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[2018] ZAGPJHC 644
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Proprietary Limited v Techtronic Technology Solutions Proprietary Limited (24915/2018) [2018] ZAGPJHC 644 (6 December 2018)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
Case
No:
24915/2018
In the matter between:
Zibsiflex Proprietary
Limited
Applicant
and
Techtronic
Technology Solutions Proprietary
Limited
Respondent
Judgment
Mokutu,
AJ
:
Summary
[1]
The applicant seeks a final winding-up order against the respondent;
That the estate of respondent be placed under final winding-up
in the
hands of the Master of this Court. The applicant further seeks
an order directing that the costs of the winding-up
application be
made costs in the winding-up of the respondent.
[2]
The applicant’s claim is predicated on the averments that on or
about 31
st
January 2017 and at Boksburg, the respondent
duly represented by its co-directors Mr Wilhelm Arp (“
Mr
Arp
”) and Mr Clive Miller (“
Mr Miller
”)
and the applicant duly represented by the late Mr Elliot Magubane
(“
Mr Magubane
”), Mr Sibusiso Samuel Khumalo (“
Mr
Khumalo
”) and Mr Tiaan Kotze (“
Mr Kotze
”)
entered into a verbal loan agreement in terms of which the applicant
lent and advanced funds in favour of the respondent
in the amount of
R1.8 million (“
loan amount
”).
[3]
It is further averred on behalf of the applicant that the said loan
was payable by the respondent on demand by the applicant
and further
that interest on the loan amount would accrue in favour of the
applicant at the legal rate of interest per annum until
date of final
payment.
[4]
As at the date of instituting its winding-up application, the
respondent is reported to be indebted to the applicant (in respect
of
the loan agreement), in the sum of R1 887 440.84.
[5]
According to the applicant, the respondent duly acknowledged its
indebtedness to the applicant in writing in terms of paragraph
5.2 of
a written agreement of sale of shares (“
shares agreement
”)
entered into between Mr Arp and Mr Miller as the respondent’s
seller’s representatives and the applicant as
purchaser of 50%
plus one shares of the issued share capital of the respondent. A copy
of the said agreement has been annexed the
founding affidavit.
[6]
The respondent, as far as I understand its bases of defence, denies
the existence and/or the conclusion of the loan agreement
as alleged
in the applicant’s founding papers. It was submitted on behalf
of the respondent that it was highly suspicious
of the applicant to
contend to have loaned or advanced an amount of approximately R1.8
million (just short of R2 million) to the
respondent in circumstances
where there was no written agreement at all.
[7]
The submission made on behalf of the respondent is, with respect,
ignorant of the settled legal position that an oral agreement
is
equally valid, binding and enforceable, the same way as a written
agreement.
[8]
Be that as it may, although the respondent denies the conclusion and
existence of the loan agreement, in paragraph 7 of the
answering
affidavit, the deponent amongst other things, states that the
applicant was involved in the business of the respondent
at the time
when the funds were loaned to the respondent
.
[9]
That notwithstanding, the respondent, in paragraph 37 of its
answering affidavit, denies the conclusion, the existence and the
material terms of the loan agreement referred to in the applicant’s
founding affidavit.
[10]
It is further trite law that a litigant cannot approbate and
reprobate in Court proceedings. The apparent conflation and/or
contradiction contained in the respondent’s answering affidavit
is crucial given the fact that the applicant predicates its
claim on
the conclusion of the oral agreement as I have indicated above.
[11]
Other than the respondent’s simultaneous admission and denial
of the existence of the loan agreement, it is also critical
to point
it out that in its founding affidavit, the applicant has specifically
placed reliance on clause 5.2 of the shares agreement.
Clause 5.2
states that:
“
It is
recorded that, on the signature date the, Sellers’ loan
accounts amount to
R8 838 836.07 (EIGHT
MILLION EIGHT HUNDRED AND THIRTY EIGHT THOUSAND EIGHT HUNDRED AND
SIXTY RAND AND SEVEN CENT)
and the Purchaser’s
to R1 887.84 (ONE MILLION EIGHT HUNDRED AND EIGHTY SEVEN
THOUSAND FOUR HUNDRED AND FOURTY RAND AND
EIGHTY-FOUR CENT
).”
