IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)
CASE NUMBER: 6222/2024
In the matter between:
FIRST TIME TRADING CC Applicant
And
THE MAGISTRATE FOR THE DISTRICT OF THE
CITY OF CAPE TOWN SUB-DISTRICT
BELLVILLE, HELD AT BELLVILLE R MAAS First Respondent
THE MASTER OF THE HIGH COURT
OF THE WESTERN CAPE Second Respondent
STEPHEN MALCOM GORE N.O. Third Respondent
DONOV AN THEORDORE MAJIEDT N .O. Fourth Respondent
NONKULULEKO LA WRENCIA THWALA N.O. Fifth Respondent
NICHOLAS TIMKOE N.O. Sixth Respondent
GREIG MICHAEL TIMKOE N.O. Seventh Respondent
FANTOM OPERATIONS LTD Eighth Respondent
SRB FINANCIAL SERVICES CC Ninth Respondent
JGL FORENSIC SERVICES (PTY) LTD Tenth Respondent
RE COÖPERATIE U.A. Eleventh Respondent
2
3
______________________________________________________________________________
REASONS FOR ORDER
DELIVERED ELECTRONICALLY ON 10 JUNE 2024
______________________________________________________________________________
MANGCU-LOCKWOOD, J
A. INTRODUCTION
[1] I hereby provide reasons for an order I granted on 9 May 2024, which was as
follows:
“Having heard counsel for the applicant and the third to eighth respondents, an order is
granted in the following terms:
1. It is directed that the application brought by First Time Trading CC under case
number 6222/24, which was set down for hearing on 10 May 2024, is promoted
on the roll and that the hearing proceeds on 7 May 2024.
2. The application brought by First Time Trading CC under case number 6222/24 is
dismissed.
3. The applicant, First Time Trading CC, is directed to pay the costs of the
application under case number 6222/24, based on a party -and-party scale C
tariff.”
[2] The applicant sought an order setting aside the first meeting of creditors which
was held on 2 February 2024 in the insolvent estate of Reeco Holdings Pty Ltd (under
liquidation) before Magistrate R Maas in terms of section 44 of the Insolvency Act 24 of
1936 (“the Insolvency Act” ); and alternatively, that the claims proved at that meeting be
declared as not proved and that it be declared that no votes were cast at that meeting. A
further prayer sought was the removal of the third respondent as a provisional liquidator
in the estate of Reeco Holdings.
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B. BACKGROUND FACTS
[3] On 20 July 2023 Reeco Holdings was placed under provisional liquidation in
terms of section 346 of the Companies Act 61 of 1973 (“the 1973 Companies Act” ), and
on 8 August 2023 t he third to seventh respondents were appointed as provisional
liquidators of the insolvent estate . The provisional order of liquidation was made final on
22 August 2023.
[4] On 22 December 2023 the first meeting of creditors and of members , the subject
of these proceedings, was advertised in the Government Gazette, and was to be held on 2
February 2024 at the Bell ville Magistrate’s Court . It proceeded on that date before
Magistrate R Maas. The proceedings were recorded and transcribed, and a copy of the
transcript, which is attached to the parties’ papers, indicates that all parties present were
legally represented.
[5] First, a meeting of the sole shareholder of Reeco Holdings, named RE Cooperatie
(eleventh respondent) , was convened, where the third respondent was nominated as
liquidator. Thereafter, a meeting of creditors was convened, where a claim belonging to
Fantom Operations Limited (eighth respondent), worth R185 million, was sought to be
proved. During that process, Mr. Harms attempted to object against the claim of Fantom
Operations.
[6] It appears from the transcript that the creditors’ claims that Mr Harms purported to
represent, numbered from 4 to 14 , had already been paid. Further, that another claim
which he purported to represent (numbered 22) , was an unliquidated damages’ claim
which was, in any event, represented by another attorney whose instructions were to
withdraw the claim, as reflected in the documents before the Magistrate. One of the
specific issues that arose during those interactions is the fact that the applicant’s claim
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against Reeco Holdings, which was based on an invoice worth R43,125, had been paid in
full prior to the meeting, and the payment was effected by Fantom Operations. Despite
vociferous objections and interjections from Mr Harms t he Magistrate considered the
R185 million claim of Fantom Operations proved. At the end of the proceedings, the
meeting of creditors was postponed to 10 May 2024 at 9h00.
