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[2013] ZAGPPHC 385
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Astrail Aviation One Ltd v South African Civil Aviation Authority and Others (56638/13) [2013] ZAGPPHC 385 (18 November 2013)
IN THE HIGH COURT OF SOUTH AFRICA
(GAUTENG DIVISION, PRETORIA)
CASE
NO: 56638/13
DATE:
18 NOVEMBER 2013
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
ASTRAIL AVIATION ONE
LTD
.........................................................................
APPLICANT
and
THE SOUTH AFRICAN CIVIL
AVIATION AUTHORITY
.................
1ST
RESPONDENT
THE DIRECTOR OF CIVIL
AVIATION
..............................................
2ND
RESPONDENT
MPONYANA LAZARUS LEDWABA
N.O
............................................
3RD
RESPONDENT
KGASHANE CHRISTOPHER
MONYELA N.O
.................................
4TH
RESPONDENT
CHAVONNES BADENHORST ST
CLAIRE COOPER N.O
..............
5TH
RESPONDENT
AVIWE NTANDAZO NYAMARA
N.O
.................................................
6TH
RESPONDENT
JOHANNES ZACHARIAS HUMAN
MULLER N.O
..........................
7TH
RESPONDENT
JUDGMENT
KHUMALO J
[1] The Applicant, an Irish based
aviation company with limited liability and its registered business
address in Dublin 2, Ireland
is seeking an order in the following
terms:
[1.1] Declaring
that the existing aircraft mortgage registered with the 1st
Respondent on the South African Aircraft Mortgage Register
under
SACAA Aircraft Mortgage Number 0011/2012/AM ("the mortgage")
over the aircraft with serial number 49829, being
a McDonnel-Douglas
DC-9-87 aircraft with South African registration letters ZS-TRJ ("the
aircraft) is discharged alternatively
of no force or effect, and null
and void.
Alternatively,
[1.2] that the 1st
Respondent and/or the 2nd Respondent be directed to discharge the
mortgage over the aircraft;
[1.3] that the 1st
and or 2nd Respondent be directed to make an entry in the South
African Aircraft Mortgage Register to the effect
that the mortgage
has been discharged, and to cancel the deed of mortgage under
mortgage number 0011/2012/AM.
[2] Applicant is also seeking in terms
of a notice of amendment served subsequent to the Application an
order as follows:
[2.1] declaring
that the 1st Respondent and/or 2nd Respondent are entitled to effect
the registration of the aircraft into the name
of the Applicant.
[2.2] the 3rd to
7th Respondents in their capacities as the appointed provisional
liquidators of 1 Time Airline (Pty) Ltd (in provisional
liquidation)
are directed to take all such steps as may be necessary to enable the
1st Respondent and/or the 2nd Respondent to
effect the registration
of the aircraft into the name of the Applicant." (" The
additional relief")
[3] The aircraft is registered in the
aircraft mortgage register in the name of 1 Time Airline (Pty) Ltd
("I will also refer
to it as "1Time"), a South African
low cost airliner. 1 Time bought the aircraft from Safomar on
February 2009. The 3rd
to 7th Respondents are cited in their
representative capacities as liquidators of 1 Time.
[4] First Respondent is the South
African Civil Aviation Authority, established in terms of s 71 of the
Civil Aviation Act 13 of
2009 (' Aviation Act") and is the
registering authority responsible for, inter alia, the registration
of deeds of aircraft
mortgage and lease agreements. 2nd Respondent is
the director in the employ of the 1st Respondent.
[5] Even though there was no formal
opposition to the Application, 1st and 2nd Respondent filed answering
Affidavits and had Counsel
in attendance who confirmed that the
purpose of his presence and 1st and 2nd Respondent's filing of papers
was to assist the court
in making a determination on the orders
sought by the Applicant by bringing to the attention of the court the
processes involved.
FACTUAL BACKGROUND
[6] In terms of a resolution filed by
Applicant, its board of directors resolved on 19 October 2011, in
Dublin to give one Maria
Macnamara, a director, a power of attorney
authorizing her to appoint one Alan Kane to represent, act and sign
on behalf of the
Applicant, documents for registration of the
mortgage deed as a continuing covering security for the repayment by
1 Time of its
indebtedness to the Applicant arising from the
mortgage. The resolution further resolved, inter alia, that:
[6.1] Applicant
enter into a purchase agreement with 1 Time to purchase the aircraft.
[6.2] Applicant
enter into a Lease Agreement, in respect of the aircraft.
