Barak Fund SPC Limited obo Barak Structured Trade Finance Segregated Portfolio v Business Venture Investments and Others (Leave to Appeal) (36125/2022) [2024] ZAGPPHC 1348 (20 December 2024)

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

CASE NO.: 36125/2022

(1) REPORTABLE: NO

(2) OF INTEREST TO OTHER JUDGES: [N]

(3) REVISED: [Y]

(4) Signature:

Date: 20/12/24

In the matter between:

BARAK FUND SPC LIMITED ON BEHALF OF BARAK

STRUCTURED TRADE FINANCE SEGREGATED PORTFOLIO Applicant

and

BUSINESS VENTURE INVESTMENTS

First Respondent

JUSTINE COLLING

Second Respondent

GILIAN HOPE MILLER

Third Respondent

BUILDMAX LIMITED

Fourth Respondent

BASICALLY SQUARED (PTY) LIMITED

Fifth Respondent

LEAVE TO APPEAL JUDGMENT

Kumalo J

INTRODUCTION

[1] This is an application for leave to appeal by the First to the Fourth Respondent a judgment of this court handed down on 24 August 2023. For convenience, the First to the Fourth Respondents shall be referred to jointly as the Respondents.

[2] The Respondents leave to appeal is premised on certain findings of fact and/or law that the Respondents submit that the court erred and misdirected itself on. I do not intend to regurgitate the said list as it would be tantamount to repeat the judgment that is under attack but address the salient features that I regard as determinative of the outcomes of the leave to appeal.

[3] Respondents submitted that this court erred with its recording of the citation of the Applicant as Barak Fund SPC Limited or Barack Fund SPC Limited (on behalf of the Barak Structured Trade Finance Segregated Portfolio) as the Applicant in paragraph 6 of the founding affidavit is described as Barak Fund SPC Limited without the suffix: “(on behalf of the Barak Structured Trade Finance Segregated Portfolio)”.

[4] It is further submitted on behalf of the Respondents that this court erred by not, since in the founding affidavit, the deponent consistently refers to only Barak Fund SPC Limited, and not to Barak Fund SPC Limited (on behalf of the Barak Structured Trade Finance Segregated Portfolio) as the entity which concluded the Facility Agreement and other agreements.

[5] Respondents further argued that this court erred in that it omitted to adjudicate the question whether Barak Fund SPC Limited or Barak Fund SPC Limited (on behalf of the Barak Structured Trade Finance Segregated Portfolio) concluded the Facility Agreement.

[6] Section 17(1)(a) of the Superior Courts Act makes provision that leave to appeal may only be given where the judge or judges concerned are of the opinion that (i) the appeal would have a reasonable prospect of success; or (ii) there is some other compelling reason why the appeal should be heard, including conflicting judgments on the matter under consideration.

[7] Rule 49(1)(b) of the Uniform Rules of Court provides that when leave to appeal is required, the grounds thereof shall be furnished within fifteen days after the date of the order appealed against. The grounds must be clearly and succinctly set out in clear and

unambiguous terms to enable the court and the respondent to be fully and properly informed of the case which the applicant seeks to make out and which the respondent is to meet in opposing the application for leave to appeal[1].

[8] The Applicant argued correctly in my view, that the present application does not contend for any compelling reason why the appeal should be heard as contemplated in section 17(1)(a)(ii) of the Superior Courts Act. All the Respondent did was to list a series of findings that it contends the Court erred and misdirected itself. The Respondent is therefore confined to the assertion that the appeal would have a reasonable prospect of success as contemplated in section 17(1)(a)(i) of the Act.

[9] The above is also clear from the First to Third Respondents’ heads of argument that they are relying on the reasonable prospects of success on all the issues raised.

[10] Section 17 has elevated the test to be applied for granting of leave to appeal. In MEC Health, Eastern Cape v Mkhitha[2], the Supreme Court of Appeals stated that a mere possibility of success , an arguable case or one that is not hopeless, is not

enough. There must be a sound, rational basis to conclude that there is a reasonable prospect of success in the appeal.

