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2011
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[2011] ZAKZDHC 20
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Feigner v Body Corporate of the Lighthouse Mall (438/2010) [2011] ZAKZDHC 20 (16 March 2011)
IN THE HIGH COURT OF SOUTH AFRICA
KWAZULU – NATAL, DURBAN
CASE: 438/2010
In the matter between:
KARL FEIGNER
…........................................................................
Plaintiff/Respondent
vs
THE BODY CORPORATE
OF THE LIGHTHOUSE MALL
…..........................................
First
Defendant/Applicant
________________________________________________________________
JUDGMENT
Delivered on 16 March 2011
Ntshangase J:
[1] This is an application in terms of
Uniform Rule 47(3) to compel the respondent (plaintiff), to provide
security for costs in
the amount of R300 000 in an action for damages
in which $1,646,896.56 (US dollars) or R11,763,546.85 is claimed as
damages against
the applicant (first defendant) and three other
defendants. The application is brought on the ground that the
respondent is a
peregrinus
in the jurisdiction of the court with
no assets in this country from which to recover costs in the event of
an adverse costs award
being made against him. The respondent resides
at 1904 – B Sunset Drive, Walla Walla, Washington, USA.
[2] The action is a sequel to bodily
injuries sustained by the respondent from falling down an elevator
shaft in the common property
of the sectional title scheme known as
Lighthouse Mall. The claim is instituted against the first defendant,
the body corporate
of the Lighthouse Mall, Otis (Pty) Limited, Dave
Brown Consultancy CC and Dave Brown, the second, third and fourth
defendants respectively
for an alleged breach of their duty of care
to take all reasonable steps to prevent the elevator causing harm to
persons.
[3] In opposing the application the
respondent submits that the fact that he is a
peregrinus
with no assets in this country, which
he concedes, does not entitle the applicant as of right to security
for costs. This does find
support in
Magida
v Minister of Police
1
.
The court is to exercise a discretion in the light of all relevant
facts and considerations of equity and fairness to both parties.
In
that regard, as stated by Gibson LJ in
Keary
Developments Ltd v Tarmac Construction Ltd and Another
2
it is essential for the court to
engage in a balancing exercise which weighs the potential injustice
to the respondent if prevented
by an order for security from pursuing
his claim as well as the potential injustice to the applicant if, by
reason of refusal of
the order for security, he is unable to recover
from the respondent the costs incurred, in the event of a successful
defence to
the respondent’s claim. The Rule states no grounds
upon which one party may claim security for costs from the other.
[4] It is conceded that the respondent
who, as a
peregrinus
with no assets in this country, can be
called upon to give security for costs in the action against the
applicant, an
incola
.
The circumstances of this matter will be examined in the light of the
object of this rule of practice which, in
Saker
& Co Ltd v Grainger
and,
as followed in all our courts, is the protection of an
incola
3
in proceedings initiated by a
peregrinus
and,
as is the object of s 13 of the Companies Act 61 of 1973, which
relates to a body corporate or company, to ensure that plaintiffs
or
applicants not effectively at risk of an adverse costs order if
unsuccessful, do not institute litigation ‘vexatiously
or in
circumstances where their prospects of success are poor.’
4
In
Keary
Developments Ltd v Tarmac Construction Ltd and Another,
Gibson LJ stated that in considering
all the circumstances the court will have regard to the plaintiff’s
prospects of success
but it should not go into the merits in detail
unless it can clearly be demonstrated that there is a high degree of
success or
failure.
5
The matter also needs to be considered
in the light of s 34 of the Constitution.
[5] I turn now to consider whether the
respondent is effectively at risk of an adverse costs order if
unsuccessful in the action
against the applicant and his
co-defendants. I observe, in regard to one of several guiding
principles to be derived from
Magida
v Minister Police
6
that the respondent is clearly not a
vagabond without a fixed residence. An
incola
is entitled to protection from a
foreign vagabond who litigates without risk of his assets being
endangered by a successful defendant’s
claim for costs. The
respondent is, in my view, an honourable man. He is a professional
engineer with 33 years’ experience.
Even in the case of a
vagabond though, the court would not readily be more disposed to
ordering him to furnish security if he possessed
fixed property in
respect of which he could furnish a hypothec
7
.
Clearly therefore, whether a person is a vagabond or not is not
necessarily decisive. It does not dispose of the question whether
or
not litigation is instituted effectively at risk of an adverse costs
order.
[6] One other principle laid down in
Magida v Minister of Police
is that no one should be required
to furnish security beyond his means to an
incola
. In this
matter the amount of security is not contested. The respondent has
disclosed movable property to the approximate value
of $ 60 000.
Although it is not in dispute that he resides in a place with a
civilised legal system, where there would be nothing
to prevent
enforcement on the judgment on costs, a clear picture of his
executable assets is not provided as he has not disclosed
whether any
of his assets, which include ‘personal clothing’
‘miscellaneous household furniture’ and ‘appliances’
are immune from execution or not, and, if so, the value of such
assets. In regard to immovable property, no more was stated by
the
attorney who deposed to the answering affidavit on behalf of the
respondent than
‘
I am still
awaiting details on the plaintiff’s immovable property
’
It was also not indicated whether the
plaintiff has liabilities; nor was it indicated whether any of the
plaintiff’s assets
are encumbered.
