THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Not Reportable

Case no: 684/2020

In the matter between:

PARK 2000 DEVELOPMENT11 (PTY) LTD
APPELLANT

and

JOHAN MOUTON
FIRST RESPONDENT

VAN SCHALKWYK VERVOER CC
SECOND RESPONDENT

COMPANIES AND INTELLECTUAL
PROPERTY COMMISSION
THIRD RESPONDENT

SMOKEN CONSULTING (PTY) LTD
FOURTH RESPONDENT

KENETH LOGAN STEWART N.O.
FIFTH RESPONDENT

Neutral Citation: Park 2000 Development 11 (Pty) Ltd v Mouton and
Others (Case no 684/21) [2021] ZASCA 140 (06 October 2021)
Coram:
WALLIS,
MBHA,
PLASKET,
CARELSE
and
MABINDLA-BOQWANA JJA
Heard:
06 September 2021
Delivered:  This judgment was handed down electronically by circulation
to the parties’ legal representatives by email, publication on the Supreme

Court of Appeal website and release to SAFLII. The date and time for
hand-down is deemed to be have been at 10h00 on 06 October 2021.

Summary:
Civil Procedure – Section 16(2)(a)(i) of the Superior
Courts Act 10 of 2013, proscribes the hearing of an appeal which will not
have any practical effect – as the only noteworthy property the appellant
owned had since been lawfully sold and transferred to an independent
purchaser, restoring appellant to its former status of being under business
rescue would not have any practical effect – appeal dismissed with costs.

___________________________________________________________
REASONS
___________________________________________________________

Mbha JA (Wallis, Plasket, Carelse and Mabindla-Boqwana JJA
concurring):

[1] At the hearing of this appeal on, 06 September 2021, this Court made
the following order:
‘1 In terms of s 16(2(a)(i) of the Superior Courts Act 10 of 2013, the appeal is dismissed
with costs, such costs to include those consequent upon the employment of two counsel.
2 The reasons for this order will follow shortly.’
The reasons follow hereunder.

[2] The appellant, a property development company and erstwhile
registered owner of two pieces of land, to wit Erf 541 in Riversdale and Erf
4573 in Stilbaai West, the latter being the remainder of portion 60,
Plattebosch Farm (the properties), appealed against the whole judgment of
the Western Cape Division, Cape Town (Sher J) delivered on 23 July 2019,
in terms of which a resolution adopted by a director of the appellant to
place the appellant under business rescue, was declared invalid and set
aside. In addition, the appointment of the fourth respondent as business
rescue practitioner was discharged.

[3] This appeal, with leave of this Court, mainly related to an application
launched by the first respondent, Johan Mouton (Mr Mouton), in which he
sought the above mentioned relief (the main application). The main
application was heard together with two other related applications: one was
launched by the fifth respondent, Kenneth Logan Stewart (Mr Stewart) in

his capacity as the purported business rescue practitioner (the BRP) of the
appellant seeking an order interdicting the intended sale in execution of the
aforementioned properties belonging to the appellant (the interdict
application). The other application was brought by two of the appellant’s
creditors, in which they sought to intervene in the interdict application. The
court a quo dismissed both applications with costs.

[4] It is necessary to briefly set out the background facts underpinning
the determination of this appeal. The appellant was a property development
enterprise. The properties were the only noteworthy assets it owned. It had
earmarked the two pieces of land for certain development in the course of
its business activity.

[5] For the purpose of raising finance for the Stilbaai development, from
2006 onwards, the appellant offered debentures which were limited to
proposed erven. These debentures were redeemable by a certain date from
the net proceeds which were to be realised from the sale of erven, unless
the requisite rezoning of the remainder of portion 60 had not occurred by
01 December 2009, in which event the directors could extend the
redemption date. It appears that extensions were effected, the last of which
supposedly occurred during November 2017.

[6] During May 2007, Mr Mouton purchased certain debentures from
the appellant and on 04 February 2016 he sought to redeem the debentures
by claiming repayment of the capital loan amount linked to the debentures
plus interest alleging inter alia, that the extended redemption date for the
debentures had since come and gone. As no payment was forthcoming, Mr
Mouton issued summons against the appellant claiming the total amount of
R400, 000.00 plus interest in respect of two debentures that he was holding

and costs. In July 2016, default judgment was granted in favour of Mr
Mouton after the appellant had failed to file a plea. However, the appellant
successfully applied to have the judgment rescinded during February 2017.
After the appellant had again failed to deliver a plea, Mr Mouton applied
for and obtained default judgment against the appellant for a second time
on 11 October 2017.

