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[2011] ZASCA 234
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Bester NO and Another v National Director of Public Prosecutions, In Re National Director of Public Prosecutions v Kleinhans and Others (198/2011) [2011] ZASCA 234; [2012] 2 All SA 453 (SCA); 2013 (1) SACR 83 (SCA) (30 November 2011)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 198/2011
In the matter
between:
CHRISTIAN FINDLAY
BESTER NO
…...............................................................
1
st
Appellant
GERARD LEONARD
PARIS NO
(In their capacity
as provisional liquidators of
AQUILA
HOLDINGS (PTY)
LTD
(in provisional liquidation))
…........................................
2
nd
Appellant
and
NATIONAL DIRECTOR
OF PUBLIC PROSECUTIONS
…...............................
Respondent
In re:
NATIONAL DIRECTOR
OF PUBLIC PROSECUTIONS
…..................................
Applicant
and
FRANCOIS EMIL
JACQUES KLEINHANS
…........................................................
Defendant
HILDA GRACE
KLEINHANS
…........................................................................
1
st
Respondent
AQUILA HOLDINGS
(PTY) LTD
(in liquidation)
…........................................
2
nd
Respondent
FINISHING TOUCH
TRADING 75 (PTY) LTD t/a AQUILA PROPERTIES
SOLUTIONS
…......................................................................................................
3
rd
Respondent
RICH REWARDS
TRADING 52 (PTY) LTD t/a AQUILA
FINANCIAL
SERVICES
…..................................................................................
4
th
Respondent
GLOBAL PACT
TRADING 73 (PTY) LTD
…..................................................
5
th
Respondent
Neutral citation:
Bester NO v NDPP
(198/11)
[2011] ZASCA 234
(30 November
2011)
Coram:
Brand
,
Maya and Seriti JJA
Heard: 21
November 2011
Delivered: 30
November 2011
Summary:
Interpretation of
s 36
of the
Prevention of Organised Crime Act
121 of 1998
.
____________________________________________________________
ORDER
On appeal from:
Western
Cape High Court, Cape Town (Fourie J, sitting as court of first
instance):
The appeal is upheld with costs,
including the costs of two counsel.
The order of the court below is
set aside and replaced with the following:
‘
(a) The
490 shares in Optipharm Healthcare (Pty) Ltd held by Aquila Holdings
(Pty) Ltd (in liquidation) are excluded from the “Schedule
of
Known Assets” reflected in annexure “A” to the
provisional restraint order of 3 July 2009 (the restraint order),
and
the restraint order is varied in this respect.
(b) The costs of the intervention
application launched by the first and second intervening applicants
shall be paid by the applicant,
including the costs of two counsel
where employed.
(c) Subject to the aforegoing,
the restraint order is confirmed against the defendant and
respondents only in respect of such property
as held by them at the
date of this order.’
____________________________________________________________
JUDGMENT
MAYA JA
(BRAND
and
SERITI
JJA
concurring):
[1] This appeal concerns the
interpretation of s 36 of the Prevention of Organised Crime Act
121 of 1998 (POCA). More particularly,
it raises the question as to
the effect of a restraining order under s 26 of POCA on the
assets of a company in liquidation
where that order is made after the
presentation of an application for the winding-up of the company, but
before the actual winding-up
order is granted.
[2] The
relevant facts are briefly these. On 19 November 2008
BMI-Techknowledge Group (Pty) Ltd, a creditor of Aquila Holdings
(Pty) Ltd (Aquila), launched an application in the Western Cape High
Court for the liquidation of Aquila on the basis that it was
unable
to pay its debts. On 10 March 2010 Aquila was placed in provisional
liquidation. It was finally wound up on 10 May 2010.
In the interim,
on 3 July 2009,
the
respondent (the NDPP) obtained a provisional restraint order in an
application launched under s 26 of POCA
1
in respect of
the realisable property of Aquila, Aquila’s sole director and
shareholder, Mr Francois Kleinhans, and other
entities linked to it.
In terms of this order, 490 shares owned by Aquila in Optipharm
Healthcare (Pty) Ltd, a company in which
it had 70 per cent
shareholding, were provisionally restrained and Mr Stephen Powell was
appointed as
curator
bonis
with
the mandate to take possession of the shares which Aquila was ordered
to surrender to him.
