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[2019] ZAFSHC 17
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Venter v Matsepe and Others (4528/2018) [2019] ZAFSHC 17 (28 March 2019)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
number: 4528/2018
In
the matter between:
ELIZABETH
MARIA
VENTER
Applicant
and
TSIU
VINCENT
MATSEPE
1
st
Respondent
ANTON
OTTILE NOORDMAN N.O.
2
nd
Respondent
PHILLIP
FOURIE
N.O.
3
rd
Respondent
MATSEPES
INCORPORATED
4
th
Respondent
FREDERICK
JACOBUS SENEKAL
5
th
Respondent
THE
MASTER OF THE HIGH COURT, BLOEMFONTEIN
6
th
Respondent
COMPANIES
AND INTELLECTUAL PROPERTY
COMMISSION
7
th
Respondent
HEARD
ON:
25 OCTOBER and 8 NOVEMBER 2018
JUDGMENT
BY:
MATHEBULA, J
DELIVERED ON:
29 MARCH
2019
[1]
This is an application for a declaratory order declaring that the
applicant is not in liquidation and that the seventh respondent
correct his records to reflect that the applicant is in business.
The applicant is requesting costs only if the application
is opposed.
[2]
The applicant, Elizabeth Maria Venter, is the only shareholder of
Sebal Beleggings (Pty) Ltd with registration number 2006/012369/07.
[3]
The first respondent, Tsiu Vincent Matsepe a practicing attorney of
Odendaalsrus is the co-liquidator in the estate of Sebal.
The second
respondent, Anton Ottlie Noordman, a practicing attorney of
Bloemfontein is also a co-liquidator in the estate of Sebal.
Both are
acting in their legal capacity stated above in opposition of the
application as well as seeking a relief as per the conditional
counterclaim filed of record. The fifth respondent, Frederick Jacobus
Senekal is the attorney of record for the first and second
respondent. The first and second respondent are the only parties who
have filed opposing papers.
[4]
This matter came before me on 25 October 2018. Mr. K.W. Luderitz SC
assisted by
Adv. F.G. Janse
van Rensburg
appeared for the applicant
and the first, second, fourth and fifth respondent were represented
by Mr. A. Sanders. Ms J. Engelbrecht
appeared for the sixth
respondent holding a watching brief. After substantial delay I
ruled that both counsel proceed with
oral submissions. Counsel for
the applicant completed his arguments. Mr. Sanders was barely
on his feet when he requested
to be given more time in order to
prepare himself because certain submissions were made of which he was
not aware of. Given
his reluctance to argue the matter and
unnecessary interjections, I formed the impression that he was
delaying the inevitable.
It is patently clear that he was
kicking for touch to avoid the bullet. The argument he raised
for the postponement was unsound
because nothing new was introduced
in the oral submissions which was not in the papers before me.
[5]
I found it prudent that I should grant him the postponement to 8
November 2018. It would have been unfair that the applicant
and/or the estate of Sebal is burdened with the wasted costs for the
day due to no fault on their part. The only litigants,
responsible for the wasted costs will naturally be the first, second
and fifth respondent in their personal capacity. I made an
order to
that effect.
[6]
On 8 November 2018 the same legal team as on the previous occasion
appeared for the applicant. Mr A. Harcourt SC assisted by
Mr A.
Sanders was now appearing for the respondents. Ms G Wright who
appeared for the sixth respondent informed me that her client
abide
by the decision of the court on the preliminary point to be
determined.
[7]
The preliminary point to be determined is a challenge in terms of
Rule 7(1) of the Uniform Rules of Court. The contention is
that the
fifth respondent is precluded to act unless and until he satisfies
this court that he is duly authorised to act.
This means that
the fifth respondent does not have the necessary authority to
represent the first and second respondent. The absence
of authority
means that neither can oppose the application or pursue the counter
application. The first and second applicants did
not have the
necessary authority as stated above in the absence of participation
of the third co-liquidator in their opposition
to the application
and/or conditional counterclaim. Further, that the
participation of the respondents in the proceedings
is unauthorized.
Therefore the first and second respondent have no
locus
standi
to pursue the relief sought.
[8]
I now turn to deal with the preliminary points raised by the
applicant and the arguments advanced by both counsel.
[9]
At the commencement of his submissions Mr. Luderitz outlined the
position of the third respondent who filed an affidavit stating
that
he does not oppose the relief sought in the main application.
One of the features of his affidavit is that the third
respondent
accepts that the order granted by Van der Merwe J (as he then was) on
28 April 2016 discharged the company from liquidation
and supports
the relief sought by the applicant. Pertinently he accepts that his
appointment as a co-liquidator on 20 June 2016
was irregular and
defective. Lastly he stated categorically that the fifth respondent
has no authority or mandate to represent
him in these proceedings and
the notice of opposition filed of record does not purport to be his.
I shall return to these aspects.
