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Companies in liquidation – response II

10 March 2011

I think it must be clearly understood that the supervision referred to in section 56(1)(b) of the Deeds Registries Act (DRA) must of necessity be a continuous process, such as that done by the Master, and not once off or at best sporadic actions such as envisaged in section 417(1) of the Companies Act (CA). Note that the Master is also empowered to take the actions set out in that section. It can therefor also not mean any possible action when a creditor or other interested party petitions the Court. These are really matters when the Court is either asked to or deems it necessary to intervene. I said so specifically in my article and do not dispute that. Conversely, if such a happening never takes place in the liquidation of a company, does that mean that the Court failed in its duty? That it did not supervise the process?

Of course the Master acts purely within the powers afforded him in some or other statute. He is a creature of statute and I also stated that very clearly. But there must be very good reason why he is the Master of the High Court? There must be very good reason why the Registrar, in the case of liquidation by the Court, and in the case of voluntary liquidations, the Registrar of Companies, must send the court order or the special resolution to the Master? In view of such practicalities, especially since the Court does NOT have the staff or the infrastructure to do so itself, it can only be because it is the Master's job to supervise the process. Is that not exactly what the judge referred to in Gilbert v Bekker 1984 (3) 774 when he states:"…Our Courts are not entrusted with insolvency administration as in England…."?

Mr. Nqhome quotes a bit selectively from The Master v Zwick. The quote should probably be: "Supervision necessarily implies the power to call for whatever proof the supervisor may reasonably require to determine whether or not the administration of an estate is being properly carried out in terms of the Act, and it would be surprising if the Legislature intended to make no provision for a remedy, at the instance of the Master, if the executor refuses or fails to furnish the proof required..". Is section 417 of CA not then that part of the power to call for proof which is meant by the Court in Zwick's case, even though that concerned a deceased estate? Keep in mind that section 417 really concerns a small part of the process concerning enquiries in liquidations. Similarly, is section 362 inter alia not exactly such a remedy?

Furthermore, Mr. Nqhome seems to ignore the powers given to the Master in CA, e.g. inter alia section 381 of CA. It is the Master who supervises liquidators in terms of that section, not the Court. Add to that the fact that section 392 of CA makes it the duty of a liquidator to supply information to the Master. This should also be read with section 381 of CA which authorises the Master the power to appoint a person to investigate the books and vouchers of a liquidator. In terms of section 379 of CA it is the Master who may remove a liquidator from office. In terms of section 386(6) of CA it is the Master who may restrict the powers of a provisional liquidator. Why are all these powers granted to the Master? Why does the CA not state "Court" instead of "Master"? I submit because the Master does it on behalf of the Court, because the Court cannot do it, thus supervision on behalf of the Court. These are the powers the Court's personnel would have had and the tasks they would have performed, if the Court had such personnel. This obviously does not detract from the Court's power to review the Master's actions, but we are talking about a normal administration process.

As regards jurisdiction and Mr Nqhome's reference to The Master v Talmud 1960 (1) SA 236 I fail to understand the relevance. The jurisdiction regarding both "Court" and "Master" in every liquidation is determined by their definitions in CA. I did discuss that point but did not specifically mention the word "jurisdiction".

Mr. Nqhome's conclusion as to what constitutes "supervision", with respect, seems distorted to me. One should not confuse the sections dealing with enquiries, such as section 417 of CA, and where provision is made for the Court to also perform that duty, besides the Master, with the argument. It is but part of the process and will mostly be performed by the Master. Sections 354 and 388 specifically state that they apply upon application, thus again review by the Court, not the norm. The fact of the matter is that, whether the liquidation is by the Court or creditor's voluntary liquidation, the Master supervises the process on behalf of the Court. This is very clear from the powers granted to the Master by CA and the Insolvency Act.

How does Mr. Nqhome explain the facts as evident from the question before Conference in RCR 9/1980?

Dudley Lee
18/2/2011


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