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[2015] ZAWCHC 63
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Patel v Master of the High Court, Western Cape Division, Cape Town and Others (7163/14, 21236/2014) [2015] ZAWCHC 63 (15 May 2015)
IN THE HIGH COURT OF
SOUTH AFRICA
(WESTERN CAPE DIVISION,
CAPE TOWN)
CASE NO: 7163/14 (&
21236/2014)
DATE: 15 MAY 2015
In the matter between:
MOHAMED ISMAIL
PATEL
.................................................................................................
Applicant
And
MASTER OF THE HIGH COURT,
WESTERN CAPE DIVISION, CAPE
TOWN
..............................................................
1st
Respondent
BAREND PIETERSEN
N.O
.........................................................................................
2nd
Respondent
DANIEL TERBLANCHE
N.O
......................................................................................
3rd
Respondent
ADV C S
STEWART
.......................................................................................................
4th
Respondent
FIRST NATIONAL
BANK
.............................................................................................
5th
Respondent
Coram: Cloete, J
Dates of Hearing: 3 March 2015
Date of Judgment: 15 May 2015
JUDGMENT
CLOETE, J
INTRODUCTION
[1] This is a review of the decision of
the first respondent (“the Master”) to authorise an
enquiry in terms of sections
417 and 418 of the Companies Act, 61 of
1973 (“the 1973 Act”) for the purpose of interrogating
the applicant , who
is one of three joint liquidators of Crimson Moon
Investments 32 CC [in liquidation] (“Crimson Moon”). The
applicant
was duly appointed by the Master as a joint liquidator
along with the second and third respondents on 17 February 2011 after
Crimson
Moon was placed in final liquidation on 3 December 2010.
[2] It is common cause that the
applicant has been solely responsible for the day to day
administration of Crimson Moon since its
liquidation. It is also
common cause that the enquiry was convened by the Master at the
instance of the fifth respondent (“the
bank”) which is a
disgruntled proven creditor of Crimson Moon. The fourth respondent
has been appointed by the Master as
the Commissioner of the envisaged
enquiry.
[3] In terms of an order granted by
agreement on 5 December 2014, the applicant persists only in his
personal capacity in seeking
to set aside the decision of the Master
in terms of section 151 of the Insolvency Act, which expressly
provides that “any
person” aggrieved by any decision of
the Master may bring it under review by the court. In the
alternative, the applicant
seeks the review of the Master’s
decision in terms of the Promotion of Administrative Justice Act, 3
of 2000 (“PAJA”).
He also challenges the validity of the
summons issued and served upon him by the Commissioner to appear at
the enquiry in order
to be interrogated. Only the bank opposes the
relief sought.
[4] According to an interim report
filed by the Commissioner the bank approached the Master to convene
the enquiry because of certain
concerns which it had with the
applicant’s administration of Crimson Moon. Regrettably,
although the Master is a party to
these proceedings, was served with
a copy of the review application and has a direct interest in the
relief sought, he has not
seen fit to take the court into his
confidence by providing reasons for his decision to convene such an
enquiry for the purpose
of interrogating the applicant.
[5] It is unnecessary to consider the
merits or otherwise of the bank’s complaints which led it to
approach the Master, because
the parties are ad idem that what lies
at the heart of the dispute is whether, as a matter of law, an
enquiry can be convened in
terms of sections 417 and 418 of the 1973
Act for the purpose of interrogating a liquidator of an insolvent
company about his conduct
in administering that company post
liquidation. The issue is thus the proper interpretation of the
provisions of sections 417
as read with 418, and section 381 of the
1973 Act.
[6] Also in issue was whether the
applicant’s failure to apply for condonation when launching the
review application five
weeks after the 180 day period stipulated in
section 7(1) of PAJA expired should have resulted in its dismissal on
that ground
alone. However, the bank now accepts that, given the
decision in Firstrand Bank Limited (t/a Rand Merchant Bank) &
Another
v Master of the High Court, Cape Town & Others
2014 (2)
SA 527
(WCC) in particular at para [38], this court is not bound to
consider the merits of the review application in terms of PAJA only.
