REPUBLIC OF SOUTH AFRICA IN THE HIGH COURT OF SOUTH AFRICA GAUTENG DIVISION, PRETORIA

Transcription

1 REPUBLIC OF SOUTH AFRICA IN THE HIGH COURT OF SOUTH AFRICA GAUTENG DIVISION, PRETORIA In the matter between: RICHARD POLLOCK N.O. MATOME JOSEPH N.O. (In their capacity as the joint liquidators of MTB Transport CC (in liquidation)) and MATTHEUS JACOBUS PIETERS NK AFVALLE CC WITBANK ABATTOIR (PTY) LTD CASE NO.: 49218/2013 First Plaintiff Second Plaintiff First Defendant Second Defendant Third Defendant Date Heard: 11 May 2017 Date of Judgement: 03 July 2017 (1) REPORTABLE: YES / NO (2) OF INTEREST TO OTHER JUDGES: YES / NO (3) REVISED: YES / NO DATE SIGNATURE J U D G E M E N T DE VOS J: [1] In this matter the plaintiffs, as joint liquidators of MTB Transport CC (in liquidation), with Registration Number 2001/036612/23 and Master s Reference G71/2011 ( the company ), issued a combined summons against the three defendants on 30 January

2 [2] The matter was set down for trial on 11 May The plaintiffs are represented by Advocate W Pye, and the third defendant by Advocate N Davis SC. It is common cause that the plaintiffs particulars of claim have undergone numerous amendments, but those relevant for present purposes were effected pursuant to a notice of amendment delivered on 28 January On the same day the aforementioned notice of amendment was delivered, the plaintiffs withdrew their action against the first and second defendants. In this judgement I will refer to the parties as they were cited before the withdrawal against the first and second defendants. The plaintiffs effected the amendment as foreshadowed by the said notice by delivering the relevant pages of their particulars of claim in their amended form on 16 February The third defendant subsequently also amended its plea, which amendment included the insertion of a special plea. The special plea is to the effect that the plaintiffs cause of action, as introduced by the amendment, has become prescribed. [3] At the hearing of this matter on 11 May 2017, both counsel requested the court to grant an order that the third defendant s special plea of prescription be separated for hearing from the remaining issues between the parties and that it shall be heard prior to and separately from the remaining issues. It was further requested that the issues not separated be postponed sine die. I consented to the request made by both counsel and accordingly separation was ordered as set out in the Draft Order marked X. Therefore, the only question to be decided before me is whether the third defendant s special plea is to be upheld as pleaded. [4] It is common cause that the insolvent company was the registered owner of the property more fully described as Erf 952 Clayville X4, held under Deed of Title Number T144001/1999 ( the property ). In and during 2008 the insolvent company, before its liquidation, sold the property to the second defendant for a purchase price of R7 million 2

3 ( the purchase price ). The second defendant was at all times duly represented by and under the control of the first defendant. Pursuant to the sale, the property was duly transferred and registered onto the name of the second defendant. [5] The second defendant did not pay the full purchase price to the insolvent company. Part of the purchase price was instead paid to the third defendant, an entity also represented by and under control of the first defendant at all relevant times. This was done in terms of clause 13 of the sale agreement, which provided: Die partye kom ooreen dat die Koper (the second defendant)(own insertion) op versoek van die Verkoper die saldo van die verskil in koopprys betaalbaar aan die Verkoper na aflossing van die verband/e van die Verkoper, deur die Koper oorbetaal moet word aan Witbank Abattoir (Edms) Bpk ter vermindering van die bedrag verskuldig deur Licia Trading BK aan Witbank Abattoir (Edms) Bpk, welke bedrag aldus betaalbaar verseker sal word deur die lewering van n bank waarborg aan Witbank Abattoir (Edms) Bpk en welke waarborg betaalbaar sal wees vry van wisselkoers te Witbank op datum van registrasie van die eiendom in naam van die Koper. The sum of R ,32 was eventually paid to Witbank Abattoir (Edms) Bpk. [6] The cause of action as pleaded by the plaintiffs prior to the amendments was set out in paragraphs 12 and 13 of the initial particulars of claim as follows: a. The sale of the property was not made for value as the purchase price thereof was less than the fair, reasonable and market-related value of the property at the time of the sale. b. The sale of the property by the company to the second defendant was made at a time when immediately after such sale, the liabilities of the company exceeded its assets. 3

