Ronbel 108 (Pty) Ltd v Sublime Investments (Pty) Ltd (555/08) [2009] ZASCA 103; 2010 (2) SA 517 (SCA) ; [2010] 1 All SA 338 (SCA) (18 September 2009)

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Ronbel 108 (Pty) Ltd v Sublime Investments (Pty) Ltd (555/08) [2009] ZASCA 103; 2010 (2) SA 517 (SCA) ; [2010] 1 All SA 338 (SCA) (18 September 2009)

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THE
SUPREME COURT OF APPEAL
OF
SOUTH AFRICA
Case No: 555/08
In the matter between :
RONBEL 108 (PTY) LTD
Appellant
(Reg No 2003/026780/07)
and
SUBLIME INVESTMENTS (PTY)
LTD Respondent
(In liquidation)
(Represented by its Liquidator S
L Anticevich NO)
Neutral citation:
Ronbel
v Sublime
(555/08)
[2009] ZASCA 103
(18 September 2009)
Coram: STREICHER, NUGENT, VAN
HEERDEN JJA, HURT and GRIESEL AJJA
Heard: 3 SEPTEMBER 2009
Delivered:
18
SEPTEMBER 2009
Summary: Section 359(2) of
Companies Act 61 of 1973 – no notice to liquidator of intention to
continue legal proceedings – proceedings
considered to be abandoned
– court’s discretion to otherwise direct – long delay in
bringing application.
ORDER
On appeal from: High Court, Johannesburg (Bruinders AJ
sitting as court of first instance).
The appeal is dismissed with costs.
JUDGMENT
STREICHER JA (NUGENT, VAN HEERDEN JJA, HURT and GRIESEL
AJJA concurring)
[1] Upon registration of a special resolution by a
company that it be wound up voluntarily all civil proceedings against
the company
are suspended until the appointment of a liquidator.
1
A person who intends to continue with such proceedings must, within
four weeks after such appointment, give three weeks’ notice
of his
intention to continue the proceedings, to the liquidator, before
doing so.
2
If notice is not so given the proceedings are considered to have been
abandoned unless the court otherwise directs.
3
The appellant’s application for such a directive in respect of an
action instituted by Absa Bank Limited, which thereafter ceded
its
claim to the appellant, was dismissed by the High Court,
Johannesburg, per TJ Bruinders AJ, and this is an appeal against his

judgment. The appeal is with the leave of the court below.
[2] Absa instituted action against Sublime Investments
(Pty) Ltd, formerly known as Capitol Hill Investments (Pty) Ltd. The
matter
was set down for trial on 30 April 2003 but shortly before the
trial was due to commence, Sublime, by special resolution, resolved

that it be voluntarily wound up and such winding-up commenced upon
the registration of the resolution.
4
As a result, in terms of s 359(1)(a) of the Companies Act 61 of
1973, the action was suspended pending the appointment of
a
liquidator. Section 1 provides that unless the context otherwise
indicates ‘liquidator’ includes a duly appointed provisional

liquidator. But in
Strydom NO v MGN
Construction (Pty) Ltd & another: In re Haljen (Pty) Ltd (in
liquidation)
1983 (1) SA 799
(D) at 806B-807H
Booysen J held, correctly in my view, that in the case of s 359
the context indeed indicates otherwise and
that, in terms of the
section, proceedings are suspended pending the appointment of a final
liquidator. The correctness of this
decision was not challenged by
either of the parties.
[3] A Mr Anticevich was appointed as provisional
liquidator and subsequently, on 1 July 2004, as final liquidator.
During the period
approximately July to August 2003 Mr Loubser, in
his capacity as an employee of Absa, made enquiries about the assets
of Sublime
and was informed by Anticevich:
(a) The company was the owner of an immovable property
with improvements on it, namely a fuel filling station;
(b) The property was subject to a long term lease in
favour of Zenex Oil (Pty) Ltd;
(c) All the future rent had been paid in advance, prior
to the liquidation, so that the company would at least for a
substantial
period of time not receive any income in the form of
rent;
(d) The lease was registered and was for a period of 20
years of which 11 years remained;
(e) The only future income of the company would be a
contribution by the lessee to the rates and taxes payable on the
property;
(f) A notarial bond was registered in favour of Zenex to
secure its rights and upon a sale of the property Zenex had a right
of
first refusal; and
(g) Apart from the property, small outstanding debts
appeared to be the only other assets.
[4] According to the statement of affairs in terms of
s 363 required of the directors of Sublime, dated 9 April 2003,
the liabilities
of the company were reflected as R2 720 651.
The assets were reflected as R120 030 comprising the immovable
property
at a value of R90 000 and outstanding book debts of
R30 030. Save for an additional liability of R5 940 in
respect
of arrear salaries these were also the assets and liabilities
according to the final liquidator’s report dated 12 July 2004.
[5] No claims were proved at the first meeting of
creditors arranged for 19 May 2004. Absa decided to refrain from
submitting and
proving a claim, principally because, if it did submit
a claim, it, in the light of the information at its disposal, could
become
liable for a contribution towards the administration costs.
However, towards the middle of 2004 the appellant expressed an
interest
in acquiring Absa’s claims and entered into negotiations
with Absa regarding the acquisition of its claims. Towards the end of

