REPORTABLE

CASE NO: 15794 / 2009
In the matter between:

versus

JUDGMENT:   10 MAY 2010

BOZALEK J:
[1]     Two issues arose for determination in this matter by virtue of an order made by Breitenbach AJ on 8 December 2009, namely:
(i) the costs in an application for summary judgment which was resolved when the application was refused and the defendant granted leave to defend the action the question of costs being stood over for determination on the semi-urgent roll;
(ii) the defendant's application for security of costs originally set down for hearing on 8 December 2009 but also postponed for hearing on the semi-urgent roll.

[2] The plaintiff is thus the applicant in the summary judgment application and the respondent in the application for security for costs whilst the defendant is the respondent and applicant respectively in the applications. For the sake of clarity, I shall refer throughout to the parties as plaintiff and defendant.

"A receipt issued by a borrower of money, usually a bank, acknowledging the deposit of a sum of money, stating to whom the money is repayable, when the capital sum is repayable, the interest rate and when interest is payable".

" (i) The issue and transfer of the certificate is restricted to resident companies, resident corporate bodies and resident individuals,..." and;
(ii) 'any bona fide transferee for value, being a resident company, resident corporate body or resident individual obtains a good title to (the) certificate."

THE APPLICATION FOR SUMMARY JUDGMENT

[8] In the same letter defendant's representatives called upon plaintiff to furnish security for defendant's costs since, it was stated, defendant did not believe that plaintiff would be in a position to satisfy any costs order which might be obtained against him.

[11] Not surprisingly, after receipt of the opposing affidavit plaintiff agreed that the application for summary judgment should fail and defendant should be given leave to defend the action. Plaintiff refused, however, to tender the costs incurred by defendant in opposing the application hence the reservation of the question of costs.

"The purpose of the subrule is, on the one hand, to discourage unnecessary or unjustified applications for summary judgment, and, on the other hand, to discourage defendants from setting up unreasonable defences. In regard to the first of these it is to be borne in mind that in many instances the object of bringing an application for summary judgment is to force the defendant to put his defence on affidavit. A plaintiff is not entitled to do this unless it is clear that there are good grounds for making the application".
In the present matter plaintiff was directly and pointedly advised of at least some of the defences upon which defendant would be relying. He had before him, moreover, defendant's deposing affidavit in a similar matter setting out such defences. Plaintiff was warned in terms that if he persisted with the summary judgment application a special order for costs would be sought against him. Notwithstanding these warnings defendant was put to the trouble and expense of drafting a lengthy opposing affidavit which predictably resulted in plaintiff withdrawing the application for summary judgment. In these circumstances it seems to me that a costs order as contemplated in s 32(9)(a) is entirely justified.

[17] In the result plaintiff is ordered to pay defendant' s costs of opposing the summary judgment application on the attorney and client scale, such costs to be taxable and payable forthwith.

APPLICATION FOR SECURITY FOR COSTS
[18] Defendant brought a substantive interlocutory application requiring that the deceased estate, alternatively plaintiff in his personal capacity, in the further alternative, both, were liable to furnish security to defendant for its costs in the sum of R100 000.00. That application was supported by an extensive supporting affidavit plus annexures. In due course it was met with plaintiff's answering affidavit which in turn elicited a replying affidavit from the defendant.
[19] In its notice in terms of Rule 47(1) defendant cited the following factors as the basis for its demand for security; that plaintiff purported to litigate in a representative capacity notwithstanding that he was statutorily not permitted to do so with the result that the action was a nullity; secondly, the deceased estate which the plaintiff purported to represent was insolvent and there was therefore reason to believe that it would not be able to pay defendant's costs should it be successful in its defence. Further grounds relied on were that plaintiff's claim or claims had no merits and, in any event, had prescribed.

[20] In order to deal with the application it is necessary to set out a brief history of the events which gave rise to the litigation. According to defendant, Standard Bank of South Africa Ltd acquired eight NCD's, including NCD 478, on 29 January 1999 for a total purchase consideration of R8m. The monthly interest payments due on each
NCD were paid upon regular presentation thereof until the date of their loss, 28 January 2000 the day before they matured. On that day the eight NCD's were handed to a Standard Bank employee for hand delivery to defendant. Sometime before they reached the relevant employee of defendant the eight NCD's disappeared. The matter was reported to the police and investigated internally by Standard Bank but ultimately nobody was found responsible for the disappearance of the instruments.

