East London Tuberculosis Association v Decawiz Investments (Pty) Ltd and Others (1497/2014) [2014] ZAECGHC 69 (22 August 2014)

IN THE HIGH COURT OF SOUTH AFRICA

EASTERN CAPE DIVISION, GRAHAMSTOWN

CASE NO: 1497/2014

DATE HEARD: 21/08/2014

DATE DELIVERED: 22/08/2014

In the matter between

EAST LONDON TUBERCULOSIS ASSOCIATION APPLICANT

and

DECAWIZ INVESTMENTS (PTY) LTD 1ST RESPONDENT

SATEESH ISSERI 2ND RESPONDENT

THE REGISTRAR OF DEEDS, KING WILLIAM’S TOWN 3RD RESPONDENT

JUDGMENT

BROOKS AJ:-

INTRODUCTION

[1] The applicant seeks a declaratory order and a mandatory interdict in respect of certain immovable property to which I shall refer, for the sake of convenience, as “Grey-Dell Farm”.

[2] In the alternative, and in the event that final relief is not granted, the applicant seeks an interim interdict restraining the first and second respondents from dealing with Grey-Dell Farm in any manner adverse to the applicant’s potential interest therein, such interim interdict to enjoy immediate effect but a lifespan limited to the finalisation of an action. The relief

contemplated in the action is a declaratory order similar to the final relief contended for in the application. It amounts to a final declaratory order on the validity of an agreement of sale which purported to transfer rights of ownership in Grey-Dell Farm from the applicant to the first respondent.

[3] In either event, the applicant seeks costs of suit on the scale as between attorney and client, such costs to include the costs of two counsel and to be paid by the first and second respondents jointly and severally, the one paying the other to be absolved.

THE PARTIES

[4] In the founding affidavit, the chairperson of the applicant describes it as “East London Tuberculosis Association”, a registered non profit organisation. He describes the applicant as wholly separate and independent from the South African

Tuberculosis Association, (SANTA - National), which is a national organisation with interests, objectives and functions similar to those held by the applicant. However, the deponent describes the applicant as being affiliated to SANTA-National as a founder member.

[5] The applicant attaches its constitution to the founding affidavit. Although undated, this document (annexure MM2A), records that it was adopted in terms of a resolution taken by the applicant at a meeting on 19 July 2000 whereby it changed its name from “South African National Tuberculosis Association, East London”, to that presently in use “to leave no doubts that it is an autonomous body and not a subordinate branch of SANTA”. (Paragraph 10 of the minutes of the meeting of 19 July 2000).

[6] The allegations in the founding affidavit are supported by an affidavit deposed to by CHRISTIAAN ZACHARIAS VENTER, who was employed

by the applicant as the manager of its hospital for the treatment of tuberculosis, situate on Grey-Dell Farm, from 1 July 1995 to 31 March 2005.

[7] A further supporting affidavit is deposed to by MICHAEL GEORGE HANDS, an attorney who was involved with SANTA-National from the early 1990’s until 2012. He states that the applicant has always operated under its own constitution and, it’s existence pre-dating that of SANTA-National, has the status of a founder member of SANTA-National but is completely independent thereof.

[8] These allegations of independence find resonance with the allegations in an affidavit deposed to by DAVID CHARLES FELDMAN, the attorney of record for SANTA-National in certain proceedings instituted in South Gauteng High Court against the first and second respondents for the recovery of immovable property.

[9] The first respondent is a company registered in accordance with South African law. The allegations in the founding affidavit suggest that the first respondent may be in the process of deregistration. These are denied in the answering affidavit.

[10] The second respondent is the sole director of the first respondent.

[11] The third respondent is the Registrar of Deeds, who is cited nomine officio because the application concerns itself with competing real rights of ownership in Grey-Dell Farm. The third respondent has indicated that he will abide the decision of the court.

[12] In the answering affidavit, the second respondent places the identity of the applicant in dispute. He alleges that there are two different entities of relevance in this matter. The first is the South African National Tuberculosis Association, East London (the applicant) and the second is the South African National Tuberculosis Association, East London Branch.

[13] The distinction is highlighted by the second respondent. The answering affidavit stresses that the South African National

Tuberculosis Association, East London Branch is not an entity which is autonomous. It is the East London branch through which

SANTA-National operates in East London. It is emphatically denied that the applicant was ever known as the South African

Tuberculosis Association, East London Branch. The deponent points to the applicant’s self description in the minutes of the meeting of 19 July 2000 as confirmation of this allegation. He states that the applicant was formerly known as “South

African Tuberculosis Association, East London”. He states that nowhere in the founding affidavit does the applicant show that it was previously the South African Tuberculosis Association, East London Branch.

