IN THE HIGH COURT OF SOUTH AFRICA
KWAZULU -NATAL LOCAL DIVISION, DURBAN
Case No: D11087/2022
In the matter between:
HEMANTH RAJKUMAR SINGH Applicant
and
BLUE LABEL DISTRIBUTION (PTY) LTD First Respondent
BARKERS Second Respondent
ORDER
Having considered the matter, the following order is made:
1. The application for leave to appeal is dismissed with costs.
JUDGMENT - APPLICATION FOR LEAVE TO APPEAL
Delivered: 7 May 2025
___________________________________________________________________
MASIPA J:
Introduction
[1] This is an application for leave to appeal against the judgment delivered by
this court on 9 January 2025, in which the applicant’s rescission application was
dismissed with costs. The application for rescission sought to set aside the default
judgment granted on 1 February 2023, which declared the applicant personally liable
for the debts of Proud Heritage 217 (Pty) Ltd (in liquidation) in terms of s 424 of the
Companies Act 61 of 1973.
[2] The applicant seeks leave to appeal to the Supreme Court of Appeal,
contending that this court erred in dismissing the rescission application and in its
interpretation and application of legal principles relating to Rule 42(1)(a), the
requirement for oral evidence in section 424 applications, and procedural fairness.
The Test for leave to appeal
[3] Section 17(1)(a) of the Superior Courts Act 10 of 2013 provides:
“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.”
As stated in Ramakatsa and Others v African National Congress and Others [2012]
ZACC 31 , a higher threshold must be met, namely a realistic, reasonable prospect of
success, and not merely an arguable case.
[4] The Constitutional Court in Zuma v Secretary of the Judicial Commission of
Inquiry into State Capture 2021 (11) BCLR 1263 (CC) at para 53 -54, and the
Supreme Court of Appeal in Mkhitha v MEC for Health, Eastern Cape [2016] JOL
36940 (SCA), confirmed that leave should not be granted unless there exists a real,
not remote, prospect that another court would arrive at a different conclusion.
Applicant’s Grounds
[5] The applicant’s principal grounds of appeal are that this court erred in
distinguishing the SCA decision in Minnaar v Van Rooyen NO 2016 (1) SA 117
(SCA) and in finding that affidavits sufficed to sustain a s 424 application in
unopposed motion proceedings without oral evidence. The applicant’s reliance on
Minnaar is misplaced. As noted in my earlier judgment and confirmed by the
respondents, Minnaar involved an unopposed action trial under Rule 39(1) without
any evidence led. In contrast, this case was an application brought in motion
proceedings under s 424, supported by affidavits providing prima facie evidence of
misconduct . The applicant’s now in his leave to appeal question s whether the
affidavit together with the annexures, in the absence of any opposition from the
Respondent becomes evidence which, on a balance of probabilities, discharges the
onus the Applicant has.
[6] It is trite that t he standard in civil cases is proof on a balance of probabilities.
The respondents established this threshold by way of uncontested affidavits and
annexures in the application. There was no requirement in our law, nor in Minnaar , to
call oral evidence where such affidavits remained unchallenged . It was however
argued by the applicant that the SCA in Philotex (Pty) Ltd v Snyman and Others
1998 (2) SA 138 (SCA) at 142H -I emphasized that ‘The remedy is a punitive one; a
director can be held personally liable for liabilities of the company without proof of
any causal link between his conduct and those liabilities: Howard v Herrigel and
Another NNO 1991 (2) SA 660 (A) at 672E. The onus is upon the party alleging
recklessness to prove it and, these being civil proceedings, to establish the
necessary facts according to the required standard, which is on a balance of
probabilities.’ It was accordingly submitted that oral evidence ought to be required
irrespective of the procedure adopted.
[7] A further, factor raised by the applicant as a ground of appeal was that the
Court erred in holding that the order was not erroneously granted within the meaning
of Rule 42(1)(a), as there was allegedly an undertaking to adjourn the matter.
Particularly, that the procedural irregularities and bad faith conduct by the
respondents, particularly relating to undertakings in email correspondence, deprived
the applicant of a fair hearing, in violation of section 34 of the Constitution. Further,
that the factual matrix mirrors Society of Advocates of Natal v Merret 1997 (4) SA
374 (N) and Marudi v NC Housing Services [2018] ZACC 32, warranting intervention.
