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[2012] ZAGPPHC 86
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Excellent Petroleum (Pty) Ltd v Brent Oil (Pty) Ltd (13614/2009) [2012] ZAGPPHC 86; 2012 (5) SA 407 (GNP) (30 May 2012)
REPORTABLE
IN
THE NORTH GAUTENG HIGH COURT. PRETORIA /ES
CASE
NO: 13614/2009
DATE:30/05/2012
IN
THE MATTER BETWEEN:
EXCELLENT
PETROLEUM (PTY)
LTD
.....................................................................
PLAINTIFF
(IN
LIQUIDATION)
AND
BRENT
OIL (PTY)
LTD
..........................................................................................
DEFENDANT
JUDGMENT
PRINSLOO.
J
[1]
This is an action based on the provisions of section 341(2) of the
Previous Companies Act, Act 61 of 1973, as amended ("the
Previous Companies Act").
For
present purposes, this provision of the Previous Companies Act is
applicable, inasmuch as it involves the consequences of the
winding-up of the liquidated plaintiff company ("the plaintiff),
despite the enactment of the New Companies Act, Act 71 of
2008.
[2]
Before me, Mr Muller SC, assisted by Mr Heystek, appeared for the
plaintiff and Mr Vorster SC for the defendant.
Introduction
and background
[3]
Section 341 of the Previous Companies Act reads as follows:
"341.
Dispositions and share transfers after winding-up void. -
(1)...
(2)
every disposition of its property (including rights of action) by any
company being wound-up and unable to pay its debts made
after the
commencement of the winding-up shall be void unless the court
otherwise orders."
[4]
The plaintiff was finally wound-up by the Western Cape High Court on
18 July 2006. The date of the provisional winding-up order
was 31 May
2006.
[5]
The winding-up application was presented to the court, as intended by
the provisions of section 348 of the Previous Companies
Act, on 3
April 2006, so that the winding-up is deemed to have commenced on
that day.
[6]
In terms of a "list of common cause facts" handed up during
the trial as exhibit "B", by agreement between
the parties,
it is common cause that as at 3 April 2006 the plaintiff was
insolvent in that its liabilities exceeded its assets.
[7]
The liquidators, Messrs Glaum and Carolus, were duly appointed by the
Master of the High Court on 18 September 2006.
[8]
In terms of exhibit "B", it is also common cause that at
the time of its liquidation the plaintiff conducted the business
of
purchasing diesel and other petroleum products for the sale to
clients at a profit.
[9]
During the period 3 April 2006 to 8 June 2006 the plaintiff made
payments to the defendant in the aggregate sum of R4 091 974,66,
which payments constitute post winding-up payments. This is also
common cause.
[10]
The post winding-up payments made by the plaintiff to the defendant
related to the sale of diesel and illuminated paraffin
by the
defendant to the plaintiff pursuant to the provisions of an
agreement, annexure "C" to the plea ("annexure
'C'").
Annexure
"C" is a letter written on the defendant's letterhead on 12
September 2005 by the then sole director of the defendant
company, Mr
Brent Watts ("Watts") to one Mr Koos Valentyn ("Valentyn")
who was at all relevant times a "proprietor"
of the
plaintiff, although not a director, because of his status as an
unrehabilitated insolvent.
In
annexure "C", Watts refers to an earlier meeting he had had
with Valentyn, where the possibility was mooted that the
defendant
would supply the plaintiff with petroleum products. In annexure "C”
Watts offers Valentyn certain rebates
in cents per litre below the
list price, in respect of diesel, petrol and illuminated paraffin
("IP") which would be
applicable in the event of the offer
being accepted by Valentyn on behalf of the plaintiff. It is
stipulated in annexure "C"
that all orders would be "cash
before collection". The relevant banking details of the
defendant are supplied in annexure
"C".
[11]
It is also common cause, in terms of exhibit "B", that all
the consignments of diesel and IP to which the payments,
supra,
relate, were duly delivered by the defendant.
[12]
It is common cause that in the period 3 April 2006 to 8 June 2006 the
plaintiff was unable to pay its debts as contemplated
in section
341(2) of the Previous Companies Act ["section 341(2)").
[13]
In terms of exhibit "B", it is also common cause that "the
defendant bears the onus of establishing the facts
upon which it
relies for the purpose of persuading the court to order that the
payments made by the company (ie the plaintiff)
to the defendant
after the commencement of the company's winding-up are not void".
[14]
As appears from the brief analysis of the pleadings, hereunder, the
plaintiff (obviously through the initiative of the liquidators
suing
in the name of the liquidated plaintiff) claims a refund from the
defendant of the payments of R4 091 974,66 paid to the
defendant in
return for the deliveries of diesel and IP (no petrol was involved in
these transactions).
A
brief analysis of the pleadings
[15]
It is convenient to quote the last few paragraphs of the particulars
of claim and the prayers for illustrative purposes:
"6.
During the period 3 April 2006 to 8 June 2006, the company made
payments to the defendant in the aggregate sum of R4 091
974,66 ('the
post winding-up payments'). A schedule reflecting the date and amount
of each payment is annexed hereto marked 'B'.
(My note: details of
these payments are common cause;)
7.
The post winding-up payments each constitute a disposition by the
company of its property as contemplated in section 341(2) of
the
Companies Act.
8.
In the premises, each of the post winding-up payments is void.
9.
Accordingly, the defendant is liable to repay to the plaintiff an
amount equivalent to each of the post winding-up payments.
Wherefore
the plaintiff claims:
(a)
An order declaring that each of the post winding-up payments
reflected in a schedule annexed hereto marked 'B' is void in terms
of
section 341(2) of the Companies Act;
(b)
an order directing the defendant to pay to the plaintiff the sum of
R4 091 974,66; alternatively, to pay to the plaintiff an
amount equal
to the aggregate of the post winding-up payments which are declared
to be void in terms of prayer (a) here above;
(c)
interest in the sum referred to in prayer (b) here above at the rate
of 15,5% per annum a tempore morae;
(d)
further and/or alternative relief;
(e)
costs of suit"
[16]
The particulars of claim are dated 30 November 2008.
[17]
As to the plea, it is convenient, for illustrative purposes, to quote
paragraph 5 thereof:
"5.1
By reason of the following facts and circumstances the defendant
pleads that any payments made to it are valid.
5.2
The plaintiff, up to the time of its liquidation, conducted the
business of buying diesel and other petroleum products and selling
it
at a profit to its clients.
