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[2019] ZAGPPHC 961
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Tshiakatumba v Pat Zoo Accommodation CC and Others (77799/2018) [2019] ZAGPPHC 961 (21 May 2019)
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Certain
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REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH
AFRICA
GAUTENG DIVISION, PRETORIA
(1)
REPORTABLE:
NO
(2)
OF
INTEREST
TO
OTHER
JUDGES:
NO
(3)
REVISED.
CASE
NO:
77799/2018
21/5/2019
PATRICK
KABEYA TSHIAKATUMBA
APPLICANT
Identity
number: [….]
and
PAT
ZOO ACCOMMODATION CC
FIRST
RESPONDENT
(in
final liquidation and under business rescue)
REG
NO. CK2005/048368/23
DAWID
MAARTENS
N.O.
SECOND
RESPONDENT
MAARTENS
VAN RENSBURG ATTORNEYS
THIRD
RESPONDENT
BUSINESS PARTNERS
LTD
FOURTH
RESPONDENT
REG NO. 1981/000918/06
STANDARD
BANK OF SOUTH AFRICA LTD
FIFTH
RESPONDENT
REG
NO. 1962/00738/06
EMFULENI
LOCAL MUNICIPALITY
SIXTH
RESPONDENT
CONRAD
ALEXANDER STARBUCK N.O.
SEVENTH
RESPONDENT
ROYNATH
PARBHOO N.O.
EIGHTH
RESPONDENT
SOUTH
AFRICAN REVENUE SERVICE
NINTH
RESPONDENT
RAAMA
CONSULTING CC
TENTH
RESPONDENT
REG
NO. CK2004/032833/23
THE
COMPANIES AND INTELLECTUAL
PROPERTY
COMMISSION
ELEVENTH
RESPONDENT
THE
REGISTRAR OF
DEEDS:
JOHANNESBURG
TWELFTH
RESPONDENT
REASONS FOR JUDGMENT
AC BASSON, J
[1]
This is an application instituted on an
urgent basis. The matter was initially enrolled and set-down for
hearing in the urgent court
on 27 November 2018. The application was
removed from the
roll
by virtue of the
number of pages involved in this matter.
[2]
The applicant (Mr. Patrick Kabeya
Tshiakatumba) is the sole member of the first respondent. The first
respondent (Pat Zoo Accommodation
CC) was placed in final liquidation
but is currently under business rescue.
[3]
The
application is opposed by
the
first,
second,
third
and
fourth
respondents. The fourth respondent (Business Partners Limited) is the
main creditor of the first respondent.
[4]
Urgency is no longer in issue. The
respondents submitted that the matter should proceed as
it is
not
in
the
best
interests
of
the
concursus creditorum
to
delay the
matter
any further.
[5]
This application is preceded by various
court orders since 2016. I will, where necessary, briefly refer to
some of
them.
The relief sought
[6]
The Notice of Motion contains no less
than 21 prayers. The relief broadly falls into three categories:
Firstly, the setting aside
of the liquidation order; secondly, the
setting aside of the business rescue order and the restoration of the
applicant as director
and thirdly, other relief. In main it appears
that what the applicant seeks is an order that
the business rescue practitioner be
removed and
that he
be
granted full
sole control of the first respondent.
The prayers include -
1.
That leave be granted to the applicant
to initiate this application, in accordance with the provisions of
Section 133(1)(b) of the
(new) Companies Act
[1]
(hereinafter referred to as "the 2008
Act");
2.
That the respondents be interdicted and
prohibited from "continuing" with the proposed sale which
was scheduled for 31
October 2018, in respect of the two immovable
properties which belonged to the first
respondent;
3.
That, in the event that the respondents
sell or alienate the two immovable properties at the
auction which was scheduled for 31
October 2018, the transfer of the two immovable properties be
interdicted;
4.
That the second respondent be "forthwith
removed, interdicted and restrained from practicing as the business
rescue practitioner
of the first respondent and that the applicant is
again granted full sole control of his company";
5.
That the business rescue plan which was
prepared by the second respondent and published on 4 December 2016,
be set-aside;
6.
That the second respondent be ordered to
"give a full account of the financial affairs of the first
respondent during his tenure
as business rescue practitioner of the
first respondent including funds received and paid on behalf of the
first respondent by
the second respondent;
7.
That the second respondent be ordered to
deliver all the books, journals, statements, records, vouchers and
documents to the financial
affairs of the first respondent;
8.
That the order that was made by this
court under case no. 5048/2016 by Baqwa, J dated 9 February 2017,
under case no. 23919/2016,
be set-aside in accordance with the
provIsIons of section 354 of the (old) Companies Act (hereinafter
referred to as the "1973
Act").
[2]
9.
That the court order initiating business
rescue proceedings of the first respondent be set-aside in accordance
with
the
provisions of
section
132(2)(a)(i) of the
2008
Act;
10.
That
the business rescue proceedings of the first respondent be
terminated;
11.
That
the three royalty agreements which were entered into and concluded
between the first respondent and the fourth respondent be
set-aside
and declared void
ab initio;
12.
That the
fourth
respondent be
ordered to
refund
the
applicant with all
payments made by him
and/or the first respondent to the fourth respondent pursuant to the
conclusion of the three royalty
agreements;
13.
That
the second, third and fourth respondents jointly and severally refund
all business rescue fees together with interest thereon
calculated
from 6 December 2017 to date of final payment, including an amount of
R325 000.00;
14.
That
the second, third and fourth respondents jointly and severally refund
the applicant in the amount of R233
500.00;
15.
That
the
second,
third
and
fourth
respondents
be
held
liable jointly
and
severally for "all
damages
and losses suffered by the applicant and/or the first respondent as
may be proved by
them";
16.
