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[2010] ZAFSHC 146
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Standard Bank of South Africa Ltd v Waterwheel Investments 107 (Pty) Ltd (4470/2010) [2010] ZAFSHC 146 (18 November 2010)
FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Case No. 4470/2010
In the matter between:-
THE STANDARD BANK
OF SOUTH AFRICA LTD
….............
Applicant
and
WATERWHEEL
INVESTMENTS 107 (PTY) LTD
…...............
Defendant
_____________________________________________________
HEARD ON:
28 OCTOBER 2010
_____________________________________________________
DELIVERED ON:
18 NOVEMBER 2010
_____________________________________________________
JUDGMENT
_____________________________________________________
RADEBE AJ:
[1] The applicant seeks a
final order for the winding up of the respondent on the following
basis:
(a) that the respondent
is
de facto
insolvent;
(b) that the respondent
is deemed to be insolvent by virtue of the provisions of section
344(f) read with section 345(1)(a) and
(c) of the Companies Act, 61
of 1973 (as amended);
(c) that it is just and
equitable to do so;
(d) that the respondent
is unable to pay its debts.
[2] The respondent did
not file any opposing affidavit although the parties had, by consent,
obtained an order directing the respondent
to file its opposing
affidavit by 13 October 2010. When the application was heard on 28
October 2010, the respondent asked the
court to adjudicate the matter
on the technicalities and points of law only, and on the basis of the
applicant’s founding
affidavit only.
[3] The applicant alleges
that this Honourable Court has jurisdiction to adjudicate upon the
matter, as the registered address is
situated within its area of
jurisdiction. The service address where the sheriff effected service
upon the respondent is undoubtedly
situated within the jurisdiction
of this Honourable Court, being at 52 Aliwal Street, Arboretum,
Bloemfontein. The respondent has
not shown by way of affidavit that
it has a different address as its principal place of business.
[4] The applicant alleges
that the respondent owes it an amount of R7 258 923.37, with interest
on the said amount calculated at
9,65% p.a. from 22 July 2010 to date
of payment, as shown in the certificate of balance – annexure
“LC3” to the
founding affidavit. The indebtedness of the
respondent, so alleges applicant, is based upon the documents annexed
to the founding
affidavit as “LC2A” – Letter of
grant of home loan facility of an amount of R11 000 000.00 (Eleven
Million Rand)
to the respondent by the applicant and “LC2B”
– Continuing Covering Mortgage Bond No. B000012327/2007
registered
in favour of the applicant (mortgagee) by the respondent
(mortgagor) registered on 15 June 2007 to secure the indebtedness of
the
respondent to the applicant.
[5] The material terms of
the Mortgage Bond as set out in paragraph 8.1 and 8.4 of the founding
affidavit and paragraph 1.1 and
1.1.3 of annexure “LC2B”
are as follows:
“
8.1 The
Respondent is truly and lawfully indebted and firmly bound unto and
on behalf of the Applicant and/or its successors in
title for the sum
of R11 000 000.00 (Eleven Million Rand) from whatsoever cause
arising, including but not restricted to:-
existing, future and contingent
indebtedness;
.....
Indebtedness arising from monies
lent or advanced, or to be lent or advanced.....
.....
.....”
[6] A certificate signed
by any of the Bank’s managers, whose appointment need to be
proved, will, on its mere production,
be proof, unless the
contrary
is proved
, of the following stated in the certificate:
“
6.1 the
amount due to the Bank at any time (‘
debt
’);
the fact that the debt is due and
payable;
the rate of interest payable;
the date from which the interest is
calculated; and
any other matter relating to the
Mortgagor’s indebtedness secured by this bond.”
The respondent has not
filed any affidavit to prove the contrary to clause 6 of the Mortgage
Bond (annexure “LA2B”).
[7] The applicant further
alleges that the respondent has failed to effect payment as it was
obliged to do under the mortgage bond.
The demand for payment of the
balance outstanding, as said above, is shown in annexure “LC6”
of the founding affidavit.
The respondent has not denied that it owes
the amount stated therein and has not indicated to this court whether
the amount is
wrong or is not owed, save for arguing that the letter
of grant (annexure “LC2A”) states that a home loan of R11
000
000.00 was approved.
[8] Counsel for the
respondent argued that the amount of R7 258 923.36 plus interest, as
shown in the Certificate of Balance as
well as in annexure “LC6”,
is neither due and payable and is not claimable by the applicant from
the respondent as
the Continuing Covering Mortgage Bond (“LC2B”)
does not provide for the payment of any amounts, instalments or
monthly
repayments.
[9] On the contrary, the
applicant argues that, the respondent passed the First Mortgage Bond
over the property, Erf 1494 Ladybrand
Ext 7, district Ladybrand,
Province of Free State; and that the respondent agreed with all the
terms of the said bond “LAC2B”).
