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[2022] ZAECMKHC 115
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KGA Life Limited v Multisure Corporation (Pty) Ltd and Others (CA 157/2022) [2022] ZAECMKHC 115 (14 December 2022)
FLYNOTES:
EXECUTION PENDING APPEAL
Civil
procedure – Appeal – Execution pending appeal –
Exceptional circumstances – Financial predicament
of party
that secured order – Irreparable harm requirements –
Superior Courts Act 10 of 2013
,
ss 18(3).
IN THE HIGH COURT OF
SOUTH AFRICA
(EASTERN CAPE
DIVISION, MAKHANDA)
Case No: CA 157/2022
Reportable
In the matter between:
KGA LIFE
LIMITED
APPELLANT
and
MULTISURE CORPORATION
(PTY)
LTD
FIRST RESPONDENT
Q LINK HOLDINGS (PTY)
LTD
SECOND RESPONDENT
AFRICAN UNITY LIFE
LIMITED
THIRD RESPONDENT
JUDGMENT
Krüger AJ:
Background
[1]
This matter concerns an urgent appeal in
terms of
section 18(4)(ii)
of the
Superior Courts Act 10 of 2013
against a court order granting an execution order pending an appeal.
[2]
The first respondent in the current
proceedings, Multisure Corporation (Pty) Ltd, was successful in
obtaining declaratory and mandatory
relief against the appellant in
these proceedings, KGA Life Limited on 15 March 2022.
[3]
For the sake of convenience, the parties
are referred to as ‘Multisure’ and ‘KGA’. The
second and third
respondents are before court since the relief
ordered on 15 March 2022 affects them. They have not actively
participated in the
litigation to date.
[4]
On 17 March 2022, KGA was granted leave to
appeal to the Supreme Court of Appeal against the whole of the
judgment in favour of
Multisure. That appeal is to be heard in due
course.
[5]
The effect of the order granting leave to
appeal suspended the operation and execution of the court order of 15
March 2022 as provided
for in
section 18
of the
Superior Courts Act.
[6
]
Some three months later, in June 2022,
Multisure applied to the court in terms of
section 18(3)
of the
Superior Courts Act for
an execution order in respect of the court
order of 15 March 2022, pending the determination of the appeal by
the Supreme Court
of Appeal. On 30 August 2022, Govindjee J granted
the relief requested by Multisure.
[7]
KGA exercised its right of automatic appeal
in terms of
section 18(4)(ii)
of the
Superior Courts Act against
the
judgment granting the execution order. This judgment concerns the
automatic appeal.
The dispute and
litigation between the parties
[8]
Multisure and KGA are involved in the
insurance business and operate respectively as an ‘independent
intermediary’,
and a ‘licenced insurer’ and
‘long-term insurer as defined in the Long-term Insurance Act 52
of 1998 and the
regulatory framework created in terms thereof.
[9]
Multisure offers funeral cover policies to
individuals and families. Many of the persons who take up
Multisure’s funeral
cover are recipients of social security
grants in terms of the
Social Assistance Act 13 of 2004
.
[10]
Multisure and KGA entered into an
intermediary agreement, which became operational on 1 January 2015,
in terms whereof KGA underwrote
the funeral cover policies of
Multisure’s clients as part of a ‘group scheme’ as
was permitted by the insurance
regulatory framework at the time.
On 5 July 2021, Multisure cancelled its intermediary agreement with
KGA and entered into
a new intermediary agreement with African Unity
Life Limited, the third respondent.
[11]
Premium deductions from social grants are
managed through Q Link Holdings (Pty) Ltd, the second respondent.
Premiums from social
grants are paid directly to the underwriting
insurer, who in turn pays the intermediary the commission due to it.
Q Link
is authorised to change the deduction codes at the South
African Social Security Agency.
