IN THE HIGH COURT OF SOUTH AFRICA
[EASTERN CAPE DIVISION – MAKHANDA]
CASE NO.: 2487/2023
In the matter between:-
KETS GROUP (PTY) LTD APPLICANT
and
BUSINESS PARTNERS LIMITED RESPONDENT
JUDGMENT
NORMAN J:
[1] This is an application for rescission of a winding up order by the applicant who
is presently in liquidation. The applicant applied for rescission of the winding –
up orders in terms of section 354 of the Companies Act 61 of 1973 (“the
Companies Act”) and also in terms of the common law. The application is
opposed by the respondent.
[2] The application is in two parts , A and B . Part A was brought on an urgent
basis wherein Kets sought an order for the suspension and/or a stay of an
order of final winding up granted by Laing J on 05 March 2024. Part A was
heard on 02 April 2024 and it was dismissed with costs by Dunywa AJ on 07
May 2024. Part B is the subject of this application. T he applicant seeks the
following main relief:
“5.1 Rescinding the Orders of 05 March 2024 and 28 November
2023 placing Kets under final and provisional liquidation
respectively; and
5.2 suspending “any warrants of execution issued subsequent
thereto pending final determination of this application.”
[3] As can be gleaned from paragraph 5.2 of Part B , above, the order that is
being sough t is similar to the one that was dismissed by Dunywa AJ on 07
May 2024.
Parties
[4] Applicant is Kets Group Proprietary Limited (Kets), a company with limited
liability that is duly registered and incorporated in terms of the company laws
of this country. Kets has its registered address at 87 Prince Alfred Street,
Queenstown, Eastern Cap e. Kets is in liquidation and i t has as its sole
director, Ms Lungelwa Okuhle Ketsekile (Mrs Ketsekile). She is the deponent
to the founding affidavit in this rescission application.
[5] Respondent is Business Partners Limited, (BPL), a company with limited
liability duly registered in terms of the company laws of the Republic of South
Africa. Respondent is a specialist risk finance company and operates its
business at 23 Hofmeyr R oad, Westville. The parties shall be referred to
hereinafter as Kets and BPL.
Factual background
[6] BPL alleged in the winding up application that Kets is indebted to it in the sum
of R1,563,640.64. The debt allegedly arose from a loan agreement concl uded
between the parties on 13 May 2019, in terms of which an amount of
R1,650,000 was loaned to Kets. Kets was, in terms of the agreement, to make
monthly instalments of R22 962.88 over a period of 120 months commencing
on 1 September 2019. The other terms of the agreement are not relevant for
the purposes of this application.
[7] In the winding up applicati on BPL alleged that Ket s fell into arrears of its
monthly instalments towards the latter part of 2022. A period of eleven months
had lapsed and Kets was not able to pay its monthly instalments to BPL. A
certificate of balance was annexed to the papers evi ncing Kets’s
indebtedness to BPL. The certificate of outstanding balance signed by the
Legal Manager of BPL reflected the arrears as at 25 September 2023 to be in
the sum of R239 169.73 and the outstanding balance as R1 563 640.64.
[8] On 24 July 2023, BPL’s legal representatives, Edward Nathan Sonnen bergs
(ENS), sent a letter of demand to Ket s wherein it dealt with the following:
advising Kets that it had breached the loan agreement, was in arrears in the
amount of R193,625.47 and dema nded immediate repayment of the
outstanding balance in the sum of R1,537,528.25 plus interest. ENS
specifically drew the attention of Ket s to the provisions of section 345 (1) (a)
of the Companies Act No. 61 of 1973 (the Act). Most importantly, Ket s was
advised that should it neglect to make payment or secure or compound the
outstanding balance to the reasonable satisfaction of BPL for three weeks,
Kets, will be deemed to be unable to pay its debts in terms of section 345(1)
(a) of the Act. Ket s was further advised that BPL would recover the amounts
outstanding which may include an application for the liquidation of Kets.
