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[2016] ZAWCHC 31
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Van Deventer and Another v Nedbank Ltd (A325/2015) [2016] ZAWCHC 31; 2016 (3) SA 622 (WCC) (30 March 2016)
THE
HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case No: A325/2015
DATE: 30 MARCH 2016
In the matter between
AEH VAN
DEVENTER
........................................................................................
FIRST
APPELLANT
ESME VAN
DEVENTER
................................................................................
SECOND
APPELLANT
And
NEDBANK
LTD
..............................................................................................................
RESPONDENT
Coram : ROGERS J
& NUKU AJ
Heard:
18 MARCH 2016
Delivered:
30 MARCH 2016
JUDGMENT
ROGERS
J (NUKU AJ concurring):
[1]
The appellants were the
defendants and the respondent the plaintiff in the court a quo. l
refer to them as such. The appeal is against
the dismissal of the
defendants’ application to rescind a default judgment. The
first appellant appeared in person for the
appellants. Mr Baguley
appeared for the respondent.
[2]
In August 2006 the
defendants signed suretyships on behalf of a close corporation, J and
B Biltong CC (‘JBB’). During
March 2008 JBB was placed in
liquidation. The plaintiff issued summons against the defendants as
sureties in July 2012. The summons
was duly served at the domicilium
citandi et executandi on 13 July 2012. Because the defendants had
left that address they were
unaware of it. The plaintiff obtained
default judgment on 13 December 2012 on claims of R65 249,77,
R294 788,89 and R163 277,08
together with interest from 5
March 2012. It appears from the letters sent to the defendants in
terms of
s 129(1)
of the
National Credit Act 34 of 2005
that the
first two amounts arose from instalment sale agreements and the third
amount from an overdraft.
[3]
The defendants allege
that they learnt of the default judgment during a meeting between the
first defendant and a representative
of the bank on 17 September
2013. On 30 September 2013 they delivered a rescission application
for hearing on 20 November 2013.
It appears that the plaintiff did
not react to the application. However the magistrate of his own
accord removed the matter from
the roll because of a typing error in
the notice of motion. A second rescission application followed on 21
November 2013, identical
to the first. Answering and replying papers
were filed. On 6 August 2014 the magistrate dismissed the second
application on a point
in limine relating to the attestation of the
founding papers.
[4]
On 30 August 2014 the
defendants launched their third rescission application. Again there
were answering and replying papers. On
9 January 2015 the magistrate
dismissed the three points in limine taken by the plaintiff. The
merits of the rescission application
were argued on 17 March 2015.
The defences which the defendants alleged were (i) that the
plaintiff’s claims against
them had prescribed; (ii) that
the plaintiff had failed to mitigate its loss, permitting goods which
were subject to the instalment
sale agreements to be sold for well
below their true value. On 24 April 2015 the magistrate dismissed the
application on the basis
that the defendants had not disclosed a bona
fide defence.
[5]
The rescission
application was brought in terms of rule 49(1) of the Magistrates’
Courts Rules. In terms thereof a default
judgment may be rescinded
‘upon good cause shown’ or if the court is satisfied that
there is ‘good reason to
do so’. In general, the showing
of good cause or good reason requires the applicant (i) to
present a reasonable explanation
for his default; (ii) to show
that his application is bona fide; (iii) to show the existence
of a bona fide defence,
ie one that has some prospect of success
(
Chetty v Law
Society, Transvaal
1985
(2) SA 756
(A) at 764J-765D;
Colyn
v Tiger Food Industries Limited t/a Meadow Feed Mills (Cape)
2003
(6) SA 1
(SCA) para 11).
[6]
Mr Baguley for the
plaintiff accepted that the defendants had presented a reasonable
explanation for their default. The critical
question was whether they
had disclosed a bona fide defence.
