Burley Appliances Limited v Grobbelaar N.O. and Others (3029/2001) [2003] ZAWCHC 31; [2003] 3 All SA 505 (C); 2004 (1) SA 602 (C) (14 July 2003)

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[2003] ZAWCHC 31
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Burley Appliances Limited v Grobbelaar N.O. and Others (3029/2001) [2003] ZAWCHC 31; [2003] 3 All SA 505 (C); 2004 (1) SA 602 (C) (14 July 2003)

IN
THE HIGH COURT OF SOUTH AFRICA
(CAPE OF GOOD HOPE PROVINCIAL
DIVISION)
CASE NO: 3029/2001
In the matter between:
BURLEY
APPLIANCES LIMITED
Plaintiff
And
PATRICIA
ANNE GROBBELAAR N.O.
1
st
Defendant
FUTEK
SYSTEMS CC
2
nd
Defendant
DUNCAN
SWINBURNE BAIN MARSHALL
3
rd
Defendant
JUDGMENT: 14 JULY 2003
NEL, J
During
June 1995, Plaintiff (‘
Burley
’)
instituted an action against a close corporation Futek Electronics CC
(‘
Futek
’)
for the repayment of the purchase price of certain defective alarm
systems and for damages arising from the delivery of the defective
systems.
The amounts claimed were R206 151-00
and £27, 995-82 respectively.
While
the action was pending and during or about October 1995,
Futek
transferred its business, allegedly worth R729 890-00, to the Second
Defendant, Futek Systems CC (‘
Systems
’)
and also paid Third Defendant (‘
Marshall
’)
an amount of R140, 855-00, purportedly in repayment of his loan
account with
Futek
.
The
action was still pending when
Futek
was provisionally liquidated on 15 October 1996. The order was made
final on 12 November 1996. The First Defendant (‘
Grobbelaar
’)
was appointed as its liquidator.
In
the particulars of claim of the present action instituted during
April 2001,
Burley
alleges that
at
all relevant times
Marshall
was the sole member of
Futek
and the managing member of
Systems
;
the
disposition of its business by
Futek
was not made for value;
immediately
after the disposition was made, the liabilities of
Futek
exceeded it’s assets;
the
payment to
Marshall
took place at a time when the liabilities of
Futek
exceeded its assets;
the
payment to
Marshall
was made with the intention of preferring one of it’s creditors
(
Marshall
)
above its other creditors, and in particular
Burley
;
by
disposing of the business of
Futek
and by paying
Marshall
,
Futek
and
Marshall
carried on the business of
Futek
recklessly, with gross
negligence or with the intent to defraud the creditors of
Futek
and in particular
Burley
;
at
all relevant times
Futek
,
Systems
and
Marshall
were knowingly parties to the disposition and the payment and acted
in collusion to avoid payment of
Futek
’s
creditors, and in particular
Burley
;
the
disposal of the business of
Futek
constituted a gross abuse by
Marshall
of the juristic personality of
Futek
as a separate entity in that it took place in order to avoid payment
of
Burley
’s
claims and in order to permit
Systems
to continue to conduct the business but without the liability
towards
Burley
;
at
the time of the transfer of the business to it,
Systems
knew that
Burley
had instituted the action against
Futek
;
The particulars of claim contains
three causes of action.
The first cause of action is based on
the provisions of Section 64(1) of the Close Corporation Act No. 69
of 1984 (“the Act”)
which reads as follows:
“
64. Liability
for reckless or fraudulent carrying-on of business of corporation.-
If it at any time
appears that any business of a corporation was or is being carried
on recklessly, with gross negligence or with
intent to defraud any
person or for any fraudulent purpose, a Court may on the application
of the Master, or any creditor, member
or liquidator of the
corporation, declare that any person who was knowingly a party to
the carrying on of the business in any such
manner shall be
personally liable for all or any of such debts or other liabilities
of the corporation as the Court may direct,
and the Court may give
such further orders as it considers proper for the purpose of giving
effect to the declaration and enforcing
that liability.”
