African Pipes Valves & Fittings (Pty) Limited v Pro Plastic Welding (Pty) Limited (2656/19) [2020] ZAMPMHC 27 (10 January 2020)

IN THE HIGH COURT OF SOUTH AFRICA,

MPUMALANGA DIVISION, MIDDELBURG

(LOCAL SEAT)

CASE NO: 2656/19

In the matter between:

AFRICAN PIPES VALVES & FITTINGS (PTY) LIMITED APPLICANT

and

PRO PLASTIC WELDING (PTY) LIMITED RESPONDENT

JUDGMENT

BRAUCKMANN AJ

[1] This is an application for the liquidation of the respondent. The applicant seeks a final order of liquidation of the respondent, a private company, duly incorporated as such in terms of the laws of the Republic of South Africa.

[2] The applicant alleges that the respondent is indebted to it in an amount of R2 194 078.49, which amount is due and payable and had been outstanding for a period longer than agreed upon.

[3] The applicant’s case is that it provided certain plastic piping and ancillary material to the respondent after an agreement was concluded between the applicant, duly represented by its director Mr Hilton Gischen (Mr Gischen) and the respondent’s director Mr Jacob Gideon Jordaan (Mr Jordaan) on 16 August 2018 at Secunda, Mpumalanga.

[4] Mr Jordaan also bound himself as surety and co-principle debtor with Draaihals Beleggins (Pty) Ltd (Draaihals), a company of which Mr Jordaan is also a director, for the obligations of the respondent towards the applicant.

[5] In terms of the agreement entered into between the parties (marked annexure C (“The agreement”) to the founding affidavit) it was recorded that goods will be sold and delivered by the applicant to the respondent on the terms and conditions as agreed upon. A specific note was made on the agreement stating:

“These terms are subject to variation per email exchanged between A.P.V.F(the applicant) and the customer (the respondent)”. This agreement was co-signed by Mr Jordaan.

[6] Prior to the conclusion of the written agreement the applicant and the respondent through their various representatives had various negotiations, and much was recorded in an email by Mr Gischen, addressed to Mr Jordaan.

[7] It is also common cause that the applicant sold and delivered certain goods to the respondent prior to the conclusion of the agreement in terms whereof no credit was granted to the respondent, but on a cash basis.

[8] Neither the conclusion of the agreement nor the conclusion of the suretyship is disputed by respondent.

[9] In terms of the agreement the applicant undertook to deliver certain goods to the respondent. In terms of clause 3 of the agreement:

“A contract shall come into existence when the company (the applicant) accepts any order for products placed by the purchaser (the respondent) or when a purchaser accepts any offer to sell products made by the company by conveying such acceptance, in which event these general terms of conditions of terms and conditions of sale shall apply”.

[10] Delivery was agreed to take place at the company’s premises unless agreed otherwise in writing; and the risk in the goods will pass to the respondent once the goods are delivered to the respondent, or received by the respondent. If a carrier company

is appointed to deliver products to the respondent, the carrier shall be deemed to the agent of the respondent and ownership in the product shall pass to respondent upon delivery to such a carrier.

[11] The agreement limits the liability of the applicant and the returns by the respondent of certain goods. The applicant undertook to take reasonable care to ensure that goods sold are goods of a good quality and workmanship but the applicant did not guarantee the suitability of such goods for any particular purpose. The respondent must satisfy itself as to the suitability of the goods for the purpose of which it is required. The respondent must notify the applicant in writing of any short deliveries or any damaged products received. Such notification must be done within 48 hours of receipt of the said goods failing which the goods will be deemed to have been delivered in compliance with the order and was accepted as such.

[12] It was further specifically agreed that where it is established, to the satisfaction of the applicant, that the products delivered to the respondent contained, at the time of receipt, some defect in quality (not being a defect caused by some act of neglect of the respondent or a third party) the applicant may, within 14 days of delivery to the respondent:

12.1 agree to accept return of the products at the respondent’s expense;

12.2 the applicant will at its own cost replace the products.

[13] Should the respondent have any complaint of whatsoever nature concerning any of the products supplied by the applicant, it shall be entitled to require the respondent to cede to it any rights that the applicant may have against the original supplier of those products and shall have no other claim against the applicant whatsoever.

