De Villiers v Global Diamond Resources SA (Pty) Ltd (621/03) [2003] ZANCHC 43 (26 September 2003)

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[2003] ZANCHC 43
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De Villiers v Global Diamond Resources SA (Pty) Ltd (621/03) [2003] ZANCHC 43 (26 September 2003)

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: 621/03
Date
heard: 2003-09-15
Date
delivered: 2003-09-26
In
the matter of
:
ALBERT
WILLEM DE VILLIERS PLAINTIFF
versus
GLOBAL
DIAMOND RESOURCES (PTY) LTD DEFENDANT
Coram:
MAJIEDT
J
JUDGEMENT
MAJIEDT
J:
The
applicant seeks the confirmation of the provisional liquidation
order issued by Olivier AJ on 18 July 2003. The respondent
opposes
such confirmation. There is also an application to intervene in
the proceedings by an alleged creditor of the respondent,
one Petrus
Frederick Cloete (“
the
intervening party
”).
The
application for provisional liquidation was brought on an urgent
basis. The respondent sought a postponement of that application,
but
was unsuccessful and a provisional order was issued. Voluminous
papers have been filed in answer and in reply – in fact
a fourth
set of affidavits has been presented by the respondent. At the
hearing counsel for the respondent went even further
and sought to
hand up two further answering affidavits from the Bar. I shall deal
with my rulings on these additional affidavits
and the reasons
therefor in due course.
The
applicant sought and obtained the provisional order of liquidation
on the grounds that
a) the
respondent is unable to pay its debts as envisaged in sec 345 of
the Companies Act, 61 of 1973 (
‘the
Act’)
in accordance with sec 344(f) of the Act; and
b) it
is just and equitable that the respondent should be wound up
(sec344(h) of the Act).
The
applicant had previously been in the employ of the respondent as
mine manager of the respondent’s Grasdrif Exploration Project
in
the Richtersveld area of Namaqualand in this province. It is
common cause that the respondent has been conducting its business
primarily at the said Grasdrif and at Caerwinning mine in the Barkly
West area where the respondent was similarly involved in exploration
activities. Although there has been a half-hearted attempt at
raising this Court’s alleged lack of jurisdiction as a point
in
limine
in the opposing papers, Mr. Walters for the respondent has wisely
elected not to pursue with it in argument. This Court clearly
has
jurisdiction to hear this application since the respondent’s main
place of business is situated in its area of jurisdiction
(sec 12(1)
of the Act).
The
applicant alleges that the respondent is indebted to him in the
following amounts:
5.1 the
sum of R70 436.04 in respect of accumulated leave pay.
5.2 an
amount of R1 026 291.26 in respect of an alleged agreed
severance benefit; and
5.3 an
amount of R250 000.00 in respect of a claim for defarmation.
With
regard to the alleged outstanding amounts in pars 5.2 and 5.3
above, there are in this Court two actions pending under case
numbers
1130/02 and 1170/02 respectively. Case number 1130/02 had been set
down for trial from 22 September 2003. In that matter
I had presided
in an opposed summary judgement application wherein I had refused
summary judgement, since I had taken the view that
the respondent has
a
bona
fide
defence.
6.1 It
is a well-established principle in our law that liquidation
proceedings ought not to be resorted to in order to enforce a claim
which is
bona
fide
disputed by a respondent company – the proper course is to have the
disputed claim adjudicated upon through ordinary litigation;
See:
Kalil
v Decotex (Pty) Ltd 1988 (1) SA 943 (A)
at
980;
Securefin
Ltd v KNA Insurance and Investment Brokers (Pty) Ltd [2001]
3
All SA 15
(W)
at
48;
Robson
v Wax Works (Pty )Ltd
2001 (3) SA 1117
(C)
6.2 Consequently
only the applicant’s claim for accumulated leave pay (par. 5.1
above) warrants further consideration herein –
it is abundantly
clear that in respect of the other two claims there is a serious
bona
fide
dispute,
in fact there is litigation pending in respect thereof.
