Coogal Finance (Pty) Ltd [In Liquidation] (Registration Number 2005/027362/07) and Another v Sumeil (Pty) Ltd (Registration Number 2013/146387/07) and Another (3642/2020) [2021] ZAFSHC 200 (26 August 2021)

IN THE HIGH COURT OF SOUTH AFRICA

FREE STATE DIVISION, BLOEMFONTEIN

CASE NO. 3642/2020

In the matte r between

COOGAL FINANCE (PTY) LTD [In Liquidation]

(Registration Number 2005/027362/07) 1st APPLICANT

KAREN FONTEIN N.O 2nd APPLICANT

versus

SUMEIL (PTY) LTD

(Registration Number 2013/146387/07) 1st RESPONDENT

MASTER OF THE FREE STATE 2nd RESPONDENT

HIGH COURT, BLOEMFONTEIN

2021

JUDGMENT

CORAM:

NAIDOO J

HEARD ON:

27 MAY 2021

DELIVERED ON: 26 AUGUST 2021

[1] The applicant (Coogal) seeks the provisional winding up of the first respondent’s estate and an order to ignore the separate legal existence of the applicant and the first respondent (Sumeil), and to treat them as one entity. The Notice of Motion was subsequently amended to include, in the alternative to the prayer for the provisional winding up of the respondent, a prayer for the payment of several amounts of money, together with ancillary relief. The application was heard virtually. Adv TP Kruger SC represented the applicant and Adv J Zietsman represented the respondent.

[2] Coogal sought the following orders:

“1. That the following rule nisi be issued:

1.1 That the First Respondent be placed under provisional liquidation;

1.2 That the First Respondent and First Applicant shall be regarded as a single entity by ignoring their separate legal existence and treating the First Applicant as if it were the only company;

1.3 That the assets and liabilities of the First Respondent and the Applicant be consolidated to enable the liquidators to administer the affairs of the two companies as one and to distribute the assets of both companies in terms of the distribution plan in the Insolvency Act, 1936 to the creditors of both companies as one concursus creditorum under Master’s Reference no B14/2019, that of Coogal Finance (Pty) Ltd (in liquidation);

1.4 That the Second Respondent be enjoined to make the required amendments to the Certificate of Appointment B14/2019 as it may deem fit and if so required;

1.5 That the proven claims against the companies be deemed to be proven under the consolidated Master’s ref no B14/2019;

2. That the rule nisi be issued with return date 12 weeks hence, for any affected party to show cause why the provisional liquidation order should not be made final, and to show cause why prayers 1.2 to 1.5 should not be confirmed.

3. That notice be given in the government gazette and a publication in the Rapport and Sunday Times with the rule nisi and a web address at which the full set of founding papers could be accessed.

4. That the costs of this application be costs in the administration of the consolidated estate of Coogal Finance (Pty) Ltd (in liquidation), Master’s ref no B14/2019.

5. In the alternative to prayers 1 to 4:

Judgment in favour of the First Applicant for:

5.1 Payment by the First Respondent in the following amounts:

5.1.1 R189 750-00;

5.1.2 R189 750-00;

5.1.3 R189 750-00;

5.1.4 R189 750-00;

5.1.5 R185 000.00

5.2 Interest a tempore morae on the amounts in prayers 5.1.1 to 5.1.5

5.3 Payment by the First Respondent of the costs awarded against the First Respondent in the litigation to recover and preserve the assets of the First Applicant, to be taxed under case number 576/2020 of this Honourable Court;

5.4 Costs of this application to be paid by the First Respondent”.

Mr Kruger advised the court that Sumeil has paid the costs referred to in prayer 5.3 and Coogal is no longer pursuing the relief set out in that prayer. I also mention that the deponent to the Founding Affidavit is Coogal’s liquidator, Ms Karen Fortein (Ms Fortein).

