In search of clarity: Navigating the new terrain of appeals in South Africa
May, 2023 - Aslam Moosajee, Fathima Omar , ENSafrica
The “interests of justice” appears to no longer be a ground for an application for leave to appeal to the SCA, if the case ofTWK Agricultural Holdings (Pty) Limited v Hoogveld Boerderybeleggings (Pty) Ltd and Othersis followed.
In a unanimous judgment by the SCA, authored by Justice Unterhalter, the appeal in the TWK Agricultural Holdings case was dismissed. Despite the defendant being granted leave to appeal by the President of the SCA, the SCA removed the appeal from its roll. The case involved shareholders of TWK, who received notice of an annual general meeting on January 7, 2019, where proposed special resolutions to amend TWK's Memorandum of Incorporation (“MOI”) were discussed.
On 5 February 2019, TWK adopted the resolutions to amend its MOI. Consequently, the plaintiffs alleged that they became related parties in terms of the amended MOI. The plaintiffs also alleged that this materially and adversely affected the preferences, rights, limitations or other terms of their shares in TWK. After compliance with the formalities required by the Companies Act, 2008 (the Companies Act), the plaintiffs demanded that TWK pay them the fair value of their shares in TWK, with the fair value being determined on the date before the adoption of the amended MOI.
TWK declined to comply with the plaintiffs' demand and refused to pay them ZAR120 per share or any other amount determined as fair value. The plaintiffs' cause of action was rooted in the appraisal rights remedy, which is established under section 164, read with section 37(8) of the Companies Act.
After receiving the summons and particulars of claim, TWK responded by asking the plaintiffs to remove the causes of the complaint. In compliance with this notice, the plaintiffs amended the particulars of the claim. However, TWK was not satisfied and lodged an exception to the amended particulars of the claim There were two legs to the exception:
- one, TWK argued that there was no cause of action to secure an appraisal right because it had only a single class of shares (the class exception); and
- two, the plaintiffs’ claim is based on the averment that the amended MOI caused them to become related to each other. TWK contended that the deemed relatedness did not have a materially adverse effect on the preferences, rights, limitations and other terms of the shares in TWK, but at worst, had an effect on the owners of the shares. Therefore TWK alleged that the particulars of claim lacked averments necessary to sustain a cause of action because the appraisal remedy requires a material and adverse effect on the shares.
The Middelburg High Court upheld the exception. The plaintiffs, with leave of the Middelburg High Court, appealed to a full court of the Middelburg High Court. The full court upheld the plaintiffs’ appeal and dismissed both exceptions. The appeal before the full court in Middelburg was not contentious because the upholding of an exception based on a failure to disclose a cause of action is final in effect and therefore is appealable (seeTrope and Others v South African Reserve Bank.
Thereafter TWK applied for special leave to appeal to the President of the SCA, and was successful. Before the SCA, the question was different: with the full court in Middelburg dismissing the exception, the SCA had to consider if the full court’s order was appealable.
In a long line of cases, the then Appellate Division held that save in limited circumstances, the dismissal of an exception is not appealable. This is because such an order is not final in effect. There is nothing to prevent the same legal points from being argued at trial.
Unterhalter AJA considered if the SCA should determine whether a decision of the High Court or full court is appealable by recourse to the overarching principle of the interests of justice.
Interests of justice features prominently in the Constitutional Court’s (“CC”)consideration of when it will entertain an appeal. The plaintiffs argued that the SCA adopting the interests of justice principle would lend coherence to the basis upon which a litigant may “ascend the judicial hierarchy”. The plaintiffs also argued before the SCA that other SCA judgments have adopted the interests of justice principle as the ultimate norm that determines whether a decision is appealable to the SCA.
Unterhalter AJA was unconvinced by the arguments put forward. He noted that the appealability of a decision holds significant implications for litigants and the functioning of the Appellate Court. He explained that the doctrine of finality plays a prominent role in the jurisdiction of the SCA, as it ensures that the High Court concludes matters before they can be appealed to the SCA. The SCA, in line with Unterhalter AJA's view, emphasised the orderly use of the court's resources. They highlighted that the doctrine of finality must be the central principle guiding the determination of appealability to the SCA. This approach serves to prevent fragmented appeals that are often costly and cause delays in the resolution of cases at the High Court.
The SCA recognised that this approach was not consistent with the approach to be adopted by the CC when considering whether to entertain an application for leave to appeal. The SCA emphasised that the interests of justice are relevant to whether the CC entertains an appeal and since the CC was the apex court, it needed flexible criteria to decide which matters warranted its attention. The SCA, however, remarked that the adoption of interests of justice as the foundational basis upon which the SCA decides whether to entertain an appeal “would put in place a regime that is both unpredictable and open-ended”.
