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[2015] ZAGPPHC 526
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National Union of Mine Workers and Another v Van Rooyen and Another (56204/2008) [2015] ZAGPPHC 526 (10 July 2015)
IN
THE GAUTENG DIVISION HIGH COURT, PRETORIA
(REPUBLIC
OF SOUTH AFRICA)
Case
Number: 56204/2008
DATE:
10 JULY 2015
In
the matter between:
NATIONAL
UNION OF MINE
WORKERS
........................................................
FIRST
PLAINTIFF
MOROANE,
S AND 199
OTHERS
...................................................................
SECOND
PLAINTIFF
And
VAN
ROOYEN,
GYSBERT
.................................................................................
FIRST
DEFENDANT
BOLTMAN,
SHALK
JACOBUS
...................................................................
SECOND
DEFENDANT
JUDGMENT
MOLEFE
J:
[1]
The plaintiffs instituted an alternative
claim against the first defendant for an order declaring the first
defendant liable jointly
and severally with Billard Contractors CC
(“Billard”)
in respect of any debt arising out of the judgment debt of the Labour
Court in its case number JS 929/02.
Background
Facts
[2]
The first plaintiff is a trade union and
the second and further plaintiffs are former employees of Billard, a
labour broker. The
first defendant has the controlling interest in
Midway Bricks (Pty) Ltd (“Midway”) and has since 22
October 2002 been
the sole member of Billard. Prior to the 22 October
2002, the second defendant and one Mr Leonard Phungu were the members
of Billard.
The second defendant was a practicing attorney who had an
interest in labour work. During 1999, he concluded an agreement on
behalf
of Billard, with Midway in terms of which Billard as a labour
broker provided the labour for the operations of Midway.
[3]
On 29 May 2002, Billard, after a series
of unprotected strikes, dismissed the second up to the 199
th
plaintiff’s. The plaintiffs challenged the lawfulness of their
dismissal against Billard in the Labour Court on 13 August
2002.
During the proceedings the plaintiff brought an application for the
joinder of Midway as a second defendant. First defendant
did not wish
judgment to be taken against Billard by default and he took over the
members’ interest in order to allow Billard
to defend the
matter on the merits. On 25 April 2006, the Labour Court ordered
Billard to reinstate the second to the fortieth
plaintiff effective
from 26 April 2005 and that compensation be paid to the 41
st
and further plaintiffs in an amount equal to two weeks remuneration,
calculated as at the date of dismissal as well as contribution
to the
plaintiffs’ costs.
[4]
On 26 May 2006 when the plaintiffs
sought to obtain performance of the Labour Court judgment, Billard
did not comply stating that
it had been dormant since 29 May 2002 and
that it had no assets nor clients since the dismissal of the workers
on 29 May 2002.
Billard has since been placed under final winding-up.
Summons was served on both defendants on 3 December 2008.
[5]
The plaintiffs in their main action
relied on sections 64 and 65 of the Close Corporations Act 69 of 1984
(“the Act”).
They sought to hold the members of Billard
personally liable for the judgment debt on the basis that they had
grossly abused Billard’s
juristic personality and that the
business of Billard had been operated recklessly, alternatively,
grossly negligently, alternatively,
for a fraudulent purpose or with
intent to defraud the plaintiffs.
[6]
The defendants’ special plea of
prescription was decided separately in terms of rule 33(4) of the
Uniform Rules of Court and
the honourable Preller J found that the
claim had prescribed.
What
remains for determination now is the plaintiffs’ alternative
claim directed against the first defendant only and based
on section
63(h) of the Act.
[7]
Section 63 of the Act provides:
- - -
the following persons shall in the following
circumstances with a corporation be jointly and severally liable for
the specified
debts of the corporation.
(h)
where the office of the accounting officer of the corporation is
vacant for a period of six months, any person who at anytime
during
that period was a member and aware of the vacancy, and who at the
expiration of the period is still a member, shall be so
liable for
every debt of the corporation incurred during such existence of the
vacancy and for every such debt thereafter incurred
while the vacancy
continues and he is still a member”.
[8]
The plaintiffs’ case is that from
29 February 2000 to the present, the office of the accounting officer
of Billard has been
vacant. The plaintiffs further allege that the
vacancy existed when the first defendant became a member of Billard
on 22 October
2002 and that he had been aware of the vacancy and its
duration, and therefore he is personally liable for the judgment debt
in
the Labour Court orders.
[9]
The first defendant denies all these
allegations and pleads that KPMG Chartered Accountants (“KPMG”)
has been appointed
as accounting officers since Billard’s
incorporation and was never removed as accounting officers.
