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[2021] ZAGPPHC 132
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Surface Preparations , Equipment & Coatings (Pty) Ltd v SwanSA (Pty) Ltd t/a Swan's Water Treatment and Others (51113/20) [2021] ZAGPPHC 132 (10 March 2021)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE
NUMBER: 51113/20
DATE:
10 March 2021
SURFACE
PREPERATIONS, EQUIPMENT & COATINGS (PTY) LTD
Applicant
V
SWANSA (PTY) LTD t/a SWAN’S
WATER TREATMENT
First Respondent
COMPANIES AND INTELLECTUAL
PROPERTIES COMMISSION
Second Respondent
BRETT PETER
SWAN
Third
Respondent
YVONNE MARISA
SWAN
Forth Respondent
THE MASTER OF THE HIGH COURT,
PRETORIA
Fifth Respondent
JUDGMENT
MABUSE
J
[1]
This matter came before me as an urgent application. The
Applicant seeks:
“
1.
That this application be heard as an urgent application in accordance
with the provisions
of Rule 6(12) and that the requirements
pertaining to service and time periods be dispensed with;
2.
that the special resolution that was adopted by the Third and Fourth
Respondents
at a special meeting on 27 August 2020, in terms of which
the First Respondent was voluntarily wound-up in accordance with the
provisions of s 349 of the Companies Act, No. 61 of 1973, as amended,
be rescinded and set aside;
3.
that the Second Respondent be directed to restore the First
Respondent’s
status to “in the business”;
4.
that the Third and Fourth Respondents be interdicted and prohibited
from adopting
a resolution or a decision to voluntarily wind-up the
First Respondent, as provided for and envisaged in s 349 of the
Companies
Act, No. 61 of 1973, as amended, pending the finalisation
of the arbitration proceedings, which were initiated by the Applicant
against the First Respondent, Coram Adv Graham Girdwood SC;
5.
in the alternative to paragraphs 2, 3 and 4 supra:
5.1
that the liquidation in respect of the First Respondent be stayed
pending the arbitration
proceedings which were initiated by the
Applicant against the First Respondent, Coram Adv Graham Girdwood SC,
alternatively that
the liquidation of the First Respondent be set
aside, as provided for in s 345 of the Companies Act, No. 61 of 1973,
as amended;
6.
that the Third and Fourth Respondents be ordered to pay the costs of
this application
jointly and severally, the one to pay, the other to
be absolved pro tando on the scale as between attorney and client,
including
the costs consequent upon the employment of two counsel;
and
7.
that such further and/or alternative relief be granted to the
Applicant which
this Court deems reasonable and appropriate under the
prevailing circumstances.”
[2]
This application is opposed.
[3]
THE PARTIES
3.1
The Applicant is a private company with limited liability, duly
registered in accordance
with the provisions of the company statutes
of this country with its principal place of business situated at 19
Kurland Road, Perseverance,
Port Elizabeth, in the Eastern Cape
Province.
3.2
The Applicant is represented in this application by its Manager and
Director, Mr Arnold
Petrus Avenant (“Mr Avenant”).
3.3
The First Respondent is a private company with limited liability,
duly registered in accordance
with the company laws of this country
with its principal place of business situated at Plot 91, Bartlett
Road, Honingklip, Krugersdorp,
Gauteng.
3.4
The Second Respondent is the Companies and Intellectual Property
Commission with its principal
place of business and head office
situated at 77 Meintjies Street, Sunnypark, Pretoria, Gauteng.
3.5
The Third Respondent is Brett Peter Swan, Identity No. 810729 5095
082, an adult businessman
residing at 298 Villa Conesa, Furrow Road,
Homeshaven Extension 6, Krugersdorp, Gauteng.
3.6
The Fourth Respondent is Yvonne Marisa Swan, Identity No. 591010 0268
080, an adult business
woman residing at Plot 91, Bartlett Road,
Hongingklip, Krugersdorp, Gauteng.
3.7
The Fifth Respondent is the Master of the High Court, Pretoria, SALU
Building, 316 Thabo
Sehume Street, Pretoria, Gauteng.
