THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 946/2023
In the matter between:

PICK ‘ N PAY RETAILERS (PTY) LTD APPELLANT
and
GEORGE DA SILVA NO RAMALHO N O FIRST RESPONDENT
AMANDA LINDOKUHLE VILAKAZI NO SECOND RESPONDENT

Neutral citation: Pick ‘n Pay Retailers (Pty) Ltd v Ramalho , NO and Another
(946/2023) [2025] ZASCA 97 (2 July 2025)
Coram: ZONDI AP and UNTERH ALTER and COPPIN JJA and PHATS HOANE
and BLOEM AJJA
Heard : 20 February 2025
Delivered : 2 July 2025
Summary: Liquidation -Concursus creditorum -Mandate given by the seller to the
attorney s to make payment from the proceeds of sale termi nated upon the seller’s
liquidation -the payment made after liquidation was unlawful -appeal dismissed with
costs .

2

___________________________________________________________________
ORDER
___________________________________________________________________
On appeal from: Gauteng Division of the High Court, Johannesburg ( Keightley J,
sitting as court of first instance):
The appeal is dismissed with costs including the cost s of two counsel , where so
employed .
___________________________________________________________________
JUDGMENT
___________________________________________________________________
Zondi AP (UNTERHALTER and COPPIN JJA and PHATSHOANE and BLOEM
AJJA concurring ):

Introduction
[1] This appeal concerns the payment made to a creditor by a third party on behalf
of the seller after the commencement of the seller’s liquidation and pursuant to an
agreement of sale between the seller and the purchaser . The question is whether such
payment was affected by the concurs us credit orum established by the seller’s
liquidation. The Gauteng Division of the High Court , Johannesburg (the high court)
held that the payment was affected by the concurs us and ordered the creditor to repay
to the liquidators the amount it received from the seller’s agent for payment , White &
Case Attorneys . The appeal is with the leave of the high court .

[2] Subsequent to the hearing of the argument on the appeal , the Court directed
the parties to file supplementary heads of argument to address the following questio ns
concerning the p ayment made by the agent for payment :
‘a) Does Clause 6.1 of the Sale of Business Agreement contain a mandate to White &
Case (WC) to make payment of money held in trust on defined terms failing which, does it
contain a mandate to WC to make payment to Pick ‘n Pay?;
b) Does Clause 6.1 provide that in the event of Lashka failing to exercise the mandate in
1 above Lashka authorises Pick ‘n Pay to do so ?;
c) If so, did those mandates end on the winding up of Lashka as per Klein N O1 judgment ?;

1 Klein NO v S outh African Transport Services and Others 1992 (3) SA 509 (W).
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d) If they did, was the payment to Pick ‘n Pay an invalid disposition ?;
e) And if so, was any such claim made in the founding affidavit based on the mandates and
their extinction ?;
f) If so, could it have been pursued without joining White & Case ?;
g) If not, how is this relevant to the resolution of the appeal before the Court ?’
The Court received the suppl ementary heads of argument from both parties for which
it is grateful.

The facts
[3] The appellant is Pick ‘n Pay Retailers (Pty) L imited (Pick ‘n Pay) . The
respondents are the joint liquidators of Lashka 167 (Pty) Ltd (in liquidation ) (Lashka) .
Lashka was placed into final liquidation on 19 February 2018, by virtue of a special
resolution which was submitted to and duly registered with the Companies and
Intellectual Property Commission. Before its liquidation Lashka , as a franchis ee, and
Pick ‘n Pay , as a franchisor , had concluded a franchise agreement , in respect of the
operation of a retail store to trade under the name and style of Pick ‘n Pay Family
Supermarket , San Ridge Square, Midrand (the business) at a monthly franchise fee .

[4] During 2016 and 2017 , Lashka experienced financial distress which resulted in
the business operating at a loss and being unable to pay its creditors , including Pick
‘n Pay , timeously . During August 2017, Pick ‘n Pay launched an application , and was
granted an order, in terms of which it was entitled to perfect a general notarial bond,
which it held in respect of Lashka’s indebtedness . At that stage Lashka was
substantially indebted to Pick ‘n Pay in the amount of R13 536 351,90.

