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[2020] ZASCA 13
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SA Express Ltd v Bagport (Pty) Ltd (160/2019) [2020] ZASCA 13; 2020 (5) SA 404 (SCA) (19 March 2020)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
Reportable
Case
No: 160/2019
In
the matter between:
SOUTH
AFRICAN EXPRESS LIMITED
APPELLANT
and
BAGPORT
(PTY) LTD
RESPONDENT
Neutral
citation:
SA Express Ltd v Bagport (Pty)
Ltd
(160/2019)
[2020] ZASCA 13
(19 March
2020)
Coram
:
SWAIN, MOKGOHLOA and PLASKET JJA and KOEN and GORVEN AJJA
Heard
:
17 February 2020
Delivered:
19 March 2020
Summary:
Appeal – lapsing of appeal –
condonation – negligence of appellant’s attorney no
excuse – no basis
for condonation – matter struck off
roll.
Order
On
appeal from:
Gauteng
Division of the High Court, Johannesburg
(Van
Oosten J sitting as court of first instance):
1 The application for
condonation and for the re-instatement of the appeal is dismissed.
2 The matter is struck
off the roll with costs.
JUDGMENT
Plasket
JA (Swain and Mokgohloa JJA and Koen and Gorven AJJA concurring)
[1]
One could be forgiven for thinking that the conclusion of a
settlement agreement by parties to a dispute would bring that dispute
to an end. In this appeal, however, the conclusion of a settlement
agreement, proposed by the appellant, drafted by its attorney
and
signed by its chief executive officer (CEO), spawned a repudiation of
the settlement agreement and a continuation of the dispute
for a
further three years.
Background
[2]
The respondent, Bagport (Pty) Ltd (Bagport) provided a baggage
wrapping service at various airports to the appellant, South
African
Express Limited (SA Express), a state-owned enterprise that operates
an airline. SA Express did not, according to Bagport,
pay what was
due for the provision of the service. Bagport issued summons on 13
December 2016 in which it claimed R4 748 373.60
from SA
Express.
[3]
SA Express filed a notice of intention to defend the action, which
was met by Bagport applying for summary judgment. In response
to the
application for summary judgment, and instead of opposing it, SA
Express proposed a settlement of the dispute.
[4]
SA Express’ attorney, on the instructions of SA Express’
legal department, drafted an agreement in which it undertook
to pay
Bagport R4 748 373.60, the amount claimed in the summons.
It was forwarded to Bagport by SA Express’ chief
procurement
officer, before being signed on behalf of Bagport on 28 February 2017
by its Payroll/Human Resources Manager and on
behalf of SA Express on
1 March 2017 by its CEO. From the papers, it is clear that apart from
SA Express’ CEO, its chief
procurement officer and its chief
financial officer were also aware of it. Indeed, the chief
procurement officer, apart from forwarding
the document to Bagport
for signature, had co-signed an expense authorization form together
with the CEO; and the chief financial
officer wrote to Bagport and
undertook to pay it in terms of the settlement agreement.
[5]
Despite this, SA Express still did not pay. As a result, Bagport
applied in terms of rule 41(4) of the Uniform Rules for the
settlement agreement to be made a court order. It did so in a notice
of motion dated 26 June 2017. The parties had agreed to this
in
clause 4.6 of the settlement agreement in the event of SA Express
reneging on its obligation to pay. SA Express not only opposed
the
application but it also brought a counter-application for an order
declaring the settlement agreement to be invalid and unenforceable.
[6]
In the Gauteng Division of the High Court, Johannesburg, Van Oosten
J, on 9 May 2018, made the settlement agreement an order,
directed SA
Express to pay Bagport R4 748 373.60, together with
interest and costs on an attorney and client scale and
dismissed the
counter-application with costs on an attorney and client scale.
(Clause 4.9 of the settlement agreement provided
that if SA Express
failed to pay on due date, it would be liable for any costs in
respect of the enforcement of the settlement
agreement on an attorney
and client scale.)
[7]
Still SA Express did not pay. Instead, it applied belatedly, in an
application dated 11 July 2018, for leave to appeal. It only
did so
after Bagport had, as a result of SA Express failing to pay it,
attached one of its aircraft. On 20 August 2018, Van Oosten
J granted
leave to appeal to this court.
