Silvercraft Helicopters (Switzerland) Ltd and Another v Zonnnekus Mansion (Pty) Ltd, Silvercraft Helicopters Ltd and Another v Executive Helicopters (Pty) Ltd and Others; Antares International Ltd and Another v Executive Helicopters (Pty) Ltd and Others (11418/2007,14624/2007, 16340/2007) [2008] ZAWCHC 119; 2009 (5) SA 602 (C) (27 October 2008)

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[2008] ZAWCHC 119
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Silvercraft Helicopters (Switzerland) Ltd and Another v Zonnnekus Mansion (Pty) Ltd, Silvercraft Helicopters Ltd and Another v Executive Helicopters (Pty) Ltd and Others; Antares International Ltd and Another v Executive Helicopters (Pty) Ltd and Others (11418/2007,14624/2007, 16340/2007) [2008] ZAWCHC 119; 2009 (5) SA 602 (C) (27 October 2008)

IN THE HIGH COURT OF SOUTH AFRICA
(CAPE OF GOOD HOPE PROVINCIAL DIVISION)
Case
no 11418/2007
In
the matter between
SILVERCRAFT
HELICOPTERS (SWITZERLAND) LTD
First
Plaintiff
ANTARES
INTERNATIONAL LTD
Second
Plaintiff
and
ZONNNEKUS
MANSION (PTY) LTD
Defendant
Case
no 14624/2007
In
the matter between
SILVERCRAFT
HELICOPTERS LTD
First
Plaintiff
ANTARES
INTERNATIONAL LTD
Second
Plaintiff
and
EXECUTIVE
HELICOPTERS (PTY) LTD
First
Defendant
ZONNEKUS
MANSION (PTY) LTD
Second
Defendant
GARY
WALTER VAN DER MERWE
Third
Defendant
GARY
MARK FOX
Fourth Defendant
WILLIAM
ANDREW OLMSTED
Fifth
Defendant
and
Case
no 16340/2007
In
the matter between
ANTARES
INTERNATIONAL LTD
First
Plaintiff
SILVERCRAFT
HELICOPTERS (SWITZERLAND) LTD
Second
Plaintiff
and
EXECUTIVE
HELICOPTERS (PTY) LTD
First
Defendant
ZONNEKUS
MANSION (PTY) LTD
Second
Defendant
GARY
WALTER VAN DER MERWE
Third
Defendant
GARY
MARK FOX
Fourth Defendant
WILLIAM
ANDREW OLMSTED
Fifth
Defendant
_____________________________________________________________
Cover sheet
_____________________________________________________________
Counsel for the PLAINTIFFS :
Adv G Myburgh SC
Adv N Badenhorst
Instructed by :
Counsel for the DEFENDANTS :
Adv
MJ Fitzgerald SC
: Adv G Elliott
Instructed by :
Date of hearing
:
21 August 2008
Date of Judgment : 27 October 2008
IN THE HIGH COURT OF SOUTH AFRICA
(CAPE OF GOOD HOPE PROVINCIAL DIVISION)
Case
no 11418/2007
In
the matter between
SILVERCRAFT
HELICOPTERS (SWITZERLAND) LTD
First
Plaintiff
ANTARES
INTERNATIONAL LTD
Second
Plaintiff
and
ZONNNEKUS
MANSION (PTY) LTD
Defendant
Case
no 14624/2007
In
the matter between
SILVERCRAFT
HELICOPTERS LTD
First
Plaintiff
ANTARES
INTERNATIONAL LTD
Second
Plaintiff
and
EXECUTIVE
HELICOPTERS (PTY) LTD
First
Defendant
ZONNEKUS
MANSION (PTY) LTD
Second
Defendant
GARY
WALTER VAN DER MERWE
Third
Defendant
GARY
MARK FOX
Fourth Defendant
WILLIAM
ANDREW OLMSTED
Fifth
Defendant
and
Case
no 16340/2007
In
the matter between
ANTARES
INTERNATIONAL LTD
First
Plaintiff
SILVERCRAFT
HELICOPTERS (SWITZERLAND) LTD
Second
Plaintiff
and
EXECUTIVE
HELICOPTERS (PTY) LTD
First
Defendant
ZONNEKUS
MANSION (PTY) LTD
Second
Defendant
GARY
WALTER VAN DER MERWE
Third
Defendant
GARY
MARK FOX
Fourth Defendant
WILLIAM
ANDREW OLMSTED
Fifth
Defendant
_____________________________________________________________
Judgment
_____________________________________________________________
In the above three applications the
defendants seek the furnishing of security from the plaintiffs. It
is not in dispute that
the plaintiffs, as
peregrine,
are obliged to furnish such security
in respect of the two actions instituted by them and they have now
tendered such security.
What is in dispute, however, is whether they
are obliged to furnish any security in respect of the claims in
reconvention filed
by the defendants in the two actions and whether
they are obliged to furnish security in respect of the contempt
proceedings
launched against the defendants.
