IN THE HIGH COURT OF LESOTHO
ECONET TELKOM LESOTHO APPELLANT
THE ARBITRATOR MRS V. KOTELO 1st RESPONDENT
BREAKTHROUGH ENTERPRISES (PTY)
Delivered by the Honourable Madam Justice N. Majara
on the 21st September 2011
Application for review – request to order applicant to pay security for costs on the ground that application is vexatious – test not whether applicant will succeed on the merits but whether the proceedingsstand outside the region of probability altogether and as such impossible – the Court to exercise its discretionary powers sparingly and under exceptional circumstances.
The applicant seeks this Court to review and set aside the award of the 1st respondent that was given in favour of the 2nd respondent at the end of arbitration proceedings between the latter and the applicant. The 2nd respondent opposes the application and also demands that the applicant pays security for costs in the amount of M80, 000.00 in terms of the provisions of High Court Rule 48 (3).
On the date of hearing Ms Makhera who appeared for the 2nd respondent moved the Court to grant their request for payment of security for costs on the grounds that the 1st respondent’s award is final and this application for review is merely vexatious as it falls outside the parties’ agreement and is made simply to delay execution of the award. She added that the grounds upon which the application was brought are insufficient to justify review and the applicant’s case is not bona fide and has no prospects of success.
Ms Makheraadded further that the application is flawed because it is based on reasons for appeal as the applicant challenges the evidence that was presented before the Arbitrator and not for review as the latter entails procedural and substantive impropriety. She contended that the application is thus vexatious. In this regard she made reference to the case of Western Assurance Co v Caldwell’s Trustee 1918 AD 262 as well as the decision is Wakatipu Environmental Society v Queenstown Lakes District Council (C001/97).
On the other hand Mr. Mpaka Counsel for the applicant made the submission that while they agree that the matter for security is in the discretion of the Court, the notice that the 2nd respondent served on them to file security does not categorize their grounds in an affidavit so that they could answer to them and the applicant only hears them for the first time during oral submissions.
He added that the proceedings are not vexatious as the respondent contends because despite the ouster clause in the parties’ agreement, the Courts have inherent jurisdiction to review any proceedings. Further that in deciding whether or not to exercise its discretion in favour of the 2nd respondent, the Court should not concern itself with the merits at this stage.
Further that the grounds upon which a litigant may be required to file security include that the party against whom such security is sought is a perigrinus, an insolvent, a company, the proceedings are vexatious and in special cases. That according to decided authorities, the affidavit accompanying the notice should set out inter alia, the reasons why security is demanded and enough evidence to substantiate the facts and that in the present case no such evidence has been given there being no affidavit accompanying the notice to furnish security.
It was Mr. Mpaka’s submission that in the event this Court orders security, such amount should be in its discretion and should be reasonable and be based on amongst others, evidence of legal experts who have brought their minds to bear upon the matter. Lastly that the 2nd respondent’s notice falls short of the requirements of Rule 48 and should be disallowed.
It is against this background that the issue for determination is whether the 2nd respondent has made out a case for the Court to exercise its discretion in its favour and order payment of security as sought.
As Counsel correctly submitted the matter of security lies in the discretion of the Court. However, at this stage I find it convenient to deal with the issue whether or not this Court has jurisdiction to review the Arbitration award, it having been submitted that the application for review is vexatious for the reason that the Award is final in terms of the ouster clause in the parties’ agreement.
This issue was dealt with in inter alia the case of Lesotho Evangelical Church v Pitso LAC (1990-1994) 474 albeit in that case it was with specific reference to ouster clauses that are contained in the constitutions of voluntary organizations. Browde JA held that the Courts have jurisdiction to review decisions of voluntary associations even if such jurisdiction is so excluded where such bodies fail to observe the provisions of their constitutions and procedures, or when they act in bad faith or irregularly or fail to observe the rules of natural justice. In my view the basis upon which the Court arrived at that decision is wide enough to include ouster clauses contained in parties’ agreements and/or contracts. Therefore, the submission that the application for review is vexatious for this reason cannot be accepted as correct.
