About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Supreme Court of Appeal
SAFLII
>>
Databases
>>
South Africa: Supreme Court of Appeal
>>
2014
>>
[2014] ZASCA 228
|
|
PMG Motors Kyalami (Pty) Ltd and Another v Firstrand Bank Ltd, Wesbank Division ([2015] 1 All SA 437 (SCA); 2015 (2) SA 634 (SCA)) [2014] ZASCA 228; [2014] ZASCA 180 (24 November 2014)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
REPORTABLE
Case
no: 866/2013
In
the matter between:
PMG
MOTORS KYALAMI (PTY) LTD
(IN
LIQUIDATION)
................................................................................................
FIRST
APELLANT
PMG
MOTORS WESTVILLE (PTY) LTD
(IN
LIQUIDATION)
........................................................................................
SECOND
APPELLANT
and
FIRSTRAND
BANK LTD, WESBANK
DIVISION
....................................................
RESPONDENT
Neutral
citation:
PMG Motors v Firstrand
Bank
(866/2013)
[
2014]
ZASCA 180
(24 November 2014)
Coram:
Lewis, Ponnan and Willis JJA and Mathopo and
Gorven AJJA
Heard
:
5 November 2014
Delivered:
24 November 2014
Summary:
Companies in liquidation –
Jurisdiction – operation of s 84(2) of the Insolvency Act
on claim under the
condictio indebiti
where payment made in respect of cancelled instalment agreements and
vehicles returned pursuant to cancellation – whether
factual
dispute raised – appropriateness of application proceedings for
claim under
condictio
– whether application premature in light of objection to
account in terms of s 111 of the Insolvency Act.
ORDER
On
appeal from:
South Gauteng High Court,
Johannesburg (Mayat J sitting as court of first instance)
The
appeal is dismissed with costs to be paid by the appellants jointly
and severally, the one paying the other to be absolved,
such costs to
include the costs consequent on the employment of two counsel.
JUDGMENT
Gorven
AJA (Lewis, Ponnan, Willis JJA and Mathopo AJA concurring):
[1]
The appellant raised five issues in this
appeal, all raised in the court below as well: First, whether the
court below had jurisdiction
to entertain the application. Secondly,
whether s 84(2) of the Insolvency Act 24 of 1936 (the
Insolvency
Act) applied
to the claim. Thirdly, whether there were material
factual disputes which should have resulted either in a referral to
oral evidence
or the dismissal of the application. Fourthly, whether
the money claim under the
condictio
indebiti
should have been brought by
way of action rather than by application. Fifthly, whether an
objection in terms of the provisions
of
s 111
of the
Insolvency
Act precluded
the grant of relief before the objection was resolved.
[2]
The respondent, Firstrand Bank Ltd, Wesbank
Division (Wesbank), which was the applicant in the court below,
launched an application
in the Gauteng South High Court, Johannesburg
for confirmation of the cancellation of agreements and repayment of
three sums of
money under the
condictio
indebiti
. The appellants were two of
the three respondents in that court, PMG Motors Kyalami (Pty) Ltd and
PMG Motors Westville (Pty) Ltd
respectively. The third respondent was
PMG Motors Alberton (Pty) Ltd (in liquidation) which has not
appealed. All of the companies
in liquidation functioned as motor
vehicle dealerships. Where I refer to more than one of the companies
in liquidation, I shall
refer to them as the dealerships.
[3]
The
payment of the amounts claimed arose from the following common cause
facts. Floor plan agreements (the agreements) were concluded
by
Wesbank with each of the dealerships, as well as with a fourth such
company in the same group which was not joined in the application.
[1]
The agreements reserved ownership in the vehicles sold under them to
Wesbank until full payment had been made. The registered address
of
all of the dealerships was in KwaZulu-Natal. PMG Westville had its
principal place of business in KwaZulu-Natal but the other
dealerships had their principal places of business within the
jurisdiction of the court below.
[4]
Wesbank
took a decision to cancel the agreements. There is no dispute that it
was entitled to do so in the circumstances. To that
end, Wesbank
prepared a number of letters which communicated its decision to
cancel the agreements and demanded the return of all
the vehicles
subject to them. The letters were dated 22 January 2009 and were
addressed to people in each of the dealerships.
Wesbank planned to
deliver these to all of the dealerships on 23 January 2009 at the
same time. The letters were delivered to the
dealerships and
subsequently Wesbank collected all of the affected vehicles with the
permission of the dealerships. Wesbank thereafter
sold the vehicles.
