IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)
REPORTABLE
CASE NO: 22938/2018
In the matter between:
CLASS A TRADING 153 (PTY) LTD DEFENDANT / APPLICANT
and
SEVEN FALLS TRADING 55 (PTY) LTD PLAINTIFF / RESPONDENT
Coram: MOOSA AJ
Heard: 29 August 2025
Delivered: 25 September 2025 (delivered electronically to the parties)
Summary: Civil procedure – Uniform Rule 47 – applicant demanding
security after 6 years of litigation – long delay is no bar to
ordering security – respondent dormant with no income and no
attachable assets – respondent litigating recklessly and
vexatiously – security for costs ordered – promotes fairness in
the administration of justice.
___________________________________________________________________
ORDER
___________________________________________________________________
1. The application succeeds. The Respondent is directed to furnish security for
the Applicant’s c osts in the main action . The Respondent shall do so in the
form, amount, and manner determined by the Registrar under Uniform Rule
47(5). Pending compliance herewith, the proceedings in the main action are
stayed.
2. Respondent is liable for costs, including costs for counsel on tariff scale B.
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Moosa AJ
Introduction
[1] This judgment relates to an application under Uniform Rule 47(3) in which the
Applicant, the defendant in the action (“the main action”) , seeks an order directing
the Respondent , the plaintiff in the main action , to give security for the Applicant’s
costs i f it succeeds in that action, and to do so in a sum , form, and manner
determined by th is Division’s Registrar. In this judgment, I refer to the parties as in
this application, although the context may , at times, require reference to each as in
the main action.
[2] ln this interlocutory dispute, the Applicant was represented by Mr P de B Vivier
SC; and Mr H N de Wet appeared for the Respondent.
[3] At the onset, I will narrate those background facts which are germane to the
adjudication of this petition. The facts are distilled from the pleadi ngs. Unless
indicated otherwise, the enumerated facts are common cause. Owing to Uniform
Rule 47(1) stipulating that security for costs should be demand ed ‘as soon as
practicable after the commencement of proceedings’, and Mr de Wet argued that this
stipulation was not adhered to, a chronolog ical timeline of key events is provided
below.
Relevant background facts
[4] At all material times, Stephanus Hunter van Zyl (“Fanie”) is the Respondent’s
sole director and shareholder . The Respondent is an incola company . It had
conducted a farming business at its farm De Heuwel situated in Windmeul, Agter -
Paarl.
[5] On 14 October 2016, the Respondent sold its farm, farming business, and all
assets as a going concern. The sale yielded a price of R9,5m. After the sale of its
business which cultivated table grapes , the Respondent has not conducted any
further trade. Except for the litigation in the main action, the Respondent has been
dormant from 2016 : it has no income ; no auditor; no bank account; and no
attachable asset(s).
[6] On 13 December 2018, the Respondent instituted an action against the
Applicant, a local company operating a business as a marketing and export
consultant of fruit, including table grapes. The Respondent sues for contractual
damages in the sum of R3 586 058,00. Its cause of action pre -dates the sale of its
farm and business.
[7] On 1 November 2014, the Respondent appointed the Applicant as its agent to
market, export, and sell the grapes cultivated by the Respondent for the 2015
harvest season. On 30 April 2015, a further agreement was concluded in which the
Respondent appointed the Applicant to sell its grapes for the 2016 harvest season.
[8] Neither the 2014 nor the 2015 agreements contained express provision of the
price at which the Applicant would sell the Respondent’s grapes. For purposes of the
present application, it is common cause that the parties’ 2014 and 2015 agreements
were to the effect that the Respondent’s table grapes would be sold at the best
possible price that could be achieved for them in the markets where they were sold.
[9] The Respondent sues the Applicant for damages alleged to have been
suffered owing to the Applicant allegedly selling the Respondent’s grapes during the
2015 and 2016 seasons at prices which are deemed less than the average market
related yield . In its plea dated 5 March 2019, the Applicant denies that it acted in
breach of the parties’ contracts, and denies that the Respondent suffered the alleged
losses.
[10] Together with its plea, the Applicant delivered a conditional counter-claim. The
Applicant sues the Respondent for payment of R1 750 160,00. Its claim is based on
the same written contracts on which the Respondent sues for contractual damages.
On 1 October 2019, the Respondent delivered its replication to the Applicant’s plea .
Simultaneously, the Respondent delivered its plea to the Applicant’s counter-claim.
[11] In and during November 2020, various discovery notices were delivered by
the Applicant’s and the Respondent’s attorney s. On 25 November 2020, the
Applicant’s attorneys complied with the call for discovery under Uniform Rule 35(3).
[12] On 7 October 2022, a joint pre-trial minute was filed. On 20 October 2022, the
Respondent delivered its request for particulars. On 17 January 2023, the Applicant
provided a response. On 18 January 2023, a revised joint pre-trial minute was filed.
On 31 January 2023, the matter was certified as trial ready. The main action
(including counter-claim) was then set down for trial scheduled to commence on 22
April 2024. While the parties were in the process of trial preparation, a problem
arose.
[13] On 20 January 2024, the Respondent was de-registered from the companies’
register by the Companies and Intellectual Property Commission (“CIPC”) . This
occurred becaus e Fanie failed to file the Respondent ’s statutory annual returns.
CIPC started the de-registration process for this reason as far back as 12 December
2020.
[14] From February 2024 onwards, several applications for reinstatement pursuant
to s 82(4) of th e Companies Act 71 of 2008 were lodged with CIPC, but failed. As a
result, in March 2024, the trial scheduled for April 2024 was removed from the roll.
[15] On 27 September 2024, Fanie launched an application under s 83(4) of the
Companies Act for an order declaring void the Respondent’s dissolution.
[16] In his founding affidavit in support of the s 83(4) application, Fanie explained
the purpose for the Res pondent’s reinstatement to be linked solely to an intention to
pursue its lawsuit in the main action. He recorded this as follows (at paras 25 and
32):
‘25. The company was deregistered due to its failure to file its annual returns. This
was entirely my fault. At the time, I had not realised that this was still required in
circumstances where the main, if not the sole, focus of the company was the litigation
referred to above. … 32. Further, the litigation is further indicative that it had always
been the intention that the company would continue to exist (sic) until, at least, the
conclusion of the litigation.’ (my emphasis added)
[17] On 1 November 2024, CIPC revived the Respondent’s legal status. This
appears to be in terms of s 82(4) of the Companies Act . On 28 January 2025, an
order was granted by this Court, the relevant part of which reads:
‘By agreement between the parties, IT IS ORDERED:
1. That the matter is set down for hearing on the fourth division roll for four
consecutive days, being the 25th, 26th, 27th, and 28th August 2025.’
[18] During March 2025, the Applicant’s attorneys delivered expert notices under
Uniform Rule 36(9)(a); and served a discovery notice under Uniform Rule 35(12) and
(14). During April and May 2025, the Applicant’s attorneys delivered its expert
summaries under Uniform Rule 36(9)(b). In April 2025, it served a Rule 35(3) notice.
[19] On 8 April 2025, with the trial looming and the parties litigating at full throttle, a
notice under Uniform Rule 47(1) was served. In relevant part, that notice read:
‘BE PLEASED TO TAKE NOTICE that the Defendant herewith demand from the
Plaintiff to provide security for the Defendant’s costs in an amount of R1 873 731,93
on the following grounds:
1. The Plaintiff through its legal representative and its sole director, Mr Fanie
van Zyl, indicated to the Defendant, as long ago as during the period of March
2016 to October 2016, that it experienced financial difficulties and sought
financial assistance from the Defendant to prevent the Plaintiff from being in a
state of insolvency.
