About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: High Court, Northern Cape Division, Kimberley
SAFLII
>>
Databases
>>
South Africa: High Court, Northern Cape Division, Kimberley
>>
2011
>>
[2011] ZANCHC 27
|
|
MEC, Roads and Public Works, NC v Vista Park Development (Pty) Ltd and Others (1522/2010) [2011] ZANCHC 27 (23 September 2011)
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 High Court, Kimberley)
Case Nr:
1522/2010
Case
Heard: 23/09/2011
Date
delivered: /09/2011
In
the matter between:
MEC, Roads
and Public Works, NC
….........................................
PLAINTIFF
and
Vista Park
Development (Pty) Ltd
….................................
1st
Respondent
Joh-arch
Investments (Pty) Ltd
…....................................
2nd
Respondent
Chavonnes
Badenhorst St Clair Cooper NO
….................
3rd
Respondent
Luke
Bernard Saffy NO
…...................................................
4th
Respondent
Donovan
Theodore Majiedt NO
…....................................
5th
Respondent
JUDGMENT
Olivier J:
In what I
will for the sake of convenience referred to as the main
application, and which was lodged in August 2010, the applicant,
the
Member of the Executive Council responsible for the Department of
Roads and Public Works in the Northern Cape Province claims
orders
confirming the cancellation of a contract between the applicant and
a joined venture consisting of the first respondent,
Vista Park
Development (Pty) Ltd, and the second respondent, Joh-arch
Investments (Pty) Ltd, for the construction of a hospital
for
mentally ill persons, and an order that the respondents vacate the
premises (where the hospital was eventually partially
constructed).
Although
notice of opposition was given on behalf of both respondents, during
September 2010, neither of the respondents initially
filed any
opposing papers.
On 6 October
2010, and therefore after the main application had already been
lodge, the first respondent was placed under provisional
liquidation, and it was finally liquidated on 3 March 2011.
In
terms of section 359 (1) (a) of the 1973 Companies Act
1
the
provisional liquidation of the first respondent resulted in the
suspension of the main application, as far as it was concerned,
until the appointment of a liquidator
2
.
When the
first respondent was placed under provisional liquidation mr Donovan
Theodore Majiedt, Mr Chavonnes Bardenhorst St Clair
Cooper and mr
Luke Bernard Saffy, to whom I will hereinafter for the sake of
convenience refer as “
the liquidators
”, where
appointed as provisional liquidators. Same persons were appointed as
final liquidators on 3 March 2011.
The
provisions of section 359 (2) of the 1973 Companies Act read as
follows:
“
(2)(a)
Every person who, having instituted legal proceedings against the
company which were suspended by a winding-up, intends to
continue
same, … shall within four weeks after the appointment of the
liquidator give the liquidator not less than 3 weeks’
notice in
writing before continuing … the proceedings.
(b) If
notice is not so given the proceedings shall be considered to be
abandoned unless the Court otherwise directs.
”
On
21 April 2011 the applicant notified the liquidators of the
intention to proceed with the main application. That notice was
clearly not within four weeks after the appointment of the
liquidators in their capacities as final liquidators
3
.
These
provisions are intended for the exclusive benefit of a liquidator,
and can therefore be waived
4
.
On 2 June 2011 the liquidators’ attorneys addressed a letter
to the applicant, without any indication of having considered
the
possibility of such a waiver, and adopted the attitude that the
applicant’s proceedings were deemed to have been abandoned
because of the applicant’s failure to furnish the liquidators
with notice within the prescribed period of four weeks.
Early in
July 2011 the applicant’s attorneys filed a notice in terms of
Rule 15 to join the liquidators as respondents in
the main
application, as well as a supplementary affidavit on behalf of the
applicant and a notice of set down in which the liquidators
were
then for the first time reflected as the third to fifth respondents
in the main application.
In the
supplementary affidavit it was indicated that, if necessary, the
applicant intended applying for an order in terms of section
359 (2)
of the Companies Act, and the grounds on which the applicant would
rely in this regard were set out. The notice of set
down already
referred to also contained, in addition to a repetition of the
relief sought in the notice of motion, a prayer for
relief in terms
of section 359 (2) (b) of the Companies Act.
