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[2012] ZAKZDHC 1
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Ansari and Another v Barakat and Others (5530/2011) [2012] ZAKZDHC 1 (16 January 2012)
IN THE KWAZULU-NATAL HIGH COURT,
DURBAN
REPUBLIC OF SOUTH AFRICA
CASE NO: 5530/2011
In
the matter between:
AZHAR
ANSARI
…..................................................
First
Applicant/Intervening Party
ASHRAF
MASOOD
…........................................
Second
Applicant/Intervening Party
and
NABIL
YOUSEF BARAKAT
…........................................................
First
Respondent
COPPER
SUNSET TRADING 424 (PTY) LIMITED
(IN
LIQUIDATION)
…..................................................................
Second
Respondent
ALBERT
IVAN SURMANY N.O
….................................................
Third
Respondent
HEILA
MAGDALENA HAMMAN N.O
…......................................
Fourth
Respondent
KURT
ROBERT KNOOP N.O
….....................................................
Fifth
Respondent
SANJEEV
SINGH N.O
…...............................................................
Sixth
Respondent
MASTER
OF THE SOUTH GAUTENG
HIGH
COURT, JOHANNESBURG
….......................................
Seventh
Respondent
MASTER
OF THE HIGH COURT,
PIETERMARITZBURG
….............................................................
Eighth
Respondent
In
re:
NABIL
YOUSEF BARAKAT
…....................................................................
Applicant
COPPER
SUNSET TRADING 424 (PTY) LIMITED
…....................
First Respondent
(IN
LIQUIDATION)
ALBERT
IVAN SURMANY N.O
….............................................
Second
Respondent
HEILA
MAGDALENA HAMMAN N.O
…........................................
Third
Respondent
KURT
ROBERT KNOOP N.O
...........................................................
Fourth
Respondent
SANJEEV
SINGH N.O
…..................................................................
Fifth
Respondent
MASTER
OF THE SOUTH GAUTENG
HIGH
COURT, JOHANNESBURG
…..............................................
Sixth
Respondent
MASTER
OF THE HIGH COURT,
PIETERMARITZBURG
…............
…..........................................
Seventh
Respondent
______________________________________________________________
J U D G M E N T
______________________________________________________________
KOEN
J
:
Introduction
[1] Before me are two applications,
namely:
(a) an application by the first and
second intervening parties to intervene in the application for the
compulsory liquidation of
Copper Sunset Trading 424 (Pty) Limited
(hereinafter referred to as ‘the first respondent ’);
(b) an application for the compulsory
liquidation of the first respondent (‘the main application’),
to be pursued to
a final winding up order, should the application for
intervention fail.
In this judgment, the intervening
parties shall be referred to as the first intervening party and the
second intervening party and
the other parties shall be referred to
as in the main application.
Background
[2] On 12 May 2011 the applicant
launched the main application seeking the following order:
‘
1. Placing
the first respondent under final winding up in accordance with the
provisions 346 (1) (e), alternatively 346 (1) (b)
and/or (c) of the
Companies Act 61 of 1973 as amended (‘the Act’).
2. To the extent that it is necessary
to do so, directing that the second and third respondents be
appointed as the joint provisional
liquidators of the first
respondent.
3. Directing that the cost of this
application be costs in the winding up of the first respondent.
4. Further and/or alternative relief.’
[3] In the main application the
applicant alleges
inter alia
that at all material times:
(a) he was a member of the first
respondent, holding forty-five percent of the shares in the first
respondent, in accordance with
a share certificate, annexure ‘NB2’
dated ‘04/12/2003’;
(b) he was a loan creditor of the
first respondent in the sum of USD1,000,387.00, being a loan advanced
by way of payments to various
of the first respondents suppliers
identified by the first intervening party;
(c) the first intervening party was
the holder of forty-five percent of the shares in the first
respondent, the remaining 10% of
the shares being held by Nabil
Darwish;
(d) the first intervening party
represented to the applicant that he, the first intervening party,
was the sole director of the
first respondent. A company searched
subsequently revealed that it was the second intervening party, and
not the first intervening
party who was reflected as the sole
director of the first respondent in those records;
(e) the applicant never had any
dealings with the second intervening party nor had the second
intervening party ever been mentioned
to him;
(f) the first respondent had been
placed under voluntary winding up resulting from a special resolution
to that effect registered
with the Registrar of Companies on 7
February 2008 in terms of s 351 of the Act;
(g) the first respondent was
represented by the joint provisional liquidators of the first
respondent, being the second and third
respondents appointed by the
sixth respondent, the Master of the High Court, Johannesburg, and the
fourth and fifth respondents
appointed by the seventh respondent, the
Master of the High Court, Pietermaritzburg;
(h) The first respondent at the time
of the voluntary winding up, carried on business from 31 Silver Oak
Avenue, Overport, Durban,
which is also his registered address.
