Petlane Oils (Pty) Limited v Shell South Africa (Pty) Limited and Another (28016/2013) [2014] ZAGPJHC 97 (1 April 2014)

REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG LOCAL DIVISION, JOHANNESBURG

CASE NO: 28016/2013

In the matter between :

PETLANE OILS (PTY) LIMITED.....................................................................................Applicant

and

SHELL SOUTH AFRICA (PTY) LIMITED.............................................................First Respondent

SHELL SOUTH AFRICA MARKETING (PTY) LTD........................................Second Respondent

JUDGMENT

MBONGWE, AJ :

[1] The applicant launched this application originally on the 25th January 2013 as semi urgent in terms of Rule 6 (12) seeking an order setting aside the attachment and sale in executionof its claim of just over R7.4 million against the 1st respondent. The 2nd respondent was thepurchaser of the said claim.

[2]It is common cause that the applicant’s attorneys, in pursuing the aforementioned claim,commenced motion proceedings during 2009 in the South Gauteng High Court. Owing touncertainty with regard to jurisdiction, the attorneys commenced similar motion proceedings in the North Gauteng High Court shortly thereafter. The applicant was unhappy with his attorneys as a result of this uncertainty.Applicant

terminated their mandate and appointed another firm of attorneyswithinstructions withdraw the two motion proceedings, ostensibly by notices , during 2009 and to tender costs. They then commenced action proceedings under case number 40189/2009 in this court.

[3] The bills of costs were taxed in the sums of R20 893.62 and R33 671.47 in the North and South Gauteng High Courts, respectively, in March 2011. It is in respect of the unpaid taxed bill of costs in the sum of R20893.62 that the applicant’s claim under case number 40189/2009 was eventually attached and sold in execution.

[4] It is common cause that the bill of costs in the sum of R33 671.47 in respect of the South Gauteng High Court costs was settled subsequent to a writ of execution having been served at the applicant’s principal place of business by the sheriff of the court. The applicant alleges that he had not been aware that there had been an outstanding bill of costs until the 11th January 2013 when he received a letter from the correspondent attorneys of the 1st respondent’s attorneys. It bears mentioning at this stage that the hearing of the action proceedings was set to commence on the 8th February 2013. The relevant letter to the applicant dated 11th January 2013 reads in part as follows: “Attached is a copy of a letter from the relevant sheriff confirming the sale in execution,

and purchase by Shell S.A Marketing (Pty) Ltd, of Petlane Oils (Pty) Ltd’s right, title and interest in and to the action instituted by it in the South Gauteng High Court, Johannesburg, under case number 40189/2009 ”. This letter is addressed . In the penultimate paragraph, this letter reads thus: “Shell S.A Marketing (Pty) Ltd hereby requests, as the current right, title and interest holders in the action under case number 40189/2009, that you withdraw as attorneys of record ” As already stated, the applicant denies having been aware of any outstanding settlement of costs and of any demand being made or

warrant of execution having been executed. Consequently, the applicant contends that the execution process was flawed and not compliant with the provisions of Rule 45 of the Uniform Rules of this Court.

[5] On receipt of the said letter the applicant instructed a different firm of attorneys to deal specifically with the attachment and sale of the applicant’s claim. These attorneys addressed a letter to the 1st respondent’s attorneys on 15 January 2013which reads, in part, thus:

5.1 Paragraph 3 : “We attend only to the matter relating to the alleged sale of our client’s right, title and interest under case number 40189/2009 purportedly sold in execution against monies outstanding under case number 22911/2009. In this regards our client’s current attorneys of record Sikhitha Daniels and Associates still act as attorneys of record under case number 40189/2009”.

5.2 Paragraph 4: “It is our client’s instructions that case number 40189/2009 has been enrolled for trial on 8 February 2013 and it is our client’s instructions that the trial will proceed as such”.

5.3 Paragraph 5: “Our client place on record that in case number 22911/2009 it instructed its attorneys of record to withdraw the application and to tender costs. In this regards it was always our client’s instructions to pay the costs after taxed or agreed with your client. It is our client instructions that the costs that became payable were indeed paid. To such an extent that any further costs were outstanding, our client was not aware of same and tenders payment of any and all such costs, lawfully owing and payable under the tender of costs”.

