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[2023] ZAFSHC 411
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Firstrand Bank Limited v Yenza Trading 519 CC t/a Masenkeng Marketing (5917/2022; 5772/2021) [2023] ZAFSHC 411 (23 October 2023)
IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Reportable: YES/NO
Of
Interest to other Judges: YES/NO
Circulate
to Magistrates: YES/NO
Case
number:
5917/2022
Case Number:
5772/2021
In
the matter between:
FIRSTRAND
BANK LIMITED
Applicant
[1]
and
YENZA
TRADING 519 CC t/a
MASENKENG
MARKETING
Respondent
[2]
Coram:
Opperman, J
Heard:
17
August 2023
Delivered:
23 October
2023.
This judgment was handed down in
court and electronically by circulation to the parties’ legal
representatives
via
email
and released to SAFLII on 23 October 2023. The date and time of
hand-down is deemed to be 15h00 on 23 October 2023
Judgment:
Opperman, J
Summary:
Insolvency
JUDGMENT
[1]
This is an opposed application for the
confirmation of a provisional order of the respondent’s winding
up granted on 23 March
2023. The applicant submits that the
respondent is factually and commercially insolvent and that it will
be just and equitable
for it to be liquidated.
[2]
The
remarks of the representative of the applicant in her replying
affidavit, dated and commissioned on 26 May 2023
[3]
and based on the information supplied by Mr Irvin Lyndon Ewertse that
is apparently the sole member of the respondent; make it
patently
clear that the proverbial writing is on the wall for the
respondent.
[4]
1.
In a summary judgment against Yenza the court
ruled on 5 May 2022 that
no
bona
fide
defence
in respect of the applicants claim(s) against the
respondent
was raised.
It was ordered that:
Having considered the
documents filed of record and having heard the legal practitioners,
IT IS ORDERED THAT:
Against
the first and second Defendants
[5]
jointly and severally the one paying the other to be absolved:
1.
1.1
Payment in the amount of R960 492.51;
1.2
Interest on the amount of R960 492.51 at a prime interest rate plus
2.05% per
annum, compounded monthly in arrears from 26 November 2021
until date of final payment, both days inclusive.
2.
2.1
Payment of the amount R1 087 670.13;
2.2
Interest on the amount of R1 087 670.13 at the prime interest rate
plus 6.75%
per annum, calculated daily and compounded monthly in
arrears from 1 November 2021 until date of final payment, both days
inclusive.
3.
Costs of suit on an attorney and client scale. (Accentuation
added)
2.
The operation of the law in terms of this order
must be abided. The court has found that the full indebtedness of
Yenza to FirstRand
is due, owing, and payable. This is
incontrovertible.
3.
Notwithstanding the fact that this court ordered
the respondent to make payment of its indebtedness, Yenza, at the
time of this
application, was not able to do so.
4.
This
fact alone is proof of the respondents’ insolvency and does it
cause some reservation to hang over the resistance by
the respondent
of the present application. Further on the respondent’s own
version is it no longer conducting business:
[6]
49.3.1. The
respondent's principal business was the delivery of bread through
contracts primarily concluded with Sasko;
49.3.2. The
respondent has sold its principal contracts with Sasko to Irko;
49.3.3. Irko
is purportedly also in the process of taking over all of the
respondent's vehicles without which
the respondent cannot effect
deliveries;
49.3.4. The
respondent no longer has any employees; and
49.3.5. The
respondent is further in the process of selling the sole immoveable
property which it owns and its sole remaining
source of income.
49.4.
Consequently, on the respondent's own version its ability to generate
income to satisfy its
indebtedness through the ordinary course of its
business dealings and affairs, as well as its substratum, has
disappeared. Accordingly,
on the respondent's own version it would be
just and equitable to grant a winding up order.
[3]
In his affidavit Mr Ewertse explained that they have endeavored to
rescue the business.
[7]
They
proposed to Irko, a loyal business acquaintance, to assist them. The
feedback was received around April 2023. It was the opinion
of Irko
that they would only be replacing an existing bond with new finance
and not put the business necessarily in a better position
to succeed
should they lend them money: replacing debt with new debt is not
helping them but rather reconciling arrears. In addition:
The
business as is, is quite marginal already and taking out rental
received, it cannot stand on its own.
