IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)
JUDGMENT
Not Reportable
Case No: 9518/2024
In the matter between:
DRAKENSTEIN MUNICIPALITY Applicant
and
TRAKPROPS 60 (PTY) LTD Respondent
Coram: RALARALA, J
Heard: 20 February 2025
Delivered: 10 February 2026
Summary: Winding up - application by municipality - rates and taxes claim based on
contested immovable property valuation - summons issued pending liquidation
application - summons dispositive of liquidation application - constitute bona fide and
reasonable grounds for disputing the claim - application dismissed.
ORDER
The application is dismissed with costs, such costs to include costs of two counsel
where so employed.
The Respondent is to pay the costs of the application to file a supplementary
affidavit.
Costs on scale B in terms of rule 67A.
JUDGMENT
Ralarala, J
INTRODUCTION
[1] This is an application for a provisional winding up brought in terms of section
344(f) read with sections 345 (1)(a)(i), 345(1)(b) and 345(1)(c) of the Companies Act,
61 of 1973 (“the Act”) in conjunction with item 9(1) of schedule 5 of the Companies
Act 71 of 2008. In May 2019, the Applicant obtained a default judgment against the
respondent. Thereafter, warrants of execution were issued against the Respondent’s
movable property at the respondent’s Welbedacht Farm, and no assets were found
to satisfy the w rits of execution or any portion thereof. The default judg ement
remains unsatisfied. The Applicant avers that the Respondent is factually insolvent.
[2] The Applicant contended that the Respondent is unable to pay its debts and
claims an unpaid amount of R423,299.19 in outstanding rates, taxes and ancillary
charges relating to Welbedacht Farm, Wellington, which is a property owned by the
Respondent.
[3] The application is opposed by the Respondent on the basis that it is not
factually insolvent and that there is a bona fide dispute over the historic evaluation of
the property, which has caused the rates and taxes applicable to the property to be
overinflated. The Respondent avers that the Applicant’s allegation that the
Respondent’s liabilities exceed its assets is incorrect.
PRELIMINARY ISSUE: FILING OF A SUPPLEMENTARY AFFIDAVIT BY THE
RESPONDENT
[4] The Respondent makes an application for the filing of a supplementary
affidavit in terms of rule 6(5)(e) of the Uniform Rules of Court, embodying two
confirmatory affidavits that purport to confirm the contents of the letters annexed to
the Respondent’s answering affidavit. The first confirmatory affidavit is deposed to by
Johannes Hendrik Hu ysamen (“Huysamen”), a Business Services Executive at
ABSA Wealth, seeks to clarify the content s of the letter dated 6 August 2024. The
said letter states that there are no loans or any credit products with outstanding
balances to the Respondent’s properti es. The second confirmatory affidavit is
deposed to by James Charles Norval Waugh (“Waugh”), an accountant director of a
firm of Professional Accountants. This particular confirmatory affidavit confirms the
contents of the second letter and states that the ir firm is collating documentation in
order to finalize the Respondent’s financial statements.
[5] Further, the Respondent seeks to place information before this court
regarding events that had since transpired subsequent to the filing of the
Respondent’s answering affidavit . The Respondent states that a summons was
issued by the applicant on 29 November 2024 under c ase number 25743/2024
against the Respondent for outstanding rates and taxes as from July 2016 until 23
October 2024 in the amount of R362,418.51. The period covered by the summons
encapsulates that of the default judg ement. Further, the Applicant has taken steps to
revalue the Respondent’s farm in the current year.
[6] The Applicant opposes this application. The court is enjoined to determine
whether the Respondent’s supplementary affidavit encompassing the two
confirmatory affidavits and the events that transpired pursuant to the filing of the
Respondent’s answering affidavit should be permitted into evidence or not.
