THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

JUDGMENT

Reportable

CASE  NO: 11/07

In the matter between :

DAVID WALLACE ZIETSMAN
Appellant

and

ELECTRONIC MEDIA NETWORK LIMITED
First Respondent
MULTICHOICE AFRICA (PTY) LIMITED
Second Respondent
VODACOM (PTY) LIMITED
Third Respondent

__________________________________________________________________________
Before:
STREICHER, NUGENT, HEHER JJA, HURT & SNYDERS
AJJA
Heard:
18 FEBRUARY 2008
Delivered:
7 MARCH 2008
Summary:
Security for costs – s 17(2) of Patents Act 57 of 1978 – ‘any party’
includes incola plaintiff – agreement to provide security – relevant
factors.
Neutral citation:
Zietsman v Electronic Media Network (11/07) [2008] ZASCA 4 (7
March 2008)
__________________________________________________________________________

STREICHER  JA

STREICHER JA:
[1] The appellant instituted action in the court of the Commissioner of
Patents against the respondents for damages for the alleged infringement of
his South African patent no 92/9925. The respondents gave notice of their
intention to defend the action but when they failed to deliver their pleas they
were in terms of the rules barred from doing so. As a result the first and
second respondents (the second and third defendants in the court a quo)
brought an application for the bar to be removed and for an extension of time
to file their pleas. In the same application they applied for an order directing
the appellant to provide security for any costs which might be awarded to
them. The third respondent (the fourth defendant in the court a quo) in two
separate applications applied for similar relief. The Commissioner of Patents
(De Vos J) directed the appellant to provide security for the costs of the
respondents, removed the bar to the filing of their pleas, granted the
respondents an extension of time to deliver their pleas and ordered the
appellant to pay the costs of the applications, including the costs of two
counsel. With the necessary leave the appellant now appeals against the order
directing him to provide security for the respondents’ costs and against the
costs orders.

[2] Section 17(2) of the Patents Act 57 of 1978 provides as follows:
‘17(2)(a)
The commissioner may also order that any party to proceedings before him
shall furnish security to the satisfaction of the commissioner in respect of any costs which
may be awarded against such party in those proceedings, and may refuse, until such
security has been furnished, to permit such proceedings to be continued.
(b)
The commissioner may have regard to the prospects of success or the bona fides of
any such party in considering whether such security should be furnished.’

[3] In the court a quo the appellant submitted that the phrase ‘any party’ in
s 17(2)(a) should not be interpreted so as to include an incola plaintiff. The
court a quo dismissed this argument as also the argument by the respondents

that the appellant had admitted his liability to provide security. It erroneously
assumed that the parties were agreed that the furnishing of security should be
ordered in the event of it being found that a plaintiff incola, such as the
appellant, could in terms of s 17 be ordered to furnish security and proceeded
to determine the quantum of the security to be furnished.

The interpretation of s 17(2)(a)
[4] Although the appellant in his heads of argument in this court attacked
the court a quo’s interpretation of s 17(2)(a) he expressly abandoned the
argument before us. The concession was correctly made. There is no reason
not to give the phrase ‘any party’ its ordinary literal meaning. The general
rule of our law is that a plaintiff incola cannot be compelled to furnish
security for costs1  but the common law recognises exceptions to this general
rule. A High Court has inherent jurisdiction to prevent abuse of its process by
ordering security in certain circumstances. One such circumstance would be if
the action is vexatious.2  In the case of companies there is a statutory
exception to the general rule.3 In the light of the position at common law and
the aforesaid statutory exception it is unlikely that the phrase ‘any party’ in
s 17(2)(a) was intended not to include incola plaintiffs. Moreover, the same
phrase, ‘any party’, appeared in s 76(1) of the Patents Act 37 of 19524, the
predecessor of s 17(2) and in Selero (Pty) Ltd and Another v Chauvier and
Another 1982 (3) SA 519 (T) at 521D-F a full bench of the Transvaal
Provincial Division held that the phrase should be interpreted literally. In the

