THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 543/2021
In the matter between:
PFC PROPERTIES (PTY) LTD First Appellant
and
THE COMMISSIONER FOR THE
SOUTH AFRICAN REVENUE
SERVICES First Respondent
TIANJIN PENGBO WEIYE
SA (PTY) LTD Second Respondent
(previously 21 PORTLAND ROAD PMB (Pty) Ltd)
(Registration Number 2008/010786/07)
THE REGISTRAR OF DEEDS,
PRETORIA Third Respondent
CLOETE MURRAY NO Fourth Respondent
ROSELYN CHANTAL NOEL NO Fifth Respondent
(in their capacities as Joint Provisional Trustees
Of the Insolvent Estate of Paul de Robillard)
and
Case No: 409/2022
In the matter between:
2
BRITA DE ROBILLARD NO First Appellant
CLIFFORD EDWARD ALEXANDER NO Second Appellant
(in their capacities as Trustees of the De Robillard Family Trust)
and
PFC PROPERTIES (PTY) LTD First Respondent
(Registration Number: 2003/026791/07)
THE COMPANIES AND INTELLECTUAL
PROPERTY COMMISSION Second Respondent
THE COMMISSIONER FOR THE
SOUTH AFRICAN REVENUE
SERVICES Third Respondent
CLOETE MURRAY NO Fourth Respondent
ROSELYN CHANTAL NOEL NO Fifth Respondent
(in their capacities as Joint Provisional Trustees
Of the Insolvent Estate of Paul de Robillard)
Neutral citation: PFC Propert ies (Pty) Ltd v Commissioner for the South
African Revenue Services and Others (Case no 543/21) and Brita De
Robillard NO and Another v PFC properties (Pty) Ltd and Others (Case No
409/22) [2023] ZASCA 111 (21 July 2023)
Coram: SCHIPPERS, MBATHA, HUGHES and WEINER JJA
and UNTERHALTER AJA
Heard: 15 May2023
Delivered: 21 July 2023
Summary: Winding-up application – business rescue application launched
thereafter – stratagem to avoid winding -up – business rescue application an
abuse of court process – applicants in business rescue application non-suited
– winding-up order correctly granted.
3
_____________________________________________________________
ORDER
_____________________________________________________________
On appeal from: The Gauteng Division of the High Court, Pretoria, case no
543/2021 (Van der Schyff J sitting as court of first instance);
The KwaZulu-Natal Division of the High Court, Pietermaritzburg , case no
409/2022 (Moodley J sitting as court of first instance):
1 Case no 543/2021: The appeal is dismissed with costs, including the
costs of two counsel, where so employed.
2 Case no 409/2022 : The appeal is dismissed with costs, including the
costs of two counsel, where so employed.
_____________________________________________________________
JUDGMENT
_____________________________________________________________
Weiner JA (Schippers, Mbatha and Hughes JJA and Unterhalter AJA
concurring)
Introduction
[1] Two related matters came before this Court on appeal. The first
(case no 543/2021) concerned an appeal against a winding -up order granted
against the appellant, PFC Properties (Pty) Ltd (PFC), in favour of the
first respondent, the Commissioner for the South African Revenue Services
(SARS). The winding-up order was granted by the Gauteng Division of the
4
High Court, Pretoria (Pretoria High Court ). The appeal is with the leave of
that court.
[2] The second matter (case no 409/2022) concerned a business rescue
application brought in the KwaZulu-Natal Division of the High Court,
Pietermaritzburg ( Pietermaritzburg High Court ), after the launch of the
winding-up application, by Mrs Brita De Robillard NO and Mr Clifford
Edward Alexander NO , the trustees (DRFT trustees) of the De Robillard
Family Trust, the sole shareholder of PFC, to place PFC into business rescue
(the business rescue application). The DRFT trustees applied for a
postponement of the application, which was refused . The business rescue
application was thereafter dismissed. The appeal, which is with the leave of
the Pietermaritzburg High Court, is against both these orders.
