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[2020] ZAECPEHC 27
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Scheffer v Art Holdings International (Pty) Ltd t/a Georgiou Future Investments (3463/2019) [2020] ZAECPEHC 27 (31 July 2020)
IN
THE HIGH COURT OF SOUTH AFRICA
EASTERN
CAPE LOCAL DIVISION, PORT ELIZABETH
Case No.: 3463/2019
Date Heard: 30 July 2020
Date Delivered: 31 July 2020
In
the matter between:
BENJAMIN
JOHANNES SCHEFFER
Applicant
and
ART
HOLDINGS INTERNATIONAL (PTY) LTD
t/a
GEORGIOU FUTURE INVESTMENTS
(Registration
number: 2017/108312/2017)
Respondent
JUDGMENT
RONAASEN
AJ:
Introduction
[1]
The applicant seeks the provisional winding-up of the respondent.
The application is opposed by the respondent.
[2]
It is alleged by the applicant that the respondent is indebted to
it
at least in the sum of R312 522.51, which indebtedness it is
alleged arises from the sale of a motor vehicle in circumstances
which I shall deal with more fully, below. A further indebtedness in
the sum of R76 123.72 is alleged to exist. That
indebtedness is said to arise from the circumstances which gave rise
to the sale of the vehicle concerned.
Background
[3]
In the following paragraphs I deal with the facts against the
background
of which this application must be determined. Those
facts are largely common cause. To the extent that there are
disputes
of fact I do not regard those disputes to be material.
[4]
The respondent trades as a dealer in second-hand motor vehicles,
using the trading style of Georgiou Future Investments, from premises
situated at 124 Hurd Street, Fernglen, Port Elizabeth.
[5]
In January 2019 the applicant responded to an advertisement placed
by
the respondent for the sale of a Jeep motor vehicle (“the
Jeep”). This vehicle was advertised for sale at
a
purchase price of R300 000.00.
[6]
The applicant visited the respondent’s dealership where he
was
attended to by Mr Philip Georgiou and Mr Andrew van Eeden. The
applicant advised them that he was unable to purchase
the Jeep
without trading in his Volkswagen and Amarok motor vehicle (“the
Amarok”). The latter vehicle and been
purchased by the
applicant with the assistance of financing from Standard Bank to whom
he was still substantially indebted in respect
of the vehicle, to the
extent of some R366 153.97.
[7]
The respondent’s abovementioned representatives were keen on
accepting the Amarok as a trade-in, according to the applicant.
Further, according to the applicant, the respondent offered
him a
trade-in price for the Amarok in the sum of R290 000.00.
The sum was substantially less than his indebtedness
to Standard Bank
in respect of the Amarok and accordingly it was agreed with the
respondent that it would arrange finance for his
purchase of the Jeep
with Wesbank for the sum of R350 000.00. The excess in
respect of the purchase price of the Jeep
would be utilised to settle
his indebtedness to Standard Bank. Ultimately the respondent
arranged for financing the sum of
R375 000.00.
[8]
The applicant states that it was agreed with the respondent that
the
additional sum of R25 000.00 would be paid to him. In the
end R10 000.00 of the sum was used to install a better
sound and
navigation system in the Jeep. R15 000.00 was paid to him by the
respondent.
[9]
The respondent disputes the agreement to pay the applicant the sum
of
R25 000.00. The sum was to be used to install “mag
wheels” and tyres on the Jeep. According to
it the
applicant changed his mind in this regard and the sum of R23 452.14
was paid to him. The applicant, in reply,
admits the payment of
this sum to him, but says that it represents the aggregate of the
abovementioned sum of R15 000.00 and
one instalment owed by him
to Standard Bank in respect of the Amarok. As will be apparent
nothing turns on this dispute,
which is not material and does not
affect my determination of the matter.
[10]
The respondent denies that it accepted the Amarok as a trade-in.
It seems,
rather, that it advised the applicant that it would not
make commercial sense for him to trade in this vehicle. It
persuaded
him to leave the vehicle with it, on consignment, and allow
the respondent to sell the vehicle on his behalf.
[11]
There was some delay in the delivery of the Jeep to the applicant.
What precisely
occurred in this regard is also in dispute but, again,
nothing turns on this dispute.
[12]
The following is common cause in respect of the Amarok:
12.1.
during February 2019 respondent sold the Amarok to a third party for
the sum of
R332 500.00;
12.2.
no portion of this amount has been paid to Standard Bank or the
applicant.
