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[2009] ZAGPJHC 124
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Come What May Properties (Pty) Ltd and Another v Master of the South Gauteng High Court Johannesburg and Others (6414/09) [2009] ZAGPJHC 124 (12 June 2009)
NOT
REPORTABLE
IN
THE SOUTH GAUTENG HIGH COURT
JOHANNESBURG
CASE
NO: 6414/09
DATE:
12/06/2009
In
the matter between
COME
WHAT MAY PROPERTIES (PTY)
LTD
................................................
1ST APPLICANT
MEGA
SUPER CEMENT
CC
............................................................................
2nd
APPLICANT
and
MASTER
OF THE SOUTH GAUTENG
HIGH
COURT
JOHANNESBURG
.................................................................
1
st
RESPONDENT
APHANE
BENNETT
.....................................................................................
2nd
RESPONDENT
VAN
DER MERWE, LIEBENBERG DAWID
RYK
.........................................
3rd
RESPONDENT
MOLOTO,
LEBOGANG
MICHAEL
...............................................................
4th
RESPONDENT
MALATSI-TEFFO,
LILY
MAMPINA
...............................................................
5th
RESPONDENT
JUDGMENT
CJ
CLAASSEN J: The 1
st
applicant in this application is a
creditor of the 2nd applicant. The first applicant became such a
creditor when cession was
taken from a certain financial institution
of its claim against the 2nd applicant. The 2nd applicant is a close
corporation, which
was placed in liquidation by this. Court on 13
April 2007. As a result of such liquidation the 3rd, 4th and 5th
respondents were
appointed as its joint liquidators.
Subsequently
thereto on 19 March 2008 the members of the 2nd applicant sought and
obtained in the North Gauteng High Court a discharge
of the 2nd
applicant from liquidation. There is currently pending before that
Court an application under case number 08/8885 to
set aside the order
discharging the 2nd applicant from liquidation. I am informed from
the bar that this application is due to
be heard during the month of
September of this year.
Bo
that as it may, the 2nd respondent Is the official acting on behalf
of the Master of the High Court who is the 1
st
respondent
in regard to the liquidation proceedings that the 2nd applicant was
involved in before its discharge from such liquidation.
The 3rd, 4th
and 5th respondents submitted to the 2
nd
respondent what
is known as an "intromission account". This document is a
voluminous document and it is attached to
the founding affidavit as
annexure CW11.
The
Companies Act makes no provision for the submission of an
intromission account, It would seem as if the submission of this
intromission account resulted from some policy document issued by the
Master of the High Court in regard to what is to happen after
a
company has been discharged from liquidation. A copy of this
intromission account was also sent to the attorneys of record of
the
applicants on 11 August 2008.
On
15 August 2008, while the 2nd applicant was still discharged from
liquidation, the 2nd respondent declared that the liquidators'
intromission account had been examined and found to be in order and
he then confirmed the account. It is the confirmation of this
account, which resulted in the applicants launching this application.
In
the notice of motion the following relief is sought.
1.
"Reviewing and setting aside the decision of the 1st respondent
in terms whereof and on 15 August 2006 its functionary the
2nd
respondent confirmed the intromission account submitted to it by the
3'd, 4th and 5th respondents and which account purported
to relate to
the administration by the 3rd. 4th and 5th respondents of the
insolvent estate of the 2nd applicant; and
2.
That the 3rd, 4lh and 5lh respondents within seven days of the grant
or the order sought in prayer 1 pay into the trust banking
account of
attorney John Joseph Finley Cameron, to be specifically designated
for the benefit of the applicants and the 3rd, 4th
and 5th
respondents, all amounts that they received relative to remuneration
and arising from the account and/or any other remuneration
amounts
that they received from the Insolvent estate of the 2nd applicant and
whilst under the administration of the 3rd, 4th and
5th respondents;
and
3.
That the 3rd, 4th and 5th respondents within 30 court days of the
grant of the order sought in prayer 1, serve and file a further
intromission account on the 13t respondent and on the 1sl and 2nd
applicants care of attorney J J F Cameron 204 Corner Drive Bramley
Johannesburg; and
4.
That the 1st respondent does not confirm the second account for a
period of 10 court days after receipt thereof so as to afford
the 1st
and 2nd applicants an opportunity to object thereto and to make
representations for purposes of prevailing upon the 1"
respondent to disallow the fee entitlements of the 3rd, 4th and 5th
respondents; and
5.That
the 2nd respondent personally alternatively the 1*' and 2nd
respondents Jointly and severally alternatively the 1st, 2*4,
3rd,
4th and 5th respondents [should these last named three respondents
oppose this application] jointly and severally pay the
costs of this
application and on the scale as between attorney and client."
