Sechaba Nkhets'e V Assistant Registrar ADV Mokhoema @ 2 Others (CIV/APN/0131/2023) [2024] LSHC 182 (17 October 2024)

 

 

 

 

IN THE HIGH COURT OF LESOTHO

 

HELD AT MASERU                                                CIV/APN/0131/2023

                                     

In the matter between

 

SECHABA NKHETŜE                                                    1^ST APPLICANT  

AND 

ASSISTANT REGISTRAR ADV MOKHOEMA                1^ST RESPONDENT

BRIDGE TAXI FINANCE NO 2 (PTY) LTD                    2^ND RESPONDENT

OC VTD/CRCU                                                             3^RD RESPONDENT

THE ATTORNEY GENERAL                                         4^TH RESPONDENT

 

Neutral Citation: Sechaba Nkhetŝe v Assistant Registrar Adv Mokhoema and 4 others [2023] LSHC 182 Civ (17 OCTOBER 2023).

 

CORAM                :         HLAELE J.

HEARD                :         ……….. 2023

DELIVERED        :         17 OCTOBER  2024

 

SUMMARY: The decision made by the assistant register presiding over security for costs is reviewable. The decision by the assistant register to order that security for cost trials be deposited into an account other than that administered by the registrar of the court is null and void and stands to be reviewed.

 

ANNOTATIONS:

CITED CASES:

1. Matebesi V Director of Immigration C of A (CIV) [1998] LSCA 83 (31

July 1998).

 

2. Teaching Service Commission and Others v Makhobala [2015] LSCA (7

August 2015).

3. Martucci v Mountain View Game Lodge (Pty) Ltd (I 22952015) [2016] NAHCMD 217 (22 July 2016) paragraph para 13-14.
4. Matebesi V Director of Immigration C of A (CIV) [1998] LSCA 83 (31 July

1998).

5.     Bridge Taxi Association No.2 (Pty) Ltd v Sekoala Rajane and Others LSHC [2022] Civ (25 Aug 2023).

6.     Giddey NO v JC Barnard and Partners, [2006] ZACC 13; 2007 (5) SA 525 (CC) at para 8.

7.     Kaleme tech & Hire v Metsi A Pula Fleet Management Agency (C of A (CIV) 60 of 2015) [2016] LSCA 15 (29 April 2016).

8.     Hepute and Others v Minister of Mines and Energy and Another 2007 (1) NR 124 (HC) at para [10] 11.

 

STATUES

1. High Court Rules
2. Legal Practitioner’s Act 1983

 

 

 

 

 

 

JUDGMENT

HLAELE J.

[1] INTRODUCTION

1.1 On the 8^th May 2024 the parties appeared before me and argued their case as will hereunder be demonstrated. At the end of the arguments presented by counsel, I made an ex-tempore judgment. Here are my reasons for judgment.

 

[2] FACTS WHICH ARE COMMON CAUSE

2.1 In the main application, the parties were locked in a dispute wherein the Respondent sought the release of a certain motor vehicle. Not much of these facts  turns on  the review application before this court except that the Respondent (Applicant in the main) is a peregrinus. It is for this reason that the applicant had filed an application that sought Security for costs under Rule 48 of the High Court Rules.

2.2 It is alleged by the Applicants that in making a determination and approving the both the amount of security and mode of payment of the same, the registrar did not invite them to make representations. As such the Applicants are before this court to seek a review of the registrars decision on the grounds of failure to adhere to the principle of audi alterm partem. To this end they have couched their Notice of motion in the following terms:

INTERIM RELIEF

1. That the 1^st Respondent be ordered to dispatch to this Honourable Court the record of proceedings which led to him approving 2^nd Respondent’s security bond on the 1^st June 2023 within seven days of the granting of the order hereof.
2. That the main application herein be stayed pending finalization of this application.
3. That a rule nisi be issued returnable on a date and time to be determined by this Honourable Court upon the Respondents to show cause why if any why the following prayers shall not be made final.

 

FINAL RELIEF

1. That the decision of the 1^st Respondent to approve the security bond of the 2^nd Respondent on the 1^st June 2023 shall not be reviewed, corrected and set aside as irregular and ordered to stat de novo.
2. That the 1^st Respondent shall not be directed to invite Applicant and 1^st Respondent to make representations before her regarding the furnishing of security as requested by Applicant within 14 days of the granting this application.

4. That 2^nd |Respondent pay costs of this application and other Respondents only in the event of opposing this application.
5. That prayer 1,2 and 3 operate with immediate effect as interim prayers of this Court.
6. Further and or alternative relief.

2.3 In response to these allegations, the Respondent does not deny that the registrar did not give the Applicants a hearing but contend that none was necessary more so when the mischief complained about or sought to be reviewed could be cured by verifying the account into which the funds were deposited into.

