THE SUPREME COURT OF APPEAL
THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
OF SOUTH AFRICA

CASE NO. 290/2000
Reportable
In the matter between
BASIL NEL NO AND 2 OTHERS

Appellant
and
THE MASTER OF THE HIGH COURT
AND 2 OTHERS

Respondents

_____________________________________________________________
CORAM:  ZULMAN, STREICHER and NUGENT JJA
HEARD: 21 FEBRUARY 2002
DELIVERED: 8 MARCH 2002

Termination of concursus creditorum – Interpretation of s 348 of the
Companies Act, 1973

JUDGMENT

ZULMAN JA

[1] The crisp issue in this appeal is what the effect is, if any, on the
concursus creditorum, when a provisional order for the winding up of a
company that was obtained at the instance of a creditor is discharged and
immediately replaced by a final order for the winding up of the company
granted at the instance of another creditor.  In other words, whether the
concursus creditorum (for the sake of brevity- concursus) that came into
existence when the provisional order was granted remains extant.

[2] The court a quo (Blieden J) held that the concursus  established by the
grant of the provisional order terminated upon the discharge of that order.
This appeal is brought with the leave of the court a quo.

[3]   The relevant common cause facts are:

3.1 On 7 April 1998 one van Niekerk filed an urgent application at
the office of the Registrar of the High Court, Johannesburg, for
the winding-up of Prop Plant Hire (Pty) Limited (the company),
(the van Niekerk application).  It is common cause that this is the
date on which the application was presented to the court as

contemplated by s 348(2) of the Companies Act, 1973.

3.2
Pursuant thereto and on 8 April 1998 a provisional order for the
winding-up of the company was granted returnable on 19 May
1998.

3.3
On 9 April 1998 the Master of the High Court (the first
respondent on appeal) appointed the appellants as joint
provisional liquidators of the company.

3.4
On 19 May 1998 the van Niekerk application stood down until
22 May 1998 and the return day of the provisional order was
extended to 2 June 1998.  The object of the extension was to
afford NBS Boland Limited (Boland) the opportunity of
bringing a substantive intervention application together with a
substantive application to wind up the company.

3.5
On 27 May 1998 Boland filed such an application.  The notice
of motion sought an order in the following terms:

“1.
dat aan die tussenbei-tredende skuldeiser  verlof verleen word om
tussenbeide te tree in die hoofaansoek;

2.
dat die respondent gelikwideer word ten behoewe van die
skuldeisers;

3.
dat die koste van die tussenbeitredende, koste in die
likwidasieverrigtinge sal wees......”

The application bore the same case number which had been
allocated to the van Niekerk application.

3.6
On 28 May 1998 Boland’s application was served on the
company and was placed in the file containing the van Niekerk
application.

3.7
On 2 June 1998 Boland moved for an order in terms of its
notice of motion.  The Court (Flemming DJP) refused to
entertain Boland’s application until it had been duly stamped
and properly issued by the Registrar under a separate case
number.  These requirements were attended to on the same day.
Thereafter but still on 2 June 1998 the following orders were
made:

In the van Niekerk application:

“3.7.1 The order of provisional liquidation is set aside;

3.7.2 The rule nisi is discharged”

In the Boland application:

“3.7.3 Dat die bogenoemde respondent maatskappy hiermee in finale
likwidasie geplaas word.”

The orders were granted in immediate succession although it is
uncertain in precisely what order.

3.8
On 22 June 1998 and pursuant to Boland’s application, the
Master appointed the appellants as joint provisional liquidators
of the company.

3.9
These appointments were made final on 7 August 1998.

[4]  The appellants sought an order in the Court a quo in these terms:

“1.
It is hereby directed that the winding-up of Prop Plant Hire (Pty) Limited

(“the company”) commenced on 8 April 1998.

2. It is hereby directed that the concursus creditorum in respect of the
company was commenced on  8 April 1998.

3. It is hereby directed that all creditors intending to prove claims against the
company are to calculate the values of their respective claims as at 8 April
1998.

4. That the costs of this application are to be paid by any party opposing the
relief sought herein, in the event of no party opposing the relief sought
herein, that the costs are to be costs in the liquidation.”

(It is common cause that the date 8 April 1998 should read 7 April
1998).

[5]  The  application was dismissed with costs, such costs to include the
costs  of two counsel.

[6]  It is trite that one of  the effects of the grant of a winding-up order is to
establish a concursus1 .  Section 348 of the Companies Act, 1973 provides a
date when such winding-up is deemed to commence in that it states:
“A winding-up of a company by the Court shall be deemed to commence at the
time of the presentation to the Court of the application for the winding-up.”

An order for the winding up of a company, be it a provisional or a final
order, is not personal to the petitioning creditor but determines the status of
the company. Accordingly when the  provisional order was granted at the
instance of van Niekerk on 8 April 1998 this brought about the
commencement of the process of winding up which, in terms of s 348, was
deemed to have commenced on 7 April 1998.  The status of the company
was therefore that it was provisionally in liquidation with all the
consequences of such a status including the creation of a concursus.

[7]  As pointed out in Lief, N.O. v Western Credit (Africa) (Pty) Limited2 the
section is designed to obviate:-
“…a possible attempt by a dishonest company, or directors, or creditors or others,
to snatch some unfair advantage during the period between the presentation of the
petition for a winding-up order and the granting of that order by a Court..”

