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[1994] ZASCA 132
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Trakman NO v Livshitz and Others (709/92) [1994] ZASCA 132; [1995] 1 All SA 434 (A) (26 September 1994)
133/94
CASE NO
: 709/92
N v H
IN THE SUPREME COURT OF SOUTH AFRICA
(APPELLATE DIVISION)
In the matter between:
SELWYN TRAKMAN N O
and
B LIVSHITZ & TWO OTHERS
SMALBERGER, JA
CASE NO
: 709/92 N v H
IN THE SUPREME COURT OF SOUTH AFRICA (APPELLATE DIVISION)
In the matter between:
SELWYN TRAKMAN N O
Appellant
and
B
LIVSHITZ
1st Respondent
FINANSFIN (PROPRIETARY) LIMITED
2nd Respondent
JOHAN ERASMUS N O
3rd Respondent
CORAM
: JOUBERT, SMALBERGER, KUMLEBEN,
FH GROSSKOPF et HARMS, JJA
HEARD
: 1 September 1994
DELIVERED
: 26 September
1994
JUDGMENT
SMALBERGER, JA:
The appellant is the duly appointed liquidator of Gold and Investment
Brokers SA (Proprietary) Limited (in liquidation)
2
("GIBSA"). GIBSA previously carried on business as an investment broker.
The second respondent ("Finansfin") was its banker. Monies
obtained by GIBSA
from clients were deposited with Finansfin. The first respondent ("Livschitz")
was one of GIBSA's clients. On 30
May 1985 (seventeen days prior to GIBSA's
provisional liquidation) Finansfin issued a cheque for one million rand in
favour of Livschitz
and debited GIBSA's account with that amount. The appellant
alleges that in doing so Finansfin exceeded its authority. Consequently
on 30
September 1986 the appellant instituted action against Finansfin and Livschitz
(to whom, where appropriate, I shall refer jointly
as "the respondents") in the
Witwatersrand Local Division ("the main action"). He claimed, as against
Finansfin, a reversal of the
debit; in the alternative, against Livschitz, he
sought appropriate relief in terms of
sections 29
,
30
and
31
of the
Insolvency
Act 24 of 1936
read with section 339 of the Companies Act 61 of 1973.
3
There appear to have been considerable delays associated
with
the litigation. In April 1992 the respondents
launched an
application to compel the appellant to furnish security
for their
costs. They each sought security in the amount of R150
000,00.
The matter was settled, and the settlement made an order of
court.
Paragraph 1 of the order provided:
"The respondent [appellant] is directed to furnish security for each of the
applicants' costs of the action in an amount to be fixed
by the
Registrar."
Representatives of the parties in due course
appeared before the third respondent ("the Registrar") to enable him to fix the
amount
of security. He determined the security payable to Livschitz and
Finansfin in the amounts of R76 000,00 and R251 692,16 respectively.
He further
directed that security in respect of the latter
amount was to be furnished by "bank guaranteed cheque to be
paid within 10 days". This led to an application by the appellant in
terms of Rule 53 of the Uniform Rules of Court to review and
4
set aside the Registrar's decision relating to the amount of security he
was obliged to furnish, and the manner and time within which
he was required to
do so. The respondents in turn brought counter-applications in which each sought
an order compelling the appellant
to furnish security in the amount fixed by the
Registrar within ten days of such orders, and certain ancillary relief. The
Registrar
elected not to file an affidavit (or report) or oppose the
application. The matter came before ROUX, J. The respondents took the
point in
limine that the appellant had no locus standi to bring the application. The
point was upheld by the learned judge. He did
so on the basis that the appellant
had ceded his rights of action against the respondents to one Alenson - a fact
which he held the
appellant had deliberately failed to disclose in his founding
affidavit. He dismissed the appellant's allegation (in a later affidavit)
that
there had subsequently been a re-cession as "a deliberate lie made to mislead
the court and the other litigants". He further
held that,
5
in any event, such purported re-cession would have had no
legal
efficacy. ROUX, J, however, did not content himself with
this
finding. He went further, as appears from the following
passage
in his judgment:
"There is a further consideration which relates to both the fate of the
review and costs. Since May 1986 the applicant [appellant]
and his attorney
Kruger have had intimate and, as far as the other litigants are concerned,
exclusive knowledge of the cession. On
his own or on Kruger's advice the
applicant has mislead this Court by his silence. This silence becomes all the
more sinister when
the delaying tactics of the applicant, as plaintiff, are
taken into account. I need not list all the procrastinations. There is ample
evidence before me to show sinister motives.
