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[2016] ZAKZDHC 20
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Engen Petroleum Limited v Plastic Brown Containers (Pty) Ltd (11693/2014) [2016] ZAKZDHC 20 (10 May 2016)
IN
HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
LOCAL DIVISION, DURBAN
CASE
NO: 11693/2014
DATE:
10 MAY 2016
ENGEN
PETROLEUM
LIMITED
...................................................................................
APPLICANT
And
PLASTIC
BROWN CONTAINERS (PTY)
LTD
.........................................................
RESPONDENT
JUDGEMENT
Delivered:
10 May 2016
MBATHA
J:
Introduction:
[1]
This is an application for the final winding up of the respondent.
The application is opposed by those representing the respondent.
On
the 15
th
of September 2015, Seegobin J granted a provisional order winding up
the respondent, which application was also opposed.
Factual
Background
[2]
The application for the liquidation of the respondent arose as a
result the applicant’s claim for goods sold and delivered
to
the respondent for an amount of R513 000, which remained unsatisfied.
The respondent was a cash customer of the applicant and
was allocated
customer account number 10077812. A special procedure was followed
for purchasing goods from the applicant. The respondent
would place
orders telephonically to the applicant. The whole process would then
be captured in an electronic management system
of the applicant,
which calculated the amount of the order and then issued a unique
order number for that particular order. The
details thereof would be
then communicated to the respondent who would in turn make payment in
advance and provide proof of payment
to the applicant’s credit
controller. The credit controller would then authorise the release of
the paid up goods from the
applicant’s warehouse. This
authorisation would simultaneously raise an invoice by a system known
as SAP and an instruction
to the applicant’s logistic and
transport service provider, Ensign Shipping & Logistics, to
release the goods to the
respondent. The respondent would then either
elect to collect the goods or the applicant would deliver the goods
at the designated
address.
[3]
The applicant avers that during February 2014 it dismissed one of its
employees, Goodman Morapane, a Sales Manager, for attempting
to
perpetrate a fraud against the applicant for the benefit of the
respondent. On or about January 2013 to March 2013, the respondent,
with the assistance of Morapane, was able to obtain the release of
lubricants to the value of R513 000 without making any
form of
payment to the applicant.
[4]
Morapane manipulated the applicant’s system by instructing one
of the applicant’s employees at its depot, Synod
Ngubane, to
bypass the applicant’s electronic computer management system by
manually authorising the release of the goods
from an Ensign
warehouse on the pretext that the respondent’s customer account
number was still in the process of being opened,
hence it could not
be captured on the electronic system. Morapane had informed Ngubane
that upon the allocation of the customer
account number the
transaction would be captured on the SAP electronic system and the
respondent would be invoiced. The very same
goods were collected by
the respondent from Ensign, which signed for them, but were never
paid for them. Morapane continued with
the same
modus
operandi
a number of times.
[5]
According to the applicant, in December, being its financial year
end, its stock on hand is balanced and any missing stock would
have
been discovered by the applicant. On the 19
th
of December 2013, Morapane gave Ngubane the respondent’s
customer account number and order numbers to raise an invoice for
the
respondent in respect of the goods already collected by the
respondent. This ensured that the applicant’s stock balanced.
The delivery notes were attached to the founding affidavit indicating
the various collections of ordered goods from the applicant
by the
respondent in annexure D1 to D6 of the founding affidavit.
[6]
The invoice raised by Morapane, dated the 19
th
of September 2013, was sent by post for payment to the respondent but
no payment was forthcoming from the respondent. The invoice
was also
not disputed by the respondent. This finally led to the applicant
forwarding a formal letter of demand to the respondent
on the 22
nd
of July 2014. The debt remained unpaid with the result that the
applicant deemed the respondent in law to be unable to pay its
debt
and brought the application for the provisional liquidation of the
respondent.
[7]
The respondent’s defence is that it had no dealings with the
applicant concerning the claim of R513 000. It denies
that it is
indebted to the applicant and that it is unable to pay its debts. It
also denies any illicit or collusive dealings with
Morapane. It avers
that there were
bona fide
dealings
between itself and Morapane’s Close Corporation, Golden
Rewards, which had invoiced it for R550 620 for goods
sold and
delivered. It avers that it settled the entire amount due to Golden
Rewards, save for R120 000 which was set off
as a result of
goods sold by the respondent to Golden Rewards.
