Ex parte Mallac: In re L D De Marigny (Pty) Ltd (In Liq): De Charmoy Estates (Pty) Ltd Intervening

• Jurisdiction: South Africa
• Judge: Caney J
• Judgment Date: 05 February 1960
• Citation: 1960 (2) SA 187 (D)
• Hearing Date: 29 January 1960
• Court: Durban and Coast Local Division

C Caney, J.:

This is an application for sanction by the Court, under the provisions of sec. 103 (2) of the Companies Act, 46 of 1926, of a compromise between the company, L. D. de Marigny (Pty.) Ltd., in liquidation (to which I shall refer as the company) and its creditors, and, under sec. 120, for discharge of the company from liquidation. The D applicant is a member of the company; on 30th October last he obtained an order of this Court under the provisions of sub-sec. (1) of sec. 103 for meetings of creditors, and directions in relation thereto, for the purpose of considering an offer made by the applicant to the liquidators to purchase the assets of the company for a sum which would, it seems, E upon distribution to creditors, have paid them less than 20s. in the £. At these meetings, the evidence is, the requisite majorities of the various classes of creditors agreed to the proposed compromise and the present application is the outcome, but a company called de Charmoy Estates (Pty.) Ltd. has appeared to oppose. This concern was the lessor of premises in which the company carried on its business, and is a creditor for rent. I shall refer to it as the lessor.

F The company was placed under provisional liquidation on 4th June, 1959; on 9th June the Master appointed Messrs. Emary and Langham as provisional liquidators. On 3rd July a final order of liquidation was made, and on 31st August the Master appointed Messrs. Ensor and Langham G (the same Mr. Langham who had been a provisional liquidator) as liquidators. These dates assume some importance in relation to one of the contentions of the lessor.

It is necessary first to examine the applicant's offer. Addressed to the liquidators, it opens

'I . . . hereby submit the following offer to the creditors of the above company in liquidation to purchase all the assets of the company of every description excluding (certain monies) but including (certain H other monies) . . . for the sum of £9,000 which shall be utilised'

to pay costs, claims of preferent and secured creditors and claims of concurrent creditors. Then follows provision for payment of the price by the applicant in three instalments. Next comes a paragraph around which has centred the main dispute:

'It is a condition of this offer that the existing leases held by the company in liquidation as lessees shall be ceded to me or my nominee.'

Following this is a paragraph reading

Caney J

'It is a further condition of this offer that upon acceptance . . . and sanction . . . the company will be discharged from liquidation and . . . application shall be made in terms of sec. 120 . . . for an order setting aside the winding up order against the company.'

The lease held by the company from the lessor contains a clause numbered 5 which reads as follows:

'The demised premises are hereby let to enable the lessee to conduct A thereon the business of a motor garage and a petrol filling station, and to cover the sale of motor accessories and articles similar thereto . . .'

Clause 8 reads as follows:

'The lessee shall not cede or assign the said lease nor shall it sublet the whole or any portion of the demised premises without the consent in writing of the lessor having been first had and obtained, provided that such consent shall not be withheld unreasonably.'

B Mr. Bizzell's argument on behalf of the lessor proceeded on three main grounds. In logical sequence, so it seems to me, the first contention for consideration was as follows: the condition in the applicant's offer for cession of the leases rendered the outcome uncertain; sec. 103 contemplates a state of affairs which, on sanction by the Court, becomes finally binding on all parties concerned (including dissentient C creditors) but here the transaction might fail, whether the condition was suspensive or resolutive. A conditional compromise was not within the section and the Court could not sanction it. He referred to In re Saratoga Investments (Pty.) Ltd., 1941 NPD 117 at pp. 138 - 40; Ex parte Singh and Another (Pty.) Ltd.: In re Orkin Bros. (Pretoria) Ltd. D (under Judicial Management) and Another, 1950 (1) SA 471 (T) at p. 476, and Corindimas and Another v Badat, 1946 AD 548 at p. 551. In addition, Mr. Bizzell drew attention to the situation which would arise if the condition were not fulfilled - the liquidation would have been set aside, but the creditors would not receive their proportions of the E price the applicant was to have paid. I pause to point out that this may occur whenever an offeror fails, for some reason or other, to pay what he is expected to pay. Mr. Bizzell emphasised that an offer of compromise must be a firm one, not a conditional one. As a corollary to the foregoing, Mr. Bizzell contended that the further condition of the offer, namely, for discharge of the Company from liquidation, could not be fulfilled because the Court could not sanction a conditional compromise.

F Mr. Warner, for the liquidators (whose argument Mr. Pretorius adopted for the applicant), contended that neither the offer, nor the resulting transaction on its acceptance, was conditional. The applicant had G offered to buy 'all the assets of the company of every description'; these included the leases, and the so-called condition was not in truth a condition, suspensive or resolutive, but merely a direction relating to the method of delivery of one of the assets, the leases - they are to be ceded to the applicant or his nominee. In essence this in no degree differed from a stipulation by a buyer that the goods he bought H were to be...