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[2023] ZAFSHC 137
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Islandsite Investments 180 (Pty) and Others v Appavoo N.O and Another (1692/2023;2427/2021) [2023] ZAFSHC 137 (3 May 2023)
IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
CASE
NO:
1692/2023
In
the matter between:
ISLANDSITE
INVESTMENTS 180 (PTY)
First
Applicant
KURT
ROBERT KNOOP
N.O.
Second
Applicant
JOHAN
LOUIS KLOPPER
N.O.
Third
Applicant
(2
nd
and 3
rd
applicants cited in their capacities as
business
rescue practitioners of the 1
st
applicant)
and
DHANESVARIN
APPAVOO
N.O.
First
Respondent
(1
st
respondent cited in his capacity as the
curator
bonis of the 1
st
applicant)
THE
NATIONAL DIRECTOR
OF
Second
Respondent
PUBLIC
PROSECUTIONS
In
re the
ex parte
application
of:
CASE
NO: 2427/2021
THE
NATIONAL DIRECTOR
OF
Applicant
PUBLIC
PROSECUTIONS
and
IQBAL
MEER
SHARMA
First
Defendant
NULANE
INVESTMENTS 204 (PTY) LTD
Second
Defendant
ISLANDSITE
INVESTMENTS 180 (PTY) LTD
Third
Defendant
KURT
ROBERT KNOOP N.O
Fourth
Defendant
JOHAN
LOUIS KLOPPER
N.O.
Fifth
Defendant
(4th
and 5
th
defendants cited in their capacities as
business
rescue practitioners of the 1
st
defendant)
ISSAR
GLOBAL LIMITED
First
Respondent
ISSAR
CAPITAL (PTY)
LTD
Second
Respondent
TARINA
PATEL-SHARMA
Third
Respondent
CORAM
:
VAN RHYN, J
HEARD
ON
:
13 APRIL 2023
DELIVERED:
3 MAY 2023
[1]
This is an opposed urgent application
instituted by the applicants for payment of legal fees
from assets
that have been placed under curatorship by an order of this court on
2 June 2021 in terms of the provisions of Sections
25 and 26 of the
Prevention of Organised Crime Act
[1]
(“POCA”).
[2]
The application is opposed by the first respondent, Dhanesvarin
Appavoo, an Insolvency Practitioner
of Dredin Consulting (Pty) Ltd,
appointed by the court as
curator bonis
, (the “
curator
bonis
”) in terms of section 28(1)(a) of POCA and the second
Respondent, the National Director of Public Prosecutions (the
“NDPP”).
[3]
First applicant is Islandsite Investments 180 (PTY) (LTD)
(“Islandsite”),
a company in business rescue, with
registered address situated at Midrand, Gauteng. The second
applicant, Mr Knoop and third
applicant, Mr Klopper are cited in
their capacities as the Business Rescue Practitioners of the first
applicant (the “BRPs”).
[4]
The application was launched on an urgent basis on 4 April 2023. The
NDPP was afforded
one day to file a notice of intention to oppose the
application and another day to file an answering affidavit. The
curator bonis
served an answering affidavit on 8 April 2023.
The application for condoning the late filing of the NDPP’s
answering affidavit
as well as an application for the late filing of
the applicant’s replying affidavit, were not opposed. When the
matter was
called on 13 April 2023, I heard arguments from the
parties on both urgency and the merits of the application.
[5]
The background to the matter is as follows: On 16 February 2018 the
directors of
Islandsite resolved to commence with voluntary
business rescue proceedings and that the company be placed under
supervision in
terms of section 129(1) of the Companies Act.
[2]
On 20 February 2018 the BRP”s were appointed and on 6 November
2020 re-appointed. On 2 June 2021 the NDPP obtained a provisional
preservation order in terms of the provisions of section 26 of POCA
under case number 3971/2021 against, amongst others, Islandsite
and,
in their representative capacities, the two BRPs.
[6]
The rule nisi was extended on numerous occasions and is scheduled for
hearing on 19
and 20 October 2023. On 27 August 2021, the applicants
brought an urgent application seeking the release of realisable
property
within the
Curator Bonis
’ control to meet the
reasonable legal expenses of the applicants in connection with the
POCA proceedings and any related
criminal proceedings (the “first
urgent application”). On 14 September 2021, by agreement
between the parties,
Molitsoane J ordered the
Curator Bonis
to
pay an amount of R 1 008 992.50 for the reasonable and
necessary legal expenses incurred by the BRPs in the main restraint
proceedings.
