[11]
First though, a look at the other provisions of s 20 of the Act, for s 20(1)(c) cannot be viewed in isolation. A useful starting point, it would seem, is s 20(1)(a). Its effect is to divest the insolvent of his estate and to vest it in the Master and then, upon his appointment, in the trustee.
Section 20(2)(a) provides, that for the purposes of s 20(1), the estate of the insolvent shall include ‘all property of the insolvent at the
date of the sequestration including property or the proceeds thereof which are in the hands of the sheriff or a messenger under a
writ of attachment’. The estate of a company in liquidation, on the other hand, remains vested in the company. In terms of
s 361(1) of the Companies Act all of the property of a company being wound up is deemed to be in the custody and under the control
of the Master until a provisional liquidator has been appointed and has assumed office. The property of the company of whatever kind,
although it is in his or her custody and under his or her control, does not vest in its liquidator unless the court so orders in
terms of s 361(3). Sections 20(1)(a) and 20(2)(a) of the Act insofar as they vest the insolvent’s property in the trustee therefore plainly have no application to a company
in winding up. Both sections are therefore not rendered applicable by s 339 of the Companies Act to a company in winding up. (See
Michael Blackman ‘Attachments put in force before the commencement of winding-up’ (1980) 97 SALJ 379 at 381.)
[12]
Section 20(1)(b), which, save for certain specified exceptions, causes all civil proceedings instituted by or against an insolvent to be stayed,
until the appointment of a trustee, likewise finds no application to a company in winding up, for it has corresponding counterparts
in ss 358 and 359 of the Companies Act. Nor for that matter is s 20(1)(d), which empowers the insolvent, if in prison for debt, to apply to a court for his release, applicable to a company in winding up,
for it by its very nature is unique to an individual insolvent.
[13]
If, as I have just shown, none of the other provisions of s 20 of the Act are of application to a company
in winding up, the legislature could hardly have intended, it seems to me, that only the one provision, that contained in s 20(1)(c) would be rendered applicable. But there is a further reason. One, which on the authority of this court, is decisive of the issue.
[14]
Section 361(1) of the Companies Act provides:
‘In any winding-up by the Court all the property of the company concerned shall be deemed to be in the custody and under the
control of the Master until a provisional liquidator has been appointed and has assumed office.’
Of its predecessor, s 124(3)(b) of the Companies Act 46 of 1926, Botha JA stated in Secretary for Customs and Excise v Millman, N.O. 1975 (3) SA 544 (A) at 552 G:
‘In view of this special provision in the Companies Act, the property of a company is not, upon its winding up, by reason of sec. 182
[now s 339] of the Companies Act, vested in the Master and the liquidator in terms of s 20 of the Insolvency Act 24 of 1936 as was
supposed in the majority judgments in Cornelissen, N.O. v Universal Caravan Sales (Pty.) Ltd 1971 (3) SA 158 (AD) at pp177, 183.’
[15]
In Cornelissen, the majority held:
‘In terms of sec 20 of the Insolvency Act (which is, mutatis mutandis, applicable in the case of liquidation of a company), the goods therefore formed part of the company’s estate and as such vested,
upon liquidation, in the appellant in his capacity as liquidator of the company. I agree with Kotzé A.J.A., that, having regard
to the terms of sec 20, read with later provisions in the Insolvency Act relating to the distribution of the proceeds of the assets,
the whole estate, which would include the goods in question, would fall to be dealt with by the liquidator strictly in accordance
with the scheme of distribution described in the Act.’ (per Miller AJA at 177H – 178A); and
‘By virtue of sub-sec. (1)(a) of sec. 20 of the Insolvency Act, 24 of 1936, as amended – applied mutatis mutandis to the winding-up of a company unable to pay its debts by sec. 182 of the Companies Act, 46 of 1926, as amended – a company
becomes divested of its estate on winding-up.’ (per Kotze AJA at 183 D)
[16]
Moreover, s 342(1) of the Companies Act provides that ‘in every winding up of a company the assets
shall be applied in payment of the costs, charges and expenses incurred in the winding up and . . . the claims of creditors . . .’
