IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)
Case No: 2026-178123
In the matter between:
CHADLEY DOLLIE Applicant
And
JOCHEM ECKHOFF N.O. First Respondent
MARIA V AN ROOYEN N.O. Second Respondent
[cited in their capacity as the duly appointed
Liquidators of Dolmar Group (Pty) Ltd (In provisional
Liquidation]
JOCHEM ECKHOFF N.O. Third Respondent
LAURETTE V AN DER MERWE N.O. Fourth Respondent
[cited in their capacity as the duly appointed
Liquidators of Iowa (Pty) Ltd (In provisional
Liquidation]
JOCHEM ECKHOFF N.O. Fifth Respondent
KARIEN V AN DER WESTHUIZEN N.O. Fourth Respondent
[cited in their capacity as the duly appointed
Liquidators of Silver Creek Durbanville (Pty) Ltd
(In provisional Liquidation]
ADVOCATE CLAIRE MORGAN N.O. Seventh Respondent
STANDARD BANK LIMITED Eighth Respondent
Neutral citation: Dollie v Eckhoff N.O and Others (Case no 2025 -178123) [202 6]
ZAWCHC … (3 September 2026)
Coram: LEKHULENI J
Summary: Company law – Commission of enquiry in terms of s s 417 and 418 of the
Companies Act 71 of 1973 - Application to stay the hearing of those proceedings pending
rescission application of the order establishing such commissions . Prima facie case not
established – Application for the stay of ss 417 and 418 enquiries dismissed.
Heard: 29 July 2026
Delivered: 3 September 2026
JUDGMENT
___________________________________________________________________________
LEKHULENI J:
Introduction
[1] This is an application the applicant brought on an urgent basis, consisting
of two parts: Part A and Part B. In Part A, the applicant sought an order
condoning non-compliance with the prescribed forms, time periods, and service
requirements under rule 6(12), and leave to have the application heard as urgent.
Further, the applicant sought an order in Part A directing the respondents to
provide copies of the papers in each of the applications brought by the
respondents in case numbers 2026 -125892, 2026-125893, and 2026 -125894 to
the applicant’s legal representatives within 5 days, subject to such
confidentiality directions this Court may impose. Alternatively, that the
applicant's legal representatives be granted leave to uplift copies of the said
papers from the court files.
[2] Pending the final determination of the relief so ught in Part B of the
application, the applicant sought an order that the c ommission of enquiry
convened pursuant to the orders of this Court under case numbers 2026-125892;
2026-125893; and 2026-125894 and presided over by the seventh respondent in
terms of s s 417 and 418 of the Companies Act 61 of 1973 , ( ‘the Companies
Act’) as amended, be stayed.
[3] In Part B, the applicant seeks an order rescinding the orders of this Court
made under c ase number s 2026-125892; 2026 -125893; and 2026 -125894
convening the commission of enquiry and appointing the seventh respondent to
preside thereover in terms of s s 417 and 418 of the Companies Act as amended.
Alternatively, the applicant seeks an order setting aside the summonses issued
pursuant to the s aid orders to the extent that they exceed the trade dealings,
affairs or property.
[4] The matter was enrolled and heard as one of urgency, and this Court
was enjoined to consider only Part A of the applicant’s application.
Essentially, the applicant sought an order staying the hearing of the
commission of enquiry convened under s 417 read with s 418 of the
Companies Act, pending the outcome of his application in Part B to rescind
the order directing that the hearing of such an enquiry be held. The enquiry
envisaged in ss 417 and 418 was scheduled for 30 and 31 July 2026. After
hearing argument s from both parties on 29 July 2026, I granted an order
dismissing the applicant’s application and indicated that reasons would follow.
What follows are the reasons for that order.
The parties
[5] The applicant is an adult businessman and th e sole director of Dolmar
Group (Pty) Ltd (in provisional liquidation) ( ‘Dolmar’), Iowa (Pty) Ltd (in
liquidation) ( ‘Iowa’), and Silver Creek Durbanville (Pty) Ltd (in liquidation)
(‘Silber Creek’). For convenience, I shall refer to these companies collectively
as the companies. The first t hrough the sixth respondents are the joint
provisional liquidators of the companies described above. The seventh
respondent is an advocate of this division and is cited in her capacity as the
court-appointed commissioner tasked with convening certain enquiries pursuant
to ss 417 and 418 of the Companies Act. The seventh respondent did not oppose
the application but instead filed a notice to abide . The eighth respondent is
Standard Bank Limited ( ‘Standard Bank ’), a company with limited liability,
duly registered and incorporated in terms of the statutes of the Republic of
South Africa, and a bank duly registered in terms of the Banks Act 94 of 1990.
