Roering and Others NNO v Nedbank Ltd

• Jurisdiction: South Africa
• Judge: Van Oosten J
• Judgment Date: 04 October 2012
• Citation: 2013 (3) SA 160 (GSJ)
• Docket Number: 2012/12834
• Hearing Date: 29 August 2012
• Counsel: JC Butler SC for the applicants. PG Robinson SC for the respondent.
• Court: South Gauteng High Court, Johannesburg

Van Oosten J: C

[1] At issue in this application is the fate of seven aircraft [1] sold by the respondent (the bank) to a company known as Aircraft Africa Contracts Company (Pty) Ltd (AACC), which has since been finally wound up due to its inability to pay its debts. The applicants, who are the appointed liquidators of the insolvent company, seek a number of declarators, to D the effect that the aircraft fell into the estate of AACC, with effect from the date of commencement of its winding-up, pursuant to the provisions of s 84(1) read with s 83 of the Insolvency Act 24 of 1936 (the Act). [2] The bank, on the other hand, contends that its ownership of the aircraft, as provided for in the reservation of ownership clause [3] in the series of instalment agreements in terms of which they were sold to AACC (the E agreements), survived the liquidation of the company.

[2] A résumé of the salient facts of this matter, which are not in dispute, is the following. AACC, until its winding-up on 13 September 2011, carried on business in the leasing and chartering of aircraft. The F agreements were concluded in the period between 24 December 2010 and 23 February 2011 and are all in materially identical terms. In terms of the agreements the bank sold the aircraft to AACC, on credit, at the price stated in the introduction to the agreements, the ownership of which vested in the bank until payment of all amounts due in terms of the agreements had been made. It is common cause that the agreements G are instalment agreements, as contemplated in s 84(1) of the Act. The bank duly delivered the aircraft, but AACC defaulted in the payment of one or more of the instalments due under the agreements. On 20 May 2011 the bank delivered a notice [4] to AACC, confirming the arrears and informing it that —

'unless payment of the [outstanding balance] is received within 10 business H days from the date of . . . delivery of this letter, the agreement will

Van Oosten J

A be cancelled and the full amount . . . will be immediately due and payable'. [The demand.]

[3] On 27 May 2011, and thus before expiry of the notice period of 10 days, applications for the winding-up of AACC were launched, with the result that this date is deemed to be the date of commencement of the B winding-up of the company in terms of s 348 of the Companies Act 61 of 1973. On 13 July 2011 the bank formally cancelled the agreements. [5] On 26 July 2011 a provisional winding-up order was issued which, despite opposition thereto, was made final on 13 September 2011.

[4] A convenient point of departure is to consider the provisions of C s 84 of the Act, which provides as follows:

'84 Special provisions in case of goods delivered to a debtor in terms of an instalment agreement

(1) If any property was delivered to any person (hereinafter referred to as the debtor) under a transaction that is an instalment agreement D contemplated in paragraph (a), (b) and (c)(i) of the definition of instalment agreement set out in section 1 of the National Credit Act . . . 34 of 2005, such a transaction shall be regarded on the sequestration of the debtor's estate as creating in favour of the other party to the transaction (hereinafter referred to as the creditor) a hypothec over that property whereby the amount still due to him under E the transaction is secured. The trustee of the debtor's insolvent estate shall, if required by the creditor, deliver the property to him, and thereupon the creditor shall be deemed to be holding that property as security for his claim and the provisions of section 83 shall apply.

(2) If the debtor returned the property to the creditor within a period of one month prior to the sequestration of the debtor's estate, the trustee may demand that the creditor deliver to him that property or the F value thereof at the date when it was so returned to the creditor. . . .'

It is common cause that the law relating to insolvency is rendered applicable to the winding-up of AACC by the operation of s 339 of the Companies Act 61 of 1973, as read with item 9 of sch 5 to the G Companies Act 71 of 2008. For the sake of completeness it is necessary to briefly summarise the consequential provisions of s 83 of the Act, which becomes operative once the statutory hypothec is created in terms of s 84(1). It provides for the realisation of securities for claims: a creditor who holds movable property as security for a claim must, before H the second meeting of creditors, give notice in writing of that fact to the Master and to the trustee, [6] and the trustee may within seven days take over the property from the creditor at a value agreed between the trustee and the creditor or at the full amount of the creditor's claim, or, if the trustee does not take over the property, the creditor may after the expiry of the period in which the trustee may take over the property, but before I the meeting, realise the property in the prescribed manner. [7] The same

Van Oosten J

rights are afforded to the creditor where no trustee has been appointed, A if permission is given by the Master. [8] As soon as the creditor has realised the property, the creditor must prove its claim and provide a statement of the proceeds of the realisation. [9] If the creditor has not realised the property before the second meeting of creditors, he must deliver the property to the trustee for the benefit of the insolvent estate. [10] The B creditor may prove its claim and place a value on the property. [11] As soon as a creditor has realised the security by selling it, the creditor must pay the proceeds of the realisation to the trustee (or, the Master, if no trustee has been appointed) and the creditor is thereafter entitled to payment out of such proceeds as a preferent claim. [12] C

[5] The controversy between the parties in essence concerns the legal effect to be given to the demand once concursus has intervened. The bank's contention is this: resulting from AACC's breach of the agreements and by the delivery of the demand, a right to cancel the D agreements accrued to the bank. I interpose to mention that the bank derives its right to cancellation from the provisions of clause 17 of the agreements, which does not contain a lex commissoria. The relevant part...