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IN THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL LOCAL DIVISION, DURBAN
CASE NO: D11428/2021
In the matter between:
INVESTEC BANK LIMITED APPLICANT
and
MFBK PROPERTIES (PTY) LTD FIRST RESPONDENT
JERIFANOS MASHAMBA NO SECOND RESPONDENT
PIERRE DE VILLIERS BERRANCE NO THIRD RESPONDENT
ORIEL RAMPOLOKENG SEKATI NO FOURTH RESPONDENT
MASTER OF THE HIGH COURT, DURBAN FIFTH RESPONDENT
COMPANIES AND INTELLECTUAL PROPERTY
COMMISSION SIXTH RESPONDENT
In re:
DONALD MANUEL HOWARD BARRELL FIRST APPLICANT
VENAY HOLDINGS (PTY) LTD SECOND APPLICANT
and
MFBK PROPERTIES (PTY) LTD (IN LIQUIDATION) FIRST RESPONDENT
(REGISTRATION NUMBER 2015/063184/07)
PIERRE DE VILLIERS BERRANGE N. O SECOND RESPONDENT
ORIEL RAMPKOKENG SEKATI N. O THIRD RESPONDENT
COMPANIES AND INTELLECTUAL PROPERTY FOURTH RESPONDENT
COMMISSION
THE MASTER OF THE HIGH COURT, DURBAN FIFTH RESPONDENT
KWAZULU NATAL
JUDGMENT
SIPUNZI AJ
Introduction
[1] This is an urgent application to set aside a court order that commenced the
business rescue proceeding of MFBK Properties (Pty) Ltd (MFBK). The court order
that is the subject of the application was granted on 17 April 2023, with the
knowledge of the applicant and the consent of the respondents.
[2] As outlined in the notice of motion, the order sought is in the following terms:
‘1. That this application be heard as one of urgency in terms of the provisions of
rule 6(12) and that the forms and service provided for in the Uniform Rules be
dispensed with.
2. That the order granted on 17 April 2023:
2.1. that MFBK Properties (Pty) Ltd (MFBK) be placed under supervision
and for business rescue proceedings to commence in terms of the
provisions of s 131(1) read with s 131(4)(a) of the Companies Act, 2008
(The Act); and
2.2. that Jerifanos Mashamba be appointed as business rescue practitioner
of MFBK in terms of s 131(5) of the Act; and
2.3. that the costs of the application be costs in the business rescue
proceedings of MFBK is set aside in terms of s 132(2) (a)(i) of the Act;
and
3. That the costs of this application be costs in the winding up of MFBK save
that, in the event of opposition, the party opposing this application be ordered to pay
the costs of the opposition.’
[3] The matter served before the court on 19 October 2023, on an urgent basis.
However, it did not proceed on that day. Instead, the parties agreed on a timetable
that regulated the further filing of papers, the hearing was postponed sine die, and
the costs of the adjournment were reserved for later determination.
The parties
[4] The applicant is Investec Bank Limited, a company duly incorporated in terms
of the laws of South Africa and a duly registered bank , which has its principal place
of business at [....] R[...] Circle, Ridgeside Office Park, Umhlanga, KwaZulu-Natal.
The applicant also considers itself to be an affected party as defined in
section 128(1)(a) of the Act , whose right to participate ( ie its locus standi) in this
application lies in section 131(3) read with section 132(2)(a)(i) of the Act.
[5] The first respondent is MFBK Properties Proprietary Limited (MFBK ) or the
company), a company duly incorporated in terms of the laws of South Africa with its
principal place of business at [....] R[...] Circle, Ridgeside Office Park, Umhlanga,
KwaZulu-Natal. MBFK was also the first respondent in the original application.
[6] The second respondent is Jerifanos Mashamba, a chartered accountant who
practices as a business rescue practitioner under the style of JM Capital (Pty) Ltd at
Morningside Office Park, 2[....] R[...] Road, Sandton. Mr Mashamba is cited in his
capacity as the business rescue practitioner of MFBK ( he will be referred to as ‘ the
BRP’), appointed by the court in terms of section 131(5) of the Act.
[7] The third respondent is Pierre De Villiers Berrance, an attorney and an
insolvency and business rescue practitioner, who practices as such as a director of
Berrange Inc. at Suite 9, 2 nd floor Block C, Townbush Office Park, Montrose,
Pietermaritzburg. Mr de Villiers Berrance is cited in his capacity as the liquidator of
MFBK. This is the second respondent in the original application
[8] The fourth respondent is Oriel Rampolokeng Sekati , an attorney and
insolvency practitioner, employed by Graceleng Trust (Pty) Ltd , and is based at
Cedar Avenue, Clubview, Extension 20, Pretoria, Gauteng. Mr Sekati is cited in his
capacity as the liquidator of MFBK. The third and fourth respondents are referred to
herein as ‘the liquidators’. This is the third respondent in the original application.