The applicant’s case
[6] The applicant brought this application to stay the enquiry scheduled for
hearing on 30 and 31 , July 2026. He contended that he had not been cited in
the applications which gave rise to the orders authorising the enquiries set
down for those dates. According to him, he was not given notice of those
applications and was not afforded an opportunity to be heard before the orders
were granted. This was notwithstanding that he is the sole director of the
companies and has consistently resisted the ir final liquidation. The applicant
further asserted that the provisional liquidators secured the orders ex parte and
in camera . Despite subsequent requests, he contends that he has not been
furnished with the papers or the factual material placed before the Court when
the ex parte orders were obtained.
[7] The applicant further pointed out that , to secure the ex parte orders, the
respondents would have been required to allege and prove, when the application
was brought , and s 417 was invoked, that the companies were unable to pay
their debts in the manner contemplated by s 339 of the Companies Act. A
factual inquiry of the companies ’ assets and liabilities would have been
necessary demonstrating they were unable to settle debts in the winding -up
process, this being a distinct and independent analysis from commercial
insolvency.
[8] In the winding -up applications brought by Standard Bank against the
companies under separate case numbers, which applications are to be heard
collectively, the applicant stated that the only debts of the companies were
recorded as claims by Standard Bank. Each claim arose from loan funding
advanced to the respective company. A provisional winding-up order was
granted on an unopposed basis. Since then, however, those debts have become
materially disputed on the basis that they have prescribed. A consolidated
answering affidavit has been filed, and that issue now awaits determination by
this Court.
[9] Because those claims are materially disputed and remain pending before
this Court, the applicant contends that it was impermissible for the liquidators
to rely on them to establish an inability to pay debts , the jurisdictional fact
required to convene an inquiry under s 417 of the Companies Act. Insofar as
the claims were relied upon, and the material dispute concerning them was not
disclosed, the applicant argues that the ex parte orders were obtained
unlawfully, constitute an abuse, and fall to be set aside.
[10] Moreover, the applicant emphasise d that the liquidators were appointed
only on a provisional basis. In his view, their primary responsibility is to
safeguard the assets of the companies for the benefit of the general body of
creditors. Accordingly, the applicant argues that the liquidators were required
to seek an extension of their powers to convene the inquiry. To do so, they had
to demonstrate that such an extension was necessary to wind up the
companies’ affairs and distribute their assets.
[11] The applicant submitted that in this case, winding up the companies and
distributing their assets is unnecessary because: firstly, the companies were not
finally liquidated and no distribution would take place until the return da te had
been determined; secondly, there is no evidence to suggest that assets needed to
be recovered as the applicant has handed over control of all assets to the
liquidators and ha s complied with all requests made by them and thirdly, the
companies therefore , are not unable to pay their debts in winding -up and as
such, there was no basis to seek an extension of powers to conv ene such an
enquiry.
[12] The applicant impugned the fact that he has been subpoenaed to appear at
the enquiry and compelled to produce a n array of documents, including his
personal bank statements; correspondence which, according to him, relates to
unrelated companies; businesses with no clear nexus to the compan ies in
liquidation. According to the applicant, these subpoenas are overbroad, clearly a
fishing expedition, and have no foundation in respect of the companies' affairs.
From the applicant's perspective, the liquidators are evidently abusing their
position as provisional liquidators, particularly given that their appointment may
be imminently discharged.
[13] The applicant asserted that a stay of the enquiry was therefore necessary.
The alleged debt of Standard Bank should not have been taken into
consideration for purposes of obtaining the ex parte orders. Further, given that
the liquidators approached the court on an ex parte basis, they had a heightened
duty to disclose all material facts to the court. Insofar as they failed to do so ,
that will constitute a further ground of abuse and be the basis for setting aside
the order.
[14] To confirm the alleged unlawfulness of the enquiry, the applicant stated
that he first needed access to the papers filed in the ex parte applications. The
applicant submitted that he was entitled to those papers to the extent that they
materially affect him as a person subpoenaed to appear at the enquiry and in
his capacity as the sole director of the companies. Absent such access, he
contended that he would be required to attend the enquiry without being able
to determine the lawfulness of its constitution. Accordingly, the applicant
requested the application papers from both the liquidators and the
commissioner, asserting that the respondents had identified no prejudice
resulting from their disclosure. He therefore prayed that the application be
granted in accordance with the relief sought, as set forth in paragraphs 1 and 2
of this judgment.
The respondents’ case (liquidators)
[15] The liquidators opposed the applicant’s application. They contended
that, following their appointments, they investigated the companies' affairs and
discovered transactions that merit serious concern. Firstly, they identified a
very substantial volume, both in number and in value, of fund transfers
effected among the companies and other entities controlled by the applicant.
