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[2007] ZASCA 141
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Intramed (Pty) Ltd (in liquidation) and Another v Standard Bank of South Africa Ltd and Others (629/06) [2007] ZASCA 141; [2007] SCA 141 (RSA); [2008] 2 All SA 394 (SCA); 2008 (2) SA 466 (SCA) (20 November 2007)
Links to summary
THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
Reportable
Case no: 629/06
In
the matter between:
INTRAMED
(PTY) LTD (IN LIQUIDATION)
...........................
First
Appellant
MACMED
HEALTHCARE LTD (IN LIQUIDATION)
...........................
Second
Appellant
and
THE
STANDARD BANK OF SOUTH AFRICA LTD
...........................
First
Respondent
THE
MASTER OF THE HIGH COURT
...........................
Second
Respondent
(EASTERN
CAPE DIVISION)
BRIAN
BASIL NEL
...........................
Third
Respondent
MICHAEL
LEO DE VILLIERS
...........................
Fourth
Respondent
______________________________________________________________________
Coram
:
Harms
ADP, Navsa, Lewis, Maya JJA et Malan AJA
Date
of hearing:
6
November 2007
Date
of delivery:
20
November 2007
Summary
:
Locus standi of bank seeking removal of joint liquidators ─
dependent on whether bank still a creditor ─ bank relying
on
judgment which in effect reinstated claim expunged by Master at
appellants’ request ─ judgment granting interest on
claim
a
tempore morae
─
held
that this meant interest from time of proof of claim ─ held
bank remained a creditor and thus had locus standi.
Neutral
citation:
This
judgment may be referred to as
Intramed
v Standard Bank
[2007]
SCA 141 (RSA).
______________________________________________________________________
JUDGMENT
______________________________________________________________________
NAVSA JA
NAVSA JA:
[1] The issue in this appeal is
whether the first respondent, a company with limited liability and
carrying on business as a registered
bank, had locus standi to apply
in the court below (the Grahamstown High Court), inter alia, for an
order for the removal of Mr Brian
Basil Nel and Mr Michael
Leo De Villiers, the joint liquidators of the first appellant, a
company in liquidation. Messrs Nel
and De Villiers were the third and
fourth respondents in the court below. The answer to the question
posed is dependent on whether,
at the relevant time, the bank was a
creditor of the first appellant. This in turn depends on the meaning
and effect of part of an
order issued by the Johannesburg High Court.
The background
[2] Macmed Health Care Limited was the
holding company of the Macmed group of companies that included 90
subsidiaries. On 9 November 1999
the company was finally
liquidated in what was regarded as a major commercial collapse. This
was followed by the liquidation of 45
of its subsidiaries, including
Intramed (Pty) Ltd. Both the holding company and Intramed (Pty) Ltd
were liquidated because they were
unable to pay their debts. Intramed
was a manufacturer of intravenous fluids and medicines. In ‘modern’
language, Macmed
was regarded as a major player in the health
industry.
[3] I shall, for the sake of
convenience, refer to the first and second appellants as Intramed and
Macmed, respectively, whether referring
to them in their pre- or
post-liquidation state. The first respondent shall be referred to as
the bank.
[4] The third and fourth respondents
became joint provisional liquidators of Intramed during December
1999. On 31 May 2000
their provisional appointment was
made final. The third respondent was also appointed joint liquidator
of Macmed and all its affected
subsidiaries. In the court below the
third and fourth respondents, to whom I shall refer as the
liquidators, were cited both in their
official and personal
capacities.
[5] On 10 May 2000, at a first meeting
of creditors of Intramed, the bank proved a claim against Intramed in
an amount of R107 728 483.64.
The basis of the bank’s
claim was a suretyship signed by Intramed for the indebtedness of
Macmed. Almost six months thereafter,
on 2 November 2000, the
liquidators, acting in terms of s 45 of the Insolvency Act 24 of
1936 (the Act), lodged a report with
the Master of the High Court in
which the Master was requested to expunge the bank’s claim. The
liquidators challenged the
bank’s claim on the basis that the
underlying documents were not executed with the necessary company
authority. The bank, through
its attorneys, filed submissions with
the Master opposing the application for expungement.
On 12 January 2001, however,
the Master expunged the
bank’s claim.
[6] After the expungement the
liquidators instituted action in the Johannesburg High Court against
the bank for payment of R15 283 144.68,
which they alleged
was an amount standing to the credit of Intramed in its current
account with the bank as part of a cash management
system. For
present purposes it is not necessary to deal with the basis of that
claim. The bank not only defended the action but
responded by
counterclaiming the amount of its expunged claim. The bank also
sought an order declaring that its claim was secured
by a cession of
book debts ─ the cession having been executed by Intramed in
its capacity as surety in favour of the bank for
Macmed’s
debts.