[9] The fifth respondent is the Master of the High Court, Durban ( ‘the Master ’)
who has his office at 2[....] D[...] Place, Durban Central, Durban . This is the fifth
respondent in the original application.
[10] The sixth respondent is the Companies and Intellectual Property Commission
(‘the CIPC ’) having its offices at DTIC Campus, Block F, 7[....] M[...] Street,
Sunnyside, Pretoria. This is the fourth respondent in the original application
[11] The first affected party is Kenneth Russel Collins (‘Mr K Collins ’), a
businessman who resides at 1[....] K[...] Road, Ballito, KwaZulu-Natal.
[12] The second affected party is Murray Russell Collins (‘Mr M Collins ’), a
businessman who resides at 1[....] C[...] V[...] , Mount Edgecombe, KwaZulu -Natal.
The first and second affected parties are referred to herein as the ‘Collins Group’.
[13] The third affected party is Redbill Holdings Proprietary Limited , a company
duly incorporated in terms of the laws of South Africa with its registered address
being [....] R[...] Circle, Ridgeside Office Park, Umhlanga, KwaZulu-Natal.
[14] The fourth affected party is Teez Away Trading Proprietary Limited , a
company duly incorporated in terms of the laws of South Africa with its registered
address being [....] R[...] Circle, Ridgeside Office Park, Umhlanga, KwaZulu-Natal.
[15] The third and the fourth affected parties are controlled by the first and second
affected parties. This herein referred to as the Collins Group.
[16] The fifth affected party is Donald Manuel Howard Barrell (‘Mr Barrell ’), a
businessman who resides at 9[....] W[...] Street, Atholl, Sandton, Gauteng. Mr Barrel
was the first applicant in the original application.
[17] The sixth affected party is Venay Holdings Proprietary Limited , a company
duly incorporated in terms of the laws of South Africa with its registered address
being 2[....] R[...] Road, Bedfordview, Gauteng. This is the second applicant in the
original application.
[18] The application is opposed by the respondents and some of affected parties
who participated in the proceedings.
Summary of facts
[19] In 2016, MFBK acquired a residential property in A tholl, Sandton, Gauteng
from Mr Barrell, who is cited as the fifth affected party herein. The plan was to have
the property rezoned by 14 April 2019 for purposes of development. However, due to
protracted and unresolved disputes over the realisation of the property, the rezoning
did not materialise. MFBK was financed by the applicant when it acquired this
residential property. The Collins Group, which comprised of the first and the second
affected parties herein, also provided the guarantees in support of MFBK funding.
[20] Subsequent to that, MFBK was in financial distress. In December 2019, its
liquidation process commenced . On 13 August 2021, before the rezoning of the
property, an order of liquidation and final winding up of MFBK was granted. The
liquidation process was suspended when the business rescue proceedings order
was granted on 17 April 2023. During the course of the business rescue
proceedings, the Collins Group continued to make monthly payments towards the
interest of the debt that was owed to the applicant.
[21] The business rescue proceedings unfolded under the second respondent, Mr
Mashamba, the BRP . The applicant and the Collins Group actively participated in
these proceedings. On 1 September 2023, when the amended business rescue plan
was presented, they were among the voters. The amended business rescue plan
was, however rejected, with the applicant and the Collins Group voting together.
Upon rejection of the amended business rescue plan, the fifth affected party, Mr
Barrell lodged two applications before the Gauteng Division of the High Court
(Gauteng Court), seeking relief that would intervene in the voting outcomes. In the
one application, he sought an order setting aside the voting results as inappropriate.1
In the second application, he sought an order of claim determination. 2 Both
applications were opposed and pending at the time of the hearing of this application.
[22] This application was lodged on 13 October 2023, shortly after the notices to
oppose were filed in the applications before the Gauteng Court. The applicant
however denied that it opposed these applications, and recorded that the Collins
Group did. Among others, the respondents’ opposition to the application to set aside
the business rescue proceedings is on the basis that the applicant is not entitled or
empowered in terms of the Act to pursue an application of this nature, as will be
discussed in detail below.
