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[2016] ZAGPPHC 1029
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Taljaard NO and Another v Van den Heever and Others (54704/2013) [2016] ZAGPPHC 1029 (12 December 2016)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE
NO:
54704/2013
12/12/2016
Reportable:
NO
Of
interest to other judges: NO
Revised.
In
the matter between:
LOUIS
MARIUS TALJAARD
N.O
1
st
Plaintiff
CHEBO
CHAZA
N.O
2
nd
plaintiff
and
JOHANNES
VAN DEN
HEEVER
1
st
Respondent
THE
REGISTRAR OF
DEEDS
2
nd
Respondent
NEDBANK
LTD
3
rd
Respondent
JUDGMENT
AC
BASSON. J
Nature
of the application
[1]
This is an application by the joint liquidators of a closed
corporation (Sunset Point Properties 212 CC - "Sunset")
in
liquidation to declare void the transfer by Sunset of its immovable
property after the effective date for the winding-up and
for
ancillary relief to procure a retransfer of the property to Sunset
from the name of the first respondent. The first respondent
(Mr J van
den Heever) is the purchaser of an immovable property identified in
the papers as the farm Kareebosch ("the farm").
The second
respondent is the Registrar of Deeds and the third respondent is
Nedbank Ltd ("Nedbank") in whose favour a
mortgage bond was
registered over the farm that was purchased by the first respondent.
Nedbank advanced no submissions and abides
by this court's findings.
Relevant
facts
[2]
A creditor (Nicky Bosman NO in re Estate Gordon Anthony Jones)
applied for the winding-up of Sunset. The application was opposed
by
Sunset. It is common cause that the application for the winding-up of
Sunset was presented to the Magistrate's Court on 7 April
2010. The
deponent to the affidavit in the liquidation application - Mr Bosman
- is the appointed executor of the estate of the
late Mr. Jones.
Sunset was represented by Ms Bierman (Elmarie Bierman Attorneys).
From the affidavit in the liquidation application
it appears that the
late Mr Jones had paid an amount of R 650 000.00 into the trust
account of Sunset which represented 50% of
the purchase price of two
immovable properties. It was common cause that the two offers to
purchase was never signed. A letter
was written to Sunset demanding
repayment of the said amount. It was common cause that the money was
never repaid to the late Mr
Jones.
[3]
The matter came before a Magistrate in Polokwane. The application for
the winding-up of Sunset was however dismissed on 13 July
2010.
[4]
The creditor (the estate of the late Mr Jones) filed an appeal to the
High Court against the order dismissing the winding-up.
On 9 February
2012 the High Court Pretoria upheld the appeal and granted an order
for the winding-up of Sunset.
[5]
At the time of the application for the winding-up, Sunset was the
registered owner of the farm.
[6]
On 16 August 2010 (which is a date after the effective date of the
winding-up of Sunset) the first respondent made an offer
to Sunset to
purchase the farm. The offer was accepted on 17 August 2010. It is
not disputed that at the time when the first respondent
made the
offer, he had no knowledge of any impending liquidation proceedings
against Sunset.
[7]
It is also not disputed on the papers that the farm was sold to the
first respondent for a price of R 3 450 000.00 which is
above market
value. From the report of a sworn valuator it appears that he had
determined at the time the market value of the farm
to be R 3 100
000.00.
[8]
Although the first respondent did not have any knowledge of any
pending liquidation proceedings at the time when the offer to
purchase was made, he subsequently became aware of the pending
liquidation application. It is not disputed that late in November
2010 the first respondent was visited by Mr Bosman ("Bosman")
the attorney appointed as the executor of the estate of
the late Mr
Jones and a certain Adv J Nel ("Nel"). The first respondent
was advised of the intended appeal. This much
is also clear from a
letter dated 18 January 2011, written by Bosman to the first
respondent, in which the conversation with him
(the first respondent)
was confirmed advising him of the pending liquidation application.
Bosman also subsequently spoke to the
first respondent's attorney (Mr
Jan Kampherbeek) advising him of the fact that there was a pending
liquidation application against
Sunset.
[9]
The first respondent admits that he was informed by Bosman of the
consequences should the appeal in the liquidation application
succeed. The first respondent states that he sought legal advice but
decided to nonetheless persist with the purchase of the farm
because
he had a valid and binding agreement of sale.
[10]
By November 2011 the first respondent therefore had knowledge of the
pending winding-up application but nonetheless decided
to proceed
with the transaction. On this point, it was submitted on behalf of
the applicants, that the first respondent could at
that stage have
cancelled the agreement on the basis that the management of Sunset
had withheld a material fact from him namely
that the farm that he
had purchased was disposed of after the effective date of a
winding-up.
[11]
It is common cause that the transfer documents in respect of the farm
was lodged with the Deeds Office somewhere in January
2011 and that
the transfer of the farm in the name of the first respondent was
effected on 11 February 2011. The transferring attorney
was the same
Ms Bierman who also acted on behalf of Sunset in the liquidation
application.
