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PULLINGER AJ
[1] In application launched at the beginning of December 2023, the applicant
seeks an order winding up the respondent in terms of section 344(f) read with
section 345, alternatively section 344(h) of the Companies Act, 1973 (“the
Companies Act”).
[2] The respondent has enrolled this matter for hearing in circumstances where the
applicant failed to file a replying affidavit, heads of argument or in any other
manner, prosecute it.
[3] The applicant alleges that it is the respondent's creditor in the amount of
R48,300.00 arising from a written agreement (“the Agreement”) for the
provision of certain trailer and print advertisement services ("the Services").
[4] The applicant contends that it rendered the Services to the respondent during
the period December 2022 to July 2023. As at 31 October 2023, so the
applicant asserts, the respondent had not paid the aforesaid sum which sum is
due to the applicant.
[5] On 13 September 2023 the applicant's attorneys transmitted by email what is
contended as being the statutory demand contemplated in section 345(1)(a)(i)
of the Companies Act to the respondent and asserts this demand came to the
respondent's attention.
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[5.1] There is a factual dispute as to whether the so-called statutory
demand was received by the respondent. The respondent asserts that
it was sent to an incorrect email address.
[5.2] This is, however, immaterial. The so-called statutory demand is not
one as contemplated in section 345(1)(a)(i) of the Companies Act as
it was not left at the respondent's registered address (Body Corporate
of Fish Eagle v Group 12 Investments (Pty) Ltd 2003 (5) SA 414 (W)
at [4]).
[5.3] As a result, the applicant is not able to rely on the deeming provision
in section 345(1)(a)(i).
[6] The consequence of the aforegoing is that first, the applicant must establish
that it is the respondent's creditor and, second it must prove to the court’s
satisfaction that the respondent is unable to pay its debts as contemplated in
section 344(1)(c).
[7] There is a further factual dispute as to whether the applicant rendered the
Services. The respondent contends that it cancelled the agreement after having
received an invoice in January 2023 for the Services. The respondent contends
that that the Services were not rendered (in January 2023 or at all). It appears
to be common cause that the trailer which was the subject of the agreement,
was never made available and no artwork was done.
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[8] In argument before me, Ms Kotze on behalf of the applicant, relied on a number
of invoices ostensibly rendered by the applicant in terms of the Agreement
which, so she submits, demonstrate the respondent's indebtedness to the
applicant. In the same breath however, Ms Kotze accepted that the rental of the
trailer could only commence once the initial payment was made. The initial
payment was not made for the reason aforesaid and this occasioned the
cancellation of the Agreement. On this construction it would appear that the
Services were not rendered. This is irresoluble on the papers as framed.
[9] Ms Kotze then sought to place reliance on various terms of the Agreement
which, so it was argued, were a complete answer to the dispute surrounding
the respondent’s obligation to pay for the Services.
[10] There is no need to analyse the terms of the Agreement nor whether these
provide a complete answer to the respondent’s opposition because the
applicant did not rely, in its the founding affidavit, on the Agreement.
[11] It warrants restating that a founding affidavit must make out a case for the relief
sought. In this way a founding affidavit must contain both the facta probanda
and facta probantia necessary for a case to be established (Quartermark
Investments (Pty) Ltd v Mkwanazi and Another 2014 (3) SA 96 (SCA) [13] and
the authorities therein cited).
[12] So then, and as a general proposition, when an applicant seeks to prove the
existence of a debt arising ex contractu, it must prove the agreement, the terms
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of the agreement , the applicant’s performance and the respondent’s non-
performance. The principle is that the debt is the amount to which the applicant
would be entitled to had the respondent performed (Victoria Falls and Transvaal
Power Co Ltd v Consolidated Langlaagte Mines Ltd 1915 AD 1 at 22). This
gives rise to a debt that is due to the applicant and which, when unpaid after
demand, leads to the inference that the respondent is unable to pay its debts
(Rosenbach & Co (Pty) Ltd v Singh’s Bazaars (Pty) Ltd 1962 (4) SA 593 (D) at
597 D to G). The applicant did not make out such a case.
[13] This matter is more nuanced because the applicant was also required to have
established that its right to payment accrued before cancellation and is
unaffected by any cancellation (Crest Enterprises (Pty) Ltd v Rykloff Beleggings
(Edms) BPK 1972 (2) SA 863 (A) at 870 G – H).
[14] Thus, it cannot be said that the founding affidavit makes out a case for the
respondent’s winding up in terms of section 344(f) read with section 345 of the
Companies Act in respect of a debt said to arise ex contractu. As such, this
application should be refused on this basis (Hart v Pinetown Drive-In Cinema
(Pty) Ltd 1972 (1) SA 464 (D) at 369 C/D to E).
[15] In this case, one can understand why the facts necessary to establish a debt
based on a breach of the agreement were not pleaded in the founding affidavit;
it is because the applicant’s case is predicated upon the deeming provision in
section 345(1)(a)(i) of the Companies Act in terms of which, the necessary facts
are limited to a demand for payment of not less than R100 .00 due to the
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creditor, which demand has been left at the company’s registered address and
that the amount demanded has not been paid, secured or compounded to the
creditor’s reasonable satisfaction within a period of three weeks after delivery
of the demand as aforesaid.
[16] In the present instance, the applicant has not proved, in any satisfactory
manner, that the respondent is unable to pay its debts as contemplated in
section 345(1)(c).
[17] In respect of the applicant's case for just and equitable relief, the principles in
Quartermark and Hart hold true. The highwater mark of the case made out for
this relief is that a liquidator might be able to conduct an inquiry into the
respondent’s affairs. This falls well short of what just and equitable relief
contemplates and the circumstances under which this form of relief may be
sought (Thunder Cats Investments 92 (Pty) Ltd and Another v Nkonjane
Economic Prospecting & Investment (Pty) Ltd 2014 (5) SA 1 (SCA) at [15]). The
bald conclusions that comprise the applicant’s case for just and equitable relief
simply do not pass muster (Die Dros (Pty) Ltd and Another v Telefon Beverages
CC and Others 2003 (4) SA 207 (C) at [28]).
[18] On consideration of the applicant's conduct, it is entirely inappropriate for a
winding up application to be launched, which creates a concursus creditorum,
and then fail to prosecute it. This sort of conduct is prejudicial to the respondent
and to the concursus if a winding up order were to be granted, regard being
had to the provisions of section 348 of the Companies Act which operates to
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make the commencement of the winding up retrospective to the date on which
the application was launched (Development Bank of South Africa Ltd v van
Rensburg and Others NNO 2002 (5) SA 425 (SCA) at [8]) and the serious
consequences of a winding up order, regard being had to, inter alia, section
341 of the Companies Act which operates to void certain transactions.
[19] Ms Magagula, who appeared for the respondent, advanced an argument in
support of a punitive costs order that this application is an abuse of process.
This is correct given applicant's dilatory conduct and my conclusions
concerning the applicant’s failure to have made out any sustainable case for
the respondent’s winding up. It is appropriate in the circumstances that the
costs of this application be paid on the scale as between attorney and client.
[20] In the circumstances the following order is made:
This application is dismissed with costs on the scale is between attorney
and client, with counsel's cost to be taxed on Scale B.