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[2020] ZAGPPHC 152
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James and Another v Van der Westhuizen N.O and Others (66148/18) [2020] ZAGPPHC 152 (27 January 2020)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
(1)
REPORT
ABLE: NO
(2)
OF
INTEREST TO OTHER JUDGES: NO
(3)
REVISED
CASE
NO: 66148/18
27/1/2020
In
the matter between:
CLIVE
EDWIN JAMES
FIRST APPLICANT
ENGELA
JAMES
SECOND APPLICANT
And
KOBUS
VAN DER WESTHUIZEN N.O
FIRST RESPONDENT
WILLIE
ENRICO PRINCE
N.O
SECOND RESPONDENT
TSHWANE
TRUST CO (PTY) LTD N.O
THIRD RESPONDENT
83
AIR CONDITIONING (PTY)
LTD
FOURTH RESPONDENT
THE
MASTER OF THE HIGH COURT
FIFTH RESPONDENT
JUDGMENT
COLLIS
J:
INTRODUCTION
[1]
This is an opposed application wherein
the applicants pray for the following relief:
1.1
That claim 1 accepted as proven in
liquidation proceedings be stayed, as the claim is based on an
unenforceable summary judgment,
(and for the claim to be proven in a
procedurally correct manner);
1.2
That the first to third respondents be
removed as liquidators in that their certificate of appointment as
liquidators be revoked
and set aside, and for them to be replaced
with an objective and impartial liquidator to be appointed by the
fifth respondent.
1.3
That further procedures and enquiries in
respect claim 1 be stayed and that the respondents be interdicted,
restrained and prevented
from continuing with such further procedures
and enquiries in respect of claim 1.
BACKGROUND
[2]
The applicants were the directors of
Centra Vac (Pty) Ltd ('the company').
[3]
On 3 October 2016 a special resolution
was passed for the voluntary liquidation of the company and pursuant
thereto, the company
status was changed.
[1]
[4]
On 27 October 2016 and after the
resolution was passed for the voluntary liquidation of the company,
the fourth respondent obtained
summary judgment against the
company.
[2]
[5]
On 3 June 2017 the first, second and
third respondents were appointed the liquidators of the company in
liquidation per reference
number T. 3462/16.
[3]
[6]
On 7 June 2017, a first creditor's
meeting was held and at was at this meeting that claim 1 which forms
the underlying causa for
the summary judgment, was accepted as a
proven claim by the liquidators.
[4]
THE
APPLICANTS CONTENTIONS
[7]
On behalf of the applicants it is
contended that claim 1 is
ultra vires
and of
no
force and effect
as it was based on
a summary judgment which was taken against Centra Vac after the
resolution liquidating the company was registered.
As such it did not
take note of the already existing lack of legal status of the company
in liquidation.
[8]
In addition to this, the applicants contend that on 9 March 2018 Mr
Bradley Brazington,
the legal representative of the fourth respondent
informed the first respondent of the liquidation status of the
company, this
after same was brought to the attention of the parties
at the enquiry held by the first respondent on the 8th March 2018.
[5]
[9]
It was on this basis that the applicants challenged the continuance
of the enquiry
and requested the first respondent to take steps to
remedy the defects.
[10]
It is further the applicants contention, that their repeated
attendances of enquiries premised
on an ultra vires and invalid
underlying claim which has been accepted as proven, is debilitating
in respect of their health, taking
emotional strain on their marriage
and infringes on their rights vested in terms of our Constitution.
[6]
[11]
In addition to the above, the applicants contend that they have a
clear right that the liquidation
proceedings should be administered
by an objective, honest and bona fide liquidator, at arms-length, as
could be expected and it
on this basis that they seek that their
appointment as liquidators be set aside and revoked.
[7]
THE
RESPONDENTS CONTENTIONS
[12]
On behalf of the first to third respondents it is contended, that the
judgment obtained during
summary judgment remains valid until such
time as it is set aside by a court and that this judgment was
obtained in circumstances
where the judgment creditor was unaware of
the voluntary liquidation of the company.
[8]
[13]
Furthermore, that even if it is found
that there exists merits to set aside the said judgment; the first
and second respondents
would have no power or
locus
standi
to do so, as the moment the
company went into voluntary winding up, the directors were divested
of all powers relating to any proceedings
regarding the insolvent
company and that such powers vested with the duly appointed
liquidators.
[9]
It is solely them that vests with the power to bring an application
to either set aside or rescind the judgment.
[14]
In addition the respondents alleges that
section 359
of the
Companies Act 71 of 2008
provides that legal
proceedings are suspended and attachments are void when a company has
been liquidated.
