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[2016] ZASCA 168
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Freshvest Investments (Pty) Ltd v Marabeng (Pty) Ltd (1030/2015) [2016] ZASCA 168 (24 November 2016)
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THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 1030/2015
In
the matter between:
FRESHVEST
INVESTMENTS (PROPRIETARY) LIMITED
APPELLANT
and
MARABENG
(PROPRIETARY) LIMITED
RESPONDENT
Neutral citation:
Freshvest
Investments (Pty) Ltd v Marabeng (Pty) Ltd
(1030/2015)
[2016] ZASCA 168
(24 November 2016)
Coram:
Shongwe,
Leach and Willis JJA and Fourie and Nicholls AJJA
Heard:
15
November 2016
Delivered:
24
November 2016
Summary:
Winding-up application:
respondent disputing debt on bona fide and reasonable grounds: court
a quo referring matter to oral evidence:
winding-up proceedings not
designed for the enforcement of disputed debts.
ORDER
On
appeal from:
Free
State Division of the High Court of South Africa, Bloemfontein
(Jordaan J sitting as court of first instance):
1
The appeal is upheld and the order of the court a quo is set aside
and substituted
with the following:
‘
The application
for the winding-up of the respondent is postponed sine die, with
costs to date to be costs in the cause.’
2
The costs of the appeal, including the costs of two counsel, where
applicable,
are to be costs in the cause in the winding-up
application.
3
Should the appellant be successful in the action that has been
instituted
(‘the pending action’) in establishing a claim
of not less than R100 against the respondent, it may then set the
winding-up
application down for hearing on the same papers, duly
amplified as needs be.
4
Should the appellant fail to establish a claim of not less than R100
against
the respondent in the pending action, or fail to prosecute
the pending action to its final conclusion, then the winding-up
application
will be deemed to have been dismissed with costs,
including the costs of two counsel, where applicable.
JUDGMENT
Fourie
AJA (Shongwe, Leach and Willis JJA and Nicholls AJA concurring):
[1]
This is an appeal, with the leave of the court a quo, against the
dismissal of an application for the winding-up of the respondent,
Marabeng (Pty) Ltd. In essence, the matter serves as a stark reminder
that winding-up proceedings are not designed for the enforcement
of a
debt that the debtor-company disputes on bona fide and reasonable
grounds. This has become known as the ‘Badenhorst
rule’
after
Badenhorst
v Northern Construction Enterprises (Pty) Ltd
1956
(2) SA 346
(T) at 347-348. See also
Kalil
v Decotex (Pty) Ltd & another
1988 (1) SA 943
(A) at 980B-D, as well as the authorities referred to
in
Kalil
at
980D-F. A collection of more recent authorities on the application of
the Badenhorst rule is found in P M Meskin et al
Henochsberg
on the
Companies Act
5 ed Vol 1 at 693-694.
[2]
The application for the winding-up of the respondent was brought at
the instance of the appellant, Freshvest Investments (Pty)
Ltd, a
company which conducts business by, inter alia, providing finance
facilities to entities active in the agricultural sector.
It is
common cause that the appellant, represented by Mr P Van As Le Roux
(Le Roux) and the respondent, represented by Mr J H Naudé
(Naudé Jnr), concluded three loan agreements during 2012, in
terms of which it was recorded that the appellant lent and
advanced
various amounts to the respondent. It is further common cause that
the respondent failed to repay the loans in terms of
the agreements,
with the result that as at 28 July 2014, an amount of R9 171 298,84
was due and owing to the appellant.
On the strength of this
indebtedness, the appellant approached the court a quo for the
winding-up of the respondent.
[3]
The respondent filed an extensive affidavit in opposition to the
application, in which it placed the validity of the appellant’s
claim in issue. The main contentions raised by the respondent in
disputing the appellant’s claim were the following:
(a)
Naudé Jnr had no authority to represent the respondent in
concluding the three loan
agreements with the appellant. In addition,
the appellant’s representative, Le Roux, was aware of Naudé
Jnr’s
lack of authority.
(b)
Both Naudé Jnr and Le Roux were aware that the loans were not
for the benefit of
the respondent, but were advanced for the sole
benefit of Naudé Jnr’s personal farming activities. The
loan agreements
were the product of the fraudulent and unlawful
collusion between Le Roux, representing the appellant, and Naudé
Jnr, to
obtain the loans for the benefit of Naudé Jnr.
(c)
Although the three loan agreements recorded that the appellant and
the respondent
were the parties thereto, the true parties to the
agreements were the appellant and Naudé Jnr. In fact, the
loans were not
utilised
by the respondent, but by
Naudé Jnr for his personal farming activities.
