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[2016] ZAKZDHC 57
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Pillay N.O and Another v Reddy and Others (10717/15) [2016] ZAKZDHC 57 (14 December 2016)
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IN THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL LOCAL DIVISION, DURBAN
Case No: 10717/15
AMERASAN PILLAY,
N.O
1
ST
APPLICANT
SHAMINDER RAMPERSAD,
N.O
2
ND
APPLICANT
V
JAHANNA
KALISHA REDDY
1
ST
RESPONDENT
COMPANIES
AND INTELLECTUAL
PROPRTY COMMISSION
2
ND
RESPONDENT
THE REGISTRAR OF
DEEDS
3
RD
RESPONDENT
JUDGMENT
DELIVERED ON: 14 DECEMBER 2016
MNGADI
AJ:
[1]
The applicants in their capacities as joint liquidators seek an order
setting aside as null and void and of no force and effect a court
order made on 5 February 2015. The court order made on 5 February
2015, amongst other ancillary orders, set aside the voluntary
liquidation of Chatsworth Investment (Proprietary) Limited (the
company). The 1
ST
respondent had bought an immovable
property from the company and she was intent to have the property
transferred to her.
[2]
The first applicant is an insolvency practitioner and the second
applicant is a practising attorney. The first respondent is a
businesswoman, the second respondent a Registrar of Deeds in the
province of KwaZulu-Natal (the registrar) and the 3
rd
respondent the Companies and Intellectual Property Commission
(PIPC) a statutory body.
[3]
The KwaZulu- Natal High Court (Gyanda AJP) on 5 February 2015, at
the
instance of the first respondent, made an order setting aside the
voluntary liquidation of the company plus some ancillary
relief. In
those proceedings the company as well as its directors were cited as
the respondents. On 17 September 2015 an application
for leave to
appeal the order of 5 February 2015 was refused. On 22 August 2016,
at the instance of the company (in liquidation)
the Supreme Court of
Appeal, on petition to it, dismissed the application for leave to
appeal on the grounds that there were no
reasonable prospects of
success in an appeal and there was no other compelling reason why an
appeal should be heard.
[4]
In an amended notice of motion, in response to a challenge to
locus
standi,
the applicants sought to add of a further prayer granting
them authority to pursue the application in terms of section 386 (5)
and
/or section 387 (3) and /or section 388 (1) and/ or (2) of the
Companies Act 61 of 1973. The first respondent in her opposing
affidavit
challenged the
locus standi
of the applicants in
that as provisional liquidators they have no legal interest in the
winding-up proceedings, and that there had
been no creditors' meeting
held to pass a special resolution to give power to the liquidators on
behalf of the company.
[5]
Further, in the amended notice of motion, the applicants sought to
join the registrar of deeds (the registrar) as the second respondent
and the Companies and Intellectual Property Commission (PIPC)
as the
third respondent. The intention to amend the notice of motion was
served on the applicants and the entities sought to be
joined as
respondents. No objection was raised. Counsel for the applicants
argued that as there was no objection raised, applicants
are entitled
to regard the notice of motion as having been amended. The reason to
join the registrar and the PIPC arose due to
issues relating to
registration and deregistration of the company subsequent to the
court order made on 5 February 2015. It became
necessary to join the
registrar because the issue of the liquidation of the company was
interlinked with the issue of enforcing
the contract of sale and
transfer of the immovable property from the company to the first
respondent.
[6]
The notice of intention to amend the notice of motion supported by
the supporting affidavit does not have an endorsement as envisaged in
a Rule 28 (2) Uniform Rules that "unless written objection
to
the proposed amendment is delivered within ten (10) days of the
delivery of the notice, the amendment will be effected".
The
notice of intention to amend was lodged about eight (8) months before
the hearing. In my view, the intention to amend is
bona fide
and
there is no prejudice to the first respondent or to the entities
sought to be joined as respondents. It is allowed. The registrar
is
joined as second respondent and the PIC is joined as third
respondent. (See Krischke v Road Accident Fund
2004 (4) SA 358
(W) at
363)
[7]
The applicants seek an order striking out nineteen (19) averments
in
the 1
st
respondent's answering affidavit on the grounds
that the averments are vexatious and/or scandalous and/or irrelevant.
An introductory
averment to the said averments state:
'Prior to dealing with founding affidavit of applicant,
I wish to raise some preliminary observation about the contents
contained
therein and the entire application must be adjudged in
light thereof'
It was the first respondent's case that there were
persons behind the liquidators who were the controlling minds driving
the litigation
to frustrate her rights. The litigation relating to
the setting aside of the voluntary liquidation of the company had
been dealt
with in various court applications. An application to
strike out should not be granted unless the court is satisfied that
the applicant
will be prejudiced in the conduct of his/her claim or
defence if it is not granted. The applicants did not show any real or
potential
prejudice in the conduct of their claim if the averments
objected to be not removed. The averments objected to were not shown
to
be vexatious or scandalous or irrelevant in the context of the
dispute. If the court is in doubt as to whether an averment sought
to
be struck out as irrelevant is in fact irrelevant it will not strike
out the averment. In my view the 1
st
respondent acted with
caution. The application to strike out is refused.
