THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not reportable

Case No: 935/2020
In the matter between:

KGORO CONSORTIUM (PTY) LTD                                  FIRST APPELLANT

REGIMENTS CAPITAL (PTY) LTD
(In liquidation)
SECOND APPELLANT

and

CEDAR PARK PROPERTIES 39 (PTY) LTD
(In liquidation)                                                                   FIRST RESPONDENT

VANTAGE MEZZANINE FUND II
PARTNERSHIP
SECOND RESPONDENT

CITY OF JOHANNESBURG METROPOLITAN
MUNICIPALITY                                                          THIRD RESPONDENT

And in the matter of:

SMIT SEWGOOLAM INCORPORATED                                           APPELLANT

In re:

KGORO CONSORTIUM (PTY) LTD                                  FIRST APPELLANT

REGIMENTS CAPITAL (PTY) LTD
(In liquidation)
SECOND APPELLANT

and

CEDAR PARK PROPERTIES 39 (PTY) LTD
(In liquidation)                                                                   FIRST RESPONDENT

VANTAGE MEZZANINE FUND II
PARTNERSHIP
SECOND RESPONDENT

CITY OF JOHANNESBURG METROPOLITAN
MUNICIPALITY                                                          THIRD RESPONDENT

Neutral Citation: Kgoro Consortium (Pty) Ltd and Another v Cedar Park
Properties 39 (Pty) Ltd and Others (935/2020) [2022] ZASCA
65 (9 May 2022)
Coram:
VAN DER MERWE, PLASKET, MBATHA and CARELSE
JJA and MATOJANE AJA
Heard:

9 March 2022

Delivered: This judgment was handed down electronically by circulation to the
parties’ legal representatives by email, publication on the website of the Supreme
Court of Appeal and release to SAFLII. The date and time for hand-down is
deemed to be 10h00 on 9 May 2022.

Summary: Company law – business rescue proceedings – whether reasonable
prospect of rescuing company as contemplated in s 131(4)(a) of Companies Act
71 of 2008.
Costs – costs de bonis propriis ordered against attorneys – no opportunity afforded
to state case – special costs order set aside.

_________________________________________________________________

ORDER
_________________________________________________________________

On appeal from: Gauteng Local Division of the High Court, Johannesburg (Twala
J, sitting as court of first instance):

In the Kgoro appeal:
The second respondent’s application for leave to file supplementary heads
of argument is dismissed with costs.
The appeal is dismissed with costs.

In the Smit Sewgoolam appeal:
The appeal is upheld with costs.
Paragraph 3 of the order of the court a quo is set aside.

_________________________________________________________________

JUDGMENT
_________________________________________________________________

Mbatha JA (Van der Merwe JA, Plasket JA and Carelse JA and Matojane
AJ concurring)
[1] On 30 June 2020, the Gauteng Division of the High Court, Johannesburg
(the high court) dismissed an application for the placing of the first respondent,
Cedar Park Properties 39 (Pty) Ltd (in liquidation) (Cedar Park), under supervision
and commencing business rescue proceedings (para 2 of the order). The
application was brought by the first appellant, Kgoro Consortium (Pty) Ltd
(Kgoro). The second appellant, Regiments Capital (Pty) Ltd (in liquidation)
(Regiments) intervened to support the application. The second respondent,
Vantage Mezzanine Fund II Partnership (Vantage), opposed the application. The

high court ordered the attorneys for the appellants, Smit Sewgoolam Incorporated
(Smit Sewgoolam), to pay Vantage’s costs de bonis propriis on the attorney and
client scale (para 3 of the order). It also directed the Registrar of the high court to
forward a copy of its judgment to the Gauteng Legal Practice Council for an
investigation into the conduct of the responsible attorney at Smit Sewgoolam (para
5 of the order). With the leave of the high court, the appellants appeal against para
2 of the order. Smit Sewgoolam appeals against paras 3 and 5 of the order, with
the leave of the court a quo. Regiments did not participate in the appeal.

Kgoro appeal
[2] The background of the matter is as follows. Cedar Park is a wholly owned
subsidiary of Kgoro. Regiments is the majority shareholder in Kgoro. Cedar Park
was used as a special purpose vehicle for the purchase of the property described as
the Remaining Extent of Erf 575, Sandown Extension 49 Township, Gauteng (the
property) and the development thereof by the construction of residential units,
shops, business premises and hotels. The property was secured from the City of
Johannesburg Metropolitan Municipality (City of Johannesburg), the third
respondent, for the sum of R280 million, with payment to be made once the
property was developed.

