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[2022] ZAFSHC 144
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Marais v Westline Aviation (Pty) Ltd and Others (1193/2021) [2022] ZAFSHC 144 (30 May 2022)
IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Case
No:
1993/2021
Reportable:
NO
Of
Interest to other Judges: NO
Circulate
to Magistrates: NO
In
the matter between:
SAREL
RENIER MARAIS
Applicant
and
WESTLINE
AVIATION (PTY)
TLD
1
st
Respondent
COMPANIES
AND INTELLECTUAL PROEPRTY COMMISSION
2
nd
Respondent
FIRSTRAND
BANK LIMITED
3
rd
Respondent
CORAM
:
JP
DAFFUE J
HEARD
ON
:
26
MAY 2022
ORDERS
GRANTED ON
:
30
MAY 2022
These
reasons were handed down electronically by circulation to the
parties’ representatives by email, and release to SAFLII.
The date and time for hand-down is deemed to be 16h00 on 30 May 2022.
REASONS
I
INTRODUCTION
[1]
I had to adjudicate an application to place a company under business
rescue and supervision
as well as a counter-application by the
company’s major creditor for the provisional winding-up of the
company. The
following orders were granted:
“
1.
The applicant’s application to place the first respondent
company, to wit Westline
Aviation (Pty) Ltd in business rescue is
dismissed with costs, such costs being the third respondent’s
costs, inclusive of
the costs consequent upon the employment of two
counsel.
2.
Leave is granted to the third respondent
in terms of the provisions of Uniform Rule of Court 6(7) and Uniform
Rule of Court of 24(2)
to institute its counter application as set
out in the notice of counter application against the first respondent
in the main application.
3.
Leave is granted to the third respondent
in terms of
section 133(1)(b)
of the
Companies Act 71 of 2008
to
bring this application and to request the relief sought in it.
4.
The first respondent company is placed
under PROVISIONAL WINDING-UP in the hands of the Master of the High
Court.
5.
A PROVISIONAL WINDING-UP ORDER is issued
calling upon all interested parties to show cause, if any, to the
court on the
21
st
day of
JULY
2022
at
09h30
why a FINAL ORDER OF WINDING-UP should not be granted against the
first respondent company.
6.
Service of this rule
nisi
and a copy of the third respondent’s counter-application and
annexures thereto as well as a copy of the founding application
in
the main application and annexures thereto shall be effected on the
first respondent company at its registered office or its
principal
place of business within the court's jurisdiction.
7.
This order shall, without delay, be
published in THE CITIZEN and the GOVERNMENT GAZETTE.
8.
The sheriff shall ascertain whether the employees of the first
respondent company
are represented by a trade union and whether there
is a notice board on the premises to which the employees have access.
9.
A copy of the provisional winding-up order shall be served on -
9.1
Every registered trade union that as far as the Sheriff can
reasonably ascertain, represents
any of the employees of the first
respondent company.
9.2
The employees of the first respondent company by affixing a copy of
the application and
provisional winding-up order on any notice board
to which the employees have access inside the first respondent
company's premises,
or if there is no access to the premises by the
employees, by affixing a copy to the front gate or front door of the
premises from
which the first respondent company conducts any
business.
9.3
The South African Revenue Service.
10.
Reasons shall be provided on Monday, 30 May 2022 to the parties by
electronic means.”
II
THE PARTIES
[2]
During the preparation of these reasons I noted that the court order
issued does not
correspond with the orders granted in opening court,
I refer specifically to paragraphs 2 and 3 of the order encapsulated
above.
Furthermore, insofar as I granted a winding-up order in
accordance with the standard order normally given by me, I mistakenly
referred
to serve to the rule
nisi
and a copy of the notice of motion and annexures which is in line
with the standard order normally granted in these kind of
applications.
Obviously in
casu
an order was granted in accordance with the counter application and
the wording of paragraph 6 of the order should have followed
the
wording of paragraph 5 of the notice of counter application. I
am entitled in accordance with the provisions of rule
42 to
mero
motu
amend
an order erroneously made and consequently the amended order to be
issued will also encapsulate this aspect.
