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[2008] ZAWCHC 96
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Unipalm Investment Holdings Ltd v BTH Konstruksie BK (14425/2007) [2008] ZAWCHC 96 (6 November 2008)
IN
THE HIGH COURT OF SOUTH AFRICA
(CAPE
OF GOOD HOPE PROVINCIAL DIVISION)
CASE
NUMBER: 14425/2007
DATE: 6
NOVEMBER 2008
In
the matter between:
UNI
PALM INVESTMENT HOLDINGS LTD
APPLICANT
and
BTH
KONSTRUKSIE BK
RESPONDENT
JUDGMENT
DAVIS.
J
:
Applicant
seeks the winding up of respondent's close 15 corporation, which was
incorporated in terms of the Close Corporations Act
69/1984. The
provisions of the Companies Act, Act 61/1973 are applicable to these
applications, save where excluded by the Close
Corporations Act.
The
respondent has been the subject of a provisional order of liquidation
and in effect the provisions to which I have made reference,
are now
applicable in order to determine whether a final order of liquidation
should be granted. In essence the applicant's case
is that it is owed
significant amounts of money which have not been repaid to it. The
thrust of applicant's case is captured
in the founding affidavit
deposed to by Mr Hoskins on behalf of the applicant in which the
following appears:
"To
the best of my knowledge and belief, respondent's financial position
as at 30 August 2007 is as set out hereunder:
29.1
Assets.
The respondent has no assets of any value.
29.2
Liabilities.
The respondent is indebted to applicant in a sum in excess of R1.7
million."
In
essence applicant contends that these monies were paid over to
respondent pursuant to two contracts or more accurately,
an agreement and an addendum to the agreement. In the principal
agreement it was entered between applicant and respondent, together
with Mr Hilton (the clear force behind the opposition to this
application) and Mr Orrie, which was entered into on 1 April 2004.
The applicant made certain undertakings to respondent, including the
procuring of the issue of guarantees (clause 4), and that
it would
undertake to provide to respondent by way of a loan, 100% of the
capital requirements of the respondent which was set
in the amount of
approximately R1 million (clause 7 of the agreement).
Furthermore
in the addendum to the agreement, there is an indication of further
funds which were made available by applicant
to the respondent, in
essence as the respondent required more capital. In this particular
regard the addendum, again entered
into between applicant,
respondent, Mr Hilton
and
Mr Orrie, on 30 September 2004, corded:
"The
capita! requirements for the completion of various contracts have
increased." (At clause 3.1).
In
the founding affidavit it is averred that applicant had given
respondent 30 days notice pursuant to the contract to which I have
made reference to repay the sum of R1 million. The 30 day period
expired and it was averred further that the respondent
had
not paid any of the amount to apt. The support for this averment is
to be found in the attachment to the founding affidavit,
being a
letter from applicant's attorneys, which was addressed to respondent
for the attention of Mr Hendricks and Mr Hilton, dated
27 August 2004
in which the following appears:
"It
is our instructions to demand, as we hereby do, in terms of the
provisions of clause 7.2.2 of the said agreement, repayment
of the
loan in the sum of R1 million... to Unipalm on or before 1 October
2004."
In
the first of the answering affidavits, Mr Hilton says, in relation to
these averments:
"Behalwe
om te erken dat respondent nie die bedrag van R1 miljoen
aan die applikant betaal het nie, word die inhoud
hiervan ontken."
As
with much of this case, the denials are couched with 10 exquisite
enigma, so that it becomes exceedingly difficult to know quite
what
is being denied and why. I presume, as Mr Coetzee, who appeared on
behalf of the respondent, urged me that I should infer
that somehow
the Letter of Demand was never received, certainly not by Mr Hilton.
I leave the matter 15 there, because it is probably
not on its own a
determinative case.
Turning
to the question as to whether these amounts are indeed owed by
respondent to applicant, Mr Coetzee submitted that an examination
of
the papers read as a whole, leads to a conclusion that respondent
does not owe applicant any money, To the contrary it may well
be that
applicant owes respondent certain amounts, to which I shall make
reference presently. The substantiation for the primary
defence,
therefore, namely that applicant is not owed money and is not in a
position of
being
a creditor, which has
locus
standi
to
bring this application, based on the following. It is common
cause that R400 000 of the amount alleged to be owing by respondent
to applicant, was repaid to the applicant. And such
sum, therefore, can not be taken into account with regard to
the
computation as to whether funds are owed to applicant.
