Caratco (Pty) Ltd v Independent Advisory (Pty) Ltd (982/18) [2020] ZASCA 17; 2020 (5) SA 35 (SCA) (25 March 2020)

Caratco (Pty) Ltd v Independent Advisory (Pty) Ltd (982/18) [2020] ZASCA 17; 2020 (5) SA 35 (SCA) (25 March 2020)

The Supreme Court of Appeal held that section 143 of the Companies Act regulates remuneration arrangements between a business rescue practitioner and the company under business rescue, but does not prohibit separate fee agreements with third parties such as creditors. There is no statutory language or penal provision indicating that such agreements are void or illegal. Caratco failed to plead or prove any facts supporting its defences of illegality or public policy. The evidence showed that the agreement for the success fee was freely negotiated, did not prejudice other creditors, and was not contrary to public policy. The court found no reasonable prospect of success in the appeal and no...

Citation
[2020] ZASCA 17
Parties
Appellant: Caratco (Pty) Ltd; Respondent: Independent Advisory (Pty) Ltd
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
25 March 2020
Case Number
982/18
Procedural Posture
Leave to Appeal / Application for Leave to Appeal to the Supreme Court of Appeal From the Gauteng Division of the High Court, Johannesburg.
Outcome
Application for leave to appeal dismissed with costs.
Judges
Cachalia, Wallis, Nicholls, Dlodlo, Koen
Legal Topics
Business Rescue Practitioner Remuneration, Companies Act Section 143, Public Policy Contracts, Fiduciary Duties, Illegality of Contracts
Commercial and Corporate Business Rescue Practitioner Remuneration Companies Act Section 143 Public Policy Contracts Fiduciary Duties Illegality of Contracts

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Parties

Caratco (Pty) Ltd

Appellant

Independent Advisory (Pty) Ltd

Respondent

Procedural Posture

Leave to Appeal / Application for Leave to Appeal to the Supreme Court of Appeal From the Gauteng Division of the High Court, Johannesburg.

Legal Issues

  1. 1 Whether a business rescue practitioner may earn a special fee from a third party outside the scope of section 143 of the Companies Act.
  2. 2 Whether the agreement for payment of a success fee is void for illegality or contrary to public policy.
  3. 3 Whether the duties under sections 75 and 76 of the Companies Act prohibit such fee arrangements.

Ratio Decidendi

The Supreme Court of Appeal held that section 143 of the Companies Act regulates remuneration arrangements between a business rescue practitioner and the company under business rescue, but does not prohibit separate fee agreements with third parties such as creditors. There is no statutory language or penal provision indicating that such agreements are void or illegal. Caratco failed to plead or prove any facts supporting its defences of illegality or public policy. The evidence showed that the agreement for the success fee was freely negotiated, did not prejudice other creditors, and was not contrary to public policy. The court found no reasonable prospect of success in the appeal and no...

Court Disposition

Application for leave to appeal dismissed with costs.

Orders

  • The application is dismissed with costs.