7. The
respondent has, in opposing the confirmation of the
rule
nisi¸
averred
that:
7.1 it
disputes the applicant’s claim for accumulated leave pay;
7.2 it
is able to pay its debts;
7.3 it
would not be just and equitable to issue a final winding-up order;
7.4 in
any event this Court should, in the exercise of its discretion,
discharge the provisional order by reason of the fact that
the
applicant is abusing the process of Court in this application.
The
respondent has also raised
in
limine
the question of urgency. It also opposes the application to
intervene.
8. The
respondent is a company primarily engaged in diamond mining. Its
main business activities for the last few years has been
concentrated
on exploration at Grasdrif and Caerwinning. Its mother company is
based in the USA. The present application for liquidation
is the
third one brought against the respondent in the last two years.
During 2001 it was placed in final liquidation by order
of the
Witwatersrand Local Division at the behest of one of the respondent’s
creditors, Standard Bank. The final order was thereafter
set aside
after the respondent had settled its indebtedness to Standard Bank.
On 31 May 2002 the present applicant withdrew his application
for the
liquidation of the respondent in this Court, the parties having
reached a settlement in the matter. That settlement entailed
respondent settling its indebtedness to the applicant in respect of
unpaid salary and contained a clear and unequivocal reservation
of
the applicant’s rights.
9. Before
I proceed to the merits of the main application, I pause to consider
two preliminary aspects, namely the question of urgency
in the main
application and the intervening creditor’s application to intervene
in these proceedings. I shall deal firstly with
the latter aspect.
10.1 On
behalf of the intervening creditor Mr Muholonyi has submitted that a
clear case has been made out on the papers to grant the
application
to intervene. The intervening creditor relies on a claim for unpaid
salary. There is a significant dispute on the papers
between the
intervening creditor and the respondent on that aspect. According to
the respondent, the intervening creditor and other
workers left the
respondent’s employ of their own volition.
10.2 Leave
to intervene does not follow as a matter of course. Accepting for
the moment that the intervening creditor has shown that
he has a
valid, enforceable claim against the respondent, for which the
creditor holds no security, the following questions arise:
Why
could the intervening creditor not await the outcome of the main
application – how can he justify incurring additional costs
(which
he asks that the respondent be ordered to pay “to achieve a result
which was possibly or probably underway in any event”;
See:
Firstrand
Bank Ltd v Wallace Pienaar Properties CC 2002(2) SA 758 (W)
at 760 H-I (per Flemming DJP).
Has
the intervening creditor in his papers contributed anything further
in his own papers towards achieving the liquidation of the
respondent? Or as Flemming DJP put it in the abovementioned case:
“
Counsel was
asked why the new party sought to 'intervene'. Paraphrased, the
explanation is that when the new party became aware of
the contents
of the opposing affidavits, they thought it proper to proceed lest
the respondent's opposition to the applicant was
successful. On the
facts of the case that is rather difficult to justify. The opposing
affidavits relied on an alleged counterclaim
but, on respondent's
own showing, it left a substantial amount owing to the applicant.
Applicant was accordingly a creditor. The
picture of inability to pay
debts was clear. There was no particular reason which ought to
influence the Court's discretion nevertheless
not to order
liquidation. And in any event the new party did not testify about the
facts deposed to in the applicant's application
but introduced its
own facts. The inferences suggested in the two applications were
similar.
I
choose to approach the matter more fundamentally. This is not the
first example of collaborative efforts by financial institutions
and
other parties. They are, of course, entitled to do so. But it is at
the risk of the 'intervening' party. It is unlike a competing
application which is lodged in ignorance of an application already
pending. The new application was with full knowledge of a pending
application and even of the contents of the opposing affidavits. What
I have to deal with is not the question of access to the Court
or the
right to lodge a competing application. “
Can
intervention be justified on the basis that the applicant has been
tardy in prosecuting the application? (see the Firstrand
Bank case,
supra
at 761 D-H). I think not.
It
is clear to me that intervention cannot be justified at all when the
abovementioned three questions are to be answered – all
in the
negative. The intervening creditor is doing no more than to aver a
claim for unpaid salary (which the applicant is also relying
on in
part) and piggybacking on the applicant’s case as to the inferences
and conclusions on the respondent’s ability to pay
its debts.