[3] One of the grounds on which Sumeil opposed the application is that Ms Fortein lacked locus standi in that she was not authorized to institute legal proceedings on behalf of Coogal. This was raised as a point in limine in the Answering Affidavit. Ms Fortein alleges in the Founding Affidavit that she is authorized to depose to the Founding Affidavit. She also alleges in the Founding Affidavit that she is mandated by the concursus of Coogal. In response to the challenge in respect of her locus standi, she attached in Reply, a court order obtained on 19 June 2019, in which she was authorized to bring this application in terms of sections 386 and 387 of the Companies Act 61 of 1973. Her powers were also extended by virtue of that court order and included, inter alia, the power to “bring or defend in the name and on behalf of the company any action or other legal proceeding of a civil nature…” The court further approved, ratified and confirmed the actions taken by her prior to the application for the increase of her powers.

[4] In his Heads of Argument, Mr Zietsman persisted in the challenge to Ms Fortein’s locus, contending that if she was indeed authorized by the concursus of Coogal, she ought to have appended the minutes of the creditors meeting that so authorized her. He makes the point that in the absence of authority granted by a creditors’ meeting or the directions of the Master or a court order, she had no authority to bring the application. The court order was obtained in June 2019, more than a year prior to the launch of this application. It is so that it was not factually correct that the liquidator was authorized by the concursus, but she certainly is an interested party in her capacity as liquidator. The factual position is that the order of the court in any event specifically clothes her with authority to institute legal action in the name and on behalf of the company. I am satisfied that she has established the necessary locus standi to institute this application. I should perhaps mention that the aspect of Ms Fortein’s locus was not raised at all by either party in oral arguments before this court, and I will accept that the challenge has been abandoned.

[5] Coogal has one director, Willem Andries Maritz Nel (Nel) and one shareholder, the Willem Andries Maritz Nel Family Trust (the Family Trust). Nel, his wife and his auditor are the trustees of the Family Trust. Coogal’s main business activity is reflected as “Brokers and Financial Services and all Related Services and Activities” in its registration documents on the database of the Companies and Intellectual Property Commission (CIPC). Coogal was liquidated by its one known creditor, JIP Vervoer, by an order of court dated 11 April 2019. The Sumeil is a company whose directors and shareholders are Nel and his wife, and whose main business, according to the CIPC database, is transport. It is evident from the papers before court that both these companies are inter-related, and were operated by Nel as such.

[6] From the background sketched by the applicant and the respondent in the Founding and Answering Affidavits respectively, it emerges that over the years, Coogal purchased vehicles which were financed by Absa Bank (Absa) in terms of instalment sale agreements, and leased them, usually on a short-term (2 to 3 months) basis, to transport contractors in need of vehicles as a result of their collision-damaged vehicles being repaired. The latter transaction was governed by what is referred to in the papers as a master rental agreement, which appears to be standard in the vehicle rental industry. A large part of Coogal’s income was derived from master rental agreements and other (presumably) related services. Some of these lease agreements were for longer periods of between 2 and 5 years.

[7] According to the respondent, in approximately 2012, Coogal concluded lease-to-buy agreements with a transport contractor (DP Botes Vervoer) in respect of all of its vehicles. In terms of such an agreement the hirer has the option to acquire ownership of the hired vehicle at no cost, when the master rental agreement has run its course. This, in effect, meant that Coogal was unable to service the needs of its short-term clients, which led it to purchase four Volvo trucks, ostensibly for the latter purpose. Sumeil, being in the transport business, contracted with Coogal for transport services, and leased the four trucks from Coogal, in respect of which monthly payments were made by Sumeil to Coogal. Subsequently, in March 2016, Sumeil concluded a master rental agreement with Coogal in respect of each truck. These agreements were due to mature on 28 February 2019. Coogal was provisionally liquidated on 7 March 2019 and the order was made final on 11 April 2019. The application for the provisional liquidation of Coogal was filed in court on 4 February 2019, which was, therefore, the deemed date of liquidation.

