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[2016] ZAGPPHC 480
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HJT Ello & R Ramonetha and Others v Manyika and Others (A839.2014) [2016] ZAGPPHC 480 (13 May 2016)
IN
THE NORTH GAUTENG HIGH COURT, PRETORIA
[REPUBLIC
OF
SOUTH
AFRICA]
APPEAL
CASE No: A893 / 14
CASE
NO.
2016
/
02
DATE: 13 MAY
2016
In
the
matter between:
HJT
ELLOF & R RAMONETHA, C/o (JZH MULLER) EQUITRUST INSOLVENCY
PRACTITIONERS B.0. LIQUIDATORS OF ZISCONSTEEL DISTRIBUTION
CENTRE
(PTY) LTD
(in
liquidation)
APPELLANT
(Second
respondent a
quo)
And
AGGREY MANYI
KA
FIRST RESPONDENT
(Applicant a
quo)
FERROCLIFF
STEEL (PTY)
LTD
SECOND RESPONDENT
REGISTRTAR
OF
COMPANIES
THIRD
RESPONDENT
(Third
respondent
a
quo)
JUDGMENT
MAVUNDLA,
J.
[1] On the 27
March 2013 Makgoba J, as he then was, granted the following order
under case no.54251/ 2012:
"1 That the
Registrar of Companies is to effect re-registration of the first and
second respondent;
2 That the second
respondent is jointly and severally liable for the obligations of the
first respondent;
3 That the second
respondent is liable for the debt of the first respondent in terms of
an order granted by the above Court under
the above case number on
the 29 of October 2009;
[AR-P48]
4That the
applicant is permitted to effect execution of the above order on the
second respondent, by attachment of the property
situated at No 3
Wicht Street Middelburg Mpumalanga, belonging to the second
respondent."
[2) Leave to
appeal was refused by the Court
a quo.
However, on petition to
the Supreme Court of Appeal, leave to appeal to this Court against
the whole of the judgment granted by
Makgoba J (as he then was) on 27
March 2013, was granted on 15 September 2014 by Wallis JA and Mathopo
AJA on limited issues, namely:
'Whether the
relief granted in paragraphs 2,3,4 and 5 was competent in the light
of the
Pieters v Kramer
N.O.
1977 (1) SA 589
where it was held
that the summons claiming substantive relief issued against a
dissolved company was a nullity."
[3] The import of
the
Pieters
v
Kramer
N.O.
(supra)
judgment is contained in pages 599H-601H of
the judgment and can be summarised as follows:
3.1 The Appeal
Court considered what the effect was of an order declaring the
dissolution of the company "to have been void".
The
question was asked whether the order had the effect of validating a
pre-issued summons that had specifically been issued at
a time when
the company had already been dissolved by the Court. The question was
therefore whether the declaration declaring the
dissolution of the
company to have been void, had the effect of a retrospective revival
of acts on behalf of or against the company
during the period of its
dissolution.
3.2
The
Court found specifically that the order avoiding the dissolution
cannot
be
said
to
have had the effect of reviving proceedings which had been commenced
during the period of
dissolution
[1]
[4] In the matter
of
Ebrahim
v
Evans
[2]
Broome
J held that: "the effect of an order declaring the dissolution
to have been void
i
s
that any action may be taken thereafter or thereupon, any
action
that
is by
or
against
the company. That
is as
far as
it
goes.
The order does no
more than to revive the company ... the effect of the order declaring
the dissolution to have been void is that
thereafter action can be
taken against or by the company, and that actions which came to an
end upon dissolution are not
revived.
'
'
[3]
[5] For purposes
of clarity, I shall refer to the parties in their respective names to
avoid any confusion.
BACKG
ROU ND
FACTS
[6] Ferrocliff
Steel and Zisconsteel Distribution are both companies wholly owned
subsidiaries of the Zimbabwe Iron & Steel
Company Limited (Zisco
Steel) a company based in Zimbabwe. The directors of the Ferrocliff
as well as Mr Manyika, a citizen of
Zimbabwe who was appointed as
manager of Ferrocliff were appointed by Zisco Steel. Manyika was also
appointed to be the Public
Officer of Ferrocliff Steel by Zisco
Steel. Zisco was wholly owned by the Government of Zimbabwe. However,
the present owners of
the company are (i) the Government of Zimbabwe;
(ii) Essar Africa Holding Ltd; and (iii) a small group of private
investors.
[7] During
approximately 2006/2007 Manyika was told by the shareholders of
Ferrocliff Steel, which was conducting its business on
the premises
owned by Ziscosteel Distribution Centre to wind down the business of
Ferrocliff Steel, pay all the creditors and close
down the company.
When asked where the funds would be coming from, the shareholders
instructed Ziscosteel Distribution Centre to
provide the necessary
funding to pay all the relevant debtors, salaries, severance
packages, etc.