[6.3] 1 Time (as
Mortgagor) being indebted to Applicant in terms of a Lease Agreement
in paragraph 6.2. in an amount of US$936,000,00
(nine Hundrend and
Thirty six Thousand United States Dollars) requires a first deed of
mortgage to be registered over the said
aircraft in favour of
Applicant as mortgagee as a continuing covering security for the
repayment by 1 Time of its indebtedness
to the Applicant.
[6.4] 1 Time as
(Mortgagor ) agrees and consents to Applicant registering an Aircraft
Mortgage in terms of the Convection on the
International Recognition
of Rights of Aircraft Act 1993 (Act no 59 of 1993) and Mortgaging of
Aircraft Regulations 1997, over
the aircraft.
[7] On the day of the signing of the
resolution, a Deed of Mortgage ("mortgage") was concluded
by 1 Time as the mortgagor
and sole beneficial owner of the aircraft
ZS-TRJ, a DC -9-87 executing the deed in favour of the Applicant as
mortgagee that had
advanced to 1 Time a loan facility in the sum of
US $1,500,000.00 (One Million Five Hundrend Thousand Dollars) on the
terms and
conditions contained in an Aircraft Purchase Agreement
entered into between the parties on 19 October 2011, the proceeds of
which
have been applied by 1 Time towards the acquisition of the
Aircraft, which it has agreed to provide the mortgagee with security
for the loan facility.
[8] The mortgage deed also recorded
that the parties on that date, the 19th October 2011 entered into an
Aircraft Lease Agreement
for a period of 36 months commencing on the
date of the contract, in terms of which 1 Time as lessee has an
option to purchase
the aircraft from the Applicant as lessor against
payment of an amount of US$936, 000.00
[9] 1 Time, its successors and assigns
warranted to the Applicant its successors and assigns and declared
that it has the power
to mortgage in the manner aforesaid the
abovementioned aircraft and that the said aircraft is free from any
encumbrances of purchase
referred to and 1 Time is the seller and
Applicant the buyer.
[10] An Application signed by M J
Kominski, a director of 1 Time and commissioned by Applicant's
attorney of record S T Farrel,
was on the same day submitted to the
1st Respondent by delivery to the 2nd Respondent for registration of
the deed of mortgage
in accordance with the Convection on the
International Recognition of Rights in Aircraft Act 59 of 1993 in
respect of which 1 Time
as the mortgagor in consideration for
US$936,000.00, the capital sum advanced to it as mortgagor by the
Applicant as mortgagee
contracts with the Applicant for the capital
sum together with interest thereon as in the deed of mortgage. On 3
February 2012,
1st Respondent issued a Certificate of Recording in
the South African Register of Aircraft Mortgages.
[11] An Aircraft purchase agreement in
terms of the resolution was also on that day, the 19th October 2011,
concluded between the
parties, signed by R L James and P Duffy on
behalf of 1 Time and A Kane on behalf of the Applicant, in terms of
which 1 Time as
the beneficial owner and seller sold and transferred
the beneficial title to the aircraft at the delivery date and time
for a purchase
price of US$1,500,000.00 an amount of which was to be
paid by the Applicant in full in cash against Delivery, that was to
occur
on a business day into the seller's standard bank account in
Boksburg.
[12] 1 Time was to effect transfer of
title to the aircraft to Applicant on the delivery date by executing
the bill of sale to Applicant
against payment of the purchase price
in accordance with the aforementioned paragraph after which title in
and to the aircraft
was to be delivered free and clear of all
encumbrances whatsoever. The parties acknowledged that 1 Time was in
possession of the
aircraft and no physical delivery of the aircraft
was to be effected and that the deed of purchase did not constitute
an instrument
for the transfer of title.
[13] The Bill of Sale formed part of
the purchase agreement and in terms thereof 1 Time as the beneficial
owner of the aircraft
who has entered into a sale agreement with the
Applicant pursuant to which the aircraft was to be sold and delivered
to the Applicant
by 1 Time sold, transferred and delivered all
rights, title and interest to and in the aircraft to the Applicant.
[14] The agreement was not to be
modified, varied or amended except by a written agreement on the
signature date or subsequent thereto
signed on behalf of the
Applicant and 1 Time by their duly authorised respective officers or
representatives.
[15] A document with a heading
Deregistration Power of Attorney was also signed on 19 October 2011
in terms of which 1 Time agreed
that it entered into a Lease
Agreement in terms of which Applicant agreed to lease the aircraft to
it, however recording that 1
Time is the registered owner of the
aircraft in the aircraft register of the 1st Respondent and Applicant
is conferred with an
irrevocable and unconditional power of attorney:
[15.1] to release,
terminate and void any and all of the interests of 1 Time in and to
the Aircraft.