As
pointed out, it is alleged that by disposing of
Futek
’s
business and by making the payment to
Marshall
of the sum of R140 855-00,
Futek
and
Marshall
carried on the business of
Futek
recklessly, with gross
negligence or with intent to defraud its creditors. It is also
alleged that
Systems
and
Marshall
were knowingly parties to these actions and an order is sought
declaring both
Systems
and
Marshall
to be jointly and severally liable for the debts of
Futek
to
Burley
and in particular for payment of the sums of R206 151-00 and £27
995-82.
The second cause of action is based on
Section 65 of the Act, which provides as follows:
“
65. Powers
of Court in case of abuse of separate juristic personality of
corporation:-
Whenever a Court on
application by an interested person, or in any proceedings in which a
corporation is involved, find that the
incorporation of, or any act
by or on behalf of, or any use of, that corporation, constitutes a
gross abuse of the juristic personality
of the corporation as a
separate entity, the Court may declare that the corporation is to be
deemed not to be a juristic person in
respect of such rights,
obligations or liabilities of the corporation, or of such member or
members thereof, or of such other person
or persons, as are specified
in the declaration, and the Court may give such further order or
orders as it may deem fit in order
to give effect to such
declaration.”
In
this regard it is alleged that the disposal of
Futek
’s
business constituted a gross abuse by
Marshall
of
Futek
’s
juristic personality. Accordingly an order is sought declaring that
Futek
should be deemed not to be a juristic person in respect of its
liabilities and declaring that
Systems
and
Marshall
are jointly and severally liable for payment to
Burley
of the sums of R206 151-00 and £27 995-82.
The third cause of action is based on
sections 34(1)
and (3) of the
Insolvency Act No. 24 of 1936
which
provide as follows:
“34. Voidable
sale of business.-
If a
trader transfer in terms of a contract any business belonging to
him, or the goodwill of such business, or any goods or property
forming part thereof (except in the ordinary course of that business
or for securing the payment of a debt), and such trader has
not
published a notice of such intended transfer in the Gazette, and in
two issues of an Afrikaans and two issues of an English
newspaper
circulating in the district in which that business is carried on,
within a period not less than thirty days and not more
than sixty
days before the date of such transfer, the said transfer shall be
void as against his creditors for a period of six
months after such
transfer, and shall be void against the trustee of his estate, if
his estate is sequestrated at any time within
the said period.
…
If any person who has
any claim against the said trader in connection with the said
business, has before such transfer, for the
purpose of enforcing his
claim, instituted proceedings against the said trader-
in any court of law,
and the person to whom the said business was transferred knew at
the time of the transfer that those proceedings
had been
instituted; or
in a Division of the
Supreme Court having jurisdiction in the district in which the said
business is carried on or in the magistrate’s
court of that
district,
the transfer shall be
void as against him for the purpose of such enforcement.”
As
pointed out it is alleged that the business transferred by
Futek
to
Systems
constituted items contemplated in
Section 34(1)
of the
Insolvency Act
and
that the action which had been instituted by
Burley
against
Futek
is a claim in connection with the business of the latter and which,
to the knowledge of
Systems,
had been instituted prior to the transfer in order to enforce
Burley
’s
claims. Accordingly an order is sought declaring the transfer of the
business to
Systems
to be void as against
Burley
for the purpose of enforcing its claims against
Futek
.
Systems
and
Marshall
filed a special plea of prescription alleging that all three causes
of action had arisen more than three years prior to the issue
of the
summons. It is against this special plea that the exception was
taken. It reads as follows:
”
1. The plaintiff’s
claims against the second and third defendants are based on the
provisions of
sections 64
and
65
of the Close Corporation Act No 69
of 1984 and
section 34(3)
of the
Insolvency Act No 24 of 1936
.
2. The said claims do not
involve the enforcement of a “debt” within the meaning of that
term in Chapter III of the
Prescription Act No. 68 of 1969
.
Alternatively to
paragraph 2, the ‘debt’ enforced by the claims based on sections
64 and 65 of the Close Corporation Act do
not fall ‘due’ for
purposes of the
Prescription Act unless
and until a declaration
under those sections has been made by the Court.
In the premises, the
special plea of prescription is bad in law.”
For the purposes of the exception, I
will assume that
a creditor of a company which is in
liquidation is entitled to pursue a claim in terms of section 64 of
the Act;
a declaration by a Court that a
particular person is liable for the payment of all debts or a
particular debt or liability, is not
a penalty;
a Court may direct such payment to be
made to a particular creditor as opposed to the company in
liquidation.
