Kevin & Lasia Property Investments CC and Another v Roos NO and Others (480/2002) [2003] ZASCA 149; [2004] 1 All SA 380 (SCA) (1 December 2003)

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[2003] ZASCA 149
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Kevin & Lasia Property Investments CC and Another v Roos NO and Others (480/2002) [2003] ZASCA 149; [2004] 1 All SA 380 (SCA); 2004 (4) SA 103 (SCA) (1 December 2003)

THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
REPORTABLE
CASE NO: 480/2002
In
the matter between:
KEVIN & LASIA PROPERTY
INVESTMENTS CC FIRST APPELLANT
ABSA
BANK LIMITED
SECOND
APPELLANT
and
ANTON
ROOS N.O.
FIRST
RESPONDENT
P
B VAN ROOYEN N.O. SECOND RESPONDENT
THE
REGISTRAR OF DEEDS
PRETORIA
THIRD RESPONDENT
CORAM: HOWIE P, NAVSA, MTHIYANE, CLOETE and LEWIS JJA
HEARD:
18 NOVEMBER 2003
DELIVERED: 1
DECEMBER 2003
Summary: Withdrawal of admission – Applicability of
s 34(1)
of the
Insolvency Act 24 of 1936
.
JUDGMENT
MTHIYANE JA:
MTHIYANE JA:
[1]
This appeal concerns the provisions of 34 (1) of the
Insolvency Act
24 of 1936
read with the definition of ‘trader’ in
s 2
thereof;
and the withdrawal of an admission made in argument.
[2]
The respondents are the liquidators of a
company, I J van der Lith Family Holdings (Pty) Limited (‘the
company’). The appeal
arises from an application launched by them
in the Transvaal Provincial Division (before Southwood J) against the
first and second
appellants and the Registrar of Deeds, Pretoria, for
an order setting aside the transfer by the company to the first
appellant of
certain immovable property over which a bond was
registered in favour of the second appellant.
[3]
The facts giving rise to the application are
the following. On 25 February 2000 the company, represented by Mr
Izak van der Lith,
concluded a written agreement of sale with the
first appellant (‘the purchaser’) pursuant to which certain
immovable property
known as OK Sentrum (‘the property’) was sold
for R7 700 000 and transferred to the purchaser on 29 June 2000. A
mortgage bond
for R7 825 000 was passed over the property in favour
of the second appellant (‘Absa’). The sale and transfer were not
preceded
by the publication of a notice as contemplated by
s 34
(1)
of the Act.
[4]
The company was provisionally liquidated on
21 November 2000 and a final liquidation order was made on 23
November 2000, barely
five months after the transfer. The
liquidators claimed that the transfer was a nullity as against them
and the company’s creditors
in that the notice provisions of
s 34
(1) had not been complied with.
Section 34
(1) provides:
‘
34 Voidable sale of business
(1) If a trader transfers 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 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 as against the trustees of his
estate, if his estate is sequestrated at any time within the said
period.’
[5]
A trader is defined in
s 2
of the Act and the
definition is quoted and discussed in paras [13] and [14] below.
[6]
The purchaser and Absa admitted that a
notice of transfer was not published as provided in
s 34
(1) but
adopted the stance that the section was not applicable to the
transaction because it was in the ordinary course of business.
Mr
Kevin Stefanus Luther who deposed to an opposing affidavit on behalf
of the purchaser, stated that the company was merely a property
owner
whose only asset, comprising six erven situated in Edleen Township,
Kempton Park was let out to tenants in order to generate
income. He
described its business as follows:
‘…Die feitlike posisie is dat die verhuring van die persele op
die erwe gekoppel was aan die insolvente maatskappy se eienaarskap
van die erwe en kon daar sonder nie geskied nie. Dieselfde is waar
van die Eerste Respondent [the purchaser] se huidige eienaarskap
van
die betrokke erwe.’
‘Die betrokke transaksie [sale and transfer]
het
geskied in die gewone loop van die besigheid van die insolvente
maatskappy. Soos reeds vermeld was die verkoper [the company]
‘n
“property holding” maatskappy met enigste noemenswaardige bates
die erwe en verbetering daarop, welke erwe aan die Eerste
Respondent
[the purchaser]
verkoop is.’
