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[2021] ZAGPJHC 3
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Bravura Capital (Pty) Limited v Drive Path Trade & Invest (Pty) Limited t/a South Energy (29755/2019) [2021] ZAGPJHC 3 (1 February 2021)
REPUBLIC
OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, JOHANNESBURG
(1)
REPORTABLE:
Yes
(2)
OF
INTEREST TO OTHER JUDGES:
Yes
1/2/2021
Case No.: 29755/2019
In the matter between:
BRAVURA
CAPITAL (PTY) LIMITED
Applicant
and
DRIVE PATH TRADE & INVEST (PTY) LIMITED t/a SOUTHERN
ENERGY
(Registration
Number: 2012/116161/07)
Respondent
JUDGMENT
This
judgment was handed down electronically by circulation to the
parties’ legal representatives by email.
Gilbert
AJ:
1. The
applicant seeks the winding-up of the respondent in terms of section
344(f) as read with section 345(1)(a) of the Companies Act, 1973.
[1]
The applicant contends that it is a creditor of the respondent and
that the respondent is deemed to be unable to pay its debts.
2. The
applicant provides corporate finance advisory services. The
respondent's
business is described as identifying, developing,
financing and operating clean energy generation projects utilising
technology
such as solar, wind, gas and hydro.
3. The
respondent was looking to raise capital for its energy projects and
approached the applicant to render corporate finance advisory
services. To this end, the parties concluded a written agreement
with
extensive terms regulating their relationship. They describe their
relationship as a ‘mandate’, although not one
of agency.
The terms included the payment of two upfront or retainer amounts, on
28 September 2017 and 31 October 2017. The applicant
invoiced the
respondent for these two amounts, totalling R456,000.
4. The
respondent has refused to pay. The respondent asserts that the
applicant
did not perform in terms of the mandate and that, in any
event, the mandate was suspended.
5. The
applicant seeks as primary relief that the respondent be placed under
final winding-up. Stripped of its nuances, the threshold that the
applicant would have to cross to persuade the court to grant
a final
winding-up order (in contrast to a provisional winding-up
order) is that of the usual
Plascon-Evans
approach
[2]
where the respondent’s version is effectively to be preferred
over that of the applicant
[3]
unless the respondent’s version can be rejected as far-fetched
and fanciful.
[4]
6. It is
unnecessary for me to consider whether the applicant has achieved
this threshold in the present instance because the applicant has
failed to comply with section 346(4A)(a)(ii) of the Companies
Act,
1973 as the employees have not been properly furnished with a copy of
the application. This means that a final order cannot
be granted.
7. Section
346(4A)(a) provides, in relevant part:
“
(4A)(a) When an application is presented to the court in
terms of this section, the applicant must furnish a copy of the
application
–
(ii) to the employees themselves -
(aa)
by affixing a copy of the
application to any notice board to which the applicant and the
employees have access inside the premises
of the company; or
(bb)
if there is no access to the
premises by the applicant and the employees, by the affixing a copy
of the application to the front
gate of the premises, where
applicable, failing which to the front door of the premises from
which the company conducted any business
at the time of the
presentation of the application.
”
8. Section
346(4A)(b) provides that:
“
(b) The applicant must, before or during the
hearing, file an affidavit by the person who furnished a copy of the
application
which sets out the manner in which paragraph (a) was
complied with”.
9. Wallis JA in
EB Steam Company (Pty) Limited v Eskom Holdings SOC Limited
2015 (2) SA 526
(SCA) at paras 16, 17 and 23 held that although it
was peremptory that the employees be furnished a copy of the
application, the
modes of doing so as set out in subsections (aa) and
(bb) are directory such that the effective furnishing of the
application can
be achieved by other means. The court must be
satisfied that the method adopted was reasonably likely to make the
application papers
accessible to the employees (
EB Steam
para
17).
10. The applicant relies upon a
return of service that reflects that a copy of the application
and
other papers was “
served … upon the employees of
[the respondent] and the registered address at 73 Beyers Naude
Drive, Cnr Preller Drive, Roosevelt Park, JHB by affixing a copy of
the abovementioned process to the principal door as registered
address (Rule 4(1)(a)(v))
”.
