REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG LOCAL DIVISION, JOHANNESBURG
CASE NO: 42818/20
In the matter between:
JOHANNES HENDRIK JACOBUS STEYN FIRST INTERVENING APPLICANT
GUNTHER DONALD FREYER SECOND INTERVENING APPLICANT
In re:
SINGLE DESTINATION ENGINEERING (PTY) LTD FIRST APPLICANT
GUARDIAN INTERGRATED SYSTEMS CC SECOND APPLICANT
and
T VAN DEN HEEVER N.O. FIRST RESPONDENT
NAG OMAR SECOND RESPONDENT
(1) REPORTABLE: NO
(2) OF INTEREST TO OTHER JUDGES: NO
(3) REVISED: NO
……… ............ …12/12/2024……
SIGNATURE DATE
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T C LOURENS N.O. THIRD RESPONDENT
[in their capacities as the joint liquidators of Skincon Calibrate
(Pty) Ltd (in liquidation)]
JUDGMENT
Manoim J:
[1] This is an application for intervention in what I will term the Main application.
The two applicants are erstwhile directors and shareholders of a company
called Skincon Calibrate (Pty) Ltd (“Skincon”) that is now in liquidation
[2] The respondents in this application , Single Destination Engineer ing (Pty) Ltd
(“SDE”) and Guardian Integrated Systems CC ( “in business rescue ”) (“GIS”),
are the applicants in the Main application. (For convenience I will refer to them
from now on collectively as the respondents , since that is their statu s in the
present application which is interlocutory to the main application. Where I deal
with them separately, I refer to them by name. ) They allege that they are
creditors of Skincon. On that basis they brought t he Main application in terms
of section 360 of the Companies Act, 71 of 2008 (“the Act”).
[3] That section provides for a creditor or member of a company that is being
wound up to apply to inspect its documents. Some background is required to
situate the present intervention application.
Background
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[4] SDE together with Skincon and another firm was a member of a consortium
tasked with the construction of a facility for First National Bank. GIS was a sub-
contractor to the consortium. According to the respondents, Skincon was the
principal contractor , which meant it was responsible for managing the
consortium’s finances. In this capacity it allegedly received all payments made
to the consortium by FNB , as the consortium did not have its own banking
account. The consortium also made use of sub -contractors. Certain
subcontractors have obtained an arbitration award against Skincon, SDE, and
another firm called Maine Consulting , for approximately R 20 million. The
respondents allege that instead of paying the amounts , Skincon’ s directors,
who are the two applicants in the intervention application, place d Skincon into
voluntary liquidation and went to Australia where they now reside.
[5] The money from FNB was paid into the Skincon account. This is the reason the
respondents say they want access to the books. They allege that prior to
launching the main application they had sought access to the books from the
applicants who initially ignored their requires and then said this was a matter
for the liquidators.
[6] The respondents both allege they are owed money by Skincon arising from the
construction project which Skinco n has refused to pay. In May 2020, Skincon
was voluntarily wound up by the applicants who were its only two directors and
members.
[7] In the main application the respondents refer to two separate lawsuits relevant
to the present matter. In the first, Theo Gaffner, a director of SDE, is being sued
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in his personal capacity from debts arising from the FNB project along with the
two applicants, and another person, by a firm called Master Power
Technologies (“MPT”).
[8] In the second matter a judgment was obtained against Skincon and SDE and
a firm called Maine Consulting Pty Ltd. The three are jointly and severally liable
for the judgment debt of R 6 million. But ironically the plaintiff in this matter is
GIS. Nevertheless, despite this judgment both firms have made common cause
in this litigation.
[9] They did so by jointly bringing an application in terms of section 360 of the Act.
That section provides, inter alia, for a creditor of a company being wound up to
apply to court for an order to inspect the books and papers of that company.
[10] Since the main application was brought in 2001 , GIS was placed in business
rescue. It is in that capacity , represented by its business rescue practitioner,
that it joins SDE in opposing the intervention application.