[8] Coogal’s shareholding changed in 2015 and was purchased by the Family Trust. In support of its prayers for the court to ignore the separate legal identities of Coogal and Sumeil and for their assets to be consolidated and distributed as if they were one entity, Coogal alleged that after 2015, the respective businesses of Coogal and Sumeil were conducted through both companies with little or no regard for their separate legal personalities. Nel, so it is argued, as the controlling mind of Coogal, Sumeil as well as the Family Trust, unconscionably abused the juristic personality of Coogal in order to benefit Sumeil. Coogal’s alternative claim for payment of monies which it alleges that Sumeil owes it, is based on the amounts reflected in its financial records as at 4 February 2019, and relate to the four Volvo trucks.

[9] The amount of R189 750.00 listed in each of prayers 5.1.1 to 5.1.4 represent the balloon payments, inclusive of 15% Value Added Tax, owing to Coogal in respect of the four trucks, due at the expiration of the master rental agreements. The amount of R185 000.00 in prayer 5.1.5 represents the outstanding balance owing by Sumeil to Coogal in respect of instalments payable in terms of the master rental agreements at the date of liquidation. Sumeil denied that it owes the amounts in respect of the balloon payments, alleging that it settled, directly with Absa, the full outstanding balance due by Coogal to Absa. It transpires from the proof of payments annexed to the Answering Affidavit that there were four payments in the amount of R182 010.88 each, made on 18 February 2019 by “MN Fam Trust” to Absa. These payments were made after the deemed date of liquidation.

[10] Coogal premises its prayer for ignoring the separate legal identities of Coogal and Sumeil and for the provisional liquidation of Sumeil, on what it argues is Nel’s unconscionable abuse of the juristic personality of Coogal. A number of extracts from transcripts of insolvency interrogations held in respect of Coogal were attached to the Founding Affidavit in support of the allegations of misuse and maladministration on the part of Nel. The allegations are essentially that Nel’s abuse of Coogal’s separate juristic identity benefitted Sumeil and the Maritz Nel Family Trust. Many instances were cited of such questionable actions and transactions, for example, that Coogal was used to take undue risks for the benefit of Sumeil, starting with engaging in bridging finance, Coogal was used to acquire assets for Sumeil, but the latter deferred operating expenses to Coogal. In other words, Coogal paid expenses which should have accrued to Sumeil. Coogal, it is alleged, was carefully wound down, stripped of assets and left with liabilities. Funds were moved between the two companies at a whim and largely to accommodate cashflow requirements. Loan accounts were also moved between Coogal and Sumeil, causing the liquidators of Coogal to have great difficulty in properly allocating loan accounts.

[11] In addition to the extracts from the transcripts I referred to earlier, Coogal also attached to its Founding Affidavit certain of Coogal’s financial records in support of its allegations, which I have detailed. I will deal with this later in this judgment. Sumeil, for the most part, denied that it or Nel have conducted themselves in a manner which can be regarded as unconscionable. Nel, who was the deponent to Sumeil’s Answering Affidavit, gave a lengthy background to the history of Coogal and Sumeil, and of the relationship between them. He also detailed the financial relationship and arrangements between Coogal and Sumeil regarding the flow of funds between them. He further alleged that when Coogal was liquidated, its legal representatives obtained from him and its Accounting Officer, all the financial records of Coogal, which included electronic and hard copies of the bookkeeping records, source documents in support thereof, contracts, financial statements and other company documents, for the financial year ending 28 February 2013 to the date of liquidation. Based on the financial records, Nel argued that Sumeil as well as the Family Trust were creditors of Coogal.

[12] The letter of demand in terms of section 345 of the Companies Act 61 of 1973 (the old Act), addressed to Sumeil in respect of the amounts owed by it to Coogal was served by the Sheriff of the High Court at Sumeil’s registered address and what also appears to be Nel’s residential address in the Western Cape. Nel denies that the letter was received by Sumeil and challenged the veracity of the Sheriff’s return. The Sheriff thereafter filed an affidavit setting out the facts surrounding such service, and I am satisfied that the letter of demand was served as indicated in the Sheriff’s return. It is not in dispute that Sumeil did not react to the letter of demand and did not pay the amount demanded.

