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[2017] ZAWCHC 67
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Arabella Investments (Pty) Ltd v Cobow Pty (Ltd) t/a Albourne Boutique Lodge Somerset West; Korevest Leisure group BV v Korevest Investment Group Proprietary Limited (4956/17) [2017] ZAWCHC 67 (28 June 2017)
Republic
of South Africa
IN
THE HIGH COURT OF SOUTH AFRICA
[WESTERN
CAPE DIVISION, CAPE TOWN]
CASE
NO.: 4956/17
In
the matter between:
ARABELLA
INVESTMENTS (Pty)
LTD
Applicant
and
COBOW
(Pty) LTD
t/a
ALBOURNE BOUTIQUE LODGE
SOMERSET
WEST
Respondent
AND:
CASE
NO.: 4957/17
In
the related matter between:
KOREVEST
LEISURE GROUP
BV
Applicant
and
KOREVEST
INVESTMENT GROUP PROPRIETARY LIMITED
(Registration
Number
2013/023166/07)
Respondent
JUDGMENT
– 28 JUNE 2017
Le
Grange, J:
[1]
In this matter there are two opposed applications for the provisional
liquidation of associated companies. I have prepared one
judgment
that covers both cases.
[2]
In the first case, Arabella Investments Pty (Ltd) (“Arabella’)
seeks the provisional winding up of the holding company
Cobow (Pty)
Ltd (“Cobow”). Arabella contends that Cobow should be
wound up on the basis that it is unable to pay its
debts, as
envisaged in s 344(f) as read with s 345(1)(c) of the 1973 Companies
Act.
[3]
In the second case, Korevest Leisure Group BV (Pty) Ltd (“KLG”)
seeks the provisional winding up of Korevest Leisure
Group (Pty) Ltd.
The issue in the second case is whether or not the Respondent
(“Korevest”) has lost its substratum.
KLG alleges that
because Korevest owns 100% of the issued shares in Cobow, Korevest
fate is inextricably wound up with that of
Cobow and the latter’s
liquidation will inevitably result in the liquidation of Korevest.
Accordingly, it was accepted
by all the parties that if the Cobow
application fails, then the Korevest application should also fail,
and vice versa.
[4]
There are numerous factual disputes on the papers filed of record.
The salient background facts which are largely uncontroversial
can be
summarised as follows: Cobow is currently carrying on business as a
guesthouse under the name of Albourne Boutique Lodge
in Somerset
West, Cape Town. Cobow owns the immovable property on which the
guesthouse is conducted. The immovable property, according
to Cobow
was valued at an amount of approximately R17 million, and together
with its business, has a market value of approximately
R22 million.
[5]
The sole shareholder of Cobow is Korevest. Cobow currently has two
directors, Gustav Schaefer (Schaefer) and Jan Eberhard Schliemann
(Schliemann). Martin Lennard Korver (Korver) was also a director of
Cobow until he resigned in August 2016. Korver is the sole
director
of Arabella and controls KLG
[6]
Korevest has three shareholders namely, KLG which owns 47 %. The
Schliemann Family Trust which owns 28% of the shares and the
Finserf
Foundation which owns 25% of the shares.
[7]
In March 2017, Investec Bank (Mauritius) Limited (“Investec”)
issued summons against Korevest, Cobow and Korver
under case no
5690/2017 (“the action”) in which it claims; payment from
Korevest, Cobow and Korver, jointly and severally,
of the amount of
Euro 442,602.94 or the Rand equivalent thereof which is roughly about
R6. 8 Million, (plus the interest as agreed
upon contractually); an
order declaring the immovable property (owned by Cobow) to be
specially executable and costs on an attorney
and own client scale.
[8]
The claim by Investec is based on a loan agreement concluded in May
2015 between Investec and Korevest, represented by Korver,
in terms
whereof Investec loaned Korevest the Euro equivalent of the amount of
R6.8 Million (“the Investec Loan”).
