About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Western Cape High Court, Cape Town
SAFLII
>>
Databases
>>
South Africa: Western Cape High Court, Cape Town
>>
2016
>>
[2016] ZAWCHC 70
|
|
Nation Unlished Trading CC t/a Engennering Drawing And Design v Bulk Petroleum Supplies (Pty) Ltd (4859/2016) [2016] ZAWCHC 70 (10 June 2016)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
Number: 4859/2016
DATE:
10 JUNE 2016
In
the matter between:
NATION
UNLISHED TRADING CC
t/a
ENGINEERING DRAWING AND
DESIGN
....................................................................
Applicant
(Registration
number: 2010/012748/23)
And
BULK
PETROLEUM SUPPLIES (PTY)
LTD
...................................................................
Respondent
(Registration
number: 2013/104799/07)
Heard
on: 09 June 2016
Delivered
on: 10 June 2016
JUDGMENT
BOQWANA,
J
Introduction
[1]
This is an application for the
provisional liquidation of the respondent. This application was
preceded by an application for condonation
for the late filing of the
answering affidavit and the respondent’s heads of argument
which were submitted in Court during
the hearing of the matter.
Condonation
application
[2]
Dealing with the condonation
application, the applicant’s counsel, Mr Brown indicated that
the applicant did not oppose the
condonation application in respect
of the late filing of the heads of argument; however his instructions
were to oppose the condonation
application in respect of the
answering affidavit.
[3]
The liquidation application was
lodged in March 2016 and set down for 21 April 2016. The respondent
filed a notice of intention
to oppose. The matter was then postponed
by Yekiso J, by agreement between the parties, to the opposed roll on
9 June 2016 (which
is the date this matter was heard). In terms
of Yekiso J’s Order the respondent was to file its
answering papers
on or before 9 May 2016 but failed to do so
necessitating the applicant to bring a Chamber Book application
seeking to compel filing
of the answering affidavit. On 16 May 2016
an Order was granted by Mahomed AJ ordering the respondent to file
its answering papers
within 3 days of the service of the Order.
Mahomed AJ’s order was served on the respondent’s
correspondent’s
attorneys, on 18 May 2016. It is not clear from
the papers when the answering affidavit was filed but it was deposed
on 24 May
2016 and served on 27 May 2016 which is four days outside
the period by which it should have been filed.
[4]
The reason offered by the
respondent’s attorney for the late filing of the answering
affidavit is that certain issues pertaining
to the mandate to
represent the respondent and the way forward, surfaced during the
drafting of the answering affidavit. These
issues, according to Mr
Jason Demetroudes, of the respondent attorneys, could not be dealt
with expeditiously. Neither are these
alleged difficult and
meritorious circumstances explained nor any dates upon which these
occurred are provided, to substantiate
such claims. An issue of
geographical problems between where the respondent and its attorney
are located is also raised, which
it is alleged impacted on the
manner in which the manner was dealt with and the speediness in
dealing with this matter. In a further
affidavit, also submitted in
Court during the course of the hearing of the proceedings, Mr
Demetroudes alleges that he never received
the Order granted in terms
of the Chamber Book application and only became aware of it after the
receipt of the replying affidavit
which was on 3 June 2016. This is
strange if one takes into account that the correspondent attorneys
were served with this Order
on 18 May 2016 and that is admitted by
the Mr Demetroudes. An explanation from the correspondent attorneys
has not been given.
[5]
In regard to the issue of the
lateness of the respondent’s heads of argument, the explanation
given is that the respondent
only received the replying affidavit on
2 June 2016 and because of its counsel’s workload it could only
be finalised later
upon consideration of the applicant’s
supplementary heads of argument which were only filed on 6 June 2016.
The manner in
which the respondent has conducted these proceedings is
dilatory and the explanation given is not adequate. There had been no
correspondence
between it and the applicant’s attorneys to
explain its situation or to seek any form of indulgence. It is
unfortunate that
the Court, in these circumstances, could not show
its displeasure by awarding costs against the respondent as costs
become costs
in the liquidation, even if the answering affidavit were
to be admitted for other reasons.
