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[2013] ZAFSHC 6
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Nedbank Ltd v Cooper NO and Others (2538/2010) [2013] ZAFSHC 6; 2013 (4) SA 353 (FB) (11 February 2013)
FREE
STATE HIGH COURT, BLOEMFONTEIN
REPUBLIC
OF SOUTH AFRICA
Application Number :
2538/2010
In
the matter between:-
NEDBANK LIMITED
..................................................................
Applicant
and
CHAVONNE BADENHORST
ST. CLAIR
COOPER N.O.
..............................................................
First
Respondent
TSIU VINCENT
MATSEPE N.O.
.............................
Second
Respondent
THE MASTER OF THE
HIGH COURT
........................
Third
Respondent
_____________________________________________________
CORAM:
VAN
ZYL, R
_____________________________________________________
DELIVERED ON:
25 OCTOBER 2012; 11 FEBRUARY 2013
_____________________________________________________
[1] The applicant
initially instituted motion proceedings for certain relief against
the first and second respondents in their capacities
as the finally
appointed joint liquidators of Marlim Group (Proprietary) Limited (In
Liquidation) (hereinafter referred to as “Marlim”).
In
the said proceedings the Master of the High Court was cited as third
respondent. The applicant and the first and second respondents,
with
the consent of the third respondent, subsequently concluded an
agreement that the dispute be determined in terms of Rule 33(1)
upon
a written statement of facts in the form of a stated case. Such
stated case, titled “Amended Written Statement of Facts
for
Adjudication in terms of Rule 33(1)” was consequently filed and
the third respondent (hereinafter referred to as “the
Master”)
duly filed a report in response thereto.
CHRONOLOGY OF
EVENTS AS REFLECTED IN THE STATED CASE:
[2] Prior to being placed
under winding-up, Marlim was a client of the applicant and was
granted certain loan and banking facilities
by the applicant. As
security for the indebtedness of Marlim to the applicant, Marlim
executed certain securities in favour of
the applicant, including:
2.1. A deed of pledge and
cession, and an additional pledge and cession (hereinafter referred
to as “the first pledge”),
executed on 25 July 2008, in
terms of which Marlim ceded, assigned and made over to the applicant
in securitatem debiti, inter alia
, all its right, title and
interest in and to, and pledged and delivered to the applicant,
Momentum policy number 01004414854 (hereinafter
referred to as “the
first Momentum policy”).
2.2. A further deed of
pledge and cession and an additional pledge and cession, both of
which were also executed on 25 July 2008,
in terms whereof Marlim
ceded, assigned and made over to the applicant
in securitatem
debiti
,
inter alia
, all its right, title and interest in
and to, and pledged and delivered to the applicant, Momentum policy
number 01004414862 (hereinafter
referred to as “the second
Momentum policy”).
[3] On 9 January 2009 the
applicant addressed a letter to Marlim, calling up its banking
facilities and informing Marlim that the
security held by the
applicant would be realised and applied in reducing the indebtedness
of Marlim to the applicant.
[4] On 27 January 2009
the debit balance on Marlim’s current account with the
applicant, was an amount of R2 129 592-04.
[5] On 30 January 2009
the applicant surrendered the first and second Momentum policies and
requested payment of the policy proceeds
from Momentum.
[6] On 4 February 2009
(hereinafter referred to as “the deemed date”) an
application by AIM Group (Pty) Ltd for the
winding-up of Marlim was
issued by the Registrar of this Court.
[7] Pursuant to the
surrender by the applicant of the first and second Momentum policies
and prior to Marlim being placed under
provisional winding-up, the
applicant received payment of the following amounts from Momentum:
7.1 On 10 February 2009,
the sum of R1 387 512-00;
7.2 On 11 February 2009,
the sum of R525 006-00.
[8] On 26 February 2009
Marlim was placed under provisional winding-up by means of a court
order granted pursuant to the application
issued on 4 February 2009.
[9] On 11 March 2009 the
applicant received payment of the further amounts of R3 519-34 and R1
331-65 from Momentum.
[10] On 19 March 2009 the
first and second respondents were appointed as provisional
liquidators of Marlim and as final liquidators
of Marlim on 12
November 2009.
[11] Marlim was placed
under final winding-up by order of this Court on 9 April 2009.
[12] The applicant
submitted claims in the insolvent estate of Marlim for:
12.1 An amount of
R5 023 743-17 plus interest, being the balance outstanding
on a term loan granted to Marlim;
12.2 An amount of R3 599
132-61 plus interest, being the balance outstanding on Marlim’s
Nedbond loan.
[13] Applicant’s
aforesaid claims were drawn based on the indebtedness of Marlim to
the applicant as at the date on which
Marlim was placed under
provisional winding-up, hence 26 February 2009. The applicant is a
proved creditor in the Marlim estate
- both the aforesaid claims
having been proved and admitted.
[14] In terms of the
liquidation and distribution account, the first and second
respondents levied a fee of:
14.1 1% on the proceeds
of the Momentum policies received by the applicant on 10 and 11
February 2009;
14.2 3% on the proceeds
of the Momentum policies received by the applicant on 11 March 2009.
