About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: South Gauteng High Court, Johannesburg
SAFLII
>>
Databases
>>
South Africa: South Gauteng High Court, Johannesburg
>>
2021
>>
[2021] ZAGPJHC 391
|
|
Eagles Landing Homeowners Association v AHUJA Properties CC (29808/2017) [2021] ZAGPJHC 391 (31 May 2021)
SAFLII
Note:
Certain
personal/private details of parties or witnesses have been
redacted from this document in compliance with the law
and
SAFLII
Policy
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
LOCAL DIVISION, JOHANNESBURG)
Case
No.: 29808/2017
REPORTABLE:
NO
OF
INTEREST TO OTHER JUDGES: NO
REVISED.
DATE:
31 MAY 2021
In
the matter between:
EAGLES
LANDING
HOMEOWNERS
ASSOCIATION
Applicant
(Registration
number: [....])
and
AHUJA
PROPERTIES
CC
Respondent
(Registration
number: [....])
JUDGMENT
Judgment
(handed down electronically by circulation to the parties' legal
representatives by email, by being uploaded to the Case
Lines system
of the Gauteng Local Division, Johannesburg. The date and time for
hand-down is deemed to be 10h00 on 31 May 2021
Matter
heard on
: Tuesday 04 May 2021
CONSTANTINIDES
AJ:
1.
The matter was by consent between the parties, heard via electronic
videoconference
on Microsoft Teams.
2.
This is the return date of an opposed application in terms of which
the Applicant
placed the Respondent into provisional liquidation.
3.
The following order was made by the Honourable Nel AJ:
"1.
The Applicant is granted condonation for the late filing of the
Replying Affidavit;
2.
The Respondent is to pay the costs of the condonation
application;
3.
The Respondent is placed under provisional liquidation;
4.
All persons who have
a
legitimate interest, including
the Respondent are called upon to put forward reasons and show
cause as to why this Court should not order the final
liquidation of the Respondent on 30 March 2021, at 10h00, or
so soon thereafter
as Counsel may be heard;
5.
A copy
of this
Order
is
to
be
served
on
the
Respondent,
by the Sheriff of
the High Court, at the Respondent's registered office;
6.
A copy of this Order is to be forthwith published in the
Government Gazette;
7.
A copy of this Order is to forthwith be forwarded to each known
creditor, by prepaid registered post, electronically receipted
telefax
transmission or electronic mail reflecting a read receipt;
8.
A copy of this Order must be served on:
8.1
every Trade Union operating at the Respondent's
premises;
8.2
the employees of the Respondent by affixing a copy of
the application and the Order to any notice board to which the
employees have
access inside the Respondent's premises, or if there
is no access, by affixing copies to the front gate, failing which,
the front
door of the premises from which the Respondent conducts or
conducted business
;
and
8.3
the South African
Revenue
Services.
9.
The costs of this application are to be costs of the final
liquidation application".
BACKGROUND
4.
The Applicant is a Homeowners Association, incorporated as a
non-profit organization.
5.
The Applicant's functions were detailed in my predecessor's Judgment
and should
be read as if incorporated herein.
6.
The Respondent is a Close Corporation and registered owner of six
immovable properties
which are situated within the Eagles Landing
Residential Estate.
7.
The Applicant sought to place the Respondent into provisional
liquidation on
the basis that the Respondent was deemed to be unable
to pay or secure a debt demanded in terms of
Section 69
of the
Close
Corporations Act, No. 69 of 1984
, as amended. ("the CC Act")
8.
The court placed the Respondent under provisional liquidation and
held that despite
the opposition that the Respondent was not a member
of the Applicant, found that the Respondent is indeed a member of the
Applicant
and that the Applicant complied with the provisions of Act
69(1)(a) of the CC Act.
9.
The Respondent has admitted that the normal levies due to the
Applicant are outstanding
in email correspondence. However, the
Respondent places into dispute the penalty fees. Despite the
Respondent providing alleged
guarantees to the Applicant, same were
not accepted as they did not constitute full payment.
10.
Furthermore, it was found that the Applicant did not have to follow
alternative
dispute resolution procedures.
11.
