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[2015] ZASCA 39
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Murray N.O. and Another v Firstrand Bank Ltd t/a Wesbank (20104/2014) [2015] ZASCA 39; 2015 (3) SA 438 (SCA) (26 March 2015)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case
No: 20104/2014
Reportable
In
the matter between:
CLOETE
MURRAY
NO
.......................................................................................
FIRST
APPELLANT
MABUTHO
LOUIS MHLONGO
NO
............................................................
SECOND
APPELLANT
and
FIRSTRAND
BANK LTD T/A
WESBANK
.................................................................
RESPONDENT
Neutral
citation:
Cloete Murray NO &
another v FirstRand Bank Ltd
(20104/2014)
[2015] ZASCA 39
(26 March 2015)
Coram:
Navsa ADP, Ponnan and Zondi JJA and Schoeman and
Fourie AJJA
Heard:
9 March 2015
Delivered:
26 March 2015
Summary:
Business rescue proceedings ─ Interpretation of
s 133(1)
of the
Companies Act 71 of 2008
─ creditor of a company under business
rescue cancelling a contract concluded prior to the commencement of
business rescue
proceedings ─ cancellation not constituting
‘enforcement action’ contemplated in
s 133(1)
─
cancellation lawful.
ORDER
On
appeal from:
North
Gauteng High Court, Pretoria (Jordaan J sitting as court of first
instance):
The
appeal is dismissed with costs, including the costs of two counsel.
JUDGMENT
Fourie
AJA (Navsa ADP, Ponnan and Zondi JJA and Schoeman AJA concurring):
[1]
This appeal deals with the provisions of Chapter 6 of the Companies
Act 71 of 2008 (the Act) relating to business rescue proceedings,
but, in reality, it has to do with competing claims in liquidation.
Be that as it may, the issue to be decided is whether, once
business
rescue proceedings under the Act have commenced, the creditor of a
company under business rescue can unilaterally cancel
an extant
instalment sale agreement that it had concluded with the company
prior to the latter being placed under business rescue.
Background
[2]
On 22 July 2010 the respondent, FirstRand Bank Ltd t/a Wesbank
(Wesbank), concluded a written Master Instalment Sale Agreement
(the
MISA) with Skyline Crane Hire (Pty) Ltd (Skyline), in terms of which
Wesbank sold and delivered movable goods (the goods)
to Skyline, with
Wesbank retaining ownership in the goods until the purchase price had
been paid in full.
[3]
On 29 May 2012 the board of Skyline voluntarily resolved that Skyline
be placed under business rescue in terms of the provisions
of s 129
of the Act. The resolution was filed with the Companies and
Intellectual Property Commission on 30 May 2012, which date,
in terms
of s 132(1)
(a)
(i)
of the Act, is the date upon which the business rescue proceedings
commenced. Skyline had by then already fallen into arrears
in respect
of the monthly instalments payable to Wesbank under the MISA.
[4]
On 30 May 2012 Wesbank dispatched a letter to Skyline, cancelling the
MISA due to Skyline’s failure to pay the monthly
instalments
due in terms thereof. The letter was addressed to Skyline at its
chosen domicilium and in terms of clause 27 of the
MISA it was deemed
to have been received by Skyline three days later, ie on 3 June 2012.
[5]
In the letter of cancellation Wesbank advised Skyline that the MISA
was cancelled with immediate effect, while reserving Wesbank’s
right to repossess the goods; to value and sell same; to credit the
proceeds to the relevant accounts and to claim damages.
[6]
During the first week of July 2012, while the business rescue
proceedings relating to Skyline were still in progress, the business
rescue practitioner (the practitioner) appointed in terms of the Act
to oversee the proceedings, consented to Wesbank repossessing
and
selling the goods forming the subject matter of the MISA. The
proceeds realised from the sale were sufficient to discharge
the debt
owing by Skyline to Wesbank under the MISA, leaving a surplus of some
R800 000. Wesbank retained the surplus, relying
on set-off in
respect of other amounts allegedly owing to it by Skyline.