5.3
On or about 12 September 2005 and at Johannesburg, alternatively Cape
Town, the defendant, being a registered wholesaler of
petroleum
products and the plaintiff, represented by its managing director,
duly authorised, entered into an agreement (in terms
whereof the
defendant undertook to sell diesel and petrol to the plaintiff at
listed prices, less rebates, from time to time, as
ordered by the
plaintiff on a strictly cash sale basis. The purchase price of a
given order was required to be paid into a banking
account of the
defendant, either at Absa Bank, Standard Bank, Nedbank or FNB. No
product would be delivered to the plaintiff by
the defendant before
payment of the purchase price had been cleared by the respective
bank. The aforesaid terms arid conditions
are reflected in the
defendant's letter of 12 September 2005 to the plaintiff, a copy of
which is annexed hereto as annexure 'C'.
5.4
Subsequent to 12 September 2005 the defendant sold and supplied
petrol and diesel (my note: it is common cause that this should
read
'paraffin and diesel') to the plaintiff on many separate occasions in
the normal course of business on the terms and conditions
contained
in annexure 'C'.
5.5
Payments made by the plaintiff to the defendant relate to the sale of
diesel only [no petrol having been sold to the plaintiff],
which
occurred in the normal course of business and strictly in terms of
the terms and conditions contained in annexure 'C' (My
note: the
facts
show that a very small percentage of IP was also sold. Nothing turns
on this.)
5.6
During the period from 3 April 2006 to 8 June 2006 the defendant bore
no knowledge of the fact that an application had been
made in the
High Court, Cape of Good Hope Provincial Division, for the winding-up
of the plaintiff, and that such application was
pending.
5.7
In selling and supplying diesel to the plaintiff as aforesaid, the
defendant at all times did so in the normal course of business
and in
the bona fide belief that the plaintiff was conducting business in
solvent circumstances.
5.8
To the best of the defendant's knowledge and belief the plaintiff
retailed petrol and diesel in the open market and required
the
quantities of diesel supplied to it by the defendant to continue to
operate its business for profit.
5.9
The plaintiff utilised the proceeds of the sale of the diesel
supplied to it by the defendant during the period 3 April 2006
to 18
July 2006 (my note: this date was later corrected in further
particulars for trial and should read 8 June 2006) to finance
further
purchases from the defendant during the said period.
5.10
By reason of the aforegoing the defendant respectfully prays that the
honourable court make an order in terms of section 341(2)
of the
Companies Act validating the sales of diesel and the purchase prices
paid by the plaintiff in respect thereof to the defendant."
[18]
The defendant also prays for "an order validating the sale of
diesel and the purchase prices paid by the plaintiff to
the defendant
in respect thereof as reflected in annexure 'B'" and for,the
plaintiffs claims to be dismissed with costs.
The
evidence
[19]
The only witness who testified before me was Mr Dennis Graham
Shepherd ("Shepherd"). He was called by the onus bearing
defendant. The plaintiff called no witnesses.
[20]
Shepherd is the managing director of the retail division of the
defendant. During the relevant period, 2006 to 2007, he was
the
managing director of the Cape division of the defendant. He started
his association with the defendant during or about September
2005.
[21]
At an earlier stage, Shepherd and his fellow director, Watts, were
attached to the company Afgri. They prepared a business
plan
involving the distribution of fuels by Afgri. Afgri did not accept
the proposals and Watts left the company. On the advice
of Shepherd,
he started the fuel distribution business on his own. This happened
in 2003 with the assistance of Shepherd. In 2005,
Shepherd's contract
with Afgri came to an end, and he joined Watts in the defendant
business.
[22]
Shepherd testified about annexure "C". He gave evidence
about the contents thereof.
[23]
It is common .cause that Valentyn, at a certain stage which is not
relevant for present purposes, but well after September
2005 when
annexure "C" was written, accepted the proposal therein
contained, and the contract came into existence between
the plaintiff
and the defendant.
[24]
The plaintiff placed the first order with the defendant in January
2006.
[25]
Shepherd gave detailed evidence about the procedure that was followed
to supply the petroleum products to the plaintiff. They
worked on a
strictly cash basis. The cash had to be deposited in one of the
defendant's banking accounts before the delivery would
be made. The
plaintiff also collected the deliveries from the refinery on a "coc"
or "customer own collection"
basis.
[26]
The defendant also had customers who received products from the
defendant on credit. This was about 20% of the defendant's
clients.
In those cases, credit applications were completed, and the credit
worthiness of the customers was investigated. This
normally involved
some of the bigger role-players.
[27]
In the case of cash clients, such as the plaintiff, it was not
necessary to investigate the credit details of such a customer.
The
reason was that payments had to be made in advance before deliveries
would take place.
[28]
During the period January to June 2006, when the parties did business
with each other, Shepherd had very little contact with
Valentyn.
Contact was not necessary. The delivery and payment procedure was an
effective one.
[29]
The first time that Shepherd heard that the plaintiff had financial
problems was on 8 June 2006 when he received a phone call
from one Ms
Moodlia from the office of the liquidators. She telephoned him and
asked him whether he knew that the plaintiff had
been placed in
liquidation (this was of course shortly after the provisional
liquidation date but well before the final liquidation
date).
Shepherd said he did not know. Ms Moodlia was very considerate and
suggested that Shepherd should take legal advice because
he was not
allowed to trade with an insolvent company.
[30]
Shepherd immediately telephoned his attorney, who advised him to stop
deliveries immediately. This was done.
[31
] Shepherd testified that he had no prior knowledge of financial
problems on the part of the plaintiff. The defendant had a
number of
other "cash customers". The plaintiff was the only cash
customer that picked up its own deliveries ("customer
own
collection") from the refineries. This meant that the defendant
had even less contact with the plaintiff.
[32]
It turns out that Valentyn and his wife also floated another company,
Excellent Fuels (Pty) Ltd, during or about the time of
the winding-up
of the plaintiff. Shepherd knew nothing about this. He only started
doing business, through the defendant, with
Excellent Fuels months
later, in December 2006 on the same cash basis, and only learnt about
its existence at that time. Before
starting doing business with
Excellent Fuels, Shepherd also took legal advice, given the history
of the plaintiffs winding-up,
and was told that he could go ahead,
but had to find out whether Excellent Fuels had financial problems.
He enquired from the insurance
company, Coface, and was advised that
there was nothing on record about financial difficulties experienced
by Excellent Fuels.
Nevertheless, the defendant and Excellent Fuels
only did business for a very short period, a month or two, whereafter
it was decided
to terminate the arrangement.
[33]
Shepherd was subjected to intensive cross-examination.
[34]
The proposals contained in annexure "C", in September 2005,
were only accepted by Valentyn in January 2006 after
Shepherd
followed up the September 2005 proposals with him.
[35]
The witness did ask Valentyn why he was changing from one supplier to
another and the answer was that he could get better rebates
from the
defendant. He was never told that the plaintiff owed the previous
supplier any money.