[8]
A few weeks before this appeal was to be heard, SA Express was placed
under business rescue. We were informed from the bar by
counsel for
SA Express that its business rescue practitioners were aware of the
appeal and had expressly mandated its legal representatives
to
proceed with the appeal.
[9]
At the hearing of the appeal, the issues for decision were narrowed
to two. They are whether, SA Express’ appeal having
lapsed,
condonation ought to be granted to it for its delay in prosecuting
the appeal and its appeal should be reinstated; and
whether SA
Express has established that the settlement agreement is
unenforceable.
Condonation
for the lapsing of the appeal
The
legal principles
[10]
In terms of rule 7 of this court’s rules, an appellant is
required to lodge a notice of appeal within a month of the
date on
which leave to appeal was granted. SA Express filed its notice of
appeal timeously.
[11]
In terms of rule 8(1), an appellant is required to lodge with this
court’s Registrar, six copies of the record of the
proceedings
in the court below within three months of the lodging of the notice
of appeal. This period may, in terms of rule 8(2),
be extended either
by the written agreement of the parties or by the Registrar following
a request by the appellant, with notice
of the request being given to
the other parties. Rule 8(3) provides that if the record is not
lodged within the period prescribed
by rule 8(1) or an extended
period in terms of rule 8(2), the appeal shall lapse.
[12]
Rule 12 makes provision for applications for condonation in the event
of non-compliance with the rules.
It is
trite that condonation is not simply available for the asking: the
party applying for condonation seeks an indulgence and
must make out
a case for the court’s discretion to be exercised in its
favour.
[13]
In
Dengetenge
Holdings (Pty) Ltd v Southern Sphere Mining and Development Company
Ltd and Others
[1]
Ponnan JA outlined
the factors relevant to the exercise of that discretion. They include
‘the degree of non-compliance, the
explanation therefor, the
importance of the case, a respondent’s interest in the finality
of the judgment of the court below,
the convenience of this court and
the avoidance of unnecessary delay in the administration of justice’.
[14]
In
Darries
v Sheriff, Magistrate’s Court, Wynberg and Another
[2]
these general
considerations were fleshed out by Plewman JA when he stated:
‘
Condonation of the
non-observance of the Rules of this Court is not a mere formality. In
all cases, some acceptable explanation,
not only of, for example, the
delay in noting an appeal, but also, where this is the case, any
delay in seeking condonation, must
be given. An appellant should
whenever he realises that he has not complied with a Rule of Court
apply for condonation as soon
as possible. Nor should it simply be
assumed that, where non-compliance was due entirely to the neglect of
the appellant’s
attorney, condonation will be granted. In
applications of this sort the applicant’s prospects of success
are in general an
important though not decisive consideration.
When application is made for condonation it is advisable that the
petition should
set forth briefly and succinctly such essential
information as may enable the Court to assess the appellant’s
prospects of
success. But appellant’s prospect of success is
but one of the factors relevant to the exercise of the Court’s
discretion,
unless the cumulative effect of the other relevant
factors in the case is such as to render the application for
condonation obviously
unworthy of consideration. Where non-observance
of the Rules has been flagrant and gross an application for
condonation should
not be granted, whatever the prospects of success
might be.’
[15]
Reference was made in
Darries
to an erroneous assumption that is sometimes made that if the cause
of a delay can be laid at the door of an applicant’s
attorney,
condonation will be granted. That issue has been dealt with by this
court on a number of occasions.
[16]
In
Saloojee
and Another NNO v Minister of Community Development
,
[3]
the notice of
appeal, the record and the condonation application were filed some
eight months late. After considering the explanation
given for the
delay and concluding that it was not even ‘remotely
satisfactory’
[4]
Steyn CJ proceeded
to hold:
[5]
‘
I should point out, however,
that it has not at any time been held that condonation will not in
any circumstances be withheld if
the blame lies with the attorney.
There is a limit beyond which a litigant cannot escape the results of
his attorney's lack of
diligence or the insufficiency of the
explanation tendered. To hold otherwise might have a disastrous
effect upon the observance
of the Rules of this Court. Considerations
ad misericordiam
should not be allowed to become an invitation
to laxity. In fact this Court has lately been burdened with an undue
and increasing
number of applications for condonation in which the
failure to comply with the Rules of this Court was due to neglect on
the part
of the attorney. The attorney, after all, is the
representative whom the litigant has chosen for himself, and there is
little reason
why, in regard to condonation of a failure to comply
with a Rule of Court, the litigant should be absolved from the normal
consequences
of such a relationship, no matter what the circumstances
of the failure are.’
