IN THE HIGH COURT OF SOUTH AFRICA (NORTH GAUTENG HIGH COURT)

Transcription

1 IN THE HIGH COURT OF SOUTH AFRICA (NORTH GAUTENG HIGH COURT) CASE NUMBER: 72522/11 In the matter between: ADVANCED TECHNOLOGIES AND APPLICANT ENGINEERING COMPANY (PTY) LTD (IN BUSINESS RESCUE) and AERONAUTIQUE ET TECHNOLOGIES FIRST RESPONDENT EMBARQUÉES SAS JEAN-MARC PIANO EURO COPTER SAS COMPANIES AND INTELLECTUAL PROPERTY SECOND RESPONDENT THIRD RESPONDENT FOURTH RESPONDENT COMMISSION, REPUBLIC OF SOUTH AFRICA REASONS FOR JUDGEMENT

2 2 FABRICIUS J, 1. On 6 June 2012 I made an order in terms of the provisions of section 129 (5) of the Companies Act number 71 of 2008 namely that the Applicants adopted resolution to commence business rescue proceedings on 26 September 2011 had lapsed and was a nullity. I also ordered that the Applicant in these proceedings pay the costs. My reasons follow. 2. In terms of a notice of motion filed on 30 December 2012, and in terms of the provisions of Rule 6(12) of the rules of this court, Applicants sought an order that the First Respondent s shareholders vote against the adoption of the business rescue plan for Applicant, exercised at the meeting held on 13 December 2011 in terms of s152 of the Companies Act, 71 of 2008 ( The Act ), be declared

3 3 inappropriate and be set aside, and that Mr. E.G. Gribnitz, the senior Business Practitioner appointed to the Applicant, be granted leave to implement the business rescue plan which was preliminary approved of affected persons held on 13 December Costs were also sought. 3. The application ultimately comprised some 1700 pages and First and Second Respondents sought an order that the mentioned Mr. Gribnitz be removed as the Practitioner in terms of the provisions of s139 of the Act. 4. On 11 May 2012 and by agreement between the parties, I made an order that the main application and the counter-application be referred to trial. The order set out in which specific defined issues such referral was made, and also dealt with aspects concerning discovery. It was agreed that the affidavits would stand as the pleadings, and that the affidavits would have the status of admissible evidence under oath

4 4 before me. (Whatever that may mean, having regard to what was said on that topic in LETUP PROP Co No 4 (Pty) Ltd v John Collin Wright ZA SAC 67 (23 May 2012)). 4. The First and Second Respondents gave notice on 25 May 2012 that they would argue certain points in limine. Heads of argument were also filed in that context. On 4 and 5 May the point mentioned in par 2.1 of the Court order was argued separately. In that context a separate bundle was handed up which was referred to as exhibit A and, which formulates the relevant point in limine with reference to correspondence between the parties and other relevant documents. Brief evidence was also led by Mr. Duncker and Miss Lotheringen, from the Fourth Respondents office. 5. Chapter 6 of the Act deals with Business Rescue and Compromise with Creditors. Part A deals with business rescue proceedings and s128 contains the relevant

5 5 definitions. An overall scheme of the business rescue regime contained in chapter 6 is usefully set out in ACTA JURIDICA 2010 at 375. Properly understood, this is however merely an analysis of the relevant sections of the Act, and contains very little or any critical analysis. It is however useful as an overview of what chapter 6 of the Act entails. In the context of par 2.1 of my mentioned order on 11 May 2012, the First and Second Respondents contended that the Applicant had failed to comply with the provisions of s129(3) and 129(4), as a result of which the mentioned resolution to begin business rescue proceedings had lapsed, and was a nullity in terms of s129(5)(a). 6. It is common cause that the Applicant had adopted the relevant resolution to commence business rescue proceedings on 26 September 2011, and filed it with the Fourth Respondent on 27 September (For present purposes I am not concerned with the other points in limine that were given notice of). Accordingly, the Applicant had to comply with the specific requirements of s129(3) and s129(4) in

