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[2021] ZAWCHC 216
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Baba and Another v Firstrand Bank Ltd and Others (14520/2021) [2021] ZAWCHC 216 (22 September 2021)
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
No.:14520/2021
In
the matter between:
YASMINA
BABA
First Applicant
BESTINVER
HOLDINGS (PTY) LTD
Second Applicant
and
FIRSTRAND
BANK
LTD
First
Respondent
CHRISTOPHER
VAN ZYL N.O.
Second
Respondent
JACOBUS
HENDRIKUS JANSE VAN RENSBURG N.O.
Third Respondent
LEOPONT
193 (PTY)
LTD
Fourth
Respondent
TRUSTEES
FOR THE TIME BEING, JAGUAR TRUST
Fifth Respondent
REASONS
DELIVERED ELECTRONICALLY ON 22 SEPTEMBER 2021
MANGCU-LOCKWOOD,
J
I.
INTRODUCTION
& BACKGROUND
[1]
On
27 August 2021, I granted an order dismissing this application with
costs. I hereby provide the reasons for the Order.
[2]
On
25 August 2021 the applicant brought an
ex
parte
application on an extremely urgent basis (after 5pm), seeking the
issue of a
rule
nisi
,
which was to operate as an interim interdict pending the return day,
in the following terms:
“
Interdicting
the respondents from selling/approving the sale of the immovable
property belonging to the fourth respondent, commonly
known as
Waldorf, being Erf 117068, Cape Town, situated in the City of Cape
Town… with its physical address situated at
82 St. Georges
Street, Cape Town (“the property”) pending the transfer
of the properties known as Princess Crossing
(owned by Bestinver
Company SA (Pty) Ltd) and Moffet on Main (owned by Joburg Skyscraper
(Pty) Ltd)”.
[1]
[3]
It
is not disputed that the notice of motion and founding affidavit were
emailed to the respondents’ legal representatives
at 17h40 on
25 August 2021. The notice of motion did not indicate when the
application was to be heard. The covering email indicated
it would be
heard “
this
evening”
on an
ex
parte
basis. No telephonic notice was afforded to the respondents or their
legal representatives regarding the extremely urgent
ex
parte
proceedings.
[4]
On
the evening of 25 August 2021, at the intervention of the first
respondent’s counsel, the matter was postponed to Thursday
26
August 2021 for hearing before me, and, pending that hearing, the
respondents were prohibited from selling or authorizing the
sale of
the property.
[5]
The
application was defective in several respects, some of which will
become apparent below when I deal with a brief history of
the matter.
The applicant, Ms Yasmina Baba, did not have
locus
standi
to launch the proceedings. Contrary to the averments made in the
founding affidavit that she was a shareholder of the fourth
respondent,
the sole shareholder of the fourth respondent is
Bestinver Holdings (Pty) Ltd (“
Bestinver”
).
But Bestinver was not cited in the founding papers, and there was no
indication that Ms Baba was its representative in any capacity.
In
addition,
one
of the business rescue practitioners appointed to the fourth
respondent, Mr Jakobus Hendrikus Janse Van Rensburg N.O was not
cited. Instead, there was an unexplained misjoinder of one Jacques du
Toit N.O. Furthermore, the purchaser of the Waldorf property
(the
subject of these proceedings), namely the Trustees for the time being
of the Jaguar Trust (“
the
Jaguar Trust”
),
was not cited as a party to the proceedings. The application was not
served on all the creditors of the fourth respondent, on
whose behalf
Ms Baba purported to be acting.
[6]
The
defects were pointed out in the respondents’ answering
affidavits, which were delivered subsequent to the postponement
order
of 25 August 2021. By the time the matter was argued before me on 26
August 2021, the applicant had delivered applications
firstly for the
intervention of Bestinver as second applicant; secondly, the joinder
of Jaguar Trust as fifth respondent; thirdly
correcting the
misjoinder of Jacques Du Toit N.O; and, in his stead, joining the
correct business rescue practitioner. The applications
to cure the
defects remained opposed.
[7]
The
correct business rescue practitioners and
Bestinver
are
necessary parties which have a direct interest in this litigation. As
a result, the interlocutory applications correcting the
misjoinder
of Mr Jacques du Toit N.O,
joining
Mr
Janse
Van Rensburg N.O, and permitting Bestinver to intervene as the second
applicant must be granted
.
