About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: South Gauteng High Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: South Gauteng High Court, Johannesburg
>>
2020
>>
[2020] ZAGPJHC 149
|
|
Cassim NO v Ramagale Holdings (Pty) Ltd and Others (2020/11605) [2020] ZAGPJHC 149 (12 June 2020)
Links to summary
REPUBLIC
OF SOUTH AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA
(GAUTENG
DIVISION, JOHANNESBURG)
CASE
NO: 2020/11605
In
the matter between:
CASSIM,
ZAHEER,
N.O.
APPLICANT
and
RAMAGALE
HOLDINGS (PTY)
LTD
1
ST
RESPONDENT
RAMAITE,
PETER
NALEDZANI
2
ND
RESPONDENT
MANENTI,
LORENSO
3
RD
RESPONDENT
J U D G M E N T
MOORCROFT
AJ
:
INTRODUCTION
1
This is an application brought by the
business rescue practitioner of the first respondent (nomine officio)
for an order that the
first respondent (“the first respondent”)
be placed in provisional winding up. The second and third respondents
are
shareholders and directors of the first respondent and they
opposed the application. Their application for leave to intervene as
respondents was not opposed by the applicant, and correctly so.
2
The applicant avers that the company is
unable to pay its debts and is commercially and factually insolvent.
More than three months
has elapsed since he was appointed as business
rescue practitioner on 7 December 2018. He brings the application in
terms of
section 141
(2) (a) (ii) and
81
(1) (b) of the
Companies Act
71 of 2008
, read with the provisions of chapter XIV of the Companies
Act 61 of 1973.
3
The second and third respondent did not
dispute the urgent nature of the application and the concession is
rightly made. Urgency
should be determined on the basis of the
applicant’s averments and the application is urgent.
4
The only aspect argued was compliance with
section 346 (4A) of the Companies Act of 1973. The section is quoted
below. The applicant
relies on an affidavit by Ms. Cassim, an
attorney, who informs the court that she was advised by the Sheriff
that the application
had been served on the company. This is
self-evident as the company purported to enter appearance to defend
and the second and
third respondents applied for leave to intervene
as respondents. More problematic is the following averments in her
affidavit:
4.1
The deponent informs the court that the
application was served on the employees at the company’s
addresses in Rivonia at the
registered address and in Nigel at the
principal place of business, and also by bulk sms. Service in Rivonia
and in Nigel was however
not carried out by the attorney who deposed
to the affidavit and that she relies on the returns of service issued
by the Sheriff.
The sheriff also communicated that the employees were
not represented by a trade union.
4.2
The deponent also refers the court to the
acknowledgement by the South African revenue service reflected on the
notice of motion
to prove service on the South African Revenue
Service (SARS.)
5
A second attorney, Ms. van der Merwe,
deposed to an affidavit confirming that bulk sms’s were sent to
SARS and to employees
to inform them of the application. The
bulk sms’s did not incorporate copies of the application but
referred the recipients
to the application available from the
applicant’s attorneys.
6
The question that arises is whether these
affidavits comply with section 346 (4A) (b) of the 1973 Act. Section
346 (4) (a) and (b)
provides as follows:
(4A)(a) When an
application is presented to the court in terms of this section, the
applicant must furnish
a copy of the application
—
(i)
to every
registered
trade
union that, as far as the applicant can reasonably
ascertain, represents any of the employees of the company; and
(ii)
to the
employees
themselves—
(aa)
by affixing a copy of the
application to any notice board to which the applicant and the
employees have access inside the premises
of the company; or
(bb)
if there is no access to
the premises by the applicant and the employees, by affixing a copy
of the application to the front gate
of the premises, where
applicable, failing which to the front door of the premises from
which the company conducted any business
at the time of the
application;
(iii)
to the
South African
Revenue Service
; and
(iv)
to the
company
,
unless the application is made by the company, or the court, at
its discretion, dispenses with the furnishing of a copy where the
court is satisfied that it would be in the interests of the company
or of the creditors to dispense with it
.
(b) The applicant must,
before or during the hearing, file an affidavit by the person who
furnished a copy of the application
which sets out the manner in
which paragraph (a) was complied with. [emphasis added]
[Sub-s.
(4A) inserted by s. 7 of Act 69 of 2002.]
7
The failure to furnish a copy to the
company itself may be dispensed with where the Court is satisfied
that it would be in the interest
of the company or creditors to do
so. Condonation is not provided for in respect of the employees or
SARS and the legislature made
a clear distinction in this regard.
8
The
deponent to the service and compliance affidavit did not see to
service personally but relies entirely on the returns of service
issued by the Sheriff and the acknowledgement by SARS.
9
In
our law service is usually proved by a return of service issued by
the Sheriff
[1]
but
section 346
(4A) of the
Companies Act of 2008
as well as in
section 9
(4A) (a) of the
Insolvency Act 24 of 1936
contain specific provisions
introduced in 2002 relating to service. The legislative background is
dealt with in
EB
Steam Co (Pty) Ltd v Eskom Holdings Society Ltd
.
