Morris NO v Airomatic (Pty) Ltd. t/a Barlows Airconditioning Company (327/88) [1989] ZASCA 163 (29 November 1989)

Morris NO v Airomatic (Pty) Ltd. t/a Barlows Airconditioning Company (327/88) [1989] ZASCA 163 (29 November 1989)

The court held that the scheme of arrangement sanctioned under section 311 of the Companies Act did not confer on the receiver the power to set aside transactions under section 29 of the Insolvency Act, as such powers are reserved for a liquidator in the context of a winding-up. The scheme binds creditors only in respect of claims existing at the date of liquidation, not in respect of claims satisfied prior to liquidation. The respondent was a creditor only for the balance of the purchase price at the relevant date, and the scheme did not create new obligations regarding goods returned prior to liquidation. The court found that the appellant's particulars of claim were inadequate to...

Citation
[1989] ZASCA 163
Parties
Appellant: David Alexander Morris N.O.; Respondent: Airomatic (Proprietary) Limited t/a Barlows Airconditioning Company
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
29 November 1989
Case Number
327/88
Procedural Posture
Civil Appeal / Appeal Against Upholding of Exception to Particulars of Claim
Outcome
Appeal dismissed with costs.
Judges
Hoexter, Smalberger, Milne, Steyn, Eksteen
Legal Topics
Scheme of Arrangement, Powers of Receiver, Voidable Preference, Companies Act Section 311, Insolvency Act Section 29
Commercial and Corporate Civil Procedure Scheme of Arrangement Powers of Receiver Voidable Preference Companies Act Section 311 Insolvency Act Section 29

Case Brief

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Parties

David Alexander Morris N.O.

Appellant

Airomatic (Proprietary) Limited t/a Barlows Airconditioning Company

Respondent

Procedural Posture

Civil Appeal / Appeal Against Upholding of Exception to Particulars of Claim

Legal Issues

  1. 1 Whether the scheme of arrangement sanctioned under section 311 of the Companies Act conferred on the receiver the power to set aside transactions under section 29 of the Insolvency Act.
  2. 2 Whether a receiver under a compromise can exercise powers equivalent to those of a liquidator to set aside voidable preferences when the company is not being wound up.
  3. 3 Whether the scheme binds creditors only in respect of claims existing at the date of liquidation, and not in respect of claims satisfied prior to liquidation.

Ratio Decidendi

The court held that the scheme of arrangement sanctioned under section 311 of the Companies Act did not confer on the receiver the power to set aside transactions under section 29 of the Insolvency Act, as such powers are reserved for a liquidator in the context of a winding-up. The scheme binds creditors only in respect of claims existing at the date of liquidation, not in respect of claims satisfied prior to liquidation. The respondent was a creditor only for the balance of the purchase price at the relevant date, and the scheme did not create new obligations regarding goods returned prior to liquidation. The court found that the appellant's particulars of claim were inadequate to...

Court Disposition

Appeal dismissed with costs.

Orders

  • The appeal is dismissed with costs.