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[2020] ZAGPJHC 355
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African Global Holdings (Pty) Ltd and Others v Lutchman N.O and Others; Fidelity Security Services (Pty) Ltd v African Global Holdings (Pty) Ltd and Others (42741/19; 44827/19; 32083/19) [2020] ZAGPJHC 355 (17 November 2020)
IN THE HIGH COURT
OF SOUTH AFRICA
(GAUTENG
LOCAL DIVISION, JOHANNESBURG)
1. Reportable:
No
2.
Of interest to other judges: No
Date:
17 November 2020
CASE
NUMBERS: 42741/19, 44827/19 and 32083/19
In
case numbers 42741/19 and 44827/19:
In
re:
AFRICAN
GLOBAL HOLDINGS (PTY) LTD
First
Applicant
SUN
WORX (PTY) LTD
Second
Applicant
KGWERANO
FINANCIAL SERVICES (PTY) LTD
Third Applicant
and
RALPH
FARREL LUTCHMAN N.O.
First
Respondent
CLOETE
MURRAY N.O.
Second
Respondent
TANIA
OOSTHUIZEN N.O.
Third
Respondent
MARIANNE
OELOFSEN N.O
.
Fourth Respondent
In
their capacities as the joint provisional liquidators of
AFRICAN
GLOBAL OPERATIONS (PTY) LTD
(in liquidation)
RALPH
FARREL LUTCHMAN N.O
.
Fifth Respondent
CLOETE
MURRAY N.O.
Sixth
Respondent
SELBY
MUSAWENKOSI NTSIBANDE N.O.
Seventh
Respondent
ANDRE
BOTHA OCTOBER N.O
Eighth
Respondent
In
their capacities as the joint provisional liquidators of
BOSASA
PROPERTIES (PTY) LTD
(in liquidation)
RALPH
FARREL LUTCHMAN N.O.
Ninth
Respondent
CLOETE
MURRAY N.O
.
Tenth Respondent
NURJEHAN
ABDOOL GAFAAR OMAR N.O.
Eleventh
Respondent
In
their capacities as the joint provisional liquidators of
GLOBAL
TECHNOLOGY SYSTEMS (PTY) LTD
(in liquidation)
RALPH
FARREL LUTCHMAN N.O.
Twelfth
Respondent
CLOETE
MURRAY N.O.
Thirteenth Respondent
ROYNATH
PARBHOO N.O.
Fourteenth Respondent
LIZETTE
OPPERMAN N.O.
Fifteenth
Respondent
In
their capacities as the joint provisional liquidators of
LEADING
PROSPECT TRADING 111 (PTY) LTD
(in liquidation)
RALPH
FARREL LUTCHMAN N.O.
Sixteenth
Respondent
CLOETE
MURRAY N.O.
Seventeenth
Respondent
OFENTSE
ANDREW NONG N.O.
Eighteenth Respondent
TSHEPO
HARRY NONYANE N.O.
Nineteenth Respondent
In
their capacities as the joint provisional liquidators of
BOSASA
YOUTH DEVELOPMENT CENTRES (PTY) LTD
(in liquidation)
RALPH
FARREL LUTCHMAN N.O.
Twentieth Respondent
CLOETE
MURRAY N.O.
Twenty-First
Respondent
TARYN
VALERIE ODELL N.O.
Twenty-Second
Respondent
GORDON
NOKHANDA N.O.
Twenty-Third
Respondent
In
their capacities as the joint provisional liquidators of
BLACK ROX
SECURITY INTELLIGENCE SERVICES (PTY) LTD
(in liquidation)
RALPH
FARREL LUTCHMAN N.O.
Twenty-Fourth
Respondent
CLOETE
MURRAY N.O.
Twenty-Fifth
Respondent
MILANI
BECKER N.O.
Twenty-Sixth
Respondent
In
their capacities as the joint provisional liquidators of
BOSASA
SUPPLY CHAIN MANAGEMENT (PTY) LTD
(in liquidation)
RALPH
FARREL LUTCHMAN N.O.
Twenty-Seventh Respondent
CLOETE
MURRAY N.O.
Twenty-Eighth
Respondent
MARC
BRADLEY BEGINSEL N.O.
Twenty-Ninth
Respondent
In
their capacities as the joint provisional liquidators of
BOSASA IT
(PTY) LTD
(in liquidation)
RALPH
FARREL LUTCHMAN N.O.
Thirtieth
Respondent
CLOETE
MURRAY N.O.
Thirty-First Respondent
MARIETTE
BENADE N.O
.
Thirty-Second Respondent
In
their capacities as the joint provisional liquidators of
RODCOR
(PTY) LTD
(in liquidation)
RALPH
FARREL LUTCHMAN N.O.
Thirty-Third
Respondent
CLOETE
MURRAY N.O.
Thirty-Fourth
Respondent
JACOLIEN
FRIEDA BARNARD N.O.
Thirty-Fifth Respondent
In
their capacities as the joint provisional liquidators of
WATSON
CORPORATE ACADEMY (PTY) LTD
(in liquidation)
RALPH
FARREL LUTCHMAN N.O.
Thirty-Sixth
Respondent
CLOETE
MURRAY N.O.
Thirty-Seventh
Respondent
DEIDRE
BASSON N.O.
Thirty-Eighth
Respondent
In
their capacities as the joint provisional liquidators of ON-IT-1
(PTY) LTD (in liquidation)
PARK
VILLAGE AUCTIONEERS AND
PROPERTY
SALES (PTY) LTD
Thirty-Ninth
Respondent
(
A
further 177 respondents set out in an order dated 11 March 2020 have
been joined as the Fortieth Respondent to the
Two-Hundred-and-Sixteenth
Respondent, but none opposed the two
applications)
COMMISSIONER
FOR THE SOUTH
AFRICAN
REVENUE SERVICES
First Intervening Party
FIDELITY
SECURITY SERVICES
(PTY)
LTD
Second
Intervening Party
In
case number 32083/19:
FIDELITY
SECURITY SERVICES
(PTY)
LTD
Applicant
and
AFRICAN
GLOBAL HOLDINGS (PTY) LTD
First Respondent
SUN
WORX (PTY) LTD
Second
Respondent
KGWERANO
FINANCIAL SERVICES (PTY) LTD
Third
Respondent
and
RALPH
FARREL LUTCHMAN N.O.
Fourth
Respondent
CLOETE
MURRAY N.O.
Fifth Respondent
TANIA
OOSTHUIZEN N.O.
Sixth
Respondent
MARIANNE
OELOFSEN N.O.
Seventh
Respondent
In
their capacities as the joint provisional liquidators of
AFRICAN
GLOBAL OPERATIONS (PTY) LTD
(in liquidation)
RALPH
FARREL LUTCHMAN N.O.
Eighth
Respondent
CLOETE
MURRAY N.O.
Ninth
Respondent
SELBY
MUSAWENKOSI NTSIBANDE N.O.
Tenth
Respondent
ANDRE
BOTHA OCTOBER N.O
Eleventh
Respondent
In
their capacities as the joint provisional liquidators of
BOSASA
PROPERTIES (PTY) LTD
(in liquidation)
RALPH
FARREL LUTCHMAN N.O.
Twelfth
Respondent
CLOETE
MURRAY N.O.
Thirteenth
Respondent
NURJEHAN
ABDOOL GAFAAR OMAR N.O.
Fourteenth Respondent
In
their capacities as the joint provisional liquidators of
GLOBAL
TECHNOLOGY SYSTEMS (PTY) LTD
(in liquidation)
RALPH
FARREL LUTCHMAN N.O.