4 c. The sale of the property by the company as aforesaid, and the subsequent payment to the third defendant, constituted a disposition without value by the company as contemplated in section 1 of the Insolvency Act 24 of 1936 ( the Insolvency Act ), as read with sections 339 and 340 of the Companies Act 61 of 1973 ( the previous Companies Act ), as read with items 9 of the schedules and section 225 of the Companies Act 71 of 2008 ( the Companies Act ). The initial particulars of claim, prior to the amendment, also contained an alternative claim in paragraph 15 thereof, which read: In the alternative to paragraph 13 above, the sale of the Property by the Company and the subsequent payment to the Third Defendant, was made with the intention of preferring the Third Defendant above other creditors of the Company to the prejudice of other creditors of the Company, and had the effect of doing so, thereby constituting an undue preference in terms of Section 30 of the Act. [7] It was further pleaded in the plaintiffs initial particulars of claim that the first, second and third defendants were aware, at the time when the said disposition was made, that: a. Immediately thereafter the liabilities of the company exceeded the value of its assets; b. Such disposition would have the effect of prejudicing the other creditors of the company and/or preferring the third defendant above the other creditors of the company and intended to have such effect; c. The disposition constituted a transaction whereby the company, in collusion with the first, second and third defendants, disposed of the property belonging to it in the manner which had the effect of prejudicing other creditors of the company. [8] In its special plea the third defendant pleads that, in summary, the plaintiffs alleged that the company sold an asset of it under its value; did not receive the purchase price from the 4

5 second defendant; had preferred the third defendant as a creditor; and had colluded with all three defendants in doing so. As a result thereof the plaintiffs claimed that the sale of the property be set aside and, in the alternative, claimed R13 million (as penalty) from all three defendants jointly and severally, together with an additional amount of R7 million, i.e. R20 million plus interest and a forfeiture of claims against the estate of the company. [9] The third defendant s counsel contends that the amendment effected by the plaintiffs on 16 February 2016 had the effect of deleting paragraphs 11, 12 and 13 of the initial particulars of claim and replacing it with the following: 11. The balance of the purchase price of the property (after paying the amount due to the mortgagee) was not paid to the company. Instead the company instructed inter alia that an amount of R ,32 be paid from the proceeds of the purchase price to the Third Defendant. 12. The payment of the amount of R ,32 was made to the Third Defendant on or about 8 January At the time of the payment the company was not a debtor of the Third Defendant and had no obligation to make payment of the said amount to the Third Defendant. 14. The payment to the Third Defendant constituted the disposition without value by the Company as contemplated in Section 26(1)(a) of the Insolvency Act 24 of 1936 ( the Insolvency Act ) as read with Sections 339 and 340 of the Companies Act 61 of 1973 ( the previous Companies Act ), as read with items 9 of schedules and Section 225 of the Companies Act 71 of 2008 ( the Companies Act ). [10] It is argued that the cause of action subsequent to the amendment does not rely on the sale of the property as a disposition; neither does it allege that the sale was under value and nor does it rely on or allege any collusion or preference of creditors. In fact, it 5

