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[2020] ZAGPJHC 347
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Bassani Mining (Pty) Ltd v Sebosat (Pty) Ltd and Another (191905/20) [2020] ZAGPJHC 347 (21 August 2020)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, JOHANNESBURG
(1)
REPORTABLE: NO/
YES
(2)
OF INTEREST TO OTHER JUDGES: NO/
YES
(3)
REVISED
DATE:
21 August 2020
Case
number:
191905/20
IN
THE MATTER BETWEEN:
BASSANI
MINING (PTY) LTD
Applicant
and
SEBOSAT
(PTY) LTD
First Respondent
MASHALA
RESOURCES (PTY) LTD
Second Respondent
HERMAN,
KURT
Third Respondent
ANDERSON,
ANDREA AVRIL
Fourth Respondent
JUDGMENT
BHOOLA
AJ:
Introduction
[1]
The applicant ("Bassani") seeks urgent interim relief
pendente lite
against the respondents in the form of an anti-dissipation order
restraining the respondents from alienating, encumbering or removing
directly or indirectly coal mined to the value of R 25 million from
the Wesselton mine ("the mine"), pending an action
for
damages against respondents to be brought by Bassani. In this
application Bassani also sought the return of its mining equipment
but the respondents made a "with prejudice" offer in
relation to the return of the equipment which has been accepted.
The
Respondents oppose the application on urgency and its merits.
Urgency
[2]
The essential facts giving rise to this application are not disputed
on the papers.
They are that:
2.1
Bassani and the second respondent, ("Sebosat"), entered
into a written agreement
("the subcontracting agreement")
on 19 February 2020. In terms of the agreement Bassani would conduct
coal-mining operations
on behalf of Sebosat at an agreed fee at the
Wesselton mine. The subcontracting agreement commenced on 20 February
2020 and Bassani
moved its equipment onto the mine and commenced
mining operations.
2.2
Bassani conducted the mining operations at the mine for three months,
for March, April and
May 2020. It is common cause that a dispute
arose between the parties, which led to Sebosat terminating the
subcontracting agreement
on 1 June 2020. Bassani has a claim against
Sebosat for unpaid invoices. Sebosat does not dispute that Bassani
has a claim against
it but is disputing the amount of that claim. It
relies on the failure to meet production targets in terms of the
subcontracting
agreement. The subcontracting agreement provides for
mediation and arbitration as dispute mechanisms. Bassani, however,
intends,
within 30 days of this application, to institute proceedings
in which it seeks damages in the sum of approximately R 17 million
against the respondents, on the basis that fraud was committed
against it by the third respondent ("Herman") and that
he
misused the juristic personalities of Sebosat and Mashala.
[3]
The deponent to the founding affidavit states that having regard to
the fraudulent
misrepresentations, the summary lockout of Bassani
from the mine, and the
mala fide
conduct of the respondents,
Bassani had to act urgently as there is a real risk that the
respondents will take every step in the
intervening period to
dissipate and/or diminish their assets in order to avoid the efficacy
of a court order and to leave it with
a hollow judgment should it
succeed in its damages claim. This, it is submitted, justifies
enrolment of this application on an
urgent basis in terms of Rule
6(12)(b) of the Uniform Rules of Court.
[4]
It is common cause that after the termination of the subcontracting
agreement Bassani
attempted to settle the dispute with Herman and
Sebosat. Bassani's founding affidavit states that there was in
principle agreement
as at 5 July 2020 for the termination of the
subcontracting agreement and the exit of Bassani. However, thereafter
Bassani's attorney's
attempts to obtain a response to the draft
settlement agreement sent on 29 June 2020 to Herman and his attorney
met with no responses.
Respondents allege however that a meeting was
held at the mine on 2 July 2020 and it is incorrect to allege that
respondents walked
away from settlement negotiations. Bassani alleges
it then received information from its attorneys on 29 July 2020 in
relation
to the allegedly fraudulent conduct of Herman, and acted
without delay to bring this application on 4 August 2020. There is no
indication on the facts that Bassani was dilatory in its institution
of these proceedings. However, the respondents oppose
urgency
and submit that urgency is self-created by Bassani. They allege that
Bassani relies on commercial urgency without setting
out the
appropriate allegations of fact and instead relies on mere assertions
as why it would not be able to obtain substantial
redress in due
course.
