Cape Town - A secret inquiry into the collapse of Isaacs Bros Furniture Manufacturing, the largest furniture manufacturer in the Eastern Cape, was halted by the Port Elizabeth high court last week.
When the company, established in 1908, went into liquidation on April 22 1999, about 600 people lost their jobs.
On July 9 last year PG Glass and PG Bison succeeded in obtaining an ex parte application (without notice) for a secret inquiry into the company's collapse to be called in terms of section 417 of the Companies Act.
The inquiry was due to start on December 18 but a series of court cases followed in which various parties sought access to the inquiry.
Brian Rayner and John Payne, former directors of Isaacs Bros, then sought an order setting aside the secret inquiry. The application was opposed by PG Glass and PG Bison, both creditors of Isaacs Bros.
Evidence was that on February 6 last year at a special meeting of creditors, PG Glass and PG Bison proved concurrent claims against Isaacs Bros of R41 949.17 and R167 485.17, respectively.
The total claims received by the liquidators amounted to R27 million, of which Standard Bank had proven claims of R20 million.
It was the admission of the bank's claim and the circumstances surrounding the security that became the essence of the complaint by PG Glass and PG Bison.
This was the reason for them seeking the inquiry.
It was alleged that Standard Bank had been preferred above other creditors.
Edward Lockyer, representing PG Bison, also alleged in court that anonymous sources had told him that R3.3 million of employee pension, provident, and medical aid contributions along with VAT payments had been used to keep the company solvent.
Judge Joseph Ludorf said in his judgment it was clear that an ex parte applicant was under a duty to make full and frank disclosures of all the material facts.
It was apparent that the affidavit of Lockyer "was in certain respects, and to his knowledge, inaccurate".
He had also failed to disclose certain relevant facts and circumstances. He failed to disclose that PG Glass and PG Bison had previously voted against a section 417 inquiry and had not objected to Standard Bank's claim earlier.
Lockyer had also failed to inform the court of a confrontation with Rayner in which he suggested that Rayner "purchases PG Bison's claim against Isaacs Bros under threat of an inquiry".
Lockyer had also failed to disclose his status when he made the affidavit in the ex parte application.
He had described himself as a director of PG Glass when he was in fact an employee who was allowed to use the title "commercial director".
The court found Lockyer's evidence was "pure hearsay of a tenuous probative value" because his sources were anonymous.
Had the judge who ordered the secret inquiry been aware that the liquidators had previously invited PG Glass and PG Bison to participate and co-operate in a proposed inquiry, the order for a secret section 417 inquiry would not have been granted.