National Potato Co-Operative v Price Waterhouse Coopers Inc

• Judge: Botha J
• Judgment Date: 27 February 2009
• Citation: 2009 JDR 0136 (T)
• Docket Number: 33297/1999
• Hearing Date: 27 February 2009
• Court: Transvaal Provincial Division

Botha J:

This is the judgment in two applications: a Rule 47(4) application and a Rule 27 application by the plaintiff, first for an extension of the time in which to furnish security, and later for condonation for the late furnishing of the security. These two applications relate to case 33297/1999. Also to be decided in this judgment is the wasted costs occasioned by the fact that case 33297/1999 could not proceed on 2 February 2009.

2009 JDR 0136 p2

Botha J

The Rule 47(4) application was launched on 19 November 2008. It was bought at a time when the plaintiff had failed to furnish further security in an amount of R1.788 million, determined in terms of Rule 47(6) by the taxing master on 3 November 2008, within a period of 10 days.

This case has a long history that has been recited in other judgments. I shall start with 6 December 2006 when I ordered the plaintiff to furnish security for the defendants' costs. The plaintiff took my order on appeal. The appeal was heard on 21 November 2007 in the Supreme Court of Appeal and on 29 November 2007 it was dismissed.

In spite of the fact that the Supreme Court of Appeal was informed that the plaintiff would not be able to furnish security if the appeal was dismissed, it had in October 2007 concluded a written agreement with an Australian company, HLS, in terms of which HLS would finance the case and provide the necessary security "or any variation thereof or any further court order."

The plaintiff informed the defendants of the agreement with HLS by way of a letter dated 4 January 2008 in which it asked an extension of the period in which security had to be provided.

On 29 January 2008 an order was made by agreement in terms of which the security had to be provided by not later than 31 March 2008.

2009 JDR 0136 p3

Botha J

The plaintiff did not meet that deadline and on 1 April 2008 the defendants launched an application for the dismissal of the plaintiff's action. That application was never heard because on 14 May 2008 an acceptable bank guarantee for the amount of the security (R7.56 million) was furnished.

On 2 June 2008 I ruled that the case should resume on 2 February 2009. The matter was argued before me. The plaintiffs argued for the earliest possible date and the defendants suggested the third term of 2009 when their leading counsel, Mr van der Linde, would be available. It appeared that Mr van der Linde had been retained by the same clients for an arbitration that would be heard during the first half of 2009. I ruled that the defendants could make other arrangements and fixed the date for the resumption of the trial on 2 February 2009. The result was that Mr van der Linde dropped out of the case. His junior, Mr Barrie SC, became the defendant's leading counsel, with a newcomer, Mr Bothma, as his junior.

I may mention at this stage that during the trial I made a ruling that the witness under cross-examination, Mr Collett, could be cross-examined by Mr van der Linde and Mr Barrie, on condition that Mr Barrie's cross-examination remained confined to two topics: subsidiaries and debtors. When the trial was adjourned in November 2006, Mr Barrie had finished his cross-examination on subsidiaries and his cross-examination on debtors still had to begin.

I return to the chronology.

2009 JDR 0136 p4

Botha J

On 6 June 2008 the defendants launched an application (defendants' review application) to review part of the determination made by the taxing master on 15 December 2006. Although the taxing master determined security in an amount of R7.56 million, he disallowed an item in the defendants' draft bill of costs (item 12) in which the defendants claimed security of R5.456 million in respect of the cost of engaging forensic auditors in their preparation for the trial. This application was eventually heard on 28 November 2008 and on 1 December I dismissed it with costs. The defendants asked for leave to appeal which application was dismissed on 2 February 2009. It is enough to say that although I found that the taxing master's reasons for disallowing item 12, were flawed, I dismissed the application because it was launched some 18 months after the taxing master's determination.

In November 2008 there was some flurry of activity. On 3 November 2008 the taxing master, at the behest of the defendants, determined that the plaintiff had to furnish further security in an amount of R1.788 million. On 19 November 2008 the defendants launched the Rule 47(4) application in view of the plaintiff's default in furnishing the additional security. At the same time, also on 19 November 2008, the plaintiff launched an application to review the taxing master's determination that additional security in an amount of R1.788 million be furnished as well as an application that the suspension of the action be stayed.