[9] The letter was served by the sheriff on 23 August 2023 at the registered
address of Kets. Kets takes issue with the return of service only on the basis
that the person who allegedly received the process was not known to it and
never brought the process to its attention. It was also contended that the
deponent was never served with the application r elating to the initiation of
liquidation proceedings.
[10] On 14 September 2023, Kets’s attorneys wrote to ENS and acknowledged the
letter of demand and requested that all further correspondence in the matter
be directed to them. Nothing further was addressed about the contents of the
demand letter. On 15 September 2023, ENS, wrote to Luxolo Fodi Inc, and
enquired about their instructions regarding settlement of the debt. They further
indicated that if they did not hear from them within a specified time , they
would proceed with legal action. No response was received from Ket s or from
its attorneys of record.
[11] On 04 October 2023, BPL launched the application wherein it sought the
winding up of Kets on the basis that it was unable to pay its debts as
contemplated in sections 344 (f) and 345 (1) (a) and (c) of the Act. It also
alleged th at Ket s owed the Enoch Mgijima Municipality an amount of
R25 084.29, which had been outstanding for sixteen months.
[12] BPL stated in its founding affidavit that it held security for the debt being a
covering mortgage bond, B 4936/2019 registered on 10 July 2019 by Ket s in
favour of BPL in the sum of R 1,650,000 as a first mortgage, the property
described as Erf 1669 Queenstown, situate in the Enoch Mgijima Local
Municipality, in extent 714 square metres held by Deed of Transfer T
10805/2019. The other form of security was a cession of rental in terms of
paragraph 18 of the loan agreement.
[13] On 24 October 2023, the application for winding up was served by the sheriff
on Kets at its registered offices as well on its attorneys, offices at 25 Ebden
Street, Queenstown. No notice to oppose was filed and Kets did not oppose
the application.
[14] On 22 November 2023, the Master of this court issued a certificate of
tendered security. On 28 November 2023 an order for the provisional winding
up of Kets was granted by Smith J (as he then was) on an unopposed basis. It
is in that order that the court called upon all interested persons to show cause
on 5 March 2024, why a final winding up order should not be issued. On the
same day the provisional order w as published in the Daily Dispatch
newspaper. On 22 December 2023, the provisional order was published in the
Government Gazette.
[15] It was only on 14 February 2024, that the provisional winding up order was
served on Kets at its registered and busin ess address. There was also
personal service of the provisional order on Mrs Ketsekile. The sheriff also
served on Kets’s attorneys of record. The return date on the provisional order
was 5 March 2024. On 05 March 2024 the final winding up order of Ket s was
granted by Laing J, on an unopposed basis.
Kets’s case for rescission
[16] Kets seeks rescission of both the provisional and final orders. It contends that
the applicant was not served with the application and was thus unaware of the
winding up application. It denied any knowledge of a Lusiba Buqa who
purportedly received the process of behalf of Kets at its registered offices .
That Lusiba Buqa did not bring the process to the attention of Ket s. The
deponent as a director of Ket s has a direct and substantial interest in the
matter but was only served with the application on 14 February 2024 and thus
not afforded sufficient time to oppose the matter due to short service. BPL
failed to comply with time frames in relation to service and as a result Kets
suffered prejudice. On the 05 March 2024, Kets briefed an attorney whose
car had a tyre puncture and as a result he arrived at court after the final order
had been granted. He was fifteen minutes late. It’s attorney approached BPL’s
attorneys requesting that the matter be recalled but they refused to do so,
hence it brought this application. If it owed an y monies to it, which is denied,
there is sufficient security which far exceeds the amount claimed. Kets stated
that the liquidation application was brought on falsified grounds and that BPL
missed various procedural steps. Kets also contend ed that BPL made
unsubstantiated allegations that the applicant committed an act of insolvency.
The winding up proceedings constitute an abuse of court processes.
[17] At paragraph 14 of the founding affidavit in Part B, she stated:
“14. The applicant not having been served timeously, had in
preparation for opposing the granting of the final order on the 5 th
March 2024, instructed a firm of attorneys to represent her in
court who got stuck on the road due to puncture, and arrived in
court just 15 minutes after the matter was called and on
discussing on recalling the matter and abandoning of the
judgment with the respondent’s attorneys they refused, hence
this application.”
