Kevin & Lasia Property Investments CC and Another v Roos NO and Others

I J van der Lith Family Holdings (Pty) Limited ('the company') sold immovable property known as OK Sentrum to the first appellant (Kevin & Lasia Property Investments CC) for R7,700,000 on 25 February 2000, which was transferred on 29 June 2000. A mortgage bond for R7,825,000 was registered in favour of the second appellant (Absa Bank Limited). No notice was published as required by section 34(1) of the Insolvency Act 24 of 1936 before the transfer. The company was provisionally liquidated on 21 November 2000 and finally liquidated on 23 November 2000, approximately five months after the transfer. The liquidators sought to set aside the transfer and bond registration on the basis that section 34(1) notice provisions had not been complied with. The company's business consisted of owning a shopping complex comprising six erven in Edleen Township, Kempton Park, which was let out to tenants to generate income. During the court a quo hearing, the appellants' counsel formally admitted that the company was a 'trader' as contemplated in section 34(1) of the Act.

• Whether the company was a 'trader' as defined in section 2 of the Insolvency Act 24 of 1936
• Whether the transfer of the property occurred in the ordinary course of the company's business as contemplated in section 34(1) of the Act
• Whether the appellants were entitled to withdraw the formal admission made during argument that the company was a trader
• Whether section 34(1) of the Insolvency Act applied to render the transfer void against creditors and liquidators

1. Leave to appeal on the question whether the company was a trader as defined in section 2 of the Act was granted and the costs of the application were made costs in the appeal. 2. The appeal succeeded with costs including, in the case of Absa, the costs of two counsel. 3. The order of the court below was set aside. 4. The matter was remitted to the court below (to be heard by any judge of that court). 5.1 The appellants were ordered jointly and severally to pay the costs of the hearing before the court below. 5.2 The remaining costs of the application were ordered to be costs in the cause. 6.1 The respondents were given leave to deliver a replying affidavit within fifteen days of the date of the order or such longer period as may be agreed by the parties or ordered by the court below on good cause shown. 6.2 If a replying affidavit was not delivered as aforesaid, the respondents would be deemed to have abandoned the application and the respondents in their representative capacity would be liable for the costs of the application (save for the costs referred to in paragraph 5.1).

1. An admission made during argument that amounts to no more than an election not to pursue a particular line of argument on available facts can be withdrawn on appeal without formal withdrawal procedure, provided there is no mala fides and the opposing party did not fail to place further facts before the court as a result of the admission. 2. The definition of 'trader' in section 2 of the Insolvency Act 24 of 1936 consists of separate and distinct clauses, each introduced by 'who' or 'or who', and must be interpreted according to its grammatical structure. 3. A person who carries on a business consisting solely of the letting or hiring of immovable property does not fall within the definition of 'trader' in section 2 of the Act. The definition does not include such persons, and the court cannot add to the legislative list on the basis of an alleged oversight in the absence of an absurdity. 4. Section 34(1) of the Insolvency Act only applies to 'traders' as defined in section 2, and the notice requirements must be satisfied before a transfer can be protected from being void against creditors and liquidators.

The court observed that on the available common cause facts, which might not present the full picture, the admission that the company was a trader appeared to be incorrect. The court noted that if the property comprising a shopping complex was purchased for the sole purpose of conducting a letting business in order to generate income, that would not, without more, fall within the definition of 'trader'. The court also made observations about the fairness of granting the liquidators an indulgence to file a replying affidavit in view of the manner in which the matter was handled by the parties in the court below. The court questioned why the legislature did not include a person who acts as a broker or agent in the letting and hiring of movable property if the intention was to be comprehensive, suggesting that in the absence of a common factor among the included enterprises, the court cannot expand the definition.

This case is significant in South African insolvency law for its interpretation of the definition of 'trader' in section 2 of the Insolvency Act 24 of 1936, particularly clarifying that a person who merely lets or hires immovable property does not fall within the definition. The case is also important for its treatment of the withdrawal of admissions made during argument in civil proceedings, establishing that admissions amounting to mere elections not to pursue particular lines of argument on available facts can be withdrawn on appeal without formal procedure, provided there is no mala fides and no prejudice to the opposing party. The judgment demonstrates the proper approach to statutory interpretation and the limits of judicial gap-filling in legislation.