Nel and Others NNO v The Master and Others

• Jurisdiction: South Africa
• Citation: 2002 (3) SA 354 (SCA)

Nel and Others NNO v The Master and Others
2002 (3) SA 354 (SCA)

2002 (3) SA p354

Citation	2002 (3) SA 354 (SCA)
Case No	290/2000
Court	Supreme Court of Appeal
Judge	Zulman JA, Streicher JA and Nugent JA
Heard	February 21, 2002
Judgment	March 8, 2002
Counsel	M D Kuper SC (with him G H Meyer) for the appellants (the heads of argument having been prepared by J J Brett SC and G H Meyer)

Flynote : Sleutelwoorde E

Company — Winding-up — Commencement of winding-up — Provisional liquidation order granted at instance of creditor A discharged but F final order of liquidation granted on same day at instance of creditor B — Orders granted in immediate succession but uncertain in what order — Winding- up commencing on day creditor A's application presented to Court — Concursus creditorum in respect of company commencing on same day.

Headnote : Kopnota

On 7 April 1998 V filed an application in a Local Division for the winding-up of a company. This was also the day on which the G application was presented to the Court as contemplated by s 348 of the Companies Act 61 of 1973. A provisional order for the winding-up of the company was granted on 8 April 1998. On 9 April 1998 the appellants were appointed by the Master as joint provisional liquidators of the company. On 22 May 1998, the extended return day of the provisional order, the return day was again extended to H 2 June 1998 to enable N Ltd to bring a substantive intervention application together with a substantive application for the winding-up of the company. The application by N Ltd was served on the company on 28 May 1998. On 2 June 1998 the provisional order of liquidation in the V application was discharged and a final liquidation order was granted in the application of N Ltd. The orders were granted I in immediate succession although it was uncertain in precisely what order. On 22 June 1998 the appellants were appointed by the Master as joint provisional liquidators pursuant to N Ltd's application. The appellants thereafter applied for an order declaring that the winding-up of the company commenced on 7 April 1998 and that the concursus creditorum in respect of the company was commenced on 7 April 1998. The application was dismissed. In an appeal, J

2002 (3) SA p355

Held, that an order for the winding-up of a company, be it a provisional or a final order, was not personal to the petitioning A creditor but determined the status of the company. Accordingly, when the provisional order was granted at the instance of V on 8 April 1998 this brought about the commencement of the process of winding-up which, in terms of s 348, was deemed to have commenced on 7 April 1998. The status of the company was therefore that it was provisionally in liquidation with all the consequences of such a status including the creation of a concursus. (Paragraph [6] at B 361H/I - 362A/B.)

Held, further, that when the rule was discharged in the V application on 2 June 1998, and even although it was immediately replaced with a final winding- up order at the instance of N Ltd, the concursus established by the provisional order did not cease to exist and a new concursus came into being. There was in C reality no hiatus which brought the concursus established on 7 April 1998 to an end. The discharge of the provisional order, and the grant of the final order, were clearly intended to take effect simultaneously (as nearly as that could be achieved in reality) and there was thus no break in the status of the company. The purpose of the N Ltd's application to intervene in the V application and to seek a final winding-up order was to ensure the continuation of the already existing process of winding-up (albeit provisional) and the D concursus that this entailed. (Paragraph [8] at 362C/D - F.) Appeal allowed.

The decision in the Witwatersrand Local Division in Nel and Others NNO v The Master and Others 2000 (2) SA 728 reversed on appeal.

Cases Considered

Annotations

Reported cases E

First National Bank Ltd v E U Civils (Pty) Ltd; First National Bank Ltd v E U Plant (Pty) Ltd; Bassett v E U Civils (Pty) Ltd; E U Holdings (Pty) Ltd v E U Plant (Pty) Ltd 1996 (1) SA 924 (C): dictum at 933G - H applied

Flax v Berliner: Houndsditch Warehouse (Pty) Ltd Intervening 1950 (2) SA 259 (W): explained and distinguished F

Kalil v Decotex (Pty) Ltd and Another 1988 (1) SA 943 (A): dictum at 961H - 962A applied

Lief NO v Western Credit (Africa) (Pty) Ltd 1966 (3) SA 344 (W): considered

Milne NO v Deputy Sheriff and Others 1955 (3) SA 160 (N): dictum at 161A - F applied G

Nel and Others NNO v The Master and Others 2000 (2) SA 728 (W): reversed on appeal

Vermeulen and Another v C C Bauermeister (Edms) Bpk and Others 1982 (4) SA 159 (T): considered

Walker v Syfret NO 1911 AD 141: dictum at 160 applied.

