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Week 11 - Compliance, Condonation and Time Limits

The document discusses security for costs, compliance with court rules, and extension of time. It provides details on when a court can order a plaintiff to provide security for costs and the factors considered. It also outlines the relevant rules and processes in the Magistrates and High Courts regarding non-compliance and requesting extensions.

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44 views

Week 11 - Compliance, Condonation and Time Limits

The document discusses security for costs, compliance with court rules, and extension of time. It provides details on when a court can order a plaintiff to provide security for costs and the factors considered. It also outlines the relevant rules and processes in the Magistrates and High Courts regarding non-compliance and requesting extensions.

Uploaded by

Nene onetwo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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TOPIC 6 – SPECIFIC APPLICATIONS

6.1. SECURITY FOR COSTS


6.2. COMPLIANCE, CONDONATION AND EXTENSION OF
TIME
SECURITY FOR COSTS
• The courts can order a plaintiff / applicants to furnish security for costs
if there was reason to believe that the plaintiff or applicants would not
be able to pay an adverse costs order.
▫ Exception: human rights/constitutional challenges
• Particularly relevant for companies (insolvency) and for plaintiffs /
applicants who are not resident within the court’s jurisdiction.
• Factors will include:
▫ Financial ability of the plaintiff to provide security
▫ Circumstances of the case
▫ Equity and fairness
• Magistrates Court Rule 62

• High Court Rule 47


Common Law Position:
Witham v Venables 1828 1 Menzies 291
▫ If the plaintiff is South African, they cannot be compelled to give security,
whether they are rich, poor, insolvent or solvent.

Ecker v Dean 1938 AD 102


▫ If the court was satisfied that the action was vexatious or reckless, the
court has a discretion to order costs to prevent abuse of process.
1973 Companies Act:

If a defendant thought the plaintiff was a risk and would not be able to
pay legal costs, it (defendant) could invoke section 13 of this Act and
bring an application asking for security to be furnished.
2008 Companies Act:
No similar provision in the 2008 Companies Act.

Boost Sports Africa (Pty) Ltd v The South Africa Breweries (Pty)
Ltd (20156/2014) [2015] ZASCA

HC- In the absence of section 13 of the Old Act the High Court held that it was
vested with discretion to regulate its own proceedings and ordered Boost to furnish
security for costs. Boost then took the matter on appeal to the SCA.
• SCA - First, section 173 of the Constitution vests the courts with the inherent
power to regulate their own proceedings and such discretion should be
exercised in order to give effect to fairness and the interests of justice.
• Second, the absence of section 13 of the Old Act from the New Act should be
seen as intentional by the legislature and the courts should not adopt a position
that the old section 13 still forms part of our law, as this would infringe on the
separation of power between the legislature and the judiciary.
• Third, courts are required to balance the interests of a plaintiff who is prevented
from pursuing a litigant by virtue of an order for security for costs against the
injustice that will befall a defendant who is unable to recover costs.
• Fourth, when developing the common law, courts must promote the spirit,
purport and objects of the Bill of Rights in terms of section 39(2) of the
Constitution.
• Fifth, section 8 of the Close Corporation Act 69 of 1984 preserved the provisions
of section 13 of the Old Act and the principles applicable to close corporations in
relation to the furnishing of security for costs differ from those applicable to a
company.
Where a company is in liquidation it is a sufficient ground for ordering
security to be given; and when the company has everything to gain and
nothing to lose, as in the present case, it would be putting a premium
upon vexatious and speculative actions if such practice were not adopted.
• The SCA held that absent section 13 of the Old Act in the New Act the
law no longer differentiated between an incola company and
an incola person (individual). In determining an order for security for
costs the SCA stated that the factors contained in section 13 of the Old
Act still had relevance and courts should have regard to the nature of
the claim, the financial status of the incola and the incola's probable
financial status should it fail in the matter. The SCA placed the onus on
the party seeking security for costs to go beyond merely showing that
an incola is unable meet an adverse costs order and held that the
applicant must satisfy the court that the main action is vexatious,
reckless or otherwise amounts to an abuse (see Ramsey NO v Maarman
200 (6) SA 159 (C)). An action will be vexatious if it is obviously
unsustainable (see African Farms & Townships v CT Municipality 1963
(2) SA 555 (A)).
• Held: The court found that security must be furnished, saying,
"The picture that emerges is that although these shareholders are
funding the litigation, they are doing so in a manner that allows
them to hide behind the corporate veil of the plaintiff. No
evidence has been adduced by them that there has been an
attempt to raise funds to put up security for the respondent’s
costs, but that they have been unable to do so.

• The SCA found that there was no set rule as to when


an incola should be required to furnish security for costs, but
rather that the facts and circumstances of each matter should
inform the decision. The consideration contemplates
reconciliation between the plaintiff's right to access courts and the
defendant's interests of not being subjected to risk free litigation.
• Brought by Notice of Motion and Founding Affidavit

• Affidavit must set out a good case for the granting of security for costs
order, including the factors listed previously (fairness, equality, ability to
pay etc.).
COMPLIANCE WITH COURT RULES
• Both the Mag court and high court rules contain provisions designed to
enforce compliance and condone non-compliance with the rules of court.

• In the Mag and High court there are rules regulating litigation. E.g. time
frames, types of documents to use (e.g. notice of motion and affidavit) and
applicable procedures.

• These rules come from legislation (Mag Court Act or Superior Courts Act) and
also the Mag Court Rules and High Court Rules.

• ‘Rules’ are like regulations – they give clarity and expand on what is in the
Statutes e.g. Mag Court Act says that a simple summons must be used for
liquid claims, the Mag Court Rules will detail what must be in the summons
and the process to follow
HIGH COURT
• Rule 30A and Rule 27
• Deals with all types of non-compliance with the rules not just
procedural steps.
• Its purpose is not just to set aside an irregular step but also to enforce
compliance with a rule that has not been followed.
Remedy for the ‘innocent’ party
• High court – Rule 30A (1): where a party fails to comply with
these rules or with a request made or a notice given, any other
party may notify the defaulting party that he or she intends,
after the lapse of 10 days to apply for an order that such rule,
notice or request be complied with or that the claim or defence
be struck out (2) failing compliance within 10 days, application
may on notice be made to the court and the court may make
an order as it deems fit.
Condonation -
Remedy for the ‘defaulting’ party
• Rule 27: Can be used by parties who have not complied with the rules
and want the court to condone (excuse) their lack of compliance.
• The defaulting party must make an application to court, on notice to
other parties, supported by an affidavit in which the applicant must
show good cause.
• What constitutes good cause?
• Courts will balance the merits of the applicant’s case against the
default.
• The applicant must explain his/her default in a supporting affidavit
together with a factual outline of his case in order to show that it is not
unfounded or without merit.
MAGISTRATES COURT
• Rule 60
• Deals with non-compliance with rules including time limits and errors.
• The court can be asked to order the opposing party to comply with a
set of rules or with a legitimate request made in terms of the rules.
• E.g. can be used to enforce discovery when there is no response or an
inadequate response to a notice.
EXTENSION OF TIME
• High court – Rule 27 (discussed previously) a defaulting party can ask
for condonation from the court using the process described previously.
• Mag court – Rule 60 (5) deals with extension of time limits.
▫ Most time limits may be extended with the written consent of the other
party (ies) in the matter.
▫ If such parties fail to consent to the extension, the court may on
application allow such an extension.

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