Commissioner for the South African Revenue Service v Miambo (1396/2018) [2020] ZAMPMBHC 33 (7 May 2020)

REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA

MPUMALANGA DIVISION

Case : 1396/2018

(1) REPORTABLE: YES / NO

(2) OF INTEREST TO OTHER JUDGES: YES/NO

(3) REVISED.

Date : 7 May 2020

SIGNATURE: H.C. Jansen van Rensburg

In the matter between

The Commissioner for the South African

Applicant

Revenue Service

And

Luciano Alberto Ricardo Miambo

Respondent

In re

Luciano Alberto Ricardo Miambo

Plaintiff

The Commissioner for the South African

Defendant

JUDGMENT

JANSEN VAN RENSBURG AJ

INTRODUCTION

[1]. This is application by the applicant (SARS) in terms of rule 47(1) of the rules of the Superior Court for the respondent to furnish security of cost prior to the conduction of legal action in the main trial set for 8th June 2020 in this honourable court.

[2]. The respondent being the plaintiff in the main matter (which is set for trial on 8th June 2020), alleges that the applicant in this application(the defendant in the main matter) on or about 11th August 2016 unlawfully and without any reason impounded the bus of the applicant.

[3]. Due to the impoundment the respondent suffered damages for which a summons under the same case number as this application for security of cost was issues and served on the applicant in this application.

[4]. The respondent(the plaintiff in the summons) claims an amount of R 3 387 200 – 00 and R 285 416 – 40 respectively from the applicant (the defendant in the main trial).

THE INTERLOCUTORY APPLICATION BY THE APPLICANT

[5]. The matter between the applicant and the respondent has a long history of being case managed on four occasions since 16th November 2018. The last case management meeting was held before the honourable Kgoele J where certain specific aspects were addressed. From the recording of the case management meeting, the defendant was instructed to file an interlocutory application on or before 15th November 2019.

[6]. From what I can see from the court file, there is an interlocutory application by the applicant and which was issued by the court dated 29th November 2019 in this matter for the respondent to provide security and that all legal actions be postponed sine die until the respondent has provided such security. This application was properly served on 2nd December 2019 on the attorney of record of the respondent being Frey and Slabber Inc.

COUNTER APPLICATION BY THE RESPONDENT

[7]. Following the application by the applicant for security, the respondent issued an application dated 5th December 2019 in terms of section 3(4) of Act 40 of 2002 wherein the respondent applied for condonation of notices served on the applicant in the trial to be followed. A separate bundle of this application is included in the court file, but this application is not before the court to adjudicate over.

APPLICATION BY THE APPLICANT: RULE 47(1) OF THE RULES OF THE SUPERIOR COURT

[8]. The applicant alleges that the respondent is a Mozambican citizen and for this reason he is a peregrine. The applicant alleges that the respondent has no movable or immovable property in South Africa which could be sold if the respondent losses its case against the applicant in the main trial.

[9]. A peregrine is generally a person who comes from abroad and is wandering away from his own country. The general rule is that a peregrine is obliged to provide for security for the cost of litigation in which the peregrine is engaged in while the same requirement in terms of an incola are not so obliged.

[10]. The object of the rule is a peregrine plaintiff could be compelled to provide security. The court has the discretion to order security for the cost in any given case. The merit of the main proceedings would be irrelevant for the demand for security, provided that the application and request for security is made bona fide and not unfounded or vexatious.

[11]. This rule prescribes the procedure for demanding and furnishing security for costs, while the common law and other statutory provisions (dealt with hereafter) deal with substantive rules relating to the provision of security.

[12]. When exercising its discretion, the court will not inquire into the merit of the dispute. The onus of proving that a plaintiff is a peregrine rests on the defendant.

[13]. Rule 47(1) –

A party entitled and desiring to demand security for costs from another shall, as soon as practicable after the commencement of proceedings, deliver a notice setting forth the grounds upon which such security is claimed, and the amount demanded.

[13.1.] The procedure requires delivery, as soon as is practicable after the commencement of proceedings,[1] of a notice setting forth the grounds upon which such security is claimed, and the amount demanded. A failure to demand security as soon as practicable does not amount to a waiver of the right and delay is not necessarily fatal. [2] It may be a factor the court may consider in the exercise of its discretion to refuse security.[3]

[13.2.] Should the demand for security be contested by the plaintiff or should the plaintiff fail or refuses to furnish security in the amount demanded within 10 day of receipt of the demand, or the amount fixed by the registrar within ten days of the demand by the registrar’s decision, the other party may apply to the court by way of an interlocutory application for an order that such security is given and that the proceedings be stayed until the order is complied with.

[14]. It is important that the applicant (the defendant in the main action) would give proper notice of the application for security of cost to respondent (the plaintiff in the main action). Failure will result in no order.

[15]. Where the application is supported by an affidavit, such affidavit the notice shall set forth the parties to the action and give some detail about the action and the reason why security is demanded and enough evidence to substantiate the facts alleged.The respondent would be entitled to oppose this application by filing opposing affidavits, to which the applicant could reply.

