Solidarity in re: Van Wyk v Atlantis Forge (Pty) Ltd (FB) [2009] ZAFSHC 34; (2010) 31 ILJ 563 (FB) (19 March 2009)

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[2009] ZAFSHC 34
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Solidarity in re: Van Wyk v Atlantis Forge (Pty) Ltd (FB) [2009] ZAFSHC 34; (2010) 31 ILJ 563 (FB) (19 March 2009)

IN
THE HIGH COURT OF SOUTH AFRICA
(FREE
STATE PROVINCIAL DIVISION)
Case No. : 779/2009
In
the
matter
between:-
SOLIDARITY
Applicant
In
R
e
:
ARNO
VAN WYK
Applicant
and
ATLANTIS
FORGE (PTY)LTD
Respondent
Registration
number: 2002/012551/07
_____________________________________________________
CORAM:
H.M.
MUSI, JP
_____________________________________________________
HEARD
ON:
5
MARCH 2009
_____________________________________________________
DELIVERED
ON:
19
MARCH 2009
_____________________________________________________
JUDGMENT
_____________________________________________________
H.M.
MUSI, JP
[1]
On
18 February 2009 this court was approached on the basis of urgency
with an application for the winding-up of Atlantis Forge (Pty)
Ltd, a
company which conducts business in the Western Cape and whose
registered address has all along been in Bellville, Cape Town.
The
application was brought by Mr. Arno van Wyk, who is chief executive
as well as being a director of the said company. He had
been
authorised to bring the application by a resolution of a majority of
the directors. One director, Mr. Khumalo, had apparently
disagreed
with the resolution. Since the urgent application was unopposed,
Mocumie J, who was on motion court duty, granted a
provisional order
of liquidation with a rule
nisi
returnable on 2 April 2009. For the sake of convenience I shall
henceforth refer to Atlantis Forge (Pty) Ltd simply as “the

company”.
[2] On
26 February 2009 Solidarity, a trade union, brought an urgent
application under case number 986/2009 seeking, firstly, permission

to join the winding-up application on behalf of some employees of the
company, who are its members, in order to oppose the application.

