Yiannakis NO and Others v A & A Cycads (Pty) Ltd (14157/04) [2005] ZAGPHC 35 (29 March 2005)

/SGIN THE HIGH COURT OFSOUTH AFRICA(TRANSVAALPROVINCIAL DIVISION)DATE:29/3/2005CASE NO:14157/2004REPORTABLEIn the matter between:DIMITRIOS PAUL NICHOLASYIANNAKIS NO

1STAPPLICANTMARIANTHI CONSTANTINOSYIANNAKIS NO

2NDAPPLICANTDOROTHEOS KOUTSOUDIS NO

3RDAPPLICANTROSRAM FINANCIAL SERVICES (PTY) LTD 4THAPPLICANTAndA & A CYCADS (PTY) LTD

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, AJOn 28 May 2004 (being the date of signature of the notice of motion) the applicants appliedfor the liquidation of the respondent. Theapplication was thereafter served on the respondent on1 June 2004. On15 June 2004the respondent filed its notice of intention to oppose the application. The applicants then served their notice of set down in terms of which the matter was enrolled for hearing for27 July 2004. The notice of set down was served on the respondent on19 July 2004. On27 July 2004the matter was postponedsine diewith no order as to costs. Thereafter the matter was enrolled for9 November 2004when it was struck

off the roll with costs. The matter was then once again set down for hearing,onThursday, 28 January 2005when it was argued before me.The respondent raised a pointin liminearguing that the applicant’s application was fatally defective and the matter should accordingly be struck off and the applicants to pay the respondent’s wasted costs. It was argued that the application was fatally defective because the applicantshad not complied with the requirements of section 346(3) of the Companies Act 61 of 1973(“the Act”)at various stages, namely:1. At the time of issuing of the application;2. At the time of service of the application;3. At the time when the application was served on the Master of the High Court in terms of section 346(4A)of the Companies Act;4. At the time when the application was served on registered trade unions of the employees of the respondent as required by section346(4A) (a)(i) of the Companies Act;5. At the time when a copy of the application was served on employees of the respondent by displaying it on a noticeboardof the respondent in terms of section 346(4A)(a)(ii) of the Companies Act;6. Atthe time when the application was served on the South African Revenue Service in terms of section 346(4A)(a)(iii) of the Companies Act;7. At the time when it was served on the respondent in terms of section 346(4A)(a)(iv) of the Companies Act; and8. At the time when the

application was enrolled for the first time for hearing.Section 346(3) of the Act provides:“(3) Every application to the Court referred to in subsection (1), except an application by the Master in terms of paragraph (e) of that subsection, shall be accompanied by a certificate by the Master, issued not more than ten days before the date of the application, to the effect that sufficient securityhas been given for the payment of all fees and charges necessary for the prosecution of all winding-up proceedings and of all costs of administering the company in liquidation until a provisional liquidator has been appointed, or, if no provisional liquidator is appointed, of all fees and charges necessary for the discharge of the company from the winding-up.”From the papers it appears that security was first provided by the applicants on23 July 2004, i.e.,on the court day but oneproceedingthe daythe application was to be heard.It was submitted by respondent’s counsel that I am bound by the decision inDe Wet NO v Mandelie (Edms) Bpk1983 1 SA 544(P) 547H548C, a judgment by NESTADTJ (as he then was):“The subsection does not provide that the certificate is to accompany the application only when it is presented. Perhaps logically itshould be interpreted as requiringthe certificate to be annexed to the application itself. That, however, is, as I have shown, not the viewpoint that has been

adopted. But it does not follow that the subsection is to be interpreted as permitting the furnishing of security and the filling of the certificate within an extended period, namely when the applicationis presented toCourt. There may be a long delay, especially seeing that the long form of notice of motion is usually used,before the application is actually filed inCourt. This may be some time after service on the respondent, who would often immediately beginincurring legal expense with a view to opposingtheapplication. In the meantime no security need yet have been furnished. If the applicant then, as he might, decidesnot to proceed with the application and therefore does not file it, the object of s346(3) would be frustrated. In saying this, my understanding of the practice is that service of the application may, and usually does, take place first, and only thereafter are the papers filed with the Registrar. This, of course, cannot take place in the case of a summons, because, before it is served, the Registrar has to sign it. Not so, however, in the case of an application.The result is that the pointin limineis upheld in both cases.”The learned judge had made a similar finding in the earlier case ofAHolmanTrading Co(Pty) Ltd v Pipeweld Construction and Erection (Pty) Ltd1977 4SA 360(TPD).Henochsbergon the Companies Actat 723states:“In a case where service of the papers is

