IN THE HIGH COURT OF SWAZILAND
Held at Mbabane Case No.: 855/2016
In the matter between
PHANGOTHI INVESTMENTS (PTY) LTD Applicant
And
UNION SUPPLIES (PTY) LTD Respondent
Neutral Citation: Phangothi Investments (Pty) Ltd v Union Supplies (855/2016) [2018] SZHC 30 ( 27 February 2018)
Coram: Hlophe J.
For the Applicant: Miss F. Ndlovu
For the Respondent: Miss B. Mkhonta
Date Heard: 16th February 2018
Date Judgement Delivered: 27th February 2018
Summary
Application Proceedings –Review of Registrar’s decision directing that security derestituendo to secure the Respondent’s interests pending appeal be in hard cash as opposed to title deed land – Nature of such security as envisaged in law discussed.
Authority whose decision is a subject of review neither cited nor served with papers –Effect of failure to cite and serve such a party in law discussed –Position of the law on non- joinder restated.
Whether the prayer that applicant be allowed to provide security in the form of immovable property had the effect of altering or reviewing the final decision of the High Court allowing execution to go ahead pending appeal on certain conditions –Whether this court is thus functus officio to entertain such a prayer –Position on when a matter becomes functus officio discussed.
Whether the reliefs sought could be entertained in the face of an alleged appeal filed by the Respondent against the decision allowing the execution pending appeal –Whether such a judgement appealable including the effect of such an appeal when it is noted without the leave of court despite its being of an interlocutory nature –Whether the procedure adopted amounts to an abuse of the court process.
All points raised in limine dismissed –In the peculiar circumstances of the matter this court substitutes its decision for that of the authority whose decision has been reviewed, corrected and set aside –Costs to follow the event in the matter.
JUDGMENT
[1] Following a judgement of this Court per Magagula J, allowing the execution of a judgement or order of this court on certain conditions, including that the determination of the security derestituendo be done by the Registrar of this court, and with the latter having decided that the security de restituendo be in terms of cash only, the applicant instituted the current application proceedings seeking inter alia, the following orders:-
(a) Reviewing, correcting and setting aside the decision of the Deputy Registrar of the High Court dated the 30th October 2017.
(b) Allowing the applicant to provide security in the form of immovable property registered in the name of its Managing Director, Musa Magongo.
(C) Costs of suit in the event of opposition.
(D) Further and/ or alternative relief.
[2] It is not in dispute that in line with the judgement of this court allowing execution, and notwithstanding the appeal noted; the Deputy Registrar of this court, whilst acting as the Registrar, determined that the security derestituendo to be provided by the Applicant as the party intending to execute notwithstanding the noted appeal, be a sum of E180,000.00 in cash as opposed to it being in the form of immovable property whose original title Deed was tendered for such a purpose by the Director and shareholder of the applicant.
[3] The obvious effect of the Deputy Registrar’s decision, at least from the Applicant’s point of view was to render the intended execution nugatory: When granting the execution of the judgement notwithstanding the noted appeal this court observed that the said appeal was frivolous which is to say it had no prospects of success. It is a fact that the decision by the Registrar had ordered that the security derestituendo be in cash, notwithstanding that the applicant had asked that such security be in the form of immovable property belonging to the Director of the applicant, one Musa Magongo.
[4] Declining to accept the immovable property in question as the required security, the Deputy Registrar said the following in paragraph 5 of her written ruling :-
“ I agree with the Respondent’s argument (sic) selling property is very cumberborne especially when there is a judgement in place. This might frustrate the respondent. I order that the costs (security?) of E180 000.00 be in cash. This is because the property might not be brought (sic) speedily especially because it is not the value of the debt but around E600,000.00. There is also a danger that the Applicant (sic) while the property is in security, might sell it because it is in his name instead of the proceedings before court. In exercising my discretion I order that the Applicant provides cash security or a bank guarantee”
[5] It is important for me to observe that the parties took it as if there was nothing in law that prevented the use of immovable property as the required security, save for the reasons put forth by the Deputy Registrar. I will therefore deal with the matter, proceeding from that basis.
