Helderberg Laboratories CC and Others v Sola Technologies (Pty) Ltd

• Jurisdiction: South Africa
• Citation: 2008 (2) SA 627 (C)

Helderberg Laboratories CC and Others v Sola Technologies (Pty) Ltd
2008 (2) SA 627 (C)

2008 (2) SA p627

Citation	2008 (2) SA 627 (C)
Case No	5742/04, 5743/04, 5744/04
Court	Cape Provincial Division
Judge	Davis J, Fourie J and Goliath J
Heard	July 27, 2007
Judgment	August 17, 2007
Counsel	RA Brusser SC for the appellants.; JR Peter for the respondent.

Flynote : Sleutelwoorde F

Company — Winding-up — Inability to pay debts — Meaning of — Ability to pay G debts determined by fact of payment and not source of payment — Ability to obtain necessary finance from third party demonstrating ability to pay debts.

Company — Winding-up — Application for — Application for leave to intervene in proceedings for order of final liquidation — Made seriously and bona fide in capacity as member and shareholder of companies being wound up and H constituting prima facie defence to winding-up application — Court should exercise discretion in favour of allowing intervention.

Company — Winding-up — Application for — Application for in terms of s 346(1)(b) of Companies Act 61 of 1973 — For provisional winding-up, applicant having to satisfy court that it is creditor within meaning of subsection — On return day applicant having to prove on balance of probabilities I that it has necessary locus standi as creditor.

Headnote : Kopnota

The appellants (first to fourth appellants) appealed against the order of the court a quo confirming their provisional liquidation on the basis of their inability to pay their debts, as contemplated in s 344(f) of the Companies Act 61 of 1973. Subsequent to the granting of the provisional orders, payment had J

2008 (2) SA p628

A been made by a third party on behalf of the appellants for their admitted indebtedness to the respondent (under protest and without admitting liability), which represented about 76% of the respondent's total claim against them. The fifth appellant, a member of the first appellant and shareholder of the second to fourth appellants, had unsuccessfully sought leave to intervene. On appeal, B

Held, that the ability of a company or close corporation to pay its debts should be determined on the fact of payment and not the source of payment and thus may be demonstrated by its ability to obtain the necessary finance from an exterior source. (Paragraph [16] at 632E.)

Held, further, that in an application for the grant of a provisional winding-up in terms of s 346(1)(b) of the Companies Act, an applicant has to satisfy the C court that it is a creditor within the meaning of the subsection. On the return day, the applicant must prove on a balance of probabilities that it has the necessary locus standi as a creditor. (Paragraph [20] at 633F - G.)

Held, further, on the facts, that the first to fourth appellants had discharged the evidential burden of showing that they disputed the balance of the respondent's claim on bona fide and reasonable grounds. The respondent had therefore D failed to prove, on a balance of probabilities, that it was a creditor of the appellants. (Paragraph [32] and [35] at 636E - F and 637B - D.)

Held, further, on the facts, that in his capacity as a member of first appellant and shareholder of second to fourth appellants, the fifth appellant clearly had a legal interest in the subject-matter of the applications, which could be prejudicially affected by the judgment of the court. The intervention E applications were made seriously and bona fide and the allegations deposed to by him in the affidavits constituted a prima facie defence to the winding- up applications. In the circumstances, the court a quo ought to have exercised its discretion in favour of allowing him to intervene in the proceedings. (Paragraph [37] at 637F - G.) Appeals upheld. F

Cases Considered

Annotations

Reported cases

Commisioner for Inland Revenue v First National Industrial Bank Ltd 1990 (3) SA 641 (A): dicta at 649G - J and 651E applied

Commonwealth Shippers Ltd v Mayland Properties (Pty) Ltd (United Dress G Fabrics (Pty) Ltd and Another Intervening) 1978 (1) SA 70 (D): dictum at 72D - E applied

Fullard v Fullard 1979 (1) SA 368 (T): dictum at 371F - 372E applied

Henri Viljoen (Pty) Ltd v Awerbuch Brothers 1953 (2) SA 151 (O): dictum at 167F - H applied H

Hülse-Reutter and Another v Heg Consulting Enterprises (Pty) Ltd (Lane and Fey NNO Intervening) 1998 (2) SA 208 (C): dictum at 219F - G applied

Kalil v Decotex (Pty) Ltd and Another 1988 (1) SA 943 (A): dictum at 980E applied

Payslip Investment Holdings CC v Y2K Tec Ltd 2001 (4) SA 781 (C): applied

United Watch & Diamond Co (Pty) Ltd and Others v Disa Hotels Ltd and I Another 1972 (4) SA 409 (C): applied

Wolhuter Steel (Welkom) (Pty) Ltd v Jatu Construction (Pty) Ltd (In Provisional Liquidation) 1983 (3) SA 815 (O): applied.

