In Pierre Pienaar N.O. v Silver Lakes Homeowners Association NPC (2021) , the Pretoria High Court made a ruling which clarified the application of Rule 27(3) of the Magistrate Court’s Rules of Court (“the Rules”). In this case, the Appellant acted as Defendant in a Magistrate’s Court trial. The trial hearing was set down for 16 July 2019, but one day prior to the trial date the Respondent served a Notice of Withdrawal. The Notice indicated that the Respondent withdraws its action against the Appellant and tendered to pay his costs on a party-and-party scale.
The Appellant was not satisfied with the scale of costs tendered by the Respondent as he was of the view that there existed sufficient grounds for a punitive cost order. Thus, the Appellant lodged an application in terms of Rule 27(3) for an order directing the Respondent to pay the costs of the action on an Attorney-and-Client scale. On the date of the trial hearing the Magistrate’s Court accepted the withdrawal and agreed that the Appellant should proceed with a Rule 27(3) application if he so wishes. At the hearing of the Application, which had been opposed, the Court ex mera motu dismissed the application on the grounds that the Magistrate’s Court lacked the necessary jurisdiction to entertain such an application.
The presiding Magistrate held that Rule 27 (3) did not provide a party with the option to lodge an application for a specific order as to costs when the Notice of Withdrawal already embodies a tender for costs on a specific scale. The matter was taken on appeal, and the question before the High Court was whether the Court a quo should have entertained the application and whether the application had prospects of success. Penultimately the Appeal Court needed to determine the correct meaning and interpretation of Rule 27(3). Rule 27(3) provides that:
“any party served with a notice of withdrawal may within 20 days thereafter apply to Court for an order that the party withdrawing shall pay the applicant’s costs of the action […] withdrawn, together with the costs incurred in so applying. Provided that where the plaintiff or applicant in the notice of withdrawal embodies consent to pay costs, such costs consent shall have the force of an order of Court and the Registrar or Clerk of the Court shall tax costs on the request of the defendant.”
The Appeal Court considered the prima facie meaning of Rule 27(3), which expressly provides that any party served with a Notice of Withdrawal may apply for an order that the withdrawing party pay the costs of the Applicant. However, the Rule also states that where a Notice of Withdrawal contains a tender for costs, such Notice shall have the effect of a Court order. Practically, this means that a Plaintiff at risk of a punitive cost order can avoid punitive costs by instituting a Notice of Withdrawal that tenders costs to a Defendant on a party-and-party scale. As the court in Pienaar correctly points out, this could not have been the intention of the legislature.
Interpreting statutory provisions, such as Rule 27(3), involves more than a literal reading of the words. The provision must be interpreted in a purposive way so that the words are understood in context of the entirety of the legislative document as well as its history. Rule 27 was introduced in 1917 to protect the interests of a Defendant or Respondent. Prior to this, a Plaintiff or Applicant could withdraw the matter without giving notice to the opposing party.
Once the Respondent or Defendant would discover that the matter is withdrawn, he or she could not obtain a cost order on the withdrawn summons. Often the Plaintiff or Applicant would refuse to pay costs, which led to the Respondent or Defendant needing to issue a new summons for an order of costs against the Applicant or Plaintiff. In light of this unfairness, Rule 27 was introduced, which inter alia requires that a Notice of Withdrawal be issued and served on the opposing party. In this way, they may be spared from needing to take further steps in the proceedings.
Rule 27(3) provides that the withdrawing party can tender costs in the Notice of Withdrawal which enables the opposing party to proceed with having his or her costs taxed. If costs are not tendered in the Notice of Withdrawal, the opposing party can approach the Court for an order of costs against the withdrawing party.
2 Rule 27(3) of the Rules Regulation the Conduct of the Proceeds of the Magistrates’ Courts of South Africa Act 740 of 2010.
4 Re Hyundai Motor Distributors (Pty) Ltd & Others v Smith NO & Others (2001) (1) SA 545.
5 Matoko v Wellbeloved 1911 OPD 54.
6 DE Van Loggerenberg Jones & Buckle: Civil Practice of the Magistrates’ Courts in South Africa (10 th ed, Juta 2021) at 27-2.
7 Stoffberg v Augustyn 1916 C PD 477.
8 Van Loggerenberg n5 above, at 27-2.
The opposing party need thus not issue a fresh summons for a cost order. This Rule 27(3) is based on the general principle that the party withdrawing the matter is liable (as unsuccessful litigants) to pay the costs of the proceedings.
According to the court in Pienaar, the Rule 27(3) deals with a situation where either a Plaintiff or a Defendant decides to withdraw either a claim or a defence respectively prior to the hearing of the matter. However, commentators on the Rule have indicated that it deals exclusively with a Plaintiff withdrawing his or her action or an Applicant withdrawing his or her application. Under the current interpretation and application of Rule 27(3), only a party in whose favour a withdrawal operates and who has not received a Notice of Withdrawal which includes a tender for costs, may approach the Court for an order of costs. As the Judge in Pienaar asserts, there is no lawful basis substantiating why the withdrawing party should be able to determine the costs tendered.
The literal interpretation, and consequent arbitrary application, of Rule 27(3) has been criticised by the High Court before. In Harding v Ma Clear, it was held that the Magistrate had to consider the background and circumstances giving rise to the application. Accordingly, the decision of the Magistrate who had failed to do so was regarded as irregular and set aside. The same was done in Pienaar, where the Court set aside the Magistrate’s decision and replaced it with two cost orders in favour of the Appellant.
It is thus established that Rule 27(3) provides for the protection of the right of the party in whose favour the withdrawal operates, by enabling the party to approach the Court for a cost order. Usually, costs tendered are party to party costs, but until the Pienaar outcome, it was unclear what steps the non-withdrawing party had to pursue a cost order other than on a party-and-party scale.
It is now clear that such
10 Id at 27-3. Naturally, there are exceptions to this general principle as demonstrated in Germishuys v Douglas Besproeiingsraad 1973 (3) SA 299 (NC); Sentraboer Kooperatief Bpk v Mphaka 1981 (2) SA 814 (O); Waste Products Utilisation (Pty) Ltd v Wilkes (Biccari Interested Party) 2003 (2) SA 590 (W) at 597A–B; Reuben Rosenblum Family Investments (Pty) Ltd v Marsubar (Pty) Ltd (Forward Enterprises (Pty) Ltd Intervening) 2003 (3) SA 547 (C) at 550C.
11 Pine Pienaar v Silver Lakes n 1 above at para 9.
12 Van Loggerenberg n5 above, at 27-2; 3.
13 Pine Pienaar v Silver Lakes n 1 above at para 10.
15 Harding v Ma Clear (2016) JDR 2188 (WCC) at para 32.
16 Pine Pienaar v Silver Lakes n 1 above at para 17.
18 Van Loggerenberg n5 above at 27-4.
a party can rely on Rule 27(3) to lodge an application for costs on a higher scale and that the Magistrate’s Court is permitted to entertain such applications.