[7] Thereafter, on or about 28 March 2024 the applicant instituted these proceedings,
seeking to be heard at 9h00 on 10 May 2024. The application was opposed by the third to
eighth respondents. In addition, the third to seventh respondents (“the liquidators ”),
supported by Fantom Operations , brought a counter-application for promotion of the
matter to the urgent roll of 7 May 2024 so that it could be heard before the date of 10
May 2024.
[8] The counter -application for promotion of the matter on the roll , which was
opposed by the applicant, was based on the fact that the adjourned meeting of creditors
was scheduled for the exact same time and date that the applicant sought to be heard in
this Court. The respondents explained that an interrogation in terms of s ection 44(7) of
the Insolvency Act was planned for that day , where the deponent to the applicant’s
affidavits, Mr Jaco Avenant, was to be interrogated , and the y argued that the application
before this Court was a stratagem to evade and frustrate the progress of those
proceedings. They also pointed out that much expenditure of time and resources would be
wasted if the adjourned meeting was aborted because of the applicant’s application, since
court officials, including the Magistrate, had been preparing for it as well as a large array
of creditors, the shareholder, and their representatives.
[9] The respondents stated that there was no basis to place the meeting in jeopardy by
adjourning it or risking its adjournment whilst the applicant pursued its application at a
leisurely pace. This would indefinitely delay the distribution of dividends to creditors. In
addition to this, the respondents argued that the applicant’s application was in any event
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brought on spurious grounds, discussed below, which include the fact that it s claim had
already been paid. As a result, the respondents argued that it was appropriate for the
matter to be dispensed with on an urgent basis prior to the meeting of creditors of 10 May
2024.
[10] The applicant opposed the promotion of the matter to the urgent rol l on the basis
that no case was made out for urgency in compliance with Uniform Rules 6(12)(b), and
the respondents had already been in receipt of the application by 20 March 2024 , and
they had only delivered their notice of intention to oppose on 10 April 2024.
Nevertheless, the applicant’s replying affidavit was delivered on 6 May 2024 in time for
the hearing of 7 May 2024 . As appears from the order I granted on 9 May 2024 , the
matter was promoted to the roll of 7 May 2024.
[11] Given that the applicant set the matter down for 10 May 2024 at 9 h00, the very
same time and date on which the creditors ’ meeting was scheduled, the conclusion was
irresistible that it must have foreseen the possibility that those proceedings would have to
be postponed in light of these court proceedings. That was borne out by correspondence
exchanged between the parties in the lead up to these proceedings. In a letter dated 10
April 2024, the applicant’s legal representatives requested the liquidators to explain why
they “[held] the view that it should be necessary to proceed with the inquiry in terms of
section 44(7) and 44(8) of the Insolvency Act while the meeting is subject to a rev iew”.
Then, after the liquidators’ legal representatives responded that the creditors’ meeting was
to continue despite the launching of these proceedings by the applicant , the applicant’s
representatives responded by stating that it was not in the interest of the company and
creditors that the inquiry in terms of the Insolvency Act should proceed on 10 May 2024,
and that if the applicant was successful in setting aside the first meeting as sought in its
notice of motion, all costs would be wasted. As a resu lt, the letter requested the
liquidators to advise whether they would indemnify the creditors against wasted costs if
the meeting was set aside in these proceedings. This makes it clear that in the applicant’s
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mind, its application before this Court would have an impact on the proceedings before
the Magistrate and, the implication in the letter was that those proceedings should not
continue until completion of these proceedings.
[12] It was as a result of the applicant’s attitude displayed in the above correspondence
that the respondents communicated an intention to promote the applicant’s application on
the roll so that it could be heard prior to 10 May 2024. In the respondents’ letter dated 22
April 2024, the applicant was confronted regarding its “intention… to utilize the fact that
a High Court application is pending as a spurious basis to suggest that the [creditors’]
meeting should be postponed thereby avoiding interrogation of yo ur clients” . It was a
mere four days later, on 26 April 2024, that the answering affidavit of the liquidators was
delivered, including the counter -application, and on 30 April 2024 that the answering
affidavit of the eighth respondent was delivered. I do not consider that to have been an
undue delay in light of the correspondence highlighted above. The correspondence makes
it clear that the applicant was made aware since 22 April 2024 that the respondents were
to pursue legal proceedings to ensure that the meeting of 10 May 2024 would proceed.
