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[1993] ZASCA 198
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Leipsig v Bankorp Ltd. (377/92) [1993] ZASCA 198; 1994 (2) SA 128 (AD); [1994] 2 All SA 150 (A) (1 December 1993)
case no: 377/92
IN
THE S
UPREME COURT OF SOUTH AFRICA
(
APPELLATE DIVISION
)
In the matter between:
RONALD CONRAD LEIPSIG
Appellant
AND
BANKORP
LIMITED
Respondent
Coram
: HOEXTER, NESTADT, EKSTEEN, JJA, NICHOLAS
et
HARMS,
AJJA
Heard
: 19 November 1993
Delivered:
1 December 1993
JUDGMENT
EKSTEEN
, JA :
On 27 August 1986 the appellant, acting in his
capacity as a director of William Lipsey and Sons (Pty) Ltd, ("the principal
debtor")
signed an acknowledgment of debt in which he acknowledged that the
principal debtor was indebted to the respondent in the sum of
R74 769.64. The
principal debtor also undertook to pay this amount, together with such finance
charges as respondent might stipulate
from time to time, in instalments, and, in
the event of a breach or non-performance of any term by it, the full amount owed
would
become due and payable
..../ 2
2
At the same time appellant bound himself to respondent as surety and
co-principal debtor for "each and every amount which the debtor
is at present
indebted to the Bank or may in future become indebted to the Bank". Prior to
entering into this deed of suretyship
appellant had entered into a mortgage bond
in which he granted a second mortgage of R60 000 over certain property in favour
of respondent
as security for any amount owing by him to respondent.
From facts agreed upon by the parties at a pre-trial conference held on 23
April 1992, and from allegations in the pleadings which
are common cause, it
appears
..../ 3
3
that the principal debtor defaulted in the pay-ment of the instalment due on
30 January 1987 and that respondent became aware of the
default on 3 February
1987.
On 30 April 1987 a liquidation order was obtained against the principal
debtor, and on 19 October 1987 respondent filed a claim for
R75 633.26 against
the company in liquidation. This claim was accepted by the liquidator, and on 16
March 1989 the Master confirmed
the second and final liquidation and
distribution account. The respondent received two payments from the liquidator
in respect of
its claim viz Rll 344.99 on 18 April 1988 and R2 946.36 on 4 April
1989.
.... / 4
4
Based on the deed of suretyship, respondent issued a summons on 1 June 1990
which was served on appellant on 14 June 1990. In it respondent
claimed an
amount of R93 749.32 and an order declaring the mortgaged property executable.
At the pre-trial conference, however, the
parties agreed that "the outstanding
amount at 15 May 1990 was R67 861.93"..
Relying on
section 13
of the
Prescription Act, no 68 of 1969
("the
Act") the
appellant in his plea raised a defence of prescription. In effect it amounted to
this viz that respondent's debt had become "the
object of a claim filed against
a company in liquidation"
/ 5
5
in terms of
section 13(1)(g)
; that the relevant
period of prescription
would, but for the pro
visions of para (i) have been completed
before,
on, or within one year after the day on which
the impediment
created by para (g) had ceased
to exist i e by virtue of the Master's
con
firmation of the second and final liquidation
and distribution account
on 16 March 1989;
and that the period of prescription had been
completed a
year after that date, and that the
debt was therefore prescribed.
The argument before us was directed at the soundness of the defence of
prescription raised by the appellant in its plea. Although
/ 6
6
at the pre-trial conference the parties are recorded as having agreed "that
the issue of prescription be dealt with in terms of
Rule 33(4)"
it would appear,
as I have indicated, that this was the only issue before the court. In his
judgment (reported in
1993 (1) SA 247
(W)), the learned judge a
quo
recorded at p 249 A that both parties had closed their cases without leading
evidence, and before us respondent's counsel indicated
that in the event of the
appeal succeeding the appropriate order would be one dismissing respondent's
claim with costs. The whole
dispute between the parties turns, therefore, on
this issue.
.... / 7
7
In the present case it should be borne in mind that we are concerned with the
debt owing by the appellant to the respondent -an indebtedness
which arose from
his assumption of the obligation of a surety and co-principal debtor. As was
pointed out in
Kilroe-Daley v Barclays National Bank Ltd
[1984] ZASCA 90
;
1984 (4) SA 609
(A) at 622 I - 623 I and the cases there cited, the contract of suretyship,
though a separate one from that between the principal
debtor and creditor, is
nevertheless accessory to the main contract. It follows therefore that where the
principal debtor is discharged
or released or in any way ceases to be bound,
then the obli-
..../ 8
8
gation of the surety also ceases to exist
(Moti and Co v Cassim's
Trustee
1924 AD 720
at 737). If the principal debt has become prescribed by
virtue of the provisions of
section 13
of the
Act, then
such prescription will
also apply to the appellant's obligation (cf
section 10(2)).