6 expressly states that the third defendant was not a creditor of the insolvent company. The subsequent cause of action further makes it abundantly clear that the instruction by the insolvent company itself that an amount due to it be utilised as payment to the third defendant constituted a disposition. Apparently the reason for the instruction by the insolvent company was recorded as being that the company had an internal agreement with its sister-corporation, Licia Trading CC who in turn was a debtor of the Third Defendant. MTB (the company) in performance of its agreement with Licia Trading CC nominated the Third Defendant as recipients of the proceeds of the sale. Furthermore it is contended that the plaintiffs now only claim R3,9 million compared to an amount of R20 million plus interest as referred to above. [11] The third defendant s special plea must be considered with regard to the aforesaid. The basis for the special plea is set out in the pleadings as follows: a. The plaintiffs have pleaded that the company was liquidated by way of special resolution on 21 November b. The plaintiffs have further pleaded that they were appointed by the Master as joint liquidators of the company on 04 February c. The plaintiffs initial claim, based on which it instituted the current action, was founded on the sale of a property of the company made not for value, which allegedly constituted a disposition without value. d. The plaintiffs new cause of action, introduced by its notice of amendment dated 28 January 2016, is founded on a disposition without value, based on an alleged instruction to pay an amount of R , 32 due to the company to the third defendant, who was not a debtor or a creditor of the company. e. The payment to the third defendant took place on or about 08 January f. More than three years have elapsed since the date of the aforesaid payment, alternatively since the date of the commencement of winding-up of the company, 6

7 further alternatively since the date of the appointment of the plaintiffs as joint liquidators to date of the introduction of this cause of action by way of the aforesaid amendment. g. In the premises, the plaintiffs claim is prescribed in terms of section 11 of the Prescription Act 68 of 1969 ( the Prescription Act ); wherefore the defendants pray that the plaintiffs claim be dismissed with costs. [12] The third defendant s counsel contends that there is a fundamental difference between the initial cause of action and the subsequent cause of action. This becomes apparent when the elements of the relief claimed are compared with each other. The initial cause of action was based on: a. The purchase of the property under its fair value by the second defendant; b. The non-payment of the purchase price to the company by the second defendant; c. Collusion committed by the first, second and third defendants; d. An undue preference of a creditor (the third defendant); e. A claim for the setting aside of the sale agreement, alternatively, payment of the alleged value of the property together with payment of R7 million (as a payment made as a collusive preference of creditors) together with a forfeiture order. In comparison, the subsequent cause of action is based on an instruction given by the company for payment of part proceeds of the sale to the third defendant. The instruction is pleaded as the disposition and the only claim is the repayment of the amount of the instruction to the third defendant. [13] Having regard to the elements of the two causes of action, the two causes of action are materially distinguishable and not part and parcel of each other. Initially, plaintiffs claim was based thereon that the sale of the property constituted an impeachable transaction 7

8 which could be set aside as a voidable disposition. They do not claim that in the subsequent cause of action. In the initial cause of action the plaintiffs claim that the sale of the property should be set aside. Such claim is not repeated in the subsequent cause of action. In the initial cause of action the plaintiffs claim, as an alternative, the present value of the property at R13 million. They no longer claim such relief. In addition thereto the plaintiffs claim repayment of the full purchase price on the basis of the sections pleaded initially. They also no longer claim this relief. In the subsequent cause of action plaintiffs claim is only in the amount of some R3,9 million and the only claim is against the third defendant being the recipient in terms of a separate cause of action, namely instruction given by the company. In conclusion it is submitted that the right to be enforced in the initial cause of action and that in the subsequent cause of action are not the same and cannot be found to be even substantially the same, particularly if regard is had to the relief claimed. There is also no clarification of a previously sufficiently delineated cause of action. In conclusion it is contended that the amendment introduced a new cause of action, which cause of action has been extinguished by the effluxion of the extinctive prescription period. It is therefore contended that the special plea should be upheld with costs. [14] The third defendant also contends that the plaintiffs replication, as it appears in paragraph 2 of the replication on p43 of the pleadings bundle, does not address the factual basis on which this special plea is raised. The plaintiffs merely pleaded: The Plaintiffs amended particulars of claim pertain to the same sale agreement, and is part and parcel of the original cause of action and merely represents a refined categorization of the disposition for the purposes of Section 26 of the Insolvency Act,