10.3 Consequently
I am of the view that the application for intervention is ill
conceived and ought to be dismissed with costs.
11. Mr.
Walters, for the respondent, has launched a fierce onslaught on the
applicant’s flimsy grounds for urgency in the founding
affidavit.
The applicant relied mainly on the evidence of one
Reality
Mthetho
,
a security guard at Caerwinning Mine, who declared in an affidavit
that a scrubber plant had been removed from the Caerwinning plant
and
that “from the size of the plant and the fact that it had to be
mechanically lifted onto the back of the trailer, (he) believe(s)
it
to be a valuable item of machinery”.
This
is very flimsy indeed – in my view certainly not enough to pass
muster on the test for urgency. As Mr Botha, for the applicant,
has
correctly pointed out however, there was additional evidence
supporting urgency which emanates from the affidavit of one
Freddie
Malinga
,
a bulldozer operator in the respondent’s employ who made mention in
his affidavit of a front-end loader which had also been removed
from
Caerwinning Mine. I am of the view that the applicant has just about
succeeded in showing sufficient grounds for urgency herein.
12.1 Returning
to the merits of the main application – can it be said that the
applicant is guilty of abusing the process of Court?
12.2 I
have already made mention of the previous liquidation application
(which was withdrawn after a settlement had been reached),
as well as
the two pending actions instituted by the applicant in this court
against the respondent. It is certainly uncontroverted
that the
applicant is keenly litigious when it comes to disputes with the
respondent.
12.3 I
have also been referred by Mr. Walters to the fact that the applicant
has unsuccessfully pursued his claim for unlawful dismissal
against
the respondent in the CCMA. In dismissing the applicant’s
application for the condonation of the late filing of his claim
for
conciliation, the presiding commissioner held that the applicant has
no prospects of success and he also made an adverse finding
as to the
true motives of the applicant. I have indicated to Counsel that this
is an opinion which I ought not and shall not have
regard to herein.
The fact of the CCMA proceedings should, however, be taken into
account in holistically assessing the applicant’s
conduct and
bona
fides
herein.
12.4 There
are two further matters which cause considerable disquiet on this
aspect. The first is the fact that the applicant is
alleged to have
approached on 8 March 2002, by way of a letter (annexed to the
respondent’s opposing affidavit) the attorneys acting
for Grimbeeck
Civils, one of the respondent’s creditors in which letter the
applicant indicated that the respondent is unable to
protect its
assets. Brent Grimbeeck of the said Grimbeeck Civils has deposed to
a confirmatory affidavit in which he confirms having
received the
aforementioned letter from the applicant. More importantly, he also
alludes to the fact that the applicant had solicited
his support for
the liquidation of the respondent. The respondent avers that this
conduct on the part of the applicant:
was
a deliberate step to commit an act of insolvency so as to sustain an
application for the immediate winding-up of the respondent;
and
should
be seen in the context of the applicant’s earlier unsuccessful
attempt to persuade the main shareholders and investors
of the
respondent to agree to a management buy-out of the respondent
(“management” being inclusive of the applicant). For
this
purpose the applicant had taken the trouble of travelling to Saudi
Arabia to meet with the investors and shareholders there.
12.5 The
second troubling aspect relates to the fact (which is common cause on
the papers) that the applicant has, as part of an entity
known as
Eureka (Pty) Ltd, applied for the allocation of the Grasdrif mining
authorisation. The respondent, who has been the holder
of such
authorisation until early August 2003, has applied for the renewal of
the said authorisation which has lapsed due to the
effluxion of time.
The respondent avers that the aforementioned fact explains the true
motive for the applicant in bringing this
liquidation application,
i.e. as part of a systematic and premeditated strategy, engineered by
the applicant, to obtain the Grasdrif
operation (which the respondent
describes as its “primary asset”) for less than its true value.