It appears from the papers, and in
particular the judgement of Cleaver J, delivered on 28 November 2007
and annexed to the application
for security in the contempt
proceedings, that the parties are litigating about six helicopters.
Antares International Ltd is a
company registered in the Channel Islands with a registered address
in Guernsey whilst Silvercraft
Helicopters (Switzerland) Ltd is a
Swiss company. Antares carries on business in the sourcing,
purchasing and sale of
inter
alia
new and second hand
military helicopters and helicopter parts. Silvercraft is a wholly
owned subsidiary of Antares and conducts
the same business as
Antares in relation to all transactions concluded in and business
executed in Switzerland. Mr La Scala is
the sole shareholder of
Antares and a director of both companies.
Antares and Silvercraft contend that
Antares is the owner of six helicopters and that at the time of
delivery of the helicopters
to Executive Helicopters (Pty) Ltd for
either refurbishment or display, they were in the possession of
Silvercraft. Antares and
Silvercraft claim that they are entitled to
the return of six helicopters. Executive refused to return the
helicopters and, instead,
asserted that it had bought and paid for
the helicopters.
On 2 August 2007 Sholto-Douglas AJ
granted an order for the attachment of two of the helicopters
pendente lite
together with ancillary relief and
dismissed the application for attachment in respect of the other
four helicopters.
On 16 October 2007 Griesel J granted
in an
ex parte
application
an interim order for the attachment of these four helicopters.
Griesel J also granted, presumably as a rule
nisi
,
an order that the respondents were in contempt of the order granted
by Sholto-Douglas AJ as well as an order committing Mr Gary
Walter
van der Merwe, Mr Gary Fox and Mr William Olmsted to a term of
imprisonment resulting from their alleged contempt.
The activities at the premises of
Executive and Zonnekus Mansion (Pty) Ltd while the sheriff was
attempting to execute the order
granted by Griesel J led to the
applicants applying for a further order committing the respondents
for contempt of court.
Cleaver J, on the return day,
confirmed the order for the attachment of the four helicopters and
referred for the hearing of oral
evidence the two contempt
applications. On 24 April 2008 Hlophe JP, by agreement, postponed
the hearing of both of the contempt
applications to 11 November
2008.
On 21 April 2008 Traverso DJP, by
agreement between the parties postponed the application for security
of costs in respect of
both the contempt applications to 21 August
2008, to be heard along with the two other applications for security
of costs brought
by the defendants in respect of the two actions.
It is these latter three applications
for security which served before me.
Silvercraft and Antares duly
instituted their actions for the return of the helicopters. The
first action was instituted on 28
August 2007 against Zonnekus for
the return of two helicopters under case number 11418/2007. In that
action Zonnekus filed a
claim in reconvention wherein an amount of
R5 million is claimed arising from the fact that by virtue of the
attachment of the
two helicopters Zonnekus would have lost that
amount as income from leasing the helicopters to an organisation
known as “Working
for Fire”, which utilises helicopters to fight
fire, by the time the trial takes place.
The second action was instituted on
13 November 2007 by Silvercraft and Antares against Executive,
Zonnekus and Messrs van der
Merwe, Fox and Olmsted for the return of
the other four helicopters under case number 16430/2007. In that
action Zonnekus, the
second defendant, filed a similar claim in
reconvention, claiming there a loss of R8,7 million.
In both actions the defendants seek
in terms of Uniform Rule of Court 47 orders directing the plaintiffs
to furnish security for
the defendants’ costs as well as, in terms
of the common law, for an order directing the plaintiffs to furnish
security both
for the value of Zonnekus’ claim in reconvention as
well as the costs of the Zonnekus’ claim in reconvention.
On 25 July 2007 a notice in terms of
uniform Rule of court 47 (1) were served on the plaintiffs’
attorneys in which security
for the defendants’ costs was
requested to be furnished in the first action in the amount of R
250, 000.00. On 14 September
2007 the plaintiffs’ attorneys was
advised that the plaintiffs would not furnish any security.
On 5 December 2007 the defendants’
attorneys served a notice in terms of Rule 47(1) on the plaintiffs’
attorneys demanding
security for the defendants’ costs in the
second action in the amount of R250 000.00.
The demands for security is made on
the admitted grounds that the plaintiffs are foreign
peregrini
of the court, that the defendants are
incola
of
the court and that the plaintiffs are not possessed of unmortgaged
removable property situated within the jurisdiction of the
court and
furthermore.
With regard to the financial position
of the plaintiffs, it is contended with reliance being placed on an
e-mail of 5 October
2006 send by Mr La Scala in short, that the
plaintiffs are in dire financial straits. It was submitted on behalf
of the defendants
that by the time they will be in a position to
execute any judgment in respect of costs or the claim in
reconvention – which
execution will of necessity have to take
place overseas – the overwhelming probability will be that the
plaintiffs will have
insufficient assets to satisfy same.
The plaintiffs dispute that the
defendants have reason to believe they will be unable to satisfy any
cost order on the claim in
convention should one be granted against
them in the action or Zonnekus’ claim in reconvention, if
successful; and the costs
of Zonnekus’ claim in reconvention if
successful.
