Business Partners Ltd v World Focus 754 CC

• Jurisdiction: South Africa

Business Partners Ltd v World Focus 754 CC
2015 (5) SA 525 (KZD)

2015 (5) SA p525

Citation	2015 (5) SA 525 (KZD)
Case No	8275/08
Court	KwaZulu-Natal Local Division, Durban
Judge	Mnguni J
Heard	May 21, 2015
Judgment	August 12, 2015
Counsel	P Quinlan for the applicant.; N Hollis SC (with D Naidoo) for the respondent.

Flynote : Sleutelwoorde B

Company — Winding-up — Application — Application an abuse of procedure — Section providing that company may prove its damages, if court allows — Which court may allow — Companies Act 61 of 1973, s 347(1A).

Headnote : Kopnota

Business Partners Ltd obtained interim and final winding-up orders against C World Focus 754 CC in the KwaZulu-Natal Local Division of the High Court. On appeal, the full court set aside the orders and declared that the winding-up had been an abuse of process.

Invoking s 347(1A) of the Companies Act 61 of 1973, World Focus applied to be allowed to prove the damages it had suffered as a result of the winding-up application. D

Section 347(1A) provides:

'(1A) Whenever the court is satisfied that an application for the winding-up 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.' E

Business Partners, relying on the word 'forthwith', asserted that only the court hearing the winding-up application could apply s 347(1A). (Paragraphs [18] – [19] at 530H – 531C.)

Held, that this was not the case. (Paragraph [21] at 531E – G.)

Held, further, that World Focus should commence its action by way of simple F summons. (Paragraph [23] at 531H – 532B.)

Claim referred to trial. (Paragraph [24] at 532B – D.)

Cases Considered

Annotations

Case law

Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Others G 2004 (4) SA 490 (CC) (2004 (7) BCLR 687; [2004] ZACC 15): dictum in para [90] applied

Bayat and Others v Hansa and Another 1955 (3) SA 547 (N): referred to

Kleynhans v Van der Westhuizen NO 1970 (1) SA 565 (O): referred to

Natal Joint Municipal Pension Fund v Endumeni Municipality H 2012 (4) SA 593 (SCA) ([2012] 2 All SA 262; [2012] ZASCA 13): dictum in para [26] applied

Pienaar v Thusano Foundation and Another 1992 (2) SA 552 (BG): dictum at 577H applied

Poseidon Ships Agencies (Pty) Ltd v African Coaling and Exporting Co (Durban) (Pty) Ltd and Another 1980 (1) SA 313 (D): dictum at 315H I applied

Pountas' Trustee v Lahanas 1924 WLD 67: referred to

Shephard v Tuckers Land and Development Corporation (Pty) Ltd (1) 1978 (1) SA 173 (W): dictum at 177H applied

World Focus 754 CC v Business Partners Ltd [2013] ZAKZPHC 10: referred to. J

2015 (5) SA p526

Statutes Considered

Statutes A

The Companies Act 61 of 1973, s 347(1A): see Juta's Statutes of South Africa 2014/15 vol 2 at 1-227.

Case Information

P Quinlan for the applicant.

N Hollis SC (with D Naidoo) for the respondent.

B An application to be allowed to prove damages.

Order

(1)

The respondent's claim for damages in terms of s 347(1A) of the Companies Act, 1973, is referred to trial.

(2)

The respondent is directed to deliver its declaration within 10 days C of the grant of this order.

(3)

The applicant is directed to deliver its plea within 10 days of the date of delivery of the declaration.

(4)

The Uniform Rules of the High Court in respect of the exchange of further pleadings and trial issues shall mutatis mutandis apply.

(5)

D The costs of this application shall be reserved for decision by the trial court hearing the respondent's claim for damages.

Judgment

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.

2015 (5) SA p527

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...