[5]
For the purposes of deciding the urgency of this matter I assumed
that Bassani's has
a
prima
facie
cause of action against the respondents which is good and that the
allegations of fraud were correct, in accordance with the approach
taken by Goldstone J in
Twentieth
Century Fox Film Corporation and another v Antony Black Films (Pty)
Ltd
[1]
,
to which I was referred by counsel for Bassani, Mr Eyles SC. Hence I
exercised my discretion to permit the matter to be enrolled
on the
basis of urgency.
The
requirements for an anti-dissipation interdict
[6]
There are various threshold requirements an applicant for an
anti-dissipation interdict
has to meet. The first of which, given the
nature of the order sought, are the standard requirements for an
interim interdict.
These are trite and include: [a] a
prima
facie
right
albeit open to some doubt, [b] a well-grounded fear of irreparable
harm to the applicant if the interim relief is refused
and the
ultimate relief is granted eventually, [c] the absence of a
satisfactory alternative remedy, and [d] the balance of convenience
favours the grant of interim relief:
Myflor
Investments (Pty) Ltd v Everett NO and Others
.
[2]
Counsel for the respondents, Mr Cassim SC, referred me to the
authority of
Knox
D’Arcy Ltd v Jamieson and Others,
[3]
which states that the requirement of absence of a satisfactory
alternative remedy (in an application for interim relief) does not
apply in the case of an anti-dissipation order.
[7]
The second threshold requirement to be met in order to obtain an
anti-dissipation
order, where the applicant does not have any special
claim to the respondent’s property, is for the applicant to
convince
the court that: the respondents are wasting or secreting
assets, or there exists a reasonable apprehension that the
respondents
are about to embark on such conduct; and save in
exceptional circumstances, it is demonstrated that there is an
intention on the
part of the respondents to defeat the applicant’s
claim :
Knox
D’Arcy Ltd and Others v Jamieson and Others.
[4]
[8]
In determining whether the requirements for an anti-dissipation
interdict have been
met the following important passage by Grosskopf
JA in
Knox D’Arcy Ltd v Jamieson and Others
, is of
particular importance:
"
As
to the nature of the interdict, this was dealt with by Stegmann J in
1994
(3) SA
at 706B707B and in 1995 (2) SA at 591A600F. The latter passage was
largely devoted to showing that it is not necessary for
an applicant
to show that the respondent has no bona fide defence to the action.
This conclusion was not attacked before us and
I agree with it. What
then must an applicant show in this regard? In the passages mentioned
above, Stegmann J quoted the relevant
cases in our law and I do not
propose dealing with all of them. For the most part they were decided
on their own facts without
providing any theoretical justification
for the interdict. However, in Mcitiki and Another v Maweni
1913 CPD
684
at 687 Hopley J stated the effect of earlier cases as follows:
'. . .
(T)hey all proceed upon the wish of the Court that the plaintiff
should not have an injustice done to him by reason of leaving
his
debtor possessed of funds sufficient to satisfy the claim, when
circumstances show that such debtor is wasting or getting rid
of such
funds to defeat his creditors, or is likely to do so.' See also
Bricktec (Pty) Ltd v Pantland
1977 (2) SA 489
(T) at 493EG.
The
question which arises from this approach is whether an applicant need
show a particular state of mind on the part of the respondent,
i.e
that he is getting rid of the funds, or is likely to do so, with the
intention of defeating the claims of creditors.
Having regard
to the purpose of this type of interdict, the answer must be, I
consider, yes, except possibly in exceptional cases.
As I have said,
the effect of the interdict is to prevent the respondent from freely
dealing with his own property to which the
applicant lays no claim.