1 See Witham v Venables (1828) 1 Menz 291.
2 See Western Assurance Co v Caldwell’s Trustee 1918 AD 262 at 274; Ecker v Dean 1937 AD 254 at 259;
and Ecker v Dean 1938 AD 102 at 111.
3 Section 13 of the Companies Act 61 of 1973 provides: ‘Where a company or other body corporate is
plaintiff or applicant in any legal proceedings, the Court may at any stage, if it appears by credible testimony
that there is reason to believe that the company or body corporate or, if it is being wound up, the liquidator
thereof, will be unable to pay the costs of the defendant or respondent if successful in his defence, require
sufficient security to be given for those costs  and may stay all proceedings till the security is given.’
4 Section 76(1) read as follows: ‘(1)   The commissioner may, for the purpose of this Act . . .(j) if any party to
proceedings before him is resident outside the Union, or has  no fixed property therein, on the application of
any other party to the proceedings, order that security to the satisfaction of the commissioner be lodged or
given by the first-mentioned party in respect of any costs which may be awarded against him in those
proceedings, and refuse until such security has been  lodged or given to permit such proceedings to be
continued, …’

light of this authoritative interpretation of the phrase it is unlikely that it was
intended to have a different meaning in s 17(2)(a).5

Was the appellant liable to furnish security to the third respondent?
[5] Before us only the third respondent persisted with the submission that
the appellant agreed to provide security to it. The following constitutes the
factual basis for the submission.
5.1
In a letter by the appellant’s attorneys, Galgut & Galgut, to the first and
second respondents’ attorneys, Adams & Adams, the appellant tendered to
furnish security for the costs of the first and second respondents in an amount
of R40 000 each. Thereafter the attorneys for the third respondent, Leslie
Cohen & Associates, wrote to the appellant that they had been advised by
Adams & Adams that the appellant was willing to furnish security for costs in
relation to each of their clients. They stated that they were of the view that the
appellant would not be able to meet an adverse order for costs, that they
required to know whether the appellant would be prepared to furnish the third
respondent with the necessary security for costs, that R40 000 security would
be inadequate and that, on the assumption that the appellant would consent
thereto, they had communicated with Adams & Adams and requested that a
time and date be arranged whereby all parties approach the Registrar to
determine the amount of the security that the appellant would be obliged to
pay.
5.2
The appellant, through his attorneys, in a letter dated 7 March 2005
responded as follows:
‘You have not stated the quantum of security required by your client. Your letter therefore
cannot be considered to be a demand in terms of Rule 47.
Our client agrees to provide security for costs in this matter. Our client tenders security in
an amount of R40 000 (forty thousand Rands). If you do not accept this amount then
doubtless you will make requisite demand and the matter will go to the Registrar for
settlement of the quantum.’

5 See Ex parte Minister of Justice: In re Rex v Bolon 1941 AD 345 at 359.

5.3
The third respondent’s attorneys responded:
‘By virtue of the fact that your client has agreed to furnish our client with security for the
costs we hereby as a consequence request that your client furnish security to our client in
the sum of R250 000.00 . . . failing which the Registrar of the High Court be approached
for the purpose of determining the amount of security to be paid by your client . . ..’
5.4
The appellant’s attorneys replied that the appellant was willing to
provide security for costs but that he contested the amount of security
required.

[6] From the aforegoing it is clear that the appellant accepted that rule 47
of the Uniform Rules of the High Court applied. Subsections (1) and (2) of
the rule provides as follows:
‘47(1) A party entitled and desiring to demand security for costs from another shall, as
soon as practicable after the commencement of proceedings, deliver a notice setting forth
the grounds upon which such security is claimed, and the amount demanded.
(2)
If the amount of security only is contested the registrar shall determine the amount
to be given and his decision shall be final.’

