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REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

 

(1)   REPORTABLE: YES / NO

(2)   OF INTEREST TO OTHER JUDGES: YES/NO

(3)   REVISED.

CASE NO:  34072/19

 

In the matter between:

SAFTA PROPERTIES (PTY) LTD                                                                       1^st Applicant

( in liquidation)

HEIKO DRAHT N.O.                                                                                            2^nd Applicant

TUELO RONALD THOMAS N.O                                                                       3^rd Applicant

and

VUKANI AVIATION (PTY) LTD                                                                       1^st Respondent

SAFTA HOLDINGS (PTY LTD                                                                           2^nd Respondent

SOUTH AFRICAN FLIGHT TRAINING ACADEMY (PTY) LTD                3^rd Respondent

AIRLUMO (PTY) LTD                                                                                        4^th Respondent

SAFTA MAINTENANCE (PTY) LTD                                                                5^th Respondent

NHLANHLA DUBE                                                                                              6^th Respondent

CYNTHIA NONHLANHLA RADEBE                                                              7^th Respondent

 

JUDGEMENT

MBONGWE, AJ:

 

SUMMARY

[1] The 1^st applicant is a company in liquidation. The 2^nd and 3^rd applicants are, in terms of the CERTIFICATE OF APPOINTMENT (Annexure HD1) in the first instance, the LIQUIDATORS of the 1^st applicant and, in the second instance, the PROVISIONAL LIQUIDATORS of the 1^st applicant. The 1^st, 2^nd and 3^rd applicants have launched this application seeking, inter alia, a declaratory order that the 1^st to the 5^th respondents be deemed not to be juristic persons and that their individual existence be ignored and they be considered or viewed as embodied in the 1^st applicant. This proposed order is, according to the applicants, in terms of the provisions of sections 20(9), 22, 141 (2) (c) and 141 (3) of the Companies Act 71 of 2008.

THE RESPONDENTS

[2] The applicants describe each of the 1^st to the 5^th respondents as a company duly incorporated in terms the company laws of the Republic of South Africa. The applicants also state the individual company registration numbers of each of the said respondents. The registered physical office address of these respondents is the same.

[3] The 6^th respondent is described as a pilot, a director of the 1^st to the 5^th respondents and a previous director of the 1st applicant.

[4] The 7^th respondent is described as a business woman who is or was a shareholder and director of most of the 1^st to the 5^th respondents and a previous director of the 1st applicant.

ORIGIN OF THE LIQUIDATION PROCESS

[5] The liquidation of the 1^st applicant originates from a judgement that was obtained against it for rental due to a school from which it had rented a portion of its hostel dwelling.  Despite the 6^th respondent’s opposition and contention that the 1^st applicant was not insolvent, the final liquidation order was granted on 17 August 2017.

BACKGROUND INFORMATION

[6] The 6^th respondent established the 1^st respondent in 2006 and was joined by the 7^th respondent in 2013. The 6^th and 7^th respondents respectively held a 80/20% shareholding in the 1^st respondent.

[7] The 1^st respondent, represented by the 6^th respondent entered into an agreement with the Department of Higher Education (‘’DHE’) in terms of which the DHE was to provide funding for the training of previously disadvantaged individuals as pilots.

[8] To further the objectives of the said agreement, the1^st respondent purchased a shareholding in the 2^nd respondent; the holding company in respect of the 1^st applicant, the 3^rd, 4^th and 5th respondents.  

[9] None of the companies under the 2^nd respondent (SAFTA GROUP) had any financial obligation towards the 1^st respondent. However, companies in the SAFTA group were to provide the services necessary for the realisation of the objectives of the agreement between the 1^st respondent and the DHE. The services included the training of student pilots, their accommodation and catering.

[10] These proceedings are a part of the ongoing liquidation of the 1^st applicant for the debt aforementioned. The 1^st, 2^nd  and 3^rd applicants seek an order the effect of which would be that the 2^nd, 3^rd, 4^th and 5^th respondents are viewed as having ceased to have their individual juristic existence and are embodied in the 1^st applicant. In short, it is sought that the SAFTA group of companies should, as a result of the insolvency of one of them, be absorbed into and treated as inextricable from the insolvent 1^st applicant.

POINT IN LIMINE : THE AUTHORITY OF THE APPLICANTS

[11] The main consideration in the present hearing is centred on the authority of the applicants, particularly the 2^nd and 3^rd applicants, to launch this application. The respondents contend that the Certificate Of Appointment issued by the Master of this Court does not lend the applicants the authority to institute these proceedings. Hereunder I traverse the contents of the said certificate (Annexure HD1) to the founding affidavit.