[3] In opposing the winding-up application, PFC relied on s 131(6) of the
Companies Act 71 of 2008 (the Act), which provides that the launch of a
business rescue application automatically suspends the winding -up
proceedings, until the business rescue application is adjudicated upon.1
Factual overview
[4] PFC is a property and asset owning company. Mr Paul De Robillard
was a director of PFC until 28 February 2011. Mrs Britta De Robillard, his
1 Section 131(6) provides:
‘If liquidation proceedings have already been commenced by or against the company at the time an
application [for business rescue] is made in terms of subsection (1), the application will suspend those
liquidation proceedings until—
(a) the court has adjudicated upon the application; or
(b) the business rescue proceedings end, if the court makes the order applied for.’
5
wife, was a director from 1 March 2012 until 24 November 2020. SARS had
conducted an audit on PFC for the tax periods 2007/1 1 and 2011/01 to
2018/12 in respect of VAT and income tax and had issued revised assessments
totalling over R52 million in respect of VAT and over R5 million in respect
of income tax.
[5] In the 2010 tax year, PFC commenced with the construction of a
residential home situated in the Serengeti Golf and Wild life Estate
(the Serengeti property) in Gauteng. SARS was informed that this was a
property development by PFC and numerous VAT claims were submitted to
SARS in respect of this development. However, Mr and Mrs De Robillard
utilised this property as their matrimonial home.
[6] In September 2012, SARS informed Mr De Robillard that it held him
personally liable for customs and excise related debts incurred by a company
styled Doltek Enterprises (Pty) Ltd (Doltek), in the amount of over
R89 million.2 SARS has been engaged in litigation with Mr De Robillard
since 2012.
[7] On 7 November 2012, Mr De Robillard brought an urgent application
to interdict SARS from collecting the se debts, pending finalisation of an
action for declaratory relief (the action). This action was instituted in
March 2013, but no steps were taken by Mr De Robillard to prosecute it.
2 In terms of s 103 of the Customs and Excise Act 91 of 1964.
6
[8] When construction of the Serengeti property was completed in 2014,
PFC claimed input tax on the construction and development costs. In August
2018, SARS issued a letter of audit findings stating that the input tax claimed
was of a private nature and any expenses incurred would be disallowed. In
September 2019, the representatives of PFC, Mani Financial Services (MFS),
requested reasons for SARS’ findings.
[9] On 23 September 2019, SARS furnished PFC with the reasons for its
audit findings. No response w as received to the letter . SARS then issued
letters confirming the finalisation of the VAT and income tax audits. PFC filed
an objection on 14 November 2019. On the same day , SARS received a
written request on behalf of PFC to suspend payment of the debts. PFC did
not tender any security and the suspension was refused.
[10] PFC submitted a supplementary request for the suspension of payment
of its tax debt on 13 December 2019, and offered security to SARS. It
described itself as ‘an asset holding company [which] constructs and develops
properties for the reselling in the property market’. PFC undertook not to
dispose of the Serengeti property, as well as two other properties in Dainfern
and Douglasdale. Mr De Robillard stated that the properties were ‘immovable
properties and there is no risk of dissipation of assets, pending the finalisation
of the dispute resolution provided for in Chapter 9 of the TAA.3 Furthermore,
[PFC] is prepared to grant SARS the right to make an endorsement against the
properties owned by [PFC] to the effect that the properties will not be sold, or
3 Tax Administration Act 28 of 2011.
7
if sold, that the [proceeds] will be kept in trust until the dispute resolution
process has been finalised’.
[11] SARS requested details of the properties a nd their values, which PFC
provided. On 18 February 2020, MFS, acting on behalf of PFC, undertook to
hold any proceeds of the sale of any of the properties in trust , pending the
outcome of the objections in the tax matters. SARS granted the suspension,
but, due to an oversight, did not register any endorsements against the
properties.
[12] Mr De Robillard did not proceed with the action instituted in 2013.
SARS thus enrolled the matter for hearing. In July 2020, seven years after the
action was instituted, Mr De Robillard withdrew it and tendered SARS’ costs.
