About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Western Cape High Court, Cape Town
SAFLII
>>
Databases
>>
South Africa: Western Cape High Court, Cape Town
>>
2010
>>
[2010] ZAWCHC 339
|
|
Golden Mile Financial Solution CC v Amagen Development (Pty) Ltd and Others (7874/2010, 17553/2010, 18001/2010) [2010] ZAWCHC 339 (18 November 2010)
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE HIGH COURT, CAPE TOWN)
CASE
NO: 7874/2010
17553/2010
18001/2010
In
the matter between:
GOLDEN
MILE FINANCIAL SOLUTIONS CC
…...................................
Applicant
And
AMAGEN
DEVELOPMENT (PTY) LTD
….........................................
Respondent
KEVIN
GADD ARCHITECTS CC
…...............................
First
Intervening Creditor
TAKE
SHAPE PROPERTIES 1 CC
…......................
Second
Intervening Creditor
ANNEMARIE
LIEBENBERG
…....................................
Third
Intervening Creditor
JUDGMENT
DELIVERED ON 18 NOVEMBER 2010
CLOETE.
AJ
[1]
This is an opposed application for the final winding up of the
respondent. There are two intervening creditors who support
the main
application and, in the alternative, approach this court in their
own right for the liquidation of respondent in the
event of the main
application being unsuccessful. A third intervening creditor (Take
Shape Properties 1 CC) withdrew its claims
prior to the hearing of
this matter.
[2]
The applicant obtained a provisional winding up order on 29 April
2010 with return date 2 June 2010. Due to the respondent's
opposition, the return date was extended to 19 August 2010. After
the applications of the intervening creditors, the return date
was
again extended to 15 September 2010, and then again to 4 November
2010, upon which date the matter was argued before this
court
[3]
The two intervening creditors who persist with their claims are
Kevin Gadd Architects CC ("Gadd") and Annemarie
Liebenberg
("Liebenberg"). When the matter was argued, the
applications of Gadd and Liebenberg to intervene in these
proceedings were not opposed by the respondent, although the
respondent opposed the balance of the relief sought by them.
[4]
The claims of the applicant. Gadd and Liebenberg arise out of the
same property development on the farm Haasendal in the district
of
Brackenfell The applicant
inter
alia
loaned
bridging finance to respondent, Gadd was the architect involved in
the development and Liebenberg sold a portion of the
land developed
to respondent. During the course of argument, all parties agreed
that it is the commercial insolvency and not
the factual insolvency
of the respondent which has application in the event that the
applicant and/or either or both of the intervening
creditors are
able to show an indebtedness to them on the basis of the established
principles in matters of this nature.
[5]
For sake of convenience I will deal firstly with the main
application, and thereafter with the applications of Gadd and
Liebenberg respectively. Where I make reference to "the
parties" in each application, I am referring to the parties in
that particular application.
THE
MAIN APPLICATION
[6]
The applicant avers that during the period March 2007 to February
2008 it concluded five bridging finance agreements with
the
respondent in terms of which it loaned and advanced capital to the
latter. The capital amount also attracts interest and
finance
charges in the form of discounting fees which are payable by the
respondent. On 3 November 2009 the applicant served
a letter in
terms of s 345(1) of the Companies Act, 61 of 1973 ("the
Companies Act") at the registered office of the
respondent.
There was no reaction to this letter and on 21 April 2010 an
application was made for the provisional winding of
the respondent,
which was granted on 29 April 2010.
[7]
Respondent disputes its indebtedness to the applicant, alleging that
the latter has miscalculated the amount due by it, and
calls for a
debatement of account. In particular, it alleges that interest was
incorrectly calculated, certain of the capital
amounts advanced have
not been proven and that in fact it has overpaid the applicant.
[8]
Where a provisional order has been granted the applicant must
satisfy the court on a balance of probabilities that a final
order
is to be granted. In
Paarwater
v South
Sahara
Investments (Pty) Ltd
2005
(4) All SA 185
(SCA) at 186G-H it was stated as follows:
"At
the outset it is important to point out that the onus rested upon
the appellant in seeking a final order to satisfy the
court, on a
balance of probabilities, that it was indeed 'just and equitable'
finally to liquidate the respondent. Furthermore,
the degree of
proof required when an application is made for a Final order is
higher than that for the grant of a provisional
order. In the former
case a mere prima facie case need be established whereas the court,
before it will grant a final order,
must be satisfied on
a
balance
of probabilities that such a case has been made out by the applicant
seeking confirmation of the provisional order."