11. The return of service
continues, in capitalised font, that “
PLEASE NOTE
I WAS INFORMED BY MS MOUTON THAT NO EMPLOYEES OF THE RESPONDENT
BELONGED TO A TRADE UNION
”.
12. The applicant did not file an
affidavit by the person who furnished the affidavit to employees
(which in this instance would be the deputy sheriff), as required in
terms of section 346(4A)(b) and instead relied upon the deputy
sheriff’s return of service.
13. Often both attorneys and
sheriffs fail to see the distinction between service of process,
which is regulated by Uniform Rule 4, and the effective furnishing of
the application to the specified persons as required by section
346(4A) of the Companies Act, 1973. Section 346(4A) does not require
service of the application, but that the application be “furnished”
to the particular person. “Service” ordinarily and in the
context of court process, refers to the delivery of the document
by
the sheriff or deputy sheriff, in terms of the rules of court. In
contrast, “furnish” does not require formal service
by
the sheriff but, in the context of section 346(4A), that a copy of
the application be furnished to the particular person in
a manner
that is reasonably likely to bring that application to the attention
of the person, or, in the context of employees, reasonably
likely to
make the application accessible to those employees.
14. Section 346(4A), relating to
the
furnishing
of the application, can be contrasted to
section 346A of the Companies Act, 1973 relating to the
service
of the winding-up order, once granted. The latter section expressly
refers to “service” of the order, and so requires
service
of the order by sheriff. And in effecting such service, the sheriff
is required to have regard not only to the relevant
rules of court,
such as Uniform Rule 4, but also the specific requirements of section
346A.
[5]
15. When a provisional order is
sought, the court is not concerned with the service of the
order (as
there is no order), but instead whether there has been effective
furnishing of the application to employees (and the
other parties
listed in section 346(4A)).
16. I do not have a
difficulty that a sheriff or deputy sheriff is the person that
attends to furnish the application under section 346(4A)(a). I also
have no difficulty that the sheriff or deputy sheriff does
not
provide a formal affidavit in terms of section 346(4A)(b), as the
contents of the return of service are
prima facie
evidence of
the matters therein stated
(section 43(2)
of the
Superior Courts Act,
2013
). In many instances though, it may be practically easier to
achieve effective furnishing of the application under
section
s346(4A)
if a properly informed candidate attorney or messenger
furnishes the application. That person can then depose to the
required
affidavit in terms of
section 346(4A)(b)
instead of seeking
to persuade a sheriff or deputy sheriff to depart from what he or she
may have become accustomed to during years
of effecting service of
process in terms of the rules of court.
17. The difficulty that I have is
whether in the present instance there has been effective
furnishing
of the application to employees by the deputy sheriff as evidenced by
the return of service. Without further explanation
from the deputy
sheriff who attended to furnish the application, I can only consider
what is contained in the return of service
as read with the papers
filed in the application. It is not at all clear that the deputy
sheriff or the applicant’s attorneys
were aware of what was
expected of them, namely, to furnish the application in such a way
that it was reasonably likely to make
the application papers
accessible to the employees. Both the deputy sheriff and the
applicant’s attorneys appear to have
lapsed into a mind-set of
service of process under the Uniform Rules, rather than seeking to
comply with section 346(4A) of the
Insolvency Act.
18. The return of service
expressly refers to service having been effected under Uniform Rule
4(1)(a)(v), which applies in respect of service of process in the
case of a corporation or company, by delivering a copy to the
responsible employee thereof at its registered office or its
principal place of business within the court’s jurisdiction,
or
if no such employee is willing to accept service, by affixing a copy
to the main door of such office or place of business, or
in any
manner provided by law.
19. What is immediately notable
is that service in terms of Uniform Rule 4(1)(a)(v) has nothing
to do
with service of a document on an employee – it is a form
of service upon of a corporation or company, albeit
that a
responsible employee may be the natural person who receives the
document on behalf of the corporation or company.