    11.1 There is a clear ambiguity in the certificate in that the English version of the heading reads: ‘’CERTIFICATE OF APPOINTMENT OF LIQUIDATOR(S)’’, the words PROVISIONAL LIQUIDATOR(S) / PROVISIONAL JUDICIAL MANAGER/ JUDICIAL MANAGER having been scratched out. This suggests the appointment of the 2^nd and 3^rd respondents as liquidators of the 1^st applicant.

   11.2 More in the middle of the certificate it appears that the 2^nd and 3^rd applicants were appointed Provisional Liquidators ‘’with the powers set out in Section 386(1) (a) (b) (c) (e) and 4(d) of Act 61 of 1973 of the Company known as SAFTA PROPERTIES (PTY) LTD REG NO: 2008/009679/07’’

[12] The 2^nd and 3^rd applicants rely on the contents of the certificate for their authority to institute these proceedings. The respondents contend that the certificate does not confer the authority asserted by the applicants and pray for the dismissal of this application.

[13] This court took the decision that the present proceedings be limited to the hearing of arguments and determination made on the applicants’ authority.

ARGUMENTS AND THE LAW

[14] The applicants’ reliance on the provisions of Section 386(1) of the Companies Act of 1973 is a none starter for the assertion that these provisions confer authority on them to institute these proceedings. While this section deals with the general powers of the liquidators, the express extent of the liquidators’ powers is defined by the prerequisites set out in sub sections (d) and (e) of that section. Section 386(1) (d) requires the liquidator to ‘’ summon any general meeting of the company or the creditors or contributories of the company for the purpose of obtaining its or their authority or sanction with respect to any matter or for such other purposes as he may consider necessary’’. Section 386(1) (e) deals with the liquidators’ powers in relation to the protection and better administration of the affairs and property of the company subject to the provisions of subsection (3), (4) and (5). While I refer specifically to the powers of the liquidator in terms of section 386(3) hereunder, it is important to state that subsections (d) specifically makes authorisation by the company or its creditors or contributories a pre requisite for the liquidators’ actions in circumstances such as the institution of proceedings, as in the present case. There is no need to state that the applicants have not shown any evidence of having complied with the prescripts of these provisions. Section 386(1) (e) deals with the liquidators’ powers with regard to the measures they may take for the protection and better administration of the affairs and property of the company, but subject to the provisions of subsections (3), (4) and (5).  Similarly, these provisions do not give authority to the applicants to institute proceedings of the nature concerned in this case.

[15] I now consider the source of the authority of a liquidator to institute or engage in legal proceedings on behalf of a company in liquidation by the Master of the High Court. In terms of Section 386(3) of the Companies Act 61 of 1973, the liquidators of a company in a winding up by the Court act in the name and on behalf of the company on the authority granted by meetings of creditors and members or contributories or on the direction of the Master given under Section 387. The applicants have not shown that they are clothed with any such authority to institute the present application. I find, consequently, that the applicants have not complied with the enabling provisions of the Companies Act. Further, a ratification of the situation is not open to them in light of the fact that the winding up in this case is not voluntary or at the instance of the directors of the 1^st applicant, but by the court. I find that the point in limine was well taken and the application is accordingly dismissed.

COSTS

[16] The principle is that liquidators who purport to act in the name or on behalf of a company without the peremptory authorisation stipulated in Section 386(3) are held to be acting in their personal capacities and consequently personally liable for the costs of the relevant proceedings (see the full bench decision of the South Gauteng High Court in AUBY, JOHN DEON v PELLOW, ALLAN DAVID N.O. & MOTALA, ENVER MOHAMED N.O., CASE NO: A5009/12 handed down on14 March 2013].

ORDER

[17] In the light of the findings in this judgement the following is ordered:

      1. The application is dismissed.

      2. The 2^nd and 3^rd respondents are ordered to pay the costs of this application in  

          their personal capacities.

 

 

 

              M. MBONGWE AJ

ACTING JUDGE OF THE HIGH COURT

GAUTENG DIVISION, PRETORIA.

 

 

Date of hearing              : 16 March 2020

Date of Judgement         : 17 June 2020

 

APPEARANCES

For the Applicant          : Mr P. A. Wilkins

Attorneys                      : C. J. Human Attorneys,

                                        Heidelberg

                                            

For the Respondent       : Mr Sam Shalom Cohen

Attorneys                       : David C. Feldman Attorneys

                                       Johannesburg

 

JUDGEMENT  ELECTRONICALLY  TRANSMITTED

     

 

 

 

 

 

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