Summary of Judgment

1. Introduction

These proceedings concerned an application for leave to appeal brought in the High Court of South Africa, Gauteng Division, Pretoria. The applicant was Ian Julian Smith (plaintiff in the main action) and the respondent was The Legal Practitioners’ Fidelity Fund Board (defendant in the main action).

The application arose after the court had previously delivered judgment on 1 February 2023, dismissing all four of the applicant’s claims and ordering the applicant to pay the respondent’s costs of suit, on the bases that the respondent’s liability was excluded by provisions of the Attorneys Act 53 of 1979, and that the applicant had not established the statutory requirements for a claim against the Fidelity Fund, particularly the requirement of entrustment. The applicant then sought leave to appeal that decision in terms of section 17(1)(a)(i) and/or (ii) of the Superior Courts Act 10 of 2013. The leave application excluded the part of the earlier judgment dismissing the respondent’s special plea.

The general subject-matter of the underlying dispute (the main action) concerned alleged theft of monies said to have been entrusted to an attorney’s trust account, giving rise to claims against the Fidelity Fund. The immediate dispute in this judgment, however, was whether leave to appeal should be granted, and if so, to which court.

The leave to appeal application was determined on the papers uploaded on Caselines, without an oral hearing, with the parties directed to upload heads of argument.

2. Material Facts

The applicant instituted action against the respondent in respect of four claims arising from alleged theft of monies which the applicant contended had been entrusted and paid into the trust account of attorney David Dadic, practising as Dadic Attorneys. The applicant alleged that he suffered pecuniary loss arising from the theft of those monies in the transactions underlying the four claims.

It was common cause that during the relevant transactions the applicant dealt with an employee of Mr Dadic, namely Andruw Stephens. It was later established that “Mr Stephens” operated under a false name and that his real name was Andrew Steven Rapport.

In defending the action, the respondent raised a special plea of excussion and pleaded over on the merits, including the contention that the applicant failed to establish the requirements of section 26(a) of the Attorneys Act, and in particular entrustment.

The court recorded that the claims in the main action were decided on the evidence of the applicant only, because the respondent closed its case without presenting evidence and confined its case to cross-examination of the applicant’s witnesses. The applicant’s evidence comprised his own testimony and that of Charles Henry Parsons, whose evidence related to the fictitious nature of transactions in claims 1 and 3.

The application for leave to appeal targeted the earlier findings (made on 1 February 2023) that the applicant had not established entrustment under section 26(a), and that exclusions in section 47(1)(g) read with section 47(5)(b) of the Attorneys Act applied, and it challenged the court’s treatment of the Supreme Court of Appeal decision in The Attorneys’ Fidelity Fund v Prevance (Pty) Ltd.

3. Legal Issues

The central question for determination in this judgment was whether leave to appeal should be granted under section 17(1)(a) of the Superior Courts Act, namely whether the proposed appeal had reasonable prospects of success and/or whether there existed some other compelling reason for the appeal to be heard.

Although the applicant’s grounds of appeal related to substantive issues in the main action (including the interpretation and application of The Attorneys’ Fidelity Fund v Prevance (Pty) Ltd, the statutory requirement of entrustment under section 26(a) of the Attorneys Act, and the applicability of statutory exclusions under section 47), the court in this judgment addressed those matters only to the extent necessary to decide whether the statutory threshold for leave to appeal was met.

The dispute was therefore primarily one of law and application of the leave-to-appeal standard to the case, specifically whether the alleged conflicting interpretations of the ratio in Prevance constituted a compelling reason within the meaning of section 17(1)(a)(ii).

A further issue was forum-related: if leave were granted, whether it should be granted to the Supreme Court of Appeal or alternatively to a Full Court of the division.

4. Court’s Reasoning

The court identified the governing statutory framework for leave to appeal as section 17(1)(a)(i) and (ii) of the Superior Courts Act 10 of 2013, which permits leave to appeal only if the judge is of the opinion that the appeal would have a reasonable prospect of success, or that there is some other compelling reason why the appeal should be heard, including conflicting judgments on the matter under consideration.

While noting that the test for leave to appeal under section 17 is trite, the court did not restate it in detail. Instead, it applied section 17 by evaluating the applicant’s grounds of appeal together with the parties’ arguments in their written heads.

The court concluded that the applicant had made out a case for leave to appeal not on the basis of prospects of success under section 17(1)(a)(i), but on the basis of “some compelling reason” under section 17(1)(a)(ii). The court’s stated reason for finding a compelling basis was the existence of a conflicting interpretation of the ratio in the Supreme Court of Appeal decision in The Attorneys’ Fidelity Fund v Prevance (Pty) Ltd. On the court’s reasoning, the proper interpretation of the ratio in Prevance was itself a sufficiently compelling reason to warrant appellate consideration.

In relation to the appropriate appellate forum, the court reasoned that because Prevance is a decision of the Supreme Court of Appeal, it was appropriate that leave be granted directly to the Supreme Court of Appeal so that the correct interpretation and application of that authority could be determined by that court.

5. Outcome and Relief

The court granted the applicant leave to appeal the judgment handed down on 1 February 2023, and directed that the appeal lies directly to the Supreme Court of Appeal.

The court ordered that costs of the leave to appeal application would be costs in the appeal.

Cases Cited

The Attorneys’ Fidelity Fund v Prevance (Pty) Ltd (917/17) [2018] 135 (28 September 2018)

Legislation Cited

Superior Courts Act 10 of 2013, section 17(1)(a)(i) and section 17(1)(a)(ii)

Attorneys Act 53 of 1979, section 26(a)

Attorneys Act 53 of 1979, section 47(1)(g)

Attorneys Act 53 of 1979, section 47(5)(b)

Rules of Court Cited

No rules of court were cited in the judgment.

Held

The court held that the applicant satisfied the threshold for leave to appeal on the basis of a compelling reason contemplated in section 17(1)(a)(ii) of the Superior Courts Act, namely a conflicting interpretation of the ratio in The Attorneys’ Fidelity Fund v Prevance (Pty) Ltd. Leave to appeal was granted directly to the Supreme Court of Appeal, and the costs of the leave application were ordered to be costs in the appeal.

LEGAL PRINCIPLES

Section 17(1)(a) of the Superior Courts Act 10 of 2013 confines the grant of leave to appeal to cases where a court forms the opinion that there is either a reasonable prospect of success on appeal, or some other compelling reason why the appeal should be heard, expressly including circumstances where there are conflicting judgments (or, as treated in this matter, materially conflicting interpretations bearing on the decisive legal basis).

Where the asserted compelling reason concerns the correct interpretation of the ratio of a Supreme Court of Appeal decision, the appropriate course may be to grant leave to appeal directly to the Supreme Court of Appeal, as the court best placed to determine the proper interpretation and application of its own precedent.