[15.2] consent to
the transfer of registration of the aircraft and all engines,
accessories or items installed thereon at the time
of such transfer.
[15.3] represent 1
Time in all matters and affairs whatsoever in connection with the
registration, de-registration or re-registration
of the aircraft
and/or any interest of 1 Time in the aircraft under the lease
agreement.
[15.4] sign,
execute, do and perform on 1 Time's behalf and in its name or
otherwise deliver and cause the signature, execution,
delivery and or
notarization of any documents or certificates with such amendments
thereto (if any) which the attorney determines
may be required to
apply for and to obtain deregistration of the aircraft from the
register of aircraft maintained by the 1st Respondent
and further to
obtain any permits or approvals which may be required for the export
of the aircraft from South Africa or any state
or country in which
the aircraft is registered at the relevant time.
[15.5] generally
do any and all such acts and things and to execute and deliver any
and all documents, deeds instruments and communications
as may be
requested or required to give effect to any of the terms of this
Power of Attorney, provided that the attorney shall
not exercise any
of the above rights
until an Event of
Default (as defined in the Lease Agreement) has occurred and is
continuing.
[16] On 16 August 2012, Applicant sent
a letter to 1 Time alleging that events of default have occurred and
continuing to occur
under the Lease Agreement, specifically rental
for the period December 2011 to 1 August 2012, Administration Fee
from October 1,
2011 to August 1, 2012 and Maintenance Reserves from
November 1, 2011 to August 1 2012 and also under the Deed of Mortgage
Number
0011/2012, demanding that payment of the amounts be paid by 17
August 2012.
[17] On 31 August 2012, Applicant's
attorneys sent a letter of cancellation of the Lease Agreement
effective from the date of the
letter.
[18] On 7 November 2012, 1 Time was
placed under provisional liquidation by an order of this Honourable
Court. The 3rd to 7th Respondent
together with a company called
Tshwane Trust Co (Pty) Ltd ("Tshwane") were jointly
appointed as Liquidators of the insolvent
company.
[19] On 8 November 2012, Applicant's
attorney sent a letter to Tshwane alleging that the letter of
cancellation of the Lease Agreement
dated 31 August 2012 entitled
Applicant to retake possession of the aircraft (together with others)
with immediate effect from
wherever it was parked requesting Tshwane
for an unconditional confirmation failing which Applicant was going
to reclaim possession
of the aircraft by means of a vindicatory
action.
[20] On 9 November 2012 one IJ
Boschoff, a Tshwane director, sent a letter confirming that the
liquidators do not object to the
removal of the leased assets to
Upington Airport. He on 28 November 2012, sent a more comprehensive
letter confirming that the
Lease Agreement has been terminated and
that the liquidators have no objection to Applicant taking possession
and disposing of
the said aircraft and the associated engines as it
deem fit.
[21] On 14 November 2012, Applicant
took possession of the aircraft.
[22] On 3 July 2013 Applicant's
attorney sent a letter to the provisional liquidators c/o Tshwane
Trust Company mentioning the Deed
of Mortgage, the loan facility
therein and its utilization for the acquisition of the Aircraft, the
lease agreement with an option
to purchase the aircraft from the
mortgagee against payment of US$ 936,000.00, to highlight the
Applicants rights with respect
to the ownership of the aircraft and
alleging to have been instructed to discharge the existing Deed of
Mortgage.
[23] F J Cohen, an attorney, on 6
August 2013 sent a response on behalf of the provisional liquidators
requesting information with
regard to the date of signature,
delivery, proof of payment of the purchase price, requesting also
copies of the purchase agreement,
bill of sale, a copy of the
signature page of the lease agreement, the acceptance certificate and
proof of payments made by 1 Time
in terms of the lease, legible Deed
of Mortgage, information on the advance made, the loan facility, when
made and to which account
paid and how the amount of US$936, 000.00
payable by 2014 becomes part of the lease agreement.
[24] Applicant's attorney then sent a
letter to 1st Respondent dated 20 August 2013, alleging that 1 Time
owes Applicant an amount
exceeding US$1,500,000.00 in arrear rental
arising from leases of several of Applicant's aircrafts by 1 Time,
further that Applicant
did not advance the sum of US$1,500,000.00 as
reflected in the deed of mortgage, however that the purchase of the
aircraft took
place with Applicant applying set off against the
purchase price and consequently acquiring ownership of the aircraft,
as a result
the Deed of Mortgage had no legal effect. Delivery was
fictional, however from that date Applicant became the lessee of the
aircraft
and such lease was cancelled on 30 August 2012, wherefore
instructing 2nd Respondent to rectify its records, failing which they
were going to bring this Application.
