About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Western Cape High Court, Cape Town
SAFLII
>>
Databases
>>
South Africa: Western Cape High Court, Cape Town
>>
2021
>>
[2021] ZAWCHC 194
|
|
Sithole N.O and Another v Sachal & Stevens (Pty) Ltd and Another (14657/2019) [2021] ZAWCHC 194 (5 October 2021)
Republic of South Africa
IN THE HIGH COURT OF SOUTH AFRICA
WESTERN CAPE DIVISION, CAPE TOWN
Case number: 14657/2019
Before: The Hon. Mr Justice Binns-Ward
Hearing: 4 August 2021
Judgment:
5 October 2021
In the
matter between:
OSCAR
JABULANI SITHOLE
N.O.
First Applicant
BEATRICE
LINDA MILLS
N.O.
Second Applicant
(In
their capacities as co-liquidators of
Sachal
Hauliers (Pty) Ltd (in liq.)
)
and
SACHAL
& STEVENS (PTY)
LTD
First
Respondent
MARK
CATER
STEVENS
Second
Respondent
JUDGMENT
(Delivered by email to the parties and release to SAFLII.)
The judgment shall be deemed to have been handed down at 10h00 on
5 October 2021.
BINNS-WARD J:
Introduction
[1]
In these proceedings the applicants, who
are the joint liquidators of Sachal Haulers (Pty) Ltd (in liq.), seek
relief, under various
heads, against the first and second
respondents, Sachal & Stevens (Pty) Ltd and Mark Cater Stevens,
respectively. I shall
refer to the company in liquidation as
‘SH’ and to the first respondent, Sachal & Stevens
(Pty) Ltd, as ‘S&S’.
The second respondent will
be referred to by his surname, Stevens. He was a director and
the controlling mind of both SH
and S&S. He remains at the
helm of S&S.
[2]
SH was placed into liquidation at the
instance of one of its creditors, Kroucamp Plumbers CC, by reason of
its inability to settle
its debts. The application for
liquidation was lodged on 9 November 2015 and, despite opposition, a
provisional winding-up
order was granted on 5 August 2016. A
final order followed on 6 September 2016.
[1]
[3]
It is common ground that SH, whose sole
business would appear to have been to undertake earth transportation
work for Arcelor Mittal,
ceased active operations in July 2015 after
it was denied access to Arcelor Mittal’s site in Saldanha.
Arcelor Mittal
gave formal notice of the termination of its contract
with SH in August 2015. Stevens claims to have learned of the
termination
only at the beginning of November 2015, although the
circumstances are such that it is highly improbable that he could
have been
unaware that SH had ceased its operations in July. I
say that because Stevens stated in affidavits made in earlier
proceedings
that Randall Kapot, the co-director and operations
manager of SH, stopped work in July and, in these proceedings, he
testified
to the sale during July 2015 of various vehicles and
equipment that were used in SH’s operations. Some
vehicles were
disposed of at that time as payment in kind of SH’s
debts.
[4]
Whilst Kroucamp Plumbers did not receive
any payment in respect of its outstanding claim for services rendered
to SH when the company
was still in business, Stevens caused SH to
make several payments to S&S during the interval between SH’s
cessation of
business and the date on which the order was granted
placing the company into liquidation.
[5]
The payments involved comprised of the
following:
1.
R513 000 on 3 August 2015;
2.
R236 854,30 on 3 August 2015;
3.
R297 161,26 on 4 August 2015;
4.
R237 408,19 on 4 August 2015;
5.
R255 531 on 25 August 2015;
6.
R255 531 on 2 September 2015;
7.
R228 171 on 2 October 2015;
8.
228 000 on 4 December 2015;
9.
R40 000 on 10 December 2015; and
10.
R5 600
on 19 January 2016.
The effect of the payments
was to clear out SH’s cash resources and leave the company
unable to pay its debt to Kroucamp Plumbers.
[6]
The applicants challenge the validity or
lawfulness of the payments on a number of grounds.
[7]
In respect of the three payments made on 4
and 10 December 2015 and on 19 January 2016, respectively, an order
is sought that they
be declared void in terms of s 341(2) of the
Companies Act 61 of 1973;
[2]
alternatively, that the payments be set aside in terms of
ss 26(1)
,
or
30
(1) or
31
of the
Insolvency Act 24 of 1936
;
[3]
further alternatively, that they be set aside in terms of the common
law based on unjust enrichment or fraud. In respect
of the
other payments, the applicants seek relief also in terms of the
aforementioned provisions of the
Insolvency Act, alternatively
, on
the grounds of unjust enrichment or fraud.
[8]
The applicants also seek an order, in terms
of
s 424
of the old Companies Act,
[4]
declaring Stevens to be personally liable for the debt of SH to
Kroucamp Plumbers CC in the amount of R454 317,31 plus mora
interest.
[9]
In addition, they seek an order, in terms
of s 423(1) of the old Companies Act,
[5]
that an enquiry be held into the conduct of Stevens as a director of
SH, including a direction that he be required to deliver a
written
account, fully supported by source documents, concerning various
vehicles, plant and equipment for the purpose determining
the
ownership of such objects and the true nature and cause of all
payments made by him on behalf of SH to S&S in connection
with
any of the aforementioned vehicles, plant or equipment, and that
orders be made for the repayment of any amounts found to
be have been
misapplied or retained or paid in breach of Stevens’ fiduciary
duty to SH.
[10]
The respondents have indicated that they do
not oppose the institution of an enquiry in terms of s 423 of
the old Companies
Act. They oppose all the other relief sought
by the applicants and contend that it would, on any approach, be
premature to
determine the application for relief under those heads
before the finalisation of the contemplated s 423 enquiry.
In
support of that contention, they say that if the plant and
equipment that they say belonged to S&S were in fact the property
of SH, then it would follow that SH could not have been insolvent at
the times the payments that the applicants seek to impeach
were made,
which would pose a fatal impediment to their ability to obtain the
relief sought in terms of the
Insolvency Act. They
also argue,
persuasively in my view, that it would be inappropriate to make an
order against Stevens in terms of
s 424
whilst the possibility
of an order being made against him in terms of
s 423
remained
undetermined.
[11]
As I shall explain presently, the
institution of an enquiry in terms of
s 423
is a matter within
the court’s discretion. It is not a procedure that is
made available merely for the asking, and
it therefore does not
follow that the respondents’ consent to such an enquiry in any
way obliges the court to hold one.
The court will order such an
enquiry only if a proper case for one has been made out, and even
then only if the court is satisfied
that the exceptional procedure
afforded in terms of the provision would be appropriate in the
circumstances.
The
applicants’ allegations and other information apparent on the
founding papers
[12]
The applicants’ case falls into two
broad categories. The first category concerns the setting aside
of the above-mentioned
payments, all of which, they contend, were
made at a time that SH was factually insolvent. The second
category concerns the
determination of the ownership of certain
vehicles and equipment. It is in relation to the second
category that the applicants
have sought an enquiry in terms of s 423
of the 1973 Companies Act. The contemplated enquiry would also
examine the propriety
of the rental payments by SH to S&S for the
vehicles and equipment should it be found that the company in
liquidation had not
been the owner thereof. There is an overlap
between the two categories because the applicants also claim the
repayment of
the amounts ostensibly paid as rental even if S&S is
the owner of the vehicles and equipment. They do so on the
basis
that they do not accept that there was a lease agreement in
place and that SH did not use or obtain any benefit from the vehicles
and equipment after it ceased to trade.
