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[2022] ZANCHC 83
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Botha N.O and Others v Taljaard and Others (1094/2022;963/2021;964/2021;2436/2021) [2022] ZANCHC 83 (24 November 2022)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
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Policy
IN
THE HIGH COURT OF SOUTH AFRICA
NORTHERN
CAPE DIVISION, KIMBERLEY
Case
No: 1094/2022
Heard:
24/11/2022
Reportable:
YES / NO
Circulate
to Judges: YES / NO
Circulate
to Magistrates: YES / NO
Circulate
to Regional Magistrates: YES / NO
Delivered:
This judgment was
handed down electronically by circulation to the parties’
representatives by e-mail. The date and time for
hand-down is deemed
to be
14h00
on 13 December 2022.
In
the matter between:
DEON
MARIUS BOTHA N.O.
(in
his capacity as provisional co-liquidator of Project Multiply
(Pty)
Ltd (in provisional liquidation) (Reg No: 1993/005325/07)
and
in his capacity as co-trustee of the insolvent estate of Carel
Aaron
van der Merwe)
First
Applicant
JOCHEN
ECKHOFF N.O.
(in
his capacity as provisional co-liquidator of Project Multiply
(Pty)
Ltd (in provisional liquidation) (Reg No: 1993/005325/07)
and
Velvetcream 15 (Pty) Ltd (in provisional
liquidation)
Reg No: 2005/033276/07); and in his capacity as
provisional
co-trustee of the Merwede Trust (IT1534/98) in his
capacity
as co-trustee of the insolvent estate of Carel Aaron
van
der
Merwe) Second
Applicant
JOHANNES
ZACHARIAS HUMAN MULLER N.O.
(in
his capacity as provisional co-liquidator of Velvetcream 15
(Pty)
Ltd (in provisional liquidation) (Reg No: 2005/033276/07;
and
in his capacity as provisional co-trustee of the Merwede
Trust
(IT1534/98)
Third
Applicant
FUSI
PATRICK RAMPOPORO N.O.
(in
his capacity as provisional co-liquidator of Project Multiply
(Pty)
Ltd (in provisional liquidation)
(Reg
No:
1993/005325/07) Fourth
Applicant
SIMON
MALEBO RAMPOPORO N.O.
(in
his capacity as provisional co-liquidator of Velvetcream 15
(Pty)
Ltd (in provisional liquidation)
(Reg
No:
2005/033276/07) Fifth
Applicant
ANGELINE
POOLE N.O.
(in
her capacity as provisional co-trustee of the Merwede
Trust
(IT1534/98)
Sixth
Applicant
PHILEMON
TATENDA MAWIRE N.O.
(in
his capacity as co-trustee of the insolvent estate of
Carel
Aron van der Merwe)
Seventh
Applicant
and
SHANIE
TALJAARD
(Previously
Fourie, ID No: [....])
First
Respondent
CURO
CONSULTANCY (PTY) LTD
Second
Respondent
THE
MASTER OF THE HIGH COURT, KIMBERLEY
Third
Respondent
IN
RE:
CASE
NO: 1094/2022
SHANIE
TALJAARD
(Previously
Fourie, ID No:
[....]) First
Applicant
CURO
CONSULTANCY (PTY)
LTD
Second
Applicant
and
THE
LAND AND AGRICULTURAL DEVELOPMENT
BANK
OF SOUTH AFRICA
First
Respondent
MINISTER
OF TRADE AND INDUSTRY
Second Respondent
MINISTER
OF JUSTICE AND CONSTITUTIONAL
DEVELOPMENT
Third
Respondent
COMPANIES
AND INTELLECTUAL PROPERTY
COMMISSION
(CIPC)
Fourth
Respondent
JOCHEN
ECKHOFF N.O.
Fifth
Respondent
(in
his capacity as provisional co-liquidator of Project Multiply
(Pty)
Ltd (in provisional liquidation) (Reg No: 1993/005325/07)
and
Velvetcream 15 (Pty) Ltd (in provisional
liquidation)
Reg No: 2005/033276/07); and in his capacity as
provisional
co-trustee of the Merwede Trust (IT1534/98) in his
capacity
as co-trustee of the insolvent estate of Carel Aaron
van
der Merwe)
DEON
MARIUS BOTHA N.O.
(in
his capacity as provisional co-liquidator of Project Multiply
(Pty)
Ltd (in provisional liquidation) (Reg No: 1993/005325/07)
and
in his capacity as co-trustee of the insolvent estate of Carel
Aaron
van der Merwe)
Sixth
Respondent
JOHANNES
ZACHARIAS HUMAN MULLER N.O.
(in
his capacity as provisional co-liquidator of Velvetcream 15
(Pty)
Ltd (in provisional liquidation) (Reg No: 2005/033276/07;
and
in his capacity as provisional co-trustee of the Merwede
Trust
(IT1534/98)
Seventh
Respondent
FUSI
PATRICK RAMPOPORO N.O.
(in
his capacity as provisional co-liquidator of Project Multiply
(Pty)
Ltd (in provisional liquidation)
(Reg
No: 1993/005325/07)
Eighth
Respondent
SIMON
MALEBO RAMPOPORO N.O.