[16]. A demand for security must be made as soon as ‘practicable possible’ after the commencement of proceedings between the parties. The court has a wide discretion whether to grant an order for security.

[17]. A court has the discretion whether to order the grant of security.The primary question in this regard is the prospects of the requested party being able to satisfy any costs order made against it.A stay of proceedings cannot be ordered before the amount of the security had been fixed, whether by agreement or by the registrar because only then can furnishing be demanded.[4]

[18]. Rule 47 does not prescribe the format of the security to be provided. Nobody should be compelled to furnish security beyond his means.[5] The sub-rule does not impose any limitation on the form of security the registrar or the court can direct to be given – both have a discretion.[6]Security normally takes the form of a suitable bank, institutional or another acceptable guarantee.

[19]. The determination of an amount for security would be reasonable and the court is entitled to consider the following aspects –

· The nature of the plaintiff’s claim.

· The difficulty of the defendant in defending the claim and costs involved.

· The circumstances of the defendant.

· The prospects of success by the defendant in the main trial or application.

ANALYSIS OF THE APPLICATION BY THE APPLICANT FOR SECURITY OF COSTS

[20]. The applicant has served notices requesting security for cost on the attorney of record of the respondent. [7] In this regard the applicant has complied with the requirements before instituting legal action against the respondent being the plaintiff in the main trial.

[21]. The application by the applicant for the respondent to furnish security has not been opposed by the respondent. I could find no indication of any notice to oppose the applicant’s application or any answering affidavit whatsoever in the court file. The applicant has filed heads of argument and a practice in this regard.

DETERMINING THE AMOUNT OF SECURITY

[21]. The applicant proposed an amount of R 1 000 000 – 00 (one million rand) to be furnished by the respondent (the plaintiff in the action) as security for the cost so incurred by the applicant (the defendant in the action) , should a court judge in favour of the applicant in the main trial.

[22]. I am of the view that having perused the court file the court has the authority to apply its mind and exercise its discretion in ‘the wide sense’ in this instance. I have taken all the factors disclosed by the applicant into account but I am mindful to the fact that the respondent, although not having disclosed information, should be treated in such a manner as to not being excluded from litigation, purely by granting an amount which would not be or could not be met by the respondent. In doing so one would refer to the amount set for security to be of such a nature whereby the respondent has effectively been ousted from litigation; this is not the purpose of setting an amount for security.

[23]. In this application, the respondent is a peregrine and the applicant is entitled to an amount to serve as security for its cost, should the trial court judge in its favour.

[24]. As a result, where security is ordered in terms of rule 47, all further litigation between the parties is suspended until the respondent has furnished the security so ordered.

[25]. Further relief provided by rule 47 is available to the applicant if so required.

ORDER

The following order is made–

1. The respondent is ordered to furnish security in the amount of R 250 000 – 00 (two hundred and fifty thousand rand) on or before 25th May 2020 to the Registrar of this Honourable Court.

2. Should the respondent fail to furnish security as per order 1 above, all proceedings between the parties will be stayed.

3. The applicant is granted leave to approach this honourable court on the same papers, supplemented if necessary, to proceed with an application for the dismissal of the respondent’s action against the applicant in the main action.

4. The respondent to pay the cost of this application.

H.C. JANSEN VAN RENSBURG

ACTING JUDGE OF THE HIGH COURT OF SOUTH AFRICA

MBOMBEL DIVISION

DATE OF HEARING AND JUDGMENT:7 May 2020

HEARING AND JUDGMENT RECORDED

COUNSEL FOR THE APPLICANT: ADV R.M. MOLEA INSTRUCTED BY: STATE ATTORNEY SALU BUILDING PRETORIA REF MR M.E. RAMETHAPE ATTORNEY OF RECORD FOR RESPONDENT: SLABBER ATTORNEYS 21 BRANDER STREET NELSPRUIT 013 – 752 5419 REF MR GK SLABBER/mm/sn4235

[1] Rule 47(1); SA Iron and Steel Corporation Ltd v Abdulanabi 1989 (2) SA 224 (T) at 236 E – F; Exploitatie en Beleggings Maatschappij Argonauten 121 BV and another v Honig 2012 (1) SA 247 (SCA) at par 14.

[2] Drakensberg Bpk & others v Sharpe 1963 (4) SA 615 (N) at 618 B – C.

[3] Zaffare v Straits Syndicate Ltd 1911 SR 121; Algoa Milling Co v J Bell & Co (1906) 23 SC 501.

[4] Sasko Bpk v Futurus Construction (Pty) Ltd 1988 (4) SA 170 (W).

[5] Magida v Minister of Police 1987 (1) SA 1 (A) at 15 E.

[6] Rule 47(5); Majunga Food Process SARL v South African Dried Fruit Co-operative 2000 (2) SA 94 (C); Schunke v Taylor & Symonds (1891) 8 SC 103 at 107; Brink v Liquidator United Farming Corporation of SA Ltd 1913 CPD 371.

[7] Application page 5 paras 17 and notices page 24 and 25.