Business Partners Ltd v World Focus 754 CC

• Jurisdiction: South Africa
• Judge: Mnguni J
• Judgment Date: 12 August 2015
• Citation: 2015 (5) SA 525 (KZD)
• Docket Number: 8275/08
• Hearing Date: 21 May 2015
• Counsel: P Quinlan for the applicant. N Hollis SC (with D Naidoo) for the respondent.
• Court: KwaZulu-Natal Local Division, Durban

Mnguni J:

[1] This application is a sequel to a finding by the full court of this E division in the reported judgment of World Focus 754 CC v Business Partners Ltd [2013] ZAKZPHC 10. World Focus 754 CC was the respondent in the court of first instance and Business Partners Ltd was the applicant. For ease of reference I shall continue to refer to the parties as such in this application.

F [2] The relevant facts giving rise to this application are common cause and have been fully and clearly set out in the reported judgment. I do not propose to refer to them with any further particularity other than is required to indicate the reasons for the conclusion at which I have arrived. They are to the following effect. On 21 May 2010 the respondent was placed under a provisional winding-up order by Skinner AJ G pursuant to an application brought by the applicant, notwithstanding that the respondent opposed the granting of such order. The winding-up proceedings were initiated on the ground that the respondent was unable to pay its debts as envisaged by s 68 (c) of the Close Corporations Act 69 of 1984 (Close Corporations Act). On 10 December 2010 H Ngwenya AJ granted a final winding-up order. Pursuant to the granting of those orders the respondent sought and was refused leave to appeal by Skinner AJ. On 13 September 2011 the Supreme Court of Appeal granted the respondent leave to appeal those orders to the full court.

[3] In a reserved judgment handed down on 25 January 2013 the full court upheld the appeal and set aside the orders granted on 21 May 2010 I and 10 December 2010. The applicant was aggrieved by this decision. It then sought and was refused special leave to appeal against the judgment of the full court by the Supreme Court of Appeal on 6 May 2013. In upholding the appeal and setting aside the provisional and final winding-up orders the full court found that the winding-up procedure J had been an abuse of the process of court.

Mnguni J

[4] This finding was destined to take centre stage in the dispute that has A subsequently arisen between the parties. Consequently the respondent has approached this court, contending that in consequence of the provisional and final winding-up orders being set aside the liquidator was obliged to restore the property of the respondent to it, but that the liquidator was no longer in a position to do so as the property had already B been sold and transferred to a third party. The respondent contends that it has suffered damages, being the difference in the market value of the property as at 6 May 2013, the date when the property should have been restored to it by the liquidator, less the amount owing to the applicant in respect of the respondent's indebtedness, if any, plus loss of rentals and other expenditure. C

[5] The respondent has instituted a claim for damages based upon the provisions of s 347(1A) of the Companies Act 61 of 1973 (the Companies Act), although originally incorrectly claimed under s 15 of the Insolvency Act 24 of 1936 (the Insolvency Act). The relief sought by the D respondent is procedural in nature. The respondent had, incorrectly, relied on the wrong statute, and the applicant, in response, filed a notice in terms of rule 6(5)(d)(iii) of the Uniform Rules of this court, in which it raised a question of law to the effect that s 15 of the Insolvency Act was not applicable in this instance, as the Insolvency Act applies to circumstances where there was an application for the sequestration of a debtor's E estate. The applicant contended that for the respondent to claim relief under this section, it must be a debtor as defined in s 2 of the Insolvency Act. The applicant contended further that because the respondent is a body corporate it falls within the exception in s 2 of the Insolvency Act and is not a debtor within the meaning of s 15 read with s 2 of the Insolvency Act. F

[6] In the same notice the applicant drew to the attention of the court and the respondent the applicability of s 347(1A) of the Companies Act as the causa for the respondent's claim. On 12 November 2014 the respondent filed a supplementary affidavit in which it conceded that G s 347(1A) is applicable to its claim and acknowledged that it ought to have brought its claim under this section. In that supplementary affidavit the respondent indicated that it was henceforth relying on s 347(1A) as the statutory basis for the relief that it seeks. The relevant section provides:

'Whenever the court is satisfied that an application for the winding-up H of a company is an abuse of the court's procedure or is malicious or vexatious, the court may allow the company forthwith to prove any damages which it may have sustained by reason of the application and award it such compensation as the court may deem fit.'

[7] Counsel for the applicant raised a preliminary point to the effect that I as the respondent's cause of action was founded on s 15 of the Insolvency Act its founding affidavit does not make out a cause of action. He submitted that the application is, therefore, fatally defective because s 15 does not provide the respondent with a cause of action for the relief claimed. As authority for this proposition he relied on two decisions, the J

Mnguni J

A most salient in...