[12]
The shares agreement was signed by duly authorised representatives of
both the applicant and the respondent and at the time
of signing the
shares agreement, the respondent’s representatives ought to
have known and understood the import of paragraph
5.2 of the shares
agreement based on the
caveat subscriptor
principle.
Analysis
of the facts
[13]
The seller of the shares (in law is the respondent) and the
respondent was, in terms of the shares agreement, represented by
Mr
Miller and Mr Arp and the purchaser was the applicant as represented
by Mr Magubane.
[14]
As far as I understand the pleaded facts and the submissions made on
behalf of the applicant, the applicant’s cause of
action is the
conclusion and the breach of the loan agreement and as a result and
given the respondent’s inability to pay
the loan amount, the
applicant had to institute the present winding-up proceedings against
the respondent.
[15]
The applicant in its heads argument argues that regard must be had to
sections 344(h) and 345(1)(c) of the Companies Act of
1973 (“
the
1973 Act
”) read with item 9 of Schedule 5 of the Companies
Act, No. 71 of 2008 (“
the 2008 Act
”).
[16]
Section 344(h) of the 1973 Act provides that:
“
[344] A
company may be wound up by the Court if-
…
(h)
it
appears to the Court that it is just and equitable that the company
should be wound up.”
[17]
Section 345(1)(c) of the 1973 Act provides that:
“
[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-
…
(c)
it
is proved to the satisfaction of the Court that the company is unable
to pay its debts.”
[18] Item 9 of Schedule 5
of the 2008 Act provides that:
“
[9]
Continued application of previous Act to winding-up and liquidation
(1)
Despite the repeal of the previous Act, until the date
determined in terms of sub-item (4), Chapter 14 of that Act continues
to
apply with respect to the winding-up and liquidation of companies
under this Act, as if that Act had not been repealed subject to
sub-items (2) and (3).
(2)
Despite sub-item (1), sections 343, 344, 346, and 348
to 353 do not apply to the winding-up of a solvent company, except to
the
extent necessary to give full effect to the provisions of Part G
of Chapter 2.
(3)
If there is a conflict between a provision of the
previous Act that continues to apply in terms of sub-item (1), and a
provision
of Part G of Chapter 2 of this Act with respect to a
solvent company, the provision of this Act prevails.
(4)
The Minister, by notice in the Gazette, may-
(a)
determine a date on which this item ceases to have
effect, but no such notice may be given until the Minister is
satisfied that
alternative legislation has been brought into force
adequately providing for the winding-up and liquidation of insolvent
companies;
and
(b)
prescribe ancillary rules as may be necessary to
provide for the efficient transition from the provisions of the
repealed Act, to
the provisions of the alternative legislation
contemplated in paragraph (a).
[19]
There is an ancillary dispute regarding the validity of the sale of
shares as amplified in the shares agreement. The applicant’s
deponent (in the founding affidavit) states that there exists a
dispute between the applicant on the one hand and Messrs Arp and
Miller on the other regarding the validity of the shares agreement
and to that end, both parties’ legal representatives exchanged
correspondence on 11
th
and 18
th
June 2018
respectively, that:
19.1. in the respondent’s
attorneys’ letter dated 11
th
June 2018, it is
stated, amongst other things, that there is a specific term and
condition of the shares agreement in that the
purchase price of R15
million would be payable in tranches of R3 million between 31
st
October 2017 until 30
th
November 2018;
19.2. the respondent’s
attorneys further recorded that the applicant had failed to make
payments as agreed in terms of the
shares agreement and an amount of
R9 million plus interest on the outstanding amount became due and
payable as at 11
th
June 2018 in favour of the respondent;
19.3. the respondent was
due to proceed to issue summons against the applicant to claim an
amount of R9 million if payment was not
received within 30 days from
the transmission of the respondent’s attorneys’ aforesaid
letter;
19.4. on 18
th
June 2018, the applicant’s attorneys responded to the
respondent’s letter of 11
th
June 2018 and recorded
that the applicant denied being indebted to both Messrs Miller and
Arp as purported creditors of the applicant
– it is to be noted
that the respondent is not, per se, recorded as the creditor on the
respondent’s attorneys’
letter of 11
th
June
2018;
19.5. in particular, the
applicant’s attorneys’ letter of 18
th
June
2018 specifically singled out the respondent as being indebted to the
applicant in the sum of R1 887 440.84 together
with
interest thereon, from 13
th
July 2017 to date of payment,
which debt was said to be undisputed and has been admitted in the
shares agreement;
19.6. the said letter
went on to state that the debt owing by respondent (not Messrs Miller
and Arp) was due and owing and payable
on the demand.
