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[2021] ZAWCHC 29
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New Approach Trading 73 CC v Precision Rigging Pty Ltd (15059/2020) [2021] ZAWCHC 29 (19 February 2021)
Republic
of South Africa
IN
THE HIGH COURT OF SOUTH AFRICA
WESTERN
CAPE DIVISION, CAPE TOWN
Case
no.: 15059/2020
Before:
The Hon. Mr Justice Binns-Ward
Hearing:
16 February 2021
Judgment:
19 February 2021
In
the matter between:
NEW
APPROACH TRADING 73 CC t/a LA
DIESEL
Applicant
and
PRECISION
RIGGING (PTY)
LTD
Respondent
JUDGMENT
(Delivered
by email to the parties’ legal representatives and by release
to SAFLII.
The
judgment shall be deemed to have been handed down at 10h00 on
19
February 2021.)
BINNS-WARD J:
[1]
The applicant has applied for the provisional
winding-up of the
respondent company on the grounds that it is unable to pay its
debts. The applicant alleges that it is
a creditor of the
respondent in the amount of R173 896,71 being in respect of
certain services and repairs rendered to equipment
that had been
subject of ‘sale and service’ agreements concluded
between the respondent and a third party, Portland
Hollowcore Slabs
(Pty) Ltd on 14 March 2019. The equipment included a Liebherr
crane. Those agreements were subsequently
consensually
terminated in terms of a ‘Surrender and Termination Agreement’
concluded on 23 January 2020.
[2]
The respondent alleged that at the time of
the conclusion of the sale
and service agreements the Liebherr crane was ‘broken’.
It alleged that the crane
was taken directly from Portland’s
premises to the applicant’s premises to be repaired on the
common understanding
that the repairs to the crane were to be for
Portland’s account. It needs to be understood that in
terms of the service
agreement the purchased equipment was to be used
by the respondent exclusively for the purpose of undertaking
installation work
for Portland in respect of ‘Hollowcore Slabs’
and ‘other products to be installed such as stairs,
steel/concrete
beams or lintels’.
[3]
The respondent has identified 15 invoices
that it alleges are the
subject matter of the applicant’s alleged claim against it.
Four of those invoices relate to
the Liebherr crane. They are
invoices 4898 (R1863,00), dated 31 May 2019, 5368 (R8320,20),
dated 11 November 2019, 5369
(R57 375,35), dated 11 November
2019, and 5371 (R2906,94), dated 12 November 2019. The
total amount charged in
terms of the unpaid Liebherr crane-related
invoices was therefore R70 465,49.
[4]
I have some difficulty correlating the Liebherr
crane invoices with
the respondent’s version described in paragraph [2] above
because they all postdate the conclusion of
the sale and service
agreements by an appreciable time, and the first of the invoices,
dated 31 May 2019 bears the narrative ‘Proceed
to vehicle at
Portland Quarry, Check oil &water, bleed fuel system, check
gearbox oil, oil needs to be topped up, test OK’.
The
amount invoiced comprised a call out fee of R350,00, ‘travel to
site’ R270 and R1 000 for labour (all prices
excl. VAT).
It was only in mid-November 2019 that invoices for apparently
extensive repair work to the Liebherr crane were
rendered. Be
that as it may, the applicant did not engage in reply with the
respondent’s allegations concerning the
Liebherr crane in any
detail. It merely denied them.
[5]
It seems to me that the merits or lack thereof
in the Liebherr
crane-related defence have been subsumed in the more general defence
of the respondent that Portland undertook,
in terms of the
termination and surrender agreement, to pay all the amounts due to
the applicant in respect of the repairs to the
equipment that had
been subject of the sale and service agreement.
[6]
Clause 6 of the termination and surrender
agreement provided:
‘
The parties agree that the total amount due to
Precision [the respondent] by Portland in terms of “TA2”
hereto [a copy
of the service agreement] and/or otherwise, shall be
retained by Portland as
inter alia
a termination penalty
(which penalty Precision accepts to be reasonable) and/or damages for
early termination of the agreements
between Portland and Precision
and/or an amount to be utilised to affect (sic) any repairs to the
Goods’.