[36]
The deliveries started in January 2006. That is also when Valentyn
accepted the terms and conditions and the "order procedures".
Watts did not have any contact with Valentyn at the time. Watts left
it to Shepherd to conclude the arrangement.
[37]
It was put to Shepherd that if he was satisfied with the plaintiffs
credit worthiness, he would have allowed deliveries to
be made on
credit. Shepherd answered that if he had been asked for credit it may
well have been given but it was not asked for.
[38]
The document bundle, exhibit "A", contains extracts of
Shepherd's evidence before an insolvency enquiry that was
held after
the winding-up. This is exhibits "A24" to "A52".
Shepherd was cross-examined about the contents
of his evidence on
that occasion. As I understand inscriptions at the bottom of each of
the transcribed pages, the evidence was
given on 2 October 2007, more
than four years before Shepherd testified before me. Shepherd was
examined about a few discrepancies
between his evidence before me and
what he told the enquiry. In my view, generally speaking, these
discrepancies were not of a
material nature, and adequately explained
by Shepherd. I do not consider it necessary to dwell on the details.
[39]
One of the central themes of the cross-examination involved the
change or purported change of the plaintiffs VAT number on
the
invoices. There was an indication that the VAT number of the
plaintiff may have been changed to the VAT number of another company
in the
Excellent group, Excellent Fuel Carriers (Pty) Ltd
which
is a company used to transport fuel. The defendant also did business
with this company on a limited basis. The VAT numbers
were not
considered to be of great importance, because fuel is "zero
rated" and does not attract VAT. Shepherd made enquiries
about
the use of VAT numbers from his auditor and was told that the VAT
numbers should be reflected, despite the "zero rating".
Any
confusion between the VAT numbers was ascribed by Shepherd to an
administrative oversight There was also some confusion about
the
registration number of the plaintiff company.
[40]
At one stage Valentyn asked Shepherd to change the company
registration number on the documentation. He referred the query
to
his financial department. He assumed that Valentyn had given the
wrong company number from the outset and now wanted to rectify
matters. He did not suspect that Valentyn wanted to replace the one
company with another one, but nevertheless requested the financial
department to investigate. The result of the investigation was that
the numbers initially used were correct On the advice of his
financial manager, it was decided and accepted that the registration
and VAT numbers initially used were correct and should be
persisted
with. He took this up with Valentyn who said that a lady in his
office had made a mistake and that the existing particulars
should be
retained. In the end, Shepherd was satisfied that the status quo
could remain. He did not suspect that anything sinister
was in the
offing. The defendant's employees on the ground also had no
information that anything untoward was going on. He said
"Ons
mense het ook niks in die veld opgetel dat iets snaaks aan die gang
is nie. Gewoonlik vind ons gou uit as iets snaaks
aangaan, ons het
nie so iets opgetel nie."
[41]
In cross-examination, it was put to Shepherd that a notarial bond
over the property of the plaintiff was already passed in
favour of a
previous supplier, Total, in January 2006, at the time when the
defendant started doing business with the plaintiff.
Shepherd was
unaware of this. He was similarly unaware of the fact that the
plaintiff had already ceded its book debts to Total
in September
2005. In this regard, I add that there is no indication before me
that Total, for example, ever took the trouble to
notify the
defendant, or other creditors, of the existence of this cession.
[42]
The witness never enquired where the funds came from that the
plaintiff used to pay for the deliveries of fuel received from
the
defendant. "Ek vra nooit so iets nie, ek het aanvaar dat die
geld wat hulle aanbied is goed."
[43]
Shepherd was asked whether he knew if the profits generated by the
plaintiff from selling the products delivered by the defendant
to the
plaintiff to the Iarter's customers were used to supplement the
coffers of the plaintiff or perhaps to spend for the benefit
of the
other company, Executive Fuels. Shepherd said that he had no idea and
did not even know about the existence of Executive
Fuels before
December 2006.
[44]
I did not get the impression that Shepherd was in any way discredited
during this intensive cross-examination. He struck me
as an honest
and reliable witness. I find nothing in his evidence which flies in
the face of what was pleaded in paragraph 5 of
the plea, supra.
Brief
remarks about the legal position
[45]
I have already quoted the provisions of section 341(2) to the effect
that "every disposition ... made after the commencement
of the
winding-up, shall be void unless the court otherwise orders".
[46]
It is clear that the court has a discretion to "otherwise
order".
[47]
In
Meskin, Henochsberg on the Companies Act
the provisions and
effect of section 341(2) are comprehensively dealt with from p676 to
p681.
As
to the court's discretion to "otherwise order" the
following is said by the learned author at p680:
"The
Court's discretion is controlled only by the general principles which
apply to every kind of judicial discretion: the
Court must decide
what would be just and fair in the circumstances of the case, bearing
in mind the purpose of the subsection ...
A disposition valid when
effected and only retrospectively invalidated by virtue of the
operation of the provisions of section
348 ... ordinarily will be
validated by the Court if it amounts to no more than the result of
the bona fide carrying on of the
company's operations in the ordinary
course ... but the Court ordinarily will refuse to validate a
disposition when it was made
eg with the object of securing an
advantage to a particular creditor in the winding-up which otherwise
he would not have enjoyed
or with the intention of giving a
particular creditor a preference..."
[48]
The learned authors Blackman et al, in their work Commentary on the
Companies Act deal with the subject at pp 14-46 to 14-61.
As
to the court's discretion to "order otherwise", the learned
authors say the
following
at 14-56:
"The
Court's discretion to validate a disposition is absolute and is
controlled only by the general principles which apply
to every kind
of judicial discretion. It is free to act according to the judge's
opinion of what is just and fair in each case.
In assessing what is
just and fair the Court must of necessity strike some balance upon
looking at what is fair vis-a-vis the applicant
as well as what is
fair vis-a-vis the creditors. Each case is dealt with on its own
facts and particular circumstances, special
regard being had to the
question of the good faith and honest intention of the persons
concerned.
All
the cases in this area indicate useful guidelines but they are no
more than that, for the Courts have had to consider the use
of the
validating power in a very wide variety of circumstances and will no
doubt in future have to consider further and different
combinations
of the possibilities inherent in commercial situations involving
insolvent companies. The different factual combinations
are, as a
matter of possibility, so varied that any attempt to state binding
rules would be highly likely to find the Courts concerned
with
factual situations for which the rules were inappropriate."
In
both
Blackman and Henochsberg
, one finds detailed discussions
on these "useful guidelines" and there are copious
references to both South African judgments
and judgments in other
jurisdictions.
I
shall later briefly revert to some of these guidelines.
