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2024
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[2024] ZAFSHC 230
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Exceed Plant Trading CC v LKGA Construction & Projects 1 CC (2556/2024) [2024] ZAFSHC 230 (8 August 2024)
IN
THE HIGH COURT OF SOUTH AFRICA
FREE
STATE DIVISION, BLOEMFONTEIN
Reportable:
NO
Of
interest to other Judges: NO
Circulate
to Magistrates:
NO
Case
no:
2556/2024
In
the matter between:
EXCEED
PLANT TRADING CC
APPLICANT
and
LKGA
CONSTRUCTION & PROJECTS 1 CC
RESPONDENT
Coram:
JP DAFFUE J
Heard
:
8 AUGUST 2024
Delivered
:
8 AUGUST 2024
ORDER
1
The respondent close corporation is hereby placed in final
liquidation.
JUDGMENT
Daffue
J
Introduction
[1]
This is the extended return date of a rule nisi issued
on 6 June 2024
against the respondent, LKGA Construction & Projects 1 CC, it
being a close corporation. When the respondent
filed its answering
affidavit just before the return date of 18 July 2024, the parties
agreed that the return date be extended
and the application postponed
to the opposed roll of 8 August 2024 with leave to the applicant to
file its replying affidavit.
This has now been done. The
parties filed their heads of argument and oral argument was presented
to the court this morning.
Statutory
requirements and compliance with the court order of 6 June 2024
[2]
It is not the respondent’s case that the applicant
failed to
comply with any of the statutory requirements or the rule nisi
granted on 6 June 2024. I have perused the papers and
am satisfied
that all requirements have been met and that the papers are
technically in order.
The
undisputed facts
[3]
The following are not in dispute:
a.
the citation of the parties;
b.
that the written rental agreement was entered
into between them on 19
September 2023 in respect of which the applicant would lease certain
yellow equipment to the respondent
to enable it to comply with its
contractual obligations;
c.
the
invoices issued by the applicant to the respondent with particular
reference to annexures TCA5F to TCA5L of the founding affidavit
(excluding annexure TCA5J) in which regard the respondent’s
deponent stated the following:
[1]
‘
Save to admit the
attached annexures, [the reference is actually to all invoices and
not only the aforesaid] I submit that the statement
of account
invoices confirm that the applicant is not owed what is alleged by
the applicant but rather way below that.’
d.
eventually, and during oral argument both
counsel confirmed, bearing
in mind invoices so admitted, the respondent conceded that an amount
in excess of R 1.8 million was
due and payable to the applicant;
e.
the two counsel differ slightly in their calculations
and were about
R 30 000 apart,
f.
if the
amount of R 2 070 000 is subtracted from the total amount in the
last statement,
[2]
the
respondent admitted under oath the remainder of the invoices in an
amount of R 2 240 918.70;
g.
the last invoice for January 2024 was issued
on 2 February 2024;
h.
on 3 April 2024 applicant’s attorneys
sent a letter of demand
in terms of s 345(1) of the Companies Act 61 of 1973 (the old
Companies Act), read with s 69 of the Close
Corporations Act 69 of
1984 (the CC Act), to various addresses provided by the respondent
and its member, but it was particularly
sent to the registered
address of the respondent;
i.
the respondent did not respond
to this letter and did not make
payment;
j.
the application was issued on
9 May 2024 and the documents were
served on the respondents and others as is evident from the papers;
k.
the application was not opposed and a rule
nisi was issued on 6 June
2024 with return date 18 July 2024 on which date the rule nisi was
extended and the application postponed
to 8 August 2024 by agreement.
Evaluation
of the parties’ submissions
[4]
The applicant brought the application in terms of s 345(1)
of the old
Companies Act, read with s 69 of the CC Act. These two sections set
out the circumstances under which a company or close
corporation is
deemed unable to pay its debts. Mr Mogwera did not make any
submissions about the letter of demand and the failure
of the
respondent to either reply thereto, or to pay what it accepted was
due and payable.
[5]
An unpaid
creditor who cannot obtain payment and who brings his claim within
the parameters of the aforesaid two sections is entitled
to relief,
subject to the limited discretion of the court.
[3]
Such creditor does not have to issue summons for payment, but may
embark on a winding-up process as the applicant has done.
[6]
As mentioned, the last invoice is dated 2 February 2024.
The last
payment was received from the respondent on 19 January 2024. I am
satisfied that the applicant has proven that the respondent
is
commercially insolvent. It cannot pay its creditors and the applicant
in particular.