The
liquidator’s response to this was to file an application, in
terms of rule 30 (1) for the notice of set down to be set
aside as
an irregular step. They contended that an abandoned application
could not be set down and that the applicant should
have lodged a
substantive application for the purposes of relief in terms of
section 359 (2) (b).
On the
initial date of hearing, 19 August 2011, it was ordered, by
agreement between the parties, that the matter be postponed
to 23
September 2011. It was further agreed, and ordered, that in the
event of the matter not being resolved by then and the
liquidators
not waiving their protection in terms of section 359 (2), the first
respondent would deliver opposing papers, to
which the applicant
would then reply. Dates for the filing of these papers and of
supplementary heads of argument, were also
agreed upon, and
incorporated into the order that was made by agreement.
It appears
that the matter has not been resolved. This is most unfortunate. It
causes a further delay in the completion of the
construction of the
hospital. The prejudice suffered by mentally ill persons and the
public in general in this province has been
described in detail in
the founding affidavit, the allegations in this regard have not been
challenged.
Be that as
it may, the first respondent has in the meantime filed an opposing
affidavit in the main application, as well as a
counter application
for the delivery of certain items, which are presently on the
premises, to the liquidators. The counterclaim
is conditional and
dependant on findings by this Court that the applicant has in fact
lodged a substantive application for the
purposes of section 359 (2)
of the Companies Act and that this Court does have the jurisdiction
to entertain the main application.
The first
respondent also applies for the condonation of its failure to file
its opposing affidavit within the period agreed upon
and ordered on
19 August 2011.
The
applicant has filed an affidavit to reply to the first respondent’s
opposing affidavit, and to oppose the counter application
and the
application for condonation.
The
condition, in the notice of the counter claim, which refers to the
jurisdiction to entertain the main application, is clearly
a mistake
en should have referred to the jurisdiction to entertain the
application in terms of section 359 (2). The jurisdiction
of this
Court to entertain the main application has never, and still is not,
challenged.
Although the
liquidators are not persisting with their application in terms of
Rule 30, they still maintain that the applicant
has not in effect
brought a substantive application for relief in terms of section 359
(2) (b) of the Companies Act. They also
now challenged this Court’s
jurisdiction to entertain the application in terms of section 359
(2) (b). In my view it would
be prudent to consider the issue of
jurisdiction firstly. Should it be found that this Court does not
have the required jurisdiction,
it would be unnecessary to decide
whether the applicant has in effect filed a substantive enough
application for these purposes.
The words
“
the Court
” in section 359 (2) (b) should be read
with, in the first place, the definition of the word “
Court
”
in section 1 of the Companies Act. The part of the definition
relevant for purposes hereof provides that the word “
in
relation to any Company …, means the Court which has
jurisdiction under this Act in respect of that Company …
”.
To determine
which Court would have jurisdiction in respect of a particular
Company regard has to be had to the provisions of
section 12 (1) of
the Act, which provides that:
“
The
Court which has jurisdiction under this Act in respect of any company
…, shall be any provincial or local division of
the High Court
of South Africa within the area of jurisdiction whereof the
registered office of the company … or the main
place of
business of the company … is situate.
”
In
Henochsberg
on the Companies Act
5
the
following is remarked as regards the jurisdiction to entertain
applications in terms of section 359 (2) (b) and other proceedings
in the course of the winding-up of a company:
At 761:
“
It
is submitted that the only Court which has jurisdiction to make the
direction
(in
terms of section 359 (2) (b))
,
where the company is in voluntarily liquidation, is the Court which
has jurisdiction in terms of section 12 (1) and, where the
company is
in compulsory liquidation the Court which ordered the company to be
wound-up; another Court, in which the proceedings
have been, or are
proposed to be, instituted, has no jurisdiction to make the direction
(
cf
Van der Harst v Wells NO
1964
(4) SA 362
(W) at 364)”
.
