Business Zone 747 (Pty) Ltd v Zarrebini

• Jurisdiction: http://justis.com/jurisdiction/166,South Africa
• Judge: Koen J
• Judgment Date: 11 September 2023
• Citation: 2023 JDR 3326 (KZP)
• Hearing Date: 05 September 2023
• Docket Number: 17544/2022P
• Court: KwaZulu-Natal Division, Pietermaritzburg

Koen J:

Introduction

[1]

The applicant (Business Zone [1] ) claims payment of the sum of R3 496 214.25 from the respondent, Dr Mehdy Zarrebini, as surety for the indebtedness of Van Dyck Carpets (Pty) Ltd (the debtor) to the applicant, together with interest and costs.

Factual Background

[2]

Business Zone seeks final relief in the application. It is trite that it can only succeed if the facts as alleged by the respondent, together with facts in the applicant’s affidavits which are admitted, or if not formally admitted cannot be denied and are therefore regarded to be admitted, justify the relief claimed. [2]

[3]

The relevant material facts in the founding affidavit are as follows:

(a)

The deponent, Mr Michael Craig Buck, describes himself as the managing director of ‘the applicant.’ He refers to ‘the applicant’, in abbreviated style, as ‘Business Zone.’ The ‘applicant’, as per the heading to the affidavit, which is part of and incorporated into the body of the affidavit by reference, is reflected as ‘The Business Zone 747 (Pty) Ltd (Registration No 2004/037286/23)’. Mr Buck is the sole director of Business Zone;

(b)

Mr Buck states that he is duly authorised to institute the proceedings pursuant to a board resolution of the applicant dated 12 August 2022, which provides:

‘Resolution of a Meeting of the Directors of the Business Zone 747 (Pty) Ltd (Reg No 213/094017/07) held at Durban North on 12th day of August 2022

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Resolved that:

1.

The Company institute action through its attorneys Cliffe Dekker Hofmeyr against the Sureties involved in respect of the Van Dyck liability, including but not limited to Dr Zarrebini;

2.

Michael Craig Buck be authorised to represent the company in such proceedings and to sign and all do to prosecute the claim/s to the end result.’

(The resolution was signed by and certified as a true copy by Mr Buck).

(c)

Business Zone, is described in the body of the founding affidavit, as a private company duly registered and incorporated in accordance with the laws of the Republic of South Africa, with registration number 2004/037286/23.

(d)

During the period from June 2018 to December 2019 Business Zone, in each instance described as ‘The Business Zone 747 (Pty) Ltd (Reg No: 2004/037286/23)’, and the debtor concluded three written loan agreements and various addenda thereto, ‘in terms of which Business Zone lent and advanced [3] sums of money’ to the debtor, in a total amount of R4 950 000 as follows:

(i)

R1 200 000 in terms of the first loan agreement and first addendum thereto;

(ii)

R2 750 000 in terms of the second loan agreement;

(iii)

R1 000 000 in terms of the third loan agreement.

(e)

The loan amounts would bear interest at the rate of 4.5% from the commencement date, being the date upon which the loan amounts were paid to the debtor, until the capital sum had been paid in full.

(f)

The debtor failed to make payment to Business Zone and accordingly ‘the amounts loaned in terms of the Loan agreements and the addenda remained due and outstanding.’

(g)

In terms of a written deed of suretyship dated 16 April 2018 the respondent bound himself as surety and co-principal debtor for the repayment on demand of all or any such sum or sums of money which the debtor may from time to time owe, or be indebted to the creditor, its successors or assigns in existence, or which may come into being in the future. [4] The creditor is reflected in the suretyship as ‘The Business Zone 747 (Pty) Ltd (reg No: 2004/037286/23);

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(h)

The following payments, totalling R1 453 785.75 were received in respect of the debtor’s indebtedness:

(i)

R770 785.75 on 24 November 2021;

(ii)

R294 000 on 22 February 2022;

(iii)

R32 000 on 15 December 2021;

(iv)

R357 000 on 27 September 2022.

(i)

The difference between the amounts loaned and advanced (R4 950 000) and the payments made (R1 453 785.75) accordingly amounts to R3 496 214.25, that being the amount claimed from the respondent.

(j)

The purpose of the application is alleged to be to seek ‘a money judgment order’ against the respondent in the amount of R3 496 214.25 ‘as per the certificate of balance . . . in accordance with the provisions of Clause 2 of the Suretyship and Guarantee signed in favour of the creditor by Dr Mehdy Zarrebini dated 16th April 2018.’

(k)

The certificate of balance completed by Mr Buck and is dated 28 November 2022. It refers to clause 2 of the Suretyship and records:

‘I hereby certify as provided therein that the indebtedness of Van Dyck Carpets (Pty) Limited, the Debtor, as at the date hereof and in respect of Capital only, is the sum of Three million, Four Hundred and Ninety-Six Thousand Rand, Two Hundred and Fourteen Rand and Twenty-Five Cents (R3 496 214.25) excluding interest and any other costs or fees to which the Creditor is entitled in terms of the Loan Agreements and the Suretyships.’

(l)

Clause 2 of the Suretyship provides:

‘the indebtedness of the said DEBTOR to the said CREDITOR(S) shall at any time be determined and proved by written certificate of the said CREDITOR, and such certificate shall be binding on us and be conclusive proof of the amount of our indebtedness and will be valid as a liquid document against us in any competent Court.’

[4]

Attached to the answering affidavit of the respondent, are two extracts of records in the offices of the Companies and Intellectual Property Commission (CIPC), marked Annexures ‘AA1’ and ‘AA2’, revealing the following:

(a)

The Business Zone 747 CC, a close corporation registered on 26 April 2004, was assigned registration number 2004/037286/23. It was converted to a company with

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number K2013094017. Its only active member was Leon Selwyn Centner. Its status is reflected as ‘CONVERSION CO/CC OR CC/CO’; [5]

(b)

The Business Zone 747 (Pty) Ltd, a private company registered on 7 June 2013, was assigned registration number 2013/094017/07. Its status is reflected as being ‘IN BUSINESS’ and that it was converted from B2004037286. Its only director is Mr Buck. [6]

[5]

In the answering affidavit the respondent alleges that:

(a)

It is common knowledge that the reference number ‘23’ at the end of a registration number is only applicable to close corporations, whilst private companies bear the reference number ‘7’;

(b)

At the time of entering into the loan and suretyship agreements an entity termed The Business Zone 747 (Pty) Ltd with registration number 2004/037286/23 could not have existed, nor could it have entered into any agreements as it had no legal standing whatsoever – that is a conclusion of law the respondent seeks to draw; [7]

(c)

Further that:

‘24.7

At all material times a conversion of a close corporation to a private company The Business Zone 747 with registration number 2013/09401/07 occurred as marked ‘AA2.’ Such conversion could only have occurred as envisaged in item 2 of schedule 2 of the Companies Act No 71 of 2008. Respondent is advised that the provisions on conversion of a close corporation to a company are:

24.7.1

Every member of the close corporation must become a shareholder of the company [8] – this has clearly not occurred;

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24.7.2

As per schedule 2, item 2 of the Companies Act, the shares to be held by the shareholders also need to be a proportion to the members interest held in the close corporation; [9] – this clearly did not occur.

24.7.3

The juristic person that existed prior to conversion will exist in the form of a company; [10]

24.7.4

All assets, liabilities, rights and obligations that vested in the close corporation or between the close corporation and its members, creditors or any...