IN THE HIGH COURT OF SOUTH AFRICA
FREE STATE DIVISION, BLOEMFONTEIN
Not reportable
Case no: 1602/2025
In the matter between:
LOOMAR BOERDERY (PTY) LTD APPLICANT
and
ELRICH RUWAYNE SMITH N.O FIRST
RESPONDENT
ELNA ELSA POHL N.O SECOND
RESPONDENT
DHANESVARIN APPAVOO N.O THIRD RESPONDENT
MASTER OF THE FREE STATE
HIGH COURT, BLOEMFONTEIN FOURTH RESPONDENT
STEPHANUS PETRUS BOTHA HANCKE N.O FIFTH RESPONDENT
Neutral citation: Loomar Boerdery (Pty) Ltd v Elrich Ruw ayne Smith and
Others (1602/2025) [2026] ZAFSHC 83 (6 March 2026)
Coram: MOLITSOANE J
Heard: 7 August 2025
2
Delivered: 6 March 2026
Summary: Insolvency law -removal of liquidators – whether the
applicant may approach a court for the removal of a liquidator before first
approaching the Master of the High Court – whether a claimant whose claim has
not been proven is a creditor is an interested person for the purposes of s 379(2)
of the Companies Act 61 of 1973 – whether the first respondent must be
disqualified to hold office as a liquidator for a period to be determined by this
Court.
3
________________________________________________________________
ORDER
__________________________________________________________________________________________
The application is dismissed with costs which costs include the costs of two
counsel where so employed on scale C.
__________________________________________________________________________________________
AMENDED JUDGMENT
__________________________________________________________________________________________
Molitsoane J
[1] The applicant seeks orders to have the first to third respondents (the
liquidators) removed as liquidators of Sandvet Pecans (Pty) Ltd, in liquidation
(Sandvet in liquidation), in terms of s 379(2) of the Companies Act 61 of 1973
(the Act); further that the first respondent be disqualified from holding office as
a liquidator and removed from office for such period as this court would in its
discretion determine.
[2] The following background is necessary for the adjudication of this
dispute.
A group of farmers in the Hoopstad area and later in Hartswater area started a
nursery for p ecan trees and established a company known as Sandvet . They
obtained financing from the Land Bank (Landbank) in the form of a loan.
Different directors and shareholders including the applicant also bound
themselves as sureties for the debt of Landbank. The applicant also advanced an
amount of more than R16m into the project. However, it appears that the project
was not successful and ran into financial difficulties, and in April 2022, Sandvet
was placed under liquidation. The first to third respondents were appointed
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liquidators. Sandvet (in liquidation) went on to obtain financing from Landbank
for more than R 10 million ; t he applicant s tood surety for this de bt. The
Landbank registered security in the form of a S pecial and G eneral Notarial
Bond over the assets of Sandvet in liquidation.
[3] On the version of the applicant, Sandvet in liquidation’s biggest assets
were its pecan trees, about 240 000 in total. The applicant contends that the
respondents neglected their duties and caused these trees to be damaged and
their negligence reduced their value from R85.00 to R2.50 per tree. This alleged
negligent conduct of the respondents, according to the applicant , caused the
sureties and creditors of the company in liquidation to suffer loss of about
R22m. The applicant contends that the respondents had a duty to preserve the
most precious assets of the company in liquidation, the pecan trees in order to
enable them to apply it for the benefit of the concursus creditorum.
[4] It is also the case for the applicant that the respondents failed to act as
expected of liquidators by failing to collect the outstanding de bt in the amount
of more than R2m. Subsequent to the liquidation, Mr FJ Senekal, a director
from the office of the instructing attorneys of the applicant, was instructed by
the applicant to conduct ss 417 and 418 enquiries into the affairs of the
company in liquidation. On 3 May 2023 the applicant’s attorneys directed a
letter to the Master in which permission was sought to conduct the inquiry
above. In the said letter, it is stated that the applicant was obliged ‘. . . to tender
the cost of the enquiry as envisage d in terms of section 417(6) and (7) of the
Companies Act 61 of 1973.’