[13] Needless to say, considerations of the proper administration of justice required that
there should be clarity regarding the status of the adjourned meeting which was
scheduled to be heard before the Magistrate. It was conceded at the hearing of the matter
on behalf of the applicant that the outcome of the se court proceedings would inevitably
have an impact on the adjourned meeting of the creditors which was scheduled for 10
May 2024. It was furthermore convenient to hear the matter on 7 May 2024 since, as
already indicated, all the parties had delivered papers , which in total, ran to
approximately 590 pages, and the matter was ripe for hearing. I also considered it to be in
the interests of justice for the matter to proceed , one of those considerations being the
common cause fact that the applicant’s claim has in fact been paid . It is also noteworthy
that, although the applicant stated that there was no urgency to hear the matter, it also
8
provided no assurances that Mr Avenant, who was to be interrogated at the meeting of 10
May 2024, intended to attend the adjourned meeting.
[14] Before discussing the application, it is apposite to set out the relevant applicable
law.
C. THE LAW
[15] The meeting that is the subject of these proceedings was convened by the Master
in terms of section 364 of the 1973 Companies Act. In terms of Item 9 in Schedule 5 of the
Companies Act 71 of 2008, the winding -up and liquidation provisions in Chapter 14 of the
1973 Companies Act continue to apply, and in terms of section 366(1) thereof, the claims
against a company in winding -up by a court “shall be proved at a meeting of
creditors mutatis mutandis in accordance with the provisions relating to the proof of
claims against an insolvent estate under the law relating to insolvency ”.1 Hence the
application of the provisions of section 44 of the Insolvency Act 24 of 1936 ( “the
Insolvency Act” ). But those provisions apply mutatis mutandis 2 - ‘subject to
the necessary alterations’3 - and must accordingly, be applied in their proper context.
[16] Section 44(1) of the Insolvency Act provides as follows:
‘Any person or the representative of any person who has a liquidated claim against an
insolvent estate, the cause of which arose before the sequestration of that estate, may, at
any time before the final distribution of that estate in terms of section one hundred and
thirteen, but subject to the provisions of section one hundred and four , prove that claim
in the manner hereinafter provided: Provided that no claim shall be proved against an
estate after the expiration of a period of three months as from the conclusion of the
second meeting of creditors of the estate, except with leave of the Court or the Master,
1 In terms of section 339 of the 1973 Companies Act, the provisions of the Insolvency Act apply mutatis mutandis to
the winding-up of a company.
2 See section 366(1) 1973 Companies Act.
3 South African Fabrics Ltd v Millman NO & another 1972 (4) SA 592 (A); Mayo NO v De Montlehu (20504/2014)
[2015] ZASCA 127; 2016 (1) SA 36 (SCA) (23 September 2015) para 14.
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and on payment of such sum to cover the cost or any part thereof, occasioned by the late
proof of the claim, as the Court or Master may direct.’
[17] The Supreme Court of Appeal (SCA) recently held in Mantis Investments
Holdings v De Jager NO 4 that section 44 of the Insolvency Act deals comprehensively
with the procedure for the proof of liquidated claims against an insolvent estate. The
procedure is intended to enable creditors to prove their claims in a relatively simple and
expeditious fashion.5 In Breda N O v Master of the High Court, Kimberley , the SCA Court
observed that a presiding officer does not adjudicate upon the claim as a court of law, is
not required to examine a claim too critically and only has to be satisfied that the claim
is prima facie proved.6
[18] After the process set out in section 44 of the insolvency Act, the provisions of
section 45 apply, notably subsection (3), which provides as follows:
“If the trustee disputes a claim after it has been proved against the estate at a meeting of
creditors, he shall report the fact in writing to the Master and shall state in his report his
reasons for disputing the claim. Thereupon the Master may confirm the claim, or he may,
after having afforded the claimant an opportunity to substantiate his claim, reduce or
disallow the claim, and if he has done so, he shall forthwith notify the claimant in
writing: Provided that such reduction or disallowance shall not debar the claimant from
establishing his claim by an action at law, but subject to the provisions of section 75.”
[19] It has been held that, similar to section 44, section 45 only requires the Master to
examine the documents supporting the proof of claims to determine whether they
disclose prima facie the existence of an enforceable claim. 7 A liquidator8 or creditor9 who
4 Mantis Investments Holdings v De Jager NO (696/2022) [2023] ZASCA 134; 2024 (3) SA 431 (SCA) (18 October
2023) para 14.
