Lief, NO v Western Credit (Africa) (Pty) Ltd

• Jurisdiction: South Africa
• Judge: Snyman J
• Judgment Date: 21 May 1965
• Citation: 1966 (3) SA 344 (W)
• Hearing Date: 20 May 1965
• Court: Witwatersrand Local Division

Snyman, J.:

The applicant (defendant in the action) applies to amend its plea. Counsel for the applicant has prepared and placed before the Court H a comprehensive amended plea so as to embody the proposed amendments.

The respondent (plaintiff in the action) opposes the application on the ground that the proposed amendments, if allowed, would not disclose a defence to the plaintiff's claim, inasmuch as they are bad in law.

Briefly the facts which I must accept and consider for the purpose of this application, are as follows:

Snyman J

On 9th May, 1961, the South African Board of Executors and Trust Co. (to which I shall refer as 'the Board', and of which the respondent is presently the liquidator and was formerly the provisional judicial manager), represented by its then managing director, Mr. Bayliss, A entered into a deed of sale with the applicant in terms of which the Board sold to the applicant certain mortgage bonds. The Board also sold its rights against the mortgagor in respect of the mortgaged property. A copy of the deed of sale is annexed to the pleadings.

Thereafter, again acting through its managing director, the Board by an underhand, i.e. a non-notarial cession, ceded the bonds to the applicant B in pursuance of this deed of sale. A copy of the cession is also attached to the pleadings. The cession is an out-and-out cession by way of purchase of the mortgage bonds and not a cession by way of security. Following upon this cession, the mortgage bonds concerned, as also the title deeds of the properties in respect of which the mortgage bonds operate, were delivered by the Board to the applicant.

C In doing all these things, the managing director, Mr. Bayliss, acted on proper resolutions of the Board and in accordance with those resolutions.

On 19th January, 1962, the Board was placed under provisional judicial D management, and the respondent was appointed provisional judicial manager. This provisional judicial management order was granted on the application of the aforesaid Mr. Bayliss, who, at the time, was the managing director of the Board.

On 2nd April, 1962, the provisional judicial manager filed an application with the Registrar of this Court in terms of sec. 197 (h) of E the Companies Act, as amended, and in it he applied for the cancellation of the provisional judicial management order and for the issue of a winding-up order. This application by the provisional judicial manager was heard and granted on 10th April, 1962. The provisional windingup order was made final on 1st May, 1962.

F On 3rd April, 1962, the applicant caused the cession of the mortgage bonds to be registered in its favour in the office of the Rand Townships Registrar and thereafter in the Deeds Registry Office. It is common cause that this registration of the cession did not require any act on the part of the Board or its successor, the provisional judicial manager, and that the applicant, in causing the registration of this cession, in fact acted unilaterally without any assistance from the G provisional judicial manager.

Those are the facts. In regard thereto three points require noting as being of importance for the issues which I have to decide in this application:

H Firstly, the cession was granted by virtue of a resolution of the board of directors of the Board before the Board was placed under provisional judicial management; it was therefore not an act of the provisional judicial manager.

Secondly, the registration of the cession took place a day after the provisional judicial manager had filed or presented his application to the Registrar of this Court for a winding-up order.

Thirdly, the registration of the cession took place before the provisional liquidation order was granted.

Snyman J

The respondent has instituted an action against the applicant to have this cession declared void on the grounds that -

(a)

The cession was invalid and was ineffective to transfer rights A or property in the said mortgage bond to the applicant by reason of the fact that it was not a notarial cession, and that without registration it was invalid, and at no time could it properly be registered validly as required by the Deeds Registry Act, 47 of 1937.

(b)

The registration of the cession on 3rd April was invalid and B void and of no effect, firstly, because it was an underhand cession; secondly, because it took place after the Board was placed under judicial management; and, thirdly, because it took place after the commencement of the winding-up order.

In view of the amendment to sec. 16 of the Deeds Registries Act, 47 of C 1937, by sec. 4 of the General Law Amendment Act of 1964, the respondent's first contention falls away.

The purpose of the proposed amendments is to set out facts in the applicant's plea which it believes will enable it to controvert the contentions by the respondent.

D Counsel for the parties have, at my request, defined the issues between them as follows:

1. (a)

On 3rd April, 1962, when registration of the cession took place, had a winding-up commenced within the meaning of sec. 115 of the Companies Act by the presentation of a petition?

(b)

E Was the affidavit of the judicial manager of 2nd April, 1962, such a petition?

(c)

Had it been properly presented?

2.

Was the registration, after judicial management, of the cession by the company of a mortgage bond in its favour, made pursuant to a F resolution passed and a cession executed by the company prior to judicial management, valid?

Those then are the two issues with which I must deal. It is inherent in the propositions stated that, if the winding-up order commenced before the registration of the cession, the mortgage bond, being immovable G property in terms of the decision in Lief, N.O v Dettmann, 1964 (2) SA 252 (AD), would have become an asset in...