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REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG LOCAL DIVISION, JOHANNESBURG

 

CASE NO: 30903/2015

Reportable: No

Of interest to other judges: No

Revised.

In the matter between:

DAVENPORT JOHN WILLIAM                                                                                APPLICANT

and

PLATFIELDS Ltd                                                                                                     RESPONDENT

 

JUDGMENT

 

KLAAREN AJ

[1] This case is centred around an application for a final liquidation order.  At present, the matter includes that application as well as an interlocutory application for variation or declaratory relief relating to the order made in this case on 30 October 2015.  At the hearing before me, most of the argument revolved around a point in limine raised by the fourth respondent Derick Bongani Mbindwane (originally an intervening party).  The merits of the applications were however also canvassed and judgment in the matter was reserved.  I will dismiss the point in limine, order declaratory relief relating to the order of 30 October 2015, and grant the final liquidation order for the reasons that follow.

 

Facts and Litigation History

[2] These proceedings began with an application by Davenport on 1 September 2015 seeking both to restore the registration of Platfields Limited which was then apparently in the process of deregistration and its liquidation.

[3] On 30 October 2015, Teffo J granted relief to Davenport that included an order that Platfields be revived and an order for provisional liquidation against Platfields with a return date of 15 December 2015.  This relief is discussed further below.  On the return date, Platfields opposed the final liquidation order.  Francis J postponed the matter to 25 January 2016.  On 25 January 2016, Derick Bongani Mbindwane served an intervention application dated 22 January 2016 and Mahalelo J postponed the matter to 29 February 2016.  On 29 February 2016, the intervention and liquidation applications were postponed by agreement to 5 April 2016.  The date of 5 April was reserved on the opposed interlocutory motion roll.  With an affidavit dated 29 March 2016, Davenport launched its application for variation/declaratory order regarding the order of 30 October 2015.

[4] On 5 April 2016, having considered the matter, Wepener J ordered that the return date for the provisional liquidation order be extended to 27 May 2016.  Wepener J also gave directions for the intervention and variation applications (including in para 2 the filing of an answering affidavit by Mbindwane in the variation application) and reserved costs. 

[5] The matter was set down on the interlocutory roll.  In the morning of 27 May 2016, Modiba J heard partial arguments in this matter.  She determined that the arguments could not be concluded within the 45 minutes allocated.  At this point, the court apparently stated that the variation application should be removed from the roll and that costs be reserved.  See further below.

[6] At lunchtime on 27 May 2016, counsel for Davenport communicated by sms with counsel for Mbindwane, informing him that he was going to request from the court an order with a specific date rather than merely stating removal from the roll without any specific date.

[7] During the afternoon of 27 May 2016, Modiba J issued a written order which reads “Having read the documents filed of record and having considered the matter, it is ordered that (1) the matter is postponed to the 22^nd day of July 2016; and (2) costs are reserved.”  The document that forms part of the court record before me records the order in this form.

[8] I have noted and it is worthwhile to state here that he J220 brown court file folder for this matter indeed has written on it in the relevant entry:  “27/05/2016 Coram Modida J matter removed from the roll, with costs reserved … matter postponed to 22 July 2016 cost reserved.”  The “words matter removed from the roll” are crossed out.  The entry thus reads “27/05/2016 Coram Modiba J … matter postponed to 22 July 2016 cost reserved.”  There are some additional notations in the entry which are apparently signatures and initials of court employees.

[9] This case next served in front of Moshidi J in unopposed motion court on 22 July 2016.   The court was not prepared to entertain an opposed argument as to whether the provisional order had lapsed.  Moshidi J thus ordered (1) that the application for liquidation and or the provisional liquidation order (if any) is extended to the opposed roll of 17 October 2016; (2) that the intervening party (Derick Bongani Mbindwane) is granted leave to intervene [in] the liquidation application, as Fourth Respondent, without the merits of same being determined and the costs occasioned by the application for leave to intervene is reserved for determination at the hearing on the date specified in paragraph 1 above; (3) that the intervening party (Derick Bongani Mbindwane) is to deliver his answering affidavit to the liquidation application (part B) within 15 days from date of this order whereafter the normal time periods in terms of Rule 6 and the practice manual shall apply, for the further conducting of the matter, save that all affidavits, heads of argument, chronology/ies, lists of authorities and practice notes must be delivered timeously so as to ensure the matter is capable of being dealt with on the date specified in paragraph 1 above; (4) that costs occasioned by and in respect of the remainder of the applications, are reserved; and (5) that no finding is made as to whether the provisional liquidation order lapsed.