(see also s 391). That purpose and indeed the purpose of s 361(1) could hardly be achieved once the sole asset of the company has
been transferred out of the company and into the name of a third party. Similarly, various powers conferred upon the liquidator by
s 386 are rendered nugatory by the grant of the declaratory relief envisaged in paragraph (b) of Blieden J’s order. It follows,
on the facts here present, that the grant of orders on the one hand finally winding up the company, and on the other authorising
its sole asset to be transferred into the name of a third party, are mutually contradictory and create what can only be described
as a legal anomaly.
[17]
It follows that s 20 (1) (c) finds no application to a company in winding up and in the result the appeal must succeed. I turn now to the cross appeal.
[18]
In my view, the appellant established that he is a creditor of the company. Furthermore, it is undisputed
that the Company was unable to pay its debts. Generally speaking an unpaid creditor has a right ex debito justitiae to a winding up order against a company unable to pay its debts. It is so that the court is vested with a discretion by the very terms
of s 344 of the Companies Act. Blieden J was alive to that and exercised his discretion in favour of the grant of a final winding
up order. In that, he cannot be faulted. In the result the cross appeal must fail.
[19]
In the result:
(a)
The appeal is upheld with costs, including the costs of two counsel.
(b)
The first respondent’s conditional cross appeal is dismissed with costs, including the costs
of two counsel.
(c)
The order of the court a quo is set aside and there is substituted therefore the following order:
(i)
The rule nisi provisionally winding up the respondent is confirmed and a final order of liquidation issues;
(ii)
The intervening party’s application is dismissed with costs, including the costs of two counsel.
____________________
V M PONNAN
JUDGE OF APPEAL
CONCUR:
HOWIE P
MLAMBO JA
MALAN AJA
HEHER JA:
[20]
I have read the judgment of Ponnan JA and agree with the orders he proposes. I prefer to leave open the
question of whether s 20(1)(c) of the Insolvency Act falls to be treated on the same footing as the other subsections of s 20(1) in the application of s 339 of
the Companies Act (‘the Act’). The last-mentioned section only applies the provisions of the law relating to insolvency
in respect of any matter not specially provided for by the Act. The provisions in question in this case are those which bring about a stay of execution after an attachment
of assets belonging to the insolvent estate. I do not think that the sections of the Act referred to by my colleague speak necessarily
or by implication on that matter: cf Mahomed v Kazi’s Agencies (Pty) Ltd and Others 1949 (1) SA 1162 (N) at 1166 in fine. Section 359(1)(a) of the Act may well do so, but for the reasons which follow, I do not think it is necessary to decide whether
it does.
[21]
Section 359(1)(a) suspends all civil proceedings (ie both those already commenced before a winding-up and those which would, but for the suspension,
be commenced after the making of an order for winding up) until the appointment of a liquidator, whereafter they may be commenced
or continued only after compliance with the provisions of s 359(2). In this case the claim against the company for transfer of the
property sold in execution had arisen before the commencement of the winding-up. After the provisional order the property remained
that of the company and fell into the concursus.
[22]
To obtain an order for transfer of the immovable property into its name Nungu had perforce to bring a
counter-application against the company, as it purported to do by serving that application at the registered office of the company.
At the time a provisional winding-up order was in operation but Nungu did not attempt to comply with s 359(2) of the Act.
[23]
It does not matter in this regard whether one treats the claim for transfer as part of the proceedings
of execution (as Jennett J did in Ex parte Flynn: in re United Investment and Development Corporation Ltd (in liquidation) 1953 (3) SA 443 (E) at 445G-H) or as an independent proceeding. In either case the counter-application purported to initiate civil
proceedings for relief against the company (cf Collett v Priest 1931 AD 290 at 299; King Pie Holdings (Pty) Ltd v King Pie (Pinetown) (Pty) Ltd 1998 (4) SA 1240 (D) at 1248H) in the face of the statutory bar while the company was powerless to resist. The court a quo accordingly had no valid application before it which enabled it to make the order for transfer (whether under s 20(1)(c) or otherwise).
____________________
J A HEHER
JUDGE OF APPEAL
SAFLII:
|
Terms of Use
|
Feedback
URL: http://www.saflii.org/za/cases/ZASCA/2007/122.html
.RTF of original document