The withdrawal of the action enabled SARS to recover the outstanding
amount from Mr De Robillard and in September 2020, SARS demanded
payment of R148 381 928.26. Payment was not forthcoming and on
3 November 2020, SARS applied to sequestrate Mr De Robillard.
[13] Mr De Robillard did not file an answering affidavit dealing with the
merits of the sequestration application. He filed a ‘preliminary answering
affidavit’ with a counter-application to stay the sequestration application until
the interdict granted in 2012 (referred to in para 7) was set aside. He could not
show that the interdict had been granted. Unable to prove these allegations,
his counter-application was dismissed. On 3 November 2020, a provisional
8
sequestration order was granted against Mr De Robillard. It was confirmed on
24 May 2021.4
[14] The f ourth respondent, Ms Roselyn Chantal Noel and the fifth
respondent, Mr Cloete Murray , were appoin ted as joint trustees in the
insolvent estate of Mr De Robillard 5 (the t rustees). On 9 December 2020,
Mr Murray visited the Serengeti property and was informed by the
De Robillards, who were still residing there, that PFC was no longer the owner
of the Serengeti property. It had been sold and transferred to the second
respondent, Tianjin Pengbo Weiye SA (Pty) Ltd for R11,5 million in
November 2020, despite being valued at R50 million. Only R1 million of the
purchase price had been paid to PFC. Mr Murray reported this to SARS.
[15] Despite having given SARS security in relation to the properties and its
undertaking that if they were sold, the proceeds would be kept in trust, PFC,
acting through Mr De Robillard, embarked upon a campaign to strip itself of
all its assets against which a creditor could levy execution . In particular, it
sold all three immoveable properties which it had undertaken not to dispose
of. In addition, it disposed of a luxury yacht valued at R45 million in PFC’s
2019 financial statements. It was sold for R12 million. Another yacht valued
at R13 million was sold for R570 000.
[16] As a result of this fraudulent conduct and in the absence of any security,
SARS informed Mr De Robillard, in February 2021, that it was withdrawing
4 An application for leave to appeal is pending in the Pietermaritzburg High Court.
5 Previously the joint trustees were Cloete Murray NO and Roselyn Chantal Noel NO cited as the fourth and
fifth respondents respectively. At the time of the hearing, Cloete Murray had died and Ms Noel was, in terms
of an unopposed amendment, cited as the sole trustee and fourth respondent.
9
the suspension of payment of PFC’s VAT and income tax. No response was
received to this letter and the suspension of payment was withdrawn. The
objection to the tax assessments was also disallowed by SARS on
11 February 2021.
[17] SARS launched the winding-up application against PFC on
26 February 2021. It was set down for hearing on 23 March 2021. On
19 March 2021, the fourth and fifth respondents in their capacity as the
trustees of the insolvent estate of Mr De Robillard, launched an urgent
application to intervene in the proceedings to wind-up PFC. They requested
that PFC be finally or alternatively provisionally wound-up by the court. The
intervention application was granted and the applications were, by agreement,
removed from the roll and re -enrolled for hearing in the urgent court on
6 April 2021. Times for filing of affidavits were agreed and PFC had to file
its answering affidavit by 23 March 2021.
[18] PFC, despite the agreement , failed to file opposing pape rs in the
winding-up application. Shortly after the winding-up proceedings had
commenced, PFC’s registered address was suddenly changed from Gauteng,
to an address within the jurisdiction of the Pietermaritzburg High Court. And
on 30 March 2021, a few days before the hearing of the winding -up
application, the DRFT trustees launched the business rescue application in the
Pietermaritzburg High Court.
[19] One court day prior to the hearing of the winding-up application, PFC’s
attorney filed an affidavit dated 1 April 2021. He contended that, in terms of
s 131(6) of the Act, SARS was precluded from proceeding with the winding-
10
up application, because the business rescue application automatically
suspended the winding-up proceedings until the former application was
adjudicated. PFC failed to deal at all with the allegations in the founding
papers in the winding-up application.
[20] SARS sought leave, in terms of s 133(1)(b) of the Act,6 to proceed with
the winding-up application in the Pretoria High Court. It submitted that the
court had a discretion in terms of that section of the Act to proceed with the
winding-up application. There was no answer to the facts stated in the
winding-up application. After dealing with the submissions of the parties, a
final winding up order was granted on 13 April 2021.