2. During or about October 2016 the Plaintiff sold its only assets, the farm De
Heuvel and the farming business conducted thereon, as a going concern.
3. The Plaintiff has not conducted any business or other income -generating
activity since the sale of its farm.
4. The Plaintiff has no assets. Its only contingent “asset” would be the claim it
seeks to enforce in this action, in the event of it being successful in proving
the claim.
5. The Plaintiff has indicated that the sole reason for its continued existence, is
to conduct the present litigation and that in all likelihood, at the end thereof,
the Plaintiff would be deregistered/liquidated.
6. The Plaintiff has already on two occasions been deregistered by CIPC for
failing to file annual returns, in 2010 and 2024.
7. The Plaintiff does not conduct any bank account, and has been dormant since
the sale of its farm and farming business in October 2016.
8. In the event of the Plaintiff failing to succeed with its claim and a costs order
being granted in favour of the Defendant, the Plaintiff will not be able to pay
such costs. The Defendant will be faced with a substantial irrecoverable bill of
costs.’
[20] On 29 April 2025 , the Respondent’s attorneys delivered a notice in which the
Respondent contests its liability to furnish security for costs. This notice culminated
in the Applicant, on 14 May 2025, launching this application under Uniform Rule
47(3).
[21] The grounds averred in the Applicant’s founding affidavit supporting the relief
sought in t he petition include those factual circumstances particularised in its
Uniform Rule 47(1) notice quoted in paragraph [19] above. Therefore, they are not
repeated here. Additional grounds were recited in its founding papers. They include
the following grounds, which are denied by the Respondent in its answering affidavit:
(a) Respondent’s reinstatement to pursue its claim against the Applicant, coupled
with ‘the intention that the company would continue to exist (sic) until, at least,
the conclusion of the litigation’ (at para 43) , is ‘irrebuttable proof thereof that in
the event of the main action being dismissed, the Respondent would not be
able to pay the Applicant’s costs. The Applicant would in such instance be
faced with a substantial irre coverable bill of costs.’ (at para 45 of the founding
affidavit);
(b) Fanie’s sole purpose for the Respondent’s reinstatement (namely, to pursue the
latter’s claim against the Applicant in the main action ) ‘constitute an abuse not
only of the separate legal personality of a corporate entity, but also of the court
process’ (at para 46 of the founding affidavit);
(c) Fanie’s explanation quoted in paragraph [16] abov e from paragraph 25 of his
founding affidavit in the Respondent’s revival application ‘defies belief’ (at para
88). Applicant avers that the fact that Fanie failed to file the Respondent’s
annual returns for multiple years ‘underscore the extent to which Mr Van Zyl
simply used the Respondent as a sepa rate corporate entity for a purpose
wholly unrelated to the true reason for its existence, i.e. to conduct a farming
business’ (at para 88 of the founding affidavit); and
(d) Respondent’s claim lacks merit and is likely to fail. In support of this ground, the
Applicant relies, inter alia, on emails between the parties ’ agents concerning
the poor quality of grapes delivered for sale in the 2015 and 2016 seasons, and
correspondence in which Fanie explains why the Respondent’s grapes were of
poor quality. Applicant further relies on correspondence in which its
representatives furnished Fanie with financial information pertaining to grape
sales for both harvest seasons, which figures were not disputed when
furnished.
[22] The Respondent filed an answering affidavit . Based on the facts averred
therein, the contents of paragraphs 1 to 8 of the Applicant’s notice delivered pursuant
to Uniform Rule 47(1), quoted in paragraph [19] above, are common cause.
[23] It is also common cause that Respondent is a dormant corporation – it
conducts no trade . It has not traded since October 2016. Fanie has no intention to
resume any trading activity in the Respondent. It exists now solely to pursue the
disputed claim against the Appli cant in the main action . Moreover, i t is common
cause that the Respondent owns no attachable asset and is not now, nor will it in
future be, in a financial position to settle a costs order issued against it at trial in the
main action.
[24] The kernel of the Respondent’s opposition is two-fold: first, it is averred that
Respondent’s lawsuit is grounded on a sound factual footing and will prevail (termed
‘an inevitable conclusion’). Consequently, it is averred that substantial damages will
be awarded . Secondly, and flowing directly from the first ground, it is averred that
this application is not bona fide , but is a ploy (labelled a ‘cynical attempt’ ) which is
designed to avoid the inevitable damages award in the Respondent’s alleged bona
fide action.
Issue for adjudication
[25] The disputed issue arising for adjudication is a crisp one: should the
Respondent be compelled to furnish security for Applicant’s costs in the main action
in a form, quantum, and manner to be determined by the Registrar of this Division?
Submissions by counsel
[26] At this point, it is necessary to provide a synopsis of the core arguments
advanced by each party’s counsel. Mr Vivier SC contended that security for costs
ought to be ordered. His submission is rooted in several vital strands of thought.
[27] First, citing Boost Sports Africa (Pty) Ltd v South African Breweries (Pty) Ltd
2015 (5) SA 38 (SCA) para 15, Mr Vivier SC advanced the position that, since the
Respondent is an empty shell and will, by its own admission, not be in a financial
position to satisfy any costs order issued against it at trial, the Applicant should not
be prejudiced by having to litigate at risk of a real loss, while the Respondent litigates
free of any risk. Respondent has everything to gain from the litigation, but nothing to
lose.
[28] Secondly, Mr Vivier SC acknowledged that the inability of an incola to satisfy a
costs order is insufficient grounds at common law to justify an order for security.
Relying on Boost Sports Africa supra paras 15 - 16, h e conceded that something
more is needed (such as, proof that the main action is vexatious, or reckless, or is an
abuse).
[29] As for abuse of court process, Mr Vivier SC submitted that the Applicant
persists in the case pleaded by it in the founding affidavit quoted in paragraphs
[19](b) and (c) above. H e submitted that this ground must be viewed with his other
arguments (see below) because , cumulatively, they establish a sound basis for
ordering security.
[30] Citing Standard Bank of SA Ltd v Maloka 2024 JDR 1569 (GJ) para 49, Mr
Vivier SC argued that Respondent’s lawsuit is vexatious as it appears unsustainable.
Citing Davidson’s Bakery (Pty) Ltd v Bur ger 1961 (1) SA 590 (O) at 593E, he
submitted that the test is less stringent in an application for security. Relying also on
Boost Sports Africa supra para 18, he submitted that, at this juncture, the merits test
for the main action is not certainty; rath er, it is a preponderance of probability. As
such, the merits need only be doubtful or questionable (‘twyfelagtig’) – the action
need not be found to lack any prospects of success. Relying on Liberty Holdings v
Maloka 2022 JDR 1772 (GJ) para 18, he submitted that a thorough investigation into
the merits is not required; nor is it necessary to undertake a close investigation of the
facts in casu.
[31] To prove that the merits of the Respondent’s main action are doubtful and, by
extension, that its lawsuit is vexatious and an abuse of judicial process, Mr Vivier SC
undertook an excursion of emails between the parties which were contemporaneous
with the 2015 and 2016 seasons, and the sale of grapes related thereto . Mr Vivier
SC submitted that the emails reveal key facts that, so he reasoned, seriously
undermine the merits of the Respondent’s cause of action. In this way, he advanced
the thesis that the Respondent’s conduct is clearly irreconcilable with its pleaded
cause of action.
