THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

JUDGMENT

Case No: 324/09

In the matter between:

R MILLER

First Appellant
A I SURMANY

Second Appellant
R M KGOSANA

Third Appellant
B K MAMOSEBA

Fourth Appellant
N Y SERITI

Fifth Appellant

and

NAFCOC INVESTMENT HOLDING COMPANY LTD           First Respondent
M LEAF

Second Respondent
L BAYA

Third Respondent
T SAUL

Fourth Respondent
K H HLONGWANE

Fifth Respondent

Neutral citation: R Miller v Nafcoc Investment Holding Company (324/09)

[2010] ZASCA 25 (25 March 2010).

Coram:
CLOETE, MHLANTLA, SHONGWE JJA, GRIESEL

et MAJIEDT AJJA

Heard:
9 March 2010

Delivered:
25 March 2010

Summary:
Companies Act 61 of 1973; ss 417 and 418: Master in ordering
enquiry does not have to act on an application by a limited category of
persons, or any application at all; it is competent and sensible for the Master
to delegate to the Commissioner the decision as to who may attend the
enquiry or have access to the record; s 73: effect of deregistration of
company; liquidators: power of liquidators to delegate responsibility to third
persons.

______________________________________________________________

ORDER
______________________________________________________________

On appeal from: South Gauteng High Court (Johannesburg) (Snyders J
sitting as court of first instance):
1.
The appeal succeeds with costs, including the costs of senior counsel.
2.
The order made by the court a quo is set aside and the following order
substituted:
'The application is dismissed with costs, including the costs of the urgent application;
and the costs of senior and junior counsel where such were employed, and of senior
counsel where senior counsel alone was employed, shall be allowed at all stages of
the proceedings.'
3.
The cross-appeal is dismissed with costs, including the costs  of senior
counsel.
______________________________________________________________

JUDGMENT
______________________________________________________________

CLOETE JA (MHLANTLA, SHONGWE JJA, GRIESEL et MAJIEDT AJJA
concurring):

[1] On 23 May 2006 a company known as Serveco (Pty) Ltd was finally
liquidated at the suit of its major shareholder Nafcoc Investment Holding
Company Ltd. Nafcoc and four individuals, each of whom was at some time a
director or employee of Serveco or Nafcoc or both (and to whom I shall refer
as 'the individual applicants'), brought urgent proceedings in the South
Gauteng High Court, Johannesburg. The second to fourth respondents in that
application were the joint liquidators of Serveco (to whom I shall refer as such)
and the first respondent, Mr Miller, was a professional liquidator who acted on
behalf of the joint liquidators. His authority to do so, as well as the joint
liquidators' ability to confer such authority on him, are in dispute.

[2] The relief sought by the individual applicants was aimed at preventing
their examination and that of their attorney, and also preventing the
attendance of Miller, at an enquiry into the affairs of Serveco authorised by
the Master in terms of ss 417 and 418 of the Companies Act 61 of 1973. The
application to the Master for the enquiry had been made ex parte by Miller
acting on behalf of the joint liquidators and the Master made the order on 27
March 2008. In terms of the order an attorney, Ms Rene Bekker, was
appointed as the Commissioner in terms of s 418 of the Companies Act. (The
Master and the Commissioner were respondents a quo but took no part in
those proceedings or this appeal.)

[3] The enquiry was due to resume on 29 August and continue on 3
November 2008 and the individual applicants and their attorney (who was
required to bring documents) were given notices to attend. On 26 August
2008 and by consent Mokgoatlheng J granted an interim order which inter alia
reserved the costs of the urgent application for determination by the court
hearing the application for final relief; prescribed time periods for the review of
the Master's decision to order the enquiry and the Commissioner's decision to
issue notices requiring the attendance of the individual applicants and their
attorney at the enquiry; put the parties on terms to deliver further affidavits,
and recorded that the enquiry convened by the Commissioner for 29 August
and 3 November 2008 would not take place.

