Albaraka Bank Limited v Cecita CC
| Jurisdiction | http://justis.com/jurisdiction/166,South Africa |
| Judge | Masipa J |
| Judgment Date | 15 June 2022 |
| Court | KwaZulu-Natal Division, Durban |
| Docket Number | 8771/2020 |
| Citation | 2022 JDR 2075 (KZD) |
Masipa J:
Background:
The applicant is a registered commercial bank, which instituted winding up proceedings against the respondent. The proceedings are opposed. The respondent, a registered Close Corporation, is not a trading entity but owns an undeveloped land situated at Ballitoville ('the immovable property'). This property is bonded to the applicant as security for the loan. The applicant and respondent are jointly referred to as 'the parties'. All procedural requirements as set out in the Companies Act, 1973 ('the Companies Act') were complied with prior to the hearing of the matter.
Issue:
The issue to be determined is whether the applicant is entitled to bring this application having instituted an action, which the respondent defended, prior to launching this application, i.e. whether the application is bona fide or an abuse of process.
The facts:
The parties in this matter concluded Musharaka agreements (agreements similar to joint venture agreements) during 2015. In terms of these agreements, the applicant lent various sums of money to the respondent. The respondent undertook to repay the loan monthly as prescribed in each agreement. The respondent used part of the money loaned to acquire the immovable property.
The applicant contends that the respondent breached the agreements by failing to pay the monthly instalments. As at the institution of the proceedings, reference is made to two accounts. The arrears in both accounts is R446 570.25 and R832 140.20 with the last payment being made during November 2017.
2022 JDR 2075 p2
Masipa J
During 2018, the applicant launched an action against the respondent referred to earlier in this judgment. The applicant avers that the respondent denied liability and has made no efforts to comply with pre-trial preparations.
On 20 July 2020, the applicant issued a notice in terms of s 69 of the close Corporations Act 69 of 1984 calling upon the respondent to pay the arrears totalling R167 247.40. The Sherriff served the letter. There was no payment by the respondent in response to the notice. The applicant contends that the only reasonable inference to draw is that the respondent is unable to pay its debts as defined by the Insolvency Act, 1936 and the Companies Act. Further, that the respondent is commercially insolvent. In view of this, the applicant elected to proceed by way of winding up proceedings.
The respondent denies that it is insolvent or that it is indebted to the applicant as alleged. The respondent avers also that the action between the parties is still pending and that after delivering its plea, the applicant did not apply for summary judgment. It accordingly contended that in the absence of a summary judgment application, the applicant's conduct was tantamount to an admission that the respondent has a bona fide defence to the action. The respondent contends that the current application constitutes an abuse of process.
The respondent avers that it is able to pay its debts. This is because the property is leased and the tenant pays rental in the sum of R36 750 which payment was to commence during March 2021. The lease provides the lessee with an option to purchase the property, which has been developed for an amount of R6.5 million. A representative of the lessee has indicated that he is exercising the option to purchase the property as soon as his vehicle business he is erecting on it is up and running which was to be around April 2021. Accordingly, it contends that there is no doubt that the respondent is solvent...
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