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[2022] ZAKZPHC 68
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Innovative Flexibles (Pty) Ltd vs Lopac Tissues CC (9139/2021P) [2022] ZAKZPHC 68 (4 November 2022)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISIION, PIETERMARITZBURG
CASE
NUMBER: 9139/2021P
In
the matter between:
INNOVATIVE
FLEXIBLES (PTY) LTD
APPLICANT
and
LOPAC
TISSUES
CC
RESPONDENT
JUDGMENT
BEZUIDENHOUT
J:
[1]
The said application is being opposed by Respondent. After all
the affidavits
had been filed Applicant also brought an application
in terms of Rule 23 set down for the hearing at the same time as the
application
to wind up Respondent that certain portions of the
answering affidavit be struck out in that it was alleged that it was
either
scandalous, vexatious or irrelevant. In paragraph 6 of
the affidavit in respect of the said application it was contended:
“
If
such are not struck, such will cause prejudice to the applicant in
the context of the main application.”
It
then sets out the various portions of the affidavit which it contends
are scandalous and vexatious and needs to be struck out.
I will
refer to this again later in the judgment.
[2]
It is common cause that Applicant supplied Respondent with various
paper products
which Respondent required. It is also common
cause that Respondent applied for credit and that such was granted in
the sum
of 1 million rand payable within 60 days.
[3]
From the papers it is apparent that various products were delivered
to Respondent
by Applicant and that there is a dispute as to what
products and what quantities were indeed ordered. Applicant
relies on
a letter addressed to Applicant by Respondent wherein it
stated “From our findings as at the end of 31 July 2021.
We
have a liability of R 3 240 579.88 which would reduce further
under completion of our analysis in terms of incorrect pricing from
Innovative. It also relies on a letter dated August 2021 where
it was stated:
“
Whilst
I concur that you might have delivered all the goods as you claimed,
the goods should have been delivered in future months
with the
liability to be paid over the future months and not immediate.”
[4]
Applicant therefore contends that this indicates that indeed the
goods were delivered
to Respondent who accepted the said goods and
which admitted that there was money owing to Applicant. It is
contended by
Applicant that from the above quotations in the said
letters it is proved that Respondent owes Applicant at least R 100.00
and
therefore it is entitled to an order to wind up Respondent as
Respondent has failed to pay the outstanding amount. It is
contended that Respondent has therefore indeed admitted an
indebtedness of at least R 100.00 and in this regard I was referred
to the decision of Lamprecht v Klipeiland (Pty) Limited
[2014] 4 All
SA 279
(SCA) at paragraph 16. It is further contended that
Respondent has failed to set forth any evidence to prove its
solvency.
The financial statements that were attached to the
answering affidavit has no elaboration thereof and there is no
confirmatory
affidavit from the auditor. These financial
statements must therefore be disregarded.
[5]
On the issue to strike out it was contended that the portions of the
answering affidavit
which is referred to in the said application are
scandalous and vexatious and that they need to be struck out.
[6]
It was contended on behalf of Respondent that prior to the
application being brought
Respondent had provided a reconciliation
which indicated that Applicant in actual fact was indebted to
Respondent. It was
further contended that the winding up
application should not have been pursued where it is known that the
claim is disputed and
that Applicant should have proceeded by way of
an action. I was referred to Trinity Asset Management (Pty) Ltd
v Grindstone
Investments 132 (Pty) Ltd
2018 (1) SA 94
(CC). It
was further submitted that if it was found that a debt did exist but
that it was
bona fide
disputed on reasonable grounds a winding
up order should not be granted. In this regard I was referred
to Badenhorst v Northern
Construction Enterprises Ltd
1956 (2) SA 346
(T).
[7]
It was further contended that if facts alleged can be proven at trial
it constitute
a good defence that is sufficient that it has a claim
that is
bona fide
and on reasonable grounds. It has not
been shown that Respondent is unable to pay its debts or is
commercially insolvent.
In respect of the application for
striking out of certain averments it was contended that Applicant has
refuted what is alleged
as offensive and that whatever there is is
not vexatious or scandalous and is not relied upon by Respondent in
its opposition to
the liquidation proceedings.
[8]
The question that arises is whether Applicant has shown that
Respondent is indebted
to it for an amount exceeding R100.00 which it
refuses to pay and further that Respondent is incapable of paying its
debts as it
is commercially insolvent and then the further issue of
whether it would be just and equitable for Respondent to be wound
up.
Respondent must prove that it is either not indebted to
Applicant; that it is not commercially insolvent or that there is a
dispute
as to the amount which is owing to Applicant.
[9]
It was submitted on behalf of Applicant that all the formal
requirements had been
satisfied and that Respondent had admitted that
it owed Applicant more than R 100.00. In Lamprecht v Klipeiland
(Pty)
[2014] 4 All SA 279
(SCA) it was held at paragraph 10:
“
All
he wanted was to assert or establish his
locus
standi
under
section 345(1)(a) of the Act, as a creditor owed an amount of no less
than R100.00 which amount was due and payable.
The dispute as
to what is owed will be settled either by the liquidator after the
appellant has lodged his claim or by court in
the event that the
creditor and liquidator are unable to agree on the amount payable.”
In
paragraph 11 of the judgment it refers to the fact that Respondent
conceded that Appellant was a debtor as contemplated in section
345(1)(a) with a claim of no less than R100.00 and further that the
money was due and payable. As set out in paragraph 15
of the
said judgment to meet the threshold of section 345(1)(a) Applicant
must prove that he is a creditor of Respondent in the
amount of not
less than R100.00; that it is due and payable and it must be liquid.
