Minister of Trade and Industry and Klein NO and Another (695/2008) [2009] ZASCA 77; [2009] 4 All SA 328 (SCA) (1 June 2009)

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[2009] ZASCA 77
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Minister of Trade and Industry and Klein NO and Another (695/2008) [2009] ZASCA 77; [2009] 4 All SA 328 (SCA) (1 June 2009)

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THE
SUPREME COURT OF APPEAL
REPUBLIC
OF SOUTH AFRICA
J
UDGMENT
Case
No: 695/2008
THE
MINISTER OF TRADE AND INDUSTRY
Appellant
and
N
KLEIN
N.O &
H M HAMMAN N.O
Respondents
Neutral
citation
:
Minister
of Trade and Industry and Klein NO
(695/08)
[2009] ZASCA 77
(1 June 2009)
Coram:
FARLAM,
CLOETE, PONNAN
JJA, LEACH and BOSIELO AJJA
Heard:
19
May 2009
Delivered:
1
June 2009
Updated:
Summary:
Appellant applying for condonation of late filing of record and heads
of argument, and seeking order reinstating lapsed appeal
– no
acceptable explanation for delays – prospects of success on the
merits remote – application dismissed.
____________________________________________________________________________________
ORDER
In
an application for leave to appeal from
the
High Court, Pretoria (Prinsloo J sitting as court of first instance).
The application for
condonation is refused with costs, including the costs
occasioned by the appeal
and the employment of two counsel
JUDGMENT
___________________________
__________________________________________
LEACH
AJA (FARLAM, CLOETE, PONNAN JJA and BOSIELO AJA concurring):
[1]
The
applicant, the Minister of Trade and Industry, who wished to appeal
to this Court against an order made against him in the Pretoria
High
Court, applied for an order condoning both his late filing of the
record and his failure timeously to prosecute the appeal.
He also
sought an order reinstating his appeal on the roll. In seeking this
relief, the applicant blamed difficulties experienced
by the State
Attorney in preparing the record which were exacerbated when the
attorney dealing with the matter resigned without
alerting the other
members of the professional staff that the appeal required urgent
attention.
[2]
Having
heard the parties, this court dismissed the application for
condonation with costs and stated that its reasons for doing
so would
follow. These are those reasons.
[3]
The
appeal arises from an application brought by the liquidators of a
company known as Corpcapital Limited (‘the company’) seeking
an
order compelling the applicant to direct the Registrar of Companies
to release to them a copy of a written report made to him
by two
inspectors who had been appointed under s 258(2) of the Companies Act
61 of 1973 to probe certain possible irregularities
in the conduct of
the company’s business and financial affairs. The inspectors were
appointed in August 2003. They completed
their report in May 2004 and
it came into the possession of the applicant in July that year.
[4]
The
report was fairly lengthy. It consisted of a summary of 126 pages, a
main report of 686 pages and annexures thereto of 288 pages.
There
was also a so-called ‘record of proceedings’ of 114 arch files.
However, by January 2005 the report had still not been
read by the
applicant, as he himself stated in his opposing affidavit filed in
response to the respondents’ application. This
led to the
respondents seeking the relief they obtained in the court below.
[5]
The
applicant conceded that the company was entitled to receive a copy of
the report in due course, but adopted the attitude that
the
application was premature as he was bound to consider the report
(which he had not yet done) before releasing it and that he
would
only do so once he had been satisfied that the complaint had been
fully investigated – even if it required him to refer
the matter
back to the inspectors for further investigation.
[6]
The
court
a quo
decided that the applicant had misconstrued his obligations under the
Act. It concluded that the applicant did not have a discretion
to
withhold the report, that he had unreasonably delayed furnishing the
report to the company, and that the application was therefore
not
premature. In the result it ordered the applicant forthwith to direct
the Registrar of Companies to forward a copy of the report
to the
respondents.
[7]
The
judgment of the court
a
quo
was delivered
on 24 August 2006. On 1 July 2007 the applicant was granted leave to
appeal. The applicant served his notice of appeal
in this Court on 2
July 2007, whereupon the Registrar informed him that the appeal
record was to be lodged by no later than 2 October
2007. It was not,
and during November 2007 the Registrar wrote to the parties advising