See
generally
Mafikeng Mail
(Pty) Ltd v Centner (No.1) and L & P Plant Hire Bk v Bosch
2001
CLR
602
(SCA) but compare
the unpublished thesis of Professor Louis de Koker Die
Roekelose
en Bedrieglike Dryf van Besigheid in die Suid-Afrikaanse
Maatskappyreg
(Universiteit
van die Oranje Vrystaat, 1996) chapter 4 and authorities referred to
therein. See also
Re Nimbus
Trading Co Ltd
(1983) 1
NZCL 98, 762.
Mr. Rogers, who appeared on behalf of the
excipient, submitted that the action instituted by Burley in terms of
sections 64 and 65
of the Close Corporations Act is not affected by
the provisions of the
Prescription Act in
that
the
Prescription Act only
applies to
‘debts’; and
before a Court ‘directs’ in terms
of
section 64
or ‘declares’ in terms of
section 65
, no ‘debt’
exists.
In
this regard he referred to
Barnard
and Lynn NNO v Schoeman and Another
2000(3) SA 168 (N) p. 170-171.
Mr
Gess
,
who appeared on behalf of
Systems
and
Marshall
in
turn submitted that
the obligation or ‘debt’ arises,
not merely when a declarator is issued by the Court, but from the
time of the conduct being
committed or the event taking place which
creates liability under the Close Corporation Act;
the submission that prescription
cannot commence to run until a Court issues the declarator is
contrary to the established principle
that a creditor cannot by
supine inaction arbitrary and at will postpone the commencement of
prescription.
He
referred to
Kotze v
Ongeskiktheidsfonds, Universiteit Stellenbosch
1996(3) SA 252 (C) and
F P
and C H Matthew Limited
[1982] 1 All ER 338
(CA).
In
Barnard and Lynn NNO v
Schoeman and Another, supra,
relied upon by Mr
Rogers,
Nicholson J held as follows (at p 170-171):
“
Mr
Winchester argued that
in terms of s 29(1) (of the
Insolvency Act) the
Court has a
discretion to set aside an impugned disposition by the company which
had the effect of preferring one of its creditors
above any other.
He further argued that in terms of
s 32(3)
, when the Court sets aside
any disposition of property, it shall declare the liquidator entitled
to recover any property alienated
under the said disposition. He
submitted that the liquidated amount was not a ‘debt’ in the true
sense of the word as it only
became due once the Court exercised the
said discretion.
Mr Winchester
quoted as authority for this proposition Meskin Insolvency Law para
5.31.16.1 where the learned author said the following:
‘there is
no obligation to restore or pay until the Court orders accordingly
and consequently … the trustee’s rights of action
in this context
can never prescribe’.
De la Rey
Mars’ Law of Insolvency in South Africa 8
th
ed at 206 is to the opposite effect where he (sic) says that the
period of prescription of a debt is three years. No authority
is
quoted by the learned author in this regard and no reasons are
supplied for the said conclusion.
………………
..
“
Mr
Winchester made mention of the difficulty a liquidator might have in
a large and complex liquidation where it could be some time
before he
became aware of the existence of any voidable transaction. Mr
Skinner submitted that the answer to this was that he had
a remedy.
As has been pointed out above it is clear, in terms of
s 11(3)
of the
Prescription Act, that
, if the creditor is not aware of the identity
of the debtor and the facts from which the debt arises, he can bring
an action within
three years of gaining such knowledge.
A
liquidator is appointed and performs a function for the Court on
behalf of the general body of creditors. When he seeks to impeach
a
transaction he is challenging, on behalf of the other creditors, an
improper preference that the insolvent sought to achieve.
He is
setting in motion a statutory procedure for recovering an asset. Can
this be said to be a debt? A normal debt can be freely
ceded but a
liquidator, who acts in terms of the said section, acts
nominee
officii
and cannot cede the right to recover voidable transactions to any
other party. See
South
African Board of Executors and Trust Co Ltd (in Liquidation) v
Gluckman
1967 (1) SA 534
(A) at 541C-542A. This seems to me to be an
indication that the debt is not a debt in the normal sense, but a
specialised right
of action bestowed on a liquidator arising out of
his statutory functions.