[18] It was stated, in reply, that Mrs Ketsekile is a lay person and needed to
appoint an attorney, a costly exercise. Kets contends that had the court been
made aware of the short service it would not have granted a final winding up
order. It further stated that the court would have granted a further
postponement which would not have been prejudicial to BPL.
BPL’s case
[19] BPL raised the following points in limine that the provisions of section 354 are
not available to Kets. They are only available to a liquidator, a creditor or a
member. The fact that the application was brought by Kets, is defective
because Kets does not have standing. It submitted that the application should
be dismissed on this ground alone.
[20] To the extent that Kets relies on rescission in terms of the common law, it has
failed to provide a reasonable explanation for not having taken steps since
October 2023 to oppose the winding up applic ation. There is no evidence
whatsoever to show that Ket s has a bona fide defence to the respondent’s
claim. BPL contends that from the time a letter of demand was sent to Kets up
to the granting of the final winding up order, Kets did nothing to resist or react
to all the processes. BPL submitted that this court should simply dismiss the
application with costs. BPL contended it does not rely on ‘acts of insolvency ’
as they are not relevant to liquidation proceedings. In the liquidation
application BPL reli ed on Kets’s commercial insolvency. BPL also stated that
the existence of security is not relevant. BPL also stated that Kets is as a fact
finally wound up.
Legal submissions
[21] Mr Ntila appeared for Kets and Mr Brown for BPL. Mr Ntila submitted that the
sole director of Kets deposed to an affidavit in support of Kets’s application
and on that basis as a Director she ha s residual powers to act on the
company’s behalf in opposing the confirmation of the rule in the provisional
winding up or to appeal against the winding up order. In this regard he relied
on Stortie v Nugent 1. He contended that there is no rational basis to
distinguish the standing of a board of directors to appeal in the company’s
name against a winding up order from Kets’s standing to apply to set aside
such an order obtained without its knowledge . He was adamant that Kets
does have standing to bring the rescission application.
[22] He relied on Chetty v Law Society of Transvaal 2 for the contention that
sufficient cause or good cause has been shown by Kets. He further relied on
Cairns’ Executors v Gaarn 3 for the contention that two essential elements of
sufficient cause for rescission are: (a) that the party seeking relief must
present a reasonable and acceptable explanation for his default and (b) that
on the merits such party has a bona fide defence which prima facie carries
some prospects of success . In this regard he also relied on De Wet and
Others v Western Bank Ltd4.
[23] He submitted that when the provisional order was granted on 28 November
2023 at 09h30 there was pending service on Kets and this fact was not
disclosed to the court . He relied on the allegations that the first time Kets
became aware of the li quidation proceedings was on ly on 14 February 2024 .
On this basis he contends that Kets is entitled to resci ssion. Later on , he
submitted that, only the provisional order was served on Kets. Mr Ntila
seemed to confuse Kets with Mrs Ketsekile , whenever he referred to the
applicant. When taken through the returns of service on Kets and on Mrs
Ketsekile, he conceded that no issue was being taken with the service as
1 Stortie v Nugent and others 2011 (3) SA 783 (W) at 795 G – 796 C; also on O’Connell Manthe &
Partners Inc v Vryheid Minerale (Edms) Bpk 1979 (1) SA 553 (T) at 5555H – 5558E.
2 Chetty v Law Society of Transvaal 1985 (2) SA 756 (A)
3 Cairns’ Executors v Gaarn 1912 AD 181 at 186.
4 De Wet and Others v Western Bank Ltd 1979 (2) SA 1031 (A) at 1042; also P E Bosman Transport
Works Committee and Others v Piet Bosman Transport (Pty) Ltd 1980 (4) SA 794 (A).
reflected in the returns of service. He argued, that the only issue is that, on
BPL’s version, the deponent, Mrs Ketsekile was only served on 14 February
2024. He argued that in terms of the Act , it was incumbent upon the BPL to
serve the winding up proceedings on the company , Kets . In making
submissions in relation to the explanation for not appearing in court on the 5 th
of March 2024, the following is stated in the heads of argument at paragraph
10:
“10. It is according to the applicant’s own version paragraph 47.5.2
common cause that the applicant became aware of winding up
proceedings on 14 February 2024 which service is undoubtedly
a short service and therefore was the reason why the
respondent was unprepared to attend the next court sitting of 05
March 2024 hence the application went unopposed.”