The
Law
[8]
It is trite that for a final winding up order, the applicant must
show on a balance of probabilities that the debt is not
bona
fide
disputed on reasonable grounds. The question which needs to be
determined first is whether the applicant is a creditor of the
respondent. Section 345(1)(a) of the old Companies Act
[1]
requires that a statutory letter of demand be sent to collect the
outstanding debt. When a company receives such a statutory demand,
its options are limited to settling the amount owed, giving security
for the claim to the satisfaction of the creditor or showing
on
balance of probabilities that the alleged indebtedness is disputed on
bona
fide
and reasonable grounds. Furthermore, if the company neglects to
adequately respond to the Section 345(1)(a) letter of demand, it
runs
the risk of being deemed to be unable to pay its debts and ultimately
face a liquidation on its deemed insolvency.
[9]
If the company elects to dispute the alleged indebtedness, it must
send a detailed response within the three weeks referred
to in
Section 345(1)(a) regarding the basis upon which the alleged
liability to pay is disputed. It is therefore imperative
upon the
respondent:
‘
to
allege facts which, if proved at a trial, would constitute a good
defence to the claims against the company
’
.
[2]
The
onus
rests on the applicant to show that on a balance of probabilities
that the debt is not
bona
fide
disputed on reasonable grounds.
[3]
Application
of the Law to the Facts
[10]
The first question that needs to be determined is whether the
applicant is a creditor or not. On this aspect the applicant
has
relied on
Clifford
v Farinha
[4]
where the court held that a delictual action can give rise to a civil
liability. In
Colrod
Motors (Pty) Ltd v Bhula
[5]
the court held that a claim for a specific amount of money wrongfully
and unlawfully misappropriated by the defendant from the
plaintiff is
liquidated within the meaning of Rule 32 of the Uniform Rules of
Court. The court was also referred on
International
Hardware Corporation (Rhod.) (Pvt). Ltd v Appleton
[6]
where it was decided that provided the damages for theft are for a
fixed, certain and definite amount, a claim therefore could
properly
be termed on liquidated demand. The same principles should apply to
this claim which I find to be liquidated, though the
sale of goods
arises from a collusion between the respondent and Morapane. I am
satisfied that it has been proved that the applicant
is a creditor to
the respondent. The collusion resulted in a sale of goods for a fixed
and certain amount of money. The goods belonged
to the applicant and
they were not paid for by the respondent.
[11]
The respondent had raised a defence that it was never a creditor,
within the meaning of Section 346(1)(b) of the Companies
Act of
1973.
[7]
It is my view that the
applicant has shown on a balance of probabilities that it was a
creditor of the respondent, irrespective
that the original agreement
between them was that the respondent had to purchase goods on a cash
basis. Annexures D1 to D6 to the
founding affidavit indicate that on
various occasions various goods were collected by the driver of the
respondent from the applicant’s
Ensign warehouse. The dates of
the delivery notes indicate that the deliveries occurred during the
period when Morapane gave instructions
to Ngubane to override the
electronic system. The delivery notes are addressed not only to the
respondent but to Zimoplast as well.
It is clear to this court that
the Zimoplast name was conveniently used by Morapane and the
respondent to conceal the unauthorised
credit purchase by the
respondent. There is no reasonable explanation given by the
respondent why they collected a delivery specified
for Zimoplast.
Furthermore, Section 346 (1) (b) of the Act does not say that
liability arises only on contract, it is sufficient
that it is proved
that the applicant is a creditor.
[12]
The defence raised by the respondent that it only conducted business
with Golden Rewards owned by Morapane, a full time employee
of the
respondent, is not acceptable. It could also not explain how it came
about that Morapane’s company had to use the
applicant’s
warehouse for delivery of the goods purchased from another entity.
[13]
The very same Morapane has invoiced them for goods purchased on
credit from the applicant as per invoice dated the 19
th
of December 2013. Morapane unilaterally produced the invoice, without
the knowledge of the senior management, showing the respondent’s
indebtedness to the applicant for R513 000. The respondent has
failed to explain why Morapane, with whom they have a business
relationship, would invoice them again for the same goods which they
have paid his company. It is clear to this court that Morapane
had
knowledge of the supply of the goods delivered to the respondent. I
therefore find that irrespective of how it had acquired
the goods, it
received the goods, which it had not paid for. I am satisfied that
the applicant has shown that it is a creditor
as required in terms of
the law.
[14]
The second question which arises is whether the respondent was unable
to pay its debts when it received a demand in terms of
Section
345(1)(a) of the Act. It is common cause that the respondent failed
to give a detailed response disputing its liability
to the applicant.