[13] With regard to Coogal’s alternative claim for the payment of the amounts I have set out earlier in this judgment, Sumeil disputes that it owes the amounts claimed. It alleges that the bookkeeping records of Coogal in respect of its financial transactions with Sumeil were contained in three different ledgers, namely general ledger 5500/004 which recorded the loans to and from Sumeil, the customer ledger with account number 006 where all the master rental agreements were recorded and the supplier ledger under account number 008 where all the expenses that Sumeil paid on behalf of Coogal were accounted for. I mention that these are the same ledgers which Coogal referred to in its Founding Affidavit (para 49-52) to substantiate its allegations that Nel/Sumeil unconscionably abused the juristic personality of Coogal to obtain assets for Sumeil but deferred the expenses to Coogal. These were the ledgers, it is argued, that were found in the “unsanitised” financial records of Coogal for the financial years 1 March 2015 to 28 February 2016, 1 March 2016 to 28 February 2017, 1 March 2017 to 28 February 2018 and 1 March 2018 to 28 February 2019.

[14] Section 345(1)(a) of the old Act provides that a company is deemed to be unable to pay its debts if a creditor to whom the company is indebted in an amount not less than R100, has served upon it a demand requiring the company to pay the amount due, and the company has for three weeks thereafter neglected to pay the amount so demanded. Section 345(1)(c) requires the creditor to prove to the satisfaction of the court that the company is unable to pay its debts. The court has a discretion to grant a winding up order or not, irrespective of the ground or grounds upon which such an order is sought.

[15] Coogal seeks an order in terms of Section 20(9) of the Companies Act 71 of 2008 which provides as follows:

If, on application by an interested person or in any proceedings in which a company is involved, a court finds that the incorporation of the company, any use of the company, or any act by or on behalf of the company, constitutes an unconscionable abuse of the juristic personality of the company as a separate entity, the court may-

(a) declare that the company is to be deemed not to be a juristic person in respect of any right, obligation or liability of the company or of a shareholder of the company or, in the case of a non-profit company, a member of the company, or of another person specified in the declaration; and

(b) make any further order the court considers appropriate to give effect to a declaration contemplated in paragraph (a).

[16] The order that Coogal seeks is usually referred to as ‘piercing’ or ‘lifting’ of the corporate veil. It is trite that a company is a legal entity separate from its shareholders and other functionaries, it has rights and obligations conferred upon it by statute and these are distinct from those of its shareholders. Its property, for example, is its own and not that of the shareholders, and it may also sue and be sued in its own name. The introduction of the statutory provision in the form of section 20(9) has given rise to the debate about whether the statutory provision has replaced the common law on piercing of the corporate veil. The court in Ex Parte Gore 2013(3) SA 382 undertook a comprehensive examination of South African, English and Australian case law and said this at para 32:

“The language of s 20(9) is cast in very wide terms. The statute enjoins that its provisions be construed with appropriate regard to ss 5(1) and (2) read with s 7 of the Act (including, to the extent appropriate, a consideration of foreign company law). Approaching the interpretation of s 20(9) of the Companies Act in that manner I am unable to identify any discord between it and the approach to piercing the corporate veil evinced in the cases decided before it came into operation”.

The court continued at para 34

“Having regard to the established predisposition against categorisation in this area of the law and the elusiveness of a convincing definition of the pertinent common-law principles, it seems that it would be appropriate to regard s 20(9) of the Companies Act as supplemental to the common law, rather than substitutive”.

[17] More recently, the interpretation of section 20(9) and its applicability was succinctly captured in City Capital SA Property Holdings Ltd v Chavonnes Badenhorst St Clair Cooper and Others 2018 (4) SA 71 (SCA). In my view, this is a more practical approach to adopt. The court held as follows:

[28] Section 20(9) of the 2008 Act provides a statutory basis for piercing the corporate veil. On its plain wording, s 20(9) permits a court to disregard the separate juristic personality of the company where its incorporation, use or an act performed by or on its behalf 'constitutes an unconscionable abuse of the juristic personality of the company as a separate entity'. The term 'unconscionable abuse' is not defined in the 2008 Act and must therefore be given its ordinary meaning.