[32] Mr Vivier SC pointed to correspondence in which Fanie admits the
substandard quality of the grapes produced. He argued that this fact would naturally
adversely impact the price s at which the Applicant could sell the Respondent’s
grapes in the relevant local and overseas markets. Mr Vivier SC also pointed to
correspondence which he submitted shows that the Applicant’s representatives
communicated, in a t imely manner, to Fanie the fact that the Respondent’s table
grapes were sold for the 2015 and 2016 harvest seasons , as well as disclosed the
sums earned on the sales.
[33] Moreover, he submitted that the emails s how that the financial information
pertaining to the sales for both seasons w as provided to Fanie who express ed no
dissatisfaction whatsoever in relation thereto, despite the Applicant’s representatives
inviting Fanie to raise any concerns which he may have as regards the figures and
other information provided to him. Fanie did not respond with any concerns.
[34] Mr de Wet ’s attack was essentially four -pronged. First, he pointed to the fact
that, in casu, security for costs is sought more than 6 years after the action was
instituted in December 2018. He submitted that, contrary to the express provisions in
Uniform Rule 47(1), the timing of the demand for security was not ‘as soon as
practicable after the commencement of proceedings’.
[35] As regards the effect of the delay, Mr de Wet referred to Exploitatie - en
Beleggingsmaatschappij Argonauten 11BV and Another v Honig 2012 (1) SA 247
(SCA). There it was held that ‘ as a general rule a party is expected to apply
expeditiously for security under rule 47’ (para 14). The SCA (at para 15) held that an
‘undue delay’ in seeking security should be explained on the papers and that a
failure to provide a plausible explanation may justify a refusal to orde r security for
costs.
[36] Mr de Wet argued that the more than 6 -year delay to invoke Uniform Rule
47(3) is unexplained in the Applicant’s papers. This, so he reasoned, ought to count
heavily against the Applicant when this Court evaluates whether the Applicant
discharged its onus to persuade this Court to exercise its narrow discretion by
ordering security.
[37] Citing Cape Cash and Carry (Pty) Ltd and Others v Extreme Works (Pty) Ltd
and Others 2025 (4) SA 156 (WCC) paras 17 - 18, Mr de Wet shot a further arrow
from his arsenal, namely, the Respondent’s admitted dormancy and financial inability
to satisfy any future costs order is not the central consideration when it comes to the
ordering of security, let alone a decisive one. Its right to access court is more pivotal.
[38] A third arrow shot from Mr de Wet’s bow is that , as appears from the
Applicant’s Uniform Rule 47(1) notice quoted in paragraph [19] above (read with the
Applicant’s founding papers ), the true reason for seeking security is the
Respondent’s financial inability to satisfy a costs order . The rule 47 notice does not
aver that the Respondent’s claim is vexatious or reckless, or an abuse. As such, this
is an afterthought. Mr de Wet argued that if real concerns existed about
Respondent’s claim being reckless or unsustainable, then the Applicant would have
invoked Uniform Rule 47 much earlier. This, so he reasoned, is logical because the
grounds on which Applicant’s case is predicated w ere known at the time when the
Applicant filed its plea in March 2019.
[39] A fourth arrow shot from Mr de Wet’s arsenal is his thesis that I cannot, on the
facts before me, conclude on a preponderance of probability , being the legal
standard for assessing merits (see Golden International Navigation SA v Zeba
Maritime 2008 (3) SA 10 (C) para 18), that the Respondent’s claim is vexatious, or
reckless, or an abuse of process.
[40] Mr de Wet argued that key facts which drive the Respondent’s claim and its
prospects of success are, first, the quality of the table grapes which the Respondent
delivered to the Applicant and which the latter either exported on the Respondent’s
behalf, or sold domestically to local purchasers . Secondly, the Respondent’s claim
hinges on establishing the best prices that the table grapes of the proved quality
would potentially yield in the local or overseas market s, depending on where they
were sold. Mr de Wet submitted that, on the papers before me, I am not in a position
to properly assess whether the merits of the Respondent’s claim are doubtful or
questionable.
Applicable legal principles
[41] To assess the cogency of the submissions delineated in the preceding part, it
is necessary that I outline the applicable legal framework crafted in Uniform Rule 47 ,
as well as the principles emerging from our case law. In relevant part, this rule reads:
‘(1) A party entitled and desiring to demand security for costs from another shall,
as soon as practicable after the commencement of proceedings, deliver a
notice setting forth the grounds upon which such security is claimed , and the
amount demanded. …
(3) If the party from whom security is demanded contests his liability to give
security or if he fails or refuses to furnish security in the amount demanded or
the amount fixed by the registrar within ten days of the demand or the
registrar’s decision, the other party may apply to court on notice for an order
that such security be given and that the proceedings be stayed until such
order is complied with.
(4) The court may, if security be not given within a reasonable time, dismiss any
proceedings instituted or strike out any pleadings filed by the party in default,
or make such other order as to it may seem meet.
(5) Any security for costs shall, unless the court otherwise directs, or the parties
otherwise agree, be given in the form, amount and manner directed by the
registrar.’ (my emphasis added)
[42] No litigant enjoys a right to security. A requirement to furnish security is
sourced in our law of civil procedure (not our substantive law ). See Jeanru
Konstruksie (Pty) Ltd v Botes 2023 (6) SA 305 (GP) paras 21 - 23. At common law, a
superior court’s reservoir of inherent powers to regulate its own procedure includes
the power to order security for costs . See Boost Sports Africa supra para 1 4. A
court’s power to order security is described as ‘a most reasonable one’ (Boost Sports
Africa supra para 13). As against an incola, even an insolvent, this power ‘ought to
Africa supra para 13). As against an incola, even an insolvent, this power ‘ought to
be sparingly exercised and only in very exceptional circumstances’ ( Western
Assurance Co v Caldwell’s Trustee 1918 AD 262 at 274), particularly when security
would restrict access to court.
[43] A party seeking security for costs bears the burden to persuade a court that
the interests of the fair administration of justice would be served by requiring
security. See Boost Sports Africa supra para 13. Adjudicating whether to order
security involves the judicious exercise of ‘a narrow and unfettered discretion’
(Fusion Properties 233 CC v Stellenbosch Municipality (932/2019) [2021] ZASCA 10
(29 January 2021) para 23).
[44] Deciding whether or not to order security involves ‘the exercise of a value
judgment’ (Fusion Properties 233 CC supra para 38) after taking into consideration
all pertinent facts and then balancing them on the scales of the fair administration of
justice, but always without adopting a predisposition for or against granting security
(see MTN Service Provider (Pty) Ltd v Afro Call (Pty) Ltd 2007 (6) 620 (SCA) para
16).
[45] In th e evaluative process , a court weigh s competing considerations and
performs a balancing act . On the one hand, there is the potential injustice and
unfairness to a litigant who successfully defends a case and is awarded costs , but
would be unable to collect costs due to the impecuniosity of the costs debtor, and the
former, qua costs creditor, is obliged to fund all litigation costs out of pocket. On the
other hand, there is the potential injustice and unfairness to a claimant who may be
prevented from pursuing a proper (i.e., legitimate) claim owing to i ts inability to give
security. See Giddey NO v JC Barnard and Partners 2007 (5) SA 525 (CC) para 8.