In
Herrigei NO v Bon Roads Construction Co (Pty) Ltd and Another
1980
4 SA 669
(SWA) the void disposition which the plaintiff liquidator
sought to recover from the recipient was made the day after the
provisional
liquidation order was granted.
In
his very comprehensive judgment, repeatedly quoted in later
judgments, the learned judge, at 679, weighed up certain factors
in
favour of the first defendant, seeking to have the disposition
validated, and considerations against such validation. It was
only a
single disposition amounting to some R12 000,00.
The
learned judge found that there was no evidence of
mala fides
on
the part of the recipient. It also appeared that the payment was made
in the course of a business transaction between the liquidated
company and the recipient.
As
to the factors weighing against validation, the learned judge said
the following at679F-H:
"On
the other hand there are weighty considerations affecting the
exercise of the discretion in favour of the plaintiff. The
disposition was not made by Quickbeton in order to keep it afloat, as
it were; in other words, this case is not one of the so-called
'salvage cases'... (my note: these 'salvage cases' are generally
those in which the disposition had the effect of keeping the company
afloat, or where the company's coffers had been swollen as a result
of the disposition. In those cases, the courts generally appear
to
favour validation.) Furthermore, the disposition in this case clearly
diminished the amount of money standing to the credit
of
Quickbeton
at the time of its liquidation. Creditors are, therefore, clearly
prejudiced by this (void) disposition."
[50]
The learned judge then goes on to make the following remarks, at
679H-680D which, in my view, is of particular relevance for
present
purposes:
"Furthermore,
there is the following tact to be considered, namely that first
defendant admits that on 26 June 1978, when it
could still have
presented the cheque for R12 518,70 for payment before Quickbeton was
provisionally liquidated later that day,
and also subsequent to this
date, Quickbeton was already unable to pay its debts.
By virtue of
the provisional liquidation order having been issued on that date,
the said
concursus creditorum
was established,
and thereafter the claim of each creditor had to be dealt with as it
existed at the time the provisional liquidation
order was issued: see
Walker1 case supra at 160 and 166: Administrator.
Natal v
Masill Grant and Nell (Ptv) Ltd
fin liquidation)
1969 1 SA
660
(A) at 671G-H. First defendant, having received payment in full
of the debt owing to it by Quickbeton after Quickbeton was
provisionally
liquidated, was clearly preferred above other creditors
because the amount available for distribution by the liquidator
(plaintiff) amongst the general body of concurrent creditors -
including
first defendant - must have been quite appreciably reduced
and first defendant was, in effect converted from an ordinary
concurrent
creditor to a preferent creditor
. The fact that first
defendant received the payment in question after liquidation
supervened, that this payment was a disposition
which was, and is,
void and (most importantly) that it had, and has, the effect of
clearly preferring first defendant above the
general body of
creditors must, in my opinion, outweigh such considerations of
fairness and equity as exist in first defendant's
favour. To validate
such preferential payment simply because first defendant did not know
that it was being preferred when the
payment was made to it, would,
in my judgment, defeat the whole purpose of section 341 of the
Companies Act." (Emphasis added.)
[51]
It is clear, from the aforegoing, that the learned judge declined to
"order otherwise" and to validate the disposition.
He
ordered the first defendant to refund the disposition with interest a
tempore morae and costs.
[52]
In
Rousseau en Andere v Malan en 'n Ander
1989 2 SA 451
(CPD)
the recipients were also ordered to repay the void disposition.
The
plaintiffs, in their capacity as liquidators of the insolvent K
company, instituted two claims against the defendants for repayment
of certain monies. The first claim related to a sum of money which
was paid to the defendants, in their capacities as agents for
the K
company, as commission and repayment was claimed on the grounds that
it was made after the K company had already been placed
in
liquidation and that it was therefore void in terms of section
341(2).
The
second claim concerned a disposition for value in terms of
section 26
of the
Insolvency Act, 24 of 1936
. I will only refer to the first
claim. It was common cause that the insolvent company's scheme, with
the recipients of the disposition
as its agents, was an illegal one.
It was aimed at the distribution of a product known as "milk
culture" .and entailed
the sale to members of the public of
so-called "activators". It appears to have been a type of
pyramid scheme and it
was also conducted in contravention of the
Gambling Act 51 of 1965. The court found that the recipients as
agents of the company
participated in the illegal scheme.
[53]
At 459A-F, the following is said:
"Die
situasie word getoets nie alleen vanuit die oogpunt van die ontvanger
nie maar ook vanuit die oogpunt van die maatskappy
wat die
vervreemding gedoen het. Die volgende blyk uit die uitsprake:
(a)
Die vervreemding moes minstens bona fide en vanuit 'n sake oogpunt
redelik gewees het. In die gewone loop van sake sal dit by
meebring
dat die ontvanger 'n teenprestasie gelewer het vir die vervreemding -
(then follows a reference to an English case).
(b)
Bostaande elemente alleen is egter nog nie genoeg nie want die Howe
moet nie te maklik die basiese konsep van 'n concursus creditorum
versteur deur toe te laat dat een skuldeiser langs daardie weg
bevoordeel word bo ander skuldeisers nie — (here follows a
few
references including one to
Herrigel, supra
).
Dit
is gevolglik van kardinale belang om daarop te let of die
vervreemding redelikerwys daarop gemik was om die maatskappy se bates
te versterk, wat tot voordeel van al sy skuldeisers sal strek.
In
die huidige saak is daar na my mening geen basis vir die uitoefening
van die hof se diskresie nie, vir die volgende redes: wat
ook al die
bona fides
van die ontvangers (dit wil se die eisers) kon die
maatskappy nie bona fides gewees het nie. Die maatskappy was in
Oktober 1984
in extremis en sy binnekring het geweet daar is geen
werklike eindproduk of vooruitsig op solvensie nie. Die hele
onderneming was
onwettig en geen vervreemding deur die maatskappy om
die onwettigheid langer te laat voortduur (en nog meer mense te
ooreed om
aktiveerders te koop) kan deur die hof gebillik word nie.”
[54]
Of course, in the present case, there is no question of an illegal
scheme. The plaintiff and the defendant started doing business
in the
ordinary course already in January 2006. Petroleum products were sold
by the defendant to the plaintiff to the value of
millions of rand.
All the orders were duly delivered and paid for in advance. In the
relevant two month period alone, ie between
3 April 2006 and 8 June
2006, between the dates when the liquidation proceedings were deemed
to commence in terms of section 348
of the Previous Companies Act,
and when the . defendant immediately stopped further deliveries upon
being told for the first time
that a provisional liquidation order
had been granted against the plaintiff, business in excess of R4
million was concluded in
the normal course between the two parties.