[4] The matter came before Snyders J on 13 November 2008. Judgment
was reserved. On 8 December of the same year the learned judge made an
order:
1.
Setting aside the decision of the Master and the Commissioner:
(a)
to convene the enquiry;
(b)
to continue or permit the continuation of the enquiry; and
(c)
to issue the notices served on the individual applicants and their
attorney to attend the enquiry on 29 August and 3 November; and
2.
Interdicting Miller from access to the enquiry, the record thereof and
any inspection thereof 'in breach of s 417(7) of the Companies Act'.

Miller and each of the joint liquidators were ordered jointly and severally to
pay the costs of the application and the costs incurred in the enquiry out of
their own pockets. Those parties now appeal to this court against the whole of
the order made by Snyders J, and Nafcoc and the individual applicants cross-
appeal for the costs of two counsel in the court a quo. Both sides obtained the
leave of the court a quo (granted by Blieden J).

[5] On appeal counsel representing the applicants sought to justify para
1(a) of the order of the court a quo and to impugn the decision of the Master
to order the enquiry into the affairs of Serveco, primarily on the basis that
there had been material non-disclosures by Miller in his ex parte application.1
Three arguments were advanced. First, it was submitted that Miller had not
disclosed that a previous enquiry had been authorised by the Master on 7
June 2006 and that that enquiry had not yet been finalised or alternatively,
that Miller had not given reasons to the Master justifying the necessity for a
second enquiry when the earlier enquiry had not concluded. Second, it was
submitted that Miller had not disclosed that Serveco was about to be
deregistered. Third, it was submitted that Miller had not disclosed that the joint
liquidators had authorised him to bring the application and to conduct the
enquiry on their behalf.

[6] The first submission is patently untenable. Miller said in the answering
affidavit delivered on behalf of the joint liquidators and himself:
'In any event for purposes of the second enquiry the grounds on which the joint
liquidators wished to hold an enquiry into the affairs of Serveco were disclosed to the
Master in the application by the joint liquidators, represented by me, to the Master on
27 March 2008. One of these grounds was the very fact of the first enquiry and the
First Applicant's conduct in relation thereto.
. . .
It was disclosed to the Master in the joint liquidators' application that there had been
a previous commission of enquiry also ordered by the Master under Advocate
Slomowitz SC.

1 See eg Schlesinger v Schlesinger 1979 (4) SA 342 (W) at 348E-350C; NDPP v Basson
2002 (1) SA 419 (SCA) para 21.

. . .
I admit that the existence of the first commission of enquiry is material to the decision
by the Master whether to convene a second one. The existence of the first
commission of enquiry was disclosed to the Master in the application and indeed, as I
have suggested above, the manner in which the first commission of enquiry was
conducted and then left for dead by the first applicant and its attorneys was an
important element of the motivation to the Master to grant leave to convene the
second enquiry.'

[7] The Master filed two reports and refused to divulge his reasons for
granting the order at issue in the appeal. The appellants were specifically
authorised by the order of Mokgoatlheng J to launch an application for
appropriate relief if they were of the view that such records which might be
filed by the Master and the Commissioner pursuant to the review application
in terms of Uniform Rule of Court 53 were 'incomplete, deficient or in any
other manner not satisfactory in law'. They did not do so. In the circumstances
I find the remarks of James AJP in Foot NO v Alloyex (Pty) Ltd & others2
apposite, and I respectfully adopt them:
'It was also argued that it was impossible to ascertain why the appointment of the
commissioner was made, or whether the commissioner's investigations were of any
value to the ordinary shareholders because of the veil of secrecy imposed by Thirion
J's order, and that at the very least I should, at this stage, allow the respondents to
peruse the reports (and even consider the voluminous records of the evidence before
the commissioner) to see whether the company's creditors had received any
advantage from the efforts of the commissioner, and should delay the case until this
opportunity was afforded to them. I have no sympathy with this submission. Although
the commission was a secret commission and the contents of the application and the
terms of the order of Court were not to be disclosed without the leave of the Court
(and the evidence and the record of evidence was not to be disclosed without the
leave of the Court or the commission) there is no suggestion that any attempt by the
respondents (or anyone else for that matter) has to this date been made to obtain
such leave. It is true that there were provisions laid down regarding secrecy but, if a
proper case had been made for the lifting of the veil, I have no doubt that it would
have been lifted. Although the grant of the order was secret it must have been clear

