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[2019] ZASCA 118
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Pieters NO v Absa Bank Ltd (979/2018) [2019] ZASCA 118; 2021 (3) SA 162 (SCA) (23 September 2019)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
no: 979/2018
In the
matter between:
RYNETTE
PIETERS
NO APPELLANT
and
ABSA
BANK
LIMITED RESPONDENT
Neutral
citation:
Pieters NO v Absa Bank Ltd
(979/2018)
[2019] ZASCA 118
(23
September 2019)
Coram:
WALLIS, MBHA and NICHOLLS JJA and WEINER and
HUGHES AJJA
Heard
:
12 September 2019
Delivered
:
23 September 2019
Summary:
Company dissolution – s 419
of Companies Act 61 of 1973 –date of dissolution is date when
Registrar recorded dissolution
in the Companies Register, not date of
publication of notice of dissolution in Government Gazette –
agreed facts –
no proof that Registrar had not recorded
dissolution of company – effect of Master’s certificates
in terms of ss 419(1)
and 385 of Companies Act to discharge
liquidator – Master lacks power to re-instate liquidator after
discharge – purported
reinstatement of liquidator invalid
ORDER
On
appeal from:
Gauteng Division of the
High Court, Johannesburg (Van der Linde J, as court of first
instance):
The
appeal is dismissed with costs, such costs to include those of two
counsel where two counsel were employed.
JUDGMENT
Wallis
JA (Mbha and Nicholls JJA and Weiner and Hughes AJJA concurring)
[1]
On 14 August 2003 the Master of the High
Court issued a certificate in terms of s 419(1) of the Companies
Act 61 of 1973 (the
Act) certifying that Cell F Services (Pty) Ltd
(Cell F) had been completely wound up. Pursuant thereto the
Master furnished
the present appellant, Ms Pieters, the liquidator of
Cell F, with a certificate of completion of her duties in terms of
s 385(1)
of the Act. That certificate provided that the bond of
security she had furnished could be reduced to nil. Nearly five years
later,
Ms Pieters, wrote to the Master of the High Court asking him
to ‘re-issue’ her certificate of appointment to enable
her to pursue recovery of a potential asset of Cell F. After the
Master complied with this request, in terms to which I will
revert,
Ms Pieters launched proceedings against the respondent, Absa Bank Ltd
(ABSA) claiming substantial damages. ABSA’s
special plea that
Ms Pieters lacked
locus standi
to pursue the claim on behalf of Cell F was separated from the other
issues in the case and dealt with on the basis of a statement
of
agreed facts. The special plea was upheld by Van der Linde J sitting
in the Gauteng Division of the High Court, Johannesburg.
This appeal
is with his leave.
The
facts
[2]
The facts from which this situation arose
are simple and uncomplicated. On 9 October 2001 Cell F was
placed under provisional
winding-up on its own application. Ms
Pieters was appointed as its provisional liquidator on 26 October
2001. A final winding-up
order was made on 13 November 2001 and Ms
Pieters was appointed as the liquidator on 7 March 2002. On 24 March
2003 she submitted
an amended First and Final Liquidation
Distribution Account to the Master. The Master confirmed this account
on 3 July 2003 in
terms of s 408 of the Act. The fact of its
confirmation was published in the Government Gazette on 18 July 2003.
[3]
On 14 August 2003 the Master addressed a
letter to Ms Pieters which, so far as material, read as follows:
‘
With reference to your letter
. . . I have to inform you that as all my requirements have been met,
the final liquidation and distribution/contribution
account herein
has now been filed of record.
I hereby certify that in terms of
Section 56(7) of the Insolvency Act 24 of 1936/385(2) of the
Companies Act, No. 61 of 1973/66(1)
of the
Close Corporations Act, No
69 of 1984
, the Bond of Security No. 605996 entered into by Rynette
Pieters on behalf of the Trustee(s)/Liquidator(s) may, with effect
from
date hereof be reduced to nil.’
[4]
On the same date, the Master addressed a
letter to the Registrar of Close Corporations and Companies,
embodying a certificate in
terms of s 419(1) of the Act, and
stating,
inter alia
,
the following:
‘
In terms of Section 419(1) of
the Companies Act, No. 61 of 1973, (as amended) read with Section 66
of the Close Corporations Act,
No 69 of 1984, I hereby certify that
according to record (sic) the affairs of the above Company/Close
Corporation have been completely
wound-up.’
