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[1984] ZASCA 90
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Kilroe-Daley v Barclays National Bank Ltd (385/82) [1984] ZASCA 90; [1984] 2 All SA 551 (A) ; 1984 (4) SA 609 (A) (4 September 1984)
Case No. 386/82
MARIA JOHANNA KILROE-DALEY
and
BARCLAYS NATIONAL BANK LTD.
385/82
mp
IN
THE SUPREME COURT OF SOUTH AFRICA
(APPELLATE DIVISION)
In the
matter between:
MARIA J
O
HANNA KILROE-DALEY
Appellant
(2nd Defendant in
Court
a quo
)
and
BARCLAYS NATIONAL BANK LTD
Respondent
(Plaintiff in Court
a quo
)
CORAM:
RABIE, CJ, JANSEN et NICHOLAS, JJA GALGUT et HOWARD,
AJJA
HEARD:
22 May 1984
DELIVERED:
4 September 1984
JUDGMENT
GALGUT, AJA,
The respondent, a registered banking
institution
2.
institution, was the plaintiff in the Court
a quo
. I
shall refer to it as "the Bank". Dodo Shipping Company (Proprietary Limited was
one of its customers. It had been granted extensive
overdraft facilities. I
shall refer to it as "Dodo".
Appellant (second defendant in the Court below) had on 30 April 1973 (I quote
from paragraphs 8 and 9 of
the Bank's declaration) -
8.
signed a document in terms whereof
she bound herself as surety in solidum and
co-principal debtor for all
debts or other
obligations of whatever nature, both
present and in future,
from whatever cause
arising, which may be or become due, owing
or payable
by the company (Dodo) to the plaintiff.
A copy of the aforesaid document is
annexed
hereto, marked 'C' ..."
9.
To secure her indebtedness to the plaintiff, arising out of annexure 'C'
hereto but limited to a sum not exceeding R70 000,00 together
with interest
thereon, the second defendant hypothecated the immovable property registered in
her name in terms of deed of transfer
No T.30010/1963
3.
No T.30010/1963 to the plaintiff under first mortgage bond No
B.39348/1973".
The date of the above bond is 18 October 1973. A company, Paardekraal
Ondernemings (Eiendoms) Beperk (Paardekraal) had also bound
itself to the Bank
as surety in solidum and co-principal debtor in respect of Dodo's liability.
Paardekraal's liability was limited
to R40 000.
As at 31 July 1974 Dodo's indebtedness to the Bank was R228 273,37. The Bank
on that date demanded payment of that sum from Dodo,
the appellant and
Paardekraal.
Dodo was unable to pay its debts and it was wound up by the Court in terms of
section 344(f) of the Companies Act 61 of 1973. The
date of the final winding up
order is 15 October 1974. On 1 April 1976 the Bank filed a claim against Dodo
(in liquidation). The
claim was accepted by the liquidator in an amount of R210
299,37.
The final liquidation and distribution account of Dodo (in liquidation) was
confirmed by the Master
of
4. of the Supreme Court on 9 August 1978. Plaintiff duly
received its dividends on its proved claim. No further
dividends are payable.
Thereafter the Bank caused summons to be issued against Paardekraal as first
defendant and appellant as second defendant. The amount
claimed from appellant
was R51 646,67 plus interest thereon. How this amount was arrived at is not
material to the issue before us.
There was also a claim for an order declaring
the property, mortgaged by the appellant, executable. The summons was served on
appellant
on 31 March 1980. The importance of the respective dates will appear
later.
Appellant and Paardekraal separately entered appearance to defend the action.
The Bank then applied for summary judgment against each
of them. Summary
judgment was not granted. The Bank then filed its declaration. The relevant
allegations against appellant are in
paras. 8 and 9 thereof - as to which, see
above.
