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[2021] ZAGPPHC 237
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PFC Properties (Pty) Ltd v Commissioner for the South African Revenue Service and Others (10396/21) [2021] ZAGPPHC 237 (10 May 2021)
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REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA
GAUTENG DIVISION,
PRETORIA
CASE
NO: 10396/21
REPORTABLE:NO
OF
INTEREST TO OTHER JUDGES:NO
REVISED:NO
Date:10
May 2021
In
the matter between:
PFC
PROPERTIES (PTY)
LTD
APPLICANT
(REG.NO.:
[…])
and
THE COMMISSIONER
FOR
FIRST RESPONDENT
THE SOUTH AFRICAN REVENUE
SERVICES
TIANJIN
PENGBO WEIYE SA (PTY) LTD
SECOND RESPONDENT
(previously 21 PORTLAND
ROAD PMB (PTY) LTD)
(REG. NO.: […])
THE REGISTRAR OF DEEDS,
PRETORIA
THIRD RESPONDENT
CLOETE MURRAY
N.O.
FIRST INTERVENING PARTY
ROSELYN CHANTAL NOEL
N.O.
SECOND INTERVENING PARTY
(In their capacities as
joint
provisional
trustees of the
Insolvent estate of
Paul de Robillard
Identity Number […])
JUDGMENT: APPLICATION FOR
LEAVE TO APPEAL
Van der Schyff J
[1]
The applicant applies for leave to appeal against the whole of the
judgment
handed down on 13 April 2021 under the above case number.
The facts of the case at hand are set out in the judgment that is the
subject of this application for leave to appeal, as are the reasons
underpinning the order granted. It is not repeated herein.
The
parties are referred to as they are cited in this application for
leave to appeal.
[2]
The applicant relies on two grounds of appeal. The first ground of
appeal is
that the court erred in finding that when liquidation
proceedings have commenced, business rescue proceedings begin when an
affected
person applies to the court for an order placing the company
under supervision in terms of s 132(1)(b) of the Companies Act, No.
71 of 2008 (‘the Act’), and because the applicant’s
(‘PFC’s’) business rescue proceedings had
begun, s
133 of the Act applied. The court subsequently erred in granting
leave to proceed with the liquidation application. Counsel
submitted
that when liquidation proceedings have commenced against a company as
in the matter at hand, business rescue proceedings
can only be said
to begin when a court makes an order placing the company under
supervision in terms of s 132(1)(c). Hence, the
argument was that s
132(1)(b) does not apply to the facts of the matter.
[3]
The second ground of appeal is that the court erred in finding that
because
of the pending business rescue application and despite the
granting of a final winding up order, the liquidation
proceedings
will be suspended. I understand the applicant’s
argument to be that the implication of granting a final winding-up
order
in the face of a pending application for business rescue is
that business rescue proceedings that commenced were now converted to
liquidation proceedings under s 132(2)(a)(ii). This, the argument
goes, is a consequence of the order granted even though the judgment
expressly states that the court did not consider the business rescue
application nor pronounced on its merits. The argument continues
that
Chapter 6 of the Act does not allow for the pending business rescue
application to remain extant after PFC was placed in final
liquidation. This renders the business application moot, and there is
no statutory suspension under s 131(6) that applies to the
liquidation process.
[4]
The applicant contends that the liquidation application could not
properly have
been decided because it was statutorily suspended. In
the result, leave to appeal must be granted because the applicant has
reasonable
prospects of success on appeal. It is also submitted that
there are compelling reasons to grant PFC leave to appeal the
judgment
as the issue is of substantial importance, not only to the
parties but also to the public. Important and novel questions of law
arise from interpreting the relevant provisions of the Act that
require legal certainty.
[5]
The first
respondent submits that the applicant’s claim that when
liquidation proceedings have commenced against a company,
business
rescue proceedings can only be said to begin when a court makes an
order placing the company under supervision in terms
of s 132(1)(c)
of the Act (the first ground of appeal),
is in
conflict with the express wording of the section. The first
respondent’s highlights
that the
procedure
followed in
this case was in
line with
the procedure followed in
Safari
Thatching v Misty Mountain Trading
[1]
(‘Safari
Thatching’)
and
ABSA
Bank Limited v Zwahili Game Lodge (Pty) Ltd, ABSA Bank v Nylstroom
Wildplase
(Pty) Ltd, ABSA Bank v Smartspec Property Investments (Pty) Ltd
[2]
(‘ABSA
Bank’).
[6]
As far as
the second ground of appeal is concerned, the first respondent
submits that the order granted did not end PFC’s
business
rescue proceedings. They can continue in parallel. The order did also
not convert the business rescue proceedings to liquidation
proceedings. In granting a final liquidation order, the court
followed
ABSA
Bank.
Counsel
for the first respondent again emphasised the finding of the
Supreme Court of Appeal in GCC
Engineering
and Others v
Maroos
and
Others.
[3]
The SCA, in interpreting the provisions of s 131(6), found that an
application for business rescue proceedings does not terminate
the
office of provisional liquidators, nor does it result in the assets
and management of the company in liquidation re-vesting
in the
directors of the company in provisional liquidation. It is the
process of winding-up and not the legal consequences of a
winding-up
order that is suspended. Reliance was placed on
Richter
v ABSA Bank
[4]
where the SCA held that ‘What is suspended is the process of
continuing with the realisation of the assets of a company in
liquidation with the aim of ultimately distributing them to various
creditors.’ In light of the fact that there already two
judgments in this Division that contain the same reasoning, and the
SCA’s ruling that it is the process of winding-up and
not the
legal consequences of a winding-up order that are suspended, counsel
for the first respondent contended that there are
no important or
novel questions
of law that
require legal certainty.