[3] On 5 June 2013, Cedar Park concluded a loan facility agreement with
Vantage in the amount of R150 million in respect of the development of the
property, which became due and payable, together with interest, on 30 June 2018.
Kgoro provided a guarantee for Cedar Park’s indebtedness to Vantage. As a
consequence, Kgoro pledged and ceded all rights, title and interest in its shares in
Cedar Park in favour of Vantage as security for the guaranteed obligations. It is
common cause that Cedar Park failed to meet its obligations in terms of the loan
facility agreement.

[4] As a consequence, on 6 December 2018, Vantage launched an application
for the winding-up of Cedar Park for failing to make payment in the amount of
more than R300 million that was due and owing. When Cedar Park failed to file
an answering affidavit, Vantage enrolled the liquidation application for hearing on
the unopposed roll for 18 February 2019. However, three days before, on 15
February 2019, Kgoro lodged the application to place Cedar Park under
supervision and commence business rescue. The application for liquidation,
therefore, had to be removed from the court roll.

[5] Vantage consequently brought an application to intervene in the business
rescue application and filed an answering affidavit thereto. Kgoro failed to file a
replying affidavit thereto within the prescribed time limits, which prompted
Vantage to enrol the application for hearing. This was, however, followed by the
application to intervene in the proceedings by Regiments.  After Kgoro finally filed
its replying affidavit to Vantage’s answering affidavit in the business rescue
application in respect of Cedar Park, the application came before Twala J, in the
high court.

[6] Before the high court, the appellants sought to make out a case for placing
Cedar Park under supervision and commence business rescue in terms of s 131(4)
of the Companies Act 71 of 2008 (the Companies Act) on the basis that it was
financially distressed, that it was just and equitable that it be placed under
supervision, and that there were reasonable prospects of rescuing it. In essence, the
appellants’ case was that the ‘Kgoro Sandton’ development was a valuable project
with great financial prospects, as the property was situated in a sought after part of
Gauteng, namely Sandton. The value of the property on the open market was said
to be at least R1,494 billion and the forced sale value R1,046 billion. It was
described as a financially viable project which had attracted a lot of interest from
potential purchasers, irrespective of the delays in the development of the property
occasioned by the late registration of the property in Cedar Park’s name, the

opposition from neighbouring property owners and the delay in obtaining vacant
possession.

[7] On the other hand, Vantage contended that the appellants had not made out
a case on the papers for such relief and that there were no reasonable prospects of
Cedar Park being rescued, that a liquidation of Cedar Park would be to the
advantage of creditors and that the appellants were dilatory in the conduct of the
proceedings to the prejudice of the creditors of Cedar Park. Vantage advanced two
main arguments: First, Kgoro did not have the locus standi to bring the application,
on the basis that it had ceded all its shares to Vantage in securitatem debiti, and as
a result it was not an affected person. Second, the appellants had failed to show
that there would be a reasonable prospect of rescuing Cedar Park as contemplated
in s 131(4)(a) of the Companies Act. I find it expedient to first determine the
second argument.

[8] The application was brought in terms of s 131(1) of the Companies Act.
Section 131(4) provides that after considering the application in terms of subsec 1,
the court may:
‘(a)
make an order placing the company under supervision and commencing business rescue
proceedings, if the court is satisfied that –
(i)
the company is financially distressed;
(ii)
the company has failed to pay over any amount in terms of an obligation under or in
terms of a public regulation, or contract, with respect to employment-related matters; or
(iii)
it is otherwise just and equitable to do so for financial reasons, and there is a reasonable
prospect for rescuing the company.’
Affected persons, like Vantage, are of course allowed to challenge the application,
on the basis of its not meeting the requirements in s 131(4) of the Companies Act.

[9] Rescuing a company means achieving the goals set out in the definition of
business rescue in s 128(1)(b) of the Companies Act. The goals contemplated in s
128(1)(b)(iii) of the Companies Act are as follows: a primary goal to facilitate the

continued existence of the company in a state of solvency; and a secondary goal,
which is provided in the alternative in the event that the achievement of the primary
goal proves not to be viable, namely, to facilitate a better return for the creditors
or shareholders of the company than would result from immediate liquidation.
Accordingly, it was imperative for Kgoro to set out grounds for a reasonable
prospect of achieving the goals set out in s 128(1)(b) of the Companies Act, in
order to satisfy the requirements for the business rescue application.

