CONSTITUTIONAL COURT OF SOUTH AFRICA
CCT65/05 Trevor B Giddey NO
vs
JC Barnard and Partners
To be heard on Tuesday 16 May 2006 at 10 a.m.
MEDIA SUMMARY
The following media summary is provided to assist in reporting this case and is not binding on the Constitutional Court or any member of the Court.
The applicant is the liquidator of Sadrema Explorations Limited, a public company in liquidation since 2001. The applicant, in his capacity as liquidator, seeks leave to appeal against an order made by the Johannesburg High Court ordering him to furnish security for costs in a matter in which he, in his capacity as liquidator, is suing the respondents, an accounting firm, for the recovery of US$100 million plus interest.
According to the liquidator, during the late 1990s the respondents concluded an oral agreement with Sadrema Explorations Ltd in terms of which the respondents would negotiate and supervise the sale of Sadrema’s assets to an overseas company. In terms of this agreement, proceeds of the sale would be held on behalf of Sadrema in trust by the respondents in an account opened in the respondents’ name, pending transfer to the company. It was also agreed that the respondents would furnish Sadrema with regular progress reports on the negotiations and sale.
The liquidator alleges that the respondents received up to US$100 million from the overseas company as proceeds of the sale and then failed to transfer the funds to Sadrema. This failure resulted in the subsequent bankruptcy and liquidation of the company. The respondents deny ever receiving the money.
The respondents applied for and were granted an order compelling the liquidator to furnish the court with security for costs to be incurred in the litigation in an amount determined by the High Court Registrar. That application was based on the provisions of section 13 of the Companies Act, 61 of 1973. The High Court also ordered that the proceedings instituted by the liquidator be stayed pending the furnishing of security. The liquidator states that he does not have funds to furnish security and that the effect of the High Court’s order is to prevent the dispute between himself, on behalf of the creditors, and the respondent being heard by a court. The liquidator accordingly claims that the
High Court order has resulted in a violation of his rights to have access to court under section 34 of the Constitution.
Having unsuccessfully sought leave to appeal against the High Court’s order to the SCA, the liquidator now applies for leave to appeal to this Court. He argues that the discretion conferred upon the High Court judge by the provisions of section 13 of the Companies Act should have been exercised in the light of the provisions of the Bill of Rights; that the judge failed to do so, and that the order requiring the furnishing of security was therefore wrongly made.
The respondents argue that the matter does not raise a constitutional issue, but that if it does, the issue was not raised before the High Court or before the Supreme Court of Appeal, and that the application for leave to appeal should therefore be dismissed. They argue that the High Court’s order was proper in the circumstances and that no limitation should be imposed on the discretionary power to order security for costs in terms of section 13 of the Companies Act.