[4] On 7 June 2011 Singh A J granted
an order, essentially as prayed in the main application, but adding
to the terms of the order
prayed in the Notice of Motion, in the
following terms (with typographical errors corrected):
‘
1. That the
1
st
Respondent is placed under provisional winding up in accordance with
the provisions of Section 346 (1) (e) of the Companies Act,
Act 61 of
1973 as read with Section 9 of schedule 5 to the
Companies Act, No 71
of 2008
.
2. That the 2
nd
and 3
rd
Respondents are appointed as the joint provisional liquidators of the
1
st
Respondent pending the return date referred to below.
3. That the costs hereof shall be
costs in the application.
4. Prayers 1, 2 and 3 aforesaid shall
operate as a provisional order pending the return day of this
application on 28th June 2011.
5. That the Applicant is directed to
effect service of this provisional order and of the application on:
5.1 the 5th respondent;
5.2 Azhar Ansarl;
5.3 Asharaf Masood;
5.4 Nabil Darwish;
But insofar as Darwish is concerned
service is effected on him by way of transmission thereof (to) his
last known e-mail address
and/or fax number.’
[5] On 26 June 2011 the intervening
parties launched a substantive application to intervene under the
same case number (‘the
Intervention Application’).
[6] The relief claimed in the
intervention application is as follows:
‘
1. THAT
AZHAR ANSARI and ASHRAF MASOOD hereinafter referred to as the First
and Second Intervening Parties be and are hereby granted
leave to
intervene in these proceedings and that they become the Eighth and
Ninth Respondents in these proceedings respectively;
2. THAT NABIL YOUSEF BARAKAT, the
Applicant in the main proceedings, and the First Respondent in this
application, be directed to
pay the costs of this intervention on the
scale as between attorney and client;
3. THAT paragraph 2 read with
paragraph 4 of the order granted on 7 June 2011 be and is hereby
reconsidered and set aside
alternatively
be and is hereby
rescinded and set aside
alternatively
be and is hereby struck
out as being part of any provisional order operating in this matter;
4. THAT the costs of striking out
paragraph 2 and its operation in terms of paragraph 4 of the order
dated 7 June 2011 be and is
hereby costs in the cause of the
application save and except in the event of it being opposed in which
event that the party opposing
be ordered to pay the costs of this
application;
5. THAT the application be and is
hereby adjourned sine die pending the outcome of the review
application against the Master of
the South Gauteng High Court,
Johannesburg, (this Sixth Respondent in the main application) to
review and set aside his decision
to appoint ALBERT IVAN SURMANY
N.O., the Second Respondent in the main application and HEILA
MAGDALENA HAMMAN N.O. the Third Respondent
in the main application,
as liquidators in COPPER SUNSET TRADING 424 (PTY) LTD (IN
LIQUIDATION), the First Respondent in the main
application, such
review to be instituted within 30 day of the grant of this order;
6. THAT the intervening parties be and
are hereby granted leave to file opposing affidavits to this
application after final determination
of the review referred to in
paragraph 5 above;
7. THAT this Honourable Court makes
such costs order and it deems meet;
8. Further and/or alternative relief.’
[7] On the return date of the
provisional order, the liquidation application again came before
Singh A J, who granted the following
order:
‘
1. That the
provisional order of winding up of the First Respondent in accordance
with paragraph 1 of the Court Order dated 7 June
2011 is extended
until 1 August 2011.
2. That the application to intervene
by Azhar Ansari and Ashraf Masood is adjourned to 1 August 2011.
3. That the applicant is directed to
deliver its opposing affidavits in the intervention application on or
before 13 July 2011.
