Section 18 of the Superior Courts Act 10 of 2013 (“the Act”) has significant implications for commercial disputes in South Africa.
Section 18(1) provides that “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.” Meanwhile, section 18(3) of the Act requires a party applying to court to enforce an order in its favour to “in addition prove on a balance of probabilities that he or she will suffer irreparable harm if the court does not so order and that the other party will not suffer irreparable harm if the court so orders.”
Prompt enforcement of court orders is vital in commercial disputes. However, an application for leave to appeal by the losing party suspends the order. Section 18(3) affords the opportunity for immediate execution of orders by the successful party in exceptional circumstances, effectively averting prolonged uncertainty and financial instability for businesses. The standard to enforce an order in the face of an appeal is very high. The test if whether the party enforcing a judgment in its favour can demonstrate that it (the successful party) will suffer irreparable harm if it is unable to do so; simultaneously, the successful party needs to prove also that the losing party will not suffer irreparable harm. The reason is to protect the right of appeal of the losing party. But for section 18(3) the right of appeal is illusionary if the successful party could enforce an order which effectively negates the appeal. emonstrating exceptional circumstances and irreparable harm is challenging for businesses, potentially limiting their ability to obtain immediate relief. This challenge can be particularly problematic in complex commercial disputes where the stakes are high.
This was the case in the recent matter of Infusion Social Club Camps Bay (Pty) Limited v Camps Bay Investment Trust (Pty) Limited and Another (“CBIT”). The Western Cape Division of the High Court was asked to stop CBIT's attempted execution of an eviction order in circumstances where Infusion Social Club intended to apply for leave to appeal to the Supreme Court of Appeal, with its initial application for leave to appeal in the High Court having been refused.
Infusion Social Club entered into a lease agreement with CBIT to operate from a shop in a commercial building in Camps Bay alongside various other tenants, including doctors and estate agents. Initially, the club presented itself as a health-focused café, offering items such as coffee and smoothies. However, issues arose when it was discovered that the club was selling cannabis products and allowing cannabis smoking on the premises, which had not been disclosed to CBIT during the conclusion of the lease agreement. As a result, other tenants and residents expressed concerns about the cannabis-related activities, prompting threats of lease cancellations and community disapproval. Consequently, CBIT terminated the lease and sought an urgent eviction order. Various disputes arose between the parties, resulting in numerous court proceedings, including a spoliation application in May 2024 and an eviction application in July 2024. The eviction application, granted on 11 July 2024, formed the basis of the present matter.
Infusion Social Club applied for leave to appeal against the eviction order, which was subsequently refused. However, the day before the hearing of the application for leave to appeal, Infusion Social Club's attorneys wrote to CBIT's attorneys, informing them of their client's instructions to petition the Supreme Court of Appeal (“SCA”) for leave to appeal should their application for leave to appeal be unsuccessful. Therefore, the Infusion Social Club's attorneys requested an undertaking from CBIT that it would stay execution of the warrant of execution “pending determination and outcome of our anticipated petition [to the SCA]”. The Infusion Social Club warned that should no such undertaking be given, an urgent application for interdictory relief would be launched. CBIT's attorneys refused to give the undertaking and informed the Infusion Social Club that “in terms of section 18(1) and 18(3) of [the Superior Courts Act], our client is entitled to pursue an application to enforce an order even if there is a pending petition to the SCA”. The Infusion Social Club urged CBIT to reconsider the position to avoid proceedings such as the present matter. It warned that a punitive costs order would be sought in such proceedings. Not only did CBIT's attorneys not give said undertaking, but CBIT caused the Sheriff to evict Infusion Social Club the next day, on a Saturday. Following intervention by the South African Police Services, the Sheriff returned on Monday to effect execution.
Court's findings
The court per Gordon-Turner AJ relied on a decision of the full court in the Western Cape High Court in P v P which strongly disapproved of a litigant who conducted himself as if an order in his favour was operative in circumstances where an application for leave to appeal had been lodged, of which he knew or of which he had constructive knowledge. Whilst P v P was concerned with custody of minor children, the full court's attitude towards the litigant informed the decision of Gordon-Turner AJ. The approach of the successful litigant in P v P and the attitude of CBIT in this matter were almost identical, as CBIT “knew of the Infusion Social Club's intentions…both to lodge a petition to the SCA and to apply for interim protection. The matters are similar in that the conduct of the party who had been successful in the first instance was directed at exploiting a timing advantage…thereby thwarting the suspension.”
The court explained the significance and importance of the right of appeal. Suspension of an order under appeal is automatic, and the litigants are restored to a position as if the order under appeal had not been granted, except in exceptional circumstances such as those provided in section 18(3) of the Superior Courts Act.
Ultimately, the court held that CBIT's hasty ejectment of the Infusion Social Club was unjustified. CBIT knew of the Infusion Social Club's intention to apply for leave to appeal. “In calculated fashion, the respondent arranged and caused the ejectment of the Infusion Social Club to proceed within one court day of the refusal order being granted.” The court explained that CBIT's conduct “was undoubtedly directed at circumventing Infusion Social Club's right to apply for leave to appeal from the SCA, or at the very least, at rendering success on appeal a pyrrhic victory. The respondent's conduct in doing so was unlawful.”
Concluding remarks
The court emphasised that successful litigants are not prohibited from executing favourable orders. However, this case highlights that successful litigants should not act unlawfully or in a fashion that seeks to nullify the opposing party's right to appeal by executing an order. As a mark of the court's displeasure with the conduct of CBIT, it was ordered to bear the costs of this application on an attorney and client scale, with counsel's costs to be paid on the highest scale, Scale C.
Takeaways from the judgment
Successful litigants are not barred from seeking to execute orders in their favour before an unsuccessful litigant applies for leave to appeal. However, it is worth noting that although section 18(1) of the Superior Courts Act provides for executing orders that are “the subject of an application for leave to appeal or of an appeal”, the Courts will consider the conduct of the party seeking to enforce an order. Courts will not look favourably upon successful litigants acting mala fide and who act in a fashion that seeks to circumvent the right to apply for leave to appeal, as was the case above.
However, should there be an application for leave to appeal, alternatively an appeal, of an order, section 18(3) of the Superior Courts Act does provide the successful litigant with an avenue to enforce the order if the successful litigant can show on a balance of probabilities, that it will suffer irreparable harm, and in turn the party seeking to appeal will not suffer irreparable harm? Successful litigants, faced with an application for leave to appeal, alternatively an appeal, may wish to consider the possibility of applying for execution of the favourable order in terms of section 18(3) of the Act to protect their interests and obtain the relief they have successfully been granted by the Court.
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