Commissioner for the South African Revenue Service ('SARS') v Zikhulise Cleaning Maintenance and Transport CC; Mpisane v Zikhulise Cleaning Maintenance and Transport CC and Another (14886/2016; 18101/2016) [2017] ZAGPPHC 1248 (2 November 2017)
The court found that the business rescue application brought by Ms Mpisane was not supported by sufficient evidence to demonstrate a reasonable prospect of rescuing ZCMT. The supplementary financial statements did not establish that the company could be restored to solvency or that business rescue would achieve a...
Source-derived case information.
- Citation
- [2017] ZAGPPHC 1248
- Parties
- Applicant: Commissioner for the South African Revenue Service ('SARS'); Respondent: Zikhulise Cleaning Maintenance and Transport CC; Applicant: Mabongi Flora-Junior Mpisane
- Court
- North Gauteng High Court, Pretoria
- Jurisdiction
- South Africa
- Case Number
- 14886/2016; 18101/2016
- Procedural Posture
- Business Rescue Application / Judgment
- Outcome
- Business rescue and review applications dismissed; provisional liquidation of ZCMT granted.
- Judges
- Ranchod
- Legal Topics
- Business Rescue, Winding Up, Locus Standi, Deferred Payment Arrangement
Source-derived case record
Summary, issues, holding and outcome
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Parties
Commissioner for the South African Revenue Service ('SARS')
Applicant
Zikhulise Cleaning Maintenance and Transport CC
Respondent
Mabongi Flora-Junior Mpisane
Applicant
Procedural Posture
Business Rescue Application / Judgment
Legal Issues
- 1 Whether Zikhulise Cleaning Maintenance and Transport CC should be placed under business rescue proceedings.
- 2 Whether the provisional liquidation of Zikhulise Cleaning Maintenance and Transport CC should be granted.
- 3 Whether Ms Mpisane had locus standi to bring a review application in her own name.
Ratio Decidendi
The court found that the business rescue application brought by Ms Mpisane was not supported by sufficient evidence to demonstrate a reasonable prospect of rescuing ZCMT. The supplementary financial statements did not establish that the company could be restored to solvency or that business rescue would achieve a better outcome for creditors than liquidation. The review application was dismissed on the basis that Ms Mpisane lacked locus standi to bring it in her own name; only ZCMT could do so. SARS's application for provisional liquidation was granted, as the facts and financial position of ZCMT justified such relief. The court exercised its discretion under section 131(4)(b) of the...
Court Disposition
Business rescue and review applications dismissed; provisional liquidation of ZCMT granted.
Orders
- The business rescue application by Ms Mpisane is dismissed.
- The review application is dismissed for lack of locus standi.
Full Case Text
Judgment text and source record
33 paragraphs
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, PRETORIA
CASE NO: 14886/2016
In the matter between:
THE COMMISSIONER FOR THE SOUTH
AFRICAN REVENUE SERVICE ('SARS') APPLICANT
and
ZIKHULISE CLEANING MAINTENANCE
AND TRANSPORT CC (Reg. no. 1997/006175/23) RESPONDENT
AND
CASE NO: 18101/2016
MABONGI FLORA-JUNIOR MPISANE APPLICANT
ZIKHULISE CLEANING MAINTENANCE FIRST RESPONDENT
AND TRANSPORT CC
THE COMMISSIONER FOR THE SOUTH SECOND RESPONDENT
AFRICAN REVENUE SERVICE
REASONS FOR JUDGMENT
RANCHOD J:
[1] This business rescue application by Ms M.F.J Mpisane is one of three applications I heard together. The other two are a review application under case No. 34564/2016 by Zikhulise Cleaning Maintenance and Transport CC (ZCMT) and a liquidation application by the Commissioner for the South African Revenue Service (SARS) to place ZCMT in liquidation under case No. 14886/2016. Counsel for SARS said that if, due to time constraints, I was not able to deliver a reasoned judgment immediately, SARS would be content with an order, with reasons to follow later. Counsel for ZCMT did not object to this suggestion . Orders were made in the three matters with reasons to follow later. Both the review application and the business rescue applications were dismissed while the application for the liquidation of the applicant was granted provisionally.
[2] The facts in the winding up application and in the business rescue application overlap considerably. In what follows are the reasons for the dismissal of both the business rescue application and the granting of a provisional order for the winding up of ZCMT. In their written and oral submissions counsel for SARS stated that they were not requesting the court to hear the winding up application but merely to exercise its discretion in terms of s131(4)(b).
[3] The matters were allocated by the Deputy Judge President to be heard together at the request of the parties. The main reason for all three matters to be heard together without an order for consolidation was because of the considerable overlap of the facts in each matter but the relief sought in each is different. In chronological order the first application was launched by SARS for the winding up of ZCMT. The second is this application, which was launched by Ms Mpisane (who is the sole member of ZCMT) for an order that ZCMT be placed under business rescue. The third application is by ZCMT for the review and setting aside of a decision by SARS not to enter into a deferred payment arrangement with ZCMT for its tax liabilities. The common thread that runs through the applications is the tax liability of ZCMT which prompted the liquidation application by SARS, which in turn led to the business rescue and review applications by ZCMT.
[4] The relief sought by the applicant in this business rescue application is set out in the Notice of Motion. Prayers 1 and 2 are
not relevant as they relate to a review application which was withdrawn after SARS raised the point that Ms Mpisane did not have
locus standi to bring a review application in her own name together with the business rescue application. The review application had to be brought by ZCMT itself. Ms Mpisane conceded the point. Of relevance then, are prayers 3 and 4-
'3. That the First Respondent be and is hereby placed under supervision and commencing business rescue proceedings in terms of the provisions of section 131(1) of the Companies Act No. 71 of 2008 ("the Companies Act").
4. That DAWID MAARTENS be appointed as interim business rescue practitioner for the First Respondent in terms of the provisions of section 131(5) of the Companies Act.'
[1] A so-called supplementary founding affidavit was filed by the applicant providing more comprehensive Financial statements and
reports in support of the application.
[2] S 13 I (6) provides -
If liquidation proceeding have already been commenced by or against the company at the time an application is made i n terms of sub section ( 1), the application will suspend those liquidation proceedings until-
a) the court has adjudicated upon the application ,or
b) the business rescue proceedings end, if the court makes the order applied for.'
[3] Oakdene Square Properties ( Ply) Ltd v Farm Bothasfontein (Kyalami) 2013 (4) SA 539 CA at para 38 per Brand JA.