[15] It is evident that
the liquidation and distribution account, annexed to the stated case
as Annexure “SC5”, was
drawn as at the deemed date, being
4 February 2009, with the headnote to the said account reflecting the
date of the liquidation
order as 26 February 2009, but with the
following inscription:
“
Effective
date of liquidation: Effective date of winding-up in terms of Section
348 is the date of issue of the papers namely 4
February 2009.”
[16] I deem it
efficacious to record paragraphs 21 to 24.4 of the stated case, as
supplemented by means of paragraph 24.5 as agreed
upon by the
applicant and the first and second respondents at the outset of the
hearing of this application:
“
21. The
applicant contends that the first and second respondents are not
entitled to levy fees on the proceeds of the first or second
Momentum
policies as the proceeds vested in the applicant on 30 January 2009,
being the date that the applicant surrendered, and
thereby realised
the policies.
22. The first and second respondents
contend that:
22.1 In terms of Section 348 of the
said Companies Act, 1973 (‘Section 348’) the winding-up
of the company by the Court
is deemed to commence at the time the
application for the winding-up, being when the application was duly
lodged with the Registrar
of the Court, which is the 4
th
February 2009;
22.2. The proceeds of the first and
second Momentum policies therefore vest in the Marlim estate; and
22.3. The first and second respondents
are entitled to levy a commission on the proceeds of the first and
second Momentum policies,
albeit that they levied a nominal
commission on the proceeds of such policies.
23. The proceeds of the first and
second Momentum policies were received by the applicant after 4
th
February 2009.
24. The essential dispute therefore
between applicant on the one hand, and the first and second
respondents on the other hand, is
the following:
24.1. The difference in law between
the date of provisional winding-up, namely 26 February 2009, and the
date of issue of the application,
namely 4 February 2009;
24.2. While the first and second
respondents agree with the applicant that the applicant’s claim
should be drawn as at date
of provisional liquidation, namely 26
February 2009, as provided for by
section 44
of the
Insolvency Act,
1936
, applicant and respondent differ about the effect of
section 348
in respect to the vesting of the proceeds of the first and second
Momentum policies;
24.3. The applicant and the first and
second respondents differ in respect to the drawing of the L & D
account, in that the
respondents contend that the L & D account
is required to be drawn with reference to the deemed date of
liquidation in terms
of the said
section 348
(i.e.
4
February 2009),
whereas the applicant contends that the L & D account is required
to be drawn with reference to the date of
provisional winding-up
(i.e. 26 February 2009);
24.4. If the L & D account is
required to be redrawn as at 26 February 2009 the L & D account
is erroneous due to a
bona fide
error by the first and second
respondents.
24.5. To the extent that the
winding-up regulations provide for liquidation and distribution
accounts to be drawn with reference
to the date of the provisional
winding-up order, whether the regulations are to such extent
ultra
vires
.”
[17] The applicant did
not object to the liquidation and distribution account prior to the
confirmation thereof by the Master on
12 March 2010, although the
parties are in agreement that the applicant attempted to do so and
was not dilatory in the steps it
took to object to the liquidation
and distribution account. Therefore the parties are in agreement that
should certain findings
be made in favour of one or the other party,
I should permit the re-opening of the liquidation and distribution
account in terms
of section 408 of the Companies Act, 61 of 1973
(hereinafter referred to as “the act”.
[18] The stated case was
concluded with the heading “Relief Claimed” and the
following paragraphs:
“
26. Having
regard to the agreed facts set out above, there is a dispute between
the applicant, on the one hand, and the first and
second respondents,
on the other, as to whether or not the proceeds of the first and
second Momentum policies vested in the Marlim
estate and as to
whether the L & D account should be drawn as at 4 February 2009
or as at 26 February 2009.
27. The applicant claims the following
relief:
27.1. An order declaring that the
proceeds of the first and second Momentum policies did not vest in
the Marlim estate, and consequently,
the first and second respondents
are not entitled to levy any fee(s) thereon;
27.2. An order that the confirmation
by the Master of the First Liquidation and Distribution account in
the matter of Marlim Group
(Proprietary) Limited (In Liquidation),
Master’s reference B33/2009, be and is hereby set aside in
terms of Section 408 of
the Companies Act, 1973;
27.3. An order declaring that the
Liquidation & Distribution account should be drawn as at 26
February 2009;
27.4. The costs of suit to be paid as
costs of administration in the Marlim estate;
27.5. Granting to the applicant
further and/or alternative relief.
28. First and second respondents claim
that they acted correctly in view of vesting, as well as the date of
the drafting of the
L & D account, namely 4 February 2009, and
contend that the relief claimed by the applicant should be dismissed.
29. The parties agree that in the
event of this Honourable Court finding that the applicant’s
claims should have been drawn
as at 4 February 2009, that the
Applicant be given leave to rectify its claims accordingly.
30. The applicant and the respondents
have agreed to present a stated case to the Honourable Court, and
that the costs thereof be
costs in the administration of the Marlim
estate.”
QUESTIONS OF LAW TO
BE DECIDED:
[19] On close scrutiny of
the stated case, in some respects considered in conjunction with the
arguments presented to me by counsel,
it is evident that the
(alleged) common cause facts between the parties on the one hand and
the questions of law/issues to be decided
together with the
subsequent relief claimed by the applicant on the other hand, have
not been set out as clearly and eloquently
as one would have
preferred. I will however deal with the respective problems as I go
along.
