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[2019] ZASCA 21
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Born Free Investments 247 (Pty) Ltd v Kriel NO (1183/17) [2019] ZASCA 21 (26 March 2019)
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SUPREME
COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 1183/17
In
the matter between:
BORN FREE
INVESTMENTS 247 (PTY)
LTD APPLICANT
and
PIERRE DU PLESSIS
KRIEL
NO RESPONDENT
Neutral
citation:
Born
Free Investments 247 (Pty) Ltd
v
Kriel NO
(1183/17)
[2019] 21 ZASCA (26 March 2019)
Coram:
Wallis,
Zondi, Mathopo and Schippers JJA and Mokgohloa AJ
Heard:
08
March 2019
Delivered:
26
March 2019
Summary
:
Interpretation of court orders – special leave – whether
final order confirmed provisional order – whether failure
to
obtain leave of court prior to institution of action rendered the
action a nullity
ORDER
On
appeal from:
Western
Cape Division of the High Court, Cape Town (Hlophe JP, Le Grange and
Dolamo JJ sitting as court of appeal):
1
Special
leave to appeal is granted and the costs of the application for
special leave are to be costs in the appeal.
2
The
appeal is upheld with costs, such costs to include those consequent
upon the employment of two counsel.
3
The
order of the full court is altered to read as follows:
‘
(a)
The appeal is upheld with costs.
(b)
The special plea is upheld and the action is stayed pending:
(i)
an order by the court granting leave to proceed with the
action; or
(ii)
the termination of the curatorship.’
JUDGMENT
Mokgohloa
AJA (Wallis, Zondi, Mathopo and Schippers JJA concurring):
[1]
On 20 August 2012, the whole of the collective investment scheme
business and the business of providing financial services of
Rockland
Asset Management and Consulting (Pty) Ltd (RAM) and two other
entities was
placed
under provisional curatorship under s 5 of the Financial Institutions
(Protection of Funds) Act.
[1]
The respondent was appointed as the curator.
[2] In terms of
paragraph 6.2 of the provisional order, a rule nisi was issued
calling upon RAM, the two entities and any other
interested party to
show cause on the return day why:
‘
an
order should not be granted that, whilst the curatorship exists, all
claims, actions, proceedings, the execution of all writs,
summonses
and other processes against any of the entities be stayed and not
instituted or proceeded with, without the leave of
the Court.’
[3] A final order
was made on the extended return day, 6 December 2012 (the final
order). Paragraph 1 of the final order reads:
‘
Subject
to the terms of this order, the rule nisi is confirmed in respect of
the business of the First and Third Respondents (“the
Entities”) and the appointment of the curator is made final.’
[4]
On 29 May 2014, the applicant instituted action against the
respondent for payment of amounts due under certain lease agreements
concluded between it and RAM. The respondent defended the action and
raised a special plea against the claim, asserting that the
applicant
did not obtain the leave of the court before instituting the action.
He contended that since the applicant did not obtain
such leave, the
institution of the action was null and void and of no legal force or
effect; alternatively, that the applicant
could not take any steps in
the action until the leave of the court has been obtained.
[5]
In its replication, the applicant accepted that the respondent’s
appointment was subject to the terms contained in the
provisional and
final orders. It admitted that it had not obtained the leave of the
court before instituting the action. However,
it argued that upon a
proper construction of the provisional and final orders, it was not
required to obtain such leave.
[6]
The Western Cape Division of the High Court (Mantame J) dismissed the
special plea with costs, but granted leave to appeal to
the full
court. The full court, (Dolamo J, Hlophe JP and Le Grange J
concurring) upheld the appeal and the special plea and dismissed
the
applicant’s action with costs. It reasoned that the moratorium
on legal proceedings which formed part of the rule in
the provisional
order was confirmed by the final order. Therefore, the applicant was
required to obtain the leave of the court
before instituting the
action. This appeal is against the decision of the full court with
special leave of this court. It turns
on the interpretation of
paragraph 1 of the final order.
[7]
The basic principles applicable to construing documents also apply to
the construction of a court order. The court’s intention
must
be ascertained mainly from the language of the order, construed
according to the usual well known rules of construction.
[2]
What must be considered is the language used; the context in which
the provision appears; the apparent purpose to which it is directed;
and the material known to those responsible for its production.
A
sensible meaning is to be preferred to one that leads to insensible
or unbusinesslike results
or
undermines the apparent purpose of
the
order.
[3]
[8]
In my view, paragraph 1 of the final order admits of only one
interpretation, namely that the rule nisi in paragraph 6.2 of
the
provisional order was confirmed in respect of the two entities placed
under final curatorship. This interpretation is also
sensible and
consistent with the context and purpose of the final order.
[9]
In terms of paragraph 6.2 of the provisional order, a rule nisi was
issued calling upon all interested parties to show cause
on the
return day why an order should not be granted that actions against
RAM and two entities should not be instituted without
the leave of
the court whilst the curatorship existed.
[10]
The language of confirming a rule nisi is frequently encountered and
well understood in legal practice. A practical and common
sense
approach needs to be adopted in ascertaining whether paragraph 6.2 of
the provisional order has been excluded.
[11]
The usual procedure with a rule nisi is that, the applicant moves to
have the order made final, whereupon the court may either
make the
rule final or discharge it.
