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[2018] ZAWCHC 174
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Trustees of the Two Oceans Aquarium Trust NNO. v Aquarides Entertainment CC t/a Vista Marina (11141, 15887/2018) [2018] ZAWCHC 174 (18 December 2018)
Republic of South Africa
IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
No.s: 11141 and 15887/2018
Before: The Hon. Mr Justice Binns-Ward
Hearing: 12-13 December 2018
Judgment:
18 December 2018
In
the matters between:
THE
TRUSTEES OF THE
TWO
OCEANS AQUARIUM TRUST
NNO.
First
to Seventh Applicants
and
AQUARIDES
ENTERTAINMENT CC
T/A
VISTA
MARINA
Respondent
JUDGMENT
BINNS-WARD
J:
[1]
I handed down judgment on 8 November 2018
in the applications brought by the trustees of the Two Oceans
Aquarium Trust in case no.s
11141/2018 and 15887/2018, respectively,
for the perfection of their security in terms of a notarial bond over
the respondent’s
property and for the eviction of the
respondent from the premises that it leased from the trust for the
purposes of conducting
a restaurant business. The applications
were heard together and disposed of in a single judgment. The
judgment (to
which I shall hereinafter refer as ‘the principal
judgment’) went in favour of the applicants in respect of both
of
their applications. It has since been published on SAFLII,
sub nom
.
Green NO and Others v Aquaride
(sic)
Entertainment CC t/a Vista Marina
[2018] ZAWCHC 145).
[2]
On 5 December 2018, I refused
applications by the respondent in both of the matters for leave to
appeal. The judgment
refusing leave to appeal was delivered
ex
tempore
, and a transcript of it has not
yet been submitted to me for approval and signature. Suffice it
to say that I explained in
that judgment that I had refused to grant
leave to appeal because I was not persuaded that an appeal would
enjoy reasonable prospects
of success. My actual view on the
prospects of any appeal against the principal judgment may be more
robustly expressed:
I am virtually certain that it would be doomed to
failure.
[3]
Irrespective of my gloomy view of its
prospects, the respondent is, however, enabled by the courts’
processes to persist in
its intention to appeal by petitioning the
Supreme Court of Appeal for leave to appeal, and should it also fail
in that forum,
then to apply to the Constitutional Court for audience
in that court. The procedures available to the respondent
permit it,
if so minded, to delay for many months yet the execution
of the orders obtained against it by the applicants. That
reality,
and their assessment of its attendant prejudicial
consequences for the trust’s interests, have prompted the
applicants to
apply, in terms of
s 18
of the
Superior Courts Act
10 of 2013
, for an order that the operation and execution of the
orders made in the principal judgment should not be suspended pending
the
exhaustion by the respondent of the avenues still open to it to
challenge that judgment. The application in terms of
s 18
was lodged prior to the hearing of the respondent’s application
for leave to appeal, and with a view that it should be heard
together
with the latter application. It was postponed for hearing a
week later, however, because the respondent sought more
time to
prepare its answering papers.
[4]
Section 18
currently
regulates the use of the power that the superior courts have
exercised historically under the common law to provide in
appropriate
cases for exceptions from the default position that the operation of
a decision that is subject of an appeal or an
application for leave
to appeal is suspended pending the decision of the application or
appeal. The provision explicitly
allows for the default
position to be overridden only in ‘exceptional
circumstances’.
[1]
That, in essence, is a reiteration of the principle manifested in the
common law.
[2]
It also places an onus on any party seeking such exceptional relief
to prove ‘on a balance of probabilities that he
or she will
suffer irreparable harm if the court does not so order and that the
other party will not suffer irreparable harm if
the court’
grants an order of the sort contemplated in s 18(1).
Although there was uncertainty at times as to
the incidence of the
onus,
[3]
these were also considerations that were pivotal in applications
under the common law for a departure from the default position;
see
in this regard points (1) and (2) in the list of pertinent
considerations identified by Corbett JA in
South
Cape Corporation (Pty) Ltd v Engineering Management Services (Pty)
Ltd
1977 (3) SA 534
(A), [1977] 4 All SA 53.
[4]
The most significant change wrought by
s 18
to the
position that obtained under the common law is its provision that any
order permitting a deviation from the default position
has been made
automatically appealable. Previously, such orders were
generally non-appealable on account of their interlocutory
character;
with appeals against them being entertained only exceptionally, in
circumstances in which the interests of justice demanded
that.
[5]
The proper construction
of
s 18
and the manner in which it falls to be applied have been
settled in a series of judgments, most notably
Incubeta
Holdings (Pty) Ltd and another v Ellis and another
2014
(3) SA 189
(GJ),
Minister
of Social Development Western Cape and Others v Justice Alliance of
South Africa and Another
[2016] ZAWCHC 34
,
[2016] JOL 35612
(WCC),
University
of the Free State v Afriforum and another
[2017] 1 All SA 79
(SCA),
2018 (3) SA 428
and
Ntlemeza
v Helen Suzman Foundation and another
[2017] 3 All SA 589
(SCA),
2017 (5) SA 402.
It would therefore
be a supererogation to rehearse here in any detail the exegeses that
can be easily turned up there.
Suffice it to record that I have
approached the determination of the current application mindful of
what is set out in those judgments;
and, in particular, the
observation in
Ntlemeza
[5]
that the provision ‘has
set the bar fairly high’.