5 Caldeira v The Master and Another 1996 (1) SA 868 (NPD) at 873H-874F.
6 Breda N O v Master of the High Court, Kimberley [2015] ZASCA 166.
7 Mantis Investments Holdings v De Jager NO paras 14-15.
8 See Mantis Investments Holdings v De Jager NO para 16.
9 Noord-Kaaplandse Ko-op Lewendehawe Agentskap Bpk v Van Rooyen and Others 1977 (1) SA 403 (NC) at 406-
407.
10
has unsuccessfully objected to the Master’s decision to admit a claim may apply to court to
review it in terms of section 151 of the Insolvency Act which provides as follows:
“Subject to the provisions of section fifty-seven any person aggrieved by any decision, ruling,
order or taxation of the Master or by a decision, ruling or order of an officer presiding at a
meeting of creditors may bring it under review by the court and to that end may apply to the court
by motion, after notice to the Master or to the presiding officer, as the case may be and to any
person whose interests are affected: Provided that if all or most of the creditors are affected,
notice to the trustee shall be deemed to be notice to all such creditors; and provided further that
the court shall not re -open any duly confirmed trustee’s account otherwise than as is provided in
section one hundred and twelve.” (my emphasis)
[20] In order to have locus standi to bring a review under section 151, an applicant
must be a ‘person aggrieved’. It has been held 10 that “the words ‘person aggrieved’ are of
wide import and should not be subjected to a restrictive interpretation. They do not
include, of course, a mere busybody who is interfering in things which do not concern him;
but they do include a person who has a genuine grievance because an order has been
made which prejudicially affects his interests.”
[21] It has also been held 11 that a ‘person aggrieved’ signif ies someone whose legal
rights have been infringed – a person harbouring a legal grievance. Further, that the legal
rights which are alleged to have been infringed must have existed at the time when the
decision in question was made.12 Further, that a ‘person aggrieved’ does not mean someone
“is disappointed of a benefit which he or she might have received if some other order had
been made. A person aggrieved must be a person who has suffered a legal grievance…
against whom a decision has been pronounced which has wrongfully deprived him or her
of something, or wrongfully refused him or her something or wrongfully affected his or her
title to something”. 13
10 See Kaniah v WPC Logistics (Joburg) CC (in liquidation) & Others (5794/2016) [2017] ZAKZDHC 45 (13
December 2017) at para [21], where the Court quoted with approval Attorney-General of Gambia v N’Jie (1961) 2
All ER 504 (PC) at 511.
11 Frances George Hill Family Trust v SA Reserve Bank and others 1992(3) SA 91 (AD) at 102C.
12 Jeeva and another v Tuck N.O. and Others 1998 (1) SA 785 (SE) at 795 D-E.
13 De Hart NO v Klopper & Botha NNO & others 1969 (2) SA 91 (T)
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[22] Since the application is final in nature , the legal principles set out in Plascon-
Evans14 apply insofar as any disputes of fact may arise in the papers. That is, that a final
order can be granted only if the facts averred in the applicant’s affidavits, which have been
admitted by the respondent s, together with the facts alleged by the latter, justify such
order.15 It may be different if the respondents ’ version consists of bald or uncreditworthy
denials, raises fictitious disputes of fact, is palpably implausible, far -fetched or so clearly
untenable that the court is justified in rejecting them merely on the papers. 16 The Court has
to accept those facts averred by applicant that were not disputed by respondents, and
respondents’ version insofar as it was plausible, tenable and credible.17
D. DISCUSSION
[23] The applicant does not specifically seek to review a decision of the Magistrate, but
instead seeks an order setting aside the creditors’ meeting itself, which is a far-reaching
remedy, and no reason is given for why it has opted to seek that relief as opposed to the
normal available remedy of a review. As the case law above indicates, section 151 of the
Insolvency Act provides the remedy for any person aggrieved by a decision of the
presiding officer at a meeting of creditors by means of a review. No specific reference is
made in the notice of motion or in the founding affidavit to any decision of the Magistrate
that is sought to be reviewed, and the applicant has otherwise made no mention of section
151 or indicated an intention to bring its application within the purview of those
provisions. To the extent that the applicant intended the application to be determined in
the light of section 151 which remains opaque, i t is trite that it falls upon an applicant to
specify the relief it seeks as well as the grounds upon which relies for the relief. That is
not a task for the respondents or the Court. Nevertheless, the grounds of irregularity