No relief is sought against the
Fifth Respondent.
THE
BACKGROUND
[4]
In his capacity as the Applicant’s director and managing
director, Mr Avenant
initiated arbitration proceedings against the
First Respondent in which the Applicant claimed damages against the
First Respondent
in the sum of R7,987,845.19 together with interest
and costs. This referral of the Applicant’s claim against
the First
Respondent was made in terms of Clause 12.2(c) of the
Sub-Contract Work Agreement. Clause 12.2(c) states that:
“
Should
a dispute arise between the parties are out or in connection with the
contract or it’s application or interpretation,
that dispute
shall be handled as follows:
(c)
Should the matter not be resolved by amicable settlement the party
wishing to declare
a dispute shall refer his dispute in writing to
arbitration before a single Arbitrator as applied in terms of the
Arbitration Act
[42 of 1965, as amended]. The arbitration shall
take place in accordance with the Rules for the Conduct of
Arbitrations issued
by the Association of Arbitrators [South Africa]
which is current at the time of the referral to arbitration.
The decision
of the Arbitrator shall be final and binding on both
parties.”
[5]
In terms of the said Clause 12.2(c), Mr Graham Girdwood SC, a member
of the Johannesburg
Society of Advocates, was appointed as the
Arbitrator. The Arbitration Proceedings were set down for 20
August 2020.
[6]
The Applicant contends that the First Respondent deliberately and
intentionally failed
or omitted to file any plea or statement of
defence in the Arbitration.
[7]
An impression was created in the mind of the Applicant that the First
Respondent was
playing cat and mouse with the Applicant and the
Arbitrator. The Arbitration Proceedings are currently pending
before Adv
Graham Girdwood SC.
[8]
The First Respondent then applied for the postponement of the
Arbitration Proceedings
which were scheduled for 20 August 2020.
The reasons for the postponement are not known or set out. It
is therefore
not known why the Arbitrator granted the application for
the postponement. Then on 20 August 2020 the arbitration
proceedings
were postponed to 29 September 2020. They were set
down for three days. The Applicant states that it took steps to
prepare itself for the Arbitration Proceedings. Such
preparations included briefing counsel, Adv Bruce Dyke SC, of the
Port
Elizabeth Bar, to represent it at the Arbitration Proceedings.
[9]
On 29 September 2020 at around 08h15, the Third Respondent sent an
email to Adv Graham
Girdwood SC. In this email, the Third
Respondent informed the said Arbitrator that the First Respondent has
been liquidated
by reason of “serious financial constraints and
the passing of Peter Swan.” I do not understand the
reason for
the liquidation. In the first place, the liquidation
was said to have been launched by the Third Respondent, Brett Peter
Swan. One of the reasons given by Brett Peter Swan for the
liquidation of the First Respondent was that his father, Peter
Ignatius Swan, had passed away. The relevant email stated that:
“
Due
to serious financial constraints and the passing of Peter Swan we
were left with no alternative but to liquidate the company.
We will
provide you with details as soon as the nominated liquidator has been
appointed.”
This letter
was signed by Brett Swan.
[10]
On 25 September 2020, Ms Joanne Anthony-Gooden, the Applicant’s
attorney sent an email
to the Third Respondent in which she requested
to be furnished with important information in order to enable her to
advise the
Applicant properly. The Third Respondent replied to
the said email. In his email dated 25 September 2020 the Third
Respondent advised the Applicant’s attorney that the First
Respondent was wound-up voluntarily. The email was brief.
It simply stated that:
“
This
was the decision for voluntary liquidation.”
Having been
informed of the liquidation of the First Respondent, the Arbitrator
postponed the Arbitration Proceedings
sine
die
and informed the parties
accordingly.
[11]
The Applicant discovered subsequently that the Third and Fourth
Respondent had convened a general
meeting of the First Respondent
which was held on 27 August 2020. During this meeting, a
special resolution was adopted to
liquidate the First Respondent
voluntarily in terms of the provisions of s 349 of the Companies Act
71 of 1973 (“the Companies
Act”). Section 349 of
the Companies Act deals with circumstances under which a company may
be voluntarily wound-up.