On 26 January 2009, all of the dealerships presented
ex
parte
applications to the KwaZulu-Natal High Court, Durban to place
themselves in liquidation. This is the date recognised by the
Companies
Act 61 of 1973 as the date of commencement of the
liquidations.
[2]
Provisional
liquidation orders were granted on 27 January 2009, which were made
final on 9 March 2009.
[5]
After liquidation, five joint liquidators
were appointed to two of the dealerships and six to the other two.
Two of the liquidators,
who both reside and conduct their business
within the jurisdiction of the court below, were common to all four
dealerships. Relying
on
s 84(2)
of the
Insolvency Act, the
liquidators of the dealerships requested that Wesbank pay them the
amounts realised from the sale of the vehicles. Wesbank acceded
to
this request and made the payments. It thereafter took the view that
s 84(2)
of the
Insolvency Act did
not apply to these amounts and
that the payments had therefore been made in the mistaken belief that
they were owing. The liquidators
refused to repay the amounts and
lodged accounts with the Master reflecting the amounts as assets of
the dealerships. Wesbank objected
to the accounts in terms of
s 111
of the
Insolvency Act on
the basis that the amounts belonged to it
and were thus incorrectly reflected as dealership assets. Wesbank
then brought an application
in the court below under the
condictio
indebiti
to claim back the three
amounts paid to each dealership.
[6]
The court below, in a judgment which both
addressed and rejected all of the issues raised by the dealerships,
granted Wesbank an
order declaring that the floor plan agreements
with the dealerships had been cancelled on 23 January 2009,
an order directing
that the relevant dealership repay the moneys paid
to it by Wesbank and an order that the dealerships pay the costs of
the application
jointly and severally, including the costs of two
counsel. It is against this order that the appellant dealerships
appeal, with
the leave of the court below. I shall deal in turn with
each of the five issues on which the dealerships relied in both
courts.
Jurisdiction
[7]
The
first issue to address is that of jurisdiction. If this is decided
against Wesbank, the appeal must succeed and the other issues
fall
away. In this regard, De Villiers JP in
Steytler
NO v Fitzgerald
,
[3]
said that the enquiry was twofold:
‘
.
. . a Court can only be said to have jurisdiction in a matter if it
has the power not only of taking cognisance of the suit, but
also of
giving effect to its judgment.’
Since
there is no issue with giving effect to the judgment, it is only the
first of these issues which arises; is there a recognised
ground of
jurisdiction?
[4]
Section 19(1)(
a
)
of the Supreme Court Act
[5]
accords to a provincial or local division of the high court
jurisdiction ‘over all persons residing or being in and in
relation
to all causes arising . . . within its area of
jurisdiction’.
[8]
Wesbank did not rely for jurisdiction on
the cause of action having arisen within the jurisdiction of the
court below. It relied
on PMG Kyalami and PMG Alberton ‘residing’
within the jurisdiction of the court below. In relation to PMG
Westville,
Wesbank relied on s 19(1)(
b
)
of the Supreme Court Act which gives jurisdiction in respect of a
party ‘who is joined . . . to any cause in relation to
which
such provincial or local division has jurisdiction . . . if the said
person resides or is within the area of jurisdiction
of any other
provincial or local division’. The dealerships challenged the
jurisdiction of the court below. They contended
that, because their
registered offices were all in KwaZulu-Natal and the liquidation
order issued from the KwaZulu-Natal High Court,
Durban, that was the
appropriate court with jurisdiction and the court below had no
jurisdiction to determine the application.
[9]
It
has long been recognised as trite that artificial persons such as
companies have no bodies and therefore cannot reside in a particular
area.
[6]
They do, however, have
directing minds and ‘the residence of a corporation will be
determined by the periodic, usual or habitual
location of the
directing mind’.
[7]
This
has been held to be the company’s ‘seat of its central
management and control, from where the general superintendence
of its
affairs takes place, and where, consequently, it is said that it
carries on its real or principal business’.
[8]
To say that a company resides at its principal place of business is
simply a convenient way of ensuring that the nerve centre of
the
operations of a company founds jurisdiction in proceedings taken
against it. Although s 12 of the Companies Act refers
to ‘the
main place of business’, this amounts to the same thing for
jurisdictional purposes.
[9]
The
dealerships accepted that, on the above basis, the court below had
jurisdiction over PMG Kyalami and PMG Alberton prior to
their
liquidation.
[10]
The dealerships submitted, however, that,
after liquidation, they could no longer be considered to have a
principal place of business.
