REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, JOHANNESBURG
Case Number: 2018/41434
In the matter between:
AFRICAN WOMEN CO -ORDINATED INVESTMENTS (PTY) LTD 1st Applicant
SEFULARO, MAGGIE SANDRA 2nd Applicant
LANGENI, NOLUTHANDO 3rd Applicant
MOJAPELO, FRIEDAH EFFY 4th Applicant
SANGION, QUEEN ELIZABETH 5th Applicant
NDUNGANE, FUNEKA 6th Applicant
NHLANGULA AGNES 9th Applicant
SEFULARO, MAGGIE SANDRA N.O. 19th Applicant
LANGENI, NOLUTHANDO 20th Applicant
MOJAPELO, FRIEDAH EFFY N.O. 21st Applicant
SANGION, QUEEN ELIZABETH N.O. 22nd Applicant
and
GAUTENG AFRICAN WOMEN’S ALLIANCE (PTY) LTD Respondent
(1) REPORTABLE: NO
(2) OF INTEREST TO OTHER JUDGES: NO
(3) REVISED: NO
17 JANUARY 2024
DATE
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and
In Re:
GAUTENG AFRICAN WOMEN’S ALLIANCE (PTY) LTD Plaintiff
and
AFRICAN WOMEN CO -ORDINATED INVESTMENTS (PTY) LTD 1st Defendant
SEFULARO, MAGGIE SANDRA 2nd Defendant
LANGENI, NOLUTHANDO 3rd Defendant
MOJAPELO, FRIEDAH EFFY 4th Defendant
SANGION, QUEEN ELIZABETH 5th Defendant
NDUNGANE, FUNEKA 6th Defendant
MBIZANA, SINDISIWE SHIELA 7th Defendant
OLIPHANT, JILL CLAUDELLE 8th Defendant
NTHLANGULA, AGNES 9th Defendant
RWEXANA, SINDISWA PATRICIA 10th Defendant
MPUMALANGA AFRICAN WOMEN’S ALLIANCE (PTY) LTD 11th Defendant
NORTH WEST AFRICAN WOMEN’S ALLIANCE (PTY) LTD 12th Defendant
FREE STATE AFRICAN WOMEN’S ALLIANCE (PTY) LTD 13th Defendant
KWAZULU -NATAL AFRICAN WOMEN’S ALLIANCE (PTY) LTD 14th Defendant
WESTERN CAPE AFRICAN WOMEN’S ALLIANCE (PTY) LTD 15th Defendant
EASTERN CAPE AFRICAN WOMEN’S ALLIANCE (PTY) LTD 16th Defendant
NORTHERN CAPE AFRICAN WOMEN’S ALLIANCE (PTY) LTD 17th Defendant
LIMPOPO AFRICAN WOMEN’S ALLIANCE (PTY) LTD 18th Defendant
SEFULARO, MAGGIE SANDRA N.O. 19th Defendant
LANGENI, NOLUTANDO N.O. 20th Defendant
MOJAPELO, FRIEDAH EFFY N.O. 21st Defendant
SANGION, QUEEN ELIZABETH N.O. 22nd Defendant
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Summary: Civil procedure – application for security for costs – whether the court’s
discretion should be exercised in the applicants’ favour by ordering the respondent to
put up security for costs.
JUDGMENT
MODIBA, J
Introduction
[1] This judgment is rendered in respect of an application for security for costs. The
application is brought by African Women Co -ordinated Investments (Pty) Ltd
(AWCI) as the first applicant together with the second to sixth, ninth, nineteenth
to twenty first applicants against Gauteng African Women’s Alliance (Pty) Ltd
(GAWA) as the respondent. AWCI seeks an order for security for costs in the
amount of R1 million.
[2] AWCI is the first defendant in the main action. Its co -applicants are cited in the
main action as its co -defendants. GAWA is the plaintiff in the main action. The
nineteenth to twenty second defendants are Trustees of the African Women
Coordinated Investments Business Trust (Trust Registration number:
IT002205/2018 T) (the Trust). The second to tenth defendants are directors of
the AWCI. Sangion, Queen Elizabeth (Sangion) is cited in her personal capacity
as the second defendant and in her capacity as the T rustee of the Trust as the
nineteenth defendant. She deposed to the founding affidavit in this application
on behalf of all the applicants.