[7] The application for the filing of an additional affidavit is as envisaged in rule 6
(5) (e) of the Uniform Rules of Court:
“within 10 days of service upon him of the affidavit and documents referred to in
subparagraph (ii) of paragraph(d) of subrule (5) the applicant may deliver a replying
affidavit. The court may in its discretion permit the filing of further affidavits.”
In the exercise of its discretion, the court must also have regard to the procedural
history of the matter. Trustees, Bymyam Trust v Butcher Shop & Grill CC 2022(2) SA
99 (WCC) para 56. In the present matter the Respondent filed an answering affidavit
responding to the Applicant’s founding affidavit. Pursuant thereto, the Applicant filed
its replying affidavit. Subsequent to this matter being postponed on 16 October 2024
to 20 February 2025 for hearing, the Respondent filed a supplementary affidavit.
[8] Only in exceptional circumstances will the court allow the filing of further
documents in motion proceedings; the norm being that three sets of affidavits are to
be filed. Upon proper explanation by the litigant as to why t he fourth set of affidavits
would be needed, the court could permit the submission of a further affidavit. In my
mind, this would be a case where something unexpected or new arises from the
applicant’s replying affidavit. See Erasmus Superior Court Practic e Vol 2 pages D1 -
67, James Brown & Hamer (Pty) Ltd (Previously named Gilbert Hamer & Co Ltd v
Simmons NO, 1963(4) SA 656 E -F: Hano Trading CC v JR 209 Investments (Pty)
Ltd.
[9] Evidently, the sole discretion whether or not to allow further affidavits res ts
and remains only with the court. Some flexibility is necessarily permitted upon
solicitation from the litigant desirous of such indulgence. Even so, such flexibility is
thus exercised and controlled by the court in its discretion, having regard to the
merits of the case. The Applicant contended that its notice in terms of rule 35(14)
merits of the case. The Applicant contended that its notice in terms of rule 35(14)
was regarding a request to the Respondent to file its financial statements and the
most recent account statement for bonds registered in favour of ABSA Bank Ltd and
held by Deeds B24658/2010 and B48458/1998 was filed on 19 August 2024. The
Respondent failed to respond to the discovery notice, and pursuant thereto, on 30
August 2024, the Applicant filed its replying affidavit, which took issue regarding
Huysamen’s letter writt en on behalf of his ABSA accounts. On 10 October 2024,
pursuant to filing its heads of argument on 2 October 2024, the Respondent filed its
heads of argument and the two confirmatory affidavits that are the subject of this
application.
[10] It was argued on behalf of the Applicant that the issue of the Respondent’s
insolvency was raised in the founding affidavit , however, the Respondent decided in
its answering affidavit to meet the Applicant with bare denials. Counsel for the
Applicant furth er argued that the application is an attempt to frustrate the hearing.
The Respondent, in its answering affidavit in support of its denial of insolvency, filed
letters one from ABSA Bank confirming that the Respondent’s term loans were fully
paid but the b onds have not been cancelled. And one from Respondent’s
accountants confirming same.
[11] It is clear from the Applicant’s submissions that the Respondent had not
adhered to the rules regarding the discovery of these two affidavits. The Respondent
is said to have filed these confirmatory affidavits in response to the Applicant’s
notices in terms of rules 35(12) and (14), two months after receipt of the said notice,
six days before the hearing on 16 October 2024, and after Applicant filed its replying
affidavit without bringing the necessary application.
[12] Further, the Applicant submitted that the Respondent did not reserve the right
to file further affidavits. The Respondent asserts however, in reply that the intention
was to bring a similar application on the date of hearing on 16 October 2024, and
such intention was indicated in its practice note of 9 October 2024.
[13] I am of the view that the requirement in rule 6(5)(e) is that the Applicant
should seek leave of the court prior to filing a supplementary affidavit. Clearly, this is
the procedure that is being followed by the Applicant in this instance.
