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[2021] ZAGPJHC 541
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CJ Polymers Sendiran Berhad v Savino Del Bene (South Africa) (Pty) Ltd (2020/13410) [2021] ZAGPJHC 541 (8 October 2021)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: 2020/13410
REPORTABLE:
No
OF
INTEREST TO OTHER JUDGES: No
REVISED:
Date:
7/10/21
In
the matter between:
CJ
POLYMERS SENDIRAN
BERHAD
Applicant
and
SAVINO
DEL BENE (SOUTH AFRICA)
(PTY)
LTD
Respondent
Coram:
Fourie AJ
Heard
on
: 3
May, 26 July 2021
Delivered:
8 October 2021
Summary:
Opposed application for final winding up, on basis of alleged debt.
Established principles applied
to the facts. Found - Respondent
discharged the onus of raising a bona fide dispute as to its
liability to the Applicant, on reasonable
grounds. Winding-up
application dismissed with costs.
JUDGMENT
Introduction
1.
This is an application for the final liquidation of the respondent.
It is opposed. The matter originally came before me in May 2021, when
it was postponed to allow for the filing of further affidavits
and
completion of mandatory service requirements, which was duly
completed, and the matter was argued on the merits on 26 July
2021.
2.
Advocate Danie Preis SC, who appeared for the respondent at
the
hearing in May 2021, sadly fell victim to Covid-19, and passed away
in early July 2021.
3.
Mr Kevin van Huyssteen of Fluxmans Attorneys represented
the
applicant, and Advocate Andrew South SC represented the respondent at
the hearing on the merits. I am indebted to both for
the quality of
their submissions, which have been of great assistance.
4.
The applicant (“CJ Polymers”) is a company incorporated
and based in Malaysia. It is an international trading and
distribution enterprise, specialising in the procurement and
distribution
of petrochemicals, polymers and textile raw materials.
5.
The respondent (“Savino”), is a company incorporated
in
South Africa, and operates as the South African branch of Savino Del
Bene S.p.A, a global logistics and forwarding company,
founded over a
century ago, with global headquarters in Florence, Italy.
6.
Mr Isaac Solomon David (“Isaac”), owner and CEO
of the
Solomon David Group (Pty) Ltd (“SDG”), is a businessman
who plays a central role in these proceedings, albeit
that neither he
nor his business are cited as parties. SDG is currently in business
rescue.
7.
CJ Polymers asserts that Savino is indebted to it to the tune
of some
R59 million rand, in respect of goods sold and delivered to Savino at
its special instance and request, during the period
April to December
2018. Savino disputes this, and asserts that at all times it merely
acted as a freight forwarding agent for SDG,
the actual purchaser of
the goods supplied by CJ Polymers. Isaac has deposed to a
confirmatory affidavit in support of Savino’s
version. There is
no dispute that monies are owed to CJ Polymers for goods delivered to
Savino – the issue is who is liable
for payment.
8.
The central issue for consideration is therefore whether, in
the
period in question, Savino purchased goods directly from CJ Polymers,
or whether it acted as forwarding agent for SDG, the
actual
purchaser. Given the nature of the proceedings, the correct approach
to addressing this dispute needs to be set out prior
to engaging with
the facts.
The
Badenhorst
rule and the correct legal approach to this dispute
9.
The name of this rule is derived from the judgment in
Badenhorst v
Northern Construction Enterprises (Pty) Ltd
1956 (2) SA 346
(T),
where it was held that liquidation proceedings are not to be used to
enforce payment of a debt that is disputed
bona fide
and
reasonable grounds.
10.
This rule has been applied and refined in numerous cases over several
decades.
In
Kalil v Decotex
(Pty) Ltd
1988 (1) SA 943
(A), the Appellate Division held that this rule should not be applied
inflexibly. In
Kalil v Decotex
and subsequent judgments, the
following principles have emerged that apply to determining an
application for
final
winding up (as opposed to provisional
winding up), where the respondent disputes the debt on which the
application is based, and
where neither party has sought a referral
to oral evidence:
10.1.