[7]
The defendants’
allegation that the plaintiff failed to mitigate its loss was so
baldly advanced that it cannot be regarded
as disclosing a bona fide
defence, even if in law the plaintiff owed the defendants a duty to
mitigate. I simply observe, in passing,
that the suretyships
expressly permitted the plaintiff to release any security it held in
whole or in part without prejudicing
its rights against the sureties.
[8]
Although the
prescription defence was likewise tersely alleged, it may have passed
muster in the absence of a response from the
plaintiff. The
defendants alleged that the debts arose at the time of JBB’s
liquidation in March 2008 and that summons was
only issued in July
2012, more than three years later.
[9]
In its opposing papers
the plaintiff alleged the following additional facts. On 14 November
2008 it lodged its claims against JBB
(this would have been in terms
of
s 44(4)
of the
Insolvency Act 24 of 1936
read with s 366
of the Companies Act 61 of 1973 and
s 66(1)
of the
Close
Corporations Act 69 of 1984
). On 26 October 2009 the claims were duly
proved in terms of
s 44(3)
of the
Insolvency Act at
a special
meeting of creditors. When summons was issued the first and final
liquidation and distribution account had not yet been
approved by the
Master. The plaintiff contended, on the strength of these facts, that
the completion of prescription against JBB,
and thus against the
sureties, had been delayed in terms of
s 13(1)(g)
of the
Prescription Act 68 of 1969
and was not yet complete when summons was
issued.
[10]
In their replying
papers the defendants did not contest the facts underlying the
plaintiff’s conclusion (ie the dates on which
the plaintiff’s
claims were lodged and proved and that the first and final account
had not yet been approved when summons
was issued). They alleged,
however, that the debts against them had arisen more than three years
prior to 14 November 2008, so
that
s 13(1)(g)
did not avail the
plaintiff. They also alleged, without amplification, that more than
one year had elapsed since the relevant impediment
had ceased as
contemplated in
s 13(1)(i)
of the
Prescription Act.
[11
]
Section 13(1)
of the
Prescription Act reads
in relevant part as follows:
‘
(1)
If
…
(g) the debt is the object of a
claim filed against the estate of a debtor who is deceased or against
the insolvent estate of the
debtor or against a company in
liquidation or against an applicant under the Agricultural Credit
Act, 1966;
…
(i) the relevant period of
prescription would, but for the provisions of this subsection, be
completed before or on, or within
one year after, the date on which
the relevant impediment referred to in paragraph (a), (b), (c), (d),
(e), (f), (g) or (h) has
ceased to exist,
the period of prescription shall
not be completed before a year has elapsed after the date referred to
in paragraph (i).’
[12]
The precise event which
causes a debt to become the object of a filed claim for purposes of
s 13(1)(g) is yet to be determined
by our highest courts (cf
Betterbridge (Pty)
Ltd v Masilo & Others
NNO
2015 (2) SA 396
(GP), where Unterhalter AJ held that the relevant event was the
decision of the presiding officer in terms of
s 44(4)
of the
Insolvency Act to
allow the claim to go forward to proof at a meeting
of creditors). We were not addressed on this question and it is
unnecessary
to decide it. What can be said is that, if
s 13(1)(g)
applies at all to close corporations (as to which see below), the
debts in the present case became the object of filed claims by
not
later than 26 October 2009 when they were proved at a special meeting
of creditors.
[13]
On this assumption,
s 13(1)(g)
would not assist the plaintiff if the debts
prescribed before 26 October 2009. Although the defendants in their
replying papers
baldly stated that the debts arose more than three
years before 14 November 2008, that allegation is inconsistent with
the assertion
in their founding papers that the debts arose at the
time of liquidation in March 2008. It was for the defendants to
allege and
prove when prescription began to run (see
Gericke
v Sack
1978 (1) SA
821
(A) at 827B-828A;
Van
Zijl v Hoogenhout
[2004]
4 All SA 427
(SCA) para 41).
