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[2015] ZAWCHC 105
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Trinity Asset Management (Pty) Ltd v Grindstone Investments 132 (Pty) Ltd (12677/14) [2015] ZAWCHC 105 (31 July 2015)
IN THE HIGH COURT OF
SOUTH AFRICA
(WESTERN CAPE DIVISION,
CAPE TOWN)
CASE NO: 12677/14
DATE: 31 JULY 2015
In the matter between:
TRINITY ASSET MANAGEMENT (PTY)
LTD
...................................................................
Applicant
And
GRINDSTONE INVESTMENTS 132 (PTY)
LTD
.............................................................
Respondent
Coram: Yekiso, J
Dates of Hearing: 4 June 2015
Date of Judgment: 31 July 2015
JUDGMENT
YEKISO, J
[1] By way of a notice of motion issued
out of this court the applicant seeks an order for the provisional
liquidation of the respondent
on the grounds that the respondent is
unable to pay its debts as contemplated in section 344(f), read with
section 345(1) (a) and
(c) of the Companies Act, 61 of 1973 (“the
Companies Act”); that the respondent is commercially insolvent;
and that
it is just and equitable that the respondent be wound up as
contemplated in section 344(h) of the Companies Act.
[2] It is alleged on behalf of the
applicant in the founding affidavit that the respondent is indebted
to the applicant in an amount
of R4,613,310-52, together with
interest thereon, arising out of a loan agreement concluded between
the applicant and the respondent
on 1 September 2007. The material
terms of the agreement were that the respondent borrowed from the
applicant a capital amount
of R3,050,000-00; that the loan capital
would be due and repayable to the applicant within thirty (30) days
from the date of delivery
of a written demand by the applicant; that
interest would be charged on the loan capital at the money market
rate from date of
payment to date of repayment; and that interest
would be due and payable on the date on which the loan would become
due and payable
as contemplated in clause 2.3 of the agreement.
[3] Clause 2.3 and 2.4 of the agreement
read as follows:
“2.3 The loan capital shall be
due and repayable to the lender within thirty (30) days from the date
of delivery of the lender’s
written demand.
2.4 Interest shall be charged by the
lender on the loan capital at the money market rate from date of
payment to date of repayment.
This interest shall be due and payable
on the date on which the loan capital is due and payable in terms of
clause 2.3. Any
interest which accrues after this date shall be due
and payable on accrual thereof.”
[4] It was a further term of the
agreement that the respondent would procure that a second mortgage
bond be registered on portion
9, being a portion of the farm Paarl
Diamant No 459, situate in the Drakenstein Municipality, Division
Paarl, in the province of
the Western Cape. Although the latter is a
material term of the agreement, the mortgage bond was never
registered over the property.
[5] As at the time of the institution
of these proceedings the applicant alleged in the founding affidavit
that the respondent is
indebted to it in an amount of R4,613,310-52
being the capital amount due inclusive of interest.
[6] The respondent opposes the relief
sought on the basis that the applicant’s claim became
prescribed in 2011; that the applicant
was not licensed in terms of
the Financial Advisory & Intermediary Services Act, 37 of 2007
and that, in view thereof, the
applicant is precluded from collecting
money payable in terms of a financial product; and that the amounts
allegedly due were paid
into the account of a director of the
respondent, James Dean, and thus not advanced to the respondent.
ACTUAL BACKGROUND
[7] The loan agreement which
constitutes the basis of the respondent’s alleged indebtedness
to the applicant was concluded
on 1 September 2007. James Dean, who
was the sole director of the respondent at the time, signed the
agreement. On 13 February
2008, on the instructions of the directors
of the respondent, the applicant paid an amount of R1,5m into the
account of James Dean,
a director of the respondent. On 15 February
2008 a further amount of R1m was paid into the same account and on 21
February 2008
an amount of R500,000-00 was paid into the same
account.
[8] On 6 April 2011 it was resolved by
the directors of the respondent that the respondent enter into a
covering mortgage bond in
favour of the applicant and that Nicholas
Lawrence Cunningham-Moorat be entitled to negotiate and settle the
terms and conditions
of the agreement on behalf of the respondent; to
sign all documentation, including but not limited to application
forms, agreements,
facility letters, security documents, including
but not limited to indemnities, suretyships, cessions, undertakings
and mortgages.
