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[2014] ZANCHC 3
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De Bruyn v Grandselect 101 (Pty) Ltd and Another (1961/2013) [2014] ZANCHC 3 (5 March 2014)
IN
THE HIGH COURT OF SOUTH AFRICA
[NORTHERN
CAPE HIGH COURT, KIMBERLEY]
JUDGMENT
CASE
NUMBER: 1961/2013
PHILLIPPUS
JOHANNES DE
BRUYN
........................................................
APPLICANT
AND
GRANDSELECT
101 (PTY) LTD
...................................................
FIRST
RESPONDENT
HANS
KLOPPER
N.O
.................................................................
SECOND
RESPONDENT
Date
of hearing: 24 January 2014
Date
of judgment: 05 March 2014
PHATSHOANE
J.
1.
On
20 November 2013 Mr Christiaan Paul Conradie and Mr Eric Peter Turck,
the directors of Grandselect 101 (Pty) Ltd, the first respondent,
resolved to voluntarily commence business rescue proceedings by
placing Grandselect under supervision by a business rescue
practitioner
in terms of
s 129(1)
of the
Companies Act, 71 of 2008
.
On 06 December 2013 Mr Phillippus Johannes de Bruyn, the applicant,
approached this Court on an urgent basis for an order that
the
resolution taken by Grandselect initiating the business rescue
proceedings be set aside; that in the event that this resolution
is
set aside it be further ordered that Grandselect is provisionally and
thereafter finally liquidated in the hands of the Master
of the High
Court. By agreement between the parties the application was postponed
to the urgent opposed roll of 24 January 2014.
2.
Adv
Oosthuizen SC, for Grandselect, broached two points
in
limine
against the application. On the
first preliminary point he contended that this Court does not have
jurisdiction to entertain the
application relating to liquidation or
business rescue of Grandselect because its registered office and
principal place of business
fall within the geographical jurisdiction
of the Western Cape High Court. It is common cause that the
registered office of Grandselect
is in Cape Town. What is in dispute
is whether its principal place of business is situated in that same
area or in Northern Cape.
Mr Oosthuizen argued that in the wake of
the
Companies Act, 71 of 2008
, only a High Court in the area where
the registered office of the Company is situated would have
jurisdiction to entertain the
application.
3.
Counsel
finds support for his contention in S
ibakhulu
Construction (Pty) Ltd v Wedgewood Village Golf Country Estate (Pty)
Ltd (Nedbank Ltd Intervening)
2013 (1)
SA 191
(WCC) where the question of Jurisdiction of the High Court
under the
Companies Act, 71 of 2008
, came under scrutiny. The
following dictum appears at para 23 of the judgment by Binns-Ward J:
“
[23]
I consider that it would give effect to the purposes set out in
s
7(k)
and (l) to interpret
s 23
of the Act [Companies Act 71 of 2008]
to the effect that a company can reside only at the place of its
registered office (which,
as mentioned, must also be the place of its
only or principal office). The result would be that there would in
respect of every
company be only a single court in South Africa with
jurisdiction in respect of winding-up and business rescue matters. I
think
it admits of no doubt that winding-up and supervision for
business rescue purposes are both matters going to the status of the
subject company, and that the power to make a determination on a
question of status involves a
ratio
jurisdictionis
exercisable only by the court within whose jurisdiction the company
'resides' or is domiciled (I do not perceive there to be scope
for
any distinction within South Africa between a local company's
residence and its domicile.) Furthermore, winding-up and business
rescue are also matters which are interlinked in such a manner by the
provisions of the 2008 Act that it is undesirable for reasons
of
comity between courts of equal status, efficiency, commercial
convenience and certainty that they be amenable to proceedings
in
concurrent jurisdictions. These are considerations militating in
favour of the recognition of a regime that recognises a company
only
to be resident in one place rather than two, thereby assuring that
only one court will have jurisdiction.”
4.
Against the backdrop of item 9 of schedule
5 of the
Companies Act, 71 of 2008
[1]
,
which provides for the continued application of the previous
Companies Act, 61 of 1973, to the liquidation and winding-up of
companies, Adv Zietsman SC, for the applicant, argued with reference
to s 339 of the previous Act that in the winding-up of a company
unable to pay its debts the law of insolvency shall continue to apply
in respect of any matter not specially provided for in the
previous
Act. In this regard he submitted that
s 149
of the
Insolvency Act, 24
of 1936
, deals with the Jurisdiction of the Court
[2]
.
It is apposite to bear in mind that in
Spendiff
NO v Kolektor (Pty) Ltd
[1992] ZASCA 18
;
1992 (2) SA 537
(A) at 543G-H the Court pronounced that
s 149(1)
of the
Insolvency
Act is
not to be applied in order to determine which Court has
jurisdiction in the winding-up of a company because the provisions of
the
Insolvency Act only
apply in the winding-up, and that stage is
only reached when the order to wind up has been granted in terms of
the Companies Act.
