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[2011] ZAGPJHC 59
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Execujet Aviation (Pty) Ltd v khumalo (2010/42058) [2011] ZAGPJHC 59 (15 June 2011)
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REPORTABLE
IN THE SOUTH GAUTENG HIGH
COURT, JOHANNESBURG
(REPUBLIC OF SOUTH
AFRICA)
CASE NO: 2010/42058
DATE:15/06/2011
In the matter between:
EXECUJET AVIATION (PTY)
LTD
.....................................
Applicant
and
MZILIKAZI GODFREY
KHUMALO
................................
Respondent
JUDGMENT
INTRODUCTION
In this application the
Applicant seeks judgment against the Respondent in an amount slightly
in excess of R1.1 million.
The Applicant’s
associated company, Execujet Flight Operations (Pty) Ltd (“Flight
Operations”), allegedly rendered
charter flight services to a
company, Metallon Corporation (Pty) Ltd (“Metallon”).
Flight Operations then allegedly
ceded its claim against Metallon to
the Applicant.
Metallon failed to pay
for the services rendered and the Applicant brought liquidation
proceedings against Metallon (“the
liquidation proceeding”).
Metallon opposed the proceedings, inter alia, on the basis that the
charter services rendered by
Flight Operations had been rendered to
the Respondent (who was the Chairman of Metallon) in his personal
capacity. Accordingly,
Metallon maintained that the Respondent was
the debtor not Metallon.
The Deponent to
Metallon’s answering affidavit in the liquidation proceeding
(“the LPAA”), Andile Reve, alleged
that he had been
informed by the Respondent that the Respondent had “undertaken
to pay the amount due by him to the Applicant
in instalments and the
latest payment of R200 000 was made on 15 June 2010”. The
Respondent filed a confirming affidavit
confirming the correctness of
the allegations contained in Reve’s affidavit.
Neither Reve nor the
Respondent clarified anywhere what the Respondent’s payment
plan was – i.e. how long the Respondent
would take to pay the
debt, in what instalments, and what interest would accrue on the
debt.
The Respondent and
Metallon also disputed that Flight Operations had validly ceded its
claim to the Applicant. Accordingly, they
denied that the Applicant
had locus standi to bring the winding up application. However, this
denial of standing was not elaborated
upon in the LPAA. It also
appears to be inconsistent with the language of the allegation made
in paragraph 7 of Metallon’s
answering affidavit, in which the
deponent appears to have admitted that the holder of the claim was in
fact the Applicant.
The Applicant filed a
replying affidavit in the liquidation proceeding (“the LPRA”),
in which the Applicant disputed
the contention that the debt was a
personal debt of the Respondent. The Applicant consistently
maintained – and still maintains
– that Metallon was its
debtor.
On 11 August 2010,
Metallon was voluntarily wound up in terms of Sections 349 and
351 of the Companies Act by way of special
resolution.
Notwithstanding the voluntary winding up, the Applicant persisted
with its compulsory winding up application and filed
a further
supplementary affidavit (“the LPSA”) in support thereof.
In this affidavit the Applicant again steadfastly
maintained that the
Applicant’s debtor was Metallon and not the Respondent.
Consequent upon the
filing of that affidavit, the Court placed Metallon under final
winding up in the hands of the Master and converted
the voluntary
winding up into a winding up in terms of Section 346(1)(e) of the
Companies Act. The purpose of the conversion was
primarily to enable
the Applicant to conduct an inquiry under Section 417 of the
Companies Act.
The Applicant has now
brought proceedings against the Respondent claiming payment of the
same debt that it previously claimed against
Metallon in the
liquidation proceeding(s). The Applicant continues to maintain that
Metallon (and not the Respondent) is its true
debtor. However, the
Applicant maintains that the Respondent’s confirming affidavit
in the winding up constitutes an acknowledgment
of liability that the
Respondent is entitled to accept and sue upon independently in these
proceedings. The Respondent opposes
the application.
ANALYSIS OF THE
AFFIDAVITS IN THE WINDING UP PROCEEDING
In paragraph 7 of
Metallon’s answering affidavit in the winding up proceeding,
Reve stated:
“
I have been
informed by Khumalo that he has undertaken to pay the amount due by
him to the applicant in instalments and that the
latest payment of
R200 000.00 was made on 15
th
June 2010 and a proof
thereof is annexed hereto marked ‘ARJ2’.