[12]
On 26 January 2011 the attorney acting on behalf of the first
respondent (Kampherbeek) addressed a letter to the attorney acting
on
behalf of Nedbank (Ms Bierman) in which he sought clarity in respect
of the allegations made by Mr Bosman in his letter dated
18 January
2011 regarding the pending liquidation application against Sunset. In
this letter Kampherbeek pertinently pointed out
to Ms Bierman that he
needed the information and that it was also the duty of Ms Bierman
(as the attorney attending to the transfer
of the property) to also
look after the interest of the purchaser of the farm (the first
respondent).
[13]
On 28 January 2011, Ms Bierman replied to this letter and stated that
there were no "pending liquidation" proceedings
against
Sunset. She, however, confirmed that an appeal had been lodged
against the decision of the Magistrates Court's refusal
of the
application but that no date had been set for the hearing of the
appeal. However, despite having first-hand knowledge of
the pending
appeal, Ms Bierman nonetheless proceeded to the transfer of the
property in the name of the first respondent.
[14]
As already pointed out, transfer of the farm was effected on 11
February 2011. A mortgage bond was registered over the property
in
favour of Nedbank. Shortly after the transfer of the farm Ms Bierman
paid out the proceeds to Sunset.
[15]
Immediately prior to the transfer of the farm, another creditor of
Sunset (Mr Musolwa - "Musolwa") launched an urgent
application to interdict the transfer of the farm to the first
respondent. (I will refer to this urgent application as the "Musolwa
urgent application".) Shortly after the Musolwa application a
second urgent application was launched. I will first deal with
the
Musolwa application as it has a direct bearing on this matter.
The
Musolwa urgent application
[16]
Musolwa launched an urgent application on 10 February 2011 (a day
before the farm was transferred to the first respondent)
to interdict
the transfer of the farm by Sunset to the first respondent,
alternatively for an order to interdict the transferring
attorney (Ms
Bierman) to pay out the proceeds of the sale pending the finalisation
of the appeal against the order in the Magistrates
Court dismissing
the application for winding-up. In the Musolwa application Sunset was
the first respondent, Van Heerden the fourth
respondent and Elmarie
Bierman Attorneys was the fifth respondent.
[17]
Although the first respondent in this application is cited as a
respondent in the Musolwa application, he alleges that the
urgent
application never came to his attention. Bosman signed a confirmatory
affidavit in support of the order sought in the Musolwa
appliaction.
I will refer to his reasons for signing that affidavit herein below.
[18]
It appears from the papers that the urgent application was then
settled at court between Musolwa and Sunset. The salient terms
of the
settlement are embodied in a court order dated 10 February 2011, that
reads as follows:
"Having read the
papers and having heard Counsel on behalf of the Applicant and by
agreement between the parties, it is hereby
ordered:
1. THAT the seventh
Respondent [the Registrar of Deeds, Pretoria) be allowed to proceed
and register the immovable property of the
First Respondent namely
potion 43 of the Farm Kareebosch no 618, Registration division LS,
Limpopo Province in the name of the
fourth Respondent [Van den
Heever]."
2. THAT pending the
finalisation of the action referred to in paragraph 3 infra. The
fifth Respondent within twenty four (24) hours
after registration of
the immovable property referred to in paragraph 1
supra,
pay
the amount of R340 000,00 to the Applicant's Attorneys, Messers De
Bruin Oberholzer, which amount shall be invested by the said
Attorneys in an interest bearing account in terms of Section 78(2A)
of the Attorneys Act pending the finalization of the action
to be
instituted by the Applicant against the first and second Respondents.
3. THAT the Applicant
institute action against first and second Respondents within thirty
(30) days from date of this order.
4. THAT the amount of
R340 000.00 will only be paid out in terms of an order of this court
alternatively in terms of a written agreement
signed by the Applicant
and first and second Respondents."
[19]
I have already pointed out that it is common cause that the farm was
transferred to the first respondent on 11 February 2011
which is the
very next day after the order referred to herein above was granted by
agreement between the parties.
[20]
On the face of this order Musolwa entered into an agreement in terms
whereof the Registrar of Deeds is "allowed"
to proceed and
register the farm in the name of the first respondent. It is further
appears from this order that the fifth respondent
(Elmarie Bierman
Attorneys will pay an amount of R340 000.00 to Musolwa' attorneys
which amount shall be invested in an interest
bearing account in
terms of section 78 (2A) of the Attorneys Act "pending the
finalization of the action to be instituted
by [Musolwa] against the
1st and 2nd respondents".
[21]
From the papers it appears that Musolwa never pursued the action and
that the amount that was intended to have been kept in
trust by his
attorneys was in fact paid out to him. This payment to Musolwa was
made in circumstances where he had not proved a
claim against Sunset
and in circumstances where there existed other creditors that had not
recovered any payment towards their
claims. Payment to Musolwa was
also ostensibly effected contrary to the express terms of the court
order. It should also be noted
that Ms Bierman paid out the proceeds
of the sale with full knowledge that there was a pending appeal and
with full knowledge that
there were other creditors (most notable the
estate of the late Mr Jones) who did share in the proceeds of the
sale.
