R Miller v Nafcoc Investment Holding Company Ltd

Serveco (Pty) Ltd was liquidated on 23 May 2006 at the suit of its major shareholder, Nafcoc Investment Holding Company Ltd. The joint liquidators of Serveco appointed Mr Miller, a professional liquidator, to act on their behalf. On 27 March 2008, the Master of the High Court, on an ex parte application by Miller acting for the joint liquidators, ordered an enquiry into the affairs of Serveco in terms of sections 417 and 418 of the Companies Act 61 of 1973, appointing Ms Rene Bekker as Commissioner. Nafcoc and four individuals (who were former directors or employees of Serveco or Nafcoc) were issued notices to attend the enquiry scheduled for 29 August and 3 November 2008. On 25 April 2008, Serveco was deregistered by CIPRO, though this was incompetent as the company had been wound up. The applicants brought urgent proceedings to prevent their examination, prevent Miller's attendance at the enquiry, and to set aside the Master's decision to order the enquiry. Serveco was restored to the register on 10 August 2008 pursuant to a court order. The court a quo (Snyders J) granted the relief sought, setting aside the Master's and Commissioner's decisions and interdicting Miller from accessing the enquiry. Miller and the joint liquidators appealed against the entire order.

• Whether the Master's decision to order an enquiry under sections 417 and 418 of the Companies Act should be set aside due to alleged material non-disclosures in the ex parte application
• Whether the deregistration of Serveco (subsequently reversed) invalidated the enquiry and notices issued
• Whether it was competent for the Master to delegate to the Commissioner the power to determine who may attend the enquiry and have access to the record
• Whether Miller could be interdicted from attending the enquiry and accessing the record under section 417(7) of the Companies Act
• Whether the joint liquidators could lawfully delegate the conduct of the enquiry to Miller

The appeal succeeded with costs, including costs of senior counsel. The order of the court a quo was set aside and replaced with an order dismissing the application with costs (including costs of the urgent application and costs of senior and junior counsel where employed). The cross-appeal was dismissed with costs, including costs of senior counsel.

1. Under section 417(1) of the Companies Act 61 of 1973, the Master does not have to act on an application by a limited category of persons, or indeed on any application at all, when ordering an enquiry into the affairs of a company in liquidation. 2. It is competent and sensible for the Master, when appointing a Commissioner under section 418, to delegate to the Commissioner the decision as to who may attend the enquiry or have access to the record, rather than requiring the Commissioner to seek permission from the Master or court for each person. 3. Joint liquidators may lawfully delegate ministerial acts to third persons (such as professional liquidators) but may not delegate matters of discretion that their office requires them to exercise jointly and personally. Delegation of ministerial acts does not violate the principle of delegatus non potest delegare. 4. The deregistration of a company that has been wound up is incompetent; the proper procedure is dissolution under section 419 of the Companies Act. However, restoration of a company to the register prior to final determination of proceedings renders moot certain challenges based on the period of deregistration.

The court observed that had there been any doubt about whether the disclosures Miller claimed to have made to the Master were actually made, the court could have preserved secrecy by examining the application to the Master itself. The court also noted that it would be extraordinary if, in the context of a confidential enquiry, permission had to be sought from the Master or court every time a liquidator wished to have an attorney bring a candidate attorney, or wished to be advised by an accountant or other expert during the examination of a witness. The court expressly declined to express any opinion on the practice of the taxing master regarding orders authorizing costs of senior counsel, as this was not properly raised for determination.

This case clarifies important principles regarding the Master's powers under sections 417 and 418 of the Companies Act 61 of 1973 in relation to enquiries into the affairs of companies in liquidation. It establishes that: (1) the Master does not require an application from any specific category of persons to order an enquiry, and can act of his own initiative; (2) it is competent and sensible for the Master to delegate to a Commissioner the decision as to who may attend the enquiry or have access to the record; (3) liquidators may delegate ministerial acts to third persons (such as professional liquidators), though they cannot delegate matters requiring their discretion. The judgment also addresses the effect of deregistration (and subsequent restoration) on ongoing liquidation processes, and reaffirms principles regarding material non-disclosure in ex parte applications.