Smith N O and Others v Master of the High Court, Free State Division, Bloemfontein and Another

BZM Transport (Pty) Ltd was placed in liquidation in August 2019 after failed business rescue proceedings. The appellants were appointed as joint liquidators. The second respondent, Mr Wilhelm Frederik Engelbrecht, was the former CEO of BZM. The liquidators alleged that Engelbrecht hindered them in performing their statutory duties by refusing to hand over company records, assets, and information regarding payments and debtors. They successfully applied to the Master of the High Court to convene an enquiry under s 417 of the Companies Act 61 of 1973. At the enquiry, presided over by an Assistant Master, Engelbrecht objected to being questioned by the liquidators’ legal representatives, contending that only the Master was entitled to examine witnesses under s 417. The objection was dismissed. Engelbrecht then approached the High Court to review and set aside the enquiry, which the High Court did, holding the enquiry to be null and void ab initio. The liquidators appealed to the Supreme Court of Appeal.

The appeal was upheld with costs, including the costs of two counsel. The High Court’s order was set aside and replaced with an order dismissing the application to review and set aside the enquiry, with costs.

This judgment resolves conflicting High Court authority on the interpretation of s 417 of the Companies Act. It clarifies that liquidators and other interested parties may, with the Master’s oversight, interrogate witnesses at a s 417 enquiry. The decision reinforces a purposive approach to statutory interpretation and strengthens the effectiveness of liquidation enquiries as tools to uncover information for the benefit of creditors and the public.