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2024
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[2024] ZAFSHC 246
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Jonker and Another v Land and Agriculture Development Bank of South Africa and Others (3159/2020) [2024] ZAFSHC 246 (16 August 2024)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Reportable:
YES/NO
Of
Interest to other Judges: YES/NO
Circulate
to Magistrates:
YES/NO
Case
Number: 3159/2020
In
the matter between:
LOUIS
JONKER
First
Applicant
JOHANNA
JACOBA JONKER
Second
Applicant
And
THE
LAND AND AGRICULTURAL DEVELOPMENT
BANK
OF SOUTH AFRICA
First
Respondent
DEON
MARIUS BOTHA N.O.
Second
Respondent
JOHANNES
ZACHARIAS HUMAN MULLER N.O.
Third
Respondent
LOUISA
SIBIYA N.O.
Fourth
Respondent
THE
MASTER OF THE HIGH COURT,
BLOEMFONTEIN
Fifth
Respondent
AFFECTED
PARTIES OF JONKER PRODUCTS CC
AS
PER LIST ANNEXED AS ANNUXURE “A”
Sixth
Respondent
JUDGMENT
BY:
REINDERS, J
HEARD
ON:
15 FEBRUARY 2024
DELIVERED
ON:
16 AUGUST 2024
[1]
The two applicants are married to each other out of community of
property. They jointly move for
the setting aside of a final
liquidation order of an entity previously known as Jonker Products CC
(in liquidation) [the CC].
[2]
The first applicant according to his founding affidavit avers that he
is the sole member of the
CC. The second applicant applies on the
basis that she is a creditor as well as an employee of the CC. For
sake of clarity and
in distinction to the present application and
other litigation, reference to the current applicants would hereafter
also include
“the Jonkers/Mr Jonker” where applicable.
The application is opposed by the first respondent, namely the Land
and Agricultural
Development Bank of South Africa (Land Bank), whom
according to the papers moved for the liquidation of the CC during
2020.
[3]
The application is voluminous as a result of the inclusion of,
amongst others, the papers filed
in applications that previously
served before this court (and in some instances other Divisions),
previous heads of arguments and
judgments granted. Ultimately, the
issues and the relief claimed, remains the setting aside of a final
winding-up order granted
by this court.
[4]
It is common cause that the application for liquidation (under the
same case number as in the current
application) originally served
before Grobler AJ on 9 September 2020 on an urgent basis. He granted
amongst others an order placing
the CC under provisional liquidation
with the return date on 29 October 2020. The aforementioned rule nisi
was confirmed by Daniso
J on 29 October 2020 on the same papers. Of
significance however is that the application before Grobler AJ was
opposed by the CC,
and not granted without having heard full
arguments by the CC. The full reasons granted by court was attached
to the papers and
consists of some 40 paragraphs. Of note is
paragraph [13] of the judgment wherein the court made mention that
the CC denied that
the Land Bank had
locus standi
to pursue
the relief it sought in the notice of motion. Ultimately he granted
the mentioned orders.
[5]
The Jonkers now, three years after the final order being granted,
aver that Land Bank indeed did
not have the required
locus standi
to have moved the application at the time of granting of the
provisional and final winding-up, and that Grobler, J did not deal
with the averred lack of
locus standi.
Moreover, so the
argument went, there were essential documentation lacking by Land
Bank which, had it been placed before Grobler,
AJ, would not have
persuaded the judge to grant the relief. In the notice of motion, it
is prayed that the final liquidation order
granted on 29 October 2020
be set aside, and in the alternative that an interim order be granted
prohibiting the liquidators from
continuing with the liquidation
processes of the CC pending an action to be instituted by the
applicants within one month from
the date of the proposed order to
set aside the liquidation proceedings. At the commencement of hearing
the application, counsel
for applicants indicated that they no longer
rely on the interim relief sought and merely moves for the setting
aside of the final
order of liquidation. However, I was requested to
refer the matter for trial. The latter relief was objected to by
counsel for
Land Bank.