Submissions of the parties
[23] According to the applicant, it should not be barred or precluded from pursuing
the relief sought in these proceedings on the basis that the applications that are
pending before the Gauteng Court. In fact, it was submitted that there were no time
1 Section 153(1)(b)(i)(bb) of the Companies Act 71 of 2008 (the Act).
2 Section 153(6) of the Act, which provides that,
‘A holder of a voting interest, or a person acquiring that interest in terms of a binding offer,
may apply to a court to review, re -appraise and re -value a determination by an independent
expert in terms of subsection (1)(b)(ii)’
restrictions for an application to set aside business rescue proceedings, it could be
done even after the adoption of the business rescue plan, so the argument
continued. According to the applicant, those applications were meant to delay the
sale of the immovable property and that the company had no prospects to be
rescued. The applicant referred to CSARS v Louis Pasteur Investments (Pty) Ltd3 on
various grounds. Particularly in relation to its entitlement to initiate the setting aside
of business rescue proceedings, as it also contended that the first respondent had
no prospects of being rescued.
[24] On behalf of the respondents, collectively and individually, two points in limine
were raised. These related to the lis alibi pendens , occasioned by the applications
that were pending before the Gauteng Court . The fifth affected person , Mr Barrel,
and the first respondent , MFBK, raised the non-joinder of other interested persons.
The respondents also submitted that the applicant was not empowered in terms of
section 132(2)(a)(i) of the Act to pursue the application for termination of the
business rescue proceedings. In actual fact their contention was that the applicant’s
conduct had the effect of usurping the powers of the BPR, the second respondent.
[25] Finally, it was also argued that the applicant did not suffer prejudice if the
business rescue proceedings continued because the debt in issue was continuously
serviced by the first and second affected parties, i.e. the Colling Group , who had
stood surety for MFBK. The respondents and some affected parties denied that the
first respondent had no prospects of being rescued.
Issues
[26] Two most salient questions that require determination from the set of facts
discussed above are: first, whether the applicant is entitled to pursue the application
at hand whilst there are two pending applications before the Gauteng Court on the
matters related to the ongoing business rescue proceedings. Second, what process
must be followed when setting aside an order that commenced the ongoing business
rescue proceedings and whether any of the affected parties or only the BPR may
pursue that process?
3 Commissioner, South African Revenue Service v Louis Pasteur Investments (Pty) Ltd (in provisional
liquidation) and others [2022] ZAGPPHC 230; 2022 (5) SA 179 (GP).
[27] Depending on how the questions above are answered , it must also be
considered whether the applicant has established a case to justify the setting aside
of the business rescue order that was granted on 17 April 2023.
Applicable legal principles
[28] The voting meeting of 1 September 2023, which would determine the rejection
or approval of the revised business rescue plan , was the last significant step in the
business rescue proceedings, which preceded the application at hand . The meeting
was convened by the BPR, or the second respondent , for the consideration of the
amended business rescue plan. During the voting, the proposed plan was rejected,
thereby activating the various options that are provided in section 153 of the Act, as
will be outlined below.
[29] Section 153 of the Act provides for where there is a failure to adopt the
business rescue plan, and the relevant part reads:
‘(1) (a) If a business rescue plan has been rejected as contemplated in section
152(3)(a) or (c)(ii)(bb) the practitioner may-
(i) seek a vote of approval from the holders of voting interests to prepare
and publish a revised plan; or
(ii) advise the meeting that the company will apply to a court to set aside
the result of the vote by the holders of voting interests or shareholders,
as the case may be, on the grounds that it was inappropriate.
(b) If the practitioner does not take any action contemplated in paragraph (a)-
(i) any affected person present at the meeting may-
(aa) call for a vote of approval from the holders of voting interests
requiring the practitioner to prepare and publish a revised plan;
or
(bb) apply to the court to set aside the result of the vote by the
holders of voting interests or shareholders, as the case may be,
on the grounds that it was inappropriate’.
[30] It is common cause in these proceedings that th ese are the steps that were
taken by the fifth affected party, Mr Barrell, when he approached the Gauteng Court.
[31] Whilst the proceedings mentioned above are still pending before the Gauteng
Court, the applicant herein seeks to invoke t he provisions of section 132(2) (a)(i) of
the Act. This provision provides for the duration of the business rescue proceedings,
and the relevant part states that:
‘Business rescue proceedings end when-
(a) the court-
(i) sets aside the resolution or order that began those proceedings’.
It should be noted that the applicant seeks to have the court order granted on 17
April 2023, set aside and not a resolution.
