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[2023] ZAFSHC 258
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Tuhf Limited v Master of the High Court Bloemfontein and Others (337/2023) [2023] ZAFSHC 258 (4 July 2023)

IN THE HIGH COURT
OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
CASE No.:
337/2023
REPORTABLE: YES/NO
OF
INTEREST TO OTHER JUDGES: YES/NO
CIRCULATE TO MAGISTRATES:
YES/NO
In
the matter between:
TUHF
LIMITED
Applicant
And
THE
MASTER OF THE HIGH COURT
First
Respondent
BLOEMFONTEIN
EMELIA
COURT (PTY) LIMITED (IN LIQUIDATION)
Second
Respondent
MARYNA
SYMES N.O.
Third
Respondent
NOMANDLA
NDABENI N.O.
Fourth
Respondent
JOSHUA
MUTHANYI N.O.
Fifth
Respondent
CORAM:
VAN RHYN, J
HEARD
ON:
25  MAY 2023
DELIVERED
ON:
4
JULY 2023
INTRODUCTION.
[1]
This
is an application in terms of the provisions of section 407(4)(a) of
the Companies Act
[1]
for the
setting aside of the First Respondent’s (the “Master”)
decision/directive
regarding an
objection which was lodged by the applicant
with the Master  in respect of the
Third to Fifth respondents’
(the “Liquidators”)    remuneration as
liquidators in the winding-up of
a company known as Emelia Court
(Pty) Limited (in liquidation), cited as the second respondent.
In the notice of motion the
applicant applies for the following
relief:
1.
Setting aside the refusal and/or failure of the Master to make
a decision regarding
the applicant’s objection to the second
respondent’s First and Final Liquidation, Distribution and
Contribution Account
as prepared by the Third respondent;
2.
An order rectifying and/or correcting the First and Final
Liquidation, Distribution and Contribution
Account, and thus
disallowing the incorrect and increased tariffs of 10% for the sale
of Portion 5 of Erf 1702 Bloemfontein (the
“property”)
and to be rectified to the usual and correct  tariff of 3% for
sale of immovable properties;
3.
That the costs of this application be paid by any party opposing
same.
[2]
The applicant is TUHF Limited, a public company registered as a bank
in terms of the Bank’s
Act
[2]
with its principal place of business at Braamfontein, Gauteng.
The applicant is a major secured and proven creditor of the
second
respondent. Applicant’s claim amounts to R 5 675 335.93.
The second respondent was finally wound-up
on 20 October 2021. On the
liquidation of the second respondent, the third, fourth and fifth
respondents were appointed as joint
liquidators on 1 December 2021.
The application is opposed by the Liquidators. On 19 May 2023,
shortly prior to the hearing of
this matter, the Master filed a
report.
THE FACTUAL BACKGROUND.
[3]
The second respondent was the owner of a block of apartments known as
Emelia Court situated at the property.
Emelia Court, consisting
of 21 units, is the only and/or the largest asset in the estate of
the second respondent and the apartments
were leased to tenants.
However, most of the tenants did not pay any rental in terms of their
lease agreements while other
units were occupied illegally. A
managing agent, Ellenberger & Kahts was appointed by the
applicant pursuant to a property
management agreement concluded
between the applicant and the agent.
[4]
On 23 February 2022 the applicant, in writing, communicated their
dissatisfaction to the selling
of the property at a public auction to
the Liquidators.  The applicant recorded that the decision by
the Liquidators to proceed
to arrange a public auction sale of the
property “
…
has left them with
the impression that their interests, as secured creditor and creditor
with the largest claim in value, are not
receiving the required
protection from the liquidators.
”
However,
the applicant agreed to the sale of the property at public auction on
the express condition that they approve the terms
and conditions of
such an auction.
[5]
Subsequent to the sale of the property, the Liquidators lodged the
First and Final Liquidation
and Distribution account (the “L &
D Account”) with the Master on 29 July 2022.  In the L &
D Account
the Liquidators charged a fee equivalent to 10 % of the
gross proceeds of the sale of the property on the basis that the sale
thereof
constituted a sale as a going concern.  On 12 August
2022 the applicant’s attorneys addressed a letter to the Master

in which the applicant’s objection to the remuneration or fee
of 10% was recorded.  The Master, having received the
objection
and the submissions by the applicant and the Liquidators, refused to
sustain the applicant’s objection on the basis
that “…
the issue of the whether or not the
sale of the immovable property was as a going concern or not is
factual and the Master is not
in a position to make a decision on
this, only the High Court on your application to that effect.”