Section 32(3)
allows the
Court to set aside a disposition of property and declare the
liquidator entitled to recover the property or its value
at the date
of disposition or the date it was set aside by the Court, whichever
is the higher. Clearly the Legislature contemplated
that with the
passage of time the property might have escalated in value and
decreed that the general body of creditors should receive
the benefit
of this higher value. If a liquidator reckons the property has
increased in value he will be entitled to lead such evidence
and ask
for a finding in that regard. He would, of course, not know what
that would be when he first demands the repayment of the
impugned
transaction. The debt, in that case the value of the property, would
not be known until the Court pronounced its findings.
It seems to me
that this is an additional reason why the debt did not become due
until the value was pronounced by the Court. Only
at that stage can
it be properly said to have been quantified to constitute a debt.
Section 29(1)
provided
that the person, in whose favour the disposition is made, has the
right to prove that the disposition was made in the ordinary
course
of business and that it was not intended to prefer one creditor above
another. It seems clear that the proof referred to
in the subsection
refers to proof before the Court and not before the liquidator. The
liquidator will only know about this defence
when he received the
plea or opposing affidavit. The debt as such is not owing if it was
made in the circumstances protected by
the section. For this reason
also I am of the view that a debt only comes into being once the
Court pronounces upon the disposition,
after considering the
existence or otherwise of the statutory defences provided.
As is made
abundantly clear in Morris NO v Airomatic (Pty) Ltd t/a Barlows
Airconditioning Co
1990 (4) SA 376
(A) at 396A-B the liquidator has
no power to set aside transactions which are contemplated by the Act.
It is the Court and the Court
alone that has the power to set aside
transactions in terms of s 29. The amount of any impugned loan only
becomes a debt and recoverable
once the Court has made an order to
that effect.”
The only authorities which seemed to have been
brought to the attention of Nicholson J were the 8 ed of Mars’ Law
of Insolvency
in South Africa and Meskin’s Law.
With respect to the learned Judge, it seems as if De
la Reyhad been misread. In the passage referred to she deals with
the common
law Paulianaand in note 6 at page 206 draws attention to
42.8.13; 2.5.4.; der Keessel Thes Select200 and Villiers v Estate
Hunt1939
AD 531. These authorities support her view that at common
law the actio Pauliana prescribed after one year, in terms of the
1943
Prescription Act after
30 years and in terms of the 1969
Prescription Act after
3 years. See also v Ebrahim and Others1956
(4) SA 723 (N).
It
is
Meskin’s
statement that
“
there
is no obligation to restore or pay until the Court orders accordingly
and consequently …. the trustee’s rights of action
in this
context can never prescribe.”
which has to be examined.
As
pointed out,
Nicholson
J, in accepting
Meskin
’s
view, concluded that the right accorded to a trustee to recover
assets or their value is something so
sui
generis
that it can never
prescribe.
He reached this conclusion on the
following grounds:
- The liquidator sets a statutory
procedure into motion to recover an asset;
- The right to recover the asset
cannot be ceded and it is thus not a debt in the normal sense,
because normal debts can be ceded;
- As the liquidator is entitled to
recover the property or its value at the time of disposition or its
value at the date it is set
aside by the Court, whichever is the
higher, the value of the debt would not be known until the
pronouncement by the Court;
- As the recipient of the asset has
the right to prove that the disposition was made in the ordinary
cause of business and that it
was not intended to prefer one creditor
above another the trustee or liquidator will only know about this
defence when the plea
or an opposing affidavit is received, and as
the debt will not be owing if the disposition had been made in the
circumstances protected
by the section, it cannot become owing before
the defences are dismissed;
- In the circumstances the amount of
any impugned loan only becomes a debt and thus recoverable once the
Court has made an order
to that effect.
The first ground (setting into motion
a statutory procedure) is certainly not unique. There are many
statutory procedures which are
not excluded from the provisions of
the 1969
Prescription Act. Even
a claim against the Road Accident
Fund is a claim which has been created by a statute.