[22]
The creditor who launched the application for the winding-up in the
first place (the estate of the late Mr Jones) therefore
did not
recover any monies from the proceeds of the sale. Another creditor,
Mr Van den Berg who had in fact instituted a claim
against Sunset and
had obtained judgment against Sunset, also did not receive any
monies. In the case of Van den Berg, Sunset did
not pay the amount
upon demand. Van den Berg then issued a warrant of execution in an
endeavour to procure payment. The Sheriff
could not attach sufficient
assets to pay the amount of the warrant. As already pointed out, only
one creditor, Musolwa, received
payment from the proceeds of the
sale. It is apparent from the papers that the Musolwa's urgent
application was settled on a basis
that only one particular creditor
(Musolwa) received payment from the proceeds of the sale whilst the
rest of the creditors were
left in the cold.
The
second urgent application
[23]
On 14 February 2011, shortly after the Musolwa order was granted,
Bosman (in his capacity as the executor of the estate of
the late Mr
Jones) launched a second urgent application (herein referred to as
"the second urgent application") for an
order that, pending
the determination of the appeal against the order of the Magistrate
dismissing the application for the winding-up
of Sunset, the third
respondent (Elmarie Bierman Attorneys), the fourth respondent (H
Swart Konsultante) and the fifth respondent
(the Registrar of Deeds)
be interdicted from proceeding with the registration and transfer of
the farm. Sunset was again cited
as the first respondent.
[24]
In the founding affidavit in this urgent application Bosman explains
that he had received instructions from the late Mr. Jones
to handle a
claim against Sunset. At that stage charges of theft were laid
against Sunset and its members. Bosman explains that
he was aware of
the fact that Musolwa's attorneys were in the process of drafting
papers to launch an urgent application on 10
February 2011. He also
states that he was aware of the fact that the purpose of that
application was to interdict the transfer
of the farm to the first
respondent. He further states that when he signed the confirmatory
affidavit in the Musolwa urgent application
he was confident that the
relief that was sought (namely to interdict the transfer) would be
granted and that the position of the
creditors would be protected
pending the liquidation application and the action to be instituted
by Musolwa. He only learned of
the court order at approximately 12HOO
on 10 February 2011. According to Bosman, he then only realised that
the other creditors
would not be protected by the terms of the court
order and that this order would have the effect that one of the
creditors (Musolwa)
would be preferred above the others.
[25]
On 14 February 2011 the High Court granted an interim order that
pending the determination of the appeal and the finalisation
of the
application for the liquidation of Sunset, the relevant respondents
were interdicted from proceeding with the registration
and transfer
of the farm. As of 14 February 2011 two conflicting court orders
existed: The one interdicted the transfer whereas
another court order
seemingly allowed the Registrar of Deeds to finalise the transfer.
[26]
By the time the urgent application was launched by Bosman (on 14
February 2011), the farm had however already been transferred
to the
first respondent and the proceeds paid by Bierman to Sunset and the
attorneys of Musolwa.
The
appeal
[27]
The appeal served before the High Court in Pretoria on 9 February
2012. The court upheld the appeal and ordered that Sunset
be
liquidated. In the judgment penned by Prinsloo, J it was concluded
that Sunset was in fact unable to pay its debts. It is noteworthy
that Prinsloo, J also remarked that he was "of the view that
given the circumstances of this case, which strongly indicate
foul
play and probably theft of the monies of the creditors" it was
in the interest of justice to proceed with the application
and
deliver judgment on the merits.
Proceedings
i n this court
[28]
The joint liquidators were appointed on 27 February 2013. On 3
September 2013 the present application for an order declaring
that
the disposition of Sunset of the farm is void and for ancillary
relief, was launched. More in particular, an order is sought
to
authorise the second respondent (the Registrar of Deeds) to rectify
the title deed of the farm so as to reflect that Sunset
(in
liquidation) is the registered owner of the farm.
[29]
The first respondent filed a notice of intention to defend as well as
a notice of a counter-application. In the counter-application
the
first respondent seeks an order that the agreement entered into
between him and Sunset whereby the farm was purchased be validated.
In his answering affidavit the first respondent also raised a point
in limine
regarding the failure of the applicants to join
Nedbank as a respondent. It is common cause that Nebank was later
joined as the
third respondent.
[30]
If regard is had to the papers at the time when the replying
affidavit was filed on behalf of the applicants, the following
was
common cause: (i) The offer to purchase was made
after
the
effective date of the winding-up of Sunset; (ii) The first respondent
was informed by Bosman and Nel in November 2010 of the
pending
liquidation of Sunset and that he nonetheless decided to proceed with
the sale; (iii) The first respondent was aware of
the second urgent
application but did not oppose it because no relief was sought
against him; (iv) The farm was transferred in
the name of the first
respondent on 11 February 2011; (v) More importantly, in his
answering affidavit the first respondent conceded
that the sale of
the farm constituted a "disposition" in terms of section
341 of the Companies Act
[1]
(herein after also referred to as "the Act") and (vi) The
first respondent instituted a counter-application in terms
of section
341(2) of the Companies Act for an order that the court exercise its
discretion to validate the sale of the farm. In
the
counter-application the first respondent set out various facts in
support of the validation of the agreement of sale.
