THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Case no: 076/2013
Reportable
In the matter between:

GAVIN CECIL GAINSFORD NO                                             First Appellant
BENNIE KEEVY NO

Second Appellant
NAKAMPE EDWIN RAMAPUPUTLA NO

Third Appellant

and

TANZER TRANSPORT (PTY) LIMITED                     Respondent

In the matter between:

GAVIN CECIL GAINSFORD NO
First Appellant
BENNIE KEEVY NO

Second Appellant
NAKAMPE EDWIN RAMAPUPUTLA NO

Third Appellant

and

TANZER TRANSPORT (PTY) LIMITED                              First Respondent
REGISTRAR OF COMPANIES

Second Appellant
MASTER OF THE HIGH COURT, JOHANNESBURG        Third Appellant
STATE LOGISTICS (PROPRIETARY) LIMITED           Fourth Respondent
PICK N PAY RETAILERS (PTY) LIMITED                        Fifth Respondent

Neutral citation: Gavin Cecil Gainsford NO & others v Tanzer Transport (Pty)
Ltd & others (076/2013) [2014] ZASCA 32(28 March 2014)

Coram:
Navsa, Mhlantla, Leach and Theron JJA and Swain AJA

Heard:

12 March 2014

Delivered
28 March 2014

Summary: Company — Winding-up — Liquidator — Proceedings by — Citation —
Liquidators may sue in their capacity as liquidators or in name of company in liquidation
proceedings under s 386(4)(a) of the Companies Act 61 of 1973
Unlawful alienations and preferences – Voidable dispositions in terms of s 341(2) of the
Companies Act 51 of 1973
Application to set aside the winding-up motivated by need to avoid repaying amount
received from the company.
________________________________________________________________
ORDER
________________________________________________________________
On appeal from:  South Gauteng High Court, Johannesburg (Saldulker J sitting
as court of first instance):
1 The appeal is upheld with costs including the costs of two counsel.
2 The the legal representatives of the respondent will only be entitled to recover
fifty per cent of their costs from the respondent in respect of the heads of
argument.
3 The order of the high court is set aside and replaced with the following:
‗(a) In the application under case no 2252/10 the following order is made.
(i) The under-mentioned payments made by Costa Logistics SA (Pty) Ltd (in
liquidation) to the respondent are declared to be void in terms of s 341(2) of the
Companies Act 61 of 1973.
05/03/2009 – R1 651 681.14
05/03/20009 – R1 078 542.53
05/03/20009 – R4 899 817.15
01/04/20009 – R1 887 596.85
01/04/20009 – R4 718 524.191

1 There was a typographical error in the Notice of Motion and this amount was incorrectly reflected as
R4 418 524.19.

(ii) The respondent is to pay the amounts in paragraph (i) above to the applicants.
(iii) The respondent is to pay the applicants‘ party and party costs.
(b) The application under case no 19020/11 is dismissed with costs.‘
________________________________________________________________
JUDGMENT
________________________________________________________________
Theron JA (Navsa, Mhlantla and Leach JJA and Swain AJA concurring):

Introduction
[1] The purpose of insolvency legislation is to bring about a concursus
creditorum which, once in place, has the effect that:
‗[T]he hand of the law is laid upon the estate, and at once the rights of the general body of
creditors have to be taken into consideration. No transaction can thereafter be entered into with
regard to estate matters by a single creditor to the prejudice of the general body. The claim
of each creditor must be dealt with as it existed at the issue of the order.‘2
Once the liquidation order is in place and the ‗the hand of the law is laid upon the
estate‘ nothing can thereafter be done by one creditor to alter the rights of other
creditors.3 The central issue in this appeal relates to payments made by a company
after the commencement of its winding-up.

Background
[2] This appeal concerns two applications. In the first application (the main
application) the liquidators of Costa Logistics (Pty) Ltd (the company) sought an
order in the high court declaring that certain payments made by the company to
Tanzer Transport (Proprietary) Limited (Tanzer) were voidable dispositions as
envisaged in s 341(2) of the Companies Act 61 of 1973 (the Act) and directing
that Tanzer repay the money to the liquidators. In that application the liquidators

2 Walker v Syfret NO 1911 AD 141 at 166. These comments, although made in respect of the legislation as it then
was, apply equally to the Companies Act 61 of 1973.
3 Ward v Barrett NO and another NO 1963 (2) SA 546 (A) at 552E-G.

also sought an order, in terms of s 386(5) read with s 386(4) of the Act,
authorising them to institute the main application. In the second application (the
setting aside application) Tanzer sought an order setting aside the winding-up of
the company.

