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[2018] ZASCA 12
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John Walker Pools v Consolidated Aone Trade & Invest 6 (Pty) Ltd (in liquidation) and Another (245/2017) [2018] ZASCA 12; 2018 (4) SA 433 (SCA) (8 March 2018)
Links to summary
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 245/2017
In
the matter between
JOHN
WALKER POOLS
APPLICANT
and
CONSOLIDATED
AONE TRADE & INVEST 6 (PTY) LTD (IN LIQUIDATION)
FIRST
RESPONDENT
IMPERIAL
CROWN TRADING (PTY) LTD (IN LIQUIDATION)
SECOND
RESPONDENT
Neutral
citation:
John Walker Pools v Consolidated
Aone Trade & Invest 6 (Pty) Ltd (in liquidation) & another
(245/2017)
[2018] ZASCA 012
(8 March 2018)
Coram:
Shongwe ADP, Willis and Mocumie JJA and Mothle and
Rogers AJJA
Heard
:
23 February 2018
Delivered:
8 March 2018
Summary:
Application for leave to appeal –
whether proposed appeal would have any practical effect or result –
such to be determined
without reference to costs, save under
exceptional circumstances – appeal in this case would have no
practical effect because
applicant’s alleged right of
occupation in ejectment proceedings expired in September 2017 –
no exceptional circumstances
justifying appeal on costs.
Costs
- application for leave to appeal – proposed appeal becoming
moot during pendency of application in Supreme Court of
Appeal –
duty of litigants to make reasonable proposals inter se on costs to
avoid need for court’s intervention –
appropriate in
present case to consider merits of application to determine costs –
proposed appeal enjoying no prospects
of success on merits –
applicant ordered to pay costs.
ORDER
Application
for leave to appeal from:
KwaZulu-Natal
Division, Pietermaritzburg (Steyn J sitting as court of first
instance):
The application for leave to appeal is dismissed with
costs.
JUDGMENT
Rogers
AJA (Shongwe ADP, Willis and Mocumie JJA and Mothle AJA concurring)
[1]
This is an application for leave to appeal which has been referred to
open court for argument. I shall refer to the applicant,
John Walker
Pools, as JWP; the first respondent, Consolidated Aone Trade &
Invest 6 (Pty) Ltd (in liquidation) as CAT; and
the second
respondent, Imperial Crown Trading (Pty) Ltd (in liquidation), as
ICT. The order of the court a quo was for the eviction
of JWP, at
CAT’s instance, from shop premises in Ballito Bay Mall (the
Mall) plus costs. The court a quo dismissed JWP’s
application
for leave to appeal. JWP applied to this court for leave to appeal
and it is this application which is now before us.
[2]
At the commencement of the hearing before us the presiding judge
raised with the applicant’s counsel whether the proposed
appeal
had not become moot. Subject to the question of mootness, the test we
must apply is not whether JWP’s proposed appeal
should succeed
but whether there are reasonable prospects of success in the proposed
appeal. The active parties before us were
JWP and CAT.
[3]
To understand the question of mootness, I must provide some brief
background. CAT’s application for eviction was based
on an
allegation that it was the owner of the premises and that JWP was in
unlawful occupation of the premises. This sufficed to
place on JWP
the onus of setting up a right of occupation.
[1]
JWP’s defence was that it was entitled to occupy the shop by
virtue of an alleged lease with ICT. In his first answering
affidavit, the deponent on behalf of JWP, Mr
Dharman
Rajoo, the sole proprietor of the business, did not
attach a copy of the lease. In its replying affidavit the deponent
for CAT contended
that the answering affidavit did not disclose a
defence because the lease was not attached and no particulars thereof
were furnished.
CAT alleged, further, that since ICT’s right to
occupy the premises had been terminated, any rights JWP might have
against
ICT did not give it a defence against CAT.
[4]
In a supplementary answering affidavit Mr Rajoo attached the lease,
explaining why he had not been able to do so earlier. The
attached
document purported to be a lease between ICT and JWP for the period
October 2012 to September 2017.
[5]
The matter came before Steyn J on 16 August 2016. JWP failed to file
heads of argument. Mr Rajoo appeared in person. He told
the judge
that his attorneys had withdrawn the previous week and that his new
attorney was not available on that day. The court
a quo refused a
postponement and granted the eviction order.
[6]
The application in this court does not raise, as a ground of appeal,
that the court a quo wrongly refused the postponement or
that JWP
should be permitted to adduce further evidence on appeal. In the
circumstances, facts and documents in the application
for leave which
were not before the court a quo must be disregarded in assessing
whether JWP has reasonable prospects of success.