required to be, or is in fact, effected on the company before the hearing, the decisions of the Courts are not harmonious with regard to the answer to the question whether the certificate may competently be obtained and filed only after the papers have been served. In theDe Wetcasesuprait was held, on the basis of certain sequestration cases mentioned in the judgment, that the answer to such question is in the negative – upon the footing essentially that, inasmuch as a purpose of the subsection is to deter frivolous or vexatious applications, security ought to be given at some stage before the company has to incur any costs for the purposes of opposition to the application.”The learned author then refers to the decisions in other provinces which differ from the decisions of this divisionand states (at 723):“It is respectfully doubted that a purpose of the subsection is to deter frivolous or vexatious applications: the purpose is to ensure that there is a fund available to meet the costs which as a result of the operation of the process of the administration of the winding-up necessarily will be incurred ... until a provisional liquidator has been appointed or no provisional liquidator is appointed and the winding-upis discharged ... In the light of this, it is respectfully submitted that where the applicant proceeds on notice to the company, whether because he so elects or

because this is required by the practice of the Court, it is immaterial: (i) when the certificate is filed with the Court so long as it is before the Court on the date when the order is sought and it is not stale; (ii) whether or not a copy of the certificate was served on the company prior to such date [this passage was accepted as correctly reflecting the position in the Cape Provincial division by VAN REENEN J inFirstNational Bank of SA Ltd v EU Civils (Pty) Ltd1996 (1) SA 924(C) at 931].”I was also referred to the case ofCourt vStandard Bank of SA Ltd;Court v Bester NO and Others[1995] ZASCA 39;1995 3 SA 123(AD). However, that case can be distinguishedin that the certificate for securityfor costs had already been obtained before service of the application on the respondent which is not the case in the matter before me. Furthermore, in that case the application was for a provisional order of sequestration in terms of theInsolvency Act 24 of 1936and was based upon anullabonareturn. Interms of the Cape Provincial Division Court Notice 59, promulgated on8 March 1984no notice of an application for a provisional sequestration need be given to a respondent if the applicant relies on anullabonareturn or an Act of Insolvency in terms of section 8(g) of the Act. In that caseVIVIERJA came to the conclusion(at 131D-F):“I am accordingly of the view that section 9(3)(b) of the

[Insolvency] Act does not require the security certificate to accompany the application either when it is filed with the registrar or when it is served on the respondent and that the practice in the courta quo, followed in the present case, does not conflict with the provisions of the subsection. Thepoints taken by the appellant that the application was fatally defective forwantof compliance with the subsection cannot therefore succeed.”There is therefore much to be said for the view that the pointin limineshould be dismissed. However,in view of the decisions and longstanding practiceof this division,the pointin limineis upheld. Iaccordingly make the following order:no order is made on the application but the applicant is granted leave to commence proceedings on the same papers after they have been re-served;the applicantsto pay the respondent’s costs.N RANCHODACTING JUDGE OF THE HIGH COURT14157/2004HEARD ON:27/7/2004FOR THE APPLICANTS: ADVE B CLAVIERINSTRUCTED BY: MESSRSMAKAULA ZILWA & CO, SANDTONc/o KRAUT WAGNER & KERNICK, PTAFOR THE RESPONDENT: ADVJ G CILLIERSINSTRUCTED BY: MESSRSGILDENHUYS VAN DER MERWE INC, PTADATE OF JUDGMENT:29/3/2005

/SG

IN THE HIGH COURT OFSOUTH AFRICA(TRANSVAALPROVINCIAL DIVISION)DATE:29/3/2005CASE NO:14157/2004

IN THE HIGH COURT OF

SOUTH AFRICA

(

TRANSVAAL

PROVINCIAL DIVISION)

DATE:

29/3/2005

CASE NO:

14157/2004

REPORTABLE

In the matter between:

DIMITRIOS PAUL NICHOLASYIANNAKIS NO

1

ST

APPLICANT

MARIANTHI CONSTANTINOSYIANNAKIS NO

2

ND

APPLICANTDOROTHEOS KOUTSOUDIS NO

3

RD

APPLICANTROSRAM FINANCIAL SERVICES (PTY) LTD 4

TH

APPLICANTAndA & A CYCADS (PTY) LTD

RESPONDENT

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

JUDGMENT

RANCHOD, AJ

On 28 May 2004 (being the date of signature of the notice of motion) the applicants appliedfor the liquidation of the respondent. Theapplication was thereafter served on the respondent on1 June 2004. On15 June 2004the respondent filed its notice of intention to oppose the application. The applicants then served their notice of set down in terms of which the matter was enrolled for hearing for27 July 2004. The notice of set down was served on the respondent on19 July 2004. On27 July 2004the matter was postponedsine diewith no order as to costs. Thereafter the matter was enrolled for9 November 2004when it was struck off the roll with costs. The matter was then once again set down for hearing,onThursday, 28 January 2005when it was argued before me.The respondent raised a pointin liminearguing that the applicant’s application was fatally defective and the matter should accordingly be struck off and the applicants to pay the respondent’s wasted costs. It was argued that the application was fatally defective because the applicantshad not complied with the requirements of section 346(3) of the Companies Act 61 of 1973(“the Act”)at various stages, namely:1. At the time of issuing of the application;2. At the time of service of the application;

