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[2016] ZAGPJHC 185
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Mabote and Others v Van Der Merwe NO and Another (2015/40324) [2016] ZAGPJHC 185 (8 July 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
SOUTH
GAUTENG LOCAL DIVISION, JOHANNESBURG
CASE NO: 2015/40324
In the matter
between
SEDICK ARENDSE
1
ST
APPLICANT
GEOFFREY OBED MABOTE
2
ND
APPLICANT
ZAFAR AHMED MAHOMED
3
RD
APPLICANT
CHARLES HUBERT MYLBURGH
4
TH
APPLICANT
ROBERT ALEXANDER DODDS
5
TH
APPLICANT
IAN CHILD
LINDA SITHOLE
SUSAN MAWER
JOHAN LIEBENBERG
ANDREAS AVRABOS
ROBERT BRUCE GRIFFITH SINCLAIR
ARMANDO FLORES FERNANDES MOCA
MAUREEN ISOBEL BEEBY HUGHES
MARC DE VILLIERS
SHAUN PRITHIVIRAJH
6
TH
APPLICANT
7
TH
APPLICANT
8
TH
APPLICANT
9
TH
APPLICANT
10
TH
APPLICANT
11
TH
APPLICANT
12
TH
APPLICANT
13
TH
APPLICANT
14
TH
APPLICANT
15
TH
APPLICANT
and
LIEBENBERG DAWID RYK VAN DER MERWE
NO
(in his capacity
as joint business rescue practi-
tioner of AFRICAN BANK INVESTMENTS LIMITED
1
ST
RESPONDENT
JOHN FRANCIS EVANS
NO
(in his capacity as joint business
rescue practitioner of AFRICAN
BANK INVESTMENTS LIMITED
2
ND
RESPONDENT
JUDGMENT
BORUCHOWITZ J:
[1]
This is an application in terms of section 133(1)(b) of the Companies
Act, 71 of 2008 (the Act) for leave to commence legal
proceedings
against a company placed under business rescue.
[2]
The applicants intend instituting such proceedings against African
Bank Investments Limited (ABIL), as co-defendants, with Ellerine
Furnishers (Pty) Limited (in business rescue) (“EF”); and
Ellerine Holdings Limited (in business rescue) (“EHL”).
ABIL was placed under business rescue with effect from 5 June 2015
but, as will appear hereafter, is no longer under business rescue.
[3]
The application for leave was argued on 29 April 2016 and judgment
was reserved. After having substantially completed
the
judgment, I was informed by the parties that on or about 19 May 2016
the respondents filed a notice of substantial implementation
of the
business rescue plan pertaining to ABIL and the business rescue
proceedings ended in terms of s 132(2) of the Act.
Accordingly, ABIL is no longer under business rescue and the
moratorium provided for in s 133 no longer applies. The
relief sought is thus moot and the only live issue is the question of
costs. In order to properly determine the incidence
of costs,
it is necessary to give consideration to the merits of the
application.
[4]
The need to obtain the Court’s leave arose in the following
circumstances. ABIL, EHL and EF form part of what is
termed
“the Ellerine Group of Companies” (the Group). EF
is a wholly-owned subsidiary of EHL which, in turn,
is wholly owned
by ABIL. EF and EHL were placed under business rescue by board
resolutions in terms of s 129 of the
Act with effect from 7
August 2014 and 21 August 2014 respectively.
[5]
The applicants were senior executives in the employ of EF. On 5
December 2013, an offer in writing was made to each of
them to
participate in what is styled the “
Ellerine Holdings Limited
Performance and Retention Incentive Scheme (PARIS)
”.
They allege that, properly construed, and taking background facts
into account, the offer was made by EF, alternatively
EHL, further
alternatively ABIL, represented by Mr Toni Fourie, the chief
executive officer of both EF and EHL (Fourie), and/or
Sinclair (the
eleventh applicant). Each of the applicants accepted the offer
during December 2013. The relevant terms
of the PARIS will be
referred to later in the judgment.
[6]
It is alleged that on a proper interpretation of the PARIS it was an
express, alternatively tacit, term that the award amounts
payable to
the participants were payable by one or more or all of EF, EHL or
ABIL, whether singularly or jointly and severally,
the one paying,
the others to be absolved.
