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[2012] ZAFSHC 29
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Foil Laminators CC and Others v Master of the High Court and Anther (5057/2011) [2012] ZAFSHC 29 (9 March 2012)
FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Case No: 5057/2011
In the matter between:
FOIL LAMINATORS CC
…...............................................
First
Applicant
UNIVERSAL VENEERS
CC
…....................................
Second
Applicant
ESENCO 1006 CC
….......................................................
Third
Applicant
and
THE MASTER OF THE
HIGH COURT
…....................
First
Respondent
TSIU VINCENT
MATSEPE N.O.
….........................
Second
Respondent
_____________________________________________________
JUDGMENT BY
:
KRUGER, J
_____________________________________________________
HEARD ON:
1
MARCH 2012
_____________________________________________________
DELIVERED ON
:
9 MARCH 2012
INTRODUCTION
[1] This is an
application in terms of section 408 of the 1973 Companies Act read
with
section 66
of the
Close Corporations Act 69 of 1984
for the
setting aside of the Master’s Confirmation of the First and
Final Liquidation and Distribution Account (“the
Account”)
in respect of the insolvent estate of Rendus Timbers CC (“Rendus”).
The first respondent is herein
referred to as the Master. The second
respondent is the duly appointed liquidator of Rendus. The applicants
also seek an order
that the said liquidation and distribution account
be re-opened as contemplated in
section 408.
[2] The Master abides the
decision of the court. The Master filed a report wherein he says that
the account lay open for inspection
at his office from 28 August 2009
to 14 September 2009, and during that period no objections were
lodged. On 7 June 2010, the first
applicant lodged an objection to
the account on the basis that the second respondent had not convened
an interrogation to deal
with certain undue preferences and other
issues. The Master rejected this objection after the second
respondent informed him that
he was going to proceed with litigation.
The second respondent wrote to the Master that litigation could “take
quite some
time to finalise”, and stated that there was no need
to hold over confirmation of the Account, because after completion of
the litigation a Second Liquidation and Distribution Account could be
drawn. The Master confirmed the Account on 15 March 2011.
THE LAW
[3] Section 407(4)(a) of
the Companies Act provides that a person aggrieved by a decision of
the Master to refuse an objection may
apply to court for an order
setting aside the Master’s decision within 14 days after the
dae of the Master’s decision.
That 14-day period expired on 29
March 2011. The present application was launched on 21 November 2011,
some eight months out of
time.
[4] The court can condone
the late bringing of the application where the reason for the delay
is satisfactorily explained. All that
is required is substantial
compliance (
CASSIM v THE MASTER AND OTHERS
1960 (2) SA
347
(D) at 349D – 350D). The provisions as to the 14-day period
are not peremptory and prejudice is considered (
LEIMAN v LIEF
NO
1958 (1) SA 376
(T) at 378A – E).
[5] Where a dividend has
been paid the account cannot be reopened. It appears that the receipt
of property by the applicants from
the insolvent should not be
regarded as a dividend; the applicants say they merely vindicated
their property, it was not a dividend.
Actual payment of a dividend
is required before it can be regarded as paid (
WISPECO (PTY)
LTD v HERRIGEL NO AND ANOTHER
1983 (2) SA 20
(C) at 26F –
27B, 27H).
[6] The applicants have
to establish fraud or
justus
error to have the Account
re-opened (
CRONJE NO AND OTHERS v HILLCREST VILLAGE (PTY) LTD
AND ANOTHER
2009 (6) SA 12
(SCA) par 37).
THE FACTS
[7] In September 2008 the
second applicant, Universal Veneers CC launched a liquidation
application against Rendus Timbers CC trading
as Timbaboard
Bloemfontein (“Rendus”). A provisional liquidation order
was granted on 9 October 2008, and a final order
on 20 November 2008.
[8] According to what is
set out in counsel’s opinion dated 23 December 2010, for the
period ending 31 July 2008, Rendus had
four major creditors, which it
owed the amounts stated below:
(i) First applicant, Foil
Laminators CC – R684 813,00
(ii) Second applicant,
Universal Veneers CC – R1 145 830,00
Third applicant, Esenco
1006 CC – R58 160,00
Sonae Novaboard –
R253 097,00.
[9] According to the
First and Final Liquidation and Distribution Account, the applicants
were not paid the following amounts:
(i) First applicant –
R657 526,17
(ii) Second applicant –
R405 453,82
(iii) Third applicant –
R48 072,20
(iv) Sonae Novaboard was
settled in full during the six-month period prior to the liquidation
of Rendus.
[10] During the period
July 2008 to September 2008 Rendus paid R438 006,26 to Sonae
Novaboard. During that same period no payments
were made to first and
third applicants. The second applicant received R600 000,00 in that
period. The second applicant, Universal
Veneers, was the largest
creditor at the end of July 2008.
[11] On 10 May 2009 the
second respondent, the liquidator, certified the First and Second
Liquidation and Distribution Account.
[12] On 22 April 2010 the
second respondent addressed a letter to the first applicant, stating
(incorrectly) that the Liquidation
and Distribution Account had been
confirmed by the Master, demanding payment of a contribution by first
applicant of R81 460,07.
[13] On 1 June 2010,
first applicant’s attorney lodged an objection to the Account
with the second respondent because an interrogation
to deal
inter
alia
with undue preferences had not been convened.
[14] On 22 June 2010, the
second respondent informed the Master of the objection, and stated
that an enquiry was to be held. He
stated that the interrogation
would have no effect on the dividend.
