Mayo NO v De Montlehu

Alain Rivalz Chevreau De Montlehu (respondent) was the sole shareholder and director of Chevreau Construction (Pty) Ltd (fourth appellant, the company in liquidation). The company was wound up by special resolution adopted on 22 July 2011 and registered on 6 September 2011. Prior to winding-up, a dispute arose between the company and Starspan Investments (Pty) Ltd (fifth appellant) regarding liability for estate agent commission totaling over R1.5 million. An arbitration was commenced but not proceeded with after liquidation. The second meeting of creditors was held on 11 May 2012. On 5 October 2012 (more than three months after the second meeting), a special meeting of creditors was convened at which Starspan lodged two claims: R173,479.40 for taxed costs and R1,577,432.70 for the disputed commission amount. The Master admitted both claims despite objections from Mr De Montlehu's attorney on the basis that the larger claim was disputed. Mr De Montlehu brought a review application to set aside the Master's decision to admit the R1,577,432.70 claim.

• Whether the three-month time period stipulated in section 44(1) of the Insolvency Act 24 of 1936 applies to claims proved against companies in liquidation under the Companies Act 61 of 1973
• Whether section 366(2) of the Companies Act 61 of 1973 displaces the requirement in section 44(1) of the Insolvency Act for leave of the court or Master and payment of costs for late proof of claims
• Whether Mr De Montlehu, as sole shareholder and director of the company in liquidation, had locus standi as a 'person aggrieved' under section 151 of the Insolvency Act to object to the admission of Starspan's claim
• The proper interpretation of 'mutatis mutandis' in section 366(1) of the Companies Act in relation to the application of insolvency law provisions

The appeal was dismissed with costs, including the costs of two counsel.

Section 366(2) of the Companies Act 61 of 1973 does not affect the applicability of the three-month time period stipulated in section 44(1) of the Insolvency Act 24 of 1936 to claims proved against companies in liquidation. Claims proved more than three months after the second meeting of creditors require leave of the court or Master and payment of costs as directed. The words 'mutatis mutandis' in section 366(1) of the Companies Act require only necessary alterations to insolvency law provisions when applied to company liquidations, not merely fitting ones. Section 366(2) operates to exclude late-proved claims from participating in distributions under accounts already lodged (affecting section 104 of the Insolvency Act), but does not displace the general requirement for timely proof of claims or the consequences of late proof under section 44(1). The three-month period in section 44(1) of the Insolvency Act is the benchmark for proof of claims in both sequestrations and liquidations of companies unable to pay their debts.

The court observed that if the three-month period did not apply to company liquidations, and in the absence of a time period being fixed by the Master under section 366(2), there would be no formal time period within which creditors would be required to lodge and prove claims, creating a risk of tardiness or inertia that would not be in the interest of creditors or the general public. The court noted that the winding-up of a company unable to pay its debts is closely akin to the winding-up of an insolvent individual's estate, with only necessary differences flowing from the fundamental distinction between companies and individuals being specifically provided for in the Companies Act (citing Woodley v Guardian Assurance Company). The court also observed that the case dealt with important and intricate questions of law justifying the award of costs for two counsel.

This case authoritatively clarifies the relationship between the Insolvency Act and the Companies Act (61 of 1973) regarding the proof of claims against companies in liquidation. It establishes that the three-month time period in section 44(1) of the Insolvency Act applies equally to companies in liquidation, and that section 366(2) of the Companies Act does not displace this requirement. The judgment provides important guidance on the interpretation of 'mutatis mutandis' in corporate insolvency contexts, requiring strict application and allowing changes only where necessary, not merely fitting. The case resolves a conflict in the case law, rejecting the approach in Stone & Stewart and confirming the reasoning in Trans-Drakensberg Bank and Barlows Tractor. The decision ensures procedural fairness and proper administration of insolvent estates by requiring late creditors to obtain leave and pay costs, preventing abuse and promoting efficiency in liquidations. It also confirms that sole shareholders and directors qualify as 'persons aggrieved' with standing to review decisions in the liquidation of their companies.