(in
his capacity as provisional co-liquidator of Velvetcream 15
(Pty)
Ltd (in provisional liquidation)
(Reg
No: 2005/033276/07)
Ninth
Respondent
ANGELINE
POOLE N.O.
(in
her capacity as provisional co-trustee of the Merwede
Trust
(IT1534/98)
Tenth
Respondent
CATHARINA
SUSANNE VAN DER MERWE N.O.
(in
her capacity as sole remaining trustee of the Merwede
Trust
(IT1534/98)
11
th
Respondent
PHILEMON
TATENDA MAWIRE N.O.
(in
his capacity as co-trustee of the insolvent estate of
Carel
Aron van der Merwe)
12
th
Respondent
AGRI
SOUTH AFRICA NPC
13
th
Respondent
MASTER
OF THE HIGH COURT, KIMBERLEY
14
th
Respondent
MASTER
OF THE HIGH COURT, CAPE TOWN
15
th
Respondent
AFFECTED
PARTIES OF PROJECT MULTIPLY (PTY) LTD
AS
PER LIST ANNEXED HERETO, MARKED “A”
16
th
Respondent
AFFECTED
PARTIES OF VELVETCREAM 15 (PTY) LTD
AS
PER LIST ANNEXED HERETO, MARKED “B”
17
th
Respondent
AFFECTED
PARTIES OF THE MERWEDE TRUST AS PER
THE
LIST ANNEXED HERETO, MARKED “C”
18
th
Respondent
AFFECTED
PARTIES OF CAREL ARON VAN DER MERWE
AS
PER LIST ANNEXED HERETO MARKED “D”
19
th
Respondent
In
re:
Case No:
963/2021
THE
LAND AND AGRICULTURAL DEVELOPMENT
BANK
OF SOUTH AFRICA
Applicant
and
JACQUES
DU TOIT N.O.
(in
his erstwhile capacity as
Business
Rescue Practitioner of Project Multiply (Pty)
Ltd
(in provisional liquidation
1
st
Respondent
PROJECT
MULTIPLY (PTY) LTD
(in
provisional
Liquidation)
(Reg No:
1993/005325/07) 2
nd
Respondent
THE
COMPANIES AND INTELLECTUAL PROPERTY
COMMISSION
(CIPC)
3
rd
Respondent
ALL
AFFECTED
PARTIES
4
th
Respondent
AND
in
re:
Case
No: 964/2021
THE
LAND AND AGRICULTURAL DEVELOPMENT
BANK
OF SOUTH
AFRICA
Applicant
and
JACQUES
DU TOIT N.O.
(in
his erstwhile capacity as
Business
Rescue Practitioner of Velvetcream 15 (Pty)
Ltd
(in provisional liquidation)
(Reg
No: 2005/033276/07)
1
st
Respondent
VELVETCREAM
15 (PTY) LTD
(in
provisional liquidation)
(Reg
No: 2005/033276/07)
2
nd
Respondent
THE
COMPANIES AND INTELLECTUAL PROPERTY
COMMISSION
(CIPC)
3
rd
Respondent
ALL
AFFECTED
PARTIES
4
th
Respondent
AND
in
re:
Mahikeng
Case No: M557/2021/27
Kimberley
Case No: 2436/2021
THE
LAND AND AGRICULTURAL DEVELOPMENT
BANK
OF SOUTH AFRICA
Applicant
and
CAREL
ARON VAN DER MERWE (SNR) N.O.
1
st
Respondent
CATHARINE
SUSANNA VAN DER MERWE N.O.
2
nd
Respondent
CAREL
ARON VAN DER MERWE (JNR) N.O.
3
rd
Respondent
(in
their capacities as co-trustees of the Merwede
Trust
(IT 1534/98)
JUDGMENT:
APPLICATION FOR A DECLARATOR OR IN TERMS OF
S 18
OF THE
SUPERIOR
COURTS ACT 10 OF 2013
Mamosebo
J
[1]
The applicants are the provisional liquidators and trustees who were
successful in
the matter that served before me on 13 September 2022
and in whose favour the following orders were granted:
“
2.
The Fifth, Sixth and Eighth respondents’ powers are extended in
terms of Sections 386(4)(a) to
(i) of the Companies Act, 61 of 1973.
3.
That the Fifth, Sixth and Eighth respondents are granted leave in
their capacities as the
joint liquidators of the insolvent company to
convene a commission of enquiry into the trade, dealings, affairs and
property of
Project Multiply (Pty) Ltd (in liquidation) in terms of
the provisions of section 417, read with section 418 of the Companies
Act,
61 of 1973, to be chaired by retired Judge Eberhardt Bertelsmann
who has consented to be so appointed, same consent has been attached
to the Notice of Motion and marked annexure “E”.
4.
That the costs of the enquiry be borne by the insolvent estate of
Project Multiply (Pty)
Ltd (in liquidation), including costs of the
commissioner, attorney and/or counsel and all other costs and
expenses incidental
to the enquiry.
5.
That the Fifth, Seventh and Ninth respondents’ powers be
extended in terms of Sections
386(4)(a) to (i) of the Companies Act,
61 of 1973.
6.
That the Fifth, Seventh and Ninth respondents are granted leave in
their capacities as the
joint liquidators of the insolvent company to
convene a commission of enquiry into the trade, dealings, affairs and
property of
Velvetcream 15 (Pty) Ltd (in liquidation) in terms of the
provisions of section 417, read with section 418 of the Companies
Act,
61 of 1973, and to be chaired by retired Judge Eberhardt
Bertelsmann who has consented to be so appointed, same consent has
been
attached to the Notice of Motion and marked annexure “E”
.
