Boost Sports Africa (Pty) Ltd v South African Breweries Pty Ltd 2015 (5) SA 38 (SCA); [2015] ZASCA 93; 2015 BIP 22 (SCA), referred to

Bowes & Ors v Manolakakis 2011 (2) ZLR 59 (H), referred to

LF Boshoff Investments (Pty) Ltd v Cape Town Municipality; Cape Town Municipality v LF Boshoff Investments (Pty) Ltd 1969 (2) SA 256 (C), applied

Lindsay v Hayes 1977 (1) RLR 171 (GD), applied

Ramsamy NO v Maarman NO and Another 2002 (6) SA 159 (C), referred to

South African Iron and Steel Corporation Ltd v Abdulnabi 1989 (2)
SA 224 (T), applied

Strydom v Griffin Engineering Co 1927 AD 552, referred to

Tobacco Sales Producers (Pvt) Ltd v Eternity Star Investments 2006 (2) ZLR 293 (H), referred to

Western Assurance Co v Caldwell's Trustee 1918 AD 262, referred to

Legislation considered:

Constitution of Zimbabwe, 2013, ss 69 (3), 89

Book cited:

Cilliers AC, Loots C and Nel HC Herbstein and Van Winsen, The Civil Practice of the High Courts and the Supreme Court of Appeal of South Africa (5th edn, Juta & Co Ltd, Cape Town, 2009) pp 306, 395, 410

I Chagonda, for the applicant

E Hamunakwadi, for the respondent

DUBE J:

This dispute relates to payment of costs. The applicant seeks stay of respondent's action pending payment of costs. Secondly, an order for security for costs against the respondent for costs that may be ordered in favour of the applicant in future proceedings. The facts surrounding this matter are generally common cause. The brief background to the respondent's claim against the applicant is that on 9 October 2012, the applicant wrongfully and illegally debited the respondent's account with US$ 55 000 without any instruction from the respondent for the withdrawal of the money. The respondent claims that it did not receive the money. The applicant has refused and neglected to reverse the transaction. The respondent has instituted proceedings which are now the subject of this application to reverse the amount debited.

The relief sought is based on the following facts: Around December 2012, the respondent issued summons against the applicant under HC 140/12. The applicant entered appearance to defend and filed a notice of exception on the basis that the summons was bad at law. The respondent subsequently withdrew the summons on 25 January 2015. The respondent filed a notice of withdrawal which was accompanied by a tender of costs.

On 28 January 2014, the respondent issued another summons against the applicant under HC 718/14. The applicant entered appearance to defend and again filed a notice of exception on the premise that the summons was bad at law and did not disclose a cause of action against it. The respondent filed a notice of withdrawal on 22 April 2014 which was accompanied by a tender of taxed costs.

On 22 May 2014, the applicant's legal practitioners wrote to the respondent requesting payment of the taxed bill of costs. By letter dated 21 May 2014 the respondent made an undertaking to pay the amount due on or by 15 June 2014. Despite this undertaking the costs were not paid. A further undertaking was made by the respondent's legal practitioners on 3 July 2014. Again, no payment came.

The respondent filed yet another summons on 12 October 2015 based on the same cause of action. The summons was served on the applicant on 23 January 2016. No payment was made for the taxed costs. The applicant wrote a letter to the respondent's legal practitioners on 19 February 2016 advising that if the taxed costs were not paid, the applicant would make an application for stay of their pending action. To date, the taxed costs have not been paid. The applicant protested that the respondent cannot continue issuing summons on the same cause of action without having paid the costs which it tendered and which have since been taxed. The applicant took issue with the fact that it has to incur unnecessary costs in defending the current summons that has been issued in circumstances where the respondent is simply failing to pay taxed costs. It bemoaned that the respondent has developed a habit of not paying costs.

The applicant further submitted that the respondent's claim has prescribed. The applicant contended that the third set of summons was served in January 2016 when the cause of action had already prescribed. It contended that is quite clear that the respondent's claim will stand to be dismissed and that it would be improper for the applicant to be dragged all the way to trial only for the action to be dismissed. The applicant urged the court not to allow the respondent to proceed with the current action until the taxed costs are paid in full, as well as, order the respondent to furnish security for costs. The applicant also seeks an order that in the event the respondent fails to comply with the terms of this order, the applicant shall be entitled to apply for dismissal of the respondent's action under HC 9790/15.