[3] On 24 May 2010 the
appellants, then Aquila’s joint provisional liquidators,
launched an application seeking leave to intervene
in the restraint
proceedings and a variation of the restraint order releasing the
shares from its ambit by virtue of s 36(2) of
POCA on the basis that
Aquila’s winding-up had started before the restraint order was
granted. This, in their opinion meant
that Aquila’s assets fell
to be administered by them. On 2 December 2010 the court below (per
Fourie J) simultaneously heard
the NDPP’s application for the
confirmation of the provisional restraint order (which was not
opposed) and the intervention
application. By then the appellants had
become Aquila’s liquidators.
[4] The court below acknowledged
the appellants’ right to intervene in terms of s 28(2)(a) of
POCA but dismissed their application
and confirmed the provisional
restraint order without variation. The gist of its reasoning was that
s 36(1) has no application
in the matter, and that on the ordinary
meaning of the provisions of s 36(2), its operation is triggered only
if the winding-up
order has actually been granted when the restraint
order is made, which did not happen in this case. The appellants
challenge this
decision with the leave of the court below.
[5] Section 36 of POCA reads:
‘
Effect
of winding-up of companies or other juristic persons on realisable
property
When any competent
court has made an order for the winding-up of any company or other
juristic person which holds realisable property
or a resolution for
the voluntary winding-up of any such company or juristic person has
been registered in terms of any applicable
law–
(a) no property for
the time being subject to a restraint order made before the relevant
time; and
(b) no proceeds of
any realisable property realised by virtue of section 30 and for the
time being in the hands of a
curator bonis
appointed under
this Chapter,
shall form part of
the assets of any such company or juristic person.
(2) Where an order
mentioned in subsection (1) has been made in respect of a company or
other juristic person or a resolution mentioned
in that subsection
has been registered in respect of such company or juristic person,
the powers conferred upon a High Court by
sections 26 to 31 and 33
(2) or upon
curator bonis
appointed under this Chapter, shall
not be exercised in respect of any property which forms part of the
assets of such company
or juristic person.
(3) Nothing in the
Companies Act, 1973 (Act 61 of 1973), or any other law relating to
juristic persons in general or any particular
juristic person, shall
be construed as prohibiting any High Court or
curator bonis
appointed under this Chapter from exercising any power contemplated
in subsection (2) in respect of any property or proceeds mentioned
in
subsection (1).
(4) For the purposes
of subsection (1), “the relevant time” means–
(a) where an order
for the winding-up of the company or juristic person, as the case may
be, has been made, the time of the presentation
to the court
concerned of the application for the winding-up; or
(b) where no such
order has been made, the time of the registration of the resolution
authorising the voluntary winding-up of the
company or juristic
person, as the case may be.
(5)
...’
2
[6] I see no ambiguity in the
wording of these provisions. Given their plain meaning and read in
context, their operation is governed
by two jurisdictional facts
envisaged in both subsecs (1) and (2) – ie the ‘making’
of an order for the winding-up
of a company and the grant of a
restraint order in respect of its realisable property. The sequence
in which these two events occur
is crucial. Section 36(1) presents no
controversy. Read with the definition of ‘relevant time’
set out in subsec (4)(a),
it expressly excludes assets under
restraint from a company’s estate where the restraint order
preceded the presentation
to court of such company’s winding-up
application.
[7] But POCA bears no description
of the phrase ‘presentation to the court’ which,
incidentally, is used nowhere else
in the Act but in ss (4)(a). A
contention made on the appellants’ behalf in this regard was
that the words must be given
the established judicial meaning (to
ensure certainty in the law among other reasons) placed upon a
similar phrase previously used
by the Legislature, in respect of a
similar subject matter, in s 348 of the Companies Act 61 of 1973 (the
Companies Act).
3
The latter section deals with the
commencement of a winding-up of a company by a court which is ‘deemed
to commence at the
time of the presentation to the Court of the
application for the winding-up’. In this context, our courts
have interpreted
the words ‘presentation to the Court’ as
meaning when the application is filed with the Registrar of the
court.
4
[8]
The
respondent conceded the correctness of these contentions, rightly so
in my view.
As
pointed out by the appellants’ counsel, s 348 of the Companies
Act, as does s 36(4)(a) of POCA, deals with issues such
as the timing
of the presentation to court of a company’s winding-up
application, such application’s impact on the
company’s
assets, the rights of creditors etc. The two sections are
pari
materia
.