5.
There is an apparent lacuna in the
Companies Act, 71 of 2008
, because it does not have a statutory
provision governing jurisdiction in the same way as its precursor
[3]
had, nor does it expressly exclude the jurisdiction of the High Court
in respect of a company whose principal place of business
is situated
within the Court’s territorial jurisdiction.
Section 12
of the
previous Companies Act, 1973, dealt with jurisdiction of the Court.
It provided as follows:
“
12.Jurisdiction
of Court under this Act and review of decisions of Registrar
(1)The
Court which has jurisdiction under this Act in respect of any company
or other body corporate, shall be any provincial or
local division of
the High Court of South Africa within the area of the jurisdiction
whereof the registered office of the company
or other body corporate
or the main place of business of the company or other body corporate
is situate.
(2)Any
person, including any company or other body corporate, aggrieved by
any decision, ruling or order of the Registrar may bring
the same
under review by the provincial or local division of the High Court of
South Africa within the area of the jurisdiction
whereof such person
is ordinarily resident or such company or other body corporate has
its registered office or main place of business.”
6.
The
following dictum appears in
Bisonboard
Ltd v K Braun Woodworking Machinery (Pty) Ltd
[1990] ZASCA 86
;
1991
(1) SA 482
(A) at 496B-E
“
..That
a company resides at its place of central control was again accepted
in
Vanderbijl
Park Health Committee and Others v Wilson and Others
1950 (1) SA 447
(A) at 466 - 7. The principle is accordingly well
established in our law, and I can see no warrant for departing from
it. I accept,
furthermore, that it applies in respect of matters of
jurisdiction, with the result that the court of the area where the
company's
place of central control is situated will have jurisdiction
to entertain a monetary claim against the company on the ground that
it is resident within the court's area of jurisdiction. On this
approach it follows that, if the company's registered office is
located elsewhere than at its place of central control, a finding
that the company is resident at the place of its registered office
for the purposes of jurisdiction must necessarily involve an
acceptance of the principle that a company can for such purposes (ie
in regard to questions of jurisdiction) be resident at two places at
the same time. In my judgment, the cases that I have mentioned
do not
preclude the acceptance of such a principle, as I shall endeavour to
show in a moment, and I consider that this Court should
now approve
it. Accordingly I find that a company can and does have a dual
residence for jurisdictional purposes, where its central
control and
its registered office are located at different places.”
See also
Dairy
Board v John T Rennie & Co (Pty) Ltd
1976
(3) SA 768
(W) at 771H.
7.
Binns-Ward
J in S
ibakhulu Construction
supra
is of the view that with the advent of the
Companies Act, 2008
, the
position as enunciated in
Bisonboard Ltd
and
Dairy
Board
supra is no longer supported by
the current statutory scheme because
s 23
of the
Companies Act, 2008
,
requires that each company or external company must continuously
maintain at least one office in the Republic which should be
registered.
Section 23(3)
of the
Companies Act, 2008
, provides:
“
(3)
Each company or external company must-
(a)
continuously maintain at least one office in the Republic; and
(b)
register the address of its office, or its principal office if it has
more than one office-
(i)
initially in the case of-
(aa)
a company, by providing the required information on its Notice of
Incorporation; or
(bb)
an external company, by providing the required information when
filing its registration in terms of subsection (1); and
(ii)
subsequently, by filing a notice of change of registered office,
together with the prescribed fee.”
8.
In
the Handbook: Erasmus Superior Court Practice Farlam
et
al
on commentary under
s 19
of the
repealed Supreme Court Act, 59 of 1959, at A1-26 (Service 41 of 2013)
state:
“
Although,
generally speaking, the principal office of a company is not
necessarily equivalent to its principal place of business,
it is
submitted that for purposes of jurisdiction based on residence under
the
Companies Act 71 of 2008
, it is. In other words, the ‘principal
office’ of a company as contemplated in
s 23(3)
of the
Companies Act 71 of 2008
constitutes, for jurisdictional purposes,
its statutory home where it is to perform its corporate functions and
where it is regarded
as at all times present and ready to conduct and
control its administrative affairs. Viewed in this context, the
requirement notional
connection with a court’s area within
which the principal office is located is present.”
9.
In
the Judgment of this Court in
Lonsdale
Commercial Corporation v Kimberley West Diamonds Mining Corporation
Case No 312/2012 at page 8-9 paras 6.2-6.3 delivered on 17 May 2013
(unreported) Lacock J held:
“
A
finding that the legislature intended the provisions of s 23(3) of
the 2008 Act to be construed “for purposes of jurisdiction”
(a phrase repeatedly used by Binns-Ward J in
Sibakhulu
(Supra) is, to my mind, tantamount to a finding that the legislature
intended to limit or oust a local- and provincial division’s
jurisdiction derived from the common law and/or section 29 of the
Supreme Court Act in respect of the liquidation and or business
rescue proceedings of a company that “resides” or has its
principal place of business within that Court’s area
of
jurisdiction, but not also its registered address. I am not persuaded
that the reasons advanced by the learned judge justify
such a drastic
limitation of a Court’s jurisdiction.