On 28 May 2004 (being the date of signature of the notice of motion) the applicants applied

for the liquidation of the respondent. The

application was thereafter served on the respondent on

1 June 2004

. On

15 June 2004

the respondent filed its notice of intention to oppose the application. The applicants then served their notice of set down in terms of which the matter was enrolled for hearing for

27 July 2004

. The notice of set down was served on the respondent on

19 July 2004

the matter was postponed

sine die

with no order as to costs. Thereafter the matter was enrolled for

9 November 2004

when it was struck off the roll with costs. The matter was then once again set down for hearing,

on

Thursday

, 2

8 January 2005

when it was argued before me.The respondent raised a point

in limine

arguing that the applicant’s application was fatally defective and the matter should acco

rdingly be struck off and the applicants to pay the respondent’s wasted costs. It was argued that the application was fatally defective because the applicants

had not complied with the requirements of section 346(3) of the Companies Act 61 of 1973

(“the Act”)

at various stages, namely:

1. At the time of issuing of the application;2. At the time of service of the application;

3. At the time when the application was served on the Master of the High Court in terms of section 346(4A)of the Companies Act;4. At the time when the application was served on registered trade unions of the employees of the respondent as required by section346(4A) (a)(i) of the Companies Act;5. At the time when a copy of the application was served on employees of the respondent by displaying it on a noticeboardof the respondent in terms of section 346(4A)(a)(ii) of the Companies Act;6. Atthe time when the application was served on the South African Revenue Service in terms of section 346(4A)(a)(iii) of the Companies Act;7. At the time when it was served on the respondent in terms of section 346(4A)(a)(iv) of the Companies Act; and

3. At the time when the application was served on the Master of the High Court in terms of sectio

n 346(4A)

of the Companies Act;4. At the time when the application was served on registered trade unions of the employees of the respondent as required by section

346(4A) (a)(i) of the Companies Act;

5. At the time when a copy of the application was served on employees of the respondent by displaying it on a notice

board

of the respondent in terms of section 346(4A)(a)(ii) of the Companies Act;

6. A

t

the time when the application was served on the South African Revenue Service in terms of section 346(4A)(a)(iii) of the Companies Act;7. At the time when it was served on the respondent in terms of section 346(4A)(a)(iv) of the Companies Act; and

8. At the time when the application was enrolled for the first time for hearing.

Section 346(3) of the Act provides:

“(3) Every application to the Court referred to in subsection (1), except an application by the Master in terms of paragraph (e) of that subsection, shall be accompanied by a certificate by the Master, issued not more than ten days before the date of the application, to the effect that sufficient securityhas been given for the payment of all fees and charges necessary for the prosecution of all winding-up proceedings and of all costs of administering the company in liquidation until a provisional liquidator has been appointed, or, if no provisional liquidator is appointed, of all fees and charges necessary for the discharge of the company from the winding-up.”

“(3) Every application to the Court referred to in subsection (1), except an application by the Master in terms of paragraph (e) of that subsection, shall be accompanied by a certificate by the Master, issued not more than ten days before the date of the application, to the effect that sufficient security

has been given for the payment of all fees and charges necessary for the prosecution of all winding-up proceedings and of all costs of administering the company in liquidation until a provisional liquidator has been appointed, or, if no provisional liquidator is appointed, of all fees and charges necessary for the discharge of the company from the winding-up.”

From the papers it appears that security was first provided by the applicants on23 July 2004, i.e.,on the court day but oneproceedingthe daythe application was to be heard.

From the papers it appears that security was first provided by the applicants on

23 July 2004

, i.e.,

on the court day but one

proceeding

the day

the application was to be heard.

