Osteen Health Group (Pty) Ltd and Another v Cross-Med Health Centre (Pty) Ltd and Others (3542/2019) [2020] ZAECGHC 19 (3 March 2020)

IN THE HIGH COURT OF SOUTH AFRICA

(EASTERN CAPE DIVISION, GRAHAMSTOWN)

Case No: 3542/2019

In the matter between:

OSTEEN HEALTH GROUP (PTY) LTD

First Applicant

CHWAYITA ONGAMA YONGAMA YAKO

Second Applicant

And

CROSS-MED HEALTH CENTRE (PTY) LTD

First Respondent

BOARD OF DIRECTORS OF CROSSMED

HEALTH CENTRE (PTY) LTD

Second Respondent

HALCYON MANAGEMENT SERVICES

Third Respondent

STEPHEN BAKER

Fourth Respondent

SOUTH AFRICAN REVENUE SERVICES

Fifth Respondent

STANDARD BANK OF SOUTH AFRICA

Sixth Respondent

COMPANIES AND INTELLECTUAL PROPERTY

COMMISSION

Seventh Respondent

JUDGMENT

SMITH J:

[1] On 30 January 2020 Stretch J granted an order striking an urgent application brought by the applicants off the unopposed Motion Court roll and ordered the applicants’ local and Mthatha attorneys “to show cause on 11th February 2020, why they should not be directed to pay these costs (including the reserved costs of 21st January 2020), de bonis propriis, on the scale as between attorney and client jointly and severally, the one firm of attorneys paying the other to be absolved”.

[2] The circumstances which prompted Stretch J to issue the rule are as follows.

[3] After the notice of motion and supporting affidavits were served on the respondents, their attorneys Shaheed Dollie Inc, wrote to the applicants’ Mthatha attorneys, namely B Mwelase Attorneys, advising that the first to fourth respondents would be opposing the matter and will file a notice to oppose.

[4] On 12 December 2019, Dollie Attorneys’ local correspondent Netteltons, served a notice to oppose on the applicants’ local attorneys, namely Mqeke Attorneys.

[5] It is common cause that the notice of intention to oppose bore the wrong case number and

erroneously referred to another pending application involving substantially the same parties. Mr Nettelton has filed an affidavit

wherein he acknowledged his mistake in this regard.

[6] However, on 17 December 2019 Mr Nettelton emailed a duly corrected notice to oppose to Mqeke Attorneys.

[7] In the meantime, Dollie Attorneys had emailed an answering affidavit to attorneys Mwelase,

Mqeke and Netteltons.

[8] It is also common cause that Mqeke Attorneys caused the matter to be enrolled on the Motion Court roll for unopposed matters to be heard on 21 January 2020, without any notice to either Netteltons or Dollie Attorneys. This was despite the fact that they were aware that Netteltons were the local attorneys of record for the respondents; that an answering affidavit had been served on them on 14 December 2019; and that an amended notice to oppose had been served electronically on Mqeke Attorneys on 17 December 2019.

[9] Mr Nettelton serendipitously became aware of the set down of the matter on 20 January 2020 when he perused the Motion Court Roll for the following day. The matter then came before Malusi J on the 21st of January 2020. The learned judge postponed the matter to the 30th of January and ordered the applicants to deliver their replying affidavits by 24 January 2020.

[10] The matter then served before Stretch J on 30 January 2020 when counsel for the applicants confirmed that the purpose for setting the matter down on the unopposed roll was to seek relief against the respondents by default. Presumably because it was evident that the applicants had set the matter down for default judgment well knowing that the matter was opposed, Stretch J issued the rule calling upon the applicants’ attorneys to show cause why they should not be ordered to pay costs de bonis propriis.

[11] When the matter came before me on the return date, both Mr Mwelase and Mr Mqeke had filed affidavits presenting their respective versions of events for the court’s consideration. Mr Nettelton had also filed an affidavit wherein he joined issue with some of the averments contained in Mwelase’s and Mqeke’s affidavits and provided a time-line of events for the court’s assistance.

[12] Mr Mwelase acknowledged that he received the letter from Dollie Attorneys indicating that the respondents would oppose the application. He said, however, that since the notice to oppose which was served the following day, namely 12 December 2019, had referred to a different case (it bore case no. 357/2018 instead of 3542/2019), and also referred to an applicant who is not a party in these proceedings, he assumed that the notice was in respect of case no. 357/2018.

