Artio Investments (Pty) Limited v Absa Bank Limited

• Jurisdiction: South Africa
• Judge: Pretorius J
• Judgment Date: 08 September 2014
• Docket Number: 7562/2014
• Court: Gauteng Division, Pretoria
• Hearing Date: 14 August 2014
• Citation: 2014 JDR 1844 (GP)

Pretorius J.

[1]

The applicant is a company, who built and developed the Brits Platinum Mall, and entered into a mortgage loan agreement for R107

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million with the first respondent (ABSA). The plaintiff defaulted on the repayments of the mortgage loan. The plaintiff commenced and started business rescue proceedings during November 2012.

[2]

The applicant launched an application in terms of section 153(1)(a)(ii) of the Companies Act, 71 of 2008 (the "Act") in terms of which the applicant applied for the vote of the first respondent, disapproving the final business rescue plan published, to be set aside and for the approval of the business rescue plan dated 10 December 2013, to be granted by the court.

[3]

This resulted in ABSA, the first respondent, to launch an urgent counter application during April 2014 requesting the following relief:

"1.

That the resolution to commence business rescue proceedings had lapsed and as result thereof the appointment of the business rescue practitioner had lapsed and is void;

2.

A declaration that the business rescue proceedings had come to an end in terms of Section 132(2)(c)(i) of the Act;

3.

That the resolution taken by the Board of Directors of Artio to be set aside in terms of Section 130(1)(a) and 130(5)(a) of the Act and declaring that the business rescue proceedings in respect of Artio came to an end: and

4.

An order for the winding-up of Artio."

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[4]

The urgent application was removed from the roll and costs were reserved. This court will have to deal with the costs of the urgent application as well. At the hearing of the application the applicant withdrew its application launched on 30 January 2014. Furthermore the applicant indicated that the applicant opposed the liquidation application only on the basis that the liquidation application should be refused in the exercise of the court's discretion.

[5]

The applicant developed a shopping centre in Brits, the Brits Platinum Mall, which opened in June 2008. The applicant trades as the retail landlord of the Mall. A loan agreement was entered into by the applicant and ABSA, whereby ABSA granted a mortgage loan in favour of Artio, the applicant, with a total facility amount of R107 million. Payment of this loan was secured by means of a mortgage bond registered over the property in favour of ABSA. The shareholders of the applicant signed surety ships in favour of ABSA to secure payment of the monies loaned and advanced.

[6]

The new Brits Mall opened in 2010 as competition, which resulted in the applicant losing the core tenant, Checkers, to the new mall. Checkers moved and closed its' doors in the centre on 13 May 2012. This caused the applicant to lose a substantial part of the rental income which caused the applicant's current financial problems. A new tenant replaced Checkers in December 2012. The tone of the Mall had

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changed, whereas it had initially catered for the upper income market, it was now forced to change by targeting the lower and middle income market.

[7]

On 26 November 2012 the applicant started business rescue proceedings. The first respondent is the applicant's largest creditor. The applicant's shopping centre was valued at R71 million on the open market with a forced sale value of R45 million. On 23 January 2014 a meeting of the creditors and employees was convened to vote on the final rescue plan. ABSA voted against the plan and it was rejected. ABSA had 98% of the votes and due to ABSA's vote against the business rescue plan it could not proceed.

[8]

Thereafter the present application by the applicant followed on 30 January 2014, which resulted in the urgent application brought by the respondent for the winding-up of the applicant in April 2014. The urgent application was removed from the roll and costs were reserved.

[9]

On the first day of this hearing of the application the applicant withdrew its application, whilst the first respondent persisted in the counterclaim to have the company placed in final liquidation.

[10]

On 4 August 2014 the applicant made an offer to ABSA, which was rejected. A revised offer was made to ABSA on 11 August 2014.

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The applicant set out four possible scenarios but in the end made an offer in terms of the fourth scenario on the day the application was set down to be heard by this court. This offer was immediately rejected by ABSA.

[11]

The calculation by the applicant for the offer is based on the following statement in the affidavit on behalf of the first respondent, ABSA:

". . . the first respondent would rather receive 20 cents in the rand, being the liquidation dividends suggested by the practitioner, than to allow the application to limp along in business rescue"

[12]

Mr Blou, for the first respondent, argued that the first respondent did not rely on this statement when deciding not to accept the applicant's offer. According to the first respondent this averment in the affidavit was not a stated fact, but a manner in which to indicate that it would not accede to business rescue proceedings at all under the circumstances. The mention of 20 cents in the rand was purely an example to show how vehemently opposed the first respondent was against business rescue at the time.

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[13]

This offer of R24 million was made by the son-in-law of one of the shareholders in the applicant, who is not a party to the original application or the winding-up application.

[14]

The applicant relied on the scenario which is set out as:

"The fourth scenario is also based on the forced sale value of the subject matter to be R45 000 000.00 but in this instance, assuming it...