Lynn NO and Another v Coreejes and Another

Mark William Lynn NO and Tintswalo Annah Nana Makhubele NO were two of three joint liquidators appointed for Wagmaar Investments CC (the third being J M Oelofsen). The company was voluntarily wound up following a judgment against it in favour of Total SA. In July 2008, two of the three joint liquidators (the appellants, excluding Oelofsen) instructed attorneys to institute an action against the respondents based on actio Pauliana, alleging the respondents as trustees received Wagmaar's business and assets fraudulently for no consideration. Oelofsen did not participate in authorizing the action, though all three liquidators had signed an indemnity agreement with Total regarding related proceedings. Oelofsen later resigned citing a conflict of interest, and the Master appointed the two appellants as the remaining joint liquidators. The respondents challenged the authority of the attorneys in terms of Uniform Rule 7, arguing that section 382(1) of the Companies Act required all liquidators to act jointly in instituting proceedings.

• Whether non-compliance with section 382(1) of the Companies Act 61 of 1973, which requires liquidators to act jointly, renders a power of attorney given by two of three liquidators for institution of action a nullity
• Whether an action instituted by two of three joint liquidators without the participation of the third liquidator is capable of subsequent ratification
• Whether section 382(1) of the Companies Act contains a prohibition analogous to section 6(1) of the Trust Property Control Act 57 of 1988
• The legal consequences and remedies available when joint liquidators fail to act jointly

The appeal was upheld with costs, including costs of two counsel. The order of the high court was set aside and substituted with an order dismissing the application with costs.

Section 382(1) of the Companies Act 61 of 1973 does not contain an absolute prohibition rendering acts by fewer than all joint liquidators void or nullities. The section requires joint action and imposes joint and several liability for jointly performed acts, but does not specify that non-joint acts are invalid. The absence of the word 'only' (unlike section 6(1) of the Trust Property Control Act) and the absence of criminal sanctions indicate that the legislature did not intend non-compliance to result in nullity. Liquidators are statutory office-holders distinct from trustees; the company's estate remains vested in the company itself. An act by some but not all liquidators may not bind the company in liquidation but can be ratified. The institution of legal proceedings is a procedural act capable of ratification by unauthorized agents with retrospective effect. Where liquidators subsequently act jointly to pursue litigation initially authorized by fewer than all of them, this constitutes effective ratification of the procedural act of institution.

The court noted that where a liquidator litigates without prescribed authority under section 386, the court may refuse costs from the company's assets and the liquidator may bear costs personally, but the litigation itself is not a nullity. A person against whom an unauthorized liquidator litigates may not object to lack of authorization as it is a matter between the liquidator and creditors. Retrospective sanction is available from creditors, members, the Master, or the court in appropriate cases. The court also observed that comparisons between powers of liquidators and directors to ratify each other's deeds may be fundamentally inapt in the context of the joint action requirement in section 382(1). The court distinguished Powell v Leech on the basis that in that case ratification was no longer possible after the warrant had been issued and executed, whereas in the present matter a procedural challenge was made before proceedings were finalized.

This case establishes important principles regarding the interpretation and application of section 382(1) of the Companies Act 61 of 1973. It clarifies that non-compliance with the joint action requirement for liquidators does not render their acts void or nullities, but rather such acts may be subject to ratification. The judgment distinguishes between the statutory framework governing liquidators under the Companies Act and trustees under the Trust Property Control Act, establishing that these offices operate under different legal principles. The case provides guidance on when procedural acts by liquidators can be cured through subsequent ratification, and reinforces the principle that unauthorized acts by agents (including liquidators) may be ratified with retrospective effect. This promotes pragmatism in insolvency administration while maintaining appropriate oversight through the Master's office.