[10] It was common cause that Cedar Park was financially distressed in terms of
the Companies Act. The question, therefore, turns on the consideration of whether
the appellants made out a case for achieving any of the two objectives set out in s
128(1)(b)(iii) of the Companies Act. The applicant in business rescue proceedings
bears the onus to prove that the company under consideration would have
reasonable prospects of recovery. This is a factual question, for which a material
foundation needs to be laid out in the founding affidavit by the applicant for
business rescue.

[11] In determining this issue, the court a quo relied on passages in Koen and
Another v Wedgewood Village Golf & Country Estate (Pty) Ltd and Others 2012
(2) SA 378 (WCC) and Southern Palace Investments 265 (Pty) Ltd v Midnight
Storm Investments 386 (Pty) Ltd 2012 (2) SA 423 (WCC). Counsel for Vantage
correctly conceded that the court a quo had erred in this regard. In Oakdene Square
Properties (Pty) Ltd and Others v Farm Bothasfontein (Kyalami) (Pty) Ltd and
Others [2013] ZASCA 68; 2013 (4) SA 539 (SCA); [2013] 3 All SA 303 (SCA)
paras 30-31, this Court said:
‘[30] Self-evidently it will be neither practical nor prudent to be prescriptive about the way in
which the appellant must show a reasonable prospect in every case. Some reported decisions
laid down, however, that the applicant must provide a substantial measure of detail about the
proposed plan to satisfy this requirement (see eg Southern Palace Investments 265 (Pty) Ltd)
paras 24-25; Koen v Wedgewood Village Golf & Country Estate (Pty) Ltd 2012 (2) SA 378

(WCC) paras 18-20). But in considering these decisions Van der Merwe J commented as follows
in Propspec Investments v Pacific Coasts Investments 97 Ltd 2013 (1) SA 542 (FB) para 11:
“I agree that vague averments and mere speculative suggestions will not suffice in this regard.
There can be no doubt that, in order to succeed in an application for business rescue, the applicant
must place before the court a factual foundation for the existence of a reasonable prospect that
the desired object can be achieved. But with respect to my learned colleagues, I believe that they
place the bar too high.”
And at para 15:
“In my judgment it is not appropriate to attempt to set out general minimum particulars of what
would constitute a reasonable prospect in this regard. It also seems to me that to require, as a
minimum, concrete and objectively ascertainable details of the likely costs of rendering the
company able to commence or resume its business, and the likely availability of the necessary
cash resource in order to enable the company to meet its day-to-day expenditure, or concrete
factual details of the source, nature and extent of the resources that are likely to be available to
the company, as well as the basis and terms on which such resources will be available, is
tantamount to requiring proof of a probability, and unjustifiably limits the availability of business
rescue proceedings.”
[31] I agree with these comments in every respect. Yet, the appellants contended that the bar
should be set even lower than that. Relying on the reference in s 128(1)(b) to “the development
and implementation, if approved, of a plan to rescue the company” their argument was that the
reasonable prospect for rescuing the company in s 131(4) demands no more than the reasonable
prospect of a rescue plan. According to this argument, the applicant for business rescue is
therefore not required to show a reasonable prospect of achieving one of the goals contemplated
in s 128 (1)(b). All the applicant has to show is that a plan to do so is capable of being developed
and implemented, regardless of whether or not it may fail. Once it is established that it is the
intention of the applicant to develop and implement a rescue plan which has that as its purpose,
so the argument went, the court should grant the business rescue application even if it is
unconvinced that this will result in the company surviving insolvency or even achieve a better
return for creditors and shareholders. I do not agree with this line of argument. As I see it, it is
in direct conflict with the express wording of s 128(1)(h). According to this section “rescuing
the company” indeed requires the achievement of one of the goals in s 128(1)(b). Self-evidently
the development of a plan cannot be a goal in itself. It can only be the means to an end. That end,
as I see it, must be either to restore the company to a solvent going concern, or at least to facilitate
a better deal for creditors and shareholders than they would secure from a liquidation process. I
have indicated my agreement with the statement in Propspec that the applicant is not required to

set out a detailed plan. That can be left to the business rescue practitioner after proper
investigation in terms of s 141. But the applicant must establish grounds for the reasonable
prospect of achieving one of the two goals in s 128(1)(b).’

