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[2010] ZAWCHC 608
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Ex parte: Daku NO and Others v Plaswrap (Pty) Ltd (6174/2009) [2010] ZAWCHC 608 (7 December 2010)
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE HIGH COURT)
CASE
NO. 6174/2009
in
the
ex
parte
application
of:
XOLISWA
EUNICE DAKU N.O.
…...........................................................................
FIRST
APPLICANT
EUGENE
BRYAN WALLACE N
.O.
….................................................................
SECOND
APPLICANT
LOUISE
GROENEWALD N
.O.
…...........................................................................
THIRD
APPLICANT
And
In
their capacities as joint provisional Trustees of:
PLASWRAP
(PTY) LTD
an
Liquidation)
And
BERMY
PACKAGING (PTY) LTD
…...............................................................................
RESPONDENT
JUDGMENT
DELIVERED ON TUESDAY, 07 DECEMBER 2010
DLODLO.J
[1]
On
14 March 2007 a company known as Piaswrap (Pty) Ltd ("Piaswrap")
was placed under provisional liquidation. Provisional
liquidators
were appointed. The Applicants in this matter were appointed final
liquidators of Piaswrap on 26 May 2008. Benny Packaging
(Pty) Ltd,
the Respondent in the instant matter, was at all relevant and
material times represented by one Patrick Norman. Prior
to the
provisional liquidation of Piaswrap DF Malan Attorneys ("DF
Malan") were the attorneys acting for Piaswrap. DF
Malan has
also been the attorneys for the Applicants in their capacities as
provisional and final liquidators.
[2]
On 26 March 2009 the Applicants launched an application against the
Respondent the purpose of which was to secure an order in
terms of
section 69 (3) of the Insolvency Act 24 of 1936 ("the
Insolvency
Act"
;) authorizing the Sheriff to seize the movable assets listed
in Annexure "A" to the Notice of Motion from the
Respondent,
and deliver same to the Applicants. The Application also
seeks a punitive costs order against the Respondent. The Respondent
resists
the application on various grounds including but not limited
to the following:
(a)
That on 29 October 2007 an agreement was concluded between it and
Plaswrap in terms of which it purchased both the assets and
the
business of Plaswrap as a going concern for One million three hundred
thousand rand (Rl 300 000.00) ("the October Agreement")
and
that the Applicants confirmed the October agreement and thus that it
exists, binding and of legal effect.
(b)
That pursuant to the October Agreement on 14 November 2007 the
Respondent paid the Nine hundred and ninety seven thousand five
hundred rand (R997 500.00) attributable to the assets but that the
amount was released back to the Respondent by agreement
(c)
That the Applicants took it upon themselves to "circumvent"
the October Agreement and seek to seize the assets in
terms of
Section 69
(3) of the
Insolvency Act.
Mr
.
Olivier and Mr. Howie appeared for the Applicants and the Respondent
respectively. The nature of this matter is such that one
would deal
with it better if one first summarizes the papers. What follows is
such summary.
[3]
THE
FOUNDING AFFIDAVIT
was
deposed to by one Mr. Eugene Bryan Wallace ("Mr. Wallace"),
a liquidator employed by Wallace Trust. Mr. Wallace stated
that
Plaswrap was placed under liquidation on 14 November 2007 and that on
26 May 2008 Louise Groenewald, Xoliswa Eunice Daku and
himself, were
appointed as joint liquidators by the Master of the High Court - this
being evident from the Masters' certificate
of appointment Annexure
"Wl" to the Founding papers. Mr. Wallace defined the
Respondent as a company with a share capital,
duly incorporated in
terms of the Act with registered office at 2
nd
Floor,
47 Strand Street, Cape Town, inter alia, trading at 4 Eagle Street,
Okavango Park, Brackenfell, Western Cape.
[4]
As the liquidator, Mr. Wallace is tasked with the day to day
administration of the company in liquidation. He described the
application as being in terms of
section 69
(2) of the
Insolvency
Act, read
with section 339 of the Companies Act for a warrant in
terms of
section 69
(3) of the
Insolvency Act, the
purpose of which
is to obtain an order to search, attach and take possession of the
movable assets of Plaswrap as set out in Annexure
"A" to
the Notice of Motion. Mr. Wallace averred that the assets relevant to
these proceedings arc in possession of the
Respondent company at its
premises and that the latter unlawfully refuses to hand possession
thereof to the Applicants. According
to Mr. Wallace, on 29 October
2007 Plaswrap and the Respondent signed a written agreement, copy of
which is Annexure "W2"
to the Founding papers.
[5]
According to Mr. Wallace the Respondent paid the purchase price into
the trust account of DF Malan Attorneys as envisaged by
the
agreement. This was, however, at a later date upon the insistence of
the Respondent, repaid against an undertaking by the Respondent
that
the purchase price would be repaid within one month into the DF Malan
trust account. This, however, never happened. Mr. Wallace
gave a
historical overview of the matter by stating that after the
appointment of provisional liquidators an agreement which would
replace Annexure "W2” was proposed and a draft prepared.
