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[2020] ZAGPJHC 402
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Vantage Mezzanine Fund 2 Partnership and Another v Cedar Park Properties 39 (Pty) Ltd (45678/2018) [2020] ZAGPJHC 402 (26 August 2020)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: 45678/2018
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
REVISED
Date:
26/08/2020
In
the matter between:
VANTAGE MEZZANINE FUND
II
PARTNERSHIP
FIRST APPLICANT
CITY OF JOHANNESBURG
METROPOLITAN
MUNICIPALITY
SECOND APPLICANT
AND
CEDAR PARK PROPERTIES
39 (PTY) LTD
JUDGMENT
Delivered:
This judgment was
handed down electronically by circulation to the parties’ legal
representatives by e-mail. The date and
time for hand-down is deemed
to be 11h30 on the 26
th
August 2020.
TWALA
J
[1]
Before this Court is an application wherein the applicants seek an
order placing the
respondent in final winding-up in the hands of the
Master of this Court with costs to be costs in the winding up.
[2]
The respondent filed a notice to oppose the application but did not
file any answering
affidavit. Instead an application to place the
respondent under supervision and that the business rescue proceeding
commence was
launched by the entity, for the purposes of this
judgment, I shall refer to as the shareholder in the respondent under
case number
5586/19. During the business rescue proceedings, the
second applicant brought an application for leave to intervene and be
joined
as an applicant in these proceedings since it was making
common cause with the applicant. The intervention application was
granted
on the 30
th
of June 2020 when the business rescue
application was dismissed.
[3]
On the 20
th
of July 2020, a case management meeting was
held before me wherein the date for the hearing of the application
for leave to appeal
the dismissal of the business rescue application
and thereafter this application for the liquidation of the respondent
was agreed
upon as the 21
st
of August 2020. I then
directed the respondent to file its answering affidavit on or before
the 31
st
July 2020 and the applicants to file their
replying affidavits, if any, on or before the 11
th
August
2020. Furthermore, the respondent requested that it be given the
benefit of the weekend and file its papers on the 3
rd
of
August 2020 instead of the 31
st
of July 2020 which request
was acceded to.
[4]
It is worth noting that on the 31
st
July 2020 the
respondent launched an application in terms of Rule 6(5) (d) (iii) of
the Uniform Rules of Court in which it sought
an order suspending the
liquidation proceedings in terms of section 131(6) of the Companies
Act, 71 of 2008 (“the Act”)
read with
section 18
of the
Superior Courts Act, 10 of 2013
by virtue of the pending application
to subject the respondent to business rescue proceedings before this
Court under case number
5586/19.
[5]
It was submitted by Advocate Potgieter that the respondent took a
conscious decision
not to file its answering affidavit on the 31
st
July 2020 as directed. The respondent relied on its application in
terms of
rule 6
and
section 18
of the
Superior Courts Act to
suspend
the liquidation proceedings. It was submitted further that if the
application for leave to appeal is dismissed, the respondent
is not
asking for time to file an answering affidavit and the matter may be
disposed of as unopposed.
[6]
Advocate van Huysteen SC contended that there was no business rescue
application pending
before this Court but an application for leave to
appeal the decision of this Court dismissing the application for
business rescue.
Section 131(6)
is applicable only when the Court is
dealing with the business rescue application but not the application
for leave to appeal.
However, so it was submitted, if the Court
were to dismiss the application for leave to appeal, then the hearing
of the liquidation
application may be finalised immediately after
judgment on the application for leave to appeal without further
hearing oral submissions
from the parties since it is not opposed by
the respondent.
[7]
Mr Sedumedi for the second applicant made common cause with the first
applicant and
supported that this application be proceeded with and
be determined on the papers as it is not opposed by the respondent.
[8]
It appears on the record that the respondent, as at 31
st
August 2018, was indebted to the first applicant in the sum of
R300 682 476.92 and has been unable to pay this amount
to
date. Furthermore, the respondent is indebted to the second applicant
in the sum of R454 185 002 which excludes a
further
R63 231 890 owed to other creditors. In the preceding two
financial years the respondent has suffered loses to
the tune of
R15 872 770 and its income is a mere R8 607 454
for the last financial year.
[9]
It has long been settled that a company may be wound up if it is
unable to pay its
debts. Furthermore, a company is deemed to be
unable to pay its debts if a demand to pay its indebtedness is served
on the company
and it fails to pay the debt or to secure or compound
it to the reasonable satisfaction of the creditor.
[10]
Section 345
of the old Companies Act, 63 of 1973 provided as follows:
“
345
When company is deemed unable to pay its debts:
(1)A
company or body corporate shall be deemed to be unable to pay its
debts if:-
(a)
A creditor, by
cession or otherwise, to whom the company is indebted in a sum not
less than one hundred rand then due –
(i)
Has served on
the company, by leaving the same at its registered office, a demand
requiring the company to pay the sum due; or
(ii)
……………………………………
.
(b)
…………………………………
.
(c)
It is proved to
the satisfaction of the Court that the company is unable to pay its
debts.”
(2)In
determining for the purpose of subsection (1) whether a company is
unable to pay its debts, the Court shall also take into
account the
contingent liabilities of the company.”
[11]
In
Henochsberg on Companies Act, 61 of 1973, 5
th
edition at page 707
the author stated the following:
“
A
company’s inability to pay its debts may be proved in any
manner. Evidence that a company has failed on demand to pay a
debt
payment of which is due is cogent prima facie proof of inability to
pay its debts: ‘for a concern which is not in financial
difficulties ought to be able to pay its way from current revenue on
readily available resources.’
[12]
I am satisfied that the respondent is unable to pay its debts
considering the amount of its income
and the debts that it has
accumulated. The total contingent liability of the respondent is a
sum of more than R800m. The first
applicant made a demand for payment
of the sum of just over R300m as it fell due on the 31
st
of August 2018 and to date it has remained outstanding and unpaid.
The inescapable conclusion is therefore that the applicants
have made
out a case in their papers that the respondent is unable to pay its
debts as envisaged in section 345 of the Act. The
applicants
therefore succeed in their application that the respondent be placed
under final winding up in the hands of the Master
of this Court.
[13]
In
the circumstances, I make the following order:
1.
The respondent is placed under final winding up in the hands of the
Master of
the High Court;
2.
The costs of this application to be costs in the winding up.
TWALA
M L
JUDGE
OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION
Date
of hearing:
21
st
August 2020
Date
of Judgment:
26
th
August 2020
For
the 1
st
Applicant:
Adv. K J van Huyssteen
Instructed
by:
Fluxmans Inc Attorneys
Tel:
011 328 17000
For
the 2
nd
Applicant:
Mr T Sedumedi
Instructed
by:
Mncedisi Ndlovu & Sedumedi Attorneys
Tel:
011 268 5225
For
the Respondent:
Adv. MvR Potgieter SC
Adv.
T Scott
Instructed
by:
Smit Sewgoolam Inc
Tel:
011 646 0006