[5] However, contrary to the letter of 3 May 2023, in a subsequent letter
dated 11 March 2025, Mr Senekal requested the Master to exercise his
discretion in terms of s 417(6) of the Companies Act and order the liquidators to
5
pay the costs of the e nquiry as administration costs in the estate. On the same
day, the Assistant Master forwarded a letter to the respondents in which he said
the following: ‘In the light of the finding of the Commissioner’s report dated 30
January 2024 and 5 March 2025 and in terms of section 417 (6) of the
Companies Act, Act 61 of 1973, as amended, I direct you to pay the whole of
the costs and expenses of the 417/8 interrogations out of the assets of the
company in liquidation’. It appears that the liquidators did not act as directed by
the Mast er as t hey apparently did not pay the costs of the e nquiry. This non-
payment of the costs of the inquiry, is one of the grounds relied upon by the
applicant to have the respondents removed as liquidators as the applicant
perceives it as a failure to heed the directives of the Master. This ground may be
disposed of at this stage.
[6] The fact is that the applicant had agreed to pay the costs which were
initiated at its request. When the Commissioner and the Master ordered the
liquidators to now pay the costs of the enquiry which they were not party to,
they were also not invited to make any submissions. It appears to me that the
process of ordering them to pay the costs appear to be unfair. I cannot fault
them for not following the Master’s directives and refusing to make the
payment. They could also not simply refuse to adhere to the Maste’s directive
and they should have taken steps to review and set aside the decision of the
Commissioner and the Master. In view of the apparent procedural unfairness,
their conduct may be excused.
[7] The other problem the applicant faces, is reliance on the proceedings
during the section 417 inquiry. The applicant seeks to rely on these proceedings
to prove that the liquidators were negligent. This reliance is misplaced. It is
common cause that the liquidators d id not participate in the se proceedings. I
agree with the contention of the liquidators that the evidence of a witness a t an
6
enquiry in terms of s417 is only admissible against such a witness. While such
evidence may be admissible to prove the testimony of the witness during the
enquiry and may be used to test his evidence, it cannot be used as proof of the
facts against a person who did not participate in such proceedings. This is
understandable because the evidence remains untested against the person who
took no part in the proceedings. For these reasons I decline to interrogate the
issues raised against the liquidators during the s417 proceedings.
[8] The applicant also contends that the respondents have a conflict of
interest. This contention ties with the allegation that the respondents have been
negligent in dealing with the assets of the company in liquidation. In this regard,
it is contended that the respondents ought to be held liable for the negligent and
reckless manner in which they handled the estate , particularly the ir actions
which resulted in the diminished value of the trees as well as prescription of the
debts of the company in liquidation. In other words, the respondents cannot
institute an action against themselves for their alleged negligence, them being
the plaintiffs and defendants in the same suit.
[9] One of the reasons the applicant proffers for the removal of the
respondents as liquidators is the allegation that the liquidators refused to
provide all accounts to the M aster in terms of s 393 of the A ct. On 5 February
2025, the applicant’s attorney addressed a letter to the Master in which he
implored the Master to invoke the provisions of s 393 Companies Act and
‘instruct the Liquidators to produce and make available all statements of
monies, goods, documents and accounts and other documents which include
financial data statements, CM 100 received by the liquidators on behalf of the
company for inspection. ’ The Master agreed with the request on the basis that
Mr Conradie agreed to the arrangement.