Thirdly notwithstanding service of the
section 345(1)(a) notice the
debtor has not paid the amount claimed nor secured or compounded to
the reasonable satisfaction of
the creditor.
[10]
It is contended by Applicant that the portions of the said letters
referred to in paragraph 3
above indicate an admission by Respondent
that it is indeed indebted to Applicant in the sum of at least R
100.00. It is
submitted that the fact that the exact amount is
not proved is not a barrier against the granting of the order as all
that Applicant
has to prove is that there is at least an amount of R
100.00 owing which has not been paid after notice had been given in
terms
of section 344(1)(a) of the Companies Act.
[11]
In Badenhorst v Northern Construction Enterprises (Pty) Ltd
1956 (2)
SA 346
(T) it was held at 347H:
“
Where
a company disputes the validity of the amount claimed and this is
done
bone fide
a liquidation order should not be granted.”
It
then refers at 348A to a quotation from Buckly on Companies 11
th
ed page 357:
“
A
winding up petition is not a legitimate means of seeking to enforce
payment of debt which is
bona
fide
disputed by
the company. A petition presented ostensibly for a winding up
order but really to execute pressure will be dismissed
and under
circumstances may be stigmatised as a scandalous abuse of the process
of the court.”
[12]
From the two letters which I have referred to above it is not
possible to establish whether indeed
there would be an amount of at
least R 100.00 owing. There is also no admission by Respondent
thereof. Respondent contends
there is a dispute and in actual
fact that Applicant owes it money.
[13]
As submitted by Respondent, Applicant is not relying on the total
amount which it alleged is
payable to it but is placing reliance on
the letters to which I have referred and which Applicant contends
indicates that at least
R 100.00 is due, owing and payable. It
is contended by Respondent that a reconciliation was provided to
Applicant which must
have been received by Applicant as it responded
to it on 30 August 2021. After this additional investigations
were undertaken
by Respondent and resulted in Respondent alleging
that in fact it was owed the sum of R 572 759.65 by Applicant.
It was therefore
submitted that the last schedule showed no
indebtedness to Applicant but in actual fact an amount owing to
Respondent. Therefore
it was submitted that Applicant had not
proved that that there was an amount of at least R 100.00 owing.
[14]
The financial statements which were attached to Respondents answering
affidavit indicate that
Respondent is not commercially insolvent.
Applicant referred me to the decision of Genesis Medical Aid Scheme v
Registrar,
Medical Schemes and Another
2017 (6) SA 1
(CC) at
paragraph 171 where it dealt with the issue of an affidavit to which
an auditor’s report was attached but was an
affidavit not from
the respondent. In my view it is distinguishable from the facts
of the present case where the person who
attested to the affidavit on
behalf of Respondent is a member of the close corporation and
confirmed the financials which were
attached to his answering
affidavit.
[15]
It is not necessary for Respondent to prove it will succeed in any
action. It only has
to prove that the grounds advanced are not
unreasonable. Hulse-Reutter and Another v HEG Consulting
Enterprises (Pty) Ltd
(Lane and Fey NNO intervening) 1998(2) SA 208
(C).
[16]
From all the documentation attached to the papers which are too
voluminous to deal with in detail
it is clear that there is a dispute
between Applicant and Respondent as to the basis firstly upon which
the goods were ordered.
Secondly whether invoices were
produced. Thirdly whether there were order forms.
Fourthly whether the prices were correct.
Fifthly a
reconciliation of the said deliveries due to the large amounts
delivered which Respondent indicated it could never have
been able to
use. It is accordingly apparent that there are major disputes
between Applicant and Respondent as to the deliveries
whether they
should have been delivered at certain times the quantities delivered
etc.
[17]
Considering all these factors it would appear to me that because
there are many disputes between
the parties and from what I have set
out above that it cannot be found that Applicant has proved that
indeed there is an amount
of R 100.00 which is owing and payable and
there is no admission in that regard from Respondent who in actual
fact contends that
Applicant owes Respondent more than R 500 000.00.
Taking these factors into account it would also appear to me that it
would
not be just and equitable in these circumstances to liquidate
Respondent and it would be more appropriate that Applicant pursue
an
action against Respondent if it is of the view that there is money
outstanding to it.
[18]
Due to the conclusion which I have reached it is not necessary to
deal with the issue of the
striking out of certain portions of the
answering affidavit as they are scandalous and vexatious. It
was set out in the affidavit
of Applicant that it will prejudice
Applicant in the main application if they are not struck out.
It is therefore due to
the conclusion reached not necessary to deal
therewith and accordingly no order is made in that regard.
I
accordingly make the following order.
The
application is dismissed with costs. Such costs to include the
costs of senior counsel.
BEZUIDENHOUT
J.
JUDGMENT
RESERVED ON: 12
SEPTEMBER
2022
JUDGMENT
HANDED DOWN ON: 4
NOVEMBER 2022
COUNSEL
FOR APPLICANT:
R R KISTEN
Instructed
by:
Messrs Pather and Pather
Attorneys Inc.
Durban
Tel:
031 304 4212
Ref:
Anashya Jugmohan/rg/P1710
c/o
Pather and Pather Attorneys Inc.
Pietermaritzburg
Tel:
033 347 1849
Ref:
Uzziel Govender
COUNSEL
FOR RESPONDENT:
A K KISSOON SINGH SC
P
KISSOON SINGH
Instructed
by: Messrs
Naidoo Maharaj Inc.
Durban
Tel:
031 209 8491
Ref:
Mr. F Khan/L076
c/o
Messrs Siva Chetty & Co.
Pietermaritzburg
Tel:
033 342 9636
Ref:
Mr. T Chetty