CASE
NO.: SA 9/2001

IN
THE SUPREME COURT OF NAMIBIA

In
the matter between

NORTHBANK
DIAMONDS LIMITED Appellant

And

FTK
HOLLAND BV First Respondent

EXOTIC
INTERNATIONAL (PTY) LTD Second Respondent

AUSSENKEHR
TOWN DEVELOPERS (PTY) LTD Third Respondent

AUSSENKEHR
FARMS (PTY) LTD Fourth Respondent

GRAPE
VALLEY PACKERS (PTY) LTD Fifth Respondent

NAMIBIA
NURSERIES (PTY) LTD Sixth Respondent

NAGRAPEX
HOLDINGS (PTY) LTD Seventh Respondent

CORAM:
Strydom, C.J., O’Linn, A.J.A. et Chomba, A.J.A.

HEARD
ON: 11/10/2001

DELIVERED
ON: 21/02/2002

APPEAL
JUDGMENT

STRYDOM,
C.J.: This is an appeal from a decision of a single Judge,
sitting in first instance, dismissing an application by the appellant
for the granting of an order for the security for costs brought
against the seven respondents. The appeal was initially brought to
the Full Bench of the High Court as of right. However Act No. 10 of
2001 amended the High Court Act, Act No 16 of 1990, by the abolition
of appeals to the Full Bench of the High Court and granting to
appellants, in this instance, a right of appeal directly to the
Supreme Court. Section 9 of that Act further provided that appeals
to the Full Bench of the High Court still pending at the date of
promulgation of Act No. 10 of 2001 shall stand removed to the Supreme
Court of Namibia.

The
seven respondents together with three others, namely Namibia Grape
Growers and Exporters Association, Namibia Farm Workers Union and
Aussenkehr Small Businesses Association, which latter Association
later withdrew from the proceedings, launched an application in the
High Court against the appellant, as third respondent in the main
application, and two others namely The Minister of Mines and Energy
and the Minerals Ancillary Rights Commission. I will herein further
refer to the appellant as Northbank and to the respondents as they
are styled in the main application namely as third to tenth
applicants.

The
seventh applicant is the owner of the farm Aussenkehr where grapes
are grown for the export market. All the other applicants are
directly or indirectly involved in the business of marketing the
grapes or are themselves growers. Northbank is a mining company
which was granted a licence to prospect for diamonds on the property
of the seventh applicant. The application launched by the
applicants, as far as Northbank is concerned, is primarily aimed to
stop it from continuing with its activities. Various declarators
were asked, inter alia, on the basis that the rights sought by
Northbank infringed on the seventh applicant’s rights in terms of
the Constitution, its rights in terms of the Foreign Investment Act,
Act No. 27 of 1990 and various provisions of the Minerals Act, Act
No. 33 of 1992. The applicants also attacked the renewals of
Northbank’s prospecting licence and asked that they be declared
null and void.

The
Counsel who appeared before us, namely Dr. Henning, assisted by Mr.
Rossouw, for Northbank, and Mr. Barnard, for all the applicants, also
appeared in the main application. The Court, at the outset, allowed
certain documents and affidavits which had formed part of the record
herein but which were not so included.

Notices
in terms of Rule 47 of the High Court Rules preceded the application
for security for costs. In these notices security was claimed from
each of the applicants in an amount of N$600,000 – 00. This amount
was based on a calculation made by a costs consultant. Liability for
payment of security was denied by the applicants which then led to
the launching of a formal application in which Northbank claimed as
follows:

“(a) That
the third applicant, fourth applicant, sixth applicant, seventh
applicant, eighth applicant, ninth applicant and tenth applicant,
jointly and severally be ordered to furnish security for the third
respondent’s costs in the main application in an amount of
N$600,000.00, alternatively in an amount to be determined by the
Registrar of the above Honourable Court;

(b) That
the third applicant, fourth applicant, sixth applicant, seventh
applicant, eighth applicant, ninth applicant and tenth applicant be
ordered to furnish the said security within a period of 7 (seven)
days after date of this order, alternatively after the date of
determination of the amount by the Registrar of the above Honourable
Court;

(c) That,
in the event of the security not being furnished, leave be granted to
the third respondent to apply on the same papers, duly amplified if
necessary, for the dismissal of the main application with costs;

