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[2022] ZAGPPHC 426
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Naturally Australian Meat and Game (Pty) Ltd v JH Meat CC (57166/20) [2022] ZAGPPHC 426 (17 June 2022)

IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE
NO: 57166/20
DATE:
17 June 2022
REPORTABLE:
YES / NO
OF
INTEREST TO OTHER JUDGES: YES / NO
REVISED
In
the matter between:-
NATURALLY
AUSTRALIAN MEAT AND GAME (PTY) LTD
Applicant
V
JH
MEAT
CC
Respondent
JUDGMENT
KOOVERJIE
J
[1]
It is the applicant’s case that the respondent be placed under
business rescue
supervision in accordance with Section 131 of the
Companies Act 71 of 2008 (“the Act”), and that Mr Daniel
Terblanche
be appointed as business rescue practitioner in accordance
with Section 131(5) of the Act.
[2]
The respondent raised two main points
in limine
in its
opposing affidavit, namely that the applicant does not have personal
knowledge of the matter, and secondly, there are material
disputes of
fact which cannot be ventilated properly on the papers.
ISSUES
FOR DETERMINATION
[3]
Whether the respondent’s points
in limine
has merit,
namely:
(i)
the applicant does not have personal knowledge of the matter;
(ii)
whether there are material disputes of facts which cannot be dealt
with properly on the papers.
[4]
On a substantive basis the applicant submits that it has made out a
case for business
rescue proceedings to be instituted.
BACKGROUND
[5]
The applicant and the respondent were in a business relationship
since 2015. The nature
of their business relationship was such that
the applicant sold frozen boneless kangaroo meat to the respondent
which was shipped
from Australia to South Africa. The business
relationship continued until November 2018 when the respondent failed
to pay for certain
shipments of kangaroo meat. It is the respondent’s
case that these shipments were received by the applicant. The amount
claimed
for the shipments was an amount of USD $327,995.89
(hereinafter referred to as “the goods”).
[6]
The respondent disputed the fact that the said goods were delivered
and received by
the applicant. The respondent pointed out that:
(i)
the goods (referred to in annexures “FA3” and “FA4.1”
to “FA4.18”
to the applicant’s founding affidavit)
were erroneously and/or fraudulently delivered by third parties
and/or entities
[1]
;
(ii)
this caused the respondent to open a criminal case of fraud/theft
against such third parties at the
SAPS Table Bay Harbour on or about
19 May 2019;
(iii)
thereafter, on 19 June 2019, it instituted civil proceedings for
recovery of the damages (in the amount
of R7,905,849.69) against the
said third parties.
[7]
The applicant, on the other hand, persisted with its argument that it
has made out
a case for the business rescue proceedings to be
instituted. Under the circumstances there is a reasonable prospect
that the respondent
can be saved if it is placed under business
rescue supervision.
POINTS
IN LIMINE
[8]
I am, firstly, required to make a determination on the points
in
limine
. In the event that I find that there is no merit, I will
proceed on the substantive issue pertaining to the business rescue
application.
[9]
On the issue of personal knowledge, the respondent contended that the
deponent to
the founding affidavit could not have personal knowledge
of the issues in this matter. The deponent, Mr Asif Kaka, was a
director
of AK Collect. AK Collect only became involved in this
matter subsequent to the respondent’s account allegedly falling
in
arrears.
[10]
Mr Kaka in his founding affidavit at paragraph [2] stated:
“
I
have personal knowledge of the applicant’s claim against the
respondent by virtue thereof and I, at all material times,
personally
dealt with the representatives of the respondent, except as otherwise
stated herein and in possession of all the files,
documents relating
to the account of the respondent.”
[11]
It was pointed out that since Mr Kaka only became involved in 2019,
he was not involved when
the parties entered into agreement to do
business, hence the contract. Nowhere in the founding affidavit or
the replying affidavit
does Mr Kaka state that he gained knowledge of
the terms of such contract/agreement between the parties by having
regard to documents
or that he was informed of such agreement by Mr
Gifford, the director of the applicant. He merely stated that he is
in possession
of the files and documents “relating to the
account of the respondent”.
[12]
Mr Gifford, as the director of the applicant in all probability would
have personal knowledge
regarding the agreement/contract between the
parties as well as various transactions between them, including the
transactions relevant
to the subject matter of the litigation.
[13]
In my view, it was rightly pointed out that Mr Gifford’s
involvement was not set out in
the founding affidavit. Mr Gifford
goes on to confirm: “
I have read the founding affidavit
deposed to by Asif Kaka and I hereby confirm all allegations and/or
statements that relate to
me.”
