Cart Blanche Marketing CC v N & X Transport CC, In re: N & X Transport CC v Cart Blanche Marketing CC and Another (3919/2011) [2012] ZAECGHC 36 (16 May 2012)

IN THE HIGH COURT OF SOUTH AFRICA

(EASTERN CAPE DIVISION – GRAHAMSTOWN)

CASE NO: 3919/2011

DATE HEARD: 26/04/2012

DATE DELIVERED: 16/05/2012

In the matter between

CART BLANCHE MARKETING CC …........................................................APPLICANT

and

N & X TRANSPORT CC …......................................................................RESPONDENT

In re:

N & X TRANSPORT CC ….............................................................................PLAINTIFF

CART BLANCHE MARKETING CC …................................................1ST DEFENDANT

MLANGENI JOSEPH SIMINI …..........................................................2ND DEFENDANT

JUDGMENT

ROBERSON J:-

[1] This is an application in terms of Rule 41 (1) (c) of the Uniform Rules, for the payment by the respondent of the costs of an action which was withdrawn by the respondent without a consent to pay costs. The respondent had instituted action against the applicant and one Simini Mlangeni for payment of damages arising from a collision between the respondent’s motor vehicle and a vehicle driven by Mlangeni in the course and scope of his employment with the applicant, or as an agent of the applicant. The applicant entered an appearance to defend the action and the respondent thereafter withdrew the action. In its notice of withdrawal it did not consent to pay the costs of the action and the notice stated that each party was to pay its own costs. The applicant thereafter brought the present application.

[2] The founding affidavit was deposed to by the applicant’s attorney. In addition to setting out the background to the matter, he accused the respondent of being disingenuous in the notice of withdrawal, in that it had never been agreed that each party should pay its own costs.

[3] The respondent’s resistance to the application is based on unusual grounds. The answering affidavit was deposed to by Siyamthemba Ngwandi, the sole member of the respondent. He admitted that there had been no agreement that each party should pay its own costs, but denied disingenuousness. He stated that the respondent, which carries on business as transport contractors, has in the past provided services to the applicant for the transportation of goods. The applicant has been a major client. After the collision referred to in paragraph [1] above, the respondent was compensated by its insurance company, Constantia Insurance Company Ltd. (Constantia) for the damage to its vehicle, in the sum of R308 700.49. Thereafter Constantia, acting under its right

of subrogation, instituted the action against the applicant and Mlangeni. After the summons was served on the applicant, one of its employees, Alwyn van Schalkwyk, whom Ngwandi believed was employed in the applicant’s sub-contracting division, on numerous occasions telephonically warned him that if Constantia continued with the action, the applicant would cease using the respondent’s

services for the transportation of goods. The applicant did terminate the business relationship. The loss of the applicant’s business had a serious impact on the respondent’s business and Ngwandi had to terminate the employment of many of its employees. He therefore had no option but to request Constantia to withdraw the action, and undertook to repay Constantia the amount they had paid out on the claim. Ngwandi annexed to his affidavit a copy of the letter which he sent to Constantia. In the letter, after referring to the collision and the issue of summons, he said:

“Now I would like to discuss this matter with the insurance to find out if there is no way that I can arrange with the insurance to pay the money myself because this process will have a big impact on my business that it will go down and also my workers will be jobless as I am doing business with Carte Blanche Marketing. I understand that the process is supposed to run like this but I am pleading with the insurance if this is possible that the summons can be dropped against Carte Blanche Marketing and I would be liable and pay the money myself.

If it is possible I would like to pay this amount of R308 700.49 in monthly instalments of R6431 for a period of 48 months beginning at the end of January 2012.”

[4] This letter was dated 5 December 2011. The action was withdrawn on 13 January 2012. According to Ngwandi, in spite of the withdrawal of the action, the applicant did not resume the business relationship with the respondent.

[5] The replying affidavit was deposed to by Michelle Airey, the sole member of the applicant. She said that the portion of the notice of withdrawal dealing with costs purported to mislead the court and amounted to an attempted fraud on the court and the applicant. She was “astounded” that Ngwandi had the “gall” to deny that the respondent had been disingenuous. She had no knowledge of who the respondent’s insurers were and what their involvement was in the matter, and accordingly denied that the respondent had been compensated by Constantia and that Constantia had instituted the action.

[6] In addition to denying Ngwandi’s allegations that van Schalkwyk had warned against continuing with the action and that the applicant had terminated the business relationship, she said that the applicant did not have a sub-contracting division, did not own any trucks or vehicles, did not conduct a transport business, and its principal business was marketing and freight transport brokerage. Van Schalkwyk had been employed by the applicant as its Service Provider Manager. Van Schalkwyk deposed to a confirmatory affidavit.

