IN THE HIGH COURT OF SOUTH AFRICA
(GAUTENG DIVISION, PRETORIA)

CASE NO: 72977/2010
Not reportable
Not of interest to other judges
Revised.
21 July 2017

In the matter between:

PARSONS TRANSPORT	Applicant

and

ZEBRA STRIPES HOLDINGS 2 CC	Respondent

DATE OF HEARING		:	18 JULY 2017
DATE OF JUDGMENT		:	21JULY 2017

JUDGMENT: APPLICATION FOR LEAVE TO APPEAL

MANAMELA, AJ

Introduction

[1] The applicant, the respondent in the mam application, seeks, in terms of this application, leave to appeal against the whole judgment and order granted on 25 May 2016 in favour of the respondent, the applicant in the main application. The judgment comprises contemporaneous reasons (given on 25 May 2016) and supplementary written reasons (dated 31 May 2017) for the order.

[2] The order made on 25 May 2016 was in the following terms:

"1. The application for leave to amend is granted with costs, save for any costs incurred from 19 May 2016;
2. There will be no order as to costs with regard to all activities from 19 May 2016 to date hereof;
3. The liquidator, IS Ponnen is to serve and file an affidavit by not later than thirty days from date hereof, in terms of which he/she confirms the authority to· the current attorneys of record and her role as the substituted applicant/plaintiff in the matter, and her general ratification of all activities or steps taken in the matter.
4. The applicant's attorneys of record are to serve and file within thirty days from date hereof an affidavit in which they explain the source of their instructions at all material
times, being from the beginning of the matter to date, including whether they were aware of the liquidation of Zebra Stripes Holdings 2 CC.
5. The rule 15 (3) notice is allowed, with applicant liable for costs relating thereto, if any."

Grounds of appeal

[3] The applicant now submits that the Court erred for the following grounds:

"1.1 The Court erred in finding that the Respondent could be substituted in terms of Rule 15(3). The change of status occurred before the Respondent launched its application for amendment, Rule 15 (3) is thus not the applicable remedy.
1.2 The Court ought to have held that the Application be removed or struck from the roll.
2.1 The Court erred in finding that the liquidator had the required authority to consent to and or launch the Application in terms of Rule 15(3). No authority was granted to the liquidator by a meeting of creditors, the Master and or on application to the Honorable [sic] Court in terms of Section 386(5) of the Companies Act.
2.2 There was furthermore no evidence on affidavit that the liquidator consented to the application in terms of rule 15(3).
2.3 The Court ought to have held that the Application in terms of Rule 15(3) was "stillborn", and had to be dismissed with costs.
3.1 The Court erred finding that the deponent to the founding affidavit did have the required authority and locus standi to depose to the affidavit.
3.2 The Court ought to have held that the founding affidavit and application for amendment was not properly before Court and that the application be struck from the roll with costs.
4. The Court erred in finding that the liquidator had the required authority to consent to the application for amendment. No authority was granted to the liquidator by a meeting of creditors, the Master and or on application to the Honorable [sic] Court in terms of Section 386(5) of the Companies Act.
5.1 The Court erred by failing to take into consideration that the liquidator had at the time of hearing of the application not rectified [sic] any procedural actions taken by the Respondent, after it's [sic] liquidation.
5.2 At the time of the hearing of the application the liquidator had thus not yet rectified [sic] any of the legal actions taken by the Respondent.
6.1 The Court erred by failing to struck the application from the roll due the [sic] fact that there was no evidence, on affidavit, of the liquidator's appointment and that she consented to and rectified [sic] the procedural actions taken by the Respondent by launching the application for amendment and application in terms of Rule 15.
6.2 The Court failed to find that there was no evidence before the Court in regards to the liquidator. The Court thus erred by taking into consideration the evidence regarding the liquidator, her consent and rectification [sic] of the procedural actions.
7. The Court erred in finding that the liquidator could rectify the actions of the Respondent, more specifically to launch the application for amendment, retrospectively.
8.1 The Court erred by not finding that the application for amendment was not properly before the Court.
8.2 The Court ought to have struck the application from the roll with costs."

[4] It is noteworthy that none of the above grounds of appeal are directed against the finding in terms of which the leave to amend was granted, which was the real substance of application before the Court. Therefore, the appeal arises from peripheral and procedural issues, almost all of which were not contained in the papers before the Court at the hearing of the matter on 25 May 2016. I will return to this.