[32] The respondents raised the defence of lis alibi pendens, in that the applicant
should not be permitted to pursue this application when other related proceedings
are pending before the Gauteng Court. In simple terms, this principle affirms that
there should be no parallel pending litigations, between the same parties, based on
the same cause of action and in respect of the same subject matter.4
[33] The Constitutional Court in AMCU v Ngululu Bulk Carriers (Pty) Ltd5 held that,
4 Eravin Construction CC v Twin Oaks Estate Development (Pty) Ltd [2012] ZANWHC 27 (‘Eravin’).
5 Association of Mineworkers and Construction Union and others v Ngululu Bulk Carriers (Pty) Ltd (In
Liquidation) and others [2020] ZACC 8; 2020 (7) BCLR 779 (CC) para 26 (‘AMCU’).
‘The purpose of lis pendens is to prevent duplication of legal proceedings. As its
requirements illustrate, once a claim is pending in a competent court, a litigant is not
allowed to initiate the same claim in different proceedings. For a lis
pendens defence to succeed, the defendant must show that there is a pending
litigation between the same parties, based on the same cause of action and in
respect of the same subject matter. This is a defence recognised by our courts for
over a century.’ (footnote omitted)
Evaluation
Non-joinder
[34] At the commencement of the oral submissions, some the interested parties
were represented. This was merely to record that they did not seek to take part in the
proceedings, and they expressed no desire to be included. Therefore, in that way,
the issue of non -joinder was resolved and ceased to be part of the respondents’
defence.6
Lis alibi pendens
[35] The elements of the lis alibi pendens defence, pointed out in Eravin, feature in
the characteristics of the litigations pending in the Gauteng and the KwaZulu-Natal
Divisions of the High Court. It is common cause that:
(a) There are currently two pending litigation processes that are unfolding before
the Gauteng Court. Similarly, to the application at hand, they too, were borne out of
the voting results of 1 September 2023.
(b) The same parties are participating in these two applications before the
Gauteng Court.
(c) It is not in dispute that the pending matters relate to the business rescue
proceedings.
6 DE van Loggerenberg Erasmus: Superior Court Practice (Revision Service 22, November 2023) at
10-3 to 10-4.
(d) These pending proceedings are attempts to invoke the specified interests of
affected parties and based on the provisions of the same legislative process.
[36] It is also not in issue that it is unavoidable and within the rights of the parties
involved to be actively involved in the litigations that are unfolding , for they have the
potential to substantially impact on their respective interests. They all relate to the
contentious processes of the unfolding business rescue proceedings that were
commenced by a court order obtained with the knowledge of the applicants and with
the consent of some of the parties involved.
[37] The applicant acknowledged that its application was instituted after it became
aware of the nature of the pending applications in the Gauteng Court. The applicant
however contended that it could not be barred by any procedural or timeframe
limitations from pursuing this application. The applicant also contended that the two
applications before the Gauteng Court are merely meant to delay the public auction
of the property and are brought on ulterior motives.
[38] The questions that arise from this summary above have to be viewed in light
of the assertion of the court in AMCU, where the court highlighted the purpose of the
lis alibi pendens defence and to the extent that its requirements should not be
separated
[39] When considering the point raised by the respondents, it will be apposite to
adopt the principle in Nestle (SA) v Mars7 where it was held that
‘The defence of lis alibi pendens shares features in common with the defence of res
judicata because they have a common underlying principle, which is that there
should be finality in litigation. Once a suit has been commenced before a tribunal
that is competent to adjudicate upon it, the suit must generally be brought to its
conclusion before that tribunal and should not be replicated ( lis alibi pendens ). By
the same token the suit will not be permitted to be revived once it has been brought
7 Nestlé (South Africa) (Pty) Ltd v Mars Inc 2001 (4) SA 542 (SCA) para 16 (‘Nestlé’).
to its proper conclusion ( res judicata ). The same suit, between the same parties,
should be brought only once and finally.’
[40] The question that arises will be whether the outcome of this application will be
determinative to the two applications that are already unfolding before the Gauteng
Court or vice versa. By implication,
‘lis alibi pendens does not have the effect of an absolute bar to the proceedings in
which the defence is raised. The Court intervenes to stay one or other of the
proceedings, because it is prima facie vexatious to bring two actions in respect of the
same subject-matter.’8
[41] The AMCU matter where the court held that lis alibi pendens defence could
not be upheld is clearly distinguishable to the applicant’s circumstances. The court
found that only one of the three requirements was satisfied, namely, that the litigation
was between the same parties in two sequential proceedings .9 It also held that, the
review application was directed at achieving a different outcome by impugning the
council’s ruling and the certificate of non -resolution, and that such had nothing to do
with unfairness of the second dismissal. It therefore concluded that the cause of
action in the two proceedings were different.10
[42] The expression ‘cause of action ’ as discussed in Abrahamse & Sons v SA
Railways and Harbours,11 should be viewed as
‘The proper legal meaning of the expression “cause of action ” is the entire set of
facts which gives rise to an enforceable claim and includes every fact which is
material to be proved to entitle a plaintiff to succeed in his claim. It includes all that a
plaintiff must set out in his declaration in order to disclose a cause of action. Such
cause of action does not “arise” or “accrue” until the occurrence of the last of such
facts and consequently the last of such facts is sometimes loosely s poken of as the
cause of action.’