THE
POINTS
IN LIMINE.
[6]
The Liquidators raised 3 points in
limine.
The
first point
in
limine
pertains
to the fact that the Master indicated that, while not being in a
position to make a decision whether the sale was as a
going concern
or not, the applicant was given until 6 January 2023 to bring an
application to the High Court for a declaratory
order. In effect the
Master has not made a decision, which can be taken on review in terms
of Section 407(4)(a) of the Companies
Act
[3]
(the “Companies Act”).
[7]
Secondly,
in limine,
the applicant failed to adhere to the
provisions of Rule 41A of the Uniform Rules of Court. The Liquidators
served a Form 27 notice
in terms of Rule 41A and indicated that they
are amenable to mediation where after the applicant filed its
replying affidavit without
referring to the Rule 41A notice or
furnishing any answer to the Liquidators’ suggestion that they
are amenable to mediation
of the dispute.
[8]
Thirdly, the Liquidators raised the point
in limine
that the
applicant applies for condonation in its founding affidavit for the
failure of lodging this application within the 14-day
period referred
to in section 407(4)(a) of the Companies Act.  The decision that
the applicant seeks to set aside is contained
in a letter by the
Master dated 8 December 2022.  Due to the fact that the Master’s
letter was received by the applicant
shortly prior the December
recess, the applicant’s application was filed two days late,
namely not on 23 January 2023 but
on 25 January 2023.
[9]
I agree with the submission made by Mr Van der Merwe, counsel for the
applicant, that this does
not constitute an inordinate delay and the
reasons for the delay were fully dealt with in the applicant’s
founding affidavit.
The Liquidators did not take issue with the
application for condonation with the result that condonation for the
late filing of
the applicant’s application in terms of Section
407(4)(a) of the Companies Act was granted at the hearing of the
matter.
In this way the third point
in limine
was
disposed with.
[10]
Arguments regarding the issue whether the failure of the Master to
make a decision in respect of the question
whether the sale of the
property was as a going concern or not, were heard in respect of the
second point
in limine
.
Both Mr Van der Merwe as well as Mr Zietsman SC, counsel on behalf of
the Liquidators, were
ad idem
that
the Master did indeed come to a decision. The Master had indicated
that, as a result of the factual dispute between the applicant
and
the Liquidators, no decision was reached in respect of the question
whether the sale of the property was as a going concern
or not. In
the Masters’ report it was stated as follows: “I must put
it to the court that the issue of the liquidators’
remuneration
is something which the Master has jurisdiction on but the angle which
both the liquidators and the objector wanted
to implore for the
Master to decide whether the sale was a going concern or not is the
one that made it impossible for the Master
to make a decision on.”
[11]
However, in the letter dated 8 December 2022, in
which the Master advised the applicant to bring this application in
terms of section
407 of the Companies Act, the Master stated that:
“Should you fail to do so the Liquidators will be instructed to
finalise
the estate as is.
”
The
language used by the Master clearly conveys that the writer had
already made up his mind and was giving a directive or ruling
that a
fee calculated at 10% will be allowed.
[12]
Mr Zietsman SC, with reference to the decision in
Fourie’s
Poultry Farm v Kwanatal Food Distributors
[4]
and
the full bench case referred to by Page J in this matter, conceded
that it is permissible for the applicant whose objection
to the L &
D Account  involves a dispute of fact not capable of being
resolved by the Master, to resort to the procedure
prescribed in
section 407(4)(a). the applicant is entitled to have the dispute
resolved by the court as well as to have the Master’s
decision
set aside, if the dispute is resolved in the applicant’s
favour. Consequently, the court is not persuaded that the
second
point
in
limine
has
merit.
[13]
Regarding the point
in limine
relating to the failure to
comply with the provisions of Rule 41A, the Liquidators submitted
that not only did the applicant fail
to comply with the provisions of
Rule 41 A, the applicant totally ignored the notice served by the
Liquidators on 27 March 2023
in terms whereof it was indicated that
they are not in opposition to mediation. In this regard Mr Van der
Merwe argued that the
stance of the Liquidators who sought to charge
a fee not permissible in law, had already caused mistrust between the
parties with
the result that the applicant’s failure to resort
to mediation cannot be faulted and cannot be equated to bad faith.