However, Mr Kaka does not
make mention of Mr Gifford’s involvement in his affidavit.
[14]
At paragraph 17, Mr Kaka only refers to Mr Gifford’s
confirmatory affidavit
[2]
.
[15]
I have further noted that Mr Kaka, a collections agent, was
authorised via a resolution to act
on behalf of the applicant “
to
do all such things and to sign all legal and/or necessary documents
pertaining to the company”
.
However, the resolution does not state that Mr Kaka was authorised to
institute proceedings and prosecute same
[3]
.
There is considerable amount of authority for the proposition that
where a company commences proceedings by way of petition, the
person
who makes the petition on behalf of the company must state that
he/she is duly authorised to institute the proceedings.
In this
instance, I find that there is insufficient evidence placed before
the court to show that the applicant was authorised
to institute
these proceedings.
[16]
At paragraph [2] of Mr Kaka’s founding affidavit he stated that
he has personal knowledge
of the applicant’s claim by virtue of
the fact that he had at all relevant times dealt with the
representatives of the respondent
and had sight of the relevant
documents. However, it cannot be disputed that he has personal
knowledge pertaining to the oral/written
contract entered into
between the parties.
[17]
Furthermore, in making reference to “except as otherwise stated
herein”, he was expected
to identify who held knowledge of
aspects which he did not.
MATERIAL
DISPUTES OF FACT
(a)
Applicant’s case
[18]
The parties argued at length as to whether the disputes of fact could
be resolved on the papers.
The disputes identified pertained to the
terms of the agreement, the amount ($327,995.89) being claimed, and
whether or not the
goods were received by the respondent.
[19]
The applicant argued that there are no disputes regarding the fact
that:
(i)
the goods were delivered to the respondent;
(ii)
the respondent is in financial distress and unable to pay its debts;
and lastly,
(iii)
the documentation supporting the applicant’s claim was provided
to the respondent.
[20]
The applicant placed emphasis on the respondent’s reply that it
will negotiate that some
compensation be paid to the applicant once
it recovers the damages from the third parties.
[21]
It was further pointed out that the respondent failed to disclose
relevant information such as
fixed assets, bank balances, debtors and
creditors and stock in hand, as well as the updated relevant
financial information and
financial statements. Hence the only
inference which could be drawn is that the respondent is in financial
distress and unable
to pay its debts.
[22]
It was also pointed out that during settlement negotiations the
applicant’s attorneys,
in fact, requested the respondent to
provide more recent financial statements to determine the
respondent’s financial position
and solvency
[4]
.
[23]
By placing the respondent under business rescue, a business rescue
practitioner would be able
to investigate the business of the
respondent and the circumstances that led to the failure by the
respondent to pay its debts.
[24]
The applicant pointed out that on the respondent’s own version
it acknowledged that it
had received four shipments of goods. The
fact that the respondent’s business associates and the partners
allegedly stole
from the respondent and/or defrauded the respondent
is not relevant as ultimately the goods were delivered to the
respondent. To
demonstrate the said fact, the applicant relied on the
affidavit of Mr Jansen van Rensburg, deposed to in the proceedings
before
the Western Cape High Court, where the respondent confirmed
that it received at least four shipments.
[25]
Regarding the terms of the agreement, it was pointed out that
material, express, implied and/or
tacit terms of the agreement were,
inter alia
, as follows:
(i)
the delivery terms would be subject to the Incoterms 2010; and
(ii)
payment would be due within 45 days after the date on the bill of
lading
[5]
.
[26]
The respondent cannot deny that it was not aware of the specific
terms of the Incoterms 2010.
The sale confirmations were signed on
behalf of the respondent and no issue was raised of the applicability
to the transactions
at the time
[6]
.
It was pointed out that by virtue of the Incoterms 2010, the Costs,
Insurance and Freight (CIF),
inter
alia
,
the following terms were applicable, namely:
(i)
costs, insurance and freight means that the seller delivers the goods
on board of the vessel;
(ii)
the seller must provide the goods with a commercial invoice in
conformity with the contract of sale;
(iii)
the seller must deliver the goods by placing on board the vessel;
(iv)
the seller bears all risk of loss of damage to the goods until they
have been delivered on board on the vessel
in accordance with clause
A4 of CIF;
(v)
the buyer must pay the price of the goods as provided in the contract
of sale;
(vi)
the buyer must take delivery of the goods where they have been
delivered as envisaged in clause A4 of CIF
and receive them from a
carrier at the main port of destination
[7]
;
(vii)   the
buyer bears all risk of loss or damage to the goods from the time
they have been delivered as envisaged in
clause A4 of CIF.