Appellant
5. Appellant in a special plea alleged that the
due date of Dodo's
liability to the Bank was 31 July 1974;
that in the normal course of events
the Bank's claim against
Dodo would have become prescribed by 31 July 1977;
that
inasmuch as her liability as surety and co-principal debtor
was accessory
to Dodo's liability, the claim against her would
also normally have become prescribed by that date; that by
reason of the provisions of sub-sees. 13(1)(g) and (i) of the
Prescription Act 68 of 1969 (the Act) the completion of the
period of prescription had been delayed till a date not later
than one year after 9 August 1978; that, as the summons was
served on appellant after that date, viz, on 31 March 1980,
the Bank's claim against her had become prescribed.
It is convenient to set out at this stage certain relevant statutory
provisions. The relevant sections of the Act read:
11.
periods of prescription of debts
.
"The periods of prescription of debts shall
be the following:
(a)
6.
(a) thirty years in respect of -
(i) any debt secured by mortgage bond; (ii) any judgment
debt;
(iii)
(iv)
(b)
(c)
(d) save where an Act of Parliament provides otherwise, three years in
respect of any other debt."
12.
When prescription begins to run
"(1) Subject to the provisions
of sub-sections (2) and (3) prescription shall commence to run as soon as the
debt is due." (Sub-sections
(2) and (3) are not relevant.)
13. (1)
Completion of prescription delayed in
certain circumstances
- "If .......
(a)
(b)
(c)
(d)
(e)
(f)
(g) the debt is the object of a claim
filed
against the estate of a debtor who is
deceased or against the
insolvent estate
of the debtor or against a company in
liquidation or
against an applicant under
the Agricultural Credit Act, 1966 (Act No 28
of
1966), or the Farmers' Assistance
Ordinance, 1962 (Ordinance No 11 of 1962,
of
the territory of South-West Africa); or
(h)
7.
(h) ; and
(i) the relevant period of prescription would, but for the provisions of this
sub-section, be completed before or on, or within one
year after, the day on
which the relevant impediment referred to in paragraphs (a), (b), (c), (d), (e),
(f), (g) or (h) has ceased
to exist,
the period of prescription shall not be completed
before a year has elapsed after the day referred
to in paragraph (i)."
Section 408 of the Companies Act reads:
408.
Confirmation of account
-
"When an account has lain open for inspection as
prescribed in s.406 and -
(a) no objection has been lodged;
(b) ) [These sub-sections deal with
) the procedure when objec-
(c) ) tions are lodged]
the Master shall confirm the account and his confirmation shall have the
effect of a final judgment, save as against such persons
as may be permitted by
the Court to re-open the account after such confirmation but before the
liquidator commences with the distribution."
The Bank in its replication denied "that sec.13(1)(i) has any application to
the instant matter" and went on to aver that "its claim
against Dodo will, in
terms of section 11(a) of Act 68 of 1969, only become prescribed
on
8.
on the 9th day of August 2008."
At the commencement of the trial in the Court
a quo
the minutes of the
pre-trial conference were handed in. These reflect that the above facts and
dates were common cause. The further
relevant paragraphs read:
"3. The trial will proceed against second defendant only on the question
whether plaintiff's claim has prescribed or not.
4.
It is recorded that
plaintiff has settled its claim against first defendant in the sum of R30 000,00
(Thirty Thousand Rand).
5.
In the event of the
Honourable Court holding that plaintiff's claim has not prescribed plaintiff
shall be entitled to judgment against
second defendant; this judgment shall be
for the amount of plaintiff's claim as set out in its declaration less the sum
of R30 000,00
received by plaintiff from first
defendant
on 10 June 1982."
It is not disputed that the due date of the
liability to the Bank was 31 July 1974 and that, in terms of
sec. 12(1) of the Act, prescription commenced to run from
that date.
The learned trial Judge having considered the provisions of sec. 408 of the
Companies Act and of
sec. ll(a)(ii)
9. sec.11(a)(ii) of the Act went on to say in his reasons
for
judgment:
"It follows in my view that when the final liquidation account was confirmed
in this matter by the Master on 9 August 1978 the Master's
confirmation had the
effect, in regard to the account as a whole, of a final judgment.