[3] The facts giving rise to this matter are largely common cause. State
Logistics (Proprietary) Limited (State Logistics), is an Australian company, and its
directors were various members of the Costa family. After growing into one of
Australia‘s largest wholesalers and exporters of fresh produce, State Logistics
expanded to South Africa where it incorporated the company in 2006. In June
2007, the company entered into an agreement with Pick n Pay Retailers (Pty)
Limited (Pick n Pay), one of South Africa‘s largest retailers, to operate the latter‘s
distribution centre in Longmeadow, Johannesburg. The essence of the distribution
agreement was that goods ordered by Pick n Pay for its retail stores would be
received, quality checked and stored at the distribution centre and then distributed
by the company to Pick n Pay stores. After the company took over the operation of
the Longmeadow distribution centre, Tanzer became a sub-contractor of the
company, providing it with transportation services.

[4] It is evident that the company experienced logistical and financial
difficulties in operating the distribution centre viably. One of the first indications
of the problems it experienced was recorded in a letter from the auditors of the
company, dated 25 July 2008, in which they expressed concerns about the
‗company‘s ability to continue as a going concern‘. In a letter dated 16 January
2009 Pick n Pay expressed its concern about the financial performance of the
distribution centre and in particular the level of stock losses and claims for
damaged and missing items from its stores and the distribution centre. On 13
February 2009 Pick n Pay cancelled its agreement with the company and

appointed another company to take over the management of the distribution centre
with effect from 1 March 2009.

[5] The resolution to place the company in winding-up, passed on 13 February
2009, was registered by the Registrar of Companies on 3 March 2009. The
winding-up was a creditor‘s voluntary winding-up in terms of ss 349 and 351 of
the Act. The directors of the company completed a statement of affairs reflecting
that as at 13 February 2009 the company was hopelessly insolvent and that its
liabilities exceeded its assets. Section 352 of the Act provides that the voluntary
winding-up of a company commences at the time of registration of the special
resolution.

[6] The liquidators estimated that as at the commencement of the company‘s
winding-up, the concurrent creditors were owed R70 000 000. The two main
creditors who lodged claims against the company were Pick n Pay and State
Logistics. Pick n Pay‘s claim was admitted to proof in the sum of R14 244 630.65,
while State Logistics‘ claim, in respect of supplies and services rendered by it to
the company, was R27 534 209.95.

[7] During March and April 2009 and after the commencement of the
company‘s winding-up, the company paid an amount totalling R14 231 61.86 to
Tanzer. It was these payments that the liquidators sought to have declared void.
The high court (Saldulker J) determined the main application on the basis of a
point in limine raised by Tanzer, namely a lack of locus standi on the part of the
liquidators. It was contended that the liquidators could only bring the main
application in the name of the company in liquidation and not as liquidators acting
on behalf of the company. These contentions found favour with Saldulker J and
she dismissed the main application on that basis and referred the setting aside
application to trial. The first order in the main application is difficult to understand

in light of the second order. Naturally, if the winding-up were to be set aside, the
issue that was the subject of the first order would be rendered moot. Nevertheless,
it is against those orders that the liquidators appeal, with the leave of the high
court. The dispute, both in the high court and on appeal, was essentially between
the liquidators and Tanzer.

The main application
[8] Tanzer, in its opposition to the main application took a number of points in
limine. Three of these were persisted with on appeal. The first two of the points in
limine raised by Tanzer are interlinked as they relate to the question of locus
standi referred to above and authority of the liquidators to institute the main
application.

[9] The first point in limine was that it was a fatal flaw for the liquidators to
bring the main application in their capacity as liquidators rather than in the name
of the company in liquidation. For this Tanzer relied on s 386(4)(a) of the Act
which provides that liquidators must bring or defend proceedings of a civil nature
‗in the name and on behalf of the company‘. Section 386(4)(a) of the Act provides
that:
‗The [liquidator‘s] powers referred to in subsection (3) are—
(a) to bring or defend in the name and on behalf of the company any action or other legal
proceedings of a civil nature, and, subject to the provisions of any law relating to criminal
procedure, any criminal proceedings: Provided that immediately upon the appointment of a
liquidator and in the absence of the authority referred to in subsection (3), the Master may
authorise, upon such terms as he thinks fit, any urgent legal proceedings for the recovery of
outstanding accounts;‘

[10] For their part, Mr Gavin Gainsford, one of the joint liquidators, who
deposed to the founding affidavit in the main application averred that:

‗I am cited herein in my capacity as the joint liquidator of Costa Logistics SA (Pty) Limited (in
liquidation) (―the company‖).‘
Similar averments were made by the second and third appellants, the other two
liquidators of the company.

