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[2021] ZAGPPHC 348
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Tshepang Electrical (Pty) Ltd v Mokgolokwane Civils CC (44188/2020) [2021] ZAGPPHC 348 (27 May 2021)
IN THE HIGH COURT OF
SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE
NO:
44188/2020
REPORTABLE
OF
INTEREST TO OTHER JUDGES
REVISED
In
the matter between:
TSHEPANG
ELECTRICAL (PTY)
LTD
Applicant
And
MOKGOLOKWANE
CIVILS
CC
Respondent
JUDGMENT
BARNARDT
AJ
1.
This is an application for the final winding up of the respondent due
to the
respondent’s alleged inability to pay its admitted
debts. The application is opposed, inter alia, on the basis that the
debt
is disputed, and that the demand was defective.
2.
The respondent also brought an application for condonation for its
failure to
file its answering papers late, which application was
opposed by the applicant.
CONDONATION
3.
I considered the lateness of the answering affidavit, reasons for the
lateness,
and any possible prejudice suffered by the applicant due to
the late filing of the answering affidavit and concluded that it is
in the interest of justice to grant condonation.
4.
I therefore order that condonation is granted, each party to pay its
own costs
occasioned by the condonation application.
FACTUAL
BACKGROUD
5.
In August 2018, the respondent was awarded a contract for the
construction of
4000 low-costing housing units in Palm Ridge by the
Gauteng Department of Human Settlement.
6.
During January 2019, the respondent and applicant concluded a written
joint venture
agreement with certain terms and conditions, with a
view to increase the respondent’s capacity to complete the
project.
7.
It is common cause that the parties, during March 2020, due to
certain issues
between them, agreed to separate and exit from the
joint venture. It is however disputed whether the parties
agreed on the
monies owed and whether an agreement about the signing
of an Acknowledgement of Debt was reached.
8.
It is evident that there was an attempt to draft an Acknowledgement
of Debt,
but it was never signed despite correspondence to clarify
certain issues.
9.
According to the applicant, the respondent owed it an amount of R20
303 255,
97 on 23 June 2020, and a notice of demand, admittedly only
for R7 919 737, 02, was served on the respondent on 14 July 2020.
10.
In reply, the respondent confirmed that they were in the process of
paying the applicant
and on 17 July 2020 an amount of R608 431, 88
was paid to the applicant by the respondent.
11.
The respondent stated in its answering affidavit that the undertaking
that it was in the
process of paying the applicant, cannot be
understood outside the framework of how and when liability arises in
terms of the joint
venture agreement. According to the respondent,
“the extent of the respondent’s indebtedness to the
applicant is still
disputed and that payment will only be made to the
applicant once the amount owing has been quantified.”
12.
The applicant averred that the respondent is unable to pay its
admitted debts and that it
would therefore be just and equitable that
the respondent should be wound-up in terms of section 344(h) of the
Companies Act as
read with the Close Corporation Act.
LEGAL
POSITION
13.
The grounds for the final winding-up of a close
corporation are the same as those that are applicable for the
winding-up of companies.
An applicant for the winding-up of a close
corporation must rely on the grounds set out in Section 344 and 345
of the Companies
Act, 61 of 1973.
14.
Section 344 provides for instances in which a company can be wound
up. Subsection (f) provides
that a company may be wound up by the
Court if it is unable to pay its debts as described in Section 345.
15.
Section 345 reads as follows:
“
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 due;
or
(ii) in the case of
anybody 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 favour 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.”
16.
It is trite that the unpaid creditor has a right,
ex
debito justitiae
,
to a winding-up order against the respondent’s company /
co-operation that has not paid its debt. In this regard, the
following
was stated in the matter of
Standard
Bank of South Africa v R-Bay Logistics
:
[1]
“
[27]
There has been judicial debate about whether, for the purposes of
Section 344(f) of the old Companies Act, it is possible for
the Court
to conclude, upon evidence of actual insolvency, that a company is
"unable to pay its debts". Certainly, proof
of the actual
insolvency of a respondent company might well provide useful evidence
in reaching the conclusion that such company
is unable to pay its
debts but that conclusion does not necessarily follow. On the other
hand, if there is evidence that the respondent
company is
commercially insolvent (ie cannot pay its debts when they fall due)
that is enough for a Court to find that the required
case under
Section 344(f) has been proved. At that level, the possible actual
solvency of the respondent company is usually only
relevant to the
exercise of the Court's residual discretion as to whether it should
grant a winding-up order or not, even though
the applicant for such
relief has established its case under Section 344(f).”
17.
