or civis municeps
and as such
entitled to all legal rights or a peregrinus who as such enjoyed
limited rights. A peregrinus was debarred from the
enjoyment of full
rights. An incola was a foreigner who took up domicile in some other
region of Rome. He was actually a domiciled
foreigner. Fabricius J.
gave an erudite exposition of the history and development of this
rule in paragraph 6 of
Siemens Telecommunications v Datagenics
2013(1) SA 65 at page 69
. In Hennochsberg on the
Companies Act
Meskm
stated or page 28-1 the following when he commented about the
provisions of s 13 of the 1973
Companies Act:
“
At
common law an impecunious
or even insolvent company or other body corporate which is an incola
of South Africa cannot be required
to give security of the costs of
proceedings instituted by it. However
section 13
creates an exception
to this rule by according the Court the discretion to order a
plaintiff company to furnish security for its
opponent's costs, if
there is a reason to believe that it will be unable to pay such
costs, if ordered to do so. The policy underlining
this section as
was the case in relation to section 216 of the 1926 Act, is that
immunity accorded to an impecunious incola under
common law should
not exist...."
Accordingly
because of the repeal of the provisions of s. 13 of the 1973
Companies Act and
furthermore because of the absence of similar
provisions in the new
Companies Act of 2008
, in terms of common law,
an impecunious litigant or even an insolvent company or other
corporate body or entity which is an incola
of South Africa may not
be required to furnish security for costs in respect of proceedings
which he or she or it has instituted.
See also paragraph 9 of
Fabricus J’s judgment where he states that:
“
The
Companies Act of 1973 was repealed by the new
Companies Act of 2008
.
This new
Companies Act does
not provide for security for costs by
companies at all. In my view, this means that the common law must
apply and I have said it
what it is in the present context. Whether
or not the omission to provide such security in the new Act was an
oversight by parliament,
or whether it was done because of the
provisions of sec. 34 of the Constitution which reaffirms the common
law relating to access
to courts, may be an interesting debate, but
it is of no consequence.The common law applies."
12.
This
principle of common law may be traced back to Ecker v Dean
1939 AD
102
at 110 where the Court had this to say:
'In
my opinion a proper consideration of these cases does not justify the
conclusion that the fact of the plaintiff being an insolvent
per se
entities the defendant to demand security for costs nor that there is
a presumption that the action is vexatious. Notwithstanding
dicta to
the contrary, it seems to me that the correct principle underlying
these decisions is that every application for security
must be
decided on the merits of the particular case before the Court,
bearing ,in mind that: the basis of granting an order for
security is
that the action is reckless and vexatious”
When the
applicant contended that the respondent should be ordered to furnish
security she relied on the latter part of the above
paragraph which
states that:
“
Notwithstanding
dicta to the contrary it seems to me that the correct principle
underlying these decisions is that every application
for security
must be decided on the merits of the particular case before the
Court, bearing in mind that basis of granting an order
for security
is that the action is reckless and vexatious”
13.
It should, however, be noted that the question of security is
one of practice and not of substantive law. See the old authority of
Mears v. Pretoria Estate and Market Co. Ltd
1907 T.S. 951
at p.
954
where Innes CJ, as he then was, stated that:
“
But,
after all, this is a question of practice, which this Court is
justified in settling for itself."
See also
Alexander v Jokl
1948 (3) SA 269
at p. 274
where Williams A.J.
stated the following:
“
The
lodging of security by any party to legal proceedings is generally a
question of the rules of practice operating in the Court
in which the
proceedings are instituted.”
Accordingly
notwithstanding the approach in terms of common law, a Court has an
inherent power to order a litigant to furnish security
for the costs
of its opponents, if it is satisfied that the litigation is
vexatious. The effect hereof is that the common law rule
is not
absolute. It remains the touchstone for as long as the proceedings
are not regarded as vexatious. The test in such a situation
seems to
be not whether or not a litigant is an incola or not but whether or
not the proceedings that an incola has instituted
against its
opponents are vexatious. This seems to be the exception rather than
the general rule. This rule find its genesis in
Western Assurance
Company v Caldwell’s Trustee
1918 A.D. 262
where the Court
laid down that a Court of law has inherent power to stop or prevent a
vexatious action if it is satisfied that
such an action constitutes
an abuse of the Court processes. A court will prevent vexatious
proceedings by making an order that
the vexatious litigant should
provide security for the costs of the other side. It is crucial,
though to emphasize that this rule
is not a general rule and that a
Court should exercise its power to order a party to provide security
for the costs of the other
side sparingly and even then if it is
satisfied that exceptional circumstances do exist. I have not been
persuaded that exceptional
circumstances do exist in this matter and
therefore am disinclined to order the respondents to furnish security
for the applicant’s
costs on that basis.
14.A
case of
Haitas and Others v Port Wild Props 12 (Pty) Ltd 2001(5)
SA 562 GSJ
, on which counsel for the applicant relied and which
was criticized by Fabricius J. in his aforementioned reported matter,
simply
have created another ground on the basis of which a Court may
order a litigant, irrespective of whether the litigant is an incola
or peregrinus, or whether the proceedings are vexatious, when it
referred to s. 173 of the Constitution of the Republic of South
Africa Act 108 of 1996 (“the Constitution”). In paragraph
7 at 563h-iTsoka J. stated that:
“
In
terms of s 173 of the Constitution of the Republic of South Africa of
1996, the court’s inherent power to protect an regulate
its
process and to develop the common law, taking into account the
interest of justice, is recognised. ”
15.
Fabricius J. opined that in its constitutional powers to
regulate its own process, a high court does not have the power to
create
substantive law. The creation of substantive law is reserved
for its inherent power to develop common law. He continued and stated
that:
“
Section
173 of the Constitution does not enable a court, under the mantle of
regulating its own process, to impair the existing
substantive rights
of a litigant. Under common law, as / have said, an in cola company
has an unimpaired substantive right to pursue
legal proceedings. ”
Perhaps
the reference to section 173 of the Constitution and to “develop
a common law” by Tsoka J. was unfortunate.
The nub of what
paragraph 7 of his judgment was intended to convey is contained in
paragraph 8 of the same authority in which he
posed the following
question:
“
Do
the facts in the present matter require the Court
to exercise its
inherent power to demand the furnishing of security by an insolvent
incola?
”
16.It
must be recalled, as I already have pointed out somewhere above, that
the question of security is one of practice and not
of substantial
law. In making a statement contained in paragraph 8 of this judgment,
I understood Tsoka J. to be emphasizing the
fact that no matter the
principles of common law or the provisions of any legislation dealing
with the provisions of security,
Courts have an inherent discretion
to grant or refuse an order of security and in coming to such a
decision will consider all the
relevant circumstances of a particular
case.
17.With
regard to the present matter I have not been moved that there are
exceptional circumstances on the basis of which I would
digress from
common law and make an order based on vexatious proceedings.
18.Accordingly,
the application by the applicant that the respondents should provide
security for her costs of the proceedings in
respect of the second
eviction is hereby dismissed, with costs.
P
M MABUSE
JUDGE
OF THE COURT
Appearances:
Counsel
for the applicant: Adv. S Maritz
Instructed
by: VFV A ttorneys
Counsel
for the respondents: Adv. PI Oosthuizen
Instructed
by: S Roux Incorporated
Date
Heard: 13 November 2013
Date
of Judgment: 15 November 2013