14 Plascon-Evans Paints (TVL) Ltd v Van Riebeck Paints (Pty) Ltd 1984 (3) SA 623 (A).
15 Harmse Civil Procedure in the Supreme Court ,B6.45.
16 Media 24 Books (Pty) Ltd v Oxford University Press Southern Africa (Pty) Ltd 2017 (2) SA 1 (SCA); National
Director of Public Prosecutions v Zuma [2009] 2 All SA 243; 2009 (2) SA 279 (SCA).
17 Airports Company South Africa Soc Ltd v Airports Bookshops (Pty) Ltd t/a Exclusive Books [2016] 4 All SA 665
(SCA).
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raised by the applicant are examined later below, within the purview of the relief sought
by the applicant.
[24] I do take into account the fact that the admission of creditors’ claims, which is the
subject of the alternative relief, was indeed a decision made by the Magistrate. However,
to the extent that this aspect of the application is to be read as a review, it is premature
because the provisions of section 45 of the Insolvency Act set out above had not yet been
exhausted when the applicant approached this Court. It provides as follows:
“(1) After a meeting of creditors the officer who presided thereat shall deliver to the trustee
every claim proved against the insolvent estate at that meeting and every document
submitted in support of the claim.
(2) The trustee shall examine all available books and documents relating to the insolvent
estate for the purpose of ascertaining whether the estate in fact owes the claimant the
amount claimed.”
[25] It is common cause that, matters had not reached the stage enunciated in the above
provisions for the liquidator to examine the documents to ascertain whether the estate in
fact owe d any of the claim s. Neither had the Master had opportunity to determine any
dispute of a claim that might be raised by the liquidator after the aforesaid examination, as
envisaged in subsection 45(3).
[26] In any event, contrary to what the applicant avers in its papers, the case law
summarized earlier 18 makes it clear that a presiding officer does not adjudicate upon the
claim as a court of law and is not required to examine a claim too critically, and only has to
be satisfied that it is prima facie proved. Thus, if the presiding officer in this case was
satisfied that the claims were regular on their face, the requirement is met.
[27] Furthermore, in terms of the case law set out earlier, a person instituting a review
in terms of section 151 must establish that (s)he is an aggrieved person. It is in this respect
18 Breda NO v Master of the High Court, Kimberley [2015] ZA SCA 166. Mantis Investments Holdings v De Jager
NO [2023] ZA SCA 134 (18 October 2023).
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that the respondents have raised a point in limine, stating that the applicant is not a creditor
of the company in liquidation because its claim is based on an invoice dated 8 May 2023
for services rendered to Reeco Holdings for an amount of R43,125, which was paid on 1
February 2024, before the first meeting of creditors was held. They state that, since the
applicant’s claim has been paid, there is no basis to suggest how or why its legal interests
have been adversely affected by any decision taken by the presiding officer. The applicant
admits that it was paid but tendered to return the payment stating that the payment was
calculated to deprive it of locus standi at the insolvency proceedings, which included the
right to question the conduct and independence of the liquidators.
[28] I do not consider it desirable to determine the dispute relating to whether the
applicant is an ‘aggrieved person’ or a creditor, given that the insolvency proceedings are
currently underway , especially as a preliminary issue preventing the applicant from
instituting these proceedings at this stage . Although it may well be the case later that the
applicant is not an aggrieved person and creditor, it is also true that the issue may very well
be affected by the processes outlined in terms of section 45 , amongst other avenues that
may be available to the applicant . In my view, this is one of the reasons why the statutory
mechanism provides , in the main, for recourse to court at a later stage, once all the
statutory remedies have been exhausted . By then, a court would have all the information
relevant and necessary to be able to make a determination of that nature, after taking into
account all the information and evidence from the insolvency proceedings. Given the
findings made in this judgment that this application is premature because the statut ory
scheme provides for alternative remedies before this Court is approached, i t would be
premature to finally decide that issue before those processes are exhausted. However, I do
take into account the fact that the applicant’s claim was paid in full, an issue which is
common cause amongst the parties.