[2]
The
provisions of the Superior Courts Act relating to service are general
provisions and do not apply when there are specific legislative
provisions such as those found in the
Companies Act or
the
Insolvency
Act in
respect of service. It is therefore to section 346 (4A) of the
Companies Act of 1973 that one must turn, and not section 43 of the
Superior Courts Act.
10
The
question also arises whether the bulk sms’s to the employees
and SARS suffice, seeing there is an affidavit by the attorney
who
sent these sms’s. In my view it does not. The Act requires a
‘copy of the application’ to be furnished but
the sms’s
merely informed the employees and SARS of the application. What we
have therefore are affidavits by the two attorneys
referring to
returns of the Sheriff and the acknowledgement of receipt by SARS, as
well as confirming the bulk sms’s that
they sent themselves and
have personal knowledge of, but without attaching a copy of the whole
application as it is referred to
in section 346 (4A) (a).
11
The
deponents are quite simply not persons “who furnished a copy of
the application” accordance with section 346 (4A)
(b). The
Sheriff furnished the application to the employees, but the Sheriff’s
affidavit is not before court.
12
In
a number of decided cases it was held that section 346 (4A) (b) and
section 9 (4A) are peremptory:
Standard
Bank of SA Ltd v Sewpersadh
;
[3]
Hannover
Reinsurance Group Africa (Pty) Ltd v Gungudoo;
[4]
Corporate
Money Managers (Pty) Ltd v Panamo Properties 49 (Pty),
[5]
Sphandile
Trading Enterprise (Pty) Ltd v Hwibidu Security Services;
[6]
EB
Steam Co (Pty) Ltd v Eskom Holdings Soc Ltd,
[7]
Pilot
Freight (Pty) Ltd v Von Landsberg Trading (Pty) Ltd
.
[8]
These
cases require an affidavit by the person who furnished the
application.
13
The
decision in
Corporate
Money Managers (Pty) Ltd v Panamo Properties 49 (Pty) Ltd
was overruled by the Supreme Court of Appeal
[9]
but
only in respect of the question as to
when
the application papers must be furnished to the specified persons and
not in respect of section 346 (4A) (b).
14
However,
EB
Steam Co (Pty) Ltd v Eskom Holdings Soc Ltd,
[10]
is
also authority that the court may by reasons of urgency or logistical
problems grant a provisional order even when the application
papers
have not yet been furnished to employees. Wallis JA said:
[12]
…. It is also unnecessary to spell out the circumstances in
which a court should be prepared at the stage when a provisional
winding-up order is sought to grant an order notwithstanding the fact
that the application papers have not yet been furnished to
employees.
Ordinarily this should be done before a provisional order is granted
but reasons of urgency or logistical problems in
furnishing them with
the application papers may provide grounds for a court to allow them
to be furnished after the grant of a
provisional order.
15
At first sight it seems as though the
Supreme Court of Appeal gave its blessing to the granting of a
provisional order under circumstances
where the application was not
served in terms of section 346 (4A). In the context however the
judgment does not say that non-compliance
with section 346 (4A) (b)
may be condoned under appropriate circumstances (such as extreme
urgency which is not the case in the
present matter) but only that it
might appear from the affidavit, for instance, that employees could
not have been furnished with
the application papers because even
though it was affixed to the main gate because all the employees had
left the premises. The
judgment says nothing about not requiring the
affidavit.
16
Reading the judgement as a whole makes it
clear however that the statement quoted above relates to the question
whether the steps
taken were sufficient and not with the question
whether the court may condone non-compliance with section 346 (4A)
(b). The Learned
Justice of Appeal went on to say:
[14]
It cannot, however, be the case that courts are hamstrung and
precluded from dealing with applications for winding-up or
sequestration
because they are uncertain whether the application has
in fact come to the attention of all employees. That is not a
sensible construction
of this requirement. [11]
[11]
Were that the case the statutory methods of placing the application
papers on a notice board to which the employees have
access, or
fastening them to the gates of premises where the employees work,
could never be accepted as sufficient. The usual way
of achieving
certainty in regard to the receipt of documents is by requiring
service in accordance with the rules of court, but
that is not what
the section demands. In my view the proper interpretation of the
requirement that the application papers be 'furnished'
to the
identified persons is that they must be made available in a manner
reasonably likely to make them accessible to the employees.
It is not
a requirement that the court must be satisfied that the application
papers have as a matter of fact come to the attention
of those
persons. It is in that sense that I refer hereafter to furnishing
the application papers to employees.
17
The
SCA judgment is authority for the proposition that in urgent matters
the Court may consider the affidavit by the person who
furnished the
application who did not affix a copy of the application at the
premises but who used some other, perhaps more efficient
means under
the circumstances. In cases of extreme urgency it may even be that a
Court could condone the failure to strictly comply
with section 346
(4A) but accept substantial compliance when presented with a service
affidavit setting out the reasons for the
failure to strictly comply.
That is not the case in the present matter – the application is
urgent but more than two weeks
have elapsed since the application was
initiated and there was sufficient time to comply with section 346
(4A) ( b).