Mr
Coetzee further submitted that a further R600 000 of the applicable
amount could not be taken into account either withregard
to the
computation of any alleged liability owed by respondent to applicant.
The reason for this submission was briefly that applicant
had sought
to claim some 49% of the R600 000 from the Mr Hilton personally by
way of a default judgment. Therefore, without unnecessary
examination of the default judgment proceedings, the thrust of Mr
Coetzee's submission was that if applicant considered that ultimately
the R600 000 was owed by Mr Hilton personally and not by respondent,
it was now no longer open for the applicant to make use of
that
alleged debt to justify its argument that it was a credit.
Furthermore
Mr Coetzee submitted that in so far as the balance of the
alleged debt was concerned, that is the balance of R1
million, it was
clear that significant sums of money had been repaid by the
respondent to the applicant, which justified
the
inference that the balance of R1 million had also been
repaid.
In particular the following passage from the
respondent's additional answering affidavit deposed to by
Mr Hilton
was critical to Mr Coetzee's submission:
"Die
balans van bogemelde deposito's ten bedrae van R17 240 333,97 was
betalings ten opsigte van gemelde drie konstruksie kontrakte.
Ek was
in beheer van die fisiese uitvoering van gemelde konstruksie
kontrakte en was veronderstel om 'n salaris van R30 000 per
maand te
ontvang. Behalwe dat ek vanaf November 2004 geen salaris ontvang het
nie, het ek nie my voile salaris vir die periode
Maart tot Oktober
2004 ontvang nie. Aanhangsel B2 is 'n opgawe van die betalings wat
aan my gemaak was gedurende gemelde periode
in die totale bedrag van
R231 387,43. Behalwe gemelde betalings, het ek geen sent uit die
vermelde bankrekening ontvang nie, behalwe
bogemelde bedrag van R452
399,87 waarop applikant geen aanspraak hoegenaamd het nie, beloop die
gewaarborgde wins op die inkomste
wat vanaf Suid-Kaapstad ontvang is
R4 310 083,49 synde 25% van die bedrag van R17 240 333,97. Toe die
bankrekening deur applikant
gesluit was op2 Februarie 2006, het die
kredietbalans op gemelde rekening R2 959,75, welke bedrag
volgens die bankstate
aan applikant se huidige prokureurs
oorbetaal was. Applikant se bewering dat die voile inkomste uit
die drie
konstruksie kontrakte aangewend was om die
uitgawes verbonde aan sodanige kontrakte betaal, is met eerbied
belaglik."
To
sum up, therefore, Mr Coetzee's argument was in effect 10 that of the
two million, R400 000 had been repaid (common cause), R600
000 or
applicable percentage thereof had been pursued against Mr Hilton
individually by way of a default judgement which, therefore,
by
reasoning, could not have been on applicant's own view an amount owed
by respondent and 15 the balance of the R1 million had
manifestly
been taken out of the profits which had been earned in the amount of
R4 310 083,49 and accordingly the remaining part
of the obligation
had been discharged. On that basis, on the probabilities, reading the
papers as they should have been, Mr 20
Coetzee's essential argument
was that those sums of money no longer constituted debts owing by
respondent to applicant and accordingly
there was no justification
for granting the final order.
The
proper approach in matters of this kind, not that they are always
followed with meticulous precision that they ought to be,
set out
over 20 years ago by
Corbett
,
J A, as he then was, in
Plascon
Evans Paints v Van Riebeeck Paints
1984(3) SA 630 (AD) at 634 H:
"It
is correct that where in proceedings of Notice of Motion disputes the
fact (indistinct) affidavits. A final order, whether
it be an
interdict or some other form of relief, may be granted if those facts
averred in the applicant's affidavit which had been
admitted by the
respondent, together with the facts alleged by the respondent,
justifies such an order. The power of the Court
to give such final
relief on the papers before it is, however, not confined to such an
situation. In certain instances the denial
by respondent of the facts
alleged by the applicant, may not be such as to raise a real genuine
or
bona
fide
dispute
of fact Moreover, there may be exceptions to this general rule, for
example, where the allegations or denials of the respondent
are so
far fetched or clearly untenable, that the Court is justified in
rejecting them merely on the papers."
