Reasons for order:
DE JAGER J:
This is an opposed rule 97(3) application. In the notice of motion, the applicant prays that the respondents, jointly and severally, the one paying the other to be absolved, pay the applicant’s legal costs in the action on a party and party cost scale, including the costs of one instructing and one instructed counsel. The applicant further prays that the rule 32(11) cost cap should not apply in the instant application and that a de bonis propriis cost order be granted against the respondents’ legal practitioners for the instant application’s costs on an attorney own client cost scale, alternatively, that the respondents, jointly and severally, the one paying the other to be absolved pay the applicant’s costs of the instant application on an attorney own client cost scale.
Some reason prevailed after the instant application was instituted, and the respondents eventually agreed to pay the applicant’s costs in the action on a party and party cost scale, including the costs of one instructing and one instructed counsel. Despite some progress in resolving the costs of the instant application, in that the applicant is not persisting with its prayer for costs de bonis propriis, the costs of the instant application remain in dispute. The issue for determination is whether there should be a cost order for the instant application and, if so, who should pay it, whether the respondents should pay it on an attorney own client cost scale, and whether the rule 32(11) cost cap should apply. The respondents’ position is that there should be no cost award, and if there is one, the cost cap applies and there is no basis for an attorney own client cost scale. The basis for their position is that the applicant was never entitled to costs de bonis propriis and praying for it was an overreach, the applicant paid lip service to rule 32(9), and there is no basis for exemption from rule 32(11) or a punitive cost scale award.
The applicant is Mons Vinum Leisure (Pty) Ltd. The respondents are Spearmint Investments (Pty) Ltd and Standard Bank Namibia Ltd, respectively. The applicant was the plaintiff in the action, while the respondents were the second and third defendants, respectively. The first and fourth defendants in the action, who are not parties to the instant application, were Tenbergen Investments One (Pty) Ltd and Namibian Property Rentals Trust, respectively. The parties are referred to as they were in the action.
Summons was instituted in May 2023. The plaintiff sought an order rectifying a written lease agreement concluded between it and the first defendant over erf ‘8872’, and declarators that the third defendant waived the requirement for the first defendant to have obtained its written consent prior to leasing erf ‘8873’, that the lease is valid and binding on the parties thereto, that the notice to vacate was of no legal force or effect, and that the lease was renewed for a further period of three years. The following is alleged in the amended particulars of claim. The first defendant was the owner of the leased premises, the second defendant was the first defendant’s sole shareholder, and the second defendant was a wholly owned subsidiary of the third defendant. The first defendant ceded its right, title and interest in and to the lease to the second defendant. The second defendant gave the plaintiff notice to vacate the leased premises.
The first, second and third defendants entered appearances to defend and were represented by the same law firm. Following the dismissal of the exception to the particulars of claim, the second and third defendants’ current legal practitioners came on record for them and the first defendant. The particulars of claim were amended. The opposing defendants pleaded and brought a counterclaim to evict the plaintiff from erf 8872 and for payment of damages for unlawful occupation. The opposing defendants then wanted to amend their plea and counterclaim, but the plaintiff objected, which led to a leave to amend application. On 4 September 2024, the leave to amend application was set down for hearing on 3 October 2024. On 30 September 2024, the second and third defendants withdrew their defence, and their legal practitioners withdrew as the first defendant’s legal practitioners. On 1 October 2024, the plaintiff set the matter down on 3 October 2024 for default judgment against the second and third defendants.
On 3 October 2024, the following events unfolded.
The plaintiff’s instructed legal practitioner appeared and prayed that the leave to amend application be struck with costs, and he moved for default judgment against the second and third defendants.
The second and third defendants’ instructed legal practitioner appeared in a watching brief capacity, but made the following submissions. The leave to amend application was on behalf of the second and third defendants. The first defendant’s plea was intact. The notice withdrawing the second and third defendant’s defence should have included a withdrawal of their counterclaim. The correct notice will be filed as soon as possible after the day’s proceedings. Instructed counsel holds instructions to tender the wasted costs for the leave to amend application, including the costs of one instructing and instructed counsel, but capped under rule 32(11). Regarding the withdrawal of the defence and counterclaim, the tender was for wasted costs on a party and party cost scale. Regarding the relief sought in the default judgment, same could not be granted without hearing the first defendant.
A newly appointed legal practitioner appeared for the first defendant. He submitted that there would be severe prejudicial consequences if default judgment was granted, and he sought an opportunity to consider all pleadings to properly advise the first defendant on the way forward. He confirmed that the leave to amend application only concerned the second and third defendants.
