Moodliar and Others v Recycling and Economic Development Initiative of South Africa NPC and Others; Gore and Others v Kusaga Taka Consulting (Pty) Ltd and Others

Redisa NPC and Kusaga Taka Consulting (Pty) Ltd (KTC), both solvent companies, were provisionally wound up in 2017 on an urgent ex parte basis at the instance of the Minister of Environmental Affairs on the ground that it was just and equitable to do so. Provisional liquidators were appointed and took control of the companies’ assets. The provisional winding-up orders were later made final, but on appeal in January 2019 the Supreme Court of Appeal set aside the final winding-up orders and discharged the provisional liquidation. Shortly before the appeal hearing, the liquidators transferred R20 million (Redisa) and R2 million (KTC) from the companies’ bank accounts into their attorneys’ trust account to ‘ring-fence’ amounts for their anticipated remuneration. After discharge from liquidation, the liquidators refused to restore these retained funds, contending that they were entitled to retain company assets to secure payment of their untaxed fees. The companies applied for repayment of the funds, and the liquidators brought counter-applications seeking declaratory relief that the companies were liable for their remuneration.

The appeal was dismissed, save for a limited amendment relating to the costs of the counter-applications. The order of the High Court was amended to grant the companies relief directing that the retained funds be paid over to them, and dismissing the counter-applications and joinder applications, with costs.

This judgment authoritatively clarifies that liquidators have no right to retain or appropriate company assets to secure their remuneration once a winding-up order is discharged. It reinforces the principle that liquidators’ fees may only be drawn after taxation and confirmation of estate accounts, and that liquidators enjoy no lien over company assets. The case is significant for corporate insolvency practice, particularly in limiting self-help measures by liquidators and protecting companies’ property rights after unsuccessful liquidation proceedings.