[7]
The question of mootness arises from the fact that JWP’s
alleged entitlement to occupy the premises terminated at the
end of
September 2017. We were told from the bar that JWP did not then
vacate the premises and that, as was the case when the eviction
application was launched, it has persisted in its failure to pay
rent. Be that as it may, it is clear that a decision on appeal
would
have no practical effect or result because, at best for JWP, an
appeal court might find that it was entitled to occupy the
premises
until the end of September 2017, a question which is now academic.
[8]
Counsel for JWP conceded that the only practical effect which an
appeal order would have was in relation to costs. In terms
of
s 16(2)(a)(ii)
of the
Superior Courts Act 10 of 2013
, the
question whether a decision would have practical effect or result is,
save under exceptional circumstances, to be determined
without
reference to any consideration of costs. The costs referred to in
this provision are the costs incurred in the court against
whose
decision the appellant or would-be appellant is seeking to appeal,
not the costs in the appellate court. The section is concerned
with
the decision of the court a quo and the circumstances in which an
appeal against the decision of that court can be dismissed
without an
enquiry into the merits. If the costs incurred in the court a quo
court were very substantial, this might constitute
an exceptional
circumstance leading to the conclusion that a reversal of that
court’s decision would have practical effect.
[2]
[9]
In the present case there are no exceptional circumstances which make
it just for an appellate court to reassess the costs order
made by
the court a quo against JWP. In the circumstances, leave to appeal
must be refused.
[10]
The remaining question is what to do about the costs of the
application in this court. Where an appeal or proposed appeal has
become moot by the time leave to appeal is first sought, it will
generally be appropriate to order the appellant or would-be appellant
to pay costs, since the proposed appeal was stillborn from the
outset. Different considerations apply where the appeal or proposed
appeal becomes moot at a later time. The appellant or would-be
appellant may consider that the appeal had good merits and that
it
should not be mulcted in costs for the period up to the date on which
the appeal became moot. The other party may hold a different
view. As
a general rule, litigants and their legal representatives are under a
duty, where an appeal or proposed appeal becomes
moot during the
pendency of appellate proceedings, to contribute to the efficient use
of judicial resources by making sensible
proposals so that an
appellate court’s intervention is not needed. If a reasonable
proposal by one of the litigants is rejected
by the other, this would
play an important part in the appropriate costs order. Apart from
taking a realistic view on prospects
of success, litigants should
take into account, among other factors, the extent of the costs
already incurred; the additional costs
that will be incurred if the
appellate proceedings are not promptly terminated; the size of the
appeal record; and the likely time
it would take an appellate court
to form a view on the merits of the moot appeal. There must be a
proper sense of proportion when
incurring costs and calling upon
judicial resources.
[11]
In the present case JWP applied to the court a quo for leave to
appeal by way of an application dated 14 September 2016. The
application for leave was argued in the court a quo on 14 February
2017 and refused on the same day. The application in this court
was
brought on 15 March 2017. Following the filing of answering and
replying papers, two judges of this court on 15 May 2017 directed
that the application be argued in open court. The appeal only became
moot at the end of September 2017. Substantial costs had by
then been
incurred. The record is short (a single volume) and it is a matter of
no great difficulty to form a view on the merits.
If in October 2017
JWP had withdrawn its application for leave to appeal and tendered
costs, that would no doubt have been acceptable
to CAT. If JWP had
withdrawn its application without tendering costs, CAT would almost
certainly have rejected the withdrawal.
Solely for the purpose of
arriving at a just order on costs, I shall briefly discuss the merits
to demonstrate why such a rejection
would have been reasonable.
[12]
In my view JWP’s opposing papers in the eviction application
did not disclose a defence. JWP did not dispute that CAT
was the
owner of the premises. JWP did not allege facts to show that a lease
with ICT gave JWP any right of occupation as against
the owner.
