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[2019] ZALMPPHC 2
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Confuscore (Pty) Limited v Ehlers N.O and Others (2919/2016) [2019] ZALMPPHC 2 (1 February 2019)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
(LIMPOPO
DIVISION, POLOKWANE)
CASE
NO: 2919/2016
In
the matter between:
CORFUSCORE
(PTY) LIMITED
THIRD
RESPONDENT
(Registration Number:
2014/049788/07)
and
GERT
HENDRIK EHLERS N.O
FIRST
APPLICANT
DANIEL
MATTHYS CHRISTOFFEL EHLERS N.O
SECOND
APPLICANT
DANIEL
FREDERICK EHLERS N.O
THIRD
APPLICANT
(
In
their capacities as the Trustees for the time
being of
The Emberbe
Trust,
Registration
number: IT20074/2000
)
In re:
GERT
HENDRIK EHLERS N.O
FIRST
APPLICANT
DANIEL
MATTHYS CHRISTOFFEL EHLERS N.O
SECOND
APPLICANT
DANIEL
FREDERICK EHLERS N.O
THIRD
APPLICANT
(
In
their capacities as the Trustees for the time
being of
The Emberbe
Trust,
Registration
number: IT20074/2000
)
and
LAND
AND AGRICULTURAL DEVELOPMENT
FIRST
RESPONDENT
BANK OF SOUTH AFRICA
THE
SHERIFF OF THE HIGH COURT, BOCHUM
SECOND
RESPONDENT
(Known to the Applicants
as Mr. Ramaala)
CORFUSCORE
(PTY) LIMITED
THIRD
RESPONDENT
(Registration Number:
2014/049788/07)
REGISTRAR
OF DEEDS, POLOKWANE
FOURTH
RESPONDENT
ABSA
BANK LIMITED
FIFTH
RESPONDENT / INTERVENING PARTY
JUDGMENT
MAKGOBA
JP
[1]
This is an application in terms section 18 of the Superior Courts Act
10 of 2013 (“the Act”)
for the operation and execution of
a Court Order pending the outcome of the Applicants’
application for leave to appeal including
the appeal, if any, to be
noted.
[2]
On the 19 January 2018 the Third Respondent (Corfuscore (Pty) Ltd)
bought three farms at a sale
in execution conducted by the Sheriff of
Bochum (the Second Respondent) and registration of transfer of
ownership was effected
by the Registrar of Deeds
into the name of the Third Respondent
on 30 April
2018. The First, Second and Third Applicants (the
former owners of the said farms) brought an application to set aside
the aforesaid
sale in execution. Their application was dismissed with
costs in a judgment of this Court delivered on 16 August 2018. The
Applicants
filed an application for leave to appeal against the said
Court judgment of the 16 August 2018, which application was dismissed
on 8 November 2018. The Applicants have since filed a petition to the
Supreme Court of Appeal seeking leave to appeal against the
Court
judgment of 16 August 2018.
[3]
It is against this background that the Third Respondent had brought
the present application in terms
of section 18 of the Act seeking an
order that the operation and execution of the aforesaid judgment of
16 August 2018 is not suspended
pending the outcome of the petition
to the Supreme Court of Appeal or the appeal itself.
[4]
The effect of this Court’s judgment of the 16 August 2018 is
that the sale in execution
is lawful and ownership of the farms had
duly passed to the Third Respondent who should now have access or
occupation of the farms
it purchased at the sale in execution. With
this application in terms of section 18 of the Act the Third
Respondent seeks to enforce
its right of ownership pending the
outcome of the appeal process sought by the Applicants.
[5]
In terms of section 18 of the Act once an application for leave to
appeal has been filed the judgment
and the order of the Court is
suspended pending the decision of the application for leave to appeal
or appeal unless the Court,
under exceptional circumstances, orders
otherwise.
[6]
The well-established common law rule of practice in our courts has
been 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. See
South Cape Corporation (Pty) Ltd v Engineering
Management Services (Pty) Ltd
1977 (3) SA 534
(A) at 544 H –
545.