The
Applicant's Counsel in argument and in its Heads of Argument referred
to the case
of
Orestisolve
(Pty) Ltd t/a Essa Investments v. NDFT Investment Holding (Pty)
Limited and Another
[1]
which
states the following:
'[18]
Even if the applicant establishes its claim on a prima facie basis, a
court will ordinarily
refuse the application if the claim is bona
fide disputed on reasonable grounds. The rule that winding-up
proceedings should not
be resorted to as
a
means
of
enforcing payment of
a
debt the existence of which is bona
fide disputed on reasonable grounds is part of the broader principle
that the court's processes
should not be abused. In the context of
liquidation proceedings, the rule is generally known as the
Badenhorst rule from the leading
eponymous
case
on the
subject, Badenhorst v Northern Construction Enterprises (Pty) Ltd
1956 (2) SA 346
(T) at
347H-348C, and is generally now treated as an independent rule not
dependent on proof of actual abuse of process (Blackman
et al
Commentary on the Companies Act Vol 3 at 14-82
-
14-83). A
distinction must thus be drawn between factual disputes relating to
the respondent's liability to the applicant and disputes
relating to
the other requirements for liquidation. At the provisional stage, the
other requirements must be satisfied on a balance
of probabilities
with reference to the affidavits. In relation to the applicant's
claim, however, the court must consider not only
where the balance of
probabilities lies on the papers but also whether the claim is bona
fide disputed on reasonable grounds; a
court may reach this
conclusion even though on a balance of probabilities
(based
on the papers) the applicant's claim has been made out (Payslip
Investment Holdings
CC
v Y2K Tee Ltd
2001 (4) SA
781
(C) at 783G-I). However, where the
applicant at the provisional stage shows that the debt prima facie
exists, the onus is on the
company to show that it is bona fide
disputed on reasonable grounds (Hulse Reutter
&
Another
v HEG Consulting Enterprises (Ply) Ltd
1998 (2) SA 208
(C) at 218D-219C.)
[9]
The test for a final order of liquidation is different. The applicant
must establish its
case
on
a
balance
of
probabilities.
Where
the
facts
are
disputed,
the
court
is
not permitted to determine the balance of probabilities on the
affidavits but must instead apply the Plascon-Evans rule (Paarwater
v
South Sahara Investments (Pty) Ltd
[2005 1
4
All S A
185
(SCA) para
4;
Golden Mile Financial Solution
CC
v Amagen
Development (Pty) Ltd
[20101 Z AWCHC
339
paras 8-10;
Badge
&
Others NNO
v
Midnight
Storm
Investments
265
Pty
Ltd
&
Another
2012
(2) SA
28
(GSJ) para 14).
[10]
The difference
in approach to factual disputes
at the provisional and final stages appears to me to have
implications for the Badenhorst rule. If there are genuine disputes
of
fact regarding the existence of the applicant's claim at the final
stage, the
applicant will fail on ordinary principles
unless it can persuade the court to refer the matter
to
oral
evidence.
The
court
cannot,
at
the
final
stage,
cast
an
onus
on
the respondent of proving that the debt is
bona fide disputed on reasonable grounds merely because the balance
of probabilities
on the affidavits favours the applicant. At
the final stage, therefore, the Badenhorst rule is likely to
find its main field of operation where the applicant, faced with
a
genuine dispute of fact, seeks a referral to oral evidence. The
court might refuse the referral on the basis that the debt is bona
fide disputed on reasonable grounds and should thus not be determined
in liquidation proceedings. (In the present case neither
side
requested
a
referral to oral evidence.)
[11]
If, on the other hand, and with due regard to the application of the
Plascon Evans rule, the court is satisfied at the
final stage
that there is no genuine factual dispute regarding the existence of
the applicant's claim, there seems to be limited
scope for finding
that the debt is nevertheless bona fide disputed on reasonable
grounds. It is thus unsurprising to find that
the reported judgments
where the Badenhorst rule has been relevant to the outcome have been
cases of applications for provisional
liquidation rather than final
liquidation.
[12]
Even where the facts are undisputed, there may be
a
genuine
and reasonable argument whether in law those facts give rise to a
claim. I have not found any case in
which the
Badenhorst rule has been applied, either at the provisional or final
stage, to purely
legal
disputes.