I have been advised by my
legal representatives that the company, in this instance the
Respondent, cannot be held liable for the
debts incurred by any of
the directors in their personal capacities.”
The Respondent was
allegedly the Chairman of Metallon’s Board of Directors at the
time. In that capacity, he was the signatory
to a resolution
ostensibly taken by the Board of Metallon, authorising the Respondent
to take all steps necessary to oppose the
winding up proceedings on
behalf of Metallon.
The Respondent filed a
confirming affidavit in the liquidation proceeding in which he
confirmed the contents of Reve’s answering
affidavit. By
implication he therefore confirmed under oath that he was indebted to
the Applicant and that he had undertaken to
pay that indebtedness in
instalments.
The sum of R200 000
was paid from the bank account of an entity called Mawenzi Resources
and Finance Company.
In response to these
allegations in the LPAA, the Applicant alleged, in the LPRA that:
“
7.3 Whenever
Execujet Flight Operations dealt with Khumalo, Khumalo acted on
behalf of the Respondent and he did not act personally,
and in this
regard I refer to the following:
7.3.1 The invoices ...
are all made out in the name of the Respondent, the reason being that
the Respondent and not Khumalo personally
contracted with Execujet
Flight Operations.
7.3.2 Neither Reve nor
Khumalo (whose confirmatory affidavit is annexed to Reve’s
affidavit) take issue with the fact that
the invoices rendered to the
Respondent ... are all made out in the name of the Respondent and not
Khumalo. Consistent with this
is the fact that the Respondent
received the invoices and no-one from the Respondent took issue with
the fact that the invoices
are all made out in the name of the
Respondent and not Khumalo.
...
7.3.5 Furthermore, with
regard to the charter quotations, whilst it is alleged ... that
Khumalo signed the charter quotations in
his personal capacity and
not as the representative of the Respondent, Khumalo does not explain
(because he cannot) why his signatures
to the charter quotations are
not qualified, i.e. that he signed the documents personally and not
on behalf of the Respondent,
and he does not explain (again he
cannot) why the documents are all made out in the name of the
Respondent and not Khumalo.
7.4 The fact that
whenever Execujet Private Operations dealt with Khumalo, Khumalo
acted on behalf of the Respondent and he did
not act personally, is
further evidenced by the following: ...”
Thereafter, paragraph 7.4
sets out a list of five factors which, according to the Applicant,
demonstrated that the indebtedness
was one owed by Metallon and not
Khumalo.
In the LPSA, the
Applicant again stated:
“
17. I submit that
the Applicant is indeed a creditor of the First Respondent, and in
this regard I refer to the contents of the
affidavits already filed
of record. In particular, as will be argued at the hearing of this
application, the indebtedness owed
to the Applicant is in fact owed
by the First Respondent and not Mzilikazi Godfrey Khumalo as alleged
by the First Respondent.”
[emphasis added].
All of these facts appear
from the Applicant’s founding affidavit to which all of the
affidavits in the liquidation proceeding
have been attached.
THE FOUNDING AFFIDAVIT IN
THIS APPLICATION
The Applicant’s
cause of action in this application is summarised in the founding
affidavit (“the FA”) in this
application as follows:
“
29. Whilst the
Applicant still maintains that the charter flight services rendered
by Execujet Flight Operations were rendered by
Metallon and not to
the Respondent personally, it is submitted that the contents of
Metallon’s answering affidavit in the
winding up application
read together with Respondent’s confirmatory affidavit,
constitutes an acknowledgement of liability
by the Respondent in
favour of Execujet Flight Operations (which acknowledgement of
liability the Applicant accepts for the purposes
of this application)
in the amount of R1 184 359,18 (at very least) as well as the amounts
of R99 781,21 and R15 336,82.
...
33. The reference in
paragraph 7 of Metallon’s answering affidavit to ‘the
amount due by him’ [i.e. the Respondent]
to the Applicant’,
confirmed by the Respondent in his confirmatory affidavit, is an
acknowledgment by the Respondent of liability
in favour of the
Applicant (which acknowledgement of liability the Applicant accepts
for the purposes of this application).”
