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[2022] ZAMPMBHC 20
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Sibiya and Another v Peri Formwork Scafolding Engeneering (Pty) Ltd (3334 / 2020) [2022] ZAMPMBHC 20 (23 March 2022)
THE
HIGH COURT OF SOUTH AFRICA
MPUMALANGA
DIVISION, MBOMBELA MAIN SEAT
CASE
NO: 3334 / 2020
REPORTABLE: NO
OF INTEREST TO OTHER
JUDGES: NO
REVISED.
23 March 2022
In
the matter between:
MDUDUZI
KHULEKANI SIBIYA
FIRST APPLICANT
MK
DUBE CONSULTING (PTY) LTD
SECOND APPLICANT
And
PERI
FORMWORK SCAFOLDING
RESPONDENT
ENGENEERING
(PTY) LTD
J U D G M E N T
RATSHIBVUMO
J:
Delivered:
This judgment was handed down
electronically by circulation to the parties' representatives by
email. The date and time for hand-down
is deemed to be 10H00 on 23
March 2022.
[1]
This is an application for the rescission
or setting aside of a final liquidation order granted by this court
in respect of the
Second Applicant on 28 May 2021. The Second
Applicant was under provisional liquidation from 11 May 2021.
Following the court order
placing it under provisional liquidation,
the Master of the High Court proceeded to appoint Mr. Cassim and Mr.
Van Staden as joint
liquidators. The First Applicant is the sole
Director of the Second Applicant. Both the provisional and the final
orders were granted
in default as they were unopposed.
[2]
The application is brought in terms of
section 354 of Companies Act, no. 61 of 1973 (the Act) which
provides,
“
354
.
Court may stay or set aside winding-up
(1)
The Court may at any time after the
commencement of a winding-up, on the application of any liquidator,
creditor or member, and
on proof to the satisfaction of the Court
that all proceedings in relation to the winding-up ought to be stayed
or set aside, make
an order staying or setting aside the proceedings
or for the continuance of any voluntary winding-up on such terms and
conditions
as the Court may deem fit.
(2)
The Court may, as to all matters relating to a winding-up, have
regard to the wishes of the creditors
or members as proved to it by
any sufficient evidence.”
[3]
The rescission application is opposed by
the Respondent on various grounds. Amongst these is the ground of
non-joinder in that the
Second Applicant (or the joint liquidators
currently in charge) and other creditors such as Nedbank and the
South African Revenue
Services (SARS) were not cited as the
Respondent. It was submitted as such that the Second Applicant was
not actually before the
court as the founding affidavit in support of
the application by the Second Applicant, was deposed to by the First
Applicant who
at the time, lacked the mandate to act on its behalf.
[3]
The First Applicant does not dispute that
there are joint liquidators appointed to liquidate and manage the
Second Applicant’s
affairs. He avers though that they were
notified of this application, and that any further action taken by
them would be at their
own risk given the fact that they now know of
this application. As for SARS and Nedbank being the creditors to the
Second Applicant,
this too is admitted by the First Applicant who
regards it as irrelevant since there are agreements reached with them
regarding
the repayments of debts due to them.
[4]
The
court’s discretion to grant a rescission of a final liquidation
order was considered in
Ward
and Another v Smit- and Another: In re Gurr v Zambia Airways Corp
Ltd
[1]
where
the court held,
“
The
language of the section is wide enough to afford the Court a
discretion to set aside a winding-up order both on the basis
that it ought not to have been granted at all and on the basis that
it falls to be set aside by reason of subsequent events. (
Meskin
Henochsberg
on
the Companies Act at 747; see also Joubert (ed) The Law of South
Africa vol 4 first re-issue para 185 (M S Blackman).)
In the case of
the former, the
onus
on
an applicant is such that generally speaking the order will be set
aside only in exceptional circumstances. This has been emphasised
by the Courts of various Provincial and Local Divisions not only in
relation to s 354 and its predecessor (s 120 of Act 46 of 1926)
but
also in relation to
s 149(2)
of the
Insolvency Act 24 of 1936
which
affords a similar discretion to a Court to rescind or vary a
sequestration order. (See
Herbst
v Hessels NO en Andere
1978
(2) SA 105
(T)
;
Aubrey
M Cramer Ltd v Wells NO
1965
(4) SA 304
(W)
;
Abdurahman
v Estate Abdurahman
1959
(1) SA 872 (C)
.)
There is nothing in the section to suggest that the Court's
discretionary power to set aside a winding-up order is confined
to the common-law grounds for rescission. However, in
the
Herbst
case
supra
,
Eloff J expressed the view (at 109F--G) that no less would be
expected of an applicant under the section than of an applicant
who
seeks to have a judgment set aside at common law. I think this must
be correct. The object of the section is not to provide
for a
rehearing of the winding-up proceedings or for the Court to sit in
appeal upon the merits of the judgment in respect of those
proceedings. To construe the section otherwise would be to render
virtually redundant the facilities available to interested parties
to
oppose winding-up proceedings and to appeal against the granting of a
final order. It would also ‘make a mockery of the
principle of
ut sit finis litium’. (
Abdurahman
v Estate Abdurahman (supra
at
875G--H).) It follows that an applicant under the section must not
only show that there are special or exceptional circumstances
which
justify the setting aside of the winding-up order; he or she is
ordinarily required to furnish, in addition, a satisfactory
explanation for not having opposed the granting of a final order
or appealed against the order. Other relevant considerations
would
include the delay in bringing the application and the extent to which
the winding-up had progressed. (Compare
Aubrey
M Cramer Ltd v Wells NO (supra
at
305H).)”