[6]
Section 18(4)(i)
provides that if a court grants an order permitting execution of its
judgment notwithstanding a pending application for leave to
appeal,
or an appeal, as the case might be, it must record its reasons for
doing so. As noted in
Ntlemeza
,
[6]
that does not require a list of reasons to be drawn up. It
implies rather that the order must be supported by a reasoned
judgment, which must include the court’s findings on
irreparable harm for the purpose of compliance with
s 18(3).
[7]
I proceed now from that
introduction to consider whether the ‘exceptional
circumstances’ requirement has been satisfied.
In
S v Dlamini
the Constitutional Court (per Kriegler J), in the context of
dismissing an attack based on vagueness of the employment of
the term
‘exceptional circumstances’ in s 65(11) of the
Criminal Procedure Act, explained that the use of it by
the
legislature was acceptable because ‘one can hardly expect the
lawgiver to circumscribe that which is inherently incapable
of
delineation’.
[7]
It is hardly surprising therefore that all of the authorities cited
in paragraph [5]
above
accept that exceptionality is a fact-and-context specific question,
and that any conclusion as to whether the circumstances
are
exceptional or not will depend on a judicial evaluation of the facts
of the given case in their peculiar context.
[8]
[8]
The determination of
exceptionality was referred to by Thring J in
MV
Ais Mamas Seatrans Maritime v Owners, MV Ais Mamas and another
2002 (6) SA 150
(C) at 156H–157C as entailing the exercise of a
discretion. Even though it has been cited in respect of the
import
of ‘exceptional circumstances’ in a number of
judgments dealing with
s 18
of the
Superior Courts Act, the
decision in
Ais
Mamas
was given in
a matter involving a quite different statutory context.
[9]
I can understand why the learned judge postulated a
discretionary exercise, for the determination entails making a
decision
upon a weighing of any number of disparate and
incommensurable features in the given case (cf.
Knox
D’Arcy Ltd and Others v Jamieson and Others
1996 (4) SA 348 (SCA), [1996] 3 All SA 669 (A)
[10]
).
And the assessment of the correctness or otherwise of the
determination might also be treated on appeal in essentially
the same
manner as an appellate court is able to deal with first instance
decisions made in the exercise of a wide discretion because
the
appellate court might weigh the facts differently to the first
instance court, and to different effect. The characterisation
of the determination as discretionary is therefore understandable.
However, I find myself in respectful agreement with the
point made by
Sutherland J in
Incubeta
[11]
that the determination, notwithstanding that ‘what is
cognisable as "exceptional circumstances" may be
indefinable
and difficult to articulate’, is founded on the
facts of the case, and
not
on the exercise of judicial discretion. It is only the decision
whether to exercise the power that a court has if the fact-based
requirements of
s 18(1)
and (3) have been satisfied that is
discretionary.
[12]
[9]
‘
Exceptional
circumstances’ within the meaning of
s 18(1)
are the
factual characteristics of the given case that are such as to make it
appropriate, assuming that the requirements of
s 18(3)
have also
been met, for the court to consider exercising its discretionary
power to make an order concerning execution that would
deviate from
the default position. Even a combination of unexceptionable
circumstances might in a given context amount to
‘exceptional
circumstances’ within the meaning of the provision; cf.
S
v Dlamini
supra, at
para. 76. The determination whether they would or not requires
a ‘judicial evaluation’
[13]
of the facts for the purpose of deciding whether the circumstances
are such as to justify a departure from the default position
in the
interest of justice.
[10]
I have summarised what I consider to be the
relevant facts of the two cases in the principal judgment. This
judgment should
be read together with the principal judgment, which
makes it unnecessary for me to re-traverse the factual matrix in any
detail
here. It also bears recording that the founding papers
in the
s 18
application incorporated by reference the papers in
the principal applications, and that the treatment of the facts in
this judgment
proceeds on the premise of such incorporation.
[11]
It is convenient to treat firstly of the
eviction order. In my view one of the most salient features of
the case that makes
the circumstances exceptional is that the
respondent is remaining on in the leased premises, and intending to
challenge the order
that was made that it must vacate them, in
circumstances in which it is common ground that it has failed to pay
the rent since
January 2018. The fact that the respondent
was liable to pay rent, and that it did not dispute its liability to
have
done so, was borne out by its payment of the rent that would
have been due in September 2018. As noted in para. 3 of
the principal judgment, the payment was dishonoured.
[12]
The ‘defences’ raised in the
eviction application were identified and disposed of in the principal
judgment in paras.
20-27. None of them, even were they found to
be good (which they were not), would have entitled the respondent to
remain
on in the premises without paying rent. On what basis is it
then entitled to remain there? The defences it raised do not
offer an answer.
[13]
This characteristic signally distinguishes
the current case from the run of the mill eviction matter predicated
on a lessee’s
failure to pay rent, where the tenant admits the
non-payment but contends that it was entitled to have withheld
payment for one
or other reason and nevertheless remain in
occupation. Examples of such cases are to be found in
Hencetrade 15 (Pty) Ltd v Tudor Hotel
Brasserie & Bar (Pty) Ltd
[2017]
ZASCA 111
at para. 3 and
[2016] ZAWCHC 55
at para. 6-8 (in which the
lessee raised the defences of set-off and the
exceptio
non adimpleti contractus
),
Ntshiqa
v Andreas Supermarket (Pty) Ltd
[1996]
3 All SA 154
(Tk),
1997 (1) SA 184
(in which the
exceptio
non adimpleti contractus
was relied on
by the lessee to good effect) and
Steynberg
v Kruger
1981 (3) SA 473
(O) (in which
the tenant alleged an entitlement to remission of rental due to
defects in the premises). The defences raised
in those cases
were of a nature that if they were upheld, the tenant’s right
to continue to occupy the let premises would
be sustained
notwithstanding a purported cancellation of the lease by the
landlord.
