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[2015] ZASCA 37
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Lancelot Stellenbosch Mountain Retreat (Pty) Ltd v Gore N.O. and Others (108/2014) [2015] ZASCA 37 (25 March 2015)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No:108/2014
In
the matter between:
LANCELOT
STELLENBOSCH
MOUNTAIN
RETREAT (PTY)
LTD
...........................................................................
APPELLANT
and
STEPHEN
MALCOLM GORE
NO
.............................................................
FIRST
RESPONDENT
BRYAN
NEVILLE SHAW
NO
.................................................................
SECOND
RESPONDENT
SADECK ZHAUN
AHMED
NO
.................................................................
THIRD
RESPONDENT
(In their capacity
as the duly appointed liquidators of
Queensgate Wealth
Manager (Pty) Ltd (in liquidation))
Neutral
citation
:
Lancelot
Stellenbosch Mountain Retreat v Gore NO
(108/14)
[2015] ZASCA 37
(25 March 2015)
Coram:
Maya, Bosielo, Willis, Zondi JJA and
Gorven AJA
Heard:
3 March 2015
Delivered:
25 March 2015
Summary:
Interruption of prescription –
onus – person asserting prescription to allege and prove date
from which prescription
commenced to run – failure to do
so – no need to determine whether prescription interrupted.
ORDER
On
appeal from:
Western
Cape High Court, Cape Town (Griesel J sitting as court of first
instance).
The
appeal is dismissed with costs including costs of two counsel.
JUDGMENT
Zondi
JA
(Maya, Bosielo, Willis JJA and
Gorven AJA concurring):
[1]
The central issue in this appeal is whether the debt, on which the
respondents relied for their locus standi to apply for the
liquidation of the appellant, had prescribed or whether the running
of the prescription period had been interrupted in terms of
s 14(1)
of the Prescription Act 68 of 1969 (the
Prescription Act).
[1
]
But
the need to determine the second question may fall away if the
enquiry on the first question yields a negative outcome. The
manner
in which this issue arose for decision on appeal, however, requires
some explanation.
[2]
On 14 May 2012 the respondents (the liquidators) brought an
application in the Western Cape High Court, Cape Town for the
liquidation
of the appellant in their capacities as liquidators of
Queensgate Wealth Manager (Pty) Ltd (in liquidation) (Queensgate
Wealth)
which was placed under a final winding-up order on 30
November 2009. The appellant, Queensgate Wealth and various other
companies
formed part of what used to be the Queensgate Group of
Companies (the Group).
[2]
It
appears that there was probably some commonality of proprietary
interest in or control over the component entities in the Group,
whether direct or indirect. According to the appellant’s
answering affidavit, Queensgate Wealth was established as the funding
arm of the
Group,
for the express purpose of obtaining loans in its own name. In turn
it on-lent loans to other companies such as Black River
Development
(Pty) Ltd (Black River) within the Group in which the developments
were taking place or were to take place. Queensgate
Wealth did not,
itself, engage in development projects.
[3]
It is common cause that Queensgate Wealth, as the funding arm of the
Group, on 15 April 2008 concluded a loan agreement with
AIK Credit
PLC, a Mauritian company (AIK) in terms of which AIK lent and
advanced an amount of €2 350 000 to Queensgate Wealth
(the AIK
loan). The purpose of the loan was to ‘fund the restructure and
development of Waterkloof and Agapé Developments
. . . .’
Clause 9 of the loan provided as follows for the Capital Repayment:
‘
At
any time, subject to two days notice, provided that the entire amount
due, including interest, shall be payable in full at the
end of 6
months, or if renewed at the end of the renewal period.’
[4]
Black River executed a deed of suretyship in favour of AIK, binding
itself as surety and co-principal debtor with Queensgate
Wealth for
the payment of the loan by Queensgate Wealth to AIK. Upon receipt of
the funds from AIK, Queensgate Wealth on-loaned
a portion thereof to
Black River. The amount of R6 480 000 is part of that
amount which Queensgate Wealth on-lent to
Black River. The terms and
conditions of that on-loan are in dispute, in particular the date of
its repayment. When Queensgate
Wealth defaulted on the AIK loan, AIK
sent a letter of demand to Queensgate Wealth on 20 October 2008,
demanding payment of €2 350 000.
The letter recorded
the following:
‘
We
refer to the Loan Agreement (“the Agreement”) between AIK
Credit PLC (“AIK”) and Queensgate Wealth Manager
Pty Ltd
(“Queensgate”) dated the 15
th
April 2008.
