REPORTABLE
CASE NO.: SA 23/2010
IN THE SUPREME COURT
OF NAMIBIA
In the matter between:
|
AUSSENKEHR
FARMS (PTY) LTD
|
APPELLANT
|
and
|
NAMIBIA
DEVELOPMENT CORPORATION LTD
|
RESPONDENT
|
Coram: Maritz JA, Mainga
JA etNgcobo AJA
Heard on: 28/03/2012
Delivered on: 13/08/2012
_________________________________________________________________
APPEAL JUDGMENT
_________________________________________________________________
NGCOBO AJA:
Introduction
This appeal concerns the
circumstances under which a court may: (a) dismiss the plaintiff’s
action for abuse of the process of the court; and (b) declarethe
filing of a pleading in the course of litigationan irregular step
under Rule 30. Thesequestions arise from an action instituted by the
Namibian Development Corporation Ltd, the respondent, against
Aussenkehr Farms (Pty) Ltd, the appellant,in the High Court. For
convenience, the parties will be referred to as in the court below.
In the course of the
proceedings in the High Court, the defendant launched two
applications. In the one application, the defendant sought an order
declaring that the late filing of the plaintiff’s amended
particulars of claim without an application for condonation of such
late filing, constituted an irregular step under Rule 30. In the
other, it sought the dismissal of the plaintiff’s action on
account of (a) inordinate delay in the finalisation of the
litigation which, the defendant contended, constituted dilatory
abuse of the process of court; and (b) vexatious proceedings which
the defendant claimed were without merit.
Heathcote, AJ, refused
both applications and ordered the defendant to pay the plaintiff’s
costs, including costs of one instructing and two instructed
counsel.The
present appeal, which comes to us with the leave of the High Court,
is against the refusal of those applications as well as the costs
order.
In addition to the above
orders, the High Court upheld the application to strike out that had
been brought by the plaintiff. At the commencement of oral argument
in this Court, Mr Barnard, who appeared on behalf of the defendant,
informed us that the defendant was no longer pursuing the appeal
against the order of the High Court granting the application to
strike out. He tendered costs occasioned by that appeal.
In order to appreciate
the merits of the defendant’s contentions, it is necessary to
set out the material parts of the history of this litigation. That
history appears from the pleadings and other papers filed of record.
The defendant has yet to plead to the plaintiff’s action.
Relevant history of
litigation
This litigation
commenced some eight years ago, on 2 February, 2004,when the
plaintiff instituted an action against the defendant for payment of
N$5 228 267,96 together with interest. The original particulars of
claim alleged that on 16 February 1994 the plaintiff and the
defendant entered into a suspensive sale agreement and a loan
agreement.In terms of these agreements, the defendant was obliged to
pay the plaintiff certain monthly instalments. On 22 August 2000 the
payment obligations of the defendant under these agreements were
rescheduled pursuant to an addendum to both agreements (the
addendum).
In terms of the
addendum, the defendant was obliged to pay equal yearly instalments
of N$1 008 714,43, the first instalment being due on the last day of
March 2001, and subsequent instalments on the last day of March each
succeeding year.The particulars of claim alleged that in breach of
the addendum, the defendant, despite demand, failed to pay the first
instalment and anysubsequent instalment; and, that in terms of both
the supensive sale agreement and the loan agreement the plaintiff
became entitled to claim the full balance outstanding, due and owing
by the defendant.
On 25 February 2004, the
defendant entered appearance to defend. This triggered an
application for summary judgment by the plaintiff which was filed on
19 March 2004. The defendant opposed summary judgment and filed a
comprehensive opposing affidavit on 15 April 2004. It advanced a
number of defences, including that: the allegations in the
particulars of claim do not sustain the cause of action asserted;
the claim is vexatious and without merit and constitutes an abuse of
the court process. The plaintiff did not pursue the application for
summary judgment; instead it called upon the defendant to file its
plea.
In response to the
invitation to file a plea, on 21 October 2004, the defendant filed a
request for further particulars. The plaintiff only delivered its
response to this request on 12 March 2008, that is,some three and a
half years later. Simultaneously with its further particulars, the
defendant filed a notice of amendment. The effect of the proposed
amendment was threefold: (a) it altered the amount claimed from N$5
228 267,96 to N$6 211 472,28; (b) it alleged failure to pay the
second instalment that was due and payable on 31 March 2002 instead
of the first instalment as originally alleged; and (c) it alleged
that the demand for the payment of this instalment was made on 9
April 2002.
There was no objection
to the proposed amendment within the period allowed by Rule 28(2).
In terms of Rule 28(3),
the defendant was deemed to have consented to the proposed
amendment. That being the case, the defendant was required by Rule
28(5) to file its amended particulars of claim by end of March 2008,
the precise date is not relevant. The defendant only filed its
amended particulars of claim on 5 December 2008, some nine and a
half months later.
The delay in the filing
of the further particulars as well as the late filing of the amended
particulars of claim triggered three sets of Rule 30 applications.
The first was filed on4 April 2008 by the defendant, in which it
alleged that the plaintiff’s late filing of further
particulars constituted an irregular step. At the time of filing
this application, the amended particulars had not yet been filed. In
response, the plaintiff launched its Rule 30 application on 10 April
2008 alleging that the defendant’s Rule 30 application
constituted an irregular proceeding because the defendant’s
remedy for the plaintiff’s late filing of further particulars
lay, not in Rule 30, but in Rule 21(6) which allows a non-defaulting
party to compel the delivery of further particulars.
The defendant did not
persist in its Rule 30 application, instead,on 15 July 2008, it
filed an application to amend the notice of motion in its Rule 30
application. The effect of the proposed amendment was to convert
theRule 30 application into an application for the dismissal of the
plaintiff’s action “on account of plaintiff’s
inordinate delay in prosecuting its action, and the vexatious
conduct of its proceedings”. The plaintiff indicated that it
would oppose this application.
The defendant’s
notice of application to amend thenotice of motion as well as the
plaintiff’sRule 30 application eventually came before Parker J
on 16 September 2008. He granted the defendant’s application
to amend its Rule 30 notice of motion and set out a schedule for the
filing of further affidavits to what had become an application to
dismiss the plaintiff’s action on the grounds of abuse of the
process of court. It appears from the order made on that day that
the plaintiff withdrew its Rule 30 application. This left the abuse
of court process application that eventually come before Heathcote
AJ on 29 September 2009.
In the meantime the
plaintiff filed its amended particulars of claimon 5 December 2008
which, as I have said, were late by some nine and a half months.This
triggered a further Rule 30 application by the defendant on 11
December 2008. The defendant alleged that the late filing of the
amended particulars of claim without an application for an order
condoning such late filing, constituted an irregular step. The
plaintiff resisted this application. This application was initially
set down for 30 January 2009. It is this Rule 30 application that
eventually came before Heathcote AJ.
To complete the
narration of the litigation history, the plaintiff filed its
answering affidavit in the abuse of process application on 16
December 2008. The defendant’s replying affidavit was filed on
3 April 2009. It is this affidavit that contained portions that
triggered the application to strike. In the light of the abandonment
of the appeal against the order granting the application to strike
out, nothing more need be said about this application.
On 16 November 2009
Heathcote AJ, made an order, inter alia: (a) dismissing the
defendant’s Rule 30 application; (b) dismissing the
defendant’s abuse of the process of court application;
(d)ordering the defendant to pay costs including costs of one
instructing and two instructed counsel; and (e)directing the
defendant to file its next pleading within 15 days.It is these
orders that are the subject of the appeal in this Court.
If the appeal against
the order refusing the defendant’s abuse of process
application is upheld, that is the end of the litigation. It is
therefore convenient to deal first with that appeal, and, if
necessary, to consider the appeal against the dismissal of the
defendant’s Rule 30 application. But before considering the
specific forms of abuse of the process alleged by the defendant, I
consider it appropriate to make some general observations on the
inherent power of the court to prevent the abuse of it process
The abuse of process
of court application
The Court has an
inherent power to
protect itself and others against an abuse of its process.As
was said in Hudson
v Hudson and Another,
“when the court finds an attempt to use for ulterior purposes
machinery devised for the better administration of justice, it is
the duty of the court to prevent such abuse".The
power to prevent the abuse of the process of the court is an
important tool in the hands of courts to protect the proper
functioning of the courts and to prevent the judicial process from
being abused by litigants who institute proceedings to harass their
adversaries with vexatious litigation. It prevents the court process
from being turned into an instrument to perpetuate unfairness and
injustice, and the administration of justice from being brought into
disrepute.