The further question which was also raised was whether a final judgment was
necessarily a judgment of a court.
In my view it is clear that the legislature intended, by the use of the words
'final judgment' to mean that it should be equated to
a judgment of a court of
law, and that it should have precisely the same effect."
He accordingly held that the applicable period of prescription was that set
out in sec.11(a)(ii), viz, 30 years and hence the Bank's
claim had not become
prescribed. He then gave judgment in favour of the Bank as prayed less R30 000
paid by Paardekraal. The appeal
is against the whole of the judgment and
order.
From now on, unless otherwise stated, all references to sections, will be to
sections of the Prescription
Act
10.
Act.
The facts are not in dispute. The issues
before this Court are whether
appellant's contention that,
by reason of sub-sees. 13(1)(g) and (i), the
Bank's claim
had become prescribed within one year after 9 August 1978,
is correct or whether the relevant period of prescription is
30 years either in terms of sec. 11(a)(i) or in terms of
sec. 408 of the
Companies Act read with sec.11(a)(ii).
Sec. 13(1) was considered in this Court in
Murray and Roberts Construction
(Cape) (Pty) Ltd. v Upington Municipality
1984(1) SA 571 (A). At page 578
et seq
GROSSKOPF, AJA, who delivered the judgment of the Court, discussed
certain philosophical explanations justifying extinctive prescription.
There is
no need to repeat what is there said. See also the remarks of MARAIS, AJA,in
Cape To
wn
Municipality v Allie N O
1981(2) SA 1(C) at p 5. At p579
B of the
Murray and Roberts
report it is said:
"It is accepted in the Act that there are circumstances in which it would be
unfair to require of the creditor that he institute
proceedings....
11.
proceedings within the time normally allowed.
This unfairness arises in the main where it
is impossible or difficult for a creditor
to enforce his rights within the time limit.
(See
De Wet
(
op cit
at 122-126).)"
(The work here referred to is
De Wet Opuscula
Miscellanea)
.
The learned Judge went on to say that there may be times when it is
impossible or difficult for a creditor to recover his debt and
that in such
cases the Act comes to his aid. He then refers to sec.13(l)(g) and says (see
p579 G) -
"There may be greater or lesser difficulty in suing debtors of the type
mentioned in this subsection. It seems clear, however, that
a part of its
underlying
ratio
is also that, in the circumstances mentioned, the
creditor
is already taking appropriate steps to recover his debt
and
should not be required to institute legal proceedings merely to interrupt the
running of prescription." (The underlining is my
own.)
Sees. 353 and 358 read with 359(1) of the Companies Act, to a greater or
lesser degree contain provisions which could result in the
creditor being
prevented from instituting
or
12.
or continuing with civil proceedings against a company. Furthermore from a
practical point of view (I have not overlooked the provisions
of sees.359(2) of
the Companies Act) it would in the ordinary course of events serve a creditor no
good purpose to institute action
against a company against which the Court has
made or is about to make a winding-up order on the ground that it is unable to
pay
its debts. I do not think that the difficulties created by the above
sections or the futility of instituting action constitute the
"impediment"
mentioned in sec.13(1)(i). I say this because the words in sec.13(1)(g) "the
debt is the object of a claim filed" must
refer to a claim already filed against
an estate or a company in liquidation. This would appear to be how this Court
interpreted
sec.13(l)(g). See the words underlined by me in the above quotation
from the
Murray and Roberts
case,
supra.
Hence, although this
section is far from clear, it would seem that the impediment commences when the
creditor files his claim.
The
13.
The next question for decision is (see sec.13(1)(i))when does
the "relevant impediment" cease to
exist? No difficulty arises in this regard in those cases
mentioned in
13(1)(a) to (f). For example, it ceases in
sub-sec (a), when the creditor becomes of age, in (b) when
the debtor returns to the Republic, in (c) when the marriage
ends. Counsel
were agreed that in respect of a claim filed
against a company in liquidation the impediment ceases to
exist if and
when it is rejected. They were also agreed that
when such a claim has been
accepted the impediment ceases to
exist and that the confirmation of the
account is the
acceptance thereof. I proceed to deal with this aspect
of
the appeal on that basis.
