Venditor Asset Management (Pty) Ltd v The Master of the High Court, Pretoria and Others (38885/2017) [2018] ZAGPPHC 332 (10 May 2018)

IN THE HIGH COURT OF SOUTH AFRICA

(GAUTENG DIVISION, PRETORIA)

REPUBLIC OF SOUTH AFRICA

(1) NOT REPORTABLE

(2) NOT OF INTEREST TO OTHER JUDGES

(3) REVISED

Case Number: 38885/2017

10/5/2018

In the matter between:

VENDITOR ASSET MANAGEMENT (PTY) LTD

Applicant

and

THE MASTER OF THE HIGH COURT, PRETORIA

First Respondent

JACOBUS PETRUS FOURIE N.O.

Second Respondent

KGASHANE CHRISTOPHER MONYELA N.O .

Third Respondent

ANNEKE BARNARD N.O.

Fourth Respondent

THEODOR WILHELM VAN DEN HEEVER. N.O.

Fifth Respondent

JUDGMENT

JANSE VAN NIEUWENHUIZEN J

[1] This application pertains to a direction issued by the Master of the High Court ("the Master'') on 29 April 2017. The applicant was aggrieved by the direction and launched the present application in terms of the provisions of section 407(4)(a) of the Companies Act, 61 of 1973, which section has been incorporated in the present Companies Act, 71 of 2008 by virtue of Item 9 of Schedule 5 to the Act.

[2] Section 407(7)(a) reads as follows:

"The liquidator or any person aggrieved by any direction of the Master under this section, or by refusal of the Master to sustain an objection lodged thereunder, may within fourteen days after the date of the Master's direction and after notice to the liquidator apply to the Court for an order setting aside the Master's decision, and the Court may on any such application confirm the account in question or make such order as it thinks fit "

PARTIES

[3] The applicant is a private company which specialises in the auction industry.

[4] The first respondent is the Master of the High Court, Pretoria cited in his/her statutory capacity for purposes of the relief claimed herein. The Master does not oppose the relief claimed herein.

[5] The second, third, fourth and fifth respondents are the duly appointed liquidators in the insolvent estate of Moco Steel Engineering CC (in liquidation) ("the company").

[6] The application is only opposed by the third, fourth and fifth respondents.

FACTS

[7] The allegations relied upon by the applicant in support of the relief claimed are, save for the instances indicated infra, largely common cause between the parties.

[8] On 18 March 2015 the company was wound-up by way of a special resolution. On 1 April 2015 the second, third and fourth respondents

were appointed as joint provisional liquidators in the insolvent estate of the company.

[9] On 28 April 2015 the second; third, fourth and fifth respondents were appointed as joint liquidators of the company.

[10] The company owned certain movable and immovable assets and according to the deponent to the applicant's founding papers, Styger, the applicant was appointed as auctioneer by the joint liquidators under the following circumstances:

·: ... On or about 4 May 2015, alternatively 14 May 2015 the Applicant, represented by myself and the liquidators, represented by Mr Kobus van der Westhuizen, entered into an partly oral part written agreement in terms of which the Applicant was appointed to see to the preparation and advertising and the

holding of an auction to auction of the movable and immovable assets of the company".

[11] In his answering affidavit, the fifth respondent denies these allegations in no uncertain terms, to wit:

“Van der Westhuizen is an employee in the offices of Fourie (second respondent). He certainly did not act on behalf of the joint liquidators acting jointly and he certainly did not have any mandate from the joint

liquidators acting jointly to appoint the applicant as auctioneers.”

[12] The third and fourth respondents in their confirmatory affidavits confirm the fifth respondent's version in this regard.

[13] The auction was scheduled to take place on 28 May 2015 and an inspection was held at the premises of the company on 21 May 2015 in preparation for the auction. According to Styger the following transpired at the inspection:

''.. The fifth respondent was present during the inspection and unequivocally acknowledged that the auction which was scheduled and advertised to take place on 28 May 2015 ("the first auction'') should proceed "

[14] The fifth respondent denies this allegation and refers to a letter he addressed after the inspection to the second, third and fourth respondents. The letter is dated 22 May 2015 and the relevant portion of the letter reads as follows:

" Pursuant to a discussion held on 21 May 2015 as between myself and Mr. Kobus van der Westhuizen of Tutor Trust, herewith the following:-

• I was not advised of the auction being arranged for 28 May 2015. However to try and "salvage this date'; I have requested that Dewald van der Nest of DEVCO be allowed to inspect the premises on Monday 25 May 2015 and to assure me that an effective auction can be held on28 May 2015.

