Serebolo v Paton and Another (79/02) [2003] ZANCHC 37 (20 June 2003)

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[2003] ZANCHC 37
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Serebolo v Paton and Another (79/02) [2003] ZANCHC 37 (20 June 2003)

Reportable: Yes /
No
Circulate to
Judges: Yes / No
Circulate
to Magistrates: Yes / No
IN THE HIGH
COURT OF SOUTH AFRICA
(Northern Cape
Division)
Case no: 79/02
Date
heard: 2003-06-13
Date
delivered: 2003-06-20
In
the matter of
:
JOHANNES
SEREBOLO APPLICANT
versus
THEOPHILUS
CECIL PATON 1
st
RESPONDENT
KLIPDRIFT
HOUSING CC 2
nd
RESPONDENT
Coram:
MAJIEDT
J
JUDGEMENT
ON COSTS
MAJIEDT
J:
In
this matter the applicant’s Counsel had, during the course of his
argument, withdrawn the applicant’s application and has
asked me
to decide the matter of costs. The respondents seek a special costs
order on the scale as between attorney and client
as far as the main
application is concerned and an order that the applicant pays the
costs of the respondents’ application for
security for costs.
2.1 In
order to decide the matter of costs, it is necessary to set out very
briefly the facts of this matter.
2.2 The
applicant sought an order in his notice of motion for a declarator
that he is entitled to a transfer of a 50% member’s interest
in the
second respondent and further an order for specific performance to
give effect to the aforementioned declarator.
2.3 In
the alternative the applicant sought an order declaring that first
respondent is bound by a certain written agreement annexed
to his
founding papers and also an order interdicting the first respondent
from disposing of certain immovable property until a dispute
between
the applicant and the first respondent has been finalized.
2.4 In
addition to the aforegoing the applicant sought an order that he is
entitled to return to certain property and a house situated
thereon
and in the alternative thereto an order declaring that his eviction
from the said property by the first respondent is unlawful.
2.5 As
a further alternative the applicant sought an order directing the
first respondent to compensate him for certain improvements
made to
the property. He also sought an order for the restoration of the
possession of certain movables which he alleged had been
spoliated
from him by the first respondent.
2.6 The
applicant also sought an order that the aforementioned relief (par.
2.4 and 2.5 above) operate as interim orders until the
final
resolution of a dispute. He also sought the usual costs orders as
against the first respondent.
The
dispute between the parties arises from the fact that the second
respondent close corporation had purchased certain immovable
property known as the farm
Mount
Rupert
and
certain business situated thereon,
inter
alia
a hotel, liquor store and a general merchant store. This property
had been purchased from another close corporation in the sum
of
R560 000.00, of which an amount of R410 000.00 was raised
through a mortgage bond from a financial institution.
It
is the applicant’s case that there is an oral agreement between
him and the first respondent that the applicant was to hold
a 50%
member’s interest in the second respondent close corporation.
The respondents on the other hand aver that certain preconditions
had to be met before the applicant would become entitled to the
aforesaid 50% member’s interest. These conditions were that
the
applicant was to pay an amount equal to half of the purchase price
of the aforementioned Mount Rupert or sign surety for such
amount.
Prior
to the aforesaid oral agreement between the applicant and the
respondents, it is common cause (or at least not seriously disputed)
that the applicant had:
5.1 Been
a lessee on Mount Rupert in terms of an agreement of lease with the
sellers of the said property; and
5.2 Concluded
a number of written agreements in terms whereof it was envisaged that
he would purchase the property from the sellers.
All
these agreements mentioned in 5.2 above had come to nought, because
the applicant was not able to raise finances on his own to
purchase
the property. As a consequence he thereafter approached the first
respondent with a view of purchasing the property together.
There
is a dispute as to what the terms of the further agreement was
between the applicant and the first respondent with regard
to the
purchase of the property as I have already alluded to in par. 4
above.
This
application was doomed to certain failure from the very start.
There are a myriad of reasons for this, but the following
will
suffice:
In
electing to proceed by way of application the applicant who, as I
will show, had been very well aware of a possibility of
a serious
dispute of fact arising in this matter, ran the risk that a Court
would have to consider the matter on the facts
as averred by the
respondents together with those facts which are common cause
between the parties;
See:
Plascon-Evans Paints Ltd
v
Van Riebeeck Paints (Pty) Ltd 1984(3) SA 623 (A)
at 634 (H).
This
particular application was preceded in 2001 by an urgent
application for an interdict
pendente
lite
brought by the applicant against the very same respondents as well
as the sellers of the immovable property (the farm
Mount
Rupert
referred
to above) and the Registrar of Deeds. As fate would have it, I
had also presided in the said urgent interdict application.
In
that matter the applicant sought to restrain the present two
respondents from having the property transferred into the
second
respondent close corporation’s name, pending the finalization of
an action to be instituted by the applicant. That
application for
an urgent interdict was dismissed with costs. Of considerable
importance are the reasons for dismissing the
application, which
entailed the following:
that
the applicant has alternative remedies readily available at his
disposal,
inter
alia
a
claim for damages
;
and
that
any action for specific performance would be bereft of any
reasonable prospects of success. As a matter of interest --
the applicant had foreshadowed the institution of an action against
the respondents in that application, which invariably raises
the
question why the application route was followed herein.
The
applicant’s claim for specific performance would be untenable in
law, since it is common cause between the parties on the
papers
before me that the applicant and the first respondent were at
extreme loggerheads with each other and would never have
been able
to co-operate properly within a close corporation as co-members.
On
the applicant’s own papers it was clear that the applicant had in
writing abandoned his claim for improvements to the property.
During
the course of applicant’s counsel’s argument, it became very
clear to all concerned, more particularly to the applicant
himself
and to his legal representatives, that their application was
stillborn. After a short adjournment, I was informed
by the
applicant’s counsel that he was instructed to withdraw the
application and that I should decide the matter of costs.
Mr.
Van Niekerk, who appeared for the respondents, has motivated the
respondents’ claim for a special costs order on the following
grounds:
That
it should have been apparent to the applicant and to those
advising him that, based on my judgement in 2001 on the urgent
interdict application, a claim for specific performance was not
feasible at all.
That
a number of matters of considerable importance had not been
disclosed in the applicant’s founding affidavit in the
main
application and when these were disclosed in the respondents’
answering affidavits, the applicant made no effort to
reply
thereto at all.
That
the applicant had expressly in writing abandoned and/or waived
his claim for compensation for improvements, yet he persisted
in
seeking such relief in the main application.
That
the applicant had already during 1999 been aware that there was a
genuine dispute of fact on material aspects between
him and the
first respondent.
Mr.
Van Niekerk emphasized that he was not seeking a special costs order
so as to punish the applicant, but rather to ensure that
the
respondents are not left out of pocket through this litigation.
The
leading authority on special costs orders is
Nel
v Waterberg Landbouwers Ko-operatieve Vereeniging 1946 AD 597
at 607 wherein it was held that
“
the
true explanation of awards of attorney and client costs not expressly
authorised by statute seems to be that, by reason of special
considerations arising either from the circumstances which give rise
to the action or from the conduct of the losing party, the court
in a
particular case considers it just by means of such an order, to
ensure more effectually that it can do by means of a judgement
for
party and party costs
that
a successful party will not be out of pocket in respect of the
expense caused to him by the litigation
.”
(my emphasis).
I
have great sympathy with the applicant in this matter, a sentiment
which I also conveyed to his counsel during the course
of his
argument. I hold the very firm view that the applicant has a
clear remedy as against the sellers of the immovable property
(
Mount
Rupert
),
at least for the sum of R129 000.00 which the applicant has
paid in terms of a written agreement to certain third parties,
as
part of a purchase price negotiated between the applicant and the
said sellers of the immovable property. I also hold the
prima
facie
view that the clause in the written agreement whereby the
applicant had expressly abandoned and/or waived his right to
compensation
for improvements which I had referred to herein
before, may very well be an unfair or excessive penalty
stipulation, subject
of course to the provisions of the
Conventional Penalties Act of 1962. It may even be that the
applicant has a claim for damages
as against the present
respondents arising from the oral agreement between them.
Mr.
Mokhari, who appeared for the applicant herein, has urged upon me
not to make a special costs order as sought by the respondents.

