Tjospomie Boerdery (Pty) Ltd v Drakensberg Botteliers (Pty) Ltd and Another

• Judge: Stegmann J, Roux J and Smit J
• Judgment Date: 14 November 1988
• Citation: 1989 (4) SA 31 (T)
• Hearing Date: 24 August 1988
• Court: Transvaal Provincial Division

Stegmann J:

This appeal has come before this Court in terms of an order of the Appellate Division made on 12 October 1987 on a petition to the Chief Justice.

On 8 June 1987 Harms J made an order for the winding-up of the company Rentekor (Pty) Ltd on the ground that such step appeared to be just B and equitable, as contemplated by s 344(h) of the Companies Act 61 of 1973. On 16 June 1987 the learned Judge refused leave to appeal in terms of s 20(4) of the Supreme Court Act 59 of 1959. On the subsequent petition to the Chief Justice, the Appellate Division granted leave to appeal in terms of s 21(2) and (3) of Act 59 of 1959; and in terms of s 20(2)(a) it directed that the appeal be heard by a Full Court of this C Division. The order provided further that the costs of both the opposed application for leave to appeal heard by Harms J on 16 June 1987, and the costs of the subsequent application for leave to appeal made by way of petition to the Chief Justice, should be costs in the appeal.

There were five parties in the Court below, viz Drakensberg D Botteliers (Pty) Ltd (first applicant), the J J Vermooten Trust (second applicant), Rentekor (Pty) Ltd (first respondent), Tjospomie Boerdery (Pty) Ltd (second respondent), L A Snyman (third respondent), and J R Snyman (fourth respondent).

The two applicants, having been successful in the Court below, are the two respondents in the appeal before this Court. The appellant E is Tjospomie Boerdery (Pty) Ltd. The remaining two parties in the Court below, L A and J R Snyman, have not joined in the appeal. The appellant, Tjospomie Boerdery, was ordered to pay the applicants' costs in the Court below, and that order for costs is, of course, also part of the subject-matter of this appeal.

F Several distinct questions arise. The first relates to the nature of the appeal itself. That question was considered by the learned Judge in the Court below in his judgment delivered on 16 June 1987 refusing the application for leave to appeal. He said:

'Die vraag wat besleg moes word in die verrigtinge was of dit reg en billik was om die eerste respondent te likwideer. Sowel G die jurisdiksionele feite as die tweede been van die ondersoek is diskresionêr van aard. In die geval van appêl ten aansien van diskresionêre regspleging kan 'n ander Hof alleen inmeng indien daardie Hof tevrede is dat die Hof wat die diskresie uitgeoefen het voldoen aan die maatstawwe neergelê in Ex parte Neethling and Others 1951 (4) SA 331 (A) op 335. Die vraag is dus nie bloot 'n vraag of ek van oordeel is dat 'n ander Hof sy diskresie op 'n ander wyse nou uitgeoefen het nie.'

H The learned Judge went on to consider the main grounds on which leave to appeal had been sought. He came to the conclusion that Tjospomie Boerdery had not shown that it would be able to bring its appeal within the principles laid down in Ex parte Neethling. That was the basis on which the learned Judge refused leave to appeal.

I On behalf of the appellant, Mr Shaw submitted that the issue before this Court was not whether the learned Judge a quo had exercised a judicial discretion, but whether he had correctly held that a liquidation would be just and equitable and that no reasonable alternative remedy existed. (The reference to an alternative remedy was, of course, an allusion to s 347(2) of the Companies Act, and to the J fact that the application had been

Stegmann J

A resisted in terms thereof. It was suggested that another remedy was available to the applicants and that they were acting unreasonably in seeking to have the company wound up instead of pursuing such other remedy.) In support of his submission, Mr Shaw cited Mahomed v Kazi's Agencies (Pty) Ltd and Others 1949 (1) SA 1162 (N) at 1167 - 9; Ensor NO v South Pine Properties (Pty) Ltd and Another 1978 (2) SA 755 (N) B at 771E - G; Borgelt v Millman NO and Another 1983 (1) SA 757 (C) at 774A - B.