The resolution was signed by the directors of the
respondent in the persons of James Mark Dean (“Dean”) and
Nicholas
Lawrence Cunningham-Moorat (“Cunningham-Moorat”).
[9] On 6 April 2011, at Paarl,
Cunningham-Moorat, in his capacity as director of the respondent,
signed a power of attorney in favour
of various persons to appear
before the registrar of deeds, Cape Town to do what may be necessary
to make the covering mortgage
bond valid and effective.
[10] On 19 September 2013 the applicant
sent the respondent an email in which an enquiry was made regarding
when the outstanding
amount on the property fund would be paid. The
email, which is addressed to Cunninghma-Moorat, reads as follows:
“Nick, could you confirm that you
are happy to settle the outstanding amount on the property fund and
give an indication as
to when it will be done? Steve, could you
confirm with Nick the amount currently outstanding?
Regards, Quinton George
CEO Trinity Asset Management (Pty)
Limited”
[11] On 25 September 2013
Cunningham-Moorat responded to the email referred to in the preceding
paragraph as follows:
“Quinton, this note serves to
confirm that Trinity has called the property fund. The current
outstanding balance is R4,55m.
We have executed on an associated
asset sale to support this call. All things being equal we expect
these funds to release within
60-90 days.
Thanks
Nick
Nick Cunningham-Moorat
Chairman and Chief Executive Officer”
[12] As at 9 December 2013 nothing
further was heard from the respondent whereupon the applicant,
through its attorneys of record,
addressed a letter of demand,
ostensibly in terms of section 345(1)(a)(i) of the Companies Act, in
which letter it was stated that
the amount specified in the loan
agreement was due and payable. In its response the respondent,
similarly through its attorneys
of record, acknowledged receipt of
the letter of demand, simultaneously indicating that the demand had
not been a proper demand
in terms of the agreement; that the
respondent denied any indebtedness to the applicant; the respondent
contended that the loan
agreement was not authorised; and that, apart
from the other defences stated in its response, the respondent had
several other
defences to the applicant’s claim.
[13] The letter of the respondent’s
attorneys, in response to a letter of demand in terms of section
345(1)(a)(i) of the Companies
Act is dated 23 December 2013. In
paragraph 3 thereof it is stated
“3. Our instructions are to deny
that our client is indebted to your client as you have set out in
your letter of demand in
terms of the Companies Act 61 of 1973.
4. Our instructions are that no money
was lent and advanced to our client in terms of the purported loan
agreement and in fact
the person to whom the funds were lent and
advanced was one Jim Deane.
…
7. Furthermore, we refer you to clause
2.3 of the agreement which states ‘the loan capital shall be
due and repayable to
the lender within 30 days from the date of
delivery of the Lender’s written demand.’
8. The demand that you have been
instructed to despatch does not accord with the provisions of the
agreement and accordingly your
client has not yet made proper demand
on our client (insofar as our client has any liability to your client
which is at this stage
denied).”
[14] On 18 July 2014, and by way of
notice of motion issued out of this court, the applicant instituted
these proceedings in which
is sought an order for the provisional
liquidation of the respondent on the basis that the respondent is
unable to pay its debts
in the ordinary course of business, as and
when these become due and payable; that the respondent is
commercially insolvent; and
that it is just and equitable that the
respondent be placed under order of provisional liquidation.
THE RESPONDENT’S DEFENCES
[15] The respondent, over and above
other defences raised, raises prescription as a defence to the
applicant’s claims. It
is contended on behalf of the
respondent that in as much as the amounts which constitute the
applicant’s claims were lent
and advanced during February 2008,
any claim based on the amounts so advanced would have become
prescribed in 2011, being three
years after the loan amounts were
lent and advanced.