[21] PFC’s argument in the winding -up application was essentially that in
terms of s 131(6) of the Act, the business rescue application in th e
Pietermaritzburg High Court suspended the liquidation application, because
business rescue proceedings only begin once the court makes an order to that
effect in terms of s 131(1) of the Act. Accordingly, so it was argued, the
liquidation application could not proceed in accordance with s 133 of the Act.
But as is shown below, the business rescue application was a stratagem: the
DRFT trustees failed to make out a case that it was just and equitable to place
PFC under supervision; and there was simply no prospect of rescuing PFC ,
which had disposed of all its assets. For these reasons, and i n view of the
decision to which I have come, it is not necessary to consider the proper
6 Section 133(1) provides: ‘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;
. . .’
11
interpretation of the relevant sections of t he Act or the submissions of the
parties in that regard.
[22] SARS and the trustees filed detailed answering affidavits in the
business rescue application. Unsurprisingly, the DRFT trustees did not file
any affidavit in reply to the facts stated in the answering affidavit s, more
specifically, that PFC, an asset holding company, had disposed of all its assets;
that it was factually insolvent; and that in its financial statements, it had falsely
created the impression that the company could be rescued. The DRFT trustees,
predictably, failed to en rol the business rescue application for hearing and
SARS applied for the application to be heard on 8 October 2021.
[23] On 7 September 2021, consistent with their stratagem, the DRFT
trustees filed an application to have the matter postponed on the basis that an
appeal was pending against the winding-up order, which rendered the business
rescue application moot, alternatively not ripe for hearing. The appeal, they
argued, would dispose of the legal uncertainty concerning the interpretation
of ss 131, 132 and 133 of the Act and this would have a material bearing on
the business rescue application. The DRFT trustees also submitted that the
business rescue application had, by ‘implication or inferential reasoning’ ,
been terminated and converted to winding-up proceedings when the Pretoria
High Court granted the winding -up order. The trustees disputed this and
contended that the business rescue application had to be decided by the
Pietermaritzburg High Court.
[24] The Pietermaritzburg High C ourt held that the pending appeal of the
winding-up order did not preclude it from determining the business rescue
12
application. It took into account that the timing of the business rescue
application was cause for concern; and that the affidavits filed by SARS and
the trustees, to w hich there was no response, were a ‘reliable and useful
indication to assess the bona fides’ of the DRFT trustees and the prejudice to
the other parties. In the light of the prejudice that PFC’s creditors would suffer
on account of delay; the lack of prosp ects of success of the business rescue
application; and the authorities,7 the application for a postponement was
refused with costs. PFC then did not proceed with the business rescue
application and its counsel left the court.
Was the business rescue application an abuse of process?
[25] In this Court, counsel for the parties were referred to the recent decision
of the Constitutional Court in Villa Crop Protection (Pty) Ltd v Bayer
Intellectual Property GmbH ,8 and asked to address the following question:
Whether the conduct on the part of PFC and the trustees of the DRFT in
launching the business rescue application , constituted an abuse of process .
More specifically, the question was whether the DRFT trustees should be non-
suited if it is found that the business rescue application was launched solely
to delay or disrupt the winding-up proceedings; and consequently, whether it
could have the effect of suspending those proceedings in terms of s 131(6) of
the Act.
7 Lekolwane and Another v Minister of Justice and Constitutional Development [2006] ZACC 19; 2007 (3)
BCLR 280 (CC) para 17.
8 Villa Crop Protection (Pty) Ltd v Bayer Intellectual Property GmbH [2022] ZACC 42; 2023 (4) BCLR 461
(CC).
13
[26] The purpose of business rescue proceedings as stated in s 128(1)(b)(iii)
of the Act,9 is to facilitate the rehabilitation of a company that is financially
distressed. One of the prerequisites for an order placing a company under
supervision is that, in terms of s 131(4)(a) of the Act ,10 there must be a
reasonable prospect of rescuing the company. 11 Further, it must be just and
equitable to place it under supervision.