In response, the respondent contended that the applicant could not bar the respondent from pursuing its rights under the law because of outstanding costs. The respondent submitted that if a party withdraws a matter from court, the matter is not dismissed or finalised and that it merely seeks to recover its money which was erroneously paid out. The respondent took issue with the fact that the applicant brings this application when it has already filed its Pre-Trial Conference ("PTC") papers and argues that instead of the applicant filing its PTC papers in response to the PTC papers filed by the respondent, the applicant is seeking to stay those proceedings simply because the respondent has very high prospects of success. It submitted that the applicant has other remedies open to it other than seeking to stay the proceedings. Furthermore, that the applicant has not been able to set a legal basis for the stay of proceedings sought. The respondent contented that the applicant cannot seek security for costs against it when it is not a peregrinus. The respondent argued that it is a Zimbabwean company and therefore an incola and cannot be asked to furnish security for costs. The respondent maintained that its claim has not prescribed and contended further that this is not the forum to raise prescription.

I wish to deal first with the issue of prescription. Prescription is a question of law and may be raised at any stage of the proceedings. A case in point is Tobacco Sales Producers (Pvt) Ltd v Eternity Star Investments 2006 (2) ZLR 293 (H) which is authority for the proposition that a plea in abatement may be raised at any time. However, I did not understand the applicant to be raising prescription as a point in limine in the present proceedings. The applicant has not moved the court to dismiss the application based on prescription. In paragraph 2.6 of its heads of argument, the applicant argues that the respondent's claim is hopelessly prescribed. The applicant argues further that in view of this fact, it would be improper for the applicant to be dragged all the way to trial only for the claim to be dismissed. The applicant's contention is that the respondent's claim is in essence vexatious and is unsustainable. Prescription is simply one of the grounds given in support of the proposition to stay proceedings. Nothing stops a litigant who desires to illustrate that proceedings are vexatious to allude to the fact that the matter has prescribed. The submission is properly before the court.

The debit complained against was made on 9 October 2012. The respondent submitted that the anomaly was only discovered in late 2012. The respondent did not specify the exact date when the discovery was made in late 2012. The term late 2012 is very wide. It could mean anything between October and December 2012. Even if it is accepted that late 2012 is December 2012, the claim would have prescribed by then. The third set of summons was issued on 15 October 2015. The summons was not immediately brought to the attention of the applicant. It was stamped by the Sheriff on 22 January 2016 and only served on the applicant after that date. The service of the summons occurred more than three years after the debit was made on 9 October 2012, which is the date when the cause of action arose. The law is clear that the issuance of a summons that is subsequently withdrawn does not have the effect of interrupting prescription. The first and second sets of summons did not interrupt prescription as they were subsequently withdrawn. A summons that has not been served on the other party has no effect of interrupting prescription. The third set of summons was served after 22 January 2016, outside the three year prescription period and hence did not interrupt prescription. The respondent's claim has prescribed.

The issues required to be resolved are whether this Court should stay proceedings and order the respondent to furnish security for costs. In Western Assurance Co v Caldwell's Trustee 1918 AD 262 at 273, the court recognised the inherent power of the courts to prevent vexatious proceedings where costs of prior proceedings remain unpaid. The same position is echoed in AC Cilliers, C Loots and HC Nel Herbstein and Van Winsen, The Civil Practice of the High Courts and the Supreme Court of Appeal of South Africa (5th edn, Juta & Co Ltd, Cape Town, 2009) at page 306 where the authors state as follows:

"South African High Courts possess inherent jurisdiction to prevent abuse of their process by staying proceedings in certain circumstances, but the power to do so will be exercised sparingly and only in exceptional circumstances. This should be done, with great caution, and only in clear cases. Proceedings will be stayed when they are vexatious or frivolous or when their continuance, in all the circumstances of the case, is, or may prove to be, an injustice or serious embarrassment to one or other of the parties, as for example, when a person brings proceedings without having paid costs that have been incurred in former proceedings in which the same subject matter was in dispute."

The circumstances in which proceedings may be stayed or set aside were dealt with in LF Boshoff Investments (Pty) Ltd v Cape Town Municipality; Cape Town Municipality v LF Boshoff Investments (Pty) Ltd 1969 (2) SA 256 (C). At 275B-D the court made the following comment:

"The power of the Court to set aside a proceeding on the grounds that it is frivolous and/or vexatious and/or an abuse of the process of the Court is one which ought to be sparingly exercised and only in very exceptional cases (see Ravden v Beeten, 1935 CPD 269 at p. 277). The proceeding must be obviously unsustainable and this must appear as a matter of certainty and not merely on a preponderance of probability (African Farms & Townships Ltd v Cape Town Municipality, 1963 (2) SA 55 (AD) at p. 565)."