It was submitted by respondent’s counsel that I am bound by the decision inDe Wet NO v Mandelie (Edms) Bpk1983 1 SA 544(P) 547H548C, a judgment by NESTADTJ (as he then was):

It was su

bmitted by respondent’s counsel that I am bound by the decision in

De Wet NO v Mandelie (Edms) Bpk

1983 1 SA 544(P) 547H548C

1983 1 SA 544

, a judgment by NESTADT

J (as he then was):

“The subsection does not provide that the certificate is to accompany the application only when it is presented. Perhaps logically itshould be interpreted as requiringthe certificate to be annexed to the application itself. That, however, is, as I have shown, not the viewpoint that has been adopted. But it does not follow that the subsection is to be interpreted as permitting the furnishing of security and the filling of the certificate within an extended period, namely when the applicationis presented toCourt. There may be a long delay, especially seeing that the long form of notice of motion is usually used,before the application is actually filed inCourt. This may be some time after service on the respondent, who would often immediately beginincurring legal expense with a view to opposingtheapplication. In the meantime no security need yet have been furnished. If the applicant then, as he might, decidesnot to proceed with the application and therefore does not file it, the object of s346(3) would be frustrated. In saying this, my understanding of the practice is that service of the application may, and usually does, take place first, and only thereafter are the papers filed with the Registrar. This, of course, cannot take place in the case of a summons, because, before it is served, the Registrar has to sign it. Not so, however, in the case of an application.The result is that the pointin limineis upheld in both cases.”

“The subsection does not provide that the certificate is to accompany the application only when it is presented. Perhaps logically it

should be interpreted as requiring

the certificate to be annexed to the application itself. That, however, is, as I have shown, not the viewpoint that has been adopted. But it does not follow that the subsection is to be interpreted as permitting the furnishing of security and the filling of the certificate within an extended period, namely when the application

is presented to

C

ourt. There may be a long delay, especially seeing that the long form of notice of motion is usually used

,

before the application is actually filed in

ourt. This may be some time after service on the respondent, who would often immediately be

gin

incurring legal expense with a view to opposing

the

application. In the meantime no security need yet have been furnished. If the applicant then, as he might, decide

s

not to proceed with the application and therefore do

es not file it, the object of s

346(3) would be frustrated. In saying this, my understanding of the practice is that service of the application may, and usually does, take place first, and only thereafter are the pa

pers filed with the R

egistrar. This, of course, cannot take place in the case of a summons, bec

ause, before it is served, the R

egistrar has to sign it. Not so, however, in the case of an application.

The result is that the point

is upheld in both cases.”

The learned judge had made a similar finding in the earlier case ofAHolmanTrading Co(Pty) Ltd v Pipeweld Construction and Erection (Pty) Ltd1977 4SA 360(TPD).Henochsbergon the Companies Actat 723states:

The learned judge had made a similar finding in the earlier case of

A

Hol

man

Trading Co

(Pty) Ltd v Pipeweld Construction and Erection (Pty) Ltd

1977 4

SA 360(

T

P

D

).

Henochsberg

on the Companies Act

at 723

a

te

s:

“In a case where service of the papers is required to be, or is in fact, effected on the company before the hearing, the decisions of the Courts are not harmonious with regard to the answer to the question whether the certificate may competently be obtained and filed only after the papers have been served. In theDe Wetcasesuprait was held, on the basis of certain sequestration cases mentioned in the judgment, that the answer to such question is in the negative – upon the footing essentially that, inasmuch as a purpose of the subsection is to deter frivolous or vexatious applications, security ought to be given at some stage before the company has to incur any costs for the purposes of opposition to the application.”

“In a case where service of the papers is required to be, or is in fact, effected on the company before the hearing, the decisions of the Courts are not harmonious with regard to the answer to the question whether the certificate may competently be obtained and filed only after the papers have been served. In the

De Wet

case

supra

it was held, on the basis of certain sequestration cases mentioned in the judgment, that the answer to such question is in the negative – upon the footing essentially that, inasmuch as a purpose of the subsection is to deter frivolous or vexatious applications, security ought to be given at some stage before the company has to incur any costs for the purposes of opposition to the application.”

The learned author then refers to the decisions in other provinces which differ from the decisions of this divisionand states (at 723):

The learned author then refers to the decisions in other provinces which differ from the decisions of this division

and states (at 723):

“It is respectfully doubted that a purpose of the subsection is to deter frivolous or vexatious applications: the purpose is to ensure that there is a fund available to meet the costs which as a result of the operation of the process of the administration of the winding-up necessarily will be incurred ... until a provisional liquidator has been appointed or no provisional liquidator is appointed and the winding-upis discharged ... In the light of this, it is respectfully submitted that where the applicant proceeds on notice to the company, whether because he so elects or because this is required by the practice of the Court, it is immaterial: (i) when the certificate is filed with the Court so long as it is before the Court on the date when the order is sought and it is not stale; (ii) whether or not a copy of the certificate was served on the company prior to such date [this passage was accepted as correctly reflecting the position in the Cape Provincial division by VAN REENEN J inFirstNational Bank of SA Ltd v EU Civils (Pty) Ltd1996 (1) SA 924(C) at 931].”

