Michael de Villiers, N.O. and Another v BOE Bank Limited

BOE Bank Limited instituted action in the South Eastern Cape Local Division against the joint liquidators of Intramed (Pty) Ltd (in liquidation) based on three loan agreements. Each loan agreement contained clauses entitling the bank to recover costs on an attorney and client scale in the event of litigation. The dispute concerned whether the loan agreements and underlying securities had been authorised by Intramed (Pty) Ltd. The court a quo held that the liquidators were liable on the three loan agreements and that the bank's claims were secured by underlying securities, and ordered the liquidators to pay the bank's costs on an attorney client scale. On appeal, the Supreme Court of Appeal held (with Heher JA dissenting) that while the agreements and securities had been authorised, the loan agreements had lapsed due to non-fulfilment of suspensive conditions. The SCA held the bank was entitled to restitution of monies advanced and substituted the costs order to costs of suit including the costs of two counsel (on the ordinary scale). The bank then applied to amend the costs orders to include costs on an attorney client scale based on provisions in the underlying security documents.

• Whether the court has power to alter or supplement a costs order after final judgment has been handed down
• Whether the fourth exception to the functus officio doctrine applies where the issue of costs was addressed in argument
• Whether costs on an attorney and client scale could be awarded based on provisions in underlying security documents when this basis was not raised in argument

The application to amend the costs order was dismissed with costs (on the ordinary scale, not including the costs of two counsel as requested by the liquidators).

Once a court has made a final order on costs after the parties have addressed the court on the question of costs (whether at the original hearing or a subsequent hearing), there can be no implied understanding that an aggrieved party may subsequently be heard on an appropriate costs order, and the fourth exception to the functus officio doctrine does not apply. The court becomes functus officio and the costs order is immutable (subject to the other three exceptions). The fact that costs may not have been addressed as comprehensively as counsel might wish, or that a particular basis for costs was not specifically raised, does not revive the court's jurisdiction to alter the costs order where the issue of costs was within the scope of matters addressed in the heads of argument and oral submissions.

The court observed that courts are entitled to base their judgments and make findings in relation to any matter flowing fairly from the record, the judgment, the heads of argument or the oral argument itself, citing Thompson v SABC. The court noted that if parties had to be forewarned of each and every finding, the court would not be able to function. Navsa JA also remarked that the application to amend the costs order was not a matter warranting the costs of two counsel, declining to award costs at that level despite the liquidators' request.

This case clarifies and applies the important principles governing when a court may alter or supplement its judgment after it has been handed down, particularly in relation to costs orders. It reinforces that the functus officio doctrine applies strictly and that the fourth exception (relating to costs not being argued) will not apply where the issue of costs has been addressed in heads of argument or oral submissions, even if not comprehensively dealt with. The judgment emphasizes that parties cannot reopen issues that were within the scope of argument simply because, with hindsight, they might have argued them more effectively. It confirms the principle from Thompson v SABC that courts are entitled to make findings on any matter flowing fairly from the record, judgment, heads of argument or oral argument without specific forewarning to the parties on each finding.