[13]
The vehicles and equipment involved are
identified in paragraph 5.1 of the notice of motion as follows:
1.
A Man truck tractor with registration no.
CA201 884;
2.
A Man truck tractor with registration no.
CA 386 976;
3.
Two tip trailers;
4.
A 950CAT front-end loader;
5.
A Manitou forklift;
6.
A lowbed trailer;
7.
A horse for the lowbed trailer with
registration no. CA 933 737;
8.
A digger loader;
9.
Two dump trucks;
10.
An
excavator;
11.
A
Toyota 3-litre diesel bakkie;
12.
A
Toyota bakkie;
13.
A
Man truck tractor with registration no. CA 933 737
[6]
or CAW 3013;
14.
A
trailer with registration no. CA 570 336 (this vehicle was
registered in SH’s name on 21 June 2010 and registered
ownership thereof was transferred to CT Trucking on 31 May 2016);
15.
A
trailer with registration no. CA 563 043;
16.
A
Toyota bakkie with registration no. CA 928 298;
17.
A
trailer with registration no. CA 928 278
18.
The
(sic) box trailer;
[7]
19.
The
(sic) trailer light tanker; and
20.
Two
Land Rover Defenders. (Two Land Rover Defender 110 TDIs with
registration numbers CA 460 378 and CA 837 337,
respectively, are listed as ‘
private
vehicles
’ on the schedule to a
Hollard Insurance Co policy issued to SH and S&S as joint insured
for the period 1 June 2014 to
31 May 2015, a copy of which is annexed
to the founding affidavit.)
[14]
At the enquiry conducted in terms of s 415
of the 1973 Companies Act into the affairs of SH, the company’s
co-director,
Randall Kapot, testified that SH had purchased the
vehicles identified in items 1-12 of the preceding paragraph.
Kapot reportedly
testified that the purchase of the vehicles was
financed by means of loans of obtained from S&S.
[15]
The first applicant, who was the deponent
to the principal founding affidavit averred that the Kapots’
evidence is supported
‘
to an
extent
’ by the ‘
limited
documentation
’ made available to
the applicants by Stevens. He pointed out that several vehicles
claimed by Stevens to be the property
of S&S were registered in
the name of SH. In this regard, he identified the vehicles
listed as items 1, 2, 13,
[8]
14, 15, 16 and 17 in paragraph [13]
above.
[16]
The documentation evidencing the
registration of some of the vehicles in SH’s name in point of
fact appears to be the only
objective evidence in support of any
claim by SH to ownership of them. Moreover, the financial
statements of SH do not reflect
any liability to S&S in respect
of the loans advanced by it to SH for the purchase of the vehicles
according to Kapot’s
version.
[17]
It is trite that registration of a vehicle
in a person’s name is not determinative of that person’s
ownership of the
vehicle; cf. e.g.
Info
Plus v Scheeke and Another
1996 (4) SA
1058
(W) at 1060 and
Akojee v Sibanyoni
and Another
1976 (3) SA 440
(W) at
442C-F. See also the cases that distinguish between ‘statutory’
ownership of motor vehicles (evidenced
by certification or
registration etc.) and ‘common law ownership’ thereof;
Cf.
Van Gend v Royal Exchange Assurance
and Ano
1969 (3) SA 564
(E) at 567,
citing
Pottie v Kotze
1954 (3) SA 719
(A). Any claim that SH might have to the
vehicles would have to be predicated on its so-called ‘common
law ownership’
thereof.
[18]
The first applicant averred that Stevens
had given inconsistent and mutually contradictory accounts concerning
the ownership of
the vehicles and equipment. He testified as
follows in that regard:
‘
In
the affidavit deposed to by Stevens in support of the warrant
application
[an application
successfully brought by S&S and Stevens to set aside a warrant
obtained by the liquidators of SH in terms of
s 69
of the
Insolvency Act to
search for and take possession from S&S and
Stevens property alleged to be that of SH]
,
he admitted that some of the vehicles used by the company
[i.e.
SH]
were registered in the name of the
company. He blamed Kapot and his wife for what he described as the
incorrect registration of
the said vehicles in the company’s
name. He explained that Kapot and his wife erroneously believed that
because the company
used the vehicles, it had to be registered in its
name. However, during the
section 415
enquiry Stevens changed his
tune and explained that the vehicles were correctly registered in the
company’s name as Arcelor
Mittal required all vehicles
operating on their site to be registered in the name of the operator.
From Arcelor Mittal’s
perspective, the company was the
operator.
’
[9]
[19]
The applicants confirm that they have been
provided with tax invoices evidencing the purchase by S&S of the
following vehicles:
1.
A Manitou forklift for R182 400 (incl.
VAT). The invoice, issued by Window Wide Traders CC of
Velddrift, reflects a transaction
date of 30/06/2011 and shows that a
deposit of R20 000 was paid on 7 July 2011, with the balance
payable on 1 August 2011.
Handwritten endorsements on the
invoice suggest that the balance was redeemed by way of EFT payments
effected on 18 July, 4 August
and 2 September 2011, respectively.
On its face the invoice could quite feasibly relate to the vehicle
identified in item
5 in paragraph [13]
above.
The invoice gives the Manitou serial number for the vehicle, so it
should be easy to confirm that the items are indeed
one and the same.
2.
A (1997) Man truck tractor for R239 400.
The invoice, issued by Anglo Commercial Enterprises (Pty) Ltd t/a
Hermans of
Somerset West, is undated but it reflects the engine and
serial numbers of the vehicle sold. It also gives its
registration
number as CA 201 884. The vehicle
accordingly appears to be that identified in item 1 in paragraph
[13].
ENatis records indicate that the vehicle was registered
in the name of SH on 24 May 2010, but SH’s financials for the
relevant
period do not reflect it as an asset of the company.
The records show that registered ownership of the vehicle was
transferred
to CT Trucking on 31 May 2016.
3.
A (2003) Man truck tractor for R387 600.
The invoice, also issued by Anglo Commercial Enterprises (Pty) Ltd
t/a Hermans
of Somerset West, is again undated but it reflects the
engine and serial numbers of the vehicle sold. It also gives
its registration
number as BWP390 NC, which appears to be a Northern
Cape vehicle registration number. The vehicle would presumably
require
to be reregistered with a Western Cape number. It
should be possible by checking the engine and serial numbers to
easily
identify whether the vehicle is one of the truck tractors
listed in paragraph [13]
above.
4.
A (2008) used 950 loader for R1,197
million. The invoice, dated 24 November 2010, was issued by
Barlow World and gives the
plant and serial numbers of the
equipment. It should be possible by checking the engine and
serial numbers to easily identify
whether the invoiced item is in
fact one of the two loaders listed in paragraph [13]
above.