The undisputed evidence of Shepherd is that the defendant had no
inkling whatsoever
of the plaintiffs financial difficulties or, for
that matter, of the liquidation proceedings having been launched and
a provisional
order having been granted a few days before the
information was conveyed to the defendant on 8 June 2006.
Having
listened to the impressive evidence of Shepherd, even when he was
subjected to intensive cross-examination, I am satisfied
that the
bona fides
of the defendant are beyond question, at least on the
probabilities.
The
plaintiff offered no evidence whatsoever. Indeed, I find myself
unable, on the probabilities, to conclude that this is not a
so-called "salvage" case in which the dispositions over a
number of months had the effect of keeping the plaintiff afloat,
or
where the company's coffers had been swollen as a result of the
disposition, in the words of the learned judge in
Herrigel
at
680D-F.
[55]
It is difficult to see how it can be argued that the monies now being
reclaimed were paid to the defendant to the detriment
of other
creditors: the monies were paid in the normal course of trade in
exchange for corresponding quantities of diesel and IP.
By all
accounts, even before he entered into the arrangement with the
defendant in January 2006, Valentyn had been trading on this
basis
for a considerable period of time. One of the common cause facts
listed in exhibit "B", provides that "at
the time of
its liquidation the company conducted the business of purchasing
diesel and other petroleum products for the sale to
clients at a
profit" (emphasis added). There was no evidence presented to me
to show that this normal commercial activity
was not aimed at
"keeping the plaintiff afloat and swelling its coffers",
even if it turned out that by April 2006 the
plaintiff was
commercially insolvent with its liabilities exceeding its assets.
Many struggling companies keep on trading in the
hope of "staying
afloat". In many instances, like the present, their trading
partners are not aware of their financial
distress. It also does not
seem to me that this particular trading activity between the
plaintiff and the defendant flew in the
face of the alleged cession
by the plaintiff of its book debts to Total at an earlier stage.
There were no "book debts"
incurred as far as the defendant
was concerned: the purchase price for the petroleum products had to
be paid before the products
were delivered for the plaintiff to sell
it to its clients at a profit In any event, the defendant was unaware
of the alleged cession
of book debts.
[56]
Against this background, it is convenient to quote passages from an
article written by Prof Blackman, whose Commentary on the
Companies
Act I have already referred to, in LAWSA First Reissue vol 4 part 3.
The relevant passages are to be found in para 174:
"The
central issue is whether the payments were made so as to allow the
company to carry on business for the ultimate benefit
of the
creditors. The element of benefit to the company will usually be
satisfied if the transaction relates to the need to continue
business
and earn income or save loss during the pendency of the application.
This
will usually involve a counter-performance from the recipient (my
note: see Rousseau, supra, at 459B-C) after the date of the
commencement of the liquidation. Thus, usually, if the payment is
made honestly and in the ordinary course of business for the
benefit
of the company for goods or services supplied to the company after
the commencement of the liquidation, a validation order
will
generally be made on the grounds that the delivery of goods or
performance of the services increased the assets of the company
....
Even if no benefit actually accrued in the sense that the company's
undertaking or assets were built up by the attacked transaction,
the
payments may still be validated if they were made in good faith for
the benefit of the company. In the case where some form
of commercial
assessment is required, this will not involve an examination of
minute detail such as the necessity or otherwise
to make particular
telephone calls; nor will it involve any element of reasoning by
hindsight in an endeavour to determine whether
the transactions
provided actual benefit to the creditors. But at the very least the
court should consider whether:
(a)
the company was carrying on business;
(b)
the continuation of the business might be considered to be in the
best interests of the creditors; and
(c)
the provision of the services by the appellant (in this case the
recipient of the payments) appeared, at the time of the transactions,
to be necessary or desirable for the continuation of business
operations. Knowledge at the time of the transaction by anyone of
the
parties that an application for the winding-up has been presented and
that a winding-up order may be made is not fatal to the
success of an
application for validation of a transaction otherwise rendered void
by the section ..."
These
remarks are made by the learned author with reference to the relevant
authorities, appearing in the footnotes from p267 onwards.
[57]
Inasmuch as the
bona fides,
or lack thereof, of the plaintiff
(presumably as represented by Valentyn and/or his wife) may be
relevant to this enquiry, there
is no evidence before me to show, at
least on the probabilities, that they did not attempt to keep the
plaintiff "afloat"
while trading with the defendant or, in
the process, to "swell its coffers". Shepherd was the only
witness. In the circumstances,
I consider this issue to be a neutral
one for present purposes.
[58]
In Lane NO v Olivier Transport
1997 1 SA 383
(CPD) a single payment
was made to the relevant recipient a day or two before the close
corporation was provisionally liquidated.
The learned judge decided
not to exercise his discretion in favour of validating the payment.
It appears from the judgment, at
387B, that the defendant (recipient)
did not plead any facts or factors for the exercise of the discretion
and its plea amounted
to a bare denial.
[59]
Of relevance, is the efforts,made by the learned judge to list at
386C-387B, a series of guidelines applicable when it comes
to the
exercise of this particular discretion. I will deal with them
briefly, without quoting the authorities relied upon by the
learned
judge barring to state that he also referred to
Herrigel
and
Rousseau
:
(a)
The discretion should be controlled only by the general principles
which apply to every kind of judicial discretion. I have
already
referred to this topic.
(b)
Each case must be dealt with on its own facts and particular
circumstances. This I have mentioned.
(c)
Special regard must be had to the question of good faith and the
honest intention of the persons concerned. This has been dealt
with.
(d)
The court must be free to act according to what it considers would be
just and fair in each case.
(e)The
court, in assessing the matter, must attempt to strike some balance
between what is fair vis-a-vis the applicant as well
as what is fair
vis-a-vis the creditors of the company in liquidation.
I
have also mentioned the question of the alleged cession of book debts
to Total. No details about creditors were presented to me
in
evidence. In fairness I must point out that counsel for the
plaintiff, in comprehensive heads of argument, made reference to
documentation to be found in the notices bundle (exhibit "Y")
showing the extent to which the assets of the plaintiff
were eclipsed
by its liabilities and suggesting that the plaintiffs financial
position deteriorated from December 2005 to April
2006. In the heads
of argument reference was also made to the fact that the Valentyns
caused Excellent Fuels (Pty) Ltd to be incorporated
shortly after the
section 345 letter was addressed to the plaintiff. It was submitted
in written heads of argument that Valentyn
had attempted to get the
defendant to "switch" company registration and VAT numbers
on its system in an effort to continue
trading under a different
guise in the face of impending liquidation. No evidence to support
these submissions was offered during
the trial. I have dealt with the
cross-examination of Shepherd on the last-mentioned subject I repeat
my earlier observation that
I am not persuaded, on the available
evidence, that the Valentyns did not, at least on the probabilities,
attempt to keep the plaintiff
afloat while trading with the
defendant-Returning to this requirement to attempt to strike some
balance between what is fair vis-d-vis
the applicant (here the
defendant) as well as what is fair vis-a-vis the creditors of the
company in liquidation, I consider it
necessary to look at the
position of the defendant: although it was not stated before me in so
many words, it must be fair to assume,
as I do, that the defendant
paid for the petroleum products before selling them to the plaintiff.