[7]
Neither EF, EHL nor ABIL’s business rescue practitioners has
disputed the applicants’ entitlement to payment of
the amounts
claimed by each of them, being, in each case, the full award amount
stipulated in the offer, but each disputes liability
to pay the award
amount. The business rescue practitioner of EF supports the
application but contends that ABIL is liable
for the amounts
claimed. He has further indicated that in the event that
litigation is commenced by the applicants against
EF it intends to
raise a point of non-joinder of ABIL to the proceedings unless ABIL
is cited as a party to such proceedings.
[8]
Accordingly, the applicants contend that it is necessary that each of
EF, EHL and ABIL be cited as co-defendants in the proposed
legal
proceedings so that it may be determined which of such defendants is
liable to the applicants for the amounts claimed.
THE
LEGAL POSITION
[9]
Section 133(1)
of the
Companies Act, 2008
, places a moratorium on
legal proceedings against a company under business rescue. The
prohibition is subject to five exceptions.
One of those
exceptions is contained in
section 133(1)(b)
which provides, in
material part, 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 –
…
(b)
with the leave of the court and in accordance with any terms the
court considers suitable.
”
[10] I am unaware of any judgment, and none has been referred to me,
in which the test to be applied by a court in deciding whether
to
grant leave in terms of
s 133(1)(b)
has been formulated.
There is authority for the proposition that a court being asked for
leave to proceed against business
rescue must receive “
a
well-motivated application for that so that it could apply its mind
to the facts and the law if necessary and then be in a position
to
make a ruling in accordance with any terms it may consider suitable
in peculiar circumstances
” (see
Merchant West Working
Capital Solutions (Pty) Ltd v Advanced Technologies & Engineering
Co (Pty) Ltd
2013 JDR 1019 (GSJ) para 67). And, in
Redpath
Mining SA (Pty) Ltd v Marsden NO and others
[2013] ZAGPJHC 148 at
paragraph [71], the same learned Judge held that: “
only in
exceptional circumstances may a court permit litigation against a
business rescue plan or related thereto.
” It is to be
noted that in neither of these cases did the court lay down a general
test or pronounce on what constitutes
“
a well-motivated
application
”, or define the minimum threshold that must be
met for an applicant to obtain such leave.
[11]
Section 133(1)(b)
does not specify the criteria or procedural
requirements that must be met in order to obtain the leave of the
court.
Ex facie
the provision, the court would appear to
enjoy a wide and unfettered discretion to make an order on “…
any terms the court considers suitable
”. That
being the position, it is implicit that the court’s discretion
must be dictated by the interests of justice.
It is also
implicit that the discretion must be exercised judicially, having
regard to the purpose and objects of
s 133(1)(b)
, read in the
context of the Act as a whole. Considerations of fairness and
convenience are fundamentally important.
[12]
To properly contextualise the section, reference should be made to
the following provisions of the Act. Section
5 stipulates that
the Act must be interpreted and applied in a manner that gives effect
to the purposes set out in s 7.
Section 7(k) provides that
one of these purposes is to “
provide
for the efficient rescue and recovery of financially distressed
companies, in a manner that balances the rights and interests
of all
relevant stakeholders
”
.
[13]
Business rescue is defined in s 128(1)(b) to mean proceedings
that facilitate the rehabilitation of a financially
distressed
company by providing, among other things, for the temporary
supervision and moratorium on the rights of claimants, and
the
development and implementation of a plan to rescue the company.
[14] Section 133(1) is a general provision providing
for a moratorium on legal proceedings against a company under
business rescue.
The moratorium is central to the business
rescue process since it provides the crucial breathing space 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 without the distraction of having to deal with
legal proceedings
(see
Cloete Murray NNO v First Rand Bank Limited
t/a Wesbank
2015 (3) SA 438
(SCA) at 441 para 14);
Chetty t/a
Nationwide Electrical v Hart & another NNO
2015 (6) SA 424
(SCA) at paras 35 and 39;
Elias Mechanicos Building &
Civil Engineering Contractors (Pty) Limited v Stedone Developments
(Pty) Ltd and others
2015 (4) SA 485
(KZD) at paras 7, 9 and
11).
[15] But the moratorium is not an absolute bar to
legal proceedings being instituted or continued against a company
under business
rescue. It is intended to be of a temporary
nature only and cannot be utilised to indefinitely delay
satisfaction of
the claims of creditors; or result in the
extinguishment of the claims of creditors.