Submissions and their analysis

[5] At the hearing of the application for leave to appeal on 18 July 2017, Mr DR du Toit appeared for the applicant and Mr GVR Fouche for the respondent. Naturally, the respondent supports the judgment and order of the Court and opposes the application. I reserved this judgment for a couple of days in order to reflect further on the issues raised in the application.

[6] Mr Du Toit for the applicant submitted at the hearing essentially as follows. The application in terms of Rule 15(4) (the Rule 15 application) made from the bar on 25 May 2016 and the application for leave to amend (the Rule 28 application) were made after the respondent had already been placed in liquidation. Therefore, the Rule 15 application was "stillborn" for want of authority of the liquidator. I immediately pause here to point out that the statement that the Rule 15 process was initiated in Court on the date of hearing was proven incorrect. To the contrary and despite what the Court was all along made to believe, Mr Fouche for the respondent handed up a notice in terms of Rule 15(3) which was served on the applicant's attorneys of record on 24 May 2016, albeit only a day before the hearing. I will revert to this later below. Mr Du Toit, as already indicated, submitted that the fact that the applications, particularly the Rule 28 application, were brought when the company was in liquidation, but without the proven authority of the liquidator renders both applications bad for want of authority and ought to have been removed or struck from the roll by the Court. Although, with respect, he was not by any measure unequivocal in this regard, Mr Du Toit appeared to also submit that the Rule 15(3) procedure did not cure the defect, as this procedure was "stillborn" in the absence of consent to same by the liquidator, which consent was to be supported by proven authority from either a meeting of creditors, the Master of the High Court or extension of powers obtained from the Court in terms of Section 386(5) of the Companies Act 61 of 1973. He also further submitted that the Court ought not to have gone further and made other parts of the order relating to the filing of affidavits by the liquidator and the respondent's attorneys, as there was no evidence before the Court to support counsel's submissions that the liquidator supports the Rule 28 application, let alone that the liquidator has the requisite capacity to do so. The evidence ought to have been by way of affidavits and absence of same was fatal to both applications. I immediately mentioned at the hearing that, in my view, the effect of the latter submission if it was to be accepted would also be that there was no evidence of when the respondent was liquidated and therefore none of the submissions made by the applicant to ground its application for leave to appeal would have been possible. It is doubtful that if the respondent was, for example, liquidated a day before the hearing of the main application, the Rule 15(3) application would have been opposed. The opposition was mounted by the applicant on the basis of the submissions by respondent's counsel that it had been discovered that the respondent has been in liquidation for months to years. Therefore, the applicant also relied on the impugned information not presented to the Court by way of affidavit. Be that as it may, Mr Du Tait also submitted that further steps that could be taken by the respondent could still "blow life into the Rule 28 application", after it was removed or struck from the roll. I must say that, I still battle to understand the logic of the latter submission. My understanding of this is that the applicant would rather have had the Rule 28 application dismissed not on merit but pure procedural grounds even when it was clear that any procedural shortcomings were not deliberately created by the respondent. This would amount to elevation of form over substance, which approach does not accord with interests of justice, especially where no prejudice was palpable or shown by the applicant, as the opposing party. The Court was always alive to the situation, hence the ancillary terms of the order regarding the delivery of affidavits by the liquidator and the respondent's attorneys.

[7] Mr Fouche, for the respondent, made the following submissions in support of the judgment of the Court. In his written heads of argument, Mr Fouche individually dealt with the issues or the grounds of appeal. I will only deal with some of these. He submitted that the correct procedure for the applicant to have followed when doubting the authority of the respondent's attorneys in respect of the Rule 28 application was to invoke Rule 7 of the Uniform Rules of this Court. This is with regard to the applicant's challenge of the authority regarding the bringing of the Rule 28 application. Further, he submitted that because the impugned order in its current form provides for filing of affidavits by the liquidator and the respondent's attorneys, it was not appealable as it does not have a final effect. I agree. He also submitted that the application does not meet the requirements of Section 17 of the Superior Courts Act 10 of 2013. Section 17, in my view, ought to be read in conjunction with Section 16(2)(a), also of the Superior Courts Act 10 of 2013, which states:

"(i) When at the hearing of an appeal the issues are of such a nature that the decision sought will have no practical effect or result, the appeal may be dismissed on this ground alone.
(ii) Save under exceptional circumstances, the question whether the decision would have no practical effect or result is to be determined without reference to any consideration of costs."

