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[2021] ZAGPJHC 168
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Trakman N.O and Others v The Master of the High Court of South Africa, Johannesburg and Others (2020/12432) [2021] ZAGPJHC 168 (21 May 2021)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, JOHANNESBURG
CASE
NUMBER:
2020/12432
REPORTABLE:
NO
OF
INTEREST TO OTHER JUDGES: NO
REVISED
YES
In
the matter between:
SELWYN TRAKMAN
N.O
1
st
APPLICANT
TSIU
VINCENT MATSEPE N.O
2
nd
APPLICANT
RISHAAD
MOOSA N.O
3
rd
APPLICANT
AND
THE MASTER OF THE HIGH
COURT
OF
SOUTH AFRICA, JOHANNESBURG
1
st
RESPONDENT
THE
LAND AND AGRICULTURAL DEVELOPMENT
BANK
OF SOUTH ARICA
2
nd
RESPONDENT
ENGELHART
CTP (SOUTH AFRICA) (PTY) LTD
(REGISTRATION
NUMBER 2013/145333/07)
3
rd
RESPONDENT
JUDGMENT
Delivered:
This judgment was handed down
electronically by circulation to the parties’ legal
representatives by e-mail. The date and
time for hand-down is deemed
to be 10h00 on the 21st of May 2021.
DIPPENAAR
J
:
[1]
The
applicants, the joint liquidators (“the liquidators”) of
Trademar Trading (Pty) Ltd (in liquidation) (“Trademar”),
sought to review, under s151 of the Insolvency Act
[1]
(“the Act”)
[2]
, a
decision and ruling of the first respondent (“the Master”),
made on 8 October 2019, pertaining to the claim of the
second
respondent (“Land Bank”). This decision and ruling are
contained in a letter from the Master, the relevant portion
of which
provides:
“
3.2.
Kindly be advised that your application to the Master for the
expungement of the Land Bank’s proved claim number
1 in
accordance with the provisions of
Section 45
(3) of the
Insolvency
Act 24 of 1936
(as amended) read with the provisions of Section 339
of the Companies Act 61 of 1973 it is hereby accordingly refused by
the Master.
The Sale Agreement which is the main issue of bringing
the expungement application has been made available to both the
Master and
your good self. The Master has perused the agreement and
came to the conclusion that the claim as proved it is a valid claim
and
that it should stand. The Liquidators of the above mentioned
company are hereby directed to proceed with payments of dividends to
all proved creditors of the company in liquidation herein”.
[2]
The liquidators sought orders setting aside
the decision of the Master to refuse the expungement of the Land Bank
claim and the
conclusion that the said claim was valid as well as
setting aside the directive to the liquidators to proceed with the
payment
of dividends to all proved creditors of Trademar. Orders were
further sought for the expungement of the Land Bank claim and costs.
[3]
Land Bank in turn sought dismissal of the
review application and sought orders directed at declaring its claim
validly proved, inclusion
of such claim in a second liquidation and
distribution account and ancillary relief. Orders were further sought
that the liquidators
be precluded from being paid their costs from
the Trademar estate and that the Land Bank’s costs be paid from
the Trademar
estate.
[4]
The Master did not deliver any report or
affidavit in the application and did not actively participate
therein. The third respondent,
(“Engelhart”), a proved
creditor of Trademar who first raised the issues constituting the nub
of this application,
delivered an explanatory affidavit but abided
the court’s decision.
[5]
The background facts are not contentious.
It is necessary to set them out in some detail,
specifically in context of the interactions between the liquidators
and Land Bank
in relation to the Land Bank’s claim.
[6]
Trademar
was placed under provisional and final winding up on 25 May 2016 and
25 July 2016 respectively
[3]
. On
8 August 2016 Land Bank was authorised by the Trademar creditors to
seek and obtain leave to commence an enquiry in terms of
sections 417
and 418 of the Companies Act, 1973 (“the Old Companies Act”).
The
enquiry, aimed mainly at the collection of Trademar’s debtors,
was held on various dates during the period September 2016
to January
2017. The liquidators were represented at the enquiry by Mr Van
Greunen, Land Bank’s attorney of record.
[7]
Land Bank formulated a claim comprising
some 409 pages and submitted it to proof at the first meeting of
creditors on 2 September
2016 without objection. The Land Bank claim
was based on a cession to it from Grocap Financial Services (Pty) Ltd
(“Grocap”)
of its book debts, including the Trademar
debt. A copy of the sale agreement between Grocap and Land Bank in
terms of which
in terms of which Grocap had
allegedly sold and ceded all rights, title and interest to its book
debts to Land Bank on 29 June 2012
(“the sale agreement”)
,
did not form part of the claim documents. This forms the nub of the
dispute between the parties.
