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[2009] ZAGPJHC 104
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Panayiotou v Full Swing Trading 357 CC (30929/2008) [2009] ZAGPJHC 104 (6 March 2009)
SOUTH GAUTENG HIGH COURT,
JOHANNESBURG
CASE NO: 30929/2008
DATE: 06-03-2009
In the matter between
D.D.A.
PANAYIOTOU
...
Applicant
versus
FULL
SWING TRADING 357 CC
Respondent
JUDGMENT
MEYER J
:
[1] This is the extended return day of
a provisional winding up order that was originally issued in this
court on 7 November 2008,
in terms whereof the respondent close
corporation was placed under provisional winding up in the hands of
the Master of the High
Court.
[2] The applicant holds a 20% interest
in the respondent. Messrs Bennett, Wales and Laas each holds a 32,5
percent, 32,5 percent,
and 5 percent interest. They oppose the
winding up of the respondent. The remaining 10% interest is held by
Mr Stefanou.
[3] The applicant’s application
for the winding up of the respondent is brought under section 68(c),
read with section 69(1),
of the Close Corporation Act 69 of 1984
(“the Act”) and also under section 68(d) of the Act.
[4] Section 68(c) of the Act provides
for the winding up of a corporation by a court if it is unable to pay
its debts. Section
69(1)(a) provides that a corporation shall be
deemed to be unable to pay its debts for the purposes of section
68(c) if a creditor
to whom the corporation is indebted for a sum of
not less than R200.00 then due, has served on the corporation a
demand requiring
the corporation to pay the sum so due, and the
corporation has for 21 days thereafter neglected to pay the sum or to
secure or
compound for it to the reasonable satisfaction of the
creditor. The applicant relies on such unsatisfied statutory demand
upon
the respondent for the repayment of his loan account.
[5] It is common cause that the
respondent was incorporated on 20 December 2004 for the purpose of
holding, as an investment, the
business of ‘The Spar’,
which business is defined in clause 2.1.14 of the association
agreement which the members concluded
on 27 January 2005 as ‘[t]he
Spar Retail Store, including Tops, situated on the corner of 4
th
Avenue and Main Road, Melville’, and clause 2.1.16 thereof
defines ‘Tops’ as ‘the bottlestore situated
on the
premises.’. Its amended founding statement describes its
principal business as ‘general trading in all aspects.’
The sole members of the Corporation were and presently are Bennett,
Wales, Laas, Stephanou and Panayiotou.
[6] Clause 8 of the association
agreement
inter alia
provides for the initial
capital contributions by members in a total sum of R9,1 million.
Clause 8.7 reads:
‘
The Members do hereby agree
that in regard to the repayment by the Corporation to each of them
their respective contributions, the
members shall not be entitled to
require or demand repayment of their respective contributions either
in whole or in part unless
and until a decision regarding such
repayment has been taken at a Members’ meeting, unless the
Corporation is wound up or
placed in liquidation by a third party, or
by the Members in pursuance of a Members’ decision to wind up
the Corporation.’
[7] The respondent acquired the
business of The Spar as defined in the association agreement (“the
Spar business”).
It is common cause that the members’
contributions in the amount of R9,1 million referred to in clause 8
of the association
agreement (‘the initial capital
contributions) was required by the respondent to acquire the Spar
business. The respondent,
however, procured a loan from ABSA Bank in
the sum of approximately R4,8 million. As a result thereof the
members’ initial
capital contributions were reduced to:
Bennett: R 1, 848, 865.00
Wales: R 1, 848, 865.00
Applicant: R 788, 000.00
Laas: R 237, 500.00
Stephanou: R 910, 000.00.
[8] It is undisputed that the Spar
business continually required further injections of capital from the
members. Clause 17 of the
association agreement provides for the
provision of further loans to the respondent by
inter
alia
its members. Certain
additional capital contributions would bear interest at a rate
equivalent to the prime rate and be repayable
before any other loan
accounts are repaid and upon such date/s as may be agreed upon
between the Corporation and the Member concerned.
As at 31 May 2008,
the loan account balances, which balances include the initial capital
contributions plus the additional capital
contributons, were as
follows:
Bennett: R 3, 415, 176.80
Wales: R 3, 304, 687.35
Applicant: R 1, 267, 670.00
Laas: R 505, 287.71
Stephanou: R 15, 458.85.
