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[2016] ZAGPJHC 346
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Willem Swanepoel Bouers CC v Mont Blanc Construction (Pty) Ltd (36738/15) [2016] ZAGPJHC 346 (5 October 2016)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA,
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO:
36738/15
In the
matter between:
WILLEM
SWANEPOEL BOUERS CC
Registration
Number 2007/183010/23
Applicant
and
MONT
BLANC CONSTRUCTION (PTY) LTD
Registration
Number
2008/0158855/07
Respondent
J
U D G M E N T
MAHALELO,
AJ
:
INTRODUCTION
[1] The
applicant applies for provisional liquidation of the respondent
and ancillary orders.
[2] The
applicant launched the present application having served a letter of
demand in terms of section 345 of the Companies Act
No 61 of 1973 on
the respondent calling upon it to pay an amount of R161 365, 65. In
terms the letter of demand the respondent
had 21 days after
delivery to make payment of the indebted amount. The respondent
failed and or neglected to pay the sum, or compromise
to the
reasonable satisfaction of the applicant. In consequence of the
respondent’s failure to liquidate the debt,
the applicant is
resolute that the respondent is unable to meet its current financial
obligation in the ordinary course of business
and therefore deemed
insolvent.
[3] The
applicant is a Close Corporation specialising in project management
and civil construction. The applicant subcontracted
from the
respondent.
[4] There
is no dispute that the applicant supplied and installed the
structural screed and performed other works as per the quotation
and
or orders. The parties are however divergent as to whether the
applicant was appointed in terms of the MBSA Subcontract Agreement
and in line with the JBCC rules to perform the work and whether there
is an outstanding amount due to the applicant by the respondent
emanating from the agreement.
[4] The
respondent contests the application and persist that it is not
indebted to the applicant in any sum and is fully able to
pay its
debts as and when they become due.
[5]
Against that brief introduction I consider the factual background
from which the claim emanates important and i endeavour to
set it out
below:
On 5
September 2014 following upon a quotation provided to the respondent
by the applicant, the applicant was, by way of an appointment
letter,
appointed for the supply and installation of structural screeds at
the Water Fall Mall in Rustenburg. According to the
applicant payment
was due upon completion of the work unless alternative arrangements
were made. The terms of the appointment
letter were the
following:
“
We
hereby advise you of your appointment for the supply and installation
of structural screeds with Drikon 5.5L/50Kg cement as per
your
proposal (attached) …
Your
appointment is made in accordance with the provisions of the MBSA
Domestic Subcontract Agreement March 2005 Edition and in
line with
the terms and conditions of the JBCC 2000 Series Edition 4.1 Code
2101 Principal Building Agreement…
”
[6]
Subsequent to the initial quotation, the respondent placed several
further orders with the applicant for further work to be
done at the
site. The orders were placed either in writing or verbally.
According to the applicant it was also an explicit
term of the
subsequent orders that payment would become due upon completion of
the work, unless an alternative arrangement had
been made between the
parties.
[7] The
applicant complied with its obligations to the respondent in respect
of the quotations and the orders received.
[8] On 25
November 2014 the respondent sent an email to the applicant
requesting full details of all works performed to date and
requested
that one cumulative claim be submitted. The applicant obliged and
submitted a statement dated 15 January 2015. The applicant,
pursuant
to this statement alleged that the respondent failed to pay amounts
due and that its payment period was 30 days. In reply
to the
applicant’s allegations the respondent emailed a letter to the
applicant stating the following:
“
It
would appear that you are holding MBC (Mont Blanc Construction) to
ransom to make payment including the release of retention
before you
complete the works. Before you proceed please note the following:
Retention
has not been released/paid to MBC and therefore not due to WSB.
Payment for your invoice dated 04/12/2014 only issued
to MBC on the
08/12/2014 has not been certified or paid to MBC. The last claim for
2014 was submitted on 27/11/2014 and payment
certificate issued on
04/12/2014. The next claim will be submitted on the 19/01/2015. Once
certified and paid, we will pay you.
”
[9] On 26
January 2015 a further email was sent to the applicant requesting a
break down and the particulars in respect of certain
claims
submitted. On 28 January 2015 the applicant emailed documents to the
respondent in response thereto. The respondent considered
the
documents but found them to be inadequate. In reply to the
applicant the respondent once more requested details and provided
an
example of the information required.
[10] On
the same day the respondent addressed an email to the applicant
querying the applicant’s invoice 2014/84 and requested
a
breakdown of the amounts of R110 000,00 and R75 000. Of note
regarding this invoice is the fact that no mention is made
that the
quotation was for material only and pursuant to the stainless steel
cladding being completed, the applicant rendered an
invoice which now
expressly excluded labour. An additional amount of R75 000,00
was invoiced by the applicant for labour for
the installation of the
stainless steel. According to the Respondent, despite its request to
the applicant to provide it with a
breakdown of the amounts of
R110 000,00 and R75 000,00 and explain the incongruity, the
applicant has failed to provide
any detail thereof.
[11] In
accordance with the JBCC and the MBSA Subcontract Agreement which
according to the applicant governed the relationship between
the
parties, the respondent examined the documents submitted and the
works completed by the applicant and thereafter prepared the
draft
final account for submission. The applicant was given 30 working days
within which to accept or object to the draft final
account.
The applicant did not raise any objection as a result it became final
and was submitted to the principal agent.