[14] It was also specifically agreed that, save for the aforementioned rights of cession and replacement of goods, the applicant will not be liable to the respondent for any loss or damage whatsoever, nor shall the applicant be liable in any way for loss of profit or consequential damages suffered as a result of a defect in quality of defective installation of the fact that the product was not fit for particular purpose. The applicant and respondent specifically agreed that the applicant shall not in any event be liable to the respondent for any indirect or consequential loss, damages or expenses.

[15] The applicant will in certain events, amongst others, should any sum owing to the applicant by the respondent become overdue or any of the terms of agreement be breached, be entitled to take immediate steps to recover the indebtedness.

[16] The agreement also contains a non-variation clause stating that:

“14.1 This contract constitutes the whole of the agreement between the parties hereto in regard to their ongoing trading, relationship and save as otherwise provided herein no amendment, alteration, addition, variation or consensual cancellation will be of any force or effect unless reduced to writing and signed by the parties hereto or their duly authorised representatives

14.2 The parties agree that no other terms or conditions, whether oral or written and whether express or implied, will apply hereto”. (Own emphasis).

[17] After signature of the agreement, which regulates the terms and conditions of the agreement between the parties, Mr Jordaan, amongst others, bound himself as surety in co-principle debtor for, together with Draaihals for the obligations of respondent to the applicant.

[18] From the suretyship, marked Annexure D to the founding affidavit, it appears it is recorded that applicant and respondent agreed that the applicant would sell and/or supply products to the respondent and the requirement was that payment was to be made within 15 days of delivery of any products supplied in terms of the agreement. The suretyship was signed by Mr Jordaan and Draaihals on 18 October 2018. The terms and conditions of the suretyship agreement are not disputed by the respondent.

[19] In terms of the agreement between the parties payment would be effected by respondent within 15 days of delivery of the products.

[20] The respondent however states that a “prior agreement” supersedes the written agreement. In terms of the “prior agreement” which, according to respondent, is contained in correspondence between the parties, different terms and conditions applied. I cannot accept the respondent’s submission in this regard. The email by the applicant to respondent dated 5 July 2019 discusses the basis upon which applicant was prepared to contract with respondent. It ended with: “I await your response and proposal as to how you wish to proceed”. It is clear that the email did not constitute terms of an agreement, but at best a proposal to enter into an agreement. There is no email from the respondent accepting the “terms” in the email dated 5 July 2019 that could possibly constitute a written agreement, and accordingly no consensus ad idem existed between applicant and respondent.

[21] The agreement dated 16 August 2018 is the only agreement between the parties. That much appears from paragraph 14 of the agreement itself.

[22] To accept that any other prior agreement existed, as the respondent states, partially oral partially verbal, will defeat, and be contrary, to the parol evidence rule and is inadmissible. The respondent’s contention that the credit agreement, “at best supplemented” the earlier agreement is obviously wrong in law. The earlier email and oral discussions are parol evidence and not admissible to prove the terms of the contract[1]. The note at the end of the agreement can only refer to email exchange between the parties after the signing of the agreement.

[23] It is not in dispute that the applicant sold and delivered certain goods to the respondent. The respondent’s case is that the applicant’s administration is of such a poor standard that it could not submit its claims to Sasol, its major customer, and therefore did not receive payment from Sasol. In consequence it could not pay the applicant. This proposition does not constitute a defence at all.

[24] The respondent’s predecessor in law also did business with the applicant, and the applicant had numerous problems collecting money from the respondent’s predecessor. This resulted in the strict conditions applied to the new debt granted to a new company which the applicant could not secure Credit Guarantee Insurance. This was because of the fact that the company was new as well as Mr Jordaan’s involvement with the previous, apparently uncreditworthy, company.

[25] As at the first week of March 2019, the amount owning and due for payment to the applicant was R2 988 137.05. The

applicant’s statement of account to respondent dated 31 May 2019 showed the total due being R2 194 078.49. The

statement further shows that certain payments had been made by the respondent during May 2019, with last payment on 20 may 2019.

The applicant also did not make any further deliveries to the respondent during May 2019.