[14] Rules 35(12) and (14) concern discovery and notices to produce documents
[14] Rules 35(12) and (14) concern discovery and notices to produce documents
in pleadings. Upon non-compliance with the rules, the party seeking discovery would
have recourse and can compel discovery, which ostensibly was not an option that
was explored in this instance. Essentially, discovery assists the parties and the court
in discovering the truth and, by doing so, helps towards a just determination of the
case. See Investec Bank Ltd v O’ Shea NO WCC CASE NO 10038/2014 dated 16
November (2020). To my mind, the same purpose would be served by these
documents in the manner the Respondent seeks to introduce them.
[15] Regarding the issue of the summons of 29 November 2024, the Respondent,
in its replying affidavit of 8 August 2024 at paragraph 9, states:
“The Applicant has repeatedly threatened to take action to enforce payment of the
alleged to date. Yet, it has failed to institute action proceedings, in circumstances
where such is not only available, but appropriate given the multiple disputes of fact
that exist.”
The Applicant in reply denied the above allegation, and pursuant t o such a denial,
the summons was issued encapsulating a claim which is covered in the liquidation
application. In my view, the issuance of the summons is tantamount to special
circumstances where something unexpected emerged. Crucially, it is inextricably
linked to the Applicant’s reply to paragraph 9 of the answering affidavit . In the
circumstances, the application for the filing of the Respondent’s supplementary
affidavit must succeed.
FACTUAL BACKGROUND
[16] The Applicant and the Respondent have been embroiled in a lengthy dispute
regarding the Respondent’s rates and taxes. The latter is evident in the body of
correspondence exchanged between the parties where the Respondent challenged
the valuation process of its immovable property and the correctness of the rates
calculation based thereon. The dispute spans from 2005. The Applicant obtained a
default judgement against the Respondent in 2019 in the Paarl Magistrates Court for
the amount of R120,431.69.
[17] Pursuant thereto, the Applicant’s attorney directed an email to the
Respondent dated 15 January 2023 embodying a notice in terms of section 345 of
the Act, demanding payment of the capital amount of R330,163.69 to be paid to the
Applicant within three weeks thereof. On 8 February 2023, the Respondent’s
attorney directed correspondence to the Applicant’s legal representative in response
to that notice, denying that the rates and taxes levied against the respondent’s
property were correctly calculated. The Respondent maintains that the reason for not
paying the rates and taxes is because of the bona fide dispute that exists and has
existed since 2005, not because the Respondent does not have the funds to pay
them.
[18] It is contended on behalf of the Respondent that the bona fide nature of the
dispute is evident in the incorrect valuation by the Applicant of the subject property
for many years. That the Applicant has, through its conduct, unequivocally waived its
right to rely on the valuations as they stand. Further, the Applicant is using the
winding up proceedings as a means of enforcing payment of a debt which is
disputed on reasonable grounds. This court is enjoined to determine whether the
provisional liquidation order should be granted or not in the prevailing circumstances.
APPLICABLE LEGAL PRINCIPLES AND DISCUSSION
[19] The grounds for winding up of a company are provided for in section 344 of
the Act while section 345 is the deeming provision. Section 344(1)(f ) reads as
follows:
“(1) a company may be wound up by the Court if-
(a). . .
(b). . .
(c). . .
(d). . .
(e). . .
(f) the company is unable to pay its debts as described in section 345;”
Section 345 reads:
“(1) A company or body corporate shall be deemed to be unable to pay its debts if-
(a) a creditor, by cession or otherwise, to whom the company is indebted in a sum not
less than R100 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 that you; or
(ii) in the case of anybody corporate not incorporated under this Act, has served
such demand by leaving it at its main office or delivering it to the secretary or
some director, manager or principal officer of such body corporate or in such
other manner as the court may direct,
(b) any process issued on a judgement, decree or order of any court in favour of a
creditor of the company is returned by the sheriff or the messenger with an
endorsement that he has property to satisfy the judgeme nt, upon sale satisfy such
process or
(c) it is proved to the satisfaction of the court that the company is unable to pay its
debts.”
