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IN THE HIGH COURT OF SOUTH AFRICA

(EASTERN CAPE DIVISION, GRAHAMSTOWN)

CASE NO: 111/2018

Date heard: 19 November 2020

Date delivered: 1 December 2020

In the matter between:

HLUMISA TECHNOLOGIES (PTY) LTD                                        First Applicant

EMPLOYEES OF HLUMISA TECHNOLOGIES (PTY) LTD          Second Applicant

and

GARTH MERRICK VOIGT N.O.                                                    First Respondent 

COMPANY & INTELLECTUAL PROPERTY COMMISSION        Second Respondent

KNOWN CREDITORS OF HLUMISA TECHNOLOGIES

(PTY) LTD                                                                                      Further Respondents

CORAM: MNQANDI AJ

JUDGMENT

MNQANDI AJ: 

[1]           The applicants, being Hlumisa Technologies (Pty) Ltd and its employees, have brought these proceedings seeking an order:

(1)          that the order granted by Mageza AJ on 15 June 2018, for the final winding up of the applicant, be rescinded and set aside; and

(2)          that the costs of the application be borne by any party or parties opposing the relief sought herein, jointly and severally, the one paying the other to be absolved.

[2]           Only the first respondent opposed the application.

[3]           The application is brought:

3.1       under Rule 42 of the Uniform Rules of Court and the common law; and

3.2       section 354(1) of the Companies Act of 1973.

[4]           The order sought to be rescinded was granted on 15 June 2018 whilst these proceedings were launched on 15 May 2019. No reason was given why these proceedings were launched about a year after the granting of the order sought to be rescinded.

[5]           Rule 42(1) provides as follows:

(1)      The court may, in addition to any other powers it may have, mero motu or upon the application of any party affected, rescind or vary:

(a)    an order or judgment erroneously sought or erroneously granted in the absence of any party affected thereby;

(b)   an order or judgment in which there is an ambiguity, or a patent error or omission, but only to the extent of such ambiguity, error or omission;

(c)   an order or judgment granted as the result of a mistake common to the parties.

[6]           Before the order was granted on 15 June 2018, the applicants participated fully in the proceedings.  They presented argument to this court. They nevertheless allege that the court committed an error in law when granting the order.

[7]           It has been held that the court does not have a discretion to set aside an order in terms of the sub-rule where one of the jurisdictional facts contained in paragraphs (a) – (c) of the sub-rule does not exist. See Swart v ABSA Bank Ltd 2009 (5) SA 219 (C) at 222B-C. At least one of the jurisdictional facts is absent in this matter, namely that the applicants were not absent when the order sought to be rescinded was granted.

[8]           At common law a judgment can be set aside on the grounds of:

(a)          fraud;

(b)          justus error;

(c)          in certain circumstances where new documents have been discovered;

(d)          where judgment has been granted by default; and

(e)          in the absence between the parties of a valid agreement to support the judgment, on the grounds of justus causa. (See National Director of Public Prosecutions v Phillips 2005 (5) SA 265 (SCA) at 275C-E.)

[9]           None of the common law grounds of rescission appear to be present in this application. Importantly, there does not seem to be any justus error relied upon by the applicants.

[10]        I have been referred to Moraitis Investments (Pty) Ltd and Others v Montic Dairy (Pty) Ltd 2017 (5) SA 508 (SCA) at para 12 where the court held:

“The approach differs depending on whether the judgment is a default judgment or one given in the course of contested proceedings. In the former case it may be rescinded in terms of either rule 31(2)(b) or rule 42 of the Uniform Rules, or under the common law on good cause shown. In contested proceedings the test is more stringent. A judgment can be rescinded at the instance of an innocent party if it were induced by fraud on the part of the successful litigant, or fraud to which the successful litigant was party. As the cases show, it is only where the fraud — usually in the form of perjured evidence or concealed documents — can be brought home to the successful party that restitutio in integrum is granted and the judgment is set aside. The mere fact that a wrong judgment has been given on the basis of perjured evidence is not a sufficient basis for setting aside the judgment. That is a clear indication that, once a judgment has been given, it is not lightly set aside, and De Villiers JA said as much in Schierhout.

Apart from fraud the only other basis recognised in our case law as empowering a court to set aside its own order is justus error. In Childerley, where this was discussed in detail, De Villiers JP said that 'non-fraudulent misrepresentation is not a ground for setting aside a judgment' and that its only relevance might be to explain how an alleged error came about. Although a non-fraudulent misrepresentation, if material, might provide a ground for avoiding a contract, it does not provide a ground for rescission of a judgment. The scope for error as a ground for vitiating a contract is narrow and the position is the same in regard to setting aside a court order. Cases of justus error were said to be 'relatively rare and exceptional.”

