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JUDGMENT
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Introduction
[1] The applicants launched an application for summary judgment against the first to
third respondents (“liquidators”) and fourth to seventh respondents (“attorneys”). The orders
sought are set out in the notice of motion as follows:
Part A1 (as against the First-to-Third Defendants)
A. Confirmation that the First Plaintiff's cancellation of the Security as to Costs Agreement is lawful.
B. That the First-to-Third Defendants are ordered to pay jointly and severally, the one paying the other to
be absolved, an amount of R 5,982,211.78 as at 15 August 2021 in damages to the First Plaintiff, made
up as follows:
(i) The return of the net actual amount of Security Capital funding provided, inclusive of the
variations to this agreement retained by the Defendants in the amount of R 1,004,261.30 as at
15 August 2021 (see Annexure marked POC 73-1 at A-24).
(ii) Default interest calculated on the net Security Capital funding provided from 18 October 2019
to 15 August 2021 of the amount of R 188,157.86 (see annexure marked POC 76 at D -7).
(iii) The return of the bank trust interest earned on Capital held by the Fourth Defendants on behalf
of the First Plaintiff as at 30 September 2020 being the difference between admitted capital and
interest held as per Fourth Defendants admission in the amount of R 1,625,363.09 (see annexure
marked POC 58), less actual net capital provided as at 30 September 2020 of R 1,004,261.30
(see annexure marked POC 73A at A-24) in the amount of R 621,101.29.
(iv) Default interest calculated on the trust interest earned as at 30 September 2020 of R 621,101.19
to 15 August 2021 in the amount of R 106 821,82 (see annexure marked POC 77 at D -5).
(v) The security fee of 15% on total capital provided of R 2,384,261.30 as at 15 August 2021, as
per the security as to costs agreement and its variations (see annexure marked POC 73A at B1,
B3, B4, B5, B7, B9, B11 and B12) in the amount of R 357,639.20.
(vi) The payment of the security interest fee of 15% per annum, calculated on progressive capital
balances, from 04 February 2014 to 15 August 2021 of calculated at R 3,414,731.14, the amount
not debt interest but agreed annual costs of providing capital (see annexure marked POC 73A
at D-25).
(vii) The recovery of the security fee of 15% calculated on the misappropriated progressive use of
the Plaintiffs trust capital and interest by the Defendants in the amount of R 754 333.51 as at
30 September 2020 (see annexure marked POC 29-1 at E-23) in the amount of R 113,150.03.
(viii) Default interest calculated on the 15% security fee of the misappropriated funds of R
113,150.03 to the date of cancellation of 15 August 2021 in the amount of R 17,177.95 (see
annexure marked POC 79 at D-7).
(ix) The recovery of the Security interest fee of 15% p.a. calculated on the use of the
misappropriated capital fund balance of R 754,333.51 from 03 February 2016 to 15 August
2021 of the amount of R 159,171.19 (see annexure marked POC 80-1 at D-22).
(x) Default interest on the total amount of R 5,982,211.78, calculated from 15 August 2021 to date
of payment at a rate of 7% in terms of the Prescribed Rate of Interest Act, Act 55 of 1975.
C. In the alternative to prayers in (A) and (B), where the Honourable court may find the cancellation
unlawful, that the Defendants be ordered to pay jointly and severally, the one paying the other to be
absolved, the amount of R 910,600.46 made up as follows:
(i) The Second Plaintiffs bank trust interest earned of R 621,101.29 as at 30 September 2020, and
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(ii) The recovery of the security fee of 15% calculated on the misappropriated progressive use of
the Plaintiffs trust capital and interest by the Defendants in the amount of R 754 333.51 as at
30 September 2020 (see annexure marked POC 29-1 at E-23) in the amount of R 113,150.03.
(iii) Default interest calculated on the 15% security fee of the misappropriated funds of R
113,150.03 to the date of cancellation of 15 August 2021 in the amount of R 17,177.95 (see
annexure marked POC 79 at D-7).
(iv) The recovery of the Security interest fee of 15% p.a. calculated on the use of the
misappropriated capital fund balance of R 754,333.51 from 03 February 2016 to 15 August
2021 of the amount of R 159,171.19 (see annexure marked POC 80-1 at D-22).
(v) Default interest at a rate of 7% in terms of the Prescribed Rate of Interest Act 55 of 1975 on the
amounts in (i) to (iv) in the alternative of R 910,600.46 from 30 September 2020 to date of
payment.
(vi) That the amounts in prayers (A) and (B) above to be ordered as costs in the administration of
the KNS estate in terms of section 89(1) of the Insolvency Act, Act 24 of 1936.