Justice may require this restriction in cases where the respondent is
shown to be acting mala fide with
the intent of preventing execution
in respect of the applicant's claim. However, there would not
normally be any justification
to compel a respondent to regulate his
bona fide expenditure so as to retain funds in his patrimony for the
payment of claims (particularly
disputed ones) against him. I am not,
of course, at the moment dealing with special situations which might
arise, for instance,
by contract or under the law of insolvency. In
the judgment a quo Stegmann J dealt with this topic as a part of the
enquiry whether
the petitioners' claims for damages 'will not be a
satisfactory remedy in the absence of the interlocutory interdict in
securitatem
debiti' (1995 (2) SA at 637E638C).
In my
view this is not a correct way of looking at the matter. It is often
said that an interdict will not be granted if there is
another
satisfactory remedy available to the applicant. In that context a
claim for damages is often contrasted with a claim for
an interdict.
The question is asked: should the respondent be interdicted from
committing the unlawful conduct complained of, or
should he be
permitted to continue with such conduct, leaving the applicant to
recover any damages he may suffer?"
[9]
The test for an anti-dissipation interdict as has been set out by Van
der Linde J
in
Carsten v Kullmann
2018 JDR 0018 (GJ)
at
[33]
requires
consideration of the following issues :
[h]
ave
the applicants shown that the respondents are dissipating or
secreting their personal assets so as to render the applicants'
claim
hollow? Or have they at least shown that the respondents have
embarked on conduct that is calculated to produce that result?
My learned brother referred in regard to the test
for an anti-dissipation order to HERBSTEIN & VAN WINSEN, The
Civil Practice
of the High Courts of South Africa, 5th ed, p1488
(footnotes omitted) as follows :
"A
special type of interdict may be granted where a respondent is
believed to be deliberately arranging his affairs in such
a way as to
ensure that by the time the applicant is in a position to execute
judgment he will be without assets or sufficient
assets on a which
the applicant expects to execute. It is not a claim to substitute the
applicant's claim for the loss suffered,
but to enforce it in the
event of success in the pending action so that he will not be left
with a hollow judgment."
[10]
The proper approach in an application for interim relief such as the
present one is to take the
fact sets out by the applicants together
with any facts set out by the respondents, which the applicants
cannot dispute, and to
consider whether having regard to the inherent
probabilities the applicants should (not could) on those facts obtain
final relief
at the trial. Furthermore, although normally stated as a
single requirement, the requirement for a right
prima facie
established, though open to some doubt, involves two stages. Once the
prima facie
right has been assessed, that part of the
requirement which refers to the doubt involves a further enquiry in
terms whereof the
court looks at the facts set up by the respondent
in contradiction of the applicant's case in order to see whether
serious doubt
is thrown on the applicant’s case and if there is
a mere contradiction or unconvincing explanation, then the right will
be
protected. Where, however, there is serious doubt then the
applicant cannot succeed: see
Webster v Mitchell
1948(1)
SA 1186 (W) at 1189;
Gool v Minister of Justice and Another
1955 (2) SA 682
(C) at 688.
The
merits
[11]
The primary justification for the
relief sought is that Bassani was a victim of fraud committed by
Herman and Sebosat.
Bassani submits that until 29 July 2020, Herman misrepresented to it,
and it believed, that it had on 20 February
2020 entered into a
legitimate subcontracting agreement with Sebosat (represented by
Herman) and that Sebosat had a legitimate
main agreement with
Mashala. The main agreement was not produced by Herman at the time.
Mashala, it is common cause, had in fact
been under business rescue
from 20 November 2014 until 30 June 2020 and did not have a main
agreement with Sebosat at the time.
It is common cause that it was
only ratified after the business rescue was finalised, by Herman and
Anderson as shareholders and
directors of Masala. In these
circumstances, Bassani avers, only the business rescue practitioners
("BRPs") could have
authorised the mining operations at
Wesselton mine.
[12]
In this regard Bassani's counsel, Mr Eyles SC, referred to
section
140(1)(a)
of the
Companies Act, 71 of 2008
, which provides that
during a company’s business rescue proceedings, the BRPs have
full management and control of the company
in substitution for its
board and pre-existing management: see
Murgatroyd
v Van den Heever NO and Others
.
[5]
In
addition, the
Companies Act also
provides that the board of directors
operates under the supervision of the BRPs, and
section 137
(4)
[6]
expressly provides that any action undertaken by a board, which the
BRPs did not authorise, is void.
