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SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document in compliance with the law and SAFLII Policy

REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, JOHANNESBURG

 

1.REPORTABLE:                                         YES/NO

2.OF INTEREST TO OTHER JUDGES:    YES/NO

3.REVISED

22/10/2020  

 

CASE NUMBER: 28249/2019 

In the matter between:-

 

WAYNE ROBERT CLARK N.O                                                              First Intervening Party   

RAYNOLD SELLO MKHONDO N.O.                                             Second Intervening Party 

THEMBA MBATHA                                                                                 Third Intervening Party 

Identity Number: [….]

OPEN VICUS NKOSI                                                                             Forth Intervening Party 

Identity Number: [….]

 

In Re:

 

SIBANYE GOLD LTD t/a                                                                                      First Applicant

SIBANYE-STILLWATER

RAND URANIUM (PTY) LTD                                                                           Second Applicant

EZULWINI MINING COMPANY (PTY) LTD                                                      Third Applicant

 

And

 

SERVIGRAPH 42 CC                                                                                                 Respondent

 

 

 

 

In the matter between:

 

CASE NUMBER: 28248/2019

 

RAND URANIUM (PTY) LTD                                                                                       Applicant

 

And

 

SERVIGRAPH 42 CC                                                                                               Respondent

 

 

 

 

In the matter between:

 

                                                                                                       CASE NUMBER: 28247/2019

 

SIBANYE GOLD LIMITED t/a

SIBANYE-STILLWATER                                                                                              Applicant

 

And

 

SERVIGRAPH 42 CC                                                                                               Respondent

                                                                                                                                                           

JUDGMENT

 

DIPPENAAR J:

 

Delivered:       This judgment was handed down electronically by circulation to the parties’ legal representatives by e-mail. The date and time for hand-down is deemed to be 10h00 on the 22^nd October 2020.

 

[1]          These three applications were enrolled for hearing and allocated as a special motion with a two day duration by the Acting Deputy Judge President (“ADJP”) on 23 July 2020. The parties had agreed that the three main applications, under case numbers 28247/2019, 28248/2019 and 29249/2019 were to be heard together as the issues which arose were the same or similar in all the proceedings. The applications were not however formally consolidated.

[2]          The applicants’ heads of argument[1] referred to the applications as “being consolidated” and stated “It is common cause that the applications should be heard together considering that the decision in one will determine the result in all of them”.

[3]          The relief sought by the applicants in the main applications were declaratory orders that the lease agreements concluded between the respective applicants and the respondent (“Servigraph”) have been duly cancelled together with eviction orders and ancillary relief. Servigraph disputed the lawfulness of the termination of the lease agreements and, inter alia, sought a referral of the matter to trial or oral evidence. It further contended for a counterclaim for damages based on the applicants’ unlawful termination of the lease agreements. The lawfulness of the termination of the various lease agreements lies at the heart of the applications.

[4]          In the proceedings under case number 28249/2019, two applications for leave to intervene were launched shortly before the hearing. The first was launched on 18 October 2020 by two employees of Servigraph, Messrs Mbatha and Nkosi (“the intervening employees”). The second was launched the following morning shortly before the hearing by Servigraph’s business rescue practitioners, Messrs Clark NO and Mkhondo NO.

[5]          The respondent supported both the intervention applications. In its heads of argument, the respondent had raised the non-joinder of the business rescue practitioners as one if its grounds of opposition to the application.

[6]          As correctly pointed out by the applicants, the respondent had not raised the issue of non-joinder in its affidavits. Neither the applicants or respondent dealt with this issue in their affidavits in the main application as the respondent was only placed under supervision after the delivery of the replying affidavits and on 8 May 2020. None of the parties applied for leave to deliver further affidavits to deal with this subsequent event.

[7]          The applicants opposed the two intervention applications launched under case number 28249/2014 and elected not to deliver any answering papers. The applications were thus argued on the basis of the founding papers in the intervention applications. The applicants further argued that the applications under case numbers 28247/2019 and 28248/2019 should proceed in the event that I was inclined to grant the employees’ intervention application, which would necessitate the postponement of the proceedings under case number 28249/2019.

