This
is an appeal against the judgement of the High Court in Case No.
HC9914/15 handed down as Judgement No. HH599-17. There is also a
related judgement of the High Court, to which I shall revert later,
in Case No. HC9438/15 handed down as Judgement No. HH609-17.
Factual
Background
In
the present matter, i.e.
in Case No. HC9914/15, the applicant, Kunganda Farm (Pvt) Ltd, was
represented by its liquidator. The applicant sought the eviction of
the respondent, who is the executor of a deceased estate, from two
pieces of land owned by the applicant company and held under one
title deed.
The
deceased, Francis Siamsipa, was, until his demise, a shareholder of
the applicant company, together with one Owen Maswela. On 22 October
2003, the applicant was placed under liquidation and Cecil Madondo
was appointed as its liquidator. At that stage, the deceased used to
live on the company land carrying on his own farming activities.
In
order to amicably resolve the interests of the two shareholders, the
liquidator suggested two options, either to subdivide or sell the two
pieces of land. In the absence of agreement between the shareholders,
the liquidator decided to subdivide the property and to sell one
piece of land to a purchaser that had already been found. The
deceased refused to vacate the farm. Hence, the applicant mounted an
application for his ejectment in the High Court. After the
application was instituted, the deceased passed away and was
subsequently represented by the executor of his estate, i.e.
the appellant herein.
Judgement
in Case No. HC9438/15
In
a separate but related matter, i.e.
Case No. HC9438/15, the applicant was the present appellant, the
executor of the deceased estate. In that matter, the applicant sought
the nullification of the appointment of Cecil Madondo as the
liquidator of Kunganda Farm (Pvt) Ltd and his removal from that
position as well as the setting aside of all liquidation proceedings
instituted by him. More importantly, for present purposes, the
applicant in that matter also sought the setting aside of the sale
and transfer, if any, of one of the pieces of land owned by Kunganda
Farm.
Both
matters were heard and determined at the same time by the same judge.
In Case No. HC9438/15, the learned judge dismissed various points in
limine
that had been raised by the liquidator. However, he upheld two other
objections in
limine
relating to the citation of the liquidator and the citation of Owen
Maswela who was no longer alive at that stage. Consequently, the
applicant, in that matter, was granted leave for the citation of
Cecil Madondo to be corrected. The applicant was also granted leave
to apply for the joinder of the executor of the estate of Owen
Maswela. It was further ordered that these applications should be
instituted within 10 days from the date of the order, failing which
the application would be deemed to be dismissed. In the meantime, the
matter was removed from the roll.
Subsequently,
the applicant, having failed to institute the requisite applications
timeously as ordered, the Registrar of the High Court duly notified
the parties that the main application was deemed to have been
abandoned and dismissed.
Judgement
of the High Court In
Casu
In
the present matter, i.e.
in Case No. HC9914/15, the High Court found that the authority of the
liquidator to recover the assets of the applicant company was firmly
entrenched in section 276(2) of the Companies Act [Chapter 24:03].
The court did not agree that this provision did not apply to the
recovery of company assets for the purposes of the sale of any of
those assets.
The
court also held that there was no legal basis for the respondent, as
shareholder, to contest the liquidator's entitlement to recover
possession of company property where he was exercising his powers in
terms of the law. Thus, the fact that the land to be recovered had
been or was being sold did not clothe the respondent with any right
to occupy the land.
In
the event, the court a quo granted an order evicting the respondent
and all persons claiming occupation through him from both pieces of
land. The respondent was given 10 days to vacate the farm, failing
which the Sheriff was directed to take all steps necessary for his
eviction. The respondent was also ordered to pay the costs of the
application.
Grounds
of Appeal
There
are three grounds of appeal in this matter. It is necessary to set
them out in full for reasons which will become apparent later in this
judgement. The grounds of appeal are as follows:
1.
The court a quo erred in holding that the respondent had power to
subdivide and subsequently sell the immovable property without the
leave of court. The court a quo therefore erred in granting an
application for the eviction of the appellant which was predicated on
the sale of property which the court never approved.
2.
The court a quo erred in placing undue emphasis on Cecil Madondo's
capacity as the liquidator of the respondent company when in actual
fact the basis of the appellant's contention was not so much that
he was the liquidator of the respondent company but that the property
had been sold improperly without an order of the court thus rendering
the sale a nullity.
3.
The learned judge in the court a quo misdirected himself at law in
that he relied on the provisions of section 276(2) of the Companies
Act in granting the application when the facts which ought to have
given rise to such reliance were never placed before him.
Sale
of Property without Leave of Court
The
first two grounds of appeal herein bemoan the absence of any order of
court granting the liquidator leave to sell one of the pieces of land
belonging to the respondent company.
It
is not in dispute that such leave of court must be obtained, as is
required by section 221(2)(h) of the Companies Act [Chapter 24:03],
before the liquidator of a company in liquidation can sell, deliver
or transfer the movable or immovable property of the company.
