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[2015] ZAGPJHC 160
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Logan N.O and Others v BHP Billiton Energy Coal and Others (48137/12) [2015] ZAGPJHC 160 (30 July 2015)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
LOCAL DIVISION, JOHANNESBURG)
CASE
NO. 48137/12
DATE:
30 JULY 2015
In the matter
between:
WISHART, GRANT
LOGAN
N.O
...................................................................................
First
Plaintiff
GOEBEL, ARNO N.O.
(In his capacity
as trustee of the LOGAN
TRUST)
.....................................................
Second
Plaintiff
WISHART, MALCOLM
GRANT N.O.
(In his capacity
as trustee of the LOGAN
TRUST)
.......................................................
Third
Plaintiff
PENGUIN MINING &
PLANT (PTY)
LIMITED
......................................................
Fourth
Plaintiff
COLT MINING (PTY)
LIMITED
....................................................................................
Fifth
Plaintiff
And
BHP BILLITON
ENERGY COAL
SOUTH AFRICA
LIMITED
.........................................................................................
First
Defendant
EURO COAL (PTY)
LIMITED
(IN
LIQUIDATION)
...................................................................................................
Second
Defendant
KLEIN, NORMAN
N.O
................................................................................................
Third
Defendant
VAN DEN HEEVER,
THEODORE
WILHELM
N.O
..........................................................................................................
Fourth
Defendant
MASTER OF THE
HIGH COURT,
GAUTENG SOUTH,
JOHANNESBURG
…................................................................
Fifth
Defendant
COMPANIES AND
INTELLECTUAL
PROPERTY
COMMISSION
(“CIPC”)
.......................................................................
Sixth
Defendant
Date heard: 3
March 2015
DATE: 30 JULY
2015
JUDGMENT
ROSSOUW AJ:
[1] Euro Coal (Pty)
Ltd (in liquidation) (“Euro Coal”) was placed in
winding-up by this Court on 13 May 2009. Euro
Coal is the Second
Defendant in the action. The Third and Fourth Defendants are the
joint liquidators of Euro Coal. The First
Defendant submitted a claim
for proof in the winding-up of the company. The claim was admitted.
[2] According to the
amended particulars of claim the First Plaintiff is a 10 %
shareholder of Euro Coal and the Logan Trust, represented
in this
action by the Second and Third Plaintiffs, is a 90 % shareholder of
Euro Coal.
[3] It is alleged in
the Plaintiffs’ amended particulars of claim that Euro Coal is
indebted to the First Plaintiff, the Logan
Trust, the Fourth
Plaintiff and the Fifth Plaintiff in various amounts. It is for
present purposes not relevant to consider the
various claims more
closely. All the Plaintiffs claim the following substantive relief
in the action:-
“1 An order
grating (sic) special leave to:
1.1 The Logan Trust
(IT1450/1987);
1.2 The First
Plaintiff;
1.3 The Fourth
Plaintiff; and
1.4 The Fifth
Plaintiff,
to prove claims in
the winding-up of Euro Coal (Pty) Ltd (in liquidation) (Master’s
Ref G73/09), in such manner and upon such
terms and conditions as the
Master may determine.
2 An order that the
claim of the First Defendant be and is hereby expunged and omitted
from the First Liquidation and Distribution
Account, dated 31 August
2012, in the winding-up of Euro Coal (Pty) Ltd (in liquidation)
(Master’s Ref G973/09).”
[4] The First
Defendant took exception to Plaintiffs’ first and second
claims. The Second, Third and Fourth Defendants also
took exception
to both claims, in terms virtually identical to the exceptions taken
by the First Defendant. It is therefore only
necessary to quote the
First Defendant’s exceptions:-
“
THE FIRST
EXCEPTION
1 The first claim by
all five plaintiffs is for
“An order
grating (sic) special leave [to the plaintiffs] ….. to prove
claims in the winding-up of EuroCoal (Pty) Ltd
(in liquidation) …
in such manner and upon such terms and conditions as the Master may
determine.”
2 In support of that
prayer, in paragraphs 79 and 80 of the particulars of claim, the
plaintiffs allege
“79. The First
Plaintiff, the Trust and the Fourth and Fifth Plaintiffs have lodged
an objection to the First Liquidation
and Distribution Account,
lodged by the Third and Fourth Defendants in the winding-up of Euro
Coal, with the Master.