[6]
Despite the scant explanation, I am
of the view that the degree of delay is not excessive and given the
ramifications of liquidation
proceedings, I will allow the late
filing of the answering affidavit. Same goes with the respondent’s
heads argument.
Provisional
liquidation application
Applicant’s
case
[7]
Turning to the merits of the case,
the applicant alleges that it is a creditor of the respondent in that
it is owed an amount of
R486 600.00 by the respondent resulting
from an oral agreement that it entered into with the respondent for
the purchase and
delivery of diesel.
[8]
It is alleged by the applicant that
on or about 26 March 2015 the parties entered into an agreement at
Boksburg or alternatively
in Mossel Bay with the applicant duly
represented by Jacobus Johannes Bezuidenhout (‘Bezuidenhout’)
and Michael Neil
De Koning (‘De Koning’) and the
respondent represented by
inter alia
David Myburgh (‘Myburgh’).
[9]
In terms of the agreement no order
will be processed unless full payment of the order was received by
the respondent. The applicant
received a pro-forma invoice dated 26
March 2015 from the respondent.
[10]
On 27 March 2015 the applicant
settled the full outstanding amount of R756 600. The applicant
alleges that it fully and duly
complied with all its obligations
under the agreement pursuant to payment it made to the respondent.
It further alleges that
the respondent failed to comply with its
obligations under the agreement and failed to deliver the purchased
diesel either timeously,
fully partially or at all. The
respondent having failed to deliver the diesel undertook to repay the
purchase price to the
applicant but has to date paid back only a
portion, to wit R270 000. The respondent made three
payment, to wit R70 000
on 28 April 2015, R100 000 on 5 May
2016 and R100 000 on 26 June 2015. In the result, the applicant
alleges that it is
owed by the applicant an amount of R486 600.
[11]
On 19 January 2016 a letter of
demand was sent in terms of section 345 of the Companies Act No. 61
of 1973 (‘Companies Act’),
demanding payment in the sum
of R486 600 within 21 days after receipt thereof.
Respondent’s
case
[12]
The respondent admits that it
received the amount,
via
its director, Myburgh. It admits that on or about 26 March 2015, it
directed a
pro-forma
invoice to the applicant to confirm the amount of R756 600 that
was due and owing to the respondent for the procurement and
delivery
of 70 000l of 500ppm diesel.
[13]
After having received the pro-forma
invoice the respondent received proof of payment of the amount
R756 600 on 27 March 2015.
The respondent alleges that it
does not stock petroleum nor does it purport to do so. It
alleges that on or about January
and March 2015 allocation holders
such as Kish Gas Petroleum (Pty) Ltd C & C Pat Log (Pty) Ltd were
contracted and paid to
deliver the fuel. The fuel was ordered
and paid for by itself.
It
attaches notices of payment in the amounts of R712 880 and
R354 818.10, which were actioned on 8 January 2016 and 27
March
2015 respectively.
[14]
The orders having been placed, the
allocation holder was required to deliver the fuel. The respondent,
according to it, complied
with its obligations in terms of its
agreement that had been entered into and in the circumstances to
fulfil its obligations except
for the petroleum having not been
delivered by the subcontractor. According to it the applicant was
fully aware of the fact that
this is the way in which the respondent
conducted its business. It alleges that the party to whom the
money was paid in order
for the fuel to be delivered failed,
alternatively refused to deliver the petroleum product.
[15]
As soon as Myburgh, who deposed to
the answering affidavit, became aware of this, he demanded that the
money be repaid, this was
not done and it subsequently resulted in
these proceedings.
[16]
From the date of when the order was
placed by him, that is Myburgh, with the allocation holder to
purchase and deliver the fuel
in question, he was in contact with the
applicant’s duly authorised representative Bezuidenhout.