In
essence, respondent does not have a blank cheque to make any averment
that he may dream up on papers. A Court has to interrogate
the
averments that it makes and test whether they are made
bona
fide,
whether
they are not so far fetched as to be untenable and, therefore, stand
to be rejected.
In
this particular case, without having to decide each and every point
that has been taken by respondent, there are two responses
that
clearly seem to have remained unanswered, responses which were
generated in the submissions of Mr Van Heerden, who appears
on behalf
of the applicant. Mr Van Heerden submitted that to the extent that
R600 000 was owing to applicant, the only question
for determination
was the identity of the entity which owed applicant that sum. He
submitted that simply because the applicant
may well have employed an
incorrect procedure in proceeding directly against Mr Hilton, did not
constitute a complete defence as
to whether the sum of R600 000 was
paid pursuant to an agreement to which I've made reference and
accordingly stood to be repaid.
It
is clear on any reasonable inference that amounts were paid by
applicant to respondent. It is clear that those amounts were paid
because an agreement had been entered into, in which I might add Mr
Hilton was a party, pursuant to which 25 these amounts were
paid
over by applicant to respondent. The
foundational
point is this, other than to suggest that applicant
may
have been unwise to proceed by way of default judgment
against
Mr Hilton, no other concrete basis put up by the
respondent
to suggest that the R600 000, (1) was not paid
over,
(2) was not owing to applicant, and (3) is, therefore,
pursuant
to the agreement, not owed by the respondent.
To
the extent as is necessary to go further in order to establish that
monies are owing, it is necessary then to turn to respondent's
own
version. In respondent's own version a schedule is set out of
payments which were made by it to applicant. These amounts, inclusive
of the R400 000 which is common cause was repaid by respondent to
applicant, amount in total over the applicable period to R821
657,41.
That clearly on its own, would indicate that further funds are
still owing by respondent to applicant. No says Mr Coetzee.
Why?
Because these were amounts in which Mr Hilton was able to crawl
through respondent's bank statements and identify payments
that
had been made by name to applicant. Therefore, given that
there were a multitude of cash payments beyond these,
Mr Coetzee
would have the Court accept that it was a reasonable inference to
conclude that the balance of the amounts would have
been paid by way
of cash payments.
It
is a speculative approach. There is no basis for such a conclusion.
I should add until September 2004, Mr Hilton was an
active member
of respondent, although in defence he suggests that he took no
interest at all in the financial affairs thereof.
Maybe that is,
but to suggest that without any further substantiation, additional
amounts of funds were paid over by respondent
to applicant beyond
specific payments which were made and stated thereto, is to enter the
realm of speculative inferential "reasoning",
which
falls directly within the exceptions set out by
Corbett
,
J A in
Plascon
Evans
.
Given
the findings which I have come to, there is perhaps no reason to
enter into any further analysis as to whether any profit
was indeed
made by respondent which would have justified the submission made of
a profit beyond R4 million. It is, however, a
submission that seems
to fly directly in the fact of a letter generated by Mr Evans, acting
on behalf of the City of Cape Town,
in which he writes to respondent
setting out the basis of a settlement of the relationship between the
parties, which clearly indicates
that to a very considerable degree
the contracts which had been entered into, were never completed, but
in fact was subject to
a settlement.
As
I have mentioned earlier, however, save to say that that evidence
itself raises questions as to whether there was any 25 proof
of
any profit having been made, which is central to the balance of R1
million and whether it is owed or not, I do not need to determine
this given the findings to which I have
come.
There
is then a further offence raised about claims that 5 respondent has
against applicant. As I have noted, applicant denies that
respondent
made any profit out of the contracts collectively. Mr Hilton's
allegation of a guaranteed 25% on the profit on contracts,
therefore,
does not appear to have evidential substance attached thereto. As
noted two of the 10 contracts were cancelled. The
probabilities
certainly dictate on the evidence that no significant profits were
generated there from.