The respondent had never been given a credit account by the applicant
and one would have expected them to immediately
dispute their
indebtedness to the applicant by stating that it has always paid cash
to the applicant. When the invoice was sent
to the respondent, it
elicited no response, irrespective of the huge amount that was
claimed from it. Instead, different versions
were given to Longo, the
forensic analyst of the applicant. Initially, Mohamed, a member of
the respondent, disputed that goods
had been purchased from the
applicant, later on this changed and he? stated that they had been
paid for. Proof of such payment
was never forthcoming from the
respondent. The engagement with the directors or managers of the
respondent regarding the issue
of payment started from February 2014
up to April 2014, but no proof of payment was given to the applicant.
[15]
On the 9
th
of May 2014 various telephonic conversations were conducted with
Mohamed and confirmed in an email to him. This also did not elicit
any response from either Mohamed or Aziz, who had also been engaged
by the applicant’s officials. Another email dated the
21
st
of May 2014 was addressed to the respondent’s, but it was not
responded too.
[16]
On the 26
th
of May 2014 Salem on behalf of the applicant addressed an email to
the respondent, to which Aziz responded by stating that he will
respond during the course of the week and thanked her for her
patience and understanding. The response never came. Aziz finally
responded on the 5
th
of June 2014 by referring the applicants to their attorneys, Shabeer
Joosab Attorneys.
[17]
The applicant extensively tried to engage with their attorney as from
the 11
th
of June 2014, but the attorney? never responded to its correspondence
and telephone calls in which it requested proof of payment.
Joosab
never disputed the applicant’s claim and never produced proof
of payment from his clients either.
[18]
The conduct of the officials of the respondent is not consistent with
the conduct of people who do not owe funds to the applicant.
It could
not have taken five months to categorically state that payment had
been made and provide proof of payment. At this stage
there was also
no denial of the existence of the debt.
[19]
A letter of demand was sent to the respondent on the 2
nd
of June 2014, thereafter a period of three weeks elapsed before the
launching of this application and the respondent has failed
to make
payment to the applicant.
[20]
In my consideration of whether the applicant has discharged the
onus
on a balance of probabilities, I have holistically considered all the
facts in this matter. The respondent has tried to raise factual
disputes, which I find to be not fundamental factual disputes. In
that regard I have borne in mind what was stated in
Mohamed
v Malik
[8]
that
viva
voce
evidence can only be allowed in exceptional cases. Furthermore, the
factual disputes must be
bona
fide
and genuine. The version given by the respondent is completely in
conflict with the principles of
bona
fides
as it is not a probable version. In
Buffalo
Freight Systems (Pty) Ltd v Crestleigh Trading (Pty) Ltd and
another
[9]
the court endorsed the principle held in
Truth
Verification Centre CC v PSE Truth Defection CC & Others
[10]
that a ‘common sense and robust approach’ in relation to
the resolution of disputed issues on paper, where a respondent
contends himself with bald and hollow denials of factual matter
confronting him must be adopted. It went on further to state that
the
court should be prepared to undertake an objective analysis of such
disputes when required to do so. In the event that there
are disputes
of fact, the court is not permitted to determine the balance of
probabilities on the affidavits but must apply the
Plascon-Evans
rule.
[11]
[21]
I am satisfied that the applicant has discharged the evidentiary
burden resting upon it. The non-responsive attitude of the
respondent
to the calls for payment leaves a lot to be desired. It was only when
the applicant brought the application for provisional
liquidation
that it expressly stated for the first time that it had dealings with
Morapane. If payment had been made to his entity,
this should have
been disclosed timeously to the applicant.
[22]
The respondent’s defence is untenable in the following
respects:
·
It produced proof of payment which is
suspect in that the invoices from Morapane were not prepared in
accordance with normal business
practice and tax legislation. The
invoices were all transmitted at the same time to the respondent;
·
The said invoices show that payments of
about R50 000 or more were even paid to Golden Rewards prior to
any purchase being
made from them. These sales were conducted six
months or so ahead, but the transmission of the invoices was
conveniently sent en
masse on the 13
th
of June 2013;
·
The delivery notes were conveniently made
out to another company when the goods were collected at the
applicant’s Ensign warehouse
by the driver of the respondent in
its own motor vehicle. Nowhere has the respondent shown that he was
unauthorised to collect
goods on behalf of Zimoplast;
·
The respondent has not shown why the goods
were not collected at the place of business of Golden Rewards but at
the applicant’s
depot;
·
The respondent knew that Morapane was
employed as Marketing Retail Manager for the applicant and yet
conveniently accepted that
he could run an entity in competition to
his principals;
·
The last nail in the coffin was that
Morapane himself issued the invoice of 19
th
of December 2013 to the respondent for goods sold and delivered for
the amount of R513 000. This shows that Morapane had knowledge
of the orders, which confirmed the sale from the applicant.