Statutes Considered

Statutes

The Companies Act 61 of 1973, ss 344(f) and 346(1)(b): see Juta's Statutes J of South Africa 2006/7 vol 2 at 1-239 and 1-241.

2008 (2) SA p629

Case Information

Appeal from a decision of a single judge in the Cape Provincial A Division to a full bench. The facts appear from the reasons for judgment.

RA Brusser SC for the appellants.

JR Peter for the respondent.

Cur adv vult.

Postea (August 17). B

Judgment

Fourie J:

Introduction

[1] On 11 May 2005 first to fourth appellants were, upon the application C of respondent, placed under provisional winding-up. On the return day each of the four applications was opposed and fifth appellant sought leave to intervene on the basis that, as a member of first appellant and shareholder of second to fourth appellants, he had a material interest in the outcome of the winding-up applications. D

[2] On 8 July 2005 the court a quo dismissed fifth appellant's appli- cations for leave to intervene and made the provisional orders for the winding-up of first to fourth appellants final. On 12 September 2005, and at the request of appellants, the learned judge a quo furnished reasons for the orders made by him. Appellants thereupon applied for leave E to appeal against the said orders, which applications were refused. Appellants then approached the Supreme Court of Appeal and, on 30 January 2006, appellants were granted leave to appeal to the full bench of this division against the orders made by the court a quo.

[3] In this court the parties were represented by the same counsel who F appeared in the court a quo, namely, Mr Brusser SC on behalf of appellants and Mr Peter on behalf of respondent.

Background to the winding-up applications

[4] Respondent sought the winding-up of the first to fourth appellants on G the ground of the inability of each to pay its debts, as contemplated by s 344(f) of the Companies Act 61 of 1973. In the founding papers it is alleged that first to fourth appellants, who formed part of a group of associated companies and close corporations trading as optometrists, are indebted to respondent in the following amounts for the provision and supply to them of spectacle lenses and laboratory services: H

First appellant - R399 366,98

Second appellant - R163 369,51

Third appellant - R375 273,15

Fourth appellant - R1 015 698,12.

[5] In their answering affidavits first to fourth appellants admitted being I indebted to respondent, but contended that, due to the failure of respondent to make all the necessary accounting information available to them, they were unable to calculate the exact amount due by each of them to respondent. They averred that they had calculated their indebtedness to the best of their ability and had offered banker's J

2008 (2) SA p630

Fourie J

A guarantees for the payment thereof, which were rejected by respondent. In respect of the balance of respondent's claims, they raised defences to which I will refer later.

[6] Traverso DJP, who heard the applications on 11 May 2005, held that insofar as first to fourth appellants conceded that they were indebted to B respondent, but had failed to pay this admitted indebtedness, respondent was entitled to orders provisionally winding up first to fourth appellants. Subsequent to the granting of the provisional orders, first to fourth appellants made a further calculation, on the alleged incomplete accounting information available to them, of their indebtedness to respondent. Payment of these amounts were tendered to respondent, who accepted same. C

[7] The tender was embodied in a letter dated 24 May 2005, addressed by appellants' attorneys to respondent's attorneys. The relevant part of this letter reads as follows:

. . . we have been instructed by False Bay Optical CC, one of the entities forming part of the Optical Eyes/Eye Site Group, to tender D payment of the following amounts in respect of the respective entities described hereinbelow, namely:

1	Helderberg Laboratories CC	R323 674,72
2	Westland Optique (Pty) Ltd	R125 712,01
3	Eye Site Boland Inc	R295 319,53
4	Eye Site Western Cape Inc	R753 854,07
E	Total	R1 498 560,33

Take notice that the aforesaid payment is tendered under protest in respect of each of the entities referred to and without admitting that any of the entities referred to are indebted in the amounts tendered hereinbefore. It is quite evident from the affidavits already filed in the F proceedings between your client on the one hand and certain of the entities in the Optical Eyes/Eye Site Group of entities on the other hand that at the very least the balance of your client's alleged claim against the entities referred to hereinbefore is disputed on bona fide and reasonable grounds. In the circumstances we invite you, by not later that the close of business on Friday 27 May 2005 to advise whether G your client intends to persist in...