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[2020] ZAGPPHC 40
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DH Construction Technologies CC v Chad Construction (45546/17) [2020] ZAGPPHC 40 (19 February 2020)
IN THE HIGH COURT OF
SOUTH AFRICA
(GAUTENG DIVISION,
PRETORIA)
Case number: 45546/17
In
the matter between:
DH
CONSTRUCTION TECHNOLOGIES CC
APPLICANT
and
CHAD
CONSTRUCTION
RESPONDENT
JUDGMENT
VAN STADEN, AJ:
INTRODUCTION
[1]
This
matter centers around the question of a bona fide and reasonable
defence in the context of a liquidation application. What
does a bona
fide and reasonable dispute in respect of a creditor’s claim
mean in the circumstances of the matter?
FOUNDING AFFIDAVIT
[2]
The
applicant, a close corporation which renders quantity surveying
services, applies for the winding up of the respondent.
[3]
The
applicant’s application is premised on the provisions of
section 345
[1]
of the
repealed Companies Act, Act 61 of 1973 (the 1973 Companies Act),
which has continued existence by virtue of the transitional
provisions contained in the Companies Act 71 of 2008 (the 2008
Companies Act). The
applicant relies on a notice in terms of
section
345
dated 14 March 2017 served on the respondent’s registered
address. Section 345 of the 1973
Companies Act is
applicable to Close
Corporations by virtue of
section 66
of the
Close Corporations Act 69
of 1984
.
[4]
The
applicant alleges that the respondent is indebted to it in the amount
of R168,150. The amount of R168,150 is made up of three
different
invoices, invoice number 1028 dated 8 December 2016 in the amount of
R37,050, invoice number 1029 dated 8 December 2016
in the amount of
R44,460 and invoice number 1033dated 7 March 2017 in the amount of
R86,6740.
[5]
Invoice
1028 pertains to quantity surveying services rendered in respect of
the Willowood Park Retail Development. Invoice 1029
pertains to
quantity surveying services rendered in respect of the Black Mountain
Gamsberg project. Invoice 1033 pertains to quantity
surveying
services rendered in respect of tender preparation for 4 different
projects.
[6]
Invoices
1028 and 1029 were forwarded to the respondent by way of e-mail on 8
December 2016. This was followed up by e-mails dated
respectively 24
January 2017 and 6 February 2017, enquiring about payment. On 7 March
2017 the applicant forwarded invoice 1033.
On the same day the
respondent indicated that the work done in respect of invoice 1033
was done on risk, and as the respondent
was unsuccessful with the
tender, the respondent is not liable for payment of the invoice.
[7]
The
respondent’s response to the
section 345
notice dated 25 April
2017, via its attorneys, was to offer payment of invoice number 1028
(payment was only made on 16 August
2017) and deny its indebtedness
in respect of invoice 1033, as the work had been done on a
contingency basis. The respondent also
denied its indebtedness in
respect of invoice 1029, and indicated that it was prepared to
discuss same, with a view to reaching
a compromise.
[8]
The
applicant contends that as the amount of R168,150 was not paid within
21 days of service of the
section 345
notice, the respondent is
deemed to be unable to pay its debts, the respondent is deemed to be
commercially insolvent.
ANSWERING AFFIDAVIT
[9]
The
respondent’s defence is that it paid invoice 1028. The
respondent furthermore states that it utilised the services of
the
applicant to prepare tenders. The respondent alleges that during or
about August 2015 the parties agreed that in the event
of the
respondent being successful with tenders, the applicant would be paid
in respect of its services so rendered. In the instances
where the
respondent was unsuccessful, no payment would be effected.
[10]
As
far as invoice 1029 is concerned, the total provisional bill of
quantities prepared by the applicant was for a sum of
R121,639,638.12.
The said tender was not accepted by the employer,
instead a tender in the amount of R74,499,754 was awarded to the
respondent.
Accordingly the respondent contends the applicant cannot
claim fees in respect of invoice 1029.
REPLYING AFFIDAVIT
[11]
In
reply the applicant points out that it is not correct that the tender
relating to invoice 1029 was successful. It was in fact
a
counter-offer that was made to the respondent, which the respondent
accepted.
INTERVENING CREITOR’S FOUNDING AFFIDAVIT
[12]
After
the intervening creditor had applied for leave to intervene, I
ordered that such leave be granted.
[13]
The
intervening creditor, a landlord, also applies for the winding up of
the respondent. Its application is also premised on the
provisions of
section 345 of the 1973
Companies Act. The
intervening creditor
relies on a notice in terms of
section 345
dated 24 October 2016
served on the respondent’s registered address, read with the
provisions of
section 344.