It may also do so in terms of the legality principle. As was held in
Fedsure Life Assurance Limited & Others v Greater Johannesburg
Transitional Metropolitan Council & Others
[1998] ZACC 17
;
1999 (1) SA 374
(CC)
at para
[56]
:
“… it is a fundamental
principle of the rule of law, recognised widely, that the exercise of
public power is only legitimate
where lawful. The rule of law –
to the extent at least that it expresses the principle of legality –
is generally
understood to be a fundamental principle of
constitutional law.”
[see also President of the Republic of
South Africa & Others v South African Rugby Football Union &
Others
2000 (1) SA 1
(CC) at para [148]; Albutt v Centre for the
Study of Violence & Reconciliation & Others
2010 (3) SA 293
(CC) at para [49].]
RELEVANT STATUTORY PROVISIONS
[7] Section 381 of the 1973 Act
provides as follows:
“381. Control of Master over
liquidators. – (1) The Master shall take cognisance 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 duties, or if any complaint is made
to him by any creditor,
member or contributory in regard thereto,
enquire into the matter and take such action thereanent as he may
think expedient.
(2) The Master may at any time require
any liquidator to answer any enquiry in relation to any winding-up in
which such liquidator
is engaged, and may, if he thinks fit, examine
such liquidator or any other person on oath concerning the
winding-up.
(3) The Master may at any time appoint
a person to investigate the books and vouchers of a liquidator.
(4) The Court may, upon the application
of the Master, order that any costs reasonably incurred by him in
performing his duties
under this section be paid out of the assets of
the company or by the liquidator de bonis propriis.
(5) Any expenses incurred by the Master
in carrying out any provision of this section shall, unless the Court
otherwise orders,
be regarded as part of the costs of the winding-up
of that company.”
[8] Section 417(1) of the same Act
stipulates that:
“417. Summoning and examination
of persons as to affairs of company. – (1) In any winding-up of
a company unable to
pay its debts, the Master or the Court may, at
any time after a winding-up order has been made, summon before him or
it any director
or officer of the company or person known or
suspected to have in his possession any property of the company or
believed to be
indebted to the company, or any person whom the Master
or the Court deems capable of giving information concerning the
trade, dealings,
affairs or property of the company.”
[9] Section 418 of the same Act deals
with the appointment of, and examination by, commissioners. Section
418(1)(a) provides that:
“418. Examination by
commissioners. – (1) (a) Every magistrate and every other
person appointed for the purpose by the
Master or the Court shall be
a commissioner for the purpose of taking evidence or holding any
enquiry under this Act in connection
with the winding-up of any
company.”
THE APPLICANT’S CASE
[10] It is the applicant’s case
that section 417(1) of the 1973 Act cannot apply to him because he
personally is not a “director
or officer of the company or
person suspected to have in his possession any property of the
company or believed to be indebted
to the company, or any person whom
the Master or the Court deems capable of giving information
concerning the trade, dealings,
affairs or property of the company”.
[11] In a related interdict application
the bank applied to be joined in these proceedings on the basis that
it is a creditor of
Crimson Moon and that:
“4.2 The bank does have major
concerns with the administration of the liquidated estate of Crimson,
and therefore applied
to the Master of the High Court, CAPE TOWN for
the convening of an inquiry (sic) through the bank’s attorneys
… in
terms of Section 417 read with Section 418 of the
Companies Act, Act 61 of 1973 …”
[12]In essence, the bank’s
complaints relate to the delay in finalising the liquidation of
Crimson Moon’s estate; that
so-called “interim dividends”
were not paid with the consequence that the security bond has not
reduced; that the proceeds
of the sale of the immovable property were
not deposited into an interest bearing account; and that VAT was not
collected and paid
over to SARS. The applicant points out that all
of these complaints relate to the post-liquidation administration by
the liquidators,
and in particular, the applicant in his capacity as
such; and not to the affairs of Crimson Moon itself which, in turn,
are relevant
to the winding-up process. Put differently, it is not
Crimson Moon’s affairs that the bank wishes to investigate, but
the
affairs of the liquidation itself.