[5] Following its perfection of the general notarial bond , Pick ‘n Pay effectively took
control of the business. Lashka and Pick ‘n Pay continued with settlement discussions
in respect of Lashka’s indebtedness to Pick ‘n Pay. Pursuant to the discussions , it was
agreed that Lashka would sell the business to a suitable third party and Pick ‘n Pay
agreed to assist with procuring potential buye rs. In due course , Pick ‘n Pay procured
Enthrall Trading (Pty) Ltd (Enthrall) , and on 3 November 2017 Lashka and Enthrall
concluded a Sale of Business Agreement ( the agreement ).

4

[6] The express material terms of the agreement were , among others , that Pick ‘n
Pay was required in terms of a suspensive condition to the agreement to consent to
the sale and waive its rights of first re fusal contemplated in the franchise agreemen t.
For the agreement to be given effect to, Pick ‘n Pay was required to consent to the
transaction on the terms of the agreement and to release the security that it had
perfected over the movable assets pursuant to the perfection order, both of which it
duly did. The suspensive condition was met. The purchase consideration payable by
Enthrall for the business was R25 million , which Enthrall had to pay into the trust
account of White & Case Attorneys .

[7] Clause 6 of the agreement provided a mechanism by which the purchase price
was to be disbursed . Since clause 6 is central to the dispute , I shall quote it in full. It
provid es the following:
‘Amount Held in Trust
6.1 White & Case will hold the funds referred to in clause 5.2.1 above ("Held Funds") in
trust for the benefit of the Seller until such time as it releases or pays out same pursuant to
the provisions of clause 6.2 below.
The Seller shall, as soon as may be practicable after the Effective Date, deliver a duly
completed payment instruction (countersigned by the Franchisor) to White & Case instructing
White & Case to apply the Held Funds in settlement of the amounts owed to First National
Bank and Pick ‘n Pay in terms of the Pick ‘n Pay claims (including any and all amounts owing
by the Seller to the franchisor in respect of stock purchased by the Seller from the Franchisor),
as specified in the payment instruction and in the amounts so specified in such payment
instruction, provided that in the event that the Seller fails to timeously deliver the completed
payment instruction/s as contemplated herein, White & Case shall, provided that the payment
instruction/s (i) confirms the amount of the payments to be made thereunder and (ii) is signed
by a representative of the Franchisor, be obliged to proceed with such payments in accordance
with such payment instructions. The Seller hereby irrevocably and unconditionally authorises
(a) the franchisor to deliver such payment instruction and ( b) White & Case to act in
accordance with any -such payments instruction.
Notwithstanding the above, the parties agree that in the event of a dispute in respect of the
amounts owing by the Seller, the franchisor will not sign off the payment instructions until such
time that the dispute is resolved .
6.2 The balance of the Held Funds (if any) remaining after payment of the amounts
contemplated in clause 6.1 above shall, upon receipt of written instructions from the Franchisor
5

to that effect, be released and paid by White & Case into the Seller's Bank Account. The
Franchisor shall deliver such written instructions to White & Case as soon as the franchisor is
satisfied that all business creditors have been settled in full.
6.3 Simultaneously with the release of the Held Funds as contemplated above, White &
Case shall release to:
6.3.1 the purchaser all interest, if any, which accrued to such amount/s from the date of
deposit thereof up until the effective date; and
6.3.2 the Seller all interest, if any, which accrued to such amount/s from the effective date
up until the date of release of such funds.
6.4 The parties hereby authorise White & Case to rely, without enquiry, on any
instruction/notice contemplated in clause 6.1 (including a facsimile message) which appears,
on the face of it, to be signed by and on behalf of the Seller and/or the Franchisor, as the case
may be.
6.5 The benefits accruing to White & Case in terms of this clause 6 are deemed to have
been imposed as a stipulatio alteri for the benefit of White & Case and may be accepted by
White & Case at any time.’