[3]
The applicant in the main application for business rescue and
supervision is Mr Sarel
Renier Marais (“Mr Marais”), a
major male person and director of the first respondent, to wit
Westline Aviation (Pty)
Ltd (“Westline”). Mr Marius
Bruwer, an attorney who is also a director of the first respondent,
appeared on behalf
of the applicant before me.
[4]
The first respondent is Westline, a registered company that holds
various air service
licences with registered address and principal
place of business at the New Tempe Airport outside Bloemfontein.
[5]
The Companies and Intellectual Property Commission is cited as the
second respondent,
but this entity did not take part in the
proceedings before me.
[6]
Firstrand Bank Ltd (“FNB”), a commercial bank and
registered credit provider
and a major creditor of Westline, is cited
as the third respondent in the main application. Advv DJ Van
der Walt SC and S
Tsangarakis appeared for the third respondent.
[7]
FNB filed a counter-application in which application it sought the
provisional winding-up of Westline.
Mr Bruwer appeared for Westline
in this application.
III
THE LITIGIOUS MATRIX
[8]
The following summary reflects the chronological history of the
relevant events that
culminated in the disputes to be adjudicated:
8.1
on 6 February 2021 FNB issued a so-called hybrid application against
Westline under application
number 542/2021, seeking the winding up of
Westline, alternatively payment in the amount of R5 595 176.58
together with
interest and costs;
8.2
on 25 March 2021
[1]
a money
judgment was granted in accordance with a settlement agreement
between the parties whereupon a total amount of R1 million
was paid
to FNB and on 8 April 2021
[2]
,
the date to which the application was postponed, a further money
judgment was granted for payment of the amounts due to FNB in
terms
of an amended settlement agreement, the outstanding amount being
R4 734 033 plus interest;
8.3
Mr Marais’ application to place Westline under business rescue
and supervision was
issued under application no 1993/2021 on 5 April
2021, more than a year ago;
8.4
on 9 July 2021 FNB filed a notice of counter-application together
with its answering affidavit
in resistance of the business rescue
application as well as its founding affidavit in the
counter-application;
8.5
although FNB elected not to proceed with the liquidation application,
contemplated in the
order of 8 April 2021 under application number
542/2021, this application was also enrolled for 26 May 2022,
although FNB made
it clear that they would not proceed with that
application if leave is granted to it to proceed with the
counter-application for
winding-up in application 1993/2021;
8.6
Mr Marais failed to file a replying affidavit in the
business rescue application and Westline not only
failed to file an
answering affidavit in application 524/2021, but also failed to file
an answering affidavit to the counter-application
in application
number 1993/2021 although a notice of opposition was filed;
8.7
no further steps were taken in the litigation until FNB decided in
April this year to set
down both applications 524/2021 and 1993/2021
for hearing on 26 May 2022;
8.8
FNB filed heads of argument in accordance with the Practice
Directives of this division,
but no heads of argument were filed by
either Mr Marais or Westline notwithstanding the fact that they were
at all times represented
by an attorney, to wit Mr R Coetzee of
Steenkamp and Jansen Inc who signed the notice of intention to oppose
the counter-application
on behalf of Westline and the notice of
motion in application 1993/2021.
IV
THE BUSINESS RESCUE APPLICATION
[9]
The events on 26 May 2022 when the applications were called need to
be recorded.
Mr Bruwer confirmed that he was appearing for Mr
Marais and Westline in his capacity as attorney employed by Steenkamp
and Jansen
Inc. He requested that the business rescue
application be removed from the roll as he merely intended to make
submissions
in respect of the counter-application for provisional
winding-up. I indicated to him that, bearing in mind the
provisions
of rule 41, he could not do that without the leave of the
opponents or the court. I requested Mr Van der Walt to
respond.