As a result, neither this nor any other
ground of jurisdiction applied. For this submission, the dealerships
relied on s 1
of the Companies Act. This defines a ‘place
of business’ as ‘any place where the company transacts or
holds itself
out as transacting business’. They pointed out
that ‘transacts’ and ‘holds itself out as
transacting business’
are used in the present tense. Therefore,
they submitted, because the
concursus
creditorum
brought about by liquidation
‘freezes all trading and suspends all other civil proceedings’
after liquidation, a company
no longer transacts or holds itself out
as transacting business and, therefore, no longer has a ‘place
of business’.
No case was made out, it was submitted, that the
dealerships continued to transact or hold themselves out as
transacting business
because the liquidators had not carried on any
part of the business. Therefore jurisdiction could not be founded on
the dealerships
‘residing’ within the area of
jurisdiction of the court below because they had no principal place
of business.
[11]
The
dealerships could cite no authority for this proposition and I could
not find any. The approach of a company having a place
of residence
is based on a convenient fiction.
[10]
The reasoning underlying the fiction concerning the principal place
of business being regarded as the residence of a company takes
cognisance of at least the following factors. The company has
established a physical presence there, it has located its senior
management there, records relating to its business dealings with
others (which are likely to be relevant to litigation arising
from
those dealings) are located there and, in many cases, the majority of
the employees of the company are stationed there. All
of these
factors would make the court within whose jurisdiction the company
has its principal place of business a convenient one
in which to
litigate. In most cases it would mean that decisions can be taken
concerning the litigation, documents can be readily
accessed,
authority to litigate and instructions relating to the litigation can
be obtained, and persons with knowledge of the
transaction in
question would be available to consult with legal representatives and
attend court with minimal disruption and expense.
Many of these
factors, which make a principal place of business a practical place
to regard as the place of residence of a company,
are unaffected by
the liquidation of that company.
[12]
There
are further relevant considerations. Section 386(4)(
f
)
of the Companies Act envisages that in certain circumstances a
liquidator will ‘carry on or discontinue any part of the
business of the company in so far as may be necessary for the
beneficial winding-up thereof’. In such a case, the principal
place of business is unlikely to change. Even though in the present
matter the liquidators testified that they had not carried
on any
part of the business of the dealerships, the potential remains for
them to do so. In any event, at what point in time could
it then be
contended that the principal place of business ceases to be such? Is
it immediately on provisional, or on final, liquidation?
Is it on the
appointment of provisional or final liquidators? Or after the
liquidators have had a reasonable time to decide whether
or not to
request authorisation to carry on business and, if so, what must be
considered a reasonable period? In addition to the
possibility of
liquidators conducting business, a company’s liquidation may be
set aside at a later date, in which case it
will ordinarily resume
trading. Further, in terms of the business rescue provisions of the
new
Companies Act 71 of 2008
, a company in liquidation may be placed
under business rescue by a court. Once an application to do so is
launched, the liquidation
is suspended until it is finalised. If an
order is granted, the liquidation is suspended until the business
rescue proceedings
come to an end.
[11]
During the time the liquidation is suspended, the company will resume
trading so as to enhance the possibility of the business
being
rescued.
[13]
The
response of the dealerships to these possibilities was that,
immediately on liquidation, the company ceases to have a place
of
business. If any of these scenarios were to ensue, it would once
again obtain a principal place of business because only then
would
the definition of ‘place of business’ in
s 1
of the
Companies Act be satisfied. Apart from the fact that this court had
determined the question of residence without reference
to the
definition of ‘place of business’ in the
Companies Act,
this
seems to me to be a highly artificial approach. It relies only
on a strict linguistic approach without taking into account the use
of the words in the context of the
Companies Act as
a whole and, in
particular, the context of the practical exigencies in its provisions
concerning companies in liquidation. The
interpretation of a
provision requires a consideration of the language used within its
context taking into account the purpose
of the provision and those
factors which prompted and informed it.
[12]
Since the notion of residence of a company is, in any case, a
fiction, the fact that a company has been liquidated does not, in
my
opinion, mean that it can no longer be said to ‘reside’
at its principal place of business. The jurisdiction of
a court
arising from the location of the principal place of business of a
company is accordingly unaffected by its liquidation.
In the present
matter, therefore, the principal places of business of PMG Kyalami
and PMG Alberton remained unchanged by liquidation
and afforded the
basis for jurisdiction in respect of the application.