7.
That the costs of the enquiry be borne by the insolvent estate of
Velvetcream 15 (Pty) Ltd
(in liquidation), including costs of the
commissioner, attorney and/or counsel and all other costs and
expenses incidental to the
enquiry.
8.
That the provisional trustees’ powers are extended in terms of
section 18(3)
and
73
of the
Insolvency Act 24 of 1936
, in order to
have the powers and the duties of a trustee as provided for by the
Insolvency Act to
bring and defend legal proceedings and to dispose
of the livestock and/or other assets necessary in the administration
of the insolvent
estate, and to appoint legal practitioners to assist
them in the investigation and/or administration of the insolvent
estate.
9.
That the costs of this application be costs in the administration of
the insolvent company
and the insolvent estates.”
[2]
The first and second respondents, Shanie Taljaard and Curo
Consultancy (Pty) Ltd,
(the respondents) noted an appeal with the
Supreme Court of Appeal on 12 October 2022. The relief that the
applicants/ liquidators
and trustees, Deon Marius Both N.O., Jochen
Eckhoff N.O., Johannes Zacharias Human Muller N.O.
, Fusi Patrick Rampoporo N.O., Simon Malebo Rampoporo N.O., Angeline
Poole N.O. and Philemon Tatenda Mawire N.O. now seek is first,
for
the application to be heard on an urgent basis in terms of Rule 6(11)
and (12) of the Uniform Rules of Court; and a declaratory
order that
the orders granted in terms of paragraphs 2 to 9 of the Judgment
dated 11 October 2022 are not suspended pending the
outcome of the
application for leave to appeal to the Supreme Court of Appeal dated
12 October 2022; alternatively, an order be
granted to the
liquidators and trustees in terms of
s 18
of the
Superior Courts Act,
10 of 2013
, for leave to execute the orders granted by this Court on
11 October 2022, pending the decision on the application for leave to
appeal, or the appeal itself, as the case may be; and, that the costs
in this application be costs in the administration of the
estates.
The respondents (Ms Taljaard and Curo Consulting) are opposing this
application. The master of the High Court,
Kimberley, has
played no role in these proceedings and it follows that any reference
to “respondents” refers only to
the first and second
respondents.
[3]
On 16 November 2022 the respondents also brought with this same
application two applications:
the first application was to
strike out in terms of Rule 6(15) of the Uniform Rules of Court
portions of the applicants’
founding affidavit dated 19 October
2022 and replying affidavit dated 01 November 2022 deposed to by Mr
Deon Marius Botha on the
basis that they constitute either vexatious
or scandalous matter, new matter raised in reply, inadmissible
hearsay evidence or
legal argument based on incorrect premises of law
or fact. In the second application the respondents seek leave
to file an
additional affidavit. The liquidators and trustees
are opposing these two applications.
[4]
For convenience I will refer to the applicants as the applicants or
the liquidators
and trustees and the first and second respondents
either as the respondents or Ms Taljaard and Curo Consulting.
Urgency
[5]
Mr De Vries, counsel for the respondents, conceded that the matter is
urgent. In
substantiation on urgency, Ms Fourie SC, counsel for
the applicants, submitted that this Court has already found, when
ruling in
favour of the liquidators and the trustees in their
conditional counter-application, that their application is urgent and
nothing
has changed. They must still perform their statutory
and fiduciary duties to secure and preserve the assets of the
insolvent
entities with no free residue. It should be borne in
mind that the livestock involved are sheep that are susceptible to
theft,
death and even requires maintenance and security costs and
some might even have to be disposed of for preservation purposes. Ms
Fourie urged the Court not to accept the contention that Van der
Merwe, an unrehabilitated insolvent, is caring for the livestock
because that is the responsibility of the liquidators in the
administration of the insolvent estates.
[6]
There are also unauthorised transactions taking place resulting in
the dissipation
of funds and/or dispersion thereof to other
individuals or entities and thus diminishing the estate of the
insolvent entities to
the detriment of the general body of creditors.
The liquidators and trustees have to date not been informed of
the specific
proportionate ownership vesting in each entity as the
information is withheld from them. This non-cooperation
with
and involvement of the liquidators and trustees in the
administration of the insolvent estates makes the matter urgent.
[7]
More importantly is that, despite the counter-application having been
found to be
urgent and adjudicated on an urgent basis and orders
granted in their favour, the respondents’ application for leave
to appeal
has thwarted the relief granted. Further, the refusal
by the respondents’ legal team, erstwhile business rescue
practitioner
and the respondents to attend the insolvency enquiry
convened before retired Judge Bertelsmann on 31 October 2022 to 02
November
2022 is another factor that validates urgency because, while
the conduct is a criminal offence punishable in law, it disempowers
or disables the liquidators and trustees from effectively carrying
out their statutory fiduciary duties.
Application
for the admission of an additional affidavit and the striking
applications:
[8]
I first deal with the additional affidavit. The respondents
seek the following
relief in the Notice of Motion dated 16 November
2022:
“
1.