[8]          I turn first to the intervention application of the intervening employees, who stated that they are employees of the respondent who reside on the farm Waterpan/Jachtfontein/Modderfontein, properties in respect of which the applicant seeks eviction orders. They also represent the group of Servigraph’s employees who live on the farm and have no other place of residence. A list of employees was attached to the affidavit as well as a photograph depicting some 6 employees. The intervening employees only found out about the application and their possible eviction on 17 October 2020 when they were told by a member of Servigraph and were not notified of the eviction proceedings earlier. Thus they were only able to launch the intervention application on 18 October 2020. Very little information is presently available regarding how many other employees may be in the same position.  It is also unclear on exactly what portion of the leased properties they reside.

[9]          The applicant’s heads of argument in the main application stated: “There are no people residing on the properties and therefore the provisions of section 4 of the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 19 of 1998 [“PIE”] do not apply”. The applicants’ founding papers in the main application did not refer to any occupiers and did not aver that there are no people residing on the properties.

[10]       The eviction applications were not served on any individuals residing or occupying the property. The applicants did not strenuously contend that the employees’ application should be dismissed, although it was expressly not conceded that there are indeed any employees of the respondent or other persons presently residing on the properties.

[11]       From the main application papers, it appears that Servigraph conducts farming activities from the farms leased by the various applicants and has some 25 full time employees who work on all the farms as well as some 20 monthly casual employees. It is thus conceivable that many of these employees may be resident on the farms with or without their families.

[12]       As correctly pointed out by counsel for the intervening employees, occupiers of immovable properties, such as the farm workers involved here, enjoy constitutionally entrenched rights [2] and are afforded statutory protection either under the Extension of Security of Tenure Act (“ESTA”)[3] or, if not applicable, under PIE when faced with eviction. The provisions of the Labour Tenure Act[4] may also be relevant. Insufficient facts are presently available to determine which of the statutes apply. Each has specific statutory requirements pertaining to eviction and the steps which must be taken to do so.

[13]       These are important issues which must be given proper consideration before a court will consider the granting of an eviction order. It can only be done in due course once all the relevant facts are available and have been properly placed before a court. The true facts must be fully investigated to establish whether there are other individuals in a similar position to that of the intervening employees who need to be considered and how many individuals are involved.  

[14]       For purposes of the intervention application it must be considered whether the intervening employees have a direct and substantial interest in the subject matter in the proceedings[5]. I am satisfied that Messrs Mbatha and Nkosi have illustrated such a direct and substantial interest and have shown prima facie that they have constitutionally entrenched rights which will be affected by the order sought by the applicants[6] .  As such, this court has no discretion and they must be allowed to intervene. It follows that the intervention application must succeed.

[15]       Both ESTA and PIE define the concept “occupiers”. It is in my view appropriate to join all occupiers of the leased properties as an additional party to the application so that all possible occupiers of the property may be included in the proceedings[7]. This is necessary to accommodate the prospect that there may be other persons occupying the property who may or may not be employees of the respondent or are hitherto unnamed employees of the respondent who have an interest in the proceedings.  [8]

[16]       It is in my view necessary to further consider the granting of additional orders regarding service of the application on persons occupying the properties in the various applications, although such relief was not specifically sought in the intervention applications. On 19 October 2020, I called for and afforded the parties an opportunity to provide additional submissions on 20 October 2020, after I stood the matter down to consider the submissions and authorities referred to by the parties.

[17]       I have now considered all the submissions made by the various parties on this issue and have concluded that it would be appropriate to direct that service of the application be effected on all the individual occupiers of the various properties, including on all the respondent’s employees. It would however be inappropriate at this juncture to give any specific directives as to how service is to be effected on the occupiers as it could result in service which may not be in accordance with the procedures and requirements of the applicable legislation. It goes without saying however that such service must be effective.  

[18]       Turning to the intervention application of the business rescue practitioners of Servigraph, their case for intervention is predicated on their statutory rights and duties under Chapter 6 of the Companies Act[9] (“the Act”). It was contended that in their capacity as duly appointed business rescue practitioners, they had a substantial interest in the subject matter of the application. In argument, emphasis was placed on the provisions of s 128, s133, s144(3) and s145(1)(a) of the Act, which, in very broad terms, defines affected persons to include the employees and creditors of the respondent, creates a moratorium on legal proceedings against the respondent and requires notification of employees and creditors of any court proceedings. It was argued that service or notification of the application should be affected on all employees and creditors of the respondent.