Before granting a final liquidation order, the court must be
satisfied that the applicant, who bears the onus, has established,
on
a balance of probabilities, the indebtedness of the respondent.
(
Paarwater v South Sahara Investments (Pty) Ltd
[2005] 4 All
SA 185
(SCA) (“
Paarwater
”) at para 3.
10.2.
Once the respondent’s debt has
prima facie
been
established, the onus is on it to show that this indebtedness is
disputed on
bona fide
and reasonable grounds, bearing in mind
that the discretion of a court not to grant a winding-up order upon
the application of
an unpaid creditor is narrow and not wide. (See
Afgri Operations Limited v Hamba Fleet (Pty) Ltd
[2017] JOL
37585
(SCA) at para 12-13.) However, the onus on the respondent is
not to prove that it is not indebted to the applicant, but rather
that it disputes the debt on
bona fide
and reasonable grounds.
(See
Kalil v Decotex
at 980C).
10.3.
Per Marcus
AJ in
Bravura
:
[1]
“
Bona
fides
and reasonableness are two distinct requirements. …As
to whether the indebtedness is
bona fide
disputed, the court
must look to the respondent’s subjective state of mind. Bald
allegations lacking particularity are unlikely
to persuade a court
that the respondent is
bona fide
. … As to whether
indebtedness is disputed on reasonable grounds, the court looks to
whether there are facts, if proven at
trial, that would constitute a
defence. This requires more than bald allegations lacking in
particularity.”
10.4.
Where there
are serious disputes in regard to essential matters that the
applicant is required to prove, and the applicant has not
sought a
referral to oral evidence of such disputes, the
Plascon-Evans
test
[2]
applies to the
resolution of factual disputes. Per Zulman JA in
Paarwater
,
at para 4:
[4]
… In the circumstances the following test enunciated by
Corbett JA in the oft referred decision of
Plascon-Evans Paints
Limited v Van Riebeeck Paints (Pty) Limited
is of application:
“
Secondly,
the affidavits reveal certain disputes of fact. The appellant
nevertheless sought a final interdict, together with ancillary
relief, on the papers and without resort to oral evidence. In such a
case the general rule was stated by Van Wyk J (with whom De
Villiers
JP and Rosenow J concurred) in Stellenbosch Farmers Winery Ltd v
Stellenvale Winery (Pty) Ltd
1957 (4) SA 234
(C) at 235E–G to
B:
‘
.
. . where there is a dispute as to the facts a final interdict should
only be granted in notice of motion proceedings if the facts
as
stated by the respondents together with the admitted facts in the
applicant’s affidavits justify such an order . . . Where
it is
clear that facts, though not formally admitted, cannot be denied,
they must be regarded as admitted.’
.
. . It seems to me, however, that this formulation of the general
rule particularly the second sentence thereof, requires some
clarification, and perhaps, qualification. It is correct that, where
in proceedings on notice of motion disputes of fact have arisen
on
the affidavits, a final order, whether it be an interdict or some
other form of relief, may be granted if those facts averred
in the
applicant’s affidavits which have been admitted by the
respondent together with the facts alleged by the respondent,
justify
such an order . . . In certain instances the denial by a respondent
of a fact alleged by the applicant may not be such
as to raise a
real, genuine or bona fide dispute of fact . . . Moreover there may
be exceptions to this general rule, as for example,
where the
allegations or denials of the respondent are so far-fetched or
clearly untenable that the Court is justified in rejecting
them
merely on the papers. . .”
10.5.
Marcus AJ in
Bravura
summarised the applicable approach
crisply as follows:
“
5.
The applicant seeks as primary relief that the respondent be placed
under final winding-up.
Stripped of its nuances, the threshold
that the applicant would have to cross to persuade the court to grant
a final winding-up
order
(in contrast to a provisional winding-up
order) is that of the usual
Plascon-Evans
approach
where
the respondent’s version is effectively to be preferred over
that of the applicant unless the respondent’s version
can be
rejected as far-fetched and fanciful.