At 692-693:
“
Chapter
XIV contains numerous sections according powers to the Court in
various contexts. Whether the winding-up is compulsory or
voluntary,
the Court which has jurisdiction to exercise the power under s 340
(1) read with the related provisions of the Insolvency
Act …
is exclusively the Court having jurisdiction at common law in respect
of the particular defendant … Whether
the same situation
obtains in relation to the exercise of any power which is aimed at
obtaining a substantive order against a particular
defendant depends
on the provisions creating such power: it is submitted that such
situation does obtain in the case of proceedings,
eg under ss 362
(1), 362 (2), 423 or 424, but not in the case of those under, eg s
417. Subjected to the above, it is respectfully
submitted that the
only Court which has jurisdiction to exercise such power is, in the
case of a compulsory winding-up, the Court
which granted the
winding-up order, and, in the case of a voluntary winding-up, the
Court which has jurisdiction in respect of
the company in terms of s
12 (1) read with s 1 (1)
sv
‘
Court’:
It is this Court which has the power at first instance ultimately to
supervise all aspects of the winding-up …
and accordingly an
order affecting the company made at first instance by any other Court
during the course of the winding-up may
hamper the effective exercise
of such power.
Cf
the
position in judicial management (Ex Parte Pan-African Tanneries Ltd
1950 (4) SA 321
(O) at 322-323)
”
In
the
Van
der Harst
case
referred to where pending in the Cape Provincial Division, but the
application in terms of section 118 (2)
6
was
lodged in the Witwatersrand Local Division, the division in which
the particular company had its registered address or place
of
business and in which, indeed, the winding-up order in respect of
that company had also been granted. It was contended for
the
respondent in that matter that the Court in which the proceedings
were pending had ? jurisdiction to entertain such an application.
Vieyra J made reference to section 229 and section 215 of the 1926
Companies Act. There provisions were to a large extent similar
to
those in their respective successors, section 1 and section 12 of
the 1973 Act. More specifically the definition of the word
“
the
Court
”
in
section 229 of the 1946 Companies Act also contained the
introductory qualification “
In
this Act unless inconsistent with the context
”
.
Vieryra J, in rejecting the contention advanced on behalf of the
respondent, held that there was nothing in section 118 (2)
that was
“
inconsistent
”
with
the definition of “
the
Court
”
in
section 229 and that, accordingly, “
the
Court
”
envisaged
in section 118 (2) would be a Court as defined in section 229. In
terms of section 229 that Court would be the Court
“
which
has jurisdiction under this Act in respect of that Company
”
.
To determine which Court would have jurisdiction in respect of the
particular company in terms of that Act one had to have regard
to
provisions of section 215 (1) of that Act which provided that “
The
court which has jurisdiction under this Act in respect of any
company … shall be any provincial division or local division
of the Supreme Court of South Africa within the area of jurisdiction
whereof the registered office of the company … or
any place
of business of the company … is situate
”
.
The Witwatersrand Local Division was the division in which the
registered office or a place of business of that company was
situated and it would therefore generally have had the jurisdiction
required in respect of that company. As regards the jurisdiction
in
respect of an application in terms of section 118 (2) the Viera J
found that the Witwatersrand Local Division would also in
that
respect have jurisdiction:
“
The
merits of any particular action or proposed action are not an issue.
The sole issue is whether there is reasonable excuse for
the default
and it is eminently reasonable that the Court which in matters
generally under the Companies Act has jurisdiction should
likewise
deal with this particular question. It is not a question of one Court
being involved in the procedural aspect of a case
being conducted in
another Court.
7
In the
Pan-Africa Tanneries
case referred to in the second quotation
above, the Court in the Free State Provincial Division was concerned
with an application
for an order summoning a meeting to consider and
offer of composition. The company had been placed under judicial
management
in the Transvaal Provincial Division and at the time the
registered office of the company had been in that division. The
Court
rejected a submission that, because the registered office had
since then been moved to Bloemfontein, that Court had the
jurisdiction
to entertain the application:
“
It
was submitted that in terms of sec. 215 of the Companies Act this
Court did have jurisdiction to grant the order by virtue of
the fact
that the company’s registered office is now in this Province.
