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[2018] ZAWCHC 125
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Preuss v Silver Lake Trading 36 (pty) Ltd (8287/2018) [2018] ZAWCHC 125 (26 September 2018)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
and
SAFLII
Policy
Republic
of South Africa
IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
Number:
8287/2018
In
the matter between:
DEON
WAYNE
PREÜSS
Applicant
(Identity
Number: […])
and
SILVER
LAKE TRADING 36 (PTY)
LTD
Respondent
(Registration
Number: 2003/029142/07)
J U D G M E N T:
HANDED DOWN ON WEDNESDAY, 26 SEPTEMBER 2018
MACWILLIAM
AJ:
[1]
The Applicant applies for an order that the
Respondent be provisionally wound up.
[2]
In his Founding Affidavit, the Applicant
alleged in paragraph 5 thereof that:
“
The
Respondent
is truly and lawfully indebted to the Applicant
in
the amount of
R1 000 000,00
(One Million Rand).”
[3]
In paragraph 6 of his Founding Affidavit,
the Applicant alleged baldly that:
“
6.
On the
1
st
and the
4
th
December 2009
the Applicant entered into an agreement
[with]
[1]
[
the
Respondent
]
and
Wayne
Allan Bengston
(hereinafter referred to as ‘Bengston’)”
[4]
That agreement, with irrelevant words
deleted, provides as follows:
“
MEMORANDUM
OF
AGREEMENT
Between:
WAYNE
ALLAN BENGSTON
[i.e.
the deponent to the Answering Affidavit]
...
and
DEON
WAYNE PREÜSS
[i.e.
the Applicant]
...
WHEREAS:
1. Both
parties are the only shareholders of the Companies Roo-Bok
Developments CC, Registration Number 2006/191573/23 and
[the
Respondent]
in
either their own names or their representative capacities as trustees
of their family trusts.
2. Roo-Bok Developments CC
has acquired the following property, being a farm in Wellington and
such property cannot be sub-divided:
...
3. Preüss
improved the property as mentioned above by renovating the farm stead
at his own expense and is not able to obtain
notable security.
NOW THEREFORE THE PARTIES
AGREE AS FOLLOWS:
(a)
Should the farm as mentioned in 2. above being sold either by consent
or forcefully at a foreclosure or otherwise the free residue
to a
maximum of R2 000 000.00 (Two Million Rand) after settling
of this bond obligation of the property in 2. above,
related Rates
and Taxes, related VAT and transferring attorney cost related to this
property, will be paid to Preüss or his
nominated beneficiary.
Should this residue funds be applied to any other obligation of
Roo-Bok Developments CC, Preüss
shall be entitled to 100 %
compensation from Roo-Bok Developments CC to the value of not more
than R2,000,000 (Two Million
Rand).
(b)
[The
Respondent]
and
or the 5B Trust and or Bengston shall within 90 days from (a)
above, release a further amount of R1 000 000,00
(One
Million Rand) as final settlement towards Preüss or his
nominated beneficiary on condition that written confirmation
has been
received from the auditor Bruce Matthews that the share exchange
between Five B Trust, The Deon Wayne Preuss Trust
and the Prema
Trust regarding shares in Roo-Bok Property Investments (Proprietary)
Limited and
[the
Respondent]
has
been finalized.
(c)
These payments as in (a) and (b) above will in full and final
settlement for private investment Preüss has done with
renovation
as referred to in clause 3 in preamble above.
...
THUS DONE AND SIGNED AT CAPE
TOWN ON THIS 4
TH
DAY OF DECEMBER 2009
AS
WITNESSES
:
1.
(Unknown
signature)
(Signature)
2.
BENGSTON
THUS DONE
AND SIGNED AT WELLINGTON ON THIS 1
ST
DAY
OF DECEMBER 2009
AS
WITNESSES
:
1.
(Unknown
signature)
(Signature)
2.
PREÜSS”
[5]
The
Applicant further alleged in his Founding Affidavit that:
“
7.
Both the Applicant and
Bengston
entered into the agreement in their capacities as the
only
members/shareholders of
Roo-Bok
Developments CC Reg No: 2006/191573/23
and
[the
Respondent]
respectively.
8. Both the Applicant and
Bengston also entered the agreement in their representative
capacities as trustees of their family trusts.
9. Shortly hereafter all the
shares that the Applicant held in the Respondent was transferred to
Bengston’s
nominee the
5B Trust
. I no
longer hold any shareholding nor am I a director of the Respondent.
I am therefore not conversant with the financial
position of the
Respondent.
