Three Diamonds Trading 50 (Pty) Ltd t/a Midway Bus Services NW v Tapisego Trading and Projects CC (KPM 47/2018) [2019] ZANWHC 7 (21 February 2019)

IN THE NORTH WEST HIGH COURT, MAFIKENG

CASE NO: KPM 47/2018

In the matter between:

THREE DIAMONDS TRADING 50 (PTY) LTD

T/A MIDWAY BUS SERVICES NW

Applicant

And

TAPISEGO TRADING AND PROJECTS CC

Respondent

DATE OF HEARING

: 14 FEBRUARY 2019

DATE OF JUDGMENT

: 21 FEBRUARY 2019

FOR THE APPLICANT

: ADV. ACKERMAN

FOR THE RESPONDENT

: MR. LETSIE

JUDGMENT

HENDRICKS J

Introduction

[1] This is an application for a provisional liquidation order against the respondent. It is common cause that the applicant and the respondent entered into a contract in terms of which the applicant would render certain services to the respondent at an agreed price. Services were duly rendered and payment was due and payable. The amount alleged to be due and payable is R567 950.00. A letter of demand was send to the respondent. No payment was received despite the demand. The applicant than lodged the present application.

[2] Initially there was disagreement about a condonation application between the parties and also an interpretation of a court order alleged to be ambiguous. These aspects has been resolved and the requisite condonation was granted for the late filing of the answering affidavit of the respondent save for the costs aspect thereof.

The Point in Limine

[3] The respondent raised a point in limine. It was argued by Mr. Letsie, the legal representative acting on behalf of the respondent, that there is a dispute of fact which cannot be resolved on the papers and need to be referred to the trial court for determination. This dispute of fact relate to the amount that is due and payable. It was contended that an invoice amounting of R33 000.00 which was not due, is included in the amount claimed and therefore the application for provisional liquidation of the respondent cannot be granted. But for this invoice of May 2018 amounting to R33 000.00, the remainder of the amount claimed is not disputed. In particular, is it not disputed that the respondent owes the applicant some money. Mr. Letsie contended that this is a bona fide and genuine dispute of fact.

[4] After listening of the submissions by counsel, I dismissed the point in limine raised, but did not at that stage pronounced on the aspect of costs. I allowed counsel to argue the merits of the application for

provisional liquidation of the respondent.

The Merits

[5] The respondent is a Close Corporation (CC). The applicant is a creditor of the respondent. On the 18th June 2018 the applicant presented an invoice to the respondent reflecting the amount due and payable. No payment was forthcoming.

The applicant than caused a letter of demand to be send to the respondent. The letter of demand in terms of the provisions of Section 69 of the Close Corporation Act 69 of 1984 was served on the respondent on the 28th June 2018. Despite, still no payment was made by the respondent subsequent to this demand. The applicant then launched the present

application in terms of Section 69 of Close Corporation Act 69 of 1984.

[6] Section 69 (1) (a) of the Close Corporation Act 69 of 1984 states:

“For the purposes of section 68 (c), a corporation shall be deemed to be unable to pay its debts, if –

(a) a creditor, by cession or otherwise, to whom the corporation is indebted in the sum of not less than two hundred rand then due has served on corporation, by delivering it at its registered office, a demand requiring the corporation to pay the sum so due, and the corporation has for 21 days thereafter neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor;”

[7] The present application was issued out of this Court on the 13th day of August 2018 and served on the 20th August 2018. This takes care of the twenty-one (21) day period stipulated in Section 69 (1) (a) of the Close Corporation Act 69 of 1984. I may hasten to state that it was not contended by the respondent that the applicant did not comply with any of the prescripts in terms of the act. The only bone of contention is the amount of money that is due and payable. It is in actual fact not disputed that the respondent is indebted to the applicant for services rendered. Hence, it is stated in paragraph 5.7 of the respondent’s heads:

“5.7 The Respondent is not contending that it’s not indebted to the Applicant, what is clear from the Respondent’s pleadings is that the amount which is sought by the Applicant is not the actual amount of its indebtness, it is inflated.”