That
the claim of the tenth respondent in the amount of R500 000.00 plus
interest be declared valid and "forthwith
reinstated";
17.
That
the sixth respondent be ordered to render, supply and maintain
services including electrical power and water supply to the
two
immovable properties which belongs to the first respondent;
and
18.
That
the second, third and fourth respondents be ordered to pay the costs
of the application jointly and severally, the one paying
the others
to be
absolved.
The liquidation
[7]
Before I turn to a consideration of the
issues before the court, and more in particular the relief sought
pertaining to the setting
aside of the
liquidation order, a few remarks in
respect of the context within which this application should be
considered.
[8]
In GCC
Engineering
(Pty) Ltd and Others v Maroos and Others
[3]
("Maroos”)
,
Marcos was
similarly placed in final liquidation in
the hands of
the
Master of this court. The Supreme Court of Appeals considered the
following three
questions:
(a)
Whether the
appointment and the
powers of
the
duly
appointed provisional joint liquidators are suspended in terms of s
131(6) of the 2008 Act;
(b)
Whether the
control
and
management of
the
property of
a
company
already placed in liquidation by a court order, can validly and
legally be re-vested in
the
director of that
company;
(c)
Whether the Master has any role
to play in business rescue proceedings.
[4]
[9]
With reference to section 131(6) of
the 2008 Act, the Supreme Court of
Appeal held
that
the
status
of
the
entity in liquidation does not
change nor does it suspend the court
order that placed the company under liquidation in the hands of the
Master in terms of section
141(2)(a)(ii) of the 2008
Act:
"[15] Section 131(6) of the
Act does not change the status of the company in liquidation nor does
it suspend the court order
that placed the company under liquidation
in the hands of the Master in terms of s 141(2)(a)(ii) of the Act.
The appointed provisional
joint liquidators must proceed with their
duties and functions to protect the assets of the company for the
benefit of all the
creditors of the company.
[16]
Successful liquidation proceedings constitute a complete process by
which a company is brought to an end and the liquidation
process
culminates in the dissolution of the company up to its deregistration
(See Richter
v
ABSA Bank
at 60D)."
[10]
The Supreme Court of Appeal further
confirmed that, in terms of section 131(6) of the 2008 Act, it is the
liquidation proceedings,
not the winding-up order, that is suspended:
"[17]...What
is
suspended
is
the
process
of
continuing
with
the
realization
of
the
assets of
the
company
in
liquidation
with
the
aim
of
ultimately
distributing
them
to
the
various creditors.
The winding-up order is still in place; and prior to the granting or
refusal of the business rescue application,
the provisional
liquidators secure the assets of the company in liquidation for the
benefit of the body of creditors."
The office and powers of the
provisional liquidators are therefore not terminated:
"[19] ...In s 131(6) the
legislature used the word 'suspend' and which not mean termination of
the office of the liquidator.
In my view the term 'liquidation
proceeding' refers only to those actions performed by a liquidator in
dealing with the affairs
of a company in liquidation in order to
bring about its dissolution. What is suspended is the process of
winding-up and not the
legal consequences of a winding-up order."
[11]
Importantly, the
Supreme Court of
Appeal held, with reference to section
361(1) and (2)
[5]
of the 1973 Act, that the control and management of the entity which
was already placed in winding-up by
virtue of an order made by a court
does
not
re-vest in the company's
director:
"[21] In
Secretary for
Customs and Excise v Millman NO
1975 (3) SA 544
(A) at 552H,
Botha JA said '[u]pon the compulsory winding-up of a company its
directors cease to function as such . . . and they
are, therefore,
deprived of their control on behalf of the company of the property of
the company which is then deemed to be in
the custody or control of
the Master or liquidator.' As stated earlier the order placing the
company under winding up is still
in place and has not been set
aside. On the granting of the winding-up order, the directors of the
company cease to function as
directors and the property of the
company falls under the control of the Master or the appointed
liquidators. The directors of
the company in liquidation have been
stripped of their control and management of the company placed in
winding-up by the court.
There is no legal provision either statutory
or at common law that sanctions the re-vesting of control and
management of the company
in liquidation to the director of the said
company."
Regarding the status of the Master
of the High Court in proceedings similar to the one which served
before this court, the Supreme
Court of Appeal in
Maroos
held
that the Master has a direct and substantial interest in the orders
applied for by the applicant and should, accordingly be
a party to
proceedings pertaining to business rescue:
"[22]The other question that
needs attention is whether the Master has any role to play in
business rescue proceedings. As
stated earlier the sixth appellant
[the Master] was not a party to the proceedings in the court a quo.
In their notice of motion
in the court a quo the applicant never
sought any order which had any impact or effect on the sixth
appellant. In their founding
and replying affidavits the applicants
did not set out any facts which justified the granting of an order
requiring the sixth appellant
to perform any functions or duties. The
sixth appellant, (the Master) has a direct and substantial interest
in the order granted
by the court a quo. In
Molusi
&
others
v Voges
NO
&
others
[2016]
ZACC
6
;
2016 (3) SA 370
(CC) para 28,
Nkabinde J said '[t]he purpose of pleadings is to define the issues
for the other party and the Court. And it is
for the Court to
adjudicate upon the disputes and those disputes alone.' The court a
quo granted an order which was not sought
by any of the parties and
consequently denied the sixth appellant an opportunity to be head
prior to the granting of an order under
consideration".
[12]
Having recognised the fact that the
Master of the High Court must be a party to proceedings such as this,
the Supreme Court of Appeal
proceeded to spell out some of the
important functions of the Master:
"[23]
...It also required the sixth appellant [the Master] to monitor the
utilisation or disposal of the assets of the company
by the manager
appointed by the court. The sixth appellant is
a
creature of statute
and
may
perform only those duties and
functions empowered
by the enabling legislation. The sixth appellant exercises control
and supervision over the winding-up, liquidation
and sequestration
processes, including rehabilitation of the insolvent and the
deregistration of the company. The Master has no
powers to deal with
a 'manager' appointed by the court or the business rescue
practitioner. The appointment of the 'manager' by
the court a quo
falls outside the scope of the winding-u
p
,
liquidation
and
sequestration
processe
s
.