[emphasis added].
The Respondent answered
this allegation as follows:
“
44. I deny that I
am indebted to the Applicant in the sum claimed or for any other sum.
Insofar as the answering affidavit in the
winding up application is
concerned, I made those statements with the understanding that the
amounts were due. However, this Honourable
Court has decided
otherwise. Accordingly, the Applicant has proceeding for the winding
up of Metallon and obtained the final winding
up order to this
Honourable Court and it cannot claim the same amount from me.”
THE DEFENCES RAISED BY
THE RESPONDENT
It is clear that the
Respondent’s intent in making the allegation contained in
paragraph 44 of the answering affidavit was
to deny liability on the
basis of res judicata. This was the Respondent’s main defence
to the application.
In this answering
affidavit, the Respondent raised the following defences to the
application:
Res judicata. The
Respondent maintained that, when the Court granted an order
converting the winding up of Metallon, it recognised
the Applicant’s
claim as being one against Metallon. Accordingly, it maintained that
the Applicant was precluded by res judicata
from pursuing the
Respondent on another basis entirely.
Waiver/election. The
Respondent maintained that, when the Applicant filed its replying
affidavit and supplementary affidavit, the
Applicant waived its right
to proceed against the Respondent and/or elected to proceed against
Metallon instead of the Respondent.
The Respondent maintained
that the claim against Khumalo had not been validly ceded to the
Applicant because, at the time when the
Applicant obtained cession
from Flight Operations, it believed its claim was against Metallon
and not the Respondent.
During the course of
argument, I expressed concern about whether the Applicant had
articulated a proper cause of action in the founding
affidavit and I
requested supplementary heads of argument. I then addressed
correspondence asking the parties to address, inter
alia, the
following issues in their supplementary heads of argument:
“
2.1 Whether the
applicant can rely upon an acknowledgement of debt given by a third
party, who on the applicant’s version
was never indebted to the
applicant. This requires, inter alia, an evaluation of whether there
is an underlying causa for the acknowledgement
of debt.
2.2 Whether the
acknowledgement of debt is an offer that was still open for
acceptance by the applicant in its founding affidavit
in this
application, and whether the applicant’s replying and
supplementary affidavits in the liquidation proceedings can
be
construed as a rejection of the offer.”
Counsel for the parties
have responded to my request and have both delivered supplementary
heads of argument on 16 May 2011.
In the winding up, the
Applicant asserted a claim against Metallon, not the Respondent. At
the same time, the Respondent maintained
that he was the true debtor,
not Metallon.
Now both parties are
taking up diametrically opposed positions. Although they both tried
to explain their changes of position, these
about faces result in
anomalies in both the Applicant’s claim and in the Respondent’s
defences. Neither party has been
able to articulate its case in the
affidavits in a manner that is juristically appropriate.
The Applicant’s
case is based upon an acknowledgement of liability. As appears from
the analysis set forth below, the Applicant’s
case is not
really based upon an acknowledgment of liability but upon the
acceptance of an alleged offer by the Respondent to pay
the debt of a
third party (Metallon).
At the same time, the
Respondent asserts that the Applicant’s predecessor-in-title
had a right to recovery against the Respondent,
which has fallen away
because the Applicant has waived that right and/or elected not to
proceed with it. As appears from the analysis
set forth below, when
the Respondent’s case is applied to the facts, the case is not
so much based upon waiver of an existing
right, but upon the
Applicant’s election to reject the Respondent’s “offer”
(such as it was) to pay off
Metallon’s debt.
Despite the fact that
neither of the parties have applied the correct juristic labels to
the claim and the defences, it remains
possible for me to resolve the
real issues between the parties based upon the largely undisputed
facts set forth in the affidavits.
1
THE VIABILITY OF THE
APPLICANT’S CAUSE OF ACTION
In this application, the
Applicant continues to maintain that its true debtor is Metallon.
However, it also maintains that the Respondent
has acknowledged
liability and that that acknowledgement of liability constitutes an
offer which the Applicant can now accept and
has accepted “for
purposes of this application”.