The
exercise of this power protects the public interest in theproper
administration of justice. As it has said, albeit in a
different context:
“Public
interest in the due administration of justice necessarily extends to
ensuring that the Court's processes are used fairly by State and
citizen alike. And the due administration of justice is a continuous
process, not confined to the determination of the particular case. It
follows that in exercising its inherent jurisdiction the Court is
protecting its ability to function as a Court of law in the future as
in the case before it. This leads on to the second aspect of the
public interest which is in the maintenance of public confidence in
the administration of justice. It is contrary to the public interest
to allow that confidence to be eroded by a concern that the Court's
processes may lend themselves to oppression and injustice."
The
primary function of a court of law is to dispense justice with
impartiality and fairness both to the parties and to the community
that it serves. Public
interest in the administration of justice requires that the court
protect its ability to function as a court of law by ensuring that
its processes are used fairly to facilitate the resolution of
genuine disputes. Unless the court protects its ability to function
in that way, public
confidence in the administration of justice may be eroded by a
concern that the courts’ processes may be used to perpetrate
unfairness and injustice, and ultimately, this may undermine the
rule of law. And public confidence in the courts is vital to the
judicial function because as,
Justice Felix
Frankfurter once reminded us,"[t]he Court’s authority -
possessed of neither the purse nor the sword - ultimately rests on
sustained public confidence in its moral sanction".
Abuse connotes improper
use, that is, use for ulterior motives. And the term “abuse of
process” connotes that “the process is employed for some
purpose other than the attainment of the claim in the action”.
At times “vexatious”
conduct or litigation is used synonymously with or as an instance of
abuse of the process of court. In its legal sense, “vexatious”
means “frivolous, improper; instituted without sufficient
ground, to serve solely as an annoyance to the defendant”.What
amounts to abuse of process is insusceptible to precise definition
or formulation comprising closed categories. Courts have
understandably refrained from attempting to restrict abuse of
process to defined and closed categories.
While
there can be no all-encompassing definition of the concept of “abuse
of process”, that is not to say that the concept of abuse is
without meaning. It
has been said that ‘an attempt made to use for ulterior
purposes machinery devised for the better administration of justice’
would constitute an abuse of the process.In
Beinash
v Wixley, the
Supreme Court of Appeal in South Africa held that“an
abuse of process takes place where the procedures permitted by the
Rules of the Court to facilitate the pursuit of the truth are used
for a purpose extraneous to that objective”.
In
Price
Waterhouse Coopers and Others v National Potato Co-operative Ltd,
it was held the “[i]general,
legal process is used properly when it is invoked for the
vindication of rights or the enforcement of just claims and it is
abused when it is diverted from its true course so as to serve
extortion or oppression; or to exert pressure so as to achieve an
improper end.”
In Walton
v Gardiner,
the High Court of Australia held that the power to strike out an
action on the grounds of abuse of process “extends to all
those categories of cases in which the
processes and procedures of the court, which exist to administer
justice with fairness and impartiality, may be converted into
instruments of injustice or unfairness”.
As a general matter, an
abuse of the process of the court occurs when the court process is
used for improper purpose. But
the
mere use
of a court process for
a purpose other than that for which it was primarily intended does
not
establish
abuse.In
order to prove abusemore
is required; it must be established that an improper result was
intended is required.Thus,
a plaintiff who has no bona
fide claim
but intends to use litigation to cause the defendant financial
(orother) prejudice will be abusing the process.
Improper
result or motive can be established by way of inference.
Whether the court
process has been used for improper purpose and therefore constitutes
an abuse of the process of the court is a question of fact that must
be determined by the circumstances of each case.The
circumstances in which abuse of process can arise are varied. It is
therefore neither possible nor desirable to attempt to list
exhaustively the circumstances under which the inherent power will
be exercised. Inordinate delay in the prosecution or finalisation of
litigation and the institution of a groundless action are among the
grounds frequently relied upon as evidence of the abuse of the
process of the court.
Finally on this aspect,
the exercise of the power to summarily dismiss an action on account
of the abuse of process constitutes a departure from the fundamental
principle that courts of law are open to all. It impedes the
exercise of the right to “a fair and public hearing by an
independent, impartial and competent Court”,
which includes the right to fully ventilate a case before the court.
A court should be slow in closing its doors to anyone who desires to
prosecute an action or to interfere with the fundamental right of
the access to the court.For
this reason, it is a power that must be exercised sparingly and only
in very exceptional
cases.It
must be exercised “with great caution and only in a clear
case”.And
the court has a discretion whether or not to dismiss the action on
account of abuse of its process.
I now turn to the
grounds relied upon by the defendant for its contention that the
plaintiff is guilty of abuse of the process of the court.
Grounds of abuse of
process relied upon
In support of its
contention that the plaintiff is guilty of abuse of process of
court, the defendant submitted that (a) the manner in which the
plaintiff has conducted the litigation is vexatious; (b) the
plaintiff’s action lacks merit and is foredoomed to fail; and
(c) plaintiff has conducted litigation in a dilatory manner. In
relation to meritless abuse claim, the defendant raised various
defences to the plaintiff’s action, including prescription, a
counter-claim against the plaintiff, that the plaintiff is not
entitled to claim under the agreement once the agreement is
cancelled and that the plaintiff will not be able to establish
entitlement to the interest claimed as it exceeds that which is
permissible under the Usury Act, 1978.
The High Court carefully
considered the defendant’s submissions and concluded that (a)
the plaintiff was not guilty of dilatory abuse and (b) the
plaintiff’s action cannot be said to be “so hopeless
that it can never succeed". It also added that even if its
conclusion is wrong in relation to both grounds of abuse, this is
not a case in which it would have exercised its inherent power
against the plaintiff. It does not appear that the Court dealt
separately with the ground that the plaintiff had conducted
litigation in a vexatious manner.
The essential question
on appeal is whether (a) the High Court was correct in its
conclusion that the plaintiff was not guilty of abuse of the process
of court; and (b) regardless of the answer to (a), the High Court
properly exercised its discretion in refusing relief.
Did the plaintiff
conduct the proceedings in a vexatious manner?
Mr Barnard contended
that the defendant has conducted its litigation in a vexatious
manner. Conduct that was said to support this contention consisted
in the delay in instituting the action; the abortive application for
summary judgment; the institution and withdrawal of the two actions
in the Magistrates’ Court based on the same cause of action;
and the so-called procedural disorder in the conduct of litigation.
The said procedural disorder relates to the confusing manner in
which the erstwhile and present legal representatives of the
defendant handled the withdrawal of the Magistrates’ Court
actions.
None of the conduct
complained of, viewed either individually or cumulatively, amount to
an abuse of the process of court.
The plaintiff was within
its procedural rights to apply for summary judgment and, if so
advised, abandon the application and call upon the defendant to file
its plea.
Similarly, the plaintiff
was entitled to institute proceedings in the Magistrates’
Court and, if so advised, withdraw these actions and bring the
action in the High Court. Clause 8.2 of the suspensive sale
agreement gives the plaintiff the option to sue either in the
Magistrates’ Court or in the High Court. The actions that were
instituted in the Magistrates’ Court were subsequently
withdrawn in 2004 and the plaintiff tendered to pay the defendant’s
costs incurred in those proceedings. The timing of the withdrawal of
those actions as well as the manner in which the withdrawalwas
handled can be attributed partly to the change in the legal
representatives of the plaintiff and partly to ineptitude on the
part of the legal representatives concerned.
The argument that the
plaintiff conducted the proceedings in a vexatious manner cannot
therefore be sustained.
Does the plaintiff’s
claim lack merit?
It is by now axiomatic
that the institution of a groundless claim is an abuse of the
process of court.
The applicable test can
be distilled from an examination of the case law on the subject in
other jurisdictions. It is not necessary to discuss in any detail
this case law, it is sufficient to refer to the principles they
announce.
In
the English case of Lawrence v Norreys,
Bowen, L.J. said that:
"It is an
abuse of the process of the Court to prosecute in it any action which
is so groundless that no reasonable person can possibly expect to
obtain relief in it . . . I quite agree that this power ought to be
exercised with the very greatest care, that it is not for the Court
on a motion of this kind to discuss the probabilities of the case
which is going to be made, except so far as to see whether the case
stands outside the region of probability altogether, and becomes
vexatious because it is impossible."
In
the South African case of Ravden
v Beeten,
it was held that this power should be exercised only in plain and
obvious cases, i.e. cases that are obviously frivolous or vexatious
or obviously unsustainable.
Although
this case was decided under the Rules of Court, the same
considerations would apply where the inherent jurisdiction of the
Court is relied upon. Other
cases have gone as far as to suggest that this power must be
exercised onlyif it appears “as a certainty, and not merely on
a preponderance of probability” that the action is
unsustainable.
I do
not understand this last statement to suggest that the standard for
deciding civil disputes, namely, preponderance of probabilities, is
not applicable in an application to dismiss an action on the ground
that it is vexatious. This is merely to emphasise the degree of
clarity required before the plaintiff’s claim can be summarily
dismissed for lack merit. As was said in Hudson
v Hudson and Another, this power must
be exercised “only in a clear case".