[7]
The
intervening parties echoed the first respondent’s view. They
also attached
the
judgment of Van der Westhuizen J in the application for leave to
appeal in
the
ABSA
Bank
matter
where
leave to
appeal
was
denied. The
subsequent
application for leave to appeal lodged with the SCA was also
dismissed. I agree with counsel for the applicant that Van
der
Westhuizen J’s judgment is indicative that certain aspects were
not adequately argued before him in the court a
quo,
hence
he refused the application for leave to appeal. Van der Westhuizen
J’s judgment and SCA’s dismissal of the application
do
not take this application for
leave to
appeal any further.
[8]
The
applicant raised three pertinent issues that it contends constitute
novel and important issues that need to be dealt with by
the SCA to
obtain legal certainty. In coming to
the order
granted on 13 April 2021, I
followed
the principles set out in two judgments emanating from this Division.
My attention has not been drawn to, neither did I
find, any other
decision emanating from this Division that s 133(1)(b) cannot be
utilised by an applicant who wants to continue
with a liquidation
application where the liquidation application was launched before
business rescue proceedings were instituted.
In fact, I found that
the position as set out by Davis AJ, as he then was, in
Safari
Thatching
was
referred to with approval, in
Razzmatazz
Trading Investment 19 (Pty) Ltd v
Q
Civils
(Pty) Ltd (CPMS Civil Road Rehabilitation (Pty) Ltd and Another as
intervening parties),
[5]
and the
ABSA
Bank
matter.
[9]
I disagree
with the applicant’s submission that is supported by the view
proffered in
Meskin’s
Insolvency
Law,
[6]
that in the
factual context of
this matter
s 133(1) only applies ‘once the company has actually been
placed under business rescue and not when an application
for business
rescue has been made and is pending’. This view is not
supported by the clear wording of s 132(1)(b) where it
is stated that
‘Business rescue proceedings begin when an affected person
applies to the court for an order placing the company
under
supervision
in
terms
of s 131(1)’ as is the position in
casu.
In
Standard
Bank of South
Africa
v A-Team
Trading
CC
[7]
Ploos
van
Amstel
J
remarked
obiter
that
'it
is
arguable
that
the
liquidation application may in any event not proceed as a result of
the moratorium on legal proceedings in s 133, which took
effect when
the business rescue application was made’. Although he did not
express a firm view on this issue, the line of
reasoning accords with
this court’s view.
[10] The
remaining issue revolves around the consequence following the final
winding-up order granted by this court.
This court’s view as
stated in the judgment that is the subject matter of this
application, that that the granting of the
final liquidation order
will ensure that the company’s assets are secured for the
benefit of the body of creditors and that
the liquidators will be
able to investigate the possible dissipation of assets in the near
future, but not be able to realise any
of the company’s assets,
is founded on the SCA’s decisions in
Richter
and
Maroos.
[8]
Although I am not convinced that another court will come to a
different view than the view expressed in the judgment and order
granted on 13 April 2021, I have to consider that in both
Richter
and
Maroos,
the
business rescue
applications
were launched after the companies were either provisionally or
finally liquidated. The factual context wherein those
matters were
decided differs from the factual context of this matter. I believe
that the question regarding the
effect and
consequences
following a
final
winding-up
order being
granted when a business rescue application is pending due to the
interaction of ss 131(6) and 133(1)(b), is a novel
and important
question of law that needs to be dealt with by the Supreme Court of
Appeal to provide legal certainty.
ORDER
In
the result, the following order is granted:
[11]
Leave to appeal is granted.
[12]
Leave is granted to appeal to the Supreme Court of Appeal.
[13]
The costs of the application are costs in the appeal.
E van der Schyff
Judge of the High Court,
Gauteng, Pretoria
Delivered: This judgement
is handed down electronically by uploading it to the electronic file
of this matter on CaseLines. As a
courtesy gesture, it will be sent
to the parties/their legal representatives by e-mail. The date for
hand-down is deemed to be
10 May 2021
Counsel for the
applicant:
Adv. P Stais SC
With: Adv
J Brewer
Instructed
by: Smit
Sewgoolam Inc
Counsel for the 1st
respondent:
Adv. MP Van der Merwe SC
With
:
Adv. L Kilmartin
Instructed by
:
MacRobert Attorneys
Counsel for the
intervening applicants: Adv. APJ Els
Instructed by:
JI Van Niekerk Ing.
Date of the
hearing:
23 April 2021
Date
of judgment:
10 May 2021
[1]
2016 (3) SA 209 (GP).
[2]
(97831
/15, 97982
/15,
97832/15)
[2019] ZAGPPHC
419 (5
September 2019).
[3]
2019 (2) SA 379 (SCA).
[4]
2015 (5) SA 57 (SCA).
[5]
[2018] JOL 39925 (FB).
[6]
Ch 18.6.
[7]
2016 (1) SA 503
(KZP) para 21.
[8]
I must indicate that
the
reference to ‘provisional liquidator’ in the last line
of paragraph 7 on p 6 of the judgment of 13 April 2021
is an error
and should read ‘liquidator’.