[11] This matter calls into question the proper citation of a party, particularly a
liquidator, engaged in legal proceedings for the recovery of a debt owed to a
company in liquidation. The high courts have adopted two divergent approaches:
on the one hand it is required that an application be brought in the name of the
company in liquidation; on the other hand, liquidators were permitted to sue qua
liquidators. I shall presently deal with the divergent authorities.

[12] Tanzer relied on Fey NO & another v Lala Govan Exporters (Pty) Ltd,
where Epstein AJ held that the reference in s 386 to the liquidator being
empowered ‗in the name and on behalf of the company‘ underpinned the
requirement that any legal proceedings instituted or engaged in the exercise of that
power must thus necessarily be brought in the name of the company, rather than
that of the liquidator nomine officio.4 The court reasoned that this requirement was
emphasised by its distinction from other provisions of the Act that enable the
liquidator to act in his or her own name.5

[13] Hugo J in Shepstone & Wylie & others v Geyser NO,6 noted the following:
‗Although s 386(4)(a) of Act 61 of 1973 empowers the liquidator ―to bring . . . in the name and
on behalf of the company any action‖ . . .  in practice such actions are frequently brought in the
name of the liquidator with the letters NO (nomine officio) appended. I have been unable to find
any rule that distinguishes the two forms of citation and it seems until now to have been up to
the whim of the liquidator concerned.‘

4 Fey NO & another v Lala Govan Exporters (Pty) Ltd 2011 (6) SA 181 (W) para 20.
5 Ibid, para 21. See also Janse Van Rensburg NO v Ladislav 2006 JDR 0815 (T).
6 Shepstone & Wylie & others v Geyser NO 1998 (1) SA 354 (N) at 359F-G.

Similarly, in Gainsford & others NNO v Hiab AB,7 there was a challenge to the
liquidators having launched proceedings in their own names to have a voidable
disposition set aside on the basis that they lacked the requisite locus standi.
Mailula J dismissed this challenge, holding that ‗where the liquidator requires
authority to exercise any power, he may approach the Court under s 386(5) read
with s 388(1) of the Act‘.8 (Emphasis added.)

[14] In my view the divergent views reflect a distinction without a difference.
The structure of the Act is such that liquidators are empowered to perform
specified acts including applying to court in a voluntary winding-up in terms of s
388(1) to determine any ‗question arising in the winding-up or to exercise any of
the powers which the Court might exercise if the company were being wound up
by the Court‘. Likewise, s 386(5) provides that:
‗In a winding-up by the Court, the Court may, if it deems fit, grant leave to a liquidator to raise
money on the security of the assets of the company concerned or to do any other thing which the
Court may consider necessary for winding up the affairs of the company and distributing its
assets.‘
As stated above, Mailula J was correct in reaching the conclusion referred to in
Gainsford, to have regard to the provisions of s 386(5) which demonstrate that
liquidators act in the stead of the company in liquidation. A distinction between
the locus standi accorded to the company in liquidation and that of its liquidators
acting in their representative capacity, is pedantic9 or illusory.10 To disqualify
liquidators properly appointed from acting on behalf of a company in liquidation
would truly be elevating form above substance.

7 Gainsford & others NNO v Hiab AB 2000 (3) SA 635 (W).
8 Gainsford & others NNO v Hiab AB 2000 (3) SA 635 (W) at 641E.
9 Airborne Express CC v Van Den Heever NO (WLD) Case No 05/18568 (7 June 2006).
10 Barnard & others NNO v Imperial Bank Ltd & another 2012 (5) SA 542 (GSJ) paras 23-24. The judgment of
Weiner J in Barnard came to this court on appeal and is reported as Imperial Bank Ltd v Barnard & others NNO
2013 (5) SA 612 (SCA). On appeal, Mpati P stated that as a result of the court‘s finding that the amendment sought
did not seek to introduce a new plaintiff and that prescription was properly interrupted on service of the original
summons, ‗the present is not an appropriate case for a consideration of the question whether or not a liquidator has
standing where a debt owed to a company in liquidation is sought to be recovered‘ (at 616A-B).

