Ellerine Brothers (Pty) Ltd v McCarthy Limited (245/13) [2014] ZASCA 46; 2014 (4) SA 22 (SCA) (1 April 2014)

Ellerine Brothers (Pty) Ltd v McCarthy Limited (245/13) [2014] ZASCA 46; 2014 (4) SA 22 (SCA) (1 April 2014)

The Supreme Court of Appeal held that the lessor's right to cancel the lease agreement was not lost upon the commencement of winding-up proceedings. The concursus creditorum does not terminate or suspend the lease, nor does it prevent the lessor from exercising a right to cancel that became enforceable after the concursus. Section 37 of the Insolvency Act does not confer any rights inconsistent with the common law, and the liquidator inherits the contract subject to its terms. The cancellation effected by Ellerine was valid, and the appeal was dismissed.

Citation
[2014] ZASCA 46
Parties
Appellant: Ellerine Brothers (Pty) Ltd; Respondent: McCarthy Limited
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
1 April 2014
Case Number
245/13
Procedural Posture
Civil Appeal / Appeal From North Gauteng High Court, Pretoria
Outcome
Appeal dismissed with costs, including the costs of two counsel.
Judges
Navsa, Mhlantla, Leach, Petse, Van Zyl
Legal Topics
Winding Up of Companies, Lease Cancellation, Concursus Creditorum, Liquidator Election, Cession of Rights
Commercial and Corporate Civil Procedure Winding Up of Companies Lease Cancellation Concursus Creditorum Liquidator Election Cession of Rights

Case Brief

Summary, issues, holding and outcome

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Parties

Ellerine Brothers (Pty) Ltd

Appellant

McCarthy Limited

Respondent

Procedural Posture

Civil Appeal / Appeal From North Gauteng High Court, Pretoria

Legal Issues

  1. 1 Whether the lessor's right to cancel a lease agreement is lost upon the commencement of winding-up proceedings against the lessee.
  2. 2 Whether cancellation of the lease after the concursus creditorum is valid.
  3. 3 Whether section 37 of the Insolvency Act affects the lessor's right to cancel the lease.

Ratio Decidendi

The Supreme Court of Appeal held that the lessor's right to cancel the lease agreement was not lost upon the commencement of winding-up proceedings. The concursus creditorum does not terminate or suspend the lease, nor does it prevent the lessor from exercising a right to cancel that became enforceable after the concursus. Section 37 of the Insolvency Act does not confer any rights inconsistent with the common law, and the liquidator inherits the contract subject to its terms. The cancellation effected by Ellerine was valid, and the appeal was dismissed.

Court Disposition

Appeal dismissed with costs, including the costs of two counsel.

Orders

  • The appeal is dismissed with costs, including the costs of two counsel.