It is identifiable by its engine serial number as one of the insured
vehicles on the schedule to the aforementioned
Hollard Insurance Co
policy issued to SH and S&S as joint insured.
5.
A ‘new’ Caterpillar 950H wheel
loader powered by a Caterpillar C7 engine for R1,824 million.
The invoice,
issued by BarlowWorld Equipment, is dated
02.11.2011. It gives the serial numbers for both the wheel
loader and the
engine. It should be possible by checking the
engine and serial numbers to easily identify whether the invoiced
item is one
of the two loaders listed in paragraph [13]
above. It is identifiable by its engine
serial number as one of the insured vehicles on the schedule to the
aforementioned
Hollard Insurance Co policy issued to SH and S&S
as joint insured.
6.
A new CPCD50-RWX19 5-ton diesel forklift
for R323 091,96 (including delivery). The invoice, dated
06/05/2013, and issued
by Manhand (W.P.) CC – part of the D&H
Engineering Group, reflect the serial, chassis and engine numbers of
the vehicle
that was sold. On the face of it the vehicle that
is the subject of this invoice does not appear to correspond to any
of
the items listed in paragraph [13]
above.
All but one
of the above invoices reflect what appears to be S&S’s VAT
number as part of the purchaser’s particulars.
[20]
It seems to be common cause that SH sold a
used lowbed trailer to S&S for R114 000 (including VAT) and
that the purchase
price was paid. SH issued S&S with a VAT
invoice for the transaction, dated 30 July 2015.
[21]
Copies of SH’s independently reviewed
financial statements for the years 2011 to 2015 were attached to the
founding affidavit.
[10]
It was only from the 2013 financials, in respect of the year ended 28
February 2013, that ‘motor vehicles’ at
a cost price
valuation of R381 000 were first reflected in the notes to the
company’s balance sheet as part of SH’s
assets.
Stevens’ loan account claim against the company increased by
R254 810 during the same period. The
financial statements
for the next two years (2014 and 2015) indicate that the ‘motor
vehicles’ reportedly acquired
by SH in the 2013 financial year
were depreciated. There is no indication in the financials that
further vehicles or plant
were acquired. There is also no
indication in the financials that S&S ever acquired a loan
account claim against SH.
[22]
The copy of the 2011 financials for SH
attached to the founding papers as part of annexure OJS5 is
incomplete. It may be discerned
from the 2012 financials,
however, that SH was reported to have paid R668 791 to S&S
(which is disclosed as a related
party) in rent during 2011 and
R2 475 763 in 2012. The corresponding figures for the
succeeding three years (2013,
2014 and 2015) are given in the notes
to the SH’s financial statements as R1 831 233,
R1 711 469 and
R1 427 273, respectively.
The said amounts are recorded in the notes to the financials in each
of those three years
as –
‘
Operating
lease charges
Motor
vehicles
·
Contractual amounts
’
[23]
The financials for the entire period show
that SH’s liabilities exceeded its assets as of each of the
five reporting dates
involved. However, a significant part of
SH’s liabilities comprised Stevens’ loan account claim,
which was subordinated
until such time as the company’s assets
exceeded its liabilities. Stevens’ evidence also suggests
that SH’s
financial statements were inaccurate in various
material respects; so, whilst it may be accepted that the statements
were drafted
with the bona fide intention of properly reflecting the
company’s financial affairs, they must nevertheless be examined
with
circumspection in the context of the evidence that exposes their
inaccuracy. The applicants have identified a number of other
inaccuracies in SH’s financials that suggest that the company’s
accounts were sloppily written up.
The respondents’ answer
[24]
The respondents, represented by Stevens,
deny that the vehicles and equipment that the applicants suggest
belong to SH in fact do
so. They point to the fact that that
SH’s financials have consistently reflected that the only
vehicle owned by the
company is that acquired for R381 000 in
July 2013 during the company’
s 2014
financial year. They
identify the vehicle in question as a lowbed trailer with
registration number CA 112 425 and provide
its serial number.
They give the name of the concern from which the trailer was
purchased. This was the vehicle that
S&S purchased from SH
for R100 000 (excl. VAT) after SH ceased operations on the
Arcelor Mittal contract. It was
identified as an asset of SH in
the company’
s 2013
financials, but that was clearly
erroneous.
[11]
[25]
Stevens asserts that the vehicles purchased
by S&S that were registered in SH’s name were so registered
only because Arcelor
Mittal required the vehicles brought onto the
site by SH to be registered in its name. He points out that the
vehicles were
reregistered in the name of S&S after SH ceased to
operate on the Arcelor Mittal site.
[26]
Stevens gave the following explanations
(printed in italics) in respect of each of the vehicles listed in
para 5.1 of the applicant’s
notice of motion (as set out
in paragraph [13]
above):
1.
A Man truck tractor with registration no.
CA201 884;
the subject of the
invoice listed as item 2 in paragraph [19]
above
.
It was sold on 26 October 2020 for
R67 800
2.
A Man truck tractor with registration no.
CA 386 976;
serial number provided,
purchased by S&S from Hermans for R340 000 on 18 May
2010.
3.
Two tip trailers;
serial
numbers and CA registration numbers provided in respect of two
Copelyn tip trailers purchased for R80 000 each from
Graceful
Transport & Logistics on 21 May 2010. One of the trailers
was scrapped and the other disposed of at a consideration
of R60 000
on 15 July 2015 to West Coast Builders in part settlement of a
R240 000 indebtedness to the latter by SH
.
4.
A 950CAT front-end loader;
Stevens
provided particulars in respect the two front end loaders evident
from the invoices described in items 4 and 5 of paragraph
[19]
above. The first mentioned is currently
not in working order and being kept at an address in Velddrift.
The other is
in working condition, and also kept at the Velddrift
address
.
5.
A Manitou forklift;
Stevens
identifies this as the vehicle subject of the invoice listed as item
1 in paragraph [19]
above
.
He states that it is in S&S’s
possession, having been returned by one Lauren Coetzee in early 2019
with major parts missing.
The circumstances in which it came to
be in Coetzee’s possession are described at para 57-59 of the
supporting affidavit
of Stevens in support of the application by him
and S&S to set aside a warrant in terms of
s 69
of the
Insolvency Act obtained
by the liquidators of SH. A copy of the
relevant part of the affidavit was attached as annexure OJS7 to the
applicants’
founding affidavit in the current application. The
information provided by Stevens in the current application suggests
that the
vehicle is in the process of being rebuilt
.
6.
A lowbed trailer;
the
vehicle described in paragraph [24]
above
.
7.
A horse for the lowbed trailer with
registration no. CA 933 737;
Man
Truck CAW
[12]
purchased by S&S from HG Fourie
Vervoer as a used vehicle for R200 000 on 2 April 2011 and sold
on 20 October 2020 for
R86 900
.
8.
A digger loader;
Stevens
has given particulars of a Caterpillar 416C Backhoe loader reportedly
acquired by S&S from BarlowWorld in 1999 for R275 000.
The equipment is reported to be on site in Rawsonville in working
condition
.
9.