[24] On the bona fide defence, he argued that Kets is not indebted to BPL and
even if it was, which is denied, the debt owed to BPL by Kets is secure d.
There is more than sufficient security to secure the debt, he argued. O n this
basis there was no reason to bring winding up proceedings. He argued that
where there is sufficient securit y it is not necessary to bring winding up
proceedings. He further submitted that t he security was three times more
than the value of the loan. He contended that th e winding up proceedings
amount to an abuse of the process of court and that rescission ought to be
granted.
[25] Mr Brown relied on HR Computek (Pty) Ltd v Dr WAA Gouws (Johannesburg)
(Pty) Ltd5, for the submission that section 354(1) of the Act excludes a
company that is under compulsory winding –up from bringing the application
envisaged in that section itself. He argued that that exclusion applies whether
the company seeks to bring the applic ation through its directors and without
the co –operation of its liquidators, or otherwise. He submitted that although
5 HR Computek (Pty) Ltd v Dr WAA Gouws (Johannesburg) (Pty) Ltd [ 2023] JOL 60146 (GJ) at para
17.
locus standi under section 354 (1) is limited, directors retain residual powers
to bring an application for rescission under Rule 42 and the common law.6
[26] On the requirements for rescission of a winding- up order under section 354 of
the Act, he relied on Ward and another v Smit and others : In re : Gurr v
Zambia Airways Corporation Ltd 7 , that Kets must: show that exceptional
circumstances exist for the setting aside of the order; provide a satisfactory
explanation for not having opposed the application in the first place; and
demonstrate prima facie prospects of success on the merits. He argued that
Kets failed to satisfy all three requirements.
[27] In dealing with the requirements where Kets relies on common law for the
rescission of the winding up order, he submitted that the applicable principles
are well established. Kets is requi red to establish sufficient cause by
demonstrating a reasonable and acceptable explanation for its default;
establishing that, on the merits, such party has a bona fide defence which,
prima facie, carries some prospect of success.8
[28] He further submitted that a bona fide defence in liquidation proceedings would
be that Kets is solvent, alternatively, that the claim relied on for liquidation was
bona fide disputed on reasonable grounds. In this regard, he relied on,
Badenhorst v Northern Construction Enterprises (Pty) Ltd9 . He submitted that
Kets failed to satisfy these requirements and the application must accordingly
fail.
[29] He further argued that the existence of security is not relevant to the
consideration of solvency and the ability to discharge debts in the normal
course of business, when they fall due, and to continue in business thereafter.
6 Praetor and Another v Aqua Earth Consulting CC (162/2016) [2017] ZAWHC 8 (15 February 2017)
at para 4.
7 Ward and another v Smit and others: In re: Gurr v Zambia Airways Corporation Ltd [ 1998} 2 All SA
479 (A).
8 See: Chetty, Storti and Praetor, supra.
9 Badenhorst v Northern Construction Enterprises (Pty) Ltd 1956 (2) SA 346 (T); Absa Bank Ltd v
Rheebokskloof (Pty) Ltd 1993 (4) SA 436 (C) at 440 F -I; Boschpoort Onderneemings (Pty vc) Ltd v
Absa Bank Ltd 2014(2) SA 518 (SCA).
That, he submitted, is the test for commercial solvency in the context of
liquidation proceedings. In this regard he relied on Absa Ba nk v
Rheebokskloof10.
Discussion
Locus standi of Kets
[30] Kets’s locus standi is predicated on the basis that Mrs Ketsekile being the
sole director retains the power to cause the company to rescind the winding
up order without co- operation of the liquidator.