He confirmed that they were taken by surprise as no
leave was sought from FNB and they heard about the intended
application for
the first time in court. He insisted that the
matter should not be removed from the roll as it might mean that Mr
Marais
could always enrol it again any time later. He submitted
that the applications shall be argued and adjudicated –
pari
passu
- upon on the papers as they stand with which submission I
agreed. Upon reconsidering the matter and without arguing the
merits of the business rescue application, Mr Bruwer submitted that
the court may dismiss that application, to wit the main application.
When I requested submissions about the costs of that application, he
again made no submissions, save to say that the award of costs
was in
the court’s discretion. Mr Van der Walt sought costs in
favour of FNB, including the costs of two counsel, whereupon
I made
an order as reflected in paragraph above. I requested Mr Bruwer
whether it was necessary to provide any reasons for
the order, but he
forfeited the right to receive any reasons. Hereafter I allowed
the parties an opportunity to argue the
counter-application.
[10]
Notwithstanding Mr Bruwer’s stance on reasons, I shall herein
later briefly deal with the
business rescue application as much of
the evidence relied upon by FNB in that application has been
incorporated in the founding
affidavit of the counter-application.
[3]
[11]
'Business rescue' is defined in
s 128
(b)
of
the
Companies Act
[4
]
to mean
—“‘proceedings to facilitate the
rehabilitation of a company that is financially distressed by
providing for —
(i)
the temporary supervision of the
company, and of the management of its affairs, business and property;
(ii)
the temporary moratorium on the rights
of claimants against the company or in respect of property in its
possession; and
(iii)
the development and implementation, if
approved, of a plan to rescue the company by restructuring its
affairs, business, property,
debt and other liabilities, and equity
in a manner that maximises the likelihood of the company continuing
in existence on a solvent
basis or, if it is not possible for the
company to so continue in existence, results in a better return for
the company's creditors
or shareholders than would result from the
immediate liquidation of the company; ...'”
[12]
In
Absa
Bank Ltd v Caine NO
[5]
I stated that business rescue proceedings were much better suited to
provide solutions for financially distressed companies than
judicial
management under the previous
Companies Act
[6
]
and continued as follows:
“
Business
rescue proceedings are much more flexible and financially distressed
company friendly than judicial management. The potential business
rescue plan provided for in
ss 128(1)
(b)
(iii) has
two objects in mind, the primary object being to facilitate the
continued existence of the company in a state of
solvency and
secondly and in the alternative, in the event that the primary
objective cannot be achieved or appears not to be viable, to
facilitate a better return for the creditors or shareholders of the
company than would result from immediate
liquidation
.
Consequently the
Supreme Court of Appeal found in
Oakdene
Square Properties (Pty) Ltd and Others v Farm Bothasfontein (Kyalami)
(Pty) Ltd and Others
2013
(4) SA 539
(SCA)
in para [26] as follows:
‘
It
follows, as I see it, that the achievement of any one of the two
goals referred to in
section 128(1)
(b)
would qualify as
'business rescue' in terms of
section 131(4).
’
As
further stated by the Supreme Court of Appeal in para [27]:
‘
.
. . business rescue proceedings are not limited to the return of the
company to solvency …’”
[13]
In their article dealing with the last decade’s
authorities pertaining to business rescue proceedings,
O’Brien
and Calitz
[7]
used a medical
metaphor which they believe are apposite to business rescue
proceedings. They argue that as a medical practitioner
cannot
do anything for the dead, so, business rescue must have regard to the
reality that some companies are simply beyond resuscitation.
Also, in medical treatment the support of all structures available to
a patient are important; likewise, with business rescue the
support
of the relevant stakeholders is important. Just as the recovery
of a patient is difficult where there is serious
disharmony among
those who should ideally provide a support structure for the patient
undergoing medical treatment, disharmony
between relevant
stakeholders of the company may make business rescue difficult, if
not impossible.