According to the liquidators, substantial transfers took place during periods
when the companies made no payments to their major creditors,
notwithstanding their obligations to do so and despite the applicant’s
assurances that such payments would be forthcoming.
[16] The liquidators noted that no apparent commercial explanation for these
transfers was provided, and they intend to investigate these payments,
including whether the companies hold claims against the recipients. Secondly,
the liquidators assert that they found evidence suggesting that some of the
companies may have transferred their restaurant businesses to different
entities, including one possibly under the control of the applicant. They seek to
determine the causa and commercial basis for these transfers, including
whether they were effected for value and what had become of the revenue.
These investigations may also uncover claims held by the companies.
[17] The liquidators asserted that b efore the y decided to apply for the
convening of s 417 enquiries, they consider ed the information they had at their
disposal; they considered that further investigation may lead to claims by the
companies; they took advice; they factored in the financial ramifications ; and
reflected on their duties as liquidators. According to them, they determined that
the costs of the inquiries were necessary and worthwhile, may potentially be
recouped through the recovery of claims, and would eventually advantage
creditors; for that reason, they would be sought as costs in the winding up of the
companies. They also decided that, given the facts, they were required to
proceed without delay and filed the necessary application. Consequently, the
court granted the s 417 orders on 5 June 2026.
[18] The liquidators also applied confidentially to the commissioner to issue
subpoenas in respect of individuals they have identified at this stage as
potentially helpful with their investigations. They identified the applicant as a
person who could potentially provide assistance . As the sole director of the
companies, they observed that the applicant must possess knowledge of the
companies’ dealings, which the liquidators intend to investigate.
[19] Moreover, they assert that the applicant appears to have personally
received and confirmed certain transfers of funds. The records that the
liquidators required the applicant to bring to the enquiries included records
pertaining to the companies and other entities controlled by the applicant that
appear to have been involved in the transfers of funds the liquidators wish to
investigate; records of entities that may have acquired the companies’ restaurant
operations; and the applicant ’s personal bank statements. Pursuant to the
request, the commissioner issued the subpoenas. The liquidators applied for the
dismissal of the applicant’s application with costs, including the cost of coun sel
on scale C.
Issues to be determined
[20] From the above discussion, this Court had to determine three issues in
dispute, Firstly, whether it is permissible in law for the provisional liquidators,
the respondents herein, to bring an application under s 417 read with s 418 . If
so, whether their application was an abuse of process. Secondly, whether the s
417 application documents that served before Sher J when the ex parte order
under s 417 was granted should be provided to the applicant. Thirdly, the
question arises as to whether the court should grant an interdict staying the s
417 enquiry.
The applicable principles
(a) The scope of ss 417 and 418 of the Companies Act
[21] Before addressing these disputed issues, I deem it proper to consider the
principles distilled over the years relevant to insolvency inquiries that apply to
the present application. The necessity in bankruptcy proceedings for a means
whereby liquidators or trustees can investigate the financial position of the
insolvent or insolvent company has long been recognised. 1 A legislative basis
for holding such enquiries has been part of South African law for over 150
1 Roering NO and Another v Mahlangu and Others 2016 (5) SA 544 (SCA) para 20.
years. Such enquiries were made available in the case of companies in 1862 and
were first imported into South African legislation in 1868. 2 They have remained
part of our law ever since. The Constitutional Court has affirmed the
constitutional legitimacy of such provisions.3
[22] Section 418, read with s 417, of the Companies Act provides that, where a
company in liquidation is unable to pay its debts, an application may be made to
the Master for an examination or inquiry relating to the affairs of the company.
The primary purpose of a s 417 inquiry is to allow liquidators to gather
information to assi st them in di scharging their duties to wind up th e company.4
In consequence of the information revealed at an enquiry, offen ces or
irregularities, if any, and dishonest conduct of the affairs of the company are
exposed.5 The acquisition of information may also lead to the recovery of assets
or funds for the benefit of the company and its creditors.6
[23] Section 417(1) delineates the permissible scope of the enquiry .7 Any
person who is known or suspected to have in their possession any property of
the company, or is believed to be indebted to the company, or any person
deemed capable of giving information concerning the trade, dealings, affairs, or
property of the company, may be summoned to give evidence or produce
documents. The potential scope of such an enquiry is extremely wide. Section
417 provides a procedure whereby, in certain circumstances, a person may be
brought before the Court or the Master; it does not determine rights or impose
obligations other than the obligation to attend the examination.8
2 Roering NO and Another v Mahlangu and Others Fn 1, para 20.
3 Bernstein and Others v Bester and Others NNO 1996 (2) SA 751 (CC).
4 Joubert et al The Law of South Africa 3rd edition volume 6-part 3 (LAWSA) para 85.
5 Papiyana & others v Master of the High Court & others [2010] JOL 26559 (GSJ) para 17.
5 Papiyana & others v Master of the High Court & others [2010] JOL 26559 (GSJ) para 17.
6 See Other Bester & others NNO 1996 (2) SA 751 (CC) at 767G and Ferreira v Levin NO & others; Vryenhoek
& others v Powell NO & others at 1057G.