The leave to amend application was struck with costs against the second and third defendants, including the costs of one instructing and one instructed legal practitioner, capped under rule 32(11). The plaintiff was ordered to file papers in support of the default judgment request on or before 18 October 2024, and the case was postponed to 30 October 2024 for default judgment.
On 10 October 2024 (at 16h33), the second and third defendants filed a notice withdrawing both their defence and counterclaim, but it did not include the cost tender placed on record on 3 October 2024.
The second notice of withdrawal was only filed after the plaintiff’s legal practitioner addressed correspondence to the second and third defendants’ legal practitioner on 10 October 2024, noting that the notice of withdrawal, which had to be amended to include the withdrawal of the counterclaim and the cost tender, had not been filed. However, the second notice of withdrawal did not include the cost tender. On 11 October 2024, further correspondence was sent noting the failure to tender the plaintiff’s costs. The second and third defendants’ legal practitioner wanted to know what the costs were before making the tender. The plaintiff’s position was that the tender was already made and the costs that would be allowed were for the taxing master’s decision. In a letter dated 23 October 2024, the plaintiff’s legal practitioner nevertheless gave the second and third defendants’ legal practitioner the costs incurred by the plaintiff on an attorney own client cost scale, which they could then calculate on a party and party cost scale. In that same letter, the plaintiff’s legal practitioner forewarned that a punitive cost order would be sought if they were required to proceed with a cost application.
Meanwhile, the matter became settled between the plaintiff and the first defendant under a deed of settlement dated 23 and 24 October 2024, which was filed of record on 28 October 2024. On 30 October 2024, the deed of settlement was made a court order. The cost issue between the plaintiff and the second and third defendants was unresolved. On 30 October 2024, the court recalled that on 3 October 2024, the second and third defendants tendered costs for withdrawing the defence and counterclaim on a party and party cost scale. The second and third defendants instructed counsel, who placed the cost tender on record on 3 October 2024, then submitted her instructions were as follows. The deed of settlement between the plaintiff and the first defendant determines that in respect of those parties, each party is to pay their own costs. The pleadings were filed jointly on behalf of the defendants. The pleadings and notices filed on behalf of the second and third defendants, which were the leave to amend application, are covered in the previous appearance's cost order. Her understanding was that there were no residual costs with respect to which a tender can or should be made, and that is the issue that the parties cannot resolve. She submitted that she was aware that the deed of settlement was not binding on the second and third defendants, but their position was that there are no residual costs since the pleadings were filed jointly on the defendants' behalf. Therefore, the agreement that each party cover their own costs covers all the costs, so she submitted. Directions were then given for the instant application.
In the court’s view, the submissions made on behalf of the second and third defendants on 30 October 2024 reneged on the cost tender made in open court on 3 October 2024. The second and third defendants’ instructed legal practitioner disagreed. Factually, the tender was reneged. However, according to the second and third defendants, it came about because of the deed of settlement. The problem with that position is that the deed of settlement was only loaded onto e-Justice on 28 October 2024, and the second and third defendants failed from 3 October 2024 to file a notice also withdrawing the counterclaim and including the cost tender made in open court on 3 October 2024. The second and third defendants, after the fact, used the subsequently concluded deed of settlement as the basis for reneging on the cost tender.
The purpose of the application was to obtain an order in accordance with the tender made on 3 October 2024.
According to the second and third defendants, they are not liable for any costs following the second withdrawal notice. In their answering affidavit dated 20 November 2024, they accepted liability for the wasted costs consequent to the withdrawal of the counterclaim instituted on their behalf and to which the first defendant was not a plaintiff in reconvention (so they said), and they tendered those costs on a party and party cost scale, including the costs of one instructing and one instructed counsel. They stated that it aligned with the tender made on 3 October 2024. The second and third defendants’ position is that costs incurred in a joint defence cannot be retrospectively apportioned among individual defendants unless specifically ordered by the court. They said that position was set out in their legal practitioner’s letter dated 29 October 2024. Considering that letter, the second and third defendants did not even accept liability for the costs occasioned by the counterclaim at that time. In that letter, their position was that the settlement of costs with the first defendant absolved them from paying the plaintiff’s wasted costs, and according to them, there were no wasted costs. The answering affidavit continues to state that the deed of settlement superseded and replaced any previous cost tenders for withdrawing the defence and by settling with the first defendant, the plaintiff implicitly accepted the principle of each party bearing its own costs and ‘each party’ on a proper interpretation means the plaintiff on the one hand and the joint defendants on the other. They contended the deed of settlement limits further claims for costs against the second and third defendants and constitutes a waiver of such further claims.
