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[2019] ZAWCHC 23
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Master of the High Court, Western Cape Division, Cape Town v Van Zyl (A276/2018) [2019] ZAWCHC 23; [2019] 2 All SA 442 (WCC) (6 March 2019)

Republic of South Africa
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
No. A 276/2018
Before: The Hon. Ms Justice Ndita
The
Hon. Mr Justice Binns-Ward
The
Hon. Mr Justice Samela
Date
of appeal hearing: 28 January 2019
Date
of judgment: 6 March 2019
In
the matter between:
THE
MASTER OF THE HIGH COURT,
WESTERN
CAPE DIVISION, CAPE
TOWN
Appellant
and
CHRISTOPHER
PETER VAN
ZYL
Respondent
JUDGMENT
BINNS-WARD J (NDITA and SAMELA JJ concurring):
Introduction
[1]
This appeal had its genesis in a decision
by the Master of the High Court, Cape Town, to remove Christopher
Peter van Zyl from office,
in one fell swoop, as the liquidator
(actually co-liquidator) of more than 100 companies.  The Master
made the decision exercising
the power vested in her by s 379(1)
of the Companies Act 61 of 1973 (‘the 1973 Companies Act’).
[1]
Van Zyl took the Master’s decision on judicial review.
His application, which came before Engers AJ at first
instance,
was partly successful, in that the Master’s decision was set
aside in respect of all but ten of the affected appointments.

With the leave of the court a quo, the Master comes on appeal against
that part of the judgment that went against her, and Van
Zyl
cross-appeals against the decision at first instance not to interfere
with the Master’s decision to remove him from office
in ten of
the companies.
The nature of the review, with particular reference to the
pertinent constraints on the exercise by the Master of the powers
conferred
in terms of s 379(1) of the 1973 Companies Act
[2]
The application to the court a quo was
brought
both
in terms of
s 151
of the
Insolvency Act 24 of 1936
[2]
and s 6 of the Promotion of Administrative Justice Act 3 of 2000
(‘PAJA’).  The provision in the
Insolvency Act is
of
application, by virtue of s 339 of the 1973 Companies Act, in
respect of the liquidation of companies that are being wound
up
because they were unable to pay their debts.
[3]
It is generally accepted that
s 151
of
the
Insolvency Act provides
for a review in the very widest sense.
[3]
It has been characterised as being of the third type of review
identified by Innes CJ in
Johannesburg
Consolidated Investment Co v Johannesburg Town Council
1903 TS 111
, being a proceeding in which the court may enter upon and
decide the matter
de novo
,
exercising not only the powers of a court of review in the legal
sense, but also having the functions of a court of appeal, with
the
additional privileges of being able, after setting aside the decision
arrived at by the tribunal or functionary concerned,
to deal with the
whole matter upon fresh evidence as if it were the decision-maker of
first instance.
[4]
A review in terms of
s 151
therefore affords scope for the court
to enter into the merits of the impugned decision in a way that would
not be permissible
in conventional administrative law review.
[4]
The obvious question then was why the dual
basis for the application under both the
Insolvency Act and
PAJA if
s 151
has wider breadth than
s 6
of PAJA?
[5]
Van Zyl’s counsel (Mr
Muller
SC, assisted by Ms
Reynolds
)
explained that resort had been had to
s 6
of PAJA in respect of
those matters, such as the winding up of Asch Professional Services
(Pty) Ltd, in which the liquidation of
the company concerned had
followed on grounds other than the company’s inability to pay
its debts, and to which
s 151
of the
Insolvency Act therefore
did not apply.  The difficulty is that in the respect of the
vast majority of the affected liquidations the record gives no

particularity as to what the grounds for the winding-up orders were,
or even of the names of the companies or close corporations

concerned.  Experience suggests however, that most of the
liquidations are likely to have followed on the corporations’

inability to pay their debts.  That, no doubt, explains why
counsel gave so much prominence in their submissions to the reach
of
s 151
in the current proceedings.
[5]
The Master’s counsel (Mr
Jamie
SC,
assisted by Ms
D. Pillay
)
argued that the acknowledged wideness of the character of review in
terms of
s 151
of the
Insolvency Act should
not mislead us into
understanding that the court a quo, or, by extension, this court on
appeal, enjoyed anything like an untrammelled
power to interfere with
the impugned decision. They submitted that, even in a review in terms
of
s 151
, the court owed a considerable measure of deference to the
Master’s decision, and might properly interfere with it only if

it were satisfied that it was ‘
clearly
wrong
’.   Mr
Jamie
relied in support of that contention
principally on his reading of the Supreme Court of Appeal’s
decision in
Nel and Another v The Master
(Absa Bank Ltd and others intervening)
2005 (1) SA 276
(SCA) at para. 23 and on a judgment of the full court
in this Division in
Laingville Fisheries
(Pty) Ltd and Others v Minister of Environmental Affairs and Tourism
and Others
[2008] ZAWCHC 28
(30 May
2008).
[6]
The judgment in
Nel
and, in particular, the court’s dicta in the cited paragraph do
not, however, bear out the argument as a general proposition.

The point made there was that the level of review occurring under
s 151
varies and is determined in each case by ‘
the
particular statutory provision concerned and the nature and extent of
the functions entrusted to the person or body making the
decision
under review
’.  The
statutory provision with which the court was concerned in
Nel
was s 384 of the 1973 Companies
Act, and the functions therein provided for were the taxation of
liquidators’ fees by
the Master in terms of s 384(1) and
the Master’s discretionary power to reduce or increase a
liquidator’s fee
in terms of s 384(2).
[6]
The court pointed out that those provisions vested what it labelled
‘a wide discretion’ in the Master,
[7]
and that due account had to be had of that in the exercise of the
court’s review powers under s 151.
[7]
The expression ‘wide discretion’
is most commonly used to describe a discretion in the broad or loose
sense.  It
is clear from the context, however, that by ‘
a
wide discretion
’ the court in
Nel
actually meant a discretion in the strict or true sense of the
concept, more commonly labelled as ‘a narrow discretion’.
[8]
The court held that the review power in terms of s 151 could not
be used in a manner that negated the nature of the
true discretion
vested in the Master by s 384, and accordingly judicial
interference with a decision made by the Master under
those
provisions would be appropriate only if the decision was ‘clearly
wrong’; in other words, only if it were apparent
that the
impugned decision was the product of a failure, or materially
misdirected exercise, of the statutory discretion.
Indeed, it
is also in respect of a judicial decision made in the exercise of a
true discretion that an
appellate
court will interfere with another court’s decision only if it
is ‘clearly wrong’.
[8]
As I shall explain presently, the exercise
of the power conferred on the Master in terms of s 379(1) does
not engage the use
of discretion in the true sense that is involved
when she acts in terms of s 384.  The exercise of the
court’s
jurisdiction in terms of
s 151
of the
Insolvency
Act is
therefore not constrained in this matter in the way in which
it was in the peculiar context of the review in
Nel
.
[9]
Section 379(1) of the 1973 Companies Act
provides:
Removal of liquidator by
Master and by the Court.
[9]
(1) The Master may remove a liquidator from his
office on the ground—
(
a
) that he was not qualified for
nomination or appointment as liquidator or that his nomination or
appointment was for any other
reason illegal or that he has become
disqualified from being nominated or appointed as a liquidator or has
been authorized, specially
or under a general power of attorney, to
vote for or on behalf of a creditor, member or contributory at a
meeting of creditors,
members or contributories of the company of
which he is the liquidator and has acted or purported to act under
such special authority
or general power of attorney; or
(
b
) that he has failed to perform
satisfactorily any duty imposed upon him by this Act or to comply
with a lawful demand of the Master
or a commissioner appointed by the
Court under this Act; or
(
c
) that his estate has become insolvent
or that he has become mentally or physically incapable of performing
satisfactorily his duties
as liquidator; or
(
d
) that the majority (reckoned in
number and in value) of creditors entitled to vote at a meeting of
creditors or, in the case of
a members’ voluntary winding-up, a
majority of the members of the company, or, in the case of a
winding-up of a company limited
by guarantee, the majority of the
contributories, has requested him in writing to do so; or
(
e
)
that in his opinion the liquidator is no longer suitable to be the
liquidator of the company concerned.
[10]
The power vested in the Master in terms of
s 379(1) is defined (and confined) by the provisions of
paragraphs (a) to (e) of
the provision.  They do not afford
anything like the truly discretionary authority that is entailed in
the taxation of fees.
In each instance, except that provided
for in paragraph (e) (of which I shall treat presently), the exercise
of the power is governed
by expressly identified objective criteria.
The Master cannot exercise the power unless she has satisfied herself
that the
pertinent criterion for its exercise has been satisfied.
[11]
In the current matter the Master stated
that she had acted in terms of s 379(1)(b) and/or (e).
[12]
Section 379(1)(b) requires a finding by the
Master (i) that the liquidator has ‘
failed
to perform satisfactorily any duty imposed upon him by th
[e]
Act or to comply with a lawful demand of
the Master or a commissioner appointed by the Court under th
[e]
Act’
and
(ii) assuming an affirmative finding on (i), a decision
whether removal is an appropriate and proportionate consequence
in
the circumstances.  In respect of (ii), the Master is
obliged to acknowledge and respect the recognition by the courts
that
the removal of a liquidator is an ‘extreme step’,
[10]
and must weigh why, in that context, the other (less extreme)
remedies provided in the Act to deal with shortcomings in the
liquidator’s
conduct would not suffice.  A failure by a
Master to approach the appropriateness of removing a liquidator from
office in
a manner consistent with that adopted by the courts would
give rise to an arbitrary and irrational discrepancy between the
effect
of the exercise of the powers of removal by the Master in
terms of subsection (1) and the overlapping and wider powers of
removal by a court in terms of subsection (2).  It would be
misdirected to construe or apply the legislation in a manner
that
would allow such a discrepancy.
[13]
Section 379(1)(e) is wholly discrete from
s 379(1)(b).  Paragraph (e) provides for the exercise of
the Master’s
power of removal in a situation in which a change
of circumstances has rendered the person who has been appointed
liquidator of
the company concerned ‘
no
longer suitable
’ to remain as
such.  The expression ‘
no
longer
’ connotes that a state
that previously subsisted has ceased to do so.
[11]
The state in issue in para. (e) of s 379(1) is ‘
suitability
’.
Its adjectival inflection ‘
suitable
’
is defined in the Oxford Dictionary as meaning ‘
well
fitted for the purpose
’.
The ‘
suitability
’
to which the statutory provision relates is not suitability to hold
the office of liquidator in general, but suitability
determined with
regard to a particular company, ‘
the
company concerned
’.
‘
Concerned
’
in the relevant sense is defined in the Oxford Dictionary as
‘
involved
’.
The words or expressions ‘
no
longer
’, ‘
suitable
’
and ‘
company concerned’
taken alone and, as they must be, in
their contextual combination in paragraph (e), have a narrowing
effect on the ambit of the
provision.
[14]
In order to determine whether a person is
no longer well fitted to be liquidator of ‘
the
company
concerned
’,
the Master has to undertake a dichotomous investigation.  On the
one hand, she has to identify the characteristics
of the liquidator
that call his suitability to continue in office into question and
then, on the other hand, consider, with reference
to the particular
needs and demands of the liquidation
of
the company involved
, whether the
liquidator is, on account of the identified characteristics, no
longer well fitted for the purpose of managing
that
company’s winding-up.  If the enquiry were not intended to
be with reference to
a particular
company
rather than with the
liquidator’s suitability to be a liquidator generally, the
words ‘
the company
concerned
’
would be superfluous.  There is a presumption against
superfluity in statutory language.
[15]
It seems clear that s 379(1)(e) is
directed at issues such as conflicts of interest, disruptive discord
with creditors, members
or co-liquidators and the like; matters that
are entirely distinguishable in character from those to which para
(b) pertains.
It is furthermore difficult to conceive how
s 379(1)(e) could find application in respect of any conduct of
a liquidator that
relates to an issue in the past that has been
addressed, has no on-going effect on the administration of the
liquidation, and is
unlikely to recur during the remainder of the
winding-up of the company concerned.  That must be so for the
matters that had
called into question the liquidator’s
suitability to remain in office in respect of the company concerned
would in that scenario
have been resolved, and no longer give rise to
difficulty.
[16]
Mr
Jamie
,
however, put special emphasis on the phrase ‘
in
his opinion
’ in paragraph (e)
of s 379(1) to try to support his contention as to the proper
application of
s 151
of the
Insolvency Act in
the
circumstances.  The essence of the argument was that those words
suggested that
s 379(1)(e)
vested a true discretion in the
Master.  But, as with any language in a statute, the words must
be understood in their context.
A contextual construction
makes it clear that the Master is not given carte blanche to form an
opinion, or to make
what has sometimes been referred to as ‘a
pure judgment’ like, for example, the Minister of Environmental
Affairs is
in terms of s 81 of the Marine Living Resources Act,
to which I shall refer later when I address Mr
Jamie’
s
reliance on the judgment in
Laingville
Fisheries
.  As I have sought to
explain, the Master is required by paragraph (e) to weigh two sets of
considerations against one another
with due regard to the interests
of the winding up of a particular company, and to make a judgment
informed by those considerations.
[17]
The observation of Lord Wilberforce in
Secretary of State for Education and
Science v Tameside Metropolitan Borough Council
[1976]
UKHL 6
,
[1976] 3 All ER 665
(CA and HL),
[1976] UKHL 6
,
[1977] AC
1014
, at pp. 681-2 (All ER), is instructive in this connection:
This form of section [i.e. framed in
a “subjective” form - if the Secretary of State “is
satisfied”] is
quite well known, and at first sight might seem
to exclude judicial review. Sections in this form may no doubt,
exclude judicial
review on what is or has become a matter of pure
judgment. But I do not think that they go further than that.  If
a judgment
requires, before it can be made, the existence of some
facts, then, although the evaluation of those facts is for the
Secretary
of State alone, the court must enquire whether those facts
exist, and have been taken into account, whether the judgment has
been
made upon a proper self direction as to those facts, whether the
judgment has not been made upon other facts which ought not to
have
been taken into account. If these requirements are not met, then the
exercise of judgment, however bona fide it may be, becomes
capable of
challenge
.
[12]
[18]
Furthermore, irrespective of whether she
acts under paragraph (b) or (e) of s 379(1), the Master must, in
every case in which
she considers removing a liquidator from office,
conscientiously take into account the interests of the liquidation
and the wishes
of the creditors, and even – although this would
be a secondary consideration – the reputational consequences
for the
liquidator,
[13]
in the same manner that a court does when considering an application
for the removal of a liquidator; cf.
Re
Adam Eyton Ltd ex parte Charlesworth
(1887)
36 Ch D 229
, at 306,
Ma-Afrika
Groepbelange (Pty) Ltd and Another v Millman and Powell NNO and
Another
1997 (1) SA 547
(C), at 561,
AMP Music Box Enterprises Ltd v Hoffman
[2003] 1 BCLC 319
, at paras. 23-27,
Hudson
and Others NNO v Wilkins NO and Others
2003 (6) SA 234
(T) especially at para. 18,
Standard
Bank of SA Ltd v The Master of the High Court
[2009]
ZAECHC 3
,
2009 (5) SA 13
(E) at paras. 7-10,
Standard
Bank of South Africa v The Master of the High Court and Others
[2010] ZASCA 4
,
[2010] 3 All SA 135
(SCA),
2010 (4) SA 405
at paras.
124-135, and
Trustees for the Time Being
of the Bermack Trust and Another v Patel N.O. and Another
[2014]
ZAWCHC 105
(8 July 2014) at paras. 59-62.  The power invested in
the Master by s 379(1) provides but one of the devices in the
toolkit
of measures afforded to her by the statute to be used to
promote and further the best interests of liquidations; any punitive
effect
occasioned by its exercise is incidental.  Any identified
shortcomings in the conduct of the liquidator must therefore be
weighed mindful of the consequences for the winding-up of the company
concerned if he or she were to be removed on account of them.
A
failure to appropriately undertake the indicated balancing of
relevant considerations is liable to conduce to decisions that
are
arbitrary and disproportionate.
[19]
In the latter regard, the dicta of
Neuberger J (as he then was) in
AMP
Music Box Enterprises
supra, loc. cit.
bear quoting in full as an informative summary of the applicable
principles.  They give expression to an
approach that has been
endorsed on numerous occasions in recent years in the English,
[14]
Australian
[15]
and South African
[16]
jurisdictions:
[23] In an application [for the removal of a liquidator
from office], the court may have to carry out a difficult balancing
exercise.
On the one hand the court expects any liquidator, whether
in a compulsory winding up or a voluntary winding up, to be efficient

