About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
2015
>>
[2015] ZASCA 199
|
|
Newton Global Trading (Pty) Ltd v Da Corte (104/15) [2015] ZASCA 199 (2 December 2015)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
Reportable
Case
No: 104/15
In
the matter
between:
NEWTON
GLOBAL TRADING (PTY) LTD
(Under
Business
Rescue)
Appellant
and
EDDIE
DA CORTE
Respondent
Neutral
citation:
Newton
Global Trading (Pty) Ltd v Da Corte
(104/15)
[2015] ZASCA 199
(02 December 2015)
Coram:
Mpati
P, Lewis, Cachalia, Saldulker and Dambuza JJA
Heard:
10
November 2015
Delivered:
02
December 2015
Summary:
Company
Law - Business rescue proceedings - resolution to commence business
rescue in terms of s 129(1) of
Companies Act 71 of 2008
-
non-compliance by company with requirements of
s 129(3)
and (4) -
whether
locus
standi
of business rescue practitioner may be challenged when resolution not
set aside.
ORDER
On
appeal from
:
Gauteng
Division of the High Court, Pretoria (Fourie J, sitting as a court of
first instance) judgment reported
sub
nom Newton Global Trading (Pty) Ltd v Da Corte & another
2015 (3) SA 466
(GP).
1
The appeal succeeds with costs, which shall include the costs of two
counsel.
2
The order of the court below is set aside and replaced with the
following:
‘
The
point
in
limine
is dismissed with costs.’
3
The matter is remitted to the court below for it to deal with the
other defences and/or the merits.
JUDGMENT
Mpati
P (Lewis, Cachalia, Saldulker and Dambuza JJA concurring)
[1]
At issue in this appeal is the effect of non-compliance with the
provisions of s 129 of the Companies Act
71 of 2008
(the Act) which relate to business rescue proceedings. The appellant
is a registered company that conducts the business
of chrome
processing. Its chrome processing plant is situated on certain leased
properties known as P
ortion
49 (a
portion of Portion 4) of the farm Bokfontein 448 Rietfontein Division
JQ, Province of North West, and Portion 50 (a portion
of Portion 17)
of the same farm (the leased premises). Because of financial
difficulties the appellant, by resolution dated 31
May 2013,
commenced voluntary business rescue, under supervision, in terms of s
129(1) of the Act. According to the minutes of
the meeting at which
the resolution was adopted Mr Re-Marius Hamel was appointed as the
business rescue practitioner.
[2]
On 10 July 2014 the appellant launched an urgent application in the
Gauteng Division of the High Court, Pretoria, against the
respondent
seeking an order interdicting the latter, or any person in his
employ, from entering the leased premises and prohibiting
them from
‘removing any mineral related material or any tangible object’
from it. In terms of the order sought the
respondent ‘and all
persons relating to [him]’ would also be prohibited ‘from
operating any part of the Chrome
processing plant’ on the
leased premises. These prayers were contained in Part B of the Notice
of Motion. In Part A the same
order was sought, which, together with
other ancillary relief, would operate on an interim basis pending a
return date.
[3]
The application was opposed, mainly on the ground that on 8 May 2014
a close corporation named Macla Logistics CC (Macla Logistics)
purchased the leased premises and took occupation on the same date.
In addition, two points
in
limine
were raised in the respondent’s answering affidavit. The first
related to a non-joinder of certain parties. It was alleged
in the
answering affidavit that the entity that undertakes operations on the
leased premises, namely Macla Transport (Pty) Ltd
(Macla Transport)
and Macla Logistics that had spent a huge amount of money in getting
the chrome plant operational and had, as
purchaser, stepped into the
shoes of the original lessor, Mr Stols, should have been cited as
respondents in the application.
[4]
The second point
in
limine
related to the appellant’s alleged lack of
locus
standi
to institute the application proceedings. The parties agreed before
the court below (Fourie J) that the second point
in
limine
be adjudicated upon first as they believed it was dispositive of the
matter. The basis upon which the appellant’s
locus
standi
was challenged was an alleged failure by the appellant to comply with
the provisions of s 129 of the Act. The consequence of the
alleged
failure to comply with the provisions of s 129, so it was alleged in
the answering affidavit, was that the business rescue
proceedings
were a nullity and the appointed business rescue practitioner, who
deposed to the founding affidavit, lacked the necessary
standing to
act on behalf of the appellant. The court below found in favour of
the respondent on the second point
in
limine
and dismissed the application, with costs, including the costs of two
counsel. It subsequently dismissed the appellant’s
application
for leave to appeal. The appeal is with the leave of this court.
