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[2010] ZAGPPHC 190
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Musenwa v Master of the North Gauteng High Court and Others (54849/10) [2010] ZAGPPHC 190 (5 November 2010)
NOT
REPORTABLE
IN
THE NORTH GAUTENG HIGH COURT
(REPUBLIC
OF SOUTH AFRICA)
CASE
NO: 54849/10
DATE:
05/11/2010
In
the matter between:
MBONENI
BALDWIN
MUSENWA
......................................................................
Applicant
and
MASTER
OF THE NORTH GAUTENG HIGH
COURT
..................................
Respondent
and
CERTAIN
INTERVENING PARTIES
REASONS
FOR JUDGMENT
Tuchten
J
:
1.
I heard this matter in the urgent court on 18 October 2010. The main
application was for interim interdicts pending a review
of a decision
of the Master, which the applicant intended to argue at a later date.
At the hearing two separate sets of intervening
parties made
application to be joined. Part of the relief sought by the applicant
directly affected the intervening parties, who
thus had a substantial
legal interest in the outcome of the application and the applications
for joinder were granted. I dismissed
the applicant's application. By
notice dated 26 October 2010, the applicant requested reasons for my
judgment
1
.
My reasons follow.
2
.
The
applicant sought orders directed at, in the first instance, restoring
his name to a list of eligible previously disadvantaged
persons kept
by the Master. This list was compiled pursuant to a determination of
the Minister under s 15(1A)(a) of the Companies
Act, 1973 and s
158(2) of the Insolvency Act, 1936 that the Master keep a list of
previously disadvantaged persons who the Master
regarded as suitable
for co-appointments to the offices of trustee, liquidator and the
like together with more experienced insolvency
practitioners.
3.
This
policy trenches upon the previously unfettered discretion of the
Master to appoint any suitable person to these offices but
obviously
does not enjoin the Master to appoint unsuitable persons to these
offices. Pursuant to the policy direction, the Master
maintains a
list of
suitable
previously disadvantaged persons, whom he appoints in rotation.
4.
During
2009 the applicant and Mr Strydom, the third intervening party, were
appointed joint provisional liquidators in the winding-up
of Coal
Experts (Pty) Ltd. Strydom and the applicant sold assets in the
provisional winding-up and got in an amount of some R10
million. They
decided to apply for an interim fee. The applicant was entrusted with
the task of submitting the application for
an interim fee to the
Master. The applicant returned to Strydom. claiming that he had
indeed submitted the application and that
it had been granted in the
sum of R500 000. On the strength of a document bearing the stamp of
the Master to this effect, Strydom,
who was in charge of the
administration of Coal Experts, paid out R200 000 of Coal Experts'
money to the applicant.
5.
It
has emerged that the document produced to Strydom was probably a
forgery. In fact the Master refused the application for an interim
fee. The applicant protests that he was an innocent party and that
the probably forged document was merely produced by an official
in
the Master's office who thought he had, but did not in fact have,
authority to grant the application for an interim fee. Despite
this
protestation by the applicant, there is in my view a strong
probability, established on the papers, there was a misappropriation
and that the applicant was a party to the misappropriation. For one
thing, the applicant alone benefited from the misappropriation.
Although the applicant says that he was innocent of any intention to
defraud Coal Experts or Strydom, from an early date after
the
misappropriation was discovered, December 2009 or January 2010, he
promised to pay the money back. Contrary to his undertaking,
he has
not paid any of the R200 000 back.
6.
The
Master held a formal enquiry into the misappropriation at which he
heard the applicant on whether, and if so to what extent,
the
applicant was a party to the misappropriation. The Master came to the
conclusion that the applicant was implicated in the fraudulent
scheme
and was thus not a fit and proper person to be appointed to the
offices in question and should be removed in those cases
where he had
been appointed. He accordingly removed the name of the applicant from
the list. As estates came up for consideration
before him in which
the applicant was involved, he systematically removed the applicant
and replaced him with a candidate from
his list.
7.
In
addition to the relief directed at restoring him to the list, the
applicant seeks interim orders, pending the adjudication of
his
review application, restoring him to his erstwhile offices,
interdicting the Master from removing the applicant in any further
insolvent estates and setting aside all decisions of the Master which
had the effect of removing the name of the applicant from
a panel of
liquidators or trustees where a liquidation and distribution account
was confirmed to the exclusion of the applicant.
8.
Despite
the far reaching relief sought, no liquidators and trustees in
affected estates were cited by the applicant as respondents
in his
application. The two sets of interveners came to court to protect
their positions but for the rest there was no adequate
information
before he court as to which estates were involved and what prejudice
would be suffered by liquidators and trustees,
acting in good faith
pursuant to decisions made by the Master, and the creditors whose
interests they represent. Nor was any basis
laid for the grant of an
order, even an interim order, in the absence of notice to such
persons.
9
.
Counsel
for the applicant appreciated this difficulty and confined himself to
the claim,
pendente
lite,
for
reinstatement on the list as a potential co-liquidator and trustee in
good standing.
10.
The
sole ground on which the interim relief was sought was that in
removing names from the list, the Master performs an administrative
act, thus engaging the Promotion of Administrative Justice Act, 3 of
2000, ("PAJA") and that the Master had not heard
him before
taking the decision to remove him from the list. The applicant
concedes that there was a full enquiry by the Master
into the
circumstances in which the money was misappropriated and that the
applicant gave evidence at the enquiry. But, says the
applicant, he
was entitled to more than that. He should, he says, have been given a
charge sheet and procedures should have been
followed akin to those
in a disciplinary enquiry.
11.
