Carse and Another v Rocacube (Pty) Ltd and Others (Ex Tempore) (14353/2021) [2024] ZAWCHC 448; 2025 (4) SA 173 (WCC) (14 November 2024)

begin wrapper begin container begin header begin slogan-floater end slogan-floater - About SAFLII About SAFLII - Databases Databases - Search Search - Terms of Use Terms of Use - RSS Feeds RSS Feeds end header begin main begin center # South Africa: Western Cape High Court, Cape Town South Africa: Western Cape High Court, Cape Town You are here: SAFLII >> Databases >> South Africa: Western Cape High Court, Cape Town >> 2024 >> [2024] ZAWCHC 448 | Noteup | LawCite sino index ## Carse and Another v Rocacube (Pty) Ltd and Others (Ex Tempore) (14353/2021) [2024] ZAWCHC 448; 2025 (4) SA 173 (WCC) (14 November 2024) Carse and Another v Rocacube (Pty) Ltd and Others (Ex Tempore) (14353/2021) [2024] ZAWCHC 448; 2025 (4) SA 173 (WCC) (14 November 2024) Download original files PDF format RTF format make_database: source=/home/saflii//raw/ZAWCHC/Data/2024_448.html sino date 14 November 2024 SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document in compliance with the law and SAFLII Policy IN THE HIGH COURT OF SOUTH AFRICA WESTERN CAPE DIVISION, CAPE TOWN CASE NO: 14353/2021 DATE: 2024.11.14 In the matter between DANIEL FRANCOIS CARSE 1 st Applicant MOHAMED NASIR JAFFER 2 nd Applicant and ROCACUBE(PTY) LTD 1 st Respondent CHARL DE WAAL BOSHOFF N.O. 2 nd Respondent JOCHEN ECKHOFF N.O. 3 rd Respondent TASNEEM SHAIK MOHAMMED N.O. 4 th Respondent BUSINESS PARTNERS LTD 5 th Respondent ORZOSCORE(PTY)LTD 6 th Respondent COMPANIES AND INTELLECTUAL PROPERTY COMMISSION 7 th Respondent THE REGISTRAR OF DEEDS, CAPE TOWN 8 th Respondent THE MASTER OF THE HIGH COURT, CAPE TOWN 9 th Respondent EX TEMPORE JUDGMENT FAGAN, AJ: The first respondent, Rocacube (Proprietary) Limited ("Rocacube"), is a property development company. Its sole shareholder is the FPC Family Trust. That is the trust of the Carse family. For present purposes that means Genene Celeste Carse, her husband Frederick Peter Carse, and their son Daniel Francois Carse, who is the first applicant. Rocacube is the owner of Erf 1[...], Somerset West, in extent 9 964 square metres.  It intended to do a sectional title development on the property under the name Pine Mew. On 6 March 2017 a written loan agreement was concluded, in terms of which Rocacube could borrow up to R7 million from Business Partners Limited ("Business Partners"), the fifth respondent. The funds were intended to be used for the first phase of the development. Annexure A to the loan agreement is a royalty agreement entitling Business Partners to payment of an amount in respect of each sectional title unit sold. Clause 6 of the loan agreement provides for repayment of the principal  debt  and finance  charges  in one instalment  of R7 067 083.33 on 1 December 2018. The amount actually advanced by Business Partners under the loan agreement is R3 953 553.70. On 23 May 2017 judgment was granted in this division to Nedbank Limited ("Nedbank") against Genene and Frederick Carse. Their property in Oranjezicht, Cape Town was declared executable. Business Partners discovered this in August 2017. Genene and Frederick Carse had bound themselves as sureties for and co-principal debtors with Rocacube in favour of Business Partners. The loan agreement entitles Business Partners to withhold any portion of the loan, and to claim immediate payment of the outstanding balance and any royalty if there should be judgment against a surety which could lead to the attachment in execution of any of the surety's assets. Business Partners, as it was entitled to do, elected not to advance any further sums. On 9 April 2018 it brought an application against Frederick Carse, Genene Carse and the FPC Family Trust seeking repayment. On 18 May 2018, one business day before the application was due to be heard, the board of Rocacube resolved in terms of section 129(1) of the Companies Act 71 of 2008 to place the company under business rescue supervision. The business rescue practitioner appointed by the board did nothing: he did not convene a meeting of creditors, nor did he publish a business rescue plan. On 23 October 2018, Business Partners accordingly instituted an application to terminate the business rescue proceedings and to liquidate Rocacube. Notwithstanding an order granted pursuant to a chamber book application that Rocacube file its answering affidavit within ten days from 16 January 2019, Rocacube waited until the day before the matter was due to be heard, being 8 February 2019, to do so. Unsurprisingly in the circumstances, this Court granted the order sought, and Rocacube was accordingly placed in provisional liquidation, with a return day of 2 April 2019. On the return day, Rocacube was placed in final liquidation. The liquidators, who are the third and fourth respondents, sold the Somerset West property by way of public auction on 3 July 2019. On the following day, Genene Carse instituted an urgent application to interdict the liquidators from confirming the sale, pending an application to set aside the final liquidation order and to substitute it with an order again placing Rocacube under business rescue. A business rescue application was instituted on 19 July 2019, the day on which the urgent interdict application was set down for hearing. In the event, the business rescue application was settled on the basis that Business Partners would withdraw its opposition in return for Genene Carse doing the following.  (a) subdividing her Oranjezicht property; (b) registering a mortgage  bond  in  favour  of  Business  Partners  for R5,5 million over the remainder; and (c) binding herself as surety for Rocacube's indebtedness to Business Partners up to R5,5 million. On 5 February 2020, this Court ( per Ndita J) made the following order: (a) declaring the liquidation proceedings suspended in terms of section 131 (6) of the Companies Act; (b ) placing Rocacube (in liquidation) under business rescue supervision; and (c) appointing Charl de Waal Boshoff, the second respondent, as business rescue practitioner. Because  of  a  lack  of  post-commencement  funding, Mr Boshoff on 7 May 2020 filed with the Companies and Intellectual  Property  Commission  ("the  CIPC")  a  notice terminating the business rescue proceedings. The validity of this notice and its effect are central to the present application, and I shall return to it in due course. The liquidators resumed their duties. On 10 July 2020 they sold the Somerset West property to the sixth respondent, Orzoscore (Proprietary) Limited ("Orzoscore"), for R8 million. They also applied for an extension of their powers, and that application was set down for hearing on 4 September 2020. On the same day, Rocacube, Frederick Carse, Genene Carse and the FPC Family Trust served on Business Partners' attorneys an application to set aside the final order of liquidation, alternatively to convert the liquidation into business rescue proceedings. After that application was postponed, a replying affidavit was delivered, to which were attached guarantees allegedly issued by Nedbank in favour of a purchaser of sectional title units, Mr Abdul Hamid Hassan. The purpose of this evidence was to show that Rocacube had funds for the development. It was however definitively shown in that matter that the guarantees were fraudulent: Nedbank had not issued them. In the founding affidavit  in the present  matter,  Mr Daniel Carse says that the fraudulent nature of the guarantees was not known to the Carse family. It is hard to understand, though, what possible advantage Mr Hassan could have obtained from fraudulent guarantees. The application to set aside the liquidation was duly withdrawn. On 24  February  2021  an  order  was  made  extending  the powers of the liquidators. That brings one to the present application. The Carses' attorneys having been advised by Business Partners' attorneys that the documents for transfer of the property were to be lodged in August 2021, the applicants instituted this application on 23 August 2021. The applicants on this occasion are Mr Daniel Carse and Dr Mohamed Nasir Jaffer. Part A was  for  interdictory  relief: the applicants  sought  an interim order interdicting the Registrar of Deeds, who is the eighth respondent, from passing transfer of the property to Orzoscore pending the final determination of the part B relief. An interdict was granted by Mangcu-Lockwood J on 30 August 2021, with costs standing over. Part B is what is before the Court now. An order is sought that the business rescue proceedings remain operative in light of the failure of either Mr Boshoff or an affected party to have applied for termination in terms of sections 132 and 141 of the Companies Act. The further relief is consequential upon that declarator. As an alternative, the applicants ask that Rocacube be placed under business rescue supervision. The Court's part A order included a timetable.  The applicants were to deliver their replying affidavit, if any, by no later than 11 October 2021.  They have not delivered a replying affidavit. They were to deliver heads of argument in accordance with the time periods applying to early allocations. The applicants have also not delivered heads of argument. Business Partners in due course brought a conditional counter-application, and no answering affidavit has been delivered. When the matter was called today there was appearance on behalf of the applicants only for the purpose of seeking a postponement.  That application was refused, and there was no further argument presented on behalf of the applicants. Business Partners has put in issue the applicants' legal standing.  The applicants averred that they are affected persons in terms of section 128( 1 )(a) of the Act, on the basis of being creditors of Rocacube.  The only document provided in support of this consists of one page, having as its heading "List of creditors". The attachment is referred to in the same way in the body of the founding affidavit, and that is the sum total of it. No explanation is provided as to who prepared the document, why it was prepared, and why it should be regarded as reliable. It says next to the name of Mr Daniel Carse  merely  "Loan", and the same next to the name of Dr Jaffer. There are no details; even the amounts of the alleged loans are not stated. Mr Carse avers that he invested R200 000 in the development during the period July 2019 to February 2020.  