Machanick Steel & Fencing (Pty) Ltd v Wesrhodan (Pty) Ltd; Machanick Steel & Fencing (Pty) Ltd v Transvaal Cold Rolling (Pty) Ltd
Jurisdiction | South Africa |
Judge | Nestadt J |
Judgment Date | 26 April 1976 |
Citation | 1979 (1) SA 265 (W) |
Hearing Date | 22 April 1976 |
Court | Witwatersrand Local Division |
Nestadt J:
These two matters are applications for provisional winding-up orders: One is against Wesrhodan (Pty) Ltd, and I refer to the respondent in that A matter as "Wesrhodan", and the other is against Transvaal Cold Rolling (Pty) Ltd, and I will refer to the respondent in that matter as "Transvaal".
I would have preferred to have taken more time to consider and prepare my judgment in these matters but there is a degree of urgency which makes it desirable that a decision be given as soon as possible.
The applicant is the same person in both matters, The respondents are B associate companies in that a certain Schroeder and a certain Hendriks are shareholders and directors of both companies. I should mention, however, that a certain Mr Muzic is also a shreholder and director of Transvaal.
Both applications, which were opposed, were argued together, not only because the respondents were represented by the same counsel, but because they involved, for reasons which will emerge later in this judgment, substantially the same issues of fact and law.
The Mr Muzic to whom I have referred, being a creditor of Transvaal, C intervened as such in the application against Transvaal and sought the dismissal of that application. The applications are brought in terms of s 344 (f) of the Companies Act 61 of 1973, it being alleged that the respondents are unable to pay their debts. In this regard s 345 (1) (c) is relied on, it having been contended on behalf of the applicant that it was proved to the satisfaction of the Court that both companies are unable to pay their respective debts. Thne applications are also brought on the E grounds that it is just and equitable that the respondents be wound up.
The main point that arises for decision is whether Wesrhodan and Transvaal are jointly and severally indebted to the applicant in the amounts alleged by the applicant, namely an amount of approximately R122000. If they are, F then it was common cause that they are unable to pay their debts.
Now, in regard to this main point, the background facts are the following: The applicant carries on business as a steel merchant. Wesrhodan carries on an engineering business. The main business of Transvaal, which carries on a similar business, is to process steel coil into sheeting. Both G Wesrhodan and Transvaal operate from the same premises. In May 1975 the applicant entered into a contract which, according to it and Muzic, was with Wesrhodan, and according to Wesrhodan and Transvaal, was with Transvaal, would convert steel supplied by the applicant into sheeting. The terms of the agreement were that the finished product was to be H returned to the applicant for it to sell to its customers. Wesrhodan, or Transvaal, as the case may be, was to be paid a fee for the work. The applicant's version is that pursuant to the agreement it supplied steel to Wesrhodan. By the beginning of March 1976 applicant ascertained, or suspected, that both Wesrhodan and Transvaal had been misappropriating applicant's steel by, having processed such steel, themselves selling the finished product to their own customers. Accordingly, a representative of the applicant interviewed Schroeder and Hendriks. They allegedly admitted the misappropriation and gave such representative a list of figures, which
Nestadt J
was annexure "Q" to the Wesrhodan application and which was a list setting out the quantity of misappropriated stock. The representative in question, a certain Berman, took the list back to the applicant's offices (and I A quote from 106 of the Wesrhodan application):
"A computation based on the said shortages figures was compiled on the basis of the selling price per running metre of the steel in question and the figure arrived at was the sum of R128 587,75."
Having done this, and at applicant's instance, a meeting between the B applicant and Wesrhodan and Transvaal (the latter two companies represented by Schroeder and Hendriks) was held on 3 March 1976. The object was for the applicant to recover its loss. At the meeting representatives of the applicant produced a document, which is annexure "S" to the Wesrhodan application, and which appears at 152 of that application, which Hendriks and Schroeder signed.