 

[3] APPLICANT’S CASE

3.1 Gleaned from the Notice of motion and supported by the facts articulated in the affidavits and amplified by the arguments written and submitted orally, the Applicants case is a review of the Registrars decision to approve the security of cost amount without giving both sides a hearing. It is also the case of the Applicants that the Registrar should not have ordered that the funds should be deposited into the trust account belonging to a certain Adams Pty Ltd.

 

 

 

[4] RESPONDENTS CASE

4.1 The version or response of the Respondents to the allegations by the Applicants is (i) the doctrine of audi alteram partem is ousted in this case because the Assistant Registrar is given a wide discretion by the rules that govern her administration of security for costs and this those rules the audi is not contemplated. (ii) that the funds are deposited into a legitimate Attorney’s Trust Account as a result of which, no prejudice is or will be suffered by the Applicants in the event that costs are ordered in their favour.

 

[5] ISSUES FOR DETERMINATION

5.1 Flowing from the dispute captured above, the bone of contention between the parties is:

1. Does Rule 48 of the High Court Rule oust principles of Natural law, specifically the audi alteram partem rule.
2. Was the Registrar correct in law to order that the security for cost bond be deposited in the account held by Adams Pty Ltd.

5.2 In order to reach a legal conclusion from these issues that stand to be determined, the court will:

1. Outline the rule that governs the granting for security for costs.
2. Determine whether in administering costs, the Registrar is bound by the principles of natural justice.
3. Examine the propriety of depositing bonds into an attorney’s trust account.

 

[6] THE LAW GORVENING SECURITY FOR COSTS

6.1 The High court Rules provide, under rule 48 the following provisions that particularize the procedure for the granting and administration of security for costs.

48. Security for costs

(1)  A party to proceedings entitled and desiring security for costs from another shall, as soon as practicable after the commencement of proceedings deliver a notice setting forth the grounds upon which such security is claimed and the amount demanded.

(2) If the amount of security only is contested the Registrar shall determine the amount to be given and his decision shall be final.

(3) If the party from whom security is demanded contests his liability to give security or if he fails or refuses to furnish security in the amount demanded or the amount fixed by the Registrar within ten days of the demand or the demand or of the Registrar’s decision, as the case may be, the other party may apply to court on notice for an order that such security be given and that the proceedings be stayed until such order is complied with. If

(4) The court may, if security be not given within a reasonable time, dismiss any proceedings instituted or strike out any pleadings filed by the party in default or make such other order as it deems just.

(5) Any security for costs shall, unless the court otherwise directs, be given to the satisfaction of the Registrar.

(6) The Registrar may, upon the application of the party in whose favour security is to be provided and on notice to all interested parties, increase, the amount thereof if he is satisfied that the amount originally furnished is no longer sufficient and his decision shall be final.

 

6.2 In this particular case, we are dealing with a situation where the statute does not specifically tackle the issue before the court. The issue is not when security for costs has to be applied for. Sub rule one directs that it shall be as soon as practicable. Neither is the case before court the issue of contestation of the amount of the security for costs. Sub rule two gives a directive that the registrar is the final arbiter. If the dispute was about what happens in the event where security is not paid timeously, sub rule four would rescue the situation. In the event where there is doubt as to who determines the amount, subrule five points to the registrar. Sub rule six would sufficiently assist the court where the dispute centred around a situation where the amount, for one reason or another, has fallen short of the one previously directed or ordered.

6.3 This case is about, where or who should be the custodian of the funds once the security of costs has been ordered by the Registrar. This begs the court to journey into the question of what is security of costs. Who pays it, and under what circumstances. Also relevant is, who administers it. It is also about who should come to the party when the issue of the amount is decided. Is it one or both of the litigants?  

 

[7] WHAT IS SECURITY FOR COSTS.

7.1 It is difficult not to venture into the trite sphere of what security for costs are and what they are intended to serve in the present case before court. The deliberations on this tested and settled law is necessitated by the reason that it formulates the ratio upon which the final decision is made.

7.2 What then is security for costs, and what is it intended to address or remedy. I start from the premise that the usual costs rule in litigation is that the losing party will be ordered to pay a substantial proportion of the winning party's legal costs. Costs follow the cause.

7.3 As a species of the costs rule, security for costs arises where the court directs a party to lodge a sum of money into the court to meet the costs of the other party to the proceedings, should the party ordered to lodge the money be unsuccessful in their action. Put differently, security for costs is an order requiring a party to pay money to the court or provide a bond or guarantee as security for their opponent’s fees of the proceedings or part of it. Meaning it is a court order, which allows a party to ensure that they will be compensated for their legal costs for representation if they succeed in defending a claim.

