Tresso Trading 490 (Proprietary) Limited v Orion Cold Storage (Proprietary) Limited

• Jurisdiction: South Africa
• Judge: Zondi J
• Judgment Date: 24 March 2014
• Docket Number: 13638/2013
• Court: Western Cape High Court, Cape Town
• Hearing Date: 06 February 2014
• Citation: 2014 JDR 0649 (WCC)

Zondi, J:

[1]

This is an application for the provisional winding-up of the respondent on the ground that it is unable to pay its debts within the meaning of s 344 (f) of the Companies Act, 61 of 1973 read together with s 9 of Schedule 5 of the Companies Act, 71 of 2008. The respondent's alleged indebtedness to the applicant arises from 132 containers of frozen chicken products which the applicant alleges it sold to the respondent on 30 November 2012. In the alternative, the applicant seeks judgment against the respondent in the amount of R4 591 978.73.

[2]

The respondent opposes the application. It denies that it is indebted to the

2014 JDR 0649 p2

Zondi, J

applicant. It avers that at all material times it acted as agent of Central Grain and not as principal. As to the applicant's alternative claim for judgment for the payment of the sum of R4 591 978.73 the respondent contends that such a claim is incompetent and amounts to an abuse of the Court process in view of the fact that the applicant's claim is bona fide disputed.

[3]

The amount claimed by the applicant is part of the purchase price of R14.4 million for 132 containers of chicken products which the applicant alleges it sold and delivered to the respondent in or about November / December 2012. According to the applicant this consignment had originally been intended for sale and export to a Zimbabwean company called Central Grain trading as Deepcatch, which for some reason became unable to proceed with the sale transaction. In terms of the sale agreement as pleaded by the applicant the respondent was to pay R14 463 221.75 for the consignment and the purchase price was payable in three equal instalments. The first instalment would be due one month after the "transfer in bond" from the applicant to the respondent had been effected. The second instalment would be due one month after the first instalment, and the third instalment one month after the second. The applicant was to retain ownership of the products until the purchase price had been paid in full.

[4]

The applicant contends that the respondent acted as a purchaser, not as agent of a third party in concluding the agreement for the sale of chicken products. In support of this averment the applicant refers to, and relies, on the two sales confirmations documents ("AM2" and "AM3") which it issued for the delivery of 32 containers, which the respondent had onsold to Chester Meat Wholesalers for R3 376 000 and for the remaining containers. These two sales confirmations according to the applicant were

2014 JDR 0649 p3

Zondi, J

signed on behalf of the respondent on 11 December 2012 by its logistics manager, Mr Jumat.

[5]

Although the respondent admits to signing the relevant sales confirmations, it contends that it did so as an agent for Central Grain. The respondent alleges that Mr Mapolie ("Mapolie") of the applicant was aware that if the chicken products were invoiced to Central Grain, this would alert the Customs and Excise Officials to the existence of the scheme by which chickens were exported to Zimbabwe at an understated value. It avers that the two sales confirmations were signed in error by Jumat. It contends he should have signed them as the agent of Central Grain, not the buyer. How this alleged error came about is, however, not explained by the respondent and for this reason it should be accepted that the relevant sales confirmations were signed by Jumat who had the necessary authority to do so.

[6]

It is, however, common cause that delivery of the consignment to the respondent was effected by the applicant by issuing "transfer of ownership" letters for custom purposes. The first letter was issued on 5 December 2012 with regard to the 100 containers stored with Commercial Cold Store and the second on 7 December 2012 in respect of the 32 containers stored with Sequence Cold Store.

[7]

Thereafter, on 4 January 2013, the applicant sent the respondent VAT invoices in respect of the consignment. This is not denied by the respondent although it contends that Mapolie was at all times aware that Central Grain was in fact the purchaser of the goods and that it was liable for payment. The respondent alleges that Central Grain sought its assistance to obtain the release of the chicken from the applicant and to dispose of the stock on its behalf in South Africa, in order to conceal

2014 JDR 0649 p4

Zondi, J

the identity of the true purchaser of the chicken from the Zimbabwean authorities. This suggestion is denied by the applicant. It alleges that when it came to its attention during January 2013 that Central Grain was taking the position that it had sold the consignment to the respondent and was accordingly intending to invoice the respondent, the applicant informed the respondent that the respondent was liable for the payment for the consignment as it was sold to it, not to Central Grain.