[29] I now proceed to deal with the irregularities raised by the applicant in its
application, which may be summarized as follows:
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a. Firstly, there were procedural irregularities in relation to the shareholder’s
meeting, including the fact that it was held before the first meeting of
creditors, and that the documents submitted on behalf of the shareholder
were not submitted 24 hours prior to the meeting.
b. Secondly, there were numerous disputes relating to the shareholding.
c. Thirdly, there were irregularities in the claims submitted for proof by
Fantom and JGL Forensic Services. With regard to the Fantom claim, the
applicant alleges that there was an irregularity with the resolution
authorizing Andre Cronje to act on behalf of Fantom Operations and submit
its creditor claim; and secondly, there was a calculation error with regards
to the claim amount. With regards to JGL Forensic Services, the applicant
alleges that some aspects of the invoice supporting the claim post -date the
deemed date of Reeco’s liquidation.
d. As regards the removal of the provisional liquidator, the applicant states
that there was an irregularity in the voting at the shareholder’s meeting
where the liquidator was nominated.
[30] The applicant claims that its legal representative was not afforded audi alteram
partem because he was not afforded an opportunity to participate in the proceedings. The
transcript shows the opposite. Mr Harms addressed the Magistrate at various s tages, some
of which I have pointed to earlier. It is correct that his views did not carry the day. That,
however, does not mean he was not given opportunity to address the proceedings. I have
otherwise referred to the difficulties, which are evident from the transcript, regarding the
exact identity of his clients at the proceedings. I find no basis for the claim made that he
was not afforded an opportunity to participate.
15
[31] As regards the complaint that the order of the two meetings was wrong because
the shareholder’s meeting was irregularly held before the creditors’ meeting, no legal basis
was laid for the allegation that this amounted to an irregularity. The two meetings were
held in terms of section 364 of the 1973 Companies Act. Although that provision sets out
the provisions relating to a meeting of creditors (at section 364(1)(a)) before those relating
to a meeting of the members (at section 364(1)(b)), there is no requirement in the statute
for the meetings to appear in any particular order, and the applicant has not referred to any
such statutory requirement. There was accordingly no merit to this argument. Th is point
was in any event conceded at the hearing before me by the counsel representing the
applicant.
[32] As to the complaints relating to the shareholder’s meeting, the applicant alleged
firstly that there was non -compliance with Regulation 12 of the Regulations for the
Winding-Up and Judicial Management of Companies published under GNR2490 in
Government Gazette 4128 dated 28 September 1973 ( “the Regulations” ) because at the
meeting the Magistrate requested one of the parties’ legal representatives to compile a list
of the creditors ’ claims, which thereafter became an official court document and was
placed in the file. The applicant stated that this was contrary to the 24 hours’ deadline for
submission of documents prescribed in the Regulations. Coupled with this, is an al legation
that, on the morning before the proceedings resumed, “the only documentation in the file
was the claims of the creditors and nothing else” . Thus , the allegation regarding the
presence or not of the creditors’ claims is, in itself unclear and contradictory. Nevertheless,
it was similarly claimed that the power of attorney from the counsel representing Reeco
Holdings was also handed up during the proceedings and was not in the court file by the
deadline prescribed in terms of Regulation 12.
[33] In answer to the applicant’s allegations relating to the non -compliance with
Regulation 12, the respondents filed a comprehensive affidavit deposed by Katherine Jane
16
Morgan and a confirmatory affidavit of an attorney Mr Dunster, in which all the
allegations are refuted. Ms Morgan was specifically tasked with lodging the creditors’
claim documents of the eighth and tenth respondents, as well as shareholder documents of
the eleventh respondent, which she attended to on 31 January 2024, two days prior to the
meeting. On 31 January 2024 she also lodged the relevant powers of attorney in the court
file. Then, on 1 February 2024 she again attended at the Bellville Magistrate’ s Court to
submit a further creditor’s claim, on behalf of the tenth respondent and to also check what
further creditors’ claims had been lodged since her lodgment on the previous day.
[34] On 2 February 2024 she was present throughout the proceedings , and she states
that the Magistrate struggled to locate the shareholder documents, especially the
shareholder’s power of attorney in the court file and that as a result, the counsel
representing the liquidators (Adv Woodland SC) handed up a copy of the shareholder’s
documents, including the power of attorney, for the Magistrate’s convenience. Indeed, the
transcript bears this out, including Mr Woodland’s mention to the Magistrate that the
documents were otherwise already in the court file.