Subsection 133(1)(a)-(e)
lists five exceptions when legal or
enforcement proceedings may be continued with or initiated.
Subsection 133(1)(a) permits
a creditor to initiate or continue
proceedings with the written consent of the practitioner and
subsection 133(1)(b) permits
a creditor to seek the Court’s
leave to institute or continue legal proceedings in the event of a
practitioner’s refusal
to give consent, or even without the
consent of the practitioner having been sought (see
Chetty v Hart
(
supra
) para 40).
[16] In my view, an applicant seeking to obtain leave
under the section must as a minimum requirement establish a
prima
facie
case against the company in business rescue.
[17] In this regard there are two issues in
contention. First, the approach to be followed by a court in
order to determine
whether or not a
prima facie
case is
established; and, second, whether the requisite
prima facie
case has been established.
[18]
What is meant by a
prima facie
case depends on the context in which it is used. The term is
normally used to denote the quantum of proof required of a party
upon
whom the onus rests in the absence of rebutting evidence. In
proceedings instituted on notice of motion, the determination
of the
question whether a
prima facie
case has been made out is usually made purely on a consideration
of the evidence contained in the founding affidavit without
regard to
any evidence adduced in rebuttal. This is especially so when a
respondent takes the preliminary objection that
the application does
not make out a
prima facie
case for the relief claimed (see
Kalil v
Decotex (Pty) Ltd and another
1988 (1)
SA 943
(A) at 976G-H;
Hart v
Pinetown Drive-In Cinema (Pty) Ltd
1972
(1) SA 464
(D) at 469C-E. Compare also
Simon
NO v Air Operations of Europe AB and others
[1998] ZASCA 79
;
1999 (1) SA 217
(SCA) at 228D).
[19]
At the other extreme are applications for provisional sequestration
and winding up of a company where evidence in rebuttal is
considered. It is now settled that where there are real and
fundamental disputes, a “
prima
facie
case” is established where,
on the affidavits of the parties, there is a balance of probabilities
in favour of the applicant
(see
Kalil
at
979A-B).
[20]
The respondents urged the Court to adopt the intermediate position
commonly encountered in applications for interim relief
or temporary
interdicts. The well-settled approach followed in such
applications is to take the facts averred by the applicant,
together
with such facts set out by the respondent that are not or cannot be
disputed and to consider whether, having regard to
the inherent
probabilities, the applicant should on those facts obtain final
relief at the trial. The facts set up in contradiction
by the
respondent should then be considered and, if serious doubt is thrown
upon the case of the applicant, he cannot succeed (
Webster
v Mitchell
1948 (1) SA 1186
(W)
1189-1190, re-affirmed in
Simon NO
(
supra
)
at 228H).
[21]
The approach followed in relation to temporary interdicts was said to
be appropriate for the following reasons. Under
s 133(1)(b),
the Court is vested with a discretion which must be judicially
exercised. If, on an examination of the
facts, both those
supported by the evidence of the applicant and those of the
respondents which the applicants admits or cannot
dispute, there is
insufficient material for concluding that the applicant could on
those facts obtain final relief at trial, the
application for leave
should be declined. Approaching the matter in this way would
enable the Court to properly exercise
a judicial discretion. A
higher degree of proof was appropriate as the legislature had placed
a limitation on what would
otherwise have been an unfettered right to
institute legal proceedings against the company under business
rescue.
[22] I disagree with the respondents’ submissions. The
approach followed in relation to temporary interdicts sets too
high a
degree of proof than is warranted. It is trite that an
applicant for a temporary interdict must establish a clear
right to
relief or, if it is not clearly established, a
prima facie
right “
though open to some doubt
”. In
Webster
Clayden J pointed out at 1189, that “
[T]he
use of the phrase ‘prima facie established though open to some
doubt’ indicates … that more is required
than
merely to look at the allegations of the applicant, but something
short of a weighing up of the probabilities of conflicting
versions
is required.
”
[23]
An application for leave under s 133(1)(b) is generally required
to be brought before the commencement or continuation
of legal
proceedings.
[1]
It
is inappropriate for an applicant to at that stage, without the
procedural advantages of a trial, including proper discovery,
to show
that he will necessarily succeed in the proposed action. It is
undesirable that the court be required to evaluate
the inherent
probabilities as they emerge from the conflicting affidavits of the
parties.
