THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Reportable

Case No: 162/2016

In the matter between:

WISHART, GRANT LOGAN NO                                                  FIRST APPELLANT
GOEBEL, ARNO NO
(In his capacity as co-trustee of the Logan Trust)              SECOND APPELLANT
WISHART, MALCOLM GRANT NO
(In his capacity as co-trustee of the Logan Trust)                  THIRD APPELLANT
PENGUIN MINING & PLANT (PTY) LIMITED                        FOURTH APPELLANT
COLT MINING (PTY) LIMITED                                                    FIFTH APPELLANT

and

BHP BILLITON ENERGY COAL
SOUTH AFRICA (PTY) LIMITED                                                 FIRST
RESPONDENT
EURO COAL (PTY) LIMITED (IN LIQUIDATION)               SECOND RESPONDENT
KLEIN, NORMAN NO                                                              THIRD RESPONDENT
VAN DEN HEEVER, THEODORE WILHELM NO               FOURTH RESPONDENT
MASTER OF THE HIGH COURT, GAUTENG
SOUTH, JOHANNESBURG                                                     FIFTH RESPONDENT
COMPANIES AND INTELLECTUAL PROPERTY

COMMISSION (CIPC)                                                               SIXTH RESPONDENT
Neutral Citation: Wishart v Billiton (162/2016) [2016] ZASCA 164 (16 November
2016)
Coram:
Lewis, Cachalia, Mathopo and Mocumie JJA and Makgoka AJA
Heard:
2 November 2016
Delivered:   16 November 2016
Corrected:  23 May 2017
Summary:  Section 44(1) of the Insolvency Act 24 of 1936 applies to the proof of
claims in the winding-up of companies and fixes a time-period for such proof, and for
making a claim after the expiry of the time period with the leave of the Master or a
court.
Only the Master has the power to expunge a claim under s 407 of the Companies
Act 61 of 1973; a court has the power to review the Master’s decision made under
the section.

___________________________________________________________________

ORDER

On appeal from: Gauteng Local Division of the High Court, Johannesburg
(Rossouw AJ sitting as court of first instance).
1 The appeal against the order upholding the first exception is upheld with costs. The
order is replaced with the following:
‘The first exception to the particulars of claim is dismissed with costs.’
2 The appeal against the order upholding the second exception is dismissed with
costs including the costs of two counsel.
___________________________________________________________________
JUDGMENT

Lewis JA (Cachalia, Mathopo and Mocumie JJA and Makgoka AJA concurring)
[1] At issue in this appeal is the interpretation of provisions of the Companies Act
61 of 1973 (the 1973 Companies Act), read with those of the Insolvency Act 24 of
1936, in relation to late proof of claims, and the expungement of claims, in the
winding up of a company. Although the 1973 Companies Act was largely repealed
when the Companies Act 71 of 2008 came into force (in 2011), those provisions
regulating the winding-up of companies remain in force.

[2] The appellants seek to appeal against a decision of the Gauteng Local
Division of the High Court of South Africa (Rossouw AJ) upholding two exceptions to
their particulars of claim. Leave to appeal was given to this court by the court a quo.
The first appellant, represented by the trustee in his insolvent estate, abides the
decision of the court on appeal. The second and third appellants, plaintiffs in the
court a quo, are the trustees  of the Logan Trust. Penguin Mining & Plant (Pty) Ltd
and Colt Mining (Pty) Ltd are the fourth and fifth appellants. Thy were the fourth and
fifth plaintiffs in the court a quo. The first respondent, BHP Billiton Energy Coal South
Africa Ltd (Billiton), is a company that submitted a claim to proof in the estate of the
second respondent, Euro Coal (Pty) Ltd (in liquidation) (Euro Coal). The other
respondents are the liquidators of Euro Coal, the Master of the Gauteng Local

Division, and the Companies and Intellectual Property Commission. The latter
respondents also play no role in the appeal.

[3] The court a quo, having upheld the exceptions, gave leave to the appellants
to amend their particulars of claim within 10 days of the date of the order, as is
customarily done. The attorney for the appellants wrote to the respondents’ attorneys
soon after the order was made asking for an extension of time within which to amend
their pleadings, which was granted. This act, the respondents argue on appeal,
amounted to a peremption of the appeal. I shall deal with the argument after
considering the exceptions.