[8]

In this regard the applicant refers to the email it forwarded on 9 January 2013 to Mr Baker and Gaertner of the respondent. The email reads:

"Andy, as mentioned on the phone, I have spoken to Patrick of Orion and have confirmed with him as follows:

Tresso Trading 490 (Pty) Ltd t/a Nexxus Corporation has legally imported the stock in question into South Africa. A customs bond transfer was effected to Orion Cold Storage for a total of 100 Containers of Chicken Backs & and Carcasses. Orion has accepted the transfer of these good and valid tax invoices has been raised against them. Terms of the agreement has been 1/3 to be paid on 30 days from Invoice (due 9th January 2013), 1/3 to be paid on 60 days from Invoice, and 1/3 to be paid on 90 days from invoice.

Patrick has advised that he has received an invoice from Deep Catch and have been requested to pay funds over to them. This unfortunately cannot happen legally. The correct flow of funds is from Orion Cold Storage to Nexxus against valid invoices and transfers. Any other manner of transacting would open up a while set of issues with regards to South African Revenue Services and as well as Foreign Exchange control through the Reserve Bank. Our auditors are Deloitte, and they are very stringent on their reporting standards and we do not wish to be involved in any complicated issues that could lead to investigations

2014 JDR 0649 p5

Zondi, J

in South Africa.

Please kindly instruct Orion Cold Store to release the funds that are due to Nexxus so payment can be made today, failing that we will have to issue a letter of demand to them.

Patrick has come to the rescue on this whole deal and it would not be fair to place them in the middle of this as they have nothing to do with the entire deal from the beginning.

Thanks in advance for your speedy action."

[9]

It is common cause that by March 2013 the respondent had not paid the first instalment. The applicant had to write to the respondent demanding payment of the instalment that had become due. The respondent failed to comply with the demand. Again on 14 March 2013 the applicant sent an email to the respondent enquiring about payment. In reply thereto the respondent by email ("AM18"), also dated 14 March 2013, informed the applicant:

"For our records I would like these docs before the 2nd payment falls due please – or earlier should customs require it. I think that's more than reasonable.

First payment is scheduled for tomorrow – Sat at the latest. As per my agreement with Jared, here is the breakdown.

NEXXUS INVOICE		R14 463 221.75
Storage up to 14/02		-R2 710 793.00
		R11 752 428.75
	Overdue invoices Deepcatch	R3 331 508.00
		R8 420 920.75
Payment	15-Mar	R2 806 973.58

2014 JDR 0649 p6

Zondi, J

15-Apr		R2 806 973.58
14-May		R2 806 973.58
	Invoice	Date
	2202523	08/02/2013	R686 333.00
	2202568	19/02/2013	R53 820.00
	2202569	19/02/2013	R51 940.00
	2202579	20/02/2013	R667 046.00
	2202587	22/02/2013	R413 600.00
	2202636	06/03/2013	R434 770.00
	2202649	07/03/2013	R206 110.00
	2202665	08/03/2013	R180 500.00
	2202696	13/03/2013	R475 920.00
	2202696	13/03/2013	R3 170 039.00
UHT Milk in Store	dc order 903 214 dd 23/08/2012	R161 469.00
	dc order 903 213 dd 23/08/2012	R161 469.00
Total Goods supplied in lieu of payment	R3 331 508.00

Regards"

[10]

The applicant did not receive payment from the respondent as undertaken by it on 14 March 2013. A meeting was held between Mapolie and Gaertner on 29 April 2013 to discuss payment. The parties reached an agreement, full details of which were confirmed by Mapolie in the email dated 29 April 2013. The email ("AM19") reads:

"I refer to our meeting at your premises this morning.

As discussed and agreed the transaction between Deep Catch Namibia and Orion Cold Store really has nothing to do with the stock sold to Orion by Nexxus. Legally the offsetting between the accounts is not correct despite the fact that Jared tried to assist the matter by buying stock from Orion. However, as a gentleman's agreement and understanding it has been agreed that Orion

2014 JDR 0649 p7

Zondi, J

will hold back an amount of circa R4million until DC Namibia pays Orion. DC Namibia will be instructed to pay up to the Orion Account as soon as possible so the balance of the monies can be transferred to Nexxus.

Orion is also disputing an amount of circa R2million for storage that will be handled as a separate matter.

It was further agreed that this leaves an amount of ±R8.6million...