2 1982 (3) SA 378 (D) at 382B-G.

to anyone concerned in this matter, and particularly for those summoned to give
evidence before the commissioner, that an order had been made and, if any of them
had grounds for believing that justice might be denied unless they were allowed to
peruse the application for the order and the reports, they should have applied for
leave to peruse them.'
Had there been any doubt whether the disclosures which Miller said he had
made to the Master, had in fact been made, the court seized with the
application could have preserved the secrecy of the proceedings by itself
looking at the application to the Master.

[8] The second submission is equally without merit. Miller said in the
answering affidavit, and there is no reason to doubt his assertion, that he and
the joint liquidators only became aware of the pending deregistration of
Serveco on 15 August 2008 ─ ie well after 27 March 2008 when the Master
ordered the enquiry. Miller obviously could not disclose what he did not know.

[9] The third submission is not maintainable in fact or in law. As a matter of
fact, Miller annexed to his application to the Master a power of attorney
authorising him to bring the application which was signed by each of the joint
liquidators. A copy of the power of attorney was annexed to the answering
affidavit. And as a matter of law, the Master did not have to act on the
application of the liquidators or, indeed, pursuant to any application; and
whether or not Miller was authorised by the liquidators to make the
application, is accordingly irrelevant. Section 417(1) of the Companies Act
reads:
'In any winding-up of a company unable to pay its debts, the Master or the Court
may, at any time after a winding-up order has been made, summon before him or it
any director or officer of the company or person known or suspected to have in his
possession any property of the company or believed to be indebted to the company,
or any person whom the Master or the Court deems capable of giving information
concerning the trade, dealings, affairs or property of the company.'
The section does not envisage an application, much less an application from
a limited category of persons ─ which is eminently sensible for otherwise the
Master would be unable to act unless he was given information from specified

persons.3 The submission that Miller had not disclosed to the Master that he
had been authorised by the liquidators to conduct the enquiry on their behalf
need not be considered as it was not raised in the papers. I shall deal later in
this judgment with the question whether it was competent for the liquidators to
have given this authority to Miller.

[10] I therefore conclude that there was no basis for the order given by the
court a quo setting aside the decision of the Master to convene the enquiry. I
refuse to consider the submission based on s 386 of the Companies Act4 that
because the liquidators did not have authority to apply for an enquiry, they
could not validly have authorised Miller to do so. This point was also not
raised in the papers ─ perhaps because there is authority in the high court5
that it is not open for persons in the position of the applicants to attack the
validity of the enquiry proceedings initiated by the liquidator. It is unnecessary
to consider the legal position as the applicants laid no factual foundation for
the argument.

[11] I turn to consider whether there was a basis for the order setting aside
the decision of the Commissioner to continue or commit the continuation of
the enquiry. Serveco was deregistered on 25 April 2008. The deregistration
was effected by an official in the Companies and Intellectual Property
Registration Office (CIPRO), purporting to act in terms of s 73 of the
Companies Act and on behalf of the Registrar of Companies. Deregistration
was incompetent in as much as Serveco had been wound-up on 23 May 2006
─ a fact which was pointed out to the official in a letter before Serveco was
deregistered ─ and the consequence of a winding-up is not deregistration but
a dissolution in terms of s 419 of the Companies Act, subsec (1) of which
provides:
'In any winding-up, when the affairs of a company have been completely wound up,
the Master shall transmit to the Registrar a certificate to that effect and send a copy
thereof to the liquidator.'

3 Venter v Williams 1982 (2) SA 310 (N) at 313-4; Lok v Venter NO 1982 (1) SA 53 (W) at 58;
Foot NO v Alloyex (Pty) Ltd above, n 2, at 383-4.
4 Which deals with the powers of liquidators.
5 Lok above, n 3, at 55H-57E.