[8]
On 24 November 2016, Hayes attorneys,
representing Engelhart, addressed a letter to the liquidators
attacking the veracity of the
Land Bank claim and the security relied
on, raising the absence of the sale agreement. The liquidators sought
an opinion regarding
Engelhart’s objection from their attorney,
Mr Dos Passos of Fluxmans Inc, (“Fluxmans”) who in turn
sought advice
from senior counsel. On 14 May 2018, Fluxmans sought a
copy of the sale agreement from Mr Van Greunen. During the period May
2018
to November 2018 further correspondence ensured between the
respective attorneys pertaining to the production of the sale
agreement.
Mr Van Greunen provided a non-disclosure agreement to be
concluded by Fluxmans prior to the sale agreement being provided,
which
Fluxmans refused to sign due to its wide and onerous terms.
Fluxmans offered certain undertakings instead, which were rejected.
Land Bank persisted in its insistence on signature of the
non-disclosure agreement. Fluxmans offered that a copy of the sale
agreement
be provided with the price sensitive information redacted.
This offer was refused.
[9]
On 25 June 2019 Fluxmans addressed a
further letter to Mr Van Greunen, recoding
inter
alia,
that an opinion had been obtained
from senior counsel and the liquidators’ duties under s 45(2)
of the Act. It was contended
that the sale agreement ought to have
been filed with the Land Bank claim and that the effect of the
proposed non-disclosure was
to prevent the liquidators from
fulfilling their duties. Land Bank was further informed that absent
the production of the sale
agreement, they would apply for the
expungement of its claim. The sale agreement was not produced and on
4
September 2019 the liquidators launched
an application under s45(3) of the Act to the Master for the
expungement of Land Bank’s
claim.
[10]
The basis of the expungement application
was that Land Bank had proved its claim with reliance on two
cessions: the first, a cession
by Trademar of its book debts to
Grocap as security for a financing facility; the second, the alleged
cession by Grocap to Land
Bank of certain book debts, being those
“satisfying predetermined criteria”. The liquidators’
case was that in
the absence of the production of the sale agreement
as part of the documentation in support of the Land Bank claim, they
were unable
to ascertain that Trademar in fact owed Land Bank the
amount claimed or any other amount, that they thus disputed the
claim, and
that it should be expunged. The application was
accompanied by a copy of the recordal and the relevant correspondence
between the
parties.
[11]
On 26 September 2019, Land Bank provided a
copy of the sale agreement to the liquidators “
in
order to avoid unnecessary litigation and further incurrence of
unnecessary costs”
. It was
provided on the basis that it would not be distributed or utilised
save as provided by s 45 of the Act. Confirmation was
requested that
the expungement application would be withdrawn without delay.
[12]
The following day, Mr Van Greunen addressed
a letter to the Master responding to the expungement application to
which a copy of
the sale agreement was attached “under
protest”. Land Bank contended that there was no need for the
sale agreement
to be attached to its claim. Reliance was placed on
the recordal which confirmed that Land Bank and Grocap were ad idem
that effect
had been given to the cession and it was illogical for a
third party to doubt the existence of the agreement.
[13]
On 10 October 2019, the liquidators via
Fluxmans addressed a letter to the Master withdrawing the expungement
application pending
further consideration of the sale agreement,
which required a proper opportunity to consider. The Master’s
letter dated 8
October 2019, dismissing the expungement application,
was not immediately provided to all the parties. A copy of the
Master’s
letter, addressed only to Mr Van Greunen, was
furnished by Mr Van Greunen to the liquidators on 18 October 2019.
The Master only
notified the liquidators of his decision via letter
dated 24 October 2019. That letter was in substance in identical
terms to his
8 October 2019 letter addressed to Mr Van Greunen. No
explanation was tendered by the Master why the liquidators and Land
Bank
were not simultaneously advised of his decision.
[14]
On 3 October 2019 Land Bank furnished the
liquidators with a copy of Grocap’s 2019 financial statements.
Attention was drawn
to note 8.2 thereto, which, it was contended,
recognised the sale of the corporate book debts in support of the
averments in the
Land Bank claim.
[15]
Prior to the launching of the review
application on 8 June 2020, substantial correspondence ensued between
the attorneys for liquidators
and the Land Bank and the Master
pertaining to the liquidators’ contentions regarding errors and
the misdirection made by
the Master in his decision and ruling of 8
October 2019.