Also,
there is
no room for drawings for
yourself
at this stage which further
contribute (sic) to the viability question. They went on to indicate
that:
The quorum felt Basie is
ultimately still the main entrepreneur (
as you are full-time
employed
) and we don't have enough history regarding judgements,
outstanding creditors, his personal balance sheet etc. and exactly
what
led to losses historically in the business (
pre-covid
).
The conditions & timeline set by the bank regarding the recalling
of the overdraft was (sic) also quite vague.
The outstanding
municipal account (by the looks of it several years) was a big
concern too
. They want us to have clarity on exactly what is
outstanding at SARS
for Yenza and Irko as Irko will likely
have to settle these accounts too if Yenza stopped all trading. Even
if we address all questions,
I think our main obstacles were the
business case and viability. Unfortunately, we decided to withdraw
the deal. If we cannot pass
it by the first committee, we won’t
be able to get it approved at the second committee. I'm so sorry
about this -
I was willing to take a chance on it, but the quorum
highlighted a few serious risks
which they do not feel
comfortable with. (Accentuation added)
[4]
The applicant is Firstrand Bank Limited, a
financial institution duly registered in terms of the applicable
legislation of this
country. It is also registered as a credit
provider in terms of the
National Credit Act 34 of 2005
. The
respondent is Yenza Trading 519 CC t/a Masenkeng Marketing, a close
corporation registered and incorporated in terms of the
prevailing
law. Its main place of business is registered in Heidedal,
Bloemfontein and its domicilium in Hamilton, Bloemfontein.
As already
indicated, Irvin Lyndon Ewertse is apparently the sole member of the
respondent.
[5]
Meskin
[8]
states with reference to case law that:
The
law regulating the winding up of a corporation is contained
substantially in the Close Corporations Act and the 2008 Companies
Act. Section 66(1) of the Close Corporations Act as amended in
terms of item 7 of Schedule 3 of the 2008 Companies Act, provides
for
the “laws mentioned or contemplated in Item 9 of Schedule 5”
of the 2008 Companies Act (i.e., Chapter XIV of the
1973 Companies
Act) to apply
mutatis
mutandis
to
the liquidation of a corporation in respect of any matter not
specifically provided for in the Close Corporations Act. In terms
of
item 7 of Schedule 3 of the 2008 Companies Act, section 67 of
the Close Corporations Act was amended so as to apply
Part G of
Chapter 2 of the 2008 Companies Act to the winding up of a solvent
corporation, and section 68 of the Close
Corporations Act
is repealed.
The
procedures applicable in the winding up of Close Corporations are
therefore essentially the same as those which apply in relation
to
companies
.
(Accentuation added)
[6]
In order to obtain a provisional winding up order FirstRand had to
establish its case on
a prima facie basis. Where the facts are
disputed, the court is not permitted to determine the balance of
probabilities on the
affidavits but must instead apply the
Plascon-Evans rule. Whereas a prima facie case sufficed for the grant
of a provisional order,
the grant of a final order requires proof on
a balance of probabilities. 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.
[9]
[7]
Mars
[10]
concluded with
reference to case law that:
In
the event of opposition being intended, affidavits setting forth the
grounds thereof should be lodged with the registrar of the
court and
served on the sequestrating creditor in sufficient time to enable him
to reply thereto; otherwise, a postponement may
be necessitated. An
applicant must normally stand or fall by his founding affidavit and
the facts alleged therein, subject always
to the court’s
discretion to allow a new matter in reply, subject in turn to the
respondent being granted an opportunity
to deal with the new matter.
Although it is permissible to supplement the allegations, the main
foundation of the application is
that stated in the founding
affidavit. The applicant may, however, rely on any information
contained in the papers before the court,
including facts set out in
the respondent’s and in the intervening creditor’s
affidavits.