What
is in issue, according to the grounds of appeal, is whether the
actual or impending sale of company property precludes the liquidator
from recovering into his possession all the movable and immovable
assets and property of the company as is specifically enjoined by
section 276(2) of the Companies Act.
Before
addressing that issue, however, it is necessary to determine whether
or not it is properly before this Court in the first place.
It
is common cause that the present appeal concerns the judgement of the
High Court in HH599-17 and not its judgement in HH609-17. It is also
common cause that the application in the latter case i.e.
Case No. HC9438/15, was dismissed for failure to comply with the time
frame prescribed by the court in its judgement. The fact of this
dismissal was duly communicated to the parties by the Registrar of
the High Court through his letter dated 19 December 2017.
Nevertheless,
despite conceding that the judgment in HH599-17, which is the subject
of the present appeal, deals with the respondent's claim for
eviction of the appellant rather than the sale of the respondent's
property, Counsel for the appellant persists with the contention that
such sale remains pertinent for the purposes of this appeal. This
contention is premised on the assertion that the court a
quo
made its ruling on the basis of the subdivision and sale of the
property. It is argued that the permit to subdivide the property,
which permit was granted on 26 January 2015, is reflected in
paragraph 1 of the order made by the court a
quo.
Furthermore, so it is argued, this sub-division necessarily
implicates the sale of the property as appears from the respondent's
founding affidavit in the proceedings below.
A
perusal of that affidavit demonstrates the following.
The
deponent, being the liquidator, sets out the background to this
matter, to wit, the options available to him pursuant to his
appointment as the liquidator of the respondent company. He indicates
that after subdivision was completed, he opted to sell the farm. He
was issued with a subdivision permit dividing the property into two
separate pieces of land. He has already sold one piece of land and
there are prospective purchasers interested in the other piece of
land. He avers that he has an obligation to give the purchasers
vacant possession of the farm. Lastly, he avers that the respondent
(the appellant herein) has failed, refused and/or neglected to vacate
the farm. Consequently, he prays for the eviction of the respondent
and all those claiming occupation through him on the farm.
What
emerges from this affidavit is that the liquidator has subdivided the
property, sold one subdivided portion and wishes to dispose of the
other remaining portion. He states, quite clearly, that following the
non-cooperation of the appellant, he used his powers, in terms of the
Companies Act, to subdivide and sell the farm. He also makes it clear
that it was the appellant's refusal to vacate the farm that has
prompted him to seek the eviction of the appellant.
It
is relatively clear that the subdivision of the farm and the sale of
its subdivided portions are the inevitable consequences of the powers
and functions vested in the liquidator to liquidate the assets of the
respondent company. These are things that the liquidator is enjoined
and duly entitled to do in terms of the Companies Act. They did not,
in my view, constitute the cause of the application before the court
a
quo.
The true causa
in those proceedings was the appellant's refusal to vacate the farm
and the relief sought therefor was his eviction from the property.
As
was clearly recognised by the liquidator, in his answering affidavit,
the duty of a liquidator in the winding up of a company is to ensure
that “the assets of the company are realised and its liabilities
minimised to the best possible advantage of the creditors and
contributories of the company”. Moreover, in granting the relief
sought, the court a
quo
had no option but to precisely identify the property in its present
subdivided form. The fact that these subdivided portions were so
identified does not mean that the court based its judgement and
eviction order on the subdivision and sale of the property.
As
I have already highlighted, the application instituted by the
appellant, in Case No. HC9438/15, sought, amongst other things, the
setting aside of the sale of one of the subdivided portions of the
respondent's farm. The principal basis of that application was that
the liquidator had imposed liabilities upon the respondent company
and had sold a portion of its property without the leave of court
having been obtained. The application was disposed of by the High
Court in HH609-17 having regard to the preliminary objections raised
by the respondents, and the appellant was granted leave to apply for
the citation of the liquidator to be corrected and for the joinder of
the executor of the deceased estate of the other shareholder. The
appellant was given 10 days to institute these applications but
failed to comply with the stipulated deadline. Consequently, the
application was dismissed in accordance with the specific terms of
the court's interlocutory order.
It
is indisputable that the appellant questioned the legality of the
sale and sought its nullification in Case No. HC9438/15. In his
opposing affidavit in Case No. HC9914/15 he expressly acknowledges
that fact by stating that he has made a separate application to have
the disposal of any portion of the farm without court approval
declared null and void. That separate application, having been
dismissed by reason of the inaction of the appellant himself, the
question of the validity of the sale was never finally determined.
What the appellant now attempts to do, through his first two grounds
of appeal, is to improperly smuggle that question into the
determination of the present appeal.
In
my view, this stratagem is totally unacceptable and cannot be
allowed. It follows that the first two grounds of appeal are not
properly before this Court and must therefore be struck out.