There are also no statutory provisions that permits
the appointment of a
'manager' in these circumstances."
[13]
In light of these principles, I will now
proceed to consider the matter.
Points
in limine
[14]
The following points
in
limine
were raised on behalf of the
respondents. They contended that these
points are not adequately addressed in
the replying affidavit:
Misjoinder
[15]
Misjoinder in that the Registrar of
Deeds, Johannesburg is cited as the twelfth respondent, whereas the
two immovable properties
that form the basis of this application are
situated within the area of jurisdiction of the Registrar of Deeds,
Pretoria.
The
twelve respondent, therefore does not
have
locus
standi in iudico
herein. In terms of
prayer 4.2 of the Notice of Motion, the applicant applies for an
order that the
second,
third and fourth respondents be
interdicted and
restrained from submitting any documents
to the twelfth respondent for the purposes of effecting the transfer
of the two immovable
properties which were sold on 31
October 2018 at an auction. The two
immovable properties fall within the area of jurisdiction of the
Registrar of Deeds, Pretoria.
As a result of having cited the wrong
Registrar, a misjoinder occurred. Although this
point was not pressed in argument, a
misjoinder clearly occurred where the wrong Registrar has been cited.
The application is therefore
fatally defective.
Non-joinder
[16]
Non-joinder in that the applicant
applies for an order in terms of which a final winding-up order (that
was granted by this court
on 9 February 2017 by Baqwa, J), be set
aside. The seventh and eight respondents were appointed as the joint
final liquidators
of the first respondent on 7 March 2017. I am in
agreement with the submission that the Master of the High Court has a
direct and
substantial interest in this
application by
virtue of
the
provisions of
section 364
[6]
of
the
1973
Act:
It is therefore not competent for this
court to set aside the final order of the first respondent's
liquidation under circumstances
where the Master of the High Court is
not a party to these proceeding
s
.
[18]
This point has merit. In fact, counsel on behalf of the applicant
conceded that the Master of
the High Court was not served with any
papers during the course of instituting this application and was in
fact only served the
day before the hearing. If regard is had to the
decision of the Supreme Court of Appeal in
Maroos,
this
omission is fatal. The relief sought in terms of prayer 9 of the
Notice of Motion therefore falls to be dismissed.
The relief is not competent
[19]
The respondents submitted that the
relief sought by the applicant is not competent in that the applicant
did not comply with the
provisions of section 354(1)
[7]
of the 1973
Act.
[20]
In terms of
this section,
a
court
may, at
any
time after
the
commencement of
a winding-up on application of any
liquidator, creditor or member,
and
on proof to
the
satisfaction of this court
that all
proceedings in relation to the winding-up ought to be stayed or
set-aside, make an order staying or setting aside the proceedings
or
for the continuance of any voluntary winding-up on such terms and
conditions as the court may deem fit.
[21]
The court therefore has a discretion to
set aside the wining-up
order.
The onus to persuade the court to do so rests on the applicant which
has to adduce sufficient evidence in support of such
an order. Two
situations are envisaged: (i) The one is an application for an order
setting aside the final winding-up order on
the basis that the
institution of the winding-up should not have occurred. Such an order
will only be granted in
exceptional
circumstances. An
applicant must show special
circumstances which justified the setting aside of the order and also
furnish satisfactory explanations
for not having opposed the granting
of the order.
[8]
(ii) The second is an order where the proceedings should be stayed or
set-aside consequent upon certain events that occurred subsequently.
[22]
If regard is had
to
the
history of this
matter: (i) The
applicant applied
for an
order in terms of which the first
respondent be placed under supervision as contemplated in terms of
section 131 of the 2008 Act.
[9]
The fourth respondent (as the intervening creditor) intervened and
the application was dismissed on 9
February 2017; (ii) a final liquidation order was granted on 9
September 2017 (Baqwa, J). According
to the respondents, the
applicant is in wilful and deliberate contempt of the order that was
made by Makgoka, J (as he then was)
on 6 September 2017 and that the
applicant in any event stands before this court with "dirty
hands".
[23]
In my view, the applicant has failed to
make out a case for the setting aside of the order. No persuasive
facts and certainly no
exceptional circumstances have been placed
before the court to justify the setting aside of the order. The fact
that the applicant
waited since 9 February 2017 to launch this
application (a period of more than 14 months), casts serious doubt
over the motives
of this application.
Moreover, sight must also not be lost of
what had transpired since the order was granted: The fourth
respondent has proved a claim
against the first respondent in the
amount of R 10 893 922.45 (ten
million
eight
hundred
and ninety-three thousand nine hundred and twenty-two thousand rand
and forty-five cents). Moreover, it will not serve the
interest of
justice to place the first respondent back into the hands of the
applicant in circumstances where the first respondent
is factually
and commercially insolvent and has no prospect of becoming a
successful business enterprise. In any event, the Master
of the High
Court having a direct interest in the matter is not a party to this
application.
Best interests of justice
[24]
I am in agreement with the submission
that it is in the best interests of justice to give effect to the
resolutions adopted at the
meeting on 5 December 2017. It is not in
the interest of justice to terminate the business rescue proceedings
nor to set aside
the appointment of the business rescue practitioner.
It is also noteworthy that the fourth respondent has no objection to
the manner
in which the business rescue proceedings have been
conducted thusfar. I will return to some of these issues hereinbelow.