9 [15] The third defendant firstly relies on Chapter III of the Prescription Act, read with section 10, for its argument that the debt has become prescribed. It is contended that the plaintiffs claim has become prescribed since a period of three years has lapsed since the instruction relied on by the plaintiffs took place on 08 January Three years from that date have then lapsed on 07 of January The company was liquidated by special resolution on 21 November 2010 and three years from that date lapsed on 20 November The plaintiffs were appointed as joint liquidators of the company on 04 February 2011 and three years from that date have lapsed on 03 February In terms of section 12(1) of the Prescription Act, read with s12(3), prescription shall commence to run as soon as the debt is due. Section 12(3) of the Prescription Act provides that: A debt shall not be deemed to be due until the creditor has knowledge of the identity of a debtor and of the facts from which the debt arises; provided that a creditor shall be deemed to have such knowledge if he could have acquired it by exercising reasonable care. [16] The third defendant contends that section 26 of the Insolvency Act provides for two possible sets of circumstances, namely dispositions more than two years before the liquidation of the company (in terms of section 26(1)(a)), and dispositions within two years of the said liquidation (in terms of section 26(1)(b)). The company was liquidated by special resolution on 21 November Before the amendment the alleged disposition without value was by way of a sale by the company of the property to the second defendant. Furthermore, in support of plaintiffs allegation that the aforesaid alleged disposition was not made for value, the plaintiffs stated that the purchase price thereof was less than the fair, reasonable and market-related value of the property at the time of the sale. The plaintiffs do not allege what the fair, reasonable and market-related value of the property was at the time of the sale and merely pleads in paragraph 21 of the particulars of claim that the current value of the property is allegedly R13 million. From 9

10 the formulation of paragraph 9 of the Plaintiffs particulars of claim it is not clear on which of the two possible set of circumstances provided for in section 26(1) the plaintiffs rely. [17] In the alternative to the alleged causes of action based on the Insolvency Act, the plaintiffs allege that the payment of the purchase price of the property to the Third Defendant preferred it above other creditors of the company. [18] In summary, the third defendant contends that no facts are alleged by the plaintiffs as to when and where they became aware of the contents of the written sale agreement. Therefore the latest date upon which the debt became due was the date upon which the liquidators were appointed and became statutorily entitled to have impeachable transactions, such as dispositions without value, set aside. That would entail to be the 3 rd February On the probabilities it can reasonably be inferred that the plaintiffs were aware of this by having instituted action based on their initial cause of action some days before the expiry of three years since their date of appointment, i.e. by issuing summons on the 30 th January 2014 prior to the prescription date of 3 February On any of the aforementioned constructions more than three years have lapsed since the plaintiffs; date of appointment and incidentally even since the date of institution of the action prior to the effecting of the amendment, whereby their subsequent cause of action was pleaded. It is common cause that the amendment was only pleaded on the 16 th February 2016 i.e. more than two years after the 4 th February In light of the plaintiffs failure to deliver any plea or replication in respect that the prescription had been delayed as provided for in s13 of the Act, or that it had been interrupted as provided for in s14 of the Act, or that there was any judicial interruption as provided for in s15 of the Act, the special plea must be upheld. 10

11 [19] In opposition to the special plea, the plaintiffs counsel contends that when summons was served in terms of the original particulars of claim it interrupted the prescription period in terms of s6 of the Prescription Act. The main question to be asked in terms of the reported cases is whether the debt referred to in the first particulars of claim and the debt referred to in the amended particulars of claim is identifiable as the same debt. It is submitted that our courts held that there is a difference between a cause of action and a right of action. It is contended that the chronology of the events remained unchanged. In 2008 there was a sale of the property by MTB Transport CC (the company) to the second defendant. On the 8 th January 2008 the second defendant paid the balance of the purchase price of the property, after paying the mortgagee, to the third defendant. On the 21 st November 2010 the company is placed under liquidation by special resolution. On the 20 th December 2010 the special resolution placing the company under liquidation is registered with the Master. On the 4 th February 2011 the plaintiffs are appointed as the joint liquidators of the company by the Master. On the 30 th January 2014 summons in the current proceedings was issued. On the 30 th January 2014 the summons was served on the third defendant and on the 16 th February 2016 the amended pages to plaintiffs notice of amendment was served on the third defendant. The following issues remain unaffected by the amendment. The debt arises from the sale of a property registered in the name of the insolvent company to the second defendant for the amount of R7 million. The full purchase price as aforesaid was not paid by the second defendant to the company but was paid instead to the third defendant, an entity also represented by and under the control of the first defendant at all relevant times. The third defendant was also represented by and under the control of the first defendant at all relevant times. The disposition of the property gave rise to the plaintiffs claim. Although in the original particulars of claim various causes of action are relied upon, all these causes relate to the plaintiffs right to be compensated for the loss incurred as a result of the sale and the subsequent payment of the purchase 11

