Petition for winding up - requirements

CIV. CASE NO. 2836/98

In the matter between

TUBECON AFRICA (PTY) LTD PETITIONER

And

AFRI-CRAFT (PTY) LTD RESPONDENT

Coram S.B. MAPHALALA – J

For the Petitioner MR. P. FLYNN

For the Respondent MR. L. MAMBA

JUDGEMENT

(22/12/98)

Maphalala J:

Provisional order of liquidation was granted by this court on the 20th November 1998, in the following terms:

On the return date of the rule the respondent filed a notice to raise points in law. The points raised are two-pronged, thus:

The matter was enrolled in the contested motion of the 11th December 1998, where the court heard arguments on the points of law raised by the respondent. Mr. Mamba for the respondent took the view that his client was served at the close of business on the 18th November 1998, when the matter was set for the 20th November 1998, and thus there was short service. He contended that for all intents and purposes the matter was heard by the court “ex parte”. The main contention by Mr. Mamba is that the petitioner in this case has not shown urgency in terms of Rule 6 (25) of the High Court Rules. To buttress this point he directed the court to annexure “TA2” dated the 10th October 1998, to wit a nulla bona return by the Deputy Sheriff of this court. Then petitioner comes to court on the 18th November 1998, and this does not show urgency. The petitioner gives his client four (4) hours to respond and this is a sheer abuse of the court process. There is no single allegation why this matter was urgent. The application has not been brought in terms of the rules of the court.

On the second leg of the points of law raised Mr. Mamba contends that it is a rule of practice as stated by the writers on the subject Cilliers and Banade on Company Law Practitioner’s Edition at page 411 that a petitioner must state the capital, main business and nature of the company.

Mr. Flynn argues that there is no such thing as an application brought by way of petition. There are petitions and applications by way of motion. The provisions of Rule 6 do not apply to petitions. Mr. Flynn directed the court to Rule 6 (19 (11) and (14) of the Rules. That applicant was not required to come by way of long form. No appearance was made by the respondent when the order was granted. The respondent has not filed an opposing affidavit. The court has nothing on record that they did not have time to instruct an attorney. Respondent approaches the court without filing any papers at all. Rule 6 (25) does not assist in this form of proceedings. There is no need for a certificate of urgency and thus the point of law raised by the respondent is ill conceived because it confuses these proceedings. There was no appearance on the 20th November 1998, when the order was granted. Nothing is said by the respondent on the merits of the issues raised in the petition. In the event that the court overrules the points of law the court has to confirm the rule nisi.

The question of the interest of creditors contends Mr. Flynn; the applicant is not required in the petition of this nature to allege that averment in its petition. The petitioner in the present case is relying Section 112 (f) read with Section 113 (b) of the Companies Act No. 7 of 1912 which reads as follows:

“(B) If execution or other process issued on a judgement, decree, or order of any court of law in favour of a creditor of the company is returned by the Sheriff of Messenger with the endorsement that he has not found sufficient assets to satisfy the judgement, decree or order, or that any assets found did not, upon sale, satisfy the execution or other process; or ...”

A Company shall be deemed to be unable to pay its debts.

On the second point of law raised by Mr. Mamba the petitioner argues that the citation of Cilliers and Banade on Company Law does not indicate that those requirement apply in Swaziland. He contended further that those requirements are not necessary in petition in terms of the Swaziland Company Act. He submitted furthermore that the respondent was duly served and that Mr. Mamba is before court representing the respondent. Both of the points raised by the respondent are without merit and in any event the respondent had the opportunity to answer the allegations contained in the petition. It ought to have raised those defences in its answer. It is Mr. Flynn view that the points raised by the respondent are clearly to delay the matter, as it has no defence in law.

These are the issues before court. I shall proceed to consider the efficacy first point of law raised by the respondent whether or not the present petitions fail within the purview of Rule 6 of the court and thus if the court finds that they are the petitioner should have followed Rule 6 (25) and allege urgency in its papers. This is the gravamen of the respondent’s argument that the petitioner failed to follow Rule 6 (19), (11) and (14) that when property read requires the petitioner to allege urgency in pari pasu as to what maintains in application brought by way of motion. The present rule draws a distinction between a petition and an applicant brought on notice of motion.

In South Africa with the promulgation of The Petition Proceedings Replacement Act No. 35 of 1976, the distinction has been abolished such that all matter is now brought by way of application brought on notice of motion. However, in our law the distinction between the two still exists it would be a great misappropriation to treat them the same way. The two forms of procedure are discussed in Du Preez 1960 (3) S.A. 388 (N). It is also trite that where a petition is prescribed by, no notice of motion is necessary, but there must be a notice of setdown (see Hepker vs national Gelantine & Glue (S.A) PTY LTD 1966 (3) S.A. 591 (W).