[14]
In the current case, by
contrast, it was obvious that the applicants were entitled to cancel
the lease when the respondent failed
to pay the rent,
[14]
which they did. The effect of the cancellation was that the
respondent thereafter had (and has) no right to remain in occupation
of the premises. Its attempt to justify its continued
occupation on the bases of the defences described in the principal
judgment is in itself, as mentioned, something that makes the case
exceptional; for none of them afforded a basis upon which the
cancellation of the lease might be exposed as invalid or ineffectual.
All of them were in any event found to be without merit
and, as
I have already noted, the prospect of any of them being upheld on
appeal with the effect of reversing the principal judgment
is very
remote in my view. The principal judgment points out that some
of the ‘defences’ are actually self-defeating
in that
pressing them home would imply that there never had been a valid
lease in place,
[15]
which, if true, would beg the (unanswered) question ‘then on
what basis does the respondent justify its continued occupation
of
the premises?’
[15]
It is now
authoritatively established that the court’s assessment of the
prospects of any appeal or application remains, as
it was under the
common law, a relevant factor to be taken into account in determining
whether in the peculiar factual setting
of the given case
‘exceptional circumstances’ within the meaning of
s 18(1)
have been established.
[16]
If the respondent, in availing of the appellate process, is seeking
to press on with absolutely untenable defences, that
is in itself a
fact that can contribute towards a justifiable finding in a given
factual matrix that the circumstances are exceptional.
[16]
The applicants have alleged that the
respondent’s resort to the appeal process is part of a
stratagem of delay designed to
allow it to remain in the premises to
take advantage of the high season at the Waterfront during the Cape
summer months.
The probabilities support the cogency of the
applicants’ allegation. The respondent’s action in
desperately clinging
onto the premises notwithstanding the parlous
financial situation in which it has been for some time and its
inability for the
better part of a year thus far to pay any amount
whatsoever in redemption of its rent obligation; its failure to have
put up any
plausible reason why the applicants’ cancellation of
the lease was invalid or ineffectual; and its resort to the court’s
appeal processes in circumstances in which its prospects of success
are dismal combine to make the circumstances of the case sufficiently
exceptional to warrant the court to consider, subject to the
applicant having satisfied the provisions of
s 18(3)
, the making
of an order that would allow a departure from the default position.
[17]
The factual matrix
gives rise to the very strong impression that the respondent is not
availing of the appeal procedures with the
bona fide intention of
seeking to reverse the judgment, but actually for the purpose of
buying several months of time to capitalise
on the rent-free
occupation of the premises for trading purposes while those
procedures are being exhausted.
[17]
That, in itself, also makes the circumstances exceptional, because
ordinarily the bona fides of a litigant’s resort
to a right of
appeal are either readily identifiable or not easily questionable.
[18]
A further factor to be
taken into account is that the arrangement that the respondent
entered into with Bidvest to hold the latter
off from pressing its
application for the respondent’s winding-up to conclusion
[18]
is a compromise of the sort that quite evidently, in the context of
the other information before this court, constitutes an act
of
insolvency in terms of
s 8
(c) of the
Insolvency Act 24 of
1936
,
[19]
which in itself is a feature suggestive of at least the commercial
insolvency of the respondent close corporation. It is
in any
event clear, in the context of the unresolved claims against the
respondent in respect of its undisputed or undisputable
indebtedness
to other creditors such as the applicant, the local authority and its
employees, that the payments being made by the
respondent to Bidvest
have the effect of unduly preferring the latter over the respondent’s
other creditors.
[19]
As noted in the
principal judgment, Bidvest is exacting the payments with the
assistance of the effect of an order that it obtained
by agreement
with the respondent postponing its pending application for the
liquidation of the respondent
sine
die
subject to
compliance by the respondent with the terms of the compromise
arrangement.
[20]
The existence of such an order, which is very much out of the
ordinary as it effectively places Bidvest’s interest
in the
settlement of its claim in an unduly preferred position over those of
other creditors such as the applicant in the redemption
of theirs,
makes the circumstances exceptional.
[20]
The prejudice
occasioned by such an order to the respondent’s other creditors
is obvious. It is not something that the
scheme of the
Companies Acts and the Close Corporations Act contemplates or would
justify.
[21]
While it stands, it complicates the ability of any other creditors,
like the applicants, themselves to obtain a winding-up
order against
the respondent.
[22]
[21]
I was informed from the bar, without
contradiction by the respondent’s counsel, that the applicants
are currently attempting
to obtain the winding-up of the respondent.
