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[2016] ZAGPPHC 654
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Mulder v Botha N.O. and Others (39490/2016) [2016] ZAGPPHC 654 (4 August 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE
NO.: 39490/2016
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
4/8/2016
In
the matter between:
EMANUEL
MULDER
Applicant
and
DEON
MARIUS BOTHA
N.O.
First Respondent
MALESELA
RUFUS RAMONETHA
N.O. Second
Respondent
MENETTE
BOERDERYE (PTY) LTD
Third Respondent
THEUNIS
HELLMUTH
Fourth Respondent
DANIELA
HELLMUTH
Fifth
Respondent
ALBERTUS
CAREL VAN ZYK
Sixth
Respondent
PHILLIP
MARTINUS
SNYMAN Seventh
Respondent
NICOLAS
PETRUS
MAREE Eight
Respondent
ASC
DU PREEZ
Ninth
Respondent
SUIDWES
AGRICULTURAL (PTY)
LTD Tenth
Respondent
CLEAR
CREEK TRADING (PTY) LTD
Eleventh
Respondent
MACK'S
PETROLEUM AGENCIES (PTY)
LTD Twelfth
Respondent
MASTER
OF THE HIGH COURT
Thirteenth Respondent
COMPANIES
AND INTELLECTUAL PROPERTY Fourteenth
Respondent
COMMISSION
JUDGMENT
VAN
DER WESTHUIZEN, A J
1.
The applicant launched an application in terms whereof he seeks that
the third respondent be placed under business rescue in
terms of the
provisions of section 131 of the Companies Act, 71 of 2008 (the
current
Companies Act) and
under the supervision of a business rescue
practitioner or, in the alternative, that the winding-up order in
respect of the third
respondent be set aside in terms of section
354(1) of the Companies Act, 61 of 1973 (the repealed Companies Act).
2.
The third respondent was finally wound-up on 17 August 2015. The
applicant is the sole director and shareholder of the third
respondent.
3.
The first and second respondents are the appointed liquidators of the
third respondent.
4.
Fourth to twelfth respondents are various creditors of the third
respondent and who had proven claims against the third respondent.
5.
The thirteenth respondent is the Master of the High Court and the
fourteenth respondent is the Companies and Intellectual Property
Commission.
6.
The fourth, fifth, sixth, seventh and eight respondents oppose the
application. I shall refer to them as the opposing respondents.
First
and second respondents have indicated that they abide by the decision
of the court.
7.
The opposing respondents enrolled this application on the urgent
roll. The reason for such enrolment being that the first and
second
respondents in their capacity as appointed liquidators of the third
respondent had received an offer to purchase some of
the immovable
property of which the third respondent was the owner, and the date
for acceptance thereof was eminent. The said offer
flows from the
auction held during May 2016.
8.
After hearing argument on the application, I granted an order
dismissing the application with costs and indicated that I would
deliver my reasons therefor in due course. These are my reasons.
9.
Mr Swart, who appeared together with Mr Els on behalf of applicant,
limited his argument to the relief sought in the alternative,
i.e.
for an order setting aside the final winding-up order. He however did
not abandon the main relief sought, that of placing
the third
respondent under business rescue proceedings.
10.
Certain of the repealed Companies Act's provisions and in particular
those relating to liquidation of a company remain operative
in terms
of the provisions of the current Companies Act The applicant seeks in
terms of the provisions of section 354(1) of the
repealed Companies
Act, that the final winding-up order of the third respondent be set
aside. That section provides as follows.
"
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."
11.
The basis of the application for the setting aside of the final
winding up order of the third respondent relates to alleged
subsequent circumstances arising which allegedly warrants the setting
aside of the final winding-up order. The subsequent circumstances
relate to an offer to purchase the farming properties of the third
respondent for an amount of R13 700 000.00 received from PGL
Boerdery
(Pty) Ltd (PGL).
12.
The applicant suggests that the amount of R13 700 000.00 is
sufficient to defray all the third respondents' indebtedness, the
applicant alleging that the claims proved against the third
respondent's estate amount to R11 100 362.20 and the administration
costs amount to R1 971 920.50. Hence the amount of
R13 700 000.00 would be adequate provision for the payment
of the
creditors' claims.
13.
It is further submitted on behalf of the applicant that on any basis
the value of the third respondent's assets exceeds its
liabilities by
far. The opposing respondents dispute this submission.
14.
Mr
Swart
primarily
relied
upon
the decision
in
Klass
v
Contract
Interiors
[1]
in support
of
the application for
setting
aside the final
winding-up
of
the
third
respondent.
He
also
relied
on
the
Supreme
Court
of
Appeal
decision
in
Ward
et
al
v
Smit
et
al:
In
re
Gurr
v
Zambia
Airways
Corporation Limited.
[2]
15.
Levenberg, AJ, in
Klass, supra,
summarised the principles
applying in terms of which the court is to exercise its discretion as
follows:
"[65]
In summary, based upon the above cases, it is my opinion that the
following principles
apply
to
the
exercise
of
the court's
discretion
to set aside a
winding-up proceeding
under
s
354
of
the
Companies
Act:
[65.1]
The
court's discretion is
practically
unlimited,
although
it
must
take
into
account
surrounding
circumstances
and
the
wishes
of
parties
in
interest,
such
as
the
liquidator,
creditors
and
members.
