CCA Little and Sons v Liquidator R Cumming (Pvt) Ltd 1964 (2) SA 684 (SR)

 CCA Little and Sons v Liquidator R Cumming (Pvt) Ltd 1964 (2) SA 684 (SR)

Issue: Whether a company's liquidator can claim money paid to a creditor by the company before it went into liquidation if the payment was made in contemplation of insolvency.

Facts:

In 1962, R Cumming (Pvt) Ltd (Cumming), a company, was in financial difficulty. In an attempt to avoid going into liquidation, Cumming paid R10,000 to CCA Little and Sons (CCA), a creditor.

Cumming went into liquidation in 1963. The liquidator of Cumming claimed that the payment of R10,000 to CCA was made in contemplation of insolvency and that CCA was therefore not entitled to retain the money.

CCA argued that the payment was made in good faith and that it was not aware that Cumming was in financial difficulty at the time of the payment.

Held:

The Court held that the liquidator of Cumming could claim the R10,000 from CCA. The Court reasoned that the payment of R10,000 was made in contemplation of insolvency and that CCA was therefore not entitled to retain the money.

The court also found that CCA had not taken reasonable steps to ascertain whether Cumming was in financial difficulty at the time of the payment.

Key Facts:

• A company paid a creditor R10,000 in an attempt to avoid going into liquidation.
• The company went into liquidation shortly after the payment was made.
• The liquidator of the company claimed that the payment was made in contemplation of insolvency and that the creditor was therefore not entitled to retain the money.
• The creditor argued that the payment was made in good faith and that it was not aware that the company was in financial difficulty at the time of the payment.

Reasons:

• The Court held that the liquidator of the company could claim the R10,000 from the creditor because the payment was made in contemplation of insolvency and the creditor was therefore not entitled to retain the money.
• The court also found that the creditor had not taken reasonable steps to ascertain whether the company was in financial difficulty at the time of the payment.

Conclusion:

The Court's decision in CCA Little and Sons v Liquidator R Cumming (Pvt) Ltd 1964 (2) SA 684 (SR) is a significant case in South African law. The Court's decision clarified the law relating to the rights of liquidators of companies that have made payments to creditors in contemplation of insolvency.