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[2016] ZAWCHC 76
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Loots v Nongoma Medical Centre CC and Another (5639/2016) [2016] ZAWCHC 76 (24 June 2016)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
Number: 5639/2016
DATE:
24 JUNE 2016
In
the matter between:
G
F
LOOTS
................................................................................................................................
Applicant
And
NONGOMA
MEDICAL CENTRE
CC
...............................................................................
Respondent
And
ABSA
BANK
LIMITED
........................................................................................
Intervening
Creditor
Heard
on: 14 June 2016
Delivered
on: 24 June 2016
JUDGMENT
BOQWANA,
J
Introduction
[1]
This is an
application for business rescue proceedings in terms of section 131
of the Companies Act, No. 71 of 2008 (‘the
Act’). This
application is one of many proceedings that have been brought by the
applicant (‘Loots’) together
with others whom I will
mention later in this judgment.
[2]
The application is
opposed by the intervening party (‘ABSA’) who was granted
leave to intervene as a creditor on 25
May 2016. Gleaning from the
Loots’ heads of argument, ABSA’s
locus
standi
is
placed in issue.
[3]
The respondent
(‘Nongoma’) is a close corporation currently in
liquidation and Loots is of the view that Nongoma can
be a viable
business if it were to be placed under supervision in terms of the
Act.
[4]
Loots brings this
application on the basis that he is a creditor of Nongoma and the
owner of 100% of the membership interest in
Nongoma which he
purchased on 15 April 2014. In regard to his claim as a
creditor, he alleges that he had a loan with Nongoma
which stood at
an amount of approximately R839 295.30 as at January 2011. This
loan, he alleges, was in respect of rental
income due to him for
sub-letting a portion of the property of Nongoma which he loaned to
Nongoma for purposes of payment of its
obligations.
[5]
In regard to his
claim of ownership of 100% of the membership interest in Nongoma,
Loots obtained a court order on 12 May 2015 ordering
the Companies
and Intellectual Property Commission (‘CIPC’) to amend
its records so as to reflect him as Nongoma’s
sole member
pursuant to failed attempts he made to the CIPC to register him as
Nongoma’s sole member. The CIPC has to date
not effected such
registration.
[6]
As a result of the
above assertions Loots contends that he is an ‘affected person’
as defined in s 128 (1)(a)(i) of
the Act, which provides as follows:
‘
Business
rescue proceedings
128.
Application and definitions applicable to Chapter
(1)
In this Chapter-
(a)
“affected person” in relation to a company, means-
(i)
a shareholder or creditor of the company’
[7]
ABSA alleges that
this application has not been brought in good faith by Loots.
It contends that the purpose of the application
is not genuinely to
rescue Nongoma from financial distress and liquidation. Its real
purpose is to obtain the suspension of the
liquidation proceedings in
respect of Nongoma and for Loots’ own personal benefit to
enable him to further unlawfully collect
rental from Nongoma’s
tenants that ABSA is entitled to. According to ABSA this amounts to
abuse of court process. Loots’
standing is also placed in
dispute by ABSA.
[8]
Before I deal with
the contentions raised by the parties, it is convenient to start with
the history of this matter and the role
players involved.
Role
players
[9]
This matter has a
long history and Loots has been central to many of the proceedings
that have been brought before various courts
dealing with issues
surrounding Nongoma, some of which involved the loan agreement
between Nongoma and ABSA.
[10]
Nongoma is a property
owning close corporation with its only asset being an immovable
commercial property in Nongoma, Kwa-Zulu Natal.
It presently
has two members registered on the records of the CIPC being Anna
Christina Barnard and Lionel Patrick Barnard (‘the
Barnards’).
The Barnards allegedly left South Africa and are now living abroad.
[11]
Loots is a medical
doctor who resigned as a member of Nongoma during 2001. Another
person who featured in many of the proceedings
and in this current
application is Hester Elizabeth Van Rooyen (‘Van Rooyen’).