[6] Disagreeing with the decision by the Deputy Registrar of this court, the applicant instituted the current proceedings seeking the reliefs referred to in the first paragraph. In its contention, the applicant claimed without expatiating, that the Registrar committed several errors. I must say that from the papers, I had a difficulty ascertaining such errors. If this was the only ground for the review, one would have been tempted to say that there was no merit in the application. This would be all the more because ground relied upon by the applicant seems to relate to the correctness of the decision as opposed to an irregularity in the proceedings. The position of our law is long settled that the correctness of the decision is a matter for an appeal whilst an irregularity in the proceedings is a matter for review. This point was illustrated in the following words in Herbstein and Van Winsen’s, The Civil Practice of The Supreme Court of South Africa, 4th Edition, 1997, Juta and Company;
“The reason for bringing proceedings under review or appeal is usually the same, SC to have the Judgement set aside. Where the reason for wanting this is that the court came to a wrong conclusion on the facts or the law, the appropriate procedure is by way of appeal. Where however the real grievance is against the method of the trial, it is proper to bring the case on review: The first distinction depends therefore, on whether it is the result only or rather the method of trial which is to be attacked. Naturally, the method of trial will be attacked on review only when the result of the trial is regarded as unsatisfactory as well. The giving of a judgement not justified by the evidence would be a matter of appeal and not of review, upon this test. The essential question in review proceedings is not the correctness of the decision under review but its validity.”
[7] At paragraph 12 of the founding affidavit, the applicant said the following, which is no doubt consistant with a ground for a review as opposed to one for an appeal:-
“At the heart or core of the Ruling was the determination of the form of security to be furnished. The exercise of discretion by the Deputy Registrar was irrational, hence subject to review, correction and/or setting aside.” (underlining added)
[8] Whereas the Registrar in her ruling had said that the property was in the name of its Director who could sell or alienate the property anytime the applicant contended there was no basis for so contending. This, it said, was because the applicant would not dare do so as to do that would indicate that it was in contempt of court which would necessitate that it be dealt with according to law.
[9] I agree that the applicant does make out a case for review in that sense and in so far as he contends that the decision of the Registrar was irrational as the reasons put forward did not justify it. Whilst I will deal with the meaning of the term rationality as applied in review proceedings, I can safely say that according to Black’s Law Dictionary 10th Edition, a rational decision is one that is “ based on logic rather than emotion attained through clear thinking; not absurd, preposterous, foolish, or fanciful.” I note that from the papers the case by the applicant it is not opposed in its merits but is opposed purely on the basis of certain points in limine raised. It was in that sense the understanding of all parties concerned that if the points in limine did not succeed, then the applicants application had to succeed as it was effectively not being opposed in its merits.
[10] The points in limine raised by the Respondent were that there was a non-joinder of an interested party in the proceedings in the form of the Deputy Registrar as the authority who had made the ruling sought to be reviewed, corrected and set aside, given that she had not been cited and served with the application. It was contended further that the prayer that sought to have the applicant provide security in the form of immovable property registered in the name of the applicant’s Director’s. It was argued that this had the effect of altering and/or revoking a decision of the High Court which this court could not do in law given that it had become functus officio. The third point in limine raised was to the effect that the applicant’s application had failed to appreciate or acknowledge that an appeal had been noted against the decision of the Honourable Magagula J directing that the execution be carried on notwithstanding the appeal. It was argued that the appeal noted against the said judgement meant that same could not be overlooked but that the applicant had to deal with it according to law. It was argued further that the natural effect of staying the execution of a judgement appealed against applied.
[11] I shall deal with these points in limine ad seriatim.
A. Non-joinder of an interested party.
[12] As indicated above, on the point that there was a non-joinder of a material or interested party and that it therefore meant that the proceedings be set aside on this point, I make the following observations.
[13] There can be no denying that in terms of our practice, a party whose decision or ruling is the subject of a review needs to be cited and served with the papers instituting the proceedings. The rationale in this is obviously to make such a party aware that his decision is being challenged on a review so that he may submit full reasons behind his decision and also be in a position to provide the necessary record. There would probaby be no other interest on the author of the decision being challenged than this one.
[14] There is however no doubt in my mind that this would not be a rule of thumb particularly because the emphasis should not be on form rather than they should be on substance. This is to say where the reasons are already given and the issues that arise during the proceedings under review are not in dispute then the need for adherence to such a practice may not be so strong particularly where the interests of the Chairman are the nominal ones.
[15] In other words where it cannot be shown that the authority whose decision is being challenged is suffering any prejudice by not being cited and served including where the reasons for that particular authority to have come to the decision it did have been put forth, the citation and service of such an authority as a party may only be a technicality whose failure to adhere to may not alone mean that there is an irregularity to lead to the dismissal of appropriate proceedings whose mere short coming would have been the failure to cite and serve an authority who is not adversely affected by such a decision. In other words such a chairman has no direct and substantial interest in the proceedings.