[15] Hefer JA when interpreting s 13 of the Act in Shepstone & Wylie & others v
Geyser NO,11 stated:
‗The express reference in s 13 to a company which is being wound up and to its liquidator
indicates that the Legislature envisaged cases where the plaintiff or applicant is a company in
liquidation. It could not have been unaware of the fact that in such cases the company is always
represented by the liquidator, whether the latter sues nomine officii or not. There can be no
doubt that the reference in the opening words to a company must be interpreted to include a
liquidator suing on behalf of a company in liquidation.‘
This dictum in itself ought to be dispositive of this point raised by Tanzer.
Moreover, in Imperial Bank Ltd v Barnard & others NNO,12 the court was faced
with an application for an amendment of the particulars of claim to reflect the
name of the close corporation where the liquidators had been cited in their own
names followed by the letters ‗NNO‘.  While the court did not pronounce on the
locus standi of the liquidators, it held that the citation of the liquidators clearly
indicated that they were not acting in their personal capacities but on behalf of the
close corporation. This is in accordance with the reasoning of Hefer JA in
Shepstone & Wylie & others v Geyser NO.

[16] It is clear that the liquidators had at no time purported to act in their
personal capacities but were always acting in their representative capacities as
duly appointed joint liquidators of the company. The claim for the declaratory
order and the order for payment had always been pursued by the liquidators on
behalf of the company. The result of them litigating in such capacity is that the
payment sought would not enure for their personal benefit but for the benefit of
the creditors of the company. Predictably, counsel on behalf of Tanzer could point
to no prejudice being suffered as a result of the liquidators suing as they did. The
high court, in finding that the liquidators did not have locus standi to institute the
main application, erred.

11 Shepstone & Wylie & others v Geyser NO 1998 (3) SA 1036 (SCA) at 1044B-C.
12 Imperial Bank Ltd v Barnard & others NNO,12 2013 (5) 612 (SCA).

[17] I now turn to the other point in limine raised by Tanzer, namely, lack of
authority in that there was no authorisation by the creditors to institute the main
application. The resolution adopted at the second meeting of creditors held on 11
August 2009, authorised the liquidators ‗to collect any outstanding debts due to
the company‘. The liquidators relied on this resolution for their authority to
institute the main application. It was stated in the founding affidavit that they had
‗been advised that [the] resolution . . .  may not be framed widely enough to
encompass the present proceedings‘. It was for this reason that they sought
authorisation from the court to institute the main application.  Tanzer,
opportunistically seized on this uncertainty on the part of the liquidators, in order
to contest the liquidators‘ authority.

[18] It was contended that the liquidators lacked authority to institute the main
application as the resolution upon which they relied for such authority was only
applicable to amounts owing to the company by debtors who had not paid the
company and did not apply to proceedings to recover voidable dispositions in
terms of the Act.

[19] In terms of ss 386(3)(b) and 386(4)(a) of the Act,13 the liquidator of a
company in a creditors‘ voluntary winding-up, has the power, inter alia, to bring
legal proceedings, provided he or she has been granted authority by creditors. The
resolution grants to the liquidators the authority to recover ‗any outstanding
debts‘. The contention advanced by Tanzer that the resolution is not framed

13  Section 386(3) provides that: ‗The liquidator of a company-
(a)   ….
(b)   in a creditors' voluntary winding-up, with the authority granted by a meeting of creditors; and
(c)   ….
shall have the powers mentioned in subsection (4).‘
Section 386(4)(a) provides that: ‗The powers referred to in subsection (3) are-
(a)   to bring or defend in the name and on behalf of the company any action or other legal proceedings of a civil
nature, and, subject to the provisions of any law relating to criminal procedure, any criminal proceedings: Provided
that immediately upon the appointment of a liquidator and in the absence of the authority referred to in subsection
(3), the Master may authorise, upon such terms as he thinks fit, any urgent legal proceedings for the recovery of
outstanding accounts;‘

sufficiently wide to cover the main application as it does not make specific
mention of voidable dispositions, cannot be sustained. The terminology of the
resolution is certainly broad enough to encompass any debt due to the company,
including a debt arising by virtue of a voidable disposition.