[14]
Rule 41 A mandates that parties to a dispute shall together with the
summons or notice of motion, serve on
each defendant or respondent a
notice indicating whether such plaintiff or applicant agrees to or
opposes referral of the dispute
to mediation. Sub-Rule (2)(c)
provides that the notice shall be substantially in accordance with
Form 27 of the First Schedule
and shall clearly and concisely
indicate the reasons for such party’s belief that the dispute
is or is not capable of being
mediated.  It follows that the
applicant was compelled by Sub-Rule (2)(a) to serve a notice in terms
of Rule 41A and such
notice ought to have been filed prior to summons
being issued or an application being launched.  It is clear from
the requirement
that a party must state its reasons for its belief
that a dispute is or is not capable of being mediated.  The
applicant did
not state the reasons, relied upon during the hearing
of arguments, as required in terms of Rule 41A.
[15]
In the unreported judgment of
Koetsioe
and Others v Minister of Defence and Military Veterans and Others
[5]
it was held as follows:
“
Rule
41A…  not only requires a notice but clearly contemplated
that a party must have considered the issue earnestly
prior to
exercising its election.  This is clear from the requirement
that a party must state its reasons for his belief that
a dispute is
or is not capable of being mediated.”
[16]
I am not convinced that the applicant duly
considered the possibility of mediation earnestly.  In any event
the applicant disregarded
the prescripts of Rule 41A and did not
apply for condonation for its non-compliance. Mr Zietsman SC referred
to case law pertaining
to the non-compliance of the provisions of
Rule 41A and argued that the application should not be removed from
the court roll,
subject to the court’s discretion in this
regard, but moved for an appropriate costs order against the
applicant.
[17]    I
am of the view that the dispute between the parties could have been
resolved through mediation and an agreement
regarding the percentage
fee to be charged by the Liquidators could have been agreed upon,
most likely with the input from the
Master. I am therefore of the
view that non-compliance should attract some kind of sanction. I,
however, agree with the submission
made by Mr Zietsman SC that the
matter be adjudicated upon and not be removed from the roll due to
the applicant’s failure
to comply with Rule 41A, but that the
court show it displeasure with the non-compliance of the Rules of
Court through an appropriate
costs order.
THE ARGUMENTS ON BEHALF
OF THE APPLICANT AND THE LIQUIDATORS IN RESPECT OF THE MERITS
[18]
The Liquidators charged a fee equivalent to 10% of the gross proceeds
of the sale of the property on the
basis that the sale thereof
constituted a sale as a going concern. On 12 August 2022 the
applicant lodged its objection to the
L & D Account and contended
that the sale could not be regarded as a sale as a going concern due
to the fact that, although
the nature of the property is such that it
could generate an income, the property had been occupied by tenants
who failed to pay
their monthly rental and by illegal occupants.
[19]
Ellenberger and Kahts was appointed as the managing agent pursuant to
the applicant exercising its right
to enforce its cession of rental
contained in the registered mortgage bond passed over the property
and thereby requiring the assistance
of Ellenberger & Kahts to
collect rental income. Accordingly, the Property Management Agreement
concluded between the applicant
and Ellenberger & Kahts will not
be transferred with the property to the purchaser.
[20]
From the contents of the statement of account received from
Ellenberger & Kahts for March 2022 it is
evident that only a few
units of the property were occupied but hardly any payments were
received from the tenants. Some of the
tenants were hostile and
intimidated other occupants. The income generated from the property
was wholly insufficient to cover any
costs and liabilities in respect
of the property.
[21]
The applicant decided not to proceed with the eviction of illegal
occupants of the property due to the estate
not having any funds
available to proceed with legal action.  It was therefore
decided to sell the property at a sheriff auction
with all risks and
liabilities in respect of the property to be passed to the purchaser
including the liability to evict any illegal
occupants. Furthermore,
it would then be the liability of the purchaser to settle all the
arrears in respect of “rates and
taxes”.  The
applicant did not instruct the Liquidators to sell the property at a
public auction or as a going concern.
[22]    Mr
Van der Merwe argued that it had not been envisaged that the sale of
the property would lead to the continuation
of the business of the
second respondent. The second respondent would be de-registered and
only the property in its dilapidated
state, mostly occupied by
non-paying tenants and illegal occupants, was sold at the auction.
In clause 2 of the Schedule
to the Auction Conditions of Sale
provision was made for the sale of the property as a going concern.
