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[2021] ZALMPPHC 20
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Rooplal N.O v MML Foods Services Proprietary Limited (7044/2019) [2021] ZALMPPHC 20 (2 February 2021)
IN
THE HIGH COURT OF SOUTH AFRICA
LIMPOPO
DIVISION, POLOKWANE
(1)
REPORTABLE: YES
(2)
OF INTEREST TO OTHER JUDGES: YES
(3)
REVISED.
2/2/2021
CASE
NO: 7044/2019
In
the matter between:
ANOOSHKUMAR
ROOPLAL N.O.
APPLICANT
And
MML
FOODS SERVICES PROPRIETARY
RESPONDENT
LIMITED
JUDGMENT
NAUDÉ
AJ:
[1]
The Applicant acts in his
nomine officio
capacity as
liquidator of VBS Mutual Bank (in liquidation) ("VBS"). The
Applicant applies for a final winding up of the
Respondent on the
basis that the Respondent is unable to pay the debts owed to its
creditors. The application is brought in terms
of Section 344(f) and
345(1)(a)(i) of the Companies Act 61 of 1973 ("the Old Companies
Act") read with the transitional
provisions of Item 9 of
Schedule 5 of the
Companies Act 71 of 2008
. There are also additional
facts manifested, in terms of Section 344(h) of the Old
Companies
Act, in
terms whereof the Applicant applies that the Respondent be
wound-up.
[2]
VBS was placed under curatorship on 10 March 2018
and was placed in
liquidation by an order of the Gauteng Division, Pretoria on 13
November 2018. The powers of the Applicant as
the liquidator of VBS
was extended in terms of the court order on 13 November 2018 to
include inter alia the taking of any legal
action considered
necessary in the interest of VBS and the institution of proceedings
in respect of any matter affecting the VBS
estate.
[3]
The Respondent is indebted to VBS in the total
amount of R35,6
million, being money lent and advanced by VBS to the Respondent in
respect of a business overdraft credit facility
made available to the
Respondent through the company's VBS Classic Business Account and a
motor vehicle finance agreement. In respect
of the VBS Classic
Business Account an amount of R19 039 249.33 was due and owing and in
respect of the Respondent's motor vehicle
finance account an amount
of R 16 564 404.59 was due and owing.
[4]
The Respondent has failed to comply with the agreements
and has
despite a statutory demand delivered in terms of Section 345 of the
Old
Companies Act, to
its registered address on 6 August 2019,
neglected to pay the due sum, or to secure or compound for it to the
reasonable satisfaction
of VBS. It is common cause that the
Respondent failed to respond to the aforesaid letter. The
Respondent in his answering
affidavit denies having received the
statutory demand, however in the Respondent's Heads of Argument it is
stated that the Respondent
did indeed receive the notice.
[5]
It is common cause that on 2 August 2016, VBS duly
represented by its
authorised representative, approved the Respondent's application for
an overdraft facility to make available
the amount of RI million to
the Respondent. The facility was renewable annually and it was to be
made available through the Respondent's
VBS Account 10012473001 ("the
facility agreement"). In terms of the facility agreement, the
Respondent, inter alia, undertook
to pay the facility regularly,
interest and other related charges and VBS was entitled on 10 (ten)
days' written notice of default,
to cancel the facility and to claim
the full outstanding amount. A certificate of indebtedness signed by
"any authorized employee"
of VBS shall constitute prima
facie evidence of the outstanding balance owing.
[6]
VBS fell prey to an elaborate fraudulent scheme
perpetrated on it by
some members of its management and their related entities. The
Applicant alleges that the Respondent benefitted
from the fraudulent
scheme perpetrated upon VBS. As part of the fraudulent scheme
perpetrated against VBS, a fictitious credit
of R 19,000,000.00 was
made into the Respondent's VBS Account on 30 March 2017. The
fictitious credit was not real payments or
deposits made into the
Respondent's VBS Account and it was nothing other than mere false
entries.
[7]
It is submitted by the Applicant that on 19 March
2017, and at the
instance of Mr. Tshifhiwa Matodzi (VBS former board chairperson and
integral to the Fraudulent Scheme), a meeting
was held with Mr.