[9]
Investec’s claim for an order declaring the immovable property
specially executable is based on a covering mortgage bond
registered
by Cobow in favour of Investec over the immovable property as
security for the monies loaned to Korevest.
[10]
Cobow in opposing the relief sought raised the following defences.
Firstly, that
Arabella
lacks
locus standi
as a creditor. Secondly, that Korver has allegedly perpetrated a
fraud on Cobow and Investec by fraudulently misrepresenting his
authority to have concluded the Investec loan and as such cannot rely
on his own wrongdoing as the causa for the winding up of
Cobow.
Thirdly, Cobow has a good defence to the claims of Investec on the
grounds that Korver allegedly committed a fraud and lacked
authority
to have concluded a loan agreement between Korevest and Investec, to
execute a guarantee by Cobow in favour of Investec
and to pass a
covering mortgage bond over Cobow’s immovable property in
favour of Investec. Lastly, that Cobow denies it
is commercially
insolvent and or unable to pay its debts.
[11]
Mr. RG Goodman, SC assisted by Ms. DM Davis appeared for the
Applicants. Mr. WG Woodland assisted by Mr. C Cutler appeared
for
Cobow.
[12]
At the start of the hearing, leave was sought by Cobow and Arabella
to file additional affidavits. Having heard counsel and
having regard
to the relevance of the matter contained in the affidavits, such
leave was granted and the affidavits admitted as
forming part of the
factual matrix underpinning the two cases.
[13]
Arabella also at the outset launched and application in terms of the
Uniform Court Rules 6(5)(g) for the referral of certain
issues to
oral evidence. The issues Arabella wants to have
resolve
at such hearing was as follows:
13.1
whether
or not there was an agreement as alleged at paragraph 22 of the
answering affidavit that Korevest would discharge Cobow’s
indebtedness to the applicant from funds paid by Cobow to Korevest;
13.2
whether
or not the admitted liability of R570 000 was paid by the
respondent to the applicant;
13.3
whether
or not Schaefer and or Schliemann had knowledge, prior to the
execution thereof, of the loan agreement between Korevest
and
Investec Bank Limited (Mauritius) (“Investec Mauritius”)
(“the Investec loan”), the ancillary Cobow
guarantee and
the Cobow mortgage bond;
13.4
whether or not Schaefer and or
Schliemann authorized Korver to negotiate with Investec Bank Limited
(Cape Town) and Investec Mauritius
to conclude the Investec loan and
Cobow guarantee and to register the mortgage bond in favour of
Investec Mauritius;
13.5
whether
or not the respondent is able to pay its debts.
[14]
Arabella premised their application for referral to oral evidence on
the dictum in
Lombaard v Dropop
2010 (5) SA 1
at para [53] wherein it was held that such applications
be made from the outset and before argument, unless there are
exceptional
circumstances present to depart from it. Despite
the request up front for the referral to oral evidence, Arabella was
confident
that on the papers as it stands a case had been made out
for the primary relief sought.
[15]
Arabella’s
locus standi
is underpinned on the allegation that it is a creditor of Cobow. In
this regard, Arabella placed reliance on the following: first,
an
extract from the management accounts of Cobow which at 3 February
2017 reflects the amounts of R235 000; R250 000 and R250 000
totalling an amount of R735 000. Secondly, a tax invoice dated
8 January 2015 for R570 000.00 (being R570 000.00
plus VAT)
for the four quarters of 2014 (in respect of the 2015 tax year).
According to Arabella the amount of R 735 000 is due
and payable but
remains unpaid either in whole or in part.
[16]
On the papers filed of record, Cobow admitted liability to Arabella
in the amount of R 570 000.00 as at year end
February 2015,
but claims it has paid the said amount. It disputes liability for the
balance of Arabella’s claim. According
to Cobow in terms of an
agreement between Cobow and Korevest, Korver caused Korevest to make
payments totalling R843 500.00
to Arabella in discharge of
Cobow’s liability to it.
[17]
Korver disputes that there was such an agreement between Korevest and
Cobow to make these payments to Arabella. According to
Korver the
payments made by Korevest to Arabella were repayments on his loan
account in Korevest and certain amounts he borrowed
from it.
