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[2019] ZAGPPHC 137
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Murendi Properties and Building Supplies (Pty) Ltd v Minister of Trade and Industry and Another (7972/2019) [2019] ZAGPPHC 137 (9 May 2019)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG DIVISION, PRETORIA)
REPUBLIC
OF SOUTH AFRICA
Case
Number: 7972/2019
In
the matter between:
MURENDI
PROPERTIES AND BUILDING SUPPLIES (PTY) LTD
Applicant
and
THE
MINISTER OF TRADE AND INDUSTRY
First
Respondent
THE
DIRECTOR GENERAL OF THE DEPARTMENT OF TRADE AND INDUSTRY
Second
Respondent
JUDGMENT
JANSE
VAN NIEUWENHUIZEN J
INTRODUCTION
[1]
This
is an application in terms of the provisions of
rule 18
of the
Superior Courts Act, 10 of 2013
, for the execution of an order
granted by Mavundla J on 22 March 2019.
[2]
The
order was granted in the urgent court and reasons for the order are
still to be furnished by Mavundla J. I was, initially, reluctant
to
hear the application without the benefit of a judgment delivered by
the court
a
quo
,
but Mr Mpofu SC, counsel for the applicant, referred me to the matter
of
University
of the Free State v Afriforum and Another
2018
(3) SA 428
(SCA) in which it was clearly stated that an application
in terms of
section 18
may still proceed, provided that the
prospects of success will not be taken into account as a factor in
deciding the application
[3]
Although
the respondents have not filed an application for leave to appeal to
date, the respondents in a letter dated 29 March 2019
made their
intention to apply for leave to appeal the order and judgment clear.
[4]
In
view of the absence of a judgment from Mavundla J and an application
for leave to appeal, I will adjudicate the application on
its merits
without taking the prospects of success on appeal into account.
BACKGROUND
FACTS
[5]
The
relevant portion of the order granted by Mavundla J, reads as
follows:
“
2.
Declaring that the applicant has met all the qualifying requirements
for the payment of the grant.
3.
The respondents are directed to pay the applicant the grant in the
amount of R 14 210 953.”
[6]
The
following facts appear from the founding affidavit:
[6.1]
the applicant is a Black industrialist firm that conducts business as
a retailer of building supplies sourced
from different suppliers and
manufacturers. The applicant also has a manufacturing business;
[6.2]
during 2016 the applicant identified an opportunity to expand its
business to include the manufacturing of concrete
roof tiles and to
this end planned on building a factory capable of producing 35 000
roof tiles per day;
[6.3]
the project would sustain 92 existing employees of the applicant and
create 46 additional jobs;
[6.4]
to finance the project, the applicant obtained a loan in the region
of R 31 million from the Industrial
Development
Corporation. The loan was granted on condition that the applicant
obtained a grant from the Department of Trade and
Industry (“the
Department”) for not less than R 12 million;
[6.5]
on 19 October 2017, the applicant was informed by the Department that
“
the DTI has pleasure in informing you that the BIS
Financing Forum Adjudication Committee meeting of 19
th
October 2017 has approved for a merchant grant of R 14 210 953”
.
The grant was approved subject to certain terms and conditions;
[6.6]
from October 2017 until the launch of the urgent application in March
2019 the applicant and the Department were
at odds in respect of the
fulfilment of the terms and conditions upon which the grant was
approved. Mavundla J in paragraph 2 of
the order, declared that the
conditions were fulfilled, which led to the order in paragraph 3 that
the Department must pay the
grant to the applicant.
EXCEPTIONAL
CIRUMSTANCES
[7]
The
applicant avers that, without receiving payment of the grant
immediately, the entire project faces imminent collapse. Mr Mpofu
SC,
emphasised that it is for this very reason that Mavundla J granted
the relief on an urgent basis.
[8]
Consequently,
and if the applicant is successful on appeal, it will be too late to
save the project embarked upon by the applicant.
[9]
In
support of the allegation that the project faces imminent collapse,
the applicant relies on annexure “B” attached
to its
founding papers which contains “
financial
information that amply demonstrates the risk of employment loss
and
the poor financial prospects of the applicant as a consequence of the
failure to receive the funding
”
.
[own
emphasis]
[10]
Annexure
“B” reads as follows:
“
Murendi PBS
– Restructuring
When Murendi applied for
the BIS grant it had 92 employees in total. All previously
disadvantaged and 99% from the rural communities
of Venda where
unemployment rate is high. Each individual has between 7-10
dependants and most are single breadwinners in their
households. It
was indicated on DTI BIS application that Murendi will sustain those
92 jobs and will create additional 46, as part
of job creation and
rural economic development.
The company worked
towards that since the approval of both the BIS grant and the IDC
loans. As part of preparing for the new plant
operations, the company
continued to employ and train new staff. Skilling the workforce that
never had any opportunity or ever
dreamt of being employed before.
