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[2017] ZAFSHC 74
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Van Jaarsveld N.O. v Q-Civils (Pty) Ltd and Another (Fortune and Others Intervening) (675/2017) [2017] ZAFSHC 74 (11 May 2017)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
number: 675/2017
In
the matter between:
DANIËL THEODORUS VAN
JAARSVELD
N.O.
Applicant
and
Q-CIVILS (PTY) LTD
(IN BUSINESS RESCUE)
[Registration number:
2006/005875/07]
First
Respondent
THE COMMISSIONER OF THE
COMPANIES
AND INTELLECTUAL PROPERTY
COMMISSION
Second
Respondent
OMAR
FORTUNE
First
Intervening Party
CPMS CIVIL ROAD
REHABILITATION
(PTY) LTD
Second
Intervening Party
O & R FORTUNE FAMILY
TRUST
Third
Intervening Party
JUDGMENT BY:
SNELLENBURG, AJ
HEARD ON:
11 MAY 2017
DELIVERED ON:
25 MAY
2017
[1]
This is an application for leave to appeal by the first respondent
and intervening parties against my order dismissing their
application
for postponement.
[2]
On 5 May 2017 I dismissed the application by the first respondent and
intervening parties for the postponement of the main application
pending an appeal which the aforesaid parties intend to pursue
against the order granted by my sister, Mbhele, J. In short
the
Court upheld a point
in
limine
to the effect that the sole director of the company under business
rescue requires the leave of the business rescue practitioner
to act
on behalf of the company (under business rescue) and in its stead.
The Court held that the sole director did not have such
authority.
The effect of her finding is that the sole director could not
instruct attorneys to act on behalf of the company (under
business
rescue) to oppose the application and to act on behalf of the company
in this litigation. As for my judgment the reasons
for my decision
are set out in my written judgment.
[3]
The first respondent did not serve its application for leave to
appeal within the prescribed time period with the result that
it
needs to apply for condonation. Currently, the first respondent
therefore does not have a right to apply for leave to appeal
against
the order of Mbhele, J. That right will only be revived if
condonation is granted for the late service of the application
for
leave to appeal.
[4]
The grounds of appeal are contained in the notice of application for
leave to appeal and are framed to be read in conjunction
and in the
alternative to one another. The first respondent and intervening
parties also gave notice in terms of Rule 16A. As matter
of
convenience the parties are referred to in this judgment as they were
referred to in my judgment which forms the subject matter
of this
application. I will also, where appropriate, refer to the first
respondent and intervening parties as ‘the applicants
for leave
to appeal’.
[5]
Counsel for the applicant and counsel for the first respondent and
intervening parties are ad idem that the dismissal of the
application
for postponement has the effect of a final decision against which an
appeal could lie if leave be granted. This is
undoubtedly correct.
[6]
Section 17(1)(
a
)(
ii
)
of Act 10 of 2013 provides that leave to appeal may be given if I am
of the opinion that the appeal would have a reasonable prospect
of
success. The test involves that the application for leave to appeal
must not be approached as if it is an impertinent challenge
to the
Judge concerned to justify his/her decisions. The Court is to the
contrary required to reflect dispassionately upon its
decision and to
decide whether reasonable prospects exist that a Higher Court may
disagree from the finding of fact or law. This
test postulates a
dispassionate decision, based on facts and the law that the Court of
Appeal could not reasonably arrive at a
conclusion different to that
of a Trial Court.
[1]
This also
calls for an approach on the footing of intellectual humility and
integrity, neither over-zealously endorsing the ineluctable
correctness of the decision that has been reached, nor over-anxiously
referring decisions that are indubitably correct to an appellate
Court.
[2]
[7]
I reserved judgment after hearing arguments in order to apply the
test dispassionately. In order to properly assess the matter
I have
taken care, whilst keeping the grounds of appeal in consideration, to
again consider the papers in the main application
in conjunction with
the submissions that were made both in support of and in opposition
to the application for postponement.