[17]
In
Mbutuma
v Xhosa Development Corporation Ltd
,
[6]
the delay in
prosecuting an appeal was due to the inexperience of the appellant’s
attorney, that matter having been his first
appeal to this court.
Trengove AJA held that the attorney’s lack of experience was no
excuse at all: he had a duty to acquaint
himself properly with the
procedure prescribed by this court’s rules.
[7]
[18]
While, generally speaking, the various factors that have been listed
in the cases, including the appellant’s prospects
of success,
should be weighed against each other, there are instances where
condonation ought not to be granted even if there are
reasonable
prospects of success. This was alluded to in the
Darries
matter.
[8]
In
Tshivhase
Royal Council and Another v Tshivhase and Another; Tshivhase and
Another v Tshivhase and Another
[9]
Nestadt JA
said that this court ‘has often said that in cases of flagrant
breaches of the Rules, especially where there is
no acceptable
explanation therefor, the indulgence of condonation may be refused
whatever the merits of the appeal are’ and
that this applies
‘even where the blame lies solely with the attorney’.
[10]
The
facts and the explanation for the delay
[19]
SA Express’ attorney deposed to an affidavit in support of the
application for condonation and for the re-instatement
of the appeal.
In it, he candidly admitted that the ‘main reason for the delay
is because neither I nor my correspondent
attorney understood
initially what a record of this Honourable Court comprised’;
and that their efforts fell short of what
was required because of
their ‘limited understanding of the Rules, given that this
matter is our first appeal in the Supreme
Court of Appeal’. He
also blamed his Bloemfontein correspondent for having been negligent
in the advice that he had given.
[11]
[20]
On 19 September 2018, the attorney instructed his correspondent to
file the notice of appeal. He did so. The Registrar of this
court
informed him that the record was due on 21 January 2019.
[21]
It then became necessary to prepare the record. The correspondent
advised the attorney that the record was ‘the transcript
of
proceedings in the court
a
quo
’. The
attorney appointed a transcribing service to transcribe ‘the
court proceedings’.
[22]
On 16 January 2019, this ‘record’ was delivered to SA
Express’ senior counsel. Two days later, he advised
the
attorney’s candidate attorney that what had been provided to
him was not a record for purposes of an appeal to this court.
As the
proceedings in the court below were application proceedings, the
‘record’ that had been transcribed was no more
than a
transcript of the argument.
[23]
When SA Express’ senior counsel was asked by the candidate
attorney what ‘the record looked like’, he was
advised to
read rule 8 of this court’s rules, and counsel also gave him
the name of a transcription service. Had the attorney
read rule 8
before ordering the transcript of the argument, he would have
discovered that rule 8(6)
(j)
provides that ‘[u]nless it is essential for the determination
of the appeal and the parties agree thereto in writing, the
record
shall not contain’, inter alia, ‘the argument and opening
address’. While rule 8 does not define ‘the
record’,
one gets a clear idea of what is required from a reading of the rule.
For instance, rule 8(6)
(i)
provides that the record ‘shall contain a correct and complete
index of the evidence, documents and exhibits in the case’.
Rule 8(6)
(h)
provides that if the record is longer than one volume, the judgment
appealed against, the judgment and order giving leave to appeal
and
the notice of appeal must be contained in a separate volume. From
this, the attorney would have gleaned that the record comprised
all
of the evidence, documents and exhibits – in other words, in
this context, the notice of motion, affidavits and annexures
–
and the judgments and notice of appeal in respect of the proceedings
in the court below.
[24]
The attorney contacted the transcription service suggested by
counsel. He was told that it would take three weeks to prepare
the
record. It was then three days before the appeal was due to lapse. He
decided that it was best for him to prepare the record
himself. He
obtained a short extension of time from Bagport’s attorneys –
until 23 January 2019. His correspondent
failed, however, to notify
the Registrar of this.
