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[2022] ZAMPMBHC 59
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FA Konstruksie CC v Mhonyini Trading Enterprize CC In re Asphaltic (Pty) Ltd v Mhonyini Trading Enterprize CC (3182/2021) [2022] ZAMPMBHC 59 (22 July 2022)
IN
THE HIGH COURT OF SOUTH AFRICA,
MPUMALANGA
DIVISION (MAIN SEAT)
CASE
NO: 3182/2021
REPORTABLE:
YES/ NO
OF
INTEREST TO OTHER JUDGES: YES/NO
REVISED.
22
July 2022
In
re
: The matters between:
FA
KONSTRUKSIE CC
Applicant
and
MHONYINI
TRADING ENTERPRISE CC
Respondent
CASE
NUMBER: 554/2021
and
ASPHALTIC
(PTY) LTD
Applicant
and
MHONYINI
TRADING ENTERPRISE CC
Respondent
The
proceedings were conducted over the Teams platform. A copy of these
reasons shall be forwarded per email to the applicants and
the
respondent on 22 July 2022.
REASONS
Roelofse
AJ:
[1]
The respondent, Mhonyini Trading
Enterprises CC (Mhonyini) is being wound-up by virtue of a
provisional winding-up order of this
court and in liquidation by
another final winding-up order, also granted by this court. The
orders were granted by this court under
different proceedings at the
instance of two separate creditors on the basis that Mhonyini is
unable to pay its debts.
[2]
It must be immediately apparent that
this is a rare circumstance which raise challenges in the process of
liquidation. These challenges
include whether it is at all possible
for a company (or close corporation) to be in liquidation and in the
process of being wound-up
by virtue of two orders that operate at the
same time; when is it deemed that the winding up commenced; what
order leads to the
appointment of a liquidator.
Background
[3]
On 19 July 2022 I granted a final
winding-up order of Mhonyini after hearing counsel for FA Konstruksie
CC (FA), the applicant in
case number 3182/2021 and counsel for
Asphaltic (Pty) Ltd (Asphaltic), the applicant under case number
554/2021. There was no appearance
on behalf of Mhonyini.
[4]
I gave no reasons for my order. I have
resolved to furnish reasons for the in order to pronounce the
difficulties that arise in
this application. In addition, after
reflection, I supplement the order that I have granted in order to
address FA’s winding-up
proceedings. This I do in order to
clear away any doubt that may remain despite my order.
The
course of the litigation up to 19 July 2022
[5]
On 17 February 2021, Asphaltic launched
an application for the winding-up of Mhonyini under case number
554/2021 (the Asphaltic
application). On 10 August 2021 a provisional
winding-up order was granted (the provisional order). The return day
of the provisional
order was on 19 November 2021. The
rule
nisi
that was issued when the
provisional order was granted was extendedon 19 November 2021 to 19
July 2022. When the matter was before
me, it was therefore the return
day of the
rule nisi
in Asphaltic’s application.
[6]
On 26 August 2021, FA issued an
application for the final winding-up of Mhonyini under case number
3182/2021 (the FA application).
A final winding up order was granted
by this court on 25 October 2021 (the final order).
[7]
Therefore, Mhonyini was finally wound-up
by an order of this court upon the application of FA that was
instituted while the provisional
order was still pending.
[8]
On 11 March 2022, FA delivered an
“Amended Notice of Motion” (motion) ostensibly seeking to
amend the relief it sought
in the FA application.
[9]
In essence, FA sought the following
relief in the motion: that FA be granted leave to file a
supplementary affidavit in the FA application;
a declaratory that
Mhoyini is in final winding-up by virtue of the final order; that the
effective date of the winding-up of Mhonyini
is 17 February 2021
(i.e., when the Asphaltic application was issued); that costs of both
FA and Asphaltic be costs in the liquidation;
alternatively, that FA
be granted leave to intervene in the Asphaltic application; and, that
unless the provisional order if favour
of Asphaltic is made final,
that the Asphaltic order be discharged and a final winding-up order
be granted.
[10]
Asphaltic delivered a notice of
intention to oppose the motion. No answering affidavit was delivered
by Asphaltic or Mhonyini.
The
hearing on 19 July 2022
[11]
At the hearing, FA persisted with the
relief it sought in the motion while Asphaltic requested that the
rule nisi
be extended and that FA’s application be case managed in terms
of this court’s Practice Directive as it has become
opposed.
[12]
I raised with council for FA whether it
is in law possible to seek an amendment of a notice of motion in a
matter where a final
order was already granted. Council for FA could
not give me any authority on this issue. Procedurally there is no way
in which
a notice of motion where final order had already been
granted can be amended or additional relief be sought. An order was
granted
and that is the end of the matter.
[13]
FA articulated the difficulty it faced
as a result of the Asphaltic order and its own order as follows in
its supplementary affidavit
in support of the motion:
‘
There
is also uncertainty at the Masters office relating to which order is
effective, and furthermore the person nominated by FA
Konstruksie for
appointment as liquidator is also concerned as to which one of the
two orders is the operating order in respect
of the winding-up of
Mhonyini. There is a degree of uncertainty in the matter in the sense
that finality must swiftly be obtained
relating to the confirmation
of the final winding-up of Mhonyini’.