In Rogers
v Rogers and Another,
the Zimbabwe Supreme Court held that an action is frivolous or
vexatious in a legal sense “when it is obviously
unsustainable, manifestly groundless or utterly hopeless and without
foundation”.
A useful collection of
the various phrases that courts have used to describe the test to be
applied appears from the Australian case of General
Steel Industries Inc. v. Commissioner for Railways (N.S.W),
where Barwick CJ, after examining decisions in which the inherent
power of the court to prevent abuse was invoked and those in which
the statutory rules were relied upon, said:
"The test to be applied has been
variously expressed; “obviously unsustainable”, "so
obviously untenable that it cannot possibly succeed";
"manifestly groundless"; "so manifestly faulty that it
does not admit of argument"; "discloses a case which the
Court is satisfied cannot succeed"; "under no possibility
can there be a good cause of action"; "be manifest that to
allow them" (the pleadings) "to stand would involve useless
expense".
It is clear from these
authorities that the
fundamental right of free access to the courts should not be
interfered with by the summary dismissal of an action without
hearing evidence, on the ground that it is vexatious, unless it is
manifest that the action is so unfounded that it could not possibly
be sustained. It must be quite clear that failure of the action is a
foregone conclusion.What
these authorities emphasise is that the plaintiff ought not to be
denied access to court unless the lack of merit in the claim is
clearly demonstrated or, to borrow the phrase from Lord Herschellin
Lawrence
v Norreys, supra,the
story told in the pleadings is a myth that has no solid foundation.
And courts rightly
emphasisethe clarity with which lack of merit must be demonstrated
before an action can be dismissed; this is an extraordinary power.
The power summarily to terminate an action is to be sparingly
employed and is not to be used except in a clear case where the
Court is satisfied that it has the requisite material to reach a
definite and certain conclusion.
Three points must be
stressed in relation to the exercise of this power.Prima facie
every litigant has a right to have matters of law as well as of fact
decided according to the ordinary rules of procedure, which includes
the full opportunity to presenthis or her case to the court. The
inherent power of the court to protect its process from abuse by
depriving a litigant of these rights and summarily disposing of an
action as frivolous and vexatious should not be exercised unless the
plaintiff's claim is so obviously untenable that it cannot possibly
succeed. The purpose of the exercise of this power is to prevent the
abuse of the judicial process but not to prevent litigants from
approaching courts to have their disputes resolved.
That the claim will not
ultimately succeed at trial in itself does not establish that the
litigant is abusing the process of court. Something more is
required;claim must be so groundless that no reasonable person can
possibly expext to it to succeeed. Where the claim is genuine and is
supported on substantial grounds by other documents properly before
the court, it cannot be said that the plaintiff is abusing the
process of the court merely because the claim might not ultimately
prevail at trial.Nor
can the court infer that the plaintiff’s case is vexatious
merely from the fact that it is weak.
The second point to
stress is that an application to dismiss an action on grounds that
it is without merit invariably requires the court to consider the
merits and the demerits of the claim and the defence. As a general
matter it is undesirable that the court should prematurely determine
the merits of the case under the guise of determining whether to
allow the claim to proceed or dismiss it. The court must always
remind itself that the remedy of a defendant who seeks the dismissal
of the plaintiff’s claim on the basis that it is bad in law is
to raise the defences by way of an exception or a special plea. As
the Australian High Courtpointed out, “the issues to be
considered go beyond the question as to whether the claim is bad in
law, the demurrer was developed to deal with that situation”.
This procedure was never
intended to replace the special plea or exception as a test of the
plaintiff’s case. Nor was it intended to provide the defendant
with a unilateral advantage of testing the soundness of the
defendant’s defences prior to trial. Where the ground relied
upon for contending that the claim is vexatious can be properly and
conveniently raised in a plea, the court in the exercise of its
discretion would be justified in refusing relief. Indeed is has been
held that the fact that the defences relied upon can be conveniently
and properly raised in the pleadings would in itself justify the
court in refusing relief.
The final point to be
stressed is that, when dealing with applications of this nature a
court should not deal with the matter as if it is deciding the case
on its merits. This is not the occasion for a full ventilation of
issues of fact and law and to decide finally the merits of the case.
All that the court is required to decide is whether there is any
question of fact or law that is fairly triable or arguable. As Bowen
L.J. remarked, “[i]t
is not for the Court on a motion of this kind to discuss the
probabilities of the case which is going to be made, except so far
as to see whether the case stands outside the region of probability
altogether, and becomes vexatious because it is impossible”.
Thus where the pleadings
raise a debatable question of law or fact or in cases of doubt or
difficulty, the relief should not be granted. As was held by the
High Court of Australia, “once it appears that there is a real
question to be determined whether of fact or law and that the rights
of the parties depend upon it, then it is not competent for the
court to dismiss the action as frivolous and vexatious and an abuse
of process”.
It now remains to apply
these principles to the facts of this appeal.
Application of these
principles to this case
Now all the defences
relied upon by Mr Barnard as showing lack of merit and therefore
vexatious abuse can be conveniently and properly raised in a
pleading. The defendant is inviting the Court to consider the merits
if its defence even before it has pleaded them. As Mr Barnard
candidly conceded in the course of argument, a ruling against the
defendant on these defences would mean that it can no longer rely on
them at trial. In my view this is a classical case in which the
court in the exercise of its discretion should refuse the relief
sought by the defendant.
Apart from this, there
are further considerations that militate against granting the relief
sought.First, the plaintiff’s claim is for the repayment of
the balance outstanding under the loan agreement. The defendantdoes
not dispute that it entered into the suspensive sale agreement and
the loan agreement as alleged by the defendant. Nor does the
defendant dispute that it failed to pay the instalment of N$1 008
714,43 that was due and payable on 31 March 2002 and any subsequent
instalments. It must therefore be accepted that the defendant has a
genuine claim against the defendant. Once it is accepted, as it must
be, that the plaintiff’sclaim is genuine and is supported on
substantial grounds by other documents properly before the court, it
cannot be said that the defendantis abusing the process of the court
merely because the claim might not ultimately prevail at trial.
Second, I am not
satisfied that the points raised by the defendantestablish that the
plaintiff’s claim is obviously unsustainable. I do not propose
to deal with all of them, it
is sufficient to refer to at least three of those to illustrate the
point. Where a right to performance under a contract has accrued to
a party prior to the rescission of the contract, this right is not
affected by rescission and it may be enforced despite the
rescission.
The fact that the loan
agreement has been cancelled does not necessarily preclude the
plaintiff from enforcing rights that had already accrued to it prior
to cancellation. Whether the plaintiff is entitled to claim the
rights that had already accrued when cancellation took place and
whether the rights sought to be enforced by the plaintiff had
accrued to it prior to the cancellation, are debatable questions.
The defence based on
prescription is premised on the assumption that the amended
particulars of claim introduced a new cause of action that had
become prescribed when the amended particulars of claim were filed.
Section 15(1) of the Prescription Act, 1969, provides that “the
running of prescription shall…be interrupted by the service
on the debtor of any process whereby the creditor claims payment of
debt”.
The test for
interruption of prescription is whether the plaintiff, in the
earlier process, claim payment of the same or substantially the same
debt which now forms the subject-matter of the claim that is said to
be prescribed.
The fundamental enquiry
in relation to the prescription defence is whether the debt claimed
in the amended particulars of claim is the same or substantially the
same debt that was claimed in the original particulars of claim.
Having regard to the nature and effect of the amendment which
alleged that the defendant failed to pay the second as opposed to
the first instalment as alleged in the original particulars of
claim, it cannot be said that the plaintiff’s contention that
the debt claimed in the amended particulars of claim is the same or
substantially the same debt that was claimed in the original
particulars of claim is obviously unsustainable. This is a debatable
question.
Nor does the defence
based on the existence of a counter-claim show that the plaintiff’s
claim is obviously unsustainable. It is apparent from the letter of
April 9, 2002, annexure B to the Further Particulars that
theexistence of the alleged counter-claim isdisputed. Apart from
this, it is at least arguable that under clauses 5.24 and 5.25of the
loan agreement the defendant renounced its right to raise a
counter-claim as a defence against the repayment of the loan. So
too, is the defendant’s alternative argument that these
clauses are contrary to public policy.Similarly, whether the
defendanthas paid interest amounting to more than double theamount
of capital is a matter that must canvassed by way of a plea.
Theconclusion by the
High Court thatit could not conclude that the plaintiff’s case
is “so hopeless that is can never succeed”, cannot
therefore be faulted.
