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[2009] ZAGPPHC 108
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Gainsford and Van Wyk NNO v Joubert and Another (15404/08) [2009] ZAGPPHC 108 (10 September 2009)
IN THE HIGH COURT OF SOUTH AFRICA
(NORTH GAUTENG DIVISION)
CASE NO: 15404/08
In the matter between:
GAINSFORD, GAVIN CECIL N.O. 1st Applicant
VAN WYK, ALTA N.O. 2nd Applicant
and
JOUBERT, DIANE MARYLYNNE 1st Respondent
JOUBERT, STEPHEN PIERRE 2nd Respondent
CORAM: EBERSOHN AJ
DATE HEARD: 17TH AUGUST 2009
DATE JUDGMENT HANDED DOWN: 10TH SEPTEMBER 2009
JUDGMENT
EBERSOHN AJ.
[1] The applicants are the duly appointed liquidators of Quantum
Communications (Pty) Ltd.(in liquidation) ("Quantum").
[2] The first respondent was the sole director of Quantum.
[3] Quantum was liquidatd under case no. 6247/07 (Estate No. T.
802/07 Pretoria Master of the High Court) in this court it being
an
application brought by Glocell Service Provider Company (Pty) Ltd.
("Glocell"). Glocell alleged that it was a major
creditor
of Quantum whilst Quantum, on its part, alleged that Glocell was in
fact indebted to Quantum.
[4] The applicants' attempt to recover a last month's salary and
retrenchment packages paid by Quantum to the first respondent
and her
husband, both being employees of Quantum, after the winding-up
application had been launched but prior to the final winding-up
order.
[5] The winding-up application of the company was launched on 22
February 2007.
[6] The two sets of payments relate to the salaries for March 2007 as
well as retrenchment payments.
[7] Quantum was placed under an order of final winding-up by the
court on 2 May 2007. in terms of the provisions of section 348
of the
Companies Act, the winding-up of Quantum is deemed to have commenced
at the time of presentation to court of the application
for its
winding-up, being 22 February 2007.
[8] The payments to the respondents constitute dispositions and the
applicants claim declarations from this court that said the
dispositions are void. For purposes thereof, the applicants rely on
section 341(2) of the Companies Act.
[9] Section 341(2) of the Companies Act provides as follows:
"Every disposition of its property o 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."
[10] There are accordingly two basic requirements the applicants have
to satisfy to succeed, namely:
a) the fact that Quantum was unable to pay its debts; and b) that a
court should order the dispositions to be void.
[11] The allegation that Quantum was unable to pay its debts at the
said date was made by the liquidating applicant Glocell in
the
application for winding-up.
[12] In paragraphs 4.1 to 4.22 on pp.40-52 of the papers, the first
respondent extensively deals with and met Glocell's allegations.
[13] In brief summary, Glocell alleged that the company was indebted
to it as at 9 February 2007 in the amount of some R12 million
of
which R8,8 million was allegedly "currently due and payable"
at that time
[14] It is clear from, not only the first respondent's answering
affidavit, but also from the preceding correspondence between
the
said parties, going as far back as October 2006, that the initial
starting point of the alleged outstanding amount due, being
an amount
of some R7,78 million, formed the subject matter of negotiations
between the parties as well as various reconciliations
and credits to
be passed. Significantly, in respect of this, Glocell as the
liquidating creditor itself conceded in par. 4.7 on
p.44 of the
papers, that:
"It was agreed that this was an ongoing process and that GSPC
[Glocell] would be prepared to pass any credits to the company
account once these had been lodged and proved by the company. In
order to resolve these, it was agreed that Irshad should travel
to
Cape Town to meet with Henda and members of her team in order to
resolve as a matter of urgency."
[15] Quantum also appeared to have been the object of a call sponsor
fraud' perpetrated on it and in respect of which Quantum has
not
received payment of fraudulent use of lines allocated and invoiced to
it and in respect of which it was entitled to a credit.
At the time
in question it was already indicated that the estimated costs of the
fraud would be closer to R2 million. It apparently
has subsequently
been established that the total fraud credit approaches the amount of
R15 million thus the eagerness on the part
of Glocell to liquidate
Quantum in a clear attempt to rid itself of a vast creditor.
[16] With regard to what is stated in paragraph [14] supra, it is
significant, that the liquidating creditors response in par,
4.9 on
p. 45 of the papers, was that:
"Hussain agreed to forward to call sponsor fraud information to
DI". ("DI" is the first respondent).
[17] In order to identify and calculate the extent of the call
sponsor fraud, essential information and data had to be obtained
by
Quantum from the liquidating creditor Glocell. It was only during the
course of January 2007 that "crucial identifiers"
for call
sponsors could be established which could lead to a reconciliation of
the specific amount. Once this had been identified,
historical data
still had to be obtained from the liquidating creditor. The
liquidating creditor had not up to the time of presentation
of the
winding-up order, presented Quantum with the information.
