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[2021] ZAMPMBHC 34
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Moller N.O and Another v Murray N.O and Others (2308/2021) [2021] ZAMPMBHC 34 (26 July 2021)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
(MPUMALANGA
DIVISION, MBOMBELA)
REPORTABLE:
NO
OF
INTEREST TO OTHER JUDGES: NO
REVISED:
YES
26/07/2021
CASE
NO: 2308/2021
In the matter
between:
JOHANN
MOLLER N.O.
First Applicant
JOHANN
AUGUST MOLLER N.O.
Second Applicant
and
CLOETE
MURRAY N.O.
First Respondent
MIRELLE
FIDELAI
VALLIE
Second Respondent
FIRSTRAND
BANK LIMITED
Third Respondent
JOHANN
MOLLER N.O.
Fourth Respondent
HAZEL
LAURA MOLLER N.O.
Fifth Respondent
MASTER
OF THE HIGH COURT
Sixth
Respondent
JUDGMENT
MASHILE J:
INTRODUCTION
[1]
The Applicants seek urgent interim relief in the following terms:
“
1
…
2.
That the first and second respondents be interdicted and restrained
from disposing
of and/or selling and/or alienating Portion 6 (a
portion of portion 2) of the Farm Lowhills 394, Registration Division
J.U., Province
of Mpumalanga, being approximately 860 hectares and
Portion 8 of the Farm Lowhills
394, Registration Division J.U., Province of Mpumalanga, being
approximately 890 hectares (“
the
immoveable properties”)
either by auction or otherwise, pending the finalisation of the
application instituted in the above honourable Court under case
number 2308/2021 for the setting aside of the liquidation of
Pierriesfontein Boerdery (Pty) Ltd (in liquidation);
3.
That the first and second respondents be interdicted and restrained
from proceeding
with the auction for the sale of the immoveable
properties arranged for 27 July 2021;
4.
That the first and second respondents are compelled to cancel the
auction for
the sale of the immoveable properties arranged for 27
July 2021;
5.
…”
FACTUAL MATRIX
[2]
The background facts to this application are generally not in
dispute. The Third Respondent
(“FirstRand Bank”) has
obtained a court order for final liquidation of a company known as
Pieriesfontain Boerdery (Pty)
Ltd (“Pieriesfontein”). The
indebtedness of Pieriesfontein to FirstRand Bank, which ultimately
led to its liquidation,
emanated from a suretyship agreement (“the
agreement”) that it executed in favour of FirstRand
Bank in
September 2017. In terms of the agreement Pieriesfontein
bound itself as surety in solidum for and as co-principal debtor
jointly
and severally with J S W Moller Konstruksie )Pty)
Ltd (“JSW”) for the latter’s obligations to
FirstRand
Bank.
[3]
The agreement was limited to R7.2 million plus interest and charges.
At the time of
the execution of the agreement, Pieriesfontein owned
two properties situate in Nkomazi, Mpumalanga Province. The
properties are
described as:
3.1
Portion 6 (a portion of portion 2) of the Farm Lowhills 394,
Registration Division J.U.,
Province of Mpumalanga, being
approximately 860 hectares; and
3.2
Portion 8 of the Farm Lowhills 394, Registration Division J.U.,
Province of Mpumalanga,
being approximately 890 hectares.
I
shall henceforth refer to these properties as “
the
immoveable properties”
).
[4]
The shareholders of Pieriesfontein were the Moller Family Trust
(“MFT”),
and Lowhills Trust whose shareholding in the
issued share capital of Pieriesfontein is 55% and 45% respectively.
When JSW defaulted
on the loan advanced to it by FirstRand Bank and
for which Pieriesfontein stood surety, FirstRand Bank launched
compulsory liquidation
proceedings, which culminated in Roelofse AJ
granting a final liquidation order on 20 February 2021. On 10 March
2020 and Following
the final liquidation order as aforesaid, the
First and Second Respondents (“Murray”) and (“Vallie”)
respectively,
were appointed provisional liquidators of
Pieriesfontein.
