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[2023] ZAWCHC 311
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Regan Van Rooy (Pty) Ltd v Louberri 14 (Pty) Ltd (6082/2023) [2023] ZAWCHC 311 (4 December 2023)

IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
CASE
NO: 6082/2023
In
the matter between:
REGAN
VAN ROOY (PTY) LTD
Applicant
(Registration
number 2006/014022/07
and
LOUBERRI
14 (PTY) LTD
Respondent
(Registration
number 2017/290704/07)
(Registered
address: 3 Severn Road, Diep River, Cape Town, Western Cape)
Heard:

23
November 2023
Delivered:

04 December 2023  (Electronically)
JUDGMENT
Pillay
AJ
INTRODUCTION
1.
This is an application for a provisional order for the winding up of
the
respondent on the following grounds:
1.1.
The respondent is unable to pay its debts as and when
they fall due
for payment; and
1.2.
It would be just and equitable for the respondent to
be wound up.
2.
In what follows, I shall first address the relevant factual
background,
after which I shall address the law and conclude with my
findings.
THE
BACKGROUND
3.
The factual background in this matter is relatively straightforward.
4.
The applicant’s case may be summarised as follows:
4.1.
The applicant is a creditor of the respondent in the
amount of R 467
786.65.  The respondent’s alleged indebtedness arises from
an invoice rendered to it by the applicant
on
14 October 2022
for the performance of professional tax and structuring support
services (“
the services
”).
4.2.
On
10 February 2023
the applicant caused a letter of demand in
terms of section 345 (1) (a) of the Companies Act No 61 of 1973 to be
served on the
respondent’s sole director at its registered
address. It is common cause that notwithstanding this demand, the
respondent
has failed to make payment to the applicant within three
weeks or at all.
4.3.
The applicant also relies on correspondence that was
exchanged
between the parties which, it submits, demonstrates that the
respondent is
de facto
commercially insolvent and that the
applicant is able to prove, to the satisfaction of this Court, that
the respondent is unable
to pay its debts in terms of section 345
(1)(c) of the 1973 Companies Act and ought to be wound up.
5.
The respondent alleges that:
5.1.
The applicant has not rendered all of the services and
that the
invoice rendered was therefore rendered prematurely.
5.2.
The applicant is not a creditor of the respondent and
accordingly
lacks the necessary
locus standi
to prosecute this
application.
6.
In terms of a letter of engagement, the terms and conditions of which
were
agreed to by both parties on
28 March 2022
(“
the
agreement
” or “
the letter of engagement
”):
6.1.
The following was stated as regards the flow of funds:
“
It is a commercial
requirement for funds to flow in late March 2022 in order to
facilitate payment of the various service providers.
Funds amounting
to circa USD 33 million will shortly be paid from Central Bank in
Europe to Mark Brummer’s account in Mauritius.
Imperial Capital
Investment, as financier, will transfer the funds to the Louberri 14
(Pty) Limited Nedbank account which was opened
3 weeks ago to
facilitate this transfer (whilst waiting for the Mauritius entities
and bank accounts to be opened). Given the time
constraints, it has
not been possible to set up the envisaged entities and bank accounts
in Mauritius as yet.)”
6.2.
The respondent would conduct a review of the current
and forecast
future structure and identify an optimised fit for purpose structure
for the applicant’s global business going
forward. Ten specific
features of what the services would include were identified.
6.3.
Under the heading of “Proposed Fee” the
following is
stated:
“
We have agreed a
fee of USD 22,400 (or ZAR equivalent) for this assignment. Invoices
are payable upon presentation with a 1% service
fee applying for
payments later than one month from the invoice date. VAT will apply
where appropriate, should any withholding
tax apply, our fee should
be net of this amount.”
7.
The following exchanges between the parties are of relevance:
7.1.
In an internal email from the respondent’s representative
dated
2 June 2022
he records that he is upset about a certain email
and that the understanding of the undertaking of all their agreements
was that
the respondent would pay all invoicing from all parties once
the funding had been secured. The email proceeds: “Now this?”

It goes on to state that it was a concern of the respondent from the
initial talks and questions that the applicant had not been
conveyed
the same message.
7.2.
On
14 October 2022
the applicant sent an invoice for
settlement to the respondent.
