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[2011] ZAGPJHC 148
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Engen Petroleum Ltd v Multi Waste (Pty) Ltd and Others (33410/11) [2011] ZAGPJHC 148; 2012 (5) SA 596 (GSJ) (23 September 2011)

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REPORTABLE
SOUTH GAUTENG HIGH COURT
JOHANNESBURG
CASE NO
:33410/11
DATE
:23/09/2011
In the matter between –
ENGEN PETROLEUM LIMITED Applicant
(Registration Number: 1989/003754/06)
and
MULTI WASTE (PTY) LIMITED
(Registration Number: 1991/005964/07)
and others Respondents
J U D G M E N T
BORUCHOWITZ J
:
[1] This is an urgent application brought by an intervening creditor,
Engen Petroleum Limited (Engen), to oppose the grant of an
order for
the placement of two companies under supervision and to commence
business rescue proceedings in terms of s 131(1) of
the Companies
Act, 71 of 2008 (the Act).
[2] The relevant facts are largely common cause and can be briefly
stated. The two companies concerned in the rescue proceedings
are
Multi Waste (Pty) Limited (Multi Waste) and Multi Fleet Logistics
(Pty) Limited (Multi Fleet). The core business of Multi
Waste is the
purchasing of fuel which it supplies to Multi Fleet in order to
enable it to conduct a cargo haulage business. The
companies are
substantially indebted to Engen in respect of fuel purchases, their
joint indebtedness amounting to approximately
R8 million.
[3] To secure its considerable financial exposure, Engen procured a
cession of the book debts of both companies and a deed of suretyship

from Multi Fleet in respect of the obligations of Multi Waste. In
June 2011 the companies executed a written acknowledgement of
debt in
favour of Engen in which they jointly undertook to discharge their
outstanding indebtedness by means of instalments, but
that
undertaking was breached.
[4] Engen proceeded to enforce the cession of book debts and
terminated Multi Fleet's mandate to receive any funds from its
debtors.
An agreement was concluded on 24 June 2011 whereunder Multi
Fleet was mandated to institute legal action on behalf of Engen
against
certain of its debtors, and undertook to furnish Engen with
the contact details of its debtors. It also undertook to inform its

debtors that payment was to be made to Engen's attorneys.
[5] Because Engen encountered difficulties in collecting the
outstanding debtors book, a meeting was held on 15 July 2011, at
which Multi Fleet again undertook to provide Engen with details of
its current debtors and creditors, and a plan to overcome its
cash
flow problems.
[6] On 25 July 2011, it was brought to Engen’s attention that a
resolution envisaged in s 129 of the Act to voluntarily begin

business rescue proceedings had been passed by the board of directors
of each of Multi Waste and Multi Fleet on 21 July 2011.
Engen was
not forewarned that such resolutions would be taken, and which was in
marked contrast to what had been discussed at the
meeting on 15 July
2011.
[7] Engen then launched an urgent application to set aside the
resolutions on the ground that they had lapsed for want of compliance

with certain procedural requirements laid down in the Act. On 16
August 2011, this Court set aside the resolutions by consent,
and a
written agreement was entered into in terms of which the companies
again undertook to provide Engen with all documents and
information
that was necessary to enforce the cession. Pursuant to that
agreement, Engen's attorney took possession of certain
documents,
which included the bank statements of Multi Fleet.
[8] The application to commence business rescue proceedings in terms
of s 131(1) of the Act was instituted on an
ex parte
basis on
2 September 2011 by various employees and the sole shareholder and
director of the companies, Mr PJL Moller, in their capacities
as
affected persons in terms of s 128(1)(a) of the Act.
[9] The present application is said to be urgent for the following
reasons
:
Multi Fleet and Multi Waste are profoundly
insolvent and fall to be liquidated rather than placed under
supervision. A company,
Multi Crow Logistics (Pty) Limited (Multi
Crow), has effectively taken over the business of Multi Fleet and is
in the process of
disposing of its assets, including vehicles and
collectable debts. Bank statements in Engen’s possession
indicate that Multi
Fleet is in the process of transferring vast sums
from its bank account to the accounts of related companies. A
creditor, Alondra
Trading CC, has also instituted winding-up
proceedings against Multi Fleet.
[10] Engen also states that it was not given proper notice of the
business rescue application and that it only learnt of the existence