(d) Directing
the third applicant, fourth applicant, sixth applicant, seventh
applicant, eighth applicant, ninth applicant and tenth applicant,
jointly and severally, to pay the costs of this application;

(e) Further
and/or alternative relief “

The
liability of the applicants to furnish security for costs was based,
firstly on common law because of the fact that the third applicant,
FTK HOLLAND BV, is a peregrinus. It is described as a
“beschlote vennootschap” duly registered in terms of the
laws of Holland, with its registered offices at Klappolder 191-193,
NL-2665MP, Bleiswijk, Holland. (See in this regard Witham v.
Venebles, (1828) 1 Menz 291 and Saker and Co. Ltd v. Grainger,
1937 AD 223 at 227). Secondly, as far as the other applicants
were concerned they were all limited companies and, although incolae
of this Court, their liability arose from the provisions of sec. 13
of the Companies Act, Act No 61 of 1973.

In
regard to a peregrinus Dr Henning pointed out that the general
principle was that a Court in proceedings so initiated was entitled
to protect an incola “to the fullest extent.” (See
Saker’s case p227). Unless a peregrinus has within
the area of jurisdiction of the Court immovable property with a
sufficient margin unburdened to satisfy any costs order the general
rule was that security had to be furnished. (See Herbstein and van
Winsen: The Civil Practice of the Supreme Court of South Africa,
4^th ed. P328.) However Counsel referred the Court also
to the case of Magida v. Minister of Police, 1987(1) SA 1 (A)
where the South African Appeal Court now laid down certain criteria
which should be considered when the Court exercises its discretion.
(See also SA Iron & Steel Corporation Ltd. v. Abdulnabi,
1989(2) SA 224 at 233F-H.)

In
regard to the incolae companies the Companies Act provides as
follows:

“13.
Security for costs in legal proceedings by companies or bodies
corporate.

Where
a company or other body corporate is plaintiff or applicant in any
legal proceedings, the court may at any stage, if it appears by
credible testimony that there is reason to believe that the company
or body corporate or, if being wound up, the liquidator thereof, will
be unable to pay the costs of the defendant or respondent if
successful in his defence, require sufficient security to be given
for those costs and may stay all proceedings till security is given.”

Section
13, and its predecessor, section 216, was on various occasions the
subject of interpretation by the Courts. In Beaton v SA Mining
Supplies (Pty) Ltd., 1957(2) SA 436 (WLD) at 439 E-F, the
following was stated:

“I
have therefore come to the conclusion that the applicant has
established by credible testimony that there is reason to believe
that if the respondent is unsuccessful in the action, it will be
unable to pay the costs of the applicant. The remaining question to
be determined is whether the court should exercise the discretion
conferred on it under section 216 in favour of the Applicant.”

Both
Counsel submitted, and correctly in my view, that section 13 requires
an investigation in two stages. Firstly the Court must consider
whether the applicant has established by credible testimony that
there is reason to believe that the company or body corporate, if
unsuccessful, will not be able to pay the costs of the defendant
applicant. If the Court is not so satisfied that is the end of the
matter. However if the Court is satisfied that a case was made out
it must then exercise the discretion conferred on it by the section.
(See also Vumba Intertrade CC v. Geometric Intertrade CC,
2001(2) SA 1068 (W) and Henry v. RE Designs CC, 1998 (2) SA
502(C) where the Courts, though dealing with section 8 of the Close
Corporations Act, concluded that nothing turns on the difference in
wording between that section and section 13 of the Companies Act.)

In
regard to when the Court has “reason to believe” that an
applicant or plaintiff company will be unable to pay a cost order
against it, the following was stated in the Vumba Intertrade-case,
supra, at page 1071 E-H, namely:

“It
is necessary to emphasise that, before a Court can decide how to
exercise the discretion vested in it by s 8 of the Close Corporations
Act, there must be “reason to believe” that the respondent close
corporation will be unable to pay the costs of the defendant
applicant if successful in its defence: Viviers v. Williams Builders
& Contractors Ltd. 1936 TPD 273 at 274; Henry v. RE Designs CC
(supra at 507H). Although the phrase “there is reason to believe”
places a much lighter burden of proof on an applicant than, for
instance, “the Court is satisfied” (Trustbank van Afrika Bpk v.
Lief and Another 1963 (4) SA 752(T); Agrodrip (Pty) Ltd v. Fedgen
Insurance Co Ltd 1998 (1) SA 182 (W) at 186 E), the “reason to
believe” must be constituted by facts giving rise to such belief
(cf London Estate (Pty) Ltd v. Nair 1957 (3) SA 591 (D) at 592 F) and
a blind belief, or a belief based on such information or hearsay
evidence as a reasonable man ought or could not give credence to,
does not suffice

In
short, there must be facts before the court on which the court can
conclude that there is reason to believe that a plaintiff close
corporation will be unable to satisfy an adverse costs order; and the
onus of adducing such facts rest on the applicant.”

Although
it may not always be easy to find facts which would support the
“reason to believe” it follows from what is stated above that
surmise, speculation and even a belief, which is not supported by the
necessary facts, would certainly not suffice. There cannot be any
doubt that the onus to prove so is on the applicant however, he may
be assisted in his task by material or facts put before the Court by
the respondent company, and where the matter is peculiarly within the
knowledge of a respondent it was laid down in various cases that less
evidence will suffice to establish a prima facie case than
generally required. (See Gericke v. Sack, 1978 (1) SA 821
(A) at 827 E-G; Monteoli v. Woolworths (Pty) Ltd, 2000 (4) SA
735 (W) at 742 D-G). However less evidence does not open the door
for surmise or speculation. I also agree with Dr. Henning that the
words “credible testimony” mean no more than evidence capable of
being believed. (See Claassen, Dictionary of Legal Words and
Phrases, Vol 1, 347).

As
pointed out previously, once the Court is satisfied that there is
credible testimony which shows that there is reason to believe that
an applicant company will not be able to pay a cost order, if
unsuccessful, the Court may order it to furnish security for such
costs. It was stated in Lappeman Diamond Cutting Works (Pty) Ltd
v. MIB Group (Pty) Ltd (No 1), 1997 (4) SA 908 (W) at p
919G-H that the purpose of sec. 13 is to protect the public in
litigation by bankrupt companies which may drag them from one court
to the other without being able to pay costs if unsuccessful.

Before
the decision of the Supreme Court of Appeal in Shepstone &
Wylie and Others v. Geyser NO, 1998 (3) SA 1036(SCA) it seems
that the Courts generally held the view that once it was established
that there was reason to believe that a company would not be able to
pay a cost order, if unsuccessful in its litigation, a defendant or
respondent should not be deprived of the benefit, namely to be
furnished with security for costs, unless special circumstances
existed. (See Fraser v. Lampert NO, 1951 (4) SA 110 (TPD)
at 115B; Trust Bank van Afrika Bpk. v. Lief and Another, 1963
(4) SA 752(T) at 754H ad fin; Cometal-Mometal SARL v.
Corliana Enterprises (Pty) Ltd, 1981 (4) SA 662 (W) at 663F-G;
Petz Products (Pty) Ltd v. Commercial Electrical Contractors (Pty)
Ltd, 1990 (4) SA 196 (CPD) at 206 E-H and Henry v R E Designs
CC – case, supra, at 508B – 509I.)

However,
in the Shepstone & Wylie- case, supra, Hefer, JA,
(as he then was), at p 1045, discussed this approach and stated at
1045I – 1046C, as follows:

“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 pre -disposition either in favour of or against granting
security. 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.’

These
are probably the ‘considerations of equity and fairness’
mentioned in Magida v Minister of Police, 1987 (1) SA 1 (A) at
14D-F in regard to the consideration of an application for security
for costs against a peregrinus, and which should, in my
judgment, also prevail in an application under s 13.”

(Discussing
the position in English law under the provisions of section 447 of
the 1948 Companies Act, which are almost similar to our section 13,
and its predecessor section 216, Lord Denning, in the case of Sir
Lindsay Parkinson & Co Ltd v Triplan Ltd, [1973] 2 All ER 273
CA, then already stated that the discretion exercised by the court,
“is unfettered even though there is before me credible evidence
that if Parkinson are successful in their defence Triplan will be
unable to pay their costs.”)