[26] After the respondent started defaulting on the payment terms, the applicant reverted to correspondence in order to ensure that payment would be forthcoming. Various letters were addressed to the respondent by Mr Gischen. A meeting between the applicant and the respondent’s representatives took place on 29 April 2019. The respondent provided the applicant with a bundle of documentation and proposed corrections in order to enable it to pay the applicant. The respondent states that it could not pay the applicant as the documentation provided by the applicant, including its invoicing, was incorrect and it could accordingly not invoice Sasol, its customer. This is stated without providing one instance of proof of rejection by Sasol of the invoices nor of proof of it that payments were, or were not received by the respondent from Sasol. I pause to mention that it was never a terms of the agreement that payment of the applicant’s invoices will be effected only in the event of

payment being received by respondent from Sasol.

[27] After the meeting on 29 April 2019 the applicant, in so far necessary and to accommodate payment, corrected the invoicing and passed certain credit notes. The document provided to applicant by the respondent at the meeting clearly indicated that an amount of R1 775 619.32 represented unpaid invoices and an unpaid invoice, not disputed, amounted to R1 544 016.80. It is clear that the respondent admits that it owes the applicant a substantial amount of money.

[28] After having corrected, in so far as it is necessary, the applicant’s Mr Gischen phoned Mr Jordaan on 16 May 2019. During the said telephone conversation Mr Jordaan admitted the respondent’s indebtedness. In the respondent’s opposing affidavit Mr Jordaan stated:

“I admit that I informed Hilton (Mr Gischen) that payment would be effected on those invoices for which all outstanding goods were resolved within 15 days and that I would endeavour to provide the applicant with a schedule of expected payment”.

Mr Jordaan then proceeds to deny that all the issues pertaining to the accounting queries that respondent had was sorted out. In his opposing affidavit not a single example is dealt with as to which problems were not sorted out after receipt of the applicant’s

corrections on the list of queries.

[29] The email correspondence between the applicant’s Mr Gischen and the respondent, in terms whereof payment would be effected during “next week”, is also not denied by respondent or Mr Jordaan.

[30] Mr Gischen recorded the applicant’s position in various emails during the period 16 May 2019 to 31 May 2019. The letters record that there were no further disputes regarding the payment of the applicant’s accounts and submission thereof to Sasol. It is significant to note that Mr Jordaan does not deny the content of the emails nor give any explanation as to why payment was not made to applicant. One can therefor accept that the version contained in the letters state the factual position correctly[2].

[31] Alet Robinson, on behalf of the respondent, in an email dated 3 June 2019, copied to amongst others Mr Jordaan, record that:

“Kindly note that I will make a payment in this week.”

The failure by the respondent to effect this payment clearly indicates, according to the applicant, the respondent’s inability to pay the amount due to the applicant.

[32] In the applicant’s replying affidavit, it traversed the issues regarding the accounting. The applicant explains that all the account irregularities, as alleged, was sorted out and that payment was now due. The respondent’s deponent does not deny these allegations in a further affidavit. It is significant, as, the averments by the applicant in this regard is of great significance, and one would have expected the respondent to file a further affidavit, dealing with the averments[3].

[33] The respondent did not show, or attempt to show, any one amount appearing in the applicant’s statement of 31 May 2019 that is not genuine or constitutes a duplicate claim. The respondent wishes to create factual disputes in order to indicate that it has a bona fide and reasonable defence. This without dealing with the 46 instances of goods sold as contained in its spreadsheet handed to the applicant on 29 April 2019. The respondent could easily have dealt with that. The respondent’s failure to

do so is a clear indication of the fact that it cannot raise this defence anymore as the applicant took care of its concerns subsequent

to the meeting held on 29 April 2019. The respondent simply had no excuse whatsoever not to pay the applicant the amount due.

[34] Before I turn to deal with the other defences raised by the respondent wish to deal with a requirement for the liquidation of a company.

[35] In terms of item 9 of schedule 5 of the Companies Act[4], chapter 14 of the previous Companies Act (Act 61 of 1973) continues to apply to the winding up of companies. Accordingly,

references to item 9 of schedule 5 are references to the relevant sections in Rule 1973 Act.