[24] In the present case the applicants propose to institute action
against EF, EHL and ABIL, citing them as alternative defendants
as
there is uncertainty as to which of them is liable to effect payment
under the PARIS. It is permissible for a plaintiff
to sue
defendants in the alternative where there is uncertainty as to which
of the defendants is in law liable, especially in circumstances
where
the defendants deny liability and reciprocally point to one another
as being the party responsible for the plaintiff’s
claim.
All that a plaintiff is required to do in such circumstances is to
lay the necessary foundation of showing,
prima facie
, that one
or other of the defendants are legally liable. This was
emphasized by Corbett JA in
Mazibuko v Santam Insurance Co
Ltd and another
1982 (3) SA 125
(A), where the following is
stated (at 135C-G):
“
I
agree with these decisions. It seems to me, moreover, that, for
similar reasons, where, as in this case, a plaintiff has sued
two
defendants in the alternative and also, in the further alternative,
jointly and severally for damages sustained by him (the
plaintiff)
and the defendants have denied liability and have also reciprocally
pointed to one another as being the party responsible
for
plaintiff's damages, then, if at the end of the plaintiff's case
there is evidence upon which a court, applying its mind reasonably,
could hold that it had been established that either the one defendant
or the other defendant or both of them were legally liable
(it being
nevertheless uncertain as to which of the alternatives was the
correct one), the Court should not grant an application
for
absolution at the suit of either defendant. In such a case, which is
in effect a tripartite suit between three adversaries,
it is, in my
opinion, in the interests of justice that the case should be decided
on the evidence which all the parties might choose
to place before
the Court, provided, as I say, that the plaintiff, when presenting
his case, has laid the necessary foundation
of showing,
prima
facie
,
that one or other or both of the defendants are legally liable. To
hold otherwise would, in many instances, defeat the object
of the
Rule which permits a plaintiff who is uncertain as to the legal
responsibility of two defendants to sue them both in the
alternative
and, in the further alternative, jointly and severally.
”
[25]
The principles generally followed by the courts in regard to
applications for the joinder of defendants
[2]
are
also relevant. These are encapsulated by Miller J (as he
then was)
in
Mgobozi
and others v The Administrator of Natal
1963
(3) SA 757
(D&CLD), at 760D-761A.
“
When
an application of this nature is made, namely, for joinder of a party
as co-defendant, the purpose is clearly to avoid multiplicity
of
actions and to save costs by bringing before the Court at one and
the same time all those parties who have an interest
in and are
materially affected by the litigation. Such procedure has been
sanctioned on innumerable occasions, and I need only
refer to the
case to which Mr.
Milne
referred me, namely
S.A.
Steel Equipment Co. (Pty.) Ltd. and Others v Lurelk (Pty.) Ltd.
,
1951
(4) SA 167
(T)
.
It follows that where allegations are made by a plaintiff, which, if
substantiated, would show that he has a claim which
he is
desirous of advancing against a party who is at that stage not before
the Court, his application to join that party will
normally be
granted unless it appears that there would be no purpose in doing so
or unless it appears that to do so at the particular
stage at which
such application is made would cause such prejudice to the
other side as could not be adequately remedied
by any order of costs.
It is not necessary for the applicant to satisfy the Court at this
stage that he will necessarily succeed
against the defendant whom he
wishes to join, on the issue raised by sec. 34. I do not think that
the court should expect more
of him than that he should make such
allegations as would show that he has a
prima
facie
case, that his application is seriously made and is not frivolous.
One might test the correctness of what I have said by having
regard
to the fact that if such a plaintiff, instead of applying for leave
to join a party, were to issue an independent summons
against the
party whom he now wished to sue, he could not be prevented from doing
so. His issue of summons would set in motion
the proceedings which he
desired to bring before the Court. If he were shown to be frivolous
it may be that application could be
made to strike out the summons as
a misuse of the process of the Court, but short of that, the matter
would proceed in the ordinary
course, and if it was destined to fail
it would fail because of the validity of the defence raised by
defendant in his plea in
the ordinary course of procedure.
”
[26] In limited instances it may be permissible
to take into account facts in the opposing affidavits, especially
facts that an
applicant is unable to contradict, and where there is
no reason to believe that in future proceedings, with the advantages
of discovery,
those facts are capable of being challenged.