[20]
The characterisation of both Mr Miller and Mr Arp as creditors of the
applicant (and not the respondent itself) is, in my view,
significant
and has a bearing in the conduct and outcome of the present
proceedings.
[21]
The summons referred to in paragraph 2.4 of the respondent’s
letter dated 11
th
June 2018 were not issued in the name of
the respondent but rather in the name of Mr Arp and Mr Miller, under
case number: 54769/2018.
[22]
Paragraph 10 of the founding affidavit further states that the shares
agreement dispute is not relevant in the winding-up application
but
was merely referenced because the applicant was advised that it would
be prudent and appropriate to bring that dispute to the
attention of
this Court, in other words, the dispute between Messrs Arp and Miller
as the plaintiff or purported creditors against
the applicant as the
debtor is a subject matter of a separate action which was
subsequently instituted by both Mr Arp and Mr Miller.
[23]
I am in agreement with the applicant’s contention that the
shares agreement dispute [based on the fact that the dispute
for the
recovery of the purchase price has been instituted by Messrs Arp and
Miller (and not the respondent)] has nothing to do
with the
winding-up application, which application is before me.
[24]
I say so because, notwithstanding the fact that a company such as the
respondent enjoys distinct and separate juristic personality
from its
shareholders and directors, the shares agreement dispute by Messrs
Arp and Miller is being pursued against the applicant
and not
instituted by the respondent itself. The plaintiffs in that action
are said to be Mr Arp and Mr Miller and there is no
averment that
they act on behalf of the respondent or they have been duly
authorised to represent or to institute the action on
behalf of the
respondent. In particular, it is Messrs Arp and Miller who seek
judgment (and not the respondent) to be entered against
the
applicant.
[25]
I am mindful that a juristic person such as the respondent acts
through a medium of its directors who must pass resolutions.
I have
also not seen evidence that the respondent would be prepared to
ratify the actions of both Messrs Arp and Miller. As at
present, I
have not been referred to documentation giving credence that both
Messrs Arp and Miller have been duly authorised to
pursue action
against the applicant under case number: 54769/2018 and in their own
names.
[26]
Flowing from a premise that the winding-up application therefore,
emanated from the loan amount advanced by the applicant to
the
respondent, it is further material to point out a part-payment made
which was effected by the respondent in
lieu
or as an attempt
to repay the loan amount. The FNB online banking proof of payment is
annexed in the applicant’s papers and
the execution date
thereon is recorded to be the 1
st
September 2017 in the
amount of R305 000.00.
[27]
Importantly, the explanation recorded on the proof of payment on page
321 of the record, marked as annexure as “
AA12
” is
titled “
Demand Deposit – 62345503701
”.
Furthermore, there is a handwritten note on the said proof of payment
that reads as thus:
“
Repayment of
Zibsiflex loan Account”
[28]
The respondent’s counsel was invited to explain what does
“
Demand Deposit
” mean on the aforesaid proof of
payment and understandably, he was unable to give either a clear or
satisfactory answer except
to state that it meant nothing.
[29]
I am thus not convinced that “
Demand Deposit
”
reference on the proof of payment coupled with the fact that the
respondent does not deny that it effected part-payment
around 1
st
September 2017, was in compliance with the loan agreement as pleaded
on behalf of the applicant.
[30]
The respondent’s explanation is that the payment of R305 000.00
was a draw down but that argument is, with respect,
not alive to the
fact that on the plain reading of the FNB proof of payment, payment
was effected by the respondent in favour of
the applicant.
Furthermore, the shares agreement explicitly refers to a recordal of
R1.8 million loan amount
[31]
It therefore begs a question why was R305 000.00 paid by the
respondent in favour of the applicant. In other words, the
respondent
has not furnished this Court with an explanation or a legal
causa
of why it effected the payment of R305 000.00 in favour of
the applicant.