[31] Section 354 provides:
“(1) The Court may at any time after the commencement of a
winding-up, on the application of any liquidator, creditor or
member, and upon proof to the satisfaction of the Court
that all proceedings in relation to the winding -up should
be stayed or set aside, make an order staying or setting
aside the proceedings or for the continuance of any
voluntary winding-up on such terms and conditions as the
Court may deem fit.
(2) The Court may, as to all matters relating to a winding -up,
have regard to the wishes of the creditors or members as
proved to it by any sufficient evidence.”
[32] In the Storti decision relied upon by Kets, Gautschi AJ stated:
“Secondly, the company, represented by its board of directors, has no
locus standi in judicio under the section. A company has the right to
10 Absa Bank Ltd v Rheebokskloof at 440 F-I.
rescind or appeal a winding -up order, or to oppose an application for
winding up11.
Mrs Ketsekile as a member of Ket s, qualifies to cause Ket s to bring the
rescission application.
[33] In the Ward decision, the Supreme Court of Appeal stated:
“12. There is nothing in the section to suggest that the court's discretionary
power to set aside a winding -up order is confined to the common law
grounds for rescission. However, in the Herbst case, supra, Eloff J
expressed the view (at 109 F - G) that no less would be expected of an
applicant under the section than of an applicant who seeks to have a
judgment set aside at common law. I think this must be correct. The
object of the section is not to provide for a rehearing of the winding -up
proceedings or for th e court to sit in appeal upon the merits of the
judgment in respect of those proceedings. To construe the section
otherwise would be to render virtually redundant the facilities available
to interested parties to oppose winding -up proceedings and to appeal
against the granting of a final order. It would also 'make a mockery of
the principle ut sit finis litium'. (Abdurahman v Estate Abdurahman,
supra, at 875 G -H.)
13. It follows that an applicant under the section must not only show that
there are special or exceptional circumstances which justify the setting
aside of the winding-up order; he or she is ordinarily required to furnish,
in addition, a satisfactory explana tion for not having opposed the
granting of a final order or appealed against the order. Other relevant
considerations would include the delay in bringing the application and
the extent to which the winding -up had progressed. (Cf Aubrey M
Cramer Ltd v Wells NO, supra, at 305 H.)12
11 Storti, supra, page 795 para H.
12 Ward, above, paras 12 and 13.
[34] In HR Computek, Coppin J (as he then was) , relied on the Praetor decision by
Binns- Ward J stated:
“[19] And, more particularly, Binns -Ward J went on to hold as follows: “It
seems to me that there is no rational basis to distinguish the standing
of a board of directors to appeal in the company’s name against a
winding-up order from its standing similarly to apply to set aside such
an order obtained without its knowledge. Indeed, in Storti supra, loc.
cit., it was stated that ‘a company has the right to rescind… a winding -
up order.’ It is clear from that context that the learned judge had in mind
that the application to rescind would be mounted by the company at the
instance of its board, not its liquidators. I am willing to accept therefore
that the second applicant as standing to bring the rescission
application, although it would probably have been correct in such
circumstances to have cited it without the words ‘in liquidation’ after its
name.” ( my emphasis)
[24] The reasoning in Praetor is sound. There is no reason in logic why the
company cannot, through its directors, and without the co -operation of
its liquidators, apply to set aside the liquidation order that had been
granted in its absence. After all, it is able to appeal against the grant of
such an order in that manner and to take all the necessary steps to
oppose the confirmation of a provisional liquidation order . The SCA
in Ward did not preclude a company from doing so, and perhaps more
fundamentally, did not deal with that issue at all.
The dicta in Impac and Ragavan, and other matters, to the contrary, or
suggesting the contrary, are, with respect, not correct, and are, in any
event, orbiter.” (Footnotes omitted)
[35] Having considered these authorities I am satisfied that Kets , through its
director, has authority to bring the rescission application, without the co -
operation of the liquidators. The authorities relied upon are progressive in that
the approach adopted therein is not only consistent with the intended purpose
in section 354(1) , but it does not place a company under liquidation at the
mercy of the liquidators (that their co – operation must be sought) even where
there are valid grounds to challenge the liquidation order. It follows that the
lack of standing point must fail.