[13]It is thus the applicant’s
contention that, instead of convening a section 417 enquiry, the
Master should have invoked
the provisions of section 381 of the 1973
Act, the purpose of which is described in Henochsberg on the
Companies Act Vol 1 [Issue
32] at 808 (2) as follows:
“[Section 381(1)] imposes duties
on the Master and to that end arms him with the power of enquiry and
the power to take such
action as he thinks expedient; these duties
arise if he has reason to believe that the liquidator is not
faithfully performing
his duties and duly observing all requirements
imposed upon him by the Act or any other law or by resolutions of
creditors or members
(or contributories) or directions of the Master
himself or the Court; or if a complaint is made to him by any
creditor or member
(or contributory): thus, if a complaint is made by
any of these the Master must exercise such powers. In addition, the
section
vests in the Master the powers under sub-ss (2) and (3) which
he may exercise unilaterally and at any time. The intention is
clearly
that the Master should maintain overall control over the
winding-up and ensure that it is properly administered.”
THE BANK’S CASE
[14] The bank agrees that it requested
the Master to convene the section 417 enquiry because of concerns
which it had with the administration
of the insolvent company by the
joint liquidators and the applicant in particular.
[15]It also accepts that sections 417
and 418 provides statutory mechanisms for the proper investigation
into the affairs of a company
and that, in consequence of information
revealed at an enquiry, offences or irregularities, if any, and
dishonest conduct in the
affairs of the company may be exposed. The
information obtained may also lead to the recovery of assets or
monies for the benefit
of the company and its creditors.
[16]The bank contends however that it
was clearly the intention of the legislature that the powers
conferred on the Master in terms
of section 381 include the power to
invoke sections 417 and 418 in order to enable the Master to comply
with the statutory obligations
imposed upon him by section 381. Put
differently, it is the bank’s submission that section 417 as
read with section 418
supplement section 381 rather than each having
separate and distinct purposes as is contended by the applicant.
[17]In support of this argument, the
bank relies on Henochsberg at 891 where the learned author writes:
“Notwithstanding Power NO v
Bieber
1955 (1) SA 490
(W) at 502, it is respectfully submitted that
the liquidator of the company may also be summoned in his capacity as
such: on the
ordinary meaning of the language, the ‘trade’,
‘dealings’ or ‘affairs’ contemplated are
those
existing before or after the inception of the winding-up, and
(notwithstanding the conclusion in Standard Bank of SA Ltd v Master
of the High Court & Others
[2006] JOL 18517
(E) at para 89 and
the cases referred to therein at paras 87 and 88) no reason occurs to
one why the Legislature should intend
the liquidator’s conduct
to be outside the Court’s or the Master’s power of
investigation, notwithstanding the
latter’s powers under s381
(cf Venter v Williams
1982 (2) SA 310
(N) at 316). It is submitted
that the correct position is not that an examination of the
liquidator’s conduct in the winding-up
or issues relating to
the liquidation process are as such outside the ambit of the matters
contemplated in s 417, but that because
of powers accorded to a
liquidator by s 381, the Court, and particularly the Master, would
summon the liquidator only in exceptional
circumstances.”
[18] The bank submits that the Master
was thus correct to invoke section 417 in order to convene the
enquiry. The applicant is
involved in the administration of the
liquidation and can therefore furnish information concerning such
administration at the enquiry.
The Commissioner himself will not
make any finding. The sole purpose of the enquiry will be to elicit
information to which the
bank is entitled as a proven creditor of
Crimson Moon.
