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[2012] ZAECPEHC 39
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Climax Concrete Products CC t/a Climax Concrete Products CC v Evening Flame Trading 449 (Pty) Ltd and Others (812/2012) [2012] ZAECPEHC 39 (21 June 2012)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE – PORT ELIZABETH)
CASE NO.: 812/2012
In the matter between:
CLIMAX CONCRETE PRODUCTS CC
t/a CLIMAX CONCRETE PRODUCTS CC
….............................................
Applicant
Registration Number CK
1985/014313/23
And
EVENING
FLAME TRADING 449 (PTY) LTD
….....................................
First
Respondent
LAMPRECHT PROPERTIES CC
…..........................................
Second
Respondent
FRIEDMAN SHECKTER
…...........................................................
Third
Respondent
JUDGMENT
BESHE, J:
INTRODUCTION
[1] This is an urgent application
wherein the applicant seeks relief in the following terms:
1. That the matter be heard as one of
urgency and that the time limits, forms and service provided for in
the Rules of Court are
dispensed with in terms of the provisions of
Rule 6 (12);
2. That the resolution of the first
respondent to commence Business Rescue Proceedings be and is hereby
set aside in terms of section
130 of Act 71 of 2008 (The Companies
Act);
3. The resolution of the second
respondent to commence Business Rescue Proceedings be and is hereby
set aside;
4. The first and second respondents be
and are hereby ordered and directed to maintain an amount of no less
than R629 068.27
at any banking facility held by either the
first respondent or the second respondent or in the Trust Account of
the third respondent;
5. Cost of the application.
[2] First and second respondent
responded by way of a counter application in terms of which they seek
the court’s approval
to file a further resolution to commence
business rescue proceedings in terms of section 129 (5) of the
Companies Act.
THE PARTIES
[3] The applicant is a Close
Corporation duly registered in terms of the Close Corporations Laws
of the Republic of South Africa
and carries on business from 49 Bell
Street, Kruis River Industrial Area, Uitenhage, Eastern Cape. The
applicant carries on the
business of a supplier of concrete products
to the building trade.
[4] The first respondent is Evening
Flame Trading 449 (Pty) Ltd, a company duly registered in terms of
the Company Laws of the Republic
of South Africa which carries on the
business of
inter alia
, a property developer within the area
of jurisdiction of this court from its registered office, 2 Mimosa
Street, Jeffrey’s
Bay an address within the jurisdiction of
this court.
[5] The second respondent is Lamprecht
Properties CC, a Close Corporation duly registered in terms of the
Close Corporation Laws
of the Republic of South Africa and carries on
business as a property developer/construction company within the
jurisdiction of
this court, from its registered office, 2 Mimosa
Street, Jeffrey’s Bay, Eastern Cape. First and second
respondents fall under
the “Lamprecht Group of Companies”.
[6] The third respondent against whom
no substantive relief is sought, is Friedman Schekter, a firm of
attorneys of 75 – 2
nd
Avenue, Newton Park, Port
Elizabeth. Third respondent is first and second respondents’
attorney in respect of a property
transaction whose proceeds are part
of funds sought to be frozen/preserved by the applicant.
COMMON CAUSE FACTS
[7] The second respondent is indebted
to the applicant in the amount of R629 088.27 in respect of a
large quantity of bricks
sold and delivered to the second respondent
by the applicant. First respondent’s indebtedness to the
applicant arises out
of an undertaking to pay, to the applicant, a
sum of R204 000.00 from the proceeds of a sale and transfer of
Daku Shopping
Centre whose registered owner is the first respondent.
The said undertaking recorded that the third respondent has been
instructed
to effect such payment directly into the account of the
applicant. It is also common cause that the undertaking recorded that
the
second respondent was the contracting entity for the first
respondent, and that the second respondent waived their right and
title
to these proceeds in favour of the applicant. There has been no
payment in terms of the undertaking.
[8] It is common cause that the
shopping centre referred to above is in the process of being sold.
However what is in dispute is
whether the transfer of the said
shopping centre is in imminent or not.
[9] Common cause also, is the fact
that the third respondent, being the transferring attorneys of the
first and second respondents
has refused to give an undertaking to
hold funds in the amount owed to the applicant pending the outcome of
the proceedings to
secure payment, on the basis that it has not
received any instructions to pay the applicant.
[10] It is common cause that on the 27
February 2012 the first respondent filed a notice of commencement of
rescue proceeding in
terms of the Companies Act (Form COR 123.1).
This form together with a Resolution of the directors of the first
respondent was
lodged with the Companies and Intellectual Property
Commission. On the 9 January 2010 the second respondent had
apparently filed
Form COR 123.2 which is a notice of appointment of a
Business Practitioner in terms of the Companies Act.
