Kleena Industries (Pty) Ltd v Senator Insurance Co Ltd

• Jurisdiction: South Africa

Kleena Industries (Pty) Ltd v Senator Insurance Co Ltd
1982 (2) SA 458 (W)

1982 (2) SA p458

Citation	1982 (2) SA 458 (W)
Court	Witwatersrand Local Division
Judge	Slomowitz AJ
Heard	November 25, 1981; November 26, 1981
Judgment	January 12, 1982

Flynote : Sleutelwoorde F

Company — Compromise — Act 61 of 1973 s 311 — 'All the creditors' in s 311 (2) — Means no more than all those creditors whom the offeror intended, on a proper construction of the offer, should be G bound — Nothing in Act precluding offeror from making an offer to acquire only some, or even one, of the claims against a company — Can also direct his offer to only some of the members of a class of creditors and not to others — Offer defining creditors as being 'any person... to whom the company was indebted... excluding the claim H by S Ltd' — Plea to counter-claim by S Ltd against the company averring that S Ltd, notwithstanding such definition, bound by sanctioned compromise — Exception to plea upheld — Quaere: Whether a class of creditors exists independently of the terms of an offer or whether the class is called into being by virtue of the offer directed at some creditors only who will then constitute the class.

Company — Compromise — Act 61 of 1973 s 311 — Court has no power, without consent of the offeror, to include in an offer any terms not included therein or to vary it without offeror's consent — Procedure to be followed if Court not satisfied with the offer.

1982 (2) SA p459

Headnote : Kopnota

Where the Companies Act 61 of 1973 refers to a sanctioned composition (ie one in terms of s 311) as being binding on all creditors or on all members of a particular class of them, the word 'all' (as it appears in the phrase 'all the creditors' in s 311 (2) of the Act) must be A qualified to mean no more than all those whom the offeror intended, on a proper construction of the offer, should be bound.

Barclays National Bank Ltd v H J de Vos Boerdery Ondernemings (Edms) Bpk 1980 (4) SA 475 (A) at 484A - C applied.

There is nothing in the Companies Act 61 of 1973 or in any of the authorities which would, all things being equal, preclude an offeror from making an offer to acquire only some of the claims which lie B against a company or perhaps only one of them, or from directing his offer to only some of the members of a class of creditors and not to others. No doubt, if such an offer is calculated to produce inequity, sanction would be withheld. Equally, a creditor, or a member, to whom the offer is not directed, would have locus standi, either when it is sought to obtain leave to convene meetings or at the later stage when C the approval of the Court is asked, to make his complaint known.

In principle, an offer of compromise in which the word 'creditor' was defined as being 'any person, firm, company or other legal entity to whom the company was indebted in respect of any claim... excluding the claim by Senator Insurance Co Ltd' (excipient/defendant) was held not to be objectionable and an exception to a special plea to the D excipient's (defendant's) counter-claim (the special plea averring that, notwithstanding the fact that the defendant's claim was excluded by the definition in the offer of compromise, the defendant was bound by the compromise as sanctioned by the Court) was upheld and the special plea was struck out.

Quaere: Whether a class of creditors exists quite independently of the terms of an offer or whether it is called into being by virtue of the fact that the offer is directed at some creditors only who will then E constitute the class in question. Question raised but not decided.

A Court has no power, without the consent of the offeror, to include in an offer any terms which the offeror has not included therein, or to vary it (as opposed to construing it) without his consent. The offer is his creature and not that of the creditors or the Court. If a Court is not satisfied with a particular offer, then its remedy is to refuse to F order that meetings be called in terms of s 311 of the Act or to sanction the offer after meetings have been held unless and until the offeror consents to such amendments as the Court requires.

Case Information

Exception to a special plea to a counter-claim. The nature of the G pleadings appears from the reasons for judgment.

R H Zulman SC (with him J I van Niekerk) for the excipient (defendant in convention).

J Browde SC (with him B W Burman) for the respondent (plaintiff in convention).

Cur adv vult.

H Postea (January 12).

Judgment

Slomowitz AJ:

This is an exception. It turns principally on the proper interpretation to be put on s 311 of the Companies Act 61 of 1973. The respondent (whom I shall refer to as the plaintiff) processes and distributes textiles and cleaning materials. It effected a policy insurance

1982 (2) SA p460

Slomowitz AJ

over its premises and plant with the defendant (who is the excipient), covering itself against the risk of loss due to fire. During the currency of the policy, a fire occurred, as a result of which the A plaintiff avers that it sustained a loss amounting to R505 286. According to the summons the defendant paid it R142 845 on account of the claim, leaving a balance of R361 441, for which the plaintiff sues, the defendant, despite the payment, having repudiated liability.

The plea reveals a dispute, immaterial to these proceedings, concerning B the precise amount paid by the defendant to the plaintiff. In a counter-claim the defendant alleges that it is entitled to avoid the policy because of a material non-disclosure by the plaintiff at the time that the insurance was effected. Accordingly and by means of a condictio it claims return of the part-payment. The plaintiff raised a special plea to the counter-claim and it is to this pleading as particularised C that the defendant excepts.

It appears from the special plea that Consortium Construction (Pty) Ltd, whom I shall call the offeror, proposed an offer of compromise in terms of s 311 of the Act between the plaintiff and its creditors. The offer D provided that on sanction the plaintiff would pay to its preferent creditors the full amount of their claims to the extent of their preferences and to its secured creditors the full amount of their claims to the extent of the value of their securities. For the rest, they were to rank as concurrent creditors. The offeror on the other hand obliged itself to contribute the sum of R40 000 to a receiver named in the E offer. This sum was to be utilised by him to discharge various costs and expenses, after which he was to distribute the balance as a dividend to concurrent creditors. In consideration for this dividend, the concurrent creditors were deemed, upon sanction of the offer, to have ceded their claims to the offeror. In order to obtain the dividend, they were bound (as indeed were all of the other creditors) to prove their F claims to the receiver's satisfaction within 60 days after the offer was sanctioned.

Meetings of creditors were directed and duly held in terms of the section. Creditors approved of the offer and the Court sanctioned it. All of this came to pass after the action had been instituted and prior to the special plea being filed.

G The special plea recites that the offer defined a creditor as being

'any person, firm, company or other legal entity to whom the...