[21] In due course, against an indemnity furnished by Standard Bank to defendant, the remaining interest payable plus the capital sums on the NCD's were paid by defendant to Standard Bank. On 9 February 2000 and at defendant's Table View branch, one of the deceased's sons presented NCD 478 to an official of defendant with a query as to whether payment of the interest and the capital could be made there rather than in Johannesburg. Defendant's official took possession of the certificate and issued the deceased's son with a receipt therefor.

[22] On 26 May 2003 the deceased launched a vindicatory action against defendant and Standard Bank in the High Court in Johannesburg seeking a declaration that he was the owner of NCD no. 478 and requiring defendant to return the original of such certificate to him. In the aforesaid application the deceased claimed to have purchased six of the missing batch of NCD's in question in return for payment of R5m from a certain Dambar. The action was opposed and on 4 December 2003 was dismissed with costs.

[23] On 19 February 2004 the deceased committed suicide and on 16 March 2004 plaintiff, one of the deceased's sons, received letters of authority from the Master in terms of s 18(3) of the Act authorising him "to take control of the assets of the estate ... to pay the debts, and to transfer the residue of the estate to the heir/s entitled thereto by law".

[24] In September 2008 the estate became subject to a final order of sequestration. This order was rescinded however in March 2009 at the instance of plaintiff on the basis that the service upon him of the application, in his capacity as a s 18(3) representative, was incompetent.

[25] As previously mentioned the present action, in respect of NCD no. 478, was instituted in this Court on 5 August 2009 and was followed, the next day, by the institution of provisional sentence proceedings in respect of the remaining five NCD's in the Johannesburg High Court, again at the instance of plaintiff.

GENERAL PRINCIPLES

One of the exceptions to the general rule is that the Court may, in its inherent jurisdiction, order a litigant to give security for the costs of the other side. The power of the court to order security for costs on this basis is, however, exercised sparingly and only in exceptional cases.

"The mere fact that a party suing is an insolvent is no ground for obliging him to provide security for his opponent's costs - each case must be considered in the light of its own particular facts, and only where the insolvent's action is vexatious or reckless or where it amounts to an abuse of the Court's process should he be called on to give security for costs".

held that, in general terms, an abuse of process took place when the procedures permitted by the Rules of Court to facilitate the pursuit of truth were used for a purpose extraneous to that objective. An improper purpose could be a factor where an abuse of process was at issue.

[30] However Olivier J qualified the general stringent test for vexatiousness in the following terms (at page 454 E - G):

On the basis hereof defendant avers that this court lacks jurisdiction. Plaintiff responds by contending that defendant has consented to the jurisdiction of this court, relying on a letter from an official of defendant agreeing to accept service of process in Cape Town.

"The rule in our law is that the only proper person to litigate on behalf of a deceased's estate, in the vindication of its assets, is its executor even to the exclusion of the beneficiaries in the estate."
[34]   S 18(3) of the Act reads as follows:

"If the value of any estate does not exceed the amount determined by the Minister by notice in the Gazette, the Master may dispense with the appointment of an executor and give directions as to the manner in which any such estate shall be liquidated and distributed."
Having regard to the terms of section 18(3) and the letters of authority issued by the Master, quoted above, there must be serious doubt whether plaintiff had the authority to institute the present action in a representative capacity for and on behalf of the estate.

[40] As far as plaintiff's ability to meet any order for costs it is common cause between the parties that the deceased estate is insolvent. According to defendant the liabilities in the estate are in the order of R17.7million whilst its only assets, presumably, are the claims it has in respect of the NCD's. According to plaintiff the estate's liabilities are less than half a million rand but no explanation is furnished for a longstanding debt in the sum of US$2.2 million.

[41] The litigation involving the NCD's has produced at least two costs orders, the first arising out of the 2003 application and the latest arising out of the successful condonation application in Johannesburg late last year. The first such order was not met and no doubt is a liability in the deceased estate. It remains to be seen whether plaintiff will meet the second costs order made herein relating to the summary judgment application.

[42] Any costs orders made in these proceedings can, in the nature of things, not be satisfied by the insolvent estate and liability therefor will be disavowed by the plaintiff personally since he sues in a representative capacity, either as the s 18(3) representative, or if his amendment is successful, as the estate's executor. Although plaintiff is legally represented it is apparent that much of the work involved in the presentation of his case and preparation of his papers is done by a lay person, presumably himself. In this matter alone plaintiff has filed two declarations running to hundreds of pages including annexures.
[43] It is likely that the litigation, irrespective of the merits of plaintiff's claim will be prolonged and strenuously contested at every level. The signs, in the form of the opposed condonation application in the provincial sentence proceedings and the summary judgment application in this action, are already clear. Plaintiff's counsel was unable to explain why, after a hiatus of six years between 2003 and 2009, plaintiff has seen fit to launch actions on two fronts seeking to enforce the estate's claims in respect of the NCD's.