The plaintiffs, however, have
conceded their obligation to furnish security for the defendants’
costs in the action and what
remains to be considered is whether
Zonnekus is entitled under the common law to an order directing the
plaintiffs to furnish
security for both the value of its claim in
reconvention as well as for the costs of its claim in reconvention.
In the contempt application the
defendants, save for the fourth defendant, Mr Fox, require that the
plaintiffs be ordered to furnish
defendants with security for their
costs.
On 12 March 2008 the defendants’
attorneys served a notice in terms of uniform Rule of court 47(1)
and the plaintiffs’ attorneys
requiring plaintiffs to provide
security in the amount of
R 175, 000.00. The plaintiffs did not
respond to the notice.
There are in fact two contempt
applications.
An application instituted by the
plaintiffs against the defendants on 15 October 2007 for an order
declaring the defendants
to be in contempt of the order of court
made by Sholto-Douglas AJ on 2 August 2007 in terms of which an
order was granted for
the preservation of two helicopters (then) in
possession of the second defendant.
An application instituted by the
plaintiffs as applicants against the defendants on 17 October 2007
also under the above case
number, for an order declaring the
defendants to be in contempt of the order of court made by Griesel
J on 16 October 2007
under the same case number (the second
application for contempt). The order by Griesel J was made final by
Cleaver J in terms
of a written judgment delivered on 28 November
2007. In terms of Cleaver J’s order both the first and second
applications
for contempt were to be heard on a semi-urgent roll,
which date was ultimately determined to be 24 April 2008. On 15
April
2008 the defendants launched an application for security for
costs in respect of the contempt application – a mere four court

days before the hearing of the contempt application.
In the event of non-compliance of any
of the above orders for security, the defendants seek an order that:
the proceedings in the action be
automatically stayed;
the attachment orders granted shall
ipso facto
lapse;
the defendant may further apply on
the same papers, supplemented if necessary, for:-
the dismissal of the two actions with
costs;
judgment on the second defendant’s
claim in reconvention.
The defendants finally seek an order
that the first and second plaintiffs pay the costs of the
applications jointly and severally.
In the premises two issues arise for
consideration. The first is whether and to what extent security
should be ordered in respect
of the claims in reconvention made by
Zonnekus. The second is whether security should be ordered in
respect of the contempt proceedings.
It is trite law that the courts have
a discretion to grant or refuse an application for security and in
coming to a decision will
consider the relevant facts of each case.
Hardship to the
peregrinus
and financial ability to provide
security are taken into account but are not necessarily decisive.
The Court should have due regard
to the particular circumstances of
the case and consideration of equity and fairness to both the
incola
and the non-domiciled foreigner.
See Herbstein & Van Winsen
The
Civil Practise of the Supreme Court of South Africa
(4
th
ed) at pp 321-322 and the authorities
cited therein.
It was also not in
dispute that
security
for costs must be given even though the suit of the
peregrinus
is likely to be successful.
See
Freer
v Oesterman
(1908) 18 CTR
662.
The practice is clearly established
that the Court will not in applications for security enquire into
the merits of the dispute
or the
bona
fide
of the parties.
See
Arkell
& Douglas v Berold
1922
CPD 198
Estate Fawcus v Wood
1934
CPD 234
at 249
Williamson AJ held in
Alexander
v Jokl and Others
1948 (3)
269 (W) at 281:
“
The
bona
fides
or
the soundness of the claim of the
peregrinus
is at no
time a factor which influences the discretion to be exercised in
deciding whether or not an
incola
should be
protected against possible loss in regard to the costs of defending
the claim brought against him. The Court in ordering
security for
such a purpose does not in any way anticipate the eventual decision
on the claim by investigating and weighing up
at that stage the
possibilities of success or the
bona
fides
of
the claim…
”
The first dispute
arises from
Saker
& Co Ltd v Grainger
1937
AD 223
, where the Appellate Division held at 227 that “
it
is also well-established practice that such a plaintiff can further
be called upon to give reasonable security for a claim
in
reconvention by the resident defendant
”
(referring to
Schunke
v Taylor
(1891) 8 SC 104
and
Van Leeuwen Roman Dutch
Law
5.17.9).
De
Wet JA emphasized that the ordering of security was not a rule of
substantive law but one of practice in which the court has
a
discretion. The principle underlying this practice was that in
proceedings initiated by a
peregrinus
,
the court is entitled to protect an
incola
to the fullest
extent.
Mr Fitzgerald, who
together with Mr Elliott, appeared for the defendants,
submitted
that I was bound by the decision and that it confirmed as a
well-established practice that a
peregrine
plaintiff can be called
upon to give reasonable security for a claim in reconvention by the
resident defendant.
Mr Myburgh
,
who assisted by Ms Badenhorst appeared for the defendants
contended that i
n
that case, the only question in issue was whether or not the
respondent, a
peregrinus
,
should be ordered to furnish security for the unsatisfied costs of
the applicant, an
incola
,
in the appeal which the latter has noted. The remark by the Court to
the effect that a
peregrinus
plaintiff can be called upon to give
reasonable security for a claim in reconvention by the
incola
defendant (at 226), was therefore
obiter
.