Merits
[36] I now turn to the explanation pro ffered by Ket s for not opposing both the
provisional and final orders. The starting point will be the returns of service.
Section 346 A (1) (d) of the Companies Act provides that a copy of the
winding -up order must be served on the company, unless the application was
made by the company.
[37] The court in Ward found that a winding -up order shall only be set aside in
exceptional circumstances whereupon a satisfactory explanation is furnished
for not having opposed the granting of a final order or appealed against the
order – that for a court to exercise its disc retion, no less would be expected of
an applicant who seeks to have a judgment rescinded at common law. With
those principles in mind one must examine the reasons for the failure to
oppose the grant of the final relief.
[38] Service of the application for the winding up is central to this application. The
undisputed evidence that has been put up by BPL shows that: the letter of
demand was properly served on Kets by the sheriff at its registered address
and was received by it. Not only did it receive it, Ke ts instructed its attorney s
of record to write to ENS in relation thereto. Despite the enquiries about
settlement plans of the debt made to the attorneys of Kets by ENS, no
response nor settlement plans were made. On these facts it has been proved
by BPL that a letter of demand was properly served and considered by Kets,
hence it instructed its attorneys of record . The demand was not met and
therefore there was justification, on the facts, for the bringing of liquidation
proceedings.
[39] Section 346A of the Companies Act provides that a copy of the winding up
order must be served on the company . As aforementioned on 24 October
2023 the sheriff ‘s return of service evinced that the rule 41A notice, notice of
motion and founding affidavit with all annexures , were served on Kets at its
registered and business address. The sheriff also served on the employees
and trade union s of Kets at its registered and business address . The sheriff
also served on the employees by affixing to a wall at Kets’s address, on the
same day being, 24 October 202 3, the aforementioned process. Further
service was also effected on Kets’s legal representative s at Luxolo Fodi Inc.
on 24 October 2023 . T here are returns of service from the sheriff evincing
how he handled and served these processes on Kets, its employees and
trade unions and on its attorneys. Most importantly, the returns of service
have the following endorsement “Note appearance date 28- Nov-2023”. There
is no explanation at all for the applicant’s non - appearance at court on that
date. Further, after the provisional order was granted in the absence of Kets,
that too, was served on Kets at its registered address.
[40] Kets does not take issue with BPL’s compliance with the formal requirements
for a winding up application . A service affidavit was filed in compliance with
section 346(4)(a) and (b) of the Act. Kets seems to suggest that it was not
served with the winding - up application prior to the granting of the provisional
order. That is not correct. There is a return of service which evinces service on
Kets at its registered address on 14 February 2024. The provisional winding
up order was served on Kets at its registered address. The sheriff recorded
that she found Mrs Ketsekile present and was in charge of the residence/
office of Kets at the time of service. The sheriff also recorded that she
explained the nature and exigency of the court order dated 28 November
2023, to the deponent, Mrs Ketsekile. The service affidavit deposed to by Mr
Stuart A ndrew Tarr, BPL’s correspondent attorney confirms that. I am
accordingly satisfied that there was proper service on Kets prior and after the
grant of the provisional order. Kets seems to conflate service on the company
and on its director. The attack on se rvice in this regard is misplaced. The
concession made by Mr Ntila to the effect that there was service on Kets was
well made.
[41] What triggered the winding up application was the failure of Kets to meet the
demand for payment or providing security to the satisfaction of BPL. BPL did
not conceal the fact that it held security for its claims against the respondent.
[42] The applicant stated the following from paragraph 27:
“27. Even if the respondent’s debts were to remain unpaid, the
respondent would not suffer as it hold to it cession of a monthly
rental to its property held by it as security. Amongst other assets
held as security is the insurance covering the non -payment of
the debt itself . For this matter not to be ventilated proper ly the
applicant will be left in the dark as re gard to other assets that
were tendered as security with the respondent company. It is on
those grounds and as demonstrated by the applicant that the
liquidation at this stage was not an option in view of the amount
of security that the respondent has. In respect of the willful
default which is also requirement for rescission the applicant’s
submissions are illustrated in paragraph 14 of her founding
affidavit.”
