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[2016] ZAECPEHC 53
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Future Corp (Pty) Ltd v Qingqani Ma-Afrika CC (4769/2015) [2016] ZAECPEHC 53 (20 September 2016)
Not
Reportable
IN
THE HIGH COURT OF SOUTH AFRICA
EASTERN
CAPE LOCAL DIVISION – PORT ELIZABETH
Case No:
4769/2015
Date
Heard: 15/09/16
Date
Delivered: 20/09/16
In
the matter between:
FUTURE
CORP (PTY)
LTD
Applicant
(REGISTRATION
NO: 2011/138308/07)
and
QINGQANI
MA-AFRIKA
CC
Respondent
(REGISTRATION
NO: 2006/07694/23)
JUDGMENT
LAHER,
AJ
[1]
This application for the winding up of the respondent is brought on
the basis that the respondent is unable to pay its debts
as
contemplated by section 68(c) read with section 69 of the Close
Corporation Act 69 of 1984 (hereinafter referred to as “the
Act”) and on the basis that it is just and equitable that the
respondent be wound up. On 26 May 2016 a provisional
liquidation order was granted and this is the extended return day of
the provincial liquidation order.
[2]
It is not in dispute that the Applicant advanced certain amounts of
money to the Respondent in terms of various agreements entered
into
between the parties during the period 30 June 2014 and 6 December
2014. The amounts advanced were to finance certain
construction
projects undertaken by the Respondent.
[3]
By August 2015 the Respondent had only repaid part of the amount so
advanced and a balance of R 675 964,71 remains due and payable.
On 3 August 2015 the
Applicant made written demand from the Respondent for the balance
owing to it. Payment was called for by no
later than 24 August 2015.
[4]
The Respondent failed to make the payment as demanded.
There were attempts to
renegotiate payment of the amounts due, but these negotiations came
to naught.
[5]
The Respondent does not deny being indebted to the Applicant.
The Respondent seeks to
avoid being liquidated by placing its fate in the judicial discretion
given to Courts hearing applications
like this, to decide whether an
entity should be finally liquidated or not.
[6]
What is more, the Respondent alleges that were it not for these
proceedings, payment might have been forthcoming on certain
awards
made in its favour arising from pay disputes it had with the Nelson
Mandela Bay Development Corporation.
In
the result, the Respondent pleads with this Court not to grant a
final order.
[7]
As envisaged in terms of the provisions of
Section 69(1)
of the
Close Corporations Act No 69 of 1984
, the
Applicant made demand requiring the Respondent to pay its
indebtedness by no later than 21 days after being served with that
demand.
[8]
The Respondent failed to make the demanded payment and therefore the
Applicant proceeded to launch the present application,
claiming that
the Respondent is unable to pay its debts. The Applicant
therefore alleges that the Respondent is commercially
insolvent.
[9]
The Respondent alleges that it is not insolvent and in fact has
several large monetary awards made in its favour and from which
amounts Applicant’s claim will be settled in full. Essentially
the Respondent seeks time to do so by relying on the discretion
this
Court has in deciding on whether to liquidate an entity or not.
[10]
The Respondent is calling on the Court to refuse the final relief
sought or at least postpone the final liquidation of the
Respondent
until after it has been given additional time to recover the amounts
awarded to it.
[11]
The Respondent does not dispute being indebted to the Applicant in
the amounts claimed.
The
Respondent does not dispute being in default of paying the amounts
due to the Applicant.
[12]
In the judgment of
Absa
Bank Ltd v Rhebokskloof (Pty) Ltd
1993 (4) SA 436
(C),
Berman
J remarked at
440F
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 exceed 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. As Caney J said in Rosenbach &
Co (Pty) Ltd v
Singh's Bazaar (Pty) Ltd
1962 (4) SA 593
(D) at 59 7E-F:
'If
the company is in fact solvent, in the sense of its assets exceeding
its liabilities, this may or may not, depending upon the
circumstances, lead to a refusal of a winding-up order; the
circumstances particularly to be taken into consideration against the
making of an order are such as show that there are liquid assets or
readily realisable assets available out of which, or the proceeds
of
which, the company is in fact able to pay its debts.'
Notwithstanding
this the Court has a discretion to refuse a winding-up order in these
circumstances but it is one which is limited
where a creditor has a
debt which the company cannot pay; in such a case the creditor is
entitled, ex debito justitiae, to a winding-up
order (see Henochsberg
on the Companies Act 4th ed vol 2 at 586; Sammel and Others v
President Brand Gold Mining Co Ltd
1969 (3) SA 629
(A) at 662F)".
[13]
The aforesaid passage was referred to with approval in the more
recent matter of FIRSTRAND BANK v LODHI 5 PROPERTIES INVESTMENT
2013
(3) SA 212
(GNP).
[14]
The Applicant submits that on the various concessions made by the
Respondent in respect of, particularly, being indebted to
and being
in default of payment to the Applicant, that the Applicant is
entitled to its relief. The Applicant submits that
the
Respondent is, by definition, commercially insolvent.
[15]
Firstly, the Respondent contends that it is not insolvent. The
Respondent contends that this much is evident from a proper
reading
of the arbitrator’s award in its favour, as well as the quantum
of a pending dispute referred to the Public Protector’s
Office.
[16]
Secondly, the Respondent contends that there is a sufficient body of
fact and rationality in what it has on offer to result
in a
reasonable pragmatic programme of payments that this Court should
exercise it’s discretion by not granting the Applicant
final
relief.
[17]
I have had regard to the matter of ABSA BANK LIMITED v NEWCITY GROUP
(Pty) Ltd AND ANOTHER RELATED MATTER
[2013] 3 ALL SA 146
(GSJ),
relied on by counsel for the Respondent, but am of the view that on
the facts it is distinguishable from the present matter.
[18]
In that matter, the Respondent placed before Court a detailed and
comprehensive proposal that appeared, at least on the face
of it, to
plan a restructuring of its debt that would allow that Respondent to
continue in existence on a solvent basis.
[19]
Presently, there is nothing of the sort before this Court. At
most, the Respondent is advancing that certain amounts
already
awarded and others that might still be awarded, will yield sufficient
cash money to settle Applicant’s claim.
[20]
I am of the view that what has been advanced by the Respondent herein
falls short of what had been done in the aforesaid NEWCITY
matter and
has not persuaded me to deprive the Applicant who is entitled,
ex
debito justitiae
,
to a winding-up order.
[21]
If regard is further had to the extended period of time the
Respondent has been in default of its payment of the amount(s)
due to
the Applicant and the nature of and the relatively recent source of
the funds it now relies on to settle its indebtedness
to the
Applicant, I hold the considered view that the Respondent is not only
commercially but indeed factually insolvent.
[22]
I therefore make the following order:
1.
The Rule Nisi granted on 26 May 2016 is confirmed and the costs of
this application be costs in the liquidation,
including the reserved
costs of 26 January 2016 and 9 February 2016.
_______________
RB
LAHER
Acting
Judge of the High Court
Counsel
for the applicant, Adv T Zietsman instructed by Du Toit Attorneys.
Counsel
for the respondent, Adv M Beneke instructed by Zolile Mgqeza
Attorneys.
Date
Heard: 15 September 2016
Date
Delivered: 20 September 2016