[19]       The applicants’ opposition to their intervention was by and large predicated on the contention that the respondent was in unlawful occupation of the property since 6 May 2019 pursuant to the valid cancellation of the lease agreements on 5 February 2019. It was argued that there was no challenge to the letters cancelling the lease agreements and that the provisions of clause 14 of the lease agreement was similarly not challenged. As the moratorium envisaged by s133 of the Act was only applicable to property “lawfully in possession” of the company, s133 was not applicable. It was argued that the business rescue practitioners thus had no legal interest in the applications. My attention was further drawn to the letter of applicants’ legal representatives addressed to the ADJP on 7 July 2020 in terms of which the present allocation was sought. Therein, it was stated by the applicants that s133 of the Act is not applicable.

[20]       The applicants further argued that the business rescue proceedings constituted an abuse and that the approach of the respondent was a strategy aimed at frustration and delay, not only in respect of the averments in its affidavits but also in relation to its conduct.  On this basis, a punitive costs order was sought against the respondent.

[21]       Reliance was placed by the applicants on Kythera Court  v Le Rendez- Vous Café CC and Another[10](“Kythera”) where Boruchowitz J found that the general moratorium in s 133 did not encompass legal proceedings for eviction where a lease has been validly cancelled and the company under business rescue is an unlawful occupier[11] . A similar finding was made in Southern Value Consortium v Tresso Trading 102 (Pty) Ltd[12] (“Tresso”),  by Blignaut J.

[22]       Whilst I respectfully agree with the conclusion reached by Boruchowitz J and Blignaut J, at this stage such proposition does not assist the applicants. In both Kythera and Tresso the court determined the validity of the cancellation of the lease and the company’s status as unlawful occupier in the same judgment and pursuant to argument on all the issues.

[23]       In the present instance, the validity of the cancellation of the lease agreements, and thus Servigraph’s status as lawful or unlawful occupier, lies at the heart of the disputes in the main application, which still has to be determined. This will determine whether s133 of the Act is applicable or not. It would be inappropriate to effectively prejudge the merits of the main application as part of the intervention application and without argument being advanced.  In the presence of substantial disputes between the parties in an application which still has to be adjudicated upon, it cannot presently be accepted as a fact that s133 of the Act is not applicable, as the applicants aver.

[24]       Whether the section is applicable and whether leave is required by the applicant under s133, as contended by the respondent, is not an issue which can or should be determined at this stage. The applicability of s133 of the Act is in any event not the end of the enquiry.

[25]       The only relevant enquiry is whether the business rescue practitioners have illustrated a direct and substantial interest matter in the subject matter of the proceedings. I have already referred to the authorities and the relevant test, in the context of the other intervention application referred to above.  

[26]       Applying the same principles, I am satisfied that the business rescue practitioners have illustrated a sufficient legal interest in the subject matter of the application[13] to be joined as parties to the proceedings under case number 28249/2019. The duties and powers of the business rescue practitioners are set out in s140 of the Act. These duties include the duties to take full management control of the company and to develop a business rescue plan. The cancellation of the lease agreements and eviction from the properties would clearly have a substantial impact on the development of a successful business rescue plan and the management of the farming business operations conducted by Servigraph.

[27]       Under s140(3) the business rescue practitioners have the responsibilities, duties and liabilities of a director of the company[14] and are officers of the court who must report to it in terms of any applicable rule of or orders by a court. One of the issues raised in the main application pertains to Servigraph’s substantial damages claims against the applicants due to the applicants’ alleged unlawful termination of the lease agreements.

[28]       In my view, the business rescue practitioners have established a direct and substantial legal interest in the subject matter in the proceedings and have shown prima facie that they have rights which will be affected by the order sought by the applicants in the pending proceedings[15].  It follows that their intervention application must succeed.

[29]       Moreover, the business rescue practitioners can in due course reliably report to the court on the relevant facts and circumstances surrounding the Servigraph employees and their occupation on the various leased properties. It would in my view be in the interests of justice to direct them do so.