and vigorous and unbiased in his conduct of the liquidation, and it
should have no hesitation in removing a liquidator if satisfied
that
he has failed to live up to those standards at least unless it can be
reasonably confident that he will live up to those requirements
in
the future.
[24] Support for this approach is not only to be found
in
Keypack
[
Re Keypack Homecare Ltd
[1987] BCL 409],
but also in some cases where the court has compulsorily wound up the
company and appointed a new liquidator in
circumstances where there
is already a voluntary liquidator in place – see for instance,
Re Zirceram Ltd
[2000] 1 BCLC 751
, especially at para  25(5).
Also where the liquidator could not be seen as independent –
see, for instance,
Re Lowestoft Traffic Services Ltd
[1986]
BCLC 81
(where the liquidator concerned seems to have been the same
liquidator as in
Keypack
).
[25] It may also be right to remove a liquidator where
the circumstances are such that, through no fault of his own, he is
perceived
to be – even though he may not be – biased in
favour of, say, one or more of the creditors – see per Robert
Walker
J in
Re Gordon & Breach Science Publishers Ltd
[1995]
2 BCLC 189
, another case concerned with a compulsory winding-up order
in circumstances where there was already a voluntary liquidator in
place.
[26] While the removal of the liquidator is not
necessarily based on any fault on his part, most such cases will
involve a degree
of criticism. Although in
Keypack
Millett J
emphasised there was no criticism of the general ability, experience
and professionalism of the liquidator, and that,
even in relation to
the particular case, there was no evidence of his being biased or
dishonest, it is nonetheless clear that he
was removed because the
judge took a dim view of the way in which he had conducted the
particular liquidation. As the judge said,
the fact that this may to
some extent resound to the discredit of the liquidator, does not mean
that the court should shy away
from making the order. On the
contrary, in an appropriate case it is the duty of the court to make
such an order, not merely on
the merits of the particular case, but
also because it sends out a clear message to liquidators that they
have an important function
which they should conduct in a vigorous,
effective and independent manner.
[27] On the other hand, if a
liquidator has been generally effective and honest, the court must
think carefully before deciding
to remove him and replace him. It
should not be seen to be easy to remove a liquidator merely because
it can be shown that in one,
or possibly more than one, respect his
conduct has fallen short of ideal. Otherwise, it would encourage
applications under s 108(2)
[of the English Insolvency Act, 1986 (c
45)]
[17]
by creditors who have not had their preferred liquidator appointed,
or who are for some other reason disgruntled. Once a liquidation
has
been conducted for a time, no doubt there can almost always be
criticism of the conduct, in the sense that one can identify
things
that could have been done better, or things that could have been done
earlier. It is all too easy for an insolvency practitioner,
who has
not been involved in a particular liquidation, to say, with the
benefit of the wisdom of hindsight, how he could have done
better. It
would plainly be undesirable to encourage an application to remove a
liquidator on such grounds. It would mean that
any liquidator who was
appointed, in circumstances where there was support for another
possible liquidator, would spend much of
his time looking over his
shoulder, and there would be a risk of the court being flooded with
applications of this sort. Further,
the court has to bear in mind
that in almost any case where it orders a liquidator to stand down,
and replaces him with another
liquidator, there will be undesirable
consequences in terms of costs and in terms of delay.
(For present purposes I would highlight the remarks in paragraph 27
in particular, but the entire passage is an eloquent exposition
of
the principle that the critically determinative consideration in such
matters is the best interests of the affected liquidation.)
[20]
On any approach, however, and irrespective
whether it acted in terms of s 151 of the Insolvency Act or s 6
of PAJA, the
court would be justified in interfering with the
Master’s decision on review if she had proceeded on a
demonstrably incorrect
appreciation of the import of the statutory
provision under which she purported to act; in this case by
proceeding without due
regard to the constraints imposed on the
exercise of her power in terms of s 379(1).
[21]
The decision in
Laingville
Fisheries
also gives no assistance to
Mr
Jamie
’s
argument.  That case involved a review of a ministerial
determination in terms of
s 81
of the
Marine Living Resources
Act 18 of 1998
.
Section 81(1)
of that Act provides ‘
If
in the opinion of the Minister there are sound reasons for doing so,
he or she may, subject to the conditions that he or she
may
determine, in writing exempt any person or group of persons or organ
of state from a provision of this Act
’
and s 81(2) provides the Minister with the power at any time to
cancel or amend such exemption.  It is entirely
up to the
Minister to decide what might constitute ‘
sound
reasons
’ in a given case, and
also to determine the nature of any conditions that might attach to
any exemption from the Act that
she might decide to grant.  A
matter of pure judgment is involved.  The only constraint on the
Minister in forming her
judgment is that she must act rationally.  As
I have sought to demonstrate, the position under s 379(1) of the
1973 Companies
Act is quite distinguishable from the subjective
discretion afforded to the Minister in terms of
s 81
of the
Marine Living Resources Act.  And
the review in
Laingville
Fisheries
was in any event a purely
PAJA review, not one of the wide variety provided for by s 151
of the Insolvency Act.  The appellant’s
reliance on the
judgment in that case in the very different circumstances of this
matter was misplaced.
[22]
For all the aforementioned reasons I agree
with the submission by Van Zyl’s counsel that the court a quo
could review and
set aside the Master’s decision on any of the
conventional review grounds now codified in PAJA as well as on the
wider review
basis applicable in the circumstances in terms of s 151
of the Insolvency Act, which in this case entitled it to set aside

the decision simply because it considered it to be ‘wrong’,
as distinct from ‘clearly wrong’.
[23]
Having established the character of the
scrutiny to which the Master’s decision was subject on review
in terms of s 151
of the Insolvency Act, the numerous grounds
upon which it was also impugned on in terms of s 6 of PAJA also
bear mention by
way of introduction.  Obviously, if an
entitlement by Van Zyl to relief on any of these grounds were
established, the court
would not have to consider whether the
decision should also be set aside in terms of s 151 for being
‘wrong’ on
its merits.  Van Zyl contended that the
Master’s decision was not supported by, and therefore not
rationally connected
to, either the information before her or the
purpose of the empowering provision (s 6(2)(f)(ii)(bb) and
(cc)), and so unreasonable
that no reasonable person could have made
it (s 6(2)(h)); that the Master’s action was procedurally
unfair (s 6(2)(c));
that the decision was materially influenced
by errors of law (s 6(2)(d)); that she had taken irrelevant
considerations into
account and not considered relevant
considerations (s 6(2)(e)(iii)); had acted arbitrarily or
capriciously (s 6(2)(e)(vi));
and she was biased or reasonably
suspected of bias (s 6(2)(a)(iii)).
[24]
A reasonably detailed description of the
factual background is necessary in order to give context to the
assessment we have had
to undertake of the Master’s decision
and the treatment by the court a quo of the challenge mounted against
it.
The lead up into the Master’s investigation into Van
Zyl’s conduct
[25]
Van Zyl’s career as a liquidator in
Cape Town reaches back nearly forty years.  I think we may take
judicial notice that
he enjoys some prominence as an insolvency
practitioner in this jurisdiction.  That is indeed borne out by
the high number
of appointments held by him in this Division at the
time the Master made her decision to remove him.  He testified,
without
contradiction, that the confidence reposed in his abilities
by many of the large financial institution creditors has secured his

appointment as liquidator in a number of large and complex winding-up
operations.  Indeed, the record shows that some such
creditors
made representations to the Master about the prejudicial consequences
they apprehended his removal from office would
have in some of the
liquidations affected by her decision in this case.  I record
this not to imply that his conduct as an
insolvency practitioner has
always been, or should be approached as, beyond criticism, but to
show that the prospect of his removal
from all of his appointments
was, and should have been appreciated by the Master as, a measure
with very impactful reputational
effect, and one that would
effectively end his life-long career.
[26]
Van Zyl’s account in the papers of
his relationship with the current Master of the High Court, Cape
Town, commences in September
2012, when he wrote to her requesting
the removal of his name from her panel of insolvency practitioners.
He had been in
poor health at the time, and did not feel up to taking
on any new appointments.  After his health had recovered, he
wrote
to the Master again, on 29 August 2013, requesting to be
reinstated on the panel of insolvency practitioners.  When she

failed to reinstate him, he instituted proceedings for the judicial
review, as a matter of urgency, of her refusal to put him back
on the
panel.  The Master explained her position in the answering
papers in that review application.  She indicated that
as a
result of a complaint that she had received about Van Zyl’s
conduct in the liquidation of Asch Professional Services
(Pty) Ltd,
she was on the point of instituting an enquiry into his conduct in
terms of s 381 of the 1973 Companies Act.
(Asch was being
wound up because it was just and equitable for the company to be
liquidated because of a deadlock between its members.
The
members had complained to the Master about certain of the fees
claimed by Van Zyl in terms of the liquidation and distribution

account.  Their particular complaint did not give rise to any of
the grounds advanced for the Master’s impugned decision
to
subsequently remove Van Zyl from all of his appointments.)
[27]
On 11 December 2013, an order was taken by
agreement in the aforementioned review application, in terms of which
the Master’s
decision not to reinstate Van Zyl on the panel of
insolvency practitioners was set aside.  The order recorded that
an enquiry
in terms of s 381 into Van Zyl’s conduct had
commenced, and noted an undertaking by the Master to proceed with it
with
reasonable expedition in the hope that it would be completed by
28 February 2014.  It also recorded an apparently quid
pro
quo undertaking by Van Zyl not to make himself available for any new
appointments until after 14 March 2014.
Enquiry in terms of s 381 of the 1973 Companies Act into
Van Zyl’s conduct
[28]
On 3 February 2014, Van Zyl’s
attorneys were advised that the Master intended using the services of
Mr Stelzner SC of
the Cape Bar to preside on her behalf to hear
evidence in the s 381 enquiry, and, on 26 February 2014, Van Zyl
was in receipt
of a letter from the Master listing various alleged
irregularities in 13 estates that were apparently to be the subject
of the
enquiry.  The Master stated in her letter of 26 February
that she was of the view that Van Zyl had been guilty of a
‘widespread
practise’ (
sic
)
whereby he fraudulently misrepresented the financial position of
liquidated companies and defrauded creditors, members and insolvents

for his own unjust enrichment.  Suffice it to say that none the
alleged irregularities identified in the Master’s letter
were
later advanced as reasons for her subsequent decision to remove him
from all of his appointments.
[29]
After an enquiry-management meeting
attended by the protagonists’ legal representatives in Mr
Stelzner’s chambers in
mid-March, Van Zyl’s attorneys
were informed by the State Attorney on 14 March 2014 that Mr
Stelzner’s services
had been disposed of.  It seems that
the decision to withdraw Mr Stelzner’s brief was inspired by an
apprehension formed
during the meeting in chambers that the enquiry
might entail a lengthy hearing and run up significant expenses.
It was decided
instead to use the services of a Deputy Master from
Johannesburg to preside over the hearing.  A certain Mr Maphaha
was
seconded to the office of the Master in Cape Town for this
purpose.
[30]
On 20 March 2014 the Master addressed a
letter to Van Zyl raising alleged misconduct by him in a further
three estates, thereby
bringing the total to 16.  Some of these
appear to have involved matters in which the liquidations had been
finalised and
Van Zyl had been discharged from office, and in respect
of which the Master consequently no longer had jurisdiction under
s 381
of the 1973 Companies Act.
[31]
Van Zyl’s attorneys submitted a very
full response in respect of the issues raised by the Master in
respect of his alleged
misconduct in the 16 estates that she had
identified.  The response, dated 12 May 2014, ran to more than
90 pages.  Amongst
other matters, the response mentioned the
conduct by Van Zyl of a number investment accounts in matters under
his administration
using the Nedbank Corporate Saver facility, about
which much will be said later in this judgment.  It gave an
explanation
of how investments using that facility worked.  The
explanation was apparently independently substantiated in aspects of
detail
by an attached letter from Werksmans Attorneys, which appears
not to have been included in the papers before the court a quo.