[5]
The relevant parts of s129, namely subsecs (3) and (4), read:
‘
(3)
Within five business days after a company has adopted and filed a
resolution, as contemplated in subsection (1), or such longer
time as
the Commission, on application by the company, may allow, the company
must –
(a)
publish
a notice of the resolution, and its effective date, in the prescribed
manner to every affected person, including with the
notice a sworn
statement of the facts relevant to the grounds on which the board
resolution was founded, and
(b)
appoint
a business rescue practitioner who satisfies the requirements of
section 138, and who has consented in writing to accept
the
appointment.
(4)
After appointing a practitioner as required by subsection (3)
(b)
,
a company must –
(a)
file
a notice of the appointment of a practitioner within two business
days after making the appointment; and
(b)
publish
a copy of the notice of appointment to each affected person within
five business days after the notice was filed.’
The
appellant’s resolution voluntarily to commence business rescue
and to appoint Mr Hamel as the business rescue practitioner
was
adopted on 31 May 2013 and filed with the Companies and Intellectual
Property Commission (Commission), on 5 June 2013. From
the
Commission’s date stamp affixed on it, the notice of the
appointment of the business rescue practitioner, in terms of
s
129(4)
(a)
,
appears to have been filed on 11 June 2013, three days out of time.
It was submitted in the respondent’s heads of argument
that the
appellant had failed or omitted to publish a copy of the notice of Mr
Hamel’s appointment as business rescue practitioner,
as is
required in terms of s 129(4)
(b)
of the Act, and omitted to publish a notice of the resolution to
commence business rescue in terms of s 129(3)
(a)
.
The appellant, therefore, did not strictly comply with the relevant
provisions of the Act.
[6]
Section 129(5) provides that if a company fails to comply with any
provision of subsecs (3) or (4) ‘its resolution to
begin
business rescue proceedings and place the company under supervision
lapses and is a nullity’. In his heads of
argument
counsel for the respondent, in supporting the judgment of the court
below, relied on certain decisions of the Gauteng
Division of the
High Court.
[1]
In
Madodza
the
court said (para 23):
‘
The
applicant argued that business rescue proceedings remain in effect
until a court with competent jurisdiction orders otherwise.
The
wording of sec 129(5) is clear, if there is no compliance the
business rescue proceedings are a nullity.’
In
that matter the applicant, which was under business rescue, brought
an urgent application to prohibit the Sheriff from removing
several
vehicles from its possession until the business rescue proceedings
had come to an end. However, it was common cause that
the applicant
had failed to appoint a business rescue practitioner within five days
after the business rescue proceedings had commenced.
There was
therefore non-compliance with the provisions of s 129(3)
(a)
of the Act. In addition to the application failing on a ground not
relevant for present purposes, it also failed on the basis that
the
business rescue proceedings were a nullity for its (the applicant’s)
failure to appoint a business rescue practitioner
within the required
time period.
[7]
In
Panamo Properties (Pty) Ltd & another v Nel & another
NNO
[2015] ZASCA 76i
2015 (5) SA 63
(SCA), this court (Wallis
JA, in a unanimous judgment), said the following on this very issue
(para 28):
‘
It
is helpful to start with what the Act says about the termination of
business rescue proceedings. The relevant provision for present
purposes is s 132(2)
(a)
(i),
which provides that business rescue proceedings end when a court sets
aside the resolution that commenced those proceedings.
In other
words, when a court grants an order in terms of s 130(5)
(a)
of
the Act, the effect of that order is not merely to set the resolution
aside, but to terminate the business rescue proceedings.
A
fortiori
it follows that until that has occurred, even if the business rescue
resolution has lapsed and become a nullity in terms of s 129(5)
(a)
,
the business rescue commenced by that resolution has not terminated.
Business rescue will only be terminated when the court sets
the
resolution aside. The assumption underpinning the various high court
judgments to the effect that the lapsing of the resolution
terminates
the business rescue process is inconsistent with the specific
provisions of the Act. None of those judgments referred
to s
132(2)
(a)(
i).’
(footnote omitted.)
And
later (para 29):
‘
If
there is non-compliance with the procedures to be followed once
business rescue commences, the resolution lapses and becomes
a
nullity and is liable to be set aside under s 130(1)
(a)
(iii).
In all cases the court must be approached for the resolution to be
set aside and business rescue to terminate.’