[7] As the appellant failed to satisfy the judgment, Mr Mouton obtained
a writ of execution against its movable property resulting in a nulla bona
return. In July 2018 Mr Mouton obtained a writ of execution authorising
the attachment and sale of the appellant’s immovable property by public
auction which was advertised and scheduled to take place on 12 December
2018.

[8] On 11 December 2018, the day before the auction for the sale of the
immovable properties was to be held, Mr Mouton received, at around
15h44, an email from attorneys acting on behalf of a company called
Meiprops Twee en Twintig (Pty) Ltd (Meiprops), notifying them that
Meiprops had launched an application for the liquidation and winding up
of the appellant. Furthermore, this application was enrolled for hearing on
14 December 2018.

[9] About 15 minutes after the receipt of the notification of the intended
liquidation application, Mr Mouton’s attorneys received a separate email
from Smoken Consulting (Pty) Ltd, through which Mr Stewart conducted
his business in consulting and business rescue services. This email advised
Mr Mouton’s attorneys that the appellant had made an application that
same day to be placed under business rescue. It is common cause that two
days later, the Companies and Intellectual Property Commission (the

CIPC) duly appointed Mr Stewart as the appellant’s business rescue
practitioner (BRP). The liquidation application of the appellant by
Meiprops was subsequently withdrawn on 12 December 2018.

[10] It is not disputed that in both the liquidation and the business rescue
applications, Mr Renier van Rooyen (Snr) a director of the appellant
deposed to the motivating affidavits on 11 December 2018. In the
liquidation application, he deposed to the founding affidavit on behalf of
the creditor, Meiprops, of which he was a director, claiming that the
appellant was indebted to this company in an amount of R2, 359,642, that
it was unable to pay this amount and was therefore hopelessly insolvent.
Consequently, it was just and equitable that it be wound up for the benefit
of creditors. However, in stark contrast to these averments he alleged, in
an affidavit he filed with the CIPC in support of the business rescue
application, that the appellant was financially distressed, that it was
‘reasonably unlikely’ that it would be able to pay its debts within the
ensuing six months, but that based on current sales volumes ‘it could in all
probability trade profitably’ if it was placed in business rescue.

[11] The auction for the sale of the immovable properties proceeded as
scheduled on 12 December 2018. It took place notwithstanding the fact that
the appellant had sought to place itself under business rescue and that Mr
Stewart had demanded that the sale in execution should be suspended and
not take place. Mr Mouton’s attorneys took the view that the business
rescue proceedings were irregular, and that the appellant had not been
validly placed in business rescue. The two properties, Erf 541 Riversdale
and Erf 4573 Stilbaai West, were sold to the second respondent for
R135, 000.00 and R3.89 million respectively.

[12] The court a quo found, rightly in my view, that the averments by Mr
van Rooyen (Snr) were mutually contradictory and that, in at least one of
the affidavits, he was being mendacious. The court a quo justifiably had
harsh words for the conduct of Mr van Rooyen and Mr Stewart, the BRP
who deposed to the founding affidavit in support of the business rescue
application. It concluded, rightly in my view, that the resolution adopted to
place the appellant in business rescue was not passed in good faith, that it
had no intention of attaining the objectives of the Companies Act 71 of
2008, as amended (the 2008 Act) in regard to business rescue and that it
was done with a view to frustrate the sale in execution. Importantly, the
court a quo found that on its assessment of the facts, the resolution to
institute liquidation proceedings was adopted by Meiprops at some point
prior to when the appellant adopted its resolution to go under business
rescue.

[13] In its judgment, the court a quo specifically granted an order
declaring the sale in execution of the two properties valid and enforceable.
Importantly, it also authorised the transfer of ownership in them to the
purchaser, the second respondent against payment of any amount owing in
respect thereof. It is significant to mention that transfer of ownership to the
second respondent has since been effected.

[14] The issues that arise from the appellant’s grounds of appeal against
the court a quo’s judgment can be summarised as follows: whether the
alleged failure of Mr Mouton to serve and join the appellants’ creditors in
the main application was fatal; whether the resolution adopted to place the
appellant under business rescue complied with the requirements
contemplated in s 128 of the 2008 Act; whether the setting aside of the
resolution commencing business rescue was just and equitable as

contemplated in s 130(5) of the 2008 Act; and whether the court a quo
erred in its treatment1 of the timing of the business rescue resolution and
its regard to conflicting authorities regarding when liquidation proceedings
are initiated. The court a quo was of the view that ‘initiation’ used in
s 129(2) of the 2008 Act was intended to refer to the preceding causative
act or conduct whereby the legal process in relation to such proceedings
was set in motion.

