North-West Star (Pty) Ltd t/a Tlhabane Bus Service and Others v Sefora (104/01) [2002] ZANWHC 10 (25 April 2002)

CASE NO : 104/01

IN THE HIGH COURT OF SOUTH AFRICA

BOPHUTHATSWANA PROVINCIAL DIVISION

In the matter between :-

NORTH WEST STAR (PTY) LTD

T/A TLHABANE BUS SERVICE 1ST APPLICANT

(under judicial management)

Represented herein by:

JOHN LOUIS CARTER FOURIE 2ND APPLICANT

JAYAT DAJI PEMA 3RD APPLICANT

and

PETER BANTY SEFORA RESPONDENT

MMABATHO:

DATE OF HEARING: 14 MARCH 2002

DATE OF JUDGMENT : 25 APRIL 2002

COUNSEL FOR THE APPLICANTS: M MOYSES

FOR THE RESPONDENT : G M SEFORA

(Attorney duly authorized to appear in the High Court)

J U D G M E N T

LEEUW J:

[1] This is an application for an order for the payment of wasted costs in terms of Rule 41 (1) (c) occasioned by the Respondent attorney’s withdrawal from the roll of an application (main application) set down for hearing on the 21st November 2001. [2] The main application was removed from the roll by agreement but the Respondent (applicant in the main application) did not tender costs in accordance with Rule 41 (1) (a). FACTUAL BACKGROUND [3] The Respondent had approached this Honourable Court for leave to proceed with proceedings already instituted against the First Applicant in a Labour related issue under the relevant statutes [4] Leave from this Honourable Court was required as all proceedings against the First Applicant were stayed in terms of the Final Judicial Management Order. [5] The main application was opposed and was accordingly enrolled for hearing on the 21st November 2001. Both parties had filed heads of argument and no point in limine was taken by the Applicants when the matter was set down by the Applicant in the main application.

[1] This is an application for an order for the payment of wasted costs in terms of Rule 41 (1) (c) occasioned by the Respondent attorney’s withdrawal from the roll of an application (main application) set down for hearing on the 21st November 2001.

[2] The main application was removed from the roll by agreement but the Respondent (applicant in the main application) did not tender costs in accordance with Rule 41 (1) (a).

FACTUAL BACKGROUND

[3] The Respondent had approached this Honourable Court for leave to proceed with proceedings already instituted against the First Applicant in a Labour related issue under the relevant statutes

[4] Leave from this Honourable Court was required as all proceedings against the First Applicant were stayed in terms of the Final Judicial Management Order.

[5] The main application was opposed and was accordingly enrolled for hearing on the 21st November 2001. Both parties had filed heads of argument and no point in limine was taken by the Applicants when the matter was set down by the Applicant in the main application.

[6] On the 16th November 2001 which was a Friday, Applicants’ attorneys informed the attorney of the Respondent that at the hearing of the main application on the 21st November 2001, argument on a point in limine would be presented to this Honourable Court, based on the failure of the Respondent to join the creditors of the First Applicant in the main application as they had a direct and substantial interest in the proceedings. It was as a result of this notice that the Respondent removed the matter from the roll on the 19th November 2001, a Monday, having telephonically informed the Applicants’ attorneys and subsequently serving them with the Notice of Removal. No offer to pay the costs was contained in the Notice. [7] The point in limine to be argued on behalf of the Applicants, was as a result of the decisions of SATAWU, MASIA & OTHERS v NTI & OTHERS Case No’s 321/01 & 133/01 (Full Bench Decision) and SATAWU & K G MASIA & OTHERS v NORTH WEST TRANSPORT INVESTMENT (PTY) LTD & OTHERS (under judicial management) Case No 133/2001, which cases, it is alleged by the Applicants attorneys were handed down on the 17 October and 8 November 2001 respectively. It was held that it was necessary for creditors to be joined in all proceedings taken against a company under judicial management, as they have a direct and substantive interest in the outcome of the proceedings. [8] The Respondent’s attorney submits that the Applicants were aware of the Full Bench decision, which was not reported, and that the main application was set down for hearing before the Full Bench decision was handed down, and that “Applicants’ failure to inform the Respondent timeously of the pending point in limine, and later the decisions was unethical and unprofessional .......”.

[6] On the 16th November 2001 which was a Friday, Applicants’ attorneys informed the attorney of the Respondent that at the hearing of the main application on the 21st November 2001, argument on a point in limine would be presented to this Honourable Court, based on the failure of the Respondent to join the creditors of the First Applicant in the main application as they had a direct and substantial interest in the proceedings. It was as a result of this notice that the Respondent removed the matter from the roll on the 19th November 2001, a Monday, having telephonically informed the Applicants’ attorneys and subsequently serving them with the Notice of Removal. No offer to pay the costs was contained in the Notice.

