Costs are awarded where there is conduct that amounts to an abuse of process

October 1st, 2020

Tjiroze v Appeal Board of the Financial Services Board (CC) (unreported case no CCT271/19, 21-7-2020) (Madlanga J (Mogoeng CJ, Jafta J, Khampepe J, Madlanga J, Majiedt J, Mathopo AJ, Mhlantla J, Theron J, Tshiqi J and Victor AJ concurring))

In the Tjiroze matter, the Constitutional Court (CC) denied leave to appeal to the applicant Hitjevi Obafemi Tjiroze, after he approached the CC on the basis that his s 34 right to a fair hearing had been undermined by collusion between the second respondent, the Financial Sector Conduct Authority (FSCA) and Senyatsi AJ, because the judge ‘knowingly held an interest in the matter’. This was after the respondent brought an application for leave to amend the notice to reflect its name correctly. This was a notice filed in a review proceeding instituted by the applicant in the Gauteng Division of the High Court in Pretoria. In the notice the second respondent referred to itself as the ‘Registrar of Financial Services Board’ instead of the ‘Registrar of Financial Services Providers’.

All other particulars were correctly reflected. However, the applicant opposed the interlocutory application, arguing that the notice of intention to oppose should be set aside, and the main application heard unopposed. Senyatsi AJ granted the application for leave to amend the notice of intention to oppose on the basis that the applicant had failed to substantiate the factual or legal basis for the prejudice he claimed he would suffer if leave was granted. The applicant, thereafter, instituted an urgent application in the High Court for the ex post facto recusal of Senyatsi AJ and ‘nullification’ of both the judgment granting the amendment and the one refusing leave to appeal. He stated that Senyatsi AJ had a conflict of interest arising, from, among others an alleged prior association with Norton Rose Fulbright and alleged that direct family relations between Senyatsi AJ and a Mr Nare Senyatsi, an employee of the second respondent.

The applicant had claimed that the urgency arose from the fact that the taxation of costs was imminent. That once the costs had been taxed, the second respondent would be entitled to enforce the ‘fraudulently obtained’ orders. He refused to oppose the taxation itself because if he entered that fray, he would be acquiescing to what he termed ‘unlawful and irregular’ proceedings.

The CC said that the applicant was seeking –

  • leave to appeal the High Court judgments and orders of Senyatsi AJ and Holland-Muller AJ;
  • the ex post facto recusal of Senyatsi AJ for the reason mentioned above;
  • a declaration that Senyatsi AJ’s judgment and order relating to the interlocutory amendment application are nullified;
  • an order that the amendment application be heard de novo;
  • a declaration that the answering affidavit in the urgent application that was determined by Holland-Muller AJ should not have been considered by the High Court; and
  • an order setting aside the costs orders against the applicant in the amendment and urgent application.

The second respondent opposed the applicant’s application at the CC on various grounds. Firstly, the FSCA argued that the matter was moot because –

  • the second respondent was now the FSCA;
  • in the pending review the FSCA had since been substituted for the Registrar of Financial Services Providers;
  • the amendment that the applicant was seeking to undo related to the citation of the second respondent before the substitution;
  • the applicant did not oppose the substitution; and
  • that substitution now exists in fact and in law.

The CC said that the second respondent argued that an ex post facto recusal application and consequent nullification of a judgment is not competent in our law. It averred that Senyatsi AJ was not conflicted as at the time he determined the amendment application, he had not been with Norton Rose Fullbright for about two decades and had last been with that firm in 1999; and Mr Nare Senyatsi is not directly related to Senyatsi AJ and does not even know him. The applicant baldly asserted that Mr Nare Senyatsi was lying. The CC added that the second respondent prayed for a punitive costs order because of the applicant’s litigation tactics and downright abuse of court process.

The CC explained that the case is moot ‘if it no longer presents an existing or live controversy’. The CC added that if Senyatsi AJ was recused, and his order granting leave to amend the citation of the second respondent is overturned, this would have no practical effect on the parties or anyone else. Neither the Registrar of the Financial Services ‘Provider’ nor the Registrar of the Financial Services ‘Board’ remains a respondent in the main application. The CC pointed out that it is so because the substitution of the FSCA in terms of s 300(3) of the Financial Sector Regulation Act 9 of 2017 and under the notice of substitution filed on 13 April 2018. In addition, since the applicant has not opposed the substitution, it stands. The application falls to be dismissed on this basis as well.

The CC said based on the above finding the matter does not raise a constitutional issue, the principles set out in Biowatch Trust v Registrar, Genetic Resources, and Others 2009 (6) SA 232 (CC) at para 23 do not apply. The CC questioned if the punitive scale prayed for was warranted? The CC referred to a matter between the Public Protector v South African Reserve Bank 2019 (6) SA 253 (CC) at para 8 where Mogoeng CJ noted that ‘[c]osts on an attorney and client scale are to be awarded where there is fraudulent, dishonest, vexatious conduct and conduct that amounts to an abuse of court process.’ The CC pointed out that although that was in the minority judgment, the CC did not read the majority judgment to differ on this. In the minority judgment Khampepe J and Theron J further noted that ‘a punitive costs order is justified where the conduct concerned is “extraordinary” and worthy of a court’s rebuke’. Both judgments referred to Plastics Convertors Association of SA on behalf of Members v National Union of Metalworkers of SA and Others (2016) 37 ILJ 2815 (LAC) at para 46, in which the Labour Appeal Court stated: ‘The scale of attorney and client is an extraordinary one which should be reserved for cases where it can be found that a litigant conducted itself in a clear and indubitably vexatious and reprehensible manner. Such an award is exceptional and is intended to be very punitive and indicative of extreme opprobrium.’

The CC said that the applicant has been litigating frivolously and vexatiously at great expense to the second respondent. In so doing, he has defamed a member of the judiciary and gratuitously accused some individuals of lying under oath without an iota of evidence in substantiation. The CC added that the litigation, which was plainly vexatious, was an attempt by the applicant to hold onto what he misguidedly perceives to be an advantage. The CC pointed out that the subtext is that an amendment will result in the applicant losing that advantage; and that it is what will cause him ‘prejudice’. The CC said that has never been our law on what constitutes prejudice of the nature that may result in an amendment being denied.

The CC said the norm is always to grant an amendment if it will not cause the other side an injustice that is incapable of being compensated by appropriate award costs. The CC added that in all three applications (including the one that was brought to it), the applicant had attempted to attack the second respondent’s opposition based on minor technicalities. The CC pointed out that this was purely to have the applications proceed unopposed notwithstanding the second respondent’s clear intention to oppose all three applications. The court said in doing so the applicant was abusing the court process.

The CC said the cumulative effect of all this called for a punitive costs order. The CC refused leave to appeal and ordered the applicant pay the costs of the second respondent on an attorney and client scale.

Kgomotso Ramotsho Cert Journ (Boston) Cert Photography (Vega) is the news reporter at De Rebus.

This article was first published in De Rebus in 2020 (Oct) DR 34.

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