This proposed agreement is annexed to the Founding papers as
Annexure
"W3'\ As clause 3.5 of Annexure "W3" shows, the
Respondent had since 1 December 2007 (with the permission
of joint
provisional liquidators) conducted the business for its own account
pending the conclusion of an envisaged transaction
whereby it would
(with effect from 1 December 2007) purchase the assets of Piaswrap on
a going concern basis for R1.3 million subject
to certain conditions.
[6]
According to Mr. Wallace the Applicants are still prepared to enter
into an agreement with the Respondent on the terms set out
in
Annexure "W3”. On the other hand, the Respondent contends
that it had made certain payments which are deductions
to be made
from the purchase price of R1.3 million. According to Mr. Wallace,
upon hearing this he requested a breakdown of these
claimed
deductions and the Respondent presented to him annexure "W4"
attached to the Founding papers. Mr. Wallace remarked
that the
Applicants are, subject to substantiation, prepared to accept that
these payments appearing on Annexure "W4"
were made and
fall to be deducted from the purchase price. Mr. Wallace made it
clear that the agreement envisaged as per Annexure
"W3" did
not materialize and was not entered into. According to Mr. Wallace on
27 October 2008, Van der Ross & Motala
Inc. ("RM"),
acting on behalf of the Respondent, addressed a letter annexed to the
Founding papers as Annexure "W5",
to DF Malan wherein an
amount of Fifty thousand rand (R50 000.00) was offered in full and
final settlement of what the Respondent
termed its "obligations
in terms of the original contract" and its "right to claim
rectification of the original
contract" are reserved. The
original contract is clearly Annexure "W2" which has become
known as the October Agreement.
[7]
According to Mr. Wallace, the reliance on the provisions of the
October Agreement is but misplaced in that the sale of the assets
was
not confirmed by the Applicants and the purchase price was not repaid
to DF Malan's trust account. In Mr. Wallace's view, either
the
Respondent did not become entitled to the assets, as the purchase
price had not been paid, or. by virtue of the provisions
of clause
5.8 of the October Agreement (Annexure "W2"), the assets
vest in Plaswrap and no party has any other claim
against the other.
In Mr. Wallace's averment, the Applicants continued in their attempts
to find an amicable resolution to the
impasse that had been reached
due to the Respondent's refusal to pay for the assets and its
unlawful retention of the assets. Numerous
meetings were held and
correspondence exchanged. One of such correspondence is Annexure "W6"
to the Founding papers which
is a copy of a letter addressed to the
Respondent's attorneys by DF Malan. The following represents the
contents of Annexure "W6":
The
Respondent was notified that the concession to use the assets had
been revoked;
The
Applicants demanded the return of the assets and requested the
Respondent to confirm in writing that the concession had been
withdrawn and that the Respondent would cease using the assets;
The
Respondent was requested to place the assets at the disposal of the
Applicants at the premises and to provide the Applicants
with free
access so as to enable them to display same to prospective
purchasers;
The
Respondent was requested to confirm that the undertaking given in
regard to the removal of the assets remain in force (this
undertaking
is set out in Annexure "W7", a letter from the Respondent's
attorneys).
[8]
On 13 March 2008, the Respondent's attorneys responded to Annexure
"W6" by means of Annexure "W8" (also
attached to
the Founding papers), wherein it was pointed out that the meeting
referred to in Annexure "W6" was held without
prejudice.
This was confirmed by DF Malan by means of Annexure "W9"
and all relevant references to what was said at the
meeting was
removed from Annexure "W6". As it appears on Annexure
"W10*\ the Respondent demanded payment of cenain
amounts before
it would be prepared to hand over the assets to the Applicants. There
is a letter received from the Respondent's
attorneys which is also
annexed to the Founding papers as Annexure "Wll" in which
the Respondent among other things reiterated
its stance that clause
5.7 and 7.1 of the October Agreement (Annexure "W2") had
been "compromised" and that
the October Agreement had not
been adhered to. The Respondent also contended that in view of its
money expended on refurbishing
of the assets it is entitled to
continue using them.
[9]
Mr. Wallace drew the Court's attention to that in terms of clause 5.2
of the October Agreement, the purchase price for the assets
is stated
to be an amount of Nine hundred and ninety seven thousand five
hundred rand (R997 500.00) and that not a single cent
of that has
been paid to the Applicants. He reiterated that in terms of clause
5.7 of the October Agreement, the purchase price
had to be paid and
the agreement had to be confirmed. No purchase price was paid and
that in any event the October Agreement was
never confirmed. All
agreements having been of no force and effect and the Respondent
still refusing to deliver possession of the
assets to the Applicants,
Mr. Wallace concluded that the Applicants are enjoined by the Act to
secure the assets of Plaswrap, to
realize same and distribute the
proceeds amongst the creditors. In his contention the retention by
the Respondent of Plaswrap's
assets is unlawful under the
circumstances. He expressed a view that in any event the Respondent
cannot be permitted to hold the
liquidators to ransom by refusing to
return the assets until it receives payment.