[5]
From the above, it appears the
court’s discretion is premised on two prerequisites in the
alternative of each other, being
the winding-up order ought not to
have been granted at all, or it falls to be set aside by reason of
subsequent events after the
it was granted. Far from suggesting that
the order ought not to have been granted at all, the First Applicant
submits in his founding
affidavit that the fact that the application
papers were not served on him or did not reach his attention, then
the judgment that
was granted thereafter was in error. He also argues
that the Second Respondent was solvent. The First Applicant does not
suggest
that there could be exceptional circumstances warranting a
consideration of an application on the basis that the order ought not
to have been granted.
[6]
The
argument to the effect that a judgment granted in default following a
non-personal service of motion papers was granted in error
is
misplaced and has no legal basis. As long as the service of motion
papers is in accordance with the Uniform Rules, the order
is valid
and not granted in error. A judgment is granted in error if certain
facts are disclosed to the court which were unknown
at the time of
the order, provided the court would not have granted the order had
those facts been brought to its attention at
the time of the
order.
[2]
In order to succeed to
have a final winding up order set aside for reason that it ought not
to have been granted requires therefore
more than proving that the
order was granted in error, but exceptional circumstances, both of
which are lacking in this application.
[7]
The
only leg on which the application can remain standing is the second
prerequisite that deals with the developments from the date
of the
winding-up order. In
Klaas
v Contract Interiors
[3]
this prerequisite was expanded to integrate four requirements that
should be met before the rescission order could be granted:
“
1.
The court's
discretion is practically unlimited, although it must take into
account surrounding circumstances and the wishes of
parties in
interest, such as the liquidator, creditors and members.
2. The
court should ordinarily not set aside a winding-up where creditors or
the liquidators remain unpaid or inadequate provision
has been made
for the payment of their claims.
3.
Where the claims of the liquidator and all creditors have been
satisfied, the court should have regard to the wishes of the members,
unless those members have bound themselves not to object to the
setting-aside order, or the member concerned will receive no less
as
a result of the order sought than would be the case if the
company remained in liquidation.
4.
In deciding whether or not to grant a setting-aside order, the court
should, where appropriate, have regard to issues of 'commercial
morality', 'the public interest' and whether the continuation of the
winding-up proceedings would be a 'contrivance' or render
the
winding-up 'the instrument of injustice'”
[8]
Counsel
for the First Applicant must have had the above in mind when he
submitted that the provisions in section 354 of the Act
certainly
allow, if not require, the court to have regard to events subsequent
to the winding up of the company.
[4]
After all, section 354(2) of the Act expressly provides for the views
and wishes of the creditors and members to be taken into
consideration. It is on this aspect that the non-joinder of the
person whose views has to be considered by the court becomes a
hindrance to the court from exercising its full mandate. The progress
or developments since the winding up order of the Second
Applicant
can only be gleaned from the liquidators, whose views are not before
the court. I am inclined to agree with the submissions
to the effect
that the Second Applicant is not before court as the affidavit on its
behalf was deposed to by a person who lacked
the company mandate and
was not authorised by the liquidators.
[9]
As for the creditors, the First Applicant
alluded to the fact that there are agreements entered into with
Nedbank and SARS and that
some amounts have been paid already. The
said creditors are not parties to this litigation so they can confirm
or deny these allegations.
The First Applicant also failed to attach
confirmatory affidavits from them regarding this arrangement.
Whatever the position may
be, there is no doubt that the Second
Applicant has not paid all its debts, even though it was claimed that
it is solvent. In the
absence of the liquidators appointed to manage
the Second Applicant affairs, the court is unable to evaluate the
progress made
so far from the date of the liquidation order. Equally,
failure to join in the creditors in these proceedings denies the
court
of an opportunity to hear their voice. For these reasons, the
application is bound to fail without considering further grounds.
[10]
Consequently, the following order is made:
[12.1] The application
for setting aside of the final winding up order is dismissed with
costs.
TV
RATSHIBVUMO
JUDGE
OF THE HIGH COURT
FOR
THE APPLICANT
: ADV. FOURIE
INSTRUCTED
BY
: PJ LOURENS ATTORNEYS
NELSPRUIT
FOR
THE RESPONDENT : ADV
KLOPPER
: INNES R STEENKAMP
ATTORNEYS
C/O KRUGER &
PARTNERS INC
NELSPRUIT
DATE
HEARD
: 08 FEBRUARY 2022
JUDGMENT
DELIVERED : 23
MARCH 2022
[1]
1998
(3) SA 175
(SCA) at 180G-181E.
[2]
Childerley
Estate Stores v Standard Bank of SA Ltd
1924
OPD 163
at 166–9.
[3]
2010
(5) SA 40
(W) at para 65.
[4]
See para 5 of the Applicant’s heads of argument.