Knoop N O and Another v Islandsite Investments 180 (Pty) Ltd and Others

Islandsite Investments 180 (Pty) Ltd was placed under business rescue. Ms Ronica Ragavan was its sole director. Messrs Knoop and Klopper were appointed as Business Rescue Practitioners (BRPs). The BRPs adopted a business rescue plan on 26 April 2018 which mandated them to sell Islandsite's property at erf 770, Constantia, Cape Town. On 2 June 2021, a preservation order was obtained by the National Director of Public Prosecutions restraining Islandsite's assets, including the property, in connection with criminal proceedings against Ms Ragavan and others. A court-appointed curator was appointed. The BRPs consulted the curator who agreed to the property being marketed for sale. Ms Ragavan objected to the sale. On 22 February 2023, the BRPs and curator concluded a sale agreement with Mr Hugh Vincent Cooke. On 22 March 2023, Ms Ragavan launched an urgent application in the Free State High Court seeking to prevent the sale. Part A (urgent relief) was heard on 20 April 2023 and an interim interdict was granted on 2 May 2023. Part B (the review of the BRPs' decision and other declaratory relief) was heard on 5-6 December 2023 and dismissed on 20 February 2024. By the time of the appeal, the property had been transferred to Mr Cooke.

• Whether the interim interdict granted in Part A was moot following the dismissal of Part B
• Whether the appeal in Part B was moot following the transfer of the disputed property
• Whether new evidence should be admitted on appeal regarding the transfer of the property
• Whether Ms Ragavan had standing (locus standi) to litigate on behalf of Islandsite in Part B without written consent under section 133(1)(b) of the Companies Act 71 of 2008
• The proper allocation of costs where an appeal is dismissed as moot

In Case 260/2024 (first appeal): The appeal was dismissed with costs in terms of section 16(2)(a)(i) of the Superior Courts Act 10 of 2013, including costs of two counsel where applicable. In Case 746/2024 (second appeal): (1) The application by the fourth respondent to adduce new evidence on appeal was granted with costs, including costs of two counsel, to be paid by the second appellant (Ms Ragavan personally); (2) The appeal was dismissed with costs in terms of section 16(2)(a)(i) of the Superior Courts Act 10 of 2013, including costs of two counsel where applicable, to be paid by the second appellant (Ms Ragavan personally).

An appeal will be dismissed as moot under section 16(2)(a)(i) of the Superior Courts Act 10 of 2013 where the issues are of such a nature that the decision sought will have no practical effect or result. An interim interdict does not have an independent lifespan and is subject to either discharge or confirmation upon final determination of the main matter. Where the main application is dismissed and the interim interdict discharged, an appeal against the interim interdict becomes moot. A court has discretion to hear an appeal despite its mootness, but this discretion should only be exercised where a discrete legal issue of public importance arises that would affect matters in the future and on which adjudication is required. Where property that is the subject matter of litigation has been sold and transferred to a third party, an appeal concerning that property becomes moot as the outcome will have no practical effect. An appeal does not lie against the reasons for judgment but against the substantive order of the lower court.

The Court noted that the correctness of the high court's order in Part A limiting Ms Ragavan's consent to litigate only to Part A was doubtful, though Ms Ragavan had not cross-appealed against it and was therefore bound by it. The Court also observed that it would serve no purpose to consider Ms Ragavan's contentions that her application was dismissed without being afforded an opportunity to address the court on the merits, given the mootness of the appeal. The Court reiterated the trite principle that whether or not a court of appeal agrees with a lower court's reasoning would be of no consequence if the result remains the same. The Court cited its earlier decision in Islandsite Investments 180 (Pty) Ltd v National Director of Public Prosecutions for the rationale that decisions to enter into litigation on behalf of a company have potential costs implications which bear on the property of a company, supporting the restriction on directors' authority to litigate during business rescue.

This case provides important guidance on mootness in South African civil procedure, particularly in the context of business rescue proceedings. It illustrates the application of section 16(2)(a)(i) of the Superior Courts Act 10 of 2013, which allows dismissal of appeals where the decision sought will have no practical effect. The judgment reinforces the principle that courts should not decide issues of academic interest only. It also confirms that interim orders do not have an independent lifespan and are subject to discharge or confirmation upon final determination. The case is significant for clarifying the requirements for directors to obtain court consent to litigate on behalf of companies under business rescue, as required by section 133(1)(b) of the Companies Act 71 of 2008, and the consequences of failing to obtain such consent. It demonstrates that such consent must be obtained separately for different stages of litigation. The judgment also illustrates the proper approach to applications for admission of new evidence on appeal under section 19(b) of the Superior Courts Act, applying the Asla Construction criteria.