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[2011] ZASCA 238
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Master of the High Court Northern Gauteng High Court, Pretoria v Motala NO and Others (172/11) [2011] ZASCA 238; 2012 (3) SA 325 (SCA) (1 December 2011)
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THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no: 172/11
MASTER
OF THE HIGH COURT
NORTH
GAUTENG HIGH COURT, PRETORIA
…................................
Appellant
and
ENVER
MOHAMED MOTALA NO
….........................................
First
Respondent
MABUTHU
LOUIS MHLONGO NO
…...................................
Second
Respondent
AMOURE
YEUN NO
….............................................................
Third
Respondent
REALEKA INVESTMENTS SA (PTY) LTD
….........................
Fourth
Respondent
Neutral
citation:
Master of the High Court NGP v Motala NO
(172/11)
[2011] ZASCA 238
(1 December 2011)
BENCH:
PONNAN, MALAN and WALLIS JJA
HEARD: 18 NOVEMBER 2011
DELIVERED: 1 DECEMBER 2011
SUMMARY:
Contempt of court – order giving rise to alleged contempt a
nullity – effect of
___________________________________________________________________
ORDER
___________________________________________________________________
On
appeal from
:
North Gauteng High Court
(Pretoria)
(Legodi J
sitting as court of first instance):
The appeal succeeds and the following paragraphs of the order of the
court below are set aside:
'1. The acting Master of the court, Ms Nthabiseng Ntsoane and the
Deputy Master of this court Ms Christine Roussouw, are hereby
found
in contempt of the court order of the 5 August 2010;
2. Sanction or punishment in respect of the contempt of court order
aforesaid is hereby postponed indefinitely.’
___________________________________________________________________
JUDGMENT
___________________________________________________________________
PONNAN JA (MALAN and WALLIS JJA concurring):
[1] On 5 August 2010 the North Gauteng High Court (per Kruger AJ)
issued inter alia the following order:
'1. THAT the First Respondent,
Realeka Investment SA (PTY) LTD [Realeka] is hereby placed under
provisional judicial management
in terms of the provisions of the
Companies Act, Act No. 61 of 1973 ("the Act");
. . .
3. THAT Hendrik Abram van
Vuuren, Second Applicant, jointly with Mabutha Mhlongo (the judicial
managers), are hereby appointed as
joint judicial managers to be in
full control of all aspects of the First Respondent and as prescribed
by Section 430 of the Act.'
The appellant, the Master of the North Gauteng High Court, declined
to issue a certificate of appointment to Mr van Vuuren. Instead,
on
19 August 2010 the Master appointed the first respondent, Mr Enver
Mohamed Motala and the third respondent, Ms Amoure Yeun together
with
Mr Mhlongo, the second respondent, as the joint provisional judicial
managers of Realeka with the powers set out in s 430
of the Companies
Act 61 of 1973 (the Act). A day later and at the instance inter alia
of Mr van Vuuren, Mavundla J issued a rule
nisi returnable on 26
October 2010 interdicting the Master from 'appointing any other
judicial managers save in terms of the court
order dated the 5
th
of August 2010'. In addition, Mavundla J ordered Realeka, which by
that stage was already under a provisional judicial management
order,
and the Master to pay the costs of that application jointly and
severally.
[2] On 6 September 2010 and on the application of Messrs Motala and
Mhlongo and Ms Yeun, Raulinga J interdicted Mr van Vuuren from
carrying out any of the functions of a provisional judicial manager
'whether conferred by the Companies Act or purportedly conferred
by
the court order dated 5 August 2010 issued by his lordship Mr Justice
Kruger'. Mr van Vuuren then approached the high court
seeking to
discharge the interdict that had issued before Raulinga J. That
application came before Legodi J on 13 September 2010
who,
mero
motu
it would seem, raised the issue of the Master's possible
contempt of the order of Kruger AJ dated 5 August 2010 and directed
the
Master to file an affidavit by not later than 15 September 2010
explaining 'why he/she should not be found to be in contempt of
the
court order of 5 August 2010 by refusing to issue [Mr van Vuuren]
with letters of appointment as judicial manager of Realeka'.
