Schulte v Van der Berg and Others NNO

• Jurisdiction: South Africa
• Judge: Marais J and Conradie J
• Judgment Date: 24 May 1991
• Hearing Date: 08 February 1991
• Court: Cape Provincial Division

Conradie J:

The question in this review is whether a commissioner presiding at an enquiry in terms of s 418 of the Companies Act 61 of G 1973 ('the Act') can be asked to recuse himself on the ground that he is biased against a person summoned to appear under the provisions of s 417(1) of the Act.

Swiftsure Ltd was a company which was formed in 1987 ostensibly to build luxury ocean-going yachts. It raised by subscription on the H venture capital board R11 million. It did not build a single yacht. It did not even come close to building a yacht. When the company was wound up in 1988 it had debts of some R20 million. Other than office furniture of some R50 000, the liquidator found no assets. The company had been a gigantic fraud.

All this was cause for considerable concern and the Master appointed I the first respondent as a commissioner to enquire into the affairs of the company. During the course of the enquiry, Mr Gourkov, the prime culprit, left the country. He has not been seen again. Many witnesses were examined before the commission. The applicant was one of them. He was represented by an attorney, Mr Peter Soller of Johannesburg. The J applicant's examination did not go off all that smoothly. There were

Conradie J

A preliminary skirmishes with the commissioner. However, eventually, the applicant did testify. After he had testified a witness was examined who gave evidence that the applicant had channelled subscriptions intended for the company into an account controlled by him. It was decided to recall the applicant to hear his answer to these allegations. The applicant did not turn up at the hearing. The commissioner applied to B Court for a warrant for his arrest. The application for a warrant was granted, but before it could be issued the matter of the applicant's attendance was settled. He undertook to attend the next sitting of the commission. True to his word, he did attend, but he refused to testify on the ground that criminal proceedings had been instituted or were C contemplated against him. The commissioner refused to let his further testimony stand over until after the criminal proceedings had been disposed of. There were heated exchanges between the commissioner and the applicant's attorney. The applicant had all along been batting very defensively and it looked as though he was now determined to go for a draw. Bouncers were bowled. The commissioner was asked to recuse D himself. He refused. Instead, another application for the arrest of the applicant was launched. This time it was defended. The applicant (respondent in that application) contended that the Court had no power to grant the relief sought. He was held to be right. (See Van der Berg v Schulte 1990 (1) SA 500 (C).) The applicant also countered by launching an application of his own for the recusal of the commissioner. He E alleged that the commissioner had behaved poorly by displaying hostility towards him and his attorney. This showed, it was said, that he was biased.

The commissioner has been cited as the first respondent. I shall continue referring to him as the commissioner. The liquidator is the second respondent, the Master the third. F

The commissioner delivered a brief affidavit denying that he had been biased. He did not appear at the hearing. Only the second respondent opposed the relief sought by the applicant which was, in essence, that the Court set aside the commissioner's refusal to recuse himself and that the first or second respondent pay the costs. The answering G affidavits on behalf of the liquidator attest to the mournful fact that money to continue the commission's enquiries has run out. The commissioner has been advised that it is no longer necessary for him to prepare a report which, it is considered, would serve no purpose. The liquidator had to give up the pursuit of those who wasted or stole Swiftsure's money. The only live issue before us today is costs. H

I do not find it necessary to decide whether or not the commissioner's conduct was such that a reasonable observer would have come away from the hearing thinking that he was biased. I am prepared for the purpose of this decision to assume in the applicant's favour that he has...