7
[10] According to the applicant, the respondents only furnished the applicant
with the cash book and none of the other documents requested. However, in a
letter dated 18 March 2025 the liquidators indicated that they were unaware of
any request for the documentation. The letter records that the discussion was
between the office of the Master and the applicant’s attorneys. The liquidators
questioned the reasons for the request and the manner of the request. It turns out
that at the time of the request, the parties were already embroiled in litigation
and the proper cause to follow was to seek an order to compel in terms of rule
35 of this court. In my view there is no merit on this ground. Furthermore, t he
applicant also seeks the removal of the liquidators on the basis that they
expended more than R450 000 from estate funds to litigate for their personal
benefit.
[11] The respondents, in turn, oppose the application on a number of grounds.
They first contend that the applicant has no locus standi as it is not a creditor of
Sandvet. The basis for this contention is that, at a special meeting of the
creditors convened by the applicant and presided over by the Master, the claim
of the applicant was rejected. It is contended that the applicant is for that reason
not an ‘interested person’ as contemplated in s 379(2) of the Act.
[12] The liquidators also contend that this application is premature. The basis
for this contention is that the applicant ought to have approached the Master
first for their removal before venturing to approaching the court. They further
contend that the applicant failed to satisfy the jurisdictional requirements for the
relief it s eeks. According to the liquidators, a liquidation and distribution
account has been submitted to the M aster who has confirmed this account. This
leaves the applicant with no basis for relief.
8
[13] As indicated above, the case for the removal of the liquidator is based on
a number of reasons and it is also opposed on many reasons. It is apt in my view
to start with the issue of whether the application is premature. Relying on First
Time Trading CC vs Magistrate for the District of the City of Cape Town sub
district Bellville and Others1 (First Time Trading) the applicants submit that the
applicant ought to have approached the Master first for their removal instead of
rushing to the court. In First Time Trading, the court said the following:
‘Section 379 of the Company’s Act is the provision which specifically provides for removal
of liquidators. It provides further removal of a liquidator by the M aster 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 one or for any other good cause . Thus, in
terms of section 379 an applicant is first required to approach the M aster before approaching
this court for removal of the third respondent. It is common cause that the applicant has not
done so in this case. The application is premature.
Furthermore, section 379 provides for various grounds upon which a liquidator’s removal
may be sought. However, the applicant has not specified the grounds he seeks to invoke. It is
strike that it falls upon the applicant to plead its case clearly and precisely and the applicant
has failed to comply with this requirement. At a hearing the applicants council considered
that no cases made out regarding any misconduct by the 3rd respondent.’2
[14] I agree with First Time Trading that the applicant ought to have
approached the Master first for the removal of the liquidators . Section 381 of
the Act provides as follows:
‘(1) The Master shall take cognizance of the conduct of liquidators and shall , if he has reason
to believe that a liquidator is not faithfully performing his duties and duly observing all the
requirements imposed on him by any law or otherwise with respect to the performance of his
1 First Time Trading CC vs Magistrate for the District of the City of Cape Town sub district Bellville and Other
[2024] ZAWCHC 163.
2 Ibid paras 41 and 42.
9
duties or if any com plaint is made back to him by any creditor member , or contributor in
regard there to enquire into the matter and take such action there thereanent as he may think
expedient.
(2) The Master may at early time require any liquidator to answer any inquiry in relation to
any winding- up in which such liquidator is engaged, and may, if the things fit, examine such
liquidator or any other person on oath concerning the winding- up.
(3) They Master may at any time appoint a person to investigate the books and vouchers of
a liquidator.’
On the other hand, s 379(2) of the Act provides:
‘The court may, on application by the Master or any interested person, remove a liquidator
from office if the Master fails to do so in any of the circumstances mentioned in subsection
one or for any other good cause.’ (Emphasis added.)
[15] Section 381 empowers the Master to exercise control over the duties of
the liquidators. In this regard, I hold the view that in the exercise of control and
supervision, if the Master opines that the winding process is flawed or there is
some compelling reason to do so, he may approach the court for the removal of
a liquidator. Should the Master fail or refuse to do so, then in that case, an
interested party may approach the court in terms of s 379(2).