As
to the nature of the discretion which a Court must exercise when
dealing with section 13, the following was stated in the Shepstone
& Wylie-case, supra, at p 1044I – 1045D, namely:

“The
last preliminary matter relates to the discretion which a court has
to grant or refuse relief under s 13. Numerous judgments of this
Court are to the effect that the power to interfere on appeal with
the exercise of a discretion is limited to cases in which it is found
that the trial Court has exercised its discretion capriciously or
upon a wrong principle, or has not brought its unbiased judgment to
bear on the question, or has not acted for substantial reasons (See,
for example, Benson v SA Mutual Life Assurance Society 1986
(1) SA 776 (A) at 781I-782B and the cases cited there.) The
judgment in Knox D’Arcy Ltd and Others v Jamieson and Others
(supra) reveals, however, that this is not the correct approach
in cases where the word ‘discretion’ is not used in the strict
sense. To say, for example, that the Court has a discretion to
grant or refuse an interim interdict means no more than that ‘the
Court is entitled to have regard to a number of disparate and
incommensurable features in coming to a conclusion’ (per EM
Grosskopf JA at 316 H-I). In such cases the Court of appeal is at
liberty to decide the matter according to its own views of the
merits. (See also Hix Networking Technologies v System
Publishers (Pty) Ltd and Another 1997 (1) SA at 401G-402C.)
Accordingly, whenever such a Court is asked to interfere, the nature
of the discretion must first be ascertained. This will not be a
simple exercise where a discretion is conferred in a statute by the
use of the word ‘may’ which, standing on its own, is not
particularly informative.”

The
Court, in the Shepstone & Wylie-case, supra, was
not called upon to determine the nature of the discretion exercised
by a Court of first instance in terms of section 13 because the Court
a quo, in that case, had wrongly come to the conclusion that
section 13 did not apply to Liquidators of insolvent companies
litigating on behalf of such company. However this issue was
decided by a Full Bench of the Witwatersrand Local Division in the
matter of Bookworks (Pty) Ltd v Greater Johannesburg Transitional
Metropolitan Council and Another, 1999 (4) SA 799 (WLD) at 804G –
808B. After a thorough discussion of the issue, Cloete, J, who
wrote the judgment of the Court, came to the conclusion that the
discretion with which a Court of first instance is vested by section
13 is a narrow or strict one. Four reasons for this conclusion are
given by the learned Judge, namely:

“(1) Section
13 is essentially concerned with costs – a matter invariably held
to involve the exercise of a discretion in a narrow sense.

(2) When
s 13 is combined with the provisions of Rule 47, as it must be to
give it practical effect, the Court is regulating its own procedure
by deciding not only whether a litigant should be ordered to provide
security for costs – a decision which may be made, in terms of the
section ‘at any stage’ of proceedings ( and therefore in
medias res) – but also, where it grants such an order, whether
the litigant should be allowed to proceed until such security has
been provided. The regulation of a Court of its own procedure is
also a matter usually to involve a discretion in the narrow sense.

(3) The
discretion requires in essence the exercise of a value judgment and
there may well be a legitimate difference of opinion as to the
appropriate conclusion.

(4) Appeals
against the exercise of the discretion conferred by s 13 should be
discouraged in the absence of some demonstrable blunder or
unjustifiable conclusion on the part of the trial Court, otherwise
the decision on the merits of a matter before the Court would be
delayed by an appeal on an application which (to use the words of
Innes CJ in Warner’s case supra at 310), ‘marks no
stage in the progress of the case but is quite outside and incidental
to it’.”

Except
that I would be hesitant to categorise, and thereby to limit, the
instances where a Court of appeal would be entitled to interfere in
the exercise of the discretion by a Court of first instance as set
out in paragraph (4) above, for fear of introducing a more stringent
qualification into what is already a limited jurisdiction for a Court
of appeal to interfere (See Shepstone & Wylie-case, supra,
at 1044I-1045D) I, with respect agree with the reasoning and
conclusion of the learned Judge. I also did not understand Counsel
for Northbank to submit otherwise.

This
brings me to the merits of the appeal. I will first deal with the
application based on section 13 of the Companies Act. This, as
previously pointed out, first of all involved a determination by the
Court –a-quo whether there was credible testimony giving
rise to a reason to believe that any of the applicant companies would
not be able to pay the costs of Northbank if the latter was
successful in its defence of the application.