[27]
This meant that the respondent particularly assumed the risk of
damage or loss to the goods when
same was put on board of the
respective vessels from Australia and received here in South Africa.
Furthermore, payment had to be
effected within 45 days after the bill
of lading date.
[28]
It is the applicant’s case that the respondent received the
goods. I was referred to the
DHL delivery notes, namely Annexure
“RA2.1 to RA2.6” to the replying affidavit
[8]
in this regard.
(b)
Respondent’s case
[29]
The respondent, on the other hand, argued that it was clearly
foreseeable that due to the material
factual dispute, proper
adjudication was not possible on the papers. For instance, the
respondent denied that it received the goods
and moreover in the
amount of $327,995.89 from the applicant. It was pleaded that these
shipments were erroneously delivered and/or
fraudulently received by
third parties, persons or entities.
[30]
The applicant alleged that the agreement between the parties was
based on a partly oral and partly
written agreement. It was, however,
pointed out that such terms of the said agreement were not properly
pleaded in the founding
affidavit. The respondent particularly denied
that the Incoterms 2010 was applicable.
[31]
It was argued that the dispute as to whether there was delivery of
the goods cannot be resolved
on the papers. To date the respondent
has not seen the delivery notes to establish who received the goods,
and/or who allegedly
received it on behalf of the respondent.
[32]
It was further pointed out that, in fact, the applicant conceded (in
reply) that it was possible
that the respondent may not have received
the seven shipments of meat
[9]
.
[33]
During the hearing it became evident that the applicant was unable to
illustrate that all seven
shipments were received by the respondent.
In the absence of signed delivery notes the respondent argued that it
was unable to
establish to whom the relevant shipments were
delivered. It was pointed out that Annexure ‘RA2.1’ to
‘RA2.6’
reflected the delivery of the import
documentation and not the goods.
[34]
In exercising my discretion, I am required to consider the alleged
facts in dispute and see whether
real disputes of fact exist which
cannot be satisfactorily determined without the aid of oral evidence.
[35]
The law pertaining to how courts should approach matters where
disputes of fact are raised has
been settled by our authorities. I am
mindful that vague and insubstantial allegations are insufficient to
raise the kind of dispute
that should be referred for oral evidence.
The respondent will certainly not succeed if there are bare denials
on the part of the
respondent to the applicant’s allegations in
its affidavit, or if denials are so farfetched and clearly untenable.
A real
genuine or
bona
fide
dispute of fact must exist
[10]
.
[36]
Often in motion proceedings the court is required to take a robust
commonsense approach to a
dispute and should not hesitate to decide
an issue on an affidavit merely because it is difficult to do so
[11]
.
However, this approach must be adopted with caution. The court should
not be tempted to settle disputes on fact solely on the
probabilities
emerging from the affidavits without giving due consideration to the
advantages of oral evidence
[12]
.
[37]
In the
Khumalo
[13]
matter the court indicated,
inter
alia,
that there should be reasonable grounds for doubting the correctness
of the allegations raised.
[38]
I also find it apt to highlight what the court stated in
Buffalo
Freight Systems (Pty) Ltd v Crestleigh Trading (Pty) Ltd
2011 (1) SA
8
SCA at 14 D-E
:
“
In
deciding disputed facts in application proceedings a court should
always be cautious about deciding probabilities in the face
of
conflict of facts in the affidavits. This is so because affidavits
are settled by legal advisors with varying degrees of experience,

skill and diligence and a litigant should not pay the price for an
advisor’s shortcomings. Judgment on the credibility of
the
deponent, absent direct and obvious contradictions, should be left
open. Nevertheless the courts have recognised reasons to
take
stronger line to avoid injustice.
[14]
.”
[39]
As alluded to above, a dispute regarding Mr Kaka’s personal
knowledge exists. I am of the
view that reasonable grounds have been
proffered doubting the personal knowledge of the deponent to the
affidavit. In this case
Mr Gifford’s testimony is necessary as
he would be able to confirm: firstly, what the terms of the contract
between the parties
were; secondly, that he was involved in the
transactions regarding the goods in issue, and lastly, whether the
goods were delivered
and received by the respondent.
[40]
On the issue as to whether the respondent was in financial distress,
it is evident that this
fact remains disputed and can only be
resolved by virtue of oral evidence. I deem it necessary to highlight
the discrepancies as
they stand on the papers on the said issue:
The
applicant’s version
:
(i)
In the founding affidavit, at paragraph [22]
[15]
the applicant alleges:
“
22.