[46] No hierarchy of importance exists between t he factors relevant to determining
whether security should be ordered . Factors to be considered are case-specific. No
single factor is decisive. Relevant factors include: (i) the nature of the claim in the
main case; (ii) the claim’s likely prospects of success; (iii) whether a claim is made
bona fide or not; (iv) the financial position of a respondent when security is sought ;
(v) a respondent’s probable financial position if it loses the main case; (vi) whether a
respondent is an incola or peregrinus; (vii) whether demand for security was
delayed; (viii) whether an applicant for security seeks to stifle or terminate a genuine
claim; and (ix) the potential prejudice or impact if security is ordered as compared if it
is not . See Boost Sports Africa supra para 14; Barker v Bishops 2019 (4) SA 1
(WCC) para 28.
[47] Therefore, a judicious exercise of discretion in casu requires a proper
consideration of all relevant facts and principles, all of which are canvassed herein.
[48] In the present case, the antagonists are both incola companies. Owing to the
repeal of s 13 in the old Companies Act 61 of 1973, every application for security
against an incola company is now resolved in the same way under the common law
as is applicable to incola natural persons. See Boost Sports Africa supra para 16.
[49] A principal concern is that ‘an incola defendant should not be left unprotected
if ultimately successful in the main action ’ (Browns The Diamond Store CC v Van Zyl
(717/2015) [2017] ZAGPJHC 70 (3 February 2017) para 14). However, since access
to justice cannot be based purely on wealth (see Cape Cash and Carry supra para
13), t he probable or likely inability of a n incola plaintiff to satisfy a potential costs
order is, on its own, insufficient grounds to require security. In law, p roof of
‘something more ’ is required on a preponderance of probability . See Boost Sports
Africa supra para 15.
[50] The ‘something more’ referred to in this context is to be found in the nature of
the main proceeding instituted by an incola plaintiff. This entails proof that the
litigation launched is either vexatious, or is reckless, or is an abuse of process. Only
if proof of the existence of a ny such criticism is established by an applicant , can
security for costs be ordered against an incola litigant. See Boost Sports Africa supra
para 16.
[51] The SCA, in Boost Sports Africa supra para 17, approved the following dictum
(per Nicholas J) in Fisheries Development Corporation v Jorgensen 1979 (3) SA 331
(W) at 1339E-F as regards the meaning of ‘vexatious’ and ‘abuse’ in this setting:
‘In its legal sense “vexatious” means “frivolo us, improper: instituted without sufficient
ground, to serve solely as an annoyance to the defendant” (Shorter Oxford English
Dictionary). Vexatious proceedings would also no doubt include proceedings which,
although properly instituted, are continued with the sole purpose of causing
annoyance to the defendant; “abuse” connotes a mis -use, an improper use, a
use mala fide, a use for an ulterior motive.’ (footnotes omitted)
[52] As for the meaning of ‘reckless’ litigation for a successful invocation of
Uniform Rule 47(3), it was held in Cape Cash and Carry supra para 25 that this
‘would connote, at least, a very high degree of negligence; or a wanton disregard for
the legitimate interests of the other party; or an obviously inappropriate or
extraordinary harnessing of the process of litigation’.
[53] Accordingly, determining if litigation is vexatious, reckless, or an abuse,
usually involves some level of assessment con cerning its merits. However, for
purposes of Uniform Rule 47(3), a court is not required, nor expected, to embark on
an in-depth analysis of the kind which a court undertake s at the end of a civil trial.
This is because, in an application for security , courts are not required to resolve the
This is because, in an application for security , courts are not required to resolve the
underlying dispute between the parties. Doing so would frustrate the purpose for
which security is sought. The ‘extent to which it is practicable to make an
assessment of a party's prospects of success would depend on th e nature of the
dispute in each case' (Zietsman v Electronic Media Network Ltd and Others 2008 (4)
SA 1 (SCA) para 21) . The SCA, in Fusion Properties 233 CC supra para 36, held
that it ‘is sufficient that a court has a fair sense of the strength and weakness of the
antagonists' respective cases’.
[54] An order requiring security should not be refused because it will, or may
reasonably likely, bring an end to litigation in the main case. See Shepstone & Wylie
and Others v Geyser NO 1998 (3) SA 1036 (SCA) at 1046G – I; Giddey NO v JC
Barnard supra paras 30, 33, and 34 . Termination of an action is an outcome which,
when Uniform Rule 47 was crafted, would have been foreshadowed by its drafters as
an inherent possibility. Despite this, the rule maker decided to cater for security.
[55] A litigant relying ‘on the probability that a security order will exclude it from the
court, must therefore adduce evidence that it will be unable to furnish security, not
only from its own resources, but also from outside sources such as shareholders or
creditors' (MTN Service Provider (Pty) Ltd v Afro Call supra para 20 ). Also, see
Fusion Properties 233 CC supra para 3 4. Therefore, when assessing whether to
require security, a relevant factor is whether ordering security might or will end the
litigation in the main action. A respondent should pertinently plead facts germane to
this issue.
[56] Even if requiring security from an incola would lead to the main litigation
coming to an end , that potential ou tcome should not deter a court from ordering
security when the circumstances merit doing so . Shying away from ordering security
merely to keep litigation alive would, in my view, be a n in judicious exercise of
discretion under Uniform Rule 47(3). This is more so if the proceedings concerned is
vexatious, or reckless, or is an abuse of process (in the legal sense explained
above).
[57] Finally, on the question of the nature and extent of a court’s discretion to order
security for costs within the framework of Uniform Rule 47(3), Janisch AJ held as
follows in Cape Cash and Carry supra para 11:
‘A decision as to whether to order the provision of security involves the exercise of a
judicial discretion. But as the authorities show, the discretion is not unfettered.’
The statement in the first sentence is undoubtedly correct . The correctness of the
recordal in the second sentence is, with respect, doubtful for the reasons given
below.
[58] First, in Browns The Diamond Store CC v Van Zyl supra para 1 4, Kathree-
Setiloane J held that ‘ there should be no fetter on a court’s discretion to order
security for costs ’. I endorse this view. Secondly, in Fusion Properties 233 CC para
23, the SCA recorded the prevailing legal position in this regard to be as follows:
‘It is by now well -established that a court considering an application for security
exercises a narrow and unfettered discretion.’ (my emphasis added)
[59] If Janisch AJ meant that a court’s discretion to order security is fettered by the
rules which render the exercise of a strict discretion to order security being
susceptible to set ting aside on appeal if it was made on the strength of incorrect
facts, or on a wrong principle, or if it is tainted by bias or caprice (see Giddey NO v
JC Barnard supra paras 19 - 23), then I agree with his second sentence quoted
above.
Application of the relevant principles to the facts in casu
[60] It is against the backdrop of the legal principles discussed under the
preceding heading that I now consider their operation in the application before me.
(a) Delay in demanding security
[61] As stated in paragraphs [34] to [36] above, Mr de Wet argued that the
demand for security was inexplicably delayed , and for an unreasonable period. This
challenge was not pleaded. It surfaced for the first time in Mr de Wet’s heads of
argument.
[62] Although Uniform Rule 47(1) stipulates that a p arty entitled to demand
security must (‘shall’) do so as soon as is reasonably practicable after the
commencement of legal proceedings, failure to call for security expeditiously is not
necessarily fatal to an application launched under the aegis of Uniform Rule 47(3) .
