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[2013] ZAECMHC 16
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Sesfikile Investment Pioneers (Pty) Ltd and Others v King Sabata Dalindyebo Municipality and Others (1896/2013) [2013] ZAECMHC 16 (29 August 2013)
REPORTABLE
IN THE HIGH COURT OF
SOUTH AFRICA
EASTERN CAPE – MTHATHA
Case No.: 1896/2013
Date Heard: 8 August 2013
Date Delivered: 29 August 2013
In the matter between :
SESFIKILE
INVESTMENT PIONEERS (PTY) LTD.
.....................................
First
Applicant
MPUMELELO
MABANGA
.......................................................................
Second
Applicant
MFUNDO
NTIRARA
.....................................................................................
Third
Applicant
and
KING SABATA DALINDYEBO MUNICIPALITY
......................................
First
Respondent
LANDMARK MTHATHA (PTY) LTD.
..................................................
Second
Respondent
AFRICAN BULK EARTHWORKS (PTY) LTD.
.......................................
Third
Respondent
LANDMARK REAL ESTATE SERVICES (PTY)
LTD.
.........................
Fourth
Respondent
LEONMED INVESTMENTS (PTY) LTD.
..................................................
Fifth
Respondent
JUDGMENT
BROOKS A J
INTRODUCTION
[1] The applicants approached the
court as a matter of urgency, armed with a directive issued by one of
my brother judges on 26
th
July 2013 pursuant to Practice
Rule 12 (a) (i) of the Joint Rules of Practice for the High Courts of
the Eastern Cape Province
(The Joint Rules of Practice). The
directive required that the matter be issued and served upon the
respondents in terms of the
Uniform Rules of Court on or before 1
st
August 2013 and that the matter be set down for hearing on 8
th
August 2013. Regrettably, for reasons which will become apparent, it
is necessary to set out something of the subsequent history
of this
matter at this point.
[2] The existence of the matter first
came to my attention on the morning of 7th August 2013, when the
answering affidavit of the
second and fourth respondents was handed
to my secretary. The matter did not appear on the roll which had been
prepared by the
Registrar for 8
th
August 2013. The reason
soon became obvious. No Court file could be found in the matter. At
my request a so-called dummy file was
prepared containing a copy of
the notice of motion and founding affidavit. In this regard, the
attorney of record for the second
and the fourth respondents was most
helpful. That afternoon, at my request, representatives from the
applicants’ attorney
of record presented themselves in my
chambers, together with the attorney for the second and fourth
respondents. When I expressed
my reservation about the ability of the
matter to proceed on the following morning, the attorney for the
second and fourth respondents
indicated that counsel briefed on
behalf of those parties was already on his way from Johannesburg and
that a legal representative
for the third respondent was on his way
from Port Elizabeth.
[3] No explanation from the
applicants’ attorney of record was forthcoming about why the
original notice of motion and founding
affidavits were missing, why
steps had not been taken to ensure that the matter was properly
enrolled by the Registrar for 8
th
August 2013 in
accordance with the directive issued, utilising a dummy file if
necessary, with the contents indexed and paginated
in compliance with
the requirements of the Joint Rule of Practice to enable the matter
to be prepared. I was informed that the
applicants’ replying
affidavit had been emailed to the relevant attorneys and would be
made available to me in due course.
I was further informed that heads
of argument from all participants would be available on the day. I
expressed the view that the
applicants’ attorneys had fallen
far short of the standard required in the fulfilment of the duties of
an attorney of record
to ensure that a matter is properly enrolled
and presented for hearing. It was only considerations of the extreme
inconvenience
of legal representatives who were travelling from afar
and the preservation of the dignity and good reputation of this
court, that
prevented me from indicating at that stage that the
matter would not be heard the following day.
[4] The same considerations, together
with an awareness of the possibility that the matter may indeed be
urgent and require swift
resolution, prompted me to give the
undertaking to read the extensive papers overnight and to meet with
the full team of legal
representatives in the morning. I requested
that the applicants’ attorneys spend the same time indexing and
paginating another
dummy file to enable informed argument if this
could be accommodated at the end of the roll on the next day. During
the course
of the afternoon, the answering affidavit of the third
respondent made its way into the dummy file which had been left with
me.
[5] No indexed or paginated papers
were available to me on the morning of 8
th
August 2013.
Nor was there any explanation why this had not been done. The matter
was called at the end of the morning.
Mr Tshiki
, who appeared
on behalf of the applicants undertook to place an indexed and
paginated set of the papers in my chambers during the
lunch
adjournment. This was done. Argument was heard during the afternoon.