80. The Trust, the
First, Fourth and Fifth Plaintiffs hereby, in terms of s 44(1) of the
Insolvency Act, read with s 339 of the
Companies Act, request that
the Court grant them special leave to prove their respective claims
in the winding-up of Euro Coal.”
3 The proof of
claims in the winding-up of a company is governed by section 366 of
the Companies Act, No. 61 of 1973 (as amended)
(“the Companies
Act”). Section 339 of the Companies Act restricts the
incorporation of “the law relating to
Insolvency” to “any
matter not specifically provided for” by the Companies Act.
4 In the
circumstances section 44 of the Insolvency Act, relied upon by the
plaintiffs does not apply except to the extent dealt
with below.
5 Section 366(1)(a)
of the Companies Act provides for claims against a company being
wound up to be proved at a meeting of creditors
mutatis mutandis in
accordance with the provisions relating to the proof of claims under
the Insolvency Act.
6 Claims are proved
under the Insolvency Act at meetings of creditors before the Master
or any other officer presiding at a meeting
of creditors.
7 No authority is
conferred upon a court to admit a claim to proof or to grant special
leave to an unproved creditor to prove a
claim.
8 In the
circumstances the plaintiffs’ first claim does not disclose a
cause of action against the first defendant.”
“
THE SECOND
EXCEPTION
9 The second claim
by all five plaintiffs if for
“An order that
the claim of the First Defendant be and is hereby expunged and
omitted from the First Liquidation and Distribution
Account, dated 31
August 2012 in the winding-up of Euro Coal …”
10 In support of the
second claim the plaintiffs plead in paragraph 81
“In the
further premises the Trust and each of the First, Fourth, Fifth
Plaintiffs are persons interested in the winding-up
of Euro Coal, as
contemplated in terms of s 407 of the Companies Act, 1973 and/or s
111(1) of the Insolvency Act, read with reg
6 of the Insolvency
Regulations, and s 339 of the Companies Act, and/or s 34 of the
Constitution, and therefore have locus standi
to seek the relief as
hereinafter set out.”
11 In the context of
the winding-up of a company the objection to a claim recorded in a
liquidation and distribution account (“L&D
Account”)
is dealt with in section 407, read with sections 403 and 406, of the
Companies Act.
12 Section 403
requires a liquidator to lodge an L&D Account with the Master.
13 Section 406
requires the account to lie for inspection on the terms set out
therein.
14 Section 407 deals
with objections to an account in the following terms that are
material herein
14.1 Any person
having an interest in the company may lodge an objection to the L&D
Account;
14.2 The Master
decides the fate of the objection; and
14.3 Thereafter, in
terms of section 407(4)(a)
“The
liquidator or any person aggrieved by any direction of the Master
under this section, or by the refusal of the Master
to sustain an
objection lodged thereunder, may within fourteen days after the date
of the Master’s direction and after notice
to the liquidator
apply to the Court for an order setting aside the Master’s
decision, and the Court may on any such application
confirm the
account in question or make such order as it thinks fit.”
15 The only context
in which a court has authority to adjust an L&D Account is where
a person aggrieved by a decision of the
Master takes the Master on
review to a court.
16 There is no
allegation in the particulars of claim of a decision by the Master
and the present action does not constitute a review
of a decision of
the Master by a person aggrieved by any such decision.
17 This Honourable
Court has no jurisdiction to entertain a claim for the “expungement”
of a proved claim in the absence
of the allegations referred to in
paragraphs 15 and 16 above.
18 In the
circumstances the plaintiffs amended particulars of claim do not
disclose a cause of action against the first defendant.”
[5] In Telematrix
(Pty) Ltd t/a Matrix Vehicle Tracking v. Advertising Standards
Authority SA,
2006 (1) SA 461
(SCA), at para [3], Harms JA (as he
then was) stated:-
“Exceptions
should be dealt with sensibly.They provide a useful mechanism to weed
out cases without legal merit. An over-technical
approach destroys
their utility.”
In deciding an
exception, the alleged facts are taken as correct. It is trite that
an excipient must show that, on every interpretation,
the particulars
of claim disclose no cause of action (see Michael v. Caroline’s
Frozen Yoghurt Parlour (Pty) Ltd,
1999 (1) SA 624
(W), at 632C-D;
Rabinowitz v. Van Graan and Others,
2013 (5) SA 315
(GSJ), at paras
[5] & [6]).
