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[2014] ZAWCHC 207
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Tiador 126 CC and Another v Rock Construction CC (21088/2013) [2014] ZAWCHC 207 (23 December 2014)
IN THE HIGH COURT OF
SOUTH AFRICA
(WESTERN CAPE DIVISION,
CAPE TOWN)
CASE NUMBER: 21088/2013
DATE: 23 DECEMBER 2014
In the matter between:
TIADOR 126 CC
(CK2002/060736/23)
...................................................................................
Applicant
EARTHWORKS DRILLING
AND
.....................................................................
1st
Intervening Party
EXPLORATION CC (REGISTRATION NO.
2009/012611/23)
JEFF DRILL AND BLAST (PTY)
LTD
.............................................................
2nd
Intervening Party
(REGISTRATION NO. 1996/017991/07)
And
ROCK CONSTRUCTION CC
(CK1994/035040/23)
.........................................................
Respondent
J U D G M E N T
DAVIS, J:
INTRODUCTION:
The applicant and the intervening
parties have applied for the final winding up of respondent in
circumstances where applicant alleges
respondent is unable to pay its
debts in terms of section 344(f), read together with section
345(1)(c) of
the Companies Act 1973 (the Act),
alternatively that the application is made for the final winding up
of respondent in terms of
section 344(a)(h) of the Act, it being just
and equitable that the respondent be so wound up.
APPLICANT’S CLAIM:
The applicant is a specialist in
drilling and related services which services were rendered to the
respondent in terms of written
agreement. The respondent engaged the
services of the applicant as a drilling specialist for a project at
De Aar, on which project
respondent was the main contractor of a
company known as Construczioni Moncada South Africa (Pty) Ltd
(“Moncada”).
Respondent was awarded the project but as
it was not a specialist in drilling operations, it engaged the
services of the applicant
to assist in drilling activities.
In short, the project entailed that the
applicant drill holes when and where it was so instructed while the
respondent planted poles
associated with the establishment of a solar
farm. Applicant rendered these services in terms of an agreement
concluded between
the parties. Accordingly it invoiced respondent
for the services so rendered. From February 2013 to May 2013
payments were made
by the respondent to the applicant for the
services so rendered. As from May 2013 respondent only made certain
payments to the
applicant. It then ceased making payments for
services rendered. This resulted in an outstanding amount of R11 502
348.31, which
was due by the respondent to the applicant on or about
November 2013.
Upon enquiry by the applicant regarding
respondents’ failure to pay, the only reason at that stage
which was furnished by
the respondent was that it had not received
payment from Moncada for the services rendered by the applicant and
consequently it
was not in a position to pay the applicant.
THE KEY AGREEMENT
I turn to examine the agreement between
the applicant and the respondent. On 25 January 2013 applicant
submitted to the respondent
a quotation with terms and conditions for
the drilling works to be conducted by the applicant.
The quotation was accepted by the
respondent but an amended version thereof was submitted to Moncada by
the respondent in order
to secure the award of the project to
respondent. From the papers it appears that the applicant was not
privy to the amended quotation
submitted to Moncada, which fact was
confirmed by Mr Schroeder, who was once an employee of respondent in
a supporting affidavit
which was attached to the papers.
THE PROVISIONAL ORDER:
An application for a provisional order
of liquidation was heard during May 2014. That application
culminated in a judgment delivered
by Blignaut, J on 17 June 2014.
From this judgment it appears that the central issue raised by
respondent was that the applicant’s
indebtedness to the
respondent had been extinguished by its claim for damages arising out
of the applicant’s defective performance
of the work it was
obliged to perform. With reference to the damage caused by the
applicant, which respondent alleged should be
set off against that
which it owed to the applicant, Blignaut, J held that:
“The problem for respondent
however is that the description of its damage and the quantification
thereof are extremely vague.
Its damage is described only in vague
remarks ..”