[8] Lashka unconditionally gave Enthrall , among others, the following warranties:
‘19 .2.1 Save in respect of those assets forming the subject matter of the Instalment Sale
Agreements only, the Seller is, as at the Effective Date, the sole and beneficial owner of the
Fixed/Movable Assets and has the right and, save as otherwise contemplated in this
Agreement, is able to sell and give free and unencumbered title to the Fixed/Movable Assets
to the Purchaser.
19.2.3 Save for the general notarial bond registered over the movable assets of the Business
in favour of the Franchisor and the encumbrances listed in Annexure "F" hereto, none of the
Fixed/Movable Assets or Stock are or will be subject to any reservation of ownership, lease,
lien, hypothec, mortgage, notarial bond, pledge or other encumbrance whatsoever.
19.2.4 Save for the Franchisor, no person has any right (whether pursuant to any option, right
of first refusal or otherwise) to purchase or acquire (whether as security or otherwise) any of
the Fixed/Movable Assets or Stock other than the right to purchas e trading stock in the normal
course of business for value.
19.2.20 As at the Effective Date, the Seller will not, in respect of the Business, be engaged in
any litigation, arbitration or criminal proceedings other than the proceedings for the collection
of debts from trade debtors in the ordinary course of busines s and the legal proceedings
stipulated in Annexure G hereto. Having made all reasonable enquiries, the Seller is not aware
6

of any facts, matters or circumstances which may give rise to any such litigation, arbitration or
criminal proceedings. ’

[9] It is common cause that Enthrall paid the purchase consideration of R25 million
into the trust account of White & Case . On 26 November 2017 , the business of Lashka
was transferred to Enthrall and E nthrall took possession of the business. First National
Bank (FNB) was paid in full. On 5 December 201 7, a first payment instruction was
completed , signed and delivered by Lashka to White & Case for the settl ing of the FNB
term loan . On 12 December 2017 , Lashka completed, signed and delivered to White
& Case a second payment instruction for the settlement of the FNB overdraft facility.
However , Lashka failed to deliver to White & Case a payment instruction regarding a
payment to Pick ‘n Pay , and by the time of its liquidation on 19 February 2018 it had
not done so. In consequence , on 25 June 2019 Pick ‘n Pay proceeded to sign and
deliver the payment instruction to White & Case in terms of clause 6 of the agreement
and was paid R 21 627 758.91 on 2 July 2019. This wa s a year after the appointment
of the respondents as liquidators.

[10] The dispute arose between the respondents and Pick ‘n Pay regarding the
latter’s entitlement to retain the amount paid to it by White & Case after Lashka’s
liquidation . As a result, on 17 February 2022 the respondents brought an application
against Pick ‘n Pay in the high court seeking payment of R21 627 758, 91 plus interest
and costs.

[11] Pick ‘n Pay opposed the application . It denied that it was liable to repay the
amount claimed by the respondents. I n addition to disput ing the claim on the merits ,
Pick ‘n Pay also raised points in limine . It contended that the respondents had failed
to make out a case for the relie f they sought . This contention was based on the
grounds , first, that s 32 of the Insolvency Act 24 of 1936 (the Insolvency Act) on which
the respondents rel ied, is not the correct section to invoke in seeking to impeach
dispositions under ss 26, 29 , 30 and 31 of the Insolvency Act. Second, in light of
serious disputes of fact on the papers , the respondents should have proceeded by
way of action instead of motion proceedings .

7

[12] As regards the merits , Pick ‘n Pay contended that it was entitled to retain the
payment it received from White & Case as such payment was made and received
pursuant to an uncompleted executory contract which the respondents had elected to
abide by . The paym ent, according to Pick ‘n Pay, was thus unaffected by the concursus
creditorum established by Lashka’s liquidation. The respondents , concluded Pick ‘n
Pay, are bound by the p ayment terms under clause 6 and are precluded from claiming
repayment of the amount.

The high court’s findings
[13] The high court rejected Pick ‘n Pay’s defences and granted the order sought by
the respondents. According to the high court , clause 6 does not preclude the
respondents from claiming repayment of the amounts paid to Pick ‘n Pay. Despite its
terms , the essential nature of the agreement was that of an ordinary sale and purchase
of a business. To the extent that the agreement was executory in nature this applied
only to the legal relationship vis -a-vis the purchaser and the seller under the
agreement. The reciprocal rights and obligation s, reasoned the high court, established
under the agreement were solely between Ent hrall and Lashka. The high court held
that once liquidation intervened , Pick ‘n Pay’s legal position under clause 6 was no
different to that of any other creditor to whom payment of a debt remain ed outstanding .
The high court concluded that Pick ‘n Pay was not entitled to exercise its rights under
clause 6.1 by signing and delivering a payment instruction to White & Case . Its rights
were limited by the concursu s to participation in the insolvent estate as a creditor .