At no stage was any explanation offered for the failure
of the
applicants’ attorneys of record, who had first sought to bring
the application as a matter of urgency, to perform
their function
timeously, either to ensure that the matter was enrolled by the
Registrar initially and in a proper state or to
ensure, at the very
least, that it was in a proper state on the morning of 8
th
August 2013.
NATURE OF THE RELIEF
[6] The applicants sought a
preliminary order in terms of rule 6 (12) of the Uniform Rules of
Court. The further relief, expressed
in convoluted and extensive
terms, was for a rule nisi returnable on 5 September 2013 embodying
an interdict, with a specific directive
that substantial portions of
the order operate as an interim interdict with immediate effect
pending the final determination of
the application. An order
directing any respondent who elected to oppose the application to pay
the costs thereof was also sought,
but did not form part of the rule
nisi contended for.
[7] The application was opposed by the
second, third and fourth respondents. At the hearing of the matter,
Mr Sakhela
, who appeared on behalf of the first respondent,
handed in a notice from that party indicating its willingness to
abide by any
decision reached by the court.
THE ORDER OF 8
TH
AUGUST 2013
[8] After hearing argument, I made the
following order :
1. The application is dismissed.
2. The issue of costs is reserved.
3. Reasons for the order will be given
in the judgment on costs.
What follows is my judgment on the
issue of costs from which the reasons for the dismissal of the
application will be apparent.
URGENCY
[9] In considering the arguments
placed before me in support of the allegations made in the full set
of affidavits filed of record,
I was of the opinion that a
consideration of the applicants’ entitlement to an order in
terms of rule 6 (12) of the Uniform
Rules of Court was intertwined
with a consideration of the applicants’ entitlement to an
interdict.
Mr Coetzee
, who appeared on behalf of the second
and fourth respondents, contended that no purpose would be served by
the issue of a rule
nisi given that the arguments had now all been
placed before the court, and urged me to treat the matter as an
application for
final relief.
Mr Tshiki
, who appeared on
behalf of the applicant, at first expressed the view that there was
merit in this submission, but later reverted
to his earlier stance
contending for the issue of a rule nisi. The motivation for this was
the submission that it would be easier
for the applicants to obtain a
rule nisi.
PROVISIONAL OR FINAL RELIEF
[10] The requirements for the granting
of a final interdict are trite. A clear right must be shown, an
injury actually committed
or reasonably apprehended and the absence
of any other satisfactory remedy. (
Setlogelo v Setlogelo
1914
AD 221).
The same applies to the requirements for the issue of an
interim interdict. Here, a right which, though
prima facie
established, is open to some doubt is sufficient. A well-grounded
apprehension of irreparable injury is a prerequisite, as is the
absence of ordinary remedy. In exercising its discretion on whether
to issue the interim interdict, the court weighs,
inter alia
,
the prejudice to the applicant if the interdict is not granted,
against the prejudice to the respondent if it is. This is referred
to
as the balance of convenience. (
Eriksen Motors (Welkom) Ltd. v
Protea Motors, Warrenton & Another
1973 (3) SA 685
(A) at 691
C to G). For reasons which will become apparent, on a consideration
of the affidavits as a whole it was not necessary
to decide on the
nature of the interdict which would be apposite in the circumstances.
LOCUS STANDI
OF THE
FIRST APPLICANT
[11] In the founding affidavit, the
first applicant was alleged to be a private company duly incorporated
in terms of the company
laws of the Republic of South Africa, with
its registered office at 106 Chief Nkwenkwezi Drive, Southridge Park,
Mthatha. The founding
affidavit was deposed to by one Ncikazi
Sarpong, who alleged that the first applicant had resolved in a
prescribed manner to institute
the proceedings and to authorise her
to act on its behalf. No supporting documentation was annexed to the
affidavit in support
of these allegations. Such documentation should
have been available to the deponent, who alleged further that she is
a director
and shareholder of the first applicant. The answering
affidavit deposed to on behalf of the second and the fourth
respondents alleged
that the first applicant did not exist. In
support of this allegation, a printout of the result of an online
search commonly referred
to as a CIPC search was annexed to the
answering affidavit. It demonstrates that the first applicant is in a
state of final deregistration.
This allegation is met somewhat lamely
in the replying affidavit by a bare denial, bolstered by an
alternative submission to the
effect that the first applicant does
exist, but only as a firm in terms of rule 14 of the Uniform Rules of
Court, enjoying a right
to sue or to be sued, up until the time of
re-registration. Plainly, the contention doesn’t withstand
scrutiny. I accept
the veracity of the allegations made on this point
in the second and the fourth respondents’ answering affidavit.
