Brief Summary

Liquidation — Reconsideration of ex parte order — Applicant seeking reconsideration of urgent order interdicting disposal of helicopter and declaring it an asset of liquidated company — Applicant not a party to original application but claims direct interest in helicopter's ownership — Court finds applicant has locus standi to intervene — No evidence presented that helicopter was owned by liquidated company; ownership remained with seller — Allegation of collusive disposition not substantiated — Court dismisses application for reconsideration and confirms original order.

Comprehensive Summary

Summary of Judgment

Introduction

The proceedings concerned an urgent reconsideration, alternatively an anticipation of the return day, of an ex parte order previously granted in the High Court of South Africa, Gauteng Division, Pretoria. The reconsideration application was brought by Money Global (Pty) Ltd t/a Aviation Sales International (“Money Global”), which had not been a party to the original ex parte application.

The ex parte application had been instituted by the joint liquidators of Ipower Services (Pty) Ltd (in liquidation) (“Ipower”), cited as Zaheer Cassim N.O. and Thea Christina Lourens N.O. They had obtained urgent relief on 31 August 2022 against several respondents, including trustees and individuals associated with a trust, and the Sheriff. The ex parte order, among other things, interdicted disposal of a 1969 Bell 204 helicopter (“the Huey”), directed its attachment, declared it an asset of Ipower, ordered its return to the liquidators, and purported to set aside an alleged “collusive disposition” of the helicopter.

The general subject-matter of the dispute was whether the ex parte relief was competent on the facts presented, particularly the relief premised on the proposition that the Huey was an asset of Ipower capable of being attached and returned to the liquidators, and whether Money Global—claiming to have purchased and taken delivery of the Huey before the ex parte order—was entitled to intervene and obtain reconsideration.

Material Facts

It was common cause in the reconsideration proceedings that the ex parte order of 31 August 2022 granted extensive relief in favour of the joint liquidators, including an interdict against disposal of the Huey, an attachment by the Sheriff, a declaration that the Huey was an asset of Ipower, an order that the Huey be returned to the liquidators, and an order setting aside an alleged “collusive disposition” of the Huey. The court noted that the ex parte order was silent as to where the Huey was to be attached, and did not state that it could be attached “wherever found”.

The liquidators’ case (as described in the reconsideration judgment) was that the Huey had been purchased with funds paid out of Ipower’s bank account, which funds had emanated from a fraud perpetrated upon Ep Inland (Pty) Ltd, Ipower’s liquidating creditor. Those monies were used to pay MML (Pty) Ltd, which was the owner of the Huey at the time, and the Huey’s ownership was then transferred to the S and M Trust, which concluded a purchase and sale agreement with MML (Pty) Ltd.

A critical factual feature relied upon by the reconsideration court was that, on the papers in the ex parte application, there was no allegation or proof that Ipower itself concluded a purchase and sale agreement for the Huey with MML (Pty) Ltd, nor that Ipower intended to purchase the Huey for itself. The court characterised Ipower, on the liquidators’ own version as described, as a mere conduit through which the fraudulently obtained monies flowed to MML (Pty) Ltd as purchase price.

Money Global’s case was that it had concluded a purchase/sale agreement with the S and M Trust on 22 August 2022, that the Huey was delivered to Money Global on 29 August 2022, and that by the time the ex parte order was granted on 31 August 2022, the sale had been perfected and ownership had transferred from the trust to Money Global. The court also recorded that Nicholson Helicopter inspected the Huey on 22 August 2022 and Money Global accepted it on that date, and that the transfer of ownership to Money Global occurred before the ex parte order was granted.

The court further accepted as material that the liquidators were, at the time of launching the ex parte application and when the order was granted, unaware of the on-sale of the Huey to Money Global. They only became aware of Money Global’s ownership after the attachment took place.

As to the liquidators’ contention in the reconsideration proceedings that the S and M Trust’s sale to Money Global was impeachable for want of a unanimous trustee resolution, the court treated this as inference or assumption by the liquidators rather than an established fact, and held that unless and until a competent court sets the contract aside, the contract exists.

