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[2013] ZAGPPHC 323
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Vincemus Investment Pty Ltd v Louhen Carries and Another (16550/2013) [2013] ZAGPPHC 323 (5 November 2013)
REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
(NORTH
GAUTENG, PRETORIA)
CASE
NO: 16550/2013
DATE:05/11/2013
In
the matter between:
VINCEMUS
INVESTMENTS (PTY) LTD
REG
NO.
1969/004762/07
…..................................................................................
APPLICANT
and
LOUHEN
CARRIERS CC (in business rescue)
REG
NO.
CK2009/008644/23
....................................................................
1ST
RESPONDENT
COMPANIES
& INTELLECTUAL PROPERTY
COMMISSION
................................................................................................
2nd
RESPONDENT
JUDGMENT
KUBUSHI,
J
[1]
This is an application in terms of s 130 of the Companies Act 71 of
2008 (the Act) for the setting aside of a resolution adopted
by the
1st respondent’s sole member to proceed with business rescue
proceedings, in accordance with s 129 of the Act. The
applicant seeks
a further order in terms of s 130 (5) (c) (i) of the Act to have the
1st respondent finally wound-up.
[2]
S 129
of the
Companies Act 71 of 2008
provides that: -
(1)
Subject to the provisions of subsection (2) (a), the board of a
company may resolve that the company voluntarily begin business
rescue proceedings and place the company under supervision, if the
board has reasonable grounds to believe that-
(a)
the company is financially distressed; and
(b)
there appears to be a reasonable prospect of rescuing the company.
and
S
130 of the Act reads as follows:-
‘
(1)
Subject to subsection (2), at any time after the adoption of a
resolution in terms of s 129, until the adoption of a business
rescue
plan in terms of s 152, an affected person may apply to a court for
an order -
(i)
there is no reasonable basis for believing that the company is
financially distressed;
(ii)
there is no reasonable prospect for rescuing the company; or
(iii)
the company has failed to satisfy the procedural requirements set out
in s 129.’
[3]
The application was initially launched on an urgent basis for hearing
on 26 March 2013. Having heard the parties the presiding
judge,
Rossouw AJ, made an order on 27 March 2013 which called upon the 1st
respondent and other affected persons to show cause
why the order
should not be granted. In terms of paragraph 2 of the said order the
applicant was ordered to serve the order on
other affected persons.
The applicant has complied with the provisions of that paragraph.
[4]
The application is pursuant to seven written lease agreements
concluded between the applicant and the 1st respondent. In terms
of
the agreements the 1st respondent rented certain goods from the
applicant, to wit: a 2005 model Mercedes Benz Axor 18.5 horse;
2005
model Top Trailer Auxie trailer; 2005 model Scania R124 420 HP truck
tractor; 2005 model Top trailer Tri Axle sloper; 2005
model Scania
R124 420 HP truck tractor; 2003 model Burg trailer; and 2007 model
Mercedes Benz Actros MP2 horse. The 1st respondent
fell in arrears
with payment of the said lease agreements and at the time of the
institution of these proceedings was in arrears
in the amount of R1
456 554, 57.
[5]
The applicant has raised a number of grounds why the resolution
adopted by the 1st respondent in terms of s 129 (1) of the Act
should
be set aside. I will however, first consider the applicant’s
ground based on s 130 (1) (a) (iii) of the Act, in that
the 1st
respondent has failed to satisfy the procedural requirements set out
in s 129 of the Act.
[6]
According to the applicant, the 1st respondent’s non-compliance
with the requirements of s 129 of the Act is based on
the ground that
the 1st respondent failed to publish the s 129 (3,) fa) notice to
every affected person within the time required
in terms of that
subsection. It is the applicant’s case that it did not receive
the notice within the time specified in the
subsection. The 1st
respondent, through the business rescue practitioner, is opposing the
application. It alleges that it has complied
with the requirements of
s 129 (3) (a) in particular it alleges that it notified the applicant
in time. The 2nd respondent is not
opposing the application and will
abide the decision of the court on condition that the applicant does
not insist on an order in
terms of which the 2nd respondent will be
liable for any costs. The applicant seeks no order against the 2nd
respondent.
[7]
It is common cause that the resolution was taken and/or adopted on 23
April 2012. S 129 (2) (b) stipulates that a resolution
‘has no
force and effect unless it has been filed.’ It is also common
cause that the resolution was filed on 13 July
2012. The resolution
thus became of force and effect on 13 July 2012.
[8]
S 129 (3) (a) provides that -
‘
Within
five business days after a company has adopted and filed a
resolution,
as
contemplated in subsection (1), or such longer time as the
Commission, on application by the company, may allow, the company
must publish a notice of the resolution, and its effective date, in
the prescribed manner to every affected person, including with
the
notice a sworn statement of the facts relevant to the grounds on
which the board resolution was founded.’ (my emphasis).
