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[2016] ZASCA 16
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Swart v Heine and Others (192/2015) [2016] ZASCA 16 (14 March 2016)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
Reportable
Case
No: 192/2015
In
the matter between:
RIAAN
ANTON
SWART
APPELLANT
and
CHARLENE
HEINE
FIRST
RESPONDENT
JUSTIN
MARK
HEINE
SECOND RESPONDENT
DEKSNY
TRADING (PTY)
LTD
THIRD RESPONDENT
CHARLES
SCOTT STEWART
FOURTH
RESPONDENT
ANTON
STRYDOM
NO
FIFTH RESPONDENT
Neutral
citation:
Swart
v Heine
(192/15)
[2016] ZASCA 16
(14 March 2016)
Coram:
Lewis, Pillay,
Willis, Mathopo JJA and Plasket AJA
Heard
:
25
February 2016
Delivered:
14 March 2016
Summary:
Company
law ─ application for rescission of an order enabling enquiry
into the affairs of a company in voluntary liquidation
in terms of s
417 of the Companies Act 61 of 1973 ─ ex parte application made
to enable enquiry met the requirements of s
388 of the Act ─
appeal dismissed with costs.
ORDER
On
appeal from:
Gauteng
Division of the High Court, Pretoria (Pretorius J sitting as court of
first instance):
The
appeal is dismissed with costs including the costs of two counsel.
JUDGMENT
Mathopo
JA (Lewis, Pillay, Willis JJA and Plasket AJA concurring):
[1]
This appeal turns on whether an ex parte application that served
before Ledwaba DJP in chambers in the Gauteng Division of the
High
Court met the requirements of s 388(1) and (2) of the Companies Act
61 of 1973 (the Act),
[1]
and whether a proper case had been made for the order sought in terms
of the section.
Ledwaba
DJP, who heard the matter in camera, granted an order for leave to
convene an enquiry in terms of s 417 and 418 of the Act
in respect of
a company under voluntary liquidation. The appellant, a former
director of the company, when he discovered that the
order had been
made, applied for rescission of the judgment on the basis that the
order was erroneously sought or granted because
there was no
reference to the provisions of s 388 of the Act in the notice of
motion and founding affidavit. Pretorius J, who heard
the application
for rescission, held that although the section was not specifically
mentioned in the notice of motion and founding
affidavit, the relief
sought before Ledwaba DJP was contemplated in terms of s 388. She
accordingly dismissed the appellant’s
application for
rescission. This appeal is against that judgment with the leave of
that court.
[2]
The order sought before Ledwaba DJP was that: (a) the matter be heard
in camera; (b) leave be granted to the applicants to hold
an enquiry
into the affairs of the company BSA Group Holdings (Pty) Ltd (in
liquidation) (the company); and (c) Mr Charles Stewart
be appointed
to conduct the enquiry under ss 417 and 418 of the Act of 1973 read
with s 9 of Schedule 5 of the
Companies Act 71 of 2008
.
[3]
A brief background to the matter is as follows. The company,
previously registered as Biz Africa 111 (Pty) Ltd, was voluntarily
wound-up by special resolution of its directors when it was unable to
pay its debts. The appellant is a director of the company
together,
with Mr Mellet and Mr Stevenson.
[4]
The first respondent (Charlene Heine), the second respondent (Justin
Mark Heine) and the third respondent (Deksny Trading (Pty)
Ltd) are
creditors of the company. They were also applicants in the ex parte
application which the appellant is challenging. Ms
Heine is owed the
amount of R45 785 in respect of outstanding salaries. Acting on
behalf of the company, the appellant signed a
settlement agreement
acknowledging the company’s indebtedness to Ms Heine. When the
company failed to honour the undertaking,
Ms Heine issued summons and
obtained judgment against the company. Mr Heine, is owed the sum of
R652 643 by the company in respect
of which Mr Stevenson signed a
settlement agreement on behalf of the company undertaking to pay him.
That amount is still outstanding
and summons was issued against the
company. Deksny Trading is owed $190 042 in respect of a loan it
advanced to the company.
