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[2023] ZAKZPHC 144
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Brown N.O and Another v MEC responsible for Transport Community Safety and Liason KwaZulu-Natal (2383/23P) [2023] ZAKZPHC 144 (27 November 2023)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
Case
Number: 2383/23P
In
the matter between:
JOELENE
BROWN N. O
FIRST APPLICANT
KURK
ROBERT KNOOP N. O
SECOND APPLICANT
In
their capacity as Joint Liquidators of
Ithuba
Agriculture (Pty) Ltd (in Liquidation)
and
THE
MEC RESPONSIBLE FOR TRANSPORT
RESPONDENT
COMMUNITY
SAFETY AND LIASON
KWAZULU-NATAL
Heard
on: 10 November 2023
Delivered:
27 November 2023
ORDER
1.
It is declared that the debt owing to the respondent by Ithuba
Agriculture (Pty)
Ltd as at 19 April 2021, forms part of a
concursus
creditorum
and is not claimable from Ithuba Agriculture (Pty) Ltd
(in Liquidation) unless the respondent follows the procedures set out
in
the Companies Act 61 of 1973 read with item 9 of schedule 5 of the
Companies Act 71 of 2008
and the Insolvency Act 24 of 1936 for
bringing such claim.
2.
The respondent is directed to accept payment by the applicants from
Ithuba Agriculture
(Pty) Ltd (in Liquidation)’s estate of all
licence fees accruing in respect of Ithuba’s vehicles after 19
April 2021,
which payment is tendered, and to issue licences in
respect of such vehicles.
3.
It is further recorded that the applicants intend claiming a refund
from the
respondent of any penalties paid under the preceding
paragraph, where any penalties imposed due to non-payment or failure
to renew
the licences are solely due the respondent’s refusal
to renew the licences due to non-payment of debts owed as at 19 April
2021, and nothing in the previous orders should be read as precluding
the applicants from bringing such claim.
4.
The respondent is ordered to pay the costs of the application.
JUDGMENT
Mlotshwa
AJ
Introduction
[1]
The applicant sought a declaratory order in the following terms
that:
[1]
‘
1.
It is declared that the debt owing to the respondent by Ithuba
Agriculture (Pty) Ltd
as at 19 April 2021, forms part of a
concursus
creditorum
and is not claimable from Ithuba Agriculture (Pty) Ltd
(in Liquidation) unless the respondent follows the procedures set out
in
the Companies Act 1973 read with schedule 5 item 9 of the
Companies Act 2008
and the
Insolvency Act 1936
for bringing such
claim.
2.
The respondent is directed to accept payment by the applicants from
Ithuba Agriculture
(Pty) Ltd (in Liquidation)’s estate of all
licence fees accruing in respect of Ithuba’s vehicles after 19
April 2021,
which payment is tendered, and to issue licences in
respect of such vehicles.
3.
It is further recorded that the applicants intend claiming a refund
from the
respondent of any penalties paid under the preceding
paragraph, where any penalties imposed due to non-payment or failure
to renew
the licences due to non-payment of debts owed as 19 April
2021, and nothing in the previous orders should be read as precluding
the applicants from bringing such claim.
4.
The respondent is ordered to pay the costs of the application.
5.
Further and / or alternative relief.’
[2]
The respondent opposed the application and launched a
counter-application. In the
counter-application the respondent sought
a declaratory order that:
[2]
‘
1.
It is declared that Regulation 25 (7) of the Road Traffic Regulations
2000 (GNR) 225
of 17 March 2000 made in terms of
section 75
of the
National Road Traffic Act 93 of 1996
, has the effect of making the
respondent a preferent creditor in respect of arrear motor licencing
fees and penalties, and that
the registering authority of the
respondent is entitled to refuse to issue a licence disc in respect
of a motor vehicle if all
arrears and penalties are not paid in full,
irrespective of the debtor being an insolvent or in liquidation.