[12] This Court in Newcity Group (Pty) Ltd v Pellow NO and Others [2014]
ZASCA 162 (SCA), endorsed the meaning of the phrase ‘reasonable prospect’ as
set out in the Oakdene judgment. It stated as follows at para 16:
‘. . . properly described [reasonable prospect means] a yardstick higher than “a mere prima facie
case or an arguable possibility” but lesser than a “reasonable probability” – a prospect based on
reasonable grounds to be established by a business rescue applicant in accordance with the rules
of motion proceedings.’
In this regard, ‘vague and speculative suggestions’ will not suffice. It is important
to take cognisance of what this Court said in Panamo Properties (Pty) Ltd and
Another v Nel N O and Others [2015] ZASCA 76; 2015 (5) SA 63 (SCA); [2015]
3 All SA 274 (SCA) para 1, that business rescue proceedings under the Companies
Act are intended to provide for the efficient rescue and recovery of financially
distressed companies, in a manner that balances the rights and interest of all the
relevant stakeholders. It held further that these proceedings contemplate the
temporary supervision of the company and its business by a business rescue
practitioner.

[13] The question is whether Kgoro nevertheless made a case for placing Cedar
Park in business rescue. As I have said, this requires an analysis of its founding
affidavit. Before I do so, I have to consider Vantage’s application for leave to file
supplementary heads of argument. The purpose hereof was to refer this Court to a
multitude of paragraphs in two reports of the Judicial Commission of Enquiry into
State Capture. These were purportedly references in the reports to Regiments and
individuals connected to it. On the strength hereof Vantage sought to argue that
this Court should ‘. . . draw negative inferences against the case for the business
rescue of Cedar Park’. It suffices to say that it would be quite impermissible for
this Court to have regard to (selective) passages in a report that was not introduced

into evidence and that in any event did not relate to Kgoro or Cedar Park. The
application must be dismissed with costs.

[14] It appeared from the evidence that, despite the loan obtained from Vantage,
Cedar Park had not meaningfully commenced the envisaged development of the
property and was unable to pay its debts. In its founding affidavit Kgoro said that
the construction in respect of the project would take five to ten years at a cost of
in excess of R6 billion. In the founding affidavit Kgoro paid no more than lip
service to achieving the primary goal of the continued existence of Cedar Park as
a solvent company. The court a quo correctly pointed out that Kgoro presented no
evidence as to how the construction costs would be financed in an accepted
business rescue plan. Kgoro’s case fell woefully short of showing a reasonable
prospect of Cedar Park continuing with the development of the property on a
solvent basis. In fact, the whole tenor and import of the application was that the
development project, including the property, could be sold for around the amounts
mentioned above.

[15] In this regard, Kgoro relied in the founding affidavit on an agreement of sale
called the Cedar Park Sale of Development Enterprise Agreement (the Sale of
Enterprise Agreement), concluded in 2018, as a financially viable offer on the table
from a potential buyer of the Kgoro Sandton development. This agreement was
subject to a number of suspensive conditions to be fulfilled at various time periods.
At the hearing before us counsel for Kgoro accepted that this agreement had lapsed
for want of fulfilment of the suspensive conditions. The other evidence in the
founding affidavit as to the interest in purchasing the development enterprise was
rather vague and tentative. But even if it is accepted that there was interest in
acquiring the development, it is to no avail. The mere fact that the development
could be sold did not result in showing the aforesaid alternative object of business
rescue. Kgoro had to go further and show that business rescue would result in a
better return for creditors or shareholders of Cedar Park than would result from

immediate liquidation. As Brand JA said in Oakdene para 33, an applicant that
relies on this ground for business rescue cannot simply offer ‘. . . an alternative,
informal kind of winding-up’. Kgoro made no attempt in the founding affidavit to
show that such a better return would be achieved by placing Cedar Park in business
rescue.

[16] In sum, the aforementioned contentions raised by Kgoro go against the
principles set out in Oakdene, where this Court held that the primary goal is to
facilitate the continued existence of the company in a state of solvency and a
secondary goal, which is provided for as an alternative in the event that the
achievement of the primary goal proves not to be viable, namely, to facilitate a
better return for the creditors or shareholders of the company than would result
from the immediate liquidation. This Court in Oakdene held that the requirements
for granting an order in terms of s 131 of the Companies Act entail that the
company under consideration must have reasonable prospect of recovery or of a
better return. In the result, I find that Kgoro failed to meet the threshold required
to put Cedar Park under supervision and commence business rescue. It follows that
it is not necessary to consider Vantage’s contentions as to lack of locus standi on
the part of Kgoro. For these reasons the Kgoro appeal must fail.

