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[2019] ZAGPPHC 94
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KDB Retail Properties (Pty) Ltd v The South African Post Office Soc Limited (79545/17) [2019] ZAGPPHC 94 (22 March 2019)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA,
GAUTENG
DIVISION, PRETORIA
Case
no: 79545/17
In
the matter between:
KBD
RETAIL PROPERTIES (PTY)
LIMITED
Applicant
and
THE
SOUTH AFRICAN POST OFFICE SOC
LIMITED
Respondent
J
U D G M E N T
MNGQIBISA-THUSI
J
:
[1]
On 22
November 2017 t
he
applicant instituted proceedings in which it sought the liquidation
of the respondent on the ground that the respondent was unable
to pay
its creditors. The applicant alleged that the respondent had
failed to comply with its commitments in terms of a settlement
agreement the parties concluded on 11 September 2019.
The
applicant sought costs against the respondent.
[2]
The
application, however, became academic when on 22 December 2017 the
respondent made payment to the applicant in the amount of
R847,
164.02 (inclusive of legal costs), in full and final settlement.
[3]
On 9
January 2018, the respondent
filed
its notice to oppose the liquidation application.
[4]
On
31 January 2018 the applicant issued a notice of set-down on the
respondent in which it indicated
that
even though the respondent had filed a notice to oppose, the matter
was set down on the unopposed motion roll because it had
become
settled with regard to the capital amount of debt and that the only
issue remaining was costs relating to the institution
of the
liquidation application.
[5]
On
7 February 2017, filed its answering affidavit to the liquidation
application. In its answering affidavit the respondent
opposes
the relief sought by the applicant on various grounds but mainly on
the fact that the applicant referred to the provisions
of the
Insolvency Act
[1]
instead of the provisions of the Companies Act
[2]
.
The respondent alleges that just on this error the applicant would
not have succeeded in its application to have it wound
up.
Further, the respondent failed to seek condonation despite the fact
that its notice to oppose and its answering affidavit
were filed
late.
[6]
The
indebtedness of the respondent which formed the basis for the
application for its liquidation arose from the fact that the
respondent as a tenant of the applicant had failed to keep up with
its rental payments for the premises it rented from the applicant.
The parties negotiated a settlement agreement which was concluded on
6 September 2017. In the settlement agreement
the
respondent undertook to make certain payments by certain dates and
even agreed to the settlement agreement being made an order
of
court. Thereafter the respondent failed to make payment as
agreed upon in the settlement agreement. On applicant
demanding
immediate payment, the respondent sent the applicant an email
(dated 13 November 2017) in which it indicated that
it was not able
to meet its obligations to the applicant and also seeking an
indulgence to be given time.
[7]
It was
on the basis of the email that the applicant instituted the
application for the liquidation of the respondent. The
ground
relied upon for the liquidation of the respondent was that the
respondent had admitted that it was unable to pay its debt.
However, as indicated above, the application was erroneously based on
s 8(e) and (g) of the Insolvency Act which applies to natural
persons
instead of s 345(1)(c) of the Companies Act.
[8]
S
345(1)(c) of the Companies Act provides that:
“
(1)
A company or body corporate shall be deemed to be able to pay its
debts if-
(c)
It is proved to the satisfaction of the Court that the company is
unable to pay its debts”.
[9]
It is
the respondent’s contention that the applicant would not have
succeeded in its application because:
9.1
at the time
the
application was instituted, the applicant had no
locus
standi
as it was
not a creditor of the respondent;
9.2
the alleged debt
owed by the respondent is not well supported;
9.3
the applicant had sought is liquidation based on provisions relating
to a natural person.
[10]
Even
though the applicant had based its application on incorrect statutory
basis, it is not in dispute that the respondent had admitted
its
inability to pay its debts and on that basis the court would have
granted an order for its liquidation in terms of s 345(1)(c)
of the
Companies Act. In Business Partners Limited v Quick Leap
Investments 221 (Pty) Ltd
[3]
the court held that:
“
In
addition, as held in the case of
Kalk
Bay Fisheries Ltd v United Restaurants Ltd
1905
TH 22
, a court might properly find that a company is unable to pay
its debts where it had admitted to its creditors that it could not
pay, had failed to adhere to an agreement with them to effect payment
in monthly instalments, had failed to pay interest due on
its
debenture stock and there was no explanation by it for these
failures”.