[20] The high court ought to have found that the liquidators were authorised by
the second meeting of the creditors to institute legal proceedings and recover debts
and that the authority so obtained extended to include declaratory relief in respect
of voidable dispositions and that the seeking of authority by the liquidators out of
caution was misguided.

[21] I now turn to deal with the last remaining point in limine, ie that the
liquidators ought to have proceeded by way of trial action instead of motion
proceedings, in that they should have foreseen that material disputes of fact, not
capable of easy determination on the papers, would have arisen between the
parties.14 Tanzer submitted that the liquidators should have anticipated, inter alia,
that a material dispute of fact would arise in relation to the question whether the
company was in fact insolvent at the time of its winding-up. It was argued that the
court should, for this reason alone, dismiss the application in its entirety.

[22] It was suggested by Tanzer that the company‘s winding-up was part of a
fraudulent scheme on the part of certain directors of the company to enable State
Logistics to drain the company of its remaining funds and evade liability for the
company‘s debts. There is force in this contention and it is accepted by the
liquidators.  It was common cause that the company had made payment of
R4 500 000 to State Logistics immediately prior to the commencement of the
liquidation proceedings. The liquidators have already instituted an action against
State Logistics in which they claim repayment of the R4 500 000 to the company.

14 Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd 1949 (3) SA 1155 (T) at 1161.

[23] It is important to note that State Logistics appears to have undertaken to
guarantee payment of certain of the company‘s debt. A reference to such
undertaking is recorded by the company‘s auditors in the financial statements of
the company for the period ended 29 June 2008. A factor that influenced the
auditor‘s determination that the company was viable was that State Logistics
would ‗continue to procure funding for the ongoing operations for the company in
terms of the binding undertaking given‘. State Logistics has since reneged on such
undertaking. This reneging by State Logistics does not advance Tanzer‘s case. It
in fact points ineluctably to the inability of the company to have continued
operating without financial support from State Logistics.

[24] Tanzer has further alleged that the company was commercially solvent by
virtue of the fact that State Logistics had agreed to defer repayment of its loan for
a period of twelve months and thus the company‘s debt owing to State Logistics,
in the amount of just under R36 million, had not yet become due and payable as at
the date of the statement of affairs. Reliance on the deferment of the loan must be
viewed in the context of the financial predicament that the company faced. The
deferring of the loan does not assist Tanzer. It remained a liability of the company
on its winding-up. The reality was that the company was not in a position to pay
its creditors.

[25] In the view I take of the matter there was no dispute of fact regarding the
solvency of the company. Even prior to its liquidation there were indications that
the company was in financial trouble. First, according to the draft financial
statement of the company for the period ended 29 June 2008, it appears that the
company had accumulated losses of R40 675 168 and that the company‘s total
liabilities exceeded its assets by R40 675 068. Second, the letter from the
company‘s auditors dated 25 July 2008, expressed concerns about the company‘s
ability to continue as a going concern. Third, in an undated affidavit of Simon

John Costa, a director of State Logistics, he stated that the company was factually
and commercially insolvent at the time of its liquidation and that it was doubtful
whether any dividend would be payable to concurrent creditors. Fourth, the
KPMG report prepared for the liquidators and tabled at the second meeting of
creditors held on 11 August 2009, reflected that as at 6 July 2009 the company had
total assets of R21 107 666 against liabilities of  R71 513 041, ie an estimated
shortfall of R50 405 375.

[26] Tanzer alleged that the true value of the company‘s assets as at the date of
its statement of affairs was R48 167 314.16, while the liquidators placed this value
at R21 107 666. The difference becomes irrelevant when regard is had to the
factors listed in paragraph 25 above. Furthermore, at the date of the company‘s
liquidation the amount in its bank account totalled R338 781.67. The company‘s
movable assets subsequently only realised an amount of R338 029.78.  On 12
October 2011, Mr Gainsford deposed to an affidavit in which he stated that ‗as
things stand creditors who have proved concurrent claims will not receive any
dividends whatsoever as there is a deficiency of R239 231.27 in the estate‘. The
evidence demonstrated that at the time the company was liquidated, it was
factually insolvent and manifestly unable to pay its debts.