It provides as follows:
“
A
company, not being an external company, may be wound-up voluntarily
if the company has, by special resolution resolved that it
be
wound-up.”
A special
resolution to wound-up a company voluntarily may provide either for a
member’s voluntary wounding up, in other words,
one effected by
the members or for a creditor’s voluntary wounding up, in other
words, one effected by the creditors in conjunction
with the members.
[12]
In terms of s 349, a company may be wound-up voluntarily for any
reason. This may happen
even if the company is solvent and
flourish. It may be so wound-up voluntarily even if bound by
obligations which by the
winding up it would become unable to
perform. See in this regard
South Rand Exploration Co. Ltd v
Transvaal Coal Owners Association Ltd
1923 W.L.D. 91
at p. 97
:
“
A
court will not interfere with a right which the Act gives to the
majority, provided of course that the majority supporting the
resolution for wounding up is sufficient for the effective
adoption of a special resolution and that no
fraud on the minority is involved.”
[13]
As pointed out properly by the Applicant’s counsel in his heads
of argument, this application
concerns the manner in which the Third
and Fourth Respondents went about in adopting the resolution at a
special meeting on 27
August 2020, in terms of which the First
Respondent was voluntarily wound-up in terms of the provisions of s
349 of the Companies
Act 71 of 1973.
[14]
The question now is what is wrong with the manner in which the Third
and Fourth Respondents adopted
a resolution at a special meeting on
27 August 2020? The Applicant’s main complaint with the
regard to the manner in
which the Third and Fourth Respondents
adopted the resolution on 27 August 2020 was that the Respondents
went about in a clandestine
and surreptitious manner by adopting the
aforementioned resolution. It is the Applicant’s case
that the said resolution
was adopted in order to prevent or delay or
avoid or to derail the arbitration proceedings which were set down
for hearing on 29
September 2020.
[15]
Two very crucial questions arise from the said statement. The
first of these two questions
is whether the Third and Forth
Respondents were obliged in law to notify the Applicant of their
intention to voluntarily liquidate
the First Respondent? The
second question is whether the arbitration proceedings in law
prevented the Third and Fourth Respondents
from adopting a resolution
in terms of which the First Respondent was voluntarily wound-up.
[16]
In the replying affidavit the Applicant states that the Respondents,
in other words, the Third
and the Fourth Respondents, were duty bound
and obliged to at least give notice to the First Respondent’s
creditors of their
intention to adopt the resolution in terms of
which the First Respondent was voluntarily wound-up.
[17]
What is the basis of this statement? Is it the Arbitration
Agreement or the law?
It is so that the parties herein had
concluded a Sub-Contractor Work Agreement which contains an
Arbitration Clause. This
Arbitration Clause is, as already
indicated above, contained in Clause 12.2(c) of the said agreement.
This is the only clause
that deals with or refers to arbitration.
There are a few problems in reliance on the Sub-Contractor Work
Agreement.
Most importantly it does not prevent the parties to
the Agreement from jettisoning it and resorting to litigation or
court proceedings.
Nothing in the Agreement provides for what
will happen in the event of one of the parties wanting to resile from
Arbitration and
what such a party could do and what the other party
can do. It would seem that the Arbitration Clause was not
binding.
One was not compelled to stick to it like a “bosluis”
to the skin of cow. In the premises, there was no cause
to
complain if one of the parties pulled out of the arbitration
proceedings even before they could start. The party
could
not, for one or the other reason, be compelled to stick around until
arbitration commenced during its duration and right
up to the end.
The current rules of the conduct of arbitration issued by the
Association of Arbitrators South Africa have
not been placed before
the Court. As a consequence, the Court has no way of knowing
whether these rules contained the rules
that prevented a party from
abandoning Arbitration Proceedings and opting for current
proceedings. As the Applicant has not
alleged that the
Respondents are bound by such rules to proceed to finality with
Arbitration Proceedings, I will assume, for safety
sake, that the
Rules concerned contain no such a clause.