October 2005 they reached agreement that –
(a) Absa would cede to the appellant all of its rights,
title and interest in and to the claims held by Absa against the
company.
(b) In consideration for the cession the appellant would
pay Absa an amount of R250 000.
(c) A claim would be prepared in the name of Absa and
submitted for proof.
[6] Pursuant to the agreement Absa’s claims were ceded
to the appellant on 31 October 2005 and at a meeting of creditors
held
on 24 May 2006 the appellant submitted Absa’s claims supported
by affidavits deposed to by Loubser on behalf of Absa for proof.
The
claims were opposed by Mr van Zyl, the company’s director, and
member on the grounds that they had been ceded to the appellant

before they were submitted for proof, that the claims were in terms
of s 359(2)(b) considered to be abandoned; that the claims
had
become prescribed and that the quantum of the claims could not be
established by a certificate of indebtedness.
[7] As set out above, s 359(2) provides as follows:
‘(a) Every person who, having instituted legal proceedings against
a company which were suspended by a winding-up, intends to
continue
the same . . . shall within four weeks after the appointment of the
liquidator give the liquidator not less than three
weeks’ notice in
writing before continuing or commencing the proceedings.
(b) If notice is not so given the proceedings shall be considered to
be abandoned unless the Court otherwise directs.’
It is common cause that Absa had not given the
liquidators notice in terms of s 359(2)(a) of an intention to
continue the proceedings.
Consequently the proceedings (not the
claims) must be considered to have been abandoned unless a court
otherwise directs.
[8] As a result of the opposition to the Absa claims the
appellant launched the application which is the subject matter of
this
appeal, in terms of which it applied to be substituted for Absa
in the action instituted by Absa and for a direction in terms of

s 359(2)(b) that the proceedings should not be considered to
have been abandoned.
[9] The court below found that the deliberate decision
by Absa not to notify the liquidator that it intended to proceed with
the
action constituted evidence that the action had been abandoned
and held that the appellant, in the circumstances, had failed to

provide a satisfactory explanation for not having notified the
liquidator of its intention to continue with the proceedings within

the time period prescribed in terms of s 359(2)(b).
[10] The appellant referred to the fact that the
allegation in its founding affidavit that the liquidator had not been
prejudiced
by Absa’s failure to give the required notice is not
disputed by the respondent and submitted that, in the circumstances,
the
court below should have exercised its discretion in its favour.
In this regard the appellant referred to
Baskin
v Levey & others NNO
1967 (3) SA 121
(W)
at 123F-124A where Boshoff J, referring to s 118 of the Companies Act
46 of 1926, the predecessor of s 359 said:
‘The purpose of this section is to prevent a newly-appointed
liquidator from being embarrassed by an action before he has had
an
opportunity of considering the matter, and to prevent costs being
incurred by the institution of proceedings between the time
when the
winding-up order has been made and the liquidator has been appointed;
Randfontein Extension Ltd v South Randfontein Mines Ltd and Others
1936 WLD 1
at p 3. If no such notice has been given to a
liquidator, proceedings are to be considered abandoned to bring about
finality
so that the liquidator may be in a position to report to the
creditors of his company as accurately as possible on the state of

and the claims against the company. It would, therefore, seem that a
liquidator would, generally speaking, be entitled to oppose
an
application for the purging of a default if he can show that he had
been prejudiced by the default or that the excuse advanced
by the
applicant is not
bona fide
and reasonable or, if it is
necessary, to insist on terms on which an applicant should be allowed
either to continue or to commence
proceedings.’
[11] Section 118 of the Companies Act 46 of 1926
provided that in default of a notice of intention to continue
proceedings suspended
by a winding-up, ‘the proceedings shall be
considered to be abandoned unless the Court finds that there was a
reasonable excuse
for the default’. Having omitted the requirement
of a reasonable excuse in s 359(2)(b) it is clear, in my view,
that the
legislature intended to give a court an unfettered
discretion to decide whether or not to direct that proceedings should
not be
considered to be abandoned. In exercising this discretion a
court should naturally have regard to the interests of all interested