[7] The point in limine to be argued on behalf of the Applicants, was as a result of the decisions of SATAWU, MASIA & OTHERS v NTI & OTHERS Case No’s 321/01 & 133/01 (Full Bench Decision) and SATAWU & K G MASIA & OTHERS v NORTH WEST TRANSPORT INVESTMENT (PTY) LTD & OTHERS (under judicial management) Case No 133/2001, which cases, it is alleged by the Applicants attorneys were handed down on the 17 October and 8 November 2001 respectively. It was held that it was necessary for creditors to be joined in all proceedings taken against a company under judicial management, as they have a direct and substantive interest in the outcome of the proceedings.

[8] The Respondent’s attorney submits that the Applicants were aware of the Full Bench decision, which was not reported, and that the main application was set down for hearing before the Full Bench decision was handed down, and that “Applicants’ failure to inform the Respondent timeously of the pending point in limine, and later the decisions was unethical and unprofessional .......”.

[9] On the other hand, the Applicants’ Counsel submits that “there is no duty on the Applicant or its attorneys to advise Respondent’s attorney as to the general principle that parties who have a direct and substantive interest in a matter, should be joined as parties.

The judgments referred to in the Applicants’ letter to the Respondent’s attorney dated 16 November 2001 (Annexure ‘LF S4') are not based on any new law but on already firmly established principles”. ANALYSIS OF ISSUES: [10] The Full Bench decision on the issue of non-joinder of creditors, the point in limine aforementioned, was raised by the Court mero motu as neither the Appellants nor the Respondents in that matter had raised it. [11] The Attorneys of record and the two Counsels who appeared for the Respondents ( a company under judicial management and the judicial managers jointly) in the Full Bench decision of this Honourable Court and subsequent decisions are the same attorneys and counsels of record appearing for the Respondents in the main application. [12] The Full Bench decision, was heard on the 23rd March 2001 and judgment was delivered on 29th March 2001(SACCAWU v NWDC (PTY) LTD & OTHERS 178/2000). The subsequent decisions of this Honourable Court wherein a similar issue was raised was on 17th October 2001 and judgments delivered on 8th November 2001 (MASIA K G & OTHERS v NORTH WEST TRANSPORT INVESTMENT (PTY) LTD (Under Judicial Management and Others) Case No 133/2001 & 321/2001 consolidated for the purpose of arguing this point).

[9] On the other hand, the Applicants’ Counsel submits that “there is no duty on the Applicant or its attorneys to advise Respondent’s attorney as to the general principle that parties who have a direct and substantive interest in a matter, should be joined as parties.

The judgments referred to in the Applicants’ letter to the Respondent’s attorney dated 16 November 2001 (Annexure ‘LF S4') are not based on any new law but on already firmly established principles”.

ANALYSIS OF ISSUES:

[10] The Full Bench decision on the issue of non-joinder of creditors, the point in limine aforementioned, was raised by the Court mero motu as neither the Appellants nor the Respondents in that matter had raised it.

[11] The Attorneys of record and the two Counsels who appeared for the Respondents ( a company under judicial management and the judicial managers jointly) in the Full Bench decision of this Honourable Court and subsequent decisions are the same attorneys and counsels of record appearing for the Respondents in the main application.

[12] The Full Bench decision, was heard on the 23rd March 2001 and judgment was delivered on 29th March 2001(SACCAWU v NWDC (PTY) LTD & OTHERS 178/2000). The subsequent decisions of this Honourable Court wherein a similar issue was raised was on 17th October 2001 and judgments delivered on 8th November 2001 (MASIA K G & OTHERS v NORTH WEST TRANSPORT INVESTMENT (PTY) LTD (Under Judicial Management and Others) Case No 133/2001 & 321/2001 consolidated for the purpose of arguing this point).

[13] The Respondent’s Answering Affidavit in the main application, was filed with the Registrar on the 4th April 2001, and the point in limine on the issue of non joinder was not raised at that stage. [14] The main application was ripe for hearing as the Applicant in the main application set the matter down on the 7th November 2001 for hearing on the 21st November 2001. The Respondents’ attorneys were served with the Notice of Set Down on the 20th September 2001. [15] If one were to seriously consider the submission made by counsel for the Applicants that it is a firmly established principle that creditors of a company under judicial management have a direct and substantive interest in whatever proceedings are brought against the company and therefore have to be joined, one wonders why when the Respondents’ Answering Affidavit in the main application was filed, this preliminary objection on the point of law was not filed at the same time in accordance with Rule 6 (5) (d) (iii). [16] Furthermore, the Full Bench decision was delivered on the 29th March 2001, almost seven (7) days prior to the filing of the Answering Affidavit of the Respondent in the main application with the Registrar on the 4th April 2001. The same issue on the law was raised by the attorneys and counsels who were appearing in the main application for the Respondents in the MASIA K G & OTHERS v NORTH WEST TRANSPORT INVESTMENT (PTY) LTD (under judicial management) supra and the judgment was delivered on the 8th November 2001 in their favour.