Deregistration, on the other hand, puts an end to the existence of the
company. Its corporate personality ends in the same way that a natural
person ceases to exist on death. Once there has been deregistration there is
obviously no purpose in a corporate post mortem and no-one would have the
authority to conduct one. Serveco was restored to the register on 10 August
2008 pursuant to an order of the Johannesburg High Court made on 4
November 2008, after a rule nisi had been issued, published in newspapers
and the Government Gazette and served on inter alios the applicants,
requiring all interested persons to show cause why this should not be done.

[12] The notices requiring the attendance of the individual applicants and
their attorney before the Commissioner were authorised by the Commissioner
whilst Serveco was deregistered. They were therefore void for that reason. (I
should mention that the Commissioner was unaware of the deregistration.)
But Serveco was restored to the register on 10 August 2008, before the
application for final relief came before the court a quo on 13 November of the
same year. I do not propose analysing what effect in law the restoration of the
company to the register had on the notices served on the individual
applicants.6 That would be an academic exercise as new notices will have to
be served on them if they are to be required to attend the enquiry. It was
accordingly unnecessary for the court a quo to set the notices aside as it did
in para 1(c) of its order; and once Serveco had been restored to the register,
there was no basis for the order setting aside the decision of the
Commissioner (or the Master) to continue or permit the continuation of the
enquiry. I reject the submission on behalf of the applicants that the authority of
the joint liquidators, the Master and the Commissioner ─ all of which was
conferred before the deregistration ─ did not survive the deregistration for the
simple reason that all such authority was conferred before Serveco was
deregistered, and there is no warrant for holding that events that occurred
before that event are in any way affected by it.

6 Cf Tyman's v Craven [1952] 2 QBD 100 (CA).

[13] I shall now deal with the interdict against Miller contained in para 2 of
the order of the court a quo, which precludes him from attending the enquiry
and access to the record thereof. Section 417(7) of the Companies Act
provides:
'Any examination or enquiry under this section or s 418 and any application therefor
shall be private and confidential, unless the Master or the Court, either generally or in
respect of any particular person, directs otherwise.'
The submission on behalf of the applicants was that the interdict was justified
because Miller did not have the permission of the Master to perform any of the
acts he was interdicted from performing. The answer to this, it seems to me,
flows from the provisions of s 418(1)(b) of the Companies Act which provides:
'The Master or the Court may refer the whole or any part of the examination of any
witness or of any enquiry under this Act to any such commissioner, whether or not he
is within the jurisdiction of the court which issued the winding-up order.'
In the present matter, the Master referred the whole enquiry to the
Commissioner. The order made contains the following paragraph:
'The contents of this application and the evidence to be taken at the commission be
kept confidential and private and not be disclosed without the prior leave of the
Commissioner or the High Court or the Master having first been had and obtained.'
The power thus conferred was in my view sufficiently wide to authorise the
Commissioner to allow Miller to attend the enquiry and to have access to the
record. The Commissioner impliedly exercised the power, well knowing (as
appears from the record of the enquiry) that Miller was not one of the joint
liquidators, by permitting him to be present at the enquiry. It seems to me not
only competent but eminently sensible for the Master, having decided to
invoke s 418 and appoint a Commissioner, to delegate to the Commissioner
the power of deciding who might be allowed to attend the hearing and have
access to the record. Indeed, in such a case I would find it extraordinary if for
example every time an attorney wished to have a candidate attorney present,
or the liquidators wished to be advised by an accountant or other expert whilst
a witness was being examined, that permission for either to attend the enquiry
would have to be sought from the Master or the court.