[11]        The applicants do make averments seeking to make a case that Mageza AJ made certain material wrong findings. This surely cannot be advanced in a rescission application. The applicants ought to have proceeded with its abandoned appeal if they felt strongly about this ground. It surely is not justus error for the court to have preferred evidence led by one party as against the evidence of another.

[12]        Section 354(1) of the Companies Act of 1973 provides:

“354  Court may stay or set aside winding-up

 (1) The Court may at any time after the commencement of a winding-up, on the application of any liquidator, creditor or member, and on proof to the satisfaction of the Court that all proceedings in relation to the winding-up ought to be stayed or set aside, make an order staying or setting aside the proceedings or for the continuance of any voluntary winding-up on such terms and conditions as the Court may deem fit.”

[13]        That section 354(1) does not at all help the applicant is made clear in Ward and Another v Suit and Others: In Re: Gurr v Zambia Airways Corporation Ltd 1998 (3) SA 175 (SCA) at para 11 – 13 where Scott JA said:

“The language of the section is wide enough to afford the Court a discretion to set aside a winding-up order both on the basis that it ought not to have been granted at all and on the basis that it falls to be set aside by reason of subsequent events. (Meskin Henochsberg on the Companies Act at 747; see also Joubert (ed) The Law of South Africa vol 4 first re-issue para 185 (M S Blackman).) In the case of the former, the onus on an applicant is such that generally speaking the order will be set aside only in exceptional circumstances. This has been emphasised by the Courts of various Provincial and Local Divisions not only in relation to s 354 and its predecessor (s 120 of Act 46 of 1926) but also in relation to s 149(2) of the Insolvency Act 24 of 1936 which affords a similar discretion to a Court to rescind or vary a sequestration order. (See Herbst v Hessels NO en Andere 1978 (2) SA 105 (T); Aubrey M Cramer Ltd v Wells NO 1965 (4) SA 304 (W); Abdurahman v Estate Abdurahman 1959 (1) SA 872 (C).)

There is nothing in the section to suggest that the Court's discretionary power to set aside a winding-up order is confined to the common-law grounds for rescission. However, in the Herbst case supra, Eloff J expressed the view (at 109F--G) that no less would be expected of an applicant under the section than of an applicant who seeks to have a judgment set aside at common law. I think this must be correct. The object of the section is not to provide for a rehearing of the winding-up proceedings or for the Court to sit in appeal upon the merits of the judgment in respect of those proceedings. To construe the section otherwise would be to render virtually redundant the facilities available to interested parties to oppose winding-up proceedings and to appeal against the granting of a final order. It would also `make a mockery of the principle of ut sit finis litium'. (Abdurahman v Estate Abdurahman (supra at 875G--H).) It follows that an applicant under the section must not only show that there are special or exceptional circumstances which justify the setting aside of the winding-up order; he or she is ordinarily required to furnish, in addition, a satisfactory explanation for not having opposed the granting of a final order or appealed against the order. Other relevant considerations would include the delay in bringing the application and the extent to which the winding-up had progressed. (Compare Aubrey M Cramer Ltd v Wells NO (supra at 305H).)”

[14]        That the instruments provided in section 354(1) are not designed to help the applicants is borne by the following:

[14.1]       the applicants were in court when the winding-up application was argued and were represented by competent counsel who argued the case on their behalf;

[14.2]       there are no special circumstances alleged which justify the setting aside of the winding-up order; and

[14.3]       granting a setting aside of the winding-up order would amount to a re-hearing of the winding-up proceedings.

[15]        The applicants further raise non-compliance with sections 141(2)(A)(1) and (2) of the Companies Act of 2008, sections 346(4)(A) of the Companies Act of 1973 and sections 9(4)(A) and 11(2) of the Insolvency Act. The effect of those sections is that this court, in granting the final winding-up order, failed to take into account relevant legislation to grant that order. I again do not agree that there can be any reason why these can be raised in a rescission application. The proper course would have been for the applicants to appeal.

[16]        In the totality of the submissions I can find no merit in the application and consequently same stands to be dismissed with costs.

[17]        Respondent has raised an issue that costs should be ordered de bonis propriis against the attorney due to various other related applications that have been brought without merit.

[18]        An award of costs de bonis propriis is generally reserved for matters in which a litigant litigates in a representative capacity. Such an award will be made as a measure of the court’s disapproval of the representative’s conduct (See Moller v Erasmus 1959 (2) SA 465 (T) at 467(B-C).) The conduct of the fiduciary or representative must evidence a lack of bona fides, negligence or recklessness in the conduct of the litigation or improper conduct which deviates from the standard of conduct to be expected of the fiduciary or representative. (See F. Vermaaks’s Estate v Vermaak’s Heirs 1909 TS 679 at 691; Blou v Lampert and Chipkin N.N.O. and others 1973 (1) SA 1 at (A) at 14.)