[8]
Imperative in this instance is the fact that Yenza pays an
installment here and there, causing
that the amount due, as result,
to start to fluctuate. This does not affect the nature of the
application. It is not an ongoing
credit agreement that is serviced
by the respondent as they deem fit. The proceedings are now centered
and focused on the insolvency
or solvency of the respondent. In
Naidoo v ABSA Bank Ltd
(391/09)
[2010] ZASCA 72
;
2010 (4) SA
597
(SCA);
[2010] 4 All SA 496
(SCA) (27 May 2010), Cachalia JA
stated in accordance with the reigning law of insolvency that:
[4]
Mr Reddy’s
submission, as I understand it, implicitly contains a concession
that
sequestration proceedings are not in and of themselves ‘legal
proceedings to enforce the agreement’ within the
meaning of s
129(1)(b). That his concession is correct is clear from the recent
judgment in Investec Bank Ltd v Mutemeri where
Trengove AJ concluded
that an order for the sequestration of a debtor’s estate is not
an order for the enforcement of the
sequestrating creditor’s
claim and sequestration is thus not a legal proceeding to enforce an
agreement. He did so after
carefully considering the authorities
which have held that
‘sequestration proceedings are
instituted by a creditor against a debtor not for the purpose of
claiming something from the
latter, but for the purpose of setting
the machinery of the law in motion to have the debtor declared
insolvent’ –
they are not proceedings ‘for the
recovery of a debt’.
The learned judge’s reasoning
accords with this court’s description of a sequestration order
as a species of execution,
affecting not only the rights of the two
litigants but also of third parties, and involves the distribution of
the insolvent’s
property to various creditors, while
restricting those creditors’ ordinary remedies and imposing
disabilities on the insolvent
– it is not an ordinary judgment
entitling a creditor to execute against a debtor
. (Accentuation
added)
[9]
The grounds for liquidation are trite and the following is important:
1.
Sections
344 and 345 of the Companies Act 61 of 1973 find
application in the evaluation of insolvency.
344.
Circumstances in which company may be wound up by Court.—A
company may be wound up by the Court if: (a) the
company has by
special resolution resolved that it be wound up by the Court; (b) the
company commenced business before the Registrar
certified that it was
entitled to commence business; (c) the company has not commenced its
business within a year from its incorporation,
or has suspended its
business for a whole year; (d) in the case of a public company, the
number of members has been reduced below
seven; (e) seventy-five per
cent of the issued share capital of the company has been lost or has
become useless for the business
of the company;
(f) the company is
unable to pay its debts as described in section 345;
(g) in the
case of an external company, that company is dissolved in the country
in which it has been incorporated, or has ceased
to carry on business
or is carrying on business only for the purpose of winding up its
affairs;
(h) it appears to the Court that it is just and equitable
that the company should be wound up.
345.
When company deemed unable to pay its debts. — (1) A
company or body corporate shall be deemed to be
unable to pay its
debts if — (a) a creditor, by cession or otherwise, to whom the
company is indebted in a sum not less than
one hundred rand then due—
(i) has served on the company, by leaving the same at its registered
office, a demand requiring
the company to pay the sum so due; or (ii)
in the case of any body corporate not incorporated under this Act,
has served such demand
by leaving it at its main office or delivering
it to the secretary or some director, manager or principal officer of
such body
corporate or in such other manner as the Court may direct,
and the company or body corporate has for three weeks thereafter
neglected
to pay the sum, or to secure or compound for it to the
reasonable satisfaction of the creditor; or (b) any process issued on
a
judgment, decree or order of any court in favor of a creditor of
the company is returned by the sheriff or the messenger with an
endorsement that he has not found sufficient disposable property to
satisfy the judgment, decree or order or that any disposable
property
found did not upon sale satisfy such process; or (c) it is proved to
the satisfaction of the Court that the company is
unable to pay its
debts. (2) In determining for the purpose of subsection (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.
2.
In this instance the
evidence shows beyond doubt that Yenza is unable to pay its debts in
terms of section 344(f) of the Companies Act
61 of 1973. A
demand for payment has not been met. A court order has not been
complied with.
3.
The threshold in
section 345 was overcome by the applicant.
4.
A company’s
assets may exceed its liabilities, but if it is still unable to pay
its debts the company is said to be commercially
insolvent.
5.
The Court retains a
discretion – although the discretion to refuse to grant an
order sought by an unpaid creditor is a 'very
narrow one' that is
rarely exercised and then in special or unusual circumstances only.
6.