[13] In addition, he had also been instructed by the second applicant that the first applicant (who is a shareholder and director of the first respondent), had not been advised of any resolution to oppose the application. It thus appears that the first respondent did in fact not adopt a resolution to oppose the proceedings and the notice to oppose is thus in any event of no force or effect. He also contends that the issue of costs cannot be determined at this stage since the application had not been

finalized, but had merely been struck off the roll.

[14] In his affidavit Mr Mqeke said that he had advised Mr Mwelase that he would not be attending court on the 30th of January 2020, and is he accordingly unable to comment on what occurred at court on that day.

[15] In Thunder Cats Investments 49 (Pty) Ltd & Others v Fenton & Others 2009 (4) SA 138 (C), at para. 30, Le Grange J said that:

“An order to hold a litigant’s legal practitioner liable to pay the costs of legal proceedings is unusual and far-reaching. Costs orders of this nature are not easily entertained and will only be considered in exceptional circumstances.”

[16] A court will show its displeasure by ordering a legal practitioner to pay costs from his or her own pocket where the conduct materially deviates from the standard expected from legal practitioners to such an extent that it would be unfair or unconscionable to expect his or her clients to bear the costs.

[17] The following are examples of conduct deserving of censure: “dishonesty, obstruction of the interest of justice, irresponsible and grossly negligent conduct; litigating in a reckless manner, misleading the court, and gross incompetence and a lack of care”. (Multi-Links Telecommunications v Africa Prepaid Services Nigeria Ltd; Telkom SA Soc Limited & another v Blue Label Telecoms Limited & others [2013] 4 All SA 346 (GNP)).

[18] In this case it is manifest that the applicants’ attorneys had set the matter down on the unopposed roll well knowing that the matter was opposed. They had by that time been served with a proper notice to oppose, as well as an answering affidavit. Their declared intention was to obtain relief by default. And if it were not for the fact that Mr Nettelton had fortuitously become aware that the matter had been enrolled for the following day, they would have proceeded to apply for default judgment.

[19] To say that their conduct was reprehensible would be an understatement. The inference is ineluctable that they have dishonestly contrived not only to “blindside” the respondents’ legal representatives, but they also no doubt intended to mislead the court. Their conduct amounted to more than mere negligence or even recklessness, since they appeared to have deliberately schemed to achieve their stated objective, namely to obtain default judgment by stealth. In my view, their conduct deviated substantially from the standard of collegial courtesy and ethical behaviour required of officers of the court, and is accordingly deserving of a punitive costs order. I am thus of the view that it is appropriate that they should be ordered to pay the costs of the appearances on 21 January and 11 February 2020, de bonis propriis and on the attorney and client scale.

[20] I may also just mention that it is significant that Mr Mqeke made no effort to explain how it came about that the matter was enrolled for the 21st of January 2020. The ineluctable inference is that there is in fact no other explanation than that their conduct was driven by a disingenuous determination to obtain default judgment against the respondents at all costs.

[21] The points raised by Mr Mwelase are untenable. Even if there were any merit in the point regarding the lack of locus standi, it still did not behove the applicants to enrol the matter without notice. And the assertion that it is not appropriate to decide the issue of reserved costs at this stage because the proceedings are not yet finalized, is simply preposterous.

[22] The impugned conduct of the applicants’ attorneys is, however, only relevant to the appearance on the 21st of January 2020 and the consequential proceedings on 11 February 2020. The fact that they may have erred regarding their assessment of the degree of urgency; may have failed to observe court rules; or laboured under an erroneous understanding of the applicable legal principles, do not necessarily mean that they must be ordered to the pay the costs in respect of the proceedings that resulted in the matter being struck off the roll, namely the appearance on 30 January 2020. The applicants must accordingly be responsible for those costs on the usual scale.

[23] In the result the rule is confirmed to the following extent:

(a) the applicants’ legal representatives, namely B Mwelase Attorneys and Mqeke Attorneys, are ordered to pay the reserved costs of 21 January 2020, as well as the costs of 11 February 2020, de bonis propriis and on the attorney and client scale, jointly and severally, the one paying the other to be absolved.

(b) the applicants are ordered to pay the costs of 30 January 2020, jointly and severally, the one paying the other to be absolved.

_____________­­__

J. E. SMITH

JUDGE OF THE HIGH COURT

Applicants’ Counsel:

Adv. Magadlela

Applicants’ Attorneys:

B Mwelase Attorneys

C/o Mqeke Attorneys

Office No. 4, 115 B High Street

City Chambers Building

Grahamstown

Respondents’ Counsel: Mr

Dollie

Respondents’ Attorneys: C/o

Netteltons Attorneys

118 A High Court

Matter heard on:

11 February 2020

Judgment delivered on: 03

March 2020