Mukhodobwane (VBS's former head of treasury) and Mr. Truter (VBS's
former chief financial officer) during which
meeting Mr. Matodzi
informed Mr. Mukhodobwane and Mr. Truter that he required certain
overdrawn VBS accounts to be removed from
the bank's balance sheet.
Such overdrawn VBS accounts were to be "cleared" with the
effect that their outstanding balances
would be removed.
[8]
On 29 March 2017, Mr. Matodzi sent the Eagle Canyon
List to Mr.
Mukhodobwane with the instruction that the overdrawn VBS accounts
listed therein be cleared by the financial year end,
being 31 March
2017. It appears from the list, the Respondent was one of the
intended beneficiaries of the Fraudulent Scheme and
the resultant
clearing of its then overdrawn account on 30 March 2017 with a
fictitious credit of RI 9,000,000.00.
[9]
The fictitious credit from the Respondent's
VBS Account was removed
in order to reflect the Respondent's true indebtedness to VBS from
time to time. A Restated Statement of
the Respondent's VBS Account,
as the true reflection of the transactions on the Respondent's VBS
account, reflects the Respondent's
indebtedness to VBS. On 7 October
2019, VBS issued a certificate of indebtedness signed by its
Collections Manager, certifying,
that the amount of R 19,039,249.33
was outstanding as at 31 December 2018 on the Respondent's overdraft
account.
[10]
The Respondent opposes the application on the bases that it alleges
that
a third party, Venmont Holdings (Pty) Ltd ("Venmont"),
made payment to the Applicant, in favour of the Respondent's VBS
Classic Business Account, in an amount of R 19,000,000.00 on the 30
th
of March 2017, thereby extinguishing its indebtedness at that
stage. The Respondent submits that it is therefore not indebted to
the Applicant. According to the Respondent, it continued to make
payment to Venmont up to the stage where VBS was placed under
curatorship. The Respondent submits that no summons was issued
against the Respondent by either Venmont or VBS.
[11]
In respect of the Motor Vehicle Finance Account, the Respondent
submits
that he did not enter into the agreement, nor did he receive
any of the vehicles. The Respondent denies the signature on the
agreement.
The Respondent's denial of the agreement however amounts
to a bare denial. The Respondent denies ever having concluded the
agreement,
that the signature on the agreement is that of one of its
representatives and ever having received the motor vehicles. The
Respondent
however failed to adduce any evidence whatsoever to prove
that the signature on the agreement was not that of any of the
directors
of the Respondent, alternatively that the vehicles were not
received.
[12]
The Applicant submits that it appears prima facie, that the
Respondent
in the very least, is indebted to VBS in the amount of R
19,039,249.33 in relation to the admitted Facility Agreement
considering
the certificate of indebtedness issued to that effect.
[13]
As the Applicant applies for a final winding-up order, the
application
must be determined on the basis of the rule as set out in
Plascon Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd,
[1984] ZASCA 51
;
1984 (3) SA
623
(A) at 634E to 635C. Rogers J in Orestisolve (Pty) Ltd t/a Essa
Investments v NDFT Investment Holdings (Pty) Ltd and Another
2015 (4)
SA 449
(WC) at par [9] stated as follows:-
"The test for a
final order of liquidation is different The applicant must establish
its case on a balance of probabilities.
Where the facts are disputed,
the court is not permitted to determine the balance of probabilities
on the affidavits but must instead
apply the PlasconEvans rule
(Paarwater v South Sahara Investments (Pty) Ltd
[2005] 4 All SA 185
(SCA) para 4; Golden Mile Financial Solution CC v Amagen Development
(Pty) Ltd
[2010] ZAWCHC 339
paras 810; Badge & Others NNO v
Midnight Storm Investments 265 Pty Ltd & Another
2012 (2) SA 28
(GSJ) para 14).
[14]
The respondent bears a rebutting onus to show that its indebtedness
to VBS is disputed on bona fide
and reasonable grounds, In Kalil v
Decotex (Pty) Ltd and Another
1988 (1) SA 943
(A) at 980C-D Corbett
JA held as follows:-
"Consequently,
where the respondent shows on a balance of probability that its
indebtedness to the applicant is disputed on
bona fide and reasonable
grounds, the Court will refuse a winding-up order. The onus on the
respondent is not to show that it is
not indebted to the applicant:
it is merely to show that the indebtedness is disputed on bona fide
and reasonable grounds. "
[15]
The court in Porterstraat 69 Eiendomme (Pty) Ltd v P A Venter
Worcester (Pty) Ltd
2000 (4) SA 598
(C) at 606A-D, per Davis J, cited
with approval the following extract on the proper meaning of "bona
fide dispute on reasonable
grounds":
"A debt is not
bona fide disputed simply because the respondent company says that it
is disputed. The dispute must not only
be bona fide or genuine but
must be on good, reasonable or substantial grounds. The expression
"genuine dispute" connotes
a plausible contention requiring
the same son of consideration a "serious question to be tried".