[11]
The
general rule is that a successful litigant is entitled to his or her
costs. In exercising its discretion in awarding costs,
the
court must exercise such discretion judicially, taking into account
the facts before it.
[12]
With
regard to the issue of costs where the merits have been settled, the
court in
Gamlan
Investments (Pty) Ltd v Trillion Cape (Pty) Ltd
[4]
held, with reference to the decision in
Jenkins
v SA Boiler Makers, Iron and Steel Workers and Ship Builders
Society
[5]
,
that:
“
In
Jenkins
v SA Boiler Makers, Iron and Steel Workers and Ship Builders Society
1946
WLD 15
, the court held that when a disputed application is settled on
a basis which disposes of the merits except insofar as the costs
are
concerned, the court should not have to hear evidence to decide the
disputed facts in order to decide who is liable for costs,
but the
court must, with the material at its disposal, make a proper
allocation as to costs’.
I
would respectfully associate myself with the conclusion to which the
court came, and more particularly with the approach adopted
by Price
J at 17 where he states that:
‘
It
seems to me to be against all principle for the Court’s time to
be taken up for several days in the hearing of a case in
respect of
which the merits had been disposed of by the acceptance of an offer,
in order to decide questions of costs only’.
The
learned Judge goes on to state:
‘
I
cannot imagine a more futile form of procedure than the one which
would require Courts of law to sit for hours, days, or perhaps
weeks,
trying dead issues to discover who would have won in order to
determine questions of costs, where cases have been settled
by the
main claims being conceded’.
The
learned Judge adds at 18 at:
‘
When
a case has been disposed of by an offer which concedes the main claim
and the costs of the whole case is still to be decided
within the
court must do its best with the material at its disposal to make a
fair allocation of costs, and bring such legal principles
as
applicable to the situation”.
[13]
The
applicant seeks the costs of bringing the liquidation application on
the ground that it was unnecessary for the respondent to
file a
notice to oppose and its answering affidavit after it had paid its
debt, which resulted in the applicant having to prepare
and file a
replying affidavit and argue the issue of costs.
[14]
At
the time of the hearing of this matter, there was no
lis
between the applicant and the respondent because the respondent had
settled its indebtedness to the applicant.
The
respondent submissions with regard to why it choose to oppose the
application for costs are made despite the fact that the respondent
has paid in full its indebtedness to the applicant, which payment was
not disclosed in its answering affidavit. The defendant does
not
proffer any explanation why, if it disputed its indebtedness to the
applicant, it paid the debt in full and final settlement.
[15]
The
respondent’s argument that the applicant should be ordered to
pay the costs of the liquidation application cannot be sustained.
As indicated above, purely on the basis that the respondent had
disclosed to the applicant that it was unable to make due payment
wen
demanded, was sufficient cause for its liquidation. As
correctly pointed out by counsel for the applicant, the fact that
the
respondent is a state owned company does not qualify it to be treated
differently from any other debtor when it comes to payment
of its
debts.
[16]
I
am satisfied that in view of the fact that the applicant would have
succeeded in its application for the liquidation of the respondent
and that when the respondent opposed that application the merits had
been settled, that the applicant is entitled to the cost order
it
seeks. There is no reason why the applicant should not be
compensated for incurring costs in having to engage in an
unnecessarily
opposed application.
[17]
In
the result, an order in terms of the draft order marked ‘X’
is granted.
N P MNGQIBISA-THUSI
Judge
of the High Court
Appearance for
applicant Adv R Ellis (instructed by PPM Attorneys) and for
respondent Mr L Mbanjwa (instructed by L Mbanjwa Inc)
[1]
Act 24 of 1936.
[2]
Act 61 of 1973
.
[3]
Unreported judgment, Case number
6168/2010, KZN High Court (26 November 2010) at para[16].
[4]
1996 (3) SA 693
(CPD) at 700G.
[5]
1946 WLD 15.