Other
creditors
[32]
Notwithstanding the fact that the applicant has made a
prima facie
case on its own and has demonstrated the respondent’s
inability to repay the loan amount, based on the inexplicable denial
of the existence of the loan agreement, the applicant has further
referenced the existence of other creditors of the respondent.
In
particular, the applicant has annexed information which lists
creditors such as the Industrial Development Corporation (“
IDC
”)
and the South African Revenue Services (“
SARS
”).
[33]
It is further deposed on behalf of the applicant that the respondent
is presently indebted to the IDC in respect of four loan
agreements
in the sum of R27 178 098.69. It is common cause fact that
the respondent does not deny its indebtedness to
the IDC.
[34]
It is further common cause that the IDC has written to the respondent
and recorded that the respondent is in arrears with its
repayment
obligations in respect of the aforesaid loans in the total amount of
R16 527 745.07 as at 22
nd
June 2018 which
amounts are due and payable.
[35]
The dispute between IDC and the respondent is not before me, however,
coupled with the fact that the respondent has placed
on record the
fact that it is undergoing financial turbulence and it is battling to
access business, in my view, I cannot simply
ignore the respondent’s
indebtedness to the IDC (an admitted fact by the respondent).
[36]
The respondent contends that it has made arrangements with its other
creditors, and I similarly take note thereof absent any
litigation by
any of those creditors as against the respondent.
[37]
Having said so, Mr Arp’s affidavit in these proceedings admits
that the respondent is cash-stripped and cannot pay its
debts and the
applicant takes issue with the fact that the respondent continues to
trade and to hold out to its creditors that
Messrs Kotze, Magubane
(who is deceased) and Khumalo are still directors of the respondent
in circumstances where Mr Magubane had
already despatched an email to
the respondent and recorded his resignation as the respondent’s
director.
[38]
The applicant further contends that the retention of both Messrs
Khumalo’s and Magubane’s names on the respondent’s
letterhead is perplexing if one has regard to the letter of 6
th
September 2017, authored by Mr Khumalo addressed to Mr Arp and Mr
Miller where Mr Khumalo recorded that Mr Arp and Mr Miller were
simply abusing him (Mr Khumalo) and Mr Magubane to enable the
respondent and/or Messrs Arp and Miller to achieve a certain level
BEE status in order to access government business.
[39]
As a further ground in opposition to the relief sought, it was
further argued on behalf of the respondent that although Denel
was
unable to pay the respondent’s invoices for the services
rendered, I must also take judicial notice of the fact that
there was
a recent announcement made in the media (both print and electronic)
that Denel would receive a government bailout. In
response, the
applicant submitted that it was incumbent upon the respondent to
prepare a supplementary affidavit outlining the
amount that would be
allocated to Denel in order for Denel to pay the respondent and the
date the respondent would receive the
money in order to pay its
debts.
[40]
I am, however, prepared to state that irrespective of the
respondent’s indebtedness elsewhere in regard to other
creditors,
the applicant has proved its case on a balance of
probabilities for the grant of the relief sought based on the
conclusion and
existence of the loan agreement.
Case
Law
[41]
Where a
creditor relies on section 345(1)(c), it is not necessary for him to
set out the financial position of the company (of which
the creditor
might be quiet unaware); but the creditor must allege sufficient
facts from which
prima
facie
an
inference of inability to pay debts can properly be drawn.
[1]
[42]
The applicant has done more than is required in law, to demonstrate
the respondent inability to pay its debts, in particular
the
respondent’s inability to repay the loan amount.
[43]
Section 346(1)(b) of the 1973 Act states:
“
[346]
Application for winding-up of company
(1)
An application to the Court for the winding-up of a
company may, subject to the provisions of this section, be made-
…
(b)
by
one or more of its creditors (including contingent or prospective
creditors).”
[44]
Although
the respondent concedes and simultaneously disputes its indebtedness
in regard to the oral loan agreement (to the extent
that the
respondent persisted with its defence that it disputed the oral
agreement) there was no explanation as to the
causa
why the
shares agreement referenced a shareholder’s loan in the amount
of R1.8 million. The
lacuna
in the
respondent’s defence in that regard leads me to the conclusion
that the
Badenhorst
[2]
principle does not find application in the present matter given the
fact that the respondent was unable to justify its bases of
defence
or its dispute of the loan amount both in its answering affidavit and
in submission on its behalf by its counsel.