Accordingly, although the company knew that it had been entitled
to a
credit in excess of whatever amount the liquidating creditor might
even itself state might be due to it, the self-same liquidating
creditor prevented Quantum from calculating this amount.
[18] The call sponsor issue" has been explained by the first
respondent to this court in paragraph 4.12 on p.46 as follows:
"Cell phone users with certain contracts could 'sponsor' up to
five 'pay as you go' users which users would then obtain airtime
for
cell phone usage on the account of the sponsor's cell phone
number/account In summary, the Company was being invoiced for airtime
usage without being credited with the airtime linked (or sponsored)
by cell phone users in respect of which the Company was entitled
to
payment. This linkage or sponsorship was done on a huge scale and in
a largely fraudulent manner (and often directly with the
networks,
bypassing service providers such as the Company). In fact, when
Vodacom launched the call sponsor program, we instructed
Glocell that
none of our lines were to be activated with this service. Despite
this, call sponsorship took place. This Honourable
Court must with
respect understand that this could potentially have resulted in a
five-fold billing for the Company without consequent
credit."
[19] The first respondent stated that the principle of the passage of
credit for fraudulent call sponsor amounts was conceded by
Glocell,
the liquidating creditor, but never implemented by Glocell.
[20] In addition to the aforesaid, and whilst the call sponsor fraud
credit reconciliation was still to be sorted out, a repayment
plan
had been agreed to between Glocell and Quantum.
[21] It is also to be noted that the winding-up order was preceded by
a so-called "reconnection application". The basis
for this
was that after the launch of the winding-up order, Glocell cut
Quantum's life-line" to business by disconnecting
Quantum's
access to the cellular line services rendered by it, on the same day
as the service of the winding-up application.
[22] In the reconnection application, already, the outstanding credit
due to Quantum was pointed out to be approximately R15,485
million.
[23] In view of the aforesaid, what apparently happened was that the
liquidating creditor simply and unilaterally decided to "pull
the plug" on Quantum's business and to terminate Quantum's MTN
business. Significantly, despite the difficulties experienced
by
Quantum as a result of the unilateral termination by the liquidating
creditor, the company further, on the liquidating creditors
own
version in the winding-up application, continued to make regular
payments to Glocell and which Glocell accepted. These have
been
detailed in par. 4.17 on pp.49 and 50 of the papers.
[24] The respondents' deponent stated that it was clear that, taking
into account the huge extent of the fraudulent claims and
the amounts
to be credited in respect thereof, the amounts due to Quantum by
Glocell far exceeded that which the liquidating creditor
alleged was
due to it. This allegation appears to be further substantiated by the
lesser amount later proved by Glocell as its
claim in the liquidated
estate. In this regard the court refers to par.4.19 on p.51 of the
papers.
[25] It is against the above-mentioned backdrop that the winding-up
application must be considered. The first respondent made the
point
that, despite all of the aforesaid and despite the prior expressed
comments by the liquidating creditor in writing that it
would "sort
the matter out", make full reconciliations, credit all the
credits due it, unbeknown to Quantum resolved
on 16 February 2007 to
launch the winding-up application which was then presented to court
on 22 February 2007.
[26] It is in these circumstances that the first respondent stated
that, at the time of the commencement of the winding-up of the
company, it was fully capable and able to pay its debts and it was
not insolvent. It was fully operational as a business concern,
despite the liquidating creditor's best attempts to close it down.
As referred to above, these later attempts in closing the
company
down "outside" the winding-up order, was successful,
despite the reconnection application"
[27] Contrary to even the liquidating creditors' best attempts, the
only attempt by the applicants in satisfying the requirement
of
section 341(2) of the Companies Act regarding the alleged inability
of the company to pay its debts at the commencement of winding-up,
is
contained in the mere four sentences comprising paragraph 25 of the
founding affidavit. The paragraph reads as follows:
"As the end of February 2007, Quantum Communications was
insolvent and its liabilities exceeded its assets. In fact, Quantum
Communications had virtually no assets, and had liabilities of at
least R12 442 394,67. Annexed hereto marked "FA7" is
a copy
of the second meeting report which sets out the liabilities of
Quantum Communications. As can be seen from the report, Glocell
proved a claim in the estate in the amount of R14 407 361,32."
The second meeting report itself has little evidential value.
[28] It is clear that the abovementioned allegation of inability to
pay has been met by the respondents, not merely by a simple
or bald
denial, but by an extensive and meticulous setting out of opposing
facts. These opposing facts indicate that the credits
due to Quantum
at the time far exceeded even the liquidating creditor's proven
claim. The respondents also detailed circumstances
which would have
entitled them to this credit and obliged the liquidating creditor, if
it had kept its word, to honour and pass
these credits.
[29] It is trite that, in motion proceedings and where there arises a
dispute of fact, that the applicant can only succeed if such
of the
allegations made by it, which are admitted by a respondent, together
with the respondent's allegations, entitles such an
applicant to an
order. (Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd
1984 (3) SA 620
(AD)).
[30] In the present instance and applying the abovementioned
principle, the applicants cannot succeed and the respondents have
discharged such onus as what there may be on them, on a balance of
probabilities.