[11] The first and second respondent
purported to act in terms of section 129 of the Companies Act which
provides that:
129
Company resolution to begin business rescue proceedings
Subject
to subsection (2) (a), the board of a company may resolve that the
company voluntarily begin business rescue proceedings
and place the
company under supervision, if the board has reasonable grounds to
believe that –
the
company is financially distressed; and
there
appears to be a reasonable prospect of rescuing the company.
A
resolution contemplated in subsection (1)-
may
not be adopted if liquidation proceedings have been initiated by or
against the company; and
has
no force or effect until it has been filed.
Within
five business days after a company has adopted and filed a
resolution, as contemplated in subsection (1), or such longer
time
as the Commission, on application by the company, may allow, the
company must-
publish
a notice of the resolution, and its effective date, in the
prescribed manner to every affected person, including with
the
notice a sworn statement of the facts relevant to the grounds on
which the board resolution was founded; and
appoint
a business rescue practitioner who satisfies the requirements of
section 138, and who has consented in writing to accept
the
appointment.
After
appointing a practitioner as required by subsection (3) (b), a
company must-
file
a notice of the appointment of a practitioner within two business
days after making the appointment; and
publish
a copy of the notice of appointment to each affected person within
five business days after the notice was filed.
If
a company fails to comply with any provision of subsection (3) or
(4)-
its
resolution to begin business rescue proceedings and place the
company under supervision lapses and is a nullity; and
the
company may not file a further resolution contemplated in subsection
(1) for a period of three months after the date on which
the lapsed
resolution was adopted, unless a court, on good cause shown on an
ex
parte
application, approves the company filing a further
resolution.
A
company that has adopted a resolution contemplated in this section
may not adopt a resolution to begin liquidation proceedings,
unless
the resolution has lapsed in terms of subsection (5), or until the
business rescue proceedings have ended as determined
in accordance
with section 132 (2).
If
the board of a company has reasonable grounds to believe that the
company has financially distressed, but the board has not
adopted a
resolution contemplated in this section, the board must deliver a
written notice to each affected person, setting out
the criteria
referred to in section 128 (1) (
e
) that are applicable to the
company, and its reasons for not adopting a resolution contemplated
in this section.
[12] It became common cause that the
respondents’ resolutions did not comply with
inter alia
,
section 129 (3) (a) of the Act and that therefore they (the
resolutions) are irregular, a nullity and of no force and effect.
DISPUTED ISSUES
[13] The following remain in issue:
(a) Is the application urgent?
(b) Have the requirements of an
interlocutory interdict been established by the applicant?
(c) Have the respondents made a case
for the order that they seek in their counter application?
URGENCY
[14] The reasons given by the
applicant for claiming that it will not be afforded substantial
redress if the matter were to be heard
in the normal course as
opposed to being heard as a one of urgency are,
inter alia
that:
1. Transfer of the respondents’
property is imminent. No undertaking has been forthcoming from the
respondent’s attorney
in regard to the applicant’s demand
for payment.
2. Once these funds have been paid to
the respondents, there is a high likelihood that these funds will be
dissipated via inter-company
accounts, and the applicant will not be
paid that money which is lawfully due to it.
3. Given that the respondent has
already applied for business rescue, there is no doubt that the
applicant will not see its money,
were it to wait for the matter to
be heard in due course which will have a negative effect on its
trading results, and will place
its business at risk.
See
paragraph 59.1 to 59.3 of founding affidavit.
[15] First and second respondents deny
that the application is urgent. They contend
inter alia
that
the transfer of the first respondent’s property is not
imminent. In view of the fact that the transfer of the said property
has not yet been lodged. Respondents also deny that the applicant
will suffers negative effect on its trading and that its business
will be placed at risk should it wait for the matter to be heard in
due course. Urgency is also disputed on the basis that, the
fact that
applicant might suffer financial consequences if it awaits its turn
in the ordinary course, does not entitle it to preferential
treatment
on the roll.
See paragraph 46 of answering affidavit.
It was
however held in
20
th
Century
Fox Film Corp. V Black Films 1982 (3) SA WLD 582
that the
urgency of commercial interests might justify the invocation of
Uniform Rule of Court 6 (12) no less than any other interest.
[16] In my view, the fact that
applicant seeks to have a resolution to commence business rescue
proceedings set aside, on its own
entitles the applicant to be heard
on an urgent basis. This is so because, if the first and second
respondents were to successfully
commence business rescue
proceedings, that would provide a “
temporary moratorium”
on the rights of claimants against the company/companies or in
respect of property in its possession.
