Valley of the Kings Thaba Motswere (Pty) Ltd and Another v Al Mayya International (EL926/2016, 2226/2016) [2016] ZAECGHC 137 (10 November 2016)

IN THE HIGH COURT OF SOUTH AFRICA

EASTERN CAPE DIVISION – GRAHAMSTOWN

Case no: EL:926/2016

GHT: 2226/2016

Date Heard: 20/10/16

Date Delivered: 10/11/16

In the matter between:

VALLEY OF THE KINGS 1ST APPLICANT

THABA MOTSWERE (PTY) LTD

(Registration number: 2008/012143/07)

PHILIPUS JACOBUS MOSTERT

2ND APPLICANT

and

AL MAYYA INTERNATIONAL RESPONDENT

(formely AL MAYYA SOUTH AFRICA LIMITED (BVI))

JUDGMENT – APPLICATION FOR LEAVE TO APPEAL

SMITH J:

[1] The applicants seek leave to appeal against my judgment and order delivered on 23 August 2016, and which placed the first applicant

(“the company”) under business rescue in terms of section 130(1) and (4) of the Companies Act, 71 of 2008 (“the Companies Act”).

[2] Section 17 of the Superior Courts Act, 10 of 2013, (“the Superior Courts Act”) provides for the following test to be applied in applications for leave to appeal:

“(1) Leave to appeal may only be given where the judge or judges concerned are of the opinion that:

(a) (i) the appeal would have a reasonable prospect of success; or

(ii) there is some other compelling reason why the appeal should be heard, including conflicting judgments on the matter under consideration;”

[3] Mr Woodland SC, who appeared for the respondent, submitted that the threshold for the test has been raised since section 17 of the Superior Courts Act uses the word “would” instead of “could”. He relied for this submission on the judgment in The Mont Chevaux Trust (IT 2012/28) and Tina Goosen and 18 Others Case No. LCC 14R/2004, at para [6], in which Bertelsman J held that:

“The use of the word “would” in the new statute indicates a measure of certainty that another court will differ from the court whose judgment is sought to be appealed against.”

[4] There can be little doubt that the use of the word “would” in section 17 (1)(a)(i) of the Superior Courts Act implies that the test for leave to appeal is now more onerous. The intention clearly being to avoid our courts of appeal being flooded with frivolous appeals that are doomed to fail. I am, however, of the respectful view that the “measure of certainty” standard propounded by the learned judge in Mont Chevaux Trust (supra)may be placing the bar too high. It would, in my respectful view, be unreasonably onerous to require an applicant for leave to appeal to convince a judge – who invariably would have provided extensive reasons for his or her findings and conclusions – that there is a “measure of certainty” that another court will upset those findings. It seems to me that a contextual construction of the phrase “reasonable prospect of success” still requires of the judge, whose judgment is sought to be appealed against, to consider, objectively and dispassionately, whether there are reasonable prospects that another court may well find merit in arguments advanced by the losing party. I shall accordingly consider the arguments advanced on behalf of the applicants on this basis.

[5] The applicants’ main ground of appeal is that there are reasonable prospects that another court would find that I erred in finding that the company is commercially insolvent and accordingly in financial distress as defined in terms of section 128 (1)(f) of the Act. The applicants furthermore assert that since the company is solvent, it would stand to be wound up in terms of Part “G” (section 78-81) of the Act, and that the 1973 Companies Act would accordingly not be applicable.

[6] I am not persuaded that there are any reasonable prospects that those assertions would (or for that matter might) be upheld by another

court.

[7] First, it was common cause that the company was unable to pay the loan of R7.5 m. It was accordingly manifest that the company is commercially insolvent and consequently in “financial distress”. (Oakdene Square Properties (Pty) Ltd and Others v Farm Bothasfontein (Kayalami) (Pty) Ltd and Others 2013 (4) SA 539 (SCA), para [7])

[8] Second, as was held in Boschpoort Ondernemings (Pty) Ltd v Absa Bank Ltd [2014] 1 All SA 507 (SCA), at para [21] , the winding-up provisions of the 1973 Companies Act apply to companies that are factually and commercially insolvent. Solvent companies are liable to be wound up in terms of Part G of Chapter 2 of the new Act. Since it was common cause that the company was unable to pay the R7.5m debt, the company was insolvent, on the basis of the test for commercial insolvency propounded in Oakdene (supra), and would accordingly be liable to be wound up in terms of the 1973 Companies Act.

[10] In the result the following order issues:

(a) The application for leave to appeal is dismissed.

(b) The applicants are ordered to pay the respondent’s costs, including the costs of two counsel, jointly and severally, the one paying the other to be absolved.

________________________

J.E SMITH

JUDGE OF THE HIGH COURT

Appearances

Appearance for the Applicant : Advocate Murphy, SC

Attorney for the Respondent : Ven Heerden & Krugel Attorneys

Block B, Floor 1

Montana

Pretoria

lenay@vhkp.co.za

C/O

Gravet Schoeman Inc.

Bonza Bay Road

Beacon Bay

East London

Ref: Ian Theophilis

ian@gslegal.co.za

Counsel for the Respondent : Advocate Woodland, SC

Assisted by

: Advocate Cutler

Attorney for the Respondent : Gillian & Veldhuizen Inc.

Suite B6, Westlake Square

Westlake Drive

Cape Town

micarle@gvinc@law.co.za

Squire-Smith & Laurie Inc.

67 Beach Road

Nahoon

mandy@squires.co.za

Date Heard

: 20 October 2016

Date Delivered

: 10 November 2016