If the Badenhorst rule's
foundation
is
abuse
of
process,
it
might
be
said
that
it
is
as
much
an abuse
to
resort
to
liquidation
where
there
is
a
genuine legal dispute as where there is
a
genuine
factual dispute. But if the Badenhorst rule extends to purely legal
disputes, I venture to suggest that the rule, which
is not
inflexible, would not generally be an obstacle to liquidation if the
court felt no real difficulty in deciding the legal
point. I have not
conducted an exhaustive
analysis
of
the
English authorities
but
the
position
stated
by
the
Court
of Appeal in HMRC v
Rochdale Drinks Distributors Ltd
[2011] EWCA Civ 1116
paras 79-80
indicates that the equivalent rule in England finds application where
the dispute is shown to be one 'whose resolution
will require the
sort of investigation that
is normally within the
province of
a
conventional trial'. A purely legal question
would not have that character.
[13]
I have used the expression 'bona fide disputed on reasonable grounds'
in describing the Badenhorst rule. The South African
cases, including
Badenhorst itself, are formulated in such a way as to indicate two
requirements, namely bona fides and reasonable
grounds. The view that
the rule comprises two distinct components was expressly articulated
in Hi.i/se-Reutter v HEG
The Applicant must
establish its case on a balance of probabilities. Where the facts are
disputed the Court is not permitted to
determine
the
balance of probabilities on the Affidavits but must instead apply the
Plascon-Evans Rule (Paarwater v. South Sahara Investments
(Pty)
Limited
2005
(4) ALL SA 185
(SCA), paragraph
4
..."
12.
If there are genuine disputes of fact regarding the existence
of the
Applicant's claim at the final stage, the Applicant will fail on
ordinary principles .
13.
It
was held that once the Applicant for provisional sequestration has
established the requisites for such an order on a
prima
facie
basis,
the Court
has a
discretion whether to grant the [final] Order. There is little
authority on
how this
discretion should be exercised which perhaps indicates that it is
unusual for a Court to exercise it in favour of the debtor.
[2]
14.
In an
application for final sequestration the Court held in
First
Rand Bank v.
Evans
[3]
:
"[28]
Once
the
applicant
for
a
provisional
order
of
sequestration
has
established
on
a
prima facie basis
the
requisites for
such
an order the
court has a discretion whether to grant the order. There is little
authority on how this discretion should be exercised
, which
perhaps
indicates
that it is
unusual
for
a
court to exercise it in favour of
the debtor. Broadly speaking it seems to me that the discretion falls
within that class of cases
qenerally described as involving a power
combined with a duty. In other words where the conditions prescribed
for the grant of
a provisional order of sequestration are satisfied
then, in the absence of some special circumstances, the court should
ordinarily
grant the order. It is for the respondent to establish the
special or unusual circumstances that warrant the exercise of
the court's discretion in his or her favour.
CHRONOLOGY
15.
On the 30
th
March 2021 the matter was postponed to the
Opposed Roll of the 3
rd
May 2021. Subsequently, the Rule
Nisi was extended to the 4
th
May 2021 to enable the
parties to argue the matter and the opposed application on the 4
th
May 2021.
16.
The Respondent purchased six erven situated in the Applicant. The
Applicant
sent a Notice in terms of
Section 69
of the
Close
Corporations Act via
registered post, demanding payment of an amount
of R778 217.65. The Respondent admitted to receipt of the letter of
demand on 22
July 2016 but alleged that one of the pages was missing.
17.
On the 10
th
October 2016 the Applicant stated that its
debt was now R990 378.27 and informed the Respondent of same and that
it intended to
proceed with the liquidation proceedings.
17.1.
It is common cause that the Respondent was placed under provisional
liquidation;
17.2.
An amount of R4 590 781.88 had been paid into the Respondent's
Attorney's Trust Account;
17.3.
An unconditional tender of payment was made by the Respondent in the
sum of R1 064 557.79 on 28 April
2021. The aforesaid offer was
subsequently replaced with an "2....unconditional offer of
immediate payment of the amount of
R3 074 544.71" in terms of a
Rule 34
Notice dated 12 May 2021. The aforesaid offer details the
levies, stand/grass cutting costs, community schemes, ombud services
levy, building penalty and interest in respect of each stand for the
period of 1 August 2016 to 1 May 2021.