4. That the First and Second
Intervening Parties are directed to file their replying affidavits in
the intervention application
on or before 26 July 2011.
5. That a copy of this order shall be
published on or before the 23
rd
day of July 2011 once in
the Government Gazette and once in a daily newspaper published in
Durban and circulating in KwaZulu-Natal.
6. That paragraph 2 of the Court Order
dated 7 June 2011 be and is hereby reconsidered and set aside.
7. That paragraph 4 of the Court Order
dated 7 June 2011 be and is hereby amended by the deletion of the
reference to “2”
therein.
8. That the Master of the High Court,
Durban, is directed to forthwith appoint a provisional liquidator
and/or provisional liquidators
as liquidators to the First
Respondent.
9. That all questions of costs
relating to the appearance on 28 June 2011 are reserved.
[8] Thereafter on 8
th
August 2011, the intervention application was adjourned to the
opposed roll and the provisional order of winding up extended
accordingly.
The Test for
intervening as a Party
:
[9] A party seeking
to intervene in proceedings can either do so in terms of rule 12 of
the Rules of Court, or in terms of the common
law
1
.
[10] A party seeking leave to
intervene must prove that:
(a) he or she has a direct and
substantial interest in the subject matter of the litigation which
could be prejudiced by the judgment
of the court; and
(b) that the
application is made seriously and is not frivolous, and that the
allegations made by the applicant to constitute a
prima
facie
defence
to the relief sought in the main application
2
.
The test to be
applied in determining whether or not a
bona
fide
defence
to the main application has been demonstrated is the same as the one
that applies to warding off summary judgment
3
.
The submissions of the
Intervening parties:
[11] Mr Findlay SC (with him Mr
Harrison) for the intervening parties submit, (in summarised form,
and not necessarily in the same
order), that:
(a) The intervening parties have a
direct and substantial interest in the relief claimed which is self
evident from the terms of
the order granted by Singh AJ requiring
that notice be given to inter alia the intervening parties, also
because the applicant
made defamatory comments of them;
(b) The intervening
parties should in any event have been joined as respondents in the
main application, arising from practice note
8.1.1.1 of the Practice
Manual of the KwaZulu-Natal Division of the High Court read with
Ex-parte
Three Sisters (Pty) Limited
4
and practice note
11 read with
Umthimkhulu
v Rampersad and Another (BOE Bank Limited Intervening Creditor)
5
;
(c) Paragraph 5 of the order of 7 June
2011 directing that the order and papers be served
inter alia
on the intervening parties, invited the intervening parties to become
parties to the litigation.
(d) A party who
obtains leave to intervene is not restricted merely to opposing on
the merits but may raise points or objections
in
limine
,
unless his rights are specifically curtailed
6
.
With the court on 28 June 2011 amending the order granted on 7 June
2011 to ensure that the winding up occurred in accordance
with the
provisions of the practice in this division, as foreshadowed in
paragraph 3 of the Notice of Motion claiming leave to
intervene, the
intervening parties’ intervention had already, to such extent,
been successful in ensuring that the error
was corrected, and they
should be awarded their costs.
(e) The mere fact that the
intervention is opposed by the applicant demonstrates the very reason
why the intervening parties should
be granted leave to intervene.
These submissions will be considered
below.
Have the intervening parties
shown that they have a direct and substantial interest in the main
application
:
(a)
Do the terms of the
court order directing service of the papers on the intervening
parties and inviting them to intervene per se
have the effect of
conferring upon them a direct and substantial interest:
[12] The court order of 7 June 2011
provided that inter alia the intervening parties be given notice of
the application. That order
did not grant them leave to intervene,
nor did it have the effect of joining them as parties.
[13] In deciding whether to grant a
particular order or not, a court exercises a judicial discretion. In
many instances, as a matter
of practice or substantive law or for
other reasons, a court, in this division, may require that notice be
given not only the respondent,
but also interested persons generally,
to show cause why a particular order should not be granted, for
example:
(a) where a provisional liquidation or
sequestration order is issued and not only the respondent, but also
all other interested
persons are called upon to show cause by a
particular date why a final order should not be granted; or
(b) where a court directs that some
notice, whether formal notice by service by a sheriff, or informal
notice by pre-paid registered
post, be given to persons specifically
identified by name or by class in the order. This may be done due to
a variety of factors,
including that, on what is disclosed in the
founding papers, the court has identified the particular persons as
potentially having
an interest which might be affected by the relief
claimed. Examples abound but include for example a shareholder or
director of
a company or a director in a winding up application, or a
person to whom improper conduct may have been attributed and/or which
may be defamatory of his or her reputation insofar as relevant to the
issues arising in the proceedings.