He has annexed no document in support of this averment.  Also, during that period the company was in liquidation, and the liquidation proceedings had not been suspended.  It is illogical that Mr Carse would have advanced monies for the development during that period, particularly as the property had been sold by public auction in July 2019 and the outcome of the pending business rescue application was as yet unknown. On 6 May 2021 the applicants' attorneys wrote to the liquidators' attorneys (who were also the attorneys for Business Partners) to say that they represented Mr Carse in his capacity as a directo, and Dr Jaffer in his capacity as a creditor. The distinction drawn in this correspondence is significant. As the Supreme Court of Appeal said in Four Wheel Drive Accessory Distributors CC v Rattan NO 2019 (3) SA 451 (SCA) para 7, "The duty to allege and prove locus standi rests on the party instituting the proceedings."  (See also Mars Inc v Candy World (Pty) Ltd [1990] ZASCA 149 ; 1991 (1) SA 567 (A) at 575H-I; Kommissaris van Binnelandse lnkomste v Van der Heever 1999 (3) SA 105 (SCA) para 10.) Absent a replying affidavit, there is nothing to gainsay the evidence put up in answer to the bald allegation that Mr Carse is a creditor. I accordingly find that he is not. Dr Jaffer, too, has presented absolutely no documentary evidence in support  of the allegation that he is a creditor. Despite having deposed to two affidavits, Dr Jaffer has not provided any basis on which the Court  is able to conclude that he is indeed a creditor. Notably, Dr Jaffer did not submit a claim to the liquidators, as he surely would have done. Importantly, on 18 May 2021 the attorneys for the liquidators in a letter to Dr Jaffer's attorneys  disputed that he was a creditor. On 24 May 2021 the attorneys replied and said that the nature of their mandate did not afford them an opportunity to enter into protracted correspondence over this issue. It seems odd, but that may have been so. It however raises the question of why the issue was not dealt with in the founding papers. I am satisfied that Dr Jaffer, too, has not shown that he is a creditor of Rocacube. The lack of locus standi on the part of the applicants means that the application must fail for that reason alone. Given the Carses' penchant for delay through litigation, though, I think it necessary also to deal with the merits of the application. What is contended on behalf of the applicants is, first, that Mr Boshoff failed to file with the CIPC a form CoR125.2 terminating the business rescue proceedings, and, second, that he failed to bring an application in terms of section 141(2)(a)(ii) of the Companies Act for an order discontinuing the business rescue proceedings and placing Rocacube into liquidation. The applicants appear to have been unaware of an email sent to the CIPC by Mr Boshoff on 7 May 2020 - which has been made available to the Court by way of a supplementary answering affidavit on behalf of Business Partners. In the email Mr Boshoff advised the CIPC that he was terminating the business rescue proceedings in terms of section 141. Attached to the email was a form CoR125.1 business rescue status report, which pertains to business rescue proceedings not having been concluded within three months. Mr Boshoff says in his email that there seems to be no CoR form for termination in terms of section 141 , and asks the CIPC to provide him with the relevant form if he is wrong about this. Mr Boshoff is correct.  There is no such form. Mr Boshoff did not comply with section 141(2)(a) of the Companies Act. He did not inform the Court that there is no reasonable prospect of Rocacube's being rescued, nor did he apply to court for an order discontinuing the business rescue proceedings  and placing the company into liquidation. The co-ordinating conjunction "and" between subparagraphs (i) and (ii) of section 141(2)(a) suggests that both these steps must be taken. In the heading to his notice to all affected persons of 7 May 2020, Mr Boshoff calls it a notice in terms of section 141(2)(a)(1) and section 132(2)(b) , and in the body of the notice Mr Bosh off referred to section 141(2)(a)(i) as read with section 132(2)(b). Although not altogether clear, it appears that the notice was also annexed to the email to the CIPC. As already explained, reliance on section 141(2)(a)(i) alone is potentially insufficient - and in any event, there is no evidence that Mr Boshoff complied even with that provision. But one sympathises with Mr Boshoff. Section 141(2)(a)(ii) would require of him to apply for an order placing the company into liquidation. The company is however already in liquidation. All that Ndita J's order did was to suspend the liquidation proceedings. That fact alone may not be enough to reinstate the liquidation upon the termination of the business proceedings. Section 131(6) expressly states that the liquidation proceedings are suspended until the business rescue proceedings end, if the Court makes the order applied for. Mr Boshoff did not apply for such an order, as already indicated. I am however in agreement with the submission made on behalf of the business rescue practitioner by Mr van Niekerk that the qualifying clause in section 