Inter alia, the liquidators
sought satisfactory proof that the Trademar debt was in fact
identified in the “
A Sale Book
Debts Storage Media
”,
alternatively, to be provided with a copy of the “
Approved
Credit Policy
” as referred to in
the sale agreement. These documents were not provided by Land Bank.
According to the liquidators this
correspondence was aimed at
avoiding the review application, although it was not disputed that
the Master was
functus
officio
and could not revisit his
decision and ruling.
[16]
Turning to the merits of the application,
the relevant portion of s151 of the Act provides:
“
.
. any person aggrieved by any decision, ruling, order or taxation of
the Master. . . may bring it under review by the Court .
. .”
.
[17]
It
is trite
that
a court has wide powers in terms of s 151. The court sits as a court
of appeal and is entitled to adjudicate the disputed matter
de
novo.
[4]
It
was common cause that b
efore
resorting to review proceedings under s151, a liquidator is obliged
to follow the procedure set out in section 45 of the Act
[5]
.
The section is peremptory
[6]
and
provides:
“
45
Trustee to examine claims:
(1)
After a meeting of creditors the officer who presided thereat shall
deliver to the trustee
every claim proved against the insolvent
estate at that meeting and every document submitted in support of the
claim.
(2)
The trustee shall examine all available books and documents relating
to the insolvent estate
for the purpose of ascertaining whether the
estate in fact owes the claimant the amount claimed.
(3)
If the trustee disputes a claim after it has been proved against the
estate at a meeting
of creditors, he shall report the fact in writing
to the Master and shall state in his report his reasons for disputing
the claim.
Thereupon the Master may confirm the claim, or he may,
after having afforded the claimant an opportunity to substantiate his
claim,
reduce or disallow the claim, and if he has done so, he shall
forthwith notify the claimant in writing: Provided that such
reduction
or disallowance shall not debar the claimant from
establishing his claim by an action at law, but subject to the
provisions of
section seventy-five;”
[18]
Prior to considering whether the Master’s
decision and directive should be reviewed and set aside, it is
apposite to consider
the liquidators’ conduct in the context of
such duties. In summary, the liquidators’ case was that the
review application
was brought in compliance with their duty under
s45(2) to “examine all available books and documents” for
the purpose
of ascertaining whether Trademar in fact owes Land Bank
the amount claimed. Their case is that they acted bona fide and in
compliance
with this duty in seeking relevant and necessary
documentation from Land Bank in order to ascertain the validity of
its claim and
that the necessary documents were not provided. As the
necessary documents were not provided, the Master misdirected himself
in
concluding that a consideration of the sale agreement was
sufficient and that the claim as proved is valid and should stand.
[19]
Land Bank’s case on the other hand
was that the liquidators did not have any factual basis to dispute
its claim and had no
controverting evidence that the Trademar debt
was not an ‘
A sale book debt
’.
It was argued that absent any controverting facts in their founding
papers, the liquidators have relied on a mere suspicion
and could not
have a reasonable belief based on facts to dispute the Land Bank
claim. Land Bank further contended that the liquidators
have embarked
on a fishing expedition and acted with an ulterior motive in seeking
additional documentation and should have accepted
the validity of its
claim on the basis of the averments in the claim documents,
specifically in relation to its locus standi as
creditor. It argued
that that all the necessary information to support the Land Bank
claim was contained in the claim documents
and the Master correctly
concluded that the claim was valid as proved.
[20]
It was undisputed that at the time the
expungement application was launched, the sale agreement had not yet
been provided.
It was common cause that the
material placed before the Master comprised of the Land Bank claim
documents, the correspondence between
the parties and the sale
agreement, which t
he Master did consider in
refusing the expungement application
.
[21]
In
arguing that the liquidators had no reasonable belief based on facts
to dispute the Land Bank claim, Land Bank relied on
Caldeira
v The Master & Another (“Caldeira”)
[7]
in
which Levinsohn J referred to the duties of a trustee or liquidator
in terms of section 45(3) of the Act and stated:
“
This
section enjoins the trustee, if he disputes the claim, to report to
the Master his reasons for doing so. It seems to me that
if a trustee
disputes the claim he must have a reasonable belief based on facts
ascertained by him that the insolvent estate is
not in fact indebted
to the creditor concerned. Mere suspicion about the claim would not
be sufficient. This belief would, I think,
generally arise after the
examination of the Company’s records and the conclusion derived
from the records that the indebtedness
does not exist or has been
extinguished. Of course, the facts giving rise to the belief may not
necessarily be derived from the
company’s records, they could
arise, for example, from the records of an interrogation conducted at
the meeting of creditors”;
[22]
It is necessary to first consider Land
Bank’s claim to determine whether the liquidators had a
reasonable belief based on
facts or whether they had embarked on a
fishing expedition. Land Bank contended that the contents of the
documents supporting its
claim was sufficient and that reliance
should be placed on the version contained under oath by Mr Ernst as
well as the memorandum
and recordal. Emphasis was placed on Mr Ernst
being a duly authorised representative of both the Land Bank and
Grocap, both of
which entities were satisfied and in agreement that
the Trademar debt was indeed sold to the Land Bank.
