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[2015] ZAGPPHC 410
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Absa Bank Limited v Jeff & Braam Truck Parts CC (41288/2014) [2015] ZAGPPHC 410 (14 May 2015)
THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, PRETORIA
CASE NO: 41288/2014
DATE
OF HEARING: 14 MAY 2015
In
the matter between:
ABSA BANK
LIMITED
Applicant
and
JEFF &
BRAAM TRUCK PARTS CC
Respondent
J U D G M E N T
AVVAKOUMIDES,
AJ
1.
The
applicant launched winding up proceedings against the respondent on
the basis that the applicant is a creditor of the respondent.
After
hearing the application I ordered a final liquidation order and that
the costs of the application shall be costs in the liquidation.
I
reserved the reasons for my decision. These are therefore my reasons
for the order.
2.
The
respondent did not dispute its indebtedness to the applicant and in
the amount so alleged, neither the arrears. The indebtedness
is
therefore common cause. As at January 2013 the applicant required of
the respondent to pay an amount of R2 714 500.91.
This was not
forthcoming.
3.
The
authorities require of a respondent in an application for winding up
to, dispute the applicant’s claim, on bona fide and
reasonable
grounds. See Kalil v Decotex (Pty) Ltd
1988 (1) SA 943
AD. On the
respondent’s version it is disposing of assets to pay off
debts. The respondent submitted that it is not
just and
equitable for the court to grant the order sought. It submitted, with
reference to Apco Africa (Pty) Ltd v Apco Worldwide
Incorporated
[2008] ZASCA 64
;
2008
(5) SA 615
SCA, that “just and equitable” was held to
afford courts with wide discretionary powers and requires a “broad
conclusion of law, justice and equity as a ground for winding up”.
Whilst this is so it requires that such discretion to
be applied to
facts that warrant such discretion.
4.
In
this application, save for the respondent raising and labouring on
its point in limine, to which I will return below, and submitting
that the applicant ought to have considered various other remedies
instead of embarking on liquidation proceedings, the respondent
has
not set out any grounds or facts that may remotely be construed as
disputing the applicant’s claim, on bona fide and
reasonable
grounds. In the absence of
bonafide
and reasonable grounds of opposition, I cannot consider that the
applicant should have taken alternative steps to enforce payment
of
the debt.
5.
It
was submitted that the applicant could, and should have considered
initiating business rescue proceedings in respect of the respondent’s
business. Whilst this may be technically possible, I find it absurd
to expect that a creditor would embark on such proceedings
for and on
behalf of its debtor, let alone on the current facts.
6.
It
was submitted that I should have regard to the downward trend of the
South African economy and that the new Companies Act is
aimed at
keeping companies afloat instead of being liquidated. These
submissions are nothing short of desperate attempts to shift
the
focus away from the real issue that the respondent cannot be
permitted to continue operating on the basis it does and ought
to be
wound up. It bears mentioning that the respondent has permitted it’s
deregistration by CIPC by failing to submit annual
returns.
7.
The
respondent, in limine, submitted that the applicant did not comply
with the provisions of section 346 (4A) of the Companies
Act 1973,
Act No. 61 of 1973. The respondent submitted, incorrectly so that
compliance of such section required service of the
application on all
persons and entities listed in the section before bringing the
application to court. This is clearly incorrect.
The section is aimed
at requiring compliance with the provisions of the section at any
stage prior to judgment in the application.
8.
The
respondent relied on E B Steam Company (Pty) Ltd v Eskom Holdings SOC
Ltd
2013 ZASCA 167.
This decision has been reported as
2015 (2) SA
526
SCA. The applicant submitted quite correctly that the
respondent’s submissions, with reference to this decision are
incorrect.
Wallis JA held the following at 532 paragraph 11 F and
further:
[11]
Section 346(4A) requires that the application papers be furnished to
various people, namely,
every registered trade union that represents
the employees; the employees themselves; SARS and the company
itself, unless
there are grounds for the court to dispense with the
last of these. Unlike the previous sub-section, which requires that
the papers
be lodged with the Master ‘before’ lodging
with the Registrar of the high court, s 346(4A) only requires that
the application
papers be furnished to these persons ‘when’
the application has been presented to the court. That difference in
terminology
is significant as it conveys that the application papers
do not have to be furnished to the specified persons until after the
application
has been lodged with the Registrar. There is a good
reason for this. It is only once the papers have been lodged that a
case
number will have been allocated and a date of set-down
determined in the event of there being no opposition and these will
be reflected
in the notice of motion. If the application is to be
heard as a matter of urgency the grounds therefor and the date of
hearing
will then appear from the application papers, which would not
be the case if they had to be served before lodging them with the
registrar of the court that will hear the application.
[12]
The contrary conclusion in Corporate Money Managers (Pty) Ltd &
others v Panamo Properties
49 (Pty) Ltd overlooked the
difference in wording between ss (4) and (4A), and is incorrect. The
application papers
can be furnished to the named persons at any time
after lodging with the Registrar provided that they have been
furnished to the
identified persons prior to the grant of a final
order. That ensures that the purpose of the section will be
fulfilled. It is unnecessary
to determine finally what a court should
do if the papers are furnished to one such person on the day of the
hearing or only shortly
before. The court should in general satisfy
itself that the persons who are entitled to be furnished with the
papers have had an
adequate opportunity to consider the application
and decide whether to intervene. It is also unnecessary to spell out
the circumstances
in which a court should be prepared at the stage
when a provisional winding-up order is sought to grant an order
notwithstanding
the fact that the application papers have not yet
been furnished to employees. Ordinarily this should be done before a
provisional
order is granted but reasons of urgency or logistical
problems in furnishing them with the application papers may provide
grounds
for a court to allow them to be furnished after the grant of
a provisional order.