Notwithstanding my considerable sympathy towards the applicant, I
am not persuaded that this is a case where I should cause
litigants such as the respondents to be out of pocket as a
consequence of litigation which had been ill-conceived and
ill-prepared.
From what I have mentioned herein before, it is
quite apparent that the respondents are not to blame for the
predicament in
which the applicant finds himself. In order to
ensure fairness and justice between the parties, I am of the view
that I should
exercise my discretion with regard to the matter of
costs of the main application in favour of the respondents.
As
far as the application for the security for costs is concerned, I
am of the view that for the reasons set out above, the
respondents
were justified in seeking security for their costs as against the
applicant. It must have been quite apparent
to the applicant and
to those advising him:
That
they had adopted the wrong procedure in litigating by way of
application; and
That
the application was, in any event, doomed to failure from the
very start.
Consequently
I am of the view that the applicant should also be ordered to pay the
costs of the respondents’ application for security
for costs.
I
therefore issue an order as follows:
The
applicant is ordered to pay the respondents’ costs in the main
application on a scale as between attorney and client.
The
applicant is ordered to pay the respondents’ costs in the
application for security for costs.
___________
SA
MAJIEDT
JUDGE
ADVOCATE
FOR THE APPLICANT : ADV W MOKHARI
ADVOCATE
FOR THE RESPONDENTS : ADV JG VAN NIEKERK
ATTORNEY FOR THE
APPLICANT : MAGABANE INCORPORATED
ATTORNEY
FOR THE RESPONDENTS : AB HORWITZ
DATE OF
HEARING : 2003-06-13
DATE
OF JUDGEMENT :
2003-06-20