[19]        Our courts have also made orders for costs de bonis propriis against the legal representatives of parties to litigation. Such orders are generally only made in exceptional circumstances (See Thunder Cats Investments 49 (PTY) LTD and Others v Fenton and Others 2009 (4) SA 138 (C) at 151A-B). In Multi-links Telecommunications Ltd v Africa Prepaid Services Nigeria Ltd and Others; Telkom SA Soc Ltd and Another v Blue Label Telecoms Ltd and Others [2013] 4 All SA 346 (GNP) at para [34] and [35], Fabricius J said:

“Costs are ordinarily ordered on the party and party scale. Only in exceptional circumstances and pursuant to a discretion judicially exercised is a party ordered to pay costs on a punitive scale. Even more exceptional is an order that a legal representative should be ordered to pay the costs out of his own pocket. It is quite correct, as was submitted, that the obvious policy consideration underlying the court’s reluctance to order costs against legal representatives personally, is that attorneys and counsel are expected to pursue their client’s rights and interests fearlessly and vigorously without undue regard for their personal convenience. In that context they ought not to be intimidated either by their opponent or even, I may add, by the court. Legal practitioners must present their case fearlessly and vigorously, but always within the context of set ethical rules that pertain to them, and which are aimed at preventing practitioners from becoming parties to a deception of the court. It is in this context that society and the courts and the professions demand absolute personal integrity and scrupulous honesty of each practitioner. See Kekana v Society of Advocates of South Africa [1998] ZASCA 54; 1998 (4) SA 649 (SCA) at 655-656 (also reported at [1998] All SA 577 (SCA) Ed).

It is true that legal representatives sometimes make errors of law, omit to comply fully with the Rules of Court or err in other ways related to the conduct of the proceedings. This is an everyday occurrence. This does not however per se ordinarily result in the court showing its displeasure by ordering the particular legal practitioner to pay the costs from his own pocket. Such an order is reserved for conduct which substantially and materially deviates from the standard expected of the legal practitioners, such that their clients, the actual parties to the litigation, cannot be expected to bear the costs, or because the court feels compelled to mark its profound displeasure at the conduct of an attorney in any particular context. Examples are, dishonesty, obstruction of the interests of justice, irresponsible and grossly negligent conduct, litigating in a reckless manner, misleading the court, and gross incompetence and a lack of care.”

[20]        In order to warrant such an order the court should be satisfied that there has been negligence in a serious degree or that the practitioner has acted inappropriately in “a reasonably egregious manner.” (See Staibank v South Africa Apartheid Museum at Freedom Park and another 2011 (10) BCLR 1058 (CC) at para 52, see also South African Liquor Traders Association v Gauteng Liquor Board 2009 (1) SA 565 (CC) at para [34].

[21]        In Silinga and others v Nelson Mandela Bay Metropolitan Municipality (CA266/2017), [2018] ZAECGHC50 (26 June 2018) at para 11, Goosen J said:

“An order that a legal practitioner (or for that matter a representative litigant) should pay the costs personally carries with it obviously serious consequences that necessarily impinge upon the rights and interests of that representative. It is for this reason that, in dealing with such costs orders, a practice has been developed by the courts to afford the affected party notice of the intention to impose such order and an opportunity to make representations or submissions prior to such order being made. This practice usually involves the issuing of a rule nisi calling upon the affected person to show cause why such order is not made and is based upon constitutionally protected fundamental rights to a fair hearing (see MEC for Health, Gauteng v Lushaba 2017 (1) SA 106 (CC) at par [18] – [21]; cf also Tasima (Pty) Ltd v Department of Transport and Others 2013 (4) SA 134 (GNP); Black Sash Trust and others v Minister of Social Development 2017 (9) BCLR 1089 (CC)).”

[22]        The first respondent stated in his answering affidavit that he would be seeking an order that Messrs Majeke Mjali Attorneys be ordered to pay the costs of the application de bonis propriis on an attorney and client scale.  Despite such notice the applicants persisted with the application which, in my view, was bound to fail. The applicant was given ample opportunity to deal with the issue of costs in his replying affidavit, but chose not to respond to all averments made regarding the order of costs sought by the respondent.

[23]         In the circumstances, it is ordered that:

(1)          The application for rescission of the order granted by Mageza AJ on 15 June 2018 is dismissed.

(2)          Messrs Majeke Mjali Attorneys shall pay the costs of the application de bonis propriis on an attorney and client scale, the one paying the other to be absolved.

(3)          A copy of this order must be served by the Sherriff at the offices of Messrs Majeke Mjali Attorneys – East London.

________________________________

P N MNQANDI

ACTING JUDGE OF THE HIGH COURT

APPEARANCES

No appearance for the applicants

Counsel for the first respondent   :           Adv DH de la Harpe SC

Attorneys for the first respondent  :           Netteltons Attorneys

                                                                  118A High Street

                                                                  GRAHAMSTOWN

                                                                   Ref: Netteltons

 

 

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