Ngwato and Another v Van der Merwe N.O and Others (2014/28470) [2016] ZAGPJHC 398 (6 May 2016)

Ngwato and Another v Van der Merwe N.O and Others (2014/28470) [2016] ZAGPJHC 398 (6 May 2016)

The court held that section 38(1) of the Insolvency Act, as read with section 339 of the Companies Act and item 9 of schedule 5 of the Companies Act, 2008, means that contracts of service of employees whose employer is a company in liquidation are suspended only from the date of the granting of a provisional or final liquidation order. Employees who continued to tender their services until that date are entitled to claim remuneration for the period between the presentation of the liquidation application and the granting of the provisional order, subject to proof that they did not obtain alternative employment during that period. Payment of such salaries constitutes a disposition under...

Citation
[2016] ZAGPJHC 398
Parties
Applicant: Reginald Ngwato; Applicant: National Union of Metalworkers of South Africa; Respondent: Liebenberg Dawid Ryk Van der Merwe N.O.; Respondent: Segopotje Sheila Mphahlele N.O.; Respondent: Anneke Barnard N.O.; Respondent: Petzetakis Africa (Pty) Limited (in liquidation); Respondent: The Master of the High Court, Johannesburg
Court
South Gauteng High Court, Johannesburg
Jurisdiction
South Africa
Judgment Date
6 May 2016
Case Number
2014/28470
Procedural Posture
Declaratory Application / Final Judgment
Outcome
Application granted. Declaratory orders issued in favour of the applicants, subject to proof of entitlement.
Judges
Malindi
Legal Topics
Insolvency Act Interpretation, Suspension of Employment Contracts, Liquidation Procedure, Employee Remuneration Claims, Concursus Creditorum, Labour Relations Act Protection
Labour Law Civil Procedure Insolvency Act Interpretation Suspension of Employment Contracts Liquidation Procedure Employee Remuneration Claims Concursus Creditorum Labour Relations Act Protection

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Parties

Reginald Ngwato

Applicant

National Union of Metalworkers of South Africa

Applicant

Liebenberg Dawid Ryk Van der Merwe N.O.

Respondent

Segopotje Sheila Mphahlele N.O.

Respondent

Anneke Barnard N.O.

Respondent

Petzetakis Africa (Pty) Limited (in liquidation)

Respondent

The Master of the High Court, Johannesburg

Respondent

Procedural Posture

Declaratory Application / Final Judgment

Legal Issues

  1. 1 Whether section 38(1) of the Insolvency Act, as read with section 339 of the Companies Act, suspends contracts of service only from the date of provisional or final liquidation order.
  2. 2 Whether employees are entitled to claim remuneration for the period between the presentation of the liquidation application and the granting of the provisional liquidation order.
  3. 3 Whether payment of salaries during the interim period constitutes a disposition under section 341(2) of the Companies Act, requiring court approval.

Ratio Decidendi

The court held that section 38(1) of the Insolvency Act, as read with section 339 of the Companies Act and item 9 of schedule 5 of the Companies Act, 2008, means that contracts of service of employees whose employer is a company in liquidation are suspended only from the date of the granting of a provisional or final liquidation order. Employees who continued to tender their services until that date are entitled to claim remuneration for the period between the presentation of the liquidation application and the granting of the provisional order, subject to proof that they did not obtain alternative employment during that period. Payment of such salaries constitutes a disposition under...

Court Disposition

Application granted. Declaratory orders issued in favour of the applicants, subject to proof of entitlement.

Orders

  • It is declared that section 38(1) of the Insolvency Act, as read with section 339 of the Companies Act and item 9 of schedule 5 of the Companies Act, 2008, means that contracts of service of employees whose employer is a company in liquidation are suspended with effect from the date of the granting of a provisional...
  • It is declared that the first applicant's contract of service with the fourth respondent was suspended on 3 February 2012, subject to proof of tender of services until that date.