Consolidated News Agencies (Pty) Ltd (In Liquidation) v Mobile Telephone Networks (Pty) Ltd and Another

• Jurisdiction: South Africa
• Judge: Navsa JA, Nugent JA, Heher JA, Mhlantla JA and Hurt AJA
• Judgment Date: 29 September 2009
• Citation: 2010 (3) SA 382 (SCA)
• Docket Number: 512/2008
• Hearing Date: 24 August 2009
• Counsel: LS Kuschke SC (with J Butler SC) for the appellant. A Subel SC (with F Snyckers) for the respondents.)
• Court: Supreme Court of Appeal

Consolidated News Agencies (Pty) Ltd (In Liquidation) v Mobile Telephone Networks (Pty) Ltd and Another
2010 (3) SA 382 (SCA)

2010 (3) SA p382

Citation	2010 (3) SA 382 (SCA)
Case No	512/2008
Court	Supreme Court of Appeal
Judge	Navsa JA, Nugent JA, Heher JA, Mhlantla JA and Hurt AJA
Heard	August 24, 2009
Judgment	September 29, 2009
Counsel	LS Kuschke SC (with J Butler SC) for the appellant.; A Subel SC (with F Snyckers) for the respondents.)

Flynote : Sleutelwoorde G

Company — Directors and officers — Director — Directing mind of company — H Seat of directing mind to be determined according to circumstances — Whether company having spoken or acted through voice or conduct of human agency or whether said agency having been engaged in activity unattributable to company — In absence of express evidence of adoption by company of statements or conduct as its own, conclusion to depend upon inference and probability.

I Insolvency — Creditors — Indemnity to creditor upon restoration of voidable disposition — Where dispositions made pursuant to agreement concluded by more than two parties, question of whether there had been parting with property not ordinarily to be considered from individual point of view of each party, but to be assessed holistically having regard to general intention of parties and overall result of agreement — Insolvency Act 24 of 1936, s 33(1). J

2010 (3) SA p383

Insolvency — Insolvent — Unlawful alienations and preferences — Disposition A not for value — Restoration against indemnification — Where dispositions made pursuant to agreement concluded by more than two parties, question of whether there had been parting with property not ordinarily to be considered from individual point of view of each party, but to be assessed holistically having regard to general intention of parties and overall result of agreement — Insolvency Act 24 of 1936, s 33(1). B

Practice — Trial — Separation of trial on issues — Reiterated that separation not always best policy — Often issues thought to be discrete found to be inextricably linked — Even where issues discrete, expeditious disposal of litigation often best served by ventilating all issues in one hearing — Court to be satisfied that convenient and proper to try issues separately. C

Headnote : Kopnota

In 1999 a retail sales agreement (the RA) had been concluded between the second respondent (M-Tel) and the appellant (CNA), prior to its liquidation, in terms of which CNA agreed to establish exclusive M-Tel sales outlets in each of its stores. The agreement incorporated a warranty by D M-Tel as to the amount of remuneration which CNA would receive from the sales of the M-Tel products in each of the three years (from 2000 to 2002) for which the RA was to subsist. In return, CNA undertook to use its best endeavours to promote the sale of M-Tel's products from these outlets. During 2001, the second year of the RA, there was a marked shortfall in sales and it became apparent that M-Tel would end the year with a E substantial liability under its warranty. At the same time, CNA was experiencing financial difficulties. In March 2001, in an effort to resolve these problems, the various affected parties (including their holding companies) negotiated certain modifications to the RA. In the modified version:

(a)

M-Tel's affiliate, the first respondent (MTN), intervened and undertook to furnish certain guarantees on behalf, inter alia, of CNA; F

(b)

CNA agreed to pay monies accruing from the sale of M-Tel products into a trust account;

(c)

CNA undertook to reimburse MTN in respect of any payment by MTN under the guarantees referred to in (a);

(d)

CNA waived its right to claim payment from M-Tel under the warranty for the second year of the RA; G

(e)

the terms of the warranty for the third year of the RA were substantially modified in M-Tel's favour;

(f)

M-Tel formally waived any right to terminate the RA and claim damages on the basis of any breach by CNA of its obligations in terms of the RA;

(g)

save as modified, the terms of the RA were to remain in force. H

CNA was provisionally placed in liquidation in July 2002. Various actions were instituted both by and against the liquidators of CNA arising out of the RA as modified. Inter alia it was contended by the liquidators that the undertakings given by CNA, its waiver of its claim under the income warranty for 2001 and the partial release of M-Tel from the warranty for I 2002 constituted voidable dispositions and fell to be set aside. In this regard, the parties agreed to ask the court for a separate ruling in terms of rule 33(4). The court was asked to assume that the dispositions were, indeed, impugnable (without MTN and M-Tel admitting that this was in fact the case) and to decide whether, in terms of s 33(1) of the Insolvency Act, the liquidators were precluded from having them set aside without indemnifying MTN and M-Tel. J

2010 (3) SA p384

A Held, that the evidence established that the modifications to the RA had been agreed upon by the various participants acting in good faith and without contemplation of a possible liquidation of CNA. (Paragraphs [71] and [88] at 402H - I and 408F.)