(d)
The three loan agreements were accordingly void ab initio and
unenforceable against the
respondent.
[4]
In its replying affidavit the appellant put these averments of the
respondent in issue. In the event, the matter was heard by
Lekale J,
who, after hearing argument, delivered a written judgment. It appears
from the judgment that Lekale J was alive to the
implications of the
Badenhorst rule, as well as the nature of the onus resting on a
respondent who disputes its alleged indebtedness
to an applicant in
winding-up proceedings. In
Kalil
at 980C-D this onus was
described as follows:
‘
Consequently,
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.’
[5]
The guidelines laid down in
Kalil
as to how factual disputes
regarding the respondent’s indebtedness in an application such
as the present should be approached,
were stated thus by Brand J in
Payslip Investment Holdings CC v Y2K Tec Limited
2001 (4) SA
781
(C) at 783H-I:
‘
With
reference to disputes regarding the respondent’s indebtedness,
the test is whether it appeared on the papers that the
applicant’s
claim is disputed by respondent 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.’
[6]
In
Hülse-Reutter & another v HEG Consulting Enterprises
(Pty) Ltd (Lane and Fey NNO intervening)
1998 (2) SA 208
(C) at
219E-220A, Thring J 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 that 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.’
[7]
In applying these principles to the facts of the instant matter,
Lekale J held as follows:
‘
I
am, therefore, persuaded by common cause facts in the present matter
that the respondent disputes the debt on bona fide and reasonable
grounds.’
In
the light of the principles set out above, and bearing in mind the
low threshold test that the respondent had to satisfy in order
to
discharge its onus, that should have been the end of the matter.
Lekale J ought thereupon to have dismissed the application.
However,
he came to the following conclusion:
‘
In
the light of the need for speedy finalisation of a matter of the
present nature, the nature and extent of the dispute involved
as well
as the fact that the dispute was not foreseeable on the part of the
applicant [the appellant], I am convinced that the
parties are
correct, in their alternative submissions, that the correct course to
follow is for the issue concerning the respondent’s
liability
to the applicant to be referred to oral evidence.’
[8]
The consequences of this referral were unfortunate. As recorded
earlier, there was no need in these proceedings for a finding
whether
or not the respondent is indebted to the appellant, as the respondent
does not have to prove its defence. All that was
required of the
respondent, was to show that the appellant’s claims were
disputed on bona fide and reasonable grounds. This
Lekale J held it
had done.
[9]
The application was then, in the temporary absence of Lekale J,
referred to Jordaan J for the hearing of oral evidence. He heard
the
evidence of Mr FJ Rossouw (Rossouw), the deponent to the opposing
affidavit of the respondent, as well as that of Le Roux.
Upon
conclusion of the evidence, Jordaan J delivered a judgment in which
he dismissed the winding-up application with costs.
[10]
It is apparent from the judgment of Jordaan J, that he was rather
surprised by the fact that, although Lekale J had held that
the
respondent disputed its indebtedness on bona fide and reasonable
grounds, the matter had been referred to oral evidence on
the issue
of the respondent’s liability to the appellant. He put it as
follows at para 10 of his judgment:
‘
The
irony of the matter is that my brother held that the debt was
disputed on bona fide and reasonable grounds. However, I accept
that
this finding was obiter, otherwise there would have been no reason to
refer the matter for oral evidence to have the same
issue decided.’
(My translation of the learned judge’s Afrikaans.)
[11]
The finding of Lekale J was not obiter. As recorded above, he had
expressly held that, on the common cause facts, the respondent
disputed the debt on bona fide and reasonable grounds. In view
thereof, Jordaan J ought to have held that it was unnecessary to
hear
oral evidence. See
Wallach
v Lew
Geffen
Estates CC
[1993] ZASCA 39
;
1993 (3) SA 258
(A) at 263H. The dismissal of the application ought
then to have followed without incurring further costs and delay.
[12]
The irony is that, after hearing evidence for three days, Jordaan J
came to exactly the same conclusion as Lekale J, namely
that the
respondent disputed the debt on bona fide and reasonable grounds.
This conclusion was based on the relevant documentation
as well as
the evidence of Rossouw and Le Roux, and after making credibility
findings, in particular, that the appellant’s
witness, Le Roux,
was an extremely poor witness.