Mr Myburgh made a compelling argument
as to why this well-known, and if I understood correctly, oft quoted
statement, was
obiter.
Joubert JA in
Magida
v Minister of Police
1987
1 SA 1
(A), however, expressly refers to it as a
dictum
(at 14F-G).
Southwood AJ, pointed out in
MV
Gladiator Samsun Corporation t/a Samsun Line Corporation v Silver
Cape Shipping Co Malta
2007(2)
410 (D) that whereas in
Saker’s
case only the question of security
for costs on appeal had to be considered, the cases of
Schunke
v Taylor and Symonds
supra
;
Taylor v Merrington
(1885) 2 SAR 30;
Prentice
& Mackie v Bell’s Assignee
1906
TH 29
and
Africair
(Rhodesia) Ltd v Interocean Airways SA
1964
(3) SA 114
(SR)
“
are all
authority for the proposition that a
peregrinus
plaintiff can be ordered to
give security for a claim in reconvention”
(at
409C).
It seems to me that in the case of a
practice it is a matter of procedural rather than substantive law.
The distinction between
procedural and substantive law was drawn by
Corbett J (as he then was) in
Universal
City Studios Inc and Others v Network Video (Pty) Ltd
[1986] ZASCA 3
;
1986 (2) SA 734
(A) at 753H – 754
with reference to Salmond Jurisprudence 11th ed at 504 who states
that
‘
Substantive law is concerned with the ends
which the administration of justice seeks; procedural law deals with
the means and instruments
by which those ends are to be attained.’
It is difficult to compose a closer definition of the distinction
than this
.”
In the premises I will approach the
question as one of a matter of practice, in which the Court has a
discretion as to whether
or not it should order security for the
full amount of the claim. This would accord with what De Wet JA held
in
Saker
& Co Ltd v Grainger
,
supra
,
which I find is binding on me. The question then is how that
discretion is to be exercised.
In
Magida
v Minister of Police
1987
(1) SA 1
(A) at 14E-G Joubert JA held that a Court had a discretion
to absolve a
peregrinus
from being ordered to pay security
before it applied the principle “
that
in proceeding initiated by a
peregrinus
,
the court is entitled to protect an
incola
to
the fullest extent.”
As was, however,
also pointed out by Joubert JA in
Magida
,
supra
,
at 14E, the court still has to exercise a judicial discretion
“
by having due
regard to the particular circumstances of the case as well as the
consideration of equality and fairness to both the
incola
and the
peregrinus
to decide
whether the latter should be compelled to furnish, or be absolved
from furnishing, security for costs, Nor is there any
justification
for requiring the Court to exercise its discretion in favour of a
peregrinus
only
sparingly.
”
In this regard, no
one should be compelled to furnish security beyond his means and a
peregrinus
should not on
account of his impecuniosity be deprived from prosecuting his action
against an
incola
(see
Magida
at 15E).
At the same time, however, the Court
will see that justice is not denied by unreasonable obstacles being
placed in the way of
persons seeking redress.
See Herbstein & Van Winsen
supra
at p322
Schunke v Taylor & Symonds
1891 (8) SC 103
at 107
As Wunsch J observed in
D-Jay
Corporation CC v Investor Management Services
1996
CLR 854
(W) at 861
“
They (the
rules for the furnishing of security for costs) are, in any event, a
matter of practice of the courts and not substantive
law (see
Africair
(Rhodesia) Ltd v Interocean Airways SA
1964 (3)
SA 114
(SR) at 116 G and cases there cited). Against the general rule
referred to in
Van
Zyl v Euodia Trust (Edms) Bpk
,
supra
1
that an
incola should have unrestricted access to the courts should be
weighed the principle, which applies in South Africa as much
as in
England, ‘
that the system
of justice which prevails in this country is founded on the premise
that the interest of justice are ordinary best
served if successful
litigants recoup the costs of their litigation, or the bulk of those
costs, and unsuccessful litigants pay
them’
(
Keary
Developments Ltd v Tarmac Construction Ltd
(1995) 3
All ER 534
(CA) at 536c), which is the approach on which section 13
2
is
based.”
In
South
African Iron & Steel Corporation Ltd v Abdulnabi
1989
(2) SA 224
(T) Hartzenberg J held
“
There is no
doubt that a
peregrinus
plaintiff
can be ordered to give security for the costs of an
incola
defendant
and also for the amount of the judgment which may be awarded against
it on a claim in reconvention
”
(at
232H-233B)
The soundness of that judgment was
questioned by a full bench in the WLD in
B
& W Industrial Technology (Pty) Ltd & Others v Baroutsos
[2005] ZAGPHC 93
;
2006 (5) SA 135
(W) in which Marais
J, speaking for the court, stated at para [41] that
“
It is
somewhat difficult to understand how Hartzenberg J in the
SA
Iron and Steel Corporation
case at
233C understood (the case of
Schunke
v Taylor and Symonds
(1891)
8 SC 103
to be authority for the proposition that a peregrinus
plaintiff can be ordered to give security for a claim in
reconvention.”