[23]
It is not necessary to deal comprehensively
with all the documents comprising the Land Bank claim. The claim form
contained the
following salient features.
The
deponent to its affidavit supporting the claim, Mr Ernst, deposed
thereto on behalf of Land Bank in his capacity as the chief
legal
advisor to Grocap and in his capacity as the true and lawful attorney
and/or agent of Land Bank. The affidavit contained
a statement that
Trademar was indebted to Land Bank in the sum of R 14,298,363.50;
that Trademar was the only liable party for
the debt and that Land
Bank held no other security apart from that referred to, in a form of
a cession of debtors, a cession of
SacOil shares, a suretyship and
deed of negative pledge, which security was unlimited in terms of its
value. A certificate of balance
was provided as at the date of
Trademar’s winding up. The facility agreements and security
agreements concluded between Trademar
and Grocap were included as
well as a service level agreement (“SLA”) between Grocap,
Land Bank and Afgri Operations
Ltd (“Afgri”).
[24]
The cession of Trademar’s debt to
Land Bank by Grocap is central to its claim and the security relied
on. On this issue, the
claim documents included a document styled
“Memorandum” and a document styled “Recordal”,
being “a
joint confirmation of Land Bank’s locus standi”.
[25]
The Memorandum is an unsigned document, the
author of which is not identified. It describes Land Bank as “the
creditor”
and states that “
a
sale agreement and a service level agreement were concluded between
Grocap and Land Bank on 29 June 2012 whereby Grocap sold,
ceded, and
delegated the rights, title and interest in and to its existing
corporate debtors book to the creditor
”
(Land Bank). It refers to an attached cession agreement, which is not
attached. It also contains the statement:
“
4
I respectfully submit that due to the nature of the Agreements
referred to supra that all debtors are automatically ceded to the
Creditor and have all Agreements referred to hereunder entered into
between Grocapital Financial Services and the Respondents been
sold,
ceded and delegated to the creditor in accordance with the agreements
between Grocapital Financial Services and the Creditor.”
[26]
In the Recordal, the omission of the sale
agreement was justified by Land Bank in the following terms:
“
2.1
The Sale Agreement and the SLA all contain confidential information
pertaining to the respective parties. In view of the aforementioned
the contents of the aforementioned agreements are incapable of being
disclosed to third parties”.
[27]
The Recordal did not in any way seek to
identify such “confidential information” or motivate,
with reference to primary
facts, why such agreement was “incapable
of being disclosed”. Rather, the recordal contained an
unsubstantiated legal
conclusion.
[28]
The Recordal
recorded
that Land Bank, Grocap and Afgri entered into the sale agreement
regarding the sale, cession and delegation by Grocap of
its rights,
title and interest in and to its existing “
Corporate
debtors book which formed part of its Specialised Finance division
”
to Land Bank, and that in terms of the sale agreement Grocap is
obliged to sell and Land Bank is obliged to purchase the
rights in
all future book debts “
subject to
such book debts satisfying predetermined criteria
”.
The Memorandum, which stated that “
all
debtors are automatically ceded
”
is thus at variance with the aforesaid statement in the Recordal.
Neither the Recordal or the Memorandum
expressly identifies the Trademar debt as having been sold to Land
Bank.
[29]
The
Recordal
[8]
provides for a
schedule, signed by either the financial director or manager of
operations of Grocap, reflecting the details of
a particular book
debt, to be provided as confirmation of such book debt being sold to
Land Bank. The Recordal was not accompanied
by such a schedule,
although Land Bank argued that the certificate of balance contained
elsewhere in the claim documents, signed
by a Mr Du Toit, the general
manager, operations of Grocap, was sufficient. I do not agree. The
certificate was not provided as
an attachment to the recordal. It
followed on the various statements of account addressed to Trademar,
all of which were either
on Afgri or Grocap letterheads and on which
no reference was made to Land Bank. The certificate of balance in its
terms did not
purport to be a schedule in terms of the Recordal or
seek to identify Trademar as a particular book debt envisaged
therein. It
merely in broad terms certified Trademar to be indebted
to Land Bank in an amount of R14 298 363-50, which amount was due and
payable.