[9]
The Act, in its definition section specifies that “Business
days” has the meaning determined in accordance with
s 5 (3) of
the Act. S 5 (3) of the Act provides for the computation of time and
states that -
‘
When,
in this Act, a particular number of “business days” is
provided for between the happening of one event and another,
the
number of days must be calculated by -
(a)
excluding the day on which the first such event occurs;
(b)
including the day on or by which the second event is to occur; and
(c)
excluding any public holiday, Saturday or Sunday that falls on or
between the days contemplated in paragraphs (a) and (b),
respectively.’
[10]
It means that, in this instance, the calculation of the period would
have started on 16 July 2012 and ended on 20 July 2012.
The ‘first
such event’ fell on 13 July 2012 which is the date on which the
resolution was filed should be excluded.
The 13 July 2012 fell on a
Friday as such Saturday and Friday are excluded from the calculation.
The first day of the calculation
of the five days fell on Monday 16
July 2012. And the ‘last day’ 20 July 2012 which is the
last day of the five days
should be included in the calculation.
[11]
The 1st respondent contends that it notified the applicant of the
business rescue proceedings in time. This it alleges was
done on the
17 July 2012 by means of email attached to its answering affidavit as
annexure “JH01”. Annexed to the said
email is a copy of a
letter which is purported to have been sent together with the email.
In brief, the letter does notify the
applicant that the 1st
respondent has commenced with business rescue proceedings and also
informs the applicant that a business
rescue practitioner will be
appointed and will contact the applicant in due course. The applicant
does not dispute receipt of this
email and annexure.
[12]
The 17 July 2012 fell within the five days within which the affected
persons should have been notified. If the applicant was
notified on
that day it therefore means that it was duly notified and the 1st
respondent complied with the requirements of section
129 (3) (a) of
the Act. However, to my mind, even if the applicant was notified in
time, the 1st respondent did not comply with
the provisions of the
subsection. This is so because the 1st respondent did not publish the
notice of the resolution, and its effective
date, in the manner
prescribed by the subsection.
[13]
The manner in which the notice should be published is enunciated in
the Companies Regulations (Published in terms of Act No.
71 of 2008)
(the regulations).
Regulation
123: Notices to be issued by a company concerning its business rescue
proceedings. - See section 129 (3), (4) (b) and
(7) and section 131
(8), states that-
(1)
A Notice of Commencement of Business Rescue Proceedings, contemplated
in s 129, must be in the form CoR 123.1, and filed in
accordance with
s 129, together with a copy of the board resolution to commence
business rescue proceedings.
(2)
After filing its Notice of Commencement of Business Rescue
Proceedings, the company must publish that Notice as required in
s
129 (3) (a), by -
(a)
delivering a copy of the Notice and resolution to every affected
person in accordance with regulation 7.
[14]
In my opinion, by notifying the applicant as stated in paragraph [11]
of this judgment, the 1st respondent did not comply with
the
provisions of s 129 (3) (a). The subsection is lucid. The notice must
be as prescribed. The prescription of the notice is set
out in the
regulations. In order for the notice to have complied, the following
should have happened: firstly, the notice contemplated
in s 129 must
be in form CoR 123.1; secondly, a copy of the board resolution to
commence business rescue proceedings must be attached
to the notice;
thirdly, the notice must first be filed and after filing, the company
must publish that notice to every affected
person; lastly, s 129 (3)
fa) requires the notice to include a sworn statement of the facts
relevant to the grounds on which the
board resolution was founded.
The 1st respondent did not comply with all these requisites. It
merely sent a letter which is not
a proper notice as required in the
regulations. The notice should be on form CoR 123.1. In that sense
the letter or purported notice
does not comply with the provisions of
s 129 read with regulation 123. The purported notice was not filed
before it was published
to the affected persons. Although a copy of
the board resolution to commence business rescue proceedings was
attached but a sworn
statement of the facts relevant to the grounds
on which the board resolution was founded was not included. A proper
notice, as
required by the subsection read with regulation 123, was
eventually sent to the applicant by the business rescue practitioner.
However, this notice was emailed
(published)
to the applicant out of time. That notice as per annexure “C”
to the founding affidavit is dated 23 July
2012 and according to the
fax date appearing at the top of the notice it was faxed to the
applicant on 24 July 2012. As I have
already determined the last date
to notify the affected persons was the 20 July 2012, it means
therefore that at the time the notice
was drafted and faxed it was
already late.
[15]
S 129 (5) provides that- If a company fails to comply with any
provision of subsection (3) or (4) -
(a)
its resolution to begin business rescue proceedings and place the
company under supervision lapses and is a nullity; and
(b)
the company may not file a further resolution contemplated in
subsection (1) for a period of three months after the date on
which
the lapsed resolution was adopted, unless a court, on good cause
shown on an ex parte application, approves the company filing
a
further resolution.
