Musa Employee Share Company (Pty) Ltd and Another v Musa Group (Pty) Ltd and Others (2020/8633) [2020] ZAGPPHC 573 (31 August 2020)

REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA,

GAUTENG DIVISION,

PRETORIA

(1) REPORTABLE: YES/NO

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

(3) REVISED.

CASE NO: 2020/8633

IN THE MATTER BETWEEN

MUSA EMPLOYEE SHARE COMPANY (PTY) LTD

FIRST APPLICANT

NDALAMO RASIVHAGA

SECOND APPLICANT

AND

MUSA GROUP (PTY) LTD

FIRST RESPONDENT

CIPC

SECOND RESPONDENT

GOVERNMENT EMPLOYEE PENSION FUND

THIRD RESPONDENT

UNEMPLOYEMNT INSURANCE FUND

FOURTH RESPONDENT

COMPENSATION FUND

FIFTH RESPONDENT

PUBLIC INVESTMENT CORPORATION

SIXTH RESPONDENT

JUDGMENT

Ceylon AJ

The Application:

[1] This is an application that the 1st respondent [Musa Group (Pty) Ltd , registration number: 2014/187025/07] be placed under supervision and that business rescue proceedings in respect of the 1st respondent be commenced with as envisaged In section 131 of the Companies Act 71 of 2008;and

1.2 that Phalami Mkhombo of Genesis Corporate Solutions and John Evans of RS Advisors be appointed as joint business rescue practitioners of the 1st respondent, alliteratively that this court appoints such business rescue practitioner as this court may deem appropriate and who is fit and proper to execute the duties of a business rescue practitioner as envisaged in the Companies Act 71 of 2008;

1.3 that costs of this application be costs of the business rescue of the 1st respondent.;

Background:

[4] The application Is opposed and the 3rd to 6th respondents filed answering papers. The applicants did not file replying papers.

[5] The applicants and 3rd to 6th respondents each filed their Heads of Argument and Practice Notes.

[6] The application was set down for hearing for 03 August 2020. It was served by the attorneys for the 3rd to 6th respondents on the applicant's attorneys on 29 June 2020 and filed at court on 30 June 2020.

[7] The applicant's attorneys filed a notice of withdrawal as attorneys of record dated 27 July 2020 (apparently uploaded to Caselines on 28 July 2020).

[8] The applicant's attorneys also filed a notice of withdrawal of application dated 27 July 2020, apparently uploaded to Caselines on 28 July 2020.

[9] According to the Read Receipt of the notice of withdrawal, the notice/s were read on Tuesday, 28 July 2020 at 09h37. The read receipt was also uploaded to Caselines on 28 July 2020.

[10] According to the notice of withdrawal of this application, costs were tendered to be costs in the liquidation of the 1•t respondent (as opposed to the business rescue of the 1st respondent).

[11] The application was allocated for hearing for 03 August 2020 on the opposed roll.

[12] On 03 August 2020, counsel for the 3rd to 6th respondents advised the judge's clerk that the said respondents does not accept the costs tendered in the notice of withdrawal of application but insisted on costs to be paid by the applicants, jointly and severally, the one to pay, the other to be absolved for, including the costs of two counsel. Said counsel also proposed that the issue of the dispute of costs be decided on the papers.

[13] The judge's clerk contacted the applicant's attorneys to seek their views on the costs sought by the respondent's counsel, but the attorneys for the applicant advised that they have no mandate to represent the applicants any further as have already withdrawn as attorneys of record.

[14] The draft order filed by the 3rd to 6th respondents indicated that the said respondents required the application to be dismissed with costs exactly in line with paragraph [12] above.

[15] There was no representation for or appearance by the applicants on the hearing date.

The issues to be decided:

[16] The issue this court is required to decide is whether or not costs should be awarded, and If so, what type of costs in the circumstances.

[17] The applicants made no representations or opposition in relation to the costs sought by the 3rd to 6th respondents.

[18] The 3rd to 6th respondents, in their answering papers and Heads of Arguments, only seek costs on the usual scale, therefore no punitive costs. It is therefore for this court to assess the circumstances of this case to determine an appropriate cost order.