Fifteenth
Respondent
CLOETE
MURRAY N.O.
Sixteenth
Respondent
ROYNATH
PARBHOO N.O.
Seventeenth
Respondent
LIZETTE
OPPERMAN N.O.
Eighteenth Respondent
In
their capacities as the joint provisional liquidators of
LEADING
PROSPECT TRADING 111 (PTY) LTD
(in liquidation)
RALPH
FARREL LUTCHMAN N.O.
Nineteenth Respondent
CLOETE
MURRAY N.O.
Twentieth Respondent
OFENTSE
ANDREW NONG N.O.
Twenty-First
Respondent
TSHEPO
HARRY NONYANE N.O.
Twenty-Second
Respondent
In
their capacities as the joint provisional liquidators of
BOSASA
YOUTH DEVELOPMENT CENTRES (PTY) LTD
(in liquidation)
RALPH
FARREL LUTCHMAN N.O.
Twenty-Third
Respondent
CLOETE
MURRAY N.O.
Twenty-Fourth
Respondent
TARYN
VALERIE ODELL N.O.
Twenty-Fifth
Respondent
GORDON
NOKHANDA N.O.
Twenty-Sixth
Respondent
In
their capacities as the joint provisional liquidators of
BLACK ROX
SECURITY INTELLIGENCE SERVICES (PTY) LTD
(in liquidation)
RALPH
FARREL LUTCHMAN N.O.
Twenty-Seventh Respondent
CLOETE
MURRAY N.O.
Twenty-Eighth
Respondent
MILANI
BECKER N.O.
Twenty-Ninth
Respondent
In
their capacities as the joint provisional liquidators of
BOSASA
SUPPLY CHAIN MANAGEMENT (PTY) LTD
(in liquidation)
RALPH
FARREL LUTCHMAN N.O.
Thirtieth
Respondent
CLOETE
MURRAY N.O
.
Thirty-First Respondent
MARC
BRADLEY BEGINSEL N.O.
Thirty-Second
Respondent
In
their capacities as the joint provisional liquidators of
BOSASA IT
(PTY) LTD
(in liquidation)
RALPH
FARREL LUTCHMAN N.O.
Thirty-Third
Respondent
CLOETE
MURRAY N.O.
Thirty-Fourth
Respondent
MARIETTE
BENADE N.O.
Thirty-Fifth Respondent
In
their capacities as the joint provisional liquidators of
RODCOR
(PTY) LTD
(in liquidation)
RALPH
FARREL LUTCHMAN N.O.
Thirty-Sixth
Respondent
CLOETE
MURRAY N.O.
Thirty-Seventh
Respondent
JACOLIEN
FRIEDA BARNARD N.O.
Thirty-Eighth
Respondent
In
their capacities as the joint provisional liquidators of
WATSON
CORPORATE ACADEMY (PTY) LTD
(in liquidation)
RALPH
FARREL LUTCHMAN N.O.
Thirty-Ninth
Respondent
CLOETE
MURRAY N.O.
Fortieth
Respondent
DEIDRE
BASSON N.O.
Forty-First Respondent
In
their capacities as the joint provisional liquidators of
ON-IT-1
(PTY) LTD
(in liquidation)
PARK
VILLAGE AUCTIONEERS AND
PROPERTY
SALES (PTY) LTD
Forty-Second
Respondent
COMMISSIONER
FOR THE SOUTH
AFRICAN
REVENUE SERVICES
Forty-Third Respondent
JUDGMENT
De
Villiers AJ:
Introduction
[1]
This is the judgment in three
applications for leave to appeal against my decision dated 24 August
2020. I continue to use the same
defined terms and abbreviations in
this judgment as used in my original judgment.
[2]
The legal
basis of my powers to grant leave to appeal is uncontentious, and is
contained in
section 17(1)(a)
of the
Superior Courts Act, 10 of
2013
. I need to form a view that there is “
a
measure of certainty that another court will differ from
”
my judgment,
or that there is a compelling reason to grant leave to appeal.
[1]
My main reason
to grant leave to appeal is on the compelling reason requirement.
Once such leave is to be granted, it becomes difficult
to excise
portions of the judgment in respect of which to grant leave to
appeal.
[3]
My original judgment dealt with three matters, the
auction application, the business rescue application, and the
Rule 42
application:
[3.1]
The applicants in the business rescue application
seek leave to appeal in the business rescue application only. They
seek the setting
aside of paragraphs 16-18 in the order in the main
judgment. They have about six grounds of appeal, as I read their
notice of application
for leave to appeal. They do not seek leave to
appeal in the auction application, or in the
Rule 42
application. In
essence they seek that my dismissal of the business rescue
application be overturned. The
other
parties in the end did not oppose the application for leave to
appeal;
[3.2]
SARS seeks
leave to appeal in the auction application and in the business rescue
application.
SARS
seeks the setting aside of paragraphs 7-11 and 17 in the order in the
main judgment. Its grounds of appeal overlap between
the auction
application and the business rescue application, and as such it has
about four grounds of appeal in the business rescue
application, and
about twelve grounds of appeal in the auction application. It does
not seek leave to appeal in the
Rule 42
application. SARS seeks the
overturning of my decision on the auction application, and a
different costs order in the business
rescue application.
[2]
The
other parties
in the end did not oppose the application for leave to appeal; and
[3.3]
The provisional liquidators seek leave to appeal
in all three of the auction application, the business rescue
application and the
rule 42
application. They have 42 grounds of
appeal. One ground addresses only an appeal on costs in the
rule 42
application, the remaining 41 grounds of appeal often overlap in the
auction application and the business rescue application. The
provisional liquidators seek to set aside paragraphs 1, 3, 6, 7, 8,
9, 10, 11, 13, 15, 17 and 19 and 21 in the order in the main
judgment. They seek the overturning of my decision on the auction
application, and several costs orders. The
other
parties in the end did not oppose the application for leave to
appeal;
[4]
Initially I was
prima
facie
of the view that I should grant
leave to appeal to the Supreme Court of Appeal (“
the
SCA
”
) on the merits in the
auction application, and possibly on an aspect of the business rescue
application, namely the use of that
procedure as an alternate
winding-up process. This would have meant that leave to appeal on the
ultimate costs orders ought to
have followed, as opposed in all
interlocutory matters. I was sceptical about leave to appeal in the
Rule 42
application.
[5]
When the matter was called on video conferencing,
I advised the parties that my
prima
facie
view was that once one party gets
leave to appeal, the others must get leave to appeal too. My notes
leading to this exchange contained
an inexplicable error, it
reflected my thinking on the main matters only, and failed to reflect
the full extent of the leave sought
in interlocutory and mere costs
matters that I believed were not appealable.
[6]
The outcome of this discussion was that the
application was not argued on the implicit understanding that I would
grant leave to
appeal to the SCA to all parties in all matters. I
made an error in this exchange. I never intended that leave in all
interlocutory
matters should have been granted, but I did not say so,
and cannot fix that error without infringing on the fairness of the
hearing.
[7]
I only
realised my error that I omitted to address interlocutory costs
orders as I prepared this judgment. I tender my apologies
to the SCA
should a party seek to persist to argue interlocutory costs orders
due to my error. The record is substantial. On CaseLines
7 490 pages
have been loaded in the business rescue application, 3 193 in the
auction application, and 1 161 in the
Rule 42
application. Much if
this I believe to be irrelevant. I am conscious of the fact that the
SCA in some instances may find that “
the
issues are of such a nature that the decision sought will have no
practical effect or result
”
,
[3]
or say that an
appeal against my reasoning is not properly before it
[4]
when it deals
with this appeal.