[25]
An attempt was made to file the record on 24 January 2019. In the
answering affidavit it was said that this record consisted
of an
unbound bundle of the affidavits in the proceedings in the court
below. It was thus not surprising that the Registrar refused
to
accept this as a proper record. Despite this, the correspondent had
told the attorney that he had filed the record.
[26]
On 30 January 2019, the Registrar wrote to the correspondent to
inform him that the appeal had lapsed. The correspondent chose
to
keep this information to himself. The attorney only found out that
the appeal had lapsed when, on 5 February 2019, he received
a letter
from Bagport’s attorneys informing him of this fact and
threatening to execute on Van Oosten J’s judgment.
[27]
When the attorney communicated with the Registrar, he was informed
that no record had been filed by the correspondent as alleged
by him.
When proof of the filing of the record was sought from the
correspondent, he said that he had attempted to file the record
on 24
January 2019 but the Registrar had refused to accept the record
because it was not properly bound. Even if the correspondent
had
informed the Registrar of the extension of time by agreement until 23
January 2019, the appeal would have lapsed by 24 January
2019.
[28]
The correspondent informed the attorney that he had been advised to
file a properly bound record and an application for condonation
and
for the reinstatement of the lapsed appeal. The attorney decided to
fly to Bloemfontein to collect the record and ‘prepare
it
correctly’. He said that his correspondent told him that
getting the appeal back on track involved an ‘administrative
process’ in which ‘the application was decided in
chambers and/or by the registrar’. All it required, said the
correspondent, was an affidavit from him setting out the basis for
the application, together with heads of argument. The matter
was left
in the hands of the correspondent and the result was that a ‘wholly
defective reinstatement application’ and
a defective record
were filed.
[29]
This vain attempt to file the record had not been simple or
expeditious. A draft of the application had been sent to the attorney
on 7 February 2019. He had made amendments to it and sent it back to
the correspondent on 8 February 2019. The attorney flew to
Bloemfontein on 9 February 2019 to collect the record and the
application. It was served on Bagport’s attorneys on 11
February
2019. On 12 February 2019, the attorney returned to
Bloemfontein to file the ‘corrected record’, in which the
corrections
had been made by hand. When the attorney and his
correspondent attempted to file this record, they were advised that
while it appeared
to be compliant, ‘we would have to file heads
of argument and a practice note for the condonation and reinstatement
application
together with the corrected record’.
[30]
The correspondent undertook to draft the heads of argument. The
attorney bought computer software to enable him to ‘transpose
references onto the record as is required by the rules of this Court
(instead of transposing the same by hand as I had previously
done)’.
On his return to Johannesburg he attended to this task and returned
to Bloemfontein on 15 February 2019. The record
was bound and left
with the correspondent for filing. Ten days later, on 25 February
2019, the record was filed together with an
application for
condonation and for the reinstatement of the appeal.
[31]
On 12 March 2019, the attorney sought confirmation from the
correspondent that condonation had been granted in terms of the
‘administrative process’ that the correspondent had
spoken of. When the correspondent said that he did not have that
confirmation, the attorney travelled once more to Bloemfontein with a
view to obtaining confirmation that condonation had indeed
been
granted.
[32]
At this stage, the correspondent went to ground. As a result, the
attorney went to the court on his own. He was informed that
the
application for condonation and reinstatement of the appeal would
only be heard in court on the day on which the appeal was
to be
heard. He also discovered to his surprise that Bagport’s
attorneys had filed a notice of opposition and answering papers.
[33]
On 14 March 2019, the attorney learnt, while consulting with counsel,
that the record filed on 25 February 2019 was defective
in a number
of material respects. He was advised by counsel that the record had
to be withdrawn and that a transcriber should be
appointed to produce
a proper record. He withdrew the defective record and the application
for condonation and reinstatement of
the appeal on 19 March 2019.
Another record was filed, together with an application for
condonation and the reinstatement of the
appeal on 12 April 2019.
Conclusion
on condonation
[34]
An applicant for condonation is required to give a full and
reasonable explanation for the delay that has occurred, and that
explanation must cover the entire period of the delay.
[12]
I
have set out the attorney’s explanation for the delay and now
turn to a consideration of its reasonableness.