[19] The bank also argues that support
for its view is to be found in a line of cases which it contends have
held that section 152
of the Insolvency Act is equivalent in its
ambit and application to section 417 and 418 of the 1973 Act and that
therefore the
applicant can be subjected to interrogation at a
section 417 enquiry. Section 152(2) provides that:
“(2) If at any time after the
sequestration of the estate of a debtor and before his
rehabilitation, the Master is of the
opinion that the insolvent or
the trustee of that estate or any other person is able to give any
information which the Master considers
desirable to obtain,
concerning the insolvent, or concerning his estate or the
administration of the estate or concerning any claim
or demand made
against the estate, he may by notice in writing delivered to the
insolvent or the trustee or such other person
summon him to appear
before the Master or before a magistrate or an officer in the public
service mentioned in such notice, at
the place and on the date and
hour stated in such notice, and to furnish the Master or other
officer before whom he is summoned
to appear with all the information
within his knowledge, concerning the insolvent or concerning the
insolvent’s estate or
the administration of the estate.”
DISCUSSION
[20] In Poswa v MEC for Economic
Affairs, Environment and Tourism, Eastern Cape
2001 (3) SA 582
(SCA)
the Supreme Court of Appeal held at paras [10] – [11] as
follows:
“[10] The literal meaning of an
Act (in the sense of strict literalism) is not always the true one,
but escaping its operation
is usually not easy, most often
impossible, for:
‘The cardinal rule of
construction of a statute is to endeavour to arrive at the intention
of the lawgiver from the language
employed in the enactment. . . . in
construing a provision of an Act of Parliament the plain meaning of
its language must be adopted
unless it leads to some absurdity,
inconsistency, hardship or anomaly which from a consideration of the
enactment as a whole a
court of law is satisfied the Legislature
could not have intended.’
(Per Stratford JA in Bhyat v
Commissioner for Immigration
1932 AD 125
at 129). (Emphasis
supplied.)
[11] The effect of this formulation is
that the court does not impose its notion of what is absurd on the
legislature’s judgment
as to what is fitting, but uses
absurdity as a means of divining what the legislature could not have
intended and therefore did
not intend, thus arriving at what it did
actually intend.”
[21] In Natal Joint Municipal Pension
Fund v Endumeni Municipality
2012 (4) SA 593
(SCA) at para [18] it
was held that:
“The present state of the law can
be expressed as follows: Interpretation is the process of attributing
meaning to the words
used in a document, be it legislation, some
other statutory instrument, or contract, having regard to the context
provided by reading
the particular provision or provisions in the
light of the document as a whole and the circumstances attendant upon
its coming
into existence. Whatever the nature of the document,
consideration must be given to the language used in the light of the
ordinary
rules of grammar and syntax; the context in which the
provision appears; the apparent purpose to which it is directed and
the material
known to those responsible for its production. Where
more than one meaning is possible each possibility must be weighed in
the
light of all these factors. The process is objective, not
subjective. A sensible meaning is to be preferred to one that leads
to
insensible or unbusinesslike results or undermines the apparent
purpose of the document. Judges must be alert to, and guard against,
the temptation to substitute what they regard as reasonable, sensible
or businesslike for the words actually used. To do so in
regard to a
statute or statutory instrument is to cross the divide between
interpretation and legislation; in a contractual context
it is to
make a contract for the parties other than the one they in fact made.
The “inevitable point of departure is the
language of the
provision itself”, read in context and having regard to the
purpose of the provision and the background to
the preparation and
production of the document.”
[22] Applying these principles the
following main distinctions emerge between section 381 on the one
hand, and section 417 as read
with section 418, on the other.
[23] The first distinction is that
section 381, on its plain wording, is designed for the specific
purpose of not only empowering,
but also obliging the Master to
monitor and exercise proper control over the conduct of all
liquidators in the exercise of their
duties and functions. The
Master exercises the powers conferred on him by section 381
irrespective of the reason for the winding-up.
Section 417 on the
other hand, applies only to a company which is wound-up because it is
unable to pay its debts, and to no other
company in liquidation.
[24] The second distinction is that in
terms of section 381 the Master may, in his sole discretion, examine
a liquidator on oath
“concerning the winding-up” and may
further appoint an independent person to investigate the liquidator’s
books
and vouchers in relation to the winding-up. In
contradistinction section 417 enables the Master or the Court to
summon specific
categories of persons to give information “concerning
the trade, dealings, affairs or property of the company”.
