City of Cape Town and Others v Master of the High Court, Cape Town and Others (2025/207083) [2025] ZAWCHC 586 (12 December 2025)

Case Note

Case Name: The City of Cape Town; Lungelo Mbandazayo; Carl Joshua Pophaim v The Master of the High Court, Cape Town; Melissa Caroline; Shona Edna Le Roux-Marx N.O.; Mankanane Violet Magagane N.O.; The Western Cape Provincial Minister of Human Settlements
Citation: Case No: 2025-207083
Date: 12 December 2025

Reportability

This case is reportable due to its significant implications for insolvency law in South Africa, particularly concerning the protection of state assets in the context of housing projects. The case explores the intersection between the Companies Act of 1973, the Insolvency Act of 1936, and the Housing Act of 1997, setting a precedent for the handling of properties in liquidation that are linked to social housing schemes. The decisions rendered will influence future insolvency proceedings, especially those involving state-sponsored housing developments, thus establishing key legal principles that ensure compliance with residents’ rights to housing.

Cases Cited

1. Eriksen Motors (Welkom) Ltd v Protea Motors, Warrenton and Another 1973 (3) SA 685 (A)
2. Setlogelo v Setlogelo 1914 AD 221
3. Gool v Minister of Justice and Another 1955 (2) SA 682 (C)
4. Spur Steak Ranches Ltd and Others v Saddles Steak Ranch, Claremont and Another 1996 (3) SA 706 (C)
5. Webster v Mitchell 1948 (1) SA 1186 (W)
6. Luna Meubel Vervaardigers (Edms) Bpk v Makin & Another 1977 (4) SA 135 (W)
7. Zulu v Minister of Defence and Others 2005 (6) SA 446 (T)

Legislation Cited

1. Companies Act 61 of 1973
2. Insolvency Act 24 of 1936
3. Housing Act 107 of 1997

Rules of Court Cited

1. Rule 6(12) of the Uniform Rules of Court

HEADNOTE

Summary

The judgment addresses an urgent application brought by the City of Cape Town and its officials against the Master of the High Court and the liquidators of a company in liquidation, Catch the Wind Trading (Pty) Ltd. The applicants sought to interdict the continuation of the insolvency proceedings that threatened to auction properties registered under the company's name, which were intended for a public housing scheme. The Court affirmed the need to protect state assets in the context of social housing and provided a detailed legal analysis regarding the application of the Companies Act, the Insolvency Act, and the Housing Act, demonstrating the balance between creditors’ rights and societal obligations toward housing.

Key Issues

The court addressed several key legal issues, including:

1. Whether the subpoenas issued to the City officials were lawful and justified, considering the context and their implication on municipal responsibilities.
2. The applicability of sections 10A and 10B of the Housing Act regarding the sale of properties linked to the social housing scheme, particularly if these properties could be auctioned off during liquidation proceedings.
3. The appropriate threshold for granting an interim interdict, especially in the context of property rights and urgent matters.

Held

The court granted an interim interdict preventing the Master and the liquidators from continuing with the insolvency proceedings concerning the interrogation of city officials and the sale of the immoveable properties pending a final determination of the issues raised in Part B of the notice of motion. It emphasized the need for due process and the protection of beneficiaries’ rights under housing laws.

THE FACTS

Catch the Wind Trading (Pty) Ltd was awarded a tender from the City of Cape Town for the construction of low-cost housing, which was intended for beneficiaries from informal settlements. Following its liquidation, conflicts arose over municipal charges and rates that accrued on properties that had not yet been transferred to beneficiaries. The City of Cape Town did not lodge a claim in the winding-up process, seeking to avoid being compelled to contribute to liquidation costs.

During insolvency proceedings, subpoenas were issued for City officials to appear as witnesses regarding the company's affairs and its financial obligations, sparking legal challenges from the City. The applicants, concerned about the implications for state-sponsored housing projects, filed for an urgent interdict to stop further proceedings that could jeopardize these properties.

THE ISSUES

The court was tasked with determining the validity of the subpoenas issued to city officials, assessing whether these officials possessed relevant information for the creditors' meeting. Additionally, the court analyzed the legal implications surrounding the sale of properties that had yet to be officially transferred to housing beneficiaries, including compliance with statutory restrictions articulated in the Housing Act. The overarching question involved balancing the rights of creditors against the constitutional right to housing.

ANALYSIS

The court reasoned that the subpoenas issued were overly broad and did not consider the relevancy of the information being sought from City officials. The presiding judge emphasized that there was a prima facie case that legal protections were in place for properties linked to state housing subsidies, which cannot be sold or transferred unless specific conditions, including the right of first refusal to the provincial housing department, are met. The court referenced existing legislative provisions ensuring that subsidies protect low-income beneficiaries' rights and highlighted that any auction of the properties could lead to significant harm to these individuals.

The balance of convenience leaned heavily in favor of the city officials and the public interest of maintaining access to low-cost housing for beneficiaries. The court also provided a nuanced interpretation of informal communication among the parties regarding the sale of the properties, which influenced its decision to grant the interdict.

REMEDY

The court ordered that:

1. The Master of the High Court and the Assistant Master were restrained from proceeding with the further interrogation of city officials regarding the company.
2. The liquidators were interdicted from selling or transferring the immovable properties linked to the Olive Close project pending the final adjudication in Part B of the application.
3. The costs of the application were reserved for later determination, acknowledging the complexity of the issues involved.

LEGAL PRINCIPLES

The judgment established several key legal principles, including:

1. Protection of State Assets: The court reiterated the need to safeguard state-backed social housing projects from liquidation manipulations that could detrimentally affect beneficiaries.

2. Application of Housing Law: The judgment highlighted the stringent application of sections 10A and 10B of the Housing Act, reinforcing the notion that properties under housing subsidies cannot be sold unless specific statutory conditions are met.

3. Interim Interdicts Framework: The reasoning reiterated the requirements for granting interim interdicts, emphasizing the requirement for a prima facie right, the apprehension of harm, balance of convenience, and the absence of alternate remedies in urgent matters.

Overall, the case delineates the evolving landscape of insolvency law and its interaction with social policies aimed at fostering housing security for vulnerable populations.