[6]
In moving their case the Jonkers in the founding affidavit and
subsequently their replying affidavit,
state that the relief for
setting aside is brought in terms of the common law only, and neither
in terms of Section 354 of the
Companies Act
[1]
which provides authority for a court to set aside a winding up order
that was previously granted, nor in terms of Uniform Rule
42 dealing
with rescission applications.
[7]
In its founding affidavit the deponent, Mr Jonker, under the heading
“the purpose of this
application”:
“
12.1 The
purpose of this application is to set aside the winding-up order of
Jonker Products, which we submit were improperly
obtained by the
First Respondent by intentionally misrepresenting the facts to the
Court, when the Application was moved on an
urgent basis.
12.2
Alternatively, in the event that the Court is not inclined to grant
the primary relief sought on motion papers,
for an interim interdict
prohibiting the Second to Fourth Respondents from continuing with the
liquidation processes of Jonker
Products pending finalisation of an
action to be instituted to set aside the orders of liquidation and
sequestration, which action
must be instituted within 1 month from
date of this order.
12.3
The Applicants contend that the Land Bank intentionally
misrepresented their
locus standi
in bringing the application
for the winding-up of Jonker Products on the basis that the CC was
unable to pay its debts, as envisaged
in section 345 of the Companies
Act, act 61 of 1973, in that the Land Bank claimed that it is a
creditor of Jonker Products, in
an amount of R 18 189 196.47, as at
31 May 2020, under circumstances where the Land Bank is not a
creditor of Jonker Products at
all, since all the loan agreements
relied upon are concluded between Jonker Products and Unigro
Financial services (Pty)
Ltd (Unigro), and not the Land Bank.
12.4
The Land Bank’s
locus standi
to launch the liquidation
proceedings was disputed from inception, but the way in which the
manner was dealt with by the Court,
precluded the Court from
adjudicating the issue of
locus standi
, and the court indeed
did not deal with the issue of
locus standi
in its judgment,
and simply accepted the Land Bank’s “say so” that
indeed it has
locus standi
.
12.5
The Applicants are advised that the Court would not have granted the
order of liquidation if the Court was
aware of the true facts and the
Applicants are therefore entitled to set aside the order of
liquidation in terms of the common
law.”
[8]
The nub of the submissions relates thereto that Land Bank placed
reliance for its
locus standi
to prove the CC’s
indebtedness to it based on certain alleged cessions and sales
agreements in terms whereof it acquired
the book debts of, amongst
others, the legal entity known as UniGro Financial Services(Ltd) Pty
[UniGro). According to Mr Jonker,
Grobler AJ in his judgment did not
deal therewith that the Land Bank did not have the required
locus
standi
. It is averred that applicants were not in possession of
all these documentation, notwithstanding an application in terms of
Rule
35(12) for discovery.
[9]
The applicants in addition under the
heading: “The rescission of judgments which were obtained
by
intentional misrepresentation” further relies thereon that Land
Bank through its functionaries and attorney misrepresented
the true
facts to court, that it was made with the intention to mislead, and
had the true facts been placed before court, the court
would not have
granted the aforementioned order. The deponent states that he has
been advised that, as a general rule, it is practically
impossible to
establish intentional misrepresentation by way of motion proceedings.
[10]
Mr Jonker states that “we were completely unaware of the Land
Bank’s intentional misrepresentation
and it only came to our
knowledge when we were informed of a similar case that was dealt with
by the same attorney on behalf of
the Land Bank…”
Reference is made to an application for the liquidation of the entity
Somerhoek Boerdery (Pty) Ltd
(Somerhoek Boerdery) in the High Court
of South Africa, Limpopo Divison in 2022. According to Mr Jonker the
Somerhoek Boerdery
application was settled on the basis that the
application for winding-up was abandoned, and Land Bank agreed to
Somerhoek being
placed in business rescue. These application
documents were obtained during April 2023. According to Mr Jonker,
having perused
these documents, “it is abundantly clear that
Land Bank knew that it did not have the necessary
locus standi
in Somerhoek”. It is averred that Land Bank knew that the
agreements relied upon contained information that would have been
relevant to the CC, and had the full contents of these agreements
been to their (the CC’s) knowledge, it would have been
used to
formulate a defence against the liquidation application. Mr Jonker
states that the CC was thus deprived of the opportunity
to raise
“these defences”.