Two dump trucks;
Stevens
has given particulars of two dump trucks, being Bell articulated dump
trucks with registration numbers CW 36786 and CW 36785,
respectively. S&S reportedly acquired the vehicles as used
vehicles from Bell / Burger Wallace for R500 000 each
on 16
October 2002. Both vehicles are reported to be on site at a
given address in Velddrift and in a ‘not functional’
condition.
10.
An
excavator;
Stevens has given
particulars of a Caterpillar 318B Hydraulic Excavator acquired from
BarlowWorld for R1 202 000 on 22
October 2002. The
vehicle is reported to be on site at a given Velddrift address in a
‘partly functional’ condition
.
11.
A
Toyota 3-litre diesel bakkie;
a
Toyota bakkie with registration number CFG 19841 belonging to SH
purchased from S&S for R35 000 on 13 August 2010
was
disposed of to West Coast Builders on 15 July 2015 for a
consideration of R20 000 in part settlement of the latter’s
R240 000 claim against SH
.
12.
A
Toyota bakkie; [It is not clear on the papers from where the
reference to a third Toyota bakkie derives. According
to the
founding papers, Kapot testified at the
s 415
enquiry that SH
acquired
two
Toyota bakkies.
[13]
]
13.
A
Man truck tractor with registration no. CA 933 737
[14]
or CAW 3013; (
This would appear to
be the same vehicle as that described in item 7, above.
)
14.
A
trailer with registration no. CA 570 336 (this vehicle was
registered in SH’s name on 21 June 2010 and registered
ownership thereof was transferred to CT Trucking on 31 May 2016);
(
This appears to be one of the two
Copelyn tip trailers described in item 3, above. The one that,
according to Stevens, was
scrapped.
)
15.
A
trailer with registration no. CA 563 043;
This
appears to be the other one of the two Copelyn tip trailers described
in item 3, above.
16.
A
Toyota bakkie with registration no. CA 928 298;
given
to Mr Kapot’s son as it was in a poor state of repair and had
had an engine and gearbox failure
.
[15]
17.
A
trailer with registration no. CA 928 278;
described
by Steven as a bowser trailer. Reportedly acquired by S&S
from CTC Plant Hire for R12 000. Currently
on site at a
given Velddrift address, having been officially deregistered on 18
August 2020 as unroadworthy.
18.
The
(sic) box trailer;
[16]
a schedule to an insurance policy issued by
the Hollard Insurance Company Ltd to S&S and SH as joint insured
(annexure OJS 17
to the founding affidavit) lists a 2000-registered
‘homebuilt box trailer’ with registration number CA
203 311.
Stevens has
not dealt with this vehicle in the schedule annexed to his answering
affidavit as annexure MCS 17.
19.
The
(sic) trailer light tanker; (
not dealt
with
in
the schedule annexed to Stevens’ answering affidavit as
annexure MCS 17
).
20.
Two
Land Rover Defenders.
Stevens’
private vehicles and still in his possession
.
The applicants’
reply
[27]
In reply, the applicants complained that
the second respondent had failed to disclose much of the information
set forth in the respondents’
answering papers at an earlier
stage. They highlighted the unreliability of SH’s
financial statements in various respects
and emphasised Stevens’
failure or inability to give a coherent indication of the terms of
the lease relied upon by Stevens
to justify the impugned rental
payments.
The relief
sought in terms of s 423 of the 1973 Companies Act
[28]
As the respondents have purported to
consent to an enquiry in terms of s 423 of the 1973 Companies
Act, I shall treat of that
aspect of the application first. I
am not willing to grant the remedy, however, because in my view, as I
shall explain presently,
a proper case for such an enquiry has not
been made out, and the applicants have in any event not exhausted
more appropriate mechanisms
of investigation that are available to
them under the statute. Suffice it to say that if I had been
persuaded that the court
should institute an enquiry under the
provision, I would have postponed much of the other relief sought by
the applicants for later
determination after the enquiry had been
concluded, as the respondents indeed argued should happen.
[29]
Section 423
[17]
affords an exceptional procedure for the summary enforcement of the
claims of a company in liquidation against the limited classes
of
person identified in subsection (1) of the provision. It is a
provision for the benefit of the creditors and members of
such
companies. Speaking of the immediate predecessor of the
provision, s 184 of the Companies Act, 1926, which was
similarly
worded, Holmes JA remarked in
Lipschitz
NO v Wolpert and Abrahams
1977 (2) SA
732
(A) at 744A-C that it ‘
makes
drastic inroads upon the normal procedure of enforcement of claims.
It cuts across and dispenses with pleadings, discovery,
and the right
of a defendant not to testify. The Court may summarily require the
alleged delinquent to give viva voce evidence
and to be
cross-examined. … The procedure may be robust and wholesome,
but it is rough and ready; and the provision should
not be construed
widely.
’
[18]
On that approach the court held that a claim against a company’s
auditor did not fall within the purview of the provision.
Similarly, in
Rennie NO v Holzman and
Others
1987 (4) SA 938
(C) and
Rennie
NO v Holzman and Others
1989 (3) SA 706
(A), it was found that the provision was not available for use in
respect of a claim against the erstwhile judicial managers of
a
company in liquidation. It follows that there can be no
question of the procedure being available in respect of a claim
to
recover SH’s property from S&S for the procedure in terms
of s 423 is not available, according to the tenor of
the
provision, for use against the company.
[30]
The procedure is available when it is made
to appear to the court that the person against whom the remedy under
s 423 is sought
has been delinquent or transgressive regarding
the management or administration of the company that is being wound
up.
[31]
A person wishing to use the mechanism
afforded by s 423 for the prosecution of a company in
liquidation’s claim for any
type of relief provided in terms of
subsection (1) thereof must make out a prima facie case in support of
its application for the
institution of an enquiry contemplated by the
provision. The nature of the case to be made out and of the
court’s discretion
regarding applications brought in terms of
s 423 was discussed by Coetzee J in the full court’s
judgment in
Timmers and Another v
Spansteel (Pty) Ltd
1979 (3) SA 242
(T).
[32]
At p. 247 of
Timmers
,
after referring to the abovementioned observations about the
procedure made in
Lipschitz
,
the learned judge said:
This
passage clearly illustrates the uniqueness of this special remedy to
which an applicant is not entitled as of right. This examination
into
the conduct of another person is a departure from the basic
principles of our adversary system of litigation. It has indeed
inquisitorial elements and can only take place after the Court has so
ordered upon application for this definite and distinct relief.
Such
an order should not be confused with one referring an application for
viva voce evidence which falls in a completely different
category,
one which cannot even properly be sought in a notice of motion. Apart
from the fact that the applicant for such an order
under s 423 may
not succeed in making out a prima facie case, it may be refused for a
variety of reasons. This is discretionary
relief and there may be
facts which persuade the Court that it should not exercise its
discretion or it may be that there are reasons
in law why the
application should be refused, for instance that the facts deposed to
by the applicant do not come within the purview
of the section, and
so forth.
