REPUBLIC OF SOUTH AFRICA
IN THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
REPORTABLE
Case number: 103/03
In the matter between:
MEEG BANK LIMITED Appellant
and
JOHN EDWARD STUART WAYMARK 1
st Respondent
XOLANI MBANGXA 2nd Respondent
MZIMTSHA VIZIA NKONKI 3rd Respondent
CORAM
: MPATI DP, FARLAM, CAMERON, MTHIYANE JJA and
SOUTHWOOD AJA
HEARD: 12 MARCH 2004
DELIVERED: 26 MARCH 2004
Subject: Dissolution of a corporation by proclamation in terms of s 13 of Transkei
Corporations Act 10 of 1976 as amended – status of subsequent general notice
correcting omission in such proclamation.
____________________________________________________________
JUDGMENT
____________________________________________________________
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MPATI DP:
[1] This appeal concerns the date on which the Premier of the Eastern
Cape dissolved the Magwa Tea Corporation (‘the Corporation’). On 10 July
1997 the Premier of the Eastern Cape issued Proclamation No 9, published in
Extraordinary Provincial Gazette No 248 of that date, in terms of which he
dissolved the Corporation and appointed the three respondents as joint
liquidators. On 1 December 1997 the Premier issued General Notice No 157
(‘the General Notice’), published in Provincial Gazette No 282 of that date,
which provided that: ‘Due to an error, Proclamation No 9 which was published
in Provincial Gazette No 248 dated 10 July 1997, is hereby replaced.’ In
terms of the General Notice the Corporat ion was dissolved ‘with effect from
date hereof’. The issue in this appeal is whether the Corporation was
dissolved on 10 July 1997 or 1 December 1997.
[2] It is common cause that appellant (‘ Meeg Bank’) (formerly the Bank of
Transkei), had an agreement with the C orporation in terms of which the
Corporation operated a current banking account with it. During March 2000
the respondents (as plaintiffs) issued summons against the appellant for
payment of the sum of R2 246 119.03 which was the credit balance in the
Corporation’s account with Meeg Bank as at 10 July 1997, and a further
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amount of R4 530 830.49 alleged to have been deposited into the
Corporation’s account after 10 July 1997. In its plea Meeg Bank admitted that
the first amount was the credit balance of the Corporation as at 10 July 1997.
It also pleaded that a total amount of R4 511 325.17 had been deposited into
such account subsequently. However, Meeg Bank denied liability and
pleaded that the Corporation was dissolved on 1 December 1997 and that it
was therefore entitled, before that date, to pay out cheques and to honour
debit orders presented to it and to receive the deposits which it in fact
received. It counterclaimed for payment of the value of certain cheques
which, having been deposited into the Corporation’s account, had been
stopped on the instructions of the respondents (‘the liquidators’), and which
allegedly caused Meeg Bank to suffer damages in the sum of R445 854.95.
[3] When the matter came before Pakade J in the court a quo the learned
judge granted an order, in terms of Rule 33(4) of the Uniform Rules and by
agreement between the parties, that the preliminary issue of the date of
dissolution of the Corporation be decided first. He found that the Corporation
was dissolved on the former date and that ‘the repealed Proclamation No 9
was in force until the second Proclamation (No 157) came into operation on 1
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December 1997’. The learned judge hel d that: ‘To give a different
interpretation would lead to an absurdity so glaring’ as could never have been
contemplated by the Premier. The judgment is reported in 2003 (4) SA 114
(Tk). Meeg Bank appeals with leave of the court a quo.
[4] The power to dissolve the Corporat ion is conferred upon the Premier by
s 13 of the Transkei Corporations Act 10 of 1976 (‘the Act’), as amended by
the Corporations Transitional Provisi ons Act (Eastern Cape) 12 of 1995.
Section 13 reads:
‘
Dissolution of corporations
13(1) The Premier may, by proclamation in the Provincial Gazette , dissolve the
development corporation or a corporation.
(2) The Premier in such proclamation:
(a) shall regulate all matters resulting from such dissolution including assets,
liabilities, rights and obligations of such corporations;
(b) may in so doing prescribe that certai n provisions of the Companies Act, 1973
(Act No 61 of 1973), and the Insolvency Act, 1936 (Act No 24 of 1936), shall
with or without modification apply to such dissolution mutatis mutandis; and
(c) may assign the powers and functions exercised by officials and appointees
under the Acts referred to in paragraph (b) to any other person whom he or
she considers appropriate in the circumstances.
