Etienne Jacques Naude and Louis Pasteur Hospital Holdings (Pty) Ltd v Louis Pasteur Medical Investments (Pty) Ltd and Others

Louis Pasteur Hospital Holdings (Pty) Ltd (Pasteur Holdings), a healthcare provider operating a hospital in Pretoria, commenced voluntary business rescue proceedings in June 2018 with Mr Etienne Jacques Naude appointed as business rescue practitioner. The first respondent (Pasteur Investments) and Bonitas Medical Fund were joint shareholders holding 74% and 26% respectively. Bonitas and SARS were the largest creditors holding more than 92% of voting interest following a judgment obtained by Bonitas against Pasteur Holdings in August 2016. In June 2019, Naude convened a meeting of creditors which rejected the business rescue plan. Arjohuntleigh Africa (Pty) Ltd subsequently applied for liquidation of Pasteur Holdings. In November 2019, Ranchod J issued directives authorizing meetings of creditors. Pasteur Investments and First Clinic objected and launched an urgent application in January 2020 before Holland-Müter AJ, who granted them legal standing at creditors' meetings and postponed further meetings pending the no-vote application. Naude and Pasteur Holdings appealed this order. Lenmed Investments, which had acquired Arjohuntleigh's claim and made competing offers to purchase Pasteur Holdings (R400 million vs RH Managers' R200 million), sought to intervene in the appeal. Shortly before the appeal hearing in August 2022, Naude and Pasteur Holdings settled with Pasteur Investments and First Clinic, and filed a notice of removal on the basis that the appeal was moot. Lenmed opposed the removal and persisted with its intervention application.

• Whether an appeal becomes moot when primary litigants settle the dispute and seek removal from the roll
• Whether an intervening party can oppose removal of an appeal when primary litigants have settled
• Whether legal standing can be granted to a shareholder who has ceded its claims and a creditor whose claim has been rejected by the business rescue practitioner
• Whether a court should exercise discretion to hear a moot appeal where there is a discrete legal issue of public importance
• Whether abandonment of a judgment under Uniform Rule 41(2) renders an appeal moot
• What costs order is appropriate where an intervention application is pursued despite mootness

1. The appeal was declared moot and removed from the roll. 2. The intervention application was struck from the roll. 3. Lenmed Investments (Pty) Ltd was ordered to pay the costs of the intervention application and the application for declaration of mootness on an attorney and client scale, including costs of two counsel where so employed.

An appeal becomes moot and should be removed from the roll when primary litigants settle their dispute through abandonment under Uniform Rule 41(2), rendering the controversy no longer live or existing. An intervening party cannot sustain an appeal merely to protect its commercial interests when: (a) the primary litigants have settled; (b) the issues sought to be raised were not properly adjudicated by the lower court or are not appealable; (c) existing interim orders already protect the interests of all affected parties; and (d) there is no discrete legal issue of public importance that warrants the court exercising its discretion to hear a moot appeal. Abandonment of a judgment under Uniform Rule 41(2) is permissible at any stage of proceedings, including on appeal, and while it does not extinguish the existence of an interim order (which remains extant until varied, rescinded or set aside), it contributes to rendering the appeal moot by removing the live controversy between parties.

The Court made several observations about the underlying business rescue proceedings, noting the complex group structure of Pasteur Holdings and the competing interests of multiple stakeholders. The Court observed that two competing purchasers (RH Managers and Lenmed) had each acquired pre-existing creditor claims, with RH Managers purchasing Bonitas's R88 million judgment debt and Lenmed acquiring Arjohuntleigh's R42,276 claim. The Court noted without deciding that "the legal effect of a sale of creditor claims on voting interests is the subject of Lenmed's substitution application" - a matter pending before the high court. The Court also observed that the questions Lenmed sought to raise regarding whether the business rescue practitioner could lawfully convene a second meeting of creditors after rejection of the first plan "are not properly before this Court and are, in any event the subject of the no vote and liquidation applications which are pending before the high court." The Court characterized the conduct of Lenmed in pursuing the intervention application as "exclusively fuelled by Lenmed's desire to protect its commercial interests" and noted this "deserves censure as an abuse of the processes of this Court," justifying the punitive costs order on an attorney-client scale including costs of two counsel.

This case establishes important principles regarding mootness in South African appellate procedure, particularly in the context of business rescue proceedings. It clarifies that: (1) settlement between primary litigants renders an appeal moot even where an intervening party seeks to continue the appeal; (2) abandonment of a judgment under Uniform Rule 41(2) is permissible at any stage including on appeal and contributes to mootness; (3) the existence of an interim order serves the public interest without requiring appellate confirmation when the underlying dispute has been settled; (4) an intervening party cannot sustain an appeal solely to protect commercial interests when primary litigants have settled and there is no discrete legal issue of public importance; (5) courts will impose punitive attorney-client costs against parties who abuse court processes by pursuing hopeless applications to protect purely commercial interests. The judgment demonstrates the Court's commitment to avoiding unnecessary litigation and penalizing abuse of process, particularly important in complex business rescue matters involving multiple stakeholders with competing commercial interests.