In
South
Cape Corporation at 545 B – C
,
Corbett JA reiterated that the purpose of the rule was to prevent
irreparable damage being done to the intending Appellant by
the
execution of the judgment pending appeal. However, as further
explained by Corbett JA at 545D-G, the Court to which application
was
made for leave to execute the judgment pending appeal, had a wide
general discretion to grant or refuse such leave and would,
inter
alia
,
have regard to the following factors:
(1)
the
potentiality of irreparable harm or prejudice being sustained by the
appellant on appeal…….if leave to execute
were to be
granted.
(2)
the
potentiality of irreparable harm or prejudice being sustained by the
respondent on appeal…….if leave to execute
were to be
refused.
(3)
the
prospects of success on appeal, including more particularly the
question as to whether the appeal is frivolous or vexatious
or has
been noted not with the
bona
fide
intention
of seeking to reverse the judgment but for some indirect purpose.
(4)
where
there is the potentiality of irreparable harm or prejudice to both
appellant and respondent, the balance of hardship or convenience,
as
the case may be.
[7]
Section 18 of the Act reads as follows:
“
Suspension
of decision pending
(1)
Subject 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)
Subject to subsection (3), unless the court under exceptional
circumstances orders otherwise, the operation and execution of
a
decision that is an interlocutory order not having the effect of a
final judgment, which is the subject of an application for
leave to
appeal or of an appeal, is not suspended pending the decision of the
application or appeal.
(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 orders.
(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.
”
[8]
Section 18 of the Act introduces a fresh test for leave to put into
operation and execute an order
pending the appeal process and
accordingly, judicial authority that predates the section has been
overtaken by its enactment.
In
Incubeta Holdings (Pty) Ltd v Ellis
2014 (3) SA 189
(GJ) at 194 B
– D
Sutherland J stated the position as follows:
“
The
thesis advanced on behalf of the Respondents is that the discretion
hereto exercised by the Court is history, and that one must
now look
exclusively to the text of section 18. Emphasis was placed on the
heavy onus on the litigant who seeks to execute an order,
pending an
appeal, as formulated on ss 18(1) and (3).
It
seems to one that there is indeed a new dimension introduced to the
test by the provisions of section 18. The test is twofold.
The
requirements are:
·
First,
whether or not exceptional circumstances exist and
·
Second,
proof on a balance of probabilities by the Applicant of –
-
The
presence of irreparable harm to the Applicant / victor, who wants to
put into operation and execute the order; and
-
The
absence of irreparable harm to the Respondent / loser, who seeks
leave to appeal.”
[9] The
test for leave to put into operation and execute an order pending the
appeal was authoritatively
set out in a more recent judgment of Full
Court (per Ranchod, Fabricius and JW Louw JJ) Gauteng Division,
Pretoria in the matter
of
Member of the Executive Council for
Co-Operative Governance, Human Settlement and Traditional Affairs
(COGHSTA) and Others v Mogalakwena
Municipality and Another
2017 (2)
SA 464
(GP)
at paragraphs [24] – [25].
See
also, more recently, the Supreme Court of Appeal decision in
University
of the Free State v Afriforum and Another
[2016] ZA SCA 165
(17
November 2016)
at paragraph [9] – [11], now reported as
2018
(3) SA 428
(SCA)
.
[10]
It is clear therefore that in terms of the present legal dispension
the Applicant must prove three jurisdictional
requirements on a
balance of probabilities namely:
10.1.
Exceptional circumstance;
10.2.
Irreparable harm to the Applicant if the order is not granted; and
10.3.
That the Respondent will not suffer irreparable harm if the order is
granted.
If
the above jurisdictional requirements are met, the Court has a
discretion to
grant
or dismiss the application. Such discretion should be exercised in
the interest of justice.
[11] Whether
or not exceptional circumstances for the purpose of section 18(1) are
present, must necessarily
depend on the peculiar facts of each case.
In
Incubeta Holdings
at paragraph 22 Sutherland J put it as
follows:
“
Necessarily,
in my view, exceptionality must be fact-specific. The circumstances
which are or may be “exceptional” must
be derived from
actual predicaments in which the given litigants find themselves.”
