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[2013] ZANCHC 20
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Freire Gaupo Garcao v Majiedt NO and Others, Majiedt NO and Others v Freire Gaupo Garcao and Others (1559/2012) [2013] ZANCHC 20 (28 June 2013)
Reportable: YES / NO
Circulate to Judges: YES / NO
Circulate to Magistrates: YES / NO
Circulate to Regional Magistrates: YES /NO
IN THE HIGH COURT OF SOUTH AFRICA
(NORTHERN CAPE HIGHT COURT)
CASE NO: 1559/2012
Case Heard: 31/05/2013
Date Delivered: 28/06/2013
In the matter of
FERNANDO MANUEL FREIRE GAUPO GARCAO
...................................
APPLICANT
and
DONOVAN THEODRE MAJIEDT NO
............................................
1
ST
RESPONDENT
EUGENE FREDERICK SAFFY NO
.
.................................................
2
ND
RESPONDENT
CHAVONNES BADENHORST ST CLAIR COOPER NO
....................
3
RD
RESPONDENT
MOLELEKWA ASHWORTH TAU NO
...........................................
4
TH
RESPONDENT
DANIEL JACOBUS LIVERSAGE
....................................................
5
TH
RESPONDENT
JOHN EDWARD BROIDO
...........................................................
6
TH
RESPONDENT
PAUL EKON
..............................................................................
7
TH
RESPONDENT
GIDEON ANDRIES PETRUS KOTZE
.............................................
8
TH
RESPONDENT
And also in the matter of:
DONOVAN THEODRE MAJIEDT NO
...............................................
1
ST
APPLICANT
EUGENE FREDERICK SAFFY NO
.....................................................
2
ND
APPLICANT
CHAVONNES BADENHORST ST CLAIR COOPER NO
........................
3
RD
APPLICANT
MOLELEKWA ASHWORTH TAU NO
...............................................
4
TH
APPLICANT
and
FERNANDO MANUEL FREIRE GAUPO GARCAO
..........................
1
ST
RESPONDENT
DANIEL JACOBUS LIVERSAGE
...................................................
2
ND
RESPONDENT
JOHN EDWARD BROIDO
...........................................................
3
RD
RESPONDENT
GIDEON ANDRIES PETRUS KOTZE
.............................................
4
TH
RESPONDENT
PAUL EKON
..............................................................................
5
TH
RESPONDENT
_________________________________________________________
JUDGMENT
ERASMUS AJ
1. This matter involves three applications. The first is
an application for a postponement(‘the interlocutory
application’)
for the postponement of another application(‘the
main application’),pending the finalization of an application
to review
and set aside the authorization of the Master of the
Northern Cape High Court (‘the Master’), of the enquiry
in terms
of section 417 of the Companies Act
,
No. 61 of 1973
, which was convened and held from 15 to 18
August 2011, alternatively, an order reviewing and setting aside the
enquiry held in
terms of section 417 of the 1973
Companies
Act,
which was convened and held from 15 to 18 August 2011 and
further relief (‘the review application’).
2. The applicant in the interlocutory application
(‘Garcao’) is also the applicant in the review
application and the
first respondent in the main application. The
first, second, third and fourth respondents interlocutory application
are the applicants
in the main application. I shall refer to the
applicants in the main application as ‘the liquidators’.
The other respondents
in the interlocutory application are also
respondents in the main application.
3.
T
he
main application is an application in terms of section 32 of the
Insolvency Act, read with section 340 of the 1973 Companies
Act and
section 9
of the
Companies Act, No. 71 of 2008
. It was lodged on 7
September 2012. Garcao and the second, third and fourth respondents
therein gave notice of their intention
to oppose the main application
on 25 September 2012. Neither Garcao, nor the other respondents have
filed opposing affidavits in
the main application.
4. The relief sought against Garcao in the main
application is,
inter alia,
for the following relief:
4.1. To have the certain transactions of the company
known as Meepo Investments Consortium (Pty) Ltd (now in liquidation)
(‘Meepo’),
declared void as dispositions not made for
value, as contemplated in the Insolvency Act, , read with the
Companies Act, No. 61
of 1973;
4.2. A declaration that the liquidators be entitled to
recover the proceeds of the sales of the assets, alternatively the
assets
itself;
4.3. An order directing the first to fourth respondents
in the main application to render an account, supported by vouchers,
of
all alienations of assets of Meepo during the 24 months
immediately preceding the application for the winding-up of the
company;
4.4. An order lifting the statutory privacy and
confidentiality under section 417(7) of the 1973 Companies Act,
attaching to the
proceedings under master’s reference number
K35/2011, which served before the master on 15 to 18 August 2011.