” (Emphasis added)
10.6.
Per Rogers
J in
Orestisolve
[3]
:
“
[9]
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
Plascon-Evans
rule
(
Paarwater v South
Sahara Investments (Pty) Ltd
[2005] 4 All SA 185
(SCA) para 4;
Golden Mile Financial Solutions CC v Amagen Development (Pty) Ltd
[2010] ZAWCHC 339
paras 8 – 10;
Budge and Others NNO v
Midnight Storm Investments 256 (Pty) Ltd and Another
2012 (2) SA
28
(GSJ) para 14).
[10]
The difference in approach to factual disputes at the provisional and
final stages appears to me to have implications for the
Badenhorst
rule.
If there are genuine disputes of fact regarding the
existence of the applicant's claim at the final stage, the applicant
will fail
on ordinary principles unless it can persuade the court to
refer the matter to oral evidence. The court cannot, at the final
stage,
cast an onus on the respondent of proving that the debt is
bona fide
disputed on reasonable grounds merely
because the balance of probabilities on the affidavits favours the
applicant
. At the final stage, therefore, the
Badenhorst
rule is likely to find its main field of operation where the
applicant, faced with a genuine dispute of fact, seeks a referral
to
oral evidence. The court might refuse the referral on the basis that
the debt is
bona fide
disputed on reasonable grounds and
should thus not be determined in liquidation proceedings. (In the
present case neither side
requested a referral to oral evidence.)”
(Emphasis added)
CJ
Polymers’ case against Savino, as pleaded in the founding
affidavit
11.
CJ Polymers alleges that it and Savino have an established
business relationship,
and that between July 2016 and December 2018,
Savino ordered various goods from CJ Polymers from time to time, and
(at least until
April 2018) paid for the goods on receipt thereof. In
each of the 42 transactions during the period July 2016 until 6 April
2018,
Savino placed the order, received the goods, and paid CJ
Polymers for the goods.
12.
Savino appears to have a close business relationship with SDG
and Isaac,
and appears to have on-sold most of the goods ordered from
CJ Polymers, to SDG. Where Isaac communicated an order directly to CJ
Polymers (which often happened), he did so after obtaining the
express approval from a Savino official, usually the National Sales
Manager, Mr Munesh Maharaj. On the basis of these approvals, CJ
Polymers fulfilled the orders placed by Isaac/SDG.
13.
Between 14 April and 10 December 2018, Savino (via Isaac/SDG, with
Savino’s
approval) placed orders for goods with CJ Polymers on
21 occasions, on the same basis as before, but despite receiving the
goods,
Savino has failed to pay for them. As at 30 August 2019,
Savino is indebted to CJ Polymers in the amount of R54,463,399.20.
14.
On 30 August 2019, a meeting was held between representatives
of CJ Polymers,
Savino and SDG. One of CJ Polymers’
representatives kept a minute of the meeting, which records that
Savino’s representatives
admitted that Savino was the buyer in
respect of each of the transactions with CJ Polymers, and that Savino
then on-sold the goods
to SDG.
15.
After the parties agreed to the above, CJ Polymers’
representatives
presented Savino’s representatives with an
account reflecting that Savino owed CJ Polymers some R56 million.
Savino’s
representative, Mr Kobus Maree (“Maree”)
then did an about turn, and denied that Savino was the contracting
party,
and claimed that Savino was simply a logistics company that
acted as a handling agent in the transactions between CJ Polymers as
seller and SDG as buyer.
16.
The meeting ended, attorneys’ letters were exchanged, and
in due
course, CJ Polymers’ attorneys issued a demand to Savino
in terms of s345 of the 1973 Companies Act, claiming payment of the
outstanding debt. The required period for payment having passed, CJ
Polymers proceeded to launch this application for winding up.
17.