To date Standard Bank remains the title holder in
respect of this vehicle;
12.3.
only the sum of R23 452 .14, referred to above, has been paid by
the respondent
to the applicant;
12.4.
the respondent contends that its failure to pay any portion of the
purchase price
of the Amarok to Standard Bank or the applicant is
justified in the circumstances. Those circumstances are,
however, far
from clear and cannot be discerned from the respondent’s
opposing affidavit. I shall deal more fully with this, below;
12.5.
a demand for payment to the applicant was addressed by’s
attorneys to the
respondent on 4 September 2019, to which was
responded by the respondent’s attorneys on 20 February 2020.
The response
was a denial of indebtedness. The letter is not a
model of clarity but it appears from the letter that the respondent
contended
an entitlement to withhold payment to the applicant or to
Standard Bank of the sum it had received in respect of the sale of
the
Amarok and would only pay over such sum to Standard Bank on
receipt of an exact settlement figure in respect of the Amarok.
This was confirmed in argument to be the principal “defence”
raised by the respondent in its opposing affidavit;
12.6.
the applicant has continued to pay Standard Bank monthly instalments
in this regard.
A total of R76 123,72 had so been paid to
Standard Bank. This is the sum referred to in paragraph [2]
above.
Statutory
background
[13]
The applicant contends that it is entitled to the provisional
winding-up of the respondent
as the respondent is unable to pay its
debts, alternatively, on the basis that it would be just and
equitable for the respondent
to be placed under provisional
winding-up.
[14]
In terms of item 9 of schedule 5 to the
Companies Act, 71 of 2008
the
provisions of chapter XIV of the Companies Act, 61 of 1973 continue
to apply to the winding-up and the liquidation of companies
under the
Companies Act, 2008
.
[15]
Section 344(f) of the Companies Act, 1973 provides that a company may
be wound up
by the court if the company is unable to pay its debts as
described in section 345 of the Companies Act, 1973.
[16]
Section 345(1)(c) of the Companies Act, 1973, in turn, provides that
a company shall
be deemed to be unable to pay its debts if it is
proved to the satisfaction of the court that the company is unable to
pay its
debts.
[17]
In terms of section 346(3) of the Companies Act, 1973 an application
for the provisional
winding-up of a company shall be accompanied by
certificate by the Master, issued no more than 10 days before the
date of the application,
to the effect that sufficient security has
been given for the payment of all fees and charges necessary for the
prosecution of
all winding-up proceedings and of all costs of
administering the company in liquidation until a provisional
liquidator has been
appointed, or, if no provisional liquidator is
appointed, of all fees and charges necessary for the discharge of the
company from
the winding-up.
[18]
Section 81
of the
Companies Act, 2008
allows for the winding-up of
solvent companies on the basis that it is just and equitable to do
so. In view of the conclusion
that I have reached in this
matter it is unnecessary for me to elaborate any further on the
provisions of this section.
Discussion
[19]
The respondent is clearly indebted to the applicant in respect of the
proceeds of
the sale of the Amarok. The respondent has,
however, raised two defences to the application. First,
it contends
that the security provided by the applicant in terms of
section 346(3) of the Companies Act, 1973 is “stale” as
it
was furnished more than 10 days prior to the date of the
application and that this makes the application fatally defective.
Second, it disputes the applicant’s entitlement to an order of
provisional winding-up in respect of the respondent, contending
principally that it is not indebted to the applicant and that its
alleged indebtedness is disputed on grounds founded in good faith.
[20]
The first defence can be relatively easily disposed of. The
certificate of
the Master confirming the furnishing of security, in
terms of section 346(3) of the Companies Act, 1973 must be “
issued
not more than ten days before the date of the application
”.
The words “
date of the application
” have been
interpreted to mean the date on which the notice of motion, setting
out the relief sought, is signed. See
De Wet NO v Mandelie
(Edms) Bpk
1983 (1) 544 SA (TPD) at 545H-546A. The notice
of motion in this matter was signed on 3 December 2019. The
certificate
contemplated by the section was issued on 4 December
2019. It can thus not be said to be “stale”.
[21]
Grounds for the second defence are hardly apparent from the
respondent’s opposing
affidavit. In this regard I
emphasise the following:
21.1.
the respondent was fully paid for the Jeep;
21.2.
the common cause facts referred to in paragraph [12] above support
the contentions
of the applicant;
21.3.
thus, the applicant was entitled to the full benefit of any sum
realised from the
sale of the Amarok;
21.4.
