Knouwds NO v Josea and Another (SA 5 of 2008) [2010] NASC 9 (14 September 2010);
REPORTABLE
CASE
NO: SA 5/2008
IN
THE SUPREME COURT OF NAMIBIA
In
the matter between
ERIC
KNOUWDS N.O.
(In
his capacity as Provisional Liquidator of
Avid
Investment Corporation (Pty) Ltd. APPELLANT
and
NICOLAAS
CORNELIUS JOSEA FIRST RESPONDENT
HEDWICHT
JOSEA SECOND RESPONDENT
Coram:
Shivute, CJ, Strydom, AJA et Mtambanengwe, AJA
Heard
on: 2010/03/10
Delivered
on: 2010/09/14
APPEAL JUDGMENT
____________________________________________________________________
STRYDOM, AJA:
The
appellant, in his capacity as provisional liquidator of Avid
Investment Corporation (Pty) Ltd. (Avid) obtained, on an urgent
basis, and without notice, a provisional sequestration order of the
estate of the first respondent. From the very beginning things went
wrong. It was not brought to the attention of the Judge who heard
the application that, because no notice was given of the application
to the first respondent, the application documents were not served
on the first respondent prior to the application being moved with
the result that the Court only gave instructions for the service of
its order. This was further aggravated by the fact that the Court
was requested to order service thereof as if the first respondent
was a private company. Consequently it was ordered that the
provisional sequestration order be served by two publications in
newspapers and that it be served on the registered address of
the first respondent, which was of course non-existent. A further
problem was that the first respondent was married in community of
property to the second respondent and she was not joined in the
application. This necessitated a later application to join the
second respondent in the sequestration proceedings. (See Michalow
NO v Premier Milling Co Ltd, 1960 (2) SA 59 (WLD) at 63C and P
De V Reklame (Edms) Bpk v Gesamentlike Onderneming van SA
Numismatiese Buro (Edms) Bpk en Vitaware (Edms) Bpk, 1985 (4) SA
876 (KPA) at 879I to 880A). This was done and she featured
thereafter as the second respondent.
The
result of all this is that the respondents denied ever having been
served with either the application documents or sequestration order
and the first respondent alleged that he only became aware of the
proceedings when he read about the order in the newspapers.
Thereafter his legal practitioner, through his own endeavour,
obtained and made copies of the documents filed in Court. When the
matter came before Court for a final order the respondents took the
point that there was non-compliance with the Rules of the Court in
that the application and order were never served on them. The Court
a quo concluded that the non-compliance was such that it
could not condone it and discharged the provisional sequestration
order on that ground and it further ordered that costs be paid on a
scale as between attorney and client. This then led to an appeal
against the whole judgment and the order of costs issued by the
Court a quo.
It
is necessary to give a short background history of the run of events
which led to the sequestration proceedings. During 2005 the Social
Security Commission, a State Owned Enterprise, transferred an amount
of N$30m to a private company, Avid, for investment on its behalf.
Avid, which seemed to have been managed by one Kandara, in turn paid
over to another company N$29,5m of this amount on certain
conditions. This company was Namangol Investments (Pty) Ltd
(Namangol). The Managing Director of Namangol, and who was also its
alter ego according to the Court a quo, was the first
respondent. One of the conditions on which the money was entrusted
to Namangol was that an amount of N$20m was to be invested with one
Alan Rosenberg, an investor operating in Johannesburg, Republic of
South Africa.
When
Avid could not come up with the money of the Social Security
Commission, when that became due, steps were taken and Avid was
provisionally liquidated and the appellant, together with two
others, were appointed as liquidators in the estate. The other two
liquidators have since resigned. In an attempt to trace the money
paid to Avid by the Social Service Commission, an enquiry was held
in terms of the provisions of sec 471 of the Companies Act, Act 61
of 1973, before a Judge of the High Court. From Avid the trail led
to Namangol and the first respondent. In evidence, given to the
Judge who was the chairperson of the enquiry, certain irregularities
were discovered concerning the investment of the Social Security
Commission which led to the first respondent being charged with
theft and fraud, and as a further result of which he was arrested
and placed in custody. Simultaneously with the enquiry,
applications were launched for the liquidation of Namangol and the
sequestration of the first respondent. A final order of liquidation
was granted in the matter of Namangol on 27 May 2008 notwithstanding
opposition by the latter. As previously stated, the respondents
opposed the granting of a final sequestration order inter alia
on the grounds of the procedural irregularity and was successful in
that the Court a quo discharged the provisional order of
sequestration.
Mr.
Corbett appeared for the appellant and Mr. van Rooyen for the
respondents. Both counsel also appeared in the Court a quo
during the enquiry into the commercial transactions of Avid and
they were well acquainted with the background history of this
matter.
At
the hearing of the appeal Mr. Corbett invited the Court to also hear
the appeal in regard to the merits of the sequestration order.
