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[2010] ZAGPPHC 96
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Standard Bank of South Africa Ltd v Heatco CC (64434/09) [2010] ZAGPPHC 96 (26 August 2010)
IN
THE NORTH GAUTENG HIGH COURT, PRETORIA
Case number: 64434/09
Date heard: 02/08/2010
Date of
Judgment:26/08/2010
In
the matter between:
STANDARD
BANK OF SOUTH AFRICA LTD APPLICANT
and
HEATCO
CC RESPONDENT
JUDGMENT
Hiemstra
AJ
[1]
This is an application for the winding-up of the Respondent on the
alleged grounds that the Respondent is unable to pay its
debt and
that it is just and equitable for the Respondent to be wound up.
[2]
The Applicant alleges that the Respondent is indebted to it in the
sum of R3 917 001.74 as a result of fraud committed by a
member of
the Respondent, a certain Pieter Abraham Bredenkamp. It is alleged
that the Respondent, represented by Bredenkamp. had
represented to
the Applicant that certain goods covered by an instalment sale
agreement between the Applicant and a company, Intuitions
Quality
Flowers (Pty) Ltd (in Liquidation) ("Intuitions"), had been
delivered to Intuitions and acquired by Intuitions
from the
Respondent whereas in fact, the goods had not been delivered. Acting
on the strength of the alleged misrepresentation,
the Applicant paid
the sum to the Respondent The Applicant accordingly alleges that it
has no reservation of ownership as provided
for In the instalment
sale agreement and will not be able to recover the loan from
Intuitions, which has in the mean time been
liquidated. Its only
recourse is therefore an action for damages against the Respondent on
the ground of the fraud perpetrated
by Bredenkamp.
[3]
The following facts appear to be either common cause, or not placed
in dispute: The Respondent, represented by Bredenkamp. had
agreed
with Intuitions, represented by a certain Chammas, tc deliver certain
goods to Intuitions and to install them. On 20 February
2007. the
Respondent issued an invoice for R3 000 141.88 to Intuitions for the
agreed price of the goods and installation. After
further
negotiations, the price for the goods and installation was increased
to R3 917 001.74, and a fresh invoice for this amount
was issued on
20 March 2007.
[4]
The goods in question, as reflected in the invoice, included "KETEL
1400 KW COMPLETE DELIVERED", quantity 12 and "POMP
NM40/12AE 2.2 KW" quantity 12.
[5]
Shortly after the invoice was issued, the Respondent agreed with
Intuitions to replace the 12 kettles with one large kettle
and the 12
pumps with 3 larger pumps.
[6]
On 4 April 2007 the Applicant paid to the Respondent the amount
reflected in the invoice. Respondent claims that it has delivered
and
installed the goods as agreed, including the large kettle and the
three pumps. The Respondent attached to its answering affidavit
photographs taken on the premises of Intuitions of installed large
equipment, such those described in the invoice. Although the
Applicant initially claimed that the goods had not been installed at
all, it did not dispute in its Replying Affidavit that the
goods on
the photographs had actually installed as alleged by the Respondent.
The Respondent's original case was reduced to the
allegation that
there is a discrepancy between the goods installed and those
reflected in the invoice.
[7]
Mr M.P. van der Merwe. appearing on behalf of the Applicant, argued
that by virtue of the change of the items specified on the
invoice,
it has no protection of a valid reservation of ownership over the
assets. Intuitions have in the mean time been liquidated
and the
Applicant may be unable to recover the amount advanced to it. It is
correct, as pointed out by Mr van der Merwe, that both
invoices
created the impression that the goods had been delivered by the time
the money was paid to the Respondent and that it
had paid over the
money on the strength of that impression, which was created by
Bredenkamp. However nothing turns on this apparent
misrepresentation
because the goods were in fact delivered, albeit not precisely the
goods as specified in the invoice.
[8]
It is not disputed that Bredenkamp, representing the Respondent, had
committed fraud on various other parties. However, on the
facts, it
does not appear that he had defrauded the Applicant. Mr van der Merwe
argued that the Applicant has suffered a loss,
or stands so suffer a
loss, as it has no valid reservation of ownership of the goods by
virtue of the incorrect description of
some of the goods. However, it
does not seem that the Applicant had made any attempt to have the
invoice rectified, insofar as
it may be necessary. On the
Respondent's version, the agreement between it and Intuitions had
been amended in the sense that certain
goods had been replaced by
others with the same function. The Applicant did not dispute that.
Rectification of the invoice should
not be an obstacle. In fact, all
parties will probably readily agree to such a rectification.
Photographs of the gooas on the premises
of Intuitions are attached
to the Answering Affidavit and they are still in possession of the
liquidator of Intuitions, The Applicant
did not allege that it had
attempted attach the goods.
[9]
On 27 August 2009, the Applicant's attorney wrote to the Respondent
demanding payment of the sum of R3 917 001.74. The letter
continues
to advise the Respondent that should its failure to pay the amount
persist for a period of 21 days, the Respondent shall
be deemed to be
unable to pay its debts within the meaning of s 69(1 )(a) of the
Close Corporations Act. 69 of 1984
. According to the Founding
Affidavit, the letter was delivered by the Sheriff at the
Respondent's registered address, as required
by
s 69(1
)(a).
[10]
The deeming provision has the effect of creating a rebuttable
presumption that the company in question is unable to pay its
debts.