[8] Mr. Ackerman, on behalf of the applicant, contended that there is no real or genuine dispute about the amount that is due and payable. The R33 000.00 complained about is nothing but a red-herring. The agreement between the applicant and the respondent was that payment should be made in advance. Hence, the invoice of R33 000.00 for May 2018. However, this invoice amount is not included in the amount claimed. This is true and quite apparent from the letter of demand and the invoices attached. The respondent never paid the amount claimed or alternatively the amount claimed less the R33 000.00

for the invoice of May 2018. The invoice of May 2018 can be safely disregarded because services had not been rendered and the agreement

was cancelled before it could be rendered.

[9] The fact that the respondent failed to make payment with regard to the amount claimed, which was due and payable, warrants an inference that the respondent is deemed to be unable to pay its debts in terms of Section 68 of the Close Corporation Act 69 of 1984. During argument Mr. Letsie stated that it is admitted that the respondent is indebted to the applicant in the amount of R431 000.00 according to his calculations. Even this is a substantial amount of money which

is admitted that it was not paid to the applicant upon demand, despite it being due and payable. The non-payment of the amount that is due and payable amounts to commercial insolvency.

[10] Reference was made to the matter of Brits Vleis (Pty) Ltd v Soft & Gentle Supply and Projects CC, Case no 34139/14, Gauteng Division, Pretoria delivered (the ‘Brits case’) on the 03rd February 2017 by Mabuse J. Reliance was placed on this judgment in support of the contention that there exist a genuine dispute of fact. This case is clearly distinguishable from the present case. In that case, Brits Vleis brought an application to have Soft and Gentle Supply & Projects CC wound up for allegedly failure to pay an amount of R200 000.00. A cheque that was drawn by Roots butchery was dishonored. The application was premised on the dishonored cheque.

[11] In the Brits case the Court found:-

“[19] In casu on evidence before Court it is clear that the debt is not simply disputed because the respondent claims so. The dispute is not only bona fide but, in my view, good and reasonable and founded on substantial grounds.

[20] Finally, counsel for the applicant, relying on a paragraph cited from Kalil v Decotex (Pty) Ltd 1988(1) SA 943 A argues that the respondent has failed to establish the existence of a bona fide dispute in relation to the applicant's claim. The said paragraph states that:

“Where the respondent shows on a balance of probability that its indebtedness to the applicant was disputed on bona fide and reasonable grounds, the Court will refuse the winding-up order. The onus on the respondent is not to show that it is not indebted to the applicant;·it is merely to show that the indebtedness is disputed on bona fide and reasonable grounds.”

In my view the respondent has succeeded to show that its dispute for its indebtedness is based on good and reasonable grounds.

[21] I am satisfied that de Sousa has tendered evidence that has established that the respondent was never indebted to the applicant at all and furthermore that there was never any underlying liability between the applicant and the respondent. The target of this winding-up application is Soft & Gentle Supply & Projects CC. In paragraph 6 of the founding affidavit Tjaart Johannes Janse van Ransburg ("van Ransburg") stated it clearly that:

"Hierdie R200,000.00 verteenwoordig 'n verskuldigheid van 'n regsentiteit by name van Roots Butchery, besit deur dieselfde lede as die van die respondent en is die tjek waarop die applikant steun gegee aan die applikant ter vermindering van die skuld van Roots Butchery teenoor die applikant " Quite clearly the respondent has nothing to do with the amount of R200,000.00. The applicant itself has placed evidence before the Court to show that Roots Butchery was the legal persona and that the amount so tendered by way of a cheque was for the debts of Roots Butchery and not of the respondent. Accordingly I accept De Sousa's evidence that the respondent was never indebted to the applicant and that this application should not have been launched against the respondent.”

[24] It is correct that all that is required of the applicant is to show that the respondent is unable to pay its debt and as and when they fall due. In this regard reliance can be placed on Rosebach & Co. Pty Ltd v Slngh's Bauars Pty Ltd 1962(4) SA 593 at page 597 C-D where the Court had the following to say:

''lf 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. "

The facts stated by the respondent and admitted by the applicant show quite convincingly that the respondent did not owe the applicant; that it was Roots Butchery, a separate legal entity that owed the applicant; that the dishonoured cheque was made good; there was no evidence that either the respondent was unable to pay its debts. In my view, on the evidence before the Court on the application for the liquidation of the respondent cannot succeed.”