[10]
THE
ANSWERING AFFIDAVIT
in
this matter was deposed to by one Patrick Manuel Terrence Norman, a
director of the Respondent who was duly authorized to do
so per the
resolution of the Respondent annexed to the Answering papers. Mr.
Norman stated that the Respondent's opposition to
the application is
premised on essentially four grounds. On the first ground, Mr. Norman
contends that Plaswrap was wound-up in
terms of section 344 (a) of
the Companies Act 61 of 1973 pursuant to a special resolution and not
on the basis that it was unable
to pay its debts. In his view
therefore the law of insolvency including section 69 of the
Insolvency Act 24 of 1936 ("the
Insolvency Act*') cannot
be
applied to the winding-up of Plaswrap. In his contention therefore
the relief sought by the application in terms of
section 69
(3) of
the
Insolvency Act is
not competent. In Mr. Norman's view, the
Applicants only have the power to launch legal proceedings of a civil
nature on behalf
of a company in terms of section 386 (4) (a) of the
Act if they have acquired the necessary authority to do so from
either the
creditors and members or contributors of the company or
from the Master in terms of section 386 (3) of the Act. In his
averment
the Applicants have failed to establish such authority, thus
rendering the application fatally defective.
[11]
He further pointed out that the liquidators can only succeed in
obtaining relief in terms of section 69 (3) if they can establish,
inter alia, that any property of the company in liquidation is being
unlawfully withheld from them. He referred to the October
Agreement
concluded between Plaswrap (prior to liquidation) and the Respondent
for the sale of the assets identified in Annexure
"A" to
the Founding papers. He contended that a contractual dispute exists
between the parties to the application. Mr.
Norman concluded that the
Applicants have failed to establish that the Respondent is unlawfully
withholding the assets from them
and their concomitant entitlement to
relief in terms of
section 69
of the
Insolvency Act. In
his
contention there exists a real and genuine dispute of fact such that
this matter cannot properly be decided on Affidavits,
thus leaving
the Court with only one option, namely, to dismiss the application
and enable the Applicants to proceed by way of
action. Mr. Norman
referred to clause 7.1 of the October Agreement where it is stated
that the Respondent wished to acquire control
of Piaswrap as a going
concern in such a manner that it could proceed with Plaswrap's
activities and supply agreements uninterruptedly.
He also referred to
clause 8.5 stating that the provisions of the agreement would be
binding on the liquidators and clauses 5.7
and 5.8 recording that the
purchase price of the assets would be paid after both the liquidation
of Piaswrap and the liquidators'
confirmation of the sale such that
the operation of Piaswrap would not be interrupted after the date of
liquidation. According
to Mr. Norman it was pursuant to the said
October Agreement and the liquidators' confirmation of the agreement
that since 1 December
2007 the Respondent has been in possession of
the assets. Concluding on this aspect Mr. Norman contended that the
October Agreement
was confirmed by the Applicants and is of full
force and effect. Mr. Norman quoted the provisions of section 339 of
the Act thus:
"In
the winding-up of a company unable to pay its debts the provisions of
the law relating to insolvency shall, insofar as
they are applicable,
be applied mutates mutandis in respect of any matter not specifically
provided for by this Act. "
Mr.
Norman concluded on this aspect as follows:
"In
the circumstances,
section 69
(3) of the
Insolvency Act is
not one
which can be invoked by the applicants in the winding-up of
Plaswrap.
The kind of relief which would have been available to the applicants
had they not confirmed the agreement would have been
that contained
in section 361 (3) of the Act which provides that in relation to the
winding-up of a company, with the Court's leave
a liquidator may
institute legal proceedings for the recovery of what is alleged to he
movable property belonging to the company.
"
[12]
Responding to paragraph 9 of the Founding Affidavit. Mr. Norman
responded as follows:
"34.
The purchase price was originally paid into the trust account of DF
Malan attorneys in accordance with the agreement.
By agreement, it
was later repaid to the respondent. The parties then delayed in
finalizing the execution of the October Agreement,
and by that time
the respondent was owed substantial sums arising from the business of
Plaswrap it was operating. These include:
34.1.
R140 851.58for rentals owing to the respondent for use of the
factory
1
premises
by Plaswrap;
34.2.
R439 352.54 for raw materials supplied by the respondent in order to
ensure that the business of Plaswrap during its liquidation
was
operated on a going concern basis uninterruptedly (as contemplated in
clause 7.1 of the October Agreement):
34.3.
R37 877.52for amounts which debtors of Plaswrap paid to the
applicants incorrectly instead of to the respondent in accordance
with the cession annexed to the October Agreement: and
34.4.