(Section 128 (b) (ii) of
the Act)
In addition thereto no undertaking has been forthcoming
from the third respondent in regard to the applicant’s demand
for
payment. This despite the fact that the undertaking by the first
respondent recorded that the third respondent has been
instructed
to effect payment directly into the account of the applicant. In my
view, on these grounds alone, the matter is of sufficient urgency
to
justify applicant approaching this court by way of an urgent
application as regards both the application to set respondents’
resolution to commence business recue proceedings aside, and in
respect of the anti-dissipatory order.
REQUIREMENTS: INTERIM INTERDICT
[17] In an application for an interim
interlocutory relief such as the present application, it is trite
that the applicant must
establish:
(a) A
prima facie
right.
(b) A reasonable apprehension of harm
should the interim relief not be granted, but final relief be
granted.
(c) Balance of convenience.
(d) Absence of satisfactory
alternative relief.
[18] In this case applicant contends
that it has a
prima facie
right against the respondents, by
virtue of the fact that the first and second respondents are indebted
to it (the applicant).
First and second respondent do not deny that
they are indebted to the applicant. I am of the view that applicant
has established
that it has a
prima facie
right against the
first and second respondents.
[19] As regards having a reasonable
apprehension of harm should the interim relief not be granted and the
balance of convenience,
applicant contends that; It entertains a
well-grounded fear that if first and second respondents are not
interdicted they will
dissipate their assets. Applicant alleges that
first and second respondents, styled as a “group of companies”
are trying
to secure themselves some benefit by invoking the
voluntary business rescue procedure. This, based
inter alia
,
on the fact that they did not give the applicant, which is its
creditor, or affected party peremptory notice of the commencement
of
the business rescue proceedings; and that in all likelihood has to do
with the imminent receipt of the proceeds flowing from
the sale of
the Daku Centre.
[20] According to the applicant, this
can also be inferred from respondents’ conduct of:
(1) Not advising the applicant’s
attorney of the impending business rescue;
(2) Not securing the payment of
applicant’s claim;
(3) Appointing different attorneys to
process the business rescue proceedings;
(4) Failing to set out in a sworn
statement the basis upon which the resolution to commence business
rescue proceedings is based;
(5) Failing to give proper notice to
the applicant.
[21] In support of its contention
applicant also drew the court’s attention to the fact that in
the answering affidavit the
deponent, Mr Abraham Jacob Lamprecht,
denies that he is the director of the first respondent having
resigned on the 25 August 2011.
However, in the Business rescue
motivation on behalf of first and second respondent, it is stated
that Mr Lamprecht is the sole
stakeholder and director of second
respondent and holds 90% of shares of the first respondent, with the
balance of 10% being held
by Mr H Swanepoel. The directors are H
Swanepoel and E Erasmus. It is also noted that the preamble to the
motivation states that
both entities (first and second respondent)
are part of a Construction and Development Group having common
shareholding by way
of holdings being controlled by Mr A J Lamprecht
either
directly or indirectly
via members or Trust and
Directorships.
[22] It is also noteworthy that Mr
Lamprecht, despite his resignation as first respondent’s
director in August 2011, the undertaking
to pay to the applicant a
sum of R204 000.00 from the proceeds of the sale and transfer of
Daku Centre on behalf of the first
respondent, is signed by him as a
shareholder and director of first respondent. The undertaking is
signed on the 15 November 2011.
See Annexure “E”.
Mr
Dyke
for the applicant argued that this is an indication that all
is not well with first and second respondent and coupled with their
failure to pay what is due to it, reasonably gives rise to an
apprehension that first and second respondent will dissipate funds
via inter-company accounts or put them beyond applicant’s
reach.
[23] On the other hand, first and
second respondent contend that applicant has failed to make out any
case, nor lay a factual basis
to show that either respondent is
wasting or getting rid of funds to defeat its creditors or is likely
to do so. There being no
evidence of an intention on the part of the
respondents to secret their assets.
[24]
Mr Beyleveld
for the
respondents argued that this was mere speculation on the part of the
applicant. That all that applicant want to do is to
secure payment
ahead of other creditors.
[25] Further that the applicant makes
a bold and unsubstantiated averment that the respondent entities are
conducted collectively
and or that they are alter ego of Mr
Lamprecht. It was argued that even if the entities are conducted
collectively, there is no
evidence proffered to indicate that they
intend to secret funds of the entities with the intention of
defeating applicant’s
claim. That the application for the
anti-dissipation order stands to be dismissed.
[26] In my view however, the applicant
is justified in its apprehension that
inter alia
the
resolution to commence business rescue proceedings by the
respondents, coupled with their failure to comply with the provisions
of section 129 of the Companies Act
vis-a-vis
the applicant is
an indication that the respondents intend avoiding the payment of the
amounts that they owe to the applicant.
I am satisfied therefore that
the balance of convenience favours the granting of the relief sought
by the applicant. It was not
suggested that the applicant has at its
disposal an alternative satisfactory relief.