[11] The matter was placed on my opposed roll for the week of 17 October 2016.  At the hearing in front of me on 18 October 2016, counsel for Mbindwane requested and was granted leave of the court to hand up his Practice Note, his Heads of Argument (undated), and his List of Authorities.  Davenport argued it was prejudiced by the last-minute submission of the heads of argument of Mbindwane which, it was claimed, did not comply with Rule 6(5)(d)(iii) and its 15-day notice period.  According to counsel for Davenport, while Davenport had emailed its heads of argument to the other parties on 12 September 2016, more than a month before the hearing, Davenport only received heads of argument in reply the morning of the hearing.

[12] It is within the discretion of the presiding judge to accept such late materials.  I did so in order to ventilate the arguments and to bring finality to this matter.  I did not do to suggest or condone such non-compliance with the usual practices and practice manual of this court.  This court also notes that Mbindwane has not complied with para 3 of Moshidi J’s order of 22 July 2016 nor para 2 of Wepener’s order of 5 April 2016.  Indeed, apart from Mbindwane’s founding affidavit in his intervention application, the affidavits in this matter are from the applicant and the applicant’s attorneys.

 

Did the provisional liquidation order made on 30 October 2015 lapse at the end of the morning on 27 May 2016?

[13] Mbindwane argues that the provisional liquidation order initially made on 30 October 2015 has lapsed.  The liquidation application was argued to have lapsed when Modiba J purported to remove the variation application from the roll without postponing the matter or extending the rule nisi of the provisional liquidation order.

[14] In support of this argument, Mbindwane argues that there were actually three applications in front of the court on 27 May 2016 and that we need to carefully distinguish among them.  One of the interlocutory applications -- the variation application -- needed to be dealt with first.  Mbindwane argues that it was dealt with and that only it was removed from the roll.  Without an extension or a postponement of the rule nisi linked to the provisional liquidation order, Mbindwane argues that the rule has been discharged and that the liquidation order has lapsed, with the intervening application becoming irrelevant.

[15] Mbindwane argues that if all three applications were in fact dealt with by Modiba J, her order granted in the afternoon in Mbindwane’s absence should have stated “having heard all the parties”.  Instead, as described above, it stated “having read the documents filed of record and having considered the matter”.  Mbindwane argues that the horse had bolted – that the order had lapsed at the end of the morning in court.  He comes to court now (and came on the 22 July 2016) simply to protect his rights.

[16] Davenport argues that the provisional liquidation order did not lapse on 27 May 2016. First, Davenport argues that a court is functus officio at the end of the day.  Second, to the extent that Mbindwane is arguing that there is a substantive difference between a matter being postponed and a rule nisi being extended, Davenport argued that there should be no difference between a postponement and an extension in these circumstances.  Section 12(2) of the Insolvency Act gives authority to postpone the hearing for a reasonable period.  This authority could be exercised to postpone a provisional liquidation order to a specific date.  There is nothing wrong with postponing the matter as opposed to extending the rule nisi.  No authority says that if an application is postponed to a specific date it lapses.  Third, there is authority to say that if the purpose of the rule nisi is achieved, then its form is not crucial.  In Theart, the Supreme Court of Appeal wished not to “promote slavish adherence to form above substance”.[1]  Here, the purpose of the rule nisi has been achieved.  Any persons who wish to oppose the provisional liquidation order have had nearly a year (minus arguably a lunchtime) to do so.  Finally, Davenport argued that even if the provisional liquidation order did lapse, in terms of Uniform Rule 42, a court can itself rescind or vary such action.