The Respondent’s
counsel, Mr Bava SC, correctly queried the meaning of the term
“for purposes of this application”.
In my opinion, it can
mean nothing other than that, while asserting a claim against the
Respondent in this application, the Applicant
is not abandoning its
claim against Metallon. As appears from what is more fully set forth
below, the retention of the claim against
Metallon has juristic
consequences for the Applicant.
In Adams v SA Motor
Industry Employers Association
1981 (3) SA 1189
(A) 1198B, Jansen JA
held:
“
There is ample
authority to the effect that an acknowledgment of debt, provided it
is coupled with an express or implied undertaking
to pay that debt,
gives rise to an obligation in terms of that undertaking when it is
accepted by the creditor; and it does not
matter whether the
acknowledgment is by way of an admission of the correctness of an
account or otherwise ... In Christou v Christoudoulou
1959 (1) SA 586
(T) there are dicta to the effect that an admission in respect of an
existing debt cannot ‘found an independent cause of
action’
unless it amounts to a novation ... This, with respect, appears to
rest on a misapprehension. There can be no objection
in principle to
a second obligation arising in respect of an existing debt, and this
appears to have been recognised by this Court
(Smit v Rondalia
Versekeringskorporasie Van Suid Afrika Bpk
1964 (3) SA 338
(A) at
346G). The decisive question is whether the acknowledgement contains
an express or implied undertaking to pay, a matter
which relates to
the intention of the parties. It may well be that an acknowledgement
of debt usually implies an undertaking to
pay, but this an aspect
upon which it is unnecessary to express an opinion now.”
[emphasis added].
At p1199G the learned
Judge continued:
“
... However, in
our law, the matter may be clarified by reference to the position
where a negotiable instrument such as a promissory
note is given in
respect of an existing debt. There can be little doubt that –
unless a novation is intended, which is not
presumed – two
obligations then exist: the original obligation and the obligation
arising from the note. They are interdependent.
The original
obligation may, in a sense, be said to be causa of the new obligation
... and defences in respect of the original
obligation may be raised
in respect of the new obligation; performance of either discharges
the other. Fortified by two obligations
in respect of the same
performance, the creditor has, however, no free election to enforce
the original obligation. Our cases have
followed the English law
that, upon acceptance by the creditor of the negotiable instrument,
the right to enforce the original
obligation is suspended until
maturity of the instrument, and when the creditor claims payment of
the original obligation he must
account for the negotiable instrument
... It follows that, if the creditor were to cede (or negotiate) the
negotiable instrument,
the debtor is safeguarded against being sued
by both the holder (on the instrument) and the creditor (on the
original application).
In accordance with the name of any nemo plus
juris rule it follows that, if the creditor were to cede the original
obligation to
a third party and retain the instrument, the third
party would be subject to the same restrictions in relation to the
old obligation
to which the creditor was before the cession. There
would, therefore, be no reason to preclude the creditor from
enforcing the
new obligation.”
[emphasis added].
The legal construct,
prevents the Applicant from suing on the alleged “acknowledgement
of debt” given by the Respondent
while at the same time
continuing to enforce the “primary obligation” against
Metallon.
In Froman v Robertson
1971 (1) SA 115
(A) 121F, Corbett AJA (as he then was) held:
“
Reverting, more
specifically, to the position of the drawer of a cheque, it is clear
that by issuing a cheque in due form he engages,
or promises, that on
due presentment it will be honoured by the bank according to its
tenor and that if dishonoured he, the drawer,
will compensate the
holder or an indorser who is compelled to pay the cheque ... As
between the payee and the drawer these promises
are enforceable only
if supported by justa causa in the above described sense; or, to put
it another way, as between himself and
the payee, the drawer, when
sued on the cheque, is always entitled to raise the defence that he
drew and issued the same without
there having been the necessary
justa causa.”
[emphasis added].
In Saambou Nasionale
Building Society v Friedman
1979 (3) SA 978
(A) 991, Jansen JA held:
“
In this court the
requirement of reasonable cause in our law once again came to the
front in Froman v Robertson Ibid – at
least with regard to the
contract between payee and drawer of a cheque (which can be regarded
as an example of a purely unilateral
contract). Although the Court
still defines reasonable cause in terms of animus contrahendi ... it
is very clear that ‘cause’
is also linked to the
underlying relationship. It will lead to greater clarity in the
future if the two concepts are kept apart
in order that animus
contrahendi no longer overlaps ‘reasonable cause’ which
must be sought in the underlying relationship
...
