Blou v Lampert and Chipkin, NNO and Others

• Jurisdiction: South Africa
• Judge: Hill J and Boshoff J
• Judgment Date: 14 December 1971
• Court: Transvaal Provincial Division
• Hearing Date: 14 June 1971
• Citation: 1972 (2) SA 501 (T)

A Boshoff, J.:

Argument in this appeal not only took a long time but was also extended over a long period. During this period one of the members of the Court was promoted to the Appellate Division and was not available to take part in the proceedings when the questions of costs, B which were reserved in the main judgment reported in 1970 (2) SA 185 (T), were argued. The remaining members of the Court heard the arguments in his absence under and by virtue of the provisions of sec. 17 (2) of the Supreme Court Act, 59 of 1959, and this judgment concerns these costs.

The costs which were reserved were the costs in the Court below and the C costs of appeal. The costs in the Court below included the costs of an application for leave to intervene.

Both the insolvent and Harlingen have asked that costs be awarded against their unsuccessful opponents jointly and severally and that the trustees be ordered to pay costs de bonis propriis. This latter order was asked in view of the Court's judgment as to the effect of the D composition on the authority of the trustees and because the effect of an unqualified order as to costs would be that Harlingen would itself have to pay the costs directly or indirectly by reason of the terms of the composition and the agreement between the insolvent and Harlingen as to the composition.

E In order to get the position of the different parties into perspective, it is necessary to refer briefly to the course of the litigation. The trustees and Sasficor jointly launched the application against the insolvent on the basis of an alleged failure by the insolvent to implement the composition and asked for an order (a) setting aside the offer of composition, (b) authorising the trustees to F proceed to realise the assets in the insolvent estate, and (c) directing that the costs of the application be paid out of the insolvent estate. The insolvent opposed the application and in his affidavit alleged that no grounds existed, either in fact or in law, which entitled the trustees to have the composition set aside. At that stage G there was some indication that Harlingen was about to seek leave to intervene in the proceedings and the insolvent thus took up the attitude that Harlingen was not a party to the composition and, at best, a person designated by him as entitled to receive certain benefits flowing from the composition and he was entitled at any time to notify the trustees of a change in the identity of the person to whom such benefits should H be made over. He also alleged that the agreement between himself and Harlingen had been cancelled by him and requested in the affidavit that, in order to enable him to dispose of the matter satisfactorily with the trustees, the Court declare that Harlingen had no rights as against the trustees or as against himself in the matter of the composition. He filed a notice of motion that he would ask for a declaratory order to the effect that the agreement between himself and Harlingen was of no force or effect as against either the trustees or the insolvent.

Boshoff J

Harlingen, in the meantime, applied for leave to intervene. The application was unsuccessfully opposed by the trustees, Sasficor and the insolvent, and Harlingen asked for an order for costs against them; the trustees to pay their costs de bonis propriis. At that stage it was A difficult to know what effect an order for costs in favour of Harlingen or of costs in the cause would have on the assets of the estate and what the position of the trustees was in relation to the estate in the light of the composition which was being asked to be set aside in the main application. The Court thus reserved the question of costs for decision by the Court hearing the main application.

B Both the insolvent and Harlingen, in opposing the main application, adopted the attitude that a valid composition was in existence and each asked the Court to be allowed to implement it, the insolvent with the assistance of his new backers and Harlingen on its own with a proper banker's guarantee since it disputed the insolvent's allegation that the C agreement between it and the insolvent had been cancelled. Harlingen indicated that it challenged the locus standi of the trustees to bring the application and alleged that they had no authority from the creditors to do so since it had by virtue of cessions of claims itself become the major concurrent creditor in the estate and was objecting to the action taken by the trustees. Because of the dispute between the D insolvent and Harlingen on the question of the cancellation of the agreement between them, the trustees took up the position that they were uncertain as to whether they were obliged to accept the new guarantee tendered by the insolvent or the guarantee tendered on behalf of harlingen and requested the Court, in the event of the Court being of the view that the composition should continue, to determine as part of E their application which guarantee should be accepted for the purpose of implementing the composition for the benefit of all the creditors.

Voluminous affidavits and documents were filed and the issues canvassed by the parties were mainly concerned with events and circumstances F relating to the implementation of the composition, most of which were also relevant to the insolvent's claim that he was entitled to cancel the agreement between himself and Harlingen and thus entitled to the declaratory order.

Argument on the application of the trustees and Sasficor and the G counter-application of the insolvent lasted several days in the Court below. The point was raised and argued on behalf of both the insolvent and Harlingen that the trustees and Sasficor had no locus standi to approach the Court for the relief claimed by them and the point was raised and argued on behalf of the trustees and Sasficor that the composition was invalid in that it did not conform to the provisions of H sec. 119 of the Insolvency Act, 24 of 1936. The Court below rejected both these points and in effect dismissed both the application and the counter-application by (i) declaring that the composition was of full force and effect, (ii) refusing to declare that the agreement between the...