Van Rooyen also resigned as a member
of Nongoma during 2007. Van
Rooyen is allegedly unemployed. Both she and Loots referred to each
other as ‘partners’.
[12]
ABSA alleges that it
is a secured creditor of Nongoma and holds a first registered
mortgage bond over the immovable property of
Nongoma situated at
Nongoma, Kwa-Zulu Natal.
Factual
background
[13]
On 29 November 2010,
ABSA issued summons in this Court against Nongoma as principal debtor
and Van Rooyen and the Barnards as sureties
for payment in the amount
of R 792 850.68.
[14]
Default judgment was
granted against all the defendants on 19 September 2011. Van
Rooyen applied for rescission of this judgment
on 13 February 2012.
Loots supported this application. On 29 May 2012, Van Rooyen
filed a notice to amend her application
and joined the Barnards as
applicants to the application. In addition to Van Rooyen’s
application, Loots brought a
separate rescission application on
behalf of Nongoma and attested to a supporting affidavit in respect
thereof. ABSA opposed the
rescission application by filing an
opposing affidavit on 16 September 2013. The rescission was
dismissed with costs by Van
Rooyen AJ on 25 August 2015. Subsequent
application for leave to appeal the dismissal of the rescission
application was also dismissed
with costs on 21 October 2015.
[15]
On 22 March 2011,
ABSA had applied for the liquidation of Nongoma which was opposed by
both Loots and Van Rooyen on 13 May 2011.
This application was
withdrawn because Nongoma had apparently been deregistered which
rendered the application defective.
[16]
On 21 June 2011,
Loots brought an application for a conditional business rescue of
Nongoma on an urgent basis under case number
12401/2011. He made no
attempts to enrol the matter until ABSA which was also the
intervening party in that application did so.
The business
rescue application was dismissed with costs on 7 October 2015.
[17]
On 7 November 2011
ABSA again lodged an application for the liquidation of Nongoma. The
CIPC company report indicates cancellation
of deregistration process
on 26 October 2011. Loots applied to intervene in the liquidation
proceedings on 13 February 2012.
He also filed an affidavit in
opposition to the liquidation application purportedly on behalf of
Nongoma. The liquidation was delayed
as a result of the business
rescue application. On 7 October 2015 a provisional liquidation order
was granted against Nongoma.
On 29 October 2015, Loots filed an
application to intervene in the liquidation proceedings and an
opposing affidavit. The
final liquidation order was granted on
11 February 2016.
[18]
On 11 December 2012,
Loots and Van Rooyen had launched an action in the Kuilsriver
Magistrates’ Court against ABSA alleging
that payment of the
debt in respect of which the default judgment had been granted in the
High Court had created a false impression
of indebtedness that misled
both Nongoma and Van Rooyen and resulted in amounts totalling R 43
548.00 being paid to ABSA in error.
That action was dismissed
with costs on 19 November 2015.
[19]
Another application
was brought in the Nongoma Magistrates’ Court by Loots,
represented by his attorney at the time Mr Rob
Green (‘Mr
Green’), in terms of which an order was made that tenants had
to pay their rental into the trust account
of Mr Green. It is
not clear on what basis Loots persuaded the Magistrate that he was
entitled to such an order.
[20]
ABSA then brought an
application against Mr Green for repayment of rentals that Mr Green
admittedly collected and held in trust.
Mr Green opposed the
application and admitted to having received an amount of R 437 074.01
in respect of the rental for the
period of 1 June 2011 until 28
February 2013 allegedly as per mandate from Loots. He also
stated that he disbursed as legal
fees to Rob Green & Associates,
his law firm, an amount of R 239 884.93 from 1 June 2011 until
28 February 2013 from
the said amount on instructions of Loots.
The remainder he disbursed in accordance with Loots’
instructions, which information
he alleged he could not divulge due
to attorney-client privilege.