[7]
On 8 September 2022 the applicants launched an urgent application
against the
Curator Bonis
and the NDPP, under case number
4348/2022 (the “second urgent application”), for payment
of legal costs in respect
of different underlying litigation. The
application was struck from the roll for lack of urgency. The
Curator
Bonis
and the NDPP contend that the same basic arguments raised
in the second urgent application apply to the application at hand.
[8]
The BRPs seek the following relief in their amended notice of motion:
8.1 an
order in terms whereof the
Curator Bonis
is directed to
release assets under restraint to pay the legal expenses incurred (or
to be incurred) by the BRPs relating to the
urgent application by Ms
Ronica Ragavan under case number 1410/2023 in accordance with the
rate card attached to the founding affidavit
and limited to an amount
of R700 000.00;
8.2 an
order in terms whereof the
Curator Bonis
is directed to
release assets under restraint to pay the legal expenses incurred (or
to be incurred) by the BRPs relating to this
application in
accordance with the rate card attached to the founding affidavit
limited to an amount of R453 400.00.
[9]
On 26 April 2018 the business rescue plan for Islandsite was duly
approved in terms
of section 152(2) of the Companies Act. The
approved plan contemplates the sale of various immovable properties
of which Islandsite
is the registered owner. During December
2022 the BRPs, the
Curator Bonis
and the NDPP jointly agreed
to sell a property, owned by Islandsite, situated at Constantia, Cape
Town (the “property”).
On 6 February 2023, Islandsite
received an offer to purchase the said property in the amount of
R20 000 000.00. The offer
was subsequently accepted the
BRPs and the
Curator Bonis.
[10]
On 22 March 2023 Ms Ragavan, a director of Islandsite, brought an
urgent application under case number
1410/2023 in this court (the
“Ragavan application”) seeking an interdict against the
BRPs and the
Curator Bonis
from, in any way, selling or
alienating the property, alternatively from transferring the property
to the purchaser in terms of
the agreement of sale. Both BRPs are
cited in their official capacities and therefore contend that it is
incumbent upon them to
participate in the proceedings and to oppose
the Ragavan application. By agreement between the relevant
parties, Part A of
the Ragavan application was postponed to be heard
on 20 April 2023. The BRP’s filed a notice to oppose, a notice
disputing
the authority of Ms Ragavan and her legal representatives
to bring the application and an answering affidavit in the Ragavan
application.
[11]
The BRPs, through the goodwill of their attorneys of record who
agreed to act on a deferred payment
basis pending the outcome of this
application, proceeded to file the notices and answering affidavit in
the Ragavan application
and launched this urgent application seeking
orders to obtain payment from the
Curator Bonis
in respect of
the current urgent application as well as the Ragavan application in
the amounts mentioned in the notice of motion.
The BRPs, through
their attorney, sent letters to the
Curator Bonis
on 12 March
2023, 22 March 2023 and 30 March 2023 requesting the
Curator Bonis
to agree to payment of the BRPs legal representatives’ fees in
respect of the Ragavan application.
[12]
Initially the
Curator Bonis
replied that he had engaged the
NDPP regarding the request and was awaiting a response. However, on
31 March 2023 the
Curator Bonis
replied that a court order to
authorise the release of funds for legal fees to be paid from the
curatorship will be required. Therefore,
on 4 April 2023, the BRPs
issued this urgent application. Mr Scott, counsel on behalf of the
applicants, argued that the BRPs acted
with the requisite diligence
in instituting this application. The BRPs had to consider the Ragavan
application and had to engage
with the
Curator Bonis
and the
NDPP before approaching the court on an urgent basis.
[13]
The BRPs delivered a notice in terms of the provisions of Rule 7(1)
of the Uniform Rules of Court in
the Ragavan application and raised
the point that Ms Ragavan do not possess the necessary authority to
litigate on behalf of Islandsite
as it is a company in business
rescue. On the basis that the
Curator Bonis
has failed to file
a Rule 7 notice, it is argued that, in their absence at the hearing
on 20 April 2023, this dispositive point
may be lost or not
considered if not advanced by the BRPs who filed the Rule 7 notice.
The exclusion of the BRP’s participation
at the hearing will
give rise to harm that cannot be redressed in the ordinary course.
[14]
Mr Scott argued that it is therefore unfair to expect from the BRPs
legal representatives to contribute
time and to incur expenses to
oppose the Ragavan application which application is on the roll for
hearing within a week from the
hearing of this application.