20. The seeds of doubt having
been sown in the present instance, the concern grows that reasonable
steps have not been taken to make the application accessible to the
employees. The deputy sheriff states that he affixed a copy
of the
papers to the principal door of the registered address. But it
appears neither from the return of service nor any of the
affidavits
that the registered address is the respondent’s business
address or that any employees were to be found at the
registered
address. During argument, the respondent’s counsel upon
instructions volunteered what would appear to be the respondent's
local business address. That address is not the registered address,
as reflected in the return of service. The respondent’s
counsel
also directed me to the answering affidavit stating that the
respondent’s projects are located in the Northern Cape
and Free
State, the inference being that employees are to be found at those
projects.
21. In any event, if there were
employees at the registered address, then section 346(4A)(a)(ii)(aa)
requires that the application be affixed to a notice board to which
the applicant and employees have access inside those premises.
This
was not the case, as appears from the return of service. Although
section 346(4A)(a)(ii)(bb) provides that if there is no
access to the
premises, a copy can be affixed to the front gate of the premises,
failing which to the front door of the premises
from which the
company conducted any business at the time of the application, this
presupposes that the relevant address was a
business address or an
address from which the company conducted business. As stated, there
is no evidence that this was so.
22. The recordal in the return of
service that a certain Ms Mouton informed the sheriff that
there were
no employees of the respondent that belonged to a trade union raises
further questions. Who is Ms Mouton and why would
she be giving
information as to whether the employees belong to a trade union? This
then calls into doubt whether there has been
compliance with sections
346(4A)(a)(i) which requires a copy of the application to be
furnished to every registered trade union
that represents the
employees.
23. In the circumstances, I am
not satisfied that the application was furnished in such a way
that
it was reasonably likely to make the application papers accessible to
the employees. The question that arises is the consequence
of
non-compliance with section 346(4A).
24. Wallis JA in
EB Steam
furnished the answer - in those circumstances the court may still
grant a provisional order. In
EB Steam
a final liquidation
order was sought and granted by the court
a quo
. On appeal,
Wallis JA found in paragraph 26 that the court
a quo
should
instead have granted a provisional winding-up order, giving
directions if necessary, on how the employees are to be served
with
the papers.
25. In the circumstances, it is
not open to me to grant a final winding-up order and therefore
it is
unnecessary for me to consider whether the applicant has achieved the
threshold for the granting of a final winding-up order.
26. Has the applicant crossed the
threshold for a provisional winding-up order?
27. It is not altogether a simple
exercise in delineating precisely what threshold needs to
be
satisfied to enable a provisional liquidation order to be granted. A
consideration of the various decisions that traverse the
standard,
such as the oft-cited
Badenhorst v Northern Construction
Enterprises (Pty) Ltd
,
[6]
and
Kalil v Decotex (Pty) Limited,
[7]
and the more recent pronouncements, reveals that they are not
entirely reconcilable.
Nonetheless, particularly useful is the judgment of Rogers J in
Gap
Merchant Recycling CC v Goal Reach Trading 55 CC
,
[8]
from which the following can be extracted:
27.1. If there are factual disputes relating to the
requirements for a winding-up
other
than respondent’s
liability to the applicant, has the applicant established those
requirements on a
prima facie
basis, i.e. on a balance of
probabilities with reference to all the affidavits (without employing
Plascon-Evans
).
[9]
27.2. If there are factual disputes concerning the
respondent’s liability to the applicant and the applicant
shows
prima facie
its claim on a balance of probabilities with
reference to all the affidavits,
[10]
then the onus is on the respondent to show that the debt is
bona
fide
disputed on reasonable grounds, i.e. the
Badenhorst
rule comes into play. If the respondent does demonstrate this, then
the application should (rather than necessarily must)
[11]
be dismissed.
[12]
This means that even if the applicant can demonstrate its claim
on a balance of probabilities, a provisional winding-up order
can be
refused if the respondent nevertheless demonstrates that the debt is
bona fide
disputed on reasonable grounds.
[13]
27.3.
Bona fides
and reasonableness are two
distinct requirements.
[14]
27.4. As to whether the indebtedness is
bona fide
disputed, the court must look to the respondent’s subjective
state of mind. Bald allegations lacking particularity are unlikely
to
persuade a court that the respondent is
bona fide
.