In an application dated 7 January 2009 the plaintiff applied in terms of Rule 27 for an extension of the time in which the additional security had to be furnished.

2009 JDR 0136 p5

Botha J

The plaintiff's review application was withdrawn on 23 January 2009. On 30 January 2009, when it was to be heard, only the issue of costs was argued. On 2 February 2009 I made an order in respect of the costs of that application. I ordered the plaintiff to pay the costs on a scale as between attorney and own client in view of suggestions made that there was a collusion between the defendant's attorney, Mr Chappel, and the taxing master in the drafting of the taxing masters reasons.

The plaintiff's review application was withdrawn on 23 January 2009. The plaintiff alleged that the new financier with whom it concluded a contract on 28 January 2009 insisted that it abandon the interlocutory application and concentrate on the main case. Apparently the security of the amount of R1.788 million was furnished in an acceptable form.

On 2 February 2009 this application was before me but is was not ripe for hearing. I laid down times for the exchange of affidavits and postponed it to 16 February 2009. The plaintiff's Rule 27 application was also postponed to 16 February 2009. On 16 February 2009 the two applications were postponed to 19 February 2009 in view of a Rule 35(12) launched by the defendants on 16 February 2009.

Also on 2 February 2009 I heard argument as to the date of the resumption of the trial, that is of course, if the Rule 47(4) application were to fail. The issue of wasted costs was reserved.

2009 JDR 0136 p6

Botha J

I ruled that the case had to resume on 27 July 2009 which was the date suggested by the defendants.

Against this background I shall now refer to the papers, starting with the Rule 47(4) application.

In the founding affidavit the defendants' attorney, Mr Chappel, referred to various letters exchanged between the parties. In a letter dated 10 November 2008 the plaintiff's attorney stated that HLS was not prepared to furnish any additional security that might be required if the defendants' review application was successful.

He referred to the fact that in its answering affidavit to the defendants' review application, it was stated that the plaintiff would not be able to furnish security unless it found another investor.

In paragraph 19 of the founding affidavit he said that finality now had to be reached and that the plaintiff should not be allowed every now and again to go and seek a new batch of investors.

He then set out the history of the matter from 29 November 2007.

He referred to the agreement between the plaintiff and HLS and contended that on a proper interpretation of clause 4.1.1 HLS was obliged to provide any additional security.

2009 JDR 0136 p7

Botha J

He pointed out that HLS had taken over the entire funding of the plaintiff's case and estimated that that would require payments of at least R1 million per month from January 2009. In the circumstances he regarded HLS's unwillingness to provide further security with suspicion.

He then referred to the fact that the claim is funded by investors. He submitted that the few remaining members of the plaintiff who were members when the cause of action arose between 1984 and 1998 would hardly benefit from any judgment in favour of the plaintiff.

He submitted that the court should be slow to grant indulgences to the plaintiff and its funders where the defendants do not have security for their costs and their expenses run into tens of millions of rands.

He referred to previous deadlines that were not met. He submitted that the plaintiff used delaying tactics to gain extra time to furnish security and that the court should not allow it to gain further time.

He referred to the imminent trial date and the coming holiday season and submitted that an application for an extension of time would be time consuming and that it would interfere with the defendants' preparation for the trial. If an extension is granted, he submitted that a punitive order for costs should be made against the plaintiff.

2009 JDR 0136 p8

Botha J

He referred to the plaintiff's review application, of which an intimation was given in a letter dated 18 November 2008 and submitted that it would jeopardize the defendants' preparation, which was costing more than R1 million per month.

In the plaintiff's answering affidavit, dated 7 February 2009, Mr Perreira, referred to the plaintiff's application to review the taxing master's determination of 3 November 2008.

He also referred to the plaintiff's application for an extension of time.

He submitted that the Rule 47(4) application should be heard after the plaintiff's review application and reserved the right to supplement the affidavit.

On 27 January 2009 the defendants filed a lengthy supplementary affidavit.

In it the deponent, once again Mr Chappel, made the following points:

(a)

that the plaintiff was in default of its obligation to furnish the security ordered on 3 November 2008.

(b)

that the plaintiff did not have the means to provide the...