The effect
of deregistration upon the first applicant is unequivocal.
It simply does not exist. (
Miller & Others v NAFCOC Investment
Holding Co. Ltd. & Others
2010 (6) SA 390
(SCA) at 395 D to
E).
CLEAR OR
PRIMA FACIE
RIGHT
[12] It follows that, contrary to the
submissions made by
Mr Tshik
i
from the bar on
behalf of the first applicant to the effect that a clear right had
been established, that party does not enjoy
either a clear right or a
prima facie
right.
[13] The second and the third
applicants approach the court as former shareholders in the second
respondent. The first applicant
makes a similar claim. It is common
cause that the second respondent is a company with limited liability
duly registered in accordance
with the company laws of the Republic
of South Africa with its registered office in Johannesburg. It is
also common cause that
the shareholding enjoyed previously by the
applicants ceased on 13
th
July 2009 when the shares held
by them in the second respondent were sold by public auction in the
hands of the sheriff and in
execution of a judgment taken against the
three applicants by the fifth respondent. Applications for the
rescission of the judgment
underlying the sales in execution have
already been pursued unsuccessfully. The circumstances which gave
rise to the claim in the
hands of the fifth respondent against the
three applicants are, for present purposes, irrelevant.
[14] In short, the relief contended
for, whether interim or final, amounts to an attempt to obtain a veto
in favour of the applicants
over the finances of the second
respondent. The motivation is the imminence of the payment by the
first respondent to the second
respondent of an amount in excess of
R252 000 000.00 in satisfaction of a judgment debt. The
attempts to create the impression
that the three applicants enjoy a
right to participate in the benefits which will accrue to the second
respondent from the payment
are disingenuous. In order to attempt to
establish them, it is clear that in this application at least, the
applicants have been
dishonest about the circumstances in which the
judgment came to be taken against them in the hands of the fifth
respondent, the
date upon which they became aware of such judgment
and their previous unsuccessful attempts to seek the rescission of
that judgment.
The reason that these attempts have been made is to
generate a foothold for the applicants on which they can attempt to
gain control
over the damages to be paid shortly by the first
respondent to the second respondent. Even if the applicants were to
have been
able to succeed in establishing before this court that they
have an entitlement to be restored as shareholders of the second
respondent
at some stage, they still fail in their demonstration of
any right to gain control over the imminent pay out by the first
respondent.
The judgment against the first respondent is in favour of
the second respondent. It is an asset of the second respondent, a
juristic
person, not of any of its shareholders
[15] Moreover, it is evident from the
longwinded and vituperous allegations made in the founding affidavit
in purported support
for the relief claimed, that the applicants
erroneously believe that they are entitled to what they refer to as
an “anti-dissipation
interdict”. This is a remedy which
provides that a creditor can obtain an interdict against its debtor
which precludes the
debtor from dissipating or hiding its assets with
the intention of defeating the claims of the creditor. (
Knox
D’Arcy Ltd. v Jamieson
[1996] ZASCA 58
;
1996 (4) SA 348
(A) from 372 E).
This type of order does not create a right in favour of an applicant;
its only function is to prevent an existing
right from becoming
empty. (
Carmel Trading Co. Ltd. v Commissioner, South African
Revenue Service & Others
2008 (2) SA 433
(SCA)).
[16] I am of the view that all three
applicants fail dismally to establish any right, whether clear or
prima facie
, though open to some doubt.
A REASONABLE APPREHENSION OF AN
INJURY
[17] The same criticism must be
levelled at the applicants in their attempt to demonstrate a
reasonable apprehension of an injury.
They rely upon vague and
generalised allegations that the current directors of the second
respondent are likely to fail in their
duties to administer the
incoming award of damages. Indeed, the mechanism of the relief
claimed was designed to frustrate the fifth
respondent from obtaining
payment by the second respondent of a judgment debt in favour of the
fifth respondent in a total amount
(capital plus interest) of
R16 300 000.00. The relief contemplated was also crafted to
prevent the second respondent
from making payment to the third
respondent of R11 260 148.85 together with interest. I am
of the view that in both instances,
this amounts to little more than
an illegitimate attempt on the part of the applicants to prevent the
directors of the second respondent
from exercising their fiduciary
duties towards the second respondent. Vague allegations of
maladministration and funds dissipating
into thin air are
unsubstantiated in the founding affidavit. They are met with suitable
contempt in the answering affidavit. In
my view, once again the
applicants fail dismally in their attempt to demonstrate a reasonable
fear of imminent injury.