[8]
I reserved
judgment to state my reasons for granting leave to appeal, as I have
a duty to give a reasoned judgment in granting leave
to appeal (or in
refusing leave to appeal).
[5]
I do not
believe that my duty to give a reasoned judgment, extends to dealing
with all criticisms
of
my reasoning, or to merely repeat my earlier findings.
[9]
I seek to address herein what I see as the
material matters on appeal.
Relevant
facts
[10]
Where I state below that I did not address a
matter in my original judgment, I merely state a fact. I do not find
thereby that I
erred by dealing with the matter differently. My
original judgment reflects that I approached the matter on a basis
that I did
not seek to resolve factual disputes where it was not
necessary to do so. I summarised in my original judgment the material
facts
that I believed I required for judgments on the merits in the
three applications, without doing an injustice to any party.
[11]
These were the types of matter that required a
resolution, not a postponement. Some of the issues now raised in the
applications
for leave to appeal, are to the effect that I had to
resolve certain factual disputes that I had left unresolved. I took a
different
view. Matters such as the present matters could end up in
endless hearings on factual disputes if every fact is sought to be
resolved.
I do not believe that an outcome of a factual dispute (say
in favour of the parties making the averments of fraud and tax
avoidance),
would have resulted in a different outcome in any of the
three applications. The same holds true of disputes about tax
liability
of the six business rescue companies, or how successful the
auction and private treaty sales were.
[12]
In papers
running into the thousands of pages, the summarised facts off course
were not the only factual averments in the papers.
It seemed to me
that most of the facts required for findings were and are
uncontentious. I do not believe that I incorrectly applied
Plascon
Evans
[6]
and
National
Scrap Metal
[7]
.
A distinction must be drawn between bare averments of purported
facts, and averments of fact that are supported by averments and
proof of
facta
probanda
and
facta
probantia
.
Plascon
Evans
is
not a stratagem to avoid dealing with a matter, but a safety net
where parties properly address facts, and a true,
bona
fide
,
factual dispute arises. Such a true,
bona
fide
,
factual dispute cannot be resolved on affidavit; hence the rule that
the respondent’s version prevails where a dealbreaker
is
required (or the matter must be referred to trial or to oral
evidence).
[13]
Practice has
become more robust (to avoid the abuse of
Plascon
Evans
),
but off course not recklessly so. See
Wightman
t/a J W Construction v Headfour (Pty) Ltd and Another
,
[8]
especially:
“
[13]
A real, genuine and bona fide dispute of fact can exist
only where the court is satisfied that the party who purports
to
raise the dispute has in his affidavit seriously and unambiguously
addressed the fact said to be disputed. .... There is thus
a serious
duty imposed upon a legal adviser who settles an answering affidavit
to ascertain and engage with facts which his client
disputes and to
reflect such disputes fully and accurately in the answering
affidavit. If that does not happen it should come as
no surprise that
the court takes a robust view of the matter
.”
[14]
In the matter before me, I believed that no true,
bona fide
,
factual dispute stood in the way of my findings, and no one sought a
referral to trial or to oral evidence. Still, the first issue
on
appeal will be if my summary of the material facts in my original
judgment, was correct. The criticisms of my original judgment
are
threefold, (a) alleged omitted facts, (b) alleged wrong facts, and
(c) alleged wrong conclusions.
[15]
As such, omitted facts are sought to be added to
my summary of material facts. The applicants in the business rescue
application
seek to rely on factual findings pertaining to rental
agreements over the Lindela Repatriation facility and the Mogale
Youth Centre,
a business partnership between Sun Worx and Technology
Systems, and the business of Rodcor. They seek to rely on the
business case
for each one of the individual, six business rescue
companies. Such detail on the business cases would include detail of
the income,
assets, liabilities (especially to SARS) and personnel,
for findings that (some or all the business rescue companies) still
trade
legitimately, and could return to an existence on a solvent
basis (if not the same business as before). I believe I should not
address these criticisms of my summary of material facts, as I cannot
do so without adding substantially to my original judgment.
I assume
that SARS and the provisional liquidators would seeks to add factual
findings on the amount of tax payable by the individual,
six business
rescue companies. The applicants in the business rescue application
also seek to advance their factual contentions
about a better return
to be achieved through business rescue proceedings of the individual,
six business rescue companies.
[16]
SARS also seek to add to my summary of material
facts. SARS in its application for leave to appeal alleges that:
“
The
court erred in failing to have regard to the fact that the applicants
have over the years together with the companies in liquidation
orchestrated a fraudulent scheme with one of the main purposes of
evading tax and SARS had already been deprived of tax for a number
of
years and it continues to be so deprived in light of the setting
aside of the sale of the immovable property
.”
[17]
The provisional liquidators averred that:
“
The
court erred in making no finding based on the alleged fraudulent
activity in Consilium Business Consultants (Pty) Ltd, Miotto
Trading
and Advisory Holdings (Pty) Ltd and Bosasa Supply Chain Management
(Pty) Ltd
.”
[18]
It is true that I did not seek to resolve
averments of fraud and tax avoidance (and indeed what the tax
liabilities of the six business
rescue companies are) in the business
rescue application. SARS is of the view that I should have done so.
As appears from my original
judgment I also did not consider the
averments about fraud and tax avoidance in the auction application.
SARS is of the view that
I should have done so. In my view a court
must decide the auction application on its merits. Even if the
applicants in that matter
were part of acts of fraud and tax
avoidance, they would still be entitled to demand that the
provisional liquidators act lawfully.
It is a matter of the Rule of
Law, in my view.
[19]
I remain
perplexed why SARS seeks to involve itself actively in the disputes
before me in the auction application. In my view, SARS
(an organ of
state) should create distance between itself and unlawful conduct,
and not condone it. This is in my view what it
means to live in a
country subject to the supremacy of the rule of law, where
obligations in terms of the Constitution must be
fulfilled, and where
“
the
state must respect, protect, promote and fulfil the rights in the
Bill of Rights
”
.
[9]
Instead SARS
argues, to my mind startlingly so, in its application for leave to
appeal:
“
The
court therefore erred in failing to consider as part of the judgment
the contentions of SARS that it, in its capacity as the
largest
(only) third-party creditor, could in any event as part of the
winding up at the relevant subsequent meetings of creditors,
condone
and ratify any unauthorised sales by the provisional liquidators, in
the event of the sales in question being held to be
unauthorised
.”
[20]
The provisional liquidators will advance a case
that I erred in my findings about the success they achieved in the
auction and private
treaty sales.
[21]
Having dealt with the alleged omitted facts, I
turn to the alleged errors of fact in the original judgment. SARS is
of the view
that I erred in concluding in motion proceedings that the
provisional liquidators
deliberately acted
unlawfully. This finding, it states, “
could
not have been made on the papers before court, at least not on
affidavit as part of motion proceedings
”
.
The provisional liquidators also contend that I could not have found
that they improperly, deliberately, disregarded the Bhoola
order and
the business rescue application. It is the same point, but it is not
consistently applied in the criticisms of my original
judgment, as
SARS and the provisional liquidators argue that I erred in not
finding (also in motion proceedings) that the business
rescue
application was an abuse.
[22]
I disagree with the principle argued; it is not
motion proceedings that stand in the way of negative findings. In
issue is if I
had a proper factual basis for my findings. In my view,
the common cause facts could lead to no other inference. In addition
thereto
is this context:
[22.1]
The about elven individuals involved as
provisional liquidators presented no evidence of advice sought
to the effect that the Bhoola order and/or the
business rescue application could be ignored in proceeding with the
sales, of any
discussions held between them about these matters, or
of decisions taken by them (and the reasons for such decisions) to
proceed
with the sales despite these matters;
[22.2]
These material facts are omitted in circumstances
where the issue of unlawful conduct was raised repeatedly with them,
and the objective
facts point to deliberate, unlawful conduct.