RI17 430.11 in interest in respect of the aforesaid amounts. "
[13]
According to Mr. Norman these amounts totaling Seven hundred and
thirty five thousand five hundred and eleven rand and seventy
five
cents (R735 511.75) are payable to the Respondent by the Applicants
in their administration of Piaswrap in liquidation, and
can be set
off against any amount which the Applicants allege to be owing to
them by the Respondent. In the view of Mr. Norman
events had
overtaken and the parties are at odds over the payment of the full
purchase price to DF Malan Attorneys as originally
contemplated in
clause 5 of the October Agreement. Mr. Norman contended that by
proposing an agreement to replace the October Agreement,
the
Applicants are merely confirming the fact that the October Agreement
is binding. He reiterated that the proposed agreement
to replace the
October Agreement evidenced by Annexure "W3" to the
Founding papers was never concluded between the panies.
He admitted
that with the permission of the Applicants, in their capacities as
joint provisional liquidators, the Respondent conducted
the business
of Piaswrap for its own account since 1 December 2007. He added,
however, that this was on the basis of what is contained
in the
October Agreement which makes express provision in clause 5 to 7 for
the acquisition of Plaswrap's assets, a cession of
Plaswrap's debtors
to the Respondent, and the latter s acquisition of Piaswrap as a
going concern in order to proceed with its
current activities and
supply agreements uninterruptedly.
[14]
In response to the averments contained in paragraph 12 of the
Founding Affidavit, Mr. Norman made it abundantly clear that
the
Respondent is not prepared to replace the October Agreement with the
proposed agreement, Annexure "W3" to the Founding
papers.
In response to averments contained in paragraph 15 of the Founding
Affidavit, Mr. Norman contended that by invoking clause
5.8 of the
October Agreement, the Applicants have by necessary implication
conceded that it is binding. Concluding on this aspect,
Mr. Norman
reiterated that
"in
the circumstances, although the applicants may be in a position to
obtain the necessary section 386 (3) authorization to
seek
contractual relief, there is absolutely no basis upon which they can
obtain search and seizure relief in terms of section
69 on the basis
that the respondent is unlawfully withholding the assets from them."
Mr.
Norman emphasized that the Respondent reiterates that its use and
possession of the assets arose from the conclusion of the
October
Agreement and not as a result of some concession given by the
Applicants.
[15]
Commenting on clause 5.8, Mr. Norman stipulated that it provides that
inter
alia,
ownership
in the assets would automatically vest in Plaswrap only if the
liquidators did not confirm the sale of the assets. Because
the
Applicants, in Mr. Norman's contention did confirm the October
Agreement, they cannot seek to rely on the provisions of clause
5.8
in an attempt to establish that the assets vest in them, and that
therefore the Respondent is in unlawful possession of the
assets. Mr.
Norman was concerned in that section 69 (1) prescribes that relief in
terms of the section must be invoked as soon
as possible after a
liquidator's appointment (including a provisional liquidator) but in
the instant matter the Applicants were
appointed as final liquidators
on 27 May 2008 and as provisional liquidators far earlier and they
did not act at all. In his contention
it is highly inappropriate at
this late stage to seek the extraordinary form of relief in terms of
section 69
of the
Insolvency Act. His
conclusion is that the
application falls to be dismissed with costs payable by the
Applicants personally because they were not
authorized to launch
these proceedings.
[16]
THE
REPLYING AFFIDAVIT
as
to be expected was deposed to by the same Mr. Wallace who deposed to
the Founding Affidavit. The Replying Affidavit as a starting
point
dealt with Mr. Norman's averment that the liquidators cannot avail
themselves of the provisions of the
Insolvency Act because
the
company was wound-up in terms of section 344 (a) of the Act and not
on the basis of its inability to pay its debts. Mr. Wallace
set the
record straight by stating that Piaswrap was in fact liquidated under
section 344 (h) of the Act and solely on the basis
that it was unable
to pay its debts. To evidence this fact he enclosed a copy of the
Founding Affidavit by Thomas Matthew Leak
in Case Number 16117/2007
used in support of the application for Plaswrap's liquidation and
this is marked as Annexure "W13"
to the Replying papers. He
contended that on this basis the Applicants are entitled to avail
themselves to the relevant provisions
of the
Insolvency Act.
[17
]
Mr. Wallace maintained that the Applicants never confirmed the
October Agreement and referred to the sequence of events in the
Founding papers illustrating this particular aspect. Mr. Wallace
referred to the contents of paragraph 43 of the Answering Affidavit
wherein the Respondent admits that it conducted the business of
Piaswrap with the permission of the Applicants. Mr. Wallace regards
the aforegoing admission as important in that if the Respondent had a
genuine belief that the October Agreement was in force, then
no such
permission could conceivably have been necessary. Mr. Wallace agreed
with the proposition that the liquidators are entitled
to relief in
terms of
section 69
(3) of the
Insolvency Act if
they establish that
the property of the company is being unlawfully withheld by the
Respondent. He submitted that upon a proper
reading of the contents
of the Founding Affidavit, that fact has been established. According
to Mr. Wallace the simple fact is
that the Applicants did not confirm
the October Agreement. Mr. Wallace dealing with the allegation of
refurbishment of the assets
lambasted the Respondent as follows:
"If
the October Agreement had been binding on Applicants (which it is
not) a dispute with regard to the refurbishment of the
Assets could
not justifiably have formed a dispute with regard to that agreement,
as it does not deal with the subject of refurbishing
at all. Clause
8.3 of the October Agreement requires that any amendments, deletions
or additions thereto must be in writing and
signed by the parties,
but there is no such signed instrument, and the subject of
refurbishment could not have become part of the
October Agreement by
amendment or otherwise."