[12]
With its cancellation of its intermediary
agreement with KGA, and the conclusion of a new intermediary
agreement with African Unity
Life, Multisure intended for a transfer
of the underwriting of the funeral cover policies of its existing
clients from KGA to African
Unity Life. In the insurance industry
this is referred to as ‘transferring the book’. For the
new intermediary agreement
to be operational, Q Link would have to
change the deduction codes to allow payment of the premiums of
Multisure’s clients
to African Unity Life.
[13]
While KGA initially seemed amenable to
‘transfer the book’, it did not comply with Multisure’s
repeated requests
to notify Q Link of the cancellation of their
agreement and transfer to African Unity Life. KGA admitted that the
intermediary
agreement had been cancelled but it did not ‘transfer
the book’ as requested.
[14]
KGA contended that a change in the
definition of ‘group’ in the insurance regulatory
framework by a 2017 legislative
amendment which came into operation
in 2018, meant that the ‘group scheme’ as it existed
under the intermediary agreement
between itself and Multisure could
not be transferred as such. This, according to KGA left the
individual insurance relationships
between the policyholders who
signed up with Multisure and itself in place. Those policies, it
contended could only be cancelled
by the individual policyholders.
[15]
KGA ceased making payments of the
commission from its clients’ policies to Multisure in September
2021.
[16]
Multisure insisted that it validly
cancelled the intermediary agreement and that it could transfer the
policies of its clients to
a different underwriter as a group
.
[17]
It was this dispute that brought the
parties before Schoeman J in October 2021. Multisure obtained
judgment in its favour.
The court order of 15 March 2022
granted declaratory relief to the effect that the intermediary
agreement between Multisure and
KGA had been cancelled with effect
from 1 September 2021 and that the group scheme established in terms
of that agreement has been
terminated. The court further directed Q
Link to change the deduction codes to ensure payment of premiums to
African Unity Life.
It further issued an order directing
payment of premiums collected since 1 September 2021 to be paid over
to African Unity Life.
[18]
On 21 June 2022, Multisure launched an
application in terms of section 18(1) and (3) of the Act to obtain an
execution order pending
the appeal to the Supreme Court of Appeal.
[19]
Govindjee J granted the execution order as
requested on the basis that Multisure met the statutory requirements
set out by section
18(1) and (3).
[20]
The
court was alive to the more onerous requirements set by the Act for
the exceptional relief requested. The judge held the
financial
difficulties faced by Multisure because it has not received payments
from KGA placed it in ‘an extraordinary position’
thus
demonstrating exceptional circumstances. It had to close branch
offices, lost staff and cut working hours. The
court considered
the merits of the matter in much detail in concluding that KGA’s
prospects of success on appeal was poor.
This, it was held, supported
Multisure’s case for the exceptional relief it requested. The
court further held, with reference
to
Premier,
Gauteng v Democratic Alliance
[1]
that the same facts giving rise to exceptional circumstances may
indicate irreparable harm. Multisure, it was held, suffered
irreparable
financial harm. The court held that KGA, on the
other hand, will not suffer irreparable harm since the premiums it
would
pay over in terms of the 15 March 2022 order could be returned
to it should it succeed on appeal. Security for the restitution
of any payment made could be provided in terms of Uniform Rule
49(12). No order to this effect was made.
[21]
It is the appeal against this judgment that
concerns this court.
The arguments before
this court
[22]
At the core of KGA’s argument was the
contention that Multisure failed to meet the statutory requirements
as determined by
section 18(1) and (3) for the exceptional relief of
an execution order pending appeal. KGA contended that Govindjee J’s
finding
that the statutory requirements were met was incorrect.