[21]
On 6 March 2014
Veldhuizen J ordered Mr Green to pay to ABSA the amount of R
437 074.01 as well as the costs of that application.
Veldhuizen
J held that Loots and/or Mr Green had no right to collect any rental
from tenants of Nongoma and that doing so was unlawful.
[22]
ABSA executed on the
judgment and the Sheriff rendered
nulla
bona
returns.
Mr Green failed to make any payments towards the judgment by
Veldhuizen J. His conduct is, according to ABSA, the subject
of
scrutiny by the Law Society and the Fidelity Fund.
[23]
On 28 May 2012 Loots
represented by Mr Green had instituted an action against the Barnards
in the amount of R 284 350.00 alleging
that Loots was the tenant of
Nongoma and that he ceded the right to occupy certain premises to the
Barnards. He further alleged
that failure by the Barnards to effect
payment of Nongoma’s obligation,
inter
alia,
in
respect of the amounts due to ABSA entitled him to payment. Green
attested to a supplementary affidavit claiming that Loots had
to be
paid a rental amount of R6050 per month and over the period it
accrued to R 284 350.00. Judgment was granted by default
in
favour of Loots for that amount.
[24]
There are other court
proceedings which I do not find it necessary to all mention.
Evaluation
[25]
The relevant
provisions of section 131 of the Act read as follows:
‘
131.
Court
order to begin business rescue proceedings.
–
(1)
Unless a company has adopted a resolution contemplated in section
129, an affected person may apply to a court at any time for
an order
placing the company under supervision and commencing business rescue
proceedings.
…
.
(4)
After considering an application in terms of subsection (1), the
court may-
(a)
make an order placing the company under supervision and commencing
business rescue proceedings, if the court is satisfied that
–
(i)
the company is financially distressed;
(ii)
the company has failed to pay over any amount in terms of an
obligation under or in terms of a public regulation, or contract,
with respect to employment-related matters; or
(iii)
it is otherwise just and equitable to do so for financial reasons,
and there is a reasonable prospect for rescuing the company;
or
(b)
dismissing the application, together with any further necessary and
appropriate order, including an order placing the company
under
liquidation.
…
(6)
If liquidation proceedings have already been commenced by or against
the company at the time an application is made in terms
of subsection
(1), the application will suspend those liquidation proceedings
until-
(a)
the court has adjudicated upon the application; or
(b)
the business rescue proceedings end, if the court makes the order
applied for.
…
’
[26]
The object of the
above provision has been articulated in many cases. As Binns-Ward J
put it in
Koen
& Another v Wedgewood Village Golf & Country Estate (Pty) Ltd
and Others
2012
(2) SA 378
at 382H-383A: ‘
[b]usiness
rescue is intended to serve that public interest by providing a
remedy directed at avoiding the deleterious consequences
of
liquidations in cases in which there is a reasonable prospect of
salvaging the business of a company in financial distress,
or of
securing a better return to creditors than would probably be achieved
in an immediate liquidation.’
[27]
The requirements that
must be shown by an affected person applying for business rescue of a
company are that (a) the company is
in financial distress, (b) the
company has failed to pay any amount in terms of an obligation or for
example a contract, or (c)
it is just and equitable to make an order
sought for financial reasons and (d) there is a reasonable prospect
for rescuing the
company.
Abuse
of process
[28]
Before I deal with
whether those requirements have been met, it is important to touch on
the important point made by
Henochsberg
on the
Companies Act 71 of 2008
,
Volume 1 at 464 (12) that:
‘
The
application must not be an abuse of process and should be brought in
good faith and for a proper purpose ie for the “rescue”
of the company…and not for an ulterior motive such as to
suspend liquidation or for a personal benefit.’