[12] What
is immediately discernible upon perusing sub-sections 18(1) and (3),
is that the legislature
has proceeded from the well-established
premise of the common law that the granting of relief of this nature
constitutes an extraordinary
deviation from the norm that, pending an
appeal, a judgment is suspended. Section 18(1) thus states that an
order implementing
a judgment pending appeal shall only be granted
under exceptional circumstances. This exceptionality order to this
effect is underscored
by section 18(4), which provides that a Court
granting the order must immediately record the reasons; that the
aggrieved party
has an automatic right of appeal; that the appeal
must be dealt with as a matter of extreme urgency and that pending
the outcome
of the appeal the order is automatically suspended. See
University
of the Free State v Afriforum and Another
2018 (3) SA 428
(SCA)
at
[9].
[13] It
is clear that the requirements introduced in sub-sections 18(1) and
(3) are more onerous than those
of the common law. Apart from the
requirements of “exceptional circumstances” in section
18(1), section 18(3) requires
the Applicant in addition to prove on a
balance of probabilities that he or she will suffer irreparable harm
if the order is not
made, and that the other party will not suffer
irreparable harm if the order is made. See
University
of the Free State v Afriforum and Another
supra
and
Ntlemeza
v Helen Suzman Foundation and Another
[2017] 3 All SA 589
(SCA)
[14]
It is trite that the prospects of success in the pending appeal
should play a role in determining whether an order
in terms of
section 18 of the Act should be granted -
University
of the Free State v Afriforum and Another
2018 (3) SA 428
(SCA)
at
[14]. In
casu
I
have already made a finding that there are no reasonable prospects of
success in the appeal, hence I dismissed the Applicant’s
application for leave to appeal on the 8 November 2018.
[15]
I now turn to examine the facts of the present application in order
to determine the predicaments of the litigants
herein so as to make a
finding as to whether exceptional circumstances do exist and to what
extent each party stands to suffer
irreparable harm in the event of
the application being granted or dismissed.
[16] The
Third Respondent avers in its founding affidavit that exceptional and
out of the ordinary
circumstances exist that indicate and dictate
that this application in terms of section 18 of the Act should move
this Court to
exercise judicial discretion to grant the relief sought
by the Third Respondent. Such exceptional circumstances follow
hereunder.
[17]
The Third Respondent finds itself in an unusual position wherein the
Applicants prevent and frustrate the
Third Respondent, as purchaser
of the farms, from exercising its ownership and occupational rights
and the right to farm its land
for which it has paid a substantial
amount of money (R 31 000 000.00). The purchase price was
raised in a form of a loan
from a banker (ABSA Bank). The Third
Respondent is obliged to service the bond on the purchased farms in
the sum of R 4 181 066.16
per annum with effect from May
2019.
[18] The
Applicants, following judicial attachment of the farms on 3 November
2017 and 13 November
2017, lost all rights to ownership of the three
farms in the subsequent sale in execution that took place on 19
January 2018 and
transfer of ownership to the Third Respondent on 30
April 2018. The Applicants remain indebted to the execution creditor
(Land
and Agricultural Development Bank) in a substantial outstanding
balance. The Applicants are virtually insolvent and will not be
able
to pay the outstanding balance of the debt.
[19]
The execution creditor (First Respondent) had obtained default
judgment against the Applicants, which judgment
remains valid and had
led to the sale in execution on 19 January 2018. As matters stand,
there are no chances that the ownership
of the farms can revert to
the Applicants as long as the Applicants are still indebted to the
First Respondent. The conduct of
the Applicants is extraordinary in
that the Third Respondent, notwithstanding the purchase and transfer
of the three farms, is
prevented from generating income from farming
its land. The fact that occupation of the farms could not take place
immediately
after the purchase date has already caused severe
prejudice and placed the Third Respondent at some financial risk.
[20]
In a conversation between the deponent to the Third Respondent’s
founding affidavit and the Applicants,
the latter told the deponent
in no uncertain terms that they will continue with appeals and
prevent the Third Respondent from farming
“for the next two
years” irrespective of the outcome. The First Applicant crudely
told the deponent that he does not
care if they (Applicants) leave
the farming property with only their underwears but they will keep on
appealing. This in my view,
is a clear indication on the part of the
Applicants to frustrate the rights of the Third Respondent.