[45]
In the result, I find that the respondent’s opposition to the
applicant’s winding-up application has no merit and
is
susceptible to being dismissed.
[46]
In as far as the IDC’s indebtedness is concerned, the applicant
contends that the respondent owes IDC an amount of R16 527 745.07.
On the respondent’s own version, the respondent does not deny
that it is indebted to the IDC but it further states that the
amount
owed is lesser than the R16.5 million.
[47]
The respondent however, makes a point that it has made arrangements
with the IDC and other creditors and therefore the applicant
should
not, and cannot and will not rely on the respondent’s
indebtedness to other creditors.
[48]
According
to Henochsberg,
[3]
where a
creditor applies for a winding-up, it is not incumbent either to
allege or prove advantage to the creditors of debtor company
because
winding-up proceedings ought not to be confused with sequestration
proceedings under the Insolvency Act. But there are
cases where facts
show such advantage (as alleged) may be relevant to the exercise by
the Court of its discretion to wind up.
[49]
The fact that it was argued, on behalf of the applicant, that the
winding-up would be to the advantage of the other creditors
should
not, in my view, render the winding-up a nullity. As I have stated, I
cannot ignore the respondent’s own admission
of is indebtedness
to other creditors.
[50]
In its answering affidavit, the deponent states under oath the
following:
“
[44.1] I
admit that the Respondent is facing financial difficulties but I must
stress that this has been the case since the Applicant
first
concluded the MOU.”
[44.2] The entire
purpose behind the First and Second Agreements was to diversify the
Respondent’s business and return the
Respondent to its previous
profit levels. The Applicant saw an opportunity in the respondent at
the time and it decided to invest
and grow the business which it
purposefully neglected to do…
[44.3]
Notwithstanding the difficult financial position of the Respondent,
no other creditors have sought to take any steps in claiming
money
from the Respondent for payment, by virtue of the fact that the
Respondent is to be paid by Denel within the near future…
That
the Respondent’s business is not as profitable as it was does
not constitute grounds for the Honourable Court to grant
the
Applicant any relief in the absence of a bona fide claim by the
Applicant against the Respondent
[4]
.
[44.4] I deny that
the Respondent is insolvent. The Respondent has made the necessary
arrangements with creditors and will likely
restore its business
operations in the coming months.
[5]
[45.1] I admit that
the Respondent’s workforce has had to be reduced but not for
reasons proffered by the Applicant. The Respondent’s
contract
with General Electric South Africa (Pty) Ltd (“GE”) has
come to an end. Many of the workers the Respondent
has had to let go
were contract workers…
[45.2] …, at
the end of June 2018 the Respondent had 87 permanent employees. In
contrast to the Respondent’s peak during
October 2017, when 94
permanent employees were employed…
[6]
.”
[51] Importantly,
notwithstanding its denial of the loan agreement, the respondent does
not explain in its answering affidavit how
it intended to pay the
balance of R1.8 million less R305 000.00 that was paid in
September 2017.
[52]
It is important to also take cognisance of the fact that the loan
agreement is said to have been concluded on 13
th
January
2017 and the part payment of R305 000.00 was only effected in
September 2017. On that score, the respondent was hard
pressed to
explain why it made a part payment of R305 000.00 if such
payment was not made consequent upon conclusion of the
loan
agreement.
[53]
The test
for commercial insolvency was aptly laid down in
Ex
Parte Lebowa Development Corporation Ltd
,
[7]
in particular the Court said the following:
“…
1.
If
it can be proved that a company's liabilities exceed its assets (i.e.
that it has lost its issued capital and more) it is properly
described as insolvent, and it is liable to be wound up on the ground
now provided by s 344(f) read with
s 345(1)(c)
of the
Companies Act,
viz
that the company is unable to pay its debts. (Indeed, a company
is liable to be wound up before it is insolvent in this sense, and
whilst its assets still exceed its liabilities by an amount equal to
25 % or less of the issued share capital, for
s 344(e)
provides that
a company may be wound up if 75 % of its issued share capital has
been lost. This is obviously a provision designed
to enable creditors
of a company which appears to be heading for insolvency to have it
wound up whilst there is still a good chance
of being paid 100 cents
in the rand from its assets. In those circumstances a winding-up
order may issue despite the fact
that the company may be meeting
current demands as they fall due.)