According to Shepherd's evidence,
the defendant's supplier, at the
time, was Afric Oil, a subsidiary of Engen. Assuming that the
products would have been sold at
a profit to the plaintiff, the
amount paid by the defendant to its supplier would presumably have
been something less than the
R4 091 000,00 received by the defendant
from the plaintiff for the petroleum sales forming the subject of
this dispute. To this
extent, the defendant will be out of pocket if
the payments were not to be validated by exercising the discretion in
its favour.
The petroleum products are lost to the defendant, and so
will the amount in excess of R4 million be which the defendant
received
from the plaintiff by way of counter-performance. The monies
paid by the defendant to its supplier for these products (presumably
something of the order of R4 million or slightly less) will represent
a clear commercial loss to the defendant. Added to this,
will be
legal expenses and interest I consider this to be a substantial loss
to an honest and bona fide trader, which complied
with its own
obligations flowing from this trading exercise, to the letter, (f)
The court should gauge whether the disposition
was made in the
ordinary course of the company's affairs or whether the disposition
was an improper alienation. On the available
evidence, as I have
indicated, it appears, on the probabilities, that the disposition was
made in the ordinary course of the plaintiffs
affairs.
(g)The
court should investigate whether the disposition was made to keep the
company afloat or augment its assets. I have, indicated
what my
finding in this regard is, on the available evidence.
(h)
The court should investigate whether the disposition was made to
secure an advantage to a particular creditor in the winding-up
which
otherwise he would riot have enjoyed or with the intention of giving
a particular creditor a preference and which latter
factor may be
decisive.
There
is no evidence to persuade me to come to such a conclusion. The
possibility of this
having happened must be remote, in my view, in
the face of a finding that the payments were made in the normal
course of business.
(i)
The court should enquire whether the recipient of the disposition was
unaware of the filing of the application for winding-up
or of the
fact that the company was in financial difficulties. This was clearly
the case, given the undisputed evidence of Shepherd.
(j)
Little weight should be attached to the hardship which will be
suffered by the applicant (here the recipient) if the payment
is not
validated, the purpose of the subsection being to minimise hardship
to the body of creditors generally. I have dealt with
the perceived
hardship to other creditors which may have been caused by the
payments made by the plaintiff to the defendant. I
will deal
hereunder with the position of the creditors which may have been
caused by the payments made by the plaintiff to the
defendant. I will
deal hereunder with the position of the
concursus creditorum
which was created upon the granting of the provisional liquidation
order.
(k)
The payment should not be looked upon as an isolated transaction if
in fact it formed part of a series of transactions. In this
case it
was a series of transactions stretching from January 2006.
(1)
Generally a court will refuse to validate a disposition by a company
when it occurs after the winding-up has commenced unless
the
liquidator (duly authorised) consents accordingly and there is a
benefit to the company or its creditors. Here the learned
judge
refers to
Herrigel
at 680. I have already quoted the passage
from
Herrigel
at 679H-680D. I have emphasised certain extracts
from that passage of the
Herrigel
judgment It seems to me that
what the learned judge in
Herrigel
had in mind concerned
payments made after the liquidation order was granted and not
payments (like here) made after the winding-up
was deemed to commence
in April 2006 in terms of the provisions of section 348 of the
Previous Companies Act. The passage from
Administrator, Natal,
quoted by the learned judge in
Herrigel
on the subject, also
concerns the situation upon the establishment of the
concursus
creditorum
. As already quoted, this relevant passage can
be found in Administrator, Natal, supra, at 671G-H where the learned
judge also confirmed
the trite principle that upon the liquidation of
that company the
concursus creditorum
was established.
I
will revert, hereunder, to the argument advanced on behalf of the
plaintiff that a different approach is required in respect of
payments made to the defendant before the provisional liquidation
order was granted on 31 May 2006, and those payments made between
the
period 31 May 2006 and 8 June 2006 when deliveries were stopped.
Should
the payments be validated by "ordering otherwise"?
[60]
I have dealt with what the learned authors,
Henochsberg
and
Blackman
, have to say about the nature of the discretion to be
exercised in this regard. It
"is
controlled only by the general principles which apply to every kind
of judicial discretion: the court must decide what
would be just and
fair in the circumstances of the case, bearing in mind the purpose of
the subsection and "a disposition
valid when effected and only
retrospectively invalidated by virtue of the operation of the
provisions of section 348 ... ordinarily
will be validated by the
court if it amounts to no more than the result of the bona fide
carrying on of the company's operations
in the ordinary course
Henochsberg
at p680.
[61]
I have dealt with the applicable guidelines. For the reasons
mentioned, it appears that the application of those guidelines
would
militate, on balance, in favour of a decision to validate the
payments. The principles, as I understand them, have been applied
to
the facts of this case. I will not embark upon unnecessary
repetition.
[62]
In the result, I have concluded that the payments made by the
plaintiff to the defendant, barring those made after 31 May 2006
when
the provisional liquidation order was granted and the concursus
creditorum established, ought to be validated.
The
dispositions made after 31 May 2006 when the provisional liquidation
order was granted up to 8 June 2006 when the defendant
ceased trading
with the plaintiff
[63]
It is common cause that the aggregate value of these payments made to
the defendant in this period is R422 432,00.
[64]
In Blackman, supra, the following is said at 14-55:
"It
would seem that the position is as follows. A company is being
'wound-up' on the grant of a provisional order of liquidation
(my
note: for this proposition, the authors rely on what was said in
Secretary for Customs & Excise v Millman, NO
1975 3 SA 544
(A) at
551-552. In that judgment, reference is also made to Walker v Syfret,
NO
1911 AD 141
where it was held at pi60 that: 'the effect of a
winding-up order is to establish a
concursus creditorum
, and
nothing can thereafter be allowed to be done by any of the creditors
to alter the rights of the other creditors' and at p166
INNES, JA
said: The sequestration order crystalises the insolvent's position;
the hand of the law is laid upon the estate, and
at once the rights
of the general body of creditors have to be taken into consideration.
No transaction can thereafter be entered
into with regard to estate
matters by a single creditor to the prejudice of the general body.
