Nedcor Investment Bank v Pretoria Belgrave Hotel (Pty) Ltd

Pretoria Belgrave Hotel (Pty) Ltd sold its hotel business, including immovable property, movables and a liquor licence, to Waterton Lakes Manufacturing (Pty) Ltd as a going concern for R1 450 000. The purchase price was partly secured by a first mortgage bond in favour of Syfrets Bank and a second bond in favour of Belgrave. The deposit was paid, the movables delivered and the immovable property registered in the purchaser’s name before the company was placed under liquidation. After liquidation, Belgrave lodged a claim for the outstanding balance of the purchase price. The liquidator sold the property as part of the insolvent estate. Belgrave applied for its claim to be treated as an expense of administration, ranking ahead of secured creditors, including Nedcor Investment Bank, which held the first bond.

The appeal was upheld with costs. The order of the court a quo was set aside and replaced with an order dismissing the application with costs.

The case clarifies the treatment of executory contracts in insolvency where ownership of property has already passed prior to liquidation. It draws an important distinction between true executory contracts and contracts where performance by one party is complete, limiting when claims can qualify as administration expenses.