[3] I generally refer to parties by their names or as cited in the main action.
[4] In the main action, GAWA seeks an order against the defendants for the
production and inspection of constitutional and corporate documents of AWCI in
its capacity as a n alleged 10% shareholder in AWCI . GAWA brought the main
action on 7 November 2018. It has since amended its particulars of claims twice.
It made the first amendment on 13 August 2019 and the second on 25 March
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2022. I refer to the particulars of the amendments at a pertinent point in the
judgment.
[5] On or about 07 July 2020, AWCI furnished GAWA with the requested records
from the date of its incorporation until 10 October 2018. AWCI contends that
despite this, GAWA persists with seeking the same documents. AWCI further
contends that this constitutes a clear abuse of the process of this court.
[6] In its amended particulars of claim, GAWA added the following to the relief it
seeks:
5.1 Claim A
(a) An order declaring that GAWA is a 10% shareholder of the issued share
capital of the AWCI for the period from AWCI’s incorporation until 10 October
2018, alternatively 9 October 2018;
(b) AWCI is ordered to produce for inspection and copying all company records
from its incorporation until the date of the granting of the order;
(c) AWCI is directed to make payment to GAWA all declared dividend s and/or
any other entitlement it may have had pursuant to it being a shareholder of AWCI
from AWCI’s date of incorporation until 10 October 2018, alternatively 9 October
2018;
(d) An order declaring that GAWA was and remains a holder of 10% of the issued
share capital in AWCI;
(e) An order directing AWCI to produce for inspection and copying all company
records from 10 October 2018 until the date of the granting of the Court Order.
5.2 Claim B
(a) A declaration that the trustees are obliged to account to GAWA and other
beneficiaries of the Trust regarding the affairs of Trust in relation to its
shareholding in AWCI from the period 10 October 2018 to date of this order;
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(b) A declaration that the resolution of AWCI dated 13 May 2014 (the resolution)
is unlawful, invalid and of no force and effect and is set aside;
5.3 Claim C
(a) An order declaring that the following AWCI directors are delinquent:
Noluthando Langeni; Friedah Effy Mojapelo (Mojapelo); Funeka Ndungane;
Agnes Ntlhangula; Sindiswa Patricia Rwexana; Queen Elizabeth Sangion;
Maggie Sandra Sefularo; Catherine Linkong Moeti; and Gillian Mapheko
Makgamatha.
[7] On 21 April 2022, the defendants delivered their consequential plea. GAWA
subsequently delivered its amended pages.
[8] The defendants contend that AWCI’s resolution of 13 May 2014 was a
shareholders’ resolution properly taken and valid. GAWA was duly notified of the
meeting, and was represented by the fourth defendant, Mo japelo in her capacity
as GAWA’s authorised representative.
[9] On 27 June 2023, the defendants demanded security for costs from GAWA in
terms of uniform rule 47(1). On 20 November 2023, GAWA filed a notice in terms
of Rule 47(3), disputing liability for the defendant’s security for costs. The
defendants subsequently b rought this application seeking an order in terms of
which the GAWA is ordered to provide security for the defendants’ costs within
thirty days of the order and that GAWA’s action is stayed pending compliance
with that order, failing which the action is di smissed.
[10] In this application, the defendants contend that GAWA’s action is mala fide ,
vexatious, reckless and constitutes an abuse of court process for reasons set out
below.
[11] In respect of claim A:
(a) GAWA persists with the action despite being furnished with the documents
that it seeks. The defendants contend that there is no basis for such an order
because they do not allege that they were denied access to the documents while
GAWA was still a shar eholder in AWCI or that it did request the documents but
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was denied access. Section 26 of the Companies Act 71 of 2008 (the Companies
Act) only permits a shareholder to access company records. Since GAWA is no
longer a shareholder in AWCI, it is not entitled to the latter’s company records.
