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[2024] ZAMPMBHC 23
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Paradise Creek Investments 34 (Pty) Limited v Zeelie N.O (A80/2022) [2024] ZAMPMBHC 23 (14 March 2024)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
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and
SAFLII
Policy
EPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA,
MPUMALANGA
DIVISION (MAIN SEAT)
Case
Number: A80/2022
1.
REPORTABLE:
YES
/ NO
2.
OF INTEREST TO OTHER JUDGES:
YES
/NO
3.
REVISED.
DATE:
14 March 2024
SIGNATURE:
[SIGNED]
In
the matter between:
PARADISE
CREEK INVESTMENTS 34 (PTY)
LIMITED
Appellant
and
PETRUS
ZEELIE N.O
[Administrator
of the MJEJANE TRUST IT 6[...]]
Respondent
In
re:
PETRUS
ZEELIE N.O
[Administrator
of the MJEJANE TRUST IT 6[...]]
Applicant
and
MJEJANE
FARM MANAGEMENT (PTY)
LIMITED
[in final liquidation]
First
Respondent
T
C RAMPATLA N.O.
Second Respondent
T
W VAN DEN HEEVER
N.O.
Third
Respondent
PARADISE
CREEK INVESTMENTS (34) (PTY) LIMITED
Intervening Party
This
judgment will be handed down electronically by circulation to the
parties’ legal representatives by email and release
to SAFLII.
The date and time for hand-down is deemed to be at 11h00 on 14 March
2024.
JUDGMENT
Coram:
Mphahlele JP; Roelofse AJ
et
Bam AJ
Roelofse
AJ:
[1]
On 22 September
2022, the first respondent (MFM), was finally liquidated by an order
of the court
a
quo
per
Ratshibvumo J (hereinafter referred to as ‘the court’
unless the context indicates otherwise).
[1]
In addition to the final winding-up order, the court granted the
appellant (Paradise Creek) leave to intervene and directed that
an
enquiry in terms of section 417 and 418 of the Companies Act 61 of
1973 (the Companies Act) be conducted into MFM’s affairs.
[2]
With leave of the court, Paradise Creek appeals the court’s
judgement and orders.
[3]
The order was
granted upon an application by the Respondent in this appeal
(Zeelie
[2]
) (the liquidation
application). The notice of motion in the liquidation application was
signed on 3 May 2021. The founding
affidavit in the liquidation
application was deposed to on 1 May 2021.
[4]
MFM was initially wound-up voluntarily upon a resolution that
was taken by two of its directors on 12 April 2021. The voluntary
winding-up was set aside by the Gauteng Division, Pretoria (per Davis
J) on 28 May 2021. Zeelie’s application for leave to
appeal the
Davis J order was dismissed. On 21 January 2022, the Supreme Court of
Appeal dismissed Zeelie’s petition in terms
of
section 17(2)(f)
of the
Superior Courts Act 10 of 2013
.
[5]
Therefore, the
voluntary winding-up was set aside subsequent to the liquidation
application being instituted and an appeal of that
order was
exhausted by the time the court heard the liquidation application.
[3]
The voluntary winding-up no longer exists.
The
relief that was sought by Zeelie in the court
a quo
and the
orders granted
[6]
In his notice of
motion in the liquidation application, Zeelie sought: the final
winding-up of MFM
[4]
; that the
proceedings in the voluntary winding-up be confirmed, including the
Master’s appointment of the liquidators
[5]
;
an order that the commencement of the court ordered winding up shall
be the date of the resolution for the voluntary winding-up
[6]
;
and that a commission of enquiry into the affairs of MFM be held in
terms of the provisions of sections 417 and 418 of the Companies
Act
[7]
together with relief
ancillary to such an enquiry
[8]
.
[7]
The court only granted: the application of Paradise
Creek to intervene; the final winding-up of MFM, and the enquiry in
terms
of section 417 and 418 of the Companies Act. The proceedings of
the voluntary winding-up and the commencement date of the winding-up
to the date of the resolution was not granted.
[8]
Paradise Creek raised nineteen grounds of appeal. The
grounds of appeal traverse the provisions of section 346(e) of the
Companies
Act and the finding that MFM is insolvent.
[9]
I commence with section 346(e) of the Companies Act.
[10]
Section 346(e) of the Companies Act provides:
‘
346.
Application for winding-up of company.—(1) An application
to the Court for the winding-up of a company
may, subject to the
provisions of this section, be made—
…
.