[30]
Considering (i) the contradictions between
the Memorandum and the Recordal, (ii) the vague objections pertaining
to confidentiality
of the sale agreement despite the clear existence
of such sale agreement and (iii) the absence of any primary documents
evidencing
the cession of the Trademar debt to Land Bank (despite the
voluminous nature of the claim documents) I am persuaded that the
liquidators
acted reasonably in demanding clarity and not on mere
suspicion. Moreover, the statements contained in the claim documents
by Mr
Ernst constitute legal conclusions, rather than providing
evidence of primary facts from which such conclusions can reliably be
drawn. The Land Bank’s criticism of the liquidators’
failure to accept his evidence as sufficient proof, does not bear
scrutiny. The failure by the Land Bank to produce the sale agreement
as part of its claim documents, and its vague reliance on
confidentiality, in my view justifiably moved the liquidators to
request the sale agreement after Engelhart raised its objection.
[31]
The
ongoing obstructive and hostile approach adopted by Land Bank on this
issue is curious. The objective undisputed facts illustrate
a
steadfast refusal on the part of Land Bank to produce the very
agreement on which its cession and thus locus standi as creditor
relies, in the face of conflicting statements and gaps in its claim
documents. Applying the principles in
Caldeira
[9]
,
I am persuaded that the facts do sustain a reasonable belief that the
debt may not be due by Trademar and that further investigation
by the
liquidators was required.
[32]
It
is apposite to refer to the majority judgment in
Standard
Bank of South Africa v The Master of the High Court and Others
[10]
,
wherein the Supreme Court of Appeal enunciated the duties of a
liquidator thus:
“
[93]
It is clear that once a claim is proved a liquidator is under an
obligation to examine all available books and documents. The
mere
admission of a claim does not ratify it or make it res judicata. The
importance of corroborating documents is clear. The presiding
officer
is obliged to deliver every document in support of the claim to the
trustee. In a scheme of things liquidators are required
to examine
all available books and documents for corroboration or comparison. In
Estate Friedman v Katziff
1924 WLD 298
the court, in dealing with a
similar section in the previous Insolvency Act 32 of 1916, said the
following at 304:
‘
In
my view there can be no doubt that the word “shall” where
used in sec 43 of the Act is peremptory and not directory,
and it is
therefore the duty of the Court to see that the provisions of the
Statute are complied with’
The liquidators’
duty in this regard are therefore peremptory”.
[33]
Measuring their conduct against these
principles, it cannot in my view be concluded that the liquidators
were doing anything other
than what s45 (2) of the Act obliges them
to do. I agree with the liquidators that they were under a statutory
duty to examine
all available relevant books and records for
corroboration or comparison and that the documentation sought by them
falls within
this category. The liquidators’ insistence on
obtaining a copy of the sale agreement and the further relevant
documents referred
to therein can in my view not be characterised as
‘a fishing expedition”. Land Bank’s contention of
the liquidators
being moved by ulterior motive similarly lacks
factual substance. Land Bank’s answering papers are replete
with repeated
intemperate criticism aimed at the liquidators. It is
not necessary to repeat these allegations in any detail. Suffice it
to state
that such criticism was unwarranted and the approach and
tone adopted by Land Bank regrettable.
[34]
I
turn to consider whether the Master’s decision of 8 October
2019 should be set aside. At this juncture it
is
apposite to refer to the exposition by Malan J (as he then was) of
the approach to be taken by a court as stated in
Al-Karafi
& Sons v Pema
[11]
:
A court hearing a
review application under s 151 sits both as a court of review and a
court of appeal to reconsider the ruling or
decision of the Master.
That does not mean that the court may disregard the factual material
before the Master or the Master’s
reasoning. It is only where
the Master, in granting his approval, has erred or misdirected
himself based on the material placed
before him that the court can,
on review and or appeal, go further and decide the matter de novo. It
is by reference to what was
placed before the Master that the
correctness or otherwise of the Master’s decision is to be
judged. If, based on what was
before the Master, there was no error
or misdirection on the Master’s part, then that is the end of
the matter. It is not
open to the parties to introduce the new
material that they seek to place before this court, and argue on the
basis of what was
not before the Master that the Master erred or
misdirected himself. The approach is to consider the factual material
placed before
the Master, together with the Master’s decision
and his report, and to consider whether in the light of that
material, the
Master erred or misdirected himself in any material
respect. If any basis for interfering with the Master’s
decision does
appear ex facie the documents before the Master as read
with his decision and rulings, then the reviewing court may
reconsider
the matter based on the material before it.
[35]
It must thus first be determined whether
the Master misdirected himself in his decision and directive of 8
October 2018. I have
already referred to the contents of Land Bank’s
claim documents and the deficiencies therein and do not repeat them.
