Venfin Investments (Pty) Ltd v KZN Resins (Pty) Ltd t/a KZN Resins

KZN Resins supplied isopthalic resin to Fibalogic (Pty) Ltd for the manufacture of fibreglass geysers. After a change in resin supplier, Fibalogic experienced an increased rate of defective geysers. Fibalogic alleged that, at meetings in November 2001, KZN orally agreed to compensate it for losses exceeding an industry norm of 2% returns. Fibalogic later ceded this alleged claim to Venfin Investments (Pty) Ltd, indemnifying Fibalogic against KZN’s claims for unpaid resin. Fibalogic was subsequently liquidated and Venfin was substituted as plaintiff. KZN denied concluding any compensation agreement and counterclaimed for unpaid amounts for resin sold and delivered, alleging Venfin was liable either under s 156 of the Insolvency Act or by virtue of the cession agreement.

The appeal was upheld. The High Court’s order was set aside and replaced with an order dismissing both Venfin’s claim and KZN’s counterclaim, each with costs (including the costs of two counsel). KZN was ordered to pay Venfin’s costs of appeal. The cross-appeal was dismissed with costs.

The case is significant for its careful treatment of disputes of fact in alleged oral agreements, the evidentiary weight of silence in response to correspondence, and the application of probabilities in commercial contexts. It also clarifies that a cession of rights, even with an indemnity, does not without more transfer underlying debts, nor does s 156 of the Insolvency Act automatically render a cessionary liable for the cedent’s obligations.