I
do
not agree that the compilation of the list constitutes administrative
action. The list is not compiled in the process of implementing
legislation but in the process of implementing the socio-political
policy of the Minister. In these circumstances, it seems to
me that
the principle articulated by Chaskelson P in
President
of the Republic of South Africa and Others v South African Rugby
Football Union and Others
2000
1 SA 1 CC para 142 (footnotes omitted) is applicable:
As
we have seen, one of the constitutional responsibilities of the
President and Cabinet Members in the national sphere (and premiers
and members of executive councils in the provincial sphere) is to
ensure the implementation of legislation. This responsibility
is an
administrative one, which is justiciable, and will ordinarily
constitute 'administrative action' within the meaning of s
33.
Cabinet Members have other constitutional responsibilities as well.
In particular, they have constitutional responsibilities
to develop
policy and to initiate legislation. Action taken in carrying out
these responsibilities cannot be construed as being
administrative
action for the purposes of s 33.
12.
If the action taken by the Master in removing the applicant's name
from the list was not administrative action, then the applicant
was
not entitled to a hearing before his name was removed from the list.
2
Furthermore,
if I am wrong and the applicant was entitled to a hearing, I can see
no reason why the applicant should have required
a charge sheet or a
formal hearing to defend himself against the allegations that there
was a misappropriation and that he was
party to the misappropriation.
At best he was entitled to a fair hearing. He must have known that
his part in the misappropriation
was being scrutinised. He must have
known that the Companies and Insolvency Acts require the Master to
appoint suitable persons
to the offices in question and to remove any
such person when it appeared that the person in question was not, or
was no longer,
a suitable person in this context. He must have known
that if the Master concluded that he was implicated in the
misappropriation,
the Master would cease to regard him as a suitable
person for appointment and that his removal, both from the list and
as a trustee
or liquidator, would inevitably follow. I think he did
get a fair hearing.
13.
The
true nature of the Master's discretion in relation to the appointment
of trustees and liquidators is to be found in the statutory
provisions empowering the Master to make such appointments.
3
This discretion has been described as being entirely discretionary.
Only rarely has the court interfered with the exercise of the
discretion, ie where he failed to exercise it at all or acted
mala
fide
or
was motivated by improper considerations.
4
14.
This
being a an application for an interim interdict, I must apply the
dictum in
Simon
NO v Air Operations of Europe AB
5
:
Insofar
as the appellant also sought an interim interdict pendente lite it
was incumbent upon him to establish, as one of the requirements
for
the relief sought, a prima facie right, even though open to some
doubt
(Webster
v Mitchell
1948
(1) SA 1186 (W) at 1189). The accepted test for a
prima
facie
right
in the context of an interim interdict is to take the facts averred
by the applicant, together with such facts set out by
the respondent
that are not or cannot be disputed and to consider whether, having
regard to the inherent probabilities, the applicant
should on those
facts obtain final relief at the trial. The facts set up in
contradiction by the respondent should then be considered
and, if
serious doubt is thrown upon the case of the applicant, he cannot
succeed.
15.
The
applicant cannot dispute that the Master believes, on reasonable
grounds, that the applicant is not a suitable person for appointment
to the offices of trustee and liquidator. In those circumstances the
Master would be failing in his duty if he appointed the applicant
to
any of the offices in question. Having come to the conclusion that
the applicant was not suitable for appointment, the Master
would have
failed in his duty, had he not removed the applicant's name from the
list. Applying the
dictum
in Simon's
case
which I have quoted, there is no doubt that the applicant should not,
on the facts presented, obtain final relief.
16.
Finally,
the balance of convenience is overwhelmingly against the applicant
and the remedy of reinstatement, pending the final determination
of
the applicant's review would not be just and equitable as that
expression is used in s 8(1) of PAJA.
17.
The
applicant pointed out that although he is an attorney, the entire
livelihoods of the applicant and his staff are dependent on
his
income as a previously disadvantaged liquidator and trustee. But
against that the evidence of misappropriation against the
respondent
is very strong and although he has promised to repay the money taken,
he has not done so. The effect of an order of
reinstatement on the
list would be to foist upon the Master, and the public, a person
whose integrity is at this stage, to put
it at its lowest, open to
considerable doubt.
Furthermore,
even if the applicant were to succeed in due course in establishing
that PAJA applies and that he was not given a fair
hearing, I
strongly doubt that any court would, in the exercise of its equitable
discretion under s 8(1) of PAJA, order that the
applicant's name be
restored to the list pending such a hearing. Certainly I do not
consider that it would be just and equitable
at this stage to order
the applicant's reinstatement.
18.
For these reasons I ordered that the applications for joinder be
granted and the applicant's application for interim relief
be
dismissed with costs, such costs to include the applications for
joinder and the costs of opposing the applicant's application
by each
of the intervening parties.
NB
Tuchten
Judge
of the High Court
4
November 2010
1
I
am unable to establish from the contents of the court file placed
before me the identities of the first and second intervening
parties, who jointly brought the first intervention application. The
second application for leave to intervene was brought by
Leonard
Johannes Strydom and Dimakatso Arnold Michael Mohasoa in their
capacities as joint liquidators of Coal Experts (Pty)
Ltd (in
liquidation).
2
Compare
Langa
CJ and Others v Hlophe
2009
4 SA 382 SCA para 34
3
Section
18(1) of the Insolvency Act; ss 367 and 368 of the Companies Act.
4
Henochsberg
on the Companies Act,
(looseieaf
ed) vol 1, note to s 368 sv
"May
appoint'.
5
1999
1 SA 217 SCA228F-H