(b) GAWA seeks company records in excess of the 7 -year period a company is
required to retain them in terms of s 24 of the Companies Act.
(c) As a non -shareholder, GAWA ought to have sought AWCI’s company records
in terms of the Promotion of Access to Information Act 2 of 2000 (PAIA). It has
not done so.
(d) Access to company records even by a shareholder does not extend to access
to AWCI’s books of account.
(e) On the one hand GAWA disavows the resolution. On the other hand, it wants
the Trust (established pursuant to and in terms of the said resolution) and its
trustees to account to it. This demonstrates its contrived and untenable
contentions;
(f) GAWA is not actively trading and has no known source(s) of income. It has
no known place of business. Therefore, it has no known realizable assets. Nine
out of GAWA’s twelve shareholders are de -registered for various reasons of non -
compliance and are u nable to contribute towards the payment of an adverse cost
order. Further, the respondents contend that GAWA’s action is not properly
authorised by its Board of Directors.
[12] Claim B is contrived because in terms of the resolution, GAWA ceased to be a
shareholder in AWCI. As a non -shareholder, it has no legal basis to access
records in terms of s 26 of the Companies Act.
[13] Claim C also lacks a legal basis because an order for the declaration of a director
as delinquent is only available to shareholders of a company. The basis on which
it seeks such an order is also devoid of merit because:
(a) As an erstwhile shareholder of AWCI, it shared the responsibility with the
other shareholders to call for a board meeting. It also failed in that duty.
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(b) There is no basis on which the court will find that the directors in AWCI were
negligent to defer its tax.
(c) It has not asserted the legal basis on which the court should find that payment
of dividends should take precedence over the payment of directors’ fees as
contended by GAWA.
[14] GAWA oppose s the application on the basis that its inability to pay the
defendants’ costs in the main action is, without more, insufficient to justify an
order for security for costs . To succeed in the application, the defendants must
establish that GAWA’s action is vexati ous, reckless and amounts to an abuse of
the process of this court. They contend that the defendants have failed in that
regard. GAWA accuses the defendants of dilatory conduct in defending the main
action. It also contends that the defendants continue to be dilatory by bringing
this application when the matter is almost trial ready. It further contends that the
defendants :
(a) only made discovery three court days before GAWA’s application to compel
was heard;
(b) took 9 months to file their consequential plea, following the amendment of the
plaintiff’s particulars of claim;
(c) delayed to file opposing papers in GAWA’s joinder application. Only the first
defendant had filed a notice of intention to oppose. Ultimately, the joinder
application was heard and an order granted on an unopposed basis;
(d) filed special pleas which lack merit and later withdrew them;
(e) failed to follow the procedure in uniform rule 47. The registrar is empowered
to determine the amount of security for costs when contested. They have failed
to meet this basic jurisdictional requirement. The defendants have not specified
how they have arrived at the amount of R1 million. This amount has not been
determined by the registrar as required in terms of uniform rule 47.
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(f) The main action was under judicial case management for a period of three
years. The defendant failed to call for security for costs during that time.
Pleadings have closed, discovery made, discovered documents exchanged,
GAWA ’s statement of case and the defendants’ response thereto filed. What
remain s to get the matter trial read y is for the parties to hold a pre -trial conference
and, thereafter approach the judicial case manager for a certificate of trial
readiness.
[15] GAWA did not persist with the rule 47 ground of opposition in its written and oral
submissions. This point shall therefore detain me no further.
[16] It is trite that a n order for security for costs is granted at the discretion of the
court, having regard to the nature of the claim, the financial position of the plaintiff
when the application was made and its probable financial position should it lose
the action. In Biochlor (Pty) Ltd v G E Betz South Africa (Pty) Ltd ,1 having
considered various legal opinions regarding the legal principles applicable in an
application for security for costs, the court articulated the approach to be followed
in an application of this nature as follows:
“(1) The point of departure is to accept that in terms of the common law
principle, incola litigants should not be ordered to pay security for costs.