Contentions of the parties
[14] Pick ‘n Pay attack s the findings and conclusions reached by th e high court and
persists before this Court with the defen ces it raised in the high court. Pick ‘n Pay
submit s that the high court ought to have upheld the point in limine that the
respondents ’ affidavits failed to disclose a cause of actio n. And further that it erred in
finding , first, that the respondents disputed that the contract was an uncompleted
executory contract when in their replying affidavit the respondents admitted th is fac t;
and second, that the reciprocal rights and obligation s established under the agreement
were solely between Enthrall and Lashka and that upon payment of the purchase price
and the delivery of the business to Enthral , the contract was complete d.

8

[15] In response to the questions posed by the Court , which are referred to in para
2 above, Pick ‘n Pay submits that cl ause 6.1 of the agreement contains a mandate by
Lashka and Enthrall to White & Case and authority by Lashka to Pick ‘n Pay to exercise
the mandate in the event of Lashka failing to exercise the same. It argues that if the
agreement is found to be an executory agreement , which the respondents abided , the
mandate given to White & Case, and the authority of Pick ‘n Pay did not end on the
winding -up of Lashk a. The agreement, in all respects, remained extant. But if the
agreement is found not to be an executory agreement , which the respondents abided
by, the mandate to White & Case ended upon the winding -up of Lashka , and so did
the authority given to Pick ‘n Pay. Pick ‘n Pay co ntends, however , that the termination
of mandate and authority was not pleaded by the respondents.

[16] In response , the respondent s submit that the agreement was completed. The
purchase price was paid and the business was transferred to Enthrall prior to the
winding -up of Lashka . The payment made to Pick ‘n Pay after the liquidation of Lashka
was irregular and disregard ed the concurs us. The respondent s argue that the
mandate provided for in clause 6.1 of the agreement came to an end on the winding -
up of Lashka. The y conten d further that given that the mandate pertained to the
payment of Lashka’s funds , on liquidation such funds could not have been dispersed
contr ary to the rights of the general body of creditors . The mandate automatically
terminated on Lashka being wound -up.

Issues
[17] Two main issues arise for consideration in this appeal. The first is whether th e
respondents’ affidavits disclose d a cause of action and the second is whether , on its
proper inter pretation , the agreement was an uncompleted executory contract and
whether the respondents had elected to abide by it.

[18] As regards the first point taken by Pick ‘n Pay , it is correct that the affidavits in
motion proceedings serve to define not only the pleaded issues between the parties,
but also to place the essential evidence before the court for the benefit of not only the
9

court, but also the parties. The y must contain factual averments that are sufficient to
support the cause of action on which the relief that is being sought is based .2

[19] It is clear from the respondents’ affidavit s that they aver that the payment that
was made by White & Case to Pick ‘n Pay , on the latter’s instruction , fell to be set
aside on the basis that it was made in disregard of the concursus credito rum
established by the liquidation of Lashka . Such payment constituted a disposition and
that Pick ‘n Pay was ‘not entitled to help itself to the funds of Lashka after it became
aware of its liquidation.’

[20] In Walker v Syfret 3 the effect of winding up was considered and it was held :
‘The effect of a winding­up order is to establish a concursus creditorum , and nothing can
thereafter be allowed to be done by any of the creditors to alter the rights of the other creditors.
If a debt owing by the insolvent company to one creditor has been extinguished by
compensation, he cannot, merely because the debt arises out of a negotiable instrument, be
allowed to deprive the other creditors of the benefit of such extinguishment by reviving it by
means of a cession to a third party. ’

[21] The court went on to hold4:
‘The object of the Insolvent Ordinance is to ensure a due distribution of assets among creditors
in the order of their preference. And with this object all the debtor ’s rights are vested in the
Master or the trustee from the moment insolvency commences. The sequestration order
crystallises the insolvent's position; the hand of the law is laid upon the estate, and at once
the rights of the general body of creditors have to be taken into consideration. No transaction
can thereafter be entered into with regard to estate matters by a single creditor to the prejudice
of the general body. The claim of each creditor must be dealt with as it existed at the issue of
the order. Now , to deprive the estate of a valid defence to a claim against it is as prejudicial to
the creditors as to take from it the most tangible asset of corresponding amount. ’