12.6 The
applicant has vehemently denied any ulterior motive on his part in
the bringing of these liquidation proceedings. He avers
that he is
merely pursuing in a
bona
fide
manner his claims against the respondent and seeks to safeguard the
interests of the body of creditors as a whole.
12.7 This
Court has inherent jurisdiction to prevent abuse of its process, that
is to say to prevent its process being used “to
achieve a object
not within the scope of the process or for a purpose other than that
for which the proceedings are properly designed,
or
to obtain some ulterior or collateral advantage beyond what the law
offers
or that it would be unjust to obtain, or when the legal process is
diverted from its true course so as to serve extortion or oppression
or harassment to exert pressure so as to achieve an end which is
improper or frivolous or vexatious”;
See:
Blackman,
Jooste, Everingham: COMMENTARY ON THE COMPANIES ACT
at 14-76, footnote 3, and cases cited thereat.
Thus
even where one or more grounds for liquidation is established, a
Court may in its discretion refuse to order the company’s
winding-up where it is established that the sole or predominant
purpose of the applicant is
mala
fide
or ulterior, to harass or oppress the company.
See:
Tucker’s
Land and Development Corporation (Pty) Ltd
v
Soja (Pty) Ltd 1980(3) SA 253 (T)
at
256;
Wackrill
v
Sandton International Removals (Pty) Ltd 1984(1) SA 282 (W)
at
293;
Hulse-Reutter
v
HEG Consulting Enterprises (Pty) Ltd 1998 (2) SA 208 (C)
at
218.
12.8 In
the present matter I have a strong suspicion that there is more to
the applicant’s application than meets the eye. While
I am not
able to find as a proved fact that his application for the
liquidation of the respondent has been actuated by ulterior
motives,
I shall most certainly place his overall conduct, as described
hereinbefore, in the scale when I consider in due course
whether it
would be just and equitable to confirm the winding-up order or
whether, in the exercise of my discretion, I should grant
or decline
the request for confirmation of the provisional order.
13.1 With
regard to the applicant’s claim for unpaid accumulated leave, Mr.
Botha has averred that such claim stands undisputed
on the papers or,
at best for the respondent, is being resisted on grounds which are
unsustainable in law.
13.2 There
is considerable merit in these submissions. Initially the
respondent, quite amazingly, relied on an alleged waiver by
the
applicant by virtue of the settlement attained in the previous
liquidation proceedings which the applicant has brought in this
court
against the respondent. That defence was totally ill founded: in the
settlement agreement the applicant had clearly and unequivocally
reserved his rights to pursue his further outstanding claims against
the respondent. During argument Mr. Walters correctly conceded
that
there was no substance in this defence.
13.3 The
second defence relied upon relates to the fact that the respondent
has a counterclaim against the applicant for the latter’s
failure
to give one month’s notice of his resignation. Quite apart from
the fact that the applicant denies that he has resigned,
there is
much to be said for the argument that there has been repudiation of a
contract of service so that notice is not required.
In any event,
even a successful counterclaim would leave a balance due to the
applicant on his claim.
13.4 A
further defence is that the applicant presently unlawfully occupies
the respondent’s property at Delportshoop, for which
the respondent
has a substantial claim against the applicant. This claim is
illiquid and bad in law as a defence.
13.5 It
is of considerable significance that as yet no counterclaim,
foreshadowed in the respondent’s opposing affidavit in the
summary
judgement application, has seen the light of day in case no. 1130/02.
13.6 On
behalf of the applicant, his attorneys had addressed a letter of
demand in respect of the claim for unpaid accumulated leave
pay to
the respondent. Since no payment had been forthcoming, the
applicant relies on the deeming provision in sec. 345(1)(a)
of
the Act for his averment that the respondent is unable to pay its
debts. The respondent, of course, avers that it disputes the
said
debt but, as I have shown, does so on questionable grounds. A
guarantee for the payment of the full sum, foreshadowed in the
respondent’s answering affidavit, was handed to the applicant’s
attorney on the day of the hearing, but the latter found it
inadequate
and hence unacceptable.