This is clear from the following dictum by the SCA in Fusion Properties 233 CC supra
para 31:
‘Whether a delay should constitute a bar to the demand entails a fact -based enquiry
in the lig ht of the facts of a given case. Thus, a court faced with an application to
compel will, in exercising its discretion, undoubtedly have regard to this factor and
weigh it up together with other relevant factors. Therefore, delay in itself will rarely be
an overriding and decisive consideration.’ (my emphasis added)
[63] The Applicant demanded security for the first time in April 2025. This occurred
almost 7 years after the main action started in December 2018. As such, the
Applicant failed to invoke Uniform Rule 47(1) with the degree of expedition that it
envisages.
[64] The Applicant did not heed the procedural stipulation requiring
expeditiousness. Therefore, i n its court papers, the Applicant failed to address the
delay and explain its cause. Mr Vivier SC argued that the delay in demanding
security is of no moment. I disagree. There will be instances, admittedly rare ones,
when a delay would be a bar to securit y. A delay ought to be e xplained. Sometimes,
failure to do so may prove fatal.
[65] The Respondent did not use the delay as a ground for its opposition. Since
the delay was not raised in the answering papers , it was not canvassed in the
replying affidavit either . The following dictum in Honig supra para 14 is instructive
here:
‘In addition, in motion proceedings the affidavits serve as both the pleadings and
evidence relevant to the issues between the parties , and a party can only be
expected to deal with averments raised by the other side and not with allegations
possibly anticipated but which are not made. Had the appellants raised the alleged
delays and their contention that the court should decline to deal with the matter as a
result, the respondent may well have offered a perfectly acceptable explanation.
Without the respondent having being called upon to do so, it would not be proper to
decide the application against him by having regard to an issue that he was not
called upon to meet.’ (my emphasis added) (footnotes omitted)
[66] On the facts before me, I conclude that , although the delay in demanding
security is substantial in duration, the delay itself is not a central consideration; nor is
it a factor which would be dispositive of the matter by serving as a complete bar to
ordering security ; nor does the delay , when it is viewed with the other relevant
factors in casu, tilt the scales of the fair administration of justice in the Respondent’s
favour.
(b) Impact on access to court if security is ordered
[67] In its founding affidavit, the Applicant persists in seeking security for costs in
the amount of R1 873 731,93 as per its demand in terms of Uniform Rule 47(1). In its
answering papers , the Respondent avers ‘that the Applicant is not entitled to any
security for costs’ (at para 52.4). The Respondent ’s case is not that it is unable to
source any sum for security ; nor does the Respondent make the case that it will be
denied access to court in the main action if security for costs is ordered in any sum.
[68] Before me, Mr de Wet argued that th e doors to the halls of justice should not
be closed to the Respondent merely because it is not in a financial position to
provide security owing to a lack of its own resources. In MTN Service Provider (Pty)
Ltd v Afro Call supra para 20 (see quote in paragraph [55] above), the SCA affirmed
that litigants who contend that an order requiring security will deal a death blow to
their action must adduce evidence of an inability to give security, both from its own
resources and external sources too . The Respondent failed to adduce evidence to
this effect.
[69] In its replying affidavit, the Applicant pointed out, correctly so, that Fanie was
not candid with this Court in his answering affidavit. Fanie failed to take this Court
into his confidence by not disclosing the source of the Respondent’s litigation
funding.
[70] Accordingly, on the evidence before me, I am unable to conclude that the
Respondent cannot provide security sourced from the same person(s) who is/are
funding the main action ( and/or possibly from other persons) in such sum, form, and
manner as may be determined in terms of Uniform Rule 47(5). In the circumstances,
I am unpersuaded that the Respondent may potentially, or will, be denied access to
court in the main action owing to insufficient funding from available sources.
[71] It bears repetition that m erely because an order requiring security might , or
will, have the effect of limiting access to court is not an overriding or decisive
consideration; nor is it a sufficient reason to refuse security. See paragraphs [54] to
[56] above.
[72] Importantly, I am satisfied that the application for security is bona fide. T he
Applicant is, in my view, not seeking security to shut the Respondent out of court. If
that were its motive, then it can reasonably be expected that the Applicant would
have sought security a long time ago, particularly since some of the key facts which
underpin the demand for security manifested themselves s ome years ago. See the
contents of the notice delivered in terms of Uniform Rule 47(1) quoted in paragraph
[19] above.
[73] Also, the Applicant seeks security mainly for its future trial related costs. FA31
is a schedule attached to the founding papers showing how the sum of
R1 873 731,94 demanded as security is computed . The breakdown records that
R1 729 811,73 is an estimate of trial costs for an advocate, an attorney, expert
witnesses, travel, and accommodation. The rest are costs incurred from 1 January
2017 to 11 April 2024.1
(c) Respondent’s present financial position and its financial position later
[74] The Respondent does not conduct any trading activity. This has been the
position from October 2016 onwards to date. Fanie has no intention to recommence
trading in t he Respondent. As a result, it has no bank ing account. All the
Respondent’s assets were sold in 2016 for R9,5m . The sale proceeds are depleted
(or withdrawn).
1 The main action was launched in December 2018. It is unclear why the Applicant seeks
security for costs incurred before the summons was issued and served. This is a matter for the
registrar to address when she performs her functions pursuant to Uniform Rule 47(5).
[75] Fanie avers that the Respondent has one asset, namely, a R3,586m claim
against the Applicant. That claim is not an asset. It is illiquid and disputed. Liability
must be judicially determined. Until a court finds that the Respondent suffered a loss
of R3,586m caused by the Applicant , uncertainty exists as a matter of fact and law
whether the Applicant is liable to pay the Respondent the sum claimed. At most (if at
all), the Respondent’s damages claim may be labelled a ‘contingent asset’, the value
of which remains the subject of a judicial determination to be made in due course.
[76] Fanie has not provided any financials for the Respondent which shows its
current balance sheet (such as, the value of all monies received on loan to fund its
litigation costs, and the nature and value of any asset/claim). The failure to provide a
set of financial statements which bears out Fanie’s assertion that the Respondent
has one asset of substantial value in its acc ounting records is unsurprising. This is
so f or the reasons enumerated in paragraph [7 5] above , and because the
Respondent has no auditor in place who can verify Fanie’s assertion . It last had an
auditor in 2005.
[77] Based on the Respondent’s financial information before me in the pleadings
viewed in their totality , as summarised in paragraph s [74] to [75] above, I find that
there is merit in the Applicant’s founding a verment that ‘ the Respondent is for all
intents and purposes an “empty shell”’ (at para 14) . The Respondent has no
asset(s). However, it does appear to have liabilities, namely, the value of loans
received to fund the Respondent’s litigation costs in both the main action and this
application. To those debts must now be added the value of the costs order granted
against it herein below.
[78] For all these reasons, I conclude that the Respondent is, at present, litigating
in a state of insolvency. The reasonably estimated value of its assets is zero (nil).
This is exceeded by the reasonable (unquantified) value of its actual a nd probable
liabilities.
[79] If the Respondent fails in the main action with costs, then its financial position
will be more precarious than at present. Its insolvency would be considerably worse.
[80] Consistent with these findings, Mr de Wet was constrained to concede that
the evidence establishes unequivocally that the Respondent will not be in a financial
position to pay the Applicant’s litigation costs as quantified in any bill of costs; nor will
the Respondent be able to pay any cost contribution in relation thereto.
[81] As a result, this case has a distinguishing feature. The Applicant has gone
beyond proving a mere probable inability on the Respondent’s part to satisfy a costs
order which may be granted against it at the end of the main action. The Applicant
has proved an actual inability on the Respondent’s part to satisfy any adverse costs
order.