[45] As far as the indemnity defence is concerned defendant readily admits that it holds an indemnity from Standard Bank against anyjudgment which may be taken against it in the respect of NCD 478. That indemnity was furnished by Standard Bank when defendant paid it the nominal value, presumably plus interest, in respect of the "lost" NCD's including no. 478.

[47] It was also contended that requiring plaintiff to furnish security for defendant's costs would infringe his rights of access to court constitutionally enshrined in s 34(1)(a) of the Bill of Rights which provides that:
"Everyone has the right to have any dispute that can be resolved by the application of law decided in a fair public hearing before a court

"Let me say at the outset that the fact that an order of security will put an end to the litigation does not by itself provide sufficient reason for refusing it. It is a possibility inherent in the very concept of a provision like s 13 which comes into operation whenever it appears to the court that the plaintiff or applicant will not be able to pay the defendant or respondent's costs in the event of the latter being successful in his defence."

[52] In the present case plaintiff states in his affidavit opposing security for costs that making such an order would put an end to the estate's claims. He gives little detail, however, as to what efforts, if any, has been made to secure finance to assist the estate in its prosecution of its claims which totals some R6m. Plaintiff does, however, state that he is funding the litigation from his personal monthly salary income and that after various deductions and monthly obligations which he had are met he is left with approximately R10 000.00 which is used to assist in the litigation against defendant. Plaintiff adds he has no other income or liquid investments from which he can fund the litigation and that his twin brother, being the other beneficiary in the estate, assists in the aforementioned funding. The position appears to be that although the plaintiff performs much of the legal work himself, he engages attorneys and counsel to present his case and presumably meets their fees through finances mentioned. In these circumstances I can see no reason why the plaintiff and his brother cannot set aside a sum of money to satisfy an order providing for security for costs. They are also free to approach any person to finance their claim as well. Plaintiff is, therefor, not an impecunious litigant who cannot afford even his own legal representation. He is, rather, a litigant able to fund his own legal expenses but largely immune to any adverse costs order. The provision by plaintiff of security for the defendant's costs in the circumstances of this matter will, at the very least, have the salutary effect of discouraging ill-considered interlocutory applications or procedural steps on the part of plaintiff.

[54] Taking all these circumstances into account I consider that the defendant has not established that the present action is doomed to failure or amounts to an abuse of the process of court. Having regard to all the surrounding circumstances, however, I am satisfied that the present action is reckless or vexatious, within the meaning discussed above. These circumstances include earlier unsuccessful litigation to establish ownership and re-claim possession of NCD 478, the long and unexplained delay in the institution of the present action, the several procedural, technical and substantive defences which defendant proposes to raise and the manner in which the plaintiff has conducted this and related litigation, most notably the filing and withdrawal of lengthy declarations and his persisting in the application for summary judgment and in opposing an application for condonation in the Johannesburg proceedings.

[55] Having made this finding it is open to this court, in exercising its discretion, to order the furnishing of security. I see no reason why defendant, notwithstanding that it is a large commercial concern, should be exposed to expensive and time consuming litigation over NCD no. 478 at the instance of a plaintiff who, if unsuccessful, can merely shrug off any adverse costs award because he sues in a representative capacity on behalf of an insolvent estate. There are strong indications that Plaintiff is one of the two beneficiaries (the other being his brother) in the estate and thus the litigation on its behalf directly furthers his interests.

[57]   In the result the following order is made:

1. Plaintiff shall pay defendant's costs in the application for summary judgement on the attorney and client scale, de bonis propriis, such costs to be payable immediately;
2. Plaintiff is directed to furnish security for the costs of defendant in an amount and form to be determined by the Registrar.

4. Plaintiff shall pay defendant's costs in the application for security for costs, such costs to include the costs of two counsel, where employed.

[58] For the guidance of the Taxing Master it is recorded that no less than two thirds of the argument heard on 17 March 2010 was devoted to the question of security for costs.

L. J BOZALEK J
JUDGE OF THE HIGH COURT