Were it not for the pending application by Bidvest for the same
relief, I doubt
that they would have much difficulty in getting such
an order. I equally doubt, having regard to the very poor
prospects
of success, that any liquidator would seek to prosecute an
appeal against the principal judgment. The fact that the
respondent,
currently still under the management of its sole member
rather than a liquidator only because of the incidental effect of the
postponement
on a never-never basis of Bidvest’s winding-up
application, is able to pursue the appeal procedures at the instance
of the
member underscores the exceptionality of the circumstances
consequent upon the postponement order.
[22]
For all the aforegoing reasons I am
satisfied that the applicants have established ‘exceptional
circumstances’ within
the meaning of s 18(1).
[23]
Turning now to the
requirements of s 18(3). There is little room to doubt
that the applicant will suffer irreparable
harm if the eviction order
is not executed immediately notwithstanding the respondent’s
evident intention to petition the
Supreme Court of Appeal for leave
to appeal. It is plain that the respondent is in serious
financial difficulty. As
noted, it is the object of a pending
winding-up application. It is not paying its rent, and, as also
already noted, its recent
attempt to partially redeem its default in
that regard resulted in a dishonoured payment. It is also in
breach of the payment
obligations undertaken to the applicants in
terms of the acknowledgement of debt executed on 23 March 2017.
Moreover,
the papers in the s 18 application suggest that it is
not able to pay its staff punctually or in full, and is in default in
its contributions on behalf of its staff to their trade union.
[23]
It sought to meet the applicants’ allegation that it was also
materially in arrears with its payments for services
to the local
authority, and that there was a consequent danger that services to
the premises might be suspended, by putting up
evidence of
substantial payments in redemption of these arrears, but even then it
emerged that one of these payments made to the
City of Cape Town in
the sum of R140 000 had been dishonoured.
[24]
The respondent’s financial
difficulties have been manifest over an extended period of time.
There is nothing in the
evidence to support a belief that the close
corporation will enjoy a turnaround in its fortunes sufficient to
enable it to redeem
its substantial indebtedness to the trust.
On the contrary, the likelihood is that the respondent will be
compulsorily wound
up within the next few months. As time goes
by, however, the debt owed by the respondent to the applicant in
respect of past
rental and damages for holding over continues to
grow. The applicants have only one opportunity to rent out the
premises
at any given time and the respondent’s continuing
occupation of the property without paying rent is keeping the
applicants
out of turning that opportunity to gainful account.
The applicant is unlikely to be able to recover anything other than,
at best, a fraction of its damages from the respondent, when, as I
have noted appears likely, the respondent is eventually wound
up.
The probability that the trust will suffer irreparable, and
ever-increasing, harm for as long as the respondent stays
on in the
premises under cover of its cynical resort to the courts’
appeal procedures is starkly evident.
[25]
The only cognisable harm that the
respondent could suffer as a result of it being required to vacate
the premises is of a financial
nature. It may well be
inconvenient, but, like the ‘reputational harm’ that
General Ntlemeza contended for in
Ntlemeza
,
inconvenience is not the sort of harm that is cognisable in terms of
s 18(3). It is only if it were to be granted leave
to appeal
and succeed in the consequent appeal that the respondent could claim
to have suffered harm as a result of having to vacate
the premises at
this stage. It cannot otherwise rely on the revenue it would be
able to generate during any time it was able
to stay there buying
time by availing unsuccessfully of the courts’ appeal
procedures for that ulterior purpose.
[26]
The applicants have undertaken to indemnify
the respondent in the event of it succeeding in any appeal against
the principal judgment
against any losses or damages it might suffer
as a consequence of being required to vacate the premises at this
stage. They
put up a draft deed of indemnity for endorsement by
the court in their supplemented founding papers. An acceptable
deed of
indemnity has often been accepted in the past as adequate
provision against a judgment debtor suffering irreparable loss as a
consequence
of execution being permitted before the judgment debtor
has exhausted its appeal remedies. This usually happens when
the
judgment in issue is one sounding in money. But I see no
reason for a distinction in principle in a case like the present,
in
which any cognisable harm that the respondent might suffer would be
calculable and compensable in money.
[27]
The supplemented papers establish that the
trust would be comfortably able to meet any obligation that might
arise were it required
to perform in terms of the indemnity that has
been offered by the applicants. In the circumstances I am
satisfied that the
applicants have discharged the onus on them to
prove that the respondent will not suffer irreparable harm if the
eviction order
is executed at this stage, provided that the
applicants furnish it with a suitable indemnity.
[28]
I have slightly reworked the wording of the
draft deed of indemnity attached to the applicants’
supplemented papers.
The reworked draft, which is attached as
Annexure A to this judgment, will be incorporated by reference in the
order that will
issue. I have provided for the deed to be
executed by all of the trustees of the trust. The draft put up
in the applicants’
papers provided for it to be executed on the
trust’s behalf by Mr Farquhar, who is employed by the trust in
the capacity
of chief executive officer. It was contended by
the respondent’s counsel that Mr Farquhar lacked authority to
execute
such an obligationary document on behalf of the trust, and
also that it was outside the trustees’ powers under the trust
deed to purport to delegate any such authority to him. I do not
consider that there is any merit in either of these contentions,
but
to put the matter beyond debate the order to be made will provide for
deed of indemnity to be executed by all the trustees.
The
plenary powers invested in the trustees by the trust deed are
unqualified, and plainly afford them the authority to furnish
the
indemnity.
