Absa Bank Ltd v Hammerle Group

• Jurisdiction: South Africa
• Judgment Date: 26 March 2015
• Citation: 2015 (5) SA 215 (SCA)

Absa Bank Ltd v Hammerle Group
2015 (5) SA 215 (SCA)

2015 (5) SA p215

Citation	2015 (5) SA 215 (SCA)
Case No	205/14; [2015] ZASCA 43
Court	Supreme Court of Appeal
Judge	Brand JA, Maya JA, Cachalia JA, Mbha JA and Mhlantla JA
Heard	March 13, 2015
Judgment	March 26, 2015
Counsel	FH Terblanche SC (with HR Fourie) for the appellant.; SL Joseph SC (with HJ Fisher) for the respondent.

Flynote : Sleutelwoorde B

Company — Winding-up — Grounds — Inability to pay debts — Proof — 'Without prejudice' offer indicating inability to pay debts — Amounting to admission of insolvency — Not privileged — Admissible in liquidation proceedings.

Company — Winding-up — Grounds — Inability to pay debts — Debt relied on C subordinated in favour of other creditors — Applicant nevertheless contingent creditor — Debt due and payable and applicant entitled to apply for winding-up — Companies Act 61 of 1973, s 346(1)(b).

Headnote : Kopnota

An offer made by a company — even on a 'without prejudice' basis — may be admitted in an application by a creditor for its liquidation if it contains an D admission of insolvency (ie of an inability to pay its debt). An admission of liability would serve to interrupt the running of prescription against the creditor. (Paragraphs [13] – [15] at 219B – 220B.)

In a letter written in response to Absa's demand for the settlement of a debt, Hammerle stated that it 'would like to make a settlement proposal', but that 'notwithstanding the aforesaid' it was 'struggling to turn the business E around' and unable 'to make any meaningful profit in the business'.

In an appeal against the dismissal of Absa's application for the winding-up of Hammerle, the SCA, having construed the letter to be both an indication of commercial insolvency and an acknowledgement of liability, (i) overruled Hammerle's argument that its contents were inadmissible; and (ii) held that F it had interrupted the running of prescription against Absa. The SCA furthermore overruled the High Court's finding that Absa's claim was not yet due and payable because it was, by agreement between the parties, subordinated to the claims of Hammerle's other creditors, on the ground that a subordinated creditor like Absa was a 'contingent creditor' with standing under s 346(1)(b) of the Companies Act. In the result the SCA replaced the order of the High Court with one liquidating Hammerle. G (Paragraphs [18] – [19] at 220G – 221A.)

Cases Considered

Annotations

Case law

Absa Bank Ltd v Chopdat 2000 (2) SA 1088 (W): dictum at 1092H – 1094F H approved and applied

Jhatam and Others v Jhatam 1958 (4) SA 36 (N): distinguished

Lynn & Main Inc v Naidoo and Another 2006 (1) SA 59 (N): dictum in paras [23] – [24] applied

Premier Industries Ltd v African Dried Fruit Co (1950) Ltd and Others 1953 (3) SA 510 (C): dictum at 513D – F applied I

Santino Publishers CC v Waylite Marketing CC 2010 (2) SA 53 (GSJ): distinguished.

Statutes Considered

Statutes

The Companies Act 61 of 1973, s 346(1)(b): see Juta's Statutes of South Africa 2014/15 vol 2 at 1-226. J

2015 (5) SA p216

Case Information

FH Terblanche SC (with HR Fourie) for the appellant. A

SL Joseph SC (with HJ Fisher) for the respondent.

An appeal against a decision in the Gauteng Division, Pretoria (Mabuse J).

Order

1.

B The appeal is upheld with costs, including the costs of two counsel.

2.

The order of the North Gauteng High Court, Pretoria, is set aside and substituted with the following order:

'(a)

The respondent is liquidated in the hands of the Master of the High Court.

(b)

Costs of the application, including the costs of two counsel, C will be costs in the winding-up of the respondent.'

Judgment

Mbha JA (Brand JA, Maya JA, Cachalia JA and Mhlantla JA concurring):

D [1] The appellant launched an application in the North Gauteng High Court, Pretoria, for the winding-up of the respondent on the ground, inter alia, that the respondent was commercially insolvent and unable to pay its debts as envisaged in s 345 of the Companies Act 61 of 1973 (the Act). The court a quo (per Mabuse J) dismissed the application on the basis that (a) part of the debt giving rise to the application was E extinguished by prescription; and (b) the remainder thereof was not yet due and payable as it had, by agreement between the parties, been subordinated to the debts of other creditors of the respondent. This appeal against those findings is with leave of the court a quo.

F [2] The relevant background to the dispute can be summarised as follows. Pursuant to a loan agreement concluded between the parties on 6 December 2007 (the loan agreement) the appellant advanced a loan of R4 million which, together with interest thereon, would be repayable in 60 instalments of R96 045,70 from 1 January 2008. The purpose of the loan was to finance the respondent and its business. The indebtedness G arising under this loan agreement was secured by a Special and General Notarial Covering Bond (the bond) which was registered by the Registrar of Deeds in favour of the appellant on 13 December 2007. In terms of clause 2 of the bond, the respondent bound certain of its movable property specially and generally as security for its obligations to the H appellant.

[3] On 19 November 2007 the appellant, the respondent, Mfiso Investments (Pty) Ltd and Uwe Christian Hammerle concluded a Subscription and Shareholders' Agreement (the subscription agreement) in terms of which the appellant loaned and advanced to the respondent the sum I of R10 million. The purpose of this loan, which took on the form of a shareholders' loan, was to enable the respondent to fund the acquisition of the respondent's business and assets. By...