The
expungement application was predicated on the need to consider
the sale agreement. In their response to the expungement application,
the Land Bank contended that it was not necessary to provide the sale
agreement, but nonetheless provided a copy thereof under
protest. The
agreement was not provided in redacted form.
The
Master’s decision was predicated on his perusal of the sale
agreement, which he considered sufficient.
[36]
In the sale agreement, the following is of
relevance: First, the category into which the Trademar debt fell was
potentially the
“A sale book debts” category. Second,
certain categories of book debts were expressly excluded from the
book debts
which Land Bank acquired from the sale. Any debt that was
excluded from the definition of “A sale book debts”, and
which did not comprise a “B sale book debt”, would thus
not have been acquired by Land Bank from Grocap. The definition
of “A
sale book debts storage media” served to identify the “A
sale book debts” sold by Grocap to Land
Bank. Third, the
allegation in the claim and specifically the Memorandum that “
all
debtors are automatically ceded
”
is thus factually incorrect and conflicts with the contents of the
sale agreement.
[37]
In
order to verify whether the Land Bank claim comprised of an “A
sale book debt” which was acquired by Land Bank, it
was
necessary to either consider the “approved credit policy”
referred to in the sale agreement or to consider the
“storage
media” as referred to in the sale agreement to consider and
confirm that the Trademar debt is specified thereon.
In terms of the
sale agreement
[12]
, Grocap
would deliver to Land Bank the “storage media”
identifying the “A sale book debts”. The storage
media is
thus vital to identifying the “A sale book debts” and is
in possession of Land Bank.
[38]
Land Bank’s reliance on definitions
contained in the SLA and other documents submitted as part of the
claim to clarify the
“A sale book debts”, “storage
media” and the like, does not bear scrutiny. The voluminous
claim documents
did not contain an exposition of those terms or
highlight the importance of the definitions. Such definitions of
themselves do
not sufficiently clarify the position.
[39]
The Master did not have or consider either
the “approved credit policy” or the “storage
media”. A mere perusal
of the sale agreement would be
insufficient to properly conclude that the Trademar debt was indeed a
debt sold and ceded to Land
Bank. It appears that the Master did not
consider it necessary to consider the “approved credit policy”
or the “storage
media” but considered provision of the
sale agreement as sufficient. The Master further did not consider the
contradictions
between the sale agreement, the Memorandum and the
Recordal regarding whether all the Grocap debts were sold to the Land
Bank.
He also did not consider that the sale agreement did not give a
definitive answer in its terms as to whether the Trademar debt was
sold to Land Bank.
[40]
I conclude that in reaching his conclusion,
the Master thus misdirected himself by not considering or
appreciating that he did not
have all the necessary information to
reach his conclusion. He also misdirected himself that scrutiny of
the sale agreement was
sufficient to determine that the Land Bank
claim was valid and the Trademar debt had in fact been ceded to the
Land Bank. It follows
that the Master’s decision to dismiss the
expungement application falls to be set aside.
[41]
That is however not the end of the matter.
Considering the conclusions reached, the application need not be
considered on the basis
of the material which was placed before the
Master and any new evidence can be considered in determining the
matter
de novo.
I
deal first with whether Land Bank’s claim should be expunged
and return to the Master’s directive later.
[42]
The expungement application was predicated
on the need to consider the sale agreement. I have already concluded
that the sale agreement
itself is insufficient. In their response to
the expungement application, Land Bank contended that:
“
The
joint confirmation of the parties concerned with the cession, which
has in fact been agreed to, is clearly evident from the
meeting of
the minds that an agreement has been reached to that effect, is
sufficient for the satisfaction of the Presiding Officer
in
accordance with
Section 44
of the
Insolvency Act&rdquo
;.
[43]
Land
Bank has persisted in this argument. For reasons already provided,
the mere
ipse
dixit
of Land Bank and Grocap is insufficient to establish Land Bank’s
locus standi as creditor or the sale of the Trademar debt
to Land
Bank. A proper consideration of all the underpinning agreements is
required to clarify what the agreements achieved, rather
than simply
accepting what the parties thought they achieved. The provision of
the sale agreement is also insufficient to reach
this conclusion,
absent consideration of the “storage media”, which
evidences whether the Trademar debt is an ”
A
sale book debt”
[13]
in terms of the sale agreement.
[44]
Certain new evidence has come to light in
the present proceedings: first, that on Land Bank’s version,
the “approved
credit policy” referred to in the sale
agreement will not take the matter further. Second, consideration
must be given to
the 2019 financial statements of Grocap provided to
the liquidators on 3 October 2019. In Mr Van Greunen’s
correspondence,
Land Bank relied on paragraph 8.2 of the notes to the
financial statements. That note is cast in broad terms and refers to
“Transferred
financial assets not derecognized entirely”.