• To the extent that this cannot be done in the timeframe allowed, the auction will have to be rescheduled,·"

[15] A First Meeting of creditors were held on 25 May 2015. On 26 May 2015, the fifth respondent made it clear in a letter addressed to the second, third and fourth respondents that he does not consent to the auction being held on 28 May 2015. The relevant portion reads as follows:

' .. The auction that has been arranged by Tutor Trust for 28 May 2015 does not meet with my approval and was not arranged in collaboration with me or with my consent I did not appoint Venditor Auctioneers (the applicant). As I am not satisfied that it would be in the best interest of creditors to proceed with the auction on 28 May 2015 and to the extent that it is possible, I will not ratify the actions taken in this regard;.. . "

[16] Notwithstanding the contents of the aforesaid letter, the auction proceeded on 28 May 2015 and resulted in the disposal of one vehicle and a generator.

[17] According to the applicant a second auction was arranged under the following circumstances:

"On 29 July 2015 the Applicant, represented by myself, was instructed by the liquidators, represented by Mr Kobus van der Westhuizen, to conduct an auction ("the second auction') to once again auction the vacant stand. The second auction was conducted by the Applicant on 28 August 2015 and the vacant stand was sold on auction. Once again the bond holder did not ratify the sale obtained on auction within the stipulated period. "

[18] The fifth respondent, similarly, denies that he consented to the second auction. The applicant proceeded to draft an invoice in the amount of R 127 317, 24 in respect of the expenses incurred in facilitating the two auctions and duly lodged a claim against the estate of the company for payment of these expenses.

[19] The fifth respondent refused to acknowledge and include the applicant's aforesaid claim in the first and final liquidation-and distribution account of the company.

[20] The applicant was, understandably, not satisfied with the fifth respondent's decision and objected to the account in terms of the provisions of section 407(1). The direction issued by the Master in respect of the objection forms the subject matter of the relief claimed herein.

[21] The direction consequently bears scrutiny and although the contents are in some instances clumsily worded, the relevant portion is nevertheless paraphrased herein:

"Reference to your objection letter dated the 21st of September 2016 ; kindly note that after a careful consideration of all the facts and counter facts from all the role players I came to the following ruling:

Salient facts:

1. It is evident that Mr Venter objected to the confirmation of the Account in its current form in terms of section 407(1) of the Companies Act 61 of 1973 (as amended).

2. The objection substantially pertains to the incurring costs by his client Venditor Auctioneers which is not reflected in the Account

3. The cost of R127,317.24 which is the final outstanding amount is objected to by the objector.

4. The objector further reiterated the fact that Venditor Asset Management (Pty) ltd was duly appointed to tend to the various auctions

regarding the movable goods and immovable property of the insolvent close corporation on instruction from Mr. K. Van der Westhuizen, Ms A. Barnard and Mr. C Monyela.

5. In view of the above, it is clear that there is plurality of joint liquidators and section 382(1) of the Companies Act 61 of 1973 (as amended) provides that when two or more liquidators have been appointed they shall act Jointly in performing their functions as liquidators and shall be jointly and severally liable for every act performed by them jointly. From the factual matrix of the objection it is apparent that Venditor never received mandate from all the joint liquidators and allowing costs of these magnitude to stand the ground since it would be disingenuous on my part as Master's official to irrationally accept this claim and if Venditor is opined that they have against this estate it would have been prudent to pursue that claim but if they do not procure a mandate from all the joint liquidators like in this instance, the objector do not have a claim against the said estate. Section 382(2) of the Act supra provides that whenever two or more liquidators disagree on any matter relating to the company of which they are liquidators like the matter in issue; this matter had been referred to my office which has determined the question in issue and thereby confirming that the said objection is out rightly rejected. "

LEGAL PRINCIPLE

[22] The nature of an application in terms of section 407(4)(a) has been described in South African Bank of Athens Ltd v Sfier and Others 1991 (3) SA 534 (TPD) at 536 F - H:

"I agree with this reasoning. Section 407 was enacted to lay down the procedure to be followed where a creditor wishes to object to an account, and also to lay down the manner in which the objection may be prosecuted until finality is reached The authority created in s 407(4)(a) to apply to Court to have the Master's decision set aside is not intended to provide relief only where the master erred on the facts before him or where his conduct is such that it is open to criticism.

