IN THE HIGH COURT OF SOUTH AFRICA, FREE STATE DIVISION, BLOEMFONTEIN Reportable: NO Of Interest to other Judges: YES Circulate to Magistrates: NO In the matter between: Case number 1242/2020 LAND AND AGRICULTURAL DEVELOPMENT BANK Applicant OF SA and RAINMAKER FARMS CC Respondent Case number: 1247/2020 LAND AND AGRICULTURAL DEVELOPMENT BANK Applicant OF SA and ROODEPOORT FARM (PTY) LTD Respondent CORAM: DAFFUE J HEARD ON: 17 SEPTEMBER 2020 REASONS 2 [1] On 17 September 2020 I granted final liquidation orders in applications 1242/2020 and 1247/2020 against two respondents, to wit Rainmaker Farms CC and Roodepoort Farm (Pty) Ltd respectively. [2] I indicated that the reasons for my orders would follow in due course. These are my reasons. For the sake of convenience one set of reasons is provided as the issue in both applications is exactly the same. [3] The demise of the Volksblad, an Afrikaans daily newspaper that was distributed in the Free State and Northern Cape for over a century, could not be foreseen when the applicant issued the two liquidation applications on 10 March 2020. [4] The last edition of Volksblad, in printed or hard-copy format, appeared on Saturday, 8 August 2020. For about a month before this date readers of the newspaper were alerted on a regular basis of the decision to cease publication in printed format. [5] On 6 August 2020 both applications for provisional liquidation orders were heard by Jordaan J. The applications were fiercely contested by the two respondents, but eventually the standard orders applicable in this division were issued. The return date in each instance was 17 September 2020. [6] Publication of the provisional orders had to take place in the Volksblad and the Government Gazette. The publication and distribution of the erstwhile local English newspaper, the Friend 3 was terminated several decades ago and for at least the past three and a half decades practitioners elected to place advertisements in the Afrikaans daily, even if the documents were in the English language as is the case in casu. [7] On Friday, 11 September 2020 the files in both matters were allocated to me for adjudication of the applications on the return date, to wit 17 September 2020. I noticed that no further heads of argument or other affidavits had been filed since issuing of the rules nisi, save for the customary affidavits pertaining to service and publication of the orders. I immediately instructed my secretary to contact the legal representatives on both sides to establish whether the applications would be opposed any further. Adv P Zietsman SC and his instructing attorney, Mr Hoffman of Maree and partners who acted for the respondents in both applications, responded and informed her by email that respondents did not intend to oppose the applications any further. [8] The day before the hearing I noticed that the provisional orders were not published in the Volksblad as directed, but the Citizen. Insofar as there was non-compliance with the orders by Jordaan J, I requested Adv A Sander who was briefed to argue the applications on behalf of applicant to present brief written heads of arguments which he did. I am grateful to him. [9] The matter was dealt with by means of the Webex internet platform and for that reason I directed that an employee of applicant’s firm of attorneys shall attend A court, it being allocated for the hearing, in order to establish if anyone turn up to oppose 4 the applications. I directed my secretary to contact the general office to inform them of the Webex hearing and that Mr Gertenbach, who was instructed by applicant’s attorneys to attend A court, be informed immediately in the event of opposition. There was no opposition and this was duly recorded whereupon Mr Sander was allowed to argue the matter. [10] Chapter 14 of the repealed Companies Act, 61 of 1973 still applies to the liquidation of insolvent companies as provided for in Item 9 of Schedule 5 of the present Companies Act, 71 of 2008. The 1973 Act does not provide for the issue of provisional liquidation orders and consequently it is quiet about the publication of rules nisi in the Government Gazette or any local newspaper. This was also the case in terms of its 1926 predecessor. [11] Section 346A of the 1973 Act was inserted by s 8 of Act 69 of 2002. This provides for service of a copy of a winding-up order on every registered trade union representing employees of the respondent company, the employees of the respondent company, the South African Revenue Service and the company, unless the application was made by the company. In terms of the definition of “winding-up order” (liquidation order) in s 1(1) of the 1973 Act, a provisional winding-up order was included as long as it remained in force. The practice of issuing