[43] I have referred to the returns of service from the sheriff that show that as early
as 24 October 2023 Kets was served with the application for provisional
winding up . There is no explanation whatsoever on the reasons why Kets
took no steps to oppose the provisional order. Between 23 August 2023 and
15 September 2023 there is no explanation from Kets as to why it did not at
the very least take up the offer, make payment plans, secure or compound the
debt as indicated in the letter of demand and that of ENS dated 15 September
2023.
[44] It did not even indicate how much rental was ceded to BPL and how such
rental was sufficient to pay off the arrears . No details whatsoever. No figures,
how much was it paying, how it would pay the arrears or even indicate its
attempts to pay those arrears. Most importantly, no details about its solvency.
There are startling allegations made in the replying affidavit by Kets. They are:
“(v) Save to note service (SAT 3) to LUXOLO FODI INC, and fails to
Understand as to why they were served as they were neither my
Attorneys of record at the time, nor parties to the proceedings”
[45] These are Kets’s attorneys who requested that service be effected on them as
early as 14 September 2023. Mr Ntila of Luxolo Fodi Inc. appeared and
argued the rescission application before this court . He also appeared for Kets
in the stay of proceedings (Part A) before Dunywa AJ. These averments are
clearly misleading.
[46] I now revert to the contents of paragraph 10 of the heads of argument ,quoted
above. The contents of that paragraph differ materially from what is stated in
paragraph 14 of the founding affidavit:
“14.
The applicant, despite her not having been served timeously., had in
preparation for opposing the granting of a final order on the 5 th March
2024, instructed a firm of attorneys to represent her in court who got stuck
on the road due to puncture, and arrived in court just 15 minutes after the
matter was called and on discussing recalling the matter and abandoning
of the judgment with the respondent’s attorneys they refused , hence this
application.”
[47] I accept that personal service of the provisional order and the application was
effected on Mrs Ketsekile on 14 February 2024. That, in my view, is of no
moment because on Ket’s version, there was effective service of the order on
Kets, its attorneys and on interested parties before and after the grant of the
provisional winding up order. Luxolo Fodi Inc . were instructed on behalf of
Kets as early as 14 September 2023 after the delivery of the letter of demand.
If on 05 March 2023, Kets’s attorney was delayed in attending court due to a
tyre puncture, he or she did not confirm those allegations. His or her name is
not known, there are no details of where he /she was when his \her car had a
puncture. Most importantly, there is no explanation of why a notice to oppose
the granting of a final winding up order was not delivered and/ or with an
answering affidavit. Mr Tarr confirmed that an attorney purporting to act for
Kets approach ed him at approximately 11h00, indicating that he had
instructions to oppose the granting of the final order. When informed that the
order had been granted he indicated that an application for rescission would
follow.
[48] Kets, when seeking rescission of the winding – up orders, is obliged to place
facts that would cause this court to find in its favour in this applica tion. As
indicated above there is n othing said about the state of solvency of Kets. The
fact that an attorney had arrived after the order was made but to date there
are no facts placed to controvert those placed before court by BPL in relation
to the commercial insolvency of Kets, except fo r bare denials, does not
constitute an acceptable explanation for the default.
[49] This is a litigant who was properly served with the application as early as 24
October 2023. Kets’s attorneys of record are also silent. The complaint that
the period from 14 February 2024 until 5 March 2024 was short and Ket s
could not instruct an attorney because it needed to have funds to instruct an
attorney, does not assist Kets because Luxolo Fodi Inc. confirmed instructions
from Kets as early as September 2023. In fact, according to the deponent
she was aware that a notice to oppose had to be filed by 29 February 2024
but there is no explanation advanced for failure to do so. A period of about
four months lapsed from October to February 2024 and there was no
challenge to the winding – up orders.
[50] In argument, Mr Ntila was constrained to concede that there is evidence that
the application for the winding up was served on Kets. The fact that the director
of Kets was served with the provisional winding up order on the 14 th of
February 2024, means that she was aware that the return date was 5 March
2024 as indicated on the order. No legal steps were taken to register
opposition to the granting of the final order. No notice to oppose was filed nor
was there an answering affidavit filed to resist the grant of either the provisional
or the final order. Kets remained supine. I accordingly find that there is no
reasonable and acceptable explanation for the default.