The claim of each creditor must be
dealt with as it existed at the
issue of the order.') Once that stage is reached, the court (although
it can ratify a disposition
made before the winding-up order) no
longer has the power in terms of section 341(2) to authorise a
company to make a disposition
of its property ... after a winding-up
order (whether provisional or final) has been made, the court cannot
grant an order for
specific performance; for, on the making of the
winding-up order, a
concursus creditorum
is established and
the creditor loses his right to specific performance (the provisions
of section 359 are therefore not relevant)
... The court has no power
to permit a company being wound-up to make dispositions of its
assets. After a winding-up order has
been granted the court may
validate dispositions made before the provisional winding-up order
was granted, but cannot validate
dispositions made after that order."
[65]
I was not referred to any decided cases exactly on this point. In
International Shipping Co (Pty) Ltd v Affinity (Pry) Ltd
1983 1 SA 79
(C) the question seems to have been left open, although in a
different context, at 86 to 87.
[66]
Dealing with International Shipping, Henochsberg, at p677, says the
following;
"The
court refused to permit the creditor to do so on the basis, broadly
speaking, that no good reason existed for putting
it in a better
position in the winding-up than other unsecured creditors. The court
found it unnecessary to decide whether the
discretion exercised by it
was under section 341(2) or the general law; it is respectfully
submitted, indeed, that as a provisional
winding-up order already
existed the court had no discretion at all to allow the creditor to
take possession of the property as
upon the grant of such order a
coricursus creditorum
was instituted ..."
[67]
I am alive to the fact that in the text of section 341(2) no
distinction is made, for purposes of validation, between payments
made before the granting of the liquidation order, and those made
thereafter.
[68]
I have also pointed out what was said in Lane at 387B and in
Herrigel
at 680 on this particular subject, dealing with the state of
affairs once the
concursus creditorum
has been established.
[69]
In my respectful view, the situation is well summarised, and placed
beyond doubt, by what was stated by INNES, J A,
supra, in Walker v
Syfret NO
at p166.
[70]
It was against this background that it was argued before me on behalf
of the plaintiff that these particular payments post
31 May 2006
cannot be validated.
[71]
In my view, these submissions are correct, and ought to be upheld. An
alternative argument offered on behalf of the defendant
[72]
Mr Vorster offered an alternative argument aimed at persuading me to
refrain from ordering the defendant to refund the payments
even if
their validation were to be refused.
[73]
Given the view I have taken already on the subject, this alternative
argument only remains relevant with regard to the post
provisional
liquidation order payments.
[74]
I do not propose dealing at length with this argument, although I
find it attractive in some respects.
[75]
The argument, briefly summarised, amounts to the following: it is
trite that, as a general proposition, the mere voidness of
a
disposition or of the
causa
of such disposition does not
create a legal obligation on the recipient to restore what was
received. Money in the hands of a recipient
such as the defendant
became its property by
confusio
and cannot be recovered by a
vindicatory action -
Stern and RitskinNO vAppleson
1951 3 SA
800
(W) at 810H-811H as approved
MacKay v Fey NO & Another
2006 3 SA 182
(SCA) at 186J-187A.
[76]
In Herrigel the following was said at 680H:
"It
is true that section 341(2) says nothing about the recovery of the
void disposition but merely avoids the disposition itself.
The
invalidation of the disposition of the company's property and the
recovery of the property disposed of are logically two distinct
matters; ..."
At
681B-D the following is said in
Herrigel
:
"In
my judgment plaintiff is entitled to the repayment of the void
disposition, this being the relief claimed by him in this
action, and
such repayment must be ordered against first defendant. Inasmuch as I
have found that the disposition was and is void
and have not, in the
exercise of my discretion in terms of section 341(2) of the Companies
Act 'ordered otherwise', it, in my view,
follows as a necessary
corollary that the order prayed for in the action for the repayment
of the void disposition must be made."
[77]
Mr Vorster also relied on the following passage from
Sackstein NO
v Proudfoot SA (Pty)
Ltd
2003 4 SA 348
(SCA) at 359F-J;
"There
is authority for the view that impeaching a transaction and the
subsequent vindication of the property concerned are
two distinct
steps in the process of recovery of the relevant assets.
In
the matter of In re Leslie Engineers Co Ltd (in liquidation) [1976] I
WLR 292 Oliver J, in the Chancery Division, had to deal
with an
application by a liquidator to have declared void two payments made
by the company after the commencement of the winding-up
of the
company. Section 227 of the English Companies Act of 1948 at the time
read as follows:
'In
a winding-up by the court, any disposition of the property of the
company, including things in action, and any transfer of shares,
or
alteration in the status of members of the company, made after the
commencement of the winding-up, shall, unless the court otherwise
orders, be void.'
On
behalf of the liquidator it was argued that if the disposition is
voided, the liquidator acquires the right to recover the property.
Oliver J at 298B-D found this argument too wide:
"Now,
it must be remembered that the invalidation of the disposition of the
company's property and the recovery of the property
disposed of, are
two logically distinct matters. Section 227 says nothing about
recovery; it merely avoids dispositions ... What
is the appropriate
remedy in respect of the invalidated disposition is a matter not
regulated by the statute and that has to be
determined by the general
law...'"
[78]
In
Sackstein
, at 359/-360C, the learned Judge of Appeal then
goes on immediately with what was said in
Herrigel
on the
subject:
"In
Herrige
l ... Lichtenberg J at 678A-B pointed out that section
227 of the English Companies Act has its counter-part in section 341
of the
South African Companies Act. Similar to the English provision,
section 341(2) of our Companies- Act gives the court a discretion
not
to declare a disposition made after the commencement of winding-up
proceedings void. On the facts the learned judge refused
to exercise
his discretion not to invalidate the 'void' disposition (at 680G).
The question then arose: can the first defendant
who had received the
benefit of the void payment by the company in liquidation, be ordered
to repay Same to the liquidator? It
is in this connection that the
learned judge following Leslie Engineers remarked, at 680H, that
section 341(2) of the Companies
Act says nothing about the recovery
of the void disposition but merely avoids the disposition itself.
That is, as I have pointed
out, also the position under section 227
of the English Companies Act."
[79]
The learned Judge of Appeal, with respect, appears to have overlooked
the remarks of the learned Judge in
Herrigel,
at 681C-E, which
I have quoted, that "it follows as a necessary corollary that
the order prayed for in the action for the
repayment of the void
disposition must be made".
The
learned Judge of Appeal in
Sackstein did
not appear to take
this issue any further or make a firm pronouncement thereon. Assuming
that he did take note of the fact that
the learned judge in
Herrigel
regarded it as a "necessary corollary"
that
the void disposition can be ordered to be refunded, it is clear that
the learned Judge of Appeal in Sackstein did not criticise
that
approach.
