GWK (Pty) Ltd v Jannie Coffee Boerdery CC and Others (1552/2006) [2007] ZANCHC 5 (24 August 2007)

About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: High Court, Northern Cape Division, Kimberley
SAFLII
>>
Databases
>>
South Africa: High Court, Northern Cape Division, Kimberley
>>
2007
>>
[2007] ZANCHC 5
|

|

GWK (Pty) Ltd v Jannie Coffee Boerdery CC and Others (1552/2006) [2007] ZANCHC 5 (24 August 2007)

Reportable:
Yes / No
Circulate to Judges: Yes
/ No
Circulate
to Magistrates: Yes / No
IN
THE HIGH COURT OF SOUTH AFRICA
(Northern
Cape Division)
Case
no
: 1552/2006
Date
Heard
: 30/03/07
Date
Delivered
:
24/08/07
In
the matter of
:
GWK
(PTY) LTD APPLICANT
versus
JANNIE
COFFEE BOERDERY CC 1
ST
RESPONDENT
JOHANNES
ADRIAAN COFFEE 2
ND
RESPONDENT
MANDY
INVESTMENT 195 (EDMS) BPK
3
rd
RESPONDENT
JUDGMENT
MOLWANTWA
AJ:
The
applicant, GWK (Pty) Ltd, is a registered company with limited
liability with its head office at De Villiers Street, Douglas,
Northern Cape. The first respondent, Jannie Coffee Boerdery CC (“
the
CC”
)
is a Close Corporation registered in terms of the Act on Close
Corporations No 69 of 1984 with its head office at No 9 Van Riebeeck
Avenue, Prieska, Northern Cape and its business premises situated at
400 Premises, Gariep Nedersetting, Groblershoop, Northern
Cape. Mr
Johannes Adriaan Coffee is the second respondent the sole member of
the CC as well as the sole director of Mandy Investments
195 (Pty)
Ltd
(“Mandy
Investment”)
.
The third respondent is also a registered company with limited
liability with its head office situated in Namibia. Mr Coffee