[7]
Thus, Mr Eyles submitted, for Mashala to have commenced legal mining
activity at Wesselton it was necessary for the BRPs to have
authorised the mining activity. It also appears from the replying
affidavit that the BRPs had warned Herman about the mining activities
being illegal. Mr Eyles submitted that for Mashala to have appointed
Sebosat as a contractor, the BRPs must either have appointed
Sebosat
themselves or they must have approved the appointment of Sebosat. It
is common cause that this was not done.
[13]
Bassani avers that Herman had therefore fraudulently concluded the
subcontracting agreement with
it on behalf of Sebosat, in the absence
of a main agreement with Mashala. As a result of the subcontracting
agreement (which
Bassani believed to be valid), it had mined
coal to the value of R 94 million, and when it queried payment of its
outstanding invoices
the subcontracting agreement was terminated and
it was summarily locked out of the mine. Herman had furthermore
grossly abused
the provisions of the
Companies Act and
of the
separate juristic personalities of Sebosat and Mashala. He
represented to Bassani that he was entitled to represent Mashala.
However, since it is common cause that Mashala is the holder of the
mining right over the mineral area at the Wesselton mine, Mr
Eyles
submitted, the only person that could (a) mine at Wesselton or (b)
appoint a contractor or subcontractor to mine at Wesselton
was
Mashala. This is clear from the
section 11
consent granted by the
Director General of Mineral Resources
[8]
on 18 February 2020 under the Mineral and Petroleum Resources
management Act ("MPRDA")
Act No,
28 of 2002
.
It transferred the shareholding but did not authorise any person
other than Mashala to mine at Wesselton or to appoint a third
party
contractor or subcontractor to mine. Hence, neither Herman nor Steel
Eye (which is the holding company of Mashala, having
purchased 100%
of the shares in Mashala from Continental Trading) or anyone else
could authorise the mining at Wesselton mine.
[14]
It is further submitted that Herman had not only misrepresented the
true facts relating to Sebosat
and Mashala to Bassani, which induced
it to enter into the subcontracting agreement, but has also
fraudulently interposed Sebosat
as a beneficiary in the contractual
relationship in an unconscionable abuse of the juristic personality
to avoid Mashala being
held liable for the mining operations being
conducted By Bassani. Thus, Mashala has had the benefit of coal worth
about R94 million
mined by Bassani during March, April and May 2020.
Bassani submits that, in the circumstances, it has a
prima
facie
right to proceed with an action for damages against Herman, Sebosat
and Mashala.
[15]
In addition to relying on its
prima facie
right, Bassani also
submits that the balance of convenience favours the granting of the
interim interdict and that the prospects
of success favour it in the
damages claim. It submits further that it has a reasonable
apprehension of harm in that given the fraudulent
and
mala fide
conduct of Herman, he is now in control of Mashala as well as
Sebosat, and it is unlikely that it would be able to recover anything
at the conclusion of its damages action. There is, it submits, a real
prospect that that by the time it is to execute the judgment
there
will be no coal left and it will be left with a hollow judgment. It
submits that if interim relief is not granted Mashala
will continue
to dispose of the coal to shelf companies and they will on-sell the
coal and diminish the assets available for execution
in due course.
Herman, Sebosat and Mashala, it is alleged, have structured their
affairs in such a way that there will be layers
of shelf companies
which will lay claim to the coal which they are disposing off at the
rate of about 8000 tonnes per week. Mr
Eyles submits that the ongoing
sale of the coal diminishes the value of assets against which Bassani
can execute, should it be
successful in its damages claim. This will
leave it with a hollow judgment.
[16]
Counsel for the respondents, Mr Cassim SC, submitted that there is no
merit to the fraud allegations
whatsoever. Bassani was at liberty to
investigate the integrity and standing of Sebosat at the stage before
it concluded the subcontracting
agreement. Any averment moreover
relating to Mashala is irrelevant to the agreement between Bassani
and Sebosat, which stands on
its own. Insofar as Bassani relies on
the misrepresentation from Herman that induced it to enter into the
subcontracting agreement,
Mr Cassim submitted that a party relying on
misrepresentation must prove that the misrepresentation induced it so
to act. In this
case, the representation relied upon by Bassani is
not material and is unrelated to its obligations to Sebosat. In any
event, Herman
was a director of Steel Eye, which had acquired the
shareholding of Mashala on 28 February 2020 and on 8 November 2018
Continental
Coal, the shareholder in Mashala sold its shares and loan
account to Steel Eye subject to suspensive conditions being met.