2 Die Dros (Pty) Ltd and Another v Telefon Beverages CC and Others [2002 ] ZAWCHC 53; [2003] 1
All SA 164 (C); 2003 (4) SA 207 (C) at para 28.
3 Walker v Syfret 1911 AD 141 at 160.
4 Ibid at 166.
10

[22] The principles in Walker v Syfret have been consistently applied by our courts.
In Pride Milling Company (Pty) Ltd v Bekker NO and Another5 this Court was
concerned with the dispositions made by a company after the grant of a provisional
winding -up order . This Court held that such payments cannot be validated in terms of
s 341(2) of the Companies Act 61 of 19 73. Petse DP , writing for the Court, explained
that to validate such payments would render nugatory the operative part of s 341(2),
in terms of which dispositions made by a company being wound up a re void and would
also have the effect of undermining the essence of the concursus creditorum , and
indeed the substratum of insolvency law .6 He stated that this would mean that the
recipient ‘would be left to enjoy the benefits of its claim being s ettled in full, while other
creditors would have to be content with whatever residue might still be available ’.7

[23] In Administrator, Natal v Magill, Grant & Nell (Pty) Ltd (In Liquidation)8 it was
held:
‘Plaintiff company was at all material dates unable to pay its debts in full, and upon its
liquidation during August 1966 a concursus creditorum was established ( Walker v. Syfret ,
N.O., 1911 A.D. 141 at p. 160, and secs. 181 and 182 of the Companies Act, 46 of 1926). In
a concursus "the claim of each creditor must be dealt with as it existed at the issue of the
order" (per INNES, J.A., in Walker v. Syfret, N.O., supra at p. 166). Included among plaintiff
company's concurrent creditors were the two aforementioned nominated sub -contractors.
Defendant's action in paying them direct, and in thereafter deducting the amount so paid from
his indebtedness to the pl aintiff, not only converted the two nominated sub -contractors into
preferent creditors receiving payment in full, but, as is obvious, it also reduced the amount
available for distribution by the liquidator amongst the general body of concurrent creditors
(including the two aforementione d nominated sub -creditors) by the R3,060.42 so paid. Once
the liquidation supervened, the two nominated sub -contractors were only entitled to receive
from their debtor (plaintiff company) whatever dividend was ultimately awarded to its
concurrent creditors . By paying them in full after liquidation had already supervened,
defendant thus enabled the nominated sub -contractors to receive more than they were legally
entitled to claim. ’9


5 Pride Milling Company (Pty) Ltd v Bekker NO and Another [2021] ZASCA 127; [2021] 4 All SA 696
(SCA); 2022 (2) SA 410 (SCA).
6 Ibid p ara 19.
7 Ibid p ara 20.
8 Administrator, Natal v Magill, Grant & Nell (Pty) Ltd (In Liquidation) 1969 (1) SA 660 (A).
9 Ibid at 671F – 672A .
11

[24] I accept that the ca use of action is inelegantly pleaded in the respondents’
affidavit , but if the averments in the founding affidavit are carefully analysed , it
becomes clear that the respondents’ case is that the payment to Pick ‘n Pay was made
in a manner and at a time that disregard s the concurs us. The complaint is that the
payment made in these circumstances had the effect of preferring Pick ‘n Pay and
caus ing prejudice to the general body of Lashka’s creditors. The claim was thus based
upon the principles applicable to a concursus creditorum. Pick ‘n Pay’s first point must
therefore fail.