5.
The review application, case no
185/2013, was placed before me during the hearing of the application.
It was issued on 1 February
2013. Garcao is the applicant and the
master of the Northern Cape High Court is the first respondent in the
review application.
The liquidators are the second to fifth
respondents in the review application.
6. On 12 February 2013, the liquidators gave notice of
their intention to oppose the review application. They also opposed
the interlocutory
application and filed their opposing papers in
respect hereof on 1 March 2013. Subsequently, on 5 April 2013, the
liquidators caused
the main application to be set down for hearing on
31 May 2013.
7. Meepo was placed under provisional liquidation on 21
February 2011 and was finally liquidated on 8 April 2011. The
liquidators
were appointed as provisional liquidators on 7 April 2011
and as final liquidators on 20 July 2011.
8. Before their
appointment as final liquidators, the liquidators lodged an urgent
application on 24 May 2011, for an order interdicting
Garcao from
alienating Meepo’s assets in his possession or under his
control, pending an investigation into certain transactions,
in terms
of section 417/418 of the 1973 Companies Act. On 10 June 2011, by
agreement between the parties, an order was made
1
and the
relevant paragraph of this order is paragraph 2.1.2, reads as
follows:
‘
The Applicant’s
powers as Provisional Liquidators are extended to empower them to
convene an investigation in terms of section
417 and/or section 418
of the Companies Act 61 of 1973 (read with Section 9 of Schedule 5 of
the
Companies Act, 71 of 2008
) pertaining to the transactions
recorded in the said Annexures “B1” and “B2”.’
9. The liquidators caused an investigation into certain
transactions. It is common cause that an enquiry was held during the
period
15 to 18 August 2011 and that the enquiry was presided over by
the assistant master.This enquiry is the subject matter of the review
application.
10. The
founding affidavit in the main application consists of 51 pages. In
the first 9 pages pertain to the description of the
parties,
locus
standi
of
the applicant, jurisdictional facts and the nature of the application
is set out.
2
The
background to the application is then set out. The deponent to the
founding affidavit then proceeds to deal with the enquiry
held at the
master’s office during the period 15 to 18 August 2011, the
evidence led and the examination of witnesses. This
comprises 28
pages of the founding affidavit.
3
12. The full
record of the enquiry is attached to the founding affidavit as
annexure ‘R’. The record comprises 4 volumes,
consisting
of almost 400 pages.
4
13 In the
founding affidavit in the main application, the deponent concludes:
5
“
Applicants aver and
argument will be presented at the hearing that the evidence elicited
through the Examination of the material
witnesses in this matter
under Oath at the Enquiry which sat at the Master’s Office in
Kimberley during the week commencing
15 August 2011 proves that the
transactions represented by the Resolutions of the Directors of Meepo
Investments dated 26 March
2010 and 31 July 2010 represent voidable
transactions and ought to be set aside as dispositions for which no
value has been received
or promised… .”
14. Mr Zietsman, on behalf of the liquidators, submitted
that the relief pertaining to the striking out of the record of the
enquiry
and certain portions of the founding affidavit in the main
application, is wholly dependant on the success of the review
application.
Mr Snellenburg, on behalf of the applicant in the
interlocutory application, conceded that the further relief sought by
Garcao
in the interlocutory application need and should not be dealt
with at this stage of proceedings.
15. The main
application is based, to a large extent, on the record of enquiry
before the assistant master and the evidence contained
in the said
record. The purpose and object of the review application is to have
the master’s authorization of this enquiry
reviewed and set
aside, alternatively, to have the enquiry itself set aside. If the
applicant herein is successful in the review
application, the record
of these proceedings, attached to the founding affidavit in the main
application, as well the allegations
and submissions based on the
record of those proceedings, will be inadmissible and the applicant
will then be entitled to apply
that it be struck from the record in
the main application. An a
pplication
to strike out must generally be made when the matter is before the
court on its merits. If made prior to that stage,
the application to
strike out will be premature.
6
I
thus do not deem it necessary to deal with this aspect at this stage
of proceedings.
16. Mr Zietsman submitted that the application for the
postponement should be dismissed. He further submitted that, if it is
dismissed,
the main application stands unopposed and the relief
sought should be granted.