To
render
s 13(1)(g)
irrelevant on the facts, they had to show that
prescription began to run against JBB, and thus against them, prior
to 26 October
2006. They have not alleged any facts in support of
such a conclusion (even allowing for the fact that in rescission
proceedings
they do not need to present all the evidence available to
them).
[14]
The impediment
contemplated in
s 13(1)(g)
ceases to exist, for purposes of
s 13(1)(i)
, when the filed claim is rejected or, if it is
accepted, when the final liquidation and distribution account is
confirmed by the
Master (
Kilroe-Daley
v Barclays National Bank Ltd
[1984] ZASCA 90
;
1984
(4) SA 609
(A) at 621-622;
Nedcor
Bank Ltd v Rundle
2008
(1) SA 415
(SCA) para 10). The plaintiff’s claims were duly
proved, not rejected. When summons was issued on 5 July 2012 a final
liquidation
and distribution account had not yet been approved
(indeed no account had yet been approved). During argument the
magistrate permitted
the plaintiff’s attorney to submit a
letter from the Master stating that the first and final liquidation
and distribution
account was confirmed on 5 June 2013. The defendants
argued that this informal evidence should not have been allowed. I am
prepared
to assume in their favour that the magistrate should not
have had regard to the letter. Even so, on the evidence before the
magistrate
a final account had not been approved as at 5 July 2012,
from which it would follow that prescription could not conceivably
have
been completed earlier than one year later, ie 5 July 2013.
Since summons was duly served on 13 July 2012, prescription would
have
been interrupted prior to its completion. (I may add that the
onus to prove that the impediment had ceased probably rested on the
defendants, not the plaintiff.)
[15]
It is now settled that
the timeous interruption of prescription of the principal debt, or a
delay in the completion of prescription
of the principal debt, also
interrupts or delays prescription in respect of a surety’s
obligation (
Jans
v Nedcor Bank Ltd
2003
(6) SA 646
(SCA)).
[16]
This leaves the
question foreshadowed above, namely whether
s 13(1)(g)
applies
to close corporations. The question was not raised before the
magistrate or in the heads of argument before us. We gave
notice to
the parties that they should be ready to address the issue, having
regard to
Shackleton
Credit Management (Pty) Ltd v Scholtz
[2011]
ZAWCHC 494
, an unreported judgment in which Blignault J held
that
s 13(1)(g)
did not apply to close corporations. If that
decision is correct, the defendants’ prescription defence would
seem to be sound.
[17]
Blignault J’s
reasoning can be summarised thus. There are broadly three approaches
to statutory interpretation. (a) The
first approach is that one
must give effect to the plain meaning of the words unless this causes
absurdity or a result contrary
to the legislature’s intention.
The plain meaning of
s 13(1)(g)
does not include a close
corporation. (b) The second approach is purposive, ie
interpretation in the light of the purpose
which the statute seeks to
achieve. Closely related to this approach is the rule that statutory
language must be read in its context.
Because this approach uses the
actual language as the starting point, it did not assist the
plaintiff’s reliance on
s 13(1)(g).
(c) The third
approach is the reading-in approach, the court playing a more
creative role.
[18]
Blignault J said that
the third approach faced three problems in the case before him:
(i) The test for implying words into
a statute is quite
stringent. The implication must be necessary in the sense that
without it effect cannot be given to the statute
as it stands and the
implication must be necessary to realise the ostensible legislative
intention or to make the legislation workable.
Section 13
contains
exceptions to the general rule regarding the running of
prescription. There are no practical or legal reasons why
close
corporations should be singled out for special treatment (ie why they
should be among the exceptions). (ii) If it was
difficult to
formulate the implied term, this militated strongly against the
implication. How, asked Blignault J rhetorically,
would the implied
provision in
s 13(1)(g)
be framed, bearing in mind that close
corporations did not exist when the
Prescription Act was
passed? (iii) There had always been entities which are
separate juristic entities but not companies, eg trading
corporations,
which would normally be sequestrated not liquidated.
