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[2005] ZAGPHC 35
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Yiannakis NO and Others v A & A Cycads (Pty) Ltd (14157/04) [2005] ZAGPHC 35 (29 March 2005)
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IN THE HIGH COURT OF SOUTH AFRICA (TRANSVAAL PROVINCIAL DIVISION) DATE: 29/3/2005 CASE NO: 14157/2004 DIMITRIOS PAUL NICHOLAS YIANNAKIS NO 1ST APPLICANT MARIANTHI CONSTANTINOS YIANNAKIS NO 2ND APPLICANT DOROTHEOS KOUTSOUDIS NO 3RD APPLICANT ROSRAM FINANCIAL SERVICES (PTY) LTD 4TH APPLICANT And A & A CYCADS (PTY) LTD RESPONDENT 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
RANCHOD, AJ
On 28 May 2004 (being the date of signature of the notice of motion) the applicants applied for the liquidation of the respondent. The application was thereafter served on the respondent on 1 June 2004. On 15 June 2004 the respondent filed its notice of intention to oppose the application. The applicants then served their notice of set down in terms
of which the matter was enrolled for hearing for 27 July 2004. The notice of set down was served on the respondent on 19 July 2004. On 27 July 2004 the matter was postponed sine die with no order as to costs. Thereafter the matter was enrolled for 9 November 2004 when it was struck off the roll with costs. The matter was then once again set down for hearing, on Thursday, 28 January 2005 when it was argued before me.
The respondent raised a point in limine arguing that the applicant’s application was fatally defective and the matter should accordingly be struck off and the applicants to pay the respondent’s wasted costs. It was argued that the application was fatally defective because the applicants had not complied with the requirements of section 346(3) of the Companies Act 61 of 1973 (“the Act”) at various stages, namely: 1. At the time of issuing of the application; 2. At the time of service of the application;
3.
At the time when the application was served on the Master of the High Court in terms of section 346(4A) of the Companies Act;
4. At the time when the application was served on registered trade unions of the employees of the respondent as required by section 346(4A) (a)(i) of the Companies Act; 5. At the time when a copy of the application was served on employees of the respondent by displaying it on a noticeboard of the respondent in terms of section 346(4A)(a)(ii) of the Companies Act; 6. At the time when the application was served on the South African Revenue Service in terms of section 346(4A)(a)(iii) of the Companies Act; 7. At the time when it was served on the respondent in terms of section 346(4A)(a)(iv) of the Companies Act; and
8.
At the time when the application was enrolled for the first time for hearing.
Section 346(3) of the Act provides:
“(3)
Every application to the Court referred to in subsection (1), except an application by the
Master in terms of paragraph (e) of that subsection, shall be accompanied by a certificate by the Master, issued not more than ten
days before the date of the application, to the effect that sufficient security has been given for the payment of all fees and charges necessary for the prosecution of all winding-up proceedings and of all costs
of administering the company in liquidation until a provisional liquidator has been appointed, or, if no provisional liquidator is
appointed, of all fees and charges necessary for the discharge of the company from the winding-up.”
From the papers it appears that security was first provided by the applicants on 23 July 2004, i.e., on the court day but one proceeding the day the application was to be heard.
It was submitted by respondent’s counsel that I am bound by the decision in De Wet NO v Mandelie (Edms) Bpk 1983 1 SA 544 (P) 547H548C, a judgment by NESTADT J (as he then was):
“The subsection does not provide that the certificate is to accompany the application only when it is presented. Perhaps logically
it should be interpreted as requiring the certificate to be annexed to the application itself. That, however, is, as I have shown, not the viewpoint that has been adopted.
But it does not follow that the subsection is to be interpreted as permitting the furnishing of security and the filling of the certificate
within an extended period, namely when the application is presented to Court. There may be a long delay, especially seeing that the long form of notice of motion is usually used, before the application is actually filed in Court. This may be some time after service on the respondent, who would often immediately begin incurring legal expense with a view to opposing the application. In the meantime no security need yet have been furnished. If the applicant then, as he might, decides not to proceed with the application and therefore does not file it, the object of s 346(3) would be frustrated. In saying this, my understanding of the practice is that service of the application may, and usually
does, take place first, and only thereafter are the papers filed with the Registrar. This, of course, cannot take place in the case of a summons, because, before it is served, the Registrar has to sign it. Not so, however, in the case of an application.