[82] As such, I am satisfied that if the trial in the main action proceeds and the
Applicant prevails with costs, then it faces the real danger of suffering a substantial
loss in the form of an irrecoverable bill of costs. This would be so regardless of
whether the Respondent is actually liquidated or not.
[83] I hold that the considerations discussed in paragraphs [7 4] to [ 82] tilt the
scales of fairness toward s Applicant being entitled to security for its costs.
Respondent should not have a free pass to litigate with everything to gain , but with
nothing to lose. The Respondent should be able to litigate the main action to finality,
but not without any risk of indemnify ing the Applicant, if the Respondent’s action is
dismissed with costs.
[84] In my view, the fair administration of justice requires that the Respon dent
should only be permitted to proceed with the litigation in the main action after it
provides security for the Applicant’s fair and reasonable litigation costs in a sum,
form, and manner to be determined by the Registrar in accordance with Uniform
Rule 47(5).
(d) Abuse of process
[85] The Applicant’s case for security is grounded, in part, on its averment that the
Respondent’s reinstatement for the sole purpose of pursuing its damages claim
against the Applicant constitutes an abuse of both the separate corporate personality
of the Respondent and this Court’s process (see paragraphs [21](b) and (c) above).
[86] As discussed in paragraphs [50] to [51] above, abuse of process is one of the
recognised grounds which, if proved, would establish the Applicant’s entitlement to
security for its costs against an incola plaintiff. This legal position made it incumbent
on Fanie to deal head -on with the content s of the founding aff idavit which alleged
that he was engaged in a stratagem tantamount to an abuse of process. He failed to
answer the averments concerned in any meaningful way. This failure proved fatal.
[87] The following is Fanie’s entire answer to the allegation that his conduct as
particularised in paragraph 46 of the founding affidavit evidences an abuse of
process:
‘28. AD PARAGRAPHS 46 AND 47 THEREOF
The content of these paragraphs is denied.’
[88] This is a bald denial of a serious and vital allegation. It required a proper
answer. Fanie’s failure to substantiate the denial speaks volumes about the probable
lack of a plausible explanation for his impugned conduct. This adds considerable
weight and credence to the Applicant’s case of mala fide litigation and mala fide
litigation tactics.
[89] Quite clearly, Fanie revived the Respondent ’s corporate status so that he
could litigate in its name . In this way, h e shields himself from, inter alia, liability for
costs. As the Respondent’s sole shareholder (and presumably the funder of its
litigation costs), Fanie will be the sole beneficiary of any damages awarded. Instead
of taking transfer of the Respondent’s claim and litigating in his own name with all
the associated risks, Fanie elects to hide behind the corporate veil between him and
the Respondent.
[90] If the Respondent’s lawsuit succeeds, then Fanie and the Respondent will be
the victors; the Applicant will be the loser. If that lawsuit fails with costs, then Fanie
and the Respondent will still be the victor s because the re would be no assets
susceptible to execution; the Applicant will still be the loser, suffering losses through
not being able to recover its costs (and any damages awarded in its counterclaim).
[91] I am satisfied that Fanie and the Respondent have adopted a litigation
posture and a litigation strategy that is intended to enable Fanie and the Respondent
to gain everything from a favourable outcome in the main action, while at the same
time ensuring that neither loses anything if an unfavourable result comes to pass .
This consideration favours ordering security. See Boost Sports Africa supra para 15.
[92] Is this conduct an abuse of process? My answer is ‘ yes’. There is no finite or
precise conception of ‘abuse of process’ which fully articulates all its various shades
and forms. In Beinash v Wixley 1997 (3) SA 721 (SCA) at 734F-G, the SCA held:
‘What does constitute an abuse of the process of the Court is a matter which needs
to be determined by the circumstances of each case. There can be no all -
encompassing definition of the concept “abuse of process”’.
Some guidance may also be gleaned from Price Waterhouse Coopers Inc and
Others v National Potato Co -Operatives Ltd 2004 (6) SA 66 (SCA) para 50. There it
was held:
‘It has long been recognised in South Africa that a court is entitled to protect itself and
others against the abuse of its process, but no all-embracing definition of ‘abuse of
process’ has been formulated. Frivolous or vexatious litigation has been held to be
an abuse of process and it has been said that ‘an attempt made to use for ulterior
purposes machinery devised for the better admin istration of justice’ would constitute
an abuse of the process ( Hudson v Hudson and another supra at 268). In general,
legal process is used properly when it is invoked for the vindication of rights or the
enforcement of just claims and it is abused when it is diverted from its true course so
as to serve extortion or oppression; or to exert pressure so as to achieve an improper
end. The mere application of a particular court procedure for a purpose other than
that for which it was primarily intended i s typical, but not complete proof, of mala
fides. In order to prove mala fides a further inference that an improper result was
intended is required. Such an application of a court procedure (for a purpose other
than that for which it was primarily intended ) is therefore a characteristic, rather than
a definition, of mala fides . Purpose or motive, even a mischievous or malicious
motive, is not in general a criteria for unlawfulness or invalidity. An improper motive
motive, is not in general a criteria for unlawfulness or invalidity. An improper motive
may however be a factor where the abuse of court process is in issue. Accordingly, a
plaintiff who has no bona fide claim but intends to use litigation to cause the
defendant financial (or other) prejudice will be abusing the process. ’ (footnotes
omitted) (my emphasis)
A court should enquire whether impugned conduct was undertaken with the sole or
predominant intention to cause harm or prejudice to an opposing litigant. If yes, then
the conduct concerned may amount to an abuse of process. See Koukoudis and
Another v Abrina 1772 (Pty) Ltd and Another 2016 (5) SA 352 (SCA) paras 30 - 31.
[93] Fanie’s misuse of an empty shell to litigate, coupled with the fact that (i) the
Respondent is dormant for all trading purposes since 2016; and/or (ii) it is litigating in
insolvent circumstances (see paragraphs [74] to [78] above) ; and/or (iii) it is litigating
vexatiously and/or recklessly (see below), then a mala fide practice is clearly
exposed.
[94] This conduct is intended to cause harm and/or be seriously prejudicial to the
Applicant and its legitimate interests. It stands to suffer substantial losses, whether it
wins or loses the main case. In as much as Fanie and the Respondent are
intentionally litigating in a way where both stand to gain everything and neither
stands to lose anything, Fanie and the Respondent are litigating in a manner which ,
by design, is intended to leave the Applicant in a damaged financial position, no
matter what the outcome in the main action . The Applicant will lose all the money it
spent in defending th at action, and it will , simultaneously, gain nothing from any
favourable award.
[95] This harmful and prejudicial outcome is intended . It is a dominant aim. It is
precisely for t his reason that Fanie, as the Respondent ’s sole director and
shareholder, orchestrated the main action to be run through a dormant, empty shell
which is technically insolvent at all material times during the main action, and likely
after it ends.
[96] As a result of t his intention, Fanie instructed Werksmans Attorneys, during
February 2024, to secure the Respondent ’s reinstatement. Fanie was determined to
litigate in the Respondent’s name for his benefit and to the Applicant’s detriment. The
reinstatement was sought , despite Fanie having no intention to conduct any trade.
The juristic entity is being mis used. It is a vehicle used to pursue a reckless and
vexatious claim (see discussion bel ow) in a manner that is intended to cause harm
and/or serious prejudice to the Applicant, while insulating Fanie and the Respondent.
This shows improper motives and mala fides. I find this conduct constitutes an abuse
of process.