18.
The Respondent has previously stated in its letter that
it disputes
the penalties that have been imposed by the Applicant and not the
levies. The initial argument was that the Respondent
was not a member
of the Applicant and therefore disputed any form of liability for the
levies payable to the Applicant and a further
argument was that the
Applicant has not proven inability to pay on the part of the
Respondent.
19.
The Respondent in its Opposing Affidavit stated that:
19.1.
"it is able to pay its debts and is therefore not
commercially insolvent;
19.2.
that a portion of the Applicant's alleged claim had become
prescribed in accordance with the provisions of the
Prescription
Act, 68 of 1969
;
and
19.3.
after litis contestatio during July 2019, the Applicant had issued
eighteen separate Summonses out of the Johannesburg Magistrate's
Court claiming recovery of its alleged claims on which it relied for
purposes of the provisional liquidation order;
19.4.
in accordance with the signed and audited financial statements of
the Respondent as at the 2fih February 2021, it was factually and
commercially
solvent;
19.5.
consequently
pursuant to
Section 81(1)(c)(ii)
of the
Companies Act 2008
, dealing
with the winding-up of solvent companies, the Applicant had to show
on a balance of probabilities that it would be just
and equitable for
the Respondent to be wound-up, an aspect not addressed at all in the
Applicant's founding papers;”
[4]
20.
It
was further argued in the Respondent's Heads of Argument that the
Respondent had undertaken a detailed analysis of the claims
described
in the Summonses and the Annexures, and how prescription affected the
Applicant 's alleged claims, and furthermore submitted
that the
claims that remained in dispute were identified and that an
unconditional tender for payment of any and all amounts owing
to the
Applicant with interest was made and this could have resulted in the
Applicant being deprived of its locus standi to proceed
with seeking
the confirmation of the provisional order.
[5]
21.
It was
argued by the Respondent's Counsel that it is impossible from the
Applicant's founding papers to ascertain the exact quantum
of the
claims against
the
Respondent.
The
Respondent
submitted
that
the
effect
of
prescription on any potential claims of the Applicant has rendered
any interest
calculation
by the
Applicant
as part of
its claims nugatory.
[6]
22.
The
Respondent has confirmed that in the
Section 69
demand dated the 14
th
June 2016 an amount of R778 217.65 was claimed in respect of the six
property units. However, the Respondent persists
with the
defence that the complete copy of the demand was not sent or
received.
[7]
23.
The Respondent had based its alleged
bona fide
dispute on the
fact that there is a dispute as to the so-called
"building
penalty"
or
" building penalty
increase"
and the imposition of penalty levies and the building penalty and
interest charged thereon.
24.
The
Respondent furthermore disputes the manner in which the interest
calculation was computed. The Respondent alleges that any amounts
claimed older than 1 August 2016 have allegedly become prescribed and
he itemizes the prescribed claims under Annexure
"
P3"
.
[8]
25.
The
Respondent then "unconditionally tendered immediate payment of
the amount R1 064 557,79 to the Applicant ...
".
[9]
26.
Due to the unconditional tender that has been made and the alleged
bona fide
dispute in relation to the Applicant's various claims,
the Respondent sought the discharge of the Provisional Order of
Liquidation
with costs. Despite the allegation that the vacant stand
cannot attract penalties, no further submissions to substantiate this
are made in this regard by the Respondent.
27.
The
Respondent accepted liability for payment of its levies but denied
that the amount of R542 142.89 is correct.
[10]
The guarantee that was allegedly issued under the cover letter of the
Respondent's Attorneys dated the 13
th
June 2016 stated that payment in terms of guarantees were made
entirely under protest and reservation of their client's rights
to
claim and obtain a refund of such payment to the extent that they
included penalty levies. The
aforesaid
guarantees were rejected by the Applicant as they were conditional.
There was an undertaking that once the properties
had been
transferred into the names of the parties that had purchased them,
the argument relating to the guarantees has become
moot as they did
not materialise.
28.
The crux of this matter is the following:
28.1.
In
the email dated the 10
th
October 2016, and more specifically in paragraph 4, the Respondent
admitted that at no time or instance did the Respondent refuse
to
make payment for their dues in respect
of the
levies as was allegedly
communicated
by its
Attorney.