131(6) , "if the court makes the order applied for", is simply in the wrong place. It should have been in the line after paragraph (b) of that subsection, because it is qualifying not the end of the business rescue proceedings, but rather the suspension that results from the application. Confusion arises also from section 132(2). One of the ways in which business rescue proceedings end is if the business rescue practitioner has filed with the CIPC a notice of the termination of business rescue proceedings. That is presented, statutorily, as an alternative to an order by a court setting aside the business rescue order that began the proceedings. How that is to be reconciled with section 141(2)(a) is very hard to know. Whereas section 141(2)(a) envisages both informing the CIPC and an application to court for the discontinuation  of  the  business  rescue  proceedings, section 132(2) appears to regard a notice of termination filed with the CIPC as being in itself sufficient. Of assistance is a Supreme Court of Appeal judgment that, although not dealing with these specific provisions, seems to give the answer. In Knoop NO and Another v Gupta (Execution) 2 021 (3) SA 1 35 (SCA), the Court was concerned with termination of business rescue proceedings not under section 141(2)(a) but under section 141(2)(b) , that is to say, with termination where there are no longer reasonable grounds to believe the company is financially distressed. However, as with subsection (2)(a), subsection (2)(b) also provides for the court to be informed, and in certain circumstances for an application to be made to court. Wallis JA said this in paragraph 40 of the judgment: "If at the end of the BRP's investigation, they conclude that there are no longer grounds for thinking that the company is financially distressed, they must inform the court, the company and all affected persons of that fact and file a notice of termination of the business rescue. On filing that notice, the business rescue proceedings end." The footnoted authority for this last proposition is section 132(2)(b). This is consistent with the judgment in Diener NO v Minister of Justice and Others 2018 (2) SA 399 (SCA) para 27, where Plasket AJA also footnoted section 132(2)(b) as founding he proposition that business rescue proceedings end when the business rescue practitioner has filed with the CIPC a notice of termination. Clearly that is at least very persuasive authority. accordingly find that in the present case the business rescue proceedings ended when Mr Boshoff filed with the CIPC a notice of termination, on 7 May 2020. As the order of Ndita J merely suspended the liquidation proceedings, those proceedings recommenced also on 7 May 2020.  I have addressed  already  the qualifying  clause in section 131(6)(b). This finding is consistent with the extension by this Court on 24 May 2021 of the powers of the liquidators. That order (made by Cloete J) would not have been a sensible one had the Court been of the view the Iiquidation remained suspended. An alternative ground for termination has been raised in argument by Business Partners. It is premised on section 150(5) of the Companies Act, in terms of which the company under business rescue must publish a business rescue plan within 25 days of the appointment of the business rescue practitioner. (The period can be extended, but that is not relevant here.) Mr Boshoff, so the argument goes, did not prepare  a business rescue plan, and accordingly the business rescue proceedings terminate by operation of law. The same argument found favour with the Court in DH Brothers Industries (Pty) Ltd v Gribnitz NO and Others 2014 (1) SA 103 (KZP) para 28, and again in Absa Bank Ltd v Caine NO and Another and one related case 2014 ZAFSHC 46 para 56. Although not necessary, given my conclusion regarding the effect of section 132(2)(b) , would have declared the business rescue proceedings terminated on this basis too. It has been four years and nine months since Mr Boshoff was appointed business rescue practitioner. No attempt at business rescue has been made since May 2020. Creditors cannot be expected to wait indefinitely to be paid. The alternative relief of again placing Rocacube under business rescue supervision can on no basis be granted. It is  unnecessary  in  the  circumstances  to consider the conditional counter-application. What remains to be addressed is the question of costs. Business Partners has sought costs on a punitive seal e on the grounds of the present application being the most recent manifestation of a long history of abuse of the legal process. I agree.  The failure on the part of the applicants to have done anything further after obtaining their part A relief demonstrates that this was all about delay. In the circumstances I make the following order: [1]        The application is dismissed with costs , including the costs of two counsel on respectively scales B and A. [2]        Such costs are to be paid jointly and severally by the applicants on the scale as between attorney and client. [3]        The costs are to include also the costs that stood over at the time that the part A relief was sought. FAGAN, AJ JUDGE OF THE HIGH COURT sino noindex make_database footer start