However, none of the
relevant clauses in clause 2.2 and 2.3.2 were
completed by the purchaser in acknowledgement of the sale as a going
concern.
[23]
The enterprise conducted upon the property as a business was not
completed in the agreement and neither were
any assets recorded.
Clause 2.3.1 specifically records that “
…
the
purchase price includes the price of the business which the Seller
sells to the Purchaser together with the property as a going
concern
as contemplated by the Value Added Tax Act, Act 89 of 1991”. No
VAT numbers were included in the agreement of sale.
[24]    On
behalf of the Liquidators it was argued that a liquidator is usually
entitled to 10% remuneration of the
sale of a going concern and over
the years such a fee was allowed by the Master. Taking cognisance of
the definition of “movable
property” in section 1 of the
Insolvency Act, being: “movable property means every kind of
property and every right
or interest which is not immovable
property”, a going concern therefore falls under the definition
of movable property.
[25]
The second respondent was not registered for VAT and neither was the
purchaser of the property.  One
way in which to prove that a
property was sold as a going concern is if both the seller and the
buyer are registered as vendors
in terms of the VAT Act. Mr Zietsman
SC argued that the property is a residential property with the result
that the usual transfer
duties are payable to the South African
Revenue Services and VAT is not applicable. Even though the applicant
appointed Ellenberger
and Kahts as the managing agent to collect the
rental income, the Liquidators, subsequent to the liquidation of the
second respondent
abided by the contract between the applicant and
Ellenberger and Kahts and requested Ellenberger and Kahts to proceed
with the
collection of the rental and to take the necessary steps for
the upkeep of the property.
[26]
Although, the building consisted of 21 apartments, there were only
approximately 6 lease agreements with
tenants. The majority of the
apartments were not occupied, which caused illegal occupants to enter
and occupy several of the unoccupied
apartments.  The liquidated
estate did not have any cash flow whatsoever.  The upkeep of the
property was left in abeyance
due to the dire financial situation and
because of the various illegal occupants, the remaining valid
occupiers refused to pay
their rent except for one tenant.  As a
result of the financial constraints the municipal costs for water,
electricity and
property rates, which were in arrears in the amount
of approximately R180 000.00, were increasing each month.
[27]
Prior to the sale of the property the Liquidators received two
written offers for the property as a going
concern.  Before the
second meeting of creditors the Liquidators applied to the Master to
realise the property as a going
concern. The motivation was to shift
the burden upon the purchaser to decide whether to keep the rental
agreements in place and
to proceed with the eviction of the illegal
occupants.  On behalf of the Liquidators it was contended that
the Master took
into consideration all the various factors and
exercised his discretion in favour of allowing a 10% remuneration for
the sale of
the property.
THE STATUTORY FRAMEWORK
[28]
In terms of the provisions of section 384 of the Companies Act the
liquidator of a company is entitled to
reasonable remuneration for
his services.  The liquidator’s remuneration is to be
taxed by the Master in accordance
with the prescribed tariff of
remuneration.  The Master may reduce or increase such a
remuneration if, in his opinion, there
is good cause for doing so,
and may disallow such  remuneration either wholly or in part on
account of any failure or delay
by the liquidator in the discharge of
his duties.
[6]
[29]
The prescribed tariff of remuneration is provided for in Annexure
CM104 to Regulation 24 of the Regulations
for the Winding-Up and
Judicial Management of Companies.  Annexure CM104 stipulates
that liquidators are entitled to the same
tariff of remuneration as a
trustee of an insolvent estate in terms of section 63(1) of the
Insolvency Act
[7]
i.e. Tariff B
as contained in the Second Schedule to the Insolvency Act.  Tariff
B, inter
alia,
provides
as follows:
29.1    On
the gross proceeds of movable property (other than shares or similar
securities) sold, or on the gross
amount collected under promissory
notes or book debts, or as rent, interest or other income
………
10 %;
29.2    On
the gross proceeds of immovable property, shares or similar security
sold, life insurance policies and
mortgage bonds recovered and the
balance recovered in respect of the
immovable property sold prior to
sequestration ……….
3%.