Furthermore,
applicant has put up evidence to suggest that 15 respondent
suffered losses in the contracts they concluded with
the City of Cape
Town and had to pay damages. The question of the profit, of course,
is relevant to whatever claim respondent
might have, but it appears
that these claims are speculative and are not necessarily based on
any significant fact. Furthermore,
when Mr Hilton claims an
amount of R452 397,87, it appears that that amount may well be owed
to him, as is clearly provided
for in clause of the agreement to
which I have made reference. That, therefore, is a claim which Mr
Hilton must bring, it is neither
liquidated nor does it fall
within the scope of these proceedings and accordingly, it can be
ignored for the purposes of the
computations which are necessary to
justify a final application.
It
is truly unclear to me why there has been such absolute 5 tenacious,
and in some cases almost emotional, opposition to this application,
as was evident in the argument raised in court this morning. It is
true, as is set out in
Blackman
et al commentary on the Companies Act at 14-87, that the procedure
for winding up is not designed for the dissolution of 10 disputes
over the existence or non-existence of a debt and, therefore, winding
up proceedings are not appropriate for that particular end.
But
in this case one is faced with respondent, which on any version, can
hardly be considered to be in the peak of health. Indeed
there is an
averment in the replying affidavit of Mr Hoskins which itself was
answered by Mr Hilton, but without any comment in
the following
passage, in which the following the averment is made:
"The
respondent has ceased trading since December 2005 when the contracts
with the City of Cape Town were terminated."
Certainly
it would be a justifiable exercise in this Court's discretion to hold
that as just and equitable to wind up this corporation.
Courts have
already accepted that the disappearance of the company's
sub-(indistinct), a deadlock between members, are
grounds for making
such an order. See
Rand
Air (Pty) Ltd v Rae Vesture Investments (Pty) Ltd
1985(2)
SA 345 (W) at 349 to 351. As the Court said in
Moosa
N.O. v Mavjee Bhawan (Pty) Ltd
1967(3) SA 131 (T), the just an et al requirement, requires that a
Court:
"...postulates
on facts, but only a broad conclusion of law, justice and equity is a
ground for winding up."
The
fact is even an inquiry is even compounded by a further dispute as to
precisely who are the members of this particular corporation.
There
is an argument raised by Mr Hilton that Mr Hendricks own 51% in the
respondent. That notwithstanding that in sequestration
proceedings on
13 October 2007, Mr Hilton recognised that the applicant, through
Hendricks, had obtained 51% of the member's interest
in respondent,
in where he stated:
"Applicant
obtained 51% member's interest held on behalf of the applicant by
Peter Hendricks. The necessary CK2 forms
having been duly
completed to this effect, management and financial control was
taken over by applicant."
Mr
Coetzee submits somehow that I cannot take any account of that
particular averment, because it was not to be employed within
this
context. Maybe so, but it raises doubts in the discretion of this
Court as to quality of this particular kind of argument
and the fact
that it was Mr Hilton who had to sign the necessary CK2 forms to give
effect to the registration of membership.
It
is not in dispute that, it appears to me, is of substantial
evidential weight sufficient to in effect to refuse to grant this
application. This is a case which cries out for an independent
liquidator to examine the full affairs of the respondent, which
it
appears to be undenied, no longer trades and to make a determination
which would be in the best interest of all the competing
stakeholders. The fact that every single possible objection to this
application has been taken without, in many cases, much more
evidence
than a trawling through of all applicable cases, only compounds the
difficulty experienced by this Court. In the final
analysis, however,
it is clear that this, on a certainly just and equitable basis, is an
application that should be granted.
One
further issue requires comment, namely the question of costs. On this
point, given the confusion, I would have to agree with
Mr Coetzee
that it is respondent that has opposed 5 this particular application
and not Mr Hilton in his personal capacity and
accordingly I cannot
see any basis for an order other than that the
rule
nisi
is
confirmed. The respondent is declared to have been liquidated and the
costs are to be costs pursuant to the course of the liquidation.
DAVIS,
J