• Law Reports
  • Ash v Mannering and Another (34408/2011) [2013] ZAGPJHC …

Ash v Mannering and Another (34408/2011) [2013] ZAGPJHC 11 (14 February 2013)

80 Reportability
Company Law
View PDF SAFLII Source
Share WhatsApp LinkedIn X Email

Brief Summary

Execution — Leave to execute pending appeal — Application for leave to execute an interim interdict pending appeal against a judgment — Applicant sought to enforce an order granting him access to business records and recognition of his membership interest in a close corporation — Respondent contended that the order was appealable and prejudicial — Court held that the order was appealable but did not find the appeal to be frivolous or vexatious — Weighing the potential harm to both parties, the court granted leave to execute the order, emphasizing the urgency and irreparable harm faced by the applicant.

Comprehensive Summary

Summary of Judgment


1. Introduction


The proceedings were an interlocutory application brought in terms of Uniform Rule 49(11) for leave to execute an order of the High Court pending the determination of an application for leave to appeal.


The applicant was Chanan Moshe Ash. The principal opposing party was Lawrence Henry Mannering (referred to in the judgment as the first respondent), and the second respondent was Eastern Suburbs Medicine Supplies CC, the close corporation whose membership interests and internal management lay at the centre of the dispute.


The procedural history was that, on 5 December 2012, Moshidi J granted urgent interim interdictory relief (Part A relief) regulating control and access to the close corporation’s affairs and recognising (pending Part B) the applicant’s asserted 95% member’s interest. The first respondent delivered a notice of application for leave to appeal on 13 December 2012, which remained pending at the time of this judgment. The present application sought permission to put the interim order into operation notwithstanding the pending appeal process, thereby avoiding the automatic suspension typically associated with appeal steps.


The general subject-matter concerned contested rights flowing from an alleged agreement in terms of which the applicant claimed to have purchased 95% of the member’s interest in the close corporation. While the underlying Part B relief concerned a declaration of validity of that sale agreement, this judgment dealt only with whether the applicant should be allowed to execute the interim interdict pending the appeal process.


2. Material Facts


It was common cause for purposes of this application that an urgent interim order had been granted on 5 December 2012, pending final determination of Part B, and that written reasons were furnished on 11 December 2012. It was also common cause that the first respondent had lodged an application for leave to appeal against that interim order and that it had not yet been finalised.


The interim order interdicted and restrained the first respondent from interfering with the applicant’s exercise of the applicant’s alleged member’s interest in the close corporation, directed the first respondent to recognise the applicant’s alleged 95% membership interest, and directed that the applicant be given full access to the corporation’s books and records. Costs were reserved for Part B.


A central factual premise relied upon by the court in considering execution was the applicant’s allegation (accepted for purposes of the interim arrangement already granted) that he was being persistently excluded from the business and affairs of the close corporation, and that such exclusion exposed him to ongoing prejudice. The court treated the ongoing effects of exclusion (and the purpose of the urgent interim relief) as material to whether execution should be allowed.


The first respondent’s opposition in this application included the contention that the applicant and his attorneys allegedly did not appreciate the effect of the order, and the assertion that the first respondent was in any event not interfering with the applicant’s purported membership interest. The judgment did not resolve the underlying membership dispute definitively; rather, it addressed prejudice and practicality in the context of interim execution.


3. Legal Issues


The central legal questions were whether the applicant had made out a proper case for leave to execute the interim order under Rule 49(11) while an application for leave to appeal was pending, and what conditions (if any) should be attached to execution in order to address potential prejudice.


A further question raised by the parties was whether the interim order was appealable at all, with the applicant contending it was not appealable because it was interim in nature and the respondent contending it was appealable because it was final in effect and not susceptible to alteration in Part B. The court treated the appealability debate as a matter it should not finally decide in the Rule 49(11) application, because of the risk of inconsistent determinations by different courts seized with different interlocutory steps.


The dispute therefore primarily concerned the exercise of a judicial discretion under Rule 49(11), involving the application of legal principles to the practical effect of the facts (including the assessment of potential harm and the balance of convenience), rather than the final determination of the underlying contractual and membership disputes reserved for Part B.