13.7 I
am satisfied that the applicant has, on a preponderance of
probabilities, shown that it has the necessary
locus
standi
as a creditor herein and that the respondent should, in terms of the
provisions contained in sec 345(1)(a) of the Act, be deemed
to
be unable to pay its debts.
13.8 In
support of the aforementioned finding, I make mention of the fact
that the respondent has clearly not been paying long outstanding
and
overdue creditors, despite having undertaken to do so. During the
discharge of the final order of liquidation in the Witwatersrand
Local Division, referred to earlier, undertakings were made that all
outstanding debts would be settled. On the respondent’s own
papers
it is clear that a number of creditors have not been paid a year
later, despite undertakings having been made.
14.1 It
is abundantly clear on the papers that the respondent presently finds
itself in very turbulent financial waters indeed. Mr.
Walters has
not contended otherwise. He has also very fairly conceded that the
respondent cannot generate revenue at present, since
its operations
at Caerwinning and Grasdrif have ground to a halt.
14.2 As
I have indicated, many of the respondent’s creditors have not
received payment, despite solemn undertakings that they would.
14.3 In
addition, the respondent is deemed to be unable to pay its debts in
terms of sec 345(1)(a) of the Act.
14.4 On
its own papers, more particularly
ex
facie
its financial statements, the respondent has been trading at a
substantial loss for the past three years or so – in 2000 the loss
exceeded R6 million; more than R4 million in 2001 and more
than R2 million in 2002. For the period 1 January to 31 July
2003,
the loss stands at R2.7 million.
14.5 Moreover,
the respondent’s liabilities exceed its assets. Of particular
concern is the fact that the respondent’s main assets,
namely its
mining infrastructure, has been encumbered as security for its short
term borrowings.
14.6 The
above facts portray a very bleak picture indeed. Are there
reasonable prospects of calmer waters ahead? Mr. Botha has urged
me
to confirm the provisional winding-up order, contending that there is
no light at the end of a very dark tunnel for this company.
15. The
respondent has held out hope for its financial rescue in the
following respects:
15.1 The
main shareholders/investors (who also happen to be the respondent’s
main creditors) have indicated a firm commitment to
inject
substantial financial resources into the respondent. The firmness of
this commitment has already been illustrated by the
fact that these
shareholders/investors have pledged and paid an amount of
US $ 95 000.00 over to the respondent, so
it has been
submitted. Mr Botha has poured scorn on this commitment, referring
me to previous promises and undertakings by the
shareholders which
have failed to materialise in full or at all. While there is
certainly some justification for a degree of scepticism
on this
aspect, I am prepared to accept that there is a genuine commitment to
supply the respondent with a lifeboat. Furthermore,
one needs to
bear in mind that, although the amount pledged and paid is wholly
insufficient to meet the respondent’s debts and
recurring
operational expenditure, it has been clearly stated in the
respondent’s papers that this is to be seen as “initial
funding”
only.
15.2 There
is also reliance placed on the proverbial white knight or, to be
consistent, an outside rescue vessel. This is in the
form of a joint
venture partner in respect of the Caerwinning and Grasdrif operations
of the respondent. Initially vague references
had been made to a
company known as SA Gemstones with which negotiations were being
conducted. In his further answering affidavit,
the deponent for the
respondent (its managing director) alludes to a company known as Pan
African Diamonds (Pty) Ltd which has made
an in-principle commitment
to such joint venture. Again there is ample room for scepticism on
this score, but I am prepared to consider
this as a prospect which is
not too remote in favour of the respondent.
15.3 The
respondent has put forward an affidavit of a geologist, one JP van
Wyk, as to the value of the mining deposits at Grasdrif
and
Caerwinning. Two aspects cast a very dark shadow over the
evidentiary value of these estimates:
a) the
fact that the respondent had previously been involved in litigation
with the very same Van Wyk over
alleged
misrepresentations which van Wyk had made about the value of diamond
deposits at Caerwinning!
(I
point out that Van Wyk is a former director of the respondent.)
b) Furthermore,
the said note on the estimates contain a clear disclaimer in the
following terms:
“
Although
the figures ... are presented with the best of my knowledge about
these deposits and m
ay
probably be attainable with careful and proper exploration and mining
techniques, given the unpredictable nature of alluvial diamond
deposits,
these
figures should be considered as speculative and may not be used to
solicit investments or otherwise influence potential investors”
(emphasis
supplied).