[7]
On 17 July 2012 the practitioner obtained an order from the North
Gauteng High Court, Pretoria, discontinuing the business rescue
proceedings, and placing Skyline in provisional liquidation. On 10
September 2012 a final order of liquidation was granted. The
appellants were subsequently appointed by the master of the high
court as the co-liquidators (the liquidators) of Skyline.
[8]
The liquidators took the view that Wesbank’s cancellation of
the MISA was contrary to the provisions of s 133(1) of the
Act and
accordingly of no force or effect. I will in due course return to the
provisions of s 133(1). The liquidators contended
that the full
proceeds of the sale of the goods were to be paid over to them to be
dealt with under ss 83 and 84 of the Insolvency
Act 24 of 1936 (the
Insolvency Act). These
sections of the
Insolvency Act regulate
the
manner in which the claims of creditors under instalment sale
transactions are to be dealt with upon sequestration or liquidation.
[9]
Wesbank, on the other hand, maintained that it had lawfully cancelled
the MISA and was entitled to the full proceeds of the
goods. In
particular, Wesbank denied that s 133(1) of the Act precluded it from
cancelling the MISA and dealing with the goods
in the manner that it
did.
[10]
The liquidators then approached the North Gauteng High Court,
Pretoria, for an order declaring that Wesbank’s letter
of
cancellation of the MISA was contrary to s 133(1) of the Act and
therefore invalid; that the MISA is to be administered by the
liquidators in terms of the provisions of
ss 83
and
84
of the
Insolvency Act and
that Wesbank is to pay over the full proceeds of
the sale of the goods to the liquidators.
[11]
Wesbank opposed the application. In the event, the matter was heard
by Jordaan J, who dismissed the application, but granted
the
liquidators leave to appeal to this court.
Business
Rescue Proceedings
[12]
One of the declared purposes of the Act is to provide for the
efficient rescue and recovery of financially distressed companies,
in
a manner that balances the rights and interests of relevant
stakeholders (s 7(
k
)). Chapter 6 of the Act (ss 128 to 154)
introduces the concept of business rescue proceedings, with s
128(1)
(b)
defining ‘business rescue’ as
‘proceedings to facilitate the rehabilitation of a company that
is financially
distressed by providing for:
(i) the temporary
supervision of the company, and of the management of its affairs,
business and property;
(ii) a temporary
moratorium on the rights of claimants against the company or in
respect of property in its possession; and
(iii)
the development and implementation, if approved, of a plan to rescue
the company. . . .’
[13]
The temporary moratorium envisaged in s 128(1)
(b)
(ii), has
been enacted by means of s 133 of the Act, which reads as follows:
‘
General
moratorium on legal proceedings against company
(1)
During business rescue proceedings, no legal proceeding, including
enforcement action, against the company, or in relation to
any
property belonging to the company, or lawfully in its possession, may
be commenced or proceeded with in any forum, except—
(a)
with the written consent of the practitioner;
(
b
) with the
leave of the court and in accordance with any terms the court
considers suitable;
(
c
) as a
set-off against any claim made by the company in any legal
proceedings, irrespective of whether those proceedings commenced
before or after the business rescue proceedings began;
(
d
) criminal
proceedings against the company or any of its directors or officers;
(
e
)
proceedings concerning any property or right over which the company
exercises the powers of a trustee; or
(
f
)
proceedings by a regulatory authority in the execution of its duties
after written notification to the business rescue practitioner.
(2)
During business rescue proceedings, a guarantee or surety by a
company in favour of any other person may not be enforced by
any
person against the company except with leave of the court and in
accordance with any terms the court considers just and equitable
in
the circumstances.
(3)
If any right to commence proceedings or otherwise assert a claim
against a company is subject to a time limit, the measurement
of that
time must be suspended during the company’s business rescue
proceedings.’
[14]
It is generally accepted that a moratorium on legal proceedings
against a company under business rescue, is of cardinal importance
since it provides the crucial breathing space or a period of respite
to enable the company to restructure its affairs. This allows
the
practitioner, in conjunction with the creditors and other affected
parties, to formulate a business rescue plan designed to
achieve the
purpose of the process. See in general, F H I Cassim et al
Contemporary Company Law
2
ed (2012) at 878-879; P Delport et al
Henochsberg
on the
Companies Act 71 of 2008
Service
Issue 9 Vol 1 at 478(5) and H L Van Huÿssteen (2012)
An
overview of the Business Rescue Moratorium Contained In
Section 133
of the
Companies Act 71 of 2008
,
Masters of Law (Commercial Law) [unpublished thesis]: University of
Johannesburg, Chapter 1 at 6-7. In fact, P Kloppers ‘Judicial
Management ─ A Corporate Rescue Mechanism In Need of Reform?’