Third, the question
whether or not to grant relief is a matter that is within the
discretion of the court. The High Court also held that even if it
was wrong in its conclusion, this is “certainly not a case in
which [it] would have exercised the court’s inherent
jurisdiction against the plaintiff”. I understand the Court to
be saying that this is not a case in which it would have exercised
its discretion in favour of granting the relief sought.Absent a
vitiating misdirection or irregularity, the court of appeal will
only interfere with the exercise of a judicial discretion if it is
satisfied that no court, acting reasonably, would have come to the
same conclusion..
Regrettably the High
Court did not indicate the basis of this conclusion. This Court is
left to speculate on the factors that the High Court took into
consideration in exercising its discretion. When a court is
entrusted with the discretion whether or not to grant the relief
sought and it exercises its discretion against granting the relief
sought, it is incumbent on the court to indicate the factors that it
took into consideration in exercising its discretion. This will
enable the appeal court, if the matter should come on appeal and the
exercise of discretion is challenged, to determine whether the
discretion was exercised properly. The appeal court should not be
left to speculate on what factors the High Court took into
consideration in exercising its discretion.
Although the High Court
did not indicate the factors that it took into consideration in
exercising its discretion against granting the relief sought, the
exercise of that discretion has ample support in the circumstances
of this case. First, the grounds relied upon by the defendant for
relief sought can be conveniently and properly raised in a plea.
Second,the power to dismiss an action on the grounds that it lacks
merits is an extraordinary power that must be exercised very
sparingly and in a clear case. This is not such a case. Third, the
plaintiff has a genuine claim that is supported on substantial
ground by documents that are before the court.
The appeal against the
order dismissing the claim based on vexatious proceedings must
therefore fail.
I now turn to the appeal
against the dismissal of the claim based on dilatory abuse. But
first the principles governingapplications for dismissal of actions
based on dilatory abuse.
Principles applicable
to dilatory abuse claim
South African and
English courts have had occasion to consider the principlesthat are
applicable to applications for dismissal of actions based on
dilatory abuse. A review of these relevant decisions provides a
useful guide to the question presented by this aspect of the case.
A convenient starting
point is the decision of the South African High Court in Molala
v Minister of Law and Order and Another on
which the parties and the High Court relied upon. There the
plaintifftook some two years torespond to the defendants’
request for further particulars in a claim involving a motor
collision. The defendant brought an application for an order barring
the plaintiff from proceeding with the action and advanced various
grounds why the plaintiff should not be allowed to proceed with the
action. The plaintiff did not oppose. The court had to consider
whether it“had any discretion to debar the plaintiff from
proceeding with the action”.
The
court accepted that there is such discretion but acknowledged that
“there is not always certainty about the basis of the
discretion and therefore about the facts which should guide the
exercise of the discretion”.
It
held nevertheless that “in the Transvaal it was, despite
doubts earlier in the year, accepted…that 'it is in the
discretion of the Court to allow proceedings to continue where there
has been this lapse of time'”,
and that “there are indications that the Court regarded such
an order as resting upon the inherent power of the Court to control
its own proceedings and that accordingly the Court should assess
whether the plaintiff is guilty of an abuse of process”.But
immediately added that such“an approach could, because such
abuse is not easy to prove, cause a rarity of orders similar to what
will follow from the views expressed in other Divisions that the
discretion should only be sparingly exercised”.
Against
this background, the
court adopted the following approach to the question:
"The approach
which I am bound to apply is therefore not simply whether more than a
reasonable time has elapsed. It should be assessed whether a facility
which is undoubtedly available to a party was used, not as an aid to
the airing of disputes and in that sense moving towards the
administration of justice, but knowingly in such a fashion that the
manner of exercise of that right would cause injustice. The issue is
whether there is behaviour which oversteps the threshold of
legitimacy. Nor, in the premises, can plaintiff be barred simply
because defendants were prejudiced. The increasingly difficult
position of the defendants is a factor which may or may not assist in
justifying an inference that plaintiff's intentions were directed to
causing or to increasing such difficulties. But the enquiry must
remain directed towards what plaintiff intended, albeit in part by
way of doluseventualis.
The increase in defendants' problems is, secondly, a factor insofar
as the Court, on an overall view of the case, is to exercise
discretion about how to deal with a proven abuse of process."
As I understand this
approach it comes down to the question whether the court process was
used for ulterior motives. On this approach neither the delay nor
prejudice to the defendant is decisive. The enquiry is what the
plaintiff intended by the delay and this can be established by way
of inference. Prejudice may give rise to an inference of abuse of
process. In addition, the Court held that where abuse has been
established, the court “is to exercise discretion about how to
deal with a proven abuse of process”.
Considerations that are
relevant in the exercise of discretion include the impact of the
delay on the administration of justice and prejudice to the
defendant. As the court put it, “the order should not follow
unless the administration of justice was in fact hampered”.
Subsequent court
decisions have focussed primarily on the statement that “[t]he
issue is whether there is behaviour which oversteps the threshold of
legitimacy” as laying down the test for when the delay will
amount to abuse. The unintended consequence of this, as I shall show
presently, is that there does not appear to be harmony on
precisely what the test to be applied entail or howthe test should
be applied.
In Gopaul
v Subbamah,
Richings AJ sitting in the KwaZulu-Natal High Court, observed that
while it is clear that the court has inherent power to dismiss an
action for delay in the prosecution of an action, what
is less clear is the circumstances under which this power may be
exercised.After
referring to the above statement in Molala
v Minister of Law and Order,
he held that “the proper
approach for the Court is to weigh up the period of delay and the
reasons therefor against the prejudice caused to the defendant”.In
addition, the court held thatthe Court should also have regard to
the reasons for the defendant's inactivity in the matter.
In Sanford v Haley
NO, Moosa J of the Western Cape High Court said the following
concerning the test:
"The
prerequisites for the exercise of such discretion are, first, that
there should be a delay in the prosecution of the action; secondly,
that the delay is inexcusable and, thirdly, that the deceased is
seriously prejudiced by such delay. (Gopaul
v Subbamah2002
(6) SA 551 (D).) The test for the dismissal of an action enunciated
by Innes CJ and reinforced by Solomon JA in the case of Western
Assurance Co
(supra)
is whether plaintiff has abused the process of the Court in the form
of frivolous or vexatious litigation. Such test formulated by
Flemming DJP in Molala's
case supra
is whether the
conduct of plaintiff oversteps the threshold of legitimacy. The test
is a stringent one. It is understandable that the relief will not
easily be granted. It will depend on the facts and circumstances of
each case and on the basis of fairness to both parties. (Herbstein
and Van WinsenThe
Civil Practice of the Supreme Court of South Africa
at 547.)"
In Golden
International Navigation SA v Zeba Maritime Co Ltd; Zeba Maritime Co
Ltd v MV VISVLEIT,
Griesel J of the Western Cape High Court, in dealing with delay,
held that: “The
crisp question for decision is whether the delay in this instance
has been so unreasonable or inordinate as to amount to an abuse of
the process of the court”.
What the court held in
Molala v Minister of Law & Order is that in determining
whether delay amounts to an abuse the court shouldassess whether a
process that is designed to facilitate the administration of justice
was used for some other purpose other than the attainment of the
claim in the action and with knowledge that if so used it would
cause injustice. This may be inferred from the prejudice to the
defendant which“may or may not” justify “an
inference that the plaintiff’s intention were directed to
causing” prejudice. But the basic enquiry “must remain
directed towards what the plaintiff intended”.It is in this
context that the statement “[t]he issue is
whether there is behaviour which oversteps the threshold of
legitimacy” must be understood.
InGopaul
v Subbamahthe
court expressedthe view that South African law on this point was
“very similar to that of the Supreme Court of Judicature in
England”. And the court in Sanford
v Haley NO appears
to have accepted this as, in explaining the test, itinvoked the
principles enunciated by the Court of Appeals in Allen
v Sir Mc Alpine & Sons Ltd
that were later adopted
by the House of Lords inBirkett
v James.
The High Court in this
case criticised reliance on English law, which it held differs from
”our law”because it does not require intention.The
High Court went on to hold that “[a]lthough some of the
elements referred [in English law] may be helpful when a Namibian
Court determines whether a dilatory-abuse has occurred [it] would be
extremely reluctant to adopt the English law as if it is the same as
our law”.
It will be convenient to
refer to English law on the subject.
The
approach of English courts is set out in speech of Lord Diplock in
the House of Lord’s decision in Birkett
v James where he said:
“The power
should be exercised only where the court is satisfied either (1) that
the default has been intentional and contumelious, e.g., disobedience
to a peremptory order of the court or conduct amounting to an abuse
of the process of the court; or (2) (a) that there has been
inordinate and inexcusable delay on the part of the plaintiff or his
lawyers, and (b) that such delay will give rise to a substantial risk
that it is not possible to have a fair trial of the issues in the
action or is such as is likely to cause or to have caused serious
prejudice to the defendants either as between themselves and the
plaintiff or between each other or between them and a third party.”
