Showroom Centre (Pty) Ltd and Others v Ronald Kagan

The respondent (plaintiff) advanced R1 million to the first and/or second applicant, of which R220,000 was repaid. This was part of an ongoing history of litigation between the parties. The plaintiff previously instituted an action in February 2019 (the first action) and a liquidation application in March 2021. Both were withdrawn. Multiple costs orders were made against the plaintiff in these proceedings - exception costs, amendment costs, strike-out costs, liquidation costs, and urgent application costs. Only two bills had been taxed when the plaintiff instituted a new action on 17 November 2021 to recover the balance owing. The defendants delivered a notice to defend but failed to file a plea. After being served with a notice to plead, the defendants instead launched an application on 21 April 2022 seeking (1) a stay of the action until all previous costs were paid, and (2) an upliftment of the bar that would arise from their failure to plead. Within approximately three weeks, three more bills were taxed and the plaintiff paid all outstanding taxed costs. The defendants then advised they would no longer seek the stay but sought costs of the stay application and upliftment of the bar. The plaintiff refused. The high court dismissed both applications.

• Whether leave to appeal should be granted to appeal the high court's refusal to award the defendants the costs of the stay application
• Whether leave to appeal should be granted in respect of the high court's refusal to uplift the bar
• Whether a grave failure of justice would result or the administration of justice be brought into disrepute if the order of the two justices refusing leave to appeal was not reconsidered
• The principles governing stay applications based on non-payment of costs from previous litigation
• The requirements for uplifting a bar under Rule 27 of the Uniform Rules of Court, including the need to establish good cause and a bona fide defence

1. The application for reconsideration is granted. 2. The application for leave to appeal is dismissed with costs.

1. Unpaid costs from previous proceedings do not automatically or per se entitle a party to a stay of subsequent proceedings. A stay is a discretionary remedy that requires proof that the proceedings are vexatious or constitute an abuse of process. 2. For an appellate court to interfere with a costs order, the applicant must demonstrate that the discretion was exercised arbitrarily, capriciously, on wrong principles, or was affected by a material misdirection - the defendants failed to establish any such basis. 3. Rule 27 of the Uniform Rules of Court requires a party seeking to uplift a bar to establish good cause, which includes: (a) a reasonable and acceptable explanation for the default in pleading; and (b) a bona fide defence which prima facie carries some prospect of success. 4. A party who strategically elects not to plead while pursuing a stay application, and becomes barred, must still satisfy all requirements under Rule 27, including establishing a bona fide defence. The pursuit of a stay application does not excuse compliance with this requirement. 5. Without a bona fide defence, there is no purpose in lifting a bar, as it would simply result in the continuation of a contested action where there is no valid defence to the plaintiff's claim. 6. Under s 16(2) of the Superior Courts Act, appeals may be dismissed where the decision sought will have no practical effect or result, and this is determined without reference to costs considerations.

The Court made several observations: 1. The application for a stay should reasonably be preceded by a demand that if unpaid costs are not paid, an application for stay will follow. Constituting the stay application itself as the demand introduces unnecessary process and costs. 2. While the requisites for a stay based on non-payment of costs were discussed (including that further proceedings must cover substantially the same grounds, must be brought truthfully and honestly, there must be a previous judgment in the applicant's favour, costs must be taxed and demanded, and non-payment must be willful), ultimately whether a stay is appropriate depends on the facts of each case. 3. The Court noted that it is not required of a court to trawl through documents and annexures in other proceedings to discern facts supporting a requirement which a party was required to establish in the current proceedings. 4. The Court emphasized the importance of litigants making difficult strategic choices, implicitly recognizing that litigation involves tactical decisions that may have consequences if the chosen strategy fails. 5. The judgment was noted as "Not Reportable" suggesting it was seen as an application of settled principles rather than establishing new law, though the comprehensive review of stay application principles is instructive.

This judgment clarifies important principles in South African civil procedure regarding: (1) Stay applications based on non-payment of costs - unpaid costs do not per se entitle a party to a stay; vexatiousness must be established, and courts retain discretion informed by factors including whether the party deliberately or carelessly occasioned costs and whether non-payment is contumacious; (2) The requirements for uplifting a bar under Rule 27 - defendants must establish good cause, which requires both a reasonable explanation for the delay and a bona fide defence with prima facie prospects of success; strategic decisions not to plead while pursuing a stay application do not excuse this requirement; (3) Appeals on costs orders - such orders involve a narrow judicial discretion that can only be challenged on limited grounds (arbitrary, capricious, wrong principles, misdirection on facts); (4) Section 16(2) Superior Courts Act - appeals may be dismissed where they will have no practical effect, determined without reference to costs considerations. The judgment emphasizes that litigants who elect to become barred while pursuing alternative strategies must still satisfy all requirements for relief, and cannot avoid establishing a bona fide defence by arguing it would be premature or inappropriate to disclose their defences.