deposed to the respondents’ Answering Affidavit.
The
applicant sought the following relief:
2.1 An
order declaring that the first respondent is insolvent as
contemplated in the Insolvency Act No 24 of 1936 (“the Act”)
read
with the provisions of the Companies Act No 61 of 1973 (“
the
Companies Act
”)
and therefore be placed under provisional liquidation;
2.2 That
a
rule
nisi
be issued calling upon the first respondent to give reasons why a
provisional winding up order should not be granted and be served
on
the first respondent;
2.3 That
the applicant should comply with the provisions of section 346(4A)
and section 346A of the Companies Act;
2.4 That
the costs of the application should be costs in the liquidation; and
2.5 Further
and alternative relief.
3. On
14 December 2006 the applicant applied for a provisional liquidation
of the CC on an urgent basis. The Court however postponed
the matter
sine
die
and made certain orders pertaining to the filing of opposing and
replying affidavits. On 22 June 2007 when I heard arguments from
both
counsel, the parties had filed all papers. The necessity for a
provisional order therefore fell away.
4. In
this application Mr Van Niekerk on behalf of the applicant argued
that the CC was commercially insolvent by virtue of the fact
that:
4.1 The
CC was not able to pay its debts; and
4.2 It
was only just and equitable that the CC be placed under provisional
liquidation.
5. In
deciding whether or not a company carrying on business should be
wound up,
Berman
J
in
ABSA
Bank Ltd v Rhebokskloof (Pty) Ltd And Others
1993
(4) SA 436
(C) at 440 paras F-I states :
“
The
primary question which a Court is called to answer in deciding
whether or not a company carrying on business should be wound
up as
commercially insolvent is whether or not it has liquid assets or
readily realisable assets available to meet its liabilities
as they
fall due to be met in the ordinary course of business and thereafter
to be in a position to carry on normal trading - in
other words, can
the company meet current demands on it and remain buoyant? It matters
not that the company’s assets, fairly valued,
far exceed its
liabilities: once the Court finds that it cannot do this, it follows
that it is entitled to, and should, hold that
the company is unable
to pay its debts within the meaning of s345 (1) (c) as read with s344
(f) of the Companies Act 61 of 1973 and
is accordingly liable to be
wound up…”
6.
The parties entered into a written agreement that stipulated that
the applicant will give the CC credit for goods sold and delivered.
In terms of this agreement the CC had to pay instalments on or before
the 1
st
day of every month failing which the applicant could resort to the
recourse of demanding payment of the outstanding balance plus
interest. By virtue of his directorship, Mr Adriaan Coffee signed
bonds on behalf of the CC and Mandy Investments for goods sold
and
delivered as per the summons marked Annexure “D” to the Notice of
Motion. Hence the application cites the three respondents
as alluded
to above.
7. When
the CC failed to pay as agreed upon the applicant, in a letter dated
19 September 2005, demanded payment of the outstanding
balance in the
amount of R733 945.69 in respect of both accounts payable on or
before 3 December 2005. In a fax-letter dated 16 September
2006 the
CC indicated that it had paid R20 000.00 in reduction of the debt and
would as soon as it had received payment from a particular
buyer, pay
all the money due. Correspondence between the attorneys of both
parties was exchanged and no resolution could be reached.
On 2
November 2006 the applicant applied for default judgment against the
CC for the outstanding balance in respect of both accounts
in Case No
1320/06. The CC filed opposing papers in which it indicated that it
had a
bona
fide
defence. The applicant applied for summary judgment and that matter
was still pending.
8. On
2 February 2006 as per Annexure “K1” of the Notice of Motion, the
CC admitted its indebtedness to the applicant. In the
same letter,
it further, offered payment of an amount of R10 000.00 per month
towards paying off the outstanding balance. The offer
was accepted by
the applicant and incorporated in the Certificates of Balance made
out by the applicant on 25 October 2006 in the
amounts of R264 244,
56 and R178 126, 33. These certificates are Annexures “A” and “B”
to the Notice of Motion.
9. Section
344 of the Companies Act provides that if certain grounds or
circumstances exist a company may be wound up by the court.
These are
if:
“
(f)
The
company is unable to pay its debts as described in section 345;
(h)
It appears to the Court that it is just and equitable that the
company should be wound up.”
10.
Section
345 of the same Act provides
:
“
(1) A
company …shall be deemed to be unable to pay its debts if-
(a) a
creditor…to whom the company is indebted in a sum not less than one
hundred 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;
…
and
the company…has for three weeks thereafter neglected to pay the
sum…
(c) it
is proved to the satisfaction of the Court that the company is unable
to pay its debts.
”
11. The
CC had acknowledged its indebtedness to the applicant in February
2006 and then pledged to pay the applicant in instalments
but did not
keep this undertaking. Instead after the applicant demanded payment
of the outstanding balance, the CC simply ignored
the demand and
claimed that the applicant had calculated the interest incorrectly.