[5]
On 1 July 2021, MFT brought an application that the
winding-up
of
Pieriesfontein be
set aside in terms of Section 354 of the Companies Act, 71 of 2008
(“the 2008
Companies Act&rdquo
;)
alternatively,
that the winding-up
order dated 20 February 2020 granted by Roelofse AJ be rescinded and
set aside. The Applicants allege that having
caught wind that MFT
would be launching the application to set aside the liquidation order
and having received a draft copy thereof,
Murray and Vallie organized
and advertised THE auction for the 27
th
of July 2021 for the sale of the two immovable properties referred to
supra
.
[6]
Urgency is not an issue but it is worth mentioning that the source of
thereof is the
impending sale that has been arranged for the 27
th
of July 2021. It is clear that the urgency was not self-created and
that the Applicants will not receive substantial redress in
due
course if they allow the sale to proceed. It is necessary that the
application be heard as one of urgency.
ISSUES
[7]
The central issue is whether or not the Applicants have made a case
for interim relief
that the public auction sale of the two properties
planned to happen on 27 July 2021 be stayed pending the finalization
of the
setting aside application due for hearing by this Court in the
normal course. It would seem not possible to consider this question
independently of the merits in the setting aside application. I will
make reference to the merits of the setting aside application
to the
extent that it may become necessary.
[8]
To succeed, the Applicants must show that they have (i) a prima facie
right even though
it might be open to some doubt, (ii) an injury has
actually been committed or that there is a reasonable apprehension of
it occurring,
(III) balance of convenience favours the interdict
being granted to the Applicants and the Applicants lack adequate
alternative
remedy. The Applicants will be entitled to a relief in
the terms sought by them if they can satisfy the court that they have
met
all the requirements described above.
LEGAL
FRAMEWORK AND ANALYSIS
PRIMA FACIE
RIGHT
[9]
In this regard, the
degree of proof required to establish a
prima
facie
right
has been formulated as follows:
9.1
The rights can be
prima
facie
established
even if it is open to some doubt;
9.2
Mere acceptance of the applicant’s allegations is insufficient
but weighing up the
probabilities of conflicting versions is not
required;
9.3
The proper approach is to consider the facts as set out by the
applicant together with any
facts set out by the respondent which the
applicant cannot dispute and to decide whether, with regard to the
inherent probabilities
and the ultimate onus, the applicant should on
those facts obtain final relief at the trial;
9.4
The facts set up in contradiction by the respondent should then be
considered and if they
throw serious doubt on the applicant’s
case he cannot succeed. See
Webster v Mitchell
1948 1 SA
1186 (W)
[10]
A court has a discretion whether or not to grant a temporary
interdict. Thus, in
Messina (Transvaal) Development Co Lid v South
African Railways and Harbours
7929 AD 7 95 at 215 to 216
Curlewis JA said:
“
In
an application for an interim interdict pending action, the Court has
a large
discretion
in granting or withholding an interdict.
Where there is merely a possibility, not
a practical certainty, of interference or injury, as in the present
case
,
the
Court will be reluctant to grant an interdict, especially if the
party seeking the interdict will have other means of redress
and will
not suffer irreparable damage.
And
the
Court
is entitled to and must regard the possible consequences, both to the
applicant
and to the respondent, which will ensue if an interdict be granted or
withheld.”