5.4 Paragraph 7: “Our client is not aware of any further payable costs or steps taken in execution of payment of such costs. As such our client is not aware of any writ that was issued or delivered or any claim for such costs”.

5.5 Paragraph 8: “It is our instructions to refer you to Court Rule 45(8)(c)(i)(a) requiring notice of the attachment to interested parties”.

5.6 Paragraph 10: “It is our instructions that no proper attachment of our client’s right, title and interest took place and, therefore, no lawful sale in execution of same took place”.

5.7 In paragraph 11 the applicant requested urgent concession by the 1st respondent by 16h00 on 16 January 2013 that no proper sale in execution of applicant’s rights, title and interest took place failing which applicant will bring an urgent application for an order setting aside the attachment and sale in execution.

[6] In response, the 1st respondent’s attorneys, in a letter dated 18 January 2013, declined to make the concession and ostensibly the offer of payment stating that the trial matter was not ripe for hearing due to the applicant having failed to respond to the 1st respondent’s notice in terms of Rule 35(3) dated 6 April 2011 and due to applicant’s failure to serve amended pages subsequent to applicant’s service of a notice to amend in terms of Rule 28(1) on 8 April 2011. It is important to state in this regard that the 1st respondent, in its answering affidavit states that, in addition to its unavailability to attend the applicant’s requested pre-trial conference in October 2012, such conference was irrelevant as the applicant’s right, title and interest to the claim had already been attached and sold in execution.

[7] The applicant then launched this application in terms of Rule 6(12) on the 25th January 2013 and called on the 1st respondent to file and serve its answering affidavit by 13h00 on 30th January 2013. The 1st respondent served its answering affidavit late in the afternoon of 30 January 2013. According to the applicant, service at that time prevented it from preparing, filing and serving a replying affidavit as well as preparing the court file timeously for hearing on 5th February 2013. Consequently, the application could not be heard on that date and was removed with costs reserved.

[8] When the matter came before me in March 2014, the following issues were to be adjudicated upon: applicant’s application for an order condoning the late filing of its replying affidavit; whether demand for payment of the taxed costs was made; whether urgency existed justifying the launching of this application in terms of Rule 6 (12); whether the process followed by the 1st respondent, when executing the writ, was compliant with the provisions of Rule 45 of the Uniform Rules of this court and, in particularly whether a demand for satisfaction of a writ was made. The applicant contends that no such demand was made and submits that such constitutes non – compliance with the provisions of Rule 45(3) and invalidates the attachment and sale of its claim.

[9] With regard to the first issue, that is, the application for an order condoning the late filing and service of the applicant’s replying affidavit, the 1st respondent’s counsel advised the court that 1st respondent would not oppose the application. The application was consequently granted.

[10] I now turn to consider whether demand was made for payment of the taxed bill of costs and whether due demand for the satisfaction of the writ of execution was made in accordance with Rule 45 (3). I deal with the issue of the demand in two phases owing to the applicant’s denial of knowledge of demand for settlement of the bill of costs ever being made.

[11] It is clear from the papers that prior to issuing the writ of execution, the 1st respondent had made demands. Copies of such demands are attached to the answering affidavit as annexures AHL4, AHL5, AHL7 and AHL8. In the last annexure, a letter dated 31 March 2011, demand is made for settlement of the bill of costs in the sum of R20 893.62 and settlement of the other bill of costs in the sum of R41 437.80 is acknowledged. All these letters were sent/faxed to the applicant’s attorneys. The applicant’s contention that it had no knowledge of these demands is, consequently, rejected.

[12] I now consider the question whether this application was urgent or not. The applicant alleges that it became aware for the first time of the attachment and sale in execution of its claim in a letter from 1st respondent’s attorney dated 11 January 2013, that is, approximately three weeks before the hearing of its claim was to commence. The crucial question to consider, therefore, is whether the procedure laid out in Rule 45(3) was complied with by the 1st respondent. The gravamen of the applicant’s application is that the 1st respondent failed to comply with the provisions of the said rule.