It is not sufficient
for the company merely to establish that there
is a serious question to be tried as to whether the dispute over the
debt is genuine
in that the debt is disputed on the basis that an
honestly held belief that it is not payable, and is not disputed,
merely for
the purpose of delay or obstruction. "Genuine'
in
this context does not mean not fabricated for the purpose of the
proceedings or not just thought up or brought forward without
genuine
belief: there can be no genuine dispute if there are not substantial
grounds for disputing the debt.
[16]
It is alleged by the Respondent that during 2017, it entered into an
agreement with
Venmont represented by a Taki Mmbi, in terms of which
Venmont lent and advanced the amount of R 19 million to the
Respondent, which
amount was utilized to pay the debt owed to VBS.
The Respondent further alleges that the amount of R 19 million was to
be repaid
to Venmont in monthly installments of R182 083.33.
[17]
I find this defence of the Respondent dubious and absurd. Instead to
servicing its
overdraft facility on the fairly common and agreed
terms set out in the Facility Agreement, the Respondent borrowed
money to pay
its credit facility debt obligations. The Respondent
merely deferred its debt.
[18]
It is astonishing that the Respondent's whole compounded debt
defence, assuming it
to be true, entirely took place within VBS's
bank accounts. The Respondent's companies and Venmont, are alleged to
have made cross-payments
(essentially intra-bank transfers) into one
another's VBS accounts.
[19]
Mr. Phophi Mukhodobwane, deposed to an affidavit which independently
detailed how the Fraudulent Scheme
was orchestrated against VBS from
within. Mr. Mukhodobwane avers in his affidavit that the Respondent
and Venmont were, together
with three other companies, exposures of a
company called Vele Investments.
[20]
Significantly, in its answering affidavit, the Respondent in relation
to the
Applicant's version of the fraudulent scheme and the
fictitious credit, simply raised a bare denial and technical points
which
I find to be without any merit. The Respondent's factual
insolvency was denied in bald and unsubstantiated terms, without any
facts
being put up substantiating such denial or evidencing the
Respondent's commercial solvency.
[21]
A real dispute of fact arises, inter alia, where a court is satisfied
that the party who purports to raise the dispute has in its affidavit
seriously and unambiguously addressed the facts said to be
disputed.
See PMG Motors Kyalami (Pty) Ltd (in liquidation) v Firstrand Bank
Ltd, Wesbank Division
2015 1 All SA 437
(SCA);
2015 (2) SA 634
(SCA).
[22]
The Respondent's counsel in argument attacked the credibility and
foundation
of the Applicant's averments in his founding papers. Yet,
in its answering papers, the Respondent failed to meaningful
discharge
the facts set up by the Applicant. The fraudulent scheme
perpetrated on VBS and the affidavit provided by Mr. Mukhodobwane has
already been addressed in various decisions.
(See VBS Mutual Bank (in
liquidation) v Madzonga (2507/2018) [2018] ZAGPJHC 515 (3 August
2018) and VBS Mutual Bank (in liquidation)
v Ramavhunga and Another
(25062/2018) [2019] ZAGPJHC 273 (23 August 2019) as well as
Annooshkumar Rooplal N.O v Tigraphase (Pty)
Ltd unreported GJ Case
Number 30611/2019 (11 September 2020)). As in the present instance,
no countervailing evidence was presented
on those issues, and am I in
agreement with the approach adopted therein.
[23]
Where fraud is manifest in the purpose and use of a company as it is
in the
present instance concerning the Respondent, a company in the
position of the Respondent may also be wound-up by the court in terms
of Section 344(h) of the Old
Companies Act, if
it appears to be just
and equitable that the company be wound-up.
