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[2010] ZAWCHC 413
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Bowen Equipment CC t/a Briggs & Stratton Hire v Ballprop Thirthy Three (Pty) Ltd (11102/2009) [2010] ZAWCHC 413 (2 June 2010)
IN THE HIGH COURT OF
SOUTH AFRICA WESTERN CAPE HIGH COURT, CAPE TOWN
CASE NUMBER:
11102/2009
In the matter between:
BOWEN EQUIPMENT CC
T/A
BRIGGS & STRATTON HIRE
…..................................................
Applicant
REG
NO 2005/015283/23
and
BALLPROP
THIRTY THREE (PTY) LTD
…...................................
Respondent
REG
MP 2002/004461/07
(For
the liquidation of the Respondent)
JUDGMENT DELIVERED ON
2 JUNE 2010
GAMBLE
J
:
[1] The Applicant seeks
a provisional winding up order of the Respondent, basing its claim
on the provisions of section 344(f)
read with section 345 of the
Companies Act, 1973.
[2] The Applicant
alleges that during early 2008 it rented out building equipment to
the Respondent from its premises in Centurion,
Gauteng, and that as
of July 2008 the Respondent was indebted to it in the sum of R84
412,00.
[3] On 21 July 2008 the
Applicant's attorneys sent a letter by registered post to the
registered offices of the Respondent in
Heathfield, Cape in
purported compliance with section 345 as aforesaid. In that letter
the Applicant's attorneys made the following
allegation:
"According to
our client ...an amount of R84 412,00 is owed and payable for rental
of goods to Ballprop Thirty Three (Pty)
Ltd."
Liquidation was
threatened in the event of non-payment within 21 days.
[4] On 31 July 2008 the
Respondent's attorneys responded on behalf of their client and
denied "the correctness of your client's
claim." They went
on to say the following:
"In view of a
possible settlement, we would appreciate to receive copies of all
delivery notes, duly signed by our client.
Kindly note that our
client was not the only company that operated at the site and thus
our client was very specific to ensure
that all delivery notes were
to be duly signed by a representative of our client. Furthermore our
client needs to be able to
verify the prices charged for the rental
of the goods.
To enable us to reply
in full to your letter, we would appreciate to receive the requested
documents as a matter of urgency. In
the light hereof we wish to
record that your client's claim is, for purposes of section 345,
denied until our client has been
furnished with full particulars
regarding the claim."
[5] There then ensued an
exchange of correspondence between the attorneys in terms whereof
the Applicant's attorneys attempted
to clarify the balance allegedly
due to their client and, in response thereto, the Respondent's
attorneys sought details establishing
delivery of equipment to the
building sites on which it was working.
[6] In a letter dated 2
September 2008 the Respondent's attorneys conceded that their client
had "accepted goods to hire
for approximately R13 000,00."
They went on to say that "our client duly paid that account. We
do not see any credit
in the statement that we received."
[7] The Applicant's
derisory response to this allegation on 4 September 2008 was to
question how the Respondent could allege only
having "accepted"
equipment to hire for R13 000,00, when payment in excess of R24
000,00 had already been received
by it. The Applicant's attorneys
also furnished the Respondent's attorneys with a detailed account
setting out how the indebtedness
in the sum of R84 412,00 was
calculated.
[8] In the founding
affidavit in the winding up application the Applicant contented
itself with the usual allegations. It went
on to say that it:
"... engaged
with discussions with Mr Fortune [of the Respondent] on a regular
basis in order to avoid approaching court.
These discussions ran on
a continuous basis during October and November [2008] during which
time Mr Fortune from the Respondent
undertook to:
12.1. pay the full
amount due and payable once he received his money from Tshwane
Municipality;
12.2. He indicated to
Mr G N Wentzel [of the Applicant] that he had approached court to
obtain his money from third parties."
[9] I am satisfied that
the founding papers make out a case indicating the business'
inability to pay its debts in the ordinary
course of trading and
they therefore call for a proper explanation from the Respondent.
[10] The opposing
affidavit filed on behalf of the Respondent is a flimsy document
which runs to no more than 9 pages including
annexures.
[11]
In it Mr Fortune firstly challenges the authority of Mr Wentzel to
bring the application in the absence of a resolution from
the
corporation. He then goes on to say that the Respondent denies that
"the
equipment eventually delivered to site, was given to the
Respondent."
He
contends that there were various contractors on the site who were
doing similar work and that he needed to see the relevant
delivery
notes to:
.. verify the
correctness of the statements. It has not received signed delivery
notes and thus Respondent denies liability, because
it submits that
the goods were not delivered to Respondent."
