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[2016] ZANCHC 69
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Morudi and Others v N C Housing Services and Development Co Ltd (1735/2014) [2016] ZANCHC 69 (12 August 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
(NORTHERN
CAPE DIVISION, KIMBERLEY)
SE
NO: 1735/2014
In
the matter between:
MORUDI
M.P. & 70
OTHERS
Applicants
And
N
C HOUSING SERVICES &
DEVELOPMENT
Respondents
CO
LTD
APPLICATION
FOR LEAVE TO APPEAL JUDGMENT
CORAM:
LEVER AJ
1.
This
is an application for leave to appeal a judgment of mine, given under
case number 1735/2014 and handed down on the 5 February
2016, where I
refused the applicants’ application for rescission of an Order
made by the Judge President on the 1 September
2014 under case number
1577/2012 (the main application). I also refused to grant the fifth
to the seventy first applicants leave
to intervene and be joined in
the main application. Applicants seek leave to appeal to the Supreme
Court of Appeal against the
whole of my judgment as handed down on
the 5 February 2016.
2.
The
applicants filed 5 pages of grounds upon which they sought leave to
appeal my judgment of the 5 February 2016. No purpose will
be served
by repeating them verbatim herein. In my view they may be distilled
into seven main issues, which are:
2.1.
Whether
or not the first to the fourth applicants were cited as directors in
the first respondent in the main application or put
differently
whether or not they were cited, not as officers of the first
respondent but as shareholders or potential shareholders
of the first
respondent;
2.2.
Whether
the first to fourth applicants had properly explained their default
in the rescission application;
2.3.
Whether
the fifth to seventy first applicants had properly explained their
default in the rescission application;
2.4.
Whether
or not the judgment of my sister Mamosebo AJ (as she then was) in an
urgent application brought under case number 1577/2012,
which was
delivered on the 8 August 2014, effectively settled all of the
disputes in the main application;
2.5.
Whether
or not a share register had been opened and share allocations
recorded in such register at the time of the meeting of shareholders
that was the subject of the urgent application before Mamosebo AJ;
2.6.
Whether
or not my interpretation of Rule 42(1)(a) of the Uniform Rules of
Court, being that such rule contemplated the physical
absence of the
affected party at the material time, was too narrow and technical;
and
2.7.
Whether
or not I was correct in finding that the rights of the applicants
contemplated by s 34 of the Constitution of the Republic
of South
Africa had not been infringed by the Judge President on the 1
September 2014, when the main application came before him.
3.
The
factual background to this matter is comprehensively set out in my
judgment, the subject of this application for leave to appeal.
None
of the parties have taken issue with my summary of the background or
my statement of the facts. In these circumstances, it
is not
necessary to traverse these issues again.
4.
The
test of what needs to be established in order to be granted the
necessary leave to appeal is now set out in s 17(1) of the Superior
Courts Act
[1]
, the relevant
provisions of which read as follows:
“
17(1)
Leave to appeal may only be given where the judge or judges concerned
are of the
opinion that-
(a)
(i)
the appeal would have a reasonable prospect of success; or
(ii)
there is some other compelling reason why the appeal should be heard,
including conflicting judgments on
the matter under consideration;
(b)
The
decision sought on appeal does not fall within the ambit of s
16(2)(a); and
…”
5.
With
this test in mind, turning to the first and second grounds summarised
above. In the circumstances of the present case, these
two grounds
run together in respect of the first to the fourth applicants. If the
first to the fourth applicants were indeed cited
in their capacities
as shareholders or potential shareholders, then they were not in
default and were properly before court on
the 1 September 2014 when
the main application served before the Judge President.
6.
If
however, they were cited in their capacity as directors of the first
respondent, then when the first respondent withdrew its
opposition to
the main application the first to fourth applicants were no longer
parties to the proceedings in the main application.
In those
circumstances they would be required to seek leave and intervene in
the main application in their capacities as shareholders
or potential
shareholders in the first respondent.
7.
As
can be seen from my judgment in the rescission application there was
evidence to support both positions. I reached my conclusion
by
analysing each argument and the evidence to support it and finally
taking a look at the evidence overall to conclude that on
the
probabilities the applicants were cited and acted as directors of the
first respondent.
8.
In
these circumstances, another court might reasonably take a different
view of the probabilities and I would have to conclude that
the
applicants would have a reasonable prospect of success on the first
two grounds of appeal as summarised above.
9.
Turning
now to the third ground of appeal as summarised above. This ground of
appeal was not formally set out in the Notice of Application
for
Leave to Appeal filed on applicants’ behalf. However, at the
hearing hereof the following ground was inserted by consent.
“7A
The court erred in finding that the fifth to seventy first applicants
have not set out and explained their default satisfactorily.”
10.
The
fifth to seventy first applicants explained that they were informed
that first to fourth applicants were protecting their interests
in
the main application. They accepted the position as such. Apart from
certain individuals who were singled out, it could not
be seriously
disputed that the majority of the fifth to seventy first applicants
had limited means. It also cannot be disputed
that they are
laypersons. It appears from the papers that they come from different
geographical areas throughout the province.
I directed certain
criticisms at the case that they made out, but my criticisms in the
main were directed at those who purported
to be acting in their
interests.
11.