[2]
[8]
However,
there remain defects which continue to loom large in these
proceedings, namely the
locus
standi
of Ms Baba to launch these proceedings; the failure to give notice to
the creditors; and the failure to comply with section 133(1)
of the
Companies Act 71 of 2008 (“
the
Companies Act”
).
II.
LOCUS
STANDI
[9]
In
the founding affidavit Ms Baba stated that she is “
an
adult female businessperson and shareholder of the fourth respondent
(Leopont). As such, I am an affected person in terms of
chapter 6 of
the
Companies Act 2008
in relation to the fourth respondent.”
The respondents denied these averments, pointing out that Ms Baba is
neither a creditor, shareholder nor employee of Leopont, and
accordingly is not an affected person as contemplated in Chapter 6 of
the
Companies Act 2008
. When the respondents raised these
issues in their answering affidavits, Ms Baba explained as follows in
a further affidavit
in which she applied for the intervention of
Bestinver as the second applicant: “
In
my haste to depose to this affidavit I did not consider that I was
not the registered shareholder of Leopont. As the Bestinver
group of
companies is a family held property owning group, the formal
shareholdings escaped my mind at the time of deposing to
the founding
affidavit.”
The
further affidavit continues to state that in fact the registered and
sole shareholder in Leopont is Bestinver.
[10]
I
find
the explanation given in Ms Baba’s further affidavit for the
error in this regard unsatisfactory. The Court remains in
the dark
about the connection between the averment that the Bestinver group of
companies is a family-held, property-owning group
and the alleged
error made in the founding affidavit. One is left to draw inferences
about Ms Baba’s connection to the Group,
the family and
Leopont. All this, in circumstances where Ms Baba is legally
represented.
[11]
What
is particularly disconcerting is that, had the respondents not raised
the issue of Ms Babs’s
locus
standi
in their affidavits of 26 August 2021, the Court would have been none
the wiser as to the true state of affairs, and might well
have
granted the
ex
parte
urgent application on the evening of 25 August 2021 on the basis of
what Ms Baba stated in her founding affidavit under oath, namely
that
she is a shareholder of Leopont. A litigant who approaches a court on
an
ex
parte
basis has a duty to make full and frank disclosure of the material
facts, especially those which might influence the Court in reaching
a
just conclusion.
[3]
Even on the
basis of a negligent omission (or wilful suppression) a Court may, on
that ground alone dismiss an
ex
parte
application.
[4]
In this regard,
I point out that this is not the only respect in which the founding
affidavit turned out to be inaccurate, and
this becomes apparent in
the discussion on the merits of the application below.
[12]
To
my mind, the lack of
locus
standi
on the part of Ms Baba is linked to the failure to give notice of
these proceedings to the creditors of Leopont and Bestinver.
Although
the joinder of the creditors is not a requirement,
[5]
the giving of notice regarding legal proceedings remains a
requirement.
[6]
In this matter, save in the instance of the first respondent, the
Court remains unaware of the remaining creditors’ views
regarding these proceedings. This is quite clearly contrary to the
provisions of the
Companies Act.
[13
]
The
failure to give notice to the creditors is especially important in
the circumstances of this case where Ms Baba purports to
act on
behalf of the interests of the fourth respondent and the Bestinver
Group, both of which are in business rescue. The creditors
have,
after all, adopted the business rescue plans which are,
effectively under attack in these proceedings.
III.
NON-COMPLIANCE
WITH SECTION 133(1) OF
COMPANIES ACT
[14]
There
is another point
in
limine
raised on behalf of the business rescue practitioners, namely the
non-compliance with
section 133(1)
of the
Companies Act.
The
relevant parts of the section provide as follows:
“
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, except-
(a) with
the written consent of the practitioner;
(b) with
the leave of the court and in accordance with any terms the court
considers suitable”
[15]
It
is not in dispute that the applicants did not seek the written
consent of the business practice practitioners, or the leave of
this
Court before instituting these proceedings. There remains no
explanation for the failure to do so.
[16]
Section
133(1)
is a general moratorium provision that applies in relation to
the assets and liabilities of the company at the stage when business
rescue comes into effect.
[7]
It
protects the company against legal action in respect of claims in
general, save with the written consent of the business rescue
practitioner and failing such consent, with the leave of the court.
