Republic of South Africa

IN THE HIGH COURT OF SOUTH AFRICA 
(WESTERN CAPE HIGH COURT, CAPE TOWN)

Case Number 6900/2010
In the matter of:

versus

Judgment: 25 August 2011

[2]    The specific relief that the applicant sought, were the following:

2.1 That a rule nisi be issued calling on the respondents to show why the following order should not be made;
2.1.1. That the Respondents be interdicted from registering the transfer of the immovable property situated at Portion 5 of Erf 16696, Somerset West in the Municipality of Helderberg, Division Stellenbosch, Province Western Cape (hereinafter "the Property") pending the institution and finalization of an action by the Applicant for specific performance of Clauses 10.1, 10.2, 10.3 and 11.2 of the deed of sale entered into for the property between Applicant and First Respondent on 8 May 2008;
2.1.2. That the First Respondent is interdicted from entering into a deed of sale for the property with any third party or to encumber the property in any manner pending the institution and finalization of the abovementioned action;
2.1.3. That First Respondent be ordered to pay the costs of the application on the scale as between attorney and client;
2.2. That paragraphs 2.1.1 and 2.1.2 above operate as an interim interdict pending the return date;
2.3. That Applicant institute the abovementioned action within 10 court days of the granting of a final order herein, failing which the interdict will expire;
2.4. That leave is granted to the parties to at the close of pleadings approach the Court for the allocation of an early court date.

[3] Both the first respondent and the third respondent opposed this application.

[5]    The court order, dated 8 April 2010, reads as follows:
"By ooreenkoms tussen die Applikant, Eerste Respondent en Derde Respondent, word die volgende bevel geneem:

2. Die Eerste en Derde Respondente onderneem om nie voor of op 23 April 2010:
2.1. oordrag van die eiendom gelee te Gedeelte 5 van Erf 16696 Somerset-Wes, in die Munisipaliteit van Helderberg, Divisie Stellenbosch ("die eiendom"), aan Applikant te registreer nie; of
2.2. die eiendom aan 'n derde party te vervreem of enigsins te beswaar nie.
3. Koste staan oor vir latere beregting."

[6] On 23 April 2010, the application was again postponed to 20 August 2010, by agreement between the parties, which was also made an order of court, in the following terms:
"By ooreenkoms tussen die Applikant, Eerste Respondent en Derde
Respondent, word die volgende bevel geneem:

2. Die Eerste en Derde Respondente onderneem om nie voor of op die voormelde datum oordrag van die eiendom gelee te Gedeelte 5 van Erf 16696 Somerset-Wes, in die Munisipaliteit van Helderberg, Divisie Stellenbosch ("die eiendom"), aan Applikant te registreer nie, tensy:
2.1.   Die vergunninsgebruiksreg vroeer toegestaan is en die proses voorsien in voormelde klousules, insluitend enige appel, afgehandel is;
2.2. Alternatiewelik, indien die vergunningsgebruiksreg nie toegestaan is nie, die Applikant sy eleksie uitgeoefen het om met die kontrak voort te gaan ooreendomstig klousulel0.2 daarvan.
3. Koste staan oor vir latere beregting.

[9]    Costs stood over for later determination.

[10] Subsequently and by August 2010 the use right for a liquor store to be run on the property had been applied for and granted by the relevant local authority. In the circumstances the first respondent had, in accordance with the above-stated court order, obtained the use right for a liquor store to be run on the property in addition to the use right for a supermarket - in accordance with the relevant terms of the deed of sale, referred to above.

[11] The first respondent and the third respondent conceded in their heads of argument (paragraph 5 thereof) and during argument, that in the circumstances, and in any event, by and before 20 August 2010, the next court date for the hearing of the application, it (the application) had become academic except insofar as the costs are concerned.