(The explanation was to be repeated on at least three further
occasions between then and the date of the Master’s decision
to
remove him from office more than three years later.)  Two days
later, on 14 May 2014, Van Zyl began once again to seek
new
appointments.
[32]
It would serve little purpose to go into
the allegations that Van Zyl was confronted with in the
correspondence from the Master
in early 2014 because they bore no
material relationship to the reasons ultimately given by the Master,
more than three years later,
for his removal from office.  It is
enough to note that they concerned allegations of much more serious
misconduct than that
ultimately relied upon by the Master for her
decision to remove him from office.
[33]
On 7 July 2014, Van Zyl’s attorneys
addressed the Master concerning their client’s disquiet at the
Master’s delay
in proceeding with the s 381 enquiry, and
highlighting the attendant prejudice to their client.
[34]
More
than a month after that, on 15 August 2014, the Master announced
her intention to proceed at the enquiry with ‘charges’
in
respect of Van Zyl’s administration of ten identified
corporations in liquidation.
[18]
Approximately two months later, on 8 October 2014, the State
Attorney addressed a letter to Van Zyl’s attorneys

introducing numerous new ‘charges’ against Van Zyl.
The 8 October letter set out, for the first time, several
‘charges’
related to the alleged contravention by Van Zyl of ss 394 and
403 of the 1973 Companies Act.  Van
Zyl provided a response to
the new matter through his attorneys on 19 December 2014.  The
response contained, amongst other
matter, a comprehensive reiteration
of the explanation concerning the workings of the Nedbank Corporate
Saver investment facility
and of his use in that connection of the
intermediary services of a financial service provider known as
BLM Administrative
Services that had been furnished in his
response earlier in the year to the different allegations made
against him in the Master’s
above-mentioned letter of
26 February of that year.
[35]
The hearing of oral evidence, including the
production of documentary exhibits, proceeded in fits and starts
before Mr Maphaha over
six days during the period February to
December 2015.  The Master engaged senior counsel, assisted by a
junior, to lead the
evidence at the hearing in support of the
allegations against Van Zyl, and Van Zyl was himself also represented
by senior counsel.
Mr Maphaha heard concluding arguments
from counsel in March 2016 and delivered his findings on 18 May
2016.
The Master’s enquiry in terms of s 381, especially
in respect of Van Zyl’s alleged non-compliance with s 394

of the 1973 Companies Act
[36]
Mr Maphaha’s findings, which were
included in the record before the court a quo, are not particularly
informative.  He
appears to have proceeded from the premise that
the enquiry over which he had presided had been instituted by the
Master pursuant
to a direction by the court that she should institute
it.  That was plainly incorrect.  Various findings of
misconduct
were made against Van Zyl.  But these were stated in
broad-brush terms, and not reasoned with any meaningful reference to
the evidence that had been adduced at the enquiry.  Mr Maphaha’s
findings, which in material part focussed on alleged
contraventions
by Van Zyl of s 394 of 1973 Companies Act, were manifestly wrong
in a number of respects, both legal and factual.
But it is not
necessary to go into the detail for present purposes.
[37]
Van Zyl’s complaint that the findings
are not only unsubstantiated, but also incoherent in parts is not
without justification.
[19]
It is difficult to imagine what use the findings could have been to
the Master in determining what precisely Van Zyl had
done wrong, or
what action it would be appropriate for her to take.  The Master
would, of course, have been able to peruse
the transcript of the
proceedings; as, indeed, she said that she did do.  To what end
we are unable to say, however, as the
transcript was not included in
the papers before the court a quo.  All that it had to go by
were the Master’s reasons
for her decision to remove Van Zyl,
to which I shall come presently, and some description in the parties’
affidavits of the
proceedings at the s 381 enquiry.  It is
clear that the Master’s view of Van Zyl’s conduct in
terms of s 394
of the Act was foundational to the reasons given
by her for the decision to remove him from office.  That had to
do with Van
Zyl’s use of the abovementioned Nedbank Corporate
Saver facility.
[38]
Van Zyl had used the Corporate Saver
facility to invest funds on hand in some of the companies in
liquidation under his administration
that were not immediately
required for expenditure.  Those funds had been invested in the
respective names of the various
companies concerned in interest
bearing accounts operated under the auspices of the aforementioned
facility.  The funds were
held in such accounts either on call,
or 7-day fixed deposit.
[39]
Investment by liquidators in savings and
fixed deposit accounts is permitted, and regulated, by s 394 of
the 1973 Companies
Act.  Section 394 provides as follows:
Banking accounts and
investments.
(1) The liquidator of a company—
(
a
) shall open a current
account from which amounts are withdrawable by cheque in the name of
the company in liquidation with a banking
institution registered
under the Banks Act, 1965 (Act 23 of 1965), within the Republic, and
shall from time to time deposit therein
to the credit of the company
all moneys received by him on its behalf;
(b) may open a
savings account in the name of such company with such a banking
institution, a mutual building society registered
under the Mutual
Building Societies Act, 1965 (Act 24 of 1965), or a building society
registered under the Building Societies Act,
1986 (Act 82 of 1986),
within the Republic, and may transfer thereto moneys deposited in the
account referred to in
paragraph
(a)
and
not immediately required for the payment of any claim against such
company;
(c) may place
moneys deposited in the account referred to in
paragraph
(a)
and
not immediately required for the payment of any claim against such
company, on interest-bearing deposit with such banking
institution,
mutual building society or building society within the Republic;
(d) shall not
withdraw any money from any account referred to in
paragraph
(b)
or
(c)
otherwise
than by way of a transfer to the said current account.
(2) Whenever
required by the Master to do so, the liquidator shall in writing
notify the Master of the banking institution or building
society and
the office, branch office or agency thereof with which he has opened
an account referred to in subsection (1), and
furnish the Master with
a bank statement or other sufficient evidence of the state of the
account.
(3) A liquidator shall not
transfer any such account from any such office, branch office or
agency to any other such office, branch
office or agency except after
written notice to the Master.
(4) All cheques or orders drawn
upon any such account shall contain the name of the payee and the
cause of payment and shall be
drawn to order and be signed by the
liquidator or his duly authorized agent.
(5) The Master and any surety for
the liquidator or any person authorized by such surety shall have the
same right to information
in regard to that account as the liquidator
himself possesses, and may examine all vouchers in relation thereto,
whether in the
possession of the banking institution or building
society or of the liquidator.
(6) The Master may, after notice
to the liquidator, in writing direct the manager of any office,
branch office or agency with which
an account referred to in
subsection (1) has been opened, to pay over into the Guardians’
Fund all moneys standing to the
credit of that account at the time of
the receipt, by the said manager, of that direction, and all moneys
which may thereafter
be paid into that account, and the said manager
shall carry out that direction.
(7) (a) Any liquidator who without
lawful excuse, retains or knowingly permits his co-liquidator to
retain any sum of money exceeding
forty rand belonging to the company
concerned longer than the earliest day after its receipt on which it
was possible for him or
his co-liquidator to pay the money into the
bank, or uses or knowingly permits his co-liquidator to use any
assets of the company
except for its benefit, shall, in addition to
any other penalty to which he may be liable, be liable to pay to the
company an amount
not exceeding double the sum so retained or double
the value of the assets so used.
(b) The amount
which the liquidator is so liable to pay, may be recovered by action
in any competent court at the instance of the
co-liquidator, the
Master or any creditor or contributory.
[40]
It was apparent that Van Zyl, and indeed a
number of other insolvency practitioners,
[20]
had for a number of years been availing of the Nedbank Corporate
Saver facility for the purpose of making the sort of interest
bearing
deposits contemplated and permitted by s 394 of the Act.
The facility apparently offered particularly attractive
interest
rates.  The higher interest rates applied because the
investments were treated by the bank as part and parcel of
what might
be labelled bulk investments by the intermediary licenced financial
service providers through whom the investments were
placed, rather
than as investments in smaller amounts by individual investors.
The higher rates of interest were paid by
reason of the large
aggregated investment amounts, and were greater than would have been
earned on the constituent investments
treated individually.  Van
Zyl testified, without contradiction, that he was obliged to use the
services of a licenced financial
service provider in order to make
the investments in the Corporate Saver facility, and that the
associated cost of investing in
that manner had been justified by the
enhanced returns that were obtained.
[41]
The financial service provider used by Van
Zyl to invest in the Nedbank Corporate Saver was BLM Administration
Services.  The
funds that he deposited enjoyed the relatively
higher returns paid by Nedbank on BLM’s aggregated
investments.  The
deposits were made via what I choose to label
as BLM’s bulk account, but they were allocated in Nedbank’s
books in
separately numbered accounts, each in the name of the
company in liquidation concerned.  Nedbank accounted to the
liquidators
directly in respect of each such separately numbered
account.  Furthermore, the funds in those separate accounts
could be
disposed of only on the written instructions of the
liquidators.  They therefore remained under the liquidators’
control
in the relevant sense.
[42]
BLM Administration Services charged a fee
for the use of their offices for the purposes of the investments made
into the Nedbank
Corporate Saver accounts.  The standing
so-called ‘take-up fee’ was levied at one per cent per
annum on the daily
balance of funds invested.  The take-up fee
was sometimes subsequently adjusted by negotiation between BLM and
Van Zyl.
In many cases the negotiated on-going fee was two per
cent per annum.  Van Zyl testified that he agreed to a higher
fee in
matters in which BLM was called upon to render additional
services.  As the court a quo observed in its judgment, the
precise
nature of these additional services was not altogether
clear.  It seems that in some cases it had to do with the use of
funds
held on call for the making of payments by EFT to third parties
in respect of various expenses in the liquidation concerned.

Such payments, which in the ordinary course should have been made
from the company in liquidation’s current account opened
in
terms of s 394(1)(a), would have entailed a higher level of
administrative attendances by BLM in order to keep abreast
of
constantly changing balances in the accounts for the purpose of
computing its fees which were based on the daily balances in
the
accounts.
[43]
Van Zyl’s claim that the Nedbank
Corporate Saver rates rendered net returns greater than those of
directly accessible savings
deposits does not appear to have been
refuted at the enquiry.  Issue was, however, taken with the
reasonableness of the fees
that he had agreed to pay to BLM in
respect of the investments.
[44]
At some stage Van Zyl was advised by
Nedbank that he could achieve even higher rates of return by placing
the funds held by the
companies in liquidation in the Corporate Saver
call accounts on 7-day fixed deposit.  He would then give
instructions for
amounts in the call accounts that were not required
to be expended within the next seven days to be placed on such fixed
deposit,
also under the umbrella of the Corporate Saver facility.
The funds would reflect in the statements that he received in respect

of the call accounts as being transferred to fixed deposit.  The
call account statements would also reflect the return to
call status
of the amounts so invested after the expiry of the fixed deposit
period, together with the interest that had accrued
thereon while
they were on fixed deposit.
[45]
The transfer of funds from call account to
fixed deposit occurred by way of book entries in Nedbank’s
records.  There
was no transfer of the funds from the companies’
Nedbank Corporate Saver call accounts to the companies’ current
accounts
and thence to Nedbank Corporate Saver fixed deposit
accounts.  Indeed, the funds invested in the Corporate Saver
accounts
remained allocated in Nedbank’s records under the same
account numbers throughout, irrespective of whether they were held
at
any particular time on call or 7-day fixed deposit.  That gave
rise to a debate, which the Master seems to regard to be
of critical
importance, as to whether the respective companies’ funds on
call and on fixed term deposit in the Corporate
Saver facility were
held in one account or two accounts.
[46]
The
statements rendered by Nedbank in respect of the funds held on call
in the Corporate Saver accounts also reflected the periodic
debiting
of BLM’s fees on a pro rata basis.  ‘Pro rata’
because the fees so reflected pertained only to
that part of the
funds held on call at the given time, and did not include the fees
payable to BLM in respect the part of the investment

contemporaneously held on fixed deposit.  The fees were
annotated as ‘
agent fee
’
on the statements.  Van Zyl did not receive separate statements
in respect of the funds while they were placed on fixed
deposit, and
it transpired that he had not been aware, until focus was brought to
bear on the question during the s 381 enquiry
hearing, that it
had been possible to obtain such statements.
[47]
It emerged in the evidence at the enquiry
that Van Zyl had not appreciated that BLM’s fees were debited
discretely in respect
of the funds on call and those on fixed
deposit, and that the agent fee reflected on the call account
statements pertained only
to
part
of the funds invested, and did not include those levied in respect of
that part of the total amount invested which was on fixed
deposit
from time to time.  The fees on the funds held on fixed deposit
were debited before those funds were returned to the
call account.
[48]
In the result, what Van Zyl had thought was
the gross interest earned on the funds while they were on fixed
deposit was, in point
of fact, the interest net of BLM’s fee.
Van Zyl testified that he had understood (mistakenly) that the agent
fee reflected
on the statements that he received in respect of the
funds on call represented the gross sum of BLM’s fee.
Necessarily
implicit in this testimony was an admission by Van Zyl
that he had not checked the amounts reflected as agent fees on the
call
accounts statements to verify that the sums reflected thereon as
having been debited in favour of BLM in fact correlated to the
fees
that he had agreed BLM might charge.  The discrepancy between
what Van Zyl thought was the sum of BLM’s fees and
what they
actually were was substantial.  The total fees paid to BLM were
nevertheless consistent with what Van Zyl had agreed
with BLM based
on a percentage of the aggregate amount invested by each company
concerned in the Corporate Saver facility.
Van Zyl’s
remissness therefore had no effect on the correctness of the amounts
reflected in the accounts that he lodged as
being available for
distribution.
[49]
Van
Zyl’s misapprehension as to the true state of affairs resulted
in him in some instances submitting liquidation and distribution

accounts that inaccurately reflected the extent of the fees paid to
BLM, materially understating their actual extent.  The

inaccurate liquidation and distribution accounts that were submitted
were accompanied in every case, as required in terms of s 403(2)