[65.2]
The
court
should ordinarily
not
set
aside
a
winding-up
where creditors
or
the
liquidators remain unpaid or
inadequate provision
has been made for the
payment
of
their
claims.
[65.3]
Where
the claims of the liquidator and all
creditors
have
been satisfied, the
court
should
have regard
to
the
wishes
of
the
members, unless
those members
have
bound
themselves
not to
object
to
the
setting-aside
order,
or
the
member
concerned
will
receive
no
less
as
a result
of the order
sought
than
would
be
the
case if
the
company
remained
in
liquidation.
[65.4]
In deciding
whether
or
not
to grant
a setting
aside
order, the court should,
where
appropriate,
have
regard to
issues
of 'commercial
morality',
'the
public
interest' and whether the
continuation of
the winding-up
proceedings
would
be a
'contrivance' or
render the
winding-up
'the instrument of
injustice'.
16.
Mr Swart submitted that paragraph [65.3] of the judgment of
Klass,
supra,
is to be read in the context of paragraph [65.2]. Thus, Mr
Swart submitted that the phrase "or adequate provision has been
made for the payment of their claims" is to be read into
paragraph [65.3] of the said judgment.
17.
The principle enunciated in paragraph [65.2], quoted above, obliges
the court not to set aside a final winding-up order where
the
creditors or the liquidators remain unpaid or inadequate provision
for payment of their claims has been made.
18.
Paragraph [65.3] quoted above, sets the principle contrary to that of
paragraph [65.2]. The principle of quoted paragraph [65.3]
relates to
where the claims of the liquidator and all the creditors have been
satisfied, i.e. have been paid, and in that regard,
the court should
have regard to the wishes of the members.
19.
In the respective contexts of quoted paragraphs [65.2] and [65.3],
different and distinct principles are enunciated. The
one
provides for where the claims of all creditors and liquidators have
been paid, whereas the other provides for where the claims
of all the
creditors and liquidators have not been paid, but adequate provision
has been made.
20.
To adhere to Mr Swart's submission, would require imputing a
requirement applicable in one principle to be tacitly included
in a
different and distinct principle. If that submission is correct,
Levenberg, AJ, would have so stipulated. It follows that
Mr Swart's
submission cannot be upheld.
21.
In
Ward,
supra,
the Supreme Court of
Appeal confirmed that the provisions of section 354 of the repealed
Companies Act is wide enough to afford
the Court a discretion to
either set a final winding-up order on the basis that it should not
have been granted in the first place,
or on the basis that it falls
to be set aside by reason of subsequent events.
22
In casu,
no case has been made for setting aside the final
winding-up order of the third respondent on the basis that it should
never have
been granted. The dispute between the parties relate to
the second situation.
23.
The critical question is whether the offer received from PGL
qualifies as a subsequent circumstance that would provide adequate
provision in respect of all the creditors' and the liquidators'
claims against the third respondent.
24.
In this regard the applicant submitted that:
(a)
a written agreement has been signed by PGL and the applicant;
(b)
a guarantee has been furnished by ABSA
Bank,
the only condition being transfer of the property
to the purchaser;
(c)
payment of an amount of R1 000 000.00 had been made into the
applicant's attorney
of record that is available to pay the creditors
of the third respondent as well as the liquidation costs.
25.
It was submitted on behalf of the applicant that an amount of R14 700
000.00 is available in respect of the claims of the creditors
and the
liquidators of the third respondent. It was further submitted that in
terms of
Klass, supra,
adequate provision has accordingly been
made for payment of creditors' claims and liquidation costs.
26.
In respect of the guarantee provided by ABSA that relates to the
offer by PGL, it is clear that it is not an irrevocable guarantee
and
ABSA can withdraw there from at any time and for any reason. It is
further conditional upon the cancellation of existing registered
mortgage bonds in respect of the various properties and the
registration of mortgage bonds on those properties in favour of ABSA.
27.
A draft order was provided on behalf of the applicant, should I
exercise my discretion in respect of the provisions of section
354(1)
in favour of the applicant. The said draft order provides that the
order setting aside the final winding-up order of the
third
respondent shall lapse in the event that the transaction relating to
the offer by PGL is cancelled or certain stipulated
creditors are not
paid within four months of the granting of the order setting aside
the final winding-up order.
28.
Mr Swart was at a loss to explain how an order setting aside the
final winding-up of the third respondent can lapse in the event
that
the purchase of the relevant properties by PGL is cancelled or the
stipulated creditors are not paid. The order setting aside
the final
winding-up of the third respondent is unconditional. Once granted, it
cannot be undone, unless set aside by a court of
appeal.
29.
It was conceded on behalf of the applicant that the applicant had
given the creditors and the liquidators the run around in
the past.