7.3.
On
27 October 2022
the applicant sent a follow-up email to the
respondent advising that it had not heard from the respondent and
requesting when settlement
of the invoice could be expected. That
email also noted that invoices are issued once the assignment is
concluded.
7.4.
On
27 October 2022
the applicant sent a further email asking
for an indication of when funding will be paid.
7.5.
On
27 October 2022
the respondent replied to the
above-mentioned email stating
inter alia
as follows:
“
This exercise was
to set up and guide Louberry Africa Ltd through all the tax
challenges that we are going to face when LAL gets
the funding from
the funding partners. The company has not been set up yet as we are
waiting for the funding to be completed soon.
The
payment will be made as soon as the funding is paid
.”
(Own emphasis)
7.6.
On
31 October 2022
the respondent indicated that the funding
would be completed by the end of November 2022 and that it would be
in contact with everyone
with the updates.
7.7.
On
1 November 2022
the applicant wrote to the respondent
advising that its stance was in contradiction with the letter of
engagement and initial discussions.
The e-mail further advised that
the applicant was giving the respondent until the end of the month,
failing which it would have
no other option but to initiate formal
collection.
7.8.
On
2 December 2022
the applicant addressed a letter of demand
to the respondent, referring to the numerous emails requesting
settlement of the debt
“as per our services delivered under the
engagement letter dated 16 March 2022” in relation to taxation
and structuring
of support services that the parties had entered
into. The letter further noted with concern that as at that date, the
debt had
not been settled and that settlement was long outstanding.
It reiterated the importance of the debt being settled in full and
that
a failure to provide a timeline for settlement of the debt would
leave the applicant with little option but to pass the account
to
their attorneys for taking such steps as may be required. The letter
asked that the matter be treated with urgency.
7.9.
On
9 February 2023
the applicant issued a statutory demand in
terms of section 345 (1) (a) of the Companies Act read together with
the relevant provisions
of Schedule 5 Item 9 of the 2008 Companies
Act. That letter indicated that the applicant had provided the
services which it had
contracted for and that it had complied with
its obligations in terms of the engagement letter. It also stated
that notwithstanding
the invoice having been presented for payment on
14 October 2022 and a subsequent letter of demand dated 2 December
2022, the respondent
had failed and/or refused and/or neglected to
make payment of the amount due to the applicant. The letter advised
that in the event
that payment was not made or if the respondent
failed to secure or compound the amount due (i.e. to present a
repayment proposal
to the reasonable satisfaction of the applicant)
within three weeks from the date of this letter, it would be deemed,
in terms
of the provisions of section 345 of the Companies Act read
together with Item 9 of Schedule 5 of the 2008 Companies Act, that
the
respondent is unable to pay its debts and that the applicant
would apply for its liquidation.
7.10.
On
27 February 2023
the respondent proposed a repayment plan
which entailed a monthly payment from 2023 through to 2026, with the
first payment being
due by the end of March 2023. The email indicated
that if the applicant was happy with the proposal, the respondent
would sign
an acknowledgement of debt stating the terms of the
repayment plan.
7.11.
On
6 March 2023
the applicant addressed an email (through its
attorneys) which stated,
inter alia
, that the repayment
proposal is not accepted and that it is evident that the respondent
is trading in commercially insolvent circumstances
which justifies a
liquidation application. That email further indicated that papers
would be finalised in the course of that week
for service on the
respondent.
7.12.
On
6 March 2023
the respondent addressed a further email which
stated as follows:
“
With reference to
your email below.
My client has a liquidity
problem and not an insolvency problem due to all the debt that he is
owed.
I request that you
refrain from proceeding with the liquidation process and present a
new acceptable proposal.”
7.13.
On
6 March 2023
the applicant advised that it was prepared to
agree to a repayment plan whereby the outstanding debt was settled in
six equal monthly
instalments with the first instalment being payable
immediately. Various other terms were imposed. That email also stated
as follows:
“It does indeed appear that your client (sic)
unable to pay their debts as and when the debts become due and that
our client
will be able to prove this requirement should we proceed
with the liquidation application.”
7.14.
Also on
6 March 2023
the respondent (through its attorneys)
sent an email indicating that the respondent would not be able to
adhere to the terms as
proposed by the applicant.
