Lynn NO v Coreejes

Wagmaar Investments CC was voluntarily wound up and three joint liquidators were appointed, namely the two appellants and a third liquidator, Mr Oelofsen. In July 2008, only two of the three liquidators authorised attorneys to institute action against the respondents based on the actio Pauliana, alleging that assets of Wagmaar were fraudulently transferred to the respondents as trustees of a trust without consideration. The third liquidator did not join in authorising the litigation and later resigned due to a conflict of interest. The respondents raised a procedural objection, arguing that section 382(1) of the Companies Act 61 of 1973 required all liquidators to act jointly, rendering the institution of action by only two liquidators a nullity. The High Court upheld this objection and struck out the claim. The liquidators appealed to the Supreme Court of Appeal.

The appeal was upheld with costs, including the costs of two counsel. The order of the High Court was set aside and replaced with an order dismissing the respondents’ application to strike out the claim, with costs.

The case clarifies that non-compliance with section 382(1) of the Companies Act 61 of 1973 does not automatically render acts of liquidators void. It distinguishes the legal position of liquidators from that of trustees and confirms that procedural acts taken without full authority may be ratified. The judgment provides important guidance on the consequences of irregular authorisation in liquidation proceedings and limits the scope of technical objections to liquidators’ authority.