The SCA’s view was that this would diminish certainty and enhance dysfunction and it would also compromise the freedom within which the CC selected matters it heard on appeal.
The SCA clarified that there is no constitutional requirement for alignment with the CC regarding questions of appealability. They reaffirmed that the doctrine of finality remains the central principle when determining appealability to the SCA.
In the case of the dismissal of an exception, the SCA determined it to be a non-final decision. Therefore, an appeal to the SCA should not be entertained until the matter reaches a final resolution. The SCA expressed concerns about the potential delays caused by appeals against exception dismissals. They emphasised the importance of moving the legal process forward and obtaining a final judgment on all issues. Avoiding fragmented litigation and expediting the trial process were identified as significant advantages.
However, the dismissal of an exception which challenges the jurisdiction of the court is appealable (seeMoch v Nedtravel (Pty) Ltd t/a American Express Travel Service).
Unterhalter AJA in the TWK matter struck the appeal from the roll as he was of the view that the dismissal of the exception by the full court did not meet the requirements of appealability to the SCA.
The effect of this judgment is that generally, a judgment or order will only be appealable to the SCA if it:
- is final in effect and not susceptible to alteration by the court of first instance;
- is definitive of the parties’ rights; and
- has the effect of disposing of a substantial part of the relief claimed in the main proceedings.
While the judgment may lighten the load of the SCA, it may result in more applications for leave to appeal being filed with the Constitutional Court, if the interests of justice are the main ground for appeal.
While the SCA judgment referred to the case ofPhilani-Ma-Afrika and Others v Mailula and Others, the SCA did not explain why it believed it was not bound by the decision in that matter. In this matter, the SCA stated that: “It is clear from such cases asS v Western Areas… that what is of paramount importance in deciding whether a judgment is appealable is the interests of justice.” In S v Western Areas, the SCA stated:
“Before the coming into operation of the constitution on 4 February 1997 this court’s jurisdiction had to be conferred by statute. Questions of appealability went to jurisdiction and had to be decided by reference to the Supreme Court Act, the Criminal Procedure Act and other legislation specifically material to appeals to this court. Now, said counsel, the appealability questions that pre-dated 1997 have fallen away; every High Court order is appealable in principle and no rule of this court restrains that otherwise limitless jurisdiction.”
They further added, “I am accordingly of the view that it would accord with the obligation imposed by s 39 (2) of the Constitution to construe the word ‘decision’ in s 21 (1) of the Supreme Court Act to include a judicial pronouncement in criminal proceedings that is not appealable on the Zweni test but one which the interests of justice require should nevertheless be subject to an appeal before termination of such proceedings. The scope which this extended meaning could have in civil proceedings is unnecessary to decide. It need hardly be said that what the interests of justice require depends on the facts of each particular case.”
The SCA did not specifically refer to theS v Western Areasjudgment and also did not refer to the CC judgment inUnited Democratic Movement and Another v Lebashe Investment Group, in which the court stated the following:
“Whether an interim order has a final effect or disposes of a substantial portion of the relief sought in a pending review is merely one consideration. Under the common law principle as laid down in Zweni, if none of the requirements set out therein were met, it was the end of the matter. But now the test of appealability is the interests of justice, and no longer the common law test as set out in Zweni.”
To add to the confusion, in an SCA judgment delivered a few days after Unterhalter AJA delivered the TWK judgment, the SCA stated the following in the case ofRoad Accident Fund v Taylor and other mattersin paragraph 26:
“That leave to appeal was granted, is only one of the two requirements for this court to have jurisdiction to entertain an appeal. The other requirement is that the order sought to be appealed against is a ‘decision’ within the meaning of s16 (1) of the Superior Courts Act, 2013. Not only traditional final judgments are such decisions. It has become settled law that an order could qualify as an appealable decision if it has a final and definitive effect on the proceedings or if the interests of justice require it to be regarded as an appealable decision. What the interests of justice require is not determined by a closed list of considerations, but depends on the facts and circumstances of each case. However, whether an appeal would lead to a just and expeditious determination of the essence of the matter, is an important consideration in deciding whether an order should be regarded as an appealable decision.”
The SCA's unanimous decision in the TWK Agricultural Holdings case has called into question the relevance of the interests of justice as a valid ground for appeal. The SCA has emphasized the doctrine of finality as the central principle in determining appealability, aiming for an orderly use of resources and expediting the resolution of cases. However, the TWK case may not be the final word on the matter, and further clarification from the SCA or a CC ruling may be necessary to provide definitive guidance on the role of the interests of justice in appeals to the SCA.
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