[27] I now turn to deal with the merits of the main application. On behalf of
Tanzer it was contended that the payments sought to be set aside by the liquidators
were made bona fide in the ordinary course of business of the company. It was
submitted that this fact was a complete answer to the application to have the
payments set aside. I disagree. Section 341(2) of the Act is clear in its terms. In
terms of this section:
‗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.‘

The court will only order otherwise in terms of this section in limited
circumstances. To have the defence proferred by Tanzer upheld in general terms
would have the effect of avoiding the objects of the Act in that it would
undoubtedly prefer one creditor above another.

[28] It is no defence to assert as Tanzer does that the dispositions were made by
the company‘s staff in ignorance of the fact that the company had been placed
under winding-up. Staff at a lower level carry out instructions and in any event
that does not deal with the question of whether the dispositions were made at a
time after the commencement of the winding-up. As has already been mentioned,
the instances in which a court will validate a disposition are limited.15 Even where
a disposition was alleged to constitute ‗a mere administrative rectification‘, the
fact that the effect thereof was to remove a claim from the concursus and settle it
in full in favour of the creditor concerned, to the prejudice of the general body of
creditors, is impermissible.16 This is in accordance with the principle that ‗the free
assets of the insolvent at the commencement of the liquidation shall be distributed
rateably amongst the insolvent‘s creditors as at that date‘.17

[29] There is in my view no acceptable basis provided by Tanzer for justifying a
departure from the well-established rule of law which prohibits any disposition by
the company after the commencement of its winding-up. Ordinarily a court will
consider whether fairness and justice require the rule to be disregarded.18 No such
considerations were disclosed in the papers. On the contrary, the evidence
demonstrates that the exercise of a discretion in favour of validity would result in
extreme and irreparable prejudice to the creditors of the company.

15 Lane NO v Oliver Transport 1997 (1) SA 383 (C) at 386C-387B.
16 Schmidt & another NNO v Absa Bank Ltd 2002 (6) SA 706 (W) para 17. See also Walker v Syfret NO 1911 AD
141.
17 Per Buckley LJ in Re Gray’s Inn Construction Co Ltd [1980] 1 All ER 814 (CA) at 819 quoted with approval by
Willis J in Schmidt, supra, para 18.
18 Chesterfin (Pty) Ltd v Contract Forwarding (Pty) Ltd & others 2002 (1) SA 155 (T) at 169D-F.

[30] The liquidators were thus entitled to the relief they sought. It is not
necessary to grant an order in terms of para 1 of the notice of motion, authorising
the liquidators to institute the main application, as they had the necessary authority
in terms of the resolution passed at the second meeting of creditors.

The setting aside application
[31] The founding affidavit of the setting aside application was deposed to by
Mr Johann Tanzer, a director of the respondent. In his affidavit he asserted that
there were two bases upon which the winding-up fell to be set aside. The first was
that the company was solvent at the time of its liquidation. This has already been
dealt with. The second was that the winding-up of the company was tainted by
fraud in that it was part of a fraudulent scheme to prefer State Logistics over all
other creditors of the company and that fraud unravels all. The liquidators have
accepted that the directors, in paying State Logistics R4 500 000, acted
improperly. As has already been mentioned, they have instituted an action to
recover that amount.

[32] It is common cause that the company has no staff, has ceased operations
and is in fact even less than a shell. Regard being had to the conclusions reached
by me in  respect  of the solvency of the company and the considerable claims by
the creditors referred to in para 6 above, one can rightly ask what would the
purpose be of setting aside the liquidation, other than preserving the undue
preference that Tanzer enjoyed? The interest of the creditors of the company
dictate that the company should remain in liquidation and that the unlawful
payments to Tanzer should be repaid into the estate to be distributed by the
liquidators amongst the proven creditors of the company in accordance with the
law of insolvency. The order sought by the liquidators in this regard is in my view
justified.

[33] Finally, the heads of argument filed by Tanzer were in flagrant disregard of
the rules of this court. Rule 10(3)(g) of the Rules of Court provides that ‗heads of
argument of any appellant or respondent shall not exceed 40 pages, unless a judge,
on request, otherwise orders‘. In Caterham Car Sales & Coachworks Ltd v Birkin
Cars (Pty) Ltd & another,19 Harms JA explained that heads of argument should
contain the most important part of the argument and not a recital of the facts
and that quotations from authorities do not amount to argument.20 He went on to
warn that practitioners who fail to give proper attention to the requirements of the
practice note might result in the disallowance of part of their fees.21 The heads
prepared on behalf of Tanzer abound with an unnecessary and lengthy analysis of
numerous cases, which was singularly unhelpful. This court cannot allow such
flagrant breaches of the Rules and its displeasure is reflected in the order set out
hereinafter.