Eradication of poverty requires both men and women in particular
youth in the rural communities
to be economic empowerment. That is
exactly what Murendi has been doing in its contribution to the
country’s drive to create
jobs through manufacturing.
With the current
concrete tile plant set-up, the operation will only be able to
achieve just a break-even point by November 2019
because the plant is
limited to achieve 54% of its full production volumes. For this tile
plant to run profitably and sustainably
it has to run with full 100%
capacity now than later or else we must find a way to cut cost (and
at this point the only option
left is to cut labour costs).
Currently the company
has employed just over 130 employees which makes 38 new jobs of 46
promised jobs to date. The current employment
costs are R
704 110
monthly as per February 2019 payroll data. (See the 5 page employment
costs summary.) The loss of income by all the soon to be
affected
employees due to the DTI malicious attempt to ignore the court order
and play delaying tactics has serious implications
and consequences
for innocent lives and yet our own government policy claims to
address better lives for all.”
(sic)
[11]
The
applicant, further, avers that, without the grant payment, it is
facing the risk that it will not be able to service its loan
repayment obligations in respect of the R 31 million loan
received from the IDC. The applicant emphasises that it embarked
on
the project on the strength of the grant approval by the Department.
Without the grant, the project would not have been feasible.
[12]
The
respondents do not deny the factual allegations set out by the
applicant, but deny that the facts constitute exceptional
circumstances.
The following paragraphs in the answering affidavit
are relevant:
“
The so-called
harm is manufactured and the Applicant has not demonstrated that it
will suffer irreparable harm if the order is not
put into operation.
There is no prejudice to the Applicant, as the DTI grant is only for
manufacturing constituting only 15% of
the turnover for the
business.”
and
“
There is no
financial information marked “B” attached to the founding
affidavit and as set out hereinbefore, funds are
only paid out once
actual costs have been incurred and the allegation that there is a
risk of employment loss is without merit
due to the fact that in
terms of the Black Industrialist Scheme, staff wages and salaries and
staff related costs incurred in implementing
the project and salary
and wages do not qualify as part of the grant money.”
DISCUSSION
[13]
In
Inchubeta
Holdings (Pty) Ltd v Ellis
2014
(3) SA 180
(GJ), Sutherland J held that exceptional
circumstances are fact dependent and that in each instance the
predicament of the
litigants should be examined.
[14]
In
casu
the
applicant was, prior to embarking on the project, a retailer of
building supplies sourced from different suppliers and manufacturers
and it had a manufacturing business. At that stage the applicant had
92 employees. It is not clear from the founding affidavit
what the
present state of the financial standing of these businesses are.
According to the applicant, the project was embarked
upon in order to
expand its business to include the manufacturing of concrete roof
tiles. This entailed the building of a factory
capable of producing
35 000 roof tiles per day.
[15]
Due
to the department’s refusal to pay the amount of R 14
million, the factory is only 54% operational. Since the inception
of
the project the applicant has only appointed 38 new employees. The
applicant alleges that as a result of its “
imminent
demise”
it
will be unable to pay the salaries of its 130 employees in the
foreseeable future.
[16]
The
list of employees on which the applicant relies, however, include the
92 employees it had prior to embarking on the project.
As indicated
these employees were employed in the applicant’s business
ventures prior to the project.
[17]
I
agree with Mr Mhapaga SC, counsel for the respondents, that the
applicant has failed dismally to take the court into its confidence
in respect of its current financial position. Taking into account
that the applicant had existing businesses prior to the project,
I am
simply not in a position to determine whether the non-payment of the
grant amount would lead to the project’s “
imminent
demise”
.
[18]
According
to the respondents, the purpose of the grant was not to pay salaries.
I am mindful that the payment of salaries is closely
connected to the
successful running of a business. Due to the lack of any financial
information, I am however not in a position
to access the viability
of the businesses of the applicant. The plant is currently operating
at 54% capacity without the assistance
of the grant money.
[19]
Should
the applicant be successful on appeal, it can still at that stage
proceed with the expansion of the plant and the employment
of further
employees.
[20]
In
the premises, I am of the view that the facts
in
casu
do
not constitute exceptional circumstances for the purposes of
section 18(1).
[21]
In
view of the aforesaid finding it follows that the applicant will not
suffer irreparable harm if the order is not put into operation.
ORDER
[22]
In
the premises the following order is made:
The
application is dismissed with costs.
N. JANSE
VAN NIEUWENHUIZEN
JUDGE OF
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
DATE
HEARD
29 April 2019
JUDGMENT
DELIVERED
9 May 2019
APPEARANCES
Counsel
for the Applicant:
Advocate D.
Mpofu SC
Instructed
by:
Falcon and
Hume Inc
(010 5945000)
Ref: No: K
Wilson/J Cloete/MAT1551
Counsel
for the First Respondent:
Advocate M.
Mphaga SC and Advocate H.C.
Janse van
Rensburg
Instructed
by:
The
State Attorney’s Office
(012
309 1567)
Ref:
No: 0658/2019/Z17