[30]
The Liquidators submitted the First and Final L & D Account with
the Master claiming remuneration at
10 % of the proceeds of the sale
of the property on the basis that they regarded it as part of the
second respondent’s business
which was sold as a going concern
“as it was a tenanted property”.  The proceeds of
the sale amounted to R 5 650 000.00
and the Liquidators
fees were calculated at 10% of the aforesaid amount, being R
565 000.00.  The applicant was awarded
a dividend in the
amount of R 4 251 866.95. The applicant lodged its
objection with the Master in respect of the amount
claimed by the
Liquidators on the basis that the proceeds fall under the second
item, i.e.  gross proceeds of immovable property.
[31]    On
request of the Master, the Liquidators furnished their comments to
the applicant’s objection.
The applicant in reply, stated
that the submissions made by the Liquidators to the Master are, for
the most part, incorrectly recorded.
The Master, having received the
objection and the further submissions by the applicant and the
Liquidators, refused to sustain
the applicant’s objection on
the basis that the issue of whether or not the sale of the immovable
property was as a going
concern or not, is a factual issue.
[32]
In support of the applicant’s argument that the sale of the
property was not as a going concern, Mr
Van der Merwe relied on the
decision in
Griffiths
v Foley’s Trustee.
[8]
The court held that in order to arrive at the amount of the trustees
commission and charges, it was necessary to make an
assessment of how
much of the purchase price of a hotel, which was sold by public
auction during the winding- up of an insolvent
estate, was for the
immovable property and how much was for the movable contents of the
hotel.
[33]
In the matter at hand, the Liquidators contented that, taking
cognisance of the fact that no cash was available
in the estate and
due to the applicant’s stance not to finance evictions of the
illegal occupants, the upkeep of the property
was left in abeyance
with the result that the Liquidators did their level best under the
circumstances to transfer the existing
lease agreements to the
purchaser to continue with the business of the second respondent.
The remuneration of the liquidator
is in the Masters discretion and
covers all the services of whatever nature rendered by the
liquidator. The Master has a wide discretion
in taxing a liquidator’s
remuneration and may for good cause reduce or increase the scales of
remuneration by considering
aspects such as the complexity of the
estate in question, the amount of work done and the time spent in
discharge the liquidator’s
duties.
[9]
THE DISPUTE
[34]
The matter came before me as a review of the decision of the Master
in terms of the provisions of section
407(4)(a) of the Companies Act.
In reply the applicant, under the prayer for further and/or
alternative relief, moved for an order
that the court base its order
on the provisions of section 6 of the Promotion of Administrative
Justice Act
[10]
,
alternatively, that the court grant declaratory relief in as far as
this is possible under section 407 of the Companies Act.
[35]
Notwithstanding the point
in
limine
raised
by the Liquidators that the applicant has not made out a case for the
review of the decision by the Master under section
407(4)(a) of the
Companies Act, Mr Zietsman SC, during argument, conceded that the
court can entertain this matter as a review
in terms of section 407
“as a
sui
generis
type
of the application”.
[36]
As such this court has review powers as well as appeal powers in
hearing the matter.  If the Master
erred or misdirected himself
in any material respect, the court may determine the matter
de
novo.
[11]
The
court must therefore consider the factual material placed before the
Master together with his report.
[37]
Section 407 provides that any person having an interest in the
company being wound-up may, at any time before
the confirmation of an
account, lodge with the Master an objection to such an account
stating the reasons for the objection
[12]
.
If the Master is of the opinion that the objection lodged ought to be
sustained, the Master shall direct the liquidator
to amend the
account or give such other directions as he may think fit.  If
the Master is of the opinion that any improper
charge has been made
against the assets of a company or that the account is in any respect
incorrect and should be amended, he
may, whether or not any objection
to the account has been lodged, direct the liquidator to amend the
account.  The Master
may give such other directions as he may
think fit.
[38]
“Going concern” is an accounting term for a company that
has the resources needed to continue
operating indefinitely until it
provides evidence to the contrary.  Conversely, this means the
entity will not be forced to
halt operations and liquidate its
assets.  An entity is assumed to be a going concern in the
absence of significant information
to the contrary.  An example
of such contrary information is an entity’s inability to meet
its obligations as they come
due without substantial asset sales, or
in this case, substantial monthly rental   income. In The
New Shorter Oxford
English Dictionary
[13]
a going concern is described as: “a business in operation and
thriving”.
[39]
The Master is evidently of the view that the property was sold at the
auction as a going concern and therefore
viewed the fee charged by
the Liquidators calculated at 10% of the purchase price for the
property as appropriate. The Master’s
report merely stated his
reasons for his findings as:
“
5.