12 price. The new cause of action introduced by the amendment does not affect the plaintiffs right to institute a claim against the third defendant. [20] It is trite law that in terms of section 15(1) of the Prescription Act, the running of prescription shall be subject to the provisions of section 15(2) and is interrupted by the service on the debtor of any process whereby the creditor claims payment of the debt. In Cape Town Municipality v Alianz Insurance Company Ltd 1990 (1) SA 311 C it was held by Howie J: A creditor prosecutes his claim under that process to final, executable judgment, not only when the process and the judgment constitute the beginning and end of the same action, but also where the process initiates an action, judgment in which finally disposes of same elements of the claim, and where the remaining elements are disposed of in a supplementary action instituted pursuant to and dependent upon that judgement. [21] In this matter the plaintiffs amended action against the Third Defendant is in essence a claim to recover a debt, i.e. a part of the proceeds of the purchase price, which was payable to the insolvent. The amended claim filed by the Plaintiffs is based on the provisions of section 26(1)(a) (a disposition without value) of the Insolvency Act, read with sections 339 and 340 of the Companies Act 61 of 1973 (the previous Companies Act) as read with items 9 of the schedules and section 225 of the Companies Act 71 of 2008 (the Companies Act). [22] The word debt is not defined in the Act. In interpreting it, the courts have given it a broad, flexible meaning, capable of different, context-based connotations. See Cape Town Municipality v Allianz Insurance Company Ltd supra; CGO Insurance Ltd v Rumdel Construction (Pty) Ltd 2004 (2) SA 622 (SCA) at para 6. The word debt refers more 12

13 generally to the claim and is wider than the technical terms cause of action. It is therefore critical to guard against confusing a debt (or right of action) with the cause of action which begets it. See Associated Paint and Chemical Industries (Pty) Ltd t/a Albestia Paint and Lacquers v Smit 2000 (2) SA 789 (SCA at 794. See also Prescription in South African Law, Saner, para on etc. [23] In terms of the law of insolvency a trustee is in law entitled to recover enforceable debts of the insolvent company from any of its debtors. For that purpose the Insolvency Act contains different provisions under which claims can be instituted. For example, alienation of assets by a debtor in fraud of creditors may be set aside by creditors under the Actio Pauliani. See Kommisaris van Binnelandse Inkomste v Willers 1999 (3) SA 19 (SCA). Similar remedies are to be found in section 64 of the Close Corporations Act 69 of 1984; section 424 of the Companies Act 61 of 1973 (which Act has been replaced by the Companies Act 71 of 2008) and several provisions in the Insolvency Act 24 of [24] There cannot be any doubt that the plaintiffs attempt to rely on sections 29, 30 and 31 of the Insolvency Act was based on the premises that the Third Defendant was a creditor of the company at that time. The plaintiffs specifically pleads in clause 15A of their amended plea that payment was made by the second defendant to the third defendant... on the basis that the third defendant was alleged by the first, second and third defendant to be a creditor of the company. It is common cause that the third defendant was not a creditor stricto sensu of the company at the time of the alleged disposition. However, clause 13 of the sale agreement constitutes in reality a donation whereby the donor, motivated by pure liberality, undertakes to give a done a gift without having received or expecting to receive any advantage in return. The sale agreement was duly signed by the donor, the company, and coupled with the requirements laid down in section 5 of the General Amendment Act 50 0f 1956 and was thereafter duly executed. The amended particulars of 13