[14] It will be convenient now to deal with an argument which is related to
the argument I have just dealt with and which was also advanced on behalf of
the applicants. The submission was that it was incompetent in law for the
liquidators to delegate the conduct of the enquiry to Miller. Reliance was
based inter alia on the following statement by Innes CJ (Bristowe and
Curlewis JJ concurring) in Goldseller v Hill7 (in regard to joint trustees in
insolvency):
'They are in law only one persona. They jointly represent the estate, and together
they are the channel through which the estate can sue or be sued, and the proper
persons to investigate all its affairs.'
But there is nothing in that statement to suggest that the liquidators cannot
have assistance in such an investigation or, put conversely, that all acts
relative to the investigation have to be performed by the liquidators
themselves. A useful judgment in the present context is Allan v Erlank's
Trustee.8  In that matter Bristow J held:
'But all the trustee was appointed to do, all his powers and discretions, the
supervision and management of the liquidation ─ all that is left to Rossouw [an
attorney]. It seems to me, therefore, that the power of attorney is a general
delegation of Hopwood's powers as trustee; and whether or not the maxim delegatus
non potest delegare applies under our law to the same extent as it applies in the law
of England ─ I think it probably does not ─ it is inconceivable to my mind that the
Insolvency Law intended that a person appointed as trustee should be at liberty to
delegate his powers to a third person. When creditors choose a trustee they choose
a person whom they can rely upon and trust, and the trustee by accepting his office
binds himself to apply his mind to bring his discretion to bear upon the various points
which arise in the course of his trusteeship. Ministerial acts he can delegate, but not
matters of discretion.'

[15] Miller said in the answering affidavit:
'I have practiced continuously as a liquidator for more than 15 years. My business
partner, the Second Respondent, has practiced continuously as a liquidator for more
than 12 years. Mr Christensen has practiced continuously as a liquidator for more
than 15 years. We all confirm that it is common practice for the administration of the

7 1908 TS 822 at 827.
8 1908 TS 1187 at 1193.

day to day affairs of a company in liquidation to be dealt with by a person who is not
necessarily one of the joint liquidators, but a colleague of one of the joint liquidators
in the legal entity used by that joint liquidator for the purposes of liquidating
companies.
. . .
Those matters in the winding up pertaining to a forensic investigation which was
conducted into the affairs of Serveco and to the application to the Master of the High
Court Johannesburg for leave to convene the insolvency enquiry and the insolvency
enquiry itself, have been handled by me. I have done so as a co-member in RMG
Trust CC and business partner of the Second Respondent.

There is nothing whatsoever unusual or improper in the division of labour I
have referred to above, which was agreed upon by the joint liquidators, shortly after
they were appointed by the Master.'
Miller also claimed to have the following authority from the joint liquidators in
terms of the power of attorney:9
'[To] attend on our behalf and represent us at all hearings of the insolvency enquiry
into the affairs of the company, in respect of which we sought and obtained in our
capacities as joint liquidators of the company an order from the Master of the High
Court Johannesburg on 27 March 2008 granting leave to convene such enquiry, to
gain access to all documents in the enquiry for the purposes of so representing us,
and to furnish instructions on our behalf to our attorneys of record in that enquiry,
Messers Knowles Husain Lindsay Inc.'
The applicants described this provision as having 'breathtaking scope'.

[16] I am not satisfied on the papers as they stand that the joint liquidators
have done anything more in this case than delegate to Miller ministerial acts,
ie acts that he is required to perform as their subordinate agent; or, put
conversely, I am unable to find that the joint liquidators have delegated to
Miller matters of discretion that their office requires them to exercise both
jointly and personally. The papers do not show that Miller has taken over the
liquidation of the company (or, for that matter, the running of the enquiry) to
the exclusion of the joint liquidators, as was the position in Allan and in Smith

9 The power of attorney annexed to the answering affidavit has been signed by only two of the
joint trustees.

& Co & others v Van Rensburg10 where Curlewis J stated (of delegation of a
trustee's powers):
'If these facts are correct ─ and, generally speaking, I take them to be correct ─ the
respondent was in effect merely a dummy trustee. He was not, and did not intend to
act the part of, a trustee, but allowed himself to be nominated through the
instrumentality of Bekker and Bekker [a firm of attorneys], and then divested himself
of all his functions as trustees by handing over to Bekker and Bekker the complete
management and control of the estate.'

[17] I accordingly conclude that there was no legitimate basis for the court a
quo to have granted the interdict against Miller. That brings me to the question
of costs.