2.
…
3.
A
company may be wound up on the basis of commercial insolvency
notwithstanding the fact that its assets may exceed its liabilities
if it appears to lack the liquid assets with which to meet current
liabilities on due date. In other words, a company which is
actually
solvent (in that its assets exceed its liabilities) may nevertheless
be commercially insolvent in that it appears to lack
the liquidity to
meet current demands…”.
[54]
I am therefore satisfied that the applicant has, indeed, discharged
its
onus
for the grant of the relief sought in the notice of
motion albeit a provisional winding-up order.
[55] I am further
satisfied that it is just and equitable that the relief sought in the
notice of motion be granted based on what
I have stated above.
Furthermore, counsel for the applicant also drew my attention to the
fact that the respondent continues to
trade in circumstances where it
seeks to get business from the State and in the process the
respondent’s letterhead continued
to record Messrs Kotze,
Magubane and Mr Khumalo as directors of the respondent in
circumstances where they had resigned and the
fact that Mr Magubane
had resigned and is now deceased.
[56]
The upshot of the applicant’s argument is that the said three
gentlemen concerned have stood sureties for the debts of
the
respondent and for as long as the respondent is allowed to trade,
then there exists a potential financial prejudice that may
befall
them (in the case of Mr Magubane, his estate) in the event the
winding-up order is not granted or should other creditors
obtain a
similar order in circumstances where they all stood as sureties (for
the debts of the respondent).
[57]
Counsel for
the respondent referred me to an authority of
Genesis
Medical Aid Scheme v Registrar, Medical Schemes and Another
,
[8]
for the proposition that notwithstanding the fact that a litigant may
have annexed a document in its affidavit, the fact that a
portion
that is being relied upon by a litigant concerned is not specifically
spelled out in the affidavit, the Court must ignore
or reject such an
annexure. It is, indeed, so that the Court in that matter held that
it is impermissible in our law to decide
a matter on the basis of a
point not stated in the affidavit but merely recorded in the annexure
to an affidavit but which is not
covered in the relevant affidavit
concerned.
[9]
[58]
With respect, the ratio referred to in
Genesis
(supra)
does not find application in the present matter based on the fact
that the applicant has pleaded that it relies on the
oral agreement
which was concluded between the parties on 13
th
January
2017 for an amount of R1.8 million and interest was to be the legal
rate of interest and nothing more. In its answering
affidavit, as I
have pointed out, the respondent approbates (accepts) and reprobates
(denies) the existence of the loan agreement,
but significantly the
applicant has pleaded all the material terms of the loan agreement in
support of its case. The applicant’s
attorneys’ letter of
18
th
June 2018 was annexed in the founding affidavit
(marked “
D
”) in the context of demonstrating the
dispute regarding the validity of the shares agreement.
[59]
Counsel for
respondent also referred me to a case of
Basson
v Chilwan and Others
[10]
where the Court stated its unpreparedness to have regard to the
allegations made or raised for the first time in the replying
affidavits.
[60]
It is again important to highlight the fact that the applicant’s
case was made in the founding affidavit, as I have explained
above
and the applicant does not rely, for the grant of the relief sought,
on what is contained in the replying affidavit. The
deponent to the
founding affidavit has explained why other agreements are not
relevant. The respondent, in its answering affidavit,
referred to
other agreements which were not referenced or pleaded stated in the
applicant’s founding affidavit in circumstances
where it was
clear that the applicant’s cause of action is the verbal loan
agreement and nothing more. In the replying affidavit,
the applicant
then dealt with various other agreements and issues raised in the
answering affidavit.
Conclusion
[61]
In the result, I find that the plaintiff has made out a case for the
grant of the relief sought in the notice of motion albeit
a
provisional winding-up order and I hereby make the following order:
(a) the above mentioned
respondent is hereby placed under provisional winding-up;
(b) all persons who have
a legitimate interest are called upon to put forward their reasons
why this Court should not order the
final winding-up of the
respondent on................................. at 10:00 am or so soon
thereafter as the matter may be heard;
(c) a copy of this order
must be served on the respondent at its registered office;
(d) a copy of this order
must also be published forthwith once in the
Government Gazette
;
(e) a copy of this order
be forthwith forwarded to each known creditor by prepaid registered
post or by electronically receipted
telefax transmission;
(f) A copy of the
provisional winding-up order must be served on:
(i) every trade union (if
any) at the respondent;
(ii) the employees of the
respondent by affixing a copy of the application to any notice board
to which the employees have access
inside the respondent's premises,
or if there is no access to the premises by the employees, by
affixing a copy to the front gate,
where applicable, failing which to
the front door of the premises from which the respondent conducted
any business at the time
of the presentation of the application;
and
(iii) the South African
Revenue Service.