COUNTER APPLICATION
[27] It was argued on behalf of the
respondents that they are entitled to the relief sought in the
counter application because the
applicant did not file any opposition
to the counter application, and that the facts set out in the counter
application should
stand.
[28] It is indeed so that the
applicants in the main application did not file any opposing papers
in respect of the counter application
and chose to raise the point
that there is no evidence that the respondents dully resolved to
institute the counter application,
in argument. It is trite that a
respondent should file his or her affidavits on the merits at the
same time as he or she takes
a
point in limine
. In
Bander
and Another v Weston and Another
1967 (1) SA 134
at 136
it
was stated that it is normally not proper for a respondent not to
file opposing affidavits but merely to take a preliminary
point.
Corbett J
, as he then was, however acknowledged that
“situations may arise where this procedure is unexceptionable”.
The learned
judge gave the example of a respondent who is suddenly
and without notice confronted with a complex application and who
would normally
be entitled to a substantial postponement to enable
him to frame opposing affidavits, might be permitted to take a
preliminary
point.
[29] I think the present is one such
situation. In the present case, the applicant in the main
application, which is brought urgently,
is confronted with a notice
of a counter application accompanied by the answering affidavit, on
the date appointed for the hearing
of the urgent application, the 20
March 2012.
[30] In my view, in the circumstances
it is appropriate to postpone the hearing of the counter application
to enable the respondent
in the counter application to prepare and
file opposing papers, with no order as to costs.
CONCLUSION
[31]
Mr Beyleveld
drew my
attention to the fact that in the notice of motion applicant does not
pray that relief sought on the second leg of its application
(anti-dissipation order) should be in place pending the determination
of an action to be instituted against the respondents. An
application
to amend the notice of motion to incorporate this prayer was opposed.
[32] It is trite that the applicant
must set out the relief he/she claims in the notice of motion.
However the prayer for further
and or alternative relief may be
invoked to justify an order in terms other than that set out in the
notice of motion where that
order is clearly indicated in the
founding affidavit.
(See Superior Court Practice: H J Erasmus
et al BI-42 B [Service 35 - 2010])
[33]
Paragraph 58 of the founding
affidavit (main application)
reads as follows:
“
It
is respectfully submitted that this is an appropriate case for this
Honourable Court to Order that the Respondents, and/or the
Third
Respondent should be ordered to maintain an available balance of
R629 068.27 in the Respondents or the Third Respondent’s
Trust account pending the outcome of an action to be instituted for
the recovery of the aforesaid amount against the respondents,
such
action to be instituted within thirty days of the granting of any
Order that this Honourable Court may deem meet to make.”
Clearly therefore the order sought by
the applicant in this regard is indicated on the founding affidavit
and I will therefore be
amenable to granting the relief sought in the
manner indicated in the founding affidavit.
[34] In the circumstances the
following order will issue:
(a)
That
the forms
and service provided for in the Rules be abridged and this
application be heard
as one of urgency;
(b) That the resolution of the
first respondent to commence Business Rescue Proceedings in terms of
section 130 of Companies Act
be and is hereby set aside;
(c) That the resolution of the
second respondent to appoint a Business Rescue Practitioner be and is
hereby set aside;
(d) That the first and second
respondent be and are hereby ordered and directed to maintain an
amount of no less than R629 068.27
at any banking facility held
by either the first or the second respondent or in the trust account
of the third respondent pending
the outcome of an action to be
instituted for the recovery of aforesaid amount against the
respondents;
(e) Applicant is directed to
commence the action set out in part (d) of this order against the
respondents within 30days of this
order being issued failing which
the order stipulated in (d) above shall lapse;
(f) That the counter application be
and is hereby postponed to enable the respondent therein to file its
notice of opposition if
any, within ten (10) days of this order being
issued and within 15 days of notifying the applicant of its intention
to oppose the
counter application, deliver its answering affidavit if
any;
(g) First and second respondent are
ordered to pay the costs of the main application.
_____________
N G BESHE
JUDGE OF THE HIGH COURT
APPEARANCES
For the Applicant: ADV: B
C Dyke
Instructed by: STRAUSS
DALY ATTORNEYS
57 Pickering Street
Newton Park
PORT ELIZABETH
Ref.: VC Tee/CL 170/0002
Tel.: 041 – 399
5300
For the Respondent: ADV:
A Beyleveld SC and ADV: I Bands
Instructed by: FREDERICKS
INCORPORATED
109 Westview drive
Mill Park
PORT ELIZABETH
Ref.: T Fredericks/LL
Tel.: 041 – 363
8506
Date Heard: 20 March 2012
Date Reserved: 20 March
2012
Date Delivered: 21 June
2012