Joggie informed me that the Respondent was not in a position to
settle the indebtedness, however, suggested that
the indebtedness be
paid over a term by way of monthly instalments…”
(ii)
At paragraph [31]
[16]
:
“
31.
Joggie, on 11 October 2019, indicated that he would be willing to
meet with our offices to discuss the indebtedness
as well as the
conclusion of a payment plan in terms of which the indebtedness may
be settled.”
(iii)
At paragraph [32] the applicant makes reference to the respondent’s
correspondence (dated 11 October
2019) where the respondent contended
that it did not receive the containers. The relevant extract reads:
“
32.1
That the Respondent did not receive the containers of the meat
ordered by the Respondent and supplied by the Applicant, in
that same
had been taken by a third party;
32.2  The
Respondent was in the midst of a forensic audit and that a case of
theft and fraud and been opened at the Table Bay
Harbour, Cape Town
Police Station;
32.3
As a result, the Respondent was unable to enter into any form of
settlement or admit any liability pending the ongoing
investigations
and that any legal action taken against the Respondent would be
defended.”
(Annexure “FA8”
of 001- 16)
(iv)
Then at paragraph [39]
[17]
the
applicant avers:
“
39.
Joggie once again informed our offices that he did not have the funds
to settle the indebtedness, however, when
questioned on this aspect,
due consideration to the payment terms of 45 days from the date of
the Bill of Lading, Joggie and Grobler
could not provide clarity. It
was rather reiterated that the goods were not received.”.
(v)
The respondent in its papers denied its indebtedness to the
applicant. The response was at paragraph
[21]:
“
I
deny informing the deponent to the Applicant’s Founding
Affidavit that the Respondent was not able to settle its
indebtedness.
I informed him about the aforesaid theft and/or fraud,
the- criminal investigation and the civil action in respect thereof,
and
I committed to negotiating a form of compensation to be paid to
the Applicant by the Respondent, once the Respondent has succeeded
in
recovering damages from the defendants in the pending civil
action.”
[18]
.
(vi)
Further at paragraph [38] of the answering affidavit the respondent
avers:
“
I
deny that the Respondent is not profitable or in financial distress
that could justify the Respondent being placed under business

rescue.”
[19]
[41]
On the said discrepancies, Mr Jansen van Rensburg’s (Joggie’s)
testimony is necessary.
His evidence should be tested, particularly
in cross-examination. He would be required to clarify what was
relayed to the applicant,
and explain his responses, namely whether
there was an intention to pay the applicant for the goods or whether
the respondent merely
intended to compensate the applicant due to the
theft. There are these variables and the court cannot conclusively
draw an inference
based on the different interpretations which appear
both in the founding and the answering affidavits.
[42]
With regard to the provisions of Section 131(4) of the Act, I am
mindful that this court has
to be satisfied that: the company is
financially distressed or that the company has failed to pay over an
amount in terms of an
obligation in terms of a contract, and
secondly, if it is just and equitable to do so for financial reasons
and there is a reasonable
prospect of rescuing the company. At this
point, even the contractual terms remain in dispute. The applicant’s
contention
that the respondent failed to pay the amount owing in
terms of the contract between the parties cannot, in my view, be
resolved
on the papers.
[43]
In the pleadings before me, I am unable to determine if the said
requirements have been met.
I have only been privy to the financial
position of the respondent in the 2014 year (hence the 2015 financial
statements). I have
not been placed in a position to determine the
status of the respondent at the time the debt became due.
[44]
The phrase “financially distressed” is defined in
Section
128(1)(f)
of the
Companies Act to
include two distinct concepts. It
is defined as follows:
“
Financially
distressed – in reference to a particular company at any
particular time, means that:
(i)
it appears to be reasonably likely that the company will be unable to
pay all of its debts
as they become due and payable within the
immediately ensuing six months; or
(ii)
it appears to be reasonably likely that the company would become
insolvent within the immediately
ensuing six months.”
[45]
In light of the disputes raised, it is not possible to determine as
to whether the respondent
is “financially distressed”.
More importantly, a mere speculative suggestion that the entity is
“financially
distressed” is not sufficient. One needs to
establish more than a mere
prima
facie
case or an arguable possibility
[20]
.
[46]
This court is required to adjudicate matters in a fair and full
manner. Often courts have to
decide where the truth lies between two
conflicting versions. In this instance, where the said disputes of
fact exist, it would
not be possible to make a determination on the
matter without subjecting the parties to cross-examination. A court
may, of course,
after cross-examination still be unable to decide
where the truth lies. However, that possibility does not entitle the
court to
decide the matter without allowing cross-examination
[21]
.
