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IN THE HIGH COURT OF SOUTH AFRICA

(WITWATERSRAND LOCAL DIVISION)

CASE NO: A5055/05

In the matter between:

PHILLIPS, ANDREW LIONEL First Appellant

D MORNINGSIDE INVESTMENTS (PTY) LTD Second Appellant

THE DEPUTY SHERIF FOR JOHANNESBURG NORTH Third Appellant

THE DEPUTY SHERIF FOR ROODEPOORT Fourth Appellant

and

VAN DEN HEEVER, THEODOR WILHELM N.O First Respondent

VAN DEN HEEVER, THEODOR WILHELM Second Respondent

JUDGMENT

SATCHWELL J and MAYAT AJ:

INTRODUCTION

1. This appeal is but one instance in the saga of litigation between Mr A L Phillips (first appellant) (‘Phillips’), whose various properties and assets were made subject to a restraint order in terms of the Prevention of Organized Crime Act (POCA), and Mr T W van den Heever ( first and second respondent) (‘van den Heever’), who was appointed curator in terms of the Act and, as first respondent, authorized to take first appellant’s property under his control and administer it. D Morningside Investments (Pty) Ltd (second appellant) (‘the company’)is a company of which Phillips is the controlling shareholder and is the company in which name the relevant restrained property is registered. The court a quo referred to the parties by their names and it is convenient to do so in this appeal

2. Arising from litigation between the parties certain costs orders were made against van den Heever. Phillips and the company caused certain warrants of execution to be issued against Van Den Heever in both his capacity as curator bonis and in his personal capacity . Van den Heever successfully applied to the court a quo (Pauw AJ), to have certain of these writs set aside and Phillips and the company were ordered to pay costs of that application, including previously reserved costs, jointly and severally. This appeal is against all orders made.

3. The Notice of Appeal¹ raises a number of issues as do the Heads of Argument submitted on behalf of the appellants, Phillips and the company. However, at the hearing of the appeal essentially two issues have been argued for decision. Firstly, whether the costs orders against van den Heever are applicable to him only in his representative capacity as curator or in his personal capacity. Secondly, whether the costs of an arbitration award made an order of court are required to be taxed as a necessary prerequisite to the issue of a warrant of attachment for such costs and/or execution in connection therewith.

4. The Sheriff for Johannesburg North (third appellant) and the Sheriff for Roodepoort (fourth appellant) were originally cited by virtue of the interest they had in the proceedings and no relief has been sought against them.

LITIGATION BACKGROUND

Restraint Order

5. At the instance of the National Director of Public Prosecutions (‘the NDPP’), certain assets of Phillips were placed under restraint, by order of this court, in terms of section 26 of the Prevention of Organised Crime Act, No. 21 of 1998 (“POCA”).² One property subject to such restraint, 26 Gary Avenue , Morningside, Sandton, (“the property”) is registered in the name of D Morningside Investments (Pty) Ltd (“the company”) of which company Phillips is sole shareholder and one of two directors.

6. Van den Heever was appointed curator bonis³ for the purpose of “making available the current value of realisable property for satisfying any confiscation order made or which might be made against the defendant” ⁴. He was specifically “authorized and required to take the property …into his possession or under his control, take care of such property and administer it” ⁵. It should be noted that, though some six years have elapsed since granting of this restraint order, no confiscation order as envisaged by POCA has been made in respect of the realizable property of Phillips or the company.

Litigation

7. Litigation ensued between Phillips and the company on the one hand and van den Heever on the other hand regarding the care taken or not taken by the curator of the property subject to restraint. In the course of such litigation various costs awards were made which have given rise to this dispute.

8. In all litigation van den Heever has been cited in his capacity as curator bonis, namely “Van den Heever, Theodor Wilhelm N.O.” and identified in the pleadings as the curator bonis.⁶ The litigation with which this judgment is concerned was pursued under the rubric of case number 2002/19455.

9. The restraint order which appointed the curator provides that “the fees and the expenditure of the curator bonis shall be paid from the proceeds of any property realised in pursuance of any confiscation order that may be made against the first respondent, failing which, by the State.” ⁷

The Contempt Application - Case number 19455/2002

10. Phillips and the company successfully applied for an order that van den Heever repair and restore the restrained property at Gary Avenue, Morningside (‘the restoration order’).^{8 9}

11. The issue as to whether or not van den Heever was possessed of sufficient funds to comply with this order did not then arise since other litigation had resulted in an order that van den Heever take steps to obtain the necessary funds ¹⁰.

12. However, Van den Heever failed to comply with the restoration order. An application was then brought against van den Heever to have him found in contempt of court ¹¹ . That application was settled at the doors of the court by way of an undertaking by van den Heever to restore the property to its erstwhile condition. It was further agreed that any dispute pertaining to the extent and quality of restoration be determined by arbitration. The costs of this contempt application were “reserved for determination by the court or the said arbitrator”. This agreement was made an order of court ¹².

Referral to Arbitration -case number 19455/2002

13. The agreement to appoint an arbitrator was made an order of court. The parties agreed on the arbitrator. Van den Heever apparently failed to furnish a brief to the agreed-upon arbitrator¹³ . Van den Heever also did not contribute towards the fees of the arbitrator.

The compliance order – case number 19455/2002

14. A further application was then brought ¹⁴ against van den Heever which resulted in an order by Horwitz AJ :

“1 It is declared that the respondent is jointly liable with the applicants, for the payment of the fees of the said arbitrator, in respect of the said arbitration, pending the making of an award by the said arbitrator.