The learned Judge continued:
“The further difficulty with the
respondent’s case is that there is virtually no concrete
evidence to support Adam’s
bold statements. He did not provide
any meaningful particulars in regard to the nature and extent of the
work that was done, nor
any breakdown or quantification of the amount
sought to be set off against applicant’s claim. There are no
particulars of
the identity of any other contractors, if any that
were involved, or the amounts paid to them. Mr Adam furthermore did
not provide
or identify any supporting documentation ... The
quantification of the respondent’s alleged damage is an
essential element
of its defence. He did not dispute that
applicant’s unpaid invoices amounted to R11 502 348.31.
Applicant’s claim
called for a detailed defence by respondent.
Respondent did not respond to this adequately at all ...Respondent’s
answering
affidavit was deposed to on 5 March 2014. Respondent thus
had more than adequate time to provide full particulars in regard to
its alleged damage...In the light of these weaknesses in the
respondent’s defence, I am of the view that applicant
established
on a balance of probabilities that it was a creditor of
the respondent. It follows that respondent is at least unable to pay
its
debts to the applicant. For the same reason I am prima facie of
the view that respondent does not dispute applicant’s claim
on
reasonable and bona fide grounds. I am also of the view that
applicant has established on a prima facie basis that it would
be to
the advantage of creditors if respondent is liquidated. In a
situation where a large debt of respondent is unpaid and its
defence
is prima facie without merit, it is important that the affairs of
respondent be investigated and creditors be treated fairly
and
equally.”
On the return day, respondent had not
supplemented its papers and therefore was faced with the same problem
which Blignaut, J had
found fatal to its opposition to the granting
of a provisional order. The return day was then extended after a
hearing on 3 September
2014. At this hearing, respondent relied on
the same papers that had been laid before Blignault J. It was only
after the extension
on 3 September 2014 that the respondent deposed
to a further affidavit dated 14 October 2014. By then two
intervening parties
had sought to intervene after the provisional
order had been granted. Finally, argument for the granting of a
final order was
heard by this Court on 15 December 2014.
THE RESPONDENTS’ OPPOSITION TO
THE GRANTING OF A FINAL ORDER:
In its supplementary papers, the
respondent sets out two defences which are designed to dispute the
claim which was central to the
applicant’s case. It disputes
the veracity of applicant’s invoices and it further alleges
that it has a counterclaim
against the applicant. Significantly, the
defence alleging that the applicant’s invoices were incorrect
was not raised when
the case was argued before this Court. Mr
Hutton, who appeared on behalf of the respondent, together with Mr
Spottiswoode, eschewed
reliance on this defence and concentrated
exclusively on the second line of defence, that is the counterclaim.
It is therefore
unnecessary to deal any further with the question of
the invoices.
THE COUNTERCLAIM:
Respondents’ counterclaim appears
to be divided into different categories, namely re-drilling, standing
time, holes drilled
too deep or too wide, failure to reach daily
targets and concrete expenses. The supplementary affidavit is not
without its own
difficulties. An annexure, WA5, to the papers set
out a counterclaim which was dated 18 March 2014, which contains the
following:
“As a direct result of the
plaintiff’s breach of the agreement, as set out, the defendant
has suffered damages in the
amount of R642 124,09 ... which is made
up as follows:
10.1 The cost of additional concrete
and costs associated with it, including the cost of labour and plant
hire required to remedy
the defective performance of the plaintiff:
R4 745 994.38.
10.2 The cost occasioned by delays in
drilling caused by the plaintiff’s breaches of the agreement as
set out above: R5 235
944,00.
10.3 Additional costs incurred by the
defendant in rectifying the holes drilled by the plaintiff that were
of the incorrect depth
or incorrect diameter: R2 162
534,40.
10.4 Less the amount that the defendant
would have expended had the plaintiff complied with its obligations
under the agreement:
R11 502 348,89.”
However Mr Hutton informed the Court
that the real counterclaim is not that contained in WA5 but in WA6.
WA6 comprises of the following claims:
standing time due to breakdowns on drilling rigs; holes drilled too
deep due to lack of supervision
from Tiador/Nightshift; reaching
daily target as per agreement; holes drilled bigger than as per
agreement, 250-270mm. The claim
is then summarised thus: total
claim excluding VAT R16 520 264,00. VAT R2 312 836.96.