When, however, the company was placed under judicial
management its
registered office was in the Transvaal, and the Transvaal Provincial
Division had jurisdiction to place the company
under judicial
management. The effect of that order was to place the company under
the management of the appointed judicial managers,
‘
subject
to the supervision
’
of
that Court. The judicial managers are responsible to that Court for
the management of the affairs of the company and are in respect
of
certain duties subjected to the direction of the Master of the
Supreme Court of the Transvaal. It seems to me that any matter
effecting the management of the company or its affairs is one to be
dealt with exclusively by the Court under whose supervision
the
company is being judicially managed.
”
8
(My emphasis)
In
my view the same argument would apply in the case of a company in
liquidation. The winding-up process will be subject to the
supervision of the Master of the Division in which the winding-up
order was granted
9
,
and of the Court which granted that order.
In
Graham
NO v The Master of the Supreme Court
10
it
was held that, in “
proceedings
arising from and during the windingup of the company
”
the
Court that had made the winding-up order was “
the
proper court to consider the application
”
11
.
Although
the Court in
Goode
Durrant & Murray (SA) Ltd and Another v Lawrence
12
was
concerned with an application for sequestration, in which it was
argued that the application should be transfer from the
Witwatersrand Local Division to the Durban and Coast Local Division
on the ground that it would be more equitable and convenient
for
that division to hear the matter, the following dictum at 331A of
the report is significant for present purposes:
“
It
follows, the moment that an order for sequestration is granted, that
the Court granting the order is vested with jurisdiction
in regard to
everything that follows upon the order; all applications to Court and
the Master’s control of that estate is
absolute and even
rehabilitation must be in that
forum
.”
This
approached is supported, as far as the liquidation of companies is
concerned, by the editors of
Insolvency
Law
13
at
15-20:
“
The
Court which liquidates a company (being,
Ex
hypothesi
,
a Court within the area of jurisdiction of which the company’s
registered office or main place of business is situated)
also has
jurisdiction under the Companies Act to exercise any power accorded
thereby in relation to the administration of the winding-up.
It is
respectfully submitted that, save in relation to a review of a
decision, ruling or order of the Registrar of Companies, it
is,
indeed, the only Court which has such jurisdiction, notwithstanding
that another Court has concurrent territorial jurisdiction
with it,
since it alone has the power at first instance
ultimately
to
supervise all aspects of the winding-up, including the setting aside
of the proceedings therein.
”
In
Pollak
on Jurisdiction
14
,
it is also stated that “
As
in the case of the sequestration of the estate of a person it is
only the Court which issued the order in consequence of which
the
company is wound-up that has jurisdiction to deal with any matter
pertaining to the winding-up
”
.
Reference is also made to
Ex
Parte Bobat: In Re Kathorian Trading Co Ltd
15
,
in which mention was also made of the importance of the supervision
of a particular division as a factor when considering the
question
of jurisdiction
16
.
In
The
Law of South Africa
17
it
is also stated, with reference to the provisions of section 12 of
the Companies Act and the
Van
der Harst
case
that the proper forum for an application in terms of section 359 (2)
(b) would be the division “
within
whose area of jurisdiction the registered office or main place of
the company is situate
”
,
which would obviously also be the Court which granted the winding-up
order, “
notwithstanding
that the Court in which the action is to be continued is in another
division
”
18
.
It
is so that the wording of section 359 (2) of the 1973 Companies Act
differs from that of section 118 (2) of the 1946 Companies
Act.
Section 118 (2) required a finding “
that
there was a reasonable excuse for the default
”
,
and in the
Van
der Harst
case
this was viewed as the
“
sole
issue
”
in
an application in terms of section 118 (2)
19
.
This
requirement was omitted in section 359 (2) of the 1973 Companies
Act, leaving the Court with “
an
unfettered discretion
”
20
.
