Chater Developments (Pty) Ltd (in liquidation) v Waterkloof Marina Estates (Pty) Ltd and Another

Chater Developments (Pty) Ltd was placed in final liquidation due to its inability to pay its debts. A liquidator, Mr Marais, was authorised by a resolution of creditors (but not by members) to dispose of the company’s movable assets. Acting under that authority, Marais concluded a written agreement selling 40% of the shares in City Lake Marina (Pty) Ltd and certain claims to Waterkloof Marina Estates (Pty) Ltd for R6 million. Chater Developments later refused to perform, arguing that the sale was invalid because the liquidator lacked the requisite members’ authority under the Companies Act 61 of 1973. Waterkloof Marina sued for transfer and enforcement of the agreement. It was common cause that Waterkloof Marina acted in good faith and that no members’ resolution authorising the sale had been obtained.

The appeal was dismissed with costs, including the costs of two counsel, and the agreement of sale was held to be valid and enforceable.

The case confirms that substantive provisions of the Insolvency Act, including section 82(8), apply to the winding-up of insolvent companies under section 339 of the Companies Act 61 of 1973. It provides important protection to bona fide purchasers who contract with liquidators lacking proper authority and clarifies the interaction between company liquidation provisions and insolvency law in South Africa.