[30]       It is in my view not necessary in the present proceedings to determine whether all creditors and employees of the respondent must be notified or receive service of the application in terms of s 144(3) and 145(1)(a) of the Act, as argued by the business rescue practitioners and the respondent. It was further not fully canvassed at the hearing whether these affected persons should be joined to the proceedings or whether notification would be sufficient. I am mindful of the fact that I have not been called upon in the intervention application to determine this issue, which may require a nuanced debate in due course.

[31]       The business rescue practitioners have not sought leave to intervene in the remaining applications under case numbers 28247/2019 and 28248/2019, where Servigraph is also the sole respondent. Neither have the intervening employees.

[32]       The applicants in those proceedings argued at the hearing on 19 October 2020 that as the intervention application only related to those under case number 28249/2019, the remaining two applications should be determined on their merits now as they pertained to different farms, to wit Libanon and Panvlakte, whilst the proceedings under case number 28249/2019 are postponed.

[33]       During the hearing on 20 October 2020 and after hearing all submissions pertaining to service, as I had requested from the parties, I ordered that all three the applications were to be postponed sine die as it was not in the interests of justice to proceed with the two applications under case numbers 28247/2019 and 28258/2019. The reasons for reaching such conclusion, follow hereunder.

[34]       The applicants’ argument was predicated on the statement that there were no persons resident on the farms Libanon and Panvlakte and it was vacant land. It was argued that PIE and/or ESTA accordingly did not apply and there was thus “no legitimate reason on the papers or elsewhere why the two matters[16] could not proceed”. This statement was repeated in a new affidavit made by a unit manager, employed by one of the applicants, Mr Jooste, delivered during the evening of 19 October 2020. In the affidavit, reliance was also placed on clause 10.1 of the lease agreement, which prohibits any person from residing on the leased properties absent consent from the applicants, which was not sought or granted by the applicant. The irresistible implication is that the applicants consider any occupiers of any of the properties as unlawful.

[35]       In addition to the fact that this affidavit was filed irregularly and without leave being sought or granted for its delivery, the affidavit is inadequate and bald in its content. In it, Mr Jooste makes the bald statement that the farms Libanon and Panvlake are unoccupied but does did not describe any steps taken by the applicants to either establish the present position or to verify whether the information available to them that the properties are vacant, is indeed correct. I am not satisfied on the available facts that it can unequivocally be accepted that there are no employees of the respondent or other individuals occupying the properties, absent a proper investigation and report on the issue by the business rescue practitioners, so that all relevant facts may be placed before a court in due course.

[36]       The applicants are further seeking to jettison an agreement reached by them with the respondent that the applications should be heard together. The decision to do so seems to be based on expedience when the shoe pinched consequent upon the intervention applications. Considering the correspondence to the ADJP regarding the allocation, this agreement formed the basis on which the matters were ultimately allocated as a special allocation.

[37]       The applicants further disregard an agreement with the respondent that the findings in one of the matters would follow in the other matters, as articulated in the applicant’s heads of argument. If the matters are dealt with separately by different courts, different factual and/or legal findings may follow.

[38]       In order to adjudicate the remaining two applications, it would require of this court to disavow my mind of information provided in the proceedings under case number 28249/2019 which is pertinent to the proceedings in the other matters and to ignore the facts placed before me pertaining to the business rescue proceedings of the respondent and the possible existence of employees of the respondent who reside or occupy the properties.

[39]       It is also now apparent that the matters are not ripe for hearing and the papers require supplementation before they can be adjudicated on all the relevant facts. Whilst there have been no intervention applications in the other two applications, the issue of non-joinder of the business rescue practitioners of Servigraph has been raised by the respondent in its heads of argument. Although belatedly raised by Servigraph, it is nonetheless a factor which I must consider.

[40]       Lastly, the main applications were launched during August 2019 and Servigraph’s answering papers were delivered during October or November 2019 respectively, well prior to Servigraph being placed in business rescue. It could thus not have been expected of any of the parties to deal with this issue in their papers. Material events have now occurred which must be placed before the court so that the applications can be properly considered. The issues surrounding employees and other individuals who occupy the properties must also be properly canvassed to ensure a proper adjudication of the applications based on all the relevant facts.