[17] One case relied upon by Mbindwane and relevant to this issue is Ex parte S & U Television Services (Pty) Ltd:  In re S & U TV Services (Pty) Ltd (in provisional liquidation), 1990 (4) SA 88 (W).  In this case, the court refused an application for the revival of a provisional order of winding up of a company.  The application was brought three weeks after the discharge of the provisional order.  The provisional order had been discharged by reason of there being no appearance on the return day on behalf of the applicant.  For Flemming J, it was probable that, because of the lapse of three weeks, matters were no longer res integra, open for decision.  Given the three weeks, it was possible that the respondents in the application might have heard of the discharge and acted accordingly.

[18] In a more recent case, a period of four weeks similarly founded a refusal to order the revival of a lapsed provisional order.  In Commissioner for SARS v Bachir and others, an application for revival of a rule nisi was dismissed and a provisional preservation order not confirmed where an ex parte application for revival of provisional preservation order had been granted without full disclosure of information as is required in an ex parte application.[2]  In that case, the relevant period of time was four weeks, leading the court to conclude that the probabilities were that the matter was no longer res integra. 

[19] While they all occupy different procedural postures, this case differs further from the two above.  Those courts concluded that the revival of a lapsed rule nisi would not be appropriate since the matter was no longer res integra.  In this case, even on the argument that the rule did lapse in the morning, in the afternoon, the matter was still open for decision and res integra.  The relevant time period here was measured in hours not weeks.  Further, while there was no appearance by counsel for Mbindwane in the afternoon, there is no dispute that counsel was informed and that all relevant information was placed before the court. 

[20] The action of the court on 27 May 2016 might be looked at in two lights: in the first, it was one continuous judicial action; in the second, it was two separate judicial actions, an initial order and then a reconsidered order.  I prefer seeing the action of the court in the first light.  The judicial consideration continued from morning through the afternoon.  As it sometimes does, the judicial process proceeded in steps forwards and backwards.  The action of the court on the day of 27 May 2016 was to postpone the matter to 22 July 2016.

[22] Incidentally, that the matter comprised at this relevant point three applications seems not to take things much further.  On 5 April 2016, all three applications then extant in the matter were postponed by Wepener J to 27 May 2016.  Likewise, at the end of the day on 27 May 2016, all three applications then extant in the matter were postponed by Modiba J to 22 July 2016.

[23] Even if I am wrong in my view of the action as one continuous judicial action, in the view of the matter as two separate judicial actions, for the reasons above in discussing TV Services and Bachir, the court still had the necessary jurisdiction in the afternoon in a matter that was still res integra to make its order of postponement.

 

Should portions of the order of 30 October 2015 be varied or declared void ab initio?

[24] The very first order of court granted in this matter on 30 October 2015 provided in nine paragraphs as follows:

1. The dissolution of the company known as Platfields Limited (deregistration process) is declared void in terms of Section 83(4) of the Companies Act, 71 of 2008.

2. Platfields Limited (deregistration process) is revived as an association of its directors.

3. The assets of Platfields Limited (deregistration process) are no longer bona vacantia.

4. The directors of Platfields Limited (deregistration process) are re-vested with its assets.

5. Any interested person may apply for an order for further relief.

6. The First Respondent Company is hereby placed under provisional winding up.

7. All persons who have a legitimate interest are called upon to put forward their reasons why this court should not order the final winding up of the Respondent on 14 December 2015 at 10:00 am or so soon thereafter as the matter may be heard.

8. The Applicant shall cause this order to be:

8.1 served on the First Respondent at its registered office by [the] Sheriff.

8.2 publish[ed] in English, once in the Government Gazette and once in a newspaper circulating in Johannesburg and;

8.3 served on the directors of Platfields Limited (deregistration process) at Platfields Limited’s (deregistration process) registered office[;]

8.4 served at The Minister of Trade and Industry[;]

8.5 served at The Companies and Intellectual Property Commission[;]

8.6 Forthwith forwarded to each known creditor by electronic mail or prepaid registered post or telefax transmission.

9. The costs of this application are to be paid by the directors of Platfields Limited (deregistration process).

[25] Davenport contends that paragraph 2 of this order was void ab initio as the court did not have jurisdiction to convert a company registered in terms of the company laws of South Africa into an association of directors “whatever this could conceivably be” as opposed to an association of members.  It is correct that this was an error.  The order should have referred to members.^[3]

[26] Likewise, paragraph 4 was contended to void ab initio since the assets of a company vest in the company not in its directors.  The court was thus without jurisdiction to order paragraph 4. 