[29]
As was observed by
Gamble J in
Blue
Star Holdings (Pty) Ltd v West Coast Oyster Growers CC
2013
(6) SA 540
(WCC) at para 20: ‘
a
business rescue application might well be used by an obstructive
debtor intent on avoiding the obviously inevitable as part of
its
ongoing strategy to hinder a creditor from pursuing its lawfully
permissible goal, and, experience tells one that the business
rescue
proceedings may then be advanced by the debtor with a degree of
tardiness inversely proportional to the alacrity with which
it
initially approached the court
’
[30]
ABSA alleges that the
present matter is a case of a person who seeks to obtain suspension
of the liquidation for his own personal
benefit and for him to
further collect rental from the tenants of Nongoma unlawfully as he
did before.
Existence
of ABSA debt and ABSA’s locus standi as a creditor
[31]
In the current
application Loots disputes that Nongoma is indebted to ABSA,
effectively challenging ABSA’s
locus
standi
as
a creditor to Nongoma. This is in my view is absurd as shall be seen
in this judgment.
[32]
It has been common
cause that ABSA is a creditor of Nongoma since it instituted action
to enforce its debt. In all previous proceedings
it was accepted by
all involved, including Loots that ABSA entered into a written loan
agreement with Nongoma on 19 August 2002
in terms of which ABSA
lent and advanced an amount of R1 117 485.26 to Nongoma.
Nongoma failed to pay instalments
in terms of the loan timeously, and
as agreed. It was in arrears as early as October 2004.
[33]
On 21 February 2002,
the Barnards and Van Rooyen signed a document titled ‘ALGEMENE
SESSIE” in terms of which Nongoma
ceded all its rights arising
from existing and future contracts of lease in respect of its
premises to ABSA.
[34]
The existence of a
debt was admitted on numerous occasions. In the replying affidavit of
the present matter, Loots now disputes
this debt. He alleges
that the “admissions” in the “various affidavits”
referred to by Mayer were
prepared under the misguided influence of
ABSA and its legal representative’s misleading and false
information. This is surprising
and disingenuous because not only was
a default judgment granted in ABSA’s favour, Loots and Van
Rooyen filed rescission
applications where they did not challenge the
existence of the debt. Instead in paragraph 10 of her affidavit
in support
of her rescission application, Van Rooyen stated that her
defence was ‘
based,
inter alia, on the fact that the, Respondent’s[ABSA]
actions by not acting timeously and reasonably has caused
prejudice
to the Applicant[Van Rooyen]….had the Respondent [ABSA] acted
reasonably and timeously not only would the debt
have been
extinguished – it was a 10 year term loan agreement initiated
on 19 August 2002 – but Respondent[ABSA] would
have taken
cession of the leases in terms of the loan agreement and ensured
collection of rentals and thus payments of the amount
owed to them.’
[35]
Loots repeated
similar allegations in an affidavit in support of the rescission
application purporting to act on behalf of Nongoma.
He mentioned,
inter alia
,
that: ‘
...It
is my submission that Respondent acted with undue delay and
furthermore it is my submission that if Respondent had acted
reasonably and timeously, it would have taken cession of rental lease
agreements which Applicant (Nongoma) had ceded to Respondent
and
ensured collection of the rentals and thus payments of the amount
owed to Respondent.’
This disingenuity
cannot be accepted. Both Loots and van Rooyen allege that they were
legally represented by Mr Green. They unequivocally
admitted
indebtedness to ABSA and raised some defences which were rejected by
Van Rooyen AJ as being without merit, not bona fide
and opportunist.
Application for leave to appeal Van Rooyen’s AJ’s
judgment was dismissed. As things stand, the judgment
granted in
favour of ABSA on 19 September 2011 stands.
[36]
Loots disputes the
existence of ABSA’s debt on the basis that the loan agreement
by ABSA was sold to an entity called Home
Obligors Mortgage Enhanced
Securities (Pty) Ltd (‘Homes’) in a process of
securitisation. When looking at the record
of previous proceedings,
it appears that the issue of securitisation was raised by Loots in
his opposing affidavit to the liquidation
application as a new fact
for consideration. It was not entertained by the Court hearing that
application as his opposition was
dismissed. He now endeavours to
present this as a new fact before this Court, which is clearly not
the case. This manner of litigating
cannot be allowed and this matter
is evidently
res
judicata
.