The failure
to disclose the cession for six years is inexcusable. This failure is only
consistent with dishonesty. When dishonesty
is harnessed to mislead the Court,
to harass the other litigants and to obtain undue advantage it will be met with
the sternest disapproval.
Because of his behaviour I would also dismiss the application. I
emphasize that 1 would have come to that decision regardless of my
views on the
cession expressed above."
6
Consequently ROUX, J, dismissed the application with costs. He ordered
such costs to be paid by the appellant de bonis proprüs
on a scale as
between attorney and own client. In regard to the counter-applications he
directed the appellant to furnish security
in the amounts determined by the
Registrar within ten days failing which the respondents were "at liberty to take
such steps as they
were advised". The appellant was further ordered to pay the
costs of the counter-applications on a party and party scale. Leave to
appeal
was refused, but was subsequently granted by this Court.
In their heads of argument the respondents (despite their earlier stand)
conceded that the appellant had locus standi to bring review
proceedings and
that the judge a quo had erred in finding to the contrary. This concession,
which was repeated in argument, was correctly
made. The appellant's locus standi
to bring the main action was never put in issue on the pleadings. There had been
an order by a
court of competent and co-ordinate jurisdiction that the
7
appellant furnish security for the respondents' costs in amounts to be
fixed by the Registrar. The issue to which such order related
was res judicata
as between the appellant and the respondents. The review proceedings arose as a
consequence of the determination
made by the Registrar pursuant to such order.
The appellant had a direct and substantial interest in the outcome of such
determination
and the process by which it was reached, and hence in the subject
matter of the review proceedings. Accordingly he had the legal
capacity to
institute review proceedings in the present matter
(Jacobs en 'n Ander v Waks
en Andere
1992(1) SA 521(A) at 533J - 534C). This finding renders it
strictly unnecessary to say anything about the question of cession, on
which the
court a quo's judgment was based. However, in the light of the strictures passed
by ROUX, J, upon the appellant's alleged
dishonesty and the impropriety of his
(or his attorney's) conduct, certain observations are called for.
8
It appears from the papers that Alenson was a creditor of GIBSA and had
proved a claim against its estate. Alenson made an offer to
the appellant, as
liquidator, to acquire the claims on which the main action is based. The offer
was made prior to the institution
of action. The offer, the details of which had
previously been circularised to all known creditors of GIBSA, was put to
creditors
at a general meeting held on 7 May 1986. The offer was accepted by
them and consequently by the appellant, and the Master of the
Supreme Court was
informed accordingly. In terms of the offer the creditors retained a stake in
whatever balance remained (after
certain deductions) of any monies recovered.
The cession was therefore not the product of an underhand deal prejudicial to
creditors.
Rather it appears to have been intended to fund litigation the estate
might otherwise not have been able to afford. There is substance
in the argument
that the cession (at least insofar as the alternative claims against Livschitz
are concerned)
9
was invalid as such claims were incapable of cession by
the
appellant
(South African Board of Executors and Trust Co Ltd
(In
Liquidation) v Gluckman
1967(1) SA 534(A)). This was
also the
view originally taken by Livschitz. In paragraph 6.3 of
his
founding affidavit in respect of his counter-application there
is
stated:
"It will be submitted on behalf of the First Respondent at the hearing of
this matter that the Applicant's claims against the First
Respondent, arising as
they do under the provisions of the
Insolvency Act no 24 of 1936
, as amended,
are not capable of being ceded by the Applicant to ALENSON."
I do not need to make a specific finding in this regard. Nor is it
necessary to consider the cession further, or the allegation (which
on the
record stands unchallenged) that in any event there was a re-cession. The point
is that, whatever the correct legal position,
there does not necessarily appear,
judging from the record, to have been a sinister reason for the non-disclosure
of the cession.
While the appellant may possibly have been lacking in candour
in
10
not referring to it in his founding affidavit, his failure to do so is
not necessarily indicative of deliberate dishonesty on his
part. So too, in the
context in which it was claimed that there had been a re-cession, there would
seem to be no sound reason for
branding it "a deliberate lie". Once again I
specifically refrain from making any definite finding in this regard as it is
not necessary
to do so for the purposes of this judgment. Locus standi existed
apart from the question of cession. Once that is so the appellant's
alleged
non-disclosure and dishonesty were in any event irrelevant to the question of
whether or not he had locus standi.