[11]
I was referred to the judgment of
Waldeck
NO and Others v The Land and Agricultural Bank of SA
[2]
for the proposition that the Land Bank misrepresented facts to
Grobler AJ in relation to its
locus
standi
.
Counsel for applicants also directed my attention to a judgment
delivered in the Gauteng Division, Johannesburg
Trakman
N.O. and Others v The Master of the High Court and Others
[3]
where
the Land Bank was found wanting in producing the required cession
agreement to proof its
locus
standi
.
[12]
In its answering affidavit the Land Bank
emphasised from the outset that it denies any allegation or
suggestion
in the applicant’s founding affidavit of any
misrepresentation made by Land Bank and/or its representatives when
the matter
was heard before Grobler AJ. According to the Land Bank,
even though the learned judge did not specifically deal with the
dispute
in respect of
locus standi
, it was fully canvassed in
argument and the court made a finding that Land Bank had the required
locus standi
to bring the application. The Land Bank submits
that the applicants should have appealed the decision, but had failed
to do so
for approximately three years.
[13]
Land Bank submitted that the creditors of the CC would be severely
prejudiced by the setting-aside of the
winding-up order and from a
practical viewpoint, all material assets of the CC have already been
sold and transferred in the administration
of the liquidated estate
and under these circumstances it would be “practically
impossible to unscramble the egg”.
[14]
In answering to the allegations of
misrepresentation as averred by the Jonkers in its founding affidavit
(placing heavy reliance
on the Somerhoek Boerdery application), the
Land Bank extensively deals with and explains what exactly transpired
in the latter
application. It is averred that
Somerhoek
Boerdery in several written
agreements
acknowledged its indebtedness to Land Bank in clear and express
terms.
Somerhoek Boerdery further formally
consented to default judgment in terms of Rule
31
of the Uniform Court Rules in favour of Land Bank (and not UniGro).
[15]
Counsel for Land Bank submitted that of great significance in this
regard is the undisputed evidence that
the business rescue
practitioners acknowledged and accepted the Land Bank's claim in
Somerhoek Boerdery after their appointment
as business rescue
practitioners. The fact that the three business rescue practitioners
acknowledged and accepted Somerhoek Boerdery's
indebtedness towards
Land Bank clearly illustrate that the inference that the present
Applicants wish to draw is wrong and
definitely
not substantiated by their reliance on the Somerhoek Boerdery matter.
Moreover, so the argument went, the allegation
in the founding
affidavit that the Land Bank failed to deal with a denial of
locus
standi
in the replying affidavit
because they believed that the Land Bank had no
locus
standi
, is untrue. In the answering
affidavit a portion of the replying affidavit
filed
in the Somerhoek Boerdery matter was quoted dealing with this issue.
Land Bank submitted that it was convincingly illustrated
that
Somerhoek Boerdery, by its own admission, on several occasions and in
writing expressly admitted liability towards Land Bank.
[16]
It was submitted by Land Bank that, at the time of arguments before
Grobler AJ, it referred to several judgments
in various divisions of
the High Court wherein the
locus
standi
of Land Bank in n respect of ceded claims were adjudicated upon and
confirmed. In
Land
and Agricultural Development Bank of South Africa v WAA Engelbrecht
NO and Others
[4]
the learned judge made a finding that “there exists a valid
cession of rights between applicant and Unigo. As the cessionary,
applicant has a valid claim against Anlem Trust and thus the
necessary
locus
standi
to institute the present proceedings has been established.” In
this division in the matter of
Land
and Agricultural Development Bank of South Africa v Casparus Johannes
Rynhardus Cilliers
[5]
having heard arguments in respect of Land Bank’s
locus
standi
it was held:
“
[11]
It was submitted, rightly so, that the applicant needs to prove its
legal standing to claim. It was
contended that the applicant did not
establish sufficiently the fulfilment of the suspensive conditions
and therefore applicant
cannot perfect the security. I do not agree
and in my view the recordal referred to in paragraph [4] above and
signed by all the
parties on 14 April 2024 leaves no doubt in my mind
that the Land Bank (present applicant) has
locus
standi
to perfect the security. See:
Aussenkehr Farms Farms (Pty) Ltd v Trio Transport CC
2002 (4) SA 483
(SCA) at para [26].”