17. In respect
of the application for the postponement, Mr Zietsman referred to the
cases of
National
Police Service Union v Minister of Safety and Security
7
and
Madinda
v Minister of Safety and Security
8
.
A postponement cannot be claimed as of right. The applicant must show
good cause for the postponement. The court has a discretion
whether
or not to grant a postponement, but should not grant the postponement
unless it is satisfied that it is in the interests
of justice to do
so. In exercise its discretion, cognisance should,
inter
alia,
be
taken of thereasons for the postponement, whether the application has
been timeously made, prejudice of the parties and the public
interest, andwhether there are
bona
fide
grounds
on the merits as to the purpose for which the postponement is sought.
18. The reasons for the postponement are clear. The
review application has been issued and has not been finalized. The
outcome thereof
is relevant to main application.
19. The application for the postponement has been
timeously made, early February 2013. The review application was
issued on 1 February
2013. At that stage the main application had not
been enrolled.
20. Although it is in the public interest that
liquidation proceedings be finalized without undue delay, the
liquidators themselves
did not act with urgency in this matter. The
enquiry before the assistant master took place in August 2011. The
was a further enquiry
scheduled for May 2012. The main application
was only lodged on 7 September 2012. Notice of intention to oppose
was given on 25
September 2012. The record of the further enquiry,
that is the proceedings of May 2012, was only produced in November
2012. Thereafter
no further steps were taken by the liquidators until
the review application was lodged. The main application was only set
down
in April 2012. In my view the liquidators will not suffer
prejudice that cannot be compensated by an appropriate cost order if
the main application is postponed.
21. The purpose of the application for the postponement
is for the finalization of the review application. I have already
indicated
that the outcome thereof is relevant in respect of the main
application. If the applicant is successful and the enquiry is set
aside, there is a reasonable prospect that a large section of the
founding affidavit of the liquidators might be struck out. There
is a
likelihood that Garcao will be prejudiced if he is required to answer
to the founding affidavit if there is a reasonable prospect
of
success in the review application.
22. The prospects of success in the review application
is a relevant factor in the consideration of the interlocutory
application.
I do not deem it necessary or proper though to deal with
the merits of the review application in depth, save in as far as set
out
below.
22.1. Mr Zietsman submitted that there is no reasonable
prospect of success in the review application.He,
inter alia
,
submitted that the decision to authorise the enquiry was made by the
court and not the master and this decision is not susceptible
to
review. In terms of the court order of 20 June 2010, the court
extended the powers of the provisional liquidators to empower
them to
convene an investigation in terms of
section 417
and/or
section 418.
The investigation was convened by the master and presided over by the
assistant master, not the court.
22.2. Mr
Snellenburg submitted that it appears
ex
facie
the
witness summonses/subpoenas that the enquiry was an enquiry in terms
of section 417 of the 1973
Companies Act. In
terms of
section 417(1)
the
Court may summon before it, or the master may summon before him, “any
director or officer of the company or person ...”
9
22.3.
In a report dated 20 February 2013, the
assistant master specifically directs the court’s attention to
the fact that paragraph
A of the witness summons/subpoena states that
the enquiry is in terms of section 417 of the Act, although the
heading states in
terms of section 417 read with section 418. He
further points to the fact that paragraph B also makes mention that
the people are
summonsed in terms of section 417(1). Paragraphs A and
B of these documents read as follows:
“
A. TAKE NOTICE that an enquiry in terms of
section 417 of the Act into the affairs of …. has been
authorised by the Master
of the High Court, Kimberley and that such
enquiry shall be held on the dates listed in paragraph B below.
B. TAKE NOTICE that you are hereby summoned, in terms
of section 417(1) of the Act ,…”.
22.4.
It is common cause that the master did not conduct the enquiry and
that the assistant master presided over the enquiry. The assistant
master did not play any active role in the proceedings and did not
examine any witness. The liquidators were represented by an
attorney
who examined the witnesses. Mr Snellenburg submitted that only the
master could and should have conducted the enquiry.
He based these
submissions on the judgment of
Swart
& Others v Master of the High Court and Others
10
.
This matter involved an application to set aside the master’s
authorization of an enquiry in terms of section 417 and involved
the
interpretation of sections 417 and 418 of the 1973 Companies Act.With
reference to Blackman, Jooste & Evering:
Commentary
on the
Companies Act
11
Goodey
AJ concluded that authorization of the master had to be set aside.
22.5.