D. In consequence to the misstatements made by the Defendants, the quantum and liability of abortive
litigation costs and damages incurred by the Plaintiffs to be determined by the Commercial Court on the
date to be determined in the deliberation of the reser ved costs in this matter as held in the Judgment of
18 March 2025 in this matter.
E. Costs of suit, the scale to be argued in the determination of reserved costs to be separately determined.
F. That the Plaintiff be granted leave to pursue the further damages claimed in the action.
G. Further and/or alternative relief.
PART A2 (In the alternative to Part A1 as against the First- to-Third Defendants)
A. Confirmation that the First Plaintiffs cancellation of the Security as to Costs Agreement is lawful
B. That the First-to-Third Defendants are ordered to pay jointly and severally, the one paying the other to
be absolved, an amount of R 5,982,211.78 as at 15 August 2021 in damages to the First Plaintiff in
consequence to the lawful cancellation, made up as follows:
(i) The return of the net actual amount of Security Capital funding provided, inclusive of the
variations to this agreement retained by the Defendants in the amount of R 1,004,261.30 as at
15 August 2021 (see Annexure marked POC 73-1 at A-24).
(ii) Default interest calculated on the net Security Capital funding provided from 18 October 2019
to 15 August 2021 of the amount of R 188,157.86 (see annexure marked POC 76 at D -7).
(iii) The return of the bank trust interest earned on Capital held by the Fourth Defendants on behalf
of the First Plaintiff as at 30 September 2020 being the difference between admitted capital and
interest held as per Fourth Defendants admission in the amount of R 1,625,363.09 (see annexure
marked POC 58), less actual net capital provided as at 30 September 2020 of R 1,004,261.30
(see annexure marked POC 73A at A-24) in the amount of R 621,101.29.
(iv) Default interest calculated on the trust interest earned as at 30 September 2020 of R 621,101.19
to 15 August 2021 in the amount of R 106 821,82 (see annexure marked POC 77 at D -5).
(v) The security fee of 15% on total capital provided of R 2,384,261.30 as at 15 August 2021, as
per the security as to costs agreement and its variations (see annexure marked POC 73A at B1,
B3, B4, B5, B7, B9, B11 and B12) in the amount of R 357,639.20.
(vi) The payment of the security interest fee of 15% per annum, calculated on progressive capital
balances, from 04 February 2014 to 15 August 2021 of calculated at R 3,414,731.14, the amount
not debt interest but agreed annual costs of providing capital (see a nnexure marked POC 73A
at D-25).
(vii) The recovery of the security fee of 15% calculated on the misappropriated progressive use of
the Plaintiffs trust capital and interest by the Defendants in the amount of R 754 333.51 as at
30 September 2020 (see annexure marked POC 29-1 at E-23) in the amount of R 113,150.03.
(viii) Default interest calculated on the 15% security fee of the misappropriated funds of R
113,150.03 to the date of cancellation of 15 August 2021 in the amount of R 17,177.95 (see
annexure marked POC 79 at D-7).
(ix) The recovery of the Security interest fee of 15% p.a. calculated on the use of the
misappropriated capital fund balance of R 754,333.51 from 03 February 2016 to 15 August
2021 of the amount of R 159,171.19 (see annexure marked POC 80-1 at D-22).
(x) (x) Default interest on the total amount of R 5,982,211.78, calculated from 15 August 2021 to
date of payment at a rate of 7% in terms of the Prescribed Rate of Interest Act, Act 55 of 1975.
C. In the alternative to prayers in (A) and (B), where this Honourable court may find the cancellation
unlawful, that the Defendants be ordered to pay jointly and severally, the one paying the other to be
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absolved, the following damages in the loss suffered in consequence to the First -to-Third Defendants
breach of their duty of care:
(i) The Second Plaintiffs bank trust interest earned of R 621,101.29 as at 30 September 2020, and
(ii) The recovery of the security fee of 15% calculated on the misappropriated progressive use of
the Plaintiffs trust capital and interest by the Defendants in the amount of R 754 333.51 as at
30 September 2020 (see annexure marked POC 29-1 at E-23) in the amount of R 113,150.03.
(iii) Default interest calculated on the 15% security fee of the misappropriated funds of R
113,150.03 to the date of cancellation of 15 August 2021 in the amount of R 17,177.95 (see
annexure marked POC 79 at D-7).
(iv) The recovery of the Security interest fee of 15% p.a. calculated on the use of the
misappropriated capital fund balance of R 754,333.51 from 03 February 2016 to 15 August
2021 of the amount of R 159,171.19 (see annexure marked POC 80-1 at D-22).