[23]
I am satisfied that the respondent has failed to discharge the
evidentiary burden resting upon it. The non-responsive
attitude
of the respondent to the call for payment says a lot. It later
on claims to have paid but failed to produce proof
of payment.
Conveniently, when the applicant brings this application, the
respondent claims to have paid another entity,
with proof of payment
which is suspect. If such payment had been made to that entity,
this should have been disclosed timeously
to the applicant. The
respondent relies on various authorities including
Helderberg
Laboratories CC & others v Sola Technologies (Pty) Ltd
[12]
where the court held that the applicant on the return date must prove
on a balance of probabilities that it has the necessary
locus
standi
as a creditor. The court held further on the facts that the first to
fourth respondents had discharged the evidential burden of
showing
that they discounted the balance owing of the respondents’
claim on
bona
fide
and reasonable grounds. In that regard the respondent had
failed to show or prove on a balance of probabilities that it was
a
creditor of the appellants. In that case the respondent had
sought the winding-up on the basis of their inability to pay
its
debts as contemplated by section 344(f) of the Act. That case was
different from the facts of this case as the appellants admitted
their indebtedness to the respondent, but contended that due to the
failure of the respondent to make all the necessary accounting
information available to them, they were unable to calculate the
exact amount due by each one of them to the respondent. In that
case
the respondents had discharged the evidential burden of showing that
they disputed the balance of the applicants’ claim
on
bona
fide
and reasonable grounds. Therefore the respondent had failed to
prove that it was a creditor to the respondents.
[24]
The South African Revenue Services (‘SARS’) has taken
judgment against the respondent. It is also not only
SARS whose
debt has not been settled, but various creditors’ claims have
arisen as fully stated in the affidavit filed by
the provisional
liquidator. There is no evidence placed before this court which
indicates any form of solvency on the part
of the respondent.
Even the assets in its possession belong to a third party and this
has not been disproved by the respondent.
Conclusion:
[25]
I have already alluded to what Section 345(1)(a) of the Act states
about a company that is deemed to be unable to pay its debts.
There
is also a technical provision in Section 345(1)(c) that a company is
deemed unable to pay its debts if this it is proved
to the
satisfaction of the court. I am satisfied that the applicant has
proved to the satisfaction of this court that the respondent
is
unable to pay its current debts, prospective debts and contingent
liability.
[26]
I therefore find in favour of the applicant.
I
make the following order:
(a)
That the provisional order granted by this court on the 15
th
of September 2015, be hereby confirmed.
(b)
That the costs hereof be in liquidation.
MBATHA
J
Date
of hearing : 26 April 2016
Date
delivered : 10 May 2016
Appearances
:
For
the Applicant m: Adv. AWM Harcourt SC
Adv
SK Dayal
Instructed
by : MAHARAJ ATTORNEYS
3
Rydall Vale Crescent
La
Lucia Ridge
Durban
For
the Respondents : Adv AE Potgieter SC
Instructed
by : SHABEER JOOSAB ATTORNEYS
Suite1,
Ground Floor
582
Ridge Road
Overport
Durban
[1]
Companies
Act 61 of 1973
[2]
Hülse-Reutter
and another v HEG Consulting Enterprises (Pty) Ltd (Lane and Fey NNO
Intervening)
1998
(2) SA 208
(C) at 220A
[3]
Orestisolve
(Pty) Ltd t/a Essa Investments NDFT Investment Holding (Pty)
Ltd and another
2015 (4) SA 449
(WCC) paras 7-13
[4]
1988
(4) SA 315 (W)
[5]
1976
(3) SA 836 (W)
[6]
1971
(1) SA 404
(R)
[7]
Companies
Act 61 of 1973
[8]
1930
TPD 615
[9]
2011
(1) SA 8 (SCA)
[10]
1998
(2) SA 689 (W)
[11]
As
formulated in
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
1984 (3) SA 623 (A)
[12]
2008
(2) SA 627
(C)