[14]
As
regards PMG Westville, the dealerships submitted that if any other
court had jurisdiction over all of the dealerships, the doctrine
of
continentia
causae
could not be invoked. Since the KwaZulu-Natal High Court, Durban, was
such a court due to the registered offices of all of the
dealerships
falling under its jurisdiction, the court below did not have
jurisdiction to hear the application. DR Harms in
Civil
Procedure in the High Court
points out that the
causae
continentia
‘principle
is now enshrined in section [19(1)(
b
)]’.
[13]
PMG Westville was a party ‘who is joined . . . to any cause in
relation to which such provincial or local division has jurisdiction
. . . if the said person resides or is within the area of
jurisdiction of any other provincial or local division’.
[14]
PMG Westville was joined in the application. The court below had
jurisdiction to entertain the application in respect of PMG Kyalami
and PMG Alberton. PMG Westville ‘resided’ within the area
of another local division. This means that
s 19(1)(
b
)
of the Supreme Court Act applied in the circumstances. I agree with
the author Pistorius in
Pollak
on Jurisdiction
[15]
that it is not necessary to consider issues of convenience when the
provisions of s 19(1)(
b
)
apply. If one had to have regard to such issues, however, the finding
of jurisdiction was amply justified in the present matter.
It avoided
a multiplicity of applications along with the additional costs and
the risk of discordant findings in a situation where
the issues were
essentially the same for each dealership.
[15]
The
submission of the dealerships to the effect that the doctrine of
continentia
causae
applies only where no other forum has jurisdiction in respect of all
of the respondents does not need to be decided since jurisdiction
was
founded on the provisions of s 19(1)(
b
).
[16]
It is also unnecessary to decide whether the court below was correct
in finding that the domicile of certain of the liquidators
of the
dealerships provided a basis for jurisdiction.
Factual
dispute
[16]
Wesbank
alleged that the cancellation letters were delivered to all three of
the dealerships on 23 January 2009. The significance
of this averment
is that cancellation of the agreements took place only when Wesbank’s
decision to cancel was conveyed to
the dealerships.
[17]
Wesbank’s case was based on cancellation having taken place
before the commencement of the liquidations. As regards PMG Kyalami
and PMG Alberton, delivery on 23 January 2009 was not seriously
disputed. The answering affidavit was deposed to by one of the
liquidators who claimed no personal knowledge of what had taken
place. In response to the averment that the cancellation letters
had
been delivered on 23 January 2009, he simply said ‘as is clear
from the affidavit of HANS JURIE LOUW . . . there is a
clear and
substantial dispute of fact as regards what transpired on 23 January
2009’. He then went on to say that he did
not ‘accept
that the letters of cancellation were delivered on the days as
alleged’. Mr Louw, whose affidavit dealt
only with events at
PMG Westville, was, at the time, the Dealer Principal there. No
affidavit was put up from persons able to testify
as to what took
place at the other two dealerships. The averments of Wesbank as
regards PMG Kyalami are therefore uncontested and
it must be accepted
that the agreement in question was cancelled on 23 January 2009. This
accordingly took place prior to the commencement
of the liquidations.
[17]
The
dealerships contended that there was a factual dispute as to whether
the cancellation letters delivered to PMG Westville were
delivered
prior to the commencement of the proceedings leading to its winding
up.
[18]
It was submitted that
this led to one of two possible outcomes. It either required the
application to be referred to oral evidence
so as to resolve this
factual dispute or to be dismissed on the basis that the dispute, if
adjudicated on the papers, should be
resolved in favour of the
dealerships as respondents on well-established principles.
[19]
[18]
Wesbank put up an affidavit by Warren
Penery who claimed to have delivered nine letters to PMG Westville on
23 January 2009. He
said that he was called by his manager to the
Nissan Regional Office that day to collect an envelope containing
letters of cancellation.
Having collected them, he went to deliver
them to Mr Louw at the principal place of business of PMG Westville.
He arrived there
at 09h00 and, at about 10h00, was instructed to
serve the letters on Mr Louw, which he did. Of the nine letters, one
was addressed
to PMG Westville and eight were addressed to other
people at PMG Westville. All were delivered to Mr Louw at the same
time. Mr
Penery testified that, after delivering the letters to Mr
Louw, he secured all the floor plan stock and that this was
voluntarily
handed back to Wesbank. He did not indicate what he meant
by ‘handed back’ or when this took place, and, in
particular,
if it took place on 23 January or on a day thereafter.
Although Mr Penery did not say so, three of the letters put up as
annexures
to the main affidavit appear to contain the signature of Mr
Louw against the date 23 January 2009. The other six letters put up
as annexures contain no signatures.
