Summary of Judgment

Introduction

The proceedings concerned an application for leave to appeal brought in the Free State Division of the High Court, Bloemfontein. The application sought leave to appeal against an earlier judgment and order in the main application, in which the court had cancelled and set aside the transfer and registration of ownership of the farm Guarriekop 330, Senekal, Free State Province into the name of the trustees of Doringboom Trust, IT1797/2004, and granted consequential relief in favour of the applicant.

The parties were cited as in the main application, with Thakeli Thubaka Sidwell N.O. as the applicant and multiple respondents including Phillipus Martinus du Buisson N.O., Sanet du Buisson N.O., Oelofse Attorneys N.O. (the third respondent), Standard Bank of South Africa, further trustees (fifth and sixth respondents), and public officials (Registrar of Deeds; Master of the High Court; and the Department of Rural Development and Land Reform). Although several respondents had opposed the main application, only the third respondent sought leave to appeal in the present proceedings.

The procedural history was that the main application had been heard and finalised by a single judge, with judgment and orders delivered on 18 August 2015. The present judgment, delivered on 13 May 2016, addressed whether leave to appeal should be granted, and, if so, whether the appeal should be directed to a full court of the division or to the Supreme Court of Appeal.

The general subject-matter of the dispute (as it emerged from the leave-to-appeal grounds) related to the validity of a trust resolution affecting a “real agreement” underpinning transfer, the resignation (or continued office) of a trustee, and the validity or effect of an allegedly defective power of attorney used in the transfer process under deeds registration principles.

Material Facts

The material facts relied upon by the court in deciding the leave-to-appeal application were those relevant to the two principal grounds advanced for appeal and to the statutory threshold for granting leave.

The court recorded that, in the main application, the determination of the validity of the real agreement had been based on the validity of a resolution attached to an additional affidavit as “Annexure A”. The third respondent accepted, for purposes of the leave application, that this was the correct approach and also accepted that the validity of the resolution turned on whether Mr Ettiene Stone was still a trustee of the TBS Family Trust, IT1156/05 on the date the resolution was passed, namely 20 November 2012.

A key factual dispute (or asserted common cause fact) concerned whether Mr Stone had resigned as trustee before that date. The third respondent relied on the applicant’s own founding affidavit in the main application, which (as reflected in the leave judgment) alleged that Mr Stone had resigned on 10 June of a year stated in the judgment (the judgment contains an internal inconsistency in the date as recorded). On the third respondent’s argument, this allegation should have been treated as common cause, leading to an inference that the resignation formalities had been complied with.

The applicant’s response relied on allegations in the answering affidavit (and confirmatory affidavits) that, during a telephone call to Mr Stone on 20 November 2013, Mr Stone informed “us” that he had resigned as trustee. The applicant’s argument treated this as indicating that the other trustees only became aware of the purported resignation at that stage, supporting the conclusion that the resignation had not been effected in accordance with clause 5.6.3 of the trust deed (as referenced in the leave judgment).

The second material issue concerned the power of attorney utilised in the transfer. The third respondent’s complaint was that the power of attorney contained an incorrect entry stating that the fifth respondent was the sole trustee of the TBS trust and that, in that capacity, he authorised the transfer. On the third respondent’s case, this error was merely formal, because the fifth respondent had in substance been authorised by resolution and had signed the transfer documents. The applicant contended that the defect went to substance and was not merely formal. The court noted, as a material procedural fact, that reliance on section 100 of the Deeds Registries Act 47 of 1937 had not been raised during argument in the main application, even though section 4(1)(b) had been relied upon at that time.

Finally, for the purpose of directing the forum of appeal, the court treated as material that the prospective appeal would implicate questions concerning the legal requirements for resignation of trustees and the interaction between resignation formalities in a trust deed and section 21 of the Trust Property Control Act 57 of 1988, with reference to an identified line of reasoning in the Western Cape High Court decision discussed below.

Legal Issues

The central legal questions the court was required to determine in the leave-to-appeal proceedings were, first, whether the third respondent had shown that an appeal would have a reasonable prospect of success as contemplated by section 17(1)(a) of the Superior Courts Act 10 of 2013; and, second, if leave were granted, whether the appeal should be directed to a full court of the division or to the Supreme Court of Appeal under section 17(6).

The dispute at the leave stage was therefore primarily one of application of legal standards to the case—namely, applying the statutory threshold for leave to appeal and the statutory criteria for the appropriate appellate forum. However, the court also evaluated whether the proposed appeal raised questions that were materially legal in nature (including whether certain issues constituted “points of law” capable of being advanced on appeal despite not having been raised below) and whether the appeal involved a question of law of importance or an area in which there were differences of opinion requiring authoritative resolution.

Although the proposed appeal would necessarily involve factual findings (for example, whether Mr Stone remained a trustee on the relevant date), the court treated the appeal as also involving important legal questions concerning trustees’ resignation requirements and deeds registration consequences of defects in instruments, and it was those legal dimensions that informed both the prospects assessment and the direction to the Supreme Court of Appeal.

Court’s Reasoning

The court began from the statutory framework governing leave to appeal. It applied section 17(1)(a) of the Superior Courts Act 10 of 2013, which permits leave to appeal where the judge is of the opinion that the appeal would have a reasonable prospect of success. After considering the arguments advanced for and against leave, the court concluded that it was compelled to find that the proposed appeal did have reasonable prospects of success, and therefore leave should be granted.