Total inclusive of VAT R18
833 100,96.
Mr Adam, who deposed to the
supplementary answering affidavit on behalf of respondent, says the
following in respect of WA6:
“This second counterclaim had a
factual foundation .. This document was sent to the respondent
erstwhile legal representatives
on 17 December 2013, as appears from
a copy of my email to them of that date (annexed as WA7), attaching
the document evidenced
as WA6. Once again I do not know why the
document evidenced as WA6 has not prior to now been presented to this
Court on the respondent’s
behalf.”
He then seeks to explain the difference
between the claims set out in WA5 and WA6:
“The second counterclaim pleaded
in annexure WA5 differs from the formulation (and amount) contained
in annex WA6. In this
regard the heads of damage pleaded in annex
WA5 … are not the complete extent of the damage suffered by
the respondent in
consequence of the applicant’s defective
performance of its obligations. Once again I do not know why the
additional heads
of damage contained in annexed WA6 were not carried
through in annex WA5 by the respondent’s erstwhile legal
representatives.
The heads of damage pleaded in annex WA5 are by no
means the full extent of the harm caused by the respondent as a
result of the
applicant’s defective performance, these are more
fully set out in annex WA6.
With reference to paragraph 10.1 and
10.3 of the second counterclaim, these heads of damage arose from
blocks C and D and were caused
by the applicant hitting a soft
subterranean river bed (after first drilling through hard ground)
which resulted in tremendous
depression which then needed to be
filled with copious amounts of concrete ...
With reference to paragraph 10.2 this
head of damage is the same as that set forth in annex WA6 under the
heading ‘Reaching
daily target as per agreement’ in the
amount claimed of R5 195 400.00. I do not know how the discrepancy in
figures arose
between that amount and the amount of R5 235 944,00,
the correct amount is that appearing annex WA6 ...
The figure in paragraph 10.45 requires
explanation and correction. This figure appears to be the same as
the applicant’s
claim in these proceedings. This figure should
not have been included at all in the computation of the counterclaim
for the following
reasons:
First, the figure should have been
reduced by the amount of the disputed invoices…
Second and more importantly, the heads
of damage contained in annex WA6 are all loss of profit values that
they already take account
of the cost to the respondent in placing
itself in a position to earn the revenue necessary to generate the
nett profit claimed.
This means that no costs need to be deducted
from the total amount in the appearing in annex WA6. The total is a
value for net
profit forgone as a result of the applicant’s
defective performance.
In the circumstances, the correct
computation of respondent’s second counterclaim and action, is
the one set out and made
up in annex WA6 ... and not annex WA5. It
exceeds the applicant’s claim in these proceedings.”
Mr Venter, who appeared on behalf of
the applicant, submitted that it should be common cause between the
parties that the respondent
did not and was not able to conduct any
drilling work or manufacture concrete. He also noted that
significantly absent from the
papers was any documentary proof
substantiating the respondent’s alleged counterclaim for, what
he desribed as the ‘preposterous
amount’ of R25 741
629,74 (annexure WA5) together with a further amount of R6 908 528,78
insofar as concrete is concerned.
Mr Venter drew the attention of the
Court not only to the absence of supporting documents, but to the
approach of Blignaut, J at
para 35 of his judgment:
“The further difficulty with the
respondent’s case is that there is virtually no concrete
evidence to support Adam’s
bold statements. He did not provide
any meaningful particulars in regard to the nature and extent of the
work that was done nor
any breakdown or quantification of the amount
sought to be set off against applicant’s claim. There are no
particulars of
the identity of any other contractors, if any, that
were involved with the amounts paid by them. Mr Adam furthermore did
not provide
or identify any supporting documents.”
Mr Venter submitted further that the
affidavit of Mr Schroeder, the previous employee of respondent’s,
was of particular importance.