THE
LEGAL FRAMEWORK
8.
Before engaging with the relevant provisions of the Companies Act,
there
was some dispute between the parties as to the applicant’s
reliance on correspondence that was written as part of
bona fide
settlement negotiations. As a result, the respondent argues that the
applicant was not entitled to refer to such correspondence.
9.
The applicant however relied on
Absa Bank Ltd v Hammerle
Group
2015 (5) SA 215
(SCA), which, in my view, finds
application and is binding on this Court.  The SCA held:
“
[12]   In my
view the contents of this letter again serve, not only as an
unequivocal acknowledgement of indebtedness by the
respondent, in the
amount claimed under the loan agreement, to the appellant. It also
shows that the respondent is unable to pay
its debts and is, in
consequence, commercially insolvent. The respondent contended that
the letter was written with a view to settling
a dispute and was as
such inadmissible. It accordingly applied that the letter be struck
out, which application was granted. Although
the offending paragraphs
which reflected the settlement proposals were blocked out, the
respondent's argument that the entire document
was rendered
inadmissible was upheld.
[13]
It is true that, as a general rule, negotiations between parties
which are undertaken with a view to a settlement
of their disputes
are privileged from disclosure. This is regardless of whether or not
the negotiations have been stipulated to
be without prejudice.
However, there are exceptions to this rule.
One of these
exceptions is that an offer made, even on a 'without prejudice'
basis, is admissible in evidence as an act of insolvency.
Where a
party therefore concedes insolvency, as the respondent did in this
case, public policy dictates that such admissions of
insolvency
should not be precluded from sequestration or winding-up proceedings,
even if made on a privileged occasion. The reason
for the exception
is that liquidation or insolvency proceedings are a matter which by
its very nature involves the public interest
. A concursus
creditorum is created and the trading public is protected from the
risk of further dealing with a person or company
trading in insolvent
circumstances. It follows that any admission of such insolvency,
whether made in confidence or otherwise,
cannot be considered
privileged. This is explained in the words of Van Schalkwyk J in Absa
Bank Ltd v Chopdat, when he said:
'(A)s a matter of public
policy, an act of insolvency should not always be afforded the same
protection which the common law privilege
accords to settlement
negotiations.   A creditor who undertakes the sequestration
of a debtor's estate is not merely
engaging in private litigation; he
initiates a juridical process which can have extensive and indeed
profound consequences for
many other creditors, some of whom might be
gravely prejudiced if the debtor is permitted to continue to trade
whilst insolvent.
I would therefore be inclined to draw an analogy
between the individual who seeks to protect from disclosure a
criminal threat
upon the basis of privilege and the debtor who
objects to the disclosure of an act of insolvency on the same basis.'
In the final analysis,
the learned judge said at 1094F:
'In this case the
respondent has admitted his insolvency. Public policy would require
that such admission should not be precluded
from these proceedings,
even if made on a privileged occasion.'”
(Own emphasis)
10.
Based on the aforementioned
dictum
, I am of the view that the
correspondence exchanged with a view to settling the matter may be
relied on and is admissible.
11.
Sections 345(1)(a)
and (c) of the Companies Act
[1]
provides:
“
(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 one
hundred rand 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 due; or
(ii)
in the case of any body 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,
and the company or body
corporate has for three weeks thereafter neglected to pay the sum, or
to secure or compound for it to the
reasonable satisfaction of the
creditor.
…
.
(c)
it is proved to the satisfaction of the Court that the company is
unable to pay its debts.”
12.
The applicable legal principles are well established and were
helpfully summarised by the
SCA in
Afgri Operations Ltd v Hamba
Fleet (Pty) Ltd
2022 (1) SA 91
(SCA):
12.1.
It is trite that
winding-up proceedings are not to be used to enforce payment of a
debt that is disputed on
bona
fide
and
reasonable grounds.  Where, however, the respondent's
indebtedness has,
prima
facie
,
been established, the onus is on it to show that this indebtedness is
indeed disputed on
bona
fide
and
reasonable grounds.
[2]
12.2.
Generally
speaking, an unpaid creditor has a right,
ex
debito justitiae
,
to a winding-up order against the respondent company that has not
discharged that debt.
[3]
12.3.