[29]
Turning now to consider
the application for the execution of the order in the perfection of
security application. In this
case too the virtually absolute
lack of prospects of any appeal against the confirmation of the rule
nisi
in terms of which the goods subject to the notarial bond makes the
circumstances exceptional. It is not, and cannot be disputed
that the respondent is indebted to the applicants in terms of the
acknowledgment of debt. The respondent’s abortive
attempt
to pay the rent due in respect of the premises in September bears
that out. The respondent has placed the calculation
of the
amount of the debt in dispute, but that does not detract from the
effectiveness of the notarial bond that was registered
pursuant to
the acknowledgement of debt or the applicants’ entitlement to
perfect the security provided thereby. The
bond was furnished
as security for all the respondent’s indebtedness to the trust,
including any amount owing pursuant to
the parties execution of the
deed of lease. The amount due in terms of the acknowledgment of
debt fell immediately due and
payable, amongst other situations, in
the event of the respondent committing an act of insolvency. I
have already described
that that has happened. The applicants were
entitled in terms of the bond to perfect their security in a number
of situations.
The ones that were applicable on the facts were
the respondent’s breach of the lease agreement and its
compromise or deferment
in the respect of the payment of its debt to
Bidvest. I pointed out in the principal judgment, with
reference to the dicta
of Harms JA in
Contract
Forwarding (Pty) Ltd v Chesterfin (Pty) Ltd and Others
2003 (2) SA 253
(SCA) at para. 10, that the scope for any court
to refuse the applicants an order perfecting their security is
extremely limited,
and finds no basis in the facts of the current
matter.
[24]
What prospect is there then, in the face of the appeal court’s
clear pronouncement of principle, of any appeal against
the
confirmation of the rule succeeding?
[30]
That the respondent should in these
circumstances proceed to try to take the principal judgment on appeal
in respect of the perfection
of security application underscores my
impression that its availment of the courts’ processes is not
bona fide, and only
to give it time to cash in for its member’s
benefit on the high season’s trading. As I have already
reasoned
in respect of the execution of the order in the eviction
application, that is sufficient to render the circumstances
exceptional
for the purposes of
s 18(1)
of the
Superior Courts
Act.
[31
]
A failure to permit the execution of the
order at this stage would probably result in irremediable harm to the
trust. It would
effectively be deprived of the benefit of its
security in the form of the limited real right in the respondent’s
property
that the notarial bond was intended to provide. In
making this finding I do not overlook that the suspension of the
execution
of the order in the ordinary course would not suspend the
effect of the provisional order or the effectiveness of the
attachment
of the respondent’s movable property that has
already been effected thereunder. Nevertheless, the mere
attachment,
without physical possession, that is in place does not in
the peculiar circumstances of the case afford sufficient protection
of
the applicants’ rights.
[32]
For one, it is evident that the movables
were not kept insured by the respondent as it was liable to do in
terms of the notarial
bond. The respondent was only prompted to
obtain a quotation from an insurance broker after the institution of
these proceedings
in terms of
s 18.
It has failed to
adduce any evidence that a contract of insurance has been concluded
and that the premium has been paid or
adequately secured. It is
obvious in the circumstances of the respondent’s demonstrably
poor credit record that it
cannot be relied upon to keep up the
insurance payments. The bond permits the applicants to insure
the goods if the respondent
fails to do so, and to recover the costs
from the respondent. However, in the context of the
respondent’s parlous financial
state, their prospect of
actually making any recovery from the respondent were they to
exercise the right to keep the goods insured
at the respondent’s
expense is nugatory.
[33]
A further factor to be taken into account
in assessing the potentiality of irreparable harm to the trust in the
peculiar circumstances
of this case is that the goods are currently
being used in the conduct of the respondent’s restaurant
business at the leased
premises, and while that situation endures the
applicants could at least take some comfort that the danger that they
would be dissipated
or not be properly looked after was relatively
limited. But that comfort will fall away in the context of the
immediate execution
of the eviction order. Although it is
notionally possible that the respondent could set up its business
elsewhere and use
the goods at the new address, the prospect of that
actually happening is unrealistic in the context of the respondent’s
financial
circumstances.
[34]
The fact that the perfection of their
security in terms of the notarial bond may well be rendered void if
the respondent is wound
up - which as I have said is a likely
prospect in my view – is something that is extraneous to the
balancing exercise between
the interests of judgment creditor and
judgment debtor contemplated in terms of
s 18(3)
of the
Superior
Courts Act. It
is instead an incident of the relationship
between the interests of the applicants and those of the other
creditors of the respondent
should such an eventuality come to pass.
[35]
For all these reasons I am satisfied that
the applicants have proven that the trust will probably suffer
irreparable harm if the
order permitting them to perfect the trust’s
security is not made immediately executable, which will allow the
pledged goods
to be removed from the premises and kept in possession
by or at the instance of the applicants in accordance with the terms
of
the court’s order in the principal application.
[36]
I am also satisfied that the execution of
the order will not cause irreparable harm to the respondent, for the
terms of the court
order in case no. 11147/2018 do not authorise the
applicants to dispose of the attached goods, and it would be
necessary for them
to obtain a further court order to be able to do
so. They would not be able to obtain such an order at least
until the pending
winding-up application against the respondent has
been determined. For the reasons given earlier it is my
assessment that
the applicants will probably have to surrender the
attached movables to a liquidator. But should that not transpire
before the
respondent has exhausted its resort to the courts’
appeal processes, it is possible to deal with the possibility that
the
respondent’s interests would be irreparably harmed by
including a direction in the order to be made prohibiting the
applicants
from disposing of the attached goods prior to the
exhaustion by the respondent of its ability to challenge the
principal judgment
on appeal. A direction to that effect will
therefore be incorporated in the order to be made.