The first limb of the
grounds for dismissal for want of prosecution included “conduct
amounting to an abuse of the process of the court". However, in
Grovit v Doctor, the House of Lords seemed to regard abuse of
process as constituting a separate ground to strike out for delay
under the inherent power of the court. Lord Woolf who delivered the
speech of the House said:
"Mr. Jacob submits that this
appeal raises that issue because the conduct by the plaintiff of
which complaint is made is insufficient by itself to amount to an
abuse of the process of the court so as to satisfy principle (1) [in
Birkett v James]. Furthermore principle (2) is not satisfied
since, although Mr. Jacob accepts there has been inordinate and
inexcusable delay, there has been no serious prejudice to the
defendants.
Although principle
(1) links abuse of process with delay which is intentional and
contumelious, the prevention of abuse of process, has by itself long
been a ground for the courts striking out or staying actions by
virtue of their inherent jurisdiction irrespective of the question of
delay and Lord Diplock's statement of the principles does not affect
this separate ground for striking out or staying proceedings."
Later on he also said:-
“…I am
satisfied that both the deputy judge and the Court of Appeal were
entitled to come to the conclusion which they did as to the reason
for the appellant’s inactivity in the libel action for a period
of over two years. This conduct on the part of the appellant
constituted an abuse of process. The courts exist to enable parties
to have their disputes resolved. To commence and to continue
litigation which you have no intention to bring to conclusion can
amount to an abuse of process. Where this is the situation the party
against whom the proceedings is brought is entitled to apply to have
the action struck out and if justice so requires (which will
frequently be the case) the courts will dismiss the action. The
evidence which was relied upon to establish the abuse of process may
be the plaintiff’s inactivity. The same evidence will then no
doubt be capable of supporting an application to dismiss for want of
prosecution. However, if there is an abuse of process, it is not
strictly necessary to establish want of prosecution under either of
the limbs identified by Lord Diplock in Birkett
v. James [1978]
A.C. 297. In this case once the conclusion was reached that the
reason for the delay was one which involved abusing the process of
the court in maintaining proceedings when there was no intention of
carrying the case to trial the court was entitled to dismiss the
proceedings.”
It is clear from this
passage that the House of Lords regards the inherent power to
prevent abuse as a separate ground for striking out proceedings on
account of delay. Commencing and continuing litigation that the
plaintiff has no intention to bring to conclusion can amount to
abuse of process. To succeed, the defendant would have to establish
that the plaintiff has commenced litigation that it has no intention
to conclude and this may be inferred from the plaintiff’s
inactivity. In this respect English law does not appear differ much
from what was said in Molala v Minister of Law & Order.
There the court postulated the enquiry as what plaintiff intended by
the manner in which the process was used. If plaintiff commences
litigation with no intention to conclude it, this can amount to
abuse of process.
Apart from the inherent
power to prevent abuse, proceedings may also be struck out on the
basis of the principles enunciated in Birkett v James which
include intentional or contumelious delay;inordinate and inexcusable
delay that will give rise to a substantial risk that a fair trial of
issues will not be possible or is likely to cause prejudice to the
defendant and other parties. These grounds including the
continuation of litigation with no intention to bring it to
conclusion are to my mind all examples of abuse of the process of
the court.Indeed, it is apparent from the decisions of the House of
Lords in Birkett v James and Grovit v Doctor that the
foundation for the power to strike out an action on account of delay
is predicated on the abuse of process.
Against this background,
the principles, which are by no means exhaustive,that should be
applied in considering applications for dismissal of an action on
account of delay are these:
Inordinate and
inexcusable delay can amount to abuse of the process of court. But
as the authorities that I have reviewed show, mere delay and the
resulting prejudice are not sufficient to justify the dismissal of
an action for abuse of process. The delay must be both inordinate
and inexcusable, and must constitute an abuse; the reason for the
delay must involve the abuse of the process of court.
The question whether the
delay complained of constitutes an abuse of process is a question of
fact. The enquiry must be directed towards what the plaintiff
intended by the delay or to put differently, what were the reasons
for the delay;why did plaintiff act in the way in
which he or she did. This may be inferred from the
circumstances of the case.
Thus if the reason for
the delay is to maintain proceedings which the plaintiff has no
intention to finalise, this can amount to abuse. This is the example
of abuse that was involved in Grovit
v Doctor.
In that case the proceedings were dismissed because the reason for
the delay involved abusing the process of the court in maintaining
proceedings when there was no intention of carrying the case to
trial.Where
the reason for the delay is to prejudice the defendant in the
conduct of his or her defence, this too can amount to abuse. This is
the abuse that the court in Molala
v Minister of Law & Order had
in mind.This form of abuse is probably covered by the first limb of
the statement of Lord Diplock in Birkett.
But what must be
stressed is a point that has already been made, namely, that the
question whether delay constitutes an abuse must be determined by
the circumstances of a case. Factors that will generally be relevant
to this enquiry include the length of the delay; any explanation put
forward for the delay; the prejudice caused to the defendant by the
delay; the effect of the delay on the conduct of the trial, in
particular, whether there is a substantial risk that a fair trial of
issues will no longer be possible; the effect of the delay on other
litigants and other proceedings; the extent, if any, to which the
defendant can be said to have contributed to the delay; the conduct
of the claimant and the defendant in relation to the action; other
special factors of relevance in the particular case.
From what is said above,
it clear that prejudice has a particular role in applications of
this nature. While the plaintiff’s action may not be dismissed
simply because of prejudice to the defendant, prejudice to the
defendant is a factor that “may or may not assist in
justifying an inference” to abuse of process.
It can justify the
inference that the plaintiff intended to abuse the court process by
causing prejudice to the defendant in the conduct of his or her
defence.
It seems to me that
where the delay is inordinate and inexcusable and is such that it
will give rise to a substantial risk that a fair trial of issues
will no longer be possible or where it is such that it is likely to
cause serious prejudice to the defendant, this can amount to abuse.
In Molala
v Minister of Law & Order the
court found that “[o]bjectively, the administration of justice
was also burdened in this case with a decreased prospect of
accurately finding the truth and of justice being satisfactorily
administered” and that this was prejudicial to the defendant.
In effect the court
found that the delay was such that it was no longer possible to have
a fair trial of issues.This is the example of abuse that is referred
to in the second limb of the statement of Lord Diplock in Birkett
v James.
Prejudice here is relevant to establish abuse.
As would have been
apparent from what is said above, even in the case whether abuse has
been established, the court has a discretion whether or not to
dismiss the action. Prejudice will be a relevant consideration when
the court exercises its discretion to decide how to deal with the
abuse in question. As the court said in Molala
v Minister of Law & Order prejudice
to the defendant “is…a factor insofar as the Court, on
an overall view of the case, is to exercise a discretion about how
to deal with a proven abuse of process”.
Obviously, at this
stage, the court will, in the exercise of its discretion, also
consider prejudice to the plaintiff. I therefore agree with the High
Court that prejudice has a dual role in matters of this nature.
But while prejudice has
an important role to play in the exercise of the court’s
discretion, it is not the only consideration. The court must have
regard to the drastic nature of remedy to summarily dismiss an
action. It is a remedy that interferes with the right of a litigant
to fully present his or her case in court. It must therefore be used
sparingly.
Equally relevant is the
impact of the delay in the conduct of the trial. That it is no
longer possible to have a fair trial of issues is a relevant factor
as it has an impact on the proper administration of justice. No
court of justice can insist on proceedings continuing when it is
manifestly clear that a fair trial is no longer possible as a result
of the delay. To do otherwise, may very well bring the
administration of justice into disrepute and, ultimately, may erode
public confidence in the judiciary.
Finally, it is apparent
from the authorites referred to above that the ultimate
consideration is the interests of justice. Once an abused has been
established, the ultimate question to ask is what is in the
interests of justice, in other words, on an overall view of the
case, what does justice demands.
Before leaving this
aspect of the case, it
is necessary to deal with the High Court’s criticism of the
view expressed in Gopaul
v Subbamah that
the court must also look at the conduct of the defendant and if
a
defendant had failed to avail himself of the remedies to compel a
dilatory plaintiff to progress to the next step in litigation when
he might reasonably have been expected to do so, the Court will look
askance at an application by him to dismiss the plaintiff's action
merely because of a delay in the prosecution.The
High Court took the view that as dominislitisthe
plaintiff bears the responsibility to prosecute the action and that
the use of the procedural devices is “discretionary in nature”
and that therefore“the defendant may, quite legitimately, sit
back and do nothing”.
There are sound reasons
why courts should not sanction the proposition that because the
plaintiff is the dominislitis, the defendant may legitimately
sit idly by while delays accumulate. In the first place it is
inimical to the public interest in the administration of justice
that disputes be brought to trialand be resolved expeditiously,
effectively and efficiently. Inordinate delays in the administration
of justice, undermines public confidence in the administration of
justice. To this extent Rules of Court provide procedural devices to
force a dilatory party to progress to the next step in
litigation.These devices not only facilitate speedy resolution of
disputes, but they also prevent prejudice to the non-defaulting that
may be caused by inordinate delay.