[11] The premise of the application for leave to appeal rest mainly on three issues, namely the finding that the Applicant is Barak Fund SPC Limited (on behalf of the Barak Structured Trade Finance Segregated Portfolio). The second issue that the Respondents described as ‘the heart of the dispute, is the question whether the various agreements, and more specifically the facility agreement, were concluded between Barak Fund SPC Limited or Barak Fund SPC Limited (on behalf of the Barak Structured Trade Finance Segregated Portfolio) and the First Respondent.

[12] Lastly whether the suretyship alleged to have been signed by Second and Third respondents were indeed so signed.

[13] The Applicant is cited as Barack fund SPC Limited on behalf of Barak Structured Trade Finance Segregated Portfolio. Barack Fund SPC Limited, a registered company in terms of the Caymen Islands Companies Laws as required by the company laws of the Cayman Islands.

[14] The Respondents in the main hearing argued that the inclusion of the words “on behalf of” denoted the existence of an agent and a principal relationship. They contended that it is not possible to determine who the plaintiff is, a party cannot act as its own agent and the conclusion of a contract by a person who intends to act as an agent, in circumstances where the principal does not exist, dos not result in a contract with the agent.

[15] The reasons for the use of the words “on behalf of” were fully canvassed before this court and explained in the Applicant’s founding affidavit. It is a requirement for such entities namely the ‘segregated portfolio companies registered as such under the company laws of the Cayman Islands. It does not denote an agency relationship.

[16] In the main judgment, I made the conclusion that the Applicant being Barak Fund SPC Limited was the entity that had entered into the facility agreement with the First Respondent. The laws of the Cayman Island required it to identify the assets forming part of the ring-fenced portfolio assets and this is a legislative framework in the Cayman Islands.

[17] More importantly, section 216(2) of the Cayman Companies Law stipulates that a segregated portfolio of or within a segregated portfolio company shall not constitute a legal entity separate from the segregated portfolio company.

[18] In my understanding, the Applicant created a single segregated company which in the course of its business with the First Respondent, created a segregated portfolio which would have required that it ring-fence the assets of that segregated portfolio. This did not create constitute a legal entity separate from the Applicant.

[19] The Respondents do not deny that they entered into facility loan agreement worth approximately R30 million at the time.

[20] The Applicant’s cause of action against the First Respondent is for the repayment of the loan granted based on the agreements referred to above. The action against the Second and Third Respondents is based on the suretyship agreements allegedly signed by them wherein they bound themselves in solidum with the First Respondent in favour of the Applicant.

[21] The Respondents argued that the Applicant (Barak Fund SPC Limited) was not a party to the suretyship. Ex facie the document, the party described as the Lender is Barak Fund SPC Limited acting on behalf of Barak Structured Trade Financed Segregated Portfolio and that is the entity entitled to enforce the suretyship. It is argued that based on the above, the third issue also enjoys a reasonable prospect of success.

[22] I am unable to agree with the Respondent’s submissions as it appears that the case for the leave to appeal is somewhat different from the case that was argued in the main.

[23] The case argued on their behalf of suretyship was that they had no recollection of having signed the suretyship and challenged the correct chronological sequence of the pages. Two pages were marked page 8 and the second page 8 thereof did not follow the correct chronological sequence and pages 9 and 10 thereof did not contain the Second and Third Respondents signatures. The Second and Third Respondents initialled every page of the suretyship except page 10. They did not deny that their signatures appear on the second page 8.

[24] The issue now raised in this application for leave to appeal that the suretyship only referred Barak Fund SPC Limited on behalf of Barak Structured Trade Finance Segregated Portfolio was never raised in the main hearing. What Respondents raised was that they did not recall signing the suretyship agreement though they did not specifically dispute their initials and signatures on the document.

[25] Based on all the above, I am of the view that there are no reasonable prospects of success in the appeal.

[26] In the premises, the following order is made:

1. The application for leave to appeal is dismissed; and

2. The First, Second and Third Respondent are to pay the cost of this application on scale C.

MP Kumalo

Judge of the High Court

Delivered: This judgment is handed down electronically by uploading it to the electronic file of this matter on CaseLines.

For the applicant: Adv D Mahon Instructed by: Schindlers Attorneys For the respondents: Adv C Acker Instructed by: Pagel Schulenburg Inc

[1] See Songono v Minister of Law and Order 1996 (4) SA 384 ( E ) at 385 I-J

[2] (1221/15) [2016] ZASCA 176 (25 November 2016) para 17