Mr Pincus, for the respondents, sought however to support the alternative
basis on which ROUX, J, purported to dismiss the application,
as set out in the
passage from his judgment quoted above. It is trite law that in an ex parte
application the utmost good faith must
be observed by an applicant. A failure to
disclose fully and fairly all material facts known to him (or her) may lead, in
the
11
exercise of the court's discretion, to the dismissal of the application
on that ground alone (see eg
Estate Logie v Priest
1926 AD 312
at 323;
Schlesinper v Schlesinper
1979(4) SA 342((W) at348E-35OB). 1 know of no
authority, and Mr Pincus was unable to refer us to any, which extends that
principle
to motion proceedings and would justify the dismissal of an opposed
application (irrespective of the merits thereof) for the reasons
given by the
judge a quo. Nor is there any sound reason for so extending the principle.
Material non-disclosure, mala fides, dishonesty
and the like in relation to
motion proceedings, may, and in most instances should, be dealt with by making
an adverse or punitive
order as to costs but cannot, in my view, serve to deny a
litigant substantive relief to which he would otherwise have been entitled.
No
justification therefore existed for the dismissal of the application on the
alternative basis. There is also a further relevant
consideration. The
appellant's alleged conduct as a ground for the dismissal of his
12
application was never put in issue on the papers. It was never claimed
that his conduct amounted to an abuse of the process of the
court. Nor does the
matter appear to have been fully debated on that ground in the court below. It
is apparently common cause that
the only issue with which ROUX, J, was
confronted in limine, and the only matter on which he was required to rule,
related to the
appellant's locus standi. He was not called upon to deal with the
merits (or demerits) of the application at that stage. He appears
to have
proceeded to deal with the application on the alternative basis of his own
accord without affording counsel a full hearing.
This he was not entitled to
do.
In the circumstances I am satisfied that ROUX, J, erred in dismissing the
application on the grounds on which he purported to do so.
That, however, is not
the end of the matter. The respondents contend that the judgment, even if it is
wrong, is nevertheless not
appealable. I turn now to address this
issue.
13
In
Zweni v Minister of Law and Order
1993(1) SA
523(A)
this Court reaffirmed (at 5321 - 533A) that an
appealable "judgment
or order", as envisaged by sec 20(1) of the
Supreme Court Act 59
of 1959 was
"a decision which, as a general principle, has three attributes, first, the
decision must be final in effect and not susceptible of
alteration by the Court
of first instance; second, it must be definitive of the rights of the parties;
and, third, it must have the
effect of disposing of at least a substantial
portion of the relief claimed in the main
proceedings."
The order in the present matter has all
the attributes (at least in form) of an appealable "judgment or order". The
order upholding
the point in limine and dismissing the application on the ground
of absence of locus standi (as well as on the alternative basis)
was final and
not susceptible of alteration by the court a quo; it was definitive of the
parties' rights in respect of the application
for review; and it disposed of all
the relief claimed in such application. However, in determining the nature and
effect of a
14
judicial pronouncement "not merely the form of the order must be
considered but also, and predominantly, its effect" (
South African Motor
Industry Employers' Association v South African Bank of Athens Ltd
1980(3)
SA 91(A) at 96 H;
Zweni v Minister of Law and Order (supra
) at
532I).
The gist of the respondents' argument, as I understood it, was this: the
review of the Registrar's decision was merely a procedural
step in the main
proceedings; an order by a judge to furnish security for costs is not appealable
(Petz Products (Pty) Ltd v Commercial Electrical Contractors (Pty) Ltd
1990(4) SA 196(C) at 211G - 212E); by parity of reasoning the grant or refusal
of the review of the Registrar's decision should also
not be
appealable.
In my view this argument overlooks the essential nature of review
proceedings. The Registrar's decision, being in the nature of an
administrative
act, was always susceptible of review provided the necessary grounds for review
existed
(Pharumela and Others v St
15
John's Apostolic Faith Mission of SA and Another
1975(1) SA 311
(T) at 313A). Any application for review would be a substantive one in its own
right. The review proceedings were
separate and distinct - they were not merely
an extension or ancillary part of the main action. The Registrar, an
indispensable party
in such proceedings, was not a party to the main action.
ROUX, J's order was intended to be definitive of the rights of all the parties
to the review application, and to finally dispose of those proceedings in the
court a quo. The present situation is somewhat analogous
to that where an
exception is taken where the lack of a plaintiff's locus standi is apparent ex
facie the pleadings
(Ahmadiyya Anjuman Ishaati-Islam Lahore (South Africa)
and Another v Muslim Judicial Council (Cape) and Others
1983(4) SA 855(C)).
If the exception is upheld the court's order is clearly appealable as it strikes
at the heart of the matter and
is final in its effect
(Trope and Others v
South African Reserve Bank
1993(3) SA 264(A) at 270G). (See too
16
Caroluskraal Farms (Edms) Bpk v Eerste Nasionale Bank van
Suider-Afrika Bpk
1994(3) SA 407(A) at 416C-F.)