Only
the 3rd respondent opposed the relief sought in the notice of motion
by filing an answering affidavit. The 4th respondent also
opposed the
application but did not file any answering affidavit. The 5th
respondent did not oppose the application. As far as
the 1st and 2nd
respondents are concerned, a report known as the Master's Report was
filed but the application itself was not opposed.
This report is to
be found as an annexure to the papers at paginated page 597.
The
entire purpose and motivation behind the launching of this
application was in order for the 1st applicant to be able to object
to an account submitted by the liquidators and, in particular, to
object to the fees charged by the liquidators. It Is the contention
of the 1st and 2nd applicants that these liquidators did not perform
their function properly and that they should not be entitled
to any
remuneration at all. This much was intimated by the attorney of
record for the applicants in a letter to the 1
st
respondent.
Mr
Gilbert appearing on behalf of the 3rd respondent took certain points
in
limine.
The most important one is that the review
application of the 1nd and 2nd respondents' confirmation of the
intromission account
is flawed. The basis of this contention Is to be
found in the fact that upon discharge of a company from liquidation
the various
provisions and regulations dealing with the liquidation
process, are no longer applicable. For this submission he relied on
Blackman
Companies Act, revision service 2, 2005 at 14/224/2 as well
as the decision in the Supreme Court of Victoria in the case of
Krextile
Holdings [Pty] Ltd] v Wictdows Raybrush Fabrics [Pty] Ltd
1974 VIC Lexis 132 at paragraphs 14 and 15. In this particular case,
the following is stated and I quote:
"In
my opinion all the matters that flow directly from or are invoked by
the making of an order as a part of the process of
winding up under
the provisions of the Companies Act 1901 are "proceeding* in
relation to the winding up". It is the
performance or observance
of all the statutory powers and duties indicated above which are
comprehended within the expression "all
proceedings in relation
to the winding up".
Accordingly,
If an order were made under section 243 of the Companies Act 1861 it
would be the process of winding up referred to
in the various
statutory consequences set out above and which directly flow from the
making of the order that would be stayed.
The Court of course is not
empowered to revoke or recall its order once it has been passed and
entered. The effect of a perpetual
stay of proceedings under section
243 however must mean a virtual end to the winding up process under
that order. The statutory
provisions that ordinarily would cause
certain things to be done no longer apply to the company and the
order for the winding up
becomes quite inoperative. Doubtless, the
Court would protect the interest of the liquidator and any parson who
could possibly
be affected by its order by invoking the latter part
of the section to grant an order for a stay only on terms. But once a
perpetual
stay was granted the winding up process comes to an end
under the order and the company still existing as persona juridica
may
then carry on its business and affairs in accordance with its
memorandum and articles of association as if no winding up order
existed. To say the least this conclusion may be regarded as somewhat
paradoxical. The order to wind up made by a Court of competent
jurisdiction remains unrevoked even though a stay be granted. But on
granting the stay under section 234 the Court renders its
own order a
dead letter"
In
the present matter, the liquidation order was in fact discharged. The
consequences would be similar to those referred to in the
aforesaid
case. Blackman supports the proposition that the statutory provisions
that ordinarily would cause certain things to be
done no longer apply
to the company.
The
attack by the applicants on the legality of the confirmation by the
1st and 2nd respondent of the intromission account, is based
on
various provisions of the Companies Act, in particular sections 403
to 408 of the Companies Act. Reference in support of this
attack was
also made to the regulations being CM101 paragraph 5 and CM104.
I
am persuaded however by the argument of Mr Gilbert and authorities
referred to above, that all the statutory liquidation provisions
contained in the Companies Act, do not apply once a liquidation order
has been discharged. The 2nd applicant became a fully fledged
juristic person again, able to conduct its business in accordance
with Its articles Of association and memorandum.
The
significance of this conclusion is the following. First of all, it
means that the act of confirming the intromission account
by the
Master was not an act pursuant to the provisions of the liquidation
provisions in the Companies Act. It was an act presumably
inspired by
the policy documents issued by the first respondent. These policy
documents are to be found at pages 611 to 617 of
the papers. In
particular, under the heading "Queries" when an order has
been set aside, the following is stated and
I quote:
"Ask
for confirmation from the liquidator trustee that all administration
costs have been paid. Request written confirmation
from directors of
the company members of the close corporation that they have been
placed in possession of all the assets."
Then under the heading
"Remember" paragraph 1,
"A
provisional account does not get advertised or confirmed so these
queries get deleted on the query sheet."
The
further consequence of the non-applicability of the liquidation
provisions after discharge from liquidation, is that the confirmation
by the Master is not an act prescribed by any legislation.