18
I
conclude that the affidavit by Ms. Cassim does not comply with
section 346 (4A) ( b) as she is not the person who furnished the
affidavit, that the bulk sms’s did not cure the defect as it
did not contain a copy of the application as required and as
no case
is made out for deviating from the provisions of section 346 (4A) (a)
(ii) (aa) and (bb), and that non-compliance can not
be condoned.
19
Section
346 (4A) (b) must be complied with in respect of SARS and the
employees. Affidavits by the Sheriff and the person who furnished
a
copy to the SARS should suffice.
20
The
following order is made:
1.
The
second and third respondents are granted leave to intervene in the
application;
2.
The
matter is removed from the roll;
3.
The
applicant is directed to file an affidavit or affidavits in
compliance with section 346A (4) (b) of the Companies Act 61 of
1973
before re-enrolling the matter in the Urgent Court;
4.
The
costs shall be costs in the application.
MOORCROFT AJ
ACTING JUDGE OF THE HIGH
COURT
Date
of hearing:
12 June 2020
Judgment
delivered:
12 June 2020
Corrected
:
22 June 2020
Attorneys for the
Applicant:
Cassim
Inc, tel 012 460 7700, email
litigation@cassimlaw.co.za
Appearance for the
Applicant: Mr. R Raubenheimer
Attorneys
for the Respondents: De Beer Attorneys, tel 011 814-8201, email
debeers3@telkomsa.net
Appearance for the
Respondents: Mr. L Froneman
[1]
Rule
4 of the Uniform Rules and
section
43 of the Superior Courts Act 10 of 2013. (1) The sheriff must,
subject to the applicable rules, execute all sentences,
judgments,
writs, summonses, rules, orders, warrants, commands and processes of
any Superior Court directed to the sheriff and
must make return of
the manner of execution thereof to the court and to the party at
whose instance they were issued.
[2]
EB
Steam Co (Pty) Ltd v Eskom Holdings Society Ltd
2015 (2) SA 526
(SCA) ([2014]
1 All SA 294
;
[2013] ZASCA 167)
paras 5 et seq
.
[3]
Standard
Bank of SA Ltd v Sewpersadh
2005 (4) SA 148
(C) para 14:
“It
is clear from the above that the Legislature used the word 'must'
and did not use 'may'. The furnishing of copies of
the application
to the Commissioner for Inland Revenue, the employees and trade
unions was therefore made peremptory (obligatory)
and not
permissive. (See
Berman
v Cape Society of Accountants 1928 (2) PH M47 (C)
.)
The
word 'must' was also used by the Legislature in defining the
obligation of the petitioner as far as proof of service is
concerned
.”
[4]
Hannover
Reinsurance Group Africa (Pty) Ltd v Gungudoo
2012 (1) SA 125
(GSJ) para 14
:
“In terms of the provisions of s 9(4A)(b), applicants'
attorneys were obliged to file an affidavit either before or during
the hearing of the application wherein the steps taken by the
applicants in compliance with the provisions of s 9(4A) are set
out.”
[5]
Corporate
Money Managers (Pty) Ltd v Panamo Properties 49 (Pty) Ltd
2013
(1) SA 522
(GNP) para 10
:
“Proof of such furnishing by means of an affidavit is …
peremptory”
[6]
Sphandile
Trading Enterprise (Pty) Ltd v Hwibidu Security Services CC
2014
(3) SA 231
(GJ) para 14
:
“It is clear that compliance with s 346(4A)(a)(iii) is
peremptory in the sense that a copy of the application must be
furnished to SARS.
The
same applies to proof of service on SARS by means of an affidavit (s
346(4A)(b).”
[7]
EB
Steam Co (Pty) Ltd v Eskom Holdings Society Ltd
2015 (2) SA 526
(SCA) ([2014]
1 All SA 294
;
[2013] ZASCA 167)
para 15.
[8]
Pilot
Freight (Pty) Ltd v Von Landsberg Trading (Pty) Ltd
2015 (2) SA
550
(GJ) para 36:
“What is clear from s 346(4A)(b) is that whoever furnishes the
application, on any of the parties referred to in the section,
must
depose to an affidavit which sets out the manner in which s
346(4A)(a) was complied with.”
[9]
EB
Steam Co (Pty) Ltd v Eskom Holdings Society Ltd
2015 (2) SA 526
(SCA) ([2014]
1 All SA 294
;
[2013] ZASCA 167)
para 12.
[10]
EB
Steam Co (Pty) Ltd v Eskom Holdings Society Ltd
2015 (2) SA 526
(SCA) ([2014]
1 All SA 294
;
[2013] ZASCA 167)
para 15.
[11]
Ekurhuleni
Metropolitan Municipality v Germiston Municipal Retirement Fund
2010
(2) SA 498
(SCA) paras 12 – 14; Natal Joint Municipal Pension
Fund v Endumeni Municipality
2012 (4) SA 593
(SCA) ([2012]
2
All SA 262
;
[2012] ZASCA 13)
para 18.