provisional liquidation orders are in place for more than a century and is regarded by Henochsberg as “longstanding.”1 Lichtenburg J (as he then was) provided the historical background in Wolhuter Steel (Welkom) (Pty) Ltd v Jatu 1 Henochsberg on the Companies Act, 71 of 2008, vol 2 at APPI - 88 5 Construction.2 Corbett JA (as he then was) confirmed the established practice in Kalil v Decotex Pty Ltd.3 The practice in this division has always been to direct publication of the rule nisi in the Government Gazette and at least one local newspaper. As Henochsberg4 points out, the reason for publication is that over and above the interests of the applicant and the respondent company, the interests of members of the respondent company as well as its creditors are affected when a liquidation order is sought. [12] Insofar as the 1973 Companies Act does not require a final liquidation order to be preceded by a provisional order, the court may in certain circumstances, given its wide discretion, decide to grant a final order without initially granting a provisional order. The Supreme Court of Appeal confirmed that the court does not have to issue a provisional liquidation order “as a matter of course” and consequently issued a final order in Johnson v Hirotec Pty Ltd5 where “the issues have been fully ventilated and the respondent has put nothing forward to persuade (the court) that further relevant facts would be forthcoming if a rule nisi were issued. [13] In casu it is common cause that the respondents received notice in accordance with the court orders. The rules nisi were served in accordance with the court order and the statutory requirements. They were published in the Government Gazette, but no publication in the Volksblad was effected, but in the Citizen. 2 1983(3) SA 815 (OPD) at 818 C and further 3 1988 (1) SA 945 (A) at 976A and further 4 Loc cit at APPI - 89 5 2000 (4) SA 930 (SCA) par 9 6 [14] Mr Sander submitted that there was substantial compliance with the rules nisi insofar as the provisional orders would on the probabilities become known to creditors who more often than not rather peruse the Government Gazette and not one or other local newspaper. This submission is doubtful, but may be true in respect of large creditors with formal credit divisions which are nowadays centrally based in cities like Johannesburg, Pretoria, Cape Town or Durban. Fact of the matter is that small and concurrent creditors are usually doing business within the area where the respondent company is conducting its business and/or is registered. Publication in a local newspaper is to the benefit of those creditors that may not have access to the Government Gazette. [15] The Citizen is distributed in the Free State, but on a limited basis only. It appears from the information obtained via applicant’s attorney that only 5% of its newspapers are distributed in thirty three Free State towns daily. About 615 copies are sold daily in the Bethlehem area. This is a minute number, bearing in mind the overall population in the province and/or in the Bethlehem area in particular. [16] Joffe et al6 suggest that provisional liquidation orders should not only be published in the Government Gazette and a local newspaper, but notice should also be given by registered mail to all known creditors. The authors recognise that the last two requirements depend on the facts and circumstances, the Practice 6 High Court Motion Procedure: A Practical Guide, Service issue 12, a Lexis Nexis publication at 5-19 7 Directives of the different divisions and the discretion of the particular judge. [17] The standard provisional liquidation order in the Pretoria High Court provides as follows and I quote the last three paragraphs only: “3. A copy of this order be served on the respondent at its registered office. 4. A copy of this order be published forthwith once in the Government Gazette. 5. A copy of this order be forthwith forwarded to each known creditor by prepaid registered post or by electronically receipted telefax transmission.”7 In Johannesburg8 the standard order provides for service in terms of s 346A in line with the practice in the Free State, whilst provision is made for publication of the order in the Government Gazette and that a copy thereof be forwarded to each known creditor by prepaid registered post or by electronically receipted telefaxed transmission. Publication of the order in a local newspaper is not required. I am not aware of any standard orders in the other divisions as these do not appear in the Practice Directives published in Erasmus. [18] Since the Volksblad became available in digital format only, publication of legal notices such as court orders has been 7 Published in Erasmus: Superior Court Practice (2nd Edition), vol 3 at H2 – 154.