[11]
The Applicants assert that they derive their prima facie right from
the fact that they own 55% and
45% of the issued share capital of
Pieriesfontein. At the time when Pieriesfontein concluded the
agreement with FirstRand Bank,
the parties failed to observe the
provisions of
Section 45(3)
as read with 45(6) of the 2008
Companies
Act. The
Section requires a party in similar circumstances as
Pieriesfontein to obtain the consent of its shareholders prior to
concluding
an agreement such as the suretyship agreement that it
entered into with FirstRand Bank. Short of the sanction by the
shareholders
of Pieriesfontein, the resultant agreement ought to be
unlawful for lack of compliance with the Section. For completeness it
is
desirable to cite the relevant portions of the Section below:
“
(3)
Despite any provision
of a company’s Memorandum of Incorporation to the
contrary,
the board may not authorise any financial assistance contemplated in
subsection (2), unless—
(
a
)
the particular provision of financial assistance is—
(i)
pursuant to an employee
share scheme that satisfies the requirements of
section 97
; or
(ii)
pursuant to
a
special resolution of
the
shareholders,
adopted
within
the
previous two years,
which approved such assistance either for the specific recipient, or
generally for a category of potential recipients,
and the specific
recipient falls within that category; and
(
b
)
the board is satisfied that—
(i)
immediately after
providing the financial assistance, the company would satisfy the
solvency and liquidity test; and
(ii)
the terms under
which the financial assistance is proposed to be given are fair and
reasonable to the company.” And Subsection
6 provides that:
“
(6)
A resolution by the
board of a company to provide financial assistance contemplated in
subsection (2), or
an
agreement with respect to the provision of any such assistance,
is void to the extent that the
provision of that assistance
would be inconsistent with—
(
a
)
this section; or
(
b
)
a prohibition, condition or requirement contemplated in subsection
(4).”
[12]
The Applicants argue that their rights as shareholders of
Pieriesfontein require protection and this
is what they set out to do
when they approach this Court for assistance. Roelofse AJ was not
alerted to the invalidity of the agreement
caused by lack of
compliance with Section 45 of the 2008
Companies Act. Had
he been
aware, so continues the argument, he would not have granted the final
liquidation order. This, argue the Applicants, is
because the
underlying agreement (suretyship agreement) that supported the loan
agreement to JSW and ultimately the bond, between
FirstRand Bank and
Pieriesfontein was invalid. Even when the matter went on appeal to
the Supreme Court of Appeal it was dismissed
on the basis that the
appeal was late and not that the agreement was unlawful.
[13]
It is common cause that when the Applicants appealed the granting of
the final liquidation order, they
had to file a condonation
application as well because they were late. Prior to considering the
appeal, itself therefore Roelofse
AJ would have been compelled to
entertain the condonation application. To demonstrate that
condonation deserves to be granted,
a party must show, among other
things, that prospects of success in the main case favour it. Absent
such demonstration, the application
ought to fail.
[14]
It is manifest from the papers filed that Mr Meintjies, the attorney
who moved the condonation application
and the appeal before Roelofse
AJ, that the invalidity of the agreement was brought up not only in
his heads of argument but also
during his address to the court on
that day. Roelofse AJ assessed the argument and dismissed the
condonation application. In short,
it could not have been possible to
refuse the condonation application without considering the validity
of the agreement. The assertion
that the validity of the agreement
was not before court as such stands to be rejected.
[15]
The applicants then proceeded to petition the SCA. The situation that
played out before the Court a
quo would have come before the SCA. The
SCA, I was told in court during argument by Counsel for the
Respondent, granted the condonation
application but went ahead and
dismissed the appeal. It is inexorable that the SCA in dealing with
the condonation and appeal would
have had regard to the issue whether
or not there was compliance with Section 45 of the 2008
Companies Act
when
the agreement was concluded. Accordingly, the Applicants’
assertion in this regard too do not attract this Court’s favour
and it is rejected.
APPREHENSION
OF IRREPARABLE HARM:
[16]
This
entails a reasonable apprehension that the continuance of the alleged
wrong will cause irreparable harm to the Applicant. See
LF
Boshoff Investments (Pty) Ltd v Cape Town Municipality
1969
(2) SA 256
(C).
Irreparable harm or loss is the loss of property (including
incorporeal property and money) in circumstances where its recovery
is impossible or improbable. The loss need not necessarily be any
financial loss, it may consist of an irremediable breach of the
applicant’s rights.