Secondly, Solidarity wants the provisional order of liquidation
granted on 18 February 2009, to be set aside and, thirdly, to
have
the liquidation application itself transferred to the Western Cape
High Court. The application brought by Solidarity is opposed
by Mr.
Arno van Wyk, again acting on behalf of the directors of the company,
as well as the company itself. He has filed an opposing
affidavit to
which is annexed a supporting affidavit by Mr. George Diedericks de
Beer, an attorney and director of the firm Honey
Attorneys, Cape
Town. He confirms giving the advice that led to the application
being launched in this court.
[3] I
should point out that the opposing affidavit was served on
Solidarity’s attorneys at 12h56 on the eve of the hearing and
Mr.
Vorster, who argued the matter on behalf of Solidarity, indicated
that he only got a copy of the opposing affidavit whilst
on his way
to Bloemfontein for the hearing. Incidentally the opposing affidavit
was served after Solidarity had filed its heads
of argument.
Solidarity did not file a reply to the opposing affidavit.
[4] I
should mention that in its founding affidavit Solidarity complained
that the company had not served the winding-up application
on either
itself or its members and claimed that although the papers were
served on its Welkom office in the morning of 18 February
2009, these
only came to its attention on Monday, 20 February 2009. It
insinuated that the company had deliberately avoided service
of the
papers on its members so as to deny them the opportunity of opposing
the application. It averred that the application was
launched in
this court, rather than the Western Cape High Court for the same
reason. However, the opposing affidavit has clearly
exposed as false
the allegation that the papers were not served on Solidarity and its
members. The complaint concerning service
was not only baseless but
was also false. The papers were served by the sheriff on all the
interested parties and there had been
full compliance with the
provisions of section 346(4A) of the Companies Act, 61 of 1973 (the
Companies Act).
[5] It
is important to comment on the nature of the application brought by
Solidarity. In the first place, Solidarity seeks permission
to
intervene. It will only become a party if it is allowed to
intervene. In this context it is an applicant. It seeks to join
in
order to oppose the winding-up application and once it has joined the
proceedings, it will become a respondent in such application.
This
is precisely how Mr. Vorster, for Solidarity, approached the matter
and I think he was correct. The logical conclusion of
this is that
as regards the winding-up application, Solidarity’s version will
have to be treated in the same way as the version
of any other
respondent in motion proceedings. It is noteworthy in this regard
that Solidarity has answered in full, paragraph
by paragraph the
averments contained in Arno van Wyk’s founding affidavit in the
main winding-up application. This type of scenario
where a party can
be an applicant in respect of one aspect and a respondent in respect
of another in the same matter, is not unheard
of in our civil
procedure. Compare
THINT
(PTY) LTD v NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS AND OTHERS;
ZUMA AND ANOTHER v NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS
AND
OTHERS
2008 (12) BCLR 1197
(CC) at p. 1203 para 9 and 10.
[6] I
deal first with the application for intervention. The company has
raised a legal point to the effect that Solidarity has
no
locus
standi
.
Mr. Steyn, for the company, contented that although section 200(1)
of the Labour Relations Act, 66 of 1995, (the LRA) empowers
trade
unions to represent their members, this relates to negotiation on
their behalf and generally assisting them, but does not
include
instituting or defending court actions on their behalf. He said that
a union can assist by providing funding and engaging
lawyers to
represent its members, but that the member himself will still need to
be the party in the relevant proceedings.
[7] Mr.
Steyn subsequently furnished me with a copy of a judgment in the
matter of
NEHAWU
obo A ADELAJA ADEKOYA v CENTRAL UNIVERSITY OF TECHNOLOGY: FREE STATE
AND ANOTHER
,
case number A1671/2008, an unreported judgment of Hancke J of this
court, delivered on 19 June 2008. In this matter Hancke J
referred
to
section 200(2)
of the
Labour Relations Act which
reads as follows:
“
(2) A registered
trade union or a registered employers' organisation is entitled to be
a party to any proceedings in terms of this
Act if one or more of its
members is a party to those proceedings.”
Based
on this Hancke J ruled that a trade union can only join the
proceedings as a party to assist a member who is already a party
to
such proceedings. Where a member to be assisted is not a party, as
in the case before him, Hancke J
held
that the union would have no
locus
standi
.
He also interpreted section 200(1) of the LRA in the light of
section 161 of the LRA and concluded that section 200(1) empowers

unions to represent their members in resolution of disputes as
opposed to the standing in the place of their members in court
proceedings.
[8] Mr.
Vorster contended that Solidarity’s members have a direct and
substantial interest in the winging-up of the company and
that
Solidarity as representative of the majority of the company’s
employees is empowered by section 200(1) of the LRA to litigate
on
behalf of such members. He submitted that the winding-up of the
company will adversely affect the employment of the employees
and is
therefore a labour related matter entitling Solidarity to intervene
to protect their interests. He referred to section
346(4A) of the
Companies Act and said that the fact that the Act makes it peremptory
for a winding-up application to be served
on a trade union
representing the workers of the company concerned, means that it was
envisaged that the union could join as a
party on behalf of its
members.
[9] It
has long been accepted in labour jurisprudence that trade unions have
locus
standi
to act on behalf of their member in court proceedings. See
MARIEVALE
CONSOLIDATED MINES LTD v PRESIDENT OF THE INDUSTRIAL COURT AND OTHERS
1986 (2) SA 485
(TPD) at 492 I – J;
GENERAL
INDUSTRIES WORKERS UNION OF SOUTH AFRICA & OTHERS v EGGO SAND
(1990) 11 ILJ 179 (IC) at 181 A – C;
STEEL
AND ENGINEERING INDUSTRIES FEDERATION AND OTHERS v NATIONAL UNION OF
METAL WORKERS OF SOUTH AFRICA (1)
(1992) 13 ILJ 1416 (T) at 1420 – 1421. John Grogan,
Workplace
Law
,
9
th
Edition, at 325 says that such
locus
is not confined to the Labour Court but extends to the civil courts
(read High Courts), but that in the latter courts the union
must show
that it has a direct and substantial interest in the subject matter
of the dispute.
[10]
In
casu
,
it is common cause that the company owes some of its employees
outstanding salaries and in addition there is an amount of R2 500