In this regard he referred to the
following from this affidavit:
“The equipment and drilling rigs
of TIADOR 126 CC (“applicant”) did not at any time delay
the progress or construction
work as there was adequate equipment,
together with service and mechanical support available at all
relevant times.
Rock Construction was stopped doing
drilling and planting of posts for a period of + 5 weeks by Moncada,
whilst busy in Blocks C
and D because Block A and part of Block B was
not completed with structures and glass. The relevant banking
institution financing
the tender would not make any payments to
Moncada as a result of incompleted works by Rock Construction
(“respondent”)
so the concrete teams were removed from
planting of posts and were used to refit broken glass, fastening of
bolts, aligning of
structures, fixing of posts that were not planted
correctly, posts damaged by construction equipment and re-drilling of
holes surveyed
incorrectly.
Mid September 2013 Moncada again
stopped Rock Construction from drilling because the drilling rigs
were + 6000 holes ahead of the
construction teams and there was
incompleted field areas A, B and C that have not been completed and
the posts still had to be
concreted in for a period of + 16 days.
Additional delays were experienced
throughout the contract because of the shortage of survey services
supplied by Moncada of + 4
weeks, delay in the posts to be supplied
by Moncada, concrete trucks breaking down because the road was not
properly maintained
by Moncada, delay in concrete supply due to no
payment to Afrimat by the respondent. When this happened I worked
during the R&R
weekend to catch up with the planting of posts so
that the construction works could continue when everybody returned
from the month-end
weekend.”
He continues:
“The only drilling contractor
appointed by respondent was the applicant. The respondent did not
employ any other drilling
contractor and also did not do any
re-drills at all done by the applicant. The respondent could not
meet their daily targets because
of insufficient concrete volumes due
to the breakdowns on the concrete truck, delays in material supply
from Moncada, the labour
did not timeously make use of the transport
provided and busloads would come half full and many labourers would
only make use of
the last bus..
The applicant was always ahead of the
planting of posts done by respondent’s construction by a
minimum of at least 2000 holes
at any given time…
Applicant completed the drilling
services on 6 November 2013 and respondent completed the final
planting of posts on 15 November
2013 thus showing that applicant
timeously completed their duties, always far ahead of the
construction teams of the respondent.”
According to Mr Venter, it was clear
from the supplementary papers and the applicant’s reply thereto
that respondent did not
and could not have done any of the remedial
drilling work itself and had not employed any other contractor to so
do this remedial
drilling work. In his view, this disposed of the
respondent’s claims relating to re-drilling of holes. Insofar
as the allegation
that the holes were drilled too deep or too wide,
he submitted that this argument was without any merit because it was
refuted
by the affidavit of Mr Du Toit, Mr Schroeder as well as Mr
Moncada himself. In this regard Mr Moncada states as follows in his
affidavit:
“The drilling works undertaken by
the applicant were satisfactory and of good quality. The re-drilling
works which had to
be undertaken was not due to the quality of the
applicant’s work and cannot be attributed to any fault on the
part of the
applicant. The applicant did not do any concrete work in
relation to the project. The additional concrete works which had to
be undertaken was not due to the quality of the applicant’s
work and cannot be attributed to any fault on the part of the
applicant. The applicant’s work was inspected by CMSA on a
regular basis in accordance with the project schedule and CMSA
always
found the applicant’s work to be of a good quality and free
from any defects.”
In response to these submissions Mr
Hutton conceded that this dispute, until recently, had been
bedevilled by a frustrating lack
of particularity in which the
respondent had raised its defences and, in particular, its
counterclaim. Correctly, he noted that
this frustration had been set
out eloquently by Blignaut, J in his judgment. He also conceded that
this frustration was always
reflected in the course of argument which
took place during the hearing on 3 September 2014, shown clearly from
the transcribed
record of that argument which is attached to the
papers.
The respondent, now represented by
different attorneys and counsel, adopted what Mr Hutton referred to
as a somewhat less sanguine
view of the matter than that taken by
their predecessors, in that respondent had taken heed of the
criticisms articulated by Blignaut,
J. In the circumstances,
respondent delivered a supplementary answering affidavit which, in Mr
Hutton’s view, dispelled
the criticism of vagueness and lack of
particularity. He submitted that respondent had now shown on its
papers that it has “a
genuine and serious counterclaim that
well exceeded the amounts claimed by the applicant”; that is
the counterclaim described
it in WA6.
Mr Hutton’s view that the
respondent’s counterclaims are genuine and serious because they
raise a triable issue, was
reflected in a number of submissions that
he made. For example he submitted that respondent’s claim for
concrete which stood
to be added to the claims in WA6 and which
amounted to R6 908 528,78 (see para 23.2 of the supplementary
answering affidavit) was
contested as follows: Mr Du Toit, on behalf
of the applicant, contests the amount because the respondent had no
drilling capability
and did not manufacture concrete. Thus it could
have no claim for concrete. According to Mr Hutton, this denial
stood in sharp
contrast to the evidence of Mr Enslin, who deposed to
an affidavit on behalf of the respondent, to the effect that
respondent had
to fill collapsing holes in blocks C and D.
Mr Enslin says the following in his
affidavit:
“As regards blocks C and D, in
these blocks the same problems arose as in Blocks A and B, except
that a further problem arose
in Blocks C and D, namely the collapsing
of holes. I noticed this for the first time during September 2013
and I immediately drew
it to the attention of the applicant’s
representatives, namely Jannie and Chester. For these collapsing
sink holes the respondent’s
remedy the defective work with
additional concrete.
This became a huge problem in block C
and D when the resultant concrete usage (paid for by the respondent)
became astronomical.
The applicant’s representatives were well
aware that these costs were being incurred by the respondent.. The
result of these
problems in Blocks C and D was that the respondent
ended up having to fill deep holes and to find aggregate mixed with
cement which
was very expensive and labour intensive.”
Mr Hutton submitted thus that there was
now a dispute which could not be resolved on the papers and had to go
to trial. He referred
further to the fact that Mr Schroeder did not
deny that there was additional concrete used (see paragraph 8.9.1 of
that affidavit)
although he blamed a third party. He then went on to
state that there was “extra concrete usage by the respondent
and also
that the respondent was advised to allow additional concrete
usage”. This alone showed that the dispute between the parties
could only be resolved by way of a trial.
Referring to the respondent’s
claim based on the standing time due to breakdowns on drill rigs, Mr
Hutton noted that this
was dealt with by Mr Du Toit and by Mr
Schroeder in their affidavits. Du Toit merely stated that this
averment was improbable
because respondent’s Adam never
mentioned it earlier. In short, Mr Schroeder simply denied that
there were any breakdowns
incurred in equipment or drilling rigs
supplied by the applicant.
Again in keeping with the general tenor
of his argument, Mr Hutton submitted that this constituted an
irresolvable dispute of fact;
either drilling rigs supplied by the
applicant’s did or did not break down. This was a matter for
trial.
The fact that these issues have been
raised in this manner compels me to examine the applicable law.
THE RELEVANT LEGAL POSITION:
In Ter Beek v United Resources (CC)
1997 (3) SA 315
(C) Van Reenen, J sought to deal with the applicable
test to be applied when an un-liquidated counterclaim exceeding the
amount
of the applicant’s claim, is raised as a defence to a
winding up application. Van Reenen, J said the following at
333H-334C:
“The courts in England have
adopted the stance that the question whether a winding up order
should be made on a petition based
on a judgment debt where there is
a genuine counterclaim against the petitioning credit, was a matter
for a judge’s discretion...
In South African law, as in English
law…the court’s power to grant a winding up order is
discretionary, irrespective
of the ground on which it is being
sought.. Accordingly, there exists in my opinion no reason why the
same approach should not
be followed in South African law, subject to
the qualification that by reason of the fact that the ‘defence’
of a counterclaim,
recognises the enforceability of the obligations
on which the applicant’s locus standi is founded (there is no
room for an
argument that an applicant is seeking to enforce a
disputed debt by means of winding up proceedings) and (b) as the
existence of
an applicant’s claim is not challenged, the
respondent should bear the onus of showing why the court should
exercise a discretion
not to grant a winding up order in his
favour...”
