Systems Applications Consultants (Pty) Ltd t/a Securinfo v Systems Applications Products AG and Others (1371/2018) [2020] ZASCA 81 (2 July 2020)

Key Facts

Issues

• The court evaluated if the appellant demonstrated a material change in circumstances to warrant releasing the security. Legal changes included the 2008 Companies Act's lack of a s 13 equivalent, while factual changes involved Ungani's financial backing. The court held that the transitional provisions preserved the 2012 Order's validity and that the appellant failed to provide objective evidence of Ungani's financial capacity.
• The court addressed whether a superior court retains inherent power under s 173 of the Constitution to reconsider a final interlocutory order for security for costs when there is a material change in legal or factual circumstances. The appellant argued that the repeal of the 1973 Companies Act and the joinder of Ungani as a funder constituted such changes. The court examined transitional provisions in the 2008 Companies Act and the applicability of s 173 to procedural matters.
• The court considered allegations that the respondent exploited interlocutory applications to delay the main action. Key incidents included premature dismissal applications, refusal of late security, and a disputed cost bill. The court concluded that the respondent's actions were within procedural rights under Rule 47 and the 2012 Order, rejecting claims of abuse.

Holdings

• The court determined that the court a quo had the power under s 173 of the Constitution to reconsider the 2012 Order but correctly exercised its discretion to deny the release of security, as the appellant did not meet the required evidentiary standard.
• The appeal was dismissed with costs because the appellant failed to demonstrate a material change in circumstances warranting the release of the R4 million security for costs. The court found no new evidence to justify altering the 2012 Order and upheld the court a quo's discretion.
• The respondent was not found to have abused court processes. The court rejected the appellant's claims of procedural misconduct, including the refusal to accept late security and requests to join parties, as these actions were within the respondent's legal rights.
• The 2012 Order was upheld as valid under the transitional provisions of the 2008 Companies Act, which preserved the applicability of the 1973 Act to ongoing proceedings. The repeal of the 1973 Act did not retroactively affect the 2012 Order.

Remedies

• The court dismissed the appellant's application to release the R4 million security for costs, as there was no material change in circumstances to warrant its release.
• The Supreme Court of Appeal dismissed the respondent's application to admit new evidence, as it was filed too late and the evidence was not incontrovertible.
• The appeal was dismissed with costs, including the costs incurred by the employment of two counsel, as the appellant failed to demonstrate a material change in circumstances.
• The court granted the respondent's application to increase the security for costs, as the original amount was no longer sufficient.

Legal Principles

• The court applied the Plascon-Evans rule, requiring the appellant to demonstrate a material change in circumstances through objective evidence. It found the appellant's reliance on an unsubstantiated letter from Ungani's auditors insufficient to meet this burden, as no independent valuation of Ungani's net worth was provided. The court reiterated that procedural orders like security for costs require factual clarity to avoid legal uncertainty.
• The court applied costs principles in determining whether to release security for costs under the transitional provisions of the Companies Act. It held that the inherent power under s 173 of the Constitution allows courts to regulate their own processes in procedural matters like security for costs, but only in exceptional circumstances. The court emphasized that the 2012 Order remained valid under the repealed 1973 Act due to transitional provisions, and the respondent's rights under that order could not constitute an abuse of process.

Precedent Name

• MTN Service Provider v Afro Call (Pty) Ltd
• SABC Ltd v National Director of Public Prosecutions
• Phillips and Others v National Director of Public Prosecutions
• Giddey NO v JC Barnard and Partners
• Boost Sports Africa (Pty) Ltd v South African Breweries
• Brummer v Gorfil Brothers Investments (Pty) Ltd en Andere
• Zondi v Member of the Executive Council for Traditional and Local Government Affairs and Others
• Molaudzi v The State

Cited Statute

• Interpretation Act 33 of 1957
• Companies Act 61 of 1973
• Companies Act 71 of 2008

Judge Name

• Mokgohloa
• Koen
• Mabindla-Boqwana
• Wallis
• Molemela

Passage Text

• Under the circumstances, I agree with the submission that in the absence of objective proof of Ungani's net worth, the contents of the unsubstantiated letter could not be given much weight. The mere existence of a funding agreement between the appellant and Ungani cannot, without more, amount to a new fact that warrants the release of the security that has already been furnished.
• Given that the respondent's rights arose from a court order (the 2012 Order), the exercise of the rights emanating from that order could not amount to an abuse of process.
• Its finding that there was no change in circumstances warranting a variation of the 2012 Order to release the security furnished, cannot, on the facts placed before it, be faulted.