[7] Section 17(2) provides that the commissioner may order a party to
furnish security to his satisfaction in respect of costs that may be awarded
against that party in the proceedings before him and it is to the commissioner
that the third respondent applied for such security. Reference to Rule 47
nevertheless assists in the interpretation of the letter of 7 March 2005. Read
with the rule the statement in the letter that should the tender of security in the
amount of R40 000 not be accepted, the quantum of the security to be
provided would be determined by the registrar, serves to confirm that the
appellant’s agreement to provide security was not limited to a specific amount
or specific costs or subject to acceptance of the tender. In terms of the letter
the appellant’s liability to furnish security was no longer in issue, only the
quantum to be provided still had to be determined. Had there not been
provision for the determination of the quantum of the security to be provided

where a party merely agreed to provide security, the agreement to provide
security, without stipulating the amount of such security, would of course
have served no purpose. That is however not the case. A commissioner faced
with an application in terms of s 17(2) of the Act has to determine whether a
party from whom security is demanded is liable to furnish security and if he is
he may order him to furnish security to his satisfaction ie he may then
determine the amount of such security. Where such party agrees to provide
security for costs, as was done by the appellant, the commissioner is relieved
of the duty to determine whether the party is liable to provide security and
may proceed to determine the amount of the security to be furnished.

[8] The
appellant,
relying
on
Cooper
v
Mutual
&
Federal
Versekeringsmaatskappy Bpk6, submitted that an agreement to provide
security did not bind a party to provide security in an amount subsequently
determined. The case is no authority for the proposition. The plaintiff in that
case agreed to provide security in a certain amount and the court held that that
was not an agreement or an admission of liability to provide security in
respect of a subsequent increase in the amount of security required.

[9] Although acting on the basis of the erroneous assumption that subject
to s 17(2)(a) being interpreted as aforesaid, liability to furnish security was
not in issue, the court a quo did determine the amount of the security to be
furnished. It said in this regard:
‘At the hearing of this application, however, counsel for the defendants submitted that an
amount of R250 000,00 would be reasonable under the circumstances. I find no facts
before me to differ from that suggestion’.
The court a quo then made the following order:
‘The plaintiff is directed to furnish security for costs for the second, third and fourth
defendants in the amount of R250 000,00.’

6 2002 (2) SA 863 (O) 869F-J.

[10] In his heads of argument appellant’s counsel made it clear that the
appellant was not appealing against the court a quo’s determination of the
quantum of the security to be provided. However, in reply before us he stated
that if, upon a correct interpretation of the order, the appellant was ordered to
furnish security in an amount of R250 000 to the third respondent and not, as
he interpreted the order, to furnish security in an amount of R250 000 to the
three respondents together the appellant did not accept such determination.
For the reasons that follow I do not think that there can be any doubt that in so
far as the third respondent is concerned, the court a quo intended to order that
security in an amount of R250 000 be furnished. First, the first and second
respondents on the one hand and the third respondent on the other brought
separate applications and were represented by different attorneys and counsel
making it highly unlikely that the court a quo could have intended that the
amount of R250 000 should serve as security for the costs of all three
respondents leaving it to the respondents to determine how to divide the
amount amongst themselves. Second, the appellant in his heads of argument
stated that the respondents had in fact submitted in the court a quo that
R250 000 per respondent would be reasonable in the circumstances. Third the
court a quo stated in its judgment that it could find no facts before it to differ
from the suggestion by counsel.

[11] Apart from stating that the appellant did not accept the determination of
the amount of security to be furnished the appellant did not advance any basis
for interfering therewith.

Was the appellant liable to furnish security to the first and second
respondents?
[12] In terms of s 17(2) the court a quo had a discretion to order the
appellant to furnish security. Such an order places a limitation on the right
conferred on litigants in terms of s 34 of the Constitution. The section

provides that everyone has the right to have any dispute that can be resolved
by the application of law decided in a fair and public hearing before a court or
tribunal. In terms of s 36 of the Constitution7 the right may be limited in terms
of a law of general application to the extent that the limitation is reasonable
and justifiable in an open and democratic society. The right is limited by the
provisions of s 17(2), the constitutionality of which is not challenged by the
appellant. It follows that it is accepted by the appellant that the conferral of a
discretion on a commissioner in terms of s 17 to order a party to furnish
security for costs is reasonable and justifiable. As the validity of the section
itself depends on the reasonableness and justifiability thereof it must follow
that an order that a plaintiff should furnish security, thereby limiting his right
to have his dispute resolved in a court, may only be made if it is reasonable
and justifiable to do so.

