Waymark and Others v Meeg Bank Ltd

• Jurisdiction: South Africa
• Judge: Pakade J
• Judgment Date: 06 November 2002
• Citation: 2003 (4) SA 114 (TkH)
• Docket Number: 135/2000
• Hearing Date: 06 November 2002
• Counsel: L B Broster SC (with him A M Annandale) for the plaintiffs. P P Delport SC (with him D E van Loggerenberg) for the defendant.
• Court: Transkei High Court

Pakade J:

[1] By Proc 9, issued by the Premier of the Eastern Cape Province on 10 July 1997, the three plaintiffs, chartered I accountants, were appointed as joint liquidators of the Magwa Tea Corporation on its dissolution.

[2] On 1 December 1997 the Premier issued another proclamation, Proc 157, also dissolving the same Magwa Tea Corporation. These two proclamations are worded identically, the only difference being in respect J

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of subparas 2.2 - 2.7, which have been omitted in Proc 9. For purposes of convenience I will refer to Proc 9 as 'the A first proclamation' and to Proc 157 as 'the second proclamation'.

[3] The only issue to be decided at this stage of the proceedings is whether Magwa Tea Corporation was dissolved with effect from 10 July 1997 by the first proclamation, or with effect from 1 December 1997 by the second proclamation. B

[4] The action, from which this issue arises, was instituted by the plaintiffs against the defendant for payment of the sum of R2 246 119,03 being outstanding balance to the credit of the corporation at the time of its dissolution. The plaintiffs claim from the defendant, payment of a further amount of R4 530 830,49 being C deposits made in favour of the corporation subsequent to its dissolution. From my understanding of the particulars of plaintiffs' claim, the plaintiffs' contention is that after the dissolution of the corporation, the defendant was obliged to pay all the outstanding balance to them on their appointment as liquidators of the corporation and was not authorised to accept any further deposits D made by or on behalf of the corporation subsequent to its dissolution. The plaintiffs then allege that the corporation was dissolved on 10 July 1997 by the first proclamation and not by the second proclamation on 1 December 1997 as alleged by the defendant on the contrary. In a nutshell, their contention is that the first amount E claimed was the credit balance in the corporation's bank account at the time of its dissolution on 10 July 1997, while the second amount represents deposits made after the corporation's dissolution but before 1 December 1997.

[5] The matter was then set down for trial after the close of pleadings but at the commencement of the hearing, counsel for both F parties made a joint application that the Court should invoke the provisions of Rule 33(4) and first determine the issue relating to when the corporation was dissolved, separately and independently from the other issues germane to the action. The application arose from an agreement reached by the parties in a pre-trial conference. In support G of this application the first and second proclamations were handed up to court by agreement. These proclamations will be dealt with fully below.

The relevant portion of Rule 33(4) reads as follows:

'If, in any pending action, it appears to the Court mero motu that there is a question of law or fact which may H conveniently be decided either before any evidence is led or separately from any other question, the Court may make an order directing the disposal of such question in such manner as it may deem fit and may order that all further proceedings be stayed until such question has been disposed of, and the Court shall on the application of any party make such order unless it appears that the question cannot conveniently be decided separately.' I

It appears on the pleadings before me that the issues germane to this action can conveniently be decided separately. It is convenient and fair to make an order of separation. The advantages of such an order will undoubtedly lead to the expeditious finality of the litigation between the parties and a major saving on costs. No prejudice will be suffered by any J

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of the parties. Accordingly, I granted the order in terms of this subrule and heard argument on the A issue of when Magwa Tea Corporation was dissolved.

[6] Mr Broster who, with Ms Annandale, appeared for the plaintiffs, submitted that ex facie the first proclamation there is nothing untoward which affects its validity. The mere omission of subparas 2.2 - 2.7 therein is too technical to render it invalid as, notwithstanding omission thereof, B everything that is required to be covered in the legislation dissolving a corporation has been sufficiently covered. He submitted that all that is required by the proclamation is that:

(a)

the corporation must be dissolved;

(b)

there must be a provision which deals with the assets and liabilities of the corporation; C

(c)

liquidators must be appointed;

(d)

liquidators must be given the power to deal with the assets and liabilities, rights and obligations of the corporation.

