---

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

 

(1)     REPORTABLE: YES/NO

(2)     OF INTEREST TO OTHER JUDGES: YES/NO

(3)     REVISED.

 

CASE NO.: 97831/15

97982/15

97832/15

5/9/2019

 

In the matter between:

ABSA BANK                                                                                                              APPLICANT

and

 

ZWAHILI GAME LODGE (PTY) LTD                                                                    RESPONDENT

ABSA BANK                                                                                                              APPLICANT

and

NYLSTROOM WILDPLASE (PTY) LTD                                                                RESPONDENT

ABSA BANK                                                                                                              APPLICANT

and

SMARTSPEC PROPERTY INVESTMENTS (PTY) LTD                                      RESPONDENT

 

COMBINED JUDGMENT

 

 

VAN DER WESTHUIZEN, J

 

[1]        The applicant, ABSA Bank, applies for a winding up order against three companies, Zwahili Game Lodge (Pty) Ltd, Nylstroom Wildsplase (Pty) Ltd and Smartspec Property Investment (Pty) Ltd, under separate case numbers.  All three the respondents are in the same group of companies.  The matters were heard together as the facts are germane to each of them and the same defences are raised in each of them.  The same counsel appeared in each of the matters.  I shall give one combined judgment.

[2]        At the commencement of the hearing, Mr Els appeared on behalf of the trustees of Clearwater Trust.  That trust holds shares in the respondents.  The trustees of the Clearwater Trust have launched business rescue proceedings on behalf of the trust in respect of each of the respondents.  Those applications were apparently issued on 27 August 2019.  The applications are to be heard during May 2020.  Mr Els does not seek to intervene in the present proceedings and has merely noted his presence and made copies of the business rescue applications available.  Mr Els clearly disavowed being part of the present proceedings.

[3]        The purpose of the business rescue proceedings is clearly to rely on the moratorium of legal proceedings in terms of the provisions of section 131(6) of the Companies Act, Act 71 of 2008 (the Act) and have the present proceedings for winding-up stayed.

[4]        Mr Vorster, SC, who appears on behalf of the applicant in the present proceedings, opposes the apparent attempt to stay these proceedings.  Mr Schoeman appearing on behalf of all three the respondents is non-plussed.  It would of course be to his clients’ advantage if the present proceedings are stayed and that an opportunity be afforded to “other interested parties” to participate.

[5]        It is to be recorded at this stage that the debt amount is admitted in each of the matters, but other defences are raised with which I shall deal with anon.  The amounts due and payable are substantial.  In respect of Zwahili it is R49 000 000,00; Nylstroom Wildsplase it is R32 000 000,00 and in respect of Smartspec it is R 36 000 000,00.  Interest on the amounts is continuing to accrue.

[6]        I heard argument on the issue of the provisions of section 131 of the Act as well as the merits.  I reserved judgment.

[7]        The present proceedings were instituted as long back as 2015.  The respondents have filed their answering affidavits during July 2018, the intervening period was speckled with negotiations that came to naught. No explanation is proffered in the business rescue proceedings for the lateness of the applications for business rescue.  No other affidavit has been filed to explain that issue.  Mr Els conceded that an explanation for the late application for business rescue is wanting.

[8]        Mr Vorster submitted that the late application for business rescue and the pertinent omission of an explanation therefor, together with the vague premises upon which it is brought, renders that application an abuse of process.  He further submitted with reference to the dicta in Safari Thatching v Misty Mountain Trading 2016 (3) SA 209 (GP), that this court is entitled to entertain a request to grant leave to the applicant in these proceedings to pursue the already instituted winding-up proceedings.