It
follows that in the present matter the business rescue proceedings
have not terminated and the appointment of the business rescue
practitioner remains extant until the resolution to commence business
rescue has been set aside.
[8]
Counsel for the respondent submitted, however, that the present
matter is distinguishable from
Panamo
on the facts. He contended that unlike in
Panamo
where
the applicant, who sought to have the resolution to commence business
rescue set aside, was an ‘affected person’,
[2]
the respondent in this matter is not. He is the sole member of Macla
Logistics and an innocent party who had had arms-length dealings
in
relation to the leased premises. And, the argument continued, once it
was established that he is not an ‘affected person’
it
follows that he was not barred by the provisions of s 130 of the
Act
[3]
from challenging the
appellant’s
locus
standi.
This must be so, the argument proceeded, because otherwise the Act
does not afford any protection to a person who is not an ‘affected
person’.
[9]
In my view, these submissions are fallacious. What is clear from
Panamo
is that as long as the resolution to commence business rescue has not
been set aside, the standing of the business rescue practitioner
appointed on the strength of that resolution cannot be challenged on
the ground of non-compliance with the procedural requirements
set out
in s 129 of the Act. And the fact that the respondent is not an
‘affected person’ cannot alter that position.
Moreover,
it could never have been in the Legislature’s contemplation
that a non-affected person could be in a better position
than an
affected person. It follows that the appeal must succeed.
[10]
There is one disturbing matter that needs mentioning. The appellant’s
heads of argument were filed in this court on 17
July 2015 together
with a copy of this court’s decision in
Panamo
.
The respondent’s heads were filed on 3 August 2015, but no
reference whatsoever was made to the
Panamo
decision, a copy of which had been made available to the respondent’s
legal representatives. The argument advanced in this
court relating
to the respondent being a non-affected party was not foreshadowed in
the respondent’s heads of argument. Both
the court and the
appellant’s legal team were taken by surprise. True, the point
was one raised as a point of law, which
may be raised at any time.
However, having had a copy of the
Panamo
judgment since at least July 2015, which, on the face of it,
decisively dealt with challenges to business rescue proceedings based
on non-compliance with the time periods (specified in s 129), one
would have expected an indication from the respondent of the
basis
upon which the present matter would be said to be distinguishable
from it. Counsel’s explanation for the respondent’s
failure to do so was that he had thought of the point only the
previous evening and therefore had no time to prepare supplementary
heads of argument covering it. It is regrettable that the members of
the court had not been afforded an opportunity to prepare
for the
argument raised by counsel for the respondent, which was the only
argument in the appeal.
[11]
As to the question of costs, counsel for the respondent contended
that since the point
in
limine
at issue was a good one at the time that it was raised before the
court below, a fair order would be one where the costs were to
be
costs in the main application. In my view, the point could not be a
good one simply because it had been upheld in more than
one decision
in the Gauteng Division. It has now been held not to be a good point.
I can find no reason why the costs should not
follow the result.
[12]
In the result the following order is made:
1
The appeal succeeds with costs, which shall include the costs of two
counsel.
2
The order of the court below is set aside and replaced with the
following:
‘
The
point
in
limine
is dismissed with costs.’
3
The matter is remitted to the court below for it to deal with the
other defences and/or the merits.
________________________
L
Mpati
President
APPEARANCES
For
the Appellants:
G C Muller S.C (with M S Mangolele)
Instructed by:
Hamel Attorneys,
Pretoria
Symington & De
Kok, Bloemfontein
For
the Respondent
F W Botes SC (with L W De Beer)
Instructed by:
Stemela & Lubbe
Incorporated, Pretoria
McIntyre & Van
Der Post, Bloemfontein
[1]
See
Madodza
(Pty) Ltd v Absa Bank Ltd & others
,
[2012] ZAGPPHC 165;
Homez
Trailers and Bodies (Pty) Ltd v Standard Bank of South Africa Ltd
,
[2013] ZAGPPHC 465; and
Vincemus
Investments (Pty) Ltd v Louhen Carriers CC & another
,
[2013] ZAGPPHC 520.
[2]
See s 128 for the
definition of an ‘affected person’.
[3]
Section 130(1)
(a)
reads:
‘Subject to subsection (2), at any time after the adoption of
a resolution in terms of section 129, until the adoption
of a
business rescue plan in terms of section 152, an affected person may
apply to a court for an order –
(a)
setting
aside the resolution, on the grounds that –
(i)
the
company has failed to satisfy the procedural requirements set out in
section 129, . . .’