[16] The law relating to defences in
liquidation applications is set out in several authorities, notably
Hülse-Reutter v Heg
Consulting Enterprises (Pty) Ltd
1998 (2) SA
208
(C) where Thring J observed that a party challenging an
application for the winding up of a company as an abuse of the
process
of the court on the grounds that the applicant’s claim
against the company is disputed must show (a) that the claim is
disputed;
(b) that it is bona fide disputed; and (c) that the grounds
for disputing the claim are reasonable. Thring J went further to
observe that it does not have to be established, even on the
probabilities, that the company would, as a matter of fact, succeed
in any action which the applicant might bring to enforce the disputed
claim. The court need merely be satisfied that the grounds
upon
which the claim is disputed are not unreasonable. To do that it is
not necessary that the actual evidence which would be
relied upon at
a trial be adduced on affidavit or otherwise. It is sufficient,
provided it is done bona fide, to allege facts
which, if proved at a
trial, would constitute a good defence to the claim made against the
company.
THE APPLICANT’S SUBMISSIONS
[17] Mr Sievers, for the applicant,
challenges the defence based on prescription on what appears to be
three broad fronts, these
being that it never was the intention of
the parties that the three tranches of loan amounts lent and advanced
to the respondent
during February 2008 would immediately become due
and payable; that the dates such tranches of loan amounts were lent
and advanced
were never intended by the parties to be dates on which
prescription would set in; that the respondent has not pleaded and
proved
both the date of inception and the date of the completion of
the period of prescription; that, in view thereof, the defence of
prescription is not raised on bona fide and reasonable grounds; and
that in view of the fact that the respondent did not respond
to the
letter of demand in terms of section 345(1)(a)(i) of the Companies
Act, the applicant, as an unpaid creditor, is entitled
to an order ex
debito justitiae.
[18]In as far as the challenge based on
the intention of the parties is concerned, Mr Sievers makes a point
in his submissions that
the mere fact that clause 2.3 of the loan
agreement provides that the loan capital shall be due and repayable
to the lender within
30 days from date of delivery of the lender’s
written demand, and the mere fact that the loan agreement, in clause
3 thereof,
provides for procurement of a second mortgage bond on the
respondent’s property, reinforces the view that it was the
intention
of the parties that the debt, arising from the loan
agreement, would only become due and payable after delivery of the
lender’s
letter of demand and not on the date the loan capital
was lent and advanced.
[19] That demand, so the submission
goes, was made by way of an email of 19 September 2013. The response
by the respondent to that
demand, by way of an email of 25 September
2013 further reinforces the view that the debt would only become due
and payable from
the date the demand was made and, in any event,
within 30 days of the lender’s written letter of demand. The
submission
boils down thereto that the loan capital became due and
payable within 30 days from 19 September 2013 and that the letter of
demand
in terms of section 345(1)(a)(i) was as a consequence of
failure by the respondent to make repayment within the stipulated
period
of 30 days.
[20] Mr Sievers, in his submissions and
argument, further refers to the resolution adopted by the directors
of the respondent on
6 April 2011. On that date the directors of the
respondent resolved that the respondent enter into a coverage
mortgage bond on
one of its properties in favour of Trinity Asset
Management Limited (the applicant in these proceedings) and that
Nicholas Lawrence
Cunningham-Moorat, one of the directors, be
entitled to negotiate and settle the terms and conditions of the
agreement on behalf
of the respondent.
[21]On the same date, namely, 6 April
2011 Cunningham-Moorat, on the basis of a resolution referred to in
the preceding paragraph
and in his capacity as director of the
respondent, signed a power of attorney in favour of various persons
for execution and registration
of a bond in favour of the applicant.
[22] Based on these submissions it is
contended on behalf of the applicant that it could never have been
the intention of the parties
that the tranches of capital loan
amounts lent and advanced during February 2007 would become due and
payable on the dates such
capital loan amounts were lent and advanced
to the respondent.
[23] It is thus submitted on behalf of
the applicant that it was not the intention of the parties that the
prescription period would
commence on the dates the loan capital
amounts were advanced but, it was always the intention of the
parties, that the debt arising
from the amounts so advanced would
only become due and payable on delivery of the written letters of
demand. In advancing this
proposition, Mr Sievers, relies on the
judgment of this court in Stockdale & another v Stockdale
2004
(1) SA 68
(C) where Traverso AJP held that the intention of the
parties was that the debtor would be afforded a reasonable
opportunity to
make payment of the loan; that the delay in calling
the loan was not deliberate or negligent; and that it was intended
that notice
would be necessary for prescription to commence. The
submission boils down thereto that in as much as the debt, in the
instance
of this matter, came into existence during February 2007 the
recoverability thereof would have to be preceded by a written demand
demanding payment within 30 days of date of the lender’s demand
and that prescription would start running after delivery
of the
written demand.