... Fortunately these
complicated matters need not now be considered and for purposes of
the present case, in pursuance of Hugo
de Groot’s exposition,
the principal agreement can be regarded as the cause for the
subsidiary agreement, in the sense that
without the former the
subsidiary agreement would not be valid. To be consistent it would
then also have to be accepted that when,
e.g., the drawer issues his
cheque to a creditor of another person in settlement of the other
person’s debt, the other person’s
debt is the causa for
the drawer’s negotiable instrument contract. That the drawer
can bind himself in this manner appears
from the decision in Froman v
Robertson (supra), and it follows that the debt of the other person
would then be regarded as ‘reasonable
cause’ for the
drawer’s contract ...
It seems quite clear that
only by agreement of the parties to the subsidiary agreement can the
subsidiary agreement and the principal
agreement be related and can
the possibility of the presence of reasonable cause for the principal
agreement be created. Various
difficult questions can arise in this
regard, but for the purpose of the present case we can consider the
negotiable instrument
contract which arises if the drawer of a cheque
delivers it to the payee. Payee and drawer will have to be in
agreement concerning
what the proceeds of the cheque are to be
devoted to before there can be any talk of reasonable cause. By this
agreement the bond
between the negotiable instrument contract and the
underlying relationship is established.”
[emphasis added].
Analysis of the juristic
nature of an acknowledgement of debt indicates that the contractual
arrangement contended for by the Applicant
does not fit neatly within
this paradigm for the following reasons.
First, it was never the
intention of the Respondent to undertake to pay the debt of a third
party – i.e. Metallon. As far
as the Respondent was concerned,
no indebtedness was ever owed by Metallon to the Applicant. The
Applicant, on the other hand,
believed that the debt was owed by
Metallon. There was no consensus on the underlying causa and its
relationship to the acknowledgment
of liability as required by
Saambou Nasionale Building Society v Friedman.
Second, given that the
Applicant and the Respondent were not ad idem as to whether the
Respondent was acknowledging a primary obligation
or separately
undertaking a subsidiary obligation, it is difficult to call the
“undertaking” an acknowledgement of
liability. Whose
liability is being acknowledged?
Third, when the Applicant
elected to proceed with the winding up in the face of the
acknowledgement of liability, the Applicant
effectively enforced the
“primary obligation”. It is now no longer possible for
the Applicant to undo what it did and
to tender to return it to the
Respondent upon payment of the amount claimed. Applying the
acknowledgement of debt module, this
inability to turn back the
clock, makes it notionally impossible for the Applicant to proceed on
the subsidiary agreement.
2
Even if the alleged
“undertaking” is not an acknowledgement of debt in the
true sense of the word, it nevertheless remains
an issue whether the
alleged acknowledgement constitutes an offer by the Respondent to pay
the Applicant that is open for acceptance
and enforceable in these
proceedings. I do not believe that it is such an offer for the
following reasons:
Assuming that the
acknowledgment is an offer, it could not give rise to a valid and
binding contract until it was accepted.
The alleged “undertaking”
given in the LPAA does not appear to have been seriously intended by
the Respondent to bring
about a binding contract – i.e. it was
not made animus contrahendi. It is not in the form of a direct
communication from
the Respondent to the Applicant. It is a statement
of fact, which the Applicant disputed – i.e. that the proper
party to
be pursued was the Respondent.
3
As a matter of law, an
offer that does not stipulate a specific time for acceptance lapses
after a reasonable time.
4
This “offer” does not stipulate a lapse date.
The offer was made on 15
June 2010, when the Respondent deposed to his confirmatory affidavit.
The present application (in which
the offer was supposedly accepted)
was launched during October 2010 five months later. The Applicant, on
whom the onus lies, has
produced no evidence of what would constitute
a reasonable time for acceptance of the offer. Prima facie, it
appears to me a period
of more than five months is not a reasonable
time.
