Imperial Bank Limited v Hendrick Jacobus Rust Barnard N.O.

The respondents, appointed as joint liquidators of Pro Med Construction CC (in liquidation), instituted action on 3 August 2007 against Imperial Bank Limited claiming R25 million in lieu of transfer of immovable property. The property had allegedly been purchased by Pro Med from the appellant under an agreement dated 27 February 2003, but the appellant subsequently sold the property to a third party. In the original summons, the liquidators were cited in their own names followed by 'N.O.' and described as acting 'in their representative capacities as the joint liquidators.' The appellant pleaded that the liquidators were not properly cited in compliance with section 386(4) of the Companies Act 61 of 1973, which provides that liquidators may bring or defend actions 'in the name and on behalf of the company.' On 17 February 2011, more than three years after service of the summons, the respondents served notice of intention to amend the particulars of claim to clarify that 'The Plaintiff is Pro Med Construction CC (In Liquidation)...duly represented herein by' the named liquidators. The appellant objected, arguing that the claim had prescribed and that the amendment constituted an impermissible substitution of parties. The High Court granted leave to amend, and the appellant appealed.

• Whether the order granting the amendment was appealable as opposed to being purely interlocutory
• Whether the amendment constituted a mere correction of a misdescription or an impermissible substitution of parties that would deprive the appellant of a prescription defence
• Whether liquidators have locus standi to institute action in their own names as opposed to in the name of the company
• Whether service of the original summons interrupted prescription where the liquidators were cited in their own names rather than explicitly citing the company as plaintiff
• Whether the proposed amendment would introduce a new cause of action or new party after prescription had run

The appeal was dismissed with costs.

Where liquidators institute proceedings in their own names followed by 'N.O.' and describe themselves as acting in their representative capacities as liquidators of a company, and the particulars of claim consistently identify the company as the creditor and contracting party, service of such a summons interrupts prescription of the company's debt under section 15(1) of the Prescription Act. An amendment to formally cite the company as plaintiff in such circumstances constitutes a correction of a misnomer rather than substitution of a new party, provided the right sought to be enforced remains the same or substantially the same and was recognizable from the original process. The test for determining whether an amendment after prescription should be allowed is whether the debt claimed in the amendment is the same or substantially the same debt as originally claimed, and whether prescription of the original debt was duly interrupted - substance prevails over form in this determination.

The Court noted that authorities are divided on how plaintiffs should be properly cited when liquidators bring proceedings under section 386(4)(a) of the Companies Act 61 of 1973, referencing conflicting High Court decisions (Fey NO v Lala Govan Exporters, Shepstone and Wylie v Geyser NO, and Fundstrust v Marais). The Court stated that until this point is authoritatively decided, it would not be equitable to refuse amendments on grounds of defective citation where prescription is raised as a defence. The Court assumed without deciding that the order granting amendment was appealable, thus leaving open the question of whether such orders are purely interlocutory. The Court also stated this was not an appropriate case for considering the broader question of whether a liquidator has standing to sue where a debt owed to a company in liquidation is sought to be recovered, expressly declining to address the correctness of the statement in Blackman's Commentary that 'a company being wound up never has standing' and that 'standing is always conferred on the liquidator.'

This case clarifies the principles governing amendments to pleadings where liquidators have sued in their own names rather than explicitly in the name of the company, particularly in the context of prescription defences. The judgment establishes that where the substance of the pleadings makes clear that liquidators are acting in representative capacities on behalf of the company (evidenced by use of 'N.O.', description of representative capacity, and consistent reference to the company as the contracting party and creditor), an amendment to correct the formal citation constitutes correction of a misnomer rather than substitution of parties. Such an amendment does not deprive a defendant of a prescription defence where the original summons made the true creditor's claim recognizable and service interrupted prescription. The case applies the principle that substance prevails over form in determining whether prescription was interrupted. While acknowledging the division in High Court authorities on proper citation of liquidators, the SCA reserved that question for determination in an appropriate case, focusing instead on whether the specific amendment caused prejudicial loss of a prescription defence.