[27] Business rescue proceedings are aimed at restoring a company to
solvency, and are not to be abused by a company with no pr ospects of being
rescued but mainly to avoid a winding -up or to obtain some respite from
creditors.12 In Van Staden and Others NNO v Pro-Wiz (Pty) Ltd,13 this Court
stated:
‘It has repeatedly been stressed that business rescue exists for the sake of rehabilitating
companies that have fallen on hard times but are capable of being restored to profitability
or, if that is impossible, to be employed where it will lead to creditors receiving an
enhanced dividend. Its use to delay a winding-up, or to afford an opportunity to those who
9 Section 128(1)(b)(iii): ‘“business rescue” means proceedings to facilitate the rehabilitation of a company
that is financially distressed by providing for—
…
(iii) the development and implementation, if approved, of a plan to rescue the company by restructuring its
affairs, business, property, debt and other liabilities, and equity in a manner that maximises the likelihood of
the company continuing in existence on a solvent basis or, if it is not possible for the company to so continue
in existence, results in a better return for the company’s creditors or shareholders than would result from the
immediate liquidation of the company;
10 Section 131(4)(a): After considering an application in terms of subsection (1), the court may — (a) make
an order placing the company under supervision and commencing business rescue proceedings, if the court
is satisfied that— (i) the company is financially distressed; (ii) the company has failed to pay over any amount
in terms of an obligation under or in terms of a public regulation, or contract, with respect to emp loyment-
related matters; or (iii) it is otherwise just and equitable to do so for financial reasons; and there is a reasonable
prospect for rescuing the company.’
11 Oakdene Square Properties (Pty) Ltd and Others v Farm Bothasfontein (Kyalami) (Pty) Ltd a nd Others
[2013] ZASCA 68; 2013 (4) SA 539 (SCA); [2013] 3 All SA 303 (SCA) para 29.
12 ABSA Bank Limited v Newcity Group (Pty) Ltd ; Cohen v Newcity Group (Pty) Ltd and Another [2012]
ZAGPJHC 144; [2013] 3 All SA 146 (GSJ) para 20 where Sutherland DJP held: ‘Moreover, in this regard,
the risk of abuse or manipulation of the rescue application process, through “un-genuine” applications to
procure an illegitimate immunity must be guarded against.’
13 Van Staden and Others NNO v Pro-Wiz (Pty) Ltd [2019] ZASCA 7; 2019 (4) SA 532 (SCA).
14
were behind its business operations not to account for their stewardship, should not be
permitted’.14
[28] In Villa Crop the Court dealt with the fate of proceedings launched by
a party with an ulterior motive. Unterhalter AJ espoused the position as
follows:
‘An abuse of process can occur in a variety of ways. The litigation may be frivolous or
vexatious. A litigant may seek to use the legal process for an ul terior purpose or by
recourse to conduct that subverts fundamental values of the rule of law. The behaviour of
the litigant may be so tainted with turpitude that the court will not come to such a litigant’s
aid. The unclean hands doctrine references this latter type of abuse. It is the abusive conduct
of the litigant that, in a proper case, may warrant the exercise of the court’s power to non-
suit such a litigant. The court does so, even though the litigant claims a right that they
would vindicate in the court proceedings. For this reason, the power is to be exercised with
great caution. Put simply, the court enjoys the power to safeguard the integrity of its
process. The court will only exercise this power upon a careful consideration of the
prejudice that this may cause to the abusive litigant, and, in particular, the harm that may
be occasioned to a litigant whose claim of right will not be decided by the court. But the
court’s power to prevent the abuse of its process is not determined by the right that t he
abusive litigant claims.’15 (Emphasis added.).
