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[2018] ZASCA 95
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Mantis Investment Holdings (Pty) Ltd v Eastern Cape Development Corporation and Others (857/2017) [2018] ZASCA 95; 2018 (4) SA 439 (SCA) (1 June 2018)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
no: 857/2017
In
the matter between:
MANTIS
INVESTMENT HOLDINGS (PTY) LTD
APPELLANT
and
EASTERN
CAPE DEVELOPMENT CORPORATION
FIRST RESPONDENT
MASTER
OF THE HIGH COURT PORT ELIZABETH
SECOND RESPONDENT
W
DE JAGER
NO
THIRD RESPONDENT
C
A SCHROEDER
NO
FOURTH RESPONDENT
Neutral
citation:
Mantis Investment
Holdings (Pty) Ltd v Eastern Cape Development Corporation &
others
(857/2017)
[2018] ZASCA 95
(1
June 2018)
Bench:
Ponnan, Swain and Dambuza JJA and Davis
and Mothle AJJA
Heard:
22 May 2018
Delivered:
1 June 2018
Summary:
Company in liquidation – issue of
subpoenas by Master – set aside.
ORDER
On
appeal from
:
Eastern
Cape Local Division of the High Court, Port Elizabeth (Mbenenge J
sitting as court of first instance):
The
appeal is dismissed with costs.
JUDGMENT
Ponnan
JA (Swain and Dambuza JJA and Davis and Mothle AJJA concurring):
[1]
This appeal has its genesis in a suretyship
issued by a company previously known as Mantis Group Holdings (Pty)
Ltd, now known as
No 1 Watt Street (Pty) Ltd (the company in
liquidation), in favour of the first respondent, the Eastern Cape
Development Corporation,
in respect of moneys loaned and advanced to
the Bushman Sands Developments (Pty) Ltd (Bushman Sands).
[2]
Bushman Sands was unable to repay the
amount due to the first respondent and as a result it instituted
action in the Eastern Cape
Local Division of the High Court, Port
Elizabeth (the high court) against the former and the company in
liquidation claiming respectively
repayment of the loan and
enforcement of the suretyship undertaking in the amount of R19 357
645. Several defences were raised
by the company in liquidation to
the claim of the first respondent, but shortly before the
commencement of the trial the appellant,
Mantis Investment Holdings
(Pty) Ltd, as the sole shareholder of the company in liquidation,
successfully applied for its liquidation.
[3]
The third respondent, W de Jager NO and the
fourth respondent, C A Schroeder NO, were appointed the joint
liquidators of the company
in liquidation. At the second meeting of
creditors held at the offices of the second respondent, the Master of
the High Court,
Port Elizabeth (the Master) on 19 July 2016 the
claims of the appellant in the sum of R2 491 455 and the first
respondent in the
sum of R19 357 645, were admitted.
Thereafter, on 4 August 2016 the appellant's attorney wrote to the
liquidators setting
out a list of persons and documents they desired
to have subpoenaed. That request was forwarded by one of the joint
liquidators
to the Master, who on 12 August 2016 and in compliance
with the request, summoned a number of employees (past and present)
of the
first respondent to appear before him on 24 August 2016.
[4]
Aggrieved by this turn of events, on 14 September 2016 the first
respondent launched an application in the high court seeking
to
review and set aside the subpoenas issued by the Master. The
application succeeded before Mbenenge J, who subsequently granted
leave to the appellant to appeal to this court.
[5]
In arriving at his conclusion, Mbenenge J identified the issue for
determination thus:
‘
At
the hearing before me the issue for determination crystallized to one
of interpretation and procedure. It was contended, by Mr
Buchanan for
the applicant, that after the applicant’s claim was, despite
opposition from the second respondent’s camp,
allowed as proven
by the first respondent without the second respondent invoking the
provisions of s 44(7) and asking for an interrogation,
the
appropriate procedure for revisiting and expunging a proved claim is
that set out in s 45(3), which has not been complied with
in the
instant matter; the issuing of subpoenas without compliance with the
requirements of s 45(3) has rendered the issuing of
the subpoenas
unlawful. Mr Beyleveld, for the second respondent, argued to the
contrary, pointing out that, upon its proper construction,
s 44(7)
accords the second respondent the right to interrogate a creditor who
has proved a claim for purposes of determining “sufficient
facts to convince the liquidator to then invoke the provisions of s
45(3),” which is not where the impugned proceedings are
at this
stage.’