Counsel submitted that an appeal lies against the order of a Court
and not against the reasons and because the finding of the Court a
quo resulted in the discharge of the provisional sequestration
order he submitted that he was entitled to argue the merits of his
application. This was opposed by Mr. van Rooyen who submitted that
only the issue of the non-service of the application was before us
on appeal.
The
Court declined the invitation by Mr. Corbett and limited counsel to
the issue decided by the Court a quo, namely
the finding that, because of the non-service of the application on
the respondents, the process amounted to a nullity which it could
not condone and discharged the provisional order. Because the Court
declined to hear the appeal on the merits as far as the
sequestration order was concerned the point was raised by Mr. van
Rooyen whether the appellant could appeal as of right and whether,
at the very least, it should not have applied for leave to appeal to
this Court.
Regarding
this Court’s refusal to deal with the merits of the
sequestration order it must be pointed out that the Court a quo,
in its judgment, only dealt with the point taken in
limine, i.e. the non-service issue. It did not express any
opinion on the merits or the demerits of the sequestration order and
was at pains to point out that the discharge of the provisional
sequestration order was as a result of the non-service of the
application on the respondents. If this Court was to hear argument
and to decide whether a final order of sequestration was to be
issued, or not to be issued, it would have done so in first instance
and would have had to exercise the discretion with which the High
Court, granting or refusing sequestration orders, is clothed. (See
in this regard Epstein v Epstein, 1987 (4) SA 606 (CPD) at
612G. See also Davidson v Honey, 1953 (1) SA 300 (AD) and
Neethling v Du Preez and Others, 1995 (1) SA 292.) However,
before we would even get that far, it was indicated by Mr. van
Rooyen that he also intended to take a number of further points in
limine as far as the provisional sequestration order was
concerned. Furthermore counsel also intended to apply for the
striking out of various paragraphs, or parts thereof, set out in the
sequestration application. All these further points in limine
and the extensive application for the striking off was set out and
foreshadowed in Mr. van Rooyen’s heads of argument. If this
Court had accepted the invitation by Mr. Corbett to deal with the
merits of the sequestration order it would have become embroiled in
various issues as a Court of first instance and where it did not
have the benefit of the pronouncement, on these issues, by a Court
of first instance. Mr. Corbett relied on the case of S v Malinde
and Others, 1990 (1) SA 57 (SCA) for the submission that the
Court should also hear the merits of the sequestration application.
In that matter the Appeal Court decided that, although there was no
provision in its Rules for such an order, the Court did have the
inherent power to regulate its procedures in the interests of the
proper administration of justice and that it would be proper to hear
certain special entries separately from the merits of the appeal
notwithstanding the fact that that would have resulted in the appeal
being heard piecemeal. The Court decided to do so because of
considerations of convenience and because the advantages of such a
hearing outweighed the disadvantages in the light of the magnitude
of the trial. The Court, inter alia, considered the fact
that the special entries were cogent and, if successful, that would
probably have been the end of the matter. The Court found that the
circumstances were exceptional and ordered separate hearing of the
special entries. None of these circumstances are present in the
appeal before us, and nor was the Court in the Malinde matter
called upon to determine factual and other issues in regard of which
there had been no decision by the Court of first instance. What Mr.
Corbett wanted this Court to do falls outside the ambit of merely
regulating the procedure of this Court.
Although
I agree with Mr. Corbett that an appeal lies against the order of
the Court a quo, it is the reasons of the Court which contain
the ratio decidendi of that Court and which explain and
motivate the order. In order to decide the appealability of the
Court’s order, this Court must determine what the order is
about and to do that it is necessary to look at the reasons for the
order.
Consequently
it is necessary to determine if the order of the Court a quo was
appealable with or without leave of that Court or at all. Sec.
18(1) of Act 16 of 1990 grants a right of appeal against all
judgments and orders of the High Court to the Supreme Court. Similar
provision is made in sec. 14(1) of the Supreme Court Act, Act 15 of
1990. This Court has, with approval, accepted the meaning ascribed
to the words “judgment or order” set out in the case of
Zweni v Minister of Law and Order, 1993 (1) SA 523 (AD) at
523I (See Aussenkehr Farm (Pty) Ltd v Minister of Mines
and Energy, 2005 NR 21 (SC)). Generally speaking the attributes
to constitute an appealable judgment or order are threefold, namely,
the decision must be final, be definitive of the rights of parties
or must have the effect of disposing of at least a substantial
portion of the relief claimed in the main proceeding. In terms of
sec. 18(3) of the High Court Act interlocutory orders are not
appealable as of right and need the leave of that Court or, if that
was refused, the leave of the Chief Justice, given by him on
petition, to be able to come on appeal.