The first exception
[4] The appellants, in their particulars of claim, sought leave to prove a late claim
in the winding-up of Euro Coal ‘in such manner and upon such terms and conditions
as the Master may determine’. They alleged that they had objected to the first
Liquidation and Distribution Account (the L & D account) lodged by the liquidators
with the Master, and asked, in terms of s 44(1) of the Insolvency Act, for special
leave to prove their respective claims.

[5] The exception raised to this claim was that s 44(1) was not applicable in the
winding-up of a company, and that s 366 of the 1973 Companies Act governed proof
of claims in a winding-up. Section 339 of the 1973 Companies Act provides:
‘339 Law of insolvency to be applied mutatis mutandis.
In the winding-up of a company unable to pay its debts the provisions of the law relating to
insolvency shall, in so far as they are applicable, be applied mutatis mutandis in respect of
any matter not specially provided for by this Act.’

[6] The question thus arises as to whether the application of s 44(1) of the
Insolvency Act, and particularly the proviso to it which deals with fixing a period for
the proof of claims, and the late proof with the leave of the Master or the court, is
excluded by the terms of s 366 of the 1973 Companies Act. Section 366(1) regulates
the proof of claims in a winding up, and s 366(2) gives the Master a discretion to fix a
time within which creditors are to prove their claims.

[7] Section 44 of the Insolvency Act regulates proof of liquidated claims against
an estate. Section 44(1) reads:
‘Any person . . . who has a liquidated claim against an insolvent estate, the cause of which
arose before the sequestration of that estate, may, at any time before the final distribution of
that estate  . . . prove that claim in the manner hereinafter provided: Provided that no claim
shall be proved against an estate after the expiration of a period of three months as from the
conclusion of the second meeting of creditors of the estate, except with the leave of the court
or the Master, and on payment of such sum to cover the cost or any part thereof, occasioned
by the late proof of the claim, as the Court or Master may direct.’

[8] Section 366 of the 1973 Companies Act reads:
‘(1)
In the winding-up of a company by the Court and by a creditors' voluntary winding-
up-
(a)
the claims against the company shall be proved at a meeting of creditors
mutatis mutandis in accordance with the provisions relating to the proof of
claims against an insolvent estate under the law relating to insolvency;
(b)
a secured creditor shall be under the same obligation to set a value upon his
security as if he were proving his claim against an insolvent estate under the
law relating to insolvency, and the value of his vote shall be determined in the
same manner as is prescribed under that law;
(c)
a secured creditor and the liquidator shall, where the company is unable to
pay its debts, have the same right respectively to take over the security as a
secured creditor and a trustee would have under the law relating to
insolvency.
(2)
The Master may, on the application of the liquidator, fix a time or times within which
creditors of the company are to prove their claims or otherwise be excluded from the
benefit of any distribution under any account lodged with the Master before those
debts are proved.’

[9] The most recent decision of this court dealing with the meaning of s 339, and
the words ‘mutatis mutandis’ in particular, and which also determines that s 44(1) of
the Insolvency Act applies in the winding up of a company, is Mayo NO & others v
De Montlehu 2016 (1) SA 36 (SCA) ([2015] ZASCA 127). This court held that s 44(1)
of the Insolvency Act governs the time period within which claims can be lodged and
a late claim be proved in a winding-up, whereas s 366 governs the procedure for
participation in a distribution in a winding-up of a company. They are complementary

rather than mutually exclusive. Section 44(1) is thus applicable to claims against a
company being wound up.

[10] That conclusion is contrary to the finding of Rossouw AJ in this matter. He
relied on an earlier decision in the division, which this court has now said to be
wrong (Stone & Stewart v Master of the Supreme Court, unreported TPD Case No
8828/87 of 18 August 1987). Rossouw AJ did not agree with the decision of the court
a quo in De Montlehu (De Montlehu v Mayo NO 2015 (3) SA 253 (GJ)), where
Kathree-Setiloane J had considered Stone & Stewart to be incorrectly decided.