Irregular steps
[25]
In addition to the aforementioned points
in limine,
the
respondents raised the following issues: When the parties met with
the acting Deputy Judge President on 12 February 2019, the
legal
representatives confirmed that the pleadings were closed. This
submission is confirmed in a letter dated 13 February 2019
and
addressed to
the
acting Deputy Judge President.
[26]
Notwithstanding this confirmation the
applicant took further steps which the respondents submit, are
irregular steps in terms of
Rule 30 of this Court's Uniform Rules.
They are:
(i)
The applicant delivered an amended
Notice of Motion on 13 February 2019 (dated 12 February 2019) without
complying with the
provisions
of Rule 28 of this Court's Uniform
Rules;
(ii)
The applicant delivered a second
replying affidavit to the second respondent's answering affidavit on
13
February
2019 without complying with
the
provisions of Rule 6(5)(d) this Court's Uniform Rules. The
respondents oppose the amended Notice of Motion and the new reply
on
the basis that no application for condonation was brought and that it
was filed without leave of the court to
file further affidavits. The application
was served on the second respondent on 26 October 2018. The Notice of
Intention to Oppose
was filed and delivered on 2 November 2018. The
second respondent filed and delivered his opposing affidavit on 16
November 2018.
The applicant filed and delivered his replying
affidavit on 22 November 2018. No further affidavits were filed until
13 February
2019, when the applicant filed a further replying
affidavit;
(iii)
The
applicant delivered a
practice note on
13
February
2019, which
does
not comply with paragraph 13.16 of this Court's amended Practice
Manual, dated
1
July 2012. The practice note is further undated and not signed by the
applicant's legal representative;
(iv)
The
applicant proceeded to
then
deliver a further amended practice note
on 14 February 2019, which practice note also did not comply with
paragraph 13.16 of this
Court's amended Practice Manual, dated 1 July
2012.
[28]
The Rule 30 application therefore
succeeds. The applicant clearly took various irregular step in
respect of the amended Notice of
Motion as well as by delivering a
second replying affidavit to the second respondent's answer without
complying with the provisions
of Rule 6(5)(e) of this Court's Uniform
Rules. Lastly, the practice notes do not comply with the requirements
set out in
this
Court's Practice Manuel.
Brief background facts
[29]
As a result of the first respondent's
failure to comply with its repayment obligations in terms of three
loan and royalty agreements
, the fourth respondent launched a
liquidation application on
22
January
2016 (under case
number
23919/16). The fourth respondent relied,
inter
a/ia,
on a statutory demand in terms
of section 66 read with section 69(1)(a) of the Closed Corporation
Act.
[10]
.
[30]
The allegations in the liquidation
application stood uncontested at the hearing of the application. More
in particular, the applicant
did not dispute the extent of the first
respondent's indebtedness to the fourth respondent in the amount of
approximately ten
million
rand. The applicant also did not dispute the first respondent's
liability for the payment of royalties.
[31]
In reaction to the liquidation
application, the applicant launched a business rescue application on
30 March 2016 in terms of section
131(1) of the Closed Corporation
Act.
[32]
On 9 February 2017, Baqwa, J dismissed
the applicant's business rescue application and
placed
the
first respondent in
final
liquidation in
the
hands
of
the
Master of the High Court. It is common
cause that this order is not the subject matter of a pending appeal
or review.
[33]
Pursuant to the provisions of section
348 of the 1973 Act, the liquidation proceedings of
the
first
respondent commenced on
22
January
2016. The
seventh
and eighth respondents were appointed as joint liquidators ("the
liquidators").
[34]
The liquidators discovered that the
applicant had been paying personal expenses from the business account
of the first respondent
and that most of the tenants who rented rooms
on a monthly basis had been paying their rental in cash. This is
admitted by
the
applicant in
the
urgent
application proceeding
s
.
This continued even
after
the
final
liquidation
of
the
first
respondent. The
applicant
failed
to
account to the
first respondent or to the liquidators.
[35]
The applicant further prevented the
liquidators from gaining access to and control of the buildings of
the first respondent and
started to utilise the account of a
different company. This allegation is also admitted by the applicant
in the present application.
As a result, the liquidators applied for
various court orders against the applicant,
inter
alia,
on
28 April 2017 and 17 May 2017.
[36]
On 6 September 2016, the second
respondent was appointed by this court as the first respondent's
business rescue practitioner
(by
Makgoka, J). By virtue of such appointment,
the
second
respondent
assumed
the
powers
and
duties
as
provided
for in
the
Act.
These
powers
were
extended
significantly
by
this
court
in
an
order
dated
6
September
2017.
The
applicant
was
ordered
to
pay
all
monies
received
from
the
rental of the two immovable properties
owned by the first respondent to the second respondent into
the
banking
account nominated by
the
second
respondent.
[11]
[37]
It is common cause that the applicant
failed and omitted to comply with paragraph 7 of the court order
dated 6 September 2017. In
paragraph [18] of the Founding Affidavit,
the applicant makes the statement that "I rent these buildings
out to students that
study at the North West University". This
statement by the applicant conveys the clear impression that he
collects the rental
income - rental income that was supposed to have
been paid into a bank account nominated by the business rescue
practitioner.
What
the
applicant seems to forget it that he
is
no
longer in
control
of the financial affairs of the first respondent: Paragraph [5] of
the court makes it patently clear that the business practitioner
is
authorise to "immediately take full management control of the
company".
[38]
The second respondent took the issue in
respect of the non-payment of all monies collected up with the
applicant who conceded that
the amounts have not been paid over. He
apologised for
the
inconvenience caused by him not
depositing all funds into
the
designated bank account. The
correspondence
attached
to
the
papers confirm that the applicant has
been informed on 1 February 2018 of
the
relevant bank account details. The applicant in fact acknowledged
having received the information.