[18]
Counsel for Arabella in the main contended that the defences raised
by Cobow is contrived and must fail even on the lower threshold
required to stave off a liquidation application as the debt are not
disputed on
bona fide
and reasonable grounds. According to Arabella’s counsel, Cobow
simply failed to allege facts which, if proven at the trial,
would
make out a good defence of payment.
[19]
The principal argument by Counsel for Cobow was that the grounds
advanced by the company in disputing the claims against it
were not
unreasonable. It was contended that the grounds as alleged by Cobow
were also made
bona fide
and if proven at a trial would constitute a good defence.
[20]
Arabella is adamant that the version advanced by Cobow of an alleged
agreement to discharge the liability to Arabella is contrived.
It was
argued that the alleged agreement was contradicted by Cobow’s
own answering papers. According to Arabella the payments
listed by
Cobow’s are described in the books of Korevest as
“
misappropriated funds Arabella”
,
and not as payments to Arabella on behalf of Cobow. It was further
contended that if indeed as alleged payments were made from
Korevest
to Arabella on behalf of Cobow for management fees in terms of an
agreement, then it is highly improbable that it would
have been
described as “
misappropriated”
in the books of Korevest. Moreover, the payments underlined on the
Korevest bank statements do not reflect a payment for an invoiced
amount of R570 000.00 to Arabella but rather payments for
different amounts ranging from R1 000.00 to R175 000.00 between
the period May 2015 to March 2016.
[21]
It was further argued that the recorded payments in the creditor’s
ledger account of Arabella in the books of Cobow,
shows payments
being made directly to Arabella by cheque and that these recorded
payments must negate the version of any agreement
that Korevest would
discharge Cobow’s liability to Arabella from money transferred
by Cobow to Korevest.
[22]
Furthermore, according to Arabella, the alleged payment of
R843 500.00, on which Cobow placed reliance on, is based on
a
journal entry dated 29 February 2016 in the books of account of both
Korevest and Cobow and as such are only a journal entry
in both sets
of accounts. The argument was advanced that the relevant journals and
opposite entries in the books of account were
not disclosed, as one
would have expected, and that Cobow’s defence of payment rests
not on the physical payment of the R570 000.00
but on dubious
journal entries, the effect whereof is purportedly to set off amounts
owed by Arabella to Korevest against amounts
owed by Cobow to
Arabella.
[23]
Cobow on the other hand contended there is no duty on them to
establish as a matter of fact that the defences raised will succeed
in any action which may be brought against them. It was contented
that all that was required were the grounds advanced by Cobow
upon
which it rely to dispute the claims were reasonable and
bona
fide
. According to Cobow, they have a
reasonable prospect of successfully defending the Investec Bank
Mauritius action and in doing
so will cause the mortgage bond and
loan agreement to be set aside.
[24]
Cobow in this regard has alleged that Korver falsified the signatures
of Schaeffer and Schliemann on the resolution of Cobow
authorising
the conclusion of the Cobow guarantee and the registration of the
mortgage bond. Furthermore, Korver falsely misrepresented
KLG as
owning 100% of the shares of Korevest, whereas it only owned 47% of
the shares, and Korver was the only director of Korevest
who signed
the Korevest resolution authorising the conclusion of the Investec
loan whereas Schaefer and Schliemann, as directors
of Korevest,
should also have signed the resolution. Moreover, Schaefer and
Schliemann have alleged that they had no knowledge
of, did not agree
to, and did not sign any documents authorising the conclusion of the
Investec loan or the passing of the mortgage
bond. It was therefore
denied by both that they had authorised Korver to engage in any
dealings with Investec on behalf of Cobow.