[9] The members eventually resolved to
sell the Spar business in order to cut their mounting losses. A sale
of the Spar business
was ultimately concluded with Wild Goose Trading
CC (“the purchaser”) for the sum of R 8,5 million plus an
additional
amount of R 2 million for its stock. A resolution
authorizing the respondent to dispose of the Spar business was taken
on 28 February
2008. The purchaser has paid an aggregate sum of R10,
516, 964.39. Only the final instalment in respect of stock in the
sum of
R321, 219.11 is still to be collected from the purchaser.
[10] It is common cause that the
members received certain repayments of their loan accounts. The
repayments, on the respondent’s
version, were only in respect
of the additional capital contributions. It is common cause that, as
at 5 August 2008, the applicant
received repayment of the sum of
R480, 617.00. This payment, according to the respondent, reduced the
balance outstanding in respect
of the applicant’s loan account
to the sum of R787, 052.90, which amount forms part of his initial
capital contribution.
Bennett and Wales only received part payment
of their additional capital contributions and all the members’
initial capital
contributions have not been repaid.
[11] It is common cause that no
resolution or decision regarding the repayment of the members’
initial contributions has been
taken at a members’ meeting as
is required in terms of clause 8.7 of the association agreement. The
applicant was accordingly
not entitled to require or to demand
repayment of his initial capital contribution and his statutory
demand upon the respondent
related to a debt that was and is not due
and payable. The onus upon the respondent is merely to show that the
indebtedness on
which the applicant relies is
bona
fide
disputed on reasonable
grounds. (See:
Kalil v
Decotex (Pty) Ltd and Another
1988 (1) SA 943
(AD)
at p 980 A-B). Such onus has been discharged in respect of the
applicant’s claim for payment of the outstanding balance
of his
loan account.
[12] Section 69(1)(c) of the Act
provides that a corporation shall be deemed to be unable to pay its
debts for the purposes of section
68(c) if it is proved to the
satisfaction of the court that the corporation is unable to pay its
debts. Section 69(2) enjoins
a court to take the contingent and
prospective liabilities of the corporation into account in
determining whether a corporation
is unable to pay its debts. It
appears that the respondent will be able to meet all of its debts in
the ordinary course of business
and that all trade creditors of the
respondent have been paid. It is, however, common cause that the
respondent will be unable
to repay substantial portions of the
members’ loan accounts representing their initial capital
contributions if they ever
become due. They will only become due
when a resolution is passed by the members determining that they are
to be repaid. Such
resolution has not been taken and it is clear
from the answering affidavit that the reason for this is to
subordinate the members’
claims to the claims of all other
creditors.
[13] Section 68(d) of the Act provides
for the winding up of a corporation if it appears to the court that
it is just and equitable
that the corporation be wound up. The
applicant appears to found his claim for relief on this ground
firstly on the basis that
the relationship between the members is
akin to that between partners or quasi-partners and friendly
co-operation is no longer
possible, and, secondly, on minority
oppression.
[14] Clause 5.2 of the association
agreement, however, expressly provides that ‘[t]he relationship
between the Members as
such shall not be construed as that of
partners or quasi-partners.’ A party is, as a rule, bound by
his agreement, so that
if the contract states that there is no
relationship of partnership, he cannot claim that there is one in
fact [see:
Hart v Pickles
1909 TH 244
at p 247;
Le
Voy v Birch’s Executors
1913 AD 102
;
Dickinson &
Brown v Fisher’s Executors
1916 AD 374
at p 383]. Obviously different considerations prevail
when the question is raised by third parties who are not parties to
the
agreement.
[15] Bennet’s undisputed
statement in paragraph 37 of the answering affidavit is this:
‘
The situation is accordingly
therefore that the applicant has been treated in a more advantageous
manner than have Wales and I.
In terms of the association agreement,
it was agreed that additional capital contributions would be repaid
prior to initial capital
contributions. This agreement has been
strictly adhered to.’
[16] Mr Cohen, who appears for the
applicant, submitted that it would be just and equitable to wind up
the respondent since its
substratum has disappeared. This ground,
however, has not been pertinently raised in the founding papers or
even in the replying
papers. I am not satisfied that all relevant
aspects pertaining to a disappearance of the respondent’s
substratum have been
canvassed on the papers.
[17] In all the circumstances I am not
satisfied that the applicant has established a case for the granting
of a final winding up
order on a balance of probabilities [see:
SMM
Holdings (Pvt) Ltd v Southern Asbestos Sales (Pty) Ltd
[2005] 4 All SA 584
(W) at p 593, para [27]].
[18] In the result the following order
is made:
The provisional winding up order is
discharged.
The application is dismissed with
costs.