Accordingly,
the purpose of section 381 is to furnish information
concerning the winding-up, whereas the purpose of section 417 is to
provide
information concerning the company itself which is being
wound-up.
[25] Section 418(1)(a), in turn, refers
only to the examination “by commissioners” for the
purpose of taking evidence
or holding “any enquiry under this
Act in connection with the winding-up of any company”. On the
other hand, section
381 does not refer at all to the appointment of a
“commissioner” to fulfil, or even supplement, the
Master’s
role as overseer of all liquidators in the proper
fulfilment of their duties and functions.
[26] Accordingly, when regard is had to
the plain language of these provisions, the context in which they
appear, and the apparent
purposes to which they are directed, it
appears clear that the intention of the legislature was to exclude
from the ambit of section
417 as read with section 418 the convening
of an enquiry for the sole purpose of having a commissioner
interrogate a liquidator
about the performance of his duties and
functions in the management and administration of the winding-up of a
liquidated company.
[27] This interpretation will not lead
to some absurdity, inconsistency, hardship or anomaly, given that
section 381 on its own
provides a perfectly workable and tailor-made
remedy for the bank, which is at liberty to approach the Master to
apply his mind
to its complaint, and to take whatever action he deems
necessary in terms of the wide powers conferred on him under that
section.
[28] It bears mentioning that in terms
of section 384(2) of the 1973 Act, the Master is also empowered to
penalise the applicant
by disallowing or reducing his remuneration on
account of any failure or delay on his part in the discharge of his
duties. Furthermore,
the bank has the additional remedy of taking
any decision made by the Master under section 381 and/or section
384(2) on review
if it is dissatisfied with the outcome of that
process.
[29] Support for this interpretation is
to be found in the following. In Venter v Williams
1982 (2) SA 310
(N) at 316 C-F it was stated that:
“Mr Lawrence argued that a
liquidator of a company could not be examined as to his conduct qua
liquidator and that, regard
being had to the provisions of s 439 of
the Companies Act, a similar principle should be applicable in the
case of a judicial manager.
In support of this submission he relied
upon Bieber’s case supra at 502 and on the case of
Scott-Hayward NO & Another
NO v Queensland Insurance Co Ltd &
Another
1961 (4) SA 540
(W) at 543. I am not sure that either of
those two cases go to the extent of saying that a liquidator of a
company can never
be questioned or interrogated as to his conduct qua
liquidator even where the enquiry relates to the company of which he
is a liquidator.
As I understand the remarks made in both those
cases, they are to the effect that such an enquiry would not normally
be allowed,
since a liquidator is accountable to the Master for his
conduct and the Master is able in other ways, for example, by
invoking
the provisions of s 381 of the Companies Act, to obtain
information concerning the conduct of the liquidator. It is,
however,
unnecessary to pursue this line of thought any further.”
[30] The remarks in Venter, which were
obviously obiter, are contextualised by the later decisions of the
Constitutional Court in
Ferreira v Levin NO & Others; Vryenhoek &
Others v Powell NO & Others
1996 (1) SA 984
(CC) and Bernstein &
Others v Bester & Others NNO
[1996] ZACC 2
;
1996 (2) SA 751
(CC). At paras
[15] and [16] of Bernstein, the court summarised the conclusions
reached in Ferreirra v Levin, and it is worthwhile
to quote the
aforementioned paragraphs in full:
“[15] Some of the major statutory
duties of the liquidator in any winding-up are:
(a) to proceed forthwith to recover
and reduce into possession all the assets and property of the
company, movable and immovable;
(b) to give the Master such
information and generally such aid as may be requisite for enabling
that officer to perform his or
her duties under the Act;
(c) to examine the affairs and
transactions of the company before its winding-up in order to
ascertain -
(i) whether any of the directors and
officers or past directors and officers of the company have
contravened or appear to have
contravened any provision of the Act or
have committed or appear to have committed any other offence; and
(ii) in respect of any of the persons
referred to in subpara (i), whether there are or appear to be any
grounds for an order by
the Court under s 219 of the Act
disqualifying a director from office as such;
(d) except in the case of a member's
voluntary winding-up, to report to the general meeting of creditors
and contributories of
the company the causes of the company's
failure, if it has failed;
(e) if the liquidator's report contains
particulars of contraventions or offences committed or suspected to
have been committed
or of any of the grounds mentioned in (c) above,
the Master must transmit a copy of the report to the
Attorney-General.
