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[2013] ZAECMHC 31
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Straus Daly Incorporated v Goqwana, In re: Meeg Bank Ltd v Goqwana (439/2005) [2013] ZAECMHC 31 (24 October 2013)
IN THE HIGH COURT OF SOUTH AFRICA
(EASTERN CAPE HIGH COURT-MTHATHA
Case
No: 439/2005
Judgment
Delivered: 24 October 2013
NOT
REPORTABLE
In
the matter between:
STRAUSS
DALY INCORPORATED
.................................................................
Applicant
and
BULELWA
NOZUKO GOQWANA
...............................................................
Respondent
In
re:
MEEG
BANK LIMITED
Plaintiff
and
BULELWA
NOZUKO GOQWANA
Defendant
________________________________________________________________
JUDGMENT
DUKADA
J:
[1] This is an application for
rescission of a costs order granted against the applicant
de bonis
propriis
on an attorney and client’s scale. That order was
granted in an action which was instituted by Meeg Bank Limited
against the
respondent on the 12
th
May 2005 (herein-after
referred to as the main action). The applicant acted in the matter as
attorneys for the plaintiff while
attorneys X.M Petse Inc. acted for
the respondent.
[2] The main action was allocated the
31
st
May 2011 as the trial date but it was postponed after
it transpired that Meeg Bank Limited was deregistered on 16
th
September 2009 and Absa Bank Limited took over that bank.
[3] Absa Bank Limited then launched an
application for it to be substituted for Meeg Bank Limited as party
in the main action.
[4] Some correspondence was thereafter
exchanged between the parties. The relevant extracts of some of those
letters will be quoted
later in this judgment as the applicant relies
on them for her case.
[5] On the 8
th
September
2011 the respondent obtained the following Court Order:-
“
1. The action of Meeg Bank
Limited (Case No 459/2005) is hereby dismissed.
2. Attorneys Strauss Daly
Incorporated are hereby directed to pay costs occasioned by this
action on attorney and own client’s
scale and such costs to
include those reserved on 26 May 2011.”
[6] It is paragraph 2 of the above
order which applicant seeks in this matter to be rescinded.
APPLICANT’S CASE
[7] The applicant states that she
received a Notice of intention to tax a Bill of Costs in respect of
the main action on the 2
nd
November 2011. The notice was
directed to the applicant as plaintiff’s attorneys and there
was no mention of the fact that
the applicant had been ordered to pay
the costs. Applicant did not appear at the taxation on behalf of the
applicant as it was
unaware of the order granted against her.
The applicant only got to know on the
18
th
January 2012 that the order for costs was granted
against her.
[8] The applicant states that she was
not in wilful default in not appearing in Court on the date when the
Court Order was granted
as there was firm agreement in place between
the respective parties that no costs order would be sought other than
prayer 3 set
out in the Notice of Motion dated 15
th
June
2011. Applicant further states that the Court was, at the time it
granted the costs order, clearly not made aware of the settlement
agreement between the parties and was probably under the impression
that the applicant had maliciously conducted the trial without
a
mandate. She further states had there been an opportunity to file an
answering affidavit it would have been pointed out to the
Court that
the applicant only became aware of the status of Meeg Bank Limited
when the applicant’s authority to institute
the main action was
challenged in May 2011.
The applicant avers that the costs
order was granted under circumstances where there was a settlement
agreement and under circumstances
where the applicant was never
afforded an opportunity to explain why it persisted with the
litigation without a proper mandate.
[9] From the above it appears that the
applicant bases this application for rescission on the following
grounds:-
(a) (i) That she was not in wilful
default is not appearing in Court on
the date when the costs order against her was granted;
(ii) She has a good and
bona fide
defence, namely that there was
a settlement agreement in respect
of the costs;
On (i) and (ii) above the applicant
appears to employ the provisions of Rule 31(2)(b) of the Uniform
Rules of Court which, in my
view, do not apply in this case, as the
applicant had not been in default of delivering a notice of intention
to defend or of a
plea.
(b) The applicant also employs Rule 42
stating the respondent failed to provide the Court with copies of
letters reflecting the
agreement that had been reached and thus the
order was erroneously granted.
RESPONDENT’S CASE
[10] The respondent raised two points
in
limine
, viz
(i) That of non-joinder of X.M. Petse
Incorporated and misjoinder the respondent Bulelwa Nozuko Goqwana,
(ii) Lack of jurisdictional facts in
support of the application for rescission in terms of Rule 42 of the
Uniform Rules of Court.
