Kerbels Flooring and Carpeting (Pty) Ltd v Shrosbree and Another

• Jurisdiction: South Africa

Kerbels Flooring and Carpeting (Pty) Ltd v Shrosbree and Another
1994 (1) SA 655 (SE)

1994 (1) SA p655

Citation	1994 (1) SA 655 (SE)
Case No	2179/92
Court	South Eastern Cape Local Division
Judge	Mullins J
Heard	August 13, 1993
Judgment	August 25, 1993

Flynote : Sleutelwoorde B

Company — Winding-up — The liquidator — Personal liability of for negligence — Liquidators can be held personally liable for negligence causing loss to others arising out of the performance of their duties — C Exception that claim of such kind does not disclose cause of action in absence of allegations of fraud, mala fides, recklessness or gross negligence dismissed.

Headnote : Kopnota

Liquidators of companies which have been placed in liquidation (and others who act in a representative capacity, such as trustees, administrators and D curators) can be held personally liable for negligence causing loss to others arising out of the performance of their duties. (At 658F read with 656I/J-J.)

The Court accordingly held that the defendants' exception to the plaintiff's alternative claim against the defendants personally (the defendants being the liquidators of a company) for loss arising out of the defendants' breach of their duty of care to ensure that their election to continue with a contract entered into between the company prior to its liquidation and the plaintiff was 'appropriate' on the ground that the E claim did not disclose a cause of action in that it was not sufficient merely to allege negligence but that there had to be an allegation of fraud, mala fides, recklessness or gross negligence, had to be dismissed. (At 658F/G read with 656G/H-H/I.)

Case Information

Exception to an alternative claim in the plaintiff's particulars of claim. The nature of the pleadings appears from the reasons for judgment.

R P van Rooyen SC [*] for the excipients (defendants). F

R G Buchanan SC for the respondent (plaintiff).

Cur adv vult.

Postea (August 25). G

Judgment

Mullins J:

This exception involves the liability of liquidators of a company for loss occasioned to a party who, at the instance of the liquidators, completed a contract entered into with the company prior to liquidation. For convenience the excipients will be referred to as the H defendants, and the respondent as the plaintiff.

The two defendants were appointed as liquidators of RDA Construction Co (Pty) Ltd ('RDA'). Prior to its liquidation, plaintiff had subcontracted with RDA to fit certain floor tiles and flooring at a school in Dordrecht on which RDA was doing building work in terms of an agreement with the I Department of Education and Training. The work which plaintiff had undertaken to do had only been partly completed when RDA was placed

1994 (1) SA p656

Mullins J

A in liquidation. According to the particulars of claim:

'After their appointment as joint provisional liquidators of RDA, the first and second defendants, in their capacity as joint provisional liquidators, were afforded an election whether or not to continue with the aforesaid contract which had been entered into between RDA and the plaintiff.' B

The particulars of claim proceed to allege that defendants elected to continue with the contract that had been entered into between RDA and the plaintiff, and that plaintiff was accordingly obliged to fulfil its obligations in terms of its subcontract. Plaintiff alleges that it is entitled to payment of R45 061,60, being 'the sum due in terms of the C contract', which respondents have failed to pay, and for which, in their capacity as joint liquidators of RDA, they are liable.

The exception is not brought against the aforesaid allegations in the particulars of claim, but nevertheless it...