“2. The respondent is ordered to pay the costs of the application, such costs to be paid by from funds other than those held on behalf of the first applicant or any of the entities referred to in the court order which is made under case number 27885/00.” ¹⁵

The Arbitration Award

15. The arbitration proceeded. In compliance with the order of Horwitz AJ , prior to the arbitrator’s award being handed down or made an Order of Court, both Phillips and the company of the one part and Van den Heever of the other part, paid to the arbitrator the sum of R 216 486.00 being their respective half-portions of his fee.¹⁶

16. The Arbitrator then made an award in favour of Phillips and the company finding that Phillips was “substantially successful in that by far the majority of the disputes which arose from the complaint and defence lists were determined in his favour”.¹⁷

17. The costs portion of the arbitration award reads as follows:

"COSTS

235 There is no reason why I should deviate from the normal principle that the party to the litigation who was substantially successful should be awarded his or her costs.

236 As is apparent from the findings referred to in the conclusion reached above, Phillips was substantially successful, in that by far the majority of the disputes which arose from the complaint and defence lists were determined in his favour.

237 Although argument was advanced by Phillips that Van den Heever should be responsible to pay the costs on a punitive scale, I am not inclined to make such an order as I do not believe that the circumstances which would warrant such an order prevailed in the proceedings before me. Accordingly I find that Van den Heever is liable to pay the costs of Phillips on the party and party scale"

18. At the instance of Phillips, the Arbitration Award was made an order of court by Joffe J ¹⁸. The costs portion of the arbitration award made an order of Court by Joffe J was not taxed by the Taxing Master.

WARRANTS OF ATTACHMENT AND EXECUTION

19. A bill of costs in respect of the costs of the compliance application was taxed and allowed ¹⁹ in the sum of R42 150,02. Despite demand van den Heever has failed/refused to pay same.

20. Phillips and the company sought payment from van den Heever of the taxed costs of the compliance application as well as the one-half of the Arbitrators fees which they had contributed prior to the arbitration award being handed down and for which costs van den Heever was now, pursuant to the arbitration award, liable in full. Payment was demanded from van den Heever who failed/refused to make any payment ²⁰.

21. Phillips and the company then caused a series of warrants of attachment and execution to be issued against van den Heever. ²¹ Six warrants were issued or served in various forms and on various occasions and may be identified as follows:

    1. Warrants one and two dated 13 April 2005 : citing van den Heever nomine officio for the sums of R 42 150.02 (compliance application) ²²and citing van den Heever nomine officio for the sum of R 216 486.00 (arbitration costs)²³. Served on van den Heever’s business address, nulla bona returns apparently resulted ²⁴.

    2. Warrant three and four dated 26 April 2005 : citing van Heever nomine officio in the case heading but with the letters ‘NO’ omitted from the body of the warrant in the sum of R 42 150.02 (compliance application)²⁵ and citing van Heever nomine officio in the case heading but with the letters ‘NO’ omitted from the body of the warrant in the sum of R 216 486.00 (arbitration costs))²⁶. Served on van den Heever’s business address, nulla bona returns apparently resulted yet again.

    3. Warrants five and six dated 4 May 2005: citing van den Heever nomine officio in the case heading but with the letters ‘NO’ omitted from the body of the warrant in the sum of R 42 150.02 (compliance application)²⁷ and citing van den Heever nomine officio in the case heading but with the letters ‘NO’ omitted from the body of the warrant in the sum of R 216 486.00 (arbitration costs) ²⁸. Served on van den Heever’s residential address, nulla bona returns resulted ²⁹.

APPLICATION TO SET ASIDE THE WARRANTS

22. Van den Heever did not challenge the 13 April 2005 warrant in respect of the costs of the compliance (R 42 150.02) citing him in his representative capacity. This has not been paid, he stating to the Deputy Sheriff that he had no money or disposable property in his capacity as curator bonis to satisfy the judgment. That warrant has not been set aside.

23. Van den Heever requested the Court a quo to set aside the remaining five warrants of execution. In this he was successful, the learned judge in the court a quo setting aside the warrants primarily on two grounds:

    1. Van den Heever was not personally liable for the costs orders made in these proceedings. Such costs orders were made against him in his representative capacity. That disposed of warrants ( three, four, five and six) issued against him personally for both the complliance and the arbitration costs.

    2. The costs of the arbitration were required to be taxed as a necessary prerequisite to a warrant of execution being issued and executed upon to recoup such costs. That disposed of all warrants (two, four and six) in respect of the arbitration costs (whether van den Heever was cited in his representative or personal capacity).

24. The learned Judge set aside only three out of the four warrants of execution issued against Van den Heever in his personal capacity. For reasons which are not explained in the judgment of the Court a quo, the warrant dated the 26th of April 2005 in the sum of R42 150,02 citing van den Heever in his personal capacity (compliance costs) (warrant three) was not set aside, even though the learned Judge’s reasons for setting aside the remaining warrants issued against Van den Heever in his personal capacity are also applicable to this warrant. At the hearing of this appeal, Counsel for both parties agreed that the omission of this warrant from the order of the Court a quo was an error and that all five warrants of execution which were the subject matter of the application in the Court a quo, are accordingly also the subject matter of this appeal.

25. The issues for decision in this appeal are firstly, secondly, whether the warrants issued against van den Heever in his personal capacity were correctly set aside by the court a quo and secondly, whether or not the court a quo was correct in setting aside the warrant of execution dated 13^th April 2005 in the sum of R 216 486,00 on the basis that the fees of the arbitrator have to be taxed as a pre-requisite to issuing a warrant in respect of same.