Innes CJ made the
following remark in dealing with the defence of solvency in the
well-known case of
De
Waard v Andrews and Thienhaus Ltd
1907
TS 727
at page 733
:
Speaking for myself, I
always look with great suspicion upon, and examine very narrowly, the
position of a debtor who says:
“
I 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 who does not
pay what he owes.
7.
In
Marais
v Westline Aviation (Pty) Ltd and Others
(1193/2021)
[2022]
ZAFSHC 144
(30 May 2022) it was stated that factual insolvency may be
established indirectly as stated in
Mars.
[11]
Absa
Bank Ltd v Rhebokskloof
1993
(4) SA 436
(C) at pages 446H – 447J
brings the point
home that weight should be attached to a respondent’s
unexplained failure to pay his debts. The best proof
of solvency is
to settle one’s debts. It just does not make sense why Yenza
does not honour their debts if they have the
assets to do so.
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.
8.
Of late Wallis JA considered the test for commercial insolvency
in a
unanimous judgment of the Supreme Court of Appeal. He held as follows
in
Murray NO and others v African Global Holdings (Pty) Ltd
2020 (2) SA 93
(SCA):
[31]
The argument about timing
misconceived the nature of commercial insolvency. It is not
something
to be measured at a single point in time by asking whether all debts
that are due up to that day have been or are going
to be paid. The
test is whether the company 'is able to meet its current liabilities,
including contingent and prospective liabilities
as they come
due'. Put slightly differently, it is whether the company —
'has
liquid assets or readily realizable 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?'
Determining
commercial insolvency requires an examination of the financial
position of the company at present and in the immediate
future to
determine whether it will be able in the ordinary course to pay its
debts, existing as well as contingent and prospective,
and continue
trading.
[32]
In the case of the Group the
answer to this was clearly that it would not…
[10]
FirstRand persists in seeking an order in terms of which Yenza is
finally wound up. The above notwithstanding;
this is what Yenza
argues, in desperation, in their heads of argument:
1.
Yenza opposes the confirmation of the provisional
winding up order.
2.
Although Yenza accepts that it is indebted
to FirstRand, it denies
that it is indebted to FirstRand in the amount as alleged. FirstRand
launched the application on an alleged
indebtedness of R2,864,330.43.
It is now common cause that Yenza is indebted for much less, i.e.,
only an amount of R1,835,570.90.
It is submitted that this
approximately 35% reduction in FirstRand’s claim causes this to
be an entirely different case than
the one FirstRand attempted to
make out in its founding papers.
3.
Yenza denies that it is either factually or
commercially insolvent.
Yenza’s assets exceed its liabilities with at least just over
R1 million, probably more. It
is common cause that
notwithstanding the provisional order for winding up, Yenza is
continuing to pay instalments on its indebtedness
to FirstRand. In so
far as the liability in respect of the bond over its fixed property
is concerned, FirstRand has a bond over
that property and the
property is worth much more than the amount of the bond.
4.
FirstRand alleges that it would be just and
equitable for Yenza to be
wound up. Yenza denies that it would be just and equitable for
it to be wound up. In addition to
FirstRand’s allegations that
Yenza is factually and commercially insolvent, it seems that the sole
independent ground based
on which FirstRand alleges in the founding
affidavit that it would be just and equitable to liquidate Yenza, is
to be found in
paragraph 82.9 of the founding affidavit. There
it is stated that:
In the light of the
precarious financial position of the respondent, [the applicant]
submits that there exists a sufficient prospect
that an investigation
of the affairs of the respondent will result in a pecuniary benefit
for creditors which consequently renders
the placing of the
respondent in winding up just and equitable.
5.
It is submitted that this conclusion is entirely
unfounded. It is
submitted that FirstRand had to allege more and prove it on a balance
of probability already in the founding affidavit
in order for the
application to succeed on this basis.
6.
Yenza submits that FirstRand has not satisfied
the above
jurisdictional requirements. Yenza contends in addition that it is
solvent as envisaged in section 4(1) of the Companies
Act 71 of 2008
(“the
Companies Act 2008
”). This Court ought therefore to
determine whether FirstRand has satisfied the jurisdictional
requirements of
section 79(2)
and
81
(1) of the
Companies Act 2008
,
i.e., whether it is just and equitable for Yenza to be wound up. It
is submitted that FirstRand has also not satisfied this requirement
and that its case is lacking in this regard.