[6] Mr Suttner SC
(with him Mr Eyles SC and Ms Cirone) for the First Defendant,
submitted that the Plaintiffs’ first claim
does not disclose a
cause of action because the proof of claims in the winding-up of a
company is governed by section 366 of the
Companies Act, No. 61 of
1973 (“the Companies Act”) and that section 339 of the
Companies Act restricts the incorporation
of “the law relating
to insolvency” to “any matter not specifically provided
for” by the Companies Act.
Mr Suttner argued that, in the
circumstances, section 44 of the Insolvency Act, No. 24 of 1936 (“the
Insolvency Act&rdquo
;), does not apply, in particular that the
proviso contained in
section 44(1)
of the
Insolvency Act finds
no
application in the winding-up of a company. Mr Theron SC, who
appeared for the Second, Third and Fourth Defendants, also submitted
that the proviso to
section 44(1)
of the
Insolvency Act finds
no
application in the winding-up of a company because section 366(1)(a)
of the Companies Act is qualified by section 339 thereof.
According
to Mr Theron, the effect of this is that claims against a company in
liquidation are proved in accordance with the provisions
relating to
the proof of claims against an insolvent estate under the law
relating to insolvency, unless, and only to the extent
that, there is
a specific applicable provision in the Companies Act. It was
submitted that the applicable provision of the Companies
Act is
evidently section 366(2).
[7] The relevant
sections of the Companies Act read:-
“339. Law of
insolvency to be applied mutatis mutandis.
In the winding-up of
a company unable to pay its debts the provisions of the law relating
to insolvency shall, insofar as they are
applicable, be applied
mutatis mutandis in respect of any matter not specifically provided
for by this Act.”
and
“366.Claims
and proof of claims.
(1) In the
winding-up of a company by the Court and by a creditors’
voluntary winding-up –
(a) the claims
against the company shall be proved at a meeting of creditors mutatis
mutandis in accordance with the provisions
relating to the proof of
claims against an insolvent estate under the law relating to
insolvency;
(b) a secured
creditor shall be under the same obligation to set a value upon his
security as if he were proving his claim against
an insolvent estate
under the law relating to insolvency, and the value of his vote shall
be determined in the same manner as is
prescribed under that law;
(c) a secured
creditor and the liquidator shall, where the company is unable to pay
its debts, have the same right respectively
to take over the security
as a secured creditor and a trustee would have under the law relating
to insolvency.
(2) The Master may,
on the application of the liquidator, fix a time or times within
which creditors of the company are to prove
their claims or otherwise
be excluded from the benefit of any distribution under any account
lodged with the Master before those
debts are proved.”
[8] Mr Hartzenberg
SC (with him Mr Combrink), for the Plaintiffs, submitted that the
proviso contained in
section 44(1)
of the
Insolvency Act does
apply
to the winding-up of a company and that it would indeed be
incongruous, if in the case of an insolvent estate, creditors
were to
enjoy the opportunity of proving late claims, but not in the case of
the winding-up of a company.
[9]
Section 44(1)
of
the
Insolvency Act provides
:-
“Any person or
the representative of any person who has a liquidated claim against
an insolvent estate, the cause of which
arose before the
sequestration of that estate, may, at any time before the final
distribution of that estate in terms of section
one hundred and
thirteen, but subject to the provisions of section one hundred and
four, prove that claim in the manner hereinafter
provided: Provided
that no claim shall be proved against an estate after the expiration
of a period of three months as from the
conclusion of the second
meeting of creditors of the estate, except with leave of the Court or
the Master, and on payment of such
sum to cover the cost or any part
thereof, occasioned by the late proof of the claim, as the Court or
Master may direct.”
[10] In Stone &
Stewart v. Master of the Supreme Court (unreported, case number
8828/87, Transvaal Provincial Division), Flemming
J (as he then was)
held that the proviso set out in
section 44(1)
of the
Insolvency Act
does
not apply to the proving of claims in the case of winding-up of
companies and stated:-
“The question
to be determined then is: does the Companies Act itself regulate the
outlimit for the proof of claims?
To my mind it does.
Whether it does so by exhaustively spelling out a period of time or
whether it does so by authorising the master
to take steps in this
regard is immaterial. The Companies Act touches upon the topic. It
serves as authorisation for the operation
of an effective and binding
date for the proof of claims. In insolvency there may be one, two,
three or four meetings, by various
names such as second meeting or
special meeting. But whatever meeting is held, the creditor is
subject to the three month limit
set out in Section 44(1). Under the
Companies Act there may be a similar number of meetings and I will
assume they can have similar
names. But the limit for proving claims
is different. Section 366 says that the master “may” lay
down a limit. There
is no pre-determinable limit as to the proof of
claims. But the Companies Act governs the limit. It says that the
limit will
be as created by the Master and accordingly not a fixed
always-effective 3 month period.