6 6 the stated time periods prescribed therein. This meant that the Applicant had 5 business days from 27 September 2011 to publish a notice of the resolution and its effective date, with a supporting affidavit to every effected person, and appoint a Business Rescue Practitioner who satisfied the requirements of s138, and who had consented in writing to accept such appointment. After duly appointing such Practitioner, the company had to file a notice of such appointment within 2 business days after making the appointment, and publish a copy of the notice of appointment to each affected person within 5 business days after the notice was filed. 7. The Applicant initially appointed a Mr. Liebenburg, but thereafter advised the Fourth Respondent of his withdrawal by means of a letter dated 29 September In that letter also it gave notice that Miss Swiegelaar was a suitable Business Rescue Practitioner, and requested that she be considered for such position. A new nomination form as per s139(3) of the Act was annexed, as was form 126(1), proof of payment of the relevant fee, and her consent. She also stated in such letter as

7 7 per the appendix that she understood and accepted that a license granted in terms of her application would be an interim conditional licence for a limited period, and would only relate to this specific business. 8. Form is an application for a Practitioners licence, and the relevant one contained in the bundle is dated 30 September 2011, indicates Miss Swiegelaar to be the particular applicant. Her CV was also annexed. It also appears from the bundle that according to form 123.2, Miss Swiegelaar had indeed been appointed as the relevant Business Rescue Practitioner by Applicant Company on 30 September This document also indicates that parallel lines had been drawn across this document with the word void inserted between such lines, and Miss Lotheringen testified that she had done so at a later stage, and because of the absence of a license for Miss Swiegelaar at that particular time. 9.

8 8 The bundle also contains form Notice of Beginning of Business Rescue Proceedings and is dated 3 October It attached the relevant resolution adopted on 26 September 2011, and states that the rescue proceedings commenced on 4 October 2011 in accordance with the provisions of s132(1)(a)(i) of the Act inasmuch as this was the date on which the notice was filed with the commission. The relevant supporting affidavit on behalf of Applicant is dated 3 October On 4 October 2011 Mr van der Westhuizen sent an electronic mail to the Fourth Respondent, in this case the mentioned Miss Lotheringen, pointing out that an application for the appointment of Miss Swiegelaar had been made on 30 September 2011, that the sworn statement required by s129(3)(a) was overdue and that it was therefore filed on the same day (4 October) and then formulated a request as follows:

9 9 5.1 extension of the time required to publish the notices to our creditors, shareholders and employees until 14 October 2011: 5.2 extension of the date on which we have to appoint a Business Rescue Practitioner until such date as you have licensed and registered our nominated Business Practitioner (Miss Swiegelaar); 5.3 confirmation from you as to the affective date of our business rescue process 27 September 2011 or 4 October 2011? Provisions of s129(3) allow for an extension of time on application by a company. 11. On 5 October a letter was written and received, again addressed to Miss Lotheringen. It was stated that all the required documents were submitted to the offices of the Fourth Respondent within the prescribed period of 5 business days as required by the Companies Act (s129(3)) the last paragraph of this letter reads as follows: I trust you will find the above in order and wish to confirm our request of 4 October 2011;

10 10 - an extension for the notice to creditors and employees until 14 October 2011; - extension for the date on which we have to appoint a business Practitioner until such time as our proposed nominated Business Practitioner has been approved and licensed by the CIPC. 12. On 5 October 2011 the said Miss Lotheringen replied to Applicants Mr van der Westhuizen, and acknowledged receipt of the relevant documentation. It was also stated that the notice of beginning of business rescue proceedings had been filed with the Fourth Respondent on 27 September 2011, therefore affording protection to the company in terms of Chapter 6 of the new Companies Act. The following also appears: It is noted and acknowledged that the appointment of a Business Rescue Practitioner could not have been done on time as she has not been conditionally licensed to accept the appointment. (My under-lining).