Although it refers to the sale it does not clarify the position in
relation
to the Trademar debt. In my view it does not take the matter
any further.
[45]
Third, in its replying affidavit to the
counter application Land Bank produced a spreadsheet, which it
contended was the relevant
extract from the storage media (“the
spreadsheet”). In the affidavit, attaching the spreadsheet, it
was stated:
”
To
the extent that the computer records could be reduced to a printed
form, I attach…the singular transaction incorporating
the
Trademar transaction against number 912884”.
[46]
This qualification is perplexing. It is not
explained why the relevant computer records could not be printed or
properly reduced
to a printed form. It was also not explained why it
was not provided to the liquidators with the sale agreement. The
replying affidavit
further does not contain any authentication of the
spreadsheet or confirmation of the information provided thereon.
[47]
In the sale agreement “
storage
media”
was defined as: “
means
a computer disk compiled by the Seller containing information which
identifies the ‘A’ Sale Book Debts sold to
Land Bank on
the Initial Effective Date (including, as a minimum, the Key
Information)”.
[48]
“
Key
information”
in
turn, was defined as: ”
means
in relation to a sale Book Debt, the minimum information specified in
Annexure B”’.
[14]
Annexure B contained a
comprehensive list of information which was to be provided.
[49]
On the spreadsheet provided, an entry
is contained against the number 912884 referring to Trademar as a C
risk debt and reflecting
certain values as at 29 June 2012. The
annexure is identified as “
Sale
Corporate Division debtors book schedule 1
”,
although the spreadsheet itself contains no heading. The spreadsheet
provided by Land Bank does not contain the key information
or
information referred to in annexure B to the agreement.
[50]
The spreadsheet, when measured against the
relevant provisions of the sale agreement, does not contain the
requisite information
required and it cannot be concluded from the
papers that it constitutes the storage media or sufficient proof that
the Trademar
debt was sold to Land Bank.
[51]
The spreadsheet was earlier provided
to the liquidators by way of letter dated 17 August 2020 from Mr Van
Greunen, the salient portions
of which provided:
“
We
attach hereto the spreadsheet which constitutes the electronic media
which was provided by Grocap to the Land Bank which further
constitutes a list of transactions which were being sold on that day
to the Land Bank.
You will note that
there is nothing untoward on this spreadsheet and really doesn’t
take it any further forward for your client.”
[52]
It was thus clear to Mr Van Greunen that
the spreadsheet did not take the matter further. A further
spreadsheet styled “fee
schedule” was attached to the
replying affidavit. It reflects the name Trademar, a sale date of 29
June 2012 and certain
fees due to respectively Grocap and the Land
Bank. This document, absent proper explanation, also does not take
the matter any
further.
[53]
It was open to Land Bank to provide proper
and sufficient proof of the storage media, properly authenticated, to
support its claim
and its counter application. In my view, what was
provided by Land Bank falls short of the mark of providing the
necessary information
to reasonably conclude that the Trademar debt
constitutes an A sale debt sold to Land Bank in terms of the sale
agreement. Its
reluctance to provide all available documents remains
unexplained. Absent proper disclosure and access to the storage media
or
proper proof of the spreadsheet, Land Bank has in my view not
provided sufficient proof of its claim. I conclude that Land Bank’s
claim falls to be expunged, absent the necessary information and
proof.
[54]
What remains is to consider the
the
directive issued by the Master in his 8 October 2019 letter. The
Master directed that the liquidators “
are
to proceed with the payment of dividends to all proved creditors”
.
[55]
The undisputed facts established that only
a first liquidation and distribution account had been lodged and
approved on 6 June 2018
and the dividends provided for therein had
been paid to creditors.
[56]
The liquidators argued that it was
necessary for them to frame and lodge a second liquidation account
which was to lie open for
inspection and be approved in terms of ss
403 to 409 of the Old Companies Act before any further dividends
could be paid. As such,
payment of dividends could not proceed and
the Master’s directive fell to be set aside as he failed to
consider the relevant
statutory provisions.
[57]
Land Bank argued that it was implicit in
the Master’s directive that a further liquidation and
distribution account would
have to be drafted and that the manner in
which the directive was phrased should be read as prescribing the
acts which the liquidators
had to perform in compliance with their
obligations under the Act. They pointed out that provision had been
made for such steps
in the counter application.