of the 1973 Companies Act,
[21]
by copies of the bank statements that he had
received in respect of the funds held on call in the Corporate Saver
accounts.
[50]
The evident purpose of the requirements of
s 403(2) is to equip the Master and other interested parties
with the means to interrogate
the accuracy of the accounts lodged by
liquidators in terms of s 403(1).  Indeed, the evidence
demonstrated that the
Master’s office does vet the accounts
that are lodged, and raises any queries it might have with the
liquidator before the
accounts are laid open for inspection.
The Master is empowered
mero
motu
to direct that an account be
amended if she considers it to be incorrect in any respect; see
s 407(3) of the Act and cf.
Taylor
and Thorne, NNO, and Others v The Master
1965 (1) SA 658
(N),
[1965] 2 All SA 106
(N) at 660 (SALR).  It
is clear from the content of the Master’s abovementioned letter
of 8 October 2014 in relation
to the ‘charges’
brought against Van Zyl in the enquiry in terms of s 381 that
her office must have, by that stage,
examined the bank statements in
respect of the funds held on call in the Nedbank Corporate Saver
accounts of the corporations whose
management was under scrutiny at
the enquiry.
[51]
The information in the bank statements that
were lodged by Van Zyl disclosed, amongst other matters, the
existence of debits in
respect of an agent’s fee and the
percentage rate applicable for the computation thereof, as well as
the apparent movement
of funds from call to fixed deposit.  It
was also possible to ascertain from those statements what rates of
return were being
achieved on the invested funds.  The Master
was therefore sufficiently informed by the detail in the statements
that were
provided by Van Zyl to be able to call for further
particulars of the fixed deposit accounts and the related bank
statements if
she had wished to (see s 394(5) of the Act).
The interval between the delivery of the findings in the s 381
enquiry and the giving of notice by the Master of her proposal
to
remove Van Zyl from office as liquidator
[52]
On 20 September 2016, Van Zyl
instituted proceedings to take the findings made by Mr Maphaha under
judicial review.  The
Master has given notice of her intention
to oppose that application.  There has been a long delay in
moving that review application
along because of a dispute between the
parties concerning the delivery by the Master of an administrative
record in terms of Uniform
Rule 53.  The Master had not
delivered an answering affidavit in those proceedings by the time the
review application that
is before us on appeal came up for hearing at
first instance.  It is apparent, however, from the record before
us that the
Master intends to take the point that the review was
premature because she had at that stage not yet adopted or acted on
the findings;
in essence her position in that matter is going to be
that no administrative action had yet been taken in relation to the
enquiry.
It is not for us to determine the question, but it
seems to me that the proceedings to review Mr Maphaha’s
findings
were overtaken for all substantive purposes by the review
application subsequently brought before the court a quo in the
present
matter.
[53]
What the Master did do after Mr Maphaha
had delivered his findings was to request copies from Van Zyl of all
Nedbank Corporate
Saver bank statements in respect of both money on
call and on fixed deposit in such accounts.  The requested
statements were
delivered to the Master by Van Zyl’s attorneys
on 29 July 2016.  By that time Van Zyl had in fact already
lodged
amended accounts in each of the as then not yet finalised
liquidations correcting the inaccuracies occasioned by his errors in
respect of the reporting of BLM’s fees and the gross rate of
interest achieved on the fixed deposit investments.  In
other
words, he had by then already remedied his and his co-liquidators’
defective compliance with s 403 of the 1973
Companies Act.
The Master’s notice of intention to remove Van Zyl from
office as liquidator
[54]
Nine months later, on 2 May 2017, the
Master wrote to Van Zyl to inform him that she intended to remove him
from his appointments
as liquidator in terms of s 379(1) of the
1973 Companies Act.  She invited him to make representations as
to why she
should not proceed as advised.
[55]
The grounds given by the Master for her
intended decision centred on her opinion that he had contravened
s 394 of the 1973
Companies Act in numerous respects and that he
had submitted liquidation and distribution accounts that had failed
to disclose
the full extent of the fees paid to BLM and the gross
interest earned on funds invested on 7-day fixed deposit.  It
was clear
that the Master took particular exception to the filing of
inaccurate accounts because they had been lodged under affidavits, in

terms of s 403, in which he (and his co-liquidators) had
purported to declare that the accounts reflected a full and true

account of their administration of the corporations concerned.
Van Zyl’s representations to the Master as to why she
should not remove him from office as liquidator
[56]
Van Zyl submitted his representations on 8
June 2017.  They were set out in a lengthy letter from his
attorneys.  For
present purposes it is necessary to summarise
only those parts of it that became related to the grounds for removal
set out in
the Master’s subsequent letter, dated 31 August
2017, confirming her decision to remove him from all of his
appointments,
to which I shall come presently.
[57]
Van Zyl commenced by pointing out that all
of the information on which the Master relied for the accusation that
he had acted in
breach of s 394 had been in her possession since
at least 2015.  He queried why she had not acted on it at the
time if
it had been considered of sufficient gravity to warrant his
wholesale removal from office.  He suggested that the delay
between
her having come by the information and acting on it was
ascribable to a lack of bona fides, and symptomatic of an endeavour
by
her to avoid the embarrassment of his pending review of the
findings of Mr Maphaha, which he described as ‘
superficial,
vague, in many respects incoherent … contradictory
[and]
…
furthermore manifestly
incorrect in many respects’.  He alleged in this regard
that ‘Mr Maphaha simply adopted
the submission made on your
behalf, in the process exposing the extent to which the outcome was
preordained.  Your latest
effort to remove
[me]
is clearly an extension of this
process brought about by your failure to achieve the results you
desired via the enquiry.
It is an attempt to circumvent that
process and the agreements as to how it would be concluded.  It
is an abuse of power and
mala fide
’.
[58]
He described yet again the manner in which
the investments into the Nedbank Corporate facility worked and why
the use of an intermediary
financial service provider such as BLM had
been necessary.  In that connection he explained, amongst other
matters, that ‘[i]
n terms of the
agreement between BLM and Nedbank, BLM is referred to as “the
agent” and the liquidators are “the
client”.
The relationship established, however, is one directly between the
liquidators of the company in liquidation
and Nedbank.  Funds
can only be moved out of the Nedbank Corporate Saver account with the
written authority of the client.
’
[59]
He
stated further that:
25.7 Funds in a Nedbank Corporate Saver account are
generally held on “call” and can be accessed at any
time.
However, the client could elect to place funds on 1-week
fixed deposit, and by so doing increase the interest earned.
When
funds are placed on fixed deposit they are however not moved
into a separate account, but merely transferred to a different type

of investment within the same account.  Nedbank recommended the
use of such fixed deposits to earn a higher rate of interest.
25.8 BLM had nothing to do with these internal transfers
within the Nedbank Corporate Saver account, or with the decision to
make
the transfers.
25.9 Whether the funds were on call or on 1-week fixed
deposit within the Nedbank Corporate Saver account, they attracted
the same
fee payable to BLM.  The Nedbank Corporate saver bank
statements, with which you were regularly supplied, clearly reflect
that an “agent fee” was being debited to the Nedbank
Corporate Saver account, the rate of that fee, and the interest
rate
being achieved on the funds.
25.10 The fee paid to BLM was paid for the benefit of
using the Nedbank Corporate Saver facility and obtaining the higher
interest
rates which came with it.  BLM is also registered with
the FSB.  It is required to have, and has, a compliance officer

and key individuals who are duly qualified to operate these systems
and auditors to audit them.  They are also required to
have
specific indemnity insurance (all of which cause BLM to incur costs
and necessitate the charging of a fee for rendering services).

BLM rendered services to a number of insolvency practitioners, to
various attorneys, and to auctioneers and financial institutions.
25.11 It was clear from all L&D accounts lodged by
[me] with you in matters where a Nedbank Corporate Saver account has
been
opened that there was such an account.  Indeed, it is
generally the first line item on the bank reconciliation at the very

beginning of the L&D account.  As stated, the Nedbank
Corporate Saver bank statements were routinely provided to you either

automatically or on request.  Until raised in [my] oral
interrogation you had previously never queried the use of the Nedbank

Corporate Saver account, or the payment of an agent fee in respect
thereof.
26. All of the above was canvassed and made clear at the
enquiry during 2015.
[60]
Van Zyl pointed out that he had stopped
using the 7-day fixed deposit investment in the Nedbank Corporate
Saver facility in May
2013 because it had ceased to offer any
advantage on returns.  He emphasised that the liquidators had
earned considerable
returns on the invested funds for the benefit of
creditors, and observed that they had not been obliged, on a
literalistic reading
of s 394, to make any investment at all in
interest bearing accounts.  (The judgment of the court a quo
notes that it
appeared that Van Zyl had not opened any new Corporate
Saver accounts since 2015.)
[61]
He also pointed out that once he had become
aware that he could obtain separate statements in respect of the
fixed deposit investments
and had consequently become astute to the
fact that the liquidation and distribution accounts lodged by him and
his co-liquidators
had failed to reflect the whole amount of the fees
debited in favour BLM, he had withdrawn the defective accounts and
replaced
them with accounts redrafted to reflect a breakdown
separately showing gross interest, bank charges, BLM fees and net
interest
in respect of funds invested in the Nedbank Corporate Saver
facility in both call and fixed deposit investments, in the manner
directed by the Master.  The amended or supplementary accounts
had been lodged between 8 April 2016 and 29 July 2016,
and
duly advertised.  No objections to them had been received from
creditors or other interested parties.
[62]
Van Zyl took issue with the Master’s
contention that he had impermissibly reflected BLM fees as a cost of
administration within
the meaning of s 342 of the 1973 Companies
Act read with s 97 of the Insolvency Act.  He stressed that
BLM’s
fee had no connection with the fee to which the
liquidators were entitled in respect of interest earned on funds
invested, which,
according to the tariff, was ten per cent on the
gross return.  He equated the fees paid to BLM in connection
with the Nedbank
Corporate Saver facility to those paid to other
kinds of agent engaged by a liquidator for the purpose of a
winding-up, such as
attorneys and auctioneers.  He also took
issue, correctly, it seems to me, with the Master’s allegation
that he had
needed permission from her office to engage BLM.  He
also denied the Master’s accusation that the fees paid to BLM
were
excessive and challenged her to demonstrate that ‘
there
was any other investment available that would have secured the same
returns
’ as those obtained by
investing in the Nedbank Corporate Saver facility through the offices
of BLM.  (It does not appear
from the record that the Master
rose to the challenge.)
[63]
Insofar as the Master had indicated that
she was considering acting against him in terms of s 379(1)(b)
of the 1973 Companies
Act, Van Zyl recorded that she had not
identified any instance of his having failed to comply with a lawful
demand by her office
or by a commissioner appointed by the court
under the Companies Act, and that she therefore appeared to be
relying wholly on her
opinions about his alleged non-compliance with
various provisions of the Act.  He submitted that removing him
from office
would be a disproportionate response to the instances in
which shortcomings in his administration had been identified or
alleged
in her letter of 2 May 2017.
[64]
With regard to the Master’s stated
intention to invoke her powers in terms of s 379(1)(e), Van Zyl
submitted that it
would be irrational and disproportionate to use the
provision to remove him as liquidator in
all
matters.  He pointed out that there were numerous other lesser
sanctions that the Master could apply if she were minded to

discipline him.  He also illustrated, using three other
identified matters in which he was a liquidator as examples, how his

removal of office would be materially prejudicial to the best
interests of the liquidations concerned.  He put up letters
from
the major creditors (or their attorneys) in those liquidations, in
which motivated concern was expressed about the prejudicial

consequences of any decision to remove him as liquidator.  It
was clear from the detail he provided that the liquidations
that he
referred to by way of example – he called them ‘a small
sample’ – were large and apparently complex
undertakings
that were already at an advanced stage of administration.
The Master’s decision and her reasons for it
[65]
On 31 August 2017 the Master communicated
her decision to remove Van Zyl from all his appointments and set out
her reasons for doing
so in a 19-page letter made up of 77 numbered
paragraphs.  It is clear that the Master had been taking legal
advice on the
issue from counsel some weeks before her decision was
communicated.  This became apparent when the State Attorney sent
a letter
on 26 July 2017 to Van Zyl’s attorneys in which a
reasoned decision to remove Van Zyl from office was set out.
The
State Attorney shortly thereafter, on the same day, advised that
the letter had been sent in error and was a draft produced in the

course of taking advice from counsel.  The Master objected on
the grounds of privilege to any reference being made to the
letter in
the proceedings before Engers AJ.  The learned judge at first
instance made no reference to the issue in his judgment,
but it seems
to me that privilege is lost when the privileged material is
published.  Whether the letter should nevertheless
be excluded
from being used in evidence on grounds of fairness or policy is
another question.  There is no need to answer
it, because, like
the court a quo, I have not found it necessary to go into the content
of the letter, which was in any event included
in the papers in
almost completely redacted form pending a determination (which did
not happen) whether regard could or should
be had to the detail of
its content.
[66]
Central to the reasons given by the Master
for her decision to remove Van Zyl from all his appointments as
liquidator was his use
of the Nedbank Corporate Saver facility, and
what the Master considered to be his associated breach of statutory
duties under ss 394
and 403 of the 1973 Companies Act.
[67]
The Master recorded (in paras. 5-12 of her
reasons letter) that she considered that the periodic movement by the
liquidators of
funds invested on call in the Corporate Saver accounts
to fixed deposit and then back to call had been in contravention of
s 394(1)(d),
which requires that any withdrawal from a savings
account or fixed deposit be made only by way a transfer to the
current account
opened by the liquidator in terms of s 394(1)(a).
The Master was of the opinion that the aforementioned mode of
operating
the Corporate Saver accounts had made it possible for funds
belonging to the companies in liquidation to be paid to BLM without