[11] On appeal, Billiton argued that, although this court in De Montlehu had settled
the matter, and although it accepted that s 44(1) did apply to claims in a winding-up,
the ratio of the decision was confined to the time period and did not affect the
balance of the proviso to s 44(1), which allows a late claim to be proved with the
consent of the Master or the court. In order to assess the argument it is necessary to
have regard to the formulation of the judgment of this court, and what was said by
Kathree-Setiloane J in the court a quo in that matter, which was considered to be
correct by this court.

[12] Willis JA said in De Montlehu (para 18) that a plain reading of s 366(2)
‘does not affect the applicability of the three-month time period in s 44(1) of the old
Companies Act and the issues that arise therefrom. Neither in logic nor in the grammar of
the respective provisions is there a reason why the three-month time period, together with
the fixing of costs and the payment thereof by a later creditor, should not apply alongside the
discretionary power granted in terms of s 366(2). In both instances the lodging of claims
needs momentum driven by the factor of time.’
He added (para 19):
‘Were the three-month period not to apply [in liquidations], then in the absence of a time
period being fixed by the master in terms of s 366(2), there would be no formal time period
within which creditors would be required to lodge and prove their claims. The risk of
tardiness, if not inertia, would be ever present. Clearly, this would not be in the interest of
either the creditors or the general public. The three-month period stipulated in s 44(1) of the
Insolvency Act relating to the proof of claims thus remains the bench mark in both
sequestrations and liquidations. Section 366(2) does not, therefore, affect the applicability of
s 44(1) of the Insolvency Act to companies in liquidation.’

[13] Despite this, argued Billiton, the decision of this court in De Montlehu was
confined to the application of only three aspects of s 44(1): the time period, the fixing
of costs and payment of costs by a creditor that submitted a claim after the three-
month period had expired. The balance of the proviso, dealing with the proof of a late
claim with the leave of the court or the Master, did not apply to claims in the winding
up of a company. The reason for that, it was argued, is that s 366(2) itself provides
for a time limit: the Master may fix a time within which creditors are to prove their
claims or otherwise be excluded from the benefit of the distribution under any
account lodged with the Master.

[14] However, Willis JA said (para 23), ‘s 366(2) relates to participation in a
distribution under a particular account, and not to the late proof of claims in general’.
He referred in this regard to Trans-Drakensberg Bank Ltd & another  v The Master,
Pietermaritzburg & another 1966 (1) SA 821 (N) at 824H-825E where Van Heerden
AJ said, of the predecessor section (179(2)) in the Companies Act 46 of 1926), that it
did not prevent a creditor from proving a claim after the date fixed by the Master nor
did it exclude from the benefit of the distribution debts proved after the date.

[15] In the court a quo in De Montlehu, Kathree-Setiloane J, finding that there was
no inconsistency between s 44(1) of the Insolvency Act and s 366(2) of the 1973
Companies Act, said (para 20):
‘[T]he two sections are functionally different, and have different objectives. Section 366(2) of
the Companies Act is a special provision intended to enable participation in a distribution
under a particular account. It has no application to the late proof of claims in general, which
is governed by the proviso to s 44(1) of the Insolvency Act . . . . Simply put, its objective is to
nullify an attempt by a creditor to delay proving his or her claim until a lodged account shows
that a distribution is to occur. The proviso to s 44(1) of the Insolvency Act, on the other hand,
is to prevent proof of a claim after the expiration of a period of three months as from the
conclusion of the second meeting of creditors, except with leave of the court or the master.
The overall purpose of the proviso to s 44(1) of the Insolvency Act is to ensure that the
administration of the estate is concluded expeditiously.’ (Footnotes omitted.)

[16] That reasoning was clearly endorsed by this court in De Montlehu.
Accordingly, the exception to the claim for the leave of the court to prove a claim on

the terms and conditions set by the Master should not have been upheld. The appeal
against the order upholding the first exception must thus succeed.