[18]
I requested the parties to comment on the provisions of ss 3, 5 and 6
of the Arbitration Act.
The parties responded accordingly.
I am indebted to them. In the first place, counsel for the
Applicant pointed out
that in terms of s 3(1) of the Arbitration Act,
the Arbitration Agreement survives any termination or cancellation of
the main
agreement. Secondly, he referred me to the provisions
of s 359 of the Companies Act and stated that the provisions of s 359
of the Companies Act strike at the heart of this application.
His view is that he has every intention to continue and to
finalise
the pending arbitration proceedings. He states furthermore that
it is competent and prudent for the Court to make
an order in terms
of prayers 1, 2, 3 and 4 of the Notice of Motion. He relies on
s 359 of the Companies Act which provides
that:
“
259(1)
When the Court has made an order for the wounding up of a company
or
a special resolution for the voluntary wounding up of the company has
been registered in terms of s 200 –
(a)
all civil proceedings by or against the company concerned shall be
suspended until the appointment
of the liquidator; and
(b)
any attachment or execution put in force against the estate or assets
of the company after
the commencement of the wounding up shall be
void.
(2)(a) Every
person who, having instituted legal proceedings against a company
which were suspended by a winding-up,
intends to continue the same,
and every person who intends to institute legal proceedings for the
purpose of enforcing any claim
against the company which arose before
the commencement of the winding-up, shall within four weeks after the
appointment of the
liquidator give the liquidator not less than three
weeks’ notice in writing before continuing or commencing the
proceedings.
(b)
If notice is not given the proceedings shall be considered to be
abandoned unless the Court
otherwise directs.”
[19]
Given an extended meaning Arbitration Proceedings amount to civil
proceedings. This was
the manner the parties had themselves
chosen to resolve their dispute. This was the method that the
Applicant had chosen
to claim payment of money from the First
Respondent. Therefore, any method by which one party claims
payment of money from
the other including arbitration proceedings,
qualifies as civil proceedings. So in terms of s 359(1)(a) of
the Companies
Act, the arbitration proceedings between the Applicant
and the First Respondent were suspended until the appointment, in
terms
of the Companies Act, of a liquidator.
[20]
Once the arbitration proceedings have been suspended in terms of s
359(1)(a) of the Companies
Act, and the liquidator has been
appointed, it would appear that such proceedings may resume,
provided, the creditor shall, within
4 weeks after the appointment of
the liquidator, give the liquidator not less than 3 weeks’
notice in writing before continuing
or commencing the proceedings.
This is very clear from s 359(2)(a) of the Companies Act. A
creditor cannot prevent
a company from taking a resolution in terms
of which the company is voluntarily wound-up. If the company
cannot be stopped
from adopting such a resolution and registering it
with the Registrar of Companies as envisaged by s 200 of the
Companies Act,
it is immaterial whether the creditor is informed or
whether, as alleged by the Applicant, the resolution is adopted
secretly.
[21]
All that the Applicant could do in these circumstances is to wait for
the appointment of the
liquidator and thereafter to continue with the
arbitration proceedings after complying with the provisions of s
359(2) of the Companies
Act. S 359(2)(b) of the Companies Act
makes it clear that if the creditor or Applicant has not followed the
procedure set
out in s 359(2)(a) of the Companies Act, he may not
continue with the suspended arbitration proceedings. It
provides that:
“
If
notice is not so given the proceedings shall be considered to be
abandoned unless the Court otherwise directs.”
[22]
The Applicant wants to continue with the suspended arbitration
proceedings. I have pointed
out that the Applicant may do so
provided he has complied with the provisions of s 359(2)(a) of the
Companies Act. If any
of the Respondents or the liquidator
wants to prevent the suspended arbitration proceedings from
continuing such a Respondent or
liquidator will have to apply to
Court in terms of s 6 of the Arbitration Act. Section 6
provides that:
“
If
any party to an arbitration agreement commences any legal proceedings
in any court (including any inferior court) against any
other party
to the agreement in respect of any matter agreed to be referred to
arbitration, any party to such legal proceedings
may at any time
after entering appearance but before delivering any pleadings or
taking any other steps in the proceedings, apply
to that court for a
stay of such proceedings.