“It is respectfully doubted that a purpose of the subsection is to deter frivolous or vexatious applications: the purpose is to ensure that there is a fund available to meet the costs which as a result of the operation of the process of the administration of the winding-up necessarily will be incurred ... until a provisional liquidator has been appointed or no provisional liquidator is appointed and the winding-up

is discharged ... In the light of this, it is respectfully submitted that where the applicant proceeds on notice to the company, whether because he so elects or because this is required by the practice of the Court, it is immaterial: (i) when the certificate is filed with the Court so long as it is before the Court on the date when the order is sought and it is not stale; (ii) whether or not a copy of the certificate was served on the company prior to such date [this passage was accepted as correctly reflecting the position in the Cape Provincial division by VAN REENEN J in

Firs

National Bank of SA Ltd v EU Civils (Pty) Ltd

1996 (1) SA 924(C) at 931].”

1996 (1) SA 924

I was also referred to the case ofCourt vStandard Bank of SA Ltd;Court v Bester NO and Others[1995] ZASCA 39;1995 3 SA 123(AD). However, that case can be distinguishedin that the certificate for securityfor costs had already been obtained before service of the application on the respondent which is not the case in the matter before me. Furthermore, in that case the application was for a provisional order of sequestration in terms of theInsolvency Act 24 of 1936and was based upon anullabonareturn. Interms of the Cape Provincial Division Court Notice 59, promulgated on8 March 1984no notice of an application for a provisional sequestration need be given to a respondent if the applicant relies on anullabonareturn or an Act of Insolvency in terms of section 8(g) of the Act. In that caseVIVIERJA came to the conclusion(at 131D-F):

I was also referred to the case of

Court v

Standard Bank of SA Ltd

;

Court v Bester NO and Others

[1995] ZASCA 39;1995 3 SA 123

[1995] ZASCA 39

1995 3 SA 123

(AD). However, that case can be distinguished

in that the certificate for security

for costs had already been obtained before service of the application on the respondent which is not the case in the matter before me. Furthermore, in that case the application was for a provisional order of sequestration in terms of theInsolvency Act 24 of 1936and was based upon a

Insolvency Act 24 of 1936

nulla

bona

return. In

terms of the Cape Provincial Division Court Notice 59, promulgated on

8 March 1984

no notice of an application for a provisional sequestration need be given to a respondent if the applicant relies on a

return or an Act of Insolvency in terms of section 8(g) of the Act

. In that case

VIVIER

JA came to the conclusion

(at 131D-F)

:

“I am accordingly of the view that section 9(3)(b) of the [Insolvency] Act does not require the security certificate to accompany the application either when it is filed with the registrar or when it is served on the respondent and that the practice in the courta quo, followed in the present case, does not conflict with the provisions of the subsection. Thepoints taken by the appellant that the application was fatally defective forwantof compliance with the subsection cannot therefore succeed.”

“I am accordingly of the view that section 9(3)(b) of the [Insolvency] Act does not require the security certificate to accompany the application either when it is filed with the registrar or when it is served on the respondent and that the practice in the court

a quo

, followed in the present case, does not conflict with the provisions of the subsection. The

points taken by the appellant that the application was fatally defective for

want

of compliance with the subsection cannot therefore succeed.”

There is therefore much to be said for the view that the pointin limineshould be dismissed. However,in view of the decisions and longstanding practiceof this division,the pointin limineis upheld. Iaccordingly make the following order:no order is made on the application but the applicant is granted leave to commence proceedings on the same papers after they have been re-served;the applicantsto pay the respondent’s costs.

There is therefore much to be said for the view that the point

should be dismissed. However,

in view of the decisions and longstanding practice

of this division,

the point

is upheld. I

accordingly make the following order:

n

o order is made on the application but the applicant is granted leave to commence proceedings on the same papers after they have been re

-

served

the applicant

to pay the respondent’s costs.

N RANCHOD

ACTING JUDGE OF THE HIGH COURT

HEARD ON:

27/7/2004

FOR THE APPLICANTS

: ADV

E B CLAVIER

INSTRUCTED BY: MESSRS

MAKAULA ZILWA & CO, SANDTON

c/o KRAUT WAGNER & KERNICK, PTA

FOR THE RESPONDENT: ADV

J G CILLIERS

GILDENHUYS VAN DER MERWE INC, PTA

DATE OF JUDGMENT: