Western Flyer Manufacturing (Pty) Ltd v Dewrance and Others NNO: In re Dewrance and Others NNO v North West Transport Investments (Pty) Ltd (Under Judicial Management) and Others

• Jurisdiction: South Africa
• Judge: Pistor AJ
• Judgment Date: 11 August 2005
• Citation: 2007 (6) SA 459 (B)
• Hearing Date: 16 May 2005
• Docket Number: 819/04
• Counsel: Adv Joubert SC (with M D Cochrane) for the applicant F H Terblanche SC (with H H Steyn) for the respondents L C J Maree SC for the liquidators
• Court: Bophuthatswana High Court

Pistor AJ:

Introduction

[1] This is an application for an order that certain dispositions by a company, Durabuild (Pty) Ltd (in liquidation) be set aside in terms of s 32 of the Insolvency Act, 1936 (Act 24 of 1936 - hereinafter referred to as the Act). H

[2] Both the citation of the parties and the form of the relief sought are relevant to the outcome of this matter. The parties are cited as stated in the heading of this judgment. I intend to revert to them later herein. I

[3] The relief sought (apart from a prayer for costs), is set out in the notice of motion:

Pistor AJ

'(1) That Western Flyer Manufacturing (Pty) Ltd is ordered to indemnify the applicants in accordance with the provisions of s 32 of A the Insolvency Act 24 of 1936 in respect of any costs relating to this application and the relief sought herein.

(2) That Western Flyer Manufacturing (Pty) Ltd is hereby authorised to proceed with this application in the name of the applicants.

(3) That the purported suretyship by Durabuild (Pty) Ltd (in liquidation) in favour of the second respondent alternatively the B first respondent dated 19 March 1999 be set aside alternatively impeached.

(4) That the notarial bond purportedly passed by Durabuild (Pty) Ltd (in liquidation) over all its movable property in favour of the second, alternatively the first respondent (BN/18346/99) be set aside alternatively impeached.

(5) That the respondents take all such steps as may be necessary in order to procure the payment of the proceeds of the C auction on 16 May 2002 in respect of the assets of Durabuild (Pty) Ltd (in liquidation) be paid to the applicants upon service of this order.'

[4] Western Flyer Manufacturing (Pty) Ltd cited in the heading of the application as the applicant, claims to be a creditor of the company known as Durabuild (Pty) Ltd. For the sake of convenience I D will refer to Western Flyer Manufacturing (Pty) Ltd herein as the applicant and to Durabuild (Pty) Ltd as 'Durabuild'.

[5] Durabuild was finally liquidated by an order of this Court and subsequent thereto five liquidators were appointed. They are cited in this application in the first instance as respondents and in the E second instance as the applicants. I refer to them jointly as the liquidators.

[6] North West Transport Investments (Pty) Ltd (under judicial management), North West Development Corporation (Pty) Ltd (under judicial management) and Comark Holdings (Pty) Ltd (in liquidation) F were cited in this application as first, second and third respondents respectively. Comark Holdings (Pty) Ltd (in liquidation) filed a notice in terms of which it abides by the decision of this Court. For the sake of convenience I refer to the other two respondents jointly as the respondents and to North West Transport Investments (Pty) Ltd as 'NTI', to North West Development Corporation (Pty) Ltd as 'NWDC' and to Comark Holdings (Pty) Ltd as G 'Comark'.

[7] Since the filing of the present application the order of judicial management in respect of NWDC was uplifted but nothing turns on this fact in the present application. H

[8] It is common cause that prior to its liquidation Durabuild signed a suretyship in favour of the NWDC for a debt owed to the latter by Comark. It is also common cause that prior to its liquidation Durabuild signed a notarial bond in respect of its movable assets.

[9] Pursuant to the said notarial bond having been signed, and on 18 February 2002, NTI and the NWDC jointly as applicants I obtained (in this Court) an order against Durabuild as respondent in terms of which NTI and the NWDC were authorised (in terms of the provisions of the said notarial bond) to take possession of Durabuild's movable assets. I refer to that order as the 'perfecting order'. J

Pistor AJ

[10] It is common cause that subsequent to the 'perfecting order' having been granted, the NWDC and NTI sold the said movable A assets by public auction and it is the proceeds of that sale that form the subject of the prayer contained in para 5 of the notice of motion referred to above.