CJ Polymers is adamant that there is no direct business
relationship between
it and SDG. In support of its claim, CJ Polymers
attached approximately 400 pages of supporting documents for each of
the 21 unpaid
transactions. It asserts that the first few documents
in each transaction clearly demonstrate that Isaac/SDG obtained
permission
from Savino prior to placing an order with CJ Polymers,
thus supporting its claim that Savino is the buyer, who on-sells to
SDG.
18.
By way of example, Annexure E1 contains documents relating to
an order
for a total of 338,000 kilograms of Polyvinyl Chloride PVC
Resin. The documents show that:
18.1.
On 26 March 2018, Isaac (on behalf of SDG) sent an email to CJ
Polymers, asking that a contract for the purchase of these
goods be
arranged, with Savino as the buyer, and the cargo to be released to
SDG.
18.2.
CJ Polymers then generated a sales contract, issued to Savino, with
details of the goods ordered, the price, and various other
details of
the shipment and packing of the goods. This invoice was emailed to
Isaac, who forwarded it to Munesh Maharaj of Savino
for approval.
Maharaj responded on the same day with a single word –
“Approved”. Isaac forwarded this email chain
on to CJ
Polymers, with the comment “approval below”.
18.3.
Neither SDG nor Savino signed the order or CJ’s general terms
of sale, which are attached to the order.
18.4.
On 14 April 2018, CJ Polymers issued a Commercial Invoice to Savino,
calling for payment in respect of a portion of the goods,
in the
amount of R3.77 million. This invoice seems to have been accompanied
by a packing list and a Bill of Lading which lists
Savino as the
Consignee of the cargo.
18.5.
A Marine Cargo Insurance Certificate issued by MSIG Insurance
Malaysia in respect of this cargo, lists CJ Polymers as the
insured,
and SDG as the Consignee.
18.6.
A declaration by the exported which appears to confirm the nature and
quality of the PVC product, lists Savino as the Consignee.
18.7.
On 10 May 2018, CJ Polymers issued a document titled “Release
Order”, addressed to Savino, and instructing it
to release the
cargo (described in the document, and matching the goods ordered) to
SDG.
18.8.
CJ Polymers also issued a Delivery Order, instructing Savino to
deliver the goods to SDG. This document contains a space for
the
customer to sign for receipt of the goods, and is countersigned by an
official of CJ Polymers.
18.9.
On 14 May 2018, CJ Polymers sent an email to Isaac, copied to a
Savino employee, containing as attachments the various shipping
documents described above, with originals to follow via courier.
19.
This example is typical of the 21 transactions that make up CJ
Polymers’
claim against Savino.
Savino’s
defence
20.
Savino is not in the business of importing and selling PVC
products. SDG
is in this business. Savino is a forwarding and
clearing agent and logistics business, and handles the South African
operations
of the global Savino Del Bene company.
21.
SDG and CJ Polymers had an established trading relationship
long before
Savino entered the picture. Different forwarding and
clearing agents were used at that time, to handle a portion of the
logistics
of the dispatch and delivery of goods from CJ Polymers (as
seller) to DSG (as buyer).
22.
Maharaj introduced Isaac and SDG to Savino during June 2016. He
had previously
had business dealings with them at his former
employers, DSV and Kuehne & Nagel (also forwarding and clearing
agents). Isaac
was keen to use Savino as the forwarding and clearing
agent in respect of SDG’s purchases from CJ Polymers.
23.
Savino duly commenced vetting SDG as a new client, which
includes determining
whether and in what amount to grant a credit
facility to the client, as Savino will have to incur fees and
expenses in landing
the goods and attending to customs clearance.
These fees are later recovered from the client. During this vetting
process, SDG
was required to put up security for the credit facility.
Initially a credit facility of R2 million was granted, which was
later
increased to R5,5 million.
24.
From time to time, Savino would invoice SDG for its services
and expenses
incurred on behalf of SDG.
25.