[8] This was in
fact done and from the record it is abundantly clear that Manyika
provided for a number of months for expenses such
as travelling etc.
from his own pocket, was not paid a salary and some of the amounts
were never paid over by the Ziscosteel Distribution
Centre to
Ferrocliff Steel to make payment in respect of all the debtors.
[9] The foregoing
resulted therein that Manyika issued summons under case number
10942/2007 during 2007 against Ferrocliff Steel
for payment of his
unpaid salary. After the matter waoriginallydefended Manyika obtained
judgment on the 29 October 2009 against
Ferrocliff Steel (Pty)
Limited in an amount of R1098 178, 31,together with interest thereon
at the rate of 15. 5% from 1April 2007
to date of judgment.
[10] Upon seeking
to execute the judgment, Manyika's attorneys became aware of the fact
that the property, from which the business
of Ferrocliff Steel was
previously conducted, was registered in the name of the appellant.
[11] Both
Ferrocliff Steel and Zisconsteel Distribution were de-registered due
to the Annual Return Non- Compliance on the 16 July
2010. Zisconsteel
Distribution owned property situated at Stand No 3 Wicht Street
Middleburg (Stand 2771 Extension 7 Mpumalanga.
It was submitted that
Zisconsteel Distribution was the interest which was used by Zisco
Steel to purchase the property on which
the business was being
conducted from.
[12] The holding
company Zisco Steel failed to support Ferrocliff Steel, as a result
the latter ran into financial woes. Zisco Steel
stopped funding
Ferrocliff Steel on the 20 November 2006.
[13] Ferrocliff
Steel and Zisconsteel Distribution were de-registered due to the
Annual Return Non- Compliance on the 16 July 2010.
Ex lege
,
the deregistration of these two companies was in terms of s73 (GA} of
the Companies Act.
[14] On 18
September 2012 Manyika launched an application under case number
54251/2012, in the Court
a quo
seeking an order to have
Ferrocliff Steel and Zisconsteel Distribution centre (Pty Ltd)
re-registered and that Zisconsteel Distribution
centre (Pty Ltd) is
jointly and severally liable for the obligations ofFerrocliff
Steel;declaring Zisconsteel Distribution Centre
(Pty Ltd liable for
the debt of Ferrocliff Steel in terms of the order granted by the
Court on the 29 October 2009, permitting
Manyika to effect execution
of the order on the Zisconsteel Distribution Centre (Pty Ltd by
attachment of the property situated
at 3 Wicht Street,
Middleburg,Mpumalanga.
[15] Notice of
intention to oppose was prepared by Zisconsteel Distribution Centre
(PTY} Ltd (in liquidation) and Ferrocliff Steel,
who instructed
attorneys in Bloemfontein. The matter on the unopposed roll became
postponed as a result and on a further occasion
specific orders were
granted when the answering affidavits had to be filed. Zisconsteel
Distribution Centre (Pty} Ltd (in liquidation)
failed to comply with
the court order in filing any affidavits and eventually the
application for postponement was refused. The
order granted as quoted
above by Makgoba J, as he then was, was then handed down,
ordering,inter
alia,
the re-registration of the respondents
and declaring appellant liable for the debt of second respondent to
Manyika.
[16] Upon attachment
of the property and arrangement for the sale in execution an urgent
application was launched to stay the sale
in execution pending an
application for leave to appeal against the order.
[17] Thereafter
leave to appeal was dismissed by Makgoka J, as he then was, and an
application for leave to appeal the order was
made to the President
of the Supreme Court of Appeal,who granted the order as quoted
hereinbefore.
[18] The crisp
issue to be decided is, as per order of the Supreme Court of Appeal,
whether the re-registration of Ferrocliff Steel
and Zisconsteel
Distribution (in liquidation} has retrospective effect not only in
restoring its property but also validating the
corporate activity
during the period of deregistration of Ferrocliff and Steel
Zisconsteel Distribution.
[19] It is trite
that upon deregistration, the assets of a deregistered legal entity,
in
casu,
Zisconsteel
Distribution (in liquidation), become
bona
vacantia
and
falls
automatically to the State;
vide
Sanlam v Rainbow Diamonds (Edms) en Andere;
[4]
Barclays
National Bank Ltd v Kalk
[5]
.
In
Miller
v Nafcoc Investment Holding
[6]
the Court held that: "Deregistration ...puts an end to the
existence of the company.
Its
corporate personality ends in
the
same way that a natural person ceased to exists at
death."
vide
also
New/ands Surgical Clinic
v
Peninsula Eye Clinic.
[7]
[20]
In
casu,
Ferrocliff
Steel and Zisconsteel Distribution were de-registered on the
16
July 2010.