[17]
Counsel for Land Bank referred me also to a recent unreported
judgment of
Shanie
Taljaard and Another v The Land and Agricultural Development and
Others
[6]
in
the High Court of South Africa (Norther Cape Division, Kimberley
delivered on 1 December 2023 under case number 1335/2021) wherein
the
Land Bank’s
locus
standi
was confirmed.
[18]
Land Bank submitted that the
Waldeck
decision does not
assist the applicants as Land Bank specifically stated in its
founding affidavit that the documents relating
to Land Bank’s
transfer of rights, were available for inspection.
Waldeck
dealt with Land Bank’s failure to adhere to a request
for discovery in terms of Sec 35 of the Uniform Rules.
[19] In
reply Mr Jonker stressed that the application is brought on the
grounds of common law and denied that
the issue of
locus standi
was properly adjudicated upon. Counsel for applicants submitted that
the judgments relied upon by the Land Bank ,“are clearly
wrong“. Counsel however could not indicate that any of these
cases had been successfully overturned on appeal.
[20] I
deem it appropriate to state that, in requesting that the matter be
referred for trial, it would axiomatically
imply that the liquidation
proceedings would be stayed pending the outcome of such litigation.
Counsel for Land Bank submitted
that this would be tantamount to the
applicants‘ alternative interim relief, for which the Jonkers
did not make out a proper
case in its papers at all. I am in
agreement, and do not intend to make such an order herein.
[21]
The Supreme Court of Appeal in
Ferris
& Another v Firstrand Bank
[7]
held that an applicant in a rescission application based on the
common law, must show good cause for the granting of such
relief. Such good cause must be illustrated in clear terms in the
founding affidavit.
[8]
[22]
Although good cause cannot be defined comprehensively, in
Storti
v Nugent and Others
[9]
it was held that recision under common law involves establishing
“sufficient cause” which in turn involves two essential
elements
(a)
the party seeking the relief must present a reasonable and
acceptable
explanation for his default; and
(b)
on the merits such person must have a bona fide defence which, prima
facie, carries some prospects
of success.
[23]
For the applicants to succeed in in its claim of setting aside a
judgment on grounds of intentional misrepresentation,
it must allege
and proof that there was a misrepresentation and the Land Bank and
its attorney subjectively knew that it did not
have
locus standi
.
[24]
An applicant must show that:
24.1
the litigant was a party to the fraud
[10]
;
24.2
the evidence was in fact incorrect
[11]
;
24.3 it
was made fraudulently and with the intent to mislead
[12]
;
24.4
and it diverged to such an extent that from the true facts that the
Court would, if the true facts had been
placed before it, have given
a judgment other than that which it was induced by the incorrect
evidence given
[13]
.
[25]
Although the applicants state that it does not rely on Section 354 of
the Companies Act
[14]
for the
relief claimed, I deem it appropriate to quote the same. The section
provides authority for a court to set aside a winding
up order that
was previously granted. Such provisions are applicable to close
corporations in terms of Sec 66 of the Close Corporation
Act
[15]
Sec 354 directs:
“
(1)
The Court may at any time after the commencement of a winding-up, on
the application of any liquidator,
creditor or member, and on proof
to the satisfaction of the Court that all proceedings in relation to
the winding-up ought to be
stayed or set aside, make an order staying
or setting aside the proceedings or for the continuance of any
voluntary wind-up on
such terms and conditions as the Court may deem
fit.
(2)
The Court may, as to all matters relating to a winding-up, have
regard to the wishes
of the creditors or members as proved to it by
any sufficient evidence.”