In
B
& W Industrial Technology (Pty) Ltd and Others v Baroutsos
,
supra
,
Marais J came to the conclusion that, insofar as a practice existed
to permit a court to order security for the amount of the
claim
where an
incola
counterclaims against a
peregrinus
plaintiff, it, in present
day circumstances, should not be followed, save perhaps in the most
exceptional of circumstances. The
Court concluded that it was not in
accordance with modern commercial needs nor was it just or equitable
to impose such a burden
on
peregrinus
plaintiff who chose to sue their
alleged debtors in South African courts (at para [42]).
The Court held that at para [37] the
equity and fairness of directing security for costs where in
incola
defendant is sued by a
peregrinus
plaintiff, is far more readily
apparent than what is the case where an
incola
defendant demands security from the
peregrinus
plaintiff
to the judgment likely to be obtained against him. In the case of
the former, the claim is brought by the
peregrinus;
in the case of the latter,
the claim is brought by the
incola
who chooses to sue the
peregrinus
plaintiff in a domestic court in the
same action, instead of instituting a separate action in the
latter’s own country were
he/she resides or is domiciled.
The court held (at para [40] and
[42]) that it is neither in accordance with modern commercial needs,
nor just and equitable to
impose the burden of having to give
security for the amount of an
incola
defendant’s counterclaim, on a
peregrinus
plaintiff – particularly in
circumstances where the
peregrinus
plaintiff resides in a civilised
country with a civilised legal system and where there is nothing
preventing the
incola
defendant, given the present ease of
travel and communication, from suing the
peregrinus
plaintiff is his/her own country.
The court accordingly refused to make
an order, directing the
peregrinus
plaintiff to give security for the
potential value of an
incola
defendant’s claim in reconvention.
While the court conceded that the
remedy might, in principle, be available, it stated that a court
should be slow to conclude
that considerations of fairness and
equity favour the granting of such security, and should do so only
in the most exceptional
of circumstances (if at all) (at para [38]
and para [42]). It is not clear from the judgment that “
the
most exceptional circumstances
”
might
entail.
I fully agree with what was said by
Marais J.
In an informative
article by Christian Schultze “
Should
a Peregrine Plaintiff Furnish Security for Costs for the
Counterclaim of an Incola Defendant?
which
appeared in (2007) 19 SA Merc LJ 393 – 399 the author wrote as
follows
“
Another
question was whether an order for security for the claim, or only for
costs, was to be made when an action (either in convention
or in
reconvention) is brought by an incola against a peregrinus.
In
Banks
v Henshaw
1962
(3) SA 464
(D & C), Milne J had held (at 465E and 466E):
“
In general, a peregrinus will not be ordered to furnish
security where he is the defendant but only where he claims against
an incola,
whether as plaintiff or as claimant in reconvention, in
which case he may be ordered to provide security to cover the costs
of
the incola… When, however, the applicant filed a counterclaim
against the respondent, he laid himself open to a claim for security,

but only for the costs of the action and no more”.
This was
confirmed in
Sandrock
Austral Ltd v Exploitation Industrialle et Commerciale ‘Bretic
1974 (2) SA 280
(D & C) at 285H-286E. Subsequently, in
Elscint
(Pty) Ltd & Another v Mobile Medical Scanners (Pty) Ltd
1986 (4) SA 552
(W), Goldstone J held (at 557H) that
“
[c]onsideration of fairness and justice and the reality of
modern international commerce and efficient means of travel and
communication
militate against treating foreign defendants who have
submitted to the jurisdiction more harshly than incola defendants”.
Referring to
these decisions, Marais J could (at 16) find
“
no
compelling reason to distinguish between the appropriate approach
when the claim is made by an incola plaintiff in convention
and the
present situation where the claim is made by the incola defendant in
reconvention”
.
Marais J’s
argument is supported by the finding in
Schunke
v Taylor Symonds
(supra
at 110-1). In that case, the Court held that a defendant is
sufficiently protected from being unduly harassed by unfounded
claims
by compelling a foreign plaintiff to give full security for costs
either expressly or by being possessed of property available
in case
of his failing in his action. To compel such plaintiff, who follows
his debtor to such debtor’s domicile, and sues him
in his own
forum, to furnish security for any amount of damages which such
debtor alleges he intends to claim by way of reconvention,
would open
the way to a denial of justice.
In summarizing the above, it is
important to differentiate between two aspects.
First, it is an
established practice and not part of the substantive law (as was
confirmed in
Saker
& Co Ltd v Grainger
supra
at 227) that a court may order security for the judgment on the
counterclaim of the resident defendant against the foreign
plaintiff.
Secondly, by
applying this practice, the court has discretion and has to consider
all the circumstances of the case, including general
considerations
of equity and fairness to both parties (see
Magida
v Minister of Police
supra
at 14).