[18] It was submitted on behalf of the applicants that they should at least be
awarded the costs in the court a quo of the urgent part of the application. On
the one hand, they and their attorney were faced with notices requiring them
to attend an enquiry on 29 August and 3 November under pain of possible
criminal sanction. On the other hand, Miller and the joint liquidators only
became aware of the deregistration of Serveco on Friday 15 August; and after
the application was served on them on 19 August, they gave an undertaking
within three days (on 22 August) that the enquiry would not proceed on 29
August. They also consented to the order given by Mokgoatlheng J on 26
August which recorded that the enquiry would not proceed on 29 August or 3
November. Furthermore, neither Miller nor the joint liquidators were
responsible for the deregistration of Serveco which was the basis for the
invalidity of the notices, nor were they remiss in not preventing it. In the
circumstances, I consider that it would be fair to make the costs of the urgent
application costs in the cause of the main application.

[19] Before making the order I should mention that counsel representing
Miller and the joint liquidators indicated that the taxing master requires an
order authorising the costs of senior counsel if such costs are to be allowed
on taxation. No submission to the contrary was made on behalf of the

10 1913 TPD 28 at 35.

applicants. This is accordingly not a proper case to examine the practice of
the taxing master, and I express no opinion on it either way.

[20] The following order is made:
1.
The appeal succeeds with costs, including the costs of senior counsel.
2.
The order made by the court a quo is set aside and the following order
substituted:
'The application is dismissed with costs, including the costs of the urgent application;
and the costs of senior and junior counsel where such were employed, and of senior
counsel where senior counsel alone was employed, shall be allowed at all stages of
the proceedings.'
3.
The cross-appeal is dismissed with costs, including the costs  of senior
counsel.

_______________
T D CLOETE
JUDGE OF APPEAL

APPEARANCES:
APPELLANTS:

A Subel SC
Instructed by Knowles Husain Lindsay Inc,
Johannesburg;
McIntyre & Van der Post, Bloemfontein

RESPONDENTS:

J Suttner SC (with him Ms P M Cirone)
Instructed by Werksmans Inc, Johannesburg;
Matsepes Attorneys, Bloemfontein

THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF
APPEAL

From:  The Registrar, Supreme Court of Appeal
Date:  xx March 2010
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

R MILLER v NAFCOC INVESTMENT HOLDING COMPANY

A company, Serveco (Pty) Ltd, was finally liquidated. Directors/employees of its
major shareholder Nafcoc brought urgent proceedings aimed at preventing their
examination, and the attendance of Miller, a professional liquidator acting on behalf
of the joint liquidators, at an enquiry of Serveco’s affairs authorised by the Master in
terms of ss 417 and 418 of the Companies Act.

The court a quo set aside the Master and the Commissioner’s decisions to convene
the enquiry; to permit its continuation; and to issue the notices served on the
applicants to attend the enquiry. Furthermore, Miller was interdicted from access to
the enquiry, the record and any inspection thereof.

In upholding Miller and the joint liquidators’ appeal against the court a quo’s
decision, to set aside the Master’s decision to convene the enquiry, which had been
made by Miller (acing on behalf of the joint liquidators), the SCA held that in ordering
an enquiry, the Master does not have to act on an application by a limited category
of persons, or any application at all for otherwise the Master would be unable to act
unless he was given information from specified persons. The SCA held that as the

notices requiring the attendance of the applicants were issued by the Commissioner
during the period that Serveco was deregistered (as a result of a mistake in the
CIPRO office), they were invalid and new notices would have to be served. The SCA
further held that the Commissioner was entitled to allow Miller to attend the enquiry
as it was not only competent but also sensible for the Master, in invoking s 418 to
appoint a Commissioner, to delegate to her the power of deciding who might be
allowed to attend the hearing and have access to the record. There was therefore no
legitimate basis for the court below interdicting Miller from access to the enquiry.
Lastly, it was not incompetent in law for the liquidators to delegate the conduct of the
enquiry to Miller. The liquidators did no more than delegate to Miller acts he was
required to perform as their subordinate agent.

---ends---