Sackstein NO (in his capacity as liquidator of Tsumeb Corporation Limited (in liquidation)) v Proudfoot SA (Pty) Ltd

Tsumeb Corporation Limited was incorporated in Namibia and registered in South Africa as an external company. It entered into a contract in Namibia with Proudfoot SA (Pty) Ltd for consulting services, under which Proudfoot was paid R5.7 million by credit transfers from Tsumeb’s Namibian bank account to Proudfoot’s South African account. Tsumeb was placed under provisional and final liquidation both in Namibia and in South Africa. The Namibian liquidation was later discharged following a sanctioned scheme of arrangement. Mr Sackstein, appointed as liquidator of the South African external company (Tsumeb SA), instituted action in South Africa to impeach the payments to Proudfoot as voidable dispositions under sections 29 and 30 of the Insolvency Act 24 of 1936 read with section 340 of the Companies Act 61 of 1973, alleging that the payments preferred Proudfoot over other creditors when Tsumeb was insolvent. Proudfoot contended that the South African liquidator had no power to impeach dispositions of property situated in Namibia.

The appeal was upheld. The judgment of the court a quo was set aside. Paragraphs 4.4 and 4.5.2 of the defendant’s plea were struck out. Proudfoot SA (Pty) Ltd was ordered to pay the costs in the court a quo and on appeal, including the costs of two counsel.

The case clarifies the powers of South African liquidators of external companies in cross-border insolvency situations. It establishes that South African courts may invalidate voidable dispositions under South African insolvency law even where the property involved is situated abroad, thereby strengthening the effectiveness of local liquidation proceedings in an international context.