(1999) 10
Stellenbosch
LR 417 at 429 aptly described the moratorium as ‘a cornerstone
of all business rescue procedures’.
[15]
I should also refer to two related sections of the Act, namely s
134(1)
(c)
and s 136(2). Section 134(1)
(c)
provides that, during business rescue proceedings, despite any
provision of an agreement to the contrary, no person may exercise
any
right in respect of any property in the lawful possession of the
company, irrespective of whether the property is owned by
the
company, except to the extent that the practitioner consents in
writing. The effect of s 136(2) of the Act is that a contract
concluded prior to the commencement of business rescue proceedings,
is not suspended or cancelled by virtue of the business rescue,
but
that the practitioner may suspend, or apply to court to cancel, any
obligation of the company under the contract.
Evaluation
[16]
It is plain from the above that, in their application in the court a
quo, the liquidators firmly pinned their colours to the
mast of s
133(1) of the Act. This appears from their notice of motion seeking
an order declaring that Wesbank’s letter of
cancellation was
contrary to the provisions of s 133(1) of the Act and as such
invalid. Similarly, in their founding papers the
liquidators
contended that the cancellation of the MISA constituted ‘enforcement
action’ as meant in s 133(1) of the
Act, and as it was effected
without the consent of the practitioner or the leave of the court, it
was invalid.
[17]
In their heads of argument in this court, the liquidators reiterated
that ‘the issue arising out of the application [in
the court
below] was the determination of the proper meaning of
s 133(1)
of the
Companies Act 71 of 2008
and particularly the correct interpretation
of the meaning of the term . . . no legal proceeding, including
enforcement action,
against a company under business rescue may be
commenced’.
[18]
At no stage prior to the date in the next paragraph did the
liquidators rely on the provisions of s 134(1)
(c)
of the Act as the basis for a finding that Wesbank’s letter of
cancellation was invalid. Although they did refer to s 134(1)
(c)
in their papers, it was only for the purpose of invoking it in aid of
their interpretation of s 133(1) of the Act.
[19]
However, one court day before the hearing of this appeal,
supplementary heads were filed on behalf of the liquidators, in which
they submitted that the cancellation of the MISA by Wesbank ‘was
invalid in terms of sections 133 and/or 134(1)
(c)
of the
Companies Act&rsquo
;. Apart from the lateness of the
supplementary heads, this court questioned whether the liquidators
were permitted to rely on
s 134(1)
(c)
as their cause of action, seeing that it was not raised in the court
below and the parties have not had the opportunity of dealing
with it
in their papers or in argument. Nor was the court a quo called upon
to deal with
s 134(1)
(c)
as the foundation for the liquidators’ case.
[20]
Counsel for the liquidators, relying on the decision in
Barkhuizen
v Napier
[2007] ZACC 5
;
2007 (5) SA 323
(CC),
submitted that the liquidators should be permitted to raise the
s
134(1)
(c)
argument in this court. In
Barkhuizen
the Constitutional Court reiterated the well-known principle that the
mere fact that a point of law is raised for the first time
on appeal,
is not in itself sufficient reason for refusing to consider it, and
if the point is covered by the pleadings and its
consideration on
appeal involves no unfairness to the other party, a court of appeal
may in the exercise of its discretion consider
same.
[21]
In my view the following considerations militate against the
application of this principle in the present appeal:
(a) The
s 134(1)
(c)
point was not raised in the pleadings before the court a quo.
(b) The reliance on
s 134(1)
(c)
does not raise a discrete point of law; on the
contrary, it would involve the determination of factual issues, to
which I allude
hereunder.
(c) The
consideration on appeal of a cause of action based on
s 134(1)
(c)
,
will no doubt prejudice Wesbank. Particularly so, as it has not had
the opportunity to deal with it in its pleadings or to consider
what
evidence may be required to counter it.