4. Court’s Reasoning


The court approached the matter by first addressing whether it should decide the appealability of the interim order in the context of a Rule 49(11) execution application. It noted that deciding appealability at this stage could produce an undesirable situation where the court hearing the Rule 49(11) application reaches one conclusion on appealability, while the court hearing the application for leave to appeal reaches a different conclusion on the same question. Referring to authority on the limited enquiry appropriate in Rule 49(11) proceedings, the court held it would not be proper at this stage to determine the issue of appealability, and proceeded on the premise that the order was appealable for purposes of this application.


On prospects of success and the character of the appeal, the court applied the principle that in Rule 49(11) proceedings the court is generally not called upon to traverse the entire case or fully evaluate prospects of success, and that only where an appeal appears to have minimal prospects, or is hopeless, may that support an inference of mala fides or delay. On the material before it, the court was not able to conclude that the appeal was frivolous or vexatious, nor that it had been noted mala fide.


Turning to the core Rule 49(11) discretion, the court reaffirmed that it has a wide discretion to grant or refuse execution pending appeal and must act in a manner that is just and equitable in the circumstances. The court identified the usual considerations, namely the potentiality of irreparable harm to the appellant if execution is granted, the harm to the respondent if execution is refused, the prospects of success (in the limited sense relevant to Rule 49(11)), and the balance of hardship or convenience.


Applying those principles to the case, the court reasoned that the urgent interim interdict had been granted because of the ongoing exclusion of the applicant from the affairs of the close corporation and the prejudice that flowed from that exclusion. It accepted that requiring the applicant to wait for the outcome of the leave to appeal process (and any further appeal steps) would exacerbate the same prejudice that prompted the urgent order in the first place. The court considered that refusing execution would undermine the purpose of the interim interdict obtained on urgency and would result in substantial prejudice to the applicant.


As to prejudice to the first respondent if execution were granted, the court did not find persuasive grounds in the answering affidavit explaining why execution should be refused. It acknowledged, however, the concern raised that the applicant could potentially act in a manner prejudicial to the first respondent, for example by disposing of the 95% member’s interest. The court addressed this by concluding that potential prejudice could be reduced by imposing appropriate conditions on execution, and it recorded that the applicant’s counsel did not object to such a limitation.


In exercising its discretion, the court concluded that the balance of convenience weighed heavily in favour of the applicant, that refusal would negate the utility of the urgent interim relief, and that no irreparable prejudice to the first respondent (beyond the identified concern capable of being managed by conditions) had been established.


5. Outcome and Relief


The court granted leave to execute the order pending the outcome of the appeal procedure.


As a condition aimed at limiting potential prejudice to the first respondent, the court interdicted the applicant from selling or disposing of the 95% member’s interest pending the appeal procedure.


The costs of the Rule 49(11) application were ordered to be costs in the appeal.


Cases Cited


Knox D’Arcy Ltd v Jamieson 1996(4) SA 348 (AD)


Metlika Trading Limited and Others v Commissioner SARS 2005(3) SA 1 (SCA)


International Trade Administration Commission v Scaw South Africa (Pty) Ltd 2012(4) SA 618 (CC)


National Treasury and Others v Opposition to Urban Tolling Alliance and Others 2012(6) SA 223 (CC)


Zweni v Minister of Law and Order 1993(1) SA 523(A)


Sorec Properties Hillbrow (Pty) Ltd and Another v Van Rooyen 1981(3) SA 650 (W)


Byron v Anderson & Co 1955(3) SA 590 (D)


Bam v Bhadha 1947(1) SA 399 (N)


Wood NO v Edwards and Another 1966(3) SA 443 (R)


South Cape Corporation (Pty) Ltd v Engineering Management Services (Pty) Ltd 1977(3) SA 534 (A)


Airy v Cross Border Road Transport Agency 2001(1) SA 737 (T)


Legislation Cited


Supreme Court Act 59 of 1959, section 20


Rules of Court Cited


Uniform Rules of Court, Rule 49(11)


Uniform Rules of Court, Rule 30A


Held


The court held that it was not appropriate in Rule 49(11) proceedings to finally determine whether the underlying interim order was appealable, because that could result in conflicting determinations between the court hearing execution and the court hearing leave to appeal. The court therefore proceeded on the basis that the order was appealable without deciding the point.