[23]
Mr
Meiring
contended that Govindjee J conflated the prospects of success with
the exceptional circumstances requirement. As such, much
weight
was – incorrectly it was submitted – attached the
prospects of success in the absence of exceptional circumstances
placed before the court by Multisure. It was further contended
that the court accepted vague assertions of financial harm
without
evidence about the details of its assets, income and liabilities of
Multisure. It was argued that that section 18(3) refers
to future
irreparable harm, whereas Multisure focused exclusively on its past
financial distress. Additionally, counsel contended
that Multisure
failed to prove, on a balance of probabilities that KGA will not
suffer irreparable harm. Multisure provided no
evidence of the
absence of harm to KGA and simply contended that any financial loss
it may suffer due to the execution of the court
order if it were
successful on appeal, could be rectified by a return of the
premiums. The court, it was contended, erred
in considering the
harm to Multisure in comparison to that KGA would suffer. This
‘balancing exercise’, it was submitted,
informed in part,
the exercise of a discretion by the court to grant an execution order
pending appeal under the common law, but
does not form part of the
assessment in terms of section 18(1) and (3).
[24]
Further arguments in support of KGA’s
appeal were that the original court order was incapable of
implementation, that there
was material non-joinder of the
individuals whose policies KGA had underwritten and lastly, that KGA
has strong prospects of success.
As a result of the findings in
relation to section 18(1) and (3), these grounds are not considered
in detail.
[25]
Multisure resisted the urgent appeal and
maintained that the judgment lifting the suspension to allow
execution of the earlier order
was unassailable on both law and fact.
[26]
It was submitted for Multisure that it
suffered financially as a result of the non-payment of commission due
to it by KGA. Its
loss of income necessitated Multisure to sell
shares it owned and withdraw savings to keep afloat. Multisure
also contended
that it downsized as a result of the loss of income
and that struggled to retain staff since it could not afford to pay
increases.
It was submitted that Multisure suffered reputational harm
since KGA failed to pay claims out speedily or at all, and that it
had
to step in to make payments to its clients. Multisure, it was
submitted, stood to suffer significant harm in comparison to the
financial loss which KGA would suffer as a result of the execution of
the order.
The legal framework
[27]
Section 18
of the
Superior Courts Act
regulates
the legal position regarding the impact of a pending appeal
on the operation and execution of the court order subject to the
appeal.
The section, in the relevant parts, provides as
follows:
‘
18.
Suspension of decision pending appeal
(1)
Subjection to subsections (2) and (3), and
unless the court under exceptional circumstances orders otherwise,
the operation and
execution of a decision which is the subject of an
application for leave to appeal or of an appeal, is suspended pending
the decision
of the application or appeal.
(2)
…
(3)
A court may only order otherwise as
contemplated in subsection (1) or (2), if the party who applied to
the court to order otherwise,
in addition proves 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 so others.
(4)
If a court orders otherwise, as contemplated in subsection (1)-
(i)
the court must immediately record its reasons for doing so;
(ii)
the aggrieved party has an automatic right of appeal to the next
highest court;
(iii)
the court hearing such an appeal must deal with it as a matter of
extreme urgency; and
(iv) such order will be
automatically suspended, pending the outcome of such appeal.
(5) For the purposes of
subsections (1) and (2), a decision becomes the subject of an
application for leave to appeal or of an appeal,
as soon as an
application for leave to appeal or a notice of appeal is lodged with
the registrar in terms of the rules.’
[28]
The
requirements for this remedy which allows for the execution of the
order pending an appeal, has been pertinently considered
by the
Supreme Court of Appeal on four occasions. The judgments, in
chronological order of delivery, illuminating the requirements
set by
section 18(1)
and (3) are
University
of the Free State v Afriforum,
[2]
Ntlemeza
v Helen Suzman Foundation,
[3]
Premier
Gauteng v Democratic Alliance
[4]
and
Knoop
NO v Gupta (Execution).
[5]
[29]
In
the first judgment of the SCA to deal with the requirements of
section 18(1)
and (3),
University
of the Free State v Afriforum,
Fourie
AJA highlighted that the relief to allow the execution of a court
order pending an appeal, is ‘an extraordinary deviation
from
the norm’ to suspend the judgment and its attendant orders
pending an appeal.
[6]
In
the first instance, an applicant for this extraordinary relief must
demonstrate ‘exceptional circumstances’
[7]
which must be ‘truly exceptional’.