[11] I will now deal with these points
in
limine seriatim
:-
NON-JOINDER
The respondent states that the relief
is sought against X.M. Petse Incorporated, more particularly an order
that X.M. Petse Incorporated
pay the costs
de
bonis propriis
on
an
attorney and own client’s scale, whereas she is not a
respondent in this application.
Adv Richard Quinn SC, Counsel for the
respondent, has argued that the general rule is that any person who
has a direct and substantial
interest in any order which the Court
might make or who is bound to be affected prejudicially by putting
into effect of a Court
order, is a necessary party and should be
joined, unless the Court is satisfied that he has waived his right to
be joined. He contended
that it is no answer to say that the
application papers were served upon X.M. Petse Incorporated and that
they are before Court.
The fact of the matter is that the papers were
delivered to X.M.Petse Incorporated in their capacity as the
attorneys for the respondent,
Bulelwa Nozuko Goqwana, and not cited
as a party nor mentioned in the Notice of Motion as a party against
whom relief is sought.
He submitted that in the absence of joinder,
as opposed to notice of proceedings in their capacity as attorneys
for the respondent,
the order sought by the applicant would not be
res judicata
against X.M.Petse Incorporated who
would be at large to execute the costs order in the respondent’s
favour.
Adv A.P. Den Hartog, Counsel for the
applicant, in reply has argued that it is the respondent who was the
applicant who obtained
a costs order against Strauss Daly Inc. on an
attorney and own client’s scale. The relief sought in this
matter is the setting
aside of a costs order in favour of Bulelwa
Nozuko Goqwana as an applicant and X.M. Petse Incorporated was not a
party to the original
application.
He therefore submitted that there is
no basis for alleging non-joinder.
I fully agree with Mr Den Hartog, the
Court in appropriate circumstances does award costs
de
bonis propriis
against an
attorney and in most of those cases the attorney would be acting for
a party in the case.
If an application for rescission of
that costs order is made, being an interlocutory application, its
papers would be served on
the attorneys of the respondent concerned.
The latter attorneys would then get to know of that application for
rescission when
its papers are served upon them.
As an alternative to joinder, the
Court may order
that judicial
notice of the proceedings be served on the party and will then be
prepared to proceed in the absence of the party
if, in response to
the notice, there is clear evidence of a waiver of the right to join
in the proceedings.
1
Judicial notice means notice emanating
from the Court which is formally served on the third party by an
officer of the Court. In
my view, the essence of a judicial notice is
to bring to the notice of the third party the full knowledge of the
proceedings. In
the instant case the respondent’s attorneys
X.M.Petse have full knowledge of this application for rescission of a
costs order
which was made in their favour while they were not a
party to the man action but only acting as attorneys for the
respondent. In
my view, it was not necessary to join the respondent’s
attorneys procedurally as a party in this application. I therefore
find no merit in this point in
limine
.
(b)
MISJOINDER
The respondent also raises a point in
limine
of misjoinder in respect of the respondent Bulelwa
Nozuko Goqwana. The foundation for this objection does not appear
clearly from
the papers other than the averment that no relief is
sought against the respondent, instead it is sought against the
respondent’s
attorneys, X.M. Petse Incorporated. In response
the applicant states that the costs order which the applicant seeks
to rescind
was granted in favour of the respondent who was the
defendant in the main action.
Mr Den Hertog has followed that line
in his argument. He contended that he does not understand this
objection. I tend to agree with
Mr Den Hertog on this point and I,
too, cannot understand the legal foundation of this point in
limine
.
(C)
LACK OF JURISDICTIONAL FACTS
IN SUPPORT OF THE APPLICATION FOR RESCISSION IN TERMS OF RULE 42 OF
UNIFORM RULES OF COURT
Mr Quinn has argued that in order for
applicant to succeed on this ground she must make out a case
disclosing jurisdictional facts
stipulated in Rule 42(1)(a) to (c) of
the Uniform Rules of Court.
Rule 42 Provides:-
“
(1) The Court may, in
addition to any other powers it may have mero motu or upon the
application of any party affected rescind or
vary:-
an order or judgment erroneously
sought or erroneously granted in the absence of any party effected
thereby,
an order or judgment in which
there is ambiguity, or a patent error or omission, but only to the
extent of such ambiguity, error
or omission;
an order or judgment granted as
the result of a mistake common to the parties.”