And
the Legislature, necessarily aware of its previous use of an
identical phrase in a similar situation in s 348 of the Companies
Act
and the subsequent judicial construction ascribed to it by the
courts, must have intended it to bear the same meaning in s
36(1) of
POCA. So, the words ‘presentation to the court concerned’
used in s 36(4)(a) mean, for purposes of determining
the ‘relevant
time’ mentioned therein, when an application for the winding-up
application of a company is filed with
the Registrar of the court.
[9] The respondent’s
argument, which found favour with the court below, is that s 36(1)
does not apply in a case like
the present where the restraint order
was made after the relevant time, that is, after the winding-up
application was filed with
the registrar of the court. I do not agree
with this argument. It is true that s 36(1) does not deal
expressly with this situation,
but I believe it must be taken to do
so implicitly. What the section expressly provides is that property
of a company which has
already been restrained by an order under s 26
of POCA before the relevant date, will not be excluded from the
assets of the
company after winding-up. But logic dictates that the
converse must equally hold true. Where the restraining order was made
after
the relevant date, the property of the company subject to the
restraint order must form part of the assets of that company after
winding-up. As I see it, s 36(1) therefore defines the concept
‘assets of the company’ in liquidation. It excludes
all
assets subject to a restraining order which preceded the relevant
date, but includes all assets subject to a restraining order
which
was granted after the relevant date.
[10] This brings the enquiry to
the effect of s 36(2) on the present facts; put differently, are the
shares excluded from the ambit
of the restraint order? The parties
were agreed that the assets of a company are not realisable property
if a restraint order follows
after a winding-up order has been made
and that they fall outside the purview of the powers vested in a
court or a
curator bonis
under Chapter 5 of POCA. As indicated
earlier, the point of difference relates to whether the section
applies in a case such as
the present, where the winding-up
application preceded a restraint order granted before the company was
finally wound up. The appellants
argued that as s 36(1) excludes
property from ‘the assets of the company’ where the
restraint order precedes the relevant
time of a winding-up,
ex
contrariis
and on a proper construction of its wording, s 36(2)
must cover any other winding-up in which the restraint does not
precede the
relevant time as long as a winding-up order is ultimately
granted.
[11] The main contention made on
the NDPP’s behalf, on the other hand, was that s 36(2) ‘applies
only where a court
is seized with an application for a restraint
order in respect of assets which already fall under the control of
liquidators, because
a winding-up order “
has been made
”
in respect of the company that owns the assets’ with the result
that the subsection could find no application on the
present facts as
no winding-up order had been made when the restraint order was
granted. Some of the reasons advanced in support
of this approach
were that the appellants’ interpretation of the subsection –
(a) creates a ‘shifting
situation’, which is not contemplated either by s 36 or the
rest of POCA, in which a court grants
a restraint order (in terms of
which a company’s assets are placed under the control of a
curator bonis
) when no winding-up order has been made, but
then, anomalously, the restraint order, whilst remaining extant,
loses its force consequent
to the granting of a winding-up order
which removes the assets from its ambit and the control of the
curator bonis
;
(b) impermissibly imports the
‘relevant time’ into s 36(2) as it is explicitly defined
only ‘for the purposes
of subsection (1)’ and can have no
application to subsection (2); and
(c) is inconsistent with POCA’s
other provisions (for example, s 35 which is a corresponding section
dealing with the property
of a natural person whose estate has been
sequestrated and s 29(2)(c) which regulates immovable property
subject to restraint)
and its structure.
[12] Put simply, the NDPP’s
interpretation is that s 36 (2) applies only where the restraint
order is granted after a company
has been wound up. I agree with his
counsel that the trigger for s 36(2) to apply is that a winding-up
order ‘has been made’.
But so does
s 36(1). Both subsections find no application at all unless the
company is eventually wound up. The first difficulty
that arises on
the construction contended for by the NDPP is that situations will
arise which are governed by neither s 36(1)
or 36(2). If the
restraining order precedes the relevant date s 36(1) applies, so
he argued. If the winding-up order comes
before the restraining
order, s 36(2) applies. But what about a situation like the
present where the restraining order is
granted between the relevant
date and the winding-up order? A further problem raised by the
construction contended for by the NDPP
is that it renders s 36(1)
superfluous. Any restraining order that precedes the winding-up order
will take preference to the
latter order and it matters not whether
the restraining order was granted before or after the relevant date.