[7] In response to the bank’s
counterclaim Intramed pleaded the lack of authority on which the
liquidators had relied in their
report to the Master. On
20 August 2004 the Johannesburg High Court (CJ Claassen J)
dismissed Intramed’s claim, rejected
its defence in relation to
the bank’s counterclaim, issued the declaratory order and
ordered Intramed to pay the bank’s
considerable costs (the
trial in the Johannesburg High court lasted seven weeks). The
following is the relevant part of the Court’s
order:
‘
2.
Defendant’s counterclaim is upheld and Plaintiff is ordered to
pay the defendant the sum of R107 728 463,64 as
well as
interest on the aforesaid amount at the prescribed rate,
a
tempore morae
.
3. It is declared that the defendant’s
… claim against the plaintiff … is secured by the
cession of book debts
as reflected in Annexure D…’.
[8] Subsequent to its success in the
Johannesburg High Court the bank received a total dividend of
R128 124 478.36 from
Intramed. It is necessary to record
that the book debts which constituted the bank’s security, were
collected and amounted
to approximately R19 million.
[9] In April 2005 the bank applied in
the Grahamstown High Court for, inter alia, the removal of the
liquidators ─ the motivation
for the removal, which is not in
issue in this appeal, appears later in this judgment.
1
The bank set out the basis on which it
contended it had locus standi as follows. The interest payable by
Intramed on the amount of
R107 728 463.64 was approximately
R83 million, calculated on the basis of simple interest at the
rate of 15.5 per
cent per annum on the judgment debt from the date of
the proof of claim, namely 10 May 2000. It had not received
full payment
and remained a creditor of Intramed. It thus had the
necessary locus standi to bring the application. In the event that it
was held
that payments received from Intramed ought to be applied
first to capital and only thereafter to interest, then on that basis,
as
at 20 September 2005, the amount outstanding on its
claim was R52 368 418.60. On either basis it was a creditor
of Intramed.
[10] In the court below Intramed and
Macmed raised a number of points
in
limine
. The only one we
need be concerned with and on which this appeal turns is that the
bank had no locus standi to apply for the removal
of the liquidators.
Intramed and Macmed contended that since the bank relied on the
judgment obtained in the Johannesburg High Court
it was entitled, in
terms of the order referred to in para 7, to interest only from the
date of judgment and not from date of liquidation.
That being so, the
interest the bank was entitled to on the amount of R107 728 463.64
was less than the total of R128 124 478.36
the bank had
already received.
[11] As can be seen from the order
quoted in para 7 above, Intramed was ordered to pay the bank the
amount claimed, with interest
thereon at the prescribed rate
a
tempore morae
. The
Grahamstown High Court (Liebenberg
et
Plasket JJ) reasoned that since the
action in the Johannesburg High Court was necessitated by the
expungement of the bank’s
claim, the practical effect of the
judgment was to confirm the validity of the claim which had to be
reinstated and that, but for
the judgment, the bank would have been
entitled to interest on the amount of its claim from the date of
liquidation in terms of s 95(1)
of the Act.
2
The court below concluded that, since
the bank had not abandoned its right to interest when it instituted
its counterclaim and obtained
the judgment, it was entitled in terms
thereof to interest from the date of liquidation and, on any
calculation, this meant that
it remained a creditor of Intramed.
Thus, the point
in limine
was dismissed with costs including the
costs of two counsel.
[12] It is against that and other
related conclusions that Intramed and Macmed presently appeal. Before
us, counsel for Intramed and
Macmed conceded that in the event of
this court finding that the effect of Claassen J’s judgment was
that the bank was entitled
to interest from the date of liquidation
or of proof of claim, the appeal is liable to be dismissed.
[13] Intramed and Macmed, in dealing
with the order made by Claassen J in relation to payment of the
bank’s claim and interest
thereon, relied on a number of
authorities which state that a judgment debtor is only liable for
interest
a tempore morae
from the date of judgment or the date
fixed thereby.
3
The authorities relied on relate to
unliquidated amounts. It follows in such instances that interest
would ordinarily run from the
date of judgment or a date determined
by a court.
[14] More than eighty years ago in
West Rand Estates Ltd v New
Zealand Insurance Co Ltd
1926
AD 173
at 182 this court said the following:
‘
Here,
however, the amount of the loss incurred in respect of each item of
the claim was ascertained by agreement between the parties
before
issue of summons, so that the defendant knew exactly what was the
value of the property destroyed, for which he was held liable,
and
his failure to pay that amount constituted
mora
on
his part. It follows therefore, that by our law interest began to run
on the amount of defendant’s liability from the date
of
mora
.
And that brings me to consider the question of what that date is.’
[15] In
Thoroughbred
Breeders’ Association v Price Waterhouse
2001
(4) SA 551
(SCA) at 594G-595B this approach was reaffirmed. The
following appears at 594G-E:
‘
The
only remaining issue regarding TBA’s claim for
mora
interest
relates to the date from which such interest should be calculated.