During the vetting process, Savino was requested to attend a
meeting with
SDG’s supplier, CJ Polymers. At this meeting, CJ
Polymers’ representative, informed Savino’s
representatives
that Savino and DSV had been shortlisted as preferred
freight forwarding agents, to attend to forwarding and clearing of
goods
purchased from CJ Polymers by Savino. Savino was then
appointed, due to the global reach and solid reputation of the Savino
Del
Bene Group
26.
During this meeting, the parties agreed to the following
process for future
business:
26.1.
SDG would place an order with CJ Polymers for particular goods after
negotiating a price, and taking into account SDG’s
credit
facility with CJ Polymers;
26.2.
CJ Polymers would then send a sales agreement to SDG for approval by
Isaac;
26.3.
Isaac would then forward the agreement to Savino for “approval”,
meaning that Savino would approve its role as
forwarding agent in the
deal, taking into account the anticipated clearing and forwarding
costs, and SDG’s credit limit with
Savino. In other words, the
“approval” emails relied on by CJ Polymers (see above) do
not mean that Savino approved
the purchase of the goods from CJ
Polymers (this was entirely between SDG and CJ Polymers), but rather
that Savino indicated its
consent to its role as forwarding and
clearing agent in the transaction between CJ Polymers and SDG.
26.4.
CJ Polymers would arrange for shipment of the goods to Savino, who
would attend to customs clearing and would take the goods
into their
warehouse. CJ Polymers would then issue a release order to Savino,
directing it to deliver the goods to SDG.
26.5.
SDG would then instruct Savino to issue an invoice to it, for the
entire purchase price and Savino’s additional costs
and fees.
On receipt of payment, Savino would pay the purchase price of the
goods to CJ Polymers, on behalf of SDG.
27.
Isaac has deposed to an affidavit confirming the accuracy of the
arrangement,
as described in summary above.
28.
Pursuant to the meeting and agreement on the process, some 68
transactions
took place during the period June 2016 to December 2018.
The process agreed to was followed, except that in some instances SDG
would pay the purchase price of the goods directly to CJ Polymers.
29.
Upon receipt of the goods, SDG would on-sell it to its buyer.
Normally
SDG would only place an order with CJ Polymers once it had
secured a buyer for the goods. Savino was not involved in this
process
at all. Isaac decided what to order from CJ Polymers.
30.
In support of its version, Savino attached various documents,
including:
30.1.
Communications between SDG and CJ Polymers on price negotiations;
30.2.
Rate terms provided by Savino to SDG for landing and clearing the
goods;
30.3.
Emails showing that Savino would only pay CJ Polymers once it
received payment from SDG, and indicating that CJ Polymers was
well
aware that the payment originated with SDG;
30.4.
A inquiry from CJ Polymers to SDG about when payment would be made on
its account;
30.5.
Affidavits from various employees, and from Isaac, confirming these
allegations.
31.
Maree, who deposed to Savino’s main affidavit, strongly denied
the applicant’s
version of events at the meeting of 30 August
2019, and in particular denies any admission that Savino is the
buyer, and is therefore
liable for outstanding payments to CJ
Polymers.
32.
Maree explains that when CJ Polymers presented a bill to Savino
during
the meeting, he was dumbfounded, and asked for an explanation
as to the basis on which CJ Polymers was looking to Savino for
payment,
and not to SDG. No explanation was forthcoming. Isaac
immediately confirmed that SDG was liable to CJ Polymers for payment,
and
not Savino. Isaac also stated that SDG had concluded an
acknowledgment of debt agreement in favour of CJ Polymers in respect
of
its entire claim. At its insistence, Isaac had also signed a
personal surety in respect of the claim. In both documents, Isaac and
SDG undertook to settle the full liability of R56 million by 31
December 2019. These documents are attached to the answering
affidavit,
and were concluded on 30 August 2019, the same day as the
meeting described above.
33.
Pursuant thereto, SDG was placed in business rescue. In late
2019, CJ
Polymers submitted a claim to the Business Rescue
Practitioner, based on the debt, and the subsequent acknowledgement
of debt signed
by Isaac on behalf of SDG. In support of its claim
against SDG, CJ Polymers attached a spreadsheet summarising the 21
transactions,
totalling R56 million, that it did not receive payment
for. The Business Rescue Practitioner duly accepted the claim. It is
likely
that this claim was not paid, and that resulted in the attempt
to obtain payment directly from Savino.