He and Bezuidenhout
were in consistent discussion and negotiations
pertaining to the non-delivery of the fuel indicating to him that
there is an issue
and the respondent was trying to resolve it.
Myburgh then approached the applicant informing them of problem in
good faith and
tendered payment of the amount which had been paid to
him for the fuel.
[17]
The purpose of him engaging with the
applicant at the stage when the fuel was not delivered was merely an
attempt to settle the
issue and restore good relations while pursuing
the party who misappropriated the funds for the petroleum. This
attempt was
merely done for purposes of settlement and was not to be
misconstrued as an acknowledgment alternatively admission of any
debt.
[18]
Bezuidenhout and Myburgh approached
the police station in Boksburg in order to open a case of fraud
against the party who did not
deliver the fuel.
Bezuidenhout himself spoke to the transporter of Kish who indicated
to him that he would not be delivering
the fuel. During the
period from when the last payment was made up until the date the
affidavit was deposed to, Myburgh had
been in continuous negotiations
with the applicant in order to resolve the matter. Upon receipt
of the section 345 notice
he directed the said notice to his newly
appointed attorneys of record, S Roux Incorporated, requesting them
to contact the attorney
for the applicant informing him of the
situation and to stay the winding up proceedings. Myburgh’s
attorney only managed
to get hold of the applicant’s attorneys
on 2 March 2016 to inform them about the situation which had arisen.
[19]
The respondent alleges that it has
operated successfully in the market since commencement of its
operation and it has maintained
good relations with its clients and
this is the only matter that has been brought to court.
[20]
It further alleges that it will not
be just and equitable to liquidate the respondent for a number
of reasons:
a)
It renders unique service in the manner in
which it operates business and the ethical approach that it has
adopted.
b)
It is well managed and all employees and
creditors are paid with the exception of the applicant, however the
full amount outstanding,
although it is not dispatched, the
respondent has paid R270 000 in the period of 3 months.
This is surely an indication
of a non-insolvent company.
c)
The respondent has been and will be able to
attempt to and continue with its main objective for which it was
incorporated.
d)
The respondent in executing its business
does so within the law.
[21]
The respondent further alleges that
it is not made up of large and valuable unencumbered assets which can
be liquidated and distributed
to the creditors, the value of the
respondent is its goodwill and by winding it up and not allowing the
respondent to trade, the
applicant will shut the door on any
potential possibility of the applicant pursuing the money it claims
is due and owing.
Further that thereto will shut the door on
any other creditors receiving any monies which may be due and owing
to them.
Legal
principles
[22]
The law with regards to an opposed
application for provisional winding up of a company is established.
As was held in
Kyle and others v Maritz
and Pieterse Inc.
2002 (3) All SA 223
(T) at para 12, in these kinds of proceedings, the onus is on the
applicant to establish that he or she is a creditor with requisite
locus standi
to
apply for the winding up of the respondent. The applicant must first
establish that it is entitled to a provisional order on
a
prima
facie
basis. It must also show
that the balance of probabilities on affidavits is in its favour.
[23]
It was held in
Orestisolve
(Pty) Ltd t/a Essa Investments vs NDFT Investments Holdings (Pty) Ltd
& Another
2015 (4) SA 449
(WCC) at
para 8 that, ‘even if the applicant establishes its claim on a
prima facie
basis, the Court will ordinarily refuse the application if the claim
in
bona fide
disputed on reasonable grounds’. Where the applicant has
shown the debt
prima facie
exists, the onus is on the respondent to show that it is
bona
fide
disputed on reasonable grounds.
(See
Badenhorst vs Northern Construction
Enterprises
(Pty) Ltd
1956 (2) SA 346
(t) at 347 H – 348 C).
[24]
Moseneke J (as he then was) observed
as follows in Kyle supra at para 13 :
‘
Where
the claim of the applicant is disputed the respondent bears the onus
to establish the existence of a bona fide dispute on
reasonable
grounds.’