10. In
terms of
paragraph
(b)
of the agreement,
[the
Respondent]
and/or
5B Trust
and/or
Wayne
Allan Bengston
are liable to pay the amount of
R1 000 000,00
(One Million Rand) as the final settlement towards the Applicant
within
90
days
from the farm (Remainder of
Erf
10568
Wellington) being sold either by consent, forcefully at foreclosure
or otherwise. The farm was sold at the sale in execution
on
27 July
2015
and finally transferred on
10 August
2015
to
CPH
developments Pty Ltd
.
11. Having received no
payment after the
90 days
had transpired Applicant caused to
be sent a demand in terms of
section 345(a)(i)
of the Act,
(‘the letter of demand’) which demand was dispatched to
the
Respondent
at its main place of business, and registered
address (as well as all alternatives the Respondent are using or used
in the past)
the
5B Trust
at its address, and
Bengston
at his residential address at
[…], B. Road, Western Cape
,
by way of registered post for payment by them of the said sum of
R1 000 000,00
(One Million Rand) and the Respondent
has for three weeks thereafter neglected to pay the sum, or to secure
or to compound for
it to my reasonable satisfaction. ... .”
[6]
Of particular relevance is the fact that
nowhere in the Founding Affidavit was it alleged:
[a]
that
Bengston, Preüss or anyone else, were the directors of the
Respondent;
[b]
how
or why the Respondent had been bound in terms of the agreement to pay
the R1 million, save for the allegation that the
Applicant and
Bengston entered into the agreement in their capacities as the only
shareholders of the Respondent;
[c]
that
the condition contained in the latter portion of paragraph (b) was
satisfied, save for the allegation made in paragraph 9 of
the
Founding Affidavit which is set out above;
[d]
insofar
as the trigger event which had to occur in order to bring paragraph
(b) into operation, being
“
90
days from (a) above”
, the
Applicant relied only on the sale of the farm (and possibly the
transfer of the farm) as alleged in paragraph 10 of the Founding
Affidavit.
[7]
Apart from the terms of the agreement
itself, the Applicant placed no context before the Court
[2]
in its Founding Affidavit and relied only on the express wording of
the agreement for the interpretation which it placed on the
agreement
and the existence of the debt allegedly owed to him by the
Respondent. He did this in circumstances when only Bengston
and
the Applicant are stated to be the parties to the agreement and their
signatures are not qualified in any way.
[8]
The Applicant’s problem regard was
compounded by the fact that in his Answering Affidavit, Bengston
states that he signed
the agreement in his personal capacity only.
[9]
While this statement may be opportunistic,
as the agreement refers to a number of entities, including the
Respondent and further
records that the Applicant and Bengston are
the Respondent’s only shareholders (either in their own names
or as trustees
of their family trusts), the manner in which the
Respondents allegedly became obliged to pay the debt of R1 million
to the
Applicant is not addressed further in the Founding Affidavit.
On the contrary, it is possible to conclude (based on the wording
of
the agreement), that the obligations created in terms thereof were
only personal obligations, in terms of which, for example,
the
signatories undertook to cause the Respondents to act in a particular
way. Without more, it is not possible to conclude
that the
Respondent was itself bound by the agreement.
[10]
In argument, the Applicant relied, in
particular, on paragraph 1 of the agreement, but that paragraph
records only that both parties
are the shareholders of the
Respondent, either in their own names or their representative
capacities as trustees of their family
trusts.
[11]
As set out above, the Applicant refined
this allegation in paragraph 7 of his Founding Affidavit by
alleging that the Applicant
and Bengston entered into the agreement
in their capacities as the only shareholders of the Respondent.
[12]
However, according to the Respondent’s
share certificate dated 1 August 2009 (which was attached to the
Respondent’s
Answering Affidavit), the 5B Trust was at
that time the registered holder of 100 shares of R1,00 each in
the Respondent
(its issued share capital being reflected in its 2017
and 2018 financial statements as R200,00). The trust deed in
respect
of the 5B Trust does not form part of the papers and the
authority and capacity of the trustees of the 5B Trust’s
to bind the Trust, let alone the Respondent, was not dealt with in
the Applicant’s affidavits, save for the bald allegation
that
the Applicant and Bengston entered into the agreement in their
representative capacities as trustees of their family trusts.
[13]
In the circumstances, the Applicant failed
to make out a case in its founding papers that in terms of the
agreement the Respondent
was obliged to
“
release”
(in itself an unusual word for which context
should have been provided) a
“
further”
amount of R1 million. Furthermore, if
clause (b) is to be construed as an undertaking to pay by the
Respondent, that
undertaking was itself qualified by the words
“
and
or the 5B Trust and or Bengston”
.