[36] In terms of section 344, a company can be wound up, inter alia, if the company is unable to pay its debts as described in section 345. In terms of section 345(1)(a)[5] a company is deemed unable to pay its debts under certain circumstances, and if it is proved to the satisfaction of the Court that the company is unable to pay its debts. The fact that the company is actually insolvent (its totally liabilities exceeds its total assets), may be evidence that the company is unable to pay its debts[6].

[37] When considering the winding up of a company in terms of section 345(1)(c) the judgment by Caney J in Rosenbach and Co (Pty) Ltd v Singh’s Bazaars (Pty) Ltd[7] explained how it should be approached:

“The proper approach in deciding the question whether a company should be wound up on this ground appears to me, in the light of what I have said, to be that, if it is established that a company is unable to pay its debts, in the sense of being unable to meet the current demands upon it, its day to day liabilities in the ordinary course of its business, it is in a state of commercial insolvency; that it is unable to pay its debts may be established by the means provided in para. (a0 or para. (b)of sec. 112, or in any other way, by proper evidence. If the company is in fact solvent, in the sense of its assets exceeding its liabilities, this may or may not, depending upon the circumstances, lead to a refusal of a winding-up order; the circumstances particularly to be taken into consideration against the making of an order are such as show that there are liquid assets or readily realisable assets available out of which, or the proceeds of which, the company is in fact able to pay its debts. Cf. Chandlers Ltd v Dealesville Hotel (Pty). Ltd, 1954(4) SA 748 (O) at p. 749. Nevertheless, in exercising its powers the Court will have regard to the fact that

‘a creditor who cannot obtain payment f his debt is entitled as between himself and the company ex debito justitiae to an order if he brings his case within the Act. He is not bound to give time.’

Buckley, p. 450.

This view is supported also by Palmer at p. 27:

‘The fact that there is due to the petitioner a liquidated sum, that the debt is not disputed, and that the petitioner has demanded payment without success, affords cogent prima facie evidence of the company’s liability to pay its debts and is the evidence most commonly relied on.’

This appears to me to accord with sound business principles, for a concern which is not in financial difficulties ought to be able to pays its way from current revenue or readily available resources.” (Own emphasis).

[38] The mere fact that the value of a company’s assets may exceed the amount of its liability does not preclude the finding that the company is unable to pay its debts; such a finding may be made if these assets are not readily realisable and the company has no funds with which to meet current demands – if, in other words, the companies ‘commercially insolvent’[8]. The applicant can also convince the court that the respondent is actually insolvent. It is not necessary for a creditor to establish the exact quantum of its claim. Provided that the applicant is a creditor, then the only question is: whether the creditor has established a case for the winding-up of the respondent, in this instance, whether the applicant has established that the respondent is unable to pay its debts and has complied with the formal requirements. It does not assist the respondent to dispute part of the indebtedness[9].

[39] In casu the respondent submits that the applicant is required to prove the exact amount due to it. This is not correct. In terms of the Badenhorst-rule[10] the court will refuse to grant the provisional winding-up order if the respondent can show that the applicant’s claim is bona fide disputed on reasonable grounds. At the provisional stage, where the applicant shows the debt prima facie exists, the respondent has the onus to show that it is bona fide disputed on reasonable grounds[11]. At the final winding-up stage, the applicant must establish its case on a balance of probabilities and not prima facie. At the latter stage the Plascon-Evans rule applies and the Badenhorst rule finds little or no application, save where the applicants seek a referral to evidence[12]. It is also known law that the Badenhorst Rule and Plascon-Evans Rule only applies to factual disputes and not legal disputes[13]. In this application, there are no factual disputes.

THE FURTHER DEFENCES RAISED

[40] The respondent raised various further defences. I have dealt with the defence raised by the respondent in respect of the respondent’s indebtedness.

THE NIL BALANCE STATEMENT

[41] Respondent states in its opposing affidavit that one of the statements attached to the founding affidavit reflects a nil balance

and therefore respondent is not indebted to the applicant in any amount.

