Court name
High Court Main Division
Case number
APPEAL 76 of 2013
Title

Slabbert and Another v Lane N.O (APPEAL 76 of 2013) [2013] NAHCMD 375 (17 September 2013);

Media neutral citation
[2013] NAHCMD 375
Coram
Geier J










REPUBLIC
OF NAMIBIA




HIGH
COURT OF NAMIBIA MAIN DIVISION, WINDHOEK





EX
TEMPORE JUDGMENT





Case
no: A 76/2013(B)





DATE:
17 SEPTEMBER 2013





In
the matter between:





MYNARD
SLABBERT...................................................................FIRST
APPLICANT





A
P VAN
STRATEN.................................................................SECOND
APPLICANT





And





MICHAEL
JOHN LANE,
N.O..............................................................RESPONDENT








Neutral
citation: Slabbert v Lane (A 76/2013(B)) [2013] NAHCMD 375 (17
September 2013)








Coram: GEIER
J





Heard: 17
September 2013





Delivered: 17
September 2013





Flynote:
Costs - Security for costs - The court must carry out a balancing
exercise - On the one hand it must weigh the injustice to the
applicant if prevented from pursuing a proper claim by an order for
security. Against that, it must weigh the injustice to the respondent
if no security is ordered and if the main action or application of
the plaintiff or applicant fails and the defendant/respondent finds
himself unable to recover from the plaintiff/applicant the costs
which have been incurred by him in his defence of the claim.





Costs
-
Security for costs - Court should not fetter its own discretion
in any manner and particularly not by adopting an approach which
brooks of no departure except in special circumstances, it must
decide each case upon a consideration of all the relevant features,
without adopting a predisposition either in favour of or against
granting security





Practice
-
Security for costs - Incola claiming security for costs against
peregrinus - Incola does not have a right which entitles him as a
matter of course to furnishing of security for costs by peregrinus -
Court has judicial discretion - Court should have regard to
particular circumstances of case, and to considerations of fairness
and equity to both parties - Peregrinus pursuing claim in official
capacity as liquidator - If peregrinus ordered to furnish security,
his chances of prosecuting his action against incola would be
effectively be prevented -





Costs
-
Security for costs – Court’s discretion - Factors
taken into account in exercising of discretion – here
respondent’s statutory role and duties which he was obliged to
perform as liquidator taken into account – here public interest
element coming into play – not in public interest that
respondent should be prevented to exercise statutory functions and
office – this constituting important factor justifying decision
not to order security to be given -








Summary:
The facts upon which the court exercised its discretion in favour
of respondent appear from the judgment.








ORDER








The
application for security for costs is hereby dismissed.

















JUDGMENT








GEIER
J:





[1]
The respondent in this application for security for costs has lodged
an application in this court in terms of which it seeks to review a
decision of the Deputy- Master of the High Court to dismiss his
objection against the first applicant’s claim in the insolvent
estate of Riaan and Mathilde Botes.





[2]
The applicants demand security for the cost in this review in the
amount of N$350 000-00. No objection was raised in respect of this
amount.





[3]
The applicants essentially based their applications on two grounds:





a)
the fact that the respondent is a peregrinus of this court; and





b)
the fact that the respondent on his own admission has insufficient
funds to cover the applicant’s legal costs.





[4]
The applicants rely on the basic rule which entitle an incola of this
court to demand and receive security for costs.





[5]
The applicants submit that they have discharged their onus in this
regard on the basis of the respondent’s admissions contained in
the answering affidavit filed of record.





[6]
I agree.





[7]
It was in such circumstances submitted further that the court should
order security unless special circumstance exist, which would enable
the court to exercise its discretion in favour of the respondent.





[8]
Applicant’ contend that no such special circumstances exist or
have been raised. In any event that this is not the test to be
adopted by the court in the determination of this question.





[9]
Applicants rely heavily on the general principle formulated in Saker
& Co Ltd vs Grainger 1937 AD were the court stated at page 227:





The
principle underlying this practice is that in proceedings initiated
by a peregrines the Court is entitled to protect an incola to the
fullest extent.”





and
that the court should be slow to absolve a peregrinus from the
obligation to provide security.





[10]
As regards the merits of the review it was submitted that such merits
should not constitute a factor which should influence the court’s
decision. In this regard reliance was placed on the case of
Alexander v Jokl 1948 (3) SA 269 (W) where Williamson AJ held that:





The
bona fides or the soundness of the claim of the peregrinus is at no
time a factor which influences the discretion to be exercised in
deciding whether or not an incola should be protected against
possible loss in regard to the costs of defending the claim brought
against him. The Court in ordering security for such a purpose does
not in any way anticipate the eventual decision on the claim by
investigating and weighing up at that stage the probabilities of
success or the bona fides of the claim … ‘. 1





[11]
On behalf of the respondent reliance was placed on the decision of
Shepstone & Wylie v Geyser NO 1998 (3) SA 1036 (SCA)2
where Hefer JA stated – and with whom all the other judges of
appeal concurred - :