The reason for the inclusion of these further words and whether or
not the 5B Trust and/or Bengston had made payment,
are also not
dealt with in the Founding Affidavit.
[14]
The situation is compounded by the fact
that the condition recorded in paragraph (b) is not addressed in the
Founding Affidavit,
save for the statement that all the shares which
the Applicant held in the Respondent had been transferred to
Bengston’s
nominee, the 5B Trust.
[15]
The Respondent in its Opposing Affidavit,
in addition to denying that the Respondent owed the Applicant the
amount of R1 million,
alleged expressly that Bengston concluded
the agreement in his personal capacity only. Although this bald
allegation is curious,
bearing in mind the references to the other
entities in the agreement, it is not possible to disregard it in the
light of the paucity
of the allegations made in the Founding
Affidavit.
[16]
The fact remains that it was for the
Applicant to make out its cause of action in its Founding Affidavit
and it failed to do this.
[17]
The Applicant attempted to salvage the
situation by alleging in its Replying Affidavit,
inter
alia
, that -
“
Ex
facie
the
Agreement ..., the Agreement was entered into between ... Bengston
and ...
[the
Applicant]
in
their capacities as the only shareholders and directors of ...
[the
Respondent]
.
... As both shareholders and only directors this renders a resolution
obsolete.”
[18]
The most striking difficulty with this
statement is that
“
ex
facie
the
agreement”
, the Applicant
and Bengston did
not
conclude the agreement in their capacity as directors of the
Respondent.
[19]
Not only that, but no documents to
substantiate that the Applicant and Bengston were the only directors
of the Respondent was attached
to the Replying Affidavit.
[20]
In the course of his argument in reply, the
Applicant’s counsel handed up a document which he stated was a
print-out from
the CPICC reflecting the accurate position with regard
to the Respondent’s directors.
[21]
However, this document, which was handed up
at the last minute and not under cover of an explanatory affidavit,
contains contradictory
allegations, for example:
[a]
the
Applicant is referred to twice as a
“
resigned
director”
, the first entry
reflecting that he was appointed on 11 March 2005 and resigned
on 26 March 2010, whereas the second
entry records that he was
appointed on 13 July 2006 (when he had apparently already been a
director for more than a year),
and resigned on 12 September
2016; and
[b]
Bengston
is referred to as being the active director, having been appointed on
11 March 2005, but under the heading of
“
DIRECTOR
4 OF 7
”
,
his resignation date is referred to as being 18 November 2003.
[22]
While the entries appear
prima
facie
to point to the fact that both
Bengston and the Applicant were the Respondent’s only directors
when the agreement was concluded
in December 2009, the Applicant
placed no facts before the Court in support of his bald allegation
that as both shareholders and
only directors of the Respondent, this
rendered
“
a
resolution obsolete”
.
[23]
In this regard, the Applicant called in aid
Aussenkehr Farms (Pty) Limited v Trio
Transport CC
[3]
and
Clifton Dunes Investments 100
Limited and Another v City SA Property Holdings Limited
.
[4]
However, in these cases, the Supreme Court of Appeal held that a
party to a contract cannot in law, after the fact, avoid
the
consequences of a contractual term, the meaning of which they had
agreed upon where both parties have acted on that agreed
meaning.
In the present case, the Applicant has simply failed to make out such
a case.
[5]
[24]
Over and above the aforegoing, the
Applicant alleged only, with regard to compliance with the trigger
event which is provided for
in paragraph (a) of the agreement, that
the payment only had to be made
“
within
90
days
from the farm ... being sold either by consent, forcefully at
foreclosure or otherwise”
.
[25]
As it transpired from the facts set out in
the answering affidavit, the farm had indeed been sold
“
by
consent”
. However,
if this was the relevant date, then by the time that the application
was launched, the claim had probably prescribed.
[26]
Furthermore, after the sale by consent fell
through, the farm was not sold
“
at
foreclosure”
, nor was it
sold
“
at
a sale in execution on 27 July 2015”
as
alleged in the Founding Affidavit. The farm was in fact sold by
the liquidator of Roo-Bok Developments CC after that corporation
had
been placed in liquidation.
[27]
Accordingly, in its Replying Affidavit and
in the course of oral argument, the Applicant was now constrained to
argue that the 90 days
referred to in clause (b) of the
agreement, only commenced to run, not only after the property had
been sold, but after all of
the obligations owed in respect of the
property had been settled and a free residue, if any, had been
determined. While this
interpretation may be a valid
interpretation, this interpretation was only advanced in reply.
[28]
It is trite that an applicant must make out
his cause of action in his founding affidavit. In this matter,
the Applicant simply
failed to do this.