[15]
27.5. As to whether indebtedness is disputed on
reasonable grounds
, the court looks to whether there are
facts, if proven at trial, that would constitute a defence. This
requires more than bald
allegations lacking in particularity.
[16]
28. Generally, a referral to oral
evidence has more of a role to play at the final stage than
at the
provisional stage.
[17]
29. If at the provisional stage a
prima facie
case is not made out on a balance of probabilities
with reference to all the affidavits, the application should be
dismissed, unless
the applicant seeks a referral to oral evidence. In
that event, the more the balance on the probabilities is tipped in
favour of
the applicant, the more likely the referral and vice versa.
It would only be in rare cases that a court would order oral evidence
where the preponderance of probabilities on the affidavits favours
the respondent.
18
30. At the provisional stage, the
court is not likely to refer the matter to oral evidence
where the
probabilities favour the applicant, and a
prima facie
case
is made out (as it is only necessary at the provisional stage to make
out a
prima facie
case with reference to all the affidavits).
The court may grant a provisional order as the matter can be referred
to oral evidence
at the final stage if so requested by the
respondent.
[18]
31. At the final stage, although
the cases do refer to the court being required to be satisfied
on a
balance of probabilities before granting a final order, the
Plascon-Evans
approach remains applicable.
[19]
It is not about assessing whether on all the affidavits the applicant
has established its claim (as was the assessment at the provisional
stage), but on the application of the
Plascon-Evans
approach
where the respondent’s
version is effectively preferred.
32. It nonetheless remains open
for the parties to seek a referral to oral evidence at the
final
stage,
[20]
and that is where a referral would be more commonplace than at the
provisional stage. If at the final stage the probabilities favour
the
applicant, a referral to oral evidence is particularly apposite
where
viva voce
evidence has reasonable prospects of
disturbing the probabilities already in favour of the
applicant. If at the final stage
the probabilities favour the
respondent, the court should dismiss the application rather than
refer to oral evidence, particularly
as liquidation proceedings are
not the forum to determine
bona fide
disputed claims and
where the
Plascon-Evans
approach effectively prefers the
respondent’s version.
33. Applying these principles to
the present matter, the first step in considering whether
a
provisional order may be granted is to consider whether the applicant
has shown
prima facie
its claim on a balance of probabilities
with reference to all the affidavits.
34. In my view, the applicant has
done so. As stated earlier, the respondent asserts that the
applicant
did not perform in terms of the mandate and that in any event the
mandate was suspended.
35. The applicant relies upon two
invoiced retainer amounts, which are expressly provided for
in the
written agreement to be invoiced at the end of each of September and
October 2017. By their nature as retainers, such performance
as can
be expected from the applicant may be rendered after the retainers
have been paid. This is reinforced by the express terms
of the
agreement. The respondent cannot expect performance from the
applicant before being liable to pay these invoiced retainers.
36. This is not to say that the
applicant can simply invoice for the retainers and then not
perform.
The applicant must perform to earn, and retain, the retainers. But
that performance does not equate to successfully bringing
about a
successful debt or equity capital raise for the respondent. The
respondent is entitled to expect the applicant to perform
in return
for the retainer by rendering the corporate finance advisory
services. But if the rendering of those services does not
result in a
successful capital raising, this does not mean that the retainer was
not earned. Although the agreement provides for
additional fees to be
paid to the applicant in the event of a successful capital raise, the
retainer fees are not dependent on
this.
37. In the circumstances, the
respondent’s grounds of opposition based upon non-performance
are not sufficiently cogent to enable me to find that the applicant
has not
prima facie
established its claim on a balance of
probabilities with reference to all the affidavits. This is
particularly so having regard
to the respondent’s answering
affidavit in which it raises such non-performance (under the heading
“
Bravura cannot deliver
”) and the applicant’s
response in its replying affidavit providing a detailed exposition of
that which it did in performing
under the agreement, supported by
various contemporaneous documents.