[10]
He argued that in response to the challenge raised relating to the
authority, the applicants relied on the powers of attorney
dated 22
October 2018. He submitted that the Rule 7 Notice was concerned
with the two (2) powers of attorney. The significant
feature of the
power of attorney signed by the first respondent is that it does not
only seek to grant authority but ratify what
has been done in the
past. The power of attorney signed by the second respondent
does not contain a clause ratifying any
past action by any/or all of
the co-liquidators. The crux of his argument was that neither of the
respondents were authorized.
In the event that they are not acting
jointly then they are not properly authorized and that they should be
ordered to pay costs
in their personal capacities.
[11]
Mr. Luderitz argued quite forcefully that nullity cannot be ratified.
He pointed out that the two joint liquidators can sign
as many powers
of attorney as they possibly can but they can never ratify anything
to the exclusion of the one other liquidator.
He argued further that
the actions of the first and second respondent were in contravention
of section 382 and 386 of the Companies
Act 61 of 1963. He relied
primarily on
Powell
and another v Leech and another.
[1]
There
the court held that joint liquidators must act jointly in carrying
out their duties. Relying on
Gainsford
and others NNO v Tanzor Transport (Pty) Ltd
[2]
he argued further that in the event that the liquidators are unable
to act jointly, section 386 provides that they can procure
support of
the creditors and if it fails seek permission from the Master. If the
Master refuses then the court can be approached
in terms of section
387 for the necessary relief.
[12]
In conclusion he submitted that the action of the respondents was
designed to burden the assets of Sebal with costs. He stated
that
although the respondents may have personal interest in the form of
their fees that does not confer on them in the capacities
as
liquidators the right to oppose the relief or seek one without joint
approval.
[13]
In response Mr. Harcourt pointed out that there was no bona fide and
genuine dispute. He conceded that he does not have any
mandate from
the third respondent. He referred to the Notice of Motion clearly
stating that the fifth respondent is the attorney
of record for the
respondents. This in his view, is an admission that he has the
necessary authority to act on behalf of the respondents.
This aspect
is even admitted by the applicant in paragraph 7.3 of the founding
affidavit wherein it is stated that at all material
times the fifth
respondent was the attorney of record. In the absence of any
suggestion that anything has changed, then the point
raised by the
applicant has no substance and lacks merit.
[14]
The authority of the fifth respondent to act for the respondents is a
non-issue because the respondents have produced signed
powers of
attorney attached to the papers on pages 187 and 188 respectively. He
emphasized that a power of attorney is not an affidavit
and it has no
prescribed form. Therefore the two powers of attorney complies with
the requirements conferring the necessary authority
on the fifth
respondent to act on behalf of the first and second respondent.
[15]
The challenge against the authority of the first and second
respondent was also raised by Merss Willers Attorneys in a letter
dated 10 February 2017 pertaining to case number 567/2017. In terms
of the court order handed down by my sister Chesiwe J on the
even
date, the first and second respondent were ordered to furnish the
written permission from the creditor and a written mandate
from the
liquidators that Matsepes may act as attorneys of record. In the
alternative, a written authority from the Master conferring
upon them
the necessary powers to act. Although this order was granted almost
two (2) years ago, the first respondent maintains
that it was
materially flawed and bad in law. It is interesting to note that it
has not been appealed against which means that
it remains an Order of
court. In response, the respondents are relying on the powers of
attorney attached to the opposing affidavit
marked TVM “7”
and “8” respectively.
[16]
Rule 7 (1) provides that the authority of anyone acting on behalf of
a party may be disputed and such person may no longer
act unless the
court is satisfied that he is authorised to act. As Mr. Harcourt
correctly pointed out, the subrule does not prescribe
the formality
of the power of attorney. Nothing much turn on this.
[17]
The pertinent issue is the definition of the word “authority”.
The synonyms thereof are right, authorisation, power,
mandate and
prerogative. It is common cause that the first and second respondent
are joint liquidators with the powers as set out
in section 352 (1)
of Act 61 of 1973 read with Item 9 of Schedule 5 of Act 71 of 2008.
[18]
The joint liquidators must always take a joint decision before acting
on a matter. The argument that the powers of attorney
by two (2)
respondents is in order is unsound. They lack the appropriate
authority if the other co-liquidator does not participate
in the
decision-making process culminating in a particular action being
taken. I also do not find any substance in the submission
that
because the applicant in her affidavit mentioned that the fifth
respondent was at all material times acting for the first
and second
respondent confer such authority to him. The authority to act is
conferred in terms of the statute.
[19]
In my view then this disposes of this matter. Even if I am wrong, the
next leg which will result in the same conclusion is
challenge raised
by the applicant relating to the issue of
locus
standi.
[20]
It is trite that it is the primary duty of the liquidator(s) to
preserve the assets of the company. In the execution of their
functions, liquidators must do so in accordance with section 382 of
the Companies Act which provides as follows:-
“
Whenever two or
more liquidators disagree on any matter relating to the company of
which they are liquidators, one or more of them
may refer the matter
to the Master who may thereupon determine the question in issue or
give directions as to the procedure to
be followed for the
determination thereof.”
