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[2013] ZASCA 209
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EB Steam Company (Pty) Ltd v Eskom Holdings Soc Ltd ([2014] 1 All SA 294 (SCA); 2015 (2) SA 526 (SCA)) [2013] ZASCA 209; [2013] ZASCA 167 (27 November 2013)
REPORTABLE
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case
no: 979/2012
DATE: 27 November 2013
In the matter between:
EB STEAM COMPANY (PTY)
LTD
............................................
Appellant
and
ESKOM HOLDINGS SOC
LTD
..............................................
Respondent
Neutral citation:
EB
Steam Company (Pty) Ltd v Eskom Holdings Soc Ltd
(979/2012)[2013]
ZASCA 167 (27 November 2013)
Coram: MTHIYANE AP,
CACHALIA, WALLIS, PILLAY and WILLIS JJA
Heard: 6 NOVEMBER 2013
Delivered: 27 NOVEMBER
2013
Summary:
Winding-up
application – requirement that application papers be furnished
to employees in terms of s 346(4A) of the Companies
Act 61 of 1973 –
requirement peremptory – what is necessary for compliance
explained – time when papers to be
furnished – mode of
furnishing papers discretionary and under control of court.
ORDER
On
appeal from:
South Gauteng High Court,
Johannesburg (Tsoka J sitting as court of first instance):
1. The appeals are upheld
to the extent that the final winding-up orders granted in cases 8303
to 8312/2012 and 8381 to 8390/2012
are set aside and replaced by
provisional winding-up orders returnable eight weeks from the date of
this order.
2. The appellants are
directed by no later than five weeks from the date of this order to
furnish to the employees of the respondent
in each application a copy
of the application papers in that application and within one week
thereafter to deliver an affidavit
setting out details of when and in
what manner they have complied with this order.
3. The respondent’s
costs in this appeal, including the costs of two counsel, are to be
costs in the liquidation of the appellant
companies, unless the
provisional winding-up orders are discharged on the return date, in
which event the appellants are ordered
jointly and severally to pay
the respondent’s costs, including the costs of two counsel.
JUDGMENT
WALLIS JA (MTHIYANE AP,
CACHALIA, PILLAY and WILLIS JJA concurring)
1]
These appeals arise from final winding-up orders made by Tsoka J in
relation to twenty companies, all of which are apparently
subsidiaries of EB Steam Holdings (Pty) Ltd.
1
The winding-up applications arose out of their failure to satisfy
arbitration awards in varying amounts made against each of them
on 1
November 2011. After the awards were made
,
a notice in terms of s 345(1)
(a)
of the Companies Act 61 of 1973 (the 1973 Act) was delivered to each
company – conveniently they all have the same registered
address – but did not result in payment. Thereafter application
was made for winding-up orders against all twenty companies
in terms
of s 346(1), read with s 344
(f)
,
of
the 1973 Act. Notwithstanding the repeal of the 1973 Act these
provisions remain in force, by virtue of the provisions of s 9
of Schedule 5 to the
Companies Act 71 of 2008
.
2] The applications were
not opposed on the merits but solely on the grounds that there had
not been proper service on the employees
of the companies as required
by s 346(4A) of the 1973 Act. That section provides that:
‘
(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.’
3] The applications for
winding-up were duly served on the companies at their registered
office. Each application cited the employees
of that company as a
‘third party’. It is by no means clear on what basis this
was done, as they were not third parties
in terms of rule 13 of the
Uniform Rules, but it is immaterial. The founding affidavit did not
give any indication of whether the
companies had any employees or
their number or whether, in relation to companies the business of
which was to supply steam at various
locations around South Africa to
large industrial concerns, any employees were in fact employed at the
registered office, which
is in an office building in Melrose Arch,
Johannesburg. Information was limited to an affidavit from a
candidate attorney in the
employ of the applicant’s attorneys
that he had been told by the lady upon whom the application papers
were served that none
of the employees belonged to a trade union.
Against that factual background the sheriff purported to serve the
applications on
the employees of each subsidiary company by affixing
a copy of the application for winding-up in relation to that company
to the
front door of the registered office, which in his return is
described as being ‘the 3
RD
PARTY'S place of
EMPLOYMENT’.
4] The appellant
companies argued that this form of service was defective for two
reasons. First, the sheriff had obtained access
to the registered
office, because he had served the applications on the companies at
that office upon an employee apparently over
the age of 16 years and
in charge of the premises. In the absence of any explanation that it
was not possible for him to do so,
s 346(4A)
(a)
(ii)
(aa)
required service to be effected by affixing the application papers to
a notice board within the premises to which the employees
had access.
