Voltex (Pty) Ltd v First Strut (RF) Ltd (In Liquidation) and Others

• Jurisdiction: South Africa
• Citation: 2022 (3) SA 550 (GP)

Voltex (Pty) Ltd v First Strut (RF) Ltd (In Liquidation) and Others
2022 (3) SA 550 (GP)

2022 (3) SA p550

Citation	2022 (3) SA 550 (GP)
Case No	43914/17
Court	Gauteng Division, Pretoria
Judge	Van der Schyff J
Heard	October 5, 2021
Judgment	October 5, 2021
Counsel	BM Gilbert for the applicant.; J Peter SC for the third respondent.

Flynote : Sleutelwoorde

Contract — Consensus — Rectification — Rectification of agreement by creditor party after debtor party placed into liquidation and concursus creditorum established — Whether permissible — Principles applicable.

Headnote : Kopnota

The present matter concerned the question whether an agreement between A and B, in which A stood as creditor, and B as debtor, could be still rectified where the application for rectification was sought by A subsequent to B's having been wound up consequent to liquidation proceedings instituted against it, and concursus creditorum accordingly reached.

What was claimed, before the Pretoria High Court, was the rectification of 'an application for credit incorporating a cession of book debts'. The applicant, Voltex (Pty) Ltd, claimed that, on 26 January 1999, an agreement was entered into between itself and the first respondent whereby the latter applied for credit facilities from the former, and ceded to the applicant its book debts and other debts as continuing covering security. The applicant claimed, however, that the written agreement, as a result of an error, did not reflect its company registration number, but that of a pre-existing company associated with the applicant that had previously shared the same name. The applicant now sought to rectify the security cession concluded between itself and the first respondent by deleting the incorrect registration number and replacing it with the correct one. Importantly for present purposes, some time after the abovementioned agreement was entered into the first respondent was placed into liquidation. The applicant was launching this rectification application four years after those proceedings had commenced; it intended to advance a secure claim against the insolvent estate of the first respondent, relying on the cession.

The third respondent, Prevance Bonds (Pty) Ltd, a rival creditor of the insolvent estate of the first respondent, opposed the rectification. It relied on the principle of law that, once a company was liquidated, a concursus creditorum was established, crystallising the insolvent's estate, and after which no transaction could be entered into with regard to estate matters by a single creditor to the prejudice of the general body. The claim of each creditor could only be dealt with as it existed at the issue of the order. To grant the rectification sought here would have the effect of allowing a creditor which was only a concurrent creditor at the date of winding-up to alter its position post-liquidation to become a preferent creditor, in disturbance of concursus creditorum. That could not be permitted. (See [6] and [12].)

The court identified the question lying at the heart of the dispute between the parties as whether, in circumstances where one party to an agreement was in liquidation, a written agreement concluded inter se could be rectified after the concursus creditorum was established (see [8]). After a thorough review of case law on the topic (see [8] – [33]), the court, referring with approval to academic authority, held that the legal position was that rectification post-concursus was only precluded where such rectification would result in a creditor acquiring a right or a claim not already held at the

2022 (3) SA p551

institution of concursus (see [34]). Thus, rectification was permissible where it was sought merely to reflect the correct position according to the true intention of the parties as at such a date. (See [34] and [35].)

The court went on to hold that, in circumstances where the facts proved that (i) a valid cession agreement was concluded between the parties prior to a liquidation order being granted; but (ii) the agreement did not reflect the parties' common intention in the sense that the creditor was not correctly described, and the evidence indicated that the insolvent and the creditor were in actual fact the parties to the agreement, rectification would neither create nor detract from any rights as they existed when the concursus creditorum came into existence. It was a misconception to view ex post facto rectification of the description of a party to an agreement as an interference with the position obtained at the concursus creditorum. If, in the present case, it was found on the facts that a valid cession of book debts was transacted between the parties, the applicant was a secured creditor and had been such from the moment of liquidation. Where a misdescription of a party was the only issue taken with the contentious agreement, there could be no prejudice to third parties if the document wherein the agreement was captured was rectified to reflect the correct description of the parties. The status quo was not affected by such rectification. (See [36].) The court went on to hold, based on the facts, that the applicant had indeed established that the parties had intended for the credit agreement and security cession to be concluded between the applicant and the first respondent (see [50]), and that it had otherwise met the requirements for rectification (see [51]). The court accordingly granted an order rectifying the agreement in the manner contended for by the applicant (see [51]).