[29] The meaning of 'unconscionable' in the Oxford English Dictionary includes, 'Showing no regard for conscience . . . unreasonably excessive . . . egregious, blatant . . . unscrupulous.' It is in my view undesirable to attempt to lay down any definition of 'unconscionable abuse'. It suffices to say that the unconscionable abuse of the juristic personality of a company within the meaning of s 20(9) of the 2008 Act includes the use of, or an act by, a company to commit fraud; or for a dishonest or improper purpose; or where the company is used as a device or facade to conceal the true facts.

[30] Thus, where the controllers of various companies within a group use those companies for a dishonest or improper purpose, and in that process treat the group in a way that draws no distinction between the separate juristic personality of the members of the group, as happened in this case, this would constitute an unconscionable abuse of the juristic personalities of the constituent members, justifying an order in terms of s 20(9) of the 2008 Act….”

[18] In the current matter, it appears from the papers that two sets of accounting and financial records were kept by Coogal and Sumeil. The transactions between them were recorded in the books of each. Coogal makes the allegations of unconscionable abuse of Coogal’s juristic personality and refers to certain entries in the financial records. It attached extracts from transcripts of insolvency hearings

in support of its allegations. I mention that these were selected extracts and there was, for the most part, no context provided for the extracts in order to determine if those extracts were substantiation for the particular allegation being made. By way of example, in para 43.1 of the Founding Affidavit, it is alleged that “As of 2015, when Coogal had a change of shareholding, Coogal was used as a vehicle to take undue risks to the benefit of Sumeil by starting with bridging finance”. In support of this allegation, annexure KF-21 was referred to. In the latter mentioned annexure, the interrogation of Nel by Mr Roos, whom I assume to be Coogal’s legal representative mentioned in the papers, revolves around Coogal Finance hiring vehicles to entities for the period from about 2012 to February 2019.

[19] From lines 16 to 26, Mr Roos questions Nel about another business he mentioned, to which the latter explained that it related to property transfer transactions, the purchase and sale of stock and certain types of goods, where in essence bridging finance was provided. The last question by Mr Roos in that extract was “So het Coogal Finance ‘n finansieringshuis geword”?(So did Coogal Finance become a finance house). Nel’s response was “Ek sal nie sê dit is ‘n finansieringshuis nie, nee” (I will not say it’s a finance house, no). I was constrained to find support for the contention that such “bridging finance” transactions involved an element of risk, undue or otherwise, or that it was to Sumeil’s benefit.

[20] Similarly annexure KF-22 is a copy of Coogal’s supplier ledger from which it appears that a large number of purchases and expenses for Sumeil were paid by Coogal. In the Answering Affidavit, Sumeil explains that in the transport industry, the usual practice is that the company hiring out truck-trailer combinations carries the running costs of the hired vehicles, such as maintenance, service and repairs, fuel, licence costs and the like. Due to Coogal’s cashflow problems, it was agreed between Coogal and Sumeil that the latter would pay such costs in respect of the Volvo trucks and invoice Coogal for such costs. Coogal would, in turn, invoice Sumeil for the use of the Volvo trucks. These transactions were recorded in the various ledgers and under the account numbers I mentioned earlier. At the end of the financial year these accounts would be reconciled to reflect the true position.

[21] Coogal’s response to this in Reply was that these assertions indicate Sumeil’s admission that there was an intimate relationship between Coogal and Sumeil and that Nel played a major role in the business of Coogal. In addition, Coogal asserted that it is irrelevant that the “incestuous” agreement matured on 28 February 2019, as the deemed date of liquidation was 4 February 2019. Sumeil’s explanation regarding the recordal of the various transactions is, therefore, not refuted. There are other similar examples in the papers, but it is not necessary to mention all of them, as this one example is sufficient for the purposes of making a finding in respect of the relief claimed in section 20(9).

[22] On the papers before me, and without more, I am constrained to find that the actions of Nel/Sumeil amount to the unconscionable abuse of Coogal’s juristic personality, within the meaning of section 20(9) of the 2008 Act, in that there is insufficient evidence before me to conclude that the use of Coogal, or acts by Sumeil, were designed to commit fraud, or were for a dishonest or improper purpose. It is also not apparent that Coogal was used as a device or facade to conceal the true facts. In respect of the relief sought for the piercing of the corporate veil, I am of the view that Coogal has not made out a case for such relief.