[3] The Assistant Master, Mr Wynand Jakobus Cilliers, who deposed to
the affidavit in compliance with the order of Legodi J, states:
'22
It was never the intention of this office to be in
contempt of Court and in support of this statement I wish to place
the following
facts before the Honourable Court:
22.1 No papers were served on this office in terms of
the mandatory provisions of section 427 read with section 346(4)(a)
of the
Companies Act 61 of 1973;
22.2 When the Court grants an order to place a company
under judicial management such order places the estate or assets of
the company
in the hands of the Master in terms of section 429 of the
Companies Act;
22.3 The Court does not make an order with regard to the
appointment of liquidators and judicial managers as this function is
that
of the Master in terms of section 429 of the Companies Act. In
practice the Court does however often make a recommendation that
the
appointment be made urgently or the Court can make a recommendation
that a specific person be appointed. The Master must however
consider
and take into account the inputs of all other creditors and the
policies of the Department of Justice before an appointment
is made;
22.4 On 20 August 2010 when the Honourable Mr Justice
Mavundla interdicted the Second Respondent in this application, this
office
had already made the appointment and issued the appointment
certificate of the judicial managers in this matter;
22.5 Mr van Vuuren changed the wording of the affidavit
of non-interest certificate as he does have a substantial interest in
the
affairs of the Fourth Applicant and can therefore not be
appointed. There is a very strong case to be made out that his own
interest
and those of other creditors may be in conflict of each
other;
22.6 Mr van Vuuren is not known to this office and has
never been appointed in a fiduciary capacity as liquidator, trustee
or judicial
manager;
22.7 Mr van Vuuren does not comply with the minimum
requirements by this office before a person can be placed on the
Master's panel
of liquidators or judicial managers. He is not an
admitted attorney or auditor and is therefore not a suitable person
to be appointed;'
In explaining how Mr Motala and Ms Yeun came to be chosen, Mr
Cilliers states:
'13
The Master has a discretion to consider who he will
appoint as judicial manager. The Master will normally also consider
the inputs
of creditors. Numerous requisitions were submitted and the
main creditor (Absa Bank) supported Mr E M Motala. The normal policy
of this office is also to appoint a previous disadvantaged person
(PDI) in each estate in order to get exposure as liquidators
or
judicial managers. This is the reason why Ms A Yeun was appointed.
This appointment was done in terms of the provisions of section
429
of the Companies Act.'
[4] Legodi J was not persuaded by the explanation proffered. He
concluded:
'1. The acting Master of the court, Ms Nthabiseng
Ntsoane and the Deputy Master of this court Ms Christine Roussouw,
are hereby
found in contempt of the court order of the 5 August 2010;
[and]
2. Sanction or punishment in respect of the contempt of
court order aforesaid is hereby postponed indefinitely.’
The present appeal against those orders is before this court with the
leave of Legodi J. The respondents have intimated that they
abide the
decision of this Court. In what follows I shall endeavour to
demonstrate that both the reasoning as also the conclusion
reached by
the learned Judge cannot be supported.
[5] A useful starting point has to be the recognition that our
insolvency administration is wholly a creature of statute. In
Gilbert
v Bekker & another
1984 (3) SA 774
(W) at 777G-H, Coetzee J
put it thus: ‘[o]ur courts are not entrusted with insolvency
administration as in England. The Court,
when called upon to do so,
merely applies the law to a given situation’. Section 429 of
the Act empowered a court on application
to it to grant a provisional
judicial management order. It provided:
'Upon the granting
of a provisional judicial management order―
(
a
)
all the property of the company concerned shall be
deemed to be in the custody of the
Master
until a
provisional judicial manager
has been appointed and has assumed office;
(
b
) the Master shall without delay—
(i)
appoint, in accordance with
policy determined by the Minister, a provisional judicial manager
(who shall not be the auditor of the
company or any person
disqualified under this Act from being appointed as liquidator in a
winding-up) who shall give such security
for the proper performance
of his or her duties in his or her capacity as such, as the Master
may direct, and who shall hold office
until discharged by the Court
as provided in
section
432
(3)(
a
);
(ii)
convene separate meetings of
the creditors, the members and
debenture
holders (if any) of the company for the purposes referred to in
section
431
.'