[33]
As to the nature of the case that an
applicant for an enquiry in terms of s 423 must make out,
Coetzee J referred to the
following passage in Price J’s
judgment in
Hamman v Hamman
1949 (1) SA 1191
(W) (an application for maintenance
pendente
lite
in a matrimonial cause) at 1193 –
In
order to decide whether a prima facie case has been made out in a
petition of this character, the Court must ask itself whether,
if all
the allegations in the petition were proved, the applicant would
succeed in the main action. The Court cannot speculate
as to who is
likely to succeed by nicely balancing the probabilities. Of course,
where a respondent produces overwhelming proof
(such as
correspondence or documentary or equally convincing evidence) showing
that there is no foundation at all for the allegations
in the
petition, the Court would be obliged to hold on the papers that the
prima facie case had not been made out, and the test
set out above
would not be applicable. Short of such evidence by the respondent,
however, the Court will assume that the allegations
in the petition
are capable of proof and will consider whether the applicant would be
entitled to judgment in the main case if
the facts set out in the
petition were
proved
And proceeded
(at p. 249F-G):
I
would adopt this approach as apposite to the instant kind of
application. This does not mean that bare allegations will suffice.
The applicant must properly produce evidence in conventional manner
in substantiation of the facts on which he relies for seeking
a
substantive order that this extraordinary procedure be made available
to him. See
Du Plessis v Gunn
([1962 (4) SA 7 (O)] at 14E). It
is not a prima facie case for a claim for the payment of money which
must be made out. All that
the applicant has to establish is a prima
facie case for the grant of an order for the holding of an enquiry.
Consequently, he
need not establish any probable amount which the
Court will order the respondents to pay. That is a problem that may
arise only
in the course of the subsequent enquiry.
[34]
In
Du Plessis
v Gunn
supra, Hofmeyr J appears to
suggest that, if possible, a proper evidential basis should be laid
for an enquiry in terms of
s 423 (the learned judge was dealing
with an application under the provision’s antecedent, s 184
of the 1926 Act)
by appropriate use of other mechanisms such as s 415
(the learned judge referred to the antecedent of that provision in
s 180
ter
of the 1926). That puts the requirement for making out a prima
facie case somewhat higher than in the passage from
Hamman
cited by Coetzee J. I find myself in respectful agreement with
Hofmeyr J’s approach and would emphasise the sentence
in the
aforementioned quotation from
Timmers
in
which Coetzee J stated ‘(t)
he
applicant must properly produce evidence in conventional manner in
substantiation of the facts on which he relies for seeking
a
substantive order that this extraordinary procedure be made available
to him
’.
[35]
The cases consistently refer to the
procedure in terms of s 423 as a ‘summary’ one.
In my judgment, a summary
procedure is indicated only when a strong
or fairly clear-cut case is made out, albeit on a prima facie basis.
This much
seems to be supported by the observation in Henochsberg
that s 423 ‘
creates no new
rights but provides a summary procedure for the enforcement of rights
of action which the company already owns arising
from the conduct of
the respondent
’.
[19]
The procedure should not be seen as an alternative exploratory tool
to the information gathering procedures available under
s 415 or
417. Whereas the latter procedures are exploratory and can be
used to confirm or establish the existence of
rights of action, s 423
is directed at providing a summary enforcement mechanism for rights
of action that have already been
established, at least prima facie.
[36]
I think this much is confirmed in the
wording of the provision. The words ‘
it
appears that .. any past or present director ... of the company
has misapplied or retained or become liable or accountable
for any
money or property of the company or has been guilty of any breach of
faith or trust in relation to the company the court
may, on the
application of ...., inquire into the conduct of the ... director ...
concerned ...
’ imply that the
misfeasance involved must be apparent when the application for the
enquiry is made. The primary purpose
of s 423 is to
provide a robust and expeditious means to a result, whether by
payment of money or delivery up of property
to the company by the
delinquent director, officer or promoter, as the case might be.
[37]
I have noted that Coetzee J in
Timmers
supra, at pp. 252-253, considered that there was a lacuna in the
legislation by reason of its omission to lay down any procedural
directions for enquiries in terms of s 423. The convention
had been for orders instituting such enquiries to be granted
in the
simple and unadorned form used in
Waisbrod
v Potgieter and Others
1953 (4) SA 502
(W), viz. an order ‘
that the
application be set down on a date to be fixed by the Registrar for
viva voce examination and cross-examination
[of the alleged delinquents]
and of
those witnesses who have made affidavits and of any other witnesses
whom the Court may allow the parties call
’.
Coetzee J feared that orders in such terms were liable to result in
the enquiry lapsing into a ‘“
free
for all”, casting unnecessary extra burdens on the Judge
hearing the matter
’. The
learned judge considered it desirable that the issues to be dealt
with at the enquiry be defined (he appears
to have in mind something
in the nature of the so-called ‘Metallurgical order’
[20]
),
that there be discovery as provided in the Uniform Rules of Court and
a ‘pre-trial conference under Rule 37’.
[38]
In my view, however, the undelimited
application of such ordinary pretrial procedures in an enquiry under
s 423 would be at
odds with the very object of the provision,
being the provision of a
summary
procedure to obtain an exigible substantive result. An enquiry
under s 423 is a procedure appropriately availed of when a
trial
should not be necessary by virtue of the apparent strength of the
prima facie case made out against the respondent.
The evidence
adduced in support of an application in terms of s 423 should be
such that little more might be expected to happen
at the enquiry than
a hearing of the apparently delinquent director’s evidence as
to why the substantive relief sought from
him should not be
granted.
[21]
That would represent a realisation of the ‘summary’
character of the remedy crafted by the provision.
[22]
[39]
In the current case, as the summary of
evidence above bears out, all the indications are that S&S is the
owner of the vehicles
and equipment in issue. The information
that can be vouched in support of that conclusion has been provided.
In the
circumstances, it is of little consequence that evidence
previously given by Stevens has not been consistent in all respects.
An enquiry is unlikely to take matters further, and s 423 in any
event does not afford the machinery by which S&S could
be ordered
to restore the property. The evidence does not support a case
for the institution of an enquiry to summarily dispose
of a case
against Stevens for having misapplied SH’s property or
committed a breach of faith or trust in relation to SH.
It goes
no further than to suggest that the possibility of such delinquency
should be explored.
[40]
If the applicants consider that it would be
fruitful to interrogate Stevens further in respect of the information
given in the respondents’
answering papers, the appropriate way
of doing that would be by means of a reconvened examination in terms
of s 415 of the
Act. Such examinations may be convened at
any time before the company in liquidation is finally dissolved; cf.
Standard Bank of South Africa Ltd v
Master of the High Court
[1999] 1 All
SA 299
(A),
1999 (2) SA 257
(SCA).
[41]
For all these reasons, I have concluded
that it would be inappropriate to accede to the applicants’
application for the institution
of an enquiry in terms of s 423
of Act 61 of 1973.
The application for a declaration that the payments made to S&S
post 9 November 2015 are void in terms of s 341(2) of Act
61 of
1973
[42]
The pertinent provisions of the 1973
Companies Act have been set out in footnote 2 above.
Consideration of those provisions
makes it clear that the declaratory
order sought by the applicants is unnecessary. The statutory
provisions are clear and
speak for themselves. The payments to
S&S made after the presentation on 9 November 2015 of the
application for SH’s
liquidation are void.