[35]
The proceedings in the court below were application proceedings. The
attorney was, not surprisingly, in possession of copies
of the
papers, although he said that some documents were not signed and
others were not stamped. Bagport’s attorneys also
made their
papers from the application available to the attorney. The record,
including the judgment, judgment granting leave to
appeal and notice
of appeal, consists of 252 pages. Yet it took from 20 August 2018 to
12 April 2019 – about a week short
of eight months – to
produce it in an acceptable form. During this period, one comedy of
errors followed another.
[36]
It was only on 12 November 2018, about two and a half months after
leave to appeal had been granted, that the attorney instructed
a
transcriber to transcribe the argument. It is so that the product of
the transcription was not a record for purposes of the appeal,
but
the delay from when leave to appeal was granted until 18 January
2019, when counsel informed the attorney that he had not produced
a
record, is indicative of the tardy and ill-directed approach of the
attorney in general.
[37]
When the attorney ordered a transcript of the argument, he was
negligent: on his own admission, he did not know what was required
and did not acquaint himself with the rules of this court. This he
was required to do, and his lack of experience is no excuse.
[13]
[38]
Once the consequences of the attorney’s lack of knowledge was
brought to his attention by counsel, he must have realized
that he
was hopelessly out of his depth. At this stage, he ought to have
sought the assistance of someone who knew what was required
and was
able to do it. He did not do so and gave no reasonable explanation
for his failure. Instead, he decided to try again to
compile a
record. Not surprisingly, the result was a disaster. And yet again,
that disaster is attributable to the attorney’s
negligence.
[39]
To the extent that the attorney has tried to lay the blame at the
door of his correspondent, there are three answers. First,
he
appointed the correspondent and cannot escape the consequences of his
agent’s negligence. Secondly, the primary obligation
to produce
a proper record and file it timeously lay with him. Thirdly, it must
have been clear to him from an early stage that
his correspondent was
as out of his depth as he was: the attorney learnt in January 2019
that the correspondent’s advice
as to the nature of a record
was incorrect, yet he continued to rely on the correspondent’s
advice.
[40]
If the attorney had, due to his ignorance of what a record is,
allowed the appeal to lapse, but had then filed a compliant
record
within a few weeks, a case for condonation may have had merit. But
that is not what he did. Instead, his ineptitude and
negligence
continued. After having presented his counsel with a transcript of
the argument, he attempted to file defective records
on 24 January
2019 and 25 February 2019, before finally managing to file a
compliant record on 12 April 2019.
[41]
Throughout the period from leave to appeal being granted to the
filing of a compliant record, there are unexplained delays.
I mention
but two. First, the record that was filed on 25 February 2019 had
been ready for filing on 15 February 2019 but nothing
appears to have
been done during this ten day period. Secondly, after that record was
withdrawn, the new, final and compliant record
was given to the
correspondent on 30 March 2019 but for reasons that are not
explained, the record was only filed on 12 April 2019.
[42]
In the foreword to the first edition of Herbstein and Van Winsen’s
book on civil procedure, reproduced in the fifth edition
now titled
Herbstein
and Van Winsen: The Civil Practice of the High Courts of South
Africa
,
[14]
Mr
Justice R P B Davis wrote:
‘
But after
all, industry is one of the attributes of an honourable character: no
honourable and honest legal practitioner will accept
a client’s
money for doing his work to the best of his ability, and then not do
it. And before he ever accepts it, he will
have qualified himself to
do the work properly, for, where skill is required, lack of it is
equivalent to negligence. Indeed, to
undertake to do something and
then not to do it with reasonable efficiency, either because of
unskillfulness or [because] of lack
of diligence, is something very
closely akin to obtaining money by false pretences.’
[43]
In this case, the attorney’s negligence lay in the fact that he
did not acquaint himself with the rules of this court,
did not have
even the most rudimentary understanding of what had to be done,
relied on the correspondent who also proved himself,
at an early
stage, to be unqualified to do the work, and steadfastly failed or
refused, until it was too late, to engage the services
of people who
knew what to do and could do the job. When the attorney’s
conduct of the appeal, from when leave to appeal
was granted until a
compliant record was filed, is viewed holistically, the conclusion is
inescapable that he was grossly negligent
throughout. The attorney’s
explanation is not reasonable. Indeed, all it does is establish his
negligence.
[44]
This is, in my view, the type of case in which condonation should be
refused irrespective of the prospects of success, and
irrespective of
the fact that the blame lies solely with the attorney: the breaches
of the rules have been flagrant and continual.