[24] Ms Gassner SC (with her D Van
Reenen) in advancing the defence of prescription, makes a point in
her submissions that, in considering
the defence of prescription, as
pleaded in the instance of this matter, there are two legal
principles that ought to be borne in
mind. The first such principle
is that a debt repayable on demand is in law considered to be payable
immediately so that a formal
demand is not necessary in order to
complete the cause of action. In such circumstances, prescription
starts to run immediately
the debt arises or immediately the loan is
lent and advanced.
[25] The second such principle, so the
submission goes, is based on the notion that a creditor cannot delay
the commencement of
prescription by failing to take a step that is in
his power to recover the amount advanced by way of a loan. The
principle is
thus based thereon that a creditor cannot simply sit
back and by supine inaction arbitrarily and at will postpone the
commencement
of prescription. The rationale for this proposition is
based on the assertion that if the date on which the debt shall
become
due is to be unilaterally determined by the creditor, if the
creditor, in such an instance, fails to take such a step to recover
the debt within the prescription period, the debt shall be deemed to
have been due at the earliest date when the creditor would
have been
in a position to make a demand. What is thus meant by this
proposition is that the law deems the creditor to have been
in a
position to demand the debt earlier and therefore prescription is
deemed to have run from the earliest date on which the demand
could
have been made which will, in all instances, be the date on which the
loan was advanced to the debtor.
[26] In advancing this proposition Ms
Gassner relies on several authorities, notably De Wet & Van Wyk:
Die Suid-Afrikaanse Kontraktereg
en Handelsreg (5 Ed) at 292; Nicholl
v Nicholl
1916 WLD 10
; Van Vuuren v Boshoff 1964 (1) 395 (TPD);
Damont NO v Van Zyl
1962 (4) SA 47
(C), amongst other authorities
relied on.
[27] In De Wet and Van Wyk; Die
Suid-Afrikaanse Kontraktereg en Handelsreg, supra, the authors make
the following observation at
292:
“Uit die aard van die saak kan
verjaring eers begin loop op die dag waarop die skuldenaar moet
voldoen, dit wil sê,
op die dag waarop die skuld opeisbaar
word. Hierdie benadering word, soos mens kan verwag, in die ou wet
en in die nuwe wet aangetref.
Soos hierbo al aangetoon, is ‘n
skuld, wat uit ooreenkoms ontstaan onmiddellik na sluiting van die
ooreenkoms opeisbaar,
tensy anders ooreengekom.”
[28] In Nicholl v Nicholl, supra, Mason
J made the following observation at p12:
“Mr Greenberg argued for the
applicant that as the claim came within these sections no right of
action arose until demand
was made, and no demand was made until
January of this year. But even if this were a claim payable on
demand, the right of action
existed as soon as the advances were
made; the rule that demand should be made so as to entitle the
plaintiff to costs has never
been construed to mean that the demand
is a condition precedent to the right of action.
[29] In Van Vuuren v Boshoff, supra, at
p400 next to the letter D, Coleman J made the following observation:
“In support of this argument
reliance was placed upon the authorities which hold that, in respect
of a claim for money lent
and repayable on demand, prescription
begins to run as soon as the loan is made, and not only when it is
demanded. But the necessary
demand, in such a case, is a simple
procedural step which the creditor, without extraneous aid, can take
at any time. If, therefore,
he fails to take that step and institute
his action within the prescriptive period, he is guilty of the type
of inaction which
the Prescription Act is designed to penalise. The
same reasoning cannot, in my view, apply when there is a necessary
element in
the creditor’s cause of action which is dependent
upon something other than his own conduct.”
[30] That the creditor cannot rely on
his or her inaction to delay the running of prescription was
confirmed in this court in Kotze
v Ongeskiktheidsfonds van die
Universiteit van Stellenbosch
1996 (3) SA 252
(C) where this court
made the following observation at 261H:
“Daarby is daar ten minste sterk
indrekte steun vir die beginsel dat ‘n skuldeiser nie deur sy
eensydige willekeurige
optrede die aanvang van die verjaringstermyn
kan uitstel nie, en daar is vir dekades reeds met goedkeuring in ons
regspraak daarna
verwys, ofskoon dit miskien nie altyd nodig of in
die huidige samehang was nie.”