The court further held that the applicant had established a proper case for execution pending appeal because refusal would substantially prejudice the applicant and would undermine the purpose of the urgent interim interdict previously granted, while any potential prejudice to the first respondent could be adequately limited through conditions.


The court accordingly granted leave to execute the interim order, coupled with a restriction preventing the applicant from selling or disposing of the disputed 95% member’s interest pending completion of the appeal procedure, and ordered that the costs of the application stand over as costs in the appeal.


LEGAL PRINCIPLES


The judgment applied the principle that, in an application under Uniform Rule 49(11), the court has a wide discretion to grant or refuse execution pending appeal, and must exercise that discretion judicially to achieve what is just and equitable in the circumstances.


In exercising the Rule 49(11) discretion, relevant considerations include the potentiality of irreparable harm or prejudice to the party seeking to appeal if execution is permitted, the harm to the party in whose favour the order was granted if execution is refused, the prospects of success on appeal in the limited sense relevant to this interlocutory enquiry (including whether the appeal is frivolous, vexatious, or brought for delay), and the balance of convenience or hardship where prejudice may arise on both sides.


The judgment also applied the principle that Rule 49(11) proceedings are not ordinarily the forum for an exhaustive enquiry into the merits of the appeal; only where the appeal appears hopeless may that materially influence the inference to be drawn about the purpose of the appeal.


Finally, the court applied the principle that potential prejudice flowing from execution may be mitigated by crafting appropriate conditions attached to the grant of leave to execute, thereby balancing the competing risks pending the outcome of appeal proceedings.

About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: South Gauteng High Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: South Gauteng High Court, Johannesburg
>>
2013
>>
[2013] ZAGPJHC 11
|

|

Ash v Mannering and Another (34408/2011) [2013] ZAGPJHC 11 (14 February 2013)

REPUBLIC OF SOUTH
AFRICA
IN
THE SOUTH GAUTENG HIGH COURT
(JOHANNESBURG)
CASE
NUMBER: 34408/2011
In
the matter between
ASH,
CHANAN MOSHE
APPLICANT
and
MANNERING,
LAWRENCE HENRY
FIRST
APPLICANT
EASTERN
SUBURBS MEDICINE SUPPLIES CC
SECOND
APPLICANT
JUDGMENT
Windell
AJ:
INTRODUCTION
[1]
This is an application in terms of rule 49(11) of the Uniform Rules
of Court for leave to execute an order of this court (the
order)
pending an application for leave to appeal.  The first
respondent has filed a notice
in terms of
rule 30 A objecting to the applicant’s use of a short form of
notice of motion. This was abandoned by the first
respondent and the
parties agreed that the matter was ready to be argued as it is.
[2] The judgment that
forms the subject matter of this application was delivered on the 5
December 2012 by Moshidi J. The application
was brought by way of
urgency and the relief claimed was for an interim interdict. Having
heard oral arguments the following order
was made by Moshidi J:
1. Pending the final
determination of the relief set out in Part B of the application, the
first respondent be:
(i). Interdicted and
restrained from directly or indirectly interfering with the applicant
in the exercise of the applicant’s
member’s interest in
the second respondent;
(ii). Directed to
recognize the applicant’s 95% membership interest in the second
respondent;
(iii). Directed to
grant the applicant full access to all books, records and other
documents of and relating to the second respondent
and its business
and affairs;
2. Directing that the
costs be reserved for determination with the relief in Part B of the
application.
3. Should reasons for
this decision be requested, such reasons will be furnished within 14
days of such request being made.
Written reasons for the
order were given by Moshidi J on the 11 December 2012.
[3] It is necessary to
briefly refer to the relief prayed for in Part B of the application.
In Part B the applicant seeks an order
declaring the agreement of the
sale of a 95% member’s interest in Eastern Suburbs Medicine
Supplies CC (second respondent)
to be valid and of full force. The
parties to the disputed agreement are the applicant (as the
purchaser) and first respondent,
who is the sole member of second
respondent, as seller.
[4] First respondent
filed a notice of application for leave to appeal on the 13 December
2012. The application is still pending.
[5]
The grounds in support of the application for leave to appeal can be
summarized as follows:
(1)
The order is final and definitive in effect
and accordingly is a judgment or order subject to appeal as
contemplated in Section
20 of the Supreme Court Act 59 of 1959.
(2)
The court erred in not finding that there
is nothing in the relief claimed by the applicant in Part A of his
notice of motion that
may be reviewed or altered by the Court which
ultimately hears Part B and, that if one has regard to the clear
wording of these
prayers, they are couched on the premise that the
applicant is in fact and in law a member of the Second Respondent.
(3)
The court erred in not referring the
application to oral evidence, despite the number of disputes of facts
between the parties which
are evident from the papers.
(4)
The court erred in finding no prejudice to
the first respondent in the granting of the interim interdict.
(5)
The court erred in finding that the balance
of convenience and respective prejudice which would be suffered by
the applicant was
greater than the balance of convenience and
respective prejudice which would be suffered by the first respondent.
(6)
The court erred in finding that the
applicant had no alternative remedies available to him.
(7)
The court erred in not striking out new
matter raised by applicant in his replying affidavit.
(8)
The court erred in finding that the
applicant made out an appropriate case for granting the interim
interdict.
[6]
One of the main disputes between the parties is whether the order
made by Moshidi J is appealable.
The
applicant submits that the order is not appealable as it is an
interim interdict and therefore not final in effect or in form,