Despite this finding,
I believe it to be prudent nonetheless to deal briefly with the
prospects of success.
The
merits
[45]
In the counter-application, it was alleged that the settlement
agreement was invalid for two reasons. They were, first, that
SA
Express’ CEO at the time had shown a ‘flagrant disregard
for internal processes’ by failing to obtain ‘the
relevant authorizing signatures from relevant role players as
envisaged in both the Contract Compliance and expense authorisation
forms’; and secondly that there had been non-compliance with ss
38(2) and 68 of the Public Finance Management Act 1 of 1999
(the
PFMA).
[46]
Despite the argument in the court below being limited to these
issues, an attempt was made to raise a third argument –
that
the settlement agreement should not be enforced because SA Express
disputed owing Bagport the amount it had claimed.
[15]
There
are two principal problems with this argument.
[47]
First, no attempt was made in the counter-application to impugn the
settlement agreement. Nowhere in the papers was it even
remotely
suggested that the settlement agreement was induced by
misrepresentation, fraud, duress, undue influence, mistake or
anything similar. Secondly, the argument lacks a factual foundation.
While SA Express made allegations about a dispute as to the
amount
that it owed Bagport, in the answering affidavit to the
counter-application, that dispute, its resolution and SA Express’
acceptance of the correctness of Bagport’s claim was fully and
convincingly explained. (SA Express’ own reconciliation,
which
concluded that it owed Bagport the amount claimed by it was attached
to the answering affidavit.) On the basis of the
Plascon-Evans
rule,
[16]
Bagport’s
version must prevail. There is consequently no merit in this belated
attack on the settlement agreement, and it
has no prospect of
success.
[48]
I turn now to the argument that the settlement agreement was invalid
because it was concluded in breach of ss 38(2) and 68
of the PFMA. I
accept that SA Express, as a state owned enterprise, is, in general,
required to comply with the PFMA. Section 38(2)
provides that an
accounting officer may not commit a trading entity ‘to any
liability for which money has not been appropriated’.
Section
68 provides:
‘
If a person,
otherwise than in accordance with section 66, lends money to an
institution to which this Act applies or purports to
issue on behalf
of such an institution a guarantee, indemnity or security, or enters
into any other transaction which purports
to bind such an institution
to any future financial commitment, the state and that institution is
not bound by the lending contract
or the guarantee, indemnity,
security or other transaction.’
Section
66(1) provides that a body to which the PFMA applies may not ‘borrow
money or issue a guarantee, indemnity or security,
or enter into any
other transaction that binds or may bind that institution . . . to
any future financial commitment, unless such
borrowing, guarantee,
indemnity, security or other transaction’ is authorised by the
PFMA.
[49]
If the PFMA applies, it applies to the conclusion of the baggage
wrapping agreement – the underlying agreement –
and not,
as Van Oosten J said of the settlement agreement, to ‘an
acknowledgement of an already existing indebtedness’.
[17]
No
factual assertions appear in SA Express’ counter-application
that could establish that the funds required to pay for the
baggage
wrapping service had not been appropriated. Similarly, no facts have
been put up to establish that the agreement was entered
into
otherwise than in accordance with s 66.
[18]
In
any event, ss 66 and 68 do not apply to the baggage wrapping
agreement because it is not an agreement that is similar to a credit
or security agreement – the types of agreement that the
sections are confined to.
[19]
There
is no merit, either factually or legally, in this argument, and it
consequently has no prospect of success.
[50]
Finally, it was argued that the settlement agreement was invalid for
want of compliance by SA Express with its own internal
procedures.
The nub of this challenge is that two forms were not completed and
signed prior to the settlement agreement being signed
by the CEO. It
was stated in the founding affidavit in the counter-application that
it was SA Express’ policy for a ‘compliance
contract
form’ to be filled in and signed, but this was not done at all.
Secondly, SA Express’ policy also required
an ‘expense
authorization form’ to be completed. While the CEO was
authorised to approve payments of up to R10 million,
the form
required the recommendation of a divisional manager and the approval
of a general manager and the chief financial officer.
In this case,
the recommendation was signed by the chief procurement officer and
approved by the CEO. (There is evidence that the
chief financial
officer was aware of the settlement agreement and undertook to honour
it.)
