Ronbel 108 (Pty) Ltd v Sublime Investments (Pty) Ltd (In liquidation)

Absa Bank Limited instituted action against Sublime Investments (Pty) Ltd (formerly Capitol Hill Investments (Pty) Ltd). Shortly before trial on 30 April 2003, Sublime resolved to be wound up voluntarily and registered a special resolution to that effect, resulting in suspension of the action. A provisional liquidator (Mr Anticevich) was appointed, followed by his appointment as final liquidator on 1 July 2004. During July-August 2003, Absa made enquiries about Sublime's assets. The company owned a fuel filling station subject to a 20-year lease to Zenex Oil, with all rent paid in advance and limited future income. The company had liabilities of R2,720,651 and assets of R120,030. Absa decided not to submit a claim to avoid liability for administration costs. In late 2005, Ronbel 108 (Pty) Ltd (the appellant) acquired Absa's claims through cession for R250,000 on 31 October 2005. Ronbel submitted the claim for proof at a creditors' meeting on 24 May 2006. The claim was opposed on grounds that it had been ceded before submission, that the proceedings were abandoned under s 359(2)(b) of the Companies Act, prescription, and quantum issues. Absa had never given notice to the liquidator of intention to continue proceedings as required by s 359(2)(a).

• Whether the court should exercise its discretion under s 359(2)(b) of the Companies Act 61 of 1973 to direct that suspended proceedings should not be considered abandoned despite failure to give notice to the liquidator
• Whether the long delay in bringing the application and the circumstances surrounding the cessation to give notice were relevant to the exercise of the court's discretion
• Whether a cessionary of a claim could revive proceedings that the original plaintiff had decided not to pursue

The appeal was dismissed with costs.

Section 359(2)(b) of the Companies Act 61 of 1973 confers an unfettered discretion on the court to direct that proceedings suspended by winding-up should not be considered abandoned, notwithstanding failure to give the required notice to the liquidator. However, in exercising this discretion, the court must have regard to the interests of all interested parties (creditors, liquidator and members). Where the original plaintiff deliberately decided not to proceed with an action and failed to give notice as required by s 359(2)(a), and where a significant delay has occurred (more than two and a half years), a court will not exercise its discretion to revive the proceedings in favour of a cessionary seeking to pursue an action that the original plaintiff had abandoned, even in the absence of alleged prejudice to the liquidator.

The court noted that in Strydom NO v MGN Construction (Pty) Ltd, Booysen J correctly held that in the context of s 359, 'liquidator' means final liquidator, not provisional liquidator, despite the general definition in s 1 including provisional liquidators. The court also observed that the court below's reference to evidence that 'the claim' had been abandoned was probably meant to refer to the action, as whether the claim had been abandoned was not an issue before the court - the issue was whether the proceedings/action had been abandoned. The court distinguished between abandonment of a claim and abandonment of proceedings, noting that negotiations may indicate Absa had not abandoned its claims, but not that it had not abandoned the action.

This case clarifies the scope of the court's discretion under s 359(2)(b) of the Companies Act 61 of 1973 when proceedings against a company in liquidation are considered abandoned for failure to give notice to the liquidator. The SCA confirmed that unlike the 1926 Act, the current provision grants an unfettered discretion, but emphasized that this discretion must be exercised having regard to the interests of all stakeholders in the liquidation. The case establishes that a long delay, coupled with evidence that the original plaintiff deliberately decided not to proceed with an action, will militate against granting relief under s 359(2)(b), even where no prejudice is alleged. It also distinguishes between abandonment of a claim versus abandonment of proceedings. The judgment reinforces the purpose of s 359 - to give liquidators an immediate opportunity to assess claims and prevent them being embarrassed by proceedings before they can consider the matter properly.