[14] The applicant addresses these various allegations in reply. No main replying affidavit and has been filed of record; rather, use is made of four “supplementary replying affidavits”. A supplementary replying affidavit deposed to by one ROBERT JOHN CHRISTOPHER KELLY HEINRICH, sometime chief executive officer of SANTA-National states that SANTA-National does not have branches. He amplifies this allegation with the following statements:

[14.1] “In the past, some people have loosely referred, misleadingly as it turns out, to its affiliated and member organisations

colloquially as branches.”;

[14.2] “SANTA-National is an umbrella organisation to which autonomous separate non-profit organisations are members;”

[14.3] “The applicant is one such affiliated member, which was previously known as SANTA-East London, SANTA, East London or variation thereof.”

[15] These allegations are supported by supplementary replying affidavits deposed to by MICHAEL GEORGE HANDS and DAVID CHARLES FELDMAN.

FINAL RELIEF

[16] The primary relief sought by the applicant in the notice of motion is final relief in the form of a declarator relating to rights of ownership in Grey-Dell Farm. This is coupled by additional final relief in the form of a mandatory interdict aimed at securing a re-transfer of the registration of the real rights in Grey-Dell Farm into the name of the applicant.

[17] It is appropriate at this stage to be reminded of the correct approach to be adopted in motion proceedings in which final relief is sought. A useful restatement of the legal principles to be applied is to be found in the judgment of Harms DP in NATIONAL

DIRECTOR OF PUBLIC PROSECUTIONS v ZUMA [2009] ZASCA 1; 2009 (2) SA 277 (SCA) at para [26] where the learned judge of appeal stated the following:

“Motion proceedings, unless concerned with interim relief, are all about the resolution of legal issues based on common cause facts. Unless the circumstances are special they cannot be use to resolve factual issues because they are not designed to determine probabilities.

It is well established under the Plascon-Evans rule that where in motion proceedings disputes of fact arise on the affidavits, a final order can be granted only if the facts averred in the applicant’s affidavits, which have been admitted by the respondent, together with the facts alleged by the latter, justify such order. It may be different if the respondent’s version consists of bald or uncreditworthy denials, raises fictitious disputes of fact, is palpably implausible, far-fetched or so clearly untenable that the court is justified in rejecting them merely on the papers.”

[18] In respect of the mandatory interdict sought, the so-called Plascon-Evans rule is to be applied in the assessment of the application papers to determine whether the applicant has demonstrated:

[18.1] a right which is clearly established;

[18.2] an injury actually committed or reasonably apprehended;

[18.3] the absence of any other satisfactory remedy.

(SETLOGELO V SETLOGELO 1914 AD 221 at 227; NIENABER v STUCKEY 1946 AD 1049 at 1053 and 1054; MOSII V MOTSEOAKHUMO 1954(3) SA 919(A); DE VILLIERS v SOETSANE 1975 (I) SA 360 (E) and EDREI INVESTMENTS 9 LTD (In Liquidation) v DIS-CHEM PHARMACIES (PTY) LTD 2012(2) SA 553 (ECP) at 556 B – C.)

[19] Whether the applicant has a right is a matter of substantive law; whether the right is clearly established is a matter of evidence.

(Erasmus, Superior Court Practice, Supplementary Volume, page E8 – 6D).

INTERIM RELIEF

[20] As a fall back position, the applicant seeks in the alternative an interim interdict operating with immediate effect but with a lifespan restricted to “the finalisation of this application and an action to be instituted by the Applicant against the Respondents to declare the aforementioned Deed of Sale invalid and of no force and effect the transfer of Grey-Dell Farm from the First Respondent to the Applicant” (sic).

[21] The applicant would be entitled to an interim interdict if it were able to establish the following factors:

[21.1] a right which is clearly established; or a right prima facie established, though open to some doubt;

[21.2] a well grounded apprehension of irreparable harm if the interim relief is not granted;

[21.3] a balance of convenience in favour of the granting of relief;

[21.4] the absence of any other satisfactory remedy.

[22] The granting of an interim interdict pending an action is an extraordinary remedy within the discretion of the court.

ERIKSEN MOTORS (WELKOM) LTD v PROTEA MOTORS, WARRENTON AND ANOTHER 1973(3) SA 685 (AD) at 691 C – E.

[23] A court will exercise a discretion to dismiss the application if a dispute of fact arises on the application papers which is a serious dispute of fact incapable of resolution on the papers and which the applicant ought to have foreseen or did in fact foresee when launching the application. ADBRO INVESTMENT CO. LTD v MINISTER OF THE INTERIOR 1956(3) SA 345 (AD).

[24] In the assessment of an entitlement to interim relief in motion proceedings, the test is different from the Plascon-Evans test. In this instance, the applicant would be entitled to interim relief if it is able to demonstrate on the application papers a prima facie right, though open to some doubt. The accepted approach to be adopted has been expressed in the following manner:

“In determining whether or not the applicants crossed the threshold, the right relied upon for a temporary interdict need not be shown by a balance of probabilities, it is enough if it is prima facie established though open to some doubt.