000,00 that the company was supposed to pay to the Provident Fund to
which the employees belong which amount is still outstanding.
The
employees are therefore the creditors of the company. Solidarity has
a duty to safeguard the interests of its members in
the winding-up
application. It has a direct and substantial interest in the
winding-up application.
[11] Besides,
section 436(4A) of the Companies Act clearly recognises unions as
interested parties in winding-up applications and
this is an
indication that they should be able to join in such applications on
behalf of their members. I conclude therefore that
Solidarity does
have
locus
standi
to intervene.
[12] It
appears to me that the authorities cited above were not brought to
the attention of my brother Hancke J in the matter of
NEHAWU
obo A ADELAJA ADEKOYA v CENTRAL UNIVERSITY OF TECHNOLOGY: FREE STATE
AND ANOTHER
referred to above, on the point of
locus
standi
of a union representing its members.
[13] I
now turn to consider Solidarity’s opposition to the winding-up
application. The main ground of its opposition is that
this court
has no jurisdiction in the matter. The basis of this contention is
that both the registered address and principal place
of business are
located in the Western Cape outside the area of jurisdiction of this
court. The company, on the other hand, strenuously
denied that this
court has no jurisdiction. Whilst conceding that it operates in the
Western Cape and that it conducts no business
in the Free State, it
averred that it changed its registered address to Bloemfontein prior
to the launching of the winding-up application.
[14] Now
Solidarity denies that the company has properly changed its
registered address. In this regard Solidarity has set out
in full
the steps that were allegedly taken by the company in an attempt to
change its registered address. In a nutshell, Solidarity’s
version
is that one Ms Amanda Jacobs was given instructions by one Gavin
Hartman, who is involved with Coopers Trust and one Estie
of Honey
Attorneys, Cape Town to change the registered address of the company
to 52A Kellner Street, Westdene, Bloemfontein. Ms
Jacobs works for
Enco Business and Financial Administrators (Pty) Ltd, a company based
in Pretoria which apparently provides company
secretarial services
relating to the Registrar of Companies in Pretoria. It should be
noted in passing that Coopers Trust is a
firm of liquidators and
insolvency practitioners based in Bloemfontein and that one of the
liquidators appointed by the Master
of the High Court in Bloemfontein
pursuant to the provisional order, is from this firm, whereas Honey
Attorneys is the firm of
Mr. De Beer, who gave the advice to change
the registered address of the company. In fact all the liquidators
are based in Bloemfontein
and appear to be linked either to Honey
Attorneys or E G Cooper, Majiedt Inc.
[15] Ms
Jacobs took the necessary steps to effect the change of address as
instructed. She requested and was given written instructions
to do
so by a letter dated 13 February 2009 from the firm Honey Attorneys,
Cape Town which is annexed to the founding affidavit
as “TS6”.
She was furnished with the form CM22 which was partly completed and
signed by a director of the company (“TS7”).
She received
confirmation from the Registrar of Companies to the effect that the
CM22 had been accepted and that the change of
address will take
effect from 9 March 2009 (“TS9”). Ms Jacobs says on 16 February
2009 she was requested by Gavin Hartman
to bring forward the date of
9 March 2009. On 17 February 2009 the same request was repeated to
her, this time by Mr. Chavonnes
Cooper (one of the provisional
liquidators). Her response was that this could not be done.
Solidarity therefore contended that
the change of address could not
have been effected by the time that the winding-up application was
launched on 17 February 2009.
[16] What
I find puzzling is that the company’s response to Solidarity’s
averments concerning the instruction given to Ms Jacobs
to change the
company’s registered address and the steps that she took following
the instruction is vague, if not evasive. The
core of the averments
is contained in paragraphs 8.3 to 8.11 of the affidavit of Mr. Tobias
Johannes Scott, on behalf of Solidarity.
The deponent to the
company’s affidavit, Mr. Arno van Wyk, who had been charged with
bringing the liquidation application, professes
lack of knowledge of
these averments. All he does is to deny that this court has no
jurisdiction in the matter and then simply
producing a copy of a CM22
that bears the stamp of the Registrar of Companies and which was
signed on 16 February 2009 and which
reflects the date upon which the
change of address would take effect as 12 February 2009. This
document is annexed to his affidavit
as annexure “4”.
[17] Now
what clearly emerges from the uncontested version of Ms Jacobs is the
following:
(a) She
was instructed to change the registered address of the company on 13
February 2009 and was furnished with a partly completed
CM22 which
she lo
dged
on 16 February 2009 with the office of the Registrar of Companies.
(b) A
comparison of the CCM2 furnished to Jacobs with annexure “4” to
the affidavit of Arno van Wyk shows that they are copies
of the same
document. I say this because everything above the signature of
director or secretary of the company which is dated
12 February 2009
is the same and the handwriting is precisely the same in both
documents. And it is noteworthy that the new registered
address is
written in a handwriting that is different from the rest of the
handwriting on the document.
(c) Jacobs
was advised by the company’s office that the CM22 had been accepted
and recorded and that the change would take effect
on 9 March 2009.
In this regard it should be noted that section 170(2)(a) of the
Companies Act requires a 21 days notice to be
given to the Registrar
of an intended change in the registered address of a company. The
date of 9 March 2009 reflects the end
of the 21 days period from the
date of lodgement of the CM22 and corroborates the version of Jacobs.
(d) On 16 February 2009
and again on 17 February 2009 the people who had approached Jacobs on
behalf of the company, requested her
to bring forward the date of 9
march 2009 so that the change of address could take place earlier.
[18] The
questions that arise are the following:
How
could the Registrar of Companies have fixed the date on which the
change of address was to take effect as 12 February 2009 when
the
CCM22 had not been lodged with his office by then? How come that
annexure “4” was signed and endorsed with the Registrar’s
stamp
on 16 February 2009 when on that very day and on the following day
Jacobs was being requested to change the dates? How could
the
effective date of the change be made retrospectively?
[19]
These
are glaring discrepancies that needed an explanation. When Arno van
Wyk signed his affidavit he must have been aware of these