[8]
As touched upon above the failure to serve an application for leave
to appeal within the prescribed time results in the lapsing
of the
right to apply for leave to appeal. Only on granting of condonation
for the late serving of the application for leave to
appeal is the
right to apply for leave to appeal revived.
[3]
It follows that the operation of the court order that my sister
Mbhele, J made has not been suspended. It is of full legal force
and
effect must be given to it.
[9]
The result is that the legal representatives purporting to act for
the first respondent would not have authority so to act on
its
behalf. That entails that they could also not make the application
for postponement of the main application on behalf of the
first
respondent without the business rescue practitioner’s
authority. This is the natural consequence of the existing court
order.
[10]
The intervening parties on the other hand always had the required
standing to apply for a postponement. Whether they were entitled
to
the postponement is a different question.
[11]
The majority of the grounds on which leave to appeal is sought imply,
as was also submitted during arguments on behalf of the
applicants
for leave to appeal, that I am not bound by Mbhele, J’s order
and that I have the option not to follow the same
if I was of the
opinion that it was clearly wrong. I do not agree with the
proposition. In the matter of
Moraitis
Investments (Pty) Ltd v Montic Dairy (Pty) Ltd
(799/2016)
[2017] ZASCA 54
(18 May 2017)
the
Supreme Court of Appeal left no doubt regarding the force and effect
of a court order.
“
For so long as
that order stood it could not be disregarded. The fact that it was a
consent order is neither here nor there. Such
an order has exactly
the same standing and qualities as any other court order. It is
res
judicata
as
between the parties in regard to the matters covered thereby.
[4]
The Constitutional Court has repeatedly said that court orders may
not be ignored. To do so is inconsistent with s 165(5)
of the
Constitution, which provides that an order issued by a court binds
all people to whom it applies.
[5]
So
much the more would I be bound by the order where I hear an
application for postponement in the same matter where the order has
been made which is final in its effect and which is not yet the
subject of an application for leave to appeal. Any rights
of
the first respondent which may be limited, is limited by an existing
court order.
[12]
There is to my mind no reasonable prospect of success that a Court of
appeal will come to a different conclusion on the law
or the facts in
this regard.
[13]
The question that needs to be considered ultimately is whether any
reasonable prospects exists that a Court of appeal may conclude
that
by dismissing the application for postponement, I failed to exercise
the discretion judicially, or had been influenced by
wrong
principles, or committed a misdirection on the facts or that I
reached a decision which in the result could not reasonably
have been
made by a court properly directing itself to all relevant facts and
principles.
[6]
[14]
The applicants for leave contend that my decision to refuse the
postponement infringes on the first respondent’s constitutional
rights to a fair hearing, to access to court, to have the dispute
resolved by application of law before the court and the right
to
enforcement of an effective remedy. The gist of the grounds of
appeal, as framed, fails to take into consideration the fact
that the
court had already pronounced on the interpretation of the applicable
provisions of the
Companies Act, 2008
. I of course refer to Mbhele,
J’s judgment and order. As stated, that order is extant.
[15]
I must ultimately access whether a Court of appeal could come to a
conclusion that my decision was vitiated by error on any
one of the
grounds listed in paragraph 13 above. I have carefully re-examined
the matter as stated.
[16]
The question reduced to its most basic form must be whether there are
reasonable prospects that the Court of appeal will come
to the
conclusion that I erred in not granting the postponement in order to
allow the first respondent the opportunity to pursue
the condonation
application, application for leave to appeal and, if successful, the
appeal to challenge the finding that a company
under business rescue
cannot be represented without leave of the business rescue
practitioner in an application for the termination
of its business
rescue and liquidation as well as its counter application in light of
the fact that the proceedings will proceed
without the first
respondent having representation.