From the
wording of
section 417(2)(a)
it appears as if the legislation
empowers only the court or the master to examine persons summoned
before it or him.
Section 418(2)
provides that a commissioner has the
same powers of examining witnesses as the court or master who
appointed him. The court has
in inherent discretion to determine who
may attend the enquiry and interrogate the witnesses, but the master
has no such discretion.
22.6.
Mr Snellenburg submitted that it was, in
casu
,
only the master who may have examined the summoned person(s), under
oath or affirmation, either orally or by way of written
interrogatories.
12
In
casu
the
assistant master presided in the proceedings. He did not play any
role and did not ask questions. During the enquiry, the examination
of the witnesses was conducted by an attorney who represented
the
liquidators.
Even it is accepted that the assistant master was appointed as a
commissioner in terms of
section 418
, it was his main duty to examine
the witnesses.
In
Receiver
of Revenue, Port Elizabeth and Others v Jeeva and Others
13
Harms
JA stated that the commissioner
“
...is the
person who conducts the enquiry. It is he who has to act in a
quasi-judicial capacity. He has the main duty to examine
the
witnesses. He has to regulate and control the interrogation. Should
he fail in his duty to apply the procedural fairness appropriate
to
this forum, an aggrieved party may approach the Court for suitable
relief”
.
22.7. With regard to the procedural fairness of the
enquiry, it is common cause that the applicant in the interlocutory
application
was not afforded opportunity of a reply after
cross-examination. It is also alleged that he was not given the
opportunity to re-examine
any of the other witnesses.Theseomissions
and the effect thereof constitute a valid point for argument during
the review proceedings.
22.8. Mr Zietsman submitted that
the review application was not lodged timeously
. From the
notice of motion in the review application it appears that Garcao
seeks condonation for non-compliance with the time
frames and the
extension of such time frames, in as far as it may be necessary. This
is a matter to be considered by the review
court.
23. The master,
prima facie
,
appears to have acted in terms of section 417 of the 1973
Companies
Act. If
this is so, he should have conducted the enquiry. I am not
convinced that the decision
Swart
& Others v Master of the High Court and Others
supra
is wrong. If the assistant master was
appointed as a commissioner in terms of
section 418
, there is a
reasonable prospect that the review court might find that the
assistant master then should have conducted the enquiry
and not
merely presided over the enquiry in the manner in which he did.
24. I deem it in the interest of justice that main
application be postponed pending the finalization of the review
application.With
regard to the costs, Mr Snellenburg submitted that
the liquidators should bear the costs of the unsuccessful opposition
of the
interlocutory application. I am of the view that
reasonableness of the opposition of the interlocutory application
should only
be assessed after finalization of the review application
and that the costs of the interlocutory applicationshould therefore
be
reserved.
25. I make the following order:
1. THE APPLICATION UNDER CASE
NUMBER 1559/2012 IS POSTPONED
SINE
DIE
,
PENDING THE FINALIZATION OF THE REVIEW APPLICATION UNDER CASE NUMBER
185/2013.
2. THE COSTS IN RESPECT OF THIS
APPLICATION ARE RESERVED.
_________________________
S L ERASMUS
ACTING JUDGE
NORTHERN CAPE
DIVISION
For
the Applicant (interlocutory application) :
Mr Snellenburg
On
instructions of De Jager Attorneys, Kimberley
For
the First - Fourth Respondents:
Mr Zietsman SC
On
instructions of Adrian B Horwitz and Associates, Kimberley
1
Annexure
‘A8’ in the main application: Vol 1 p 72 - 75
2
Main
application: Vol 1 p 10 par 1 to p 18 par 7.3.4
3
Main
application: Vol 1 p 29 par 10 to p 57 par 11.10
4
Main
application: Vol 2 p 103 to Vol 5 p 501
5
Main
application: Vol 1 p 57 par 12.1
6
Elher
(Pty) Ltd v Silver
1947
(4) SA 173
(W)
; Shephard v Tuckers Land & Development
Corporation (Pty) Ltd (1)
1978
(1) SA 173 (W)
at 177D–E
7
2000(4)
SA 1110 (CC) par [4] and [5]
8
[2008] ZASCA 34
;
[2008]
3 ALL SA 143
SCA
9
s
417(1)
10
">
10
2012
(4)
SA 219 (GNP)
11
Revision
Service 5 p 14-480 and Swart
supra
par [5.5] to [5.6]
12
s
417(2)(
a
)
13
1996 (2) SA 573
(A) at 579
13