[8]
In
casu
,
FNB can be equated to the affluent uncle of the seriously ill
patient, Westline, confined to a ventilator providing oxygen in
ICU.
The affluent uncle is not prepared to spend any further money in the
hope that the patient will recover. Nobody
else can provide
financial support although the patient’s brothers believe that
his life can be saved. Medical opinion
is that the chances of
recovery are slim. The hospital is not prepared to provide
further assistance in the absence of financial
backing. The outcome
is not difficult to predict.
[14]
A substantial degree of urgency is envisaged once a company has
decided to adopt a resolution
to institute business rescue
proceedings. While sentiments expressed in adopting business
rescue procedure to avoid liquidation
of a company may be noble, it
should not lead to a situation that an extraordinary amount of
time is taken in an attempt –
often futile - to achieve this
result. Delay is often at the expense of the rights of
creditors. Although this is not an
application to terminate business
rescue proceedings, I respectfully agree with the following
dictum
of Kusevitski AJ in
South
African Bank of Athens v Zennies Fresh Fruit CC:
[9]
“
In
my view the mechanisms of business rescue proceedings were not
designed to protect a company indefinitely to the detriment of
the
rights of its creditors. The delay in the finalisation of the
business rescue proceedings is unreasonable in the circumstances
and
I am satisfied that an order terminating the proceedings is
justified.”
A
balancing of the various rights of affected persons and that of the
company should always be paramount in order to achieve fairness.
[15]
In
Diener
NO v Minister of Justice and Correctional Services and others
[10]
the Constitutional Court summed up the purpose of business rescue
proceedings in the following words:
“
[54] The
purpose of business rescue is to assist a financially distressed
company with paying its debts, avoiding insolvency,
and maximising
the benefit to stakeholders upon liquidation (if inevitable). It is
stated expressly in
s 7
(k)
of the
Companies Act that
one
of the purposes of the Act is to 'provide for the efficient
rescue and recovery of financially distressed companies, in
a manner
that balances the rights and interests of all relevant stakeholders'.
It must be emphasised that this must be done while
balancing the
rights of all affected persons, including creditors, employees, and
shareholders. The primary goal of business rescue
is to avoid
liquidation and its attendant negative consequences on stakeholders.
In addition, a secondary purpose is to achieve
a better outcome on
liquidation or disinvestment, whereby '[t]he underlying principle
behind restructuring or reorganisation proceedings
is that a business
may be worth a lot more if preserved, or even sold, as a going
concern than if the parts are sold off piecemeal'.
At the same
time, where it is not viable to rescue a company, it should be
liquidated and its business sold. Business rescue can
only begin
where there is a reasonable prospect of saving the company.
This was highlighted in
KJ Foods
, where the Supreme Court
of Appeal quoted with approval the High Court in
DH Brothers
Industries
, which stated that —
'Chapter
[6] as a whole reflects ''a legislative preference for proceedings
aimed at the restoration of viable companies rather
than their
destruction''
but only of viable companies, not of all
companies placed under business rescue
.'
This
is in line with the ultimate aim of balancing the rights and
interests of all relevant stakeholders.”
[16]
In
casu
, Mr Marais correctly conceded that Westline is
commercially insolvent, although it was averred that it’s
assets exceeded
its liabilities and that it was not factually
insolvent. In this regard Westline relies on the say-so of Mr
Marais and outdated
financial statements for the year ending 28
February 2020. I shall deal with factual solvency when I
evaluate the evidence
and submissions pertaining to the winding-up
application later herein. Save for the payment of R1 million
referred to above,
Westline has not made any further payments to
FNB. Although Mr Marais tried to make out a case that
Westline’s difficulties
had arisen as a result of the Covid
pandemic, FNB presented uncontested evidence that Westline was
already financially distressed
before the Covid pandemic hit this
country.
[17]
Mr Marais believed that Westline could be saved by making use of the
aircraft that are mortgaged
in favour of FNB, but FNB made it clear
that it was not prepared to assist Westline in this regard and that
it would vehemently
oppose any business plan to be prepared by a
business rescue practitioner based on the information provided in the
founding affidavit.
