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Pholosa Asset Management v Swanepoel and Another (1386/2011) [2011] ZAECGHC 48 (22 September 2011)

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IN THE HIGH COURT OF SOUTH AFRICA

EASTERN CAPE DIVISION, GRAHAMSTOWN


Case no: 1386/2011

Date Heard:15/9/11

Date Delivered:22/9/11

In the matter between:




PHOLOSA ASSET MANAGEMENT (PTY) LTD ….......................Applicant



Versus




FREDERICK SWANEPOEL ….......................................First Respondent


MAGISTRATE SS NOBUMBA …..............................Second Respondent


JUDGMENT


SMITH J:


[1] The Applicant seeks an order directing the First Respondent to pay security for costs in the amount of R60 000.00 in respect of an application brought by the latter for directions from the court regarding his lapsed appeal. The security is required on the basis that the main application is vexatious, has no prospects of success and that the First Respondent does not possess means to satisfy an adverse costs order.


[2] On 31 May 2010 the Second Respondent, being a Magistrate in the district of Port Elizabeth, ordered the First Respondent to pay to the Applicant the sum of R87.43, interest thereon and costs of the suit on an attorney and client scale. The First Respondent noted an appeal against the judgment but failed to lodge security and did not prosecute the appeal within the time frames provided for by the rules of court.


[3] During May 2010 the First Respondent launched and application for an order, inter alia,:

Giving directions to the parties with regard to the steps to be taken by the applicant alternatively by the parties, to enable the applicant to prosecute an appeal in respect of a judgment handed down by the second respondent on 31 May 2010.”


He also seeks condonation for his failure to furnish security in terms of Magistrate Court rule 51(4).


[4] Mr Segal, who appeared for the Applicant, submitted that the main application is vexatious and has no prospects of success for the following reasons:

(a) The First Respondent and his attorney had known as early as 20 October 2010 that he would not be in a position to prosecute the appeal timeously;


(b) They were aware by 2 February 2011 that security had not been filed yet nothing was done to obtain appropriate relief. The main application was launched only during May 2011 and to date the security has still not been lodged;


(c) The appeal is in respect if an insignificantly small amount of money and has, on the First Respondent’s own version, been precipitated by the taxing of the Bills of costs;


(d) The relief sought by the First Respondent in the main application is untenable in law and he is effectively seeking advice from the court. The First Respondent has misconceived the relief that it requires and has chosen to bring the application in the wrong court, the appropriate court being a court of appeal. See in this regard: Beaumont v Anderson 1949 NPD page 562;


(e) The first Respondent has not relied on any important legal issues and it is therefore improbable that condonation will be granted where the appeal is likely to be about costs only; and


(g) The first Respondent seeks an order that the proceedings in the court a quo be commenced de novo. This relief is also untenable as the matter is res judicata.


[5] Mr Segal submitted also that the First Respondent is, on his own version, not able to pay the legal costs attendant on the main application. He has relied in particular on the following statement in the First Respondent’s founding affidavit in the main application:

Whilst the capital amount of the judgment is trifling, the bill of the Port Elizabeth attorneys engaged by the First Respondent has already been taxed in an amount of R10 797.28. As will, with respect, appear from the affidavit of Mr Schoeman, although this bill has not yet been taxed, the bill for the First Respondent’s Johannesburg attorneys, prior to taxation, is for an amount of R91 927.50. Accordingly, even if 75% of this amount should be taxed off, as matters stand a very substantial sum, which I cannot afford, and which I do not believe that I owe, will be payable by me. In addition I have had to pay my own Attorney during the course of these proceedings.”


[6] In his opposing affidavit in this application the First Respondent stated that he would indeed be able to pay an adverse cost order in the main application. He avers that he owns a property in Hunters Retreat, Port Elizabeth which has been valued between R675 000.00 and R695.000. 00. The property is bonded for R380 000.00 only. Both he and his wife are employed and earn net salaries of R10 000.00 per month each.


[7] The First Respondent has further averred that the delay in prosecuting the appeal was mainly due to the record of the proceedings having been lost and the parties being unable to agree on the reconstruction thereof. He states also that although the judgment amount is trifling, the taxed costs amount to some R22 794. 63 and he now has a civil judgment against his name, which adversely affects his chances of obtaining credit.


