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[2016] ZAGPPHC 1244
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Steenkamp v Murray (80173/2015) [2016] ZAGPPHC 1244 (21 October 2016)
THE
HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE
NUMBER: 80173
/
2015
DATE
OF
HEARING: 14 OCTOBER 2016
DATE
OF JUDGMENT: 21 OCTOBER 2016
REPORTABLE
OF
INTEREST TO OTHER JUDGMENTS
REVISED
In
the matter between:
JACOBUS
HENDRIK JOHANNES
STEENKAMP
Applicant
and
WILLEM
JACOBUS NIEMAND
MURRAY
Respondent
JUDGMENT
AVVAKOUMIDES,
AJ
[1]
This is an application in terms of which applicant seeks an order
that the respondent be held personally liable for all or any
debts
and other liabilities of Wimma Wyne CC (in liquidation), a close
corporation incorporated in terms of the laws of the Republic
of
South Africa under registration number 2007/247513/23 ("the
CC"), owing to applicant and that the respondent be ordered
to
pay the costs of the application.
[2]
The applicant's claim is based on section 64 of the Close
Corporations Act, 69 of 1984 ("the CC Act") which reads
as
follows:
"64. Liability for reckless or
fraudulent carrying-on of business or corporation.
(1) If it at any time appears
that any business of a corporation was or is being carried on
recklessly, gross negligence or
with intent to defraud any person or
for any fraudulent purpose, a Court may on the application of the
Master, or any creditor,
member or liquidator of the corporation,
declare that any person who was knowingly a party to the carrying on
of the business of
any such manner, shall be personally liable for
all or any of such debts or other liabilities of the corporation as
the Court may
direct, and the Court may give such further orders as
it considers proper for the purpose of giving effect to the
declaration and
enforcing that liability.
(2) If any business of a
corporation is carried on in any manner contemplated in sub-section
(1), every person who is knowingly
a party to the carrying on of the
business in any such manner shall be guilty of an offence."
[3]
The applicant's notice of motion and founding papers were served upon
respondent on 22 October 2015. On 3 December 2015 the
respondent
delivered his opposing papers in which he raised an
in limine
point of prescription and denies that he carried on the business
of the CC in a reckless and fraudulent manner with the intent to
defraud applicant.
[4]
The undisputed background facts are as follows. During or about
January 2008 an agency agreement was concluded between applicant
and
the CC in terms of which it was agreed that the CC would act as
applicant's agent for the sale of wine to retailers in the
Gauteng
area ("the agency agreement").
[5]
In terms of the agency agreement the CC agreed to market and sell
wine on behalf of applicant to retailers in Gauteng and notably
to
retailers within the Pick n Pay group. In turn, applicant agreed to
pay the CC a basic fee, together with storage and delivery
costs, as
well as commission for each bottle of wine sold. It was an express
term in the agency agreement that the CC would pay
all monies
received from retailers in payment for wine directly to applicant,
upon receipt of which applicant would pay a 10% fee
to the CC as
commission.
[6]
During the currency of the agency agreement the CC fell in arrears in
respect to the sums due to applicant and failed to make
payment to
applicant for sums received on his behalf. At all material times the
wines sold by the CC would remain the property
of applicant and that
all monies received by the CC in respect to such sales would be paid
directly to applicant.
[7]
On 6 September 2012 the applicant obtained default judgment against
the CC for payment in the sum of R424 796.12 on the basis
of monies
due to him in terms of the agency agreement. On 10 May 2013, the CC
was placed under voluntary winding-up. On 5 November
2013, the
applicant's attorneys of record addressed a letter to the liquidators
of the CC informing them that applicant obtained
judgment against the
CC in the aforementioned sum and requesting them to investigate the
CC's transactions prior to its liquidation,
and the respondent's role
in respect thereto.
[8]
The respondent responded by way of a letter on behalf of the CC in
which he explained that the CC acted as applicant's agent
for the
sale of wine within the Gauteng area. The respondent explained that
the CC failed to pay over sums held it it to applicant
because it
utilised such monies for the payment of its operational expenses. The
respondent expressed himself in the following
terms:
"... ons moes die inkomste
aanwend om die bedryfsuitgawes mee te betaal want Greenland wou nie
die koste aan ons betaal voordat
ons hulle nie betaal het nie.