[42] The nil balance statement is properly explained by the applicant in its replying affidavit. The applicant explains that provision had to be made at the financial year end of the applicant (31 July 2019) for possible bad debts that will be written back. Instructions were given to the applicant’s staff by the applicant’s auditors to write the amount back as to account to potential bad debt. An incorrect procedure was followed by the applicant’s bookkeeper, Mariaan Koen, in that a credit note was passed. Provision should only have been made for bad debt and this, according to the applicant was rectified. Applicant never intended to waive the respondent’s liability, or indebtedness to the applicant. A copy of the incorrectly issued credit note and necessary corrections of the invoices and statements is attached to the applicant’s replying affidavit.

[43] I accept the applicant’s explanation of this administrative blunder and the reasons for the fact that the amount was written back for tax purposes as provision had to be made for bad debt and not to waive the debt. I am also of the opinion, based on the application before me that the applicant acted reasonably by doing so.

ATTEMPT TO REDEFINE THE CONTRACT

[44] The respondent alleges that Annexure B to the founding affidavit really constitutes the agreement between the parties.

Respondent alleges that the agreement merely supplemented a partially verbal, partially oral agreement between the parties. This cannot be correct. Annexure B is not the recordal of an agreement. It is a recordal of discussions and concludes, as already stated earlier in this judgment:

“I await your response and proposal as to how you wish to proceed.”

[45] This is a clear indication that the parties have not agreed on the terms of the agreement. The agreement pro-forma is a written application for credit that was signed by Mr Jordaan on behalf of the respondent. Its terms and conditions applied to any contract in terms of which the applicant agreed to sell products to respondent. The contract constituted, as referred to above the whole of the agreement between the parties in regard to their ongoing relationship and no amendment, alteration, addition, variation or consensual cancellation would be of any force or effect unless contained in writing and signed by both parties. As stated earlier, no written response was forthcoming from the respondent, confirming the “terms in Annexure B to the founding affidavit”. For the respondent to contend that the agreement is partially oral partially written cannot go up in law.

[46] The handwritten note I reads, and was cos-signed by the parties: “These terms are subject to variation per email exchange between APVF and the customer” 16 August 2018 on the last page of the agreement referring to email exchanges clearly refers to email exchanges between the parties in future.

[47] From the email exchanges subsequent to the conclusion of the agreement it is clear that it was purely dealing with the respondent’s indebtedness and failure to pay the outstanding amount, and the terms of the agreement was never varied.

[48] The respondent’s defence in this regard is rejected as farfetched and without any substance.

ATTEMPT TO IMPOSE TERMS

[49] Respondent’s case is heavily reliant on the fact that the respondent apparently instructed the applicant to comply with the same invoicing requirements as expected of the respondent by Sasol. It states, as its defence, the applicant failed to comply with the same requirements. Respondent’s contention is further that the applicant must comply with the same requirements for respondent in order to secure payment for Sasol. This is not so. No case has been made out by the respondent for its reliance on this defence. The agreement is the only agreement that exists between the parties. No such requirement (complaining with Sasol’s’ invoice requirements) is contained therein (or in the suretyship agreement). From the emails exchanged between the parties, prior to and after the signing of the agreement same could also not be inferred or understood.

[50] I therefor find that this defence raised by the respondent is untenable.

THE MEETING OF 29 APRIL AND THE SPREADSHEET

[51] It is common cause that the meeting was held between the representatives of the applicant and representatives of the respondent on 29 April 2019.

[52] Subsequent to the meeting the applicant, as far as it was possible, made certain concessions and passed whatever credits the respondent’s required in order that there could be no dispute surrounding the amount owed to the applicant and that the applicant could simply be paid for the goods that it had sold to the respondent.

[53] Mr Jordaan, on behalf of the respondent, confirms the meeting in paragraph 37 of the respondent’s opposing affidavit. In paragraph 37.2 thereof Mr Jordaan further confirms that the respondents had prepared a lever arch file which contained a spreadsheet. He state’s that this summarized “all the queries and errors”. (Own emphasis).

