Case Comments: Security for Costs in Corporate Litigation and the Right of Access to Courts: Giddey NO v J C Barnard and Partners

• Jurisdiction: South Africa
• Author: Stephanie Luiz
• Pages: 102-109
• Published date: 25 May 2019
• Date: 25 May 2019

Case Comments

Security for Costs in Corporate Litigation and

the Right of Access to Courts: Giddey NOvJC

Barnard and Partners

STEPHANIE LUIZ

University of KwaZulu-Natal

ZUENÉ TALJAARD

University of KwaZulu-Natal

1 Introduction

Section 34 of the Constitution of the Republic of South Africa, 1996 gives

every person ‘the right to have any dispute that can be resolved by the

application of law decided in a fair public hearing before a court or, where

appropriate, another independent and impartial tribunal or forum’. (For a

general discussion of the right of access to courts, see GE Devenish The South

African Constitution (2005) in pars 151-6 at 168-73). However, s 36 of the

Constitution permits a limitation by way of a law of general application,

provided that the limitation is reasonable and justif‌iable. An example of such a

limitation can be found in s 2(1)(a) of the Vexatious Proceedings Act 3 of

1956, which provides that a court may order that no legal proceedings be

instituted if it is satisf‌ied that a person has ‘persistently and without any

reasonable ground instituted legal proceedings’. This limitation was held to

be reasonable and justif‌iable, taking into account all the relevant factors

(Beinash & Another v Ernst & Young & Others 1999 (2) SA116 (CC) in par

16 at 122-3).

Another example of the limitation of rights of access to courts is to be

found in s 13 of the Companies Act 61 of 1973 (‘the Act’). (See also s 8 of the

Close Corporations Act 69 of 1984.) Section 13 of the Act stipulates that a

company, if plaintiff or applicant (or if the company is being wound up, its

liquidator), may be ordered by the Court to provide security for costs if it

appears by credible testimony that there is reason to believe that the company

will be unable to pay the costs of the successful defendant or respondent. The

purpose of s 13 is to ensure that companies that ‘are unlikely to be able to pay

costs and therefore not effectively at risk of an adverse costs order if

unsuccessful, do not institute litigation vexatiously or in circumstances where

102

(2009) 21 SA Merc LJ 102

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