[16] The applicant however contends that there is no provision obliging it to
first approach the Master for the removal of the liquidators. In this case it is
undisputed that the applicant had addressed issues raised in this application with
the Master. I t was up to the Master to have invoked his controlling powers in
terms of s 381, which he did not do. In any case, the applicant also did not ask
him to invoke s 381, let alone the removal of the liquidators. Rather, what the
applicant did was to bring what it perceive d to be conduct worthy of the
removal to the Master’s attention. Whether the Master shared this sentiment is,
removal to the Master’s attention. Whether the Master shared this sentiment is,
however, another thing and his inaction may be attributed to the fact that the
10
Master saw nothing untoward in the performance of the liquidators in their
fiduciary duties.
[17] In my view, the operat ive words in s 379(2) are ‘if the Master fails’ .
These words connote some form of deliberate positive conduct or omission on
the part of the Master, which would trigger the jurisdictional basis for the court
to remove the liquidator. There is consequently no case made that the Master
has failed or even refused to remove the liquidators. Rather, the Master was
simply not approached to remove the liquidators as envisaged in s 379(2). I
align myself with First Time Trading and hold that there is an obligation to
approach the Maste r first, for the removal of the liquidators, before launching
these proceedings. The applicant did not do so, and t he application is
accordingly premature. Failure to approach the Master before approaching this
Court is dispositive of this application.
[18] The next issue to consider is the locus standi of the applicant. This attack
is based on the assertion that the applicant did not prove a claim against the
insolvent estate. It is common cause that the claim of the applicant was rejected
in the meeting of the creditors presided over by the M aster. It is trite that locus
standi relates to the capacity of a party to sue or to be sued. Harms in Amler’s
Precedents of Pleadings3 defines locus standi thus:
‘The question of loc us standi is in a sense procedural, but it is also a matter of substance. It
concerns the sufficiency and directness of a person’s interest in the litigation to be accepted
as a litigating party. It is also related to the capacity of a person to conclude a jural act.
Sufficiency of interest depends on the facts of each case and there are no fixed rules.’4
3 LCT Harms Amler’s Precedents of Pleadings 9 ed LexisNexis.
4 Ibid at 247.
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[19] As a starting point it is necessary to point out tha t a ‘creditor’ for the
purposes of an insolvent estate has not been defined in the Act. Bertelsman et al
in Mars: The Law of Insolvency in South Africa5 (Mars) states:
‘A “creditor” as referred to in the Act, can be either a proved or an unproved creditor, or both
depending on the circumstances. A ‘creditor’ who applies for sequestration is obviously an
unproved creditor; the trustee sends his report to ‘each creditor’ of the estate whose name and
address is known to the trustee, whether the creditor has proved a claim or not; but ‘creditors’
who give directions to the trustee at the second meeting are approved creditors only, although
this is not explicitly stated.’ (Footnotes omitted.)
[20] It is not in dispute that the applicant has a claim against the insolvent
estate. What is disputed in view of the rejection of the claim of the applicant is
whether the applicant has locus standi. It is immaterial in my view whether the
applicant has a proven or not proven claim. What is important, rather, is that he
has a claim against the estate and therefore becomes a person who has an
interest as envisaged in s 379(2). Apart from having a claim against the
insolvent estate, the applicant is again a surety of the liquidators’ debts and
obligations and thus has a substantial interest in the outcome of these
proceedings. His standing is based on the fact that he has a claim against the
insolvent estate although same has been rejected and also, he bound himself as a
surety for the due fulfilment of the debts of the company in liquidation. The
liquidators also assert that the claim of the applicant has prescribed. The attack
on the locus standi of the applicant must accordingly fail. This finding does not
assist the applicant in view of other findings I make.