The debt owing by Dodo was due on 31 July 1974.
In the ordinary course of
events that debt would have become prescribed by 31 July 1977 (see sees. 12(1)
and 11(d)). The Bank's claim
was filed on 1 April 1976. As appears from what has
been said above the "impediment" brought about by such
filing
14. filing delayed the running of prescription. In terms
of
sec.13(l)(i) that delay continued for one year after the
impediment ceased to exist which was one year after 9 August
1978, the date on which the account was confirmed. It
follows that unless the Bank's claim against Dodo is governed
by
sec.11(a)(i) or ll(a)(ii) it became prescribed by
9 August 1979.
For reasons which will appear later, it is convenient to deal with the
argument of counsel for respondent first. In seeking to support
the judgment
a quo
he submitted:
A. That appellant as a co-principal debtor, had executed
the mortgage bond
to secure her liability to the Bank
and that by reason of the provisions of
sec.11(a)(i)
the prescriptive period applicable is thirty years; and
B. That the Bank had filed its claim against Dodo (in
liquidation) on 1
April 1976, i.e. before 31 July 1977;
that
15. that by reason of sub-sees. 13(1)(g) and (i) the
ordinary period of prescription had been extended; that
the liquidator's account had been confirmed by the
Master on 9 August 1978; that in terms of sec.408 of
the Companies Act "the confirmation had the effect of a
final judgment"; that it followed that the prescriptive
period was thirty years as provided in sec.11(a)(ii).
Counsel at
the commencement of his argument stated that he preferred to address the Court
on submission B first and proceeded to do
so. I find it more convenient to
discuss submission A first.
Ad A above. Is sec.ll(a)(i) applicable?
Counsel urged that the words "any debt secured by mortgage bond" are cast in
the widest terms; that appellant had bound herself as
a surety and co-principal
debtor; that that was a contract separate from Dodo's contract and that there
was thus no reason to exclude
the
debt
16.
debt of a surety and co-principal debtor secured by a mortgage bond from the
provisions of the wide terms of sec.11(a)(1).
It becomes necessary to decide what the debt was which appellant secured. The
liability which she under= took is set out in paragraph
8 of the declaration
(see above). She bound herself as surety and co-principal debtor. It is correct
that a contract of suretyship
is a separate contract from that of the principal
debtor and his creditor. It is, however, accessory to the main contract - see
Corrans and Another v Transvaal Government and Coull's Trustee
1909 TS
605
at p612. See also
Union Government v van der Merwe
1921 TPD 318
at
p321 where WESSELS, JP said:
"The legal scope of the surety's contract is identical with that of the
principal debtor -
accessorium sui principalis naturam sequitur.
The
surety undertakes the same obligation as the debtor, and undertakes to perform
this same obligation so soon as the debtor, when
called upon, fails to perform
it. Troplong, Caut: 46. It is true there are two contracts, the one between the
creditor and the debtor
and the other between the creditor and the surety. But
the
contract
17.
contract between the creditor and the surety is not an independent contract
with an obligation of its own but an accessory contract
with the very same
obligation that exists between the principal debtor and the creditor. Although
it is true that the suretyship
contract may be entered into by an agreement
different to that of the principal contract, yet immediately the surety agrees
to become
such, whether by a written or a verbal agreement, then his contract
with the creditor is of the same nature as that of the principal
debtor, because
it becomes accessory to it, or is, as it were, absorbed by it."
At page 322 the learned Judge says:
"The present case is, however, stronger for the surety has signed as surety
and co-principal debtor. We must give some meaning to
the words 'co-principal
debtor'. That the addition of these words operate as a renunciation of the
benefits of the surety is clear,
but they have a still greater force. The
addition of these words shows that the surety intends that his obligation shall
be co-equal
in extent with that of the principal debtor: or otherwise expressed,
that his obligation shall be of the same scope and nature as
that of the
principal debtor."