The CC subsequently signed a bond in favour of
First National Bank
for payment of a debt with First National Bank. This on its own
shows that the CC was giving preferential treatment
to other
creditors to the detriment of the applicant.
12. Where
the main object for which a company was formed is not possible of
being attained; in other words, the company’s
substratum
has failed or disappeared then it is just and equitable to wind up
such a company as was held to be the case in
Rand
Air (Pty) Ltd v Ray Bester Investments (Pty) Ltd
1985
(2) SA 345
(W). Mr Van Niekerk contended that this is exactly what
happened in this case.
The
CC was until recently registered as a company but registered as a
Close Corporation on 30 October 2006 as evidenced by copies
of
certificates of the Registrar of Companies as per Annexures “C
1
”
and “C
2
”
to the Notice of Motion.
13. Mr
Coetzee, notwithstanding this inability on the part of the CC to pay
or to satisfy this very substantial debt, argued in the
first place
that the CC was not commercially insolvent based on the following:
13.1 That
it has already made payment of R360 000.00 to the applicant and has
R495.000, 00 in its attorney’s Trust Account to settle
the
applicant’s debt;
13.2 That
its assets are valued at R4 million - plus and therefore in excess of
its liabilities of R2 million - plus.
14. He
submitted, in the second place that the applicant had conducted its
affairs with the CC with mala fide and in an obstructive
manner. In
that when the CC approached FNB for financial assistance the
applicant refused to release part of the bond in excess
of its debt.
In the light thereof he contended that it would not be fair nor just
nor equitable to grant the applicant a winding
up order. I am unable
to uphold this contention.
15. It
is perhaps the manner in which the CC has conducted itself in its
dealings with the applicant referred to and elaborated upon
below
which made the applicant to opt for this route. It is a factor which
is to be taken into account in deciding whether or not
to exercise
one’s discretion against the CC and grant a winding up order.
16. There
are several factors which support Mr Van Niekerk’s contention that
the CC has no
bona
fide
defence. In paragraph 11 of the opposing affidavit Mr Coffee stated
that there was no agreement that it repays the applicant and
yet in
the preceding paragraph 9 he stated that the agreement between him
and the applicant was that the applicant will purchase
the machines
and packaging material and the invoices provided will then form part
of the credit previously granted to the CC. If
that is the position
one wonders then how else would this business agreement benefit the
applicant if there was no understanding
that the CC will repay the
applicant.
17. The
sales agreement that the applicant and the CC concluded annexed to
the replying affidavit marked “JK” clearly evidences
the terms
and conditions of the sale agreement. This documents states,
inter
alia
under the heading
“BETALING
VAN TOTALE VERKOOPPRYS
”
,
payment of interest at 0,5 % lower than the interest payable on
production accounts. The CC’s argument that the applicant’s
calculations in respect of the interest charged are wrong is not
supported by any evidence. Furthermore in a letter dated 3 February
2006 it is stated that the CC has made out two R10 000.00 cheques as
well as payment proposals. The CC also undertook to pay the
whole
amount in full and final settlement with interest.
18. My
view on the facts before me is that the CC is commercially insolvent.
It has failed to pay its debts to the applicant and
several other
creditors. Even if its assets
ex-facie
the papers exceed its debts it is abundantly clear that the applicant
had proved that the CC was unable to meet its indebtedness
amounting
to R733 945.69. See
ABSA
Bank Ltd v Rhebokskloof (Pty) Ltd & Others
supra
.
In
the event that the CC gets deeper into financial trouble, as is
inevitable, the applicant and other creditors will be seriously
prejudiced. The CC has already manifested a preference of creditors
by paying FNB its debt whilst owing the applicant.
19. I
am satisfied that the applicant has made out a case that the CC is
commercially insolvent and liable to be wound up. See
Johnson
v Hirotec
(Pty) Ltd
2006 (4) SA 930
(SCA). The CC has managed to keep itself
artificially afloat by means of paying its creditors selectively and
negotiating extension
for other payments. These are acts of
insolvency which demonstrate that the CC was experiencing serious
cashflow problems. See
Bree
Holdings Pty Ltd
1972
(3) SA 353
(T) at 354-355;
PA
Venter Worcester Pty Ltd
2000 (4) SA 598
(C). The situation is exacerbated by the fact that
the farm namely
“Groot
Drink No 400, Siyanda District Gordonia”
which was generating a substantial part of the CC’s income has been
sold to Henque 1273 CC.
20. Having
regard to all the circumstances here present I am satisfied that it
is just and equitable that the CC be wound up.
In
the circumstances I make the following order.
ORDER
1.
That Jannie Coffee Boerdery CC is placed under liquidation in the
hands of the Master of this High Court;
2. That
Jannie Coffee Boerdery CC is ordered to pay the wasted costs of this
application.
____________________________
BC
MOLWANTWA
ACTING
JUDGE
HIGH
COURT OF SOUTH AFRICA
NORTHERN
CAPE DIVISION
FOR
THE APPLICANT : ADV J VAN NIEKERK (SC)
INSTRUCTED
BY : DUNCAN & ROTHMAN ATTORNEYS
FOR
THE RESPONDENT : ADV W COETZEE
INSTRUCTED
BY : ENGELSMAN MAGABANE INC.