[13] In exercising his discretion in terms of s 17(2) a commissioner must
consider all relevant factors and balance them against one another. It is clear
that the court a quo never did so. The court a quo in fact never applied its
mind to the question whether it should exercise its discretion in favour of the
respondents. As stated above it proceeded on the basis of an erroneous
assumption that the parties were agreed that it should order the appellant to
provide security in the event of it finding that it could in terms of the section
order a plaintiff incola to provide security. It is therefore for this court, having
regard to all relevant factors, to decide whether the court a quo should have
ordered the appellant to provide security for the costs of the first and the
second respondents.

7 Section 36 reads as follows: ‘The rights in the Bill of Rights may be limited only in terms of law of general
application to the extent that the limitation is reasonable and justifiable in an open and democratic society
based on human dignity, equality and freedom, taking into account all relevant factors, including –
(a) the nature of the right;
(b) the importance of the purpose of the limitation;
(c) the nature and extent of the limitation;
(d) the relation between the limitation and its purpose; and
(e) less restrictive means to achieve the purpose.’

[14] The first and second respondents alleged that they, in another pending
matter, experienced considerable difficulty in extracting payment from the
appellant in respect of various costs orders against him and that their holding
company experienced similar problems in a matter between it and the
appellant. Writs of execution had to be issued against the appellant and nulla
bona returns were received in respect of them. Although the costs awarded
against the appellant were eventually paid, in one instance only after the
appellant’s patent which gave rise to these proceedings was attached, these
allegations cast doubt on the ability of the appellant to meet adverse costs
orders. Such doubt is reinforced by the fact that the appellant did not state that
he would be able to meet adverse costs orders and made no disclosure
concerning his financial affairs but stated that his financial state was
irrelevant. In the circumstances I am satisfied that there is reason to believe
that the appellant may not be able to meet adverse costs orders.

[15] The object of s 17(2) in so far as defendants are concerned is clearly to
protect them in appropriate circumstances against actions instituted by
plaintiffs who may eventually be unable to meet costs orders made against
them. 8  The fact that there is reason to believe that the appellant may not be
able to meet such orders is therefore a relevant factor to be taken into account
in exercising a discretion in terms of the section. 9

[16] The appellant stated in his answering affidavit that the effect of the
security sought would be to deny him his right to assert his rights in his
property and to deprive him of his right to access to a court for that purpose.
He would, he said, simply not be in a position to finance the assertion of his
rights in court and put up security in the extraordinary amounts claimed by
the respondents. It is self-evident that the extent to which the right of access

8 Cf Hudson &Son v London Trading Co Ltd 1930 WLD 288 at 291; Shepstone & Wylie and Others v Geyser
NO 1998 (3) SA 1036 (SCA) at 1044E-F.
9 Giddey NO v J C Barnard and Partners 2007 (5) SA 525 (CC) at 530B-E.

to a court would be curtailed by an order that security be furnished is a
relevant consideration in determining whether such curtailment would be
reasonable and justifiable. However, the appellant who is relying on this
factor, failed to adduce any evidence in support of the conclusion that he
would be unable to enforce his patent rights should he be ordered to furnish
security.

[17] It does not follow from the fact that there is reason to believe that the
appellant may not be able to meet adverse costs orders that there is also
reason to believe that the appellant would not be able to furnish security.
Funds may be available to the appellant for as long as there is a prospect of
success but not after the case had been lost. That the appellant has access to
funds appears from the fact that he is conducting these proceedings and that
he was able to offer security in an amount of R120 000. The appellant did,
however, not disclose the source and extent of these funds. In the result there
is no basis upon which it can be found that the appellant would be unable to
raise security for costs and thus be unable to exercise his right to have his
action decided by a court.

