South Africa: The Silver Lining To Receiving Notice Of Appeal

Section 18 may offer relief to some victors of an order that has been taken on appeal

The victors in litigation are often dismayed when, after spending a lot of money and winning in court, the decision granted in their favour is appealed. Not only does this mean that they have to prove their case all over again, but it also means that the operation and execution of the order granted in their favour is automatically suspended pending the outcome of the appeal.  

However, receiving news of an appeal of the decision need not be all doom and gloom for the victors. Section 18 of the Superior Courts Act provides a silver lining: it provides relief to the aggrieved victor and enables them to bring an application to have the suspension of the operation and execution of the court order lifted, pending the outcome of the appeal. This means that the victor can ask the court to order that the pending appeal will have no suspending effect on the previous court order and its immediate operation. The order will thus remain enforceable until (and if) it is overturned on appeal.

The Requirements

As an order granted under Section 18 departs from the normal position, stringent requirements must be met for an application of this nature to succeed. The first requirement is that the applicant must show that exceptional circumstances exist which gives them the right to this remedy. Whether exceptional circumstances exist is determined by the facts of each case and will be judged at the discretion of the court. The second requirement is that the applicant must prove, on a balance of probabilities, that they will suffer irreparable harm if the court does not order against the suspension imposed by the appeal application. Further to this requirement, the applicant must also show on a balance of probabilities that the appellant will not suffer irreparable harm if the court does grant such an order.

Exceptional Circumstances

In consideration of the requirement of exceptional circumstances, the authorities have acknowledged the view taken in Incubeta Holdings (Pty) Ltd v Ellis that it must be “fact-specific” and “must be derived from the actual predicament in which the given litigants find themselves”. The court must therefore consider each matter on a case-by-case basis.  The reason for this is that each case differs in fact and context.

Irreparable Harm

The Constitutional Court, in City of Tshwane Metropolitan Municipality v Afriforum and another, established that the “ordinary meaning of harm is injury, damage or ill effect [and] for harm to be irreparable, the effects or consequences must be irreversible or permanent”. Therefore, the applicant can establish the presence of irreparable harm if they can show that, should the order be suspended, they will suffer injury, damage or ill effect, the consequences of which will be irreversible or permanent.

A recent example

Recently, in Equity Diamond Cutting Works (Pty) Ltd v Quantum Leap Investments 706 (Pty) Ltd & Others,  the respondents were charged with not conducting themselves in line with their fiduciary duties as directors. Equity Diamond Cutting Works (Pty) Ltd (“EDCW”) applied to the court to have certain directors dismissed due to their breaches of their fiduciary duties. The court a quo ordered that the directors should be dismissed. This order was appealed by the directors. 

EDCW consequently sought an order in terms of section 18. In its application, EDCW contended that a failure to provide certain undertakings, and accurate information about bank accounts, together with the findings of dishonesty and less than fiduciary actions by the director constituted the exceptional circumstances for purposes of section 18 and proved to the court on a balance of probabilities that, should the court a quo's order be suspended, they will suffer irreparable harm. EDCW also contended that the other party would suffer no harm as, if they were to succeed with the appeal, they would be reinstated as directors. The court granted the order and held that the operation of the order of the court a quo should not be suspended. The directors were thus dismissed pending the outcome of the appeal application.

Although a Section 18 application is not a shortcut to victory for those who succeeded in the court a quo, it provides a very useful and necessary remedy to ensure that the interests of litigants are protected where the suspension of an order granted in their favour would result in them suffering irreparable harm. 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.