Ex
lege
the
effect of de-registration dissolved both
entities,
however,
this
did not extinguish their respective liabilities, but merely rendered
them
unenforceable;
vide
Barclays National Bank Ltd v Kalk.
[8]
The Supreme Court of Appeal, per Brand AJ in the matter of
Newlands
Surgical Clinic v Peninsula Eye Clinic
[9]
held
that: "All subsequent actions purportedly taken on behalf of
the
deregistered company are consequently void and of no effect...unless
the
re-instatement
has, or is afforded retrospective effect." Consequently the
order obtained on
the 29
October 2009 could not be
executed
against
the
property of
the
aforesaid
de-registered
entities.
[21] In an effort
to circumvent the impediment presented by the deregistration, Manyika
issued the proceedings under case number
54251/2012 on the
18
September
2012.
[10]
I
n
my view, these proceedings, on the strength of the pronouncement of
Brand
AJ
supra
are a
nullity.
This has to
be so
because
of
the
Pieters v Kramer N.O.
(supra)
judgment. In the
commentary
on ss419 and 420 of the Companies Act of
1
973,
the
learned authors of Henochberg quite correctly, with respect,
opined
that
Pieters
v
Kramer
N.O.
(supra)
i
s
still applicable and that
l
egal
proceedings instituted against a company become
null
and
void
upon
i
ts
dissolution.
[22] At the time
of institution of the proceedings under case number 54251/2012 the
Ferrocliff Steel and Ziscosteel Distribution
Centre were
non-existent, had no directors and the action was instituted against
non-existent entities and those proceedings are
ipso facto
a
nullity. The property these two entities owned at the time of
de-registration became
bona vacantia
and vested with the State
and it could not be attached.
[23] In the matter
of
Absa
Bank v Companies and Intellectual Property Commission
and
Others
[11]
the
Court held that: "..in terms of S 73(6) (a) and 73{6A) of the
1973 Act the Court
had
the power to re-instate a deregistered company,
it
never
had
the power on application to validate anything done by or against a
company between deregistration and reinstatement and by
operation
of law
the
effect of the order of restoration
was
that
the
company
was
to
be
registered
as
never
having
been deregistered (Bright Bay Property Services case
supra
para
30)."
[24] The
deregistration of Ferrocliff and Zisconsteel Distribution Centre was
on the 16 July 2010 in terms of s73 (GA) of the Companies
Act 71 of
1973. This particular Act was repealed by the
Companies Act of 2008
which latter Act inured on the 1May 2011. Prior to the last-mentioned
date the
Pieters v Kramer N.O. (supra)
judgment
prevailed.
[25] In
the
matter of Kadoma
Trading
15 v Noble Crest
[12]
the Supreme Court of Appeal held that:
"Dealing
with the meaning of s73 (6), the court in
Ex
Parte
Sengol Investments
(Pty}
Ltd
1982 (3)
SA 474C-D
said: 'The effect of restoration to the register is that
the company is deemed not to have been deregistered at all. This
entails
that all parties who have by deregistration of the company or
thereafter acquired rights to assets which the company had upon
deregistration
will lose those rights as the assets will revert to
the company. This includes assets which have become
bona
vacantia
and
as such accrued to the State. Likewise
debtors and creditors of the company at the time of deregistration
may upon restoration find
their obligation and rights resuscitated.
It follows that the effect of restoration of the company in terms of
s73 (6) may have
wide-ranging effects.'
[14] This court
had occasion to consider the issue thereafter in
Insamcor (Pty)
Ltd b Dorbyl
Light
&
General
Engineering
(Pty)
2007 (4) SA 467
(SCA). Approving
the dictum in
Ex
Porte
Sengol
and
related decisions, the court commented as follows: 'As a result of
de-registration, third parties may have acquired or lost
rights, or
they may have decided not to exercise their rights against the
company--- precisely because the company did not exist.
Through the
operation of a restoration order obligations towards the company,
which were extinguished because of deregistration,
would revive with
retrospective effect. What is more, restoration order seems to
validate, retrospectively, all acts done since
deregistration--including for example, the institution of legal
proceedings-on behalf of a company that did not exist.'
This has been the
line of thinking in Commonwealth jurisdictions too, notably well
before the promulgation of the
Companies Act. There
, substantially
similar provisions have consistently been interpreted to mean that
acts concluded during the deregistration period
are retrospectively
validated upon the company's registration."
[13]
[26] The
re-registration of the aforesaid mentioned companies, after the
repeal of the 1973 Act, could only be done through the
Companies Act
71 of 2008
which inured on the 1November 2011. It does not seem, in
my view that the
Companies Act of 2008
, as couched, can operate
retrospectively beyond its date of operation. Had that been the
intention, the legislature would have
specifically stated so. In my
view, the new
Companies Act does
not offset the
Pieters v Kramer
N.O.
status quo
which prevailed prior to the
inception of the Act.