Hardly
any reliance can in my view be placed on such a speculative opinion.
15.4 The
respondent has averred that the wishes of its creditors should be
taken into account. This is a two-pronged submission:
a) Firstly
there are the main creditors, who are also the respondent’s main
shareholders/investors, who have indicated that they
are keen to have
the respondent continue as a going concern. They have also
committed funds to rescue the respondent and have,
to the extent of
US $ 95 000.00, put their money where their mouths
are.
b) The
applicant had made mention in his founding affidavit and in the
replying affidavits of a number of creditors of the respondent
who
have not been paid for a substantial length of time. The respondent,
in its further answering affidavit, has obtained affidavits
from all
these creditors (eight in total) in which a willingness to further
defer payment is expressed. In addition, all these creditors
have
indicated that they desire the rule
nisi
to be discharged herein. Mr. Botha has referred to the fact
that these affidavits appear to be
pro
forma
.
The reason for this, in my view, may simply be one of expediency.
What is of more substance is Mr. Botha’s submission that these
creditors do not appear to be properly apprised of all the facts
herein, more particularly the respondent’s parlous financial
situation.
For this he relies on
Porterstraat
69 Eiendomme
v
PA Venter Worcester 2000(4) SA 598 (C)
at
613 H – 614 E.
It
seems to me that that cannot be the case – the creditors in the
present matter most certainly have sufficient knowledge of the
facts.
It can also not be said that their approach is unreasonable, bearing
in mind that a similar stance has been adopted by the
respondent’s
main creditors. I come to this conclusion in the light of the fact
that some of these creditors had made detailed
affidavits in the
founding papers â€“ ostensibly in support of the applicant’s
application. I fail to see how they can now
be said to be ignorant
of the full facts of this matter.
16. During
the hearing I had allowed the introduction of a fourth set of
affidavits – the further answering affidavit from respondent.
I
did so because:
a) Mr.
Botha for the applicant did not seriously oppose the introduction
thereof; and
b) it
appeared to me to be just that the respondent be permitted to deal
with the numerous new matters introduced by the applicant
in its
replying papers.
A
subsequent confirmatory affidavit of the main deponent for the
respondent, Macdonald, was handed in from the Bar during the hearing
and admitted for the same reason. The further affidavit of Vries was
however disallowed, because it was a thinly veiled attempt
to plug a
loophole in the respondent’s case which appeared in its answering
affidavit.
17.1 It
is perhaps opportune at this juncture to deal very briefly with the
apparent disputes of fact on the papers herein. As is
apparent from
this judgement, there are numerous disputes of facts on a number of
issues in this matter, some more important and
material than others.
Not surprisingly, neither of the parties has applied for a referral
of this matter for the hearing of oral
evidence. The reason for that
is clear: these disputes are either not genuine,
bona
fide
disputes of fact or they do not preclude the matter from being
decided on the papers as they stand.
17.2 In
opposed provisional winding-up applications a Court has a wide
discretion to order the hearing of oral evidence, even where
no
prima
facie
case has been established by an applicant. Such discretion would,
however, only be exercised in favour of the hearing of oral evidence
in
appropriate instances
.
See:
Shepstone
& Wylie & Others v Geyser NO 1998(3) SA 1036 (A)
at
1044-5;
Atkinson
v Rare Earth Extraction
[2002] 3 All SA 68
(C)
at 72-73.
The
same principle applies in my view to opposed confirmation proceedings
of a provisional winding-up order, such as the present one.
17.3 In
the present matter there are no grounds justifying the hearing of
oral evidence, since the matter can be resolved on the papers
as they
stand.
18.1 Upon
a careful consideration of the facts as they appear from the papers
and having regard to Counsel’s arguments, I am of
the view that the
applicant has established, on a balance of probabilities, that the
respondent is unable to pay its debts within
the meaning of sec. 345
of the Act. I make this finding in respect of the applicant’s
outstanding accumulated leave pay.