[20] In applications of this nature, an applicant is required to first establish, in
terms of the Act, that the court has the necessary jurisdiction to hear the application.
Secondly, the creditor/applicant, in terms of section 346 of the Act, must show that it
has the necessary locus standi. Thirdly, in terms of section 344 of the Act, there
exists valid ground for the liquidat ion of the debtor. This means that the applicant
must show in its affidavit that the balance of probabilities is in its favour. See Kalili v
Decorex (Pty) Ltd and Another 1988 (1) SA 943(A) at 975J – 979F.
[21] In terms of section 345 of the Act, a company shall be deemed unable to pay
its debts if a creditor has served on the company a demand requiring the company to
pay the amount due, and the company has for three weeks thereafter neglected to
pay the sum, or to secure or compound for it to the reasonable satisfaction of the
creditor or it is proved to the satisfaction of the court that the company is unable to
pay its debts. See Emcom Communications Transvaal (Pty) Ltd v Procourts (Pty) Ltd
1982 (3) SA 252(W) 255. Liquidation may be ordered if it appears to the court that it
is just and equitable that the respondent company should be wound up [section 344
(h)].
[22] At this stage of provisional liquidation, the Applicant has to show that the debt
[22] At this stage of provisional liquidation, the Applicant has to show that the debt
prima facie exists. The onus rests with the Respondent to show that it is disputed on
reasonable grounds. Even if the Applicant establishes his claim on a prima facie
basis, a court will refuse an application for the liquidation of the company if the
company bona fide disputes the applicant’s claim on reasonable grounds. This is to
avert the abuse of the liquidation process for the enforcement of debts. In the context
of liquidation proceedings, the rule is generally known as the Bardenhost rule,
derived from Badenhorst v Northern Construction Enterprises (Pty) Ltd 1956 (2) SA
346(T) at 347H - 348C. See also Orestisolve (Pty) Ltd T/A Essa Investments v NDFT
Investments Holdings (Pty) Ltd and Another 2015 (4) SA 449. Though its object is to
prevent the abuse of the liquidation process for the enforcement of debts, it is now
treated as an independent rule not requiring proof of actual abuse of process.
Orestisolve.
[23] A distinction must thus be drawn between the fact ual disputes relating to the
Respondent’s liability to the Applicant and disputes relating to other requirements for
liquidation. Regarding the latter, at this stage the court must be satisfied on a
balance of probabilities, having regard to the affidavits . In Gap Merchant Recycling
CC v Goal Reach Trading 55 CC 2016 (1) SA 261 (WCC) at para 20, the Court
stated that:
“A distinction is thus drawn between factual disputes relating to the respondent’s
liability to the applicant and disputes relating to the other requirements for liquidation.
At the provisional stage, the other requirements must be satisfied on a balance of
probabilities with reference to the affidavits. In relation to the respondent’s liability, on
the other hand, the question is whether the applicant’s claim is disputed on
reasonable and bona fide grounds; a court may reach this conclusion even though on
a balance of probabilities (based on the papers) the applicant’s claim has been made
out (Payslip Investment Holdings CC v Y2K Tec Ltd 2001 (4) SA 781 (C) at 783G-I).”
[24] The Respondent must have neglected to pay the sum demanded by the
Applicant to the reasonable satisfaction of the Applicant. In this context ‘neglected’
signifies not a mere omission on the part of the Respondent but the omission to pay
signifies not a mere omission on the part of the Respondent but the omission to pay
without a reasonable excuse. See Emcom Communications Transvaal (Pty) Ltd v
Procourts (Pty) Ltd 1982 (3) SA 252(W) 255.