Support for this proposition is to be found in
Imperial
Marine Company v Pasquale della Gatta; Imperial Marine Company v
Filippo Lemb
o
2012 (1) SA 58
(SCA),
where Wallis JA (in a different
context, namely an application for the attachment of a vessel), said
the following (at para
[22]):
“ …
For
that latter reason I indicate briefly why there is much to be said,
in deciding whether the applicant has established a prima
facie case,
for taking into account the facts in the opposing affidavits that an
applicant does not contradict, at least where
there is no reason to
believe that in future proceedings, with the advantages of discovery,
those facts are capable of being challenged.
The primary reason is
that in principle to do otherwise is to shut one’s eyes to
relevant factual material that may fatally
undermine the arresting
party’s claim and courts do not ordinarily disregard relevant
and admissible evidence when reaching
their decisions. Disregarding
such evidence seems inconsistent with the constitutional requirement
that both parties are entitled
to a fair hearing and confers an
unjustifiable advantage on the arresting party. In the present
context, our courts have repeatedly
stressed that the arrest of a
ship is a matter with serious consequences. That being so, it seems
incongruous for a court faced
with a decision whether to order or
sustain such an arrest to ignore materially relevant and undisputed
evidence.”
[27]
To conclude, there is no justification why an applicant for leave
under s 133(1)(b) should be obliged to establish a
prima
facie
case with a higher degree of
proof than would ordinarily be required in a summons or founding
affidavit. It is sufficient
if it be shown that the averments
made, if unchallenged, establish a cause of action or demonstrate the
existence of a triable
issue. The fact that the averments made
are contradicted or the probabilities are against the version
advanced, would not
disentitle an applicant to relief. Nor is
it necessary for an applicant to satisfy the court that the proposed
legal proceedings
will be successful. In the present case, the
quantum of proof required to establish a
prima
facie
case is even less onerous as the
applicants are unable to say with certainty which of EF, EHL and ABIL
is liable to effect payment
under the PARIS (see
Mazibuko
(
supra
)).
[28]
What needs to be fully set out in any application for leave are the
reasons why legal proceedings against the company in business
rescue
are necessary and appropriate (see
Merchant
West
(
supra
)).
As mentioned above, the Court has a wide discretion which must be
dictated by the interests of justice. There is
no closed list
of the factors that may be taken into account in deciding whether or
not to grant leave as each case must be determined
on its own facts.
Without being prescriptive in any way, the following considerations
are relevant: (a) The effect
that the grant or refusal of
leave would have on the applicants’ rights as opposed to other
affected persons and relevant
stakeholders; (b) The impact
that the proposed legal proceedings would have on the well-being of
the company and its
ability to regain its financial health; and
(c) whether the grant of leave would be inimical to the object
and purpose
of business rescue proceedings as set out in
sections 7(k) and 128(b) of the Act.
[29]
I disagree with the observation in
Redpath
that leave in terms of s 133(1)(b) may only be granted in
exceptional circumstances. The learned Judge in
Redpath
did not refer to any authority or provide any reasoning for the
conclusion that “
exceptional
circumstances
” should apply
generally to an application brought in terms of s 133(1)(b) of
the Act. If the legislature had intended
to limit the grant of
leave to “
exceptional
circumstances
” that test would
have been expressly stated in the section. Instead, the Court
is given wide powers not only to grant
leave, but also to determine
the terms on which such leave is granted.
THE
ISSUE
[30]
The only question to be decided is whether the applicants have made
out a
prima facie
case for relief against ABIL. Counsel for the respondents
submitted that on a conspectus of the relevant affidavits there
is no
factual dispute which, if resolved in the applicants’ favour,
would result in a finding that ABIL was liable on the
remuneration
scheme provided for in the PARIS. In the final analysis, the
applicants’ case is simply based on conjecture,
perception and
supposition.
[31]
What is in dispute is which of EF, EHL or ABIL is liable to make good
on the promise contained in the PARIS. This turns
on an
interpretation of the PARIS. The proper approach to the
interpretation of a contract is to have regard to the language
of the
contract, read in the light of its context, apparent purpose and the
factual background against which it came into existence
(
National
Joint Municipal Pension Fund v Endumeni Municipality
2012 (4) SA 593
(SCA) para 18;
Bothma-Batho
Transport (Pty) Ltd v S Bothma & Seun Transport (Pty) Ltd
2014 (2) SA 494
(SCA). Also see
Novartis SA (Pty) Ltd v Maphil Trading
(Pty) Ltd
2016 (1) SA 518
(SCA) para
28).