[97] The Respondent is a proverbial ‘sitting duck’ for liquidation. On the facts
before me, the Applicant has a reasonable apprehension that the Respondent’s
liquidation will likely ensue if the Respondent’s action is dismissed with costs. This is
another consideration which crie s out for an explanation of the rationale behind the
strategy of litigating in the Respondent’s name . Fanie chose to evade disclosure
thereof.
[98] The evasive tactics adopted are a miscalculation. Without an explanation that
provides justification for Fanie’s afore-described conduct, a finding of an abuse of
process is, in my view, wholly merited. This is reinforced by a consideration of the
facts surrounding the Respondent’s deregistration and Fanie’s conduct related
thereto.
[99] On 20 December 2020, CIPC commenced the process of deregistering the
Respondent. It effected deregistration on 20 January 2024 , being more than 3 years
after the process commenced. Throughout this time, litigation continued unabated.
[100] By law, CIPC is required to give notice to the Respondent of any intended
steps to deregister it from the companies’ register. In view of the allegations against
Fanie of abuse of process related to, and arising from, his misuse of the
Respondent’s corporate status, it was incumbent on Fanie to explain, inter alia, when
and how he bec ame aware of the Respondent’s deregistration; and whether
Respondent received notice from CIPC of its intention to deregister it; and if not, then
why would that be so.
[101] Fanie’s silence on all this (and more, as explained earlier) strongly favours the
Applicant’s case that Fanie and the Respondent are guilty of abuse of process. In my
view, o n all the facts before me, the probabilities favour a finding that Fanie
continued to litigate in the Respondent’s name knowing that it was being
deregistered. Later, he even continued to litigate after the deregistration was brought
to his attention.
[102] The Applicant was, during February 2024, engaged in preparation for the 4-
day trial scheduled to run in April 2024 . On 5 February 2024, its attorneys
uncovered, rather fortuitously, that the Respondent was deregistered. As such, the
Respondent had no corporate existence and lack ed legal personality. See Falk NO
and Others v Rapitrade 659 (Pty) Ltd and Others (3519/2021) [2022] ZAWCHC 128
(9 May 2022).
[103] If the Applicant’s attorneys had not uncovered the deregistration, the Applicant
would, as averred in its founding papers, have suffered s erious harm and/or
prejudice. It would have litigated entirely oblivious to the Respondent’s true legal
status under the Companies Act. The Applicant would have incurred s ubstantial
litigation costs, none of which would have been recoverable against the deregistered
company. This improper outcome was part of Fanie’s mischievous intention . This is
entirely consistent with Fanie’s improper motives discussed earlier in paragraphs
[93] to [95].
[104] When the Applicant became aware of the Respondent’s deregistration, it s
attorneys took immediate steps that protected scarce judicial resources from being
wasted, and prevented further abuse of process through the running of a trial for the
benefit of a company which, at that time, had no right of access to court.
[105] On 5 February 2024, the Applicant’s attorneys addressed a letter to the
Respondent’s erstwhile attorneys, being Werksmans. The former demanded that the
latter file a notice removing the main action from the trial roll owing to the
Respondent’s deregistration . This was a n eminently reasonable request. It was,
however, ignored.
[106] On 12 February 202 4, the Applicant’s attorneys sent a follow -up letter .
Werksmans responded via email to the latter correspondence on 13 February 2024 .
It read:
‘We are instructed that Mr Fanie van Zyl has already completed and lodged the
necessary documentation to reinstate the company. We are further instructed that the
reinstatement will take a maximum of 21 days from date of lodgement.
Accordingly, we confirm herewith that we hold instructions t o proceed with the trial
and that your client must proceed to prepare for trial which is set down for 10 weeks
from now.
Our client’s rights remain expressly reserved.’
[107] Fanie’s ins istence that the litigation and the trial preparation processes
continue as normal despite the deregistration is abusive of the judicial process. At
that time, the Respondent was non -existent in the eyes of the law and could not
litigate. It had no rights, and none could be ‘expressly reserved’. The position taken
is, in law, untenable.
[108] In view of Werksmans response, the Applicant’s attorneys, understandably so,
sent an email marked ‘Urgent’ in which it requested ‘a copy of the completed and
lodged documentation to reinstate the Company’. This request was ignored , thereby
culminating in a further ‘Urgent’ email sent on 23 February 2024.
[109] The latter email elicited the following response which, to my mind, further
underscores Fanie’s mala fides and his abuse of process in the main action:
‘We are instructed that the application lodged at CIPC is not rel evant to the dispute
as set out in the pleadings. Furthermore, we are instructed to once again inform you
to proceed to prepare for trial as Mr Van Zyl is confident that the reinstatement is a
mere formality and will be finalised soon.’
[110] This res ponse from Fanie through his attorney s evinces the same evasive
tactic employed by him in his answering affidavit in the application with which I am
seized. The Applicant’s representatives were understandably concerned about the
Applicant’s exposure to har m and prejudice if it simply forged ahead on trust and
Fanie’s word, without proof that steps were underway to restore the Respondent’s
legal status.
[111] Providing the documentation requested would have gone a long way to
demonstrating Fanie’s bona fides in the litigation with the Applicant, and it would
have allayed concerns that the Respondent’s deregistration occurred with his
knowledge.
[112] I am struck by the absence of a ny statement, both in communications from
the Respondent’s attorneys to the Applicant’s attorneys and in the answering
affidavit, to the effect that Fanie was taken by surprise when, on 5 February 2024,
the Applicant’s attorneys informed Werksmans that the Respondent was
deregistered in January 2024. This omissio n suggests that Fanie was not surprised
to learn of the Respondent’s deregistration. This aligns with my view (see paragraph
[101] above) as to his probable knowledge that the Respondent was, since
December 2020, in the process of deregistration. This woul d mean that he took no
steps to stop it. Why not?
[113] Fanie’s point blank refusal to provide a copy of the documentation which
ought to have been readily available was unreasonable . Moreover, it wreaks further
bad faith in the litigation and evidences improper motives on his part. All this
conduct, when viewed together with Fanie’s other conduct, leads me to conclude
that Fanie is, as alleged by the Applicant, guilty of abuse of process in relation to the
main action.
[114] I find that t his is a ‘clear case ’ where this Court’s discretion should ‘be
sparingly exercised’ against an incola plaintiff by requiring it to provide security
before it can litigate further against an incola defendant . See Cape Cash and Carry
supra paras 16, 22. I deem it necessary to d iscuss certain additional factors which,
when considered with the other relevant factors discussed above, serve to fortify my
view that this case has exceptional circumstances which justify security being
ordered. See Caldwell’s Trustee supra at 274. To some degree, the factors
discussed below work hand -in-hand with the abuse of process consideration
discussed in this part.
(e) Reckless litigation
[115] The Respondent is not trading , and has no t traded since 2016. It has no
assets; nor any bank account. The Respondent lacks the necessary own resources
that would provide it with the liquidity to fund its own litigation costs. Those costs are
presently being funded by an external source(s). Presumably, Fanie is funding these
costs on loan account.
[116] All such borrowings are reckless in that the funds are received at a time when
Fanie, as director, knows that there is no reasonable prospect of repaying the loans.
The corporation lacks the necessary solvency and liquidity. The company is dormant:
it has no staff; it does not trade; it has no business; it has no assets; and it has no
income. The Respondent is receiving the loans with a high degree of negligence.