[8]
Fourie AJA referred with approval to Sutherland J’s
interpretation of the exceptional circumstances requirement in
Incubeta
Holdings (Pty) Ltd v Ellis
[9]
who held that
‘…
exceptionality
must be fact-specific. The circumstances which are or may be
exceptional must be derived from the actual predicaments
in which the
given litigants find themselves.’
[30]
The
court in
University
of the Free State
acknowledged that the exceptional nature of the relief in terms of
section 18(1)
and (3) is further underscored by the requirements that
the court granting the relief must immediately record its reasons for
granting
the relief, the creation of an automatic right of appeal
against the order granting the relief to be dealt with on an urgent
basis
and the automatic suspension of the order.
[10]
[31]
Fourie
AJA further pointed out that these statutory requirements for the
relief to permit the execution of an order which is subject
to appeal
are more stringent than the requirements under the common law which
granted the court a wide general discretion to grant
or refuse the
execution order.
[11]
In
demonstrating the higher threshold, Fourie AJA approved the dictum of
Sutherland J in
Incubeta
Holdings (Pty) Ltd v Ellis,
[12]
holding that subsection 3 requires the applicant to prove two
distinct facts; namely that it will suffer irreparable harm if an
order permitting the operation and execution of the court order
subject to the appeal were not permitted, and that the respondent
will not suffer irreparable harm if such an order is made.
[13]
This stands in contrast with the determination of the balance of
hardship or convenience under the common law which required the
court
to engage in a balancing exercise when considering the potentiality
of irreparable harm to both the applicant and the respondent.
[14]
[32]
Fourie
AJA further endorsed the approach of the High Court in
Minister
of Social Development v Justice Alliance
[15]
insofar as the role of the prospects of success on appeal in
exercising a discretion to grant the execution order. He
rejected
the contrary approach in
Incubeta
which
held that the prospects of success played no role in the
determination.
[16]
Binns-Ward
J, writing for the full court in
Justice
Alliance,
held that the prospects of success remain a relevant factor in
exercising a ‘wide discretion’ as to whether to grant
an
execution order or not once the statutory requirements had been
satisfied.
[17]
[33]
In
Ntlemeza
v Helen Suzman Foundation,
Navsa
JA prefaced his elaboration on
section 18
by noting that, with the
enactment of
section 18
, the ‘legislature has set the bar
fairly high’
[18]
for an
order allowing departure from the norm. Like Fourie AJA in
University
of the Free State,
Navsa
JA referred to
Incubeta
Holdings
and its exposition of the two-fold test, relating to the
demonstration of exceptional circumstances in the first instance, and
secondly, proof on a balance of probabilities, of irreparable harm to
the applicant should the earlier court order not be put into
operation and the absence of such harm to the respondent if it were
to be granted.
[19]
These
requirements act as ‘controlling measure[s],
[20]
’
to regulate deviations from the norm.
[34]
With
reference to
Incubeta’s
reliance on
MV
Ais Mamas: Seatrans Maritime v Owners, MV Ais Mamas
,
[21]
the SCA in
Ntlemeza
confirmed
that ‘exceptional circumstances’ must be determined with
reference to the facts of the particular case.
[22]
[35]
In
Premier,
Gauteng v Democratic Alliance
,
the SCA confirmed the requirements for relief under
section 18
as
outlined in
University
of the Free State
and
Ntlemeza.
[23]
Significantly, the court held that, while exceptional circumstances
and irreparable harm to the applicant were separate requirements,
the
facts could be relevant in relation to both requirements.
[24]
[36]
In
Knoop
NO v Gupta
,
Wallis JA confirmed the established approach of
University
of the Free State
and
Ntlemeza,
and the three requirements to be proven to justify deviation from the
norm.
[25]
Exceptional
circumstances, the court explained, must be ‘something out of
the ordinary and of an unusual nature’, determined
on the facts
of the particular case.