[9]
There was some debate before me as to the test to be applied in
deciding whether the applicant is entitled to a final winding
up
order. I am satisfied that this court is obliged to apply the rule
in
Plascon
Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984
(3) SA 623
(A) at 634H-635C:
"It
is correct that, where in proceedings on notice of motion disputes
of fact have arisen on the affidavits, a final order,
whether it be
an interdict or some other form of relief, may be granted if those
facts averred in the applicant's affidavits
which have been admitted
by the respondent, together with the facts alleged by the
respondent, justify such an order. The power
of the court to give
such final relief on the papers before it is, however, not confined
to such a situation. In certain instances
the denial by respondent
of a fact alleged by the applicant may not be such as to raise a
real, genuine or bona fide dispute
of fact ... moreover, there may
be exceptions to this general rule,
as,
for
example, where the allegations or denials of the respondent are so
far fetched or clearly untenable that the court is justified
in
rejecting them merely on the papers ..."
[10]
Where
an application for a final order is opposed on the basis of a
disputeas to the existence of a debt upon which the applicant
relies, what is in issue is whether the debt is genuinely disputed
on reasonable grounds. The court will not allow a genuine
dispute
raised on reasonable grounds to be resolved by way of winding up
proceedings. The applicant bears a full onus to establish
the claim
upon which it relies. A party that seeks to show that the claim is
bona fide disputed on reasonable grounds need only
show that it is
not being unreasonable in its opposition; it need not adduce
evidence on affidavit upon which it would rely at
a trial in due
course. It need only make allegations of fact which, if proved at
trial, would disclose a defence to any claim
made against it:
See
Helderberg
Laboratories CC v Solar Technologies
2008
(2) SA 627
(C) at 633G-H
[11]
The dispute between Mr David Muller of the applicant and Mr Thomas
Notnagel of the respondent is a classic case of a business
relationship turned sour, and neither party can be complimented on
keeping detailed and accurate records of its dealings with
the
other. The lack of these records has inevitably given rise to a
whole host of disputes of fact, and it is thus important
to focus on
whether the debt is genuinely disputed on reasonable grounds. With
the above in mind, the following emerges from
the papers;
[11.1.]
In its founding affidavit, applicant relies on an indebtedness by
respondent of R276 199.06 together with interest thereon
at the rate
of 36% per annum as from 19 January 2009 until date of final
payment.
[11.2.]
By way of background, applicant alleges that it provided bridging
finance to the respondent in a total sum of R490 000
together with
interest at a rate of 0.15% per day. It then alleges that the
respondent repaid the applicant R446 110.59 on 19
June 2008, at
which date the outstanding balance due by respondent (inclusive of
interest) was R256 233.87. It further alleges
that the parties
thereafter decided to consolidate the respondent's debt, as the
applicant required security for the amount still
owing to it. (The
founding affidavit does not allege when the decision to consolidate
was taken, where it was taken or by which
natural persons the
juristic entities were represented). In this regard the applicant
relies on a power of attorney to register
a mortgage bond over the
respondent's property, which it avers was signed by Notnagel on 10
June 2008 The draft mortgage bond
reflects an indebtedness to the
applicant of R450 000 plus interest thereon at the rate of 36% per
annum as from 13 June 2008
until date of payment. It is common cause
that this mortgage bond was never registered
[11.3.]
In answer the respondent disputes the advance of the sums as alleged
(but not vouched) by the applicant. Respondent alleges
that its
payment of R446 110.59 on 19 June 2008 would have extinguished its
entire indebtedness at that date, and that indeed
there has been an
overpayment by it of R6 906.26. Respondent further denies the
applicant's claim for interest, which it alleges
falls foul of the
regulations promulgated under the
National Credit Act, 34 of 2005
.
Alternatively and in any event, the applicant's claim for interest
falls foul of the
in
duplum
rule,
which prevents a creditor from charging interest in excess of the
capital sum due. On respondent's version the interest
charged (and
claimed) would have exceeded 100% of the capital sums allegedly
advanced by. the latest, mid 2010.
