---

IN THE HIGH COURT OF SOUTH AFRICA

KWAZULU-NATAL DIVISION, PIETERMARITZBURG

 

CASE NO:  15281/2014

In the matter between:

 

SALVANATHAN NARAINSAMY                                                  APPLICANT

SALVANATHAN NARAINSAMY N.O.                                         SECOND APPLICANT

KETAN JAMNADAS SONI                                                             THIRD APPLICANT

(RESPONDENTS IN THE APPLICATION FOR LEAVE TO APPEAL)

 

and

 

LAUREN ANN NEL                                                                         FIRST RESPONDENT

(APPLICANT IN APPLICATION FOR LEAVE TO APPEAL)

FIONA BELINDA SCOTT                                                              SECOND RESPONDENT

THE REGISTRAR OF DEEDS, CAPE TOWN                            THIRD RESPONDENT

 

Coram:           Bezuidenhout AJ

Heard:            19 June 2020

Delivered:      1 July 2020

 

 

ORDER

The following order is made:

The application for leave to appeal is dismissed with costs.

 

JUDGMENT

 

Bezuidenhout AJ

 

[1]        The first respondent, Lauren Ann Nel, applied for leave to appeal against the whole of the judgment and order delivered by me on 28 February 2020 in this matter. The three applicants, Salvanathan Narainsamy, Salvanathan Narainsamy N.O. and Ketan Jamnadas Soni, opposed the application. It was argued before me on 19 June 2020 by video conference utilising Zoom, due to challenges posed by the Covid-19 pandemic. Although a representative of Sneller Recordings sat in on the hearing via a Zoom invitation and recorded the proceedings, I was concerned about the possible lack of quality and clarity of the recording and decided to rather hand down a written judgment as opposed to delivering an ex tempore judgment, as is practice in applications of this nature.

 

[2]        The facts of the matter are rather cumbersome and are dealt with fully in my judgment of 28 February 2020, but central to the issue between the parties is a court order dated 18 May 2018 in terms of which the Narainsamys undertook to transfer a property to Nel, contingent upon various conditions being met and placing certain obligations involving SARS on Mr Narainsamy. Narainsamy failed to comply with some of the terms of the court order due to an alleged unwillingness by SARS to entertain a compromise offer, and on 11 June 2018 he cancelled the agreement, as provided for (according to him) in the court order.

 

[3]        Narainsamy then entered into an agreement with Soni on 6 August 2018 in terms of which the property was sold and subsequently transferred to Soni on 18 December 2018. Nel was informed of Soni being the new owner on 19 December 2018. Nel had been in occupation of the property since February 2013 (moving in shortly after entering into a sale agreement with the Narainsamys in October 2012), without paying occupational rent, levies or rates. 

 

[4]        On the 10^th of June 2019 Narainsamy launched the current application proceedings at the instance of Soni as Nel was refusing to vacate the property. In the proceedings Narainsamy asked for certain declaratory relief.  Nel opposed the application and instituted a counter-application wherein she claimed inter alia that the transfer of the property between Narainsamy and Soni be set aside and that Narainsamy be ordered to effect valid transfer of ownership to herself. Nel never instituted contempt of court proceedings against Narainsamy.

 

[5]        At the time when the Narainsamys and Nel concluded a sale agreement, Nedbank Limited was the bondholder and had obtained judgment against the Narainsamys on 22 May 2012, together with an order declaring the property executable. It is common cause that Soni had to negotiate the sale of the property directly with Nedbank and had to increase his original purchase price to the satisfaction of Nedbank. 

 

[6]        The grounds of appeal on which Nel relies can be summarised as follows:

(a)       The real agreement concluded between the Narainsamys and Soni is invalid because it is contra bonos mores in that it renders a court order ineffective and nugatory.

(b)       That rendering the real agreement void is not tantamount to reintroducing the causal theory of property transfer.

(c)        That the non-joinder of Nedbank was immaterial and that its interests are not affected by the relief to set aside the transfer.

 

[7]        I need to say something about the test to be applied in applications of this nature, especially in light of certain submissions made and authorities relied upon by Mr Bothma, counsel for Nel. 

 

[8]        In terms of section 17(1)(a)(i) of the Superior Courts Act 10 of 2013, leave to appeal may only be given where the judge is of the opinion that the appeal would have a reasonable prospect of success. 

 

[9]        Both Nel’s counsel and Mr Singh SC, counsel for Soni, referred me to the decision of The Mont Chevaux Trust v Goosen & others [2014] ZALCC 20; 2014 JDR 2325 (LCC) para 6 where Bertelsmann J held that:

‘It is clear that the threshold for granting leave to appeal against a judgment of a High Court has been raised in the new Act. The former test whether leave to appeal should be granted was a reasonable prospect that another court might come to a different conclusion, see Van Heerden v Cronwright & Others 1985 (2) SA 342 (T) at 343H. The use of the word “would” in the new statute indicates a measure of certainty that another court will differ from the court’s whose judgement is sought to be appealed against’.