[21] Section 379 of the Companies Act 61 of 1973 regulates the removal of
5 Bertelsman et al Mars: The law of Insolvency in South Africa 9 ed at 372.
12
liquidators. It provides:
'(1) The Master may remove a liquidator from his office on the ground–
(a) that he was not qualified for nomination or appointment as liquidator or that his
nomination or appointment was for any other reason illegal or that he has become
disqualified from being nominated or appointed as a liquidator or has been authorized,
specially or under a general power of attorney, to vote for or on behalf of a creditor, member
or contributory at a meeting of creditors, members or contributories of the company of which
he is the liquidator and has acted or purported to act under such special authority or general
power of attorney; or
(b) that he has failed to perform satisfactorily any duty imposed upon him by this Act or
to comply with a lawful demand of the Master or a commissioner appointed by the Court
under this Act; or
(c) that his estate has become insolvent or that he has become mentally or physically
incapable of performing satisfactorily his duties as liquidator; or
(d) that the majority (reckoned in number and in value) of creditors entitled to vote at a
meeting of creditors or, in the case of a members' voluntary winding -up, a majority of the
members of the company, or, in the case of a winding- up of a company limited by guarantee,
the majority of the contributories, has requested him in writing to do so; or
(e) that in his opinion the liquidator is no longer suitable to be the liquidator of the
company concerned.
(2) The Court may, on application by the Master or any interested person, remove a
liquidator from office if the Master fails to do so in any of the circumstances mentioned in
subsection (1) or for any other good cause.'
[22] In Ma Africa Groepbelang (Pty) Ltd v M illman and Powell’s NNO 6 (Ma
Africa) the following was said:
‘It goes without saying that the removal of a liquidator is a radical form of relief which will
not be granted unless the court is satisfied that a proper case is made out therefor. In this
not be granted unless the court is satisfied that a proper case is made out therefor. In this
regard it will not be sufficient merely to show that there is an apprehension or perception of
6 Ma Africa Groepbelang (Pty) Ltd v Millman and Powell’s NNO 1997 (1) SA 547 (C) at 566A-E.
13
bias, partiality, lack of independence or unfairness on the part of the liquidator. Nor will it
suffice to establish even p rima facie here that the liquidator has not performed satisfactorily,
has made questionable decisions or committed errors of judgment. This may well point to a
lack of competence or experience but will not necessarily be regarded as “ good cause ”
justifying the removal of the liquidator obliged to assess the conduct of the liquidator in its
full context with reverence to all relevant facts and circumstances . And at the end of the day,
it is of cardinal importance that the court must be satisfied that removal of the liquidator is to
the general advantage and benefit of all persons concerned or otherwise interested in the
winding-up of the company in liquidation. In this regard a relevant factor is the expense
which will be incurred and inconvenient suffered to appoint a new liquidator for purpose of
completing the work already done by his predecessor. A court would hence be less inclined to
remove a liquidator at a late stage in the winding -up process than it would be to replace him
at an early stage.’ (Emphasis added.)
[23] I now tend to be grounds underpinning this application. The c ourt in
Standard Bank of South Africa v the Master of the High Court 7 (Standard Bank)
referred with approval to Lawsa para 236 and held that ‘[A] liquidator stands in
a “fiduciary relationship towards the company and its members and creditors.
As such, he occupies a position in some ways analogous to that of a trustee. ”’
The court went further and referred with approval t o Commentary on the
Companies Act8 in which the following was said:
‘The liquidator stands in a fiduciary relationship to the company of which he is the liquidator,
to the body of its creditors as a whole and to the body of its members as a whole.
As a fiduciary, the liquidator must at all times act openly and in good faith, and must exercise
his powers for the benefit of the company and the creditors as a whole, and not for his own
benefit or the benefit of a 3 rd party or for any other collateral purpose. He must act in the
interests of the company and all the creditors, both as individuals and as a group. He must not
make a decision which would prejudice one creditor and be of no advantage to any of the
other creditors or to the company.