[13]
Like the earlier sub-sections, there can be little doubt that the
section imposes an obligation
on the applicant to furnish the
application papers to the persons named in the section. That accords
with the section’s purpose.
For example the inclusion of SARS
in the list is dictated by its role in protecting South Africa’s
tax base and ensuring
that in the public interest all taxes properly
levied are collected. There are obvious reasons why it should know
about applications
for winding-up or sequestration. The reasons for
requiring that the application papers be furnished to employees and
their representatives
have already been mentioned. The section
says that the application papers ‘must’ be furnished to
the named persons.
In the traditional language of the law that is
peremptory.
9.
I
am satisfied that the applicant has complied with the provisions of
section 346 (4A) and with the various affidavits filed in
compliance
thereof.
10.
In
respect of the uncertainty and different interpretations given by our
courts to commercial insolvency and factual insolvency,
the applicant
submitted that this has been brought an end by the decision in
Boschpoort Ondernemings (Pty) Ltd v Absa Bank Limited
2014 (2) SA 518
SCA, where Willis JA held as follows:
“
[17]
Were the test for solvency in liquidation proceedings to be whether
assets exceed liabilities, this
would undermine there being a
predictable and therefore effective legal environment for the
adjudication of the liquidation of
companies: one of the purposes of
the new Act, set out in s 7(1) thereof.
[18]
In view of the long established and well-settled practice in our
courts that commercial insolvency
justifies the liquidation of a
company, it must be presumed that the legislature was aware of this
fact. The principle that Parliament
is presumed to be acquainted with
the interpretation of earlier legislation by the court, applies where
there has been a settled
and well- recognised judicial interpretation
before the relevant legislation was passed.
[19]
It has also long been a construction of interpretation of statutes
that, in the absence of express
wording to the contrary, the
legislature did not intend to alter the law as it had previously
stood. Accordingly, it must
be presumed that the legislature
deliberately refrained from defining ‘solvency’. It must
have done so with a view
to ensuring that the well-oiled machinery of
the courts in matters of company liquidations should not stall. The
legislature must
have been content that prevailing judicial
interpretations of solvency and insolvency respectively should
continue to have effect.
The meaning of those terms must be one that
leads to a sensible and business-like result.
[22]
Consequently, in order for a solvent company to be wound-up in terms
of either s 80 or 81 of
the new Act, it must be commercially solvent.
If it is commercially insolvent it may be wound-up in accordance with
chapter 14
of the old Act, as is provided for in sub item 9(i) of
schedule 5 of the new Act.
[23]
The confusion which has arisen as to when a company may be wound-up
in terms of the new Act or
in terms of the old Act is thus
eliminated. The so-called factual solvency of a company is not, in
itself, a determinant of whether
a company should be placed in
liquidation or not. The veracity of this deduction may be
illustrated, as in the present case, where
the issue has arisen as to
whether a company which is factually solvent, but commercially
insolvent, is to be wound-up in terms
of the new Act or the old Act.
To attribute so-called ‘factual solvency’ to the meaning
of the term ‘solvent
company’ in the new Act would lead
to an unbusiness-like result that would not make sense.
[24]
Factual solvency in itself is accordingly not a bar to an application
to wind-up a company in
terms of the old Act on the ground that it is
commercially insolvent. It will, however, always be a factor in
deciding whether
a company is unable to pay its debts. See Johnson v
Hirotec (Pty) Ltd, It follows that a commercially solvent
company (whether
factually solvent or insolvent), may be wound up in
terms of the new Act only; a solvent company cannot be wound up in
terms of
the old Act.
11.
I
was requested to consider issuing a final order instead of a
provisional liquidation order because a provisional order would not
take the matter any further and the respondent would not, under the
circumstances be able to return on the return date in any different
positon. I am inclined to agree. The practice is this division is
that the courts have wide discretion to issue final orders of
liquidation where the circumstances justify such an order.
I have had regard to the decision in Johnson v Hirotec
[2000] ZASCA 131
;
2000 (4) SA
930
SCA where Melunsky AJA held as follows:
“
The
remaining question is whether this Court should issue a provisional
or a final order of winding-up. The Act does not require
a
final order to be preceded by a provisional order, but in Kalil v
Decotex (Pty) Ltd and Another
1988 (1) SA 943
(A) at 976 A-B, Corbett
JA referred to the practice, which he regarded as well-established,
of granting a provisional order of
winding-up and a rule nisi calling
upon persons concerned to show cause why a final order should not be
granted. From the
information given to us by counsel it would
seem that there is no longer a uniform practice in this regard
throughout the country.
According to the Practice Manual of the
Transvaal Provincial Division, a judge of that Division appears to
have a wide discretion
to grant a provisional or a final winding-up
order, as the case may require, and is under no constraint to issue a
provisional
order as a matter of course.
“
12.
Consequently,
I make the following order:
12.1
The respondent is placed under final liquidation.
12.2
The costs of this application shall be costs in the liquidation.
________________________________
AVVAKOUMIDES, AJ
JUDGE OF THE HIGH COURT
GAUTENG
DIVISION, PRETORIA
Representation for Applicant:
Counsel
Adv: M.P. Van der Merwe SC
Instructed by:
Tim Du Toit Incorporated
Representation for the Respondent:
Counsel
Adv: Q. A. Van der Heever
Instructed by
Liesl Van Rensburg Attorneys