The
grounds of appeal, regarding this part of the case, are aimed at,
what is termed, the findings of the Court a quo that the
applicants were jointly and severally able to pay any order of costs
which may be awarded to Northbank if it should succeed in its defence
in the main application. That in my opinion is the main thrust of
Northbank’s attack although certain grounds also individually
attacked certain findings made by the Court and complained of factors
not considered by the Court, which it should have. During argument
Northbank’s Counsel submitted that the finding of the Court a
quo that the issue is really one whether the overall financial
position and the pooled financial resources were sufficient to take
care of any costs order made against the applicants meant that the
Court never reached the stage where it was called upon to exercise a
discretion as it did not get past the requirement for the exercise of
such a discretion laid down by section 13, namely the reason to
believe that one or some or all of the applicants would not be able
to comply with such an order. This, so it seems to me, presupposes
a finding by the Court a quo that all the applicants were
pecunious and had the necessary financial resources to pay such an
order. In my opinion the Court never made such a finding either
expressly or by implication.

Although,
on the other hand, the Court did not make a specific finding that
some of the applicants, or all of them, were impecunious, its
reference to the pooled financial resources and overall financial
position of all the applicants would have been meaningless if the
Court did not come to the conclusion that, at least in regard to some
of the applicants, there was reason to believe that they would not be
able to pay an order for costs. The Court a quo, in my
opinion clearly demonstrated its understanding of section 13. The
Court, in its judgment, referred to the words of the section namely,
that the Court may make an order if there is reason to believe, and
then continued and stated:

“My
understanding of the statement is that the section confers a
discretion on the court to make an order if the requirements of
the section have been satisfied.”

The
Court itself supplied the emphasis to the last part of the sentence.
The reference to the requirements of section 13 can only refer to
the “reason to believe”. The Court then dealt with the
financial position of some of the applicants and concluded that the
pooled resources of all the applicants would be sufficient to pay any
order of costs made against the applicants jointly and severally.
Although the Court, in the exercise of its discretion, also took
other factors into consideration, such as the possibility that the
backers of the various companies would come to their rescue in the
case of a costs order, it came to the conclusion that Northbank did
not show that the pooled resources of all the applicants were not
sufficient to pay its costs.

Counsel
on both sides also raised various other arguments. Mr. Barnard
submitted, inter alia, that because of the lateness of the
application the Court should dismiss it. He further submitted that
the appeal really only concerns costs and should simply for that
reason not be entertained by this Court. He also questioned the
bona fides of Northbank and submitted that it is a company
entirely run and financed by outsiders. Dr. Henning, on the other
hand, submitted that there is reason to believe that each and every
one of the applicants would be unable to pay an order of costs if
Northbank should be successful in its defence of the main
application. Counsel pointed out that the applicants have omitted
to substantiate any of their allegations by placing financial
documents and Balance Sheets before the Court. Because of the
conclusion to which I have come it will not be necessary for me to
deal with all of these contentions.

On
all the evidence placed before the Court it seems to me that in
regard to the fourth, sixth and ninth applicants there is reason to
believe that they would be unable to comply with an order of costs
against them. In regard to some of them there is a dearth of
information concerning their financial position. Until the
transformation, alleged in regard to the fourth applicant, takes
place, its financial position is uncertain. It suffered a loss of
N$l,726 million during the 2000 financial year. As far as the sixth
applicant is concerned the proclamation of the township has not yet
happened and in any event, as was pointed out by Dr. Henning, that is
no indication by itself of financial ability. The ninth applicant
was only registered in November 1999 with an issued share capital of
N$100, and apart from the value of some grape sticks very little
other information was given. In regard to these applicants, or
some of them, the omission to give financial information such as
balance sheets etc. may very well lead to the inference that had they
given such information, that would not have provided any answer to
the demand for security for costs. (See in this regard Milne v.
Sadowa Minerals (Pty) Ltd, 1956 (2) PH F89 (W); Equitable
Trust and Insurance Company of SA Ltd v. Registrar of Banks, 1957
(1) SA 689 (T) at 691D-F; Petz Products (Pty) Ltd v. Commercial
Electrical Contractors (Pty) Ltd, 1990 (4) SA 196 © at
206E-G and Henry v. RE Designs CC, supra, at 512E.)