7 Roering NO and Another v Mahlangu and Others 2016 (5) SA 455 (SCA) para 21.
8 Shapowloff v Stirling Henry Ltd 1972 2 NSWLR 691 CA (NSW) 693.
[24] The Master or the Court may appoint a commissioner to conduct an
enquiry. That is what occurred in this matter: the Court appointed the seventh
respondent, Advocate C Morgan, as the commissioner to conduct the enquiry .
Upon appointment, the commissioner is empowered to summon witnesses and
require the production of documents. This is precisely what happened here.
The commissioner summoned the applicant to appear before the inquiry on 30
and 31 July 2026, and to produce the relevant document. The applicant now
seeks to impugn those summonses and the constitution of the enquiry. A
person summoned to an enquiry is entitled to legal representation and to be
furnished with a copy of their evidence. A witness is obliged to answer any
question put to them, but incriminating answers are not admissible in evidence
against them in later criminal proceedings.9
[25] In Bernstein & others v Bester & others NNO ,10 the Constitutional Court
noted that Courts in many foreign jurisdictions have recognised the (potentially)
oppressive nature of a s 417 type enquiry, while at the same time pointing out
that there is a need for a speedy process through which the liquidator is enabled
to obtain the necessary information about the company ’s affairs and dealings,
and to trace the whereabouts of assets and possibly recover some assets for the
financial benefit of creditors. The Court added that c ourts normally exercise
control over the enquiry in two ways. First, courts have scrutinised applications
to hold the enquiry. Second, courts have intervened to prevent the oppressive or
unfair conduct of proceedings in the enquiry itself. The Court explained the
purpose of the s 417 enquiry and stated as follows:
9 Ferreira v Levin NO and Others; Vryenhoek and Others v Powell NO and Others 1996 (1) SA 984 (CC) para
157.
10 1996 (2) SA 751 (CC).
‘As I have endeavoured to show in this judgment, the very purpose of the proceedings under
sections 417 and 418 of the Act is in order to provide the company with information about
itself, its own affairs, its own claims and its own liabilities, which it cannot get from its
erstwhile brain and other sensory organs or other persons who have a public duty to furnish
such information but are unwilling or reluctant to do so fully and frankly.’11
[26] I emphasise that the duty to attend and give evidence at the enquiry
forms part of the responsibility to account to shareholders and creditors for the
failure of the business, a responsibility inherent in the use of companies to
raise money from the public and to conduct business on the basis of limited
liability.
[27] In Ferreira v Levin NO and Others; Vryenhoek and Others v Powell NO
and Others ,12 the Constitutional Court observed that company directors and
other officials who appeal to the public for funds and engage in public
commercial activity with the benefit of not being personally liable for the
company’s debts, cannot complain if they are subsequently called upon to
account for their stewardship , at least, for the purposes of discovering all assets
so as to minimise the loss to creditors and give full information to shareholders.
Importantly for present purposes , the Court noted that when raising funds and
trading with the protection of not being personally liable for company debts, the
company officials implicitly undertake to submit to such enquiry and effectively
waive in advance any claim not to answer questions of an incriminating kind
that relate to their management of the company's affairs.
[28] There exists considerable support for the contention that, in particular,
directors and others concerned with the management and affairs of a failed
company all have a duty to creditors and shareholders to provide a candid, full ,
11 At para 121.
12 1996 (1) SA 984 (CC) at 1117.
and truthful account of the ir stewardship.13 A prospective examinee at a
proposed enquiry has no right to receive proper notice of the liquidator's
application to the court. 14 However, a n examinee who becomes aware of the
application or that an order has been made has locus standi to oppose the
application or to move to have the order set aside. 15 It is for the prospective
examinee to establish fact s that will entitle him or her to relief. However, the
grounds on which he may validly seek to resist an order are very narrow.
(b) Confidentiality
[29] Section 417(7) of the Companies Act provides that a ny examination or
enquiry conducted under this section or s 418 along with any associated
application, shall remain private and confidential, unless the Master o r the
Court, either generally or in respect of any particular person, direct s otherwise.
