Thaw Trading And Investments OO5 CC v central Lake Trading 214 (Pty) Ltd (1666/12) [2013] ZANWHC 67 (31 October 2013)

IN THE NORTH WEST HIGH COURT

MAFIKENG

CASE NO.: 1666/12

DATE: 31 OCTOBER 2013

In the matter between:

THAW TRADING AND INVESTMENTS 005 CC........................................APPLICANT

And

CENTRAL LAKE TRADING 214 (PTY) LTD........................................RESPONDENT

CIVIL MATTER

KGOELE J

DATE OF HEARING : 12 SEPTEMBER 2013

DATE OF JUDGMENT : 31 OCTOBER 2013

FOR THE APPLICANT : Adv. P.A. Swanepoel

FOR THE RESPONDENT : Adv. J.H.F. Pistor (SC) (With Him Adv. M.D. Silver)

JUDGMENT

KGOELE J:

[1] A provisional winding up order was granted by Gutta J against the respondent company on the 25 April 2013 with the return date being the 27 June 2013. On the 27 June 2013, by agreement between the applicant and the respondent, the rule nisi was extended to the 12 September 2013 for respondent to apply for leave to file a further affidavit.

[2] The respondent company filed a further affidavit deposed to by Mr Aobakwe Sylvestor Louw, who initially was the deponent to the answering affidavit in opposition to the granting of the provisional winding up order, without a formal application and leave of the Court. The respondent company further filed an application for leave to intervene by one Motshabaesi Louw who in his affidavit alleges that he is the sole director of the respondent. According to the respondent the application to intervene in the main application was conditionally sought in the event this Court finds that the respondent company and its directors are not permitted (has no locus standi) to put forward reasons why this Court should not order its final winding up. The applicant opposed both the further filing of the affidavit by Aobakwe Sylvester Louw and the application to intervene by Motshabaesi Louw. The parties agreed to make submissions in regard to these two interlocutory issues and obtain an order thereof before the final determination of the main application, hence this judgment.

[3] The applicant submitted that the respondent was not entitled to file another affidavit in addition to the affidavits that had been filed prior to the granting of the provisional liquidation order without a formal application and leave of the Court. The applicant based this submission on the fact that the respondent, when the matter was postponed on the 27 June 2013 agreed that a formal application to file such affidavit will be made, which fact they failed to do. The applicant referred to an order dated 27 June 2013 of which paragraph 1 provides for the postponement of the application to 12 September 2013 and which order contains in the said paragraph thereof the following words in brackets:-

“For the Respondent to apply for leave to file a further affidavit”

[4] Lastly that, only three sets of affidavits are allowed according to the Uniform Rules of Court (the Rules). Further affidavit can be filed only with leave of the Court.

[5] The respondent submitted that the applicant is wrong in this regard as

the respondent company and/or its directors have a legitimate interest in the outcome of this matter. The respondent further submitted that, by virtue of the provisional liquidation order which reads as follows:-

“All persons who had a legitimate interest be and are hereby called upon to put forward the reasons why this court should not order the final winding up of the respondent’s company …….” the respondent company and/or the directors were therefore called upon to put forward reasons why a final winding up order should not be made. It is further the contention of the respondent that the only manner by which he can put facts before Court in order to support an argument that a final winding up order should not be made, is by way of an affidavit. The provisional order therefore entitled the respondent company and/or its directors to file further affidavits and the need to apply to Court to file further affidavits fell away.

[6] In as far as the order of the 27 June 2013 is concerned, counsel for

the respondent submitted that it seems as if the applicant is of the view that the respondent was bound to apply for leave to file further affidavits by virtue of the contents of paragraph 1. According to him there was no agreement between the parties as to the words in

brackets. The said words in brackets merely provide the reason for the postponement and do not reflect a binding order on the respondent.

In his view, there appears to be no intention in the latter order that the honourable Judge had the intention of restricting in any way whatsoever the terms of the provisional order that the respondent referred to herein above. Consequently, the respondent was entitled to file further affidavits. The point raised by the applicant in this regard, must therefore be dismissed with costs.

[7] The Rules provides for the filing of three sets of affidavits in applications. The Court has also in terms of Rule 6 (5) (e) the discretion to permit the filing of further affidavits. The Court will exercise this discretion against the backdrop of the fundamental consideration that a matter should be adjudicated upon all the facts relevant to the issues in dispute. See: Bader v Weston 1967 (1) SA 134 (C) at 138 D.