Smit Sewgoolam appeal
[17] As I have said, Smit Sewgoolam was ordered to pay costs de bonis propriis
on a punitive scale and the high court directed that the Registrar forward the
judgment to the Gauteng Legal Practice Council to investigate the conduct of the
attorney involved in this matter. In essence, the court a quo penalised Smit
Sewgoolam for failing to disclose that a previous order of the high court had
interdicted the implementation of the Sale of Enterprise Agreement.

[18] There is no basis to interfere with the referral under para 5 of the order.
There were prima facie reasons for an investigation into the conduct in question.
As to para 3 of the order, it is trite that costs de bonis propriis should only be
ordered in exceptional circumstances (Grobbelaar v Grobbelaar 1959 (4) SA 719
(A) at 725). There must have been conduct which is egregious on the part of the
particular attorney to attract such an order of costs. The assessment of the gravity
of the conduct is objective and lies at the discretion of the court (See Public
Protector v South African Reserve Bank [2019] ZACC 29; 2019 (9) BCLR 1113
(CC); 2019 (6) SA 253 (CC)). The Constitutional Court in SA Liquor Traders’
Association and Others v Chairperson, Gauteng Liquor Board and Others [2006]
ZACC 7; 2009 (1) SA 565 (CC); 2006 (8) BCLR 901 (CC) para 54, held that an
order for costs de bonis propriis is made against attorneys where a court is satisfied
that there has been negligence in a serious degree which warrants an order of costs
being made as a mark of the court’s displeasure. In the light of what follows,
however, it is not necessary to consider the alleged misconduct on the part of Smit
Sewgoolam.

[19] Such an order may not be made against a party or person that had not been
afforded a proper opportunity to respond to the allegations in question and to state
his or her case in respect of the envisaged costs order. See, for instance, the
judgments of this Court in C B and Another v H B 2021 (6) SA 332 (SCA) para 20
and Chithi and Others; In re: Luhlwini Mchunu Community v Hancock and Others
[2021] ZASCA 123 (SCA). This is the reason why the costs order against Smit
Sewgoolam cannot stand. Although Vantage alluded to this in its answering
affidavit in opposition to the business rescue application and Kgoro responded
thereto in the replying affidavit, the draft order that Vantage subsequently
presented to the court a quo reasonably indicated to Smit Sewgoolam that no costs
order would be sought against it. The court a quo did not call upon Smit
Sewgoolam to explain itself. In the circumstances, it was denied an opportunity to
state its case. In the result, its appeal must succeed with costs.

[20] In consequence of the aforegoing,the following orders are issued:
In the Kgoro appeal:
The second respondent’s application for leave to file supplementary heads
of argument is dismissed with costs.
The appeal is dismissed with costs.

In the Smit Sewgoolam appeal:
The appeal is upheld with costs.
Paragraph 3 of the order of the court a quo is set aside.

____________________
Y T MBATHA
JUDGE OF APPEAL

APPEARANCES

For first appellant:
M v R Potgieter SC (with T Scott)

Instructed by:

Smit Sewgoolam Incorporated, Johannesburg

McIntyre Van der Post Incorporated,
Bloemfontein

For second respondent:
K van Huyssteen

Instructed by:

Fluxmans Incorporated, Johannesburg

Lovius Block Attorneys, Bloemfontein

For Smit Sewgoolam:
T Scott

Instructed by:

Smit Sewgoolam Incorporated, Johannesburg

McIntyre Van der Post 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:
9 May 2022
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
Kgoro Consortium (Pty) Ltd and Another v Cedar Park Properties 39 (Pty) Ltd and
Others (935/2020) [2022] ZASCA 65 (9 May 2022)
The Supreme Court of Appeal (SCA) today dismissed an appeal with costs brought by
the appellants against the decision of the Gauteng Division of the High Court,
Johannesburg (the high court). The SCA, in addition, upheld with costs a further
appeal brought by the attorneys for the appellants, and thus set aside the decision of
the high court that they pay costs de bonis propriis on a punitive scale.

The first appellant, Kgoro Consortium (Pty) Ltd (Kgoro), brought an application in the
high court for the placing of the first respondent, Cedar Park Properties 39 (Pty) Ltd
(in liquidation) (Cedar Park), under supervision and commencing business rescue
proceedings. The second appellant, Regiments Capital (Pty) Ltd (in liquidation)
(Regiments) intervened to support the application. The second respondent, Vantage
Mezzanine Fund II Partnership (Vantage), opposed the application. The high court
dismissed the business rescue application (para 2 of the order). Additionally, the high
court ordered the attorneys for the appellants, Smit Sewgoolam Incorporated (Smit
Sewgoolam) to pay Vantage’s costs de bonis propriis on the attorney and client scale
(para 3 of the order), as well as directed the Registrar of the high court to forward a
copy of its judgment to the Gauteng Legal Practice Council for an investigation into
the conduct of the responsible attorney at Smit Sewgoolam (para 5 of the order). The
appellants appealed against para 2 of the order (the Kgoro appeal). Smit Sewgoolam
appealed against paras 3 and 5 of the order (the Smit Sewgoolam appeal). Regiments
did not participate in the appeal.

