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[2010] ZAGPPHC 21
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Chater and Others v Meyer (A881/07) [2010] ZAGPPHC 21 (23 March 2010)
IN THE HIGH COURT OF SOUTH
AFRICA
(NORTH
GAUTENG
HIGH COURT, PRETORIA)
Date: 2010-03-23
Case Number:
A881/07
Case No Court A Quo 1590/2007
In the matter between:
GARY BRIAN
CHATER
First
Appellant
CHATER
TECHNOLOGIES CC
Second
Appellant
ERF 25 BROMHOF
CC
Third
Appellant
and
JOHANNES
FREDERICK MEYER
Respondent
JUDGMENT
SOUTHWOOD J
[1] In November
2006 the respondent instituted provisional sentence proceedings
against the appellants in which the respondent claimed
payment of R1
million and interest based on a written agreement (‘the
agreement’) signed by the parties. The appellants
gave notice
of their intention to oppose the respondent’s provisional
sentence action and filed an answering affidavit in
which they
objected to provisional sentence being granted on the agreement
which
,
they contended, was not a liquid document. They did not set out a
defence to the respondent’s claim for payment of R1 million.
On 13 December 2006 the court (Patel J) found that the agreement was
a liquid document, dismissed the appellants’ objection
and
granted provisional sentence. The appellants immediately (on 13
December 2006) delivered a notice of application for leave
to appeal
against the provisional sentence judgment. The only ground for the
application was that the court erred in finding that
the agreement is
a liquid document. Notwithstanding the delivery of the notice of
application for leave to appeal, on 15 December
2006 the respondent
caused a warrant of execution to be issued to give effect to the
provisional sentence judgment. On the same
day the respondent’s
attorney addressed a letter to the appellants’ attorney in
which the respondent’s attorney
pointed out that the
provisional sentence judgment is not appealable, that the notice of
application for leave to appeal is irregular
and that Rule 49(11)
does not apply. The respondent’s attorney also informed the
appellants’ attorney that he was
giving instructions to the
sheriff to execute the warrant of execution. On 19 December 2006,
consequent upon the warrant of execution,
the sheriff attached the
appellants’ right, title and interest in Chater Developments
(Pty) Ltd, including the first appellant’s
100 shares in the
company. On 18 January 2007 the appellants launched an application
in the court
a
quo
seeking
orders setting aside the warrant of execution and the attachment made
pursuant thereto. On 2 February 2007 the respondent
launched a
counter-application seeking an order that the appellants’
notice of application for leave to appeal is void and
unsustainable
in law, alternatively, a declarator that the provisional sentence
order made by Patel on 13 December 2006 is not
appealable and an
order that the respondent’s warrant of execution dated 15
December 2006 and the attachment made pursuant
thereto are valid and
enforceable. On 11 May 2007 the court
a
quo
(Visser
AJ) heard the application and counter-application and dismissed the
appellants’ application with costs and granted
an order
declaring that the provisional sentence judgment of 13 December 2006
is not appealable. The court
a
quo
also
ordered the appellants to pay the costs of the counter-application.
The appellants did not enter into the principal case within
two
months of the grant of provisional sentence and, in accordance with
Rule 8(10) and 8(11) the provisional sentence judgment
ipso
facto
became
a final judgment. With the leave of the court
a
quo
the
appellants and the respondent appeal against all the orders made in
the application and counter-application.
[2] The appellants
seek condonation for their failure to comply with Rule 49(7) (i.e.
filing with the registrar copies of the record
at the same time as
the application for a date for the hearing of the appeal). The
appellants applied for a date for the hearing
of the appeal on 8
December 2007 but delivered the copies of the record on 12 November
2008, almost one year late. The respondent
opposes the application
for condonation on the grounds that the appellants have not furnished
a reasonable and acceptable explanation
for their failure timeously
to comply with Rule 49(7) and that there is no reasonable prospect of
success in the appeal. While
acknowledging that the appellants’
explanation is unsatisfactory the appellants’ counsel contend
that condonation should
be granted because the appellants’
prospects of success on the merits are very strong. Accordingly, it
will be convenient
to consider the merits of the appeal before
deciding the application for condonation.