Once these requirements are satisfied, so goes the argument, the proclamation is valid and the dissolution of the corporation takes D place. He further submitted on this point that if there are matters not specifically dealt with in the proclamation, the liquidators have the power to go to court for direction.

[7] Mr Delport who, with Mr Van Loggerenberg appeared for the defendant, countered this E argument by submitting that the corporation was not dissolved with effect from 10 July 1997 but with effect from 1 December 1997. His argument is based, first, on the premise that the first proclamation is fatally defective because it does not refer to all the matters relating to the dissolution of a corporation as subparas 2.2 - 2.7 have been omitted therein. He argued, secondly, that on a proper interpretation of the second proclamation, it was the F intention of the Premier to replace the first proclamation with the second proclamation as it did not comply with the empowering legislation and to dissolve the corporation with effect from 1 December 1997. The argument developed to the effect that the Premier must have become aware of the defect in the first proclamation and G decided to issue the second proclamation to correct it.

I will deal with counsel's argument hereunder but before I do so it is necessary to first say something about the legislation from which the Premier derives his powers to dissolve a corporation.

[8] In terms of the provisions of s 13(1) of the Corporations Act 10 of 1985 (Transkei) (hereinafter referred to as 'the H Corporations Act') and as amended by s 19 of the Corporations Transitional Provisions Act 12 of 1995 (Eastern Cape)(the Act), the Premier of the Province of the Eastern Cape may, by proclamation in the Provincial Gazette dissolve a corporation established in terms of the Corporations Act. Section 19 of the Act, authorises the Premier to dissolve the Development Corporation or a corporation by I proclamation in the Provincial Gazette. It is important to notice that the section prescribes what the proclamation must embody. In this regard the relevant excerpt of the section reads as follows:

'19 Dissolution of corporations J

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(1) . . . A

(2) The Premier in such proclamation -

(a)

shall regulate all matters resulting from such dissolution including assets, liabilities, rights and obligations of such corporations;

(b)

may in so doing prescribe that certain provisions of the Companies Act 61 of 1973 and the Insolvency Act 24 of 1936 shall with or without modification apply to such dissolution mutatis B mutandis; and

(c)

may assign the powers exercised by officials and appointees under the Acts referred to in para (b) to any other person whom he or she considers appropriate in the circumstances.'

[9] It is clear from the wording of s 19(2) of the Act that the Premier is required to regulate in such proclamations, all matters C resulting from the dissolution, including assets, liabilities, rights and obligations of such corporation. The provisions embodying these requirements are categorised by the use of the word 'shall' while the remaining provisions of s 19(2) are couched by the use of the word 'may'. The primary question therefore is whether, notwithstanding the omission to insert subparas 2.2 - 2.7 in the first proclamation, the D Premier has complied with the above legislation which granted him powers to legislate by proclamation in the Government Gazette, all the matters resulting from the dissolution of Magwa Tea Corporation.

[10] In Provincial Gazette 248 dated 10 July 1997 the Premier, acting in terms of s 13 of the Corporation's Act, E issued the first proclamation (No 9) in terms whereof he dissolved the Magwa Tea Corporation with effect from that date. Subsequently, the Premier, acting in terms of s 13 of the same Act and in Provincial Gazette 282 issued the second proclamation (No 157) in terms whereof he once again dissolved the Magwa Tea Corporation. F

[11] The two proclamations are worded identically and in line with other proclamations dissolving other corporations in the Eastern Cape, such as the Ciskei Agricultural Corporation and the Transkei Agricultural Corporation. The first proclamation and Procs 8 and 10 dissolving the latter two corporations are in one Government Gazette, No 248, whereas the second proclamation is in Government Gazette 282. The same Premier dissolving all G these corporations issued all the proclamations referred to above but only the first proclamation does not contain subparas 2.2 - 2.7.

[12] Mr Delport submitted that the Premier's failure to incorporate subparas 2.2 - 2.7 in the first proclamation constitutes H a breach of the peremptory provisions of the statute and thus renders the proclamation a nullity.

[13] The question whether a statutory requirement is peremptory or directory has been the subject of numerous decisions. The basic test I is whether the legislature expressly or impliedly visits non-compliance with nullity. In each case one must look to the subject-matter, consider the importance of the provision that has been omitted and the...