7 Standard Bank of South Africa v The Master of the High Court [2010] ZASCA 4; 2010 (4) SA 405 (SCA).
8 Blackman et al Commentary of the Companies Act vol 3.
14
He may not act in any matter in which he has a personal interest or a duty which conflicts, or
which might possible conflict with his duties as a liquidator of the company.’9
[24] The high watermark of the applicant’s case is that the liquidators were
negligent in the performance of their duties . Their negligence is attributed ,
according to the applicant, to the fact that the liquidators caused the pecan trees
to be damaged which, as a direct result thereof, caused their value to be
diminished. This ground ties in with the allegation that the liquidators where
consequently liable for the damage and ought to be defendants while at the
same time being plaintiffs as liquidators, in that they have a duty to institute
actions against those who caused the loss, and who incidentally are the same
liquidators.
[25] The difficulty of the applicant in satisfying this Court that the liquidators
were negligent in the performance of their duties is the fact that there is a
material dispute of fact. In line with Plascon Evans Paints Ltd v Van Riebeeck
Paints (Pty)Ltd10 the contention of the applicant must be rejected, and I explain
why. On the version of the applicant, the liquidators have caused Sandvet to
suffer damages by not tendering to the upkeep of the pecan trees and thus
causing their value to reduce by R 82.50 per tree . T he liquidators responded
comprehensively to the allegations in their answering affidavit. It is common
cause that Landbank is the largest proven creditor of Sandvet . It has a proven
claim of more than R9 million. On the other hand, the applicant is not even a
proved creditor and could not even, as indicated by Mars, ‘give directions to the
trustees at the second meeting of the creditors.’
9 Footnote 7 para 112.
10 Plascon Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A).
15
[26] This debt, according to the liquidators, attracts interest of about R900 000
per month. The liquidators assert that Sandvet was insolvent by an amount
exceeding R12 million as there were no funds available which could be used for
the preservation of the pecan trees. To illustrate the challenge in the upkeep of
the tre es, the liquidation and distribution account filed with the Master and
confirmed by him, reflects that creditors of proven claims against Sandvet were
liable for a contribution. The liquidators also make the following point in the
answering affidavit: ‘Given that the Landbank’s notarial security extends over
the pecan nut trees, and that the proceeds of the sale thereof would first go to
the Landbank, it was exclusively for it to decide whether or not it wanted to
extend funds to the liquidators for the preservation of the same.’
[27] The liquidators were acutely aware that the main estate assets consisted
of pecan trees and needed daily maintenance. Correspondence was directed to
Landbank as the biggest secured creditor in which it was informed that the trees
required daily maintenance. In a letter dated 10 November 2022, the liquidators
also forwarded the quotation for the maintenance costs per month which came
from Mr Van Niekerk, a former director of Sandvet. According to the
liquidators, the upkeep costs for the maintenance of the pecan trees amounted to
about R150 000 per month. In view of the costs of maintenance, permission was
sought from Landbank to sell the assets.
[28] It appears that Landbank agreed only to incurring minimum expenses for
the preservation of the trees. According to the liquidators, the reason for
agreeing thus was that: (i) ‘the trees in the condition that they were found by the
liquidators, did not hold great value nor was their value capable of being
substantively/ commercially increased; (ii) to fund Sandvet expenses, relevant
to the pecan nutrients would be a case of the Landbank throwing good money
to the pecan nutrients would be a case of the Landbank throwing good money
after bad debts; (iii) and that the market demand for the pecan nut trees was
16
poor’. Notwithstanding this, it is important to emphasise that the Landbank did
not support the removal of the liquidators. In a letter dated 4 June 2025, it says:
‘[We] participated in the administration of the liquidated company. We have also obtained a
copy of the application for the removal of the liquidators under case number 1602 / 2025.
We do not support the application for the removal of the liquidators and would prefer that the
current liquidators finalize the administration process as the administration is already at a
mature stage and the liquidators at all times acted in the best interest of the body of the
creditors.’ (Emphasis added.)