[3] The following issues arise for
decision in the appeal:
(1) Whether the provisional sentence
judgment granted by Patel J on 13 December 2006 is appealable: i.e.
whether that judgment
was a ‘judgment or order’ for the
purposes of section 20(1) of the Supreme Court Act 59 of 1959 (‘the
Act’).
This is the primary issue. If the judgment was
appealable then the provisions of Rule 49(11) were applicable and the
application
should have been granted and the counter-application
dismissed;
(2) Even if the
provisional sentence judgment is not appealable –
(i) whether the delivery of the notice
of application for leave to appeal in terms of Rule 49(11) suspended
the operation and execution
of the provisional sentence judgment
pending the decision on the application;
(ii) whether the respondent was
obliged to set aside the application for leave to appeal before
executing upon the judgment;
(iii) whether the
court which must hear the application for leave to appeal is the only
court which may decide whether the provisional
sentence judgment is
appealable or not.
These questions
will be consi
dered
in turn.
Was
the provisional sentence judgment appealable?
[4] Patel J granted
provisional sentence against the appellants after deciding the only
issue raised by them
:
whether the agreement sued on was a liquid document. This was not a
final judgment. The appellants’ counsel point out
that the
provisional sentence judgment only became a final order in accordance
with Rule 8(10) and 8(11) after the appellants failed
to enter into
the main case. Nevertheless, they argue that the provisional
sentence judgment was final because the court found
that the
agreement was a liquid document and it would therefore serve no
purpose (‘be pointless’) to enter into the
main case on
that issue. In support of this argument they refer to
Avtjoglou
v First National Bank of Southern Africa Ltd
2004
(2) SA 453
(SCA)
paras
5 and 6
;
Smit
v Scania South Africa (Pty) Ltd
2004
(3) SA 628
(SCA)
para
7;
Scott-King
(Pty) Ltd v Cohen
1999
(1) SA 806
(W)
at
825C-E
;
Maketha
v Limbada
1998
(4) SA 143
(W)
at
145B-146C;
Osmans
Spice Works CC v Corporate International (Pty) Ltd
2005
(6) SA 494
(WLD)
paras
6 and 7 and
Jones
v Krok
1996
(2) SA 71
(T)
at
73D-E. With reference to
Jones
v Krok
[1994] ZASCA 177
;
1995
(1) SA 677
(A)
at
684A-B; 687I and 688E-F they submit that it would be artificial to
regard the summons based upon a non-liquid document as not
capable of
supporting the principal case but deny the defendant the right to
appeal against an order finding the document to be
a liquid document.
[5] As pointed out
in the passage from
Scott-King
(Pty) Ltd v Cohen
which
is quoted with approval in
Avtjoglou
v First National Bank of Southern Africa Ltd supra
,
to determine appealability in provisional sentence proceedings a
distinction must be drawn between decisions granting provisional
sentence; decisions refusing provisional sentence on a ground which
shows the provisional sentence summons to have been invalid;
and
decisions refusing provisional sentence on a ground which does not
undermine the validity of the provisional sentence summons
but leaves
it to stand as a valid summons in the principal case. In
Smit
v Scania South Africa (Pty) Ltd supra
(para
6) the court pointed out that in
Avtjoglou
the
court had decided that, generally, the grant of provisional sentence
is not appealable and that to determine whether a provisional
sentence judgment is appealable the requirements for appealability
laid down in
Zweni
v Minister of Law and Order
1993
(1) SA 523
(A)
at
532I-J must be applied. In
Smit
v Scania South Africa (Pty) Ltd supra
(para
7) the court also pointed out that in an exceptional case the
application of these requirements to a provisional sentence
judgment
will show that that provisional sentence judgment is appealable.
Accordingly, these requirements must be applied to the
provisional
sentence judgment granted by Patel J to determine whether or not that
judgment is appealable.