Service in the manner he adopted was accordingly defective. Second,
it was submitted that it was obvious from the names
of the companies
and the nature of their business that they operated at locations
throughout the country and that in those circumstances
the court
should not have accepted the correctness of the sheriff’s
return. It was argued that compliance with s 346(4A)
was
peremptory and accordingly that non-compliance was fatal to the
applications.
5] In order to place this
objection in context it is necessary to have regard to the
circumstances in which s 346(4A) came
to be introduced into the
1973 Act. It came not by way of a general amendment to the 1973 Act,
but was introduced as a result of
amendments effected to the Labour
Relations Act 66 of 1995 (the LRA). It is necessary therefore to
start with that Act which is
the primary vehicle through which effect
is given to the right to fair labour practices enshrined in s 23(1)
of the Constitution.
6] The
Labour Relations Amendment Act 12 of 2002
effected substantial
amendments to the LRA particularly in relation to the issue of
security of employment
.
Among these was the introduction of
s 197B
, which dealt with the
employer’s obligation to disclose information concerning
insolvency. The section obliges an employer
facing financial
difficulties that might reasonably result, if it is a corporate body
,
in its winding
-
up,
or, if they are a natural person or unincorporated entity
,
in their sequestration, to advise any consulting party with which the
employer is obliged to consult over employment issues in
terms of
s 189(1)
of the LRA of that fact. Furthermore if an employer
applies to be wound
-
up
or sequestrated they are obliged at the time of making the
application to provide a consulting party with a copy of the
application.
Conversely if they receive an application for winding-up
they are obliged to supply a copy of the application to any
consulting
party within two days of receipt, or if the proceedings
are urgent, within 12 hours. Similarly
,
if the employer is a natural person or unincorporated entity and
receives an application for their sequestration
,
the same notice must be given. Bearing in mind that parties facing
winding-up or sequestration may be in a state of administrative
disarray the legislature, at the same time and in the same amending
Act, introduced the provision quoted above into the 1973 Act
and
similarly worded provisions into the
Insolvency Act 24 of 1936
. This
was done with a view to ensuring, so far as reasonably feasible, that
employees become aware of an application for the winding-up
of a
company or an application for the sequestration or voluntary
surrender of a natural person or unincorporated entity’s
estate.
2
7]
These provisions were introduced simultaneously into the LRA, the
1973 Act and the
Insolvency Act, by
way of a statute directed at the
topic of labour relations and protecting the interests of employees.
It must therefore be accepted
that their purpose was to ensure, so
far as reasonably feasible, that applications for winding-up,
voluntary surrender or sequestration
come to the attention of the
employees of the employer in question and their representatives so
that the interests of the employees
can be protected
.
3
Their purpose is to enable the employees of an employer
,
facing winding-up or sequestration
,
or their representatives, to engage the employer and possibly the
creditors with a view to protecting the position of the employees,
insofar as it is reasonably possible to do so. They must be construed
in the light of that purpose.
4
8] The corollary to this
conclusion about legislative purpose is that
s 346(4A)
is not
directed at providing a technical defence to the employer, invoked to
avoid or postpone the evil hour when a winding-up
or sequestration
order is made. However, experience in motion courts hearing these
applications around the country suggests that
complaints that notice
has not been given under these provisions are usually made by the
employer facing winding-up or sequestration,
not one of the parties
to whom notice must be given. In the present case, this is the only
defence raised and no attempt has been
made to advance any factual
basis upon which the companies can avoid being wound-up. Whether the
defence should succeed depends
upon the proper construction of the
section and the powers of the court hearing an application for a
winding-up order.
9] It
is helpful to examine the provisions of
s 346
more generally in
regard to the requirements for applications for winding-up in order
to understand the role that
s 346(4A)
plays. The starting point
is
s 346(3)
which requires that every application ‘shall
be accompanied by a certificate by the Master, issued not more than
ten days
before the date of the application’ to the effect that
sufficient security has been given for the prosecution of the
winding-up
proceedings and the costs of administering the company in
liquidation. It is well established that the section is peremptory;
that
a provisional order cannot be issued in the absence of such a
certificate; and that the ten days is calculated from the date of
the
notice of motion. However, the certificate does not have to accompany
the application at the time that it is lodged, but only
when it is
heard
,
and may be furnished to the court at any time prior to the issue of a
provisional order. The cases that lay this down
5
were decided under the corresponding provisions of the
Insolvency
Act, but
they are of equal application to applications for
winding
-
up.