[26]
In
relation to the case before it, the court held that the mere fact
that the court order subject to the appeal held that a particular
person should be removed from an office he or she holds in terms of a
statutory provision, does not in and of itself constitute
exceptional
circumstances. There must be something more in the circumstances of
the case to warrant the immediate implementation
of the order.
[27]
[37]
The
need to establish exceptional circumstances is closely linked to the
applicant establishing that they will suffer irreparable
harm if the
order is not implemented.
[28]
The applicant must prove ‘a real and substantial risk of
immediate and irreparable harm’ should the court order
not be
executed pending the appeal.
[29]
[38]
Wallis
JA confirmed the approach taken in
University
of the Free State
which identified the proof of absence of irreparable harm to the
respondent as a distinct requirement which does not involve a
balancing exercise between the harm suffered by the applicant and the
respondent.
[30]
As such, the
SCA
explained,
a failure to prove absence of irreparable harm to the respondent
should the execution order be granted ‘is fatal’
to the
case of an applicant.
[31]
[39]
On the issue of the consideration of the
prospects of success, Wallis JA highlighted the challenge presented
as follows:
[49] In
Justice
Alliance
it was held that the court has a wide discretion to
grant or refuse an execution order once the statutory requirements
are satisfied,
and that prospects of success in the appeal have a
role to play in considering the exercise of that discretion. There is
a dictum
in
UFS v Afriforum
that supports this approach, but
in both that case and
Ntlemeza
the record in the main appeal
was not before this court and the appeals had perforce to be decided
without the full record or any
consideration of the merits of the
main appeals.
[50] We had the full
record in the main appeal before us and had read it in anticipation
of dealing with the main appeal, but the
argument on the urgent
appeal did not include any debate over prospects of success in the
main appeal.
Our finding that the three requirements for making an
execution order were not established means that we did not have to
consider
whether there is a discretion once they are present and, if
so, whether the prospects of success should affect its exercise.
There may be difficulties if the High Court takes the prospects of
success into account in granting an execution order, because
it is
not clear that the court hearing an urgent appeal under
s 18(4)
will
always be in a position to assess the weight of this factor. As I
have noted, in both
UFS v Afriforum
and
Ntlemeza
the
court disposed of the appeal by disregarding the prospects of success
on appeal. The urgency of the appeal almost inevitably
dictates that
in this court, and possibly in a full court, the appeal court will
not have the record before it and will be confined
to assessing the
prospects of success in the main appeal from the judgment alone. The
usual principle that an appeal court decides
the appeal on the record
before the High Court cannot apply in those circumstances. If the
language of
s 18(4)
confers a discretion, is that a full discretion
or a power, combined with a duty to exercise that power on proof of
the requirements
for its exercise? These issues may warrant a
reconsideration of the approach in
Justice Alliance
on an
appropriate occasion.’
(Emphasis added)
[40]
Wallis JA in
Knoop
NO
clarified that the three
requirements of
section 18(1)
and (3) are peremptory requirements for
granting an execution order. Whether the court has a discretion to
grant the relief and
what role the prospects of success should play
therein, were not decided.
[41]
While the prospects of success thus
received a nod of approval from Fourie AJA in
University
of the Free State
as a consideration in
the exercise of a discretion to determine whether an execution order
pending appeal should be granted, it
de
facto
played no role in that matter, in
Ntlemeza
or
in
Knoop NO.
[42]
From the SCA judgments the following is
evident:
(a)
The suspension of a court order pending an
appeal is the norm.
(b)
An execution order pending an appeal is
extraordinary relief for which an applicant have to make out a case
on the specific facts
in the matter
(c)
This requires the applicant, as a first
hurdle,
I.
to demonstrate that exceptional
circumstances exist which warrant departure from the norm, and
II.
to prove on a probabilities, that
i.
he or she will suffer irreparable harm if
the execution order is not granted and
ii.
the respondent will not suffer irreparable
harm should the execution order be granted.
(d)
Failure on the part of the applicant to
prove any one of these facts, is fatal to the application.
(e)
Facts may be relevant to both the
requirements of exceptional circumstances and irreparable harm.