38. The applicant having so
prima
facie
established its claim on a balance of probabilities with
reference to all the affidavits, it is for the respondent to show
that
the debt is nonetheless
bona fide
disputed on reasonable
grounds.
[21]
39. That the applicant has
established its claim
prima facie
on a balance of
probabilities will often inform, perhaps definitively in many cases,
the enquiry as to whether the debt is nevertheless
bona fide
disputed by the respondent on reasonable grounds. For
example, the greater force with which the applicant can demonstrate
its claim on a balance of probabilities, the more difficult it would
be for the respondent to demonstrate that it
bona fide
disputes
the debt on reasonable grounds. Nonetheless, as appears from
Payslip
Holdings
,
[22]
it is possible that the respondent can nevertheless show that it bona
fide disputes the debt on reasonable grounds even where the
applicant’s claim is made out on a balance of probabilities.
40. As pointed out in
Gap
Merchant
,
bona fides
and reasonableness are two distinct
requirements.
41. The respondent contends that
the applicant has not performed in relation to the retainer
amounts.
The respondent asserts that a key deliverable under the mandate is a
binding term sheet from a
bona fide
investor. In looking at
the reasonableness of these grounds, which is an objective enquiry to
ascertain whether certain facts,
if proven at trial, would constitute
a defence, in my view the applicant has sufficiently demonstrated in
its replying affidavit,
with reference to contemporaneous documents,
how it performed in the discharge of its mandate. The respondent
expects the performance
to translate into a successful raising of
capital, or a binding term sheet, but, as discussed above, this is
not what is required
of the applicant in terms of the mandate, at
least as a
quid pro quo
for the retainer amounts. Even should
the respondent demonstrate at trial that there is no binding term
sheet, which is in any
event common cause on the papers,
that will not constitute a defence to the respondent’s
non-payment of the invoiced
retainer amounts.
42. The respondent’s
reliance upon a suspension of the mandate at some point in 2017,
and
so presumably a suspension of its obligations to pay the invoiced
retainer amounts, also, in my view, does not constitute reasonable
grounds for disputing the indebtedness. I assume in favour of the
respondent that there is sufficient evidence that the parties
may
have agreed on some or other “
suspension”
of the
mandate. For example, the gap in correspondence from October 2017 to
March 2018 between the parties supports the respondent’s
assertion that there was such a suspension. Further, the respondent
in its email of 9 April 2018 to the applicant, in response
to the
applicant making enquiries as to it continuing to render services
under the agreement, refers to a suspension of the ‘original
mandate’. The applicant’s response shortly thereafter
that day per email does not take issue with the respondent’s
recordal of a suspension of the mandate.
43. The respondent's difficulty
does not lie so much in there being no evidence to support
a possible
suspension of the mandate, but rather the express terms of the
agreement.
44. Clause 23.3 of the written
“
Terms of Business
” that form part of the written
agreement expressly provides:
“
23.3 No agreement varying, amending
or cancelling the Mandate or these Terms, and no suspension of any
right
under the Mandate or these Terms is effective unless
reduced to writing and signed by or on behalf of the Parties by a
person
duly authorised thereto.
”
45. A suspension by the applicant
of its right to payment of the retainer amounts, assuming
that there
was such a suspension, falls foul of clause 23.3.
46. Clause 23.2 of the Terms of
Business provides:
“
23.2 No extension of time or other
indulgence which either party may allow the other constitutes a
waiver
by the first mentioned Party of its rights to require the
other to comply with its obligations strictly in accordance with the
Mandate and these Terms
”.
47. The suspension contended for
by the respondent would be such an extension of time or indulgence,
at least concerning payment of the retainer amounts, and too would
fall foul of clause 23.2.
48. I enquired of the
respondent’s counsel how, in the light of these exclusionary
clauses,
reliance can be placed by the respondent upon a suspension
of the mandate, and the payment obligations. The submission was that
in the exercise of my discretion in liquidation proceedings I could
go beyond the written terms of the agreement and look to the
parties'
conduct. In my view, the precise purpose of exclusionary clauses is
to preclude a court from looking at such conduct of
the parties, at
least in the absence of an adequate jurisprudential basis to do so,
such as by an assertion of fraud. I am unaware
of any jurisprudential
basis arising from
such discretion as the court may have in deciding whether to grant a
winding-up order that would justify the exclusionary clauses
from
being disregarded.
