Summary of Judgment

1. Introduction

This judgment concerns an application for leave to appeal, together with an associated application for condonation for the late filing of that application. The proceedings arose after the court had previously delivered a judgment in a trial action between the same parties.

The applicant was Nedbank Limited (the plaintiff in the trial action). The respondent was Binder: Joseph Frederick (the defendant in the trial action), who had been sued in his capacity as surety for a principal debtor alleged by Nedbank to be indebted to it.

In the trial judgment delivered on 7 April 2016, the court found that the principal debtor did not owe Nedbank any money, with the result that the surety likewise owed nothing. The claim was accordingly dismissed with costs. The present judgment does not revisit that outcome; instead, it addresses whether leave to appeal should be granted in relation to a distinct point decided obiter in the trial judgment.

The general subject-matter of the dispute in the leave-to-appeal proceedings was whether the court’s obiter finding—namely that a particular certificate of balance clause (clause 6 in the suretyship) was invalid and unenforceable—was appealable, and if so, whether leave and condonation should be granted.

2. Material Facts

The material facts were primarily procedural and were largely undisputed, as the application for leave to appeal was unopposed.

In the underlying trial action, Nedbank sued the respondent for capital, interest, and costs based on his alleged liability as surety for a principal debtor. The court’s dispositive factual finding in that trial was that the principal debtor was not indebted to Nedbank, and therefore the respondent as surety was also not liable.

Although the trial claim was dismissed on that basis, the court also made an additional finding obiter during the trial judgment: it held that the suretyship’s certificate of balance clause (clause 6) was invalid. The present application for leave to appeal was directed solely at that obiter finding, and not at the dismissal of the claim or the reasoning leading to the dismissal.

A further relevant fact was that the application for leave to appeal was brought late, requiring an application for condonation. The condonation application was supported by an affidavit explaining that the applicant had initially been advised in one manner and later advised differently. The court accepted that there was no prejudice to the respondent arising from the lateness.

3. Legal Issues

The central legal questions were whether the impugned decision was appealable and, if so, whether leave to appeal should be granted.

The first issue concerned the appealability of an obiter finding that did not dispose of any part of the relief claimed in the trial action and would not, on its own, “lead to a just and prompt resolution of the real issues between the parties,” as contemplated in section 17(1)(c) of the Superior Courts Act 10 of 2013. This was principally a question of law, focused on the threshold requirements for appealability in the circumstances of the case.

The second issue was whether, assuming appealability, there were reasonable prospects of success on appeal in relation to the finding that clause 6 was invalid and unenforceable. This was a mixed inquiry involving the application of legal standards governing leave to appeal, and an assessment of the nature of the interpretive question (the court noting that interpretation of written instruments may be difficult).

A third issue was whether the applicant should be granted condonation for the late filing of the leave application. This required a discretionary evaluation of the explanation offered and any prejudice.

4. Court’s Reasoning

On the question of appealability, the court recognised that the application was unusual because it targeted an obiter decision that did not determine any portion of the relief claimed in the main proceeding. The court noted that an appeal against the decision would not advance the resolution of the “real issues” between the parties, which had effectively been resolved by the dispositive finding that no debt was owed by the principal debtor.

The court nevertheless engaged with the applicant’s submission, advanced with reference to City of Tshwane Metropolitan Municipality v Afriforum and Another [2016] ZACC 19 (19 May 2016) and its discussion of Zweni v Minister of Law and Order 1993 (1) SA 523 (A). The court accepted that Zweni is authority for the proposition that an appealable judgment or order must ordinarily have disposed of at least a substantial portion of the relief claimed. However, the court also referred to Afriforum as indicating that the common-law approach to appealability is subordinate to the “supreme law” and that the constitutional interests of justice provide the controlling requirement for appealability. While the court observed that this was stated in a context involving interim orders and earlier legislation, it considered that the point applied with even greater force in relation to final orders and the current statutory framework.

Although the court acknowledged that there was no live issue between the parties concerning the interpretation it had given to the certificate clause, it accepted the applicant’s submission that refusing appealability would place the applicant in an “invidious position.” Specifically, the applicant would be left with a judgment declaring invalid a clause contained in its standard-form suretyships, a matter said to have far-reaching consequences, without an opportunity to seek correction by an appellate court.

On that basis, the court concluded that the interests of justice required that its decision concerning the validity of clause 6 should be treated as appealable, notwithstanding its obiter character and despite the fact that it did not affect the relief ultimately granted in the trial action. The court further accepted that there were reasonable prospects of success, observing that issues of interpretation of written instruments can be particularly complex.

Turning to condonation, the court addressed the lateness of the application for leave to appeal. It considered the explanation provided, namely that the applicant had initially received one form of advice and later received different advice, and it emphasised the absence of prejudice to the respondent. In those circumstances, the court exercised its discretion to grant condonation.

Finally, the court considered the appropriate appellate forum and determined that the full court of the division was the proper forum for the appeal.

5. Outcome and Relief

The court granted condonation for the late filing of the application for leave to appeal.

The court granted the applicant leave to appeal to the full court of the division, limited to the decision in paragraph [19] of the trial judgment of 7 April 2016, namely the finding that clause 6 of the suretyship (exhibit D) is invalid and unenforceable.

The court made no order as to costs in relation to the leave-to-appeal proceedings.

Cases Cited

City of Tshwane Metropolitan Municipality v Afriforum and Another [2016] ZACC 19 (19 May 2016)

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

Legislation Cited

Superior Courts Act 10 of 2013 (section 17(1)(c))

Rules of Court Cited

No rules of court were cited in the judgment.

Held

The court held that, although the impugned finding regarding the invalidity of the suretyship’s certificate of balance clause was obiter and did not dispose of any portion of the relief claimed in the trial, the interests of justice required that it be treated as appealable. The court further held that there were reasonable prospects of success on appeal and that the late filing should be condoned given the explanation advanced and the absence of prejudice. Leave to appeal was granted to the full court against the specific finding that clause 6 was invalid and unenforceable, with no costs order.

LEGAL PRINCIPLES

The judgment applied the principle that appealability is not determined solely by whether the decision appealed against disposed of a substantial portion of the relief claimed. While Zweni v Minister of Law and Order 1993 (1) SA 523 (A) remains authority for the traditional common-law approach that appealability generally requires a decision to have a substantive dispositive effect, the judgment treated that approach as qualified by the constitutional standard emphasised in City of Tshwane Metropolitan Municipality v Afriforum and Another [2016] ZACC 19 (19 May 2016), namely that the interests of justice operate as the controlling consideration.

The judgment further applied the principle that, in assessing leave to appeal, the court considers whether there are reasonable prospects of success, and that interpretive issues concerning written instruments may warrant appellate consideration because they can be difficult and contestable.

In relation to procedural compliance, the judgment applied the principle that condonation may be granted for late filing where an adequate explanation is provided, prejudice is absent, and it is appropriate in the circumstances for the court to exercise its discretion to permit the matter to proceed.