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[2015] ZAWCHC 174
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Southern Value Consortium v Tresso Trading 102 (Pty) Ltd and Another (16139/2015) [2015] ZAWCHC 174; 2016 (6) SA 501 (WCC) (23 November 2015)
IN THE HIGH COURT OF
SOUTH AFRICA
WESTERN CAPE HIGH
COURT, CAPE TOWN
CASE NUMBER: 16139/2015
DATE: 23 NOVEMBER 2015
In the matter between:
SOUTHERN VALUE
CONSORTIUM
...................................................................................
Applicant
And
TRESSO TRADING 102 (PTY)
LTD
..................................................................................
Respondent
JOHANNES FREDERICK KLOPPER NO AND
JACQUES DU TOIT
NO
...................................................
Intervening
Business Rescue Practitioners
REASONS PROVIDED ON 23 NOVEMBER 2015
BLIGNAULT J:
[1] On 30 October 2015 I granted the
following orders in this application:
(1) Respondent is ejected from the
property described as Unit E2, Access Park, 81 Chichester Road,
Kenilworth, Cape Town.
(2) Respondent is ordered to pay the
costs of this application.
[2] My reasons for granting these
orders follow hereunder.
[3] Applicant is described as follows
in the founding affidavit deposed to by Ms Desiree White, a manager
of applicant: Vividend
Income Fund Limited (registration number
2010/003232/06) and Forum SA Trading 143 (Proprietary) Limited
(registration number 2001/018387/07),
carrying on business jointly
under the name and style of Southern Value Consortium at Access Park,
Chichester Road, Kenilworth,
Cape Town.
[4] Respondent is Tresso Trading 102
(Pty) Ltd a company which carries on business at the property. It was
placed in business rescue
in terms of section 129 of the Companies
Act 71 of 2008 (‘the
Companies Act&rsquo
;).
[5] Mr Johannes Frederick Klopper and
Mr Jacques Du Toit were duly appointed as respondent’s business
rescue practitioners.
They oppose the present application on
respondent’s behalf.
[6] Applicant is the registered owner
of the immovable property described as Unit E2, Access Park, 81
Chichester Road, Kenilworth
(‘the property’). On 11
August 2014 applicant and respondent concluded a written agreement of
lease in terms of which
applicant let the property to respondent. As
at 20 April 2015 respondent was indebted to applicant in the amount
of R320 501,12
in respect of outstanding monthly rental, operating
costs, utility consumption and municipality charges in terms of the
agreement
of lease (‘the rental and additional charges’).
[7] On 20 April 2015 applicant’s
attorneys addressed a letter to respondent informing it that it was
in breach of the agreement
of lease by failing to make payment of the
rental and additional charges due to applicant. Respondent was
informed in this letter
that respondent was indebted to it in the
amount of R320 501,12 in respect of rental and additional charges and
that applicant
reserved the right to cancel the agreement.
[8] On 6 May 2015 applicant’s
attorneys addressed a further letter to respondent in which they
recorded that respondent was
then indebted to applicant in the amount
of R381 455,69 in respect of rental and additional charges.
Respondent was informed that
applicant demanded payment of this
amount.
[9] On 8 May 2015 applicant instituted
an action in the Wynberg Regional Court in which it claimed an order
ejecting respondent
from the property and payment of the sum of R381
455,69 plus interest. The summons was served on respondent on 11 May
2015. Paragraph
13 of applicant’s summons in that action read
as follows:
“The Plaintiff has cancelled,
alternatively hereby cancels the lease with immediate effect.”
[10] On 29 May 215 applicant obtained
an order in terms of
section 32
of the Magistrate’s Courts Act
32 of 1944 which directed the Sheriff to attach so much of the
movables at the property as
shall be sufficient to satisfy the sum of
R381 455,69. Pursuant to this order the Sheriff attached all the
movables at the premises.
The proceedings in the regional court were
later withdrawn.
[11] Applicant contended in the present
application that it had cancelled the lease agreement and that it was
entitled to eject
respondent from the property. To that end applicant
launched the present application on 27 August 2015. Respondent was
then indebted
to applicant in the amount of R564 385,57 in respect of
outstanding rental and additional charges.
[12] The business rescue practitioners
opposed the application on behalf of respondent. Mr Jacques du Toit
deposed to the main answering
affidavit on behalf of both of them.
According to the register of the Companies and Intellectual Property
Commission respondent
commenced business rescue proceedings on 16
September 2015. The business rescue practitioners were appointed on
the same date.
[13] In their answering affidavit and
in argument the business rescue practitioners raised a number of
defences in limine. They
may be summarised as follows:
(1) There is a conflict in the identity
of the entities which claim to represent the applicant.
(2) There is no proof that Ms Desiree
White was authorised to bring the present application on behalf of
applicant.
(3) Applicant came to court with dirty
hands in that it unlawfully dispossessed respondent from the property
by changing the locks.
(4) Applicant’s attachment of
respondent’s movables was irregular.
[14] I propose to deal first with these
in limine points before turning to respondent’s substantive
defence, namely that applicant
is precluded by the provisions of
sections 133(1)
and
134
(1)(c) of the
Companies Act from
pursuing the
present application.