Instead of explaining, the provisional liquidators kept quiet on what
happened;
[22.3]
Added thereto is, with respect, the fact that
provisional liquidators present a developing case of alleged consent,
alternatively
alleged tacit consent, alternatively that it was
impossible to obtain consent, further alternatively that the
requirement for consent
fell away.
[23]
Similarly, the provisional liquidators in their
application for leave to appeal take issue with my interpretation of
certain letters
by their attorneys. In my view, the fact that I dealt
with motion proceedings, does not mean that I am precluded from
assessing
conduct from, what is in fact, common cause facts.
[24]
I believe that my conclusions were justified. I
believe that I correctly made such findings without having to refer
the matter to
trial or to the hearing evidence.
[25]
SARS alleges that I had to make a finding that all
purchasers of assets from the provisional liquidators acted
bona
fide
(i.e. that they purchased assets
without knowing that the authority of the provisional liquidators to
sell the assets, has been
placed in issue). I respectfully disagree
that it was a matter before me for decision, or that I could make
such a decision without
considering the facts in each case. In my
view a court could not have made such a factual assumption.
[26]
I only refer to some of the challenges to my
factual findings by the provisional liquidators.
[27]
The provisional liquidators deny that it was
common cause that the business rescue application was prepared under
pressure (and
presumably that I should have rejected the timeline put
up by the lawyers acting for the provisional liquidators). The
answering
affidavit by the provisional liquidators read:
“
40
The application is manifestly a rushed bastardisation of
[conflicting] company law principles and provisions
.
…
40.1
…
41
What manifestly transpired is that the applicants were in the process
of preparing an application contemplated by section 354
of the 1973
Act and after they reflected on the SCA Judgment and realised that
such an application will not achieve a stay of the
auction, they at
the last minute converted that application to a business rescue
application.
”
I deal below with the timeline,
further reflecting the time pressure.
[28]
The provisional liquidators deny that the business
rescue application was served on 3 December 2019:
[28.1]
The application was issued on 3 December 2019,
according to the Registrar’s stamp.
[28.2]
The deponent on behalf of the provisional
liquidators (Mr Murray) stated in the answering affidavit to the
business rescue application-
[28.2.1]
“
21
This
application was subsequently issued on 3 December 2019. Served on my
offices on that same day and e-mailed to me at around
18h00 that
evening
”
;
[28.2.2]
“
167
On 3 December 2019. the applicants' attorneys called upon us to
cancel the auction as a consequence of this application being
issued.
A copy of their letter to this effect is attached hereto as annexure
AA43.
168
Our attorneys responded on 4 December 2019, contending that the mere
issue of this application did not have the effect of suspending
the
liquidation proceedings …
”
[28.3]
The service affidavit in the business rescue
application reflects service by e-mail on 3 December 2019 to a range
of persons being
what is described as known creditors, directors of
the applicants, employees of the affected companies, about 19 e-mails
to provisional
liquidators, CIPC, and the auctioneers. It further
reflects service by a candidate attorney on 3 December 2019 on Mr
Lutchman and
by the Sherriff on Mr Murray.
[29]
The provisional liquidators deny that it was
common cause between the parties that all six business rescue
companies were in financial
distress. If they are of the view that
the six business rescue companies were not in financial distress, why
would they oppose
the business rescue application? At the heart of
their case is that they say that the six business rescue companies
cannot be resuscitated,
they are too far gone on the road of
no-recovery.
[30]
The provisional liquidators aver that I erred in
reflecting the extent of the urgent application papers was presented
to Wright
J as comprising 70 pages as opposed to 170 pages, as I
should have reflected 1 200 pages due to the annexures thereto that
included
the business rescue application. The point has some merit,
as the answering affidavit in the business rescue application on
behalf
of the provisional liquidators made both points-
[30.1]
“
174
However, when the urgent application had subsequently come to hand.
At around 16h00 on 4 December 2019. it emerged that it in
actual fact
comprised more than 170 pages and it sought to …
”
;
and
[30.2]
“
179
Essentially. through the manipulative non-disclosure of material
detail, the applicants unconscionably orchestrated an obligation
upon
us to have consulted on, consider and respond to affidavits in excess
of 1200 pages over-night and within approximately 18
hours
.”
[31]
The provisional liquidators averred that “
(t)he
court erred in finding that the allegations of fraud and corruption
were made by the liquidators as against Mr Jared Watson
”
.
What they accused him expressly of, only in the answering affidavit
in the business rescue application, included:
[31.1]
“
20
If there was any doubt that Mr Jared - the present protagonists
behind Holdings - were hellbent on derailing and frustrating
the
winding up of these subject companies, such doubt can be no longer
”
;
[31.2]
“
39
Ultimately, this application is persisted with the clear ulterior
motive to neutralise the appointment of truly independent liquidators
to the subject companies under circumstances where the Bosasa
protagonists had a clearly intended plan in mind when they placed
the
said companies in liquidation on day one
”
;
[31.3]
“
53
As I will demonstrate hereunder, the contents of the affidavits in
support of the Urgent Application is palpably false, to the
knowledge
of the Watsons and intentionally crafted so as to dishonestly mislead
the court in the hope of ultimately persuading
it to grant the relief
sought in an absolute and blatant contrivance
”
;
[31.4]
“
56
Stripped of its verbosity and the unfortunate but obviously
purposefully employed vague nomenclature, the contents of the
answering
affidavit in and of itself evince why the liquidation
proceedings in relation to the subject companies must as of necessity
proceed
and why the position that the Watsons want to prevail must be
avoided at all costs
”
;
[31.5]
“
57
The liquidators resist the application on a number of imbricated
grounds. By way of summary, the liquidators' defences to this
application are as follows:
57.1
…
57.3
this application is an abuse in the advance of an inherently
dishonest modus operandi. the very basis for the Rescue Application
is dishonest and ma/a tide and should be dismissed for those reasons
alone
;”
[31.6]
“
294
There is a litany of reasonably anticipated litigation which is
likely to occupy a business rescue practitioner for some time
to
come. This is particularly so in light of the dubious conduct on the
part of the Bosasa protagonists and the matters already
dealt with
herein above
”
;
[31.7]
“
304
Moreover. company creditors may very well again be placed at risk of
further substantial mismanagement of the companies' affairs
by and at
the instance of the Bosasa protagonists or parties aligned to it,
which will certainly be avoided in the event that the
companies are
left to remain in liquidation
”
;
[31.8]
“
305
What is of a further concern is the Watsons· association and
intricate involvement in various other entities. The company
creditors for obvious reasons do not have insight into the affairs of
these other entities.
…”
;
[31.9]
“
313.2
The funds of the companies have been expended at the instance and
according to the preference and commensurate discretion
of the
Watsons and other Bosasa protagonists. This
…”
;
[31.10]
“
320
Ultimately the very basis upon which this application has been
brought remains dishonest, both factually and legally
”
;
[31.11]
“
347.91.1
Each of the subject companies· directors were removed from
office pursuant to the SCA handing down judgment in the
Setting Aside
Application. The only present Board of directors is that of Holdings,
Holdings’ board, at this point in time.
is confined to Mr Jared
and Ms Lindsay Watson and they are presently its principal
protagonists
”
;
[31.12]
“
347.92.5
If anything, Mr and Ms Watson cannot be trusted and their contention
that they aim to be the proverbial "new broom"
certainly
does not instil confidence, but rather concern.