[10]
[15]
Furthermore, the respondents alleges.
that the applicants had failed to attend the first meeting of
creditors despite the meeting
being validly advertised and it was at
this meeting where the Master who holds an overriding discretion to
appoint a final liquidator
had chosen the liquidator.
[11]
[16]
It was also at this first meeting of creditors that the fourth
respondents claim was presented
and being aware that the judgment was
obtained after the date of voluntary liquidation the claim had to be
proven.
[17]
In this regard the liquidators had
placed reliance on the combined summons as issued under case number
61931/2016. The claim of
the fourth respondent was duly investigated
and the first respondent was satisfied as to its validity.
[12]
As nothing was found untoward in accepting the claim, the first and
second respondent was thereafter appointed as the final
liquidators.
[13]
As mentioned the judgment was obtained by way of summary judgment for
services rendered to the company in liquidation, which application
the applicants had failed to oppose.
[14]
[18]
It is further the first and second
respondent's contention that the launching of the present application
and the challenge of their
appointments as liquidators, is merely a
knee jerk reaction to the subpoenaed served on the second applicant
to attend the proceedings
of the enquiry. That prior to the date of
the launching of the present application, no challenge was raised to
the appointment
of the liquidators, despite the fact that their
appointment had taken placed as early as June 2017.
[15]
APPLICABLE
LEGISLATIVE FRAMEWORK
[19]
Section 44
of the
Insolvency Act 24 of
1936
provides as follows:
“
44
Proof of
liquidated claims against estate:
(3)
A claim made against an insolvent estate
shall be proved at a meeting of creditors of that estate to the
satisfaction of the officer
presiding at that meeting, who shall
admit or reject the claim:....
(4)
Every such claim shall be proved by
affidavit in a form corresponding substantially with Form C or D in
the First Schedule of this
Act. That affidavit may be made by the
creditor or by any person fully cognizant of the claim, who shall set
forth in the affidavit
the facts upon which his knowledge of the
claim is based and the nature and particulars of the claim, whether
it was acquired by
cession after the institution of the proceedings
by which the estate was sequestrated, and if the creditor holds
security therefor,
the nature and particulars of that security and in
the case of security other than movable property which he has
realized in terms
of section eighty- three, the amount at which he
values the security………………………………………………………"
[20]
Section 45
of Act 24 of 1936 provides as
follows:
"45.
Trustee to examine claims-
(1)
After a
meeting of creditors the officer who presided thereat shall deliver
to the trustee every claim proved against the insolvent
estate at
that meeting and every document submitted in support of the claim.
(2)
The trustee
shall examine all available books and documents relating to the
insolvent estate for the purpose of ascertaining whether
the estate
in facts owes the claimant the amount claimed.
(3)
If the
trustee disputes a claim after it has been proven against the estate
at the meeting of creditors, he shall report the fact
to the Master
in writing and shall state in his report his reasons for disputing
the claim. Thereupon the Master may confirm the
claim, or he may,
after having afforded the claimant an opportunity to substantiate his
claim, reduce or disallow the claim, and
if he has done so, he shall
forthwith notify the claimant in writing: Provided that such
reduction or disallowance shall not debar
the claimant from
establishing his claim by an action at law, but subject to the
provision of section seventy-five."
[21]
Section 339 of the Companies Act 61 of
1973 further provides as follows:
"339. Law of insolvency to be
applied
mutatis mutandis.
In the winding-up of a company
unable to pay its debts the provisions of the law relating to
insolvency shall, in so far as they
are applicable, be applied
mutatis mutandis in respect of any matter not specifically provided
for by this Act."
[22]
In the present instance, it is common
cause between the parties that the grievance by the applicants, is
premised on the acceptance
by the first and second respondents of the
claim by the fourth respondent.
[23]
It is further common cause between them,
that the applicants were absent from the first meeting of creditors
called albeit that
same was properly advertised in the Government
Gazette on 19th May 2017.
[24]
In their replying affidavit, the applicants set out that their
absence at the first meeting of
creditors was as a result of them
having been unfortunately blissfully unaware of the date and
mechanics of the first creditors
meeting......", and them having
been without the services of a legal representative, who had
withdrawn and that the liquidator
should have somehow made contact
with their erstwhile attorneys to inform them of the date of the
first meeting of creditors.
[16]
[25]
Now
firstly, there simply is no requirement in law, that liquidators are
obliged to correspond with directors personally (or with
their
attorneys) and by so doing to inform them of the details as to when
the first meeting of creditors is scheduled to take place.