It
is evident from the terms of the agreement construed as a whole that
‘
the Goods
’ were the equipment that had been
purchased by the respondent from Portland in terms of the sale
agreement that was being
terminated. The sale agreement was an
executory agreement and, by virtue of its terms, Portland had
retained ownership in
‘the Goods’ until the respondent
had redeemed the purchase price thereof, which fell to be achieved by
the appropriation
by Portland of a stipulated percentage of the sums
that it would periodically become liable to pay to the respondent for
services
rendered under the aforementioned contemporaneously
concluded services agreement.
[7]
The respondent alleged that the intended
import of clause 6 was that
Portland would assume responsibility for the payment of all of the
outstanding repair bills for the
‘the Goods’. Mr
Newton
, counsel for the applicant, submitted, however, that it
was clear upon a proper interpretation of clause 6 that the provision
was
intended to regulate responsibility for the payment of repairs
that might be necessary to restore the returned equipment into proper
operational order. It was, so counsel argued, plainly not
intended to burden Portland with the debt already incurred by the
respondent in respect of the repair of any of the equipment while it
had been in the respondent’s possession during the currency
of
the sale and service agreements.
[8]
The clause might indeed be construed as Mr
Newton
would have
it, but it is very loosely worded, and consequently ambiguous.
That is in large part due to the employment in the
clause of the
expressions ‘inter alia’ and ‘and/or’.
The contextual setting does not make the respondent’s
contention as to the intended import of clause 6 an obviously
far-fetched or untenable one. One of the objects of the
surrender
and termination agreement does appear to have been to draw
a financial line under the abortive contractual relationship between
the respondent and Portland, and it was done in a way that involved
the appropriation of funds that would have accrued to the respondent
in terms of the service agreement that was being terminated. It
is by no means inherently improbable in that context that
Portland
would have undertaken to pay for the repairs effected to what was its
own equipment from funds that would have come to
the respondent.
[9]
As the applicant’s counsel was at pains
to emphasise, however,
an agreement between the respondent and Portland that the latter
would pay for the repairs to the equipment
commissioned by the
respondent would not, by and of itself, release the respondent from
its contractual obligations to the applicant
in respect of such
repair work. The applicant would have to agree to accept
Portland as its debtor in the place of the respondent
for that to
happen.
[10]
The respondent has alleged that the applicant did agree to look
to
Portland instead of to it for payment for the repairs. The
applicant disputes that there was any such agreement.
It is not
for a court seized of a winding-up application to determine such
disputes, which go to the very existence of the applicant’s
claim to legal standing to move for a liquidation order against the
respondent.
[11]
The proper approach in the given circumstances was described by
Corbett JA in
Kalil v Decotex (Pty) Ltd and Another
1988
(1) SA 943
(A) at 980 C-D as follows:
‘…
where the respondent shows on a balance
of probability that its indebtedness to the applicant is disputed on
bona fide
and reasonable grounds, the Court will refuse a
winding-up order. The
onus
on the respondent is not to show
that it is not indebted to the applicant: it is merely to show that
the indebtedness is disputed
on
bona fide
and reasonable
grounds.’
That is the essence of what the learned judge labelled
as ‘the Badenhorst rule’ (named after the judgment of
Hiemstra J
in
Badenhorst v Northern Construction Enterprises
(Pty) Ltd
1956 (2) SA 346
(T) at 347H - 348B). Cf. also in
this regard
Hülse-Reutter and Another v HEG Consulting
Enterprises (Pty) Ltd (Lane and Fey NNO intervening)
1998 (2) SA
208
(C) at 219E-220A and
Payslip Investment Holdings CC v Y2K Tec
Limited
2001 (4) SA 781
(C) at 783H-I.
[12]
In my view, the respondent has shown that it is bona fide in
disputing
the applicant’s claim and that the grounds upon which
it does so are reasonable, by all of which expressions I understand
is meant that the claim is genuinely disputed on apparently cogent
grounds. There are a number of factors that support such
a
conclusion. Firstly, there is the uncontroverted averment in
the respondent’s answering affidavit that the applicant
initially requested payment for the repairs from Portland, and turned
to the respondent for payment only when Portland refused
to make
payment. Secondly, there is a demonstrated pattern of behaviour in
which the respondent has paid those of the applicants
invoices that
it says were not subject to the aforementioned payment arrangements
incidental to the surrender and termination agreement.