[16] I agree with the Applicant’s submission that the test on whether a party has a direct and substantial interest in the matter is whether such a party has a legal interest in the subject matter which may be affected prejudicially by the judgement of the court in the proceedings. The judgement in Amalgamated Engineering Union V Minister of Labour 1949(3) SA 637 (A) at 657 is instructive in this regard just as is what was stated in Martin Gordon Vs Department of Health Supreme Court of Appeal of South Africa Case No.337/07.
[17] In the latter case, the position expressed in Amalgamated Engineering Union V Minister of Labour 1949(3) SA 637 (A) at 657, was upheld and applied with the following apposite remarks being made at paragraph (9) of the judgement:-
“…..The issue in our matter , as it is in any non-joinder dispute, is whether the party sought to be joined has a direct and substantial interest in the matter. The test is whether a party that is alleged to be a necessary party, has a legal interest in the subject matter; which may be affected prejudicially by the judgement of the court in the proceedings concerned. In the Amalgamated Engineering Union, Case (Supra) it was found that the question of joinder should…not depend on the nature of the subject matter … but… on the manner in which, and the extent to which, the court’s order may affect the interests of third parties; to consider whether the third party would have locus standi to claim relief concerning the subject-matter, and then to examine whether a situation could arise in which, because the third party had not been joined, any order the court might make would not be res judicata against him, entitling him to approach the courts again concerning the same subject matter and possibly obtain an order irreconcilable with the order made in the first instance. This has been found to mean that if the order or judgement sought cannot be sustained and carried into effect without necessarily prejudicing the interests of a party or parties not joined in the proceedings, then that party or parties have a legal interest in the matter and must be joined.” (underlining has been added)
[18] Applying the principle whether or not a judgement that may be issued by this court can be carried into effect without jeopardizing the interests of such a party, one has to come to the conclusion that the judgement envisaged herein can be carried into effect without the interests of the Registrar or Deputy Registrar being prejudiced which means that the latter is not a party who has a direct and substantial interest. That is to say she did not have to be joined in these proceedings. In other words the failure to cite such a party is not fatal to the proceedings.
[19] I am therefore of the view that the point on non-joinder raised by the applicant cannot succeed and I hereby dismiss it.
B. The Order sought is incompetent because it is functus officio.
[20] This takes me to the second point raised in limine, namely that the relief as sought in prayer two of the Notice of Motion is incompetent because it allegedly seeks to contradict or vary the final order of this court which is not allowed because it has since become functus officio.
[21] The Applicant contends that the basis for this prayer is the alleged fact that the order issued by this court per Judge Magagula in terms of order 1.3 of his judgement delivered on the 7th June 2017 was to the effect that the security to be provided had to be in terms of cash and not immovable property as the relief sought suggested.
[22] One can only determine this issue by looking closely at the two provisions. Verbatim order 1.3 as contained in the judgement concerned reads as follows:-
“The Applicant is to give Security to cover the sum of E180.000.00 and (Sic)which security shall be determined by the Registrar of this Court.”
[23] On the other hand the prayer by the Applicant which according to the Respondent seeks to vary or alter the final judgement or order cited above is couched in the following terms-
“Allowing the Applicant to provide security in the form of immovable property registered in the name of its Managing Director, Musa Magongo.”
[24] I have proceeded with the determination on the assumption that the order contained in the judgement of this court issued on the 7th June 2017 is final and conclusive. This I have done because no issue was raised with regards this assertion by the Respondent during the hearing of the matter. This being the case, the question that arises for determination is whether or not it can be said that the prayer sought does indeed seek to alter or vary the final order of this court, which renders it functus officio.
[25] The order as contained in the judgement referred to above, does not say what form the security pledged by the applicant should take except to say that such security should be one capable of covering a sum of E180,000.00 which is the value of the judgement debt, whose challenge on appeal was found by this court in terms of the said judgement of Justice Magagula to be frivolous and/or to be lacking in merit. Otherwise the question as to what form the security needed to take was left with the Registrar or her lawful deputy. Ofcourse in determining this question the Registrar or her lawful deputy had to act judicially and judiciously, failing which her decision would be susceptible to a challenge on review on any of the legally cognizable grounds.
[26] In bringing the current proceedings the applicant is simply saying the Registrar or her lawfully deputy did not act judicially or judiciously and therefore that her decision should be reviewed. Whether or not prayer two (2) can be granted would depend on whether or not there is a basis in law to review the decision of the Registrar or her lawful deputy, because if there is then there would be nothing in law preventing the grant of such prayer. This would be more so if in its view it would not be necessary to revert the matter back to the authority that granted the order under review. Ofcourse the position of our law is settled on what matters should or should not be referred to such authority.