[41]       I turn to the issue of costs. The applicants sought a punitive costs order against the respondent. In turn, adverse punitive costs orders were sought against the applicants by the intervening parties and the respondent. In short, the applicants contended that the business rescue proceedings were an abuse and part of a strategy to frustrate and delay the eviction applications; whereas the intervening parties and the respondent contended that the applicants, as dominus litis, had failed to take all of the necessary steps in relation to the applications, which resulted in the need for the intervening employees and the business rescue practitioners to launch intervention applications to protect their interests and ultimately the postponement of the main applications.

[42]       On the available facts, it cannot be concluded that the business rescue proceedings were an abuse. Nor can the intervention applications be characterised as such.  The conduct of the applicant and how it resulted in the present position, must be considered.

[43]       It was undisputed that Servigraph’s voluntary business rescue resolution was signed on 7 May 2020 and registered with CIPC on 8 May 2020. Its creditors were notified of the business rescue on 15 May 2020. On 23 June 2020, Servigraph’s attorney addressed a letter to each of the applicants in the three main applications, advising them that it had been placed under supervision and business rescue and advising them of the identity of one of the business rescue practitioners, Mr Clark. In that correspondence, attention was drawn to the provisions of s133 of the Act and the moratorium contained therein. The letter further drew attention to the fact that the validity of the cancellation of the lease agreements formed a major dispute in the pending main applications and it was contended that the applicants required the permission of the business rescue practitioner to proceed with the three applications.

[44]       On 7 July 2020, the applicants’ attorneys addressed a letter to the ADJP requesting the allocation of the three matters as a special motion. In that letter reference was made to the 23 June letter and the dispute regarding the applicability of s133. It was contended that the business rescue constituted an abuse of process designed to delay the finalisation of the eviction proceedings. In the same letter the applicants expressed the view that s133 of the Act was not applicable as the lease agreements were validly cancelled and Servigraph was thus in unlawful occupation of the properties. The same argument was advanced in opposition to the business rescue practitioner’s intervention application.

[45]       The dispute regarding the applicability of s133 of the Act and the position of the business rescue practitioners is thus not new and existed even before the ADJP was approached for an allocation, yet no steps were taken by the applicants to address the issue timeously or to raise it as an issue in the application papers so that it could be considered at the hearing. No leave was sought to file additional papers to bring the existence of the business rescue proceedings to the attention of the court. The applicants also manifestly failed to take any active steps to involve the business rescue practitioners in the proceedings and unreasonably opposed their intervention application.

[46]       In launching the eviction proceedings, the applicants further at no stage considered the position of employees of the respondent who may well be residing on the various properties and took no steps to establish what the position was in relation to people who may be occupying any of the properties. The applicants should have notified the employees of the proceedings earlier and afforded them an opportunity to exercise their rights. At the very least, the applicants should have properly investigated the facts surrounding individuals who may occupy or reside on the properties when launching the eviction proceedings and thereafter. The founding papers do not even address the issue properly or comprehensively.

[47]       Considering that Servigraph conducted farming activities, it would be unreasonable for the applicants not to anticipate that it has multiple employees and that at least some of them may be in occupation of or resident on the properties and that this issue should be taken into consideration.

[48]       Although the applicants complained that the intervention applications were an ambush, it was as a result of their own failure to do what was necessary that the events unfolded at the hearing as they did, ultimately necessitating the postponement of the main applications.

[49]       The granting of a punitive costs order is warranted and in the interests of justice in these circumstances, at the very least so that the intervening parties and the respondent are not out of pocket for the legal expenses incurred.[17] This is specifically apposite in respect of the intervening employees who are not people of means and whose rights require protection.

[50]       The position of the respondent in the proceedings under case number 28249/2019 however stands on a slightly different footing. In the correspondence, the applicants justifiably criticised Servigraph for failing to timeously deliver their affidavits and heads of argument. The complaint was echoed in the correspondence to the ADJP and resulted in a directive being given on 23 July 2020 that the respondent’s heads of argument were to be served by 21 August 2020. The respondent failed to do so. After allocation of the matter to me, I gave a further directive for the respondent to deliver its heads of argument. In response, a practice note was filed by respondent’s counsel explaining that he had recently been briefed in the matter, that he was under the impression heads had been filed previously and that it would be impossible to deliver heads of argument by the deadline. In those circumstances, I granted a further indulgence for the heads of argument to be delivered so that a postponement could be avoided. During the hearing, and in all the respondents’ papers, including its heads of argument, no explanation was tendered why respondent’s heads were not delivered timeously, other than the limited explanation proffered in the practice note, and why counsel was briefed late.  It does not avail the respondent to blame the applicants for failing to bring a compelling application in relation thereto, whilst it, independently, was fully aware of its obligation to deliver its heads of argument timeously under the rules, enforced by the ADJP’s directive to do so by 21 August 2020.