The
Registrar responded to receipt of the Master’s certificate in
terms of s 419(1) by way of a letter asking for further
details
of the company, as it could not be traced in the Registrar’s
records. The Registrar’s letter had the incorrect
name for the
company, so that may have been the source of the confusion. The
correct details were furnished to the Registrar under
cover of a
letter dated 16 September 2003.
[5]
On 30 January 2008, Ms Pieters, then
employed by Independent Trustees (Pty) Ltd, wrote to the Master
stating that it had come to
her attention that there might be a
further asset of Cell F and that, as the company had not yet
been dissolved in terms of
s 419 of the Act, the Master was asked to
‘re-issue’ her certificate of appointment urgently to
enable her to take
the matter further. This was duly done on 5 March
2008, the certificate from the Master recording that Ms Pieters had
been ‘re-instated’
as liquidator.
[6]
On these facts, the sole issue before Van
der Linde J and this court was whether Ms Pieters’
‘re-instatement’
as liquidator was effective to give her
the necessary
locus standi
to
pursue the claim against ABSA. The basis of the special plea was that
Cell F had been finally wound up on 14 August 2003,
when the
Master certified in terms of s 419(1) of the Act that it had
been ‘completely wound up’. Both the liquidator
and the
Master had fully and finally discharged their respective offices and
it was therefore not open to Ms Pieters to request
that her
certificate of appointment be re-issued, or to the Master to grant
the request and ‘re-instate’ her in that
office. The
Master was said to be
functus officio
.
[7]
Ms Pieters’ retort was that the
company had not been dissolved because of the failure by the
Registrar to record its dissolution
and to publish a notice of its
dissolution in the Government Gazette. She contended that the company
remained in existence and
in liquidation and that it was therefore
permissible for the Master to re-issue a certificate of appointment
to her to enable her
to pursue the new matter that had come up in
relation to the affairs of the company.
Was
Cell F dissolved?
[8]
Dissolution of a company is an inevitable
consequence of its winding up. This is dealt with in s 419 of
the Act, which at the
relevant time read as follows:
‘
Dissolution of companies
and other bodies corporate
(1)
In any winding-up, when
the affairs of a company have been completely wound up, the Master
shall transmit to the Registrar a certificate
to that effect and send
a copy thereof to the liquidator.
(2)
The Registrar shall
record the dissolution of the company and shall publish notice
thereof in the
Gazette
.
(3)
The date of dissolution
of the company shall be the date of recording referred to in
subsection (2).
(4)
In the case of any
other body corporate the certificate of the Master under subsection
(1) shall constitute its dissolution.’
[9]
Little attention was given in the heads of
argument to an analysis of the section. The prescribed procedure
commences with the Master
sending a certificate to the Registrar in
terms of s 419(1) certifying that the affairs of the company
have been completely
wound up. The need for that certificate flows
from the Registrar’s function of maintaining the register of
companies. This
register contains the founding documents of the
company
[1]
and various statutory records such as the annual return including the
annual financial statements,
[2]
notices relating to the appointment and resignation of directors,
special resolutions and the like. For the sake of completeness
of
those records the Registrar must record the dissolution of the
company. Otherwise the Registrar has no involvement in the winding-up
of companies. That takes place under the supervision of the Master.
This indicates that the purpose of the Master’s certificate
in
terms of s 419(1) is to inform the Registrar of the fact that
the company has been completely wound up, so that the Registrar
can
update the records in the register in relation to the company.
[10]
The provisions of s 419(2) reinforce this
approach. They require the Registrar to ‘record the dissolution
of the company’.
That presupposes that the company has already
been dissolved. One cannot record something until it has happened.
That suggests
that the dissolution of the company occurs prior to the
Registrar receiving the notice in terms of s 419(1) and that the
Registrar
does not dissolve the company, but merely records the fact
of its dissolution. Where the date of dissolution is relevant,
s 419(3) provides that it will be the date on which the
Registrar records its dissolution.
[11]
This analysis points to the dissolution of
the company occurring when the Master sends the s 419(1)
certificate to the Registrar.