[27] Section 82
provides for administrative dissolution of companies and
administrative reinstatement; vide s82 (4) of the 2008
Companies Act.
Manyika
, in my view, should first have sought reinstatement, and only
thereafter sought an order to hold the said companies liable for the
debts of Ferrocliff.
[28] The effect
of the order of Makgoba J (as he then was) has the effect of going
against the
Pieters v Kramer N.O
decision as well as the law
as it existed at the time the default judgment was obtained and is
therefore, with respect incorrect.
In my view, Manyika brought the
application in terms of the notice of motion dated 18 September 2012,
seeking the relief which
was subsequently granted by the Court
a
quo
on the 27 March 2013. In the matter of
New/ands Surgical
Clinic v Peninsula
Eye
Clinic
2015 (4) SA 34
{SCA)
at 41G-I Brand JA held that: "All subsequent actions purportedly
taken on behalf of the deregistered company are consequently
void and
of no effect ...unless the reinstatement has, or is afforded
retrospective effect". Even so, such restrospectivity
can only
be of force so long as it is within the tenant of the law. The Court
itself cannot breathe life to what is not imbued
by the law.
[29] It
further
needs to be borne
i
n
mind that Zisco Steel,
which
i
s
the true owner of the property sought to be
executed
against, was never joined in
the
initial
litigation
between Manyika
and
Ferrocliff.
I
t
i
s
i
nstructive
that
according
to
Manyika,
Zisco Steel
was
wholly owned by the
Government
of Zimbabwe.
However,
the present ownership
of
the
company
has
since
changed
and
no
longer
consists
solely
of
The
Government of Zimbabwe.
[14]
[30] The order of
Makgoba J (as he then was) would, in my view, have far negative
result in depriving shareholders of assets belong
to a company, which
was not involved in the litigation which resulted in the deprivation.
Besides Manyika, who originates from
Zimbabwe, employed by Ferrocliff
must have been privy to the relationship between all three companies,
i.e. Ferrocliff, Zisconsteel
Distribution Centre (Pty) Ltd {in the
liquidation) and Zisco Steel. There is no reason why he did not join
all three entities in
the same proceedings right from the onset.
Further, it does not seem that the consent from the liquidators of
both Ferrocliff in
liquidation and Zisconsteel Distribution Centre
(Pty) Ltd in liquidation was obtained prior to bringing these
proceeding which
culminated in the order appealed against.
[31]
Consequently, in my view, the appeal should succeed and the order of
Makgoba J, as he then was, with respect stands to be set
aside for
the reasons stated herein above. Needless to state that costs follow
the event.
[32] In the
premises I am of the view that the following order should be made:
1.That the appeal
is upheld with costs.
2.That the order
of Makgoba J (as he then was), dated 27 March 2013 is set aside and
substituted with the following order:
''That the
application is dismissed with costs"
N.M.
MAVU NDLA
JUDGE
OF THE HIGH COURT
I
agree,
and
it
is
so
ordered
RABIE
JUDGE
OF THE HIGH COURT
I
agree
and
it
is
so
ordered
JUDGE OF THE
HIGH COURT
DATE
OF HEARING : 28 / 01/ 2015
DATE
OF JUDGMENT: 13/ 05/ 2016
APPELLANT'S
ADV : ADV. J.R. MINNAAR
INSTRUCTED
BY: PEDZISAI-PION ATTORNEYS
1sr
RESPONDENT'S' ADV : ADV. M. SNYMAN
INSTRUCTED
BY: BRANDMULLER
ATTORNEYS
[1]
Vide
also
Ebrahim
v Evans
1990
(4) SA 424
{D & CLD) at 425E-G.
[2]
Supra
at
At 427G-H.
[3]
Supra
at
428A-B.
[4]
1982 (4) SA 633
at 6388.
5
1981(4) SA 291 (W) at 295.
[6]
2010
(6)
SA
390
(SCA)
at
395D-E
7
2015 (4) SA 34
(SCA) at 41G-H.
[8]
981 (4) SA 291
(W} at 295.
[9]
Supra
at
41G-H.
[10]
Vide
paragraph
(14]
supra.
[11]
2013
(4)
SA
194
(WCC).
[12]
2013 (3)
SA
338
(SCA)
at 343E-344D.
[13]
For example,
i
n
Tyman's
Ltd v Craven [
1
952]
2 QB
1
00
[
1
952]
1
ALL
ER 6
1
3
(CA)), the court held that the effect of broadly similar provisions
was not only that the corporate existence of the company
that had
been struck off the register was preserved but was also
retrospective. See also Top Creative Ltd
v St
ALBANS District Council
[2002] 2 BCLC 379
(CAO at 385e-387f; Royal
Bank of Canada v Cressler Hotels
1
980
Can L
1
1
1
072
(ABQB).
[14]
Vide
para
[6]
supra.