Once the
respondent's indebtedness has
prima
facie
been
established, the onus is on it to show that this indebtedness is
disputed on
bona
fide
and
reasonable grounds; and the discretion of a court not to grant a
winding-up order upon the application of an unpaid creditor
is narrow
and not wide.
[4]
13.
The applicant also relies on sections 344(f) and 344(h) read together
with sections 345(1)(a)
and 345(1)(c) of the Companies Act,
contending that it is just and equitable that the respondent should
be wound up.
APPLICATION
OF THE LAW
14.
Turning then to the evidence and my findings.
15.
While I accept that the language used in some of the email exchanges
referred to may be
described as somewhat loose in that it refers to
“he” as opposed to the respondent entity, it is clear to
me that the
exchange at all material times pertained to the
outstanding invoice for services pursuant to the agreement concluded
between the
parties.
16.
It is also clear from the detailed engagements that I have referred
to that there was no
indication that the services had in fact not
been rendered. Against that factual background and quite remarkably,
the answering
affidavit identifies all of the services referred to in
the agreement as not having been rendered and makes the following
averments
in that regard:
“
39.
In addition to the fact that it was agreed that the applicant’s
fees will only be paid after it rendered
the services and the
respondent has received the funding, it is respectfully submitted
that the above service has not yet been
rendered by the applicant and
therefore the full amount can in any event not to be due and payable.
40.
The applicant has only provided the respondent with a draft letter
setting out tax advice on the optimal
tax structure and consequently
none of the aforementioned services has therefore been provided in
full.
41.
Following on the above, the invoice rendered and referred to in the
applicant’s application as
“FA 2” is therefore
premature and cannot be due and payable, the reason being twofold:
41.1.   The
fees as (sic) not yet been received by the respondent from Imperial
Investment Mauritius; and
41.2.   An
all-inclusive fee was agreed upon and therefore the entire amount can
only be due once all the agreed-upon
services have been rendered.”
17.
I have considered each of the arguments proffered on behalf of the
respondent as to why
the debt is not due. In my view none of them
have any merit. This is so for the following reasons:
17.1.
First
, as to the terms of the agreement as set out in the
engagement letter, which I have quoted above, it is clear that
invoices are
payable upon presentation. That was a term that both
parties agreed to and I am not satisfied that the correspondence that
was
exchanged at that time had any impact on the relevant clause in
the agreement. The respondent directed me to an email dated 16 March

2022 in this regard which stated: “Kindly note that the funds
will be transferred once we have the transferred funds available
at
April 2022”.  That statement does not, in my view, alter
the agreement that had been reached between the parties
in terms of
which invoices were payable on presentation.
17.2.
Second
, as to the contention that not all of the services had
been rendered, it is clear from the exchange of correspondence
attendant
on issuance of the invoice that this issue was not raised
as a basis for non-payment. Indeed the exchange of correspondence
appears
to indicate quite the contrary, in that the only issue that
has been raised is receipt of the transfer of funds. It is also
telling
that the answering affidavit does not identify precisely
which services were not rendered. It is clear from an annexure to the
replying affidavit titled “Tax Advice on the Optimal Tax
Structure” that the services were rendered.
17.3.
Third
,
in light of the language of the agreement and the subsequent exchange
of correspondence, I do not accept that there is any room
for an
implied term or a tacit term as contended for by the respondent.
The legal principles pertaining to implied and tacit
terms are
well-established.  An implied term is one implied by law and a
tacit term is one flowing from the actual or imputed
intention of the
parties to the contract.
[5]
The SCA has explained each of these terms in
South
African Maritime Safety Authority v McKenzie
2010
(3) SA 601
(SCA) paras 11 and 12 as follows:
“
[11]   In the
alternative it is alleged that the term arises either by way of an
implied term or as a tacit term. Corbett AJA
explained the difference
between the two in Alfred McAlpine & Son (Pty) Ltd v Transvaal
Provincial Administration.
An implied term
properly so called is a term that is introduced into the contract as
a matter of course by operation of law, either
the common law, trade
usage or custom, or statute, as an invariable feature of such a
contract, subject only to the parties’
entitlement in certain,
but not all, instances to vary it by agreement
.