That the first and second respondents be granted leave to file the
further [affixed] affidavit, dated
15 November 2022, and that same be
admitted into the record.
2.
That the applicants be offered an opportunity to file a further set
of affidavits in response
to the first and second respondents’
further affidavit.
3.
That any party that opposes the relief claimed in this application
shall be ordered to pay
the first and second respondents’ costs
associated with such opposition.”
[9]
The practice pertaining to the number of affidavits in motion
proceedings is settled.
The ordinary rule is that three sets of
affidavits are allowed and the Court may, in its discretion, admit
the filing of
a further affidavit. The discretion of the Court
to admit this affidavit is provided for in Rule 6(5)(e) of the
Uniform Rules
of Court. This discretion must be exercised
judicially taking into consideration all the relevant facts of the
case. Where
an affidavit is tendered in motion proceedings,
both late and out of its ordinary sequence, the party tendering it is
seeking,
not a right, but an indulgence from the Court; he/she or it
must advance not only an explanation why the affidavit is out of time
but must also satisfy the Court that, despite being late and regard
being had to all the circumstances, it must still be received.
The
explanation must exclude
mala
fides
or
culpable remissness having contributed in the information not being
before Court earlier. It is also crucial for the Court
to be
satisfied that there will be no prejudice to the other party which
cannot be remedied by an order of costs.
[1]
[10]
This brings me to the facts and circumstances upon which the first
applicant, Ms Taljaard’s,
application for the admission of the
additional affidavit is predicated. First, she is querying
reference made by the liquidators/trustees
to the non-cooperation of
Mr van der Merwe and the erstwhile business rescue practitioner
(BRP), Mr Jacques du Toit, with them
and also with the Commissioner
appointed to conduct the insolvency enquiry and imputes such
averments to the efforts by the liquidators
to mislead this Court
because, according to her, Van der Merwe and the BRP have given their
full cooperation and furnished all
the required documentation. She
was, however, not in attendance when the said individuals attended
the meeting and it is
incomprehensible how she can be in a position
to attest to same with certainty and as a matter of fact.
[11]
The second gripe by Ms Taljaard refers to correspondence between the
applicants’ attorneys
and my registrar, Ms Viljoen, and the
chief registrar, Ms Basson, to secure a hearing date prior to
launching the application in
which they were allegedly not copied.
The last aspect is that they were made to appear on an urgent
basis before Williams
J on 01 November 2022 and were informed that
the matter will be adjudicated by Mamosebo J who is seized with it.
[12]
Ms Fourie SC, appearing for the applicants, submitted that the
respondents have not shown any
prejudice for them to succeed in this
application; and that as far as the issue of new matters raised are
concerned, the findings
by the Court in its judgment are fact-based.
Counsel pointed out that though she did not draft the papers
she, nevertheless,
noticed that there were allegations made by the
one side to the other and vice versa: proverbially “
the pot
calling the kettle black
”. Counsel castigated the
respondents, Van der Merwe, the BRP and the legal team for blatantly
refusing to attend the
insolvency enquiry even after they were
subpoenaed to do so. They only attended the meeting held in the
Western Cape.
[13]
Mr De Vries, relying on
Viljoen
v Federated Trust Ltd
[2]
,
argued
that the applicants did not give the respondents an opportunity to
remove the cause of complaint whereas Mr Botha has filed
a
replication to the additional affidavit. Counsel urged this
Court to disregard them and only focus on the pleaded case.
Ms
Fourie, countering this submission, highlighted that this Court must
be mindful of the difference between striking out
under Rule 6(15) in
accordance with Rule 6(11) as opposed to Rule 23. The
respondents have still not shown any prejudice.
The affidavit
filed by Mr Botha was to address the complaints raised by the
respondents, the contention went.
[14]
Before a court can accept a further affidavit, there must be fairness
to both sides. Each
case is determined on its own merits. The
Court must be satisfied of the absence of prejudice caused by the
filing of the
additional affidavit which cannot be cured or remedied
by an appropriate cost order.
[15]
On a conspectus of the evidence before me I could not
discern any
mala fides
on the part of the office of the
Registrar. The communication for the allocation of a hearing
date was done in the ordinary
course of its administrative function.
I must emphasise that I was not involved in the administrative
functions and allocation
of dates. I take note that the other
party was not informed and this is to be discouraged as the
acceptable practice is to
keep the other side abreast of the
developments in the matter. This, however, does not take away
the fact that the demur
has already been dealt with in the previous
affidavits and judgments.
[16]
I am convinced that the additional affidavit and the opposing
affidavit were unnecessary and
served not only to repeat what is
already in the record but makes it unreasonably prolix. Having
carefully considered all
the factors bearing on the exercise of my
discretion in the light of all the relevant authorities and the
explanation advanced
by the respondents, I have come to the
conclusion that the additional affidavit deposed to by Ms Shanie
Taljaard should not be
admitted as part of the record and is regarded
as
pro non scripto
.
The
striking out application
[17]
Striking out is regulated by Rule 6(15) of the Uniform Rules of Court
which provides that the
court may on application order to be struck
out from any affidavit any matter which is scandalous, vexatious or
irrelevant, with
an appropriate order as to costs, including costs as
between attorney and client. The court may not grant the
application
unless it is satisfied that the applicant will be
prejudiced if the application is not granted.
