Absa Bank Limited v Hammerle Group (Pty) Ltd (205/14) [2015] ZASCA 43; 2015 (5) SA 215 (SCA) (26 March 2015)

Absa Bank Limited v Hammerle Group (Pty) Ltd (205/14) [2015] ZASCA 43; 2015 (5) SA 215 (SCA) (26 March 2015)

The Supreme Court of Appeal held that the appellant, as a contingent creditor due to the subordination clause in the subscription agreement, was entitled to apply for the winding-up of the respondent under section 346 of the Companies Act. The respondent's admissions of liability and insolvency in correspondence were not privileged and were admissible in evidence, as public policy in insolvency proceedings overrides settlement privilege. These admissions interrupted prescription, rendering the respondent's defence of prescription unsustainable. The respondent was found to be commercially insolvent and unable to pay its debts. The court found no basis to grant only a provisional winding-up...

Citation
[2015] ZASCA 43
Parties
Appellant: Absa Bank Limited; Respondent: Hammerle Group (Pty) Ltd
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
26 March 2015
Case Number
205/14
Procedural Posture
Civil Appeal / Appeal From North Gauteng High Court, Pretoria
Outcome
Appeal upheld; respondent liquidated in the hands of the Master of the High Court.
Judges
Brand, Maya, Cachalia, Mhlantla, Mbha
Legal Topics
Winding Up, Contingent Creditor, Prescription, Subordination Clause, Commercial Insolvency
Commercial and Corporate Civil Procedure Winding Up Contingent Creditor Prescription Subordination Clause Commercial Insolvency

Case Brief

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Parties

Absa Bank Limited

Appellant

Hammerle Group (Pty) Ltd

Respondent

Procedural Posture

Civil Appeal / Appeal From North Gauteng High Court, Pretoria

Legal Issues

  1. 1 Whether the appellant, as a contingent creditor due to a subordination clause, is entitled to institute winding-up proceedings against the respondent.
  2. 2 Whether the respondent's debt to the appellant had prescribed, extinguishing the claim.
  3. 3 Whether admissions of insolvency made in correspondence are privileged and inadmissible in winding-up proceedings.

Ratio Decidendi

The Supreme Court of Appeal held that the appellant, as a contingent creditor due to the subordination clause in the subscription agreement, was entitled to apply for the winding-up of the respondent under section 346 of the Companies Act. The respondent's admissions of liability and insolvency in correspondence were not privileged and were admissible in evidence, as public policy in insolvency proceedings overrides settlement privilege. These admissions interrupted prescription, rendering the respondent's defence of prescription unsustainable. The respondent was found to be commercially insolvent and unable to pay its debts. The court found no basis to grant only a provisional winding-up...

Court Disposition

Appeal upheld; respondent liquidated in the hands of the Master of the High Court.

Orders

  • The appeal is upheld with costs, including the costs of two counsel.
  • The order of the North Gauteng High Court, Pretoria, is set aside and substituted with: '(a) The respondent is liquidated in the hands of the Master of the High Court. (b) Costs of the application, including the cost of two counsel, will be costs in the winding-up of the respondent.'