[6] That section reserved to the Master the power to appoint a
judicial manager. The effect of such a provision as Potgieter J
observed (albeit in respect of
s 151
of the
Insolvency Act 24 of
1936
) in
Goldfields Trading Company (Pty) Ltd v Schutte
1956
(3) SA 1
(O) at 2D is that: ‘[t]he appointment of a provisional
trustee is purely statutory and I cannot see how the Court has any
inherent power where such power is vested in the Master by statute’.
That was echoed by Myburgh J in respect of the Act here
under
consideration in
Lipschitz v Wattrus NO
1980 (1) SA 662
(T) at
671G, who stated: ‘[a]s to any such provisional appointments
[of trustees, liquidators and judicial managers] the
Master clearly
has an unfettered and sole administrative discretion and it is within
his enacted powers to give directions to his
staff about such
appointments’.
[7] Any doubt as may have existed as to the power of the high court
to appoint judicial managers — and to my mind there ought
to
have been none — has now been laid to rest by the judgment of
Bertelsmann J in
Ex parte The Master of the High Court South
Africa (North Gauteng)
2011 (5) SA 311
(GNP). In that matter the
Master saw fit to approach the high court for declaratory relief.
What motivated the application appears
from the reported judgment
(paras 2-4), which reads:
'The application has been necessitated by a practice
that has developed over the past years that attorneys who apply for
the sequestration
of individuals or the liquidation of companies (or,
for that matter, close corporations), or for judicial management of a
company
in terms of the Companies Act 61 of 1973 (see now Act 71 of
2008), include a prayer in the notice of motion and draft order for
the appointment of a specific individual as trustee or provisional
trustee, as liquidator or as provisional liquidator or judicial
manager or provisional judicial manager.
Advocates who are instructed to appear in these
applications, usually in the unopposed motion court, move for orders
in these terms,
and, as is apparent from a number of orders granted
by judges of this court, do so successfully.
The Master contends that such orders are in conflict
with the clear provisions of the relevant statutory provisions, and
that officers
of the court should not apply for, and this court
should not grant, orders that interfere with the exercise of the
applicant's
functions.'
Bertelsmann J issued inter alia the following order:
'1 It is declared that the Master of the High Court of
South Africa is the only person authorised to appoint:
1.1 trustees and provisional trustees of sequestrated
and provisionally sequestrated estates;
1.2 liquidators and provisional liquidators of companies
and close corporations in liquidation or provisional liquidation; and
1.3 judicial managers and provisional judicial managers
of companies in judicial management and provisional judicial
management;
and
2 no judge of the High Court of South Africa has
authority or jurisdiction to effect any appointment of any person to
any of the
positions referred to in paragraph 1.'
[8] It thus was plainly impermissible for Kruger AJ to appoint the
provisional judicial managers of Realeka. What is more, nothing
in
the order of 5 August 2010 required the Master to do or not do
something. In particular it did not direct the Master to appoint
Mr
van Vuuren as the judge had already purported to do that or for that
matter to issue him with a certificate of appointment.
Nor, on the
authorities that I have already cited, could it. It follows that
whatever the Master may have done or not done that
could not have
constituted disobedience of the order of 5 August 2010 so as to found
any contempt on his part.
[9] It remains to consider the order of Mavundla J. According to Mr
Cilliers, although the order of Kruger AJ issued on 5 August
2010,
the Master's office was only served with a copy of the papers on 18
August 2010. On that very day officials in the employ
of the Master
proceeded in terms of s 429 of the Companies Act to appoint Messrs
Motala and Mhlongo and Ms Yeun as the provisional
judicial managers
of Realeka. A certificate to that effect issued on 19 August 2010.
Thus by the time that Mavundla J had issued
the rule nisi
interdicting the Master ‘from appointing any other judicial
manager save in terms of the court order dated
5
th
August
2010’ the officials in the employ of the Master's office had
already acted in terms of s 429. It follows that here
as well there
was no disobedience of the order of Mavundla J. To my mind, had
Mavundla J been aware that an appointment had already
been made, he
could hardly have issued the order that he did on 20 August 2010.
Like Kruger AJ before him, Mavundla J, also misconceived
the legal
position. Mavundla J went further than Kruger AJ though in purporting
to compel the Master to act in a particular way.