[32] The offer to participate in the PARIS is set out in a document
which bears the EF name and address and is signed by Mr Toni
Fourie, who describes himself as the chief executive officer.
Although Fourie is the chief executive officer of both EF and
EHL, he
does not indicate in what capacity he signed the document. The
scheme is described as the “ELLERINE HOLDINGS
LIMITED
PERFORMANCE AND RETENTION INCENTIVE SCHEME”. The
following provisions of the PARIS are relevant for present
purposes:
“
The
Ellerine Holdings Limited (‘EHL’) Performance and
Retention Incentive Scheme (‘“PARIS’) was approved
on 28
th
November 2013 by the African Bank Investments Limited (ABIL)
Remuneration Committee, a fully mandated committee of the ABIL Board.
The
primary
objective
of PARIS is that of Executive
retention
over the next 2 years whist a secondary objective is to drive
performance of EHL. As you are aware, there is the possibility
that the ownership of EHL may change in the foreseeable future, and
it is thus critical that the skills of key Executives are retained
over the next 2 years.
You
are viewed as a critical employee to retain over this 2 year period
and I am pleased to advise you that the Remuneration Committee
(Remco) has approved your participation in PARIS with an award amount
of R5,000,000. You are therefore invited to participate
in this
scheme knowing that such participation will be entirely at you (
sic
)
discretion and the acceptance of the following terms and conditions:
…
If
ABIL sells EHL before the expiry of the 2 year retention period i.e.
before 01
st
October 2015, and the acquirer terminates your employment for reasons
based on operational requirements i.e. retrenchment, the
PARIS will
terminate upon the date of termination of your employment. The
same rules will apply as above, measured at the
date of acquisition,
as if the 2 year retention period had run its course, except for
performance above budget, where the excess
PARIS payment will be
pro-rated.
If
ABIL sells EHL before the expiry of the 2 year retention period i.e.
before 01
st
October 2015, and the acquirer retains your services, the PARIS award
will be paid out on the anniversary of the 2 year retention
period
.
”
[33]
Broadly stated, the case which the applicants seek to advance in
their proposed action is based on the following facts.
The case
against EF is that it was the contractual employer liable for the
applicants’ remuneration at the time that the
offer was made;
the offer was on an EF letterhead and signed by its chief executive
officer. The case against EHL is
that the document bears EHL’s
logo and was signed by EHL’s chief executive officer; the
scheme is also styled
“the Ellerine Holdings Limited
performance and retention incentive scheme”. The case
against ABIL is premised
on the assertion that the scheme was
conceived primarily for ABIL’s benefit; ABIL’s
duly-authorised remuneration
committee approved the scheme. It
subsidiaries, EHL and EF, contend that it was the intention of the
parties that ABIL would
pay out the awards.
[34]
Counsel for the respondents submitted that the following facts
militate against the conclusion that ABIL would have been liable
to
pay out the awards. The offer is on the letterhead of EF.
The heading in the offer identifies the PARIS as the EHL
PARIS.
This identification is repeated a number of times in the document.
It is stated in the PARIS that its primary
objective is to retain
executive employees; and its secondary objective to drive the
performance of EHL. The addressee of
the offer was identified
as a critical employee. The PARIS was stipulated to be for a
two-year period during which it was
contemplated that there would be
a sale of EHL to a third party acquirer. The award would be
paid out earlier than two years
if the employee was retrenched at the
instance of the third party acquirer, and at the end of two years if
the employee was not
retrenched. Both of these payment events
were contemplated to take place at a time after ABIL had ceased to be
the shareholder
of EHL. Participation by the employee in the
PARIS would terminate if the employee’s services with EHL
terminated before
termination of the scheme by reason of resignation
or dismissal for misconduct. The value of the award was related
to the
performance of EHL and not that of ABIL. The award was
to be determined and payable after approval by the board of EHL of
its financial results. The offer was made by Fourie, the chief
executive officer of EHL, and not made by the chief executive
officer
of ABIL.