49. In the circumstances, I am
unable to find that the respondent has disputed the indebtedness
on
reasonable grounds.
50. But, more telling, in my
view, and even should I have erred in finding that the debt is
not
disputed on reasonable grounds, the respondent has not demonstrated
that its dispute is
bona fide
. As stated in
Gap Merchant
,
bona fides
is a separate enquiry and is to be assessed with
reference to the respondent’s subjective state of mind, i.e. is
the respondent
bona fide
in raising the dispute that it now
does?
51. On 25 May 2018, the applicant
terminated the mandate on thirty days’ notice and reminded
the
respondent that the first and second retainers remained payable. The
response that was forthcoming from the respondent in a
brief email on
20 June 2018 is to record a belief that “
Bravura still has a
role to play on this matter
” which is inconsistent with an
assertion that the applicant’s performance was so lacking it
could not be said to have
earned its retainer. That email further
continues as
follows:
“
After our meeting at your offices, where we discussed the
revised mandate, it remained clear to us that your expertise is more
in
pure corporate finance advisory, rather than infrastructure
projects and equity financing. This, of course, initially became
evidence
in the early phase of our engagement where you could not
grasp the proposed concept, and therefore the appropriate approach
and
audience. We then suspended the mandate, and engaged PWC to
assist with putting together a project document which would form the
basis of a new capital raising plan.
”
52. Whilst this does to some
extent question the applicant's expertise and refers to a suspension
of the mandate, the respondent does not squarely dispute its
indebtedness to the applicant on the retainer amounts that had
already
been invoiced and which the applicant was pressing be paid.
53. Perhaps if the applicant's
correspondence ended there, a finding of
bona fides
could have
been made in favour of the respondent. But the correspondence did not
end there.
54. On 9 July 2018, the applicant
addressed a formal demand to the respondent demanding payment.
No
response was received.
55. On 3 December 2018, the
applicant addressed a further demand seeking payment. Again, no
response was received.
56. The applicant approached its
present attorneys, and on 4 March 2019 the applicant’s
attorneys addressed a formal letter of demand to the respondent.
Again, there was no response forthcoming.
57. On 20 September 2019, the
formal statutory demand was made in terms of section 345(1)(a)
of the
Companies Act, 1973 and it was served upon the respondent at its
registered address. There is no denial of receipt of this
letter.
Notwithstanding the obvious seriousness of the statutory demand,
threatening liquidation proceedings, still no response
was
forthcoming from the respondent.
58. On 30 October 2019, the
present application was served upon the respondent
[23]
but still no response was forthcoming.
59. It was only after the
enrolment of this liquidation application for the unopposed roll
for
hearing on 11 December 2019 that the respondent, to use the
phraseology of the applicant’s counsel, came out the woodwork
on 9 December 2019 in belatedly delivering an answering affidavit in
which the respondent disputes its indebtedness to the applicant.
Such
communications as had emanated from the respondent preceded formal
demand, and had then only in vague terms suggested a suspension
of
mandate and a lack of expertise on the part of the applicant. Had the
respondent been
bona fide,
it would have responded to the
several demands, raising its grounds of opposition.
60. To the extent that the
respondent did have some or other reasonable grounds for disputing
the indebtedness, it cannot be said to now be raising that dispute in
good faith in circumstances where over a protracted period
it had the
opportunity to do so, but failed to do so.
61. In the circumstances, the
respondent has failed to demonstrate that it
bona fide
disputes
the indebtedness on reasonable grounds.
62. Neither party sought any
referral to oral evidence and therefore I need not consider whether
there should be such a referral. In any event, it remains open for
either party to seek a referral to oral evidence when the court
is
called upon to decide whether to grant a final order.
