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REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG LOCAL DIVISION, JOHANNESBURG

CASE NO: 16364/2013\

DATE: 7 MARCH 2013

NOT REPORTABLE

NOT OF INTEREST TO OTHER JUDGES

In the matter between:

ESKOM HOLDINGS LIMITED.................................................................................Applicant

and

TRANSDECO GTMH (PTY) LTD

(IN LIQUIDATION) …...............................................................................First Respondent

VAN SCHALKWYK, R T......................................................................Second Respondent

J U D G M E N T

MBONGWE, AJ:

[1] The application serving before me stems from the provisions of section 359(2)(b) of the Companies Act of 1973 (“the Act”), in terms of which a party, in pending proceedings or who intends to institute a claim against a company under liquidation, and who has failed or omitted to give notice to the appointed liquidators of such company in terms of section 359(2)(a) within 4 weeks of the appointment of such liquidators, may apply to court for an order declaring that such party intends to proceed with its claim or intends to institute proceedings in pursuance of a claim it has against the company under liquidation. In short, section 359(2)(b) provides an olive branch to parties who failed to give timeous notice in terms of section 359(2)(a) and are consequently considered to have abandoned their claims.

[2] Both the applicant and the first respondent are parties to pending arbitration proceedings before the second respondent, the arbitrator.  It bears mentioning that the said proceedings commenced prior to the voluntary liquidation of the first respondent and continued thereafter, with the liquidators having stepped in the shoes of the first respondent, until the adjournment of such proceedings to enable the applicant to launch this application. It is to be noted that awards were made prior to and during the liquidation of the first respondent by the adjudicator and subsequently by the second respondent.

[3] While it may be tempting to assume and conclude that, by being a party in the pending arbitration proceedings, the liquidators have waived their right to raise the applicant’s non-compliance with the provisions of section 359(2)(a) as a defence, reality is that the section does not confer the authority on the liquidators to waive this defence;  neither expressly nor by conduct.  This is apparent from the strictly stipulated narrow criterion by which a claimant may be eligible to have its claim against a company in liquidation entertained by the liquidators:  namely; by either giving timeous notice to the liquidators (section 359(2)(a), failing which, through a successful application to court (section 359(2)(b).  It is these strict stipulations that inform my finding that the dictum by Harms JA’s in the Barlows Tractor Co (Pty) Ltd v Townsend case[1996] ZASCA 3; , 1996 (2) SA 869 (A) at 884F-G, namely, that the liquidator is not obliged to raise the defence provided to him by section 359(2)(a) is untenable for its implied introduction of an expanded or additional criterion for eligibility to claim, namely, the waiver of the defence provided for in the Act.

[4] In the present case, albeit belatedly, the liquidators were correct in raising the applicant’s non-compliance with section 359(2)(a) as a defence. At the same time, it was just for the arbitrator, in view of the sustained pursuit of the applicant’s claim against the first respondent, to adjourn the proceedings before him pending the outcome of this application by the applicants. On the other hand, I find that the knowledge of the first respondent, from the pending arbitration proceedings, that the applicant was still pursuing its claim, renders the first respondent’s opposition to this application vexatious and has to be rejected.

[5] The first respondent further extensively argued that the olive branch afforded by section 359(2)(b), i.e. the right to bring this application, is a debt and, is therefore, subject to the provisions of the Prescription Act of 1968.  To determine the veracity of this argument, I deem it convenient to seek to answer the question : what is it that the applicant seek to achieve in launching this application?  The applicant seeks an order of this Court for eligibility to pursue its claim against the first respondent in terms of section 359(2)(b); not for the determination of the claim by the court. It is clear, therefore, that the right to launch this application cannot be said to be a debt and is not subject to prescription. The first respondent’s argument is, consequently, rejected.

[6] Each side has argued for costs, including the costs of two counsel, to be awarded against the other. In accordance with the findings above, I find that the first respondent was unreasonable both in opposing this application and further prolonging the hearing of this application with its flawed plea of prescription. I can find no reason why the first respondent should not be ordered to pay the costs of this application.

[7] The following order is therefore given:

1. It is declared that the applicant has not abandoned its claim against the first respondent;

2. The first respondent is ordered to pay the costs of this application, which costs shall include the costs of the two counsel engaged by the applicant.

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M MBONGWE

ACTING JUDGE OF THE HIGH COURT

OF SOUTH AFRICA

GAUTENG LOCAL DIVISION, JOHANNESBURG

DATE OF HEARING: 3 MARCH 2014

DATE OF JUDGMENT: 7 MARCH 2014

FOR THE APPLICANT: ADV A GAUTCHI SC

ADV S BALOYI

INSTRUCTED BY: EDWARD NATHAN SONNENBERGS

JOHANNESBURG

FOR THE FIRST RESPONDENT: ADV A KEMACK SC

ADV T OSSIN

INSTRUCTED BY : c/o LINDSAY KELLER ATTORNEY

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