The Supreme Court of Appeal (“SCA”) has stated
the
purpose of
s 133(1)
as follows:
“
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.”
[8]
[17]
The
provision is pertinently relevant to these proceedings because, as
will become apparent in the discussion of the merits below,
what Ms
Baba seeks affects the business rescue practitioner plans which have
been approved by creditors. The launching of these
proceedings in the
circumstances of this case is the very opposite of
providing
the crucial breathing space or a period of respite to enable the
company to restructure its affairs, as contemplated in
Cloete
Murray and Another NNO v FirstRand Bank Ltd t/a
WesBank
above.
[9]
[18]
In
my view, the cumulative effect of the defects mentioned above, as
well as the manner in which these proceedings were launched,
leaves
much to be desired, and adds a shade of unfairness towards the
respondents. I am furthermore not persuaded that the
ex
parte
manner in which these proceedings were launched was necessary or
appropriate. On the evidence presented before me, it is was most
non-collegial, given that the parties and their legal representatives
had, until the launching of the proceedings, been in
correspondence.
[10]
[19]
For
all the above reasons, I am of the view that the application should
be dismissed with costs. However, even when regard is had
to the
substantive application, my view is similarly that the application
must fail.
IV.
THE
FACTS
[20]
The
fourth respondent (“
Leopont”
)
is one of four companies which form the Bestinver group of companies
(“
the
Group”
).
The Group owns various immovable properties from which it generates
rental income. The other companies in the Group are
Joburg
Skyscraper, Bestinverprop01 (Pty) Ltd (“
Bestinverprop”
)
and Bestinver Company South Africa (Pty) Ltd (“
Bestinver
SA”
).
Joburg Skyscraper, Bestinverprop and Leopont are currently in
business rescue, while Bestinver SA is now in final liquidation
after
also being in business rescue.
[21]
The
common cause background is that various companies in Bestinver,
including Leopont, previously signed suretyship agreements in
favour
of the first respondent for amounts owed by other companies in the
Group, and the first respondent has accelerated the debts
owed to it.
Leopont is indebted to the first respondent for an amount of
R318,6 million in terms of the suretyship facilities,
from an initial
amount of R570 million which was reduced following a sale of
immovable property by Bestinverprop for R261 million.
[22]
On
19 June 2020, the Group was placed in business rescue in terms of
section 131(1)
of the
Insolvency Act 24 of 1936
. On 18 December 2020
the business rescue plans for the three companies in business rescue
were adopted by the Group’s creditors,
though the plans were
opposed by Ms Baba for amongst other things, failure to include a
transaction known as “
the
Stein Transaction”
.
The applicant’s challenge to the business rescue plans is
currently awaiting appeal.
[23]
The
Stein Transaction entailed the sale of a retail enterprise, including
the immovable property known as Princess Crossing to Stein
(Pty) Ltd
(“
Stein”
)
for the sum of R280 000 000, as well the provision of a loan by
Stein to Bestinver SA in an amount of R105 000 000.
According to the founding affidavit, if the Stein Transaction was
successful, it would bring in approximately R385 000 000,
which the Group could use to settle the first respondent’s
claims, and make a significant contribution to the other concurrent
creditors. Leopont owes other creditors an amount of R24 million.
[24]
On
13 August 2021 the powers of the
Bestinver
SA
liquidators
were extended
to
permit them to sell Princess Crossing pursuant to the Stein
Transaction.
Stein’s
offer
to
purchase was signed by the liquidators, and the first respondent
offered to finance the transaction. As a result, in the founding
affidavit the applicants claim that the Stein transaction “
is
therefore all but complete”.
[25]
While
the Stein Transaction was being negotiated the business rescue
practitioners appointed to companies in the Group were considering
selling the other properties as follows: Moffett on Main, which is
owned by Joburg Skyscraper for a price of R125 million; and
the
Waldorf, which is owned by Leopont for a price of R100 million.
[26]
According
to the applicants, Leopont stands to be prejudiced by the
arrangements made by the business rescue practitioners because
the
Waldorf is actually valued at R145 100 000, and therefore its
proposed sale would constitute an undervaluation by R45
100 000.
