Nedbank Ltd v Chance and Others

• Jurisdiction: South Africa
• Judge: Theron J
• Judgment Date: 28 November 2008
• Citation: 2008 (4) SA 209 (D)
• Docket Number: 496/2006
• Counsel: RJ Salmon SC for the plaintiff. JJ Gauntlett SC and IJ Muller SC for the first, second, third, fourth and fifth defendants.
• Court: Durban and Coast Local Division

Theron J:

C [1] The plaintiff (Nedbank) sues the first, second, third, fourth and fifth defendants (the defendants) in their capacity as sureties for the sixth defendant's (Chance Brothers) indebtedness to the plaintiff. The only question before this court is whether Nedbank is entitled to claim rectification of an agreement entered into between it and Chance D Brothers.

[2] This matter was argued on the basis of an agreed set of facts. On 17 April 1998, Chance Brothers was placed in provisional liquidation at the instance of Nedbank. During October 1998, the parties entered into E an agreement (the reorganisation agreement) with the purpose of restructuring Chance Brothers' indebtedness to Nedbank and to ensure Chance Brothers' removal from provisional liquidation. It was recorded in the reorganisation agreement that Chance Brothers was indebted to Nedbank, as at the date of signature of the agreement, in an amount in excess of R10 million. It was also recorded that the defendants had F personally guaranteed the obligations of Chance Brothers to Nedbank in terms of suretyship agreements executed during 1993.

[3] In terms of the reorganisation agreement a portion of the debt owed by Chance Brothers, R3,5 million, was to be repaid to Nedbank by the issue to the latter of 3,5 million cumulative redeemable preference G shares. The parties agreed on the issue price of one rand per preference share, with a cost of one cent and a premium of 99 cents per share. The shares were issued subject to the terms and conditions set out in the annexure to the reorganisation agreement. Chance Brothers' remaining indebtedness to Nedbank was to be dealt with in terms of a loan H agreement concluded by the parties during 1996.

[4] On 18 December 2002 an application was launched for Chance Brothers' winding-up and on 20 December 2002 a provisional winding-up order was granted.

[5] In this action Nedbank claims from the defendants the balance which I it contends was owed to it by Chance Brothers on the winding-up of the latter. This balance is calculated with reference to what Nedbank alleges was the total indebtedness of Chance Brothers to it at the date of winding-up, less dividends paid to Nedbank by the liquidators following the winding-up. Nedbank's claim against Chance Brothers was J R10 752 119,85 and included an amount of R3,5 million being the

Theron J

redemption value of the preference shares. Nedbank's claim was A accepted by the liquidators. The liquidators' first, and second and final liquidation and distribution accounts were confirmed by the Master of the High Court on 9 March 2004 and 31 May 2007, respectively. It was common cause that the liquidators had paid dividends to the plaintiff in the amount R7 936 835, 81. B

[6] The defence raised by the defendants is that the reorganisation agreement cannot, as a matter of law, be rectified after the...