10]
Section 346(4)
(a)
provides
that ‘[b]efore an application for the winding-up of a company
is presented to the Court’ a copy of the application
shall be
lodged with the Master or, in certain circumstances, with another
officer in the public service designated for that purpose.
There is a
significant body of authority that holds that an application is
presented to the court when it is lodged with the Registrar
6
and there is no need for us to review it in this case. The effect
then of
s 346(4)
(a)
is
that it is peremptory for the applicant to lodge the application with
the Master before lodging the application with the Registrar.
The
Master then furnishes a report to the court before the hearing of the
application.
11]
Section 346(4A)
requires that the application papers be furnished to
various people, namely, every registered trade union that represents
the employees;
the employees themselves; SARS
7
and the company itself, unless there are grounds for the court to
dispense with the last of these. Unlike the previous sub-section,
which requires that the papers be lodged with the Master ‘before’
lodging with the Registrar of the high court,
s 346(4A)
only
requires that the application papers be furnished to these persons
‘when’ the application has been presented to
the court.
That difference in terminology is significant as it conveys that the
application papers do not have to be furnished
to the specified
persons until after the application has been lodged with the
Registrar.
8
There is a good reason for this. It is only once the papers have been
lodged that a case number will have been allocated and a
date of
set-down determined in the event of there being no opposition and
these will be reflected in the notice of motion. If the
application
is to be heard as a matter of urgency the grounds therefor and the
date of hearing will then appear from the application
papers, which
would not be the case if they had to be served before lodging them
with the registrar of the court that will hear
the application.
12] The contrary
conclusion in
Corporate
Money Managers (Pty) Ltd & others v Panamo Properties 49 (Pty)
Ltd
9
overlooked
the difference in wording between ss (4) and (4A)
,
and is incorrect. The application papers can be furnished to the
named persons at any time after lodging with the Registrar provided
that they have been furnished to the identified persons prior to the
grant of a final order. That ensures that the purpose of the
section
will be fulfilled. It is unnecessary to determine finally what a
court should do if the papers are furnished to one such
person on the
day of the hearing or only shortly before. The court should in
general satisfy itself that the persons who are entitled
to be
furnished with the papers have had an adequate opportunity to
consider the application and decide whether to intervene. 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.
13]
Like the earlier sub-sections
,
there can be little doubt that the section imposes an obligation on
the applicant to furnish the application papers to the persons
named
in the section. That accords with the section’s purpose. For
example the inclusion of SARS in the list is dictated
by its role in
protecting South Africa’s tax base and ensuring that in the
public interest all taxes properly levied are
collected. There are
obvious reasons why it should know about applications for winding-up
or sequestration
.
The reasons for requiring that the application papers be furnished to
employees and their representatives have already been mentioned.
The
section says that the application papers ‘must’ be
furnished to the named persons. In the traditional language
of the
law that is peremptory.
10
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
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.
15]
Section 346(4A)
(b)
is of considerable significance because it reinforces the
proposition that the papers must be furnished to the relevant persons
only after the application has been lodged with the Registrar.
Additionally it requires the applicant to provide an affidavit, which
may be presented to the court at the hearing itself, setting out the
manner in which paragraph
(a)
was complied with. It
necessarily follows that, if for any reason it has not been possible
to comply with those requirements, or
compliance has taken an unusual
form, the affidavit must spell this out. That raises the question of
the court’s powers in
the event of such non-compliance.
16]
The type of problem posed in complying with the section neatly
emerges from the facts in one of the cases to which we were referred,
namely
Hendricks
NO v Cape Kingdom (Pty) Ltd
.
12
There the evidence showed that none of the employees were still at
the premises of the company or any other premises where it had
carried on business. Three employees had been served personally with
copies of the application papers. The point was then taken
by the
company that there had not been service at the places or in any of
the forms specified in
s 346(4A)
(a)
(ii)
and that other employees had not been served. The applicant then
caused another person to be personally served and in relation
to
three employees at a farm, who were not present when an attempt was
made to serve them, the application papers were left with
another
employee who was present. The court held that the requirements of the
section had been satisfied. In my view it was correct
to do so. All
that could reasonably have been done to make the application papers
available to the employees had been done
.
17] The point has already
been made that it is obligatory for the applicant for a winding-up
order (or a sequestration order) to
furnish a copy of the application
papers to the persons mentioned in
s 346(4A).