The power to stay proceedings was dealt with in the Western Assurance Co case (supra) where at 273 the court remarked that "The courts of law are open to all, and it is only in exceptional circumstances that the door will be closed upon anyone who desires to prosecute an action." The applicant is required to go further and show that the action is hopeless or impossible of success. See also Strydom v Griffin Engineering Co 1927 AD 552. The case of Lindsay v Hayes 1977 (1) RLR 171 (GD) is authority for the proposition that where a litigant has failed to pay taxed costs, the court ought to stay the action and preclude the plaintiff from instituting any other proceedings related to the matter in issue.

The conduct of a plaintiff is pertinent in considering whether to make an order for security for costs. In South African Iron and Steel Corporation Ltd v Abdulnabi 1989 (2) SA 224 (T) at 237C-D HARTZENBERG J said the following, in deciding whether or not to grant an order for security for costs:

"...the Court must now decide... the nature of the case... to be taken into account and the circumstances as to how the claim arose [and]... the conduct of the parties during the previous stages of this case."

In Bowes & Ors v Manolakakis 2011 (2) ZLR 59 (H) the headnote to the judgment remarked that:

"In exercising its discretion [for security of costs] the court is guided... by the provisions of... the Constitution of Zimbabwe 1980... that every person is entitled to the protection of the law and to be afforded a fair hearing."

Our rules of court do not provide for stay of proceedings where costs remain unpaid. A practice has arisen based on the common law where courts will stay proceedings where a litigant has failed or neglected to pay costs. The court derives such powers from its inherent jurisdiction which gives the court power to regulate its own proceedings. A party who seeks to stay proceedings on the basis that they are vexatious is required to do so by way of an application. Strong grounds are required to justify a stay of the proceedings. The court may, in the exercise of its inherent jurisdiction stay proceedings where it is satisfied that the proceedings are vexatious or frivolous and where it is satisfied that their continuance will cause an injustice or embarrassment to the other party and the proceedings amount to an abuse of court process. It must be shown that the proceedings are unsustainable. A stay of proceedings pending payment of costs may be ordered where a litigant brings further proceedings and fails to pay costs incurred in previous proceedings in which the same subject matter is in dispute. It must be shown that by its conduct, the respondent abused court process. Where a respondent has failed to pay taxed costs, the court ought to stay the action and preclude the respondent from instituting further proceedings related to the same matter.

The requirement for a plaintiff to pay security for costs is also a common law practice. Security for costs are costs paid into court by a plaintiff to secure payment of such costs if such person fails to meet future costs. The subject of payment of security for costs is dealt with in Cilliers et al (op cit) where the authors at page 395 state that the question of security is merely one of practice and is in the discretion of the court. The authors also state at page 410, that the court has inherent jurisdiction to order a litigant to give security for the costs of the other side when it is satisfied that the litigation is vexatious. The authors warn that the power of the court to order security for costs on the basis of vexatiousness is sparingly exercised and is only so exercised in exceptional circumstances.

The subject regarding furnishing of security for costs by an incola was dealt with in the South African case of Boost Sports Africa (Pty) Ltd v South African Breweries (Pty) Ltd 2015 (5) SA 38 (SCA), a case involving an impoverished litigant. The court ordered an incola company to pay security for costs and held that an incola may be required to provide security. The court held that it is established law that the question of security for costs is one of procedure and not substantive law. That being so, the court has inherent jurisdiction to prevent unmeritorious and vexatious litigation at the instance of an incola plaintiff company by ordering it to provide the defendant with security for costs. See also Ramsamy NO v Maarman NO and Another 2002 (6) SA 159 (C).

What emerges from this discussion is that the question of security for costs is one of judicial practice and not substantive law. It is ordinarily a peregrinus, a foreign plaintiff, who is required to pay security for costs. Our law does not normally require an incola to pay security for costs. An incola will be ordered to pay security for costs where its claim is vexatious, reckless or where its claim amounts to an abuse of process. There are no clearly laid down rules governing when an incola will be required to pay security for costs. Again, each case will depend on its own circumstances.