her knowledge or consent, and also without the knowledge of Van Zyl.
She stated that this had evinced a situation in which
Van Zyl had not
been in control of the funds placed on 7-day fixed deposit and that
he had been ‘
unaware of what was
happening to those funds, more particularly in respect of the earning
by BLM of an agent’s fee in that
regard
’.
The Master rejected Van Zyl’s contention that the funds
invested in the Corporate Saver were in each case single
accounts and
not separate savings and fixed deposit accounts.
[68]
The Master also regarded the debits in
respect of BLM fees on the funds held on 7-day fixed deposit as
evidencing contraventions
by Van Zyl of s 394(4) of the Act,
which requires that all cheques and orders drawn on any account
opened in terms of subsection
(1) shall contain the name of the payee
and the cause of payment.  (She dealt with this at paras. 13-16
of her letter.) The
Master acknowledged that the wording of s 394(4)
‘
no longer coincides with the
reality of developments such as electronic banking’
and
stated that she accordingly placed ‘
no
store on the references to “cheques or orders” and to
“payee”
’.  She
maintained that the ‘
spirit of the
provision
’ nevertheless required
adherence ‘
viz. that the identity
of the payee and the cause of all payments must be ascertainable by
the Master
’.  At para. 16
of her reasons, the Master stated that she considered the payment of
part of BLM’s fees from
the funds held on fixed deposit
evidenced ‘
a serious
contravention
’ of s 394(4)
‘
as it concealed the fact that
monies were being dispensed from the accounts of the companies in
liquidation without any disclosure
thereof
’.
[69]
The reasons given by the Master for Van
Zyl’s removal also included a finding (at paras. 17-19) that he
had contravened s
394(7) of the Act.  Section 394(7) provides
for the monetary penalisation of a liquidator who unlawfully uses the
assets of
a company in liquidation other than for the benefit of the
company.  The basis of the alleged ‘contravention’
relied on by the Master in this regard was that Van Zyl had,
according to her, ‘
permitted a
third party, BLM, to obtain significant, in fact exorbitant, benefit
from providing little, if any, service to the companies
in
liquidation
’ and thereby ‘…
have permitted the assets of the
companies in liquidation to be used otherwise than for their benefit,
and more particularly for
the benefit of BLM
’.
[70]
At paras. 20-36 of her reasons letter, the
Master found that Van Zyl had contravened s 403(1) of the 1973
Companies Act and s 92(1)
and (2) of the Insolvency Act.
The provisions in the respective statutes are essentially mirror
images of each other.
They both provide for the framing by the
liquidator, or trustee, as the case might be, of vouched liquidation
and distribution
accounts.
[22]
The Master’s finding was founded on the omission in some of the
liquidation and distribution accounts that had been
lodged of any
disclosure of the fees debited in favour of BLM in respect of the
funds held in the 7-day fixed deposit accounts.
The
circumstances in which this occurred have been described at length
above.  And it will be recalled that all of these omissions
had
been rectified more than a year before the Master removed Van Zyl
from his appointments.
[71]
The Master stated that the accounts lodged
by Van Zyl had been confirmed on affidavit (as prescribed by the
provision) had weighed
significantly in the making of her decision
that he was ‘
no longer suitable to
hold the office of liquidator in any of the matters in which
[he had]
been so appointed
’.
She reasoned ‘
If the Master cannot
rely upon the word of a liquidator given under oath, the entire
integrity and efficacy of the system breaks
down
’.
The Master stated that she considered that Van Zyl’s admission
that he had been ignorant of the substantial
amounts debited in
respect of BLM’s fees demonstrated ‘
gross
incompetence
’ and a ‘
total
dereliction
’ of his duties as
liquidator.
[72]
In
paragraphs 37 – 72 of her reasons letter, the Master treated of
six issues that she characterised as evincing a breach
by Van Zyl of
his fiduciary duties.  Four of these related to BLM’s
fees.  The Master considered that the absence
of a written
mandate in respect of BLM’s fees, the absence of a justifiable
basis for the fees, the apparently arbitrary
nature of the fees and
the ‘grossly excessive’ scale of the fees demonstrated
that Van Zyl had not ‘
properly
performed his fiduciary duties
’.
The other two issues treated as breaches of fiduciary duty were
(i) that Van Zyl had in certain instances allowed
funds invested
in the Nedbank Corporate Saver facility to remain on 7-day fixed
deposit even though the returns offered on such
deposits had fallen
marginally below those obtainable in respect of funds invested on
call and (ii) that Van Zyl had failed
to claim a tax credit on
the value added tax that had been paid on BLM’s fees in respect
the funds held on fixed deposit.
(The alleged failure to claim
VAT credits was not a matter upon which Van Zyl had been invited by
the Master in her aforementioned
letter of 2 May 2017 to make
representations.)
[73]
The Master brushed aside creditors’
concerns that the removal of Van Zyl as liquidator in certain of the
matters might prejudice
the efficient conduct of the winding-up of
the companies concerned by noting that there would be nothing to
prevent the remaining
or replacement liquidators from engaging Van
Zyl’s services to assist them where required.
[74]
Van Zyl launched the application to review
the Master’s decision on 5 September 2017.  The matter was
heard by the court
a quo on 4 December 2017, and judgment was
delivered four and a half months later, on 16 March 2018.
The
judgment of the court a quo
[75]
The
court a quo approached the review on the basis that the impugned
decision had entailed the exercise by the Master of a discretionary

power.  The court, however, omitted to consider and determine
whether the discretion concerned was a true discretion or a
broad
one.  It appears to have proceeded on an assumption that a true
discretion was involved.  Such an assumption seems
to underlie
the judge’s statement that the court could interfere with the
Master’s decision only if it was ‘unreasonable’.
[76]
For the reasons given in the first section
of this judgment, I consider, with respect, that the court a quo was
misdirected in its
approach, and consequently failed to appreciate
the breadth of the review insofar as it was brought under s 151
of the Insolvency
Act.  I think that this determined the court’s
approach that it would not interfere with the Master’s decision

unless the decision had been shown to be ‘unreasonable’,
in the sense of being shown to have been ‘clearly wrong’.
[77]
In the context of what eventually became
the Master’s principal complaint, the learned judge a quo held
that the alleged non-compliance
by Van Zyl with s 394 of the
1973 Companies Act lay ‘at the heart of the matter’.
Engers AJ was inclined
to the view that the funds placed by Van Zyl
in Nedbank Corporate Saver accounts had been placed in single
accounts administered
according to a mandate that provided that those
parts of the funds in the accounts held on 7-day fixed deposit
attracted a different
rate of interest to the funds in the accounts
that were held on call.  He held that even if the funds invested
on call in
the Nedbank Corporate Saver accounts were in separate
accounts from the funds held on fixed deposit, the non-compliance
with s 394
occasioned by the failure to effect the transfers
from the call accounts to the fixed deposit accounts through the
current accounts
that had been opened in terms of s 394(1)(a)
was of a technical nature.  Strict compliance would, in the
judge’s
opinion, have entailed ‘
an
unnecessarily cumbersome way of going about things
’.
He did not say so expressly, but I think that by the expression
‘
unnecessarily cumbersome
’,
the learned judge must have been implying that the manner in which
the transfers occurred did not materially thwart the
achievement of
the objects of the provision.
[78]
The learned judge a quo, nevertheless
considered that there was no basis for interference with the Master’s
decision to remove
Van Zyl from as liquidator of the ten companies in
respect of which she had investigated his conduct.  His
reasoning was to
a material extent premised on his acceptance of the
Master’s findings that Van Zyl had acted in breach of his
‘
fiduciary
duties
’
in regard to the winding-up of those companies ‘
in
at least three respects
’.
[79]
The judge treated of these breaches, and
the resultant failure by Van Zyl to faithfully fulfil his duties in
terms of s 403
of the 1973 Companies Act, as follows at paras.
28-35 and 38 of his judgment:
28.
The Master alleges that
[Van Zyl] breached his fiduciary duties towards each of the
companies.  There are at least three aspects
to this.
29.
The first (although not
chronologically) is [Van Zyl’s] failure to notice that the
fixed deposits were at a lower rate than
the Corporate Saver in
2012/2013 [August 2012 – May 2013].  This failure spanned
a total of some 8 to 8½ months
or about 34 weeks.  In my
view, this clearly amounted to negligence, possibly even gross
negligence on the part of [Van Zyl].
30.
The second aspect is
[Van Zyl’s] failure to realise that the funds in the fixed
deposit were not accounted for in the statements
which he received.
Coupled with that is the fact that [Van Zyl] did not have control
over those funds when they were in the
fixed deposit.
31.
It is common cause that
[Van Zyl] did not have any idea of what actually happened to the
funds when in the fixed deposit.
By his own admission, he
thought that the fees shown in the Corporate Saver statements
represented the total fee charged by BLM.
In the Asch estate,
which is one of ten, BLM took fees of R878 598,50 on the fixed
deposit, and fees of RR834 980,85
on the Corporate Saver [i.e.
the funds invested on call].  Until he became aware that he
could get statements or registers
for the fixed deposit, and started
doing so, any amounts could have been deducted from the fixed deposit
without his ever knowing
about it.  The applicant simply had no
control over those funds.
32.
To allow a situation
like this to continue for several years is in my view also grossly
negligent.  It should have become apparent
to [Van Zyl] when he
first began to put funds into the fixed deposit, that the changes
[?charges] in these funds were not being
shown on the statements.
Had he done this he would presumably have found out that he could get
statements for the fixed deposit,
and would have done so.  That
would have had two consequences: (i) he would have been aware of
the true fees being taken
by BLM and (ii) he would not have
compiled and given the Master accounts which were inaccurate and
misleading.
33.
The third aspect is the
applicant’s failure to obtain the best possible rates for BLM’s
fees.  According to [Van
Zyl], the take-on fee was 1% of the
capital.  This was subsequently varied (upwards).  Yet,
when in 2013 there was a
complaint that the fees were excessive, [Van
Zyl] apparently had no difficulty in negotiating a lower fee.
This implies that
the fees were indeed excessive.  [Van Zyl] has
not really dealt with this point satisfactorily, to explain how and
why the
fees were agreed and varied.
34.
Because of all this,
[Van Zyl] confirmed under oath, the correctness of accounts which did
not show the true position.  That
constituted a breach of his
duties in terms of s 403 [of the 1973 Companies Act].
35.
In
the light of all the above, I consider that [Van Zyl’s]
challenge to the decision on the basis that the Master’s

decision was unreasonable, at least in regard to the ten companies,
must fail.
36.
…
37.
…
38.
As I hav
e
stated above, [Van Zyl’s] conduct in respect of the Corporate
Saver accounts, and his reporting to the Master thereon, constituted

negligence, and in some instances gross negligence.  That would
certainly affect his suitability to administer those estates,
and
would justify the respondent in removing [Van Zyl] as no longer being
suitable in the companies concerned.
[80]
The quoted passage demonstrates that court
a quo uncritically accepted, and even endorsed, the Master’s
contention that Van
Zyl had acted in breach of his fiduciary duty in
certain respects.  For the reasons that I shall give presently
when dealing
with the cross-appeal, I consider that the court a quo,
in common with the Master, proceeded on the basis of a fundamental
misconception
of the import of a liquidator’s fiduciary duty.
I shall also explain why I consider that the court a quo was
wrong
to have characterised the degree in which Van Zyl’s
conduct fell short of perfection as evincing gross negligence and
failed,
in any event, to weigh the minimal consequences of the
demonstrated negligence in the balance against the extremity of the
Master’s
response.
[81]
The court a quo did not make any findings
as to the extent, if any, the Master’s decision-making had
engaged in the careful
weighing exercise that had been required were
she to act in accordance with the principles enunciated in the
jurisprudence referred
to earlier in this judgment.  Despite
having noted the facts, the judge also did not attach any
significance in his reasoning
to the consideration that all of the
identified deficiencies in Van Zyl’s administration of the 10
estates that had been
investigated had been remedied more than a year
before the Master made her decision, and that there was no evidence
that they were
likely to recur.  The availability of less
extreme corrective measures and the question whether the Master’s
resort
to an ‘extreme step’ in the circumstances was a
proportionate response to the identified shortcomings also did not
receive consideration.
[82]
The learned judge upheld the review
challenge to the Master’s decision to remove Van Zyl from
office in respect of those companies
in liquidation in which his
conduct had not been individually investigated on the basis that she
could not have taken into account
the interests of the liquidations
in those matters, and that her decision therefore fell to be set
aside in terms of s 6(2)(e)(iii)
of PAJA.
[23]
[83]
The court a quo found that Van Zyl had
failed to substantiate his allegation that that the Master had been
biased or had acted with
an improper motive in conducting ‘a
campaign to have him removed as liquidator’.  The learned
judge did not, however,
set out an analysis of the facts and
arguments put up by Van Zyl in support of that ground of his review
application or reason
his evident rejection of them.
[84]
The aforementioned misdirections in the
judgment of the court a quo concerning the approach to the review and
the character and
effect of Van Zyl’s identified misdemeanours
were sufficiently material, in my view, to justify this court
assessing the
review completely afresh on appeal, untrammelled by the
effect of the findings at first instance.
Determination of the appeal by the Master against the decision
of the court a quo
[85]
As already noted, the Master appears to
have overlooked the confining effect of the expressions ‘
no
longer suitable
’ and ‘
the
company concerned
’ in paragraph
(e) of s 379(1) of the 1973 Companies Act in making a blanket
decision to remove Van Zyl from all of his
appointments without any
specific investigation in the vast majority of cases into the
particularity of his conduct of the winding-up
of the companies
concerned.  Insofar as her decision to remove Van Zyl as
liquidator in those cases purported to have been
predicated on
s 379(1)(e) of the 1973 Companies Act, it is clear that the
Master acted on the basis of a material misapprehension
of the import
of that provision; and the decision was liable, on that account, to
be set aside on conventional review grounds in
terms of s 6(2)(d)
of PAJA because it was materially influenced by an error of law.
[86]
In addition, apart from in respect of the
ten companies that are the subject of Van Zyl’s cross-appeal,
there was no evidence
that Van Zyl had
failed
to perform satisfactorily any duty imposed upon him by the Act or to
comply with a lawful demand of the Master.  In
the circumstances
it had not been open to the Master to found her decision to remove
Van Zyl as liquidator of the companies whose
management under
liquidation had not been specifically investigated by her on
s 379(1)(b) of the 1973 Companies Act, and any
reliance by her
on that provision in support of her decision in respect of what might
be called the unspecified cases cannot withstand
scrutiny.
[87]
Furthermore, as the
court a quo correctly held, the Master gave no consideration to the
effect of Van Zyl’s removal on the
best interests of the
winding-up processes that were in progress in the 90+ cases that she
had not specifically investigated. Her
decision
also
fell to be impugned in terms of s 6(2)(e)(iii) on that account,
as found by the court a quo.
[88]
Any one of the aforementioned flaws in the
decision-making would, on its own, justify the review and setting
aside of the Master’s
decision in respect of the 90+
unspecified cases.
[89]
Furthermore, as will appear from my
discussion of the merits of Van Zyl’s cross-appeal later in
this judgment, I consider
that the Master’s contention that she
was justified in removing Van Zyl from all of his appointments
because her assessment
of his conduct in the ten corporations in
liquidation that she had investigated resulted in her no longer being
able to trust him
as a liquidator was fundamentally misdirected in a
number of material respects.  At this stage it suffices to note
in that
regard that the Master has no general power to remove a
liquidator because she has lost trust in him.  Her power is
limited
to the specific instances set forth in s 379(1), and she
is bound to exercise it in accordance with the confining precepts
of
the provision.  If, as I have identified, she acted outside the
limits of that power, she did so unlawfully.
[90]
It is a basic tenet of our constitutional
scheme and the rule of law that those who have been invested with
public powers ‘
are constrained by
the principle that they may exercise no power and perform no function
beyond that conferred upon them by law
’.
[24]
The Master’s remedy, if she were of the opinion that her
findings in respect of Van Zyl’s conduct in the ten
matters
that she investigated afforded good cause for his removal from all
the other appointments he held, would have been to apply
to court for
his removal in terms of s 379(2).
[25]
It will be apparent from this judgment that on the available facts I
do not think that any such application would have succeeded.
[91]
There is accordingly no reason to fault the
decision of the court a quo to review and set aside the Master’s
decision to remove
Van Zyl from his appointments as liquidator of the
companies that had not been the subject of her investigation into his
conduct
in terms of s 381 of the 1973 Companies Act.  The
court’s decision in that respect was well-founded, irrespective