FURTHER REQUIREMENTS FOR AN
INTERDICT
[18] In circumstances in which the
applicants fail to establish any right before the court, and plainly
do not face circumstances
amounting to an imminent threat of injury,
no purpose is served by a consideration of whether the applicants
establish the further
requirements to either an interim or final
interdict.
APPROPRIATE COSTS ORDER
[19] Inevitably, costs must follow the
result in this matter. The question is what sort of costs order, and
how such an order should
be worded. For this reason, judgment on this
aspect was reserved.
[20] The first respondent was entitled
to serve and file a notice indicating its preparedness to abide the
decision of the court.
Whilst it may be argued that it was not
necessary for an appearance to be made on behalf of the first
respondent in order to hand
up such a notice in open court, it can
also be said that had the relief been granted in either form, the
effect may well have been
that the first respondent was prevented
from discharging legitimate obligations to the second respondent
arising from the terms
of a court order, and in those circumstances
was well advised to maintain a presence in court, particularly when
called to indicate
its attitude towards the litigation at such short
notice. The second, third and fourth respondents were entitled to
oppose the
application and did so successfully.
[21] In meeting the first applicant’s
allegations about its
locus standi
as set out in the founding
affidavit, the director of the second respondent who deposed to its
answering affidavit specifically
called upon the attorneys of record
acting for the first applicant, in terms of the provisions of rule 7
(1) of the Uniform Rules
of Court, to satisfy this court that they
are authorised to represent an existing client. They were warned that
if they failed
to do so, the second respondent would ask that those
attorneys themselves be ordered to pay the costs payable by their
purported
client, the first applicant. In the replying affidavit, the
following is the response :
“
The
founding affidavit of myself together with the instant affidavit is
clear proof of the authority of our attorney. For the sake
of
completeness, a power of attorney signed by myself will be filed as
confirmation of existence of the 1
st
applicant as a firm envisaged in rule 14 of the uniform rules.”
(sic).
This statement indicates something of
a shift from the bold assertions in the founding affidavit by the
same deponent, who there
alleged that she was the director of the
first applicant, a private company which was duly registered and
which has its registered
office in Mthatha. The founding affidavit
alleges that the deponent deposes to the affidavit in her capacity as
both director and
shareholder of the first applicant, alleging
further that the first applicant has resolved both to institute the
application and
authorise her to depose to the affidavit and act on
behalf of the first applicant. That resolution was never produced.
What the
sub rule requires is that the court be satisfied that the
first applicant’s attorney is authorised to act. (
Firstrand
Bank Ltd. v Fillis
2010 (6) SA 565
(ECP) at 569 A). For obvious
reasons, the first applicant’s attorney of record could never
produce a resolution. No power
of attorney of the sort referred to in
the replying affidavit was produced either. No direct response under
oath was forthcoming
from a member of the first applicant’s
attorney of record.
[22] The allegations, at best, are now
that the first applicant exists as a firm as defined by rule 14 of
the Uniform Rules of Court.
Little needs to be said about the refuge
sought in rule 14. Its provisions are applicable to unincorporated
bodies of persons,
not being partnerships (associations), businesses,
including a business carried on by a body corporate, carried on by
the sole
proprietor thereof under a name other than his own (firms)
and partnerships. The rule creates a climate of some leniency towards
the manner in which these three categories of litigants may be cited.
It is a procedural aid to assist in the citation of certain
legal
entities which do not have any existence separate from their members
or owners. (
Ex-TRTC United Workers Front and Others v Premier,
Eastern Cape
2010 (2) SA 114
(ECB) at 125 D to E). The rule does
not refer in any terms to companies or close corporations which are
duly incorporated in terms
of the company laws of the Republic of
South Africa. It cannot be used to avoid the consequences of the
deregistration of the first
applicant.
[23] A court making an order as to
costs has a wide discretion, to be exercised judicially on a
consideration of all the facts and,
in essence, as a matter of
fairness to both sides. (
Blou v Lampert & Chipkin
,
N
N.O., & Others
973 (1) SA 1
(AD) at 15 E). When awarding
costs against an attorney
de bonis propriis
,
this
should be done when “justice requires that a special order as
to the costs be made”. (
Machumela v Santam Insurance Co.
Ltd.