[14] The instances referred to in
paragraphs 13 (a) and (b) above, simply recognize
prima facie
that such parties, whether identified by name or class, may have an
interest in the litigation to which they are not parties. Their
interest is however not such that in their absence there would be a
fatal non joinder. Indeed should they elect not to intervene
in the
proceedings after receiving such notification, any subsequent relief
granted against will not be
res judicata
against them.
.
[15] Receiving such notification does
not automatically make them parties to the litigation with reciprocal
rights and obligations
against the existing parties to the
litigation. If these persons, having received notice of the
litigation, object to or support
the relief claimed sufficiently
strongly as wanting to advance their views and submissions before the
court finally adjudicating
on the matter, whether it be on the merits
or some point or objection
in limine
, fairness to the existing
parties to the litigation requires that the proceedings to which they
are parties, not be delayed or
burdened by admitting further parties,
unless these persons are able to persuade a court that they have a
sufficiently direct and
substantial interest in such litigation and
that their intervention would be bona fide and not frivolous.
[16] The fact that notice was required
to be given to inter alia the intervening parties, whatever the
motivation for requiring
such notice, does not elevate them
simpliciter to the status of co-respondents, as the intervening
parties wish to become in the
main application.
[17] If interested persons are called
upon to show cause why a winding up order should not be granted, it
serves as an invitation
to, for example, a director or shareholder of
the respondent who might want to place his views before the court
hearing the winding
up order, to do so, but unless it is agreed
between the parties that he or she has a sufficient substantial
interest in the litigation
and that he should be heard, he, in most
instances, would be required formally to apply for leave to
intervene, proving such direct
and substantial interest, and only
after obtaining the requisite leave, then become a party to the
litigation.
[18] To invite
interested persons to show cause, or to specifically require notice
of an application to be given to specifically
identified persons, but
then to require them to have a direct and substantial interest which
would justify their elevation to that
of parties to the litigation,
is, ‘not blowing hot and cold’
7
.
[19] Having been considered as
deserving of being given notice of the application does not per se
confer or establish a direct and
substantial interest. The person
receiving such notice must satisfy this court that he or she has such
an interest based on some
factual premise founding such an interest.
(b)
Do the relationships of the
intervening parties to the first respondent establish a sufficiently
direct and substantial interest
to entitle them to leave to
intervene:
[20] This is often also referred to as
the parties’ locus standi; that is legal standing in the sense
of having a sufficiently
direct and substantial legal interest in the
subject matter of the litigation.
.
[21] The high water mark in the
founding affidavit in support of the intervention application is the
ipse dixit of the intervening
parties that they have a direct and
substantial interest. They do not however state what this direct and
substantial interest is.
Neither the first nor the second intervening
party dealt with the issue of any shareholding or directorships in
the first respondent
in the affidavit in support of the intervention
application. During argument, the intervening parties however
submitted that recourse
should also properly be had to the founding
affidavit in the main application to determine whether the
intervening parties have
a direct and substantial interest. I shall
accept that it is competent to do so.
[22] The founding affidavit in the
main application alleges that the first intervening party is a
shareholder of the first respondent.
It further states that the
second intervening party might, at best for him, be a director of the
first respondent based on what
is registered in the office of the
Registrar of Companies.
[23] Mr Findlay also contended, with
reference to the financial statements of the first respondent for the
year ended 28 February
2007 annexed to the founding affidavit in the
winding up application, reflecting a shareholders loan owing to the
first intervening
party of R1 500 000 at 28 February 2007, that the
first intervening party also has
locus standi
as a creditor of
the first respondent. Nowhere is it however independently confirmed
under oath by the first intervening party
that he is a loan creditor
of the first respondent. More specifically, assuming that the first
intervening party might have been
a loan creditor at 28 February
2007, nowhere is it confirmed under oath that he is still a creditor
at present, and if so, in what
amount. The loan amount reflected in
the 2007 financial statements, assuming it to be correct as it simply
appears in financials
which although annexed by the applicant are
unsigned statements and alleged to have been prepared by the first
intervening party,
might for example have been repaid in the interim.