(d)
This court will be required to consider a case based on
s 134(1)
(c)
,
which was not pleaded and without the factual basis required for its
determination. Nor would it have the benefit of a reasoned
judgment
by the court a quo on this issue.
[22]
Had the liquidators based their application on s 134(1)
(c)
of the Act, the question would have arisen as to what the legal
consequences were of the practitioner’s consenting to Wesbank’s
repossession of the goods forming the subject matter of the MISA.
Could this conduct of the practitioner not arguably be regarded
as an
acceptance of the termination of the MISA by Wesbank, with the result
that the goods were no longer in the lawful possession
of Skyline and
s 134(1)
(c)
would therefore not be available to the liquidators in their quest to
reclaim the goods or their proceeds from Wesbank? It also
brings into
sharp focus the factual basis on which the practitioner relinquished
possession of the goods.
[23]
In the same vein it could be asked whether the repossession of the
goods with the consent of the practitioner, did not destroy
the
substratum
of the MISA. One of the
essentialia
of an
instalment sale agreement such as the MISA, is that the buyer is
entitled to immediate possession of the relevant goods and
to retain
such possession pending payment of the full purchase price, when
ownership in the goods will revert to the buyer. See
M A Diemont and
P J Aronstam
The Law of Credit Agreements and Hire-Purchase in
South Africa
5 ed (1982) at 2. The
essentialia
of a
contract were described as follows by M Pothier
A treatise on the
Law of Obligations or Contracts
vol 1 (1806) 56:
‘
Things
which are of the essence of a contract are those without which such
contract cannot subsist, and for want of which there
is either no
contract at all, or a contract of a different kind.’
(See
also R H Christie and G B Bradfield
Christie’s
The Law of Contract in South Africa
6
ed (2011) at 164.) In these circumstances a similar legal consequence
may follow, namely, that the repossession of the goods
has resulted
in the termination of the MISA and therefore the liquidators
are unable to invoke s 134(1)
(c)
to reclaim the goods or the proceeds thereof. I should hasten
to add that, as in the case of paragraph 22 above, I make no
finding
in this regard.
[24]
I do appreciate that the consent of the practitioner, as described
above, was not in writing as required in terms of s 134(1)
(c)
of the Act. However, I do not believe that the requirement of writing
should necessarily be regarded as peremptory rather than
directory.
In this regard, it is important to note that there is no sanction
added in case the requirement is not met, nor does
the section state
that a failure to meet the requirement of written consent should be
visited with nullity. Also, on the liquidators’
own version,
the practitioner, being fully aware of Wesbank’s letter of
cancellation, voluntarily consented to Wesbank repossessing
the
goods. In these circumstances it would lead to an injustice to
construe the requirement of writing in s 134(1)
(c)
as peremptory and to hold that the practitioner’s failure to
consent in writing, rendered the repossession of the goods by
Wesbank
void. See
Nkisimane v Santam Insurance
Company Limited
1978 (2) SA 430
(A) at
433H-434E;
Taljaard v TL Botha
Properties
[2008] ZASCA 38
;
2008 (6) SA 207
(SCA) para
5;
Chief Executive Officer, South
African Social Security Agency & others v Cash Paymaster Services
(Pty) Ltd
2012 (1) SA 216
(SCA) para 28
and
Liebenberg NO v Bergrivier
Municipality
[2012] 4 All SA 626
(SCA).
[25]
Had the liquidators based their application on s 134(1)
(c)
of the Act, they may very well have been met with a defence along the
lines suggested above. However, to properly consider a defence
of
this nature, evidence would be required regarding the circumstances
in which and the intention with which possession of the
goods had
been relinquished. There are conflicting versions in the papers as to
what the practitioner intended when he consented
to Wesbank
repossessing the goods. On the one hand, the liquidators allege that
the practitioner allowed the repossession of the
goods for purposes
of safekeeping pending the winding-up of Skyline. On the other, they
contend that the practitioner did not have
any objection to Wesbank
selling the goods in business rescue. Wesbank, however, alleges that
the practitioner consented to the
repossession of the goods as he
felt that they were at risk of depreciation and it would be prudent
to transfer possession to Wesbank.