[35] There is no basis to refute the averments of Ms Morgan. At the hearing, the
applicant’s counsel also conceded this point, and accepted that the issue relating to the
alleged irregularity in this regard has no merit. My observation is that e ven in the papers,
the applicant’s case in this regard was not clearly established in any event because the
applicant did not state that he personally inspected the file or how he established that the
said documents were missing as alleged from the court file.
[36] The applicant also allege d that there were numerous disputes relating to the
shareholding, presumably of Reeco Holdings, which are not identified in the papers. No
case was made out in this regard , and here too the applicant’s c ounsel capitulated at the
hearing.
17
[37] Next, the applicant claim ed that the resolution which authorized Mr Cronje to act
on behalf of Fantom was invalid because it was not signed by Mr Cronje who is a director
of Fantom. The complaint is that the resolution is signed by two other directors. However,
there is no discernible reason for why the resolution is invalid , since it was not disputed
that the two directors who did sign the resolution ha d the authority to grant Mr Cronje the
authorization to sign all necessary documents and to take all the steps required to enforce
Fantom Operation’s rights. Accordingly, this ground had no merit, and indeed the applicant
was unable to substantiate it.
[38] Likewise, the allegation that the calculation of the rand value of Fantom
Operation’s claim as reflected in the documents was invalid appeared to be based on a
reliance on the applicant’s own rand value of them claim. I say ‘appear ed to be based ’
because there was otherwise no substantiation for wh y the applicant’s calculation was said
to be correct and Fantom Operations’ was not. I was otherwise not referred to any legal
authority for the proposition that a creditor is only permitted to advance its claim in South
African rands. There was no legal impediment to Fantom Operations to calculate its claim
in foreign currency. The respondents have referred to figures contained in an affidavit
submitted by Fantom Operations in the insolvency proceedings, where the rand value was
reflected as of the date of transfer, stating that th e figures were correct. The applicant has
not provided any evidence to the contrary, save to state a figure that it relies upon, without
substantiation. On application of the principles laid down in Plascon-Evans set out earlier,
the respondents’ version must prevail. Lastly on this point, it is worth po inting out that ,
even if the calculation was incorrect, this would not alter the position of Fantom
Operations as a creditor, although admittedly the claim would have to altered, which would
trigger a process in terms of section 45, and not application to this Court at this stage.
[39] As regards the JGL Forensics Services claim, the applicant claims that some of the
work claimed for in the invoices was performed after the issue of the papers in the
liquidation application. However, whether these amounts should ultimately be included in
18
the claim is a matter for determination in the insolvency proceedings and specifically
investigations in terms of section 45(3) of the Insolvency Act. It is not for this Court at this
juncture to make such a determination.
[40] I now proceed to deal with the applicant’s grounds for the removal of the third
respondent. First, the applicant claims that the voting for the third respondent was irregular
and in contravention of section 59 of the Insolvency Act and/or sections 339 and 379 of the
1973 Companies Act. The first observation is that section 59 of the Insolvency Act does
not apply to liquidators but only to trustees. As for section 339 of the Companies Act, there
is no indication from the applicant of how it specifically appl ies independently of section
379.
[41] Section 379 of the Companies Act is the provision which specifically provides for
removal of liquidators. It provides for the removal of a liquidator by the Master and by the
court in certain specified circumstances. Notably, in terms of subsection (2) “the court
may, on application by the Master or any person, remove a liquidator from office if the
Master fails to do so in any of the circumstances in subsection (1), or for any other good
cause”. Thus, in terms of section 379 an applicant is first required to approach the Master
before approaching this Court for removal of the third respondent . It is common cause that
the applicant has not done so in this case. Accordingly, the application is premature.
[42] Furthermore, section 379 provides for various grounds upon which a liquidator’s
removal may be sought. However, the applicant has not specified the ground(s) he seeks to
invoke. It is trite that it falls upon the applicant to plead its case clearly and precisely, and
the applicant has failed to comply with this requirement. At the hearing, the applicant’s
counsel conceded that no case is mase out regarding any misconduct by the third
respondent.