Much of the approach adopted by Van
Reenen, J in Ter Beek was sourced in English Law. It is therefore
necessary, at least briefly,
to refer to the English case of Seawind
Tankers Corporation v Bay Oil SA
[1999] 1 ALLER 374
(CA). In this
case it was held that the court had a greater discretion where the
petition was a creditor but the company was arguing
for the petition
to be stayed or dismissed because of a counterclaim of an amount
which was greater than the claim. The petition
would still be
dismissed where there was no genuine counterclaim, except in special
circumstances.
In the light of this judgment,
Binns-Ward, J in Absa Bank Limited v Erf 1252 Marine Drive (Pty) Ltd
[2012] ZAWCHC 43
sought to revisit the issue again.
Binns-Ward, J’s approach was
critical of that adopted by Van Reenen, J in Ter Beek because, in his
view, the latter judgment
failed to come to terms with the narrow
nature of the discretion that English courts possess in these cases.
As the learned Judge
said:
“In Ter Beek ... Van Reenen, J
despite actually mentioning the decisions in Portman Provincial
Cinemas and LHF Wools Ltd,
described his understanding of the
position under English Law with no acknowledgment of the narrow
nature of discretion available
to English court and, after citing two
South African cases which merely recite the trite principle that a
South African court has
a discretion to refuse to make a winding up
order even when the applicant has proved the elements necessary to
obtain such an order
opined that there existed no reason why the
English approach should not be followed in South African Law. With
respect however
in failing to appreciate its limiting effect on the
breath of the applicable judicial discretion, the learned Judge
appears to
have misdirected himself on the import of the English law
in point.”
Binns-Ward, J then continued:
“Appearing to hold (though his
reference to Kalil v Decotex (where the question was in fact left
open) that the Badenhorst
rule which pertains to the determination of
‘disputed debt cases’ in our law went to locus standi,
Van Reenen, J expressed
himself ... against following that approach
in South African law and, to that extent, qualified his opinion that
we should in general
follow the English judicial practice as he
understood it to be.
I am hesitant to accept the notion that
a Badenhorst rule (sic) goes to standing. After all as Corbett, JA
observed in Kalil v
Decotex ... it is inconceivable that a creditor
could establish on the balance of probabilities that it had a claim
against the
respondent’s claim in winding up proceedings while
the respondent at the same time was able to establish the claim was
disputed
on bona fide and reasonable grounds. The applicant in such
case would have established its standing, while the respondent would
have established, irrespective of the merits of the claim or its
defence to it, that the remedy sought by the applicant should
not be
granted. The Badenhorst rule does seem to constitute a self standing
(and possibly flexible) principle that winding up
proceedings are not
an appropriate procedure for a creditor’s use when the debt is
bona fide disputed ...”
Binns-Ward then concluded:
“It is possible to state the
position in South African law without reference to the English law.
There is no reason for our
courts to adopt or entrench what Nourse LJ
in Bayoil clearly suspected to be a mistakenly taken course in
English jurisprudence
determined in Portman. In my view, reliance by
a respondent on the genuine, serious, un-liquidated counterclaim to
oppose an application
for its liquidation, is a quite distinguishable
basis for resisting winding up from that premised on a bona fide and
reasonable
dispute of an alleged indebtedness to a creditor
applicant. As pointed out by Van Reenen, J in Ter Beek, reliance by
a respondent
company on a counterclaim to avert a winding up order
actually entails an admission by it of the alleged indebtedness to
the applicant
relied upon by the creditor applicant. The allegation
of the existence of the un-liquidated counterclaim is nothing more
than
a putting up by the respondent of a basis upon which it is able
to ask the court to exercise its discretion against making a winding
up order, notwithstanding that the applicant may have satisfied a
technical requirement to achieve the remedy…I venture
that in
the majority of cases a distinction between the English approach and
ours will be notional rather than real, certainly
in respect of the
result. A court will in the nature of things be inclined to exercise
its discretion against making a winding
up order in a matter in which
it appears that there is a reasonable possibility that a counterclaim
by the debtor company will
upon its determination extinguish the debt
relied on by the applicant in its application for a winding up.”