[25] The second defence raised by Pick ‘n Pay is that the agreement is an
uncompleted executory contract and that as the respondents had elected to abide by
it, the contract remained unaffected by the creation of the concurs us. This Court in Du
Plessis and Another NNO v Rolfes Ltd10 had this to say regarding the effect of
insolvency on uncompleted contracts :
‘At common law a liquidator or trustee is not bound to perform unexecuted contracts
entered into by an insolvent before insolvency unless he, in conjunction with the general
body of creditors, considers that such performance will be in their interests (see, for
example, Uys and Another v Sam Friedman Ltd 1934 OPD 80 at 85; Ex parte Liquidators
of Parity Insurance Co Ltd 1966 (1) SA 463 (W) at 470F­­H and Montelindo Compania
Naviera SA v Bank of Lisbon and SA Ltd 1969 (2) SA 127 (W) at 141C­­142A). If a trustee
elects to abide by an executory contract he must of course perform all the obligations of
the insolvent. He must also give reasonable notice of his intention to continue with the
contract, otherwise the other party to the contract may treat the contract as being at an
end (Tangney and Others v Zive's Trustee 1961 (1) SA 449 (W) at 452­­3) and hold the
insolvent estate liable for any damages that it might have suffered as a consequence
thereof. The claim for such damages is a concurrent one and does not form part of the
costs of administration. As pointed out by Friedman J in Smith and Another v Parton NO
1980 (3) SA 724 (D) at 728 in fine ­­729B,
“. . . there is nothing in the law of insolvency which affects uncompleted contracts in general;
the contract is neither terminated nor modified nor in any other way altered by the insolvency
of one of the parties (cf Uys and Another v Sam Friedman Ltd 1935 AD 165) except in one
respect, and that is that, because of the supervening concursus , the trustee cannot be
compelled by the other party to perform the contract. Put somewhat differently, this means

10 Du Plessis and Another NNO v Rolfes Ltd [1996] ZASCA 45; 1997 (2) SA 354 (SCA); [1996] 2 All
SA 390 (A) at 363E -J.
12

that the contract survives the insolvency and, save in the respect mentioned, the trustee
steps into the insolvent's shoes. The rule that a trustee has a right of election whether or
not to abide by the contract is no more than one aspect of the application of this legal
principle that I have enunciated.' ”

[26] Recently , in Ellerine Brothers (Pty) Ltd v McCarthy Ltd 11 this Court considered
the effect of insolvency on uncompleted executory contracts and explained it in these
terms :
‘Following on the insolvency of the lessee the position is governed by the ordinary principles
of the common law which apply when a party to an executory contract goes insolvent. As in
the case of any other uncompleted contract, the liquidator inherits the lease in its entirety. The
creation of the concursus creditorum therefore does not terminate the continuous operation of
a lease agreement to which the insolvent is a party. The concursus neither alters nor suspends
the rights and obligations of the partie s thereunder and the liquidator, as the universal
successor, steps into the shoes of the insolvent and does not acquire any rights greater than
those of the insolvent. This means that the liquidator must perform whatever is required of the
insolvent in ter ms of the lease, including unfulfilled past obligations of the lessee. ’12

[27] This Court went on further to state:
‘The intended aim of the concursus , or as it has also been described, the ‘community of
creditors’, created immediately upon the liquidation of the insolvent, is to give equal protection
to all the creditors without undue preference and to preserve and distribute the estate to the
benefit of all of them. To give effect to the concursus , the liquidator must decide whether it
would be to the benefit of the community of creditors to continue to perform the inherited
obligations of the insolvent under an uncompleted contract. He may elect not t o do so. In that
event a consequence of the concursus is that the other party to the contract cannot demand
performance by the liquidator of the insolvent’s contractual obligations. The statement,
‘frequently encountered, that a trustee or a liquidator in insolvency has a “right of election”
whether or not t o abide by a contract’ means no more than that by reason of the existence of
the concursus ‘the other party cannot exact specific performance against the trustee or
liquidator if the latter should decide to abandon the contract’. The act of the liquidator in
deciding not to continue the lease constitutes ‘. . . a repudiation of the contract, which would
have afforded the lessor . . . the right, concurrently with other creditors, to claim from the
liquidat or the payment of damages for the non -performance by the company of its contractual

11 Ellerine Brothers (Pty) Ltd v McCarthy Ltd 2014] ZASCA 46; 2014 (4) SA 22 (SCA) .
12 Ibid p ara 10 .
13

obligations’. The claims of the other contractant are therefore reduced by the concursus to a
monetary claim and participation in the insolvent estate as a concurrent creditor, where it is
treated on the same basis as all the other creditors in the insolvent estate. ’13
. . . .
‘. . . As stated in Porteous ‘after the concursus occurs, the trustee steps into the shoes of the
insolvent, and the trustee is then obliged to perform whatever is required of the insolvent in
terms of the contract, including unfulfilled past obligations of the insolvent’. It is only in the
event of the liquidator making an election not to abide by the uncompleted contract that the
lessor, because of the concursus , cannot compel performance. Absent such an election, the
terms of the lease remain in place and the liquidator must comply with it.’14