The
second ground (that the right to recover cannot be ceded) is also not
unique. Many rights cannot be ceded. See
Lawsa
Vol 2 R
. par 254 as
follows:
“
254 Cession
prohibited by statute
Particular statutory provisions may prohibit the cession of
particular rights, for instance a pensioner’s right to his pension
or an insolvent’s right to his earnings. Similarly, the Public
Service Act prohibits the cession of the whole or any part of any
salary or allowance owed to an ‘officer’ or ‘employee’
without the written approval of an accounting officer. The Credit
Agreements Act contains a qualified prohibition: a cession of more
than 25% of the cedent’s income is invalid if made to secure
payments due in terms of a credit agreement. The right to
compensation in terms of the Workmen’s Compensation Act cannot be
ceded
or assigned. The Alienation of Land Act provides that a
cession of the right to payment of an amount payable periodically
under
a contract of service or towards the maintenance of any person,
to secure any payment in terms of a contract, as defined, will be
null and void. Under the old
Prescription Act a
prescribed debt could
not be ceded. A statutory claim which one spouse has against the
other or his or her estate upon the dissolution
of their marriage for
a proportionate share in the accrual of their respective estates, is
not transferable. And the Commissioner
for Inland Revenue, so it has
been held, cannot cede a claim for the payment of income tax.”
Of
more relevance an
actio
injuriarum
can also not be
ceded before
litis
contestatio
. See
Sande
Cession of Actions,
(Anders) p.62 par 11 and
Susan
Scott
‘The Law of
Cession’ 2ed p.188 and authorities there cited. It can surely not
be suggested that the running of prescription
is delayed until
litis
contestatio
.
The third ground (the amount not
fixed) is also not unique. The amount of general damages is never
known until pronounced upon by
a Court.
See
Benson and Another v Walters
and Others
1984(1) 73 (AD)
at p82 A-D:
“
Section
12(1)
of the
Prescription Act 68 of 1969
provides that ‘prescription
shall commence to run as soon as the debt is due’. It is clear
that the date on which a debt becomes
due does not always coincide
with the date on which it arises. In
List
v Jungers
1979 (3) SA 106
(A) at 121, DIEMONT JA remarked that the difference
relates to the coming into existence of the debt on the one hand and
the recoverability
thereof on the other hand. And in
The
Master v I L Back and Co Ltd and Others
1983(1) SA 986 (A) at 1004 the following was said:
‘
The words ‘debt is
due’ in the section (ie
s 12(1))
must be given their ordinary
meaning. It seems clear that this means that there must be a
liquidated money obligation presently
claimable by the creditor for
which an action could presently be brought against the debtor.
Stated another way, the debt must be
one in respect of which the
debtor is under an obligation to pay immediately.’
In
parenthesis it may be pointed out that, if it was intended to
formulate a principle of general application, the words ‘liquidated’
and ‘money’ were clearly used
per
incuriam
,
since is no doubt that prescription runs in regard to unliquidated
claims for damages and also claims not sounding in money. It
should
be borne in mind, however, that in
Back
’s
case the relevant obligation was indeed one to pay a liquidated
amount of money, and that the only question was whether that
amount
was ‘presently claimable.”
See
also
Harker v Fussell and
Another
2002 (1) SA 170
(TPD).
The fourth ground (special defences
which might be raised) is not convincing. It has never been
suggested that the possibility that
special defences to delictual
claims might exist, such as statutory authority or necessity, would
delay the date upon which prescription
would start to run.
Any
any event, even if
Nicholson
J was correct in regard to
section 29
of the
Insolvency Act, section
64 of the Close Corporation Act fortunately does not create so many
problems.
Section 64 of the Close Corporation
Act, (as did the corresponding section in the Companies Act) created
statutory rights and corresponding
liabilities when the business of a
CC is carried out recklessly or with gross negligence or with the
intent to defraud any person
or for any fraudulent purpose.
The
history and development of these rights and corresponding liabilities
which were created in the companies acts of England, Ireland,
Austalia, New Zealand and South Africa, are traced in the well
researched thesis of
Professor
de Koker
.
Following upon the report of the
Greene Committee in 1926, the following section was introduced in the
English Companies Act, 1928
“
If in the course of a
winding-up it appears that any business of the company has been
carried on with intent to defraud creditors
of the company or
creditors of any other person or for any fraudulent purpose, the
court, on the application of the official receiver,
or the liquidator
or any creditor or contributory of the company, may, if it thinks
proper to do so, declare that any of the directors,
whether past or
present, of the company who were knowingly parties to the carrying on
of the business in manner aforesaid shall be
personally responsible,
without any limitation of liability, for all or any debts or other
liabilities of the company as the court
may direct…”
Some amendments were introduced in
1948. In 1986 this section, with amendments thereto, was introduced
into a new
Insolvency Act.