[25]
The version advanced on behalf of Cobow was that Korevest had
borrowed funds in foreign currency from a foreign entity called
Cloetenberg Management (“Cloetenberg”) to pay out the
previous shareholders’ loans in Cobow, and that it was
agreed
between Korver, Schaefer and Schliemann that Korevest’s debt to
Cloetenberg would be secured by a bond over the immovable
property in
favour of Cloetenberg. However, nothing came of this and it is
alleged that Korver instead suggested that it would
be better to have
a bond registered over the immovable property in favour of Investec
as security for a guarantee which Investec
would provide to
Cloetenberg to secure Korevest’s debt to Cloetenberg.
[26]
Korver on behalf of Arabella disputes this version, in particular the
professed ignorance of Schliemann and Schaefer of the
fact of the
Investec loan and the mortgage bond. According to Korver, Schaefer
and Schliemann were well aware of the fact of the
loan and of the
mortgage bond. To this extent reliance was placed on the following
documents:
26.1 A letter dated
8 April 2015 from Investec to Korevest setting out full details of
the terms of the loan and the security therefor
(including the Cobow
guarantee and the mortgage bond) which was sent to the address of the
offices of Schliemann Incorporated;
26.2 A letter dated
27 May 2015 written by Schliemann to the Registrar of Deeds, Cape
Town, in which he made reference to the fact
that Cobow had been
granted a bond through Investec and was merely waiting for delivery
of the title deed before the bond could
be lodged and funds released
to Cobow.
26.3 A WhatsApp
message sent by Korver to Schaefer on 15 May 2015 in which Korver
refers to two resolutions in connection with Investec
(to be signed
on behalf of Korevest and Cobow) and asks Schaefer to sign them and
scan them back to him and Schaefer replies stating
“Check
email”.
26.4 One of the two
documents signed by Schaefer on 15 May 2015, being a resolution
signed on behalf of Korevest in which it is
pertinently stated that
Korver is authorised on behalf of Korevest to negotiate with
Investec, to conclude documents and to “
consummate
any transaction”
.
[27]
According to Korver, Schaefer signed a similar resolution for Cobow
on 15 May 2015, and that on 18 May 2015 Schliemann was
meant to meet
with him and Schaefer to sign the two resolutions, but did not arrive
for the meeting. He accordingly signed Schliemann’s
name on the
resolutions in the presence of Schaefer in the knowledge and belief
that Schliemann would in due course sign the resolutions,
which
according to Korver in fact happened a few days later but was unable
to produce these signed resolutions as they were apparently
removed
from his files.
[28]
According to Korver, much was made by Schaefer and Schliemann of the
fact that he supposedly “falsified” their
signatures on
the resolution. Korver was however adamant that he was duly
authorised to sign all necessary documentation on behalf
of Cobow and
Korevest in relation to the Investec transaction, and therefore there
could not have been an objection if he had signed
his own name “
pp”
for Schaefer and Schliemann instead of signing Schaefer’s and
Schliemann’s names.
[29]
It was argued that Schaefer and Schliemann’s denial of
knowledge of the transaction and of Korver’s authority is
opportunistic and falsely contrived to escape liability to Investec
in terms of the Cobow guarantee and the mortgage bond.
[30]
Cobow further contended that the present applications are an abuse of
the Court’s process. To this end it was contended
that it is
opportunistic for Korver to rely on his own wrongdoing as a
causa
for winding up Cobow where he allegedly
unlawfully caused Cobow to encumber its immovable property and having
allegedly stolen a
substantial part of the funds loaned by Korevest
from Investec.
[31]
According to Korver, this argument loses much of its force if it is
accepted that Schaefer and Schliemann were well aware of
and
acquiesced in the Investec loan, the Cobow guarantee and the mortgage
bond. Korver also denied that he stole a substantial
part of the loan
funds received from Investec.
[32]
It was further contended that Cobow is commercially insolvent.
According to Arabella, the financial statements of Cobow as
at 29
February 2016 reflected a total loss of R179 703 as opposed to a
profit of R1 524 347 the previous financial year. Furthermore,
Cobow’s management accounts, profit and loss statement for the
6 months period of March to October 2016 also reflected a
loss for
that period of R349 138, 11. It was further contended that
Cobow has no readily realisable assets which can be liquidated
to
fund its liabilities while it continues trading, since its main asset
is the immovable property and guesthouse business. Furthermore,
if
Investec does take judgment against Cobow in the action, Cobow does
not have the funds to settle the judgment debt without the
sale of
the immovable property, which would mean the end of its trading
activities.