[27] Reverting to the question whether prayer 2 seeks to vary or alter a final judgement or order of this court I am of the view that there is no merit in that contention. As indicated above, the judgement of Justice Magagula made no mention of what form that security should take which was left to the Registrar or her lawful deputy to determine. If in determining this question the Registrar or her lawful deputy, as the case may be, did not act judicially or judiciously, then determining that question would not amount to this court being functus officio.
[28] Ofcourse that question would not have been judicially and judiciously determined if the Registrar or her lawful deputy had acted irrationally which as I understood was the basis of the Applicant’s review.
[29] According to Black’s Law Dictionary 10th Edition a decision is irrational if it is “not guided by reason or by a fair consideration of the facts”. The same dictionary defines the term rationality which is the opposite of what is not rational in the following words:-
“rationality (is) 1. The quality, state or condition of being agreeable or consonant with clear – headed, sensible thought….(2) The ability or tendency to view things from an emotionally detached and logically principled standpoint.”
See also the Judgement in. Democratic Alliance V President of the Republic of S.A (24396/2017) [2017] ZAGPPHC 148; [2017] 3ALL SA 124(GP); 2017 (4) SA 253 (GP).
[30] Clearly a decision that does not bear out these attributes stands to be reviewed corrected and set aside. Reverting to the facts of the matter, it seems not to be rational in my view that a process to determine the nature of the security to be proved as ordered be embarked upon by this court per Magagula J would have to be secured through cash of the very same amount that is sought to be recovered. It is even worse when considerations of the property being put forward as security, which is more in value than the judgement debt, is said not to be good enough because it would not easily find a market. If the applicant would wait for sometime to be paid a judgement debt found by more than one court to be due with a rider that an appeal against such a finding was frivolous, I do not understand why the same waiting could not be extended to a Judgement debtor who has been found by the courts not to be having sound reasons to resist to pay the debt and or even to appeal a judgement that compels him to pay such a debt.
[31] As I have said, there is no merit in the contention that the relief herein sought tinkers with the functus officio principle given that the prayer here is not seeking to contradict the order as expressed in the Judgement delivered on the 7th June 2017. If anything I am convinced that the impugned prayer is aimed at giving efficacy to the said Judgement or order.
[32] I also confirm the finding I have respectfully come to which is that the decision of the learned Deputy Registrar is irrational.
[33] For those reasons the point raised by the Respondent that the said prayer is incompetent because it seeks to contradict the functus officio principle cannot stand. It is accordingly dismissed.
C. The Decision sought to be enforced has been appealed against which stays its execution in law.
[34] The Respondent contends in its third point in limine that the judgement of this court authorizing the execution of the Judgement issued in favour of the applicant is itself appealed against which means that it should be stayed pending the appeal.
[35] It sounds strange that a Judgement which was meant to allow execution pending appeal should itself be rendered ineffective through its being appealed against. This is all the more so when the appeal so made is against an interlocutory matter and it has been done without leave of court. This does not seem proper in its face, and can easily be seen to be an abuse of the court process. I had asked for authority that this can be done during the hearing and I have to this day not been favoured with any.
[36] I am therefore of the considered view that the appeal against the judgement to execute the earlier one pending appeal against it in so far as it was made without any leave having been sought and granted, is of no force or effect and should be treated as a non act. This is because the Respondent stands to suffer no prejudice as proper security has been put forth. The case in point here is that of South Cape Corporation V Engineering Management Services 1977(3) SA 534.
[37] The question now is whether having come to the conclusion I have, the route open to me is to dismiss the points in limine raised only or having dismissed such points in limine I am now required to grant the reliefs prayed for, firstly by granting the review after which to then correct the decision as opposed to reverting the matter to the Registrar to correct her shortcoming and thereafter grant an appropriate relief.
[38] It seems to me that given the issues involved herein, which are very simple taken together with the fact that the authority whose decision is being reviewed is not likely to come to a different decision or order from the one I should make, I am bound to, once having reviewed the decision by the Registrar, substitute it with a the one. I consider proper.
[39] This being the case I hereby make the following order:-
39.1. The decision made by the Registrar or Deputy Registrar of this Court directing that the security given by the Applicant or anyone on the latter’s behalf be in cash, be and is hereby reviewed, corrected and set aside.
39.2. The Applicant is ordered to provide security in the form of the immovable property referred to in his application.
39.3. An interdict against the property in question, to ensure it is prevented from alienation whilst serving as security for purposes of this matter, is to be registered or placed against its title by the Registrar of Deeds. This is to be done at the cost and instance of the Applicant.
39.4. The Respondent be and is hereby ordered to pay the costs of these proceedings.
______________________
N. J. HLOPHE
JUDGE – HIGH COURT