[31]
Because of the fact that it was common cause at that stage that the
sale of the farm constituted a disposition in terms of
section 341 of
the Companies Act, the only question then before the court was
whether this court should exercise its discretion
in terms of section
341(2) of the Companies Act and "decide otherwise" and
validate the sale and transfer of the farm.
[32]
In December 2014 the two liquidators (applicants) filed an
application in terms of Rule 28(1) for the amendment of the Notion
of
Motion to include a prayer that the registration of the bond over the
farm be declared void. I should mention in passing that
it is in any
event a legal consequence of a disposition in terms of section 341(1)
of the Act that the mortgage bond will likewise
be void. See in this
regard
Gainsford
and others NNO v Tiffski Property Investments (Pty) Ltd and others
[2]
where
the court held that a mortgage bond which was registered
simultaneously with the registration of transfer of an immovable
property (where the transaction is void) will likewise be void:
"[11] The
registration of the disputed mortgage bonds was assailed on the
grounds that: (a) Tiffski did not acquire valid title
to the
immovable property on the purported transfer to it; and (b) thus
could not validly grant the bank a real right thereon by
hypothecating or encumbering the immovable property. Thus the
mortgage bonds registered simultaneously with registration of
transfer
of the immovable property to Tiffski were void."
Application
to withdraw an admission
[33]
On 15 June 2016 the application was set down for hearing. However, on
the day of the hearing the first respondent sought a
postponement of
the application. The first respondent thereafter brought an
application in terms of which he gave notice that he
would apply to
this court on 28 November 2016 for an order that he be granted leave
to formally withdraw the admission contained
in paragraph 12 of his
answering affidavit of the main application where it is admitted that
the agreement of sale (the disposition)
is void subject to the
validation by this court as set out in his notice of the
counter-application.
[34]
In brief it is the submission on behalf of the first respondent that
the Musolwa order specifically provided that the Registrar
of Deeds
be allowed to proceed and register the farm. The "disposition"
of the farm to the first respondent was therefore
in compliance of a
court order and therefore the transfer of the farm cannot be regarded
as "a disposition" for purposes
of Section 341 of the
Companies Act. In this regard the first respondent referred to the
definition of a "disposition"
in terms of Section 2 of the
Insolvency Act
[3]
which
expressly excludes "a disposition" in compliance with a
court order.
[4]
The first
respondent accordingly prayed for an order dismissing the main
application.
[35]
The applicants opposed this application and in their affidavit,
proceeded to set out in fair detail the circumstances under
which the
court order was obtained by Musolwa. I will return to some of these
facts herein below where I specifically deal with
the issue as to
whether the disposition of the farm can be regarded as a
"disposition" in terms on the provisions of
Section 341(1)
of the Companies Act. The pertinent point made by the applicants in
their answering affidavit (in the application
to amend) is the fact
that the court order in the Musolwa urgent application were made in
circumstances where one creditor was
clearly preferred above others
and in circumstances where the transferring attorney (Bierman) knew
that there was a pending appeal.
In this regard it was submitted that
the settlement agreement (in terms of which one creditor (Musolwa)
was preferred to the exclusion
of other creditors) was clearly aimed
at serving the selfish interest of one creditor only and that of the
management of Sunset.
The applicants further submitted that when the
settlement agreement was made an order of court, there was no
bona
fida
intention to ventilate and engage in a court on the merits
of Musolwa's claim. This is evident from the fact that Musolwa never
instituted a claim and from the fact that Ms Bierman paid Musolwa's
attorneys shortly after the court order was obtained. Furthermore,
at
the time of the court order, Sunset was well aware of the fact that
there were other unpaid creditors who did not receive any
payments
from the proceeds of the sale.
[36]
The applicants however persisted with their claim that the winding-up
is void by virtue of the provisions of section 342(1)
of the
Companies Act and persisted in seeking an order to this effect
together with other ancillary relief.
Legal
framework
[37]
It is not in dispute that the effective date of the winding-up of
Sunset was 7 April 2010 which is the date when the application
for
winding-up was presented to the Magistrates Court (section 348
[5]
of the Companies Act). See also the decision in
Herrigel
NO v Bon Roads Construction
Co
(Pty)
Ltd and Another
where
this principle was confirmed.
[6]
[38]
It is also not in dispute that Sunset had disposed of the farm
after
the commencement of the winding-up of the close corporation. The
parties are in agreement that dispositions in these circumstances
(and the registration of the mortgage bond) are void. In this regard
section 341 of the Act provides as follows:
"341 Dispositions
and share transfers after winding-up void
(1) Every transfer of
shares of a company being wound up or alteration in the status of its
members effected after the commencement
of the winding-up without the
sanction of the liquidator, shall be void.
(2) Every disposition of
its property (including rights of action) by any company being
wound-up and unable to pay its debts made
after the commencement of
the winding-up, shall be void unless the Court otherwise orders."