[21]
In Powell and another supra the court held that joint liquidators
must act jointly and that the observance of the provisions
of section
382 is peremptory. The court went further that section 382
contemplates a joint decision prior to action taking place.
This
means that it cannot be done respectively.
[22]
The actions of the first and second respondent are in contravention
of this section. It is common cause that the third respondent
is not
party to the decision to oppose the relief sought or seek relief
contemplated in the conditional counterclaim. It stands
to reason
that he is not a party to the appointment of the fifth respondent as
the attorney of record. Equally so, to the
appointment of the
fourth respondent as the law firm of choice.
[23]
The section provides that in the event of an impasse between joint
liquidators, such may be referred to the Master for the
determination
of the question in issue or give direction as to the procedures to be
followed for the determination thereof. It
appears from the papers
that the first and/or second respondent did not invoke the provisions
of section 382 (2) of the Companies
Act.
[24]
A further window of opportunity is provided to the joint
liquidator(s) in this predicament in the form of section 387 (2) of
the Companies Act. There it is provided that in the event the Master
refuse to give directions, the liquidators may approach the
court for
the necessary relief. I was not referred to any application pending
or contemplated by the first and/or second respondent
to approach the
court for the relief in resolving this impasse. I conclude that there
is none.
[25]
Section 386 deals with the general powers conferred upon the
liquidators. In particular subsection 3 provides that armed with
the
authority granted by meetings of creditors or members or
contributories or on the direction of the Master, the liquidators
shall have the power to bring or defend in the name and on behalf of
the company any action or other legal proceedings of a civil
nature.
In Gainsford supra the court held that the liquidator(s) must have
the authority from the meeting of the creditors which
must precede
the bringing of such proceedings. The court went on to say that it is
clear that the citation of the liquidated company
itself and the
prior authority of the creditors are the jurisdictional requirements
for civil proceedings to be validly and properly
before the court in
terms of section 386 (4)(a).
[26]
It is common cause that the first and/or second respondent do not
derive their power from any meeting of creditors. I venture
to say
that they are acting on their own. This strengthened the submission
that they lack any authority to place any defence or
even seek relief
validly before this court. Acting as liquidators they could not have
appointed the fifth respondent to act in
the name of the company.
Obviously if they act in their personal capacities, they do not have
to obtain the authority as envisaged
in terms of the Companies Act.
[27]
The importance of this section was emphasized in the passage on
paragraph 31 in the Gainsford matter in the following manner:-
“
This court is
thus persuaded by the remarks of Epstein AJ in Fay supra that section
386 (4)(a) of the Companies Act is couched in
peremptory terms and
that liquidators cannot exercise the discretion to sue in the name of
the company itself or whether to sue
in their own names with the
letters “NO” appended. The liquidators do not have locus
standi in terms of section 386
(4)(a) of the Companies Act to
institute proceedings under their own names. Any action instituted by
the liquidator must be brought
in the name of the company in which
the assets vest and cannot be brought in the name of the liquidator.
The liquidation of the
company does not destroy the identity of the
company. The Companies Act does make provisions for a liquidator in
certain circumstances
to institute an action in his/her name, but
only where a court so directs.”
I
agree
[28]
This leads me to the conclusion that the first and second respondent
could not have given the fifth respondent any authority
to represent
the estate of the company. Equally, they lacked the necessary locus
standi to sue and be sued in their capacity as
co-liquidators.
[29]
On the issue of costs, I find no reason to deviate from the principle
that the costs follow the result. However in this
matter, I
conclude that the estate of the company should not be burdened with
the costs when the first, second and fifth respondent
did not act in
accordance with the law. I hold that the aforementioned respondents
must pay the costs in their personal capacity.
[30]
In the premises I make the following order:-
30.1. The fifth
respondent does not have the authority to represent the first and
second respondent in their capacity as liquidators
in this matter.
30.2. The first and
second respondent lack the locus standi to sue or be sued in their
capacity as liquidators in this matter.
30.3. The first, second
and fifth respondent must pay in their personal capacity the wasted
costs of the 25 October 2018 jointly
and severally the one paying the
other to be absolved.
30.4. The first, second
and fifth respondent must pay the costs of the application.
_____________
MATHEBULA,
J
On
behalf of Plaintiff: Adv. K. W. Luderitz (SC)
assisted
by
Adv.
F.G. Janse van Rensburg
Instructed
by: Willers Attorneys
Bloemfontein
On
behalf of
Respondent 1,2, 4 & 5
:
Adv. A. Harcourt (SC) assisted by Adv. A. Sanders
Instructed
by: F.J. Senekal Incorporated
Bloemfontein
On
behalf of
Respondent 6
:
Miss. J Engelbrecht
Instructed
by: Master of the High Court
Bloemfontein
[1]
1997 (4) All SA 106 (W)
[2]
2013 (4) SA 394
(GS)