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The decision in RONBEL v SUBLIME [2009] ZASCA 103 (18 September 2009) endorses S359 (2) of the Companies Act and applies it within the context of cession. It is apparent that the relevance of this section is not to be under-estimated, as it creates strict time constraints, which if not complied with, may lead to the abandonment of proceedings.

 

S359 (1) of the Companies Act states that upon the registration of a special resolution by a company that it be wound up voluntarily, all civil proceedings against that company are suspended until such time as a liquidator is appointed. S359 (2) states that a person who intends to continue with such proceedings must, within four weeks after the appointment of the liquidator, give the liquidator three weeks notice of his intention to continue. In the event that such notice is not provided for then the proceedings are considered to have been abandoned [S359 (2) (b)].

 

In the present case, ABSA bank had a claim against Sublime Investments and had instituted action. ABSA later ceded the claim to the Appellant who are now seeking such a directive as to allow the proceedings to continue, after the directive had been refused in the Johannesburg High Court.

 

ABSA instituted claim against Sublime and the date for the hearing was for the 30 April 2003. Shortly before the trial was to commence, Sublime (Pty) Ltd, by Special Resolution, resolved that it would be voluntarily wound up and that the winding up would be affected by the registration of the resolution. In light of the Companies Act, the action instituted by ABSA was suspended pending the appointment of a liquidator.[1]

 

A Mr. Anticevich was appointed as final liquidator on July 1^st 2004. Around this time, the appellant expressed an interest in acquiring ABSA’s claims and entered into negotiations with ABSA regarding the acquisitions of such claims. Towards the end of October they reached the following agreement: that a) ABSA would cede to the appellant all of its rights, title and interest in and to the claims held by ABSA against the company; b) in consideration for the cession the appellant would pay ABSA an amount of R250 000; and c) a claim would be prepared in the name of ABSA and submitted for proof.

 

These claims were ceded on the 31^st of October 2005 and at a meeting of creditors held on the 24^th of May 2006 the appellant submitted ABSA’s claims. The claims were however opposed by the company’s director and member, Mr. Van Zyl on the grounds that they had been ceded to the appellant before they were submitted for proof, that the claims had become prescribed and that the quantum of the claims could not be established by a certificate of indebtedness.

 

It was common cause that the appellants had not given the liquidators notice in terms of S 359 (2) (a) of an intention to continue the proceedings. Consequently the proceedings (not the claims) must be considered to have been abandoned unless a court otherwise directs it. It was found in the court below that the deliberate decision for ABSA not to notify the liquidator that it intended to proceed with the action constituted evidence that the action had been abandoned and that the appellant had failed to provide a satisfactory explanation for not notifying the liquidator.

 

The appellant argued that the liquidator was in no way prejudiced by the fact that no notice was given to him. It was held that although no prejudice is alleged by the appellant the liquidator had, contrary to the interests of the general body of creditors of the appellant, not been given an opportunity immediately after his appointment to consider and assess the nature and validity of ABSA’s claim against the appellant. The reason why the liquidator had not been afforded that opportunity is that ABSA decided not to proceed with the proceedings and not to prove a claim against Sublime for fear of being held liable for a contribution. When ABSA took that decision information as to the assets and liabilities of Sublime was available and known to ABSA. Only about two years after the time for giving notice of intention to continue with the proceedings had expired, was an attempt made by the appellant, not ABSA, to prove the claims. The application for a directive followed more than six months later.

 

It was decided therefore that ABSA took the deliberate decision not to proceed with the action and that there was no allegation that the decision was changed during the period that it had an interest in the claim against Sublime, i.e. up to the date of the cession. Furthermore it was stated that since ABSA did not deny having knowledge of the S359 (2) (b), they are assumed to have such knowledge, thus justifying the presumption that ABSA in fact abandoned the action. The distinction between the abandonment of the claim and the abandonment of the action discussed, whereby it was decided that the fact that ABSA entered into the negotiations it had no abandoned the claim, yet had abandoned the action. If it had not abandoned the action, it would have been prudent for them to have given notice in terms of S 359 (2) (a).

 

On these grounds the appeal was dismissed, resulting in the fact that as far as the court is concerned ABSA had in fact abandoned the action. The relevance of this section is thus not to be under-estimated, as it creates strict time constraints, which if not complied with, may lead to the abandonment of proceedings, which may not be too sublime an experience for client.

 

 

 

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