Order
[34] 1 The appeal is upheld with costs including the costs of two counsel.
2 The legal representatives of the respondent will only be entitled to recover fifty
per cent of their costs from the respondent in respect of the heads of argument.
3 The order of the high court is set aside and replaced with the following:
‗(a) In the application under case no 2252/10 the following order is made.
(i) The under-mentioned payments made by Costa Logistics SA (Pty) Ltd (in
liquidation) to the respondent are declared to be void in terms of s 341(2) of the
Companies Act 61 of 1973:
05/03/2009 – R1 651 681.14
05/03/20009 – R1 078 542.53
05/03/20009 – R4 899 817.15

19 Caterham Car Sales & Coachworks Ltd v Birkin Cars (Pty) Ltd & another 1998 (3) SA 938 (SCA).
20 Para 37.
21 Para 38. See also Van der Westhuizen NO v United Democratic Front 1989 (2) SA 242 (A) at 252B-G.

01/04/20009 – R1 887 596.85
01/04/20009 – R4 718 524.1922
(ii) The respondent is to pay the amounts in paragraph (i) above to the applicants;
(iii) The respondent is to pay the applicants‘ party and party costs.
(b) The application under case no 19020/11 is dismissed with costs.‘

______________
L V THERON
JUDGE OF APPEAL

22 There was a typographical error in the Notice of Motion and this amount was incorrectly reflected as
R4 418 524.19

APPEARANCES
For Appellant:

I Miltz SC with J J Bitter
Instructed by:
Edward Nathan Sonnenbergs Attorneys,
Johannesburg
Symington De Kok Attorneys,
Bloemfontein

For Respondent:

R G Cohen

Instructed by:
Mervyn Dendy Attorney, Johannesburg

Lovius Block Attorneys, Bloemfontein
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

From:
The Registrar, Supreme Court of Appeal
Date:
28 March 2014
Status:
Immediate

Please note that the media summary is intended for the benefit of the media and does not
form part of the judgment of the Supreme Court of Appeal.

GAVIN CECIL GAINSFORD NO & OTHERS V TANZER TRANSPORT (PTY)
LTD & OTHERS

The Supreme Court of Appeal (SCA) today unanimously upheld an appeal against a
decision of the South Gauteng High Court to dismiss an application for an order declaring
that certain payments made to Tanzer Transport (Proprietary) Limited (Tanzer) were
voidable dispositions as envisaged in s 341(2) of the Companies Act 61 of 1973 (the Act).

Tanzer was a sub-contractor of State Logistics (Proprietary) Limited (State Logistics),
providing the latter company with transportation services. State Logistics experienced
various financial problems and a special resolution to commence a creditor’s voluntary
winding-up was passed and duly registered in early 2009, at which point the winding-up of
the company commenced. Thereafter, the company made payments totalling R14 231 61.86
to Tanzer. It was these payments that the liquidators sought to have declared void.

Tanzer resisted the application on the basis that the liquidators lacked locus standi insofar
as the main application was brought in their own names. Further, Tanzer argued that the
creditors’ resolution upon which the liquidators relied for such authority applied only to
amounts owing to the company by debtors and did not apply to proceedings to recover
voidable dispositions. Thirdly, Tanzer objected to the application on the grounds that the
liquidators ought to have proceeded by way of trial action, there being foreseeable and
material disputes of fact between the parties in relation to the question whether the
company was in fact insolvent at the time of its winding-up. On appeal, the SCA found that
the high court erred in dismissing the application on these grounds; that liquidators acting
in their representative capacities, as the liquidators purported to do in this case, are
accorded locus standi; that the phrasing of the creditors’ resolution was broad enough to
encompass a debt arising by virtue of a voidable disposition; and that there was no dispute
of fact regarding the insolvency of the company.

Turning to the merits of the application, the SCA held that even where a disposition was
alleged to constitute ‘a mere administrative rectification’, the fact that the effect thereof was
to remove a claim from the concursus and settle it in full in favour of one creditor
concerned, to the prejudice of the general body of creditors, is impermissible. In the result,
the liquidators were held to be entitled to the relief they sought.

In the second application, Tanzer sought an order setting aside the winding-up of the
company, which application the SCA dismissed.