The first question of
law:
[20] With regard to the
relief claimed in paragraph 27.1 of the stated case pertaining to the
vesting of the proceeds of the Momentum
policies and first and second
respondents’ entitlement to have levied fees thereon, this
aspect is in fact in dispute between
the parties. However, it was
recorded in paragraph 24.2 of the stated case that
“applicant
and respondents differ about the effect of Section 348 in respect to
the vesting of the proceeds of the first and
second Momentum
policies”.
This is not entirely correct. Although
the arguments of Mr Steyn, on behalf of the first and second
respondents, were in fact presented
on this basis, the arguments of
Mr Rood, on behalf of the applicant, was not based on the effect of
Section 348 in relation to
when the payments were actually made, but
rather on the effect of the fact that the applicant surrendered, and
thereby realized,
the policies on 30 January 2009, hence, even before
the deemed date of liquidation (and irrespective of whether the
deemed date
or the date of the provisional winding-up order be
considered to be the effective date), as is also evident from the
contents of
paragraph 21 of the stated case.
[21] I however accept and
it seems evident that the parties are
ad idem
that the
question of law I have to decide is whether the proceeds of the first
and second Momentum policies in fact vested in the
Marlim estate (or
not) and consequently, whether the first and second respondents were
in fact entitled to levy fees thereon (or
not).
[22] It is clear from the
terms and the wording of both the pledges and cessions that they
constituted cessions
in securitatem debiti
and not out-and-out
cessions. Mr Rood did not at any stage, in my view correctly so, try
to argue differently. The effect of a
cession
in securitatem
debiti
has been summarised in
WILLE’S PRINCIPLES OF
SOUTH AFRICAN LAW
,
F du Bois
et al
, 9
th
Edition, pages 846 – 847:
“
The effect
of a cession
in
securitatem debiti
has for many years been a vexed issue. The traditional view, now
firmly entrenched in the practice of the courts, is that such
a
cession is analogous to the pledge of a movable: the cedent pledges
his right as security for a debt owed by him to the cessionary;
the
bare dominium (or ‘reversionary interest’) in the right
remains vested in the cedent, and accordingly the right
falls into
his estate upon his insolvency.”
[23] The liquidator is
entitled to claim and administer claims of an insolvent company which
have been ceded
in securitatem debiti
. This right flow from
the fact that the dominium in the policy remains vested in the cedent
and the proceeds recovered form an
asset in the estate of the company
in liquidation. In
MILLMAN N.O. v TWIGGS AND ANOTHER
[1995] ZASCA 62
;
1995 (3)
SA 674
(A) at 676 H – I the position was stated as follows:
“
When a right
is ceded with the avowed object of securing a debt the cession as
regarded as a pledge of the right in question: dominium
of the right
remains with the cedent and vests upon his insolvency in his trustee,
who is under the common law entitled to administer
it ‘in the
interests of all creditors’ and with due regard to the special
position of the pledgee’.”
In
INCORPORATED
GENERAL INSURANCES LIMITED v GUSH AND ANOTHER
1990 (4) SA 573
(WLD) at 577 A and at 580 B – C it was stated as follows:
“
It will be
appreciated that the trustee’s right to administer the proceeds
of the policy flowed from the conclusion that the
so-called dominium
in the policy remained with the cedent.
....
Accordingly, on the authority of the
Appellate Division cases, by which I am of course bound, I conclude
that the issue in the special
case before me is indistinguishable
from the facts in the National Bank case
supra
. The latter is
authority for the proposition that the proceeds of the collection of
the book debts properly fell into the estate
of the company in
liquidation as being an asset of such company. It follows that the
first defendant was empowered and indeed obliged
to collect them.
Accordingly he is entitled to 10% of the proceeds in terms of para 1
of tariff B.”
[24] An amount collected
by a liquidator which does not constitute an asset of the estate
being wound up, does not form the basis
for a fee provided for in the
tariff. See
INCORPORATED GENERAL INSURANCES LIMITED
,
supra,
at 576 B – C.
[25] Although Mr Rood
agreed that the aforesaid is in fact the correct legal position, he
submitted that the current matter is distinguishable
from those
dealing with cessions
in securitatem debiti
of book debt. In this regard he submitted that upon the
surrender of the policies, whatever rights may have vested in Marlim,
terminated
and the only rights which were capable of enforcement were
the rights which had been then exercised by the applicant. Mr Rood
contended
that the policies were terminated by the surrendering
thereof and consequently nothing remained vested in Marlim. Mr Rood
therefore
argued that the contractual nexus as between the insurer
(Momentum) and the insured (Marlim) terminated and at the deemed date
of sequestration the policies were no longer an asset in the estate.
Mr Rood relied on a statement in
GORDON &
GETZ, THE SOUTH AFRICAN LAW OF INSURANCE, DM DAVIS, 4
TH
EDITION
at p. 166, where
the following is stated:
“
The
surrender of a life policy terminates it.”
He also referred to the
authority contained in footnote 27 thereof in support of the said
statement, being
PIENAAR v AFRICAN LIFE ASSURANCE SOCIETY
(1930) 16 PH A82 (W). The aforesaid judgment is very short and it
doesn’t give a detailed exposition of the relevant legal
position which was used as basis for the finding. It seems that the
finding was also very much based upon the specific terms and
conditions of the contracts of insurance which were concluded with
the defendant in that specific instance. The judgment deals
with an
exception which was upheld on the following basis:
“
That there
was no right in existence after the surrender which enured to the
benefit of the plaintiff: that the contract was put
an end to by the
surrender, and that, therefore, that put an end to the contractual
relations between the parties.”