The above statement of the Law was accepted in
Mahomed v Lockhat Bros and
Co
Ltd
1944 AD 230
at p238 where TINDALL, JA said:
"Now
18.
"Now the defendant is a surety but he bound himself under the
compromise as co-principal debtor, and therefore his obligation under
the
compromise in respect of the due payment of the 24 monthly instalments is 'of
the same scope and nature as that of the principal
debtor' (see
Union
Government v van der Merwe
1921, TPD 318
, per WESSELS, JP, at p322).
Accordingly the liability of the defendant in the present proceedings depends on
the obligation of the
debtor under the compromise agreement."
It follows from what has been said above that a surety and co-principal
debtor does not undertake a separate independent liability
as a principal
debtor; the addition of the words "co-principal debtor" does not transform his
contract into any contract other than
one of suretyship - see also
Ideal
Finance Corporation v Coetzer
1969(4) SA 43 (0) at p44C and the cases there
cited.
The appellant executed a mortgage bond. In so doing she did not enter into a
contract separate from her contract of suretyship; she
merely furnished security
for her indebtedness. This appears quite clearly from what is said in paragraph
9 of the declaration. I
pause to say
that
19. that I have studied the deed of suretyship and the bond.
Paragraphs 8 and 9 of the declaration correctly reflect what
appears in
those documents. As we have seen, appellant's
indebtedness is accessory to that of the principal debtor,
Dodo. It is not
a separate independent liability as a
principal debtor. It was that accessory
and dependent debt
which was secured by the bond. It follows that if
the
principal debt, i.e. Dodo's debt, became prescribed or for
any other
reason ceased to exist, the appellant's debt also
became prescribed and
ceased to exist. In the result the
Bank cannot invoke sec.11(a)(i).
Ad B above. Do the words "shall have the effect of a final judgment" in
sec.408 of the Companies Act mean that the confirmation of
the liquidation
account is tantamount to a "judgment debt" as stated in sec.11(a)(ii)?
Sec. 3(2) of the Prescription Act No 18 of 1943 provided that:
"(2) The periods of extinctive prescription
shall be the following:-
(e)
20.
(e) thirty years in respect of
(i)
(ii) judgments of a court of law for
payment of money, or for specific performance, or other such judgments which
require further action by the person in whose favour
they have been given, in
order to secure compliance therewith."
Sec.11(a)(ii) merely provides that the "period of prescription of debts"
shall be "thirty years in respect of "any judgment debt."
Having regard to the 1943 provisions it must be accepted that the words
"judgment debt" do not mean only a money debt. They would
include judgments e.g.
for the delivery of property or for specific performance. This also is the view
of the learned authors (DE
WET AND YEATS) of
Kontraktereg en Handelsreg
4th Edition at p261 where in a footnote they say:
"Art.11(a)(ii). Ook hierdie bepaling bring niks nuuts nie. 'n Vonnisskuld
hoef natuurlik nie 'n geldskuld te wees nie."
That
21.
That means that judgment debt in sec.11(a)(ii)
refers, in the case of
money, to the amount in respect of which execution can be levied by the judgment
creditor; that in the case
of any other debt steps can be taken by the judgment
creditor to exact performance of the debt i.e. delivery of the property, or
performance of the obligation. A further feature of a judgment debt is that the
judgment is appealable.
This brings me to the question of what is meant in sec.408 of the Companies
Act (to which I shall hereafter refer as sec.408) where
it is said the
confirmation of the account by the Master "shall have the effect of a final
judgment."
Counsel for the respondent urged that the account (the relevant page thereof
appears at p195 of the record before us) reflected that
the amount of the Bank's
claim was R210 299,37; that the liquidator had accepted the claim in that
amount; that the Master had confirmed
the
account
22. account which meant that he had confirmed that the
amount
due to the Bank was the said figure; that that confirmation
had the effect
of a final judgment and accordingly that was
a judgment debt as envisaged by
sec.ll(a)(ii). He went on
to say that the dividend payable to the Bank in
terms of
the account was merely the result of a mathematical
calculation
arrived at by dividing the amount available for
distribution
amongst the creditors of Dodo (in liquidation).