The applicant was
accordingly fully entitled to prove his claim at the meeting
concerned. He was not subject to any limit at all
as things stand.
For that reason then he was wrongly debarred from proving his claim.
But the remedy was not to take the Master’s
decision on review
nor to ask this court’s leave in terms of
Section 44(1)
of the
Insolvency Act. His
remedy was to get the presiding officer to a
correct view of the law.”
[11]
Kathree-Setiloane J in De Montlehu v. Mayo N.O. and Others [2014] JDR
1096 (GJ) held that the finding of Flemming J in Stone
& Stewart
that the proviso to
section 44(1)
of the
Insolvency Act has
no
application to the proving of claims in a winding-up to be clearly
wrong. The learned Judge stated (para [19] of the judgment):-
“For these
reasons I consider the finding of Flemming J in Stone & Stewart,
that the proviso to
s 44(1)
of the
Insolvency Act has
no application
to a proof of claim in a winding-up in the light of the provisions of
s 366(2) of the Companies Act, to be clearly
wrong. To arrive at the
conclusion that Flemming J did, would require reading the words of
the section that precede the conjunction
“or”
disjunctively from the words of the section that appear after it, and
in the process to completely ignore the
latter. This is a flawed
approach to the interpretation of section 366(2) as it does not give
effect to its purpose, which is
to prevent the holding up of
distribution under an account lodged with the Master, as a result of
proof of claim after lodgement
of such account by for instance a
creditor who elects not to prove his or her claim until it is
established that there is to be
a distribution.”
The learned Judge
found support for her finding in the judgment reported as
Trans-Drakensberg Bank Ltd and Another v. The Master,
Pietermaritzburg, and Another,
1966 (1) SA 821
(N), at 824.
[12] Section 366(2)
of the Companies Act is clear in its terms, irrespective of whether
the two parts of the section are to be read
disjunctively or
conjunctively. The Master “may … fix a time or times
within which creditors of the company are to
prove their claims or
otherwise be excluded from the benefit of any distribution under any
account lodged with the Master before
those debts are proved”.
This means that the Master may fix a time or times within which
creditors of a company in liquidation
have to prove claims. The
purpose of section 366(2) is not, to my mind, to regulate a
participation in a distribution under a
particular account. If
section 366(2) was intended to regulate the participation in a
distribution under a particular account,
then there would be no need
for the time limit prescribed by
section 44(1)
of the
Insolvency Act.
[13
] In the
Trans-Drakensberg case the Court dealt with section 179(2) of the
Companies Act, No. 46 of 1926. That section is substantially
similar
to section 366(2). In the Trans-Drakensberg case Van Heerden AJ
found (at 825H):-
“Sec. 179(2)
gives the Master a discretion to fix “a time or times”
for the proving of claims and, it seems to
me that, upon a proper
reading of the section, it was the intention of the Legislature to
give the Master a discretionary right
not only to fix a date but also
to extend that date.”
Evidently, the
intention of the legislature was that the proviso to
section 44(1)
of
the
Insolvency Act would
not apply to companies, but that
section
366(2)
would apply. The result is, unless determined otherwise by
the Master, that there is no fixed time period within which creditors
of a company in liquidation have to prove claims against the company.
I respectfully disagree with the finding of the learned judge
in De
Montlehu and I am inclined to follow Flemming J’s judgment in
Stone & Stewart.
[14] The first claim
is based upon
section 44(1)
of the
Insolvency Act read
with section
339 of the Companies Act. In my view, this is misconceived. Section
366(2) of the Companies Act regulates the time
for the proving of
claims in the case of companies in liquidation.
[15] I therefore
find that the proviso to
section 44(1)
of the
Insolvency Act finds
no
application in the case of the winding-up of a company and that this
Court does not have the power in the circumstances to admit
the
Plaintiffs’ claims to proof or to grant special leave for them
to prove their respective claims. The first exception
must therefore
succeed.
[16] I turn to deal
now with the second exception.
[17] The Plaintiffs
allege that they are persons interested in the winding-up of Euro
Coal as contemplated in terms of section 407
of the Companies Act
and/or
section 111(1)
of the
Insolvency Act read
with Regulation 6 of
the Insolvency Regulations and section 339 of the Companies Act
and/or section 34 of the Constitution and
that they therefore have
locus standi to seek the relief claimed in terms of the second claim.
