THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

JUDGMENT

Not Reportable
Case No: 192/2015

In the matter between:

RIAAN ANTON SWART                                                                          APPELLANT

and

CHARLENE HEINE                                                                  FIRST RESPONDENT

JUSTIN MARK HEINE                                                         SECOND RESPONDENT

DEKSNY TRADING (PTY) LTD                                               THIRD RESPONDENT

CHARLES SCOTT STEWART                                            FOURTH RESPONDENT

ANTON STRYDOM NO                                                            FIFTH RESPONDENT

Neutral citation:
Swart v Heine (192/15) [2016] ZASCA 16 (14 March 2016)

Coram:
Lewis, Pillay, Willis, Mathopo JJA and Plasket AJA

Heard:

25 February 2016

Delivered:

14 March 2016

Summary:
Company law ─ application for rescission of an order enabling
enquiry into the affairs of a company in voluntary liquidation in terms of s 417 of the
Companies Act 61 of 1973 ─ ex parte application made to enable enquiry met the
requirements of s 388 of the Act ─ appeal dismissed with costs.

___________________________________________________________________

ORDER

On appeal from: Gauteng Division of the High Court, Pretoria (Pretorius J sitting as
court of first instance):

The appeal is dismissed with costs including the costs of two counsel.

JUDGMENT

Mathopo JA (Lewis, Pillay, Willis JJA and Plasket AJA concurring):

[1] This appeal turns on whether an ex parte application that served before
Ledwaba DJP in chambers in the Gauteng Division of the High Court met the
requirements of s 388(1) and (2) of the Companies Act 61 of 1973 (the Act),1 and
whether a proper case had been made for the order sought in terms of the section.
Ledwaba DJP, who heard the matter in camera, granted an order for leave to
convene an enquiry in terms of s 417 and 418 of the Act in respect of a company
under voluntary liquidation. The appellant, a former director of the company, when
he discovered that the order had been made, applied for rescission of the judgment
on the basis that the order was erroneously sought or granted because there was no
reference to the provisions of s 388 of the Act in the notice of motion and founding
affidavit. Pretorius J, who heard the application for rescission, held that although the
section was not specifically mentioned in the notice of motion and founding affidavit,
the relief sought before Ledwaba DJP was contemplated in terms of s 388. She
accordingly dismissed the appellant’s application for rescission. This appeal is
against that judgment with the leave of that court.

[2] The order sought before Ledwaba DJP was that: (a) the matter be heard in
camera; (b) leave be granted to the applicants to hold an enquiry into the affairs of
the company BSA Group Holdings (Pty) Ltd (in liquidation) (the company); and (c) Mr

1 I shall set out the section in full below.

Charles Stewart be appointed to conduct the enquiry under ss 417 and 418 of the
Act of 1973 read with s 9 of Schedule 5 of the Companies Act 71 of 2008.

[3] A brief background to the matter is as follows. The company, previously
registered as Biz Africa 111 (Pty) Ltd, was voluntarily wound-up by special resolution
of its directors when it was unable to pay its debts. The appellant is a director of the
company together, with Mr Mellet and Mr Stevenson.

[4] The first respondent (Charlene Heine), the second respondent (Justin Mark
Heine) and the third respondent (Deksny Trading (Pty) Ltd) are creditors of the
company. They were also applicants in the ex parte application which the appellant
is challenging. Ms Heine is owed the amount of R45 785 in respect of outstanding
salaries. Acting on behalf of the company, the appellant signed a settlement
agreement acknowledging the company’s indebtedness to Ms Heine. When the
company failed to honour the undertaking, Ms Heine issued summons and obtained
judgment against the company. Mr Heine, is owed the sum of R652 643 by the
company in respect of which Mr Stevenson signed a settlement agreement on behalf
of the company undertaking to pay him. That amount is still outstanding and
summons was issued against the company. Deksny Trading is owed $190 042 in
respect of a loan it advanced to the company.