In support of the above submissions counsel referred to
Executors Dative
of R Masterman vs Morris, Strachan & Co and Solomon Niekerk
8 N L R
(1887) 59. At p61 CONNORS, CJ who delivered the majority judgment of the Court
is reported as saying:
"With reference to the question of prescription, his Lordship observed that
our Law (14 of 1861), s.2), which was referred to, excepted
from prescription, a
claim in respect of which there was a judgment or order of a Court in the Colony
or elsewhere. In this case,
there was clearly an Order, when the Court in East
Griqualand confirmed the account which involved the sums that were the subject
of the action."
(The
23.
(The Court was there dealing with the confirmation of an
account in an
insolvent estate). No reasons are given by CONNORS, CJ, for his conclusion.
In
Central African Building Society v Pierce, N O
1969(1) SA 445 (R A
D), the liquidator (Pierce) of a company in liquidation accepted a creditor's
claim based on a mortgage bond,
for compound interest, up to the date of
liquidation but refused such interest thereafter. Interim distribution accounts
had been
confirmed. Thereafter the creditor sought to challenge the liquidator's
decision. BEADLE, CJ, who delivered the Court's judgment,
having discussed the
legal principles relating to a claim for compound interest after the date of
liquidation went on to say at p455:
"I turn now to deal with the third question posed by the learned Judge, that
is, the effect of the confirmation of the interim distribution
accounts. There
is no doubt that under the provisions of sec.250 of the Companies Act, Chap.223,
the confirmation of a distribution
account has the effect of final sentence; it
has precisely the
same
24.
same effect as a judgment of a court, and, before another court can go behind
such a judgment, application must be made to have it
set aside."
In MARS -
The Law of Insolvency
(7th edition by Waters and Jooste) at
p406 it is said:
"Confirmation of an account, being in the
nature of a judgment, may be regarded as an order
for the purposes of the law of prescription."
The authors merely quote the
Masterman
case and the
Central African
Building Society
case as authority for their statement.
I am of the view that to the extent that the statement by CONNORS,
CJ,purports to say that the confirmation of a trustee's account
by the Court (as
the law was at that time) was, in respect of each item in the account,
tantamount to a judgment of a court, and
so affects the running of prescription
it is not a correct statement of the law. My reasons will appear later.
As to the above statement from the
Central
25.
Central African Building Society
case, it does
not say, as does the
Masterman
case, that prescription runs anew from the
date of the confirmation of the account. BEADLE, CJ, was there concerned with
whether
the creditor could, in regard to the already confirmed accounts, go
behind the accounts. It was held that he could not do so. The
learned Judge,
when dealing with the "third question", was not concerned with the question
whether confirmation of the account invests
each claim with all the attributes
of a judgment of a Court. Moreover he was not concerned with the question of
prescription. All
he was concerned with was whether the confirmation of the
interim accounts rendered those accounts final. As will be seen shortly
there
are decisions in our Courts which hold that confirmation of an account renders
it final in the sense that, like a judgment
of a court, it will only be set
aside in cases where
restitutio in int
e
grum
would be granted. It
follows that the authors of
Mars
are not justified in citing the
Central African Building Society
case as authority
for
26.
for the statement that "confirmation of an account, being in the
nature of a judgment, may be regarded as an order for the purposes
of the law of
prescription."
Counsel referred us to cases in which our Courts were asked to order the
re-opening of a liquidator's account or a trustee's account.
In each of those
cases the wording of the relevant section was similar to the wording of sec.408.
In those cases the learned Judges
say the confirmation of the account has the
effect of a judgment of a court. See for e.g. S
A Clay Industries (Pty) Ltd v
Katzenellenbogen N O
1957 (1) SA 220
(W) at 223H to 224F and the cases there
cited , and also
Rulten NO vs Herald Industries (Pty)
Ltd 1982(3) SA
600(D) at p604F. These statements take the matter no further. They do not
purport to say that the confirmation of
the account elevates each item in the
account to a judgment of a court.