[18]
Mr. Wallace disputed that paragraph 21 of the Founding Affidavit
confirms "the existence of the contractual dispute."
He
contended that in as much as paragraph 21 refers to a dispute, such
dispute concerns the unlawful withholding of the Assets
from the
Applicants as contemplated by
section 69
(3) of the
Insolvency Act.
He
emphatically denied that there are disputes of fact between the
parties contending that the disputes are of a legal nature. Mr.
Wallace proceeded to point out what he called "the inaccuracies"
contained in the Answering papers and these are in connection
with
the alleged scheme of arrangement - which is disputed by the
Applicants.
[19]
Mr. Wallace stated that the Respondent however, nevertheless wished
to acquire the assets, but only if the operations of Piaswrap
carried
on without interruption and certain disbursements which were not
provided for in the October Agreement, would be subtractable
from the
purchase consideration of R1.3 million. According to Mr. Wallace the
Applicants were prepared to make the concessions
which the Respondent
desired and therefore did not confirm the October Agreement, but
rather gave the Respondent permission to
use the Assets in the
conduct of Piaswrap for own account as from 1 December 2007 pending
the conclusion of the "W3"-Agreement
and so that the
operations of Piaswrap would not be interrupted. He thus denied that
the Respondent has been in possession of the
Assets since 1 December
2007 by virtue of the Applicants' confirmation of the October
Agreement. Responding to paragraph 34 of
the Answering Affidavit, Mr.
Wallace admitted that the purchase price was originally paid into the
trust account of DF Malan Attorneys
in accordance with clause 5.3 of
the October Agreement and he added that this took place prior to the
liquidation of Piaswrap on
14 November 2007. He emphatically denied
that the purchase price was repaid by virtue of any agreement with
the Applicants. In
Mr. Wallace's view it is quite preposterous to
suggest that the Applicants would have repaid the purchase price
after confirming
the October Agreement which (according to the
Respondent) already occurred prior to 1 December 2007.
[20]
Mr. Wallace, responding further on the content of paragraph 34 of the
Answering Affidavit remarked that it is not clear what
the Respondent
meant by stating that the parties delayed the October Agreement. Mr.
Wallace stated that if the Respondent intended
to say that the
implementation of the October Agreement was delayed then it needs to
be made clear that there is nothing in the
October Agreement which
the Applicants were able to delay (except perhaps delaying confirming
it). Mr. Wallace reiterated that
the amount of Seven hundred and
thirty five thousand five hundred and eleven rand and seventy five
cents (R735 511.75) is not owed
to the Respondent on any basis, not
even on the basis of the October Agreement if it had been confirmed,
let alone as a cost of
administration of the insolvent estate.
[21]
Mr. Wallace denied that the reference by him to replacing the October
Agreement with "W3"-agreement meant that the
October
Agreement was in force. According to Mr. Wallace, that simply meant
that the October Agreement (which was not in force)
was to be
replaced with one that would be in force. Mr. Wallace accepted that
the Respondent by way of the October Agreement prior
to 31 December
2007 purchased the Assets from Plaswrap but not from the Applicants.
But the true position is that the ownership
of the Assets in
accordance with clause 5.7 and 5.8 of the October Agreement
automatically reverted to Plaswrap when the October
Agreement was not
confirmed and the purchase price was not paid. The possession by the
Respondent of the Assets as from 1 December
2007 was by virtue of the
permission granted by the Applicants. Concluding on this aspect, Mr.
Wallace stated the following:
"When
the Applicants gave their aforesaid permission, the Respondent had
already been in possession of the Assets and was already
conducting
the company pursuant to the October Agreement...It stands to reason,
under these circumstances, that the aforesaid permission
would not
have been required if the Applicants confirmed the October Agreement.
"
The
Respondent introduced a further Affidavit with leave of the Court in
which it attached Annexure "PN3.2" which is intended
to
show that the October Agreement was confirmed. Mr. Wallace dealt with
how Annexure PN3.2" came about in a subsequent Affidavit.
DISCUSSION
[22]
It shall perhaps be helpful to first set out the provisions of
section 69
(3) of the
Insolvency Act. It
provides as follows:
"
(1)
A
liquidator shall, as soon as possible after his appointment...take
into his possession or under his control all movable
property...belonging
to the estate of which he is trustee and shall
furnish the Master with a valuation of such movable property by an
appraiser appointed
under any law relating to the administration of
the estates of deceased persons or by a person approved of by the
Master for the
purpose.