IS THE LIABILITY OF VAN DEN HEEVER NOMINE OFFICIO OR PERSONAL ?

26. The warrants of 26^th April and 4^th May ( in respect of both the compliance application and the arbitration award) apparently were intended to cite van den Heever in his personal capacity ³⁰ . The question is simply whether the orders made by Horwitz AJ and by Joffe J operate against van den Heever in his representative capacity as curator of the restrained property or whether he is personally liable.

27. The costs order in respect of the contempt application reads that “The respondent is ordered to pay the costs of the application, such costs to be paid by from funds other than those held on behalf of the first applicant or any of the entities referred to in the court order which is made under case number 27885/00.” . The costs in respect of the arbitration were dealt with in the compliance application as follows: “It is declared that the respondent is jointly liable with the applicants, for the payment of the fees of the said arbitrator, in respect of the said arbitration, pending the making of an award by the said arbitrator” and in the award of the arbitrator as follows: “ Although argument was advanced by Phillips that Van den Heever should be responsible to pay the costs on a punitive scale, I am not inclined to make such an order as I do not believe that the circumstances which would warrant such an order prevailed in the proceedings before me. Accordingly I find that Van den Heever is liable to pay the costs of Phillips on the party and party scale" .

28. A number of interlinked reasons have been advanced on behalf of Phillips and the company why it was intended to hold van den Heever personally liable. Some were set out in Heads of Argument prepared on behalf of Phillips and the company and others advanced at the hearing of the appeal.

Wording of the Orders

29. Both counsel, relying on Firestone SA (Pty) Ltd v Genticuro AG, 1977 (4) SA 298 (A) ³¹, submitted that the meaning of the order is apparent from the wording used.

30. Mr Slomowitz, appearing for Phillips and the company, submitted that it is plain from a reading of the order of Horwitz, AJ and from the terms of the order that he did not intend that the costs be paid from the assets of the Phillips and the company , i.e. from any assets in respect of which van den Heever was the curator bonis. It is equally plain that Horwitz, AJ did not direct the State to pay the costs. Indeed, he could not do so since the State was not a party. It follows that as between Phillips and the company on the one hand and van den Heever on the other, the order means that van den Heever must pay the costs personally.

31. Mr Cohen, appearing for van den Heever, argued that the interpretation contended for by Phillips and the company does violence to the clear language of the order of Horwitz AJ when, clearly, the order to pay costs is directed against Van den Heever, in his representative capacity, subject to the rider that he may not use funds which are the subject of the restraint order.

32. We are of the view that the wording of all orders is clear and unambiguous. Van den Heever was cited and described in both the contempt and the compliance litigation instituted under case number 19455/2002 in his representative capacity. The party held responsible for the costs was identified by Horwitz AJ as “the respondent” who was the curator, van den Heever, cited in his representative capacity. In the arbitration proceedings he was cited as in his representative capacity. Similarly, van den Heever was cited in his representative capacity when the arbitrators award was made an order of court.

33. The order made by Horwitz AJ was that “the respondent” identified throughout as “ Theodor Wilhelm Van den Heever NO”³² was jointly liable for payment of the arbitrators fees and was to pay the costs of the application.

34. The words customarily used to indicate anything other than liability for costs in the capacity in which one was cited, in this case de bonis propriis, were not used.³³

The Proviso to the Order

35. Mr Slomowitz, appearing for Phillips and the company, submitted that the only sensible construction of the proviso incorporated in the costs order was that, since it was not intended that costs be paid from the assets of the Phillips and the company and since the State was not a party to the litigation and not ordered to pay costs, it follows that as between Phillips and the company and van den Heever, the order means that van den Heever must pay the costs personally. This was particularly so since Van den Heever, in his representative capacity did not have funds to satisfy the court order.

36. Further, it was also suggested that, to the extent that the proviso merely constitutes a restatement of Van den Heever’s powers in terms of POCA as incorporated in a previous court order, the proviso was redundant and served no purpose unless the proviso was intended to direct van den Heever to pay the costs in his personal capacity.

37. Mr Cohen, for van den Heever, argued that the rider appearing in the court order was, in the light of the powers conferred on the curator bonis in terms of the restraint order and in view of the purposes of POCA, redundant. The curator is not entitled in law to make use of funds or other assets which form the subject-matter of a restraint order to satisfy a costs order which forms part of his expenditure ³⁴.

38. Most tellingly, Mr Cohen pointed out at the appeal hearing that, if Horwitz AJ had intended his orders to operate de bonis propriis against van den Heever personally, there would have been no need to repeat the exclusion of the restrained assets from operation of any such order.

39. We agree that the rider constituted no more than a restatement of the law and was therefore superfluous. Perhaps it was intended to constitute a timely reminder to van den Heever that his obstructionism would not be visited upon Phillips and the company and would, at the end of the day, possibly constitute yet another expense met by taxpayers.

40. The rider cannot however, be construed as excluding all sources of funding to which van den Heever might turn to meet the obligations of and expenditure of the curatorship. The order appointing him (and POCA) certainly envisages the State as the ultimate source. However, in the event that there may one day be a confiscation order, the assets currently under restraint may possibly become a source to meet these curatorship costs. In the interim, the State may furnish the funds or furnish guarantees to enable funds to be accessed by way of loans etc. ³⁵. There is no basis on which it could be found that the only source of funds for payment of costs, other than the assets under restraint, are the personal funds of the curator himself.