When dealing with
employees the section refers to three possible ways of doing this.
The one is by placing the papers on a notice
board at the premises
where they work and to which they have access. The second and third
are by affixing a copy of the application
papers to the front gate of
the premises where the employees work, if access to the premises
cannot be obtained, or to the front
door of the premises from which
the business was conducted at the time of the application. Manifestly
none of these methods may
result in the application papers actually
coming to the attention of the employees. If the business has closed
down none of them
may serve to inform the employees of the
application for winding-up. However, there may be other means of
doing so, as in
Hendricks
,
where personal service on
the employees was feasible. What this suggests is that, whilst the
obligation to furnish the application
papers to the employees is
peremptory, the modes of doing so indicated in the section are
directory and alternative effective means
may be adopted. In other
words the methods for furnishing employees with the application
papers as set out in
s 346(4A)
(a)
(ii) are no more than
guides. If other more effective means are adopted and reflected in
the affidavit filed in terms of
s 346(4A)
(b)
then,
provided the court is satisfied that the method adopted was
reasonably likely to make the application papers accessible to
the
employees, there has been compliance with the section.
18] The fallacy in the
first contention advanced on behalf of the appellants lies in
treating not only the obligation to furnish
the application papers to
the specified persons as peremptory, but also, in the case of the
employees, the methods for doing so.
There is no logical connection
between the two and no need to turn a helpful indication by the
legislature of the ways in which
the application papers can be
furnished to the employees into a peremptory requirement,
non-compliance with which affords the company
a ground for defeating
the winding-up application. In my opinion the modes of achieving
compliance mentioned in the section are
merely directory and it is
permissible for an alternative mode to be adopted.
19] It follows that when
the court is satisfied that the method adopted by the applicant to
furnish the application papers to the
employees is satisfactory and
reasonably likely to make them accessible to the employees, there is
no reason to refuse a winding-up
order, whether provisional or final,
merely because they were not furnished to the employees in one of the
ways indicated in
s 346(4A)
(a)
(ii). Nor should the court
refuse an order merely because it is not satisfied that the
application papers have come to the attention
of all employees. That
is not what the section requires.
20] That conclusion does
not address the converse situation that arises in this case of the
application papers having been served
by the sheriff in one of the
ways indicated by
s 346(4A)
(a)
(ii), but the circumstances
of the case are such that the court is left in doubt whether this
achieved the statutory purpose. Nor
does it resolve the problem
confronting an applicant that is aware that none of the statutory
methods will serve to bring the application
papers to the attention
of the employees, but has no other certain method of doing so. For
example the applicant may be unaware
of whether there are employees
or may not know where they work. The business may have closed and it
may be uncertain whether there
are employees. In today’s modern
world employees often work from home and there are those, such as
sales representatives
or financial advisers, who may have no need to
work in an office and only rarely need to attend at the employer’s
premises.
Then there is the problem of the employer conducting its
business at a number of different premises and having employees at
each.
21]
Once it is accepted that the purpose of the section is, so far as
reasonably feasible to bring the application to the attention
of the
employees
,
the answer to these problems is clear. If the court hearing the
application is not satisfied that the method adopted to furnish
the
application papers to the employees is appropriate to achieve the
statutory purpose, even if it complies with one of the methods
specified in
s 346(4A)
(a)
(ii),
then it should, as in all other cases where courts are not satisfied
with the adequacy of service, require a different and
more effective
method to be adopted.
13
Similarly if the applicant in its affidavit dealing with these
matters indicates that it has been unable to furnish the application
papers to the employees by following the methods indicated in that
section, the court should direct the manner of service to be
followed
in order to achieve the statutory purpose. This approach secures
compliance with the statutory purpose and places the
court in control
of the issue of the adequacy of the service of documents relating to
the institution of court proceedings, which
is consistent with the
proper function of courts. It is also consistent with the provisions
of the Constitution that, in s 173,
vests in the high courts the
inherent power to regulate their own procedures. Control over service
and the requirement that application
papers and other forms of
judicial process are brought to the attention of those potentially
affected by them falls squarely within
this constitutional mandate.
22] In order for the
court to perform this function properly it will be necessary for
applicants, in the founding affidavit or the
affidavit in terms of
s 346(4A)
(b)
,
to deal with whether the respondent
has employees and if so where those employees are working or are
likely to be found. It is only
in the light of this information that
the court hearing the application can decide whether there has been
compliance with the requirements
of the section. If there is reason
to believe that the respondent does not have employees then this and
the grounds for it must
be stated.