[51]       I agree with the applicants’ contention that the respondent’s conduct is worthy of censure on this issue. An appropriate way to illustrate displeasure would be to deprive the respondent of the punitive costs order I intend to grant under case number 28249/2019 and to direct such costs to be on the usual scale as between party and party.

[52]         I grant the following orders:

Case number 28247/2019

[1] The application is postponed sine die.

[2] The applicant is directed to pay the wasted costs on the scale as between attorney and client.

Case number 28248/2019

[1] The application is postponed sine die.

[2] The applicant is directed to pay the wasted costs on the scale as between attorney and client.

Case number 28249/2019

[1] The application is postponed sine die.

[2] The first and second intervening parties, Messrs Clark NO and Mkhondi NO, in their capacities as the duly appointed business rescue practitioners of the respondent, are granted leave to intervene and are joined as the second respondent and third respondent respectively.

[3] The third and fourth intervening parties, Mr Mbatha and Mr Nkosi are granted leave to intervene and are joined as the fourth respondent and fifth respondent respectively.

[4] “All occupiers of unregistered portions of Portion 3, 5, 8, 14, 19, 21, 24 and 23 of the Farm Waterpan, Portion 24 of the farm Modderfontein and Portion 41 of the Farm Jachtfontein” (“the leased properties”) is joined as sixth respondent.

[5] The first, second third and fourth intervening parties are directed to deliver their answering papers within 15 days of date of this order.

[6] The first and second intervening parties are directed to compile and submit a report to the Court and the parties within 15 days of date of this order regarding the employees of the respondent, which shall include in respect of each employee: (i) whether such employee occupies and is presently resident on any of the properties occupied by the respondent and leased from any of the applicants (“the properties”) ; if so (ii) the identification of which part of the properties is occupied by such employee, and (iii) how many individuals occupy such property with such employee.

[6] The applicants are directed to serve the application in an effective manner and in compliance with the applicable statutory provisions on all occupiers of the leased properties and on all employees of the respondent.

[7] The applicants are directed to pay the costs of the intervention application of the first and second intervening parties, Messrs Clark NO and Mkhondo NO, on the scale as between attorney and client, jointly and severally, the one paying the other to be absolved.

[8] The applicants are directed to pay the costs of the intervention application of the third and fourth intervening parties, Messrs Mbatha and Nkosi on the scale as between attorney and client, jointly and severally, the one paying the other to be absolved.

[9] The applicants are directed to pay the costs of the respondent, jointly and severally, the one paying the other to be absolved.

 

           

EF DIPPENAAR                       

JUDGE OF THE HIGH COURT JOHANNESBURG

 

 

 

APPEARANCES

 

DATES OF HEARING                                            :           19 and 20 October 2020

 

DATE OF JUDGMENT                                           :           22 October 2020

 

 

1^ST AND 2^ND INTERVENING PARTIES              :           Adv. J Scherman

COUNSEL                           

                                     

1^st  AND 2^nd INTERVENING PARTIES              :           Venn & Muller Inc

ATTORNEYS                                                          

(business rescue practitioners)

 

 

3^rd AND 4^th INTERVENING PARTIES                :           Adv. M. Mathaphuna

COUNSEL

                                                                                     

3^rd AND 4^th INTERVENING PARTIES                :           Mfinci Bahlmann Inc.

ATTORNEYS                                                          

(employees)

 

APPLICANTS’ COUNSEL                                   :           Adv. TJB Bokaba SC

                                                                                                Adv. H Rajah

APPLICANTS’ ATTORNEYS                              :           Werksmans Attorneys

                                                                                                 

RESPONDENT’S COUNSEL                               :           Adv. S. van Rensburg SC

 

RESPONDENT’S ATTORNEYS                          :           Martin van Vuuren Attoneys

 

                                                                       

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