insofar as the substantive issues between the parties are concerned,
as these will be addressed again by the court when hearing
the
application for final relief. In support of this counsel relied on
the following authorities:
Knox
D’Arcy Ltd v Jamieson 1996(4) SA 348 (AD) at 359 F-H and 360
A-C;
and
Metlika
Trading Limited and Others v Commissioner SARS 2005(3) SA 1 (SCA) at
par 19-24.
[7] The respondent
contends that the order is appealable in that it is final and not
capable of amendment by the court in part B
of the application. The
order has immediate effect and may be extremely prejudicial to the
first respondent. In support of this
the following authorities were
quoted:
International Trade
Administration Commission v Scaw South Africa (Pty) Ltd 2012(4) SA
618 (CC) at 638 C-D;
National Treasury and
Others v Opposition to Urban Tolling Alliance and Others 2012(6) SA
223 (CC) at paragraphs 24-25;
Zweni v Minister of
Law and Order 1993(1) SA 523(A) at 532-533;
THE APPEALABLILITY OF
THE ORDER
[8] The question arises
whether it would be proper for this court at this stage of the
proceedings to decide whether the order is
appealable. This can lead
to the unsustainable situation where one court hearing the
application in terms of rule 49(11), might
come to one finding on the
appealability and another court, hearing the application for leave to
appeal, coming to a different
finding on the same issue.
[9] In
Sorec
Properties Hillbrow (PTY) LTD and Another v Van Rooyen 1981(3) SA 650
(W)
the argument was raised that the respondent had no reasonable
success on appeal. The court found with reference to
Byron
v Anderson & Co 1955(3) SA 590 (D), Bam v Bhadha 1947(1) SA 399
(N) and
Wood
NO v Edwards and Another 1966(3) SA 443 (R) at 446
that
[zRPz]
in proceedings in terms of Rule of Court 49 (11), the court is
not called upon to enquire into the whole case or to attempt to
evaluate
the prospects of success on appeal. Only if the Court is
satisfied that the appeal has minimal prospects of success or is
hopeless,
it will take that into account and may draw the inference
from it that the appeal was noted
mala fide
, or for the
purpose of delay.
[10] In my view, applying
the above principles, it would not be proper for this court at this
stage, to determine the issue as to
the appealibility. I propose to
deal with this application on the précis that the order is
appealable.
[11] As for the prospects
of success on appeal, I am in unable to find that the appeal is
frivolous or vexatious, or that it has
been noted
mala fides
.
THE RULE 49(11)
APPLICATION
[12] It is trite that the
court in adjudicating an application under Rule 49(11) has a wide
general discretion to grant or refuse
leave to execute. Such
discretion must be exercised judiciously taking into consideration
what is just and equitable in the specific
circumstances of each case
having regard to
inter alia
the following factors:
a)
the potentiality of irreparable harm or
prejudice being sustained by (i) the appellant on appeal (respondent
in the application)
if leave to execute were to be granted, and (ii)
by the respondent on appeal (applicant in the application) if leave
to execute
were to be refused;
b)
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, eg to gain
time or to harass the other party;
c)
where there is the potentiality of
irreparable harm or prejudice to both appellant and respondent, the
balance of hardship or convenience,
as the case may be.
[13]
In
South Cape Corporation (Pty) Ltd v Engineering Management
Services (Pty) Ltd 1977(3) SA 534 (A)
at 545B - 546C  Corbett
JA dealt with the relevant principles as follows:
“
I
have a wide general discretion to grant or refuse the application
and, if I grant it, to determine the conditions upon which
the
vehicles may be used pending the conclusion of any appeal against my
judgment. I must do what is just and equitable in all
the
circumstances. In this regard the potentiality of harm or prejudice
and the balance of convenience in regard to such harm or
prejudice
may, and usually will, carry considerable weight”
[14] In
Airy v Cross
Border Road Transport Agency 2001(1) SA 737 (T)
it was reiterated
that the appropriateness of granting a rule 49(11) application will
depend on the circumstances of each case.
In this regard Tuchten AJ
stated as follows:
“
The
Judge who presides in a Court which considers a Rule 49(11)
application must try to do real and substantial justice, for