[33]
Cobow has denied it is commercially insolvent. On the papers filed of
record, Cobow is adamant that the loan and subsequent
mortgage bond
was unauthorised. According to Cobow, Korver then
misappropriated most of the funds loaned and advanced by
Investec in
the amount of approximately R6 001 596. 00. In addition, he
apparently unlawfully took an aggregate amount of at least
R3 150
500.00 from Korevest and Cobow. Unauthorised personal expenses of at
least R306 164.19 were also apparently paid out of
the bank accounts
of Korevest and Cobow to Korver.
[34]
According to Cobow, it is the consequence of this fraudulent conduct
of Korver that Arabella now contends that Cobow should
be wound up
because Investec has foreclosed on the mortgage bond and as a result
issued summons against both Cobow and Korevest.
According to
Cobow, if the current assets were to be calculated to include the
funds misappropriated by Korver, which are
due and payable, then
Cobow’s assets exceeds its total liability significantly and
Arabella’s relief for provisional
winding up must fail.
[35]
Cobow has also taken issue with the contention by Arabella that there
will be an imminent sale in execution of its only asset
being the
guesthouse, to defray the indebtedness of Korevest to Investec. It is
not in issue that Korver, Cobow and Korevest have
entered an
appearance to defend the summons instituted by Investec. Cobow and
Korevest are opposing the claims of Investec on the
basis
inter
alia
that the loan and the mortgage
bond are void and unenforceable for want of authority. Korver
also as the Third Defendant
in the matter, filed an affidavit
resisting summary judgment.
[36]
Guidelines as to how factual disputes should be approached in an
application such as the present were laid down by the Appellate
Division in
Kalil v Decotex (Pty) Ltd
and Another
1988 (1) SA 943
(A) and
restated in
Payslip Investment Holdings
CC v Y2K Tec Limited
2001 (4) SA 781
(C) at 783 H-I where the following was held:
‘
According
to these guidelines a distinction is to be drawn between disputes
regarding the respondents liability to the applicant
and other
disputes. Regarding the latter, the test is whether the balance of
probabilities favour the applicant’s version
on the papers. If
so, a provisional order will usually be granted. If not, the
application will either be refused or the dispute
referred for the
hearing of oral evidence, depending on, inter alia, the strength of
the respondent’s case and the prospects
of viva voce evidence
tipping the scales in favour of the applicant. With reference to
disputes regarding the respondent’s
indebtedness, the test is
whether it appeared on the papers filed of record that the
applicant’s claim is disputed on reasonable
and bona fide
grounds. In this event it is not sufficient that the applicant has
made out a case on the probabilities. The stated
exception regarding
disputes about an applicant’s claim thus cuts across the
approach to factual disputes in general.
’
[37]
In
Hülse-Reutter & another v
HEG Consulting Enterprises (Pty) Ltd (Lane and Fey NNO intervening)
1998 (2) SA 208
(C) at 219E-220A, the Court commented as follows on
the nature and the extent of this onus:
‘
I think
that it is important to bear in mind exactly what it is that the
trustees have to establish in order to resist this application
with
success. Apart from the fact that they dispute the applicants’
claims, and do so bona fide, … what they must
establish is no
more and no less than the grounds on which they do so are reasonable.
They do not have to establish, even on the
probabilities, that the
company, under their 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 that they
have to satisfy me of is that the grounds which they advance for
their and the company’s
disputing these claims are not
unreasonable… It seems to me to be sufficient for the trustees
in the present application,
as long as they do so bona fide,…
to allege facts which, if proved at a trial, would constitute a good
defence to the claims
made against the company.’
