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[2013] ZAFSHC 62
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Free State Development Corporation v Cross point Trading 23 (Pty) Ltd (820/2013) [2013] ZAFSHC 62 (25 April 2013)
FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Case No. : 820/2013
In the matter between:-
FREE STATE
DEVELOPMENT CORPORATION
...................
Applicant
and
CROSS POINT TRADING
23 (PTY) LIMITED
.....................
Respondent
_____________________________________________________
HEARD ON:
18 APRIL 2013
_____________________________________________________
JUDGMENT BY:
KRUGER, J
_____________________________________________________
DELIVERED ON:
25 APRIL 2013
_____________________________________________________
[1] This matter came
before me in the unopposed motion court as an application for
liquidation. The applicant in 2007 made loans
to the respondent in
excess of R3 million. No repayments were made. The respondent’s
debt to applicant is R4,8 million. According
to the founding
affidavit the respondent ceased trading in 2011. The notice of motion
was issued on 5 April 2013. The only security
of any value held by
applicant is a bond for R2,2 million over respondent’s
immovable property. The R2,2 million loan is
secured by a mortgage
bond and the prescriptive period is 30 years. No mention is made of
other creditors in the application.
[2] The respondent was,
according to the Cipro report dated 17 April 2013 handed in by the
applicant’s legal representative,
registered on 29 November
2006 and started business on that day. On 1 March 2007 it bought Erf
3460 in Bethlehem Extention 44,
which is 23 Witteberg Street,
Bethlehem, being the registered office of the respondent, and,
according to the sheriff’s return
of service of 19 March 2013,
the address is vacant land. It is not clear where the respondent
conducted business.
[3] In the founding
affidavit the respondent says that the property was bought for R2,2
million in 2009. According to the windeed
report handed in by
applicant’s legal representative, the property is still
registered in the applicant’s name, having
been purchased in
2007 for R650 000,00.
[4] The applicant
attaches a loan agreement dated 6 March 2007 in terms whereof a loan
of R2 229 321,00 was granted to
the respondent, repayable
over 10 years, interest free. According to the loan agreement the
following securities were required:
(i) special notarial bond; (ii)
mortgage bond – Erf 3460, Bethlehem; (iii) Syretyships of M S
Radebe and T A Moloi; (iv)
cession of share certificate and
shareholders loan account. The two bonds were registered. It does not
appear from the papers whether
the suretyships and cession were
obtained by applicant.
[5] According to the
windeed report handed in by applicant’s legal representative,
the purchase price of Erf 3460 on 1 March
2007 was R650 000,00.
On 29 March 2007 a bond for R2 229 321,00 was registered
over Erf 3460 in favour of applicant.
[6] On 6 March 2007 a
“shareholders’ agreement” was entered into between
three entities: (1) the applicant; (2)
the respondent (represented by
a director, Thapelo Aubrey Moloi), and (3) Tribal Zone Trading 440 CC
(represented by Mqhetheki
Stanley Radebe, member). In that agreement
the applicant is described as “FDC” and the respondent as
“the company”.
The other party is “Tribal Zone”.
The agreement records that the applicant grants a “commercial
loan” to
the respondent and the applicant takes equity in the
respondent and makes a “shareholders’ loan” to the
respondent.
The agreement defines a shareholders’ loan as any
amount that the shareholders may lend or advance to the respondent,
which
amount is credited to the account of a shareholder in the books
of the respondent. Paragraph 9.4 records that the applicant in its
capacity as shareholder lends R737 756,00 to the respondent.
[7] No repayments were
made by the respondent. It is not clear whether any demands for
payment were made.
[8] According to the
Cipro report dated 17 April 2013, the respondent has been finally
deregistered. For that reason Ms Brink, for
applicant, asked that the
matter be removed from the roll.
[9] The applicant deals
with public funds. It is not clear whether the applicant complied
with the provisions of the
Public Finance Management Act 10 of 1999
and in particular
section 38
thereof.
The following questions
arise:
Why did the applicant
take out a R2,2 million bond on 27 March 2007 over property which
had on 1 March 2007 been bought for R650 000,00
according to
the windeed report?
Why does the deponent to
the founding affidavit state (page 10, para 9.2) that the respondent
bought the property for R2,2 million
in 2009?
Where are the moveable
assets listed in annexure “A” to the notarial bond
(pages 55 – 56), and what is their
value?
The deponent to the
founding affidavit states that the respondent ceased trading in
2011. Why was this application only launched
in February 2013?
Were any demands ever
sent to respondent? According to the founding affidavit the
respondent has not paid any instalments to the
applicant.
Were the suretyships
mentioned in the loan agreement (MM4, page 57) ever signed? If yes,
what steps were taken to hold the sureties
liable?
The applicant attached a
Cipro report dated 5 August 2008 to the application. Should a more
recent report not have been attached?
According to the
“shareholders agreement” (MM5, page 62) the applicant is
apparently a shareholder of respondent.
Should this fact not have
been expressly stated in the application?
Why was summons not
issued and default judgment taken, with execution against the
mortgage bond rather than bringing a liquidation
application?
At what address was the
respondent conducting its business? According to the sheriff’s
return (page 107) the respondent’s
registered address is
vacant land.
The above points were not
fully explained in court. The question arises whether this matter
should not be investigated further.
ORDER
[10] 1. The matter is
removed from the roll.
2. The registrar is
requested to send a copy of this judgment and the contents of the
court file to the Director of Public Prosecutions,
Bloemfontein and
the Public Protector for possible further investigation.
____________
A. KRUGER, J
On
behalf of applicant: Ms L Brink
Instructed
by:
Symington
& De Kok
BLOEMFONTEIN
On
behalf of respondent: No appearance
/spieterse