that the appeal had lapsed. Some 11 months
later, in October 2008,
the applicant lodged the record (13 months after the appeal had
lapsed). He did so without simultaneously
filing an application for
condonation. That application was only forthcoming after a delay of a
further two months.
[8]
The
applicant’s explanation for these delays is flimsy, to say the
least. It is alleged that the member of staff of the State
Attorney
originally handling the matter, Mr Mabetshu, had difficulty in
locating the court file which the transcribers needed to
prepare a
record, that Mabetshu resigned in November 2007 (by which time the
appeal had already lapsed) and that despite a record
still not having
been prepared by then, Mabetshu failed to bring this state of affairs
to the attention of anyone in the office
of the State Attorney when
he departed. In December 2007, Mr Le Roux took over the matters
Mabetshu had been handling. In an affidavit
filed in this court he
alleged that he had been very busy at the time, but had
telephonically contacted the transcribers in regard
to the record in
mid-December 2007. However that appears to be all Le Roux did for
the next five months before May 2008 when he
received a draft index
from the transcribers. He still did nothing for another three months
until the respondents’ attorneys
sent him their copy of the papers
in order to facilitate the preparation of a record. These papers were
made available to the transcribers
and eventually led to a record
being forthcoming on 10 October 2008.
[9]
This
is not an adequate explanation for the many inexcusable delays that
took place. There is in fact no real explanation for why
the appeal
lapsed. I accept that the court file appears to have been mislaid,
but there is no explanation why the State Attorney’s
own file was
not sufficient for the purpose of preparing a record. Nor is there
any explanation of why, while Mabetshu was still
handling the matter,
the offer of the respondents’ attorney of 17 August 2007 to assist
him in the reconstruction of the record
was ignored – despite being
repeated on 28 August 2007 and again on 14 September 2007.
[10
] Not
only is the Mabetshu’s failure to take up the offer of assistance
from the respondent’s attorney unexplained, but Le Roux
does not
explain why he did not do so when he took over the file. Moreover,
not only does Le Roux fail to provide any acceptable
explanation for
why he effectively did nothing in the matter from December 2007 to
May 2008, he also does not explain why he did
not immediately accept
a similar offer made to him by the respondents’ attorney on 5 June
2008 and why it took him almost a month
to reply by merely thanking
him for his ‘feedback’. And Le Roux fails to explain why after
yet a further month’s delay, and
only after further prompting from
the respondents’ attorney, he ultimately accepted the respondents’
assistance. This was almost
a year after such assistance had
initially been offered. The delay in accepting it is as inexplicable
as it is unexplained.
[11
] In
the light of this, appellant’s counsel correctly conceded that the
appellant had failed to provide a reasonable explanation
for the
various delays. Not only was the concession correctly made, but the
fact that the applicant gave no acceptable explanation
for the delays
is probably sufficient reason alone to refuse condonation – compare
Laerskool Generaal
Hendrik Schoeman v Bastian Financial Services (Pty) Ltd
[2009]
ZACC 12
delivered on 7 May 2009.
[12]
However, it was
argued on behalf of the applicant that the prospects of success on
appeal were good and more than made up for the
deficiencies in the
respondent’s explanation. I accept that strong prospects of success
may at times overcome an inadequate explanation
for a delay in cases
of this nature, but this does not appear to be the case in this
matter – particularly as the applicant faces
a substantial hurdle
in the form of s 21A(1) of the Supreme Court Act 59 of 1959 which
provides that this court may dismiss an
appeal on the sole ground
that ‘the judgment or order sought will have no practical effect or
result’.
[13] By
the time the application was heard in the court below
,
the appellant had directed the Registrar of Companies to send a copy
of the inspector’s report to the company. Accordingly,
the question
whether he had been obliged to do so earlier became moot and no
practical effect will be achieved by ventilating the
issues argued in
the court below once more.
[14]
Counsel
for the applicant however submitted that this court’s
interpretation of s 261(2) of the Companies Act and an authoritative