Had
the legislature intended to limit a Court’s jurisdiction as
suggested by Binns-Ward, I would have expected the legislature
to
have made provision for such drastic limitation in clear and
unambiguous terms. This was not expressly done when the 2008 Act
was
promulgated or since.”
10.
Jurisdiction
should be determined by common law and/or the relevant statute. See
Bisonboard Ltd
supra at 486H—J. This is a common thread which runs through
Sibakhulu Construction
and
Lonsdale Commercial
.
Consideration of the question of jurisdiction involves a two-stage
enquiry. Firstly, it should be determined if the Court is,
as matter
of principle, competent to take cognisance of the particular case
(whether a recognised jurisdictional ground exists
–
ratio
jurisdictionis
). Secondly, whether the
defendant is subject to the Court’s authority (whether an
effective judgment can be given). See Harms
Handbook: Civil Procedure
in the Supreme Court, A-16 [Issue 49]. In
Estate
Agents Board v Lek
1979 (3) SA 1048
(A)
at 1063 F–H Trollip JA set out the general principles of
our law in determining jurisdiction as follows:
“
That
depends on (a) the nature of the proceedings, (b) the nature of the
relief claimed therein, or (c) in some cases, both (a)
and (b). . . .
Approach (a) was adopted by Innes J in Steytler's case 1911 AD at
315-16. The inquiry was, he said, whether, by
its nature, the action
was personal, real, or mixed. De Villiers JP adopted approach (b) at
346-7; and (c) was applied in the
Gulf
Oil
case
[
Gulf
Oil Corporation v Rembrandt Fabrikante en Handelaars(Edms) Bpk
1963
(2) SA 10
(T)]. Approach (b) is based on the principle of
effectiveness - the power of the Court, not only to grant the relief
claimed, but
also to effectively enforce it directly within its area
of jurisdiction, ie without any resort to the procedural provisions
in
the Supreme Court Act 59 of 1959 canvassed above.”
11.
Section
21(1)
of the
Superior Courts Act, 10 of 2013
, provides in part that a
Division of the High Court has jurisdiction over all persons residing
or being in, and in relation to
all causes arising and all offences
triable within its area of jurisdiction and all other matters of
which it may according to
law take cognisance. Harms in his Handbook
Civil Procedure in the Supreme Court in the commentary under
s 21
of
the
Superior Courts Act, 2013
, restates the legal position set out in
Bisonboard Ltd
and
Dairy Board
supra
that a domestic corporation or legal person is resident both at the
place where its registered office is located and where
its principal
place of business is. Put differently, it may have dual residence.
12.
It
is a well-known rule of statutory interpretation that the curtailment
of the powers of a court of law will not be presumed in
the absence
of an express provision or a necessary implication to the contrary.
See
inter alia
,
Richards Bay Bulk Storage (Pty) Ltd v
Minister of Public Enterprises
[1996] ZASCA 23
;
1996 (4)
SA 490
(A) at 494G-I.
13.
There
can be no doubt that the approach propounded by Binns-Ward J is
commercially sound and brings about certainty. The examples
of
problematic situations that may arise if only one Court is intended
to have jurisdiction in respect of liquidations and business
rescue
proceedings highlighted by Binns-Ward J in para 24 of his judgment
are compelling. Nevertheless, considerations of convenience
as stated
in
Dairy Board
should also be taken into account. I wish to add that in certain
instances this may be decisive. I share the view expressed by
Lacock
J that the hurdles alluded to by Binns-Ward J are not insurmountable
and sufficient to oust the Court of jurisdiction in
respect of a
company whose principal place of business is situated in its
boundaries. I am of the view that this Court would have
jurisdiction
to determine the liquidation or business rescue application of a
company whose principal place of business and/or
registered office is
situated in its area of jurisdiction.
14.
Grandselect’s
registered address is No 3 Rose Avenue, Kirstenhof, Cape Town,
Western Cape. As mentioned earlier, it is in
dispute that
Grandselect’s principal place of business is within this
Court’s territorial jurisdiction. Grandselect
is the registered
owner of Farm Houmoed whose business is farming operations. The
applicant states that it brought this application
in this Court
because Farm Houmoed, the only asset of Grandselect, is situated in
the district of Upington, Northern Cape. It is
settled that the
principal place of business of a company for jurisdictional purposes
is the place where the central control and
management of the company
abides. See
Leibowitz t/a Lee Finance v
Mhlana and Others
2006 (6) SA 180
(SCA)
at 184B – C para 9.