[13]
Counsel for JWP submitted that the facts showing that JWP’s
lease with ICT gave it a right of occupation against CAT
appeared
sufficiently from CAT’s founding papers. As background to the
facts on which counsel relied, it is necessary to
mention that CAT
was placed in provisional liquidation on 19 September 2013 and in
final liquidation on 20 March 2014; and that
ICT, which by October
2013 was in business rescue, was placed in provisional liquidation on
22 November 2013 and in final liquidation
on 17 January 2014. The
facts alleged in CAT’s founding papers pertaining to ICT (which
were not denied in JWP’s answering
papers) were:
(i) that on 8 October 2013 CAT’s provisional
liquidators wrote to the attorneys acting for ICT and for its
business rescue
practitioner, terminating ‘the agreement that
ICT relied on for its occupation of the Mall and its right to let
premises
in the Mall to tenants’;
(ii) that on 9 October 2013 CAT’s provisional
liquidators addressed a further letter to the said attorneys,
terminating
‘the sale agreement which was purportedly
concluded’ between CAT and ICT and in terms whereof ICT had
purchased two
sections in the sectional title scheme proposed to be
established in respect of the Mall and terminating ‘any other
occupation
agreement which placed ICT in occupation of the Mall’;
(iii) that on 29 October 2014 the attorneys acting
for CAT’s provisional liquidators wrote to ICT’s
provisional
liquidators, terminating ‘any agreements existing
between’ ICT and CAT ‘regarding the occupation, letting
out
or sale of the Mall, including but not limited to the sale
agreement dated 1 December 2009’;
(iv) that, in the premises, ‘any right which
ICT had to conclude agreements of lease with tenants of the Mall and
any
right which ICT had to continue to act as landlord and give
occupation and possession of premises at the Mall to tenants’
were terminated by 9 October 2013, alternatively by 29 October 2014.
[14]
Counsel for JWP argued that these facts showed that there was an
‘agency agreement’ between CAT and ICT; that,
‘on a
proper construction’ of the founding papers, CAT had ‘conceded’
that its rights as owner had been
‘relinquished to ICT’;
and that the relinquished rights were CAT’s ‘right to
sell its property and lease
its property out’. The allegations
in question show no such thing. The documents embodying the agreement
or agreements between
CAT and ICT did not form part of the eviction
papers. CAT simply stated that any agreements on which ICT might have
relied to occupy
and let out premises had been terminated. CAT did
not allege that there were in fact any agreements which gave ICT the
right to
let out premises.
[15]
In any event, the very allegations on which counsel relied included
the allegation that such rights as ICT might have had to
occupy and
let out the premises had been terminated. JWP did not place the
validity of the terminations in issue. On ordinary principles,
a
sub-lessee cannot raise, against the owner, a lease which it has with
the owner’s lessee.
[3]
The position would be different if, in the present case, ICT had
concluded a lease with JWP as an agent for CAT, but the allegations
I
have summarised from the founding papers do not show such to have
been the case nor did JWP’s opposing papers allege agency.
The
lease on which JWP relied, including the very detailed standard terms
and conditions, made no reference whatsoever to CAT.
CAT was not
called upon to reply to a defence based on agency.
[16]
Given its very bleak prospects on the merits had the proposed appeal
not become moot, JWP should be ordered to pay the costs
of the
application in this court for leave to appeal. (JWP has already been
ordered to pay the costs of the application for leave
to appeal in
the court a quo.) Counsel for CAT submitted that these costs should
be on a punitive scale. This is something to which
I have given
careful consideration. There is much to criticise about JWP’s
conduct. JWP appears to have bought itself time
by pursuing an
unmeritorious application for leave to appeal, all the while failing
to pay rent. Furthermore, it did not vacate
the premises at the end
of September 2017 and did not curtail further costs by raising the
question of mootness with CAT. However,
the facts regarding its
continued occupation and non-payment of rent were communicated to us
informally from the bar and have thus
not been canvassed in
affidavits. It may also be mentioned that CAT could have, but did
not, take the initiative in raising the
question of mootness. CAT
also did not give notice that it would be seeking a punitive costs
order. While this last consideration
is not decisive, I am narrowly
persuaded that we should not mark our displeasure by way of a special
costs order.
[17]
The following order is made:
The
application for leave to appeal is dismissed with costs.
__________________
OL
Rogers
Acting
Judge of Appeal
APPEARANCES
For
Applicant:
J
P Broster
Instructed
by
Leon
Pillay & Company Attorneys, Durban
c/o
Bezuidenhouts Inc, Bloemfontein
For
First Respondent:
G
M E Lotz SC
Instructed
by
Edward
Nathan Sonnenbergs Inc, Umhlanga c/o McIntyre van der Post,
Bloemfontein
[1]
Chetty v Naidoo
1974 (3) SA
13
(A) at 20A-E;
Airports
Company South Africa Soc Limited v Airports Bookshops (Pty) Limited
t/a Exclusive Books
[2016]
ZASCA 129
;
2017 (3) SA 128
(SCA) para 24.
[2]
See, eg,
Oudebaaskraal (Edms)
Bpk
& andere v Jansen van Vuuren & andere
2001 (2) SA 806
(SCA) at 812D-E.
[3]
Ntai
& others v Vereeniging
Town Council & another
1953 (4) SA 579
(A) at 589A-D;
Ellerine Brothers (Pty) Ltd v McCarthy Ltd
[2014] ZASCA 46
;
2014 (4) SA 22
(SCA) para 5.