[25] If the reason proffered for non -payment of the debt is a genuine and
strenuous contention, based on substantial grounds, that no liability exists, then the
person cannot be said to be neglecting payment. However, if there is liability, a
failure to dischar ge it may well be neglect, whether it is due to inadvertence,
obstinacy or dilatoriness; a challenge to liability is a challenge to the foundation upon
which any neglect contention in relation to an application must rest. Counsel for the
Applicant submitte d that there is no reasonable bona fide basis on which the
Respondent can dispute its liability to the applicant , in that the manner of calculating
the valuation of a property in order to determine the liability for rates is contained in
the applicable by -law. In addition, it is argued that the Respondent had failed for
years to contest its liability based on the valuations, and the decisions to impose
value on the property stood until set aside by a court of law.
[26] It was argued on behalf of the Respondent, that the Applicant had however
realised that the valuations could not be correct and should be revisited. Revisiting
valuations is as envisaged in section 78(1)(e) and (f) of the Municipal Property Rates
Act 6 of 2004. This section deals with supplementary valuations and states:
“78(1) A municipality must, whenever necessary, cause a supplementary valuation to
be made in respect of any rateable property-
(a) …
(b) …
(c) …
(d) …
(e) substantially incorrectly valued during the last general valuation; or
(f) that must be revalued for any other exceptional reason.”
[27] The wording of the section is peremptory, meaning that its provisions should
be invoked in instances where the ratepayer has challenged the valuation. The
Respondent asserts t hat prior to the default judg ement in 2019, the Respondent
persistently conveyed to the Applicant via a body of correspondence from 2005,
2008 and 2009 that the Respondent’s immovable property, Welbedacht Farm was
overvalued. Crucially, subsequent to the default judgement from 10 September 2020,
the communication between the parties continued halting the execution of writs . On
16 October 2019, at a meeting held between the parties, the Applicant had
16 October 2019, at a meeting held between the parties, the Applicant had
undertaken to instruct a valuer Coenrad Botha (“Botha”) fr om HBC property
valuations to re-evaluate the 2016 valuation of the property. Also t he 2017 South
African Wine Industry Information and Systems (“SAWIS”) summary of the property
would be provided to Botha to assist in properly assessing the farm’s value
according to the quality and quantity of its wine hectarage, and Botha would consider
the valuations of neighbouring farms during the same period in his re-evaluation.
[28] The argument proffered by the Applicant that the Respondent has failed to
challenge its liability for the rates, and the valuations cannot be sustained. This is
because it is clear that the appointment of a valuer to re -evaluate the Respondent’s
property was based on the Respondent’s challenge of the previous valuations.
[29] In my view, the revaluation by Botha is permissible in section 78, and it is an
indication that the Applicant accepted that the previous valuations were contested
and thus no longer intended to rely on the contested valuations. I agree with the
Respondent’s contention that the Applicant cannot rely on the historical valuations of
the Respondent’s property as the basis of its claims prior to resolving the matter. It
cannot, therefore, be argued that the Applicant had not been aware of the disputes of
fact prior to launching the current proceedings.
[30] The Respondent contended that, contrary to the Applicant’s assertion that the
Respondent is factually insolvent, correspondence dated 6 August 2024 from ABSA
Bank, and the confirmatory affidavit of Huysamen confirm that there are no
outstanding balances remaining on the bonds over the properties owned by the
Respondent, including on Welbedacht Farm. Thus, the Applicant’s allegation to the
effect that the Respondent’s liabilities far exceed its assets is incorrect, as the
Respondent is solvent and able to pay its debts as they become due and payable.
There is no evidence placed before this court suggesting that the Respondent is
insolvent and cannot pay its debts.
[31] It has already been pointed out in the previous paragraphs that on 29
November 2024, the Applicant issued a summons, and the Respondent avers that
the Applicant relies on the same cause of action as in the current application and in
respect of the same subject matter in both the liquidation application and the action,
which gives rise to a factual presumption that the action is prima facie vexatious.
which gives rise to a factual presumption that the action is prima facie vexatious.