He further held
that:
‘
The
dispute raised by the debtor company must be in good faith. It must
be genuine and honest. The dispute so raised must of course
be based
on reasonable grounds.
Therefore a
defence which is inherently improbable or patently false or dishonest
would not qualify as a bona fide dispute
:
‘
a
debt is not bona fide disputed simply because the respondent company
says that it is disputed. A dispute must not only be bona
fide or
genuine but must be on good, reasonable or substantial grounds. The
expression ‘genuine dispute’ connotes a
plausible
contention requiring the same sort of consideration as ‘serious
question to be tried.
’
(I underline for
emphasis )
[25]
I accept Mr Ferreira’s
contention that in these proceedings, as stated in
Robson
v Wax Works (Pty) Ltd and Others
2001
(3) SA 1117 (C) at para 14, quoting a passage in
Hülse-Reutter
and Another v HEG Consulting Enterprises (Pty) Ltd (Lane and Fey NNO
Intervening)
1998 (2) SA 208 (C)
at 219F-220A, ‘what the respondent must establish is no more
and no less than that the grounds
on which they do so are reasonable.
They do not have to establish, even on the probabilities, that the
company, under the direction,
will, as a matter of fact, succeed in
any action which might be brought against it by the applicants to
enforce their disputed
claims. They...do not have to prove the
company’s defence in any such proceedings. All they have to
satisfy me of is that
the grounds which they advance for their claims
are not unreasonable.
…’
[26]
The dispute must be genuine in the
sense that the applicant must still provide a plausible contention
requiring the same sort of
consideration as a ‘serious question
to be tried’ as was held by Moseneke J in the
Kyle
matter supra.
The claim and
whether it bona fide disputed on reasonable grounds
The
relationship
[27]
It is not disputed that an oral
agreement was entered into between the applicant and the respondent
and pursuant to that, the applicant
paid to the respondent an amount
of R756 600 on or before 26 March 2015 for the procurement and
delivery of the diesel.
[28]
The diesel was never delivered and
the respondent admitted that the delivery would not take place. The
respondent however alleges
that non-delivery was due to a third
party, a subcontractor,’s failure to deliver the diesel.
[29]
It is borne out by the papers that
the respondent held itself out to be a supplier of petroleum
products. This is alleged in paragraph
20 of the answering affidavit
and is also apparent from an email dated 19 January 2016 attached to
the founding affidavit written
by Myburgh to Dimitri Paleologu. In
this email, the signature recorded the respondent as a licenser and
exporter of all petroleum
products. This information also appears
from the
pro forma
invoices.
[30]
The respondent submits that it
contracted with a subcontractor to deliver the diesel ordered by the
applicant, but avers that the
subcontractor’s failure to
deliver did not create any liability on its part because it simply
acted as an intermediary. According
to it the applicant should have
taken up its case against the subcontractor because it, as a
respondent, had fully complied with
the obligation under the
agreement.
[31]
This third party relationship
between the respondent’s clients and its so-called allocation
holders, the subcontractors has
not been made out by the respondent
on the papers nor have the terms of this alleged relationship been
alleged. What the papers
reveal is an agreement that existed between
the respondent and the applicant, its client, where an order was
placed for delivery
of the diesel and payment made.
[32]
The fact that the respondent
contracts with allocation holders to supply it with the petroleum and
facilitates the transport and
loading and offloading of the petroleum
product has nothing to do with the applicant. The arrangement
which exists between
itself and its client is that upon payment of
the invoice, the client would collect the product so ordered or
alternatively it
gets delivered by the respondent to the client.
[33]
In this connection it is clear that
the relationship exists between the client and the respondent and
there is no direct nexus between
the applicant and the third party
subcontractors. The term ‘
subcontractor
’
itself spells-out the nature of the relationship as it denotes a firm
carrying out work as part of a larger project (See
Concise Oxford
English Dictionary, Eleventh Edition). The fact that the respondent
proceeded to pay money to the subcontractor
but the subcontractor
failed to supply it with petroleum is of no consequence to its
relationship with the respondent.