 

[10]      Nel’s counsel in addition referred me to the unreported judgment of the Eastern Cape High Court, Grahamstown, Valley of the Kings Thaba Motswere (Pty) Ltd & another v Al Mayya International [2016] ZAECGHC 137 para 4 where Smith J held: 

‘[4] There can be little doubt that the use of the word “would” in section 17 (1)(a)(i) of the Superior Courts Act implies that the test for leave to appeal is now more onerous. The intention clearly being to avoid our courts of appeal being flooded with frivolous appeals that are doomed to fail. I am, however, of the respectful view that the “measure of certainty” standard propounded by the learned judge in Mont Chevaux Trust (supra) may be placing the bar too high. It would, in my respectful view, be unreasonably onerous to require an applicant for leave to appeal to convince a judge – who invariably would have provided extensive reasons for his or her findings and conclusions – that there is a “measure of certainty” that another court will upset those findings. It seems to me that a contextual construction of the phrase “reasonable prospect of success” still requires of the judge, whose judgment is sought to be appealed against, to consider, objectively and dispassionately, whether there are reasonable prospects that another court may well find merit in arguments advanced by the losing party.’

 

[11]      Soni’s counsel referred me to two decisions by the Supreme Court of Appeal in which identical views to the ones of Bertelsmann J in the Mont Chevaux matter were expressed. In Notshokovu v S [2016] ZASCA 112 para 2 the court held that: ‘An appellant, on the other hand, faces a higher and stringent threshold, in terms of the Act compared to the provisions of the repealed Supreme Court Act 59 of 1959. . . .’ 

 

[12]      In the matter of S v Smith 2012 (1) SACR 567 (SCA) para 7, the court held: 

‘[7] What the test of reasonable prospects of success postulates is a dispassionate decision, based on the facts and the law, that a court of appeal could reasonably arrive at a conclusion different to that of the trial court.  In order to succeed, therefore, the appellant must convince this court on proper grounds that he has prospects of success on appeal and that those prospects are not remote but have a realistic chance of succeeding. More is required to be established than that there is a mere possibility of success, that the case is arguable on appeal or that the case cannot be categorised as hopeless. There must, in other words, be a sound, rational basis for the conclusion that there are prospects of success on appeal.’ (Footnotes omitted)

 

[13]      I fully align myself with the views expressed in the Mont Chevaux Trust, Smith and Notshokovu judgments. Despite Nel’s counsel conceding that the threshold is now higher in applications of this nature, he continued to submit that another court may or might find in favour of his client, which is clearly no longer the test.

 

[14]      In his heads of argument and in his argument before me, Nel’s counsel argued with reference to the first ground of appeal, that:

(a)       The May 2018 order obligated Narainsamy to give transfer of the property to Nel;

(b)       The real agreement concluded between Narainsamy and Soni precluded the transfer of the property by Narainsamy to Nel, which led to the conclusion that the real agreement precluded the implementation of the May 2018 order and renders it nugatory or without effect.

 

[15]      In response to this line of argument, Soni’s counsel reminded me that Nel’s case on her papers was originally that the real agreement between Soni and Narainsamy was contra bonos mores because it was in breach of the May 2018 order, and was induced by fraud.

 

[16]      It is clear that the May 2018 order itself does not contain any terms prohibiting Narainsamy from passing transfer to Soni. I made this finding in my judgment and Nel has chosen not to appeal against this finding. There is therefore no breach of the May 2018 order and Nel’s case has clearly now evolved to find a way around the actual terms of the May 2018 court order.  

 

[17]      The argument by Nel’s counsel loses sight of the fact that Narainsamy undertook to give transfer to Nel, contingent upon various conditions. It is Narainsamy’s alledged failure to comply with these conditions that precluded the transfer of the property to Nel, and not the real agreement concluded between Narainsamy and Soni.Narainsamy concluded the real agreement with Soni believing that he was entitled to do so,knowing that SARS was unwilling to compromise and that he had cancelled the agreement with Nel.

 

[18]      Despite having knowledge of Narainsamy’s cancellation of the agreement in June 2018, Nel chose not to launch contempt of court proceedings against Narainsamy, well knowing that he had not complied with the terms of the May 2018 order. She has failed to provide a proper explanation for not exhausting her remedies in this regard.

 

[19]      Soni’s counsel also pointed out that even though transfer had taken place following the real agreement between Soni and Narainsamy, it did not necessarily mean that such transfer precluded the transfer of the property between Narainsamy and Nel as Narainsamy could still buy the property back from Soni and effect transfer to Nel – an extreme scenario but nonetheless possible. 