[26]
I should add that, had the liquidators sought relief in terms of s
134(1)
(c)
on the papers before the court a quo, the matter would have been
decided on the facts as stated by Wesbank (see
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A) at 634).This would inevitably have resulted in
the dismissal of the application.
[27]
In these circumstances, and for the further reasons alluded to in
paragraph 21 above, the liquidators are not at this late
stage
entitled to base their case on s 134(1)
(c)
of the Act.
[28]
Turning to s 133(1) of the Act, the liquidators’ approach was
that Wesbank’s cancellation of the MISA constituted
‘enforcement action’ as meant in the subsection, and
absent the consent of the practitioner or the leave of the court,
the
cancellation was of no force or effect. By contrast, Wesbank
submitted that the cancellation of an agreement did not constitute
‘enforcement action’ as envisaged by s 133(1) of the
Act, therefore the consent of the practitioner or the leave
of the
court was not required to effect a lawful cancellation of the MISA.
The latter submission found favour with the court a
quo.
[29]
It follows that an interpretation of s 133(1) of the Act is called
for, the crisp issue being whether the cancellation of the
MISA by
Wesbank by means of its letter of 30 May 2012, constituted
‘enforcement action’ as meant in s 133(1) of the
Act.
[30]
In
Natal Joint Municipal Pension Fund v
Endumeni Municipality
2012 (4) SA 593
(SCA) para 18, this court reiterated that the inevitable point of
departure in interpreting a statute 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. It should, however, be borne in mind that, if the words of
the relevant provision are unable to bear the meaning
contended for,
then that meaning is impermissible. See
Firstrand
Bank Ltd v Land and Agricultural Development Bank of South Africa
2015 (1) SA 38
(SCA) para 27. It is also important to note that s
39(2) of the Constitution, which compels an interpretation of
legislative provisions
in the light of the values enshrined in the
Bill of Rights, applies only where the language of the statute is not
unduly strained.
See
South African
Airways (Pty) Ltd v Aviation Union of South Africa & others
2011
(3) SA 148
(SCA) paras 25-26.
[31]
Section 133(1) of the Act places a moratorium on ‘legal
proceeding, including enforcement action’. In the Afrikaans
text the reference is to ‘geregtelike stappe, insluitende
afdwingingsaksie’. The Act does not contain a definition
of
these terms. However, the term ‘legal proceeding’ is
well-known in South African legal parlance and usually bears
the
meaning of a lawsuit or ‘hofsaak’. See
Van
Zyl v Euodia Trust (Edms) Bpk
1983 (3)
SA 394
(T) at 399C-D and
Lister Garment
Corporation (Pty) Ltd v Wallace NO
1992
(2) SA 722
(D) at 723G-H. Unsurprisingly, counsel were agreed that
the cancellation of an agreement does not constitute a ‘legal
proceeding’
as envisaged in s 133(1) of the Act.
[32]
As to the meaning of the phrase ‘enforcement action’, in
my view Wesbank correctly submitted that, in our legal
parlance,
‘enforce’ or ‘enforcement’, usually refers to
the enforcement of obligations. In the context
of s 133(1) of
the Act, it is significant that reference is made to ‘no legal
proceeding,
including
enforcement action’. (My emphasis.) The inclusion of the term
‘enforcement action’ under the generic phrase ‘legal
proceeding’, seems to me to indicate that ‘enforcement
action’ is considered to be a species of ‘legal
proceeding’ or, at least, is meant to have its origin in legal
proceedings. This conclusion is strengthened by the fact that
s
133(1) provides that no legal proceeding, including enforcement
action, ‘may be commenced or proceeded with
in
any forum
’. (My emphasis.) A
‘forum’ is normally defined as a court or tribunal (see
the Concise Oxford Dictionary 12 ed
(2011)) and its employment in s
133(1) conveys the notion that ‘enforcement action’
relates to formal proceedings ancillary
to legal proceedings, such as
the enforcement or execution of court orders by means of writs of
execution or attachment.
[33]
Moreover, the concepts ‘enforcement’ and ‘cancellation’
are traditionally regarded as mutually exclusive.