An offer is terminated
upon rejection
5
.
In the present context, after receipt of the LPAA, the Applicant
continued to steadfastly maintain in both its replying affidavit
and
supplementary affidavit that the “undertaking” did not
avail Metallon as a defence in the liquidation proceeding.
The
Respondent disputed that the liability was the Respondent’s and
put up evidence to demonstrate that the liability was
Metallon’s.
In addition, the Respondent proceeded with the winding up.
There can be no doubt
that the Applicant’s conduct (which the Respondent labels an
“election” or “waiver”)
constituted a
rejection of the alleged “offer”.
6
In reaching this conclusion, I recognise that the Respondent was not
a direct party to the winding up application. However, it
is clear
that, as the person who had been authorised by Metallon to defend the
proceedings on its behalf, he was aware of the contents
of the
replying affidavit. As the chairman of the company’s board of
directors, he would also have been aware of the fact
that, after the
replying affidavit was filed, Metallon’s shareholders elected
to place the company in voluntary winding up,
presumably in response
to the replying affidavit. To conclude that the rejection was not
communicated to the Respondent because
he was not a direct party in
the litigation would be the height of formalism.
Even assuming that the
Respondent intended to make an offer in the answering affidavit,
having regard to the context in which the
offer was made, it must
have been an implied term of the offer that the Applicant could not
proceed with the winding up while at
the same time accepting the
Respondent’s alleged offer of payment. After all, the stated
purpose of the alleged “offer”
was to prevent the
liquidation from occurring. Having elected to proceed with the
liquidation, it is no longer open for the Applicant
to accept the
alleged offer.
As noted above, the terms
of the offer to pay are too vague to be enforceable. On its face, the
undertaking is not an undertaking
to pay the entire capital amount
all at once. It is an undertaking to pay an unspecified number of
instalments in unspecified amounts.
It is also not clear when
payments are to commence. The question of interest has not been dealt
with. Acceptance of the offer therefore
cannot give rise to a binding
and enforceable contract that would entitle the Applicant to
immediate judgment at this stage.
Finally, I must consider
whether the Applicant can succeed if I decide this claim on the
Respondent’s version only. In this
respect, the Respondent’s
testimony in the winding up application was that he was the true
debtor. Based on this version
only, can I grant judgment in the
amount claimed? I am afraid I must conclude that I cannot for the
following reasons.
First, it is not the
Applicant’s case that its debtor is the Respondent. The
Applicant has put up convincing evidence (which
was accepted by the
Court in the liquidation proceeding) that its true debtor is Metallon
and not the Respondent. I cannot shut
my eyes to this evidence (which
is before me) and simply base my decision on what the Respondent said
in a previous proceeding.
7
Second, to the extent
that the Applicant may have had a right to proceed against the
Respondent if he was the true debtor, the Applicant
waived that right
when the Applicant elected to proceed against Metallon rather than
the Respondent personally.
In a very able argument,
Mr Hollander, who appeared for the Applicant, argued that there
could not be a waiver in these circumstances,
because at the time
when the alleged waiver occurred, the Applicant was not aware of all
of the facts – i.e. that its claim
was against the Respondent
and not Metallon. I do not agree with this argument. At the time when
the Applicant filed its replying
affidavit and supplementary
affidavit in the liquidation proceeding, the Applicant was aware of
the fact that the Respondent alleged
that he was the true debtor. At
that stage, the Applicant was in possession of all of the facts upon
which to base a decision as
to whether to proceed with the
liquidation proceeding. Nevertheless, it chose to go forward with the
winding up proceeding against
Metallon.
The Applicant also
contends that, because the Respondent was not a party to the winding
up proceeding, the Applicant’s waiver
or election has not been
notified to the Respondent. This argument fails for the reasons
stated in paragraph 40.6 above. The Respondent,
as the chairman of
Metallon, and the person authorised to represent it, would
undoubtedly have been aware of the election or waiver.
Accordingly, I am driven
to the conclusion that the Applicant has not established a
contractual cause of action. As a consequence
of this finding, the
application must fail.
In the view I take of the
matter, it not necessary for me to address the other specific
defences raised by the Respondent, as summarised
in paragraph [22]
above.