[43]
The court is vested with a discretion to
declare that payments made between the lodging of the winding-up
application and the making
of an order placing a company into
liquidation (whether such be a provisional or a final order matters
not). The respondents
have contended in the answering papers
that the court should not make such an order in this case, but there
is no counter-application
formally seeking such relief. The
respondents adopted the position that a determination whether to
exempt the payments from
the voiding effect of s 341(2) should
stand over until after the enquiry in terms of s 423 to which
they had consented.
That was a misdirected approach. An
enquiry in terms of s 423 is not, according to the terms of the
provision, directed at
determining whether a case for an exemption
from s 341(2) can be made out. The payments are void
ex
lege
, and if the respondents sought a
special exemption it was for them to make out a case for it.
[44]
The considerations that are generally
applicable when an order exceptionally exempting payments from the
generally voiding effect
of s 341(2) is considered were very
recently rehearsed in
Pride Milling
Company (Pty) Ltd v Bekker NO and Another
[2021] ZASCA 127
(30 September 2021). See also
Gainsford
NO and Others v Tanzer Transport (Pty) Ltd, In Re; Gainsford NO and
Others v Tanzer Transport (Pty) Limited and Others
[2014] ZASCA 32
(28 March
2014); 2014 (3) SA 468
(SCA);
[2014] 3 All
SA 21
(SCA). An exemption order will be granted only in very
limited circumstances because the making of such an order goes
against
the object of the subsection, which is to protect the
interests of the
concursus creditorum
and ensure that the company’s creditors are treated equally.
As the judgment in
Tanzer Transport
illustrates, the mere fact that a payment was allegedly made in the
ordinary course of business will not, of itself, afford sufficient
reason to have it declared valid and effective. The respondents
have not shown any good reason for this court to make an
order
exempting the payments made to S&S from the effect of s 341(2).
[45]
In the current matter Stevens has contended
that the debt to Kroukamp Plumbers was not due when the impugned
payments by SH to S&S
were made. That is of no consequence
in the application of s 341(2). Even if Kroucamp Plumbers
had agreed to wait
for payment until Arcelor Mittal had fully
redeemed its indebtedness to SH, improbable as that seems, that would
not detract from
the fact that the payments to S&S after 9
November 2015 afforded the latter company the sort of unfair
preference in insolvency
that s 341(2) is directed at
preventing.
[46]
S&S is accordingly liable to repay to
the company in liquidation the payments listed as 8-10 in paragraph
[5]
above, totalling R273 600.
The Claim for Repayment of the Amounts paid to S&S in
settlement of the latter’s invoices in respect of the rental of
vehicles and equipment.
[47]
The payments listed in items 2 to 10 of the
list in paragraph [5]
above were
purportedly in settlement of the rentals that Stevens avers were due
by SH to S&S in respect of certain vehicles
and equipment
allegedly leased by SH from S&S. S&S rendered invoices
for the said amounts.
[48]
It will be recalled from the description at
the beginning of this judgment of the various heads under which the
applicants have
advanced their claim for the repayment of the moneys
paid by SH to S&S that the ostensible rental payments are being
reclaimed
either on the basis that they were impeachable transactions
under the
Insolvency Act or
on the basis of unjust enrichment.
[49]
Whilst I think that SH could very well have
been factually insolvent when the impugned rental payments were made,
I am not satisfied
that this has been established with the required
degree of certainty on the probabilities, especially as the
applicants appear
to wish to further investigate the issue of the
ownership of the relevant vehicles and equipment. That seems to
put paid
to any determination in the applicants’ favour under
the
Insolvency Act in
respect of those payments.
[50]
If one assumes in the applicants’
favour that the property is that of SH, then, of course, there could
be no question of the
company in liquidation having hired its own
property, and the so-called rental payments would be demonstrably
bogus. If,
on the other hand, it is assumed the property was,
as the respondents contend and as appears to me to have probably been
the case,
owned by S&S, the rental payments would be valid only
if they were made by SH in terms of an underlying contractual
obligation,
for it is clear that SH did not use them from July 2015
onwards. The respondents assert the existence of a contract of
lease.
The applicants, however, contend that the evidence does
not support the respondents’ assertion. If there was not
a
lease, there would be no obligationary basis for the payments
during the period after SH had ceased to trade and did not use the
vehicles and equipment. The applicants would then be entitled
to reclaim those ostensible rent payments on the grounds of
unjust
enrichment.
[51]
The essential elements of a contract of
lease are trite, but they bear repetition for the purpose of the
current case. These
essential terms are the temporary use and
enjoyment of the property let, and the rent as payment for that use
and enjoyment.
[23]
The amount of the rent must be certain or ascertainable for the
obligation to pay it to be enforceable; see
Proud
Investments (Pty) Ltd v Lanchem International (Pty) Ltd
[1991] ZASCA 60
;
1991 (3) SA 738
(A) at 746H. An arrangement permitting one of
the parties, in its unfettered discretion, to determine the rent does
not give
rise to a valid lease agreement; cf.
Benlou
Properties (Pty) Ltd v Vector Graphics (Pty) Ltd
[1992] ZASCA 158
;
1993 (1) SA 179
(A) at 182G and
Murray &
Roberts Construction Ltd v Finat Properties (Pty) Ltd
1991(1) SA 508 (A) at 514H.
[52]
In the current matter S&S issued rental
invoices to SH monthly in notably disparate amounts, ostensibly in
respect of the rental
of the same vehicles and equipment. Thus,
the invoices for the ‘(h)
ire of 3
MAN truck tractors and Copelyn Tip Trailers and Bell ADT’s
Caterpillar 318 excavator and 2 x Caterpillar 950 FELs
’
for the months of February, March, April, May, June, July, August,
September, October, November and December 2015 were in
the
VAT-exclusive amounts of R251 450, R172 912.48,
R207 766.93, R208 252.80, R260 667.77, R224 150,
R224 150, R200 150, R240 000, R240 000,
respectively. Rental for the same equipment in respect of
January
2012 was invoiced in February 2012 in the VAT- exclusive
amount of R131 207.09 and in June 2011 S&S invoiced SH in
the
VAT-exclusive amount of R242 987.91 for the hire of ‘
3
Man truck tractors and Copelyn Tip Trailers and Bell ADT’s for
month of May 2011
’ (i.e. only
some of the vehicles and equipment listed in the 2015 invoices).
Rental for the same equipment was charged
in the VAT-exclusive sum of
R94 698.27 for the month of November 2011.
[53]
Stevens has been afforded several
opportunities to explain the terms of the alleged lease, which he
says was concluded orally.
He has not disclosed who represented
the respective companies in making the alleged orally concluded
agreement and has provided
vague and inconsistent versions concerning
the terms of the alleged lease in respect of the determination of the
rent.
[54]
The applicants have founded their
allegation that there is no enforceable lease on Stevens’
inability to describe its terms.