[54] As stated by the applicant in its heads of argument, the court does not need to consider any prior “errors” because the 29 April 2019 spreadsheet contained, according to respondent, all the alleged queries and errors. It confirmed that the respondent undertook to add the extra column to the spreadsheet setting out what the applicant had to resolve. Annexure P12 to the respondent’s opposing affidavit, prepared by the respondent admits an indebtedness to the applicant in the sum of R1 706 584.13. In annexure HG4 to the applicant’s replying affidavit, a copy of the spreadsheet prepared by the applicant’s administrative staff, under supervision of the applicant’s branch manager is annexed. After the queries were sorted out as appears from annexure HG4 to the replying affidavit, an email was sent to the applicant by the respondents dated 16 May 2019. In the said email Ms Sunette Robinson, an employee duly authorised by the respondent, states that “we are working through the documents sent (i.e. spreadsheet) by your team and are now able to invoice our client with those that are rectified. We will be processing payment per invoice as we receive payment. Trust all in order.” This email was copied to Mr Jordaan and Ms Robinson. It is clear what is stated in this email does not comply with the terms and conditions as agreed upon between the parties. Soon thereafter the telephone conversation referred to earlier herein took place, and the email from Ms Robinson with undertaking to pay, was received by applicant.

[55] The payment by the respondent to the applicant was never conditional on payment received by the respondent from Sasol. The account was simply a 15-day account which, irrespective of whether payment was received from Sasol, had to be paid by the respondent.

[56] After all the queries and concerns in the accounting records of the applicant was sorted out subsequent to the 29 April 2019 meeting, Mr Jordaan confirmed the telephone conversation that he had with Mr Gischen on 16 May 2019, that everything is in order and payment will soon be made. It is common cause that no payment was effected by respondent.

[57] Mr Jordaan’s attempt to deny that all accounting issues had been sorted out and effort to create factual disputes is, in my opinion opportunistic.

[58] All disputes concerning accounting system, invoices, delivery notes, credit notes, sale of goods was solved when annexure HG4 to the applicant’s replying affidavit was compiled and sent to respondent. It is also significant to note that, despite

various recordals by Mr Gischen on behalf of the applicant between 16 May 2019 and 31 May 2019 of the indebtedness, and request for payment, no disputes were raised by the respondent, or Mr Jordaan.

[59] Mr Jodaan, in the opposing affidavit deposed to on behalf of the respondent, also do not attempt to show that any one amount appearing from annexure HG4 or the applicant’s statement dated 31 May 2019 is not genuine and constitutes a duplicate claim. All that it does is to make bald unsubstantiated allegations. He could easily have dealt with it in a further affidavit.

FACTUAL INSOLVENCY/FINANCIAL AND MANAGEMENT STATEMENTS

[60] It is vehemently disputed by respondent that the letter by the applicant to the respondent in terms of section 345(1)(a) of the Companies Act was properly served.

[61] Even if it is accepted that this letter was not properly served, which I do not think is correct, it is clear from the papers filed by the applicant and the opposing affidavit by the respondent, that the respondent is not in a position to pay its debts.

[62] Mr Jordaan, in paragraph 88 of the respondent’s opposing affidavit confirms, in dealing with the respondent’s financial

position, that the respondent is solvent and able to meet its financial obligation. For that purpose he relies on the Financial Statements for the year ended 28 February 2019 and “Management Statements Dated 31 July 2019”. These are annexed to respondent’s opposing affidavit.

[63] The financial statements were not audited and the accountant that prepared the statements could not verify the accuracy or completion of the information supplied to them by the respondent.

[64] It appears from the Financial Statements that, as at 28 February 2019, the respondent was insolvent. The respondent’s total liabilities exceeded its total assets, and it appears the only reason why the respondent had cash in its bank account was because of a loan by the shareholder to the respondent in the amount of R802 618. It appears from the statement of cash flow that the only cash that was deposited into the respondent’s account for the entire year was the amount as aforementioned. The loan is recorded in note 3 to the financial statement as a loan from Mr Jordaan.

[65] The management statements worsens the respondent’s fate. It shows an increase in trade and other receivables of R1 245 177.00 from 28 February 2019, to R2 387 431.00, on 31 July 2019. At the same time, the respondent’s bank balance declined from R859 258.00 on 28 February 2019, to R350 757.00 on 31 July 2019.

[66] Mr Jordann, as a shareholder, injected more cash into the respondent who was clearly fading at that stage. His loan account in the company increased from R802 618.00 as on 28 February 2019 to R1 269 402.00 on 31 July 2019. The bank account of the respondent, having only R350 757.00 on 31 July 2019 clearly indicates, that read with the financial statements and management statements, the respondent is not in a position to pay its debts and is factually insolvent.