[11]
28.2.
To
date the Respondent has not even paid its normal monthly levies
which is
highly relevant in this matter.
[12]
29.
The Applicant in the Replying Affidavit clarifies the
quantum that is
being claimed more particularly as follows:
"28.4 The
difference between the amount of R990 378.27 and R577 188.47 is
clearly relating to the increasing levies and penalties
occurring to
date."
[13]
30.
Despite having admitted that the Respondent is liable
to make payment
of the levies and contributions towards the levies, let alone the
penalties to date, no payment whatsoever has
been made to the
Applicant by the Respondent.
31.
The Respondent admitted to paragraph 13.24 of the Founding
Affidavit
which reads as follows:
"Each member who
is not in
possession
of
the
requisite
Occupational Certificate will be subject to pay 3 (three) times the
monthly levy until such Occupation Certificate is
handed to, and an
acknowledgementreceived in writing from the Applicant"
[14]
32.
Therefore, it does not assist the Respondent to deny
the penalty
levies incurred due to failure to provide an Occupational Certificate
to the Applicant.
33.
The Applicant submits that the levies due and payable
in terms of a
Memorandum of Incorporation of the Applicant on a monthly basis far
exceeds R200.00 as contemplated by the Respondent
and therefore the
Respondent is indebted to the Applicant for an amount in excess of
R200.00. The Applicant therefore relies on
Section 69 of the CC Act,
read with
Section 345
of the
Companies Act No. 71 of 2008
, as
amended, for the confirmation of the Provisional Winding-Up Order of
the Respondent.
34.
It is trite law that once a respondent took ownership
of the property
in the estate, it becomes a member of the Home Owners Association by
title.
35.
Despite the disputes raised relating to the levies by
the Respondent,
the Respondent has failed to make payment of the normal levies which
are not in dispute let alone the penalties
that have been levied.
36.
I am in agreement that the fact that the Notice in Terms
of
Section
69
of the
Close Corporations Act was
forwarded to the Respondent by
registered mail and was not returned to the sender, is sufficient
proof that same was received by
the Respondent and there has been
compliance in regard to the aforesaid Section of the CC Act by the
Applicant.
37.
The allegation that there was a missing page was not
immediately
addressed by the Attorney of the Respondent.
38.
The Respondent is indebted to the Applicant at the very
least for
unpaid levies, as it is the registered owner of Stands 23, 24, 48,
49, 50 and 71 in the Applicant's Estate. The Respondent
has failed to
prove that it is not indebted to the Applicant in amount of at least
R200.00.
39.
The Respondent's allegation that its assets exceeded
their
liabilities does not assist the Respondent as it has failed to
respond to or comply with the Section 69 Notice.
40.
According to the Applicant, neither the Constitution
nor the
Memorandum of Incorporation of the Applicant makes any provision for
the payment of levies via guarantees and levies are
due and payable
in advance and in cash.
41.
The tender that was made by the Respondent on the eve
of the hearing
of this Opposed Application was not accepted by the Applicant as it
was submitted that this tender does not settle
even one quarter of
the debt.
42.
The business of the Respondent is to buy property and
resell it or
rent it. The properties in issue are empty plots and the Respondent
has not sold same. A submission has been made
on the part of Counsel
for the Applicant that the Applicant has proven that a debt exists in
excess of R200.00 and that the Respondent
is commercially insolvent
and unable to pay the debt and even if the Respondent made payment of
the R1 million tender, there was
a balance owing to the Respondent.
43.
A Rule 30(A)(1) objection was filed prior to the hearing
of the
Opposed Application and the Applicant's Counsel has placed on record
that he has no objection to the Court accepting the
Further
Supplementary Affidavit of the Respondent and has proceeded to argue
on this Affidavit without filing further papers.
The 30(A)(1)
Notice has been withdrawn by the Applicant.
44.
The Respondent's Counsel weighed heavily on the allegation
that a
portion of the debt has allegedly become prescribed. It was argued
that despite the submission that the Respondent is not
insolvent as
according to the recent audited financial statements, there are R1.2
million assets over liabilities. However, the
Applicant's Counsel
placed on record that in fact the alleged R1.2 million assets of the
Respondent did not take into account the
R4 000 000.00 owed to the
Applicant.