[11.4.]
The applicant's difficulties are compounded by the allegation in its
replying affidavit that as at 19 June 2008 the balance
due by the
respondent was R318 918 76 (as opposed to R276 199.06 in the
founding affidavit). Respondent requested a debatement
of account
but the applicant chose instead to persist in its application for
the winding up of the respondent, with the assistance
of the
intervening creditors. .
[12]
Furthermore, it appears that the interest charged by the applicant
has been calculated at impermissible rates, and thus the
claims so
calculated are void. In
Schierhout
v Minister of Justice
1926
AD 99
at 109 it was stated as follows:
“
It
is
a fundamental principle of our law that a thing done contrary to the
direct prohibition of the law is void and of no effect
... so that
what is done contrary to the prohibition of the law is not only of
no effect but must be regarded as never having
been done - and that
whether the lawgiver has expressly so decreed or not; the mere
prohibition operates to nullify the act."
[13]
To my mind, the applicant cannot succeed in this application. It is
clear, in light of the allegations emerging from the
papers, that
the respondent is not being unreasonable in its opposition to the
applicant's claim, as envisaged in
Helderberg
Laboratories CC v Solar Technologies
supra
[14]
The applicant has not discharged the onus resting upon it as is set
out in
Paarwater
v South Sahara Investments (Pty) Ltd
as
read with the test in
Plascon
Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd
(supra).
I have thus concluded that the provisional order obtained by the
applicant against the respondent should be discharged.
THE
APPLICATION OF GADD
[15]
In order for Gadd to succeed in its application for the winding up
of the respondent it must,
prima
facie,
establish
that:
[15.1.]
It is a creditor of the respondent; and
[15.2.]
The respondent is unable to pay its debts.
See
s
346(1)(b)
and
s 344(f)
read together with s 345(1)(c) of the Companies Act, 61
of 1973 ("the Act")
[16]
The following is clear from the papers:
[16.1.]
Gadd brought a previous application for the winding up of the
respondent on 11 June 2009 which was opposed;
[16.2.]
On 14 October 2009 and by agreement between the parties, an order
was granted by this court in terms of which Gadd withdrew
its
application for the provisional
liquidation
of the respondent and the respondent agreed to pay Gadd the sum of
R456 000 by not later than 14 December 2009;
[16.3.]
Respondent failed to make any payment by 14 December 2009; [164]
Over the period December 2009 to June 2010 respondent
made various
proposals and gave undertakings to settle its indebtedness to Gadd,
which respondent has failed to honour;
[16.5]
Due to the respondent's failure to pay. Gadd proceeded to execute
against its immovable properties;
[16.6.)
Notwithstanding the execution steps, respondent still failed to make
any payment to Gadd who was then prevented from proceeding
with the
sale in execution as a result of the provisional winding up order
obtained against respondent at the instance of the
applicant
[17]
In its notice of motion, Gadd incorrectly applied, in the
alternative, for an order of final liquidation against respondent.
To my mind, nothing turns on this, inasmuch as I am satisfied that,
notwithstanding this error. Gadd has complied with all of
the
necessary procedural requirements for the grant of a provisional
winding up order, by effecting service as required in terms
of ss
346(4) and 346(4A) of the Act, furnishing the requisite security and
producing the necessary certificate from the Master.
[18]
Respondent's counsel sought to persuade me that Gadd's application
was "contradictory" in that if the provisional
order
against the respondent was discharged, the agreed (payment) process
could run its course in order to enable Gadd to obtain
payment. To
my mind, there is no merit in this submission. Gadd was clearly
entitled to proceed to levy execution against the
immovable property
of the respondent in circumstances in which the latter had failed to
pay the amount due to it within the deadline
stipulated in the
settlement agreement
[19]
Respondent's counsel further submitted that the fact that immovable
property of the respondent had been attached would confer
a
preferent claim on Gadd in the event of a final winding up order
being granted. Respondent's counsel thus argued that
"because
be is going to get paid anyway, how can his claim be taken into
account in determining whether the respondent is
commercially
insolvent?".