parties being the creditors, liquidator and members.
5
[12] In
Umbogintwini Land &
Investment Co (Pty) Ltd (in liquidation) v Barclays National Bank Ltd
& another
1987 (4) SA 894
(A) Viljoen JA
said in respect of s 359(2)(b):
6
‘The provision was designed, in my view, to afford the liquidator
an opportunity, immediately after his appointment, to consider
and
assess, in the interests of the general body of creditors, the nature
and validity of the claim or contemplated claim and how
to deal with
it – whether, for instance, to dispute or settle or acknowledge
it.’
[13] Although no prejudice is alleged by the appellant
the liquidator had, contrary to the interests of the general body of
creditors
of the appellant, not been given an opportunity immediately
after his appointment to consider and assess the nature and validity

of Absa’s claim against the appellant. The reason why the
liquidator had not been afforded that opportunity is that Absa
decided
not to proceed with the proceedings and not to prove a claim
against Sublime for fear of being held liable for a contribution.
When Absa took that decision information as to the assets and
liabilities of Sublime was available and known to Absa. Only about

two years after the time for giving notice of intention to continue
with the proceedings had expired, was an attempt made by the

appellant, not Absa, to prove the claims. The application for a
directive followed more than six months later.
[14] Absa took a deliberate decision not to proceed with
the action and there is no allegation that it changed that decision
for
as long as it had an interest in the claim against Sublime, ie up
to the date of the cession of that claim 16 months after the
appointment of a final liquidator. Absa does not deny having had
knowledge of the provisions of s 359(2)(b) and must be assumed

to have had such knowledge. These facts justify the inference that
Absa in fact abandoned the action. The appellant submitted that
the
fact that Absa entered into negotiations with the appellant indicated
that it had not abandoned the action. In my view the
negotiations may
be an indication that Absa had not abandoned its claims, not that
Absa had not abandoned the action. If Absa had
not abandoned the
action it would have considered it prudent to give notice in terms of
s 359(2)(a). But even if Absa had
not in fact abandoned the
action there is no reason why the court below should have exercised
its discretion in favour of an applicant
(the appellant) who wishes
to proceed with an action which the plaintiff in that action (Absa)
had decided not to proceed with
some two and a half years previously.
[15] The appeal should therefore be dismissed. But it
should be added that the court below said in its judgment that there
was further
evidence that ‘the claim’ had been abandoned. Whether
or not the claim had been abandoned was not an issue in the case and
the court below probably meant to say that there was further evidence
that the action had been abandoned.
[
16] For these reasons the appeal is
dismissed with costs.
__________________
P E STREICHER
JUDGE OF APPEAL
A
ppearances
:
For Appellant: M P van der Merwe
Instructed by
Bieldermans Inc, Johannesburg
Schoeman Maree Inc, Bloemfontein
For Respondent: M Smit
Instructed by
Melamed & Hurwitz Inc, Johannesburg
Rosendorff Reitz Barry, Bloemfontein
1
Section 359(1) of the Companies Act 61 of 1973 provides:
‘(1) When
the Court has made an order for the winding-up of a company or a
special resolution for the voluntary winding-up of
a company has
been registered in terms of section 200 –
(a) all
civil proceedings by or against the company concerned shall be
suspended until the appointment of a liquidator; and
(b) . . ..’
2
Section 359(2)(a) provides:
‘(2)(a)
Every person who, having instituted legal proceedings against a
company which were suspended by a winding-up, intends
to continue
the same . . . shall within four weeks after the appointment of the
liquidator give the liquidator not less that
three weeks’ notice
in writing before continuing or commencing the proceedings.’
3
Section 359(2)(b) provides:
‘(b) If
notice is not so given the proceedings shall be considered to be
abandoned unless the Court otherwise directs.’
4
Section 352(1) provides:
‘A
voluntary winding-up of a company shall commence at the time of the
registration in terms of section 200 of the special resolution

authorising the winding-up.’
5
See P M Meskin
Henochsberg on the Companies Act
Vol 1 5 ed
(2008) p 761.
6
At 910H-I.