In my view the applicants’
allegation was of a character that imposed an obligation on Stevens
to answer it with corroborative
detail if the respondents were to
neutralise its prima facie effect. The situation is of the sort
contemplated in the appeal
court’s judgment in
Wightman
t/a JW Construction v Headfour (Pty) Ltd and Another
[2008] ZASCA 6
;
2008 (3) SA 371
(SCA) at para 13, in which Heher JA observed:
‘
A
real, genuine and bona fide dispute of fact can exist only where the
court is satisfied that the party who purports to raise the
dispute
has in his affidavit seriously and unambiguously addressed the fact
said to be disputed. There will of course be instances
where a bare
denial meets the requirement because there is no other way open to
the disputing party and nothing more can therefore
be expected of
him. But even that may not be sufficient if the fact averred lies
purely within the knowledge of the averring party
and no basis is
laid for disputing the veracity or accuracy of the averment. When the
facts averred are such that the disputing
party must necessarily
possess knowledge of them and be able to provide an answer (or
countervailing evidence) if they be not true
or accurate but, instead
of doing so, rests his case on a bare or ambiguous denial the court
will generally have difficulty in
finding that the test is satisfied.
I say 'generally' because factual averments seldom stand apart from a
broader matrix of circumstances
all of which needs to be borne in
mind when arriving at a decision. A litigant may not necessarily
recognise or understand the
nuances of a bare or general denial as
against a real attempt to grapple with all relevant factual
allegations made by the other
party. But when he signs the answering
affidavit, he commits himself to its contents, inadequate as they may
be, and will only
in exceptional circumstances be permitted to
disavow them. There is thus a serious duty imposed upon a legal
adviser who settles
an answering affidavit to ascertain and engage
with facts which his client disputes and to reflect such disputes
fully and accurately
in the answering affidavit. If that does not
happen it should come as no surprise that the court takes a robust
view of the matter.’
[55]
I consider that a robust approach to the
issue of the existence of a lease is justified in the current case.
It impels the
conclusion that there was no valid lease for want of
any certainty as to the rent. In the circumstances where the
company
in liquidation had no use of the allegedly hired out vehicles
and equipment from August 2015, S&S was unjustly enriched at the
expense of SH in respect of its receipt of the payments ostensibly in
payment of rent for the months August to December 2015.
The
applicants are entitled to an order requiring S&S to repay those
amounts to the company in liquidation. The affected
payments
are those listed as items 6-10 in paragraph [5]
above,
which relate to the payment of the amounts, totalling R757 302
invoiced for August, September and October 2015.
As discussed
earlier, three of those payments were in any event void by virtue of
s 341(2) of the 1973 Companies Act,
[56]
An order will not be made for the repayment
of the payments made ostensibly in respect of rent for the period
before and including
July 2015 because it appears that SH enjoyed the
use of the vehicles and equipment during that period and it is
therefore unclear
to what extent, if any, S&S was unjustly
enriched by such payments.
[57]
The respondents allege that the payment by
SH of the sum of R513 000 to S&S on 3 August 2015 was
in settlement of
an amount owed in respect of the repair of a
front-end loader. The only basis for the claim for repayment of
that amount
made out in the applicants’ papers is under the
Insolvency Act. The
applicants inferred that the payment was an
unfairly preferential redemption of a loan account claim. The
claim has not been
established because, quite apart from the dispute
between the parties concerning the reason for the payment, I am in
any event
not satisfied that it is has been established that SH was
factually insolvent at the time the payment was made to S&S.
[58]
I am also not satisfied that the applicants
have made out a case for relief in terms of s 424 of the 1973
Companies Act against
Stevens. Apart from any other
consideration, it is not clear that SH (in liquidation) will be
unable to pay the claim of
the only creditor with a proved claim,
namely Kroucamp Plumbers. As Harms JA pointed out in
Saincic
and Others v Industro-Clean (Pty) Ltd and Another
2009 (1) SA 538
(SCA) in para 27, with reference to
L&P
Plant Hire BK v Bosch
2002 (2) SA 662
(SCA) at para 39-40, the provision is directed at the protection of a
company’s creditors against the negative consequences
of the
fraudulent or reckless management of the company. See also
Fourie v Firstrand Bank Ltd and Another
NO
2013 (1) SA 204
(SCA) at para 28, where the point made in the
aforementioned judgments is elucidated, and
Gihwala
and Others v Grancy Property Ltd and Others
2017 (2) SA 337
(SCA) at para 119. The creditors are not in
need of such protection if despite the gross mismanagement of the
debtor company,
it is nevertheless in a position to settle the
creditor’s claim.
Costs
[59]
The applicants have been substantially
successful in respect of the claims brought against the first
respondent and I consider that
they are therefore entitled to their
costs of suit against S&S. They have not, however,
succeeded in obtaining any relief
against the second respondent.
Ordinarily, Stevens would have been awarded his costs of suit.
It is clear, however,
that his failure to cooperate conscientiously
in the post-liquidation process of SH contributed materially to the
instigation of
the current litigation. The application for an
enquiry in terms of s 423 of Act 61 of 1973 might well have been
pre-empted
had Stevens provided all of the information disclosed in
the respondents’ answering papers earlier, as he should have
done.
He admittedly failed to comply with his obligations under
s 363 of the 1973 Companies Act, which is a criminal offence,
and
the information that he has subsequently furnished to the
liquidators and creditors has in some respects been inconsistent and
unreliable. I consider that it would be appropriate in the
circumstances to mark the court’s displeasure by withholding
any costs order in his favour.
Order
[60]
An order is made in the following terms:
a)
The following payments made by Sachel
Haulers (Pty) Ltd to Sachel & Stevens (Pty) Ltd are void by
virtue of s 341(2) of
the Companies Act 61 of 1973:
i.
The payment of R228 000 made on or
about 4 December 2015;
ii.
The payment of R40 000 made on or
about 10 December 2015; and
iii.
The payment of R5 600 made on or about
19 January 2016.
b)
The first respondent is ordered to repay
the said sums to the applicants for the credit of Sachel Haulers
(Pty) Ltd (in liquidation),
together with interest thereon at the
prescribed rate from the dates on which the payments were received to
the date on which the
said sums are repaid.
c)
The applicants’ claim against the
first respondent for the payment of R483 702 (being the sum of
the payments of R255 531and
R228 171 made by Sachel Haulers
(Pty) Ltd to Sachel & Stevens (Pty) Ltd on or about 2 September
2015 and on or about 2
October 2015, respectively) is upheld on the
grounds that such payments were made
sine
causa
and the first respondent was
unjustly enriched thereby.
d)
The first respondent is ordered to pay the
said sum of R483 702 to the applicants for the credit of Sachel
Haulers (Pty) Ltd
(in liquidation), together with interest thereon at
the prescribed rate from the date of service of the notice of motion
on the
first respondent to date of payment;
e)
Save as provided in paragraphs (a) to (d)
above and in paragraph (f) below, the other relief sought in the
notice of motion is refused;
f)
The first respondent shall pay the
applicants’ costs of suit.
A.G. BINNS-WARD
Judge
of the High Court
APPEARANCES
Applicants’
counsel:
Wallis Roux
Applicants’
attorneys:
PP Smit Attorneys
Langebaan
Mauritz Briers & Associates
Cape Town
Respondents’
counsel
Heinrich Jansen van Rensburg
Respondents’
attorneys:
Ward Brink
Cape Town
[1]
The date of the final liquidation order may be
deduced from the return day of the provisional order (which is
apparent from the
copy of the judgment attached as annexure OJS4 to
the founding affidavit) and the certificate of appointment of
liquidators (annexure
OJS1 to the founding affidavit).
