Imperial Bank Ltd v Barnard and Others NNO

• Jurisdiction: South Africa
• Judge: Mpati P, Cachalia JA, Pillay JA, Schoeman AJA and Saldulker AJA
• Judgment Date: 28 March 2013
• Citation: 2013 (5) SA 612 (SCA)
• Docket Number: 349/12 [2013] ZASCA 42
• Hearing Date: 22 February 2013
• Counsel: PG Robinson SC (with A Botha) for the appellant. WJ Vermeulen SC for the respondents.
• Court: Supreme Court of Appeal

Mpati P (Cachalia JA, Pillay JA, Schoeman AJA and Saldulker AJA concurring): G

[1] On 3 August 2007 the respondents, acting in their representative capacities as the duly appointed joint liquidators in the estate of Pro Med Construction CC (in liquidation) [1] (Pro Med), instituted action against the appellant, as first defendant, and Land for Africa (Pty) Ltd (Land for H Africa), as second defendant, claiming payment, from the appellant, of an amount of R25 million, together with interest and costs of suit. The amount claimed was said to be 'in lieu of transfer' of certain fixed property allegedly purchased by Pro Med, prior to its liquidation, from the appellant, in terms of an agreement of purchase and sale concluded on 27 February 2003. Subsequent to the conclusion of that agreement I the appellant apparently sold the property to Land for Africa. However, no order was sought against Land for Africa, which, consequently, does not feature in this appeal.

Mpati P (Cachalia JA, Pillay JA, Schoeman AJA and Saldulker AJA concurring)

A [2] In the particulars of claim the first respondent is described as 'Hendrick Jacobus Rust Barnard, an adult male liquidator and practising attorney . . .'. The rest of the liquidators are also cited in their own names and the fourth and fifth respondents are similarly described as adult male and female liquidators and practising attorneys respectively, B while the second and third respondents are described as adult male liquidators practising as such. While admitting the names of the respondents the appellant has denied in its plea, which was delivered on 13 November 2007, that the respondents are 'properly cited in compliance with the provisions of s 386(4) of the Companies Act 61 of 1973 (the Act), or that they are entitled to bring [the] action in their own C name'. Section 386(4)(a) of the Act, which applies to the liquidation of close corporations by virtue of the provisions of s 66 of the Close Corporations Act 69 of 1984, empowers liquidators —

'to bring or defend in the name and on behalf of the company any action D or other legal proceedings of a civil nature . . .'.

[3] On 17 February 2011 the respondents served on the appellant a notice of intention to amend their particulars of claim 'in the following respects':

'Replacing paragraphs 1.1 to 1.5 of their particulars of claim with the E following: —

"1.

The Plaintiff is Pro Med Construction CC (In Liquidation) (Pro Med), Master's reference G2750/04 duly represented herein by: —

1.1

Hendrik Jacobus Rust Barnard NO,

1.2

Norman Klein NO

1.3

F Farouk Sharief NO

1.4

Themba Benedict Langa NO

1.5

Itumeleng Brenda Mohale NO

who bring this action in the name and on behalf of Pro Med pursuant to the provisions of section 386(4) of the Companies Act 61 of 1973.'

G The appellant objected to the proposed amendment on the basis that the notice of intention to amend was served more than three years after the debt became due; that Pro Med's claim had become prescribed in terms of s 11 of the Prescription Act 68 of 1969 (the Prescription Act) and that it would be prejudiced (in the sense that it would be deprived of the H opportunity to raise the defence of prescription) were Pro Med to be substituted 'as the new plaintiff for the existing plaintiffs', being the respondents. The respondents thereafter sought leave from the court a quo to effect the proposed amendment. On 1 November 2011, and despite the appellant's opposition, the court (Weiner J) granted the I amendment. This appeal is with its leave.

[4] There are two issues in the appeal. The first, raised by the respondents, is whether the order granting the amendment is purely interlocutory and thus not appealable. The second is whether the amendment amounted to a substitution of parties or whether it merely involved a J correction of a misdescription of the plaintiff. Although it appears to me,

Mpati P (Cachalia JA, Pillay JA, Schoeman AJA and Saldulker AJA concurring)

at least prima facie, that the order granting the amendment is appealable, A I shall, for purposes of the appeal, assume, without deciding, that the order is indeed appealable.

[5] It was argued on behalf of the appellant that leave to amend the particulars of claim should have been refused for the reasons that the liquidators did not have the necessary locus standi to issue the summons B in their own name; that accordingly any attempt to now substitute the liquidators with the corporation amounts to the introduction of a new plaintiff; that the corporation's claim has become prescribed since the issue was drawn to the attention of the liquidators by the appellant in its plea more than three years before the notice of intention to amend was C served; and that, in the circumstances, granting the amendment at this stage would prejudice the appellant by irreversibly depriving it of the defence of prescription.

[6] In granting the amendment the court a quo, [*] with reference to judgments of the South Gauteng High Court [2] and of other high courts, [3] D observed that the authorities 'are divided on the point as to how the plaintiff should be cited' in claims such as the one instituted by the liquidators in this matter. It reasoned that until this point is authoritatively decided 'it would not be equitable [for it] to refuse the amendment on the basis that the liquidators did not have locus standi when they brought this action and thus that such action did not interrupt prescription'. E Having said that, however, the court continued:

'It is clear that a company being wound up never has standing; the locus standi is always conferred on the liquidator who litigates on the company's behalf. Therefore, at the time that proceedings were instituted the plaintiffs did have locus standi, although, according to the defendants (and some authorities), such citation was defective.' [†] F

The court a quo concluded that the citation of the respondents, 'even based upon a strict interpretation of section 386(4)(a)', was a mere misdescription.

[7] Counsel for the appellant submitted that because the assets of a G company being wound up do not vest in the liquidator, but remain vested in the company, ie unlike the estate of an insolvent, which is vested in the trustee, the company in liquidation retains its locus standi to institute its own actions. Its liquidator, so the argument continued, is in the same position as its directors were in prior to its winding-up. The liquidator, H therefore, has no locus standi to institute action in his or her own name to recover debts owed to the company. Counsel accordingly argued that

Mpati P (Cachalia JA, Pillay JA...