Mazars Recovery & Restructuring (Pty) Ltd and Others v Montic Dairy (Pty) Ltd (in liquidation) and Others (526/2021) [2022] ZASCA 135; 2023 (1) SA 398 (SCA) (13 October 2022)

Mazars Recovery & Restructuring (Pty) Ltd and Others v Montic Dairy (Pty) Ltd (in liquidation) and Others (526/2021) [2022] ZASCA 135; 2023 (1) SA 398 (SCA) (13 October 2022)

The Supreme Court of Appeal held that payments made to business rescue practitioners after the commencement of liquidation proceedings, as defined by the presentation of the application for winding-up, are void under s 341(2) read with s 348 of the Companies Act 61 of 1973 unless validated by a court order. The court rejected the appellants' argument that the Companies Act 71 of 2008 creates a statutory exception for such payments, finding that ss 143(1), 135(3), and 143(5) do not confer a right to payment after business rescue has terminated and liquidation has commenced. The practitioners failed to seek validation under the proviso to s 341(2), and their claims for remuneration do not...

Citation
[2022] ZASCA 135
Parties
Appellant: Mazars Recovery & Restructuring (Pty) Ltd; Appellant: Fenwick Neil Miller; Appellant: Byron Norman Chevalier; Appellant: Stuart Daniel Terblanche; Respondent: Montic Dairy (Pty) Ltd (in liquidation); Respondent: Peter Charles Bothomley N O; Respondent: Salim Ismail Ganie N O; Respondent: Ethne Mary van Wyk N O
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
13 October 2022
Case Number
526/2021
Procedural Posture
Civil Appeal / Appeal From Western Cape Division of the High Court, Cape Town
Outcome
Appeal dismissed with costs, including costs of two counsel.
Judges
Ponnan, Makgoka, Gorven, Hughes, Chetty
Legal Topics
Business Rescue, Liquidation Proceedings, Remuneration of Practitioner, Void Dispositions, Creditor Preference
Commercial and Corporate Civil Procedure Business Rescue Liquidation Proceedings Remuneration of Practitioner Void Dispositions Creditor Preference

Case Brief

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Parties

Mazars Recovery & Restructuring (Pty) Ltd

Appellant

Fenwick Neil Miller

Appellant

Byron Norman Chevalier

Appellant

Stuart Daniel Terblanche

Appellant

Montic Dairy (Pty) Ltd (in liquidation)

Respondent

Peter Charles Bothomley N O

Respondent

Salim Ismail Ganie N O

Respondent

Ethne Mary van Wyk N O

Respondent

Procedural Posture

Civil Appeal / Appeal From Western Cape Division of the High Court, Cape Town

Legal Issues

  1. 1 Whether payments made to business rescue practitioners after the commencement of liquidation proceedings but before the final winding-up order are void under s 341(2) read with s 348 of the Companies Act 61 of 1973.
  2. 2 Whether the statutory provisions of the Companies Act 71 of 2008 create an exception to the voiding of such payments.
  3. 3 Whether business rescue practitioners are entitled to payment for services rendered during the period after liquidation proceedings have commenced but before the winding-up order.

Ratio Decidendi

The Supreme Court of Appeal held that payments made to business rescue practitioners after the commencement of liquidation proceedings, as defined by the presentation of the application for winding-up, are void under s 341(2) read with s 348 of the Companies Act 61 of 1973 unless validated by a court order. The court rejected the appellants' argument that the Companies Act 71 of 2008 creates a statutory exception for such payments, finding that ss 143(1), 135(3), and 143(5) do not confer a right to payment after business rescue has terminated and liquidation has commenced. The practitioners failed to seek validation under the proviso to s 341(2), and their claims for remuneration do not...

Court Disposition

Appeal dismissed with costs, including costs of two counsel.

Orders

  • The appeal is dismissed with costs, including the costs of two counsel.
  • Payments made to Mazars Recovery & Restructuring (Pty) Ltd in respect of business rescue practitioners' fees and expenses after the commencement of liquidation proceedings are declared void.