After all these it appeared that this is a factual dispute and as the
Master I cannot make a decision on it.  The
liquidators were
then put on terms to advice
(sic)
the
Master whether the sale was a going concern or not and not put it on
the Master to decide for them.  The liquidators then
responded
in their e-mail dated 01/12/2022 that indeed the sale was a going
concern.
6.  On 8 December
2022 (Annexure M1) I made a decision in terms of section 407(4) of
the Companies Act 61 of 1973 where I advised
the objector that I am
not in a position to make a decision on this seeing that the
objection raised is factual in nature and that
only the High Court on
application by any of them may make a decision.
7.  I must put it to
the Court that the issue of the Liquidators remuneration is something
which the Master has jurisdiction
on but the angle with which both
the Liquidators and the objector wanted to implore for the Master to
decide whether the sale was
a going (sic) or not is the one that made
it impossible for the Master to make a decision on.”
[40]
These reasons provided by the Master are unhelpful and does not
provide a basis for finding that the Liquidators
would be entitled to
a fee equivalent to 10% in respect of the property sold.  I am
therefore of the view that the absence
of ascertainable reasons for
the decision by the Master points to an arbitrary decision. No
adequate reasons to justify the Master’s
conclusion were
provided.  As such the Master’s decision to ultimately
agree to a fee of 10% must be set aside as one
where he erred or
misdirected himself.
[41]    Mr
Van der Merwe argued that section 384(1) of the Companies Act does
not provide a wide discretion to the
Master in terms of which the
Master is entitled to refuse to ‘tax’ in accordance with
the tariff.  It is incumbent
upon the Master to perform a
taxation which includes the categorisation of assets under the
various tariff items in order to apply
the percentile based tariff to
each of the items thus identified.  Only thereafter, does the
Master acquire a wide discretion
as contemplated in section 384(2) of
the Companies Act.
[42]
In his submission, Mr Van der Merwe relied upon the following dicta
in
Nel
and Another NNO v The Master (ABSA Bank Ltd Intervening) and Others
Intervening:
[14]
“…
the
Master, as a statutory functionary, is not free to choose whether or
not to tax the liquidator’s remuneration –
the Master
must tax in accordance with the tariff (s 384(1)), but having done
so, may reduce or increase the amount arrived at
by applying the
tariff if, in his or her discretion, there is ‘good cause’
to do so.  The dominant provision in
s 384(1) remains that the
remuneration to which a liquidator is entitled,
is
remuneration for work or services rendered
,
not a set commission, and that it must be reasonable.  The
determination of ‘reasonable remuneration’ by the
Master
involves, in the first instance, ‘taxation’ in accordance
with the tariff, which includes the categorisation
of assets under
the various tariff items in order to apply the (percentile- based)
tariff to each of the items thus identified.
The tariff serves
as a point of departure for the determination of the appropriate
fee.  However, once taxation is complete,
the Master has a
flexible discretion to increase or decrease the amount of
remuneration arrived at by the previous application
of the tariff-
the jurisdictional fact for the exercise of this discretion is the
forming by the Master of the opinion that ‘good
cause’
exists for doing so.  On this approach, there is no difference
in meaning between the phrase ‘getakseer
moet word’ and
the corresponding phrase’ to be taxed”
[15]
[43]
On behalf of the applicant it was contended that the issue to be
determined is whether the tariff of 10%
applied by the Liquidators in
the L & D Account in respect of their remuneration in relation to
the sale of the property is
correct or whether the Liquidators are
only entitled to a fee of 3%. I do not agree with this submission.
The argument entails
that the Master is obliged to tax in accordance
with the tariff (section 384(1)) and thus, based on the facts in this
matter either
allow a fee of 3% or a fee of 10%. In
Nel
v The Master
the
Supreme Court of Appeal held that although the Master
must
tax in
accordance with the prescribed tariff, after having done so, the
Master may reduce or increase the amount arrived at if,
in his or her
discretion, there is “good cause to do so.”
