Janse Van Rensburg NO and Others v Ladislav (8037/06) [2006] ZAGPHC 95 (1 November 2006)

IN THE HIGH COURT OF SOUTH AFRICA

(TRANSVAAL PROVINCIAL DIVISION)

Date: 2006-11-01

Case Number: 8037/2006

In the matter between:

JACOBUS HENDRIKUS JANSE VAN

RENSBURG N.O. First Plaintiff

PHILIP FOURIE N.O. Second Plaintiff

JACOB LUCIEN LUBISI N.O. Third Plaintiff

LILY MAMPINA MALATSI-TEFFO N.O. Fourth Plaintiff

ENVER MOHAMMED MOTALA N.O. Fifth Plaintiff

RABOJANE MOSS KGOSANA N.O.

(in their capacities as joint-liquidators of

M P FINANCE GROUP CC (IN LIQUIDATION) Sixth Plaintiff

and

LADISLAV, ZAJIC Defendant

______________________________________________________________

JUDGMENT

SOUTHWOOD J

[1] The defendant excepts to the plaintiff’s amended particulars of claim. The defendant contends that because of the provisions of section 386(4)(a) of the Companies Act, 61 of 1973, the plaintiffs do not have locus standi to bring the claim. The plaintiffs are all liquidators of M P Finance Group CC (in liquidation). In that capacity the plaintiffs instituted action against the defendant claiming an order setting aside payments to the defendant totalling R829 612,10 and an order that the defendant effect payment of that amount to the plaintiffs. The plaintiffs claim that relief in terms of section 26(1) read with section 32(3) of the Insolvency Act, 33 of 1936. They allege that the payments to the defendant were dispositions without value in terms of section 26(1) of the Insolvency Act and fall to be set aside.

[2] The issue raised by the exception is simply whether the plaintiffs are entitled to sue for this relief in their capacities as liquidators of M P Finance Group CC (in liquidation) or whether the plaintiffs are obliged by the provisions of section 386(4)(a) of the Companies Act to institute the claim in the name and on behalf of the close corporation in liquidation. The excipient’s counsel concedes that there is no difference between the plaintiffs suing in their capacity as the liquidators of the close corporation and suing in the name of and on behalf of the close corporation in liquidation. He contends that the provisions of section 386(4)(a) are peremptory and must therefore be complied with. The excipient relies on the unreported judgment of Epstein AJ in the Witwatersrand Local Division in the matter between Eileen Margaret Fey NO and Mawaal Cloete NO v Mahandrabai Naran Gowan WLD Case Number 19644/05 in which the court upheld the point raised in the present exception.

[3] The plaintiffs’ counsel does not contend that the reasoning of the learned judge is wrong in so far as it deals with section 386(4)(a). However he contends that section 386(4)(a) does not apply to the present claim because section 26(1) is a statutory claim based on the provisions of that section read with section 32 which expressly empowers the liquidators of the close corporation to bring the action. He points out that the provisions of section 32 of the Insolvency Act were not referred to by Epstein AJ and were clearly not raised before him.

[4] Section 386(4)(a) confers on the liquidator of a company the power to institute and defend proceedings by or against the company in liquidation. It provides in terms that the liquidator has the power –

‘to bring or defend in the name and on behalf of the company any action or other legal proceedings of a civil nature …’

[5] The relevant provisions of the Close Corporations Act, 69 of 1984, read as follows –

‘66(1) The provisions of the Companies Act which relate to the winding up of a company, including the regulations made thereunder, (except a number of sections not presently relevant) shall apply mutatis mutandis and in so far as they can be applied to the liquidation of a corporation in respect of any matter not specifically provided for in this Part or in any other provision of this Act.

(2) For the purposes of subsection (1) –

(a) any reference in a relevant provision of the Companies Act, and in any provision of the Insolvency Act, 1936 (Act No 24 of 1936), made applicable by any such provision –

(i) to a company, shall be construed as a reference to a corporation;

(xi) to a provisional liquidator of a company, or to a liquidator of a company or a trustee of an insolvent estate, shall be construed as a reference to a provisional liquidator and to a liquidator of a corporation respectively.’

[6] The relevant provisions of the Companies Act made applicable by section 66 of the Close Corporations Act read as follows –

‘339 In the winding up of a company unable to pay its debts the provisions of the law relating to insolvency shall, in so far as they are applicable, be applied mutatis mutandis in respect of any matter not specifically provided for by this Act.

340(1) Every disposition by a company of its property which, if made by an individual, could, for any reason, be set aside in the event of his insolvency, may, if made by a company, be set aside in the event of the company being wound up and unable to pay all its debts, and the provisions of the law relating to insolvency shall mutatis mutandis be applied to any such disposition’.

[7] Sections 26, 29, 30 and 31 of the Insolvency Act provide for the circumstances in which dispositions of property by the debtor may be set aside after insolvency. Section 26 deals with dispositions not made for value. These provisions must be read with section 32, the relevant part which reads as follows –

‘32(1)(a) Proceedings … to set aside any disposition of property under section 26, 29, 30 or 31, or for the recovery of compensation or a penalty under section 31, may be taken by the trustee.

(b) If the trustee fails to take any such proceedings they may be taken by any creditor in the name of the trustee upon his indemnifying the trustee against all costs thereof.

(3) When the court sets aside any disposition of property under any of the said sections, it shall declare the trustee entitled to recover any property alienated under the said disposition or in default of such property the value thereof at the date of the disposition or at the date on which the disposition is set aside, which ever is the higher.’

[8] Section 66 of the Close Corporations Act makes the provisions of sections 339 and 340 of the Companies Act applicable to the close corporation and section 340 of the Companies Act makes the provisions of sections 26, 29, 30, 31 and 32 of the Insolvency Act applicable. As provided in section 66(2) of the Close Corporations Act, references in the sections to a company shall be construed as a reference to a corporation and references to a trustee of an insolvent estate shall be construed as a reference to a liquidator of a corporation. The effect of these sections is therefore that the liquidators of the corporation may bring proceedings to set aside any disposition of property and to recover and be awarded compensation. See also Shepstone & Wylie and Others v Geyser NO 1998 (1) SA 354 (N) at 360A-C and 361E-F. The exception therefore cannot succeed.

Order

[9] The exception is dismissed with costs.

____________________

B.R. SOUTHWOOD

JUDGE OF THE HIGH COURT

CASE NO: 8037/2006

HEARD ON: 2006-10-24

FOR THE PLAINTIFFS: ADV. F. DU TOIT SC

INSTRUCTED BY: Mr Cronje of Thys Cronje Inc

FOR THE DEFENDANT/EXCIPIENT: ADV. R.G. COHEN

INSTRUCTED BY: Mr B.M. Levy of Jacobson & Levy Inc

DATE OF JUDGMENT: 2006-11-01