The applicant does not specify on
which sub-rule of Rule 42 she relies. In fact she does not come out
clearly on this ground and
one has to rake through her affidavit to
find some indication of the basis of this ground. For instance, in
paragraph 22 of her
founding affidavit she states:-
“
If the version as
represented by the respondent’s attorneys is correct that the
Court of its own accord ordered the applicant
to pay the costs de
bonis propriis, it is submitted that such order was erroneously
granted in the absence of the applicant and
was granted under
incorrect circumstances as provided for in Rule 42 of the Uniform
Rules of Court.”
The applicant further states as
follows in paragraphs 24 and 25:-
“
24. The Honourable Court was
clearly not made aware of the settlement agreement between the
parties and was probably under the impression
that the applicant had
maliciously conducted the trial without a mandate. Had there been an
opportunity to file an answering affidavit,
it would have been
pointed to the Honourable Court that the applicant only became aware
of the status of Meeg Bank when the challenge
arose is May 2011. It
was directly after this that the matter was settled on the basis that
it was.
25. The order was thus granted
under circumstances where there was a settlement and under
circumstances where the applicant was
never afforded an opportunity
to explain why it persisted with the litigation without a proper
mandate.”
On closer examination the applicant’s
thrust seems to me to be on that the order was erroneously granted
because the Court
was not informed of the existence of a settlement
agreement between the parties. To me it seems it can best be
pigeon-holed within
subrule (1)(a) Rule 42 of the Uniform Rules of
Court . The critical question seems to me to be whether there was a
settlement agreement
between the parties which, if the Court was
informed of, would have persuaded the Court not to grant the costs
order in question.
In support of her stance that a settlement
agreement was reached the applicant refers to the following extracts
from the correspondence
exchanged between the parties:-
From a letter by applicant to
respondent’s attorneys dated 25
th
June 2011:-
“
We confirm a firm agreement
between our Mr Karato Moetsi and your Mr Zilwa that Absa Bank Limited
will withdraw its Substitution
Application and tender costs, subject
to your client not seeking de bonis propriis cost order neither
against Keightly Inc. and/or
Strauss Daly Inc.
We further confirm that the
aforesaid costs order will not be sought against Keightly Inc.
Strauss Daly Inc. and/or Absa Bank Limited
in Client’s
dismissal application.”
A letter in reply dated 6
th
July 2011 from the respondent’s attorney:-
“
Whilst we are ad idem about
the issue of costs in a substitution application, we do not
understand when you say there will be no
costs order with regard to
the dismissal application. It will be noted that in our application
for dismissal our client has prayed
for costs on a scale as between
attorney and client. Our instructions are that we should pursue our
prayers to the application.
In the circumstances you will understand
client’s stance and therefore the sooner your client tenders
such costs the cheaper
it will be, since there will be no need to
argue that in Court.”
A letter from applicant dated 7
th
July 2011 in reply:-
“
We refer to your fascimile
dated 06 July 2011, contents which have been noted.
With regard to your client’s
dismissal application, all that we mean is that neither Keightly
Inc.;Strauss Daly Inc. and/or
Absa Bank is opposing the said
application, as a result you may proceed to pursue your prayers as
stated in your Notice i.t.o Rule
6(11).
In the circumstances, it makes
sense that we also agree that no costs order be sought neither
against Keightly Inc.; Strauss Daly
and/or Absa Bank.”
As appears from above the exchange of
correspondence between the attorneys of the parties ended in the
letter of the applicant’s
attorneys dated 7
th
July 2011. In my view, it is the
interpretation of that letter, more particularly the last paragraph
thereof, quoted above, that
will assist us in determining whether a
settled agreement was reached between the parties with regard to
costs, viz where the applicant
says :-
“
In the circumstances it
makes sense that we also agree that no costs be sought neither
against Keightly Inc; Strauss Daly Inc and/or
Absa Bank Ltd.”
The most common and the most helpful
technique for ascertaining whether these has been an agreement is to
look for an offer and
an acceptance of that offer.
2
R.H.Christie, op cit however, goes
further to sound a warning that offer and acceptance must never be
sought for their own sake,
but as aids whether an agreement has been
reached.
A person is said to make an offer when
he puts forward a proposal with the intention that by its mere
acceptance, without more,
a contract should be formed.