11 The last paragraph of that letter then reads: extension of the requirements of s129(3) is herewith granted to Advanced Technologies and Engineering Company (Pty) Ltd until such time as the recommended Practitioner has been conditionally licensed and can be appointed. It is clear from this letter also that Fourth Respondent regarded the effective date as having been the 27 September On 11 October 2011 Mr van der Westhuizen sent an electronic mail to Miss Lotheringen saying that it was 5 days since they have filed their business rescue request. He wanted to know whether the company could continue with the relevant notices to creditor and employees, or whether it had to wait for her final confirmation that it had been accepted. On 12 October 2011 another reminder was sent stating that Applicant was awaiting her written approval granting them

12 12 extension until 14 October 2011 to inform all the relevant parties of there business rescue process. 15. On 13 October 2011 Miss Lotheringen replied to Mr van der Westhuizen and addressed this electronic mail to Tanya, Sakkie and Others (that is Mr van der Westhuizen). She then said the following: Attached is a copy of the scanned licensed certificate that is a conditional Registration Certificate issued by the Companies and Intellectual Property Commission. It is only applicable to rescue proceedings of Advanced Technologies and Engineering Company (Pty) Ltd. Please note that the Business Rescue Practitioner may not engage with any interested parties until such time as the Company has resolved to appoint him by completing and filling with the CIPC form CoR A copy is attached for your ease of reference.

13 13 The Registration Certificate issued by the CIPC is not an appointment to perform the rescue it is merely a certification that you are qualified and classified to perform the rescue. (Bundle a p 37) 16. The registration certificate relating to Miss Swiegelaar (form 126.2) is dated 13 October 2011 and appears in the bundle at p 39. This Registration Certificate, according to its own wording, states that she has been licensed in terms of s138 of the Act to serve as a Business Rescue Practitioner in regard to Applicant Company with effect from the date of this Certificate. 17. Mr Duncker had given evidence that the various employees had been given notice of the company resolution to its employees on 13, 14 and 17 October 2011.

14 On 14 October 2011 Mr van der Westhuizen again wrote to Miss Lotheringen informing her that one of the Companies had objected to the appointment of Miss Swiegelaar, and that the Company had accordingly decided to nominate Mr Gribnitz, who was already registered on her system as a Business Rescue Practitioner. He attached Mr Gribnitz s acceptance of the nomination, and requested that he be licensed as such. It is common cause that this was the first time that Mr Gribnitz had been mentioned to Fourth Respondent and it was also conceeded by Mr Hunt SC on behalf of the Applicant, that all the previous correspondence between the Company and Miss Lotheringen had referred to Miss Swiegelaar only, and specifically to her. 19. On 17 October 2011 a Registration Certificate in respect of Mr Gribnitz was issued by the Fourth Respondent.

15 On 18 October 2011 the Company Board of Directors resolved to appoint Mr Gribnitz as Business Rescue Practitioner as per s129(3)(b) of the Act. 21. Mr Gribnitz gave notice to all effected parties on 21 October 2011 of his Registration Certificate and notice of appointment, stating at the same time that the Company had commenced business rescue proceedings on 4 October Mr Labuschagne SC accordingly argued that it was apparent from all the mentioned documentation that there was one application for an extension in terms of s129(3), and that the period granted for such extension expired upon the licensing of Miss Swiegelaar on 13 October There was no compliance with the provision of s129(3) and s129(4) for the following reasons:

16 If Miss Swiegelaar had been conditionally appointed by the Applicant on or about 30 September 2011, subject to licensing, then she was licensed on 13 October 2011 being the date on which the extension expired. It was common cause that the Applicant had not filed a further notice of appointment of Miss Swiegelaar, and had not published a copy of the notice of such appointment to affected persons. Accordingly there was a failure to comply with the provisions of s129(4). As an alternative, and in the event of Miss Swiegalaar only being licensed on 13 October 2011, but not appointed as Business Rescue Practitioner by the Applicant present thereto, then there was non-compliance with s129(3)(b). Further, the 5 day period (as extended) for publication of the business rescue resolution expired on 13 October 2011 when Miss Siwegelaar was licensed and could be appointed. The relevant publication of the resolution to commence this new business rescue took place on 13 October, 14 October and 17 October 2011 as I have

17 17 said. Accordingly, it was contended that the publication took place outside of the prescribed time period. 23. It cannot in my view be seriously contended, and Mr Hunt SC properly did not even attempt to do so, that all the relevant documentation relating to an extension referred to Miss Swiegelaar only, and sought the extension until she had been licensed. This occurred on 13 October It was also not an issue that Mr Gribnitz was mentioned for the first time as a Practitioner on 14 October He was licensed on 17 October 2011, and if the correspondence between Applicant and Miss Lotheringen did not refer to Miss Swiegelaar specifically, 17 October would be the date until which extension for compliance with s129(3)(b) had been granted. He was however only appointed on 18 October 2011, after expiry of the period of extension. 24.

18 18 However, for purposes of this point in limine, I accept, as did Mr Hunt SC, that all the mentioned correspondence in the context of an extension that was sought only refers to Miss Swiegelaar and specifically to her. It was not a request for a general extension in respect of any Practitioner who was competent, qualified and able to be appointed. 25. Mr Manca on behalf of the Third Respondent argued that after the licensing of Miss Swiegelaar, the Company had a reasonable time to appoint Miss Swiegelaar as Practitioner. He suggested that the Act gave no guidance on this topic. Having regard to the specific time periods contained in s129, I do not agree. An appointment must be made within 5 business days as per the specific wording of the section, alternatively within such longer a time as the commission, on application, may allow. In my view, the extension of the 5 day period actually granted by the Fourth Respondent must be judged on its own wording in the light of the actual request for such extension. Were it otherwise, the time periods

19 19 contained in s129(3) and s129($) would become meaningless and their purpose would be subverted. 26. I am of the view that Mr Labuschagne SC, on behalf of the First and Second Respondents, is correct in arguing that I ought not to consider the asked-for extension that had been granted outside the specific request. According to Applicant it had already appointed Miss Singular on 30 September 2011, and it had obviously not been aware of the fact that Miss Lotheringen had regarded this appointment as having been void at a later stage. In its own mind therefore its request for an extension only related to the licensing of Miss Swiegelaar. However, if this appointment had indeed been void, she was licensed on 13 October 2011 and thereafter was never appointed. There was therefore noncompliance with the provisions of s129(3)(b). 27.

20 20 Having regard to the provisions of s129(3) and s129(4), the specific time periods, the objects of the Act, and the other time periods contained in other sections of the Act, I am of the view that Mr Labuschagne SC s argument must be upheld. It is clear from the relevant sections contained in chapter 6 that a substantial degree of urgency is envisaged once a company has decided to adopt the relevant resolution beginning business rescue proceedings. The purpose of s129(5), is very plain and blunt. There can be no argument that substantial compliance can ever be sufficient in the given context. If there is non-compliance with s129(3) or (4) the relevant resolution lapses and is a nullity. There is no other way out, and no question of any condonation or argument pertaining to substantial compliance. The requirements contained in the relevant sub-sections were either complied with or they were not. In this case they were not, for the reasons stated herein above. 28.

21 21 Accordingly the following order is made: it is declared that Applicant s resolution to commence business rescue proceedings has lapsed and has become a nullity in terms of the provisions of s129(5) of the Companies Act 71 of The company has not complied with the provisions of s129(3) and /or s129(4). Applicant is to pay the costs of the application. 6 June 2012 JUDGE H J FABRICIUS JUDGE OF THE NORTH GAUTENG HIGH COURT