In
terms of the Agreement, a Loan was granted to Queensgate from AIK
with specific terms and conditions (the conditions). Inter
alia, the
conditions stipulated that timely repayment of the Loan amount,
interest and costs were due to be effected on or before
the 17
th
of October 2008.
The
total capital, outstanding amount of €2,350,000 (Euro Two
Million Three Hundred and Fifty Thousand Only) exclusive of interest
as per our statement sent to you on October 8, 2008 has not been
received by us on due date.
We
note that you have failed or neglected to make the capital repayment
as aforesaid and have breached the Agreement. You are therefore
most
formally requested to settle the above amount within 10 business days
on receipt of this letter failing which we will refer
the matter to
our Legal Advisors to proceed with the default proceeding inclusive
of execution of the encumbered properties as
per the Mortgage Bond
Agreement (Bond Nos. B 084427/08 and B 46866/08).
Please further note
that in terms of
Section 5
of the conditions penalty interest of 3%
p.a. will be calculated on the outstanding amount as from October 18,
2008.’
Queensgate
Wealth failed to pay the amount claimed in the letter.
[5]
The winding-up of the appellant was sought on the basis of the
allegations that it was unable to pay its debts within the meaning
of
s 344(
f
)
as read with
s 345(1)(
a
)
and (
c
)
of the Companies Act 61 of 1973 (the Companies Act).
[3]
The
appellant’s indebtedness to Queensgate Wealth arose from a
written agreement of assignment and delegation concluded on
23
September 2008 between Black River, the appellant and Queensgate
Wealth (the assignment agreement). In terms of that agreement,
as
from the effective date (which was the transfer date of the property
sold by Black River to the appellant) Black River assigned
and
delegated to the appellant all of its obligations under, in, and to
and arising from an amount of R6 480 000 owed
by Black
River to Queensgate Wealth in terms of a loan agreement. It is common
cause that the transfer of the property from Black
River to the
appellant occurred on 6 January 2009 which then is the date on which
the assignment agreement took effect. As, by
the time of liquidation
of Queensgate Wealth the debt owing to it by the appellant still
remained unpaid, the liquidators’
attorneys, on 26 April 2010
addressed a letter of demand in terms of s 345(1)(a) to the appellant
for payment of the sum of R6
480 000. This letter was served by the
sheriff at the appellant’s previous registered address and at
its then current registered
address on 3 May 2010 and 5 May 2010,
respectively.
[6]
In the letter of demand the liquidators referred to the assignment
agreement in terms of which the appellant assumed the obligations
of
Black River arising from the loan between Black River and Queensgate
Wealth. The letter proceeded to state:
‘
3.
The loan amount is now due and payable by you;
4.
We therefore call on you , as assignee, to make payment of the said
sum of R6, 480, 000,00 within 3 weeks (i.e. 21
calendar
days) from the date of the delivery of this demand, as contemplated
in terms of section 345(1)(
a
)(i)
of the Companies Act. . . .’
The
appellant failed to respond to the letter of demand, and neither did
it discharge its indebtedness to Queensgate Wealth.
[7]
The appellant opposed the winding-up application and raised a point
in limine
that the liquidators lacked locus standi to bring the liquidation
proceedings because the debt on which they relied had prescribed.
In
this regard it was contended by the appellant that the debt became
due, owing and payable on 17 October 2008 and was extinguished
by
prescription on 16 October 2011 (which is three years after it became
due). The basis for this contention was the allegation
that the
amount of R6 480 000 advanced by Queensgate Wealth to Black
River was part of the funds sourced by Queensgate
Wealth from AIK and
the terms of its payment were governed by the AIK loan. The
appellant’s position was that the loan between
Queensgate
Wealth and Black River became due for payment on 17 October 2008
which is the date on which the AIK loan became due
for payment by
Queensgate Wealth. The appellant contended that the assignment
agreement did not alter the terms and conditions
relating to the
payment of the portion of the loan (R6 480 000) which was
assigned by Black River to the appellant.
[8]
The liquidators denied that the debt had prescribed. They alleged
that the appellant had on a number of occasions prior to the
alleged
date of prescription tacitly acknowledged the existence of the debt,
which acknowledgement they contended, interrupted
the running of the
prescription as contemplated in terms of
s 14(1)
of the
Prescription
Act. In
particular, they relied on the failure to challenge the
letter sent in terms of
s 345(1)(
a
)
mentioned above as a tacit acknowledgement of liability.
[9]
In dealing with the defence of prescription, the high court (Griesel
J) assumed in favour of the appellant that the prescription
period
commenced to run more than three years before the application was
launched. It found, however, that the appellant’s
failure to
respond to the liquidators’ 345(1)(
a
)
letter of demand constituted a tacit acknowledgement of liability
which had the effect of interrupting the running of prescription.