(3) The Premier shall submit such proc lamation to the Provincial Legislature within 30
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days of such dissolution.
(4) The registrar of companies shall ent er the dissolution in his or her registers.’
[5] Meeg Bank’s contention is, in essence, that Proclamation No 9 was
fatally defective and thus invalid and of no force and effect, because the
Premier failed to regulate ‘all matters resulting’ from the purported dissolution
of the Corporation on 10 July 1997 as he was obliged to do in terms of
s 13(2)(a) of the Corporations Act. As did the court a quo, counsel for the
appellant referred to the General Notice of 1 December 1997 as a
proclamation (hence the reference to ‘the second Proclamation’ in the
judgment of the court a quo).
[6] On the front page of the Extraordi nary Provincial Gazette appears the
sub-heading: ‘PROCLAMATIONS’ between double tram lines. The first page
of Proclamation No 9 is headed:
‘PROCLAMATION
by the
Premier of the Province of the Eastern Cape
No 9
DISSOLUTION OF MAGWA TEA CORPORATION UNDER SECTION 13 OF THE
CORPORATIONS ACT, 1985 (ACT No 10 of 1985) (TRANSKEI).’
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[7] By contrast, the cover page of the Provincial Gazette of 1 December
1997 bears the sub-heading: ‘GENERAL NOTICE’ between double tram lines
with its number, No 157 printed on the left, below the lower tram lines. The
second page is then headed as follows:
‘CORRECTION NOTICE
Due to an error, Proclamation No 9 whic h was published in Provincial Gazette No
248 dated 10 July 1997, is hereby replaced by the following:
PROCLAMATION
by the
Premier of the Province of the Eastern Cape
DISSOLUTION OF MAGWA TEA CORPORATION UNDER SECTION 13 OF THE
CORPORATIONS ACT, 1985 (ACT No 10 of 1985) (TRANSKEI).’
The General Notice has no proclamation number. The rest of the document
contains provisions identical to those in Proclamation No 9, as well as
paragraphs 2.2 to 2.7, which were omitted from Proclamation No 9. These
are some of the general provisions decreed by the Premier to apply to the
dissolution and winding-up of the Corporat ion. Counsel for Meeg Bank
contended that it is the omission of these paragraphs which renders
Proclamation No 9 invalid and of no force and effect. He argued that these
paragraphs (or at least some of them) contain powers without which the
liquidators would not have been able properly to perform their functions.
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These paragraphs read:
‘2.2 The liquidators are authorised to collect any outstanding debts due to the
Corporation in liquidation, and for the purpose thereof either to sell or compound any
of these debts for such sum and on such te rms and conditions as they in their
discretion may deem fit, or to abandon any claim which they, in their discretion may
deem appropriate and that all legal costs so incurred shall be costs of the estate.
2.3 The liquidators are authorised to employ auditors to investigate and write up the
books of the Corporation to the date of liquidation and to produce an audited
balance sheet as at that date, and to complete any necessary income tax and other
Government returns and that all costs so incurred shall be costs in the liquidation of
the Corporation.
2.4 The liquidators are authorised to dispose [of] the movable and immovable assets of
the Corporation by public auction, privat e treaty or public tender and the mode of
sale for any one or more of the assets shall be determined by the liquidators and all
costs incurred in relation thereto shall be costs of administration.
2.5 Costs incurred for the use of a record ing machine where the Government does not
provide this service without costs, the costs incurred herein and the costs to obtain
copies of such court records shall be allowed against the estate as costs of
administration.
2.6 The liquidators are author ised and empowered in their discretion to hold an enquiry
into the formation and affairs of the Corporation, and/or any matter relating thereto,
should they deem it to be in the interest of creditors, and to employ attorneys and/or
counsel and/or recording agents, to assist in the said enquiry, and to summons any
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person whom they deem nece ssary to be present at the enquiry; all costs so
incurred to be costs of administration.
2.7 The liquidators are authoris ed and empowered to investigate any apparent voidable
and/or undue preference and/or any dispositions of property, and to take any steps
which they in their discretion may deem necessary, including the instituting of legal
action and the employment of attorneys and/or counsel, to have these set aside and
to proceed to the final end or determination of any such legal action or to abandon
same at any time as they in their discretion may deem appropriate and that all costs
incurred in terms hereof shall be treated as administration costs.’