In the matter of
Orestisolve
(Pty) Ltd t/a Essa Investments v NDFT Investments Holdings (Pty) Ltd
& Another
[2]
the
following was stated with reference to the relevant legal principles:
"[7] In
an opposed application for provisional liquidation the applicant must
establish
its entitlement to an order on a
prima
facie
basis, meaning that the applicant must show that the balance of
probabilities on the affidavits is in its favour
(Kalil
v Decotex (Pty) Ltd and Another
1988
(1) SA 943
(A)
at 975J - 979F). This would include the existence of the
applicant's claim where such is disputed. (I need not
concern myself
with the circumstances in which oral evidence will be permitted where
the applicant cannot establish a
prima
facie
case.)
[8] Even
if the applicant establishes its claim on a
prima
facie
basis, a court
will ordinarily refuse the application if the claim is bona
fide disputed on reasonable
grounds. The rule that winding-up
proceedings should not be resorted to as a means of
enforcing payment of a debt,
the existence of which is
bona
fide
disputed
on reasonable grounds, is part of the broader principle that the
court's processes should not be abused. In the context
of liquidation
proceedings the rule is generally known as the
Badenhorst
rule,
from the leading eponymous case on the subject,
Badenhorst
v Northern Construction Enterprises (Pty) Ltd
1956
(2) SA 346
(T)
at 347H - 348C, and is generally now treated as
an independent rule, not dependent on proof of actual
abuse
of process (Blackman et al, Commentary on the Companies Act
Vol 3 at 14 - 82 to 14 - 8).
A
distinction must thus be drawn between factual disputes relating to
the respondent's liability to the applicant and disputes
relating to
the other requirements for liquidation. At the provisional stage the
other requirements must be satisfied on a balance
of
probabilities with reference to the affidavits. In relation to the
applicant's claim, however, the court must consider not only
where
the balance of probabilities lies on the papers, but also whether the
claim is
bona
fide
disputed
on reasonable grounds. A court may reach this conclusion even though
on a balance of probabilities (based
on the papers) the
applicant's claim has been made out
(Payslips
Investment Holdings CC v Y2K Tee Ld
2001
(4) SA 781
(C)
at 783G - I). However, where the applicant at the
provisional stage shows that the debt
prima
facie
exists,
the onus is on the company to show that it is
bona
fide
disputed
on reasonable grounds
(Hulse-
Reutter
and Another v HEG Consulting Enterprises (Pty) Ltd (Lane ad Fey NNO
Interveni
ng)
1995
(2) SA 208
(C)
at 218D-
219C).”
18.
Upon reading and considering the
affidavits and annexures thereto, and submissions by both parties, I
am of the view that the following
can
prima
facie
be accepted
:
18.1
The applicant served a statutory demand on the respondent and
although various amounts were mentioned, the
demand was for R7 919
738, 02.
18.2
The respondent conceded that it is indebted to the applicant in the
amount of at least R3 000 000, 00. In
this regard, I am of the view
that the conclusion by Malan J (as he then was) in
Body
Corporate of Fish Eagle v Group Twelve Investments
[3]
is
important:
"The
deeming provision of s 345(1)(a) of the Companies Act creates a
rebuttable presumption to the effect that the respondent
is unable to
pay its debts (Ter Beek's case supra at 331F). If the respondent
admits a debt over R100, even though the respondent's
indebtedness is
less than the amount the applicant demanded in terms of s 345(1)(a)
of the Companies Act, then on the respondent's
own version, the
applicant is entitled to succeed in its liquidation application and
the conclusion of law is that the respondent
is unable to pay its
debts."
18.3
The alleged
bona
fide
disputes regarding the geysers, vat and management fees were raised
and discussed in the interdictory application and it is noted
that
the respondent in its answering affidavit, which was filed after the
interdictory application, did not deal with them. In
Wightman
t/a J W Construction v Headfour
.
[4]
Heher JA discussed bona fide disputes as follows:
“
A
real, genuine and bona fide dispute of fact can exist only where the
court is satisfied that the party who purports to raise the
dispute
has in his affidavit seriously and unambiguously addressed the fact
said to be disputed. There will of course be instances
where a bare
denial meets the requirement because there is no other way open to
the disputing party and nothing more can therefore
be expected of
him. But even that may not be sufficient if the fact averred lies
purely within the knowledge of the averring party
and no basis is
laid for disputing the veracity or accuracy of the averment. When the
facts averred are such that the disputing
party must necessarily
possess knowledge of them and be able to provide an answer (or
countervailing evidence) if they be not true
or accurate but, instead
of doing so, rests his case on a bare or ambiguous denial the court
will generally have difficulty in
finding that the test is satisfied.