However
in regard to the seventh Applicant it was alleged, and accepted by
the Court a quo, that it had received some N$9,23 million in
respect of 92 000 of approximately 270 000 boxes of Aussenkehr grapes
which were sold to overseas markets and paid approximately N$1,3
million in cash as wages to its workers. It was the owner of
Aussenkehr farm of which portion 7 was sold for an amount of N$ 18
million. The remainder of the arable land would fetch about N$500
million in terms of current market value. It was thus accepted that
the seventh applicant had generated a nett income of N$9,23 million
during the current grape season and had, as at 26 January 2001, the
date on which the application was due to be heard, liquid funds of a
little over N$979 000 in its bank account, which amount is subject to
fluctuation. The highest credit balance was N$1,229 million and the
lowest N$3015 debit.

Dr.
Henning criticized this information and pointed out that again no
financial statements were put before the Court. In this regard it
was pointed out by Cloete, J. in Vumba Intertrade CC-case,
supra, at 1072A that the furnishing of a balance sheet so that
the Court could see by how much a corporation’s assets exceeds its
liabilities could not be elevated to a rule which permits a defendant
to an order for security where such documents were not produced on
demand. That, so it seems to me, would depend on the strength of
the case made out and the other information put before the Court,
also information put before the Court by the company. In this
regard there is the value of the land possessed by the seventh
applicant. Dr. Henning said that the value was based on hearsay
evidence. That may be true to a certain extent but this value can be
compared with the price for which previously land was sold for N$l8
million. This price was paid for 778,3760 hectares of arable land
according to Walker, the deponent on behalf of Northbank (See the
record p 16, pa 20.4, vol. 1). Even if it was accepted that the
value of the remainder, which comprises some 10 000 hectares of
arable land, is not necessarily the same as that for which portion 7
was sold, it still remains that such land must be worth many million
dollars. This is, in my opinion, supported by the fact that two
bonds were registered over the property, one in the amount of N$38,5
million and another of N$5 million. It is so that these bonds are
liabilities but at the same time it is also a reflection of the value
of the land over which they were passed. The first bond was
serviced by payment of an amount of approximately N$6 million for the
year in March 2001. The income of N$9,23 million was not
substantiated other than by a composite statement, as was pointed out
by Counsel, but on the other hand it could also not be denied.
Documents to substantiate the sale of so many boxes of grapes would
in all probability have swollen the record far beyond what it already
is and would have been impractical. In regard to the credit balance
of N$979 000 on its bank account, nothing much could be said except
that the seventh applicant was being selective in placing only one
page of its statement before the Court. I am satisfied that there
is no reason to believe that the seventh applicant would be unable to
pay any order of costs made against it. The above evidence, in my
opinion, clearly showed that the seventh applicant would be able to
generate sufficient funds to pay any adverse costs order.

In
regard to the eighth applicant it was alleged that it owns a store
worth $1 million American dollars which was built with a loan in that
amount and that it made a trading profit of N$400 000. During the
current season it packed 150 000 cartons of grapes at a packing fee
of N$3,5 million. The tenth applicant owns land on Aussenkehr the
value of which was alleged to be N$25 million dollars based on the
current market value in that area and has a loan of N$18 million.

In
its replicating affidavit, and in answer to the applicants’ set out
of their financial position, the deponent on behalf of Northbank
stated that although the applicants did not have to prove that they
were solvent, they had to prove that they were possessed of
sufficient liquid assets to pay Northbank’s costs if ordered to do
so. If this means that the company must have some liquid fund ready
and available to pay for such costs then I cannot agree. In my
opinion the company must be able to show that it has free assets
which can easily be liquidated or in respect of which the necessary
funds can be raised to pay an order for costs.