[11] In t he main application, the respondents allege that they are creditors of
Skincon and thus are entitled to inspect the books of the company , now under
the control of the liquidators . They give seven reasons for doing so. Amongst
those relevant to the intervention application are those that contemplate future
litigation against the applicants in their personal capacities. I mention them
briefly:
a. That it may be necessary to hold an insolvency enquiry for the purpose of
gathering evidence to hold the applicants personally liable. The documents
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they seek to inspect they allege “… will be vital in motivating such an
enquiry;”
b. SDE (the first respondent) needs the documents to prove its claims against
Skincon and the respondents in their personal capacities and to prove that
they (“Skincon”) and the respondents are liable to indemnify SDE against
claims made against it.
c. The respondents need to ascertain whether any payments from FNB have
been routed to a company called Yaris which had been set up by the
applicants.
[12] But despite these several mentions of the applicants in the founding affidavit in
the main application only the liquidators of Skincon are cited as responden ts.
Although at one stage it appeared that the applicants might be cited this never
transpired. Initially it appeared the application would proceed unopposed. In
September 2021, the three joint liquidators had indicated to the applicants that
they would not oppose the main application. The applicants then brought the
present intervention application in October 2021. But the liquidators have
changed their position, since the papers in the intervention application were
finalised, and in June 2024, they filed papers to oppose the main application.
[13] The intervention application was thus premised on the main application
proceeding unopposed. But that has now changed.
[14] Nevertheless, I now consider what facts the intervention application was based
on when it was launched. The applicants allege that:
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a. The main application has been brought mala fide because SDE wishes to
use the information gleaned from the inspection to bolster its own case where
it faces a lawsuit brought against it at the instance of MPT. The real motive it is
alleged, is to seek information that could lead to the applicants, as erstwhile
directors, becoming personally liable.
b. The applicants have a direct and financial interest in the main application
because as the sole shareholders of Skincon they have a reversionary interest
in the company.
c. Certain inaccurate factual allegations have been made about the applicants
in the main application which must be corrected. Specifically mentioned is the
allegation that they left to go to Australia when they wound up Skincon.
d. The liquidators were not opposing the application and as a result certain legal
issues might not get raised if the application proceed ed unopposed.
Specifically, the applicants placed in issue that the respondents are not
creditors of Skincon and hence ha d no locus standi to bring the application in
terms of section 360. In the case of SDE it is alleged that it has never proved
its claim and in respect of GIS that the judgment it relies on is a nullity, at least
as against Skincon, as it was brought on an unopposed basis after the company
had been placed in provisional liquidation.
Requirement for intervention
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[15] Intervention applications are governed by Rule 12 of the Uniform Rules. It is
trite law that the requirements for an intervention application are that the party
seeking intervention must meet at least two minimum requirements:
a. it has a direct and substantial interest in the main application; and
b. Its rights would be prejudicially affected if it were not allowed to intervene.1
[16] The respondents argue that the applicants have not met either of these
requirements. First , they argue that they have not shown a direct and
substantial interest in the subject matter of the main application. Given that
Skincon is now in the process of being wound up the liquidators stand in the
stead of the erstwhile director’s and members. 2 Hence, they have no direct
interest. Nor does their shareholding in the company amount to more than a
financial interest. The courts have held that a financial interest is only an indirect
interest in the litigation. But they also argue that the applicants failed to make
out the second element of the requirements for intervention – that they are
affected by the outcome of the case.
Analysis
[17] The test for intervention is not controversial. Nor are the legal issues that the
respondents rely on. The applicants ’ shareholding in Skincon is a financial
interest. It does not give rise to a direct and substantial interest in the subject
matter of the main matter, otherwise each shareholder would always have such
1 See for instance Amalgamated Engineering Union v Minister of Labour 1949(3) SA 637(A) at 659.
2 Section 80(8)(b)(ii) of the Companies Act 71 of 2008
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an interest. 3 Nor does the fact that they are the only shareholders of the
company; that goes to the quantity of their interest not its legal nature. The fact
that they were directors is also of no moment once the company is in the
process of being wound up.