How could the lawmaker have known in 1969 that a similar type of
entity, if
and when it came into being, would be liquidated rather
than sequestrated?
[19]
The learned judge
mentioned two cases in which
s13(1)(g)
was applied to close
corporations, namely
Thrupp
Investment Holdings (Pty) Ltd v Goldrick
2
008
(2) SA 253
(W) and
Nedcor
Bank Ltd v Sutherland
1998
(4) SA 32
(N). He observed, however, that the issue seems not to have
been argued and reasons were not given for the assumption.
[20]
Finally, Blignault J
referred to and distinguished
Vitamax
(Pty) Ltd v Executive Catering Equipment CC & Others
1993
(2) SA 556
(W) in which Mahomed J (as he then was) concluded that a
deed of suretyship relating to ‘companies’ included a
principal
debtor which was a close corporation. Blignault J listed
four reasons for distinguishing
Vitamax
:
(i) The
Close Corporations Act did
not yet exist when the
Prescription Act was
passed but did exist when the suretyship in
Vitamax
was
executed. (ii) It is more difficult to imply a term into a
statute than into a contract. (iii) The approach which
Mohamed J
followed placed an onus on the defendant to show that ‘companies’
did not include close corporations whereas
in the case of
s 13(1)(g)
the onus would be on the plaintiff to extend the usual meaning of
‘company’. (iv) Not all the entities referred
to in
the cases cited by Mohamed J at 558H-I were companies.
[21]
The approach to
statutory interpretation was stated as follows by the Constitutional
Court in
Cool Ideas
1186 CC v Hubbard & Another
2014
(4) SA 474
(CC) para 28 (footnotes omitted):
‘
A
fundamental tenet of statutory interpretation is that the words in a
statute must be given their ordinary grammatical meaning,
unless to
do so would result in an absurdity. There are three important
interrelated riders to this general principle, namely:
(a) that statutory
provisions should always be read purposively;
(b) the relevant statutory
provision must be properly contextualised; and
(c) all
statutes must be construed consistently with the Constitution, that
is, where reasonably possible, legislative provisions
ought to be
interpreted to preserve their constitutional validity. This proviso
to the general principle is closely related to
the purposive approach
referred to in (a) above.’
[1]
[22]
Another recent
authoritative statement of the correct approach is to be found in
Natal Joint
Municipal Pension Fund v Endumeni Municipality
2012
(4) SA 593
(SCA) para 18 (footnotes again omitted):
‘
The
present state of the law can be expressed as follows: Interpretation
is the process of attributing meaning to the words used
in a
document, be it legislation, some other statutory instrument, or
contract, having regard to the context provided by reading
the
particular provision or provisions in the light of the document as a
whole and the circumstances attendant upon its coming
into existence.
Whatever the nature of the document, consideration must be given to
the language used in the light of the ordinary
rules of grammar and
syntax; the context in which the provision appears; the apparent
purpose to which it is directed and the material
known to those
responsible for its production. Where more than one meaning is
possible each possibility must be weighed in the
light of all these
factors. The process is objective, not subjective. A sensible meaning
is to be preferred to one that leads to
insensible or unbusinesslike
results or undermines the apparent purpose of the document. Judges
must be alert to, and guard against,
the temptation to substitute
what they regard as reasonable, sensible or businesslike for the
words actually used. To do so in
regard to a statute or statutory
instrument is to cross the divide between interpretation and
legislation; in a contractual context
it is to make a contract for
the parties other than the one they in fact made. The “inevitable
point of departure is the
language of the provision itself”,
read in context and having regard to the purpose of the provision and
the background to
the preparation and production of the document.’
[23]
Mr Baguley’s
argument was not that we should read words into s 13(1)(g) but
that we should interpret the word ‘company’
as including
a close corporation. Another approach might be to interpret the words
‘claim filed… against the insolvent
estate of the
debtor’ as including a claim filed in the liquidation of a
close corporation.