[15] In his answering affidavit to the appellant’s application for leave to
appeal to this Court, Mr Mouton averred inter alia that the appeal is moot.
His basis was the following: The appellant is no longer under business
rescue and the two immovable properties concerned have since been sold
and transfer into the name of the purchasers has been effected. In addition,
the appellant did not apply for leave to appeal the costs order and
accordingly, there is no live issue to be determined on appeal.

[16] As the issue of mootness was not dealt with in the appellant’s heads
of argument, this Court directed the Registrar to dispatch correspondence
to the parties to file additional arguments on the question of mootness and
any reasons why the Court should not consider and dispose of this point in
terms of s 19(d) of the Superior Courts Act 10 of 2013. Both counsel duly
filed their respective supplementary heads and the Court is indebted to
them for their assistance.
[17] The appellant submitted that if it were successful with the appeal i.e.
if the appellant’s erstwhile business rescue status was restored, the transfer
of the two properties to the second respondent could be set aside

1 The court a quo took a different stance to that of Swain J in First Rand Bank Ltd v Imperial Crown
Trading (Pty) Ltd 2012 (4) SA 266 (KZN) where it was held that the word ‘initiated’ in s 129(2) of the
2008 Act must have been intended to have the same meaning as the word ‘commencement’ in s 131 (6)
of the Companies Act 61 of 1973.

retrospectively by the fifth respondent who should also have been
reinstated to his previous position as the appellant’s BRP. The appellant
sought to place reliance on the case of Knox N.O. v Mofokeng2 by drawing
an analogy with the facts in casu. In that case the sale in execution had
indeed been perfected, but the purchaser had knowledge of the proceedings
instituted by the judgment debtor for rescission prior to registration.

[18] The appellant submitted further that even if the second respondent
was oblivious to the fact that the appellant was under business rescue at the
time it purchased the properties, it undoubtedly subsequently gained
knowledge of the fact of business rescue before transfer was taken. As the
second respondent was alive to the appellant’s assertion that it was under
business rescue and its attack on the validity of the sale due to s 133(1) of
the 2008 Act might fail, so it was further argued, the second respondent
assumed the risk that the sale might be set aside in due course.

[19] In my view the aforesaid argument by the appellant cannot succeed
and falls to be rejected outright. The reliance on Knox N.O was
misconceived as the facts in that case, which concerned a rescission and
not a business rescue are totally distinguishable. Significantly, the validity
of the sales in execution was not even challenged in the court a quo.

[20] It is important to note that the court a quo specifically granted an
order dismissing with costs the application to interdict the transfer of the
properties that was launched by the fifth respondent under case number
8488/2016. Significantly, that application does not form the subject matter
of this appeal. In this regard, it is noted that in paragraph 24 of the founding

2 Knox N.O v Mofokeng 2013 (4) SA 46 (GSJ).

affidavit of the appellant’s petition to this Court for leave to appeal, it stated
as follows:
‘Although other interlocutory applications were also launched subsequently, it is the
aforesaid (main) application that forms the subject matter of the current application.
The other applications are rendered moot and need not be discussed here.’
(My emphasis)

[21] It is clear from the aforesaid founding affidavit that the appellant
accepted that it was no longer under business rescue and that Mr Stewart
was the applicant’s erstwhile BRP. The appellant had the two immovable
properties concerned as its only noteworthy assets and nothing else. It has
no assets left to administer. Clearly in those circumstances restoring it to
business rescue will serve no purpose. The grant of the appeal will not
reverse the transfer of the properties. The submission that the BRP once
restored to his previous position, will be able to reverse the transfer of the
properties which were lawfully and validly authorised by the court a quo
cannot be sustained. It is by no means clear that Mr Stewart wishes to be
restored to that position.

[22] Section 16(2)(a)(i) of the Superior Courts Act provides that ‘when
at the hearing of an appeal the issues are of such a nature that the decision
sought will have no practical effect or result, the appeal may be dismissed
on this ground alone’. The effect is that if there is no longer any live
controversy between the properties, then there is no longer an appeal that
would have any practical effect.