The issues for determination.
[12] The crisp issue for determination by this court is therefore the question of costs. It is the applicant's case that, inasmuch as they are substantially the successful party having obtained the aforesaid court order, which is substantially in accordance with the relief it sought against the first and third respondents, that it is entitled to its costs on the principle that costs should follow the result. In addition, so the argument went, since these proceedings which the applicant was forced to institute against these two respondents on an urgent basis, were essentially proceedings pursuant to a breach of a term or terms of the deed of sale entered into between the parties (the applicant and first respondent) more particularly clause 7.3 thereof, the applicant is entitled to its costs "on the scale as between attorney and own client." Clause 7.3 reads as follows:

client, including such pre-litigation charges, tracing fears and such
collection commission." The first and third respondents contended that, on the facts of this case, the applicant is not entitled to its costs, inasmuch as:
(a) The applicant created its own urgency, and was consequently not entitled to bring an urgent application;
(b) The applicant would have been unsuccessful on the merits, and
(c) With regards to the prayer for increased scale costs (attorney and own client scale) the applicant did not prove that this application was proceedings pursuant to a breach of the agreement between the parties, and
(d)That should the applicant rely on the relevant clause of the agreement, the terms of that agreement also requested of applicant to give the respondents 14 days written notice within which to remedy such an alleged breach of the contract, which they did not do. In the circumstance, so the argument went, the applicant is not entitled to any costs, least a cost order on the scale as between attorney and own client. It was submitted, in the alternative, that should the court exercise its discretion regarding costs in favor of the applicant, that such costs to on the ordinary party-and-party scale, allowing the costs of one counsel only. 

The issues to be determined are therefore firstly, to whom should costs be awarded, secondly, whether costs should be awarded on the scale as between party-and-party, or on an attorney and own client scale, and thirdly, whether, if applicant is found to be entitled to its costs, such costs should include the costs of two counsel.

The applicable legal principles.

[14] The approach towards costs where the merits of the dispute between the parties had been settled, except the issue of costs, had been formulated as follows:

[15] It is in the context of the above-stated crystallized legal principles, and guided by them, that this court now turns to the issues at hand (as set out above), with the material at its disposal.

A brief factual background.
[16] On or about 8 May 2008 the applicant (Shoprite Checkers), and the first respondent (Westacre Devco) - hereinafter the "contract-parties") entered into an agreement in terms whereof in essence, the applicant bought the property from the first respondent for a total amount of R25 million, plus VAT, and pursuant thereto, paid Rl million to the first respondent as a deposit. The balance of the purchase price, amounting to R27,5 million, VAT included, was paid to the first respondent in an around August 2008.

[20] The property was at all relevant times zoned what is referred to as a Business Zone 1, which would qualify it for an application for the consent use and operation of a liquor shop on and in respect of, the property. It is perhaps necessary to quote the relevant clauses of the agreement, which also constitute to a large extent, the dispute that had arisen between the parties: The relevant clauses read as follows:

[21] What transpired subsequently was that the first respondent, being of the view that it had complied with all its obligations in terms of the agreement, notified the applicant that it was ready to lodge the papers with the second respondent for registration and transfer of the property to the applicant. The applicant, however, on perusal of the relevant papers and documents for purposes of the registration of transfer of the property, on or about 16 February 2010, realized that the application for the use-rights and consent use of the liquor shop was not included in its file and documents. One of its officials, Adriana du Toit, who was also the deponent to the founding affidavit, thereupon enquired from the third respondent, the legal representative of first respondent, via e-mail, on 16 February 2010, whether such an application was indeed lodged with the local authority. She was informed on 25 February 2010 also via e-mail, by the third respondent that such an application was in fact not lodged, at the time. This was followed by various correspondence between the parties, the upshot whereof was, that the third respondent asked the applicant on 5 March 2010 to waive its right to apply for consent-use of the liquor shop and to allow third respondent in effect, to proceed with the registration of the transfer of the property. The applicant however, insisted that such an application be brought, on its behalf, by the first respondent, claiming that it was entitled thereto on the basis of the provisions of the above-stated clauses and terms of the agreement. In the circumstances the applicant's position, which it conveyed to the first and third respondents on 19 March 2010, was that it would not agree to and accept transfer and registration of the property in its name until and unless the first respondent has complied with its obligations in terms of the agreement, more particularly, to bring an application and secured approval for the said use-right, and particularly the consent use of the liquor store.

[23] It was against this background and in this context that the applicant then launched and issued its urgent application, for the relief as set out above (in paragraph 2) on 7 April 2010. The subsequent developments are recorded and set out in the court orders of 8 April 2010 and 23 April 2010, referred to above. It is common cause between the parties that by 20 August 2010, which was the next date for the hearing of the application, the use-right for a liquor store to be run on the property had been applied for and obtained by the first respondent and registration of the property in the name of the applicant, and transfer thereof to the applicant had taken place. However, prior to this hearing date, and on 16 July 2010, the applicant brought a chamber book application to compel the first and second respondents to file their opposing papers, which was granted. (See the court order by Blignaut, J dated Friday 16 July 2010, record page 108).