(e)
in the case of any company being wound up voluntarily, by the Master
or any creditor or
member of that company;
…
.’
[11]
The starting point in my view is to consider what
Zeelie prayed for in the trust’s notice of motion and what
relief
the court ultimately granted. Prayers 2 and 3, read with
prayer 1 of the notice of motion clearly sought what would in effect
be
a “conversion” of the voluntary winding-up to a
creditor’s winding-up. Zeelie, at paragraph 16 in the trust’s
founding affidavit in the liquidation application says:
‘
This is firstly an
application in terms of Section 346(e) of the Act [Companies Act].
The applicant seeks an order that the first
respondent, which is
presently in voluntary liquidation, be finally wound up by an order
of this Court. This is a so-called conversion
application, wherein a
voluntary liquidation is converted into a forced liquidation or a
court liquidation.’
[12]
In paragraph 62.3 of the trust’s founding
affidavit, Zeelie submits:
‘
that a Court
liquidation as envisaged in section 346(1)(e) ought to be granted.’
[13]
The trust delivered a supplementary affidavit that was
deposed to on 17 August 2021. In the supplementary affidavit, Zeelie
refers to the judgment of Davis J that set aside the voluntary
winding-up and confirms that Davis J refused leave to appeal his
judgment, that Zeelie petitioned the Supreme Court of Appeal and the
petition to the Supreme Court of Appeal suspends Davis J’s
order which results that the voluntary winding-up is still in force.
[14]
The trust therefore clearly proceeded on the basis that it
sought a conversion of the voluntary winding-up to a winding-up by
the
court. Of course this was no longer possible after the Supreme
Court of Appeal refused leave to appeal Davis J’s judgment.
[15]
The trust’s persistence with the conversion of the
voluntary winding-up to a winding-up of the court must be seen in the
light
of the order of the court. The court did not grant prayers 2
and 3 of the notice of motion. What the court therefore ordered was
a
winding-up by the court.
[16]
The granting of
prayer 4 of the notice of motion also does not translate to the
conversion of the voluntary winding-up. Prayer 4
of the notice of
motion that was granted could in any event have been granted without
invoking section 346(e) because section 388
[9]
of the Companies Act allows for leave to be granted by the court to
convene an inquiry in terms of section 417 of the Companies
Act. In
Michelin
Tyre Company (South Africa)(Pty) Ltd v Janse Van Rensburg and
Others
[10]
‘
There are at least
two ways of procuring a s 417 enquiry even in a voluntary winding-up.
The first is to convert the winding-up
into a winding-up by the court
under s 346(1)(e); and the other is an application to court under s
388 for leave to convene an
enquiry.’
[17]
Prayer 4 of the
notice of motion is clearly aimed at procuring a section 417 enquiry
and notwithstanding the trust not specifically
mentioning section 388
of the Companies Act, I see no reason why the court could not have
granted prayer 4 of the notice of motion,
even in the absence of the
voluntary winding-up. In this regard I, just as the court
[11]
,
took guidance from
Swart
v Heine and Others
[12]
,
that sets out as follows:
‘
[7] In my view it
is not necessary for a litigant who is relying on a statutory
provision to specify it. It is sufficient if it
is clear from the
facts alleged by the litigant that the section is relevant and
operative. This point was made clear in Fundstrust
(Pty) Ltd (in
liquidation) v Van Deventer
1997 (1) SA 710
(A) 725H-726A, where this
court stated the following:
‘
It is not
necessary in a pleading, even where the pleader relies on a
particular statute or section of a statute, for him to refer
in terms
to it provided that he formulates his case clearly (see Ketteringham
v City of Cape Town
1934 AD 80
at 90) or, put differently, it is
sufficient if the facts are pleaded from which the conclusion can be
drawn that the provisions
of the statute apply (see Price v Price
1946 CPD 59
, Wasmuth v Jacobs
1987 (3) SA 629
(SWA) at 634I).’
See also in this regard
Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs &
others
[2004] ZACC 15
;
2004 (4) SA 490
(CC) para 27.
In the present, case all
averments necessary support the relief which they were granted were
made by the respondents. A reading
of the notice of motion, in
particular paras 2 and 3, and the entire founding affidavit
demonstrate clearly that what the respondents
sought before Ledwaba
DJP was leave to convene an enquiry in terms of ss 417 and 418 on the
Act having stated the company had been
wound-up voluntarily and that
they were creditors of the company. It is of course difficult to
imagine, in the circumstances of
this case, that the application
meant to achieve something other than an application contemplated in
terms of s 388 of the Act.’