Ons is van mening dat indien Greenland
elke maand hulle kostes en kommissie aan ons oor betaal het en ons
nie met die inkomste ons
bedryfs uitgawes moes betaal het nie sou die
BK sy verpligtinge kon nakom maar die skuldlas het net te veel geword
en ons het na
raadpleging met Mnr Gerhard Scheepers besluit om die BK
te likwideer."
[9]
On 3 February 2015 an insolvency inquiry in terms of
section 152
of
the
Insolvency Act, 24 of 1936
was held in Pretoria. The relevant
exchange reads as follows:
"ADV BOTHMA: You understand that
you acted as an agent? Yes or No?
W MURRAY: Yes
ADV BOTHMA: You understand that you
never became the owner of the wine? Yes or no?
W MURRAY: Yes
ADV BOTHMA: You understand that you
took money from the retailers on behalf of your client's (sic) i.e.
Greenland.
W MURRAY: All the farmers.
ADV BOTHMA: You accept that you use
(sic) that money to pay the running expenses of the cc.
W MURRAY: Yes."
[10]
Pursuant to the evidence obtained in the inquiry the applicant
instituted the present proceedings. Section 64 of the Act creates
a
remedy for a creditor in the circumstances set out in that section. A
creditor who wishes to rely on the provisions of section
64 of the CC
Act must show that the respondent was knowingly party to the
carrying-on of the business of the CC recklessly, with
gross
negligence or with intent to defraud any person or for any fraudulent
purpose. In this case the CC throughout acted as the
agent of
applicant and it was obligated to immediately pay all sums as
received from retailers to applicant.
[11]
The position of an agent that misappropriates funds held on behalf of
his principal for his own benefit was considered in the
matter of S v
Kotze
1965 (1) SA 118
(A). In that case the defendant received
cheques on behalf of his principal and appropriated the funds for his
own benefit. The
then Appellate Division expressed itself in the
following terms:
"Die mandaat waarvolgens A die
tjeks ontvang het was om die fondse daardeur verteenwoordig tot
voordeel van B te bele. Deur,
teenstrydig met daardie mandaat, die
tjeks ter vereffening van sy privaat skulde te deponeer, het
appellant - onderhewig alleenlik
aan enige spesiale verdediging wat
hy op die besondere feite van die geval miskien kon opper ... - 'n
toeeiningshandeling gepleeg
wat - gestel dat die orige elemente van
die misdaad van diefstal aanwesig is - as niks anders as 'n
fraudu/osa contrectatio
beskou kan word nie."
[12]
It thus follows that where an agent knowingly, and without the
permission of his principal, uses funds held on behalf of his
principal for his own benefit, such conduct constitutes fraudulent
behaviour. The respondent, by his own admission, both by way
the CC's
letter aforesaid and under cross-examination in the section 152
examination, knowingly caused the CC to utilise funds
held on behalf
of applicant to pay for its operational expenses.
[13]
The respondent raised a point
in limine
to the effect that the
applicant's claims against respondent have prescribed. The respondent
submitted in his papers as follows:
"It is submitted that the
Applicant, having obtained judgement against Wimma Wyne in excess of
three years prior to the launching
of the current application, never
indicated or raised any concern to the effect that the Respondent was
to be held liable for the
debts of Wimma Wyne. This application
constitutes a mere after-thought subsequent to an insolvency enquiry
where the Applicant
realised that Wimma Wyne had insufficient funds
in order to ensure a dividend in respect of the Applicant's claim,
which claim
has not been proven against the insolvent and liquidated
estate."
[14]
Section 12(1) of the Prescription Act, 68 of 1969 ("the
Prescription Act"
;), provides that "Prescription shall
commence to run as soon as the debt is due."
Section 12(3)
,
introduced by way of an amendment in 1984, provides that:
"A debt shall not be deemed to be
due until the creditor has knowledge of the identity of the debtor
and of the facts from
which the debt arises: Provided that a creditor
shall be deemed to have such knowledge if he could have acquired it
by exercising
reasonable care."