(f)
The
position as to whether the court retains a discretion
[32]
to grant the relief and the role of the prospects of success in the
exercise of that discretion remains unclear. However,
it would
seem that the prospects of success on appeal do not take centre stage
in the determination of an application for an execution
order in
terms of
section 18(1)
and (3) since these were not considered in the
cases before the SCA.
Did
Multisure meet the requirements for the extraordinary relief it
sought?
[43]
The court
a
quo
held that Multisure established
exceptional circumstances with reference to its financial hardship
and KGA’s poor prospects
of success on appeal.
Multisure’s financial hardship was also considered in relation
to the requirement of irreparable
harm.
[44]
It is indeed so that facts relevant to the
determination of exceptional circumstances may be relevant to the
determination of irreparable
harm.
[45]
What this court has to determine, in the
first instance, is whether Multisure had indeed established that
exceptional circumstances
exist. These are circumstances which
are ‘out of the ordinary’ or ‘unusual’.
What must be determined
is whether the ‘actual predicament’
of Multisure warranted a deviation from the norm.
[46]
Other than the SCA in
University
of the Free State
and
Ntlemeza
,
the court
a quo
and this court had the benefit of having the appeal record before
it. However, I do not think that it means that the court
a
quo
had to, or this court has to engage
the merits of the appeal in exacting detail. The appeal on the merits
will be determined by
the SCA.
[47]
The fact that the SCA did not consider the
prospects of success pertinently in
University
of the Free State, Ntlemeza
or in
Knoop
NO
in determining whether exceptional
circumstances existed, points to a less significant role in
determination whether an execution
order pending appeal should be
granted.
[48]
In my view, the prospects of success of
Multisure’s opposition to the appeal, as assessed by the court
a quo
, do
not in and of itself constitute exceptional circumstances. Without
engaging in the merits of the appeal, I am satisfied
that KGA has
some prospects of success on appeal. It was, after all, granted
leave to appeal on the merits by Schoeman J
in respect of her
judgment.
[49]
The court
a
quo
held that the financial predicament
of Multisure as a result of the non-payment of commission by KGA
placed it in an ‘extraordinary
position’.
[50]
The sole shareholder and co-director of
Multisure deposed to an affidavit outlining a decline in the income
and profits of Multisure,
confirmed by its auditor on oath. In
the six months preceding the withholding of payments, Multisure
received income of R
4 922 560 and made a profit of R 1 054 766.
From 1 September 2021 to 28 February 2022, Multisure’s income
was R 1 873
893 and it suffered a loss of R703 177. Prior to
September 2021, Multisure received payments of commission in the
amount
of R 1 059 000 from KGA. It was not clear whether these
payments were made on a monthly basis or not. As at 21 June
2022, Multisure estimated that an amount of R 5 683 377.40 was due to
it in commission. But for the pending appeal, it contended,
it
would have received this payment after the premiums were paid to the
third respondent.
[51]
The court
a
quo
accepted the evidence of Multisure
that it sold shares and used its savings to keep its business afloat.
It further accepted that
the business was downsized as a result of
its financial hardship. KGA contested Multisure’s evidence
regarding its financial
hardship and submitted that the information
lacked detail which could easily have been provided. In particular,
it contended that
Multisure without providing detail, attributed its
financial decline solely to the KGA’s non-payment, while
ignoring the
impact of the Covid 19-pandemic which had a negative
impact on all the sectors of the economy.
[52]
While it is true that Multisure could have
bolstered its case by providing details of its other income, its
expenditure, the shares
it had sold, income raised from shares and
how that was used, its evidence on the hard figures confirmed by its
auditor demonstrates
a clear decline in income and in profit from the
time when KGA ceased making payments.
[53]
Does the financial decline demonstrated by
Multisure constitute exceptional circumstances? Multisure was
successful in obtaining
the relief it sought against KGA from the
court. However, KGA’s leave to appeal suspended the
execution of the order,
as does this automatic appeal which followed
after Multisure succeeded in the court
a
quo
. Multisure demonstrated that it
finds itself in a financial predicament which places its business at
risk. In my view that
constitutes exceptional circumstances.