[7]
If an
applicant’s claim is
bona
fide
disputed by the respondent on reasonable grounds, an application for
a winding-up order cannot succeed. In terms of the so-called
Badenhorst
Rule,
[4]
accepted by the Appeal Court in
Kalil
v Decotex
[5]
the
respondent must show the existence of a
bona
fide
dispute on reasonable grounds. Corbett JA put it as follows in
Kalil v
Decotex
[6]
:
‘
Consequently,
where the respondent shows on a balance of probability that its
indebtedness to the applicant is disputed on
bona fide
and reasonable grounds, the Court will refuse a winding-up order. The
onus
on the respondent is not to show that it is not indebted
to the applicant: it is merely to show that the indebtedness is
disputed
on
bona fide
and reasonable grounds.’
[8]
The
respondent queried the acknowledgement of debt (AOD)
[7]
relied upon by the applicant in terms whereof the respondent agreed
to pay R 2 070 000. In terms of the AOD this amount
is
indebted in respect of ‘monies for agreed consultation and
contract fees’, whilst the applicant stated under oath
that
this claim is in respect of its portion of the profit to be made by
the respondent and which was to be paid up-front. Mr Mogwera
submitted that the applicant failed to attach the written profit
sharing agreement entered into between the parties and therefore,
this AOD could not stand on its own. I would have considered and
dealt more fully with this issue if the applicant relied on this
claim only. I must say that Mr Mogwera’s submission is not in
line with his client’s version in the answering affidavit,
stating that a deadlock arose between the parties and the profit
sharing agreement had not finally been agreed upon.
[8]
Based on my approach, it is not necessary to come to a final
conclusion regarding the amount of R 2 070 000. Even if
I
accept that respondent has shown
that
its indebtedness is disputed on
bona
fide
and reasonable grounds, that does not follow that the applicant is
not a creditor and that the rule nisi should be discharged.
I refer
to the facts agreed upon and the undisputed debt of at least R 1.8
million
ex
facie
the invoices.
[9]
Mr Mogwera submitted that the court’s discretion
should be
exercised in favour of the respondent, the reason being that the
applicant is guilty of ‘greediness’. If
it was prepared
to wait a little bit, so he submitted, the claim would have been paid
in full from funds payable by the Government
to the respondent.
Unfortunately for the respondent, it did not respond to the letter of
demand and/or present facts under oath
in its answering affidavit how
much was expected from whom and when would payment be due. It is
reiterated that the applicant waited
three months since the last
invoice before it sent its letter of demand. It is now the 8
th
of August 2024 and a period of sixth months has lapsed since the last
invoice and the undisputed outstanding account has not been
paid.
Surely, it could not be expected of the applicant to allow the
respondent to use its expensive equipment further without
being paid
the rentals agreed upon. There is no commercial sense in allowing a
lessee the usage of the lessor’s equipment
without payment of
the remuneration agreed upon.
[10]
The respondent failed to provide the court with details of its assets
and liabilities.
The court is in the dark as to its solvency status.
However, even if the value of the close corporation’s assets
may exceed
its liabilities – an aspect totally ignored by the
respondent – this does not preclude a finding that it is unable
to pay its debts. The respondent also failed to show what book debts
and/or future claims are payable to it. What is known and certain,
is
that the respondent cannot pay its debts and it is therefore clearly
commercially insolvent. This has been proven on a balance
of
probabilities.
[11]
I am satisfied that the applicant has made out a proper case and that
the rule
nisi should be confirmed. Therefore, a final liquidation
order shall be issued.
Order
[12]
The respondent close corporation is hereby placed in final
liquidation.
JP
DAFFUE J
Appearances
For
applicant:
Adv J
Ferreira
Instructed
by:
Noordmans
Attorneys
Bloemfontein.
For
respondent:
Adv T
Mogwera
Instructed
by:
Fixane
Attorneys
Bloemfontein.
[1]
Record at 98; para 23 of the opposing affidavit.
[2]
Record at 39; annexure TCA5A to the founding affidavit.
[3]
Absa
Bank Ltd v Rhebokskloof (Pty) Ltd
and
Others
1993 (4) SA 436
(C) at 440-441.
[4]
Badenhorst
v Northern Construction Enterprises (Pty) Ltd
1956 (2) SA 346
(T) at 347H-348C.
[5]
1988 (1) SA 943 (AD).
[6]
Ibid
at 980B-D.
[7]
Record at 36; annexure TCA4 of the founding affidavit.
[8]
Record at 97; answering affidavit para 16.