Mr Marais made the point in the founding
affidavit that the plan to rescue Westline was not premised on the
injection of post commencement
finance insofar as it “possesses
of all the necessary equipment in order to render training
services.”
[11]
. He
stated that once “business is back to normal, Westline’s
income will slowly increase and, within at least
the next 15
(fifteen) months, return to normal.” Then it will be able
to meet its financial obligations.
[12]
I agree with FNB that the proposed business rescue plan, insofar as
it may be found that a proper plan was put on the table
which I am
not prepared to accept even for the argument, is based on the
proposition that Westline can carry on conducting business
with FNB’s
money in circumstances where FNB is not interested in a continued
business relationship with Westline. FNB
has a cession in its
favour over all debts due to Westline and that Westline will not be
able to continue to trade and generate
a profit simply because all
monies earned will have to be paid to FNB by virtue of this
security. Secondly, FNB is not prepared
to allow Westline to
use the aircraft to generate income. These aircraft are subject
to registered aircraft mortgages in
favour of FNB and by utilizing
them, they will be exposed to risk and a decrease in value if used
during the business rescue process
which will dilute and diminish FNB
security.
[13]
[18]
If the time when the business rescue application was issued and the
delay in finalising that
application is considered, Mr Marais and
Westline did exactly what is not required of affected persons and a
company in financial
distress,
ie
to keep creditors on a
string instead of finalising the business rescue process as soon as
possible.
[19]
No reasons have been advanced as to why Mr Marais shall not pay the
costs of the business rescue
application incurred by FNB, inclusive
of the costs of two counsel. Consequently, such order is
appropriate in the circumstances.
V
EVALUATION OF THE EVIDENCE AND SUBMISSIONS BY THE PARTIES PERTAINING
TO THE WINDING-UP
APPLICATION
[20]
As mentioned, the winding-up application was not opposed insofar as
no answering affidavit had
been filed. No heads of argument
were filed on behalf of Westline. Mr Bruwer made it clear
during oral argument that
he did not rely on any technical points or
possible non-compliance with statutory requirements. That was a
wise decision.
I was satisfied that all statutory requirements
pertaining to the provision of security and service had been complied
with.
Mr Bruwer also insisted to argue the winding-up
application on the evidential material before the court, stating that
Westline
did not intend to file an answering affidavit.
[21]
In principle an applicant seeking a provisional winding-up order must
merely establish its entitlement
to such order on a
prima
facie
basis,
ie
it must show that the balance of probabilities on the affidavits is
in its favour.
[14]
I
also wish to quote the following
dictum
of Brand J as he then was in
Payslip
Investment Holdings CC v Y2K Tec Ltd
[15]
and
wish to emphasize that this is applicable for provisional winding-up
orders only and not final orders:
“
Guidelines
as to how factual disputes should be approached in an application
such as the present were laid down by the Appellate
Division in
Kalil
v Decotex (Pty) Ltd and Another
1988
(1) SA 943
(A)
.
According to these guidelines a distinction is to be drawn between
disputes regarding the respondent's liability to the applicant
and other disputes. Regarding the latter, the test is whether the
balance of probabilities favours the applicant's version on the
papers. If so, a provisional order will usually be granted. If not,
the application will either be refused or the dispute referred
for
the hearing of oral evidence, depending on,
inter
alia
,
the strength of the respondent's case and the prospects of
viva
voce
evidence
tipping the scales in favour of the applicant. With reference to
disputes regarding the respondent's indebtedness,
the test is whether
it appeared on the papers that the applicant's claim is disputed by
respondent on reasonable and
bona
fide
grounds.
In this event it is not sufficient that the applicant has made out a
case on the probabilities. The stated exception
regarding disputes
about an applicant's claim thus cuts across the approach to factual
disputes in general.”