The latter set of judicial observations
provides a reason for why there is little need to read the English
position as being significantly
different from our law or indeed from
the approach adopted by Van Reenen, J in Ter Beek, supra. The present
case does not involve
a determination of the genuiness of applicant’s
claim. As respondent’s case is based upon a counterclaim that
allegedly
exceeds the applicant’s claim, this is not a case
where the applicant’s claim is disputed on bona fide and
genuine
grounds which would trigger the so-called Badenhorst rule
(Badenhorst V Northern Construction Enterprises (Pty) Ltd
1956 (2) SA
346
(T) at 347-348.)
The question which is critical in
determination of this case concerns the existence of a counterclaim;
expressed differently, is
this a counterclaim in which there is a
reasonable possibility that it will extinguish the claim, if so
proved? Yet again, set
out in different terms: is this counterclaim
set out so with sufficient particularity for a court to find that
there is a reasonable
possibility that it will extinguish the claim
that has already been acknowledged by the respondents?
In this context, Lord Justice Ward said
in Seawind Tankers, supra, at 11:
“There is a practice that the
company should not be wound up where there is a serious and genuine
cross-claim save in special
circumstances.”
For these reasons, I find that, however
interesting the impressive learning set out by Binns-Ward J, and
relied upon by Mr Hutton
may be, it does not add much to the key
point in this case: in exercising a discretion, how genuine is the
counter-claim?
Within this context, the facts are
critical, particularly the following:
(1) No mention of WA5 appears to have
been made when Blignaut, J heard the application for the provisional
liquidation, some two
months after it had actually been signed by the
very counsel who had acted for respondent in the preparation of the
case as well
as at the hearing before Blignault J.
(2) When the matter was initially
argued before this court on 3 September 2014, respondent made no
mention of WA5, which had now
predated the hearing by almost six
months.
(3) On 4 December 2013 an amount of
R268 660.00 was paid by respondent to applicant for work done.
Somehow, respondent paid this
amount even though, but over a week
later, respondent claims that it had a counterclaim for more than R18
million.
(4) There is some significant doubt as
to when WA6 was generated. The only point that Mr Hutton could raise
in support of the argument
that the claim was instituted and thus WA6
existed in December 2013 (the relevant time) was an email of 12
December 2013. It reads
thus: “From Francois Du Toit to Waeed
Adam. Subject: FW Claim against Tiador 126 CC. Hi Adam. Most of
this we can prove.
This excludes holes that were drilled as we
cannot prove it.”
I am not certain what this email means
in the light of its exact wording. Somehow, it is averred by
respondent that this email
shows that there was a claim against
applicant in the amount specified in WA6. There is no attachment
which would reveal to which
“claim against Tiador CC”,
this email refers and whether in fact it was WA6.
I accept, as I was informed later,
that, as I understand it, an Apple computer which was used, does not
contain an attachment which
is reflected on the email, but that does
not remove the doubt as to what the reference in the email is
directed; that is to which
claim.
(5) The plethora of defences raised
which have subsequently been abandoned is further cause for doubt;
for example a key defence
raised in the opposing affidavit of March
2013 was that applicant would not be paid by respondent until the
latter had been paid
by Moncada. This defence, as with the
allegations regarding the incorrect invoices which were contained in
the supplementary affidavit
of Mr Adam of October 2014, have now been
abandoned.
(6) In the opposing affidavit of March
2014, Mr Adam states as follows: “I can state that the
Respondent has not caused damage
to the Applicant. The truth is the
opposite. The Applicant did not timeously and punctually attend to
all work. The work was
woefully defective causing the Respondent to
have to spent significant amounts of money in order to remedy the
defective workmanship.