The
Court a quo exercised its discretion against Northbank on the
basis that the pooled resources of the applicants were sufficient to
pay the costs if Northbank were successful in its defence in the main
application. The first requisite for such a finding is of course
that the facts must be such that if an order of costs is made that it
will be made against all the applicants jointly and severally. That
the Court has a discretion to make such an order is not in dispute.
In Minister of Labour v. Port Elizabeth Municipality, 1952 (2)
SA 522 (A) at 537A-D the following was stated:

“I
have cited these examples to show that the practice in Voet’s time
was quite different from modern practice, for what Voet says does not
apply to-day. This being so, it seems to me to be unsafe to accept
Voet as a guide in matters of costs. It is, however, interesting to
note that Voet in 42.1.23 recognised that the Court has a wide
discretion where he said that it would not be unjust that one of
several co-litigants in the same law suit should be alone condemned
to pay the costs of suit, insofar as he alone caused the costs to be
increased by his own fault and obstinacy.

The
doubt, which seems to have been raised in Gray’s case, supra, as to
whether a Court can grant costs jointly and severally against more
than one defendant, appears to me to have no substance. In modern
practice a trial Court has a discretion as to costs and the
successful party should, as a general rule, have his costs.”

See
further Cilliers, Law of Costs, (2^nd ed.) p175 and
Yassen and Others v. Yassen and Others, 1965 (1) SA 438 (N) at
444F-H. In Blou v Lampert and Chipkin NNO and Others, 1972
(2) SA 501 (T) at 505E-G it was said that:

“There
is no fault to be found with the suggestion that the unsuccessful
opponents be ordered to pay costs jointly and severally because if no
such special order is made an order for costs against them as
consortes lites means that each one of them is only
liable for his aliquot share of the costs. Where they have made
common cause with one another in bringing the unsuccessful
proceedings or in opposing them, the successful party is entitled to
ask that they be ordered to pay his costs jointly and severally even
if there has been no specific prayer to that effect…”

In
the present instance all the applicants, also those not involved in
this application, made common cause and joined together to bring the
main application against Northbank and the other two respondents.
That the case of the one is also the case of the other was
demonstrated by the fact that they confirmed the affidavit by their
deponent Ndauendapo, who concluded his affidavit by stating that he
“prays on behalf of the applicants for the relief set out in the
Notice of Motion”. There is therefore a total overlapping of the
causes of action of the various applicants and if an order of costs
is made in favour of Northbank it will be made jointly and severally
against all the applicants. After all, it was the finding of the
Judge-a-quo, which is also the Judge in the main application,
that in regard to costs it is the pooled resources of all the
applicants that are at stake. That is also the attitude of Mr.
Barnard and he would hardly be able to submit otherwise when it comes
to a costs order in Northbank’s favour at a later stage in the
proceedings. It was submitted that some of the applicants might
decide to withdraw as did happen in the case of the fifth applicant.
It is not clear to me when the fifth applicant withdrew but at this
stage we were informed that the case has been argued for a
considerable number of days and it is therefore unlikely that further
withdrawals would take place. We were also informed that the locus
standi of certain of the applicants are attacked.

On
the allegations made this is of course always a possibility but one
which this court can hardly adjudicate upon without going extensively
into the merits of the main application which, as I have understood
counsel, is not permissible in applications of this nature. To what
extent the Court may consider the merits see Henry v R.E. Designs
cc, supra, p 508. There was, in any event not sufficient
material put before the Court to enable it to undertake such an
investigation.

Mr.
Barnard, supporting the finding of the Court a quo, submitted
that where one or more of the applicant companies are shown to be
able to pay an adverse costs order and where it is also clear that
such order to pay costs will be made jointly and severally, it does
not follow that the fact that some of the applicant companies were
shown to be impecunious, the Court would order the impecunious
companies to furnish security for costs. For this submission Counsel
relied on English cases and the interpretation of section 447 of the
English Companies Act, 1948, by the Courts.

The
early practice in English law in regard to Co-plaintiffs or
applicants where one is a peregrinus is to refuse an
application for security for costs if there is a fund available
within the jurisdiction against which a successful defendant can
enforce the judgment for costs. (See Porzelack KG v Porzelack
(UK), [1987] 1 All ER ChD 1074 at l076 I – 1077a; Sykes v.
Sykes, (1869) LR 4 CP 645; D’Hormusgee v. Grey (1882) 10
QBD 13 and Pearson v. Naydler [1977] All ER Ch D 531 at 534c).
In regard to the interpretation of sec 447 of the English Companies
Act, 1948, which is almost similar to our section 13, this rule of
practice was now regarded as a factor which the Court, in the
exercise of its discretion, should consider. See the Pearson-case,
supra, at 535i; In the case of John Bishop Ltd v. National
Union Bank Ltd, [1973] All ER 707 Ch D, also dealing with the
interpretation of section 447, the Court ordered security to be given
because the Court was not satisfied that the one co-plaintiff “…will
necessarily be ordered to pay to the defendants all the costs which
they incurred vis-à-vis the plaintiff company.”