of whether the review was decided in terms of s 151 of the
Insolvency Act or s 6 of PAJA.  The Master’s appeal

must therefore fail.
Determination of the cross-appeal by Van Zyl against the
decision of the court a quo
[92]
I turn now to Van Zyl’s cross-appeal
against the dismissal by the court a quo of his application to review
and set aside the
Master’s decision to remove him from his
appointments as liquidator of the ten corporations identified in
paragraph (a)(i)-(x)
of the court’s order.
[26]
It is convenient to begin with what Engers AJ considered lay at
the heart of the matter: Van Zyl’s alleged non-compliance
in
various respects with s 394 of the 1973 Companies Act.
[93]
I am inclined to agree with the learned
judge’s finding that the funds invested on call or deposit in
the Corporate Saver
facility were placed in a single account in
respect of each corporate entity under liquidation to be administered
differently according
to account holder’s instructions.
The fact that they were identified in the banker’s books under
a single account
number in each case irrespective of whether the
invested funds were held subject to withdrawal on call or on fixed
term deposit
supports such an inference.  Furthermore, the
evidence concerning the conduct of the accounts in the Corporate
Saver facility
does not suggest that the funds initially held there
on call that were periodically held on fixed term deposit were
withdrawn
by the liquidator in the sense evidently contemplated by the word
‘
withdraw
’
in s 394(1)(d).  The funds were not taken out of the
Corporate Saver accounts; on the contrary they remained invested

there, but on altered terms.
[94]
If the characterisation of the accounts
were really as important in the circumstances as the Master would
appear to have considered,
it is puzzling that there was apparently
no evidence adduced by her representatives from Nedbank and BLM at
the s 381 enquiry
as to precisely how the facility operated, and
the contractual mechanics of how the interest came to be calculated
on the basis
of BLM’s aggregate or bulk investment rather than
that of the individual investors introduced by BLM.  Such
evidence
could also have shone light on the detail of the contractual
arrangement in terms of which BLM’s fees were debited directly

from the account, as it would appear was also done in the matter of
The Standard Bank of South Africa
Limited v The Master of the High Court, Eastern Cape, Port Elizabeth
and Others
[2018] ZAECPEHC 55; [2018] 4
All SA 871 (ECP).
[27]
The absence of such evidence in this case left the answers to what
were supposedly important questions, such as the basis
for the direct
debiting, open to speculation – an unwholesome situation for a
decision-maker contemplating taking an ‘extreme
step’.
[95]
But even assuming that two accounts had
been involved, that would not have been material in my view.  In
assessing the materiality
of the alleged transgressions by Van Zyl of
s 394 of the 1973 Companies Act, one has to ask what the objects of
the provision are,
and to what extent, if any, Van Zyl’s
conduct of the accounts conducted in the Nedbank Corporate Saver
facility undermined
or thwarted them.
[96]
The evidence showed, and indeed the Master
acknowledged, that some of the prescripts of s 394 have become
outmoded because they
hark back to the age before electronic
banking.  Literally applied, liquidators would be obliged, in
terms of s 394, to make
all payments by the company in liquidation by
cheque; EFT’s would be irregular because s 394 requires that
all payments from
the funds of a company in liquidation must be made
by cheque or order drawn on the current account.  A hardcopy
document,
physically endorsed with the prescribed information, is
what is required by the provision, construed strictly according to
its
tenor.  That is not how things work in the electronic age.
It is much safer, more efficient, and (according to Van Zyl’s

uncontroverted evidence) cheaper to make payments by EFT.  EFT’s
do not, by themselves, create a documentary record
of the transaction
involved in the way that a cheque or money order did.  The
documentary record of an EFT transaction, which
proceeds from a
digitally given instruction, is most commonly to be found as an entry
on a bank statement or a computer generated
payment confirmation
printout.  It emerged in the evidence that the Chief Master had
issued a circular encouraging liquidators
to use EFT’s instead
of cheques; quite understandably, if the real concern is the
optimally efficient and beneficial conduct
of liquidations.  No
purpose is served in the digital age by insistence on a strictly
formalistic application of s 394 according
to the letter of its 1973
text.
[28]
[97]
The primary object of s 394(1)-(6) is to
regulate the manner in which the company in liquidation’s funds
are held and expended
in a manner that facilitates the keeping of a
vouched record that can be easily checked by the Master and any other
interested
person.  Nothing about the way in which the
companies’ banking accounts were operated by Van Zyl thwarted
the objects
of s 394.  It is true that Van Zyl initially failed
to properly vouch for the gross interest earned on the funds on fixed
deposit and for the fees levied by BLM in respect of the funds held
on fixed deposit, but that was because he did not obtain the
relevant
statements from the bank, not because the operation of the accounts
inherently inhibited his ability to have done so,
or indeed that of
the Master herself to have obtained them directly from Nedbank in
terms of s 394(5).
[98]
As it was, the vouchers that Van Zyl
submitted with the liquidation and distribution accounts that he
lodged did disclose the use
of the fixed deposit aspect of the
Corporate Saver accounts, the payment of ‘agent’s fees’,
and the net interest
paid on funds invested on fixed deposit.
In the result, sufficient information had been disclosed to enable
the Master or
any other interested party to obtain further
particularity, should they have wished to do so.  The Master’s
retort (in
para. 30 of her reasons letter) that her office
‘
cannot be expected to peruse each
and every bank statement and it is for this reason that my office
relies upon liquidators to make
a full disclosure in the liquidation
and distribution accounts
’ does
not bear scrutiny.  As discussed below, the very purpose of the
bank statements and vouchers that liquidators
are required in terms
of s 403(3) of the Act to submit together with any liquidation
and distribution account that they lodge
is to equip the Master to
audit and verify the information in the lodged accounts.
[99]
The conduct of the accounts in the
Corporate Saver facility, moreover, did not entail that there was a
loss of control by the liquidator
over the invested funds, as found
by the Master; and apparently accepted by Engers AJ.  I do not
agree with the statement
in paragraph 25 of the court a quo’s
judgment that the liquidator would not know from the statements he
received in respect
of the funds invested on call what was happening
to funds being administered under 7-day deposit instructions.
That inference
is inconsistent with the effect of the uncontroverted
evidence.  Van Zyl did know how much was being administered in
terms
of the fixed deposit arrangement because the placement of money
on fixed deposit followed in each case on his instructions, and
was
reflected on the call account statements.  He also knew what the
net return on the fixed deposit was because that also
reflected on
the statements rendered in respect of the amounts invested on call.
The funds, whether they were on call or
on fixed deposit, could not
be dealt with other than on the liquidators’ instructions.
Where was the loss of control?
The debiting of BLM’s fees
to the accounts can, as a matter of probability, only have occurred
pursuant to a pertinent provision
in the contractual arrangements
between the liquidator, the intermediary and the bank.  As
noted, as far as we can tell, the
detail of these arrangements does
not appear to have been established at the s 381 enquiry.
[100]
The only thing that Van Zyl was confessedly
ignorant about was that the agency fee in respect of the funds held
on fixed deposit
was not included in that reflected on the call
account statements.  However, there is nothing to indicate that
the fees debited
in favour of BLM, whether in respect of the funds
held on call or those invested on fixed deposit, in point of fact
differed from
what Van Zyl had agreed to.  They were calculated
on an agreed percentage basis with reference to the total amount of
money
invested at any time in Nedbank’s Corporate Saver.
Van Zyl’s failure to notice that the BLM fees reflected on
the
bank statements that he received in respect of the funds invested on
call were significantly less than what he should have
expected to be
debited on the total sum of the funds he had invested was remiss, but
it in no way adversely affected the actual
administration of the
winding-up of the companies concerned in any way that was shown in
the evidence.  It had no bearing
or effect on the amount of the
proceeds of the realisation of the companies’ assets that was
available for distribution to
creditors.  Ironically, the only
practical consequence of Van Zyl’s shortcoming in this
connection, apart from his defective
reporting in the liquidation
accounts, was that he under-calculated the liquidators’ fee
entitlement in respect of interest
earned because he calculated the
amount on the net interest instead of on the gross interest as
permitted in terms of the tariff.
[101]
For all these reasons I consider that the
Master’s finding that Van Zyl’s conduct evinced ‘serious
contraventions’
of s 394 of the 1973 Companies Act was
wrong.  Were she minded to take punitive steps against the
liquidators for their
negligent omission to check the correctness of
the fees paid to BLM and to report the full fees paid in respect of
the funds invested
on fixed deposit in the liquidation and
distribution accounts, an appropriate and suitably proportionate
means of doing so would
have been to disallow all or part of the
liquidators’ fees based on the returns earned on the
investments that were inadequately
vouched and reported.
[102]
The Master’s finding that Van Zyl had
‘contravened’ s 394(7) of the 1973 Companies Act was
fundamentally
misdirected.  It is not a provision that is
capable of being contravened.  It is a provision that empowers
the Master
to penalise a liquidator for using the assets of a company
in liquidation for purposes other than the benefit of the company, or

for failing to timeously deposit moneys received by the liquidator
for the company’s account into its bank account.
The
Master did not see fit to impose any such penalty in the ten matters
under consideration in the cross-appeal, and her invocation
of
s 394(7) was therefore an irrelevant distraction premised on a
material misdirection in respect of the applicable law.
All
that is germane in this connection is the Master’s factual
finding that the payment of fees to BLM was an application
of the
companies’ funds other than for the companies’ benefit.
That finding was inconsistent with the evidence,
and entirely devoid
of merit.
[103]
The fees paid to BLM were in respect of the
facilitation of the investment of the funds of the companies in
liquidation through
the Corporate Saver facility.  The evidence
that that could be done only by using the offices of a licenced
financial service
provider like BLM was uncontroverted, as was the
evidence that the incurrence of the expenses in respect of BLM’s
fee was
justified by the higher rates of return obtainable by
investment in the Corporate Saver.  The fees were therefore
undisputedly
paid for the benefit of the companies concerned.
Even if the benefits to the companies could notionally have been
enhanced
by Van Zyl negotiating a lower fee, that would not detract
from the fact that the fees that were actually paid were expended for

the companies’ benefit.  Of course BLM also benefitted
from the payment of the fee, but so would any recipient of a
payment
by the liquidator in consideration for a service rendered to the
company or in furtherance of its winding-up.
[104]
The fact that certain of the liquidation
and distribution accounts lodged by Van Zyl and his co-liquidators
were defective, which
resulted in the liquidators falling short in
the discharge of their duties in terms of s 403 of the 1973
Companies Act, was
inextricably bound up in their conduct of the
Corporate Saver investment accounts, and properly fell to be
addressed by the Master
as an incidence of that conduct, and not
something discrete from what she chose to deal with as contraventions
of s 394 of
the Act.  It was not suggested that Van Zyl and
his co-liquidators had been guilty of any deliberate
misrepresentation in
the accounts that were lodged, or that Van Zyl’s
accompanying verifying affidavits in terms of s 403(2) had been
made
perjuriously.  The Master’s statement that if she
could not rely upon the word of a liquidator given under oath the
entire integrity and efficacy of the system would break down was
inappropriately hyperbolical in the circumstances.
[105]
The whole purpose of the lodgement and
advertisement of liquidation and distribution accounts in terms of
s 403 is so that
their content can be interrogated, and if needs
be questioned.  The system provides for the reality that such
accounts will
not always be correct or indisputable, and affords
mechanisms for their correction.  It just does not follow that
because
a liquidator lodges an account that is defective because of
some or other oversight, even a negligent one, he or she is
thereafter
not to be trusted in that or any other liquidation in
which he or she might be engaged.  The reasons for the mistake,
its
practical effects, whether it is remediable, and the likelihood
of its recurrence are just some of the factors that the Master would

have to take into account before she could rationally come to the far
reaching conclusion that the liquidator was unfit to retain
office on
account of the mistake.  There is nothing in the evidence to
indicate convincingly that the Master undertook such
an exercise,
and, if she did, the conclusion that she reached was entirely
disproportionate in the factual context.  This
points strongly
to the irrationality of her decision.
[106]
Turning now to consider the Master’s
finding that Van Zyl had breached his fiduciary duty in the various
respects described
in paragraph [72]
above.
It is clear that the Master misdirected herself as to what the
concept of fiduciary duty involves (as to which see
Phillips
v Fieldstone Africa (Pty) Ltd and Another
[2003] ZASCA 137
;
[2004] 1 All SA 150
(SCA);
2004 (3) SA 465
at
paras. 27-32 and
Robinson v
Randfontein Estates Gold Mining Co Ltd
1921 AD 168
at 177-180).
[107]
That liquidators stand in a fiduciary
relationship to the companies under their administration is trite.
Breach of fiduciary
duty is a very serious infraction by any person
placed in a position with fiduciary responsibilities; it generally
involves dishonesty
or lack of probity.  (The case of
Standard
Bank of South Africa v The Master of The High Court and Others
2010 (4) SA 405
(SCA) gives an example of a matter in which the
liquidators were in breach of their fiduciary duties, when they used
the company’s
money to fund litigation in which their personal
interests rather than those of the company were in issue and
concluded contracts
in which their interests were conflicted with
those of the company whose interests they were required to foster.)
[108]
Breach of fiduciary duty entails something
materially different from the negligent discharge of his or her
functions by a person
in a fiduciary position. Millett LJ (as he
then was) stressed this axiom in
Bristol
and West Building Society v Mothew (t/a Stapley & Co)
[1996] EWCA Civ 533
;
[1998] 1 Ch 1
,
[1996] 4 All ER 698
(CA) at p.712 (All ER), noting
that ‘
The various obligations of a
fiduciary merely reflect different aspects of his core duties of
loyalty and fidelity. Breach of fiduciary
obligation, therefore,
connotes disloyalty or infidelity. Mere incompetence is not enough. A
servant who loyally does his incompetent
best for his master is not
unfaithful and is not guilty of a breach of fiduciary duty’
.
The matters that the Master characterised (and the court a quo
accepted) as breaches by Van Zyl of his fiduciary duties
were all
instances in which she considered that he had acted negligently or
incompetently; not with dishonesty, disloyalty or infidelity.