In an application in terms of s 407 or of the similarly worded s 111 of the Insolvency Act 24 of 1936, the applicant is not limited to the material placed before the Master. It is not a review, and not even an appeal in the wide sense, limited to the facts which had been before the Master. It is indeed, as suggested, by Mr Joseph, a fresh application where new facts and in appropriate cases also oral evidence will be allowed."

[23] In casu the applicant did not rely on new facts. In the result, I am of the view that the approach discussed by Griesel J in Van Zyl NO v The Master 2000 (3) SA 602 (CPD) at paragraph [20] applies, to wit:

" In considering this question I bear in mind that the Master is the official entrusted by the Legislature with the administration of all insolvent estates (as, indeed, of all other estates as well), including companies in liquidation. As such the Master's rulings ordinarily deserve some deference. For this reason I would venture to suggest that where no new facts have been placed before the Court, the Court should hesitate to substitute its own opinion for that of the Master in exercising its wide powers under 407(4)(a) of the Act unless it is clear that any particular ruling by the Master is tainted by irregularity or error."

DISCUSSION

[24] In my view, the facts pertaining to the objection are correctly summarised in the Master's direction. Mr van Twisk, counsel for the applicant, quite correctly did not rely on any factual inaccuracy in the direction.

[25] Section 382(1) of the Act is applicable to the aforesaid facts and reads as follows:

"When two or more liquidators have been appointed they shall act jointly in performing their functions as liquidators and shall be jointly and severally liable for every act performed by them. "(own emphasis)

[26] In Henochsberg on the Companies Act 71 of 2008, Vol 2 at APPI - 175, the authors give a handy summary of the import of section 382:

"In Lynn NO and Another v Coreejes and Another {2011] JOL 27992 (SCA) the Court held that a liquidator is a creature of statute, deriving his powers from the Companies Act and the Insolvency Act 24 of 1936, and may act within the bounds of those powers only. The Court went on to state that the primary objective of s 382(1) is to ensure joint liquidators act jointly, and that the second part of the section which relates to joint liability was in its view decisive. As regards the second part of the section the Court found that it imposes joint and several liability on liquidators who act jointly, although the Court found it unnecessary to inquire into any implication that might now from this provision. Finally, the Court found that the subsection does not visit that acts of liquidators who did not act jointly, with nullity; where an act is done by some and not all the liquidators it may not bind the company in liquidation, but it does not follow that the conduct of the liquidator may not be ratified... "

[27] Mr van Twisk submitted that the Master erred in not finding that the actions of Van der Westhuizen, purportedly acting on behalf of the second respondent, were not ratified by the third, fourth and fifth respondents.

[28] This submission is based on the fact that the third, fourth and fifth respondents accepted and included the proceeds of the first auction in the first and final liquidation-and-distribution account.

[29] Differently stated, the submission entails that any unauthorised act of a joint liquidator will be ratified once the act yields proceeds for the insolvent estate.

[30] The clear wording of section 382 and the authorities thereon does not support this submission. Section 382 was no doubt enacted to protect the interests of the body of creditors by, inter alia, preventing the haphazard disposal of assets belonging to the insolvent estate.

[31] The section envisages a process of collective thinking and careful planning by all the joint liquidators to ensure the best possible

outcome for the body of creditors.

[32] In the premises, I do not agree with Mr van Twisk and the application stands to be dismissed.

[33] The third to fifth respondents were successful in their opposition of the matter and costs should follow suit.

ORDER

[34] In the premises, I grant the following order:

The application is dismissed with costs.

N. JANSE VAN NIEUWENHUIZEN J

JUDGE OF THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

DATE HEARD 03 May 2018

JUDGMENT DELIVERED

10 May 2018

APPEARANCES

Counsel for the Applicant:

Advocate M.H. van Twisk

(012-947 9106)

Instructed by:

Phillip Venter Attorneys

(086 100 7669)

Ref: P VENTER/STY1-0046/SDH

Counsel for the Third, Fourth and

Fifth Respondents:

Advocate J.W. Steyn

(083 266 5005)

Instructed by:

De Vries Incorporated

(011 775 6000)

Ref: A Bonnet/lj/D&T160/0001