[25] 1st and 2nd Respondent refused to
accede to the demand without the Applicant supplying the information
requested by FJ Cohen
and because of the new allegations by Applicant
that contests the information in the Deed of Mortgage.
APPLICATION
[26] Applicant as a result seeks the
relief as prayed alleging that:
[26.1] it became the owner of the
aircraft on 19 October 2011, pursuant to the delivery of the Bill of
Sale when the title and the
passing of the beneficial ownership, in
and to the aircraft was effected from 1 Time to Applicant.
[26.2] Despite passing of ownership, in
terms of the agreement of lease that henceforth 1 Time was to lease
the aircraft, the parties
agreed that 1 Time remains in possession of
the aircraft, having been in its possession prior to 19 October 2011
in its capacity
as owner and from henceforth was in its capacity as
lessee and Applicant as the owner.
[26.3] As at 19 October 2011, 1 Time
was indebted to the Applicant in the liquidated amount of
US$1979,642.00 for lease payments
and related charges in respect of
other aircraft that the Applicant had leased to 1 Time, such amount
being due and payable to
Applicant. The purchase price of
US$1,500,000.00 was paid by way of set off against the liquidated
amount.
[26.4] Whereas in the deregistration of
power of attorney, 1 Time is recorded as the registered owner of the
aircraft in the aircraft
register, such registration does not mean 1
Time is in fact the owner of the aircraft. In terms thereof as
security for the performance
of 1 Time's obligations under the lease
agreement, 1 Time conferred an irrevocable and unconditional power of
attorney in favour
of Applicant to release terminate and to void any
and all the interests of 1 Time in and to the aircraft, do all such
acts and
consent to the transfer of registration of aircraft and all
its engines, accessories or items installed thereon at the time of
such transfer.
[26.5] The Deed of Mortgage was
erroneously prepared and contains various factual and legal errors as
a result of extreme time constraints
that various agreement had to be
prepared and signed on the same day. The application and the recital
were not properly checked
and contain a number of factual errors such
as:
[26.5.1] The Applicant did not advance
to 1 Time the sum of US$1,500,000.00 as a loan facility at all. 1
Time was indebted to the
Applicant in respect of arrear lease
payments and related charges as at 19 October 2011.
[26.5.2] The Applicant was in fact the
owner of the aircraft at date of signing of the Application for
registration therefore the
recordal in the recital is incorrect as it
is not possible in law to be the mortgagee in respect of one's
property. The Application
for the registration of the mortgage ought
never to have occurred and was mistakenly submitted to the 1st
Respondent for registration.
[26.7] 1 Time has continually defaulted
in respect of the lease agreement and on 31 August 2012 Applicant
accordingly cancelled
the lease agreement.
[26.8] The liquidators confirmed that
the lease agreement between Applicant and 1 Time has been terminated.
Applicant was therefore
entitled to take possession of the aircraft
and liquidators had no objection.
[26.9] The liquidators have failed
after repeated requests to provide the documentation needed for
purposes of issuing a certificate
of registration in the name of
Applicant.
[26.10] Accordingly Applicant was
informed that in order to amend the certificate of registration of
the aircraft it was necessary
to first discharge the deed of
mortgage. The 1st Respondent refuses to accede to the request and
liquidators are non-committal.
ANSWERING AFFIDAVIT
[31] In their answering affidavit 1st
and 2nd Respondents' highlighted the following, inter alia:
[31.1] that in
terms of the records at their disposal, the owner of the aircraft is
1 Time.
[31.2] they have
not been provided with a copy of a lease agreement concluded in
respect of the aircraft (contrary to par 48.02.1
of the Civil
Aviation Regulations, 2011) which is an integral part of the
mortgage.
[31.3] The
Application for the registration of the deed of mortgage submitted to
the 1st Respondent and registered on 8th February
2012 was signed by
M Kaminski sworn before a Commissioner of Oaths who is the legal
representative of the Applicant, that 1 Time
as the mortgagor, its
successors and assigns warrant to the mortgagee and declare that 1
Time has the power to mortgage in the
manner as described in the deed
of mortgage, the aircraft in question, which is free of encumbrances.