[39]
A disposition after the commencement of a winding-up is void and not
merely voidable. Although this section does not make provision
for
the "setting aside of' or for the declaring void "of the
disposition", it would follow as a necessary corollary
that. in
the absence of an order of an order validating the disposition, the
disposition would be void.
[40]
I have already pointed out that it is now submitted on behalf of the
first respondent that, because the disposition (the transfer)
took
place in the context and "in compliance" of a court order
allowing for such a transfer, it is not open to the applicants
to
attack the disposition under section 341(1) of the Act and it is
submitted that the application should be dismissed. In the
alternative, it was submitted on behalf of the first respondent that
the court should exercise its discretion in terms of section
341(2)
of the Companies Act in favour of the first respondent and validate
the disposition. (I will return to the issue of the
validation of the
disposition herein below.)
"Disposition"
in terms of the Companies Act
[41]
On behalf of the applicants it was initially argued that the
definition of the word "disposition" contained in the
Insolvency Act does not necessarily bear the same meaning in context
of the Companies Act simply because the structure of the two
sets of
legislation cater for completely different circumstances: In the
Insolvency Act the impeachable dispositions are voidable
and not void
(as they are in terms of the Companies Act) and refers to
dispositions prior to sequestration and not to dispositions
after
sequestration.
[7]
In argument it
was, however, conceded on behalf of the applicants that there is
authority for this proposition. In this regard
the Court was referred
to the decision in
International
Shipping Co (Pty) Ltd v Affinity (Pty) Ltd and Another
[8]
where
the court held as follows:
"The handing over of
the assets would have amounted to a disposition of the company's
property; it would have been made after
the commencement of the
winding-up; the company is unable to pay its debts, and, therefore,
upon the company being wound-up, the
handing over would have been
rendered void. For complete protection the applicant then needed a
Court order. Such an order might
have been an order in terms of s 341
(2) specifically validating the disposition, but any order directing
the respondent to effect
the disposition would have sufficed.
Where
s 341 (2) speaks of
a
"disposition"
being avoided, it refers to
a
"disposition"
as defined in s 2 of the Insolvency Act 24 of 1936 (see s
339
of the
Companies Act which renders the provisions of the Jaw relating to
insolvency applicable in respect of any matter not specially
provided
for in the Companies Act). And "disposition" in the
Insolvency Act excludes
"a
disposition
in compliance with an order of the Court".
[9]
[42]
I am in light of this concession prepared to accept that the word
"disposition" in the Companies Act should be read
in light
of the definition contained in
Section 2
of the
Insolvency Act. It
is
also on the basis of this acceptance that I am of the view that the
application to formally withdraw the admission contained
in paragraph
12 of the second respondent's answering affidavit in the main
application is not without merit and that it should
be granted.
[43]
On behalf of the first respondent it was submitted that, because such
a court order exists, this court must necessarily find
that the
disposition took place "in compliance with a court order"
and consequently that the discretion provided for
in terms of section
341(2) of the Companies Act, does not arise. On behalf of the
applicants it was submitted that it can by no
stretch of the
imagination be concluded that the transfer took place "in
compliance with a court order".
[44]
The issue in dispute, as I see it, is therefore whether the
settlement agreement which was made an order of court in the Musolwa
matter, protects the first respondent against an application for an
order that the disposition which took place after the effective
date
of the winding-up of Sunset is void as contemplated by section 341(1)
of the Companies Act.
[45]
In my view, this enquiry necessarily invites this court to consider
the circumstances under which the Musolwa court order which
purportedly insolates the first respondent from the effects of
section 341(1) of the Companies Act.
[46]
Justification for this approach can be found in a plethora of
decisions where the courts have set aside dispositions in terms
of
the
Insolvency Act despite
the fact that such disposition had been
made in compliance with a court order. For example, in
Dabelstein
and Others v Lane and Fey NNO
[10]
the
court set aside two court orders which by agreement was made an order
of court because the court found that the parties to the
settlement
agreements were not
bona
fide:
"[5] Relying on
Sackstein and Venter NNO v Greyling
1990 (2) SA 323
(0) the
applicants' counsel submits that it is indeed justified. In that case
the plaintiffs sought to have a disposition set aside
under
s 29
or
30
despite the
fact
that it had been made in compliance with
an order of court. The order had been granted in terms of a
settlement agreement. At 3278
- D Van Coller J reasoned that the
exclusion in
s 2
could not have been intended to afford protection to
the receiver of property who fraudulently colluded to procure an
order of
court with a view to prejudicing other creditors; and that
there may be other forms of improper conduct that may justify the
refusal
of protection. Although the plaintiffs had not alleged
collusion or fraud or any other form of improper conduct in the
conclusion
of the settlement agreement an exception to the
particulars of claim was dismissed on the ground that it might emerge
at the trial
that the parties had acted fraudulently.
In the present case both
orders were granted in terms of settlement agreements between Harksen
and the Dabelsteins and the submission
is that the latter are not
protected by the orders because the parties to the agreements were
not
bona fide.