The submissions and findings. Urgency.
[25] It was contended on behalf of the first and third respondents, both in its heads of argument (page 7, paragraph 16) and during oral argument, that the application ought to have failed, and in the result, that the applicant should not be awarded any costs for lack of urgency because the urgency was self created. The applicant on the other had contended that, given the facts of this case, and more particularly third respondent's threatening attitude as displayed in its letter of 19 March 2010 (annexure ADT14 to the applicant's founding affidavit, record page 71-74) to proceed with the registration and transfer of the property "in the course of the next week or so" (ibid paragraph 8), and which intention was again manifestly displayed in a letter sent to the applicant on 6 April 2010 via electronic mail (annexure ADT18,  to  the  applicant's  founding  affidavit,  record page  91-92) to proceed with the registration which was set down for 8 April 2010, it had no other alternative than to approach this court for a temporary interdict on an urgent basis. On the facts of this case and based on the material at my disposal, I am inclined to agree with this submission advanced on behalf of the applicant. Moreover, neither the first respondent nor the third respondent specifically disputed the urgency of the application when it was launched and issued. They also did not reserve their rights to dispute the urgency of the application, in any of the abovementioned court orders - all whereof were by agreement between the parties (except for the chamber book order of Blignaut, J on 16 July 2010). This is indicative of the fact that these respondents appreciated and accepted the urgency of the application. In the result this court is satisfied that the applicant was justified to bring this application as one of urgency.

"Use-rights: Approved application for consent use for supermarket

a)	That the transfer of the property, scheduled for 8 April 2010 was not effected;
b)	To enable the first respondent to apply to the relevant local authority for the required use-right, namely, the consent use of a liquor store in respect of the property, which was subsequently done and obtained by the first respondent; and
c)	That the first and third respondents gave an undertaking, not to register transfer of the property before 20 August 2010 unless the said use-right is granted earlier and the appeal process provided for in the agreement having been finalized, alternatively if the use-right is not granted, the applicant has elected to proceed with the deed of sale in terms of clause 10.2 thereof.

[27] Objectively, the terms of this court order are, substantially in accordance with the relief that the applicant had asked when it approached this court on an urgent basis on 8 April 2010. In the circumstances, it follows that the applicant had established on a balance of probabilities that it was the successful party and is therefore entitled to its costs. In any event, and as set out above, it is clear, on the material placed before this court, that the applicant would have been successful on the merits of this application.

[28] The remaining issue is whether costs should be awarded on an attorney and client scale, as contended for by the applicant. As pointed out above, the applicant relies on clause 7.3 of the agreement between the parties for costs to be awarded to it on the attorney and client scale. It was contended on behalf of the first and third respondents that the applicant is not entitled to costs on this scale, for essentially three reasons:
a) there was no breach of any term of the agreement by the first and third respondents, at the time when the applicant launched and issued its urgent application - there was only an alleged threatened breach of the agreement to transfer the property to the applicant without obtaining the disputed use-right;
b) the applicant is/was required, in the event of an alleged breach of the terms of the agreement, to give to the first respondent 14 calendar days notice to remedy the alleged breach, which it had not done; and
c) the first respondent had, at the stage of bringing the application, not yet transferred the property to the applicant, nor had applicant put the first respondent on terms to remedy any breach regarding the use-right, therefore the urgent application was not steps taken against the first respondent pursuant to a breach of the agreement as required by clause 7.3 of the deed of sale.

[30]  It has also been contended, on behalf of the applicant, that inasmuch as the applicant initially had to use the services of two counsel, that same was justified by the huge amounts of money involved in this transaction, and the relative complexity of the matter. Therefore should this court order costs in favour of the applicant, such costs should include the costs of two counsel. Counsel for the first and third respondents vehemently opposed such an order, arguing and submitting that both the first and third respondents only used the services of one counsel, and that the matter was not of such a complexity to warrant two counsel. This court is not persuaded to exercise its discretion in favour of allowing costs of two counsel.

Conclusion.
[31] In the circumstances of this case and in the exercise of my discretion, the following order is therefore made:

The applicant is awarded the costs of its application, including the costs occasioned by the postponements on 8 April 2010, 23 April 2010 and 20 August 2010, such costs to be on the scale as between party and party; and such costs to include the costs pursuant to the employment of one counsel.