[12] In relation to the
allegation by the Applicant set out in paragraph 8 above Mr Fortune
says the following:
"I confirm that
I, on behalf of the Applicant consented that, in the event of (sic)
all the payments is (sic) made by the
Tshwane Municipality the
Respondent will pay Applicant. I never admitted that the amount was
due and payable, or even correct,
but merely subject to the proof
that the equipment was indeed used on the site in Shoshanguwe (sic)
and that the said payment
will be made on the receipt of the money
from Tshwane Municipality. Until date hereof the Respondent has not
received any money
from the Tshwane Municipality and the dispute is
still ongoing and will be referred to court ...I, in any event,
confirm that
the Applicant represented by Wentzel, accepted that
payment will be made on receipt of the payment from Tshwane
Municipality
and thus the outstanding amount is not due and payable
(sic) it is subject to the condition contained in para 12.1 and
12.2.
The claim is thus lodged prematurely .... There was a
settlement and a novation took place and for this reasons (sic) the
amount
is not due and payable."
[13] The defence then
put up to the claim of indebtedness is to the following effect: "I
am not sure whether I owe you anything
but even if you can prove
delivery of the equipment to me we have agreed that I will only pay
you when one of my debtors (i.e.
Tshwane Municipality) pays me."
It is suggested that the Applicant agreed to this arrangement hence
the claim of a novation
by the Respondent.
[14] In the replying
affidavit the Applicant points out that the Respondent was furnished
with a number of "dispatch notes"
and "collection
slips" by its attorneys in August 2008. The relevant documents
are annexed to the Applicant's reply.
Any claim of an inability to
ascertain delivery/collection is therefore disputed by the
Applicant.
[15]
in regard to the alleged novation of the debt, the Applicant denies
the allegation and says that the suggestion is "laughable"
-that no independent contractor would agree to wait
ad
infinitum
while
it's debtor attempted to extract payment from a third party.
[16] Implicit in the
defence put up by the Respondent is an inability to pay what is due
to the Applicant in the ordinary course
of business. It can only
pay, it says, when it recovers money due to it by a third party, and
that obligation, it says, is the
subject of on-going litigation
between the Respondent and the third party.
[17] Novation involves
the replacement of an existing obligation by a new one, the existing
obligation thereby being discharged.
1
Like any other obligation it is consensual in nature.
2
[18] One must be
cautious too, to distinguish between a novation and an agreement to
vary but one obligation of the old contract
(such as the date for
payment) leaving the remaining terms in place. The latter scenario
usually constitutes a variation of the
original agreement rather
than a novation thereof.
3
[19]
In any event, the onus of establishing a novation (or, for that
matter, a variation) rests on the party relying hereon -
in
casu
the
Respondent.
4
[20]
In this application the allegation in relation to the novation is as
I have said, strenuously disputed by the Applicant.
This being an
application for a provincial winding-up order the approach followed
in
Kalil
v Decotex (Pty) Ltd and another
5
is
applicable.
[21]
In
Payslip
Investment Holdings CC v Y2K TEC Ltd
6
Brand
J
(as
he then was) summarized the ratio in
Kalil
's
case as follows:
"According
to these guidelines [in
Kalil
's
case] a distinction is to be drawn between disputes regarding the
respondent's liability to the applicant and other disputes.
Regarding the latter, the test is whether the balance of
probabilities favours the applicant's version on the papers. If so,
a provisional order will usually be granted. If not, the application
will either be refused or the dispute referred for the hearing
of
oral evidence, depending on,
inter
alia,
the
strength of the respondent's case and the prospects of viva voce
evidence tipping the scales in favour of the applicant. With
reference to disputes regarding the respondent's indebtedness, the
test is whether it appeared on the papers that the applicant's
claim
is disputed by respondent on reasonable and bona fide grounds. In
this event it is not sufficient that the Applicant has
made out a
case on the probabilities. The stated exception regarding disputes
about an applicant's claim thus cuts across the
approach to factual
disputes in general."
[22]
The
claim by the Respondent in the instant case of novation falls into
the category of "other disputes" referred to
Brand
J
above.
In this regard I am of the view that the probabilities favour the
Applicant's version herein.
[23]
I am further of the view that the Applicant has made out a
prima
facie
case
on the papers before me establishing Respondent's liability to it.