[23] In Legal Aid South Africa v Magidiwana and Others3 the court
reiterated the position that ‘courts should not and ought not to decide issues
of academic interest only’.

[24] In light of what I have stated above, I find that there are no longer
any live issues between the parties. The issues on appeal were accordingly
of such a nature that the decision sought would have no practical effect or
result between the parties. In the result, the Court granted an order
dismissing the entire appeal with costs including the costs of two counsel,
as set out in paragraph [1] above.

_________________
B H Mbha
Judge of Appeal

3 Legal Aid South Africa v Magidiwana and Others [2014] ZASCA 141; 2015 (2) SA 568 (SCA) paras
2 – 4; 18.

APPEARANCES:

For appellant:
J P Steenkamp
Instructed by:
BDP Attorneys, Cape Town

Honey Attorneys, Bloemfontein

For 1st and 2nd respondents:     T Dicker SC (with her, M A McChesney)
Instructed by:

ST Attorneys, Cape Town

Bezuidenhouts Incorporated, Bloemfontein

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL

From:
The Registrar, Supreme Court of Appeal
Date:

06 October 2021
Status:
Immediate
The following summary is for the benefit of the media in the reporting of this case and does not
form part of the judgments of the Supreme Court of Appeal
Park 2000 Development 11 (Pty) Ltd v Mouton and Others (Case no 684/21) [2021] ZASCA 140
(06 October 2021)
This appeal was heard on 06 September 2021. On that day the Supreme Court of Appeal ((SCA) made
an order dismissing with costs the appellant’s appeal against the judgment and order of the Western
Cape Division, Cape Town, in terms of which a resolution adopted by a director of the appellant to place
the appellant under business rescue, was declared invalid and set aside. Today the SCA handed down
the reasons for its order.
The appellant had failed to satisfy a judgment debt in favour of the first respondent. As a result the first
respondent obtained a writ of execution which authorised the attachment and sale of the appellant’s
two immovable properties by public auction. On the day before the auction for the sale of the immovable
properties was to be held, the first respondent’s attorneys received two emails. The first email, from the
appellant’s alleged creditor (Meiprops Twee en Twintig (Pty) Ltd (Meiprops)), notified that Meiprops had
launched an application for the liquidation and winding up of the appellant. The second email was from
the appellant’s alleged business rescue practitioner (BRP). This email advised the first respondent’s
attorneys that the appellant had made an application that same day to be placed under business rescue.
In both the liquidation and the business rescue applications, the director of the appellant deposed to
the motivating affidavits. However, the averments contained in those affidavits were in stark contrast to
each other. In the one the appellant is alleged to be hopelessly insolvent, whereas in the other it is
alleged that the appellant could trade profitably if placed under business rescue. On the day of the
auction, the liquidation application was withdrawn and the sale in execution took place notwithstanding
the business rescue application. The two immovable properties were sold to the second respondent.
The SCA held that the high court was correct in concluding that that the resolution adopted to place the
appellant in business rescue was not passed in good faith, that it had no intention of attaining the
objectives of the Companies Act 71 of 2008, as amended, in regard to business rescue and that it was
done with a view to frustrate the sale in execution.
Dealing with the issue of mootness, the appellant submitted that if its business rescue status was
restored, the transfer of the two properties to the second respondent could be set aside retrospectively
by the BRP who should also have been reinstated to his previous position as the appellant’s BRP. The
appellant submitted further that even though the second respondent may not have been aware of the
appellant’s business rescue ‘status’, it undoubtedly subsequently gained such knowledge before
transfer could take place and therefore assumed the risk that the sale might be set aside in due course.
The SCA held that the aforesaid argument by the appellant cannot succeed and fell to be rejected
outright. The validity of the sales in execution was not even challenged in the high court. The SCA held

further, that the appellant only had the two immovable properties concerned as its only noteworthy
assets. It had no assets left to administer. Clearly in those circumstances restoring it to business rescue
would serve no purpose. The grant of the appeal would not reverse the transfer of the properties.  The
SCA held further, that s 16(2)(a)(i) of the Superior Courts Act 10 of 2013 provides that ‘when at the
hearing of an appeal the issues are of such a nature that the decision sought will have no practical
effect or result, the appeal may be dismissed on this ground alone’. As a result, the SCA found that
there were no longer any live issues between the parties and that an appeal would not have any
practical effect. The SCA therefore dismissed the appeal.

~~~~ends~~~~