[15]
Counsel for the applicant submitted that a distinction must be drawn
between the facts which must be proved to disclose a cause
of action
(facta probanda)
and the evidence which proves such facts
(facta probantia).
It follows thus that a cause of action for
the purposes of prescription means:
"... every fact which it would be
necessary for a plaintiff to prove, if traversed, in order to support
his right to the judgement
of the Court. It does not comprise every
piece of evidence which is necessary to prove each fact, but every
fact which is necessary
to be proved."
[16]
The application of the
Prescription Act to
claims in terms of Section
64(1) of the CC Act was considered in the matter of Burley Appliances
Ltd v Grobbelaar N.O. and Others
2004 (1) SA 602
(C). The court held
that section 64 of the Act created a new remedy or right which became
available to a creditor in the circumstances
set out therein and that
prescription would commence once:
“…
it appears that any
business of the corporation was or is being carried on recklessly,
with gross negligence or with intent to defraud
any person or for any
fraudulent purpose and the corporation has debts or other
liabilities, a creditor can enforce the remedy
which was created by s
64."
[17]
In this case the first instance upon which the applicant learnt (and
could reasonably be expected to learn) of the fraudulent
manner in
which respondent conducted the business of the CC was when respondent
acknowledged that he caused the CC to use funds
held on behalf of
applicant for its own benefit. This fact first came to light in the
response to applicant's attorney's letter
of 5 November 2013. It
therefore follows that the earliest date on which prescription in
this matter could have commenced would
be sometime after 5 November
2013 and not when applicant obtained judgement against the CC on 6
September 2012, as alleged by the
respondent. I am of therefore of
the view that there is no substance in the point
in limine
and
it stands to be rejected. The remaining submissions by the
respondents to the effect that the applicant had failed to show on
the probabilities that the respondent had acted fraudulently are
similarly rejected.
[18]
The applicant's counsel submitted that I should order that costs must
be paid on the scale as between attorney and client based
on the
respondent's conduct. He submitted that this case warrants a special
cost order on a scale as between attorney and client
because the
respondent's denial in the answering affidavit that he
misappropriated the applicant's funds for the benefit of the
CC was
in direct contrast with the respondent's evidence in the section 152
inquiry coupled with the respondent's explanation in
the letter he
sent to the applicant's attorneys. The opposition of the current
application was accordingly vexatious. The applicant
relied on the
case of In Re: Aluvial Creek Ltd where Gardiner JP held as follows:
"An order is asked for that he
pay the costs as between attorney and client. Now sometimes such an
order is given because of
something in the conduct of a party which
the Court considers should be punished, malice, misleading the Court
and things like
that, but I think the order may also be granted
without any reflection upon the party where the proceedings are
vexatious, and
by vexatious I mean where they have the effect of
being vexatious. There are people who enter into litigation with the
most upright
purpose and the most firm belief in the justice of their
cause, and yet whose proceedings may be regarded as vexatious when
they
put the other side to unnecessary trouble and expense which the
other side ought not to bear. That I think is the position in the
present case."
[19]
I am inclined to agree that the cost order should be on a punitive
scale, given the facts of the case. The respondent did act
fraudulently in his conduct. He put the applicant to unnecessary
effort and expense to recover monies so misappropriated. I am
thus of
the view that respondent's opposition of the current application was
vexatious and that a cost order on the scale as between
attorney and
client is justified.
[20]
I accordingly make the following order:
[20.1] The respondent is declared to
be personally liable for all and any debts and other liabilities of
Wimma Wyne CC (in liquidation),
a close corporation duly incorporated
in terms of the laws of the Republic of South Africa with
registration number 2007/247513/23,
owing to applicant.
[20.2] The respondent is ordered to
pay applicant's costs on a scale as between attorney and client.
G.
T. AVVAKOUMIDES
ACTING
JUDGE OF THE HIGH COURT
GAUTENG
DIVISION, PRETORIA
DATE:
21 OCTOBER 2016
Representation
for Applicants:
Counsel:
P.S. Bothma
Instructed
by:
Marais Muller Attorneys
Representation
for Respondent:
Counsel:
B. Lee
Instructed
by:
Scheepers Attorneys