Held, further (Heher JA dissenting) that where, as in this case, dispositions had been made pursuant to an agreement concluded by more than two parties, the B question whether there had been a 'parting with property' as contemplated by s 33(1) should not ordinarily be considered from the individual point of view of each of the parties involved, but should be assessed holistically having regard to the general intention of the parties and the overall result of the agreement. Thus in this instance, the furnishing of the guarantees by MTN and its subsequent payment of those guarantees on behalf of CNA could not be C regarded as irrelevant when assessing M-Tel's position under s 33(1). (Paragraphs [82], [84] and [87] at 406H, 407E - G and 408C - E.)

HeldThough it might, in some cases, be desirable to have a single issue decided separately (either by way of a separation of issues or by a stated case or otherwise), this should only be done if the discrete issue disposes of a major part of a case, or will in some way lead to the remainder of the case being D expeditiously decided. In the majority of cases, however, expeditious disposal of the litigation would be best served by ventilating all issues at one hearing. Counsel and the trial court should therefore be careful to ensure that the isolation and decision of a single issue will achieve one or other of these objectives before pursuing that course. (Paragraphs [89] - [90] at 408G - H.)

Cases Considered

E Annotations:

Reported cases

Southern Africa

Barclays National Bank Ltd v Umbogintwini Land and Investment Co (Pty) Ltd (in Liquidation) and Another 1985 (4) SA 407 (D): applied

Bob's Shoe Centre v Heneways Freight Services (Pty) Ltd 1995 (2) SA 421 (A): F referred to

Cooper and Another NNO v Merchant Trade Finance Ltd 2000 (3) SA 1009 (SCA): dictum in para [30] applied

David Hersch Organisation (Pty) Ltd and Another v Absa Insurance Brokers (Pty) Ltd 1998 (4) SA 783 (T): referred to

Denel (Edms) Bpk v Vorster 2004 (4) SA 481 (SCA) ((2004) 25 ILJ 659; 2005 (4) BLLR 313): G dictum in para [3] applied

Gert de Jager (Edms) Bpk v Jones NO en McHardy NO 1964 (3) SA 325 (A): dictum at 331B applied

Malherbe's Trustee v Dinner and Others 1922 OPD 18: dictum at 24 - 25 applied

Middleton v Carr 1949 (2) SA 374 (A): dictum at 385 - 386 applied

H National Bank of South Africa Ltd v Hoffman's Trustee 1923 AD 247: dictum at 254 - 255 applied

Pretorius NO v Stock Owners' Co-operative Co Ltd 1959 (4) SA 462 (A): ref

Pretorius' Trustee v Van Blommenstein 1949 (1) SA 267 (O): dictum at 278 applied

Ruskin NO v Barclays Bank DCO 1959 (1) SA 577 (W): dictum at 584 - 585 I applied

SA Eagle Versekeringsmaatskappy Bpk v Harford 1992 (2) SA 786 (A): applied

Simon NO and Others v Mitsui and Co Ltd and Others 1997 (2) SA 475 (W): dictum at 526I - 531A applied

Swanepoel NO v National Bank of South Africa 1923 OPD 35: referred to

J Venter v Volkskas Ltd 1973 (3) SA 175 (T): dictum at 179E applied.

2010 (3) SA p385

Australia A

Brambles Holdings Ltd v Carey (1976) 2 ACLR 176 SCSA: applied

Entwells (Pty) Ltd v National and General Insurance Co Ltd (1991) 5 ACSR 424 SC (WA): applied

Re Chisum Services (Pty) Ltd (1982) 7 ACLR 641 SC (NSW) ((1982) 1 ACLC 292): applied. B

Canada

Canadian Dredge & Dock Co Ltd v R (1985) 19 DLR (4th) 314 (SCC): applied.

England C

El Ajou v Dollar Land Holdings plc and Another [1994] 2 All ER 685 (CA): applied

Re Bank of Credit and Commerce International SA (In Liquidation) (No 15): Morris v Bank of India [2005] 2 BCLC 328 (CA): applied

Thorburn v Steward (1871) LR 3 PC 478: referred to. D

Statutes Considered

Statutes

The Insolvency Act 24 of 1936, s 33(1): see Juta's Statutes of South Africa 2008/9 vol 2 at 1-545.

Case Information

Appeal against a decision of the South Gauteng High Court, E Johannesburg (Saldulker J). The facts appear from the minority judgment of Heher JA.

LS Kuschke SC (with J Butler SC) for the appellant.

A Subel SC (with F Snyckers) for the respondents. F

Cur adv vult.

Postea (September 29).

Judgment

Heher JA: [Minority judgment - Eds.] G

[1] The issue in this appeal concerns the entitlement of the respondents to rely on the indemnity provisions of s 33(1) of the Insolvency Act 24 of 1936 (the Act). [1]

[2] This is an appeal from a judgment of the then Witwatersrand Local H Division of the High Court (Saldulker J), with leave of the learned judge,

2010 (3) SA p386

Heher JA

A who had found for the present first and second respondents in respect of an issue separated under rule 33(4)...