[37]
These allegations are
in any event denied by ABSA as being false. ABSA alleges that records
at the Deeds Office contradict the allegation
made by Loots. It also
disputes the allegation also because only residential mortgages may
be securitised. The loan to Nongoma
is a commercial loan. Nongoma’s
property is zoned as commercial property and cannot form part of any
securitisation practise.
ABSA further alleges that the system it uses
does not afford a possibility of commercial properties and commercial
loans being
included in any securitisation process. Based on the
well-known
Plascon-Evans
rule
(
Plascon-Evans
Paints Ltd v Van Riebeeck Paints
(Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA
623
(A) at 634-635), there would have been no reason not to accept
ABSA’s version.
Previous
business rescue proceedings
[38]
Loots previously
brought an application for the business rescue of Nongoma and that
application was dismissed. The basis of those
proceedings was that he
was a creditor of Nongoma in the sum of R839 295.30, as the rental
income due to him for sub-letting a
portion of the premises, in the
amount of some R6050 per month, was loaned to Nongoma for purposes of
Nongoma’s obligations
in respect of the loan from the
bondholder, ABSA. The second basis was that Loots had obtained a
Power of Attorney in 2011 from
the remaining members of Nongoma, the
Barnards.
[39]
The first part of the
above bases is similar to the current application. The second part
relates to the Power of Attorney which
was the subject of previous
litigation before Veldhuizen J. This Power of Attorney purportedly
signed and given by the Barnards
on 13 January 2011 nominated Loots
and van Rooyen as follows:
‘…
to
be our Agent for managing and transacting our business in THE
REPUBLIC OF SOUTH AFRICA AND IN EVERY TERRITORY OR COUNTRY ANYWHERE
IN THE WORLD with full power and authority to sell all fixed property
and settle all outstanding bonds registered in our name.’
[40]
Veldhuizen J found at
paras 12 and 13 of his judgment dated 6 March 2014 in the matter of
ABSA Bank
Limited v Robert Peter Green
,
case number 18662/2013 dated 6 March 2014 that:
‘
[12]If
regard is to be had to the history of the matter and the steps which
the applicant [ABSA]took to recover the money Nongoma
owed it then
should have been clear to Loots and the respondent [Mr Green] that
they did not have a mandate to collect the rentals
due to Nongoma.
Even if the power of attorney gave Loots the power to manage
Nongoma’s affairs it did not give him a mandate
to disburse the
rentals that were collected in the manner admitted by the respondent
[ABSA].
[13]
In the result I conclude that the respondent failed to prove that he
had a mandate to collect and disburse the rentals due
to Nongoma.’
[41]
In the present
matter, Loots no longer relies on the Power of Attorney for obvious
reasons. He now relies on a lease agreement which
he alleges was
entered into between Nongoma and himself on 1 February 2011. Van
Rooyen signed this lease agreement on behalf of
Nongoma, purportedly
by virtue of the same Power of Attorney dated 13 January 2011, that I
have alluded to above. The commencement
date in the lease agreement
is stated as 1 February 2011 and termination date is 31 July 2020.
[42]
In terms of clause 4
of the lease agreement, subject to clause 14.2, Loots would pay a
monthly rental of R50.00 inclusive of VAT
and other taxes and levies.
Clause 14.2 states that :
‘
At
the
sole discretion of the Tenant
[Loots],
the Tenant may consent (verbally or in writing) that the Landlord
[Nongoma] may let out, in its own name, any buildings
or portion of
land situated on the Property. In this event any or all rentals
received by the Landlord (or any other income received
by the
Landlord as a result of this consent) will be appropriated by the
Landlord towards the maintenance, management and expenses
of the
Property or of the Landlord (including payment of any creditors of
the Landlord) as will be allocated and directed by the
Tenant in its
sole discretion. During the time which any rentals are being
appropriated by the Tenant as per clause 14.1, or such
letting of
land or buildings by the Landlord in its own name is allowed (as per
clause 14.2) the rental payable by the Tenant (as
per clause 4) will
be waived.’