[26]
Publication in the Government Gazette is what
the Act prescribes and this is so to afford all interested parties
and more specifically
creditors of the company in liquidation an
opportunity to present their claims against the said company in
liquidation.
[27]
The rationale for this is to allow for an open
and transparent process to be embarked upon and it follows that all
claims made against
a company in liquidation will be made at a public
forum and will be subject to examination by the officer who presided
over the
meeting and then by the trustees in terms of the provisions
of section 45.
[28]
In addition to this, the applicants having taken the decision to
voluntary place the company
in liquidation ought to have appraised
themselves of the process which will follow once a company had placed
itself in voluntary
liquidation and their ignorance of the law in
this regard cannot be used as an excuse.
[29]
As mentioned previously
section 45(3)
of the
Insolvency Act
specifically
provides for a mechanism in terms of which an aggrieved
creditor or a member can seek the expungement of a claim. In this
regard
although correspondence purporting same was directed to the
liquidators, this correspondence exchange occurred several months
after
the first meeting of creditors was held and it also failed to
provide evidence before the liquidator in respect of which the
summary
judgment in terms of which the judgment was granted could be
challenged by the liquidators.
[30]
In the absence thereof, there simply exists no basis upon which the
liquidators was obliged to
challenge the judgment of the fourth
respondent by way of a rescission application and in the absence
thereof the judgment stands
until it is set aside by a court. It
therefore follows that the application must fail.
[31]
The acceptance of claim 1 by the appointed liquidators is the basis
upon which the applicants
further contend warrants that the
appointment of the liquidators to be set aside and revoked and
further procedures and inquires
in respect of claim 1 to be stayed.
As previously mentioned the Master holds the overriding discretion to
appoint a final liquidator
of choice and on the evidence placed
before this court, nothing points to the fact that the applicants had
indeed approached the
Master to challenge the appointment of the
first and second respondents as liquidators of the company in
liquidation, but rather
that such challenge was launched as a knee
jerk reaction by them to avoid attendance and their participation in
the inquiry currently
embarked upon by the appointed liquidators. The
applicant by approaching the Court to revoke the appointment of the
liquidators,
without first approaching the Master, is to request the
Court to usurp the function of the Master.
[32]
It therefore must follow, that the applicants have failed satisfy
this court to be awarded the
relief which they seek and consequently
their application must fail.
[33]
In the result the following order is made:
33.1
The application is dismissed.
33.2
The applicants are ordered to pay the costs of
the application on an Attorney and Client scale personally, and
jointly and severally,
the one paying the other to be absolved.
C.
J. COLLIS
JUDGE
OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION PRETORIA
APPEARANCES:
1.
FOR THE
APPLICANTS:
ADV. Z. PANSEGROUW
2.
INSTRUCTED BY:
D.P. DU PLESSIS INCORPORATED
3.
FOR THE FIRST, SECOND &
THIRD RESPONDENTS:
ADV. J. HERSHENSOHN
4.
INSTRUCTED BY:
BRAZINGTON & McCONNELL
5.
DATE OF HEARING:
26 AUGUST 2019
6.
DATE OF JUDGMENT:
27 JANUARY 2020
[1]
Founding Affidavit para 32 p 12
[2]
Founding Affidavit para 34
[3]
Founding Affidavit para 35
[4]
Founding Affidavit para 37
[5]
Founding Affidavit para 39 and Annexure" CEJ 6"
[6]
Founding Affidavit para 48 & 51.
[7]
Founding Affidavit para 53 & Notice of Motion prayer 1.
[8]
Answering Affidavit para 5.7
[9]
Answering Affidavit 5.7 & 5.10
[10]
Answering Affidavit para 5.5; Section
359 Act 71
of 2008 provides as
follows:
359 Legal proceedings
suspended and attachments void:
(1) When the Court has made an
order for the winding- up of a company or a special resolution for
the voluntary winding- up of
a company has been registered in terms
of section 200-
(a) all civil proceedings by or against the company
concerned shall be suspended until the appointment of a liquidator;
and
(b) any attachment or execution put in force against the
estate or assets of the company after the commencement of
the
winding-up shall be void.
[11]
Answering Affidavit para 5.14 & 5. 15
[12]
Answering Affidavit para 14.3.3
[13]
Answering Affidavit para 6.7
[14]
Answering Affidavit para 6.20 & Minutes of Meeting held by the
Master p 133, Annexure "KW9"
[15]
Answering Affidavit para 6.20.5 & 6.22
[16]
Replying Affidavit para 88