Respondents’ Grounds of Opposition
[8] The respondents oppose the application, arguing that the rescission
application failed to meet the jurisdictional requirements under Rule 42(1)(a) or the
common law . The applicant’s claim of an undertaking for adjournment based on an
email sent on 31 January 2023 was canvassed in the rescission application. It was
clear that while the respondents acknowledged such communication, it did not
amount to an unconditional agreement not to proceed. The matter was duly set down
and stood down for instructions, with the applicant ultimately defaulting . It was
submitted fo r the respondent that the applicant’s procedural complaints were
misplaced as no exclusion or procedural irregularity occurred any default was
voluntary.
[9] It was f urther argued that no reasonable prospect exists that another court
would find differently, as this court correctly distinguished Minnaar and properly
applied the law to the facts. Additionally, the respondent argued that the affidavits in
the s 424 application contained sufficient evidence to sustain the order and no bona
fide defence was established. Further that s 424 of the Companies Act expressly
refers to application proceedings. Consequently, the respondent argued that the
application for leave lacks merit and fails to demonstrate compelling grounds or
reasonable prospects of success.
Evaluation
[10] It is trite that in application proceedings, affidavits do not only constitute
pleadings but are also evidence. See Kleynhans v Van der Westhuizen NO 1970 (1)
SA 565 at 568E. The applicant’s argument rests predominantly on the assertion that
Minnaar necessitates oral evidence in all s 424 matters. This court, however, found
Minnaar distinguishable correctly, in my view as it dealt with an unopposed trial
under Rule 39(1), not an application supported by affidavits as provided for in s 424.
[11] While Minnaar confirms the need for evidence in unopposed actions, it does
not exclude affidavit evidence in unopposed applications, where procedural rules
differ, and the founding affidavit constitutes both evidence and pleadings . In Philotex
at 144A -C it was accepted that despite the need to determine whether the conduct of
Directo r(s) was reckless of not, the proceedings were by way of application. In that
case, no oral evidence was le d. The facts in the current matter are also
distinguishable to those in Business Partners Ltd v World Focus 754 CC 2015 (5) SA
525 (KZD ) since there, the claim which was for damages was incorrectly categorised
as falling under s 15 of the Insolvency Act which action proceedings ought to have
been instituted.
[12] The applicant’s further reliance on Merret and Marudi is also unpersuasive.
The facts of those matters involved procedural exclusion or deceit of a kind
materially absent here. While this court found the respondents’ conduct ill -advised in
light of the prior email, the applicant was not legally excluded and could have
safeguarded his position.
[13] Regarding prospects of success, no credible basis has been demonstrated
that the SCA would likely overturn this court’s findings on either the procedural
sufficiency of the s 424 application; or the absence of jurisdictional grounds for
rescission. Nor has any other compelling reason been shown, within the meaning of
section 17(1)(a)(ii), to warrant the appeal being heard, as there is no conflicting
authority requiring resolution.
[14] The applicant failed to provide a reasonable explanation for the delay in
bringing the rescission application, nor did he demonstrate a bona fide defence with
prospects of success on the merits, as required by Chetty v Law Society, Transvaal
1985 (2) SA 756 (A) . No effort was made by the applicant to evidence any bona fide
defence to the merits of the matter relating to s 424 in the rescission application. His
focus was mainly on the issue of a postponement. An attempt is now made in
hindsight to address that issue which in my view is late.
[15] As for the procedural point, the Constitutional Court in Zuma held that Rule
42(1)(a) is confined to cases of procedural exclusion, not voluntary absence despite
due notice. This matter clearly falls into the latter category.
[16] Having considered the applicant’s submissions, including the points raised
regarding Minnaar , the standard of proof in s 424 proceedings, and alleged
procedural irregularities, I am not persuaded that there are reasonable prospects
that another court would come to a different conclusion. Nor has the applicant
advanced any other compelling reason, such as conflicting authority or public
interest, to justify a hearing before the Supreme Court of Appeal or to the full court .
In the circumstances, I am not satisfied that there are reasonable prospects of
success on appeal, nor is there any compelling reason for the appeal to be heard.
Order
[12] The application for leave to appeal is dismissed with costs.
MBS Masipa J
Details of the Hearing
Heard: 9 January 2025
Delivered: 7 May 2025
Appearances :
For the applicants: L B Broster SC
Instructed by: Rakesh Maharaj & Company, KwaDukuza
For the respondents: J L Miranda
Instructed by: Bakers Attorneys