(v) Default interest at a rate of 7% in terms of the Prescribed Rate of Interest Act 55 of 1975 on the
amounts in (i) to (iv) in the alternative of R 910,600.46 from 30 September 2020 to date of
payment.
(vi) That the amounts in prayers (A) and (B) above to be ordered as costs in the administration of
the KNS estate in terms of section 89(1) of the Insolvency Act, Act 24 of 1936.
D. In consequence to the misstatements made by the Defendants, the quantum and liability of abortive
litigation costs and damages incurred by the Plaintiffs to be determined by the Commercial Court on the
date to be determined in the deliberation of the reserved costs in this matter as held in the Judgment of
18 March 2025 in this matter.
E. Costs of suit, the scale to be argued in the determination of reserved costs to be separately determined.
F. That the Plaintiff be granted leave to pursue the further damages claimed in the actio n.
G. G. Further and/or alternative relief
PART A3 (As against the Fourth-to-Seventh Defendants)
PART A3 (As against the Fourth-to-Seventh Defendants)
A. That where the First-to-Third Defendants have been held to be liable for damages in the cancellation of
the Security as to Costs Agreement that the Fourth-to-Seventh Defendants are ordered to pay jointly and
severally, the one paying the other to be absolved, together with the First-to-third Defendants, an amount
of R 5,982,211.78 as at 15 August 2021 in damages to the First Plaintiff in consequence to the lawful
cancellation of the security as to costs agreement, made up as follows:
(i) The return of the net actual amount of Security Capital funding provided, inclusive of the
variations to this agreement retained by the Defendants in the amount of R 1,004,261.30 as at
15 August 2021 (see Annexure marked POC 73-1 at A-24).
(ii) Default interest calculated on the net Security Capital funding provided from 18 October 2019
to 15 August 2021 of the amount of R 188,157.86 (see annexure marked POC 76 at D -7).
(iii) The return of the bank trust interest earned on Capital held by the Fourth Defendants on behalf
of the First Plaintiff as at 30 September 2020 being the difference between admitted capital and
interest held as per Fourth Defendants admission in the amount of R 1,625,363.09 (see annexure
marked POC 58), less actual net capital provided as at 30 September 2020 of R 1,004,261.30
(see annexure marked POC 73A at A-24) in the amount of R 621,101.29.
(iv) Default interest calculated on the trust interest earned as at 30 September 2020 of R 621, 101.19
to 15 August 2021 in the amount of R 106 821,82 (see annexure marked POC 77 at D -5).
(v) The security fee of 15% on total capital provided of R 2,384,261.30 as at 15 August 2021, as
per the security as to costs agreement and its variations (see annexure marked POC 73A at B1,
B3, B4, B5, B7, B9, B11 and B12) in the amount of R 357,639.20.
(vi) The payment of the security interest fee of 15% per annum, calculated on progressive capital
balances, from 04 February 2014 to 15 August 2021 of calculated at R 3,414,731.14, the amount
not debt interest but agreed annual costs of providing capital (see a nnexure marked POC 73A
at D-25).
(vii) The recovery of the security fee of 15% calculated on the misappropriated progressive use of
the Plaintiffs trust capital and interest by the Defendants in the amount of R 754 333.51 as at
30 September 2020 (see annexure marked POC 29-1 at E-23) in the amount of R 113,150.03.
(viii) Default interest calculated on the 15% security fee of the misappropriated funds of R
113,150.03 to the date of cancellation of 15 August 2021 in the amount of R 17,177.95 (see
annexure marked POC 79 at D-7).
(ix) The recovery of the Security interest fee of 15% p.a. calculated on the use of the
misappropriated capital fund balance of R 754,333.51 from 03 February 2016 to 15 August
2021 of the amount of R 159,171.19 (see annexure marked POC 80-1 at D-22).
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(x) Default interest on the total amount of R 5,982,211.78, calculated from 15 August 2021 to date
of payment at a rate of 7% in terms of the Prescribed Rate of Interest Act, Act 55 of 1975.
B. In the alternative to prayers in (A), that the Fourth-to-Seventh Defendant be ordered as follows:
(i) That the Fourth-to Seventh Defendants are held to have misappropriated the Second Plaintiff's
section 86(4) trust account, and
(ii) That the Fourth -to-Seventh Defendants are ordered to pay jointly and severally, the one
paying the other to be absolved, the following damages in the loss suffered in consequence
to the Fourth-to-Seventh Defendants breach of their duty of care:
(a) The Second Plaintiffs bank trust interest earned of R 621,101.29 as at 30 September
2020, and
(b) The recovery of the security fee of 15% calculated on the misappropriated
progressive use of the Plaintiffs trust capital and interest by the Defendants in the
amount of R 754 333.51 as at 30 September 2020 (see annexure marked POC 29 -1
at E-23) in the amount of R 113,150.03.