23] To
sum up thus far the position is as follows. The requirement that the
application papers be furnished to the persons specified
in s 346(4A)
is peremptory. It is not however peremptory, when furnishing them to
the respondent’s employees, that this
be done in any of the
ways specified in s 346(4A)
(a)
(ii).
If those modes of service are impossible or ineffectual another mode
of service that is reasonably likely to make them accessible
to the
employees will satisfy the requirements of the section. If the
applicant is unable to furnish the application papers to
employees in
one of the methods specified in the section
,
or those methods are ineffective to achieve that purpose and it has
not devised some other effective manner
,
the court should be approached to give directions as to the manner in
which this is to be done.
14
Throughout the emphasis must be on achieving the statutory purpose of
so far as reasonably possible bringing the application to
the
attention of the employees
.
24] That leaves one final
question, namely whether the inability of the applicant, for whatever
reason, to furnish the application
papers to the employees before the
hearing precludes the court from granting any relief. Certainly the
failure to provide a security
certificate in terms of s 346(3)
or the failure to lodge the papers with the Master in terms of
s 346(4) is fatal to
the grant of immediate relief. However,
that is because of the nature and purpose of these requirements. To
permit an application
for winding-up to proceed without security
having been furnished may result in costs being incurred, including
by public officials,
without any means of recouping them. As the
Master is the person who will have to oversee the winding-up there
are obvious reasons
for ascertaining in advance whether the Master is
aware of reasons why a winding-up order should not be granted. The
position in
regard to the notification provisions in s 346(4A)
is different. Their purpose is to ensure that certain specified
persons,
who may have an interest in the winding-up, in order to
protect their own interests, are, so far as reasonably possible,
furnished
with the application papers in order to assess their own
position in the light of the case made by the applicant. They may
well
applaud and support the application as did some of the employees
in
Hendricks
.
25] The fact that the
requirement that these persons be furnished with the application
papers is peremptory means that it is not
permissible for the court
to grant a final winding-up order without that having occurred. Does
that mean that it is equally impermissible
for the court to grant a
provisional winding-up order? In my view it does not. The position
may well be that an overwhelming case
is made on the papers for the
grant of a winding-up order and that any delay will allow assets to
be concealed or disposed of to
the detriment of the general body of
creditors and particularly the employees and SARS, who may have
preferential claims. It would
be absurd to hold that the court was
disabled from granting a provisional order merely because it had not
been feasible, possibly
as a result of the conduct of the employer,
to furnish a copy of the application papers to the employees or a
representative trade
union or even SARS, although the latter is
unlikely to be a practical problem.
26] This case provides a
clear example of the absurdity of holding that the fact that an
applicant has failed to furnish the application
papers to the
employees in an effective manner precludes the court from granting a
provisional winding-up order. Indeed, counsel
for the appellants
accepted that even if the point regarding service of the papers on
the employees had substance it would not
in any way prejudice his
clients if a provisional winding-up order was substituted for the
final order granted by Tsoka J. There
are advantages that may flow
from following this procedure. The court will be able to place the
company in the hands of a provisional
liquidator and the
concursus
creditorum
will commence, so that assets may be preserved and the
company is shielded from litigation. At the same time an appropriate
order
may be granted, returnable on the same day as the rule
nisi
,
directing how the application papers are to be furnished to
employees. One of the obvious ways in which this can be achieved,
where the company is, as here, represented, is by directing it to
perform its statutory obligations in terms of s 197B of the LRA.
After all the company should know who its employees are, where they
are situated and what the best way is in which to inform them
of the
application and make the application papers available to them.
27]
Turning
to the present case
,
the application papers are silent about the existence of employees or
their location
.
The different companies operate in a number of different locations
around South Africa. There is no indication in the sheriff’s
return of service that he made any enquiries as to the existence of
employees of the companies or their place of work. In those
circumstances the court below should not have been satisfied that
there had been compliance with the requirements of s 346(4A)
insofar as the employees were concerned. For that reason it was
inappropriate to grant final winding-up orders in relation to these
companies. Whilst that is permissible in certain cases
15
the well-established rule that, save in clear cases, a provisional
winding-up order should be issued
,
16
should have been followed here and directions given for the employees
to be identified and the application papers to be furnished
to them.
It is appropriate in this case to achieve that by directing the
appellants to fulfil their obligations under the LRA.
