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

• Jurisdiction: http://justis.com/jurisdiction/166,South Africa
• Judge: TA Maumela J
• Judgment Date: 29 June 2022
• Court: Gauteng High Court, Pretoria
• Hearing Date: 29 June 2022
• Docket Number: 62712/2021

Maumela J:

1.

This is an application for leave to appeal which is opposed. The judgment against which this application for leave to appeal is brought provided for the following order:

1.1

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

1.4

That the Respondent be ordered to pay the cost of this application on a scale as between Attorney and Client.

BACKGROUND.

2.

On the 9th of December 2021, the Respondent launched an urgent application, seeking final relief, in terms of Section 163 of the 2008 Companies Act ("the Act"). Argument was heard was heard on on the 22nd of December 2022. Relief was granted on the 24th of January 2022. Henceforth, the parties will be referred to in these heads as they were before the Court a quo.

3.

The order made on the 24th of January 2022 rendered M K Africa Plant and Equipment Pty (Ltd to be under business rescue. Gideon Slabbert was appointed as interim business rescue practitioner as intended in section 131(5) of the Companies Act, with all the powers and duties entrusted to him in terms of the Act, pending ratification of such appointment by the creditors at their first meeting.

4.

For purposes of these proceedings, the parties will be referred to as they were in the application for business rescue, ie the Applicant; Ben Venter, and the Respondent, MK Africa Plant and

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Equipment. Before the court a quo, the Respondent was ordered to pay the costs of the application on a scale as between attorney and client. Leave to appeal against the above order is sought. The application for leave to appeal is defended.

5.

The Applicant points out that the purpose of business rescue and the mechanisms as provided for in Chapter 6 of the Companies Act 71 of 2008 (Companies Act) got undermined where an application for leave to appeal was brought. The Applicant makes the point that should leave to appeal be granted, the result will become academic as the Company would in all probability be liquidated.

6.

The Applicant submits that it is against this background that the Court should specifically consider the overly technical points that the Respondent has taken in an attempt to persuade the Court to grant leave to appeal. The Court already found that Mr. Venter misstated the affairs of the Company and made unfounded allegations of agreements with the creditors of the Company. [1]

7.

Section 17(1) of the Superior Courts Act, Act 10 of 2013. ("the Superior Courts Act"), regulates applications for leave to appeal. In that regard, this section provides as follows:

'(1).

Leave to appeal may only be given where the judge or judges concerned are of the opinion that-

(a). (i).

the appeal would have a reasonable prospect of success; or

(ii).

there is some other compelling reason why the appeal should be heard, including conflicting judgments on the matter under consideration;

(b).

the decision sought on appeal does not fall within the ambit of section 16(2)(a); and

(c).

where the decision sought to be appealed does not dispose of all the issues in the case, the appeal would lead to a just and prompt resolution of the real issues between the parties.'

Regarding the threshold for purposes of leave to appeal, Plaskett AJA, as he then was, wrote the following in the judgment, in which Cloete JA and Maya JA, as she then was, concurred, in S v Smith [2] , at paragraph 7: "What the test of reasonable prospects of success postulates is a dispassionate decision, based on the facts and the

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law that the Court of Appeal could reasonably arrive at a conclusion different to that of the trial court. In order to succeed, therefore, the appellant must convince this Court on proper grounds that he has prospects of success on appeal and that those prospects are not remote, but have a realistic chance of succeeding. More is required to be established than that there is a mere possibility of success. That the case is arguable on appeal or that the case cannot be categorized as hopeless. There must, in other words, be a sound, rational basis for the conclusion that there are prospects of success on appeal."

9.

In the case of Month Chevaux Trust v Goosen [3] at para 6, Bertelsman J held as follows: "It is clear that the threshold for granting leave to appeal against a judgment of a High Court has been raised in the new Act. The former test whether leave to appeal should be granted was a reasonable prospect that another court might come to a different conclusion, see Van Heerden v Cronwright and Others [4] at 343H. The use of the word 'would' in the new statute indicates a measure of certainty that another court will differ from the court whose judgment he sought to be appealed against"

10.

In the case of Acting National Director of Public Prosecutions and Others v Democratic Alliance In Re: Democratic Alliance v Acting National Director of Public Prosecutions and Others [5] , the Full Bench of this Division, after citing the The Mont Chevaux Trust passage, stated as follows at paragraph 29: "When the Court deals with an application for leave to appeal, leave may only be given if we are of the opinion that the appeal would have reasonable prospects of success…"

11.

It is trite that the Respondent bears the duty show that this appeal incumbent has a more than reasonable prospect of success and that another Court would come to a different conclusion. The Respondent also has to show that there are compelling reasons for leave to appeal to be granted.

GROUNDS OF APPEAL.

12.

The Respondent submits that the first ground of appeal deals with the peremptory requirements regarding service of an application seeking to place a company in business rescue. It argues that such an order affects the status of the company and due and proper notice has to be given to the body of affected persons (creditors, shareholders and employee as defined in Section 128

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of the Act).

13.

The Respondent submitted that there were various 'known creditors' who were not given due and proper notice of the application. It made the point that the authorities clearly require that on this basis alone, the application should have been dismissed with costs. It referred to Section 131 of the Act which provides as follows:

"Court order to begin business rescue proceedings

(1).

Unless a company has adopted a resolution contemplated in section 129, an affected person may apply to a court at any time for an order placing the company under supervision and commencing business rescue proceedings.

(2).

An applicant in terms of subsection (1) must—

(a). serve a copy of the application on the company and the Commission; and

(b). notify each affected person of the application in the prescribed manner.'

The use of the word 'must' in section 131(2) is indicative of the peremptory nature of the provisions.

14.

The Respondent pointed out that in the case of Engen Petroleum Ltd v Multi Waste (Pty) Ltd and Others [6] , the Court considered the notification requirements in terms of regulation 124 and at paragraph 24 said the following: "at the very least it is incumbent upon an applicant to demonstrate that all reasonable steps have been taken to establish the identity of the affected persons and their addresses to which the relevant notices are to be delivered". In Taboo Trading 232 (Pty) ltd v Pro Wreck Scrap Metal CC and Others [7] the Court, at paragraph 11, said: "The purpose of the notification required by s 131(2)(b), is to facilitate participation in terms of s 131(3), by affected persons in the hearing of the business rescue application. Creditors, being affected persons, in the business rescue application, also have a material interest in the liquidation proceedings. In my view, it is implicit in ss 131(2)(b) and 131(3), that reasonable notification must be given to affected persons. Short notice which renders participation in the hearing impossible, cannot be regarded as due compliance with s 131(2)(b). There is a strong policy justification for interpreting these provisions in a way which would not facilitate a dilatory or supine approach by an applicant in business rescue proceedings. Service of a copy of the application on the Commission, and notification of each affected person, are not merely procedural steps. They are substantive requirements, compliance with which is an integral part of the making

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of an application for an order in terms of s 131(1) of the Companies Act".

15.

It was submitted that Section 131(2)(b) of the Act contains a mandatory provision that all affected persons should be notified. The Respondent argues that this is not just a procedural step but a substantive requirement. It points out that it is evident from the Respondent's own service affidavit and application that there were multiple known creditors who were either not properly notified or not even notified at all. It is argued that if another court considers the numerous creditors who were known to the applicant at the time when the application was launched, who did not receive notice of the application, it will find that the application should have been dismissed on this basis alone, with costs.

16.

The second...