However, there is a contrary indication
in s 419(4), which provides that, in the case of other bodies
corporate, it is the
date of the Master’s certificate that
constitutes its dissolution. If that were the case with a company,
why not include
it with other bodies corporate? After all, the
Master’s certificate in relation to other bodies corporate has
also to be
furnished to the Registrar and reflected in the records
kept by the Registrar. The inference is that a distinction was for
some
reason drawn between the case of companies and that of other
bodies corporate. The difference is reflected in the provision in
s 419 (3) that the date of recording by the Registrar is the
date of dissolution, as opposed to the earlier date of the Master’s
certificate in terms of s 419(3). Because of this difference I
will accept for present purposes, without finally deciding,
that the
date of recording is the date upon which dissolution occurs, even
though the company will have been completely wound-up
at an earlier
date.
[12]
There
was a fundamental flaw in the argument advanced on behalf of Ms
Pieters in both the heads of argument and, apparently, in
the high
court. That argument was based on the premise that the critical date
was the date of publication of notice of the dissolution
in the
Government Gazette. Throughout the heads it was said that the
dissolution of the company was a consequence of publication
in the
Gazette and that it was only after publication that dissolution was
complete. This ignored the wording of s 419(3).
The two are
necessarily different because the Registrar’s recording of the
dissolution would inevitably occur before publication
in the Gazette.
Section 419(3) is a clear legislative choice that it would be the
former and not the latter date that would determine
when the company
is dissolved. Publication is merely a public intimation of an
existing fact, namely, that the company has been
dissolved.
[13]
This error may have affected the matter
from the outset. In her letter asking for her certificate of
appointment to be re-issued
Ms Pieters said that:
‘
We have determined that the
company has not as yet been dissolved in terms of section 419 of the
Companies Act.’
No
details were given of the basis for that statement. It was common
cause that no notice of dissolution had been published in the
Government Gazette. If that is what she had in mind, she was in
error. Given the approach adopted on her behalf in argument, there
is
inevitably the suspicion that her view was based on the absence of
publication in the Gazette and nothing more.
[14]
The issue of dissolution was dealt with in
the statement of agreed facts in the following terms:
‘
No proof that Cell f (in
liquidation) was dissolved as contemplated in section 419(2) of the
Companies Act 61 of 1973 could be found
in the records of the CIPC.’
The
CIPC
[3]
has succeeded to the functions of the Registrar of Companies under
the Act and is obliged to maintain the register of companies
in terms
of
s 187(4)
of the
Companies Act 71 of 2008
.
[15]
No further evidence was placed before the
high court in regard to the processes followed by the former
Registrar of Companies in
recording the dissolution of a company in
terms of s 419(2) of the Act. The regulations promulgated under the
Act and in force
at that time had no provisions dictating how this
was to be done. Presumably, the Registrar maintained the register of
companies
in a form that enabled a record to be maintained of all
documents, such as annual financial statements, or changes in
directors,
special resolutions and the like that required to be filed
with the Registrar. However, we do not know how this was done or
whether
the record was retained in a file or electronically. We do
not know whether a separate register was kept in relation to the
dissolution
of companies or whether this was simply a matter recorded
in relation to the company concerned as part of the overall records
maintained
in respect of it.
[16]
Counsel for Ms Pieters assumed that the
agreement that there was no proof of the dissolution of Cell F in the
records of the CIPC
was sufficient to establish that it had not been
dissolved, but that assumption was misplaced. Absence of proof is not
proof of
absence. The absence of anything in the records does not
prove that the Registrar did not record the dissolution of Cell F,
and
the absence of publication in the Government Gazette was
irrelevant to dissolution, because under s 419(3) it was the
date
of recording by the Registrar that determined the date of
dissolution.
[17]
Unless there was a statutory or regulatory
requirement stipulating how the Registrar was to record the
dissolution of a company,
and none has been produced, all that
s 419(2) required was that the Registrar make a record of the
dissolution of the company.
As Van der Linde J noted in his judgment,
this did not require the Registrar to exercise a discretion or
perform any executive
act. It was simply a matter of making a record
of the company’s dissolution. How that was to be done was a
matter for the
Registrar. I see no reason why that record could not
have been made by the simple action of placing in the company’s
file
the s 419(1) notice furnished to the Registrar by the
Master.
[4]
Once the Registrar’s office had tracked down the relevant file
in the light of the information furnished to it by the Master
on 16
September 2003, filing the s 419(1) notice in Cell F’s
file (whether a conventional file or one kept electronically)
would
constitute an adequate recording of the dissolution of the company
for the purposes of s 419(2).