[8] It is trite law that the court has inherent jurisdiction to order a litigant to provide security for costs where it appears that the litigation is vexatious. See: Becker v Dean 1937 AD 254 at 259 where Curlewis J held that:

In Western Assurance Co v Caldwell’s Trustees 1918 AD 262 this court laid down that a court of law had inherent jurisdiction to stop or prevent a vexatious action as being an abuse of the process of the court, one of the ways of doing so is ordering the vexatious litigant to give security for the costs of the other side”



[9] In Fitchet v Fitchet 1987 (1) SA 450 (ECD) it was held that for the purposes of dismissing an action the term “vexatious action” has been equated to one standing ”outside the region of probability all together and which becomes vexatious because it is impossible”


[10] In an application for security for costs however the test is less stringent. Olivier J, in the Fitchet matter, quoted with approval the following dictum by Klopper J in Davidson Bakery (Pty) Ltd v Burger 1961 (1) SA 589 (O) at 593E:

Myns insiens is die meriete van eiser se aksie nie altyd deurslaggewend nie, maar slegs 'n faktor wat in oorweging geneem moet word. Daar kan gevalle wees waar die Hof sekuriteit stelling sal verleen al word dit slegs bevind dat die kanse van welslae op die aksie alleen twyfelagtig is sonder dat dit gesê kan word dat dit geen vooruitsigte van sukses inhou nie.



[11] I am of the view that the Respondent has a mountain to climb in the main application. I agree with Mr Segal’s submission that the relief sought by the First Respondent in that application is convoluted and indeed amounts to an attempt to elicit legal advice from the court. It is required of an applicant to clearly state the nature of the relief sought and to support that with the factual basis in his or her supporting affidavits. The First Respondent has failed to do so. Apart from the numerous difficulties which he faces with regard to his tardiness, his failure to lodge security for the appeal and to prosecute the appeal timeously, he will also have to contend with the implications of s. 21 of the Supreme Court Act, 59 of 1959, which empowers the appeal court to dismiss an appeal on the ground that it will have no practical effect.

[12] Section 21A (3) of that Act provides that:

Save under exceptional circumstances, the question whether the judgment or order would have no practical effect or result in is to be determined without reference to the conservation of costs.”




[13] There is in my view also considerable merit in Mr Segal’s contention that the proceedings in the main application will in all probability be aborted because the First Respondent should have applied for the relief to the appeal court. For these reasons I am of the view that the First Respondent’s prospects of success in the main application are very slim indeed and at best for him, doubtful.


[14] I agree also with Mr Segal’s submission that the First Respondent has failed to put up sufficient facts to satisfy the court that he will be in a position to pay an adverse costs order. The First Respondent has stated in his founding papers in the main application that he could not afford to pay the taxed costs in that matter. His subsequent averment in his opposing papers in this application to the effect that he will be able to pay an adverse costs order must, with respect, be taken with a pinch of salt. It was, on his own version, his inability to satisfy the costs order in the initial proceedings that prompted him to pursue the appeal.


[15] I do agree however with Mr Lowe SC, who appeared for the First Respondent, that the Applicant has not put up sufficient facts to enable me to determine the amount of security to be provided. I am therefore of the view that it will be appropriate for the amount of security to be determined by the Registrar.


[16] In the result the following order shall issue.


1. The First Respondent is directed to put up security for costs in such amount as may be determined by the Registrar in respect of proceedings instituted by the First Respondent against the Applicant under case number 1386/11;

2. The First Respondent’s application is stayed pending the furnishing of the security;

3. The Applicant is authorized, in the event of the First Respondent’s non-compliance with paragraph 1 above, to apply on these papers, supplemented if necessary, for an order striking out the relief sought by the First Respondent, together with the attendant costs in respect thereof.


4. The First Respondent is ordered to pay the Applicant’s costs on the party and party scale.





_____________________

J.E SMITH

JUDGE OF THE HIGH COURT

Appearances

Counsel for the Applicant : Advocate Seagal

Attorneys for the Applicant : Dold and Stone Attorneys

100 High Street

GRAHANSTOWN

6140

Ref: Ms Y Cotzee


Counsel for the Respondent : Advocate Lowe, SC

Attorneys for the Respondent : Whitesides Attorneys

53 African Court

GRAHAMSTOWN

Ref: Mr Nunn/rn/C08854


Date of Hearing : 15 September 2011

Date Delivered : 22 September 2011