Jac N Coetzer Inc, which is also one of the proven creditors, also does not
support the removal of the liquidators.
[29] With the liquidation and distribution account duly confirmed by the
Master, this liquidation is at its tail end. It seems that the only reason that the
liquidation cannot be completed is because of several a pplications which the
liquidators were obliged to bring because of the conduct of the applicant. I will
deal succinctly with those applications when I deal with the issue raised that the
liquidators used the Sandvet funds to litigate in their own interests . What,
however, is important to note is that the removal and new appointment of
liquidators will delay the finalization of this liquidation and will escal ate further
costs towards this factually insolvent estate to the detriment of the general
creditors and interested persons.
[30] The liquidation and distribution account confirmed by the M aster
indicates that Sandvet is factually insolvent by an amount of more than R 12
million. It could not be expected of t he liquidators to employ someone to look
after and maintain the pecan trees, when the upkeep expenses would be
prohibitory. If they did that, they would be acting against the general advantage
and benefit of the creditors. I, therefore, cannot find that they were negligent in
and benefit of the creditors. I, therefore, cannot find that they were negligent in
the performance of their duties and further, the contentions by the applicant are
17
denied by two major proven creditors of Sandvet. In any case, even if it could
be said that I am wrong in my analysis, the applicant still faces an
insurmountable hurdle in the form of material dispute of facts on this issue
which cannot be resolved on affidavits. The relief sought by the applicant also
must be rejected on this basis.
[31] It is, at this stage, necessary to deal with the issue of conflict of interest
as well. The applicant avers that , because the liquidators c aused damages to the
pecan trees, they ought to hold themselves liable and consequently must be
defendants in their cause. In the replying affidavit the applicant make s the
following allegation:
‘The liquidators nowhere in their answering affidavit properly explain why and despite the
material conflict of interest they have (where they cannot investigate themselves, being
Plaintiff and D efendant in the same case) , how they can further keep their position as
liquidators.’
[32] In my view this contention is without merit . Launching such an
investigation would entail that the liquidators first admit negligence in the
performance of their fiduciary duties. I have already found that no negligence
can be imputed on their part and consequently it cannot be correct that they be
removed on allegations of conflict of interest in the absence of any proof
thereof. One would have expected the applicant to approach the Master to
implore him/her to remove the liquidators if there was any impropriety on their
part; I have already made a finding that such an approach was not embarked
upon. Failure to prove a prima facie case of negligence also affects the assertion
that the liquidators are conflicted. On this basis the application must also be
dismissed.
18
[33] Another ground raised by the applicant is that the liquidators had litigated
and incurred costs for their own interests. In this regard, it is an alleged that an
amount of R455,000 was expen ded by the liquidators . In Standard Bank the
court said the following with reference to use of monies of a liquidated
company:
‘It is self-evident that monies in the estate of the company being wound up cannot be put to
private use by the liquidators. For a liquid ator to act in that fashion is the very anti thesis of
what should rightly be expected of a liquidator.’11
[34] All the litigation had been financed from the coffers of Sandvet. What ,
however, cannot be denied is that the litigation had not been pursued for the
private gratification or self -serving interests of the liquidators. What the
liquidators sought to do in the litigation was to prevent, rightly or wrongly, what
they perceived to be unlawful conduct against Sandvet.
[35] For the purposes of this discussion, it is unnecessary to go into the merits
of the litigation in which the liquidators were embroiled. First, the applicant
requested leave of the Master to convene interrogation proceedings in terms of
ss 417 and 418 of the Company’s Act. The applicant’s attorneys caused
subpoenas to be issued by the Commissioner against the liquidators and their
appointed agents. Pursuant to this, the liquidators brought an urgent interdictory
application to suspend the operation and execution of the issued subpoenas
pending an application to review and set aside the decision of the Mast er to
order and direct an enquiry in terms of ss 417 and 14 to be convened, as well as
the decision of the Commissioner to issue the subpoenas against the liquidators.