[39]
On 20 February 2018, the second
respondent informed the applicant that an amount of R287 610.00 (two
hundred and eighty-seven thousand
six hundred and ten rand) was
outstanding and that immediate payment was sought.
[40]
On 27
March
2018, the applicant responded stating
that the
court
order in
terms
of
which
the
second
respondent was appointed as
a business rescue practitioner have
"reduced you [the business practitioner] in a collection
agent".
[41]
The second respondent persists with his
allegation that the applicant misappropriated an amount in excess of
two million rand. According
to the second respondent this allegation
has never been denied by the applicant. The court was referred to the
fact that the applicant
had confirmed that an amount of R 3 231
185.05 (three million two hundred and thirty one thousand one hundred
and eighty five rand
and five cents) was collective in respect of
rent received. If all the expenses or overheads are taken into
account, an amount
of two million rand is unaccounted for. The second
respondent insists that the applicant is not in a position to explain
the whereabouts
of this amount.
[42]
On 17 May 2017, the seventh and eight
respondents approached this court on an urgent basis to freeze the
bank account of Zakhele
Mzansi Bricks (Pty) Ltd - a private company
of which the applicant is the sole director. Its principal business
is to manufacture
bricks. This application was necessitated after
it was discovered that the applicant
caused funds which belonged to the first respondent to be paid into
this company's bank account.
Janse van Nieuwenhuizen, J made an order
on 17 May 2017 in terms of which the said bank account was frozen
pending the finalisation
of an action to be
instituted.
[43]
Since 7 September 2017, the applicant made no effort or attempt to
approach this
court for an order in terms of section 132(2)(a)(i) of
the 2008 Act.
[44]
On 31 October 2018, the liquidators sold
the immovable property of the first respondent (bonded in favour of
the fourth respondent)
on auction. The sale and transfer of the
properties were not completed in the course of the liquidation
proceedings. The first
respondent remains the registered owner of
three properties. Two are situated in Vanderbijlpark, Gauteng and one
in Emfuleni Local
Municipality. Two of
the
properties (identified as
Roval
and
Santrust) were
sold
on
31
October
2018, at an auction for more than thirteen million rand. The fourth
respondent instructed the second respondent to proceed
with the
transfer and registration of the properties into the name of the
purchaser.
[45]
On the basis of this sale, the
respondents submit that prayer 3 of the Notice of Motion has
therefore become moot and it could be
of no force or effect.
The respondents further submit that the
applicant has, at
all
times since 5 December 2017, been aware
of the intention to sell all the properties that belong to the first
respondent and has
made no
attempt
to interdict or prohibit the second respondent from selling or
alienating the properties belonging to
the first respondent.
[46]
On 5 December 2017, a business rescue
plan was adopted in terms of section 151. It is in terms of this
plan
[12]
that a Notice of Substantial Implementation of the Business Rescue
Plan will be filed once all the properties have been sold and
all
dividends have been paid to the creditors as stipulated in this plan.
The applicant attended the meeting held in terms of section
151 of
the 2008 Act. At the meeting it was specifically discussed that it
was the intention in terms of the plan to sell all the
encumbered and
unencumbered assets of the first respondent during the next twelve
months. The applicant voted in favour of the
adoption of the business
rescue plan.
[13]
[47]
On 1 August 2018, the tenth respondent
launched business rescue proceedings. The tenth respondent -
previously known as Ramatsebe
Consulting CC and represented by Mr DP
Ramatsebe ("Ramatsebe") alleged that it is a creditor of
the applicant and an
"affected person". The result of the
business rescue application was to suspend the liquidation
proceedings of the first
respondent and also had the effect that the
liquidators were precluded from exercising their statutory powers.
Ramatsebe enrolled
his application for hearing on the unopposed
motion role some two and a half months later - on 9 November 2017.
[48]
The
liquidators
established
during
their
investigations
into
the
affairs
of
the
first
respondent that the monthly rental collected by the applicant in
cash, were substantially
more
than
previously estimated.
The
fourth
respondent
then
launched
an
urgent
business
rescue
application
to
place
the
first
respondent
under
supervision
and commenced business rescue
proceedings. The second respondent was then appointed as
practitioner.
[50]
I interpose here to restate that, in
terms of section 131(6) a business rescue application suspends the
liquidation proceedings
until the court has adjudicated upon the
application or, if the order is granted, until business rescue
proceedings end (see Maroos
[14]
).
[51]
It is on this basis that the respondents
submit that there is a misjoinde:r The applicant seeks to
set
aside
the
final
liquidation order as well as
the
order
commencing business rescue proceedings. However, business rescue
proceedings have not terminated. The first respondent was
already in
final liquidation when the business rescue proceedings commenced. It
was thus necessary to join the master. (I have
already dealt with
this issue
hereinabove.)
The business rescue plan
[52]
A business rescue plan that has been
adopted is binding on the company and on each of its creditors in
terms of section 152(4).
[53]
In terms of this plan, it was resolved
that the immovable property of the first respondent would be sold and
that it would be sold
as a going concern. This would have resulted in
a better return for the first respondent's creditors opposed to the
immediate liquidation
of the company. The second objective as
envisaged in section 128(1)(b) would therefore have been achieved.
[54]
The fourth respondent further
compromised its claim for further royalties. The total outstanding
amount still due and
payable
to the
fourth
respondent in terms of the loan agreements is R 8 720
495.99
(eight million seven hundred and
twenty thousand four hundred and
ninety-five rand and ninety-nine cents). This is not disputed in the
reply. The fourth respondent
contends that should the business rescue
plan not be implemented but set aside, the compromise in respect of
the royalties will
lapse and the first respondent will remain liable
for the payment thereof.
[55]
I now return briefly to the relief
sought.