(In the light
of the approach they have taken to this litigation I assume that they
have not already done so.) The directions embodied
in the order set
out below will not preclude the respondent from placing evidence
before the court hearing the application on the
issue of furnishing
the application papers to employees of the companies.
28] An order in those
terms will not bring the appellants any significant degree of success
in this appeal. Accordingly it should
not carry with it a favourable
order for costs. By contrast the respondents will largely have
defended their position and preserved
the position where the
companies are still subject to winding-up. They should recover their
costs.
29] The following order
is made:
1. The appeals are upheld
to the extent that the final winding-up orders granted in case 8303
to 8311/2012 and 8381 to 8390/2012
are set aside and replaced by
provisional winding-up orders returnable eight weeks from the date of
this order.
2. The appellants are
directed by no later than five weeks from the date of this order to
furnish to the employees of the company
in each application a copy of
the application papers in that application and within one week
thereafter to deliver an affidavit
setting out details of when and in
what manner they have complied with this order.
3. The respondent’s
costs in this appeal, including the costs of two counsel, are to be
costs in the liquidation of the appellant
companies, unless the
provisional winding-up orders are discharged on the return date, in
which event the appellants are ordered
jointly and severally to pay
the respondent’s costs, including the costs of two counsel.
M J D WALLIS
JUDGE OF APPEAL
Appearances
For the Appellants: I
Miltz SC (with him J J Bitter)
Instructed by: Webber
Wentzel, Johannesburg;
Honey Attorneys,
Bloemfontein
For the Respondent: D
M Fine SC (with him F S Nalane)
Instructed by: Bowman
Gilfillan Inc, Sandton;
Webbers Attorneys,
Bloemfontein.
1
In the heading to this judgment the twenty
companies are compendiously referred to as EB Steam Company (Pty)
Ltd
.
2
The relevant provisions are contained in s 346(4A)(
a
) and s
346A of the Companies Act 61 of 1973 and ss 4(2)(
b
) and
9(4A)(
a
) of the
Insolvency Act 24 of 1936
.
3
Gungudoo v Hannover Reinsurance Group Africa (Pty) Ltd
2012
(6) SA 537
(SCA) para 41.
4
Natal Joint Municipal Pension Fund v Endumeni Municipality
2012
(4) SA 593
(SCA) para 18.
5
RSA Factors Ltd v Hansen
1983 (4) SA 873
(D) and
Court v
Standard Bank of SA Ltd; Court v Bester NO & others
[1995] ZASCA 39
;
1995 (3)
SA 123
(A).
6
See the note on
s 348
in
Henochsberg on the Companies Act
Vol 1, 5 ed (Consulting editor Justice B Galgut) p 740(1) and
740(2), Issue 28. The contrary view by KJ Douglas ‘Backdating
of Windings-Up’
(1987) 104
SALJ
616
at 617-625 does not
appear to have found favour with our courts.
7
The South African Revenue Service.
8
This is to understand ‘when’ in the sense of ‘after
which’, as in ‘When you have completed your
work, you
may play with your friend.’
Concise Oxford English
Dictionary
12 ed (2011) 1643.
9
Corporate Money Managers (Pty) Ltd & others v Panamo
Properties 49 (Pty) Ltd
2013 (1) SA 522
(GNP).
10
Nkisimane & others v Santam Insurance Co Ltd
1978 (2) SA
430
(A) at 433H-434E.
11
Ekurhuleni 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) para
18.
12
Hendricks NO v Cape Kingdom (Pty) Ltd
2010
(5) SA 274
(WCC).
13
There have been cases over the years where, for example, courts have
refused to accept service at a
domicilium
as adequate to
inform the defendant of the action. See
FirstRand Bank Ltd v Gazu
2011 (1) SA 45
(KZP). The position may be different in relation to
service of contractual notices. See
Amcoal Collieries Ltd v
Truter
1990 (1) SA 1
(A) at 5I.
14
In the course of argument the example of a retail business having
several hundred stores throughout South Africa was put to counsel.
Manifestly service in any of the ways set out in the section would
not be effective to bring the application to the attention
of the
employees of such a business and it would be an exercise in
pointless formalism, subversive of the statutory purpose,
to say
that an order could be granted because service had formally been
effected in one of the ways set out in the section.
15
Johnson v Hirotec (Pty) Ltd
[2000] ZASCA 131
;
2000
(4) SA 930
(SCA) para 9.
16
Kalil v Decotex (Pty) Ltd & another
1988 (1) SA 943
(A)
at 976A-B.