Van Staden and Others NNO v Pro-Wiz Group (Pty) Ltd

Oljaco CC was placed in provisional liquidation in February 2015 and final liquidation in May 2015, with the appellants appointed as liquidators. In April 2016, Pro-Wiz Group (Pty) Ltd launched an urgent application in terms of s 131(1) of the Companies Act 71 of 2008 to place Oljaco under business rescue, citing the liquidators as respondents. The liquidators and SARS, Oljaco’s principal creditor, opposed the application, contending it was an abuse of process aimed at delaying liquidation and avoiding an interrogation of Oljaco’s sole member under s 418 of the Companies Act 61 of 1973. Shortly before the hearing, Pro-Wiz withdrew the application and tendered only SARS’s costs. The liquidators sought a costs order against Pro-Wiz. The High Court refused to grant costs, holding that s 131(6) deprived the liquidators of locus standi. Leave to appeal was refused, but granted by the Supreme Court of Appeal.

The appeal was upheld. The High Court order was set aside and replaced with an order that Pro-Wiz Group (Pty) Ltd pay the costs of the liquidators in the High Court on an attorney-and-client scale. Pro-Wiz was ordered to pay the costs of the appeal, including the costs of two counsel.

The case clarifies that liquidators retain locus standi to oppose business rescue applications brought in respect of companies already in liquidation, notwithstanding s 131(6) of the Companies Act. It also reinforces judicial intolerance for the abuse of business rescue proceedings and confirms that punitive costs orders are appropriate where business rescue is used to delay winding-up or frustrate creditor investigations.