Hence,
he did not misrepresent his authority to represent
Mashala. Respondents thus submit that no fraud has been committed and
in any
event on Bassani's version, it would have no recourse against
Mashala. Mr Cassim submitted that what Bassani is seeking is in fact,
security which would be
in terrorem
to Mashala and Steel Eye
(the latter not even being a party to the application), and is unfair
in circumstances where its claim
for services rendered is disputed
and where in any event it could under the subcontracting agreement
resort to expedited arbitration
to enforce its rights.
[17] Mr
Cassim submitted that the subcontracting agreement imposes no
obligation whatsoever upon Mashala in favour of Bassani, and
hence
there is no basis for an interim interdict against Mashala. In any
event there is no evidence in relation to [a] the disposal
of assets
with the intention to thwart Bassani’s claim, and [b] the
mala
fides
of Mashala. There is no evidence whatsoever that Mashala is
disposing of the coal in any other manner other than in the ordinary
course of business, or that it is being done without a fair value in
return to Mashala or that the proceeds from the sale of the
coal are
being hidden or diverted. Quite to the contrary, Mashala is disposing
of the coal in the ordinary course of business.
In these
circumstances Mr Cassim submitted that the requisite intention
required to prove dissipation is absent.
[18]
In any event, Mr Cassim submitted, Mashala has been misjoined to
these proceedings. It was not
responsible for the appointment of the
Bassani as a subcontractor, and by implication not responsible for
any of the alleged misrepresentations
made by Herman. There are in
fact no averments to the effect that that Mashala was a party to the
alleged fraud.
[19]
In relation to the averments that Herman had misused the corporate
personalities of Mashala and
Sebosat, Mr Cassim submitted that
Bassani at the very least is required to demonstrate some misuse or
abuse of the distinction
between the corporate entity and those who
control it, which misuse or abuse results in an unfair advantage to
the latter: see
HülseReutter
v Gödde
[9]
and
Nel
v Metequity Ltd.
[10]
There is no evidence that demonstrates that the affairs of Mashala
were conducted in a manner that maintained no distinguishable
corporate identity between Mashala and Sebosat. In fact, the
subcontracting agreement between Bassani and Sebosat makes it clear
that Sebosat is the contractor, Bassani is the subcontractor and
Mashala is the holder of the mining right. Mr Cassim submitted
further that the allegations of impropriety that have been made (and
which are disputed by the Respondents) were made in relation
to
Sebosat and Herman, neither of which exercised ownership or control
over Mashala at the time of the subcontracting agreement.
Moreover,
the fact that Herman and Anderson became directors of Mashala after
the conclusion of the subcontracting agreement, and
did not represent
it before that date (19 February 2020), does not
ipso
facto
result in an abuse of the corporate personality. In any event they
confirmed that they ratified the agreement between Sebosat and
Mashala, again supporting the respondents' contentions that the
companies are separate juristic entities. Ownership of Mashala
moreover, it is common cause, vests in Steel Eye Trading Ltd, which
is not cited as a party to the application and no allegations
of
impropriety have been made against it.
Conclusion
[20]
It seems to me that there is some substance, at least on a
prima
facie
basis, to a damages claim against Herman and/ or Sebosat
arising out of the alleged fraud, and that there are allegations of
illegal
mining against Mashala that fall to be proven. However, I am
not required to determine these issues in this application. They will
undoubtedly be fully dealt with in the damages claim. For present
purposes I am required to determine whether the test for an
anti-dissipation interdict has been met. It is common cause,
alternatively not seriously disputed that [a] the coal is being mined
by Sebosat and Mashala and disposed of in the ordinary course of
business, and that [b] the coal mined by Bassani has already been
sold. In the founding affidavit reliance is placed on coal mined by
Bassani that is being dissipated, but there is no reply to
the
allegation that there is no longer any coal on the premises mined by
Bassani.