The default position for s 417 enquiries are private and confidential. Section
417(7) operates to deny all persons access to the application and any documents
accompanying it and to the examination or enquiry itself, the record of it and to
any books or papers produced at it. 16 However, a witness is entitled, at his own
cost, to a copy of the record of his own evidence in terms of s 418(4).
[30] Accordingly, prior to his interrogation, whether by the court or , as the
case may be, the Master under s 417 or at a commission constituted in terms of
s 418, a person summoned has no access to the application and cannot compel
discovery of documents in the possession of the applicant or the commissioner,
subject however to any direction in terms of s 417(7).17
13 Spedley Securities Ltd v bond Corporation Holdings Ltd (1990) 1 ACSR 726 SC (NSW) at 738.
14 Friedland and Others v The Master and others 1992 (2) SA 370 (WLD).
15 Ex parte Liquidators Ismail Suliman & Co (Pty) Ltd 1941 WLD 33.
16 Kotze v De Wet NO and Another 1977 (4) SA 368 (T) at 375.
17 Goodman And Others v Druker NO 1961 (4) SA 161 (W).
[31] The Court possesses the authority to revoke confidentiality in the
liquidators’ s 417 applications. The Court or the Master may lift the
confidentiality veil if it appears that, without access to the application, the
examinee will be unfairly prejudiced in the conduct of his opposition or in his
application to have the s 417 orders set aside. The proposed examinee must
demonstrate that he has an arguable case to which the material is relevant. Even
if he shows an arguable case, the proposed examinee must also show that the
material sought will be , or at least ought to be, relevant to that arguable case,
and point to the material’s relevance to show that he will be unfairly prejudiced
if it is not disclosed. Simply, there must be a genuine, articulable basis for
challenging the confidentiality veil.
[32] Against this backdrop, I turn to consider the applicant’s application in
light of the disputed issues discussed above . I will discuss the issues in dispute
ad seriatim.
Is it permissible in law for the provisional liquidators to apply for a s 417 read
with s 418 enquiry?
[33] The applicant contended that the liquidators ha d been provisionally
appointed. In the applicant’s view, their primary responsibility is to safeguard
the assets of the companies for the benefit of the general body of creditors.
Accordingly, the applicant asserts that the liquidators had to seek an extension
of their powers to convene the enquiry. The applicant submitted that the
liquidators herein are clearly abusing their position as provisional liquidators,
and they do so in circumstances where their appointment may soon be
discharged.
[34] Where an appropriate case is made out, there is good reason to read s
417(1) of the Companies Act as permitting the establishment of an enquiry even
whilst the company is still in provisional liquidation. 18 As Bozalek J noted in
Massyn, opposition to a final order could result in extended litigation and
thereby frustrate the primary purpose of a s 417 enquiry which is to obtain
information about the affairs of the company on an expeditious basis so that the
liquidators can perform their functions and act in the best interest of the
creditors and shareholders.
[35] From the orders issued by Sher J on 05 June 2026, it is evident that the
provisional liquidators’ powers were extended under, s 386(4)(a) and/or s s
386(4)(i) and 386(5) of the Companies Act, read with item 9 of Schedule 5 of
the Companies Act 71 of 2008, to bring the said application and to exercise the
powers envisaged in that order relating to the administration of the companies in
liquidation.19 These orders have not been impugned and remain extant.
[36] In general , the powers conferred upon a provisional liquidator are the
same powers as are enjoyed by liquidators. 20 In other words, a provisional
liquidator appointed in terms s 368 of the Companies Act has all the powers of a
liquidator, except the power to litigate in the name and on behalf of the
company save in so far as the Master may have specifically curtailed such
powers.21 Section 386(6) of the Companies Act provides that the Master may
restrict the powers of a provisional liquidator. The Master may, subsequent to
the appointment, relax any restriction imposed by him in terms of s 386(6) of
the Act. Thus, the powers of a provisional liquidator depend substantially on the
terms of his appointment under s 368 by the Master.
18 Massyn v De Villiers N.O and Others [2021] 3 All SA 578 (WCC) para 10 (‘Massyn’).
19 Chapter 14 of the Companies Act 61 of 1973, including s 386, continues to apply to the winding -up of
insolvent companies under the Companies Act 71 2008 by virtue of s 224(3), read with item 9(1) of Schedule 5
to the Companies Act 71 of 2008.
to the Companies Act 71 of 2008.
20 Ex parte Contemporary Refrigerator (Pty) Ltd 1966 (2) SA 227 (D) at 229.
21 Ex parte Provisional Liquidators Pharmacy Holdings Ltd 1962 (2) SA 12 (W) at 15.
[37] The provisional liquidators in casu have powers in terms of s 386 (1)(e),
which include to take such measures for the protection and better administration
of the affairs and property of the company as the trustee of an insolvent estate
may take in the ordinary course of his duties and without the authority of a
resolution of creditors. In my view, this must include the power to apply to the
Master or the court for an enquiry to be convened in terms of s 417(1). To
exclude provisional liquidators from approaching the court or the Master for
such an enquiry merely because their appointment is provisional would be
irrational and make no sense.