2.
The applicant is ordered to pay the costs of the counter-application.
3.
Further and/ or alternative relief.’
[3]
The parties in this judgment would be referred to as applicants and
respondent irrespective
that judgment dealt with main and
counter-applications.
The
facts
[4]
The material facts of this application are largely common cause and
are as follows:
[5]
On 19 April 2021, a special resolution was passed placing Ithuba
Agriculture (Pty)
Ltd (Ithuba) in liquidation.
[3]
[6]
Pursuant to notice given in the
Government
Gazette
,
the Master called a first meeting of creditors at 10h00 on 11 June
2021.
[4]
[7]
On 14 June 2021, the two applicants (applicants) were appointed by
the Master of the
High Court, KwaZulu-Natal as joint liquidators of
Ithuba,
[5]
[8]
On 16 August 2021, the applicants obtained a Court order in terms of
section 386(5)
of the Companies Act 1973 extending their powers and
authorising them to bring any action or other legal proceeding of a
civil
nature and to engage the services of attorneys and counsel in
the name of Ithuba.
[9]
On 22 April 2022, a second meeting of creditors was called with
notice being given
in the
Government
Gazette
.
[6]
[10]
At the time Ithuba was placed in liquidation on 19 April 2021, it was
already in arrears with
paying licence fees and penalties for certain
vehicles.
[7]
[11]
The Amangcolosi Community Trust are owners of the land on which
Ithuba is farming
[8]
and have
brought an application in this court that is still pending under case
number 10168/23P to judicially review and set aside
the recognition
of the winding up resolution
[9]
by the Master.
[12]
The applicants contended that they cannot lawfully pay any arrears
owing as at 19 April 2021
save in the form of a distribution to the
respondent on proof of a claim in the ordinary manner by the
respondent.
[13]
It was submitted by Mr Christison, on behalf of the applicants, that:
(a)
The applicants as liquidators are facing a difficult situation
whether to comply with Companies
Act 61 of 1973 (1973 Companies Act)
or regulation 25(7) of the National Road Traffic Regulations.
[10]
The respondent has claimed that the National Road Traffic Regulations
accords the respondent preferential status as a creditor.
(b)
The arrear licence fees and penalties are to be regarded as a debt.
(c)
As a consequence of Ithuba being placed into liquidation, as
explained in
Muller
NO v Community Medical Aid Scheme
,
[11]
the effect of section 361 and 391 is to statutorily encapsulate the
establishment of a
concursus
creditorum
in
relation to a company placed in liquidation.
(d)
Innes J explained in
Walker
v Syfret NO
[12]
that the sequestration order crystallises the insolvent’s
position, the hand of the law is laid upon the estate, and at once
the rights of the general body of creditors have to be taken into
consideration. No transaction can thereafter be entered into
with
regard to estate matters by a single creditor to the prejudice of the
general body. The claim of each creditor must be dealt
with as it
existed at the issue of the order.
(e)
Section 366(1) of the Companies Act states that:
‘
In
the winding-up of a company by the Court and by a creditors'
voluntary winding-up-
(a
)
the claims against the company shall be proved at a meeting of
creditors
mutatis mutandis
in
accordance with the provisions relating to the proof of claims
against an insolvent estate under the law relating to insolvency;
(b)
a secured creditor shall be under the
same obligation to set a value upon his security as if he were
proving his claim against an
insolvent estate under the law relating
to insolvency, and the value of his vote shall be determined in the
same manner as is prescribed
under that law;
(c)
a secured creditor and the liquidator
shall, where the company is unable to pay its debts, have the same
right respectively to take
over the security as a secured creditor
and a trustee would have under the law relating to insolvency
.’