Prayers 3 and 4: The properties
[56]
In terms of these prayers, the applicant
seeks an order that the second, third and fourth respondents be
interdicted from continuing
with and concluding "the proposed
sale on 31 October 2018" in respect of the two properties. There
is no merit in this
relief sought: The immovable properties have been
sold on auction on 31 October 2018 and
the relief sought in
terms of
prayer 3 and
4 has accordingly become moot.
Prayer 5: Full control of the
first respondent
[57]
In terms of this prayer, the applicant
seeks an order removing the second respondent as the business rescue
practitioner and to
grant the applicant "full sole control of
his
company".
[58]
The applicant is not entitled to "full
sole control" of the first respondent and the order is,
accordingly not competent.
The applicant has further not, in terms of
section 139(2) of the 2008 Act, made out a case for the removal of
the duly court appointed
business rescue practitioner. In terms of
this section, a business rescue practitioner may only be removed on
the following grounds:
"(2) Upon
request of an
affected person, or
on
its
own motion, the
court may remove a
practitioner from office on any of the following grounds:
(a)
Incompetence or failure to
perform the duties of a business rescue practitioner of the
particular company;
(b)
failure to exercise the
proper degree of care in the performance of the practitioner's
functions;
(c)
engaging in illegal acts or
conduct;
(d)
if the
practitioner no
longer satisfies the
requirements set out in section 138
(1);
(e)
conflict of interest or lack
of independence; or
(f)
the practitioner is
incapacitated and unable to perform the functions of that office, and
is unlikely to regain that capacity within
a reasonable
time."
[59]
Nothing, apart from a mere allegation of
"fraud, deceit, incompetence, maladministration", has been
placed
before this court.
The
relief
sought in
this
prayer is accordingly dismissed.
Prayer
6: Application to set aside the adopted plan
[60] The plan has been
adopted by agreement between the first respondent and the creditors.
The applicant voted in favour
of the plan and cannot now claim that
the plan should be set aside merely because he has changed his mind.
This relief sought in
this prayer is accordingly dismissed
Prayer 9: Rescission of the
liquidation order
[61]
An applicant under section 345 of the Act, must not only show there
are "special or exceptional
circumstances" to justify a
recession of the liquidation order, such applicant must provide a
"satisfactory explanation
for not having opposed the granting of
a final order or appealed against the order". No such case has
been made out. In any
event, as already pointed out, the Master of
the High Court has a direct and substantial interest in the orders
applied for by
the applicant. The Master of the High Court has not
been joined and therefore it is not competent for this Court to set
aside the
final liquidation order of the first respondent.
Prayers
10 and 11: Business rescue proceedings
[62]
In terms of prayer 10 the applicant sought an order to set aside the
order commencing the
business
rescue
proceedings and in
terms
of
prayer 11, the
applicant
seeks an order to "terminate" the business rescue
proceedings. No such a case has been made out.
Prayer
12: Royalty agreements
[63]
The applicant contended that the royalty agreements "are nothing
less than simulated
agreements
to
increase
the
earnings
of
the
fourth
respondent".
There
is
no merit
in
this
contention.
On
the
applicant's
own
version,
the
fourth
respondent
as
early as 2014
informed him that he signed and agreed to a 17% royalty. Moreover,
the royalty agreements are
part and parcel of
the loan
agreements.
Furthermore, it
is
a condition of the
loans that royalty
agreements are
entered into.
[64]
A similar attack against the fourth respondent's royalty agreements
was rejected by the full bench in this
division in
Business
Partners Limited v Silverstars Trading
245
CC.
[15]
At issue in this matter was whether the court a
quo
correctly found
that the royalty agreement is contrary to public policy and void. The
court in
Business
Partners
confirmed
that
the
onus to
establish that
a contract is void
and unenforceable is
upon the party who alleges
it:
"[40] The onus to establish
that a contract is void and unenforceable because it is contrary to
public policy is upon the party
who alleges it; refer Diners Club SA
v Singh
2004 (3) SA 530
(D) at 645 G where Levinsohn J said the
following:
'The legal onus of establishing
that
a
term
in
a
contract
(admittedly entered into by the
defendants) is contra bonos
mores rests on the defendants. This carries with it the duty finally
to satisfy the court that it ought
to succeed on the issue and they
have also the duty to adduce evidence in regard to the factual
background relevant to the defence.'"
[65]
There is nothing before the court to
indicate that the applicant was not aware and that he did not
understand that royalty payments
were payable. In fact, the applicant
admits that he had signed and agreed to a 17% royalty.
Prayer 13: Refund of payments
[66]
The applicant claims a refund of all
payments. There are several issues with the relief claimed here.
First, the applicant does
not have
locus
standi
to claim the relief sought;
secondly, it is not pleaded which amounts, if any, are claimed;
thirdly, the royalty agreements were
concluded during 2012 and 2013
and any claim for a refund has now become prescribed or at least
partially prescribed.
Prayers 14 and 15: Business
rescue fees
[67]
The applicant claims a refund of all
business rescue fees. There is no merit in this claim and I am in
agreement with the submission
made by the fourth respondent that one
of the creditors of the first respondent can never be liable for the
refund of business
rescue fees.
Prayer 16: Damages
[68]
The
applicant
essentially
claims
damages
for
alleged
maladministration. There is
no
merit
in
this
claim. Firstly,
no
legal
basis
is
made
out
for
this
claim.
Secondly,
the fourth
respondent
furthermore
disputes
the
allegations
that
form
the
basis
of
this
claim. Declaratory relief in application
proceedings in these circumstances is simply inappropriate.
Prayer 17: Claim of tenth
respondent
[69]
The applicant claims relief on behalf of
the tenth respondent. The
applicant
simply, does not have any
locus
standi
to claim anything on behalf
of the tenth respondent. In any event, the claim of the tenth
respondent was rejected by the practitioner.