(2)
If on any such application the court is satisfied that there is no
sufficient reason why
the dispute should not be referred to
arbitration in accordance with the agreement the Court may make an
order staying the proceedings
subject to such terms and conditions as
it may consider just.”
[23]
In the meantime, s 5 of the Arbitration Act deals with the insolvency
or wounding up of a party
to an arbitration agreement. It
provides as follows:
“
5
Unless the agreement otherwise provides, an arbitration agreement or
any appointment
of an arbitrator or umpire thereunder shall not be
terminated by the sequestration of the estate of any party thereto or
if such
party be a corporate body by the wounding up of the corporate
body or the placing of the corporate body under judicial management.”
In other words, the appointment
of the Arbitrator in the suspended arbitration proceedings
continues. It does not end simply
because the First Respondent
has been judicially wound-up.
Section 5(2) provides as follows:
“
If
the estate of any party to an arbitration agreement is sequestrated
or if, in the case of a corporate body which is a party to
such an
agreement, a petition for the winding up of the corporate body or for
placing the corporate body under judicial management
is presented or
an order for winding up the corporate body or for placing the
corporate body under judicial management is made,
the provisions of
any law relating to the sequestration of insolvent estates or, as the
case may be, any law relating to the winding
up or judicial
management of a corporate body concerned, shall apply in the same
manner as if a reference of a dispute to arbitration
under the
arbitration agreement were an action or proceedings or civil
proceedings or legal proceedings or civil legal proceedings
within
the meaning of any such law.”
Section 5(3) provides that:
“
For
the purpose of the application of the laws referred to in subsection
(2) –
(a)
a reference of a dispute to arbitration shall be deemed to be an
action or civil proceedings
or legal proceedings or civil legal
proceedings by or against any person or corporate body instituted or
pending in any court of
law having jurisdiction if any party to the
dispute has served on the other party or parties thereto a written
notice requiring
him or them to appoint or to agree to the
appointment of an arbitrator, or, where the Arbitrator is named or
designated in the
arbitration agreement, requiring the dispute to be
referred to the arbitrator so named or designated; and
(b)
a reference of a dispute to arbitration shall be deemed to be an
action or proceeding which
is being or is about to be instituted
against a corporate body, if any party to the dispute is taking steps
to serve or is about
to serve on the corporate body a written notice
such as is referred to in paragraph (a).”
Section 5(4)
provides that:
“
Any
period of time fixed by or under this Act which is interrupted by any
stay, suspension or restrain resulting from the application
of any
law referred to in subsection (2), shall be extended by a period
equal to the period of such interruption.”
[24]
On the other hand, counsel for the Third and Fourth Respondents
contends that the Arbitration
Act has no impact on the rights created
by the Companies Act. The Arbitration Act does not prevent a
director or directors
of a company from proceeding in terms of the
Companies Act, as in this instant matter. According to counsel
for the Third
and Fourth Respondents, s 3 of the Arbitration Act
relates to the fact that the agreement between the parties is binding
between
them. According to him, s 5(1) and (3) of the
Arbitration Act specifically provides for the proceedings, that is
arbitration
proceedings, to continue after an order of liquidation of
the company. In this current matter, the liquidator has been
appointed.
[25]
This Court is disinclined to come to the assistance of the Applicant
in respect of prayers 2,
3 and 4 for the reasons set out in paragraph
[12] herein
supra
. In my view, there was no need for the
Applicant to launch this application. The application can
therefore not succeed.
It is accordingly dismissed,
with costs.
PM MABUSE
JUDGE OF THE HIGH COURT
Appearances
:
Counsel for the Applicant:
Adv FW Botes SC
Instructed
by:
Anthony-Gooden Inc.
c/o Gothe
Attorneys
Counsel for the Defendant:
Adv LK van der Merwe
Instructed
by:
Rudolf van Niekerk Attorneys
c/o Cawood
Attorneys Inc.
Date on the opposed roll before
Mabuse J: 16 November 2020
Date of Judgment:
10 March 2021