It is glaring that the second and third defendants wanted to escape the 3 October 2024 cost tender, and their stance changed with the weather. Such conduct calls for a sanction. They contend in the answering affidavit that the cost tender therein for the withdrawn counterclaim was in line with the 3 October 2024 cost tender but lose sight that the 3 October 2024 cost tender was also for the withdrawn defence, the costs of which are not tendered in the answering affidavit. They submit in the answering affidavit that they are not liable for any costs following the second withdrawal notice, but they failed to include a cost tender in the second withdrawal notice, even for the withdrawn counterclaim, the costs of which is tendered in the answering affidavit.
According to the second and third defendants, the court should avoid setting a precedent that discourages legal practitioners from robustly representing their clients. They say the plaintiff must be mulcted in costs for the following reasons. The plaintiff failed to specify which portion of the costs it considers attributable to the second and third defendants. The plaintiff contends the second and third defendants should bear all the costs because the deed of settlement precludes it from recovering costs from the first defendant. The plaintiff was invited to quantify the wasted costs. The second and third defendants rely on a request to the plaintiff’s legal practitioners on 18 October 2024 to specify the costs which the plaintiff wants them to make a tender on. Instead of a meaningful engagement, they were given a bill of costs drawn on an attorney own client cost scale. The plaintiff is criticised for paying lip service to rule 32(9). Lastly, they contend that the plaintiff overreached in the relief sought.
The answering affidavit concludes with prayers that the application be dismissed, that the plaintiff be ordered to pay its costs on a party and party cost scale including the costs of one instructing and one instructed counsel capped under rule 32(11), and that the second and third defendants be ordered to pay the wasted costs occasioned by the withdrawal of the counterclaim on a party and party cost scale including the costs of one instructing and one instructed counsel.
The second and third defendants lose sight of the fact that the court is not dealing with an apportionment of costs, and the quantification of the costs is irrelevant to the instant application. The basis for the cost application is the cost tender made in open court on 3 October 2024, which the second and third defendants failed to follow through. According to the plaintiff, the second and third defendants were not entitled to revoke the unconditional cost tender. The plaintiff was required to bring the cost application because they did not follow through with the tender made in open court on 3 October 2024. After they reneged on their tender on 30 October 2024, they again did so in their answering affidavit insofar as the withdrawal of their defence is concerned. The main reason for doing so was the deed of settlement, and their position that, because of the deed of settlement, there were no residual wasted costs. In their answering papers, they capitulated on the costs following the withdrawal of their counterclaim, but they persisted with their position in respect of the withdrawal of their defence.
In their initial heads of argument dated 17 January 2025, they conceded that the deed of settlement did not shield them from costs. In those heads of argument, they suggested that they be ordered to pay 66 per cent of the plaintiff’s costs in the action, excluding the costs for which cost orders were already awarded on a party and party cost scale and that there be no cost order in the cost application. In their supplementary heads of argument dated 12 March 2025, they submitted that the regrettable conclusion in their initial heads of argument that the costs must be apportioned, which was ‘a relic of a discarded version of the heads which remained in the final version as filed’, stands to be corrected. It was then submitted that the second and third defendants should be ordered to pay the plaintiff’s wasted costs consequent to the withdrawal of the counterclaim and the defence on a party and party cost scale, including the costs of one instructing and one instructed counsel. They, however, persisted that no cost order should be made in the rule 97(3) application.
It was thus only in the supplementary heads of argument that the second and third defendants capitulated on the main relief sought in the cost application. The second withdrawal notice should have included the cost tender made in open court on 3 October 2024. The second and third defendants failed to establish an acceptable reason for that failure.
The plaintiff, albeit by ultimate agreement, succeeded in the main relief sought in the cost application. The general cost rule is that costs follow the event. There is no reason why the general cost rule should not be applied. On the contrary, the issue is whether, based on the case facts, it should not be coupled with a punitive cost order. The obvious answer is that the second and third defendants should pay the instant application’s costs, including the costs occasioned by their opposition. Their position that there should be no cost award, which would mean that the plaintiff is responsible for its costs in bringing the instant application, is opportunistic and frowned upon.
The court now considers whether the costs must be awarded on a punitive cost scale and whether the rule 32(11) cost cap should apply.