Furthermore, Ms Baba points out that Leopont is principally
indebted to concurrent creditors for no more than
R24 million and
does not directly owe the first respondent other than by way of the
cross suretyships for the Group. The respondents
dispute the
averments set out in this paragraph by Ms Baba.
The
immediate events leading to this application
[27]
According
to an email dated 10 August 2021 the first respondent afforded the
Group an opportunity to secure the Stein Transaction
funding to
settle creditors’ claims in the Group. In this regard, the
first respondent initially imposed a deadline of 13
August 2021 for
Stein to provide acceptable guarantee to finance the sale of Princess
Crossing, failing which the first respondent
would approve the sale
of the Waldorf.
[28]
This
deadline, however, could not be met because Stein’s finance
application was only to be reviewed by the first respondent's
credit
committee on 23 August 2021. As a result, on 10 August 2021 the
Group’s attorneys requested an extension of the deadline
from
13 August 2021 to 26 August 2021.
In
an email dated 12 August 2021 the first respondent’s attorneys
granted the extension requested by the Group’s attorneys,
and
the Group’s attorneys confirmed the terms of that agreement in
an email dated 17 August 2021. The terms agreed between
the parties
have become important for purposes of this application, and were set
out as follows:
“
1.
Our
client [first respondent] undertakes not to confirm the Waldorf sale
on 26 August 2021 subject to the following conditions being
met on
the deadlines stipulated below:
a.
Stein
providing acceptable guarantees/proof of funding in the amount of
R280 million to the liquidator in respect of the purchase
of Princess
Crossing, which guarantees/proof of funding is to be provided by no
later than 17h00 on 25 August 2021.
b.
Stein
making payment of the amount of R100 million to our client by no
later than 17h00 on 25 August 2021/Stein by no later than
17h00 on 25
August 2021, delivering acceptable guarantees to our client in the
amount of R100 million, which guarantees are payable
upon demand;
in
the alternative to b above
c.
Stein
and the [business rescue practitioners] concluding an offer to
purchase agreement for Moffet on Main in the amount of not
less than
R125 million and acceptable guarantees being delivered for the
purchase price by no later than 17h00 on 25 August 2021.
d.
the
transactions listed in b and c above should be unconditional.
2.
Should
the conditions in 1 be met timeously and the transactions envisaged
in terms of a and b or c above proceed; the proceeds
thereof will be
utilized to settle the debt due to our client. Should a shortfall
remain, our client will notify your clients accordingly
and afford
your clients a period of 5 days from receipt of the notice to pay the
shortfall to our client. Should the shortfall
not be paid within the
5 day period, the [business rescue practitioners] and liquidators
will proceed with their respective processes
in selling the
properties to make payment of the debts due to the creditors.
3.
Should the conditions in 1 not be met, our client will confirm the
Waldorf sale on 26 August 2021, and the [business rescue
practitioners]
and liquidators will proceed with their respective
processes in selling the properties to make payment of the debts due
to the
creditors.”
[29]
As
I have already indicated, the Group’s legal representatives
agreed to the above arrangement in an email dated 17 August
2021.
According to Ms Baba, the negotiations with Stein reached an impasse
on the evening of 24 August 2021. It transpired that,
whereas the
Group envisaged an ‘out and out’ sale and an arm’s
length loan from Stein, Stein wanted to acquire
the properties,
including the Waldorf, for itself. In a letter addressed to the
applicant’s attorneys and dated 25 August
2021, Stein’s
attorneys offered to buy Moffat-on-Main for R110 million, the Waldorf
for R100 million, and Princess Crossing
for R250 million. As a
result, the guarantees required in terms of the agreement between the
parties could not be provided.
[30]
On
the morning of 25 August 2021 Ms Baba’s attorneys enquired
whether the first respondent still intended to authorize the
sale of
Waldorf in light if the impasse reached with Stein. The first
respondent indicated that the sale of Waldorf was to proceed
if the
guarantees were not provided by close of business of 25 August 2021.
[31]
The
founding affidavit states that if the sale of the Waldorf were
authorised it would be unconditional and not easily capable of
being
reversed given, amongst other things, the rights of the purchaser.
Further, if the interdict were not granted, the first
respondent
would almost certainly grant authorisation for the sale of the
Waldorf on the morning of 26 August 2021.
V.
THE
LAW
[32]
The
requirements for an interim interdict are well-known.