[43]
First, it is rather
strange that this lease agreement was not presented in court during
the proceedings before Veldhuizen J as a
document which entitled
Loots to collect the rental. The curiosity arises because this
agreement was purportedly concluded long
before Veldhuizen J’s
judgment of 2014 was delivered. Clearly the lease agreement would
have been pivotal in convincing the
Court of Loots’ entitlement
to the collection of the rental. This lease agreement was also not
raised in the previous business
rescue application proceedings.
[44]
In this regard,
ABSA’s allegation that this document may have been contrived in
order to support the current application and
be presented as the
latest premise since Loots could not use the Power of Attorney as the
basis to collect rental, is not far-fetched
at all.
[45]
The second issue
which is concerning about this lease agreement is that Loots is only
obliged to pay R50.00 rental amount to Nongoma
whereas Nongoma
according to him, currently has funds of R45 000 per month
available to pay its costs, maintenance and expenses
[from
sub-leases]. It does not make sense that the potential rental income
received by Loots is R45 000 a month for his sub-leases
but he
only pays R50.00 to Nongoma.
[46]
A further disturbing
factor is that Loots declines disclosing information or
substantiation in this regard on the basis it is ‘private
and
confidential’ and pertains to himself only. This clearly does
not appear to come from an applicant determined to convince
the Court
by demonstrating candidly that reasonable prospects exist that
Nongoma can be rescued.
[47]
The nature of this
lease agreement and the fact that it was never disclosed during the
proceedings before Veldhuizen J points to
one inescapable conclusion
that the lease agreement seems to be a strategy designed to
circumvent the findings in Veldhuizen J’s
judgment. This is all
the more why it is necessary for the liquidation process to continue
so as to investigate all these matters.
[48]
For the reasons
outlined above alone, the application is not bona fide and should be
dismissed. The merits which I will nevertheless
touch on are not
convincing either.
Requirements
of the Act for a business rescue
Financial
distress
[49]
There has been no
attempt to acknowledge that the company is in financial distress.
Loots instead lays the blame on ABSA as being
responsible for
bringing Nongoma into financial distress. He seeks to demonstrate
that Nongoma is a sound business with its assets
exceeding
liabilities and is commercially solvent. In all of this supposed
solvent state of Nongoma, ABSA as a creditor remained
unpaid.
[50]
In
Southern
Palace Investments 265 (Pty) Ltd v Midnight Storm Investments 386 LTD
2012
(2) SA 423
WCC at para 24 the court held that:
‘
while
every case must be considered on its own merits, it is difficult to
conceive of a rescue plan in a given case that will have
a reasonable
prospect of success of the company concerned continuing on a solvent
basis, unless it addresses the cause of the demise
or failure of the
company’s business, and offers a remedy therefor that has a
reasonable prospect of being sustainable...’
[51]
Loots has not
fulfilled this requirement, instead he puts blame on the legal
proceedings brought by ABSA and ABSA’s alleged
misleading
information about the status of the loan agreement as being the cause
of its financial distress. This allegation is
lacking in substance
and is without foundation.
Reasonable
prospects
[52]
The courts have held
that ‘a reasonable prospect’ is a lesser requirement than
a reasonable probability. (See
Oakdene
Square Properties (Pty) Ltd v Farm Bothasfontein (Kayalami) (Pty) Ltd
and Others
2013
(4) SA 539
(SCA) at para 29).
