Smith NO and Another v Kalro Farming (Pty) Ltd (1594/2020) [2021] ZAFSHC 130 (18 May 2021)

IN THE HIGH COURT

OF SOUTH AFRICA

FREE STATE DIVISION, BLOEMFONTEIN

Case Number: 1594/2020

In the matter of:

ELRICH RUWAYNE SMITH N.O.

First Applicant

ETHNE MARY VAN WYK N.O.

Second Applicant

(in their capacity as Liquidators of

Trackstar Trading 140 (Pty) Ltd – In Liquidation

and

KALRO FARMING (PTY)

LTD

(Reg No: 2014/168184/07

Respondent

CORAM:

NAIDOO, J

HEARD ON:

29 JANUARY 2021

DELIVERED ON: 18 MAY 2021

JUDGMENT

APPLICATION FOR LEAVE TO APPEAL

[1] This is an application by the applicants for Leave to Appeal to the Full Bench of this court, alternatively to the Supreme Court of Appeal, against the whole of the judgment in this matter, which was delivered on 18 August 2020. Adv P Zietsman SC appeared for the applicants. The respondent did not oppose the application, and was not legally represented. One of its directors, Mr Karel Jacobus Smit, was present in court to observe proceedings.

[2] The judgment was assailed on a number of grounds, most of which deal with various individual aspects on which the court based its reasons for the order ultimately made. The judgment sets out the court’s reasoning in detail and I do not propose to repeat those reasons here. Based on the evidence before the court, it must exercise its discretion in deciding whether an order for the provisional liquidation of the respondent should be granted. The reasons for exercising this discretion in favour of the respondent are clear from the judgment.

[3] With the advent of the Superior Courts Act 10 of 2013 (the Act), section 17 thereof now regulates the test to be applied in an application for leave to appeal. The relevant provisions of section 17(1) provide as follows:

“(1) Leave to appeal may only be given where the judge or judges concerned are of the opinion that

(a) (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;” (my emphasis and underlining).

[4] Previously, an applicant was merely required to show that there is a reasonable possibility that another court, differently constituted, would find differently to the court against whose judgment leave to appeal is sought. It is clear from section 17(I), set out above, that the situation is now somewhat different, and an applicant for leave to appeal is required to convince the court that there is a reasonable prospect of success and not merely a possibility of success. In the matter of The Mont Chevaux Trust v Tina Goosen + 18 2014 JDR LCC, 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….The

use of the word ‘would’ in the new statute indicates a measure of certainty that another court will differ from the court whose judgment is sought to be appealed against.”

[5] The Mont Chevaux decision was cited with approval in a number of cases, one such matter being Matoto v Free State Gambling and Liquor Authority (4629/2015) [2017] ZAFSHC 80 (8 June 2017), a decision emanating from this Division, where my brother Daffue J echoed the remarks of Bertelsmann J at paragraph 5 and remarked that “There can be no doubt that the bar for granting leave to appeal has been raised…The use by the legislature of the word “only”

emphasized supra, is a further indication of a more stringent test.”

The Full Court in Acting National Director of Public Prosecutions and Others v Democratic Alliance (19577/2009) [2016] ZAGPPHC 489 (24 June 2016) also cited Mont Cheveau with approval.

[6] The applicants in this matter appear not to have properly investigated the assertions of the directors of Kalro with regard to the debt allegedly owed to Trackstar, the company in liquidation. As indicated in my judgment, the relationship between Du Preez and Kalro ought to have triggered closer scrutiny of the financial statements and other documentation in respect of the debt owed to Trackstar, if any. The judgment makes it clear the applicants ought to have embarked on this course of action instead of rushing to court for relief.

[7] The court dealt with the judgment taken by Nedbank against Kalru and the arrangements made for repaying such debt. The fact that that Kalro was able to do so and still continue its business operations was one of the reasons for holding that the applicants failed to show that Kalro was insolvent. In my view, the applicants have not shown that another court would come to a different finding to this court ‘s finding, and I accordingly hold the view that there are no reasonable

prospects of success on appeal.

[8] In the circumstances I make the following order:

8.1 The application for leave to appeal is dismissed.

­­­­­­­­­­­­­­­­_______

S

NAIDOO J

On Behalf of the Applicant: Adv P Zietsman

Instructed By:

Phatshoane Henney

36 Markgraaff Street

Westdene

Bloemfontein

(REF: JPO/tp/SMI183/0108)

On Behalf of the Respondent: No appearance - Unopposed