[6] The
appellants’ counsels’ principal argument is that the
principles governing appealability laid down in
Zweni’s
case
emphasise the effect of the judgment in question: i.e. it must be
final in effect and not susceptible of alteration by the
court of
first instance and it must be definitive of the rights of parties:
and that this applies to the finding of the court
of first instance.
That court found that the agreement was a liquid document and this
finding is not susceptible of alteration
by the court of first
instance and is definitive of the rights of the parties. This
argument flies in the face of Rule 8(10) and
8(11) (which expressly
provide that the grant of provisional sentence will become final only
if the defendant fails to enter into
the principal case) the judgment
in
Avtjoglou
(which states expressly in paragraph 6 that a provisional sentence
judgment does not have any of the attributes necessary for it
to be
appealable and that even the question of whether the document sued
upon is liquid is susceptible of alteration by the Court
hearing the
principal case) and the nature of provisional sentence described in
cases such as
Oliff
v Minnie
1952
(4) SA 369
(A)
at
374G-375C;
Avtjoglou’s
case
in para 5 and
Ndamase
v Functions 4 All
2004
(5) SA 602
(SCA)
paras
9-11 and the authorities there cited.
[7] The reliance of the appellants’
counsel on the other cases referred to is misplaced:
(1) They rely
heavily on
Maketha
v Limbada
1998
(4) SA 143
(W)
which
they contend is closely analogous to the present case. In that case
the full court held that the provisional sentence judgment
granted by
the court of first instance was appealable where that court had
decided that the defendant had signed the cheque in
question. The
only defence raised by the defendant was that the signature on his
cheque had been forged and the court of first
instance had found, on
the affidavits, that the probabilities were overwhelmingly against
that defence and that the plaintiff had
discharged the onus of
proving that the defendant had signed the cheque. This was a
straightforward case and the application of
the
Zweni
principles should have
resulted in a finding that the provisional sentence judgment was not
appealable. In my view the decision
on the issue of appealability
was clearly wrong. Rule 8(7) provides that the Court may hear oral
evidence as to the authenticity
of the defendant’s signature to
the document upon which the claim for provisional sentence is
founded. If the court of first
instance had done so I would have
agreed that the issue had been finally decided and that the judgment
was appealable. By deciding
the issue on the affidavits the judgment
remained provisional and the defendant could have entered into the
main case and shown
by means of
viva
voce
evidence that his
signature had been forged. I therefore do not agree with the
statement at 146B that the court of first instance
‘disposed of
the issue of authenticity in a manner which renders it pointless to
go into the principal case’. In my
view the opposite is true.
I therefore do not consider the judgment in
Maketha
v Limbada
to be binding
or even persuasive on the issue.
(2) The
appellants’
counsel also contend that
Osmans
Spiceworks CC v Corporate International (Pty) Ltd
2005
(6) SA 494
(W)
is
analogous to the present case. The decision sought to be appealed
against in that case
was
the dismissal of an application for an order that the defendant was
precluded from entering into the principal case after provisional
sentence had been granted. The full court found that it was but did
not explain how it reached that conclusion by applying the
Zweni
principles.
Even if it is accepted that the decision on appealability is correct
it is not relevant to the question of appealability
in the present
case: i.e. whether a provisional sentence judgment is appealable.
(3
) The
appellant’s counsel also refer to
Jones
v Krok
1996
(2) SA 71
(T)
in
support of their contention that the provisional sentence granted was
final in its effect. They seem to suggest that the provisional
sentence judgment in that case is analogous to the judgment in the
present case. This is the only reported judgment in which a
court
has properly found that the provisional sentence granted had the
three attributes referred to in
Zweni’s
case
and was therefore appealable. But the circumstances of the case were
clearly exceptional as the judgment granting provisional
sentence was
obviously final in effect. The plaintiff instituted provisional
sentence proceedings in South Africa based on a judgment
of the
Californian Superior Court which awarded the plaintiff the amount of
$13 670 987 as compensatory damages and $12 000 000
as ‘punitive
or exemplary damages’. The defendants in that case appealed
against the judgment and when the matter
was first heard in the
Transvaal Provincial Division (and also in the Appellate Division)
the appeal was still pending before the
Californian Court of Appeal.