[8] When the omission came to his a ttention, so the argument went, the
Premier ‘replaced’ Proclamation No 9 with the second Proclamation and
dissolved the Corporation with effect from the date of the second
Proclamation. When it was pointed out to counsel that the Provincial Gazette
of 1 December 1997 contains what is referred to therein as a ‘General Notice’
he submitted that the Premier in tended to issue both a general notice
informing the public of the dissolution, and a Proclamation in terms of which
the dissolution was to take effect on that date.
[9] I do not agree that the Premier intended to issue a second Proclamation
dissolving the Corporation a second time. I say this for the following reasons.
Proclamation No 9 appeared in Provincial Gazette No 248 of 10 July 1997
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together with two other Proclamations. The first was Proclamation No 8 by
which the Premier dissolved the Ciskei Agricultural Corporation with effect
from 10 July 1997. The second was Proclamation No 9 and the third was
Proclamation No 10 in terms of which the Transkei Agricultural Corporation
was dissolved with effect from 10 July 1997. Both Proclamations No 8 and No
10 are identical to Proclamation No 9, but contain paragraphs 2.2 to 2.7 which
do not appear in Proclamation No 9. In Proclamation No 9 paragraph 2.1 is
followed by paragraph 2.8, a clear indicati on, in my view, that the Premier
had intended to include paragraphs 2.2 to 2.7 in Proclamation No 9, and that
the paragraphs were erroneously omitted by the printers. The General Notice
was obviously intended to correct this error. This is clear from the heading
‘CORRECTION NOTICE’.
[10] The provision in Proclamation No 9 in terms of which the Corporation
was dissolved reads:
‘Under the powers vested in me by section 13 of the Corporations Act, 1985 (Act No 10 of
1985) (Transkei), as amended by section 19 of the Corporations Transitional Provisions
Act, 1995 (Eastern Cape) (Act No 12 of 1995), I, Makhenkesi Arnold Stofile, Premier of the
Province of the Eastern Cape, hereby –
(a) after consultation with the Minister of Public Enterprises, dissolve the Magwa Tea
Corporation (the Corporation) with effect from the date hereof;
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. . . .’
The same provision in exactly the same terms is repeated in the General
Notice. It is on the basis of the words: ‘with effect from the date hereof’ that
counsel argued that the Corporation was dissolved on 1 December 1997. If
the Premier had merely wished to insert paragraphs 2.2 to 2.7 into
Proclamation No 9, so counsel submitted, he could easily have done so by
stating as much. Instead, he included the contents of the whole of
Proclamation No 9 into the General Notice, a clear indication, counsel argued,
that Proclamation No 9 was replaced by the later publication and is now no
more.
[11] In my view, the argument overlooks the provisions of s 13 of the
Corporations Act which empowers the Premier to dissolve a corporation ‘by
Proclamation’ (s 13(1)) and to regulate all matters resulting from such
dissolution ‘in such proclamation’ (s 13(2)). It is clear, therefore, that the
regulation of all matters resulting from such dissolution must be contained in
the proclamation which dissolves such corporation. It was clearly with this
requirement in mind that the Premier reproduced the whole of Proclamation
No 9 in the General Notice. The content of the General Notice confirms that it
is not a Proclamation. Proclamations are designated as such and are
numbered. The General Notice di d not purport to withdraw or annul
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Proclamation No 9 (assuming that it could do so), which shows that the
Premier considered Proclamation No 9 to have been valid and of full force and
effect when he issued the ‘Correction Notice’ contained in the General Notice.
To hold otherwise would create an untenable situation. The liquidators may
have done things pursuant to their appointment which would be rendered
invalid if the notice has the effect of postponing the date of dissolution to 1
December 1997. Such a situation could result in claims against them,
something the Premier could never have intended. It follows that the General
Notice of 1 December 1997 is not a proclamation dissolving a corporation, or,
indeed, a proclamation at all.
[12] Section 13(1) of the Corporations Act is very clear: the act of dissolving
a corporation must
be by proclamation. The section does not say that a
corporation may also be dissolved by way of a ‘correction notice’ contained in
a general notice, which is in fact what was published under the General
Notice. In the context of this case, the word ‘replaced’ in the General Notice
must be read to mean that the content of Proclamation No 9 is now as
appears in the ‘Correction Notice’. Such an interpretation results in no
absurdity. I agree, therefore, with the court a quo that the Corporation was
dissolved on 10 July 1997. This conclusion effectively disposes of the appeal.