[16] The enquiry under ss 417 and 418
has many objectives.
(a) It is undoubtedly meant to assist
liquidators in discharging these abovementioned duties so that they
can determine the most
advantageous course to adopt in regard to the
liquidation of the company.
(b) In particular it is aimed at
achieving the primary goal of liquidators, namely to determine what
the assets and liabilities
of the company are, to recover the assets
and to pay the liabilities and to do so in a way which will best
serve the interests
of the company's creditors.
(c) Liquidators have a duty to
enquire into the company's affairs.
(d) This is as much one of their
functions as reducing the assets of the company into their possession
and dealing with them in
the prescribed manner, and is an ancillary
power in order to recover properly the company's assets.
(e) It is only by conducting such
enquiries that liquidators can:
(i) determine what the assets and who
the creditors and contributories of the company are;
(ii) properly investigate doubtful
claims against outsiders before pursuing them, as well as claims
against the company before pursuing
them.
(f) It is permissible for the
interrogation to be directed exclusively at the general credibility
of an examinee, where the testing
of such person's veracity is
necessary in order to decide whether to embark on a trial to obtain
what is due to the company being
wound up.
(g) Not infrequently the very persons
who are responsible for the mismanagement of and depradations on the
company are the only
persons who have knowledge of the workings of
the company prior to liquidation (such as directors, other officers
and certain outsiders
working in collaboration with the former) and
are, for this very reason, reluctant to assist the liquidator
voluntarily. In these
circumstances it is in the interest of
creditors and the public generally to compel such persons to assist.
(h) The interrogation is essential to
enable the liquidator, who most frequently comes into the company
with no previous knowledge
and finds that the company's records are
missing or defective, to get sufficient information to reconstitute
the state of knowledge
that the company should possess; such
information is not limited to documents because it is almost
inevitable that there will be
transactions which are difficult to
discover or understand from the written materials of the company
alone.
(i) The liquidator must, in such
circumstances, be enabled to put the affairs of the company in order
and to carry out the liquidation
in all its varying aspects.
(j) The interrogation may be
necessary in order to enable the liquidator, who thinks that he may
be under a duty to recover something
from an officer or employee of a
company, or even from an outsider concerned with the company's
affairs, to discover as swiftly,
easily and inexpensively as possible
the facts surrounding any such possible claim.
(k) There is a responsibility on those
who use companies to raise money from the public and to conduct
business on the basis of
limited liability to account to shareholders
and creditors for the failure of the business, if the company goes
insolvent. Giving
evidence at a s 417 enquiry is part of this
responsibility. This responsibility is not limited to officers of the
company, in the
strict sense, but extends also to the auditors of the
company.”
[31] The purpose of sections 417 and
418 has thus conclusively been found by the Constitutional Court to
be to assist liquidators
in discharging their duties as such. It
must therefore be so that it is inappropriate for the self-same
statutory provisions to
be invoked at the instance of an aggrieved
creditor (albeit via the Master) to subject liquidators to
interrogation about the manner
in which they have exercised their
duties and functions. To my mind, this is a further reason why the
legislature saw it fit to
enact section 381. To place on sections
417 and 418 the construction contended for by the bank could, in
principle at least,
render a liquidator vulnerable to interrogation
at the instance of a creditor who may have an agenda unrelated to the
interests
of the company in liquidation and/or the body of creditors
as a whole.