[18]
For a party to succeed in the application to strike out, two
requirements must be met as held
by the Supreme Court of Appeal in
Beinash
v Wixley
[3]
:
first, the matter sought to be struck out must be scandalous,
vexatious or irrelevant; secondly, the court must be satisfied
that
if such matter was not struck out the party seeking such relief would
be prejudiced.
[19]
Erasmus
[4]
explains: “Any
matter which is scandalous, vexatious or irrelevant” the
meaning of these terms has been stated as follows:
(a)
Scandalous
matter – allegations which may or may not be relevant but which
are so worded as to be abusive or defamatory.
(b)
Vexatious
matter – allegations which may or may not be relevant but are
so worded as to convey an intention to harass or annoy.
(c)
Irrelevant
matter – allegations which do not apply to the matter in hand
and do not contribute in one way or the other to
a decision of such
matter. See also
Tshabalala-Msimang
and Another v Makhanya and Others
[5]
;
Vaatz v Law Society of Namibia
[6]
and
Breedenkamp
and Others v Standard Bank of South Africa Ltd and Another
[7]
;
Swissborough Diamond Mines v The Government of the RSA
[8]
.
[20]
In her founding affidavit, Ms Taljaard attacked certain portions of
the applicants’ founding
affidavit dated 19 October 2022 and
replying affidavit dated 01 November 2022 deposed to by Mr Deon
Marius Botha on the grounds
that they constitute either vexatious or
scandalous matter, new matter raised in reply, inadmissible hearsay
evidence or are argumentative.
These allegations are set out in
the founding affidavit at paras 46, 63, 76 and the replying affidavit
at paras 10, 11, 12.3,
15.7, 27, 36, 41.5, 41.7, 41.8, 53, 59, 60,
65, 104, 116, 124, 125, 141, 148,150, 151, 165, 173, and 179.
[21]
It was contended on behalf of the respondents that the allegations
contained in the above paragraphs
were scandalous, vexatious
speculative and argumentative. Mr De Vries, relied on
Knoop
and Another NNO v Gupta (Tayob Intervening)
[9]
to
attack
the credibility of the applicants’ legal team and the
insolvency practitioners, especially the deponent to the affidavits.
The contents are distinguishable and do not support the
contention by counsel.
[22]
I have considered all the impugned paragraphs both in the founding
and replying affidavits and
disagree with the contention. What
in my view they set out to emphasise, not in the manner alleged by
the respondents, is
that the liquidators/trustees are prevented from
fulfilling their statutory mandate; they cannot leave the
administration of the
insolvent estates in the hands of Van der
Merwe, who is himself an unrehabilitated insolvent; there is
dissipation of assets taking
place; Van der Merwe and the applicants
cannot be trusted to continue to operate the entities as if it is
business as usual.
[23]
The correct approach in assessing the correctness of these
allegations would be to determine
the facts in totality. A
piecemeal approach may provide a skewed and myopic view, out of
kilter, with unintended consequences.
In the ultimate
determination of all these facts, lies the answer. I do not
deem these allegations to be scandalous,
vexatious, irrelevant or
even argumentative. I am also satisfied that if such paragraphs
are not struck out the respondents
would not be prejudiced. The
application to have them struck out is misplaced.
The
application for a declarator alternatively relief in terms of
s 18(3)
of the
Superior Courts Act, 10 of 2013
.
[24]
The relief sought by the liquidators and the trustees, opposed by the
respondents, is a declaratory
order that the orders I granted in my
judgment dated 11 October 2022, paraphrased hereunder, are not
suspended pending the outcome
of the respondents’ leave to
appeal to the Supreme Court of Appeal dated 12 October 2022:
24.1
extended the
liquidators’ powers in terms of s 386(4)(a)-(i) and 386(5) of
the Companies Act, 61 of 1973(the Companies Act);
24.2
granted the
liquidators leave to convene a commission of enquiry into the trade,
dealings, affairs and property of Project Multiply
and Velvetcream 15
in terms of ss 417 and 418 of the Companies Act; and
24.3
extended the
trustees’ powers in terms of
ss 18(3)
and
73
of the
Insolvency
Act, 24 of 1936
, alternatively, and only in the event that the
applicants are not successful in obtaining a declarator, for leave to
execute the
orders as contemplated in
s18(1)
and
18
(3) of the
Superior Courts Act 10 of 2013
pending the decision on the
application for leave to appeal or appeal, as the case may be, and
that costs be in the administration
of the estate.
[25]
The events giving rise to this application are the following. The
respondents, Ms Shanie
Taljaard and Curo Consultancy (Pty) Ltd,
brought an application (the main application) in three parts:
Part
A, which was subsequently abandoned, comprised the intervention and
joinder application in the winding-up and sequestration
applications
of Project Multiply, Velvetcream 15 and the Merwede Trust.
In
Part B, declaratory relief was sought pertaining to a constitutional
challenge to Chapter 6 of the
Companies Act, 71 of 2008
, on the basis
that individuals and trusts fall to be placed under business rescue,
and their exclusion from the protection of business
rescue
proceedings, is unconstitutional.
In
Part C
Taljaard and Curo Consultancy sought the dismissal of the
winding-up and sequestration applications of Project Multiply,
Velvetcream
15 and the Merwede Trust and orders that these entities
be placed under business rescue in terms of
s 131(1)
of the
Companies
Act.