In exercising the discretion, the
court has to take into consideration the changes of practice which
had occurred as a result of
the evolution of modern technology. It
goes without saying that, as a general rule, a foreign plaintiff can,
in the discretion
of the court, be compelled to give security for
costs… The underlying principle is to protect the incola to the
fullest. However,
the quest to protect a defendant who is domiciled
within the area of the jurisdiction of the court sufficiently against
unfounded
claims by a foreign plaintiff would be overstretched if the
court were to make an order compelling such plaintiff to provide
security
for any amount of money which the defendant alleges he
intends to claim by way of reconvention. The court must consider all
the
circumstances connected with the claim and determine the nature
and extent of security which should be given, so as to protect the

claimant, on the hand, and to see that justice is not denied, on the
other hand. To order a peregrine plaintiff to furnish security
in
respect of a claim by an incola in reconvention could, if made a
general rule, result in a denial of justice.”
I am in agreement with this lucid
analysis and adopt it.
In view of the foregoing, I am of the
view that there is indeed a practice operating in this Division that
would permit the Court
to grant an order, directing the plaintiffs
to give security for the potential value, and costs, of the second
defendant’s
claim in reconvention, but that all the circumstances
should be considered before a plaintiff is compelled to provide
security
in full for a claim in reconvention.
Mr Myburgh submitted that a
consideration which weighs against the defendant is that the
Sholto-Douglas AJ has already refused
the defendants’ request that
security be furnished in support of the undertaking given in respect
of the defendants’ alleged
damages – which damages from the
basis of their claim in reconvention.
Sholto-Douglas AJ was informed by Mr
Myburgh, who also appeared before him on behalf of the defendants,
that Silvercraft undertook
to pay such damages as Zonnekus may
establish that it suffered as a result of the attachment of the
helicopters. This undertaking
was considered by Sholto-Douglas AJ as
a factor in considering the issue of balance of convenience.
Sholto-Douglas AJ considered
whether, in addition to the
undertaking, and by virtue of the fact that the applicants were
peregrine,
security should be ordered. He found
that he was unable to determine if, or to what extent, Zonnekus will
suffer damages if an
interim interdict is granted and the action is
ultimately dismissed. He held that net effect was that issue of an
undertaking
and the furnishing of security was neutral.
Sholto-Douglas AJ remarked that Zonnekus was not entitled to an
order for security
in support of the undertaking. Mr Myburgh did not
contend that a binding finding was made, he contended that it was a
factor
to be taken into account.
Mr Fitzgerald submitted that an
undertaking to pay damages can never be a substitute for the actual
payment of the value of the
claim as security. I agree.
The plaintiffs also state that they
have been compelled to institute proceedings against the defendants
for the return of helicopters
which Zonnekus allegedly acquired with
full knowledge of the plaintiffs’ claim in respect of those
helicopters and the plaintiffs’
intention to institute proceedings
for the recovery thereof from Zonnekus. The plaintiffs contend that
this was done in an attempt
to thwart their attempts to recover the
helicopters from Zonnekus.
Accordingly, the plaintiffs submitted
that it would not be just and equitable to compel the plaintiffs to
provide security for
the costs of the action in circumstances where
the defendants were aware of the dispute and the claim in respect of
the helicopters
by the plaintiff.
More particularly, so it was
submitted, the defendants took possession of the helicopters in the
face of a dispute and, having
taken that risk, should face the costs
and risks of the attendant litigation resulting therefrom.
Mr Fitzgerald submitted that the
plaintiffs’ attempt to introduce the merits of the action into the
question of security should
not be countenanced in the light of the
authorities referred to in paragraphs 29 and 0 above. In any event,
the circumstances
upon which the second defendant took possession of
the helicopters were unilaterally disclosed by it in the answering
affidavit
filed of record during July 2007.
No doubt these disputed allegations
of impropriety and lack of
bona
fides
will be traversed at
the trial. I, mindful of the above authorities, refrain from
entertaining the argument advanced on behalf
of the plaintiffs.
Mr Myburgh submitted that there was
nothing exceptional about the present application that would justify
the granting of an order
for the full amount of the claims in
reconvention. The first and second plaintiffs are resident or
domiciled in civilised countries
with civilised legal systems and
there is nothing preventing the defendants from suing them in
Switzerland and Great Britain
respectively. I tend to agree. I am of
the view that to order security for the full value of the
defendants’ counterclaims
would amount to a denial of justice. Mr
Fitzgerald, at the outset of his argument also made it clear that he
was not pursuing
such a claim. He submitted that a lesser amount,
left in my discretion, should be ordered. He pointed out that that
would accord
with what was held in
Saker’s
case and
Schunke
v Taylor Symonds
,
supra.
He pointed out that to merely order
security for the cost of the claim in reconvention may be
meaningless, after all, one would
often not be able to distinguish
between the costs of the claim and the claim in reconvention. In
this regard what comes to mind
in the context of considering whether
a defendant should be ordered to furnish security in respect of its
claim in reconvention,
is what Aaron AJ said in
Compair
SA (Pty) Ltd v Global Chemical Co (Pty) Ltd
1985
(1) SA 532
(C) at 532-533A
“
A
counterclaim is technically separate and distinct from the claim in
convention, and it is probably competent to order, in a proper
case,
that a defendant give security for the costs of the counterclaim.