[14]
It was submitted by Mr Snyman SC, on behalf of the respondent that:
(a)
As the applicants are asking for a declaratory order that the
licensing fees for motor vehicles
owned by Ithuba form part of a
concursus creditorum
, is not claimable from Ithuba unless the
respondent follows the procedure set out in the 1973 Companies Act,
read with item
9 of schedule 5 of the Companies Act 71 of 2008 (2008
Companies Act) and
the
Insolvency Act 24 of 1936
, the respondent on
the other hand argues that it is a preferent creditor, and does not
form part of a
concursus creditorum
and is therefore asking
for a declaratory order in this regard in the counter-application.
(b)
Regulation 25(7) of the National Road Traffic Regulations states
that:
‘
The
registering authority may refuse to issue a licence disc in respect
of a motor vehicle—
(
a)
. . .
(
b
)
the owner of which owes any penalties or fees in terms of the
provisions of this Act;
(
b
) . . .
(
c
)
the owner of which is also the owner of another motor vehicle the
licence of which has expired
more than 23 days ago’.
(c)
The Amangcolosi Community Trust are the owners of the land on which
Ithuba is farming,
and they have brought an application under case
number 10168/23P to review and set aside the winding up resolution by
the Master
and to restore Ithuba to its pre-liquidation status.
[15]
There are significant factors that deserve consideration and appear
to be militating against
the respondent in the main application and
applicant in the counter-application.
(a)
Though there is application of the Amangcolosi Community Trust, under
case 10168/23P to
review and set aside the recognition of special
resolution by the Master, this application cannot be put on hold
pending the determination
of the judicial review on the basis that
the applicants are currently facing a dilemma on whether to
comply with regulation
25(7) by paying the fees and penalties due
from Ithuba before liquidation in preference to other creditors or
comply with sections
342 and 391 of the 1973
Companies Act and
sections 95
to
104
of the
Insolvency Act.
(b
)
Annexure ‘KRK-C’ shows that a special resolution was
passed on 19 April 2021 which
effectively placed Ithuba in
liquidation and judicial review was only brought to court this year
(ie 2023), which raises concerns
about the delay in bringing the
review.
(c)
The applicants served a letter,
annexure ‘KRK-F’, on the respondent on 20 October
2022
stating, amongst others, as follows:
‘
7.
The claim for arrear licence fees i.e. up to date of liquidation (19
April 2021) constitutes a claim against the insolvent estate
of
Ithuba and, as a matter of law, payment may only be made once a claim
has been submitted to a meeting of creditors and in accordance
with
the
concursus
creditorum
.
8.
What this means is that the arrear licence fees cannot be claimed
from Ithuba as a precondition for the renewal of the existing
licences.
9.
Our clients tender payment of arrear licence fees from date of
liquidation and we accordingly request that you please renew the
licences for all vehicles against payment of the arrear licence fees
from date of liquidation together with the current licence
fees.’
(d)
The respondent unequivocally conceded that the claim for arrear
licence fees up to the date
of liquidation (19 April 2021), were
never proved at either the first or the second meeting of creditors
as this failure had no
effect on the fact that the applicants have to
pay the arrear licencing fees before new licences discs can be
issued.
[13]
[16]
The respondent did not appear as having properly applied its mind to
serious legal issues raised
by the applicants in the letter annexure
“KRK-F” nor did they dispute the correctness of the legal
position referred
to in the letter.
[17]
The frustration of the applicants in relation to the dilemma is
clearly captured in annexure
“KRK-F” with paragraph 10
stating:
‘
Should
you refuse to issue licences for the vehicles against payment of the
amounts tendered, our clients will have no option but
to approach the
High Court for an urgent order compelling you to issue the licences
which we trust will not be necessary.’
[18]
The applicants did not have any other satisfactory remedy available
after the letter annexure
“KRK-F” had been served on the
respondent without favourable consideration.
[19]
The applicants established that the claim for arrear licence
fees up to the date of liquidation
(19 April 2021) constitutes a
claim against the insolvent estate of Ithuba and that as a matter of
law, payment may only be made
once a claim has been submitted to a
meeting of creditors and in accordance with the
concursus
creditorum.
