- within International Law, Environment and Finance and Banking topic(s)
In a judgment delivered recently in the matter of The Standard Bank of South Africa Limited ("Standard Bank") & Another v Advertising Digital Services (Pty) Limited ("ADS") & Another, the Pretoria High Court granted an order in favour of Standard Bank in terms of the Vexatious Proceedings Act, 1956 and held that it is improper, abusive and vexatious to refuse to accept the final decisions of a court.
The court took into account that Section 34 of the Constitution entitles everyone to the right to have any dispute resolved by the application of the law decided in a fair public hearing before a court and emphasised that without this right, the Bill of Rights would have no real force. The court quoted with approval the Constitutional Court's judgment in Barkhuizen v Napier, which set out the purpose of Section 34. In Barkhuizen, the court stated the following: "Our democratic order requires an orderly and fair resolution of disputes by courts ... This is fundamental to the stability of an orderly society. It is indeed vital to a society that, like ours, is founded on the rule of law. Section 34 gives expression to this foundational value by guaranteeing to everyone the right to seek the assistance of a court."
Similarly, in Chief Lesapo v North West Agricultural Bank and Another, the Constitutional Court remarked that the right of access is foundational to the stability of an orderly society and a "bulwark" against vigilantism, and the chaos and anarchy which it causes. Therefore, access to court is of cardinal importance and very powerful considerations would be required for the limitation of the right to access to court. The right, however, is not unlimited and can be curbed when a litigant's conduct abuses the judicial process.
Facts
In July 2003, Standard Bank developed an electronic pin-pad for internet banking security where the sequence of numbers appeared in a random order to enhance protection against hacking. In August 2003, ADS approached Standard Bank with a virtual scrambled pin-pad that it designed for security purposes. At the time, Standard Bank was evaluating various proposals to enhance internet banking security but did not disclose to ADS that it had already developed a scrambled pin-pad. On 18 August 2003, a meeting occurred between Standard Bank and ADS during which Standard Bank signed a non-disclosure agreement ("NDA"). Standard Bank, after ADS' presentation to it, concluded that ADS' solution offered no value to it. Later, ADS alleged that this meeting prompted Standard Bank to implement its scrambled pin-pad, and it got the idea for this from ADS. Therefore ADS alleged that Standard Bank breached the NDA.
On 28 July 2004, ADS instituted action against Standard Bank under case number 2004/25833 in the Johannesburg High Court. ADS' claim was for damages arising from the alleged breach of ADS' confidential information and the NDA.
The trial in relation to this matter was eventually set down for 14 April 2008. ADS delayed the proceedings by failing to deliver expert summaries and by frequently changing attorneys.
The trial was again set down for hearing on 25 March 2010. On 5 March 2010, ADS attempted to postpone the trial, but the postponement application was unsuccessful. On 25 March 2010, ADS tried again to secure a postponement on the basis that its attorneys (which were the fourth set of attorneys) had withdrawn. This application was also refused.
The trial proceeded before Justice Tsoka and after hearing evidence and arguments, ADS' claim was dismissed. ADS filed a notice of application for leave to appeal the refusal of the 25 March 2010 postponement application, but this was subsequently withdrawn following Standard Bank delivering a notice of an irregular step.
Justice Tsoka's judgment ruled that there was no breach of confidentiality and information had already been publicly available online since 1998 and Standard Bank had a similar solution developed prior to the meeting with ADS.
On 20 June 2010, after a fifth set of attorneys came on board for ADS, ADS filed an application for leave to appeal Justice Tsoka's judgment, which dismissed ADS' claim, and it also filed an application for condonation for the late filing of this application for leave to appeal. This condonation application was dismissed.
ADS then signalled its intention to appeal the dismissal of the condonation application to the Supreme Court of Appeal ("SCA") and appointed its sixth set of attorneys. These attorneys then filed an application for leave to appeal to the SCA.
On 28 February 2012, ADS withdrew this SCA application after Standard Bank delivered its answering affidavit. Thereafter, in March 2012, ADS launched a third application in the High Court for condonation and leave to appeal Justice Tsoka's judgment. These applications were also dismissed.
On 13 November 2012, ADS filed a fourth application for leave to appeal the dismissal of the applications for condonation and leave to appeal. Justice Tsoka declined to hear this application on the basis that he had already dismissed a similar prior application.
In 2016, ADS filed an application for leave to appeal and condonation (the fifth such application) with the SCA. On 27 January 2017, the SCA granted condonation but refused leave to appeal on the basis that there were no reasonable prospects of success.
On 22 February 2017, ADS filed a sixth application under Section 17(2)(f) of the Superior Courts Act and sought a reconsideration or variation of the SCA's order dismissing the application for leave to appeal. In this application, ADS alleged fraud. This reconsideration application was also dismissed by the SCA for lack of exceptional circumstances.
In June 2017, ADS filed an application for leave to appeal with the Constitutional Court requesting that the 2010 trial be set aside. This application was also dismissed.
ADS then instituted a fresh action (the second action) against Standard Bank but its employee was cited as a second defendant. The claim was now formulated as a delictual claim and included allegations of fraud and misrepresentations allegedly made during the 2010 trial. This was some 12 years after the first action had been instituted and after every legal avenue pursued by ADS during these 12 years had been unsuccessful.
Standard Bank then instituted an application to declare ADS and Mr Reynders as vexatious litigants. On 8 October 2018, this application came before court, but the court gave directions regarding the further conduct of ADS' second action. Standard Bank and its employee raised special pleas in the second action, including special pleas based on prescription, res judicata and issue estoppel. On 28 July 2022, the special pleas were upheld, and the second action was dismissed with a punitive costs order. In this judgment, the court criticised ADS' conduct as an abuse of process that wasted judicial resources.
ADS then tried to appeal this judgment, but Standard Bank filed a Rule 30(1) application to set aside the notice of application for leave to appeal on the basis that the application for leave to appeal was signed by Mr Reynders, who is not a legal practitioner. This occurred after ADS' then attorneys had also withdrawn.
The application to declare ADS and Mr Reynders as vexatious litigants was referred to case management and it was agreed during the case management process that the parties should wait for the decision in regard to the Rule 30(1) application before any further directives were issued. Judgment in the Rule 30(1) application was delivered in favour of Standard Bank.
The application to declare ADS and Mr Reynders as vexatious litigants was then set down for hearing on 12 September 2025 and directions were also given for the filing of further affidavits, heads of argument and a practice note.
In Millar J's judgment in the vexatious application, the court found that:
- persistent groundless proceedings should not be allowed to amount to harassment and abuse of process;
- ADS and Mr Reynders acted improperly and in an abusive manner by their inability and failure to accept the finality of adverse court findings; and
- Standard Bank and its employee ought not to be subjected to the further recycling of the matter.
Order
Consequently, the court ordered that ADS and Mr Reynders are, indefinitely, prohibited from instituting legal proceedings against Standard Bank and its employee or any current or former employees of Standard Bank without the leave of such court or Judge and such leave may only be granted where the court concerned is satisfied that the proceedings are not an abuse of the process of the court and that there are prima facie grounds for the proceedings. ADS and Mr Reynders were also ordered to pay Standard Bank and its employee's costs on the attorney and own client scale, and counsels' costs were to be taxed on Scale C. The court also ordered the Registrar to cause a copy of the order to be published in the Government Gazette as provided for in Section 2(3) of the Vexatious Proceedings Act.
The judgment is useful in that it ensures that defendants/respondents can curb vexatious and abusive legal proceedings, if the proceedings are frivolous or vexatious and amounts to an abuse of process.
Note: Standard Bank and its employee were represented by ENS in these proceedings.
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