That, with respect
to the learned Judge, he could not do, for as Innes CJ explained in
an analogous context in
Hoisain v Town Clerk Wynberg
1916 AD
236
at 240:
'It is sought to compel the Town Clerk to place the
applicant's name upon the statutory list; he can only do that upon
the grant
of a certificate by the Council, which that body has
definitely refused to give. Such a certificate is not in truth in
existence.
So that the Court is asked to compel the Town Clerk to do
something which this statute does not allow him to do; in other words
we are asked to force him to commit an illegality.'
[10] Moreover, although it was not incumbent upon the Master to do
so, Mr Cilliers explained why the Master did not see his way
clear to
appointing Mr van Vuuren:
‘
It must be noted that this
office do not know Mr van Vuuren and we have never appointed him in
any estate in a fiduciary capacity
especially as liquidator, trustee
or judicial manager. He also in terms of the new guidelines used by
this office does not qualify
to be appointed as such. The guideline
presently applied to be admitted to the Master's panel of liquidators
/ judicial managers
is that the applicant must be an admitted
attorney or auditor.'
It is undisputed that Mr van Vuuren was neither an admitted attorney
nor an auditor. Nor was he independent, so his appointment
would have
been contrary to the general rule that liquidators and judicial
managers should be entirely disinterested persons, unconnected
with
the affairs of the company (
In re Greatrex Footwear (Pty Ltd (II)
1936 NPD 536
at 538-9). In those circumstances it could not be
said that the Master had not exercised his discretion honestly, nor
could it
be said that he had acted
mala fide
(see
Krumm &
another v The Master & another
1989 (3) SA 944
(D)). Legodi J
was not persuaded, however, and dealt with the Master’s
explanation thus:
'Instead of dealing with the essence of the court order,
they were carried away by the fact that the second respondent was not
on
the panel of their insolvency practitioners. This cannot be a
reasonable explanation to escape contempt.'
With respect to the learned Judge once again he appears to have
misconceived the position. In
Hartley v The Master
1921 AD
403
, where although the facts are not in point, but the general
doctrine formulated is instructive, Innes CJ stated (at 407):
‘
In the meanwhile [the
Master's] refusal bars the way, and under the general rule applicable
to such cases there are no grounds here
upon which interference of
the Court could be invoked. For the matter is left to his entire
discretion. The test is what he thinks
with regard to prejudice, not
what we think. We have no power to compel him to change his mind in
respect of a question which he
has duly considered’.
[11] What appeared to weigh with Legodi J was the following general
proposition: all orders of court whether correctly or incorrectly
granted have to be obeyed until they are properly set aside
(
Culverwell v Beira
1992 (4) SA 490
(W) at 494A-C;
Bezuidenhout v Patensie Sitrus Beherend BPK
2001 (2) SA 224
(E) at 229). No doubt there are important policy considerations why
that must be so. But, that raises a logically anterior question,
which Legodi J described as 'the most vexing aspect of this judgment'
- namely the status of the order of Kruger AJ. The Master
contended
that it was a nullity and could, without more, be disregarded. Legodi
J took a contrary view.
[12] As long ago as 1883, Connor CJ stated in
G W
Willis v
L B Cauvin
4 NLR 97
at 98-99:
'The general rule seems to be that a judgment, without
jurisdiction in the Judge pronouncing it, is ineffectual and null.
The maxim
extra territorium jus dicenti inpune
non paretur
(
Dig
.
2.1.20) is applicable (
Dig
.
50.17.170 & 2.1.20;
Cod.
7.48.1
& 14.4;
Wes
.
ibi
Poth. Pand.
42.1.(14,15);
Voet
42.1.48;
Wes.
ad. Dig
. 42.1.(5);
Wes.
ad. Dig.
50 17.170 & 2.1.(50);
Groenwn.
ad. Cod.
7.64;
Christin.
Decis
. 4.94.2).'
Willis v L B Cauvin
was cited with approval in
Lewis &
Marks v Middel
1904 TS 291
and
Sliom v Wallach's Printing and
Publishing Company Ltd
1925 TPD 650.
In the former Mason J (with
whom Innes CJ and Bristowe J concurred) held at 303:
'It was maintained that the only remedy was to appeal
against the decision of the Land Commission; but we think that the
authorities
are quite clear that where legal proceedings are
initiated against a party, and he is not cited to appear, they are
null and void;
and upon proof of invalidity the decision may be
disregarded, in the same way as a decision given without
jurisdiction, without
the necessity of a formal order setting it
aside (Voet, 2, 4, 14; and 66; 49, 8, 1, and 3; Groenewegen,
ad
Cod
. 2; 41; 7, 54;
Willis
v Cauvin
,
4 N.L.R. 98
;
Rex
v Stockwell
,
[1903] T.S. 177
;
Barnett & Co. v Burmester & Co.,
[1903]
T.H 30).'
