Cloete Murray NO & another v FirstRand Bank Ltd t/a Wesbank

FirstRand Bank Ltd t/a Wesbank concluded a master instalment sale agreement (MISA) with Skyline Crane Hire (Pty) Ltd in 2010, retaining ownership of movable goods until full payment. In May 2012 Skyline fell into arrears and was placed under business rescue. On the same day business rescue commenced, Wesbank cancelled the MISA for non-payment. During business rescue, with the practitioner’s consent, Wesbank repossessed and sold the goods, settling its claim and retaining a surplus. Skyline was later liquidated and the appellants appointed as liquidators. The liquidators contended that Wesbank’s cancellation of the MISA during business rescue was invalid under s 133(1) of the Companies Act 71 of 2008 and that the proceeds should be dealt with under the Insolvency Act.

The appeal was dismissed with costs, including the costs of two counsel. The cancellation of the instalment sale agreement by Wesbank was held to be lawful.

This case is a leading authority on the interpretation of the business rescue moratorium in s 133(1) of the Companies Act. It clarifies that the moratorium does not prevent creditors from cancelling contracts during business rescue and delineates the boundary between contractual rights and prohibited enforcement action, thereby providing certainty to creditors and practitioners.