[51]
As with the other arguments that I have dealt with above, once again,
the factual basis for the conclusion that SA Express
contends for is
absent. The policy that it relied on was not attached to its papers
and nothing was said as to its legal provenance.
In order for the
finding contended for by SA Express to be made, it would be necessary
to interpret the policy within the context
of its legal pedigree and
context. Only then could a finding be made on whether a failure to
complete the two forms would lead
to the invalidity of the settlement
agreement.
[52]
Without the policy having been proved, such a finding cannot be made.
Instead, it would appear that SA Express, when the settlement
agreement was signed, had merely failed to comply with its own
internal procedures. In
City
of Tshwane Metropolitan Municipality v RPM Bricks (Pty) Ltd
,
[20]
Ponnan
JA drew a distinction, for purposes of the operation of estoppel
against an organ of state, between non-compliance with internal
procedures, on the one hand, and with empowering provisions, on the
other. He explained the position thus:
[21]
‘
[11] It is
important at the outset to distinguish between two separate, often
interwoven, yet distinctly different “categories”
of
cases. The distinction ought to be clear enough conceptually. And
yet, as the present matter amply demonstrates, it is not always
truly
discerned. I am referring to the distinction between an act beyond or
in excess of the legal powers of a public authority
(the first
category), on the one hand, and the irregular or informal exercise of
power granted (the second category), on the other.
That broad
distinction lies at the heart of the present appeal, for the
successful invocation of the doctrine of estoppel may depend
upon it.
[12] In the second category, persons
contracting in good faith with a statutory body or its agents are not
bound, in the absence
of knowledge to the contrary, to enquire
whether the relevant internal arrangements or formalities have been
satisfied, but are
entitled to assume that all the necessary
arrangements or formalities have indeed been complied with. Such
persons may then rely
on estoppel if the defence raised is that the
relevant internal arrangements or formalities were not complied with.
[13] As to the
first category: failure by a statutory body to comply with provisions
which the legislature has prescribed for the
validity of a specified
transaction cannot be remedied by estoppel because that would give
validity to a transaction which is unlawful
and therefore ultra
vires.’
[53]
SA Express is a public company.
[22]
It
is subject to the
Companies Act 71 of 2008
.
Section 20(7)
of the
Companies Act codifies
the
Turquand
rule of the common law.
[23]
It
provides:
‘
A person
dealing with a company in good faith, other than a director,
prescribed officer or shareholder of the company, is entitled
to
presume that the company, in making any decision in the exercise of
its powers, has complied with all of the formal and procedural
requirements in terms of this Act, its Memorandum of Incorporation
and any rules of the company unless, in the circumstances, the
person
knew or reasonably ought to have known of any failure by the company
to comply with any such requirement.’
Section
20(8) provides that s 20(7) ‘must be construed concurrently
with, and not in substitution for, any relevant common
law principle
relating to the presumed validity of the actions of a company in the
exercise of its powers’.
[54]
It has not been suggested that when Bagport concluded the settlement
agreement it was not dealing in good faith with SA Express.
There has
likewise been no suggestion that it knew or ought reasonably to have
known that the two forms had not been completed.
In these
circumstances,
s 20(7)
of the
Companies Act applies
to prevent SA
Express from relying on its failure to comply with its own internal
procedures. For this reason, SA Express’s
third argument on the
invalidity of the settlement agreement has no merit, and no prospects
of success.
[55]
Having considered the merits, I am of the view that had it been
necessary to consider SA Express’ prospects of success
as part
of the condonation application, the answer would have been that its
prospects of success are extremely poor and could not
assist in
relation to condonation.
Conclusion
[56]
It is necessary to say something about the way in which SA Express
has conducted itself in this matter. In a word, its conduct
has been
disgraceful. It has attempted to avoid its clear and admitted
obligations in a most underhanded way. Better is expected
of an organ
of state, which should serve as a role model
[24]
and
display an acceptable level of commercial morality in its dealings
with the public. As Cameron J said in
MEC
for Health, Eastern Cape and Another v Kirland Investments (Pty) Ltd
t/a Eye & Lazer Institute
,
[25]
albeit
in a different context, organs of state have a duty ‘to tread
respectfully when dealing with rights’ even, I
would suggest,
in their commercial dealings.
[57]
In the result, I make the following order.