[26
]
The Land and Agricultural Bank of South Africa (the Landbank) opposed
the main application and issued
a counter-application to be heard on
an urgent basis on 05 August 2022 seeking the following relief:
26.1
That the main application be dismissed with punitive costs;
26.2
That it be declared that the business rescue plan, proposed by
Taljaard and filed in support of the application for business
rescue,
is not achievable on reasonably objective grounds; and
26.3
That costs be granted on a punitive scale.
[27]
The liquidators and trustees filed a conditional counter-application:
dependent upon the Court
dismissing the main application and granting
the counter-application by the Landbank. The main application
was argued on
08 September 2022 and judgment delivered on 11 October
2022 dismissing the main application and upholding the Landbank’s
and the liquidators’ and trustees’ counter-applications.
Taljaard and Curo filed an application for leave to appeal
on
12 October 2022. It is noteworthy that while the Notice of
Motion seeks relief against the whole of the judgment and orders
the
founding affidavit seems to suggest differently.
[28]
The deponent to the founding affidavit in the application for leave
to appeal states in para
9: “
this matter is, first and
foremost, a matter which calls on the Supreme Court of Appeal to
consider a constitutional issue of national
importance.”
A few paras later, in para 14, the deponent states:” as
will be dealt with hereunder, the only relief that is sought is
that the protection mechanism created by Chapter 6 of the
Companies
Act, 71 of 2008
, for companies be made available for trusts and
natural persons as the Minister of Justice and Constitutional
Development intended
back in the year 2014 already.”
Much
later, at para 44 the deponent states “
this case is about a
lacuna in Chapter 6 business rescue provisions of the 2008
Companies
Act.”
The
application for leave to appeal prompted
the applicants to approach this Court for a declarator alternatively
for the relief in
terms of
s 18
of the Superior Courts Act.
[29]
In addition to drawing that distinction on the grounds upon which the
respondents rely for application
for leave to appeal, of significance
is that the attack is primarily on the constitutional challenge to
Chapter 6 of the
Companies Act. As
contended by the liquidators
in their replying affidavit the respondents did not oppose their
conditional counter-application nor
appeal against the orders granted
in the liquidators’ favour. It is necessary to quote the
respondents’ reply
[10]
titled ‘
Replying
affidavit in main application and answering affidavit in
counter-applications”:
“
I
do not intend on dealing, ad seratium, with the
liquidators’/trustees’ provisional counter-application
due to the
fact that if the main application is dismissed/Landbank’s
counter-application is granted, there would be no reason for the
applicants to flog the proverbial dead horse (or more aptly put, in
casu, sheep). In any event, the justification for the
relief
sought by the liquidators/trustees is primarily based on the false
and misleading allegations of Landbank, which I have
already dealt
with herein.”
Unquestionably,
the liquidators and trustees’ counter-application was never
expressly opposed by the respondents.
The
declarator
[30]
As stated earlier, the applicants are seeking a declaratory order
that the orders granted in
terms of paras 2 to 9 (at para 1 above) of
my judgment dated 11 October 2022, are not suspended pending the
outcome of the applicants’
application for leave to appeal
dated 12 October 2022.
[31]
Farlam JA in
Trinity
Asset Management (Pty) Ltd v Investec Bank Ltd
[11]
held:
“
[62]
Although the granting of a
declaratory order is discretionary it can be granted only upon a
judicial exercise of the discretion
.
There can be no proper exercise of such discretion if essential
elements of a declarator are not fulfilled. In Cordiant Trading
CC v
Daimler Chrysler Financial Services (Pty) Ltd
[2005 (6) SA 205
(SCA)
at 17 – 18] this court said:
'Although
the existence of a dispute between the parties is not a prerequisite
for the exercise of the power conferred upon the
High Court by the
subsection [s 19(1)(a)(iii) of the Supreme Court Act 59 of 1959],
[12]
at least there must be interested parties on whom the declaratory
order would be binding.’
…
(T)he
two stage approach under the subsection consists of the following.
During
the
first leg
of the enquiry
the
Court must be satisfied that the applicant has an interest in an
''existing, future or contingent right or obligation
''.
At this stage the focus is only upon establishing that the necessary
conditions precedent for the exercise of the Court's discretion
exist. If the Court is satisfied that the existence of such
conditions has been proved, it has to exercise this discretion by
deciding either to refuse or grant the order sought.
The
consideration of whether or not to grant the order constitutes the
second leg of the enquiry
.'”
(Emphasis
added)
[32]
In
Rail
Commuters Action Group v Transnet Ltd t/a Metrorail
[13]
O’Regan
J pronounced:
“
[107]
It is quite clear that before it makes a declaratory order
a court
must consider all the relevant circumstances. A declaratory order is
a flexible remedy which can assist in clarifying legal
and
constitutional obligations in a manner which promotes the protection
and enforcement of our Constitution and its values. Declaratory
orders, of course, may be accompanied by other forms of relief, such
as mandatory or prohibitory orders, but they may also stand
on their
own. In considering whether it is desirable to order mandatory or
prohibitory relief in addition to the declarator, a
court will
consider all the relevant circumstances.”