[4]
In the absence of an exclusion or qualification, the confirmation of
a rule nisi means that what was in the provisional order becomes
part
of the final order. Had it been the intention of the court to confirm
only one part of the rule, one would have expected paragraph
1 of the
final order to state this expressly. It did not. Paragraph 6.2 was
confirmed in the final order.
[12]
Counsel for the applicant submitted that the rule nisi in paragraph
6.1 referred to the curator’s appointment being ‘confirmed’
while 6.2 referred to the ‘grant’ of an order staying all
legal proceedings. As the final order stated only that the
rule was
confirmed, so it was submitted, no order was granted in terms of
paragraph 6.2. In my view, such interpretation is strained,
technical
and inconsistent with the practical realities regarding the
confirmation of rules nisi as set out above.
[13]
For these reasons the applicant’s argument that paragraph 6.2
of the provisional order was not confirmed is unsustainable.
There is
no basis for the conclusion that the words ‘subject to the
terms of this order’ in paragraph 1 of the final
order excluded
paragraph 6.2 of the provisional order. And likewise, the words ‘in
respect of the business of the First and
Third Respondents’
cannot be interpreted to exclude paragraph 6.2 of the provisional
order.
[14]
It was accepted that the purpose of putting in place the moratorium
on legal proceedings in the provisional order was to offer
a
breathing space to the curator, allowing him to investigate the
affairs of the distressed company and to prepare a report for
the
court. A moratorium would assist with the administration of the
distressed company and help bring it back to its financial
well-being
without the extra burden of having to deal with litigation which may
delay or disrupt the process. There is no reason
in principle why the
court, having imposed a procedural safeguard of this nature for the
period of the interim order and issued
a rule nisi calling for
reasons why it should not be made final, would then have left it out
of the final order.
[15]
What remains is whether the applicant’s claim should have been
dismissed. This issue falls to be decided on a construction
of
paragraph 6.2 of the provisional order. Although paragraph 6.2 is
clumsily worded, it does not state that non-compliance with
its
provisions would result in a nullity. To accept that failure to
obtain leave of the court prior to instituting legal proceedings
leads to nullity would, in my view, lead to injustice. It would also
lead to inconsistency, because existing actions would be stayed,
but
an action instituted without prior leave would be dismissed, which
seems an extreme and unnecessary result. It would be contrary
to s 34
of the Constitution which provides that ‘everyone has the right
to have any dispute that can be resolved by the application
of the
law decided in a fair public hearing before a court’. Suppose a
creditor, oblivious to the moratorium, issued summons
without
obtaining the leave of the court, it would mean that it would be
precluded from proceeding with its claim because its summons
was a
nullity for want of prior leave of the court. Such a construction, in
my view, would be unjust. It seems to me that a sensible
interpretation of paragraph 6.2 is that an action may not be
instituted without the leave of the court, and where it has been
instituted, such action should be stayed until leave is obtained.
[16]
In the circumstances, the dismissal of the applicant’s action
in my view, was a denial of justice which justified special
leave to
appeal. For these reasons the appeal must also be upheld in part and
the dismissal of the action altered to an order staying
it, pending
an order authorizing the action to continue or the termination of the
curatorship.
[17]
Regarding costs, on 7 November 2017, after the judgment of the full
court was delivered, the applicant’s attorney wrote
a letter to
the respondent’s attorney
enquiring whether
the respondent would agree to abandon the portion of the full court’s
judgment which provided for the dismissal
of the applicant’s
claim. The applicant warned that should the respondent not be
agreeable to such abandonment, it would
have no option but to
petition the Supreme Court of Appeal and ask for the amendment of the
order. The respondent refused to agree
to such proposal.
Consequently, the applicant had no option but to come to this court
to obtain the amendment of the order to remedy
the dismissal of its
action. It has succeeded substantially in this appeal and it is
therefore entitled to costs.
[18]
The following order is made:
1 Special leave to
appeal is granted and the costs of the application for special
leave are to be costs in the appeal.
2 The appeal is
upheld with costs, such costs to include those consequent upon the
employment of two counsel.
3 The order of the
full court is altered to read as follows:
‘
(a) The
appeal is upheld with costs.
(b) The plaintiff’s
action is stayed pending:
(i) an order by
the court granting leave to proceed with the action;or
(ii) the termination
of the curatorship.’
___________________
FE
Mokgohloa
Acting
Judge of Appeal
APPEARANCES
For
the Applicant: BJ Manca SC and FJ Gordon-Turner
Instructed
by:
Bradley
Conradie Halton Cheadle,
Cape
Town
Bezuidenhouts
Inc, Bloemfontein
For
the Respondent: E Fagan SC and M Janisch SC
Instructed
by:
Werksmans
Attorneys, Tigervalley,
Cape
Town
McIntyre
van der Post, Bloemfontein
[1]
Financial
Institutions (Protection of Funds) Act 28 of 2001
.
[2]
Firestone
South Africa (Pty) Ltd v Gentiruco
AG
1977 (4) SA 298
(A) at 304D-H.
[3]
Natal
Joint Municipal Pension Fund v Endumeni Municipality
[2012] ZASCA 13
;
2012 (4) SA 593
(SCA) para 18.
[4]
A
C Cilliers, C Loots and H C Nel
Herbstein
and Van Winsen: The
Civil
Practice of the High Courts & Supreme Court of Appeal of South
Africa
5 ed (2009) at 456-457.