While inactivity of the
defendant does not justify the dilatory conduct of the plaintiff, it
is certainly relevant in the court’s exercise of its
discretion whether or not to grant relief. But apart from this, the
use of compelling devices may, in an appropriate case, strengthen
the defendant’s case by showing a history of a plaintiff who
had to be compelled to take the next step in litigation at every
step of the way. Such conduct on the part of the plaintiff, viewed
with other conduct in the course of litigation may justify a
conclusion that the plaintiff has no intention to bring litigation
to conclusion.
In the second place, it
may cause delays in the justice system. It encourages the defendant
to do little or nothing to progress litigation.And this may in turn
encourage litigation tactics on the part of some defendants to
permit actions “to go to sleep” and to adopt the “let
sleeping dogs lie” attitude. These defendants sit
idly by while delays accumulate in the hope that, if of sufficient
length, the delay can lead to a chance to apply for the dismissal of
the action. They will then use the very delay that they have allowed
to occur and the very prejudice that they have not sought to prevent
through the compelling devices, as the basis for the relief.
Inordinate delays have
become a blot in the administration of justice. One of the foremost
factors that accounts for these delays is that the pace of
litigation, with few exceptions, is left in the hands of the
litigants. This is exacerbated by the adversary system that prevails
in our courts. With certain irrelevant exceptions, the courts cannot
act of their own motion but on the application of one or other of
the parties. Courts are passive and only get involved when the
parties choose to involve them. In this atmosphere procedural
devices that are designed to expedite litigation and prevent delays
as well as the resultant prejudice are seldom used. Parties grant
one another generous extensions of time and only bring matters to
court at their convenience.
It is this feature of
the civil justice system that has prompted the introduction of the
judicial case management system in many countries including this
country. The advent of the judicial case
management introduced by the Judicial Case Management(JCM) Ruleshas
brought about a fundamental change in the litigation culture. As
Damaseb JP recently commented on the JCMRules:
"The case
management rules of this court represent a radical departure from the
civil process of old. Litigation is now no longer left to the parties
alone. The resolution of disputes is now as much the business of the
judges of this court as it is of the parties. Courts exist to serve
the public as a whole and not merely the parties to a particular
dispute before court at a given time."
This radical departure
is apparent from the objectives JCM which include:
“(a) to ensure the speedy
disposal of any action or application;
(b) to promote the prompt and economic
disposal of any action or application;
(c) to use efficiently the available
judicial, legal and administrative resources;
(d) to provide for a court-controlled
process in litigation;
(e) to identify issues in dispute at
an early stage;
(f) to determine the course of the
proceedings so that the parties are aware of succeeding events and
stages and the likely time and costs involved;
(g) to curtail proceedings;
(h) to reduce the delay and expense of
interlocutory processes…”
And the JCM Rules spell
out the obligations of the parties and their legal representatives,
which is to :
“(a) assist the managing judge
in curtailing the proceedings;
(b) comply with rule 37 and other
rules regarding judicial case management;
(c) comply with any direction given by
the managing judge at any case management conference or status
hearing; and
(d) attend all case management
conferences, pre-trial conferences and status hearings caused to be
arranged by the managing judge.”
The
main purpose of the JCM is to bring about a change in litigation
culture. The principal objectives of the JCM are to: ensure that
parties to litigation are brought as expeditiously as possible to a
resolution of their disputes, whether by way of adjudication or by
settlement; increase the cost effectiveness of the civil justice
systemand to eliminate delays in litigation; promote active case
management by the courts and in doing so, not only facilitate the
expeditious resolution of disputes, but also bearing in mind the
position of other litigants and the courts’ own resources; and
inculcate a culture among litigants and their legal representatives
that there exists a duty to assist the court in furthering the
objectives ofJCM.
With
the advent of the JCM Rules where all parties to the proceedings
have the obligation to prosecute the proceedings and assist the
Court in furthering the underlying objectives, it would be highly
relevant to consider any inaction on the part of the parties.And
there is no place for defendants to adopt the attitude of “letting
sleeping dogs lie” and for a defendant to sit idly by and do
nothing, in the hope that sufficient delay would be accumulated so
that some sort of prejudice can then be asserted.
To
conclude this aspect of the case, in the exercise of their
discretion whether or not to summarily dismiss an action on account
of delay, courts must bear in mind that the
rule of law requires the existence of courts for the determination
of disputes and that litigants have a right to use the courts for
this purpose. But courts must also, however, be alert to their
processes being used in a way that results in an injustice or that
would bring the administration of justice into disrepute. They
should guard against this as it may undermine public confidence in
the administration of justice and, ultimately, the rule of law. And
the court cannot afford the loss of confidence in the administration
of justice, as their authority “ultimately rests on sustained
public confidence in its moral sanction".
And now to the facts of
this case.
Application of the
principles to this case
The manner in which the
plaintiff has conducted the litigation leaves a great deal to be
desired. The litigation has been punctuated by two inordinate
delays; it took more than three and a half years for the plaintiff
to respond to a request for further particulars, and it took a
further nine and a half months for the plaintiff to deliver its
amended particulars of claim. While the change in the status of the
plaintiff and the resultant reduction in its personnel, the
subsequent uncertainty over its future status that prevailed since
15 May 2003 when the coming into operation of the winding up
provisions of Namibia Development Bank Act, 2000, were suspended,
and the change in its legal representatives, relied upon by the
plaintiff, cannot be ignored, these do not provide a satisfactory
explanation for the inordinate delay.
Nevertheless,
the existence of some explanation though not satisfactory, and the
facts supporting it, casts doubt as to whether the conduct of the
plaintiff can be said to amount to abuse of the process of the
court. Merely for the plaintiff to commence litigation and
then delay, which often involves a failure to comply with the
applicable Rules of Court, will not necessarily amount to an abuse.
The appropriate remedy in such a case is to seek an order to compel
compliance on pain of dismissal of the action. For delay to justify
the dismissal of an action, it must be clear that the plaintiff is
abusing the process of the court.
In these circumstances,
I am unable to conclude that the High Court was wrong in its
conclusion that the plaintiff was not guilty of dilatory abuse. Nor
can I say that the High Court exercised its discretion wrongly.
While the High Court did not indicate the factors that it took into
account in exercising its discretion, there is amply evidence to
warrant the manner in which the High Court exercised its discretion.
The relief sought is a drastic measure and must be resorted to in a
clear case. It is true the plaintiff has been guilty of inordinate
delay and there is no satisfactory explanation for this, but
such delay will not normally, in the absence of some other special
feature, be sufficient to justify an order dismissing the
plaintiff’s action. There is nothing to show that the
plaintiff intended to abuse the process of court by this delay.
On
the issue of prejudice, the defendant submitted that it has lost the
opportunity to pursue its counter-claim because it has become
prescribed. It says it did not take any steps to safeguard its
counter-claim from becoming prescribed because it believed “that
the plaintiff did not seriously intend to pursue its claims”.
It now complains that it was plaintiff’s
inordinate delay in prosecuting its action and not its inaction that
has resulted in its counter-claim to become prescribed. In effect
what the defendant is saying is that it sat idly by and adopted the
“let the sleeping dogs lie attitude” in the hope that
the main claim will die together with its counter-claim. Unbeknown
to the defendant, the plaintiff’s claim was simply unconscious
while its counter-claim went into permanent sleep.
The defendant’s
counter-claim, if it has become prescribed, has become prescribed
due to the defendant’s inactivity.It could
have taken a number of steps to safeguard its counter-claim by, for
example, resort to the procedural devices to force the plaintiff to
progress expeditiously with the litigation. It did nothing other
than to wait for the delay to be long enough for it to contend that
the plaintiff has no intention to bring its claim to conclusion. To
this extent it was even prepared to sacrifice its counter-claim.
Apart from this, it is debatable whether the defendant is entitled
to rely on the alleged counter-claim. I am unable to conclude that
the delay and the circumstances of this case justify the inference
that the plaintiff intended to prejudice the defendant in its
counter-claim.
What
must be stressed here is that mere prejudice is not sufficient to
establish abuse. The plaintiff cannot be “barred simply
because the defendants were prejudiced”.
Prejudice
is a factor that may assist in justifying the inference that the
plaintiff intended to prejudice the defendant and thus abused the
court process. The evidence simply does not justify the inference
that the reason for delay in this case involved abusing the process
by prejudicing the defendant in the conduct of its defence.