[19]
Mr Louw put up an affidavit. This forms the
basis of the contention by the dealerships that a factual dispute
existed. In dealing
with the averments that the letters were
delivered on 23 January 2009, he stated that he had been ‘referred
to’ the
affidavit of Raylene Meyer and two paragraphs in it had
been brought to his attention which he set out as being:
‘
20.
In respect of PMG Motors Westville, the letters of cancellation were
delivered by Warren Penery . . . of the Applicant at the
address of
the dealership, 1134 Jan Smuts Highway, Westville, KwaZulu-Natal on
23 January 2009 at 10h00.
21.
The letter was delivered by Penery to the Dealer Principal, Hansie
Louw . . . and all vehicles were, with the consent of the
dealership,
removed by the Applicant on 23 January 2009.’
Significantly,
Mr Louw nowhere stated that he had been shown the rest of the
founding affidavit, the annexures to the founding affidavit
or the
affidavit of Mr Penery. All he had been shown was the two paragraphs
quoted by him and a single document. Mr Louw went on,
variously, to
say:
‘
The
letters of cancellation in question were never delivered on 23
January 2009’;
and
‘
I
specifically recall that it was on Monday, 26 January 2009 that I
first became aware that there was a liquidation in progress’;
and
‘
I
deny that the signature on [annexure RM 6.3] is my signature or that
it was dated in my presence’;
and
‘
I
accordingly deny that the letters of cancellation referred to in the
affidavit of RAELENE MEYER and the affidavit of PENERY were
served on
23 January 2009 and specifically recall that the vehicles
were only returned to the Applicant on 26 January
2009 more
particularly as 26 January 2009 was supposed to have been payday, and
I never received my salary for that month.’
[20]
In reply, Wesbank put up an affidavit by
Alec Labuschagne where he said that he met Mr Penery at the premises
of PMG Westville on
23 January 2009. His affidavit continued as
follows:
‘
9.
Penery had in his possession a voluminous envelope containing all the
cancellation letters to the various directors of [PMG Westville]
and
[PMG Westville] itself. These letters were in triplicate and were
handed by Penery directly to Louw who, in my presence, signed
copies
of these letters, dated them and handed them back to Penery. Louw
retained the originals.
.
. .
11.
After having received the letters, Louw and certain employees of [PMG
Westville] assisted with the moving of vehicles and with
preparing
them for the carriers . . . .’
These
averments elicited no application by the dealerships to put up a
fourth set of affidavits.
[21]
In the light of the above, it must be
determined whether the assertion of Mr Louw that ‘[t]he letters
of cancellation in question
were never delivered on 23 January 2009’
gives rise to a genuine factual dispute. The only two averments in
his affidavit
of specific recollections on his part were that he
first became aware of a liquidation on 26 January and that the
vehicles were
removed that day. The denial that the letters were
delivered on 23 January was followed immediately, as if by way of
explanation,
by an assertion that he only became aware of a
liquidation the following Monday. The letters do not, however, refer
to liquidation.
As mentioned above, Wesbank did not apply for
liquidation of the dealerships, the dealerships themselves did so.
The letters deal
only with the cancellation of the floor plan
agreement and the demand for return of the vehicles which were
subject to it. His
other assertion, denying having signed a specific
letter or that it was dated in his presence, relates to a single
document which
he said he had been shown prior to deposing to the
affidavit. There were eight other letters put up as annexures, two of
which
were signed and contained the handwritten date of 23 January
2009 alongside his signature. Mr Louw did not deal at all with these
eight annexures. In addition, he nowhere denied that the letters were
at some stage delivered to him. Despite not having said that
he had
been shown the rest of the founding affidavit or that of Mr Penery,
he purported to deny the averments contained in both
of these
affidavits concerning the cancellation letters.
[22]
Mr Louw’s affidavit appears to have
been carefully crafted so as not to pertinently deal with a number of
crucial averments.
As mentioned, he did not deny signing two of the
letters or receiving the other six. His denial that he signed
annexure RM 6.3
and that it was not dated in his presence stands
alone. Apart from not having said that he had seen the affidavit of
Penery, he
certainly did not deal with any of the specific averments
in it. One such significant averment was that, between 09h00 and
10h00
on 23 January, Mr Louw was aware of the presence of Mr
Penery at the principal place of business of PMG Westville. The
dealerships
also did not put up a further affidavit by Mr Louw to
contradict the affidavit of Mr Labuschagne. The latter was clearly
put up
in circumstances where Wesbank did not anticipate a denial of
the averments in the founding affidavit concerning delivery of the
cancellation letters on 23 January 2009.