(Precisely what the so called lack of
bona
fides
connotes will be discussed later.)"
[47]
Further at paragraph [7) the court explained under which
circumstances such dispositions will be set aside:
"I accept for
purposes of the argument that there are cases where dispositions in
compliance with orders of court may be set
aside. On the view that I
take of the matter it is not necessary to decide on precisely what
grounds this may be done. I will assume
that fraud or collusion or
perhaps other kinds of reprehensible conduct on the creditor's part
in procuring an order will suffice."
[11]
[48]
I am of the view that in the present circumstances at least "other
kinds of reprehensible conduct" existed which
warrants this
court to find that the receiver of the property (the first
respondent) is not entitled to the protection granted
to dispositions
"in compliance with a court order". My reasons for this
conclusion are briefly the following: (i) Firstly,
the Musolwa urgent
application was for an order interdicting the transfer of the farm.
The application was not for an order allowing
the transfer of the
farm. The transfer cannot therefore be said to have taken place "in
contemplation of a court order";
(ii) Secondly, I am in
agreement with the submission that by no stretch of the imagination
can it be concluded that the transfer
took place "in
contemplation of a court order". Put differently, it cannot be
said that "but for" the court
order, the transfer would not
have taken place. At the time of the Musolwa application the transfer
of the farm was imminent. In
fact the farm was transferred the very
next day. The transfer documents have been lodge at the Deeds Office
long before the Musolwa
application was launched and was thus not
dependent upon a court ordering the transfer. Moreover, the fact that
the transfer took
place a day after the court order supports the
conclusion that the transfer was not "in contemplation of a
court order"
but that it was plainly as a result of the
execution of the purchase agreement; (iii) Thirdly, it cannot be
ignored that Musolwa
and Sunset reached a settlement in the absence
of the other creditors. Musolwa had a substantial claim against
Sunset and launched
the urgent application in an attempt to prevent
the transfer from going through in an attempt to protect his claim
against Sunset.
Musolwa settled the matter with Sunset on the basis
that whatever is owed to him will be paid from the proceeds of the
sale into
his attorney's trust account pending him instituting an
action for the amount of R340 000.00 allegedly owed to him by Sunset.
Bosman,
who acted on behalf of another creditor did not attend the
court proceedings but he explains in an affidavit that he did not do
so in light of the fact that the relief sought by Musolwa was to
interdict the transfer of the farm and that he was satisfied at
that
stage that the interests of all creditors would be protected. He only
realised after the fact that a settlement was reached
at court and
that one of the terms was the transfer of the property - something
which was not contemplated in the Musolwa urgent
application. Clearly
therefore Musolwa had an interest in the court order and clearly
consented to prayer 1 of the order well knowing
that the effect
thereof would be that whatever was owed to him would be paid to the
trust account of his attorneys; (iv) Fourthly,
Musolwa clearly
concluded this settlement agreement which resulted in a court order
with the intention to obtain an advantage above
the other creditors.
[49]
In light of the aforegoing it is therefore concluded that the first
respondent is not entitled to rely on the court order dated
of 10
February 2010 for protection against the operation of section 341(1)
of the Companies Act. Consequently it is held that the
disposition of
the farm after the effective date of the winding up of Sunset is
void as contemplated by the provisions of
section 341(1) of the
Companies Act.
[50]
I will now briefly turn to the counter-application and consider
whether the court should exercise its discretion in favour
of the
first respondent and validate the agreement of sale.
Discretion
of the court
[51]
The court has a discretion in terms of section 341(2) of the Act to
validate a disposition that is otherwise void. In this
regard the
court in
Lane
NO v Olivier Transport
[12]
set out
the factors - which is now regarded as trite law - that a court must
consider in exercising a discretion provided for in
section 341(2) of
the Act:
"It appears to me
that Lichtenberg J did not intend to find that the discretion vested
in him was one not to declare the disposition
void. If he did so
intend, I respectfully choose not to follow him in that regard, and I
find that the discretion is one which
entitles a Court to validate
what is already a void disposition.
The question which arose
for decision in the
Herrigel
case and which arises in this
case is the circumstances under which the discretion is to be
exercised, if the discretion is to be
exercised at all.
I set out hereunder a
summary of the guidelines for the exercise of the ' discretion,
namely:
(a) The discretion
should be controlled only by the general principles which apply to
every kind of judicial discretion. (See
Re Steane's (Bournemouth)
Ltd
[1950] 1 All ER 21
(Ch) at 25.)
(b) Each case must
be dealt with on its own facts and particular circumstances.
(c) Special regard
must be had to the question of good faith and the honest intention of
the persons concerned.
(d) The Court must
be free to act according to what it considers would be just and fair
in each case. See
Herrigel's
case
supra
at 678 and see
Re Clifton Place Garage Ltd
[1970] Ch 477
(CA) at 490 and 492
([1970]
1 All ER 353
at 356 and 357-8).
(e) The Court, in
assessing the matter, must attempt to strike some balance between
what is fair
vis-a-vis
the applicant as well as what is fair
vis-a-vis
the creditors of the company in liquidation.