45.
It was submitted by the Respondent's Counsel that the
Applicant
should accept the tender and that the balance of the tender which was
disputed, should be postponed to be argued at a
later stage.
46.
However, the Respondent's Counsel could not address the
Court as to
whether the payment of the amount tendered to the Applicant would not
amount to an undue preference of creditors in
the event of there
being other creditors to which the Respondent owes money. The
aforesaid was also not addressed in relation to
the most recent
unconditional tender which was made.
47.
During argument the Respondent has failed to explain
to the Court why
all the building penalties were excluded in the recalculation of the
levies due and owing to the Applicant. After
reconsideration as is
evident from the most recent tender made by the Respondent there is a
concession that most of the penalties
(which are allegedly not
prescribed) are indeed due and owing to the Applicant.
48.
The quantum that the Respondent admitted owing to the
Applicant at
the hearing was in fact in excess of the R1 million tender, however
the Respondent basis its defence on the allegation
that certain of
the Applicant's claims have "prescribed".
49.
The Respondent has not disclosed where the alleged funds
which have
been tendered come from. The copy of the account reflecting the funds
describes the funds as follows:
" Funds for Mr Abuja" .
In the most recent tender once again there is no indication where
these funds have been sourced from by the Respondent.
50.
In determining whether the Court should confirm the Rule
Nisi,
the
Court finds that it is not necessary to determine the Respondent's
argument on prescription or the exact amount due and owing
at this
stage as it is clear that the Respondent owes at least R200.00 to the
Applicant. The Respondent claims that the unconditional
tender should
be accepted by the Applicant and that the balance of the alleged
disputed matter of the Applicant's claim be postponed
sine die
and
that the Rule
Nisi
be extended for that purpose. Furthermore,
there should be a referral to oral evidence if a
bona fide and
prima facie
dispute is found to exist.
RESPONDENT'S
RULE 34 NOTICE
51.
In terms of a Rule 34 Notice dated 12 May 2021 the Respondent
made a
further unconditional offer ("the Rule 34 Notice") of
immediate payment of the amount of R3 074 544.71 to the
Applicant.
52.
The Applicant in the additional heads of argument raises
the
following issues in regard to the Rule 34 Notice :
52.1
That rule 34 applies to actions and not applications;
52.2
There is no indication in the notice that the Respondent has
authorised
his attorneys in writing to make this offer;
52.3
The latest offer falls short of R 1 500 000.00 of the total debt
claimed
which is allegedly now an amount of R4 590 781.88;
52.4
The offer calculates the debt from August 2016, whereas the Applicant
claims from March 2014;
52.5
The Respondent's calculations of the interest rate is based on the
prime
lending rate instead of 10.5% as determined by the Applicant's
directors;
52.6
This is a liquidation application and therefore the court is not
required
to determine the exact quantum of the debt, but only whether
the Respondent owes a debt in excess of R200.00;
52.7
It is
for the Applicant to prove the exact claim and quantum to the
liquidator if the Respondent if finally liquidated.
[15]
53.
The Respondent's counsel in the additional Heads of argument
states :
"22.
The salient importance of the fresh offer is that in accordance
with the Respondent's
detailed
and
motivated
calculations
as set
out therein this is the maximum amount which the Applicant is
entitled to claim from it in relation to claims which are not
disputed
on reasonable grounds
...
24.
....
On the probabilities therefore the
undisputed
portion of any indebtedness
has been
tendered
in
payment.." (emphasis added)
THE
LAW
54.
An
Affidavit of compliance with the Rule
Nisi
[16]
order was
deposed
to by the
Applicant's
Attorney, Mr Philip John Badenhorst
on the 26
th
March 2021.
55.
I am satisfied that the Honourable Nel AJ's Court Order has been
complied with.
56.
Relating to
the Applicant's locus standi the relationship between the Applicant
and the Respondent has been determined by Nel AJ
and I request that
same be read as if incorporated
herein.
[17]
Nel AJ states:
“
[49] The
Applicant did not attach a copy of the Articles of Association to its
Replying Affidavit, but alleged that an owner
becomes
a member of the Applicant upon registration ('by virtue of title'),
as a matter of law."