I say 'generally' because factual averments seldom stand apart from a
broader matrix of circumstances
all of which needs to be borne in
mind when arriving at a decision. A litigant may not necessarily
recognise or understand the
nuances of a bare or general denial as
against a real attempt to grapple with all relevant factual
allegations made by the other
party. But when he signs the answering
affidavit, he commits himself to its contents, inadequate as they may
be, and will only
in exceptional circumstances be permitted to
disavow them. There is thus a serious duty imposed upon a legal
adviser who settles
an answering affidavit to ascertain and engage
with facts which his client disputes and to reflect such disputes
fully and accurately
in the answering affidavit. If that does not
happen it should come as no surprise that the court takes a robust
view of the matter.”
19.
The respondent stated that it is solvent and claimed that the
applicant did not produce
evidence to the contrary. The
respondent however, who is in the best position to show through its
financial statements that
it is solvent, opted not to attach any
statements in support of its claim. In
Boschpoort
Ondernemings (Pty) Ltd v Absa Bank Ltd
[5]
the question of winding-up
‘solvent’ companies has been discussed:
“
[23]
... The so-called factual solvency of a company is not, in itself, a
determinant of whether a company should be placed in liquidation
or
not. The veracity of this deduction may be illustrated, as in the
present case, where the issue has arisen as to whether a company
which is factually solvent, but commercially insolvent, is to be
wound-up in terms of the new Act or the old Act. To attribute
so-called ‘factual solvency’ to the meaning of the term
‘solvent company’ in the new Act would lead to
an
unbusiness-like result that would not make sense.
[24]
Factual solvency in itself is accordingly not a bar to an application
to wind-up a company in terms of the old Act on the ground
that it is
commercially insolvent. It will, however, always be a factor in
deciding whether a company is unable to pay its debts.
See Johnson v
Hirotec (Pty) Ltd. It follows that a commercially solvent company
(whether factually solvent or insolvent), may be
wound up in terms of
the new Act only; a solvent company cannot be wound up in terms of
the old Act.”
20.
With due consideration of all relevant facts and case law, I am of
the view that it would be just to grant a provisional order
of
winding-up of the respondent on the ground that it is unable to pay
its debt.
21.
In the circumstances I make the following order:
21.1
The respondent is provisionally wound-up.
21.2 A
rule nisi is issued calling upon all persons to appear and show
cause, if any, to this Court on/or before
10:00 am on 2 December
2021, why the respondent should not be finally wound-up, and why the
costs of this application should not
be costs in the winding-up.
21.3
This order, together with a copy of the Notice of Motion and
annexures thereto, must be served upon the respondent.
21.4. The copy of
this order must be served on:
21.4.1. Any registered
trade union that as far as the Sheriff can reasonably ascertain
represents any of the employees of the respondent.
21.4.2. The respondents’
employees, if any, by affixing a copy of the order and the
application to any notice board, to which
the employees have access
inside the respondents’ premises, or if there is no access to
the premises by the employees, by
fixing copy to the front gate,
where applicable, failing which, to the front door of the premises
from which the respondents reside
and/or conduct any business.
21.4.3. The South African
Revenue Service.
21.4.4. This order shall
be published once in the Government Gazette and a local newspaper.
21.5.
The costs of this application to be costs in the administration of
the estate of the respondents.
ACTING
JUDGE JF BARNARDT
JUDGE OF THE HIGH
COURT
GAUTENG
DIVISION OF THE HIGH COURT, PRETORIA
Delivered:
This judgment was prepared and authored by the Judge whose name is
reflected and is handed down electronically by circulation
to the
Parties/their legal representatives by email and by uploading it to
the electronic file of this matter on CaseLines.
The date for
hand-down is deemed to be 27 May 2021.
APPEARANCES
For
the applicant: Adv. Silver
Instructed
by: Beder Friedland Inc.
For
the respondent: Adv R Tulk and Adv TR Monene
Instructed
by: Mabuza Attorneys
Date
heard: 11 March 2021
Date
of judgment: 27 May 2021
[1]
2013 (2) SA 295
– paragraph [27’
[2]
2015
(4) SA 449
(WCC)
par. 7 - 8
[3]
.
2003 (5) SA 414
(W) at 428B-C
[4]
[2008] ZASCA 6
;
2008
(3) SA 371
(SCA) at 375 G - 376 B
[5]
Saflii (936/12)
[2013] ZASCA 173
(28 November 2013)