(emphasis added)

[12] To reiterate, the present case is clearly distinguishable from the Brits Vleis case. In this case, the locus standi of the applicant is not disputed. Furthermore is it admitted that the respondent is indebted to the applicant. But for the R33 000.00

of the May 2018 invoice, which was in any event not included in the amount claimed, there is no dispute between the parties. This is totally different from the facts in the Brits Vleis matter. Each case must be decided on its own merits.

[13] Mr. Letsie submitted that based on the bank statement of the respondent, the respondent is able to pay its debts and an order for the provisional

liquidation should not be granted. This contention with due respect misses the point. It is not whether the respondent is able to pay. It is rather a question of the respondent failed to pay what was due and payable and are therefore deemed to be unable to pay its debts.

[14] In Interturbo (Pty) Ltd and Others v Absa Bank Ltd and Other (45884/2012) [2016] ZAGPJHC 215 at paragraphs [33] and [34] Mashile J states:

“[33] It must be borne in mind that the deemed inability to pay as envisaged in sub-s 345 (1) (a) is a conclusion of law. In this regard, Henochsberg in its commentary on the 1973 Act outlines the point as follows:

“It is respectfully submitted that the intention is that in any of the situations set out in sub-s (1)(a), (b) and (c) the conclusion that the company is unable to pay its debts is to be a conclusion of law, i.e., for the purpose of the exercise by the Court of the jurisdiction to wind up under s 344( f ), the company is, where any of such situations exists, in law unable to pay its debts even if in fact it is able to pay them…..”

[34] It is conceivable for a solvent company to be declared unable to pay its debts even though it can. The point is did the company pay and not whether or not it can pay. Thus failure to settle a debt demanded in terms of Section 345(1)(a)(i) of the 1973 Act or to settle a judgment validly obtained, as is the case in the instant case, could result in a legitimate winding-up. I therefore agree with the conclusion of the First respondent’s Counsel that given the aforesaid exposition of the situation, assuming that the winding up order were to be rescinded, the Applicants would nonetheless fail in their opposition of the liquidation application.”

I find the aforementioned dictum quite apposite in this case.

[15] In applying a robust approach to facts of this case, I am satisfied that the respondent is indebted to the applicant; that demand for payment had been made; that the respondent failed to make payment to the applicant despite demand; that there was compliance with the prescripts of the law and procedure; that a case has been made out for an order of the provisional liquidation of the respondent. The costs relevant to the condonation application must be paid by the respondent. Such costs to be on the scale as between attorney and client based on the behavior of the respondent; its lack of due diligence and the fact that it was timeously notified by the applicant. The remainder of the costs must be costs in the liquidation.

Order:

[22] Consequently, an order is granted in terms of the draft order marked “x”, hereto attached.

_______________

R D HENDRICKS

JUDGE OF THE HIGH COURT,

NORTH WEST DIVISION, MAHIKENG

“X”

IN THE HIGH COURT OF SOUTH AFRICA

CASE NO: KPM 47/2018

THREE DIAMONDS TRADING 50 (PTY) LTD

T/A MIDWAY BUS SERVICE NW

APPLICANT

AND

TAPISEGO TRADING AND PROJECTS CC

RESPONDENT

____________________________________________________________

DRAFT ORDER

After hearing the respective legal representatives for the parties it is ordered that:

1 the application for condonation for the late filing of the respondent's answering affidavit be granted and the respondent be ordered to pay all such costs occasioned thereby on a scale between attorney and client;

2 the point in Iimine be dismissed with costs;

3 a rule nisi be issued in terms whereof the estate of the respondent be provisionally liquidated and its assets be placed in the hands of the

Master of this Court;

4 a copy of the order nisi be served on the respondent at its registered address and be published once in each of the Government Gazette and the Beeld Newspaper;

5 the costs of the application for liquidation be costs in the liquidation;

6 that all interested parties, are called upon to provide reasons, if any, on THURSDAY 28th MARCH 2019 at 10H00 why the rule nisi as granted above should not be confirmed.

_____________

BY ORDER