[18]
57.
The Court finds that the Respondent is a member of the Applicant as
confirmed
in Nel AJ's findings and was bound by the Applicant's
Constitution and Rules and therefore this establishes the
locus
standi
of the Applicant.
58.
In relation to the indebtedness of the levies and/or penalties, the
disputes
raised by the Respondent cannot be seen to be
bona fide,
as there has been an acknowledgement that, in the very least, the
levies and penalties are due and owing to the Respondent albeit
that
the Respondent actually raises prescription as an alleged defence.
59.
The subsequent Rule 34 offer also confirms that there are levies and
penalties
raised in the accounts of the Respondent. This notice is in
effect an acknowledgement of the indebtedness by the Respondent to
the Applicant.
60.
The Applicant has aptly argued that the Respondent has not disclosed
where the
funds were sourced from to make the tender for payment to
the Applicant.
61.
Corbett JA
in
Kalil
v Decotex (Pty) Ltd
[19]
at
980B - D stated that:
it has
been
held,
following
certain
English
authority, that an application for liquidation should not be
resorted to in order to enforce
a
claim which is bona fide
disputed by the company. Consequently, where the
[company
in question] shows on
a
balance of probability that its
indebtedness to the [creditor] is disputed on bona fide and
reasonable
grounds, the Court will refuse
a
winding-up order. The onus on the [company from which payment is
claimed] is not to show that it is not indebted to the [creditor]:
it
is merely to show that the indebtedness is disputed on bona fide and
reasonable grounds.'
The low threshold of
proof to counter the winding-up application
This
dictum was quoted with approval by the Supreme Court of Appeal in
Desert Star Trading 145 (Ply) Ltd v No 11 Flamboyant Edleen
CC
2011 (2) SA 266
(SCA)
62.
The Applicant has relied on the deeming provisions of the Section
69(1)(a) of
the CC Act as the basis for the alleged Act of Insolvency
by the Respondent which reads as follows:
Circumstances
under which corporation deemed unable to pay debts
69. (1) For the
purposes of section 68 (c)
a
corporation shall be deemed to be
unable to pay its debts, if- (a)
a
creditor, by cession or
otherwise, to whom the corporation is indebted in
a
sum of not
less than two hundred rand then due has served on the corporation, by
delivering it at its registered office,
a
demand requiring the
corporation to pay the sum so due, and the corporation has for 21
days thereafter neglected to pay the sum
or to secure or compound
for it to the reasonable satisfaction of the creditor;
63.
In terms of Section 25(2) of the CC Act, any document which has been
served
or sent by registered post to the registered office of the
Close Corporation shall be deemed to have been served.
64.
Nel AJ was satisfied that there was
prima facie
compliance
with Section 69(1)(a) of the CC Act in respect of in terms of the
Applicant's Letter of Demand in accordance with Section
69(1)(a) the
CC Act and there is no reason for me to differ from that finding.
65.
The Respondent's indebtedness was addressed by Nel AJ. To date no
payments have
been made even in respect of the admitted levies that
are due and payable to the Applicant by the Respondent despite failed
attempts
to make various conditional tenders of guarantees and an
unconditional tender of R1 064 557.79 and the most recent tender of
R3
074 544.71 in terms of the Rule 34 Notice to the Applicant and the
provisional liquidators.
66.
In an email
dated the 10
th
October 2016, the Respondent has admitted that
levies are
outstanding by the Respondent to the Applicants and the most recent
tender made
[20]
in the Rule 34
Notice tenders payment of an
"undisputed
portion
"
of
indebtedness. ( emphasis added)
67.
Due to the aforesaid, I am satisfied that the Applicant has
established that
the Respondent is indebted to it in an amount
exceeding R200.00 for purposes of the winding-up proceedings and that
the Applicant
is a Creditor of the Respondent.
68.
The undisputed portions of the debt owing to the Applicant which is
ordinary
levies that are due and owing are in excess of R200.00.
69.
The Respondent raised the issue that dispute resolution should have
been followed
by the Applicant, however the Respondent was also
entitled to pursue that avenue and has failed to do so.
70.