19
[43] But in any event, the third respondent was merely nominated by the shareholder in
terms of section 369(2)(a) of the 1973 Companies Act , and the nomination has yet to be
confirmed by the Master . It is only o nce that is done that section 371 provides the
mechanism for challenging the appointed liquidator , which must be instituted by an
‘aggrieved person ’. Because the third respondent had only been nominated by the
shareholder in this case, the Master ha d not accepted the nomination when the applicant
approached this Court . I n fact, the creditors ha d not yet nominated the liquidator. Only
after the Master has accepted the nomination would the applicant have a remedy in terms
of section 371. 19 Once again, the applicant’s counsel conceded that section 371 does not
apply in the circumstances of this case for all the reasons already mentioned.
[44] Thus, insofar as the applicant sought the removal of the third respondent , the
application was premature. In addition, section 37 1(2) provides that a court may only
remove a liquidator after the Master fails to remove a liquidator on the request of an
interested person. In this regard, provided that the applicant will be able to establish that it
is an ‘aggrieved person’, it has available alternative remedy.
[45] Then, the applicant s ought to rely on section 55(m) of the Insolvency Act stating
that in terms of a power of attorney, A dvocate Woodland SC was authorized to act on
behalf of the creditors Fantom Operations and JGL Forensics, but also advanced arguments
on behalf of the “the liquidator”. It is not clear from the papers which liquidator this is
said to refer to, since there are no fewer than five liquidators in this matter. However,
assuming that this is a reference to the third respondent, the first observation is that section
55 of the Insolvency Act does not apply to liquidators but to trustees , and that s ection
372(j) of the 1973 Companies Act is the equivalent, applicable provision. But in order for
that provision to apply, it would have to be established that Mr Woodland sought
appointment as liquidator, which is not the case of the applicant . Alternatively, since it is
19 Henochsberg on the Companies Act 71 of 2008, Delport et al 371, and C Geduldt v The Master & others 2005 (4)
SA 460 (C) at 464.
20
the liquidator’s nomination that the applicant challenges, it would have to be established
that the third respondent was an agent authorized to vote on behalf of creditor(s) at the
meeting. No such case has been made out by the applicant. Also significant is that the
transcript reveals that Fantom Operations was represented by a different counsel, Advocate
Greig, whilst Mr Woodland represented the liquidators. This was made clear to the
Magistrate as the proceedings commenced on 2 February 2024. There is ac cordingly no
substance to this complaint.
[46] In conclusion, t here is no doubt that the relief sought by the applicant is drastic
and is final in nature. Accordingly, the applicant was required to make out a clear case for
it. As appears from the discussion above, the case had very poor merit, and most of the
case was, in any event, conceded at the hearing. Furthermore, this judgment has discussed
various remedies available to the applicant in the event that it should encounter
irregularities, or there should be objections to be raised during the winding-up proceedings.
E. COSTS
[47] There is no reason why costs should not follow the result. The applicant’s case was
without merit and, by all accounts, was calculated to delay if not collapse a meeting
scheduled for 10 May 2024. No reason has ever been provided by the applicant why that
specific date of 10 May 2024 and th e specific time of 9h00 was chosen for the hearing of
the matter , even after the respondents challenged the applicant directly regarding its
motives. The inference is irresistible that the purpose was to collapse the adjourned
creditors’ meeting scheduled for that date and time. Furthermore, the respondents had no
option but to approach the court, not only to resist the applicant’s unmeritorious
application, but to also ensure that the insolvency proceedings continue on the scheduled
the date of 10 May 2024. The respondents should not be placed out of pocket in those
circumstances.
F. ORDER
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[48] In the circumstances, the following order is made:
1. It is directed that the application brought by First Time Trading CC under
case number 6222/24, which was set down for hearing on 10 May 2024, is
promoted on the roll and that the hearing proceeds on 7 May 2024.
2. The application brought by First Time Trading CC under case number
6222/24 is dismissed.
3. The applicant, First Time Trading CC, is directed to pay the costs of the
application under case number 6222/24, based on a party -and-party scale C
tariff.
___________________________
N. MANGCU-LOCKWOOD
Judge of the High Court
APPEARANCES
For the applicant : Adv M H van Twisk
Instructed by : Grundlingh & Associates
Mr J M Grundlingh
For the third to seventh respondents : Adv G W Woodland SC
Instructed by : Gillan & Veldhuizen Inc.
Mr P J Veldhuizen
For the eighth respondent : Adv M Greig
Instructed by : Dunsters Attorneys