Department: Transport, Province of KwaZulu-Natal v S Ramsaran & others

On 25 November 2014, the appellant Department of Transport, Province of KwaZulu-Natal issued a combined summons through Lambert Attorneys Incorporated (a private firm) against nine of its employees, alleging they were parties to a fraudulent scheme causing the department a loss of R7,123,704.91. The defendants (respondents) responded with a rule 7 notice on 3 March 2015, challenging whether the department was authorized under Treasury Regulation item 12.7.2 (promulgated under the Public Finance Management Act 1 of 1999) to instruct private attorneys rather than the State Attorney to act in the matter. They applied for the summons to be set aside as a nullity. The High Court (Gyanda J) on 4 December 2015 gave the department 30 days to rectify the circumstances of the power of attorney. The department, believing that a leave to appeal application suspended the operation of the order, failed to comply within the 30-day period. The further affidavits filed on 29 March 2016 were out of time and not accompanied by a condonation application. The High Court refused condonation and on 16 November 2016 granted an order setting aside the summons and declaring it a nullity, with costs against the department. The department appealed with leave. During the appeal, on 6 August 2018, the respondents filed a notice abandoning the judgment in terms of rule 41(2), save for the order of costs.

• Whether abandonment of a judgment by the successful party in terms of Uniform rule 41(2) extinguishes the judgment and removes the basis for an appeal on the merits
• Whether an appellant may or should pursue an appeal on the merits after the judgment has been abandoned
• What costs consequences follow from an abandonment of judgment under Uniform rule 41(2) where no tender of costs is made
• Whether an appeal lies against the reasons for a judgment as opposed to the operative order

The appeal was dismissed with costs up to and including 6 August 2018 to be paid jointly and severally by the first, third, fourth, sixth and eighth respondents.

The binding legal principles established are: (1) Abandonment of a judgment in terms of Uniform rule 41(2) removes the lis between the parties and concedes the relief the appellant would be entitled to seek on appeal, making it unnecessary and inappropriate for the court to enter into the merits of the appeal. (2) An appeal lies against the substantive operative order made by a court, not against the reasons for judgment. Once a judgment is abandoned, the reasoning of the lower court does not remain extant as a precedent requiring appellate consideration. (3) Where a party abandons a judgment under rule 41(2) without tendering costs, the other party is not required to persist with the appeal to recover costs; instead, under rule 41(1)(c) read with rule 41(2), the affected party may apply on notice to the court for an order for costs. (4) In circumstances of abandonment during the appeal process, the appellant is entitled to costs of the appeal only up to and including the date of abandonment.

Ponnan JA expressed grave reservations (without deciding the issues) about: (a) whether a breach of Treasury regulations prohibiting a department from instructing private attorneys independent of the State Attorney would, without more, result in the nullity of a summons; and (b) whether such an order declaring a summons null could be issued absent the joinder of the State Attorney and relevant Ministers. These observations suggest that the correctness of the High Court's approach to the nullity application may be questionable, but the court did not find it necessary to determine these issues given the abandonment. The court also noted two alternative courses available to a party seeking costs after abandonment: setting the appeal down not for argument on the merits but for recovering costs, or applying on notice for an order from the Appeal Court granting costs, with the second course appearing more logical.

This case clarifies important principles regarding abandonment of judgments under Uniform rule 41(2) of the Rules of Court. It confirms that abandonment removes the lis between parties and that an appeal cannot proceed on the merits once judgment is abandoned. It also establishes that an appeal lies against the operative order and not the reasoning of the court below. The judgment provides guidance on the costs consequences of abandonment, particularly where no tender of costs is made: the party affected may apply on notice for a costs order under rule 41(1)(c) rather than pursuing the appeal. The case also confirms the entitlement to costs is limited to the date of abandonment. The judgment touches on (though does not decide) interesting questions about whether breach of Treasury Regulations concerning authorization to instruct attorneys renders proceedings a nullity, and whether such an order could be made without joinder of the State Attorney and relevant Ministers.