[117] The loans are used exclusively t o fund the main action. If the Respondent’s
lawsuit fails, then it can never repay the loans. Fanie is forging ahead with the
pending action and funding it with borrowings regardless of the consequences. This
taints the litigation with a high degree of neg ligence. This, in my view, amounts to
recklessness.
[118] In addition, the circumstances surrounding the main action reflect a wanton
disregard for the Applicant’s interests in the outcome of the lawsuit . The lack of a ny
prospect to recover anything pursuant to an order in its favour is not because the
Respondent is impecunious, but owing instead to wanton indifference being show n
to the Applicant’s legitimate interests. Fanie intentionally arranged the Respondent’s
affairs in a manner that allows it to litigate free of any chance that the Applicant could
recover anything. It will gain nothing. Fanie made sure that the Respondent is, for all
intents and purposes, an empty shell. It has , and will have, no attachable assets .
This rend ers the action to be reckless litigation. See Cape Cash and Carry supra
para 25.
[119] Consequently, the scales of fairness in the administration of justice tilt heavily
in the Applicant’s favour for the granting of an order requiring the Respondent to
provide security before it can proceed further with its action . Also, pending security
being provided, the Respondent’s action ought to be stayed. This will be ordered.
(f) Vexatious litigation
[120] For the Respondent to succeed in its claim at trial, it bears the burden to
prove, inter alia, that it suffered contractual damages which were ca used by the
Applicant selling the Respondent’s grapes for the 2015 and 2016 seasons at prices
below their market value. In addition, the Respondent must prove the quantum of its
alleged losses. The Respondent’s claim suffers from certain weaknesses.
[121] In Fanie’s answering affidavit, he admits that the Respondent has problems
with its case. This is, in part, due to the Respondent not having access to significant
source documents which the Applicant authored, but which it is unable to produce for
reasons disclosed in the pre -trial minutes dated 17 January 2023. Despite this, the
Respondent records in various pre-trial minutes filed of record that it accepts that it is
not prejudiced in its preparation for tria l. It is difficult to understand how this can be
so.
[122] The problems experienced by the Respondent in accessing various source
documents will hamper its ability to d ischarge its onus of proof on the question of
merits. This consideration raises serious doubts in my mind about the Respondent’s
prospects of success in the main action. Success, while not impossible, is unlikely.
[123] The weaknesses identified include , but are not necessarily limited to, the
following aspects of the Respondent’s claim for contractual damages in the
aggregate sum of R3 586 058,00 for the 2015 and 2016 harvest seasons:
(a) In its plea, the Applicant alleges that the grapes delivered by the Respondent
were of poor quality and could not, as a result, yield the best possible prices. Its
defence is that the price yielded was the best price for the quality of grapes
delivered. To prove this defence, the Applicant will rely on the expert evidence
of Johan van der Westhuizen who will testify as to i nspections conducted by
him on the Respondent’s grapes and the quality thereof. In his answering
affidavit (at para 35.1), Fanie denies ‘that the grapes that Van der Westhuizen
inspected originated from the Respondent’. Fanie provides no factual basis for
this averment. Fanie was not present at the inspections . Thus, he would not be
able to testify as to the origins of the grapes inspected. Van der Westhuizen’s
testimony and that of the Applicant’s representative s would probably, in the
absence of source documents, be the best available evidence that would prove
the grapes ’ origins. This consideration favour s Applicant in its defence and
exposes weakness in the Respondent’s claim for damages for both seasons;
(b) In its plea, the Applicant avers that the grapes delivered by the Respondent
were of poor quality. In his answering affidavit, Fanie avers that ‘on the
assumption that these grapes [i.e., the grapes inspected by Van der
Westhuizen] were in fact the Respon dent’s grapes, it is impossible, without the
necessary source documents to determine who was responsible for the poor
quality of the grapes’ (at para 35.2). This assertion appears to be rather weak. It
overlooks the various emails authored by Fanie, partic ularly in relation to the
2015 harvest season, in which he admits t hat the grapes produced by the
Respondent were of poor quality at source. He explains the reasons for their
poor quality. This consideration too favours the Applicant in its defence and
exposes further weakness in the Respondent’s claim for damages;
(c) To prove the defence raised by the Applicant, namely, that the Respondent’s
grapes were of poor quality for export purposes, the Applicant gave notice of its
intention to call Alexander Veltman and Stefan Droogendijk ‘to give expert
evidence on the examination and quality reports on grapes of the Plaintiff
inspected on arrival in the Netherlands’. The Respondent has not given n otice
to call any expert to counter the Applicant’s intended expert evidence. On the
face of it, this further indicates that the Applicant is more likely to show that the
Respondent’s grapes were of poor quality than the latter seems able to prove
that its grapes were of good quality for purposes of an export market to, inter
alia, the Netherlands so that it ought to have yielded a higher price than it
actually did;
(d) In his answering affidavit, Fanie records that ‘by the time that the Applicant
provided any information to the Respondent, it was already too …, the
Respondent could not confirm the correctness of the allegations regarding poor
quality and/or investigate which party was responsible for the poor quality of the
grapes’ (at para 39.2) . The Responde nt is in no better position at present.
Therefore, it appears that the Respondent is unable to genuinely refute the
testimony which the Applicant intends to lead to the effect that the
Respondent’s grapes were of poor quality and that the Respondent is
responsible for the poor quality (and not the Applicant). This consideration too
favours the Applicant in its defence and shows weakness in the Respondent’s
claim; and
(e) In the signed pre -trial minutes, the Respondent records that it will not call any
expert. This is an Achille’s heel. To prove the loss pleaded and its quantum ,
expert evidence would be needed to prove what, on the Respondent’s version,
is a market related price was for its 2015 and 2016 grapes.
[124] After a careful consideration of the apparent strengths and weaknesses of the
Respondent’s claim and the Applicant’s defence to it, I am persuaded that, on a
preponderance of probability, the Respondent’s prospects of success are open to
sufficient doubt a s to render its claim vexatious. Its claim appears to be
unsustainable.
[125] I emphasise that, i n accordance w ith the principle s discussed in Liberty
Holdings v Maloka supra para 18, I reached this conclusion without engaging in a
close analysis of all the facts, and without undertaking the kind of in -depth analysis
of all the evidence as would be required of a trial court when it adjudicates the
question of merits . I reviewed the pleadings, and considered the notices and the
other contents in the court file, both in the main action and the Uniform Rule 47
application.
[126] Further to th e above, I conclude that the Respondent’s prospects of success
are so bleak that continuation of its action would itself be an abuse of process. See
Golden International Navigation SA v Zeba Maritime supra para 18.
[127] For all these reasons, I find that an order requiring security is merited in casu.
Costs
[128] At the hearing, both parties’ counsel argued that costs of the application ought
to follow the result and that costs for counsel should be on tariff scale B. I agree.
Order
[129] In the result, the following order is made:
(a) The application succeeds. The Respondent is directed to furnish
security for the Applicant’s costs in the main action. The Respondent
shall do so in the form, amount, and manner determined by the
Registrar under Uniform Rule 47(5). Pending compliance herewith, the
proceedings in the main action are stayed;
(b) Respondent is liable for costs, including costs for counsel on tariff scale
B.
_____________________
F. MOOSA
ACTING JUDGE OF THE HIGH COURT
Appearances
For Applicant: P de B Vivier SC
Instructed by: Saunders Venter Van der Watt (Mr N van der Watt)
For Respondent: H. N de Wet
Instructed by: BBS Attorneys Inc (Mr B Boshoff)