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[2012] ZAKZPHC 78
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Fraser NO and Others v Amalgamated Brokers CC (7806/2011) [2012] ZAKZPHC 78 (27 June 2012)
IN
THE HIGH COURT OF SOUTH AFRICA, PIETERMARITZBURG
REPUBLIC
OF SOUTH AFRICA
Case
No.: 7806/2011
In
the matter between:
MICHAEL
DENNIS FRASER N.O.
First
Applicant
WILLIAM
DOUGLAS HOWIE N.O.
Second
Applicant
ANTHONY
PAUL GREEN
Third
Applicant
and
AMALGAMATED
BROKERS CC
(2000/041342/23)
Respondent
JUDGMENT
Date of hearing: 15 June 2012
Date of judgment:
27 June 2012
D.
PILLAY J
[1] In
this application for the provisional liquidation of the respondent,
the first issue in dispute is whether the applicant,
now deceased and
represented by his executors, caused a demand for payment to be
served in compliance with s 345(1)(a)(i) or (ii)
of the Companies Act
61 of 1973 (CA) read with section 69 of the Closed Corporations Act
69 of 1984 (CCA). The respondent contends
that the letter of demand
was never delivered at the respondent’s registered office in
strict compliance with the requirements
of the CA or the CCA. As
such compliance is a jurisdictional prerequisite, the application
should be dismissed.
[2] The
applicant contends that the letter of demand was sent by registered
mail to the respondent and before it could be delivered
a member of
the respondent collected the letter from the post office. Mr
Harrison for the respondent referred the court to two
high court
decisions
1
in support of his submission that the CA and the CCA required strict
compliance. At the end of his argument he also handed up
a recent
judgment of Ndlovu J of this division in
Mouritzen
v Greystone Enterprises (Pty) Ltd and Other
case number 10442/2011 (unreported)
2
in which he presented a similar argument. In that case the learned
judge predictably preferred the views of the Appellate Division
in
Odendaalsrus Municipality v Odendaalsrus Gold, General Investments
and Extensions Ltd
1959 (1) SA 374
(A) at 380B-D in which the AD accepted that there was
sufficient compliance with the requirement of service if the
respondent received
the letter of demand no matter how it was
delivered. Importantly, the notice must reach the person concerned
and must effectually
convey to him or her the information that needs
to be conveyed.
3
I agree with Ndlovu J that to insist on strict compliance when the
respondent received the letter of demand would be to prefer
form over
substance.
[3]
As to whether the respondent received the letter of demand, the
respondent does not deny receiving it. Furthermore, the applicants
adduced evidence in the replying affidavit attaching confirmation
from the post office that the registered mail was collected by
a
person whose signature is identical to that of Brenda de Wet who
signed the respondent’s letters dated 8 October 2009 and
10
November 2009 (Annexures “E” and “F” to the
answering affidavit). In any event, the identity number
of the
recipient of the registered mail is also recorded on the registered
slip which the respondent could easily have checked
if it disputed
receipt of the letter of demand.
[4] The
significance of the service of the letter of demand in this case is
that it is a ground on which the applicant relies to
prove that the
respondent is unable to pay its debts. Section 345(1)(a)(ii)
provides:
‘
A
company or body corporate shall be deemed to be unable to pay its
debt if:
In
the case of any body corporate not incorporated under this act has
served such demand by leaving it at its main office or delivering
it
to the secretary or some director, manager or principal officer of
such body corporate or in such other manner as the court
may direct,
and a company or body corporate has for three weeks thereafter
neglected to pay the sums, or to secure or compound
for it to the
reasonable satisfaction of the creditor.’
The
respondent has not paid the debt demanded in the letter. This fact,
coupled with my finding above that the letter of demand
was served
fulfils the requirements for deeming the respondent to be unable to
pay its debts in terms of s 345(1)(a)(ii).
[5] The
applicant also relies on the minutes of various meetings as proof
that the respondent acknowledged its indebtedness. I
cannot rely on
such minutes because they are brief notes of what each speaker said
and not a verbatim transcription. Furthermore,
the respondent
disputes the accuracy of the minutes. Besides, in the nature of
evidence in the form of minutes, they usually require
further
explanation to clarify what the text actually means in the context.
Such explanation is not adequate on the papers before
me; it probably
requires ventilation through oral evidence.
[6] The
next question is whether the respondent is indebted to the
applicants. The transaction giving rise to this claim stems
from a
request by the deceased to the respondent to procure a motor grader.