[5] The respondents’ locus standi as creditors of the company is not disputed.
The gravamen of the appellant’s complaint relates to whether or not the ex parte
application that served before Ledwaba DJP met the requirements of s 388(1) and
(2) of the Act. An answer to this question is dispositive of the appeal. It is thus not
necessary to deal with all the points raised by the appellant’s counsel in his heads of
argument as during the hearing in this court, the issues on appeal were narrowed to:
(a) whether the ex parte application was defective for lack of specific reference to
s 388(1) and (2), in the notice of motion and founding affidavit; and (b) if not whether
a proper case was made for the relief sought in the papers. Section 388 of the Act
provides:
‘Court may determine questions in voluntary winding-up
(1) Where a company is being wound up voluntarily, the liquidator or any member or creditor
or contributory of the company may apply to the Court 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.
(2) The Court may, if satisfied that the determination of any such question or the exercise of
any such power will be just and beneficial, accede wholly or partly to the application on such
terms and conditions as it may determine, or make such other order on the application as it
thinks fit.’

[6] In relation to the first issue, the appellant contends that since there was no
specific reference to s 388 in the notice of motion and founding affidavit, the
jurisdictional requirements in terms of that section were absent and thus that the
order granted ex parte was erroneously sought and granted. Counsel for the
appellant thus contended that in the absence of an express reference to the section
Ledwaba DJP could not have appreciated or understood that this was an application
in terms of s 388 of the Act. In support of his argument, he referred to the affidavit
filed by the attorney for the respondents, which he submitted, also did not make any
reference to s 388. This submission is misplaced. What has to be considered in my
view is not merely the form but rather the substance of the entire application. The
submission that Ledwaba DJP misconstrued the nature and purpose of the
application is ill-conceived. Equally unsustainable is the reliance on Gainsford &
others NNO v Tanzer Transport (Pty) Ltd 2013 (4) SA 394 (GSJ), where Saldulker J
held that the absence of reference to a section was a ‘serious mistake’ affecting the
case. That judgment was overturned by this court on appeal (Gainsford & others
NNO v Tanzer Transport (Pty) Ltd 2014 (3) SA 468 (SCA)) although not on this
point. However, the statement of Saldulker J was not in line with authority in this
regard.

[7] In my view it is not necessary for a litigant who is relying on a statutory
provision to specify it. It is sufficient if it is clear from the facts alleged by the litigant
that the section is relevant and operative. This point was made clear in Fundstrust
(Pty) Ltd (in liquidation) v Van Deventer 1997 (1) SA 710 (A) 725H-726A, where this
court stated the following:
‘It is not necessary in a pleading, even where the pleader relies on a particular statute or
section of a statute, for him to refer in terms to it provided that he formulates his case clearly
(see Ketteringham v City of Cape Town 1934 AD 80 at 90) or, put differently, it is sufficient if

the facts are pleaded from which the conclusion can be drawn that the provisions of the
statute apply (see Price v Price 1946 CPD 59, Wasmuth v Jacobs 1987 (3) SA 629 (SWA) at
634I).’
See also in this regard Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs
& others 2004 (4) SA 490 (CC) para 27.

[8] In the present, case all averments necessary support the relief which they
were granted were made by the respondents. A reading of the notice of motion, in
particular paras 2 and 3, and the entire founding affidavit demonstrate clearly that
what the respondents sought before Ledwaba DJP was leave to convene an enquiry
in terms of ss 417 and 418 on the Act having stated the company had been wound-
up voluntarily and that they were creditors of the company. It is of course difficult to
imagine, in the circumstances of this case, that the application meant to achieve
something other than an application contemplated in terms of s 388 of the Act.