[18] The objection
to a claim in the winding-up of a company recorded in a liquidation
and distribution account is dealt with in
section 407 read with
sections 403 and 406 of the Companies Act. Section 403 requires a
liquidator to lodge a liquidation and
distribution account with the
Master. Thereafter, in terms of section 406, the account must lie
for inspection and section 407
deals with objections to an account.
Any person having an interest in the company may lodge an objection,
the Master decides the
fate of the objection and thereafter, in terms
of section 407(4)(a):-
“The
liquidator or any person aggrieved by any decision of the Master
under this section, or by the refusal of the Master
to sustain an
objection lodged thereunder, may within fourteen days after the date
of the Master’s direction and after notice
to the liquidator
apply to the Court for an order setting aside the Master’s
decision and the Court may on any such application
confirm the
account in question or make such order as it thinks fit.”
[19] Messrs Suttner
and Theron argued that the Court only has authority to adjust a
liquidation and distribution account where an
aggrieved person takes
the Master on review. There is no allegation in the particulars of
claim of a decision by the Master and
the present action does not
constitute a review of a decision of the Master by an aggrieved
person.
[20] For the
Plaintiffs Mr Hartzenberg submitted that it is alleged in the
particulars of claim that the First Defendant’s
claim was
admitted which, by necessary implication, must mean that the Master
had made a decision to admit such claim. It was
further submitted
that the exception to the Plaintiffs’ second claim flies in the
face of the decision in Millman and Another
N.N.O. v. Pieterse and
Others,
1997 (1) SA 784
(C), at 788H-789G.
[21] However, the
Plaintiffs do not seek to review or set aside any decision by the
Master. This is clear from the allegations
contained in the
particulars of claim. In fact, it is alleged that the Master has not
determined the Plaintiffs’ objection
in terms of section 407 of
the Companies Act. It is also not alleged that the Master has
refused to sustain the Plaintiffs’
objections and the
jurisdictional trigger for the setting aside of a decision by the
Master is therefore absent.
[22] A review
envisaged in terms of
section 151
of the
Insolvency Act (and
section
407 of the Companies Act) is the type of review identified in
Johannesburg Consolidated Investment Co. v. Johannesburg
Town
Council,
1903 TS 111
, at 117. The Plaintiffs’ reliance on the
judgment in Millman is misconceived as the facts of that case are
distinguishable
from the facts in the present matter.
[23] In this present
case the Plaintiffs have a specific statutory remedy which triggers a
review in terms of section 407 of the
Companies Act. The Plaintiffs
pleaded their case in support of the second claim in a manner which
establishes that the jurisdictional
trigger, i.e. the rejection of
their objection to the First Defendant’s claim, has not been
activated.
[24] In the
circumstances, I am of the view that this Court has no jurisdiction
to entertain a claim for the “expungement”
of a proved
claim in the absence of an allegation of a decision by the Master
which has been taken on review by a person aggrieved
by such
decision. It follows that the Plaintiffs’ amended particulars
of claim do not disclose a cause of action to support
the second
claim.
[25] The Plaintiffs
employed the services of two counsel, the First Defendant the
services of three counsel and the Second, Third
and Fourth Defendants
the services of one counsel. The nature and complexity of the matter
warranted the employment of two counsel
and the costs of two counsel
should be awarded, where two or more counsel were used. I must add
that the First Defendant only sought
the costs of two counsel.
[26] In the result,
I make the following order:-
(a) The first and
second exceptions of the First to Fourth Defendants are upheld;
(b) The Plaintiffs
are given leave to amend their particulars of claim within 10 (ten)
days from date of this order;
(c) The Plaintiffs
are ordered, jointly and severally, the one paying the others to be
absolved, to pay the First to Fourth Defendant’s
costs, in the
case of the First Defendant to include the costs consequent upon the
employment of two counsel.
P F ROSSOUW
Acting Judge of
the High Court
10 July 2015.
APPEARANCES:
For the
Plaintiff:
C J Hartzenberg
SC, L E Combrink, instructed by Venns Attorneys
For the First
Defendant:
J M Suttner SC, A
Eyles SC, P Cirone, instructed by Hogan Lovells Attorneys
For the Second to
Fourth Defendants:
E L Theron SC,
instructed by Hahn & Hahn Attorneys
Date of Hearing :
30 July 2015