[10]
During
August 2011, Mr Stephanus Johannes Martinus de Beer, deposed to an
affidavit in the proceedings in the Labour Court between
the
plaintiffs, Billard and the first defendant. The plaintiffs in an
application sought the committal of the first defendant to
gaol for
contempt of court in relation to the Labour Court order referred to
above. Mr de Beer’s affidavit was filed in the
Labour Court and
the first respondent (defendant) relied on it resisting the
application. In the affidavit, Mr de Beer stated that
at the time of
the registration of Billard, the accounting officer was KPMG and he
was employed by KPMG at that time. When the
first defendant took over
the member’s interest on 22 October 2002, KPMG was still the
accounting officer
[1]
.
He also stated
that
to the best of his knowledge Billard never traded since then and that
“we have never compiled any financial statements
for the close
corporation”.
[11]
Mr de Beer testified at the Labour Court
hearing on 8 September 2011 and during his evidence in chief he
stated that he had been
a partner at KPMG until August 2006, and had
personal knowledge relating to the close corporation Billard
Contractors. He testified
that “Billard Contractors is a CC
that was registered when we were still at KPMG, were appointed as the
accountant of Billard,
we never did any accounting or tax work for
Billarcf”.
[12]
Mr de Beer was the plaintiffs’
only witness at the trial and in his examination in chief he admitted
the contents of the Labour
Court Case No J2801/07 transcript in
Bundle “C” relating to his testimony as correct and
confirmed that he stood by
his evidence in the transcript.
[13]
Under cross-examination Mr de Beer was
referred to Bundle “C” pages 1-16
a)
page 7 is a letter to the Registrar of
Close Corporation dated 18 October 1999 wherein KPMG accepted
appointment as accounting officer
of Billard;
b)
page 5 is a company report request dated
15 April 2015 and KPMG status as accounting officers is listed as
“
current
’;
c)
pages 8 and 15 are tax invoices and
pages 9 and 16 are related remittance advices. The tax invoices each
reflect a fee owing to
KPMG services (Proprietary) Limited, not KPMG
Chartered Accountants;
d)
page 10 is a letter sent by DPU Coetzer
on behalf of KPMG (Eiendoms) Beperk dated 1 February 2002, informing
Billard that a provisional
tax returns for the period
"2002
Second Period
” had been filed on that
day.
He
testified that he was not aware that KPMG resigned as when he left in
2006, KPMG was still Billard’s accounting officer.
He could not
remember KPMG ever drawing up financial statements for Billard.
[14]
Plaintiffs
counsel
[2]
argued that the documents referred to in Bundle “C” are
consistent with Mr de Beer’s evidence and that neither
KPMG
Chartered Accountants nor KPMG Services (Pty) Limited performed any
of the activities described in section 62 of the Act at
any time.
That means that for each financial year commencing with the year end
February 2000 and including the year ended February
2007 (that is
including the year when the Labour Court granted judgment against
Billard); Billard did not submit/produce financial
statements and
KPMG did not carry out the duties that are specifically assigned to
the accounting officer by section 62 of the
Act. Counsel for the
plaintiffs submitted that therefore, Billard’s office of the
accounting officer was vacant throughout
the period from 29 February
2000 until it was placed in liquidation.
[15]
Plaintiffs
counsel relied on
Airport Cold Storage
(Pty) Limited v Ebrahim and Others
[2007] ZAWCHC 25
;
2008 (2) SA 303
(c)
wherein
Griesel J held:
“
[38]
To my mind, this approach is highly technical and formalistic. It is
clearly the intention of the Act that there should be
an accounting
officer on a continuous basis; hence the provision in section 59 (3)
of the Act that requires a vacancy to be filled,
‘within 28
days’, and the provisions of section 63(h) imposing personal
liability for the debts of the corporation
on individual members
where debts exist for more than six months. ... It cannot be held
that the name of someone as accounting
officer is sufficient
compliance with the provisions of the Act”.
Counsel
argued that if the corporation does not utilize the services of the
accounting officer to perform the duties provided for
under section
62 of the Act on a continuous basis, the office is therefore vacant.
[16]
Counsel
for the first defendant
[3]
submitted that the
Airport
Cold Storage (Pty) Ltd
case supra is different from this case in that in the
Airport
Cold Storage,
case the Ebrahims conceded that they did not appoint an accounting
officer whereas in casu, KPMG was the appointed accounting officer.
It
was counsel’s argument that on 27 May 2002, Billard became
dormant whilst KPMG was still listed as the current accounting
officer. First defendant contends that the fact that the appointed
accounting officer did not perform some of his duties did not
mean
that the position is vacant.