[38] Significantly, t heir function is essentially that of a receiver pendent lite,
i.e., to assume control and manage the administration of the property and
affairs of the company pending the appointment of th e liquidator. 22 As Bozalek
J noted in Massyn, I also do not understand the role of the provisional
liquidator to be a passive one, i.e. merely limited to preserving the assets of the
company pending the appointment of a permanent liquidator. In Ex parte:
Klopper NO: in re Sogervim SA (Pty) Ltd,23 Boshoff J stated:
‘When a provisional or final winding -up order is made the circumstances or the affairs of a
company may be such that it is in the interest of the company and the general body of
creditors that some other person than the Master should as soon as possible take all the
property into his control and custody and attend to urgent matters for the preservation of the
property and the beneficial winding -up of the company . To meet such a situation the Master
has the power to appoint a provisional liquidator as soon as a provisional or final winding -up
order is made and he then holds office until the appointment of a liquidator; (sec. 124 (2)).
The Master, in appointing a provisional liquidator, may, under sec. 130 (4), restrict his
powers. The extent to which his powers will be restricted will depend on the circumstances of
powers. The extent to which his powers will be restricted will depend on the circumstances of
each particular case.’ (emphasis added)
22 See Henochsberg on the Companies Act vol 1 at 790.
23 1971 (3) SA 791 (TPD) at 796G-797A.
[39] It is noteworthy that there is no indication that the Master limited their
powers in terms of s 386(6) so as to reserve the right to apply for a s 417 and s
418 enquiry exclusively to the final liquidators. Evidently, the first to the sixth
respondents would be failing in their duties were they to neglect to make use
of the elaborate machinery provided by the Companies Act under which they
were appointed. 24 Consequently, the application by the provisional liquidators
to the Court for the extension of their powers to order an enquiry in terms of s
417 read with s 418 was legitimate and cannot be faulted.
[40] The provisional liquidators pointed out that they identified significant
volume, in both number and value, of fund transfers apparently amongst the
companies as well as other entities controlled by the applicant. They noted
significant fund transfers during periods when the companies made no payment
to their major creditors, notwithstanding the applicant’s assurances to make
such payments . In my view, the suggestion that they abused their powers is
unfounded and must be rejected. I now turn to consider the second disputed
issue.
Should the ex parte application documents be provided to the applicant?
[41] In these proceedings, the applicant asks the court to exercise its powers to
lift confidentiality in th e liquidators’ s 417 application. At the hearing of this
application, Mr Sievers SC, counsel for the applicant, submitted that because
there is no evidence that any creditors other than Standard Bank exist, and
because there is no evidence that the issue of prescription was disclosed when
the ex parte orders were secured, the ex parte orders fall to be set aside. Counsel
submitted that because the orders fall to be set aside, the papers giving rise to
those orders should be disclosed. Absent such disclosure , the argument went,
the applicant will be hampered in his rescission application , and an injustice
the applicant will be hampered in his rescission application , and an injustice
24 Papiyana & others v Master of the High Court & others [2010] JOL 26559 (GSJ) para 21.
will be occasioned both towards the applicant and in the administration of
justice. I respectfully disagree with this proposition.
[42] From the outset, I must emphasise that the object of the procedure in
terms of s 417 is to conceal from the proposed examinee the subject matter of
the examination, which information, if disclosed to him or her , might enable
him or her to defeat or to stultify the process of the examination itself. As
foreshadowed above, th e default position is confidentiality. As Ms Reynolds,
counsel for the respondents, noted, the reasons for th e confidentiality have been
explained as follows:
‘There is good reason for the preservation of secrecy. This has long been recognised, both
here and in England. If not only the fact that an enquiry was to be held but also the reasons
why such enquiry was necessary and the matters which were to be inquired into were to be
made public or to be disclosed to the very people who were to be called to testify at the
enquiry, because it is their dealings with the company which is to be the subject of the
enquiry, it could indeed stultify not only the liquidators' task, but the enquiry itself and I
would think it is self -evident that such persons should not be apprised of what has been
placed before the Court in support of the application for the holding of the enquiry.’25
[43] The applicant implored the court to exercise its power to revoke
confidentiality in the liquidator's application and to furnish him with copies of
that application to enable him to impugn that order in Part B of his application.