The payment to the Applicant for that work
was reciprocal upon the Applicant completing its work in a proper and
workmanlike manner
and this it clearly failed to do.”
Not a scintilla of evidence about the
counterclaim, even of the first version in the form of WA5 is
mentioned, albeit that the latter
was signed on 14 March 2014. See
also paragraphs 29.2 and 29.3 of that affidavit.
(7) The relevant applicable agreement
provided thus: “9.4.4 Where the subcontractor intends to
withhold payment from any person
in its employ regarding the Works,
fully substantiated details of the nature of the dispute, reason for
withholding payment and
works that such withhold payment relates to,
must be substantiated in writing.”
Had there been objection to applicant’s
work sufficient to withhold payment, as would have been the case on
respondent’s
version based upon the counterclaim, objections
would have been placed in writing. There is no evidence thereof.
One would have
at least expected respondent at this late stage to
have provided some proof of this required documentation.
(8) The only reason given for the late
submission of a counterclaim is, as appears from the supplementary
answering affidavit, the
following: “This particularisation is
necessary I suspect because the evidence which I now produce was
either not in existence
by 5 March 2014 (the date on which I made the
answering affidavit) or for reasons unclear to me the respondent’s
legal advisors
had not put that evidence before this Court by means
of my answering affidavit.”
(9) Applicant calls seriously into
question the claim in respect of the additional concrete. This is
particularly evident by way
of an email sent by Moncada to respondent
on 31 November 2013 which reads thus: “Referring to the extra
concrete, I remind
you that this issue has never been approved. Also
was denied to Chris and Francois, directly by Mr Salvatore Moncada.
If Rock
didn’t make well, the study of the works in order to
make quotation in the beginning is not our problem, had all our
information
to make it so don’t speak about things that aren’t
true and speak about another company (JD) which they have never asked
this extra and they continuing properly with the work. It’s
sure that they made correctly his study work. You have ever
known
that we have the Rock in different parts of the solar farm and the
sand in other parts.” (sic).
I accept that, on these papers, to
reject the respondent’s allegations, a conclusion should be
reached that its allegations
are so farfetched or untenable as to be
susceptible to rejection on the papers which had been presented to
the Court without the
benefit of oral evidence. In so examining the
respondent’s version, there is a need to test whether there is
a reasonable
possibility that the counterclaim by respondent will,
upon its determination, extinguish the debt relied upon by the
applicant
and which in this case has finally, after much protestation
and initial denial by respondent been conceded.
In a case where a provisional order was
granted and the Court rejected the respondent’s version because
of a lack of particularity
and the respondent arrived at court to
oppose the final order on the same papers as at 3 September 2014, a
newly developed counterclaim
which emerges thereafter needs to be
carefully scrutinised with forensic precision.
There is simply no explanation for the
omission from respondent’s case of any of these averments until
October 2014, save
for what has become a ritual defence of blame
which is heaped upon previous attorneys and counsel who had actually
signed the counterclaim
particulars. At the very least, greater
particularity was required to restore respondent’s shattered
credibility, given
the manner in which it sought to conduct its
opposition. No documents which were provided with the email of 12
December 2013.
No explanation is given as to what this alleged claim
referred to, that is in the emails of 12 December 2013. There is no
explanation
as to why payments were made a week before the
counterclaim was alleged to be generated, which would then have
justified non-payment
of R268 000,00. There is no engagement with a
basis of payment in terms of Clause 9 of the agreement between
respondent and Moncada.
It appears to me that, on these
particular papers, the entire counterclaim as set out, continues to
lack particularity or sufficient
credibility. Respondent has not
taken the Court into its confidence and, in my view, this
counterclaim cannot be regarded as a
sufficient defence to the
application for a final order.
There is, in the light of the findings
to which I have come, no need to deal with the persuasive arguments
of the remaining intervening
creditors.
IN THE RESULT A FINAL ORDER OF
LIQUIDATION OF RESPONDENT IS GRANTED.
DAVIS, J