Dobsa Services CC v Dlamini Advisory Services (Pty) Ltd and Another; Dlamini Advisory Services (Pty) Ltd and Another v Dobsa Services CC

Dobsa Services CC (Dobsa), an auditing and accounting corporation, entered into a written contract in November/December 2010 with Dlamini Advisory Services (Pty) Ltd (the company) and Zolile Abel Dlamini to render forensic investigation services to Bakubung Ba-Ratheo Traditional Community at R1,350 per hour. A dispute arose in March-May 2011 regarding overdue payments. Dobsa withheld its forensic report until payment was made upfront, while the company insisted it could not pay without first receiving the report. This led to a contractual breakdown. On 6 June 2013, Dobsa instituted an action for payment of R1,125,336.97 (comprising four claims). The summons was served on 19 June 2013. Dlamini emailed the summons to his attorney of 15 years, but inadvertently sent it to an incorrect email address. Through this inadvertence, the company failed to defend the action. Default judgment was granted on 1 August 2013, and a writ of execution was issued on 28 October 2013. On 23 October 2013, the company discovered the default judgment. On 29 October 2013, the company's attorneys requested Dobsa stay further enforcement pending a rescission application. Dobsa did not respond or provide an undertaking. On 12 November 2013, the company launched a rescission application. On 28 November 2013, the company launched an urgent application for an interdict to restrain Dobsa from removing goods pursuant to an attachment on 26 November 2013.

• Whether the court a quo properly exercised its discretion in awarding costs against Dobsa in the application for an interdict staying execution of the default judgment
• Whether the court a quo properly exercised its discretion in awarding costs against the company in the rescission application
• The proper exercise of judicial discretion in awarding costs
• The circumstances in which an appellate court can interfere with a costs order made by a court of first instance

Both appeals dismissed with costs.

The ratio decidendi is that: (1) An appellate court's power to interfere with a costs order made by a court of first instance exercising judicial discretion is circumscribed and limited to instances where the court did not exercise the discretion judicially, acted upon wrong principles, exercised discretion capriciously, did not bring unbiased judgment to bear on the question, or did not act for substantial reasons. (2) A party opposing an interdict to stay execution of a default judgment pending a rescission application does so at their peril as to costs if the opposition is unreasonable in the circumstances, even if technically entitled to enforce the judgment. (3) An applicant in a rescission application is seeking an indulgence from the court. (4) That an appellate court would probably have come to a different conclusion had it sat as a court of first instance is of no moment and does not justify interference with the exercise of discretion.

The Court made important non-binding observations regarding: (1) The practice of granting leave to appeal to the Supreme Court of Appeal in matters not deserving of its attention, particularly matters concerning only costs orders which could be dealt with by full courts. The Court lamented the frequency of such grants and noted the unfortunate consequence that complex cases deserving of the Court's attention have to wait longer for enrolment as they compete with undeserving cases. (2) The Court noted that Uniform Rule 49(11) had been repealed and that in light of section 18 of the Superior Courts Act 10 of 2013, there was no justification for embarking on interpreting the repealed rule to settle controversies generated by discordant judgments, contrary to what counsel contended. The Court was not persuaded that the controversy was likely to arise again. (3) The Court noted that while one factual statement by the court a quo was clearly incorrect (that the writ was issued after the rescission application was launched), this was not the sole consideration that influenced the court a quo's decision.

This case is significant for reaffirming the principles governing appellate interference with costs orders made by courts of first instance. It emphasizes that courts have wide discretion in awarding costs and that appellate courts may only interfere in limited circumstances where the discretion was not exercised judicially, was based on wrong principles, was capricious, lacked unbiased judgment, or lacked substantial reasons. The case also illustrates the principle that parties who adopt unreasonable and obdurate stances in litigation do so at their peril regarding costs, even when technically entitled to enforce their rights. It confirms that applicants in rescission applications seek an indulgence from the court. The judgment also contains important obiter dicta regarding the inappropriate granting of leave to appeal to the Supreme Court of Appeal in matters that should properly be determined by full courts, particularly in relation to costs orders.