Gutman NO v CT International Finance Development (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Davis J
• Judgment Date: 05 March 2003
• Docket Number: 1254/02
• Court: Cape Provincial Division
• Hearing Date: 05 March 2003
• Citation: 2003 JDR 0243 (C)

Davis J:

This is an application for leave to appeal against the judgment of this Court on 10 December 2002 which dismissed an application which had been brought to declare void certain dispositions made to respondent by Bahn Investments Ltd (Bahn) totalling R451 605,27, and to further order directing respondent to repay the amount of the dispositions to applicant.

In essence, the respondent had not disputed that an application for the liquidation of Bahn had been launched on 22 October 1998. Respondent contended that the date of the original lodgement of the application did not constitute the commencement date for liquidation in that, when the application had been brought on 22 October 1998, in essence a settlement agreement for the outstanding sum had been concluded. Furthermore, the creditor was placed in the position that if the debtor failed to pay the amount due, the full balance outstanding

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would become immediately due and payable. Alternatively, it was contended that the creditor had reserved its rights to re-enrol the liquidation application should the debtor fail to pay the amount timeously or at all.

The essence of respondent's contention is that the date of the commencement of the application for liquidation, which ultimately resulted in the provisional order, was on 17 February 1999, being the date on which a notice of enrolment was lodged with the Registrar.

The dispute is set out in the main judgment. For the purposes of this judgment I will merely recapitulate briefly. Applicant relied on the provisions of section 341 (2) of the Companies Act 61 of 1973, which provides:

"Dispositions and share transfers after winding up void -

...

(2)

Every disposition of its property (including rights of action) by any company being wound up and unable to pay its debts made after the commencement of the winding up, shall be void unless the Court, otherwise orders."

Crucial to the determination of the dispute were the words "after the commencement of the winding up" are the provisions of section 348 of the Companies Act which provides that:

"The winding up of a company by the Court shall be deemed to commence at the time of the

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presentation to the Court of the application for the winding up."

The key issue can be framed thus: when was the application for the winding up presented to the Court?

The principal judgment against which applicant now lodges an appeal came to the conclusion that the presentation to the Court of the application for the winding up took place on 23 February 1999, pursuant to which, an application for a provisional liquidation order of liquidation of Bahn was granted. Mr Donen, who appears for applicant, submitted that this Court had misdirected itself in applying the provisions of section 348 of the Companies Act in holding that the time of the presentation to Court of the application for the winding up of Bahn was 17 February 1999 when In fact, a proper construction of section 348 read together with section 346(1)(a), (b) and (d), section 346(3), (4), 334(f), 345(1)(a), 345(2) and 347(1) of the Companies Act, would support the contention of applicant that the 'time of the presentation to the Court of the application for the winding up occurred on 22 October 1998. On that date Bahn's creditor (the GAP (Pty) Ltd) had presented an application, which application was on 28 October 1998 adjourned conditionally for reasons which I have set out above.

The key to unlocking this dispute therefore, is to make sense of section 348 of the Act. Manifestly, the commencement of a winding up is backdated to the presentation to the Court of the application as opposed to the date when the order is granted. However, the very description of the commencement date is itself indicative that the

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Legislature intended the application for the winding up to produce an order for winding up. If that were not the case, the section would make no sense. In other words, the assumption upon which the provision is predicated is that the application for the winding up is successful so that the backdating can take place to the time of presentation to the Court of the application.

Mr van Schalkwyk, who appeared together with Mr Brown on behalf of the respondents, submitted that an application for winding up within the meaning of section 348 is duly presented when it has been duly lodged with the Registrar of the Court. An application is duly lodged when the notice of motion, together with supporting affidavits and proof of compliance with the provisions of section 346(4), are filed with the Registrar of the Court (see First National Bank Ltd v EU Civils Pty Ltd 1996(1) SA 924 (CJ at 933H). Section 346(4) of the Act requires a copy of the application and every affidavit confirming the facts stated therein, to be lodged with the Master.

The application upon which the provisional order was granted on 23 February 1999, in Mr van Schalkwyk view, could, therefore, not have been properly lodged with the Master before 16 February 1999, that Is the day on which the supplementary affidavit was signed. It was on that day that the application could properly have been lodged. It appears from the Master's report that the report itself is dated 17 February 1999 and was filed with the Registrar on 19 February 1999. In short, Mr van Schalkwyk submitted that the application upon which

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the order was made that brought into operation the provisions of section 348 was presented to Court on 19 February 1999 and it was in terms o that application that the provisional order was granted on 23 February 1999.

In my view, when one looks at the very purpose of section 348 namely that there is a manifest linkage between the commencement o the winding up, being the application, and the order which is granted pursuant to that application, then the argument which Mr van Schalkwyk employed in argument before this Court and which formed the basis on the judgment, is unassailable. Whatever ambiguities might flow from a postponement of an application sine die, and whatever academic interest there might be in the determination of that concept these are irrelevant to the facts of this case and a determination of the rights of the two parties, one of whom has been successful before this Court, and the other who is disgruntled by that judgment. The only test is whether upon the facts of this case, applying the law as it is, there is reasonable prospect that another Court might come to the conclusion that section 348 should be interpreted, as it were, to uncouple the application from the order which is granted pursuant to that application. There is, in my view, no merit in such a contention. Once that is rejected the basis of the application for leave to appeal, as set out in the notice, must be rejected.

For these reasons the application for leave to appeal is dismissed with costs including the costs of two counsel.

DAVIS, J

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Davis, J:

Introduction

Orders are granted regularly by our courts on an unopposed basis whereby a matter is postponed sine die. Surprisingly, this usual event has not been interrogated...