[31] Finally, on this point, this
court, per Rogers J, as recent as 27 February 2015, in Johan de Bruyn
v Derick du Toit Case No
1162/2015 p3 made the following observation
and specifically with reference to Stockdale & another v
Stockdale, supra, relied
on by the applicant:
“Stockdale and earlier cases
dealing with amounts payable “on demand” do not lay down
a rule that such a debt
becomes due for purposes of prescription only
after demand has been made. On the contrary, and in keeping with
the principle
that a creditor cannot delay the commencement of
prescription by failing to take a step within its power, it has been
held on a
number of occasions that a loan repayable on demand is
immediately due for purposes of prescription. It is only where the
giving
of notice is a condition precedent for a claim, and thus a
necessary ingredient of the creditor’s cause of action, that
the running of prescription is deferred until the giving of a
notice.”
[32] Based on those authorities Ms
Gassner submits that the defence of prescription raised by the
respondent is, in essence, a legal
defence which is good and that, if
it is found to be a good defence, the question of bona fides raised
by the applicant should
not have a bearing on a defence which is
presented on grounds that are not unreasonable. The submission goes
further to suggest
that prescription, advanced as a defence in the
instance of this matter, is a good and valid defence, based on facts
that are common
cause and, that being so, the hurdle of bona fides
has been met. What in effect is being raised here is a dispute on a
debt which,
on the applicant’s submission, has since become
prescribed. All that I am required to do, in the instance of this
matter,
is to determine whether the defence raised by the respondent
is not unreasonable.
[33] I have considered the parties’
submissions relating to the defence of prescription raised by the
respondent as well as
the authorities relied on and I am of the view
that prescription, as raised by the respondent, is indeed a valid
defence. As
pointed out by Thring J in Hülse-Reutter &
another v Heg Consulting Enterprises (Pty) Ltd, supra, it need not be
established
at this stage of the proceedings whether the defence
raised by the respondents might be successful at trial.I am not
required to
determine the merits of this defence or whether the
defence raised is likely to succeed at trial. All that I am required
to determine
is whether the defence, as advanced by the respondent,
is reasonable and, if that be so, whether the debt sought to be
recovered
is disputed on reasonable grounds. I am satisfied that the
grounds upon which the claim is disputed are not unreasonable and,
for that reason, the application falls to be dismissed.
[34] Whilst bona fides in a factual
dispute may become very important, in the matter such as the one
before me there is no reliance
on a factual dispute. As has already
been pointed out elsewhere in this judgment the facts in this matter
are virtually common
cause. What in effect is happening in the
instance of this matter is that prescription is being raised as a
defence and, in my
view, this is done on grounds that are not
unreasonable.
[35] In the light of the conclusion I
have reached in the preceding paragraph it is not necessary for me to
determine the other
issues raised by the parties in these
proceedings, as for an example, the other defences raised in the
respondent’s submissions;
and whether the respondent’s
response by way of an email of 25 September 2013 to what is suggested
as a demand contemplated
in clause 2.3 of the loan agreement
constitutes interruption of prescription. These are all issues that
may possibly be ventilated
at trial should the applicants be advised
to proceed by way of an action for recovery of the debt allegedly
due.
[36] And, then of course, there is a
matter of costs occasioned by the postponement of this matter on 30
April 2015. That postponement
was occasioned by the need to afford
the respondent an opportunity to launch an application in terms of
rule 6(5)(e) of the Uniform
Rules of Court for the admission of
supplementary affidavits. In my view it was not necessary for the
proceedings to be postponed
for purposes of such an exercise or, such
a postponement has had no bearing on the outcome of the matter, so
that all costs occasioned
by that postponement ought to be borne by
the respondent.
[37] In the result, the following order
is made:
(1) The application for the provisional
winding up order of the respondent is dismissed;
(2) The applicant is ordered to pay the
respondent’s costs, save for those costs occasioned by the
postponement on 30 April
2015, which shall be borne by the
respondent.
N J Yekiso
Judge of the High Court