And in the latter, Curlewis JP (Krause J concurring) held at 656:
'The action, therefore, of the respondent company in
applying for judgment, apparently by default, against the individual
partner
Sliom, the appellant in the present case, was an illegal and
wrongful act. A judgment was thereby obtained against a person who
had not been legally cited before the Court, and the effect of that
judgment is that it is a nulllity; it is invalid and of no
effect. In
the case of
Lewis & Marks v Middel
,
to which Mr Murray has referred us, and also in an earlier case where
the Roman-Dutch authorities were examined, it was laid down
on the
authority of
Voet
that
a judgment given against a person who had not been duly cited before
the Court is of no effect whatsoever. It is a nullity
and can be
disregarded. It seems to me that is the position here. A judgment was
obtained against the individual Sliom personally,
whereas he had
never been cited personally and individually to appear before the
Court. Therefore, that judgment was wrongly obtained
against him, and
that judgment, in my opinion, was a nullity as far as he was
concerned. The only judgment the plaintiff, on that
citation, was
entitled to was against the partnership.'
[13]
Lewis & Marks
and
Sliom
were cited with
approval by this court in
S v Absalom
1989 (3) SA 154
(A) at
164, which held:
'Dit volg dus dat die Volle Hof myns insiens geen
bevoegdheid gehad het om die appèl aan te hoor nie. Die
gevolg, meen ek,
was, soos voorspel deur Strydom R, dat die Volle Hof
se uitspraak 'n nietigheid was. Sien, benewens die bronne, aangehaal
deur
Strydom R, Voet
Commentarius ad Pandectus
49.8.1 en 3; Groenewegen
De
Legibus Abrogatis
,
Ad
Cod
7.64;
Lewis &
Marks v Middel
1904 (TS) 291 op 303;
Sliom
v Wallach's Printing and Publishing Co Ltd
1925
TPD 650
op 656 en
Trade Fairs and Promotions
(Pty) Ltd v Thomson and Another
1984 (4) SA
177
(W) op 183D-E. Soos blyk uit hierdie bronne, het die uitspraak
van 'n hof wat nie regsbevoegdheid het nie, geen regskrag nie, en
kan
dit eenvoudig geïgnoreer word.
Groenwegen
(
loc cit
)
sê wel dat, waar dit gaan oor die nietigheid van 'n uitspraak
van die Hooggeregshof, die
Princeps
se hulp ingeroep moet word, maar hierdie reël geld
nie meer by ons nie.'
(See also
State v Mkize
1962 (2) SA 457
(N)
at
460;
Government of the Republic of South Africa v Von Abo
2011
(5) SA 262
(SCA) paras 18 and 19.)
[14] In my view, as I have demonstrated, Kruger AJ was not empowered
to issue and therefore it was incompetent for him to have
issued the
order that he did. The learned judge had usurped for himself a power
that he did not have. That power had been expressly
left to the
Master by the Act. His order was therefore a nullity. In acting as he
did, Kruger AJ served to defeat the provisions
of a statutory
enactment. It is after all a fundamental principle of our law that a
thing done contrary to a direct prohibition
of the law is void and of
no force and effect
(Schierhout v Minister of Justice
1926 AD
99
at 109). Being a nullity a pronouncement to that effect was
unnecessary. Nor did it first have to be set aside by a court of
equal
standing. For as Coetzee J observed in
Trade Fairs and
Promotions (Pty) Ltd v Thomson & another
1984 (4) SA 177
(W)
at 183E: ‘[i]t would be incongruous if parties were to be bound
by a decision which is a nullity until a Court of an
equal number of
Judges has to be constituted specially to hear this point and to make
such a declaration’. (See also
Suid-Afrikaanse Sentrale
Ko-operatiewe Graanmaatskappy Bpk v Shifren & others and the
Taxing Master
1964 (1) SA 162
(O) at 164D-H.)