[32] As previously stated, the bank
relies on a line of cases relating to section 152 of the Insolvency
Act in support of its argument
that the powers conferred on the
Master in terms of section 381 are supplemented by sections 417 and
418, because, so it is contended,
these cases have held that the
latter sections are equivalent in ambit to section 152.
[33] The first is Nedcor Bank Limited &
Others v The Master of the High Court, Pretoria & Others (2)
[2002] ZASCA 54
, where the only question to be determined was whether
section 152 of the Insolvency Act, which regulates the holding of a
private
enquiry in the administration of an insolvent’s estate,
applied to close corporations in liquidation, given that
section 66
of the
Close Corporations Act, 69 of 1984
expressly excluded sections
417 and 418 of the 1973 Act from its operation. The court a quo had
found that because the
Close Corporations Act was
silent on the
holding of the equivalent of a
section 417
enquiry, section 152 of
the Insolvency Act applied by virtue of section 339 of the 1973 Act,
which deals with the general application
of the Insolvency Act to a
company unable to pay its debts in respect of any matter not
specially provided for by the 1973 Act.
[34] At para [7] the Supreme Court of
Appeal held that:
“Counsel for the appellant could
suggest no reason why a close corporation should be treated
differently from an individual
who is sequestrated or from a company
being wound up. In both these instances, provision is made for
confidential enquiries.
Assuming that the complexity of the
procedures set out in ss 417 and 418 of the Companies Act is not
warranted in respect of a
close corporation, and for that reason the
legislature excluded their application, it seems obvious that the
simpler process entailed
in s 152 enquiries, designed for
individuals, should have been made applicable to close corporations.”
[35] In my view, the aforementioned
decision is not authority for the bank’s contention. The very
reason why the Supreme
Court of Appeal found that section 152 of the
Insolvency Act applied to close corporations is because there was no
provision equivalent
to sections 417 and 418 in the
Close
Corporations Act. The
court expressly referred to the fact that
separate provisions exist in both the Insolvency Act and the 1973
Act, and thus applied
a purposive interpretation to make section 152
of the Insolvency Act applicable to close corporations.
[36] The second case relied upon by the
bank is Podlas v Cohen & Bryden NNO & Others
1994 (4) SA 662
(TPD). This case dealt with an entirely different issue, namely,
whether the applicant was entitled to an interdict to prevent
a
section 152 enquiry from proceeding pending a challenge to the
constitutional validity of that section. It is thus wholly
distinguishable.
[37] The third case is Nedbank Limited
v Master of the High Court, Witwatersrand Local Division, &
Others
2009 (3) SA 403
(WLD). Again, that case is distinguishable
from the present. It related to whether or not the Master’s
decision to convene
a section 417 enquiry amounted to administrative
action for purposes of PAJA. The court found that it did not. The
paragraph
relied upon by the bank in heads of argument filed on its
behalf, namely, para [42] is merely a reference to Podlas and thus
takes
the matter no further.
[38] The last case relied upon by the
bank is that of Blignault J in Firstrand Bank Limited to which I
referred earlier in this
judgment. Again, it is not authority for
the bank’s contention. Blignault J was not called upon to deal
with this issue
at all, and in any event came to the opposite
conclusion from the court in the Nedbank Limited decision to which I
have just referred.
CONCLUSION
[39] Having regard to the aforegoing, I
am persuaded that the Master made an error of law in deciding to
convene a section 417 enquiry
for purposes of interrogating the
applicant who, on any version, could only have furnished information
in his capacity as a joint
liquidator of Crimson Moon. As such, the
Master’s decision falls to be set aside under the principle of
legality.
[40] In the result the following order
is made:
(1) The first respondent’s
decision to convene an enquiry in terms of sections 417 and 418,
taken on 11 February 2014, as
well as all process arising from such
enquiry, are hereby reviewed and set aside.
(2) The fifth respondent shall pay the
applicant’s costs in this application as well as in the related
interdict application
on the scale as between party and party, and
including all reserved costs orders.
J I Cloete
Judge of the High Court