[24] The reliability and correctness
of this financial statement is furthermore, in any event, open to
doubt. Although it also reflects
the applicant as holding a
shareholders loan of US dollars 1 000 387, which at an exchange rate
at the time of R6,04 converted
to R6 420 337, the intervening parties
in the intervention application have disputed the existence of this
loan and that it is
a shareholders loan, contending that the
applicant had received consideration for any such monies that were
advanced by him in
the form of shares held by the applicant in the
first respondent. The accuracy and the reliability of the very
document now sought
to be relied upon by the intervening parties for
the status of the first intervening party as an alleged loan
creditor, has thus
been questioned by the intervening parties
themselves. In these circumstances, particularly in the absence of a
clear and unambiguous
allegation on oath that the first intervening
party still is a creditor of the respondent, I am not persuaded that
the first intervening
party has proved on clear, uncontroverted,
credible evidence that he has
locus standi
as a creditor of
the first respondent.
[25] I shall accept, based on the
contents of the founding affidavit in the main application that the
first intervening party is
a 45% member of the first respondent, that
the first intervening party has locus standi as such to pursue the
application for intervention.
[26] The position of the second
intervening party as the sole director of the first respondent is
extremely tenuous. The allegations
do not go beyond the applicant in
the founding affidavit in the main application stating that he had
been advised by the first
intervening party that the latter was the
sole director of the first respondent, but that a subsequent company
office search revealed
the second intervening party as the sole
director of the first respondent, not the first intervening party.
This came as a surprise
to the applicant as he had never had any
dealings with second intervening party, nor was the second
intervening party ever mentioned
to the applicant. The
locus
standi
of the second intervening party as a director of the first
respondent has not been established by the intervening parties on a
balance of probability on clear and satisfactory evidence.
[27] But, even if I am wrong in that
regard, it nevertheless seems to me that the application for
intervention falls to be dismissed
on other grounds, not only in
respect of the second intervening party, but also in respect of the
first intervening party. These
will be considered further below.
(c)
Whether the
intervening parties should and ought to have been joined as
respondents in the winding up application
:
[28] Essentially the contention here
is that the failure to join the two intervening parties is akin to a
fatal non- joinder. Reliance
is placed by the intervening parties on
inter alia practice directive 8.1.1.1 and the decision in
Ex parte
Three Sisters (Pty) Limited
(supra).
[29] The
Ex parte Three Sisters
decision dealt with the position where a company resolves to apply to
court for its own compulsory winding up. The present application
is
not such an instance. Practice directive 8.1.1.1 accordingly does not
find application.
[30] But even if it did, creditors
wishing to intervene would, in the absence of agreement, be required
to satisfy the court that
they were entitled to intervene.
The order of 28 June 2011:
[31] On the return day of the
provisional winding up order, the court had a discretion which it had
to exercise namely, whether
to discharge the provisional order, or to
extend the provisional order further and if the latter, the terms on
which it might be
extended.
[32] The reference in paragraph 6 of
the order of 28 June 2011 that paragraph 2 of the original order was
‘reconsidered’,
should not be construed as the result
following after a formal reconsideration application was considered.
There was no formal
application for reconsideration of the
provisional order in terms of rule 6(12)(c) by any of the parties to
the litigation at that
stage which was adjudicated upon that day. The
Honourable Judge might have perused the application to intervene by
that time, he
might have had certain matters pointed out to him
during argument, he might even have raised the correctness or
desirability of
paragraph 2 of his original order mero motu. Whatever
the motivation for paragraph 2 of the original order being
‘reconsidered’
and paragraph 4 being amended, the learned
Judge in extending the provisional order further, was entitled to
stipulate and amend
the conditions upon which this would be done.
[33] The intervening parties had not
yet however at that stage been granted leave to intervene. That much
is patently clear from
par 2, 3 and 4 of the order dated 28 June
2011. Indeed the relief that leave be granted to intervene in
paragraphs 1 and 2 of the
application to intervene, was framed as
separate and distinct from that relating to the points
in limine.