14 claim contain sufficient allegations if proved for a finding that the third defendant was not a creditor stricto sensu of the company when the disposition occurred, alternatively that the donation is not a true donation; in which event the third defendant becomes liable. [25] Insofar as the amended claim based on section 26 is concerned, plaintiffs particulars of claim read as follows: a. Paragraph 10 of the particulars of claim, date of transfer and registration of the property into the name of the Second Defendant, was amended from 8 January 2008 to 17 March b. Paragraph 14, the reference to section 26(1) was amended to read section 26(1)(a) of the Insolvency Act. c. Paragraph 15 was amended by inserting a paragraph 15A thereafter. For the sake of completeness, clause 15 reads: The aforesaid payment by the Company to the Third Defendant was made more than two years before the liquidation of the Company, and immediately after the payment was made the liabilities of the company exceeded its assets ; and, Clause 15A reads as follows: The payment made by the Second Defendant to the Third Defendant was made on the basis that the Third Defendant was alleged by the First, Second and Third Defendant to be a creditor of the Company. The aforesaid amendments were not opposed and the particulars of claim were thereafter amended accordingly. The introduction of section 26(1)(a) in terms of the amendment cured the defects to the plaintiffs claim. It is not a precondition of section 26(1)(a) that the person against whom the claim is instituted must be a creditor of the insolvent. The section applies to both creditors and non-creditors of the insolvent company. It follows that once it is proved that a disposition without value has taken place, the receiver/beneficiary of the disposition becomes liable to the Trustees to repay such benefit and then automatically becomes a debtor of the insolvent. Section 26(1) is not merely a novel 14

15 procedure for enforcing existing debts. Sections 26 to 30 of the Insolvency Act create a statutory remedy for liquidators in addition to remedies that might be available under common law. It might be that the liquidators have an alternative claim against the Third Defendant for recovery of a present debt under the common law remedies for fraud, or under the common law in terms of the condition sine causa, but they are not pursuing remedies of that kind. The Insolvency Act creates a different and wider remedy to liquidators to recover assets that have been removed from an estate before the insolvency. See Duet and Magnum Financial Services v Koster 2010(4) SA 499 (SCA) at 503B-D. [26] The creation of a cause of action in section 26(1)(a) is used to describe the factual basis, the set of material facts that begets the plaintiffs legal right of action and complimentary, the defendant s debt, (the word used in the Prescription Act). See Evans v Shield Insurance Co Ltd supra. It means every fact which is material to be proved to entitle a plaintiff to succeed in its claim must form part of the material facts. [27] Once the right of action accrued that right becomes a debt against which prescription commenced to run, but an action can be repelled on the ground that the time fixed by law as that within which it should have been raised has expired. Nugent JA in the Duet case supra concluded in para 27 (p507): It is clear that the sections of the Insolvency Act... give a right to a liquidator, in prescribed circumstances, to have a person declared to be a debtor of the estate, and it complement is a debt for purposes of prescription, in that the person concerned is liable to have such a declaration made... It is sufficient to say that prescription ordinarily commences to run no later than the date upon which a liquidator is appointed. 15

16 [28] Having regard to the facts before me, there is no doubt that the plaintiffs intention was allalong to recover at least that part of the purchase price that was incorrectly paid to the third defendant. Before the amendment the defendant was incorrectly referred to as a creditor; this does not detract from the fact that the Trustees were entitled and obliged to institute a claim against the third defendant for repayment, which they duly did by instituting an action before their claim prescribed. The amendment of their claim in order to introduce section 26(1)(a) on which their claim is based merely confirms their intention to proceed with their action against the third defendant. Even if I accept that the different sections relied on before the amendment, and the section relied upon after the amendment, do not create the same cause of action, even in the extended sense, I find it difficult to understand how a different cause of action can be equated to meant the same as the right to claim. The right to claim is a much wider concept which may be enforced through various causes of action. [29] The only remaining question is whether section 26(1)(a) of the Insolvency Act creates a new right of action compared to the claims which have now been abandoned. The elements of a claim under section 26(1)(a) of the Insolvency Act are very similar to what a creditor can claim under the condictio sine causa, applicable under the common law. It is trite that the requirements for a claim under the condictio sine causa are: a. receipt by a defendant of money or goods to which the plaintiff is entitled; b. the absence of a valid cause for such receipt i.e. no other obligation or lawful ground justifying the enrichment must exist; c. the defendant s enrichment through the receipt of money or goods at the expense of the plaintiff. d. that the plaintiff was impoverished. See Harms, Amlers Precedents of Pleadings 7 th edition p