[16]
[44]
The court held that the Master has a duty to satisfy himself or
herself as to the reasonableness of the remuneration
arrived at by
the application of the tariff.  The court further held that the
discretion vested in the Master in terms of
section 384(2) is a
wide one. Regarding the Master’s discretion the court in the
Nel
matter held as follows:
“
This
means that where, in the Master’s view, there is ‘good
cause’ for departing from the tariff, the Master has
the power
to do so.  The concept of ‘good cause’ is very wide
and there is nothing in s384 of the Act which indicates
that it
should be interpreted so as to exclude
any
factor
which may be relevant in determining what constitutes reasonable
remuneration for a liquidator’s services in the circumstances

of each case.  Obviously, what factors
are
relevant
will vary from case to case, but may certainly include aspects such
as the complexity of the estate in question, the degree
of difficulty
encountered by the liquidator in the administration thereof, the
amount of work done by the liquidator and the time
spent by him or
her in the discharge of the duties involved.  If, in the
winding-up of a company, particular difficulties
are experienced by
the liquidator because of the nature of the assets or some other
similar feature connected with the winding
up, this would undoubtedly
constitute ‘good cause’ entitling the Master to
increase
the
tariff of remuneration.  On the other hand, in a situation
where, having regard to all the relevant factors, the Master
forms
view that the remuneration calculated according to the tariff is
excessive in relation to the work done or the responsibility

involved, this would likewise entitle the Master – and the
Master will be obliged- to depart from the tariff figures by
decreasing
the
tariff of remuneration to an amount which would be reasonable in the
circumstances.
[17]
(foot notes
omitted)
[45]
The view of the Liquidators is that the monies recovered from the
sale of the property as a going concern
constitute “other
income” collected in terms of Item 1 of Tariff B,
prima
facie
entitling the liquidators to 10% of the gross amount so
collected. Tariff B is obviously intended to be exhaustive, and the
words
“or other income” are wide enough to cover a case
where a business is sold in the winding-up of a company as a going

concern. The applicant considers the proceeds from the sale of the
property to fall within the ambit of Item 2 Tariff B i.e.”

gross proceeds from immovable property”.
[46]
Taking cognizance of the facts relating to the property sold at the
auction, it is evident that only 6 of
the 21 apartments were occupied
by tenants with lease agreements. However, only 1 of the tenants paid
the monthly rentals in terms
of the lease agreement.  It is
common cause that second respondent suffered financial constraints
due to dwindling income
with an exponential increase of expenditure
as a result of the influx of illegal occupants. The amount due in
respect of municipal
accounts amounted to approximately R180 000.00.
This means that the Mangaung Metropolitan Municipality was certainly

entitled to disconnect the delivery of services, including water and
electricity to the property. I am not convinced that the property

sold at the auction falls within the description of “a business
in operation and thriving”.
[47]    I
agree with the submission made by Mr Van der Merwe that the property
was not sold as a going concern. The
reason is firstly that the
property was evidently not advertised to be sold as a going concern.
In any event, a prospective
purchaser of the property as a going
concern, would have been entitled to rescind the agreement of sale on
the grounds of misrepresentation,
if the liquidators or agent for
that matter, falsely represented to the purchaser that the property
was generating an income and
consisted of goodwill and a number of
lease agreements which generated an income to sustain the business as
a going concern.
[48]
It is evident from the contents of the conditions of sale which
ultimately became the agreement of sale that
no agreement was reached
that the property was sold as a going concern. In
Engelbrecht
NO and Others v The Master of the High Court, Pretoria
[18]
the facts were that a company known as Pamodozi Orkney, which
operated a gold mine in Orkney with a workforce of approximately
6000
employees was wound-up.  The mine, inclusive of all its assets
used in connection with the mining operations, was placed
under care
and maintenance which resulted in the mine being capable of operating
fully.
[49]
The liquidators were of the opinion that the continued operation of
the mining activities would enable them
to sell the business as a
going concern.  The liquidators concluded a sale agreement for a
considerable purchase price which
included the immovable property as
well as a description of the “sale assets” that were sold
and defined in the agreement.
The “sale assets”,
inter
alia,
included the following: “… the equipment and
infrastructure, the fixed assets, the intellectual property, the new
order mining rights, the shafts, the surface assets, the surface
right permits, the stock and all information and technical data

relating to the Orkney gold mine area, including geology reports,
drill cores and the like…”
[50]
Janse van Niewenhuizen J in the
Engelbrecht NO
matter held
that even if some of the assets do not attach to the immovable
property, it is clear that the assets sold consisted
of both
immovable and movable property.  In the matter at hand the sale
agreement refers only to immovable property and nothing
else.
If the Liquidators’ version is correct, the existing lease
agreements and the goodwill of the second respondent
would have
formed part of the assets which ought to have been included in the
sale agreement.  This was not done.