15.
Grandselect
states that its principal place of business is in the Western Cape
because its control, management and administration
are conducted from
the offices of Afrifresh Group (Pty) Ltd situated at 5 Primrose
Avenue, Cape Town, while its auditor’s
office and home is at 3
Rose Avenue, Kirstenhof, Cape Town. Mr Christiaan Paul Conradie,
Grandselect’s deponent, says 5 Primrose
Avenue is a place where
Grandselect’s directors meet and at which its annual general
meetings are held. It maintains that
even if it were to be held that
its principal place of business is Farm Houmoed that would be
insufficient to confer jurisdiction
upon this Court.
16.
Apparent from the papers are disputes of
fact on the exact location of the principal place of business of
Grandselect. In terms
of the oft quoted
Plascon-Evans
rule
[4]
,
where disputes of fact in motion proceedings arise in the affidavits,
a final order could be granted only if the facts averred
in the
applicant's affidavits and admitted by the respondent, together
with the facts alleged by the latter, justify such
order. The
situation would of course be different if the respondent’s
version consists of bald or implausible denials, raises
fabricated
disputes of fact, or was palpably implausible, far-fetched or
untenable that the Court would be justified in rejecting
it merely on
papers. This is not a case where it can be said that the respondents’
version on the place where the central
management and control of
Grandselect resides can be regarded as far-fetched. The upshot of
this is that this Court does not have
jurisdiction to entertain the
application.
17.
Lastly,
Mr Zietsman urged, belatedly in the heads of argument, that should
the Court find that it does not have jurisdiction, that
this matter
be transferred to the Western Cape High Court in terms of
s 27
of the
Superior Courts Act, 10 of 2013
, which provides:
“
27
Removal of proceedings from one Division to another or from one seat
to another in same Division:
(1)
If any proceedings have been instituted in a Division or at a seat
of a Division, and it appears to the court that such proceedings-
(a)
should have been instituted in another Division or at another seat of
that Division; or
(b)
would be more conveniently or more appropriately heard or determined-
(i)
at another seat of that Division; or
(ii)
by another Division,
that
court may, upon application by any party thereto and after hearing
all other parties thereto, order such proceedings to be
removed to
that other Division or seat, as the case may be.
(2)
An order for removal under subsection (1) must be transmitted to the
registrar of the court to which the removal is ordered,
and upon the
receipt of such order that court may hear and determine the
proceedings in question.”
18.
Mr
Oosthuizen objected to the removal of the matter because the
applicant did not bring a substantive application justifying the
removal. He contended that the removal will cause a wholly
unacceptable delay in the holding of the necessary business rescue
meetings. He added that there are considerable costs to which the
respondents have been put in defending the proceedings which the
applicant instituted in the incorrect Court without any tender of
costs.
19.
In
terms of
s 27
of the
Superior Courts Act 10, of 2013
, the removal of
a matter can be made upon the application by a party. No basis
has been established in the papers for the
removal save the
contingent oral argument. This is insufficient. In the result the
prayer for the removal of the matter cannot
be acceded to. Costs will
follow the results.
Order:
1.
The application by Mr. Phillippus J de
Bruyn (the applicant) that the resolution taken by Grandselect 101
(Pty) Ltd (the first respondent)
initiating business rescue
proceedings be set aside is refused and dismissed with costs.
M.V.
PHATSHOANE
JUDGE
NORTHERN
CAPE HIGH COURT
Counsel for the Applicant: Adv. P. Zietsman SC
Instructed by: Van De Wall & Partners, Kimberley
Counsel for the First Respondent: Adv. A.C. Oosthuizen SC
Instructed by: Duncan & Rothman, Kimberley
[1]
Item 9 of schedule 5 provides in part:
(1)
Despite the repeal of the previous Act,
until the date determined in terms of sub-item (4), Chapter 14 of
that Act continues to
apply with respect to the winding-up and
liquidation of companies under this Act, as if that Act had not been
repealed subject
to sub-items (2) and (3).
…
.
(4) The Minister, by notice in the Gazette, may-
(a) determine a date on which this item ceases
to have effect, but no such notice may be given until the Minister
is satisfied
that alternative legislation has been brought into
force adequately providing for the winding-up and liquidation of
insolvent
companies; and..
[2]
Section 149 provides:
(1) The court shall have jurisdiction under this Act
over every debtor and in regard to the estate of every debtor who-
(a) on the date on which a petition for the
acceptance of the surrender or for the sequestration of his estate
is lodged with
the registrar of the court, is domiciled or owns or
is entitled to property situate within the jurisdiction of the
court; or…
[3]
See s 12 of Companies Act, 1973.
[4]
Plascon-Evans Paints Ltd v Van Riebeeck Paints
(Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A): See
dictum at 634E – 635C