discrepancies and yet chose not to deal with them. He simply
produced annexure “4” with no explanation whatsoever. He did
not
even aver that it was properly endorsed by a competent person in the
office of the Registrar of Companies. Not even that the
requirements
of section 170 of the Companies Act had been complied with,
especially subsection 2(d). The onus was on him to establish
that
this court had jurisdiction and he has dismally failed to discharge
such onus.
[20] Besides,
these are motion proceedings and where there are disputes of fact
that cannot be resolved on the papers, the rule
enunciated in
PLASCON-EVANS
PAINTS LTD v VAN RIEBEECK PAINTS (PTY) LTD
[1984] ZASCA 51
;
1984 (3) SA 623
(A) applies. The version of the respondent prevails.
See
THINT
(PTY) LTD v NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS AND OTHERS;
ZUMA AND ANOTHER v NATIONAL DIRECTOR OF PUBLIC PROSECUTIONS
AND
OTHERS
,
supra
,
at 1203 par. [8]. I have already ruled that Solidarity is the
respondent in the liquidation application. Its version that when
the
winding-up application was launched the company’s registered
address had not been changed to Bloemfontein prevails. I therefore

find that this court had no jurisdiction to entertain the winding-up
application.
[21] Mr.
Vorster acknowledged that in an application for the setting aside of
a provisional order of liquidation the applicant must
give a
satisfactory explanation as to why it did not oppose the granting of
such order. See
WARD
AND ANOTHER v SMIT AND OTHERS: IN RE GURR v ZAMBIA AIRWAYS
CORPORATION LTD
1998 (3) SA 175
(SCA) at 181 A – D. Solidarity’s explanation was
that it only became aware of the application on 20 February 2009 when
it
was brought to its attention by its Welkom branch. Of course, it
is common cause that the application was served on its Welkom
branch
in the morning of 18 February 2009. But one must take into account
that this was short notice and that the case was to
be heard far away
in Bloemfontein. Also Solidarity is based in Pretoria whilst the
members it was to represent are based in Cape
Town. Under those
circumstances, the failure to oppose the urgent application is not
inexcusable.
[22] Now
there is merit in the company’s contention that Solidarity is
ambivalent in whether they support the winding-up of the
company or
not and indeed whether they have valid grounds for opposing the
application. It must, however, be borne in mind that
Solidarity does
not seek to set aside the entire application and such issues can best
be considered by the court finally hearing
the matter. Moreover if
this court had no jurisdiction in the matter it cannot now deal with
the merits of the application.
[2
3]
Solidarity has asked that this court should act in terms of section 3
in the Interim Rationalisation of Jurisdiction of High
Court Act, 41
of 2009, and order the transfer of the application to the Western
Cape High Court. Even apart from the question
of jurisdiction, there
can be no doubt that the Western Cape High Court would have been the
appropriate court to hear this matter.
The company’s principal
place of business is in the Western Cape. That is also where its
operations, its property, its employees
and its management are
located. Even the resolution authorising the institution of the
application was passed and signed in Cape
Town where the directors
including, Mr. Arno van Wyk, are located. In short, all the
interested parties are there.
[24] An
interesting question arose during oral argument as to whether this
court has the power to transfer the matter where it has
no
jurisdiction. Mr. Vorster drew my attention to the matter of
ROAD
ACCIDENT FUND v RAMPUKAR; ROAD ACCIDENT FUND v GUMEDE
2008 (2) SA 534
(SCA) in which Brand JA stated the following at 540:
“
As I have said