[16]
The purpose of s 129 (5), is very plain and blunt. There can be no
argument that substantial compliance can ever be sufficient
in the
given context. If there is non-compliance with s 129 (3) or (4) the
relevant resolution lapses and is a nullity. There is
no other way
out. The requirements contained in the relevant subsections are
either complied with or not. See Advanced Technologies
and
Engineering Company (Ptv) Ltd (In Business Rescue) v Aeronautiaue Et
Technologies and Others judgment of the NGHC given on
6
June 2012 quoted with approval in Madodza (Ptv) Ltd (in business
rescue) v ABSA Bank Limited & Others, judgment of the NGHC
given
on 15 August 2012.
[17]
It is clear that in this instance, the relevant provisions s 129 (3)
(a) were not complied with. The 1st respondent did not
give proper
notice, as required by s 129 read with regulation 123, to the
applicant. It is also evident that in sending the proper
notice on 24
July 2012 the practitioner was trying to rectify the situation.
However, it was already late. The resolution has therefore
lapsed and
it is a nullity.
[18]
Section 130 (1) provides that an affected person may apply to court
at any time after the adoption of a resolution in terms
of s 129,
until the adoption of a business rescue plan in terms of s 152. There
is a dispute between the parties as to whether
the business rescue
plan has been adopted or not and whether it complies with the
requirements of the Act or not. I do not intend
to go into that
debate. I must however say that even if it can be found that the plan
had been properly adopted it would not assist
the 1st respondent in
this instance. I have already found that the resolution is a nullity.
An act which is a nullity is of no
force or effect and cannot be
revived by the subsection.
[19]
The applicant also seeks an order in terms of s 130 (5) (c) (i) of
the Act placing the 1st respondent under liquidation.
[20]
The provisions of s 130 (5) fcj(i) are that: -
“
When
considering an application in terms of subsection (1) (a) to set
aside the company’s resolution, the court may if it
makes an
order under paragraph (a) or (b) setting aside the company’s
resolution may make any further necessary and appropriate
order,
including an order to place the company under liquidation.”
[21]
The applicant prayer to place the 1st respondent under liquidation is
in terms of the provisions of section 344 (f) and 346
of the
Companies Act 61 of 1973 (the Act) which has been retained in terms
of items 7 and 8 of schedule 3 to the new
Companies Act 71 of 2008
and
sections 66
and
69
(1) of the
Close Corporations Act 69 of 1984
[22]
In case of applications for a provisional winding-up, the court is
not bound to follow practices evolved in sequestration proceedings.
The court has an inherent power to order its own procedures and it
does so having regard to the fair and expeditious administration
of
justice. See Kalil v Docotex (Ptv) Ltd and Another
1988 (1) SA 943
(A) at 978H.
[7]
In this instance, the application for setting aside the resolution
adopted to proceed with business rescue proceedings is opposed
by the
practitioner. His answering affidavit does not touch on the request
for the liquidation order. My approach in this instance
would be to
afford the 1st respondent an opportunity to respond to the
applicant’s request for an order placing it under
liquidation.
In the interest of justice it is only fair that the 1st respondent be
provided an opportunity to answer to the applicant’s
prayer for
an order for liquidation. The applicant has made out a prima facie
case in the founding affidavit which entitles it
to a provisional
order of winding up. A provisional order must therefore be granted in
its favour and a rule nisi be issued calling
upon the 1st respondent
to show cause why it should not be made a final order of court.
[8]
In the circumstances I make the following order:
a.
The resolution adopted by the 1st respondent in terms of
Section 129
(1) of the
Companies Act, 71 of 2008
is hereby set aside.
b.
The 1st respondent is in terms of
section 130
(5) (c) (i) of the
Companies Act, 71 of 2008
, placed under provisional liquidation.
c.
The 1st respondent is ordered to show cause to this court within
fifteen
(15)
days of the service of this order upon it why this order should not
be made a final order of the court.
d.
This order must be served on the 1st respondent by the sheriff of
this court.
e.
Costs of this application are costs in the liquidation.
E.
M. KUBUSHI
JUDGE
OF THE HIGH COURT
Appearances:
HEARD
ON THE : 01 AUGUST 2013 DATE OF JUDGMENT
APPLICANT’S
COUNSEL : ADV F W BOTES
APPLICANT’S
ATTORNEY : DE JAGER LORDAN INC
C/O
HARTZENBERG INCORPORATED
1st
RESPONDENT’S ATTORNEY :MR M. COETZEE
1st
RESPONDENTS’ ATTORNEYS :POTGIETER, PENZHORN & TAUTE INC