[47]
In the premises I make the following order:
1.
This matter is referred to trial for oral evidence.
2.
Costs of the application are reserved.
H
KOOVERJIE
JUDGE
OF THE HIGH COURT
Appearances
:
Counsel
for the plaintiff/respondent:
Adv IM
Lindeque
Instructed
by:

O’Connell Attorneys
Counsel
for the defendant/applicant:
Adv JJ Greeff
Instructed
by:

Hendrik Grobler Attorneys
Date
heard:

6 June 2022
Date
of Judgment:
June 2022
[1]
Opposing
affidavit, page 007-8
[2]
001-9
to 001-12
[3]
Erasmus,
Superior Court Practice, D1-55. See also Mall (Cape) (Pty) Ltd v
Merino Ko-operasie BPK
1957 (2) SA 347
(C) at 351 H
[4]
001-19
founding affidavit, para 46
[5]
Founding
affidavit page 001-8 paragraph 11
[6]
Annexure
“FA4.1” (page 001-29), Annexure “FA4.8”
(page 001-36), Annexure “FA4.11” (page 001-39),
Annexure
“FA4.14 (page 001-42) and Annexure “FA4.17 (page 001-45)
[7]
Annexure
“RA1, page 006-0079
[8]
Replying
affidavit, RA 2.1 page 008-82 to 008-87
[9]
Paragraph
9.7, replying affidavit
[10]
South
African Veterinary Council and Another v Szymanski
2003 (4) SA 42
SCA at paragraph 24
[11]
Plascon
Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
N
at 634 and 635
[12]
Erasmus,
Superior Court Practice at D1-74
[13]
Khumalo
v Director General Cooperation and Development and Others
[1990] ZASCA 118
;
1991 (1)
SA 158
A at 167 G to 168 A where the court cited with approval the
conclusions of Kumleben J in
Moosa
Brothers and Sons (Pty) Ltd v Rajah 1975(4) SA 187 D at 93 E-H
regarding the approach adopted in applications for referral to oral
evidence in terms of
Rule 6(5)(g).
The passage is worthy of
repetition:
“
(a)
As a matter of interpretation there is nothing in the language of
Rule 6(5)(g)
which restricts the discretionary power of the court to
order the cross-examination of a deponent to cases in which a
dispute
of fact is shown to exist.
(b)
The illustrations of genuine dispute of fact given in the Room Hire
case at 1163
do not and did not purport to set out circumstances in
which cross-examination under the relevant Transvaal law a court
could
be authorised. They a fortiori do not determine the
circumstances in which such a relief should be granted in terms of
Rule 6(5)
(g).
(c)
Without attempting to lay down any precise rule, which may have the
effect of limiting
the wide discretion implicit in the rule, in my
view,
oral evidence is one or
other form envisaged by the rule should be allowed if there are
reasonable grounds for doubting the correctness
of the allegations
concerned
.
(d)
In reaching the decision in this regard facts peculiarly within the
knowledge of
the applicant which for that reason cannot be directly
contradicted or refuted by the opposite party, are to be carefully
scrutinized.”
(my emphasis).
[14]
Van
Loggerenberg page D-76
[15]
Page
001-13 of the record
[16]
Page
001-15 of the record
[17]
001-16
of the record
[18]
007-11
to 12 of the record
[19]
007-17
of the record
[20]
In
Oakdene
Square Properties Ltd and Others v Farm Bothasfontein (Kyalami)
(Pty) Ltd and Others
2013 (4) SA 539
(SCA) at para 29
the Supreme Court of Appeal concluded that the phrase of a
reasonable prospect should be understood as follows:
“
This
leads me to next debate which revolve around the meaning of a
reasonable prospect. As the starting point it is generally
accepted
that it is a lesser requirement than a reasonable possibility which
has a yardstick for placing a company under judicial
management in
terms of Section 427(1) of the 1973
Companies Act
... On the other
hand, I believe it requires more than a mere prima facie case or an
arguable possibility. Of even greater significance,
I think, is that
it must be a reasonable prospect, with emphasis on reasonable –
which means that it must be a prospect
based on reasonable grounds.
A mere speculative suggestion is not enough. More, because it is the
applicant who seeks to satisfy
the court of the prospect, it must
establish that these reasonable grounds in accordance with the rules
of motion proceedings
which generally speaking, require that it must
do so in its founding papers.”
[21]
Freedom
Under Law v Acting Chair Person; Judicial Service Commission
2011
(3) SA 549
SCA at 564 F-H