Again,
it is my view that this submission is without merit. In Henochsberg
on the Companies Act at Vol
1
p760
it is stated that;
"A
sale in execution of property attached prior to the commencement of
the winding up is suspended in terms of s 359(1)(a)
... Indeed,
after such commencement it cannot proceed at the instance of the
execution creditor not even if he purports to give
notice in terms
ofs 359(2)(a) of an intention to continue with the execution. The
liquidator, in the light of the provisions
of ss 342(1) and 391, is
bound and entitled to claim the property from the execution officer
who must deliver it to him... and
if, despite the institution of the
winding up, the execution creditor causes the sale to proceed, the
proceeds of such sale must
be released to the liquidator by the
execution officer if held by him and must be repaid to the
liquidator by the execution creditor
if they were paid to him
subject only to the preference enjoyed by the execution creditor for
the costs of execution not exceeding
R50 ..."
[20]
These two "defences" constitute the high water mark of
respondent's attempt to fend off payment to Gadd. I agree
with
Gadd's counsel that the following dictum by Innes CJ in
De
Waard v Andrew & Thienhaus Ltd
1907
TS 727
at 733 summarises and puts into perspective the issues
involved in this application:
"Speaking
for myself, I always look with great suspicion upon, and examine
very narrowly, the position of a debtor who says
7
am
sorry that I cannot pay my creditor, but my assets far exceed my
liabilities' To my mind, the best proof of solvency is that
a man
should pay his debts; and therefore I always examine in a critical
spirit the case of a man does not pay what he owes."
[21]
In
ABSA
Bank Ltd v Rhebokskloof (Pty) Ltd & Others
1993
(4) SA 436
CPD at 440F-H the court dealt with the concept of
"commercial insolvency" as follows:
"The
concept of commercial insolvency as a ground for winding up a
company is eminently practical and commercially sensible.
The
primary question which a court is called upon to answer in deciding
whether or not a company carrying on business should
be wound up as
commercially insolvent is whether or not it has liquid assets or
readily realisable assets available to meet its
liabilities as they
fall due to be met in the ordinary course of business and thereafter
to be in a position to carry on normal
trading - in other words, can
the company meet current demands on it and remain buoyant? It
matters not that the company's assets,
fairly valued, far exceeds
its liabilities: once the court finds that it cannot do this, it
follows that it is entitled to, and
should, hold that the company is
unable to pay its debts within the meaning of s 345(1)(c) as read
with s 344(f) of the Companies
Act, 61 of 1973 and is accordingly
liable to be wound up."
[22]
In my view, the inescapable conclusion is that the respondent is
unable to pay its debts within the meaning of s 345(1 )(c)
as read
with s 344(f), of the Act and that it is commercially insolvent.
[23]
I am thus satisfied that Gadd has established a prima facie case for
the grant of a provisional winding up order in accordance
with the
principle referred to at
Paarwater
v South Sahara Investments (Pty) Ltd
supra.
THE
APPLICATION OF LIEBENBERG
[24]
Liebenberg's application sets out that she sold a smallholding in
Brackenfell for development as residential erven. She alleges
that
she is a creditor of the respondent with a claim of R 2 657 430
being the balance of the purchase price due to her arising
out of
the aforementioned sale.
[25]
Liebenberg avers that the deed of sale does not reflect her oral
agreement with the respondent. She states that the respondent
undertook to pay a portion of the purchase price to her on the grant
of rezoning approval, and that she signed the deed of sale
with this
understanding. In the alternative (and albeit in reply), Liebenberg
relies upon an unwritten undertaking of the respondent
that it would
make payment to her upon approval of the rezoning.
[26]
Respondent relies upon the terms of the deed of sale itself, the
relevant clause (i.e. clause 4.1) providing that Liebenberg's
claim
only arises from the nett proceeds of sales to end buyers and that,
inasmuch as the erven have not been sold to end buyers,
Liebenberg's
claim is not payable. On Liebenberg's alternative claim, respondent
avers that she has not alleged that rezoning
approval has been
granted, nor does she attach any proof of such approval to her
affidavits (such approval would of course be
a matter of public
record). Accordingly, even on her alternative claim, Liebenberg has
failed to establish that her claim is
payable. (Respondent also
disputes that certain payments made by it were made on account of
the purchase price, and sought to
persuade this court that such
payments were in fact loans to Liebenberg. However, even on the
respondent's version, an amount
is owing to Liebenberg, and the
probabilities are overwhelming that this amount - whatever it may be
- exceeds the sum of R100).
