Bester NO and Others v CTS Trailers (Pty) Ltd and Another (4372/2020) [2020] ZAWCHC 169 (16 October 2020)

Bester NO and Others v CTS Trailers (Pty) Ltd and Another (4372/2020) [2020] ZAWCHC 169 (16 October 2020)

The court found that the Master’s approval under section 46 of the Insolvency Act lawfully empowered the liquidators to disregard any set off between first respondent and fourth applicant. First respondent did not challenge the Master’s decision, which remains valid and binding until set aside. The liquidators are therefore entitled to claim the debt as if no set off occurred. Regarding the payment by first respondent to second respondent, the court identified material factual disputes as to whether the payment was authorised, constituted a disposition, and was made in the ordinary course of business or with intent to prefer one creditor. These disputes could not be resolved on the papers...

Citation
[2020] ZAWCHC 169
Parties
Applicant: Christian Findlay Bester N.O; Applicant: Chavonnes Badenhorst Sinclair Cooper N.O; Applicant: Imran Dinath N.O; Applicant: Elite Fibre (Pty) Ltd (in liquidation); Respondent: CTS Trailers (Pty) Ltd; Respondent: Afrit (Pty) Ltd
Court
Western Cape High Court, Cape Town
Jurisdiction
South Africa
Judgment Date
16 October 2020
Case Number
4372/2020
Procedural Posture
Civil Application / Judgment on Opposed Application; Partial Final Order and Referral for Oral Evidence
Outcome
Partial final order granted for payment of R 1 941 696.80 by first respondent to applicants; remaining issues referred for oral evidence.
Judges
Davis
Legal Topics
Set Off, Insolvency Act Section 46, Disposition of Property, Preferential Payment, Motion Proceedings, Liquidation Claims
Civil Procedure Commercial and Corporate Set Off Insolvency Act Section 46 Disposition of Property Preferential Payment Motion Proceedings Liquidation Claims

Case Brief

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Parties

Christian Findlay Bester N.O

Applicant

Chavonnes Badenhorst Sinclair Cooper N.O

Applicant

Imran Dinath N.O

Applicant

Elite Fibre (Pty) Ltd (in liquidation)

Applicant

CTS Trailers (Pty) Ltd

Respondent

Afrit (Pty) Ltd

Respondent

Procedural Posture

Civil Application / Judgment on Opposed Application; Partial Final Order and Referral for Oral Evidence

Legal Issues

  1. 1 Whether set off between first respondent and fourth applicant was validly effected or prohibited by agreement.
  2. 2 Whether the Master’s approval under section 46 of the Insolvency Act lawfully empowered the liquidators to disregard set off.
  3. 3 Whether the payment by first respondent to second respondent constituted a disposition of property by the insolvent company, and if so, whether it was made in the ordinary course of business or with intent to prefer one creditor.

Ratio Decidendi

The court found that the Master’s approval under section 46 of the Insolvency Act lawfully empowered the liquidators to disregard any set off between first respondent and fourth applicant. First respondent did not challenge the Master’s decision, which remains valid and binding until set aside. The liquidators are therefore entitled to claim the debt as if no set off occurred. Regarding the payment by first respondent to second respondent, the court identified material factual disputes as to whether the payment was authorised, constituted a disposition, and was made in the ordinary course of business or with intent to prefer one creditor. These disputes could not be resolved on the papers...

Court Disposition

Partial final order granted for payment of R 1 941 696.80 by first respondent to applicants; remaining issues referred for oral evidence.

Orders

  • First respondent is directed to pay to the applicants the amount of R 1 941 696.80 together with interest at 10.25% per annum from the date of this order to the date of payment.
  • Oral evidence is to be heard from Mr Christiaan Bester, Mr Deon Prinsloo and Mr Andre van Wetering on the following issues: (a) whether the no set off agreement was terminated, (b) whether payment between first and second respondents discharged the debt to fourth applicant, (c) whether the set off and payment were...