[8] Mr Fouche's submission that the appeal would have no practical effect arises from what occurred in this matter subsequent to the granting of the impugned order. In papers filed by the respondent in an urgent application under the same case number as in this matter and involving the current parties, it was disclosed that the litigation is at the instance of the insurer due to application of the doctrine of subrogation. This was on 26 May 2016, being literally a day after the granting of the impugned order. The liquidator also consented to the litigation. Evidently, these facts became known to the applicant before launching the current application for leave to appeal. Mr Fouche submitted that a Court on an appellate level would not just ignore the facts and decide the appeal in a vacuum. I agree. He also submitted that for this reason the application for leave to appeal is vexatious and frivolous and should be met with a dismissal and costs.

[9] I have had regard of the submissions made in this matter. I rely on the reasons I gave for the order I made. I do not agree with the contention that the Court was not entitled to consider the Rule 15 or Rule 28 applications due to absence of evidence on affidavit that the liquidator supported the litigation. Submissions were made from the bar that the liquidator supports the litigation and in the absence of prejudice been raised or perceived by the Court on the part of the applicant, the Court, in the interests of justice , granted the order in did. The order was not final in effect without all its composite parts being met. This was to ensure that in case the submissions made from the bar proved erroneous, the order would have no effect. Striking the matter off the roll or postponing it, would have achieved nothing, save to afford the applicant temporary bragging rights and costs, whilst the respondent was rejigging its application, so to speak. This did not and still does not appear to me to be in the interests of justice, lest the Court is confined by its own rules. The facts clearly suggested that the respondent didn't mean to breach the rules and practice of this Court and the applicant did not show any prejudice. And if the main order was erroneous, in my view, the ancillary order would have rectified the situation.

[10] I also·agree with the contention made on behalf of the respondent that the application for leave to appeal is premature. The effect of the order made is that paragraphs 1 and 5 of the order are pivoted upon paragraphs 2 to 4 of the same order, as the latter serve as ancillary orders in terms of which the liquidator and the respondent's attorneys are required to file affidavits to complete the otherwise inchoate order. Before this, the order does not have any final effect and falls short of the requirements of Sections 16(2)(a) and 17 of the Superior Courts Act 10 of 2013.

Conclusion

[11] Therefore, in my view, there are no prospects of success in the grounds of appeal. In terms of the provisions of Section 17(1)(a) of the Superior Courts Act leave to appeal may only be given when the Court is of the opinion that the intended appeal ''would have" a reasonable prospect of success. This signifies a raised threshold from provisions of the repealed Supreme Court Act 59 of 1959 and "indicates a measure of certainty that another court will differ from the court whose judgment is sought to be appealed against". No other Court would reach a different conclusion or outcome to the judgment or order of 25 May 2016. The application will be dismissed.

[12] I have also had regard to the unreported judgment dated 25 June 2017 by my brother Kollapen J also in this matter handed up during the hearing by Mr Du Toit. I do not find its dicta or ratio applicable to the issues in this application.

[13] Mr Fouche, for the respondent, submitted that the Court should mark its disapproval with a punitive costs order on the basis that the applicant had knowledge of the facts alleged in the subrogation and the liquidator's support of the litigation, before launching the application for leave to appeal. I do not think that the conduct of the applicant was mala fide in this regard. The issues raised, although being of a technical nature, cannot be regarded as. amounting to the applicant conducting itself in a vexatious or frivolous manner. I am therefore not persuaded that a costs order, other than one on a party and party scale, is appropriate. Consequently, the application for leave to appeal fails and the applicant will be liable for cost of the application.

Order
[14] In the premises, I make the following order:
a) application for leave to appeal is dismissed with costs.

_______________________
K. La M. Manamela
Acting Judge of the High Court
21 July 2017

Appearances:

For the Applicant	GVR Fouche

Instructed by		Botha & Sutherland Attorneys,
c/o Wiese & Wiese
Arcadia, Pretoria

For the Respondent	DR Du Toit

Instructed by		Maritz Smith Inc,
Hatfield, Johannesburg