It
accordingly granted an order for the final liquidation of the
appellant. The high court refused leave to appeal. The appeal
is with
the leave of this Court.
[10]
For the reasons that will become apparent later, my approach to the
matter is somewhat different from the one adopted by the
court below.
As I have pointed out
above,
the first question is whether it was established that the debt on
which the liquidators’ locus standi was based, had
prescribed.
It is a determination that must precede the question whether or not
the running of the prescription had been interrupted.
Depending on
the outcome of the enquiry on the first question, the determination
of the latter question may or may not arise at
all. This is so
because when a debtor raises the defence of prescription he bears the
full evidentiary burden to prove it. And
that burden shifts to the
creditor only if the debtor has established a prima facie case. In
that event, a creditor bears the onus
to allege and prove the
interruption of prescription through either an express or tacit
acknowledgement of liability by the debtor,
in terms of
s 14
of the
Prescription Act.
[4
]
[11]
The debate before us focused on whether the date of inception of the
prescription period had been established. It was submitted
on behalf
of the appellant that the prescription began to run on 17 October
2008 which, it was contended, was the date on which
the AIK loan to
Queensgate Wealth became due and payable. It was argued that it is
wrong to use the effective date (6 January 2009)
referred to in the
assignment agreement as the date on which the loan became due and
payable. The argument was that the AIK loan
had already become due
and payable by the time the assignment agreement took effect on 6
January 2009. This was so, it was argued,
because the appellant
stepped into the shoes of Black River when the assignment agreement
came
into
effect. Counsel for the appellant maintained that, in general, there
was nothing improbable about the on-loan to be on the
same terms as
the main loan. He also rejected the suggestion that the debt became
due and payable on 26 April 2010 when the
s 345
statutory demand was
addressed to the appellant.
[12]
Section 10
of the
Prescription Act provides
for the extinctive
prescription of a debt and the prescriptive period of 3 years is
applicable to the liquidators’ claim.
[5]
Prescription
commences to run as soon as the debt is due.
[6]
For
the purpose of the
Prescription Act the
debt is due when it is
immediately claimable by the creditor and it is immediately payable
by the debtor. In other words, the debt
must be one in respect of
which the debtor is under obligation to pay immediately.
[7]
It
was said in
List
v Jungers
1979
(3) SA 106
(A) at 121C-D that:
‘
.
. . the date on which a debt arises usually coincides with the date
on which it becomes due, but that that is not always the case.
The
difference relates to the coming into existence of the debt on the
one hand and the recoverability thereof on the other hand.’
The
appellant, as the party that raised prescription, bore the onus to
prove that a debt, on which the liquidators’ locus
standi as
creditors was founded, had prescribed. In other words, it had to
prove when the loan between Queensgate Wealth and Black
River became
due for the purposes of establishing the date of inception of the
period of prescription.
[8]
[13]
I am not satisfied that the appellant has established on a balance of
probabilities that the debt on which the liquidators
relied for its
locus standi became prescribed. I agree with counsel for the
liquidators’ submission that there is no evidence
for the
assertion that the loan of R6 480 000 was payable on the
same terms as the AIK loan. Affidavits in motion proceedings
serve to
define not only the issues between the parties, but also to place the
essential evidence before the court. They must contain
factual
averments that are sufficient to support the relief sought.
[9]
As
was held in
Swissborough
Diamond Mines v Government of the Republic of South Africa &
others
1999
(2) SA 279
(T) at 324C:
‘
The
more complex the dispute between the parties, the greater the
precision that is required in the formulation of the issues.’
The
terms of the oral loan agreement between Queensgate Wealth and Black
River were set out by the appellant in vague terms. All
that it
alleged, was that the loan between Queensgate Wealth and Black River
was payable on 17 October 2008 because that was the
repayment date of
the AIK loan, but there was no factual basis laid for that assertion.
We were not told who represented the parties
in concluding the loan
agreement, when precisely it was concluded, what were the material
terms and whether those terms remained
the same when the assignment
agreement took effect on 6 January 2009. In the absence of a properly
pleaded oral loan agreement
between Queensgate Wealth and Black River
it is difficult to understand how the appellant reached the
conclusion that the loan
of R6 480 000 was payable on the
same terms as the AIK loan.