[21]
The circumstances outlined in paragraphs 17 to 20 above constitute,
in my view, exceptional circumstances calling
for the intervention of
this Court by way of implementing the provisions of section 18 of the
Act.
[22]
The conduct of the Applicants in refusing the Third Respondent access
to the farming property is causing
irreparable harm to the Third
Respondent. The intention of the Third Respondent was to purchase
the farming property to farm the
land. This entails producing food
and to contribute to food security for the country and to make profit
to pay the loan obtained
from ABSA Bank. The Third Respondent had
obtained a loan in the sum of R 31 000 000.00 to purchase
the three farms. In
terms of the sale agreement the Third Respondent
would have been entitled to occupation of the farms immediately upon
the fall
of the hammer at the auction of 19 January 2018. The conduct
of the Applicants is prejudicial to the Third Respondent and
continues
to cause irreparable harm to the Third Respondent.
[23]
The Third Respondent avers that had it received occupation of the
farming property immediately upon the purchase
thereof on 19 January
2018, the net income from the planned production on the farms would
have yielded a nett income of at least
R 4 323 537.00.
These allegations are not denied by the Applicants in their answering
affidavit. The loss of income or
profit seriously prejudice the Third
Respondent and the Third Respondent will have difficulty to pay the
first instalment due and
payable in May 2019. This will unfortunately
raise the possibility that the Third Respondent’s bankers could
reconsider the
loan, which is a real and extremely serious threat to
the continued existence of the Third Respondent as food producer and
employer
of many workers on the farms.
[24]
To date hereof the Third Respondent has already lost income of no
less than approximately R 4 323 573.00.
In the event that
the Third Respondent is not granted the relief sought in this
application, the Third Respondent would suffer
further irreparable
financial harm in that the Third Respondent would also lose the
potential income from farming for 2019. This
is so because the
finalization of the appeal process could take another year or even
more.
[25]
On the evidence before me it has not been shown that the Applicants
will suffer any harm if the order sought
by the Third Respondent is
granted. The First Applicant is a retired farmer who is not involved
with or connected with the farming
on the three farms. He simply
resides with his wife on one of the farms. The Second Applicant
together with his wife reside on
one of the farms and does not
conduct any farming there. The Third Applicant is employed as a
reverend and resides in Ermelo. He
is not physically involved with
the farming on any of the three farms.
[26]
In my view the Applicants do not conduct any feasible or profitable
farming on the three farms but they simply
continue to frustrate the
Third Respondent’s ownership rights with continuous litigation
aimed at preventing the Third Respondent
from proceeding with its
planned commercial farming on the farming property. In the event that
the relief sought in this application
is granted, the Applicants will
not be caused any harm whatsoever as they will be allowed in the
interim to continue residing on
the farm until they take reasonable
steps to obtain alternative accommodation.
[27]
The Third Respondent has made out a case for the relief sought in
terms of
section 18
of the
Superior Courts Act, 10 of 2013
and I
accordingly grant the following order:
1.
The
judgment and order of this Court granted on 16 August 2018 shall
operate and be executed pending the outcome of the application
for
leave to appeal including any appeal noted, if at all.
2.
The
Third Respondent is exempted from furnishing security in terms of
Rule 49(12) of the Uniform Rules of Court.
3.
The
Applicants are to pay the costs of this application jointly and
severally, the one paying the other to be absolved.
E
M MAKGOBA
JUDGE
PRESIDENT OF THE HIGH COURT, LIMPOPO DIVISION, POLOKWANE
APPEARANCES
Application
heard on :
25 January 2019
Judgment
delivered on :
1 February 2019
For
Third Respondent :
Adv JC Klopper
Instructed
by
: Corrie Nel & Co
Attorneys
Polokwane
For
the Applicants
:
Adv. F Botes SC
Adv.
M Bresler
Instructed
by
: Espag Magwai Attorneys
Polokwane