New
Zealand, as did Australia, also
followed the recommendations of the Greene Committee with the
resultant introduction of the ‘fraudulent
trading’ concept. In
1955 section 320 of the New Zealand Companies Act of 1955 read as
follows:
“
(1) If in the course
of the winding up of a company it appears that any business of the
company has been carried on with intent to
defraud creditors of the
company or creditors of any other person or for any fraudulent
purpose, the Court, on the application of
the Official Assignee or
the liquidator or any other creditor or contributory of the company,
may, if it thinks proper so to do,
declare that any persons who were
knowingly parties to the carrying on of the business in manner
aforesaid shall be personally responsible,
without any limitation of
liability, for all or any of the debts or other liabilities of the
company as the Court may direct …”
In South Africa, the concept of
fraudulent trading was introduced into the Companies Act in 1939.
After some amendments in 1952 and
1973 the present section 424(1)
reads as follows:
“
When
it appears, whether it be in a winding-up, judicial management or
otherwise, that any business of the company was or is being
carried
on recklessly or with intent to defraud creditors of the company or
creditors of any other person or for any fraudulent purpose,
the
Court may, on the application of the Master, the liquidator, the
judicial manager, any creditors or member or contributory of
the
company, declare that any person who was knowingly a party to the
carrying on of the business in the manner aforesaid, shall
be
personally responsible, without any limitation of liability, for all
or any of the debts or other liabilities of the company as
the Court
may direct.”
This
section was considered by Schabort J in
Food
& Nutritional Products (Pty) Ltd v Neumans
1986
(3) 464 and he seems to have come to the conclusion that the
previously existing common law action based on fraud had been
codified
by the section.
The judgment reads as follows (at 476
G – 477 A)
“
It
has been submitted on the strength of
Orkin
Bros Ltd v Bell and Others
1921 TPD 92
that the creditors of a company could ‘at common law’
found personal liability against the director of a company for their
‘recklessness
without the necessity of proving a fraudulent intent
in the ordinary sense’ (Hyman ‘Directors’ Liability for
Company’s Debtors’
in 1980 SA
Company
Law Journal at
E4).
With due respect, this view does not in my opinion reflect the
import of the
Orkin
Bros
judgment correctly. According to my understanding of the decision,
the directors were held liable personally on the basis of fraud
and
BRISTOW J, in his concurring judgment, went no further than to point
out that fraud could also be committed with
dolus
eventualis
.
It has moreover been decided recently with pertinent reference to
the
Orkin
case
supra
that ‘save where authorized by statute’ our Courts would ‘at
the present juncture’ not disregard ‘the separate identity
of
companies except upon proof of fraud’. Cf
Lategan and Another NNO v Boyes and Another
1980 (4) SA 191
(T) at 201F-202A.
Upon
proof of fraud it is quite clear, on the authority of the
Orkin
and
Lategan
case
supra
,
that a Court would at the instance of a creditor of a company impose
personal liability on those responsible and who would otherwise
have
been able to shelter behind the corporate façade of the company.
The
effect of the aforegoing is that s 424 must be construed as
comprising a single remedy in respect of a common law right (relating
to fraud) and a statutory right (relating to recklessness) against
the persons contemplated therein. The common law right was codified
to the extend that it was enacted in the provision and the statutory
right was created therein.”
With respect to the
learned judge, I do not agree with his view that “
the common law
right was codified to the extend it was enacted in the provision
”.
See
De Kokersupra
at
p.222-223 as follows:
“’
n
Eiser wat ‘n aansoek ingevolge artikel 424 bring, moet aantoon dat
die betrokke persone wetens deelgeneem het aan die roekelose
of
bedrieglike dryf van besigheid van die maatskappy, maar het nie nodig
om skade of benadeling te bewys ten einde ‘n hofbevel
rakende die
persoonlike aanspreeklikheid van die betrokke persone te verkry nie.