[18] There are, however, other factors militating against an order that
security be furnished by the appellant.
18.1 The fact that a commissioner may in terms of s 17(2) order a plaintiff
incola to furnish security does not have the result that the residential status of
the plaintiff is no longer relevant especially not if the plaintiff is a natural
person. Generally the chances of extracting payment from a presently
impecunious plaintiff are much better in the case of a natural person who is
also an incola than from a presently impecunious plaintiff who is a company
or a peregrinus.

18.2 It is stated in the founding affidavit to the first and the second
respondents’ application that they intend making application to set aside
certain amendments to the relevant patent on the basis that the amendments
do not comply with the provisions of s 51(6) of the Act. However, they do not
state what the effect of the setting aside of the amendments would be on the
appellant’s claim. They demand that security be furnished without even
alleging that they have a defence to the appellant’s claim, let alone stating
what the nature of their defence is. They are doing so notwithstanding the fact
that s 17(2)(b) specifically provides that the Commissioner may have regard
to the prospects of success or the bona fides of the party from whom security
is required.

[19] In my view it would be quite unreasonable to order the appellant, an
incola natural person, to provide security for an action instituted by him, at
the behest of a defendant who may not even have a defence worthy of
consideration. The first and second respondents submitted that, in the light of
the fact that the appellant made no allegation in regard to his prospects of
success either, it should be accepted that they do have a defence which is not
devoid of any merit. There are two answers to this submission. First, the onus
is on the first and second respondents as applicants for security to persuade a
court that security should be ordered. Second, not only is a defence not
disclosed in the application, it is not alleged that a defence has at any stage
been disclosed to the appellant. Therefore, assuming the first and second
respondents have a defence to the appellant’s action, it does not appear from
the papers filed that the appellant is in a position to deal with the merits of the
defence.

[20] The appellant’s counsel conceded that there is reason to fear that the
appellant may eventually not be able to meet an adverse costs order but then
no reason has been advanced to fear that an adverse costs order may

eventually be made against the appellant. To require the appellant to furnish
security in these circumstances would place an unjust impediment on his
constitutional right in terms of s 36 of the Constitution.

[21] I am not suggesting that a court should in an application for security
attempt to resolve the dispute between the parties. Such a requirement would
frustrate the purpose for which security is sought. The extent to which it is
practicable to make an assessment of a party’s prospects of success would
depend on the nature of the dispute in each case.

[22] It follows that the first and second respondents’ application for security
should have been dismissed by the court a quo.

Costs
[23] The appellant also appealed against the order that he should pay the
costs of the respondents’ applications for the removal of bar and the extension
of the time for the filing of their pleas. The application of the first and second
respondents formed an insignificant part of their application for security and
their counsel conceded that the costs thereof should follow the result of their
application for security. It follows that the appellant’s appeal against the costs
order in respect of the first and second respondents’ application should
succeed.

[24] The third respondent brought an application for removal of bar and an
extension of time and subsequently, when the appellant disputed that he had
agreed to provide security, a separate application for security. The two
applications and the application by the first and second respondents were
heard together. The appellant submitted that he had not opposed the
application for an extension but only opposed the third respondent’s prayer

for costs, that the third respondent was asking for an indulgence and that it
should have tendered the costs of the application.