[29]
No argument was addressed to me as to why
the Applicant should be allowed to make out his cause of action in
his Replying Affidavit,
even if it could be said that he had done
this.
[30]
There is a further problem which the
Applicant faces.
[31]
Both counsel referred to and relied upon
two judgments of Rogers J in this division, the one being
One
Stop Financial Services (Pty) Limited v Neffensaan Ontwikkelings
(Pty) Limited and Another
, an
unreported judgment handed down on 17 June 2015 under case
number 2002/28/14, and the other
Orestisolve
v NDFT Holdings
.
[6]
In both cases the judge laid down the following relevant legal
principles (and I quote from the second case):
“
[7]
In an opposed application for provisional liquidation the applicant
must establish its entitlement to an order on a prima facie
basis,
meaning that the applicant must show that the balance of
probabilities on the affidavits is in its favour (
Kalil
v Decotex (Pty) Ltd and Another
1988
(1) SA 943
(A) at 975J-979F). This would include the existence
of the applicant’s claim where such is disputed. (I need
not concern myself with the circumstances in which oral evidence will
be permitted where the applicant cannot establish a prima
facie
case.)
[8] Even
if the applicant establishes its claim on a prima facie basis,
a
court will ordinarily refuse the application if the claim is bona
fide disputed on reasonable grounds
.
The rule that winding-up proceedings should not be resorted to as a
means of enforcing payment of a debt, the existence
of which is bona
fide disputed on reasonable grounds, is part of a broader principle
that the court’s processes should not
be abused. In the
context of liquidation proceedings the rule is generally known as the
Badenhorst
rule, from
the leading eponymous case on the subject,
Badenorst
v Northern Construction Enterprises (Pty) Ltd
1956 (2)
SA 346
(T) at 347H-348C, and is generally now treated as an
independent rule, not dependent on proof of actual abuse of process
(Blackman
et al
Commentary
on the Companies Act
vol
3 at 14-82 to 14-83). A distinction must thus be drawn between
factual disputes relating to the other requirements for
liquidation.
At the provisional stage the other requirements must be satisfied on
a balance of probabilities with reference
to the affidavits.
In
relation to the applicant’s claim, however, the court must
consider not only where the balance of probabilities lies on
the
papers but also whether the claim is bona fide disputed on reasonable
grounds. A court may reach this conclusion even
though on a
balance of probabilities (based on the papers) the applicant’s
claim has been made out
(
Payslip
Investment Holdings CC v Y2K Tec Ltd
2001
(4) SA 781
(C) at 783G-I). However, where the applicant at the
provisional stage shows that the debt prima facie exists, the onus is
on the company to show that it is bona fide disputed on reasonable
grounds (
Hülse-Reutter
and Another v HEG Consulting Enterprises (Pty) Ltd (Lane and Fey NNO
Intervening)
1998
(2) SA 208
(C) at 218D-219C)”
(emphasis
added).
[7]
[32]
In the present matter it is simply not
possible to conclude that the claim is not disputed on reasonable
grounds. The Applicant
failed to make out its case in its
Founding Affidavit and I cannot conclude that the disputes raised in
the Answering Affidavits
are not unreasonable in the circumstances of
this case. Not only that, but the fact that the Applicant
attempted to resolve
some of his difficulties in his Replying
Affidavit, meant that the Respondent had no right to reply thereto.
[33]
In these circumstances, there is no need to
consider the various defences raised by the Respondent, save to
comment that they appear
to be of doubtful validity.
[34]
In the circumstances, the application is
dismissed with costs.
MACWILLIAM AJ
DATE
OF HEARING:
13 September 2018
APPEARANCES
For
the Applicant: Adv. M Basson
Instructed
by: De Waal Incorporated, Durbanville
For
the Respondent: Adv. T Benadé
Instructed
by: Anton Posthumus Attorneys, Cape Town
[1]
The “
with”
was omitted in the affidavit,
presumably in error.
[2]
cf
Natal Joint Municipal Pension Fund v Endumeni Municipality
2012 (4) SA 593
(SCA) at para [18]
[3]
2002 (4) SA 483
(SCA) at para [25]
[4]
(169/14)
[2015] ZASCA 12
(16 March 2015) at para [11]
[5]
The Applicant did not attach to its affidavits a copy of the
Respondent’s then Articles or Memorandum of Association and
did not refer the Court to the case of
Gohlke & Schneider
v Westies Minerale Beperk
1970 (2) SA 685
(AD) at 692E-693A
or the cases in which the principles set out therein were applied.
In any event, the Applicant failed
to make out a case on this basis
either.
[6]
2015 (4) SA 449 (WC)
[7]
Orestisolve
supra
at paragraphs [7] and [8]