”
[32]
The provisional liquidators averred that “
(t)he
court erred in finding that the liquidators advanced a case to the
effect that counsel for the applicants in the business
rescue
application was part of a conspiracy to abuse the court process
”
:
[32.1]
The answering affidavit in the business rescue
application on behalf of the provisional liquidators states with
regard to the role
of the senior counsel and his attorney-
[32.1.1]
“
175
The actual extent of the urgent application papers was certainly not
correctly represented to Wright [J] in chambers
.”
[32.1.2]
179
Essentially. through the manipulative non-disclosure of material
detail, the applicants unconscionably orchestrated an obligation
upon
us to have consulted on, consider and respond to affidavits in excess
of 1200 pages over-night and within approximately 18
hours
.”
[32.2]
The same averments about the senior counsel and
his attorney appear in the answering affidavit in the auction
application on behalf
of the provisional liquidators;
[32.3]
The answering affidavit in the business rescue
application on behalf of the provisional liquidators further states
with reference
to the senior counsel and his attorney-
“
177
The actual extent of what was truly contained and traversed in the
urgent application and what were to be required for it to
be heard
was, in the circumstances. equally not accurately represented to
Wright [J].
178
Senior Counsel for the applicants made it clear that he did not have
precise insight into the founding papers to the urgent
application
but certain of the aforesaid representations were made to Wright [J]
by him in the presence of his instructing attorney
and certain other
representations were made by his instructing attorney personally.
179
Essentially. through the manipulative non-disclosure of material
detail, the applicants unconscionably orchestrated an obligation
upon
us to have consulted on, consider and respond to affidavits in excess
of 1200 pages over-night and within approximately 18
hours
”
;
[32.4]
The answering affidavit in the auction application
on behalf of the provisional liquidators further states with
reference to the
senior counsel and his attorney-
[32.4.1]
“
20
The business rescue application, comprising in excess of one thousand
pages [supported by a founding affidavit that without its
annexures
span one hundred and sixty-two pages] was brought at the fifty ninth
minute of the eleventh hour with the clear and sole
purpose of
derailing the auction.
21
It was manifestly kept in the barrel and purposefully only issued on
3 December 2019 in an [unsuccessful] attempt to trigger
the
provisions of 131 (6) of the 2008 Act, to suspend the liquidation
proceedings and derail the auction
.”
[32.4.2]
“
167
It suffices to state that the business rescue application:
167.1
comprising in excess of a 1000 pages [supported by a founding
affidavit that without its annexures span 162 pages], was
demonstrably
kept in the barrel and purposefully only issued on 3
December 2019 in an [unsuccessful] attempt to trigger the provisions
of 131
(6) of the 2008 Act i.e. to suspend the liquidation
proceedings and derail the auction;
167.2
is the quintessential example of a flagrant abuse of court process
and in want of merit on every conceivable basis, which
is now also
particularly emphasised by the content of paragraphs 94 to 98 of the
founding affidavit in this application
.”
[32.5]
The replying affidavit clearly addressed these
matters and denied them. In addition, the averments about what was
told to Wright
J were
prima facie
made by someone who in the normal course would not
have been present in the judge’s chambers (an issue raised in
the replying
affidavit). Strong exception was taken to the imputation
of dishonest conduct about what transpired before Wright J. The
withholding
of the business rescue application with the assistance of
a legal team was pertinently dealt with in the replying affidavit in
the auction application where the deponent stated-
[32.5.1]
“
74.
In consequence of the upholding of the SCA appeal, which meant that
the Group was officially in liquidation, the directors of
Holdings
decided, upon advice from a business rescue practitioner, to apply
for business rescue. This discussion occurred on the
following Monday
25 November 2019.
75.
Telephonic discussions and exchanges of documents followed from 25
November 2019 onwards with the Group's newly appointed legal
team,
and on Friday, 29 November 2019 Roth Watson, the son of the late
Gavin Watson, and I flew to Cape Town to consult with counsel.
During
the weekend of 30 November 2019 to l December 2019, a first draft of
the business rescue application was prepared, which
was finalised on
Monday 2 December 2019 and issued on Tuesday 3 December 2019 in the
High Court of South Africa, Gauteng Local
Division, Johannesburg,
under case number 427 41/2019
”
.
[32.5.2]
“
132.1.
The deponent's unfounded speculation that this business rescue
application was "kept in the barrel and purposefully
only issued
on 3 December 2019" is devoid of all truth. In reality the
application was extensive, which the deponent appears
to accept, and
was only initiated on 25 November 2019 subsequent to the SCA handing
down judgment in favour of the provisional
liquidators on 22 November
2019, and drafting of the affidavits by our legal team only commenced
on 30 November 2019
.”
[32.6]
Knowing the facts stated in the replying
affidavit, and later confirmed by their lawyers about their role in
heads of argument submitted
by them, and knowing of an application to
strike out offensive matter, these statements were repeated in the
heads of argument
on behalf of the provisional liquidators. These
statements include averments about how Wright J was misled, including
stating that
“
through the
manipulative non-disclosure of material detail, the applicants
unconscionably orchestrated
…”
There
were was no factual basis for the repeated attack on the lawyers’
integrity, in my view.
[33]
I briefly address next some other matters of
overall importance.
Other
matters
[34]
SARS is of the view that my questions about the
application of
stare decisis
“
is such a fundamental departure from
what has always been the trite position in our law, that this finding
alone warrants leave
to appeal being granted and that it be granted
to the Supreme Court of Appeal
”
.
[35]
I believe that
I did not err in the application of
stare
decisis
.
[10]
Some changes
to the application of
stare
decisis
is,
with respect, clearly overdue. Our law of precedent
inter
alia
depends
on the borders of colonies, Boer Republics, provincial boundaries
after 1910, and often on fragmented Bantustan borders.
Our current
areas of jurisdiction do not follow those old borders and sometimes
contain some of them in some areas. That is the
first reason a change
is necessary.
[36]
The current
system further ignores that we have a single judiciary under the
Constitution. As such I am bound by a single judge
in Johannesburg
and in Pretoria, and not by three judges say sitting in Cape Town.
This is untenable where we have a single judiciary.
It is hardly a
revolutionary idea.
Whose
decisis must we stare?
[11]
The article
refers to the effect of (a) item 16(6)(a) of the Sixth Schedule to
the Constitution, (b) the effect of the change from
“
High
Courts
”
to
“
High
Court
”
in
section 166(c) of the Constitution, brought about by section 2 (a) of
the Constitution Seventeenth Amendment Act of 2012, and
(c)
section 6
of the
Superior Courts Act 10 of 2013
that refers to a High
Court with divisions.
[37]
These matters are of practical
importance. Judges are subjected to a deluge of electronically
reported cases. Those judgments are
prepared by judges who work under
pressure and with limited resources. It becomes increasingly likely
that a problematic judgment
in a provincial division will be found,
stored on the “
web
”
,
never intended to have precedent value, never relied upon by anyone
giving advice, often unearthed by a judge and not addressed
in
argument. A preferred decision in another division of the single
judiciary often will be available.
[38]
It
is a hard place to find oneself in, between a judgment that seems to
be against legal principle, but which
stare
decisis
dictates
should be followed. A judge is always mindful of the statement in
1968 in
The
South African Legal System and its Background
[12]
that
stare
decisis
inter
alia
:
“…
keeps the
weaker judge along right and rational paths, drastically limiting the
play allowed to partiality, caprice or prejudice,
thereby not only
securing justice in the instance but also retaining public confidence
in the judicial machine through like being
dealt with alike
…”
[39]
Accordingly,
addressing that hard position is not easy. The tension is between
giving effect to the principled approach that underlie
the Common Law
and the Bill of Rights, versus the certainty that
stare
decisis
brings.