7.4 Meaning it arises where the defendant (or any litigant for that matter), may be confident of successfully defending a claim but may fear that the claimant will not or cannot pay any costs awarded against it. The defendant can apply to the court early in the proceedings for an order that the claimant provide security for the costs it may become liable to pay.

7.5 The Namibian courts in the case of Hepute and Others v Minister of Mines and Energy and Another,[1] had occasion to deal with the issue of Security for costs particularly in relation to its nature and application. It stated:

‘It is trite that in an application for security for costs, (a) the court has a discretion to grant or refuse such security; (b) the question of security for costs is not one of substantive law, but one of practice; and (c) the court does not enquire into the merits of the dispute, but may have regard to the nature of the case.’

7.6 This was echoed in our jurisdiction in the case of Kaleme tech & Hire v Metsi A Pula Fleet Management Agency (C of A (CIV) 60 of 2015) [2016] LSCA 15[2] when it said;

The question of security for costs is one of practice and not substantive law hence the court has a discretion to grant or refuse an order for security for costs. That discretion must be exercised judicially, however. The underlying principle is that in proceedings initiated by a peregrinus, the court is entitled to protect the incola to the fullest possible extent before it will assist the peregrinus and allow him to use the process of the court, but it must also see to it that justice is not denied by unreasonable obstacles placed in the way of persons seeking redress - Magida v Minister of Police 1987 (1) SA 1 (A); Saker & Co. Ltd v Granger 1937 A D 223

7.7 It is a balancing act between the right to litigate by a indigent litigant and the fear by the opposite side that their costs may not be covered n the event thar they are successful.  This was stipulated aptly be the South African Constitutional Court in the case of

Giddey NO v JC Barnard and Partners,[3] which concerned the correct constitutional approach to a court’s discretion as whether to require a litigant to furnish security for costs. There the Constitutional Court stated as follows in relation to the balancing exercise:

‘To do this balancing exercise correctly, a court needs to be apprised of all the relevant information. An application for security will therefore need to show that there is a probability that the plaintiff company will be unable to pay costs. The respondent company, on the other hand, must establish that the order for costs might well result in it being unable to pursue the litigation and should indicate the nature and importance of the litigation to rebut a suggestion that it may be vexatious or without prospect of success. Equipped with this information, a court will need to balance the interest of the plaintiff in pursuing the litigation against the risks to the defendant of an unrealisable costs order.’

7.8 Having said this it is prudent and correct to therefore conclude that the purpose of an order for security for costs is to ensure justice between the parties, and in particular to ensure that unsuccessful proceedings do not disadvantage defendants if a plaintiff lacks financial resources to meet a costs order. Or vice versa.

 

[8] WHO ADMINISTERS SECURITY FOR COSTS

8.1 The Rules clearly identify and appoint the Registrar of the High Court as the administrator of issues relating to security for costs.[4]

8.2 The role of the courts is to grant an order for security for costs. Once the order has been made by the court, unless it is set aside, the office of the registrar takes over.

Masuku J captures this by stating:

From a reading of the relevant subrules, I am of the view that the matter of the nature, form and amount of security is ordinarily a matter exclusively for the decision of the registrar. That this is the case is plain from reading subrule (3). This suggests that it is only in exceptional circumstances, probably envisaged in subrule (6) that the managing judge would prescribe the form, amount and manner of giving security to be furnished.[5]

 

8.3 He continues to state what the rational for this is by saying:

The registrar is the hands and feet of the court and in a sense, an expert when it comes to matters of costs, the tariffs and other related technical matters. For that reason, it would seem to me, it is on that basis that the ordinary office fitting to determine the amount form and manner of the security to be furnished, once liability to pay costs has been established, is that of the registrar.[6]

8.4 It follows that the Applicant s were correct in their founding affidavit in identifying the Assistant Registrar as an administrative officer.

 

[9] DUTY TO GIVE BOTH PARTIES A HEARING

9.1 Having established and identified the Registrar or his assistant as a public authority, he is clothed with administrative powers. In the exercise of administrative powers, the pertinent question is whether he should have given both parties the right to be heard before he made the decision.  The Respondents argue that although this is a well-established principle, it should be exercised with flexibility. Citing the case of Matebesi v Director of Immigration[7] to bolster the view that the right to audi is “infinitely flexible” in that it may be ‘ousted by statute or reduced in operation.”

9.2 Whilst this may be so, in this case, neither has the statute categorically ousted it, nor has it been greatly reduced. Nothing in the reading of Rule 48 would attract the assertion in Matebesi. Instead, rule 48 is birthed by litigation, which in its nature envisages two warring parties. The contestation of costs naturally fosters that afore a decision is taken, each party should be heard. Indeed, as cited in the heads of the Respondents, in the case of Teaching service Commission v Makhobalo[8] the court must have regard to the context in which the decision is taken. It cannot therefore be, that where amounts of moneys involving litigation are before a decision maker, he finds it prudent not to call the opposite side under the guise of the flexibility of the audi rule. Thats stretching the flexibility to its unintended interpretation.