[15] The first defence in limine is the
alleged confusion regarding the identity of the entities claiming to
be the applicant. In
my view this alleged confusion is more apparent
than real. Legally a consortium is not a separate entity. It refers
in general
to two or more persons or entities acting jointly. As such
it is not unlike an unincorporated association. In the present case
the consortium consists of two legal entities Vivided Income Fund
Limited and Forum SA Trading 143 (Proprietary) Limited. It is
clear
from the affidavits that they are the joint owners of the property,
that they had concluded the lease agreement jointly and
that they
brought the present application jointly under the name of Southern
Value Consortium. Despite loose language in other
documents
respondent could not have been in any doubt as to the identity of
applicant, nor could the business rescue practitioners
have been.
[16] The second point in limine
concerns the authority of Ms Desiree White to represent applicant in
these proceedings. Applicant
was granted leave to file a resolution
in order to clarify the question of her authority. The resolution
makes it clear that the
two companies do business as a consortium,
that all the steps taken on behalf of the applicant, including the
bringing of the present
application, the affidavits deposed to on
behalf of it and the appointment of their attorneys were duly
authorised by the two companies
at the time when these steps were
taken.
[17] The resolution went further and,
as an alternative step, purported to ratify all the steps that had
been taken on behalf of
applicant in the litigation. In argument the
business rescue practitioner’s attorney attacked the validity
of this ratification.
It seems to me, however, that the question of
ratification became a non-issue. It was presumably introduced ex
abundante cautela
but it was not required and simply caused some
confusion. In my view applicant proved that these proceedings were
properly authorised
by it.
[18] In the course of respondent’s
attorney’s argument on ratification he referred to the judgment
in Pangbourne Properties
Ltd and Another v Your Life (Pty) Ltd and
Another
[2013] 4 ALL SA 719
(GSJ) in support of a submission that
unauthorised legal proceedings could not be ratified after they had
been instituted. He pointed
out that applicant had ceded its claim to
a bank before it launched the present proceedings. Counsel for
applicant did not concede
that this was a fixed rule but and he
pointed out that the claim against respondent was in any event
receded to Vividend Income
Fund Limited on 12 August 2015 ie before
applicant brought the present application.
[19] Respondent’s third point in
limine was that the application should be dismissed because applicant
approached the court
with dirty hands as it had acted irregularly in
the course of the enforcement of applicant’s rent interdict.
[20] In my view this issue is not
relevant to the present proceedings. Apart from the fact that
respondent’s allegations are
disputed, applicant is at present
seeking to assert its rights to the property and not to the movables.
Any disputes in regard
to the movables can be resolved, if need be,
in separate proceedings.
[21] The fourth defence in limine was
that applicant obtained an interdict in terms of section 32 of the
Magistrates’ Court
Act as security for the rent and the
additional charges but the section only provides for security for
rent.
[22] This issue is in my view equally
irrelevant to the present proceedings. The possible invalidity of the
attachment of respondent’s
movables and the consequences
thereof do not affect applicant’s claim in the present
application. As I said above, disputes
in regard to the movables can
be resolved in separate proceedings. Respondent’s defences in
limine are accordingly dismissed.
[23] Before discussing the
interpretation of
sections 133(1)
and
134
(1)(c) of the
Companies Act,
I
must deal with the business rescue practitioners’ attack on
the validity of applicant’s cancellation of the lease
agreement.
They contend that the cancellation was premature as
applicant had not yet acquired the right to cancel the agreement when
it purported
to do so.
[24] In my view this submission is
without merit. The agreement contained specific provisions regarding
the day on which rent had
to be paid, namely monthly in advance on
the first day of each month. Respondent then failed to pay the
monthly rent and fell into
mora ex re. Applicant thereupon acquired
the right to cancel the agreement. In its attorney’s letter
dated 20 April 2015
it notified respondent of its intention to cancel
the agreement. By way of the summons in the magistrate’s court
it actually
cancelled the agreement. It is settled law that an
agreement may be cancelled by way of a summons or an application.
See Win Twice
Properties (Pty) LTd v Binos and Another
2004 (4) SA
436
(WLD).
[25] Respondent’s principal
defence is that applicant is precluded by the provisions of
sections
133(1)
and
134
(1)(c) of the
Companies Act to
bring the present
proceedings. The relevant provisions of these two sub-sections read
as follows:
“133 General moratorium on legal
proceedings against company
(1) During business rescue proceedings,
no legal proceeding, including enforcement action, against the
company, or in relation to
any property belonging to the company, or
lawfully in its possession, may be commenced or proceeded with in any
forum…
“134 Protection of property
interests
(1) Subject to subsections (2) and (3),
during a company’s business rescue proceedings
… …
(c) despite any provision of an
agreement to the contrary, no person may exercise any right in
respect of any property in the lawful
possession of the company,
irrespective of whether the property is owned by the company, except
to the extent that the practitioner
consents in writing.”