The difficulty in one sense must not be overstated. Following a
larger court’s reasons for its findings is not that
different
to apply legislation binding on a court. But no judge of normal
sensibilities wants to find that another judge was clearly
wrong, or
overlooked legal principle. A judge is also always mindful how
negative creative reasoning (sometimes the only too available
to
distinguish binding authority) appears to the readers of the
distinguishing judgment. It seems to me that any limited return
to
the Common Law (where
stare
decisis
did
not apply)
[13]
is unlikely.
Any revision of the rules as raised in
Whose
decisis must we stare?
would
be for a higher court to deal with, should it wish to do so. Much of
the academic work has been done.
[14]
I did not
raise these matters in my original judgment as our highest courts
have confirmed the approach in our law in several judgments:
Strict
application of
stare
decisis
,
with limited exceptions.
[15]
I seek to
apply that law, as I must.
[40]
What I raised in my original judgment is that I do
believe that a revision of current rules due to current court areas
of jurisdiction
and a single judiciary under the Constitution, is
likely. I believe it to be an uncontentious matter.
[41]
The next matter of overall importance is that it
is implicit that my interpretation of the Bhoola order and certain
legislative
provisions, is challenged.
[42]
I did address
the law on interpreting of legal instruments in my original judgment.
In my view true adherence to
Endumeni,
[16]
reconciled
with
Cool
Ideas
[17]
brought me to
the findings I made. Looking into the mirror, in my view (a) an
objective standard is in fact applied in interpreting
of legal
instruments, and (b) in fact there are times when text matters more
than context. The quality of the drafting in issue
and the context
within which it came about, are two of the factors that point to
where the balance between text and context falls.
Our law is not that
text means that whatever a judge believes the text should have meant
under some vague reference to context.
I do believe that our courts
should always be mindful of the risk of crossing the line between
interpretation (adjudication) and
legislative functions, the risk of
crossing the line between correcting a court order and interpreting
the order, the risk of crossing
the line between making an agreement
for the parties and interpreting it.
[43]
There
is another matter of overall importance. SARS and the provisional
liquidators take issue with my approach to decide the matter
based on
all the evidence before me. They both say I failed to apply
Valentino
Globe
[18]
by
not only looking at the founding affidavits. I disagree.
Valentino
Globe
in
my view is a tool to prevent a matter without substance entering the
process. Once the papers are supplemented and all the evidence
is
before the court, it serves no purpose dismiss the matter for a
defect in the founding papers, already fixed. Even a matter
defectively put together, can be rescued with further evidence with
the leave of the court. Had a case been made out about a defect
in
the papers, in the normal course leave to supplement the founding
papers would have been granted, especially where papers had
been
prepared on short notice. This is not a case where the respondents
did not know what case they had to meet or the applicants
should have
been non-suited. This is not a case where one of the material facts I
relied upon, has been alleged to have been impermissibly
considered
by me. What was the alternative? In this case I read thousands of
pages. Who would benefit from a dismissal, for supplemented
papers to
be re-issued, and for another judge to hear the matter after again
after reading thousands of pages? I believe that my
approach to meet
the real issues head-on, and facilitate the resolution of the real
issues in matters, is the preferred one.
[44]
Similarly, the provisional
liquidators allege that Mr J Watson lacked personal knowledge of some
matters, and that I erred in not
dismissing the application simply
because he deposed to the main affidavits (supplemented by
confirmatory affidavits and mostly
by documents that were common
cause). Any such argument also would have required an interrogation
of material facts relied upon
by me, which were not supported by
documentary proof and/or confirmatory affidavits.
No
such work has been done in the very long application for leave to
appeal of some 50 pages, headings included.
[45]
Both SARS and the provisional
liquidators argue that even after the joinder of SARS, I should have
dismissed the business rescue
application because it was not
originally joined therein. I disagree, not only has it been joined,
but my original judgment addressed
the unique statutory requirements.
[46]
I do not believe that
stare
decisis
,
interpretation, my approach to hear the matter on its merits, alleged
hearsay evidence, or alleged non-joinder would have warranted
leave
to appeal.
[47]
I now turn to the three applications.
The
Rule 42 application
[48]
This was the application that Fidelity brought to
fix an error in the order obtained by the provisional liquidators
before Bhoola
AJ. I granted the relief to vary the order, relief that
the provisional liquidators (and SARS) supported. In my view,
rectifying
the order was a simple application of contextual facts.
The material facts were common cause. My original judgment contains
my
reasoning.
[49]
The provisional liquidators contend that I erred
finding that there was no reason for the liquidators to bring an
application to
join as co-applicant in the Rule 42 application once
Fidelity had brought it, and that I erred in “
striking
the application by the provisional liquidators to join in support of
the Rule 42 application from the roll and to disregard
their heads of
argument filed in pursuance of supporting that application
”
.
I should have awarded them the costs in respect thereof, they submit.
They do not disagree with my order on the merits in the
Rule 42
application, but in essence they sought leave to appeal to obtain a
costs order for an application delivered the day before
the hearing,
and for heads of argument also delivered the day before the hearing
(and thus with no opportunity for a response to
both).
[50]
The provisional liquidators contend that I omitted
to consider the stance taken by their opponents, namely that Fidelity
lacked
locus standi
.
I indeed did not address it. Rule 42(1) states that “
any
party affected
”
may being the
application. It is true that I said nothing about the meaning of the
Rule in my original judgment.
[51]
In my view, the grounds of appeal do not meet the
test(s) for the granting leave to appeal. I exercised a discretion in
the admission
of documents served at the last minute. There is in my
view no “
measure of certainty that
another court will differ from
”
my
judgment. Still,
I grant leave to appeal as
at the heart of the 50-page application for leave to appeal is a
complaint that I was too harsh on the
provisional liquidators in my
original judgment. If all the other matters are to be revisited on
appeal, then in this instance
this complaint too should be open to
revisited should the court of appeal so wish to do. I do not want to
grant leave to appeal
that would unduly restrict the court of appeal
in overturning my judgment.
The
auction application
[52]
As set out in my original judgment, my finding
that the provisional liquidators lacked the power to sell the assets
at the public
auction rested on two grounds, the effect of the Bhoola
order, or on section 131 of the 2008 Act (which depends on when an
application
for business rescue is made). There are decisions
contrary to mine as to when an application for business rescue is
made.
[53]
To succeed on appeal, the provisional liquidators
and SARS will have to show that I erred on both findings. They will
have to show
that that I erred in:
[53.1]
Interpreting the Bhoola order. SARS does not take
issue with my interpretation;
[53.2]
Finding that there was no consent to the sales by
the provisional liquidators. SARS does not take issue with my
finding, but the
provisional liquidators do;
[53.3]
Finding that it was possible to obtain consent to
the sales by the provisional liquidators. The provisional liquidators
and SARS
take issue with my finding, in the case of the provisional
liquidators their submission necessarily must be in the alternative.
[54]
Once the
provisional liquidators and SARS overcome my findings on the Bhoola
order, they still will need to convince the court of
appeal that I
was wrong on when an application for business rescue is made. I am
not convinced of the required prospect of success
on these grounds.
Due to the conflicting judgments
on
when an application for business rescue is made, in my view, there is
enough reason to grant leave to appeal. Any decision of
mootness
stands to be made by the SCA.