Is there a bona fide defence which, prima facie, carries some prospect of success?
[51] The only defence is that there was sufficient security that was put up by Ket s
to secure the debt. There are no details or facts whatsoever dealing with,
amongst others, how Ket s fell into arrears ; whether it has liquid assets or
readily realizable assets available out of which or the proceeds of which , Kets
is in fact able to pay its debts; whether it has since recovered from the
financial difficulties it experienced; how much rental was ceded to BPL and to
what extent would such rental liquidate the arrears ; how is Ket s trading; how
is it able to meet its debts when these debts bec ome due and payable and
why it had failed to make an offer to settle the debt as invited to do so b y BPL.
None of those details are given in the rescission application. Most importantly,
there is no logical defence put up in respect of the merits t o demonstrate that
Kets is solvent. Failure to place such facts before this court has resulted in
this court not to be able to locate a bona fide defence that, prima facie, carries
some prospect of success. It follows that Kets has failed to meet this
requirement as is required if the application is brought under common law.
[52] In Murray and Others NNO v African Global Holdings (Pty) Ltd and Others 13
where in was found as follows:
“[31] The argument about timing misconceived the nature of
commercial insolvency. It is not something to be measured at a
single point in time by asking whether all debts that are due up
to that day have been or are going to be paid. The test is
whether the comp any ‘is able to meet its current liabilities,
including contingent and prospective liabilities as they come
due’. Put slightly differently, it is whether the company ‘has liquid
assets or readily realisable assets available to meet its liabilities
13 Murray and Others NNO v African Global Holdings (Pty) Ltd and Others 2020(2) SA 93 (SAC) at
para 31.
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?’ Determining commercial insolvency requires an
examination of the financial position of the company at present
and in the immediate future to determine whether it will be able
in the ordinary course to pay its debts, existing as well as
contingent and prospective, and continue trading.” (excluding
footnotes)
[53] In my view, Kets also failed to make out a case for the relief sought in terms of
section 354 of the Companies Act because no special or exceptional
circumstances were advanced to support a rescission of the winding – up
orders. In the circumstances and f or all the reasons advanced the rescission
application must fail.
Costs
[54] The general rule is that a successful party is entitled to costs . In the exercise
of this court’s discretion, I do not intend to grant a punitive cost order against
Kets as requested by BPL. The reason for that is that in the Part A order Kets
was ordered to pay costs on a punitive scale because of the manner it
conducted itself in dealing with that application. Some of the conduct frowne d
upon in Part A does feature in this application. To punish it for the same
conduct twice will not be in the interests of justice. It is for that reason that I
do not find that a punitive cost order is warranted. Kets has, in any event ,
succeeded in resisting the lack of standing point in limine.
ORDER
[55] In the result the following Order is made:
55.1 The point in limine based on the applicant’s lack of locus standi is
dismissed with costs.
55.2. The application for rescission of the winding –up orders is
dismissed with costs.
______________________________
T.V NORMAN
JUDGE OF THE HIGH COURT
APPEARANCES:
For the APPLICANT : MR NTILA
Instructed by : LUXOLO FODI INC.
c/o : MABENTSELA & ASSOCIATES
110 HIGH STREET
MAKHANDA
TEL: 072 129 3484
EMAIL: kaypeentila@outlook.com
REF: MR NTILA:2309/NM/023
For the RESPONDENT : ADV BROWN
Instructed by : EDWARD NATHAN SONNENBERGS INC.
1 RICHEFOND CIRCLE
RIDGESIDE OFFICE PARK
UMHLANGA
REF: C SCHOON/0507896
c/o : DE JAGER & LORDAN INC.
2 ALLEN STREET
MAKHANDA
EMAIL: stuart@djlaw.co.za /
chantal@djlaw.co.za
REF: ST/cb/B694
Matter heard on : 13 November 2024
Judgment delivered on : 03 December 2024