I emphasise that the
finding that I have made in this judgment is a finding only that the
Applicant cannot proceed against the Respondent
personally based upon
the specific cause of action sought to be enunciated in this
application – i.e. that the Respondent
made an offer to pay
Metallon’s debt which the Applicant can now accept. Nothing in
this judgment precludes the Applicant
from proceeding against the
Respondent personally on a basis that is consistent with the notion
that the primary obligation is
Metallon’s. Accordingly, there
is nothing in this judgment that would, for example, preclude the
Applicant from proceeding
to recover against the Respondent under
section 424 of the former Companies Act or by asserting a claim based
upon abuse of corporate
personality, if such the claims are
meritorious.
COSTS
As the Respondent has
achieved substantial success in this application, the Respondent
would ordinarily be entitled to costs. However,
in my opinion this is
an appropriate case to depart from the usual rule: “Costs are
in the discretion of the Court ... and
ethical considerations may
enter into the exercise of that discretion”
8
.
The Respondent has abused
the process of the Court. He put up an affidavit in the winding up
application in which he confirmed that
he had undertaken to pay the
debt off in an effort to defeat the application for winding up. It is
plain that the Respondent had
no intention of honouring that
undertaking.
As a result of this
assertion, the winding up application had to be treated as an opposed
matter and the Applicant was forced to
file a replying affidavit and
to argue the matter. Metallon then went into voluntary liquidation.
This forced the Applicant to
bring an application for conversion.
All of this caused the
Applicant considerable expense and delay which may or may not be
recoverable from the estate of Metallon,
depending upon its financial
position. Even if it is recoverable from the estate of Metallon, the
claim for costs will ultimately
come out of the pocket of Metallon’s
creditors.
I am therefore not
disposed to award the costs of this application to the Respondent.
CONCLUSION
Accordingly, I make the
following order:
The application is
dismissed.
Each party is to pay
its/his own costs.
______________________________
P.N. LEVENBERG, AJ
Acting Judge of the High
Court
Counsel for the
Applicant:L Hollander
Attorney for the
Applicant:Darryl Furman & Associates
Counsel for the
Respondent:A Bava SC
Attorneys for the
Respondent:Cliffe Dekker Hofmeyr Inc
1
Paddock Motors (Pty) Ltd v Igesund
1976 (3) SA 60
(A) 24A-G
.
2
South African Breweries Limited v Ribeiro t/a Docks Liquor
Merchants
[1994] 4 All SA 627
(W)
,
Adams v SA
Motor Industry Employers Association
1981 (3) SA 1189
(A)
.
3
See
Societe Commercial de Moteurs v Ackerman
1981
(3) SA 423
(A) 434A – 435D
(in which the Court held that a
letter advising the plaintiff that the defendant had undertaken to
guarantee the indebtedness
of a company, Peughold, to the plaintiff
was insufficient to establish a contract between the defendant and
the plaintiff directly).
4
Dietrichsen v Dietrichsen
1911 TPD 486
, 496
.
5
Christie: The Law of Contract in South Africa
:
5
th
Ed: p49
.
6
Kotze v Suid-Westelike Transvaalse Landbou Kooperasie
2005 [2] All SA 232 (SCA) para [24]
;
Sanjo Marketing CC
v Bank of Athens South Africa Limited
2002 [JOL] 9473
(W)
.
7
Administrator, Transvaal, & Others v Theletsane &
Others
[1990] ZASCA 156
;
1991 (2) SA 192
(A) 196
(The Court held that,
where the applicants had come to Court on the basis that they had
been afforded no hearing prior to their
dismissal as employees, it
was not permissible for them to succeed based upon allegations in
the respondent’s answering
affidavit, which asserted that the
applicants had been afforded a hearing, but described a hearing that
the applicants maintained
was unfair);
Al-Kharafi & Sons v
Pema
2010 (2) SA 360
(W) 389D
(The Court held that
the applicant could not, arising out of something that emerged from
the respondent’s answering affidavit,
seek to make out a case
that was contrary to a case made out in the founding affidavit).
8
Mahomed v Nagdee
1952 (1) SA 410
(A) 420-421
;
Merber v Merber
1948 (1) SA 446
(A) 423-453
.