Legal Issues

The court was required to determine, first, whether the reconsideration/anticipation application was urgent and procedurally competent under Rule 6(12)(c) and Rule 6(8) of the Uniform Rules of Court. This issue concerned the application of procedural rules to the posture of an order granted in a party’s absence.

Second, the court had to decide whether Money Global had the required locus standi and whether it should be granted leave to intervene in the ex parte proceedings, which turned on whether it had a direct, material and substantial interest in the subject-matter and outcome of the order. This was primarily a value judgment based on the legal standard for intervention, applied to the facts alleged about ownership and the effect of the ex parte relief.

Third, the central substantive question was whether, on the case made in the ex parte papers and the material facts accepted on reconsideration, there was any basis to grant the relief (particularly prayers 2.1 to 2.4) that depended on the proposition that the Huey was an asset of Ipower, that there had been a “collusive disposition” of it from Ipower, and that it could competently be attached and returned to the joint liquidators. This was a question involving the application of law to fact, including whether the Insolvency Act 24 of 1936, specifically sections 31 and 32, could apply on the facts as found.

A further issue, consequential upon the attachment, was whether the Sheriff had to be joined for purposes of effective relief, and whether the joinder should be authorised and ratified.

Court’s Reasoning

On urgency, the court held that both reconsideration under Rule 6(12)(c) (for an order granted in a person’s absence in an urgent application) and anticipation of a return day under Rule 6(8) (for an ex parte order) are procedures that are inherently urgent. On that basis, the court rejected the liquidators’ point in limine challenging urgency.

On locus standi and intervention, the liquidators argued that Money Global could not seek reconsideration because it had not been a party to the ex parte application and should first have brought a substantive intervention application. The court reasoned that there was no bar to combining an application for leave to intervene with an application for reconsideration/anticipation, given that the issues were closely interrelated. It further held that Money Global had set out the facts supporting intervention in its founding affidavit, and that a proper case had been made for intervention. The court therefore granted leave to intervene as a further respondent.

The court addressed joinder of the Sheriff on the basis that Money Global sought relief directly affecting the Sheriff’s attachment of the Huey and its documentation. The court reasoned that the Sheriff’s joinder was necessary for effective relief and accordingly authorised and ratified the joinder.

Regarding the filing of affidavits in a reconsideration process, the court noted that neither Rule 6(8) nor Rule 6(12)(c) expressly requires further affidavits, but that courts accept that parties may file affidavits in support of their contentions, with reference to authority cited in the judgment.

The decisive reasoning concerned ownership and the foundation for the ex parte relief. The court held that, on a close reading of the founding affidavit in the ex parte application, no case was made that ownership of the Huey vested in Ipower and therefore in the joint liquidators. The court emphasised the absence of allegations and proof of any purchase, intention to purchase, or contract of sale by Ipower in respect of the Huey. In the court’s analysis, the fact that funds flowed from Ipower’s bank account to pay the purchase price (funds said to be traceable to a fraud on Ep Inland (Pty) Ltd) did not establish that Ipower acquired ownership. On the version described, Ipower functioned as a conduit for payment; at most, the court held, Ipower might have a recourse claim for refund of the payment, but this did not translate into ownership of the helicopter.

This conclusion drove the court’s treatment of the “collusive disposition” relief. The court reasoned that, at the time of the ex parte application and order, the liquidators were unaware of the subsequent sale to Money Global; accordingly the phrase “collusive disposition” in the ex parte order could only have been directed at the earlier transaction between MML (Pty) Ltd and the S and M Trust. The court then held that even if that transaction were to be set aside, ownership would revert to MML (Pty) Ltd, not to Ipower, because Ipower never became owner. On that reasoning, the court concluded that there could be no collusive disposition of the Huey from Ipower’s estate, because it was never an asset of Ipower.

In relation to the liquidators’ contention that Money Global’s purchase from the S and M Trust was voidable for want of proper trustee authorisation, the court held that the submission relied on inference or assumption and did not, on its own, impugn the contract’s validity. The court treated the contract as existing unless and until set aside by a competent court.