9.
In any event, as appears from FirstRand’s papers, it based its
application
squarely on the provisions of the Companies Act 1973. In
the result, it is submitted that if this court finds that Yenza is
solvent,
and it is submitted that it is, the provisional order for
winding up ought to be discharged for this reason alone.
10.
Yenza argues that FirstRand brought the application for Yenza’s
winding up on the
basis that it is “indebted and exposed”
to FirstRand in the amount of R2,864,330.43. It was alleged that the
last payment
received in reduction of Yenza’s exposure to
FirstRand was made on 8 November 2022 in the amount of R19,000.00 in
respect
of a written loan agreement entered into between FirstRand
and Yenza on or about 26 April 2017. It is common cause that the
above
no longer holds true. Yenza owes much less, namely only an
amount of R1,835,570.90. This is even less than the amount of
R1,846,536.36 alleged by Yenza at paragraph 36 of the answering
affidavit. In addition, it is not correct that Yenza made its last
payment towards its indebtedness to FirstRand on or about 26 April
2017. It is common cause that Yenza made a deposit in terms
of the
FirstRand platinum overdraft facility on 22 December 2022. It is
further common cause that notwithstanding the provisional
order of
liquidation being granted, Yenza is continuing to service the
instalments on its FirstRand indebtedness. It is submitted
that this
is significant and that the application, which was brought for the
winding up of Yenza, now with the changed facts, faces
an entirely
different landscape and ought, for this reason alone, not to be
granted.
[11]
FirstRand stands fast; and correctly so, that Yenza is indebted to
the applicant t/a First National
Bank by way of a term loan agreement
and a facility agreement. The First National Bank indebtedness, of
Yenza to the applicant,
forms the subject of an undisturbed order of
this court; Yenza is also indebted to the applicant t/a Wesbank by
way of two instalment
sale agreements. It is explained that Yenza
was, at the time of the issuing of the present application, indebted
to the applicant
in terms of three instalment sale agreements and has
subsequently settled its indebtedness to the applicant in respect of
one such
instalment sale agreement; the full particularity of Yenza’s
indebtedness to FirstRand (i.e. both the First National Bank
and
Wesbank indebtedness) is evident from the founding affidavit at
paragraphs 24 to 48. The facts of this matter illustrate
that
notwithstanding Yenza being ordered to make payment of a portion of
its indebtedness to the applicant, as ordered on 5 May
2022,
some 14 months later it has still been unable to do so.
[12]
FirstRand explained that Yenza has only managed to make a partial
reduction of the quantum of said
indebtedness. It stands that Yenza
cannot meet its debts.
[13]
Slotting in with the above has it been proven that Yenza is factually
insolvent because the respondent’s
liabilities, fairly
estimated, exceed its assets fairly valued. If they were not
insolvent, they would have been able to meet their
debts; that is the
inference on their own version.
[14]
There exists no expert evidence whatsoever as to the market value of
Yenza’s assets. The individuals
that deposed to affidavits on
behalf of Yenza failed to qualify themselves as experts. “Moreover,
no process of reasoning
which led to the recordals of the purported
value of Yenza’s assets, as set out in its unsigned financial
statements, including
the premises from which the reasoning proceeds,
is either dealt with or disclosed.”
[12]
In
Coopers
(South Africa) (Pty) Ltd v Deutsche Gesellschaft für
Schädlingsbekämpfung MBH
1976 (3) SA 352
(A) at 3781 G – H, Wessels JA emphasised the necessity for the
facts to be established and the reasons to be disclosed in
the
following passage:
As I see it, an expert
opinion represents his reasonable conclusion based on certain facts
or data, which are either common cause
or established by his own
evidence or that of some other competent witness… Proper
evaluation of the opinion can only be
undertaken if the process of
reasoning which led to the conclusion, including the premises from
which the reasoning proceeds, are
disclosed…
[15]
The issue of
section 4
of the
Companies Act, 2008
came as an
afterthought in the arguments of the respondent and has no
application in determining whether Yenza is solvent (or not)
for
purposes of the present application. Yenza’s submissions are
misplaced. The unreported judgment of
Cumming v Nuvest Chemicals
(Pty) Ltd
(38402/15) [2017] ZAGPJHC 180 (19 May 2017) has the
last say.