[18] But even if they were able to contend for such an interest as being direct and
substantial, they fail on the second leg. The applicants are not prejudiced by
the outcome of the application. It is important not to lose sight of what the
application is for. It is the right to inspect documents of the company. What the
applicants are concerned about is that the respondents will uncover some
documents in the course of the inspection, which might encourage the
respondents to act against them in some later proceedings. But that is not what
is meant by prejudice caused by the order. That prejudice , if it is occasioned,
would be the product of any later proceedings, not an order to inspect granted
in the main application . Those documents exist already. The order does not
have any transformative effect on them. The only implication if the main
application is successful is that a class of persons gains access to inspect them.
No other direct implication for the applicants flows from this.
[19] Nor is it relevant for the court to consider now what the respondents’ motives
are. Doubtless most creditors or members seeking a right of inspection have
some future proceeding in mind. Speculation for that purpose it is to be used
later is irrelevant at this stage.
3 Henri Viljoen (Pty) Ltd v Awerbuch Brothers 1953 (2) SA 151 (0), at page 167
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[20] Then the applicants make the point that certain false accusations have been
made against them in the main application. The respondents alleged that
applicants had left for Australia after things got tough. But say the applicants
they will be able to show that this chronology of events is false. But even if they
can sustain this version it goes to the reasons for the decision not the decision
itself. As was held in the Zuma case this is not a basis to permit intervention.
There Harms JA explained:
[21] “Nevertheless, to be able to intervene in proceedings a party must have a direct
and substantial interest in the outcome of the litigation, whether in the court of
first instance or on appeal. The basic problem with the application is that the
applicants have no interest in the order but onl y in the reasoning. They are in
the position of a witness whose evidence has been rejected or on whose
demeanour an unfavourable finding has been expressed. Such a person has
no ready remedy especially not by means of intervention. To be able to
intervene in an appeal, which is by its nature directed at a wrong order and not
at incorrect reasoning, an applicant must have an interest in the order under
appeal. The applicants do not have such an interest.”4
[22] But while the Zuma case dealt with intervention in an appeal the reasoning
remains apposite in the present case. An interest in the reasoning does not
constitute a basis for intervention because the party has no interest in the order.
[23] Finally, the applicants seek to challenge the respondent’s status as creditors.
When the main application was unopposed this was a central plank of the
4 National Director of Public Prosecutions v Zuma 2009 (2) SA 277 (SCA).
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intervention application. The concern was that if the main application continued
unopposed, possibly unauthorised parties might get access to inspect
Skincon’s documents. But since then , the liquidators have decided to oppose
the application, and they have raised this point themselves. Thus, even if they
could have intervened in the proceedings on some extended notion of
intervention contemplated in the United Watch case, that plank has now been
removed.5 The court hearing the main application will now have the benefit of
hearing argument on this point.
[24] The application for intervention fails. The respondents are entitled to their costs.
ORDER: -
[25] In the result the following order is made:
1. The application is dismissed with costs, including costs of counsel on scale
B.
___________ ______
N. MANOIM
JUDGE OF THE HIGH COURT
GAUTENG DIVISION
JOHNANNESBURG
5See United Watch and Diamond Co Pt Ltd v Disa Hotels Ltd l972 4 SA409 C at416A , where it was
held that a court has a discretion where a party seeks leave to intervene and there is no authoritative
definition of the limit of that discretion.
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Date of hearing: 06 December 2024
Date of Reasons: 12 December 2024
Appearances:
Counsel for the Intervening Applicants: M P van der Merwe SC
Instructed by: Tim du Toit & Co Inc
Counsel for the First Respondent: WKC Pretsch
Instructed by: Primerio Law Inc