[2]
Section 341(2) provides:
‘
Every
disposition of its property (including rights of action) by any
company being wound-up and unable to pay its debts made
after the
commencement of the winding-up, shall be void unless the Court
otherwise orders.
’
The
provision falls to be read together with s 348 of the Act,
which provides:
‘
A
winding-up of a company by the Court shall be deemed to commence at
the time of the presentation to the Court of the application
for the
winding-up.
’
[3]
The provisions of the
Insolvency Act on
which the
applicants rely provide as follows:
‘
26.
Disposition without value
(1) Every
disposition of property not made for value may be set aside by the
court if such disposition was made by an insolvent-
(a)
more than two years before the sequestration of his estate, and
it
is proved that, immediately after the disposition was made, the
liabilities of the insolvent exceeded his assets;
(b)
within two years of the sequestration of his estate, and the person
claiming under or benefited by the disposition is unable to prove
that, immediately after the disposition was made, the assets
of the
insolvent exceeded his liabilities:
Provided
that if it is proved that the liabilities of the insolvent at any
time after the making of the disposition exceeded his
assets by less
than the value of the property disposed of, it may be set aside only
to the extent of such excess.
30
Undue preference to creditors
(1) If a
debtor made a disposition of his property at a time when his
liabilities exceeded his assets, with the intention of preferring
one of his creditors above another, and his estate is thereafter
sequestrated, the court may set aside the disposition.
31
Collusive dealings before sequestration
(1) After
the sequestration of a debtor's estate the court may set aside any
transaction entered into by the debtor before the
sequestration,
whereby he, in collusion with another person, disposed of property
belonging to him in a manner which had the
effect of prejudicing his
creditors or of preferring one of his creditors above another.
(2) Any
person who was a party to such collusive disposition shall be liable
to make good any loss thereby caused to the insolvent
estate in
question and shall pay for the benefit of the estate, by way of
penalty, such sum as the court may adjudge, not exceeding
the amount
by which he would have benefited by such dealing if it had not been
set aside; and if he is a creditor he shall also
forfeit his claim
against the estate.
(3) Such
compensation and penalty may be recovered in any action to set aside
the transaction in question.
[4]
Section 424
provides as follows, insofar as
relevant in the current matter:
Liability of directors and others for fraudulent conduct of
business
(1) When
it appears, whether it be in a winding-up, judicial management or
otherwise, that any business of the company was or
is being carried
on recklessly or with intent to defraud creditors of the company or
creditors of any other person or for any
fraudulent purpose, the
Court may, on the application of the Master, the liquidator, the
judicial manager, any creditor or member
or contributory of the
company, declare that any person who was knowingly a party to the
carrying on of the business in the manner
aforesaid, shall be
personally responsible, without any limitation of liability, for all
or any of the debts or other liabilities
of the company as the Court
may direct.
(2)(a)
Where the Court makes any such declaration, it may give such further
directions as it thinks proper for the purpose of
giving effect to
the declaration, and in particular may make provision for making the
liability of any such person under the
declaration a charge on any
debt or obligation due from the company to him, or on any mortgage
or charge or any interest in any
mortgage or charge on any assets of
the company held by or vested in him or any company or person on his
behalf or any person
claiming as assignee from or through the person
liable or any company or person acting on his behalf, and may from
time to time
make such further orders as may be necessary for the
purpose of enforcing any charge imposed under this subsection.
[5]
Section 423(1)
provides:
‘
Delinquent
directors and others to restore property and to compensate the
company
(1)
Where in the course of the winding-up or judicial management of a
company it appears that any person who has taken part in
the
formation or promotion of the company, or any past or present
director or any officer of the company has misapplied or retained
or
become liable or accountable for any money or property of the
company or has been guilty of any breach of faith or trust in
relation to the company the Court may, on the application of the
Master or of the liquidator or of any creditor or member or
contributory of the company, enquire into the conduct of the
promoter, director or officer concerned and may order him to repay
or restore the money or property or any part thereof, with interest
at such rate as the Court thinks just, or to contribute such
sum to
the assets of the company by way of compensation in respect of the
misapplication, retention, breach of faith or trust
as the Court
thinks just.
’
[6]
The same registration number as that given for
the vehicle identified in item 7 above.
[7]
A schedule to an insurance policy issued by the
Hollard Insurance Company Ltd to S&S and SH as joint insured
(annexure OJS
17 to the founding affidavit) lists a 2000-registered
‘homebuilt box trailer’ with registration number CA
203 311.
[8]
Which, as noted in footnote 6, corresponds, by
way of the given registration number, with the vehicle identified as
item 8 in
para 13 above.
[9]
In para 40 of the founding affidavit.
[10]
The independent reviewer’s report records
‘
The procedures performed in a
review engagement are substantially less than those performed in an
audit conducted in accordance
with International Standards on
Auditing. Accordingly, we do not express an audit opinion on these
financial statements.
’
[11]
The independent reviewer’s report on the
2013 financials was signed on 16 September 2013, which suggests that
the statement
might well have been drawn up after July 2013.
[12]
Taking judicial notice that CAW denotes a George
vehicle registration number,
I have
assumed that the ‘CAW’ is a reference to the vehicle’s
George registration particulars at time of acquisition.
[13]
Para 38 of the founding affidavit.
[14]
The same registration number as that given for
the vehicle identified in item 7 above.
[15]
Stevens’ answering affidavit, para 43.8.
[16]
A schedule to an insurance policy issued by the
Hollard Insurance Company Ltd to S&S and SH as joint insured
(annexure OJS
17 to the founding affidavit) lists a 2000-registered
‘homebuilt box trailer’ with registration number CA
203 311.
[17]
The wording of
s 423(1)
is set out in
footnote 5 above.
[18]
In
Timmers and
Another v Spansteel (Pty) Ltd
1979 (3)
SA 242
(T) at 250B, the enquiry procedure in terms of
s 423
was
described as ‘(t)
his summary and
rather drastic remedy
’.
[19]
Kunst et al (eds),
Henochsberg
on the Companies Act 61 of 1973
5 ed.
(LexisNexis) at p.906.
[20]
After the order made by Colman J in
Metallurgical
and Commercial Consultants (Pty) Ltd v Metal Sales Co (Pty) Ltd
1971 (2) SA 388 (W).
[21]
Compare the procedure applied in the enquiry in
terms of s 423 in
Spansteel (Pty)
Ltd v Timmers and Another
1980 (3) SA
422
(W) and the order made in
L Suzman
(Rand) Ltd v Yamoyani (2)
1972 (1) SA
109 (W).
[22]
The
Oxford
Dictionary of the English Language
gives the following pertinent definition of ‘
summary
’:
‘
Law
(of a judicial process) conducted without the customary legal
formalities
’.
[23]
LAWSA vol 26(1) (Third Edition), s.v. ‘Lease’
(GB Bradfield), at para 80.