Mahem Verhurings CC v First Rand Bank Limited (A 316/2017) [2019] ZAGPPHC 272 (27 June 2019)

Mahem Verhurings CC v First Rand Bank Limited (A 316/2017) [2019] ZAGPPHC 272 (27 June 2019)

The Court held that the Undertaking relied upon by Mahem was a draft, unsigned document and, in any event, the agreement between Mahem and First Rand contained a non-variation clause requiring written and signed amendments. Therefore, the Undertaking did not apply to Mahem. Even if it did, liquidation proceedings are not 'legal action' to collect debt, but rather proceedings to establish a concursus creditorum. Mahem failed to pay the debt after statutory demand, satisfying section 69(1)(a) of the Close Corporation Act. Commercial insolvency, not factual insolvency, is the relevant test; Mahem's alleged asset value did not preclude liquidation. The Court a quo properly exercised its...

Citation
[2019] ZAGPPHC 272
Parties
Appellant: Mahem Verhurings CC; Respondent: First Rand Bank Limited
Court
North Gauteng High Court, Pretoria
Jurisdiction
South Africa
Judgment Date
27 June 2019
Case Number
A 316/2017
Procedural Posture
Civil Appeal / Appeal From Final Winding Up Order; Supreme Court of Appeal Granted Leave to Appeal to Full Court
Outcome
Appeal dismissed; final winding-up order confirmed.
Judges
R G Tolmay, N Ranchod, V Nkosi
Legal Topics
Close Corporation Liquidation, Commercial Insolvency, Statutory Demand, Non Variation Clause, Interpretation of Undertakings
Commercial and Corporate Civil Procedure Close Corporation Liquidation Commercial Insolvency Statutory Demand Non Variation Clause Interpretation of Undertakings

Case Brief

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Parties

Mahem Verhurings CC

Appellant

First Rand Bank Limited

Respondent

Procedural Posture

Civil Appeal / Appeal From Final Winding Up Order; Supreme Court of Appeal Granted Leave to Appeal to Full Court

Legal Issues

  1. 1 Whether the Undertaking between First Rand and entities in the De Beers Group precluded First Rand from launching liquidation proceedings against Mahem Verhurings CC.
  2. 2 Whether Mahem Verhurings CC was deemed unable to pay its debts under section 69 of the Close Corporation Act 69 of 1984.
  3. 3 Whether the Court a quo erred in considering new matter raised in the replying affidavit and refusing to accept the Beaumont file at hearing.

Ratio Decidendi

The Court held that the Undertaking relied upon by Mahem was a draft, unsigned document and, in any event, the agreement between Mahem and First Rand contained a non-variation clause requiring written and signed amendments. Therefore, the Undertaking did not apply to Mahem. Even if it did, liquidation proceedings are not 'legal action' to collect debt, but rather proceedings to establish a concursus creditorum. Mahem failed to pay the debt after statutory demand, satisfying section 69(1)(a) of the Close Corporation Act. Commercial insolvency, not factual insolvency, is the relevant test; Mahem's alleged asset value did not preclude liquidation. The Court a quo properly exercised its...

Court Disposition

Appeal dismissed; final winding-up order confirmed.

Orders

  • The appeal is dismissed.
  • The Appellant is ordered to pay the costs of the Respondent.