(2)
If the liquidator has reason to believe that any such property ...is
concealed or otherwise unlawfully withheld from him, he
may apply to
the Magistrate having jurisdiction for a search warrant mentioned in
sub-section (3).
(3)
If
it appears to a Magistrate to whom such application is made...that
there are reasonable grounds for suspecting that any property...
belonging to an insolvent estate is concealed...or is otherwise
unlawfully withheld from the liquidator concerned...he may issue
a
warrant to search for and take possession of that property..."
It
would appear that there is some measure of confusion caused by the
fact that there was an
ex
parte
application
for liquidation. It emerges from the papers that
Ex
parte
application
was withdrawn and Piaswrap was liquidated on the allegations
contained in the Founding Affidavit deposed to by Mr. Leak
on 8
November 2007. The contents of the said Mr. Leak's Affidavit make it
abundantly clear that Piaswrap was wound-up on the grounds
that it
was unable to pay its debts. It was also contended initially on
behalf of the Respondent that the Applicants had no
locus
standi
to
launch these proceedings. I must, however, mention that this
contention was not at all pursued by Mr. Howie on behalf of the
Respondent in his oral submissions. In any event, the papers show
that the resolutions adopted at the second meeting of creditors
(held
on 22 August 2008) particularly Resolution 4 clearly authorize the
Applicants to institute these proceedings.
[23]
Mr. Howie contended that the contents of the further Answering
Affidavit of the Second Applicant ("Wallace") confirm
that
there are material disputes of fact which were known to the
Applicants prior to them launching this application, particularly
in
regard to the existence of the October Agreement. In Mr. Howie's
submissions an application in terms of
section 69
of the
Insolvency
Act is
an application for final relief and accordingly, the
determination of this application is subject to the rule stated in
Plascon-Evans
Paints Limited v Van Riebeeck paintis (Pty) Ltd.
Relying
on
TMT
Bulk Co. Ltd v Bunkers
laden
aboard the MV "Vogerunner"
2010 (3) SA 138
(C) paragraph [
13], Mr. Howie contended that the result is that, in the absence of
any basis to reject the factual assertions
of the Respondent as
obviously untenable, the Court is able to accept their validity and
probity and can also accept the documentation
filed in support of its
opposition at face value. The crux of the Respondent's submission is
essentially that it is not in unlawful
possession of the assets
belonging to Plaswrap in that the October Agreement is alive and
kicking - that is it exists and has a
binding effect as mentioned
earlier on in this Judgment. It is a fact that Plaswrap concluded the
October Agreement with the Respondent
and that was prior to its
liquidation. The October Agreement is annexed to the Founding papers
and is marked Annexure "W2".
It is necessary to set out
some of the provisions of the October Agreement, namely:
"5.3
Bermy shall pay the Purchase Price into the trust account of DF Malan
Attorneys to be held by such attorney on Bermy
's
behalf
pending fulfillment of the provisions set out in
5.7
below;
5.4
Upon payment of the Purchase Price the Assets will be deemed
automatically to have been delivered to and vest in Bermy."
We
know from the same October Agreement that the purchase price that
should have been paid to DF Malan is the sum of Nine hundred
and
ninety seven thousand five hundred rand (R997 500.00)
[24]
The following provisions of the October Agreement also deserve to be
quoted in this Judgment:
"5.7.
The Purchase Price will be paid to Piaswrap after the liquidation of
Piaswrap once the Liquidator confirms the sale of
the Assets in a
manner that renders Bermy's title to the Assets indisputable, and the
business operations of Piaswrap shall not
have been interrupted after
the date of liquidation.
5.8.
In the absence of such confirmation by the Liquidator the Purchase
Price will be repaid to Bermy and ownership in the Assets
will again
vest in Piaswrap and no party will have any claim against the other
parry by virtue of the failure of the purchase.
"
It
does not appear that the Respondent complied with the provisions of
the above quoted clause 5.3 of the October Agreement. Whilst
it is
true that a certain amount (not the agreed R997 500.00) was indeed
paid into DF Malan Trust account towards this end, the
same sum of
money was returned to the Respondent on its request. The Respondent
does not deny this. All the Respondent says in
this regard is that it
was returned to it in terms of the agreement subsequently entered
into. I understand that to mean an agreement
other than the October
Agreement. The fact of the matter is that neither Piaswrap nor the
Applicants had received payment of the
purchase price in terms of the
October Agreement. I hardly understand the stance taken by the
Respondent in this regard because
it contends that events had
overtaken and that the parties were at odds regarding the payment to
the attorneys of the full purchase
price.
[25]
The above quoted clauses of the October Agreement that is. clauses
5.3, 5.7 and 5.8 read together make it abundantly clear
that the
purchase price (which should have been paid to DF Malan) would be
paid to Plaswrap after liquidation. There is no dispute
on the fact
that it did not happen like that. 1 have said above that I do not
understand the Respondent's stance of events having
been overtaken.