According to the second and third defendants, punitive costs are only awarded if conduct is vexatious, dishonest and oppressive. That is incorrect. Awarding costs on an attorney own client cost scale is not only about punishment. In Nel v Waterberg Landbouwers Ko-operatieve Vereeniging it was said that the true explanation of such cost awards seems to be that, by reason of special considerations arising either from the circumstances which give rise to the action or from the conduct of the losing party, the court considers it just, by means of such an order, to ensure more effectually than it can by means of a judgment for party and party costs that the successful party will not be out of pocket in respect of the expense caused by the litigation. Such awards are also used by the court to mark its disapproval of some conduct which should be frowned upon. In Hailulu v Anti-Corruption Commission and Others the court said it has an inherent jurisdiction to grant attorney and client costs when special circumstances are present arising from a litigant’s reprehensible conduct warranting such an order and the court considers it just that an innocent litigant adversely affected thereby is not out of pocket in respect of the expense caused by such conduct. The court must be satisfied that a party and party cost order will not sufficiently meet the expense incurred by the innocent litigant.
The second and third defendants’ conduct after 3 October 2024 was reprehensible and warrants a punitive cost order. Considerable time and resources had to be expended on the cost application since 3 October 2024. The second withdrawal notice was not in line with what the second and third defendants’ instructed counsel submitted in open court on 3 October 2024. The plaintiff was necessitated to bring the instant application, adversely affecting it by having to incur expenses that it would otherwise not have to incur. Moreover, the second withdrawal notice was filed on 10 October 2024, only after the plaintiff’s legal practitioner’s prompt and before word of the deed of settlement between the plaintiff and the first defendant. The 10 October 2024 withdrawal notice should have included the cost tender made in open court on 3 October 2024. That failure was objectionable, unreasonable, unjustifiable and oppressive. The second and third defendants then used the deed of settlement concluded between the plaintiff and the first defendant on 23 and 24 October 2024 to avoid following through on their cost tender. In other words, by 10 October 2024, there was no reason why the cost tender was not included in the withdrawal notice, and afterwards, as a farce, the deed of settlement was used as an excuse, only to eventually capitulate that the deed of settlement did not shield them against costs. Their conduct indeed calls for a sanction to mark the court’s disapproval. The second and third defendants’ arrogance has no bounds when they prayed in the answering affidavit that the applicant should be ordered to pay the instant application’s costs. On the case facts, the court considers it just that the plaintiff should not be out of pocket for the expense incurred in the cost application, and a cost award on a party and party cost scale will not sufficiently meet that expense. An attorney own client cost award is justified in the case at hand.
The second and third defendants relied on rule 32(11) and argued that no special circumstances exist for exemption from that rule. They further relied on South African Poultry Association and Others v Ministry of Trade and Industry and Others and submitted that it provides an authoritative guideline of what to be considered for exemption and that the instant case has no special circumstances for exemption from rule 32(11). That authority does not assist the second and third defendants escape a punitive cost scale award. The circumstances listed in that authority are not an exhaustive list of circumstances justifying exemption. What is required is that a clear case must be made if the court is to allow a cost scale above the upper limit allowed in the rules. The case facts and the court’s conclusions that the second and third defendants’ conduct warrants a punitive cost scale award to mark the court’s disapproval and that the plaintiff should not be out of pocket for the instant application make a clear case as to why the costs should be uncapped.
In hindsight, after insight into the answering affidavit, the second and third defendants may be correct in submitting that the plaintiff overreached in seeking costs de bonis propriis for the rule 97(3) application. However, as the plaintiff’s counsel submitted in reply, legal practitioners should be able to rely on each other’s word, and considering the tender made in open court on 3 October 2024 and the subsequent failure to include it in the withdrawal notice before the deed of settlement was concluded, the de bonis propriis cost prayer was understandable. The second and third defendants’ failure to follow the cost tender through in those circumstances could have been seen as dishonest and/or errant behaviour. The court need not decide that issue as the plaintiff is not persisting with the de bonis propriis cost prayer. In those circumstances, the court does not hold the plaintiff’s overreach against it.
In conclusion, it is ordered that:
The respondents must, jointly and severally, the one paying the other to be absolved, pay the applicant’s legal costs in the action on a party and party cost scale, such costs to include the costs of one instructing and one instructed counsel.
The respondents must, jointly and severally, the one paying the other to be absolved, pay the applicant’s costs of the rule 97(3) application on an attorney own client cost scale, such costs to include the costs of one instructing and one instructed counsel, uncapped under rule 32(11).
The status hearing scheduled for 4 June 2025 under HC-MD-CIV-ACT-CON-2023/02498 is cancelled.
The matters under HC-MD-CIV-ACT-CON-2023/02498 and INT-HC-OTH-2024/01014 are finalised and removed from the roll. |
