Sivraj v Caspian Freight CC

• Jurisdiction: South Africa
• Judge: Steyn J, Moodley J and Mbatha J
• Judgment Date: 13 May 2014
• Docket Number: AR652/12
• Court: KwaZulu-Natal High Court, Pietermaritzburg
• Hearing Date: 25 April 2014
• Citation: 2014 JDR 0943 (KZP)

Steyn J:

[1]

The appellant appeals with the leave of the Supreme Court of Appeal of South Africa against the judgment and order of Madondo J in which he granted the following relief:

"(a)

The respondent is directed to furnish the Applicant with security for costs in an amount to be determined by the registrar.

(b)

That the proceedings under case no. 15342/2010 be stayed until such order has been complied with.

(c)

That the respondent be ordered to pay the costs of the application."

He further ordered that security be furnished in the form of a bank guarantee.

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[2]

The appellant, Kiranchand Sivraj, is an adult businessman from Durban and accordingly an incola of the court. The respondent is a duly registered close corporation with its principal place of business at Phoenix Industrial Park, Phoenix.

[3]

In the application before the court a quo an order for security of costs was sought in terms of Rule 47(3) on the following three (3) grounds:

(a)

The appellant has poor prospects of being able to satisfy a costs order which might be made against him in the action;

(b)

The appellant has poor prospects of success in the action; and

(c)

The action is brought for an improper purpose and therefore amounts to an abuse of the process of court.

[4]

It is necessary, at this early stage of the judgment to state that this court in main will deal with the grounds listed under (a) and (b) since the court a quo was not satisfied that the third ground was substantiated, when it held:

"The last ground is that the action is brought for an improper purpose amounting to an abuse of the process. Well, in this case it is very difficult to say whether or not that is the case, regard being had to the history between the parties because there have been a plethora of proceedings between these parties in various forums. That will be determined by the Court which will be seized with the trial relating to the claims presently instituted by the respondent." (Page 87 lines 22-25 and page 88 lines 1-3.) (My emphasis)

[5]

Mr Pillay, acting on behalf of the appellant, submitted that the evidence before the Court did not support any finding that the claim of the appellant was either reckless, vexatious or an abuse of the process. Accordingly, so it was argued, the Court ought not to have directed an incola to provide security of

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costs, in circumstances where it was not required to do so in terms of common law.

[6]

Mr Dutton, acting on behalf of the respondent, submitted to us in his written heads that there were strong grounds that supported and favoured the costs order. He inter alia listed the following grounds:

(a)

The plaintiff's version was improbable, since Jappie J found that 'it simply would not have made economic sense' for the defendant to have hired the vehicle at a rate of R66 000,00 a month'. The improbability stems in large part from the fact that the vehicle was worth only in the region of R200 000,00.

(b)

The case before Jappie J did not include the alleged profit-share which now forms part of the present action. The probabilities are even more remote with the inclusion of an extremely lucrative claim which was simply not pursued in the previous action.

(c)

In addition, there is not a shred of documentary evidence to support the plaintiff's version of the oral contract, whether by email, written confirmation of the contract or in any other form whatsoever.

(d)

The plaintiff has fundamentally changed his case. No claim for a profit-share or debatement of account was made in the first action. The claim is potentially enormous and it is highly unlikely that such a failure would have occurred had the profit-share agreement in fact been concluded.

(e)

The plaintiff's case on the aspect of the profit-share agreement is alarmingly inconsistent.

(f)

There was no allegation in the first action of amendments to the oral contract to the effect that the debt would only be payable on demand. An allegation appears to have been incorporated into the present claim in order to avoid the problem of prescription.

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(g)

The defendant has previously had difficulty obtaining satisfaction of a cost order against the plaintiff.

In addition, when the matter was argued, he submitted that the Court a quo had regard to section 173 of the Constitution of the Republic of South Africa, 1996 and used its inherent power to regulate its own process when it made the order.

Legal Framework

[7]

Even though Rule 47 does not deal with the grounds upon which a court would grant a costs order, it is necessary for the sake of completeness to consider the procedure before we consider the merits of this appeal. Rule 47 of the Uniform Rules of Court provides as follows:

"47(1) A party entitled and desiring to demand security for costs from another shall, as soon as practicable after the commencement of proceedings, deliver a notice setting forth the grounds upon which such security is claimed and the amount demanded.

(2) If the amount of security only is contested the registrar shall determine the amount to be given and his decision shall be final.

(3) If the party from whom security is demanded contests his liability to give security or if he fails or refuses to furnish security in the amount demanded or the amount fixed by the registrar within ten days of the demand or the registrar's decision, the other party may apply to court on notice for an order that such security be given and that the proceedings be stayed until such order is complied with."

The general rule under common law is that an incola of the Republic would not be called upon to give security for costs. This has been recognised by Van Dijkhorst J in Van Zyl v Euodia Trust (Edms) Bpk 1983 (3) SA 393 (T) at 396C-D:

"Reeds in 1928 het die Kaapse Hooggeregshof in Witham v Venables Menz 291, na ondersoek van die ou skrywers, die gemeenregtelike reëls wat betref sekuriteit vir koste soos volg opgesom: ' … that no person who is either civis municeps or incola of this colony, can, as a

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plaintiff, be compelled to give security for costs, whether he be rich or poor, solvent or insolvent, and, on the other hand, that every person, who is neither civis municeps nec incola, may, as plaintiff, be called on to give security for costs, unless he prove that he is possessed of immovable property, situated within the colony'."

The general principles regarding the furnishing of security for costs were unequivocally stated by De Wet JA in Ecker v Dean 1938 AD 102 at 111:

"The Court has inherent jurisdiction to prevent abuse of its process by staying proceedings or ordering security in certain circumtances, but as ppointed out by Soloman JA in Western Assurance Company v Caldwell's Trustee 1918 AD at 274 this power ought to be sparingly exercised and only in very exceptional circumstances." (My emphasis)

[8]

In Zietsman v Electronic Media Network 2008 (4) SA 1 (SCA) Streicher JA, at para 21, stated:

"I am not suggesting that a court should in an application for security attempt to resolve the dispute between the parties. Such a requirement would frustrate the purpose for which security is...