 

[20]      Just as the May 2018 order does not prohibit Narainsamy from passing transfer to Soni, it likewise does not contain anything that prohibits Narainsamy from doing something that would render the order nugatory or ineffective. Soni’s counsel referred me inter alia to the decision of Minister of Home Affairs & others v Scalabrini Centre & others 2013 (6) SA 421 (SCA) para 77 where it was held that: ‘. . . litigants who are required to comply with court orders, at the risk otherwise of being in contempt if they do not, must know with clarity what is required of them’. One surely cannot expect someone to have to comply with an order and in addition to also be aware of taking any steps or actions which might render the order nugatory or be interpreted as rendering the order nugatory.

 

[21]      Nel is trying to find something in the May 2018 order which is simply not there.  The conclusion proposed by Nel’s counsel, namely that it is the real agreement which precludes the implementation of the May 2018 order, rendering it nugatory, is not borne out by the facts of the matter. It is furthermore a significant leap from where Nel’s case started, namely that the real agreement was induced by fraud and was contra bonos mores because it was in breach of the May 2018 order.

 

[22]      I am accordingly of the view that there is no merit in this ground, and that another court would not arrive at a different conclusion.

 

[23]      As far as the second ground is concerned, Soni’s counsel submitted that should I find against Nel on the first ground, the question raised in respect of the second ground becomes moot. I agree with this submission.

 

[24]      I am furthermore of the view, after having read my judgment again carefully, that I did not make a finding that rendering the real agreement void on account of it being contra bonos mores is tantamount to reintroducing the causal theory of property transfer. In para 79 I said the following: “..I cannot help but take cognisance of the submissions made by counsel for Soni, who urged me to have due regard to the Legator McKenna case, and in particular the warning that one should be careful not to revert back to the casual theory of transfer-which Mr Bothma-counsel for Nel - is in essence trying to achieve”.  This ground is therefore without merit.

 

[25]      In respect of the third ground, namely that the non-joinder of Nedbank Limited was immaterial, Nel’s counsel submitted that should the real agreement be set aside, Soni would have no claim against Nedbank but only against Narainsamy. In essence, once Nedbank was paid, they were out of the picture. He also submitted that an amount of R1,6 million was available in the second respondent’s trust account, which would be available to Soni. He perhaps lost sight of the fact that Soni paid an amount in excess of R2 million to Nedbank in order to purchase the property, and would definitely be out of pocket.

 

[26]      Both Soni’s counsel and Mr Albert, counsel for Narainsamy, made various submissions to counter this argument.

 

[27]      Soni’s attorney had lengthy negotiations with Nedbank, who was the execution creditor and who dictated the terms of the sale between Soni and Narainsamy. Only once Soni had agreed to increase his offer and to the other terms set by Nedbank, was the final agreement concluded. Soni’s counsel referred to it as being a tripartite agreement and in particular submitted that Soni would be entitled to look to Nedbank for repayment of the sum paid in a claim based on contract, should the real agreement be set aside.  Nedbank could very well find itself in a queue of creditors, with the likes of SARS, to try and recover money from a financially distressed Narainsamy, without holding security for its claim (as it would no longer be holding a bond over the property). There are various other scenarios and permutations, but I was reminded by Narainsamy’s counsel of what I said in my judgment regarding the difficulties of unscrambling the effect of a possible setting aside of the real agreement. I however did not make a specific finding in that regard but it is nonetheless useful to bear those remarks in mind. 

 

[28]      I remain of the view that Nedbank clearly had an interest in the matter, and that there are no prospects that another court would arrive at a different conclusion.

 

[29]      Accordingly, I am of the opinion that the appeal would have no reasonable prospects of success, and in as far as it may be necessary, that none of the other circumstances as set out in sections 17(1)(b) and (c) of Superior Courts Act are present.

 

[30]      I therefore make the following order:

The application for leave to appeal is dismissed with costs.

 

 

BEZUIDENHOUT AJ

 

DATE OF HEARING:                      19 JUNE 2020

DATE OF JUDGMENT:                 

 

APPEARANCES

 

For the First and Second Applicants:             Adv. SM Alberts

Instructed by:                                                  MCGREGOR AND ASSOCIATES

                                                                        14 Leathern Street

                                                                        Pietermaritzburg

 

For the Third Applicant:                                  Adv. N Singh SC

                                                                        APHSANA YUSUPH ATTORNEYS

                                                                        Suite 205

                                                                        FNB House

                                                                        151 Musgrave Road

                                                                        Durban

                                                                        c/o MESSENGER KING

                                       Swaleh Mohamed Attorneys

                                       281 Burger Street

                                       Pietermaritzburg

 

 

 

For the First Respondent:                                Adv. P Bothma

Instructed by:                                                  DRAKE FLEMMER ORSMOND INC.

                                                                        Tewkesbury House

                                       22 St. James Road

                                       Southernwood

                                       East London

                                       c/o LISTER & LISTER

                                       First Floor, Suite 101

                                       161 Pietermaritz Street

                                       Pietermaritzburg

---