[9]        In the Safari matter, Davis, AJ., was required to consider and interpret the provisions of section 133(1)(b) of the Act.  That section permits leave to be granted to institute or proceed with already instituted proceedings despite the suspension thereof in terms of the provisions of section 131 of the Act.  Davis, AJ., in a well-reasoned judgment concluded that where winding-up proceedings were pending at the stage when an application was launched for business rescue proceedings in respect of the respondent company, leave to proceed with those proceedings did not require a separate and distinct application for leave to proceed with the pending winding-up proceedings and could be made during the hearing of the main proceedings.

[10]      I respectfully endorse the reasons and conclusions of Davis, AJ., in the Safari judgment.

[11]      Applying the principles enunciated in the Safari judgment the following facts are relevant:

(a)       There has been a long delay since the institution of the winding-up proceedings and the launching of the business rescue proceedings with no explanation in that regard;

(b)       The debt is admitted and no defence in that respect is raised in the answering affidavits;

(c)        The debt amount in each instance is substantial;

(d)       All the formal requirements pertaining to the winding-up application have been complied with;

(e)       At the eleventh hour before the hearing of these proceedings the applications for business rescue were launched;

(f)        No applications have been made for the formal postponement of these proceedings.  Mr Els disavowed being part of these proceedings and on behalf of the respondents a mere submission to that effect was made by Mr Schoeman who further submitted that he was unaware of the grounds for the business rescue applications.

 

[12]      I do not propose to pronounce upon the merits of the application for business rescue.  However, on a cursory reading of the application for business rescue the following appears:

(a)       vague and unsubstantiated benefits are proposed should such application succeed;

(b)       the mechanism in respect of deriving the proposed benefits has not been commenced with, nor has any date been suggested in that regard;

(c)        furthermore, the time at which the proposed benefits would become available is not suggested;

(d)       no mechanism has been proposed to finance the proposed benefits and no indication is provided when such would become available.

 

[13]      It follows that Mr Vorster’s request from the bar for leave to proceed with the winding-up proceedings stands to be granted and is so granted.

[14]      The issue whether to grant a winding-up order requires consideration.  In this regard, the debt amount is not disputed.  It is also not disputed that the debt amount is due and payable.

[15]      The respondents raise, in their respective answering affidavits, the same defences, being:

(a)       an alleged damages claim against the applicant on the part of a sister company in the group of companies;

(b)       as a result the sister company lost its ability to conduct its business and generate income from which loans and facilities could be used to fund the respondents;

(c)        an ulterior purpose on the part of the applicant to achieve a situation to force a sale in liquidation in order that the respondents’ securities could be purchased less than market value;

(d)       every disposition of property by the respondents’ made after 8 December 2015 (the effective date of any winding up order) is void.

 

[16]      The alleged defences are without merit.  Each alleged defence is refuted by the applicant with reference to documented facts.

[17]      It is to be recorded that no other creditor of any of the respondents have opposed the winding-up applications[1] and it is clear that the respondents are unable to pay their debts despite demands thereto over a period.  None of the respondents’ undertakings in respect of payment of the debt, or part thereof, have been honoured by the respondents.

[18]      Furthermore, it is submitted on behalf of the applicant that it is just and equitable for the respective respondents to be wound-up.

[19]      In my view, following on what is stated earlier, the applicant is entitled to a winding-up order.  The issue is whether a final winding-up order is to be granted or a provisional winding-up order.

[20]      It is clear that substantial amounts are due and payable.  None of the respondents were able to honour their respective undertakings prior to the hearing of this application.  The possibility of salvaging the respondents in business rescue proceedings are vague and slim.  It would be fair and just to grant a final winding-up order in the absence of any opposition by other creditors of any of the respondents.

 

I grant a final winding-up order in terms of the respective draft orders marked

“XYZ” and attached to this judgment.

 

 

C J VAN DER WESTHUIZEN

JUDGE OF THE HIGH COURT

 

 

On behalf of Applicant:       J P Vorster SC        

Instructed by:                       Tim Du Toit & Co Inc          

 

On behalf of Respondents: Z Schoeman

Instructed by:                      Alant , Gell & Martin Inc.    

---