4 Seasons Logistics CC v Nicholas Ngwanammoto Kgotse

The respondent (Kgotse) advanced funds to the applicant (4 Seasons Logistics CC, a close corporation) intended to capitalise the business in return for a joint beneficial interest. When that objective failed, the parties concluded a Repayment Agreement for approximately R1.8 million. 4 Seasons defaulted and the respondent obtained a default judgment for roughly R1.695 million. Execution proved fruitless. 4 Seasons renewed undertakings to pay instalments but again defaulted. The respondent applied for the provisional winding-up of 4 Seasons. 4 Seasons opposed and counter-applied for rescission of the default judgment and for variation of the judgment. On 9 December 2022 Binns-Ward J refused rescission, finding the explanation for default unconvincing and hallmarked by delay, and granted a provisional winding-up order. On 1 December 2022, on the return date, Kusevitsky J confirmed final liquidation but failed to provide reasons despite a request. Kusevitsky J later refused leave to appeal. Two judges of the Supreme Court of Appeal dismissed 4 Seasons’ petition for leave to appeal. 4 Seasons applied under s 17(2)(f) of the Superior Courts Act 10 of 2013 for the President to refer the refusal to the full Court for reconsideration. The President referred the matter on 5 March 2024. 4 Seasons contended that procedural missteps occurred, that the default judgment was premature, and that the liquidation was wrongly confirmed.

• The proper interpretation of s 17(2)(f) of the Superior Courts Act 10 of 2013: whether the existence of 'exceptional circumstances' is a jurisdictional fact that the full Supreme Court of Appeal must determine de novo before entertaining a reconsideration of a refusal of leave to appeal referred by the President, or whether the President alone makes that determination.
• Whether, on reconsideration, the refusal of leave to appeal by two judges of the Supreme Court of Appeal should be varied.
• Whether the Western Cape High Court erred in confirming the final winding-up order and/or in refusing rescission of the default judgment.
• Whether a costs order de bonis propriis against members of the close corporation in their personal capacity was properly granted.
• Whether a member of a close corporation retains a residual power to appeal a final liquidation order.

The following words in the order of the Western Cape Division of the High Court, Cape Town of 30 August 2023, namely 'which costs will not be borne by the insolvent estate, but by the members in their personal capacity', were deleted. Save for the foregoing, the application in terms of s 17(2)(f) of the Superior Courts Act 10 of 2013 for reconsideration of the decision refusing leave to appeal was dismissed with costs, including the costs of two counsel, which shall be costs in the liquidation.

1. Under s 17(2)(f) of the Superior Courts Act 10 of 2013, the determination of whether exceptional circumstances exist to justify referral of a refusal of leave to appeal for reconsideration is the exclusive preserve of the President of the Supreme Court of Appeal. The full court to which the matter is referred must step into the shoes of the judges who refused leave and decide only whether that refusal was correct; it does not revisit the existence of exceptional circumstances as a jurisdictional fact. 2. A party seeking rescission of a default judgment must furnish a satisfactory and acceptable explanation for the default; absent such explanation, the application must fail irrespective of the prospects of success on the merits. 3. A costs order de bonis propriis against a person who is not a party to the proceedings should not be made lightly; there must be actual misconduct relating to how the litigation was conducted, and the person must be afforded an opportunity to be heard before such an order is made.

The Court commented that judicial officers are duty-bound to provide reasons for their decisions when requested, and that failure to do so is inexcusable, undermines the rule of law, and may impinge on the right of access to courts. The Court also noted, without deciding the issue because it was unnecessary, that a member of a close corporation retains a residual power to appeal a final liquidation order. Observations regarding the doctrine of precedent and the separation of powers in statutory interpretation were also made in the course of overruling previous decisions.

The judgment is significant because it overrules several prior Supreme Court of Appeal decisions and authoritatively settles the interpretation of s 17(2)(f) of the Superior Courts Act: the President alone decides whether exceptional circumstances exist to justify a referral for reconsideration, and the full Court does not treat this as a jurisdictional fact to be re-established. The case also restates the principle that rescission of a default judgment requires a satisfactory explanation for the default, regardless of prospects of success on the merits; reaffirms that de bonis propriis costs orders against non-parties require actual misconduct and a prior opportunity to be heard; and strongly criticises a judicial officer’s failure to provide reasons for an order as inexcusable.