It is clear that in the case in casu we are dealing with a petition as prescribed by the Companies Act No. 7 of 1912. In view of the legal background I have just outlined and my reading of Rule 6 and the Subrule as directed by counsel for the respondent I am inclined to agree with the contention by Mr. Flynn that the petitioner in the present case is not required to satisfy Rule 6 (25) of the rules. It is my considered view that this rule has no application in petitions of this nature. I agree in toto with the submissions made by Mr. Flynn for the petitioner and for the sake of brevity I am not going to repeat them save to point out some salient points of his submissions. The respondent was served by the petitioner with the papers as Mr. Mamba confirmed but on the date of set down it failed to appear before court and thus the order was granted. If it felt that it did not get enough time that is more reason for it to come to court and apply for a postponement to instruct counsel if it wished to oppose the granting of the order. This court has had numerous persons in such proceedings to appear even in their individual capacities to seek for postponement to instruct lawyers and the court invariably oblige them. Here we are told the respondent was served at the close of business on the 18th November 1998, to appear on the 20th November 1998. Respondent elected not to appear. There is not even sworn affidavit, which attest to this save the submissions by Mr. Mamba from the bar.

The respondent approaches the court without filing any papers at all. One would expect them to incorporate these points of law in their answering affidavit, which discloses what defence it, has against the confirmation of the rule.

The respondent does not advance any defence on the merits. It is my considered conclusion that the first point of law fails as being ill conceived and is dilatory in nature.

Now I proceed to consider the second prong of the points of law raised by the respondents that it is a requirement of our law that in such petitions the capital, main business and nature of business should be alleged. The court was directed to Cilliers and Benade on Company Law (Practitioner’s Edition) at page 411 where the learned authors state as follows:

“The application must mention the capital, main business and nature of the company and its registered office,....” (my emphasis). To support this proposition they refer the reader to the case Klas vs Zwadestein en Odendaal (Pty) Ltd 1961 (2) S.A. 552 (w) which is cited to be a legal authority where all the above-mentioned requirements were discussed. However, when one reads the said case decided by Steyn J the only requirement discussed therein that the company’s registered business should be alleged. The head note of that case reads simply as follows:

“In application for the winding up of a company it is essential to state the correct address of the company’s registered office”. (my emphasis).

After having carefully reading the case for the other requirements I was met with a blank. The authors do not give us legal authorities to support their exposition that the other factors are also essential averments in our law.

It is trite in these courts to follow traceable legal authorities in the form of case law rather than the postulations of legal writers whose authority is not that persuasive in the absence of case law supporting those legal postulations. This seem to be the case in the instant case. If one take the matter further and look at the latest edition of Cillier and Banade on Company Law (4th Edition) at page 591, the authors do not mention the other requirements but only discuss the one which was the subject matter in the Klas case (supra). They state as follows at paragraph 34.36:

“The application for winding up is made to the court having jurisdiction in respect of the company, which is the provincial or local division of the supreme court of South Africa in whose area of jurisdiction the registered office or the main place of business is situated”.

The authors outline that this is in line with Section 12 (1) of the South African Act. It appears to me; therefore from this brief survey that the essential requirement in South Africa is an averment in the petition that spells out the registered office or main business of the company. The other requirements outlined in the (Practioner’s Edition of 1973) are either antiquated or of no legal force in South Africa. In any event the authors in 1973 failed to support them by legal authority. Looking at the petition before court this requirement is satisfied when one looks at paragraph 2 of the petition, which reads as follows:

“2 The respondent is Afri-Craft (PTY) Limited, a company duly registered and incorporated according to the company laws of the Kingdom of Swaziland and which has its registered office and principal place of business at Plot 557, Matsapha Industrial Site, Manzini District, Swaziland”.

The conclusion to which I have come in relation to this point of law raised by the respondent it has no basis in our current statutory framework, as pointed out by Mr. Flynn in the head of arguments and it is safe to conclude that these are not essential requirement their omission will render a petition defective save to say the requirement to mention the registered office seem to be backed by common law (see Klas case (supra)). I must say it would have been helpful if counsel for the respondent had directed the court to the relevant sections in our Company Act or at least attempt to cite traceable authorities in the form of case law to assist the court. On my part I was unable to find any relevant provisions in our Company Act after a thorough search in both the Act and in case law. I find therefore that the second point raised by the respondent is without any merit in law.

In the absence of any substantive defence to the rule issued by this court for the provisional liquidation of the respondent I am enjoined by law to confirm the rule with costs.

S.B. MAPHALALA

JUDGE

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