[29] In my view, and for the reasons set out below, the conduct of the DRFT
trustees in launching the business rescue applicatio n amounts to an abuse of
process as described in Villa Crop. The facts show that from the outset, the
launch of the business rescue application was a stratagem and that the DRFT
trustees had no intention of prosecuting that application to its conclusion. To
begin with, the address of PFC’s registered office was del iberately changed
14 Ibid para 22, emphasis added.
15 Villa Crop fn 8 para 77.
15
from Gauteng to KwaZulu-Natal, so that the business rescue application could
be brought in the Pietermaritzburg High Court. In the founding affidavit the
DRFT trustees baldly alleged that SARS’ claim in the liquidation application
that PF C had defrauded SARS, by falsely claiming VAT input expenses
relating to the Serengeti property and disposing of its assets in suspicious
circumstances, were ‘unsubstantiated and based on speculation’. What the
DFRT trustees did not disclose to the court, was that PFC had never answered
SARS’ allegations concerning its fraudulent VAT claims and the dissipation
of its assets, despite its undertaking to file opposing papers in the liquidation
application. That undertaking suggests that PFC had a defence to th e
liquidation application and was thus not insolvent – which was not disclosed
to the Pietermaritzburg High Court.
[30] Next, the DRFT trustees sought to explain away Mr De Robillard’s
claim for some R93 million against PFC, recorded as such in its financial
statements from 2011 to 2019 . Regarding this claim and recordal , i n the
founding affidavit Mrs De Robillard said: ‘I can categorically state that the
entry is incorrect’; and that it was the result of ‘an incorrect journaling
method’. This assertion was unsupported by any document or affidavit by the
relevant accountant, to explain how the so-called incorrect entry came about.
Mrs De Robillard attached draft financial statements of PFC for the year
ending 29 February 2020, which instead recorded Mr De Robillard as a debtor
of PFC in an amount of R37 million. And this, when Mrs De Robillard stated
under oath that she knew nothing about the affairs of PFC, at an enquiry in
terms of ss 417 and 418 of the Act, into the affairs of Doltek , a company of
which Mr De Robillard was a director. It too had been liquidated by SARS.
16
[31] What is more, the DRFT trustees knew or ought to have known that the
business rescue application had no prospect of success. PFC's very existence
– if it was ever a genuine asset holding company – was destroyed by the
dissipation of all of its assets. It was factually and commercially insolvent.
Yet in the founding affidavit the DRFT trustees claimed that ‘the purchaser of
the property has agreed to re -transfer it to PFC’. This allegation was made
solely to bolster PFC's financial status and to create the impression that i t
could be rescued. So too, the new allegation by Mrs De Robillard that Mr De
Robillard was never a creditor of PFC. Other entries in PFC’s 2020 financial
statements seeking to demonstrate that PFC could be rescued, were also
contrary to figures presented in its previous financial statements.
[32] Crucially, both SARS and the trustees filed comprehensive opposing
affidavits in the business rescue application – which were never answered. On
the Plascon-Evans16 rule, an order for business rescue could not be granted on
the facts. And the DRFT trustees were never going to file a replying affidavit.
They failed to enrol the application for hearing. Instead, they filed an
application for its postponement. This was part of the stratagem: to advance a
technical argument – devoid of any factual foundation that PFC could be
rescued – that the application was either moot or not ripe for hearing, so as to
delay (i) the winding-up application; (ii) any enquiry into the stewardship of
PFC by the De Robillards; and (iii) the payment of the tax liabilities of PFC.
[33] This is buttressed by the fact that when the application for a
postponement was refused, counsel for PFC informed the court that they ‘had
16 Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A).
17
no instructions’ to argue the business rescue application, and left the court.
This step enabled PFC to apply for leave to appeal purely on the technical
argument, and is the clearest indicator that the DRFT trustees had no intention
of prosecuting that application, and that it was not brought bona fide. In these
circumstances, there can be no question of any prejudice to PFC because its
claim for business rescue was not de termined by the Pietermaritzburg High
Court; or that its appeal against the refusal of the postponement of the business
rescue application, is not decided by this Court.17
[34] All of this explains why the foundation of the business rescue
application comprises the most perfunctory assertion: to pursue an app eal in
respect of PFC ’s liability to SARS which, if successful, would be to the
benefit of PFC’s creditors. On its own version, PFC owes SARS R16 million,
which it is unable to pay. So, even if a tax appeal were to succeed (SARS
denied that it has any merit) there would still be a large tax debt due to SARS.
In any event, an appeal could still be pursued by a liquidator. Apart from this,
PFC owes R93 million to Mr De Robillard, claimed by the trustees of his
insolvent estate.