11 Footnote 7 para 113.
19
[36] The review application was defended by the applicant and at that time of
the hearing of this application had not been finalized. There were two f urther
review applications brought by the liquidators. Non e of the li tigation can be
attributed to a notion that the liquidators were acting in their private interest.
The litigation went into the deep end of the administration of this winding up.
From the affidavits, the issues raised as to whether the liquidators litigated for
their own benefits can only be resolved by leading viva voce evidence. I am
unable to grant the order sought in view of a material dispute of fact.
[37] It has thus not been established, at least at this stage as the three review
applications are still outstanding, that their conduct was motivated by any
ulterior motive, and I cannot, therefore, find that Standard Bank was applicable
in this case . Furthermore, I can also not find that the liquidators pursued their
own interests and , importantly, that the litigation was not engaged in for the
benefit of Sandvet. Whether the litigation was engaged based on an ulterior
motive would have to be adjudicated upon by the courts seized with review
proceedings. This ground must also accordingly fail.
[38] I now turn to the alleged conduct of Mr Smith, the first respondent. It is
alleged that the applicant was approached by the first respondent to garner
support for the first respondent to be appointed provisional liquidator of
Sandvet. This allegation is denied. A material dispute of fact arises as the first
respondent categorically denies the allegation and has someone confirming his
version which goes against the version of the applicant. In my view, such
conflict cannot be resolved on papers.
[39] It is further alleged that the liquidators failed to collect debts amounting
to over R2m, which belonged to Sandvet in liquidation. The applicant, however,
has not furnished full particulars surrounding the identity of the debtors and the
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circumstances surrounding the indebtedness. The liquidators admit that Mr Van
Niekerk had approached the first respondent and informed him about the
alleged debt of a former director of Sandvet, Mr Fanus Van Jaarsveld and one
Willem du Plessis. On the version of the first respondent, the two debtors were
represented by Mr Gustav le Grange of Jan Coetzer Attorneys, who was
contacted by the first respondent to verify the assertions. However, Mr L e
Grange could not confirm them. Ultimately, the undisputed evidence of the first
respondent is that the financial statement attached to the papers make no refence
to the alleged liabilities of the debts of Van Jaarsveld and Du Plessis.
[40] The first respondent also avers that he was given the minutes of a meeting
which culminated in the production of the above- mentioned financial statement.
The relevant part of the minute states that the directors established Sandvet with
the aim of obtaining free trees. It then goes further to set out how many trees
certain individuals have obtained. It is, however, silent on the alleged debt of
Van Jaarsveld and Du Plessis. It also appears that during the interrogation in
terms of ss 417 and 418, these debts were not interrogated.
[41] The applicant through his attorney had an opportunity to delve into these
pre-liquidation debts during the ss 417 and 418 interrogations, if they existed ,
and make any information discovered available to the liquidators. On the
undisputed evidence of the first respondent, he had no evidence to ascertain the
facts that substantiated the allegations of Mr Van Niekerk. In addition, he avers
that Landbank was also not prepared to fund the interrogations herein. It cannot
be correct to litigate on suspicion. Consequently, based on the scant information
and lack of resources to hold interrogations, the conduct of the liquidators
cannot be impugned.
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[42] In the result, I hold the view that the applicant has not made out a case for
the relief sought and the application must accordingly fail with costs. I order as
follows:
The application is dismissed with costs which costs include the costs of two
counsel where so employed on scale C.
______________________
P E MOLITSOANE
JUDGE OF THE HIGH COURT
Appearances
For the Applicant: MP Hershonsohn SC
RD Leeuw
Instructed by: FJ Senekal Inc
Bloemfontein
For the First, Second and Third Respondent: MP Van Der Merwe SC
S Tsangarakis
Instructed by: Hendre Conradie Inc
Bloemfontein
For the fifth respondent: No appearance