41. Again, it bears repeating that where a party is cited in his or her representative capacity in court proceedings and the court intends that party to pay costs out of his or her personal estate, then invariably, the party cited in his or her representative capacity is ordered to pay costs “de bonis propriis”. ³⁶

Context justifies a punitive order

42. Phillips and the company contend that the costs orders have to be interpreted within the context of such orders and the litigation between the parties. After all such context is the genesis to the orders being examined. It is submitted that van den Heever was made personally liable for costs because of his vexatious behaviour, his breach of duty and his refusal to pay the Arbitrator’s fees which he had agreed to pay.

43. The court a quo rejected this submission having regard to the fiduciary position occupied by van den Heever, the powers granted to a curator to both litigate and defend litigation, the absence of an explicit finding of male fides, the absence of any provision for personal liability in POCA and the operation of section 78 of POCA.

44. It is trite that a curator appointed in terms of POCA occupies a fiduciary position. After all his prime responsibility is to ensure that realizable property is available to satisfy any confiscation order which may be made and for that purpose he is required to take care of such property ³⁷. Persons occupying such position are only entrusted with administration of assets not their own and accordingly expected to act in accordance with the highest standards of probity and good faith.³⁸

45. Appointment to such a fiduciary position, whether it be as curator ad litem or curator bonis, trustee, guardian, executor, administrator or even company director usually affords prima facie protection against personal liability for costs of unsuccessful litigation ³⁹ . Such person is indemnified against personal financial liability for any actions undertaken or not undertaken in this fiduciary capacity which were performed or not performed in accordance with the expected high standards of honesty and diligence. In casu, section 78 of POCAreiterates this approach – “Any person generally or specifically authorized to perform any functions in terms of this Act, shall not, in his or her personal capacity, be held liable for anything done in good faith under this Act.”

46. Where, however, such a fiduciary appointee acts in an improper or unreasonable manner or with lack of bona fides costs may be awarded against such person in his or her personal capacity. “The basic notion is material departure from the responsibility of office…”⁴⁰ Costs for the own account of the fiduciary (whether curator, executor, trustee) have been awarded on findings of negligence, unreasonable conduct, abuse of trust, acting without care, fraud, want of honesty, willfulness, vexatiousness, acting in one’s own interest and not that of the estate concerned, with want of bona fides, male fides⁴¹. In the case of a curator appointed in terms of POCA it would appear that the exclusion from liability applies in all cases save where there is an absence of good faith.

47. It would appear to be a requirement that the fiduciary is who is in jeopardy of such an order being made is informed of the possibility thereof and afforded an opportunity to contest any argument advanced therefore. This is either done at time of initiation of the proceedings or in the course of the litigation. The fiduciary should at the very least be confronted with the possibility of personal liability. Not only should the fiduciary be aware that the protection of the representative capacity may, in the discretion of the court be withdrawn. In addition, any court requested or minded to exercise its discretion to make such an order of personal liability should be provided with all facts and argument thereon. Absent a proper hearing, the exercise of a discretion in this manner would be undesirable.

48. The Notice of Motion in the particular contempt application against van den Heever which was the genesis of the compliance order did not seek costs against van den Heever de bonis propriis only seeking “costs of the application, such costs to be paid from funds other than those held on behalf of A L Phillips or any of the entities referred to in the court order of 00/27885.” There is no indication in the judgment of Horwitz AJ that van den Heever was warned that he was on the verge of losing the shield of representative or fiduciary status by reason of incompetence, laziness, obstructiveness, malevolence or lack of “good faith”⁴². There is no indication that the learned acting judge who handed down that order had formed an opinion that van den Heever had so conducted himself that a punitive and personal order was warranted⁴³. This is in contrast to other judgments where such orders were made against van den Heever.⁴⁴

49. By contrast, the arbitrator did address this very issue in his award indicating that he had been invited to make order van den Heever to pay costs on a punitive scale and declined to do so finding that “ I am not inclined to make such an order as I do not believe that the circumstances which would warrant such an order prevailed in the proceedings before me.”⁴⁵

50. If good reason need be shown for such a punitive order to be made and reasons given for making such an order then it follows that such order should be clearly and unambiguously expressed. Where a party has been cited in his or her representative capacity in court proceedings and the court intends that party to pay costs out of his or her personal estate, then invariably, the party cited in his or her representative capacity is ordered to pay costs “de bonis propriis”. In Re Estate Potgieter 1908 TS 982 Solomon J stated the following at p 1000:

“In the court below, the respondent, the trustee, was ordered to pay the costs de bonis propriis. This is an exceptional order to make in a case where a trustee of an insolvent estate, or any other person in a similar fiduciary position, is an unsuccessful litigant. The usual order in such a case is to give costs against him in his representative capacity, that is, in the capacity in which he is sued; and where an order is made that a trustee should pay the costs, it is understood that he is to pay them out of the estate. When it is desired that a trustee should pay costs personally, the order is made in the form in which it was made in this case - that he pay the costs de bonis propriis.”

51. We are cognizant of Mr Slomowitz argument that costs awarded personally against litigants cited in their representative capacity are not expressed always and only using the term “de bonis propriis”. Mr Slomowitz referred the Court to three cases ⁴⁶ in which trustees of insolvent estates, in their representative capacities, brought applications to Court to review assessments of the Master. In all of these cases the applications instituted by the trustees in their representative capacities were dismissed with costs and the Court ordered that such costs could not be paid by the trustees concerned from the assets of the insolvent estates being administered by the said trustees.

