Ronbel 108 (Pty) Ltd v Sublime Investments (Pty) Ltd (in liquidation)

Absa Bank Ltd instituted action against Sublime Investments (Pty) Ltd. Shortly before trial, Sublime resolved to be voluntarily wound up, suspending the action under s 359(1) of the Companies Act 61 of 1973. Absa did not give the liquidator notice within the prescribed period of its intention to continue the proceedings as required by s 359(2)(a), and deliberately chose not to pursue the action or prove a claim due to potential liability for contribution. More than a year later Absa ceded its claims to Ronbel 108 (Pty) Ltd. Ronbel attempted to prove the claims and applied to be substituted as plaintiff and for a directive under s 359(2)(b) that the action not be regarded as abandoned. The High Court dismissed the application, and Ronbel appealed to the Supreme Court of Appeal.

The appeal was dismissed with costs; the High Court’s refusal to direct that the proceedings not be considered abandoned was upheld.

The case clarifies the operation of s 359(2) of the Companies Act 61 of 1973, particularly that failure to give notice results in deemed abandonment of proceedings unless a court otherwise directs. It affirms that the court’s discretion is broad but must be exercised in light of the interests of creditors and the liquidation process, and that proceedings deliberately abandoned by a creditor cannot easily be revived by a cessionary after lengthy delay.