This smacks of a clear attempt of avoiding the clear and unequivocal
provisions of the October Agreement. I also
cannot comprehend the
contention that the money paid into the DF Malan trust account was
refunded to the Respondent on the basis
of a subsequent agreement. If
the October Agreement is valid and still has legal force as contended
by the Respondent then any
alleged waiver or amendment thereto falls
foul of the provisions of clauses 8.2 and 8.3 of the same October
Agreement. It may be
helpful to also set out these clauses
infra:
"8.2.
Except as expressly provided to the contrary in this Agreement, none
of the terms and conditions of this Agreement are
capable of being
waived, amended, added to or deleted, unless such waiver, amendment,
deletion or addition is reduced to writing
and signed by the Parties
hereto.
8.3
No relaxation or indulgence granted by the one Party to the other
will in any way limit or prejudice the rights of the Party
granting
such indulgence, the rights of whom shall remain unaffected as if
such indulgence had not been granted at all. Any- such
indulgence
shall also not constitute an estoppel in favour of or against any of
the Parties or constitute a waiver or a novation
of any such right or
of this Agreement, nor shall any single or partial exercise of any
right preclude any other or future exercise
thereof or the exercise
of any other right under this Agreement. "
[26]
It is contended by the Applicants that they had not confirmed the
October Agreement. The Respondent of course contended differently
and
on its behalf heavy reliance is placed on a letter, Annexure "PN3.2"
to the Respondent's papers introduced to these
proceedings, by way of
an application to file a further Affidavit. This is an e-mail the
Respondent apparently found to exist far
after having filed its
Answering Affidavit. The authors of Annexure "PN3.2" are DF
Malan Attorneys. This Annexure reads:
"Dear
Mr. Norman
1.
We refer to our telephone conversation of this morning with regard to
your taking over of the assets of Piaswrap as set out in
the
agreement of 29 October 2007.
2.
We informed you that the liquidator has instructed us to let you know
that you have to duly perform in terms of the aforesaid
agreement by
no later than Friday 24 October 2008.
3.
If you fail or refuse to do so the liquidator will take such further
steps as he in the circumstances deem fit. These steps may
include,
without prejudice to his other rights, cancellation of the said
agreement and the sale of the assets concerned by public
auction or
other private treaty.
4.
We record that you responded by saying that you intended to make a
new offer to the liquidator by not later than Friday the 24
l
\
"
The
above e-mail was addressed to PMT Cell Solutions (Pty) Limited and
marked for the attention of Mr. Patrick Norman. Mr. Howie
submitted
that the Applicants needed to show that the Respondent is in unlawful
possession of the assets of Plaswrap. In his submission
a fact which
is detrimental to their (Applicants') being able to discharge this
onus is if the October Agreement was concluded
between the parties
because then the Respondent took possession of the assets and
maintains them pursuant to a contract and therefore
not unlawfully.
Mr. Howie contended that the "elephant in the room" is the
telefax of 21 October 2008 (Annexure "PN3.2")
in which the
existence of the October Agreement is confirmed. Mr. Howie placed
heavy reliance on the following words from Annexure
"PN3.2":
"We
informed you that the liquidator has instructed us to let you know
that you have to perform in terms of the aforesaid agreement...
".
and
contended that there was confirmation and that therefore there is a
dispute of facts.
[27]
Mr. Wallace, the deponent to the Applicants' Answering Affidavit in
the application to file further Affidavit explained the
coming into
being of Annexure "W2" (an unsigned agreement intended to
replace the October Agreement). He was anxious
that the Respondent
sign this proposed agreement. When it appeared to him that the
Respondent was deliberately delaying in order
to gain the advantage
of using the assets as long as possible without paying anything for
them he warned the Respondent that he
would have to accept that it
had in fact declined the "W2" agreement. According to Mr.
Wallace he then directed his attorney
to direct "PN3.2" to
the Respondent in an effort to encourage the Respondent to finalize
the "W2
V
agreement.
According to Mr. Wallace,
"for
this reason it was stated in paragraph 1 of the e-mail that the
assets were to he taken over pursuant to the October Agreement,
notwithstanding that the October Agreement had not yet been
confirmed, but covertly thereby threatening that Applicants might do
so ".