[26] Mr Steyn on the
other hand pointed out that given the established legal position that
the reversionary interest, the dominium,
remains with the cedent, it
is common cause that if the money that the policies were worth was in
excess of the debt owed to the
applicant, the excess must be paid
back to the cedent based on his reversionary interest. Using this
established principle as basis,
Mr Steyn submitted that the
surrendering of a policy always creates a potential asset in an
insolvent estate, in that more money
may be realised than what is
owed to the creditor. If not, there would be no basis for a
liquidator or a trustee of an insolvent
estate to claim the balance
back from the said creditor. He submitted that should Mr Rood’s
argument be accepted, it would
have the result that the policies,
which policies were given as a cession
in securitatem debiti
,
become an out-and-out cession because of the surrendering thereof,
which cannot be correct. Mr Steyn therefore submitted that
where the
proceeds of the policies had not yet been paid out on the deemed
date, their surrender values still formed an asset in
the insolvent
estate. He also pointed out that it should be remembered that when
Momentum was to pay the proceeds to the applicant,
it would still
have been utilised in favour of Marlim to reduce Marlim’s
liability towards the applicant.
[27] I have to agree with
the submissions by Mr Steyn. It is evident that by means of a cession
in securitatem debiti
, a personal right is pledged, the
pledgor retains the dominium of the right, he transfers only the
power to realise the right to
the pledgee and accordingly the right
falls into his estate upon his insolvency. See
THE LAW OF CESSION,
SUSAN SCOTT
, par 12.2.1.5.1, at p. 240 – 241. Therefore,
when book debts are ceded
in securitatem debiti
, the effect
thereof is as was held in
BANK OF LISBON AND SOUTH AFRICA LTD v
THE MASTER AND OTHERS
1987 (1) SA 276
(AD) at 294 C – D:
“
When book
debts are ceded
in
securitatem debiti
,
as in the cession to Nedbank, the cedent cedes to the cessionary the
exclusive right to claim and perceive from the existing and
future
‘book debtors’ the amounts owing by them. The amount so
collected by the cessionary are credited to the account
of the
cedent. Any amount collected in excess if the cedent’s debt
belongs to the latter. Thus it cannot be said that by
such a cession
that it was intended to pass ownership.”
Therefore even it is to
be accepted that in the current instance the surrendering of the
policies terminated them as such, it is
irrelevant. What was
effectively ceded in this instance was Marlim’s right to claim
and receive the surrender value of the
policies. Therefore, even if
the policies were terminated because of the surrendering thereof,
Marlim still held the dominium in
the said right, being,
inter
alia
, the “entitlement” to the money. That is why
when the money was to be received by the applicant (had it not been
for
the liquidation of Marlim), it still was to be credited to the
account of Marlim to reduce Marlim`s liability towards the applicant.
Should there have been any excess, Marlim would have been entitled to
claim it back from the applicant.
[28] Therefore, where the
proceeds had not yet been received by the applicant by the deemed
date of liquidation, Marlim was still
to be considered to have held
the ownership of those proceeds and accordingly it vested in Marlim’s
estate upon its liquidation.
Even if it is to be accepted that the
surrendering of the policies terminated them, up and until the
proceeds of the policies were
in fact paid out, the dominium of the
right to receive payment of the surrender values of the policies
remained vested in Marlim
and form an asset in the estate of Marlim.
In my view the money (in the form of the surrender values of the
policies) does not,
for the reasons mentioned, stand on a different
footing from the policies themselves. See
NATIONAL BANK OF
SOUTH-AFRICA LIMITED v COHEN’S TRUSTEE
1911 AD 235
at 245
and 254. Considering the findings I have already made, I therefore
also do not agree with Mr Rood’s argument that
the facts
in
casu
are distinguishable from the facts in the last mentioned
case.
[29] As I have already
indicated, Mr Rood conceded in his argument that should I find in
favour of the first and second respondents
regarding the issue as to
whether the proceeds of the policies formed an asset in the estate of
Marlim, the finding should be applicable
to all four payments. I
agree with his concession. The first and second respondents were
consequently entitled to levy fees on
the said proceeds of the
policies, both with regard to the payments made before the deemed
date of liquidation and those made after
the actual provisional
liquidation of Marlim.
[30] The relief claimed
by the applicant in paragraph 27.1 of the stated case can therefore
not be granted.
Determining the
further questions of law:
[31] With regard to the
further questions of law, it is evident from the relief claimed in
paragraph 27.3 of the stated case that
the applicant also seeks an
order declaring that the liquidation and distribution account should
be drawn as at 26 February 2009,
hence as at date of the provisional
winding-up order and not as at the deemed date. In this regard Mr
Rood referred to paragraph
18 of the stated case which reads as
follows:
“
As
liquidation and distribution accounts (‘L & D accounts’)
are generally drawn as at date of provisional liquidation,
the
applicant contends that the date from which all liabilities and
assets of Marlim are to be brought to account is the date of
provisional liquidation and not the deemed date of liquidation and
accordingly……”
Based on the first part
of the quoted paragraph, Mr Rood submitted that it is actually an
agreed fact between the parties that it
is the prevailing practice
that liquidation and distribution accounts are generally drawn as at
date of provisional liquidation.