[25] The appellant did say in the last paragraph of a twelve page answering
affidavit that he did not take issue with third respondent’s ‘application for the
indulgences sought’ and that he abided the decision of the court a quo but in
the preceding part of the affidavit he disputed the basis upon which the third
respondent claimed to be entitled to an extension of time and concluded: ‘The
applicant has not, I am advised, shown good cause for the indulgences sought
and has made no attempt to explain its remissness in not pleading timeously’.
He even filed a duplication to the third respondent’s replying affidavit. As in
the case of the application for security the main dispute in the application for
an extension was whether the appellant was liable to furnish security for the
costs of the third respondent. This dispute was decided against the appellant.
In these circumstances the court a quo in the exercise of its discretion
awarded the third respondent the costs of the application. It cannot be said
that the court a quo did not exercise its discretion judicially. In the
circumstances this court cannot interfere with the order by the court a quo.
However, the court a quo went further and ordered that the costs of the
application for extension as well as the application for security should include
the costs of two counsel. The court a quo did so on the basis of a practice in
that court ‘that where the main action justifies the retention of two counsel,
both counsel may appear in interlocutory proceedings to the action and the
cost for both counsel are justified’. We were informed from the bar that the
practice referred to is not an invariable practice. The court a quo had a
discretion and by simply following a practice in that court it failed to exercise
that discretion. This court is therefore free to interfere with the costs order
insofar as it relates to the costs of two counsel. In my view the applications
did not justify the employment of two counsel.

[26] In the result the following order is made:
(1)
The appellant’s appeal against the order directing him to furnish
security to the first and second respondents (the second and third
defendants in the court a quo) and to pay the costs of the first and
second respondents in respect of their applications for security, removal
of bar and extension of time to plead, is upheld with costs.
(2)
The appellant’s appeal against the order directing him to provide
security in an amount of R250 000 to the third respondent (the fourth
defendant in the court a quo) is dismissed.
(3)
The appellant’s appeal against the order that the costs of the third
respondent in respect of the applications for removal of bar and
extension of time to plead should include the costs of two counsel, is
upheld.
(4)
The appellant is ordered to pay the third respondent’s costs of the
appeal.
(5)
The order of the court a quo is replaced with the following order:
‘(a)
(i)
The second and third defendants’ application for
security for costs is dismissed.
(ii)
The second and third defendants’ application for the
removal of the bar to the filing of their pleas and for
an extension of time is granted.
(iii) The second and third defendants are ordered to pay
the costs of these applications.
(iv)
The second and third defendants are granted leave
to plead to the plaintiffs particulars of claim within a
period of 20 days after their application in terms of
s 51(10) has been determined.
(b)
(i) The plaintiff is ordered to furnish security for the
costs of the fourth defendant in an amount of
R250 000.

(ii) The fourth defendant’s application for the removal
of the bar to the filing of its plea and for an
extension of time to plead is granted.
(iii) The plaintiff is ordered to pay the costs of these
applications.
(iv) The fourth defendant is granted leave to plead to the
plaintiffs particulars of claim within a period of 20
days after the application in terms of s 51(10) has
been determined or after the plaintiff has furnished
security for its costs, whichever occurs later.

_____________________
P E STREICHER
JUDGE OF APPEAL
CONCUR:
NUGENT JA)
HEHER JA)
HURT AJA)
SNYDERS AJA)

THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

From:
The Registrar, Supreme Court of Appeal
Date:
7 March 2008
Status:
Immediate

D W ZIETSMAN v ELECTRONIC MEDIA NETWORK LIMITED & OTHERS

Please note that the media summary is intended for the benefit of the media and does not form
part of the judgment of the Supreme Court of Appeal.

* * *

The Supreme Court of Appeal today upheld an appeal against a judgment in the Court of the
Commissioner of Patents in terms of which that court ordered a plaintiff who is resident in
South Africa to provide security for the costs of three of the defendants. The SCA held that, in
terms of s 17(2) of the Patents Act 57 of 1978, the court a quo had a discretion to order an
incola plaintiff to provide security but that the court a quo misdirected itself in assuming that
the parties were agreed, that in the event of it being found that an incola plaintiff could be
ordered to provide security, only the quantum of such security had to be determined. The
SCA thereupon considered all relevant factors and concluded that the plaintiff should not
have been ordered to furnish security. One of the factors that weighed with the SCA was that
the defendants had not disclosed a defence. The SCA stated that it would be quite
unreasonable to order a plaintiff, an incola natural person, to provide security for the costs of
an action instituted by him, at the behest of a defendant who may not even have a defence
worthy of consideration.