As
far as South African law is concerned the Court was only referred by
Mr. Barnard to two cases dealing, to a certain extent, with this
issue. That is Kruger Stores And Another v. Koopman and Another,
1957 (1) SA 645 (WLD) and Paradigm Capital Holdings Ltd v. Pap
Computer Services CC, 2000 (4) SA l070 (WLD). (This last
mentioned case does not seem to me to be of any assistance.) In
the Kruger-case, supra, at 648 F-H the following was
stated:

“I
do not think that there is any substance in the second argument.
Mr. Kentridge’s point, as I have said, was that even if the
applicant company was ordered to give security that would not prevent
it from proceeding in the name of the second applicant as agent for
the second applicant. I am unable to agree with that. If there
are two applicants and one is a company then that one surely can be
ordered to give security even though there is another applicant that
is not a company. Mr. Oshry’s answer to the argument was that
that argument could only succeed if the applicant company withdrew
from the proceedings, leaving a non-company applicant as the sole
applicant, ant I am disposed to agree with that argument; as long
as the company remains on the record as an applicant with a potential
liability for costs that applicant can be ordered to give security.”

I
do not think that anyone can argue with the statement that as long as
the company remains on record as an applicant with a potential
liability for costs that such company can be ordered to give security
for costs. The question whether the Court will do so in the exercise
of its discretion where the other co-applicant is pecunious and where
there is a total overlapping of causes of action, was however not
decided.

In
the exercise of its discretion in terms of section 13 of the
Companies Act the Court “…must decide each case upon a
consideration of all the relevant features…” (My emphasis.
See the Shepstone-case, supra,p1045 I.) In the
present case where all the applicants have made common cause and
where it is clear that if Northbank is successful in its defence that
an order jointly and severally for the payment of such costs will be
made by the Court, then if one or more of such applicants would be
able to foot the bill, that is a feature which the Court has to
consider in the exercise of its discretion. Dr. Henning, if I
understood him correctly, conceded this. In fact such a situation
where one or more of the appellants are well able to pay an order for
costs made jointly and severely would remove any possible injustice
to Northbank of not being compensated for its costs if it is
successful in its defence of the claims instituted by the applicants
bearing in mind that one or more of the applicants are able to pay
its costs. (See Keary Developments Ltd v. Tarmac Construction
Ltd and Another, [1995] 3 All ER 534 (CA) at 540a-b-).

It
therefore seems to me that the Court a quo was entitled to
consider the overall financial position of the applicants and their
pooled financial resources and that this Court, sitting as a Court of
appeal, will not interfere with the exercise of its discretion by the
Court a quo.

As
far as the third applicant is concerned, that is the peregrinus
to the Court’s jurisdiction, it seems that the finding of the Court
a quo that the pooled resources of all the applicants were
sufficient to ensure payment of any order of costs in favour of
Northbank also operated in favour of the peregrinus company.
As the same facts, concerning a joint and several order for costs,
which applied to the incola companies, also applies to the peregrinus
company, it seems to me that there is likewise no basis on which
this Court, sitting as a Court of appeal, can interfere with the
exercise of its discretion by the Court a quo. The attack on
this part of the judgment must therefore also fail.

In
the result the appeal is dismissed with costs.

(signed
) STRYDOM C.J.

I
agree.

(signed)
O’LINN, A.J.A.

I
agree.

(signed)
CHOMBA, A.J.A.

COUNSEL
FOR THE APPELLANT: DR. P.J. v R. HENNING, S.C.

ASSISTED
BY: ADV. P.F. ROSSOUW

(ELLIS
& PARTNERS)

COUNSEL
ON BEHALF OF THE RESPONDENTS: ADV. T.A. BARNARD

(NATE
NDAUENDAPO & ASS.)