E
Mokutu
Acting
Judge, High Court
Johannesburg
For
the applicant: Adv. JK Berlowitz
Instructed
by: Shapiro-Aarons Incorporated
1
Unity Street, Fellside
JOHANNESBURG
Tel:
(011) 483 2046
Ref:
Mr Aarons/EZ/Z206
For
the respondent: Adv. HP van Niewenhuizen
Instructed
by: Barnard’s Incorporated
Unit
3, Glen Eagle Office Park
37
Koorsboom Avenue
KEMPTON
PARK
Tel:
(011) 975 2667
Ref:
F Barnard/Sanet/TEC3/27/T1208
Date
of trial: 30 November 2018
Date
of judgment: 06 December 2018
[1]
Rosenbach
& Co (Pty) Ltd v Singh's Bazaars (Pty) Ltd
1962 (4) SA 593
(D) at 599 to 600.
[2]
In the recent decision of
Trinity
Asset Management (Pty) Ltd v Grindstone Investments 132 (Pty) Ltd
2018 (1) SA 94
(CC), the Constitutional Court had cause to consider
the matter of
Badenhorst
v Northern Construction Enterprise (Pty) Ltd
1956 (2) SA 346
(T) 347 to 349; which was reaffirmed by the SCA in
Kalil
v Decotex (Pty) Ltd and Another
1988 (1) SA 943
(A) at 980 B; and discussed in the matter of
Exploitatie — en Beleggings
Maatschappij
Argonautent 11 BV and Another v Honig
2012 (1) SA 247
(SCA) paragraphs 11 to 12. At [27] the learned
Judges in the majority decision held that:
“
[27]
As regards liquidation, there is a general principle that, where
there is a genuine and bona fide
dispute concerning
the Respondent’s indebtedness to the Applicant the application
for liquidation should be dismissed (Badenhorst
principle). This
principle acknowledges that liquidation proceedings are not the
proper realm to determine disputed debts, and
that the proceedings
should not be abused in an attempt to enforce repayment.
[28] Applying the
Badenhorst principle, the High Court held that the defence of
prescription raised by the Respondent was indeed
a valid defence.
The High Court held further that it was not required to determine
the merits of the defence or if the defence
raised was likely to
succeed at trial. Accordingly, the application for provisional
liquidation was dismissed.
As the High Court
found, whether the Respondent is indebted to the Applicant or not is
a genuine and bona fide dispute. The dispute
turns on whether the
Applicant’s claim has prescribed. The High Court correctly
applied the Badenhorst principle and dismissed
the application. The
dispute was indeed palpable, and this was confirmed (in retrospect)
by the very fact that the issue led
to a split decision in the SCA
and is now before this court.”
[3]
Commentary on the 2008 Act, Volume 2, Issue 15, APP1 – 67
[Issue 11].
[4]
It was submitted on behalf of the applicant that, to the extent that
the applicant was able to demonstrate to this honourable
Court, its
bona
fide
in pursuing its claim against the respondent, then there ought not
to be any legal impediment for the grant of the order sought.
[5]
The answering affidavit was deposed and commissioned on 6
th
August 2018 and as at the date of hearing of the present
application, no supplementary affidavit by the respondent was handed
in to demonstrate the changed financial position (to the better) of
the respondent.
[6]
The respondent’s averment is made notwithstanding the fact
that on the respondent’s own version, at the height or
during
the peak of the respondent’s business, the respondent has had
to let go contract workers employed which, according
to the
respondent, amounted to R150 million worth of contract with GE.
[7]
1989 (3) SA 71
(P) at 95B – 97J.
[8]
2017 (6) SA 1
(CC) at para. 169 to 171
[9]
Para. 171 of the
Genesis
(supra) judgment.
[10]
[1993] ZASCA 61
;
1993 (3) SA 742
(AD) at 753F.