In
the circumstances of the case it is reasonably possible that another
court might interpret the facts differently. On this ground
as well I
have to conclude that there is a reasonable prospect of success on
appeal.
12.
Turning
now to the fourth ground of appeal as summarised above, being whether
or not the judgement of Mamosebo AJ effectively settled
the disputes
in the main application. The judgment of Mamosebo AJ dealt with the
urgent application brought by the present first
to fourth applicants
purporting to act on behalf of the first respondent company. The
object of the said urgent application that
served before Mamosebo AJ
was to set aside the resolution adopted by the general meeting on the
19 April 2013 in terms of which
the first respondent withdrew its
opposition to the main application.
13.
The
urgent application was dismissed by Mamosebo AJ and the consequence
that flows from that judgment is that the resolution of
the general
meeting of 19 April 2013 stands. In these circumstances, the
respondents argued that granting leave to appeal would
have no
practical effect and that on that ground alone I should refuse leave
to appeal.
14.
This
is the ground of appeal that causes me some difficulty. However, on
reflection I do not believe this fourth ground of appeal
should be
considered in isolation from the fifth ground of appeal. This fifth
ground of appeal is to the effect that on the 19
April 2013 there
were no shareholders in the first respondent. It must be remembered
that one of the Orders made by Williams J
on the 16 October 2012 was
that the Board of Directors of the first respondent were authorised
and directed to issue one ordinary
par value share to each person
whose name appeared on annexure “M”.
15.
If
the Board of Directors did not open a share register and issue the
share certificates as directed in the Order of Williams J
the
consequence that would flow from that would be that there was no
general meeting of the first respondent as there were no shareholders
to convene in general meeting. If that was the case, there could be
no resolution of the first respondent to withdraw its opposition
to
the main application. It goes without saying that if there was no
resolution then applicants would not be required to set anything
aside and in that context the judgment of Mamosebo AJ would not be a
bar to the relief the applicants sought.
16.
I
reached my conclusion that applicants had not raised this issue
pertinently in their founding papers by reading the relevant passages
in the founding affidavit in a particular context. On reflection, I
believe this may be open to interpretation. I criticised the
applicants’ credibility on the issue of the shares on the basis
of what is set out in applicants’ replying affidavit.
Again, on
reflection I believe this may be open to interpretation. In these
circumstances, I have to conclude that another court
may reach a
different decision and consequently, in the circumstances I believe
that the appeal would have a reasonable prospect
of success.
17.
In
regard to the sixth ground of appeal, being that I followed a narrow
and technical approach to the application of Rule 42(1)(a)
of the
Uniform Rules of Court. In the context of the fact that I could find
no South African authority directly in point and neither
Counsel
could refer me to any such authority and the fact that I followed the
reasoning of a court in the Republic of Botswana
on a similarly
worded provision in their Rules, I believe that it would be
reasonable to conclude that another court might follow
a different
approach. In these circumstances the applicants would have a
reasonable prospect of success on this ground of appeal.
18.
Turning
to the last ground of appeal, being the question of whether or not
the Judge President had infringed the applicants’
rights under
s 34 of the constitution when the matter came before him on the 1
September 2014. In reaching my conclusion that the
rights of the
applicants had not been infringed, I interpreted the record of
proceedings in a particular context. It is reasonably
possible that
another court may interpret the context differently. In my view,
there is a reasonable prospect of success on appeal.
19.
The
next question is whether this matter should be referred to the Full
Bench of this Division or if the matter should be referred
to the
Supreme Court of Appeal. This question is governed by the provisions
of s 17(6)(a) of Superior Court Act. This section requires
that I
weigh-up two broad considerations. Firstly, whether the issues
involve important questions of law. Secondly, whether the
interests
of justice, either generally or in the particular case, require that
the matter be heard by the Supreme Court of Appeal.
20.
Mr
Van Niekerk SC who appeared on behalf of the applicants submitted
that the matter should be referred to the Supreme Court of
Appeal on
the basis that generally the interests of justice required that it be
referred to the SCA. Mr Van Niekerk motivated this
submission on the
basis that the matter was of major importance to all of the parties;
it related to questions of access to justice;
and that my
interpretation of Rule 42 was literal and simplistic. After
considering these issues, I believe that generally it is
in the
interests of justice that the matter be heard by the Supreme Court of
Appeal. In these circumstances s 17(6)(a)(ii) requires
me to direct
that the matter be heard by the Supreme Court of Appeal.
21.
The
final issue for consideration is the issue of the costs of this
application for leave to appeal. In the circumstances, I believe
that
the appropriate order is that such costs be costs in the appeal.
Accordingly,
the following Order is made:
1)
The
applicants are granted leave to appeal.
2)
Such
appeal is to be heard by the Supreme Court of Appeal.
3)
The
costs of the application for leave to appeal are to be costs in the
appeal.
_____________
Lawrence
Lever
Acting
Judge
Northern
Cape Provincial Division
On
behalf of the Applicant:
Adv J Van Niekerk SC
Attorneys
on record:
Towell & Groenewaldt
On
behalf of the Respondent:
Adv
P R Cronje
Attorneys
on record:
A B Horwitz
Date
of Hearing:
05 May 2016
Date
of Judgment:
12
August 2016
[1]
Act 10 of 2013.