See for example Walker v Syfret NO 1911 AD 141 at 160
1966(3) SA 344 (W) at 347 B-C.  See also Vermeulen and Another v CC Bauermeister

(Edms) Bpk 1982(4) SA  159 (T) at 161 F-H

[8]  As a consequence of the deemed commencement of the winding-up
of the company on 7 April 1998 a concursus then came into being.3  The
respondents conceded that this concursus endured until some time on 2
June 1998.  However, and  contrary to what is contended for by the
appellants, the respondents  submitted that when the rule was discharged
in the van Niekerk application on 2 June 1998, and even although it was
immediately replaced with a final winding-up order at the instance of
Boland, the concursus established by the provisional order ceased to exist
and a new concursus came into being.  I cannot agree.  There was in
reality no hiatus which brought the concursus established on 7 April
1998  to an end.  The discharge of the provisional order, and the grant of
the final order, were clearly intended to take effect simultaneously (as
nearly as that could be achieved in reality) and there was thus no break in
the status of the company.    The purpose of the Boland application to
intervene in the van Niekerk application and to seek a final winding-up
order was to ensure the continuation of the already existing process of
winding up (albeit provisional) and the  concursus that this entailed.

[9]  The situation which obtained was no different to that which occurred

Kalil v Decotex (Pty) Ltd 1988(1) SA 943 (A) at 961H – 962A and First National Bank Limited v
EU Civils (Pty) Ltd 1996(1) SA 924  (C) at 933 G-H

in Milne, N.O. v Deputy Sheriff and Others4  in which Caney J stated the
following:
“On 22nd March, Selke J, had made a provisional liquidation order against
the company at the instance of one Ismail Hajee Moosa.  This order was
made notwithstanding resistance on behalf of the company at that stage of
the proceedings, and the rule nisi in connection with the provisional
liquidation order was returnable on 14th April.  It was, however, extended
until 26th April, on which date the petitioner, Moosa, applied for its
discharge.  Another creditor, however, one Mayet, had apparently come to
know of the intention of Moosa to make that application, and he moved on
the same day, the 26th April, for a provisional liquidation order.  The two
applications, that of Moosa for discharge of the order he had obtained and
that of Mayet for a provisional liquidation order, were heard
simultaneously, and both were granted.  The contention of the second
respondent before me was that the provisional liquidation order made at
the instance of Moosa having been discharged, the applicant’s
appointment as provisional liquidator of the company ceased to operate,
and that, as he had not been re-appointed after the making of the
provisional liquidation order at the instance of Mayet, he no longer had
any authority to continue the proceedings in which he had obtained the
rule nisi on 7th April.
The contention of the applicant, in answer to this, was that he had not
been appointed provisional liquidator in the matter of Moosa against the
company, but provisional liquidator of the company in provisional
liquidation;  that the company never ceased after his appointment to be in
provisional liquidation;   that there was no space of time or hiatus between
the discharge of the order which Moosa had obtained and the grant of the
order which Mayet obtained;  and that consequently he continues to be the
provisional liquidator of the company until either it be discharged from
liquidation, or a liquidator be appointed to it.  On his behalf the
submission was advanced that the Court had on 26th April deliberately
heard the two submissions simultaneously with the object of avoiding any
break in the continuity of the state of provisional liquidation in which the
company was at that time.
The contentions advanced on behalf of the applicant appeal to me as
being sound, and I consider that he continues to function at the present
time as the provisional liquidator of the company and consequently has
locus standi to apply for confirmation of the rule nisi granted on 7th
April.”

1955(3) SA 160 (N) at 161 A - F

[10]  Counsel for the respondents referred us to Flax v Berliner: Houndsditch
Warehouse (Pty), Ltd, Intervening,5 in support of his general submission
that upon the discharge of the provisional winding-up order the
concursus came to an end.  A consideration of the judgment of Millin
J in that matter reveals, however, that the learned judge merely
referred to an assumption made by counsel that if an existing
provisional sequestration order was discharged, no new order granted
after this expiration of the six month period referred to in s 34(1) of
the Insolvency Act, 1936, even if granted simultaneously with the
discharge, could bring the section into operation  (This section deals
with the voidable sale of a business by a trader).

[11]  It is, in my view, irrelevant whether Boland can properly be said to
have intervened in the van Niekerk application (in the sense that it
sought to pursue the same cause of action) or whether its application
was a concurrent application for the same relief.  In either event the
effect of the order that was granted at its instance was to cause the
winding-up process that had commenced on 7 April 1998 to continue
uninterrupted.

1950(2) SA 259 (W)

[12]  Accordingly:

1.
The appeal is allowed with costs such costs to include the costs
of two counsel.

2.
The order made by the court a quo is set aside and replaced
with the following order:

“2.1 It is declared that the winding-up of Prop Plant Hire (Pty)
Limited (“the company”) commenced on 7 April 1998

2.2      It is declared that the concursus creditorum in respect of
the company commenced on  7 April 1998.

2.3      All creditors intending to prove claims against the
company are to calculate the values of their respective
claims as at 7 April 1998.

2.4     The second and third respondents are to pay the
applicants’ costs such costs to include the costs of two
counsel.”

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R H ZULMAN
JUDGE OF APPEAL

STREICHER  JA
)
NUGENT JA

)
CONCUR