Waar skade wel gely is, hoef geen kousale verband
tussen die skade en
die betrokke skulde of verpligtinge aangetoon te word nie. Die
gemeenregtelike remedie ten aansien van opsetlike
wanvoorstelling is
deliktueel van aard. ‘n Eiser wat hierdie remedie wil benut moet
gevolglik al die deliktuele elemente, waaronder
skade en kousaliteit,
aantoon. Die afwesigheid van hierdie twee elemente in die statutêre
bepaling bring teweeg dat die karakter
van die statutêre remedie so
ingrypend verskil van die deliktuele remedie dat daar kwalik van
kodifisering sprake kan wees.
Artikel 424 kodiseer en
vervang dus nie die gemeenregtelike remedies nie, maar bied ‘n
unieke verhalingsmeganisme vir ‘n skuldeiser
van ‘n maatskappy.
Waar die skuldeiser oor deliktuele remedies teenoor die maatskappy
beskik, stel artikel 424 ‘n addisionele
meganisme tot sy
beskikking. Waar ‘n skuldeiser egter nie oor ‘n deliktuele
remedie beskik nie, aangesien hy nie skade gelei
het of nie ‘n
kousale verband tussen ‘n gewraakte handeling en sy gelede skade
kan aantoon nie, kan hy artikel 424 benut om ‘n
bedrag gelykstaande
aan sy skuldvordering te verhaal, indien hy in staat is om te bewys
dat die betrokke persone wetens deelgeneem
het aan die roekelose of
bedrieglike dryf van besigheid ingevolge die bepaling.”
See also
Howard v
Herrigel and Another NNO
1991(2) SA 660 (AD) at 672 C-G.
In my view, section 64 of the Close
Corporation Act (and the corresponding section in the Companies Act)
created a new remedy or ‘right’
which becomes available to a
creditor in the circumstances set out in the section.
In terms of sections 10, 11 and 12 of
the South African
Prescription Act of 1969
, a debt is extinguished by
prescription after the lapse of the relevant period (ie. three years)
and prescription commences to run
as soon as the debt is due.
A debt shall not be deemed to be due
until the creditor has knowledge of the identity of the debtor and of
the facts from which the
debt arises.
In
Desai NO v Desai and
Another
1996(1) SA 141 (AD)
at 146 it was stated that
“ ‘
Debt’
is not defined in the Act but it has a wide and general meaning, and
includes an obligation to do something or refrain from
doing
something”.
And
as pointed out by
Howie
J (as he then was) in
Cape
Town Municipality and Another v Allianz Insurance Co Ltd
1990 (1) SA 311
(CPD).
“a
right and a debt are, after all merely opposite poles of one and the
same obligation”
The judgment reads as follows at 321
C-F; 324 D-G and 331 C-E
“
It
seems to me that the familiar comprehensive motor insurance policy
affords an appropriate illustration on the present point. It
indemnifies an insured against (a) loss or damage to the motor car
and (b) all sums which the owner shall become legally liable to
pay.
Clearly (a) is property insurance and (b) is liability insurance. In
Boshoff
v South
British Insurance Co Ltd
1951 (3) SA 481
(T) at 487 C-D, the Court said, of the stage when
such indemnities are due:
‘
All
that can ever be ‘due’ to the insured under the policy, all that
he can ever have a ‘right to’ is an indemnity; an indemnity
against loss or damage or an indemnity against sums which he becomes
legally liable to pay. He can only be indemnified, compensated,
when the extent of his loss is known. He only becomes legally liable
to pay a sum when a sum is fixed by a Court or by agreement.’
The
statement in the last sentence in that passage was confirmed in
Pereira’s
case at the above-cited reference and applies to liability insurance.
The penultimate sentence reflects, in my view, the position
in the
case of property insurance, ie the insurer’s debt is due when the
extent of the insured’s loss or damage is known. That
must mean,
in my view, the physical loss, not the final ascertainment of its
pecuniary extent.”
“
In
response, second plaintiff’s counsel argued that one is not dealing
here with a damages claim but a claim for a specific performance
of a
contractual obligation and that the attempted analogy is
inappropriate.