The defendant has made
sweeping statements about a fire that ravaged some of its
storerooms, withoutindicating whether the documents relevant to this
case were kept in those storerooms; and that a number of witnesses
who could have been of assistance to it if the action had been
prosecuted timeously, including the official who signed all the
agreements, may in future not have a clear recollection of the
facts. There is no indication why these particular witnesses may not
have a clear recollection of facts.
It is true over time
memories fade, but as the High Court correctly observed, the nature
of the issues involved are relatively straight forward. The signing
of the agreements is not in dispute. Nor is it in dispute that the
defendant only paid the first installment that was due on 31 March
2001 and did not pay subsequent installments. Apart from the legal
issues raised by the defendant, the question will, as the High Court
found, how much, if anything, must the defendant pay the plaintiff.
In any event, having regard to the defences raised by the defendant,
I am not satisfied that the defendant will be prejudiced in the
conduct of its defence or that the delay in this case involve
abusing of the process of court in causing prejudice to the
defendant.
On facts and
circumstances of this case, it cannot be said that a fair trial of
issues in this case is no longer possible. Nor does the prejudice
alleged, justify an inference of abuse. The evidence in this case
falls far short of establishing that the reason for the delay
involved the abuse of the process of court.
In all the
circumstances, I am unable to find fault with the conclusion of the
High Court on this aspect of the case. Nor can the conclusion of the
High Court that even if it were to conclude that the plaintiff was
guilty of abuse, this is not such an exceptional case where the
court should exercise its discretion in favour of the defendant. As
can be seen from the history of the proceedings, the defendant has
not itself shown much enthusiasm in revealing the true nature of its
defence other than the technical defences nor to progress the
proceedings to an effective resolution of its dispute with the
plaintiff.
It is the conduct of the
defendants who adopt the attitude of “letting sleeping dogs
lie” and failure to use the procedural devices that are
available under the Rules to compel the dilatory plaintiff to bring
the actions to finality that accounts for some of the delays in the
civil justice system. Eight years since litigation commenced, it has
hardly progressed beyond the delivery of amended particulars of
claim, the defendant has yet to plead and the case is nowhere near
trial. There is nothing to suggest that the procedural devices to
force a dilatory plaintiff to take the next step in litigation were
at any stage used in the course of the delay now complained of.
Overall justice in this
case does not demand that the plaintiff’s claim be dismissed.
While there is much that could have prompted the defendant to seek
the dismissal of the plaintiff’s action, this is by no means a
clear case of abuse that would prompt the court to dismiss the
action; certainly it is by no means plain and obvious that this
ultimate sanction should be utilized. No doubt, with the delay that
has already taken place in this action, the present applications
have, to date, taken over three years to resolve, the court and the
parties will now be keen to move these proceedings along at a more
acceptable pace. This will be in the interest of everyone.
It follows therefore
that the appeal against the order refusing to
dismiss the plaintiff’s action on account of inordinate delay
must therefore fail. It now remains to consider the appeal against
the dismissal of the defendant’s Rule 30 application.
The appeal against the
dismissal of Rule 30 application.
As pointed out above the
plaintiff’s amended particulars of claim were filed some nine
and a half months late and the plaintiff did not seek condonationfor
such late filing. It is this step that the defendant contended was
irregular within the meaning of Rule 30. That Rule provides that
“[a] party to a cause in which an irregular step or proceeding
has been taken by any other party may within 15 days after becoming
aware of the irregularity, apply to set aside the step or
proceeding”.
The High Court dismissed
this application holding that the defendant had failed to allege and
establish prejudice, a prerequisite for success in a Rule 30
application.In
this Court, the defendant challenged this finding of the High Court
and submitted that Rule 30 does not require prejudice. It maintained
that the late filing of the amended particulars of claim without an
application for condonation is an irregular step as envisaged in
Rule 30. For its part, the plaintiff supported the reasoning of the
High Court, and in addition, contended that the defendant’s
remedy lay in Rule 26 to compel the delivery of the amended
particulars of claim.
It submitted that the
resort to Rule 30 in the circumstances was an abuse of Rule 30.
The key finding of the
High Court was that:
"As the
defendant has not shown that it has suffered prejudice as envisaged
in Rule 30, the result should therefore be that defendant's Rule 30
application be dismissed. Naturally, it should then follow that
plaintiff's amended particulars of claim is not an irregular step,
but a regular one."
The reasoning
underpinning this finding appears from the following passage:
"Rule 30
concerns 'irregular proceedings or steps'. Rule 30 does not determine
that a step or proceeding can be set aside if it 'does not comply
with the Rules'. In short, all non-compliances with the Rules do not
necessarily constitute irregular steps or proceedings as envisaged in
Rule 30. Something more is required: prejudice. Rule 30(1) leaves a
litigant who receives a proceeding or document which does not comply
with the Rules, with an option. He can either lodge a Rule 30
application, or take a further step. If a further step is taken, or
if he waits longer than 15 days to lodge a Rule 30 application, the
non-compliance of the Rules by his adversary is automatically
condoned by Rule 30(1) — without a formal condonation."
The reasoning of the
High Court raises the question as to whether prejudice is a
prerequisite for declaring a step irregular under Rule 30. On its
face the Rule does not require prejudice. Rule 30 contemplates two
separate but interrelated enquiries, which should not be conflated.
The first is whether the step or proceeding complained of is
irregular. The answer to this question must be determined by
considering the step itself in the light of the meaning of an
irregular step or proceeding. The second enquiry, which only arises
once it is established that the step complained of is irregular, is
what order should follow the finding of an irregularity. In this
enquiry, the court has discretion whether or not to overlook
irregularity.
It is in this enquiry
where prejudice is relevant.
Prejudice is therefore
relevant not to the enquiry whether the step is irregular, but to
the second enquiry, whether or not the irregular step ought to be
set aside. Irregularity must be determined by reference to the
pleading complained of. The irregularity of a step does not depend
on whether or notthe non-defaulting party has suffered any prejudice
but depends on the character of the step or proceeding complained
of.
The High Court relied
upon the judgment of Silingwe J in China
State Construction Engineering Corporation (Southern Africa) (Pty)
Ltd v Pro Joinery CCfor
its conclusion that prejudice is a prerequisite for a successful
Rule 30 application. There the court was concerned with the issue of
costs in an application for default judgment. In the course of
argument, it was submitted that the applicant was entitled to ignore
the summons because it was excepiable. The High Court considered
this submission in the context of a Rule 30 application. It held
that the proper course for a party who is prejudiced by an irregular
step is not simply to ignore the step but to have it set aside under
Rule 30.
The key passage in the
judgment is the following:
"It
is, of course, important to be mindful of the fact that the court has
discretion whether or not to grant the application, even if the
irregularity is established. The general approach is that, in a
proper case, the court is entitled to overlook any irregularity in
procedure which does not occasion any substantial prejudice. Such an
approach was affirmed by Hoff J in Gariseb
v Bayerl2003
NR 118 (HC),
where he said at 121I - 122A-B:
‘This Court
has a discretion to overlook any irregularity in procedure which does
not work any substantial prejudice…’
In Trans-African
Insurance Co Ltd v Maluleka
1956 (2)
SA 273 (A) at 278F - G Schreiner JA said the following:
'(T)echnical
objections to less than perfect procedural steps shouldnot be
permitted in the absence of prejudice, to interfere with the
expeditious and, if possible, inexpensive decision of cases on the
real merits.’"
Significantly, the court
held that “the court has a discretion whether or not to grant
the application even if the irregularity is established”,
and further that “the
court is entitled to overlook any irregularity in procedure which
does not occasion substantial prejudice”.
It was in this context
that the Court held that “prejudice is a prerequisite to
success in an application in terms of Rule 30”.
What is apparent from
this passage is that the High Court made a distinction between a
finding that a step or proceeding is irregular and the order that
must follow from such finding. A court hearing a Rule 30 application
must first make a finding as to whether or not the step complained
of is irregular. If the court finds that the step is irregular,
subrule 30(3) gives the court discretion whether or not to “set
it aside …and grant leave to amend or make any such order as
to it seems meet”. It is a discretion that, like all
discretions, must be exercised properly and in the course of which
prejudice will be an important consideration.
It is in this context
the statement in the China State Construction Engineering
Corporation (Southern Africa) (Pty) Ltd v Pro Joinery CC relied
upon by the High Court, namely, that “prejudice is a
prerequisite to success in an application in terms of Rule 30”,
must be understood. It means success in the sense that the irregular
step is set aside and not success in the sense of a finding that the
step complained of is irregular. If the High Court and the court
inChina State Construction Engineering Corporation (Southern
Africa)(Pty) Ltd v Pro Joinery CC intended to hold that
prejudice is a prerequisite for a finding that a step is irregular
under Rule 30, I am unable to agree with that view.
