The Master of the High Court, Western Cape Division, Cape Town v Van Zyl

• Jurisdiction: South Africa
• Court: Western Cape Division, Cape Town
• Judge: Binns-Ward J (Ndita J and Samela J concurring):
• Judgment Date: 06 March 2019
• Citation: 2019 JDR 0386 (WCC)
• Hearing Date: 28 January 2019
• Docket Number: A 276/2018

Binns-Ward J (Ndita and Samela JJ concurring):

Introduction

[1]

This appeal had its genesis in a decision by the Master of the High Court, Cape Town, to remove Christopher Peter van Zyl from office, in one fell swoop, as the liquidator (actually co-liquidator) of more than 100 companies. The Master made the decision exercising the power vested in her by s 379(1) of the Companies Act 61 of

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1973 ('the 1973 Companies Act'). [1] Van Zyl took the Master's decision on judicial review. His application, which came before Engers AJ at first instance, was partly successful, in that the Master's decision was set aside in respect of all but ten of the affected appointments. With the leave of the court a quo, the Master comes on appeal against that part of the judgment that went against her, and Van Zyl cross-appeals against the decision at first instance not to interfere with the Master's decision to remove him from office in ten of the companies.

The nature of the review, with particular reference to the pertinent constraints on the exercise by the Master of the powers conferred in terms of s 379(1) of the 1973 Companies Act

[2]

The application to the court a quo was brought both in terms of s 151 of the Insolvency Act 24 of 1936 [2] and s 6 of the Promotion of Administrative Justice Act 3 of 2000 ('PAJA'). The provision in the Insolvency Act is of application, by virtue of s 339 of the 1973 Companies Act, in respect of the liquidation of companies that are being wound up because they were unable to pay their debts.

[3]

It is generally accepted that s 151 of the Insolvency Act provides for a review in the very widest sense. [3] It has been characterised as being of the third type of review identified by Innes CJ in Johannesburg Consolidated Investment Co v Johannesburg Town Council 1903 TS 111, being a proceeding in which the court may enter upon and decide the matter de novo, exercising not only the powers of a court of review in the legal sense, but also having the functions of a court of appeal, with the additional privileges of being able, after setting aside the decision arrived at by the tribunal or functionary concerned, to deal with the whole matter upon fresh evidence as if it were

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the decision-maker of first instance. [4] A review in terms of s 151 therefore affords scope for the court to enter into the merits of the impugned decision in a way that would not be permissible in conventional administrative law review.

[4]

The obvious question then was why the dual basis for the application under both the Insolvency Act and PAJA if s 151 has wider breadth than s 6 of PAJA?[5] Van Zyl's counsel (Mr Muller SC, assisted by Ms Reynolds) explained that resort had been had to s 6 of PAJA in respect of those matters, such as the winding up of Asch Professional Services (Pty) Ltd, in which the liquidation of the company concerned had followed on grounds other than the company's inability to pay its debts, and to which s 151 of the Insolvency Act therefore did not apply. The difficulty is that in the respect of the vast majority of the affected liquidations the record gives no particularity as to what the grounds for the winding-up orders were, or even of the names of the companies or close corporations concerned. Experience suggests however, that most of the liquidations are likely to have followed on the corporations' inability to pay their debts. That, no doubt, explains why counsel gave so much prominence in their submissions to the reach of s 151 in the current proceedings.

[5]

The Master's counsel (Mr Jamie SC, assisted by Ms D. Pillay) argued that the acknowledged wideness of the character of review in terms of s 151 of the Insolvency Act should not mislead us into understanding that the court a quo, or, by extension, this court on appeal, enjoyed anything like an untrammelled power to interfere with the impugned decision. They submitted that, even in a review in terms of s 151, the court owed a considerable measure of deference to the Master's decision, and might properly interfere with it only if it were satisfied that it was 'clearly wrong'. Mr Jamie relied in support of that contention principally on his reading of the Supreme Court of Appeal's decision in Nel and Another v The Master (Absa Bank Ltd and others intervening) 2005 (1) SA 276 (SCA) at para. 23 and on a judgment of the full court in this Division in Laingville Fisheries (Pty) Ltd and Others v Minister of Environmental Affairs and Tourism and Others [2008] ZAWCHC 28 (30 May 2008).