[53]
The Court in
Oakdene
supra
held at para 29:
‘
On
the other hand, I believe it requires more than a prima facie case or
an arguable possibility. Of even greater significance,
I think, is
that it must be a reasonable prospect – with the emphasis on
‘reasonable’ – which means that
it must be a
prospect based on reasonable grounds. A mere speculative suggestion
is not enough. Moreover, because it is the applicant
who seeks to
satisfy the court of the prospect, it must establish these reasonable
grounds in accordance with the rules of motion
proceedings which,
generally speaking, require that it must do so in its founding
papers.’
[54]
The lease agreement
that I have already dealt with is presented as the only evidence to
support a reasonable prospect of rescue.
I have dealt with my
impressions of this lease agreement. Loots alleges that he is leasing
the entire property from Nongoma and
is subletting the commercial
building situated in the property. He further alleges that there is
no rental amount payable by him
to Nongoma. He further contends that
Nongoma currently has funds of about R45 000 a month available
to pay for its costs,
maintenance and expenses. The lease entitles
him to receive all the rental amounts payable from shops and offices
on Nongoma’s
property but yet he refuses to disclose any
information regarding the total amount of the rental and on what
basis thereof is it
being made available to Nongoma. I am in
agreement with ABSA that, in these circumstances, the lease agreement
cannot be held to
be genuine. It appears to have been created for the
purposes of undermining the cession that ABSA has to all the rental
payable
in respect of Nongoma’s premises.
[55]
I am inclined to
accept ABSA’s supposition that all these efforts, including the
sudden denial the existence of ABSA’s
debt are attempts to get
the debt removed so as to present Nongoma as being commercially
viable as a business. In the process,
other creditors of Nongoma have
not been disclosed and what amounts are owing to them. Furthermore,
no information has been given
regarding the business rescue
practitioner apart from the mentioning of his or her name in the
notice of motion. No details of
any proposed business plan have been
outlined either, so as to satisfy the Court about the reasonable
prospect of rescuing Nongoma.
[56]
In the circumstances,
Loots has failed to show any grounds to satisfy the court that there
is a reasonable prospect of rescuing
Nongoma from financial distress
and liquidation. If ever there was a case that should be subjected to
the scrutiny it is this one.
[57]
I conclude with the
words of Eloff AJ in
Southern
Palace Investments 265 v Midnight Storm Investments
386
2012 (2) SA 423
(WCC) at 426 C – D where he stated that:
‘
It
is necessary that an application for business rescue be carefully
scrutinised so as to ensure that it entails a genuine attempt
to
achieve the aims of the statutory remedy. The instant case is one
where such attempt was not discernible from the affidavits
filed of
record’
[58]
For these reasons,
the application for business rescue cannot succeed.
[59]
As to costs, ABSA
seeks costs on an attorney and client scale. I do not need to spend
much time on this issue save to say that the
Loots’ conduct as
demonstrated above evidently justifies costs on an attorney and
client scale. The court must show its discontent
with the manner in
which Loots has conducted this litigation. A number of issues raised
in this application were raised and determined
in previous
proceedings. Furthermore, Loots did not disclose in his founding
affidavit various proceedings previously brought before
other courts
which had an impact on this application. Had this application not
been opposed by ABSA, those proceedings and the
content thereof would
possibly not have come to this Court’s attention. Apart from
that, I am satisfied that based on my
findings in this matter a cost
order on attorney and client scale is warranted. I must mention
in passing my concerns about
the persistent litigation surrounding
the business of Nongoma, which is undoubtedly costly. This in my view
cannot be supporting
the interests of Nongoma and must at some point
come to an end.
[60]
In the result I make
the following order:
1.
The application is
dismissed with costs on attorney and client scale.
N
P BOQWANA
Judge
of the High Court
APPEARANCES
For
the Applicant: Adv E Callaghan
Instructed
by : Van der Linde Attorneys, Cape Town
For
the Intervening Party: Adv P de B Vivier SC
Instructed
by: Sandenbergh Nel Haggard, Bellville
c/o
Nilands Attorneys, Cape Town