The
Companies Act does not contain such a provision. The Master's
confirmation can at best as understood as a necessary action due
to a
lacuna in the Companies Act. The act does not deal with the
particular situation after discharge of a liquidation order,
In
that capacity, the Master is therefore not acting as a functionary of
any State organ. That being the case, the confirmation
can also not
be-reviewed pursuant to the provisions of the
Promotion of
Administrative Justice Act 3 of 2000
, In this Act, "administrative
action" means any decision taken by an organ of state when
exercising the ) power "In
terms of any legislation". The
concept of an organ of State refers to any functionary exercising
power or performing a function
in terms of the Constitution or a
Provincial Constitution or exercising the public power or performing
a public function in terms
of any legislation.
As
previously stated the Master in confirming the intromission account
was not acting in terms of any particular legislation. At
best he
acted in pursuance of policy rules made by the Master for purposes of
regulating the situation which is not covered by
legislation. That
being the case, I am of the view that the review application is ill
conceived and cannot succeed.
Mr
Wetton on behalf of the applicant referred me to section 151 of the
Insolvency Act which allows any person affected by an order
in terms
of the Insolvency Act to object thereto and to seek relief in Court.
However, this section is part and parcel of the liquidation
proceedings of companies by virtue of section 339 of the Companies
Act. The argument that I referred to above will therefore equally
be
applicable to section 151 of the Insolvency Act, Once insolvency or
liquidation has been discharged, those provisions no longer
apply.
The
basis of seeking the review of the Master's confirmation was not
based upo.n the fact that the Master had no power to confirm
the
account. Rather the applicants brought the application on the basis
that such confirmation was contrary to the express provisions
dealing
with confirmation of accounts as provided for in the various sections
dealing with the liquidation process in the Companies
Act. it cannot
therefore now be argued that the Master had no power to confirm this
particular intromission account. The applicants'
case must stand or
fall by the basis upon which it was brought namely that the
confirmation was contrary to express, statutory
provisions.
The
next point raised by Mr Gilbert is that at best for the applicants
and after discharge of the liquidation order, a duty rests
upon the
erstwhile liquidators to account to the company with regard to the
assets of the company while they were administering
the liquidation.
This
much is quite clear as set out by Galgut J in Howard Motors [Pty] Ltd
v Waterson
1963 (3) SA 669
(T) where it was stated that:
"A
liquidator is for all practical purposes an officer of the company
while he is so controlling and conducting the affairs
of a company in
liquidation," In AMS Marketing Company [Pty] Ltd v Holtzman and
another 1983 (3) SA263 (W) at 270 A, Levisohn
AJ held that:
"Up
to the moment of discharge of a company from winding up, all
activities performed and all work done by him in the continuation
of
the company's business operations will have been performed and done
by him in his capacity as a primary organ of the company."
It
goes without saying that once a company is no longer subject toy
liquidation limitations, it would want to continue business
and
therefore would want to have all its assets under its control again,
To that extent there is a duty upon the liquidators to
account to the
company, in this case 2
nd
applicant.
The
basis upon which the applicants sought the relief in paragraph 3 and
4 in the notice of motion is based upon the successful
review of the
Master's confirmation of the intromission account. Once that falls by
the wayside for the reasons set out above,
I am of the view that the
relief sought in paragraphs 3 and 4 of the notice of motion cannot be
granted as it has throughout the
case been based upon a wrong
conception of the legal category under which the confirmation by the
Master was executed.
There
are further points raised by Mr Gilbert in limine, which I prefer not
to deal with, one of which Is that this application
is premature in
that the application in the North Gauteng High Court must first be
concluded to establish the status of the 2nd
applicant
I
then come to the question of costs. Mr Gilbert strenuously argued
that Mr Cameron the attorney of record for the applicants was
not
duly authorised to bring this application. This argument is based on
the fact that subsequent to the discharge order the 2nd
applicant was
again placed in liquidation, voluntary by the members of the 2nd
applicant. As of now the 2nd applicant is therefore
again in
liquidation. New liquidators were appointed to the 2nd applicant In
liquidation and the question was whether they authorised
Mr Cameron
to continue with this application. An affidavit was filed by one of
the new liquidators indicating that he has the support
of the 2nd
liquidator in sanctioning this application. The 3rd liquidator opted
to resign as he preferred not to make any decision
in regard to this
application. In my view, it cannot be said that Mr Cameron was not
authorised to bring this application. The
request to make the cost
order against Mr Cameron
de bonis propris
is therefore ill
conceived.
For
the reasons aforesaid, I therefore come to the conclusion that the
application cannot succeed, I make the following order.
1.
The 1st and 2nd applicants' application is dismissed with costs.
2.
These costs are to be regarded as costs of administration in the
liquidation of the 2nd applicant.