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[2016] ZAFSHC 86
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Knipe and Another v Noordman N.O. and Others (A230/2014) [2016] ZAFSHC 86 (2 June 2016)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
No: A230/2014
In
the matter between:-
JOHN
DOUGLAS JANSE KNIPE
1
st
Appellant
ANDRé
BAZZET JANSEN KNIPE
2
nd
Appellant
and
OTTLIE
ANTON NOORDMAN N.O.
1
st
Respondent
CHAVONNES
BADENHORST ST CLAIR COOPER N.O.
2
nd
Respondent
SIMON
MALEBO RAMPOPORO N.O.
3
rd
Respondent
CORAM:
VAN
DER MERWE, J
et
MOCUMIE, J
et
LEKALE,
J
JUDGMENT
BY:
VAN
DER MERWE, J
HEARD
ON:
9
MAY 2016
DELIVERED
ON:
2
JUNE 2016
[1]
The respondents in this appeal are the joint provisional liquidators
of two companies, Kameelhoek (Pty) Ltd and Schaapplaats
978 (Pty) Ltd
(the companies). The appellants, who are brothers, and their
three siblings are the shareholders of the companies.
The court
a
quo
,
in essence, granted authority to the respondents to sell the assets
of the companies. The appellants appeal against the
judgment
and order of the court
a
quo
,
with its leave.
[2]
This matter forms part of extensive and protracted litigation in
respect of the companies. Fortunately it is not necessary
to
burden any reader of this judgment with a full exposition thereof.
The following background suffices for a proper understanding
of this
judgment.
[3]
The companies were incorporated at the instance of the father of the
shareholders of the companies. The companies are
not
insolvent. Each company carries the name of the farm that it
owns. The value of these farms far exceeds any valuation
of the
liabilities of the companies. The companies have no tangible
moveable assets. It is common cause that the cattle
and game on
the farms are not the property of the companies. The only
possible other assets of the companies are rather nebulous
claims
related to the fact that the cattle and game were kept on the farms.
It follows that the respondents were granted
leave to sell the farms
and, in effect, to liquidate the companies.
[4]
Provisional liquidation orders in respect of the companies were made
on 30 August 2012. They were made on the ground that
it was
just and equitable to liquidate the companies. The main
underlying reason for the provisional liquidation orders in
respect
of the companies was the inability of the shareholders to get along.
On 6 September 2012 the respondents were appointed
as provisional
liquidators of the companies. In terms of section 386(5) of the
Companies Act 61 of 1973 (the Act), the Master
of this court
restricted the powers of the respondents to those set out in section
386(1) of the Act. Despite the repeal
of the Act by the
Companies Act 71 of 2008
, the provisions of Chapter 14 of the Act
remain of application, subject to exceptions not presently relevant.
This is provided
for in item 9 of Schedule 5 of Act 71 of 2008.
[5]
The respondents gave notice of general meetings of the creditors and
members of the companies in terms of section 386(1)(d)
of the Act.
These meetings, presided over by the Master, took place on 16 April
2013 and 5 June 2013 respectively, before
the final liquidation of
the companies. The notices of the meeting of creditors set out
the reasons for the meeting.
These reasons did not include
proof of claims of creditors. Nevertheless, one Mr Loftus
Viljoen was allowed to prove claims
against the companies at the
meeting of 16 April 2013. Mr Viljoen then proceeded to give
instructions to the respondents.
These instructions included
that the respondents should continue to secure the cattle and game on
the farms, on the basis that
they somehow served as security for the
alleged claims of the companies against the owners of the cattle and
game.
[6]
Final liquidation orders were made on 27 June 2013. The
appellants’ applications for leave to appeal against the
final
liquidation orders were refused and on 5 February 2014 their petition
to the Supreme Court of Appeal suffered the same fate.