The result is that the point in limine is upheld in both cases.”
The learned judge had made a similar finding in the earlier case of A Holman Trading Co (Pty) Ltd v Pipeweld Construction and Erection (Pty) Ltd 1977 4 SA 360 (TPD). Henochsberg on the Companies Act at 723 states:
“In a case where service of the papers is required to be, or is in fact, effected on the company before the hearing, the decisions
of the Courts are not harmonious with regard to the answer to the question whether the certificate may competently be obtained and
filed only after the papers have been served. In the De Wet case supra it was held, on the basis of certain sequestration cases mentioned in the judgment, that the answer to such question is in the negative
– upon the footing essentially that, inasmuch as a purpose of the subsection is to deter frivolous or vexatious applications,
security ought to be given at some stage before the company has to incur any costs for the purposes of opposition to the application.”
The learned author then refers to the decisions in other provinces which differ from
the decisions of this division and states (at 723):
“It is respectfully doubted that a purpose of the subsection is to deter frivolous or vexatious applications: the purpose is
to ensure that there is a fund available to meet the costs which as a result of the operation of the process of the administration
of the winding-up necessarily will be incurred ... until a provisional liquidator has been appointed or no provisional liquidator
is appointed and the winding-up is discharged ... In the light of this, it is respectfully submitted that where the applicant proceeds on notice to the company, whether
because he so elects or because this is required by the practice of the Court, it is immaterial: (i) when the certificate is filed
with the Court so long as it is before the Court on the date when the order is sought and it is not stale; (ii) whether or not
a copy of the certificate was served on the company prior to such date [this passage was accepted as correctly reflecting the position
in the Cape Provincial division by VAN REENEN J in First National Bank of SA Ltd v EU Civils (Pty) Ltd 1996 (1) SA 924 (C) at 931].”
I was also referred to the case of Court v Standard Bank of SA Ltd; Court v Bester NO and Others [1995] ZASCA 39; 1995 3 SA 123 (AD). However, that case can be distinguished in that the certificate for security for costs had already been obtained before service of the application on the respondent which is not the case in the matter before
me. Furthermore, in that case the application was for a provisional order of sequestration in terms of the Insolvency Act 24 of 1936 and was based upon a nulla bona return. In terms of the Cape Provincial Division Court Notice 59, promulgated on 8 March 1984 no notice of an application for a provisional sequestration need be given to a respondent if the applicant relies on a nulla bona return or an Act of Insolvency in terms of section 8(g) of the Act. In that case VIVIER JA came to the conclusion (at 131D-F):
“I am accordingly of the view that section 9(3)(b) of the [Insolvency] Act does not require the security certificate to accompany
the application either when it is filed with the registrar or when it is served on the respondent and that the practice in the court
a quo, followed in the present case, does not conflict with the provisions of the subsection. The points taken by the appellant that the application was fatally defective for want of compliance with the subsection cannot therefore succeed.”
There is therefore much to be said for the view that the point in limine should be dismissed. However, in view of the decisions and longstanding practice of this division, the point in limine is upheld. I accordingly make the following order: no order is made on the application but the applicant is granted leave to commence proceedings on the same papers after they have been
re-served; the applicants to pay the respondent’s costs.
N RANCHOD
ACTING JUDGE OF THE HIGH COURT
14157/2004
HEARD ON: 27/7/2004 FOR THE APPLICANTS: ADV E B CLAVIER INSTRUCTED BY: MESSRS MAKAULA ZILWA & CO, SANDTON c/o KRAUT WAGNER & KERNICK, PTA FOR THE RESPONDENT: ADV J G CILLIERS INSTRUCTED BY: MESSRS GILDENHUYS VAN DER MERWE INC, PTA DATE OF JUDGMENT: 29/3/2005 |