The
learned Judge continued at para 108:
“
[108]
It should also be borne in mind that
declaratory
relief is of particular value in a constitutional democracy
which enables courts to declare the law, on the one hand, but leave
to the other arms of government, the Executive and the Legislature,
the decision as to how best the law, once stated, should be
observed.”
[33]
Mr De Vries contended on behalf of the respondents that because there
is a pending application
for business rescue to the SCA the
liquidation proceedings are suspended until the SCA has adjudicated
the matter. He relies
on
s 131(6)
of the
Companies Act 71 of
2008
which provides:
“
(6)
If liquidation proceedings have already been commenced by or against
the company at the time an application
is made in terms of subsection
(1), the application will suspend those liquidation proceedings
until-
(a)
the court has adjudicated upon the application; or
(b)
the business rescue proceedings end, if the court makes the order
applied for.”
[34]
On 12 October 2022 this Court granted the Landbank final winding-up
orders in respect of Velvetcream
15 and Project Multiply and a final
sequestration order against the Merwede Trust. Le Grange J
ordered a final sequestration
order in the Western Cape High Court
under Case Number 15365/2021 against Van der Merwe and later refused
him leave to appeal.
He petitioned the SCA but Justices Ponnan
and Hughes JJA dismissed his application on 07 September 2022 on the
grounds that
there are no reasonable prospects of success in the
application and no compelling reasons why an appeal should be heard.
[35]
The main judgment dealt comprehensively with the relief sought by the
respondents. Just
to recap, the respondents in Part B of the
relief were seeking a declarator relating to a constitutional
challenge to Chapter 6
of the
Companies Act, 71 of 2008
, on the basis
that individuals and trusts fall to be placed under business rescue
and that their exclusion from the protection
of business rescue
proceedings is unconstitutional. In
Part C
, the relief sought
was the dismissal of the winding-up and sequestration applications of
Project Multiply, Velvetcream 15 and the
Merwede Trust and ordered
that they be placed under business rescue in terms of
s 131(1)
of the
Companies Act.
[36
]
There are no prospects of success on appeal: the main
constitutional challenge has no merit;
the respondents are continuing
to ignore the fact that each entity, company and close corporation,
trust and individual is regulated
by the different pieces of
legislation and protected differently by those pieces of legislation;
that Courts do not legislate by
virtue of the doctrine of separation
of powers but only adjudicate matters; and Van der Merwe is already
finally sequestrated with
no prospects of success on appeal as the
SCA has already definitively pronounced.
[37]
More importantly, the respondents continue to undermine the statutory
and fiduciary duties afforded
to the liquidators and trustees who
bear the responsibility to administer the insolvent estates and
report to the Master of the
High Court. The less said regarding
the conduct of the respondents, the erstwhile business rescue
practitioner and the legal
team in blatantly refusing to attend the
Commission of enquiry ordered by this Court, the better. The
attendance of this
enquiry, in my view, will help the parties to
unravel the necessary information, particularly of proportionate
ownership, whether
there has been dissipation or not and account to
the Master and protect the general body of creditors. The hands
of the liquidators
and trustees need to be strengthened under these
circumstances. The objective of the
Insolvency Act and
the
Companies Act must
be met. Turning a blind eye to the conduct
of the respondents in leaving Van der Merwe and Taljaard to blatantly
continue
to operate the insolvent entities as if it is business as
usual would render nugatory the statutory rights and obligations of
the
liquidators and trustees. This cannot be countenanced.
[38]
The argument by Mr De Vries ignores the provisions of
s 150(3)
of the
Insolvency Act which
was dealt with at para 38 of the main judgment.
The section provides that when an appeal has been noted
(whether under this
section or under any other law), against a final
order of sequestration, the provisions of this Act shall nevertheless
apply as
if no appeal had been noted: Provided that no property
belonging to the sequestrated estate shall be realized without the
written consent of the insolvent concerned.
[39]
Mr De Vries, invoking the
Natal
Joint Municipal Fund v Endumeni Municipality
[14]
,
urged this Court to follow the interpretation that is reasonable,
sensible or business like when interpreting
s 131(6)
of the
Companies
Act. I
must also attach its ordinary grammatical meaning
[15]
unless, as stated in
Smyth
and Others v Investec Bank Limited and Another
[16]
,
to
do so would result in an absurdity. In other words, what Mr De
Vries wants this Court to do is to say although I have already
pronounced on the business rescue application and found against the
respondents, the correct meaning to the phrase “
the
court that has adjudicated upon the application”
does
not refer to the High Court but to the SCA.
[40]
The interpretation that Mr De Vries is urging this Court to attach to
the phrase is flawed in
more than one way. First, the
constitutional challenge to Chapter 6 of the
Companies Act, has
no
prospects of success. Mr van der Merwe has already failed on
that leg. Secondly, the SCA in
Oakdene
Square Properties (Pty) Ltd and Others v Farm Bothasfontein
(Kyalami)(Pty) Ltd and Others
[17]
cautioned
that if the majority creditors declare that they will oppose any
business rescue scheme based on those grounds, the Landbank
holding
95% vote as a major creditor, there would be no reason why the
proclaimed opposition should be ignored unless it was said
to be
unreasonable or
mala
fide.
I have not found that to be the case. Landbank is owed
R80 million whereas Ms Taljaard is owed R10,000.00 and Curo
Consulting R160,000.00. Thirdly, the liquidators and trustees
have statutory rights and obligations that continue to be undermined.
