PMG Motors Kyalami (Pty) Ltd (In Liquidation) v Firstrand Bank Ltd, Wesbank Division

Wesbank (respondent) entered into floor plan agreements with three motor vehicle dealerships (appellants), reserving ownership in vehicles until full payment. On 22 January 2009, Wesbank prepared letters cancelling the agreements and demanding return of vehicles. The letters were delivered on 23 January 2009. On 26 January 2009, the dealerships presented ex parte applications to the KwaZulu-Natal High Court, Durban for liquidation (the date of commencement of liquidation). Provisional liquidation orders were granted on 27 January 2009 and made final on 9 March 2009. After liquidation, liquidators requested payment from Wesbank under s 84(2) of the Insolvency Act. Wesbank paid but later believed the payments were made in error as s 84(2) did not apply because the agreements were cancelled before liquidation commenced. Liquidators refused repayment. Wesbank brought an application under the condictio indebiti in the South Gauteng High Court, Johannesburg to recover the payments. The court granted Wesbank's application. The dealerships appealed.

• Whether the court below had jurisdiction to entertain the application
• Whether s 84(2) of the Insolvency Act applied to the claim where agreements were cancelled prior to liquidation
• Whether there were material factual disputes requiring referral to oral evidence or dismissal
• Whether the money claim under the condictio indebiti should have been brought by action rather than application
• Whether an objection in terms of s 111 of the Insolvency Act precluded the grant of relief before the objection was resolved

The appeal was dismissed with costs to be paid by the appellants jointly and severally, the one paying the other to be absolved, such costs to include the costs consequent on the employment of two counsel.

A company in liquidation does not cease to have a principal place of business for jurisdictional purposes. The fiction of corporate residence remains unaffected by liquidation, taking into account practical factors such as physical presence, location of senior management and records, potential for business continuation, and business rescue provisions. Both s 84(1) and s 84(2) of the Insolvency Act require the existence of a contract binding on both parties at the time of liquidation. Section 84(2) cannot apply where an instalment agreement with reservation of ownership has been cancelled prior to the commencement of liquidation. Once cancelled, no amount remains payable under the transaction, which is a prerequisite for s 84(2) to operate. A real, genuine and bona fide dispute of fact can exist only where the party raising the dispute has seriously and unambiguously addressed the facts in dispute. Bare denials that fail to engage with detailed evidence do not create genuine factual disputes requiring referral to oral evidence.

The court noted it was unnecessary to decide whether the domicile of certain liquidators of the dealerships provided an alternative basis for jurisdiction. The court also noted that its finding regarding s 111 objections was limited to the peculiar facts of this matter and should not be understood as opening the door to objectors under s 111 to approach a court prior to the objection having been ruled on by the Master in ordinary circumstances. The court observed that the doctrine of continentia causae is enshrined in s 19(1)(b) of the Supreme Court Act (now s 21(2) of the Superior Courts Act). It was unnecessary to decide whether the doctrine applies only where no other forum has jurisdiction in respect of all respondents.

This case clarifies important principles regarding jurisdiction over companies in liquidation, the interpretation and application of s 84(2) of the Insolvency Act, and the interaction between liquidation procedures and claims under the condictio indebiti. It establishes that liquidation does not terminate a company's principal place of business for jurisdictional purposes, recognizing the practical realities of liquidation including potential business rescue and continuation of business. The judgment provides important guidance on when s 84(2) of the Insolvency Act applies, requiring that instalment agreements be extant at the commencement of liquidation. It also demonstrates the application of principles regarding genuine factual disputes in motion proceedings and confirms that the condictio indebiti may be pursued by application in appropriate circumstances even where objections under s 111 of the Insolvency Act have been lodged.