CONCLUSION
[35]
Based on the averments set out in the founding affidavit and those
facts in the answering affidavit which the applicants are
unable to
dispute, I am satisfied that the applicants have at the very least a
prima facie
claim against either EF, EHL or ABIL, or a combination of one or more
or all of them, jointly and severally.
[36]
Although the PARIS does not indicate in express terms which entity
would be liable to pay the awards, contextual evidence given
at a
trial in due course may establish that the PARIS was conceived for
ABIL’s benefit and that it was to pay out the awards.
The
above-quoted clauses of the PARIS are not inconsistent with such
interpretation. There is,
prima
facie
, a triable issue involving ABIL.
[37]
As mentioned above, it is permissible for a plaintiff to sue
defendants in the alternative where there is uncertainty as to
which
of the defendants is in law liable, especially in circumstances where
the defendants deny liability and reciprocally point
to one another
as being the party responsible for the plaintiff’s claim (see
Mazibuko, supra
).
[38]
The applicants were justified in approaching this Court for leave to
institute legal proceedings against the respondents.
It is only
by instituting proceedings in a court that the applicants would
be able to obtain an executable order against
ABIL, should it be
found that ABIL was in fact the party liable. The dispute
resolution procedures provided for in the business
rescue plans of EF
and EHL do not permit a joinder of a third party such as ABIL, and it
would not be competent for the expert
adjudicating the dispute to
make a finding that would render ABIL liable to pay the awards.
Attempts to refer the matter
to arbitration have failed. The
business rescue practitioners of EHL and EF have consented to the
institution of legal proceedings,
but the consent of the business
rescue practitioner of EF is conditional upon the institution of
proceedings against ABIL simultaneously
therewith.
[39]
For these reasons I would have granted the applicants leave to
institute legal proceedings against the respondents.
[40]
The following considerations are relevant in determining an
appropriate costs order. The grant of leave in terms of s 133(1)(b)
of the Act is exclusively in the discretion of the Court. An
applicant does not have any right or entitlement thereto. In
the exercise of that discretion the Court is required, among other
things, to give consideration to the views of the business rescue
practitioner. It was not unreasonable for the respondents to have
resisted the application. It was indeed arguable whether
or not
the applicants had established the requisite
prima
facie
case. The submissions made
on behalf of the respondents were not unreasonable or untenable.
It is clear from the papers
that the applicants’ primary
contention is that either EF or EHL is liable and that the need to
join ABIL only arose after
the business rescue practitioner of EF
indicated that he was not prepared to consent to proceedings against
EF unless ABIL was
joined as a party. For these reasons, I consider
it appropriate that the costs of the application as well as the costs
incurred
by the respondents be paid by the applicants.
[41] In the result, the following order is made.
The
costs of the application are to be paid by the applicants jointly and
severally, the one paying, the others to be absolved.
Such costs are
to include the costs incurred by the respondents in opposing the
application.
BORUCHOWITZ
J
JUDGE
OF THE HIGH COURT
GAUTENG
LOCAL DIVISION, JOHANNESBURG
DATE OF HEARING : 29 April 2016
DATE
OF JUDGMENT : 08 July 2016
ON BEHALF OF
THE
APPLICANTS : ADVOCATE C E WATT-PRINGLE SC
with
ADVOCATE D MAHON
INSTRUCTED BY :
SCHINDLERS ATTORNEYS
Ref: Ms L SHER
ON BEHALF OF
THE
RESPONDENTS : ADV J PETER SC
INSTRUCTED BY :
FLUXMANS ATTORNEYS
Ref: Mr
C STRIME
[1]
See
Elias Mechanicos
Building & Civil Engineering Contractors (Pty) Ltd v Stedone
Developments (Pty) Ltd
2015
(4) SA 485
(KZD). But it has been held that in appropriate
cases leave may be granted notwithstanding that proceedings were
commenced
before the grant of leave (see
Standard
Bank of South Africa Limited v Dalhousie Land Corporation (Pty) Ltd
and another
(unreported
decision – GLD Case No 2014/42541);
African
Bank Corporation of Botswana Limited v Kariba Furniture
Manufacturers (Pty) Ltd and others
2013
(6) SA 471
(NGP) at para 7.)
[2]
Rule
10(3). See, also, Erasmus Superior Court Practice (2 ed)
D1-128 and cases there cited.