The defendant objected to the provisional sentence proceedings
because the judgment of the Californian
Superior Court was not final.
The court of first instance accepted this argument and dismissed the
provisional sentence action
on that and other grounds. On appeal the
Appellate Division found that this judgment was, on the application
of the
Zweni
principles,
appealable (683H-689A) and upheld the appeal and replaced the order
of the court of first instance with an order staying
the plaintiff’s
action for provisional sentence pending the final determination of
the pending appeal to the Californian
Court of Appeal and the
exhaustion of any further right of appeal by either party to the
litigation in the Californian courts (697E-G).
After the Californian
Court of Appeal had dismissed the appeal and the defendant had
exhausted all further rights of appeal the
provisional sentence
proceedings resumed in the Transvaal Provincial Division. The
defendant then raised only three defences,
all legal:
(i) the enforcement of the judgment is
precluded by the provisions of the Protection of Business Act 99 of
1978;
(ii) the enforcement of the judgment
would be contrary to the principles of natural justice and public
policy; and
(iii) the award of
punitive damages would not be enforced in South Africa (
Jones
v Krok
1996
(1) SA 504
(T)
).
During argument in
the Transvaal Provincial Division the defendant’s counsel
conceded that Rule 8(8) would not assist the
defendant if the court
found against the defendant on the legal defences raised. The court
found against the defendant on the
first two defences and granted
provisional sentence for the compensatory damages. It found for the
defendant on the third issue
and refused provisional sentence for the
punitive or exemplary damages. In granting leave to appeal against
the judgment granting
provisional sentence (
Jones
v Krok
1996
(2) SA 71
(T)
)
the court referred to this concession which demonstrated that the
provisional sentence judgment was final in effect and therefore
appealable (73E-74H). Clearly this was correct. There were no
factual defences and the defences raised were questions of law
which
had been decided against the defendant.
Jones
v Krok
therefore
does not assist the appellants. Ultimately in the Transvaal
Provincial Division the issues were whether the foreign judgment
would be enforced in South Africa, not whether the foreign judgment
was a liquid document for the purpose of provisional sentence.
(4)
The
appellants’ counsel rely on
Jones
v Krok
[1994] ZASCA 177
;
1995
(1) SA 677
(A)
in
support of a contention that it would be artificial to regard the
summons based upon a non-liquid document as not capable of
supporting
the principal case but deny the defendant the right to appeal against
an order finding the document to be a liquid document.
This
contention simply ignores the established categories of decisions in
provisional sentence proceedings which are appealable
and the logic
is therefore questionable. The appeal court was dealing with a
decision dismissing a claim for provisional sentence
on the ground
that the document sued on was not a liquid document: in that case it
was a judgment of a foreign court which was
still subject to appeal.
On the question of appealability the court concluded at 688F-I –
‘… It
seems to me that where a plaintiff seeks provisional sentence on a
document (annexed to his summons –
see Uniform Rule 8(3)) which
lacks liquidity, then the summons is “bad or defective”
in the sense referred to in
Oliff’s
case
and where provisional sentence is refused on this ground, the
provisional sentence summons will not stand as summons in the
principal case and the proceedings are at an end. In my opinion, it
makes no difference whether such lack of liquidity appears
ex
facie
the
document sued on or whether it is demonstrated by evidence in the
affidavits. (Compare
Sirioupoulos
v Tzerefos
1979
(3) SA 1197
(O)
at
1200H.)