9.3 Awarding security for costs without engaging both parties to the litigation opens the process up for decisions which are unfavourable, leading to unnecessary interventions by the court. What is envisaged by rule 48 to be an administrative issue then would have the unintended effect of prolonging litigation by constant review applications resulting from one-sided hearings. It is for this reason that I find that the registrar ought to have given both parties a hearing before making a determination regarding the amount to be furnished as security for costs.

 

[10] WHERE SHOULD THE SECURITY FOR COSTS FUNDS BE DEPOSITED.

10.1 Rule 48 is silent on the issue of who becomes the custodian of the funds held as security for costs. Earlier in the judgement, I addressed the rational for security for costs. They are funds that are intended to ensure that unsuccessful proceedings do not disadvantage defendants if a plaintiff lacks financial resources to meet a costs order. This envisages that once costs are ordered in favour of a successful party, they should be easily accessible to him without   interruption and with ease.

10.2 It is common cause in this case that the once the Registrar had decided on the amount of security in the absence of the Applicant he, still excluding the Applicant from the decision, decided that funds should be deposited into a trust account held by Adams (pty) ltd.

The Respondent categorically states;

The security was therefore paid into an attorney’s trust account. This therefore cures Applicant’s alleged prejudice as outlined in his founding affidavit and to that extend, renders the Applicant’s review application redundant.

10.3 To which the Applicants reply that the funds should not be paid into an account of a party linked in any manner to the litigation.

10.4 The question for determination for the court therefor is, was it rational for the Registrar to have made an administrative decision the effect of which was to deposit the funds into an account held by a party having an interest in the litigation?

10.5 Zoning into the issue at hand, the question is, did the assistant registrar consider all factors and facts that are relevant to the issue at hand. These may include, but are not limited to as, the legal status of the trust account, the propriety of diverting from the norm of requesting that the funds are deposited from government bank account, the security of the funds. The availability of the funds at the stage of disposal, the fact that she cannot control through her office the account held by Adams Pty Ltd, the inconvenience that may be suffered by the Applicant in the event that the signatory of the account refuses to release the funds.  These are the issues that the registrar has or had to consider before deciding that the funds could be deposited in the trust account.

10.6 To compound this, there is nothing placed before the court that the Registrar had addressed her mind to the issue whether the trust account complies with the dictates of the Legal Practitioners Act[9] which provide that;

 TRUST ACCOUNTS

1. Every practising attorney, notary or conveyancer or firm of practising attorneys, notaries or conveyancers (herein after in this section referred to as the attorney) shall once in each calendar year or at such other times as the Law Society may require furnish to the Law Society a certificate by an accountant approved by the Law Society. Such accountant shall be appointed by the attorney at his expense.

The certificate shall state —

 (a) Whether or not he has carried out an audit or has merely made an examination in terms of this section;

(b) Whether or not he is satisfied by an examination, to the extent that he considered necessary, of the books of account, bank statements and system of bookkeeping employed by the attorney concerned for the period of twelve months (or for such lesser period as the attorney has been practising) terminating at the date to be specified in the certificate, that —

(i) The attorney has kept for the period under review Accountant’s certificate and is keeping proper books in such manner as to enable him to comply with the provisions of this Act;

(ii) Monies received by such attorney on account of any person were deposited regularly and promptly in the trust banking account kept by such attorney in terms of this Act;

(c) The date to which such books appear to have been written up and the date to which it appears that they were last balanced and whether or not it appears that the attorney during the period specified in paragraph (b) above complied with the provisions of sub-section (5) of this section;

10.7 These provisions are intended to ensure that funds that are held by attorneys in trust accounts are safe. Court decisions are replete with occasions where attorneys have syphoned funds entrusted to them by clients.  This calls for the Registrar to have addressed her mind to these factors before making her decision.

10.8 As an official discharging an administrative action, the Registrar is called upon to address her mind to the issues at hand. There must be a rational connection between the facts before the Registrar and the decision she has made.  The intention is not to replace or substitute the decision of the registrar but to place facts before her and find a nexus between such facts and the outcome. The prejudice likely to result from her failure to address her mind to these factors attracts a review of her decision.

 

 

 

10.9 As had been held in the decision of Bridge Taxi Association No.2 (Pty) Ltd v Sekoala Rajane[10] the decision of the registrar as an administrator dealing with security for costs, is reviewable.

I therefore make the following order.

1. The decision of the Registrar is reviewed and set aside.

 

 

_______________________

              M. G. HLAELE

  JUDGE

 

 

Applicant:       Adv L.D Molapo

 

Respondent:    Adv. M.M Makara