[51]    It
follows that the monies in question cannot be described as “other
income” in terms of Item
1 in Tariff B and the moneys so
recovered from the sale of the immovable property must then be
considered to be income in respect
of which the Liquidators is
entitled to 3% in terms of the tariff subject to the provisions of
the proviso that the Master may
on good cause reduce or increase the
Liquidators remuneration.  In the premises, the applicant made
out a case for the setting
aside of the directive/decision that the
Liquidators’ fee is to be calculated on the basis that the sale
of the property
was a going concern.
[52]
I, however also agree with the submission made by Mr Zietsman SC that
the court would normally not interfere
with the discretion of the
Master regarding the remuneration of a liquidator.
[19]
I am therefore of the view that the ultimate decision regarding the
‘reasonable remuneration’ for the services of the

Liquidators in the winding-up of the second respondent rests with the
Master. Similar to the decision made by Janse Van Niewenhuizen
J in
the
Engelbrecht
N.O
matter,
I am inclined to revert the matter back to the Master to determine
the reasonable remuneration of the Liquidators in accordance
with the
applicable guidelines.
COSTS
[53]
The general rule in awarding costs is that the court has a discretion
to be exercised judicially upon a consideration
of all the facts in
the particular case.  It must also strive to achieve fairness to
both parties. The relevant circumstances
and the conduct of the
parties may also play a role.
[20]
In principle the successful party is entitled to his/her costs and
the court should not depart from this established principle,
except
where there are good grounds to deviate, or unless exceptional
circumstances exist.
[21]
[54]
The applicant was substantially successful in the relief sought.
However, as a result of the
applicant’s disregard of the
provisions of Rule 41A and to respond to the notice served by the
Liquidators in this regard,
I am of the view that the applicant is
not entitled to the usual cost order. This is an appropriate case to
order the parties to
pay their own costs.  In my view such order
is fair to both parties.
ORDER
:
[55]
In
the result the following order is made:
1.   The
refusal and/or failure of the First Respondent to make a decision
regarding the Applicant’s objection to
the Second Respondent’s
First and Final Liquidation, distribution and contribution Account as
prepared by the Third Respondent
is set aside.
2.   The matter
is referred back to the First Respondent in order to determine the
reasonable remuneration of the Third,
Fourth and Fifth Respondents in
terms of the applicable legislation and having regard to the finding
by this court that the sale
of the property of the Second Respondent,
Portion 5 of Erf 1702 Bloemfontein, only consisted of the immovable
property.
3.    Each
party shall pay his/her own costs in respect of this application.
VAN
RHYN. J
On
behalf of the Applicant:
ADV.
R VAN DER MERWE
I
nstructed
by:
WEBBERS
ATTORNEYS
BLOEMFONTEIN
On
behalf of the Respondent:
ADV.
P ZIETSMAN SC
Instructed
by:
VAN
DER BERG VAN VUUREN ATTORNEYS
BLOEMFONTEIN
[1]
Act
61 of 1973.
[2]
Act
No 94 of 1990 (as amended).
[3]
Act
61 of 1973.
[4]
1991
(4) SA 514 (NPD).
[5]
(12096/2021)
[2021] ZAGPPHC 203 (6 April 2021) para 6.
[6]
Section
384(2) of the Companies Act.
[7]
Act
24 of 1936.
[8]
1910
17 GWL 270.
[9]
[9]
Collie
NO v The Master
1972 (2) SA 7
(T);
1972 (3) SA 623
(A).
[10]
3 of
2000.
[11]
Johannesburg
Consolidated Investment Co v Johannesburg Town Council
1903 TS 111
;
Unreported
Judgment:
Nedbank Limited v Master of the High Court, Cape Town and Others
(11689/2018) [2019]
ZAWCHC
180 (12 December 2019) at para14.
[12]
Section
407(1).
[13]
Oxford
University Press, Fourth Ed 1993, p 1113.
[14]
2005
(1) SA 276 (SCA).
[15]
Nel v
The Master (supra) at [19]
[16]
Nel v
The Master (supra) at [19].
[17]
Nel v
The Master (supra) at [20].
[18]
(55163/2016)
[2017] ZAGPPHC 5 (18 January 2017).
[19]
Graaff
Reinet Board of Executors Ltd v Fourie NO 1959 (4) SA 517 (O).
[20]
Erasmus
loc cit at D5-6 and authorities quoted.
[21]
Ibid
D5-7