[5]
The respondents’ locus standi as creditors of the company is
not disputed. The gravamen of the appellant’s complaint
relates
to whether or not the ex parte application that served before Ledwaba
DJP met the requirements of s 388(1) and (2) of the
Act. An answer to
this question is dispositive of the appeal. It is thus not necessary
to deal with all the points raised by the
appellant’s counsel
in his heads of argument as during the hearing in this court, the
issues on appeal were narrowed to:
(a) whether the ex parte
application was defective for lack of specific reference to s 388(1)
and (2), in the notice of motion
and founding affidavit; and (b) if
not whether a proper case was made for the relief sought in the
papers. Section 388 of the Act
provides:
‘
Court
may determine questions in voluntary winding-up
(1) Where
a company is being wound up voluntarily, the liquidator or any member
or creditor or contributory of the company
may apply to the Court to
determine any question arising in the winding-up or to exercise any
of the powers which the Court might
exercise if the company were
being wound up by the Court.
(2) The
Court may, if satisfied that the determination of any such question
or the exercise of any such power will be just
and beneficial, accede
wholly or partly to the application on such terms and conditions as
it may determine, or make such other
order on the application as it
thinks fit.’
[6]
In relation to the first issue, the appellant contends that since
there was no specific reference to s 388 in the notice of
motion and
founding affidavit, the jurisdictional requirements in terms of that
section were absent and thus that the order granted
ex parte was
erroneously sought and granted. Counsel for the appellant thus
contended that in the absence of an express reference
to the section
Ledwaba DJP could not have appreciated or understood that this was an
application in terms of s 388 of the Act.
In support of his argument,
he referred to the affidavit filed by the attorney for the
respondents, which he submitted, also did
not make any reference to s
388. This submission is misplaced. What has to be considered in my
view is not merely the form but
rather the substance of the entire
application. The submission that Ledwaba DJP misconstrued the nature
and purpose of the application
is ill-conceived. Equally
unsustainable is the reliance on
Gainsford
& others NNO v Tanzer Transport (Pty) Ltd
2013
(4) SA 394
(GSJ), where Saldulker J held that the absence of
reference to a section was a ‘serious mistake’ affecting
the case.
That judgment was overturned by this court on appeal
(
Gainsford
& others NNO v Tanzer Transport (Pty) Ltd
2014
(3) SA 468
(SCA)) although not on this point. However, the statement
of Saldulker J was not in line with authority in this regard.
[7]
In my view it is not necessary for a litigant who is relying on a
statutory provision to specify it. It is sufficient if it
is clear
from the facts alleged by the litigant that the section is relevant
and operative. This point was made clear in
Fundstrust (Pty) Ltd
(in liquidation) v Van Deventer
1997 (1) SA 710
(A) 725H-726A,
where this court stated the following:
‘
It
is not necessary in a pleading, even where the pleader relies on a
particular statute or section of a statute, for him to refer
in terms
to it provided that he formulates his case clearly (see
Ketteringham
v City of Cape Town
1934
AD 80
at 90) or, put differently, it is sufficient if the facts are
pleaded from which the conclusion can be drawn that the provisions
of
the statute apply (see
Price
v Price
1946 CPD 59
,
Wasmuth
v Jacobs
1987 (3) SA 629
(SWA) at 634I).’
See
also in this regard
Bato
Star Fishing (Pty) Ltd v Minister of Environmental Affairs &
others
[2004] ZACC 15
;
2004
(4) SA 490
(CC) para 27.
[8]
In the present, case all averments necessary support the relief which
they were granted were made by the respondents. A reading
of the
notice of motion, in particular paras 2 and 3, and the entire
founding affidavit demonstrate clearly that what the respondents
sought before Ledwaba DJP was leave to convene an enquiry in terms of
ss 417 and 418 on the Act having stated the company had been
wound-up
voluntarily and that they were creditors of the company. It is of
course difficult to imagine, in the circumstances of
this case, that
the application meant to achieve something other than an application
contemplated in terms of s 388 of the Act.
[9]
Once it became clear to the respondents that the financial status of
the company required an investigation, they decided to
launch an
application under s 388 for leave to convene an enquiry in terms of
ss 417 and 418 of the Act. This was especially so
because the company
had been voluntarily wound-up by the directors in circumstances where
it was clear that such an enquiry was
not only desirable but urgently
warranted, because, as at the date of liquidation, the company had no
movable or immovable assets.
