EB Steam Co (Pty) Ltd v Eskom Holdings SOC Ltd

• Jurisdiction: South Africa
• Judge: Mthiyane AP, Cachalia JA, Wallis JA, Pillay JA and Willis JA
• Judgment Date: 27 November 2013
• Citation: 2015 (2) SA 526 (SCA)
• Docket Number: 979/2012 [2013] ZASCA 167
• Hearing Date: 06 November 2013
• Counsel: I Miltz SC (with JJ Bitter) for the appellants. DM Fine SC (with F Nalane) for the respondent.
• Court: Supreme Court of Appeal

EB Steam Co (Pty) Ltd v Eskom Holdings SOC Ltd
2015 (2) SA 526 (SCA)

2015 (2) SA p526

Citation	2015 (2) SA 526 (SCA)
Case No	979/2012; [2013] ZASCA 167
Court	Supreme Court of Appeal
Judge	Mthiyane AP, Cachalia JA, Wallis JA, Pillay JA and Willis JA
Heard	November 6, 2013
Judgment	November 27, 2013
Counsel	I Miltz SC (with JJ Bitter) for the appellants.; DM Fine SC (with F Nalane) for the respondent.

Flynote : Sleutelwoorde B

Company — Winding-up — Application — Furnishing of copy to employees — When to be furnished — Whether section peremptory — Meaning of 'furnish' C — Alternative modes of doing so — Applicant's affidavit — Statement on respondent's employees — Inability to furnish papers before hearing — Whether barring court granting relief — Companies Act 61 of 1973, ss 346(4A)(a), 346(4A)(a)(ii) and 346(4A)(b).

Headnote : Kopnota

In this case Eskom Holdings Soc Ltd applied for the winding-up of EB Steam Company (Pty) Ltd D and 19 other companies. The companies opposed the applications by claiming that Eskom had failed to comply with s 346(4A)(a)(ii) of the Companies Act 61 of 1973. That section provides that:

'(4A)(a) When an application is presented to the court in terms E of this section, the applicant must furnish a copy of the application —

. . .

(ii)

to the employees themselves —

(aa)

F by affixing a copy of the application to any notice board to which the applicant and the employees have access inside the premises of the company; or

(bb)

if there is no access to the premises by the applicant and the employees, by affixing a copy of the application to the front gate of the premises, where applicable, failing which G to the front door of the premises from which the company conducted any business at the time of the application;

. . .

(b) The applicant must, before or during the hearing, file an H affidavit by the person who furnished a copy of the application which sets out the manner in which paragraph (a) was complied with.'

The sheriff had affixed a copy of the application to the front door of the registered office of all of the companies, which was in Johannesburg. The companies I asserted that there had been non-compliance with the section on the basis that the application ought to have been affixed to a notice board within the premises; and on the basis that service at the registered office would not have brought the application to the attention of all of the employees. (The companies contended that they operated at sites throughout the country.) The companies further argued that compliance with s 346(4A)(a) was J peremptory and that Eskom's non-compliance was fatal to the applications.

2015 (2) SA p527

The high court was however satisfied that s 346(4A)(a)(ii)'s requirements had A been met, and granted orders of final winding-up. The companies appealed to the Supreme Court of Appeal, where the issues were as follows:

When the application was to be furnished to the persons specified in s 346(4A)(a)

Held, that the application could be furnished to the named persons at any time B after it had been lodged with the registrar of the high court, provided that it was furnished prior to the grant of the final order. The court had to be satisfied that the persons entitled to be furnished with the application had had an adequate opportunity to consider the papers and to decide whether to intervene. (Paragraphs [11] – [12] at 532E – 533E.)

Whether s 346(4A)(a) was peremptory C

Held, that the requirement to furnish the application to the persons specified in s 346(4A)(a) was peremptory, but that the methods stipulated in s 346(4A)(a)(ii) for furnishing the application to employees were merely directory. To 'furnish' the application meant to make it available in a manner that was reasonably likely to make it accessible to the named persons. (It was D not a requirement that the papers, as a matter of fact, came to the attention of those persons.) Thus if a method other than those in s 346(4A)(a)(ii) was used to furnish the papers to the employees, there would be compliance with the section, if the method were reasonably likely to make the papers accessible to them. An alternative method might be employed where those stipulated would be impossible, or where they would not achieve the provision's purpose of bringing the application to the attention of the E employees. If an applicant was unable to devise an alternative effective method, then it needed to approach a court for directions. Furthermore, in order for the court to decide if there had been compliance with the section, the applicant had to set out in its founding affidavit, or in its affidavit in terms of s 346(4A)(b), whether the respondent had employees, and if so, where they were working, or where they were likely to be found. Conversely, if it F appeared that the respondent did not have employees, then this, and the grounds for asserting this, had to be stated. (Paragraphs [14], [17] and [22] – [23] at 533G – 534C, 534H – 535D and 536F – 537B.)