[24]
As I understand the
approach to statutory interpretation set out in the cases to which I
have referred, one does not start with
the literal meaning of the
words and only move beyond that meaning if there is absurdity. One
must from the outset consider the
meaning of the words in their
context and having regard to the purpose of the statute. One must
also consider the consistency of
competing interpretations with the
Constitution. I do not think, with respect, that one can properly
speak of an onus when it comes
to the proper interpretation of a
statute.
[25]
The purpose of
s 13(1)(g) is clear. Insolvency legislation contains
specifically tailored non-litigious procedures for establishing
claims against insolvent parties. It is undesirable as a matter of
policy that creditors should have to engage in a parallel process
of
litigation to prevent their claims from prescribing (see
Leipsig
v Bankorp Ltd
[1993] ZASCA 198
;
1994
(2) SA 128
(A) at 134A-135A). It is likewise undesirable that those
administering the insolvency should be put to the expense of
investigating
and defending litigation where the claims might be
established without controversy through the specified procedures.
[26]
When s 13(1)(g)
was enacted its language covered the whole field of generally
available modes for owning assets or conducting
business. Sole
proprietorships, partnerships and trusts would have estates which
could be sequestrated. As an alternative, individuals,
whether on
their own or in combination, could form companies, in which case the
company could upon insolvency be liquidated. These
corporate bodies
could take various forms as permitted by legislation prevailing from
time to time, for example companies with
issued shares (private or
public; with or without limited liability) or not-for-gain
associations limited by guarantee. (When I
refer to ‘generally
available modes’ for owning assets or conducting business, I
exclude entities established to conduct
specially regulated
activities and which have juristic personality in terms of their
governing legislation, for example pension
funds and friendly
societies. It is unnecessary in this judgment to consider whether
s13(1)(g) could apply to such entities.)
[27]
The
Close Corporations
Act 69 of 1984
introduced another form of corporate body, also
generally available to persons seeking the benefit of incorporation.
The provisions
of the new Act could, without doing violence to the
notion of a ‘company’, have been inserted into the
Companies Act
as a further form of ‘company’. The purpose
of the
Close Corporations Act was
to make available to members of the
public a form of incorporation which was administratively less
burdensome than companies as
then regulated by the Companies Act. In
the spectrum of available forms of organisation, the close
corporation – from the
perspective of administrative regulation
– lay between sole proprietorships, partnerships and trusts on
the one side and
companies on the other.
[28]
With the coming into
force of the
Companies Act 71 of 2008
, close corporations may no
longer be formed (see
s 2
of the
Close Corporations Act as
amended). Instead the new
Companies Act has
introduced a somewhat
greater gradation in the formal regulation of companies. For example,
private companies falling below prescribed
thresholds need not have
their financial statements audited (cf 30(2)) and do not have to
comply with the enhanced accountability
and transparency provisions
of Chapter 3.
[29]
If close corporations
had existed when the
Prescription Act was
enacted, there would have
been no conceivable reason to treat them differently from sole
proprietorships, partnerships, trusts
and companies. The policy
considerations and purposes underlying
s 13(1)(g)
would have
applied as much to close corporations as to these other forms of
organisation. In
Shackleton
Blignault J said
that there was no practical or legal reason to single out close
corporations for special treatment. If by this
he meant (as I think
he did) that there was no practical or legal reason for close
corporations to be subject to
s 13(1)(g)
, then I must
respectfully disagree. On the contrary, there is to my mind no
practical or legal reason why close corporations should
be treated
differently from unincorporated insolvent estates and liquidated
companies.
[30]
Section 366
of the old
Companies Act (which
remains applicable to the liquidation of
insolvent companies) renders applicable to companies the provisions
of the
Insolvency Act in
relation to the proof of claims. The old
Companies Act contains
its own provisions for liquidation and
distribution accounts and their confirmation
(ss 403
-
408
). These
are analogous to corresponding provisions in the
Insolvency Act
(ss
91-111). In terms of
s 342
of the
Companies Act the
assets of a liquidated company must be applied in the payment of
costs, charges and expenses incurred in the winding-up and in
the
claims of creditors as nearly as possible as they would be applied in
the payment of costs of sequestration and the claims
of creditors
under the law relating to insolvency.