[18]
The inadequacy of the statement of agreed
facts to establish that there had been no recording by the Registrar
of the dissolution
of Cell F is palpable. First, it does not disclose
what documents if any existed in the CIPC records in relation to Cell
F. It
does not say whether there was a file for Cell F or whether it
contained the s 419(1) notice and the two letters that flowed
from the notice being lodged with the Registrar. Second, it does not
deal with the procedures in the Registrar’s offices
for
maintaining records in relation to companies and what form recording
of the dissolution of companies took. Third, it does not
disclose
what investigations were conducted to ascertain the contents of the
records in the Registrar’s office in respect
of Cell F. Nor
does it disclose on what factual basis Ms Pieters informed the Master
that the company had not been dissolved. Fourthly,
it did not address
the transition between the old and new Companies Acts and whether, in
the course of transferring the functions
of the Registrar to the
newly created CIPC, documents and records could have been thrown
away, lost or misfiled. Fifthly, we were
not told whether the
relevant paragraph in the statement was based on investigations made
in 2017 or 2018, shortly before the determination
of the separated
issue, or in 2007 or 2008 shortly before Ms Pieters sent her letter
to the Master seeking the re-issue of her
letters of appointment as
liquidator. Finally, it is significant that there is no evidence that
the company was treated by the
Registrar, or anyone else, as anything
other than dissolved, in the nearly five years that elapsed between
the issue of the two
certificates and Ms Pieters’ letter asking
for the re-issue of her letters of appointment.
[19]
Counsel sought to rely on Ms Pieters’
statement in the letter to the Master of 30 January 2008 as proof of
non-compliance
with the requirements of s 491(2). This faced two
insuperable difficulties. First, the letter was not admissible as
proof
of the correctness of factual statements made in it. Second,
the statement was a conclusion of law in respect of which no facts
were furnished. It provided no support for the submission.
[20]
The onus of establishing that her
appointment was legally effective and gave her
locus
standi
to bring this action against
ABSA rested on Ms Pieters. The foundation of her re-instatement as
liquidator by the Master was the
proposition that Cell F had not been
dissolved in terms of s 419(2) and (3) of the Act. For the
reasons set out above she
failed to discharge that onus.
[21]
It seems to me more probable than not that
the s 419(1) notice was filed in the records of the Registrar,
at least once the
further information about the company had been
furnished by the Master on 16 September 2003. If that was the case no
reason was
advanced why this did not suffice as a recording of the
dissolution of the company. However, I do not need to go so far. It
suffices
for present purposes to say that Ms Pieters did not prove on
a balance of probabilities that Cell F was not dissolved. That being
so she failed to establish that her reinstatement as liquidator by
the Master was lawful and vested her with
locus
standi
to bring proceedings as
liquidator of Cell F. On that ground alone the appeal must be
dismissed. However, as I think it falls to
be dismissed on the point
argued before the high court, I will deal with that issue as well
If
Cell F was not dissolved, was the appointment valid?
[22]
The s 419(1) notice recorded that Cell
F had been completely wound up. Although the s 385(1)
certificate may conceivably
be sent after the s 419(1)
certificate,
[5]
in this instance they were sent at the same time. The s 385
certificate provided that the bond of security could be reduced
to
nil. Counsel submitted that this did not amount to consent to the
cancellation of the bond of security in terms of s 385(2)
of the
Act. I do not agree. A bond of security reflecting nil, is no
security at all. The purpose of consenting to its reduction
to nil is
to enable the liquidator to go to the financial institution that
issued it and have it cancelled. That is what happened
in the present
case, as Ms Pieters submitted a fresh bond of security in order to
procure her re-instatement as liquidator.
[23]
What then is the legal effect of the issue
of the s 419(1) and s 385(2) certificates? In
Standard
Bank v The Master
[6]
Nienaber JA dealt with this in the context of a contention that the
winding up was complete once the liquidation and distribution
account
had lain for inspection and been approved, and a distribution had
been made to creditors. Two aspects of the judgment are
relevant.
First, he said that s 385 deals with the release of the
liquidator. Second, he emphasised that s 419(1) contemplates
a
distinction between the company being wound up and it being
completely wound up. In that case it had clearly not been completely
wound up, nor had the liquidator been released under s 385. The
same is not true of this case.