A vexatious claim is one that is unsustainable and devoid of any merit. Security for costs will be granted where there are recurrent motions and where the motions are devoid of any merit and the claims concerned have no reasonable prospects of success. It must be shown that the claim is frivolous and is clearly meant to abuse court processes and has the effect of harassing the other party. The law allows the court in the exercise of its inherent jurisdiction to order security for the costs when it is satisfied that the litigation is vexatious even where the plaintiff is an incola. A court will not order an incola to furnish security for costs merely because it is likely to fail to pay costs or that it has failed to pay previous costs. The onus is on an applicant to show an entitlement to security for costs. The applicant must go beyond just showing that the respondent is unable to pay costs. It must persuade the court that the respondent's claim is vexatious, reckless and amounts to an abuse of court process. This Court has inherent jurisdiction to prevent or stop vexatious proceedings that result in abuse of court process. A court dealing with an application for security for costs is expected to consider all relevant factors of the case in exercising its discretion to grant or refuse to grant an order for security of costs. The court should be guided by notions of fairness and equity.

The court has discretion over whether or not to grant the orders sought. That discretion is to be exercised sparingly. The court is required to exercise caution and be alive to the provisions of the Constitution of Zimbabwe, 2013 ("the Constitution") governing the right to a fair trial and access to justice. Section 69 (3) of the Constitution provides for the right to access to a court of law and a fair hearing. The section accords every person the right of access to the courts for the resolution of any dispute. The right to a fair hearing and access to court and justice ought not to be unduly limited by the obligation to pay costs. A plaintiff should not be denied access to the court without just cause. This right is required to be exercised reasonably and with due regard to the rights and freedoms of other persons in terms of s 89 of the Constitution. The court has to balance the interests of a plaintiff who will be prevented access to the court and from pursuing its claim because it is required to furnish security for costs or because its claim is being stayed, against the injustice likely to be suffered by a defendant who is being denied its taxed costs. The court has to be alive to the constitutional limitations to this right. What the sections implore the court to do is to balance the interests of the parties in coming up with an appropriate decision. Each case is determined on its own circumstances.

The conduct of the respondent in this matter justifies an order for stay of proceedings and for security of costs. The respondent filed two previous summonses which it subsequently withdrew and offered to pay wasted costs. The withdrawals were on account of lack of a cause of action on the same facts. The costs were taxed. The respondent has undertaken to pay the taxed costs to no avail. It failed to satisfy the previous taxed costs. To safeguard the applicant, an order for stay of proceedings pending payment of costs and security for costs for further proceedings before pursuing its claim is appropriate in the circumstances of this case. It is competent to order the respondent who is in an incola to pay security for costs.

The respondent's claim has clearly prescribed. It would be improper and unfair for the applicant to be dragged to trial only for the court dealing with the trial to dismiss the claim. For this reason the proceedings become vexatious. The court is aware that the main matter has reached the PTC stage. The court is satisfied that the respondent's claim is hopeless and impossible of success. No doubt the respondent's claim is vexatious. Allowing the matter to proceed would amount to the court allowing the respondent to flog a dead horse and amount to an abuse of court process. No purpose is going to be served by allowing a matter which has clearly prescribed to proceed to trial. There is no guarantee that the respondent will not seek to withdraw the summons again. The insistence by the respondent to continue with the claim will cause an injustice to the applicant, especially as the respondent is not prepared to pay costs.

An order for stay of proceedings and security for costs will cushion the applicant in that it will be assured that it will get its costs and also in the event that it succeeds in the pending trial. If an order for security for costs is not granted it may prove difficult for the applicant to obtain its costs in the future when one has regard to the respondent's previous conduct. The fact that the respondent is an incola is of no consequence.

The court has decided, in the exercise of its inherent power to accede to the applicant's request. The applicant is entitled to the order sought.

In the result it is orders as follows:

1. That the respondent's action against the applicant in case number HC 9790/15 be and is hereby stayed pending the payment of the applicant's taxed costs in case numbers HC 14046/12 and HC 718/14.

2. That the respondent shall pay security for costs in the sum of US$ 5 000 against costs that may be ordered against it in favour of the applicant in case number HC 9790/15 with the Registrar of this Honourable Court within 30 days of service of this order.

3. That in the event that the respondent fails to comply with any term of this order, the applicant shall be entitled to apply for the dismissal of the defendant's action in case number HC 9790/15.

4. That the applicant's legal practitioner may serve this order on the respondents' legal practitioners.

5. That the respondent shall pay the costs of this application.

Atherstone & Cook, applicant's legal practitioners

Nyandoro and Mukwena, respondent's legal practitioners