Section 66(1)
of the
Close
Corporations Act states
, subject to certain exclusions not here
relevant, that the provisions of the
Companies Act relating
to the
winding-up of companies apply mutatis mutandis to close
corporations which are thus, in the respects I have mentioned,
put in
exactly the same position as companies.
[31]
There is also a
constitutional dimensional to the interpretation of
s 13(1)(g)
,
because consistency with the Constitution is an important controlling
consideration in the interpretation of statutes. Differentiation
on
grounds other than those specified in s 9(3) of the Constitution
violates s 9(1) (the right of equality before the
law and the
equal protection and benefit of the law) if the differentiation does
not bear a rational connection to a legitimate
government purpose
(
Harksen v Lane NO &
Others
[1997] ZACC 12
;
1998 (1) SA
300
(CC) para 54;
Sarrahwitz
v Maritz NO & Another
2015 (4) SA 491
(CC) paras 48-54). If
s 13(1)(g) does not apply to close corporations in liquidation
but does apply to insolvent estates which
can be sequestrated under
the
Insolvency Act and
to liquidated entities incorporated under the
Companies Acts as they have existed from time to time, the
differentiation would
indeed in my view be utterly irrational and
unrelated to any legitimate government purpose. I do not think that
Blignault J suggested
that there were grounds (apart from the
strictures of language) justifying differential treatment.
[32]
What is the
significance of the fact that close corporations did not exist in
1969 when the
Prescription Act was
enacted? In a leading English
decision,
R
(Quintavalle) v Secretary Of State for Health
[2003]
2 All ER (HL), Lord Bingham said that there was no inconsistency
between the rule that statutory language retains the meaning
it had
when Parliament used it and the rule that a statute ‘is always
speaking’ (para 9). In terms of the latter rule,
a statute may
in appropriate circumstances be held to apply to something which
could not have been known to the lawmaker when the
legislation was
enacted. Lord Bingham and Lord Steyn both cited the following passage
from the speech of Lord Wilberforce in
Royal
College of Nursing of the UK v Department Of Health and Social
Security
[1980] UKHL 10
;
[1981] 1
All ER 545
(HL) at 564-565:
‘
In
interpreting an Act of Parliament it is proper, and indeed necessary,
to have regard to the state of affairs existing, and known
by
Parliament to be existing, at the time. It is a fair presumption that
Parliament’s policy or intention is directed to
that state of
affairs. Leaving aside cases of omission by inadvertence, this being
not such a case when a new state of affairs,
or a fresh set of facts
bearing on policy, comes into existence, the courts have to consider
whether they fall within the parliamentary
intention. They may be
held to do so if they fall within the same genus of facts as those to
which the expressed policy has been
formulated. They may also be held
to do so if there can be detected a clear purpose in the legislation
which can only be fulfilled
if the extension is made. How liberally
these principles may be applied must depend on the nature of the
enactment, and the strictness
or otherwise of the words in which it
has been expressed. The courts should be less willing to extend
expressed meanings if it
is clear that the Act in question was
designed to be restrictive or circumscribed in its operation rather
than liberal or permissive.
They will be much less willing to do so
where the new subject matter is different in kind or dimension from
that for which the
legislation was passed. In any event there is one
course which the courts cannot take under the law of this country:
they cannot
fill gaps; they cannot by asking the question, “What
would Parliament have done in this current case, not being one in
contemplation,
if the facts had been before it?”, attempt
themselves to supply the answer, if the answer is not to be found in
the terms
of the Act itself.’