1 The application for
condonation and for the re-instatement of the appeal is dismissed.
2 The
matter is struck off the roll with costs.
_______________________
C Plasket
Judge of Appeal
APPEARANCES
For
the appellant: T Ngcukaitobi SC, R Tulk and N Nyembe
Instructed
by:
Ezra
Matlala Attorneys, Johannesburg
Honey
Attorneys, after substituting L M Mokhele Attorneys, Bloemfontein
For
the respondent: N P G Redman SC
Instructed
by:
Le
Roux & Vivier Associates, Johannesburg
Lovius
Block, Bloemfontein
[1]
Dengetenge
Holdings (Pty) Ltd v Southern Sphere Mining and Development Company
Ltd and Others
[2015]
ZASCA 5
para 11.
[2]
Darries
v Sheriff, Magistrate’s Court, Wynberg and Another
1998 (3) SA
34
(SCA) at 40I-41E. (References omitted.)
[3]
Saloojee
and Another NNO v Minister of Community Development
1965 (2) SA
135 (A).
[4]
At 140H.
[5]
At 141B-E.
[6]
Mbutuma
v Xhosa Development Corporation Ltd
1978 (1) SA
681 (A).
[7]
At
684H-685A. See too
Moaki
v Reckitt and Colman (Africa) (Pty) Ltd and Another
1968 (3) SA 98
(A) at 101G-H.
[8]
Note 2 at
40I-41E.
[9]
Tshivhase
Royal Council and Another v Tshivhase and Another; Tshivhase and
Another v Tshivhase and Another
[1992] ZASCA 185
;
1992 (4) SA
852
(A) at 859E-F.
[10]
See by way
of example,
PE
Bosman Transport Works Committee and Others v Piet Bosman Transport
(Pty) Ltd
1980 (4) SA 794
(A) at 799D-E. See too
Blumenthal
and Another v Thomson NO and Another
[1993] ZASCA 190
;
1994 (2) SA 118
(A) at 121I-122B.
[11]
I shall refer to SA Express’ attorney as ‘the attorney’
and I shall refer to his Bloemfontein correspondent
as the
‘correspondent’.
[12]
Van Wyk
v Unitas Hospital and Another (Open Democratic Advice Centre as
amicus curiae)
[2007] ZACC
24
;
2008 (2) SA 472
(CC) para 22;
Laerskool
Generaal Hendrik Schoeman v Bastian Financial Services (Pty) Ltd
[2009] ZACC 12
;
2012 (2) SA 637
(CC) para 15.
[13]
Mbutuma
v Xhosa Development Corporation Ltd
(note 6) at
684H-685A.
[14]
A C
Cilliers, C Loots and H C Nel
Herbstein
and Van Winsen: The Civil Practice of the High Courts of South
Africa
(5 ed) (2009) Vol 1 at xvi.
[15]
In the
court below, Van Oosten J said of this issue that ‘[n]ot
surprisingly, and in my view wisely so, counsel for SA Express
did
not rely on the history of the matter as a ground for attacking the
validity of the settlement agreement’ (para 6).
[16]
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA
623
(A) at 634E-I.
[17]
Para 10.
[18]
A number of
factual allegations were made in the heads of argument filed on
behalf of SA Express. They can safely be ignored as
they do not
appear in any of the affidavits and are thus not evidence. To
include them in the heads of argument was, in my view,
improper.
[19]
Road
Traffic Management Corporation v Waymark Infotech (Pty) Ltd
[2018] ZACC
12
;
2019 (5) SA 29
(CC) para 45.
[20]
City of
Tshwane Metropolitan Municipality v RPM Bricks (Pty) Ltd
[2007]
ZASCA 28; 2008 (3) SA 1 (SCA).
[21]
Paras
11-13. (References omitted.)
[22]
South
African Express Act 34 of 2007
,
s 6.
[23]
See
Royal
British Bank v Turquand
(1856) 6 E & B 327.
[24]
S v
Makwanyane and Another
[1995] ZACC 3
;
1995 (3) SA
391
(CC) para 222.
[25]
MEC for
Health, Eastern Cape and Another v Kirland Investments (Pty) Ltd t/a
Eye & Lazer Institute
[2014] ZACC
6
;
2014 (3) SA 481
(CC) para 82.