Shalala v Bowman NO and Others

• Jurisdiction: South Africa
• Judge: Blum AJ
• Judgment Date: 26 September 1988
• Citation: 1989 (4) SA 900 (W)
• Hearing Date: 07 September 1988
• Court: Witwatersrand Local Division

Shalala v Bowman NO and Others
1989 (4) SA 900 (W)

1989 (4) SA p900

Citation	1989 (4) SA 900 (W)
Court	Witwatersrand Local Division
Judge	Blum AJ
Heard	September 7, 1988
Judgment	September 26, 1988

Flynote : Sleutelwoorde B

Execution — Sale in execution — Immovable property sold in execution — Prior to transfer of property, company which owned the property placed under liquidation order — Liquidator not bound by such sale — C Companies Act 61 of 1973 ss 359(1)(b) and 361(1).

Headnote : Kopnota

A liquidator of a company in liquidation is not bound by a sale in execution of immovable property, owned by the company, where transfer has not yet taken place.

In the instant case, the applicant, the erstwhile director and also a creditor of a company in liquidation, applied for an order declaring D that the first respondent, the liquidator of the company, was not bound by and was entitled to repudiate a sale in execution of immovable property in terms of which property registered in the name of the company was sold to the third respondent. The property had been sold at the instance of the second respondent, a judgment creditor who had the property sold in satisfaction of the judgment debt. The sale in execution had taken place before the provisional winding-up order was granted. The third respondent complied with all the obligations imposed at the time of the sale and tendered to pay the purchase price. Transfer had, however, not yet been passed to the third respondent. Upon an E examination of ss 359(1)(b) and 361(1) of the Companies Act 61 of 1973, the Court held that the liquidator was not bound by the sale and and an order was granted to this effect.

Case Information

Application for a declaratory order. The facts appear from the reasons F for judgment.

L I Goldblatt SC (with him P Blieden ) for the applicant.

No appearance for the first respondent.

A R Gautschi for the second respondent.

B Knoetze for the third respondent.

G Cur adv vult.

Postea (26 September 1988).

Judgment

Blum AJ:

In this case the applicant seeks a declaratory order that the H first respondent as liquidator of the company M J Shalala Properties (Pty) Ltd (in liquidation) is not bound by, and is entitled to repudiate the sale in execution by the deputy sheriff of the immovable property the farm Roma 42 registration division I.2 Transvaal, measuring 1161,1811 hectares, which is registered in the name of the company in liquidation.

I Applicant, although the erstwhile director, is also a creditor of M J Shalala Properties (Pty) Ltd (which is hereinafter referred to as 'the company').

The company was placed under provisional liquidation on 25 August 1987 and a final order was granted on 6 October 1987.

The first respondent is the liquidator of the company and was J appointed on 8 September 1987.

1989 (4) SA p901

Blum AJ

A The second respondent is a judgment creditor who, having obtained a judgment against the company, proceeded to have the immovable property referred to above attached and sold in execution in satisfaction of its judgment.

The third respondent is the purchaser of the said property, who has apparently complied with the obligations imposed at the time of the B sale, and has tendered to pay or has paid the price raised at a sale in execution conducted by the deputy sheriff on 14 August 1987. Transfer however has not yet been passed to the third respondent.

The first respondent has not intervened actively and has stated that he abides the decision of the Court.

C When applicant first launched the application only the first and second respondents were cited. Subsequently, however, third respondent has been joined, and the applicant now seeks an order for costs against the second and third respondents jointly and severally, alternatively for costs against the second and third respondents as the Court deems just.

D The costs of the application to join the third respondent were reserved for determination by the Court hearing the main application. At the outset the application to join the third respondent was opposed by both himself and the second respondent. However, this opposition was subsequently withdrawn.

E During the course of the hearing the third respondent raised certain points in limine which are conveniently dealt with at this stage.

Firstly, Mr Knoetze for the third respondent argued that the applicant has no locus standi to move for the application. It is clear that the applicant is not bringing the application as erstwhile director for the company, but as the hitherto only proved creditor who has a real interest in the outcome. In terms of s 19(1)(c) of the Supreme Court Act 59 of 1959

F '... a Provincial or Local Division shall have power...

(iii)

in its discretion and at the instance of any interested person to enquire into and determine any existing, future or contingent right or obligation, notwithstanding that such person cannot claim any relief consequential upon the determination'.

G All the interested parties are now before the Court and in fact the liquidator actually suggested to the applicant that the applicant bring this application, although of course if he did not otherwise have locus standi, this invitation would not have conferred it on the applicant.

It seems accordingly pre-eminently a matter which the applicant, being H without doubt an 'interested person', could have launched. I can therefore not uphold the first point in limine.

Mr Knoetze's second point was that the issue raised by the applicant is hypothetical and academic. So, it is argued, that even if the applicant is successful, the first respondent has not indicated that he would repudiate the sale, and refers in this regard to the letter from I the first respondent to applicant's attorney, in which he suggests the present application and in para 4 thereof says:

'In view of the urgency I must place on record that such proceedings should, however, be instituted prior to 15 January 1988, failing which I shall implement the terms of the sale by the deputy sheriff.'

J (My italicising.)

1989 (4) SA p902

Blum AJ

A Firstly, the intention to proceed with the sale is only if the applicant does not timeously take the steps suggested.

Secondly, it is common cause that these proceedings were not initiated by 15 January 1988, but nonetheless the first respondent has not implemented the sale, no doubt because he is awaiting the outcome of the B Court's decision, and thus if the Court so holds, and if a better price could be realised, he could well be obliged in the interests of the creditors to repudiate the sale and attempt to obtain such higher price. The fact that a higher price might be forthcoming is indicated in the affidavit of the applicant's attorney, where he states that he has furnished the first respondent with an offer on behalf of a client of a C price in excess of that realised at the sale in execution. Accordingly the issue herein cannot be described as hypothetical or academic.

The third respondent argued further on this point that since the applicant was so sure of the state of the law and that first respondent's view, apparently also having taken legal advice, coincided with his own, there was no need to seek the relief now sought and that D the dispute was self-created.

Although the first respondent said he prima facie believed he was not bound by the sale, the fact is that he had been supplied with an opinion by senior counsel to the effect that he would not be entitled to repudiate the sale, and notwithstanding his view, which he unhappily E describes as irrelevant, there were thus two approaches to this issue. Accordingly he made the suggestion to applicant to bring the application.

In terms of s 19(1) the Court has a discretion to consider a matter such as the one presently raised, and although there is clear authority which would bind me on certain aspects of the liquidator's rights and obligations, and on the status of the...