18.2 The
matter does not end there however – the question which arises is:
would it be just and equitable to place the respondent
in final
liquidation? The enquiry into what is just and equitable “postulates
not facts but only a broad conclusion of law, justice
and equity, as
a ground for winding up”
per
Trollip J (as he then was) in
Moosa
NO
v
Mavjee Bhawan (Pty) Ltd 1967(3) SA 131 (T)
at 136. As to a Court’s general discretionary power to grant or
decline a winding-up order even where grounds therefor have been
established, see:
Tjospomie
Boerdery (Pty) Ltd
v
Drakensberg Botteliers (Pty) Ltd 1989(4) SA 31 (T)
at
42-43.
Kyle
v
Maritz & Pieterse Inc [2002] 3 All SA 223 (T)
at 232.
In
considering this aspect, regard must also be had to the wishes of
creditors and the respondent’s shareholders where sufficient
evidence of such wishes exists.
See:
Leca
Investments (Pty) Ltd
v
Shiers
1978(4) SA 703 (W)
at
705.
18.3 I
have grave doubts as to whether it can be said, on the facts of this
case, that it would be just and equitable to place the
respondent in
final liquidation. I expressly refrain from making a finding
thereon. In the exercise of my discretion I do however,
decline to
confirm the
rule
nisi
,
despite the strong case made out by the applicant. I do so for the
reasons hereinafter enumerated:
a) The
overwhelming majority of creditors, both in value and in number,
desire the continued operation of the respondent and request
the
discharge of the provisional winding-up order. I am satisfied that
these creditors have sufficient factual knowledge of and
insight in
the matter to be able to make such a request.
b) The
respondent’s main shareholders (and main creditors) have made a
firm commitment to place sufficient financial resources at
the
respondent’s disposal to enable it to continue operating. This
commitment has been underscored by initial funding of US $ 95 000.00.
c) It
can safely be accepted that there are significant diamond deposits
ready for mining at the respondent’s Grasdrif operations.

Considerable sums of money have been expended in exploring for the
diamonds (although such monies have not always been optimally
expended) and have yielded favourable results. The applicant,
through Eureka (Pty) Ltd, has in fact corroborated the fact of the
existence of such diamond deposits at Grasdrif – why else would he
take the trouble of applying for authorisation to mine there?
d) I
have grave difficulty in accepting, without reservation, the
applicant’s
bona
fides
in this application. While I cannot find as a fact that he had acted
with an ulterior purpose herein, it is an aspect which weighs
to an
extent in tilting the scales ever so slightly away from him.
e) There
appears to be a not too remote prospect of the respondent obtaining a
joint venture partner for its Grasdrif and Caerwinning
operations.
This would cause substantial further injecting of funds into the
respondent.
19. Having
come to the aforementioned conclusion, there remains the matter of
costs. The applicant has been successful in obtaining
a provisional
order of liquidation. Mr Botha has urged that I make a costs order
in the applicant’s favour to that limited extent,
even if I should
discharge the provisional winding-up order. I decline to do so, by
reason of the fact that at the time of the issuing
of the provisional
order no facts as to the merits of the matter were at hand from the
respondent’s side – it having unsuccessfully
sought a
postponement of the matter. Costs must follow the outcome.
20. I
issue the following order:
20.1
The
application of Petrus Frederick Cloete for leave to intervene in
these proceedings is dismissed with costs
.
20.2
The
provisional winding-up order, issued on 18 July 2003, is hereby
discharged
.
20.3
The
applicant is ordered to pay the respondent’s costs.
___________
SA
MAJIEDT
JUDGE
ADVOCATE
FOR THE PLAINTIFF : Adv CH Botha
ADVOCATE
FOR THE DEFENDANT : Adv G Walters
ATTORNEY
FOR THE PLAINTIFF : AB Horwitz
ATTORNEY
FOR THE DEFENDANT : Neville Cloete
DATE
OF HEARING : 2003-09-15
DATE OF
JUDGEMENT :
2003-09-26