Further, that the act ion is dispositive of the liquidation application. With this
realization, the Respondent’s attorneys wrote to the Applicant’s attorneys on 13
February 2025, inviting the Applicant to consider the withdrawal of the liquidation
application, a call that was n ot heeded by the Applicant’s attorneys. In response, the
Applicant contended that the Applicant is not under compulsion to do as the
Respondent dictates and the action proceedings are not a confirmation that a bona
fide dispute exists between the parties.
[32] The Applicant submitted that the liquidation process should proceed
notwithstanding the summons. Reliance was placed on Electrolux South Africa (Pty)
Ltd v Rentek Consulting (Pty) Ltd [2023] ZAWCHC 202; 2023 (6) SA 452 (WCC). To
comprehend the impact of issuing summons on provisional liquidation applications, it
is crucial to grasp the key distinctions between action proceedings and liquidation
proceedings. Action proceedings, usually commenced by summons, aim to pursue a
creditor’s claim against a debtor for the recovery of a designated debt. These
proceedings involve the presentation of facts and evidence in court during the trial.
Conversely, liquidation proceedings are initiated by application processes utilising a
notice of motion accompanied by an affidavit. Liquidation proceedings are aimed not
solely to recover a debt owed to a specific creditor, but to initiate legal processes to
declare a debtor bankrupt and to administer the e state for the benefit of all creditors.
It is well to remind ourselves of the Bardenhorst rule and reiterate that winding -up
proceedings are not designed for enforcement of debts that the debtor disputes on
bona fide and reasonable grounds. Freshvest Inves tments (Proprietary) Limited v
Marabeng (Proprietary) Limited 2016 JDR 2216(SCA) para 1.
[33] When identical legal disputes involving the same parties and subject matter
are concurrently being adjudicated in another court or proceedings, this situation
may give rise to the defence of lis alibi pendens . This approach aims to prevent
concurrent litigation that may lead to contradictory rulings and to eliminate the
burdensome proliferation of legal actions. To successfully invoke the plea of lis alibi
pendens, three critical criteria must be satisfied: (1) the same parties must be
present; (2) the identical subject matter must be at stake; and (3) the same cause of
present; (2) the identical subject matter must be at stake; and (3) the same cause of
action must be present in both cases. The essential enquiry about section 345 is
whether the iss uance of a summons for debt collection represents the identical
cause of action as a liquidation application predicated on the debtor’s non -
compliance with a statutory demand. This was the issue raised in Electrolux.
[34] In Electrolux, the Applicant filed a combined summons seeking payment of
R3,384,885.36 from the Defendant, after the Respondent neglected to adhere to a
section 345 statutory demand. Subsequently, the Applicant initiated a liquidation
action predicated on the same. The Respondent presented a preliminary objection,
contending that the defence of lis alibi pendens was applicable since the summons
was issued before the initiation of liquidation proceedings for the identical debt. The
Respondent argued that the liquidation applica tion should be dismissed or
suspended until the conclusion of the action proceedings.
[35] The court dismissed this argument, noting that while the action proceedings
and the liquidation application included identical parties in the same underlying debt,
the causes of action in the liquidation application pertain specifically to the
Respondent’s non-compliance with a statutory demand for payment, while the cause
of action in the action proceedings was based on a breach of a contract or another
legal foundation for the debt itself. The Court concluded as follows in para 15:
“From these definitions, it is apparent that the cause of action for the recovery of a
liquidated debt from the respondent is different from the set of facts which give rise to
an enforceable claim for the liquidation of the respondent.”
The substance of the relief pursued in the action proceedings is unequivocally
distinct from that sought in the application for the Respondent’s liquidation.