I revert to the
facts of the case under consideration. Roux J refused provisional
sentence primarily on the ground that the judgment
of the US Court
was not final. At this stage I do not enter into the merits of that
decision. If a foreign judgment lacks the
finality required in order
for it to be enforced by our Courts, then, in my view, it is not a
liquid document; and, where provisional
sentence is refused on this
ground of lack of a liquidity, then, in accordance with what I have
stated above, the summons must
be regarded as bad and the proceedings
at an end. If the provisional proceedings are at an end, then the
judgment or order dismissing
the action must be regarded as having
the finality necessary to qualify as a judgment or order, as opposed
to a ruling. The other
requirements,
viz
that
it be definitive of the rights of the parties and have the effect of
disposing of at least a substantial portion of the relief
claimed in
the proceedings, are clearly satisfied.’
This is clearly
different from the situation in the present case (i.e. the grant of
provisional sentence after finding that the
document sued on is
liquid) and is the second category of decisions referred to in
Scott-King
(Pty) Ltd v Cohen supra
at
825D-E which is clearly appealable (826A-D). The decision in
Jones
v Krok
[1994] ZASCA 177
;
1995
(1) SA 677
(A)
therefore
does not assist the appellants.
[8] The application
of the
Zweni
requirements
shows that the provisional sentence judgment granted by Patel J on 13
December 2006 was not a ‘judgment or order’
and the court
a
quo
correctly
found that the judgment was not appealable.
Effect
of a notice of application for leave to appeal where the judgment or
order concerned is not appealable
[9
] The
next two issues involve a consideration of the standing of a notice
of application for leave to appeal where the judgment
or order
concerned is not appealable. In the present case the respondent
ignored the notice of application for leave to appeal
and proceeded
to execute on the provisional sentence judgment without first setting
aside the notice. The appellants’ counsel
contend that the
respondent was not entitled to do this.
[10
] Rule
49(11) provides:
‘Where
an appeal has been noted or an application for leave to appeal
against or to rescind, correct, review or vary an order
of court has
been made, the operation and execution of the order in question shall
be suspended, pending the decision of such appeal
or application,
unless the court which gave such order, on the application of a
party, otherwise directs.’
[11
] This
rule is consistent with the common law rule of procedure that,
generally, the execution of a judgment is automatically suspended
upon the noting of an appeal with the result, that pending the
appeal, the judgment cannot be carried out and no effect can be
given
thereto except with the leave of the Court which granted the
judgment. The purpose of the rule is to prevent irreparable
harm
being done to the intending appellant, either by levy under writ of
execution or by execution of the judgment in any other
manner –
see
South
Cape Corporation (Pty) Ltd v Engineering Management Services (Pty)
Ltd
1977
(3) SA 534
(AD)
at
544H-545C. However, it is clear that an order in terms of Rule
49(11) putting into operation the order appealed against is a
purely
interlocutory order (i.e. it does not dispose of any issue or any
portion of the issue in the main suit: nor does it irreparably
anticipate or preclude any of the relief which might be given at the
hearing: it leaves the Appeal Court free to make whatever
decision
it deems fit in the main action) and is not appealable – see
South
Cape Corporation (Pty) Ltd v Engineering Management Services (Pty)
Ltd supra
at
551G-552H;
South
African Druggists Ltd v Beecham Group plc
1987
(4) SA 876
(T)
at
878D-880G. In the latter case the full court held that the notice of
appeal filed was a nullity and set it aside as an irregular
step in
terms of Rule 30. In my view this is the standing of any notice of
appeal filed in respect of any judgment or order that
is not
appealable. See e.g.
Van
Leggelo v Transvaal Cellocrete (Pty) Ltd and Another
1953
(2) SA 287
(T)
at
288H-289D. Such notice does not have the effect of suspending the
operation of the order appealed against and may be ignored
–
see
Lourenco
and Others v Ferela (Pty) Ltd and Others No 2
1998
(3) SA 302
(T)
at
309E-310D and 311D-E;
Van
Leggelo v Transvaal Cellocrete (Pty) Ltd and Another supra
at
289C-D.
[12
] The
filing of the notice of application for leave to appeal therefore was
a nullity which did not suspend the operation of the
provisional
sentence judgment and the respondent was free to disregard it.