(See
Subrule 23(2) of the Uniform Rules; Ahlers NO v Snoeck
1946 TPD 590
;
Harding & Parker v John Pierce & Co
1919 OPD
113
; Richter v Town Council of Bloemfontein
1920 OPD 161
at 173-174;
Golding v Torch Printing & Publishing Co.(Pty) Ltd
1948 (3) SA
1067
C at 1090)
[8]
The 1st respondent argues that condonation should not be granted to
applicants'
late filing of their replying affidavit. The replying
affidavit was filed on 24 February 2016 whereas the opposing
affidavit was
filed on 4 December 2015. It was thirty six (36) pages
long. It is argued that the delay is not satisfactory and
sufficiently fully
explained and that it was a reckless and
intentional disregard on the rules of court. The applicants argue
that the delay is sufficiently
explained and it is in the interest of
justice to grant condonation. In my view, taking into account the
December closure, the
period of the delay was not unduly long. The
first respondent has not shown any prejudice she will suffer if the
delay is condoned.
Whereas if the delay is not condoned the
applicants will be prejudiced
in
being unable to fully present
their case before court. In view of the short period of the delay,
the explanation of the delay, I
am of the view that the explanation
is
bona fide
and not patently unfounded. The delay in serving
and filing the replying affidavit is condoned.
(See Nedcor Investment Bank Ltd v Visser NO and others
2002 (4) SA 588
(T) at 591)
[9]
Regarding the main relief, the applicants state that on 30 December
2015
a special resolution to place the company in voluntary
winding-up was adopted. On 19 January 2015 the special resolution was
duly
registered by the Companies and Intellectual Property Commission
which resulted in the commencement of the voluntary winding-up
of the
company. (Section 352 (2) of the Companies Act 61 of 1973). On 4
March 2015 the applicants were appointed joint liquidators
of the
company. Consequently, when the court on 5 February 2015 set aside
the voluntary winding-up of the company, it is argued,
the company
(in liquidation) was not represe nted . It could only be represented
by the liquidators and they had not been appointed.
Section 353 (2)
of the companies Act provides:
'As from the commencement of a voluntary winding-up all
the powers of the directors of the company concerned shall cease
except
in so far as their continuance is sanctioned:
(a)
by the liquidator or the creditors in a creditors voluntary
winding-up.
As a result, it is argued, it was improper for the court
on 5 February 2015 to make the order it made.
[10] The first respondent
challenged the
locus standi
of applicants on the basis that
since the voluntary winding-up of the company was set aside on 5
February 2015 no appointment of
liquidators could be made on 4 March
2015. In my view, the relief sought determines whether a party
seeking that relief has
locus standi
or not. The applicants
seek to set aside an order which, if it stands, has an effect that
they have no interest in the matter. To
determine whether they have
locus standi
or not in terms of the judgement they are
challenging is to prejudge the issue. The appointment of the
applicants as joint liquidators
of the company, render them to have
an interest in the issue of whether the order setting aside the
voluntary winding up of
the company is proper or not. The
applicants have not brought the application as part of the winding-up
the company but they are
challenging an order which undermines their
very appointment as liquidators of the company. In my view, without
resorting to the
provisions of section 386 (5) and/or section 387(3)
and /or section 388 (1) and/or (2) of the Companies Act, the
applicants have
sufficient interest in the relief they are seeking to
render them to have
locus standi.
[11] The
applicants argue that it was irregular for the court on 5 February
2015 to set
aside the voluntary winding-up of the company. The order
made on 5 February 2015 reads as follows:
'In the matter between:
JAHANNA KALISHA REDDY
AND
CHATSWORTH INVESTMENTS(PTY)LTD
(Reg
No.[…..]
1
st
RESPONDENT
POORSHOTIHAM
NAIDU
2
ND
RESPONDENT
MUTHIALOO
NAIDOO
3
RD
RESPONDENT
DABBADIE & PARTNERS
4
TH
REPONDENT
REGISTRAR
OF DEEDS, KWAZULU-NATAL
5
TH
RESPONDENT
THE SHERIFF OF HIGH COURT, CHARTSWORTH
6
TH
RESPONDENT
Upon the Motion of Counsel for the Applicant and upon
reading the NOTICE OF MOTION and other documents filed of record
IT IS ORDERED
1. That the voluntary
winding-up of the first respondent be and is hereby set aside.
2. The Companies and
Intellectual Property Commissioner is directed to forthwith delete
all references
to the first respondent being in voluntary liquidation
and is hereby furthermore directed to reflect the status of the first
respondent
as "registered "and/or in business".
3. The first
respondent is, against payment of the balance of the purchase price,
ordered
and directed to forthwith effect transfer of the immovable
property, known as Erf 988 Umhlatuzana, Registration Division FT,
Province
of KwaZulu-Natal ....
4. The sheriff
of the Court is authorised and directed to do all things necessary,
including
executing and signing all documents necessary and taking
all steps as may be required to effect transfer of the immovable
property
as aforesaid.