In
my view, the analogy is correctly drawn. An action against an
insurer for wrongful repudiation of an indemnity insurance policy
‘sounds in unliquidated damages rather than in debt’: Ivamy
General
Principles of Insurance Law
5
th
ed at 9. The case of action accrues when the loss is suffered:
Halsbury’s
Law
of England
4
th
ed vol 28 para 622 read with para 669. When the loss has occurred
the insured becomes entitled to enforce the policy and the insurer
becomes liable to pay the amount of the loss:
Ivamy
(op cit at 395)
.
In context, those authorities, in my view, can only mean that the
cause of action accrues when the physical loss is suffered and
not
when the pecuniary extent of the loss is finally ascertained.
Consistent with this conclusion are the
dicta
in
Chandris
v Argo Insurance Co Ltd and Others
[1963] 2 LI LR 72 at 73-4.
Accordingly, the debt was
due when the pipeline was damaged and displaced. Therefore, first
plaintiff’s ground for contending that
defendant’s debt was not
due by 7 October 1984 must fail.”
“
One
must bear in mind that a ‘right’ and a ‘debt’ are, after all,
merely opposite poles of one and the same obligation (
Erasmus
v Grunow en ‘n Ander
1978 (4) SA 233
(O) at 245E). Essentially, therefore, claiming
payment of the debt is no different in principle from enforcing the
right to payment
of the debt. The 1943 Act required that for the
interruption of prescription the process served had to be one whereby
proceedings
were instituted for the enforcement of a right.
Construing that requirement in
Santam
Insurance Co Ltd v Vilakasi
1967 (1) Sa 246
(A) at 253H, the majority of the Court held that the
process envisaged was one whereby action was instituted ‘as a step
in the
enforcement of a claim or right’ whereby the creditor
‘formally involves his debtor in court proceedings for the
enforcement
of his claim.’ “
In my view as soon as it
“
appears
that any business of the corporation was or is being carried on
recklessly, with gross negligence or with intent to defraud
any
person or for any fraudulent purpose …”
and the corporation has debts or other
liabilities, a creditor can enforce the remedy which was created by
section 64. The remedy
is the right to apply to a Court for a
declaration that a particular person or particular persons should
personally be held liable
for all or any of such debts or liabilities
as the Court may direct.
In
England proceedings under the corresponding section must be commenced
within six years of the company going into insolvent liquidation,
which has been held to be the date when the
‘cause
of action accrues’
for
the purposes of the Limitation Act. See
Boyle
& Sykes
,
Gore-Browne
on Companies
vol 2 p.
35.026.
In
Re Maney & Sons De Luxe
Service Station Ltd, Covan V Maney
1969 NZLR 116
the New Zealand Court of Appeal similarly held that
prescription begins to run against the liquidator of a company from
either the
commencement of the winding up or from the appointment of
the liquidator. (The date upon which ‘
the
cause of action accrued
’
in terms of section 4 of the Limitation Act, 1950).
If follows, that in my view, the
exception taken against the plea to the cause of action based on
section 64, must fail.
The exception taken against the plea
to the cause of action based on section 65 must, in my view, and for
similar reasons, also fail.
The third cause of action based on
sections 34(1)
and (3) of the
Insolvency Act is
not a true cause of
action and relates to the action instituted during June, 1995. No
order was sought in relation thereto.
Accordingly, I would dismiss the
exceptions, with costs.
I agree
POTGIETER AJ
The exceptions are dismissed, with
costs.
H C NEL
IN
THE HIGH COURT OF SOUTH AFRICA
(CAPE OF GOOD HOPE PROVINCIAL
DIVISION)
CASE NO: 3029/2001
REPORTABLE
In the matter between:
BURLEY APPLIANCES
LIMITED Plaintiff
And
PATRICIA
ANNE GROBBELAAR N.O. 1
st
Defendant
FUTEK
SYSTEMS CC 2
nd
Defendant
DUNCAN
SWIMBURNE BAIN MARSHALL 3
rd
Defendant
JUDGMENT BY : H C NEL, J
For the Plaintiffs : Adv. O. L.
Rogers
Instructed by : Fairbridge Arderne
& Lawton Inc
For
the 1
st
Defendant : Not represented
For
the 2
nd
& 3
rd
Defendant : Adv. D.W. Gess
Instructed by : Scheibert &
Associates
Date of Hearing : 10 May 2002
Judgment delivered on : 14 July 2003