APPLICABILITY
OF SECTION 4 OF THE NEW ACT
[22]
Mr Theron submitted that in
assessing the Respondent’s solvency, regard may only
be had to
the audited financial statements of February 2015 and not to the
unaudited financial statements of February 2016, which
he referred to
as a ‘document’ as section 4, read with sections 28 and
29, of the New Act obliged the court to only
have regard to financial
statements which complied with the requirements of such sections.
That was so, he submitted, because the
New Act has repealed the Old
Act in its totality. In terms of Section 224(3), read with Schedule
5, and particularly Section 9(1)
of Schedule 5 of the New Act, all
companies are now wound up in terms of the New Act. Section
9(1) of Schedule 5 of the New
Act reads as follows:
‘
Despite the repeal
of the previous Act, until the date determined in terms of sub-item
(4), Chapter 14 of that Act continues to
apply with respect to the
winding up and liquidation of companies under this Act, as if that
Act had not been repealed subject
to sub-items (2) and (3).’
(emphasis provided)
[23]
The liquidation, so the argument
continued, occurs in terms of the New Act. Section 4(1)
of the new
Act reads as follows:
“
For any purpose of
this Act, a company satisfies the solvency and liquidity test at a
particular time if, considering all reasonable
foreseeable financial
circumstances of the company at that time–
(a)
the assets of the company, as fairly valued, equal or exceed the
liabilities
of the company, as fairly valued; and
(b)
it appears that the company will be able to pay its debts as they
become due
in the ordinary course of business for a period of –
(i)
12 months after the date on which the test is considered; or
(ii)
in the case of a distribution contemplated in paragraph (a) of the
definition
of “distribution” in section 1, 12 months
following that distribution.”
[24]
Section 4(2) of the New Act
imports the requirements of Sections 28 and 29 of the New
Act when
accounting information regarding the company is considered. Thus, the
argument continued, the Court when faced with an
application for the
liquidation of a company in terms of the New Act, should determine
whether the company is solvent by employing
section 4 to do so. If
the court determines that it is insolvent, the company may only be
wound up in terms of Schedule 5, read
with the Old Act, and is
enjoined by the New Act, in Section 4, to have regard to accounting
records as contemplated in Sections
28 and 29. Once it is shown that
the company is commercially insolvent (Section 4(1)(b) of the new
Act) by having regard to admissible
evidence, i.e. accounting records
that comply with Sections 28 and 29 of the new Act, the company
should be liquidated, so the
argument ran.
[25]
I do not agree that section 4 of
the New Act has any application in determining whether
a company is
solvent or not for purposes of the current enquiry.
[26]
The concept ‘solvency and
liquidity test’ has a particular purpose and application
in the
New Act. In section 1 of the New Act, the definitions clause,
‘solvency and liquidity test’ is defined as ‘..the
test set out in section 4(1)’ (my emphasis). Section 4 provides
that ‘For purposes of this Act, a company satisfies
the
solvency and liquidity test at a particular time if…… ‘
(my emphasis). Such test must be satisfied when
for example loans or
other financial assistance is to be provided to directors,
distributions are authorised by the board, or the
board resolves to
offer a cash payment in lieu of awarding a capitalisation share. The
test is applied differently depending on
the section that puts the
test in operation. The provisions of the Old Act that relate to
winding up are to be applied as if they
had not been repealed.
[27]
In
Firstrand Bank Ltd v
Wayrail Investments (Pty) Ltd
, Vahed J held at paras [34] and
[35] as follows:
“
[34]
As best as I can make out, the sections of the 2008 Act that refer to
and call for the application
of the solvency and liquidity test set
out in section 4, are those dealt with in paragraphs 24 to 33 above.
To my mind, the solvency
and liquidity test, as described in section
4, is a device or tool for the purposes of implementing the
provisions or satisfying
the restrictions imposed in or by those
sections.
[35]
Significantly, neither section 81 (or for that matter the whole of
Part G) nor Item 9
of Schedule 5 of the 2008 Act refers to the
solvency and liquidity test. It refers simply to a solvent company.”