The
applicants must establish (a) a
prima
facie
right even if it is open to some doubt; (b) a reasonable apprehension
of irreparable and imminent harm to the right if the interdict
is not
granted; (c) the balance of convenience must favour the grant of the
interdict; and (d) the applicant must have no other
available remedy.
If
a clear right is established, there is no need to establish element
of the apprehension of irreparable harm.
[11]
[33]
The
applicable test in this regard is that which is set out
in
Webster
v Mitchell
[12]
,
as qualified by
Gool
v Minister of Justice and Another
[13]
,
in
terms of which the applicants must show that on their version,
together with the allegations of the respondents that they cannot
dispute, they should obtain relief at the trial. If, having regard to
the respondents’ contrary version and the inherent
probabilities serious doubt is then cast on the applicants’
case, the applicants cannot succeed.
VI.
PRIMA
FACIE
RIGHT
[34]
According
to the notice of motion the applicants seek to interdict the
respondents “
from
selling or approving the sale of the Waldorf”
.
Upon enquiry from the Bench, the applicants’ counsel advised
that the applicants no longer sought to interdict the respondents
“
from
selling”
the
Waldorf, but now only sought to interdict the respondents from
“
approving
the sale of the Waldorf”
.
This is because, according to the common cause facts, the sale of the
Waldorf had already taken place on 14 July 2021, well before
these
urgent proceedings were instituted, and the applicants’
attorneys were provided with a copy of the sale agreement on
19 July
2021.
[35]
As
regards the approval of the sale of the Waldorf, that issue is
regulated by the terms of the sale agreement between Leopont and
the
Jaguar Trust. The sale agreement provides for two conditions
precedent for the sale of the Waldorf in clauses 3.1.1 and 3.1.2,
as
follows:
“
3.1.1
to the extent necessary and within 30 Business Days of the Signature
Date, FirstRand Bank Limited, as a secured creditor of
the Seller and
the bond holder in respect of the Property, provides written consent
to the sale and registration of transfer of
the Property as
contemplated in this Agreement; and
3.1.2
with reference to clause 11 below, and within 30 Business Days of the
Signature Date, the Seller obtains agreement
from FirstRand Bank
Limited or any other financial institution to finance or effect
payment of all Clearance Figures payable in
respect of the Property.
3.2
The Suspensive Condition[s] contemplated in clauses 3.1.1 and 3.1.2
are imposed for the
benefit of the Seller and may be waived and
relaxed by the Seller by written notice of such waiver or relaxation
as the case may
be to the purchaser at any time before the due date
for fulfillment thereof.”
[36]
Thus,
in terms of clause 3.1.1 of the sale agreement, it is the first
respondent that was to provide written consent for the sale
and
registration of the transfer of the Waldorf. And once the consent was
granted by the first respondent, the sale became unconditional.
The
applicants have not sought to impugn the provisions of the sale
agreement in these proceedings. Yet what is sought in essence
is a
unilateral amendment of a contractual undertaking. This, in
circumstances where no such case is made out.
The
applicants do not have a
prima
facie
right to stop the first respondent from granting the written consent
contemplated in clause 3.1.1.
[37]
Confronted
with the above terms of the sale agreement, the applicants state in
the replying affidavit that in terms of clause 3.2,
the business
rescue practitioners can simply waive or extend the condition that
the first respondent approve the sale, pending
the return day of the
rule
nisi
.
In my view, this brings into purview the application of
section
133(1)
of the
Companies Act. One
does not know how the business
rescue practitioners might have responded had they been requested to
waive or extend the condition
for approval. There is no indication
that such a request was made to them prior to the institution of
these proceedings. In any
event, this belated request for the
business rescue practitioners to waive or extend the condition is
another attempt to unilaterally
amend the terms of the sale
agreement, and is inappropriate, given the
ex
parte
,
urgent manner in which these proceedings were brought. This request
is furthermore made in the replying affidavit, in circumstances
where
the applicants were aware the respondents could not respond, given
the urgency with which the matter proceeded.