[35] Counsel for the DRFT trustees conceded in this Court that the case for
business rescue is ‘thin’. That is an overstatement. PFC failed to make out a
case that it could be rescued let alone profitable, or that creditors wou ld
receive an enhanced dividend. As was said by Brand JA regarding the
prospect of rescuing a company:
‘It must be a reasonable prospect – with the emphasis on “reasonable” – which means that
it must be a prospect based on reasonable grounds. A mere speculative suggestion is not
17 Villa Crop fn 8 para 77.
18
enough. Moreover, because it is the applicant who seeks to satisfy the court of the prospect,
it must establish these reasonable grounds in accordance with the rules of motion
proceedings which, generally speaking, require that it must do so in its founding papers.’18
[36] From what is set out above, it is clear that t he DRFT trustees have
sought to use the legal process provided for companies which may
legitimately be rescued, for an ulterior purpose – to thwart the winding -up
proceedings and the consequences for the De R obillards that may arise
therefrom. T his stratagem, as stated in Villa Crop , ‘subverts fundamental
values of the rule of law’.19 The conduct of the DRFT trustees and PFC is so
tainted with impropriety that this Court must use the power it has to ‘safeguard
the integrity of its process’.20
[37] In so acting, the power of this Court to non-suit the DRFT trustees is
warranted. As a consequence, their ill-fated application should not have been
entertained by reason of its use in a scheme of abuse. Although the application
was correctly dismissed by the Pietermaritzburg high court, it fails in this
court, on appeal, for different reasons.
[38] PFC sought to oppose the liquidation application on the basis of the
moratorium provided for in s 131(6) of the Act. But the legislature could not
have intended that a business rescue application, tainted by abuse, would have
that effect.21 In essence, because the DRFT trustees were non -suited for the
18 Oakdene Square Properties fn 11 para 29.
19 Villa Crop fn 8 para 77.
20 Ibid.
21 Oakdene Square Properties fn 11 paras 32-33; Gormley v West City Precinct Properties (Pty) Ltd and
Another, Anglo Irish Bank Corporation Ltd v West City Precinct P roperties (Pty) Ltd and Another [2012]
ZAWCHC 33 paras 12-15.
19
reasons set out above, the doomed business rescue application was not ‘made’
as envisaged in s 131(6).22 Thus, the moratorium did not come into operation
and did not suspend the winding up proceedings. That being so, there was no
impediment to the winding-up proceedings.
[39] It is clear that PFC is unable to pay its debts, and is commercially and
factually insolvent. Its assets had been siphoned off and dissipated; and it had
lost i ts substratum. It was not conducting any business activities. Certain
dispositions of its property could be impeached and several transac tions
needed to be investigated. It was just and equitable that it be wound up. The
Pretoria High Court’s decision to grant a final order of liquidation is therefore
unassailable.
[40] The following order is therefore issued:
1 Case no 543/2021: The appeal is dismissed with costs, including the
costs of two counsel, where so employed.
2 Case no 409/2022: The appeal is dismissed with costs, including the
costs of two counsel, where so employed.
____________________
WEINER JA
JUDGE OF APPEAL
22 Lutchman NO and Others v African Global Holdings (Pty) Ltd and Others: African Global Holdings (Pty)
Ltd and Others v Lutchman NO and Others [2022] ZASCA 66; [2022] 3 All SA 35 (SCA) ; Nel NO and
Others v Astrotail 109 (Pty) Ltd and Another [2022] ZAGPPHC 873 para 11.
20
Appearances
For appellants: P Stais SC (with J Brewer)
Instructed by: Smit Sewgoolam Inc, Johannesburg
McIntyre Van Der Post, Bloemfontein
For first and third
respondents: M P Van der Merwe SC (with L G Kilmartin)
Instructed by: MacRobert Inc, Pretoria
Lovius Block Attorneys, Bloemfontein
For fourth and
fifth respondents: P J Wallis SC (with L K Olsen)
Instructed by: Cox Yeats Attorneys, Durban
Symington & De Kok, Bloemfontein