[23] I turn now to consider the grounds upon which Coogal moves for the provisional liquidation of Sumeil. The court will consider not only the grounds upon which an application for winding up is made but other factors which may bear on the justness and equity of such an order. The applicant is required to show that the respondent is unable to pay its debts, and once it discharges that onus, the court’s discretion to refuse a winding up order becomes narrower. If however, the respondent discharges the onus on it to show that it is bona fide in its dispute of the claim and that such dispute is based on reasonable grounds, the winding up order will not be granted.

[24] As I indicated earlier, a letter of demand was served on Sumeil at its registered address, and the debt remained unpaid. The applicant, Coogal bears the onus to show that Sumeil is unable to pay its debts. Sumeil denied that it is unable to pay its debts and asserted that it is neither factually nor commercially insolvent. Sumeil attached to its Answering Affidavit its financial statements for the year ended 29 February 2020 and summarised the contents thereof. Its cashflow from operating activities increased significantly from R390 499.00 in 2019 to R3 480 967.00 for the year ending 28 February 2020. It showed a retained income of R3 573 273.00 and a total equity of R4 183 649.00 for the year ended 29 February 2020. Coogal did not take issue with these allegations by Sumeil and merely indicated in Reply that the court has the discretion to grant winding up or not. If it finds that Sumeil is not factually or commercially insolvent, and able to pay its debts, the court can still order it to pay the debt owed to Coogal.

[25] Sumeil denied that it is indebted in any amount to Coogal, but admits that at the date of liquidation, in terms of the ledger with account number 006: Sumeil, it owed Coogal an amount of R185 000,00. It also insists that the balloon payments owed to Coogal, which I have mentioned earlier in this judgment, were settled directly with Absa albeit after the date of liquidation. In addition, Sumeil alleges that at the date of liquidation, Coogal’s general ledger 5500/004 reflected a credit balance of R1 412 906.83 respect of Sumeil. If the amount of R185 000.00 were deducted from that amount, Coogal owed Sumeil an amount of R 1227 906.83 at the date of liquidation. Coogal alleges that the entry referred to is a simulated journal entry and that if were true, Sumeil would have lodged a claim against Coogal’s insolvent estate for such amount, which it did not.

[26] It is on the basis of the amount Sumeil alleges is owed to it by Coogal, that it holds that it has raised a dispute against such debt on bona fide and reasonable grounds. I note that Coogal alleges that no source documents were produced by Sumeil or furnished to it in support of the various journal entries it claims to reflect a debt owed to it by Coogal. Although Sumeil alleges that such documents were furnished by the accounting officer, Mr Maree, to Coogal’s attorney, this was not confirmed by Mr Maree. There is correspondence which is part of the papers calling on Mr Maree to confirm that the various journal entries have corresponding source documents and to furnish such documents to Coogal’s attorneys. No response was received to the letter. Mr Zietsman in his Heads of Argument contends that in terms of the Badenhorst Rule, which was a principle enunciated in Badenhorst v Northern Construction Enterprises (Pty) Ltd 1956(2) SA346 (T) at 348B, Sumeil has raised a bona fide dispute on reasonable grounds and therefore the application for winding up should be dismissed.

[27] With regard to Sumeil’s ability to pay its debts, I am satisfied that, on the papers before me, it has not been established that Sumeil is factually or commercially insolvent or that it is unable to pay its debts as they fall due. This is fortified by the fact that on the morning of 27 May 2021, and just prior to the hearing of this matter on that day, Sumeil filed a notice indicating that it paid, as security for any money judgment this court may grant against it, an amount of R968 218.87 into the Trust Account of attorneys Kramer Weihmann and Joubert.

This amount was paid on 26 May 2021, and such was confirmed in a letter by the attorneys attached to the Notice of Security. However, with regard to the disputed debt, I am not convinced that it is a bona fide dispute raised on reasonable grounds. As I have indicated, there is no objective evidence, in the form of source documents showing how this debt arose, to support the claim that the journal entry evidencing the indebtedness of Coogal to Sumeil was properly and correctly made. Having said that, however, it is still my view that no case has been made out for the provisional winding up of Sumeil.