[26] In my view the key to the
interpretation of
section 133(1)
of the
Companies Act lies
in the
difference between between a real right and a personal right. In
Absa Bank Ltd v Keet
2015 (4) SA 474
(SCA) para [20] the Supreme
Court of Appeal provided an authoritative description of the
distinction:
‘[20] In my view there is merit
in the argument that a vindicatory claim, because it is a claim based
on ownership of a thing,
cannot be described as a debt as envisaged
by the Prescription Act. The High Court in Staegemann (para 16) was
correct to say that
the solution to the problem of prescription is to
be found in the basic distinction in our law between a real right
(jus in re)
and a personal right (jus in personam). Real rights are
primarily concerned with the relationship between a person and a
thing,
and personal rights are concerned with a relationship between
two persons. The person who is entitled to a real right over a thing
can, by way of vindicatory action, claim that thing from any
individual who interferes with his right. Such a right is the right
of ownership. If, however, the right is not absolute, but a relative
right to a thing, so that it can only be enforced against
a
determined individual or a class of individuals, then it is a
personal right.
[21] That distinction between real
rights and personal rights has consistently been recognised in our
case law and was recently
explained by this court in National Stadium
South Africa (Pty) Ltd v Firstrand Bank Ltd
[2011 (2) SA 157
(SCA)]
para 31:
'The first concerns the distinction
between real and personal rights. Real rights have as their object a
thing (Latin: res; Afrikaans:
saak). Personal rights have as their
object performance by another, and the duty to perform may (for
present purposes) arise from
a contract. Personal rights may give
rise to real rights; for instance, a personal obligation to grant
someone a servitude matures
into a real right on registration. Real
rights give rise to competencies: ownership of land entitles the
owner to use the land
or to give others rights in respect thereof.
Others may say that ownership consists of a bundle of rights,
including the right
to use the land, but it does not really matter
who is right on this point.’
[27] The concept ‘legal
proceedings’ in
section 133(1)
of the
Companies Act is
on the
face of it quite wide. The section draws an express distinction,
however, between two categories of legal proceedings, namely:
(i) against the company; and
(ii) in relation to any property
belonging to the company, or lawfully in its possession.
[28] In my view this distinction
corresponds with the difference between a personal right and real
right. The first category of
proceedings comprises actions which are
intended to enforce personal rights. The second category comprises
actions which are intended
to enforce real rights. Applicant’s
cause of action in the present case is the rei vindicatio. It seeks
to recover property
in respect of which it has a real right, namely
ownership. It does not seek to enforce any contractual or other
personal right
against respondent.
[29] There is a well established
presumption in the interpretation of statutes that a reference to
conduct is presumed to be a reference
to lawful conduct. See Du
Plessis LAWSA second edition Vol 25(1) para 343 and Steyn Die Uitleg
van Wette vyfde uitgawe 127 and
the cases cited in footnote 251.
[30] In the present context the word
belong, if read in isolation, may have a wide meaning but if the
presumption referred to above
is applied, it can only mean belong in
a legally valid sense. It cannot in my view be construed to include
a case where the belonging
is unlawful. The same interpretation
applies to the meaning of the concept possession.
Section 133(1)
of
the
Companies Act indeed
refers expressly to lawful possession.
[31] Applicant claims to be the lawful
owner of the property. The business practitioners did not refute this
claim. It follows that
the property never belonged to respondent.
Following the cancellation of the lease agreement respondent was,
furthermore, no longer
in lawful possession of the property. The
business practitioners can therefore not rely on the provisions of
section 133(1)
of the
Companies Act as
a defence to applicant’s
claim.
[32] Similar reasoning applies to the
interpretation of
section 134(1)(c)
of the
Companies Act. The
key
concept is the lawful possession of the company. After the
cancellation of the lease agreement respondent was no longer in
lawful possession of the property.
[33] My interpretation of
section
134(1)(c)
is also supported by considerations of reasonableness and
practicality. If an owner of a thing cannot vindicate it from an
unlawful
possessor it would give rise to a stalemate situation. The
owner (applicant in casu) would in effect be deprived of his power to
exercise his ownership in the thing whilst the possessor (respondent
in casu) would be unable to use it as such use would be unlawful.
[34] In Cloete Murray and Another NNO v
Firstrand Bank Ltd t/a Wesbank
2015 (3) SA 438
(SCA) para [14] the
Supreme Court of Appeal said this:
‘[14] It is generally accepted
that a moratorium on legal proceedings against a company under
business rescue is of cardinal
importance since it provides the
crucial breathing space or a period of respite to enable the company
to restructure its affairs.
This allows the practitioner, in
conjunction with the creditors and other affected parties, to
formulate a business rescue plan
designed to achieve the purpose of
the process.’
[35] In my view it could not have been
the legislature’s intention that the company in business rescue
would restructure its
affairs by utilising assets to which it has no
lawful claim.
[36] I accordingly formed the view that
applicant is not precluded by the provisions of
sections 133(1)
and
134
(1)(c) of the
Companies Act from
asserting its right of ownership
in the property.
[37] For these reasons I granted the
relief sought by applicant.
A P BLIGNAULT