[37]
It will be apparent from what I have said
thus far that I have been persuaded that it would be appropriate for
the court in the
exercise of its discretion to exercise its power to
make the order sought by the applicants in terms of
s 18
of the
Superior Courts Act.
[38]
It remains only to consider the issue of
costs.
[39]
When the application was argued on 12
December it was made apparent that I had significant reservations as
to whether the applicants
had discharged the onus to prove that the
respondent would not suffer irreparable harm if the principal
judgment were put into
effect before its attempts to appeal were
exhausted, or any appeal that it might be given leave to prosecute
were determined.
I made it clear to the applicants’
counsel that I doubted whether the bland averment that an indemnity
was offered to the
respondent for any loss it might suffer would
suffice. I indicated that I would have expected the terms of
the proffered
indemnity to be expressly spelled out, and for there to
be evidence in support of the trust’s financial ability to
honour
its obligations in terms of it if called upon to do so.
The difficulties that I raised with counsel prompted him to seek the
opportunity for the applicants to supplement their founding papers,
as mentioned above.
[40]
The respondent’s
counsel demurred at my readiness to accede to the applicants’
counsel’s request and contended
that the applicant was bound to
stand or fall by its supporting papers when the application was
lodged. As I pointed out
at the time, the position adopted by
the respondent’s counsel was misconceived. The
application is for simple
interlocutory relief not having final
effect,
[25]
and any refusal of the
application on account of some or other shortcoming in the papers
would not have precluded the applicants
from making a fresh
application for the same relief on improved papers.
Furthermore, as pointed out by Corbett JA in
South
Cape Corporation
,
[26]
any order made by a court of
the sort contemplated by
s 18
is amenable, while it is in
operation, to correction, alteration, or even to being recalled by
the court that made it at any time
before the final determination of
the matter on appeal or the refusal of the right to appeal. An
order in terms of
s 18
of the
Superior Courts Act is
an incident
of the courts’ regulation of their own process.
Litigation is not a game, and, as Navsa JA observed
in
Ntlemeza
,
‘[c]ourts must be the guardians of their own process and be
[astute] to avoid a to-ing and fro-ing of litigants’.
[27]
[41]
In the event the matter was stood down
until the 13
th
to allow the applicant to supplement its papers to meet the issues
that I had raised. The only respectable point for the
respondent to have taken in the circumstances, which it eventually
duly did, was to ask that the applicants should pay its wasted
costs
incurred on account of the postponement. A direction to that
effect will be incorporated in the order to be made at
the end of
this judgment.
[42]
It seems to me that otherwise liability for
the costs of the
s 18
application should depend on the fate of
the respondent’s resort to the appeal processes. If those
should be futile
in the sense that it does not obtain leave to
appeal, or should any appeal that is permitted not succeed, then the
respondent should
be liable for the applicants’ costs of suit.
If, on the other hand, the respondent succeeds in any appeal in
having
the principal judgment reversed in respect of both
applications, the applicants should be liable to pay the respondent’s
costs, and if the respondent’s success on appeal is limited to
only one of the two applications, then the applicants should
be
liable to pay one half of the respondent’s costs in these
proceedings.
[43]
The following order is made:
1.
It
is ordered in terms of
s 18
of the
Superior Courts Act 10 of
2013
that, subject to the further provisions of this order, the
orders made by this court on 8 November 2018 in case no.s 11147/2018
and 15887/2018, respectively, shall not be suspended pending the
exhaustion by the respondent of the processes available to it
to
challenge the judgment of this court in which those orders were made
on appeal.
2.
The
aforementioned orders of this court made on 8 November 2018
shall, however, notwithstanding the terms of paragraph 1 of
this
order, not be enforceable by the applicants until and unless they
have executed a deed of indemnity in favour of the respondent
in the
form of the draft annexed as Annexure A to the judgment in these
proceedings and have lodged a copy of the executed deed
with the
Registrar of this court and also procured the service of a copy
thereof by the Sheriff at the respondent’s registered
office;
and any goods attached and removed by or at the instance of the
applicants in terms of the order made in case no. 11147/2018
shall in any event not be disposed of by the applicants prior to the
exhaustion by the respondent of its ability to challenge the
aforementioned judgment of this court in respect of that matter on
appeal.
3.
Save
as provided in paragraph 4 hereof, the respondent shall be liable for
the applicants’ costs of suit in these proceedings
in the event
that it does not obtain leave to appeal against the judgment of this
court dated 8 November 2018 in case no.s 11147/2018
and 15887/2018,
or should it, having obtained leave, not be ultimately successful in
any appellate court to which it is permitted
to appeal; provided that
the applicants shall be liable to pay the respondent’s costs of
suit in these proceedings should
the respondent succeed on appeal in
respect of the judgment in both the aforementioned case numbers, or
for one half of the respondent’s
costs should the respondent
succeed on appeal in only one of the said cases.
4.
The
applicants shall in any event be liable to pay the wasted costs
incurred by the respondent as a result of the postponement of
the
hearing of the application on 12 December 2018.