34.
In other words, CJ Polymers claims payment of this amount based
on the
same transactions, from both SDG (in the business rescue
proceedings) and now as the basis on which it seeks the final winding
up of Savino, and in both instances asserts that it seeks payment
from the purchaser of the goods.
Assessment
of the contradictory versions
35.
There are various other disputes that arise in the papers,
particularly
in the replying papers, where allegations of fraud are
made, and where CJ Polymers attaches a transcript of the meeting of
30 August
2019, which it appears to have secretly recorded. In a
further answer to the new matter in reply, the admissibility and
veracity
of the transcript are attacked.
36.
I do not intend dealing with these further disputes, as for
present purposes
they do not in my view materially affect the
assessment of the key issues for determination; being whether, on the
application
of
Plascon-Evans
, Savino has raised a
bona fide
and reasonable dispute as to its alleged indebtedness to CJ Polymers.
37.
In my view there is nothing far-fetched or fanciful in Savino’s
version that would enable me to disregard the version pleaded by it.
The version is not lacking in detail, such that would call
into
question the bona fides or reasonableness of the dispute. On the
contrary – Savino has pleaded a clear and credible
defence, in
meticulous detail and supported by documents and affidavits from key
role players (including Isaac, who supports the
version that SDG is
the actual debtor). I am satisfied that Savino has discharged the
onus of proving that the debt is
bona fide
disputed, on
reasonable grounds, and that the facts pleaded by it, if proved at a
trial, would amount to a successful defence to
a claim for payment.
In the circumstances, it is not for this court to engage in an
assessment of the overall probabilities.
Conclusion
and costs
38.
For the reasons set out above, the application must fail. I see
no reason
why costs should not follow the result. It should have been
apparent to CJ Polymers, on a reading of the answering papers, that
there was little hope in succeeding in an application for final
winding up on the papers. It could have elected to withdraw the
application and to issue summons against Savino for payment, or it
could have sought a referral to oral evidence of the disputes.
It did
neither, and elected to proceed with this application. Choices in
litigation have consequences, and in this instance support
an order
that costs follow the result.
39.
The postponement of the matter on 3 May 2021 was largely the
applicant’s
doing, in failing to attend to mandatory service
requirements (which had to be rectified prior to the hearing of the
matter), and
in raising new matter in reply. The reserved costs of
this postponement should therefore also follow the result.
Order
40.
The application to place the respondent in final winding-up is
dismissed
with costs, which costs are to include the reserved costs
of 3 May 2021.
Greg
Fourie
Acting
Judge of the High Court of South Africa
Gauteng
Local Division, Johannesburg
HEARD
ON:
3 May and 26 July 2021
DATE
OF JUDGMENT:
7 October 2021
FOR
THE APPELLANT:
Adv A South SC
INSTRUCTED
BY:
Ryan Attorneys
FOR
THE RESPONDENT:
Mr K van Huyssteen
INSTRUCTED
BY:
Fluxmans Inc
[1]
Bravura
Capital (Pty) Limited v Drive Path Trade & Invest (Pty) Limited
t/a South Energy
(29755/2019) [2021] ZAGPJHC 3 (1 February 2021), available on
www.saflii.org
(“Bravura”),
at para 27, and with reference to the decision of Rogers J in
Gap
Merchant Recycling CC v Goal Reach Trading 55 CC
2016 (1) SA 261
(WCC).
[2]
Formulated
in
Plascon-Evans
Paints Limited v Van Riebeeck Paints (Pty) Limited
[1984] ZASCA 51
;
1984 (3) SA 623
(A) at 634E–635C.
[3]
Orestisolve
(Pty) Ltd t/a Essa Inv v NDFT Inv Holdings (Pty) Ltd
2015 (4) SA 449
(WCC)