However, Ms Makhera also submitted that the applicant has no prospects of success in the main because the grounds it seeks to rely on are of appeal and not review because it challenges the award itself and the evidence, not procedural irregularity. On the other hand Mr. Mpaka made the contention that at this stage the Court is not concerned with the merits but rather with whether or not under the circumstances of this case, the applicant should be ordered to pay security.
In order to determine this question, I find it apposite to explore the grounds and rationale behind the requirement for a litigant to pay security for costs. In Herbstein and Van Winsen, the Civil Practice of the Supreme Court of South Africa 4th Edition p 321 the learned authors state that while such grounds are varied, the most important is that the party concerned is a perigrinus and not an incola and that it does not matter how rich or poor that party may be as was laid down in the early case of Witham v Venables (1828) 1 Menz 291.
However, they add that whilst this decision has been widely followed in the South African courts it has been departed from in many other respects such as where statutory provisions affect the circumstances as set out in the Companies Act 1973. Since none of the present litigants is a perigrinus, I find it apposite to proceed to consider the other circumstances that are provided therein.
One such is where the party is insolvent and has brought a vexatious action. In other words, insolvency per se will not entitle the other party to security for costs unless the Court is satisfied over and above that the proceedings are vexatious and are an abuse of the Court process. In this regard reference is made to the case of Crest Enterprises (Pty) Ltd & Another v Barnett & Schlosberg NNO 1986 (4) SA (C) amongst others. It has not been suggested that the applicant herein is insolvent or will not be able to satisfy the judgment should the application fail. I will come back to this issue later.
The other circumstance is with respect to companies where a company or a liquidator has initiated proceedings the costs of which the company would not be able to pay should the opposite party be successful. The 2nd respondent has not suggested that the applicant would not be able to pay should it i.e. the respondent be successful. This circumstance is therefore not applicable to the present application.
As I have already stated above the Court can also order a litigant to give security when it is satisfied that the litigation is vexatious. This is the main ground upon which the applicant seeks this Court to order the respondent to file security for costs. The leading authority in this regard is the decision in Western Assurance Co. (supra) which was cited with approval by the Court in Ecker v Dean 1937 AD 254 namely that a court of law has inherent jurisdiction to stop or prevent a vexatious action as being an abuse of the process of the Court and that one way of doing so is by ordering the vexatious litigant to give security for the costs of the other side.
This being the case, the next question for me to consider is what is meant by vexatious proceedings. The meaning thereof was dealt with in inter alia, the case of Fitchet v Fitchet 1987 (1) SA 450 (E) at 454 B-C wherein Olivier J had this to say:-
“…however, a vexatious action, for purposes of dismissing an action, has been equated to one standing outside the region of probability altogether and which becomes vexatious if is impossible.”
The same test was applied in previous cases such as in Argus Printing and Publishing Co Ltd v Anastassiades 1954 (1) SA 71 (W) where the Court held that although it was highly improbable that the plaintiff’s contention will succeed, it was not obviously insupportable, and the action could not be dismissed on that basis.
Applying the same test to the present matter, I am not persuaded to accept that the applicant’s case falls within the meaning of vexatious proceedings as applied in the above authorities for the simple reason that the grounds upon which it has approached this Court for relief are those of appeal and not review. While there is a probability that this contention might be correct, the remedy that is sought is neither impossible nor is it obviously insupportable to warrant this Court to exercise the power that is to be used sparingly and only in exceptional circumstances. In my view, there is nothing exceptional about the circumstances of this case because what the applicant has done is to follow up on a decision that it is not satisfied with and this is permissible. Whether or not he will definitely succeed is not the test. To this end, see the case of Fourie v Ratefo 1972 (1) SA 252 (O) quoted to this Court.
It is on the basis of all the foregoing reasons that I dismiss the interlocutory application with costs.
For the applicant : Mr. T. Mpaka
For the 1st respondent : Ms P. Makhera
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