[18]
The trust alleged
(and the court accepted) that MFM’s assets were being
dissipated or attempts were made to dissipate MFM’s
assets and
Zeelie believed that more money and assets may have been dissipated
because “…
large
parts of it belongs to the Trust or had to be paid out to the
trust.”
[13]
The court proceeded to say the following:
‘
In light of the
above, the Applicant [Zeelie] needed an inquiry to be conducted into
the affairs of the First Respondent [MFM] in
terms of section 417 and
418 of the Act as he [Zeelie] did not have a clear understanding of
what happened in its [MFM] affairs
and the dealings it had with the
Trust. This situation was made worse because the erstwhile trustees
had until then ignored the
court orders directing them to hand over
documents pertaining to the affairs of the Trust.’
[14]
[19]
In its answering
affidavit, Paradise Creek, challenges the allegations of Zeelie over
the dissipation of assets by labelling these
allegations as
scurrilous and completely unfounded.
[15]
[20]
The factual findings of the court which ultimately lead to the
order in paragraph [27.3] of the judgment should only be interfered
with on appeal if such findings constitute a clear misdirection. I
see no misdirection by the court. In my view, only an inquiry
in
terms of section 417 shall uncover the true dealings of the company
insofar as it relates to the Trust and Paradice Creek. If
there is
nothing untoward as is alleged by Zeelie, MFM, Paradise Creek and its
directors shall be able to demonstrate same. Section
417 of the Act
is an indispensable tool to enhance openness and transparency where
the artificial corporate veil fails.
[21]
Paradise Creeks challenge of the court’s order in
paragraph [27.3] of the judgment must therefore fail.
[22]
I proceed with the solvency challenge.
[23]
Paradise Creek’s challenge on this score is that: the
court erred in finding that MFM was apparently insolvent; the court
erred in exercising its discretion in favour of a final winding-up;
the court ought to have found that the trust’s alleged
claim
was
bona fide
disputed; the court erred in concluding that it
was common cause that the trust was MFM’s creditor.
[24]
I logically first have to deal with the dispute that was
raised over the trust’s alleged claim for if it should have
been
found that the trust’s claim was disputed on
bona fide
grounds, the findings that MFM was apparently insolvent, that the
trust was MFM’s creditor and the discretion that was ultimately
exercised by the court to grant the final winding-up would have been
be wrong.
[25]
Regarding dispute Paradise Creek raised over MFM’s
indebtedness to the trust, the court found at paragraph 25 of its
judgment:
‘
In
light of the above, I conclude that the Intervening Party’s
dispute van be best described as consisting of a bald or
uncreditworhty
denials, raises fictitious disputed of fact, is
palpably implausible, far-fetched or so clearly untenable that the
court is justified
in rejecting them merely on the papers. It is
clear from the evidence presented that the First Respondent is indeed
insolvent and
that the provisional liquidation should be confirmed.’
[26]
The court made the aforesaid finding after considering the
rent calculations in respect of a new lease agreement that was
alleged
by Paradise Creek but disputed by the trust. Even if it is
accepted that the new lease agreement was indeed concluded and in
force,
MFM would still be indebted to the trust. Yet again the
court’s findings are not open to be challenged before this
count
in the absence of a misdirection by the court. No such
misdirection exists in the court’s judgment having regard to
the facts
in its totality.
[27]
I turn to Paradise
Creek’s challenge that the court, in exercising its discretion,
should not have granted the final winding-up
order. In this regard,
the court exercised a narrow discretion. In
Imobrite
(Pty) Ltd v DTL Boerdery CC
[16]
the nature of the court’s
discretion is explained as follows:
‘
[19]
It is well-established that the two types of discretion exercised by
courts are often referred to as a discretion in
the
strict/narrow/true sense and a discretion in the broad/wide/loose
sense. In the context of an application for business
rescue,
this Court in Oakdene Square Properties v Farm Bothasfontein
(Oakdene), observed that the term ‘discretion’
is
sometimes used in the loose sense to indicate no more than the
application of a value judgment. Furthermore, this Court in Oakdene
explained that where the ‘discretion’ exercised by the
lower court was one in the loose sense of a value judgment,
the
limitation imposed on the authority of the court of appeal to
interfere does not apply. Moreover, it pointed out that ‘in
that event the court of appeal is both entitled, and in fact
duty-bound, to interfere if it would have come to a different
conclusion.’