[25]
In
Storti
supra
the Court
defined six principles that define this power:
1
The
Court's discretionary power is not limited to rescission on
common-law grounds;
2
Unusual
or exceptional circumstances must exist to justify the relief sought;
3
The section may not be invoked to obtain a
re-hearing of the sequestration application:
4
Where the relief is sought on the basis
that the sequestration order should never have been granted, the
facts must at least support
a common-law rescission:
5
Where
the application is based upon supervening events, it should involve
unnecessary hardship to restrict the debtor to the ordinary
rehabilitation relief; and
6
A
Court will not exercise this relief if setting aside the order would
cause undesirable consequences
.
[26]
In
Ward
and Another v Smith and Others: In re Girr v Zambia Airways
Corporation Ltd
[16]
the court found that the object of the section is not to provide for
a re-hearing of the winding-up proceedings nor for the court
to sit
on appeal upon the merits of the judgment in respect of those
proceedings.
[27]
I have quoted verbatim the basis on which the Jonkers rely for the
rescission of the final order of liquidation.
Reliance for the relief
sought is placed thereon that Land Bank intentionally misrepresented
to Grobler AJ that Land Bank was not
a creditor of the CC and thus
lacked
locus standi
. The reasons proffered for the alleged
misrepresentation by Land Bank in the founding affidavit, consist in
my view of inferences
drawn and speculation by the Jonkers on how
they perceive the Land Bank to have somehow known that they lack
locus standi
in the Somerhoek litigation. The Land
Bank in opposing these averments, set out comprehensively what had
transpired
and put paid to the Jonkers’ averments in this
regard. In any event, the applicants opposed the application before
Grobler
AJ, and the averment by the Jonkers that they would have been
“able to formulate a defence”, is untenable.
[28]
In respect of the allegations of fraud and/or misrepresentation I
keep in mind what was stated in
Raubex
Construction (Pty) Ltd v Bryte Insurance Company (Pty)
[17]
Ltd at paragraph [24], namely that fraud will not easily be inferred
where it is sought in motion proceedings. A party has to show
that
the representor advanced contentions in bad faith knowing it to be
incorrect. Land Bank avers that
locus
standi
had been dealt with extensively before the trial court and that
various judgments supported their view of
locus
standi
at the time. I agree with the contention on behalf of Land Bank that
it would be insufficient to only convince me that Land Bank
did not
have the required
locus
standi
at the time. I agree that in addition for me to interfere with the
order granted, applicants would have to proof subjective knowledge
of
those facts and the intention by Land Bank and its legal
representative to mislead the court in respect of the winding-up
proceedings.
Such intention and subjective knowledge have in my view
not been proved by the applicants on the papers.
[29]
In
Shani
Taljaard
[18]
the applicants moved for the rescission of liquidation and
sequestration orders granted against them on the same basis as in
casu,
namely that the Land Bank lacked
locus
standi
to have brought such applications and had intentionally
misrepresented its
locus
standi
in that there was no proof of a cession between Land Bank and Unigro
of the debts owed to Unigro by the applicants. In some 6 paragraphs,
the learned judge dealt comprehensively with the aspect of Land
Bank’s
locus
standi
and concluded that the Land Bank had proven its
locus
standi
.
I align myself with such conclusion.
[30]
The Land Bank opposed the application for a rescission of the winding
up of the CC in the respects as mentioned
herein above. The CC dealt
with its
locus standi
and explained same covering almost eight
pages and which covered the documentation that it relied upon. The CC
disputed the
locus standi
of Land Bank in its opposing
affidavit as a point in limine consisting of approximately six pages.
In the present application and
in argument that Land Bank’s
locus standi
was disputed at the inception of the litigation.
As mentioned above, the trial judge granting the provisional order
gave his reasons
why he concluded that a proper case had been made
out which included a reference to the disputed
locus standi
of
the Land Bank. Put differently, that court assessed and concluded the
question of
locus standi
and it would be improper for me to
have what would essentially amount to a re-hearing of the winding-up
proceedings or to attempt
to sit on appeal as a single judge upon the
merits of a judgment by a different judge of similar status. As
pointed out by Land
Bank, the applicants had been aware of the
judgment by Grobler AJ since September 2020 and never appealed the
order.