Per letter
dated 9 April 2014 the respondents recommended to the Master in terms
of section 386(2A) of the Act that the farms be
sold. For
reasons not necessary to state herein, the Master declined to
authorise the sale of the farms. The application
that served
before the court
a
quo
was consequently issued on 25 April 2014. By that date some of
the shareholders of the companies had launched an application
to
inter
alia
review and set aside the decision of the Master to admit proof of the
creditor’s claims at the meeting of 16 April 2013 (the
review
application). When the respondents’ application was
launched, a date of hearing of the review application had
not been
set.
[7]
The basis of the respondents’ application to the court
a
quo
was that it was necessary to sell the farms to provide for payment of
the administration costs of the respondents. The main
allegations in support of the application were the following.
It was stated that because of the delay caused by the legal
processes
leading to the refusal of the petition, the respondents had by 25
April 2014 incurred administration costs in the amount
of
approximately R1,5 million. The respondents said that because
of the pending review application, the Master was unable
to convene
first meetings in terms of section 364(1) of the Act and that
therefore final liquidators could not be appointed before
finalisation of the review application. In the meantime, so the
respondents said, the administration costs would continue
to escalate
at the rate of approximately R125 000,00 per month. By far
the greatest portion of the past and future administration
costs
related to the costs of an agent appointed by the respondents to
safeguard the cattle and game on the farms.
[8]
In their answering affidavits the appellants vehemently denied that
these expenses were necessary and/or reasonable. The
court
a
quo,
however, found that the appellants could not be heard to dispute the
quantum of the administration costs, mainly because of a settlement
agreement entered into between the parties hereto on 26 November
2013. On the view that I take of the matter, it is not
necessary to give further attention to the issue of the extent or
reasonableness of the administration costs.
[9]
The principal duty of a provisional liquidator is to look after the
property of the company in liquidation and preserve the
status
quo
until the appointment of a final liquidator. A provisional
liquidator should therefore not be given powers to do what may
amount
to a liquidation of a company prior to the appointment of a final
liquidator. For this reason our courts have repeatedly
held
that only in exceptional circumstances should authority be granted to
a provisional liquidator to sell the assets of a company.
See
Ex
parte
Klopper N.O., in re Sogervim SA (Pty) Ltd (in liquidation)(Sogervim
SA intervening)
1971 (3) SA 791
(T) at 797A-F and
Ex
parte
Paterson N.O., in re Goodearth Estates
1974 (4) SA 281
(ECD) at 282F. This was recognised by the court
a
quo.
It found that the past and future administration costs
constituted exceptional circumstances justifying its order.
[10]
Section 364(1) of the Act provides:
“
(1)
As soon as may be after a final winding-up order has
been made by the Court or a special resolution for a creditors'
voluntary winding-up of a company has been registered in terms of
section 200, the Master shall summon-
(a)
a meeting of the creditors of the company for the purpose of-
(i)
considering the statement as to the affairs of the company lodged
with the Master under section 363;
(ii)
the proof of claims against the company; and
(iii)
nominating a person or persons for appointment as liquidator or
liquidators; and
(b)
a meeting of the members of the company or, in the case where the
winding-up concerns a company
limited by guarantee, a meeting of the
contributories in respect of that company, for the purpose of-
(i)
considering the said statement as to the affairs of the company; and
(ii)
nominating a person or persons for appointment as liquidator or
liquidators, unless the company in general meeting,
when passing a
resolution provided for in section 349, has already disposed of the
matters referred to in subparagraphs (i) and
(ii).”
In
a case such as the present, the appointment of the nominated person
or persons as liquidator(s) is made by the Master in terms
of section
369(2) of the Act.
[11]
It was a material part of the case for the respondents that pending
the finalisation of the review application, the Master
was precluded
from proceeding in terms of section 364(1), despite the refusal of
the petition on 5 February 2014. In their
answering affidavits
the appellants on more than one occasion pertinently said that there
was no reason why
the
first
meetings of creditors and members and appointment of final
liquidators could not have taken place already in February 2014.