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[13] Counsel for the appellant subm itted, however, as I have mentioned
above, that the omission of paragraphs 2.2 to 2.7 of the general provisions
from Proclamation No 9 rendered the Proclamation invalid. Counsel limited
himself to paragraphs 2.2, 2.4 and 2.6 in his argument on this issue. These
general provisions have been set out in paragraph 7 above.
[14] As to paragraph 2.2, counsel submitted that there are three aspects
relating to debts due to the Corporation which the liquidators are given power
to deal with in their discretion. These are the power to sell or compound any
of such debts for such sum and on such terms and conditions as the
liquidators in their discretion may deem fit, or to abandon any claim for
payment of a debt. These powers, argued counsel, are necessary for the
proper performance by the liquidators of their duties. They are not contained
in the Insolvency Act 24 of 1936 and t heir omission in Proclamation No 9
means that not all matters resulting from the dissolution of the Corporation
have been regulated in the proclamation as required by s 13(2)(a) of the
Corporations Act. By reason of the word ‘shall’, counsel submitted, the
provisions of the subsection are peremptory and therefore exact compliance is
called for.
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[15] I do not find it necessary to deal in any detail with the issue whether
s 13(2)(a) of the Corporations Act is peremptory or directory. Suffice it to say
that not all provisions that contain the word ‘shall’ are peremptory. Whether a
provision is peremptory or directory may very well depend on the scope and
purpose of the legislation at issue. (Nkisimane and others v Santam Insurance
Co Ltd 1978 (2) SA 430 (A) at 433H-434E; Weenen Transitional Local
Council v Van Dyk 2002 (4) SA 653 (SCA) para [13].) The purpose of s 13(2)
of the Corporations Act is, in my view, to ensure the proper and efficient
winding-up of a corporation. Counsel in any event conceded in the end that
Proclamation No 9 would be devoid of legal effect only if the extent of its
compliance with the provisions of s 13(2)(a) of the Corporations Act was
insubstantial.
[16] Counsel’s submission that not all matters resulting from the
Corporation’s dissolution were regulated in Proclamation No 9 was premised
on an argument that the powers conferred on a liquidator by the provisions of
s 386(4) of the Companies Act 61 of 1973 (‘the Companies Act’) are not
available to the liquidators, because such powers can be exercised only if the
Corporation was in a winding-up by the court, in a creditors’ voluntary winding-
up, or in a members’ voluntary winding-up (s 386(3)). (The Premier has made
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a number of the provisions of the Companies Act applicable in the winding-
up.) This submission overlooks the provisions of paragraph (c)(v) of
Proclamation No 9, which decrees that the liquidators ‘shall exercise, mutatis
mutandis, the same powers as those mentioned in section 386 of the
Companies Act . . .’. The phrase mutatis mutandis has been interpreted to
mean ‘with the necessary changes’. (See Touriel v Minister of Internal Affairs,
Southern Rhodesia 1946 AD 535 at 545.) The provisions of s 386 are
therefore applicable in this matter with whatever changes are necessary,
unless there are factors which render them inapplicable. That raised by
counsel is not one of them.
[17] Section 386(4)(h) of the Companies Act confers upon a liquidator the
power to sell any movable and immovable property of the company (in
liquidation) by public auction, public tender or private contract. The same
power is conferred by paragraph 2.4 of Proclamation No 9 (as inserted by the
correction notice). As to paragraph 2.6 of the general provisions the authority
given to the liquidators, in their discretion, to hold an enquiry into the formation
and affairs of the Corporation is not strictly necessary for the proper and
efficient winding-up of the Corporation. So too the discretion to sell or
compound debts due to the Corporation or to abandon any claim. The power
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to exercise a discretion in doing these things is merely additional so as to
circumvent the need to obtain directions from eg creditors or a court. The
absence of these powers would not have incapacitated the liquidators in the
winding-up of the Corporation. Paragraph (d) of Proclamation No 9 prescribes
that in the winding-up of the Corporation the provisions of the law relating to
insolvency shall in so far as they are applicable be applied mutatis mutandis in
respect of any matter not specifica lly provided for. The omission of
paragraphs 2.2 to 2.7 from Proclamation No 9 was accordingly not fatal and
did not render the Proclamation invalid.
[18] The appeal is dismissed with costs, including the costs consequent
upon the employment of two counsel.
L MPATI DP
CONCUR:
FARLAM JA
CAMERON JA
MTHIYANE JA
SOUTHWOOD AJA