Rescission applications and suspension of orders

September 26th, 2016
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By Michael van Kerckhoven

The law relating to suspension of court orders that are the subject of an application for rescission has historically been mired in confusion. Many civil litigation practitioners may recall their first instruction to bring an application for rescission of an order of the High Court and the comfort that the plain wording of r 49(11) of the Uniform Rules of Court at the time appeared to present to them. The rule reads as follows:

‘Where an appeal has been noted or an application for leave to appeal against or to rescind, correct, review or vary an order of court has been made, the operation and execution of the order in question shall be suspended, pending the decision of such appeal or application, unless the court which gave such order, on the application of a party, otherwise directs’ (my italics).

On its plain wording the rule clearly provided that once an application for rescission has been made, the order – which is sought to be rescinded – is suspended and cannot be executed on. This was comforting to a practitioner tasked with bringing an application for rescission, as at face value, the rule provided that the application for rescission itself would automatically suspend the effect of the order and execution thereon. In the event that the party in whose favour the judgment was granted wished to nonetheless execute, the rule provided that it was incumbent on them to bring a substantive application to request the court’s leave to do so.

Many such practitioners will hopefully also recall having been diligent enough to read the commentary on r 49, and having been alerted to the decision of United Reflective Converters (Pty) Ltd v Levine 1988 (4) SA 460 (W).

In short, Roux J held in United Reflective Converters that there is no substantive rule of law that an application to vary or rescind an order automatically suspends its operation (at 463J). As such, insofar as r 49(11) sought to create such a substantive rule of law, it had overstepped the mark and was ultra vires and of no force or effect. Regarding the automatic suspension of an order on the noting of an appeal, Roux J held that r 49(11) merely restated the already existing substantive law and, was therefore, valid in this respect.

As a result of United Reflective Converters, a practice developed that a practitioner representing a client seeking the rescission of an order would urgently seek an undertaking from the party in whose favour the order was granted that they would not execute on this order pending the finalisation of the intended rescission application, and failing such an undertaking would bring an urgent application seeking to suspend the effect of the order and execution thereon pending the determination of a rescission application. Many rescission applications of necessity, therefore evolved to be brought in two parts, namely –

  • seeking an urgent suspension of the order pending the hearing of the rescission application; and
  • seeking the rescission itself in the ordinary course.

Historically the United Reflective Converters matter enjoyed support from its own, as well as other divisions. However, two more recent judgments of the same division (now the Gauteng Local Division, Johannesburg) disagreed with the approach of Roux J.

In Khoza and Others v Body Corporate of Ella Court 2014 (2) SA 112 (GSJ)
Notshe AJ was of the view that r 49(11) did provide for a rule of procedure, as opposed to a substantive rule of law, and was not satisfied with Roux J’s conclusion that there is no common law supporting an automatic suspension of an order on the bringing of an application for rescission. In any event, Notshe AJ held that, if the common law were lacking such a rule, it should be developed by the courts to provide for it. These conclusions are set out in para 16 of Notshe AJ’s judgment. In reasoning that such a common law rule should be developed, Notshe AJ stated as follows in para 28 of the judgment:

‘An applicant for a rescission of an order would be irreparably prejudiced if the order were allowed to operate despite the application. This is no different from a situation where a notice of application for leave to appeal is delivered. In the circumstances, the rule that applies to the noting of appeals would be extended to noting of the rescission application as well.’

Notshe AJ’s sentiments were later echoed by Vally J in Peniel Development (Pty) Ltd and Another Pietersen and Others [2014] 2 All SA 219 (GJ). Vally J in para 14 of his judgment also pointed to the additional strain which these urgent stay applications placed on the judiciary’s and litigants’ resources. Given that these urgent stay applications were, according to Vally J, invariably granted, this strain on resources was in the judge’s view unwarranted.

The United Reflective Converters case, while previously having been followed in its division and others, was now being questioned in its own division. This obviously caused immense uncertainty in the law, particularly with regards to whether or not an order was automatically stayed by the bringing of a rescission application.

On 23 August 2013 the Superior Courts Act 10 of 2013 (the Act) came into effect. The relevant parts of s 18 read as follows:

‘18. Suspension of decision pending appeal. –

(1) Subject to subsections (2) and (3), and unless the court under exceptional circumstances orders otherwise, the operation and execution of a decision which is the subject of an application for leave to appeal or of an appeal, is suspended pending the decision of the application or appeal.