[38]
Another
aspect of the notice of motion that requires scrutiny is the period
of its operation. The interdict is sought pending the
transfer
of
Princess Crossing and Moffet-on-Main. There is no indication in the
papers of when the transfer of Princess Crossing and Moffett-on-Main
are to be expected. And in any event, it is not clear what is to
occur once the transfers do take place. In this last respect,
it
appears that the relief sought is final in nature. Given that the
interdict is sought pending the happening of the event(s)
of the
transfers of the Princess Crossing and Moffet-on-Main, I inquired in
this regard at the hearing, and no answers could be
provided on
behalf of the applicants from the bar.
[39]
Furthermore,
as I have stated, the basis on which this application was launched
was that the Stein Transaction is “
all
but complete
”
and “
so
near completion”
and “
imminent”
.
However, on the very facts averred by Ms Baba in the founding
affidavit, the Stein Transaction had not gone according to plan
because Stein did a
volte
face
.
There is otherwise no evidence of the alleged imminence of the Stein
Transaction. Apart from contradicting the very basis on which
this
application was launched, the fact that the Stein Transaction had
already not materialized also undermines the alleged interim
nature
of this application.
[40]
The
relief sought in the notice of motion is therefore, on its face,
incompetent, for the reasons discussed above. However, there
are more
reasons as to why the application falls to be dismissed.
[41]
According
to the founding affidavit, the applicants’
prima
facie
right is said to be that Leopont has a clear right to benefit from
the true value of the Waldorf, which was to be infringed by
its sale
to the Jaguar Trust. It is also said that the rights of creditors of
the Group will be negatively affected by the unnecessary
sale of the
Waldorf while the Stein Transaction is so near completion.
[42]
Firstly,
the offer from Stein in respect of the Waldorf amounted to an amount
of R100 million, the same amount as the purchase price
to the Jaguar
Trust. Thus, the alleged true value of the Waldorf is gainsaid by the
very Stein Transaction that the applicants
appeared to pin their
hopes on for this application. The alleged true value is, in any
event disputed by the respondents. In reply,
the applicants attached
to the replying affidavit a valuation which they state is the only
extant valuation of the Waldorf, and
that it was received by the
business rescue practitioners “
post
coronavirus”
.
The business rescue practitioners deny this alleged true value.
Furthermore, the document provided by the applicants itself does
not
support the averments made by the applicants. It states that “
the
last valuation as at 01/04/2020”
is R145,100,000, and shows that the document was printed on 17
September 2020. This is not evidence of an extant evaluation which
was obtained “post coronavirus”, as the deponent of the
replying affidavit claims. The result is that the alleged prejudice
to Leopont, which forms the basis for
this
application, is not established.
[43]
By
contrast, the respondents state that the rights of creditors will be
adversely affected if the Waldorf is not sold. This is because
the
business rescue plan approved by the creditors contemplates the sale
of the assets of the Group, including Leopont’s,
in order to
pay creditors a better dividend than they would receive if Leopont
were liquidated. In terms of
section 128(b)
of the
Companies Act,
this
is a valid form of “rescue”. This makes the
sale a lawful pursuit, and takes it outside the realm of unlawful
conduct.
[44]
As
I have already indicated, the evidence shows that the alleged
imminence of the Stein Transaction, as regards the Waldorf, had
not
materialised by the time these proceedings were launched. The
respondents point out that even if the Stein Transaction were
successful it would only cover the debt due to the first respondent,
and not the R24 million owed to other creditors. In the replying
affidavit the applicants state that Stein’s offer to purchase
Princess Crossing and Moffet-on-Main is adequate to settle
all the
creditors’ claims - the first respondent’s and the other
creditors’ - and will result in a surplus of
R32 400 000,00,
and that this was pointed out to the respondents in an email of 29
July 2021. I deal with this email
correspondence below. But first, I
note that according to the first respondent, Stein had in fact
previously concluded a written
offer to purchase Princess Crossing
with the liquidators of Bestinver SA for R280 million, and that
Stein’s recent offer
of R250 million seems to be a repudiation
of that earlier agreement with Bestinver SA’s liquidators.
Indeed, in the agreement
of 17 August 2021 quoted earlier, the
guarantee to be provided in respect of Princess Crossing was R280
million. The replying affidavit
is silent in this regard.
[45]
Secondly,
the calculations relied upon in the replying affidavit are different
from those which were the basis for launching these
proceedings.