[58]
I do not agree with Land Bank’s
interpretation of the directive. In its terms, the Master’s
directive is at best ambiguous
and did not require the drafting of a
second liquidation and distribution account. Instead, it directed
payment of dividends to
be made. The Master in issuing the directive
in its terms did not have regard to the statutory requirements of ss
403 to 409 of
the Old Companies Act. In my view the Master
misdirected himself and erred in issuing the directive in its terms.
Land Bank’s
argument implicitly concedes as much.
[59]
Based on these conclusions it follows that
Land Bank’s counter application for declaratory relief cannot
succeed. There is
further no basis to grant the costs orders sought
in the counter application. It cannot on the facts be concluded that
the liquidators
acted contrary to their duties. To the contrary, they
acted diligently and in the best interests of the body of creditors
of the
Trademar estate. There is sound no basis to mulct the Trademar
estate with the costs incurred in this application.
[60]
If Land Bank had cooperated fully in
providing all documents necessary to substantiate its claim, the
legal proceedings could have
been avoided. The normal principle is
that costs follow the result. There is no reason to deviate from this
principle. Both parties
were represented by senior counsel. I am
satisfied that the employment of senior counsel was warranted,
considering the complexities
of the matter.
[61]
I grant the following order:
[1] The decision of the
Master contained in his letter dated 8 October 2019 is set aside,
including his:
[1.1]
refusal to expunge a claim proved by the second
respondent, the Land Bank in the insolvent estate of Trademar in the
amount of R14,293,363.50;
[1.2] conclusion that the
Land Bank claim is valid and should stand;
[1.3] directive that the
applicants, the liquidators, were to proceed with the payment of
dividends to all proved creditors of Trademar.
[2] The Land Bank claim
is expunged.
[3] The second
respondent, the Land Bank, is directed to pay the costs of the
application, including the costs of senior counsel.
[4] The second
respondent’s counter application is dismissed with costs,
including the costs of senior counsel.
EF
DIPPENAAR
JUDGE
OF THE HIGH COURT
JOHANNESBURG
APPEARANCES
DATE
OF HEARING
:
12 April 2021
DATE
OF JUDGMENT
:
21 May 2021
APPLICANT’S
COUNSEL
: Adv. PT. Rood SC
APPLICANT’S
ATTORNEYS
: Fluxmans Inc
Mr
L Los Passos
2
nd
RESPONDENT’S COUNSEL
: Adv. MA Badenhorst SC
2
nd
RESPONDENT’S ATTORNEYS
: Van Greunen & Associates Inc
Mr
Van Greunen
[1]
24
of 1936
[2]
Read
with s 399 of the Companies Act 61 of 1973 and item 9 of Schedule 5
of the
Companies Act 71 of 2008
[3]
S348
date being 22 April 2016
[4]
Talacchi
& Another v The Master and Others
1997 (1) SA 702
TPD 706 I –
707; Gilbey Distillers &
Vintners
(Pty) Ltd & Others v Morris N.O. & Another
[1990] ZASCA 134
;
1991 (1) SA 648
(A); Rabinowitz v De Beer N.O. & Another 1983 (4) SA 410 (T)
[5]
Rendered
applicable to companies in terms of s339 of the Companies Act 61 of
1973 read with item 9 of Schedule 5 of the
Companies Act 71 of 2008
[6]
Standard
Bank of South Africa v The Master of the High Court & Others
2010 (4) SA 405
(SCA);
Wishart
v BHP Billiton
2017 (4) SA 152
SCA 159, par. 24 C - D
[7]
Caldeira
v The Master & Another
1996 (1) SA 868
(N) at 874 D – E,
referred to with approval by Griesel AJA in the minority judgment in
Standard Bank of south Africa Ltd
v the Master, fn 10 infra
[8]
Clause
2.2
[9]
Fn
7 supra
[10]
2010
(4) SA 405
(SCA) para [93]
[11]
2010
(2) SA 360
(W) par [11]; Nel and Another NNO v Meester (Absa Bank
Ltd and Others intervening)
2005 (1) SA 276
(SCA) paras 22-23
[12]
Clause
7.1 of the sale agreement provided: “
In
respect of all ‘A’ Sale Book debts to be sold to Land
Bank in terms of this agreement by no later than the Completion
date, the Seller shall deliver to the Land Bank the Storage Media
specifying, amongst other things, the ‘A’ Sale
Book
Debts to be sold to Land Bank in terms of this Agreement which shall
comprise of all’ ‘A’ Sale Book debts”.
[13]
The
parties were in agreement that the Trademar debt would fall into
this category.
[14]
Annexure
B formed part of the claim documents although it was not attached
to
the copy of the agreement provided to the liquidators or the Master.