[34]
The respondent’s liability to
the client is direct and based on the contract entered into between
them. Orders are placed
with the respondent by clients and the
respondent gets paid. It is the respondent that procures
product from sub-contractors
chosen by it, based on the relationship
and the agreement that it has with them. Arrangements on how
the relevant subcontractor
would be paid and how the diesel would be
supplied to the respondent are between the respondent and such
subcontractor. The client
has no involvement on how that relationship
is structured and managed. At least that has not been shown in these
papers.
[35]
Mr Ferreira conceded that the
alleged intermediary relationship is not clearly set out on the
papers. He attempted to argue that
this intermediary relationship was
also akin to an agency relationship. That proposition was advisedly
withdrawn as it is not supported
by the papers. The respondent simply
could not advance any plausible contention demonstrating this alleged
intermediary relationship.
[36]
The debt itself is acknowledged in
many parts of the respondent’s answering affidavit. Myburgh
admits that he approached the
applicant and tendered payment of the
amount which had been paid to him for the fuel, (i.e. the R756 600).
He once again
admitted averments pertaining to the undertaking to
repay the purchase price. The excuse that he did not understand the
legal ramifications
when he did that does not assist him, instead it
strengthens the notion that the respondent laboured under the
knowledge that it
was indebted to the applicant and obliged to pay
that debt. This payment could not be
in
lieu
of a settlement as he alleges. In
any event, on what basis would he tender to repay such a large sum of
money, if the respondent
did not owe the applicant? There is also no
indication that the alleged holders knew that repayments were made on
their behalf
nor was there any indication that the respondents was
pursuing payments from them on behalf of the applicant. At no
stage
did he advise the applicant to pursue the allocation holders
directly, he instead, tried to settle the amount owing, as he
alleges,
whilst pursuing those misappropriating the funds.
[37]
The respondent attempted to make
repayments to the applicant of the amount that it owed. The
explanation given that it was
doing so in order to maintain
relationship between it and the applicant does not hold water.
The amount that was tendered
was the debt of R756 600. The
respondent does not mention any lesser amount that it had approached
the applicant to pay as
a form settlement. The respondent
admits allegations made by the applicant that there is an outstanding
debt in various parts
of its answering affidavit, albeit mentioning
at some stage that the alleged debt is in dispute. In this regard the
respondent
contradicts itself.
[38]
In the circumstances, I agree with
submission made on behalf of the applicant that on the respondent’s
own version, the respondent
acknowledged its indebtedness to the
applicant by offering to pay the amount of R756 600, even if the
applicant’s version
of the contractual arrangement were to be
rejected. If that was not the case, the respondent would have
directed the applicant
to the relevant subcontractor to be paid by it
and for that subcontractor to fulfil its obligations towards the
applicant.
[39]
For these reasons, I am satisfied
that the applicant has established that it is a creditor of the
respondent and that the respondent
is indebted to it. I am not
persuaded that the respondent has a
bona
fide
defence which is disputed on
reasonable grounds. I cannot find on the papers that the
respondents are genuine in disputing
the claim and that the claim was
bona fide
disputed on reasonable grounds. The dispute is based on vague,
ambiguous and contradictory statements and it is difficult
to find it
reasonable. The respondent in my view seeks to create a dispute
merely to avoid being wound-up; it has not discharge
its onus in my
view to show that the indebtedness is disputed on reasonable grounds
as required by law.
Inability to
pay its debts and the court’s discretion
[40]
The applicant relies on the
presumption created by section 345(1) (a) that the respondent
allegedly was unable to pay its debts
cause after it was called upon
to pay the remainder of its indebtedness within 21 days of receiving
the demand. It failed
to do so and accordingly was deemed to be
unable to pay its debts for the purposes of section 345(f).