thereof when its attorney received an incomplete email copy on 6
September 2011. It also complains that there has not been
disclosure,
as required in
ex parte
applications, of
Engen's position as a partially secured and affected party, the
involvement of Multi Crow and the pending application
for liquidation
brought by Alondra Trading CC.
[11] The business rescue application is bristling with procedural
irregularities. The most glaring of the irregularities pertains
to
the use of the short form notice of motion (Form 2 of the First
Schedule to the Uniform Rules) and the failure to comply with
the
service and notice requirements laid down in the Act.
[12] Section 131 of the Act, provides, so far as is relevant, 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.
(2) An
applicant in terms of subsection (1) must –
(a) Serve
a copy of the application on the company and the Commission; and
(b) Notify
each affected person of the application in the prescribed manner.
(3) Each
affected person has a right to participate in the hearing of an
application in terms of this section.
(4)
…
"
[13] An
ex parte
application, or and application using the
short form notice of motion (Form 2), is used either because it is
not necessary to give
notice to the respondent, or the relief claimed
is not final in nature (see
Simross Vintners (Pty) Limited v
Vermeulen
1978 (1) SA 779
(T) at 783A;
Ghomeshi-Bozorg v
Yousefi
1998 (1) SA 692
(W) at 696D. Rule 6(5)(a) provides that
every application other than one brought
ex parte
shall
be brought in accordance with Form 2(a) of the First Schedule to the
Uniform Rules.
[14] The following are, in my view, textual indications in the Act
that an application under s131(1) must be brought using the
long form
notice of motion (Form 2(a)).
[15] Section 131(2) provides that an applicant, in terms of ss (1)
must serve a copy of the application on the company and the

Commission, and notify each affected person of the application in the
prescribed manner. As both the company and the Commission
(the
Companies and Intellectual Property Commission) have a direct and
substantial interest in any order that the Court might make
and are
required to be joined as parties to the business rescue application.
The Commission is one of the regulatory agencies
established under
Chapter 8 of the Act. Each affected person has a right to
participate in the hearing of an application in terms
of s 131(1)
(see ss 131(4), 144, 145 and 146), a right that can only properly be
exercised if affected persons are given notice
of the application in
the manner prescribed in the Act and regulations.
[16] The legislature appears to have been cognisant of the
distinction between an
ex parte
application and an application
brought using the long form notice of motion. Although in a
different context, specific reference
is made in s 129(5)(b) to the
use of an
ex parte
application. It is safe to assume that had
an
ex parte
application been intended in respect of
applications brought under section 131(1), the legislature would have
said so.
[17] Adopting a purposive approach to the sections mentioned, I am
satisfied that the word "apply", as it appears in
section
131(1), contemplates an application brought utilising Form 2(a) and
the use by the applicants of the
ex parte
form (Form 2)
constitutes an irregularity.
[18] Section 131(2)(a) requires that an applicant serve a copy of the
application on the company and the Commission. Rule 4(1)(a)
provides
that service of any document initiating application proceedings shall
be effected by the sheriff in one or more of the
manners therein
stipulated. An application to place a company under supervision in
terms of section 131(1) is clearly a document
that initiates
proceedings and is thus required to be served by the sheriff. The
companies have purported to waive the requirements
of service and
notice but the Commission has not. Proof is therefore required that
the application was served on the Commission
by the sheriff as
required in terms of Rule 4. A copy of the application appears
simply to have been left at the office of the
Commission but not
served by the sheriff as required under the Rules. This also
constitutes an irregularity.
[19] Section 131(2)(b) provides that an applicant must “
notify
”
each affected person of the application “
in the prescribed
manner
”. The Act and Companies Regulations, 2011,
published under GN R351 in
GG
34239
of 26
April 2011, specifically provide how notification is to be given to
affected persons.
[20] Regulation 124 reads
:
“
124. Notices
to be issued by affected persons concerning court proceedings.
– An applicant in court proceedings who is required, in terms
of either section 130(3)(b) or 131(2)(b), to notify affected
persons
that an application has been made to a court, must deliver a copy of
the court application, in accordance with regulation
7, to each
affected person known to the applicant.
”
[21] Regulation 7 provides as follows
:
“
7. Delivery
of documents.
– (1) A notice or document to be delivered for any purpose
contemplated in the Act or these regulations may be delivered
in any
manner –
(a) contemplated
in section 6(10) or (11); or
set
out in Table CR 3.
A
document delivered by a method listed in the second column of Table
CR3 must be regarded as having been delivered to the intended

recipient –
on
the date and at the time shown opposite that method, in the third
column of that table; or
if
the date and time for the delivery of a document referred to in
Table CR 3 to a regulatory agency is outside of the office
hours of
that regulatory agency, as set out in regulation 165(2), that
document will be deemed to have been delivered on the
next business
day, subject to regulation 165(3).
(3) If,
in a particular matter, it proves impossible to deliver a document in
any manner provided for in the Act or these regulations -
if
any person other than the Tribunal is required to deliver the
document, the person may apply to either the Tribunal or the
High
Court for an order of substituted service; or
if
the Tribunal is required to deliver the document, the recording
officer of the Tribunal concerned may apply to the High Court
for an
order of substituted service.
(4) A
document that is delivered by fax must include a cover page, and a
document that is transmitted by electronic mail must be
accompanied
by a cover message, in either case setting out -
(a) the
name, address, and telephone number of the sender;
(b) either
-
(i) the
name of the person to whom it is addressed, and the name of that
person’s attorney, if applicable; or,
(ii) the
name or description of the class of intended recipients, if the
document is being delivered generally to all the members
of a
particular class of persons;
(c) the
date of the transmission; and
(d) in
the case of a fax transmission –
(i) the
total number of pages sent, including the cover page; and
(ii) the
name and telephone number of the person to contact if the
transmission is incomplete or otherwise unsuccessful.
”
[22] Subsections 6(10) and (11) of the Act stipulate
:
“
6(10)
If,
in terms of this Act, a notice is required or permitted to be given
or published to any person, it is sufficient if the notice
is
transmitted electronically directly to that person in a manner and
form such that the notice can conveniently be printed by
the
recipient within a reasonable time and at a reasonable cost.
6(11) If,
in terms of this Act, a document, record or statement, other than a
notice contemplated in subsection (10), is required –
to
be retained, it is sufficient if an electronic original or
reproduction of that document is retained as provided for in section