From these findings the court drew express conclusions: Ipower never obtained ownership; the Huey never became an asset of Ipower; and no collusive disposition from Ipower’s assets was proven or could have occurred on the accepted facts. The court further held that, on those premises, sections 31 and 32 of the Insolvency Act 24 of 1936 did not apply in the present instance. It followed, in the court’s view, that there were no bases upon which the ex parte relief in prayers 2.1 to 2.4 should or could have been granted.

Outcome and Relief

The court upheld the reconsideration application. It declared the matter urgent, granted Money Global leave to intervene as a further respondent in the ex parte application, and authorised and ratified the joinder of the Sheriff of the High Court, Germiston South.

The court set aside and deleted prayers 2.1, 2.2, 2.3, and 2.4 of the ex parte order granted on 31 August 2022. It directed the Sheriff forthwith to uplift the attachment of the Huey and to uplift the attachment of the logbooks and documentation relating to the Huey, and it ordered the Sheriff to return the Huey and those documents to Money Global.

In addition, the court ordered Money Global’s attorneys to retain in trust the purchase price of R4 million paid for the Huey, for the benefit of the party ultimately held by a competent court (or by written agreement among specified parties) to be entitled to that amount.

On costs, the court ordered the first and second applicants in the ex parte application (the joint liquidators) to pay the costs of the reconsideration application, jointly and severally, on the attorney and client scale, including the costs consequent upon the employment of two counsel.

Cases Cited

Industrial Development Corporation of South Africa v Sooliman 2013(5) SA 603 (GSJ)

Legislation Cited

Insolvency Act 24 of 1936 (sections 31 and 32)

Rules of Court Cited

Uniform Rules of Court, Rule 6(12)(c)

Uniform Rules of Court, Rule 6(8)

Held

The court held that the reconsideration/anticipation procedure under Rules 6(12)(c) and 6(8) is inherently urgent, and that Money Global demonstrated a direct, material and substantial interest sufficient to justify intervention.

On the merits, the court held that the ex parte papers did not establish that Ipower ever acquired ownership of the Huey, that the Huey was therefore not an asset in Ipower’s liquidation, and that no collusive disposition from Ipower’s estate was proven or could have occurred on the accepted facts. It followed that Insolvency Act sections 31 and 32 did not apply on the facts as found, and that the core ex parte relief relating to interdiction, attachment, return of the helicopter, declaration of it as an asset, and setting aside an alleged collusive disposition could not stand. The court accordingly set aside those parts of the ex parte order and directed the uplifting of the attachment and the return of the helicopter and documentation to Money Global, while directing that the purchase price be held in trust pending determination of entitlement.

LEGAL PRINCIPLES

The judgment applied the principle that reconsideration of an order granted in a party’s absence in an urgent context under Uniform Rule 6(12)(c), and anticipation of the return day of an ex parte order under Uniform Rule 6(8), are procedures that are treated as inherently urgent.

It applied the intervention principle that a non-party seeking to intervene must establish a direct, material and substantial interest in the subject-matter of the litigation, and that an application for leave to intervene may be combined with an application for reconsideration/anticipation where the issues are closely connected and the founding papers set out the necessary basis.

On the substantive relief, the judgment applied the principle that relief declaring property to be an asset of a company in liquidation, ordering its return to liquidators, and setting aside a disposition as “collusive” under insolvency-related mechanisms requires an adequate factual foundation establishing that the property was in fact part of the insolvent estate. The use of funds flowing through an entity as a conduit, without allegations and proof of a contract of purchase or intention to purchase by that entity, was treated as insufficient to establish ownership in the entity, and thus insufficient to ground relief premised on the property being an estate asset.

Finally, the judgment applied the principle that where relief directly affects the acts of the Sheriff (such as an attachment), joinder may be necessary to ensure effective relief, justifying authorisation and ratification of joinder in appropriate circumstances.

Money Global (Pty) Ltd t/a Aviation Sales International; Cassim N.O and Another v Coetzee WPN N.O and Others (2022-018324) [2022] ZAGPPHC 729 (30 September 2022)