The respondent sourced the grader from Canada. After
receiving an
invoice from Ontario on 23 August 2009 for $118 000, it invoiced the
applicant for 50% of the purchase price, in the
amount of R524
400.00, including VAT of R64 400 on 31 August 2009. The deceased paid
the respondent on 2 September 2009. The respondent
applied for
foreign exchange through Standard Bank on 15 September 2009. The
respondent paid the supplier US$59 000.00. The applicant
contends
that this transaction amounted to a purchase and sale between the
deceased and the respondent; the respondent contends
that it merely
acted as the deceased’s agent.
[7] Factors
that support a finding that the transaction was a purchase and sale
include the following:
(a) The
purported seller invoiced the respondent not the applicant.
(b)
The dock receipt was issued to the respondent.
(c)
The respondent was the co-signee.
(d)
The respondent paid the purchase price to the purported supplier of
the grader.
(e)
The respondent undertook to pay the balance when it received a
signed bill of lading from the supplier.
(f)
The respondent levied VAT on the purchase price.
[8] Factors
the respondent relies on as proof it was the applicant’s agent
are:
(a) The
applicant was a ‘customer’ of the respondent.
(b) The
respondent did ‘not hold stock but buys and sells used plant,
used equipment and parts as and when required’
or ‘source
and sell specific parts as and when required’.
(c)
Prior to the transaction in issue the respondent sold a Hyundai 210
excavator for the applicant and received a commission
as broker.
(b)
The applicant pre-paid 50% of the grader in advance.
[9] The
Hyundai transaction was an agency with the deceased being the seller
and the third party the buyer. The respondent merely
facilitated the
sale. Weighing all the factors together the dominant nature of this
transaction was a purchase and sale of the
grader. On the
respondent’s own version, it ‘buys and sells’ or
‘source(s) and sell(s)’ plant, etc.
Another decisive
factor is that the respondent could not levy VAT unless he was a
vendor. Although the respondent describes the
money he would have
received from the transaction as a commission, it is its remuneration
irrespective of whether it is called
a commission or profit.
Similarly, referring to the applicant as a customer of the respondent
is no indication as to whether the
transaction was one of agency or
purchase and sale. The only buyer the foreign seller would have known
was the respondent. The
law pertaining to the passing of risk in an
international sale of goods transaction would apply between the
respondent and the
foreign seller.
[10] Irrespective
of whether the relationship was as buyer and seller or principal and
agent, the respondent had another arrow to
its bow. The respondent
paid the money it received from the applicant to Mediterranean
Chartered Shipping Company (MCSC) which
masqueraded as Mediterranean
Shipping Company (MSC). Did it act negligently in paying MSCS
instead of MSC?
[11] The
respondent alleges that the applicant refused to transact by means of
a letter of credit because there would have been
an additional cost
of R85 000.00. The applicant denies this. In the respondent’s
letter to Standard Bank the respondent
records that the sellers or
their agents were not interested in a letter of credit and the
respondent accordingly agreed to pay
50% of the purchase price via
Standard Bank, the balance to be paid on receiving a signed bill of
lading from the suppliers. The
decision to dispense with a letter of
credit therefore was the respondent’s. Furthermore, the
respondent paid against the
invoice only without waiting until it
received a track shipping report confirming that the consignment had
arrived at the terminal,
dock receipt and bill of lading from the
seller. In those circumstances the respondent was negligent. He
failed to exercise reasonable
care in effecting an electronic
transnational transaction.
[12] This
is an application for the provisional liquidation of the respondent.
In determining whether a company is unable to pay
its debt the court
shall take into account the contingent and prospective liabilities of
the company.
4
If, following the liquidator’s investigation it transpires that
the respondent is able to pay its debts, then the respondent
can
avoid confirmation of this rule
nisi
.
[13] In
the circumstances I grant an order in terms of paragraph 1, 2 and 3
with the return date in paragraph 2 to be 1 August 2012
and in
paragraph 3 to be 27 July 2012.
___________
D.
PILLAY J
Counsel
for the Applicant: Mr Van Rooyen
Instructed
by Venn Nemeth & Hart, Pietermaritzburg
Counsel
for the Respondent: Mr C. Pretorius
Instructed
by Brown Brodie & Fourie, Pietermaritzburg
1
Phase Electric Company (Pty) Ltd v Zinman’s
Sales (Pty) Ltd
1973 (3) SA 914
(W);
Afric Oil v Ramadaan Investment CC
2004 (1) SA 35
(N)
2
At para 25-33
3
Mouritzen
para
25;
Odendaalsrus Municipality
para 380B-D
4
s 345 of the CA