It
is of paramount importance that I quote the following paragraph
4.8
of Mr. Wallace's Affidavit aforementioned:
"4.8
I
,
however,
point out that the e-mail "PN3.2 ", does not in itself
confirm the October Agreement, nor does it state that
the October
Agreement had already been confirmed, and thus the lack of evidence
from the side of Respondent on the question of
confirmation, in my
view, remains unresolved, while there is overwhelming other evidence,
as appears from all Applicants' papers
in the main Application, that
the October Agreement had not been confirmed and that Respondent was
perfectly aware of this. "
[28]
Apart from the interpretation which the Respondent attaches to
Annexure "PN3.2" I have come upon no other document
in the
instant matter that demonstrates that the Applicants did in fact
confirm the October Agreement. Clause 5.8 quoted earlier
on in this
Judgment makes it abundantly clear what must happen in the event that
the October Agreement is not confirmed by the
Applicants. It provides
that in that eventuality the purchase price will be repaid to the
Respondent and that ownership in the
assets will again automatically
vest in Piaswrap and no party will have any claim against the other
party by virtue of the failure
of the purchase. 1 have demonstrated
above that what purported to be the purchase price was in fact repaid
to the Respondent at
its request. As matters stand no purchase price
was paid therefore. I do not agree with Mr. Howie that Annexure
"PN3.2"
is or purports to be confirmation envisaged in
clause 5.8 of the October Agreement. Annexure "PN3.2" is
also, in my finding,
no evidence that the October Agreement was ever
confirmed by the Applicants. Annexure "PN3.2" is probably
badly drafted
particularly the portion relied on by Mr. Howie. The
explanation tendered by Mr. Wallace quoted in the aforegoing
paragraph puts
this beyond any possible misinterpretation. My finding
having had regard not only to the papers filed in this matter, but
also
to the submissions made on behalf of the parties is that the
October Agreement was never confirmed by the Applicants and that
therefore
in terms of clause 5.8 thereof the October Agreement fell
away or ceased to exist. In terms of clause 5.8 therefore no purchase
price needs to be repaid to the Respondent because the latter did not
pay the purchase price into the trust account of DF Malan
in terms of
clause 5.3 of the October Agreement. The ownership in the listed
assets therefore automatically vest in Plaswrap in
terms of clause
5.8 of the October Agreement.
[29]
I am more than mindful of the fact that it is contended on behalf of
the Respondent that the October Agreement is still of
legal force.
Even if it were to be accepted for purposes of argument that the
Respondent is correct in the latter regard, the question
that almost
spontaneously comes to mind is why then did the Respondent not comply
with what it contends is a valid and legally
binding Agreement? The
Respondent cannot point out a single respect in which it complied
with the October Agreement. That the Respondent
is holding or is in
possession of the assets belonging to Plaswrap unlawfully is beyond
question. The Respondent has over the years
enjoyed the use of these
assets in the furtherance of its own business activities without even
paying rentals for such use. It
is untenable that the liquidators are
alleged to have confirmed the October Agreement without any reference
to any such actual
confirmation by them. Immediately such an
allegation of confirmation is made (as made by the Respondent) then
the next question
is how did they confirm? Probably the Respondent is
intimating that this Court should infer such confirmation from the
conduct
of the Applicants. But which conduct of the Applicants
portraits such confirmation? Certainly not the contents of Annexure
"PN3.2"
I have already expressed my views on Annexure
K
PN3.2
t
*.
I would agree with Mr. Olivier that no date, time, place or person
who allegedly confirmed the October Agreement on behalf of
the
Applicants are given and that therefore the alleged confirmation is
and remains vague and unsubstantiated. It is hardly supported
by any
relevant fact or circumstance. The Respondent clearly failed to pay
in terms of the October Agreement but it retained the
assets of
Plaswrap. On the question of costs I am of the view mat in all
fairness costs should follow the cause. It is common cause
that when
the relationship started between the parties the intentions were
good.
[30]
ORDER:
(a)
In respect of the liquidation of Plaswrap (Pty) Limited (in
liquidation) ("the company"), the Sheriff is hereby
authorized
and ordered in terms of section 69 (3) of the Act, read
with section 21 of Act 51 of 1977 ("the Criminal Procedure
Act").
to enter and search the properties situated at 4 Eagle
Street. Okavango Park, Brakenfell, Western Cape, to attach the
movable assets
set out in Annexure "A" hereto ("the
assets") and make an inventory thereof.
(b)
The Sheriff is hereby authorized and ordered in terms of section 69
(3) of the Act, to take possession of the assets.
(c)
The Sheriff is hereby authorized and ordered in terms of
section 69
(4) of the
Insolvency Act, to
deliver all the attached assets to the
Applicants herein, in their capacities as joint liquidators of the
company.
The
costs of this application as well as all the costs incurred in
respect of the execution of this order (including all costs
reserved
for later determination), taxed on an attorney and client scale,
shall be paid by the Respondent.
DLODLO,
J
Annexure
A
SCHEDULE OF THE ASSETS SOLD BY PLASWRAP TO BERMY
Quantity
Serial
No.
Description
Purchase
Price
Per
Item
1
12S7
Complete Dole; Extrusion Line
R325.OOO.00
1
1976
Complete Dolci Extrusion Line
R325.000.00
1
Complete Recycling Line
R160,OOC.O0
2
Complete Ribbon Mixers
R25.000.00
1 1 Samsung Forklift
R25.000.0G
TOTAL
PURCHASE PRICE
R997.500.00