[24]
Given the extent of VBS's looting from which the Respondent has
benefited,
there is in my view, in addition, a compelling, just and
equitable ground for the court to grant a winding-up order against
the
Respondent in terms of Section 344(h) of the Old
Companies Act.
[25
]
It was argued by the Applicant's counsel that the principal duty of
the courts
is to suppress fraud whereof it is the more pernicious
when it is close and disguised. It was argued that consequently, the
contingency
of granting a final winding-up order in the circumstances
of this case is unassailable, as the court will wind-up a company on
the ground that it is just and equitable to do so if the company was
promoted for the purpose of perpetrating a fraud or deception.
It is
precisely what happened in the present case. The Respondent was
established with the purpose to defraud VBS at the dishonest
expense
of VBS depositors.
[26]
In my view, the Respondent has failed to discharge the rebutting onus
which
rests on it to show that its indebtedness as claimed by VBS is
disputed on bona fide and reasonable grounds. The Respondent has
also
failed to show that it is factually solvent. In addition, in my view,
the Respondent should be wound-up on the ground that
it is just and
equitable to do so.
[27]
The question arises whether a provisional winding-up order should be
granted or a final winding-up order. In Wolhuter Steel (Welkom) (Pty)
Ltd v Jatu Construction (Pty) Ltd (In Provisional Liquidation)
-
1983
(3) SA 815
(0) at p823A-B confirmed that in our law and practice a
company is practically invariably first liquidated provisionally
before
it is thereafter liquidated finally and that the rule nisi
calls upon "all interested parties to show cause why a final
order
of liquidation should not be granted against the company"
[28]
The above practice is however not inflexible as was found by the
Supreme
Court of Appeal in Johnson v Hirotec (Pty) Ltd
[2000] ZASCA 131
;
2000 (4) SA
930
(SCA) at 933H-934C, inter alia that:
"The remaining
question is whether this Court should issue a provisional or a final
order of winding-up. The Act does not require
a final order to be
preceded by a provisional order, but in Kalil v Decotex (Pty)Ltd and
Another
1988 (1) SA 943
(A) at 976 A-B, Corbett JA referred to the
practice, which he regarded as well established, of granting a
provisional order of
winding-up and a rule nisi calling upon persons
concerned to show cause why a final order should not be granted. From
the information
given to us by counsel it would seem that there is no
longer a uniform practice in this regard throughout the country.
According
to the Practice Manual of the Transvaal Provincial
Division, a judge of that Division appears to have a wide discretion
to grant
a provisional or a final winding-up order, as the case may
require, and is under no constraint to issue a provisional order as a
matter of course. This Court should ordinarily apply the rules of
practice of the division from which the appeal emanates and,
adopting
this principle, there is no reason why, in an appropriate case, this
Court should not grant a final order. This is such
a case. The
respondent opposed the grant of a winding-up order in the court a quo
and in this Court. The issues have been
fully ventilated and
the respondent has put nothing forward to persuade us that further
relevant facts would be forthcoming if
a rule nisi were issued.”
[29]
In my view, in this case, there are sufficient facts not in dispute
or disputed
facts which are not material, and which are also not real
and genuine disputes of fact, on which relief can nevertheless be
granted.
Those facts which are in dispute would therefore be accepted
as facts in favour of the Respondent. The court is of the view that
this approach is consistent with the law expressed in various cases
on this issue. In my view there is therefore no reason why
a
provisional order should be granted and not a final winding-up order.
[30]
The normal principle is that the costs of the application form part
of the
costs of the winding-up. There is no reason to deviate from
this principle.
[31]
I therefore make the following order:-
1
. The Respondent, MML Foods Services (Pty) Ltd, be and is hereby
placed under final winding
up in the hands of the Master of the High
Court.
2
The costs of the application will be costs in the winding-up.
M.
NAUDE
ACTING
JUDGE OF
THE
HIGH COURT
APPEARANCES:
HEARD
ON:
15
OCTOBER 2020
JUDGMENT
DELIVERED ON:
2
FEBRUARY 2021
For
the Applicants:
Adv.
S. L. Mohapi
Instructed
by:
Werksmans
Attorneys
C/o
Bosman Attorneys
Polokwane
For
the Respondents:
Adv.
Marianne Bresler
Instructed
by:
Pratt,
Luyt & De Lange Attorneys
Polokwane