[13] The above situation enjoins this court to focus and determine all aspects of the attachment and to ultimately rule in respect of the validity of the attachment of the applicant’s claim. The circumstances surrounding this aspect are set out in the

answering affidavit and have been summarised in the 1st respondent’s heads of arguments as follow:

13.1 Paragraph 8: the Sheriff was instructed to execute the writ of execution at the applicant’s principal place of business in Three Rivers, Vereeniging. At that address the Sheriff was informed by one Alice that the place was the residential address of M. Detlane. It is to be noted that the applicant, who is the managing director and deponent to the founding affidavit, is M. Petlane. It seems clear that there may have been a miscommunication between the sheriff and the said Alice. Applicant’s counsel raised this issue and 1st respondent’s counsel conceded to the possibility of a miscommunication having occurred. In the result the Sheriff rendered a return of non-service. It follows, therefore, that no demand for satisfaction of the writ was made. The court noted the applicant’s allegation that this address is the same one at which satisfaction of the first writ in this case was demanded and shortly thereafter satisfied.

13.2 In paragraph 10 the first respondent’s counsel states that the Sheriff was then instructed to execute the writ at the registered address of the applicant and “In doing so the Sheriff attached the applicant’s right, title and interest in and to the claim”. The relevant return of service, annexure AHL 11, does not state that no one was found on the premises and/or that no attachable goods were pointed out or could be found. “Copy of writ and inventory affixed to registered address”, reads the return of service. Of particular interest is that the Sheriff already had the particulars of the applicant’s claim giving the impression that the Sheriff was instructed to deviate from the normal manner of executing a writ and to attach a predetermined incorporeal property of the applicant, namely claim. This, in my view, constitutes an irregularity and is inconsistent with the procedure prescribed in Rule 45 (3) and thus warrants the setting aside of the attachment and sale of the applicant’s claim. The question whether this court can intervene was addressed in BRUMMER v GORFIL BROTHERS INVESTMENT ( PTY) LTD EN ANDERE 1997 (2) SA 411 (T), where Spoelstra J stated thus: “Where steps in the process of execution have been taken but not completed – the court can only interfere therewith in appropriate cases in the interest of justice. Where the procedure has already been completed, the position is different. The rights of other persons are then involved. The court can then only interfere if there was a reviewable irregularity in the process which prejudiced the debtor, in other words, where the process was not carried out in accordance with the provisions applicable thereto.”

[14] In my view and in line with my finding that there was an irregularity in the process of execution, this court can interfere in casu on the basis of the existence of the irregularity and the fact that there is no third party, in the ordinary meaning of the word, involved. It is important to state that in the present case the purchaser of the claim, 2nd respondent, is the marketing arm of the 1st respondent and, consequently, not a third party. Consequently no prejudice to a third party is to be considered. Despite argument to the contrary by respondents’

counsel, in my view, and for all intents and practical purposes, the 2nd respondent is an integral part of the 1st respondent and it is unthinkable that the 2nd respondent will pursue the claim against its mother body. The fact that the 2nd respondent has a separate and distinct company registration number does not confer on the 2nd respondent any different status to that of being a marketing division of the 1st respondent. I find, therefore, that the irregularity marked a deviation from the normal procedure prescribed in Rule 45(3) and

warrants the setting aside of the attachment and subsequent sale of the applicant’s claim.

[15] The respondents’ attorneys would reasonably have been expected to instruct the sheriff to return to the business address of the applicant, clarify the apparent miscommunication and execute the writ normally more so in that in respect of the earlier writ issued by the same attorneys, demand for its satisfaction was made at that address and was shortly thereafter satisfied.

[16] The second instruction on 3rd September 2012 to the Sheriff “to demand satisfaction of the writ and serve notice of the sale of the claim” was clearly an attempt to correct the earlier flaw and failure to follow due process; what would have been thereason for demanding satisfaction of the writ on 3rd September 2012 when the claim had already been attached in the Chief Registrar’s office on 16 August 2012 ?