[31]
The above conclusion appears to me to be the end of the matter and
the application cannot succeed. The applicants
did not avail itself
of its remedy to appeal the final order where they could apply if so
advised to convince a court of appeal
to hear further evidence.
[32]
The applicants in their founding affidavit makes mention thereof that
following the appointment of liquidators
they filed an urgent
application to have the meetings and decisions taken thereat set
aside for want of compliance with section
78(1) of the CC Act. A rule
nisi was granted and confirmed, setting aside the first and second
meetings and the decisions taken
thereat. Leave was granted to
the Land Bank to appeal the order, and judgment have since been
delivered.
[19]
The Supreme
Court of Appeal (majority judgment) ordered a declarator that
s78(1)
of the
Close Corporations Act 69 of 1984
permits the Master to
grant consent to a liquidator to summon a first meeting of creditors
and members after the expiry of one
month from the date of final
liquidation, at any time before the meeting so summoned is
held.
[33]
In my view the finding of the SCA does not bear effect on this
application for setting aside the final order
of liquidation. The SCA
was most certainly not required to deal with the aspect of
locus
standi
. I was informed that other litigation (the exact detail of
which is unknown to me) in respect of the parties before me, are
still
pending in this Division.
[34]
Land Bank raised a point of non-joinder which may
or may not be a good point. I do not consider it necessary
for
purposes hereof to finally adjudicate same.
[35]
Having reached the conclusions herein above, the application for the
setting aside of the final liquidation
order granted in this Division
on 29 September 2020 cannot succeed. Both parties were represented by
senior and junior counsel
and requested costs of two counsel. Land
Bank pressed on me to make a punitive cost order against the
applicants. In the exercise
of my discretion costs would be on a
party and party scale.
[36]
Accordingly I grant the following order:
The application is
dismissed with costs,
such costs to include the
costs consequent upon the employment of two counsel.
C
REINDERS, J
On
behalf of the Applicant:
Adv
GD Maritz SC
Adv
FG Janse van Rensburg
Instructed
by:
Eugene
Geyser Attorneys
c/o
Lovius Block Attorneys
BLOEMFONTEIN
On
behalf of the First Respondent:
Adv J
Marais SC
Adv S
Tsangarakis
Instructed
by:
Strydom
and Bredenkamp
c/o
EG Cooper Majiedt Attorneys
BLOEMFONTEIN
[1]
, 61 of 1973 (Such provisions are applicable to close corporations
in terms of Sec 66 of the Close Corp Act 69 of 1984)
[2]
Unreported judgment in the Mpumalanga High Court Case Number
4103/2018.
[3]
Unreported judgment Case number 2020/12432 delivered on 21 may 2021.
[4]
Unreported
judgment in the Limpopo Division of the High Court under Case Number
2973/2020 delivered on 30 June 2020.
[5]
Unreported
judgment under Case Number 4201/2019 delivered on 19 December 2019.
[6]
Unreported
judgment under Case Number 1355/2021 delivered on 1 December 2023.
[7]
2014(3) SA 39 (SCA)
[8]
See:
Shakot
Investments (pty) Ltd v Town Counsel of the Borough of of Stanger
1976(2)
SA 70 (D).
[9]
2001(3) SA 783 (W) at 807A.
[10]
See:
Makings
v Makings
1958 (1) SA (A) at 344H-345A.
[11]
See:
Fraai
Uitzicht 1798 Farm (Pty) Ltd v McCoullough
(unreported Supreme Court of Appeal case
number
118/2019 deliverd on 5 June 2020.
[12]
See:
Minister
of Land Tenure v Sizwe Development
1991 (1) SA 677
(TK) at 680 B.
[13]
See:
Rowe
v Rowe
[1997] ZASCA 54
;
1997 (4) SA 160
(SCA) at 1661.
[14]
61 of 1973.
[15]
69 of 1984.
[16]
1998 (8) SA 175 (SCA)
[17]
2019
(2) All SA 322
SCA.
[18]
Supra
[19]
Botha
NO and Others v Jonker and Others
(1003/2022)
[2024] ZASCA 78
;
[2024] 3 All SA 365
(SCA) (27 May
2024).