The above submissions by counsel cannot be sustained for the reasons set out
hereunder.
A
27. A judgment debt is the amount or subject matter of the award in
the judgment. Execution can be levied to recover the judgment
debt. As will be
seen later it cannot be suggested that the words in sec.408, (the Master's)
"confirmation shall have the effect
of a final judgment", enable a creditor
whose claim has been proved and accepted to levy execution for the amount of his
proved claim
or even for the dividend awarded to him in the confirmed account.
In the present case the Bank could not have proceeded to execution
for payment
of the sum of R210 299 (less of course the dividend) nor could it so proceed in
the future. I have not overlooked the
fact that if in terms of an account a
creditor is liable to contribute and fails to pay the amount of his liability
the liquidator
is empowered to issue a writ of execution. This is only so
because sec.118(1) of the
Insolvency Act 24 of 1936
specially provides that this
can be done. (It will be remembered that sec.339 of the Companies Act provides
that, in a winding up
of a company unable to
pay
28.
pay its debts, the provisions of the
Insolvency Act shall
apply
mutatis mutandis.)
The very fact that there is such a provision indicates
that without it execution could not have been levied.
In the case of a judgment debt the judgment is as I have stated appealable.
Sec.408 provides that once the account has been confirmed
it may only be
re-opened by such persons as may be permitted by the Court so to do. We were
referred to decisions in our Courts in
which application was made to have the
account of a liquidator (or trustee in insolvency) re-opened. The principle
which runs through
all these cases is that an applicant must show grounds for
restitutio in integrum
such as j
ustus error
or
dolus
before
a Court will order the re-opening of a confirmed account. See
S A Clay
Industries Ltd v Katzenellenbogen N 0 and Anothe
r 1957(1) SA 220 (W) at
pages 223-224 and the cases there cited. See also HENOCHSBERG,
On the
Companies Act
(Third edition) at p709. I am of the view that the fact that
execution cannot
be
29.
be levied in respect of the amount allowed in a confirmed
account; that execution against a contributory can only be levied becuase
of an
authorising provision; that an appeal does not lie in respect of an account as a
whole (which means there is no appeal in respect
of an individual item therein)
indicates that the items in an account are not elevated to the status of
judgments.
I am also of the view that if one has regard to other relevant sections of
the Companies Act, sec.408 cannot be interpreted to mean
that individual items
in a confirmed account have the effect of a final judgment.
A liquidator has to lodge accounts within prescribed periods; he has to
advertise that an account (be it the first or a later account)
is lying for
inspection; he has to give each proved creditor notice that an account is lying
for inspection; periods for lodging
objections are fixed and if an objection is
overruled the objector can approach the Court for relief. See sees.403, 406, 407
and
408 (b)
30.
408 (b) and (c) of the Companies Act. It may well happen, after the
first account has been confirmed, that additional facts come to
the liquidators'
notice. If, as is my view, the whole account is, after confirmation, final, the
liquidator cannot re-open it. This
would not preclude him from in his later
account, reducing or increasing a creditor's claim or increasing or reducing a
creditor's
contribution. He will probably have to make the necessary
mathematical adjustments in the amounts to be paid or collected, It could
hardly
be said that the items in the first account were equivalent to judgments.
Sec.403 of the Companies Act details the matters which must appear in an
account. At pages 1026-1027 of HENOCHSBERG,
sup.cit
., there appear
details of the essential contents of an account. The account must reflect a
record of all receipts from monies collected,
of proceeds of assets realised,
details of assets hypothecated or subject to other security and many other
matters. It is inconceivable
that
the
31.
the confirmation of the account means that each
item therein
has the effect of a final judgment.