In
my judgment, this is not how an application for security should be
approached. Because a Court should not fetter its own discretion in
any manner and particularly not by adopting an approach which brooks
of no departure except in special circumstances, it must decide each
case upon a consideration of all the relevant features, without
adopting a predisposition either in favour of or against granting
security. (Compare Lappeman Diamond Cutting Works (Pty) Ltd v MIB
Group (Pty) Ltd (No 1) 1997 (4) SA 908 (W) at 919G--H; Wallace NO v
Rooibos Tea Control Board 1989 (1) SA 137 (C) at 144B--D.). I prefer
the approach in Keary Developments Ltd v Tarmac Construction Ltd and
Another [1995] 3 All ER 534 (CA) at 540a --b where Peter Gibson LJ
said:



'The
court must carry out a balancing exercise. On the one hand it must
weigh the injustice to the plaintiff if prevented from pursuing a
proper claim by an order for security. Against that, it must weigh
the injustice to the defendant if no security is ordered and at the
trial the plaintiff's claim fails and the defendant finds himself
unable to recover from the plaintiff the costs which have been
incurred by him in his defence of the claim.' 3





[12]
These principles where approved by Strydom CJ and adopted in this
jurisdiction by the Supreme Court in Northbank Diamonds Ltd v FTK
Holland BV 2002 NR 284 (SC)4
and the, there preferred, approach, as adopted from the English
decision of Keary Developments Ltd v Tarmac Construction Ltd and
Another as quoted in these decisions, as adopted further in Hepute v
Minister of Mines & Energy 2008 (2) NR 399 (SC) at [30] 5
.





[13]
It would appear further that also considerations of ‘equity and
fairness’ come into play if one considers that Joubert JA’s
dictum in Magida v Minister of Police 1987 (1) SA 1 (A) as appearing
at page 14 D to F 6
was seemingly approved in Namibia’s North Bank Diamond Ltd
decision.7
.





[14]
It was against the backdrop of these authorities contented that the
following factors should absolve the respondent from the requirement
to furnish security for costs.





(a)
Had he, the respondent not repaid the first applicant the sum of
N$1,154,341.00 at the expense of other costs in the administration of
the insolvent estate of Baobab Financial Services, he would have been
in the position to meet the first and second applicant’s demand
for security;





(b)
The respondent has also been authorised to prove a claim in the
amount of N$2,326,531.00, plus interest and costs, against the
insolvent estate Botes, by a special meeting.;





(c)
There may be some security, in the form of funds, in the amount of
N$1 863 503.80, held by the second applicant, which may become due to
Baobab in the event of such claim proving to be successful.





[15]
In addition the court was entreated to take into account the
important consideration that the respondent does not approach the
court, in the main review application, in his own right, but by
virtue of his appointment as liquidator, which obliges him to carry
out his statutory functions under the auspices of the Master of the
Cape Town High Court.





[16]
In this regard Hefer JA’s consideration of the impact of this
type of role, as set out in the Shepstone & Wylie case, was
relied upon where the Learned Judge of Appeal remarked:





Turning
to the remarks about the public interest and litigation against the
very persons who are alleged to have caused the company's financial
ruin, I have already indicated that the public interest may indeed
come into play in appropriate cases. I also accept that a liquidator
should not be discouraged from pursuing a claim based on the conduct
which has impoverished the company (Henochsberg at 28; Beaton v SA
Mining Supplies (Pty) Ltd 1957 (2) SA 436 (W) at 439G--440C)…’.
8





[17]
In addition, and although it was essentially conceded that the merits
of the main application were not of direct relevance, it was
submitted, on the strength of the Hepute matter, that the court
should at least have regard to the nature of the main case.








[18]
Some argument was addressed on this issue. Ultimately counsel were
however agreed that this factor, (and particularly when it came to
the merits of this application), should not weigh with the court save
that the court would legitimately be entitled to take into account
the nature of the claim in an opposite case.





[19]
In this vein it was submitted further that the court should take into
account that:





‘… the
first applicant had submitted an affidavit for proof of a claim inter
alia for payment of N$1 736,231.78 against the estate of Baobab.
These ‘costs’ were in fact advanced to Baobab in respect
of litigation by the first applicant. The first applicant accordingly
enjoyed an administrative claim only against Baobab for the recovery
of his loan to Baobab to fund such litigation and administration.
First applicant advanced to and on behalf of Baobab a total sum of
N$1,192,421.50. Baobab repaid the first applicant the sum of
N$1,154,341.00 leaving a balance of some N$38 000.00 owing by Baobab
to the first applicant.





First
applicant does not have any claim against the insolvent estate of
Botes whatsoever. Firstly, any claim would lie against Baobab and
not against the Botes estate; and secondly, first applicant has
already been paid by Baobab almost all the funds advanced to Baobab.
When the first applicant submitted his claim against the insolvent
estate, he owed approximately N$ 38 000.00 by Baobab and nothing by
the insolvent estate. First applicant would have known this and
accordingly his claim was fraudulent.’





[20]
Finally respondent contended that this application for security was
merely ‘a ploy to deny Baobab its valid claims in Namibia’.