[15]
In respect of the merits of the application the BRPs contend that
paragraph 1.11 of the restraint order empowers
the
Curator Bonis
to pay expenses related to restrained assets that would ordinarily be
carried by the estate. The restraint order, in particular
paragraph
1.11 thereof entitles the
Curator Bonis
to pay the expenses
contemplated in paragraph 2 and 3 of the notice of motion. Reliance
is also placed on the provisions
of paragraph 19 of annexure B of the
restraint order which provides as follows:
“
the curator bonis
shall only pay legal costs for any person subject to curatorship if
ordered to do so by a court or with the prior
written consent of the
National Director of Public Prosecutions.”
[16]
Mr Zietsman SC, counsel on behalf of the
Curator Bonis
argued
that the BRPs have not made out a case for the relief sought, both in
respect of urgency as well as regarding the merits
of the
application. Islandsite is illiquid, remains financially distressed
and there are no liquid assets that are readily available.
Even if
the order is granted, the court order will have no practical effect
until such time as Islandsite has been placed into
funds and the
Curator Bonis
will therefore not be able to satisfy such
order.
[17]
In the answering affidavit filed in the Ragavan application by the
BRPs, a copy of which is appended
to this application, it was clearly
stated that the continuous litigation instigated by Ms Gupta and Ms
Ragavan have caused delays
which, along with Islandsite’s
inability to raise funds by disposing of assets in terms of the
business rescue plan, have
left Islandsite without funds to repair
the property. The
Curator Bonis
furthermore contends that if
the interdict is granted in the Ragavan urgent application of which
Part A was to be heard on 20 April
2023, the transfer of the property
for an amount of R20 000 000.00 will not proceed, or not
soon, and the
Curator Bonis
will not be able to comply with
the order.
[18]
In respect of the merits, Mr Zietsman SC argued that the nature of
the proceedings between the Ms Ragavan
and the BRPs concerns the
authority of the BRPs to consent to the sale of the property. It is a
question of law and is similar
to the issue in
Ragavan
and Others v Optimum Coal Terminal (PTY) LTD (In Business
Rescue) and Others
[3]
.
The issue raised by the BRPs in the Ragavan application has to be
answered in accordance with the provisions of the Companies
Act and
does not concern the provisions of POCA. The
Curator
Bonis
opposes
the application for payment of the legal costs already incurred or to
be incurred by the BRPs on the basis that the BRPs
has not made out a
case for the relief claimed.
[19]
The NDPP opposes the application on the basis that the matter is not
urgent in that the BRPs have known
since 2 June 2021, when the
restraint order was granted against Islandsite and the BRPs in their
representative capacities, that
they are prohibited from dealing with
Islandsite’s property other than in terms of the restraint
order. Since 10 March 2023
the BRPs had knowledge of the anticipated
Ragavan application. Therefore, this is a typical example of self-
created urgency and
as a result the application should be struck from
the roll for that reason alone.
[20]
In respect of the merits, Ms De Villiers, counsel on behalf of the
NDPP argued that the BRPs have not identified
any specific provision
in the restraint order permitting them to administer Islandsite’s
assets and to incur very substantial
legal expenses in doing so.
The relief sought is thus vague and does not disclose a cause of
action. The application is furthermore
unnecessary, unreasonable and
wasteful which will lead to the unnecessary dissipation of the value
of the assets of Islandsite
and property under restraint. In this
regard Ms De Villiers contends that the Ragavan application will be
opposed by the
Curator Bonis
and it is unnecessary for the
BRPs to oppose the Ragavan application merely on the basis that they
are the only parties who filed
a Rule 7 notice.
[21]
The legal principles to adopt when dealing with urgent applications
are governed by the provisions
of Rule 6(12) of the Uniform Rules of
Court. The court has discretionary powers to dispense with the forms
and service provided
for in the rules and dispose of the matter at
such time and place in such manner and in accordance with such
procedure as it deems
fit. Urgent applications require an applicant
to persuade the court that non-compliance with the rules and the
extent thereof,
are justified on the grounds of urgency. The
applicant must demonstrate why he claims that he could not be
afforded substantial
redress at a hearing in due course
[4]
.
[22]
A respondent confronted with an urgent application, in an endeavour
to avoid judgment being given by
default, is obliged to,
provisionally, accept the time periods set by the applicant and then
at the hearing of the matter argue
its objections regarding the
urgency of the matter, if any.
[5]
Upon reading the founding affidavit, answering and replying
affidavits and the annexures thereto, it became apparent that the
applicants would have difficulty in meeting the requirements of
establishing the urgency for which it contended. The history of
the
matter is set out by the NDPP. It is clear that the ongoing dispute
between the BRPs and the
Curator
Bonis
pertaining to the control and release of assets under the restraint
for payment of the BRPs legal fees has been ongoing for a
considerable time, in fact since the restraint order was granted on 2
June 2021.