A.G. BINNS-WARD
Judge
of the High Court
ANNEXURE
A
Indemnity and Undertakings
by the Two Oceans Aquarium Trust
in favour of Aquarides Entertainment CC t/a Vista
Marina
WHEREAS
,
the Western Cape Division of the High Court of South Africa (“the
Court”) gave judgment on 8 November 2018 in favour
of the Two
Oceans Aquarium Trust (“the Trust”) in proceedings under
case number 11141/2018 (“the Perfection Application”)
and
case number 15887/2018 (“the Eviction Application”)
against Aquarides Entertainment CC (reg. no. 2010/080715/23)
t/a
Vista Marina (“Vista Marina”) in terms of which the Court
confirmed a rule nisi authorising the Trust to perfect
its security
in terms of a notarial bond executed by Vista Marina in favour of the
Trust and authorised the eviction of Vista Marina
from the premises
at the Victoria and Alfred Waterfront that it had leased from the
Trust and at which it currently carries on
business;
AND
WHEREAS
, Vista Marina applied for leave
to appeal against the said judgment, which application was refused by
the Court on 5 December
2018;
AND
WHEREAS
, Vista Marina is entitled in
law to persist with its intention to appeal against the said judgment
by way of applications for leave
to appeal to the Supreme Court of
Appeal and ultimately to the Constitutional Court;
AND
WHEREAS
, on 18 December 2018, the Court
made an order at the instance of the Trust in terms of
s 18
of
the
Superior Courts Act 10 of 2013
directing that the judgment
granted in favour of the Trust in the Perfection Application and the
Eviction Application might be
executed by the Trust notwithstanding
any application for leave to appeal or appeal by Vista Marina;
AND
WHEREAS
, the said order made by the
Court on 18 December 2018 is, according to its tenor, subject to
the provision by the Trust of
an indemnity in the terms set out in
Annexure A to the Court’s judgment in the Trust’s
application in terms of
s 18
of the
Superior Courts Act;
AND
WHEREAS
, the aforesaid order made by
the Court on 18 December 2018 is subject, in terms of
s 18(4)(iv)
of the
Superior Courts Act, to
an automatic right of
appeal by Vista Marina;
NOW
THEREFORE BY THIS INSTRUMENT:
We,
the undersigned trustees for the time being of the Trust –
1.
do
hereby, and subject to the terms of this instrument, bind the Trust
to indemnify Vista Marina for any loss or damages it may
sustain, and
in respect of any liability, cost or expense it may incur as a result
of the execution of the Court’s judgment
in the Perfection
Application and/or the Eviction Application pursuant to the
abovementioned order made by the Court in terms of
s 18
of the
Superior Courts Act on
18 December 2018; provided that this
indemnity shall apply only if, and to the extent that, the Court’s
judgment in
the Perfection Application and the Eviction Application
is reversed on appeal, and provided further, that in the event of a
dispute
arising in respect of the quantification of any claim that
might accrue to Vista Marina in terms of this indemnity it shall be
determined by an arbitrator and the provisions of clauses 16.2 to
16.5.3 of the deed of lease executed by the Trust and Vista Marina
on
13 September 2016 shall apply
mutatis
mutandis
.
2.
without
derogating from the generality of the indemnity furnished hereby,
undertake that in the event of any appeal against the
judgment in
respect of the Perfection Application being upheld, the Trust shall
restore possession of the goods attached by the
Trust under the
judgment in perfection of its security, and to that end undertake
further that the said goods will not be disposed
of until Vista
Marina’s rights of appeal in terms of the relevant rules of
court have been finally exhausted.
3.
without
derogating from the generality of the indemnity furnished hereby,
undertake that in the event of any appeal against the
judgment in
respect of the Eviction Application being upheld, the Trust will
permit the Vista Marina to resume occupation of the
premises subject
to the provisions of the deed of lease executed between the Trust and
Vista Marina on xxx, and to that end undertake
further to include a
term in any lease of the said premises that the Trust may conclude
with any replacement tenant before Vista
Marina’s rights of
appeal in terms of the relevant rules of court have been finally
exhausted binding such tenant to vacate
the premises upon the written
request of the trustees in the event of any appeal against the
judgment in respect of the Eviction
Application being upheld.
The
indemnity and undertakings furnished hereby shall be separate and
severable and enforceable accordingly and shall endure subject
to
Vista Marina prosecuting any steps available to it to appeal the
judgment in the Perfection Application and/or the Eviction
Application in terms of the
Superior Courts Act and
the applicable
rules of court strictly within the prescribed time limits.
[To
be signed by each of the trustees.]
APPEARANCES
Applicants’
counsel: Deneys van Reenen
Applicants’
attorneys: Hayes Incorporated
Cape
Town
Respondent’s
counsel: Brendan Atkins
Respondent’s
attorneys: Tanya Nöckler Attorneys
Cape
Town
[1]
See
s 18(1).
[2]
Note the observation
by Fourie AJA in
University of the
Free State v Afriforum and another
[2017] 1 All SA 79
(SCA),
2018 (3) SA 428
, in para. 9, that in
enacting
s 18
of the
Superior Courts Act the
legislature
‘proceeded from the well-established premise of the common law
that the granting of relief of this nature constitutes
an
extraordinary deviation from the norm that, pending an appeal, a
judgment and its attendant orders are suspended’.