[1]
and
‘
I
submit respectfully that the FA Konstruksie order is valid because
unlike the Asphaltic order, it is not a provisional order for
the
winding-up but a final winding-up order. On the other hand, the
attorney for Asphaltic holds the view that FA Konstruksie was
not
entitled at all to procure a final order for winding-up as a result
of the existing provisional order in respect of the Asphaltic
application. It is consequently necessary in this context to resolve
the actual existing controversy between the parties and this
Honourable Court will therefore be requested to issue an appropriate
declaratory order in order to settle the conflict and to give
clarity
on the status of the final a winding-up of Mhonyini’
[2]
The
law
[14]
Section 347(5) of the Companies Act 61
of 1973 provides as follows:
‘
The
Court shall not grant a final winding-up order in the case of a
company or other body corporate which is already being wound
up by
order of Court within the Republic.’
[15]
In
terms of the provisions of section 348 of the Companies Act, the
winding up of a company (or close corporation) shall be deemed
to
commence at the time of the presentation to the court of the
application for the winding-up. The application is presented to
the
court, within the meaning of this section, when it has been duly
lodged with the Registrar of the court.
[3]
[16]
The Asphaltic application was issued on
17 February 2021. That is therefore when Mhonyini’s winding-up
was deemed to commence.
The final order was granted on 25
October 2021, that is, after Mhonyini’s winding-up commenced on
17 February 2021.
[17]
In
Commissioner
for the South African Revenue Service v Zikhulise Cleaning
Maintenance and Transport Service; Mpisane v Zikhulise Cleaning
Maintenance and Transport CC and Another
[4]
,
SARS brought an application for the liquidation of a company who was
already under provisional winding-up. Collis J said
[5]
:
‘…
.[a]s
I see it, where a third party other than the parties cited in the …..
[a] liquidation application as is the position
before this court,
wishes to apply for the liquidation of an entity against whom a
provisional order for winding-up has already
been granted. This step
so undertaken by a third party would then be impermissible as
logically the process of provisional winding-up
ought first to be
concluded.’
[18]
The provisions of section 347(5)
therefore barred the granting of the final winding-up order while the
provisional order was still
pending. To put it differently, the
final order could not have been granted and in my view although
granted, constitutes
a nullity because it offends the provisions of
section 347(5) of the Companies Act. Although granted, the final
winding-up order
is therefore of no force and effect. The difficulty
however is that the order exists. I employ the provisions of section
354(1)
of the Companies Act to address this difficulty.
[19]
In
terms of the provisions of section 354(1) of the Companies Act, a
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.
FA seeks in the motion that the final
winding-up order be
‘…
..substituted
and replaced with a final winding-up order of the Respondent…….’
.
What FA is in effect seeking is the setting aside of the final
winding-up order. FA, as a creditor, may. in terms of the provisions
of section 354(1) of the Companies Act seek the setting aside of the
proceedings, that is, the final winding-up order. In
Ward
& another v Smit & others, In re: Gurr v Zambia Airways
Corporation Ltd
[6]
,
it was said:
‘
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.’
[20]
On the basis that the final winding-up
order should not have been granted at all, I shall set aside the
proceedings in the FA application.
FA’s
intervention application
[21]
FA
has
locus
standi
to intervene in the Asphaltic application for it is a creditor of
Mhonyini. However, FA has not brought an application to
intervene. Instead, FA sought to amend its notice of motion upon
which the final order was already granted. In that amended notice
of
motion, FA seeks leave to intervene.
[7]
I have already set out that FA cannot seek to amend its notice of
motion in terms of which a final order has already been granted.
In
light of the view I take regarding the provisional order, there would
be no purpose for FA to intervene.
Fate
of the provisional order
[22]
Mhonyini has not opposed either of the
applications and had filed no papers. Both on Asphaltic’s
papers and on FA’s
papers, a proper case is made out for the
final winding-up of Mhonyini. There is no reason for the
extension of the
rule nisi
and no reason why the Asphaltic order should not be confirmed.
I
make the following order:
1.
The proceedings under case number
3182/2021 is hereby set aside.
2.
Mhonyini Trading Enterprise CC is
finally would-up in the hands of the Master.
3.
The costs in respect of the proceedings
under case numbers 554/2021 and 3182/2021 shall be costs in the
liquidation.
JH
Roelofse
Acting
Judge of the High Court
APPEARANCES
FOR
FA KONSTRUKSIE (PTY) LTD: ADV WELGEMOED
Instructed
by
Coetzee and Van der Merwe Attorneys
FOR
ASPHALTIC (PTY) LTD:
ADV JACOBS
Instructed
by
Strydom Bredenkamp Inc.
DATE
OF HEARING: 19
JULY 2022
DATE
OF JUDGMENT: 22 July 2022
[1]
Para
25 of the affidavit.
[2]
Para
26 of the affidavit.
[3]
See:
Venter NO v Farley
1991 (1) SA 316
(W) at 320
[4]
(14886/16; 18101/16) [2020] ZAGPPHC 561 (14 October 2020).
[5]
At
paragraph 24 of
South
African Revenue Service v Zikhulise Cleaning Maintenance and
Transport Service.
[6]
[1998] 2 All SA 479
(A).
[7]
Para
6.1 thereof.