Louis Case Reports

COMPANY – Winding up – Abuse of business rescue

Stratagem to avoid winding up – Application an abuse of court process – Applicants in business rescue application non-suited – Using legal process provided for companies which may legitimately be rescued for an ulterior purpose to thwart the winding-up proceedings – Winding-up order correctly granted – Companies Act 71 of 2008, s 131(6).

Facts: PFC is a property and asset owning company. A dispute with SARS over amounts owed resulted in approaches to court and an offer of security to SARS. PFC later embarked upon a campaign to strip itself of all its assets against which a creditor could levy execution. In particular, it sold all three immoveable properties which it had undertaken not to dispose of, as well as two yachts. SARS launched a winding-up application and PFC’s registered address was suddenly changed from Gauteng, to an address within the jurisdiction of the Pietermaritzburg High Court. A few days before the hearing of the winding-up application, a family trust, the sole shareholder of PFC, launched a business rescue application in the Pietermaritzburg High Court.

Appeal: Against the winding-up order granted against PFC by the Pretoria High Court. Also appealed is the order of the Pietermaritzburg High Court refusing a postponement sought by the trustees and dismissing the business rescue application.

Discussion: The Constitutional Court case of Villa Crop Protection v Bayer; whether the conduct on the part of PFC and the trustees, in launching the business rescue application, constituted an abuse of process; whether the trustees should be non-suited if it is found that the business rescue application was launched solely to delay or disrupt the winding-up proceedings; and whether it could have the effect of suspending those proceedings in terms of section 131(6) of the Companies Act 71 of 2008.

Findings: Business rescue proceedings are aimed at restoring a company to solvency, and are not to be abused by a company with no prospects of being rescued but mainly to avoid a winding-up or to obtain some respite from creditors. The conduct of the trustees in launching the business rescue application amounts to an abuse of process as described in Villa Crop. The facts show that from the outset, the launch of the business rescue application was a stratagem and that the trustees had no intention of prosecuting that application to its conclusion. The trustees knew or ought to have known that the business rescue application had no prospect of success. PFC’s very existence, if it was ever a genuine asset holding company, was destroyed by the dissipation of all of its assets. It was clear that PFC is unable to pay its debts, and is commercially and factually insolvent.

Order: The appeals are dismissed.

WEINER JA (SCHIPPERS JA, MBATHA JA, HUGHES JA and UNTERHALTER AJA concurring)

PFC Properties v CSARS [2023] ZASCA 111

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LABOUR – Dismissal – Malingering – Employee telling supervisor that he was ill

Supervisor seeing him on television at a protest march – CCMA commissioner finding dismissal substantively unfair – Probabilities were overwhelming that employee was not sick and malingering in order to avail himself for the protest action – That he was seen at protest march is sufficient enough evidence to expose his false impression – Award set aside and replaced with one finding dismissal substantively fair.

Facts: Mr Mathebula was employed as a junior investigator by SARS and one day messaged his supervisor to inform him that he was not feeling well. On the following day he said that he was still not feeling well. Whilst watching the news on television, his supervisor spotted Mr Mathebula participating in a protest march by the Economic Freedom Fighters (EFF) against Clicks on the two days that he had called sick (7 and 8 September). Mr Mathebula allegedly consulted a doctor and obtained a medical certificate certifying that he was unfit from 9 to 11 September. Mr Mathebula was found guilty on charges of dishonest and gross dishonest and dismissed.

Application: Seeking the review of an arbitration where the commissioner found that the dismissal of Mr Mathebula was substantively unfair. The commissioner ordered SARS to reinstate Mr Mathebula and to pay him for his loss of salary.

Discussion: That it was common cause that Mr Mathebula participated in a protest action on a day in which he unashamedly and audaciously indicated to SARS that he was not feeling well; that although he was not feeling well enough to attend to his contractual duties, he felt well enough to participate in a protest action; that when he represented to his supervisor that he was not feeling well so that he must be excused from work, he was not being truthful about the state of his health; and that the employee took advantage of the provisions in the policy of SARS to the effect that for illness lasting two days or less, the employer will accept the representations of the employee as to their fitness to attend duty without the need for a medical certificate.

Findings: The probabilities were overwhelming that Mr Mathebula was not sick and in fact he was malingering in order to avail himself for the protest action. If he was able to clap hands and sing, it must follow that he would have been able to perform his contractual duties. In cases of malingering, it is an employee who alleges illness. He who alleges must prove. The fact that he was seen at the protest march is sufficient enough evidence to expose his false impression. The arbitration award of Mooi does not pass the constitutional muster.

Order: The arbitration award is reviewed and set aside and replaced with an order that the dismissal of Mr Mathebula was substantively fair.

MOSHOANA J

SARS v CCMA [2023] JR2243-21 (LC)

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FAMILY – Children – Parental alienation

Expert report that child lacking empathy when under the influence of father – Child seemingly becoming convinced that his mother and her parents are harmful or dangerous – Parental Alienation Syndrome – Detrimental effect on a child’s psychological and mental well-being – Court should not hesitate to intervene in the interest of the minor child – Mother awarded full parental responsibilities and rights – Alienating parent deprived of contact pending therapy.

Facts: The child, M, was born in 2015 and has since his birth been caught in the middle of a tug-of-war between the applicant (his mother) and the respondent (his father), who were never married. Several court orders ensued and the appointment of a number of experts. In 2022 the court appointed an advocate as curator ad litem and also appointed Leonard Carr, a clinical psychologist, to urgently conduct a full investigation regarding the circumstances of the minor child. Another order provided that that the mother and the father would remain jointly vested with full parental responsibilities and rights and that the primary care and residency of M would alternate in a shared-residency scheme.

Application: An urgent application by the mother seeking full parental responsibilities and rights in respect of the eight-year-old boy.

Mr Carr’s report: M was more at risk than ever and that his psychological functioning was in a process of rapid and very concerning decline. Drastic measures were needed to decisively put an end to the conflict. M was living in a psychologically chaotic and emotionally dysregulated family. M demonstrates a marked lack of empathy when he is under the influence of his father’s agenda and he is at risk of losing the ability to see his mother as a person with valid emotions and experiences. M seemingly becoming convinced that his mother and her parents are harmful or dangerous – the very definition of Parental Alienation Syndrome.

Findings: Mr Carr’s expert opinion was based on sound reasoning and is underpinned by the facts. He recommended that M needs a period of protective separation from his father’s influence. The curator’s investigations led him to conclude that M is suffering severely from the consequences of the clear inability of the parties to jointly act in his best interests.

Order: The applicant is awarded full parental responsibilities and rights in respect of the minor child and primary residence of the minor child shall vest with the applicant. The child shall not have any contact with the respondent for a period of three months while the child is undergoing the therapy process outlined in the order (see para [30]).

ADAMS J

TLD v BG [2023] ZAGPJHC 801

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ABOUT THE EDITOR

Louis Podbielski spent ten years at Juta working on various law reports and has read many thousands of judgments for case selection. He has considerable experience in writing flynotes and headnotes, compiling case annotations, and in refining subject indexes.​ During his four years at LexisNexis he was involved with legal data, analytics and in developing various legal tech solutions. He now runs his own case law service Louis Case Law

You can read his full CV and more about Louis on his LinkedIn profile where he shares interesting and recent cases.

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