[33]
In
Malcolm
v Premier, Western Cape Government
2014
(3) SA 177
(SCA) Wallis JA, after referring to the
Quintavalle
case and other
authorities to similar effect (para 10 and footnote 14), said that
there was obvious sense in the always-speaking
approach when a court
is confronted with a novel situation that could not have been in the
contemplation of the legislature when
the law was enacted. Courts can
then, in the light of the broad purpose of the legislation, current
social conditions and technological
development, determine whether
the new situation can properly, as a matter of interpretation, be
encompassed by the language. While
the principle has limits, Wallis
JA saw no reason why in appropriate cases our courts should not
invoke it, particularly in the
light of our present constitutional
order in terms of which statutes are to be construed in the light of
constitutional values
(para 11).
[34]
In
Chubb
Insurance Company of Australia Ltd v Moore
[2013]
NSWCA 212
the court said that
another
way of putting the always-speaking proposition was
‘
that
a statute should generally be construed so as to apply to all things
coming within the
denotation
of its terms, having regard to their
connotation
at the time of enactment. The connotation of a word or phrase is its
essential attributes, which are to be determined as at the
time of
enactment. The denotation of a word or phrase is the class of things
that, from time to time, may be seen to possess those
essential
attributes sufficiently to justify the application of the word or
phrase to them.’
(Para
82, emphasis in the original.)
[35]
I am entirely satisfied
that the legislature could not rationally have intended to exclude
corporate entities such as close corporations
from the scope of
s 13(1)(g) and that such entities are within the parliamentary
intent of s 13(1)(g). I reach this conclusion
not by speculating
as to what the lawmaker would have done had it been aware that
statutory provision would in the future be made
for corporate
entities in the form of close corporations but by having regard to
the lawmaker’s intent and purpose as they
appear from
s 13(1)(g) and to the absence of any material distinction
(insofar as such intent and purpose are concerned) between
the
sequestration of individuals and liquidation of the companies on the
one hand and the liquidation of close corporations on
the other. In
the language of Lord Wilberforce in the
Royal
College of Nursing
case,
close corporations fall within ‘the same genus of facts’
as those to which the lawmaker’s expressed policy
has been
formulated. The filing of claims against liquidated close
corporations is not ‘different in kind or dimension’
from
the filing of claims against sequestrated individuals and liquidated
companies.
[36]
For these reasons, and
in order to avoid irrational and thus unconstitutional
differentiation, I am satisfied that s 13(1)(g)
should be
construed as being applicable to close corporations if its language
reasonably permits. One possibility is to construe
‘company’
liberally so as to include a close corporation. This is what Mr
Baguley argued. In
Vitamax
Mohamed J said that
the crucial characteristics of a ‘company’ are its
existence as an entity distinct from its members,
its capacity to own
property apart from its members and perpetual succession; and that a
close corporation shared all these characteristics
(at 558J-559B). I
may add that share capital is a common but not essential
characteristic of a company (in certain circumstances
a company may
be limited by guarantee). In the context of s 13(1)(g), another
characteristic of a ‘company’ might
be that it is a form
of incorporation available to members of the public for general
purposes rather than a specially regulated
form of juristic person
(such as a pension fund).
[37]
I consider that
‘company’ in s 13(1)(g) is indeed capable of being
interpreted liberally so as to include a close
corporation. Whether
the word was correctly ascribed this extended meaning in
Vitamax
is of course not
germane; that depended on the interpretation of the suretyship in
question. However, and in respectful disagreement
with Blignault J, I
do not regard as significant that in
Vitamax
close corporations
existed when the suretyship was executed whereas they did not exist
when s 13(1)(g) was enacted. On the
contrary, it might tell
against an extended meaning that the draftsman omitted reference to a
known type of entity:
inclusio
unius exlusio alterius
.
In the case of s 13(1)(g) there can be no question of an
intentional omission or inadvertence, since close corporations did
not then exist.
[38]
There is, however,
another way to reach a rational result in accordance with the
lawmaker’s obvious purpose. A claim filed
in the liquidation of
a close corporation could be regarded as a claim filed ‘against
the insolvent estate of the debtor’.