(f) The Court should
gauge whether the disposition was made in the ordinary course of the
company's affairs or whether the disposition
was an improper
alienation. See
Re Wiltshire Iron
Co;
Ex parte Pearson
(1868) LR 3 Ch App 443
at 447.
(g) The Court
should investigate whether the disposition was made to keep the
company afloat or augment its assets. See
Herrigel's
case
supra
at 679-80.
(h) The Court
should investigate whether the disposition was made to secure an
advantage to a particular creditor in the winding-up
which otherwise
he would not have enjoyed or with the intention of giving a
particular creditor a preference and which latter factor
may be
decisive. See
Wiltshire's
case
supra
at 447.
(i) The Court should
enquire whether the recipient of the disposition was unaware of the
filing of the application for winding-up
or of the fact that the
company was in financial difficulties. See
Re Te/Isa Furniture
(Pty) Ltd
(1984-85) 9 ACLR 869
(NSW).
(j) Little weight should
be attached to the hardship which will be suffered by the applicant
if the payment is not validated, the
purpose of the subsection being
to minimise hardship to the body of creditors generally. See
Herrigel's
case
supra
at 680.
(k) The payment
should not be looked upon as an isolated transaction if in fact it
formed part of a series of transactions.
See
Herrigel's
case
supra
at 680.
(l) Generally a Court
will refuse to validate a disposition by a company when it occurs
after the winding-up has commenced unless
the liquidator (duly
authorised) consents accordingly and there is a benefit to the
company or its creditors."
[52]
Prinsloo, J in
Brent
Oil
[13]
considered
the factors as set out by the Court in
Lane
and
remarked that the following is of particular importance in exercising
a discretion: (i) A court must exercise its discretion
taking into
consideration the relevant facts and circumstances pertaining to the
matter before it; (ii) A court must consider the
question of good
faith and the intentions of the persons involved in the matter: (iii)
The learned judge further emphasised that
a court must be free to act
according to what it considers to be just and fair, and (iv) that a
court must strike some balance
between what is fair to an applicant
(in a validation application) and what is far to the creditors of a
company in liquidation.
[53]
The first respondent urged this court to exercise a discretion in his
favour with reference to the following factors: (i) The
farm was
purchased at a higher price than the market value at the time. I have
already pointed out that this fact does not seem
to be in dispute on
the papers and that it is accepted that the farm was not sold below
its market value; (ii) The first respondent
was
bona fide
in
respect of the transaction: According to him he had no personal
relationship with the seller and had acted
bona fide
at all
material times. He, however, deny that he knew of the application
before he received transfer of the property and allege
that he had a
valid contract and that he could not cancel the contract. I have
already dealt with this aspect herein above. By
November 2010 the
first respondent knew about the pending liquidation application and
was in fact fully appraised of the consequences
should the
liquidation application be successful. I am further in
agreement with the submission that the first respondent
could have
cancelled the contract on the basis that the seller did not disclose
to him the fact that there was a pending liquidation
application. The
fact of the matter is that the first respondent proceeded with the
transaction with full knowledge of the risks
inherent in a
liquidation. Furthermore, Ms Bierman, with full knowledge of the
pending liquidation application nonetheless proceeded
with the
transfer; (iii) The first respondent submitted that the sale of the
farm was to the benefit of the general body of unsecured
creditors as
a forced sale would in all probability not have raised a purchase
price in excess of the market value. According to
him Sunset
benefitted as a result of the sale and that the coffers of Sunset in
fact benefited in an amount of approximately 1.1
million. There is in
my view no merit in this submission simply because the general body
of creditors did not in fact benefit at
all. The only person who
benefitted from the sale was Musolwa, who obtained an unfair
advantage over other creditors when he obtained
a court order in
apparent collusion with Sunset sanctioning the transfer of the
property. I have already pointed out that this
court order was
obtained in circumstances where only one creditor to the exclusion of
others obtained an advantage. Moreover, the
amount that had to be
held in trust pending the outcome of the action that Musolwa had to
institute was ostensibly paid out to
him in circumstances that can
only be described as suspicious in light of the fact that no action
had been instituted by Musolwa.
Despite the clear terms of the court
order I am again reminded of what Prinsloo, J found in the
liquidation application namely
that the fact "strongly indicate
foul play and probably theft of the monies of the creditors". In
this regard the applicants
point out that the members of Sunset were
in fact later arrested for fraud and were to appear in the Regional
Court in Mokopane.
Furthermore, the first respondent was represented
by attorneys at the time who were aware of the pending liquidation
application.
These attorneys ought to have appreciated the inherent
risks should the first respondent continue with the transaction; (iv)
Although
the first respondent will undoubtedly be affected by an
order refusing to validate the transaction. I am nonetheless
exercising
my discretion against validating the transaction. The
entire disposition of this farm smacks of foul play. Moreover, if the
transaction
is not validated the property will be returned to Sunset
and the first respondent will have a concurrent claim.