[38]
Applying these stated principles and guidelines a distinction is to
be drawn between disputes regarding Cobow’s liability
to
Arabella and other disputes. With reference to disputes regarding
Cobow’s indebtedness, the test is and remains whether
on the
papers filed of record, Arabella’s claim is disputed on
reasonable and
bona fide
grounds. In this instance it is not sufficient that Arabella may have
made out a case on the probabilities regarding the other
disputes.
The stated exception regarding disputes about an applicant’s
case in matters of this nature cuts across the approach
to factual
disputes.
[39]
On Cobow’s own version it has admitted liability to Arabella in
the amount of R570 000.00 as at year end February
2015, but
claims it has paid the said amount. It disputes liability for the
balance of Arabella’s claim. According
to Cobow, Korver
caused Korevest to make payments totalling R843 500.00 to
Arabella in discharge of Cobow’s liability
to it in terms of an
agreement between Cobow and Korevest. In fact Cobow avers that an
overpayment occurred and is entitled to
reclaim it. Moreover, it
appears on the papers filed of record that there is no longer an
imminent threat of a sale in execution
of Cobow’s only asset.
It is common cause that Korver, Cobow and Korevest have entered an
appearance to defend the summons
instituted by Investec. Cobow and
Korevest are opposing the claims of Investec on the basis
inter
alia
that the loan and the mortgage
bond are void and unenforceable for want of authority. Korver
has also as the Third Defendant
in the matter filed an affidavit
resisting summary judgment
[40]
It is now a well-established in our law that an application for
liquidation should not be resorted to in order to enforce a
claim
which is on reasonable grounds and
bona
fide
disputed.
[41]
On a conspectus of all the evidence, and in view of the low threshold
test that a respondent had to satisfy to discharge its
onus in
matters of this nature, I am satisfied that the grounds Cobow have
advanced for disputing Arabella’s
claims are objectively not unreasonable. With regard to the
requirement of
bona fides
,
in the context of the
Badenhorst
Rule (
Badenhorst v Northen Construction
Enterprises
(Pty) Ltd
1956 (2) SA 346
(T)), Cobow in my view need not hold the belief that at the trial its
defence(s) to the claim(s) would definitely succeed. What
is required
is that it genuinely wished to contest the claim(s) and genuinely
believes it has a reasonable prospect of success
that the alleged
facts which, if proved at a trial, would constitute a good defence to
the claims made against it. In this regard
see
Orestisolve
(Pty) Ltd t/a Essa Investments v NDFT Investments Holdings (Pty) Ltd
and Another
2015 (4) SA 499
(WCC) at
para [67].
[42]
On the papers filed of record, Cobow in my view has further
demonstrated that despite refusing to pay Arabella’s disputed
claim(s), it has assets or readily realizable assets available to
meet its liabilities as they fall due in the ordinary course
of
business and remain buoyant. On these facts, I see no reason why my
residual discretion in matters of this nature should not
be exercised
in favour of Cobow.
[43]
Since Cobow has discharged its onus that the claim(s) against it are
disputed
bona fide
and on reasonable grounds it is unnecessary to refer the matter for
viva voce
evidence on the disputed issues. In this regard see
Freshvest
Investments (Proprietary) Limited v Marabeng (Proprietary) Limited
[2016] JOL 36911
(SCA) at para [7].
[44]
For these stated reasons it follows that the Application for
provisional winding up of the Respondent (Cobow) cannot succeed
and
falls to be dismissed.
Korevest fate, in
the second case is inextricably wound up with that of Cobow and it
follows that if the Cobow application has failed,
then the Korevest
application also falls to be dismissed.
[45]
In the Result the following order is made.
The Application for the provisional
winding up of Cobow (Pty) Ltd t/a Albourne Boutique Lodge Somerset
West in case no. 4956/17
and the Application for the provisional
winding up of Korevest Investment Group Proprietary Limited
(Registration no. 2013/023166/07)
in case no 4957/17, are dismissed
with costs. Such costs to include the costs occasioned by the
employment of two counsel.
_____________________
LE
GRANGE, J