[16]
The evidence pleaded by FirstRand and Yenza as well as the
submissions of counsel convinces that the
final winding up of Yenza
will be just and equitable, in the interest of justice and to the
advantage of the creditor(s). Yenza
is unable to pay its debts in the
ordinary course of its business dealings and affairs, is financially
distressed and in a state
of commercial insolvency; Yenza is
hopelessly factually insolvent in that its liabilities fairly
estimated, exceeds it assets,
fairly valued.
[17]
ORDER
1.
It is ordered that the respondent close corporation be placed under
final liquidation.
2.
The costs of this application shall be paid out of the estate of the
respondent.
M
OPPERMAN, J
APPEARANCES
Applicant
S
TSANGARAKIS SC
Symington
De Kok Attorneys
Bloemfontein
Respondent
HGA
SNYMAN SC
Diale
Mogashoa Attorneys
Pretoria
c/o
Honey Attorneys
Bloemfontein
[1]
“
FirstRand”.
[2]
“
Yenza”.
[3]
Pages 487 to 531 of the court bundle indexed on 18 July 2023. Also
see page 317.
[4]
The matter was brought to court by the litigants on motion
proceedings and will thus be adjudicated on this process and on the
Plascon Evans – dictum that finds application. It entails as
ruled by the Supreme Court of Appeal
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A) that:
1.
In all instances where there are material disputes of fact on the
papers;
2.
and where there is no request for the hearing of oral evidence by
the parties;
3.
the general rule is that final relief may only be granted if those
facts as stated by the respondent;
4.
together with those facts stated by the applicant that are admitted
by the respondent;
5.
justify the granting of an order.
6.
Simply stated, the court will consider what facts have been alleged
by the respondent in its
answering affidavit; against the facts
and/or version of the applicant which have been admitted by the
respondent.
7.
This approach makes it possible to effectively establish which facts
are common cause between
both applicant and respondent; and
thereafter consider which facts that are denied by the respondent
are, genuine and bona fide,
a dispute of fact.
8.
If there is indeed a real, genuine, and bona fide dispute of fact, a
respondent may, as it is
entitled to do in terms of the Uniform
Rules of Court, refer such dispute to the hearing of oral evidence.
9.
The Plascon-Evan Rule is not rigid in this sense that the matter
must be referred to oral evidence.
10. If,
however, the respondent fails to do so, the respondent’s case
will stand and fall on the facts averred
in its answering affidavit.
[5]
YENZA TRADING 519 CC: Registration Number: 2004/025239/23, First
Defendant & IRVIN LYNDON EWERTSE, Second Defendant.
[6]
At pages 526 to 527 of the record.
[7]
Pages
316 to 318 of the record at paragraphs 132 to 135 of the answering
affidavit of Mr Ewertse.
[8]
Insolvency,
Meskin's
Insolvency Law
,
Chapter 1 Law applicable, 1.5 Winding up of close corporation, Last
Updated: June 2023 - SI 60,
https://www.mylexisnexis.co.za/Index.aspx
21 October 2023.
[9]
Orestisolve
(Pty) Ltd t/a Essa Investments v NDFT Investments Holdings (Pty) Ltd
& Another
2015
(4) SA 449
(WCC),
Export
Harness Supplies (Pty) Ltd v Pasdec Automotive Technologies (Pty)
Ltd
[2005]
JOL 14056
(SCA) and
Paarwater
v South Sahara Investments (Pty) Ltd
[2005] JOL 13832
(SCA).
[10]
Bertelsmann
et
al,
The
Law of Insolvency in South Africa
,
(10th Edition), Internet: ISSN 2224-4743, Jutastat, e-publications,
Chapter 5, Compulsory sequestration, 5.9 Return day of rule
nisi,
5.9.1 Opposition at pages 143 to 144.
[11]
Bertelsmann
et
al
,
Mars:
The
Law of Insolvency in South Africa
,
(10th Edition), Internet: ISSN 2224-4743, Jutastat e-publications,
Chapter 4 Acts of insolvency, 4.3 Failure to satisfy judgment
debt
at pages 91 to 94.
[12]
Paragraph 20 of the FIRSTRAND BANK LIMITED’S HEADS OF ARGUMENT
(FILED IN SUPPORT OF A FINAL ORDER OF LIQUIDATION OF THE
RESPONDENT).