[7]
When the matter came before Southwood J the
purchaser and Absa, through counsel who then represented them,
admitted that the company
was a trader within the meaning of the Act.
The terms of the admission were:
‘dat die eerste en tweede respondente [the purchaser and Absa]
formeel erken dat die
maatskappy ‘n handelaar was soos beoog in Artikel 34 (1) van die
Wet.’
On the available common cause facts which, it would
seem, might not present the full picture, the admission would appear
to be incorrect.
In the founding affidavit deposed to by first
respondent, the liquidators would appear to accept that the property,
comprising a
shopping complex, was purchased for the sole purpose of
conducting a letting business in order to generate income. That,
without
more, would not fall within the definition of ‘trader’
for the reasons discussed below in paras [13] and [14].
[8]
Counsel then proceeded to identify to the
learned judge what they considered to be the only remaining issue in
the case. This was
whether the transfer of the property occurred in
the ordinary course of its business in accordance with
s 34
(1) of
the Act.
[9]
The judge
a quo
found that the
transfer of the property from the company to the purchaser did not
occur in the ordinary course of its business and
held that
s 34
(1)
was applicable. He duly granted an order declaring the transfer, and
the subsequent registration of the bond in favour of Absa,
void
against the liquidators and the company’s creditors in terms of
s
34(1).
[10]
The purchaser and Absa applied for leave to
appeal on a number of grounds, including that the company was not a
trader as contemplated
in
s 2
of the Act. The court granted leave to
appeal to this Court on all grounds but for the question whether or
not the company was a
trader at the time of transfer. In refusing
leave to appeal on that ground, the judge said that the formal
admission made by the
purchaser and Absa during the hearing that the
company was a trader, was binding on them. He reasoned as follows:
‘Hierdie formele erkenning is gemaak om die verrigtinge te verkort
en klaarblyklik nadat die respondente [the purchaser and Absa]
hulle
saak behoorlik oorweeg het. Daar was tydens die argument voor my
geen poging om die formele erkenning terug te trek nie.
Daar was
geen substantiewe aansoek om die erkenning terug te trek nie en daar
is geen eedsverklaring geliasseer om die bewering dat
die erkenning
verkeerdelik gemaak is, te staaf nie. Die applikante kan nie
eenvoudig die erkenning ignoreer asof dit nie gemaak
is nie. Hulle
is gebonde daaraan.’
[11]
Because of the admission referred to above
the judge
a quo
did not deal with the question whether the
company was a trader as defined. If the answer to that question is
in the affirmative,
then
s 34
(1) was applicable and notice had to be
published before transfer was effected in order to give the creditors
of the company an opportunity
to oppose, if they so wished, to avoid
any possible prejudice to the creditors.
1
In the appeal the issue is primarily whether the purchaser and Absa
are entitled to withdraw the admission that the company was a
trader.
[12]
It seems to me that one must consider the
context in which the admission was made. Having regard to that
context, the admission
did not require a formal withdrawal. In the
circumstances in which it was made the admission amounted to no more
than an election
not to pursue a particular line of argument on
available facts. There is no suggestion that, because of the
admission, the liquidators
failed to place further facts before the
court – on the contrary, before the admission was made, they had
elected not to deliver
a replying affidavit. No question of
mala
fides
can arise. The admission could therefore be withdrawn on
appeal.
[13]
In
s 2
of the Act a trader is defined as
follows:
‘ “
trader”
means any person who carries on any trade,
business, industry or undertaking in which property is sold, or is
bought, exchanged or
manufactured for purpose of sale or exchange, or
in which building operations of whatever nature are performed, or an
object whereof
is public entertainment , or who carries on the
business of an hotel keeper or boarding-housekeeper, or who acts as a
broker or agent
of any person in the sale or purchase of any property
or in the letting or hiring of immovable property; and any person
shall be
deemed to be a trader for the purpose of this Act (except
for the purposes of subsection (10) of section
twenty one
)
unless it is proved that he is not a trader as hereinbefore defined :
Provided that if any person carries on the trade, business,
industry
or undertaking of selling property which he produced (either
personally or through any servant) by means of farming operations,
the provisions of this Act relating to traders only shall not apply
to him in connection with his said trade, business, industry
or
undertaking’.