TBA’s contention is that the commencement date should
be a date
earlier than the date of summons because the
quantum
of
its damages was readily ascertainable by PW at such earlier date. I
disagree. In the first place the
quantum
was
by no means capable of easy and ready proof and the fact that Reid
reported on it cannot be held as an admission by PW against
itself.
In the second place it fails to recognise the fundamental principle
that, however liquidated a plaintiff’s claim for
damages may
be,
mora
interest
can only be calculated from the date when
mora
commenced.’
[16] In V G Hiemstra and H L Gonin’s
Trilingual Legal Dictionary
3 ed (1992)
p 147 the phrase
a
tempore morae
is defined as
follows:
‘
vanaf
die tydstip wanneer die skuldenaar in gebreke is; vanaf die tydstip
van wanbetaling / / from the moment the debtor is in default.’
[17] The authorities referred to in
the preceding paragraphs give expression to this meaning. The phrase
always has to be viewed in
the context in which it is used and in
particular, in relation to the attendant claim and the debtor’s
knowledge or ascertainment
of the amount due. In the present
circumstances Intramed and the liquidators would have been aware of
the basis, particulars and
precise amount of the bank’s claim
at the time that it was proved at the first meeting of creditors,
namely 10 May 2000.
It is therefore abundantly clear that
this is the
mora
date and that, in terms of the order
of Claassen J, interest would run from that time, rendering the bank
a creditor. The primary
question posed in para 1 above must therefore
be answered in the affirmative.
[18] The appellants submitted, rather
tentatively, that giving effect to the judgment of the Johannesburg
High Court in this manner
would have the result that interest of 15.5
per cent would be awarded in respect of that part of the realisable
property not subject
to the bank’s security beyond the interest
rate of 8 per cent provided for in s 103(2) of the Act. We
are not required
to address that issue or the basis of calculation of
interest on one or other of the bases set out in para 9 above. These
are matters
to be dealt with in the liquidation process.
[19] There is one further aspect that
requires attention, namely, the issue of the conduct of the
liquidators and its impact on costs.
[20] The
liquidators are not litigation-shy. Not only was the litigation
against the bank pursued, but after expunging a claim by
another
registered bank, BOE bank, the liquidators litigated against it on
the same basis as it did in the case before Claassen J
─
denying authority on the part of officers of the company. That case
culminated in an appeal to this court, resulting in success
for BOE
bank.
4
In engaging
in such litigation and denying authority to sign the underlying
documents in both cases the liquidators ignored the manner
in which
Macmed and Intramed did business. In the present case in the first
liquidation and distribution account the liquidators
provided for
payment to themselves of fees of approximately R21.2 million. This
gave rise to a dispute with the Master. It culminated
in a ruling by
him which fixed their total remuneration at an amount of R3 250 000.
An application to court to review the
ruling of the Master was
unsuccessful. In that matter both the high court and this court
5
ordered the
liquidators to pay the costs of the litigation personally.
Considering this background and the manner in which its claim
was
treated by the liquidators, it is hardly surprising that the bank
sought their removal as liquidators.
[21] In the present case the
liquidators chose not to pursue the appeal themselves. They were,
after all, personally affected and
had a direct interest in the court
below and in the outcome of this appeal. It is difficult to avoid the
inference that Intramed
and Macmed are the appellants in order to
avoid the risk of another costs order against the liquidators
personally. The present appeal,
as demonstrated above, is devoid of
merit. The costs of litigation will impact on creditors. We seriously
considered ordering the
liquidators to pay the costs
de
bonis propriis
. On balance,
however, considering that Macmed is a creditor and that Intramed had
a sufficient interest in the appeal we decided,
as the order will
reflect, not to do so.
[22] The following order is made:
‘
The appeal
is dismissed with costs including the costs of two counsel.’
_________________
M
S NAVSA
JUDGE
OF APPEAL
CONCUR:
Harms
ADP
Lewis
JA
Maya
JA
Malan
AJA
1
Para
21.
2
Section
95(1) provides:
‘
The
proceeds of any property which was subject to a special mortgage,
landlord’s legal hypothec, pledge or right of retention,
after
deduction therefrom of the costs mentioned in subsection (1) of
section
eighty-nine
,
shall be applied in satisfying the claims secured by the said
property, in their order of preference, with interest thereon
calculated
in manner provided in subsection (2) of section
one
hundred and three
from
the date of sequestration to the date of payment, but subject to the
provisions of subsection (4) of section
ninety-six
.’
3
See
General Accident
Versekeringsmaatskappy Suid-Afrika v Bailey NO
1988
(4) SA 353
(A);
Administrateur,
Schenk v Schenk
1993 (2)
SA 346
(E);
Transvaal v JD
van Niekerk en Genote BK
1995
(2) SA 241 (A).
4
De
Villiers and Another NNO v BOE Bank Limited
2004
(3) SA 1
(SCA).
5
Nel
& Another NNO v The Master (ABSA Bank Ltd & others
intervening)
2005 (1) SA
276
(SCA).