[23]
This
court has held that a ‘real, genuine and bona fide dispute of
fact can exist only where the court is satisfied that the
party who
purports to raise the dispute has in his affidavit seriously and
unambiguously addressed the fact said to be disputed’.
[20]
It has also held that where a ‘version consists of bald or
uncreditworthy denials, raises fictitious disputes of fact, is
palpably implausible, far-fetched or . . . clearly untenable’
the court is justified in rejecting it merely on the papers.
[21]
Against these yardsticks, Mr Louw’s general assertion that the
letters of cancellation were not delivered on 23 January 2009
must be
held to amount to a bare denial where proper and detailed treatment
was required addressing what was said by the Wesbank
witnesses about
the events of that day. He failed to ‘seriously and
unambiguously’ address the averments of Mr Penery
and Mr
Labuschagne. I am therefore of the opinion that his affidavit does
not give rise to a genuine factual dispute as to delivery
of the
letters of cancellation on 23 January 2009.
[22]
Accordingly, the court below correctly found that cancellation of all
the floor plan agreements, including that with PMG Westville,
took
place prior to the commencement of the winding-up proceedings. It is
also undisputed that the cancellation letters were acted
upon by the
dealerships inasmuch as the vehicles comprising the floor stock were
handed over to Wesbank.
Section
84(2)
of the
Insolvency Act
[24
]
The dealerships contended that even if it
was found that the agreements were cancelled prior to the
commencement of the liquidations,
the provisions of
s 84(2)
of
the
Insolvency Act applied
to the moneys realised from the sale of
the vehicles. This, in effect, amounts to a submission that the
payments were not made
indebite
because a valid
causa
for them was provided by
s 84(2).
In order to evaluate this
submission, it is necessary to set out the whole of
s 84
, which
reads as follows:
‘
(1)
If any property was delivered to a person (hereinafter referred to as
the debtor) under a transaction that is an instalment
agreement
contemplated in paragraph
(a)
,
(b)
,
and
(c)
(i) of the definition of “instalment agreement” set out
in
section
1
of
the
National Credit Act, 2005
[
Act
34 of 2005]
,
such a transaction shall be regarded on the sequestration of the
debtor's estate as creating in favour of the other party to the
transaction (hereinafter referred to as the creditor) a hypothec over
that property whereby the amount still due to him under the
transaction is secured. The trustee of the debtor's insolvent estate
shall, if required by the creditor, deliver the property to
him, and
thereupon the creditor shall be deemed to be holding that property as
security for his claim and the provisions of section
83 shall apply.
(2)
If the debtor returned the property to the creditor within a period
of one month prior to the sequestration of the debtor's
estate, the
trustee may demand that the creditor deliver to him that property or
the value thereof at the date when it was so returned
to the
creditor, subject to payment to the creditor by the trustee or to
deduction from the value (as the case may be) of the difference
between the total amount payable under the said transaction and the
total amount actually paid thereunder. If the property is delivered
to the trustee the provisions of subsection (1) shall apply.’
[25]
It was not disputed that the agreements
fell within the definition of instalment agreements under the
National Credit Act 34 of 2005
. It was also not disputed that the
vehicles were returned to Wesbank within one month before the
commencement of the liquidations.
The issue is whether
s 84(2)
applies to property which was the subject of such an agreement where
ownership was reserved and where the agreement was cancelled
prior to
the commencement of the liquidation of a company. This depends on a
construction of the section.
[26]
The
dealerships conceded that
s 84(1)
requires an agreement to be
extant before it can be said to apply. This is clearly a correct
concession. The wording talks of a
transaction in which rights and
obligations remain intact so that they can create ‘
in
favour of the other party to the transaction . . . a hypothec over
that property whereby the amount still due to him under the
transaction is secured’. In other words,
s 84(1)
‘presupposes the existence of a contract binding on both
parties’.
[23]
The
agreement must be extant at the time the section is invoked. If it
was cancelled before liquidation, as occurred here, the section
clearly does not apply.
[27]
It
was submitted on behalf of the dealerships, however, that although
s 84(1)
did not find application, that this was not the case
with
s 84(2)
and that it is intended to be a stand-alone
provision, to be read separately from
s 84(1).
There are strong
factors which militate against this approach. First,
s 84(1)
and
s 84(2)
are subsections of the same section headed ‘special
provisions in case of goods delivered to a debtor in terms of an
instalment
agreement’. There is no indication that they deal
with different subject matter or distinctly different aspects arising
from
the same subject matter. Secondly, and related to this,
s 84(2)
is inextricably bound to
s 84(1)
, for it is there that one
derives the meaning for the expressions ‘the property’
‘the debtor’ and
‘the said transaction’.