Section 13(1)(g) does not
use the word ‘sequestration’ or refer in terms to claims
filed in terms of the
Insolvency Act. What
is sequestrated under the
Insolvency Act is
an estate, the assets and liabilities of the debtor
vesting in the debtor’s trustee. In the case of companies and
close corporations,
the entity itself is liquidated. Its estate,
while falling under the control of the liquidator, remains vested in
the entity (see
Leigh
v Nungu Trading 353 (Pty) Ltd & Another
2008
(2) SA 1
(SCA)). The reason for this is probably that, unlike the
sequestration of individuals, a corporate entity’s existence is
terminated upon the conclusion of the liquidation process. However,
in the context of
s 13(1)(g)
this is a distinction without a
difference. In both instances there is a concursus. The hand of the
law is placed on the estate.
The manner of proving claims is the
same. The same rules govern how the assets in the estate are to be
applied to meet costs and
claims. The fact that the corporate
entity’s assets and liabilities are not vested in the
liquidator does not mean that the
entity does not have an estate.
Since in liquidation claims have to be met from that estate, I see no
difficulty in regarding a
claim filed in the liquidation of a close
corporation as being a claim against the corporation’s
insolvent estate.
[39]
It may be said that, if
this view were sound, it would have been unnecessary for the lawmaker
in 1969 to have made express reference
to a company in liquidation.
While one normally avoids an interpretation which results in
tautology (
Commissioner
for Inland Revenue v Golden Dumps (Pty) Ltd
[1993] ZASCA 89
;
1993
(4) SA 110
(A) at 116F-117A), statutory tautology is not unknown,
particularly where the lawmaker is intent on ‘covering the
field’
(
Sekretaris
van Binnelandse Inkomste v Lourens Erasmus (Edms) Bpk
1966
(4) SA 434
(A) at 441F-442D;
Casey
NO v Minister of Defence
1973
(1) SA 630
(A) at 639B-D;
Bastian
Financial Services (Pty) Ltd v General Hendrik Schoeman Primary
School
2008 (1) SA
1
(SCA) paras 26-27). If the lawmaker in 1969 had failed
expressly to mention the only form of generally available
incorporation
then available (companies), some significance might
have been attached to the omission. It thus made sense, and did no
harm, to
refer to liquidated companies, even if, without such
reference, the preceding words would have been sufficient.
[40]
In the above discussion
I have referred to 1969 as the date of
s 13(1)(g)
’s
enactment. I do not overlook that
s 13(1)(g)
was amended by
s 11(b) of the General Law Amendment Act 139 of 1992, at a time
when close corporations existed. The amendments
effected by Act 139
of 1992 were the deletion of various provisions in the
Prescription
Act referring
to the former territory of South West Africa. In the
case of
s 13(1)(g)
, all that was done was to delete a reference
to a South West African ordinance. There is nothing to suggest that
other matters,
such as the introduction of close corporations, were
within the lawmaker’s contemplation. There had been no judicial
decisions
on the subject.
[41]
For all the reasons
given above, I respectfully consider that
Shackleton
was incorrectly
decided. It follows that the appeal in the present case must be
dismissed.
[42]
In regard to costs, we
raised with Mr Baguley whether, having regard to the fact that his
client’s points in limine were dismissed
pursuant to a separate
hearing, the parties should not bear their own costs in the court a
quo. Although he left this in our hands,
I do not think on reflection
that we can intervene as there is no distinct appeal against the
magistrate’s costs order.
[43]
The following order is
made: The appeal is dismissed with costs.
ROGERS
J
NUKU
AJ
APPEARANCES
For Appellants In person
For Respondent Mr D
Baguley
Instructed by
Vanderspuy Cape Town
4th Floor, 14 Long
Street
Cape Town
[1]
See also
Democratic
Alliance v Speaker of the National Assembly & Others
[2016]
ZACC 8
para 19.