It seems to me that when the applicant
says “
In the
circumstances it make sense that we also agree that no costs be
sought …………”,
she
was putting a proposal to the respondent’s attorneys. She does
not confirm or record an agreement that had been reached.
As the
respondent’s attorneys did not respond to that proposal, the
question that arises is what the legal effect or result
of such
failure to respond or to put it differently, can such silence be
taken as acceptance.
On this aspect Watermeyer CJ remarked
as follows in Collen V Rietfontein Engineering Works.:-
3
“
Quiessence
is
not necessarily acquiescence and one party cannot, without the assent
of the other, impose upon such other a condition to that
effect.”
However, that is not always the case,
as Muller JA in Mc Williams v First Consolidated Holdings (Pty) Ltd
4
put is aptly as follows :-
“
I accept that quiescence is
not necessarily acquiescence (see Collen v Rietfontein Engineering
Works 1948(1) SA 413 (A) at 422)
and that a party’s failure to
reply to a letter asserting the existence of an obligation owed by
such a party to the writer
does not always justify an inference that
the assertion was accepted as the truth. But in general, when
according to ordinary commercial
practice and human expectation firm
repudiation of such an assertion would be the norm if it was not
accepted as correct such party’s
silence and inaction, unless
satisfactorily explained, may be taken to constitute an admission by
him of the truth of the assertion,
or at least will be an important
factor telling against him in the assessment of the probabilities and
in the final determination
of the dispute. And an adverse inference
will be more be readily drawn when the unchallenged assertion had
been preceded by correspondence
or negotiations between the parties
relative to the subject-matter of the assertion
.”
Reverting to the instant case I am not
persuaded that the above-quoted passage of the last letter from the
applicant’s attorneys
contained an assertion such that the
silence of the respondent’s attorneys to it may be taken to
constitute an admission
by them of the truth of such assertion. In
fact, in my view, the said passage contains no assertion at all but a
proposal.
In my view, therefore, such proposal
without acceptance by the respondent’s attorneys did not result
to an agreement, a settlement
agreement in the words of the
applicant.
I, therefore, cannot agree with Mr Den
Hertog’s submission to the contrary.
A further dimension to this aspect is
brought about by the following paragraph in the answering affidavit
of Hymie Zilwa of the
respondent’s attorneys’ firm, in
the application for substitution and dismissal dated 15
th
June 2011:-
“
By reason of the conduct of
the attorneys who purported to act on behalf of Meeg Bank subsequent
to its deregistration, both Strauss
Daly and Keightly Incorporated
should be directed to pay the applicant’s costs de bonis
propriis on a scale as between attorney
and client.
Alternatively Absa Bank should be
directed to pay the costs of both applications on the scale as
between attorney and client.”
I cannot understand why on the face of
this paragraph and in the absence of a clear and unequivocal
acceptance of their afore-mentioned
proposal the applicant’s
attorneys did not appear in Court on the date on which the costs
order was made.
To sum up, I do not agree that if what
the applicant alleges to have been a firm settlement agreement, was
brought to the notice
of the Court, the costs order in question could
not have been granted. I say so because, as I have concluded, there
was no settlement
agreement as to costs at all at the time the costs
order in question was made.
It is my view, therefore, that such
costs order was not erroneously granted.
[12] From the common law perspective,
for applicant to succeed she must show sufficient cause for the
rescission.
Trengrove AJA (as he then was) set out
the provisions of our common law relating to the rescission of
judgments as follows:-
“
Thus, under the common law,
the Courts of Holland were, generally speaking, empowered to resend
judgments obtained on default of
appearance, on sufficient cause
shown ………Broadly speaking, the exercise of the
Court’s discretionary
power appears to have been influence by
considerations of justice and fairness, having regard to all the
facts and circumstances
of the particular case.”
5
[13] Turning to the present case, as
appears from para 24 of her founding affidavit quoted above, it might
happen that the applicant
can succeed to present a reasonable and
acceptable explanation as to why she continued with the action though
her client Meeg Bank
Ltd was deregistered.
[14] Generally an order for costs
de
bonis propriis
will be
ordered against attorneys only in reasonably serious cases. The costs
order in question here also granted costs on an attorney
and client’s
scale. It is trite law that such costs are not granted lightly, as
the Court looks upon such orders with disfavor
and is loath to
penalize a person who has exercised a right to obtain a judicial
decision on any complaint such party may have.
6
[15] Normally an order for costs on
the attorney and client’s scale will be made only when there is
a special prayer for it
or when notice has been given that the order
will be asked for.