It follows from what has been said above that I am of the opinion that the
words (the Master's) "confirmation shall have the effect
of a final judgment" do
not give each item in the account the quality of a judgment of a court. They
mean that, once the Master has
confirmed an account, after objections if any
have been dealt with, his confirmation of that account is final and it cannot be
re-opened
save where a Court authorises the re-opening. Such a provision is
necessary. See in this regard what was said by KUPER, J in the
S A Clay
Industries case sup.cit
at p224.
"It must be remembered that the whole machinery of the Act is directed
towards a speedy liquidation and distribution of the assets
of an insolvent
estate. It is for that reason that the section precludes the re-opening of an
account when a dividend has been paid
under the account. After confirmation and
before the payment of a dividend the aggrieved person must show something more
than ignorance
and prejudice: he must show that this failure to object has been
induced by
Justus error
or by fraud."
It
32.
It follows from what is said above that the
Bank's claim against Dodo
became prescribed within one year from 9 August 1978. Hence the claim against
appellant also became prescribed
on that date.
Heads of argument were filed in terms of Rule 8 of the Rules of this Court.
In those heads the matters dealt with above were canvassed
and the appeal was
conducted, in the main, on that basis. However, at the hearing of the appeal,
Counsel for the appellant (he did
not draw the original heads) handed in
additional heads. In support of these heads he relied on
Rand Bank Ltd vs de
Jager
1982(3) SA 418(C). In that case each of two sureties bound himself as
surety and co-principal debtor for the principal debtor's indebtedness
to the
creditor - Rand Bank Ltd. One of these was de Jager. The creditor sued the
principal debtor and the other surety and obtained
judgment against both of
them. This of course meant that as against them the period of prescription was
thirty years. Thereafter,
after a lapse
of
33. of more than three years from the due date of the
principal
debtor's liability, the creditor sued de Jager. He pleaded
that
his contract was a separate contract and his liability
had become prescribed.
The creditor maintained that inasmuch
as de Jager's contract was accessory to
and of the same
scope and nature as that of the principal debtor
the
relevant period of prescription applicable was, by virtue
of the
judgment, thirty years. The Court, however, held
that the fact that, a
judgment had been taken against the
principal debtor, did not mean that the
prescription period
of thirty years applied to de Jager's liability.
Hence,
so submitted appellant's counsel before us, even if the
Bank's
claim in the present case became a judgment by virtue
of the Master's
confirmation of the account, appellant's
debt nevertheless had become
prescribed in three years, i.e.
by 31 July 1977 or within one year from 9 August 1978.
As stated above, by reason of the way in which
the appeal was argued before us, the matters discussed
earlier
34.
earlier in this judgment had to be decided. Because of
the
conclusions arrived at above it is unnecessary to decide whether the last
submission by appellant's counsel is correct. I hasten
to say that nothing in
this judgment must be read to mean that this Court agrees or disagrees with what
is said in
Rand Bank Ltd v de Jag
er cited above.
In the result the appeal must succeed. It is, however, necessary to say
something about the costs. As stated earlier, two abortive
applications for
summary judgment were launched, viz., one against each of the defendants in the
trial. All the papers, including
the affidavits, relating to these applications
were included in the record before us. Counsel for the appellant correctly
conceded
that these documents should not have been included in the record.
Counsel also conceded that save for p195, all the documents in
volume three of
the record should not have been included. The appellant is not entitled to any
costs relating to the unnecessary
documents
35.
documents. In order to assist the taxing master I will, in
the order, detail the relevant pages.
1. The appeal is allowed with costs save that such costs
are not to
include any costs occasioned by the inclusion
in the record of pages 9 - 12;
31 - 34; 52 - 64;
143 - 194; 196 - 201.
2.
The costs occasioned by the
employment of two counsel are allowed.
3.
The
order of the Court
a quo
is set aside and there
is
substituted therefor an order reading:
"Plaintiff's claim against second defendant is dismissed with costs."
O GALGUT AJA
RABIE, CJ ) JANSEN, JA ) NICHOLAS, JA ) Concur
HOWARD, AJA )