[23]
The NDPP has made its stance in respect of payment of the BRPs legal
expenses known since 14 September
2021, namely that such payment can
only be made pursuant to an order in terms of section 26(6) of POCA
and paragraphs 1.42 and
1.43 of the restraint order. Furthermore,
payment of such expenses is conditional upon the expenses being
reasonable and properly
motivated as set out in the order granted on
14 September 2021 in the first urgent application.
[24]
The primary object of POCA is to fight, inter alia, organised crime
and money laundering activities by targeting
the proceeds of unlawful
activities. POCA confers certain statutory powers, duties and
authority to the appointed
curator bonis
who is tasked with
overseeing the business and property that forms the subject of the
preservation order. Business rescue proceedings
have a different
objective, namely to,
inter alia
, facilitate the
rehabilitation of a financially distressed company in a manner that
balances the rights and interests of all the
relevant stakeholders.
Clearly, the business rescue proceedings and any attempt by the
curator bonis
at preservation of all assets, may lead to
disputes between the business rescue practitioner and the
curator
bonis
in the event of sales of assets envisaged in terms of the
business rescue plan.
[25]
The
Curator Bonis
and the NDPP referred to the fact that
Islandsite is illiquid and financially distress with the result that
no liquid assets are
currently available for disposal by the
Curator
Bonis
to pay the legal costs claimed by the BRPs. The BRPs
acknowledged as much. It is therefore common cause that in the event
of an
order being granted by the court in accordance with the prayers
2 and 3 of the Notice of Motion, such order cannot be executed by
the
Curator Bonis
.
[26]
A court will not make an order that cannot be enforced. When Mr Scott
was asked to address the problem
that no funds are available to
satisfy any order if granted. He indicated that the order may be
granted on the basis that in the
event of funds becoming available,
such payment should be effected to the BRPs. A court order must be
effective, enforceable and
immediately capable of execution.
[6]
Only an order
ad
pecuniam solvendam
(for the payment of a sum of money) or ad factum praestandum (for the
performance of a specific act) satisfies this requirement.
[27]
Taking cognisance of the many uncertain future events pertaining to
the possible outcome of the Ragavan
application, the judgment in the
section 174 of the Criminal Procedure Act in the criminal case in
terms whereof the
Curator Bonis
has been appointed, (which has
been delivered since this matter was heard), having a direct
influence on the availability of funds,
I am of the view that this
court cannot grant an order of which the efficacy remains uncertain
and dependent upon the liquidity
of Islandsite in future.
[28]
The BRPs seek an order which, on their own
version, is not capable of execution at the time of hearing
of the
matter. If a party request a court for an order on an urgent basis
which cannot be enforced, that is a very good reason
for refusing to
grant the relief sought.
[29]
In this matter the NDPP and the
Curator Bonis
were denied a
considerable period to carefully consider the merits of the
application and the legal representatives of the NDPP
and the
Curator
Bonis
had to file their answering affidavits within a very short
period of time. The applicants thus fail to justify the procedure and
the time limits imposed upon the
Curator Bonis
and the NDPP to
such an extent that the matter warrants being struck from the roll
with costs.
ORDER
[30]
1. The application is struck from the roll for want of urgency.
2. The First Applicant is
ordered to pay the respondents costs.
_____________________
VAN
RHYN, J
On
behalf of the applicants
:
Adv.
T Scott
MCINTYRE
VAN DER POST ATTORNEYS
BLOEMFONTEIN
On
behalf of the First Respondent:
Adv.
J Zietsman SC
SYNINGTON
& DE KOK ATTORNEYS
BLOEMFONTEIN
On
behalf of the Second Respondent:
Adv.
S de Villiers
THE
OFFICE OF THE STATE ATTORNEY
BLOEMFONTEIN
[1]
Act 121 of 1988.
[2]
Act
71 of 2008. Section 129(1) provides as follows:
‘
(1)
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-
(a)
the company is financially distressed;
and
(b)
there appears to be a reasonable
prospect of rescuing the company…’
[3]
(136/2020)
[2023] ZASCA 34
(31 March 2023).
[4]
Luna Meubel Vervaardigers (Edms) Bpk) v Makin (t/a Makin’s
Furniture Manufacturers) and Another 1977(4) SA 135 (W) at 137F;
Cekeshe and Others v Premier, Eastern Cape and Others
1998 (4) SA
935
at 948 A- 949C.
[5]
Nelson Mandela Metropolitan Municipality & Others v Greyvenouw
CC and Others
2004 (2) SA 81
(SE) at [37], [38] and [40].
[6]
Thutha v Thutha
2008 (3) SA 494
at [15].