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THE HIGH COURT OF SOUTH AFRICA

NATAL PROVINCIAL DIVISION CASE NO. 4222/07

In the matter between:

SHOSHOLOZA AUCTIONEERS CC APPLICANT/DEFENDANT

and

NGQURA HARBOUR CONTRACTORS RESPONDENT/PLAINTIFF

______________________________________________________________

J U D G M E N T

______________________________________________________________

NDLOVU, J

[1] This is an application whereby the applicant (the defendant in the main action) (i) challenged the authority of the attorneys for the respondent (the plaintiff in the main action) to act for the respondent and (ii) sought to have the notice of bar issued by the respondent against the applicant set aside or removed. The application was opposed by the respondent who, in turn, filed a counter-application seeking a declarator barring the applicant from pleading in the main action.

[2] In its amended order prayed the applicant sought an order:

“ 1.

1.1 That the respondent/plaintiff within 5 days of the granting of this order, comply with applicant/defendant’s notice in terms of Rule 7(1).

1.2 In the event that respondent/plaintiff does not comply with the order in prayer 1.1 above that applicant/defendant be granted leave to set the matter down again, for an order that respondent/plaintiff’s claim be struck out.

2.

That the notice of bar issued and filed by plaintiff/respondent on 9 October 2007 be set aside/removed.

3.

Costs of the application.”

[3] The applicant’s challenge as such was premised on a notice dated 13 July 2007 issued by the applicant in terms of Rule 7(1) of the Uniform Rules of Court. This notice (hereafter referred to as the Rule 7(1) notice) was served on the respondent calling upon it to furnish the power of attorney envisaged under the said Rule authorising its attorneys to act on behalf of the respondent in this matter.

[4] In the main action the respondent sued the applicant for payment of the sum of R966 800,00 plus costs of suit.

[5] The Rule 7(1) notice read as follows:

“PLEASE TAKE NOTICE that, in terms of Rule 7(1) of the Uniform Rules of Court, the Defendant disputes the authority of Paula Drotskie Attorneys and/or Lister and Lister to act for the plaintiff.”

[6] The respondent, apparently believing that it had complied with the Rule 7(1) notice and seeing that the applicant had still not filed its plea, after the time prescribed by the Rules, served on the applicant a notice of bar placing the applicant on terms to plead within 5 days of receipt thereof on pain of being barred from pleading. It was this notice of bar which the applicant also sought to be set aside.

[7] In response to the Rule 7(1) notice, the respondent filed and served on the applicant a document headed “Executive Committee Resolution” dated 30 August 2007 (which was marked Annexure “FJ5B”). This document was contained in a letterhead with the names at the top thereof of the respondent and three other corporate entities, namely: Hochtief Construction AG, Concor and NEC, the last-mentioned further having four sub-entities under its name: Africa Construction, Siyaya Civils, Saklusizwe Construction and MMP Civils.

[8] Indeed, in its particulars of claim the respondent (as plaintiff) described its legal status as being that of a partnership trading under the name and style of Ngqura Harbour Contractors. Upon enquiry by the applicant in terms of Rule 14(5) the respondent furnished the names and addresses of the individual partners engaged in business with the respondent. The names of the other partners were those appearing with the name of the respondent in Annexure “FJ5B”.

[9] As indicated earlier, Annexure “FJ5B” was filed in response to the applicant’s Rule 7(1) notice, whereby the applicant had challenged the authority of the respondent’s attorney to act on behalf of the respondent. The entire document (Annexure “FJ5B”) read thus:

“EXECUTIVE COMMITTEE RESOLUTION: 30^TH AUGUST 2007.

1. INSTITUTION OF ACTION AGAINST SHOSHOLOZA AUCTIONEERS CC FOR THE SUM OF R966 800.00 (NINE HUNDRED AND SIXTY SIX THOUSAND EIGHT HUNDRED RAND) INCLUSIVE OF VAT)

2. APPOINTMENT OF ATTORNEYS TO REPRESENT THE JOINT VENTURE PARTNERSHIP

1. RESOLVED THAT

Ngqura Harbour Contractors, a partnership institute legal action against Shosholoza Auctioneers CC for the payment of the sum of R966 800.00 (nine hundred and sixty six thousand eight hundred rand) inclusive of Vat.

2. RESOLVED FURTHER THAT

Paula Drotskie Attorneys of 29 Avonwold, Saxonwold, Johannesburg be and is hereby appointed as attorneys to the joint venture to represent it in all matters pertaining to the abovementioned legal action.”

[10] There was no indication of the exact date as to when Annexure “FJ5B” was served on the applicant. I can therefore only assume that it was on or about the same date as that of the resolution, namely 30 August 2007. According to the respondent, Annexure “FJ5B” served as a power of attorney authorising the respondent’s attorneys, Paula Drotskie Attorney of Johannesburg, to act for the respondent. It was common cause that their local correspondent attorneys were Lister and Lister of Pietermaritzburg.

[11] Indeed, there was no immediate objection by the applicant against the validity of Annexure “FJ5B” to have served as power of attorney. There being no defendant’s plea filed by the applicant within the time prescribed by the Rules, the respondent filed and served a notice of bar on the applicant on or about 9 October 2007. This was already over five weeks after the respondent had served the applicant with Annexure “FJ5B”. Only on the day thereafter (being on 10 October 2007) that the applicant filed a notice in terms of Rule 30A(1) in which, for the first time, alleged that the respondent failed to file a power of attorney and that the respondent was accordingly in breach of the provisions of Rule 7(1). Significantly, the applicant did not specify at that stage in what respect it alleged that the respondent had not complied with Rule 7(1).

[12] On the same date as the Rule 30A(1) notice the applicant further filed and served on the respondent a notice in terms of Rule 30(2)(b) alleging that the respondent had committed an irregular step in that the respondent served the applicant a notice of bar prematurely when the respondent itself had not yet complied properly with the applicant’s Rule 7(1) notice. Again, the Rule 30(2)(b) notice did not specify in what respect the respondent was allegedly in breach of the Rule 7(1) requirements.

[13] Subsequently, the respondent filed its answering affidavit in which it expressed amazement and surprise as to what precisely the applicant sought to be furnished with. It was submitted and argued on behalf of the respondent that Annexure “FJ5B” complied with the requirements of Rule 7(1) and therefore properly served as a valid power of attorney authorising the respondent’s attorneys to act for the respondent.

[14] The specific details of the applicant’s challenge appeared for the first time in paragraph 4 of the applicant’s replying affidavit, filed on 30 April 2008, which read thus:

“4.1 I submit that the resolution which was provided by Respondent annexure “FJ5B” is inadequate.

4.1.1 It refers to “the joint venture partnership”. It does not set out who makes up the said partnership.

4.1.2 A copy of the partnership agreement is also not provided.

4.1.3 It does not set out who on behalf of the partnership or on behalf of each of the entities making up the partnership authorised the said resolution, nor who was present when the resolution was taken or where it was taken.

4.1.4 It further fails to set out who authorised the said J.R. Millward to sign the resolution.

4.1.5 It further fails to set out who was authorised to instruct Paula Drotskie Attorney.

4.2 Respondents reply in terms of Rule 14 (5) annexure “FJ3”, states that NEC consists inter alia of African Construction (Pty) Ltd in liquidation.

4.2.1 It is submitted that a company in liquidation cannot trade without permission from the Master or a Court Order and that it accordingly appears that as it is in liquidation it cannot be a partner in a partnership agreement.

4.3 It is thus submitted that the requirements in paragraphs 9.2.2, 9.2.3 and 9.2.4, as set out by Respondents have not been satisfied that annexure “FJ5B” does not comply therewith and that the attorney was accordingly not properly authorised.

4.4 In paragraph 9.3.2 it refers to the executive committee of Respondent.

4.4.1 Once again he fails to set out who the said “executive committee” is, how it came into being or how it is constituted or what its authority is.

4.4.2 I submit that it is still impossible to determine if the “partnership” is correctly constituted and who authorised the legal proceedings.

4.5 I submit that any attorney can only have a valid authority or power of attorney if the person or entity who grants it is correctly constituted and has the necessary authority.

4.6 I submit that in terms of Rule 7 this Honourable Court must be satisfied that there was the necessary authority.”

[15] Rule 7(1) of the Uniform Rules of Court, on which the applicant relies, provides as follows:

“(1) Subject to the provisions of sub-rules (2) and (3) a power of attorney need not be filed, but the authority of anyone acting on behalf of a party may, within 10 days after it has come to the notice of a party that such person is so acting, or with the leave of the court on good cause shown at any time before judgment, be disputed, whereafter such person may no longer act unless he satisfied the court that he is authorised so to act, and to enable him to do so the court may postpone the hearing of the action or application.”

[16] In Eskom v Soweto City Council 1992 (2) SA 703 (WLD) at 705F the Court stated:

“If the attorney is authorised to bring the application on behalf of the applicant, the application necessarily is that of the applicant … As to when and how the attorney’s authority should be proved, the Rule-maker made a policy decision. Perhaps because the risk is minimal that that an attorney will act for a person without authority to do so, proof is dispensed with except only if the other party challenges the authority. See rule 7(1). Courts should honour that approach.” (at 705F; G-H). (My emphasis)

(This decision was cited with approval in Ganes and Another v Telecom Namibia Ltd 2004 (3) SA 615 (SCA) at 624I-625A. See also Unlawful Occupiers, School Site v City of Johannesburg 2005 (4) SA 199 at 206 G-H).

[17] In South African Allied Workers’ Union v De Klerk 1990 (3) SA 425 (ECD) at 436F/J-437B the Court stated:

“The power of attorney contemplated by Rule 7(1) is a power to take certain formal procedural steps, namely to issue process and to sign Court documentation such as a summons or notice of motion on behalf of a litigant. … Rule 7(1) is, in essence, merely a means of achieving production of the ordinary power of attorney in order to establish the authority of an attorney to act for his client. It may be called for simply by notice and without an evidentiary challenge to such authority. Moreover the authority of a litigant’s attorney to represent him is not a fact which need be alleged in pleadings or established at a trial …”

[18] The applicant was accordingly entitled to challenge the authority of the respondent’s attorneys to act for the respondent. Once the challenge was put forth it was then for the respondent to satisfy the Court that the attorneys concerned did have the requisite authority so to act. (Gainsford and Others NNO v Hiab AB 2000 (3) SA 635 (WLD) at 640A).

[19] There was no hard and fast rule that the power of attorney must necessarily be framed in a particular way or format and that it must always have a heading “Power of Attorney”. In Administrator, Transvaal v Mponyane and Others 1990 (4) SA 407 (WLD) at 409C-E the Court stated (per Botha J):

“In my view there is nothing in Rule 7 in its present form that requires the authorisation of an attorney to be embodied in a document styled a power of attorney. The provisions of Rule 7 specifically requiring powers of attorney I appeals fortifies the impression that otherwise an attorney’s mandate can be proved otherwise than by the production of a written power of attorney. I also think that Rule 7 should be viewed against the background of its original form.

Before its recent amendment it only required powers of attorney to be lodged in the case of actions and appeals. See Edmund Woodhouse (Pty) Ltd v Brits 1967 (40 SA 318 (T) and Brown v Oosthuizen en ‘n Ander 1980 (2) SA 155 (O). I have no doubt that the underlying intention of the recent amendment of Rule 7 was to make the Rule less cumbersome and formalistic.

I therefore conclude that proof of the authority of the respondents’ attorney is not dependent on the production of a written power of attorney.”

[20] It followed, accordingly, that what mattered was the substance rather than the form of the power of attorney contemplated under Rule 7(1).

[21] The fact that the summons was filed on 15 May 2007 and the power of attorney (that is, Annexure “FJ5B”) was dated 30 August 2007 and filed only on 4 October 2007 (which was after the filing of the summons) did not detract from the validity of the power of attorney as representing authority for the attorneys mentioned therein (namely Paula Drotskie Attorneys) to act for the respondent. In this regard, “all that is required is that the court must be satisfied that authority exists at the time when proof of it is proffered.” (Johannesburg City Council v Elesander Investments (Pty) Ltd 1979 (3) SA 1273 (T) at 1280A). Thereafter it was proper for Paula Drotskie Attoneys, being a law firm based in Johannesburg, to involve attorneys Lister and Lister of Pietermaritzburg as the local correspondent attorneys for the respondent. (See Rule 6 (5)).

[22] Indeed, it would appear that the applicant’s challenge was nothing but a tactical and dilatory device aimed at stalling the respondent’s suit against the applicant in terms of the main action. It also seems to me that the strategy was somewhat opportunistic in that the applicant came up with this challenge for the first time only a day after receiving the notice of bar and, notably, after some nine weeks of its receipt of the respondent’s reply in relation to the power of attorney issue. The applicant’s response, in turn, were the Rule 30A(1) and 30(2)(b) notices which it served on the respondent. In the circumstances, I can safely infer that were it not for the notice of bar, the Rule 30 notices aforesaid would most probably not have been issued.

[23] It was also clear, in the light of the provisions of Rule 7(1), that the applicant was required to challenge the authority of the respondent’s attorneys within 10 days after it came to the applicant’s notice that such attorneys were acting for the respondent, in this case, Paula Drotskie Attorneys and/or Lister and Lister. The date was not apparent from the papers as to when the applicant first became aware that these attorneys were acting for the respondent. However, there was evidence of the appearance to defend and the notice in terms of Rule 14(5) having been signed by the applicant on 30 May 2007, although it was not clear as to when these were served on the respondent’s attorneys Lister and Lister. The presumption, in the absence of any indication to the contrary, was that they were served on the same day of their issue, namely on 30 May 2007. Further, the name of the attorneys Lister and Lister also appeared in the respondent’s summons which was served on the applicant on 17 May 2007, in terms of the Sheriff’s return of service dated 22 May 2007. Therefore, it is apparent that as early as 30 May 2007 (at the latest) the applicant became aware that the respondent was locally represented by attorneys Lister and Lister.

[24] In the light of the provisions of Rule 7(1) the applicant was required to have noted its challenge of the respondent’s attorneys’ authority not later than 10 days after 30 May 2007, meaning not later than 13 June 2007. It was common cause that the challenge was only raised by the applicant per its Rule 7(1) notice dated 13 July 2007 and filed on 16 July 2007 (some 23 days out of time). No condonation application was filed by the applicant in this regard, nor was there any satisfactory explanation given as to why this was not done. It was therefore ironic that, whilst the applicant pretended so studiously and enthusiastically to ensure that the Rules of Court were complied with by the respondent, the same was not evident when it pertained to the applicant itself.

[25] There was also no explanation as to why the applicant did not immediately specify the ground(s) upon which it relied in its assailing the authority of respondent’s attorneys. In a situation where the respondent had furnished what it believed was a valid power of attorney (Annexure “FJ5B”) it was incumbent of the applicant then to indicate with specificity what it was that the applicant was still not satisfied about with regard to the document. This tends to lend credence to an inference that the applicant was by then still on a fishing expedition, which was further opportunistic on the part of the applicant.

[26] The first time that the applicant let the world know of the specific grounds of its challenge, was in its replying affidavit. This step was tantamount to the applicant making out its case in reply which was generally not permissible. In this regard I recall the decision in Bowman NO v De Souza Roldao 1988 (4) SA 326 (T) at 327C-G where the Court stated:

“Generally speaking, an applicant must stand or fall by his founding affidavit; he is not allowed to make out his case or rely upon new grounds in the replying affidavit. See, for example, Director of Hospital Services v Mistry 1979 (1) SA 626 (A) at 635 in fin-636 where Diemont JA said the following:

‘When, as in this case, the proceedings are launched by way of notice of motion, it is to the founding affidavit which a Judge will look to determine what the complaint is. As was pointed out by Krause J in Pountas’ Trustee v Lahanas 1924 WLD 67 at 68 and as has been said in many other cases

‘… an applicant must stand or fall by his petition and the facts alleged therein and that, although sometimes it is permissible to supplement the allegations contained in the petition, still the main foundation of the application is the allegation of facts stated therein, because those are the facts which the respondent is called upon either to affirm or deny’.