[31.4] the
mortgage is recorded to be securing the grant of a loan facility and
in compliance with the provisions of the aircraft
Lease Agreement.
[31.5] It is
stipulated that 1 Time agrees to pay US$936,000.00 to the Applicant
on 19 October 2014 or such later date as the Applicant
shall agree.
[31.6] The
mortgage is said to be the security which shall be held by the
Applicant as a continuing covering security for the due
performance
of 1 Time's obligations to the Applicant in terms of the aircraft
lease agreement and the mortgage.
[31.7] further
stipulated in the mortgage is that when 1 Time fulfills all its
obligations to the Applicant in terms of the aircraft
lease agreement
and the mortgage, then the mortgage and the rights thereunder shall
cease and determine, but shall remain in full
force and effect until
cancelled by the Applicant.
[31.8] The deed of
mortgage describes "Obligations" to mean the mortgagor's
payment obligations to the mortgagee as required
in terms of the
aircraft lease agreement and as provided for in the mortgage. Whilst
"Security Period" means the period
commencing on the date
upon which the mortgage is registered and terminating on the due
fulfillment of all the mortgagors' obligations
to the mortgagee in
terms of the aircraft lease agreement.
[31.9] Any
notification of discharge of a mortgage shall be submitted to the 1st
Respondent on a prescribed form which requires
confirmation that the
loan capital secured by the mortgage has been settled.
[31.10] Applicant's
legal representative was furnished with the power of attorney to sign
such other documents as may be necessary
to attend to the
registration of the mortgage in terms of Act 59 of 1993 and the
mortgaging of Aircraft Regulations 1997. A resolution
taken by the
directors of the Applicant was filed with 1st Respondent confirming
the indebtedness of 1 Time to Applicant in the
amount of
US$936,000.00 in terms of the lease agreement and 1 Time consenting
to the registering of the aircraft in terms of the
Act 59 of 1993.
[31.11] The estate
of 1 Time since liquidation fell under the control of the 3rd to 7th
Respondent.
[32] The following preliminary issues
have a critical bearing on the substance of the matter, postured a
challenge to the success
of this Application.
[32.1] Tshwane is
a joint provisional liquidator with 3rd to 7th Respondent and
incontrovertibly an interested party in the matter
however has not
been cited as a party in the Application.
[32.2] In terms
of the Applicant's resolution, the legal proceedings were to be
instituted against all the liquidators including
Tshwane.
[32.3] Notwithstanding
being cited in their individual representative capacity, 3rd to 7th
Respondents have been served jointly
at the offices of Tshwane, the
un¬cited provisional liquidator. The service is therefore
improper.
[32.4] The letters
confirming that Applicant can take possession of the aircraft was
issued by Tshwane at the time when 1 Time was
already placed under
provisional liquidation without any consensus from the other
liquidators or creditors and the Master's consent.
[32.5] The
aforementioned conduct is therefore in contravention of the Companies
Act 1973 ('the Act") that in s 382 provides
that:
"When two or
more liquidators have been appointed they shall act jointly in
performing their functions as liquidators and shall
be jointly and
severally liable for every act performed by them jointly.
and also of s 386
(4) of the Act.
[32.6] The lease
Agreement/s from which 1 Time's indebtedness is alleged to have
arisen and upon which the Applicant relies for
the relief it seeks
was not annexed to the Application.
[32.7] No
averments has been made with regard to the fulfillment or non-
fulfillment of the obligations with respect to the consideration
of
the capital sum of US$ 936,000.00 that was owing to Applicant
allegedly by 1 Time and in respect of which the first deed of
mortgage was registered over the aircraft as a continuing covering
security repayable in 2014.
[32.8] Even though
the Power of attorney and the resolution by Applicant signed by Maria
Macnamara on 19 October 2011 accords with
the Deed of Mortgage,
application for registration thereof and the purchase agreement
concluded by Alan Kane on behalf of the Applicant
on the same date
and also with the letter by S T Farrell on behalf of Applicant dated
3 July 2013, no affidavit, confirmatory or
supporting has been filed
by the authors or signatories of all these documents to refute or
explain the contradictory allegations
raised in the Applicants
Founding Affidavit in respect of the contents of these documents.
[32.9] The refusal
by the 1st and 2nd Respondent to accede to the Applicant's requests
is under the circumstances justified. A proper
case has not been made
for the relief sought by the Applicant and I therefore make the
following order:
[32.9.1] Application
is dismissed.
N V KHUMALO J
JUDGE OF THE HIGH COURT