The second exception
[17] The second claim made by the appellants was for the expungement from the
L & D account of Billiton’s claim in the winding-up of Euro Coal. The exception taken
by the respondents was that an objection to an L & D account is governed by s 407
of the 1973 Companies Act. Section 403 requires that the account be lodged with the
Master, and s 406 that it lies open for inspection.  Section 407 regulates who may
object to the account and the procedure for doing so. It reads:
‘(1)
Any person having an interest in the company being wound up may, at any time
before the confirmation of an account, lodge with the Master an objection to such
account stating the reasons for the objection.
(2)
If the Master is of opinion that any such objection ought to be sustained, he shall
direct the liquidator to amend the account or give such other directions as he may
think fit.
(3)
If in respect of any account the Master is of the opinion that any improper charge has
been made against the assets of a company or that the account is in any respect
incorrect and should be amended, he may, whether or not any objection to the
account has been lodged with him, direct the liquidator to amend the account, or he
may give such other directions as he may think fit.
(4)      (a)
The liquidator or any person aggrieved by any direction of the Master under
this section, or by the refusal of the Master to sustain an objection lodged
thereunder, may within fourteen days after the date of the Master's direction
and after notice to the liquidator apply to the Court for an order setting aside
the Master's decision, and the Court may on any such application confirm the
account in question or make such order as it thinks fit
. . .’

[18] The respondents asserted, in response to the particulars of claim, that as
there was no allegation in the particulars that a decision had been taken by the
Master, by which the appellants were aggrieved, the claim was excipiable. The gist
of the exception is that objections to an L & D account must first be made to the
Master: only when he or she has made such a decision can a review of it be

undertaken by a court. In the absence of an allegation that the Master had made a
decision, the particulars disclosed no cause of action.

[19] Rossouw AJ upheld the exception, finding that the appellants’ remedy was
statutory – a review in terms of s 407 – and that a court has no jurisdiction to
expunge a claim. The appellants argue that the decision of the court a quo flies in
the face of the authority in Millman & another NNO v Pieterse & others 1997 (1) SA
784 (C).  In that matter, the liquidators of a company instituted action to claim
expungement of the claims of certain creditors that had been admitted to proof at the
first meeting of creditors. The defendants excepted to the claims on the basis that a
court has no jurisdiction to expunge claims, but is confined to reviewing a decision of
the Master under s 151 of the Insolvency Act.

[20] The court in Millman dismissed the exception, holding that it had the
jurisdiction to review a decision at common law, and that s 151 of the Insolvency Act
did not oust that jurisdiction. Section 151 provides that any person aggrieved by a
decision of the Master may review it on application to a court. Friedman JP and
Farlam J in Millman stated (at 788G-I):
‘There  is a  strong  presumption  against the ouster or curtailment of the Court’s jurisdiction.
. . . The mere fact that the Legislature has created an extra-judicial remedy is not conclusive
of the question whether the Court’s power has been restricted. It is in every case necessary
to consider all the circumstances and then to determine whether a necessary implication
arises that the Court’s jurisdiction is either wholly excluded or at least deferred until the
domestic or extra-judicial remedies have been exhausted.’

[21] That court considered that since the Insolvency Act did not expressly ‘oust’
the court’s jurisdiction, and since there appeared to be no intention in the Act to
deprive the court of the power to expunge a claim, especially where there were
complicated factual disputes, it had the power to expunge the creditors’ claims in an
action brought by the liquidators. It is not clear to me, however, what power the court
had that it considered was ousted. Insolvency administration is wholly a creature of
statute: The Master of the High Court (North Gauteng High Court, Pretoria) v Motala
NO & others 2012 (3) SA 325 (SCA) ([2011] ZASCA 238) para 5. The various
statutes regulating insolvency of individuals and companies have always conferred

the power to expunge a claim on the Master. It is only once the Master has made the
decision whether or not to expunge a claim that it becomes subject to review by a
court.

[22] The court a quo held that Millman is distinguishable on the facts: the plaintiffs
were liquidators, not creditors, as in this case, and the claims sought to be expunged
were not included in the L & D account, but had been admitted to proof at the first
meeting of creditors.

[23] On appeal, the appellants argue that the decision of Rossouw AJ did not take
into account the judgment of this court in Fey NO and Whiteford NO v Serfontein &
another 1993 (2) SA 605 (A), which held that the power of the court at common law
to remove a trustee of an insolvent estate on the ground of misconduct was not
displaced by the enactment of the Insolvency Act. Hoexter JA said (at 613F-G):
‘It is trite law, moreover, that statutes in derogation of the common law are to be strictly
construed. The common law will be displaced only where the terms of the statute are
irreconcilably opposed to the common law.’