The latest event being an attempt by the applicant to obtain an order
to postpone an auction during May 2016 in respect
of the third
respondent's immovable properties.
30.
When regard is had to the terms of the proffered guarantee by ABSA,
and the terms of the proposed draft order, the adequacy
of the
provision for the creditors' and liquidators' claims against the
third respondent becomes questionable. The dispute between
the
parties relating to the amounts in respect of creditors' claims and
the costs of liquidation is a further factor to be considered
when
exercising a discretion to set aside the final winding-up order of
the third respondent.
31.
Mr Terblanche, who appeared together with Mr Wessels on behalf of the
opposing respondents, submitted that the application for
business
rescue was solely brought to frustrate the liquidation of the third
respondent. He submitted further that there was no
merit in the
application for business rescue proceedings and that there has been
no compliance with the requirements of section
131(2)(a) of the
current Companies Act. In that regard, it was submitted that not all
the third respondent's known creditors were
notified of the
application for business rescue proceedings to commence.
32.
In
particular
it
was
submitted
that
the
Landbank
is a
creditor
of
the
third
respondent
that
has
not
been
notified
of
the
application
for
the
commencement of business rescue proceedings.
Mr
Terblanche
submitted
that
this
is
fatal
to
the
application
for
commencement
of
business
rescue proceedings.
[3]
33.
It was further submitted that the applicant had undertaken to make
payment of an amount of R6 000 000.00 into the trust account
of the
applicant's attorney, but failed to do so and now only mentions the
payment of an amount of R1 000 000.00 into the applicant's
trust
account. The failure to make the payment of R6 000 000.00 is not
explained by the applicant. Mr Terblanche submitted that
this is but
one of many instances where the applicant has reneged on undertakings
given by him in the past and with reference to
the winding-up
proceedings.
34.
A further factor that is to be considered when exercising a
discretion in respect of the application for either the commencement
of business rescue proceedings or the setting aside of the final
winding-up order of the third respondent is the uncontested fact
that
the third respondent had not conducted any business for the past
three years nor has it planted any crops for the past two
years.
Furthermore, it is not in possession of any farming equipment or
funding to continue the third respondent's farming activities.
35.
It was further pointed out by Mr Terblanche that apart from the known
creditors, the third respondent is indebted to the local
municipality
in respect of the third respondent's property taxes in an amount of
R176 000.00. The applicant does not deny that
statement. The local
municipality was not joined in the present application as an affected
party.
36.
Mr Terblanche further submitted that the true reason for the
application was an attempt to preserve the various property of
the
third respondent for the children of the applicant. That this
submission is correct appears from the option granted to a third
party by PGL in a separate agreement accessory to the aforesaid
purchase offer by PGL. The applicant being the driving force behind
that third party.
37.
Subsequent to the auction of the properties of third respondent
during May 2016, the applicant through his attorneys consented
to the
properties being sold. However, subsequent to that, this application
was launched. After the filing of the answering affidavit
in this
application, the applicant entered into the said agreement with PGL
for an amount far less than the amount raised by the
auction. The
applicant does not explain this discrepancy.
38.
These subsequent circumstances (offer by PGL) relied upon by the
applicant arose after the launch of these proceedings and after
the
opposing affidavits were received. This is a further factor to be
considered when the discretion is to be exercised in terms
of section
354(1) of the repealed Companies Act.
39.
Mr Terblanche further submitted that the applicant has not proven
that he is a member of the third respondent, the challenge
being made
in the answering affidavit, and for that reason, it was submitted
that the applicant has no
locus
standi
to bring
this application. There was no response to this submission on behalf
of the applicant.
40.
In my view there has been no compliance with the requirements in
terms of section 131 of the current Companies Act. In the absence
of
any business being conducted for the past three years and the non
possession of farming equipment by the third respondent
together with
the absence of the necessary funds to conduct any farming activities,
the applicant has not proven that the commencement
of business rescue
proceedings would be to the advantage of the third respondent or its
creditors.
41.
Form the foregoing, and with reference to the application for the
setting aside of the final winding-up order of the third respondent,
the applicant has equally failed to prove subsequent circumstances
that would warrant the setting aside of the final winding-up
order.
42.
It follows that the principles enunciated in
Klass,
supra,
which are relied upon by the applicant find no application in the
present matter.
43.
It then follows that the applicant is not entitled to an order that
the third respondent be placed in business rescue under
the
supervision of a business rescue practitioner, or that the final
winding-up order of the third respondent be set aside.
_____________________
C
J VAN DER WESTHUIZEN
ACTING
JUDGE OF THE HIGH COURT
GAUTENG
DIVISION
On
behalf of Applicants:
B H Swart
SC
A P J Els
Instructed
by:
Couzyn Hertzog & Horak
On
behalf of Respondents:
F H Terblanche SC
A J Wessels
Instructed
by: Strydom & Bredenkamp
[1]
2010(5)
SA
40
(WLD)
paragraph
[46]
-
[65]
[2]
1998(3) SA 175 (SCA) at 180H
[3]
Golden Dividend v ABSA Bank (56912015) [2016] ZSCA 78 (30 May 2016)