[14]
The
intervening creditor alleges that the respondent is indebted to it in
the amount of R300,018.09 for arrear rental. During September
2011 or
May 2012, the intervening creditor and the respondent concluded a
written lease agreement in respect of immovable property
(the
immovable property) situated at Kathu, Northern Cape.
[15]
During
October 2012 the intervening creditor and the respondent concluded a
verbal extension of said lease agreement. The parties
agreed that the
monthly rental would be subject to the 10% annual increase as
determined in in the written lease agreement.
[16]
During
September 2015 the respondent breached the rental agreement by
failing to pay the monthly rental of R26,620 (this rental
increased
to R29,282.01 during January 2016). After a few months had passed
without any rental payment, the intervening creditor
cancelled the
lease agreement by way of correspondence dated 26 July 2016. Therein
the intervening creditor also requested payment
of all outstanding
monies. The letter of cancellation was followed up by way of e-mails
dated respectively 1 August 2016 and 1
September 2016, requesting
payment.
[17]
The
section 345
notice dated 24 October 2016 was answered by way of the
respondent’s attorneys’ correspondence dated 11 November
2016.
Therein the respondent’s indebtedness is denied, and a
request is made for an exposition of the amount claimed.
[18]
Due
to the respondent’s failure to comply with the
section 345
notice, the intervening creditor submits that the respondent is
deemed to be unable to pay its debts. The intervening creditor
submits that the respondent is commercially insolvent.
RESPONDENT’S ANSWERING AFFIDAVIT TO INTERVENING CREDITOR’S
FOUNDING AFFIDAVIT
[19]
In
answer the respondent states that on 30 June 2016 it concluded a
purchase agreement with the intervening creditor in respect
of the
immovable property for the amount of R2,500,000. The respondent
alleges that it was agreed that the respondent would build
a store on
the immovable property. Improvements to the immovable property were
done during 2014 and 2015. The respondent alleges
that these
improvements amount to R1,400,000. The respondent attaches a
valuation of the immovable property in the amount of R2,700,000.
[20]
The
respondent could not obtain a bond. However, the respondent alleges
it was agreed that it would no longer be liable to pay rental,
in
exchange for the improvements to the immovable property. Such oral
agreement was concluded after 30 June 2016. The respondent
denies
being indebted to the intervening creditor in the sum of
approximately R300,000, it having been agreed that the intervening
creditor would not claim or be entitled to payment of said amount.
INTERVENING CREDITOR’S REPLYING AFFIDAVIT
[21]
In
reply the intervening creditor contends that bearing in mind that the
purchase price for the immovable property was R2,500,000,
and the
immovable property was valued at R2,700,000, the respondent’s
version that it effected improvements to the value
of R1,400,000, is
implausible. It would mean that the respondent paid for the
improvements twice, the first time when the improvements
were
effected, and the second time when the respondent was prepared to pay
the increased value of the immovable property as the
purchase price.
[22]
Furthermore,
the intervening creditor points out that the respondent ignored the
e-mails demanding payment of the arrear rental.
Only on 11 November
2016 the respondent’s attorneys denied liability on behalf of
the respondent. The defences now raised
by the respondent were not
raised by itself or its attorneys, while it is evident that such a
defence already existed at the time.
The respondent never raised the
defence in correspondence with the intervening creditor.
[23]
The
intervening creditor submits that the only reasonable inference to be
drawn is that the respondent’s defence is a contrived
defence.
The intervening creditor submits it can be rejected on the papers
alone.
DISCUSSION OF APPLICANT’S CASE
[24]
In
argument the applicant submits that even on the respondent’s
defence of the agreement in respect of work done on risk,
the
applicant was entitled to payment in respect of invoice 1029. The
work that had to be done remained exactly the same, notwithstanding
the reduction in the tender price. The tender was granted to the
respondent on the strength of the tender documents prepared by
the
applicant. The applicant contends that the defence of it not being
entitled to any payment due to a reduction in the tender
price,
stands to be rejected as simply untenable and far-fetched.
[25]
The
question I need to determine is whether the applicant’s claim
is disputed on bona fide and reasonable grounds. I need
not concern
myself in this regard with invoice 1028, it having been paid. I can
also not state that the defence in respect of invoice
1033 is not
disputed on bona fide and reasonable grounds. The applicant knew the
work in respect of invoice 1033 was done for tender
purposes, that
the respondent may not obtain the tender. Under such circumstances it
does not appear implausible that the parties
would agree that payment
for services rendered would only occur if the tender is successful.
[26]
However,
the same can’t be said in respect of invoice 1029. The
respondent’s defence is that the parties agreed that
in the
event of the respondent being successful with tenders, the applicant
would be paid in respect of its services so rendered.
On the
respondent’s own version the tender was materially successful.
On the respondent’s own version, the applicant
was entitled to
payment in respect of invoice 1029.