63. Such other defences as have
been raised by the respondent can be shortly disposed of. Although
the agreement provides for a dispute resolution mechanism by way of
inter alia
arbitration, the respondent’s counsel
conceded, justifiably, that the mere presence of an arbitration
clause in and of itself
does not constitute a bar to granting a
winding-up order. This is especially so where the respondent cannot
demonstrate that there
is a
bona fide
dispute that would be
worthy of consideration by way of the dispute resolution mechanism.
64. Respondent’s counsel’s
belated reliance in his heads of argument on one of
the two invoiced
retainer amounts having prescribed cannot be considered as it falls
foul of
section 17(2)
of the
Prescription Act, 1969
which requires a
party to litigation who invokes prescription to do so in the relevant
document filed of record in the proceedings.
Nothing is said about
prescription in the answering affidavit and it cannot be raised for
the first time in heads of argument.
65. The respondent’s
complaint that the applicant seeks to make out a case for an
inability
to pay debts in the replying affidavit overlooks that the
case made out by the applicant in its founding affidavit is that the
respondent is deemed to be unable to pay its debts in terms of
section 345(1)(a) of the Companies Act, 1973. Once the
respondent
is unable to demonstrate that it
bona fide
disputes
the indebtedness on reasonable grounds and so did not have a
justifiable basis for failing to respond to that letter, the
deeming
provision is sufficient to demonstrate that the respondent is unable
to pay its debts.
66. In the circumstances, the
applicant has demonstrated that it is entitled to a provisional
order
of winding-up.
67. Section 346A of the Companies
Act, 1973 regulates the service of the provisional order,
including
on employees and trade unions, if any. Undoubtedly, the applicant’s
attorneys will take heed of what is stated
in this judgment to ensure
effective and compliant service of the provisional order, including
upon employees and any registered
trade unions.
68. In the circumstances, the
following order is made:
68.1. The respondent is placed under
provisional winding-up in the hands of the Master of the High
Court,
Johannesburg.
68.2. All persons who have a legitimate
interest are called upon to put forward on a date to be obtained
from
the Registrar at 10h00 or so soon thereafter as counsel may be heard
the reasons why this court should not order the final
winding-up of
the respondent and that the costs of this application be costs in the
winding-up of the respondent.
68.3. A copy of this order is to be
served on the various persons as provided for in section 346A
of the
Companies Act, 1973 and is to be published once in the Government
Gazette and once in a newspaper circulating in Gauteng.
68.4. A copy of this order is to be
furnished to each known creditor and shareholder, either per
email or
per telefax or per registered post.
Gilbert
AJ
Date of hearing:
26 January 2021
Date of
judgment:
1 February 2021
Counsel for the
Applicant:
Ms P Bosman
Instructed by:
Ulrich Roux & Associates
Counsel for the
Respondent:
Mr K Mokoena
Instructed by:
Nsele Trevor
Attorneys
[1]
As read with item 5 of schedule 9 of the
Companies Act, 2008
.
[2]
Paarwater v South Sahara Investments (Pty) Limited
[2005] 4
All SA 185
(SCA) para [3] and [4].
[3]
Final relief can only be granted on motion if the facts as stated by
the first respondent, together with the admitted facts in
the
applicant’s affidavits, justify the granting of the relief:
Plascon-Evans Paints Limited v Van Riebeeck Paints (Pty) Limited
[1984] ZASCA 51
;
1984 (3) SA 623
(A) at 634 E-G, as reaffirmed in
National
Director of Public Prosecutions v Zuma
[2009] ZASCA 1
;
2009 (2) SA 277
(SCA) at
290 D-G. Effectively, any factual disputes ought to be resolved by
accepting the respondents’ version, save where
such version is
“
so far-fetched or clearly untenable that the court is
justified in rejecting (it) merely on the papers”: Botha v Law
Society,
Northern Provinces
2009 (1) SA 277
(SCA) at para 4,
with reference to
Plascon-Evans Paints
.
[4]
Once the respondent’s version is rejected as far-fetched and
fanciful, there would only be one version before the court,
namely
that of the applicant and therefore the
Plascon-Evans
approach
does not come into play as there are no longer conflicting factual
versions.