As discussed above, a court or th e Master may direct the lifting of the
confidentiality veil to enable the examinee to inspect the documents giving rise
to the inquiry. The court will order such disclosure if it appears that , without
access to the application, the proposed examinee will or may be unfairly
prejudiced in conducting his opposition to the order or in his application to have
it set aside.
it set aside.
25 Merchant Shippers SA (Pty) Ltd v Millman 1986 (1) 413 (C) at 418B-C.
[44] However, the proposed examinee must present evidence before the court
demonstrating that he has an arguable case to which the material is relevant.
The mere fact that the application was before the court or the Master and has
not been viewed by the proposed examinee does not , by itself, constitute good
reason to breach confidentiality. If the examinee shows good reason for
requiring disclosure of the application for the order, disclosure will be ordered.
However, our courts have emphasi sed that if, in the proper exercise of his
duties, a liquidator approaches the Court with a request that a commission of
inquiry be appointed on the grounds that it is necessary to his investigation into
the affairs of the company, the Court will necessarily be influenced by his
views.26
[45] Ms Reynolds correctly pointed out, there are two interconnected reasons
the court takes th e approach of being largely guided by the liquidator's attitude.
Firstly, liquidators have obliged to investigate the company, and secondly, they
are required to carry out their duties honestly and professionally. A liquidator
owes duties both to the company to ensure maximi sation of asset , realisation
and minimisation of liabilities to the creditors to see that they minimize their
loss and receive the most advantageous dividends. Those duties must be
executed with professional skill, care and diligence .27 The court will therefore
assume, unless there are compelling indications to the contrary, that the
liquidator’s assessment of what is advisable regarding the confidentiality of the
inquiry has been conducted responsibly, fairly and with due diligence. To this
end, King AJ, as he then was, in Merchant Shippers SA (Pty) Ltd v Millman No
and Others(supra) stated:
26 Merchant Shippers SA (Pty) Ltd v Millman No and Others 1986 (1) SA 413 (C) at 416.
27 See Concorde Leasing Corp (Rhodesia) Ltd v Pringle-Wood NO 1975 (4) SA 231 (R) at 234G-235A.
‘The Court will be largely guided by the attitude of the liquidator. Whether or not he is
correctly designated an officer of the Court, he performs certain statutory functions, and the
Court would in my view be right to assume that he was acting responsibly and fairly. The
difficulties with which his task confronts him need hardly be emphasised. In the nature of
things, the affairs of a company which has been placed in liquidation are often not readily
diagnosed. The liquidator must strike a balance between on the one hand a cautious approach
to the further expenditure of company funds and on the other a proper exercise of his function
to recover in the interest of creditors monies due to the company.’28
[46] The gravamen of the applicant’s case is the stay of the enquiry and the
upliftment of the confidentiality veil to enable him to prepare his case in Part
B of the application to rescind the order establishing the enquiries. As appears
from the above discussion, before the upliftment of confidentiality is
warranted, a witness , in this instance, the applicant , must place material before
the Court demonstrating that he already has sufficient grounds for an arguable
case to set aside the s 417 enquiry. A Court will not afford a witness whose
case for setting aside is merely theoretical or speculative access to confidential
material in order to establish a factual basis for such a case. The mere fact that
an order in terms of s 417 has been granted on a confidential basis does not, in
itself, justify the upliftment of confidentiality.
[47] In this matter, the applicant has failed to place material before this Court
demonstrating that he has an arguable case to set aside the s 417 enquiry. The
applicant assert s that the jurisdictional requirements of s 417 were not met
because the companies were all able to pay their debts at the time the s 417
applications were made and the orders issued. Surprisingly, when the
applications were made and the orders issued. Surprisingly, when the
applications were made to place th ese companies under provisional liquidation ,
those applications were not opposed. Moreover, the defence that the companies
were all able to pay their debts was not at all raised or placed before the court.
28 At 417H-I.
[48] Furthermore, the applicant hinges his case on the grounds that the
companies have no financial obligations to Standard Bank because the bank's
claim has prescribed. The bank's position is that prescription was interrupted by
acknowledgment of debt. In other words, the bank refutes that its claim against
the companies has prescribed. Clearly, t his court cannot conclude from this
information that the applicant has presented an arguable case that the bank's
claim has indeed prescribed.
[49] Moreover, the liquidators stated that even assuming in the applicant's
favour that the bank's claims have prescribed, none of the companies are able to
settle their debts during the winding up process. Most importantly , the
applicant’s case is premised on speculation and conjecture. The applicant
asserts that if the liquidators relied on the bank's claim in the s 417 applications
without disclosing that the claims are disputed, then the s 417 orders were
obtained unlawfully, and this constitute s an abuse of process. As the
respondents contended, this assertion is patently speculative and does not
establish an arguable case that the applicant will be able to rely on non -
disclosures or misrepresentations in the s 417 application s as a basis to set the
orders aside.