Where reliance is placed on such a term the intention of the parties
will not come into the picture and the issue is the purely
legal one,
of whether in those circumstances in relation to a contract of that
particular type the law imposes such a term on the
parties as part of
their contract. A tacit term is a term that arises from the actual or
imputed intention of the parties as representing
what they intended
should be the contractual position in a particular situation or,
where they did not address their minds to that
situation, what it is
inferred they would have intended had they applied their minds to the
question.
[12]
In our law as it stands at present the usual test for the
existence of a tacit term is that of the interfering bystander who
asks
what is to happen in the particular situation and receives the
answer: ‘Of course X will be the position. It is too obvious

for us to say so
.’  The application of that test in
relation to the term pleaded on behalf of Mr McKenzie is destructive
of the contention
that his employment contract is subject to that
term….”
(Own Emphasis)
17.4.
No basis was laid for an implied term (i.e. one that is introduced
into
the contract as a matter of course by operation of law, either
the common law, trade usage or custom, or statute, as an invariable

feature of such a contract, subject only to the parties' entitlement
in certain, but not all, instances to vary it by agreement).
As
to a tacit term, it does not pass muster on the interfering bystander
test.  It is also manifestly inconsistent with the
express
wording of the agreement.
18.
On having considered the evidence, I am satisfied that on the
evidence, there is a
prima facie
case in favour of the
applicant. I am not satisfied that the respondent has succeeded in
showing that the debt is disputed on
bona fide
and reasonable
grounds or by showing that it is able to meet its obligations. I am
also satisfied that the threshold of justice
and equity as
contemplated by section 344(h) of the Companies Act has been met on
the evidence.
THE
FORMALITIES HAVE BEEN COMPLIED WITH
19.
This application has been served on the respondent, on the South
African Revenue Service,
and on the Master of the High Court. The
respondent has no employees and thus there are no trade unions with
any interest in the
application.
20.
The applicant has lodged a bond of security with the Master.
According to the Master’s
Report, he knows of no facts which
would justify the Court postponing the hearing or dismissing the
application.  The last
two orders made hereunder have been
provided for at the request of the Master.
ORDER
21.
In the circumstances, I make the following order:
21.1.
The respondent is placed under provisional winding up in the hands of

the Master of the High Court.
21.2.
A
rule nisi
is issued calling upon the respondent and all
interested parties to appear on the return date on
14 February
2024
to provide reasons, if any, as to why:
21.2.1.
a final order of liquidation should not be granted; and
21.2.2.
the applicant’s costs of the application, including
reserved
costs, should not be costs in the winding up.
21.3.
Service of this order shall be effected as follows:
21.3.1.
By the Sheriff on the respondent;
21.3.2.
On the South African Revenue Service;
21.3.3.
By publication on one edition of respectively the
Cape Times
and
Die Burger
newspapers.
21.4.
The registrar is directed to transmit a copy of this Order to the
Sheriff
of the province in which the registered office of the
respondent is situated and to the Sheriff of every province in which
it appears
that the respondent owns business.
21.5.
The Sheriff is directed to attach all property which appears to
belong
to the respondent and transmit to the Master an inventory of
all property attached by him or her in terms of
section 19
of the
Insolvency Act No 24 of 1936
.
Pillay
AJ
Acting
Judge of the High Court
Appearances
:
For
the Applicant :
Advocate
D R De Wet
Instructed
by :
Tim
du Toit Attorneys
(ref:
C Lang)
For
the Respondent :
Advocate
M van der Merwe
Instructed
by :
Smit
& Hugo Attorneys
(ref:
A Venter)
[1]
In terms of
Companies Act 71 of 2008
Schedule 5, paragraph 9,
despite “the repeal of the previous Act, until the date
determined in terms of sub-item (4), Chapter
14 of that Act
continues to apply with respect to the winding-up and liquidation of
companies under this Act, as if that Act
had not been repealed
subject to sub-items (2) and (3).”
[2]
At par 6.
[3]
At par 12.
[4]
At par 13.
[5]
Alfred
McAlpine & Son (Pty) Ltd v Transvaal Provincial
Administration
1974
(3) SA 506
(A) at 531D – 532G;
South
African Maritime Safety Authority v McKenzie
2010
(3) SA 601
(SCA) paras 11 and 12.