[7] What also exacerbates the problem
of determining the respondent’s ability to pursue the action,
should he be required
to give security, is whether the respondent is
‘… clearly not a man of straw’ or whether his
‘current
cash flow is precarious’ as his position is
ambivalently described in his affidavit’s paragraphs 13 and 8
respectively.
There is, in the light of the foregoing, no clear
evidence as to the effect of an order to give security on the
respondent’s
ability to pursue the action should he be required
to provide security. In
Keary
Developments Ltd v Tarmac Construction Ltd and Another
8
the court held that before the court
refuses to order security on the ground that it would unfairly stifle
a valid claim, the court
must be satisfied that, in all the
circumstances, it is probable that the claim would be stifled. In
this matter there is no evidence
to so satisfy the court.
[8] It was also submitted on behalf of
the respondent that litigation would have been obviated if the
applicant had responded to
his request for certain information. The
respondent did not furnish the detail of the information requested.
The applicant has
appended annexure “C” to his replying
affidavit as reflecting the requested information. It is not clear as
to how
the response to information as sought in annexure “C”,
would have obviated litigation when viewed in the light of the
respondent’s claim and the defence thereto. It is however clear
from what reflects in the answering affidavit deposed to
on behalf of
the respondent that the respondent had, up to the time of institution
of the action, not determined which defendant
was responsible for the
malfunctioning of the elevator and the actual basis of liability of
any particular defendant to sustain
his claim. In paragraph 9 he
states:
‘
The first
defendant could have avoided this litigation had it responded to the
plaintiff’s request for information. It did
not do so. In the
result, the plaintiff has been unable to determine which of the
defendants is responsible for the malfunctioning
elevator which
caused his severe injuries.
’
Without going into the merits of the
case, it is fair to state that this evinces a negative bearing on the
respondent’s prospects
of success in the action.
[9] I deal now with the respondent’s
submission that if he be compelled to provide security, it would
severely impact on his
ability to continue with the litigation
against the applicant and the other defendants, and consequently
constitute an unreasonable
limitation of a right in terms of s 34 of
the Constitution which entitles everyone to have any dispute that can
be resolved by
the application of the law decided in a fair public
hearing before the court. The constitutionality of Uniform Rule 47 is
not in
issue in these proceedings. The Rule itself cannot be properly
perceived as operating to defy the provisions of s 34 of the
Constitution.
It is, as was stated by O’Regan J in
Giddey
N O v J C Barnard and Partners
9
with reference to s 13 of the
Companies Act 61 of 1973, ‘not capable of being read, in light
of the Constitution or otherwise,
to mean that a court has no
discretion to order security to be furnished where the effect of that
order will be to terminate litigation’.
As the court enjoined
in that case, this court in the present matter, has borne in mind the
provisions of s 34 of the Constitution
and weighed them in the light
of other facts placed before it and the potential injustice to the
respondent if he be prevented
from pursuing a legitimate claim, as
well as the potential injustice to the applicant, if it succeeds in
its defence but cannot
recover its costs, bearing in mind the
salutary effect of the ordinary rule of costs that unsuccessful
litigants must pay the costs
of their opponents.
In
Giddey
NO v J C Barnard and Partners
10
the court rejected the following
criticism of the reasoning of the court in
Shepstone
& Wylie and Others v Geyser N O
11
“
Let me say at the
outset that the fact that an order of security will put an end to the
litigation does not by itself provide sufficient
reason for refusing
it. It is a possibility inherent in the very concept of a provision
like s 13 which comes into operation whenever
it appears to the Court
that the plaintiff or applicant will not be able to pay the defendant
or respondent’s costs in the
event of the latter being
successful in his defence. If there is no evidence either way, the
mere possibility that the order will
effectively terminate the
litigation can plainly not affect the Court’s decision. It only
becomes a factor once it is established,
it remains no more than a
factor to be taken into account; by itself it does not provide
sufficient reason for refusing an order.
”
[10]
I accordingly make the following order:
That
the respondent (plaintiff) be and is hereby ordered to furnish
security to the applicant (first defendant) in the amount
of
R300,000 within seven (7) days of the date of this order;
that
in the event that the respondent (plaintiff) does not comply with
paragraph (a) above, the applicant (first defendant) shall
be
entitled to apply on these papers supplemented in so far as it may
be necessary, for an order dismissing the respondent’s
(plaintiff’s) claim;
that
the costs of this application be paid by the respondent (plaintiff).
Appearances:
For Applicant (First Defendant): Adv A
J Boulle,
instructed by Deneys Reitz Inc,
Durban.
For
Respondent (Plaintiff): Adv A A Gabriel,
instructed by Malcolm Lyons &
Brivik Inc, Cape Town.
1
1987
(1) SA 1
(A) at 12A-B
2
[1995]
3 All ER 534
(CA) at 540a-b
3
1937
AD 223
at 227
4
See
Giddey NO v J C Barnard and Partners
2005 (5) SA 525
(CC) para 7
5
Cited
above n 2 at 540d-e
6
Cited
above n 1 at 12E-13G
7
Ibid
at 12E-F
8
Cited
above n 2 at 540f-g
9
[2006] ZACC 13
;
2007
(5) SA 525
(CC) para 29
10
Cited
above n 4 para 27
11
1998
(3) SA 1036
(SCA)