17 [30] Although the elements of the amended claim are not similar to the elements contended in the original claim, it cannot be disputed that both the original claim and the amended claim contain the following common features: a. The parties remain the same; b. The claims are all based on the same transaction, i.e. the sale of the property; c. The purchase price remained the same; d. Payment of the purchase price was duly effected as provided for in the sale agreement. e. The dispute regarding payment of the full purchase price remains the same. The only real difference is that before the amendment the trustees claim was based on their election to regard the sale as void; in terms of the amendment they do not rely on their original election, but elects to recover the outstanding balance of the purchase price. [31] The fact that before the amendment it was alleged that the Third defendant was a creditor of the plaintiff. became irrelevant, as section 26 does not require that the defendant must be a creditor of the insolvent. In the original claim it was alleged that the property was not sold for value. The value claimed was based on the present value when summons was issued and not the date of the original sale agreement. This was based on the allegation that the original sale must be set aside. This has also become irrelevant. In the amended claim, it is not claimed that the sale must be set aside but it is accepted that a sale took place and that the property was sold for its real value, but that the insolvent company did not receive the total purchase price from the second defendant which had preferred the third defendant as a creditor and had colluded with all three defendants in doing so. This allegation is repeated in the amended claim as set out in clause 15A. [32] When the original claim and the amended claim are compared to each other it is clear that 17

18 although the claims are based on different sections of the Insolvency Act, the material facts remained the same. The differences between the claims do not change the material facts relied upon by the plaintiffs. The word debt refers generally to the claim and not to the cause of action. See Rustenburg Platinum Mines v Industrial Maintenance Painting Services [2008] ZASCA 108. The term debt refers to anything that is owed or due. See Electricity Supply Commission v Stewardts & Lloyds of SA (Pty) Ltd 1981 (3) SA 340 (A); CGU Insurance Ltd v Rumdel Construction (Pty) Ltd 2003 (2) All SA 597 (SCA). In this matter prescription has been interrupted by service of the particulars of claim, whereby the Trustees of the insolvent estate claimed cancellation of the sale agreement and restitution of the property. Although the relief sought by the plaintiffs might have been changed as a result of the amendment, the facts relied upon remained the same. [33] The fact that the plaintiffs original claim was for the restitution of the property, or its value which was subsequently amended for the replacement of a certain specified amount has no effect on the material facts on which the plaintiffs rely. However, that is not the end of the enquiry. The plaintiffs remedy defends an election made by the trustees as to whether they are seeking restitution or repayment of the outstanding purchase price. In the present instance I am not concerned with the question whether the plaintiffs were estopped to recall their original election and to make a new election to be bound by the contract. This can be dealt with during the trial. In this instance the original election made by the plaintiffs was to seek restitution. Subsequently this election was withdrawn and plaintiffs were informed in the amended particulars of claim that the remedy they are seeking is payment of the outstanding amount of the purchase price. There was no objection to the amendment. The amendment was effected whilst prescription was interrupted as a result of the service of summons. The amendment was accordingly effected during the period of interruption of prescription. See CGU Insurance Ltd v Rumdel Construction (Pty) Ltd supra. Accordingly, the special plea cannot be upheld. 18

19 In so far as costs are concerned, the plaintiffs are successful in their opposition of the special plea of prescription and the normal rule must be applied as to costs. I THEREFORE MAKE THE FOLLOWING ORDER: 1. The Third Defendant s special plea that the plaintiffs claim has become prescribed is dismissed. 2. The Third Defendant is ordered to pay the costs of the application. DE VOS J JUDGE OF THE GAUTENG DIVISION OF THE HIGH COURT OF SOUTH AFRICA 19

20 For the plaintiffs: Instructed by: For the third defendant: Instructed by: Advocate W Pye Harris Billings Attorneys c/o Andrea Rae Attorney Advocate N Davis SC Herman Esterhuizen Smalman Attorneys 20