[24]
We were referred to a judgment of the full
court of the Gauteng Division
[7]
in which, in the context of insolvency, the court held that the
trustee of an insolvent estate remained obliged to collect debts
owing to the estate of the insolvent even after confirmation of the
account. The case is not in point. The trustee had not been
discharged from office nor had the security furnished by her been
released. The estate remained vested in the trustee, whereas
that is
not the case with a company being wound up.
[25]
In my view the issue by the Master of a
certificate under s 385, permitting the liquidator to cause the
bond of security to
be cancelled, in conjunction with the issue of a
certificate under s 419(1) that the company had been completely
wound up,
brought the winding up process to an end and released the
liquidator from office. Assuming in favour of Ms Pieters that the
company
had not been dissolved and remained a company in liquidation,
it was nonetheless a company in respect of which the liquidator’s
appointment had been terminated. If it transpired that there were
further assets and this occurred between the completion of the
winding up and the company’s dissolution that required, at the
very least, a fresh appointment of a liquidator. (I express
no firm
view on whether a fresh application for liquidation would be
necessary, or at least the setting aside on review of the
certificate
under s 419(1). Prima facie, until that happened the s 419(1)
certificate stood and the Master was
functus
officio
.) A fresh appointment could
only be made in terms of s 377(1) of the Act. That route was not
followed in the present case.
[26]
It is interesting, but by no means
decisive, that the approach I have adopted in regard to the effect of
the certificates in terms
of ss 385(2) and 419(1), accords with
what happened in the present case. When the possible contract was
drawn to her attention,
Ms Pieters did not proceed as if her
appointment had never come to an end. Instead she approached the
Master asking for her letters
of appointment to be re-issued. The
bond of security had clearly been cancelled because she proffered a
fresh bond of security
and the Master required her to furnish this.
The Master issued new letters of appointment and certified that Ms
Pieters was re-instated
as liquidator of Cell F. All of this was
consistent only with her having been discharged as liquidator once
the company was fully
wound up.
[27]
As a final point in oral argument counsel
submitted that, in the absence of proof that the company had been
dissolved, Ms Pieters
had no choice but to follow the course that she
did. He submitted that an application for reinstatement of the
company to the register
in terms of s 420 was not open to her
because she could not establish that it had been dissolved and
removed from the register.
The point is without merit. Accepting that
there was some uncertainty as to the position, Ms Pieters was no
differently situated
from any other potential litigant who is faced
with factual uncertainty and needs to determine the correct course of
action. She
could have brought an application for restoration of Cell
F to the register on the footing that the company had been dissolved.
In the alternative she could have asked for declaratory relief as to
the proper procedure to be followed by the Master if the company
had
not been dissolved. I accept that there would be a notional
possibility of the court saying that it could not determine either
way whether the company had been dissolved, but do not believe that a
judge would reach such a commercially insensible conclusion.
Result
[28]
The appeal is dismissed with costs, such costs to
include the costs of two counsel where two counsel were employed.
___________________________
M J D WALLIS
JUDGE OF APPEAL
Appearances
For
appellant: C Hattingh (heads of argument prepared by R Michau SC and
C Hattingh)
Instructed
by: Wessels and Hattingh Inc, Pietermaritzburg;
Van
Wyk & Preller Inc, Bloemfontein
For
respondent: D van Loggerenberg SC (heads of argument prepared by W H
Trengove SC and D van Loggerenberg SC)
Instructed
by: Jay Mothobi Inc, Johannesburg;
EG
Cooper Majiedt Inc, Bloemfontein.
[1]
Companies Act 71 of 2008
,
ss 13
to
17
.
[2]
Companies Act 71 of 2008
,
s 33
, read with
s 187(4).
[3]
Companies and Intellectual Property Commission
established in terms of
s 185
of the
Companies Act 71 of 2008
.
[4]
I understand that the practice was formerly that
all
s 419(1)
notices would be sent to the office of the Chief
Master in Pretoria and on receipt would be taken and delivered by
hand to the
office of the Registrar of Companies. Presumably they
would then have been filed and instructions given to publish notice
of
the dissolution in the Government Gazette.
[5]
Standard Bank of S A Ltd v The Master and
Others
1999 (2) SA 257
(SCA) at 265J
-266I.
[6]
Ibid.
[7]
Cook NO v S J Coetzee Inc
2012
(2) SA 616
(GNP) para 10.