(2) Subject to subsection (3), unless the court under exceptional circumstances orders otherwise, the operation and execution of a decision that is an interlocutory order not having the effect of a final judgment, which is the subject of an application for leave to appeal or of an appeal, is not suspended pending the decision of the application or appeal.’

While dealing with exactly the same subject matter as that of r 49(11), s 18 of the Act omits any reference to an application for rescission. Of further note, while s 18 was already in effect at the time of the judgment in Peniel Development, it is not mentioned in this judgment.

Later the Rules Board for Courts of Law (the Rules Board) amended r 49 by the repeal of sub-rule (11) in its entirety. This repeal was effective from 22 May 2015 and was published in GN R317 GG38694/17-4-2015.

This significant change in landscape was considered by Meyer J in the case of Erstwhile Tenants of Williston Court and Another v Lewray Investments (Pty) Ltd and Another (GJ) (unreported case no 17119/15, 10-9-2015) (Meyer J), again being a decision of the Gauteng Local Division.

Meyer J was faced with two questions which were at the core of this case: ‘… whether there is a substantive rule of law that an application to rescind an order or judgment automatically suspends its operation pending the decision of such application and the proper interpretation of s 18 of the Superior Courts Act …’ (para 9).

Meyer J specifically pointed to the decision in United Reflective Converters, as well as the contrary decisions in Khoza and Peniel Developments. While respectfully stating his agreement with the contention that the decision in Khoza was ‘not beyond doubt’ (para 15), Meyer J stated that a determination of the correctness of these decisions was unnecessary given his finding on the correct interpretation of s 18 of the Act.

Meyer J held that s 18 was to be interpreted in accordance with the established principles of interpretation set out in, among other cases, Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) 593 (SCA). Meyer J then stated as follows in para 18: ‘… I am of the view that had it been the intention of the legislature for the operation and execution of a decision which is the subject of an application for rescission also to be automatically suspended, then such decision would have been expressly included in section 18(1).’

I submit that the introduction of s 18 of the Act and the repeal of r 49(11) puts an end to any further argument of the existence of a substantive rule of law that automatically suspends orders that are the subject of a rescission application, whether that substantive rule of law was one which existed historically, or one which was developed in the Khoza and Peniel Developments cases.

One must assume that the legislature and the Rules Board were acutely aware of the state of the substantive law relative to automatic suspension of orders as it applies to rescission applications. Being so aware, the legislature drafted
s 18 (ultimately the successor to r 49(11)) to exclude reference to rescission applications, and the Rules Board repealed r 49(11) in its entirety. Taken in context, the intention of the legislature could only have been to exclude rescission applications from the ambit of automatic suspensions.

I further submit that distinguishing between appeals and applications for rescission in this manner, the former automatically suspending the order (ignoring for the moment interlocutory orders) and the latter requiring a formal application to suspend, is entirely warranted.

Any appeal first requires a successful application for leave to appeal at which juncture an initial assessment of the prospects of success of the intended appeal is conducted. The determination of an application for leave to appeal should ordinarily also take place on an expedited basis.

An opposed application for rescission in a busy division such as the Gauteng Division, Pretoria or the Gauteng Local Division, Johannesburg would likely only be heard approximately a year after this application is made.

An unmeritorious appeal would therefore be put to an end in a relatively short period of time resulting in only a small delay in execution. If a rescission application automatically suspended the order, an assessment of this application would only take place at the hearing of the matter on the opposed roll in the ordinary course. The result is that an unmeritorious rescission application would result in a significant delay in execution if it automatically suspended the order. Requiring a separate, generally urgent, application for suspension of the order pending the determination of the rescission application introduces an initial assessment on an expedited basis of the prospects of success in the rescission application. While this may introduce further strain on the judiciary’s resources, I submit that this is warranted in order to ensure that unmeritorious rescission applications do not unduly delay the right of a successful litigant to execute on an order.

 

Michael van Kerckhoven LLM (cum laude) (Wits) is an attorney at Tshisevhe Gwina Ratshimbilani Inc in Johannesburg.

This article was first published in De Rebus in 2016 (Oct) DR 28.