In the result,
for the reasons given, ROUX, J's order is appealable. It is accordingly not
necessary to deal with the appellant's
alternative argument viz whether the
principles relating to the doctrine of "issue estoppel" (if it is part of our
law - a matter
still open to doubt) would have rendered the order appealable.
Once it is held that the order in respect of the review application
is
appealable, that in relation to the counter-applications (which were dependent
for their success on the fate of the review application)
must also be.
It follows that the appeal must succeed. The order of the Court a quo
dismissing the review application, as well as its order of costs,
must be set
aside. It therefore becomes unnecessary to consider whether the punitive order
for costs that was made would otherwise
have been justified (a matter open to
considerable doubt,
17
to say the least). The order in respect of the counter-applications will,
in turn, have to be set aside. The parties are agreed that
the application for
review should be referred back to the Witwatersrand Local Division for hearing
and determination. It would be
inappropriate for the matter to come before the
judge a quo again. Mr Pincus contended that, irrespective of the outcome of the
appeal,
the appellant should be ordered to pay the costs thereof, or be deprived
of his costs, as a mark of disapproval of his conduct. There
is nothing in the
appellant's conduct in relation to the appeal to justify such an order. If there
is any call for an adverse order
as to costs in relation to the proceedings, the
appropriate time to make such order will be after the hearing of the review
application.
No sound reason therefore exists to depart from the normal rule
that costs should follow the result. The appellant contended that
the
respondents should pay his appeal costs on an attorney and client basis because
they persisted in clinging to the decision of
the court
18
a quo despite their concession that the point in limine should not have
succeeded. The fact that they unsuccessfully sought to resist
the appeal and
defend the judgment on other (albeit flimsy) grounds is not in itself a
sufficient reason for a punitive order as
to costs.
Finally, the fact that the appeal record appears to have been burdened
with unnecessary documentation calls for comment. In the appellant's
heads of
argument it was stated that it was not necessary to have regard, for the
purposes of the appeal, to more than approximately
one third of the total record
of 794 pages. It would seem,prima facie, that unnecessary costs have been
occurred. None of the parties,
however, sought any special order as to costs in
respect of the record. It is timely to again draw attention to, and to
emphasize,
the remarks of CORBETT, JA, in
Government of the Republic of South
Africa v Maskam Boukontrakteurs (Edms) Beperk
1984(1) SA 680(A) at 692G -
693A where he said the following:
19
"In recent years this Court has on a number of occasions drawn attention
to the unnecessary inclusion in appeal records of numerous
and sometimes lengthy
documents and has made appropriate orders relating to the needless costs
occasioned thereby. (See eg Omega
Africa Plastics case supra; Olivier NO v
Rondalia Versekeringsmaatskappy van SA Bpk 1979(3) SA 20(A) at 36B-D; Woji v
Santam Insurance
Co Ltd 1981(1) SA 1020(A) at 1030; Die Meeker v Joubert en
Andere 1981(4) SA 211(A) at 228.) Despite what has been said and ordered
in
these and other cases the practice of including unnecessary documents in appeal
records persists. In my opinion, it is the duty
of attorneys responsible for the
preparation and lodging of appeal records to ensure that, if possible, this does
not occur and thereby
to obviate the incurring of unnecessary costs. Failure to
perform this duty could amount to a breach of the duty of care owed by
the
attorney to his client. The time may come when this Court may consider it
appropriate in such cases to order the such unnecessary
costs be paid by the
attorney concerned de bonis proprüs (cf Machumela v Santam Insurance Co Ltd
1977(1) SA 660(A) at 664A-C)."
(See too
Louw v W P Koöperatief Bpk en Andere
1994(3) SA
434(A) at 447.) Practitioners who fail to heed these remarks in future do so at
their own peril. They cannot be heard
to say that
20
they were not warned.
In the result the following order is
made:
1)
The
appeal is upheld, with costs, including the costs consequent upon the employment
of two counsel.
2)
The orders
of the court a quo in relation to both the review application and the
counter-applications are set aside and replaced with
the following
order:
"The first and second respondents'
point in limine is dismissed with costs."
3) The review application and the counter-applications
are
remitted to the Witwatersrand Local Division
for
hearing and determination by a different judge.
J W SMALBERGER
JUDGE OF APPEAL
JOUBERT, JA) KUMLEBEN, JA) FH GROSSKOPF, JA) CONCUR HARMS, JA)