In
casu
no
evidence was presented on behalf of Westline, neither in the business
rescue application, nor in the counter-application, to
dispute FNB’s
version that Westline is not only commercially insolvent, but also
factually insolvent. I shall deal
briefly with these
allegations hereunder. More importantly, FNB’s status as
creditor and the amount due to it is common
cause and not in
dispute. Some authorities will be referred to in the next
paragraphs where after the parties’ submissions
will be
considered.
[22]
More than a century ago Innes CJ made the following statement in
De
Waard v Andrews & Thienhaus Ltd
:
[16]
“
To
my mind the best proof of solvency is that a man should pay his
debts; and therefore I always examine in a critical spirit the
case
of a man who does not pay what he owes.”
[23]
It is also necessary to refer to the often quoted
dictum
of Berman J in
ABSA
Bank Ltd v Rhebokskloof (Pty) Ltd and Others:
[17]
“
The
primary question which a Court is called upon to answer in deciding
whether or not a company carrying on business should be
wound up as
commercially insolvent is whether or not it has liquid assets or
readily realisable assets available to meet its liabilities
as they
fall due to be met in the ordinary course of business and thereafter
to be in a position to carry on normal trading - in
other words, can
the company meet current demands on it and remain buoyant? It matters
not that the company's assets, fairly valued,
far exceed its
liabilities: once the Court finds that it cannot do this, it follows
that it is entitled to, and should, hold that
the company is unable
to pay its debts within the meaning of
s 345(1)
(c)
as
read with s 344
(f)
of the Companies Act 61 of 1973 and is
accordingly liable to be wound up.”
[24]
Recently Wallis JA considered the test for commercial insolvency in a
unanimous judgment of the
Supreme Court of Appeal. He held as
follows in
Murray
NO and others v African Global Holdings (Pty) Ltd and others
:
[18]
“
[31]
The argument about timing misconceived the nature of commercial
insolvency. It is not something to be measured at a single
point in
time by asking whether all debts that are due up to that day have
been or are going to be paid. The test is whether the
company 'is
able to meet its current liabilities, including contingent and
prospective liabilities as they come due'. Put
slightly
differently, it is whether the company —
'has
liquid assets or readily realisable assets available to meet its
liabilities as they fall due to be met in the ordinary course
of
business and thereafter to be in a position to carry on normal
trading — in other words, can the company meet current
demands
on it and remain buoyant?
'
Determining
commercial insolvency requires an examination of the financial
position of the company at present and in the immediate
future to
determine whether it will be able in the ordinary course to pay its
debts, existing as well as contingent and prospective,
and continue
trading.” (Emphasis added and footnotes omitted)
[25]
Mr Bruwer repeatedly tried to rely on facts not forming part of the
evidential material before
the court and even legislation to obtain
what he called a “just and equitable” order. Mr Van
der Walt objected
to this unprocedural approach, but I decided to
provide some lee-way to Mr Bruwer. I shall return hereto.
[26]
It is trite law that a party relying in litigation – motion
procedure included – on statutory
provisions must quote the
specific Act and the relevant section with clarity. The same
applies to regulations, ordinances
or other statutory provisions.
Evidence tendered from the bar is unacceptable and inadmissible.
The affidavits in motion
proceedings serve not only as the pleadings,
but must contain the essential evidence which would ordinarily be led
at the trial.
[19]
A
party opposing relief in motion procedure must comply with the
well-known and oft-quoted
dicta
of the Supreme Court of Appeal in
Wightman
t/a JW Construction v Headfour (Pty) Ltd and another.
[20]
In
casu,
Westline
did not even file an answering affidavit in an attempt to engage with
facts which it disputes.
[27]
Contrary to the trite legal principles Mr Bruwer made two points.
First, there was an alternative
remedy available to FNB and
winding-up procedure was not called for. Second, it was not
just and equitable to wound up Westline.
In the process he
inter
alia
referred to an article dealing with aviation finance as well as the
Convention on the International Recognition of Rights in Aircraft
Act.