[54]
I am therefore not persuaded that there are facts present to compel
me to exercise my discretion in favour of the first respondent.
On
the contrary, I am of the view that there are sufficient and
persuasive facts before me not to do so.
Costs
[55]
Costs should follow the result. In respect of Nedbank, it was
submitted that costs should also be ordered against Nedbank,
in light
of its opposition. Ican see no reason why costs should not also be
granted against Nedbank.
Ms
Bierman of Elmarie Bierman Attorneys
[56]
Serious allegations have been levelled in the papers against Ms
Bierman of Elmarie Bierman Attorneys. I am of the view that
these
allegations warrant an investigation by the Law Society of the
Northern Provinces. I have therefore made it part of my order
that
this judgment and all the court documents pertaining to this
application be provided to the Law Society of the Northern Provinces
for further investigation.
[57]
In the event the following order is made:
1. The application to
formally withdraw the admission contained in paragraph 12 of the
second respondent's answering affidavit in
the main application is
granted with costs.
2. It is declared that
the disposition by Sunset Point Properties 212 CC, registration
number 2005/064500/23 of its immovable property,
better known as Farm
Kareebos 618, Portion 43, Molemole Local Municipality, Registration
Division LS, Limpopo, is void.
3. The registration of
the mortage bond B5767/2011 over the immovable property Kareebos 618,
Portion 43, Molemole Local Municipality,
Registration Division L,
Limpopo, is declared void.
4. It is declared that
the applicants on behalf of Sunset Point Properties 212 CC are
authorised to take all steps necessary to
procure a retransfer of the
immovable property, better known as Farm Kareebos 618, Portion 43,
Molemole Local Municipality, Registration
Division LS from the first
respondent's name to that of Sunset Point Properties 212 CC (In
Liquidation).
5. The second respondent
is authorised to rectify the title deed of the immovable property
better known as Farm Kareebos 618, Portion
43, Molemole Local
Municipality, Registration Division, so as to reflect Sunset Point
Properties 212 CC (In Liquidation) as the
registered owner of the
immovable property.
6. The first and third
respondents, jointly and severally, are ordered to pay the
applicant's costs, including the costs consequent
upon the employment
of senior counsel.
7. The Registrar is
directed to furnish a copy of this judgment and the contents of the
file to the Law Society of the Northern
Provinces in order to conduct
an investigation in the conduct of Ms Bierman of Elmarie Bierman
Attorneys in this matter.
_____________________
AC
BASSON
JUDGE
OF THE HIGH COURT
Appearances:
For
the applicants
: MP Van
der Merwe (SC)
Instructed
by
: Bosman
Attorneys
For
the first respondent
:
BC
Stoop
Instructed
by
:
Kampherbreek Twine & Pogrund
For
the third respondent
:
R Ellis
Instructed
by
: Adams &
Adams
[1]
Act 61 of 1973.
[2]
2012 (3) SA 35 (SCA).
[3]
Act 24 Of 1936.
[4]
The definition in section reads as follows: "'disposition'
means any transfer or abandonment of rights to property and includes
a sale, lease, mortgage, pledge, delivery, payment, release,
compromise, donation or any contract therefor, but does not include
a disposition in compliance with an order of the court; and
'dispose' has a corresponding meaning;"
[5]
Section 348 reads as follows: "Commencement of winding-up by
Court: "A winding-up of a company by the Court shall be
deemed
to commence at the time of the presentation to the Court of the
application for the winding-up."
[6]
1980 (4) SA 669
(SWA) at 673H.
[7]
In this regard the Court in Sackstein en Venter NNO v Greyling
1990
(2) SA 323
(0) at 327A-C held as follows in respect of the purpose
of the provisions of
section 2
of the
Insolvency Act that
contains
the definition of a "disposition": "Dit kom my voor
dat die Wetgewer met die uitsluitende bepalings in
art 2 beskerming
wou bied aan die persoon aan wie die regte oorgedra is. 'n
Skuldeiser wat sy vordering in 'n hot afgedwing het,
en lewering van
'n bate ontvang het ter voldoening aan die bevel wat in sy guns
gegee is, behoort die sekerheid te he dat die
toedrag van sake nie
versteur sal word deur die latere insolvensie van sy skuldenaar nie.
lndien dit anders sou wees sou dit
aanleiding kan gee tot
regsonsekerheid. Die bewoording wat gebruik is dui oak nie daarop
dat die beskerming nie van toepassing
is waar die hofbevel verkry is
nadat 'n bonafide skikkingsooreenkoms aangegaan is nie. Dit kan
egter nie die bedoeling van die
Wetgewer gewees het om die
beskerming ook te bied aan die skuldeiser wat op bedrieglike wyse
saamwerk met die skuldenaar om 'n
hofbevel te verkry ten einde ander
skuldeisers te benadeel nie."
[8]
1983 (1) SA 79
(C) at 85B - E.
[9]
My emphasis.
[10]
2001 (1) SA 1222 (SCA).
[11]
Ibid at 12288 of the judgment.
[12]
1997 (1) SA 383 (C).
[13]
At paragraph [59] of the judgment.