it is, furthermore, of no consequence whether the Amarok was traded
in with respondent
or was sold by it on consignment on behalf of the
applicant. In neither event would the respondent be entitled to
retain
the proceeds of the sale other than with the agreement of the
applicant. No such agreement is alleged;
21.5.
to the extent that a defence can be discerned from the opposing
papers of the respondent
it appears that such defence amounts to a
contention that the respondent was entitled, indefinitely, to hold
the proceeds pending
advices from the applicant as to the exact
extent of his indebtedness to Standard Bank. It was correctly
conceded in argument
that the amount owing to Standard Bank had been
furnished in the applicant’s founding affidavit. Thus the
response
to the applicant’s demand for payment sent by the
respondent’s attorney on 20 February 2020 after receipt of the
application
is disingenuous where it again cites the absence of such
information as a reson for withholding payment. That
contention,
in my view, is so far-fetched that it can be easily
rejected. Why not simply pay the amount it held to Standard
Bank particularly
as such payment would enable it to meet its
obligation to the purchaser of the Amarok;
21.6.
on its version the respondent was acting as the agent of the
applicant in respect
of the sale of the Amarok. It was
therefore obliged to follow instructions of the applicant as to the
disposal of the proceeds
of the sale. On the one hand it
contends that it was holding the proceeds of the sale pending
instructions from the applicant
as to his indebtedness to Standard
Bank. On the other hand, it says that it was under no
obligation to the applicant to pay
Standard Bank;
21.7.
any notion that the respondent could continue to hold the sale of the
proceeds of
the Amarok indefinitely must have been dispelled by the
applicant’s demand sent out on 4 September 2019 by his
attorney.
It is of no consequence whether this demand complied
with the provisions of section 345(1)(a) or not. It is clear in
its
terms, namely that the applicant required payment of his money,
which was being held by the respondent. The demand was ignored
for some five months and was only responded to the day before Mr
Georgiou deposed to the opposing affidavit on behalf of the
respondent.
In the response no discernible legal grounds are
set out as to why the respondent was entitled to continue to hold the
applicant’s
money despite clear instructions to the contrary
and having been furnished with the amount owing to Standard Bank in
the applicant’s
founding affidavit;
21.8.
the response to the demand and the respondent’s opposing
affidavit are obfuscatory
in the extreme and are not indicative of a
defence to the applicant’s claim, raised in good faith.
[22]
The allegation that the respondent is unable to pay its debts is
pertinently made
by the applicant in his founding affidavit.
The respondent, on the other hand, does not deal pertinently with
this allegation.
It contents itself with a denial that the
respondent is insolvent. An inability by a company
to pay its debts
does not necessarily equate to its factual
insolvency. Insolvency is not the test in winding-up
proceedings.
[23]
The respondent’s persistent refusal to pay the applicant,
directly, or Standard
Bank, on his behalf, the proceeds of the sale
of the Amarok, in the face of the demand of 4 September 2019 and in
the face of this
application, in circumstances where he has not set
out any legal basis for continuing to hold the applicant’s
money, satisfactorily
proves to me that the respondent is unable to
pay its debts. If, as the respondent says, its indebtedness to
the applicant
is disputed in good faith, why did he not demonstrate
such good faith by, for instance paying the amount it held to
Standard Bank
or by paying the money into the trust account of its
attorney to be held pending determination of the alleged dispute?
[24]
The purported defences raised by the respondent were nothing more
than attempts by
it to conceal its inability to pay its debts.
Conclusion
[25]
I am therefore satisfied that the applicant has made out a case for
the relief it
seeks in terms of the notice of motion.
[26]
The following order will thus issue:
1.
The respondent is placed under provisional winding-up in the hands of
the Master of the High Court.
2.
A rule
nisi
is issued with return date on Tuesday, 25 August
2020 at 9:30 calling on the respondent and interested parties to show
cause why
the respondent should not be placed under final winding-up.
3.
This order is to be served as follows:
3.1
by the sheriff on:
3.1.1
the respondent at its principal place of business;
3.1.2
the employees of the respondent at its principal place of
business;
3.1.3
the South African Revenue Service;
3.2
on creditors of the respondent by one
publication in each of
The
Herald
and
Die Burger
newspapers.
4.
The costs of this application will be costs in the liquidation.
O
H RONAASEN
ACTING
JUDGE OF THE HIGH COURT
Appearances:
For
Applicant:
Adv P du Toit instructed by Greyvensteins Inc, Port Elizabeth
For
Respondent: Adv I Lambrechts instructed
by Deon van der Merwe Attorneys
Inc c/o Wouter Minnie Attorneys, Port Elizabeth