The term
‘cancellation’ connotes the termination of obligations
between parties to an agreement. However, the liquidators
contended
for a wider meaning to be attributed to the expression ‘enforcement
action’ to include the cancellation of
an agreement. In so
doing, I believe that they are doing violence to the wording of s
133(1) of the Act. Cancellation is a unilateral
act of a party to an
agreement and save for giving the other party notice of such
cancellation, it does not occur in or by means
of any process
associated with any form of forum. In any event, as pointed out on
behalf of Wesbank, it also does not make linguistic
sense to speak of
cancellation as having ‘commenced or proceeded with’ in
any forum, as envisaged by s 133(1). It therefore
seems to me that,
linguistically, the phrase ‘enforcement action’ in s
133(1) is unable to bear the meaning of the
cancellation of an
agreement, as contended for by the liquidators. Contextually it must
be understood to refer to enforcement by
way of legal proceedings.
[34]
This is really the end of the matter, but for the sake of
completeness I will succinctly deal with the remainder of the reasons
for my conclusion. I have in paragraph 14 above, alluded to the
purpose of the moratorium in s 133(1) of the Act, namely to provide
a
company in distress with the crucial breathing space to enable it to
restructure its affairs. I accept, as stated in
Henochsberg
at 478(6), that the intention of the moratorium is to cast the net as
wide as possible in order to include any conceivable type
of action
against the company. The liquidators submit that, having regard to
this purpose, it would result in the inevitable demise
of business
rescue proceedings if any creditor is allowed to cancel any contract
with a company under business rescue. Therefore,
they contend that
the net is cast so wide by means of s 133(1) of the Act as to include
a moratorium against a creditor cancelling
an agreement with a
financially distressed company under business rescue.
[35]
I do not agree with this submission. In my view there are sufficient
safeguards in Chapter 6 of the Act to prevent the disastrous
result
foreshadowed by the liquidators. I refer to the following:
(a) In terms of s
136(2)
(a)
of the Act, the practitioner may, despite any
provision of an agreement to the contrary, entirely, partially or
conditionally suspend,
for the duration of the business rescue
proceedings, any obligation of the company that arises under an
agreement to which the
company was a party at the commencement of the
business rescue proceedings. By invoking this provision, the
practitioner could
prevent a creditor from instituting action and
repossessing or attaching property in the company’s possession.
(b)
Section 154(2) of the Act provides that, once a business rescue plan
has been approved and implemented, a creditor is not entitled
to
enforce any debt owed by the company prior to the beginning of the
business rescue process, except to the extent permitted in
the
business rescue plan.
[36]
It follows, in my view, that an interpretation of s 133(1) of the
Act, to the effect that the cancellation of the MISA by Wesbank
did
not constitute ‘enforcement action’, would not do
violence to the purpose of s 133(1).
[37]
In their interpretation of s 133(1) of the Act, the liquidators
placed reliance on the wording of s 128(1)
(b)
(ii)
of the Act, in which a temporary moratorium on the
rights
of claimants against a company under business rescue or in respect of
property in its possession, is envisaged. (My emphasis.)
This
section, it was submitted, envisages a moratorium on the rights of
creditors such as the right to cancel an agreement. I do
not agree.
Section 128(1)
(b)
(ii)
deals with the broad purpose of Chapter 6 of the Act, while s 133 has
been specifically enacted to cater for the temporary
moratorium. What
is therefore required, is an interpretation of the specific
provisions of s 133(1) and not to seek to interpret
it by resorting
to s 128(1)
(b)
(ii).
[38]
The liquidators even attempted their hand at legislating, rather than
interpreting s 133(1) of the Act. They suggested that
if one were to
read the last part of s 133(1) with a comma after the word
‘commenced’, the section is capable of being
read as
envisaging ‘. . . legal proceedings being proceeded with in any
forum . . .’ or ‘. . .
enforcement action
commenced with . . .’, which would support the interpretation
contended for by them. What this submission
really demonstrates is
that, if the legislature intended s 133(1) to have this meaning, it
could easily have done so by adopting
the approach suggested by the
liquidators. The fact that the legislature did not follow this route
puts paid to this submission
of the liquidators.