Applicable Legal Principles:

[19] The general rule in our law is that costs follow the result, meaning that the unsuccessful party bears the burden of costs.

[20] In terms of Rule 41(1) of the Rules of the High Court (the Rules) proceedings may be withdrawn before the matter Is set down for hearing. A withdrawal of proceedings after set down can be done either by way of consent of the parties or leave of this court.

[21] A party that withdraws from the proceedings once set down has been effected, has to do so, on notice, which may embody an undertaking to pay cots of the suit. In a case where the withdrawal does not include a tender for costs, the other party is entitled to apply for same.

[22] It is generally accepted that a litigant who withdraws proceedings is in the same position as an unsuccessful litigant and should be responsible for costs [Germlshuys v Douglas 1973 (3) SA 229 (NC) and Sentraboer Korporasle B k V Maohaka 1981 (2) SA 814 at para 818; Std Bank of SA Ltd v Tempu-U-Alr Services Ltd 28945/2016, unreported ZAGPJHC, at para 8- 10].

[23] The basic rule regarding costs in litigation is that costs are In the discretion of the court [Kruger Bros and Wasserman v Ruskin 1915 AD 36 69] , which discretion must be exercised judicially, ie not arbitrarily, upon a consideration of all the facts of each case [AC Cilliers: The law of costs ,2nd ed, at p9] and which discretion although wide, is not unfettered [Muller v Erasmus 1959 (2) SA 465 (T) at 465]

[24] In McDonald t/a Sport Helicopter v Hney Extreme Club 2008 at 22A-B it was held that the court's discretionary decision has to be a matter of fairness to both sides. In exercising its

discretion the court must have regard to the issue in the case, the conduct of the parties and any other circumstances which may have a bearing on the issue of costs, to enable it to make a cost order that would be just and fair between the parties [Fripp v Gibbon & Co 1913 AD 354 ad 363].

[25] According to Jones & Buckle RS12, 2016 Rule 33-21, the purpose of a cost award is to indemnify the successful party that has incurred expenses to bring or oppose an application.

[26] In casu, It Is common cause that the notice of withdrawal was done on notice after set down and that it contained a tender of costs.

[27] From the above the applicants can be regarded as the unsuccessful litigants and bears the burden of costs.

[28] The final Issue to be decided is what kind of costs should be awarded in the circumstances.

[29] As indicated the applicant tendered the costs to be costs In the liquidation of the 1st respondent.

[30] The 1st respondent is already In liquidation even prior to the bringing of this application, and costs in the said liquidation was already

granted to be costs in the liquidation. The two applications are separate from each other. The applicants' tender under this application cannot be made with respect to another application (the liquidation application). This will not be fair and reasonable towards the respondents in this application. This tender cannot in the circumstances be sustained.

[31] The respondents had to oppose and finalise this application at huge costs as the applicants brought the application to court. Only after set down, at the last moment, the applicants withdrew their application.

[32] In this court's view, the respondents are indeed entitled to Insist on being adequately compensated for their litigation costs and not being left out of pocket by the applicants' inadequate tender of costs.

[33] This application is clearly of a complex nature and involved the preparation and drafting of papers, including Heads of Arguments and appearance by counsel and senior counsel. In Eerste Nasionale Bank In SA v Mokotso 2003 JDR 0655(0) it was held that whether increased costs for counsel should be awarded depends on the circumstances of the matter as well as the complexity of the case.

[34] In light of the contents of the papers flied and circumstances of the matter, it would be just and fair that an appropriate cost order be granted In favour of the 3rd to 6th respondents.

[35] In the result, the following order Is made:

Order:

1. The withdrawal of the application Is confirmed.

2. That the applicants pay the costs of the application, jointly and severally, the one to pay, the other to be absolved for, Including

the costs of two counsel.

B CEYLON

ACTING JUDGE OF THE HIGH COURT

OF SOUTH AFRICA,

GAUTENG DIVISION,

Appearances:

For the Applicant

: Mr P Strydom

Instructed by

: Strydom Attorneys

For first Respondent

: Adv K Tsatsawane SC & Adv N Daniels

Instructed by

: Cliffe Dekker Hofmeyr Inc

Date heard

: 03 August 2020

Date delivered

:31 August 2020