When a debt
is
disputed in a bona fide and reasonable manner,
then
the
Badenhorst
v. Northern Construction Enterprises {Pty) Limited
[21]
Rule
would apply. In this case the
Badenhorst
Rule
does not assist the Respondents in this matter as it is quite clear
that there are large amounts of money due and owing to
the Applicant.
(emphasis added) The defences
which the
Respondent has initially raised have subsequently been abandoned with
the unconditional offer of payment in terms of the
Rule 34 Notice.
Therefore, it cannot be ruled that the Respondent has disputed the
debt claimed in a
bona
fide and reasonable manner.
(emphasis
added)
71.
The existence of the levies due are clearly
bona fide
and
cannot be disputed by the Respondent as same has admitted to an
"undisputed portion" of indebtedness due to the Applicant.
72.
The issues raised by the Respondent at the eleventh hour such as the
alleged
prescription of a certain portion of the unpaid levies and
penalties cannot be seen to be a
bona fide
dispute which is
reasonable on the part of the Respondent, and the aforesaid defences
relied upon by the Respondent cannot assist
the Respondent in
preventing the final winding up of the CC.
73.
It was argued on behalf of the Respondent at the hearing that the
Court should
exercise its discretion and extend the Rule
Nisi
and
make the tender an Order of Court and postpone the balance of the
disputes for determination at a later stage.
74.
The Court has a discretion in terms of Section 347(1) of the 1973 Act
to be
exercised in deserving circumstances. The Court rationale would
be that there is a
convincing prospect of a liquidation being
avoided
and that prospect must be seriously evaluated. (emphasis
added)
75.
Regrettably the Respondent has not provided any evidence of
circumstances which
would enable the court to exercise its discretion
in favour of the Respondent. Therefore, the application to extend the
Rule
Nisi
and to postpone the balance of the disputes must be
refused.
76.
In the circumstances I am satisfied the Applicant has on a balance of
probabilities
made out a case for the grant of the final winding-up
of the Respondent.
The
following order is made:
1.
The Respondent is placed under final winding-up in the hands
of the
Master.
2.
The costs of this application are costs in the winding-up.
H
CONSTANTINIDES
Judge
of High Court
Gauteng
Local Division
Johannesburg
31
May 2021
Date
of Hearing:
4 May 2020
Date
of Judgment:
31 May 2021
Counsel
for
the
Applicant
Advocate A J J Du Plooy
Cell:
082 924 9076
EMail:
ajjduplooy@advokaat.org
Instructed
by
Richards Attorneys
Counsel
for the Respondent
:
Advocate J Smit
Cell: 083 333 8270
EMail:
jansmit@law.co.za
Instructed
by
NLA Legal Inc.
[1]
2015
(4) SA 449 (WCC)
[2]
See:
H
-
3
Caseli nes , paragraph 4
of
the Applicant's Heads of Argument
[3]
2011
(4) SA 597
(KZD) at p. 607 D
-
E
[4]
Respondent's Heads of Argument -
3
-
84
to 3
-
85 of
Caselines.
[5]
Respondent's Heads of Arguments,
4.2
at B-85 of Caselines
[6]
Respondent's Heads of Argument,
para
8, at 3-86 of Caselines.
[7]
Para
9.1, page 87 of Caselines
Respondent's
Heads of Argument.
[8]
Para
28.11, FSA, Caselines 9
-
204
[9]
Para 14 of the Respondent's Heads of Argument, 3-90
[10]
19.2 of the Applicant's Replying Affidavit at 1-282.
[11]
Para 24.1, Applicant 's Replying Affidavit at
1-286
of Case
Lines
[12]
Para 24.7, Applicant's Replying Affidavit at
1-287
of Caselines
[13]
Para 28.4.1, Applicant's Replying Affidavit at
1-290
of Caselines
[14]
Para 35.1 of the Applicant's Replying Affidavit at
1-297
of Caselines
[15]
Applicant's supplementary heads of argument paras 4-14
[16]
9.9
-
1 of
Caselines
[17]
At 28 to 46, pag e 0007 to 49
[18]
000 - 11 at [49] of Nel AJ's Judgement
[19]
1988
(1) SA 943
(AD) at 979 B
-
d
[20]
Respondents additional heads of argument para 24 caselines 3-98
[21]
1956 (2) SA 346
(T) at 347 H