[17]
The following main contentions were also made in support of the
application in addition to the grounds for leave to appeal
as
contained in the application for leave to appeal: The effect of the
dismissal of the application for postponement is that the
matter will
argued without legal representatives arguing the first respondent’s
case on its behalf; nobody is entitled to
argue another’s cause
on his behalf; by allowing the main application to be argued in
absence of the first respondent I also
limit its right to access to
court and a fair hearing whilst the limitation is not justifiable; I
failed to apply
s
36
of the Constitution; I found that the first respondent does not have
locus standi; the first respondent has reasonable prospects
of
success with the intended appeal and I erred in not according enough
weight to that issue which should have been the determining
factor in
light of the constitutional infringements; the appeal will become
academic and a Court of appeal may refuse to hear the
appeal if leave
be granted but the main application has been adjudicated upon; I over
emphasised the interests of affected parties
and erred in finding
that the interests of justice dictated that the application must be
heard regardless of the exclusion of representation
on behalf of the
first respondent; the application for postponement was not an
ordinary application and I did not have an unfettered
discretion to
refuse the application as the matter raises important and novel
questions; I erred in concluding that the interests
of affected
parties were not addressed as the matter was canvassed in the first
respondent’s answering affidavit where the
prospects that the
business can still be rescued are dealt with.
[18]
To my mind there are no reasonable prospects that a Court of appeal
will conclude that I erred in exercising my discretion
or that my
dismissal of the application for postponement is impeachable as
result of a vitiating error.
18.1 The intervening
parties intervened in the event that the special plea was upheld so
that the application can be opposed. They
incorporated the ‘first
respondent’s answering affidavit’ in their applications
to resist the relief. The intervening
parties now argue in this
application for leave to appeal that I erred in finding that they
rely on the same grounds as advanced
on behalf of the first
respondent. But that is exactly what the intervening parties have
done by incorporating the answering affidavit
filed on behalf of the
first respondent into their intervention applications which also
serve as affidavits to resist the relief
in the main application.
18.2 Mr Fortune is the
sole director and represents the shareholder. He is also on his
version an affected party as creditor of
the first respondent. He
deposed to all the affidavits that resist the application and
incorporated his evidence in the answering
affidavit to the main
application into his personal intervention application. He claims the
same relief as in the counter application
filed on behalf of the
first respondent.
18.3 The finding that the
first respondent cannot be represented by the present attorney and
counsel does not change the ambit of
the evidence that will serve
before the court. Mr Fortune remains the primary witness in
opposition to the relief and his evidence
is before the court by
agreement between the parties. There is no witness better able to
testify as to why the main application
should fail and the counter
application should succeed. In this instance the distinction appears
to be more apparent than real.
18.4 The existing court
order does have the effect that the director cannot without
authorisation appoint legal representatives
to act for the respondent
to oppose the main application. I am bound to that decision. The
limitation needs to be weighed against
the other prevailing
considerations. I did consider the constitutional rights of the first
respondent and the limitation thereof.
18.5 The reality remains
that all the evidence that could conceivably have been led in favour
of the first respondent has been put
before the court by the sole
director of the first respondent. He would have testified on behalf
of the first respondent, he now
does so in his capacity as director
of the company, representative of the shareholder, creditor, member
of an associated company
and he relies on the same evidence he gave
on behalf of the company in the first place. In what manner the scope
of the evidence
is argued to be subject to change has not been
identified.
18.6 The underlying
factual matrix always remain relevant. The intervening parties, with
reliance on the answering affidavit, paints
a dire picture of the
ineptness of the current business practitioner. Serious allegations
are levelled against him to such extent
that his replacement by a new
business rescue practitioner is advocated and in fact sought. These
allegations on their own indicate
that the interests of the affected
persons are also material and seriously at stake. It was submitted
that business rescue may
also yield a better dividend than the
liquidation would. It is inconceivable that this can be achieved if
the present business
rescue practitioner remains in office on the
version presently before court. The current business rescue
practitioner has in fact
been put on terms regarding possible claims
for damages by the director. There is also mention of a joint-venture
that may be concluded
to assist the first respondent that the current
business rescue practitioner is not interested in following up on. It
could never
be argued to be in the intervening parties interests, or
that of the first respondent itself, or the affected parties’
that
the status
quo
remain for an undetermined period of time in light of these
allegations and considerations.
