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[2013] ZAFSHC 206
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Pearl Construction (Pty) Ltd v Seabo Construction, Plumbing And Business Ventures cc (1597/2013) [2013] ZAFSHC 206 (19 November 2013)
IN THE HIGH COURT OF
SOUTH AFRICA
FREE STATE DIVISION,
BLOEMFONTEIN
....................................................................................................................................................................................................
Case No : 1597/2013
In the matter between:
PEARL CONSTRUCTION
(PTY) LTD
......................................
Applicant
and
SEABO CONSTRUCTION,
PLUMBING AND
BUSINESS VENTURES CC
.................................................
Respondent
HEARD ON: 15 NOVEMBER
2013
JUDGMENT BY: DAFFUE, J
DELIVERED ON: 19
NOVEMBER 2013
[1] This is an
application for leave to appeal against the judgment of Thamage AJ
delivered on 26 September 2013 in terms whereof
applicant’s
application for the winding-up of respondent was dismissed with
costs. The application was referred to me to
consider in accordance
with the provisions of rule 49(1)(e) as the learned acting judge’s
acting stint came to an end at
the end of the third term.
[2] I am acutely aware
that I don’t sit as a court of appeal in this matter, but
confirm that I have requested counsel for
the parties to address me
on the issue as to whether Thamage AJ was correct in finding that the
correct legal
persona
was cited as respondent. It is common
cause that a close corporation known as Seabo Construction, Plumbing
& Business Ventures
CC contracted with applicant, but that this
close corporation was converted into a company on 11 July 2012 and
before the winding-up
proceedings were instituted. Section 2 of
Schedule 2 of the
Companies Act, 71 of 2008
provides that any
enforcement procedures that could have been commenced with in respect
of the close corporation in terms of the
Close Corporations Act, 1984
for conduct occurring before date of registration of the conversion,
may be brought against the company on the same basis as if
the
conversation had not occurred. It is also true that the juristic
person that existed as a close corporation before such conversion
continues to exist as a juristic person, albeit in the form of a
company. In terms of
s 1(4)(a)
of the Schedule the Commission must
cancel the registration of the close corporation upon conversion. The
close corporation has
been cited as respondent instead of the
company.
Ex facie
the judgment of Thamage AJ no application
for substitution was made and there was also no such application when
counsel addressed
arguments to me in the application for leave to
appeal. Although I am of the view that Thamage AJ should have upheld
the point
taken on behalf of respondent, it is immaterial at this
stage insofar as he dismissed the winding-up application on different
grounds.
Therefore these comments are merely made in passing.
[3] The real bone of
contention in the application for leave to appeal is whether Thamage
AJ was correct in finding that applicant’s
claim was
bona
fide
disputed on reasonable grounds. Adv Zietsman SC, acting for
applicant, argued that it was clear that applicant has a valid claim
against respondent, even though there is a dispute as to the exact
amount due and payable. He submitted that although the total
amount
of applicant’s claim in the amount of R180 976.29 is in
dispute, it is apparent that only certain amounts are
really in
dispute and if these are deducted it will still lead us to the
inevitable conclusion that respondent admitted reliability
in the
amounts of R40 296.06 in respect of air-conditioning works and
R45 285.40 in respect of electrical works. In his
argument Adv
Snellenburg, on behalf of respondent, submitted that respondent had
indeed shown that applicant’s claim was
bona fide
disputed on reasonable grounds. He relied on two submissions in this
regard, first, the fact that as he put it, applicant tried
to make
out a case in its replying affidavit with particular reference to the
allegations in paragraph 1 on pages 113 – 116
thereof to show
that respondent was indebted to applicant, which applicant was not
entitled to do as it had to make out its case
in its founding
affidavit, and secondly, respondent relies on the confirmatory
affidavit of Mr Mapoe, a qualified quantity surveyor
in the employ of
the Department of Public Works, appointed for the particular project,
to the effect that all amounts that were
due, owing and payable by
respondent to applicant had indeed been paid by way of direct
payments from respondent or by way of payments
by the Departement of
Public Works made in terms of a cession.
[4] It is not for the
court hearing the winding-up application to come to a final
conclusion as to whether respondent indeed owes
certain amounts to
applicant or not. The test is merely whether sufficient facts have
been put forward to show that the debt is
bona fide
disputed
on reasonable grounds.
[5] If an applicant’s
claim is
bona fide
disputed by the respondent on reasonable
grounds, an application for a sequestration or winding-up order
cannot succeed. In terms
of the so-called
Badenhorst
Rule
(
Badenhorst v Northern Construction Enterprises (Pty) Ltd
1956 (2) SA 346
(T) at 347H – 348C) accepted by the Appeal
Court in
Kalil v Decotex (Pty) Ltd and Another
1988 (1)
SA 943
(AD) at 980C, the respondent must show the existence of a
bona
fide
dispute on reasonable grounds. Corbett JA (as he then was)
puts it as follows in
Kalil v Decotex
at 980B –
D:
“
Consequently,
where the respondent shows on a balance of probability that its
indebtedness to the applicant is disputed on
bona
fide
and
reasonable grounds, the Court will refuse a winding-up order. The
onus
on
the
respondent
is not to show that it is not indebted to the applicant
:
it is merely to show that the indebtedness is disputed on
bona
fide
and
reasonable grounds.”
(emphasis
added)
[6]
Brand, J (as he then was) summarised the approach to be adopted in
applications for provisional winding-up where a respondent
disputes
its liability to the applicant, with reliance on the guidelines laid
down in
Kalil v Decotex
loc cit
and I quote:
“
Guidelines
as to how factual disputes should be approached in an application
such as the present were laid down by the Appellate
Division in
Kalil
v Decotex (Pty) Ltd and Another
1988 (1) SA 943
(A). According to these
guidelines a distinction is to be drawn between disputes regarding
the respondent’s liability to
the applicant and other disputes.