It is, therefore,
the obligation of the principal debtor to the respondent which has to be
considered.
Section 13(1)
of the
Act as
it stands at present - and to all intents and
purposes as it stood prior to its amendment by
section 11
of Act 139 of 1992
which simply removed references to the then South West Africa
.... / 9
9
in para (b) and (g) -reads as follows:
"13. (1) If -
(a)
the creditor is a minor or
is insane or is a person under cura-torship or is prevented by superior force
including any law or any
order of court from interrupting the running of
prescription as contemplated in section 15(1); or
(b)
the debtor is outside the Republic; or
(c)
the creditor and debtor are married to each other;
or
(d)
the creditor and debtor are partners
and the debt is a debt which arose out of the partnership relationship;
or
(e)
the creditor is a juristic person and
the debtor is a member of the governing body of such juristic person;
or
(f)
the debt is the object of a dispute
subjected to arbitration; or
(g) the debt is the
object of a claim
filed against the estate of a
.... / 10
10
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 (h) the creditor or the debtor is
deceased and an executor of the estate
in question has not yet been appointed;
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 paragraph (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)."
This inept section is by no means
clear and presents obvious problems of
interpretation.
.... / 11
11
In the present case the debt with which we are concerned became due and
payable on 3 February 1987 when respondent became aware of
the principal
debtor's default (section 12(3) of the Act). In the ordinary course, therefore,
the debt would have become prescribed
on 3 February 1990 (section 11(d)). The
principal debtor,however, was placed in liquidation on 30 April 1987 and on 19
October 1987
respondent filed a claim against the principal debtor in
liquidation. In terms of para (g) read with para (i) this act of filing
a claim
constituted an "impediment" and consequently had the effect of extending the
period of prescription to the end of a year
after it had ceased to exist.
.... / 12
12
It is by no means clear what the legislature sought to convey by the word
"impediment". The Shorter Oxford Dictionary defines "impediment"
as "the fact of
impeding or condition of being impeded; something that impedes; a hindrance; an
obstruction".
Our common law recognized what Van der Keessel (Praelectiones 3.46.4) called
an "im-pedimentum juris" whereby the running of prescription
was suspended or
delayed against minors, insane persons, persons under curatorship, persons
absent from the country, or persons unable
for some reason or other to enforce
their rights until the impediment had come to an end (cf
..../ 13
13
Van Staden v Venter
1992 (1) SA (A) at 559 C-H. As is pointed out (at
H) even in the common law this principle was not applied consistently and
various
other circumstances were imported as "impedimenta".
If one has regard to the impediments listed in section 13 it seems clear that
the impediment does not necessarily come about as a
result of an absolute bar to
a creditor instituting action against his debtor. A minor or a person under
curatorship can sue through
his guardian or curator; actions ex
contractu
and
ex delicto
between spouses
stante matrimonio
are not excluded
in law (
Rohloff v Ocean Accident and Guarantee
..../ 14
14
Corporation Ltd
1960 (2) SA 291
(A) at 310 F;
the
actio pro socio
is in certain circumstances available to partners
during the existence of the partnership, and a juristic person is not precluded
from suing a member of its governing body. In most of these instances, however,
it would be undesirable to do so for obvious reasons.
In
Murray and Roberts
Construction (Cape) (Pty) Ltd v Upington Municipalit
y
1984 (1) SA 571
(A) at
579 B Grosskopf AJA put it on
the basis that
"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
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."
.... / 15
15
Be that as it may, this much seems clear: that each of the circumstances
referred to in section 13(1)(a) - (h) will give rise to an
impediment - i e to
some legal or practical problem which makes it difficult or undesirable for a
creditor to institute proceedings
for the enforcement of his claim against the
debtor -which impediment will delay the running of prescription, and that
prescription
will only commence running again after the impediment has ceased to
exist. With more particular reference to para (g), with which
we are primarily
concerned, there is no legal bar to a creditor suing a company in liquidation
-
.... / 16
16
see section 359(2)(a) of the Companies Act 61 of
1973 which provides that:
"Every person who, having instituted legal proceedings against a company
which were suspended by a winding up, intends to continue
the same,and every
pers
on who intends to ins
titute legal proce
edings
for the
purpose of enforcing any claim against the company which arose before the
commencement of the winding up
, shall within four weeks after the
appointment of the liquidator give the liquidator not less than three weeks'
notice in writing
before continuing or commencing the proceedings." (My
italics.)