If that was so, the
whole field would be covered by s 36(2). I
believe it hardly requires any motivation that a construction of s 36
which
requires one of the subsections to be ignored completely,
cannot be sustained.
[13]
The
NDPP’s argument that ‘relevant time’ is
specifically defined for the purposes of subsection (1) only, takes
the matter no further, since that concept is not used in any other
section.
Further, his approach completely ignores the words
‘mentioned in subsection (1)’, in reference to the order
in subsec
(2), which clearly link the order to which the latter
subsection refers, to the application envisaged in subsection (1).
When the
two subsections are read together, as they must, it
inexorably follows that the application pursuant to which the
winding-up order
contemplated in subsec (2) was made, is that
mentioned in subsec (1). Thus, the ‘relevant time’ of the
application
in subsec (1) directly impacts subsec (2) and must be the
same for both subsections. This construction accords with the scheme
and objectives of s 36 which refers to ‘property which forms
part of the assets of [a] company’ in liquidation in both
ss
(1) and (2): delineating the assets which constitute the estate of a
company in liquidation in subsec (1) and providing for
those not
covered by these provisions (which must fall under the liquidator’s
control when a winding-up order is granted)
in subsec (2).
In
short, s 36(1) defines the ‘assets of the company’
after winding-up. Section 36(2) tells us what will happen
to those
assets after winding-up.
The wording of subsec (3) appears to
reinforce this view as it seeks to protect from limitation the powers
of the high court and
curator bonis
‘contemplated in
subsection (2) in respect of
any property
or proceeds
mentioned in subsection (1)
’ (emphasis added).
[14] The further string to the
NDPP’s bow, his reliance on the differently worded provisions
of s 35 of POCA, does not seem
to me to lend any support to his
cause. The section provides:
‘
Effect
of sequestration of estates on realisable property
When the estate of
a person who holds realisable property is sequestrated–
the property for
the time being subject to a restraint order made before the date of
sequestration; and
the proceeds of any
realisable property realised by virtue of section 30 and for the
time being in the hands of a
curator bonis
under this
Chapter,
shall not vest in
the Master of the High Court or trustee concerned, as the case may
be.
...
Where the estate of
an insolvent has been sequestrated, the powers conferred upon a High
Court by sections 26 to 31 and 33(2)
or upon a
curator bonis
appointed under this Chapter, shall not be exercised–
in respect of any
property which forms part of that estate; or
in respect of any
property which the trustee concerned is entitled to claim from the
insolvent under
section 23
of the
Insolvency Act, 1936
.
Nothing in the
Insolvency Act, 1936
, shall be construed as prohibiting any High
Court or
curator bonis
appointed under this Chapter from
exercising any power contemplated in subsection (3) in respect of
any property or proceeds
mentioned in subsection(1).’
[15] Quite obviously,
ss 36(1)
and (2) are the equivalent of
s 35(1)(a)
and
35
(3)(a), respectively.
But, in language different to that used in its counterpart,
s
35(3)(a)
, unequivocally and without any reference to
s 35(1)(a)
,
deals with the estate of an insolvent that ‘has been
sequestrated’ before the restraint order is made and excludes
property constituting that estate from the ambit of the various
powers it confers. And
s 35(1)(a)
simply excludes property subject to
a restraint order granted before the sequestration order from the
insolvent estate without
making any provision for ‘relevant
time’, as done in
s 36(1)
, or any qualification relating to the
filing of the application for sequestration. The differences in the
respective provisions
are far from trifling. They are, in my view,
deliberate and were clearly meant to distinguish between natural
persons and juristic
entities because the Legislature could simply
have used identical language in both scenarios had its intention been
to treat them
similarly. The distinction is not surprising in any
event in view of the fact that the concept of a winding-up order
commencing
retrospectively is unique to company law and has no
corresponding provision in the law of insolvency. Therefore, the
meaning of
s 35(3)
cannot be attributed to
s 36(2).
[16] I find it unnecessary to
deal with the other points raised on the NDPP’s behalf as they
do not take the dispute any further.