[54]
In addition to demonstrating exceptional
circumstances, Multisure had to prove, on a balance of probabilities,
that it will suffer
irreparable harm if the execution order was not
granted. I accept that the facts relating to exceptional
circumstances are
relevant to the determination of irreparable harm
on the part of Multisure. I further accept that the evidence of a
trajectory
of financial decline since KGA stopped its payments to
Multisure, gives a clear indication of continuing future harm.
Whether
this harm is irreparable or not, stands to be determined.
[55]
Multisure contended that the financial harm
to KGA should the execution order be granted, can be undone by a
repayment of the premiums
to it. It is not evident why the same
could not apply in relation to the financial harm it has suffered and
will suffer until
the finalisation of the appeal. Multisure has not
placed evidence about its overall financial position before the
court.
It is unclear whether it owns assets, what other income
it has, what its liabilities are and whether it can raise loans to
remain
financially afloat pending the appeal. The information
before the court is too sparse to make a determination. While
Multisure has certainly established that it will suffer harm, it has
not proven that harm to be irreparable on a balance of
probabilities.
[56]
Multisure’s contentions regarding the
absence of harm to KGA should the execution order be granted, were
set out as follows
in the founding affidavit:
‘
153.
Any prejudice to the First Respondent [KGA], should the Applicant
[Multisure] be entitled to execute against the order of the
Honourable Madam Justice Schoeman, pales into comparison to the
prejudice/irreparable harm to the Applicant should the Applicant
not
be permitted to execute thereon.
154. To the extent that
the First Respondent may be financially distressed, as intimated
hereinabove, and to the extent that the
quantum of the Applicant’s
claim in respect of the unpaid commission as against the First
Respondent continues to escalate
for as long as the First Respondent
continues with its conduct as aforesaid, it is likely that the
Applicant will not be recover
the full extent of the eventual debt
against the First Respondent.
155. ….
156. It is abundantly
clear that the irreparable harm to the Applicant if the order is not
executed upon is far in excess of any
harm which the First Respondent
would sustain, should the Order be given effect to.
157. It is submitted that
the only harm that the First Respondent may suffer, if the Order is
executed, is financial loss due to
the premiums it would have to pay
over to the Third Respondent, and the loss of future income which it
would no longer receive.
158. As such harm, I
submit, would not be irreparable harm in that any financial losses
which the First Respondent may suffer as
a result of paying over the
collected premiums to the Third Respondent (including of future
premiums not earned by the First Respondent),
could be rectified by a
return of the premiums to it in the event of the First Respondent
eventually being successful with its
appeal to the Supreme Court of
Appeal’.
[57]
Multisure
thus argued that KGA would not suffer harm. It contended that
the harm it would suffer if the execution order were
not to be
granted would far exceed that which KGA would suffer if it were to be
successful. This approach reflects the common
law position.
At common law, the court, in exercising its ‘wide discretion’
as to whether an execution order
should be granted pending appeal,
would consider, among other factors, ‘
the
balance of hardship or convenience’ where harm would be
suffered by both parties.
[33]
[58]
Section 18(3)
fundamentally altered the
common law. To succeed in its application for the exceptional
relief, Multisure must, in addition
to demonstrating exceptional
circumstances, prove two independent facts: the presence of
irreparable harm to it should the
order not be granted, and the
absence of irreparable harm to KGA should the order be granted.
[59]
The court
a
quo
accepted Multisure’s
assertion that KGA would not suffer irreparable harm if the execution
order were to be granted without
more. The court
a
quo
referred to security for
restitution in terms of
Rule 49(12)
, but made no order to that
effect. More pertinently, the court
a
quo
accepted Multisure’s
contention as evidence. However, a mere statement to the effect
that KGA would not suffer irreparable
harm, does not provide proof on
a balance of probabilities.