[21]
He wrongly
referred to a 1953 Act instead of the 1993 Act. The relevance
of either the article or the Act escapes me.
I repeatedly asked
Mr Bruwer to which section of the Act he was referring, but he merely
insisted that it was “a short Act”
without providing the
alleged relevant section. Obviously, all of us in court were
ignorant of the intention to refer to
this piece of legislation, but
I undertook to do my own research in this regard. My
prima
facie
view as expressed during argument was that the only relevance could
be pertaining to aircraft mortgages and a mortgagee’s
right to
liquidate its security, in the same vein as the perfection of
notarial bonds, but that a creditor who has such security
is not
necessarily barred from applying for winding up although it is a
factor to be considered.
[28]
The Convention on the International Recognition of Rights in
Aircrafts Act referred to by Mr
Bruwer was studied by me over the
weekend. This act contains absolutely nothing to support Mr
Bruwer’s submission that
a provisional winding-up order should
not be granted. It deals with the mortgage of aircraft, the
priority of mortgages and
the rights of mortgagees. As
anticipated, s 7 of the Act dealing with the rights of mortgagees
stipulates as follows which
is in line with the perfection of
notarial bonds:
“
7
Rights of mortgagee
(1)
The mortgagee under a registered
mortgage of an aircraft or a share in an aircraft shall be entitled
to recover the amount due under the mortgage in any court of
competent jurisdiction, and when giving judgment or thereafter the
court may direct that the mortgaged aircraft or share be sold in
execution of the judgment.
(2)
Subject to the provisions of
subsection (1), the mortgagee under a registered mortgage of an
aircraft or a share in an aircraft shall not merely by virtue of the
mortgage be entitled to sell or otherwise dispose of the mortgaged
aircraft or share.”
The
article referred to above which Mr Bruwer handed up to me from the
bar deals with aviation finance and the security provided
by
mortgages over aircraft. Again, there is nothing that supports
any of Mr Bruwer’s submissions in the article by
Van Zuylen and
Msimang.
[22]
[29]
Westline terminated its insurance policy in respect of all the
aircraft mortgage to FNB without
FNB’s knowledge, consent or
permission and although it obtained alternative insurance, it did not
see its rights in terms
of the relevant insurance policy to FNB,
[23]
this poses a serious risks to FNB and must be considered in the light
of Mr Bruwer’s submissions pertaining to FNB’s
security
over the aircraft. According to the version of FNB which should
be considered as uncontested at this stage, Westline
is factually
insolvent in an amount of R5 140 847.04.
[24]
Westline is therefore factually insolvent in the sense that its
liabilities fairly estimated, exceeds its assets fairly valued.
Mr Marias version that Westline is factually solvent in the amount of
approximately R13 million is based on inadmissible evidence,
irrelevant and does not have any probative value.
[25]
As mentioned no affidavit was filed of any expert to establish the
market value of its corporeal assets, its financial statements
as on
29 February 2020 is more than two years old. It is also
interesting that the loan agreements of related parties indicating
an
indebtedness to them by Westline, to wit Central AMO (Pty) Ltd,
Charann Hanger Trust and Mrs DA Marais showed an increase over
the
period from March 2019 to 29 February 2020 in an amount of
R5 290 283. A reasonable deduction to be made of
this
is that Westline whilst being commercially insolvent, colluded with
these related parties to the prejudice of its creditors
and FNB’s
influence in this regard appears to be justified.
[26]
[30]
Mr Bruwer submitted that the application for winding-up should be
dismissed, alternatively the
application should be postponed for six
weeks to enable Westline to settle its debt. This submission is
again confirmation
that Westline does not have any defence
whatsoever, does not dispute FNB’s debt and merely wish to
obtain a further delay.
As mentioned, the last payment made by
Westline to FNB was on 1 April 2021. There was no reason to
adhere to Mr Bruwer’s
request.