The account was sent to the
applicant together with a letter of rejection on 24 February 2015.
[12] On
the 11 August 2015 the applicant’s attorneys forwarded a letter
of demand to the respondent requesting payment of
the amount of R161
365, 65. The applicant contended that the amount owed to it by the
respondent is for work performed in accordance
with the quotation
furnished and does not form part of the MBSA and JBCC agreements.
Applicant further contented that the respondent
is indebted to it in
the said amount and has failed to timeously pay the amount due to
lack of financial resources and that it
will be just and equitable
for the respondent to be liquidated.
[13] On
the other hand the respondent disputed the applicant’s
allegations that the explicit terms of the agreements were
that
payment would become due upon completion of the work. According to
the respondent, the procedure in terms of the MBSA and
the JBCC
Agreements had to be followed for payment to become due. Further that
it duly made payments to the applicant over the
course of the
agreements as and when claims were submitted and certified.
[14] A
cursory reading of the appointment letter shows that the applicant’s
appointment was subject to the MBSA and JBCC Agreements.
[15]
Against this background this court must decide whether the respondent
is insolvent and unable to meet its financial commitments.
LEGAL
FRAME WORK
[16]
In an opposed application for provisional liquidation the applicant
must establish its entitlement to the order on a prima
facie basis.
The applicant must show that the balance of probabilities on the
affidavits is in its favour. (See
Kalil
v Decotex
[1]
)
.
This would include the existence of applicant’s claim where
such is disputed.
[17]
Even if the applicant established its claim on a prima facie basis, a
court will ordinary refuse the application if the claim
is bona fide
disputed on reasonable grounds. The rule that winding up
proceedings should not be used as a means of enforcing
a debt the
existence of which is bona fide disputed on reasonable grounds is
part of the broader principle that court’s process
should not
be abused. (See
Badenhorst
v Northern Construction Enterprises (Pty) Ltd
[2]
).
[18]
In relation to the applicant’s claim the court must consider
not only where the balances of probabilities lie on the
papers, but
also whether a claim is bona fide disputed on reasonable grounds.
The courts can reach this conclusion even though
on a balance of
probabilities, based on the papers, the applicant’s claim has
been made out.(See
Payslip
Investment Holdings CC v Y2K Tech Ltd
[3]
).
[19] The
only answer to applicant’s claim is that the applicant failed
to provide a breakdown of the account and therefore
failed to provide
the basis upon which it alleged that payment of certain invoices was
outstanding.
[20] In
the answering affidavit the respondent denied that it is unable to
pay its debts. This denial is elaborated upon by filling
a report by
its registered auditors dated 13 November 2015. In this report the
auditors G M Engelbrecht & Associates,
inter alia
, makes
the following unequivocal statement: “
to the best of our
knowledge and belief, the financial affairs of the company are in
good standing and the internal financial controls
adequately meet the
requirements of the Companies Act 71 of 2008
”
(“the
Act”).
In the replying affidavit the applicant points out
that the respondent made no tender to pay the outstanding amounts
into the respondent’s
attorneys’ trust account or into
court pending litigation and submits that this would have been a sign
of good faith and
added some credence to the respondent‘s
version that it is still solvent.
[21] The
onus
of demonstrating a respondent’s inability to settle
its debts during the conduct of ordinary business rests on the party
making the allegation, the applicant in this instance. According to
the report of the respondent’s auditors dated November
2015 the
respondent‘s financials were in good standing. There is no
evidence of any litigation in progress against the respondent
by its
creditors. At the hearing of this matter it appeared that the
respondent was still in business there being no reports
that its
bankers have declined any of its instruments meant for the settlement
of its debts. After consideration of all the facts
and of the
arguments and counter arguments presented, I am not persuaded that I
can on a balance of probabilities on the papers
conclude that the
respondent is unable to pay its debts as contemplated in section
344(f) of the Act. I say this for the
following reasons:
[22] The
claim by the applicant is clearly disputed by the respondent. The
finding that the dispute is not genuine and
bona fide
is not
justified on the papers. It cannot be inferred from the respondent’s
failure to meet the applicant’s claim that
the respondent is
unable to do so. This is said bearing in mind the report by the
respondent’s auditors. In my view
it is equally likely that the
respondent is unwilling to do so because the claim is unsubstantiated
by the applicant. The applicant
is at liberty to institute an action
against the respondent if it believes that the respondent is indebted
to it. It is not entitled
to use liquidation proceedings to settle
claims which are
bona fide
disputed.
[23] It
follows that the applicant has, in my view, failed to make out a case
for the relief he seeks. Consequently the application
cannot
succeed. What is clear from the papers is that there was some sort of
misunderstanding as regards invoicing.
[24] In
the result the following order is made:
24.1
Application is dismissed with costs.
_________________________________________________
M
B MAHALELO
ACTING
JUDGE OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG LOCAL
DIVISION, JOHANNESBURG
APPEARENCES:
Counsel
for applicant: Adv J Scallan
Instructing
Attorneys: Botha & sutherland
Counsel
for respondent: Adv WC Carstens
Instructing
Attorneys: Richard Meaden and
Associates Inc
Date of
Hearing: 4
August 2016
[1]
1988
(1) SA 943 (A)
[2]
1956 (2) SA 346 (T)
[3]
2001
(4) SA 781
(C)