[20]
In Afgri Operations Limited v Hamba Fleet (Pty) Ltd,
this Court
reaffirmed that an unpaid creditor has a right, ex debito justitiae,
to a winding-up order against a company that has
not discharged its
debt. Notably, it also reaffirmed the trite principle that the
refusal of a winding-up order under such
circumstances entails the
exercise of a narrow discretion. The following observations in
Boschpoort Ondernemings (Pty) Ltd
v Absa Bank Limited
appositely illustrate that the mere fact that there may be more value
than the claim is not, without
more, sufficient to sway a court
towards exercising the discretion in favour of a debtor:’
…
.
[21] In summing up, it
bears emphasising that the exercise of discretion in favour of not
granting a liquidation order must be based
on a solid factual
foundation. As mentioned in the foregoing paragraphs, that factual
foundation is missing from the facts presented
by the respondent in
the answering affidavit. In the face of a compelling case made by the
appellant for granting a winding-up
order, the respondent did not
raise a bona fide defence to the claim. Instead, it relied on
untenable technical defences. These
were rightly rejected by the high
court.
[22] It is
well-established that an appellate court may interfere with the
exercise of a discretion in the true sense by a court
of the first
instance only if it can be demonstrated that the latter court
exercised its discretion capriciously or on a wrong
principle, or has
not brought an unbiased judgment to bear on the question under
consideration, ‘or has not acted for substantial
reasons’.’
[Footnotes omitted]
[28]
The facts demonstrate that the trust is a creditor of MFM and
that there is no
bona fide
dispute over MFM’s
indebtedness to the trust. In addition, the facts illustrate that
MFM’s affairs are in such a state
that its survival, either
commercially or otherwise is impossible. There is therefore no reason
to interfere with the court when
it exercised its discretion to grant
the final winding-up order.
[29]
There is no reason why costs should not follow the result.
[30]
In the premises, I made the following order:
(a)
The appeal is dismissed with costs.
Roelofse AJ
Acting Judge of the High
Court
I
agree and it is so ordered.
pp.
Mphahlele
JP
I
agree and it is so ordered.
pp.
Bam
AJ
DATE
OF HEARING: 21
AUGUST 2023
DATE
OF JUDGMENT: 14 MARCH 2024
APPEARANCES
FOR
THE APPELLANT:
MP van
Der Merwe SC instructed by Weavind and Weavind
FOR
THE RESPONDENT:
EM
Theron SC instructed by Du Toit Smuts Attorneys
[1]
Paragraph
[27.2] of the order. The provisional winding-up order was granted on
15 November 2021.
[2]
Who
is the court-appointed trustee of the Mjejane Trust (the trust). The
trust is alleged to be one of MFM’s creditors.
[3]
19 July, 6 and 22 September 2022.
[4]
Prayer
1 of the Notice of Motion.
[5]
Prayer 2 of the notice of motion. The liquidators being t
he
second and third respondents in the liquidation application.
[6]
15
April 2021.
[7]
Prayer
4 of the Notice of Motion.
[8]
Prayers
4.2 to 4.5 of the Notice of Motion which includes directing the
scope of the enquiry, the appointment of a commissioner,
that
section 418 apply to the enquiry, and that the proceedings before
the commissioner be kept private.
[9]
Which
provides:
‘
388.
Court may determine questions in voluntary winding-up.—(1)
Where a company is being wound up voluntarily,
the liquidator or any
member or creditor or contributory of the company may apply to the
Court to determine any question arising
in the winding-up or to
exercise any of the powers which the Court might exercise if the
company were being wound up by the Court.
(2) The Court may,
if satisfied that the determination of any such question or the
exercise of any such power will be just
and beneficial, accede
wholly or partly to the application on such terms and conditions as
it may determine, or make such other
order on the application as it
thinks fit.’
[10]
(198/2001)
[2002] ZASCA 55
(29 May 2002) at para. 5.
[11]
At
paragraph [12] of the judgment.
[12]
(192/2015)
[2016] ZASCA 16
(14 March 2016).
[13]
Judgment
at para. 11.
[14]
Judgment
at para. 12.
[15]
Paragraphs
88 and 89 at pages 452 and 453.
[16]
(1007/20)
[2022] ZASCA 67
(May 2022).