15 of the Electronic Communications and Transactions Act; or
to
be published, provided or delivered, it is sufficient if –
an
electronic original or reproduction of that document, record or
statement is published, provided or delivered by electronic

communication in a manner and form such that the document, record
or statement can conveniently be printed by the recipient
within a
reasonable time and at a reasonable cost; or
a
notice of the availability of that document, record or statement,
summarising its content and satisfying any prescribed requirements,

is delivered at each intended recipient of the document, record or
statement, together with instructions for receiving the
complete
document, record or statement.
”
[23] Table CR3 details the various methods of notification and dates
of times of deemed delivery.
[24] An applicant must satisfy the court that all reasonable steps
have been taken to notify all affected persons known to the

applicant, by delivering a copy of the court application to them in
accordance with regulation 7. Where compliance proves impossible,
an
applicant may apply to the High Court for an order of substituted
service (see regulation 7(3)). At the very least it is incumbent

upon an applicant to demonstrate that all reasonable steps have been
taken to establish the identity of the affected persons and
their
addresses to which the relevant notices are to be delivered. Where
electronic means, such as a fax machine, is used to give
notice,
evidence is required of the information stipulated in regulation
7(4).
[25] The seventh applicant is the sole shareholder and director of
Multi Waste and Multi Fleet. In that capacity he would
have had
control of and access to the companies’ records and was in a
position to properly identify the affected persons
entitled to
notification of the application. He should have provided the Court
with the information contemplated in regulation
7 (including ss 6(10)
and (11) of the Act, and Table CR3).
[26] On a proper conspectus of the papers, it cannot be said that
there has been compliance, or even substantial compliance, with
the
notification requirements laid down in the Act and Regulations.
[27] Given the nature and extent of the irregularities involved, the
business rescue application falls to be dismissed. On 13
September
2011, the application was postponed
sine die
. To permit a
thoroughly irregular application to remain pending before the Court
on an indefinite basis is confusing and potentially
prejudicial to
creditors, affected persons or persons who in the future choose to
deal with the companies. This, in itself, creates
an element of
urgency.
[28] There are other considerations that render the matter urgent.
There is evidence that Multi Fleet, which is profoundly insolvent,
is
disposing of or transferring its assets to other entities, and moneys
received from its book debtors is being paid to entities
other than
Engen. It is, in my view, essential that a winding-up order be
granted so as to enable a liquidator to take control
of the affairs
of both Multi Fleet and Multin Waste.
[29] There is yet a further reason why the business rescue
application cannot succeed. It is settled practice in this Division

that the liquidation of more than one company cannot be sought in a
single application unless there is a complete identity of interests

(see
Breetveldt
and Others v Van Zyl
1972 (1) SA 304
(T)); nor is it
advisable that two or more individuals should be joined in an
application for their sequestration (
Ferela (Pty) Limited v
Craigie
1980 (3) SA 167
(W); see, also, the unreported judgment
of
Erich Brack and Another v Front Runner Racks and Others
,
(Case No: 45084/2010). Each of the companies involved in the
present application has its own separate share capital, creditors and

presumably different affected persons. It would be prejudicial to
persons who are only interested in one of the companies to be
engaged
in business rescue proceedings in respect of the other.
[30] Engen, as an affected person, has a right to participate in the
hearing of an application in terms of s 131(1) of the
Act. It
would not require leave of the Court to intervene. Such leave may,
however, be necessary as a procedural requirement.
See, in this
regard,
Fullard v Fullard
1979 (1) SA 368
(T) and
Shapiro v
South African Recording Rights Association Limited (Galeta
Intervening)
2008 (4) SA 145
(W).
[31] For these reasons I would allow the intervention and dismiss the
business rescue application.
[32] The following order is granted:
(a) The application for leave to intervene is granted.
(b) The application brought under Case No: 33410/2011 to place Multi
Waste (Pty) Limited and Multi Fleet Logistics (Pty) Limited
under
supervision and to commence business rescue proceedings in terms of
Section 131(1) of the Act is dismissed with costs.
(c) No order is granted in respect of prayer 5 of the application to
intervene.
DATED at JOHANNESBURG on this the 25
th
day of OCTOBER 2011
_____________________________
P BORUCHOWITZ
JUDGE OF THE SOUTH GAUTENG
HIGH COURT
Counsel for Applicant : ADVOCATE JP COETZEE SC
Attorneys for Applicant: LANHAM-LOVE ATTORNEYS
Counsel for Respondent: ADVOCATE C VAN DER SPUY
Attorneys for Respondent: LOCKETTS ATTORNEYS