Statutes Considered

Statutes H

The Companies Act 61 of 1973, s 348: see Juta's Statutes of South Africa 2000 vol 2 at 1-204.

Case Information

Appeal from a decision in the Witwatersrand Local Division (Blieden J), reported at 2000 (2) SA 728. The facts appear from the judgment of Zulman JA.

M D Kuper SC (with him G H Meyer) for the I appellants (the heads of argument having been prepared by J J Brett SC and G H Meyer): The judgment of the Court a quo is essentially based upon two findings, namely that: (1) the provisions of s 348 of the Companies Act 61 of 1973 contain a deeming provision to the effect that the winding-up of a company commences at the time of the presentation to the Court of the J

2002 (3) SA p356

application for the winding-up; and (2) the concursus creditorum established in consequence of the provisional A winding-up order under the Van Niekerk application was terminated upon the discharge of such order and commenced afresh upon the grant of the order under the Boland Bank (N Ltd in the headnote) application. The Court a quo erred in its findings as aforesaid. The concursus creditorum was established upon the grant of the provisional winding-up order under the Van Niekerk application and B endured throughout notwithstanding the discharge of the provisional winding-up order and the subsequent grant of the final order under the Boland Bank application. The concursus creditorum has been described as the judicial seizure of the debtor's property. Walker v Syfret NO 1911 AD 141 at 166. Consequent upon the concursus creditorum no transaction may be entered into with C regard to a company's affairs by a single creditor to the general prejudice of the general body of creditors and the claim of each creditor is to be dealt with as it existed at the time of the order. Walker v Syfret NO (supra). The purpose of permitting the intervention of a creditor in a winding-up application is either to prevent the applicant in the main application for the D winding-up from obtaining a winding-up order, alternatively to ensure that a final winding-up order is obtained. Fullard v Fullard 1979 (1) SA 368 (T). In both of the aforementioned instances the intervening party's locus standi arises from the fact that such party is a creditor of the estate of the company sought to be wound-up. Boland Bank is a substantial creditor of the company. The E dominant purpose of an application for leave to intervene in a winding-up application in order to obtain a final winding-up order against the company in question is to enable such creditor to ensure that the company's assets remain under attachment. In casu and on 22 May 1998, the Court extended the return date of the rule nisi in the Van Niekerk application to 2 June 1998 in F order to afford Boland Bank the opportunity of intervening in the Van Niekerk application despite (1) having been informed that the attorney representing Van Niekerk had withdrawn as attorney of record; and (2) knowledge that Boland Bank intended to intervene in the Van Niekerk application. The entire purpose of the Boland Bank application to intervene in the Van Niekerk application was to ensure the continuity G of the concursus creditorum which occurred on 7 April 1998. The object to be gained by ensuring the continuity of the concursus creditorum is, inter alia, the saving of costs of a second attachment and also that the estate would remain under attachment and that there could be no dealings with the estate. Ochse v Wepener 1930 OPD 150. The procedural nature of an H intervention in sequestration proceedings and the object sought to be achieved thereby are equally applicable to proceedings for the winding-up of a company. Mohamedy & Sons (Pty) Ltd v Economic Clothing Manufacturers (Pty) Ltd 1955 (1) SA 52 (D); African Motherhood Endowment Society v Joynt 1922 CPD 390 at 391; Ex parte Standard Trading Co (Pty) Ltd: In re Perl v Simco Clothing I Manufacturers (Pty) Ltd 1955 (3) SA 508 (W). The company never ceased being in liquidation notwithstanding the discharge of the provisional winding-up order in the Van Niekerk application as the final order of liquidation in the Boland Bank application occurred virtually simultaneously. Milne NO v Deputy Sheriff and J

2002 (3) SA p357

Others 1955 (3) SA 160 (N). There was no space of time or hiatus A between the discharge of the order in the Van Niekerk application and the grant of the order in the Boland Bank application. Consequently the company remained in liquidation throughout. In order to give effect to the intervention by Boland Bank, the concursus creditorum which existed since the date of the grant of the provisional winding-up order in the Van Niekerk application ought to be regarded as having continued throughout. The object of granting an intervention in the B winding-up of a company...