Mr Steyn, on the other hand,
submitted that although the said paragraph might be considered to
have been drawn ineloquently, the
intention of the parties was to the
effect that the first part of the sentence actually forms part of the
applicant’s contention.
He submitted that the last mentioned
interpretation of the wording is confirmed by paragraph 24, read with
paragraph 24.3 of the
stated case, where it is specifically stated
that the applicant and the first and second respondents differ in
respect to the drawing
of the liquidation and distribution account,
being whether it should be drawn with reference to the deemed date of
liquidation
or whether it should be drawn with reference to the
actual date of the provisional winding-up order.
[32] I have to agree with
Mr Steyn’s submissions. When the stated case is read in
totality, it is in my view very evident
that the relevant part of
paragraph 18 could never have been intended to be interpreted to the
effect that the first and second
respondents agree that it is the
general practice that a liquidation and distribution account be drawn
as at date of provisional
liquidation. It is evident from the rest of
the stated case that this is clearly one of the issues in dispute
between the parties,
as specifically recorded in paragraph 24 and
24.3. The last mentioned interpretation is furthermore confirmed by
paragraph 26 of
the stated case where it is also clearly recorded
that there is a dispute between the applicant, on the one hand, and
the first
and second respondents, on the other,
“as to
whether the L & D account should be drawn as at 4 February 2009
or as at 26 February 2009”
. That is also why the
relevant relief in the form in the form of a declaratory order is
sought in paragraph 27.3 of the stated
case. As correctly pointed out
by Mr Steyn, if the parties were in fact in agreement that
liquidation and distribution accounts
are usually drawn as at date of
the provisional winding-up order, there would have been no need for
me to rule on this issue.
[33] Another issue which
in my view was also dealt with in a very confusing manner in the
stated case, is the question as to how
the applicant’s claim
should be drawn, in the sense of as at date of provisional
liquidation or as at the deemed date. In
this regard the following
was stated in paragraph 24.2 of the stated case:
“…
while
the first and second respondents agree with the applicant that the
applicant’s claim should be drawn as at date of provisional
liquidation, namely 26 February 2009, as provided by
Section 44
of
the
Insolvency Act, 1936
...”
In paragraph 18 of the
stated case the applicant specifically stated that it has in fact
drawn its claims as at 26 February 2009,
together with interest as
from 27 February 2009 to date of final payment, hence as at date of
provisional liquidation. Both these
claims have been proved and
admitted. In a letter of 24 March 2010 which the applicant’s
attorney of first instance addressed
to the liquidators raising
certain objections and queries in regard to the liquidation and
distribution account, which letter is
annexed to the stated case as
Annexure “SC7”, this issue was also raised in paragraphs
7.2 and 7.3 thereof:
“
7.2. In any
event it appears from correspondence addressed by you to our client
on the 22
nd
of February 2010, you agreed that the date of liquidation for
calculation of our client’s claim was to be the 26
th
of February 2010.
7.3. In your first liquidation and
distribution account you record the effective date of liquidation
being the 4
th
of February 2010 which is contrary to your
correspondence to our client.”
Therefore, contrary to
what was stated in paragraph 24.2 of the stated case, it is evident
that this issue is also in dispute between
the parties. This is
furthermore confirmed by paragraph 29 of the stated case which reads
as follows:
“
The parties
agree that in the event of this Honourable Court finding that the
applicant’s claim should have been drawn as
at 4 February 2009,
that the applicant be given leave to rectify its claims accordingly.”
[34] The question now
arises whether I can adjudicate the aforesaid two issues in
circumstances where same have not been clearly
formulated and where
it is not so clear what was actually agreed upon between the parties.
Rule 33(1)
and
33
(2)(a) read as follows:
“
(1) The
parties to any dispute may, after institution of proceedings, agree
upon a written statement of facts in the form of a special
case for
the adjudication of the court.
(2)(a) Such statement shall set forth
the facts agreed upon, the questions of law in dispute between the
parties and the contentions
thereon…”
In
ERASMUS, SUPERIOR
COURT PRACTICE
D E van Loggerenberg
et al
, at p. B1-234
the following relevant discussion regarding this part of
Rule 33
appears:
“
The
agreement contemplated by subrules (1) and (2)(a) relates primarily
to the facts and not to the questions of law in dispute
between the
parties. If the parties were to overlook a question of law arising
from the facts agreed upon, a question fundamental
to the issues they
have discerned and stated, the court is not confined to the issues of
law explicitly raised in the stated case.”
In
PADDOCK MOTORS
(PTY) LTD v IGESUND
1976 (3) SA 16
(A) at 24 B – C it was
stated as follows:
“
If e.g. the
parties were to overlook a question of law arising from the facts
agreed upon, a question fundamental to the issues
they have discerned
and stated, the Court could hardly be bound to ignore the fundamental
problem and only decide the secondary
and depended issues actually
mentioned in the special case. This would be a fruitless exercise,
divorced from reality, and may
lead to a wrong decision. It follows
that the Court cannot be confined in all circumstances to the issues
of law explicitly raised
in the special case. This does not mean that
the Court will always be free to enlarge the issues, whether
mero
motu
or at the request of a party. The question of prejudice may arise,
e.g., where a party would not have agreed on material facts,
or on
only those stated in the special case, had he realised that other
legal issues, not stated in the special case, were involved.
