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

• Jurisdiction: South Africa
• Citation: 1960 (2) SA 187 (D)

Ex parte Mallac: In re L D De Marigny (Pty) Ltd (In Liq): De Charmoy Estates (Pty) Ltd Intervening
1960 (2) SA 187 (D)

1960 (2) SA p187

Citation	1960 (2) SA 187 (D)
Court	Durban and Coast Local Division
Judge	Caney J
Heard	January 29, 1960
Judgment	February 5, 1960

Flynote : Sleutelwoorde E

Company — Winding-up by Court — Liquidator — Compromise F — Sanction of — Lessor of business premises opposing as a creditor for rent — Condition of offer that lease be ceded to offeror — Such not making the compromise a conditional one — Failure by provisional liquidators to continue the lease not determining the lease — Clause in lease prohibiting cession without lessor's G consent — Such clause not preventing fulfilment of transaction — Sanction granted.

Headnote : Kopnota

An application for sanction by the Court under the provisions of section 103 (2) of Act 46 of 1926 of a compromise between a company in liquidation and its creditors and for the discharge of the company from liquidation was opposed by the lessor of the premises in which the company had carried on business, the lessor being a creditor for rent. H It was a condition of the offer that the lease should be ceded to the offeror.

Held, that the condition of the offer did not constitute it a conditional compromise which the Court could not sanction.

Held, further, that the lease had not been determined by virtue of the fact that the provisional liquidators had not exercised any power to continue it during their period of office, since they had lacked yet the authority to exercise the powers of section 130 (2) (f) of Act 46 of 1926.

Held, further, that the clause in the lease prohibiting cession of the lease without the consent of the lessor was not binding on the liquidators and did

1960 (2) SA p188

not stand in the way of fulfilment of the transaction made by the acceptance by the creditors of the offer.

Held, further, that the compromise should be sanctioned.

Case Information

Application under sec 103 (2) of Act 46 of 1926 for an order sanctioning A a compromise. The facts appear from the reasons for judgment.

S. T. Pretorius, for the applicant.

A. C. Warner, Q.C., (with him M. L. Mitchell), for the liquidators.

H v L. Bizzell, Q.C., (with him D. F. L. Thompson), for party intervening to oppose sanction of compromise. B

Cur. adv. vult.

Postea (February 5th).

Judgment

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

1960 (2) SA p189

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...