which purpose he may take into account all relevant circumstances
surrounding the case. Ideally therefore, he should be fully
acquainted with the proceedings which led to the order giving rise to
the Rule 49(11) application. He must form a view on the prospects
of
success on appeal. He must consider the prejudice to the
parties. The Judge who made the order under attack will more often

than not already have done a substantial part of the work required
for the proper adjudication of a Rule 49(11) application. Another

Judge would have to reiterate much of the work of his erstwhile
Colleague.”
[15] The requirements for
an interim interdict and some of the factors to be taking into
consideration in determining a rule 49(11)
application are similar.
For an applicant to be successful in obtaining an interim interdict
the following must be proven: a clear
right, an injury actually
committed or reasonably apprehended, the absence of similar
protection by any other ordinary remedy and
the balance of
convenience.
THE MERITS
[16]
Applicant in the main application
alleged that he has 95% of the member’s interest in second
respondent; that he is suffering
irreparable harm being excluded by
first respondent from the business and affairs of the second
respondent.
[17]   At the
hearing of the application Moshidi J ruled the matter to be urgent.
The learned judge found that the persistent
exclusion of the
applicant from exercising his right as a 95% member in the second
respondent exposes the applicant to continued
suffering and prejudice
and that it was not equitable and just to expect the applicant to
await the final determination of the
matter before taking effective
control of the corporation.
[18] The applicant now
contends that he will suffer the same prejudice as was found by
Moshidi J which will be exasperated should
he be required to await
the outcome of the application for leave to appeal and possible
further appeal proceedings.
[19]. It is submitted by
first respondent that the applicant and his attorneys do not know
themselves what effect the order of 5
December 2012 has and that he
is in any event not interfering with the applicant’s purported
member’s interest.
[20] I
am unable to find anything in the first respondent’s answering
affidavit indicating why the court should not grant
this application.
The contention that the first respondent might suffer prejudice if
leave to execute is granted, as the applicant
would then in effect
have the right to for example sell or dispose of his 95% member’s
interest in the second respondent,
in my view, can be minimized in
ordering appropriate conditions as part of the order I prepare to
make.
Counsel for the
applicant raised no objections thereto.
[21]
The onus of establishing a proper case for the grant of leave to
execute rests on the applicant, irrespective of whether the
judgment
in question is one sounding in money only or other forms of relief.
I am satisfied that a refusal of this application
will negate the whole purpose of obtaining the interim interdict on
an urgent
basis in the first place. The prejudice
the applicant will
further suffer if leave to execute is not granted is substantial. The
balance of convenience also heavily weighs
in favour of the
applicant. No irreparable prejudice to the first respondent, other
than the possibility of prejudice that with
which I have dealt above,
has been suggested or comes to mind.
[22] In the result the
following order is made:
Leave
to execute is granted.
The
applicant is interdicted from selling or disposing of the 95%
member’s interest pending the outcome of the appeal procedure.
Costs
of the application are made costs in the appeal.
L. Windell
Acting Judge of the
South Gauteng High Court
Counsel for applicant
: Adv. BM Gilbert
Counsel for respondents :
Adv MW Verster
Date of hearing  :
31 January 2013
Date
of judgment : 14 February 201

Back to Law Reports