To sum up, the restraint order
must precede the filing of a winding-up application as otherwise, as
here by virtue of
s 36(2)
, a
concursus creditorum
is
established over the assets of the company where the winding-up order
is granted. This situation clearly operates to exclude
the restraint
order which must then lie dormant and the
curator bonis
must
yield his control over the assets to the liquidator. Thus, the
so-called ‘shifting’ phenomenon adverted by the
NDPP
seems to be precisely what the Legislature intended. In this case,
s
36(2)
of POCA excludes the shares from the ambit of the restraint
order granted on 3 July 2009. For these reasons, it was not competent
for the court below to confirm the provisional restraint order in
respect of such shares. The appeal must succeed. However, the
appropriate relief is a declaratory order and not a variation of the
restraint order as was originally sought by the appellants
because,
as pointed out above, the effect of the restraint order is simply
excluded by operation of the law.
[17] Accordingly, the following
order is made:
The appeal is upheld with costs,
including the costs of two counsel.
The order of the court below is
set aside and replaced with the following:
‘
(a) The
490 shares in Optipharm Healthcare (Pty) Ltd held by Aquila Holdings
(Pty) Ltd (in liquidation) are excluded from the “Schedule
of
Known Assets” reflected in annexure “A” to the
provisional restraint order of 3 July 2009 (the restraint order),
and
the restraint order is varied in this respect.
(b) The costs of the intervention
application launched by the first and second intervening applicants
shall be paid by the applicant,
including the costs of two counsel
where employed.
(c) Subject to the aforegoing,
the restraint order is confirmed against the defendant and
respondents only in respect of such property
as held by them at the
date of this order.’
___________________
MML Maya
Judge of Appeal
APPEARANCES
For Appellant: S. Olivier SC
R. Howie
Instructed by:
Bowman Gilfillan Inc., Cape Town
Matsepes Inc., Bloemfontein
For Respondents: G. Budlender SC
K. Saller
Instructed by:
State Attorney, Cape Town
State Attorney, Bloemfontein
1
Section
26
of POCA makes provision
for restraint orders and the relevant parts read:
‘
(1)
The National Director may by way of an
ex
parte
application
apply to a competent High Court for an order prohibiting any person,
subject to such conditions and exceptions as
may be specified in the
order, from dealing in any manner with any property to which the
order relates.
(2)
A restraint order may be made–
(a) in respect of
such realisable property as may be specified in the restraint order
and which is held by the person against
whom the restraint order is
being made;
(b) in respect of
all realisable property held by such person, whether it is specified
in the restraint order or not;
(c) in respect of
all property which, if it is transferred to such person after the
making of the restraint order, would be realisable
property.
(3) (a) A court to
which an application is made in terms of subsection (1) may make a
provisional restraint order having immediate
effect and may
simultaneously grant a rule nisi calling upon the defendant upon a
day mentioned in the rule to appear and to
show cause why the
restraint order should not be made final.’
2
‘
Realisable
property’ is defined in
s 14
as follows:
‘
(1)
Subject to the provisions of subsection (2), the following property
shall be realisable in terms of this Chapter, namely–
any
property held by the defendant concerned; and
any
property held by a person to whom that defendant has directly or
indirectly made any affected gift.
(2)
Property shall not be realisable property if a declaration of
forfeiture is in force in respect thereof.’
‘
Affected
gift’ is in turn defined in
s 12(1)
as ‘any gift (a)
made by the defendant concerned not more than seven years before
[the institution of a prosecution for
an offence or the date on
which a restraint order is made]; or (b) made by the defendant
concerned at any time, if it was a gift
…(i) of property
received by that defendant in connection with an offence committed
by him or her or any other person;
or (ii) of property, or any part
thereof, which directly or indirectly represented in that
defendant’s hands property received
by him or her in that
connection …’.
3
The
Companies Act has since been repealed by
s 224
of the
Companies Act
71 of 2008
although its application to a company liquidated for
inability to pay its debts is saved by transitional provisions set
out in
item 9 to schedule 5 of the latter Acts.
4
See,
for example,
Rennie NO v South African Sea Products Ltd
1986
(2) SA 138
(C) at 141I-142A;
Lief NO v Western Credit (Africa)
(Pty) Ltd
1966 (3) SA 344
(W) at 347A;
Venter NO v Farley
1991 (1) SA 316
(C) at 320C-F;
The Nantai Princess Nantai Line Co
Ltd v Cargo Laden on the MV Nantai Princess and other Vessels
1997
(2) SA 580
(D) at 584G-586G.