Pressma Services (Pty) Ltd v Schuttler and Another

• Jurisdiction: South Africa
• Judge: Van Schalkwyk AJ
• Judgment Date: 12 September 1989
• Citation: 1990 (2) SA 411 (C)
• Hearing Date: 19 April 1989
• Court: Cape Provincial Division

Van Schalkwyk AJ:

This is an application in terms of s 424(1) of the Companies Act 61 of 1973 ('the Act'). The history of the matter may be C summarised as follows:

1.

On 15 May 1985 Intergrafis (Pty) Ltd ('the company') was placed under provisional liquidation at the instance of the first respondent in the instant case.

2.

At all material times prior to the liquidation, the respondents in D the instant case were directors of the company.

3.

On 19 June 1985, upon application by the provisional liquidator of the company, leave was granted in terms of s 311 of the Act to convene meetings of the creditors of the company for the purposes of considering an offer of compromise proposed by Creda Group (Pty) Ltd ('the offeror').

4.

E Thereafter, meetings of creditors were duly convened and the offer of compromise was accepted by the requisite majorities. The applicant in the instant case, a creditor of the company, voted against acceptance of the offer but was bound by the majority.

5.

On 10 July 1985 the offer of compromise was duly sanctioned in F terms of s 311 of the Act, whereupon, in terms of the offer:

(i)

the rights of creditors to obtain payment of their claims against the company were limited to the right to obtain payment as provided for in the offer;

(ii)

the creditors ceased to have any further claims against the company or the offeror;

(iii)

G the face value of the creditors' claims were deemed to be reduced by R1 in respect of each claim;

(iv)

the claims thus reduced were deemed to have been ceded by the creditors to the offeror.

6.

On 24 September 1987 the provisional order of liquidation was H retrospectively discharged with effect from 10 July 1985 and the offer of compromise was duly implemented.

7.

On 28 January 1988 the applicant instituted the present proceedings in which payment of the sum of R47 568,69 is claimed from the respondents, jointly and severally.

The respondents, in their answering affidavits, raised what amounts to a point in limine. They contend that the applicant does not have the I right to proceed in terms of s 424(1) of the Act as it ceased to be a creditor of the company upon the offer of compromise being sanctioned and implemented.

It is also apparent from the affidavits filed by the parties that there are substantial disputes of fact which cannot be resolved without J recourse to

Van Schalkwyk AJ

A oral evidence. The parties accordingly requested that the following questions be decided before the merits of the matter are considered -

(a)

the point in limine ; and

(b)

if the point in limine is decided in the applicant's favour, an application by the applicant in terms of Rule 6(5)(g) of the Uniform Rules of Court for oral evidence to be heard on certain B specified issues.

This request was acceded to pursuant to the provisions of Rule 33(4).

Section 424(1) of the Act provides as follows:

'When it appears, whether it be in a winding-up, judicial management or otherwise, that any business of the company was or is being carried C on recklessly or with intent to defraud creditors of the company or creditors of any other person or for any fraudulent purpose, the Court may, on the application of the Master, the liquidator, the judicial manager, any creditor or member or contributory of the company, declare that any person who was knowingly a party to the carrying on of the business in the manner aforesaid, shall be personally responsible, without any limitation of liability, for all or any of the debts or D other liabilities of the company as the Court may direct.'

The contention on behalf of the respondents, in essence, is that any claim which the applicant may have had against the company was extinguished upon the offer of compromise being sanctioned and implemented. The applicant, so it was contended, then ceased to be a E creditor of the company within the meaning of s 424(1) and therefore no longer had the necessary locus standi to institute proceedings in terms of the subsection.

In answer to the respondents' contention, Mr Horn, on behalf of the applicant, made the following submissions:

(a)

F That upon a proper construction of s 424(1), the words 'any creditor... of the company' must be construed as meaning any person who was a creditor of the company at the time of the alleged fraudulent or reckless conduct.

(b)

That the alteration of rights and barring of debts resulting from a compromise being sanctioned does not affect rights of G recovery against persons other than the company itself. For this proposition, Mr Horn relied on the decision in Re Knebel Woodworking Co (Pty) Ltd (1985) 3 ACLC 739, a decision of the Supreme Court of New South Wales, Australia.

(c)

That in the light of the decisions such as Ex parte Kaplan and H Others NNO: In re Robin Consolidated Industries Ltd1987 (3) SA 413 (W) and Ex parte Millman and Others NNO: In re Multi-Bou (Pty) Ltd and Others1987 (4) SA 405 (C), the sanction of the compromise in the instant case was irregular and should therefore be regarded as pro non scripto for the purposes of deciding the present issue.

During the hearing, it was put to counsel that the sanctioning and I implementation of an offer of compromise such as the one in the instant case could affect the right conferred on a creditor by s 424(1) in one of three possible ways, viz the right could cease to exist or it could pass to the offeror, to whom the creditors are 'deemed' to have ceded their claims in terms of the offer of compromise, or it could remain vested in the creditor. Mr Horn, for the applicant, understandably J contended that the right

Van Schalkwyk AJ

A remained vested in the creditor, while Mr Engers, for the respondents, contended that the right either ceased to exist or that it passed to the offeror.

The constituent elements of s 424(1) of the Act are as follows:

1. The subsection may be invoked:

(a)

at the instance of:

(i)

B the Master;

(ii)

the liquidator;

(iii)...