Nevertheless the issues in the conventional action and
the
reconventional action may be so closely related that, if the Court
orders a plaintiff in reconvention to give security for
costs, it may
in effect be ordering it to give security for the costs brought about
by its defence of the action in convention.
Accordingly, although it
may be competent for a Court to order security to be given by a
plaintiff in reconvention, the Court may
in the exercise of its
discretion decline to do so in such cases.”
In the instant case, it appears that
the claims in reconvention, are not merely defensive proceedings and
one does not know how
the trial may proceed. The claims in
reconvention total some R13,7 million. I don’t know what the value
of the 6 helicopters
is. The defendants have estimated their costs
of defending the two actions at R250 000 per action and in respect
of the contempt
proceedings at R175 000. I can take no view on the
quantum that should be ordered in respect of the claims in
reconvention. Justice
may very well be denied were I to order
security for a substantial amount in respect of the claims in
reconvention. On the other
hand the Zonnekus should be adequately
protected were I to order security for its costs in the claims in
reconvention. Any other
amount, in my view, would be a guess, and
accordingly not be an amount awarded in the proper exercise of a
discretion.
In the premises, I am of the view
that Zonnekus is entitled to security for the costs of its claims in
reconvention in the two
actions.
The final issue which requires
consideration is whether security for costs should be ordered in
respect of contempt of court proceedings.
In his answering affidavit on behalf
of the plaintiffs Mr Dewald Nel van den Berg, an attorney of this
court, submits as follows:
“
It is
respectfully submitted that there is no reason why a party, who has
good reason to believe that a criminal offence (namely
contempt of
court) has been committed and then report same to the court by way of
an contempt application, should have to put up
security for doing so.
If this were to be the case, the interests of justice would be
seriously prejudiced as it would discourage
parties from bringing
such an offence to the attention of the Court.”
Mr Myburgh pointed out that as far
has he could ascertain there was no reported cases where the High
Court has ordered an applicant
in contempt proceedings to furnish
security.
Mr Myburgh submitted that
Such an order is inappropriate in
contempt proceedings which, by their nature, are
quasi-
criminal,
and they stand on a different footing to ordinary proceedings.
There is no reason why a party, who
has good reason to believe that a criminal offence (namely
contempt) of court has been committed
and who reports same by way
of a contempt application, should have to put up security to do so.
If this were so, the interests
of justice would be seriously
prejudiced as it would discourage parties from bringing such an
offence to the attention of the
Court.
The plaintiffs are correct, in their
contention that contempt of court is a criminal offence, but I
disagree that the only way
of bringing such an offence to the
attention of the Court is by way of a contempt application. The
plaintiffs could have laid
a criminal charge. There is no suggestion
that that was done. The contempt application is brought for also for
the purpose of
enforcing the attachments and not merely to unmask
the criminal offence. It is, of course, the right of the plaintiffs
to do
so.
In
S
v Beyers
1968 (3) SA 70
(A) the then appellate division held that the wilful non compliance
with an interdict granted by a civil court constitutes the
crime of
contempt of court for which the state can prosecute. Steyn CJ
referred to
Verkoutering v
Savage
1918 TPD 62
where
the court held that an application for committal is a civil process
(at 77H-78A). Steyn CJ held as follows at 80C-G:
“
Dat daar ‘n
gevestigde prosedure bestaan waarvolgens ‘n gedingvoerder wat ‘n
bevel teen sy teenparty verkry het, in sy eie
belang bestraffing van
sy teenparty weens minagting van die Hof kan aanvra om gehoorsaamheid
aan die bevel af te dwing, val nie
te betwyfel nie. Dit is ‘n
proses van tweeslagtige aard wat volgens sivielregtelike prosedures
afgehandel word (vlg
Afrikaanse
Pers-Publikasie (Edms) Bpk v Mbeki
1964 (4)
SA 618
(A) op bl 626).
In
navolging van die Engelse reg word die minagting dan beskryf as
siviele minagting. Dit is egter ewe duidelik dat hierdie vorm
van
minagting nie deurgaans 'n strafregtelike inhoud ontsê nie. Dit
word telkens beskryf en behandel as 'n misdaad met geen
aanduiding
dat dit anders as die gemeenregtelike minagting van die hof beskou
word nie. . . . Die opvatting dat dit inderdaad 'n
misdaad is, blyk
ten duidelikste uit die feit dat 'n gewone straf opgelê word as
die aansoek slaag. Strafoplegging sonder
dat 'n misdaad gepleeg is,
sou in ons reg iets onbestaanbaar wees. Al is afdwinging van 'n
burgerlike verpligting die hoofdoel
van die straf, dan word dit
nogtans nie opgelê bloot omdat die verpligting nie nagekom is
nie, maar uit hoofde van misdadige
minagting van die Hof wat daarmee
gepaard gegaan het.”
