South African Property Owners Association v Minister of Trade and Industry and Others

• Jurisdiction: South Africa

South African Property Owners Association v Minister of Trade and Industry and Others
2018 (2) SA 523 (GP)

2018 (2) SA p523

Citation	2018 (2) SA 523 (GP)
Case No	66068/2016
Court	Gauteng Division, Pretoria
Judge	Van der Westhuizen AJ
Heard	November 29, 2016
Judgment	November 29, 2016
Counsel	AE Bham SC (with A Dipa) for the applicant.

Flynote : Sleutelwoorde

Company — Business rescue — Post-commencement finance — Rental and other amounts payable iro occupation of immovable property by company under business rescue — Not constituting 'financing' or 'costs of business C recue proceedings' — Companies Act 71 of 2008, ss 135(2) and 135(3).

Headnote : Kopnota

Under the heading 'Post-commencement finance', s 135(2) of the Companies Act 71 of 2008 provides that a company under business rescue may 'obtain financing . . . secured to the lender by utilising any asset of the company to the extent that it is not otherwise encumbered . . . in the order of preference D set out in subsection (3)(b)'; and s 135(3) creates a preference for 'other costs arising out of the costs of the business rescue proceedings'. (Sections 135(2) and 135(3) are quoted in [21].)

The applicant sought a declaratory order that rental (and other amounts such as a share of rates, taxes and public utility charges), payable in respect of the occupation of immovable property by a company under business rescue, E constituted either 'financing' as contemplated in s 135(2) or 'costs of the business rescue proceedings' as contemplated in s 135(3) of the Companies Act 71 of 2008.

Held

The 'financing' contemplated s 135(2) of the Act related to the obtaining of F financing in order to assist in managing the company out of its financial distress, hence the provision that any asset of the company may be utilised to secure that financing to the extent that the asset is not otherwise encumbered. It did not lean to an interpretation that encompassed existing obligations (other than obligations to company employees, under s 135(1) of the Act).

Section 135(3) of the Act provided for two categories of costs: those in s 143 of G the Act; and the other, costs incurred due to the business rescue proceedings. The costs contemplated by the applicant were costs incidental to a lease agreement; it did not, by any interpretation, constitute costs arising out of the business rescue proceedings. To hold that such costs constituted post-commencement financing would elevate an obligation incurred prior to commencement of business rescue proceedings to a preference over H other creditors not provided or contemplated by the provisions of s 135 of the Act. It followed that the application would be dismissed (See [22] – [27] and [31].)

Cases cited

African Banking Corporation of Botswana Ltd v Kariba Furniture Manufacturers I (Pty) Ltd and Others 2015 (5) SA 192 (SCA) ([2015] ZASCA 69): dictum in para [42] applied

Bothma-Batho Transport (Edms) Bpk v S Bothma & Seun Transport (Edms) Bpk 2014 (2) SA 494 (SCA) ([2013] ZASCA 176): referred to

Chetty t/a Nationwide Electrical v Hart and Another NNO 2015 (6) SA 424 (SCA): referred to J

2018 (2) SA p524

Cloete A Murray and Another NNO v FirstRand Bank Ltd t/a Wesbank 2015 (3) SA 438 (SCA) ([2015] ZASCA 39): referred to

Cordiant Trading CC v Daimler Chrysler Financial Services (Pty) Ltd 2005 (6) SA 205 (SCA) ([2006] 1 All SA 103): referred to

Dempa Investments CC v Body Corporate, Los Angeles 2010 (2) SA 69 (W): referred to

Natal B Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA) ([2012] 2 All SA 262; [2012] ZASCA 13): referred to

Reinecke v Incorporated General Insurances Ltd 1974 (2) SA 84 (A): referred to

Trinity Asset Management (Pty) Ltd and Others v Investec Bank Ltd and Others 2009 (4) SA 89 (SCA): referred to.

Legislation cited

Statutes

The C Companies Act 71 of 2008, ss 135(2) and 135(3): see Juta's Statutes of South Africa 2016/17 vol 2 at 1-385 to 1-386.

Case Information

AE Bham SC (with A Dipa) for the applicant.

An D application for a declaratory order. The order, dismissing the application, is in [31].

Judgment

Van der Westhuizen AJ:

[1] E This application was enrolled on the unopposed roll. It concerns the interpretation of certain phrases appearing in ss 135(2) and 135(3) of the Companies Act 71 of 2008 (the Act). I indicated that I would require some time to prepare a considered judgment in view of the relief sought.

[2] In that regard the applicant seeks a declaratory order that the rights F of a landlord, in respect of rental and other services rendered to property utilised by a legal entity under business rescue, fall within the ambit of either the phrase 'post-commencement financing' or the phrase 'costs arising out of the costs of the business rescue proceedings'.

[3] G Section 21(1)(c) of the Superior Courts Act 10 of 2013 provides that a court may in its discretion, subject to certain requirements, on application by any interested party determine any existing, future or contingent right or obligation, notwithstanding that such person cannot claim any relief consequential upon the determination. The principles applicable to the exercise of such discretion are succinctly set out in H various judgments. [1] This application falls within the aforesaid principles.

[4] The applicant, the South African Property Owners Association (SAPOA), is the umbrella organisation of homeowners associations that are members thereof. It acts as an association of property owners and I associated persons in the interest of its members in terms of s 157(1)(c)

2018 (2) SA p525

Van der Westhuizen AJ

of the Act. It...