In general, however, the occasion
for such proceedings would be rare, e g where
the creditor seeks to have an unliquidated claim
quantified by the court. As a general rule
there can be no advantage to a creditor in suing
.... / 17
17
a company in liquidation. The effect of a winding up order is to create a
concursus cre
-
ditorum
and it is only through the machinery of the
Companies Act that his claim can be satisfied in full or in part (cf
Consolidated Textile Mills Ltd v Weiniger
1961 (3) SA 335
(0) at 340 H
and, in the case of sequestration,
Central Africa Building Society v Pierce N
O
1969 (1) SA 445
(RAD) at 447 H - 448 A).
In addition to these considerations part of the underlying
ratio
to
section 13 may well be that
"in the circumstances mentioned, the creditor is already taking appropriate
steps to recover his debt and should
.... / 18
18
not be required to institute legal proceedings merely to interrupt the
running of prescription." (Per Grosskopf AJA in
Murray and Roberts
' case
(
supra)
at 579 G-H.)
The critical question, however, is when does the impediment cease to exist?
The answer to the question posed in respect of the circumstances
referred to in
para (a) -(f) and (h) seems fairly obvious. It is not so obvious in respect of
para (g).
In terms of the section the impediment arises once "the debt is the object of
a claim filed ... against a company in liquidation".
In his judgment in the
court a
quo
Flemming DJP held (at 250 E) that :
..../ 19
19
"Unless it is set aside by competent authority, 'filing' is an accomplished
fact; on a retrospective view it is as immutable as other
history that the claim
did become the object of a filed claim"
and that the impediment would cease only if the
claim was withdrawn,
deleted, or rejected by
the liquidator, "or as a result of a court
order",
or if the company was no longer in liquidation
(p 251 H-J). Neither the confirmation of the
final liquidation and distribution account nor
the payment of any dividends in terms of such
account would bring an end to the impediment
since one could never tell whether some further
assets might not turn up so as to give rise to
yet a further liquidation and distribution account .
..../ 20
20
Assuming that the liquidation of a company proceeds in the ordinary fashion
this line of reasoning would entail that the impediment
to prescription created
by the filing of a claim and its acceptance by the liquidator, will never cease,
and the running of prescription
will be suspended
in diem aeternitatis
.
This, to my mind, would be a startling result, which the legislature could
hardly have contemplated.
When a claim is filed it must be considered by the liquidator. If the
liquidator accepts the claim he will bring it up in his account.
Such an account
must eventually lie for inspection and any interested party
..../ 21
21
may object. If such objection is sustained by the Master, he will direct the
liquidator to amend the account (see sections 406 and
407 of the Companies Act).
Up to this stage there can be no certainty as to how much, if anything, a
creditor will receive. When,
however, the Master has confirmed the final
liquidation and distribution account there is a measure of finality. Section 408
of the
Companies Act provides that such confirmation "shall have the effect of a
final judgment". As was pointed out in the
Kilroe-Daley
case
(
supra
) at p 627 E-F this does not mean that the account will have the
quality of a judgment of a court
..../ 22
22
of law. It does, however, 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."
In the ordinary course of events it is highly unlikely that the creditor will
receive any more from the company in liquidation than
has been accorded him in
the final account, and the finality attendant on such a determination would, in
my view, remove any impediment
to the further running of prescription. The
creditor would then be able to compel payment of the dividend by the liquidator
and to
pro-
.../ 23
2 3
ceed against any sureties for the balance of his claim without let or
hindrance, whether for reasons of fairness or otherwise. The
debt is no longer
"the object of a claim filed against a company in liquidation", but has
crystallized into a dividend due and payable
by the liquidator to the
creditor.
It follows that in terms of section 13(1) of the Act extinctive prescription
had run its course on the effluxion of one year from
the date of the
confirmation of the final account, i e on 16 March 1990, and that the debt was
already prescribed when the summons
was served on 14 June 1990.
..../ 24
24
The appeal succeeds with costs and the order of the court a
quo
is
altered to read:
"Plaintiff's claim is dismissed with costs."
J.P.G EKSTEEN, JA
HOEXTER, JA )
NESTADT, JA )
concur NICHOLAS, AJA )
HARMS, AJA )