The threshold question
therefore is whether or not the late filing of amended particulars
of claim without an application for condonationis an irregular step
under Rule 30. The Rules do not define the meaning of irregular; it
must therefore bear its ordinary dictionary meaning. The Concise
Oxford Dictionary defines “irregular” to mean “contrary
to a rule, standard or convention”; “having inflections
that do not conform to the usual rule”. The word “irregular”
as used in the Rule is wide enough to include non-compliance with
the Rules, for non-compliance with the Rules is as contrary to the
Rules as a summons that is not properly signed.
The High Court cited the
following passage fromMolala v Minister of Law & Order and
Another, supra,
"Then it was
contended that respondent's failure
to deliver further
particulars within a reasonable time is an irregular step within the
meaning of Court Rule 30. If it were at all possible for the omission
of a step to be regarded as a 'step', I am unconvinced that failure
to deliver a plea within the permissible time falls within Rule 30.
In any event I do not understand what the Court is supposed to set
aside if nothing was done; nothing was brought into being.
Turning to the
third prayer, the complaint is that the lateness of delivery
caused the delivery
of the further
particulars in 1991 to be an 'irregular step'. (If that is so, almost
every action in this Division is tainted by such an irregular step.)
The further particulars were in proper form. Plaintiff, in contrast
with a step which a party is entitled to omit, for example asking for
the production of documents at the trial, remained obliged to
delivery thereof. In fact, it is when (and because) delivery is
overdue that the Court compels a party to deliver his response. It
would make no sense if it were so that a Court thereby compels the
plaintiff to an irregular step or to believe that compliance with
such an order will leave the delivery open to an application in terms
of Rule 30. The only defect affecting delivery of the particulars
rendered it a belated step but not an irregular one within the
meaning of Rule 30."
The Court in Molala
v Minister of Law & Order did
not cite any authority for the statement that “[t]he only
defect affecting delivery of the particulars renders it a belated
step, but not an irregular one within the meaning of Rule
30”.However, there is a line of cases which appear to express
a contrary view. Cases dealing with the question whether a plaintiff
is entitled to seek default judgment and simply ignore appearance to
defend that was filed late seem to hold otherwise.In each of these
cases it was accepted that the late filing of entry of appearance to
defend was an irregular step.
The principle upon which
the decision in these cases seems to rest is that the filing of a
pleading outside the time limit allowed by the Rules is an irregular
step.
Apart
from these cases, it has been held that the Rule is applicable
where, for example: a proper power of attorney had not been filed;
pleadings are not signed in accordance with the Rules or do not
comply with the Rules as to form;
notice of intention to defend is delivered out of time;
a notice of appeal is defective;
an application is brought on short notice on grounds of urgency, but
no reasons of urgency are set out in the supporting affidavits;
and a party failed to give notice resulting in the proceedings
taking place in the absence of the opposite party.In
each of these cases the act complained of was not in compliance with
the Rules of Court. The act itself was in breach of the Rules and,
on that account, constituted the irregular step or proceeding.
The principle involved
in these cases is that a step or proceeding taken in breach of the
Rules constitutes an irregular step or proceeding. This principle is
in accord with the ordinary meaning of the word “irregular”.
The word “irregular” is a word of wide importand there
is nothing to suggest that it was not intended to apply to pleadings
filed late. That the non-defaulting party may have some other remedy
under the Rules such as that contemplated in Rule 30(5) does not
detract from the wide ambit of the word. The existence of other
remedies such Rule 30(5) may be a factor for the court to take into
consideration in the exercise of its discretion whether or not to
set aside the irregular step. But it does not affect the question
whether or not the step complained of is irregular.
In resisting the
application, the plaintiff submitted that the defendant’s
remedy lay in Rule 26 which permits a non-defaulting party to
deliver a notice of bar to the defaulting party. But that remedy is
available while the pleading remains outstanding. And as I have
pointed out above, the existence of this remedy does not affect the
question whether or not the pleading delivered late is an irregular
step.
For these reasons, I
conclude that the late delivery of the amended particulars of claim
without an application for condonationconstituted an irregular step.
The question is whether in the exercise of its discretion, the court
should set asidethe amended particulars of claim. The High Court did
not consider this aspect of the case as it took the view that the
defendant did not allege or establish prejudice. This Court is
entitled to consider this aspect.
As pointed out above,
the court has discretion whether or not to set aside the irregular
step.This is implicit, if not explicit from Rule 30(3). I endorse
the statement in China
State Construction Engineering Corporation (Southern Africa) (Pty)
Ltd v Pro Joinery CC that
the court has discretion whether or not to grant the application to
set aside the irregular step even if the irregularity has been
established. The court may, in the exercise of its discretion,
overlook the irregularity. A relevant consideration in this regard
is prejudice. Prejudice that is required relates to the “exercise
of a party’s procedural right or duty to respond to a
communication received or to the taking of a next step in the
sequence of permissible procedure to ripen the matter for
properorderly hearing”.
The principle involved
here is that enunciated by Schreiner JA, namely, that while legal
practitioners should not be encouraged to become slack in the
observance of the Rules, which are vital to the administration of
justice, “technical objections to less than perfect procedural
steps should not be permitted, in the absence of prejudice, to
interfere with the expeditious and if possible, inexpensive decision
of cases on their real merits”.
Thus where prejudice is
absent, an order to set aside a step under Rule 30 will not be
granted.
And then to the facts of
this case.
Application of the
principles to this case
The complaint here
relates to the late filing of the amended particulars of claim. The
defendant knew at least nine and a half months prior to the filing
of amended particulars of claim that the plaintiff intended to amend
its particulars of claim and the extent of the amendment. It did not
have any objection to the proposed amendment. The only prejudice
that the defendant suffered was delay and inability to exercise its
procedural right to respond to the amended particulars of claim.
This prejudice could have been avoided by resorting to Rule 26 and
compelling the plaintiff to file its amended particulars of claim or
be barred.
But now that the
particulars of claim have been filed, it is difficult to see what
prejudice, if any, that the defendant will suffer if the amended
particulars of claim are not set aside. Counsel was unable to point
out to any such prejudice. Indeed, he could hardly do so in the
light of the fact that throughout the period of delay, the defendant
knew the extent of the proposed amendment and acting diligently it
could safeguarded its rights. And weighing prejudice, if any, to the
defendant if the amended particulars of claim is not set aside
against prejudice to the plaintiff if the amended particulars of
claim is set aside, the prejudice to the plaintiff outweighs that of
the defendant.
In these circumstances,
it will not be just and proper to set aside the amended particulars
of claim. The appeal against the dismissal of Rule 30 application
must therefore be dismissed.
It now remains to
consider the question of costs
Costs
As a general matter,
costs should follow the result. Pursuant to this general rule the
High Court awarded costs against the defendant. Sitting as the court
of first instance, in view of the conduct of the plaintiff which
justified these proceedings being brought, I would have ordered each
party to bear its own costs. But that is not the test. The proper
approach to the issue of costs on appeal is that set out by Corbett
JA (as he then was) inAttorney-General, Eastern Cape v Blom and
Otherswhere he said:
“In awarding
costs, the Court of first instance exercises a judicial discretion
and a Court of appeal will not readily interfere with the exercise of
that discretion. The power of interference on appeal is limited to
cases of vitiation by misdirection or irregularity, or the absence of
grounds on which a court, acting reasonably, could have made the
order in question. The Court of appeal cannot interfere merely on the
ground that it would itself have made a different order.”
In determining costs,
the High Court took into consideration the conduct of the plaintiff
which it found dilatory though bona fide and awarded costs on
an ordinary scale. I am unable to find any misdirection or
irregularity on the part of the High Court. The order for costs made
by it must therefore left undisturbed.
Different considerations
apply to costs in this Court. The manner in which the plaintiff
conducted litigation is sufficiently reprehensible to warrant a
departure from the general rule that the costs should follow the
result. There were two inordinate delays and no satisfactory
explanation was offered. While I have found that that the plaintiff
was not guilty of dilatory abuse, that does not detract from the
unacceptable manner in which it has conducted this litigation.
Justice demands that it be deprived of the costs though successful.
The costs must therefore be allowed to lie where they fall.
In the event, the
following order is made:
The appeal is dismissed.
There will be no order
for costs in this Court.
The order of the High
Court is upheld.
________________________
NGCOBO AJA
I agree.
________________________
MARITZ, JA
I agree.
________________________
MAINGA, JA
|
COUNSEL
ON BEHALF OF THE APPELLANT:
|
Mr
T A Barnard
|
|
Instructed
by:
|
Diekmann
Associates
|
|
|
|
|
COUNSEL
ON BEHALF OF RESPONDENT:
|
Mr
T J Frank SC
|
|
Assisted
by:
|
Mr
G Dicks
|
|
Instructed
by:
|
Engling,
Stritter& Partners
|
Aussenkehr Farms (Pty) Ltd v Namibia Development Corporation Ltd (SA 23/2010) [2012] NASC 15 (13 August 2012);