The
learned judge then proceeded to a consideration of
ss 44(7)
and
45
(3)
of the
Insolvency Act 24 of 1936
. However, as I shall attempt to
show, there is an antecedent question that ought to have occupied the
attention of the high court.
As that question is dispositive of the
appeal, it is unnecessary to consider whether that court was correct
in its interpretive
exercise. This should not be construed as an
endorsement of the correctness of the high court’s approach on
that score.
[6]
The very essence of our Bill of Rights is that an individual should
not be subjected to unreasonable intrusions on their liberty
or the
privacy of their person, property or effects. The Master has no
reservoir of power outside the statutory instruments that
authorise
an intrusion upon those rights and thus no general authority to make
an order that impinges on those rights. A subpoena,
even one at the
hands of the Master, is a significant invasion of the rights of an
individual and must therefore be exercised within
certain clearly
defined limits.
[7]
The request from the appellant’s attorney to the co-liquidator
for the employees of the first respondent and for all documents
relating to the grant of the loan facility to be subpoenaed was
forwarded by the latter to the Master. The request itself was
unmotivated. Although no statutory provision was alluded to in
support of the request, one would have been forgiven for thinking
that it is to the provisions of the
Insolvency Act that
one had to
look. Nor was there any articulation in the request as to the source
of the envisaged power to be exercised by the co-liquidator
or the
Master. In simply forwarding the request to the Master, the
co-liquidator did not bring an independent mind to bear on the
application. Rather, he appears to have contented himself in acting
as no more than a mere conduit.
[8]
In acceding to the request of the co-liquidator, the Master invoked
ss 415 and 417 of the Companies Act 61 of 1973. Neither
the Master
nor the liquidator, who forwarded the request to the Master, deposed
to affidavits in this matter. It is thus unclear
what the legal basis
was for the request to the Master or why the latter thought that ss
415 and 417 of the Companies Act found
application. But, even if
those provisions did apply, as Berman J pointed out in
Foot
v The Master
:
[1]
'Now
to oblige a person, not an officer or director of a company in the
course of being wound-up, to appear at a public enquiry
held to
enquire into the business and affairs of that company is a serious
matter, not one lightly resorted to. It is an obligation,
the
performance of which is demanded under threat of imprisonment if not
carried out, it is an invasion of an individual's privacy
which is
countenanced only under specific conditions and specific
circumstances. It requires a person to "bare his soul"
in
public, and a person who is authorised to require the attendance of
such a person for the purposes of interrogation must of
necessity
invoke this authority and exercise this power circumspectly, after
due and proper consideration as to the need for such
interrogation,
the aim, ambit and purpose thereof and to ensure that the person
concerned is not called for the examination on
matters extraneous to
the enquiry. That person, in this case the master, in considering
whether to require the attendance of a
particular person at an
enquiry in terms of s 415 of the Act, must apply his mind to what may
lawfully and relevantly be required
of a proposed "interrogee"
by way of oral evidence and delivery of books and records and other
documentation. He (the
master) is not the tool or agent of the
liquidator, obliged to carry out the latter’s instructions; the
master may take advice
and may consult the liquidator, but calling
for the attendance of a person at an enquiry under s 415 of the Act,
he is his own
man, performing a duty and exercising a right imposed
and granted him by statute and he is required to bring an independent
mind
on the need for an enquiry and for an interrogation to be
conducted thereat and as to the manner in which this is to be carried
out.'
[9]
None of those considerations appeared to weigh with the Master, who
performed a mere rubber-stamping function in this case.
It follows
that the subpoenas could not stand and they were correctly set aside
by the high court.
[10]
In the result the appeal is dismissed with costs.
_________________
V
M Ponnan
Judge
of Appeal
APPEARANCES:
For
Appellants:
T Strydom SC (with him T Mkhwanazi)
Instructed
by:
Ndobela
& Lamola Incorporated, Pretoria
Honey
Attorneys, Bloemfontein
For
Respondent:
GJ
Marcus SC (with him JB Currie)
Instructed
by:
Adams
& Adams, Pretoria
Phatshoane
Henney Attorneys, Bloemfontein
[1]
Foot v
The Master
unreported
judgment delivered on 23 July 1993 in the Cape Provincial Division,
cited with approval in
Laskarides
v German Tyre Centre (Pty) Ltd (In Liquidation) and others NNO
2010 (1) SA 390
(W) at 393F-394A. See also P M Meskin
Insolvency
Law
(1990) Service Issue 49 at 8-7.