Applicant argues that
the respondent agreed that if it failed to observe or perform any of
the provisions of the bond or failed
to pay any amount which may be
legally claimable by the applicant, then all amounts secured by the
bond shall at the applicant’s
option, become immediately due
and payable in full.
[10] As stated in
paragraph [1] of this judgment, the applicant brought this
application on the basis of,
inter alia
,
section 344(f) read with section 345(1)(a) and (c) of the Companies
Act (as amended); inability to pay its debt; and, that it
is just and
equitable to place the respondent under liquidation.
[11] Section 345 of the
Companies Act stipulates the following:
“
345 When
company deemed unable to pay its debts
(1) A company or 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-
(i) has served on the company, by
leaving the same at its registered office, a demand requiring the
company to pay the sum so due;
or
(ii) in the case of any body corporate
not incorporated under this Act ... (not applicable in this case) and
the company of body
corporate has for three weeks thereafter
neglected to pay the sum, or to secure or compound for it to the
reasonable satisfaction
of the creditor; or
(b)
any process issued on a
judgment, decree or order of any court ... (not applicable in this
case)
(c)
it is proved to the
satisfaction of the Court that the company is unable to pay its
debts.”
[12] The amount owed is
shown in annexure “LC3”, which is a Certificate of
Balance. I am persuaded to come to the conclusion
that this
certificate complies in all material respects with the provisions in
clause 6 of the Mortgage Bond. The amount stated
therein is above
R100.00 and therefore satisfies the provisions of section 345(1)(a).
If read with the letter in annexure “LC6”,
addressed by
Stupel and Berman Inc, acting for the applicant, the said amount
became due, owing and payable on 28 July 2010. The
respondent
undoubtedly has for three weeks thereafter neglected to pay the said
sum.
[13] Respondent’s
counsel takes the point that the said amount is secured by a
continuing covering mortgage bond and that
there are no instalments
specified, but does not advance any reasons why it has not paid any
part of the arrears which are shown
to be R7 258 923.37. Respondent’s
failure to put his case before court properly by way of an answering
affidavit was, in
my view, fatal. The technical points that the
respondent advance, do not take its case anywhere as it does not
address the questions
of whether the amount is owing or not and is
owed to the applicant. In fact, respondent argues that the amount
advanced, was a
building loan and not a home loan and that the said
amount is not due and payable. This type of argument is totally
contrary to
the Mortgage Bond (“LC2B”) passed by the
respondent in favour of the applicant.
[14] I refer to page 38
of the indexed papers where the details of the monthly instalments of
R122 295.76, at 12,5% p.a. are specified.
Further, on page 39 to 59
of the indexed papers,
“the principal applicants”
details are given and the respondent clearly signed for
a home loan application. All of these are part of “LC2A”.
[15] The only reasonable
inference that can be drawn is that the respondent is unable to pay
its debts, despite being demanded to
do so on 28 July 2010; that it
is in terms of section 344(f) read with section 345(1)(a) and (c) of
the Companies Act, deemed to
be insolvent.
[16] For the record, a
fresh security bond dated 25 October 2010 has been placed before
court.
[17] In the circumstances
I come to the conclusion that the applicant has shown sufficient
grounds for the provisional liquidation
of the respondent company. I
therefore give the following order:
ORDER:
1. The respondent company
is hereby placed under provisional liquidation in the hands of the
Master of the High Court.
2. A provisional order is
hereby issue calling upon all interested parties to show cause, if
any, to the court on the 6
th
day of January 2011 at 09h30
why a final order of liquidation should not be granted against
respondent company.
3. Service of this rule,
and a copy of the notice of motion and annexures must be effected on
the respondent company at its registered
office, or its principal
place of business within the courts’ jurisdiction.
4. This order must,
without delay, be published in “Die Volksblad” and The
Government Gazette.
5. A copy of the
winding-up order must be served on-
5.1 Every registered
trade union that as far as the sheriff can reasonably ascertain,
represents any of the employees of the respondent
company.
5.2 The employees of the
respondent company by affixing a copy of the application and
provisional order on any notice board to which
the employees have
access inside the respondent company’s premises or if there is
no access to the premises by the employees,
by affixing a copy to the
front gate or front door of the premises from which the respondent
company conducted any business.
5.3 The South African
Revenue Services.
6. The sheriff must
ascertain whether the employees of the respondent are represented by
a Trade Union and whether there is a notice
board on the premises to
which the employees have access.
________________________________
MADAME JUSTICE N.H.
RADEBE, AJ
18 November 2010
On behalf of applicant:
Adv. A. Williams
Instructed by:
Stupel & Berman
c/o Lovius Block
Attorneys
31 First Avenue
BLOEMFONTEIN
On behalf of respondent:
Adv. C. Snyman
Instructed by:
Kramer Weihmann &
Joubert Inc
149 St Andrew Street
BLOEMFONTEIN
Ref.: JL
WEIHMANN/svn/C07405
/sp