According to the founding affidavit the Stein Transaction was to
result in the sale of Princess Crossing to Stein
for the sum of R280
000 000, as well the provision of a loan by Stein to Bestinver
SA in an amount of R105 000 000,
which would bring in
approximately R385 000 000, and allow the Group to settle
the first respondent’s claims. In
the replying affidavit, there
is no longer reliance placed on a loan amount of R105 000 from
Stein, presumably because of
the concomitant acknowledgement that the
Stein Transaction had not materialized. The significance is that the
applicants attempted
to change their case in the replying affidavit,
which is impermissible.
[46]
As
regards the email correspondence of 29 July 2021, the reliance
thereon is problematic in several respects. First, on the common
cause facts, the email of 29 July 2021 was sent before the parties
agreed to the arrangement that resulted in the applicant being
granted until end of 25 August 2021 to provide a guarantee from
Stein. It must be remembered that the basis on which the applicant
approached this Court was that the Stein Transaction was imminent. It
was not on the basis that the issues raised in the email
of 29 July
2021 were not complied with by the respondents. A litigant must stand
or fall by their founding papers. Second, there
is no evidence that
the parties had agreed that, if the Stein Transaction failed, the
parties would resort to the position set
out in the email of 29 July
2021. Third, the averments relating to the correspondence of 29 July
2021 are made in a replying affidavit,
in an urgent application, in
circumstances where the respondents did not have an opportunity to
respond.
[47]
In
the replying affidavit, and at the hearing of the matter, the
applicants relied on a statement made by Nel AJ in
Baba
v Janse van Rensburg NO
(case number 2594/2021) in the context of
section 140(3)(c)(ii)
, that
the business rescue practitioners should “
carefully
navigate the sales of the properties and monitor the concomitant debt
reduction from the proceeds of such sales, in order
to ensure that
properties are not sold unnecessarily”
.
Again, this is not the basis on which the applicants approached
the Court. In any event, there is no evidence that the business
rescue practitioners have transgressed these sentiments of the Court.
[48]
Instead,
the business rescue practitioners have set out how and why the sale
of the Waldorf became necessary. According to the business
rescue
practitioners all income earned from the Waldorf was, at the time of
these proceedings, ceded to the first respondent, and
could therefore
not be used without the latter’s consent. Absent access to the
encumbered rental income, the business rescue
practitioners had
insufficient funds to meet day-to-day operational expenses and
business rescue costs, and liquidation would have
been inevitable.
[49]
Furthermore,
according to the business rescue practitioners the Group has been
afforded every opportunity, since the commencement
of the business
rescue on 19 June 2020, to rescue their business through refinancing,
including by pursuing the Stein Transaction,
but to no avail. At the
same time, they state that it has always been clear that the funding
was urgently required, and if not
urgently acquired, properties would
need to be sold. Indeed, this is borne out by the agreement of 17
August 2021 between the parties.
[50]
As
a result of the circumstances set out immediately above, a formal,
private tender process was pursued for the sale of the Waldorf.
Seven offers were received – the lowest for R50 million,
and the highest, from the Jaguar Trust, for R100 million.
Following
that process, the business rescue practitioners entered into a formal
deed of sale with the Jaguar Trust, for R100 million,
on 14 July
2021. Thereafter, the parties agreed to the arrangement that allowed
the Group to pursue the Stein Transaction.
[51]
The
applicants have not shown anything irregular about any of the events
leading up to 25 August 2021. Instead, it is the Group
that appears
to have failed to meet the conditions of the agreement to provide a
guarantee from Stein by end of 25 August 2021.
There is no basis for
the Court to intervene in these circumstances. Importantly, the
applicant has failed to make out a
prima
facie
case for the relief sought.
VII.
THE
REMAINING REQUIREMENTS FOR INTERIM INTERDICT
[52]
Turning
to the requirement of irreparable harm, the founding affidavit stated
that once the first respondent approves the sale it
will become
unconditional and there is nothing that the Group, including Leopont,
could do to prevent the sale. Again, on this
aspect the applicant
relies on the alleged imminent Stein Transaction which I have already
discussed
ad
nauseum
.
[53]
I
have already made a finding against the applicants’ allegation
that the sale of the Waldorf to the Jaguar Trust is for less
than its
true value. It therefore remains an allegation that is not
established on the evidence. As a result, the applicant has
failed to
demonstrate that Leopont and the Group will suffer irreparable harm.