On behalf of the respondents, Mr Zeiss submitted that the fact that this Court might come to the conclusion that it would not have exercised the discretion to order a winding-up would not be a sufficient basis C to justify interference with the decision made by Harms J. Interference would only be justified if this Court should be satisfied that the Court a quo exercised its discretion capriciously or upon a wrong principle or that it had not brought its unbiased judgment to bear on the question or had not acted for substantial reasons. In support of these submissions, D Mr Zeiss referred to Ex parte Neethling and Others 1951 (4) SA 331 (A) at 335D - E, and also to the already mentioned judgment delivered by Harms J in this matter on 16 June 1987.

The answer to this preliminary question concerning the nature of the appeal will determine what factual matter is relevant for the purposes E of deciding the appeal. It is therefore necessary to come to a conclusion in that regard immediately.

As the argument developed before us, it tended to suggest that there is an antithesis between the principles stated by the Appellate Division in Ex parte Neethling and Others (supra) and those stated by a Full Bench of the Natal Provincial Division per Broome J in Mahomed v Kazi's Agencies (Pty) Ltd (supra). The question that must be decided in F this Court is not without its complications. The nature of the complications becomes apparent when these supposedly antithetical decisions are seen in their historical context.

Mahomed v Kazi's Agencies (Pty) Ltd and Others was decided by a Full Bench in Natal in 1949. The ratio decidendi of the relevant point may be summarised thus. Courts are called upon to exercise discretions G which vary infinitely in their nature; no general principle can be formulated which will govern all cases where the exercise of a discretion by a court is brought on appeal; the Court of appeal must examine the nature of the discretion the exercise of which is questioned before it; its first decision must be one in terms of which it characterises the discretion; amongst the categories of discretions are, H firstly, those (such as a decision of a judicial officer as to the conduct of business in his own court) in regard to which a Court of appeal would not interfere unless satisfied that the court below was 'clearly wrong' and, secondly, those in which a Court of appeal is in as good a position as the court below to exercise the relevant discretion; in a case within the latter category it is the function of the Court of I appeal to exercise the discretion anew, and it is therefore not required to confine its attention to 'a consideration of the fairness and honesty of the Judge in the Court below'; the discretionary power to sanction a compromise in terms of s 103(2) of the Companies Act 1926 (now replaced by s 311(2) of the Companies Act 1973) must be characterised as being of the latter kind in which an appeal involves the exercise of J the discretion anew.

Stegmann J

A Two years later, in 1951, the Appellate Division was called upon to decide Ex parte Neethling and Others. It does not appear to have been referred to the decision in Mahomed v Kazi's Agencies (Pty) Ltd and Others. The matter before the Appellate Division was a decision by a Provincial Division exercising the discretionary power then defined in s 87 of the Administration of Estates Act 24 of 1913, and declining B to authorise the sale of certain immovable property in which a number of minor children were interested in terms of their grandparents' will. The Appellate Division assumed that a right of appeal lay against such a decision. On the basis of that assumption it dealt with the further C question whether its function was simply to substitute its discretion for the discretion initially vested in the Court below; or whether it had first to consider the prior question whether the Court below had exercised its discretion judicially, and to refrain from substituting its discretion for that of the Court below unless it appeared that the decision of the Court below was vitiated by a failure on its part to exercise its discretion judicially. The approach of the D Appellate Division to the latter question was casuistic. It referred to decisions in previous matters in which it had been held that discretionary orders on the question of costs, on a postponement, on an amendment of pleadings and on sentence were all cases in which a Court of appeal was not entitled to substitute its discretion for the discretion of the court of first instance unless it appeared that the decision of the latter was vitiated by a failure to exercise its E discretion judicially. It held that the same principle applied to a case in which the Court of first instance had exercised the discretionary power to authorise or to decline to authorise the sale of immovable property in which minor children were interested.

It must be emphasised that the Appellate Division did not hold that there is any general principle to the effect that whenever a court F of first instance is vested with any sort of discretionary power, a Court of appeal is precluded from substituting its own discretion for that of the court of first instance unless the latter's decision is shown to have been vitiated by a failure to exercise discretion judicially. The ratio decidendi of the case was plainly that the G question is to be approached casuistically, and that there are particular categories of cases in which interference by a Court of appeal with the exercise of a discretionary power by a court below is conditional upon the appellant's establishing a failure on the part of the court below to exercise the discretion judicially. It follows that the Appellate Division implicitly acknowledged the existence of other categories of cases (as contemplated in Mahomed v Kazi's Agencies (Pty) H Ltd and Others) in which interference by a Court of appeal with the exercise of a...