[20]
The Constitutional Court held in
Public
Protector v South African Reserve Bank
[14]
that:
‘
The
legal principles that guide the grant of litigation costs have been
refined over the years. Some costs are strictly
outcome-specific.
Others depend on the character of the case being
prosecuted or the specific issues to be determined’.
[21]
As a consequence thereof, exercise of discretion dictates in this
application that costs must
follow the result of the application.
[22]
Accordingly, the main application must succeed and the
counter-application must fail.
Order
[21]
In the result, I make the following order:
1.
It is declared that the debt owing to the respondent by Ithuba
Agriculture (Pty)
Ltd as at 19 April 2021, forms part of a
concursus
creditorum
and is not claimable from Ithuba Agriculture (Pty) ltd
(in Liquidation) unless the respondent follows the procedures set out
in
the Companies Act 61 of 1973 read with item 9 of schedule 5 of the
Companies Act 71 of 2008
and the
Insolvency Act 24 of 1936
for
bringing such claim.
2.
The respondent is directed to accept payment by the applicants from
Ithuba Agriculture
(Pty) Ltd (in Liquidation)’s estate of all
licence fees accruing in respect of Ithuba’s vehicles after 19
April 2021,
which payment is tendered, and to issue licences in
respect of such vehicles.
3.
It is further recorded that the applicants intend claiming a refund
from the
respondent of any penalties paid under the preceding
paragraph, where any penalties imposed due to non-payment or failure
to renew
the licences are solely due the respondent’s refusal
to renew the licences due to non-payment of debts owed as at 19 April
2021, and nothing in the previous orders should be read as precluding
the applicants from bringing such claim.
4.
The respondent is ordered to pay the costs of the application.
MLOTSHWA
AJ
APPEARANCES
For
the Applicants:
AL
Christison
Instructed
by:
Grant
& Swanepoel Attorneys
Suite
1, The Mews, Redland Estate
George
MacFarlane Lane
Pietermaritzburg
Ref:
Mr R Mahabeer/tm/03M023721
For
the Respondent:
CJ
Snyman SC / MSP Mdunge
Instructed
by:
Mbili
Attorneys
The
Mageza House
110
Oribi Road
Pietermaritzburg
Ref:
BAM/ba/K042/23
[1]
Notice of Motion paras 1 to 5.
[2]
Notice of Motion-counter application paras 1 to 3.
[3]
Annexure “KRK-C” form CM26.
[4]
‘
Form/Vorm
J29: First meetings of creditors, contributories, members or
debenture holders of sequestrated estates, companies being
wound-up
or placed under provisional judicial management’,
GG
44637 of 28 May 2021.
[5]
Annexure “KRK-A” certificate of appointment.
[6]
‘
Form/Vorm
1: Appointment of trustees and liquidators and proof of claims in
sequestrated estates or companies being wound up’,
GG
46052 of 18 March 2022.
[7]
Annexure ‘KRK-E’ a schedule of Ithuba vehicles with
amounts the respondent considered to be due
[8]
Annexure ‘KRK-B’ agreement of lease between Amangcolosi
Community Trust and Ithuba Agriculture (Pty) Ltd.
[9]
Annexure ‘KRK-A’ certificate of appointment of
liquidators by special resolution registered on 19 April 2021.
[10]
National
Road Traffic Regulations, 2000 GN R225 in
GG
20963 of 17 March 2000.
[11]
Muller
& another NNO v Community Medical Aid Scheme
[2010] ZAGPJHC 31 paras 4 and 5.
[12]
Walker
v Syfret NO
1911 AD 141
at 166.
[13]
Para 31 of answering affidavit.
[14]
Public Protector v South African Reserve Bank (CCT107/18)
[2019]
ZACC 29
, (9) BCLR 1113 (CC),
2019 (6) SA 253
(CC) (22 July 2019) at
para 34