[31]
The point that Mr Bruwer wanted to drive home is that Westline is a
valuable asset to the Free
State aircraft community and it would be a
sad day if it had to be wound up. Many employees will become
unemployed and no
company will be available to take charge of the
Tempe Airport over which Westline has complete control. No
training will
be provided to aspirant pilots from within and outside
the borders of this country. Furthermore, the equity in the
aircraft
mortgaged in favour of FNB by far exceed its claim.
[32]
The version presented by Mr Bruwer is not totally new. Mr
Marais made mention of some aspects
in the business rescue
application. FNB pointed out in that application that the
values relied upon in order to arrive at
Westline’s asset
portfolio was inadmissible, either because it was hearsay, or
outdated, or not confirmed under oath by experts.
[33]
Bearing in mind the common cause fact that Westline is commercially
insolvent, it is strictly
speaking unnecessary to deal with factual
insolvency. I shall therefore just briefly refer to the version
presented by FNB
in this regard.
VI
CONCLUSION
[34]
In conclusion, and after having been satisfied that FNB has
prima
facie
proven an entitlement to a provisional winding-up order,
the orders were granted as encapsulated in paragraph 1 above with the
rider contained in paragraph 2.
JP
DAFFUE J
On
behalf of the applicant & 1
st
Respondent:
Mr M Bruwer
Instructed
by Steenkamp
Jansen Inc
BLOEMFONTEIN
On
behalf of the 3
rd
Respondent:
Advv
DJ Van der Walt SC & S
Tsangarakis
Instructed
by:
SYMINGTON & DE KOK
BLOEMFONTEIN
[1]
Annexure “FA15”, pp 82 - 92
[2]
Annexure “FA16”, pp 93 - 101
[3]
Paras 19 & 20 of the founding affidavit in the
counter-application read with paras 18 to 111 of the answering
affidavit
in the main-application
[4]
71 of 2008
[5]
[2014] ZAFSHC 46
at para 40
[6]
Act 61 of 1973
[7]
“Considerations that inform the view of whether there is a
reasonable prospect of rescuing a company: A decade of legal
precedent”, 2022 TSAR 25
[8]
Ibid
:
p 27
[9]
2018 (3) SA 278
(WCC) at para 43; see also
Advanced
Technologies & Engineering Co (Pty) Ltd (in Business Rescue) v
Aeronautique et Technologies Embarquées SAS
GNP
72522/11
[10]
2019 (4) SA 374 (CC)
[11]
Founding affidavit: para 69, p 28 read with
[12]
Ibid
:
para 52, p 23
[13]
Oakdene
Square Properties (Pty) Ltd & Others v Farm Bothasfontein
(Kyalami) (Pty) Ltd and Others
2013 (4) SA 538
(SCA) at para 38
[14]
Kalil v
Decotex (Pty) Ltd and Another
1988 (1) SA 943
(A) at 975 J – 979 F
[15]
2001
(4) SA 781
(CPD) at 783
[16]
1907 TS 707
at p 733
[17]
1993 (4) SA 436
(C) at 440 F – 441 A
[18]
2020 (2) SA 93
(SCA) at para 31
[19]
Transnet
Ltd v Rubenstein
2006
(1) 591 (SCA) at 600G – H; see also
Minister
of land Affairs and Agriculture and others v D & F Wevell Trust
and others
2008 (2) SA 184
(SCA) at 220B - E
[20]
[2008] ZASCA 6
;
2008
(3) SA 371
at para 13
[21]
59 of 1993
[22]
Van Zuylen and Msimang, Aviation Finance in South Africa:
Overview, practical nor Country Q&A 5-627-8904
[23]
Paras 22.4 and 22.5 of the founding affidavit to the counter
application read with the applicable paragraphs of the answering
affidavit in the Business Rescue application
[24]
Answering affidavit in the business rescue application, paras 18 –
27, pp 145 – 150
[25]
Founding affidavit, paras 38 – 38.2, p 19
[26]
Founding affidavit in the counter application, para 27, p 13