[70]
In the event, the relief sought in the
Notice of Motion is dismissed with costs such costs to include the
costs occasioned by the
employment of senior
counsel.
Heads of argument
[71]
In conclusion it is necessary to make a
few remarks regarding the manner in which this
matter was conducted. It is
trite law what the
purpose of Heads of Argument is. In
light of
what served before this court,
it
is
unfortunately necessary to
again remind parties what the purpose of
Heads of Argument is. It is certainly not
the purpose of the Heads of Argument to
merely regurgitate the facts contained in the
papers.
[72]
Paragraph 13.8 of this court's amended
Practice Manual sets out, in broad terms, what the purpose is and
states as follows:
"2.
The heads of argument
should indicate the issues that fall for determination and counsel's
contentions in respect of those issues.
Reference to
the authorities
relied upon for those contentions should be set out."
[73]
I can do no better than to refer to what
was stated by the Court in
S v
Ntuli
[16]
(albeit in the context of a criminal
trial):
'”[16]
Unless counsel properly
represents his or her client, the right to a fair trial and the right
to a fair appeal may be negated. At
issue is simply the basic
proposition that the minimum required of counsel is to prepare and
present a proper argument on behalf
of his
or her client. Heads
of argument serve a critical
purpose. They ought
to articulate the best argument available to the appellant. They
ought to engage fairly with the evidence and
to advance submissions
in relation thereto. They ought to deal with the case law. Where this
is not done and the work is left to
the Judges, justice cannot be
seen to be done. Accordingly, it is essential that those who have the
privilege of appearing in the
Superior Courts do their duty
scrupulously in this regard. In
S
v Steyn
2001 (1)
SA 1146
(CC) para [24] at 1160C - 1161A
(2001 (1) SACR 25
at 38e -
39c
[2000] ZACC 24
; ;
2001 (1) BCLR 52)
at the Constitutional Court stressed the
importance of oral argument in the context of criminal appeals. The
same holds true for
written argument."
[74]
The Heads of Argument in this matter
consist of 127 pages and consist mainly of a regurgitation of the
evidence. Apart from one
single judgment referred to in paragraph 9
of the applicant's Heads of Argument, the applicant omitted to refer
to any authorities
in support of the relief he applies for. This is
clearly not helpful to a court.
[75]
More concerning is the fact that the
Heads of Argument are replete with numerous defamatory statements or
allegations. Counsel is
expected to respect the decorum of this court
and should refrain from insulting the other party, their attorneys
and even counsel
acting on behalf of one of the parties. I refer to
some
examples:
Ad par 3:
"It
now transpired that Dawid Maartens is stealing the money of Pat Zoo
and whittling away the assets of Pat
Zoo."
Ad par
6.24:
"This just shows how skewed Dawid Maartens priorities are."
Ad par 6.25:
"He is more set to remain in power as business rescue
practitioner of
Pat Zoo at the expense of Pat Zoo, so he can steal
more money from Pat Zoo than paying the day to day expenses of Pat
Zoo and making
sure Pat Zoo survives."
Ad par
6.29:
"The reason of course why this expense was incurred by Dawid
Maartens and his attorney
Wim Cornelius is of course because the
money is not their money and they could not care less what happens to
it."
Ad par
6.30:
"This
just shows the sick mind of Dawid Maartens."
Ad par 6.39:
"The
truth
is
that
Dawid
Maartens wants
Pat
Zoo
to
fail
to
cover
up his theft and
impropriety."
Ad par 7.6:
"Dawid Maartens also lies to make up paper space and pad his
answering
affidavit."
Ad par 7.7: "It
will also be shown that Dawid Maartens is a liar, a conman, a thief,
a criminal and corrupt to the bone. "
Ad par
8.12:
"Ms Van Heerden on behalf of Business Partners lied."
Ad par
20:
"It
is
therefore submitted that on
the proper
interpretation
of
the dirty hands principal the Honourable Court should immediately
remove Dawid Maartens and order him and his cohorts to pay
back the
money they stole from Applicant and Pat
Zoo."
Ad par
24:
"This is of course a blatant lie. The problem that Dawid
Maartens
however faces is that he has to lie to justify the selling
of the buildings. Dawid Maartens has no other option."
Ad par 24.1.11:
"He now does not want to justify his conduct therefore he lies
by alleging that Pat
Zoo is insolvent."
Ad par 25:
"The only reason
why Dawid
Maartens now out of
the blue suddenly
allege that Pat Zoo is financially insolvent , is to justify his
illogical, nonsensica,l irrational and illegal
conduct, which is to
sell the Roval and Santrust Buildings of Pat Zoo."
Ad par 35:
"This annexure "DM12" is all part of a pathetic
attempt by him to show that Pat Zoo is insolvent. This is not only
misleading but a blatant lie."
Ad par 37:
"Dawid Maartens has done this before. It seems he has become
quite an expert in conjuring up income and expense sheets of Pat Zoo
showing that Pat zoo is insolvent whenever it is convenient
for him
to do so."
Ad par 40:
"On Dawid Maartens' own version and therefore according to
the
annexure "DM12" despite Dawid Maartens rewarding himself
and his close associates generously Pat Zoo is economically
viable up
and until 16 November 2018 the day Dawid Maartens disposed of his
answering affidavit."
Ad par 40:
"Dawid Maartens is lying. Dawid Maartens is a liar."
Ad par
41:
"He stole this money. Dawid Maartens is a thief, a criminal and
a
crook."
Ad par
43:
"He together with his
cohorts, his attorney Wim Cornelius, advocate Goertzen and maybe even
his accountant Michelle Nieman
are stealing from me and Pat Zoo.
Apart from stealing from Pat Zoo Dawid Maartens made no contribution
whatsoever to the rescuing
of Pat Zoo. Dawid Maartens and his cohorts
are whittling away the assets of Pat Zoo. If he and his cohorts are
not stopped on an
urgent basis there will be nothing left."
