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[2023] ZAGPJHC 431
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National Empowerment Fund v Fortress Income (Pty) Ltd and Others (Reasons) (2022-060026) [2023] ZAGPJHC 431 (4 May 2023)
REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG LOCAL DIVISION,
JOHANNESBURG
Case Number:
2022-060026
NOT REPORTABLE
NOT OF INTEREST TO OTHER JUDGES
REVISED
In
the matter between:
NATIONAL
EMPOWERMENT FUND
Applicant
and
FORTRESS
INCOME (PTY) LTD
First Respondent
JHI
PROPERTIES (PTY) LTD
Second
Respondent
GCWABAZA
HOLDINGS (PTY) LTD
Third Respondent
Neutral
Citation:
National Empowerment Fund
v Fortress Income (Pty) Ltd and 2 Others
(Case
No. 2022-060026) [2023] ZAGPJHC 431(4 May 2023)
WRITTEN REASONS FOR ORDER
YACOOB J:
1.
This application was set down in the urgent
court on 20 December 2022. At that time the applicant sought the
rescission of an order
granted under case number 2022/11244, and the
permanent stay of a warrant of execution issued pursuant to that
order on 16 November
2022. The applicant also sought costs in respect
of the parties opposing the application.
2.
The matter was heard on 22 December 2022 to
permit the filing of papers by the first and second respondents, who
opposed the application.
By that date the applicant had altered the
relief sought, simply to stay the warrant of execution and all
process resulting from
it, pending the finalisation of the third
respondent’s business rescue proceedings, and costs. The order
was granted in those
terms, and costs against the first respondent
after 20 December.
3.
The first respondent has requested reasons
for the decision.
4.
The applicant approached the court on
the basis that the third respondent was in business rescue, which
business rescue proceedings
had commenced on 15 August 2022. The
warrant was therefore unlawfully issued as it was issued after the
company was in business
rescue, which was inconsistent with
section
133
of the
Companies Act, 71 of 2008
, which provides for a moratorium
on legal proceedings against the company without written consent of
the business rescue practitioner
or leave of the court.
5.
The applicant has provided funding relief
to the third respondent for use towards operating costs during the
business rescue. The
execution of the warrant resulted in the
freezing of the bank account in which those funds were kept. This was
the basis of the
urgency.
6.
The respondents raised the following points
in opposition:
6.1.
The applicant had no
locus
standi
because it was not a party to
the order it was seeking to rescind;
6.2.
That other respondents in the matter in
which the order was granted had not been joined;
6.3.
There was no basis for the rescission as
the order was granted before the company went into business rescue;
6.4.
That the company was not in business rescue
because a new business rescue practitioner had not yet been appointed
after an existing
one was relieved of his duties, and
6.5.
The stay would achieve nothing as there was
very little money in the account.
7.
I found that the applicant’s interest
as the provider of post-commencement finance was sufficient to
justify it seeking the
stay of the warrant and resulting processes.
8.
The applicant pointed out in its replying
affidavit that the two additional respondents to the application
which gave rise to the
warrant were directors of the third
respondent. It was not necessary to join them since the reason for
this application was to
protect the integrity of the business rescue
proceedings, and there would be no substantial prejudice to them by
not joining them.
I consider that to be sufficient basis to reject
the non-joinder point.
9.
There was no reason to consider arguments
relating to the rescission as it was no longer being sought. However
it was clear that
the stay was required because the issue and
execution of the warrant while the third respondent was in business
rescue was both
unlawful and likely to interfere with the business
rescue.
10.
The applicant also pointed out in reply
that although one business rescue practitioner had just resigned, the
business rescue proceedings
were continuing and a new practitioner
was going to be appointed.
11.
In any event, whether a new practitioner
had yet been appointed is not relevant to whether the business rescue
had come to an end.
Section 132
of the
Companies Act sets
out exactly
when business rescue proceedings come to an end, and does not include
the resignation of a practitioner.
12.
At the hearing counsel for the
respondents indicated that the respondents had no issue with the
stay, the only issue was with costs.
It was submitted that the first
time the respondents knew that only a stay was being sought was on
the day of the hearing. However,
the applicant had informed the legal
representatives of the respondent on 20 December that the relief
sought would only be a stay.
13.
Counsel for the respondent submitted that
the applicant should never have sought costs against the second
respondent because it
was only the managing agent of the first
respondent. However costs were only sought against those respondents
who opposed, and
it was the second respondent who chose to oppose. If
it truly had no interest it ought not to have opposed.
14.
That said, it was clear from the affidavit
that the true opposition was from the first respondent, and that
therefore only the first
respondent should have to pay costs, and
that only from 20 December 2022, when its representatives were made
aware of the change
in the relief sought.
15.
These, then, are the reasons for the order.
S YACOOB
JUDGE OF THE HIGH COURT
JOHANNESBURG
Date of Hearing: 22 December 2022
Date of Order: 22 December 2022
Date of Written Reasons:
04 May 2023
For
the Applicant:
For
the Respondents:
B
Babha instructed by Madhlopa & Thenga Inc
R
Bhima instructed by Verton Moodley Associates Inc