before, in accordance with the wider interpretation, s 3(1)(a) does
not bestow jurisdiction on a court which has
no jurisdiction under s
19(1) of the Supreme Court Act to decide the case on its merits. All
it does is to afford the 'wrong' court
- ie the transferring court -
limited jurisdiction to transfer the case to the 'right' court which
does have jurisdiction under
s 19(1).”
[2
5] On
the issue of costs, Mr. Steyn submitted that Solidarity had falsely
alleged that the company had deliberately avoided to serve
the papers
on it and its members in an attempt to cast the company in a bad
light. For that reason he submitted that Solidarity
had been
mala
fide
and should be penalised with costs. This may be so. On the other
hand, I cannot ignore the fact that the company sought in a

calculated, questionable manner to move its registered address from
Cape Town to Bloemfontein purely in order to enable it to bring
this
application in a court of an area that has got absolutely no
connection with it. Though apparently legal if done properly,
it is
a practice that should be frowned upon. It is a serious matter when
the company’s stakeholders have to be dragged all
the way from Cape
Town to Bloemfontein at substantial costs, for the convenience of a
few individuals. And I am not persuaded
that the reasons advanced
for this move, are weighty or sound. This is an appropriate case
where the court should express its
displeasure by awarding punitive
costs and I think it is only proper that such costs be borne by all
the directors who passed the
resolution that authorised the change of
the company’s registered address in order to bring the winding-up
application in this
court.
[26] It
has also been contended that there was no justification for
Solidarity bringing its application on the basis of urgency
and that
Solidarity could simply have prepared to oppose the granting of the
final order on 2 April 2009. My view is that urgency
was justified.
Once Solidarity was convinced that this court had no jurisdiction, it
was entitled to take immediate steps to correct
the situation and set
aside an order that should not have been granted. It is a matter
that could not be delayed.
[27] In
conclusion, I should mention that the provisional liquidators are
aware of Solidarity’s application and did not oppose
it. Instead
they have themselves launched an urgent application under case number
1105/2009 seeking
inter
alia
leave to raise money on the security of the assets of the company as
provided for in section 366(5) of the Companies Act. Their

application was postponed in order to await the outcome of the
instant application. The advocate who appeared on their behalf

intimated that the liquidators did not intend opposing the instant
matter.
[2
8] The
following order is made:
1. Leave is granted to
Solidarity to intervene in the winding-up application under case
number 779/2009.
2. The provisional order
for the winding-up of Atlantis Forge (Pty) Ltd granted on 18 February
2009 is set aside.
3. The
winding-up application issued under number 799/2009 is transferred to
the Western Cape High Court;
4. The
directors of Atlantis Forge (Pty) Ltd who passed the resolution
authorising the change of the registered address and launching
of the
winding-up application in this court, including Mr. Arno van Wyk,
shall pay the costs of suit on an attorney and client
scale, jointly
and severally, the one paying the others to be absolved.
___________
_
H.M.
MUSI, J
P
On behalf of
Solidarity: Adv. J. Vorster
Instructed by:
De Kock Attorneys
c/o Du Toit Louw
Botha Inc.
BLOEMFONTEIN
On
behalf of Arno van Wyk: Adv. J.W. Steyn
Instructed
by:
c/o
Saffy and Associates
BLOEMFONTEIN
On
behalf of respondent: Adv. J.W. Steyn
Instructed
by:
c/o
Saffy and Associates
BLOEMFONTEIN
/sp