[80]
F add that in Leslie Engineers, supra, evidently relied on with
approval by the learned Judge of Appeal in
Sackstein
, the
recipient of the void disposition was also ordered to make repayment.
The same, of course, happened in
Herrigel
, Rousseau and Lane.
In
Blackman et al, supra, at 14-15, the following is said oh the
subject:
"The
section does not provide for recovery of the property. It merely
renders the disposition void, and gives the court a discretionary
power to order otherwise, ie to validate the disposition. Thus, the
appropriate remedy in respect of the invalidated disposition
is a
matter not regulated by the section and has to be determined by the
general law.
Where
the disposition has been made by a cheque drawn on the company's bank
account, whether in credit or overdrawn, the amount
must be recovered
from the payee and cannot be recovered from the bank in terms of
section 341."
The
learned authors rely on Leslie Engineers, supra, in the course of
this discussion.
At
14-61, relying on
Herrigel
, they simply say the following:
'Although
the court is not expressly empowered to make an order declaring a
disposition to be void, it may make such a declaratory
order. The
court will order a person who has received a void disposition to
repay it. The court has the power to order him to pay
interest a
temporae morae
. It does not however follow from the invalidation
of a disposition of a company's property, such as money standing to
its credit
at a bank, that the property may be recovered. It may have
become inextricably mingled with an innocent recipient's property,"
For
this latter proposition, the authors also rely on what was held in
Leslie Engineers.
[81]
Mr Vorster, in his comprehensive heads of argument,
inter alia
,
relied on the following passage in Leslie Engineers, already quoted:
"What
is the appropriate remedy in respect of the invalidated disposition
is a matter not regulated by the statute and that
has to be
determined by the general law..."
It
was argued by Mr Vorster that the "general law" there
referred to, would in' South African parlance be the common law
and
more specifically the law relating to unjustified enrichment. In the
present case, the plaintiff has made no averments in the
particulars
of claim suggesting either that the defendant was unjustifiably
enriched
or that the plaintiff was unjustifiably impoverished by the payments
in question. This is not surprising, so the argument
goes, as it is
clear on the evidence that the plaintiff received full
counter-performance for the payments made by it in the form
of fuel
delivered to it and presumably on sold by it. Consequently, so the
argument goes, even if validation were to be refused,
the prayer for
repayment should similarly be refused.
[82]
Although I find this argument of Mr Vorster attractive in some
respects, I am not prepared to uphold it in the present case.
Firstly, the defence, such as it may be, was not pleaded. Secondly,
the approach that repayment must necessarily follow a refusal
to
validate, adopted by a series of eminent authorities, as I
illustrated, and not evidently criticised in
Sackstein
where
Herrigel
was under consideration, has not been shown, in my view,
to be so clearly wrong that I ought to deviate therefrom. Thirdly, Mr
Vorster's
argument about the absence of unjustified enrichment, is in
my view not applicable to the question as to whether or not payments
made after the liquidation order has been granted should be
validated. Unjustified enrichment does not, in my view, enter into
the equation at the post liquidation order stage. Such payments
simply fly in the face of the principles governing the law of
insolvency. In the celebrated words "of INNES, JA, supra, "...
the sequestration order crystalises the insolvent's position;
the
hand of the law is laid upon the estate, and at once the rights of
the general body of creditors have to be taken into consideration.
No
transaction can thereafter be entered into with regard to estate
matters by a single creditor to the prejudice of the general
body
...”
[83]
In the result, I am not prepared to uphold Mr Vorster's alternative
argument in this particular case, given the conclusions
I have
arrived at.
The
costs
[84]
The payments for the period 31 May 2006 until 8 June 2006, which I
will decline to validate, for the reasons mentioned, amount
to R422
432,00 as I have indicated.
[85]
This amount equals only about 10% of the claim of R4 091 974,66, An
order directing the defendant to repay the lesser amount,
will riot,
in my view, amount to substantial success for the plaintiff. Payment
of the lesser amount does, however, fall inside
the ambit of the
claim as formulated and the argument as presented to me. I consider
that it will be just and equitable to award
only a percentage of the
plaintiffs costs in the circumstances.
The
application in terms of rule 21(4)
[86]
It appears that the plaintiff moved an application in terms of rule
21(4) when admissions as to the details of all the dispositions
made
could not be secured from the defendant in terms of a request for
particulars for trial. When agreement as to the figures
was
subsequently reached, it was not necessary to pursue the application.
It was argued on behalf of the defendant that it was
entitled at
first to deny details of the dispositions. There was no room for an
application to compel in terms of rule 21(4). The
payments were later
agreed upon.
I
was not fully addressed as to all the details relating to this
application, such as the chronological sequence of events and whether
or not the initial refusal to make the admissions was reasonable in
the circumstances. In the result, I am of the view that it
would be
appropriate to order each party to pay its own costs relating to this
application.
[87]
As to costs, generally, I am satisfied that the complexity of the
case justifies the employment of two counsel.
The
mora rate of interest
[88]
The parties were in agreement before me that interest should run on
the amounts which the defendant may be directed to repay
from 20 May
2008 (fourteen days after the date of demand) at the Prescribed Rate
of Interest of 15,5% per annum.
The
order
[89]
I make the following order:
1.
In terms of the provisions of section 341(2) of the Previous
Companies Act, Act 61 of 1973, the sales of diesel and the purchase
prices paid by the plaintiff to the defendant in respect thereof as
reflected in annexure "B" to the particulars of claim
and
prior to 31 May 2006, are validated.
2.
The payments made by the plaintiff to the defendant in respect of the
purchases mentioned in 1 above between 31 May 2006 and
8 June 2006
are declared to be void in terms of the provisions of section 341(2)
of the Companies Act aforementioned.
3.
The defendant is directed to forthwith pay to the plaintiff the sum
of R422 432,00.
4.
The defendant is directed to pay interest on the aforesaid sum at
the rate of 15,5% per annum calculated from 20 May 2008 to
date of
payment.
5.
The defendant is ordered to pay 20% of the plaintiffs costs which
will include the costs flowing from the employment of two counsel.
6.
In respect of the application in terms of rule 21(4), each party is
ordered to pay its own costs.
WRC
PRINSLOO
JUDGE
OF THE NORTH GAUTENG HIGH COURT
13614-2009
HEARD
ON: 29 FEBRUARY 2012 TO 1 MARCH 2012
FOR
THE PLAINTIFF: J MULLER SC ASSISTED BY A M HEYSTEK.
INSTRUCTED
BY:
KAPDITWALA
LAW FIRM
FOR
THE DEFENDANT: JP VOSTER SC
INSTRUCTED
BY: WESSELS & VAN ZYL INC