With regard to the Kgoro appeal, the background of the matter was as follows. Cedar
Park was a wholly owned subsidiary of Kgoro. Regiments was the majority
shareholder in Kgoro. Cedar Park was used as a special purpose vehicle for the
purchase of the property described as the Remaining Extent of Erf 575, Sandown
Extension 49 Township, Gauteng (the property) and the development thereof by the
construction of residential units, shops, business premises and hotels. The property

was secured from the City of Johannesburg Metropolitan Municipality (City of
Johannesburg), the third respondent, for the sum of R280 million, with payment to be
made once the property was developed. On 5 June 2013, Cedar Park concluded a
loan facility agreement with Vantage in the amount of R150 million in respect of the
development of the property, which became due and payable, together with interest,
on 30 June 2018. Kgoro provided a guarantee for Cedar Park’s indebtedness to
Vantage. As a consequence, Kgoro pledged and ceded all rights, title and interest in
its shares in Cedar Park in favour of Vantage as security for the guaranteed
obligations. It was common cause that Cedar Park failed to meet its obligations in
terms of the loan facility agreement. As a consequence, on 6 December 2018,
Vantage launched an application for the winding-up of Cedar Park for failing to make
payment in the amount of more than R300 million that was due and owing. However,
on 15 February 2019, before the liquidation application was heard, Kgoro lodged the
application to place Cedar Park under supervision and commence business rescue.
The application for liquidation, therefore, had to be removed from the court roll.
Vantage consequently brought an application to intervene in the business rescue
application. This was followed by the application to intervene in the proceedings by
Regiments. The application came before Twala J, in the high court.

It was common cause that Cedar Park was financially distressed in terms of the
Companies Act. The SCA found that the question, therefore, turned on the
consideration of whether the appellants had made out a case for achieving any of the
two objectives set out in s 128(1)(b)(iii) of the Companies Act. The SCA thus found
that Kgoro bore the onus to prove that Cedar Park would have reasonable prospects
of recovery. This was a factual question, for which a material foundation needed to be
laid out in its founding affidavit.

The SCA found that the contentions raised by Kgoro went against the principles set
out in Oakdene Square Properties (Pty) Ltd and Others v Farm Bothasfontein
(Kyalami) (Pty) Ltd and Others [2013] ZASCA 68; 2013 (4) SA 539 (SCA); [2013] 3 All
SA 303 (SCA), wherein it was held that the requirements for granting an order in terms
of s 131 of the Companies Act entailed that the company under consideration must
have had reasonable prospect of recovery or of a better return. The SCA held that
Kgoro failed to meet the threshold required to put Cedar Park under supervision and
commence business rescue. It followed that it was not necessary to consider
Vantage’s contentions as to lack of locus standi on the part of Kgoro. The Kgoro appeal
thus failed.

With regard to the Smit Sewgoolam appeal, the SCA found that the court a quo, in
essence, penalised Smit Sewgoolam for failing to disclose that a previous order of the
high court had interdicted the implementation of an agreement of sale called the Cedar
Park Sale of Development Enterprise Agreement (the Sale of Enterprise Agreement),
concluded in 2018, as a purportedly financially viable offer on the table from a potential
buyer of the Kgoro Sandton development.

The SCA held that costs de bonis propriis should only be ordered in exceptional
circumstances, and such an order may not be made against a party or person that had
not been afforded a proper opportunity to respond to the allegations in question and
to state his or her case in respect of the envisaged costs order. The SCA found that
the court a quo had not called upon Smit Sewgoolam to explain itself. In the
circumstances, it was denied an opportunity to state its case. The SCA thus held that
its appeal against the punitive costs order (para 3 of the high court’s order) succeeded
with costs.

Lastly, the SCA held that there was no basis to interfere with the referral of the
judgment to the Gauteng Legal Practice Council under para 5 of the high court’s order.
This, on the basis that there were prima facie reasons for an investigation into the
attorney’s conduct in question.

~~~~ends~~~~