[10]
[14]
The appellant’s claim in this regard is expressed in broad and
unsubstantiated terms in the answering affidavit. The
court is in
essence invited to independently search through the pleadings to
ascertain whether there is a connection between the
AIK loan and the
loan agreement between Queensgate Wealth and Black River regarding
the terms of their payment. The high water
mark of the appellant’s
case is set out in para 84 of its further affidavit which reads:
‘
It
was understood by all the aforementioned, that the terms of the loan
as between AIK and Queensgate Wealth were the same as between
Queensgate Wealth (which was simply the conduit) and Black River. It
is however almost impossible to say that there was any particular
day
when Queensgate and Black River concluded such an express,
alternatively tacit oral agreement relating to the loan as between
Queensgate Wealth and Black River. It is therefore impossible to say,
as Applicant now suggests ought to have been done, that the
oral loan
agreement was concluded by certain parties, at a certain place, on a
certain date. I further point out however that it
is also the
Applicants’ case, and it is therefore common cause, that such
an oral loan agreement was in fact concluded.’
[15]
In my view, it is not for the court in the absence of sufficient
indication in the appellant’s answering affidavit to
accept
that the payment date of the loan between Queensgate Wealth and Black
River should be determined with reference to the terms
and conditions
of the AIK loan. I find therefore that the loan of R6 480 000
became due and payable when a demand for
its payment was served on
the appellant on 5 May 2010. Accordingly, when the winding-up
application was launched on 14 May 2012
the debt under that loan had
not become prescribed. In the light of this finding, it is
unnecessary to consider whether the appellant’s
failure to
respond to the
s 345
letter of demand constituted a tacit
acknowledgement of debt and the effect thereof on the running of
prescription. In the circumstances
the appellant’s prescription
defence must fail. The court below therefore correctly granted a
final liquidation order.
[16]
In the result I make the following order:
The
appeal is dismissed with costs including costs of two counsel.
_______________________
D
H Zondi
Judge
of Appeal
Appearances
For
the Appellant: D W Gess
Instructed
by:
Springer-Nel
Attorneys, Cape Town
Van
der Merwe & Sorour, Bloemfontein
For the Respondents:
W R E Duminy SC (with him M D Edmunds)
Instructed
by:
Scheibert
& Associates Inc Attorneys, Cape Town
Lovius-Block
Attorneys, Bloemfontein
[1]
Section 14(1)
provides as follows:
‘
The
running of prescription shall be interrupted by an express or tacit
acknowledgement of liability by the debtor.’
[2]
Queensgate Holdings (Pty) Ltd (‘Queensgate Holdings, which was
placed in liquidation on 10 June 2010’); Queensgate
Wealth
(‘the respondent’, now in liquidation);Black River
Development (Pty) Ltd (which was liquidated on 28 July
2009);
Lancelot Development Holdings (Pty) Ltd (‘Lancelot
Development’); Lancelot Stellenbosch Mountain Retreat (Pty)
Ltd (‘the appellant’); and Great Force Investments 109
(Pty) Ltd (‘Great Force’), a subsidiary of Lancelot
Development.
[3]
Section
345(1)(a)
and (c) provides:
‘
(1)
A company or body corporate shall be deemed to be unable to pay its
debts if─
(a)
a creditor, by cession or otherwise, to whom the company is
indebted in a sum not less than one hundred rand then due─
(i)
has served on the company, by leaving the same at its registered
office, a demand requiring the company to pay the sum so
due; or
(ii)
in the case of any body corporate not incorporated under this Act,
has served such demand by leaving it at its main office
or
delivering it to the secretary or some director, manager or
principal officer of such body corporate or in such other manner
as
the Court may direct,
and
the company or body corporate has for three weeks thereafter
neglected to pay the sum, or to secure or compound for it to
the
reasonable satisfaction of the creditor; or
.
. .
(c)
it is proved to the satisfaction of the Court that the company
is unable to pay its debts.’
[4]
Benson
& another v Walters & another
1984
(1) SA 73
(A) at 86D-87A;
MacLeod
v Kweyiya
2013 (6) SA 1
SCA para 10.
[5]
Section 11(d).
[6]
Section 12(1) provides:
‘
Subject
to the provisions of subsections (2), (3) and (4), prescription
shall commence to run as soon as the debt is due.’
[7]
The
Master v I L Back & Co Ltd & others
1983
(1) SA 986
(A) at 1004F-H;
Umgeni
Water & others v Mshengu
[2010] 2 All SA 505
(SCA) para 5.
[8]
Gericke
v Sack
1978 (1) SA 821 (A).
[9]
Die
Dros (Pty) Ltd & another v Telefon Beverages CC & others
2003
(4) SA 207
(C) para 28.
[10]
Radebe
& others v Eastern Transvaal Development Board
1988 (2) SA 785
(A) at 793C-F.