Incledon (Welkom) (Pty) Ltd v QwaQwa Development Corporation Ltd

• Jurisdiction: South Africa
• Judge: Hoexter JA, Van Heerden JA, Milne JA, Nicholas AJA and Goldstone AJA
• Judgment Date: 07 September 1990
• Citation: 1990 (4) SA 798 (A)
• Hearing Date: 23 August 1990
• Court: Appellate Division

Goldstone AJA:

On 5 June 1987 the liquidator of Maree and Blignaut Meubelfabrikante (Edms) Bpk (the company) filed his second and final liquidation and distribution account. Encumbered asset account No 8 reflected the payment to the liquidator of an amount of R139 643 from the Board for the Decentralisation of Industry. That Board makes payment of concessions to persons who qualify therefor by establishing industries in the Black National States. The aforesaid amount related to J the concessions

Goldstone AJA

A which had been granted to the company by that Board and which will be referred to as 'the concessions'. After deducting certain costs and expenses, the liquidator awarded the balance of R124 325,58 to Incledon (Welkom) (Pty) Ltd ('Incledon') in respect of claim No 71. QwaQwa Development Corporation Ltd ('QDC') objected to that award and claimed B that the concessions should have been used for the payment, inter alia, of its own claims, Nos 5 and 7, in the amounts of R50 000 and R51 761,67 respectively. This objection was dismissed by both the liquidator and the Master of the Supreme Court in Bloemfontein. The QDC then applied to the Orange Free State Provincial Division for the review of the decision of the Master. That application succeeded with costs and the liquidator C (who was the second respondent in the Court a quo) was ordered to frame the account in the terms sought by the QDC. With leave of the Court a quo Incledon now appeals to this Court against the judgment and order.

On 30 March 1983 the company became entitled to receive the D concessions. On 28 April 1983 it entered into a written agreement with the Corporation for Economic Development (the CED) in terms of which the company ceded to the CED the company's

'right, title and interest in and to any concessions granted or to be granted to it by the Board for the Decentralisation of Industry as security for the fulfilment of its obligations in terms of any agreement E entered into or which may be entered into by and between the cedent and the cessionary'.

I shall refer to this cession as 'the CED cession'.

Also on 28 April 1983, the CED and the company entered into a written agreement of loan. In terms thereof the CED undertook to lend and advance to the company the amount of R60 000. It was to be repaid in 60 F equal instalments of R1 000 each, commencing on the last day of the twelfth month following the date on which the amount was advanced to the company. It does not appear from the papers when the amount of the loan was advanced by the CED to the company or when and what repayments were made by the company. All that appears from the record is that in terms G of the second and final liquidation account, dated 5 June 1987, the total claim of the CED was reflected in the amount of R63 883,98. Of that amount the sum of R37 977,05 was treated as a preferred or secured claim. A further preferent dividend in the account was reflected in the amount of R2 415,61, making a total dividend of R40 392,66. The shortfall was reflected in the amount of R23 491,32. It appears from a H letter addressed by the QDC's attorneys to the Master dated 25 November 1987 that the security of the CED which was relied upon by it and recognised by the liquidator was the CED cession.

On 6 May 1983 the company entered into a second agreement of cession, this time with Incledon. It ceded I

'all claims of whatsoever nature and description and howsoever arising which I/we may now or at any time hereafter have against all and any persons, companies, corporations, firms, partnerships, associations, syndicates and other legal personae whomsoever and whatsoever... as continuing covering security for the due payment of every sum of money which may now or at any time hereafter be or become owing by me/us to J the creditor (Incledon) from whatsoever cause or causes

Goldstone AJA

A arising and for the due performance of every other obligation howsoever arising which I/we may now be or become bound to perform in favour of the creditor'.

I shall refer to this cession as 'the Incledon cession'. It is upon this cession that Incledon relies for the preference claimed by it.

On 8 March 1985 the company executed a third cession, this one in B favour of the QDC. In terms thereof it ceded to the QDC

'enige en alle regte... wat Maree en Blignaut van die Desentralisasieraad in enige voormelde konsessie mag ontvang in die bedrag van R128 040'.

I shall refer to this cession as 'the QDC cession'. It was to serve as security for the payment of moneys advanced or to be advanced by the QDC C to the company. The QDC relies upon both the CED cession and the QDC cession for the preference claimed by it in respect of claims Nos 5 and 7.

The CED...