Kgoro Consortium (Pty) Ltd and Another v Cedar Park Properties 39 (Pty) Ltd and Others; Smit Sewgoolam Incorporated v Cedar Park Properties 39 (Pty) Ltd and Others

Cedar Park Properties 39 (Pty) Ltd (in liquidation) was a wholly owned subsidiary of Kgoro Consortium (Pty) Ltd and was used as a special purpose vehicle to acquire and develop a large Sandton property. Cedar Park borrowed R150 million from Vantage Mezzanine Fund II Partnership, guaranteed by Kgoro, and ceded its shares as security. Cedar Park defaulted on the loan. Vantage applied for Cedar Park’s liquidation. Shortly before the liquidation hearing, Kgoro applied under s 131 of the Companies Act 71 of 2008 to place Cedar Park under business rescue. The High Court dismissed the business rescue application and ordered Kgoro’s attorneys, Smit Sewgoolam Inc, to pay costs de bonis propriis. Kgoro appealed against the refusal of business rescue, and Smit Sewgoolam appealed against the punitive costs order.

The appeal against the refusal of business rescue was dismissed with costs. The appeal by Smit Sewgoolam Incorporated was upheld, and the High Court’s costs de bonis propriis order (paragraph 3) was set aside. The referral to the Legal Practice Council remained intact.

The judgment reaffirms the strict evidentiary threshold for business rescue applications under the Companies Act and underscores that business rescue cannot be used as an informal liquidation or delay tactic. It also reinforces procedural fairness requirements before punitive costs orders against legal practitioners may be made.