[15] It follows that Legodi J’s conclusion that the acting
Master, Ms Nthabiseng Ntsoane and the Deputy Master, Ms Christine
Roussouw, had acted in contempt of the order of Kruger AJ of 5 August
2010 cannot be supported. In the result the appeal must succeed
and
that finding as also the order postponing indefinitely the imposition
of punishment on them fall to be set aside.
[16] One further aspect merits attention: During the course of his
judgment, Legodi J passed certain comments about the conduct
of the
Master. The learned Judge expressed himself thus:
‘
The events after the 19 August
2010 and some actions of the Master in relation to the order of the 5
August 2010 worry me a lot.
Such actions border around unethical and
unprofessional conduct on the part of the Master.
. . .
The approach in chambers and in the absence of the other
parties, was not only uncalled for, unethical and unprofessional, but
was
also as I see it, meant to embarrass and compromise the Judge
concerned. In paragraph 20 of Mr Cilliers's affidavit deposed to on
15 September 2010, it is suggested that the Judge concerned in
chambers expressed his views as follows . . .’
The ‘approach in chambers’ that provoked such strong
feelings of disquiet in the learned Judge is explained in a
supplementary
affidavit filed by Mr Cilliers, who states:
'3.
On 24 August 2010 a Mr Norman Prigge of the firm E W
Serfontein and Associates Incorporated Attorneys, visited Ms Rossouw
on behalf
of a creditor enquiring about the status of this judicial
management.
4.
Ms Rossouw brought the Mr Prigge to my office and I
agreed to accompany him to make enquiries at the Registrar of the
Court. I did
this because Mr Prigge informed me that he could not
trace the Court file in the judicial management application and that
it appeared
that the application had not yet been registered on the
Court's computer system.
5.
We approached Mr D M Pietersen, the Chief Registrar. We
then located the matter on the urgent roll of 5 August 2010 and Mr
Pietersen
instructed his staff to locate the file but they were
unsuccessful in doing so. Mr Pietersen could also not locate the
application
on the Court's computer system.
6.
Mr Pietersen then suggested that we approach the
Honourable Mr Acting Justice Kruger, who heard the matter, and he
then took us
to the Judge's office.
7.
Mr Kruger AJ then informed us that he will investigate
the matter and that he will revert to us. On 27 August 2010 I
received a
telephone call from the Judge's secretary informing me
that the Judge wanted to see me and my attorney in his chambers. The
State
Attorney dealing with this matter, Mr C Malan, was attending to
another matter and I requested another State Attorney, Mr P Cavanagh,
to accompany me to the Judge's chambers.
8.
Mr Kruger AJ then informed us that he still could not
locate the Court file but that he had listened to the Court tapes,
that he
discussed the matter with most of his colleagues and that two
suggestions had been made to him. He further informed us that the
one
school of thought was that he is
functus
officio
to rectify his own order and that the
other school of thought was that we should have a look at Rule 42(1).
He however was of the
opinion that Rule 42(1) had limited
applicability and would not be of any use to us.'
I do not share the learned Judge’s disquiet. As Mr Cilliers
states, the contact with Kruger AJ was prompted by the desire
to find
a missing court file. The initial visit to the learned acting Judge’s
chambers was initiated by the high court registrar.
The second was at
the instance of the Judge himself. I cannot imagine that Mr Cilliers
could have declined to attend on the Judge’s
chambers when he
had been specifically invited by the latter’s secretary to do
so. That the learned acting Judge may have
expressed himself on the
matter in the absence of the other litigants hardly redounds to the
discredit of Mr Cilliers, particularly
as the Master was then not a
litigant before the court but a statutory functionary endeavouring to
discharge statutory functions
under trying circumstances. In my view
nothing in the conduct as explained by Mr Cilliers, appears to have
been unethical or designed
to embarrass the Judge. On the contrary it
was perfectly innocuous and certainly not deserving of the censure
and opprobrium visited
on it by Legodi J.
_________________
V M PONNAN
JUDGE OF APPEAL
APPEARANCES:
For
Appellant: M P van der Merwe
Instructed
by:
The
State Attorney
Pretoria
The
State Attorney
Bloemfontein
For
Respondent: No appearance