[13] The Respondent’s Answering Affidavit in the main application, was filed with the Registrar on the 4th April 2001, and the point in limine on the issue of non joinder was not raised at that stage.

[14] The main application was ripe for hearing as the Applicant in the main application set the matter down on the 7th November 2001 for hearing on the 21st November 2001. The Respondents’ attorneys were served with the Notice of Set Down on the 20th September 2001.

[15] If one were to seriously consider the submission made by counsel for the Applicants that it is a firmly established principle that creditors of a company under judicial management have a direct and substantive interest in whatever proceedings are brought against the company and therefore have to be joined, one wonders why when the Respondents’ Answering Affidavit in the main application was filed, this preliminary objection on the point of law was not filed at the same time in accordance with Rule 6 (5) (d) (iii).

[16] Furthermore, the Full Bench decision was delivered on the 29th March 2001, almost seven (7) days prior to the filing of the Answering Affidavit of the Respondent in the main application with the Registrar on the 4th April 2001. The same issue on the law was raised by the attorneys and counsels who were appearing in the main application for the Respondents in the MASIA K G & OTHERS v NORTH WEST TRANSPORT INVESTMENT (PTY) LTD (under judicial management) supra and the judgment was delivered on the 8th November 2001 in their favour.

[17] I do agree with the Applicant’s counsel submission that there might not be a legal duty on the part of the Applicants’ attorneys to inform the Respondent’s attorney on the legal issue, but I am of the opinion that there is a moral and ethical duty on their part to do so as colleagues in the profession. In any case, the provisions of Rule 6 (5) (d) (iii) were not complied with. [18] The fact that the attorneys and counsel for the applicants had not taken this legal point on non joinder of creditors in the Full Bench decision, but that this point was raised mero motu by the Court, impacts on the ingenuity of the Applicants’ attorneys failure to raise this “already firmly established principle“ of the law. One further wonders why the Applicants’ attorneys had to wait three days before the date of hearing to advise the Respondent’s attorney accordingly of the point in limine to be argued. By informing the Respondent timeously, as early as when the Respondents Answering Affidavit was filed in the main application, the Applicants would have minimized their expenses in that the matter would not have been placed on the roll for lack of non joinder of creditors, and Respondent’s attorney would have remedied the concern raised, having been informed of the Full Bench decision of this Honourable Court. I find that the conduct of the Applicants’ attorneys of deliberately failing to notify the Respondent of the point in limine raised in accordance with Rule 6 (5) (d) (iii) or sooner thereafter, does not justify an award of costs in favour of the Respondents in the main application. ORDER: In the circumstances

[17] I do agree with the Applicant’s counsel submission that there might not be a legal duty on the part of the Applicants’ attorneys to inform the Respondent’s attorney on the legal issue, but I am of the opinion that there is a moral and ethical duty on their part to do so as colleagues in the profession. In any case, the provisions of Rule 6 (5) (d) (iii) were not complied with.

[18] The fact that the attorneys and counsel for the applicants had not taken this legal point on non joinder of creditors in the Full Bench decision, but that this point was raised mero motu by the Court, impacts on the ingenuity of the Applicants’ attorneys failure to raise this “already firmly established principle“ of the law. One further wonders why the Applicants’ attorneys had to wait three days before the date of hearing to advise the Respondent’s attorney accordingly of the point in limine to be argued. By informing the Respondent timeously, as early as when the Respondents Answering Affidavit was filed in the main application, the Applicants would have minimized their expenses in that the matter would not have been placed on the roll for lack of non joinder of creditors, and Respondent’s attorney would have remedied the concern raised, having been informed of the Full Bench decision of this Honourable Court.

I find that the conduct of the Applicants’ attorneys of deliberately failing to notify the Respondent of the point in limine raised in accordance with Rule 6 (5) (d) (iii) or sooner thereafter, does not justify an award of costs in favour of the Respondents in the main application.

ORDER:

In the circumstances

(1) The application for an order that the Respondent pay wasted costs for the set down of the matter on the 21 November 2001 is refused. (2) The Applicants are jointly ordered to pay costs of this application. M M LEEUW JUDGE OF THE HIGH COURT Applicants attorneys : Smit, Stanton, Motlhabani INC Respondent’s attorneys : Sefora & Partners

(1) The application for an order that the Respondent pay wasted costs for the set down of the matter on the 21 November 2001 is refused.

(2) The Applicants are jointly ordered to pay costs of this application.

M M LEEUW

JUDGE OF THE HIGH COURT

Applicants attorneys : Smit, Stanton, Motlhabani INC

Respondent’s attorneys : Sefora & Partners