Companies which institute reckless or frivolous litigation can still be liable to furnish security for the defendant’s legal costs, despite the legislature’s omission of this provision from the Companies Act of 2008.
This was the finding of the full bench of the Supreme Court of Appeal on Monday.
It dismissed with costs an appeal by an East London marketing company which had been ordered to pay security for costs in its fight against South African Breweries (SAB).
The case relates to the popular Carling Black Label “Be the Coach” soccer competition.
Boost Sports Africa claimed it disclosed a particular advertising concept known as the “fans challenge concept” to SAB in 2006.
The company claimed SAB later used the concept for its “Be the Coach” competition.
Fans from Kaizer Chiefs and Orlando Pirates are given an opportunity to vote on player selection for a competition that takes place during the football off-season.
Before the matter could be heard in the high court in 2013, SAB became concerned Boost Sports Africa would not be able to meet an adverse costs order if it failed in the planned action.
SAB then launched an application for security for costs, in the event Boost Sports lost its case against the brewer. The high court granted SAB’s application.
There have been differing rulings in the high courts on whether companies should pay security for costs since the 1973 Companies Act was replaced by the Companies Act of 2008.
The earlier act gave courts discretion to order payment of security for costs, but the later one makes no such provision.
Law firm Bowman Gilfillan attorney Clement Mkiva said yesterday the provision in the old Companies Act sought to dissuade companies, which were unlikely to be able to pay an adverse costs order if unsuccessful, from instituting litigation if they had poor prospects of success.
Mkiva said the section also provided defendants with means to secure their legal costs when defending frivolous claims against companies that would be unable to satisfy an adverse costs order.
In its judgment, the appeal court said in the absence of a provision similar to section 13 of the old Companies Act, a local company could be compelled to furnish security for costs.
It is unclear what course of action Boost Sports Africa intended to take.
Jed Webber, a director at Boost Sports Africa, said: “We are considering the judgment and will decide what to do in due course.” — mabuzae@timesmedia.co.za
EL firm loses costs battle against SAB
This was the finding of the full bench of the Supreme Court of Appeal on Monday.
It dismissed with costs an appeal by an East London marketing company which had been ordered to pay security for costs in its fight against South African Breweries (SAB).
The case relates to the popular Carling Black Label “Be the Coach” soccer competition.
Boost Sports Africa claimed it disclosed a particular advertising concept known as the “fans challenge concept” to SAB in 2006.
The company claimed SAB later used the concept for its “Be the Coach” competition.
Fans from Kaizer Chiefs and Orlando Pirates are given an opportunity to vote on player selection for a competition that takes place during the football off-season.
Before the matter could be heard in the high court in 2013, SAB became concerned Boost Sports Africa would not be able to meet an adverse costs order if it failed in the planned action.
SAB then launched an application for security for costs, in the event Boost Sports lost its case against the brewer. The high court granted SAB’s application.
There have been differing rulings in the high courts on whether companies should pay security for costs since the 1973 Companies Act was replaced by the Companies Act of 2008.
The earlier act gave courts discretion to order payment of security for costs, but the later one makes no such provision.
Law firm Bowman Gilfillan attorney Clement Mkiva said yesterday the provision in the old Companies Act sought to dissuade companies, which were unlikely to be able to pay an adverse costs order if unsuccessful, from instituting litigation if they had poor prospects of success.
Mkiva said the section also provided defendants with means to secure their legal costs when defending frivolous claims against companies that would be unable to satisfy an adverse costs order.
In its judgment, the appeal court said in the absence of a provision similar to section 13 of the old Companies Act, a local company could be compelled to furnish security for costs.
It is unclear what course of action Boost Sports Africa intended to take.
Jed Webber, a director at Boost Sports Africa, said: “We are considering the judgment and will decide what to do in due course.” — mabuzae@timesmedia.co.za
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