The application for leave to intervene and the costs order
pertaining thereto were formulated as paragraphs 1 and 2 of the
application
to intervene. The points
in limine
and the costs
order relating thereto, form the subject matter of paragraphs 3 and 4
of the application to intervene. But the
in limine
objections
could and should only have been heard at the instance of the
intervening parties once they were admitted as parties
to the
litigation.
[34] The fact that the learned Judge
amended the terms upon which the provisional order was extended, to
in effect take account
of what was foreshadowed in the
in limine
point and objections of the intervening parties, does not necessarily
mean that the ‘intervening parties intervention had
already
been successful … to ensure that … the second and third
respondents are not appointed joint provisional liquidators
in the
liquidation.’ They were not parties to the litigation prior to
them being granted leave to intervene, which at that
stage had not
yet occurred. Accordingly, they cannot succeed with a claim for costs
either.
[35] In any event, what prompted the
learned Judge to amend the original order as he did on the 28 June
2011 is not clear. Neither
the leading counsel for the intervening
parties nor the applicant was present on that day. Junior counsel for
the intervening parties
was present and advised through Mr Findlay
that his recollection was that the issue of the possible irregular
appointment of the
second and third respondents was argued, or at
least alluded to during some argument presented on that day. Any such
argument should,
with respect, not have been entertained where the
intervention application was opposed and the opposed hearing not
before him.
[36] All questions of costs relating
to the appearance on the 28 June 2011 were reserved in terms of
paragraph 9 of the order of
28 June 2011. The intervening parties
have not persuaded me that they had advanced a basis upon which the
appointment of second
and third respondents was necessarily
irregular. They were in any event at that point not yet parties to
the litigation having
not yet been granted leave to intervene. On
what is before me, the applicant never conceded the relief in
paragraphs 3 and 4 of
the application to intervene. The order the
learned judge granted on the 28 June 2011 in fact gave effect to what
is claimed in
paragraph 3 of the Notice of Motion in the application
to intervene, but on what grounds he did so, is not clear.
[37] That a party who obtains leave to
intervene is not restricted merely to opposing on the merits but may
raise points or objections
in limine,
unless his rights are
specifically curtailed, is undoubtedly a correct statement of the
law. However, it is a power open only to
a party who has obtained
leave to intervene. Prior to obtaining leave to intervene, there is
no lis between a party who is seeking,
but still has to be granted,
leave to intervene and the existing parties to the litigation. The
objections raised by the intervening
parties to paragraphs 2 and 4 of
the original order of 7 June 2011, clearly would qualify as such
points or objections
in limine
which they may raised once they
were granted leave to intervene.
Whether the intervention
application is made bona fide and seriously and discloses a
prima
facie
defence to the relief in the main
application, or whether it frivolous.
[38] It is not stated clearly by the
intervening parties whether their intention is to support or oppose
the main application.
[39] A reading of the papers, notably
the concluding paragraph of the replying affidavit where it is stated
that the replying affidavit
“is in no way intended to be an
opposing affidavit…. (w)e simply seek leave to file such an
affidavit”, would
suggest that they intend opposing the main
relief claimed. However in the founding affidavit in support of the
application to intervene,
the concern expressed by the first
intervening party is that “the applicant is trying to hi-jack
the liquidation proceedings
in order to avoid the investigation and
dealings into his conduct in the matter”, which together with
an allegation elsewhere
in the replying affidavit that “it is
indeed the applicant who is being duplicitous”, would suggest
that the intervening
parties also want the first respondent wound up,
specifically that they desire some investigation into the applicant’s
conduct,
such as could follow upon a compulsory winding up order.
[40] Interpreted generously, it
appears that the intention of the intervening parties to intervene in
the main application is confined
to the following:
(a) to dispute the applicants claim as
a loan creditor;
(b) to correct certain alleged
irregularities in the order of the 7 June 2011 relating to the
appointment of the second and third
respondents in the main
application;
(c) to maintain that the applicant
should have followed a different procedure to the compulsory winding
up of the first respondent.
The question arising is whether the
pursuit of these objectives is not frivolous or irrelevant to the
main application.
[41] Any alleged irregularities
relating to the appointment of the second and third respondents, have
already been corrected by
the learned judge in his order of the 28
June 2011.