In reaching that conclusion, the court addressed both principal grounds underpinning the proposed appeal. On the first ground, the court noted the third respondent’s concessions regarding the correct analytical approach in the main judgment (namely, that the validity of the real agreement depended on the validity of the resolution, and that the validity of the resolution turned on whether Mr Stone remained a trustee on 20 November 2012). The dispute was thus narrowed to the correctness of the court’s earlier conclusion that Mr Stone still held office as trustee at the relevant time.

The third respondent’s argument on this issue depended significantly on treating the applicant’s pleaded allegation of resignation as common cause, and drawing the inference that resignation formalities had been met. The applicant, in turn, relied on the answering and confirmatory affidavits indicating that the trustees were only told of the resignation in a later telephone conversation, supporting an inference that resignation had not complied with clause 5.6.3 of the trust deed. The court rejected an attempted explanation that the answering affidavit’s deponent was merely an attorney rather than the trustees themselves, because the affidavit referred to what “us” had been told and confirmatory affidavits supported that account. Although the leave judgment did not finally determine the merits of this underlying dispute, it accepted that, on the arguments presented, the proposed appeal had sufficient substance to satisfy the reasonable-prospects threshold.

On the second ground, relating to the power of attorney, the court recorded the third respondent’s contention that the incorrect description of trusteeship was a formal defect capable of rectification and not invalidating the transfer, with reliance placed on sections 4(1)(b) and 100 of the Deeds Registries Act 47 of 1937. The applicant’s response was that the defect was substantive, and that section 100 had not been relied upon in the main application. The court accepted that section 100 had not previously been raised, but observed that, if it constituted a point of law and other conditions were met, it might be advanced for the first time on appeal. This formed part of the overall assessment that the appeal was not devoid of merit for leave purposes.

Having decided to grant leave, the court then considered the statutory direction regarding the appropriate appellate forum. It referred to sections 15(1) and 16(1)(a) of the Superior Courts Act, and in particular to section 17(6)(a)(i), which requires a judge granting leave to direct that the appeal be heard by a full court of the division unless the decision involves a question of law of importance, whether because of general application or otherwise, or where a Supreme Court of Appeal decision is required to resolve differences of opinion.

The third respondent requested that leave be granted to the Supreme Court of Appeal rather than to a full court, relying on the judgment in Meijer NO and Another v FirstRand Bank Limited (Formerly Known as First National Bank of Southern Africa) and Another: in re FirstRand Bank Limited (Formerly Known as First National Bank of Southern Africa) v Meijer NO and Others [2013] JOL 30560 (WCC). The court accepted that, although the appeal would entail factual findings, the questions of law identified in the Meijer judgment (or at least some depending on the factual findings ultimately made) would be applicable and essential to determining the appeal. It considered those questions to be important, of general application, and subject to differing opinions, such that a decision of the Supreme Court of Appeal was required for legal certainty. On that basis, the court directed that the appeal lie to the Supreme Court of Appeal.

On costs, the court considered there to be no reason to depart from the usual approach in leave-to-appeal proceedings and ordered that the costs of the leave application be costs in the appeal.

Outcome and Relief

The court granted the third respondent leave to appeal to the Supreme Court of Appeal against the whole of the judgment given and the orders made on 18 August 2015.

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

Cases Cited

Meijer NO and Another v FirstRand Bank Limited (Formerly Known as First National Bank of Southern Africa) and Another: in re FirstRand Bank Limited (Formerly Known as First National Bank of Southern Africa) v Meijer NO and Others [2013] JOL 30560 (WCC)

Legislation Cited

Superior Courts Act 10 of 2013 (sections 15(1), 16(1)(a), 17(1)(a), 17(6)(a)(i))

Trust Property Control Act 57 of 1988 (section 21)

Deeds Registries Act 47 of 1937 (sections 4(1)(b), 100)

The Constitution of the Republic of South Africa, 1996 (referred to generally in relation to the appeal framework)

Rules of Court Cited

No rules of court were cited in the judgment.

Held

The court held that the third respondent had shown that the proposed appeal met the statutory threshold of having a reasonable prospect of success under section 17(1)(a) of the Superior Courts Act 10 of 2013. The court further held that the appeal raised important questions of law, including questions bearing on trustees’ resignation requirements and related uncertainty reflected in existing authority, such that the appeal should be directed to the Supreme Court of Appeal under section 17(6)(a)(i). Leave to appeal to the Supreme Court of Appeal was granted against the whole of the main judgment and orders, with the costs of the leave application ordered to be costs in the appeal.

LEGAL PRINCIPLES

The judgment applied the principle that leave to appeal in the High Court is governed by section 17(1)(a) of the Superior Courts Act 10 of 2013, requiring that the judge be of the opinion that the appeal would have a reasonable prospect of success. The court’s function at this stage was not to decide the merits of the appeal, but to assess whether the proposed appeal was reasonably arguable on the material advanced.

The judgment further applied the appellate allocation principle in section 17(6)(a)(i) of the Superior Courts Act 10 of 2013, namely that an appeal from a single-judge decision must ordinarily be directed to a full court of the division unless the decision involves a question of law of importance (including by reason of general application) or one in respect of which a decision of the Supreme Court of Appeal is required to resolve differences of opinion. The court treated the need for legal certainty in an area of divergent views as a factor supporting direct access to the Supreme Court of Appeal.

In addition, the judgment recognised (without finally deciding the point) that a legal contention not raised in argument in the court below—here, reliance on section 100 of the Deeds Registries Act 47 of 1937—may, in appropriate circumstances, potentially be advanced for the first time on appeal where it constitutes a point of law and where applicable procedural requirements are satisfied.