Sinokhule Development Consultants (Pty) Ltd v Mbombela Housing Association

• Jurisdiction: http://justis.com/jurisdiction/166,South Africa
• Judge: BA Mashile J
• Judgment Date: 25 August 2022
• Docket Number: 4937/2021
• Hearing Date: 25 August 2022
• Court: Mpumalanga Division, Mbombela
• Citation: 2022 JDR 2466 (MN)

Mashile J:

INTRODUCTION:

[1]

This is an Application for the provisional winding-up of the Respondent ("MHA") in terms of Section 343(1)(a) of the Companies Act, 61 of 1973 ("the Act"). Item 9 of Schedule 5 of the Companies Act, 71 of 2008, provides that all insolvent companies will be liquidated under Chapter 14 of the Act. The basis of the application is that MHA is unable to pay its debts as and when they arise as contemplated in Section 344(f) of the Act.

[2]

Briefly, MHA opposes the application on the ground that the agreement that it concluded with the Applicant ("Sinokhule") anticipates that any amount that it owes to Sinokhule will only become due and payable upon it receiving payment from SHRA. Accordingly, continues the argument, since MHA has not received any payment from its sources, payment is not due, notwithstanding the fact that it owes the amount to Sinokhule. On the other hand, and as a preliminary point, Sinokhule has raised the fact that the resolution on which the deponent to the answering affidavit relies for his authority is signed by him alone aside his claim that he has been authorised by all the directors of MHA.

FACTUAL MATRIX:

[3]

The terse background against which the liquidation application arises is fully canvassed below. The facts upon which this claim is founded are generally common cause. In a letter dated 20 October 2020, MHA appointed Sinokhule as Project Managers for the development of a Social Housing Development of Mbombela Housing Association in Sonheuwel Extension 12. The appointment letter was subsequently followed by a conclusion of a written agreement between the parties on 29 October 2020. The agreement was for the pre-feasibility stage of the project. In terms of the agreement

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Sinokhule was to provide required services and render reports to MHA to enable it to settle its submission to SHRA.

[4]

All quotations and appointments would form part of the submission of MHA to SHRA. Once the funding from SHRA has been approved, a fee claim for services rendered could be submitted. In terms of the letter of appointment MHA would advise the professional team in writing once the above approval has been received. According to the letter of appointment it was only at that stage that formal invoices could be submitted to MHA. Certain payments were to be made by MHA to Sinokhule on specific intervals during the subsistence of the agreement. Additionally, MHA had agreed to make payment of certain retainer amounts to Sinokhule. I proceed to describe the intervals below:

4.1	Stage 1 Inception (5%)	R61 334.98;
4.2	2 Stage 2 Concept and Viability (25%)	R306 674.89;
4.3	Stage 3 Design Development (25%)	R306 674.89;
4.4	Stage 4 Documentation and Procure (15%)	R184 004.93;
4.5	Stage 5 Contract Admin and Superv (25%)	R306 674.89; and
4.6	Close-out (5%)	R61 334.98.
TOTAL		R1 226 699.56.

[5]

It is not disputed that Sinokhule has discharged its obligations arising in terms of the agreement. MHA on the other hand, admits that it has failed to effect payment to Sinokhule and that at least an amount of R61 334.98 remains due and payable. MHA does not dispute having received invoices containing the amounts claimed by Sinokhule. On 18 August 2021 and noting that MHA was not making payment, Sinokhule caused a

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letter of demand for payment in terms of Section 345(1)(a)(i) of the Act to be served by the sheriff at the registered address of MHA. The sheriff served the letter on 24 August 2021.

[6]

On the basis of the above, Sinokhule states that:

6.1

MHA is unable to pay its debt after service upon it of a demand in accordance with the Provisions of Section 344 and 345;

6.2

MHA is unable to pay its debt as provided for in Section 345(1)(c) as it is indebted to Sinokhule in an amount of not less than one hundred rand, which amount is due and payable.

[7]

The demand aforesaid in terms of Sections 344 and 345 of the Act notwithstanding, MHA has still not paid the amount it owes to Sinokhule nor has it in the alternative, provided security for the amount nor has it compounded for the said amount. In consequence, Sinokhule submits that in terms of Section 345(1)(a)(i) of the Act, MHA ought to be deemed to be unable to pay its debts.

ISSUES:

[8]

There are three issues that stand for determination. First is the point in limine concerning the admissibility of the answering affidavit. This was brought about as a result of the answering affidavit signed by one director despite the allegation that authority has been given to the deponent by his co-directors. Second is that whether or not MHA is commercially insolvent. Requiring it to be placed under provisional liquidation, as Sinokhule believes it should. Third, whether or not the submission of the invoices by Sinokhule was premature in terms of the provisions of the agreement.

LEGAL FRAMEWORK:

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[9]

Section 344(f) of the Act is headed: Circumstances in which company may be wound-up by Court. It provides that a company may be wound-up by a Court if the company is unable to pay its debts as described in section 345. Section 345(1) and (2) of the Act in relevant parts describes when a company or body corporate shall be deemed unable to pay its debts. It lays down that:

(a)

a creditor, by cession or otherwise, to whom the company is indebted in a sum not less than one hundred rand then due -

(i)

has served on the company, by leaving the same at its registered...