As to ‘the property’,
s 84(1)
describes it as ‘any
property [which] was delivered . . . under a transaction’.
‘The debtor’ is described
as a person to whom property
was delivered under a transaction. And ‘[t]he said transaction’
refers to ‘a transaction
that is an instalment agreement’
pursuant to which the property was delivered. Thirdly,
s 84(2)
in itself requires an extant agreement because it refers to an
‘amount payable under the . . . transaction’.
This presupposes that an amount remains payable under the
transaction. On the same reasoning as applies to
s 84(1)
, this
requires ‘the existence of a contract binding on both
parties’.
[24]
Once an
agreement has been cancelled, no amount remains payable under it.
That would require enforcement of the agreement which
cannot take
place if it has been cancelled. This places
s 84(2)
on the same
footing as
s 84(1).
[28]
It was submitted by the dealerships that
the fact that the provisions of
s 84(1)
are made to apply only
after property has been delivered under
s 84(2)
indicates that
the two subsections must be read as stand-alone sections. But this
does not assist the dealerships because
s 84(1)
, as has been
indicated above and was conceded by them, applies only to extant
agreements. The fact that property must be dealt
with in accordance
with
s 84(1)
supports the conclusion that both subsections deal
only with extant agreements.
[29]
Accordingly, it is clear that
s 84(2)
applies only where an agreement remained in existence and the
property in question was accordingly subject to the agreement as
at
the date of commencement of winding-up. By reason of the fact that
the agreements in this matter were cancelled prior to the
commencement of the liquidations of the dealerships,
s 84(2)
does not apply and the payments were made
indebite
.
The court below was therefore correct in its conclusion in this
regard. It should perhaps be mentioned that the application or
otherwise of
s 84(2)
was the only defence raised as to whether
the
condictio indebiti
applied to the payments. Other elements of that cause of action
therefore do not arise for consideration.
Application
or action proceedings
[30]
The submission of the dealerships was that
the claim ought to have been brought by way of action. This
submission was premised on
the need for an adjustment of the amounts
admittedly paid by Wesbank in the manner provided for in
s 84(2)
of the
Insolvency Act. It
was submitted that the need for such
evidence and adjustment rendered the claim illiquid. This submission
cannot succeed if
s 84(2)
did not apply as was the case in this
matter. In the light of my finding on that issue, nothing further
need be said on this submission.
Section
111
objection
[31]
Finally, the dealerships contended that,
because Wesbank had objected to the account in terms of
s 111
of
the
Insolvency Act on
the basis that the moneys paid should not have
been reflected as an asset of the dealerships, this precluded Wesbank
from approaching
a court. They submitted that, ‘[h]aving so
elected it is obliged to await the outcome of its said objections’.
During
argument before us they submitted that Wesbank could also have
withdrawn the objection. It is certainly the case that an approach
to
the court under
s 111(2)(
a
)
to set aside the decision of the Master cannot be brought before the
Master has given his ruling on the objection. This was not
such an
application, however. First, it did not seek to set aside any ruling
or to require the Master to take any steps in relation
to the
objection. Secondly, Wesbank had made payments to the liquidators
after the
concursus
had taken place. Wesbank does not regard itself as a creditor of the
dealerships as regards the claim under the
condictio
.
In fact, there is no indication on the record that Wesbank lodged any
claim against the estates. The procedure under
s 111
does not
appear to bear on the application in question at all. The contention
of the dealerships would be correct where, for example,
a claim had
been lodged against the estate but excluded from the account but this
was not such a situation.
[32]
In the peculiar facts of this matter,
therefore, it would be artificial to require Wesbank to await the
outcome of the objection
before making a case in court based on the
condictio indebiti
.
This must not be understood as opening the door to objectors under
s 111
to approach a court prior to the objection having been
ruled on by the Master. In the circumstances of this matter, however,
Wesbank
was entitled to bring the application.
[33]
In the result, the appeal is dismissed with
costs
to be paid by the appellants jointly
and severally, the one paying the other to be absolved
,
such costs to include the costs consequent on the employment of two
counsel.