[19]
[55]
My findings formed the basis for prohibiting sales
of the assets of the six business rescue companies (prayer 7),
declaring sales
unauthorised (prayer 8),
and
prohibiting the transfer of immovable property (prayer 9).
[56]
There are further grounds for seeking leave to
appeal, I assume in the alternative (i.e. even if my findings on the
Bhoola order
and when the business rescue application was made, were
to be upheld). I address the further grounds next.
[57]
The
relief sought before me by the applicants in the auction application
was that I had to declare the sales null and void. In rejecting
the
claim that I must declare the sales by the provisional liquidators
“
null
and void
”
,
I held that I could not do so as some, or many, of the sales of
movables may have been unauthorised, but still valid. In the essence,
I applied the Constitutional right to equality (section 9) in terms
of section 39(2) of the Constitution in the interpretive exercise
to
use the powers given to me in section 339 of the Companies Act, 1973
to achieve equality. In my view, my duties to apply both
could not
have been clearer.
[20]
In
my view the rights of innocent purchasers before me was a novel issue
and I was free to interpret the law as I did. All the parties
before
me accept my interpretation. They and I may be held to be wrong.
[58]
Instead,
the provisional liquidators and SARS aver that I did not go far
enough. I should have made findings, they aver, (a) that
all sales by
the provisional liquidators were to
bona
fide
purchasers,
and (b) the fact that the purchasers of immovable property learn that
the sales were unauthorised before transfer, is
irrelevant
[21]
and
they may demand transfer. There are further difficulties with this
relief sought on appeal:
[58.1]
SARS and the provisional liquidators did not seek
such relief before me in counter-applications. They sought the
dismissal of the
auction application;
[58.2]
SARS takes issue not with all the three sales of
immovable properties, but with the one to Fidelity only;
[58.3]
I did not
find, as suggested by SARS, that the intention of the provisional
liquidators
[22]
had an impact
on my findings of
bona
fide
purchasers.
A
bona
fide
purchaser
(in this case) is clearly someone who does not know that the
authority of the provisional liquidators to sell the asset
has been
placed in issue.
[59]
SARS points out that the order that I granted in
paragraph 8 regarding written consent by resolution of the board of
directors of
Holdings goes beyond the Bhoola order. It was deliberate
step, to stop any further disputes about tacit consent. SARS
criticises
paragraph 9 of my order that impacts on sales after the
auction. It, with respect, misses the point that some assets were
sold
after the auction by private treaty when it argues that
“
The
court could in view of its findings at best have prohibited in
paragraph 9 of the orders that any transfer of immovable assets
sold
at
the auction
,
in the instances where transfer
have
not yet taken place
,
are prohibited
.”
The
business rescue application
[60]
All the parties seek a re-evaluation of my
original judgment in the business rescue application. SARS is of the
view that I should
have dismissed the business rescue application for
other reasons than the ones that I used:
[60.1]
That I erred in finding that it was not necessary
to have joined SARS (by operation of law and by implication that I
was wrong to
have found that in any event any joinder defect was
cured after the first hearing). The provisional liquidators agree
with SARS;
[60.2]
That I erred in not first looking at the alleged
fatally defective case made out in the founding papers, before I
considered all
the papers filed of record as a whole;
[60.3]
That I erred in not finding that the business
rescue application was an abuse, and launched for ulterior purposes.
[61]
I am not going to revisit these matters, save to
state briefly that:
[61.1]
I do not believe that the first two points have
merit. As I discussed the approach to the hearing of the matter with
the parties,
it was agreed that points
in
limine
would not be argued separately.
I did not impose any process; I facilitated a discussion and the
parties agreed on the way argument
would take place. It would have
served no one’s interest to hear points
in
limine
, consider to postpone the
hearing to allow for supplementary founding papers to be delivered,
and if required, to postpone the
hearing for further affidavits, with
only costs to be wasted. No one would have non-suited the applicants
in papers prepared under
time pressure. I believe justice was served
by the approach taken by me. No one abandoned any points, but when I
heard the matter
over two days, the focus was on the merits of the
matter, as set out in all the affidavits. No one was prejudiced
thereby;
[61.2]
I expressed a different view in the original
judgment about the third point. In fact, SARS and the provisional
liquidators do not
oppose that leave to appeal be granted to the
applicants in the business rescue application.
[62]
The third point, is argued to the contrary by the
applicants in the business rescue application. I have already in the
summary of
the facts reflected that the applicants in the business
rescue application are of the view that I should have referred to
more
material facts in the original judgment and should have granted
the business rescue application(s). As stated, I cannot address
them
fully without significant addition to my original judgment. In
summary, the applicants in the business rescue application
have the
following grounds of appeal:
[62.1]
That I erred in not finding that the six business
rescue companies could be rescued and be restructured to conduct
business on a
solvent basis in that inter alia-
[62.1.1]
Properties, Leading Prospect, and Youth
Development Centres own immovable property and would receive rental
income;
[62.1.2]
Technology Systems and Sun Worx, in partnership,
are predominantly engaged in the private sector,
and that certain or all six
business rescue companies could be rescued to resume trading; and
[62.2]
That I erred in not attaching sufficient weight to
the second goal of business rescue being a better return than would
result from
the immediate liquidation, and erred by incorrectly
applying the legal principles relating to that second goal, in that-
[62.2.1]
The Rodcor plant on its own represents a
substantial benefit of business rescue as opposed to immediate
liquidation in that, if
sold as a copper plant, and not the sum of
its parts, a potential gain of R238 Million stands to be made;
[62.2.2]
I erred in not appreciating that SARS has a
limited claim that could be settled from available cash within the
six business rescue
companies;
[62.2.3]
I erred in not giving due consideration to the
interests of the ultimate shareholders and/or the creditors other
than SARS;
[62.2.4]
I erred in not appreciating that
a
business rescue practitioner, taking
the opportunity to work with the directors in identifying appropriate
clients over time, should
produce a better return than a forced sale;
[62.2.5]
That I erred in not finding that the business
rescue application would also cater for the investigatory and
recovery functions under
winding-up due to the legislated functions
of the business rescue practitioner, especially due to sections
140(3)(a) and 141(2)
of the 2008 Act;
[62.2.6]
That I erred in not appointing an independent
business rescue practitioner once I found that the provisional
liquidators sold assets
without having had the authority to do so.
[63]
Two parties aver that the application is so
without merit, that it is an abuse. The other party avers that I
erred in dismissing
the applications. It seems to me that the
strongest case on appeal would be where to draw the line between
normal liquidation proceedings,
and business rescue proceedings as a
liquidation tool. I believe this to be matter of importance, but I
make no comment on the
second leg of the matter.
Conclusion
[64]
I make the following orders:
1.
The late delivery of its notice of
application for leave to appeal by SARS, is condoned
Case Number
42741/19
2.
The application for leave to appeal
by the 1
st
,
2
nd
and 3
rd
applicants against my decision
reflected in paragraphs 16, 17 and 18 in the order in the original
judgment dated 24 August 2020
succeeds, such leave is to the Supreme
Court of Appeal and the costs of the application for leave to appeal
shall be the costs
in such appeal;
3.
The application for leave to appeal
by the first intervening party, against my decision reflected in
paragraph 17 in the order in
the original judgment dated 24 August
2020 succeeds, such leave is to the Supreme Court of Appeal and the
costs of the application
for leave to appeal shall be the costs in
such appeal;
4.