[39]
A further indication why the interpretation contended for by the
liquidators is untenable, is that it would render s 136(2)
of the Act
superfluous. In terms of the latter section the practitioner may
during business rescue proceedings entirely, partially
or
conditionally suspend any obligation of the company arising under an
extant agreement. If, as the liquidators submit, s 133(1)
already has
the effect that rights and obligations are frozen upon the
commencement of business rescue, there would have been no
need for
the legislature to incorporate s 136(2) in the Act.
[40]
The liquidators’ construction that, in terms of s 133(1), the
cancellation of an agreement constitutes ‘enforcement
action’
which requires the consent of the practitioner or the court, would
also fundamentally change our law of contract.
As explained earlier,
our law of contract provides for a unilateral cancellation in the
case of a breach of contract. The way I
see it, the legislature
intended to allow the company in distress the necessary breathing
space by placing a moratorium on legal
proceedings and enforcement
action in any forum, but not to interfere with the contractual rights
and obligations of the parties
to an agreement. Such an intention
would, in any event, be contrary to the tenet of our law that the
legislature does not intend
to alter the existing law more than is
necessary, particularly if it takes away existing rights. See L C
Steyn
Die Uitleg van Wette
5 ed (1981) at 97 and 237.
[41]
Support for this view is found in s 133(3) of the Act, which provides
protection to third parties in respect of claims which
are subject to
the moratorium in that, if the commencement of proceedings or claims
are subject to a time limit, it is suspended
during business rescue
proceedings. As emphasised by Jonathan Rushworth ‘A critical
analysis of the business rescue regime
in the Companies Act 71 of
2008’ (2010)
Acta Juridica
at 384, the wording of s 133(3) is consistent with the concept of a
temporary moratorium on bringing claims, rather than a greater
restriction on creditors’ rights.
[42]
We have been referred to some decisions of the high courts dealing
with various issues relating to business rescue. Apart from
the
general principles, these decisions are not of much assistance, as
they do not deal pertinently with the issues to be decided
in this
appeal. It is, however, necessary to refer to one of the decisions,
namely
LA Sport 4x4 Outdoor CC v
Broadsword Trading 20 (Pty) Ltd
&
others (A513/2013 [2015] ZAGPPHC 78 (26 February 2015), which
concerned the provisions of s 133(3) of the Act. In the course
of the
judgment the learned judge opined that the cancellation of an
agreement constituted ‘legal process which falls under
the
moratorium placed on legal action against the company’. No
reasons were furnished for this obiter dictum, but, in view
of what
is set out above, I believe that it is clearly wrong. In any event,
it transpired during argument in this court that an
appeal against
the decision has recently been upheld by the full court of that
division.
[43]
Finally, I should refer to s 5(2) of the Act, which provides that
‘[t]o the extent appropriate, a court interpreting
or applying
this Act may consider foreign company law’. The liquidators
referred us to corresponding provisions in foreign
jurisdictions,
particularly those in England, Australia and Canada. Whilst
apparently sharing the same aim and goal as Chapter
6 of the Act, the
wording of the corresponding provisions in these jurisdictions,
dealing with moratoriums and stay of proceedings,
differ to such an
extent from their South African counterpart, that no meaningful
assistance would be gained by invoking them in
the interpretation of
s 133(1) of the Act.
[44]
I therefore conclude that the court a quo correctly rejected the
liquidators’ interpretation of s 133(1) of the Act.
It follows
that the appeal falls to be dismissed. As to costs, I am of the view
that the employment of two counsel was justified.
[45]
In the result the following order is made:
The
appeal is dismissed with costs, including the costs of two counsel.
________________________
P B FOURIE
ACTING
JUDGE OF APPEAL
APPEARANCES:
For
the Appellant: F H Terblanche SC
J
Hershensohn
Instructed
by:
Tintingers
Attorneys, Pretoria
Lovius
Block Attorneys, Bloemfontein
For
the Respondent: C van der Spuy
L
Meintjes
Instructed
by:
Lanham-Love
Attorneys, Pretoria
c/o
Prinsloo-Van Der Linde Attorneys
McIntyre
& Van Der Post Attorneys, Bloemfontein