__________________
T
R Gorven
Acting
Judge of Appeal
Appearances
For Appellants: A K
Kissoon Singh SC (with him G M Harrison)
Instructed
by:
V
Chetty, La Lucia
Lovius
Block, Bloemfontein
For
Respondent: A Gautschi SC (with him P W Belger)
Instructed
by:
Lanham
Love Attorneys, Johannesburg
Symington
& De Kok, Bloemfontein
[1]
It
was explained that because the letter cancelling the floor plan
agreement with PMG Motors Fourways (Pty) Ltd was not delivered
on 23
January 2009, the provisions of
s 84
of the
Insolvency Act
applied
which is why this company was not included in the
application.
[2]
Section
348
of the
Companies Act
provides
as follows:
‘
A
winding-up of a company by the Court shall be deemed to commence at
the time of the presentation to the Court of the application
for the
winding-up.’
It
was common cause that, because the liquidation application was
launched at a time when the
Companies Act was
still in force, it
governed the application launched by Wesbank, including the issue of
jurisdiction, even though, at the time,
the Companies Act 71 of 2008
(the new
Companies Act), whose
general date of commencement was
1 May 2011, had come into effect.
[3]
Steytler
NO v Fitzgerald
1911
AD 295
at 346.
[4]
Bisonboard
Ltd v K Braun Woodworking Machinery (Pty) Ltd
[1990] ZASCA 86
;
1991
(1) SA 482
(A) at 499E-F.
[5]
Supreme
Court Act
59
of 1959. This Act governed the application since the
Superior Courts
Act 10 of 2013
only came into effect on 23 August 2013, after
judgment had been handed down.
[6]
Estate
Kootcher v Commissioner for Inland Revenue
1941
AD 256
at 260.
[7]
Ibid
.
[8]
Bisonboard
at
496A-B. It was accepted in this matter, at 503D-E, that where the
registered office was at a different place to the principal
place of
business, a company may be said to reside simultaneously at both
places.
[9]
The
new
Companies Act does
not contain such a definition. This has led
to conflicting judgments in some high courts as to the basis on
which jurisdiction
is founded under the new
Companies Act but
this
does not apply in the present matter and the issue does not arise.
[10]
Innes
JA, in
TW
Beckett & Co Ltd v H Kroomer Ltd
1912 AD 324
at 334 said:
‘
Now,
the terms “reside” and “residence” can only
be used in their true significance with regard to natural
persons.
The residence of a legal
persona
,
like a company, artificially created, must be a mere notional
conception introduced for purposes of jurisdiction and law. .
. The
only home which a corporation can be said to have is the place where
the operations for which it was called into existence
are carried
on.’
[11]
Section
131(6)
of the new
Companies Act.
[12
]
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012
(4) SA 593
(SCA) para 18.
[13]
At
A4.19.
See
also its successor
s 21(2)
of the
Superior Courts Act 10 of 2013
.
[14]
Section
19(1)(
b
)
of the Supreme Court Act.
[15]
D
Pistorius
Pollak
on Jurisdiction
(2ed, 1993) at 26.
[16]
This
submission appears to be based on an assertion made by Pistorius at
26. That assertion likewise does not need to be considered.
[17]
Swart
v Vosloo
1965
(1) SA 100
(A) at 105G.
[18]
It
is not disputed that the windings up commenced some time on 26
January 2009 in terms of s 348 of the Companies Act 61
of 1973
(see note 2). The actual time of presentation on that day was not
alleged.
[19]
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984
(3) SA 623
(A) at 634E-635D.
[20]
Per
Heher JA in
Wightman
t/a JW Construction v Headfour (Pty) Ltd & another
[2008] ZASCA 6
;
2008 (3) SA 371
(SCA) para 13.
[21]
National
Director of Public Prosecutions v Zuma
[2009] ZASCA 1
;
2009
(2) SA 277
(SCA) para 26.
[22]
This
involves a prior, and different, exercise to one where there are two
positive versions before the court. In such a case,
it is not open
to a court to decide the matter on the probabilities, even where one
version appears improbable. The approach,
as set out in
National
Scrap Metal (Cape Town) (Pty) Ltd & another v Murray &
Roberts Ltd & others
2012
(5) SA 300
(SCA) para 21 is that
‘
[a]
n
attempt to evaluate the competing versions of either side is thus
both inadvisable and unnecessary as the issue is not which
version
is the more probable but whether that of the appellants is so
far-fetched and improbable that it can be rejected without
evidence’.
[23]
Per
O’Hagan J in
Epsom
Motors (Pty) Ltd v Estate Winson
1961 (1) SA 687
(E) at 692D-E. See also
ABSA
Bank Ltd v Cooper NO & others
2001 (4) SA 876
(T) at 881H-J & 882G-H.
[24]
Ibid
.