And
thirdly, the respondent has shown, at least prima facie, that it is
able to pay the amount claimed by the applicant, and furthermore
tendered to pay into its attorneys’ trust account prior to the
hearing of the application the full amount claimed by the
applicant,
to be held in trust pending the determination of the disputed claim
in appropriate proceedings. (The tender was
not accepted.)
[13]
In the circumstances, applying the principles elucidated in the
passage from
Kalil v Decotex
quoted above, the application
falls to be dismissed, with costs to follow the result. An an
order to that effect will issue.
[14]
I should have mentioned that the applicant relied on the provisions
of s 345 of the Companies Act 61 of 1973 for the purposes of
establishing the respondent’s alleged inability to pay
its
debts. It has not been necessary, in view of the conclusion at
which I have arrived, to make any determination in respect
of the
respondent’s contentions that the applicant’s demand in
terms of s 345 was ineffectual by reason of the
applicant’s
failure to comply punctiliously with the letter of the provision.
Mr
de Jager
, who appeared for the respondent, relied in
support of the respondent’s attack on the efficacy of the s 345
demand on
certain obiter dicta of Margo J in the full court of the
Transvaal Provincial Division’s judgment in
BP & JM
Investments (Pty) Ltd v Hardroad (Pty) Ltd
1978 (2) SA 481(T).
[15]
The learned judge’s remarks in that case would indeed
appear to lend support to Mr
de
Jager
’s argument,
but at p.487B-C, Margo J expressly stated that he did not find it
necessary to determine the point. In
the other judgment relied
upon by Mr
de Jager
,
Bank of Baroda v Annex Distribution
(Pty) Ltd
[2020] ZAGPPHC 158 (14 May 2020), Kirstein AJ followed
BP & JM Investments
without acknowledging that Margo
J’s remarks in the latter matter were expressly obiter.
In classifying the provisions
of s 345 as ‘peremptory’,
and applying the approach favoured by Margo J in a judgment delivered
nearly half a
century ago, the learned acting judge may, with
respect, have overlooked the following observation in the
Constitutional Court’s
judgment in
Allpay C
onsolidated
Investment Holdings (Pty) Ltd and Others v Chief Executive Officer of
the South African Social Security Agency and Others
2014
(1) SA 604
(CC);
2014 (1) BCLR 1
(CC))
[2013] ZACC 42
(29 November
2013) in para 30:
‘
Assessing the materiality of
compliance with legal requirements in our administrative law is,
fortunately, an exercise unencumbered
by excessive formality.
It was not always so. Formal distinctions were drawn between
“mandatory” or “peremptory”
provisions on the
one hand and “directory” ones on the other, the former
needing strict compliance on pain of non-validity,
and the latter
only substantial compliance or even non-compliance. That strict
mechanical approach has been discarded.
Although a number of
factors need to be considered in this kind of enquiry, the central
element is to link the question of compliance
to the purpose of the
provision. In this Court O’Regan J succinctly put
the question in
ACDP
v Electoral Commission
[
[1]
]
as being “whether what the applicant did constituted compliance
with the statutory provisions viewed in the light of their
purpose”.
This is not the same as asking whether compliance with the provisions
will lead to a different result.’
(Footnotes omitted.)
Had it been necessary to determine the point, my
inclination would have been to hold that what the applicant did in
purported compliance
with the provisions constituted effective
compliance therewith viewed in the light of their purpose; for it is
undisputed that
the demand came to the respondent company’s
notice and there was no doubting, despite a misnomer, that it was the
applicant
which was making the demand.
[16]
The application is dismissed with costs.
A.G.BINNS-WARD
Judge
of the High Court
APPEARANCES
Applicant’s
counsel:
A.R. Newton
Applicant’s
attorneys:
Lombard & Kriek
Bellville
MacGregor Stanford Kruger
Cape Town
Respondent’s
counsel:
Nick de Jager
Respondent’s
attorneys:
Cluver Markotter
Stellenbosch
Walkers Inc
Cape Town
[1]
African Christian Democratic Party v
Electoral Commission
[2006] ZACC 1
(24
February
[2006] ZACC 1
;
2006); 2006 (3) SA 305
(CC);
2006 (5) BCLR 579
(CC) at para
25.