In Ter Beek v United Resources CC and Another
1
.
Van Reenen J. referring to
s 68
of Act 69 said: "In view of the
fact that in terms of
s 68
of Act 69 of 1984 a Court's discretion in
regard to the winding-up of a close corporation operates even in
those instances where
the application for winding-up is based on a
deemed inability on the part of the close corporation to pay its
debts I incline to
the view that the provisions of s 69(1) of Act 69
of 1984 are merely supplementary lie extending wnat the subject
matter includes)
and prima facie (i.e rebuttable) Accordingly first
respondent is not precluded from assailing the 'conclusion of law'. .
which
results from a failure to respond to a statutory demand in
terms of s 69(1 )(c) of Act 69 of 1984 "
[11]
The Respondent did not respond to the statutory notice of 27 August
2009. Mr F.C. Nagel, a member of the Respondent, stated
in the
answering affidavit that since the Respondent denied liability for
the amount, it had rejected the letter with contempt.
Although the
alleged contempt is gratuitous, no negative inference can be drawn
from the Respondent's failure to respond. A response
would not have
averted the deeming provision. The only way, in terms of s 69(1 )(c)
in which the presumption can be averted is
to "pay the sum or to
secure or compound for it to the reasonable satisfaction of the
creditor."
[12]
The Respondent attached the financial statements of the corporation
for the year ending 29 February 2008 as well as a list
of its assets
to the Answering Affidavit. The deponent also stated that the
corporation has 51 employees and that its turnover
from the beginning
of the current financial year to date was R10 859 985.00. The
financial statements reflect a profitable organisation
with a
positive cash flow. Its assets are substantial. The only issues
raised by the Applicant in its Replying Affidavit are that
the
statements have not been signed and are not current. Although that is
correct, Mr Nagel confirmed the financial statements
and list of
assets under oath. Although the Respondent has not provided
conclusive proof of its financial health, in the absence
of evi- '
1997 (3) SA 315(C)
at 331dence to the contrary, the answering
affidavit is sufficient to rebut the presumption that it is unable to
pay its debts
[13]
The Applicant has for two reasons failed to make out a case for the
Respondent's liquidation. The first is that it appears
that the
Respondent has a bona fide defence to the claim. The second is that
the Respondent has rebutted the presumption created
by s 69 of the
Close Corporations Act that it is unable to pay its debts.
[14]
It is necessary for me comment on the manner in which the Applicant
is attempting to recover the amount paid to the Respondent
in respect
of the goods delivered and services rendered to Intuitions in terms
of the instalment sale agreement. It had at least
two alternative
courses of action at its disposal.
1.
It could have attached the goods by virtue of its reservation of
ownership This is obviously unattractive because it would have
had to
sell the gooas in order to recover as much as possible from the loan.
On the other hand, to have the Respondent wound up
would have been
equally cumbersome There may also have been problems because of the
incorrect description of some of the goods,
but as I have stated,
they are far from insurmountable.
2.
If it were convinced that It had been defrauded by the Respondent and
that it had suffered damages, it could have instituted
an action
against the Respondent.
[15]
The course of action adopted by the Applicant is clearly a tactical
device to compel the Respondent to pay the alleged debt.
It was held
in Alton Coach Africa CC v Datcentre Motors (Pty) Ltd t/a CMH
Commercial
2
that this was an abuse of the process and the Court made a punitive
cost order against the offending party. In Kalley Flooring
Co (Pty)
Ltd v President Carpeting Manufacturers Ltd
3
it was argued that no matter how sound the financial position of a
respondent company, any creditor was entitled to bring an application
for its : liquidation and thus force the company to either pay or
appear as a respondent in liquidation proceedings if it wanted
to
dispute the claim. Burger J rejected this submission, stating the
following at 683 - 684:
"After
the affidavit setting out the financial position of Kalley Flooring
was filed, it is clear that President Carpet Manufacturers
Ltd
persisted when it knew or ought to have known tha' Kalley Flooring
was not insolvent and that the application for liquidation
would not
be grantee if thereafter it persisted because it merely wanted to
recover its costs, then it was a simple matter to say
so and it would
have limited the relief prayed for accordingly. In that event might
have had a certain amount of sympathy But It
persisted with the main
application and it seems to me that it persisted solely to embarrass
Kalley Flooring and, in doing so,
it was abusing the process of
court"
It
is inevitably so that under today's circumstances the moment a
company's name is mentioned in court as respondent in liquidation
proceedings, or even when its name appears as such on the roll
published in a newspaper, that fact casts a shadow over its ability
to pay its creditors. Hence liquidation proceedings should not be
launched merely as an instrument to embarrass a solvent company
when
disputed questions of fact are involved "
[16]
The Respondent in this matter is also clearly a solvent company and
the Applicant has exposed it to severe embarrassment and
might even
have damaged its reputation by casting a shadow over its ability to
pay its creditors.
In
the result the application is dismissed with costs at an attorney and
client scale.
J.Hiemstra AJ
Date
heard: 2010-08-02
Date
of judgment: 2010-08-26
Applicants'
counsel: Adv M.P. van der Merwe
Applicants'
attorney: David Oshry & Associates
Respondents'
counsel: Adv J.A. Pieterse
Respondents'
attorney: Lategan Viljoen & Pretorius
1
1997
(3) SA 315(C)
at 331
2
:
2007
(6) SA 154(D)
3
1982
(4) SA681 (C)