This does not, however, in my view mean that the existence of such
reasonable explanation will not still be a factor to be considered,
and it will therefore still remain “
eminently
reasonable
”
that
the Court which would generally have jurisdiction in terms of the
Companies Act, should consider this factor
21
.
The question would be whether the failure to file a notice timeously
could possibly negatively affect the winding-up process,
a process
ultimately supervised by that Court.
In
addition the Court considering such an application should “
have
regard to the interest of all interested parties, being the
creditors, liquidator and members
”
22
.
In
my view the Court which “
ultimately
”
supervises
the winding-up process, and whose jurisdiction the Master in control
of that process is situate, is the Court best
positioned to consider
these interests.
I may add,
in passing, that I have requested that the Master in Bloemfontein
furnish a report in this matter. A report has in
the meantime
provided to me. The Master, however, seems to have misunderstood the
purpose of the report. His report is of no
assistance at all,
because it does not address the interest of creditors, liquidators
and the members of the company in liquidation.
In my view
this underscores the importance of the supervision of the winding-up
process as a factor in determining the issue of
jurisdiction. The
Court which granted the winding-up order would be the Court to which
the Master in its area of jurisdiction
would in the normal course of
events report, and which would ultimately and in effect balance and
protect the interests of all
parties involved in, or potentially
effected by, the winding-up; all the more so where the liquidators
are involved as parties
and are opposing the pending proceedings.
It would be
an anomaly if a Court which does not supervise a particular
winding-up process, and has not control over it, could
make an order
which may eventually negatively affect the interest of creditors and
members in that winding-up process.
The Court
where the proceedings are pending, or are to be instituted, would
also in my view not necessarily be in a better position
to consider
whether the applicant has a
prima facie
case.
I have
therefore come to the conclusion that this Court does not have the
jurisdiction to entertain this application in terms
of section 359
(2).
______________________
C J
OLIVIER
JUDGE
NORTHERN
CAPE DIVISION
For
the Plaintiff: Adv Bhana, SC
Instructed
by: KIMBERLEY
For
the Respondent: Adv Zietsman, SC
Instructed
by: KIMBERLEY
1
61
of 1973
2
In
terms of the provisions of item 9 Schedule 5 to the 2008 Company’s
Act (71 of 2008) which came into operation on 1 May
2011, the
provisions of chapter 14 of the 1973 Company’s Act (which will
include section 359 of that Act) “
continues
to apply with respect to the winding-up and liquidation of
company’s
”
.
3
Strydom
NO v M G Construction (Pty) Ltd and Another: In re Haljen (Pty) Ltd
(In Liquidation)
1983 (1) SA 799
(D)
at 806B-807H;
Ronbel v Sublime
Investments
2010 (2) SA 517
(SCA) at
519A-B
4
Barlows
Tractor Co (Pty) Ltd v Townsend
[1996] ZASCA 3
;
1996
(2) SA 869
(A) at 884F-G;
Gilbert Hamer
& Co Ltd v Icedrome Promotions (Pty) Ltd
1962
(3) SA 372
(D) & (CLD)
5
Meskin,
November 2010 edited by Kunst
et al
6
of
the Company’s Act 46 of 1926, and the predecessor of section
359 (2) of the 1973 Company’s Act
7
At
364D-E of the report
8
at
322A-D
9
see
the definition of “
Master
”
in section 1 (1) (b) of the 1973 Company’s
Act
10
1996
(CLR) 797 (D)
11
at
800
12
1961
(4) SA 329
(WLD)
13
Meskin,
November 2010 edited by the Hon Mr Justice P M Magid
et
al
14
2
nd
edition, Pistorius, p130
15
1965
(2) SA 291
(D & CLD)
16
at
293E
17
vol
4, part 3, 1
st
re-issue
18
page
279
19
Van
der Harst and Another v Wells NO, supra
,
at 364D-E
20
Ronbell
v Sublime Investments, supra
, at 521D
21
Van
der Harst and Another v Wells NO, supra
,
at 364E
22
Ronbell
v Sublime Investments, supra
, at 521D