[67] It is also not stated by the respondent whether the trade and payables in the sum of R2 158 499.00, includes or excludes, the debt due to the applicant. If it does not include the said debt it worsens the position even further, but I will not speculate. The respondent should/could easily have cleared the position for court. From the above mentioned it is clear that the respondent is factually insolvent and not in a position to pay its debts.

[68] In summary, it is clear that the applicant has a liquidated claim against the respondent of more than R100.00. So much is admitted by Mr Jordaan in the opposing affidavit.

[69] The respondent is factually insolvent, on its own version, and as prima facie proven by the applicant.

[70] It is significant to note that although the respondent denies that the letter of demand that sets out his claim constitutes or triggers the deeming provision contained in section 345(a) of the Companies Act, it fails to deal with the balance of the allegations contained in the said letter, and one can safely assume that these allegations are admitted by respondent[14]. It is clear that the respondent was basically playing for time, has no reasonable or bona fide defence and are factually insolvent.

[71] I find that the applicant has made out a prima facie case for the relief sought.

[72] I accordingly make the following order:

1. That the respondent’s estate is hereby placed under provisional liquidation.

2. Costs in this application is costs in the insolvent estate of the respondent.

3. That all interested parties are called upon to appear in this Court on 17 April 2020 at 10h00 to provide reasons why the order in 1 and 2 above should not be made final.

4. That this order must be served and advertised as follows:

4.1 Service on the respondent at his registered address.

4.2 Service on the respondent’s employees and trade unions at its registered address and principal place of business.

4.3 This order to be published in the Citizen Newspaper prior to the return date herein.

4.4 That this order be published in the Government Gazette.

_ _____________________________

HF BRAUCKMANN

ACTING JUDGE OF THE HIGH COURT

REPRESENTATIVE FOR THE APPLICANT: ADV. S VIVIAN (SC)

INSTRUCTED BY: DAVID OSHRY & ASSOCIATES

REPRESENTATIVE FOR THE RESPONDENT: ADV C.J MARNEWECK

INSTRUCTED BY: VAN KAAM-OBERHOLSTER INC

DATE OF HEARING: 3 DECEMBER 2019

DATE OF JUDGMENT: 10 JANUARY 2020

[1] Tshwane City v Blair Atholl Homeowners Association 2019(3) SA 398 (SCA) at par 76 and 77.

[2] Benefit Cycle Works v Armore 1927 TPD 524 p. 530

[3]Tantoush v Refugee Appeal Board and Others 2008(1) SA 232(t) at par 51.

[4] Act 71 of 2008

[5] When company deemed unable to pay its debts (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; or (b) any process issued on a judgment, 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 not found sufficient disposable property to satisfy the judgment, decree or order or that any disposable property found did not 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. (2) In determining for the purpose of subsection (1) whether a company is unable to pay its debts, the Court shall also take into account the contingent and prospective liabilities of the company.

[5] When company deemed unable to pay its debts

(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; or

(b) any process issued on a judgment, 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 not found sufficient disposable property to satisfy the judgment, decree or order or that any disposable property found did not 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.

(2) In determining for the purpose of subsection (1) whether a company is unable to pay its debts, the Court shall also take into account the contingent and prospective liabilities of the company.

[6] Johnson v Hiratec (Pty) Ltd 2000(4) SA 930 (SCA) at 933 to 934.

[7] 1962(4) SA 593(D) at 597 D-G

[8] Henochsberg on the Companies Act 71 of 2008, vol (II) page APTI_66 (5).

[9] Prudential Shippers SA Ltd v Tempest Clothing Co (Pty) Ltd 1976(2) SA 856 (w) at 861 F and Henochsberg, supra, at vol II APTI 74.

[10] Badenhorst v Northern Construction Enterprises (Pty) Ltd 1956(2) SA 346 (T) at 347 H- 348 I.

[11] Orestisolve v NDFT Holdings 2015(4) SA 449 (WCC) at par 8.

[12] Ovestisolve, supra, par 9 & 10.

[13] Trinity Asset Management v Grindstone 2019(1) SA 94 (CC) at par 92.

[14] Benefit Cycle Works, supra.