Whether an applicant's inability to furnish the papers to the employees before the hearing precluded the court from granting any relief

Held, that if the papers were not furnished to employees, it would be impermissible G for a court to grant a final winding-up order; however it would be permissible to grant a provisional winding-up order. (The court could at the same time grant an order directing how the application was to be furnished to employees.) (Paragraphs [24] – [26] at 537B – 538D.)

The present case H

Here, the high court should not have been satisfied that there had been compliance with s 346(4A)(a)(ii) because of the application papers' silence as to whether there were employees; the companies operating (and conceivably employing persons) at several locations in South Africa; and the sheriff's failure to indicate in his return of service that he had made I enquiries as to the existence of employees or their places of work. The high court should consequently not have granted a final winding-up order. What it should have done was issue a provisional winding-up order and given directions for the employees to be identified and for the application papers to be furnished to them.

Appeal upheld; provisional winding-up order substituted for final winding-up order; directions given for furnishing to the employees the applications, and J

2015 (2) SA p528

A thereafter, for delivery of an affidavit setting out how and when the application papers had been furnished. (Paragraphs [27] and [29] at 538D – H and 538I – 539C.)

Cases Considered

Annotations

Case law B

Amcoal Collieries Ltd v Truter 1990 (1) SA 1 (A): referred to

Corporate Money Managers (Pty) Ltd and Others v Panamo Properties 49 (Pty) Ltd 2013 (1) SA 522 (GNP): overruled

Court v Standard Bank of SA Ltd; Court v Bester NO and Others 1995 (3) SA 123 (A): followed

C Ekurhuleni Metropolitan Municipality v Germiston Municipal Retirement Fund 2010 (2) SA 498 (SCA): dictum in paras [12] – [14] applied

FirstRand Bank Ltd v Gazu 2011 (1) SA 45 (KZP): referred to

Gungudoo and Another v Hannover Reinsurance Group Africa (Pty) Ltd and Another 2012 (6) SA 537 (SCA): referred to

Hendricks NO and Others v Cape Kingdom (Pty) Ltd 2010 (5) SA 274 (WCC): D approved

Johnson v Hirotec (Pty) Ltd 2000 (4) SA 930 (SCA): referred to

Kalil v Decotex (Pty) Ltd and Another 1988 (1) SA 943 (A): referred to

Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA) ([2012] 2 All SA 262; [2012] ZASCA 13): dictum in E para [18] applied

Nkisimane and Others v Santam Insurance Co Ltd 1978 (2) SA 430 (A): dictum at 433H – 434E applied

RSA Factors Ltd v Hansen 1983 (4) SA 873 (D): followed.

Statutes Considered

Statutes

The Companies Act 61 of 1973, ss 346(4A)(a), 346(4A)(a)(ii) and 346(4A)(b): F see Juta's Statutes of South Africa 2013/14 vol 2 at 1-226.

Case Information

I Miltz SC (with JJ Bitter) for the appellants.

DM Fine SC (with F Nalane) for the respondent.

G An appeal from the South Gauteng High Court, Johannesburg (Tsoka J).

Order

1.

The appeals are upheld to the extent that the final winding-up orders granted in cases 8303 to 8311/2012 and 8381 to 8390/2012 are set aside and replaced by provisional winding-up orders returnable H eight weeks from the date of this order.

2.

The appellants are directed by no later than five weeks from the date of this order to furnish to the employees of the respondent in each application a copy of the application papers in that application and within one week thereafter to deliver an affidavit setting out details I of when and in what manner they have complied with this order.

3.

The respondent's costs in this appeal, including the costs of two counsel, are to be costs in the liquidation of the appellant companies, unless the provisional winding-up orders are discharged on the return date, in which event the appellants are ordered jointly and severally to pay the respondent's costs, including the costs of two J counsel.

2015 (2) SA p529

Judgment

Wallis JA (Mthiyane AP, Cachalia JA, Pillay JA and Willis JA A concurring):

[1] These appeals arise from final winding-up orders made by Tsoka J in relation to 20 companies, all of which are apparently subsidiaries of EB Steam Holdings (Pty) Ltd. [1] The winding-up applications arose out of their failure to satisfy arbitration awards in varying amounts made B against each of them on 1 November 2011. After the awards were made, a notice in terms of s 345(1)(a) of the Companies Act 61 of 1973 (the 1973 Act) was delivered to each company — conveniently they all have the same registered address — but did not result in payment. Thereafter application was made for winding-up orders against all twenty companies C in terms...