Estate Debt Collections and Auctioneers (Edms) Bpk v Wilcass Group C (35240/2006) [2007] ZAGPHC 196 (11 September 2007)

IN THE HIGH COURT OF

SOUTH AFRICA

(TRANSVAAL PROVINCIAL DIVISION)

CASE NO: 35240/2006

DATE:11 SEPTEMBER 2007

In the matter between:

ESTATE

DEBT COLLECTIONS AND AUCTIONEERS

(EDMS)

BPK APPLICANT

and

THE

WILCASS GROUP C RESPONDENT

JUDGMENT

MAKGOKA(AJ)

[1] This is an application for liquidation of the respondent close corporation in terms of Section 68 (c) read with Section 69(1)(a) of the Close Corporation Act 69 of 1984. The Applicant is a creditor by cession, of the Respondent for R756 715.00

[2] As a result, Applicant approached this Court to liquidate the Respondent on the basis that the Respondent is unable to pay its debt. The Applicant relies on the deeming provision of Section 69(1)(a) of the Close Corporation Act, which reads:

“69(1) For the purpose of Section 68(c), a corporation shall be deemed to be unable to pay its debt, if-

a creditor, by cession or otherwise, to whom the corporation is indebted in a sum of not less than R200.00 then due has served on the corporation, by delivering it at its registered office, a demand requiring the corporation to pay the sum so due, and the corporation has for twenty one (21) days thereafter, rejected to pay the sum or to secure or compound for it to reasonable satisfaction of the creditor, or-

any process issued on a judgment, decree or order of any court in favour of a creditor of the corporation is returned by the sheriff, or a messenger of a Magistrate’s court, with endorsement that he has not found sufficient disposable property to satisfy the judgment, decree or order, or that disposable property found did not upon sale, satisfy such process. or-

it is proved to the satisfaction of the Court that the corporation is unable to pay its debt.”

[3] On 10 August 2006 a notice in terms of Section 69(1) of the Act was served by the Sheriff at 6th Avenue, Industrial Area, Polokwane. The Sheriff’s return reads:

“Op hierdie 10 Augustus 2006 om 13H00 het ek die Adjunk Balju: PA Bornaman, die brief op die Verweerder Wilcass Group te 6de laan Industriele gebied Polokwane beteken deur ‘n ware afskrif daarvan op ‘n volwasse verantwoordelike persoon , Suzan Sisheng in beheer van die perseel tydens betokening te oorhandig. Tydens betokening het ek die aard van die dokument verduidelik, asook die oorspronklike daarvan getoon.”

[4] It is now common cause that the said office is not the registered office of the Respondent. It is further denied on behalf of the Respondent, that the Respondent received the said notice. Mr. Badenhorst, on behalf of the Applicant submitted that the true test is whether on the balance of probabilities the notice came to the knowledge of the Respondent. He further urged me to find that there had been “substantial compliance”. He sought to rely for this submission, on the interpretation of section accorded in Nathamiel v Efthymakis Properties v Hartebeesspruit Landgoed CC 1996(2) ALL SA 317(T).

[5] In that judgment of Van Dijkhorst J, after analysing the cases on a similar section 345 of the Companies Act and its predecessor held that substantial compliance with section 69 of the Act, would suffice.

The Learned Judge, at 322 E-G stated:

“It is clear that in the case of a body corporate which is not company incorporated in terms of Act 61 of 1973, the demand may also be delivered to an officer or in Any manner directed by the Court. It would seem incongruous that in the case of such body, a wide range of portions are open to the creditor but in the case of Section 345(1)(a)(i) strict compliance is required and substantial compliance is inadequate. There is no difference in object between subsections (i) and (ii). It is that the corporate bodies concerned be notified that a demand is made in order that a conclusion of inability to pay. The primary concern in both cases is that the demand comes to the knowledge of the corporate body. Generally speaking the best may of effecting that is in the case of a company, by delivering at its registered office. I can however, not see why substantial compliance would not suffice- provided that there is no proof that the demand did in fact reach management of the company for which it was intended.”

[6] At 322. J the Learned Judge proceeded that:

“ with these conclusions in mind I turn to section 69(1)(a) of the Close Corporation Act of 1984 I find no compelling reason to require strict compliance with the provisions thereof, provided it is clear that the close corporation has in fact received the demand. To hold otherwise would elevate from above substance..”

[7] In the present case, there is no proof before me that the Respondent has in fact received the demand. I am therefore unable to agree with Mr Badenhorst’s submission that the test is whether on a balance of probabilities the notice came to the knowledge of the Respondent. The test is more stringent than that, in that proof is required.

[8] As a result, I find that no proper notice in terms of Section 69(1)(a) has been served. Consequently the application for provisional liquidation of the Respondent must fail.

[9] I need to comment on the content of the Sheriff’s return of service in this matter. In my view, a Sheriff’s return must ex facia, indicate the nature and title of the document served- if it is a notice in terms of Statute, as in his case, the return must indicate the provisions of the statute as it appears on that particular notice. In this case the Sheriff’s return simply states that a “letter” was served. It further appears that a copy of the said letter was served instead of the original.

[10] Accordingly, I make the following order;

“The application is dismissed with costs.”

________

T M MAKGOKA

ACTING JUDGE OF THE HIGH COURT.

Date of hearing: 24 AUGUST 2007

Advocate for the Applicant: MA BADENHORST (SC)

Attorneys of Applicant: STRYDOM & BREDNEKAMP ING

Advocate for Respondent: H R FOURIE

Attorneys for Respondent: KWOWLES HUSIAN LINDSAY INC

Date of Judgment:11 SEPTEMBER 2007