C In terms of this undertaking, Wesrhodan and Transvaal acknowledged, inter alia, that they were in possession of stocks of galvanised coil and sheeting which were at all times the property of the applicant, that Wesrhodan and Transvaal had wrongfully and without authority misappropriated such stock, that the value of such stock misappropriated amounted to not less than R128 587,75, and that Wesrhodan and Transvaal D did not have the funds available to pay this sum. Further, in terms of this acknowledgment, the two companies, jointly and severally, accepted responsibility to repay to the applicant the amoun t in instalments of R30 000 per month commencing from 15 March 1976. The acknowledgment also contained an acceleration clause. Interest at the rate of 12 per cent per E annum, calculated from 1 July 1975, on the capital amount owing was also provided for. The companies also acknowledged that the capital sum "is the figure arrived at and calculated by ourselves". There was also a provision authorising an auditor and attorney appointed by the applicant to inspect the books and records of the companies to confirm the correctness of the F calculations in regard to the capital sum.
Consequent upon an investigation of the companies' affairs on behalf of the applicant, and for reasons which are unnecessary to canvass, the applicant was not satisfied with this acknowledgment and called another meeting with Wesrhodan and Transvaal for 12 March 1976. At this meeting Schroeder and G Hendriks were again present as also Muzic, together with certain other persons. A document, which was annexure "B" to the Wesrhodan application, and which is to be found at 27 - 33 of that application, was produced on behalf of the applicant, and this document was signed by Hendriks on behalf of Wesrhodan and Transvaal. The effect of this document is in broadly similar terms to the acknowledgment which has been signed on behalf of Wesrhodan and Transvaal on 3 March 1976. It is perhaps a little H more comprehensive in the definition of the applicant's rights and the respondents' obligations.
This is the manner in which Wesrhodan and Transvaal's alleged indebtedness of R128 000 arose, and on which the applicant relies in these proceedings. I should have mentioned that the first instalment of R30 000, due and payable under the acknowledgment dated 12 March 1976 and which first instalment was also due on 15 March 1976, was not paid, and when this happened these applications were immediately launched and
Nestadt J
set down as a matter of urgency for hearing on 25 March 1976. I should also mention that the amount referred to in the acknowledgment of 12 March 1976, to which I shall refer as annexure "B", was reduced to R122000, A which, as I have indicated, is the alleged present indebtedness of the respondents to the applicant, having regard to certain moneys which were collected by the applicant pursuant to the cessions provided for in annexure "B". One of these cessions was of the book debts of the companies in favour of the applicant.
B Now it is not disputed on behalf of Wesrhodan and Transvaal that meetings were held as alleged and that annexures "S" and "B" were signed. Certian allegations have been made on behalf of the respondents relating to the signature of these documents, and I shall deal later in this judgment with those allegations.
C The main basis on which it was contended, on behalf of Wesrhodan and Transvaal, by Mr Duke, who appeared for them, that annexure "B" was not binding on them, was that it was entered into under duress, or that it amounted to an unlawful compounding of an offence, and that in either event it was voidable at the option of the respondents. In addition, Mr Wise, on behalf of Muzic, contended that annexure "B" was not binding on Transvaal mainly on the basis that the signature on behalf of Transvaal D by Hendriks was not properly authorised.
Before dealing with these issues I must mention the following: Both respondents deny that they had been guilty of any misappropriation. As I have indicated both respondents say that the contract was with Transvaal E and not with Wesrhodan. Accordingly, on this basis, it was denied that Wesrhodan misappropriated any of the applicant's steel. Wesrhodan admits, however, that it is indebted to the applicant in a sum of between R1500 and R2000. In this regard it is stated by Schroeder in his answering affidavit in the Wesrhodan application, as follows:
"Apart from an amount of approximately R1500 to R2000, the respondent is not indebted to the applicant."
F How exactly this admitted indebtedness of Wesrhodan to the applicant arose is not clear. With regard to Transvaal the allegation is that is was agreed that it was entitled to dispose of the finished product to its customers and that Transvaal would each month account to the applicant for the proceeds of the sales of such steel. It admits, however, that it G failed so to account and admits an indebtedness to the applicant in an unspecified sum arising therefrom. As against that, however, Transvaal contends that the applicant owes it an unspecified amount being Transvaal's charges for processing the steel. More particularly with regard to the amount which Transvaal admits it owes the applicant, it is stated in the Transvaal application on behalf of that respondent, as follows:
H "The said Hendriks and I have attempted to evaluate the present indebtedness of the Transvaal Cold Rolling (Pty) Ltd to the applicant but have been totally unable to do so due to the unavailability of the respondent's records and books of account, all of which are in the possession of the...
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