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[6]

The judgment in Nel and, in particular, the court's dicta in the cited paragraph do not, however, bear out the argument as a general proposition. The point made there was that the level of review occurring under s 151 varies and is determined in each case by 'the particular statutory provision concerned and the nature and extent of the functions entrusted to the person or body making the decision under review'. The statutory provision with which the court was concerned in Nel was s 384 of the 1973 Companies Act, and the functions therein provided for were the taxation of liquidators' fees by the Master in terms of s 384(1) and the Master's discretionary power to reduce or increase a liquidator's fee in terms of s 384(2). [6] The court pointed out that those provisions vested what it labelled 'a wide discretion' in the Master, [7] and that due account had to be had of that in the exercise of the court's review powers under s 151.

[7]

The expression 'wide discretion' is most commonly used to describe a discretion in the broad or loose sense. It is clear from the context, however, that by 'a wide discretion' the court in Nel actually meant a discretion in the strict or true sense of the concept, more commonly labelled as 'a narrow discretion'. [8] The court held that the review power in terms of s 151 could not be used in a manner that negated the nature of the true discretion vested in the Master by s 384, and accordingly judicial interference with a decision made by the Master under those provisions would be appropriate only if the decision was 'clearly wrong'; in other words, only if it were

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apparent that the impugned decision was the product of a failure, or materially misdirected exercise, of the statutory discretion. Indeed, it is also in respect of a judicial decision made in the exercise of a true discretion that an appellate court will interfere with another court's decision only if it is 'clearly wrong'.

[8]

As I shall explain presently, the exercise of the power conferred on the Master in terms of s 379(1) does not engage the use of discretion in the true sense that is involved when she acts in terms of s 384. The exercise of the court's jurisdiction in terms of s 151 of the Insolvency Act is therefore not constrained in this matter in the way in which it was in the peculiar context of the review in Nel.

[9]

Section 379(1) of the 1973 Companies Act provides:

Removal of liquidator by Master and by the Court. [9]

(1)

The Master may remove a liquidator from his office on the ground—

(a)

that he was not qualified for nomination or appointment as liquidator or that his nomination or appointment was for any other reason illegal or that he has become disqualified from being nominated or appointed as a liquidator or has been authorized, specially or under a general power of attorney, to vote for or on behalf of a creditor, member or contributory at a meeting of creditors, members or contributories of the company of which he is the liquidator and has acted or purported to act under such special authority or general power of attorney; or

(b)

that he has failed to perform satisfactorily any duty imposed upon him by this Act or to comply with a lawful demand of the Master or a commissioner appointed by the Court under this Act; or

(c)

that his estate has become insolvent or that he has become mentally or physically incapable of performing satisfactorily his duties as liquidator; or

(d)

that the majority (reckoned in number and in value) of creditors entitled to vote at a meeting of creditors or, in the case of a members' voluntary winding-up, a majority of the members of the company, or, in the case of a winding-up of a company limited by guarantee, the majority of the contributories, has requested him in writing to do so; or

(e)

that in his opinion the liquidator is no longer suitable to be the liquidator of the company concerned.

[10]

The power vested in the Master in terms of s 379(1) is defined (and confined) by the provisions of paragraphs (a) to (e) of the provision. They do not afford anything like the truly discretionary authority that is entailed in the taxation of fees. In each instance, except that provided for in paragraph (e) (of which I shall treat presently), the

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exercise of the power is governed by expressly identified objective criteria. The Master cannot exercise the power unless she has satisfied herself that the pertinent criterion for its exercise has been satisfied.

[11]

In the current matter the Master stated that she had acted in terms of s 379(1)(b) and/or (e).

[12]

Section 379(1)(b) requires a finding by the Master (i) that the liquidator has 'failed to perform satisfactorily any duty imposed upon him by th[e] Act or to comply with a lawful demand of the Master or a commissioner appointed by the Court under th[e] Act' and (ii) assuming an affirmative finding on (i), a decision whether removal is an appropriate and proportionate consequence in the circumstances. In respect of (ii), the Master is obliged to...