52. It is our view that these cases are distinguishable from that before us. Firstly, those applications were specifically held by the courts not to have been brought in the interests of the whole body of creditors of the insolvent estates administered by the trustees ⁴⁷ . While it may be thought that equally harsh comments could perhaps be made concerning van den Heever’s attitude and behaviour in this whole sorry saga, the judgment of Horwitz AJ is silent in this regard. Neither the award of Horwitz AJ nor that of the arbitrator (which was made a Court order by Joffe J) expressed any findings pertaining to Van den Heever having acted in bad faith or in his own interest to the detriment of the assets under his control. Secondly, in the cases involving administration of insolvent estates there were no source of funding available to meet the costs of litigation other than the assets of the estate which were being administered for the benefit of the creditors. In insolvency the entire estate is under administration. In casu there is another explicit source of funding. Both POCA and the order appointing van den Heever clearly provide that the State is liable to meet disbursements if such disbursements cannot be met from a confiscated estate. It must be accepted that the court is always mindful that the POCA provides for the State as the ultimate source for funding.

53. Both the orders of Horwitz AJ and the arbitrators award, made an order of court by Joffe J, were the eventual outcome of a litigation process initiated by way of an application for an order that van den Heever was in contempt of court. It was submitted that, if a contempt order had been granted against van den Heever in his representative capacity, it could never be envisaged that such order would only operate against him in his representative capacity and accordingly that such orders should therefore personally enforceable against him. It was argued at the hearing of the appeal that the order of Horwitz J and the award of the arbitrator were extensions of the contempt proceedings for which van den Heever bore personal liability.

54. With respect, the fatal flaw in this submission is that no contempt order was ever actually made against van den Heever. That application was settled by way of an agreement to go to arbitration. It may well be that the submission to arbitration implicitly conceded fault or negligence or dereliction on the part of van den Heever. However, lack of good faith was never decided by the court – which made the agreement to arbitrate an order of court. The order which settled that application specifically stated that the question of costs was “reserved for determination by the court or the said arbitrator”. No order for costs was ever made pursuant to an order that van den Heever was in contempt of court. If a contempt order had been made then the situation may very well have been very different.

Successful litigant entitled to costs without undue delay

55. It was further contended that, if van den Heever is not held personally liable for the costs orders against him, these awards would become meaningless because they would not be capable of immediate enforcement, inasmuch as the costs awarded could only be paid from the proceeds of a future, and as yet hypothetical, confiscation award which might eventually be made or by the State at some unspecified future date. ^{48 49}

56. The learned judge in the court a quo indicated he did not wish to express an opinion as to when the State might become liable for expenses.

57. It is noted that the restraint order of Labe J is worded that the fees and expenditure of the curator bonis shall be paid from the proceeds of property realized in pursuance of any confiscation order “failing which, by the State”. The order is clear that it is the absence of such an order which entitles the curator to seek his fees and disbursements from the State. The wording does not limit the liability of the State to conclusion of the proceedings initiated in terms of POCA and the wording does not require the curator (or anyone else) to await the outcome of such proceedings. The curator is obliged to Phillips and the company at the present time. His obligation is now. The curator has the responsibility of meeting his obligations now. He may approach whom he wishes for funding for his “fees and disbursements”. The Act and the restraint order suggest that a likely source of funding at the present time is “the State”.

58. It does not follow, because the curator cannot access any restrained funds of Phillips or the company, that costs awarded against the curator will not be paid because no confiscation order has been made and therefore that the only way to avoid such injustice is to award the costs against the curator personally. It is not in dispute that van den Heever, as all other POCA curators, has other sources of funding available to him. Indeed, it is common cause that van den Heever has already procured two substantive loans in the total sum of R 25 million from banks for the purposes of meeting his disbursements as curator.

59. This issue has already been canvassed by at least two other courts of this Division. In the course of the various disputes between. Phillips and van den Heever, the latter claimed that he was without funds with which to carry out his duties such as payment of rates, water and electricity and other costs upon the restrained property.

60. Grobler AJ gave consideration as to the sources from which expenses may be defrayed until such time as a confiscation order is made and property is realized in terms of S30 or until such time as it becomes apparent that no such order will be made. The Learned Judge took the view that the curator bonis was vested with powers to obtain income to the extent possible. The source of the funds to cover expenses was not considered by the learned judge to be his concern.

“If a shortfall exists, the curator bonis should obtain the necessary funds from the State. The necessary order in this regards already exists. The curator bonis is clearly not expected to bear the expenses in his personal capacity. He must simply do whatever may be necessary to obtain sufficient funds to cover his expenses”. ⁵⁰

61. Van den Heever then borrowed the sums of R 10 million during November 2003 and R 15 million during September 2004 and concluded certain moratoria agreements to delay payment of outstanding funds.

62. Subsequent to the order of Grobler AJ, van den Heever again failed to pay charges accruing on this property again claiming the absence of funds. Yet another contempt application was launched against him for failure to make these various payments. In yet another application De Jager AJ was critical of van den Heever’ behaviour.⁵¹ The judgment continued

“the respondent, having accepted the duties of a curator bonis, cannot sit back and offer the excuse that he has no money available to fulfill his duties”.

63. The court had previously ordered van den Heever to make payment from available funds including funds to be provided by the State. De Jager AJ continued.

Should the state fail to provide funds he, as a “bonus et diligens paterfamilias” should take the necessary steps – including legal action- against the State to procure the funds. This should be done timeously. Attempts to raise funds, whether from commercial banks with the assistance and guarantees provided by the State, or by taking appropriate legal action against the State, should not be a last resort grasped at once an applicant is threatening with or issuing legal process against the respondent as is evident in the present matter”⁵²

64. Phillips and the company, as successful litigants before Horwitz AJ and in the arbitration , are not therefore deprived of their costs against the curator. If he fails or refuses to pay on the grounds that he lacks funds – appropriate action has been taken against him in the past. To read personal liability of this curator into the orders of Horwitz AJ and Joffe J cannot be justified on the grounds that there is no other source of funds.