Regarding the latter, the test is whether the balance of
probabilities favours the applicant’s
version on the papers. If
so, a provisional order will usually be granted. If not, the
application will either be refused or the
dispute referred for the
hearing of oral evidence, depending on,
inter
alia
, the strength of the respondent’s
case and the prospects of
viva voce
evidence tipping the scales in favour of
the applicant.
With reference to
disputes regarding the respondent’s indebtedness, the test is
whether it appeared on the papers that the
applicant’s claim is
disputed by respondent on reasonable and
bona
fide
grounds.
In this event it is not sufficient that the applicant has made out a
case on the probabilities. The stated exception regarding
disputes
about an applicant’s claim thus cuts across the approach to
factual disputes in general
. “
(emphasis
added)
See
Payslip Investment Holdings CC v Y2K Tec Ltd
2001 (4)
SA 781
(C) at 783 G – I.
[7] The following dictum
of Thring J in
Hülse-Reutter and Another v Heg Consulting
Enterprises (Pty) Ltd (Lane and Fey NNO Intervening)
1998 (2)
SA 208
(C) at 219F – 220A demonstrates the current position of
the law in my respectful submission:
“
Apart from
the fact that they dispute the applicants' claims, and do so
bona
fide
,
which is now common cause, what they must establish is no more and no
less than that the grounds on which they do so are reasonable.
They
do not have to establish, even on the probabilities, that the
company, under their direction, will, as a matter of fact, succeed
in
any action which might be brought against it by the applicants to
enforce their disputed claims.
They
do not, in this matter, have to prove the company's defence in any
such proceedings. All that they have to satisfy me of is
that the
grounds which they advance for their and the company's disputing
these claims are not unreasonable.
To do that,
I do not think that it is necessary for them to adduce on affidavit,
or otherwise, the actual evidence on which
they would rely at
such a trial...
It
seems to me to be sufficient for the trustees in the present
application, as long as they do so
bona
fide
,
to allege facts which, if proved at a trial, would constitute a good
defence to the claims made against the company.”
(emphasis
added)
[8] The issue was more
recently considered again by Griesel J in
Investec Bank Ltd v
Lewis
2002 (2) SA 111
(C) insofar as a defence was raised
that the bank’s restructuring of a financial transaction
prejudiced the sureties and
the respondent in the sequestration
proceedings in particular. The learned judge was not prepared to
grant a provisional sequestration
order and remarked
inter alia
as
follows at 119F - H:
“…
there
appears to be merit in the argument on behalf of the respondents,
namely that Investec, in breach of its contractual obligations,
acted
in a way that prejudiced the sureties. However, bearing in mind the
test to be applied at this stage, it is both unnecessary
and
undesirable to come to any final conclusion as to the legal validity
of the defence……It is sufficient to find
…that
the debt … is disputed on
bona
fide
and
reasonable grounds.”
[9] It
is also apposite to refer to the following
dictum
of the Full Bench in
Helderberg
Laboratories CC and Others v Sola Technologies (Pty) Ltd
2008
(2) SA 627
(C)
at para [23] p 634 F:
“
[23] I am in
respectful agreement with the aforesaid dictum of Milne J, which has
been approved by the Appellate Division in
Kalil
v Decotex (Pty) Ltd and Another
(
supra
)
at 980E. It therefore appears to me that it would be preferable to
refer to this duty, of a respondent to show that the alleged
debt is
disputed on bona fide and reasonable grounds, as an evidential burden
and not an onus. Be that as it may, it should be
borne in mind, as
explained by Thring J in the Hülse-Reutter case (
supra
)
at 219F - G, that a respondent merely has to satisfy the court that
the grounds which are advanced for its disputing the debt
are not
unreasonable.
The
learned judge further emphasised that it is not necessary for the
respondent to adduce on affidavit, or otherwise, the actual
evidence
on which it would rely at a trial. It is sufficient if the respondent
bona fide alleges facts which, if proved at a trial,
would constitute
a good defence to the claim made against it.”
(emphasis
added)
[10] I have considered Mr
Zietsman’s arguments, but I am unable to find that respondent
has unequivocally admitted its indebtedness
in respect of the above
two amounts. In order to arrive at the conclusion to which Mr
Zietsman has arrived, one has to rely on
inferential reasoning based
on the applicant’s invoices and handwritten notes thereon,
together with the explanation set
out in the replying affidavit and
the annexures thereto which annexures cannot be regarded as evidence
as these have not been confirmed
under oath as true and correct. I
have followed Mr Zietsman’s explanation how to arrive at the
amounts allegedly due and
payable and although I have my doubt as to
whether respondent is correct in averring that nothing is due and
payable by it to applicant
that is not the test to be applied in
winding-up applications.
[11] I am not convinced
that there is a reasonable possibility that another court may come to
a different conclusion as Thamage
AJ. In order to establish its
locus
standi
to bring the application, applicant did not show, on a
balance of probabilities, that it is a creditor insofar as the
alleged debt
is disputed on
bona fide
and reasonable grounds.
[12] Therefore the
following order is granted:
1. The application for
leave to appeal is dismissed with costs.
______________
J.P. DAFFUE, J
On behalf of applicant:
Adv P. Zietsman SC
Instructed by:
Lovius Block
BLOEMFONTEIN
On behalf of respondent:
Adv N. Snellenburg
Instructed by:
Honey Attorneys
BLOEMFONTEIN
/spieterse