8 Loader v Dursot Bros (Pty) Ltd 1948 (3) SA 136 (T) at 138.
9 AMCU para 28.
10 AMCU para 29.
11 Abrahamse & Sons v S.A. Railways and Harbours 1933 CPD 626.
[43] In the instant matter, all the parties involved are seeking to pursue their
interests in relation to the ongoing business rescue proceedings. The main point of
contention is the immovable property that is the only asset of MFBK or its proceeds.
The parties are in disagreement about the future or process of the business rescue
proceedings, and obviously, the same parties are involved. The set of facts that
require to be declared in all these litigations are the same, including the competing
interests that are sought to be enforced.
[44] Upon application of the principles in AMCU and Nestlé and reflection on the
presence of all the factors highlighted in Eravin, to my mind, it would cause a
duplication of litigation processes to allow this application to proceed in the current
form without offending the lis alibi pendens principle for all the parties involved. The
situation may turn out to be problematic, particularly to the BRP, who is a central
figure in all these disputes. It is inescapable that the posture adopted by the
applicant, if permitted, has the potential to complicate , disorganised and prolong the
litigation process for all parties whose interests are affected, thereby offending the
efficacy of justice.
[45] The applicant has no t advanced any factors that substantiate the contention
that the litigation before the Gauteng Court are merely meant to delay the public
auction of the property and were brought on ulterior motives. From the available
evidence, there is no support for the view that the applicant could not be barred by
any procedural or timeframe limitations from pursuing this application.
[46] In light of the findings above and pursuant to the guidance provided in Kerbel
v Kerbel,12 as discussed in Mofokeng v Motloung N.O.13 that
‘once the requisites for a plea of lis alibi pendens are established, the court should
be inclined to uphold it, because it is undesirable for there to be litigation in two
courts over the same issue.’
12 Kerbel v Kerbel 1987 (1) SA 562 (W) at 567F-G.
13 Mofokeng v Motloung N.O. and others [2022] ZAGPJHC 546 para 46.
Evidently, a sufficient link between the litigation processes that are pending before
the two Divisions, which are of equal status and powers has been established. I am
of the firm view that substantial grounds to uphold the lis alibi pendens raised by the
respondents have been established.
[47] The merits of the application can be dealt with once the litigation proceedings
before the Gauteng Division of the High Court has been determined.
Costs
[48] The first and second respondents argued that punitive costs should be
ordered, on the basis that this application was an abuse of process by the applicant.
The applicant disagreed with this contention. I am also not persuaded that the
institution of this application and the conduct of the applicant in these proc eeding
warranted the costs in a punitive scale.
Order
[49] Given all these considerations, the following order is made:
1. The point in limine of lis alibi pendens raised by the first and second
respondents is upheld.
2. The current application is stayed pending the finalisation of the proceedings
that are currently before the Gauteng Division of the High Court.
3. The applicant is to pay the costs of this application.
Sipunzi AJ
Date of hearing: 22 March 2024
Date of Judgment: 25 April 2024
APPEARANCES
For the applicants Adv RM van Rooyen
Instructed by: MENDELSON ATTORNEYS
55 Victoria Road
Sandringham
Johannesburg
Ref: JM/B019
C/O STRAUSS DALY INC
9th Floor, Strauss Daly Place
41 Ridgeside Office Park
Umhlanga
Durban
Ref: M Lombard
For the first & second respondents: Mr M Marshall
Instructed by: MICHAEL MARSHALL ATTORNEYS
42 Cheltenham Ridge
5 Parade Ring Road
Royal Ascot
Milnerton
Cape Town
Ref: MFBK001/MAT053
C/O HK ATTORNEYS INC
2nd Floor, Mayfair on the Lake
5 Park Lane
Umhlanga
Durban
For the first to fourth affected persons
not participating: Ms Singh
For the fifth & sixth affected persons: Mr N Rylie