[7] With regard to the letter which Ngwandi said he sent to Constantia, Airey said there w*as no proof that the letter was in fact sent. She referred to Ngwandi’s averment that following his request Constantia withdrew the action, as a “fictitious afterthought” and said that the absence of confirmatory affidavits from Constantia or the respondent’s attorney “belittled” Ngwandi’s allegations, which were a “lie”.

[8] She denied Ngwandi’s averment that despite the action having been withdrawn the applicant had not resumed the business relationship, and reiterated her previous averments to the effect that the applicant’s principal business is marketing and freight transport brokerage and that it does not conduct a transport business.

[9] She said she had no knowledge of Ngwandi’s averment that a court has a discretion in the award of costs where an action has been withdrawn without a tender of costs, and accordingly denied such averment. Presumably this denial was an error on the part of the person who prepared Airey’s affidavit, because in the applicant’s counsel’s heads of argument it was submitted that the court indeed retains such a discretion.

[10] In an affidavit by the applicant’s attorney in support of an application for condonation of the late filing of the replying affidavit, he stated that an action for the same claim has again been instituted by the respondent against the applicant and Mlangeni.

[11] The chief attack on the respondent’s opposition was that the grounds for opposition were unsupported. I fail to see how the respondent could have found support for Ngwandi’s allegation of threats by van Schalkwyk of a termination of the business relationship, when Ngwandi is the sole member of the respondent and van Schalkwyk had allegedly telephoned him directly. Affidavits from Constantia and the attorneys who issued the summons would have supported the respondent’s opposition but all the affidavits must be considered in their totality. Where there is a dispute of fact a final order may be granted “if those facts averred in the applicant’s affidavits which have been admitted by the respondent, together with the facts alleged by the respondent, justify such an order”.1 An exception to this general rule may occur “where the allegations or denials of the respondent are so far-fetched or clearly untenable that the Court is justified in rejecting them merely on the papers.”2

[12] I am of the view that the respondent’s version is not so far-fetched or untenable that it can be rejected. The contents of Ngwandi’s letter to Constantia accord with what he said in his affidavit. The applicant did have an employee named Van Schalkwyk. The action was indeed withdrawn, by way of a notice issued by the firm of attorneys which issued the summons. The fact that a new action has been instituted supports the respondent’s reasons for the withdrawal of the first action and the averment that the business relationship has not been resumed despite the withdrawal.

[13] The replying affidavit of the applicant in this case does little to dispel the respondent’s grounds of opposition. Strong, at times extravagant, language was used in accusing the respondent of fraud and disingenuousness, but on analysis the applicant failed to deal with the alleged previous business relationship between the parties, the termination of such relationship after the issue of summons, or the failure to resume the relationship after the withdrawal of the action. The applicant effectively sidestepped this aspect by saying that it does not conduct the business of road transportation. Ngwandi never said that the applicant conducts such a business. He said that the respondent conducts such a business and that the applicant was a client. The prior business relationship and its termination by the applicant are crucial to the respondent’s opposition to the application. It would have been a simple matter for the applicant to deal directly with the status of the business relationship between the parties. Instead the general content of the replying affidavit is one of bald denials and bald accusations of fabrication on the part of the respondent.

[14] The respondent’s version is therefore accepted.

[15] In Wildlife & Enviromental Society v MEC for Economic Affairs 2005 (6) SA 123 (ECD) at 131 B-C, Pickering J, after referring to various authorities, said the following:

“It is clear from the above, in my view, that, even in cases where litigation has been withdrawn, the general rule is of application,

namely, that a successful litigant is entitled to his costs unless the Court is persuaded, in the exercise of its judicial discretion

upon a consideration of all the facts, that it would be unfair to mulct the unsuccessful party in costs.”

[16] The facts which I have accepted in the present case mean that the applicant exerted pressure on the respondent to withdraw the action, in a manner akin to blackmail. The respondent had a choice, but it had to weigh up the advantage of being paid out by Constantia and the gross disadvantage of losing the business of a major client. Had it not been for the applicant’s warnings and the termination of the business relationship, the action would not have been withdrawn. The applicant’s conduct was an

unconscionable attempt to thwart the respondent’s right to have a dispute decided in a court (in the sense that having been

compensated by Constantia, Constantia could claim from the applicant by way of its right of subrogation). As it turns out, the same claim is still being pursued in a fresh action, so this is not a typical case of a successful litigant.

[17] In the exercise of my discretion, I am therefore of the view that it would not be fair in the circumstances to order the respondent to pay the costs of the action. The costs of the present application should follow the result.

[18] In the result, the application is dismissed with costs.

______________

J M ROBERSON

JUDGE OF THE HIGH COURT

Appearances

For the Applicant: Adv JJ Bester, instructed by Messrs Eugene Marais Attorneys, Bryanston. c/o Neville Borman& Botha Attorneys, Grahamston

For the Respondent: Adv J R Koekemoer, instructed by Whitesides Attorneys, Grahamstown.

1Per Corbett JA in Plascon-Evans Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 620 (AD) at 634H-I

2At 635C