It appears from the judgment of the court
a
quo,
however, that at the hearing before it the appellants did not dispute
this stance of the respondents. And it is clear from
the
judgment of the court
a
quo
that it accepted that the pending review application precluded
proceedings in terms of section 364(1). As I shall show, this
view was wrong and amounted to a material misdirection.
[12]
A creditor of a company in liquidation may only prove a claim at the
first meeting of creditors summoned by the Master after
a final
liquidation order. See Blackman, Jooste and Everingham,
Commentary
on the Company’s Act
,
Volume 3, at 14-329. At 14-349-350 the authors said:
“
Section
386(1)(d) empowers the liquidator to convene meetings of members or
creditors or contributories to obtain their authority
or sanction in
respect of any matter. Meetings of creditors can be summoned by
a liquidator only after the first meeting
of creditors (summoned by
the Master) has been held. This is because, until then, no
creditor will have proved his claim
against the company, and
consequently no meeting of creditors can be held to decide upon
anything. At that meeting the final
liquidator is nominated.
Thus, even where the Master does not exclude this power, the
provisional liquidator will not be
able to exercise it, unless,
perhaps, there is some delay in the appointment of the liquidator
after the first meetings of members
and creditors.”
This
passage was quoted with approval in
Ex
parte
Van den Berg and Others NNO: in re Riviera International (Pty) Ltd
(in liquidation) and Another
2003 (6) SA 727
(W) at 734H.
[13]
The notice of the meeting of 16 April 2013 rightly did not state that
its purpose included proof of claims by creditors of
the companies.
Mr Viljoen had no right to prove his claims and the Master had no
power or jurisdiction to admit proof of
claims of creditors. It
follows that the purported proof and admission of the Viljoen claims
on 16 April 2013, was a nullity
that should simply have been
ignored. Even an order made by a high court that did not have
jurisdiction, is a nullity and
could simply be ignored. See
S
v Absalom
1989 (3) SA 154
(A) at 164E-G. This was no doubt applicable to
the quasi-judicial proceedings before the Master. See
Aircondi
Refrigeration (Pty) Ltd v Ruskin NO and Others
1981 (1) SA 799
(W) at 804H and
Vidavsky
v Body Corporate of Sunhill Villas
2005 (5) SA 200
(SCA) at 207C-J. See also
The
Master of the High Court (North Gauteng High Court, Pretoria) v
Motala NO & Others
2012 (3) SA 325
(SCA) par [13] to [14].
[14]
Therefore, by the time that the respondents launched their
application, the first meeting of creditors and members and
appointment
of final liquidators should already have taken place.
Only 10 days’ notice of these meetings is required. It
appears that the companies have only two possible creditors, Standard
Bank and Mr Viljoen. The members of the companies are
known and
limited. One cannot enter into speculation that there may have
been some unspecified obstacle or delay in respect
of the first
meetings in terms of section 364(1). Therefore, when the matter
served before the court
a
quo
,
it should have regarded the appointment of final liquidators as
imminent. The respondents did not pay their agent and the
agent
succeeded in managing its account in respect of administration costs
at least until the application was launched. The
main concern
then was the future administration costs. On this basis there
were no exceptional circumstances justifying the
sale of the farms by
the provisional liquidators. The court
a
quo
ought to have dismissed the respondents’ application with
costs.
[15]
The following order is made:
1.
The
appeal is upheld with costs.
2.
The
order of the court
a
quo
is set aside and replaced with an order dismissing the application
with costs.
_________________________
C.
H. G. VAN DER MERWE, J
I
concur.
________________
B.C.
MOCUMIE, J
I
concur.
________________
L.
J. LEKALE, J
On
behalf of the appellants: Adv. S. Grobler
Instructed
by:
Matsepes
Inc.
BLOEMFONTEIN
On
behalf of the respondents: Adv. P. F. Rossouw SC
Instructed
by:
Phatsoane
Henney Inc.
BLOEMFONTEIN
/eb