Fourthly, the issue regarding dissipation of assets and
operations of the insolvent estates still left in the hands of Van
der Merwe with unauthorised transactions taking place is untenable.
Lastly, the refusal by the respondents, the erstwhile
business
rescue practitioner and the legal team to attend the Commission of
Enquiry where details pertaining to these insolvent
entities would
finally be thrashed out, is obstructionist. The respondents and
their legal team have not explained how any
of them would suffer
prejudice should the enquiry proceed. Inferentially it can be
concluded that they are not willing to
answer questions and furnish
the required details.
[41]
I am satisfied that the applicants have an interest in an existing,
future or contingent right
or obligation in that, they have a right
to perform statutory duties as the liquidators and trustees of the
insolvent estates found
to be both factually and commercially
insolvent and are unable to pay their debts. The non-fulfilment
of this statutory obligation
will result in adverse consequences for
the liquidators and trustees in both their official and personal
capacities.
[42]
The second leg of the requirement is that once I am satisfied that
the right exists, I have a
discretion to decide whether to grant the
order or not, which discretion must be exercised judicially.
[43]
Regard being had to all the relevant circumstances in the matter, I
am of the view that the relief
that this Court granted on 11 October
2022 in favour of the liquidators and trustees
ex facie
the
founding affidavit in support of the application for leave to appeal,
the orders granted are not subject to appeal, and therefore
not
subject to
s 18
of the
Superior Courts Act. The
applicants have
therefore made out a case for a declarator. I deem it
unnecessary to consider
s 18
in this matter.
On
the issue of costs
[44]
In estate matters costs are normally costs in the administration of
the estate. However,
Ms Fourie persuasively made the following
submissions: While accepting that a punitive cost order was not
foreshadowed in
the Notice of Motion, the opposition of this
application has not been
bona fide,
not only because of the
enormity of the papers generated but also because the respondents
also raised irrelevant matters in the
interlocutory applications.
Counsel submitted that the costs in the application be costs in
the administration of the estates
but costs in the interlocutory
applications be borne by Ms Taljaard and Curo Consulting. Mr De
Vries merely asked the application
be dismissed with costs.
[45]
There is no reason why the applicants or the insolvent estate should
continue to be mulcted in
costs unduly. The respondents acted
without circumspection in opposing this application for the relief
sought by the applicants
and are being dilatory to the point of being
obstructionist. There was simply no reason for opposition and
no prospects of
success on appeal.
[46]
In the result, the following order is made:
1.
It is declared
that the orders granted in terms of paragraphs 2 – 9 of the
written judgment of Mamosebo J dated 11 October
2022, are not
suspended pending the outcome of the first and second respondents’
application for leave to appeal dated 12
October 2022, or appeal as
the case may be.
2.
Costs in the
liquidators and trustees’ application are costs in the
administration of the estate.
3.
The first and
second respondents are ordered to pay the costs in the interlocutory
applications (striking out and additional affidavit)
on the scale as
between attorney and client, jointly and severally, the one paying
the other to be absolved.
M.C.
MAMOSEBO
JUDGE
OF THE HIGH COURT
NORTHERN
CAPE DIVISION
For
the 1
st
to 7
th
applicants:
Adv
HR
Fourie SC
Adv
U Van Niekerk
Instructed
by:
JI
Van Niekerk Inc. Attorneys
c/o
Majiedt Swart Inc.
For
the 1
st
and 2
nd
respondents:
Adv
JD De Vries
Instructed
by:
Johan
Victor Attorneys
c/o
Engelsman & Magabane Inc.
[1]
Court
in James Brown & Hamer (Pty) Ltd (previously named Gilbert Hamer
& Co Ltd) v Simmons NO
1963 (4) SA 656
(A) at 660E – H;
Cohen NO v Nel and Another 1975(3) SA 963 (W); Transvaal Racing Club
v Jockey Club of South Africa
1958 (3) SA 599
(W); Standard Bank of
SA Ltd v Sewpersadh and Another 2005 (4) SA 148 (C).
[2]
1971
(1) SA 750
(OPD) at 753G
[3]
[1997] ZASCA 32
;
1997
(3) SA 721
(SCA) at 732A - B
[4]
Superior
Courts Practice Volume 2 [Service 7, 2018] D1-91
[5]
[2007] ZAGPHC 161
;
[2008]
1 All SA 509
(W) at 516e-f
[6]
1991
(3) SA 563
NmHC at 566C - E
[7]
2009
(5) SA 304
(GSJ) at 321C - E
[8]
1999
(2) SA 279 (TPD)
[9]
2021
(3) SA 88
(SCA) at para145
[10]
At
para 409.1 of their replying/answering affidavit in the main
application
[11]
2009
(4) SA 89
(SCA) at 106G
[12]
Now
section 21(1)(c)
of the
Superior Courts Act, 10 of 2013
.
[13]
[2004] ZACC 20
;
2005
(2) SA 359
(CC) at 410D – E (para 107)
[14]
2012
(4) SA 593
(SCA) at para 18
[15]
Cool
Ideas 1186 CC v Hubbard and Another
2014 (4) SA 474
(CC) at para 28
[16]
2018
(1) SA 494
(SCA) paras 28 -29
[17]
2013
(4) SA 539
(SCA) at para 38