Courts must recognise and accept that incola litigants, including corporate
entities, have the right to litigate in terms of section 34 of the Constitution;
(2) Section 173 of the Constitution provides the courts with inherent power to
regulate their own process es and to develop the common law, taking into account
the interests of justice;
(3) In regulating their own process es as stated in (2) above, the courts are
entitled to intervene, on application by a party in litigation and where evidence
exists, against any incola plaintiff/applicant, to protect the court process from
litigation that appears to be vexatious, or reckless, or amount to an abuse of the
process;
1 [2014] ZAGPPHC 1030 (10 December 2014).
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(4) The court may, in appropriate instances, and in its discretion, order a party
to litigation to pay security for costs;
(5) The fact of insolvency or being an impecunious litigant should not, on its own,
be a reason to order an incola plaintiff/applicant to pay security for costs;
(6) The court’s discretion must be exercised judiciously and sparingly, after
having carefully balanced the right to litigate on the one hand and the need to
protect court process from vexatious, or reckless or conduct that amount to
abuse of the court process, on the other hand.”
[17] As contended on behalf of the defendants, in Boots Sports Africa ,2 the Supreme
Court of Appeal did not replace the test as articulated in Biochlo r. However, in
their written and oral submissions, they tried to persuade this court to grant the
application because of GAWA’s precarious financial position. They relied on
various judicial authorities to support their contention that since GAWA failed to
dispute their allegation that it is unable to meet an order for costs because it is a
non-trading entity with no assets, they should succeed. This ignores the
balancing approach enunciated in Biochlor.
[18] It concerns me that the defendants conducted this litigation until it is almost trial
ready without seeking an order for costs. Its reasons for seeking costs have been
there from inception. It has provided no reason why it is only brought the
application when the matter is almost trial rea dy, further delaying the hearing of
the matter. It has not addressed the allegation of dilatory conduct in defending
the action because it is largely incontrovertible yet is it quick to blame GAWA for
not belatedly recording that it is not persisting with the relief in respect of the
disclosure of documents that are not in its possession. This is of no moment
because this relief is not dispositive of GAWA ’s claim.
[19] It is unclear how the defendants arrived at the amount they seek as security for
costs. They made no effort to justify it.
[20] The high-water mark of the defendants’ case is that GAWA’s action is vexati ous,
reckless and constitutes an abuse of the court process. The question of GAWA’s
2 2015 (5) SA 38 (SCA) at para 25.
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shareholding in AWCI is highly contested. It is the primary basis on which the
GAWA seek s the remaining relief in the main action. It is also the primary basis
on which the defendants oppose that relief. This issue will turn on the validity of
the resolution which is also highly disputed between the parties. These issues
stand to be determined at the trial on the basis of the parties’ evidence. The
defendants’ have not persuaded me that GAWA’s shareholding claim is
baseless. The fact that GAWA belatedly in this application abandoned its claim
for the disclosure of AWCI’s company records is not dispositive of these other
claims.
[21] Therefore, the defendants have failed to establish that GAWA’s action is
vexatious, reckless and constitutes an abuse of the court process. This leaves
GAWA’s precarious financial position as the only basis on which the defendants
seek an order for security for costs.
[22] I am not persuaded that if the defendants are successful in the main action, they
are facing a hallow cost order . They have not explained why they cannot recover
their costs from GAWA’s directors. Yet, in this application, they argued that
GAWA’s directors have not put up security. Nothing precludes the defendants
from pursuing them for their legal costs. They may do so by piercing the
corporate veil in terms of the Companies Act. This may be a long way to
recovering its costs. Any prejudice it stands to su ffer as a result is self -created
because it inexplicably brought this application more than four years after the
action was instituted . It therefore opted to conduct its defence for that period at
risk notwithstanding GAWA ’s precarious financial position.
[23] GAWA is an investment company. It seeks to realize a return on its investment
in the main action. Ordering GAWA to put up a security for costs under these
circumstances will only serve to stymie its ability to run the trial, thus adversely
affecting its rights in terms of section 34 of the Constitution. These circumstances
justify the exercise of this court’s discretion in favour of GAWA.
[24] AWCI took issue with the authority of the deponent to GAWA’s affidavits to
depose to them on GAWA’s behalf. However, it did not persist with this point in
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