They did
not
constitute breaches of his fiduciary duty.
[109]
But quite apart from the legal
mischaracterisation of Van Zyl’s conduct as breaches of his
fiduciary duty, the instances identified
by the Master in that
connection were also misconceived, either factually or as to their
significance.
[110]
The absence of a written mandate agreement
with BLM or an insufficiently detailed recordal of the terms of the
mandate in the instances
where there were written mandates might very
well have been legitimate reason for the Master to be dissatisfied.
But it was
within her statutory powers to direct that the position be
remedied.  There was no indication in the evidence, that when
the
Master did require remedial steps to be taken, Van Zyl did not
punctiliously and expeditiously comply with her instructions; indeed,

the evidence is to the contrary.  The only material matter in
respect of which the deficiencies in the recordal of the mandates

appear to have been pertinent was the fixing of the percentage of the
total sum of funds invested with reference to which BLM’s
fee
fell in each case to be determined.  That it must have been
recorded in some or other manner, however, seems to follow
from
Nedbank’s recorded practice of debiting the fees at source.
The fees that were debited were recorded in the relevant
bank
statements, and the manner in which they were computed could be
ascertained from the statements.
[111]
The evidence did not support the Master’s
conclusion that the there was no justifiable basis for the fees paid
to BLM.
The justification was that it enabled the companies in
liquidation to obtain a higher return on the investment of available
funds
than would otherwise be generally obtainable.
[112]
The Master’s finding that the fees
paid to BLM were arbitrary or excessive seems to me to rest on shaky
foundations.
It is certainly not borne out by the content of
the testimony of an expert witness who gave oral evidence at the
instance of the
Master at the s 381, enquiry, Mr Habib.  Judged
by the comparative fee computations referred to in that evidence in
the
transcript included in the papers before the court a quo, BLM’s
fee seems to have fallen within the range commonly charged
in the
market.  But even if the Master were justifiably of the opinion
that Van Zyl had incurred an excessive liability in
respect of the
fees paid to BLM, she could require him to adjust the accounts, as
provided for in terms of s 407(3) of the
1973 Companies Act, to
allow only what she considered would have been reasonable
expenditure.  The result of any such direction
would be that Van
Zyl and his co-liquidators would have to bear the difference between
the amount of the excessive fee and that
of the amount that they
reasonably should have incurred out of their own pockets.
[113]
The Master’s counsel did not seek to
support in argument before us her finding that Van Zyl had been in
breach of his fiduciary
duties by failing to have claimed certain VAT
credits, which means that all that still remains to be considered
under this heading
is her finding that he had been in breach of his
duties by allowing funds to remain invested on 7-day deposit at times
when the
rate of return on such investment had fallen marginally
below that which could have been obtained on funds invested on call.
The
Master considered, and the court a quo appears to have concurred,
that Van Zyl had been ‘grossly negligent’ in that

regard.
[114]
It was noted in
MV
Stella Tingas ;Transnet Ltd t/a Portnet v Owners of the MV Stella
Tingas and Another
[2003] 1 All SA 286
(SCA),
2003 (2) SA 473
, at para. 7, that ‘[g]ross
negligence is not an exact concept capable of precise definition.’
On any approach,
however, it entails a
radical
departure from the standard of the reasonable person.  After
referring to several examples of attempts at defining the concept
in
a number of judgments and textbooks, Scott JA concluded in
Stella Tingas
loc.
cit.: ‘
It follows, I think, that
to qualify as gross negligence the conduct in question, although
falling short of dolus eventualis, must
involve a departure from the
standard of the reasonable person to such an extent that it may
properly be categorised as extreme;
it must demonstrate, where there
is found to be conscious risk-taking, a complete obtuseness of mind
or, where there is no conscious
risk-taking, a total failure to take
care. If something less were required, the distinction between
ordinary and gross negligence
would lose its validity
’.
In
Gihwala and Others v Grancy Property
Ltd and Others
[2016] ZASCA 35
;
[2016]
2 All SA 649
(SCA);
2017 (2) SA 337
(SCA), at para 144, it was noted,
in regard to conduct of directors of companies, that ‘
There
is a long history of courts treating gross negligence as the
equivalent of recklessness, when dealing with the conduct of
those
responsible for the administration of companies, and recklessness is
plainly serious misconduct
’.
That observation also would apply by parity of reasoning to
liquidators of companies.
[115]
I do not agree with the characterisation of
the liquidator’s failure to notice a marginal interest rate
differential for 8
months as ‘grossly negligent’.
‘A total failure to take care’ or reckless indifference
might have
been demonstrated had it been shown that there had been a
very material discrepancy between the net returns realised on the
Corporate
Saver investments and other available savings investments,
which could not have escaped notice by any liquidator paying even a
modicum of attention to his responsibilities.  There was no such
evidence.  The bank statements put in evidence, moreover,
show
that the liquidators did give attention to the funds in the accounts
on a regular basis.  The transfers and payments
reflected in the
statements confirm that.  The evidence does not support the
conclusion that Van Zyl was reckless, or that
he could not care
less.  Logic suggests, and common experience tells, that it is
most unusual, at least at the time of investment,
for the return
offered on a fixed term deposit investment to be less than that
obtainable on a call deposit.  In the current
matter, the
unusual happened, but the difference in the respective rates was so
marginal – at its greatest 0,09% per annum
– that it
could easily go unnoticed, and its effect in rands and cents was
small.
[116]
The extent to which Van Zyl and his
co-liquidators’ conduct in failing to notice and act on the
rate of return aberration
might be adjudged to have departed from the
standard reasonably expected of a liquidator had to be weighed
mindful that there is
no statutory duty on a liquidator to invest
funds that are not immediately required at the highest available
interest rate.
He is in fact notionally entitled to hold all of
the company’s money in a current account, rather than an
interest-bearing
savings or fixed term deposit account.
[29]
Indeed, until, the substitution of s 394(1) of the 1973
Companies Act, in terms of s 6 of the Companies Amendment
Act 63
of 1988, a liquidator needed to obtain permission from the Master to
invest funds that were surplus to immediate requirement
in an
interest bearing account.
[117]
Furthermore, when it comes to interest
rates, the highest attainable rates available can potentially come
with increased risk.
The express limitation of investment
options available in terms of s 394 of the old Companies Act implies
an understandable intention
by the legislature that funds not
required immediately should be conservatively invested by
liquidators.  Huisamen AJ made
that point in
The
Standard Bank of South Africa Limited v The Master of the High Court,
Eastern Cape, Port Elizabeth and Others
[2018] ZAECPEHC 55;
[2018] 4 All SA 871
(ECP) at paras. 86-87.
[118]
It is of interest to note that a master who
is concerned about the conduct of a company in liquidation’s
bank accounts is
able to gain insight into the conduct of the
accounts at any time, even before a liquidation and distribution
account is lodged
(s 394(2),(3) and (5)).  A master who
considers that a liquidator is not managing available funds to best
advantage is
able to take over control of the invested funds by
directing that they be transferred to the Guardians Fund (s 394(6)).
The
rates of return given on funds invested in the Guardians Fund
have historically been conservative; and they are determined annually

by the Minister, and not monitored weekly or monthly to determine
whether they should be increased or lowered.  Nothing about
Van
Zyl’s management of the invested funds appears to have been of
sufficient concern to have moved the Master to use her
power to
intervene in Van Zyl’s conduct of the various banking accounts
in issue.  On the contrary, she was instead
content to leave him
in charge of the investments for an extended period of time after she
was apprised of the relevant facts before
she announced a decision to
remove him from office.  Her conduct was inconsistent with what
might reasonably have been expected
of a conscientious functionary in
her position who was genuinely concerned that a liquidator had been
grossly negligent in the
management of a company’s funds.
[119]
If it were considered appropriate by the
Master to penalise the Van Zyl and his co-liquidators for not being
astute to the fact
that they could, for a few months, have done
slightly better for the companies concerned by keeping the funds
invested on call,
the appropriate and proportionate manner of doing
that would have been to disallow part of their fees so as to
compensate for any
loss that creditors or members might have suffered
in consequence of their carelessness.  If the liquidators were
aggrieved
by any such action it would, of course, be open to them to
take the decision on review.
[120]
There is no indication that Master took the
interests of the affected liquidations sufficiently into account in
making her decision.
In the great majority of cases she had not
individually investigated the matters and sought to justify her
action merely on the
basis of her asserted loss of trust in Van Zyl.
Her response to the concerns expressed by some creditors that Van
Zyl’s
could be hired by his replacement begged the (unanswered)
question, how it could be to the benefit of creditors for the
liquidators
to incur additional costs over and above the liquidators’
fees for Van Zyl to provide important services that would have been

included in the liquidators’ fee had he been retained in
office.
[121]
It is significant that the Master has given
no indication of why resort to the less extreme punitive or
corrective measures that
were available to her would not have been
adequate in the circumstances.  At the very best for her, this
is but one of a number
of indications that she failed to undertake
the required careful balancing exercise described in the judgments
cited in the introductory
section of this judgment.  On the
contrary, the evidence leaves one with a very strong impression that
the Master pressed
on throughout in accordance with the strongly
expressed views in her letter of 26 February 2014 that Van Zyl
was guilty of
widespread fraudulent practices and made her decision
on that basis notwithstanding that the findings on which she acted
had not
sustained those allegations.  Even the removal of Van
Zyl from office in the ten corporations in respect of which his
administration
was investigated was a starkly disproportionate
response to the identified shortcomings in his conduct, and
accordingly irrational.
It would appear that it was the product
of her having given effect to her unfounded and wildly exaggerated
characterisations of
Van Zyl’s conduct as ‘
grossly
incompetent’, ‘
grossly
negligent’ and ‘a
total
dereliction of duty’, and insufficient attention to the
uncontroverted information in Van Zyl’s representations that

showed that even when his conduct had fallen short of what might have
been expected of him the adverse consequences had been limited
and to
a material degree already remediated.
[122]
In my judgment the Master’s decision
to remove Van Zyl from office as liquidator in the ten identified
corporations was wrong.
It is liable to be set aside on various
grounds in terms of s 6(2) of PAJA; viz. that it was not
supported by, and therefore
not rationally connected either to the
information before her, or the purpose of the empowering provision;
it so was so unreasonable
that no reasonable functionary in her
position would have made it; she had not properly taken relevant
considerations into account
and she had acted arbitrarily.  I am
respectfully of the view that the court a quo was in error for not
having recognised
as much.  Van Zyl’s cross-appeal must
consequently be upheld.
Allegation that the Master acted mala fide and with bias
[123]
It has not been necessary to reach the
allegations by Van Zyl that the Master acted mala fide and with
bias.  Her conduct in
certain respects was such that it should
have come as no surprise that Van Zyl should have taken that stand
against her.
The Master’s strongly worded statements,
even before the formal commencement of the s 381 enquiry, that
Van Zyl was
guilty of widespread fraudulent practice were
inappropriate and reflected an attitude of prejudgement.  The
wide extent of
the Master’s investigation into matters
apparently quite unrelated to the original complaint by the members
of Asch Professional
Services (Pty) Ltd about an aspect of the fees
raised by Van Zyl could understandably cause suspicion about the
existence of an
ulterior motive.  Perceptions of mala fides and
bias would also find support in the obviously disproportionate action
taken
by the Master against Van Zyl, especially when judged against
her failure to have taken any action against his co-liquidators who

also made affidavits in terms of s 403(2) verifying the
defective accounts to which she took such strong exception.
Co-liquidators
are required to act jointly, and are responsible for
each other’s acts and omissions; see s 382 of the 1973
Companies Act
and cf.
Gross and Others v
Pentz
[1996] ZASCA 78
;
1996 (4) SA 617
(SCA) and
Durandt
v Fedsure General Insurance Ltd
[2004]
ZASCA 119
;
2005 (3) SA 350
(SCA) at para. 12.  If the Master
considered it justifiable to remove Van Zyl from all his appointments
because she could
not trust him because he had filed defective
liquidation and distribution accounts under affidavit, how could she
keep on his co-liquidators
who had done just the same?
[124]
There was also the matter of the reported
conversation between Mr Maphaha and Van Zyl in the cloakroom during
an interval in proceedings
during the hearing at the s 381
enquiry.  Van Zyl reported to his attorneys at the time that
Maphaha had conveyed to
him that the outcome of the enquiry had been
preconceived and that he was merely going through the motions.
When the incident
was taken up with the State Attorney by Van Zyl’s
attorneys, Maphaha admitted that he had had a conversation with Van
Zyl
in the cloakroom, but denied the veracity of Van Zyl’s
report as to its content.  The resulting conflict in the
evidence
could not be determined on paper.  Were it necessary to
have done so for the purpose of deciding the appeal and cross-appeal,

it would have to have been resolved against Van Zyl by application of
the rule in
Plascon-Evans
.
[125]
I have treated of this issue at some length
because it is an important one in the greater context of this matter,
and I would not
like it to be thought that, by not mentioning it, we
had overlooked it.  If it had been necessary to make
determinative findings
on it I would have been reluctant to do so on
paper.  The allegations have such far reaching implications –
beyond the
parameters of the review itself – that it would be
undesirable for them to be adjudicated other than on the basis of
oral
evidence.
Order
[126]
The court a quo did not incorporate in its
order reviewing and partly setting aside the Master’s decision
a direction remitting
any aspect of the matter for reconsideration by
the Master (see s 8(c)(i) of PAJA).  I do not think that
there was anything
amiss in that omission.  It is not obvious
that there is any aspect of the matter that specifically requires
reconsideration.
Certainly, there was nothing in the judgment
of the court a quo, nor is there anything in this judgment, that
prohibits the Master
from continuing to exercise her powers of
supervision in respect of any of the estates that are under Van Zyl’s
administration.
The only effect of our judgment is to reinstate
Van Zyl to his position as liquidator of the corporations in
liquidation affected
by the Master’s impugned decision.
It is not open to the Master to revisit her decision to remove him
from any of those
appointments on any of the grounds set out in her
letter of 31 August 2017.
[127]
The following order is made:
i.
The
appeal is dismissed with costs, including the costs of two counsel.
ii.
The
cross-appeal is upheld with costs, including the costs of two
counsel.
iii.
The
order made by the court a quo is set aside and substituted with an
order in the following terms:
a)
The
decision by the Master of the High Court, Cape Town, dated 31 August
2017, purportedly in terms of s 379(1) of the
Companies Act 61
of 1973, to remove Christopher Peter van Zyl from office as
liquidator of –
i.
Asch
Professional Services (Pty) Ltd,
ii.
Kingsfield
Aviation Leasing Five (Pty) Ltd,
iii.
Elprom
Electronic Product Manufacturers (Pty) Ltd,
iv.
Aquila
Insurance and Healthcare Consultants (Pty) Ltd,
v.
Erf
1252 Marine Drive (Pty) Ltd,
vi.
Shoe
HQ (Pty) Ltd,
vii.
New
World Fruit Venturers (Pty) Ltd,
viii.
Zib
Devco Building (Pty) Ltd,
ix.
Huysamen
Motors CC and
x.
Treehouse
Children’s Décor Co – SA (Pty) Ltd.
and any other matter under her jurisdiction in which he held an
appointment as liquidator is reviewed and set aside.
b)
The
respondent shall be liable to pay the applicant’s costs of
suit, including the costs of two counsel.
A.G. BINNS-WARD
Judge of the High Court
T.C. NDITA
Judge of the High Court
M.I. SAMELA
Judge
of the High Court
APPEARANCES
Appellant’s counsel:

I. Jamie SC
D. Pillay
Appellant’s attorneys:

The State Attorney
Cape Town
Respondent’s counsel:

I.J. Muller SC
K. Reynolds
Respondent’s attorneys:

Edward Nathan Sonnenbergs Inc
Cape Town
[1]
All of the provisions of the 1973 Companies Act
referred to in this judgment resort in Chapter XIV of the statute
and remain in
force notwithstanding the repeal of the Act by virtue
of the provisions of Item 9 of Schedule 5 to the
Companies Act
71 of 2008
.
[2]
Section 151 of the Insolvency Act provides in
relevant part as follows:
‘…
a
ny person
aggrieved by any decision, ruling, order or taxation of the Master …
may bring it under review by the court and
to that end may apply to
the court by motion, after notice to the Master … and to any
person whose interests are affected:
Provided that …
’
[3]
See e.g.
Gilbey Distillers & Vintners (Pty) Ltd and Others v
Morris NO and Another
[1990] ZASCA 134
;
1991 (1) SA 648
(A) 655G
– J,
[1991] 1 All SA 406
(A), and
Cooper NO and Others v
South African Mutual Life Assurance Society and Others
[2000]
ZASCA 64
;
2001 (1) SA 967
(SCA);
[2001] 1 All SA 355
(A) at para 11.
[4]
See e.g.
Cooper NO v
SA Mutual
supra, at para. 11
[5]
Section 151 of the Insolvency Act cannot be construed to more
limiting effect than s 6 of PAJA because that would derogate

from PAJA’s role of giving effect to everyone’s rights
to administrative justice in terms of s 33 of the
Constitution.
It can only be read to potentially enhance the
extent of the court’s review power in cases in which it
applies.
[6]
Section 384(1) and (2) provide:
Remuneration of liquidator.
(1)  In any winding-up a liquidator shall be entitled to
reasonable remuneration for his services to be taxed by the Master

in accordance with the prescribed tariff of remuneration: Provided
that, in the case of a members’ voluntary winding-up,
the
liquidator’s remuneration may be determined by the company in
general meeting.
(
2)  The Master may reduce or increase such remuneration if
in his opinion there is good cause for doing so, and may disallow

such remuneration either wholly or in part on account of any failure
or delay by the liquidator in the discharge of his duties.
[7]
Cf.
President of the Republic of South Africa and Others v
Gauteng Lions Rugby Union
[2001] ZACC 5
;
2002 (1) BCLR 1
(CC);
2002 (2) SA 64
(CC) at para. 13 and the other cases cited there and
in footnote 12 to the judgment.
[8]
The terminology used by judges to distinguish the
senses of the concept of discretion has not always been consistent.
In
Trencon Construction (Pty) Ltd v
Industrial Development Corporation of South Africa and another
[2015] ZACC 22
,
2015 (5) SA 245
(CC),
2015 (10) BCLR 1199
, in
para. 82 at footnote 65, the Constitutional Court observed ‘
The
two types of discretion are often referred to as a discretion in the
strict/narrow/true sense and a discretion in the broad/wide/loose

sense
’.  A discretion that falls to be exercised with
regard to prescribed attendant findings to be made by the
decision-maker
of an identified factual or a mixed factual/legal
character (as in s 379(1) of the 1973
Companies Act) is
not a
true or strict discretion; cf.
Media Workers Association of South
Africa and Others v Press Corporation of South Africa Ltd
('Perskor')
[1992] ZASCA 149
;
1992 (4) SA 791
(A),
[1992] 2 All SA 453
at
800C-G (SALR).
[9]
Section 379(2)
deals with the removal of a
liquidator from office by a court.
[10]
Standard Bank of South Africa v The Master of the High Court and
Others
2010 (4) SA 405
(SCA) at para. 135;
Ma-Africa
Groepbelange (Pty) Ltd and Another v Millman and Powell NNO and
Another
1997 (1) SA 547
(C) at 566 and
Motala v Master of the
North Gauteng High Court, Pretoria
[2017] ZAGPPHC 665 (9 October
2017) at para. 26.
[11]
The
Collins Free Online English Dictionary
(accessed on
17 February 2019) defines ‘
no
longer
’
in the following way: ‘
Something that is
no
longer
the case used to be the case but is not the
case now
’.  The
Oxford Dictionary of English
(Version 2.3.0 (203.16.12), © 2005–2018 Apple Inc.)
puts it in the following way: ‘
not now as formerly; not any
more
’
[12]
Cited with approval in
Pepcor Retirement Fund and Another v
Financial Services Board and
Another
[2003] ZASCA 56
,
[2003] 3
All SA 21
(SCA),
2003 (6) SA 38
, at para. 36.  Compare also the
approach in respect of the review of executive conduct under
legislation framed using the
phrase ‘if it appears to the
Minister’ in
Minister of Home Affairs and Another v Austin
and Another
1986 (4) SA 281
(ZS), at 293H-294, and in similar
vein
Office of Fair Trading and others v IBA Healthcare Ltd
[2004] EWCA Civ 142
;
[2004] 4 All ER 1103
(CA), at para. 45; and
Da
Cruz and Another v City of Cape Town and Another
[2017] ZAWCHC
1
;
[2017] 1 All SA 890
(WCC),
2017 (4) SA 107
(WCC) at paras. 33-34.
[13]
Cf. e.g.
Standard Bank of South Africa v The Master of the High
Court and Others
2010 (4) SA 405
(SCA) at para. 135;
Hudson
and others NNO v Wilkins NO and Others
2003
(6) SA 234
(T) at 239D;
Re Edennote Ltd; Tottenham Hotspur
plc & Ors v. Ryman & Anor
supra at 398 (BCLC) and
Hobbs
& Anor v Gibson & Ors
[2010] EWHC 3676
(Ch) at para. 47
[14]
Quickson (South and West) Ltd. v Katz &
Anor
[2004] EWHC 2443
(Ch) (25 August
2004) at paras. 162-169,
Sisu Capital Fund Ltd &
Ors v Tucker & Ors
[2005] EWHC 2170
(Ch) (09 September 2005)
at para. 83-88, and for essentially the same approach see
Re
Edennote Ltd; Tottenham Hotspur plc & Ors v. Ryman & Anor
[1996] 2 BCLC 389
,
[1996] BCC 718
,
[1996] EWCA Civ 1349
in the
last six paragraphs.
[15]
See
Re St Gregory’s Armenian School (in liq)
[2012]
NSWSC 1215
;
(2012) 92 ACSR 588
,
SingTel Optus Pty Ltd v Weston
[2012] NSWSC 674
;
(2012) 90 ACSR 225
,
Re Joe & Joe
Developments Pty Ltd (subject to a Deed of Co Arrangement)
[2014] NSWSC 1444
,
Re ACN 151 726 224 Pty Ltd (in liq) previously
Ridley Capital Holdings Pty Ltd
[2016] NSWSC 1801
and
Hebbel
Constructions Pty Ltd v Bitar Pty Ltd
[2018] NSWSC 758
at para.
4.
[16]
Bermack Trust
supra
and Blackman et al.
Commentary on the
Companies Act
(Juta
) at 14-315
(Revision service 7, 2010)
[17]
Section 108(2) of the Insolvency Act, 1986 c 45
provides: ‘
The court may, on
cause shown, remove a liquidator and appoint another
’.
[18]
Asch Professional Services (Pty) Ltd, Kingsfield
Aviation Leasing Five (Pty) Ltd, Elprom Electronic Product
Manufacturers (Pty)
Ltd, Aquila Insurance and Healthcare Consultants
(Pty) Ltd, Erf 1252 Marine Drive (Pty) Ltd, Shoe HQ (Pty) Ltd, New
World Fruit
Venturers (Pty) Ltd, Zib Devco Building (Pty) Ltd,
Huysamen Motors CC and Treehouse Children’s Décor Co –

SA (Pty) Ltd.
[19]
By way of example paragraph 10 of the findings
goes as follows:
‘
It is worth noting that all processes
that precede the confirmation of the liquidation and distribution
are not met in some of
the matters.  Therefore the issue of
confirmation of the accounts will be limited those matters where
there was confirmation
of the accounts.  In matter where there
was no confirmation the Master is not barred from directing the
liquidator to amend
the account, however when this enquiry was
instituted it was as per trend and pattern in which fees were
charged in all matters
that form part of this enquiry.
’
The paragraph is quoted in isolation, but regard to the context does
not assist in making head or tail of its meaning.
[20]
See
The Standard
Bank of South Africa Limited v The Master of the High Court, Eastern
Cape, Port Elizabeth and Others
[2018]
ZAECPEHC 55,
[2018] 4 All SA 871
(ECP), which is another case in
which a liquidator’s investment in the Nedbank Corporate Saver
facility featured large.
[21]
Section 403 provides:
Liquidator’s duty to file liquidation and distribution
account.
(1) (a) Every liquidator shall, unless he receives an extension
of time as hereinafter provided, frame and lodge with the Master
not
later than six months after his appointment an account of his
receipts and payments and a plan of distribution or, if there
is a
liability among creditors and contributories to contribute towards
the costs of the winding-up, a plan of contribution apportioning

their liability.
(b) If the account lodged under paragraph (a) is not a final
account, the liquidator shall from time to time and as the Master
may direct, but at least once in every period of six months (unless
he receives an extension of time), frame and lodge with the
Master a
further account and plan of distribution: Provided that the Master
may at any time and in any case where the liquidator
has funds in
hand, which ought in the opinion of the Master to be distributed or
applied towards the payment of debts, direct
the liquidator in
writing to frame and lodge with him an account and plan of
distribution in respect of such funds within a period
specified.
(2) Any account shall be lodged in duplicate in the prescribed
form, shall be fully supported by vouchers, including the
liquidator’s
bank statements or certified extracts from his
bank and building society accounts showing all deposits and
withdrawals, and shall
be verified by an affidavit in the prescribed
form.
[22]
Section 403 has been quoted in full in note 21 above.
[23]
Section 6(2)(e)(iii) of PAJA provides:
A court or tribunal has the power to judicially review an
administrative action if—
(e)
the action was taken—
(iii) because irrelevant considerations were taken into account
or relevant considerations were not considered; ...
[24]
See
Fedsure Life
Assurance Ltd and Others v Greater Johannesburg Transitional
Metropolitan Council and Others
[1998]
ZACC 17
,
1999 (1) SA 374
(CC),
1998 (12) BCLR 1458
, at para. 58.
[25]
For the reasons that will become apparent when I deal with the
cross-appeal later in this judgment, I do not think she would
have
enjoyed good prospects of success with any such application.
[26]
The corporations concerned are those named in
note 18
above.
[27]
I appreciate that the position was not necessarily the same in the
Corporate Saver investments in which Van Zyl was involved,
but it
would appear from the judgment in
Standard Bank v The Master,
Port Elizabeth
that the intermediary through whom the liquidator
in that case had invested in the Corporate Saver facility was paid
its commission,
which was a percentage of the interest earned by the
company in liquidation, by virtue of an agreement with Nedbank,
rather than
the liquidator.  The company in liquidation in that
case was entitled in terms of the applicable contractual
arrangements
only to the net interest on the Corporate Saver
investments, that is net of the commission payable by Nedbank to the
intermediary;
see in this regard paras. 69 and 70 of the judgment in
particular.  That there would have been some privity of
contract
between BLM and Nedbank in respect of the Corporate Saver
investments is obvious, for how otherwise would the interest rates

be determined with reference to the BLM’s aggregate
investment, rather than the individual investment of the company in
liquidation?  Indeed, Van Zyl’s attorney’s
abovementioned letter of 12 May2014 – the response to the

Master’s initially advanced ‘charges’ against Van
Zyl – records that a copy of the agreement between
BLM and
Nedbank was provided to the Master.
[28]
Indeed, as long as a century ago, it was held, in
respect of a predecessor of s 394 (s 100 of the Insolvency Ordinance
6 of 1843),
that ‘
A further
objection relates to section 100 of the Ordinance not having been
complied with, in that the cheques drawn by the trustee
did not
express the cause of indebtedness; it is admitted that this was so,
but the law on this head appears to have been, in
practice, never
regarded as strictly to be carried out.
’;
see
Louw and Dummer v Fagan
1914 CPD 630
at 644.
[29]
The learned judge a quo suggested in a footnote
that the omission in the provisions of the imposition of any
positive duty on
liquidators to place idle funds in interest bearing
investments might have been because ‘the 1973 Act dates back
to an
era when inflation was still relatively low, and it was not as
crucial as it is today to ensure that one’s money grows to

keep pace with inflation.’  According to data published
online by Statistics South Africa, the reported CPI headline
year on
year inflation rate in 1973 was in fact more than double that in
2018; viz. 9,45% as against 4,7%.
http://www.statssa.gov.za/publications/P0141/CPIHistory.pdf?

(accessed 24 February 2019)
Inflation
had indeed become an especially pressing issue at the time that
s 394(1) was substituted in 1988, doing away with
the
requirement that liquidators first obtain permission from the Master
before making investments in interest bearing savings
or fixed
deposit accounts.  The CPI year on year inflation rate in 1986
was 18,7% and in 1987, 16,1%.