Kgoro Consortium (Pty) Ltd and Another v Cedar Park Properties 39 (Pty) Ltd and Others (935/2020) [2022] ZASCA 65 (9 May 2022)

Kgoro Consortium (Pty) Ltd and Another v Cedar Park Properties 39 (Pty) Ltd and Others (935/2020) [2022] ZASCA 65 (9 May 2022)

The Supreme Court of Appeal held that the appellants failed to establish a reasonable prospect of rescuing Cedar Park Properties 39 (Pty) Ltd as required by s 131(4)(a) of the Companies Act. The evidence did not show how the development would be financed or that business rescue would yield a better return for creditors than liquidation. The application relied on a lapsed sale agreement and vague indications of interest, which did not meet the statutory threshold. Consequently, the appeal to place Cedar Park under business rescue was dismissed. Regarding the costs order against Smit Sewgoolam Incorporated, the court found that the attorneys were not afforded an opportunity to respond to...

Citation
[2022] ZASCA 65
Parties
Appellant: Kgoro Consortium (Pty) Ltd; Appellant: Regiments Capital (Pty) Ltd (in liquidation); Respondent: Cedar Park Properties 39 (Pty) Ltd (in liquidation); Respondent: Vantage Mezzanine Fund II Partnership; Respondent: City of Johannesburg Metropolitan Municipality; Appellant: Smit Sewgoolam Incorporated
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
9 May 2022
Case Number
935/2020
Procedural Posture
Civil Appeal / Appeal From Gauteng Local Division of the High Court, Johannesburg
Outcome
The appeal by Kgoro Consortium (Pty) Ltd and Regiments Capital (Pty) Ltd is dismissed with costs. The appeal by Smit Sewgoolam Incorporated is upheld with costs; the special costs order against it is set aside.
Judges
Van der Merwe JA, Plasket JA, Mbatha JA, Carelse JA, Matojane AJA
Legal Topics
Business Rescue, Reasonable Prospect, Costs De Bonis Propriis, Locus Standi, Companies Act Section 131, Attorney Misconduct
Commercial and Corporate Civil Procedure Business Rescue Reasonable Prospect Costs De Bonis Propriis Locus Standi Companies Act Section 131 Attorney Misconduct

Case Brief

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Parties

Kgoro Consortium (Pty) Ltd

Appellant

Regiments Capital (Pty) Ltd (in liquidation)

Appellant

Cedar Park Properties 39 (Pty) Ltd (in liquidation)

Respondent

Vantage Mezzanine Fund II Partnership

Respondent

City of Johannesburg Metropolitan Municipality

Respondent

Smit Sewgoolam Incorporated

Appellant

Procedural Posture

Civil Appeal / Appeal From Gauteng Local Division of the High Court, Johannesburg

Legal Issues

  1. 1 Whether Cedar Park Properties 39 (Pty) Ltd should be placed under supervision and commence business rescue proceedings under s 131(4)(a) of the Companies Act.
  2. 2 Whether the appellants established a reasonable prospect of rescuing Cedar Park as required by the Companies Act.
  3. 3 Whether the costs de bonis propriis order against Smit Sewgoolam Incorporated was justified without affording an opportunity to state its case.

Ratio Decidendi

The Supreme Court of Appeal held that the appellants failed to establish a reasonable prospect of rescuing Cedar Park Properties 39 (Pty) Ltd as required by s 131(4)(a) of the Companies Act. The evidence did not show how the development would be financed or that business rescue would yield a better return for creditors than liquidation. The application relied on a lapsed sale agreement and vague indications of interest, which did not meet the statutory threshold. Consequently, the appeal to place Cedar Park under business rescue was dismissed. Regarding the costs order against Smit Sewgoolam Incorporated, the court found that the attorneys were not afforded an opportunity to respond to...

Court Disposition

The appeal by Kgoro Consortium (Pty) Ltd and Regiments Capital (Pty) Ltd is dismissed with costs. The appeal by Smit Sewgoolam Incorporated is upheld with costs; the special costs order against it is set aside.

Orders

  • The second respondent’s application for leave to file supplementary heads of argument is dismissed with costs.
  • The appeal by Kgoro Consortium (Pty) Ltd and Regiments Capital (Pty) Ltd is dismissed with costs.