[5]
For the same analysis, in the context of sequestration proceedings
and sections 9(4A) and 11 of the Insolvency Act, 1946, see
C C v
D C
[2020] ZAGPJHC 225 (12 August 2020), para 45 to 61.
[6]
1956 (2) SA 346
(T) at 347H – 348C, and from which comes the
often referred to ‘Badenhorst rule’.
[7]
1988 (1) SA 943 (A).
[8]
2016 (1) SA 261 (WCC).
[9]
Para 20.See also para 7 and 8 of
Orestisolve p/l t/a Essa
Investments v NDFT Investment Holdings p/l
2015 (4) SA 449
(WCC)
;
para 9 of
Afgri Operations Ltd v Hamba Fleet (Pty)
Ltd
[2017] ZASCA 24
(24 March 2017)
[10]
The Full Bench of this Division in
Total
Auctioneering Services and Sales CC t/a Consolidated Auctioneers v
Norfolk
Freightways CC
[2012] ZAGPJHC 211
(30 October 2012), para 13 describes this as an exception to the
general reluctance of the court in motion
proceedings to decide
disputes of fact purely on the basis of the probabilities, citing
Kalil v Decotex
at 979G-H. See also
Reynolds NO v
Mecklenberg (Pty) Ltd
1996 (1) SA
75
(W) at 80G to 81A.
[11]
See the discussion in
Kalil v Decotex
at 980G-I as to whether
the Badenhorst rule (namely that where the respondent disputes
liability for a debt “
bona fide en op redelike ground”…
“dan
moet
die aansoek afgewys word
”)
is inflexible, or is applicable only where it appears that the
applicant is abusing the winding-up procedure as a means
of putting
pressure on a company to pay a debt that is
bona fide
disputed. This discussion features in
Hannover Group Reinsurance
(Pty) Ltd and another v Gungudoo and another
[2011] 1 All SA 549
(GSJ) para 11 to 16, where the court expresses, in effect, doubt
whether the Badenhorst rule is immutable, as contrasted to the
court, at the provisional stage, doing “
its best to decide
the probabilities by taking into account the full conspectus of
allegations and denials as they appear in the
affidavits, read as a
while, placed before it.”
[12]
Para 20, citing
Hulse-Reutter and another v HEG Consulting
Enterprises
1998 (2) SA 208
(C) at 218D – 219C.
See also
Orestisolve
paras 7 and
8;
Afgri Operations
paras 6, 14, 17.
[13]
Payslip Investment Holdings CC v Y2K Tec Ltd
2001 (4) SA 781
(C) at 783I.
[14]
Para 23,
Standard Bank of SA Ltd v El-Naddaf and another
1999
(4) SA 779
(W), at 748G-895B, which in turn cites
Badenhorst
.
[15]
Para 24 to 26, citing
Badenhorst
and
El-Naddaf.
[16]
Para 26; citing
Hulse-Reutter
.
[17]
In
Provincial Building Society of South Africa v Du Bois
1966
(3) SA 76
(W), the court at 79H to 80E expressed a somewhat firm
view that save in exceptional circumstances, a referral to oral
evidence
should not be resorted to at the provisional stage, and
that a provisional order should be granted. Subsequent support for
this
approach by our Full Bench is found in
Total Auctioneering
above, para 14.
18
Kalil
ay 979E-I.
[18]
Kalil
at 979B-E.
[19]
See
Paarwater
above, para 3 and 4.
[20]
Uniform Rule 6(5)(g) expressly allows for such a referral. See also
Kalil
at 979B-E, citing
Wackrill v Sandton International
Removals (Pty) Ltd
1984 (1) SA 282
(W) at 285H – 86A.
[21]
I assume in favour of the respondent that the “Badenhorst
rule’ applies notwithstanding the debate referred to above
as
to whether it is an immutable rule, or a rule only to be applied
where there is an abuse of winding up proceedings.
[22]
Above, at 783G, as cited in
Gap Merchant
at 267I.
[23]
This was an amended version of the application that contained the
statutory demand in terms of section 345(1)(a) that had since
been
served upon the respondent at it registered office. The application
in its initial form relied upon a statutory demand that
had been
served at an incorrect address as there had been a typographical
error.