The application for leave to appeal
by the
1
st
to 3
rd
,
the 5
th
to 34
th
,
and the 36
th
to 38
th
respondents
against my decision reflected in paragraphs 1, 13, 15, and 17 in the
order in the original judgment dated 24 August
2020 succeeds, such
leave is to the Supreme Court of Appeal and the costs of the
application for leave to appeal shall be the costs
in such appeal;
Case Number
44827/19
5.
The application for leave to appeal
by the 43
rd
respondent against my decision
reflected in paragraph 7 and 11 in the order in the original judgment
dated 24 August 2020 succeeds,
such leave is to the Supreme Court of
Appeal and the costs of the application for leave to appeal shall be
the costs in such appeal;
6.
The application for leave to appeal
by the
1
st
to 3
rd
,
the 5
th
to 34
th
,
and the 36
th
to 38
th
respondents
against my decision reflected in paragraphs 1, 3, 6, 7, 8, 9, 10 and
11 in the order in the original judgment dated
24 August 2020
succeeds, such leave is to the Supreme Court of Appeal and the costs
of the application for leave to appeal shall
be the costs in such
appeal;
Case Number 32083/19
7.
The application for leave to appeal
the 4
th
to 6
th
,
the 8
th
to 37
th
,
and the 39
th
to 41
st
respondents against my decision
reflected in paragraph 19 and 21 in the order in the original
judgment dated 24 August 2020 succeeds,
such leave is to the Supreme
Court of Appeal, and the costs of the application for leave to appeal
shall be the costs in such appeal.
DP de Villiers AJ
Delivered: This judgement
was prepared and authored by the Judge whose name is reflected and is
handed down electronically
by circulation to the Parties/their legal
representatives by email and by uploading it to the electronic file
of this matter on
CaseLines. The date for hand-down is deemed
to be 17 November 2020.
Heard
on:
30 September 2020
Delivered
on:
17 November 2020 electronically, by e-mail and by uploading on
CaseLines
The representation
is reflected as in the original applications:
On behalf of the
applicants in case numbers 44827/19 and 42741/19 and on behalf of the
first to third respondents in case number
32083/19
Adv
F Joubert SC
Adv
J de Vries
Instructed by Goodes
& Seedat Attorneys
On behalf of the
first to thirty-ninth respondents (excluding the fourth and the
thirty-fifth respondents) in case numbers 44827/19
and 42741/19 and
on behalf of the eighth to forty-first respondents (excluding the
seventh and the thirty-eighth respondents) in
case number 32083/19
Adv
KW Lüderitz SC
Adv P Lourens
Instructed by
MacRobert Attorneys
On behalf of the
first intervening party in case numbers 44827/19 and 42741/19 and on
behalf of the forty-third respondents in case
number 32083/19
Adv
HGA Snyman SC
Adv K Kollapen
Instructed by VZLR
Inc
[1]
See in this
division the full court decision in
Fair
Trade Tobacco Association v President of the Republic of South
Africa and Others
[2020]
ZAGPPHC 311 para 2-6, relying inter alia on
Smith
v S
[2011]
ZASCA 15
para 7.
[2]
The effect of
their submission is that if a court does not award costs
de
bonis propriis
against
a liquidator, it should not be deprived of costs due to his/her
conduct as the liquidator would simply recover those costs
from the
estate. I say no more about this below, as I believe that it would
be a clear conflict of interest for a liquidator
to act in this
manner.
[3]
See
section
16(2)(a)(i)
of the
Superior Courts Act 10 of 2013
.
[4]
See
Neotel
(Pty) Ltd v Telkom SA Soc Ltd and Others
[2017]
ZASCA 47
para 15-24.
[5]
See
Phillipa
Susan van Zyl NO v Getz
[2020]
ZASCA 84
para 11-13, relying
inter
alia
on
Strategic
Liquor Services v Mvumbi NO and Others
2010
(2) SA 92
(CC) para 15 and 17, and
Mphahlele
v First National Bank of South Africa Ltd
[1999] ZACC 1
;
1999
(2) SA 667
(CC) para 12. See too
Liesching
and Others v The State
[2018]
ZACC 25
para 54-55, and
Maake
v Director of Public Prosecutions
[2010]
ZASCA 51
para 19-20.
[6]
Plascon
Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd
1984 (3) (SA)
623 (A) at 634 E - 635 D.
[7]
National
Scrap Metal v Murray & Roberts
2012
(5) SA 300
(SCA) para 21-23.
[8]
Wightman
t/a J W Construction v Headfour (Pty) Ltd and Another
[2008] ZASCA 6
;
2008 (3) SA
371
(SCA) para 12-13.
[9]
Summarised
from the
first few sections in the Constitution.
[10]
Stare
decisis et non quieta movere
(stand
by what has been decided and do not disturb the settled).
[11]
M Wallis,
Whose
decisis must we stare?
[11]
(2018) 135
The South African Law Journal page 1-17
[12]
HR Hahlo and
E Kahn,
The
South African Legal System and its Background
,
Juta, 1968 at page 214-215.
[13]
Despite its
description in Latin,
stare
decisis
did
not form part of Roman Law. The Roman Dutch Common Law, in the end,
also still allowed for a High Court judge to depart from
precedent
“
for
convincing reason after careful consideration
”
.
See
The
South African Legal System and its Background
page
221, quoting Van der Linde.
[14]
See JG Kotze,
Judicial
Precedent
,
(1917) South African Law Journal 280
; JC de Wet,
Gemene
Reg of Wetgewing
,
1948 THRHR 1
; E Kahn,
The
Rules of Precedent Applied in South African Courts
,
(1967) South African Law Journal from 43, 175, and 308; HR Hahlo and
E Kahn,
The
South African Legal System and its Background
,
Juta, 1968 from 214; S Woolman and D Brand
,
Is there a Constitution in this Courtroom? Constitutional
jurisdiction after Afrox and Walters
,
(2003) 18 SAPR 37.
[15]
Afrox
Healthcare Bpk v Strydom
2002
(6) SA 21
(SCA) para 26-30;
Van
der Walt v Metcash Trading Ltd
[2002] ZACC 4
;
2002
4 SA 317
(CC) para 39,
Daniels
v Campbell NO and Others
[2004] ZACC 14
;
2004
5 SA 331
(CC) para 94,
True
Motives 84 (Pty) Ltd v Mahdi and Another
2009
4 SA 153
(SCA) para 100,
Camps
Bay Ratepayers and Residents Association and Another v Harrison and
Another
2011
(4) SA 42
(CC) para 28.
[16]
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012 (4) SA
593 (SCA);
[17]
Cool Ideas
1186 CC v Hubbard and Another
2014
(4) SA 474
(CC);
[18]
Valentino
Globe BV v Phillips and Another
1998
(3) SA 775 (SCA).
[19]
See
Mahlangu
v Mahlangu
[2017]
ZASCA 81
para 13-16, and
President
of the Republic of South Africa v Democratic Alliance and Others
2020 (1) SA
428
(CC) para 16-40.
[20]
See
Independent
Institute of Education (Pty) Limited v KwazuluNatal Law Society and
Others
[2019]
ZACC 47
para 2.
[21]
The
suggestion by SARS may even be that my findings are irrational: “
The
court erred in finding that the second intervening party in the
auction application and the applicant in the application under
case
number 32083/19 (“the rule 42 application”), Fidelity
Security Services (Pty) Ltd (“Fidelity”),
was suddenly
no longer a bona fide purchaser and in doing so the court erred in
setting aside the sale of the immovable property
to Fidelity
Security Services
.”
[22]
“
The
court should have found that Fidelity was and remained a bona fide
purchaser of the immovable property in question and that
nothing,
least not the intentions of the provisional liquidators, could have
changed that fact
.”