[17] There is also a further reason why this court will set aside the attachment and sale of the applicant’s claim, namely; prejudice or prospective prejudice to the applicant.The following facts emerged from the arguments in court: on learning that his claim had been the attached and sold, the applicant, inter alia, offered to pay all amounts outstanding in respect of the debt of R20 893.62. The applicant stated that a sum of R25 000.00 had already been deposited in it’s attorneys’ trust account for settlement of the debt. The 1st respondent declined this offer. What concerned this court was a

response by 1st respondent’s counsel that the claim was bought for a much lesser amount and that the 1st respondent intends to claim the shortfall from the applicant.Why would the 1st respondent be so eager to perpetuate litigation when an offer has been made that could bring to an end the issue of the attachment and sale of the applicant’s claim? The existence of the irregularity and the close relationship between the 1st and the second respondent cannot be ignored in this regard. This clearly points to an unjust prejudice to the applicant who would lose, in addition to the claim, the R25000.00 it made available to settle the debt. Surely these circumstances warrant intervention by the court in the interest of justice.

[18] A third reason justifying the setting aside of the attachment and sale in execution ofthe applicant’s claim and which is of paramount importance is to be found in theprovisions of Rule 45(1) and 45(2) in terms whereof an attachment should be madeon a duly taxed bill of costs only if it arose from an order contained in a judgment,such judgment being a prerequisite for the validity of the writ of execution on whichthe attachment is based [See NU –SHELF INVESTMENTS CC v BANGAAR 2012(3) SA 136 (KZN) at 137G –H]. It is common cause in casu that there was no court order or judgment validating the writ of execution. Consequently, I find that the attachment and sale in execution of the applicant’s incorporeal property is invalid and the subsequent sale of such right void.

[19] Further to the above findings, I also find that the application for an order settingaside the attachment and sale of applicant’s

claim was indeed urgent considering the following :

19.1 The attachment and sale of applicant’s claim was conveyed to it on 11 January 2013 while the hearing of that claim was to commence on 8 February 2013;

19.2 The 1st respondent’s allegation that the applicant’s claim was not trial ready due to the applicant’s failure to respond to a notice in terms of Rule 35(3) served on the applicant on 6th April 2011 does not hold water in that therules provide for the 1st respondent to bring an application to compel compliance in such circumstances. The first respondent chose not to bring that application during the period April 2011 to January 2013;

19.3 The 1st respondent’s allegation that, having served a notice to amend its claim on 8th April 2011, the applicant failed to serve duly amended pages of its particulars of claim. This assertion, correct as it is, should never have been seen to provide the 1st respondent with reason not to honour a request for pre-trial conference to be held. By its nature, a pre-trial conference is meant, inter alia, for addressing and clarifying issues to minimise the duration of the trial, including the exchange of or request for information that may be necessary for proper preparations for trial. The applicant’s failure would have impacted on costs in the event of the matter not being able to proceed on the 8th February 2013. The first respondent’s assertion is, consequently, rejected.

[20] Resulting from the above findings, the following order is given:

1. The attachment and subsequent sale of the applicant’s right, title and interest in and to its claim under case number 40189/2009 is hereby set aside;

2. The said right, title and interest in and to the claim is hereby declared to vest in the applicant;

3. The application launched by the applicant on the 25th January 2013 is found to have been urgent;

4. The costs reserved in respect of the urgent application on the 5th February 2013 are ordered payable by the 1st respondent;

5. The 1st respondent is further ordered to pay the costs of this application.

MBONGWE, AJ

ACTING JUDGE OF THE HIGH COURT

OF SOUTH AFRICA

DATE OF HEARING : 04 MARCH 2014

DATE OF JUDGMENT : 1st APRIL 2014

FOR THE APPLICANT : J BROODRYK

INSTRUCTED BY : NEIL ESTERHUYSEN & ASSOC. INCORPORATED

CENTURION

FOR THE RESPONDENTS: ADV C.J BRESLER

INSTRUCTED BY: CLIFFE DEKKER HOFMEYER INC.

JOHANNESBURG