[14]
Counsel on behalf of the liquidators
submitted that the definition of ‘trader’ can be interpreted as
meaning ‘any person who
carries on any business in the letting or
hiring of immovable property’. There are several problems with this
submission. The definition
commences with the words ‘‘‘trader’’
means any person’. There follow a numbers of clauses which commence
with the word
‘who’ and thereafter, the words ‘or who,’ i.e.
‘who carries on any trade … or who carries on the business … or
who
acts as a broker’. Each clause is separate and distinct from
the others. The interpretation suggested necessitates taking the verb
in the first clause as referring to the last clause. That is simply
not permissible. Nor is the result it produces sensible English:
‘“Trader” means any person who carries on any … business …
in the letting or hiring of immovable property’. The (signed)
Afrikaans version produces a worse result: ‘“Handelaar” beteken
iemand wat ‘n … bedryf … dryf … by die huur or verhuur
van
onroerende goed’.
[15]
It was also submitted that there is no
apparent reason why a business consisting of a letting or hiring of
immovable property should
be excluded. But it cannot be submitted
that the omission results in an absurdity entitling a court to fill
the
lacuna
. It might equally be asked why the legislature did
not include, as it obviously did not, a person who acts as a broker
or agent of
any person in the letting and hiring of movable property.
In the absence of some factor common to the enterprises which are
included
– and there is none – a court cannot add to the list on
the basis that the omission was an obvious legislative oversight.
[16]
Counsel for the liquidators asked, in the
event that his other arguments were not upheld, for an opportunity to
consider whether
a replying affidavit should be filed but at the same
time indicated that the respondents might be unable to file a
replying affidavit,
in which case he asked that there be built into
the order some provision that would bring an end to the litigation.
In my view it
would be fair to grant him that indulgence in view of
the manner in which the matter was handled by the parties in the
court below.
[17]
Southwood J
as I have said refused leave to appeal on the
ground that the company was not a trader. His approach to the
admission was wrong,
and leave should therefore be granted by this
Court on the point so as to enable this Court to set aside that order
and to refer
the matter back to the court
a quo
for any
further facts to be placed before the court. That would enable an
informed decision to be taken as to whether the company
is or is not
a ‘trader’ as defined in
s 2
of the Act.
[18]
Southwood J granted leave on the basis
that it is arguable that another court may come to a different
conclusion on the question of
whether the property was disposed of in
the ordinary course of business of the company. That question is
tied up with the bigger
question of whether the company was a
‘trader’ as defined and should accordingly be dealt with by the
court when finally deciding
the application.
[19]
As to the costs, the purchaser and Absa have
been successful and are entitled to the costs of the appeal. The
point on which this
appeal will succeed was taken by them in their
heads of argument and the liquidators did not abandon the order of
the court
a quo
. In regard to the costs of the application in
the court
a quo
it seems to me that these should be costs in
the cause. Justice will be served by referring the matter back to the
court
a quo
and whichever party then succeeds would be
entitled to costs of the application.
[20]
Accordingly the appeal succeeds and the
following order is made.
1. Leave to appeal on the question whether the company
was a trader as defined in
s 2
of the Act is granted and the costs of
the application are made
costs in the appeal.
2. The appeal succeeds with costs including, in the case
of Absa, the costs of two counsel.
3. The order of the court below is set aside.
4. The matter is remitted to the court below (and may be
heard by any judge
of that court).
5.1 The appellants are ordered jointly and severally to
pay the costs of the hearing before the court below.
5.2. The remaining costs of the application will be
costs in the cause.
6.1 The respondents are given leave to deliver a
replying affidavit within fifteen
days of the date of this order or such longer period as
may be agreed by the parties or ordered by the court below on good
cause shown.
6.2 If a replying affidavit is not delivered as
aforesaid, the respondents will be
deemed to have abandoned the application and the
respondents in their representative capacity will be liable for the
costs of the
application (save for the costs referred to in paragraph
5.1 above).
__________________
KK MTHIYANE
JUDGE OF APPEAL
CONCUR:
HOWIE
P
NAVSA
JA
CLOETE
JA
LEWIS
JA
1
c
f. Kelvin Park Properties CC v Paterson NO
2001 (3) SA 31
(SCA) para 15.