In the
present instance such considerations do not arise as the question the
appellant now seeks to raise was actually part of
the special case
when the facts were agreed upon… Moreover, the contention as
to the fulfilment of the ‘condition
precedent’ turn on
the proper construction of the contract, which is also basic to the
adjudication upon the other two points
of law.”
[35] In my view, the
issues on which the parties contradict themselves when the stated
case is read as a whole, are two questions
of law and not factual
issues, being as at which date the liquidation and distribution
account should be drawn and as at which
date the applicant’s
claims should be drawn. These two issues go hand in hand and I deem
it necessary in the circumstances
to rule on both issues, which
apparently was also the intention of the parties. In these
circumstances and where these issues have
in any event been properly
ventilated in argument on behalf of both parties, there can be no
prejudice in handling it in this manner.
The second and third
questions of law:
[36] I therefore now turn
to the aforesaid two questions, namely whether the liquidation and
distribution account should be drawn
as at the deemed date of
liquidation in terms of
Section 348
(4 February 2009) or as at date
of the provisional winding-up order (26 February 2009), and
furthermore as at which of the aforesaid
dates should the applicant’s
claims be drawn.
[37] Section 348 of the
Act reads as follows:
“
348.
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.”
The effect of this
section is described in
HENOCHSBERG ON THE COMPANIES ACT
,
Meskin, Vol 1, at p. 740 (2):
“
The effect
of this section is to make the commencement of the winding-up
retrospective to the time of the presentation to the Court
of the
application, i.e. when it is lodged with the Registrar of the Court
(
DEVELOPMENT
BANK OF SOUTHERN AFRICA LTD v VAN RENSBURG NNO
2002 (5) SA 425
(SCA). In this case the Court held (at 431) that the
phrase ‘at the time’ in s 348 means ‘at the
specific point
in time’ when the application was lodged with
the Court and not the date of such lodgement, and that the section is
to be
interpreted restrictively since ‘it retrospectively
avoids transactions that may have been perfectly legitimate at the
time
they were entered into’); but for this retrospectivity to
operate the winding-up order must be granted (
VERMEULEN
v CC BAUERMEISTER (EDMS) BPK
1982 (4) SA 159
(T) at 162...”
[38] The purpose of
section 348 is to nullify
“a possible attempt by a
dishonest company, or directors, or creditors or others, to snatch
some unfair advantage during the
period between the presentation of
the petition for a winding-up order and the granting of that order by
a Court”
. See
LIEF N.O. v
WESTERN CREDIT (AFRICA) (PTY) LTD
1966 (3) SA
344
at 347 C, with reference to the similar provisions of s 115 of
the 1926 Act.
[39] Mr Rood and Mr Steyn
were
ad idem
that a
concursus creditorum
was
established when the application for Marlim`s winding-up was filed
with the Registrar of the Court – hence, at the deeming
date.
See
THOMAS CONSTRUCTION (PTY) LTD (IN
LIQUIDATION
) v GRAFTON FURNITURE
1988 (2) SA
546
(AD) at p. 566 H. The effect of the
concursus
is stated in
WALKER v SYFRET N.O.
1911 AD 141
at p. 166 as follows:
“
The object
of the Insolvent Ordinance is to ensure a due distribution of assets
among creditors in the order of their preference.
And with this
object all the debtors’ rights are vested in the Master or the
trustee from the moment insolvency commences.
The sequestration order
crystallises the insolvent’s position; the hand of the law is
laid upon the estate, and at once the
rights of the general body of
creditors have to be taken into consideration. No transaction can
thereafter be entered into with
regard to estate matters by a single
creditor to the prejudice of the general body. The claim of its
creditor must be dealt with
as it existed at the issue of the order.”
It is important to take
note that the last mentioned quotation deals with a
concursus
in
the event of a sequestration, in which instance no deeming provision
is applicable and therefore the sequestration and consequent
concursus
commence at the date of the issue of the provisional
sequestration order. When the principle is applied to liquidation,
considering
the deeming provision contained in section 348, a
concursus
, as already stated, is instituted at the deeming
date in terms of section 348, with the result that the aforesaid
stated principle
means that the claim of a creditor must be dealt
with as it existed at the deeming date. This is indicative thereof
that a creditor
should draw its claim against a liquidated estate as
at the deemed date and that the liquidation and distribution account
should
consequently also reflect the position of the estate as at the
deemed date.
[40] The importance and
the conclusiveness of this deeming provision was dealt with in
REEBIB
RENTALS (PTY) LTD v LETS TRADE 1163 CC
2009 (3) SA 396
(D&CLD)
at 400 C – 401 B and I will refer to only certain relevant
parts thereof:
“
[17] Mr De
Beer S.C., who appeared for the applicant, answered this argument by
submitting that the court was vested with a discretion
in terms of s
347 of the Companies Act to grant ‘any other order it may deem
just’ in any application for the winding-up.
I therefore
possessed a discretion to order that the winding-up of the respondent
should only commence on the date upon which a
further provisional
winding-up order was granted.