[24] The respondents, on the other hand, argue that Millman is not only different,
but also wrongly decided. In Bank of Lisbon and South Africa Ltd v The Master &
others 1987 (1) SA 276 (A) at 287G it was held that the admission of a claim by the
Master at a meeting of creditors did not amount to ratification of the claim or render it
res judicata. (See also Estate Friedman v Katzeff 1924 WLD 298 at 303.) And in
Standard Bank of South Africa v The Master of the High Court & others 2010 (4) SA
405 (SCA) ([2010] ZASCA 4), this court held that, before resorting to review
proceedings under s 151 of the Insolvency Act, a liquidator is obliged to follow the
procedures set out in s 45 of the Act. The section is peremptory (para 93). That is
contrary to the decision in Millman.

[25] Section 45 of the Insolvency Act requires that every claim proved against an
insolvent estate at a meeting of creditors, and all documents supporting such claim,
must be delivered to the trustee, who must examine all available books and
documents to ascertain whether the estate owes the claimant the amount claimed. If
a trustee disputes a claim after proof at a meeting he or she must report on this to

the Master, explaining why the claim is disputed. The Master may confirm the claim,
or, after affording the claimant an opportunity to substantiate the claim, reduce or
disallow it. It is this decision that triggers the review procedure under s 151 of the
Insolvency Act.

[26] The court’s jurisdiction is not, in my view, ousted: the trustee has first to
comply with s 45 before a decision can be reviewed, but that hardly amounts to an
ouster of jurisdiction, if ever the court had the power to expunge a claim. In finding
that procedure by action instead of implementing the provisions of ss 45 and 151 of
the Insolvency Act is permissible, the court in Millman did not apparently take fully
into account the principle that a review under s 151 is one where the court has the
powers of appeal and review, and can hear further evidence, deciding the matter de
novo. See the classic statement of Innes J in Johannesburg Consolidated
Investment Co Ltd v Johannesburg Town Council 1903 TS 111 at 117. The court in
Millman was alive to this, but nonetheless considered that s 45 was not peremptory.
In so far as the decision is not consonant with the principle enunciated in Standard
Bank above, it is incorrect.

[27] I consider that the appellants should have invoked the procedures set out in
s 407 of the 1973 Companies. The power to expunge a claim or to reduce it is
conferred on the Master alone. (See B Galgut et al (eds) Henochsberg on the
Companies Act 61 of 1973, Volume 1, pp 861-862 (service issue 20) and the
authorities cited there.) Only when the Master has made a decision in this regard
may an interested person approach a court to review it. The second exception was
thus correctly upheld by the court a quo.

Peremption of the appeal
[28] The respondents argued that by asking for an extension of time in which to file
amended particulars of claim, the appellants’ attorney had indicated an intention not
to appeal, which had the effect of perempting the appeal. There is no need to
consider whether the appellants manifested a clear intention to acquiesce in the
order of the court a quo. The order in respect of which the letter was written was not
appealable. The request by the attorney had nothing to do with the orders on the two

exceptions, which were appealable. The respondents fairly conceded at the hearing
that the appeal had not been perempted.

Costs
[29] The appellants have succeeded in so far as the first exception is concerned,
but failed in so far as the second exception is concerned. They are entitled to the
costs of the appeal in relation to the first order. The respondents are entitled to the
costs of the appeal in respect of the second order, and there is no reason to deprive
them of the costs of two counsel, for which they have asked.

[30] Accordingly:
1 The appeal against the order upholding the first exception is upheld with costs. The
order is replaced with the following:
‘The first exception to the particulars of claim is dismissed with costs.’
2 The appeal against the order upholding the second exception is dismissed with
costs including those of two counsel.

_______________________
C H Lewis
Judge of Appeal

APPEARANCES

For the Second, Third, Fourth and
Fifth Appellants:
L E Combrink
Instructed by:
Venns Attorneys, Pietermaritzburg
Pieter Skein Attorneys, Bloemfontein

For the First Respondent:

J Suttner SC (with him P Cirone)
Hogan Lovells (South Africa) Incorporated
as Routledge Modise Inc, Johannesburg
Webbers, Bloemfontein

For the Second, Third and Fourth
Respondents:

E Theron (with him A Thomson)
Instructed by:
Ric Martin Attorneys, Pretoria
McIntyre & Van der Post, Bloemfontein