[27]
In his heads of argument, counsel for respondent put it thus (at
para 61):
"White
Liebenberg may enjoy a prospective claim conferring upon her locus
standi, and that can be taken into account in reckoning
whether the
respondent is actually insolvent, she does not enjoy a payable claim
that can be taken into account in evaluating
whether the respondent
is commercially insolvent"
[28]
This submission is without merit. Section 345 of the Act makes
provision for the instances in which a company is deemed unable
to
pay its debts. Section 345(2) specifically provides as follows:
"In
determining for the purpose of sub section (1) whether a company is
unable to pay its debts, the court shall also take
into account the
contingent and prospective liabilities of the company."
[29]
Henochsberg supra at p711 summarises the position as follows:
"A
contingent liability is one which, by reason of an existing vinculum
juris between the creditor and the company, may become
an
enforceable liability on the happening of some future event; a
prospective liability is one which, by reason of an existing
vinculum juris between the creditor and the company, will become an
enforceable liability on a future date or on a date determinable
by
reference to future events ... In taking a contingent or prospective
liability into account the court should not treat it
as it were due
and payable; it should treat it as it is and as one of the factors
affecting its decision as to whether or not
the company is unable to
pay its debts (Barclays Bank CD & O v Riverside Dried Fruit Co
(Pty) Ltd
1949 (1) SA 937
(C) at 949-950)."
[30]
Although Liebenberg's claim for a provisional winding up order has
been rendered abortive in light of my conclusion that
Gadd is
entitled to such an order, it is nonetheless necessary for me to
consider whether Liebenberg approached this court bona
fide for the
relief sought, as this is relevant to her costs. In light of my view
that
Liebenberg
has a claim against respondent as envisaged in s 345(1) as read with
s 345(2) of the Act, I am satisfied that she indeed
approached this
court on bona fide grounds
[31]
Liebenberg sought an order that her costs be costs in the
liquidation. In this regard however I must be guided by the decision
in
Ex
parte Aitchison
1924
TPD 570
(quoted with approval in
Simms
Sen/ice Station v Maharaj
1960
(3) DCLD 465
at 466G and 467C-D) to the following effect:
The
question whether the costs of an abortive application should be
included in the costs of sequestration and so made preferent,
should
be determined, in the first instance, by the trustee after
consultation with the creditors, and the court should not make
an
anticipatory order."
ORDER
[32]
In the result, I make the following order:
[32.1
] The provisional winding up order obtained at the instance of the
applicant on 29 April 2010 is discharged with costs,
such costs to
include the costs of the postponement on 2 June 2010 but excluding
the costs of the postponements on 19 August
2010 and 15 September
2010;
[32.2.]
Respondent is placed under provisional liquidation at the instance
of the first intervening creditor, Kevin Gadd Architects
CC;
[32.3
] A rule
nisi
is
issued calling upon the respondent and all persons concerned to
appearand show cause to this Court at 10h00 on
TUESDAY,
11 JANUARY 2011
why:
[32.3.1.]
A final order of liquidation should not be granted;
[32.3.2.]
The costs of the first intervening creditors application, including
the costs incurred by it in respect of the postponements
on 19
August 2010 and 15 September 2010, should not be costs in the
liquidation
[32.4.]
Service of this order is to be effected:
[32.4.1.]
on the respondent at its registered office;
[32.4.2.]
by one publication in the Cape Times and Die Burger newspapers;
[32.4.3]
on the respondent's employees by affixing a copy thereof to any
notice board to which the employees have access inside
the
respondent's premises or by affixing a copy thereof to the front
door of the premises from which the respondent conducts
business;
[32.4.4.]
on any registered trade union that represents any of the
respondent's employees; and
[32.4.5.]
on the South African Revenue Service.
[32.5]
Whether the costs of the third intervening party (including the
costs incurred by her in respect of the postponements on
19 August
2010 and 15 September 2010) shall form part of the costs in the
liquidation shall be determined by the liquidator in
consultation
with the respondent's creditors.
J
I CLOETE, AJ