Ad par
63:
"This further shows
that Pat Zoo has indeed recovered and will be able to pay its debts
especially since Dawid Maartens will
not be around to misuse or steal
from Pat Zoo."
Ad par
66:
"Annexure"DM12" and annexure "DM56" shows it
is only after
16 November 2018 and
some doctoring by
Dawid
Maartens that
Pat Zoo showed a
negative
balance."
Ad par
78:
"Only after Applicant saw the financial statements of Pat Zoo,
Applicant
became aware of how in more detail Dawid Maartens stole
money from Pat Zoo to enrich himself and his fellow cohorts."
Ad par
88:
"If Michelle Nieman took money to which she was not entitled,
she
is a thief."
Ad par
94:
"Once again, no explanation given as to why this payment was
made.
Applicant was not given an account by advocate Goertzen. A
total payment of R54 394.50 was made towards advocate Goertzen with
no explanation given. What other reasonable inference must Applicant
make that this is nothing else but a kick back payment
Dawid
Maartens made towards advocate Goertzen as a reward for
recommending Dawid
Maartens as
business
rescue practitioner of Pat Zoo. Advocate Goertzen took this R54
394.50 to which he is not entitled. Advocate Goertzen is
a thief."
Ad par
100:
"Dawid Maartens took money from Pat Zoo to which he is not
entitled.
Dawid
Maartens
stole
from
Applicant and
Pat
Zoo. Dawid Maartens
is a
thief."
Ad par
102: "Dawid
Maartens is corrupt to the bone."
Ad par
105:
"DawidMaartens
is
lying. Dawid
Maartens
is
a
liar."
Ad par
108: "He
stole this money. Dawid Maartens is a thief, a criminal and a crook."
[76]
The conduct of Advocate Hugo warrants
the attention of the Professional and Ethics Committee as this type
of conduct reflects negatively
on our profession. All practitioners
must respect the decorum in this
court.
Order
1.
The application is
dismissed.
2.
The applicant is to pay the first,
second, third and fourth respondents' costs on an attorney and client
scale.
AC BASSON
JUDGE IN THE HIGH COURT
Appearances:
Applicant:
Advocate Hugo
Instructed by:
Hamann Attorneys
First,
second and third respondents: Advocate FW
Bates SC
Instructed by:
Wolvaardt Incorporated
Fourth
respondent:
Advocate Y Coertzen
Instructed
by:
Strydom Britz Mohulatsi Inc.
[1]
Act 71 of 2008.
[2]
Act 61 of 1973.
[3]
2019 (2) SA 379 (SCA).
[4]
Ibid
at para [9].
[5]
Section
361(1) and (2) of the Act read as follows:
"1.
In any winding-up by the Court all the property of the company
concerned shall be deemed to be in the custody and under
the control
of the Master until
a
provisional
liquidator has been appointed and has assumed office.
2. In
any winding-up of any company, at all times while the office of the
liquidator is vacant or he is unable to perform his
duties, the
property of the company shall be deemed to be in the custody and
under the control of the Master."
[6]
"364
Master to summon first meetings of creditors
and members and purpose thereof
(1)
As soon as may be after a final winding-up order has been
made by the Court or a special resolution for a creditors' voluntary
winding-up of a company has been registered in terms of section 200,
the Master shall summon-
(a)
a meeting of
the creditors of the company for the purpose
of-
(i)
considering
the statement as to the affairs of the company lodged with the
Master under section
363;
(ii)
the proof of
claims against the company; and(iii) nominating a person or persons
for appointment as liquidator or liquidators;
and
(b)
a meeting of
the members of the company or, in the
case
where the
winding-up concerns a company limited by guarantee, a meeting of the
contributories in respect of that company, for
the purpose of-(i)
considering the said statement
as
to the affairs
of the company; and
(ii) nominating a person or
persons for appointment
as
liquidator or
liquidators, unless the company in general meeting, when passing a
resolution provided for
in
section
349, has already disposed of the matters referred to in
subparagraphs (i) and (ii).
(2)
Meetings of
creditors under this section shall be summoned and held as nearly as
may be in the manner provided by the law relating
to insolvency, and
meetings of members or contributories in the manner prescribed by
regulation: Provided that, in the case of
a meeting of creditors,
the Master may direct the company concerned or the provisional
liquidator to send a notice of such meeting
by post to every
creditor of the company."
[7]
"354 Court may stay or
set aside winding-up
(1)
The Court
may at any time after the commencement of a winding-up, on the
application of any liquidator, creditor or member, and
on proof to
the satisfaction of the Court that all proceedings in relation to
the winding-up ought to be stayed or set
aside, make
an order staying or setting aside the proceedings or for the
continuance of any voluntary winding-up on such terms
and conditions
as the Court may deem fit.
(2)
The
Court may, as to all matters relating to
a
winding-up, have
regard to the wishes of the creditors or members as proved to it by
any sufficient evidence."
[8]
Crown Hill Prop 3 CC v Body Corporate Villa Luca
2013 JDR
0740 (GNP) at para [7]:
''The Applicants under section 354 of the
Act must show special circumstances which justified the setting
aside of the order and
also furnish satisfactory explanations for
not having opposed the granting of the order.
[9]
Case number: 23919/2016.
[10]
Act 69 of 1984.
[11]
Paragraph [7] and [8] of the court order.
[12]
Clause 25.2 of the Business Rescue Plan.
[13]
Clause 8.4 of the minutes of the meeting held on 5 December 2017.
[14]
Supra .
[15]
(A762/2012, 14408/2008) [2015] ZAGPPHC 1108 (29 May 2015).
[16]
2003
(4)
SA 258
(W) at 2658 - D.