Since it is clear that the applicant stands or falls by his petition and the facts therein alleged

‘it is not permissible to make out new grounds for the application in the replying affidavit.’”

[27] As shown earlier, in the Rule 7(1) notice the applicant (as defendant) “dispute(d) the authority of Paula Drotskie Attorneys and/or Lister and Lister to act for the plaintiff.” The objection against attorneys Lister and Lister was strange, given that the applicant’s attorney of record, Mr Farouk Jasat, who deposed to the applicant’s founding affidavit, duly authorised to attest thereto on behalf of the applicant, stated positively under oath, in part, as follows:

“Respondent/Plaintiff is Ngqura Harbour Contractors a partnership with its principal place of business at shop number 8 Vulindlela Village, Wells Estate, I Addo Road, Port Elizabeth. They are represented herein by their attorney Lister and Lister of ABSA Building, Langalibalele Street, Pietermaritzburg, KwaZulu-Natal.” (My emphasis.)

(paragraph 2 of the applicant’s founding affidavit).

[28] In any event, I am satisfied, on the papers, that the document marked Annexure “FJ5B” substantially complied with the provisions of Rule 7(1) and that the document accordingly served as a valid power of attorney, authentically issued on behalf of the respondent’s partnership and authorising the respondent’s attorneys Paula Drotskie Attorneys of Johannesburg (who in turn appointed Lister and Lister of Pietermaritzburg as correspondent attorneys) to act for the respondent in this matter. All the grounds of objection listed in paragraph 4 of the applicant’s replying affidavit are, in my view, simply irrelevant as they have nothing to do with the validity or otherwise of a power of attorney contemplated in Rule 7(1). Accordingly, the application falls to be dismissed with costs.

[29] Concerning the respondent’s counter-application for a declarator barring the applicant from pleading to the main action: The main action is no doubt of importance to both parties, given the huge claim of almost a million rand. In my view, the dismissal with costs of the applicant’s interlocutory application should satisfy the respondent. A further order that would effectively shut the door to the applicant from defending itself would, in my view, be unduly harsh and not in the interests of justice. An order barring a defendant from pleading its defence was a drastic measure which, in my view, ought not to be lightly made. I do not think the circumstances of this case justify it. The applicant should accordingly be allowed to be heard in the main action. The respondent’s application for a declarator can therefore not succeed. However, the respondent’s step to ask for the declarator was not unreasonable in the circumstances and, on that basis, no costs order should be awarded against the respondent on the declarator issue.

[30] It transpired that the matter was initially scheduled for hearing on the opposed roll on 28 May 2008, but it did not proceed on that day because the respondent had not filed its heads of argument. For that reason the matter was adjourned and the issue of wasted costs reserved. Counsel for the respondent was unable to persuade me why the reserved costs for 28 May 2008 should not be awarded against the respondent. That should be the case.

[31] The following order is made:

1. The application is dismissed with costs, save for the reserved costs occasioned by the adjournment on 28 May 2008 which costs shall be borne by the respondent.

2. The respondent’s application for a declarator is dismissed. No order as to costs.

3. Any further conduct in relation to the main action may be pursued in terms of the Rules.

_________________________

Application heard on : 10 September 2008

Counsel for the Applicant : Mr PC Bezuidenhout

Instructed by : Jasat and Jasat, Pietermaritzburg

Counsel for the Respondent : Mr RJ Seggie

Instructed by : Paula Drotskie Attorneys

c/o Lister and Lister, Pietermaritzburg

Date of Judgment : 4 November 2008

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