[42] Perhaps Justice has the
intervening parties to thank for highlighting and drawing attention
to those parts of original order
providing for the immediate
appointment of the second and third respondents as provisional
liquidators, and causing that part of
the order to be amended in the
order subsequently issued on the 28 June 2011. But the fact remains
that:
(a) those parts of the order, which
also form the subject matter of the relief claimed in paragraphs 3
and 4 of the intervention
application, have been altered;
(b) any such alleged irregularity was
corrected before the intervening parties had been granted leave to
intervene and became parties
to the litigation.
[43] No purpose will be served in now
granting leave to the intervening parties to intervene to claim
relief, which has already
been incorporated in an amended order and
which therefore is no longer in issue.
[44] Earlier in
this judgment I have referred to the dilemma of the third intervening
party in seeking to rely on the financial
statements of the first
respondent as at 28 February 2007 to establish his own
locus standi
as loan creditor,
but which,
ex
facie
the
document, also reflects the applicant as a loan creditor in the
amount alleged by the applicant, but which loan the intervening
parties then dispute.
[45] At the level of probability, the
probabilities certainly lean heavily on balance in favour of the
contention by the applicant
that he is in fact a loan creditor of the
first respondent.
[46] However and in
any event, the
locus
standi
of
the applicant in the main application is not confined to him having
been a loan creditor. If his status as a loan creditor was
the only
basis on which the applicant claimed
locus
standi
in
the main application, the position might (but probably would not)
have been different, but the allegations in the founding papers
are
also sufficiently wide to entitle the applicant to found his
application for the winding up of the first respondent on his
membership of the first respondent, as provided in section 346 (1)
(c) of the Act No. 61 of 1973. The applicant has been registered
as a
member for a period of at least six months immediately prior to the
date of the application
8
.
The share certificate relating to his shareholding was issued to him
on the 4 December 2003.
[48] To burden the
estate with the costs of a full application, probably with oral
evidence, to determine whether the applicant
is in fact a loan
creditor in the first respondent, when there are other grounds upon
which the application for the compulsory
winding up of the first
respondent should follow and cheaper, more expeditious administrative
procedures exist to resolve the status
or otherwise of potential
creditors, would not be in the interest of justice to grant leave to
intervene on such basis alone. The
applicant’s allegations as
to his loan and the amount thereof will not be binding on the
liquidator of the first respondent
9
.
Should the intervening parties
be allowed to intervene to oppose the winding up on the basis that
the applicant should have extended
the powers of provisional
liquidators under s 388 rather than proceeding under s 346:
[49] There is no
reason in law which compels the applicant to pursue relief in terms
of s 388 of the Act, as opposed to that pursued
in the main
application in terms of s 346
10
.
[50] The choice to
proceed either in terms of s 388 or 346 was that of the applicant, he
being
dominus
litis.
The
argument that the applicant could have proceeded only in terms of
s388, is frivolous and without merit.
[51] In either event, that is whether
the relief was claimed in terms of s 388 of the Act or in terms of s
346 (1), an application
to court would have been necessary. At best
an application in terms of s 388 might have been less costly. But
that would only be
a valid argument which could at best afford a
direct and substantial interest, if it could be said that there was
any obligation
in law upon the applicant to have pursued an
application in terms of s 388 as opposed to one in terms of s 346
(1). However s346(1)(e)
of the Act recognizes that the applicant
could apply in terms of s 346 (1) instead of bringing an application
in terms of s 388.
[52] I am accordingly not persuaded
that the intervention application is bona fide and not frivolous, in
the legal sense.
Conclusion in
respect of the intervention application
:
[53] The intervening parties have not
satisfied this court that leave to intervene should be granted. It
accordingly follows that
the application for leave to intervene
should be dismissed with costs.
The winding
up application
:
[54] It clear from
a reading of the allegations in the founding papers
per
se,
but
also when contrasted with those in the application for intervention,
that there are accusations and recriminations between the
applicant
on the one hand and the first intervening party on the other, both
holding 45% of the issued shares, of alleged wrongful,
if not
criminal conduct in regard to the affairs of the first respondent.
The first respondent is a company with only three share
holders.