The proper approach is to take the facts set out by the applicants together with any facts set out by the respondents, which the

applicants cannot dispute, and to consider whether having regard to the inherent probabilities the applicants should, not could, on those facts obtain final relief at the trial.

It is also necessary to repeat that although normally stated as a single requirement, the requirement for a right prima facie established, though open to some doubt, involves two stages. Once the prima facie right has been assessed, that part of the requirement which refers to the doubt involves a further enquiry in terms whereof the Court looks at the facts set up by the respondent in contradiction of the applicant’s case in order to see whether serious doubt is thrown on the applicant’s case and if there is a mere contradiction or unconvincing explanation, then the right will be protected. Where, however, there is serious doubt then the applicant cannot succeed. See Webster v Mitchell 1948(1) SA 1186 (W) at 1189; Gool v Minister of Justice and Another 1955(2) SA 682 (C) at 688.”

SPUR STEAK RANCHES LTD AND OTHERS v SADDLES STEAK RANCH, CLAREMONT, AND ANOTHER 1996(3) SA 706 (C) at 714 E – G.

OBJECTIONS IN LIMINE

[25] In the answering affidavit, the first and second respondents raise two main bases upon which they rely in submitting that the

application cannot succeed: lis pendens and irresolvable disputes of fact. It follows that the extent of the merit in the objections falls to be assessed in the light of the legal principles set out earlier in this judgment.

[26] Attached to the answering affidavit is a copy of a combined summons issued by the applicant against the first and second respondents on 15 May 2014. The second respondent draws the attention of the court to the fact that the relief claimed in the action is substantially the same as the final relief sought in prayers 1,2 and 3 of the present application.

[27] It is clear from the stamp of the Registrar impressed upon the Notice of Motion in this matter that the application was launched on 13 May 2014.

[28] The supplementary replying affidavit deposed to by the chairman of the applicant is the only one in which these allegations are dealt with. The issue of the combined summons is admitted. Moreover, the chairman discloses that he was advised by legal representatives to issue summons simultaneously with the application “as the matter was due to prescribe before the application can be adjudicated”.

[29] In the same breath, the chairman of the applicant states:

“I am advised that the application may expeditiously dispose of the action, alternatively act as an interim interdict pending the outcome of the action.”

Whilst the potential effect of an interim interdict may have been expressed correctly in this statement, it is the preceding portion of the sentence that gives cause for concern, indicating unequivocally an awareness of a duplication in process.

[30] Plainly, the grant of final relief or interim relief in this application would involve a decision concerning the same subject

matter, founded upon the same cause of complaint and between the same parties. In my view, the requisites for an objection of lis pendens are established.

MITFORDS’S EXECUTOR v EBDEN’S EXECUTORS 1917 AD 682; LE ROUX v LE ROUX 1967(1) SA 446 (A).

[31] Lis pendens is not an absolute bar to the application proceeding. The court remains vested with a discretion to allow the application to proceed if that would be more just and equitable in the circumstances.

YEKELO v BODLANI 1990(3) SA 970 (Tk) at 973 D.

[32] The question of whether or not the application should be allowed to proceed, and the exercise of my discretion in that enquiry, cannot lose sight of the nature of the relief sought and the prospects of success in the application.

[33] In my view, whether contending for final relief or interim relief, and with due regard to the application of the different approaches to be taken in the assessment of the facts contained in the affidavits in each instance, the applicant cannot succeed. In reaching this conclusion, I have had regard to the following factors.

[34] The absence of a satisfactory alternative remedy is a requirement common to both the establishment of an entitlement to final relief and the establishment of an entitlement to interim relief. Not only is the institution of an action an obvious alternative remedy, but it has already been invoked by the applicant. The supplementary replying affidavit confirms this fact.

[35] It was not argued that the action which has been instituted by the applicant does not constitute a satisfactory alternative remedy. It is the vehicle ideally suited to the proper determination of the issues raised in respect of the transfer of rights of ownership in Grey-Dell Farm. This is particularly so when regard is had to the disputes of fact relating to the locus standi of the applicant which are rooted in the history of the ownership of Grey-Dell Farm.

[36] In my view, the disputes of fact relating to the history of ownership of Grey-Dell Farm and the locus standi of the applicant cannot be resolved in favour of the applicant on the application papers. It cannot be said that the applicant has demonstrated a right which is clearly established. To come to this conclusion, the disputes of fact raised in the answering affidavit would have to be found to be fictitious, implausible, far-fetched or so clearly untenable that the court is justified in rejecting them merely on the papers. I am unable to do so. In my view, the allegations in the founding affidavit and the allegations in the replying affidavits do not expose those in the answering affidavit as deserving of any of those adjectives.