[36] The Court clarified that in action proceedings, a creditor aims to assert a claim
against a debtor for personal gain, but liquidation procedures are intended to declare
a debtor insolvent and manage the estate for the benefit of all creditors, not solely
the applicant. Liquidation impacts third -party rights and necessitates the distribution
of assets to creditors based on their legal entitlements and securities. The court in
Electrolux determined that it is evident that the Respondent cannot invoke the plea of
lis alibi pendens as a consequence. However, Electrolux is distinguishable from the
current matter in that, in this instance, the liquidation application preceded the
current matter in that, in this instance, the liquidation application preceded the
issuance of summons, which was not the case in Electrolux. Put differently, the
liquidation application was ongoing when the summons was issued in casu . In
Freshvest the SCA in determining an appeal after the High Court found that the
Respondent disputed the debt on bona fide and reasonable grounds but referred the
matter for oral evidence, held that the matter ought to have ended with the finding
and the appellant ought then to instituted action proceedings to prove its disputed
claim in the normal course. This shows that the two processes cannot proceed
simultaneously.
[37] In addition, in the present matter, there are no other creditors that stand to
benefit from the distribution of the Respondent’s assets. Further, in Electrolux, the
issue raised was lis alibi pendens, while in the present matter, that is not the case;
the Respondent raised the issue of issuance of summons in the midst of a liquidation
application and argues that it's an indication that the Respondent has a bona fide
dispute on reasonable grounds. Indeed, the Applicant would not have issued
summons if it cle arly believed that the Respondent was insolvent. The Applicant
would have insisted on the liquidation of the Respondent.
[38] Primarily, the practical implications of the sequence followed in the two
processes are that, on the one hand, in respect of the liquidation application, the
Applicant contends that the Respondent is factually and commercially insolvent.
Pursuant thereto, the Applicant proceeds to pursue a claim for the recovery of a debt
that is a subject matter of the liquidation proceedings, whic h is suggestive of the
Respondent’s ability to pay its debts . Importantly, the latter perception is formulated
after the former perception that the Respondent is commercially insolvent, which, in
a way, negates the former stance. Commercial insolvency deno tes a company’s
inability to fulfil its debt obligations as they mature, irrespective of the company’s
assets-to-liability ratio. In my view, the institution of the action proceedings imply that
the Applicant is able to pay its debt but neglected or refused to do so.
[39] Where the summons was issued prior to the liquidation application, it would
be understood that the creditor was of the view that the debtor would pay the debt
and the creditor could still entertain the idea that the debtor might be commercially
insolvent. However, where the creditor launches a liquidation application contending
insolvent. However, where the creditor launches a liquidation application contending
that the debtor is commercially insolvent, it cannot be successfully argued that upon
issuing summons, miraculously, the debtor will be able to pay the creditor. Creditors
must meticulously design their debt recovery tactics accordingly. Although concurrent
actions are allowed, creditors must ensure that the liquidation applications are
founded on undisputed debts or obligations that cannot be legitimately contested, to
avoid incurrin g adverse costs orders for the improper use of the liquidation
procedure. In the present matter the parties have a history of disputed valuations
dating back to over a decade, that alone is telling.
[40] The sequence the Applicant used to launch the liqui dation application and the
action proceedings underscores not only that the Applicant confirms the existence of
a bona fide defence but the exploitation of the liquidation proceedings as a
mechanism for debt recovery. In the circumstances, the issuance of a summons
pursuant to a liquidation application should be a barrier to a provisional liquidation
order. In other words, the Applicant’s action proceedings are dispositive of the
Applicant’s liquidation application.
[41] From the totality of the factors di scussed above, I am of the view that the
Respondent has shown that the indebtedness as contended by the Applicant is
disputed on bona fide and reasonable grounds.
ORDER
[42] It is accordingly ordered as follows:
[42.1] The application is dismissed with costs, such costs to include costs of
two counsel were so employed;
[42.2] The Respondent is to pay the co sts of the application to file a
supplementary affidavit;
[42.3] Costs on scale B in terms of rule 67A.
________________________
N.E. Ralarala
Judge of the High Court
APPEARANCES
For the Applicant:
A Montzinger instructed by Oosthuizen & Co (Paarl) Inc.
For the Respondent:
M Schreuder SC and M Van Der Berg instructed by SDP Attorneys