The Respondent has not set up a
bona
fide
defence
to that claim and I agree with the Applicant's contention that it is
unlikely that a party would agree to wait for payment
where the
party obliged to pay still has unresolved issues with a third party
that owes it money. This does not accord with commercial
reality. It
follows that the Applicant is entitled to a provisional winding up
order.
[24] I turn lastly to
the question of authority. In the founding affidavit signed on 1
December 2008, Ms Linda Moira Wentzel says
that she is the sole
member of the Applicant. She goes on to confirm that the facts in
the affidavit are true, correct and within
her personal knowledge.
She does not say however that she is authorised to bring the
application nor does she attach a resolution
to this effect to the
affidavit.
[25] When the Respondent
challenged her authority in the answering affidavit, Ms Wentzel
attempted to shore up her founding papers
by alleging in the
replying affidavit dated 6 September 2009 that the position had been
ratified. She presented a resolution
dated 4 September 2009 to this
effect.
[26] Undeterred the
Respondent then suggested that Ms Wentzel was not the sole member of
the Applicant and at a late stage of
proceedings (in fact after the
matter had been argued) produced a CIPRO search to show that Ms
Wentzel's husband and daughter
were also members of then Applicant.
Some further to-ing and fro-ing took place in the form of an
exchange of further affidavits
and it eventually transpired that the
change in membership of the Applicant in fact occurred in about
December 2009.
[27] The undisputed
facts remain: at the time that the founding and replying affidavits
were signed, Ms Wentzel was the sole member
of the Applicant. The
ratification contained in the later resolution of 4 September 2009
is therefore in order.
[28] It was argued on
behalf of the Respondent that the application ought to be regarded
as a nullity in light of the absence
of any allegations by Ms
Wentzel to demonstrate that it was the Applicant and not she that
was the litigant.
[29] I consider the
approach adopted by the Respondent in that regard to be unduly
technical and pedantic.
7
We are concerned here with a small, family-owned business in which,
at the time this application was lodged, Ms Wentzel was the
only
member. Can there be any suggestion in those circumstances that
there was the potential for a divergence of view between
the
deponent to the founding affidavit and the guiding mind of the
corporation? Is it really necessary that Ms Wentzel should
have
invited herself to a meeting at which she was to table a resolution
to authorise herself to initiate those proceedings?
I think not.
8
[30] But in any event, a
resolution by Ms Wentzel ratifying this step was filed in reply and
the application has therefore been
duly authorised.
CONCLUSION
[31] In the
circumstances I am satisfied that:
31.1.
The Applicant has adduced
prima
facie
proof
that it is a creditor within the ambit of section 345(1 )(a)(i) of
the Companies Act;
31.2.
That the Respondent has not set up a
bona
fide
defence
to the Applicant's claim; and
32.3. The Applicant is
entitled to the relief set forth hereunder to enforce payment of its
claim.
ORDER
1. It is ordered that
the Respondent be placed under Provisional Liquidation in the hands
of the Master of the High Court (Cape
Provincial Division);
2.
A rule
nisi
is
issued in terms whereof the Respondent and all other interested
parties are called upon to show cause, if any, to this Honourable
Court on Tuesday 27 July 2010 why:
2.1. the Respondent
should not be placed under final liquidation;
2.2. the costs of this
application should not be costs in the liquidation.
3.
The
order shall be served as follows:
3.1. By the Sheriff of
the High Court on the Respondent at its registered address being 11
Sunbury Road, Sunbury Estate, Heathfield;
3.2 By the Sheriff of
the High Court on the South African Revenue Services;
3.3. Publication of this
Order in one publication each of "Die Burger" and the
"Cape Times" newspapers in
the language in which this
order is granted; and
3.4. On the employees of
the Respondent, if applicable, and on all trade unions representing
such employees.
P A L GAMBLE
Judge
of the Western Cape High Court
1
Christie
,
Law of Contract in SA (5
th
edition)
p 449
etseq.
2
Swadif
(Ptv) Ltd v Dyke N O
1978(1)
SA 928(A) at 940G.
3
Christie
op
cit
at
451;
Christou
v Christoudoul
ou
1959(1) SA 586(T) at 587 - 8.
4
Marendaz
v Marendaz
1953(4)
SA 218(C) at 226 - 7
5
3
1988(1) SA 943(A) at 976 - 9.
6
2001(4)
SA 781(C) at 783 G
7
Baeck
and Co SA (Pty) Ltd v Van Zummeren and Another 1982(2) SA 112(W) at
118G
et
seq.
8
Nahrungsmittel
GmbH v Otto 1991(4) SA 414 (C) at 418C.