[41]
Section 345(1) (a) creates only a
rebuttable presumption, one would need to investigate whether the
presumption has been rebutted
by evidence that the respondent is not
commercially insolvent. Alternatively the question would be whether
despite the deemed inability
to pay debts, the court’s
discretion should nevertheless be exercised. (See Orestisolve supra
at para 71).
[42]
The respondent has placed no facts
before this Court to show that notwithstanding the deeming provision
it is in fact able to pay
its debts and thus not commercially
insolvent.
[43]
The respondent has failed to place
any fact before this court to provide any insight into it financial
position except a bald statement
that it has operated successfully
since the commencement of its operations until the date of the
answering affidavit and has potential
to grow further only in the
event of it being able to trade.
[44]
In fact it admits it has other
creditors, which it does not name and which it has paid except for
the applicant. It has not stated
the amounts it has paid to these
creditors and over what period. The last payment of the three
tranches paid to the applicant was
R100 000 made in June 2015. Since
then no amounts has been paid. No financial statements or any
financial records of any kind have
been brought for the Court to
ascertain the respondent’s financial position or even
allegations pertaining to the respondent’s
finances.
[45]
The respondent admits not to have
any substantial assets which can repay its indebtedness. In the
circumstances, the respondent
has not been able to rebut the
presumption that it is unable to pay its debts. It has instead
strengthened the opposite.
[46]
I have not been persuaded either
that it will not be just an equitable to wind-up the respondent. The
respondent has not put up
any sufficient grounds on this score as can
be seen from its case that has been outlined above.
Conclusion
[47]
In conclusion, no facts have been
made out to gainsay the case that has been placed by the applicant
prima facie
before this Court that would persuade the Court to exercise its
discretion in favour of the respondent by not granting the
provisional
winding-up order sought. The applicant has been able to
show that it is a creditor and I have not been persuaded that a
bona
fide
defence exists on reasonable
grounds to dispute the applicant’s claim. Nothing has been
placed before this Court to upset
the deeming provision that the
respondent has been unable to pay its debt in terms of section
345(1)(a) of the Companies Act and
that it would not be just and
equitable to wind it up. In the circumstances provisional order
winding-up the respondent must succeed.
The applicant sought relief
in terms of 3.1 to 3.4 of the notice of motion, correctly, so in my
view. I will add that in view of
the fact that there are creditors
mentioned in the respondent’s papers, service of the
provisional Order must be done to
known creditors as well as
publication in the newspapers. The applicant has not made provision
for that in its notice of motion.
[48]
I therefore make an order in the
following terms:
1.
Late filing of the answering affidavit and
respondent’s heads of argument is condoned.
2.
The respondent is placed under provisional
liquidation in the hands of the Master of the High Court.
3.
A Rule Nisi is issued calling upon the
respondent and any other interested parties to show cause to this
Court on 29 July
2016
why the respondent should not be placed under a final winding up
order.
4.
This order is to be served forthwith on:
4.1
The respondent’s registered physical
address;
4.2
The respondent’s employees, if any;
4.3
Trade union, if known by the Applicant in
terms of section 346 (2) read with section 346 (1) (a) of the
Insolvency Act;
4.4
The offices of the South African Revenue
Services, Cape Town;
4.5
The Master of
the Western Cape High Court, Cape Town;
4.6
By one
publication in each of the Cape Times and Die Burger newspapers;
4.7
By registered
mail to all known creditors whose claims are in excess of R20 000;
5.
That the costs of this application be the
costs in the liquidation.
N
P BOQWANA
Judge
of the High Court
APPEARANCES
For the
Applicants: Adv G Brown
Instructed by: D
Paleologu Attorneys c/o De Klerk & Van Gend Inc., Cape Town
For the
Respondents: Adv A Ferreira
Instructed by: S
Roux Inc. c/o Strauss Daly Attorneys, Cape Town