That
observation was reiterated by Navsa JA in
Ntlemeza
v Helen Suzman Foundation and another
[2017] 3 All SA 589
(SCA),
2017 (5) SA 402
, in para. 38.
[3]
See
South
Cape Corporation
(Pty)
Ltd v Engineering Management Services (Pty) Ltd
1977 (3) SA 534
(A),
[1977] 4 All SA 53
(at pp. 547-9 SALR;
pp. 59-61 All SA).
[4]
At p. 545 SALR;
p. 57 All SA.
[5]
In para. 28.
[6]
In para. 38.
[7]
S v Dlamini, S v Dladla
and Others; S v Joubert; S v Schietekat
[1999] ZACC 8
;
1999 (4) SA 623
;
1999 (7) BCLR 771
, at para. 75.
[8]
See
Incubeta
supra, in para.
22,
Minister of
Social Development Western
Cape
supra, in para. 20,
UFS
v
Afriforum
supra,
in para. 13, and
Ntlemeza
supra, in para. 37.
[9]
Section 5(5)(a) of the
Admiralty Jurisdiction Regulation Act 105 of 1983, which, in
relevant part reads:
(a)
A court may in the exercise of its admiralty jurisdiction at any
time on the application of any interested person or
of its own
motion –
(
i) if it appears to the court to be
necessary or desirable for the purpose of determining any maritime
claim, or any defence to any such claim, which has been or may be
brought before a court, arbitrator or referee
in the Republic
,
make an order for the examination, testing or inspection by any
person of any ship, cargo, documents or any other thing and
for the
taking of the evidence of any person
(ii)
…
(iii)
…
(iv)
In
exceptional circumstances
, make such an order as is
contemplated in subparagraph (i) with regard to a maritime claim
which has been or may be brought before
any court, arbitrator,
referee or
tribunal elsewhere than in the Republic
,…
(Underlining
supplied for highlighting purposes.)
[10]
At p. 361 (SALR); p. 680
(All SA).
[11]
In para. 17-22.
[12]
See
Minister
of Social Development Western
Cape
supra, in para. 26.
[13]
Cf.
S
v Dlamini
supra,
at para. 76.
[14]
See clause 3.5 of the lease
read with clause 15.1 and 15.2 thereof.
[15]
See para. 26 of the principal
judgment.
[16]
See
UFS
v Afriforum
supra,
at paras. 13-15.
[17]
See the third of the four
pertinent considerations in respect of the making of an exceptional
order for execution before the appeal
process has been exhausted
identified by Corbett JA in
South
Cape Corporation
supra, (at p. 545 SALR; p. 57 All SA), namely, ‘
the
prospects of success on appeal, including more particularly the
question as to whether the appeal is frivolous or vexatious
or has
been noted not with the bona fide intention of seeking to reverse
the judgment but for some indirect purpose, e.g., to
gain time or
harass the other party
’.
I obviously do not purport to make or anticipate any finding in this
connection, but the respondent’s member
would be well advised
in this context to consider his position in respect to both civil
and criminal liability with regard to
the provisions of
s 64
of
the
Close Corporations Act 69 of 1984
.
[18]
See paras.4-6 of the
principal judgment.
[19]
Section 8(c)
of the
Insolvency Act provides
:
A debtor commits an act of
insolvency –
(c) if he
makes or attempts to make any disposition of any or his property
which has or would have the
effect of prejudicing his creditors or
of preferring one creditor above another
’
.
The word ‘
disposition
’
is widely defined in terms of
s 2
of the Act. It includes
any payment or compromise and any contract therefor.
[20]
A copy of the order, which
was made on 28 June 2018 – the day after service of the
applicant’s application in
case no. 11141/2018 had been served
at the respondent’s place of business – is to be found
at p. 341 of the papers
in case no. 11147/18.
[21]
Consider in particular the
effect in the established factual context of
s 66
of the
Close
Corporations Act 69 of 1984
read with s 340 of the Companies
Act 61 of 1973.
[22]
My understanding of the
position is that they would have to obtain leave to intervene in the
pending application instituted by
Bidvest; see the cases referred to
in the general note on s 347 in
Henochsberg
on the Companies Act 61 of 1973
.
[23]
The applicants’
allegations concerning the late and short payment of staff and trade
union contributions were based on information
obtained by the
applicants from a trade union representative. They were denied
by the respondent, but if did not provide
corroborating evidence in
support of its denial. These being interlocutory proceedings
(see paragraph [40]
below),
the evidence falls to be assessed with a view to the probabilities
as they appear from the papers, and
not
,
as the respondent’s counsel sought to argue, by applying the
rule in
Plascon-Evans
.
The probability of the veracity of the reports given to the
applicant concerning problems with the payment of the respondent’s
staff is supported by the incidence of the direct evidence
concerning the problems that the respondent has experienced on an
ongoing basis with the payment of its other creditors.
[24]
See para. 16 of the principal
judgment.
[25]
See
South
Cape Corporation
supra,
at pp. 549-552 (SALR), pp. 61-64 (All SA).
[26]
At p. 552 SALR;
p. 64 All SA.
[27]
In para.
32.
The learned judge actually used the word ‘
slow
’
instead of ‘
astute
’,
but it is clear from the context that by ‘
slow
’
he intended the meaning denoted by ‘
astute
’
or ‘
careful
’,
or a word to similar effect.