[21]
In order to succeed in this application, Bassani has to show that the
dispositions are being
done with the intention of thwarting its
pending damages claim. There is no evidence that Mashala and Sebosat
are arranging their
assets or disposing of coal with the intention of
defeating its claim. It may or may not be that Bassani succeeds in
proving the
allegation that there is pattern of conduct by Herman to
use shelf companies and interpose them between the subcontractor and
Mashala
to protect its assets. In other words, that there is a
practice to "use" various subcontractors (i.e. Latozest,
Tamosys
and Sebosat), by contractors represented by Herman but when
disputes arise (as occurred between Latozest with the contractor
Close
Up Mining (Pty) Ltd), the contractor has no assets and is
allowed to be liquidated, thus protecting Mashala as owner of the
coal.
These allegations would need to be established by evidence in
the damages claim.
[22]
Bassani has therefore not proven, as it alleged, that there is a real
risk that the respondents
will take every step in the intervening
period before the damages claim is heard, to dissipate and/or
diminish their assets in
order to avoid the efficacy of a court order
and to leave it with a hollow judgment should it succeed. This means
that it has not
met the second threshold requirement for obtaining an
anti-dissipation interdict as required by
Knox D’Arcy Ltd
(supra)
and its application falls to be dismissed.
Order
[23]
In the result, I make the following order:
23.1
The application is dismissed.
23.1
The applicant is to pay the costs of the respondents, including the
costs of two counsel.
U. BHOOLA
Acting Judge of the High Court of
South Africa
Gauteng Local Division,
Johannesburg
Date
of hearing: 11 August 2020. Heard by videoconference as per the
Consolidated Directive of the Judge President of 11 May extended
to
15 August 2020.
Date
of judgment:
This judgment was handed down
electronically by circulation to the parties’ legal
representatives by email, by being uploaded
onto the CaseLines
digital system of the GLD and by release to SAFLII. The date and time
for hand-down is deemed to be 10h00 on
21
August
2020.
Appearance:
Counsel
for the Applicant :
AJ EYLES SC with
R ISMAIL
Instructed by:
Hogan Lovells
Johannesburg
Counsel
for the Respondents :
N
CASSIM SC with A VORSTER
Instructed by:
Hulley & Associates
Johannesburg
[1]
1982
(3) SA 582 (W).
[2]
2001
(2) SA 1083
(C) at 1088 E-F.
[3]
(283/95)
[1996] ZASCA 58
;
1996 (4) SA 348
(SCA)
at
373D.
[1996] ZASCA 58
;
[1996]
3 All SA 669
(A) (29 May 1996).
[4]
[1996] ZASCA 58
;
1996
(4) SA 348
(A) at 372F-H. See also
Carmel
Trading Co Ltd v Commissioner, South African Revenue Service and
Others
2008 (2) SA 433 (SCA).
[5]
[2014]
4 All SA 89
(GJ) para 16.
[6]
Section
137 (4):
"
If, during a company’s business rescue proceedings, the board,
or one or more directors of the company, purports
to take any action
on behalf of the company that requires the approval of the
practitioner, that action is void unless approved
by the
practitioner.”
[7]
See the judgment of
Mosopa
J in
Tayob
and Another v Shiva Uranium (Pty) Ltd (In business rescue) and
Others
(86673/2018) [2018] ZAGPJHC (21 December 2018) para 34.
[8]
“
NOW
THEREFORE I, Adv Thabo Mokoena in my capacity as a Director-
General;
of Mineral Resources, by virtue if the powers delegated to me,
hereby grant consent for the transfer to transfer 100%
shares held
by Continental Coal (Pty) Ltd in Mashala Resources (Pty) Ltd to
Steel Eye Trading (Pty) Ltd.”
[9]
[2002]
2 All SA 211 (A), 2001 (4) SA 1336 (SCA).
[10]
[2007]
2 All SA 602
(SCA),
2007 (3) SA 34
(SCA).