The directors of the company signed
settlement agreements purporting to bind the company in circumstances
where the company was
already unable to pay its debts. In those
circumstances the respondents were entitled to approach the court in
terms of s 388.
This point was made by Hefer AP in
Michelin
Tyre Company (South Africa) Pty Ltd v Janse van Rensburg
2002
(5) SA 239
para 4,
where
he said the following:
‘
There
are at least two ways of procuring a s 418 enquiry even in a
voluntarily winding-up. The first is to convert the winding-up
into a
winding-up by the court under s 346(1)
(e)
and
the other is an application to court under s 388 for leave to convene
an enquiry.’
[10]
It is clear that Ledwaba DJP was informed, in the founding affidavit,
that the company had been voluntarily liquidated on the
basis it was
unable to pay its debts. The respondents also made it clear that the
relief they sought was just and beneficial. He
thus properly
exercised his discretion and granted the order sought. On that basis
alone I would dismiss the appeal.
[11]
In view of this conclusion it is not strictly necessary to deal with
the other submissions made on behalf of the appellant.
However, a few
observations may not be inappropriate. Counsel for the appellant
contended that the respondents should have approached
the court in
terms of s 415 of the Act for leave to interrogate the appellant by
the Master or the presiding officer at the second
meeting of the
creditors. This submission misconceives the purpose of the enquiry
under the section. After the first meeting of
creditors it became
clear to the respondents, following the report of the provisional
liquidators, that they would not succeed
in uncovering the truth
about the financial affairs of the company. In that report the
liquidators stated inter alia that:
‘
At
this stage it appears that a further enquiry is not desirable in
regard to any matter relating to the promotion, formation or
failure
of the Company or the conduct of its business unless further
justifiable information becomes available.’
The
report further went on to say:
‘
As
of yet we could not find any grounds to believe that directors or
officers or previous directors or officers of the Company to
be
personally liable for damages or compensation to the Company or for
any debts or liabilities of the Company, as provided in
the Act.
Should further investigations reveal any offences, a report will be
submitted.’
[12]
The respondents, as creditors of the company, were understandably
unhappy with the liquidators’ report and thus exercised
their
rights in terms of s 388 of the Act.
From
the wording of s 388, it is clear that the respondents could bring
such an application and that the court could determine any
such
question arising in the winding-up or to exercise any of the powers
which the court might exercise where a company is wound-up
by the
court. In my view nothing precluded them from approaching the court
in terms of this section. In fact, the circumstances
of this case
clearly warranted an urgent intervention in terms of ss 417 and 418
of the Act. The appellant’s submission that
the purpose of the
enquiry is to extort, frustrate or squeeze payments from him is
ill-conceived.
[13]
There is a further disconcerting aspect to this appeal. The issues in
this appeal are simple and straightforward and do not
involve
complicated or complex issues of law. This is a case where leave to
appeal should not have been granted at all. Why the
court a quo
thought this appeal deserves the attention of this court is not
explained. This court has repeatedly bemoaned the fact
that unworthy
appeals are referred to it, with the result that more deserving and
meritorious appeals are either delayed or lose
their places in the
roll. (See
Shoprite
Checkers Pty Ltd v Bumper
2003 (5) SA 534
(SCA);
S
v Monyane & others
2008
(1) SACR 543
(SCA).) Leave to appeal should not be granted where
there is no reasonable prospect of success on appeal, or no
compelling reason
why an appeal should be heard ─
s 17(1)
(a)
of the
Superior Courts Act 10 of 2013
.
[14]
Accordingly, the
appeal
is dismissed with costs including the costs of two counsel.
______________
R
S Mathopo
Judge
of Appeal
Appearances
For Appellant:
J Vorster (with him U Lottering)
Instructed by:
J I van Niekerk Inc, Pretoria
Symington & De Kok, Bloemfontein
For
First, Second
and
Third Respondent: A J Louw
SC (with him J Holland-Müter)
Instructed by:
Van Greunen & Associates Inc,
Pretoria
Azar & Havenga, Bloemfontein
[1]
I shall set out
the section in full below.