For
the sake of completeness, even assuming that those grounds are
properly before us, I take the view that they are entirely devoid of
merit. They are not sustainable for the simple reason that the
motives of a liquidator in seeking the eviction of an unlawful
occupier of company property is entirely irrelevant and cannot found
any defence to his claim for eviction. Moreover, the fact that the
liquidator has subdivided or sold any of the company's assets,
whether with or without the leave of court, is wholly immaterial to
the functions vested in him and the powers lawfully conferred upon
him in the exercise of those functions. His statutory duty, in terms
of section 276(2) of the Companies Act [Chapter 24:03], is to
“proceed forthwith to recover and reduce into possession all the
assets and property of the company, movable and immovable.”
Thus,
even if the appellant had succeeded in his application to set aside
the sale of the property, this would not have served to prevent his
eviction from that property. The two processes, namely, the sale of
the property and the eviction of the appellant therefrom, are two
entirely distinct and separate processes. The former does not present
any impediment or avail any defence to the latter. Accordingly, in
the instant case, the actual or impending sale of the respondent's
property, even without the leave of court, would not preclude the
liquidator from seeking and obtaining the eviction of the appellant
from that property.
For
this reason, I would have dismissed the first two grounds of appeal,
even if they had been properly advanced herein.
Reliance
on section 276(2) of the Companies Act
The
third and only remaining ground of appeal impugns the reliance placed
by the court a
quo
on the provisions of section 276(2) of the Companies Act [Chapter
24:03]. It is contended that the facts which might have justified
such reliance were never placed before the court. Furthermore, the
court made its determination in this regard without the benefit of
any argument thereon.
Counsel
for the appellant submits that the relevant facts for the purpose of
section 276(2) of the Companies Act would include the following:
(i)
The dates when the liquidator was appointed;
(ii)
That the liquidator acted forthwith to recover all the property of
the respondent company; and
(iii)
The refusal of the party in possession, i.e.
the appellant, to comply with the process of recovery.
Counsel
for the appellant further submits that the liquidator was appointed
in 2009 and the application for ejectment in
casu
was only launched in 2015. The liquidator therefore did not act
“forthwith” to recover the respondent company's property.
It
is difficult to comprehend counsel for the appellant's contentions
regarding the date when the liquidator was appointed and the refusal
of the appellant to vacate the farm when called upon to do so. These
facts are amply articulated in the founding affidavit alluded to
earlier as read with the supporting documents contained in the
founding papers.
With
respect to the liquidator's obligation to act forthwith, the
salient facts also appear relatively clearly from the founding
papers. The judgment ordering the liquidation of the respondent
company was handed down on 22 October 2003. That judgement was then
appealed against. At the stage when the provisional liquidator was
appointed, in 2009, the appeal was yet to be determined. The appeal
was only finalised by this Court on 26 March 2012, when it was struck
off the roll, with costs to be borne by the deceased, Francis
Siamsipa. On 31 August 2015, Cecil Madondo was appointed as the final
liquidator of the respondent company. He attempted to communicate
with the appellant at that time to no avail and consequently
instituted the application in Case No. HC9914/15 on 15 October 2015.
From
the foregoing facts, it is clear that the liquidator acted without
delay in the given circumstances. After being appointed as the
provisional liquidator, and after the appeal against the order of
liquidation had been finalised, he attempted to resolve and settle
the matter by obtaining the consent of both shareholders to the
subdivision and/or sale of the property. Later, after his appointment
as the final liquidator, he requested the appellant to vacate the
property but the latter refused to accede to his request. He then
sought the eviction of the appellant through the application in
casu
within a period of less than two months. In the circumstances, I am
satisfied that he acted forthwith to recover and repossess the assets
and property of the respondent company in conformity with his
statutory obligation under section 276(2) of the Companies Act
[Chapter 24:03].
Disposition
I
have concluded that the first two grounds of appeal raise issues that
were determinable aliunde
and are therefore not properly before this Court. In any event, even
if these grounds of appeal were properly raised herein, they are not
legally or factually sustainable.
As
for the third ground of appeal, I am of the view that the salient
facts supporting the invocation of section 276(2) of the Companies
Act were adequately adduced and canvassed before the court a
quo.
Moreover, the court was amply justified, on those facts and in the
circumstances of this case, in granting the order sought by the
respondent for the eviction of the appellant from the property in
question.
As
regards costs, I am persuaded by counsel for the respondent that an
order of punitive costs is warranted by the conduct that the
appellant has displayed in this matter.
He
has resisted every overture made and action taken by the liquidator
without just cause. Moreover, he has inexplicably abandoned his
application in Case No. HC9438/15. In effect, he has delayed his
eviction and removal from the respondent's property without any
modicum of bona
fides
through this frivolous and vexatious appeal.
It
is accordingly ordered that the appeal be and is hereby dismissed
with the appellant to bear costs on a legal practitioner and client
scale.