[50] Furthermore, the applicant requested access to the s 417 applications
from the duly appointed commissioner, the seventh respondent. In response,
the commissioner advised the applicant clearly and unequivocally that the
factors he relied upon , including the jurisdictional requirements of s 417 , were
before the Court when the orders were granted. As already discussed, a Court
will not waive confidentiality to enable a witness to fish for a case. The
applicant is evidently seeking to construct a basis for Part B of his application,
and his request for access amounts to an impermissible fishing expedition.
[51] In addition, t he applicant argued that the subpoenas served upon him are
abusive because they are broad in their scope . This proposition, in my view, is
devoid of substance. The applicant serves as the sole director of all three
companies and can inherently assist the liquidators in putting together the facts
regarding the companies' affairs, including the bank transfers and the alleged
sales of the companies' businesses. He is the principal individual not an external
party to the company.
[52] The liquidators have explained that they called for documents relating to
entities beyond the companies themselves because of the multiple transfers of
funds between entities and the alleged transfer of the compan ies’ restaurant
businesses. I have no reason to doubt their explanation . Consistent with the trite
principle, this court will be largely guided by the views of the liquidator. The
applicant’s contention that the inquiry will invade his right to privacy is
without merit. Given that he is the sole director of the companies and
considering the matters the liquidators seek to question him about, his
participation in the inquiry does not implicate his right to privacy considering
the principle espoused by the Constitutional Court’s decision in Ferreira v
Levin (supra).
[53] The applicant is called to the s 417 inquiry to account for his stewardship
of the companies. In my view, the applicant , as the sole director of the three
companies, should not complain about being called to account for the
stewardship of his companies. Consequently, the applicant has not crossed the
threshold necessary for the court to lift confidentiality and allow him access to
the s 417 application .
[54] To this end, I share similar sentiments expressed by King AJ in Merchant
Shippers SA (Pty) Ltd v Millman No And Others (supra) that, in light of the
guidelines laid down over many years, one should not relax the ordinary
practice, namely that the enquiry and the documents placed before the Court to
justify the holding of such an enquiry are necessarily private and not open to
disclosure to interested parties. Accordingly, the applicant’s application for
access to the s 417 applications must fail.
Should the s 417 enquiry be stayed?
[55] As detailed above, the inquiry was scheduled to begin on Thursday, 30
July and continue on 31 July 2026. The applicant sought a stay of the enquiry
pending the determination of his application to set the enquiry aside in Part B of
his application. To this end, the applicant sought an interim interdict pending
the outcome of the Part B application. Therefore , the applicant had to establish
at least a prima facie right to succeed in setting aside the application. The
applicant also had to show an apprehension of irreparable harm if interlocutory
relief is not granted. The applicant also had to show that the balance of
convenience is in his favour.
[56] I do not intend to repeat th e reasons I have articulated above ; however,
there is no basis to grant interlocutory relief. The applicant has not established
any apprehension of harm if interlocutory relief is not granted. His privacy and
reputation will be protected by the confidentiality of proceedings. He is e ntitled
to legal representation at the inquiry , and the commissioner's role includes
protecting witnesses , including the applicant, from abuse. The proceedings
before the commissioner will be conducted in accordance with the fundamental
principles of justice.
[57] I share the view that the balance of convenience favours the liquidators.
They have established all the practical arrangements necessary for the
enquiries to proceed on the scheduled dates. Any delay in the commencement
of the inquiry would prejudice the companies and their creditors. The
companies are in provisional liquidation, and assets , including assets held by
third parties , may be dissipated if the enquiry is postponed. Costs already
incurred in preparing for the enquiry will be wasted. Having regard to the
conspectus of all the facts placed before this Court, the applicant has not met
the requirements for interim interlocutory relief, and this application must
accordingly be dismissed.
Order
[58] Given all these considerations, I granted the following order:
58.1 The applicant's application for the stay of the commission of enquiry in
terms of s 417 read with s 418 of Act 61 of 1973, as well as the request
for the s 417 court application papers under case numbers 2026 -125892,
2026-125893 and 2026-125894, are hereby dismissed.
58.2 The applicant is ordered to pay the cost s of this application on a party -
and-party scale, including counsel costs on scale B.
___________________________
LEKHULENI JD
JUDGE OF THE HIGH
COURT
APPEARANCES
For the Applicant: Adv Sievers SC
Instructed by: Enderstein Malumbete Inc
For the first to the sixth Respondents: Adv Reynolds
Instructed by: Edward Nathan Sonnenberg Inc