WARRANTS FOR ARBITRATION COSTS COULD NOT BE ISSUED WITHOUT PRIOR TAXATION

Rule 45(2) of the Rules of Court

65. An award made by an arbitrator is not automatically an award of either a Magistrates or High court. Accordingly, it cannot be enforced through the processes of either of those courts. It is only where it is made an order of court that an arbitrators award, as an order of court, is capable of being enforced by way of a writ of execution issued out of and by such court in accordance with the rules of the court. Hence, pursuant to an application by Phillips, the arbitrator's award was made an order of Court by Joffe J.

66. Relying on the provisions of Rule 45(2) of the Rules of Court, counsel for Van den Heever, Mr Cohen, submitted that unless costs are agreed, the taxation of a bill of costs is a pre-requisite for the issuing of a writ of execution in respect of costs awarded.

67. Rule 45 (2) provides that:

” No process of execution shall issue for the levying and raising of any costs ordered by the court to any party, until they have been taxed by the taxing master or agreed to in writing by the party concerned in a fixed sum: Provided….”

68. The Arbitration Agreement was silent as to the fees which could or should be charged by the Arbitrator. It is common cause that there was no agreement between the parties or between parties and the arbitrator as to the fees to be charged by the arbitrator ⁵³. Certainly, there was no agreement in writing, as envisaged by the Rule, as to the amount of the arbitration fees (and other costs).

69. It is common cause that the costs award by the arbitrator which was made an order of Court by Joffe J was not taxed by the Taxing Master.

70. Van den Heever has not challenged the reasonableness of the arbitrators fees. He has never stated that he disputes the fee. He has either said he does not have the funds or that the process followed did not comply with the Rules of Court ⁵⁴.

71. It was submitted on behalf of Phillips in heads of argument that it is not correct that, in all circumstances, costs cannot be recovered until they are taxed. Reference was made to Benson v Walters, 1981 (4) SA 42 (C) at 49C-D, where was stated "Taxation is not a prerequisite to a client's liability. If the client is satisfied with the attorneys’ charges or had agreed to them in advance, there is no reason why the attorney should not claim his fees. Taxation is merely a method whereby the reasonableness of the fees charged by one of the officers of the Court is prima facie determined by another, where this is put in issue by the client."

72. In casu the liability of van den Heever is to be found in the arbitration award which has been made an order of court. It is not taxation which founds van Heever’s liability but the court order. Further, taxation in the present instance is the means whereby reasonableness of the fees is determined prior to the issue of and execution of a warrant (of attachment or execution) of the court. Rule 45(2) requires taxation in the absence of written agreement on the fixed sum - the Rule does not require an expression of disagreement.

73. The warrants issued all purported to be issued in the name of the High Court and invoked the authority of that court and it’s processes. We are of the view that, absent either taxation or written agreement to make payment of the sum of R 216 486.00, it would be and was impermissible for Phillips and the company to rely on the Supreme Court Rules to issue a writ of execution against van den Heever to recover the costs paid by Phillips to the arbitrator

The costs are not an award of court but an award of an arbitration tribunal

74. Counsel appearing for Phillips and the company, Mr Slomowitz, submitted that the award for costs was not an ‘award of the Court’ as contemplated in the Rules of Court but an award made by an arbitration tribunal which, if anything, rendered the provisions of the Arbitration Act, 42 of 1965, applicable.

75. The difficulty, with this submission is that the entire arbitration award, not just parts thereof, was made an order of court. The final portion which was made an order of court by Joffe J specifically dealt with costs. The costs award of the arbitrator therefore became a costs award of the High Court and liable to be dealt with in accordance with the rules of that court, in casu Rule 45(2).

The fees of the arbitrator have been agreed

76. It was submitted on behalf of Phillips and the company that , in paying the Arbitrator half of what he charged, van den Heever agreed and accepted the amount and the reasonableness thereof and further that van den Heever has never disputed the reasonableness of the fees charged.

77. With respect, this submission ignores the background to and the basis upon which the arbitration was initiated, the arbitrator was briefed and his fees were paid. The contempt application against van den Heever was settled by way of an agreement to go to arbitration. That agreement was made an order of court. The arbitration agreement did not specify the scale or a tariff of fees. Van den Heever did not brief the arbitrator which brief would have contained an undertaking to be liable for arbitration fees on an agreed basis. A further application was made to court. In the course of his judgment, Horwitz AJ had occasion to state “ I emphasise that the liability is only an interim one because the arbitrator will, in due course, deal with the question of costs which may have a consequence that one side may have to reimburse the other”⁵⁵. The order of Horwitz AJ with regard to arbitration fees read as follows: “It is declared that the respondent is jointly liable with the applicants, for the payment of the fees of the said arbitrator, in respect of the said arbitration, pending the making of an award by the said arbitrator.” The arbitrator had a discretion as to costs and in making his order, Horwitz AJ specifically stated that his award “is entirely without prejudice to the power of the arbitrator to make an appropriate award as to the costs of the arbitration” . The arbitrator submitted invoices rendered on a time basis which clearly indicates that no inclusive lump sum amount was ever contemplated or agreed, the final figure therefore being unknown to either the arbitrator or the parties.

