IN THE KWAZULU-NATAL HIGH COURT
        		      DURBAN AND COAST LOCAL DIVISION
        		             REPUBLIC OF SOUTH AFRICA
									CASE NO: 10626/2009
In the matter between: 

IGOLKISSHORE RAGUNANDAN                                                    Applicant

and  
AFRICHOICE TENDERS CC                                                             Respondent     

							                Delivered: 5 November 2010
										
 JUDGMENT

HUGHES-MADONDO AJ

In these proceedings the applicant seeks an order directing the respondent to furnish security in the amount of R120 000.00 in respect of his costs pending the outcome of an action instituted by the respondent against the applicant.. 

On 30 July 2009 the respondent instituted an action seeking judgment against the applicant in his personal capacity for costs in the amount of R262 319.42. The aforesaid amount ought to be amended to R101 691.00 as per the allocator of the respondent’s taxed bill of costs.   These costs arise from review proceedings instituted by the applicant against the respondent, where the applicant had been unsuccessful. 

In respondent’s action it alleges that RMR Commodity Enterprise CC t/d Krass, a close corporation of which the applicant is a member, acted in a grossly reckless and negligent manner when they pursued the review. The respondent further alleges that at all material times the applicant and Krass knew they had no prospects of succeeding with the review but regard less, they proceeded ahead. .   

The review proceedings were instituted because the respondent had been successful in the award of a tender worth R20 151 000.00 for the supply of blanket to the Department of Correctional Service. The applicant and Krass were unsuccessful and sought to review the tender process. The tender was for the period commencing 1 August 2007 until 31 March 2008.

Of interest is the fact that during these review proceedings the applicant obtained a cost order against the respondent for an amount of R87 472.61. When the applicant sought payment of those costs on 21 August 2008, the respondent promptly made payment on 15 October 2008.

The applicant argued that as the respondent was a close corporation without a trading address and no assets, if the respondent was unsuccessful in the action, it would not be in a position to pay the applicant’s costs.

Mr. K. Naidu, representing the applicant argued that on 24 November 2009, the applicant served a notice seeking security upon the respondent. No response was forthcoming from    the respondent. He argued further, that had the respondent replied, the parties would not be before this court, and in all likelihood the applicant would not have preceded further with the matter.

Mr. Marnewick SC,  representing the respondent argued that in terms of section 8 of the Close Corporation Act 69 of 1984, an applicant who requires security for costs must establish that “there is good reason to believe” that the other party will not be able to pay the costs.  He argued further that the evidence adduced by the applicant, fell short of proving to establish a cause of action for security to be granted 

He further argued that in terms of section 8, had the applicant had made out a case for security, the Court had a discretion in granting such security.   As regards the aforesaid, he stated that in the review there had been a cost order against the respondent to which prompt payment was made the respondent. In addition, the respondent was financially sound having completed its obligation in respect of the R20 151 000. 00 tender. Marnewick SC argued that this court ought to find that the applicant had not made out a case for security.

 On an examination of the evidence, the applicant has not demonstrated that ‘it appears that there is reason to believe that’ the respondent will not be able to pay the costs, if unsuccessful in the action. In terms of section 8 of the Close Corporation Act,  the applicant needs to show that ‘that it appears there is a reason to believe’ that the respondent will not be able to pay, for this Court to  exercise it discretion, Vumba Intertrade cc v Geometric Intertrade cc 2001 (2) SA1068 at 1071E-F

From as far back as 2007, the parties have been in protracted litigation. In the review the respondent was cited as the second respondent. The applicant would not cited the respondent if it was not certain whether it would be able to obtain and execute a judgment against it. It is common cause that in those proceedings it obtained a cost order which was promptly paid by the respondent. The value of which is not far from the amount sought as security in the action. The litigation between the parties as regards the review even went as far as the Supreme Court of Appeal. This to my mind is an indication that the applicant, as a member of Krass, must have had knowledge that the respondent was in a position to make good on payment if ordered to do so, as was done with the cost order. 

From the previous conduct of the respondent as regards its prompt payment, coupled with the fact that it had obtained the tender of R20 151 000.00, the applicant has clearly failed to make out a case that there is a reason to believe that the respondent would not be able to pay his costs if it was unsuccessful in the action. 

The applicant’s argument that the parties would not be before court had the respondent just responded to his notice further illustrates that there is no reason to believe that the respondent will not pay. There are no facts available to the applicant to succeed in seeking security, bearing in mind that the onus rest with the applicant to adduce such facts – Vumba Intertrade cc 

On the aspect of costs, these are to follow the successful litigant, in this case the respondent. 

I therefore made the following order:
The application is dismissed with costs.

 
HUGHES-MADONDO AJ
(i)	osts of such procee

APPEARANCES:
Counsel for the applicant:  K. NAIDU    
Attorneys for applicant:     RAJ RAMSARAN & CO.
Counsel for the respondent:  C. G. MARNEWICK SC
Attorney for respondent:  NOCHUMSOHN & TEPER c/o COX YEATS
Heard on:  19 October 2010
Delivered on:      November 2010