[15] In a letter, dated
13 July 2010, the first applicant informed the Master that it
persists with its objection.
[16] The interrogation
was apparently held on 26 July 2010.
[17] On 10 August 2010,
the second respondent informed first applicant’s attorney that
the inquiry had been finalised and
requested payment of the account
of “Blue Platinum”, which evoked the response on 20
August 2010 as to who “Blue
Platinum” was.
[18] On 23 August 2010,
the second respondent requested the confirmation of the first
applicant that he could proceed with the confirmation
of the account.
[19] On 23 August 2010,
the second respondent informed first applicant’s attorney that
Blue Platinum were forensic auditors.
[20] On 25 August 2010,
the Master requested counsel’s opinion on undue prefaces.
[21] On 5 November 2010,
the second respondent asked the Master to confirm his account pending
counsel’s opinion.
[22] On 15 March 2011,
the Master confirmed the Account.
[23] On 10 May 2011, the
second respondent informed first applicant’s attorney that the
Master had confirmed the Account and
requested payment of the
contribution within seven days.
[24] On 23 June 2011,
first applicant’s attorney informed the second respondent that
his Liquidation and Distribution appeared
to be incorrect for a
number of reasons. (This can be called the second objection.)
[25] On 21 November 2011,
the applicants launched the present application for review.
APPLICANT’S
CONTENTIONS
[26] The applicants want
the second respondent to first claim the amounts from Sonae Novaboard
before the Account is confirmed by
the Master. Mr Williams says that
the claim against Sonae Novaboard is an asset in the estate, and the
Account should not have
been confirmed whilst claims with a prospect
of success are contingent claims in the estate. Applicants are the
only proven creditors.
It will be prejudicial to them to have to pay
a substantial contribution of R81 460,07 at this stage, only to be
reimbursed at
a later stage when litigation against Sonae Novaboard
has been finalised. The second respondent’s prejudice is that
he will
have to wait for payment of his fees.
SECOND RESPONDENT’S
CONTENTIONS
[27] Mr Gilliland, for
the second respondent, says that the applicants have not
satisfactorily explained their delay. He points
out that at best for
the applicants by 10 May 2011 they were apprised of the fact that the
Master had confirmed the account. Instead
of approaching the court,
they raised new objections. The applicants’ case is that they
were not made aware that the Account
was laying for inspection with
the Master, after their attorney had lodged complaints.
CONDONATION
[28] It is common cause
that this application is some eight months out of time. There is no
prayer for condonation. Mr Gilliland
refers to the following dates:
(i) 23 December 2010:
Counsel’s opinion obtained, stating that there is a claim
against Sonae Novaboard.
(ii) 15 March 2011:
Liquidation and Distribution Account approved by the Master.
23 June 2011:
Applicants’ attorneys write to the second respondent and state
that his Liquidation and Distribution Account
is incorrect,
inter
alia
, because the second respondent’s fees have been
calculated incorrectly. (Mr Gilliland describes this as the second
objection,
the first having been the objection that no inquiry was
held).
25 July 2011: Second
respondent informs applicants’ attorney that the Master
confirmed the Account on 15 March 2011. (This
is the latest date on
which the applicants were aware of the confirmation of the Account).
21 November 2011: This
application is launched.
[29] In the Founding
Affidavit, the applicants do not address the delay from July to
November 2011 in bringing the application.
Mr Williams does not deal
with the late bringing of the application.
MERITS
[30] On the merits, Mr
Gilliland says that there are only three creditors in this insolvent
estate, being the three applicants.
After the litigation against
Sonae Novaboard, they will still be the only three creditors,
therefore the percentage of their dividend
will not change although
the quantum thereof may be different. Mr Williams disagrees. He says
if the second respondent succeeds
in the claim against Sonae
Novaboard, the latter then becomes a creditor in the insolvent estate
and can put in a claim. That claim
would influence the dividend.
CONCLUSION
[31] The facts of this
case are unusual. The applicants say that the second respondent is
just keen to get his fee, that is why
he asked the Master to confirm
the Account. They say it is undesirable to confirm the Account if it
has not been finalised. The
second respondent says the applicants
only started raising problems when he demanded payment of a
contribution so that his fees
could be paid. And even then they still
delayed for eight months before bringing this application.
[32] The applicants bear
the onus to convince the court that they are entitled to the relief
they seek. Their first problem is the
unexplained delay in bringing
this application – eight months is a substantial period.
[33] This is in fact an
application to review the Master’s decision to confirm the
Account. The Master knew of the pending
litigation against Sonae
Novaboard when he took the decision to confirm the account. He
accepted the second respondent’s
suggestion that at a later
stage, if need be, there could be a Second Liquidation and
Distribution Account. Courts are reluctant
to interfere with the
exercise of discretion by a specialised official.
[34] The fact that the
Master abides the decision of the court does not assist the
applicants. It is the proper attitude of the
Master not to become
involved in disputes between the parties.
[35] The delay of the
applicants in bringing the application is unexplained, and their
prejudice in having to pay a contribution
now is not of such a nature
as to call for the re-opening of the account.
[36] The application is
dismissed with costs.
_____________
KRUGER, J
On behalf of the
applicants: Adv. A. Williams
Instructed by:
Lovius Block
BLOEMFONTEIN
On behalf of the second
respondent: Adv. J G Gilliland
Instructed by:
Matsepes Inc
BLOEMFONTEIN
/EB