[27]
I
find it palpably implausible that the parties would agree that in the
event of the tender not being awarded in the exact amount
as
tendered, the applicant would not be entitled to any remuneration and
all its work would go up in smoke. This appears far-fetched.
[28]
The
work done by the applicant in respect of invoice 1029 remained the
same, despite the reduction of the tender price. Even if
I were to
accept that this meant a concomitant reduction of the applicant’s
invoice 1029 (which seems implausible, bearing
in mind that the work
done remained the same), it would have required of the respondent to
at least make payment of a substantial
portion of the invoice. The
lack of response to make part payment of the invoice, further
indicates that the respondent’s
defence is not bona fide and
reasonable.
[29]
The
fact that the respondent did not respond to the demands for payment
in respect of invoice 1029 in the period December 2016 to
February
2017, also serves to indicate a lack of bona fides in respect of the
respondent’s defence pertaining to invoice
1029. Surely the
respondent would have indicated then already that it disputed
liability, if that was indeed the case. I must take
cognisance of
such lack of candour, in determining the bona fide and reasonable
nature of the defence.
[30]
In
the matter of
Van
Wyk Von Ludwig & Hanekom Inc. v Ferguson
[2]
a party’s lack of candour, albeit in the context of an
answering affidavit, is dealt with as follows:
“
In my
view the respondent’s lack of candour and respect for the truth
leaves much to be desired. His promises and undertakings
carried very
little weight. His denials and explanations are suspect… In my
opinion he was not very frank, open and truthful
to the court about
his financial affairs. On the evidence before me, I therefore have
serious doubts about the credibility of the
respondent.”
[31]
Taking
into consideration the so-called Badenhorst principle
[3]
,
I find that the debt in respect of invoice 1029 is not disputed on
reasonable and bona fide grounds.
DISCUSSION OF INTERVENING CREDITOR’S CASE
[32]
The
respondent’s defence in respect of the intervening creditor’s
claim is an agreement that it would no longer be liable
to pay
rental, in exchange for the improvements to the immovable property,
that such oral agreement was concluded after 30 June
2016. I must
assess this defence in the light of what happened in that time
period.
[33]
The
intervening creditor cancelled the lease agreement on 26 July 2016
and requested payment of all outstanding monies. This was
followed up
by way of e-mails dated respectively 1 August 2016 and 1 September
2016, requesting payment. This correspondence happened
in the time
period the respondent says the agreement absolving it from rental was
concluded.
[34]
I
find it highly palpably implausible that the respondent would after
June 2016, the same period as the intervening creditor’s
correspondence, conclude an agreement in terms whereof it is not
liable for rental, but then not mention the agreement in response,
when called upon to pay. It makes little sense to conclude an
agreement, but in the same time period then not to rely thereon.
It
is farfetched to allege the conclusion of the agreement under such
circumstances.
[35]
This
is further exacerbated by the respondent’s attorney’s
bold denial of liability on 11 November 2016, and the request
for an
exposition of the amount claimed. Such request for an exposition of
the amount claimed conflicts with the respondent’s
version that
the intervening creditor agreed that the amount claimed be written
off. Had such agreement existed, there would have
been no need for
the respondent’s attorney to request an exposition, as the
amount had been agreed upon and written off.
[36]
Accordingly
I find that the intervening creditor’s debt is not disputed on
reasonable and bona fide grounds. I find that the
respondent should
be wound up on the basis of
section 345(1)(a)(i)
, read with section
344(f) of the 1973
Companies Act.
ORDER
In
the premises I order as follows:
a.
The
intervening creditor be joined as second applicant in the
application;
b.
The
respondent be placed under final winding-up;
Both
the costs of the applicant’s application and that of the
intervening creditor be costs in the winding-up of the respondent.
\
M VAN STADEN
ACTING JUDGE OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, PRETORIA
DATE OF
HEARING: 11 FEBRUARY 2020
DATE OF
JUDGMENT: 19 FEBRUARY 2020
ATTORNEY FOR
APPLICANT:
STRYDOM & BREDENKAMP
INC.
ADVOCATE FOR
APPLICANT:
ADV
ATTORNEY FOR
RESPONDENT: JAN
ROSSOUW ATTORNEYS
ADVOCATE FOR
RESPONDENT: ADV
[1]
Section
345
determines:
“
(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
so
due; or
(ii) in the case of any body 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.
(2)
In determining for the purpose of subsection (1) whether a company
is unable to pay its debts, the Court shall also take into
account
the contingent and prospective liabilities of the company.
”
[2]
[2]
[2001]
2 All SA 592
C at 598.
[3]
Badenhorst
v Northern Construction Enterprises (Pty) Ltd
1956
(2) SA 346
(T) at 348 A – C.