Being akin to a partnership, there should be close co-operation and
trust amongst the shareholders, particularly the applicant
and the
first intervening party. Clearly the basis of any such trusts has
disappeared. The first intervening party contends apparently
for the
sole directorship of the first respondent being vested in the second
intervening party, whereas the applicant knows nothing
about that. In
the absence of any trust between the parties
11
it is clear that
the affairs of the first respondent have degenerated to a level where
it is just and equitable that it should also
be wound up in terms of
s 344 (h) of the Act.
[55] All the formalities in respect of
the winding up have been complied with. The applicant is entitled to
a final winding up order
in respect of the first respondent.
[56] There is no reason why the costs
should not follow the result and that all costs relating to the
application for the winding
up be paid from the estate of the first
respondent.
Orders granted
:
To summarise, the following orders are
granted:
(a) The application to intervene is
dismissed with costs, such costs to include any costs relating to the
application to intervene
which were reserved on the 28 June 2011.
(b) The first respondent, Copper
Sunset Trading 424 (Pty) Limited is placed under a final winding up
order in accordance with the
provisions of
s 346
of the
Companies
Act.
>
The costs relating to the winding up
application, including any costs reserved on 28 June 2011, are
directed to the costs in the
administration of the estate of the
first respondent.
DATE
OF HEARING: 21/10/11
DATE
OF DELIVERY: 16/01/12
FOR
THE INTERVENING PARTIES:
MR
A FINDLAY SC with him
MR
G M HARRISON
INSTRUCTED
BY: ASMAL & ASMAL ATTORNEYS
Ref.:
M Asmal/ss/A224/GEN
FOR
THE FIRST RESPONDENT IN THE INTERVENING APPLICATION AND THE APPLICANT
IN THE LIQUIDATION APPLICATION:
MR
A G SAWMA SC
INSTRUCTED
BY: BRIAN KAHN INC.
Locally
represented by:
GARLICKE
AND BOUSFIELD INC.
Ref.:
Victoria Mc Donald
1
Minister
of Local Government v Sizwe Development
1991
(1) SA 677
(TkGB) at 678 H;
Ex
parte Sudurhavid: In re
Namibia
Marine Resources v Ferina (Pty) Limited
1993
(SA) 737 (NmHC) at 741 g;
Shapiro
v SA Recording Rights Association Limited
(Galeta
Intervening)
2008
(4) SA 145
(W) at 150 a-b para 10 and 11.
2
Registrar
of Banks v Regal Treasury Private Bank Limited (under curatorship)
and Another (Regal Treasury Bank Holdings Limited
Intervening)
2004 (3) SA 560
W
(at 573 e-f).
Registrar
of Banks v Regal Treasury Private Bank Limited (under curatorship)
and Another (Regal Treasury Bank Holdings Limited
Intervening)
2004 (3) SA 560
W
(at 573 e-f).
3
Ex
parte
Moosa:
In re
Hassim
v Harrop-Allin
1974
(4) SA 412
T (at 416 G-H).
4
1986
(1) SA 592
(D).
5
[2000]
3 ALL SA 512.
6
Garment
Workers Union v Minister of Labour
1945
(2) PH F 69 (W) at p 104; Herbstein and Van Winsen The Civil
Practice of The High Courts of South Africa p 228.
7
To
borrow that phrase from the judgment of Lichtenberg J in
Wolhuter
Steel (Welkom) (Pty) Limited v Jatu Construction (Pty) Limited
(In
provisional liquidation)
1983
(3) SA 815
(O). What the learned Judge in that case called ‘quite
ludicrous‘, is the proposition that where a company is
provisionally
wound up, having the result that its board of
directors is divested of its control of the company, it could be
argued that those
directors would not be interested in the issue
whether a final winding up order should be granted. If the
provisional order was
to be discharged, it would have the result
that the directors be re-vested with their powers. Clearly that
consequence would
provide a direct and substantial interest
justifying their intervention to oppose the grant of a final order
of liquidation.
8
s346
(2) of the Act. However, on the strength of his membership, the
application would be confined to the grounds in s 344 (b)
(c) (d)
(e) or (h) - see s 346 (2) of the Act.
9
Swadiff
(Pty) limited v Dyke NO
1978 (1) SA 928
(AD).
10
Corigraim
Trading SA v Resora (Pty) Limited
2004
(2) SA 348
W at 351 A.
11
see
Emphy v Pacer Properties (Pty) Limited
1979 (3) SA 363
(D)