[28] Pick ‘n Pay accepted that it was not a party to the contract , notwithstanding the
role it played in its conclusion , which included the right to decide whether to approve
of or reject a purchaser proposed to it by Laksha ; a right to receive payment of its
claims against Lashka from the proceeds of sale held by White & Case and the
authority to instruct White & Case to pay it in the event of Lashka’s failure to give
similar instruction s to White & Case . But d espite this acceptance , Pick ‘n Pay
nevertheless submit s that the right s which it derived from clause 6 of the agreement ,
including the right to receive payment from the proceeds of sale, are directly
enforceable rights . It is correct that c lause 6 of the agreement impose s an obligation
on White & Case to pay Pick ‘n Pay on Lashka’s written pay ment instructions, failing
which, on Pick ‘n Pay’s written payment instructions and that by the time of its
liquidation Lashka had not discharged its obligation . Proceeding from this premise,
Pick ‘n Pay argue s that to the extent that its payment remained outstanding as at the
time of Lashka’s liquidation , the agreement was uncomplete d and remained
unaffected by the creation of concurs us since the respondents had abided by it.

[29] I am prepared to assume in favour of Pick ‘n Pay that although it was not a party
to the agreement it nevertheless derived directly enforceable rights from the
agreement , including the right to be paid its claims against Lashka . This was facilitated
by Lashka and Enthrall agreeing for the payment instruction s to be given to White &
Case by Lashka , and in the event of Lashka failing to timeously deliver such payment

13 Ibid para 11 .
14 Ibid para 13 .
14

instruction s, by Lashka irrevocably and unconditionally authorising Pick ‘n Pay to
deliver payment instruction s to White & Case , and for the latter to act in accordance
with such instruction s.

[30] The funds held by White & Case belonged to Lashka and were to be dealt with
in accordance with Lashka’s instructions , failing such , on Pick ’n Pay ’s instruction s.
Pick ‘n Pay ’s authority to give payment instructions to White & Case was conferred on
it by Lashka in the event of the latter’s failure to timeously give such instructions . The
mandate that was given by Lashka to W hite & Case to make payment from the
proceeds of the sale and given to Pick ‘n Pay to issue payment instructions to White
& Case terminated with the liquidation of Lashka . White & Case ’s mandate to keep
funds on behalf of Lashka and to make payment to FNB and Pick ‘n Pay terminated
upon the insolvency of Lashka , its principal (Klein NO ;15 Goodricke & Son v Auto
Protection Insurance Co Ltd16). Being Lashka’s agent , White & Case was not permitted
to execute the instruction s given to it by Pick ‘n Pay and the latter , as Las hka’s agent ,
was not permitted to issue payment instructions to White & Case after Lashka’s
insolvency. Whatever mandate White & Cas e might have obtained from Lashka to
keep funds and to pay FNB and Pick ‘n Pay from such funds , such mandate could not
still have been in force after the li quidation of Lashka. Therefore clause 6.1 , which is
the source of Pick ‘n Pay ’s authority to give payment instruction s to White & Case and
to receive payment from them and the concomitant obligation by White & Case to
honour such instruction, did not survive Lashka’s liquidation . This must be so since
the effect of authority for White & Case to make payment without regard to the rights
of other creditors, would be t o prejudice such creditors. The contract was not executory
because the sale of business had been performed, and the mandate simply gave
authority to White & Case to make payment from the proceeds of the sale. That
mandate confers authority; it does not require performance and hence is not executory
in nature. The payment made to Pick ‘n Pay , on its instruction s, after the liquidation of
Lashka , was unla wful. It follows , therefore , that the money received by Pick ‘n Pay
must be re paid to the respondents .


15 Klein NO 513B -C.
16 Goodricke & Son v Auto Protection Insurance Co Ltd (in liquidation)1968(1) SA 717 (A) at 722H -
723A.
15

Order
[31] In the result , I make the following order:
The appeal is dismissed with costs including the cost s of two counsel , where so
employed.

____ _____ ________
D H ZONDI
ACTING PRESIDENT
16

Appearances

For the appellant: JE Smit SC
Instructed by: DLA Piper South Africa (RF) Inc
Symington De Kok, Bloemfontein

For the respondents : AJ Daniels SC and C de Villiers -Golding
Instructed by: Richter Attorneys, Rosebank
Pieter Skein Attorneys, Bloemfontein .