[11] The applicant filed a founding affidavit deposed to by the applicant's attorney. B

[12] The liquidators did not file any affidavits. The respondents filed an answering affidavit in which they took a number of points in limine. They did not initially react to the averments relating to merits of the application. On the strength of the said points in limine the respondents maintained that the application cannot succeed. C

[13] The respondents subsequently also filed affidavits on the merits but it is not necessary for the purpose of this judgment to consider the merits of the case.

[14] The first of the said points in limine was one of non joinder. However this point was subsequently abandoned and I D need not refer to it at all.

[15] The second point raised in the answering affidavit was that the applicant failed to indemnify the liquidators against all costs of the application. This point was raised by virtue of the provisions of s 32(1)(b) of the Act to which I intend to revert later herein. E

[16] A further point in limine constitutes an attack on the authority of the attorney who deposed to the founding affidavit, to depose to that affidavit on behalf of the liquidators. The point was developed further in argument and in a nutshell it boils down to an averment that the application was not made 'in the name of' the liquidators. F

[17] The answering affidavit was signed on 16 August 2004. On 24 February 2005 the respondents filed a 'notice to introduce a further point in limine'. The gist of the latter point is that the applicant has not applied for the setting aside of the 'perfecting order' referred to above and that the applicant can therefore not succeed with its application. G

[18] On 2 December 2004 the applicant and the respondents were represented when the matter was called before Leeuw J. The liquidators were not represented on that day. By agreement between the parties then before the learned Judge a draft order, prepared by the parties, was made an order of Court. In terms of the H latter order the matter was referred for evidence on the following issues:

'Whether the suretyship, general notarial bond and the perfection of the notarial bond constituted impeachable dispositions in terms of ss 26, 29, 30 or 31 of the Insolvency Act.' I

[19] The matter was set down for hearing before me on 16 May and subsequent days. A total of seven days was reserved for the hearing of the matter. Before the start of the matter on 16 May 2005 the legal representatives of the parties approached me in Chambers. They are Adv Joubert SC with Adv Cochrane on behalf of the applicant, J

Pistor AJ

Adv Terblanche SC with Adv Steyn on behalf of the respondents and Adv Maree A SC on behalf of the liquidators. I was then informed by them that the applicant was prepared and ready to proceed to lead the evidence of a witness. However Mr Joubert indicated that the particulars of the evidence of the witness were given to Mr Terblanche late and that the matter might have to be postponed in order for Mr Terblanche to consider his position. Mr Joubert B was of the view that, by virtue of the agreement that had been made an order by Leeuw J (referred to above) the said points in limine would be argued after the evidence was led. Mr Maree was of the view that his clients were not given an indemnity and that he would in any event want to argue the point in limine with regard to the failure of the applicant to C provide the liquidators with an indemnity. Mr Maree did not consider himself bound by the agreement that the matter be referred for evidence and that the points in limine be argued at the end of the evidence. I was informed that the points in limine had not been abandoned and will be proceeded with irrespective of D whether the evidence will be led. I was of the view that at least some of the points in limine appear prima facie to be of such a nature that should they succeed the leading of evidence might be unnecessary. I then requested the parties to argue the points in limine first.

[20] The matter then stood down until the next morning when argument on the points in limine started. Having heard E argument on the points I became convinced that at least one of the points in limine ought to be successful. However, I needed more time to consider a full judgment on the matter. The indication that I got from the parties was that the matter could be proceeded with if I dismissed the points in limine. I therefore, and in F order not to keep the parties in uncertainty, at the end of the argument on the points in limine, dismissed the application based on the one point. However, I reserved my reasons for doing so as well as the rest of my judgment. I now deal with the points in limine.

[21] I have had the benefit of heads of argument and able oral G argument submitted by counsel on behalf of all the parties for which I thank counsel. I now deal with the points in limine.

Failure by the applicant to provide to the liquidators an indemnity in terms of s 32 of the Act H

[22] It is common cause that on the morning of the day on which the points in limine were argued before me, the liquidators received an indemnity in respect of the costs of this application to their satisfaction. However, the contentions of both Mr Maree and Mr Terblanche were that such an I indemnity came too late and that the applicant's application ought to be dismissed, since it was instituted before the indemnity had been provided.

[23] Section 32 of the Act is relevant for present purposes and provides (insofar as relevant) as follows: J

Pistor AJ

'32 Proceedings to set aside improper disposition A

(1)(a) Proceedings to recover the value of property or a right in terms of s 25(4), to set aside any disposition of...