[8] Although I am in agreement with the applicant’s counsel that it is an unusual feature of these kind of proceedings that the respondent in this matter filed a further set of an affidavit without a leave of Court, I am of the view that the sui generis nature of the current proceedings coupled with the wording of the provisional order, which calls for interested person to oppose the final granting of the order, tilts the scale towards this Court in exercising its discretion in favour of the respondent, because to hold otherwise, would fly in the face of the very object and purpose of the rule nisi. Otherwise, how else can interested persons oppose the final granting of the order except by way of an “affidavit”? In any event, the applicant in this matter also did not indicate to this Court what prejudice it will suffer in the event the said affidavit is allowed by this Court which prejudice cannot be compensated by an order of costs.

[9] I decline to consider the argument submitted by the respondent that relates to whether the words so stated in brackets in the order of Gura J dated 27 June 2013 merely provide reasons for the postponement or not and further, do or not reflect a binding order on the respondent because of the conclusion that I already reached in paragraph 9. I will therefore proceed to consider the next point which was raised by the parties.

[10] The respondent submitted that the application to intervene was filed conditionally on the basis that if this Court find that the respondent company does not have locus standi to oppose the main application after the provisional order had been granted, it would be necessary for the application to intervene to be proceeded with. On the other hand, the applicant submitted that the application to intervene is irregular because the respondent company together with its directors lost their locus standi at the time the provisional order was granted.

[11] The respondent’s counsel drew the Court’s attention to the fact that the decisions of the our Courts are not unanimous in their approach to the question whether the company and its directors retain locus standi to oppose the final liquidation order after a provisional liquidation order has been granted. He urged this Court to follow the decision in O’Connel Manthe and Partners Inc v Vryheid Minerale (Edms) Bpk 1979(1) SA 553 (T) and others that subsequently followed the decision therein that a company including its directors has the right to oppose an application for winding up after a provisional order has been granted. The applicant’s counsel on the other hand urged this Court to follow the contrary decision of Ruskin NO v Hi-Level Enterprise (Pty) Ltd 1981 (1) SA 315 (W) and others that followed it in these regards.

[12] At page 795 and 796 of the matter of Storti v Nugent and Others 2001 (3) SA 783 (W) Gautschi AJ cited several matters that supported the view as expressed in O’Connel Manthe matter and those that supported the Ruskin matter. I have studied the judgments in all of the above matters and have come to the conclusion that I associate myself and agree with the decision in the O’Connel matter and those that supported the reasoning therein. O’Connel decision

has been widely supported to such an extent that there is no need for this Court to further emphasize it. I can do no better than to quote Van Dijkhorst in the same O’Connel matter where the honourable Judge said the following at 556 D-F:-

“Does this then lead to the startling result that where a provisional order of liquidation has been obtained, possibly on short notice or without notice, without the company having appeared, the company, acting through its directors and directed thereto by its members, cannot on the return date oppose the confirmation and apply for the discharge of the rule nisi? This would mean that the decision to oppose the confirmation would be left to a provisional liquidator who might not even be appointed at that stage, or, having been appointed, will probably not have been able to obtain instructions from creditors. Apart from this practical difficulty it would be unjust that the member of the company, acting through the directors, who have a vital interest in the outcome of the application for liquidation, will not be in a position to influence the decision taken on behalf of the company on the question of opposing the confirmation of the rule or not”.

[13] The test the Court ought to apply in order to determine whether the final order should be granted or not, is more stringent than during the provisional order. I therefore come to the conclusion that there is no reason why the company and or its directors cannot take steps that are necessary to oppose the confirmation of a provisional liquidation order. It follows that the further affidavit filed by the respondent is properly before Court.

[14] The following order is thus made:-

14.1 The point raised by the appellant in regard to the filing of a further affidavit by the respondent is dismissed;

14.2 The respondent company and or its directors have locus standi to oppose the main application after the provisional order has been granted;

14.3 Applicant is to pay the costs and such costs are to include:-

14.3.1 costs which were occasioned by the employment of two counsel.

14.3.2 costs which were occasioned by the postponement that was granted on the 27 June 2013.

A M KGOELE

JUDGE OF THE HIGH COURT

ATTORNEYS

FOR THE APPLICANT : Minchin & Kelly Inc.

Kelgor House, Ground Floor, East Annex

14 Tillard Street

FOR THE RESPONDENT : Kgomo, Mokhetle & Tlou Attorneys

53 Shippard Street