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[2012] ZAGPPHC 325
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Epitaph Productions t/a Legend Productions v Legend Golf & Safari Resort (Pty) Ltd (15636/2012) [2012] ZAGPPHC 325 (30 November 2012)
NOT
REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
(NORTH
GAUTENG, PRETORIA)
Case
No.: 15636/2012
DATE:30/11/2012
In
the matter between:
EPITAPH
PRODUCTIONS
t/a
LEGEND
PRODUCTIONS
......................................................................
APPLICANT
and
LEGEND
GOLF & SAFARI RESORT (PTY)
LTD
.......................................
RESPONDENT
JUDGMENT
HIEMSTRA
AJ
[1]
The applicant applies for the provisional winding-up of the
respondent on the ground of the deeming provision in s345 of the
Companies Act, 61 of 1973 (the Act) that it is unable to pay its
debts. On 17 January 2011 the applicant caused a letter in terms
of
s345 of the Act
to
be served on the respondent, claiming that the respondent is indebted
to the applicant in the sum of R690 000 in respect of damages
suffered by the applicant as a result of the respondent’s
alleged breach of a contract between them. The respondent failed
to
respond within the three weeks as stipulated in subsection
(1)(a)(ii). The respondent denies knowledge of the letter. In view
of
my findings on other aspects of the applicant’s claims, it is
not necessary to resolve this issue.
[2]
The applicant alleges that the parties entered into a contract in
terms of which the applicant would for a period of five years
arrange
and produce an annual weekend golf day and music festival, styled the
“Bosveld Makiti’, to be held at the Legend
Golf and
Safari Resort, owned by the respondent. The applicant claims that it
had contracted with several well- known performing
artists to perform
at the first event which was to be held on the weekend of 30
September to 1 October 2011. It had paid several
of these artists in
advance in terms of the agreements with them and had incurred other
costs in relation to the event. On or about
14 September 2011, the
respondent cancelled the event, leaving the applicant with financial
obligations and wasted expenditure
to the tune of R690 000.
[3]
The respondent vigorously denies that it is indebted to the applicant
in any amount and claims that no contract had come into
existence
between the parties that it could have breached, causing the
applicant to suffer damages. Apart from the respondent’s
denials in its answering affidavit, the respondent’s defence to
the claims is succinctly set out in an e- mail, dated 16
September
2011. addressed to a certain Elmien Fitchet, representing the
applicant. It is significant that this e-mail is dated
one day prior
to the date of the letter in terms of s345. It reads as follows:
“
Dear
Elmien
Your
e-mail dated 13 September 2011 refers.
Please
take note that Legend is not in breach of contract, as no contract is
in place for the Bosveld Makiti nor for the Golf Day.
We have not
received any contract from you for the Bosveld Makiti, despite your
undertaking some time ago to furnish us with a
contract for our
consideration. You also failed to furnish us with your company
registration number and VAT number. We have sent
the contract for the
Golf Day to you. but have not received the signed copy from you. As
we are still in the negotiation stage
of both agreements, no formal
contracts were concluded. Only once the required contracts are signed
by all relevant parties can
there be a breach of contract.
You
have unilaterally cancelled the media launch, without any reasonable
explanation, it is our opinion that you do not have sufficient
time
left to reschedule a media launch and to timeously prepare for the
Makiti and Golf Day for the proposed date of 30 September
2011. It is
a well-known fact that timeous marketing and preparation for both
events are a prerequisite for a successful event.
Concerning
information was brought to our attention about the way you (Elmien)
conduct business. In the light of the allegations
we need time to
investigate the correctness thereof prior to entering into any formal
relationship with you.
Regards”
[4]
As to the amounts allegedly paid to the performing artists, it is
apparent from the applicant’s own Founding Affidavit
that
the artists were paid after the respondent had withdrawn from the
events. It may be that the applicant had been contractually
bound to
pay the artists regardless of the cancellation of the event. However,
the applicant states in its Replying Affidavit that
the venue of the
Bosvela Makiti had at the fast minute been moved to another venue
where it duly took place. Not all, if any, of
the alleged expenditure
was therefore wasted.
[5]
Counsel for the applicant argued that the allegations disclosed in
the respondent’s answering affidavit do not constitute
a bona
fide defence to the alleged indebtedness. It is, however, impossible
to evaluate the merits of the claims and counterclaims
on the papers.
There are numerous factual disputes. I cannot on any ground find that
the respondent’s defence is bogus or
not in good faith. Without
deciding the issues, the respondent’s allegations and
submissions appear on the face of the papers
before me persuasive.
[6]
S 345 of the Act provides a company or a body corporate shall be
deemed to be unable to pay its debts if—
“
(a)
a creditor, by cession or otherwise, to whom the company is indebted
in a sum not less than one hundred rand then due—
...
“ [my emphasis]
It
has been held in many judgments referred to in Henochsberg on the
Companies Act. 1973, at 707, that the underlined words mean
“then
due and payable” and that the debt must therefore be a liquid
or a liquidated claim.
[7]
The alleged debt is in respect of damages and it is not liquidated.
On the applicant’s own Founding Affidavit the debt,
if it
existed at all, was not due and payable at the time of the s345
letter. The amount of the alleged debt is far from clear
or easily
determinable. The Makiti in fact took place at a different venue with
the result that much, if not all, the expenditure
had not in fact
been wasted.
[8]
It is further noted that the applicant has failed to furnish an
affidavit by the person who had furnished a copy of the application
to the employees of the respondent and to the South African Revenue
Service as required by s 346(4)(b) of the Act. It has been
held that
this is a peremptory requirement.
[9]
It was held in a long line of cases, starting with Badenhorst v
Northern Construction Enterprises (Pty) Ltd
1956 (2) SA 346
at 347 -
348 that winding-up proceedings ought not to be resorted to in order
to enforce a debt, the existence of which is bona
fide disputed by
the company on reasonable grounds. This is exactly what the applicant
did. The applicant could not have believed
that the alleged debt
would not be disputed by the respondent, especially in view of the
e-mail of 16 September 2011 in which the
respondent’s defence
is set out on grounds that are uncontested. It is common cause that
no written contracts had been concluded
between the parties and that
there were still a number of issues outstanding before such contracts
could be concluded.
[10]
I find that this application is entirely misconceived and a clear
abuse of the process of court. This is a ground for making
a punitive
cost order against the applicant.
I
make the following order:
The
application is dismissed with costs on an attorney and client scale.
J.
HIEMSTRA
ACTING
JUDGE OF THE HIGH COURT
Date
heard:22 November 2012
Date
of judgment:30 November 2012
Counsel
for the applicant: Adv J. Hershensohn
Attorney
for the applicant: Smit & Vosloo Attorneys
1213
Cobham Road Queenswood, Pretoria
Counsel
for the respondent:Adv L.W. De Koning SC
Adv
W.J. Botha Adv. J. Van der Merwe Attorney for the respondent:Nel. van
der Merwe & Smallman Attorneys
Ref:
CVDM/KG/CM 0067 do Ross & Jacobsz 457 Rodericks Road Lynnwood,
Pretoria