[31] The court considered referring the matter for the hearing of
oral evidence but have decided against it for obvious reasons.
The
applicants elected to come to court on motion proceedings in which
they failed to prove their case.
[32] Furthermore, a court's discretion to declare a disposition not
void is firstly discretionary and secondly is controlled only
by the
general principles which are applied to every kind of judicial
discretion, namely that the court must decide what would
be just and
fair in the circumstances of the case. (Henochsberg on the Companies
Act at the Commentary on section 341). It has
been held that, in
order for a court to decide what would be just and fair in the
circumstances of the case, it should have regard
to the particular
circumstances of the case and to the issues of "good faith and
honest intentions of the persons concerned.(Herrigel
NO v Bon Roads
Construction Company (Pty) Ltd
1980 (4) SA 669
(SWA) at 678; Rousseau
v Malan
1989 (2) SA 451
(C) at 459).
[33] A disposition which was valid when effected (as the payments in
the present instance had been) and which only retrospectively
became
invalidated by virtue of the operation of the provisions of Section
348, which "antedates" the commencement of
winding-up to a
date prior to the actual granting of the order, would ordinarily be
validated by a court if it amounts to no more
than the bona fide
carrying on of the company's operations in the ordinary course. In
this regard the quotation from in re Wiltshire
Iron Company; Ex parte
Pearson
(1868) LR 3 Chapp 443
at 447 as quoted as follows in
Henochsberg (supra) is apposite:
" Where a company actually trading, which it is in the interest
of everyone to preserve, and ultimately to sell, as a going
concern,
is made the object of winding-up petition, which may fail or succeed,
if it were to be supposed that transactions in the
ordinary course of
its current trade, bona fide entered into and completed, would be
avoided and would not, in the discretion given
to the court, be
maintained, the result would be that the presentation of a petition,
groundless or well-founded, would, ipso facto,
paralyse the trade of
the company and great injury, without any counterbalance or
advantage, would be done to those interested
in the assets of the
company."
[34] In the present instance, the two respondents were the employees
of the company who actually saw to the running thereof. As
a result
of the subsequent actions of the liquidating creditor, it was clear
that the operations of the company would need to be
shut down and/or
the employees "be let go" or be retrenched. The two
respondents should not be seen as ordinary creditors
but as employees
and it would be in the ordinary course of business of any company
facing a possible closure of its business, to
prudently retrench its
employees. Mr. Davis, for the respondents argued that there was no
suggestion on the papers that the payment
of the salaries (for only
one month) was anything but the normal salaries. There is also no
indication that the retrenchment packages
had not been properly
calculated in strict accordance with the applicable labour
provisions. I agree with Mr. Davis.
[35] The dispositions had clearly been in the ordinary course of a
company in distress and had not been with the intent to prefer
any
creditor.
[36] The details of having acted in the normal course of business and
how retrenchment packages had been calculated in respect
of all of
the company's 14 employees have been set out in par.6 on pp.56-57 of
the papers. It has been stated justifiably so, that
it was surprising
to note that the applicants chose to only "come after" the
respondents and did not attempt to set aside
the other payments of
retrenchment packages to other employees as dispositions. This aspect
and the failure or unwillingness of
the applicants as liquidators to
pursue the company's rights of recourse against Glocell for the
recovery of vast amounts of credits,
causes concern and according to
Mr. Davis, displays some element of vexatiousness. I agree with him.
[37] Mr. Davis further argued that the applicants sought to create
some atmosphere and/or insinuate improper conduct in the respondents'
initial attempted opposition of the winding-up application prior to
the withdrawal thereof. It is clear that the respondents initially
sought to oppose the winding-up application but, upon the failure of
the reconnection application, was forced to close their business
down
as a result of the separate "closing down" perpetrated by
the liquidating creditor outside the winding-up application.
On the
papers there can not be any finding that any of the respondents acted
other than bona fide at all relevant times.
[38] I accordingly find that the applicants have not succeeded in
satisfying either of the requirements of section 341(2) and the
application has to be dismissed with costs. To ensure that the claim
against Glocell is investigated by the liquidators a copy
of this
judgment will be forwarded by the Registrar to the Master of the High
Court.
[39] The following order is accordingly made:
"1. It is declared that the payments set out in the prayers in
the notice of motion are not void and the application is accordingly
dismissed with costs including the costs of senior counsel.
2. The Registrar is directed to forward a copy of this judgment to
the Pretoria Master of the High Court (Estate No. T.802/07)."
P.Z. EBERSOHN
ACTING JUDGE OF THE HIGH COURT
Applicants' counsel: Adv. J. Smit
Applicants' attorneys: Edward Nathan Sonnenberg
c/o Adams & Adams Tel. 012x 481 1500 Ref. G. Wolter
Respondents' counsel: N. Davis SC
Respondents' attorneys: Routledge Modise Attorneys
c/o Jacobson & Levy Tel. 012x320 2202
Ref. Mr. J. Levy/K945