In
Fakie
NO v CCII Systems (Pty) Ltd
[2006] ZASCA 52
;
2006
(4) SA 326
(SCA) Cameron JA held as follows at para [8] and [9]
“
[8] In the
hands of a private party, the application for committal for contempt
is a peculiar amalgam, for it is a civil proceeding
that invokes a
criminal sanction or its threat. And while the litigant seeking
enforcement has a manifest private interest in securing
compliance,
the court grants enforcement also because of the broader public
interest in obedience to its orders, since disregard
sullies the
authority of the courts and detracts from the rule of law.
[9] The test for when disobedience
of a civil order constitutes contempt has come to be stated as
whether the breach was committed
'deliberately and mala fide'. A
deliberate disregard is not enough, since the non-complier may
genuinely, albeit mistakenly, believe
him or herself entitled to act
in the way claimed to constitute the contempt. In such a case, good
faith avoids the infraction.
Even a refusal to comply that is
objectively unreasonable may be bona fide (though unreasonableness
could evidence lack of good
faith).”
There is to my mind, in principle,
nothing unjust in requiring security in contempt proceedings.
Section 9
of the
Criminal Procedure Act, 51 of 1977
, provides for
security to be furnished by the private prosecutors for the costs of
accused in private prosecutions (see for instance
Williams
and Another v Janse van Rensburg and Others
(1)
1989 (4) SA 485
(C)). In my view a factor, in applying the test laid
down in
Magida
’
s
case, would be to enquire whether security should be ordered in
contempt proceedings, rather than to proceed from the premise
that,
because it is contempt proceedings, it should not be required at
all.
Accordingly the mere fact of contempt
proceedings does not in itself absolve the plaintiffs from
furnishing security. And all
else being equal it must follow that
the plaintiffs are obliged to furnish security in the contempt
applications just as they
had tendered to do in the two actions.
The plaintiffs have placed no
evidence before this Court in support of the bald allegation that
they have sufficient assets to
satisfy any judgment.
I am satisfied that the defendants
have established a basis upon which the Court should exercise its
discretion in favour of the
defendants and order the plaintiffs to
furnish security for the defendants’ costs in the action (as
tendered) and for the costs
in the claim in reconvention but not for
the amount of the second defendant’s claim in reconvention. I am
also satisfied that
the defendants are entitled to security for
costs in respect of the contempt application.
In the premises I make the following
orders.
Under case number 11418/2007.
The first and second plaintiffs,
jointly and severally, are ordered to furnish the defendant with
security for its costs of the
claim in reconvention in the amount
and form to be determined by the Registrar of the Court (“the
Registrar”).
The first and second plaintiffs,
jointly and severally, are ordered to furnish the defendant with
security for the costs of the
defendant’s claim in reconvention in
this matter in the amount and form to be determined by the
Registrar.
That in the even of non-compliance
with either or both of the prayers 1 and/ or 2 above (or any part
thereof):
the proceedings under the above case
number will be automatically stayed;
the of attachment granted on 2
August 2007 under case number 9657/2007 shall
ipso
facto
lapse;
the defendant may further apply on
the same papers, duly supplemented if necessary, for:
the dismissal of the action under
case number 11418/2007, with costs;
judgment on its claim in
reconvention.
The first and second plaintiff,
jointly and severally, are ordered to pay the costs of this
application, which costs are to include
the costs of two counsel.
B.
Under
case number 16340/2007
The first and second plaintiffs,
jointly and severally, are ordered to furnish the defendants with
security for their costs of
the claim in convention in the amount
and form to be determined by the Registrar.
The first and second plaintiffs,
jointly and severally, are ordered to furnish second defendant with
security for the costs of
second defendant’s claim in reconvention
in this matter in the amount and form to be determined by the
Registrar.
That in the event of non-compliance
with either or both of the prayers 1 and/ or 2 above (or any part
thereof):
the proceedings under the above case
number will be automatically stayed;
the order of attachment granted on
28 November under case number 14624/2007 shall
ipso
facto
lapse;
the defendants may further apply on
the same papers, duly supplemented if necessary, for the dismissal
of the action under case
number 16340/2007, with costs;
the second defendant may further
apply on the same papers, duly supplemented if necessary, for
judgement on its claim in reconvention.
The first and second plaintiffs,
jointly and severally, are ordered to pay the costs of this
application, which costs are to include
the costs of two counsel.
C.
Under
case number 14624/2007.
The first and second plaintiffs,
jointly and severally, are ordered to furnish the defendants with
security for their costs of
the contempt of
court proceedings in
this matter in the amount and form to be determined by the
Registrar.
That in the event of non-compliance
with prayer 1 above:
that the contempt of court
proceedings under the above case number will be automatically
stayed;
the defendants may further apply on
the same papers, duly supplemented if necessary, for dismissal of
the contempt proceedings,
with costs.
The first and second plaintiffs,
jointly and severally, are ordered to pay the costs of this
application, which costs are to include
the costs of two counsel.
S Olivier AJ
27 October 2008
1
1983
(3) SA 394
(T)
2
of
the Companies Act, Act 61 of 1973