[27] This is also well-founded.  In its founding affidavit for the variation application (which has not been answered), Davenport avers that “Paragraph 4 of the order by Teffo J has been regarded and treated as pro-non-scripto by the Master and liquidators.”  Reference to directors and not to members in this paragraph is a patent error since if the dissolution of a company is declared void, the company will be revived as an association of members not directors.^[4]

[28] Finally, in a confusion of the directors for the juristic person of the company^[5], paragraph 9 purported to order the directors of the company to pay the costs of the application without the directors having been served with papers seeking to hold them liable.  Paragraph 9 was equally null and void.

[29] As described above, Davenport applied for variation of or alternatively a declaratory order regarding the order of 30 October 2015.  At the hearing before me, counsel argued that the variation order was not necessary but that it might be done in order to clarify and confirm the current meaning of the court’s order dated 30 October 2015.

[30] The choice between two forms of relief only arises once this court takes the view (as I have above) that paragraphs 2, 4, and 9 of the order of 30 October 2016 were incorrectly granted.  Given the relief I am granting, dismissing the point in limine and making the provisional liquidation order final, it is not necessary to grant a variation of the order of 30 October 2015.  I will instead grant declaratory relief.

 

Should the final liquidation order be granted?

[31] As described above, the initial application in this matter sought relief in terms of section 83(4) of the Companies Act 2008 – the restoration of the first respondent, Platfields Ltd.  The application additionally sought a provisional liquidation order.  Part B of that application sought a final liquidation order of Platfields.  In this application, the section 83(4) restoration relief was conditional and subject to the deregistration of Platfields.  As events transpired, Platfields was not actually deregistered.  The request for such relief thus falls away.

[32] The factual basis for the liquidation is to be found on the affidavits before this court.  As noted above, these are nearly all those of Davenport, with no answering affidavits filed in the liquidation application.  Davenport is a judgment creditor of Platfields in the amount of R357 000.00.  R77 554.71 has been attached from a bank account of Platfields, leaving R279 445.29 due.  Davenport has issued a demand in terms of section 345(1)(a) of the Companies Act which was served on 22 May 2015.  The demand period expired on 12 June 2015.  Platfields has failed to pay.  This demonstrates Platfields is commercially insolvent.

[33] As required by statute, the liquidation application was served on the Master, SARS, the CIPC, and the Minister of Trade and Industry.  Davenport states he has no knowledge of the full details of the employees of Platfields nor whether they are represented by any specific trade union.  In the intervention application, nothing is said of any employees nor whether any employees are represented by a trade union.  Davenport has done what has been required to notify potential creditors, employees, and other relevant persons.

[34] I will thus grant the application for final winding up of Platfields.

[35] Finally, I consider the matter of costs.  Davenport notes that it did not ask for costs against Mbindwane in the intervention application.  It seeks costs in the liquidation application and the variation application.  Based on its success, those costs should be granted.

[36] Having heard the parties and read the documents filed on record, it is ordered that:

1. The provisional order for the winding-up of the first respondent is made final.

2. The costs of this application, including the costs reserved on 12 April 2012, shall be costs in the liquidation.

3.  It is declared that the words in paragraph 2 of the 30 October 2015 order following upon the word “revived” were void ab initio, as well as paragraphs 4 and 9 of that order.

 

___________________________________________________

J.E.  KLAAREN

ACTING JUDGE OF THE HIGH COURT OF SOUTH AFRICA

GAUTENG LOCAL DIVISION, JOHANNESBURG

 

DATE OF HEARING                                                 : 18/10/2016

DATE OF DELIVERY                                               : 15/12/2016

COUNSEL FOR THE APPLICANT                          : C van der Merwe

COUNSEL FOR THE INTERVENING PARTY       : G Naude (SC)

ATTORNEYS FOR THE APPLICANT                    : SENEKAL SIMMONDS INC

ATTORNEYS FOR THE INTERVENING PARTY :  VERCUIEL ATTORNEY

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