[37] Even if one were to entertain the prospect that the applicant may have demonstrated a prima facie right, though open to some doubt, the effect of this finding would be trumped by a failure on the part of the applicant to establish an injury actually committed or reasonably apprehended. It follows that this failure also militates against the grant of final relief.

[38] All that the applicant says in the founding affidavit which might have been intended to address this requirement is the following:

“An important tuberculosis hospital is located on Grey-Dell Farm, where a large number of tuberculosis patients are treated and convalesce.

Any action which jeopardises the provision of these services could have far-reaching consequences upon the patients and the Applicant,

whose financial resources as a charity are constrained. I repeat that the Eastern Cape Provincial Department of Health presently leases the hospital from the Applicant for which it receives rent; …”

If it was intended by the deponent that the terms of this statement somehow convey a sense of imminent harm or injury, in my view, the attempt fails.

[39] The chairman of the applicant then encroaches into the territory of an assessment of the balance of convenience. How could it ever be argued, in the face of the facts identified in the preceding paragraph, that the balance of convenience favours the grant of interim relief? The inability of the applicant to establish this requirement is compounded further by the statement made in the founding affidavit to the effect that the third respondent has issued a caveat in respect of Grey-Dell Farm which “provides some but not complete protection for the applicant”. The existence of the caveat was confirmed in documentation emanating from the third respondent which was handed in on behalf of the applicant when this matter was argued.

[40] Accordingly, in returning to the question of how the judicial discretion should be exercised in the face of the lis pendens objection raised by the first and second respondents, I am of the view that because the duplication of process in this matter involves an action on the one hand and an application on the other, the assessment of the lis pendens objection is inextricably bound up with an assessment of the extent to which the applicant has demonstrated an entitlement to final relief or to interim relief in the application before me. No matter how one approaches the resultant question, for the reasons given earlier, it must be answered against the applicant.

[41] It follows that I am of the view that the application falls to be dismissed.

COSTS

[42] In seeking the dismissal of the application, the first and second respondents seek an order that the applicant pay the costs on the scale as between attorney and client. Several reasons are advanced for this punitive order:

[43] The submission is made that the institution of the application against the background of a clear intention to seek final relief,

substantially similar to that sought in the notice of motion, in an action, constitutes a gross abuse of the process of court. In my view, there is some merit in this submission when made in the circumstances of this matter. The issue of a combined summons two days after the commencement of the application demonstrates clearly that simultaneous consideration was being given to both. That much is confirmed in the chairman’s supplementary replying affidavit; however, the thought provoking allegations made by the first and second respondents about the applicability and effect of lis pendens in the circumstances as constituting a gross abuse of the process of the court receive scant attention.

[44] The answering affidavit criticises the applicant for instituting application proceedings in circumstances where it knew, or where it was readily apparent and foreseeable, that a dispute of fact would be raised about the locus standi of the applicant and the validity of its claim to a transfer of the rights of ownership in Grey-Dell Farm. The submission is also made that this dispute of fact is irresolvable by way of application proceedings. With these submissions I find myself to be in agreement. The broader history of the matter which involves immovable property owned by SANTA-National, and resultant litigation, must have informed the applicant that issues of locus standi and unravelling the apparently complicated history of the ownership of Grey-Dell Farm would be central to a determination of the applicant’s entitlement to both final and interim relief in this matter. As pointed out by the second respondent in the answering affidavit, this awareness on the part of the applicant is underscored by the extensive use made in the founding papers of “opinion evidence” of various person who have been connected to that history in some way. In my view, the resultant criticism of the launching of motion proceedings in such circumstances is well made.

[45] Even if one were to allow some leeway before criticising the applicant for the commencement of motion proceedings in the face of obvious disputes of fact and simultaneously with the institution of an action for substantially similar final relief, this generosity

cannot survive beyond the stage where the answering affidavit is filed in this matter. In that affidavit, the high risk attaching to the applicant’s pursuit of the application is pertinently expressed. Notwithstanding the salutary injunction

to limit the pursuit of the final relief to only one process, the applicant has doggedly pursued this application against the background of the existence of the more appropriate action. In my view, such an approach amounts to an abuse of the process of this court. This must be particularly so when the applicant’s circumstances so obviously demonstrate that neither final relief nor interim relief could be granted on these application papers. An appropriate costs order should be issued.

ORDER

[44] In the result, I make the following order:

“1. The application is dismissed.

2. The applicant is directed to pay the costs of the application on the scale as between attorney and client.”

______________

R W N BROOKS

JUDGE OF THE HIGH COURT (ACTING)

Appearances:-

For the Applicant: Adv J Kayser, instructed by Netteltons Attorneys, Grahamstown

For the Respondent: Adv A Macmanus, instructed by McCallum Attorneys, Grahamstown