78. Payment by van den Heever was not made by reason of an agreement with the other parties to the arbitration or the arbitrator himself. The application before Horwitz AJ was brought because, in Horwitz AJ’s words, van den Heever “disavows liability”. Payment by van den Heever was compliance with the order of Horwitz AJ. It was, in effect, payment made under duress. The invoices were paid as and when rendered. The court order gave no directions as to scale or quantum of fees. The final figure, being unknown, could not be agreed ⁵⁶. Payment by van den Heever indicated obedience to the court order not acceptance of the ‘reasonableness’ of the fees. The court order made it clear that payment was for purposes of facilitating progress of the arbitration. Van den Heever’s liability for payment of one-half of the fees as determined by Horwitz AJ endured only until the outcome of the arbitration. Thereafter, the award of the arbitrator determined final liability of one or both of the parties. Compliance with the court order by van den Heever was, under these circumstances, certainly constituted neither agreement nor acceptance.

The provisions of Section 35 of the Arbitration Act

79. It was submitted on behalf of Phillips and the company that the arbitrator had ‘settled ‘the costs as envisaged by the provisions of section 35(3) of the Arbitration Act. In marking his fee, the arbitrator had necessarily made a determination that such fee was reasonable. On this argument, it was further submitted that an arbitrator who determined a fee deemed reasonable by himself could hardly be required to then tax his own fee. It was further submitted, by reference to Davis v First South African Starr -Bowkett Building Society 1908 TS 1107 at 1109/10, that this would especially not be required where the parties had accepted the fees as reasonable and paid them on that basis.

80. We have already dealt with the absence of concurrence by the parties as to the reasonableness of the arbitrators fees and the basis for payment thereof.

81. The court a quo, in First Starr- Bowkett Building Society v Davis 1908 TH 177 per Curlewis J, had considered the phrase to “settle the amount of costs” which appeared in the applicable 1904 Ordinance. This was not then a term known in South African procedure but the power of ‘settling’ was understood to be distinct from taxation in that a “gross sum may be awarded” and the English schedule appeared to authorize the arbitrator to “settle finally the amount of costs to be paid to them, and if fixed in their award their charges are not subject to taxation; they are made the judges in their own cause”. On appeal Innes CJ expressed “surprise that there could be any question as to the right of an umpire or arbitrator to fix his own fees” especially in the absence of a scale for taxing same. The appeal court did not consider the point merely commenting that “ It is probable that, if fees were fixed which were so manifestly excessive and wrong as to call for the interference of the court, then we should find some appropriate machinery for redressing the grievance, and relieving the complaining party”.

82. Our practice is currently regulated by the Arbitration Act of 1965 and not the Ordinance of 1904.. It would appear that the fact that an arbitrator has a view as to his own fee does not preclude a professional and impartial determination which may or may not be in accordance with the arbitrators view. See Benson v Walters supra.

83. The court a quo found that “from the evidence it can be concluded Mr. Daniels would have been entitled to his usual fee. If I am wrong in that regard, it may be an implied term of the agreement between the litigants and the Arbitrator that the Arbitrator is entitled to reasonable fee.” The learned judge made no finding as to whether or not an agreement was reached or whether Sections 34 or 35 of the Arbitration Act applied.

84. Section 35 of the Arbitration Act provides for a number of possible arrangements with regard to costs in arbitration proceedings. The learned judge in the court a quo discussed such different scenarios.

85. The learned judge saw no need to discuss subsection (1) ⁵⁷. The award of costs was in the discretion of the arbitration tribunal which had made a costs award , without directing the scale of costs. The tribunal had neither taxed nor settled the final figure. The court a quo found section 35(2) did not apply because there had been an award of costs and no party had applied to the arbitrator in respect of his scale of fees⁵⁸. Section 35(4) did not apply because no order for taxation had been sought from Joffe J when the arbitration award was made an order of court ⁵⁹ . As far as section 35(3) 60anc" HREF="#sdfootnote60sym">⁶⁰ was concerned, the court a quo found that the arbitrator had not settled or taxed the costs but “ it therefore follows, however impractical, that Mr. Daniel’s fees are to be taxed as part of the costs order contemplated by S35 (3) of the Arbitration Act…I do not express any view as to what would occur should the Taxing Master decline to exercise his /her discretion”.

86. We do not think it necessary to make a finding on the method of implementation of the taxation process. The costs award of the arbitrator has been made an order of court. Either party may approach the taxing master to have same taxed. Such taxation is a prerequisite to issue and execution of a writ of the court. The taxing master would presumably approach the taxation on the ‘reasonableness’ or otherwise of the fees charged by an arbitrator of particular standing in an arbitration of a particular degree of complexity .

87. For these reasons we are of the view that the court a quo properly set aside the warrant dated 13 April 2005 in the sum of R216 486,00.

CONCLUSION

88. Accordingly, we are of the view that the learned judge in the court a quo correctly set aside the warrants dated 13 April 2005, 26 April 2005 and 4 May 2005 in the sums of R 216 486.00 in respect of costs which had not yet been taxed. We are of the view that the learned judge in the court a quo correctly set aside the warrants which identified the curator as personally liable being those dated 26 April and 4 May 2005 in the sums of R 216 486.00 and the warrants dated 26 April and 4 May 2005 in the sums of R 42 150.02 .

89. The appeal is accordingly dismissed.

COSTS

90. As the successful litigant in this matter, van den Heever (in both capacities) should be entitled to his costs. This appeal merited the services of two counsel, including senior counsel. We regret that there are not good grounds on which we could depart from the general rule that costs should follow the result.

91. In exercising our discretion with regard to costs we are mindful of the chronology of this and other litigation involving van den Heever in his capacity as curator of the relevant property as also the chronology of the issue of the warrants and the fate thereof.

92. The warrants for the sum of R 42 150.02 were in respect of costs arising from a contempt of court application where van den Heever had failed/refused to attend to the care of the property. He had failed to take the necessary steps to implement the agreement to arbitrate which had been made an order of court. The costs order was made by Horwitz AJ and then taxed. Demand was made to van den Heever, as curator, for payment of these costs but without response. A warrant was issued and served on him in his representative capacity. The Sheriff met with the response from van den Heever that, “in my capacity as curator bonis of Andrew Lionel Phillips” and “ I in my aforesaid capacity have no money or disposable property to satisfy the judgment”.⁶¹

93. The warrants for the sum of R 216 486. 00 were in respect of costs arising from the arbitration award which was itself the process whereby the contempt application was settled. Van den Heever was unsuccessful in this arbitration which suggests that the contempt application was not unjustified. Demand was made to van den Heever, as curator, for payment of these costs but without response. A warrant was issued and served on him in his representative capacity and the Sheriff met with the same consistent response that, in his official and representative capacity as curator, van den Heever was without funds to satisfy the judgment.⁶² It is trite that the taxation would not have affected liability for costs but only the amount of costs payable.⁶³

94. Van den Heever’s response to these warrants were made subsequent to the expressions of concern by at least two judges of this Division as to his attitude towards his obligations to meet the disbursements of curatorship. Grobler AJ had commented that van den Heever “could have approached the court long ago to obtain clarity” if he was uncertain regarding his powers and duties. ⁶⁴ De Jager AJ stated that “the respondent, having accepted the duties of a curator bonis, cannot sit back and offer the excuse that he has no money available to fulfill his duties” and went on to comment that van den Heever’s conduct was to be criticized on the grounds that “ He is in a position to pay all charges, but still fails to do so or at least to pay those charges which he concedes were correctly levied. ”⁶⁵

95. We note that, although van den Heever did not apply to court to have the warrant for the compliance costs citing him nominee officio set aside, nowhere in his papers does he dispute the averment that he failed or refused to make payment thereof. We further note that van den Heever has not disputed the arbitration costs award made an order of court by Joffe J nor has he challenged this sum or requested taxation. His challenge to these warrants on the very narrow ground that the costs had not yet been taxed only emerged after he had informed the Sheriff that he was without funds.

96. On the basis of van den Heever’s previous conduct, it can reasonably be assumed that, if and when the arbitration costs are duly taxed (incorporating the fees of the arbitrator paid by Phillips), the Sheriff is likely to render a further nulla bona return in respect of such costs. Van den Heever’s attitude and conduct suggests confidence that taxed costs in respect of the compliance application as well as the arbitration cannot be effectively recovered from him in his representative capacity.

97. Previous judgments sought to remind van den Heever of the requirement that he act bonus et diligens paterfamilias ⁶⁶ and that he was to take timeous steps to meet his financial obligations. He was also reminded that Phillips and the company are presumed to be innocent until the contrary is proved and “this cardinal rule should be kept in mind when the rights and duties of the curator are considered during the period prior to the conviction”.⁶⁷ Van den Heever was cautioned that he should not act according to directions received from the National Director of Prosecutions but “at all times act as an independent administrator of the applicant’s estate and in accordance with the prescriptions of the Act, the court orders and the duties of a curator bonis”. ⁶⁸ Van den Heever was again advised that “He should not hesitate to take whatever steps necessary (including legal action against the state) if such steps are necessary to fulfill his duties as diligens paterfamilias and to keep it in the same state as received. The applicant at this stage is presumed to be innocent.”.⁶⁹ It would appear that van den Heever either did not understand such advice or has been, at best , disregarding and, at worst, contemptuous thereof.

98. If this court had sat as a court of first instance in the compliance application or presided in the arbitration hearing, it is indeed possible that punitive costs awards would have been made against van den Heever in his personal capacity. If this court had sat as a court of first instance in this particular application, it is indeed possible that we would not have awarded costs to van den Heever as the successful party. However, we are mindful we have heard an appeal where the decision of the court a quo has not been disturbed. The appellants have unsuccessfully appealed the decision of the lower court and must bear the financial burden of their own decision.

99. Appellants are, no doubt, mindful of their rights with regard to set off of indebtedness as between themselves and the respondent ⁷⁰. Nevertheless, we are of the view that it is just and equitable that we mark our displeasure of van den Heever’s attitude and behaviour by directing that the taxed costs of the respondent (van den Heever) in this appeal fall to be reduced by the taxed costs of the appellants (Phillips and the company) in the orders granted by Horwitz AJ and Joffe J.

ORDER

100. In the result the following order is made:

1. The appeal is dismissed;

2. The first and second appellants are ordered to pay the first and second respondents costs of appeal, including the costs of two counsel, subject to the condition that such costs fall to be reduced by the cumulative taxed costs granted in favour of the first and second appellants against the first respondent pursuant to the order by Horwitz AJ dated 30 July 2004 and the order by Joffe J dated 26 January 2005.

Dated at Johannesburg 8^th March 2007

_________________

Satchwell J

Judge of the High Court

_________________

Mayat AJ

Acting Judge of the High Court

____________

I agree

Salduker J

First and Second Appellants: H Z Slomowitz SC

N P G Redman

Instructed by: Attorneys Shannon Little

For the Respondents : C Z Cohen SC

E F Dippenaar

Instructed by: Fluxmans Inc

Date of Hearing 29 November 2006

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