It
is in my opinion clear that the decision by the Court a quo was
neither final nor was it definitive of the rights of the parties nor
did it have the effect of disposing of at least a substantial
portion of the relief claimed in the main proceedings. The basis on
which the Court a quo discharged the provisional order was
procedural in nature and could be corrected by the appellant by
simply correcting its failure to serve the sequestration proceedings
on the respondents. For that purpose it could even do so by serving
the same application documents. I agree with Mr. van Rooyen that,
because of the finding of the Court a quo, an issue such as
res judicata cannot be raised in those circumstances. (See
African Wanderers Football Club (Pty) Ltd v Wanderers
Football Club, 1977 (2) SA 38 (AD)). This is a further
indication that the Court did not finally dispose of the rights of
the parties.
In
the matter of Moch v Nedtravel (Pty) Ltd t/a American Express
Travel Service 1996 (3) SA 1 (AD) the Court recognized that
there were instances which did not fit the mould set out in Zweni’s
case but where the effect of the Court’s finding might be
final and definitive of the rights of the parties. These instances,
which are of a final bearing on the rights of the parties, are such
that they are not interlocutory orders and are appealable as of
right. However, for the same reasons set out above, the order of
the Court a quo was in my opinion not final and therefore not
appealable in this instance.
There
is further the rule against piecemeal appeals which, in my opinion
applies to the present proceedings. If, in this instance, the court
should now allow the appeal and refer the matter back to the Court a
quo, further appeals may result, even before the merits of the
sequestration are considered. If the appeal is not allowed the
appellant could, because of the nature of the proceedings, start
proceedings afresh, in which case this situation may repeat itself.
In the latter instance the decision of this Court would only be of
academic interest. The Court will not decide issues which are
academic, abstract or hypothetical. (See in this regard Mushwena
v Government of the Republic of Namibia and Another (2), 2004 NR
94 (HC) at 102.) In the matter of Guardian National Insurance
Co Ltd v Searle NO, 1999 (3) SA 296 (SCA), the appellant was
granted leave to appeal to the Supreme Court of Appeal after the
Judge in first instance made certain rulings as to how the issue of
damages should be calculated, without deciding the issue of damages.
On appeal the following was stated by Howie, JA, at p. 301B –
D:
“As previous decisions of this
Court indicate, there are still sound grounds for a basic approach
which avoids the piecemeal appellate disposal of the issues in
litigation. It is unnecessarily expensive and generally it is
desirable, for obvious reasons, that such issues be resolved by the
same Court and at one and the same time. Where this approach has
been relaxed it has been because the judicial decisions in question,
whether referred to as judgments, orders, rulings or declarations,
had three attributes. First, they were final in effect and not
susceptible of alteration by the court of first instance. Secondly,
they were definitive of the rights of the parties, for example,
because they granted definitive or distinct relief. Thirdly, they
had the effect of disposing of at least a substantial portion of the
relief claimed.”
Further, on page 301, pa.
F, the Court stated, in regard to the first attribute, as follows:
“Plainly, the rulings here have
neither the second nor third of the required attributes. That is
enough to disqualify them as appealable decisions. I say that because
the first attribute - assuming it were present – cannot on its
own confer appealability.”
In
my opinion what was stated in the Guardian case is also
apposite to the present matter. Because the issues between the
parties are not res judicata it follows that whatever the
outcome of this appeal, the appellant can start all over again. In
my opinion it would have been more convenient and cost effective if
the appellant had followed the route to re-apply for a sequestration
order, after serving the documents, than to bring this matter on
appeal as of right and running the risk that the matter was not
appealable as such.
It
was further stated in Wellington Court Shareblock v Johannesburg
City Council, 1995 (3) SA 827 (AD) at 834A that in determining
appealability of a decision the emphasis must be placed on the
effect of the decision rather than on its form. This is relevant to
the present case where at first blush it may seem that the order of
the Court a quo has a definitive effect on the rights of the
parties. That is however not so as the appellant can start anew
after correcting the defect of non-service. (See also Caroluskraal
Farms (Edms) Bpk v Eerste Nasionale Bank van Suider Afrika Bpk, 1994
(3) SA 407 (AD) at 414D).
I
have therefore come to the conclusion that, also on the principles
set out in the Moch-case, supra, that this matter does
not comply with the statutory provisions to be appealable and that
it must be struck off the roll.
There
was also an application for condonation by the appellant for
non-compliance with the provisions of Rule 5(5)(b) and 5(6)(b) of
this Court but because there was no proper appeal before us there is
no need to deal with the application.
In
the result the following order is made:
The appeal is struck off
the roll with costs such costs to include the costs of one
instructing counsel and one instructed counsel.
________________________
STRYDOM,
AJA
I
agree
________________________
SHIVUTE,
CJ
I
agree
________________________
MTAMBANENGWE,
AJA
COUNSEL Instructed | Mr. Dr. |
COUNSEL Instructed | Mr. Andre |