1977 (1) SA 660
(A)). Such an order has been made against an
attorney who had the propensity of embarking on legal proceedings
without prospect
of success, mostly relying on technical points in
the litigation. (
Webb & Others v Botha
1980 (3) SA 666
(N)
at 672 C to 673 H).
[24] I am of the view that where it is
clear that the application was brought at a time when the first
applicant did not exist,
had no
locus standi
, and the
revelation of this fact in the answering affidavit is met with no
more than a dogged persistence in the litigation on
a platform which
is opportunistically seized from the Uniform Rules of Court and is
without merit, it can only be assumed that
the allegations made in
the founding affidavit were intended deliberately to mislead the
court, and the respondents. There can
be no right of recovery
pursuant to an order for costs issued against the first applicant.
The injustice of a successful litigant
being faced with this reality
is plain. The first applicant’s attorneys of record had no
authority to represent the first
applicant in these proceedings.
De
jure
, the first applicant was not before the court, and did not
litigate, and cannot be ordered to pay costs. The right persons to be
mulcted in costs for the abortive application must be the persons who
purported to bring it on behalf of the first applicant, without
authority to do so, together with the unsuccessful second and third
applicants. (
Blou v Lampert & Chipkin N N.O. & Others
(
supra
) at 14 B to F). The attorneys who purported to act on
behalf of the first applicant were warned that such an order would be
sought,
and persisted with the application regardless. As
demonstrated at the commencement of this judgment, this was also done
in a most
cavalier and inefficient manner.
[25] I pertinently raised with
Mr
Tshiki
during his argument before me the prospect of an order
de
bonis propriis
being made against his firm as contended for by
Mr
Coetzee
on behalf of the second and fourth respondents and on the
basis that was set out in their answering affidavit. His response was
simply that in the event that I concluded that any costs to be
awarded against the first applicant appeared to be irrecoverable,
I
should order them to be paid by the second and third applicants. I am
unable to establish any basis upon which this would be
apposite in
the circumstances of this matter. In my view, it is plain that
justice requires that a special order as to those costs
be made.
[26] The wide discretion of the court
when it comes to an order for costs includes the possibility of
making a punitive costs order
on the attorney and client scale, where
such an order is justified on a consideration of all relevant
factors. (
Rautenbach v Symington
1995 (4) SA 583
(O) at 588 A
to B). The fifth respondent seeks such an order upon the dismissal of
the application in the final section of its
answering affidavit. Such
an order would be apposite were I to be of the view that the manner
in which the applicants brought and
conducted this application
warranted a demonstration of the censure of this court. In the
exercise of my discretion, I am of the
view that such an order would
be apposite. The founding affidavits are full of allegations designed
to mislead the court and to
create a perception of legitimacy in the
claims of the applicants where none existed. The extensive answering
affidavits and annexures
were replete with full and necessary
allegations and supporting documentation upon which the court relied
heavily in being able
to identify the sham that represents the true
identity of the applicants’ case. The extensive background to
this matter indicates
that the applicants are no strangers to the
court and it can never be said that they were simply mistaken about
the nature and
extent of their rights in this matter. They persisted
with the application, clearly relying upon deliberate legal advice,
alleging
an untenable basis for urgency, flouting the rules of court
as they went, notwithstanding the legitimate and thought provoking
opposition to their claims which eventually carried the day. In doing
so, they plainly acted in concert, as seems to have been the
case
throughout the factual history disclosed in the matter. In my view,
such an imposition upon the court and upon the respondents
warrants
the censure of this court.
[27] In the circumstances, I make the
following order for costs :
1.
Tshiki & Sons Incorporated
,
which purported to act on behalf of the first applicant, shall be
liable
de bonis propriis
jointly and severally, together with
the second applicant and the third applicant, the one paying the
others to be absolved, for
payment of the costs of this application
on the scale as between attorney and client.
2. For the purposes of liability under
paragraph 1 of this order, it is specifically directed that the costs
of this application
shall include the costs attendant upon the
appearance of counsel and attorneys acting on behalf of the first,
second, third and
fourth respondents, respectively, in this court on
8
th
August 2013.
___________________________________
R W N BROOKS
JUDGE OF THE HIGH COURT (Acting)
Appearances:
For the Applicants: Mr Tshiki of
Tshiki & Sons Incorporated., Mthatha
For First Respondent: Mr Sakhela of
Dayimani Sakhela Incorporated, Mthatha
For Second and Fourth
Respondents: Mr Coetzee S C
instructed by J F Heunis & Associates,
Mthatha
For Third Respondent: Mr Friedman
of Friedman Scheckter, Port Elizabeth
For Fifth Respondent: No
appearance.