[54]
It
is also relevant in this regard that the creditors were not given
notice of these proceedings, for their interests are also affected
by
this application.
[55]
As
regards the balance of convenience, the applicants again relied on
the alleged imminent Stein Transaction, which is contrary
to the
established evidence. In addition, for this requirement Ms Baba
cursorily alleged that she, the fourth respondent and the
Group would
be severely prejudiced if the interdict is not granted. Nothing more
is stated to substantiate this averment. Accordingly,
no case is made
out in this regard.
[56]
By
contrast, as I have stated, the respondents state that if the Waldorf
is sold, the proceeds can be used to pay the creditors,
as
contemplated by the business rescue plan.
[57]
In
considering the alternative remedy, I am mindful that, on the facts
of this case, the applicants have been afforded ample opportunity,
since the institution of the business rescue proceedings and later,
the adoption of the business rescue plans, to make alternative
arrangements. This last opportunity, which expired on 26 August 2021,
was one such opportunity. Furthermore, should it transpire
that the
applicants do find alternative funding before the transfer of the
Waldorf, the applicants could apply to interdict the
transfer on the
basis of a firm offer which is acceptable to all the parties affected
by this case.
[58]
In
all the above circumstances I am not persuaded that an interdict
ought to be granted in the circumstances of this case.
VIII.
COSTS
[59]
There
is no reason why the costs should not follow the result. Furthermore,
given the unsatisfactory manner in which these proceedings
were
launched, and which I have set out earlier in this judgment, I
consider it appropriate for the applicants to bear the costs.
The
unsatisfactory manner of proceeding continued well into the replying
affidavit, where it is clear that the applicants now wished
to
distance themselves from the basis on which these proceedings were
launched on such an extremely urgent basis, namely that “the
Stein Transaction is imminent”. In fact the replying affidavit
was constrained to admit that the transaction did not materialize.
In
my view, this issue alone is sufficient to mulct the applicants with
costs.
[60]
In
the circumstances, the following Order was granted on 27 August 2021:
a.
The
application is dismissed with costs.
N. MANGCU-LOCKWOOD
Judge of the High Court
APPEARANCES
For the applicant
: Adv M
Greig
Instructed by
: Mr L
Timothy
Timothy and Timothy Attorneys
For the 1
st
respondent
: Adv B
Manca (SC)
Instructed
by
: Ms A
van der Merwe
Werksman Attorneys
For the 2
nd
, 3
rd
and 4
th
respondents
:
Adv R
Goodman (SC)
Instructed
by
: Ms J
Hutton
Bowmans
[1]
In addition,
the applicant sought a costs order against any respondents who were
to oppose the application.
[2]
See
SA
Riding for the Disabled Association v Regional Land Claims
Commissioner
2017
(5) SA1 (CC) at 5A-D.
[3]
Schlesinger
v Schlesinger
1979
(4) SA 342 (W).
[4]
Schlesinger
v Schlesinger
at
348E – 350B.
[5]
Timasani
(Pty) Ltd (in business rescue) and Another v Afrimat Iron Ore (Pty)
Ltd
[2021]
3 All SA 843
(SCA) at paras [17] – [20].
[6]
Timasani
(Pty) Ltd (in business rescue) and Another v Afrimat Iron Ore (Pty)
Ltd at
para
[19].
[7]
Chetty
t/a Nationwide Electrical v Hart and Another NNO
2015
(6) SA 424
(SCA)
para 28.
[8]
Cloete
Murray and Another NNO v FirstRand Bank Ltd t/a
WesBank
2015
(3) SA 438
(SCA)
para 14. See also
Chetty
fn
10 para 28.
[9]
See also
Timasani
(Pty) Ltd (in business rescue) and Another v Afrimat Iron Ore (Pty)
Ltd
[2021] 3 All SA 843 (SCA).
[10]
See in this regard the judgment
of Sutherland J in
South
African Airways Soc v BDFM Publishers (Pty) Ltd and Others
2016
(2) SA 561
(GJ) (17 December 2015) at paras 22 - 26.7
[11]
E
rasmus,
Superior
Court Practice
at
D6-20.
[12]
Webster
v Mitchell
1948
(1) SA 1186
(W)
at 11189.
[13]
Gool
v Minister of Justice and Another
,
1955
(2) SA 682
(C)
at 688E.