5. The
Applicant is interdicted and restrained from effecting transfer of
the immovable
property to any third party for a period of one (1)
year from the date of transfer of the immovable property into the
applicant's
name subject to the proviso that the first to third
respondents are entitled to approach the above court on these papers
,supplemented
insofar as same may be necessary and on good cause
shown, to extend that period should same be necessary.
6. That an
interdict will be registered over the title deed of the immovable
property after
transfer of the immovable property into the
applicant's name ,specifying that the applicant is interdicted and
restrained for a
period of one (1) year from the date of registration
of the property into applicant's name from effecting transfer of the
immovable
property to any third party and that after the
aforementioned period of one(1) year the interdict will lapse and be
of no force
and effect unless extended by this court as contemplated
in paragraph 5.
7. It is
directed that this order be put into force and effect notwithstanding
any rescission
application brought by or on behalf of any one or more
of the first ,secondor third respondent against any one or more or
all of
the orders granted in terms hereof.
8. The first,
second and third respondents be directed to pay the costs of this
application
(being applicant's interlocutory enforcement application
dated 8 December 2014) on attorney and client scale, jointly and
severally
, the one paying the others to be absolved, such costs to
include those consequent upon employment of two counsel.
9. It is
ordered that first, second and third respondents are precluded from
bringing any
application for rescission or any application for leave
to appeal in respect of any one or more or all of the orders set out
herein
unless and until the first, second and third respondents have
paid the applicants costs of this application as ordered in paragraph
8 above'.
[12] The order
exhibits some unusual features probably due to the history of the
litigation.
The second and third respondents in the proceedings
culminating in the order of 5 February 2015 were the directors of the
Company.
The applicants' remedy in this application are to persuade a
court vested with proper jurisdiction that the order made on 5
February
2015 falls to be set aside. The applicants after their
appointment on 4 March 2015 became aware of the order made on 5
February
2015. They embarked on legal proceedings to have the said
order set aside, namely; in the application for leave to appeal and
in
the petition to the Supreme Court of Appeal.
Section
353 of the Companies Act provides:
'Effect of a voluntary winding - up on status of
company and on directors.
(1)
A company which is being wound up voluntary shall,
notwithstanding anything contained in its articles, remain a
corporate body and
retail all its powers to such, but shall from the
commencement of winding-up cease to carry on its business except in
to far as
maybe required for the beneficial winding-up thereof.
(2)
As from the commencement of a voluntary winding-up all the
powers of directors of the company concerned shall cease except in so
far as their continuance is sanctioned....
(a) by the liquidator or the creditors
voluntary winding-up; or
(b) by the liquidator or the company in general
meeting in a members voluntary winding-up.'
In view of the provisions of Section 353, it is arguable
whether the company was properly represented or not in the court
proceedings
culminating in the order made on 5 February 2015.
However, it is not necessary to decide the issue in these proceedings
[13] The
applicants, having become aware of the order of 5 February 2015,
brought an application
for leave to appeal the 5 February 2015
judgment. On 16 September 2015 the application for leave to appeal
was refused. A petition
to the Supreme Court of Appeal for special
leave to appeal was also dismissed on 22 August 2016.
[14] The
applicants have not succeeded in the appeal process to persuade the
relevant
courts that the decision of the court on 5 February 2016 is
wrong. They now approach this court for a similar relief. This court
is in the same level as the court which gave judgement on 5 February
2015. It has no power to review or set aside on appeal the
decision
of the court which gave judgement on 5 February 2015.
[15] The first
respondent has argued that the applicants' remedy was to appeal the
judgement
and not to apply to declare the judgement a nullity. It is
trite that judgements are presumed to be correct to promote certainty
in law. Whether the 5 February 2015 judgement falls into the category
of judgement that could only be set aside on appeal or review,
or
whether in falls into the limited category of judgements they may be
declared a nullity, in my view, does not arise in this
matter. It
does not arise because the applicants elected to appeal the
judgement. Having so elected, they are bound by their election.
[16] The
position of the judiciary is entrenched in the Constitution. A
judgement or order
of a court binds all persons to whom and organs of
state to which it applies. It remains operative until set aside on
appeal or
review. It can only be reviewed or set aside on appeal by a
court with competent authority to review or set aside the decision of
the court that delivered the judgement. The hierarchy of courts is
fundamental to certainty and the principle of precedent is core
to
the functioning of the judiciary.
(See Sections 2, 165 (1), and 165(5) of the
Constitution; Department of Transport and Others v Tasima (Pty)
Limited
[2016] ZACC 39
para 179).
[17] This
court has no jurisdiction to review or set aside the decision of the
court which
gave judgement on 5 February 2015. It is ordered that the
application is dismissed with costs.
MNGADI AJ
APPEARANCES
Case
Number
: 10717/15
Applicant
: A Pillay & Ano.
Represented by
: V.I Gajoo S. C.
Applicant's
Attorneys
: Suren Moodley
Incorporated
031 303 2777
Respondent
: J.K Reddy
Represented
by
; Adv R A Solomon SC
Adv A MacManus
Respondent's
Attorney
: Atisha
Ghela and Associates
Date of
Hearing
: 16 November 2016
Date of
Judgment
: 14 December
2016