[18] …
[19] …
[20] Consider the object of this
section, together with the following words of Levinsohn J (as he then
was) in the case of
THE NANTAI PRINCESS: NANTAI LINE CO LTD AND
ANOTHER v CARGO LADEN ON THE MV NANTAI PRINCESS AND OTHER VESSELS AND
OTHERS
1997 (2) SA 580
(D) at 585 E – F, namely –
‘
The
fact of the matter, however, is that `
the
existing legislation provides for the date of commencement of the
winding-
up
and it is obviously a matter of great importance to commerce in
general and companies in particularly that there be certainty
as to
its ascertainment.’
I am satisfied that the deeming
provision in s 348 must be regarded as conclusive or irrebuttable.
I therefore consider that I do not possess a discretion contended for
by Mr De Beer S.C.” (Own emphasis)
[41] Section 341(2) of
the Act determines as follows:
“
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.”
Both “disposition”
and “property” have the meaning assigned to them in
section 2
of the
Insolvency Act and
therefore cover a very wide range
of transactions. See
HERRIGOL N.O. v BON ROADS CONSTRUCTION
COMPANY (PTY) LTD
1980 (4) SA 669
(SWA) at 674.
[42] In my view
section
341(2)
(read with
section 348)
is a very strong indication that the
deemed date is the obvious “cut-off point” to protect the
financial position of
a soon to be liquidated company which is unable
to pay its debts in favour of the body of creditors of such a
company. The intention
of the Legislature is clearly that by the time
such a company is actually wind-up by means of a provisional
winding-up order, its
financial position, specifically with regard to
property, should be as near as possible to what it was at the deeming
date and
therefore be “brought back” to what it was at
the deeming date. This intention of the Legislature also corresponds
with the principle that a
concursus creditorum
is established
at the deeming date. See
PRUDENTIAL SHIPPERS SA LTD v TEMPEST
CLOTHING CO (PTY) LTD
1976 (4) SA 75
(W) at 83 A – B. Also
see
SCHMIDT AND ANOTHER v ABSA BANK LTD
2002 (6) SA 706
(WLD)
at 711J – 713B.
[43] The aforesaid
intention of the Legislature is also reflected is also reflected in
similar protective sections of the Act, such
as section 359.
[44] Section 366 of the
Act provides,
inter alia
, that in the winding-up of a company
by the Court the claims against the company shall be proved at a
meeting of creditors
mutatis mutandis
in accordance with the
provisions relating to the proof of claims against an insolvent
estate under the law relating to insolvency.
In the discussion in
HENOCHSBERG ON THE COMPANIES ACT
,
supra
at p. 782, it
is evident that the deemed date of liquidation is considered to be
the relevant date for purposes of calculating
a claim:
“
It is
submitted that, since at the commencement of the winding-up a
concursus
creditorum
is instituted, the rate which must be applied to convert to rands
approved claim in a foreign currency is the rate prevailing at
the
date of such commencement.
A claim for a debt carrying interest,
which became due prior to the date of the commencement of the
winding-up, may be proved for
its amount and for the arrear interest
to such date
(s 50(1)
of the
Insolvency Act). …if
a debt is
payable only after such date, the creditor may prove a claim for such
debt as if it were due at such date
(s 50(2)
of the
Insolvency Act).”
From
the aforesaid it is
evident that “such date” refers to the deemed date of
winding-up.
I am therefore also of
the view that where, as a result of the aforesaid section 366 of the
Act, a claim must be proved by affidavit
in a form corresponding
substantially with Form D or C contained in the First Schedule to the
Insolvency Act (in
terms of
section 44
of the
Insolvency Act), the
words on the said Forms that read
“was at the date of
sequestration”
indebted to the relevant creditor,
should be, for purposes of a winding-up, be interpreted to mean and
refer to the deemed date
of winding-up in light of the provisions of
Section 348 of the Act.
[45] Section 339 of the
Act determines as follows:
“
In the
winding-up of a company unable to pay its debts the provisions of the
law relating to insolvency shall, insofar as they are
applicable, be
applied
mutatis
mutandis
in respect of any matter
not
specially provided for by this Act
.”
It is evident that it is
the intention of the Legislature that the law relating to insolvency
is applicable only in respect of matters
for which the Companies Act
itself makes no provision. Where section 348 provides for a deemed
date of commencement of winding-up,
without any qualification or
restriction thereto, I am of the view that it has to be applied
throughout the winding-up process,
including pertaining to as at what
date a creditor’s claim should be calculated and as at what
date the liquidation and distribution
account should be drawn.
[46] Mr Rood referred to
Section 403 of the Act, more specifically Section 403(2), which deals
with the content of the liquidation
and distribution account, which
is submitted is peremptory:
“
(2) Any
account shall be lodged in duplicate in the prescribed form, shall be
fully supported by vouchers, including the liquidator’s
bank
statements or certified extracts from his bank and building society
account showing all deposits and withdrawals and shall
be verified by
an affidavit in the prescribed form.”
The “prescribed
form” is the form set out in Annexures “CM101” to
the regulations. Item 2 of the said Annexure
provides as follows:
“
A detailed
account of all the liquidator’s receipts and payments in
respect of the company must be given. The account of receipts
must
contain a record of all receipts derived from the realisation of
assets existing at the date of the winding-up order or resolution
including any balance in the bank, book debts and calls collected,
property sold….”