[60]
Multisure did not discharge the burden of
proof placed on its by
section 18(3)
of the
Superior Courts Act.
This
is fatal to its case.
[61]
In the light of the above, the appeal must
succeed. In my view, it is not necessary to consider the other
grounds of appeal
raised by KGA since the peremptory requirements for
the relief in terms of
section 18(1)
and (3) were not met.
[62]
Mr
Meiring
requested the court to order punitive damages against Multisure.
He submitted that Multisure’s application constituted
an abuse
of court process. Multisure delayed in bringing the application
and ought to have done so when leave to appeal was
granted. Mr
Nepgen
, in
turn, highlighted that the parties sought to resolve their dispute
amicably, thus causing the delay. Accordingly, he
submitted a
punitive order was not appropriate.
[63]
It is trite that an award of costs is in
the discretion of the court. I do not think that Multisure’s
conduct in the
litigation warrants a punitive costs order. It
legitimately brought an application for relief that it believed it
was entitled
to. It should not be punished for doing so.
[64]
I am, however, of the view that the costs
should follow suit, as is usual. Throughout the litigation and
before the court
a quo
,
KGA was represented by one counsel. There was nothing
exceptional or complex in this matter that required the employment
of
two counsel.
[65]
In the result, I make the following order:
(a)
The appeal is upheld with costs as to
include the costs of one counsel.
(b)
The order of the court a quo of 30 August
2022 is substituted with the following order:
I.
The application is dismissed with costs.
R KRüGER AJ
ACTING JUDGE OF THE
HIGH COURT
I agree:
S M MBENENGE JP
JUDGE PRESIDENT OF THE
HIGH COURT
I agree:
N GQAMANA
JUDGE OF THE HIGH
COURT
APPEARANCES:
For the
Appellant:
JJ Meiring and NT Dwayi
Instructed
by:
Greyvensteins Inc, Gqeberha C/O Huxtable Attorneys, Makhanda
For the First
Respondent:
J
Nepgen
Instructed by:
Vic Skelton Inc, Gqeberha C/O Cloete and Company, Makhanda
For the Second
Respondent:
No appearance
For the Third
Respondent:
No appearance
Date
heard:
7 November 2022
Date
judgment delivered:
14 December 2022
[1]
2021
(1) All SA 60 (SCA).
[2]
2018
(3) SA 428 (SCA).
[3]
2017
(5) SA 402 (SCA).
[4]
2021
(1) All SA 60 (SCA).
[5]
2021
(3) SA 135 (SCA).
[6]
University
of the Free State
para 9.
[7]
Para
10.
[8]
Para
12.
[9]
2014
(3) 189 (GJ) para 22.
[10]
Para
9, referring to the provisions of
section 18(4).
[11]
Para
11.
[12]
Incubeta
Holdings
para 24
[13]
University
of the Free State
para 11.
[14]
As
set out in
South
Cape Corporation (Pty) Ltd v Engineering Management Services (Pty)
Ltd
1977
(3) SA 534
(A) 545F.
[15]
2016
JDR 0606 (WCC).
[16]
University
of the Free State
paras 14-16.
[17]
Justice
Alliance
paras 26-29.
[18]
Ntlemeza
para
28.
[19]
Para
36.
[20]
Para
35.
[21]
2002
(6) SA 150
(C) 156H-157C.
[22]
Ntlemeza
para 37.
[23]
Premier,
Gauteng
para 13.
[24]
Para
25
[25]
Knoop
NO
45.
[26]
Para
46.
[27]
Ibid.
[28]
Para
47.
[29]
Ibid.
[30]
Para
48
[31]
Knoop
NO
para 48.
[32]
At
common law, the court had a discretion whether to grant an execution
order pending appeal:
South
Cape Corporation (Pty) Ltd v Engineering Management Services (Pty)
Ltd
1977
(3) SA 534 (A).
[33]
South
Cape Corporation (Pty) Ltd v Engineering Management Services (Pty)
Ltd
543F.