Braham
V Hood
1956
(1) SA 651
(D) at 655B
and
Cliff
v Electronic Media Network (Pty) Ltd and Another
2016
(2) All SA 102
(GJ).
[17]
The Applicants assert that the irreparable harm which they will
suffer is apparent. The only assets
in the estate of the surety are
the two immoveable properties. Moreover, as a property-owning
company that does not trade,
the sale of the immoveable properties in
circumstances where the setting aside application subsequently
succeeds, the can be no
doubt of prejudice ensuing. The Applicants
assert further that a risk that the immovable properties will be sold
for far less than
their value is real because the amount claimed by
FirstRand Bank is far less than the value of the properties.
[18]
Furthermore, say the Applicants, the risk become palpable by the
refusal of FirstRand Bank to give
any guarantees that it will
stipulate a reserve price for the immovable properties. If the
immovable properties are sold and the
setting aside application is
ultimately successful, the Applicants and the beneficiaries of MFT
would be deprived of any future
value in the properties. All these
arguments raised by the Applicants would hold if I had found that the
right that they enjoy
required protection. The finding of this Court
that the Applicants have failed to establish a prima facie right
means that there
is no prima facie right to be protected. As such,
the Applicants must fail in their attempt to demonstrate irreparable
harm.
BALANCE OF
CONVENIENCE AND ABSENCE OF OTHER SATISFACTORY REMEDY
[19]
In this regard,
the court
must balance the prejudice to the Applicants if the interim interdict
is refused against the prejudice to FirstRand Bank
if it is granted.
See,
Breedenkamp v Standard Bank of
South Africa
Ltd
2009(5)
SA 304 (GSJ)
at 314G
and
Lieberthal v
Primedia Broadcasting (Pty) Ltd
2003 (5)
SA 39
(W) at 43F
.
The
enquiry is whether or not the Applicants can obtain adequate redress
in some other form of ordinary relief or an alternative
legal remedy.
See,
Camps Bay Residents and Ratepayers
Association v Augoustides
2009(6) SA 190
(WCC) at 195I- 196A.
[20]
Usually this will resolve itself into a consideration of the
prospects of success in the main action
and the balance of
convenience. The stronger the prospects of success, the less need for
the balance of convenience to favour the
Applicant. The weaker the
prospects of success, the
greater the need for the balance of convenience
to favour him. See
Breedenkamp
supra
.
I need to reiterate that once there exist
no right, there will be nothing to protect. The prospects of success
in the main case
being tenuous in the setting aside application, it
follows that the balance of convenience necessarily favours FirstRand
Bank,
which entails a dismissal of the application. The question of
lack of any other satisfactory remedy stands to suffer the same fate
as did the apprehension of harm and balance of convenience.
CONCLUSION
[21]
The main finding of this Court is that, contrary to what the
Applicants would have this Court believe,
the validity of the
agreement insofar as there might have been lack of compliance with
Section 45 of the 2008
Companies Act were
considered by both the
Court a quo, per Roelofse AJ, and the SCA. The consideration of the
validity argument notwithstanding, both
courts dismissed the appeal.
The validity argument may not have been addressed in the context of
the liquidation itself but certainly
it was during the hearing of the
condonation application when both courts looked at prospects of
success. Prospects of success
in the setting aside application being
minimal, the interim interdict must fail.
ORDER
[22]
In the result, I make the following order:
The
application is dismissed with costs.
B A MASHILE
JUDGE OF THE HIGH
COURT OF SOUTH AFRICA
MPUMALANGA
DIVISION, MBOMBELA
This judgment was
handed down electronically by circulation to the parties and/or
parties’ representatives by email. The date
and time for
hand-down is deemed to be 26 July 2021 at 10:00.
APPEARANCES:
Counsel for the
Applicant:
Adv N Marshall
Instructed by:
Marais Attorneys
Counsel for the
Third Respondent: Adv J Smith
Instructed by:
Werksmans Attorneys
Date of
Hearing:
20 July 2021
Date of Judgment:
26 July 2021