Woodley v Guardian Assurance Co of SA Ltd

• Jurisdiction: South Africa
• Judge: Colman J
• Judgment Date: 30 October 1975
• Citation: 1976 (1) SA 758 (W)
• Hearing Date: 21 October 1975
• Court: Witwatersrand Local Division

Colman, J.:

This is an exception, taken by the plaintiff in a pending action, to a special plea which has been filed on behalf of the defendant.

The plaintiff's case, as set out in the particulars of his F claim, may be summarised in these terms:

(a)

That on 28 November 1972 when he was lawfully on the site of a building in the course of construction, he sustained bodily injuries, and in consequence thereof suffered damages in the sum of R32 914,05.

(b)

That the injuries were suffered in consequence of the negligence of the building contractor, a limited liability G company, or of its employees acting in the course of their employment, in the construction of the said building.

(c)

That the building contractor is in liquidation, as a company unable to pay its debts.

(d)

That the defendant was, at all material times, obliged, in terms of a certain insurance policy, to indemnify the H building contractor against all sums which the contractor would become liable to pay as compensation for bodily injuries suffered by any person and arising out of the performance by the contractor of its contract to erect the said building.

(e)

That in the premises, and by reason of the provisions of sec. 156 of the Insolvency Act, 24 of 1936, read with sec. 182 of the Companies Act, 46 of 1926, the defendant is liable to the plaintiff for payment of the damages suffered by him.

Colman J

The particulars of claim, in their original form, referred, not to sec. 182 of the Companies Act, 46 of 1926, but to sec. 339 of the Companies Act of 1973 (which is differently worded). But it was thereafter ascertained that the final winding up order against the contractor company had been granted in April 1973 and that, consequently, the 1973 A Act (which was then not yet in operation) did not apply; the plaintiff had to rely upon sec. 182 of the 1926 Act if it was to pursue its claim against the defendant.

By consent, the particulars of claim, and certain subsequent pleadings in which reference had been made to the later statute, were amended. I shall confine what I have to say to the pleadings as amended.

The defendant, after certain particulars had been B called for and furnished, filed a special plea, as well as a plea to the merits of the claim. I am concerned, at this stage, only with the special plea, wherein the essential paragraph reads as follows:

'2.

The defendant denies that the provisions of sec. 156 of the Insolvency Act, 24 of 1936, are applicable to the defendant or to C any company incorporated under the laws relating to companies, and further denies that sec. 182 of the Companies Act, 46 of 1926, renders the provisions of the Insolvency Act, 24 of 1936, applicable to the defendant or to any company incorporated under D the laws relating to companies.'

The plaintiff excepted to the special plea, and that is the exception now before me.

Sec. 156 of the Insolvency Act, 24 of 1936, as amended, provides that -

'whenever any person (hereinafter called the insurer) is obliged to indemnity another person (hereinafter called the insured) in respect of any liability incurred by the insured towards a third party, the latter E shall, on the sequestration of the estate of the insured, be entitled to recover from the insurer the amount of the insured's liability towards the third party, but not exceeding the maximum amount for which the insurer has bound himself to indemnity the insured'.

That provision, based no doubt on considerations of public policy, enjoins a departure from the normal course of events in relation to an insolvent estate and its debtors and creditors. The claimant, instead of F having to prefer his claim against the estate and be content with a dividend at such rate as the trustee (after recovering what is due to the estate by the insurer) is able to pay to unsecured creditors, is placed in a more favourable position. He can recover directly from the insurer. The amount which he can recover cannot exceed the limit fixed by the policy. But subject to that, he recovers in full, even if other G unsecured creditors have to be content with a few cents in the rand.

If, in the present case, the contractor had been an individual, and had been sequestrated, the plaintiff would clearly have been entitled to prefer his claim against the defendant, under sec. 156 of the Insolvency H Act, and to recover from it such amount of damages as he could prove that he had suffered.

Here the contractor is not an individual under sequestration, but a company under liquidation, and unable to pay its debts. The question which is crisply raised by the exception is whether or not sec. 182 of the Companies Act, 46 of 1926, as amended, confers upon the plaintiff the same fights as he would have enjoyed against the defendant if the contractor had been an individual under sequestration.

Sec. 182 of Act 46 of 1926 reads as follows:

Colman J

'In the case of every winding-up of a company unable to pay its debts, the provisions of the law relating to insolvent estates shall, in so far as they are applicable, be applied mutatis mutandis in respect of any matter not specially provided for in this Act, or the rules framed under sec. 220.'

It is common cause that the 1926 Act applies to the contractor company A in liquidation and that it is a company unable to pay its debts within the meaning of the section. It is common cause, also, that the possible application of sec. 156 of the Insolvency Act is not a matter...