[13]
This court is now faced with an appeal arising from proceedings
before Jordaan J which were unwarranted and irrelevant. Lekale
J had
already held that the debt was disputed on bona fide and reasonable
grounds. This finding was no doubt correct, as, on the
papers
(particularly the extensive answering affidavit), a defence was
raised which was not unreasonable – on the contrary,
the facts
raised in opposition, if proved at a trial, would no doubt constitute
a good
defence
.
Further, a lack of bona fides cannot readily be inferred from the
papers. Therefore, the matter ought to have ended with this
finding
of Lekale J and the appellant ought then to have instituted action to
prove its disputed claim in the normal course. As
recorded earlier,
Lekale J compounded the confusion by referring the matter to oral
evidence on the issue as to whether or not
the debt was, in fact,
due. Jordaan J then, contrary to the order of Lekale J, decided the
issue as to whether or not the debt
was disputed on bona fide and
reasonable grounds. This issue had, however, not only already been
decided, but was an issue that
had to be decided on the papers and
not with the aid of oral evidence. How does this court now unscramble
the egg?
[14]
What is clear from the above, is that the winding-up application
could not have succeeded. But, should the appeal against the
order of
Jordaan J now simply be dismissed? Although one may at first blush be
inclined to follow this route, I believe that, for
the reasons set
out hereinafter, the appeal ought not to be dismissed.
[15]
The appellant’s counsel forcefully argued that should this
court find that the respondent has in fact discharged its
onus, the
appeal should not be dismissed, but it should be ordered that the
winding-up application be postponed sine die to enable
the appellant
in the meantime to proceed against the respondent with its action for
payment of its claim. We have been informed
that action proceedings
have already been instituted by the appellant for the recovery of the
full amount allegedly due to it by
the respondent.
[16]
Counsel for the appellant further submitted that, in the hearing
before Jordaan J, the respondent had changed its stance by
contending
that the relevant loan agreements were simulated transactions and
not, as initially alleged in the answering affidavit,
the result of
fraudulent and unlawful collusion between the appellant and Naudé
Jnr. Counsel contended that it was apparent
from the evidence of
Rossouw, the respondent’s witness, that an amount of at least
R600 000 of the funds advanced by
the appellant in terms of the
agreements, was paid to the respondent’s creditor and not to
Naudé Jnr. Therefore, counsel
argued, there was a reasonable
possibility that the appellant will have some success in its action
against the respondent.
[17]
Whilst it is not necessary to delve into the evidence tendered before
Jordaan J, I believe that there is merit in counsel’s
submission that allowance should be made for the possibility that the
appellant may in the main action obtain an order recovering
some
portion of the debt allegedly owing and on which the winding-up
application is based. However, I hasten to add that I make
no
definite finding in this regard. Therefore it appears to be just and
equitable at this stage not to finally dispose of the winding-up
application, but rather to postpone it sine die, thereby awaiting the
finalisation of the action proceedings.
[18]
In arriving at this conclusion, I have also taken account of the fact
that both of the parties were instrumental in having
the matter
referred to oral evidence by Lekale J. As appears from his judgment,
the parties put this forward as an alternative
route to follow and
then actively participated in the hearing before Jordaan J,
notwithstanding the prior finding made by Lekale
J that the
respondent disputed the debt on bona fide and reasonable grounds.
[19]
In making this order, it has been helpful to refer to the order made
by Griesel J in
Investec
Bank Limited v Lewis
2002 (2) SA 111
(C) at 121A-C.
[20]
It is ordered that:
1
The appeal is upheld and the order of the court a quo is set aside
and substituted
with the following:
‘
The
application for the winding-up of the respondent is postponed sine
die, with costs to date to be costs in the cause.’
2
The costs of the appeal, including the costs of two counsel, where
applicable,
are to be costs in the cause in the winding-up
application.
3
Should the appellant be successful in the action that has been
instituted
(‘the pending action’) in establishing a claim
of not less than R100 against the respondent, it may then set the
winding-up
application down for hearing on the same papers, duly
amplified as needs be.
4
Should the appellant fail to establish a claim of not less than R100
against
the respondent in the pending action, or fail to prosecute
the pending action to its final conclusion, then the winding-up
application
will be deemed to have been dismissed with costs,
including the costs of two counsel, where applicable.
_____________________
P B
Fourie
Acting
Judge of Appeal
APPEARANCES:
Counsel
for Appellant:
L M
Buikman SC
Instructed by:
Cluver Markotter Inc.,
Stellenbosch
McIntyre & van der
Post, Bloemfontein
Counsel for
Respondent:
P J Greyling (with him J J
Potgieter)
Instructed by:
Karien Schutte Attorneys,
Middelburg
Schoeman Maree Inc.,
Bloemfontein