Venter v M K Africa Plant and Equipment Pty (Ltd)

• Jurisdiction: http://justis.com/jurisdiction/166,South Africa
• Judge: TA Maumela J
• Judgment Date: 24 January 2022
• Docket Number: 62712/2021
• Hearing Date: 21 December 2021
• Court: North Gauteng High Court, Pretoria
• Citation: 2022 JDR 0321 (GP)

Maumela J:

1.

This matter came before court in the urgent roll. In it, the Applicant sought an order in the following terms:

1.1

That this application be heard as an urgent application in terms of rule 6 (12) of the rules of this court and that applicant's non-compliance with the applicable time-periods under rules pertaining to service be condoned.

1.2

That the Respondent company, ("MK AFRICA PLANT AND EQUIPMENT PTY (LTD") be placed under supervision and business rescue proceedings in terms of section 131(4) of the Companies Act 2008: (Act No: 71 of 2008) – The Act.

1.3

That Gideon Slabbert is appointed as Interim Business Rescue Practitioner as intended in section 131 (5) of the Act, pending ratification of such appointment by the creditors at their first meeting.

1.4

That any person opposing the granting of the relief be ordered to pay the cost of this application on a scale as between Attorney and Client.

BACKGROUND.

2.

The applicant charges that the company: M K Africa Plant and Equipment Pty (Ltd) is financially distressed. He contends that the company has received no less than 5 (five) summonses in respect of which it is unable to meet payment. Where the Respondent claims that debts were paid, no receipts can be produced.

3.

It is contended that even where payments have been effected, it still does not imply that the company is not financially distressed. The parties are in dispute about whether the Applicant ever resigned in his capacity as a director or not. The applicant also charges that the Respondent is oppressive against him in conduct.

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4.

It was argued that once a director obtains a judgment, other directors get disadvantaged. The applicant submitted that instead of acting in good faith, the Respondent is unwilling to take the court into its confidence and that it is not likely to do so in the future.

5.

Through this urgent application, the Applicant purposes to obtain a relief in terms of Section 163 (2) (c) of The Act. In terms of this section, the Applicant intends to have the 'Respondent Company' – "The Company"; placed under 'business rescue'. He alleges that the 'The Company' is currently financially distressed and the court's intervention can ensure that it be rescued within a period of 12 to 18 months. The applicant contends that the Respondent Company carries out business in a manner oppressive.

6.

The Respondent contends that there is no urgency in the matter. It makes the point that no prejudice stands to be occasioned if the order sought is not granted. He also alleges that the Respondent also resigned in his capacity as Director and he left the office on the 6th of November 2021. It, (the Respondent), contends that what the Applicant alleges is a falsity, and it is unfounded. It denies that he ever refused to engage in the meeting of January 2022.

7.

The Applicant submits that around October 2015, he became involved in the affairs of the Respondent Company where he was appointed in the position of director of the company. His duty was that of managing the day-to-day affairs of the company. He was also to acquire new clients for the company. Up until 2020, when the repercussions of the Covid 19 pandemic which had an adverse global effect, the company was operational and everything was in order. However the effect of the Covid 19 pandemic was that construction operation works in South Africa got halted.

8.

The Respondent Company was involved in the project with M K Africa Infrastructure, ("the Infrastructure") during the latter part of 2020. Infrastructure became the Respondent that was to pay the accounts. As time went by, it became abundantly clear that Infrastructure is no longer capable of honouring the accounts

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through payment. The Applicant submits that in discussions with the Respondent, the latter impressed it on him to find new clients so as to acquire capability to honour payments.

9.

Around October 2020, he approached Mr. Venter to inform him that he received information to the effect that Grinaker-LTA as well as G4 Civils are no longer prepared to do business with him. This directly affected all projects in which Mr. Venter is in dealings with both Grinaker-LTA and G4 Civils. He then suggested that Smart-Site-Support, which was registered in 2013, should be created in order for it to lease out the equipment, engaging both Grinaker-LTA and G4 Civils. The Respondent would generate invoices and relate them to Grinaker-LTA and G4 Civils. According to the Applicant, Mr. Venter became agreeable to this plan.

10.

Through this arrangement, Smart-Site-Support achieved a small profit and this kept the Respondent going. The Respondent would be paid only as and when Smart-Site-Support got paid. Around September 2021, the relationship between him and Mr. Venter became strained when the Respondent no longer made profit and in fact started running at a loss on a month-to-month basis. Realizing these developments, he approached Mr. Venter and suggested that some of the equipment be sold so that some of the creditors be paid.

11.

He said that initially, Mr. Venter was agreeable to this suggestion and indeed, some of the equipment got sold and as such, some of the creditors received payment on a 40-cent-to-the-Rand basis. This exercise was aimed at convincing the creditors that the Respondent remains purposed to settle debts and that if allowed more time, it will be able to pull out of indebtedness. Thereafter, Mr. Venter simply and flatly refused to continue with this process of paying debts. He expressed strong scepticism about the Respondent's ability to settle all debts, using the above method.

12.

Mr. Venter's view was that the Respondent would be able to be lift out of indebtedness by simply using the methods there were in place before the financial constraints and the indebtedness took effect. The Applicant submits that this would never have become

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possible and the fact that the Respondent now stands indebtedness to various creditors to the tune of R 3,200,000.00 bears testimony to such conclusion.

13.

Around the 7th of October 2021, Mr. Venter wrote a letter to the Applicant, accusing him of having created the company Smart- Site-Support without his, (Mr. Venter's) knowledge and against the best interests of the company. The Applicant was further accused of having acted in breach of the Directors' Governance Agreement. He was given 14 days' notice to remedy the breach. A copy of that letter is attached as Exhibit "C". His legal representative responded to Mr. Venter's letter, denying the allegations made against him.

14.

It is then that legal representatives of...