18.7 On the other hand
the business rescue practitioner paints a very bleak picture of a
factually and commercially insolvent company.
He states that
contracts have been cancelled or will expire in the near future;
there is no short term
insurance in place; the work force has been terminated; the value of
contracts that the director relies on
is over-estimated and creates a
misperception regarding the possible income and the business is
insolvent. There is no post-business
rescue finance available. The
possible ‘joint-venture’ is not a realistic possibility
according to him. If these facts
are found to be correct the
creditors’ interests are just as much at stake and in jeopardy.
How long should the creditors
be without recourse if this is found to
be the correct factual situation.
18.8 The matter of
prejudice to affected parties, other than the intervening parties, as
should be apparent, is material and was
not adequately addressed by
applicants for the postponement. Those interests must also be weighed
against the limitations complained
of by the first respondent. The
constitutional infringements were carefully considered and weighed
against the other relevant interests.
18.9 It cannot be argued
in the present circumstances that the Court had no discretion to
refuse the application for postponement.
I do not agree with the
applicants for leave to appeal’s contention that this is a
matter where the Court would have no choice
than to grant a
postponement.
18.10 The Supreme
Court of Appeal and Courts of appeal do have the discretion to
pronounce on issues which are of sufficient
importance even when the
main lis has fallen away.
[19]
I am not satisfied that reasonable prospects exists that the Court of
Appeal could reasonably arrive at a conclusion that the
discretion
was not exercised judicially or that there exists some other
vitiating error.
[20]
Accordingly,
IT
IS ORDERED
:
1.
The
application for leave to appeal is dismissed with costs.
____________________
N.
SNELLENBURG, AJ
On
behalf of the First Respondent
and
1
st
, 2
nd
and 3
rd
Intervening party
(Applicants
for leave to appeal):
Adv. C Ploos van Amstel
SC
Assisted
by:
Adv. P du P Greyling
Instructed
by:
M Van Zyl, Marius Van Zyl Inc.
Bloemfontein
On
behalf of the Applicant
(Respondent
re
application for leave): Adv. P Zietsman SC
Assisted
by:
Adv. R van der Merwe
Instructed
by:
BM Jones, Honey Attorneys
Bloemfontein
[1]
S v Mabena and Another
2007(1) SACR 482 (SCA).
[2]
Shinga v The State and Another
(Society of Advocates (Pietermaritzburg Bar) Intervening as Amicus
Curiae); S v O'Connell and Others
2007
(2) SACR 28
(CC) para 53.
[3]
Panayiotou v Shoprite Checkers
(Pty) Ltd AND Others
2016 (3) SA 110 (GJ).
[4]
Eke v Parsons
2016 (3) SA 37
(CC) paras 29-31;
Provincial
Government North West and Another v Tsoga Developers CC and Others
[2016] ZACC 9
;
2016 (5) BCLR 687
(CC) para 47.
[5]
Department
of Transport and Others v Tasima (Pty) Ltd
[2016] ZACC 39
;
2017 (2) SA 622
(CC) paras 177-183. There is a narrow exception
where a court makes an order that is on its face beyond its powers,
as with the
order to appoint a specific individual as a provisional
liquidator that was in issue in Master of the High Court (North
Gauteng
High Court, Pretoria) v Motala
NO and Others
[2011]
ZASCA 238
;
2012 (3) SA 325
(SCA). That order was invalid as the
power to appoint a provisional liquidator was exclusively vested in
the Master and accordingly
the Master could not be held to be in
contempt by declining to make the appointment. See Tasima para 197
and
Provincial
Government North West v Tsoga Developers CC and Others
[2016] ZACC 9
;
2016 (5) BCLR 687
(CC) para 50.
[6]
National Coalition for Gay &
Lesbian Equality v Minister of Home Affairs
2000 (2) SA 1
(CC) par 11.