7
In this case the Notice of Motion
contained a notice of a prayer “
That
Meeg Bank Limited be directed to pay the defendant’s costs on
the scale as between attorney and client.”
There
was no such special prayer as against the applicant. Though there are
circumstances, such as suggested in Sopher’s case,
supra at p
600 E, where the absence of any sort of notice does not necessarily
debar the granting of the order, and furthermore,
although there was
an intimation to ask for such order in Hymie Zilwa’s affidavit
quoted afore, one has to bear in mind that
as attorney –and-clients’s
costs order is (as Williamson J puts it
Sopher
v Sopher, supra, at 600 F-G)
an
extraordinary order made only in [certain] circumstances , it is for
the party asking for the order to establish the “
special
consideration
”
or
“
the conduct of the
losing party
”
which
justify the award of such costs. Consequently I am of the view that
it would have been fair and just to have heard an explanation,
if
any, from the applicant before granting the order.
[16] In the circumstances I conclude
that the applicant has shown sufficient cause for the rescission of
the costs order of the
8
th
September 2011.
[17] There remains the question of
costs. In my view, in the circumstances of this case, the question of
costs at this stage hangs
in the balance between the parties and they
need to be fully ventilated in argument in the hearing of the
question of costs.
[18] A point has been raised in
argument to the effect that if this application succeeds the action
of Meeg Bank Limited under Case
No: 439/2009 will stand dismissed
without a costs order. I understand this application to be for the
rescission of only paragraph
2 of the Court Order dealing with costs,
in other words paragraph 1 dismissing the action will remain.
It is trite law that where, as in the
instant case, a disputed matter is settled on a basis which disposes
of the merits except
so far as the costs are concerned, the Court
should not have to hear evidence to decide the disputed facts in
order to decide who
is liable for costs, but the Court must with the
material it its disposal, make a proper allocation of costs.
8
[19] In the result the following order
shall issue:-
Paragraph 2 of the order of this
Court granted on the 8
th
September 2011 reading:-
“
Attorneys Strauss Daly
Incorporated are hereby directed to pay costs occasioned by this
action on an attorney and own client’s
scale and such costs to
include those reserved on 26 May 2011,” is hereby rescinded;
Costs of this application for
rescission are hereby reserved for determination together with the
question of costs in the main
action.
_______________________
D.Z. DUKADA
JUDGE OF THE HIGH COURT
Appearances
Adv. Den Hartog, Instucted by
For the applicant : Keightly, Sigadla
& Nonkonyana Inc.
MTHATHA
For the 2
nd
Respondent :
Adv Quinn SC, Instructed by
X.M. Petse Inc
MTHATHA
1
Herbstein
& Van Winsen: The Civil Practice of the High Courts of South
Africa, 5
th
Edition, Vol 1 by Cilliers, Loots & Nel
at page 216
2
The
Law of Contract in South Africa, 5
th
Edition by R.H.
Christie at page 28
3
1948
(1) SA 413 (A) 422
4
1982
(2) SA 1
(A) 10
5
1979
(2) SA 1031
(A) at 1042 F-H; See also Chetty v Law Society Transvaal
1985 (2) SA 756
(A) at 765 B-C; Nyingwa v Moolman NO
1993 (2) SA 508
(TK); Harris v Absa Bank Limited t/a Volkskas
2006 (4) SA 527
(T) at
528 H – 529 A; Naaido v Motlala NO. 2012(1) SA 143 (GNP) at
152 H-153A
6
See
Herbstein & Van Winsen, opcit, at page 971, and the cases cited
in note 169.
7
Sopher
v Sopher
1957 (1) SA 598
(W) at 600 D-E; Marsh v Odendeabrus Cold
Strages Ltd 1963(2) SA 263 (W) at 269 H
8
See
Jenkins v SA Bookmakers Iron and Steel Workers and Shipbuilders
Society
1946 WLD 15
; Mashaone v Mashoane
1962 (2) SA 684
(D) 687;
Gamlan Investments (Pty) Ltd v Trilion Cape (Pty) Ltd
1996 (3) SA
692
(C) at 700G; First National Bank of Southern Africa Ltd t/a
Wesbank v First East Cape Financing (Pty) Ltd
1999 (4) SA 1073
(SE)
1079; Dekock v Minister of Public Works
[2004] 1 All SA 282
(CK)
296.
9