Obviously if a dispute arose as to the effect of the
filing of the
notice this could be decided by the court at any time: either by way
of an application in terms of Rule 30 to set
aside the notice, as was
done in the
South
African Druggists
case
(880H-881H), or by way of a declaratory order in terms of section
19(1)(a)(iii) of the Act, as was done in this case –
see
Ex
parte Nell
1963
(1) SA 754
(A)
.
The appellants’ counsel contend that the notice of application
for leave to appeal cannot simply be ignored and must be
set aside
before the respondent proceeds to execute on the provisional sentence
judgment. They submit that the situation is analogous
to the
situation where the defendant delivers a notice of intention to
defend late where the courts have held that the plaintiff
cannot
ignore the notice but must first apply to set it aside before
applying for judgment by default – see
Theron
v Coetzee
1970
(4) SA 37
(T)
and
Oostelike
Transvaalse Koöperasie Beperk v Aurora Boerdery en Andere
1979
(1) SA 521
(T).
In
my view the late filing of a notice of intention to defend is not
analogous to filing a notice of application for leave to appeal
against a judgment or order which is not appealable. The late filing
of the notice of intention to defend is not a nullity. It
is an
irregular step but still serves its purpose and can be condoned on
good cause shown. A notice of application for leave to
appeal
against a judgment or order which is not appealable is a nullity and
does not serve any purpose.
Is
the court hearing the application for leave to appeal the only court
which may decide the question of appealability
[13
] With
regard to this issue the appellants’ counsel have not referred
to any authority in support of the contention that only
the court
hearing the application for leave to appeal can decide whether the
provisional sentence order is appealable or not and
that until the
court hears the application for leave to appeal the notice of
application for leave to appeal stands as a valid
and regular
document, it cannot be set aside as an irregular proceeding and
suspend the operation of the provisional sentence and
writ of
execution. As already demonstrated these contentions are contrary to
authority. In my view they are also contrary to
common sense. Where
the issue of appealability arises in a context different from the
application for leave to appeal the court
is obviously free to decide
it to regulate its own process and to ensure that justice is done
between the parties.
[14
] The
appellants’ appeal therefore cannot succeed and condonation
will be refused.
[15
] As
far as the respondent’s cross-appeal is concerned, this relates
only to the order granted. In my view the authorities
referred to in
this judgment show that the notice of application for leave to appeal
was a nullity and did not have the effect
of suspending the operation
of the provisional sentence judgment. It follows that the
respondent’s warrant of execution
and the attachment made
pursuant thereto were valid and enforceable. The court
a
quo
therefore
erred in not granting declarators to that effect.
Order
[16
] I The
appellants’ application for condonation is dismissed and the
appellants’ appeal is struck off the roll;
II The respondent’s
cross-appeal is upheld and paragraph 2 of the order of the court
a
quo
is
replaced with the following order:
‘
1. It is
declared that the applicants’ notice of appeal dated 13
December 2006 is void
ab
initio
and
unsustainable in law;
2. It is declared that the first
respondent’s writ of execution dated 15 December 2006 and the
attachment made in pursuance
thereof are valid and enforceable.’
III The appellants are ordered to pay
the costs of the appeal and the cross-appeal.
_________________________
B.R. SOUTHWOOD
JUDGE OF THE HIGH COURT
I agree
_________________________
A.P. LEDWABA
JUDGE OF THE HIGH COURT
I
agree
_________________________
A.A. LOUW
JUDGE OF THE HIGH COURT
CASE NO:
A881/07
HEARD
ON: 10 February 2010
FOR
THE APPELLANTS: ADV. A. SUBEL SC
ADV.
L. FRIEDMAN
INSTRUCTED
BY: Gavin Hartog Attorneys
FOR
THE DEFENDANT: ADV. D.E. VAN LOGGERENBERG SC
INSTRUCTED
BY: Beyers & Day Inc.
DATE
OF JUDGMENT: 23 March 2010