Cases cited

Botha v Fick 1995 (2) SA 750 (A): referred to

Brayton Carlswald (Pty) Ltd and Another v Brews 2017 (5) SA 498 (SCA): dictum in para [9] applied

De Hart NO v Virginia Land and Estate Co Ltd and Another 1957 (4) SA 501 (O): referred to

Durmalingam v Bruce NO 1964 (1) SA 807 (D): discussed and distinguished

FirstRand Bank Ltd v Land and Agricultural Development Bank of South Africa 2015 (1) SA 38 (SCA) ([2014] ZASCA 115): referred to

Guman and Another v Latib 1965 (4) SA 715 (A): referred to

Incledon (Welkom) (Pty) Ltd v QwaQwa Development Corporation Ltd 1990 (4) SA 798 (A): referred to

Industrial Finance and Trust Co (Pty) Ltd v Heitner and Another 1961 (1) SA 516 (W): referred to

Klerck NO v Van Zyl and Maritz NNO and Another and Related Cases 1989 (4) SA 263 (SE): referred to

Lazarus v Gorfinkel 1988 (4) SA 123 (C): referred to

Milner Street Properties (Pty) Ltd v Eckstein Properties (Pty) Ltd 2001 (4) SA 1315 (SCA): referred to

National Credit Regulator v Lewis Stores (Pty) Ltd and Another 2020 (2) SA 390 (SCA) ([2020] 2 All SA 31; [2019] ZASCA 190): referred to

Nedbank v Chance and Others 2008 (4) SA 209 (D): discussed and not followed

Oertel NNO v Brink 1972 (2) PH A43 (WLD): referred to

Oilwell (Pty) Ltd v Protec International Ltd and Others 2011 (4) SA 394 (SCA) ([2011] ZASCA 29): referred to

2022 (3) SA p552

PG Bison Ltd and Others v Master of the High Court, Grahamstown, and Another [1998] JOL 1225 (E): compared

Spiller and Others v Lawrence 1976 (1) SA 307 (N): referred to

Standard Bank of South Africa Ltd v Strydom NO and Others [2019] ZAGPPHC 142: referred to

Syfrets Bank Ltd v Sheriff of the Supreme Court, Durban Central, and Another; Schoerie NO v Syfrets Bank Ltd and Others 1997 (1) SA 764 (D): referred to

Thienhaus NO v Metje & Ziegler Ltd and Another 1965 (3) SA 25 (A): discussed and applied

Van Zyl and Others NNO v The Master, Western Cape High Court, and Another 2013 (5) SA 71 (WCC): discussed and compared

Walker v Syfret NO 1911 AD 141: dictum at 160 discussed

Ward v Barrett NO and Another NO 1963 (2) SA 546 (A): referred to

Weinerlein v Goch Buildings Ltd 1925 AD 282: dictum at 291 applied.

Case Information

BM Gilbert for the applicant.

J Peter SC for the third respondent.

An application for the rectification of 'an application for credit incorporating a cession of book debts'.

Order

1.

The 'Application for Credit Facilities Incorporating Deed/s of Suretyship' containing the security cession, dated 26 January 1999, a copy of which is annexed to the notice of motion, is hereby rectified by the deletion of 'REG. NO. 88/006535/07' as it appears on p 2 thereof and substituted with 'REG. NO. 1964/006740/07'.

2.

The third respondent is to pay the costs of the application.

Judgment

Van der Schyff J:

Introduction

[1] This is an application for the rectification of 'an application for credit incorporating a cession of book debts' (the written agreement). The applicant avers that the written agreement was concluded between itself and the first respondent prior to the latter being wound up. Although the written agreement reflects the applicant's name (Voltex (Pty) Ltd — previously known as Voltex Distributors (Pty) Ltd — herein referred to as 'Voltex 2'), it does not reflect the applicant's company registration number. Coincidentally it reflects the company registration number of a pre-existing company with an identical name (Voltex (Pty) Ltd — 'Voltex 1'), which company effected a name change to Aberdale Cables SA (Pty) Ltd during 1998. The applicant concluded a general cession of book debts in favour of Voltex 1 during 1995 and allegedly a second credit agreement with cession of book debts with Voltex 2 during 1999. This second agreement constitutes the written agreement that is the subject-matter of this application because it reflects Voltex 1's company registration number, and not Voltex 2's company registration number. The first respondent is presently in liquidation. The applicant seeks to

2022 (3) SA p553

Van der Schyff J

advance a secured claim against the insolvent estate of the first respondent, relying on the cession. The rectification application was launched almost four years after the winding-up commenced.

[2] When the application was heard, the applicant did...