Common
Cause Facts
[17]
Billard was incorporated on 26 November
1999. According to Billard’s founding statement the name of its
accounting officer
upon incorporation was KPMG. In a letter dated 18
October 1999, KPMG consented in writing to appointment as Billard’s
accounting
officer.
[18]
The first defendant became a member of
Billard on 22 October 2002. The debt for which the plaintiffs seek to
hold the first defendant
liable was incurred on 26 April 2006 when
the Labour Court gave judgment in the plaintiffs’ favour,
including an order directing
Billard to pay 25% of the plaintiffs’
costs.
[19]
Billard never traded since the dismissal
of workers on 29 May 2002 and the plaintiffs’ witness confirmed
that "we have
never compiled any financial statements for the
close corporation”. There is no evidence that KPMG compiled the
financial
reports for Billard. This is not surprising since Billard
was dormant and had no clients. It is also common cause that KPMG
never
resigned as accounting officer.
[20]
The crisp issue to be determined is
whether Billard’s office of the accounting officer was vacant
and that the liability set
out in the Labour court judgment was
incurred during the existence of the vacancy and whilst the first
defendant was still a member
of Billard.
[21]
Section 62 of the Act provides that:
“
62
Duties of accounting officers
1)
The accounting officer of a corporation
shall, not later than three months after completion of the annual
financial statements-
a)
Subject to the provisions of section
58(2) (d),determine whether the annual financial statements are in
agreement with the accounting
records of the Corporation;
b)
Review the appropriateness of the
accounting policies represented to the accounting officer as having
been applied in the preparation
of the annual financial statements;
and
c)
Report in respect of paragraphs (a) and
(b) to the corporation
2)
(a)
...........
(b)
.........................
3)
If an accounting officer of a
corporation -
a)
at any time knows, or has reason to believe, that the corporation is
not carrying on business or is not in operation and has
no intention
of resuming operations in the foreseeable future;
or;
i)
...........................
ii)
----------------------
Hi)
............................
he
or she shall forthwith by registered post report accordingly to the
Registrar.
[22]
It is common cause that since 29 May
2002, Billard became dormant and was not carrying on business and no
annual financial statements
were generated in terms of section 62 (1)
(c) of the Act by KPMG. In my view, this does not mean that the
office of the accounting
officer was vacant and was not occupied due
to failure by KPMG to generate annual financial statements for
Billard. The fact that
KPMG failed to report that Billard was not
carrying on business as prescribed by section 62 (3) (a) of the Act,
does not make the
office of the accounting officer vacant.
[23]
The facts in casu are different from the
Airport Cold Storage
case supra. There
was no registered accounting officer in the Airport case but only an
acceptance of the appointments.
Furthermore,
the Supreme Court of Appeal in
Ebrahim v Airports Cold Storage
(Pty) Ltd
[2009] 1 ALL SA 330
(SCA)
found it
unnecessary to consider the issue of section 63 (h) (no accounting
officer). I have read the papers of the transcript on
which the
plaintiffs rely for their view and am of the opinion that the
inference that they purport to have been drawn from Mr
de Beer’s
evidence is not justified.
[24]
In casu, KPMG, had been appointed as
accounting officers since the incorporation of Billard and had been
active in performing the
duties of an accounting officer for Billard.
Since its appointment, provisional tax returns were filed and tax
invoices and related
remitted advices were sent to Billard. There is
no merit on the submission that the office of the accounting officer
was vacant
by mere fact that KPMG compiled no financial reports for
Billard and that the first defendant is to be held liable jointly and
severally with Billard for the judgment debt of the Labour Court case
number JS 929/02.
[25]
In the circumstances I make the
following order:
The
plaintiffs’ alternative claim against the first defendant based
on Section 63 (h) of the Close Corporation Act
69
of
1984 that the first defendant is liable jointly
and
severally with Billard Contractors CC, in respect of any debt arising
out of the judgment of the Labour Court in its case number
JS929/02
is dismissed with costs.
D
S MOLEFE
JUDGE
OF THE HIGH COURT
APPEARANCES:
Counsel
on behalf of Plaintiffs’ Adv. JG van der Riet SC and AJ
Lamplough
Instructed
by Cheadle Thompson & Haysom
Counsel
on behalf of Defendants’ Adv. GC Pretorius SC
Instructed
by Van Zyl Roux & Hunter INC
Date
Heard 30 April 2015
Date
Delivered 10 July 2015
[1]
Bundle page 18 par 3 and 5
[2]
Advocate JG van der Riet SC
[3]
Advocate
G L Pretorius SC