decision on the applicant’s obligations thereunder are important,
particularly as the applicant may again be involved in the

appointment of inspectors and the receipt of reports, and there is
therefore a public interest to be served by this court hearing
the
matter which is not just of academic interest. This argument was not
grounded on any factual allegations appearing in the papers,
and the
applicant has not shown that the appointment of investigators is a
common occurrence despite the specific allegation in
the respondents’
answering affidavit in the condonation application (to which there
was no reply) that ‘the [applicant] has
set out no facts to
indicate that the {applicant] is persistently or presently required
to deal with matters in terms of sections
258 to 261 of the Companies
Act and that consequently there is a practical significance to the
interoretation issues relating to
section 261. . .’ .
Significantly, the papers include a newspaper report containing a
statement that the investigation in the
present case was only the
sixth such probe undertaken by the Department of Trade and Industry.
Bearing in mind that the Companies
Act has been on the statute books
for the last 36 years, if that is anything to go by, reports by
inspectors are unlikely to be
a frequent event in the future.
[15]
But
in any event, the Companies Act of 1973 under which the inspectors
were appointed has been repealed and replaced by the
Companies Act 71
of 2008
. The latter Act is not yet in effect and can only be brought
into operation after 9 April 2010 (see GN 421 of 9 April 2009). But

the provisions of the current Act relating to the appointment of
investigators and their reports have not been taken over into
the new
Act, and the section which the appellant wishes this court to
interpret is thus not likely to be operative for more than
a
relatively restricted time in the future. Absent any information
regarding any other investigations or the likelihood of further

reports being called for or received in the near future, the
applicant has failed to show that the necessity to interpret the
current section will necessarily arise again. This unlikelihood
militates against this court exercising its discretion to hear an

academic dispute of this nature – compare
Netherburn
Engineering CC t/a Netherburn Ceramics v Mundau NO and Others
[2009]
ZACC 10
delivered on 1 April 2009.
[16]
In
addition, even if this court was to hear the appeal, there exists the
very real prospect of its not deciding the legal issue
the appellant
wishes to have decided. Even if the appellant was not obliged to make
the report immediately available to the respondents,
as he contends,
he concedes that he was obliged to do so within a reasonable time.
And while the report may have been quite lengthy
as I have pointed
out, it was not so voluminous that it could not have been reasonably
assimilated and acted upon within a few
weeks. Consequently, if the
appeal was to be ventilated there is a reasonable possibility (and I
put it no higher than that) that
the court would decline to interpret
s 261
of the
Companies Act and
dismiss the appeal on the basis that
even if the applicant’s interpretation of the section were correct,
there had been an unreasonable
delay on the part of the applicant
which entitled the respondents to the relief they were granted.
[17] Two
further issues need to be mentioned briefly. First, the
interpretation of the
Companies Act became
a deadletter as far as the
respondents were concerned when the report was made available. Even
if the applicant had an interest
in obtaining a more authoritative
judgment on the issue there was no need for it to do so at the
respondents’ cost. The applicant
did not tender to pay the
respondents’ costs. Instead he sought a costs order against them,
and I see no reason why they should
be at risk in regard to the costs
of a matter in which they have no interest. Secondly, to allow the
appeal to be heard will lead
to further delays in the winding-up of
the company, to the detriment of its creditors, and there is no
reason for them to be prejudiced
merely to allow the applicant to
obtain a judgment which is academic in so far as they are concerned.
These two factors alone make
it somewhat surprising that leave to
appeal was granted in the first instance.
[
18] The
applicant has therefore failed to show that the appeal will have any
practical effect or result. In so far as the present
parties are
concerned, the matter is moot and of academic interest only. Not only
has the applicant failed to show that the legal
issue he seeks to
have decided is likely to arise again, but he has failed to establish
that it would even be determined if the
appeal were to be heard.
There is no reason for the respondents to be dragged into an appeal
in respect of which they have no real
interest in order to have an
academic issue decided to their potential prejudice and cost.
[1
9] Consequently,
even if the applicant had offered a reasonable and acceptable
explanation for the inordinate delay, this court
would probably have
refused to hear the appeal under
s 21A.
That being so, in the absence
of a credible explanation for the delays, the court concluded that
condonation should not be granted.
[20] There
was no reason for the applicant not to pay the respondents’ costs,
including their costs in preparing for the appeal
if it had gone
ahead. The parties were correctly agreed that the costs of two
counsel should be allowed.
[21] For
the above reasons, this court made the following order:
‘
The
application for condonation is refused with costs, including the
costs occasioned by the appeal and the employment of two counsel’.
________________________
LE
LEACH
ACTING
JUDGE OF APPEAL
A
ppearances:
F
or
appellant: B R Tokota SC and Z Z Matebese
I
nstructed
by: State Attorney, Pretoria
State
Attorney, Bloemfontein
F
or
respondents: A E Bham SC and T Ntsonkota
I
nstructed
by: Deneys Reitz Inc, c/o Mothle Jooma Sabdia, Pretoria
W
ebbers,
Bloemfontein