[21]
In respect of the last-mentioned factor, it can immediately stated
that it cannot be said that the applicants had launched this
application in a frivolous manner and without any basis - although it
may very well be that the applicants considered this application to
be a useful procedural tool, available to them, to obtain a tactical
advantage vis-a-vis the respondent - which they were however
legitimately entitled to employ. I will accordingly not take this
factor into account when exercising my discretion in this case.





[22]
Although I am bound by virtue of the authority of the Hepute decision
to have some regard to the nature of the main case, which I do, I
will mainly exercise my discretion with reference to the other
factors advanced by the respondent.





[23]
While I also recognise that there is some risk that the respondent
may eventually not have sufficient funds to pay applicant’s
costs, and that the applicant, as incola, should be protected –
and - while I recognise that there is a legitimate expectation in
such premises that the applicant be granted the security it seeks -
as the applicant should be protected against the possible loss in
regard to costs - it can on the other hand not be argued away that
the respondent may indeed be able to prove a claim on behalf of
Baobab to the tune of N$2,326,531.00 against the insolvent estate
Botes, which estate admittedly holds funds to the tune of N$1,863
583.83. In this regard it is significant to take into account
further that Baobab is the only outstanding creditor with a claim in
regard to these funds. It would appear therefore that there is some
prospect, that should such claim prove successful, that sufficient
monies would eventually be realised to pay for the applicant’s
costs in the main review.





[24]
The factor which however carries the most weight in my view is the
respondent’s statutory role and the duties which he is obliged
to perform as liquidator. It is the public interest element that here
comes into play by virtue of this office and which militates that I
should not shut him out to exercise those duties, by ordering him to
provide the amount of security as claimed, an amount, which I need to
add, has not even been quantified in any manner, although this aspect
was left uncontested.





[25]
In addition: on the papers there is a dispute in regard to the legal
steps and proceedings which are expected to be taken in the main
review. I should add that the mere demand of N$ 350 000.00,
unaccompanied by any breakdown as to how same was computed, would, in
the normal course of events, have detracted from the veracity of the
applicant’s case. However in view of the provisions of Rule
47(2) and (3) the applicant could have disputed the amount claimed,
which it decided not to do.





[26]
In the final result – and - after taking into account all the
factors advanced in favour of excusing the respondent from providing
security for costs - at the same time weighing the injustice of
possibly preventing the respondent from ultimately pursuing Baobab’s
claims, in his capacity as liquidator - against the possibility that
the applicants’ might find themselves eventually unable to
recover their costs - against the factor that the moneys, availabe in
the Botes estate, might be paid over to respondent – and -
which factor is somewhat enhanced by the probability that Boabab’s
claim there may yield sufficient funds to cover legal costs - I lean
towards exercising my discretion against the applicants.





[27]
In addition I believe that also the dictates of equity and fairness -
as well as the important consideration that the doors of the court
might be shut to a litigant, should I accede to this application -
should drive me to exercise my discretion against the granting of
this application.





[28]
In circumstances however - where the applicants had a strong prima
facie case - and - where the court’s discretion could just as
easily have fallen in applicant’s favour - I consider it
equitable that each party bear its own costs.





[29]
In the result the application is dismissed.











H
GEIER





Judge








APPEARANCES





APPLICANTS:
J A N Strydom





Instructed
by MB De Klerk & Associates,





Windhoek.





RESPONDENT:
A W Corbett





Instructed
by Fisher, Quarmby & Pfeifer,





Windhoek






1At
p281




2Also
reported in the
[1998]
3 All SA 349




3At
1045I – 1046C




4 At
p 290




5[30]
What the court is engaged in is a balancing exercise. As was said in
Keary
Developments Ltd v Tarmac Construction Ltd and Another

[1995]  3 All ER 534 (CA) at 540a - b:'The court must carry out
a balancing exercise… ‘.




6 Notwithstanding
the obsolescence of the
cautio
juratoria

as security on oath we must bear in mind that our common law
principles which underlie its granting are still applicable in our
modern practice when a
peregrinus
in his answering affidavit deposes to his inability to furnish
security for  costs owing to his impecuniosity, since it must
be left to the judicial discretion of the Court by having due regard
to the particular circumstances of the case as well as
considerations of equity and fairness to both the
incola
and the
peregrinus
to decide whether the latter should be compelled to furnish, or be
absolved from furnishing, security for costs. Nor is there any
justification for requiring the Court to exercise its   
discretion in favour of a
peregrinus
only sparingly. It follows that the following dictum in Saker &
Co Ltd v Grainger 1937 AD 223 per De Wet JA at 227, viz: 'The
principle underlying this practice is that in proceedings initiated
by a
peregrinus
the Court is entitled to protect an
incola
to the fullest extent,'should be read subject to the qualification
that it is only applicable after the Court, in the exercise of its
judicial discretion in accordance with the principles hereinbefore
stated, had come to the conclusion that the
peregrinus
should not be absolved from furnishing security for costs.




7at
p 286 I to J and at p 287 D




8At
p1047A - B