[9] Once it became clear to the respondents that the financial status of the
company required an investigation, they decided to launch an application under s
388 for leave to convene an enquiry in terms of ss 417 and 418 of the Act. This was
especially so because the company had been voluntarily wound-up by the directors
in circumstances where it was clear that such an enquiry was not only desirable but
urgently warranted, because, as at the date of liquidation, the company had no
movable or immovable assets. The directors of the company signed settlement
agreements purporting to bind the company in circumstances where the company
was already unable to pay its debts. In those circumstances the respondents were
entitled to approach the court in terms of s 388. This point was made by Hefer AP in
Michelin Tyre Company (South Africa) Pty Ltd v Janse van Rensburg 2002 (5) SA
239 para 4, where he said the following:
‘There are at least two ways of procuring a s 418 enquiry even in a voluntarily winding-up.
The first is to convert the winding-up into a winding-up by the court under s 346(1)(e) and the
other is an application to court under s 388 for leave to convene an enquiry.’

[10] It is clear that Ledwaba DJP was informed, in the founding affidavit, that the
company had been voluntarily liquidated on the basis it was unable to pay its debts.
The respondents also made it clear that the relief they sought was just and

beneficial. He thus properly exercised his discretion and granted the order sought.
On that basis alone I would dismiss the appeal.

[11] In view of this conclusion it is not strictly necessary to deal with the other
submissions made on behalf of the appellant. However, a few observations may not
be inappropriate. Counsel for the appellant contended that the respondents should
have approached the court in terms of s 415 of the Act for leave to interrogate the
appellant by the Master or the presiding officer at the second meeting of the
creditors. This submission misconceives the purpose of the enquiry under the
section. After the first meeting of creditors it became clear to the respondents,
following the report of the provisional liquidators, that they would not succeed in
uncovering the truth about the financial affairs of the company. In that report the
liquidators stated inter alia that:
‘At this stage it appears that a further enquiry is not desirable in regard to any matter relating
to the promotion, formation or failure of the Company or the conduct of its business unless
further justifiable information becomes available.’
The report further went on to say:
‘As of yet we could not find any grounds to believe that directors or officers or previous
directors or officers of the Company to be personally liable for damages or compensation to
the Company or for any debts or liabilities of the Company, as provided in the Act. Should
further investigations reveal any offences, a report will be submitted.’

[12] The respondents, as creditors of the company, were understandably unhappy
with the liquidators’ report and thus exercised their rights in terms of s 388 of the Act.
From the wording of s 388, it is clear that the respondents could bring such an
application and that the court could determine any such question arising in the
winding-up or to exercise any of the powers which the court might exercise where a
company is wound-up by the court. In my view nothing precluded them from
approaching the court in terms of this section. In fact, the circumstances of this case
clearly warranted an urgent intervention in terms of ss 417 and 418 of the Act. The
appellant’s submission that the purpose of the enquiry is to extort, frustrate or
squeeze payments from him is ill-conceived.

[13] There is a further disconcerting aspect to this appeal. The issues in this
appeal are simple and straightforward and do not involve complicated or complex
issues of law. This is a case where leave to appeal should not have been granted at
all. Why the court a quo thought this appeal deserves the attention of this court is not
explained. This court has repeatedly bemoaned the fact that unworthy appeals are
referred to it, with the result that more deserving and meritorious appeals are either
delayed or lose their places in the roll. (See Shoprite Checkers Pty Ltd v Bumper
2003 (5) SA 534 (SCA); S v Monyane & others 2008 (1) SACR 543 (SCA).) Leave to
appeal should not be granted where there is no reasonable prospect of success on
appeal, or no compelling reason why an appeal should be heard ─ s 17(1)(a) of the
Superior Courts Act 10 of 2013.

[14] Accordingly, the appeal is dismissed with costs including the costs of two
counsel.

______________

R S Mathopo
Judge of Appeal

Appearances
For Appellant:
J Vorster (with him U Lottering)

Instructed by:
J I van Niekerk Inc, Pretoria
Symington & De Kok, Bloemfontein

For First, Second
and Third Respondent:
A J Louw SC (with him J Holland-Müter)
Instructed by:
Van Greunen & Associates Inc, Pretoria
Azar & Havenga, Bloemfontein