Mr Rood submitted that
the words
“the date of the winding-up order”
is
the date of the actual issue of the provisional winding-up order. Had
the legislature intended the liquidation and distribution
account to
be framed with reference to the deemed date of commencement of
winding-up within the meaning of Section 348 of the Act,
the
legislature could have specified it in that manner.
[47] Mr Rood made
reference to the well-known primary rule of statutory interpretation
and the fact that the rules applicable to
the interpretation of
statutes also applied to the interpretation of subordinate
legislation.
[48] However, Mr Rood
also referred to the very important principle that regulations are
not to be read in isolation, but where
possible, are to be construed
consistently with the empowering statute under which they are made.
In
SA RESERVE BANK v KHUMALO
2010 (5) SA 449
(SCA) at 455 F –
H this principle was stated as follows:
“
The next
question is whether regulation, by omitting any reference to a time
limit, means that the President sought to give a power
to the
Treasury that is not limited in time. I think not. The regulations
are not to be read in isolation. Where possible, they
are to be
construed consistently with the empowering Act under which they were
made. No matter how clear and unequivocal regulations
may appear to
be, ‘their interpretation and validity by depending upon their
empowering provisions which authorise them’.
The regulations
must therefore be read in the light of the provisions of s 9(2) and
its purpose and objectives – including
that the attachment of
money and goods may not be for a period longer than that prescribed
in the Act. It therefore cannot be argued
that, merely because no
mention of the time limitation contained in s 9(2)(4) is made in the
regulations, it does not apply to
an attachment made under the
regulations.”
[49] I have already dealt
with section 348 of the Act, as well as other sections of the Act
which are clearly confirmation of the
purpose and objective of
section 348 of the Act. When the aforesaid regulations are to be
interpreted in conjunction with the empowering
statute, it is in my
view clear that the words
“at the date of the winding-up
order”
should likewise be interpreted to mean the
deemed date as provided for in section 348. This interpretation is
necessary in order
to comply with the intention of the Legislature as
reflected in section 348 of the Act. This viewpoint is also confirmed
by the
fact that the said regulation also contains the words “or
resolution”. Such a resolution is clearly a reference to the
resolution authorising the winding-up in the instance of a voluntary
winding-up. The commencement of a voluntary winding-up is
provided
for in section 352 of the Act. The regulation therefore seems to have
attempted to provide for the commencement of the
two forms of
winding-up, one by the Court and the other voluntarily. It will lead
to an absurdity if the regulation is to be interpreted
to amend the
commencement of the respective forms of winding-up from that which is
contained in sections 348 and 352 of the Act
respectively.
[50] I however do not
find the relevant regulation to be
ultra vires
. In my view it
is rather a matter of proper and appropriate interpretation thereof
in view of the purpose of the enabling statute.
[51] It is evident from
the Master’s report that it is also the viewpoint of the Master
that for the purposes of drawing a
liquidation and distribution
account, the date referred to is the date when the application was
issued by the Registrar of the
High Court and not the date of the
actual provisional winding-up order.
[52] In the premises I
find:
52.1 That the liquidation
and distribution account was correctly drawn as at the deemed
commencement date of the winding-up, being
4 February 2009;
52.2 That the applicant’s
claims should have been drawn as at the deemed commencement date of
the winding-up, being 4 February
2009.
RE-OPENING OF THE
LIQUIDATION AND DISTRIBUTION ACCOUNT:
[53] Section 408 of the
Act determines as follows:
“
408.
Confirmation
of account.
–
When an account has lain open for inspection as prescribed in Section
406 and –
(a) ….
(b) …
(c) …
The Master shall confirm the account
and his confirmation shall have the effect of a final judgment, save
as against such persons
as may be permitted by the Court to re-open
the account after such confirmation but before the liquidator
commences with the distribution.”
[54] The parties were
ad
idem
that should I find that the applicant’s claims should
have been drawn as at 4 February 2009, the applicant should be given
leave to rectify its claims accordingly. Considering the relevant
facts and circumstances explained in the stated case, I agree
with
them. I therefore intend granting leave to the applicant that the
first liquidation and distribution account be re-opened
by the
Master, but for the aforesaid restricted purpose only.
COSTS:
[55] The parties hereto
have agreed that the costs of the application and stated case are to
be costs in the administration of the
Marlim estate and therefore I
intend ordering as such.
[56] In the premises the
following orders are made:
The relief sought by the
applicant in paragraphs 27.1 to 27.3 of the amended stated case
dated 15 February 2012, is dismissed.
With reference to
paragraph 29 of the amended stated case, leave is granted to the
applicant that the first liquidation and distribution
account
pertaining to Marlim Group (Pty) Ltd (In Liquidation) (Master’s
reference: B33/2009) be re-opened by the Master
in terms of Section
408 of the Companies Act, 61 of 1973, solely for the purpose of
allowing applicant to rectify its claims
and submit same with
reference to the deemed date of liquidation, being 4 February 2009.
Costs of the
application, which include the costs of the stated case, are to be
costs in the administration of the aforesaid Marlim
estate.
______________
C. VAN ZYL, J
On behalf of the
Applicant: Adv P.T. Rood S.C. On instructions of:
Naudes Attorneys
BLOEMFONTEIN
On behalf of the First
and Second
Respondents: Adv J.W.
Steyn On instructions of:
Christo Dippenaar
Attorneys
BLOEMFONTEIN