Ex parte Russlyn Construction (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Didcott J
• Judgment Date: 10 July 1986
• Citation: 1987 (1) SA 33 (D)
• Hearing Date: 08 July 1986
• Court: Durban and Coast Local Division

Didcott J:

An order for the liquidation of a company is sought from the Court in this case. The grounds are that it cannot pay G its debts.

The company itself purports to apply for the order. That it has locus standi to seek such is clear from 346(1)(a) of the Companies Act 61 of 1973. Whether it does so indeed, whether it has decided effectively to do so, is the question that arises.

The deponent to the affidavit supporting the application is one of the company's directors. He has produced a resolution H explicitly sanctioning the proceedings and authorising him to see to them. The resolution was adopted, however, by the directors and not the shareholders, who have passed no separate resolution either. Did the directors on their own have the power, one therefore asks, to decide for the company that it should apply for its liquidation? To that question the one I have posed boils down.

I The company's articles of association are not before me. What the exact powers of the directors happen to be in terms of them is therefore beyond my ken. The affidavit tells me that they 'place control of the affairs of the applicant in the hands of its directors'. This sounds to me more like their gist, as understood by the deponent, than any actual wording lifted from them. Counsel thought so too. He asked me in the circumstances J to assume that they had borrowed art 60 from Table B to the Act's First

Didcott J

Schedule, repeating its language but going no further and A containing nothing else which counted. I am willing to fall in with this and, for the time being, to deal with the case on that footing.

The part of art 60 which matters goes thus:

'The business of the company shall be managed by the directors who... may exercise all such powers of the company as are B not by the Act or by these articles required to be exercised by the company in general meeting.'

A decision that the company should be liquidated, counsel argued in the first place, was one taken in the management of its business and thus in the exercise of the power to manage such.

I disagree. One does not manage the business of a company, in my opinion, by deciding to terminate the company's very C existence. That strikes me as the antithesis of management.

This is not, as it happens, the first time I have expressed such a view. An earlier occasion was In re Hlobane Building and Mining Supplies (Pty) Ltd 1984 (3) SA 270 (N) (at 273G - H). I held then, and for much the same reason, that leave to apply D for an order liquidating a company under provisional judicial management was not one of the directions concerning 'the management of the company or any matter incidental thereto' which might competently have been given to its provisional judicial manager under s 428(2)(c) of the Act. True it is that I was busy examining the powers of the provisional judicial manager and not those of the directors whom he had replaced. E The reasoning was such, however, that the distinction makes no difference. The point may be even stronger in the present case. I say so because it occurs to me that the idea of managing a company's business may be somewhat narrower than the one of managing the company itself. But I do not need to decide whether it really is. What matters is that it is certainly no F broader.

Nor, I see now, is the view I take mine alone. The same point arose in England about eight years ago, in the case of In re Emmadart Ltd [1979] 1 Ch 540 ([1979] 1 All ER 599) when Brightman J looked at it closely and considered it thoroughly. He was concerned with art 80 of Table A, an English article with wording substantially the same in form and exactly the same in substance as that of our art 60. And the conclusion to G which he came...