(c) Default interest calculated on the 15% security fee of the misappropriated funds of
R 113,150.03 to the date of cancellation of 15 August 2021 in the amount of R
17,177.95 (see annexure marked POC 79 at D- 7).
(d) The recovery of the Security interest fee of 15% p.a. calculated on the use of the
misappropriated capital fund balance of R 754,333.51 from 03 February 2016 to 15
August 2021 of the amount of R 159,171.19 (see annexure marked POC 80 -1 at D-
22).
(e) Default interest at a rate of 7% in terms of the Prescribed Rate of Interest Act 55 of
1975 on the amounts in (i) to (iv) in the alternative of R 910,600.46 from 30
September 2020 to date of payment. (1) That the amounts in prayers (A) and (B)
above to be ordered as costs in the administration of the KNS estate in terms of
section 89(1) of the Insolvency Act, Act 24 of 1936.
C. In consequence to the misstatements made by the Defendants, the quantum and liability of abortive
litigation costs and damages incurred by the Plaintiffs to be determined by the Commercial Court on the
date to be determined in the deliberation of the reser ved costs in this matter as held in the Judgment of
18 March 2025 in this matter.
D. Costs of suit, the scale to be argued in the determination of reserved costs to be separately determined.
E. That the Plaintiff be granted leave to pursue the further damages claimed in the action.
F. Further and/or alternative relief
Part B1 (as against the First-to-Third Defendants)
A. That the first-to-third Defendants are ordered to pay the second Plaintiff the amount of R 1,914,678.12,
jointly and severally, the one paying the other to be absolved made up as follows;
(i) The return of the bridging finance capital amount of R 600,000.00.
(ii) The payment of the 15% capital raising fees (security fee) of R 90,000.00.
(iii) The payment of the Security interest fee compounded at 15% calculated on the capital raising
security fee and capital from 04 June 2014 to the 26 May 2021, being the earliest date the Second
Plaintiffs became aware of the breach and misrepresentations, in the amount R 1,224,678.12, the
amount not debt interest but agreed annual costs of providing capital (see annexures marked POC
55 and POC 101 at D5).
(iv) Default interest at 7 % in terms of the Prescribed Rate of Interest Act 55 of 1975 on the amount
of R 1,914, 678.12 calculated from the 26 May 2021 to 29 July 2022.
(v) Default interest at 9 % in terms of the Prescribed Rate of Interest Act 55 of 1975 on the aforesaid
amounts in (i) to (iv) calculated from the 29 July 2022 to date of payment.
B. In consequence to the misstatements made by the Defendants, the quantum and liability of abortive
litigation costs and damages incurred by the Plaintiffs to be determined by the Commercial Court on the
date to be determined in the deliberation of the rese rved costs in this matter as held in the Judgment of
18 March 2025 in this matter.
18 March 2025 in this matter.
C. Costs of suit, the scale to be argued in the determination of reserved costs to be separately determined.
D. That the Plaintiff be granted leave to pursue the further damages claimed in the action.
E. Further and/or alternative relief
Part B2 (in the alternative to B1 as against the First-to-Third Defendants).
A. That the first-to-third Defendants are ordered to pay the second Plaintiff the amount of R 1,914,678.12,
jointly and severally, the one paying the other to be absolved made up as follows;
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(i) The return of the bridging finance capital amount of R 600,000.00
(ii) The payment of the 15% capital raising fees (security fee) of R 90,000.00.
(iii) The payment of the Security interest fee compounded at 15% calculated on the capital raising
security fee and capital from 04 June 2014 to the 26 May 2021, being the earliest date the
Second Plaintiffs became aware of the breach and misrepresentations, in the amount R
1,224,678.12, the amount not debt interest but agreed annual costs of providing capital (see
annexures marked POC 55 and POC 101 at D5).
(iv ) Default interest at 7 % in terms of the Prescribed Rate of Interest Act 55 of 1975 on the
amount of R 1,914, 678.12 calculated from the 26 May 2021 to 29 July 2022.
(v) Default interest at 9 % in terms of the Prescribed Rate of Interest Act 55 of 1975 on the
aforesaid amounts in (i) to (iv) calculated from the 55 of 1975 on the aforesaid amounts in (i)
to (iv) calculated from the 29 July 2022 to date of payment.
B. In consequence to the misstatements made by the Defendants, the quantum and liability of abortive
litigation costs and damages incurred by the Plaintiffs to be determined by the Commercial Court on the
date to be determined in the deliberation of the reser ved costs in this matter as held in the Judgment of
18 March 2025 in this matter.
C. Costs of suit, the scale to be argued in the determination of reserved costs to be separately determined.
D. That the Plaintiff be granted leave to pursue the further damages claimed in the action.
E. Further and/or alternative relief PART B3 (As against the Fourth-to-Seventh Defendants).
PART B3 (As against the Fourth-to-Seventh Defendants)
A. That the fourth -to-Seventh Defendants are ordered to pay the second Plaintiff the amount of R
1,914,678.12, jointly and severally, the one paying the other to be absolved made up as follows;
(i) The return of the bridging finance capital amount of R 600,000.00.
(i) The return of the bridging finance capital amount of R 600,000.00.
(ii) The payment of the 15% capital raising fees (security fee) of R 90,000.00.
(iii) The payment of the Security interest fee compounded at 15% calculated on the capital
raising security fee and capital from 04 June 2014 to the 26 May 2021, being the earliest
date the Second Plaintiffs became aware of the breach and misrepresentations, in the
amount R 1,224,678.12, the amount not debt interest but agreed annual costs of providing
capital (see annexures marked POC 55 and POC 101 at D5).
(iv) Default interest at 7 % in terms of the Prescribed Rate of Interest Act 55 of 1975 on the
amount of R 1,914, 678.12 calculated from the 26 May 2021 to 29 July 2022.
(v) Default interest at 9 % in terms of the Prescribed Rate of Interest Act 55 of 1975 on the
aforesaid amounts in (i) to (iv) calculated from the 29 July 2022 to date of payment.
A. In consequence to the misstatements made by the Defendants, the quantum and liability of abortive
litigation costs and damages incurred by the Plaintiffs to be determined by the Commercial Court
on the date to be determined in the deliberation of the reser ved costs in this matter as held in the
Judgment of 18 March 2025 in this matter.
B. Costs of suit, the scale to be argued in the determination of reserved costs to be separately
determined.
C. That the Plaintiff be granted leave to pursue the further damages claimed in the action.
D. Further and/or alternative relief
Background
[2] The background apropos this application has been comprehensively chronicled in my
previous judgment and would not be repeated in this judgment. In brief, the disputes between
the parties emanate from the two agreements entered into inter se. The first agreement is
titled ‘Security for Costs Agreement ’ which was entered into on 8 November 2013. This
agreement relates to the security provided by the applicants in respect of the Arbitration
agreement relates to the security provided by the applicants in respect of the Arbitration
proceedings launched by the liquidators of KNS Construction (Pty) Ltd (“ KNS”) regarding
the dispute with Genesis on Fairmont Partnership (“Genesis”). The security provided by the
first applicant was the amount of R 1 000 000.00 pa id into the fourth respondent’s trust
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account, to be invested in an interest-bearing account for the benefit of the first applicant.1
The fourth respondent , in turn , issued a guarantee for the arbitration costs ( to be taxed),
payable at the end of the arbitration proceedings. The balance (if any) and interest would be
refunded to the applicants.2
[3] The second agreement is the Bridging Finance Agreement concluded on 4 June 2014
in terms of which the second applicant agreed to pay the respondent s an amount of
R600 000.00, intended to cover the costs for the launching of debt collection proceedings
against Wilgeheuwel and SANRAL (“debtors”). The applicants contend that the amount was
paid on the understanding that it would be repaid from the amount collected from the debtors.
[4] The parties subsequently varied the repayment conditions , which were confirmed in
the plaintiffs’ emails dated 12 and 13 January 2016, attached to the plaintiffs’ particulars of
claim. The emails specifically stated that “…loan and costs will be returned either through
the attainment of a successful litigation of the Mutual and Federal matter (aqua) and/or by
the release of the guarantee of fees if successful in the Genesis matter , whichever is the
soonest.”
[5] Genesis was placed under liquidation , and the arbitration proceedings were stayed.
The liquidators launched civil proceedings against Vestacor Limited (“ Vestacor”), which
took over Genesis’ obligations. The judgment was obtained by default on 10 October 2019
in the amount of R27 000 000.00.3 The applicants were notified of the judgment and
construed it as success in arbitration and proceeded to cancel the Security for Costs
Agreement on 15 August 2021, then demanded a refund. The respondents did not heed the
demand for payment, and the applicants sued out a summons (“first action- 009661/2022”)
for the refund. The respondents served a notice to defend and a plea. The applicants launched
an application for summary judgment and set it down for 13 March 2023.
an application for summary judgment and set it down for 13 March 2023.
[6] The respondents filed an opposing affidavit denying that success was achieved since
the judgment obtained against Vestacor was rescinded by consent. Furthermore, that success
would never be achieved since the civil claim which instituted against Vestacor , which
11 The applicants are for convenience not differentiated in this judgment.
2 There is a dispute as to how the funds must be disbursed.
3 The liquidators further launched proceedings against Mutual and Federal.
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continued after the rescission of judgment, was also unsuccessful.4 The respondents further
stated that they had previously conveyed to the respondents that the judgment against
Vestacor was rescinded erroneously on 28 July 2021 instead of 14 January 2022.
[7] The respondents’ opposing affidavit was not aligned with what was stated in the plea,
and then served a notice to amend the plea , which was opposed by the applicants. T he
respondents then launched an application for leave to amend.
[8] The parties then agreed to postpone the summary judgment application on condition
that the applicants would be allowed to supplement the application for summary judgment,
if so advised , upon receipt of the amended plea. The agreement to pos tpone was made an
order of court on 3 March 2023.
[9] The application for leave to amend the plea served before me on 27 January 2025. I
handed down judgment on 18 March 2025, where I granted the respondents leave to amend.
[10] The discovery that the judgment against Vestacor had been rescinded compelled the
applicants to initiate new proceedings (" second action –132503/2023"). The respondents
contended that the crafting of the pleadings in the second action created an impression that
some causes of action in the first action were indirectly abandoned. The applicants disputed
this assertion. I was invited to pronounce on the status of certain causes of action in the first
action in view of the respondents’ assertion that the two actions cannot co-exist.
[11] After hearing arguments, I returned a judgment and ruled that 8 of the 13 claims set
out in the first action were abandoned and the applicants would proceed only with claims
predicated on misappropriation of funds, delict, and inducement to enter into a contract.
[12] The respondents duly delivered their amended plea, followed by the applicants filing
a notice of intention to amend the particulars of claim in view of the changes emanating from
the amended plea.
the amended plea.
[13] The applicants proceeded to supplement their papers as envisaged in the court order
of 3 March 2023 5 and set down the application for summary judgment. The respondents
served a supplementary opposing affidavit bemoaning the applicants’ failure to compliance
4 The appeal against the dismissal of the claim against Mutual and Federal was also dismissed.
5 See para 7 above.
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with the provisions of Rule 32(1) of the Uniform Rules of Court and also introducing new
issues.
Submissions by the parties
Respondents’ points in limine
[14] The respondents raised the following preliminary points: first, that the applicants had
submitted a fresh application for summary judgment and not supplemented the initial
application in accordance with the order of 3 March 2023. Secondly, the orders now sought
go beyond my order of 18 March 2025, which limited the applicants’ case to claims based
on misappropriation of funds, delict , and inducement to enter into a Bridging Finance
Agreement6, and had added relief relating to costs for the aborted litigation under Part C ,
declaratory orders, repudiation, orders based on the abandoned contractual claims , and
misstatements. The applicants' papers also refer to unjust enrichment.
[15] The respondents’ contention that the order granted in 2023 has catch -all provisions
in terms of which the applicants is entitled to supplement the application and add all that is
deemed necessary pursuant to the amendment of the plea, is stretching the order of 3 March
2023 overzealously. Relief sought under Parts A1, A2, and C hinges on the order declaring
the cancellation of the agreement lawful or unlawful . Such relief are incompetent under a
summary judgment application regime.
[16] To the extent that certain orders now sought by the applicants are not captured in the
order I made on 18 March 2025, the points raised by the respondents are sustained. This also
applies to the relief which are not countenanced by Rule 32 of the Uniform Rules of Court,
namely, declaratory orders and damages claims.
[17] The adjudication of the application for summary judgment will be limited to the relief
sought in accordance with the causes of action as set out in the order of 18 March 2025.
6 The respondents contend that all these claims are illiquid and or claims for damages. The respondents seem
to fail to appreciate that at centre of the summary judgment application is not the cause of action, but whether
the order sought is, inter alia, for a liquidated amount in money.
10
Merits
Misappropriation of funds.
[18] The applicants contend that the liquidators wrongfully and unlawfully authorised the
attorneys to make payments from the funds held as Security for Costs towards expenses
associated with the arbitration process . This authorisation was inconsistent with the initial
instructions in terms of which the funds availed as Security for Costs would only be paid
upon finalisation of the arbitration. There were however specific instances, applicants
submitted, where the applicants authorised payments from those funds, namely, R100 000.00
on 24 June 2016 (for an application in the high court) and R200 000.00 on 7 January 2017
(being 50% of the appeal tribunal costs in the arbitration), which were recorded in the finance
schedules issued by the applicants. Secondly, the attorneys acting on authorisation from the
liquidators also paid interest (which was payable only to the first applicant) to third parties
without prior authorisation from the applicants.
[19] The applicants contend further that the attorneys stood in a fiduciary relationship to
the applicants7 as providers of funds and are therefore considered to be co-wrongdoers with
the liquidators in the misappropriation of the funds. They should therefore, the argument
continued, be held liable in solidum with the liquidators based on collusion inter se.
[20] In their defence, the respondents contend that all payments effected were preceded
by consultation with the applicants who gave authorisation, and to this end, the applicants’
averments are disputed.
[21] The applicants argued further that the conduct of the respondents amounted to
repudiation, which took two forms: first, refusal to pay the amount after the respondents had
stated that there was success in arbitration pursuant to the order granted against Vestacor on
10 October 2019. In retort, the respondents contend that this claim is linked to the contractual
claims, which have now been abandoned. Secondly, reneging to repay the amount of
R600 000,00, which was payable in terms of the bridging finance agreement.
7 The applicants referred to Flionis v Bartlett and Another (506/04) [2006] ZASCA 23 and Legal Practitioner
Fidelity Fund v Guilherme (702/2022) [2023] ZASCA 96 , where the court held that the attorneys owe a duty
of care to depositors who may not be their clients.
11
[22] The claims relating to repudiation or a delictual claim are mainly based on the failure
to obtain authorisation from the applicants, which claim is disputed by the respondent, having
stated that the payments were made after consultation with the applicants. According to the
respondents, the funds were for expenses associated with the arbitration and were clearly
accounted for. The said payments were never challenged by the applicants before. This
appears to be a genuine dispute and cannot be construed as fanciful, implausible, or
untenable, and should therefore be referred to oral evidence.
Delictual claims
[23] The applicants contend that the liquidators and the attorneys have a fiduciary duty as
appointed liquidators and legal practitioners, respectively, in relation to the applicants in their
capacities as funders to the estate and proven creditors in the estate. The liquidators and the
attorneys are considered by the applicants as joint wrongdoers for the misappropriation of
the trust funds.
Inducement to enter into a contract.
[24] In this regard , the applicants submit that the y seek damages arising from the
cancellation of the bridging finance agreement (“finance agreement”) . The applicants
contend that the respondents induced them to enter into the finance agreement by undertaking
to refund the amount of R600,000.00 knowing well that they would not fulfil this
undertaking. The misrepresentation was material and justified the cancellation of the finance
agreement. If the court finds that the misrepresentation did not warrant cancellation, then the
respondents should be ordered to refund the applicants based on unjust enrichment, as the
estate has no funds and there are no longer remaining debtors.
[25] The respondents, on the other hand, dispute that any inducement was made and that
the monies received from the collection of debts were also applied to other expenses pursuant
the monies received from the collection of debts were also applied to other expenses pursuant
to the discussion with the applicants. Further, that to this end, the defence raised is bona fide
and summary judgment should be granted, the respondents argued.
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Legal principles
[26] It is trite that the summary judgment applications provide remedies for the applicants
where it is ineluctable that the respondents do not have a bo na fide defence to the claims
against them. The said rule is, however, circumscribed to claims which are based on a liquid
document, liquidated amount in money, delivery of specified movable property or ejectment,
together with any claim for interest and costs.
[27] The respondents have correctly stated that some of the orders sought by the applicants
are not countenanced by Rule 32 of the Uniform Rules. This includes a declaratory order that
the cancellation of the agreements by the applicants is lawful.
[28] Where there are disputes of fact in motion proceedings, the court should have regard
to whether the dispute raised is genuine or bona fide; if so, the summary judgment application
would not be granted. But where such dispute s are far-fetched and clearly untenable , the
court should readily reject same and grant the judgment.8
Analysis
[29] The claims predicated on misappropriation of funds (under Part A) by the respondents
have been met with a defence that authorisa tion was obtained from the applicants . Though
the funds were meant to be used only after the arbitration had been finalised and after
taxation, the applicants authorised some payments before. I note that the respondents contend
that the applicants authorised payments over time without demur . Despite the fact that the
applicants aver that only two payments were authorised , I am inclined to allow the
respondents to lead evidence before a trial court regarding the alleged authorisation in respect
of other payments . I consider the defence to be raising a triable issue and summary
application to be incompetent . This conclusion would mutatis mutandis apply to the claim
predicated on delict.
[30] Concerning the claim under Part B, which is based on the assertion that the applicants
[30] Concerning the claim under Part B, which is based on the assertion that the applicants
were induced to enter into a finance agreement, it cannot be resolved without regard to oral
evidence presented by the parties. The case advanced by the applicants in the summary
8 The applicants referred to Wightman t/a Construction v Headfour Pty Ltd and Another 2008 (3) SA 371
(SCA) (10 March 2008), at para [12] and Absa Bank Ltd v van der Walt (8817/2022) [2023] ZAGPJHC 680 (9
June 2023) at [25].
13
judgment application requires the court to draw an inference that the respondents never
intended to keep their bargain and pay , is unsustainable , since the applicants have not
presented sufficient facts (on the respondents' state of mind) from which such an inference
should be drawn.
Conclusion
[31] As set out above , the defences raised by the respondents give rise to triable issues
which militate against the granting of summary judgment. In the premises, the application is
bound to fail.
Costs
[32] The respondents seek that the applicants’ first and second applications for summary
judgment be dismissed with costs on an attorney and client scale, including costs of counsel
on Scale C against the applicants jointly and severally, the one paying the other to be
absolved. The respondents contend that the applicants served a fresh application instead of
only filing a supplementary affidavit relating to the amendment of the plea as contemplated
in the order granted on 3 March 2023. Furthermore, the fresh application , which is
voluminous, did not refer to the amended plea served by the respondents , which is also in
defiance of the order that the applicants would file supplementary papers relating to issues
raised in the respondents' amended plea.
[33] In addition, the applicants have included in their summary judgment application new
causes of action which do not engage the claims identified in the judgment I granted on 18
March 2025.
[34] In retort, the applicants contend that the service of the voluminous and additional
papers was due to the misrepresentation or misstatements of facts emanating primarily from
the respondents having misrepresented the date of the rescission of the judgment against
Vestacor. The declaratory order sought relating to aborted costs is also linked to the said
misrepresentation.
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[35] The Constitutional Court held in Mkhatshwa 9 “… that the purposes of punitive costs,
being an extraordinarily rare award, are to minimise the extent to which the successful litigant
is out of pocket and to indicate the court’s extreme opprobrium and disapproval of a party’s
conduct.” I had regard to the presentation of this application and the arguments advanced by
both parties and the voluminous documentation filed by the applicants , which are
characterised by rambling prolixity, and find that a punitive costs order is warranted.
[36] The respondents, in addition, seek that the order of costs should be accompanied by
an order in terms of Rule 32(9)(a) in terms of which the court would direct that the
proceedings be stayed pending the payment of costs where the court found that the applicants
persisted with a summary judgment application where the defences raised w ere not
unreasonable. An order prohibiting a party from proceeding unless the costs are settled may
generally be considered an infringement of the party’s right to access courts , which is
inconsistent with section 34 of the Constitution. As is well known, the rights enshrined in the
Constitution can be limited under section 36. In this instance, Rule 32(9)(a) would qualify
for the limitation, noting further that the constitution also provides for the right of the court
to regulate own processes.
[37] It is trite that the question of costs is within the repository of the court’s discretion ,
which must be exercised having considered certain factors , including but not limited to ,
whether there is an abuse of the court process by a litigant.10 One would have to consider that
the reasons why the matter is allocated to the commercial court are to, inter alia, attempt to
adjudicate disputes speedily though with a measure flexibility and quicker turnarounds. The
process of taxation may frustrate the attainment of a quicker justice. Having regard to a
process of taxation may frustrate the attainment of a quicker justice. Having regard to a
possible delay due to taxation and the fact that I have relayed my displeasure by ordering
costs at a punitive scale, exercising my discretion to order a stay of the proceedings pending
payment of costs as envisaged in Rule 32(9)(a) of the Uniform Rules of Court would lead to
unnecessary delay and double jeopardy to the applicants.
9 Mkhatshwa and Others v Mkhatshwa and Others [2021] ZACC 15, at para 17, quoting with approval 2 Public
Protector v South African Reserve Bank [2019] ZACC 29; 2019 (6) SA 253 (CC); 2019 (9) BCLR 1113 (CC)
(SARB) at paras 224 and 227 and Limpopo Legal Solutions v Eskom Holdings (S OC) Limited [2017] ZACC
34; 2017 (12) BCLR 1497 (CC) (Eskom) at para 20.
10 See Argus Printing & Publishing Co Ltd v Rut land 1953 (3) SA 466 (C), Howff (PDT) Ltd v Prompts
Engineering (BPK) Ltd 1977 (2) SA 267 (A) and Rheeder v Sperms 1978 (1) 1041 (A).