[28] I deal now with the alternative claim in the Notice of Motion for the payment by Sumeil of the amount R944 000.00, made up of the amounts I have set out in para 5 of this judgment. The amount of R185 000.00 has been admitted by Sumeil as owing by it to Coogal. The four balloon payments of R189 750.00 in respect of each Volvo truck was owing to Coogal at the date of liquidation, which has not been disputed by Sumeil. As I indicated, the payment of these amounts was made directly to Absa, instead of to Coogal in terms of the master rental agreement, by the Family Trust who is the sole shareholder of Coogal, and not by Sumeil. Although the latter claims that such payment was made on its behalf, there is no supporting evidence to this effect. These payments were made some two weeks after the date of liquidation, so it does not fall to be taken into account. In my view, the payments by the Family Trust did not extinguish Sumeil’s indebtedness to Coogal. It may well be that the Family Trust’s recourse is to recover the money from Absa.

[29] The manner in which these payments were made is further indicative of the relationship between these two companies, and the fact that Nel is more than likely to be the directing hand in Coogal, Sumeil and the Family Trust. These are matters that the liquidator is empowered to properly investigate and to act in terms of the Companies Act as well as the Insolvency Act. Ms Fortein specifically mentions that there were many void and voidable transactions involving Sumeil and the Family Trust. She is also eminently aware of her powers to act decisively on behalf of the insolvent estate in terms of the relevant statutes to recover the monies and/or assets which are the subject matter of void and voidable transactions, without the intervention of the court.

[30] I deal briefly with the issue of costs. As will be evident from the order below, Coogal is successful only in respect of the alternative claim. The papers became voluminous and the matter more complicated by the application for the provisional liquidation of Sumeil and for the piercing of the corporate veil in respect of Sumeil. It was in respect of these prayers that Coogal did not succeed in obtaining the relief it sought. Neither party addressed the court on the issue costs. Coogal simply asked for the application to be granted with costs and Sumeil asked for the application to be dismissed with costs. The alternative claim was inserted in the Notice of Motion by way of an amendment some five months after the date of the launch of this application. Sumeil had no choice but to oppose the matter fully and was successful in its opposition. The alternative claim made its appearance after the pleadings in the matter were closed, so to speak, and Coogal succeeded only in respect of this claim. The award of costs is in the discretion of the court, which discretion must be exercised judicially to ensure that fairness prevails in respect of each party. In the interests of fairness and equity, and for the reasons I have set out, I am of the view that Sumeil should not be mulcted in all the costs in this matter, but only a percentage thereof. I, therefore, intend to exercise my discretion in favour of Sumeil with regard to costs.

[31] In the circumstances the following order is made:

31.1 The application for the provisional liquidation of the first respondent is dismissed;

31.2 The application to ignore the separate legal existence of the first respondent and the first applicant, to treat them as a single entity and to treat the first applicant as if it were the only company, is dismissed;

31.3 All the ancillary relief prayed for and which would have been consequent upon the granting of the applications mentioned in 31.1 and 31.2 are dismissed;

31.4 Judgment is granted, in terms of the alternative claim, against the first respondent for payment to the first applicant (in liquidation) of the amount of Nine Hundred and Forty-Four Thousand Rand (R944 000.00).

31.5 Payment of interest on the amount referred to in 31.4, a tempore morae;

31.6 The first respondent is directed to pay 30% the costs of this application.

S NAIDOO J

On behalf of the Applicants: Adv TP Kruger SC

Instructed by: Jaco Roos Attorneys Inc

c/o Noordmans Inc

1 Eighth Street

Arboretum

Bloemfontein

(Ref: Nr Roos/Gerrie/MAT383)

On behalf of the Respondent: Adv J Zietsman

Instructed by: Kramer Weihmann Attorneys

KW Building, 24 Barnes Street

Westdene

(Ref: DB Muller/jvdw/TSJ635)