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Case No. 4103/2004

In the matter between

CITIBANK N.A. Applicant





8 February 2005
1. Introduction

On 31 August 2004 KRUGER J granted a provisional winding-up order returnable on Tuesday 28 September 2004, in respect of the Respondent.

Prior to this matter being heard, on 27th February 2004, the Applicant had applied for summary judgment under case number 251/2004 against Avinash Ishwarlall Maharaj, being the First Respondent in that action, and Prime Dime CC, the Second Respondent. Avinash Ishwarlall Maharaj (Avinash) is the sole shareholder of the Respondent in this matter. The summary judgment application was refused by MAGID J and the Defendants were granted leave to defend on 27th February 2004.

Now, the Applicant is seeking the final winding-up order of the Respondent on the basis that it is deemed to be unable to pay its debts in terms of the provisions of s 69(1) (a) or (c) of the Close Corporations Act, 69 of 1984, alternatively that it is just and equitable that the Respondent be wound up in terms of the provisions of s 68 (d) of the Act. These same grounds were advanced by the Applicant when the provisional winding up order was granted.

The Applicant is a South African branch of Citibank N.A., a national association registered in terms of the National Banks Act of the United States of America and registered in the Republic of South Africa as a branch of foreign institution in terms of the Banks Act, 94 of 1990 and duly incorporated in the Republic as a company in terms of the Companies Act, 61 of 1973, as amended.

The Respondent is a close-corporation duly registered in terms of the Close Corporations Act, 69 of 1984, which principally carries on business in the area of financial intermediation, insurance, real estate and business services. Its principal place of business is 133 Davenport Road, Glenwood, Durban.

At the commencement of the hearing of this application the Respondent applied for admission of further affidavits of Ishwarlall Ramsunder Maharaj and Avinash. The application was opposed by the Applicant. After hearing argument, I reserved my decision on the issue. I deal with the issue hereunder.

2. Application for filing of further affidavits

The first issue to be determined is whether the Respondent is entitled to file further affidavits. The principal case for the Respondent in this regard is that when the Court declined to grant a final winding-up order and granted instead a provisional order, the Court called upon the Respondent to show cause why a final winding-up order should not be granted. It was argued that the mere fact that a rule nisi calls upon the Respondent to "show cause" obviously entitles it to place further information before court. Accordingly, so it was submitted, the Respondent in this matter has a right to file further affidavits.

Mr. Pammenter, SC, who appeared with Mr. Woodhaymal for the Respondent, submitted in the alternative that this is an appropriate case for granting of leave in terms of Rule 6(5)(e).

The main reasons advanced by the Respondent for seeking the admission of these affidavits are that: the applicant was at all times aware that the Respondent disputed that it was in arrears with payments due in terms of the loan agreement' the Applicant did not deal with this issue in its founding affidavit and did not even mention the existence of the dispute; that when the Respondent raised the dispute in its answering affidavit, the Applicant endeavoured to counter same in its replying affidavit by relying on Annexures "A", "B" and "C" of the affidavit. It was submitted that by adopting this strategy, the Applicant precluded the Respondent from being able to deal with these documents in its answering affidavit. It is therefore the purpose of the affidavits to show that the aforementioned annexures to the replying affidavit did not entitle the Applicant to appropriate the sum of R340 000,00 paid to it on behalf of the Respondent towards the liability of Prime Dime CC.

Mr. Finnigan, appearing for the Applicant, submitted that the affidavits are both late and out of the ordinary sequence provided for in Rule 6(5). He argued that a party tendering affidavits late and out of their ordinary sequence must explain why they are out of time and satisfy the court that in all the circumstances of the case they should be received. (James Brown & Hamer v Simmons N.O. 1963(4) SA 656 (A) at 660F.) It was further submitted that generally circumstances identified in Mkhanazi v van der Merwe 1970(1) SA 609 (A) at 626 need to be considered by the court before exercising its discretion either to grant or refuse the application. The court must be satisfied by the reasons of the Respondent that although the affidavits are submitted late and out of the ordinary sequence, they should nevertheless be admitted, otherwise it will not be inclined towards admitting the affidavits filed. (Dawood v Mohamed 1979(2) SA 361 (D) at 365)

It was further argued that the explanation by the Respondent why the evidence in the affidavits was not produced timeously is both unsatisfactory and inadequate.

The principal point insisted on by Mr. Finnigan and also referred to in his heads of argument is that the affidavits in issue are inadmissible because they are contrary to the loan payment structure provided for in the written loan agreement. He therefore argued that the affidavits seem to change the provisions of the loan agreement.

Dealing with the same issue of admission of a fourth set of affidavits in

the application, in Afric Oil (Pty) Ltd v Ramadaam Investments CC 2004(1)

SA 35 (N) at 38 I - 39 A, MOLEKO J said:

"Normally in motion proceedings three sets of affidavits are allowed and no further affidavits may be filed without leave of Court. Such leave is in the discretion of the Court and such discretion is to be exercised judicially upon consideration of the facts in each case.

In Herbstein and Van Winsen Civil Practice of the Supreme Court of South Africa at 359 it is stated that leave of Court will only be granted in special circumstances or if the Court considers such a course advisable. Special circumstances exist where something unexpected or something new emerges from applicant's replying affidavit. There must be a satisfactory explanation which negatives mala fide as to the reason why the information was not placed before the court at an earlier stage."

First, I deal with the availability of an automatic right to lead further evidence or furnish further affidavits on the return date because the Respondent was asked in the rule nisi to show cause why the provisional order should not be made final. The Respondent here did not refer me to any cases to support this submission and I am not aware of any. The point on contentions dealt with by the affidavits is not new; the Respondent was well aware of the Applicant's replying affidavit a long time ago as it was delivered on 27 May 2004. There is no explanation as to why the affidavits were not delivered before the hearing on 31 August 2004. This means the Respondent waited until after the first opposed hearing before it delivered the affidavits on 27 September 2004. There is no explanation why this occurred. One would expect that from the Respondent's point of view, it would have reacted more urgently to such a replying affidavit. I will therefore agree with Mr. Finnigan that this shows remissness on the part of the Respondent. It remains to be decided whether such remissness can be corrected without material prejudice to the Applicant (see Dawood v Mahomed [supra] at 365 F-G).
There was no prejudice that was identified by counsel for the Applicant that might be suffered if the application is granted. I am aware of the importance and necessity of abiding by rules and proper observance thereof, but tend to agree with what PAGE AJ (as he then was) said in Dawood v Mahomed (supra) at 365 G - H:

"Whilst in no way seeking to detract from the necessity for rules and the proper observance thereof it remains the fundamental task of the Court to attempt to adjudicate upon the real issues between the parties rather than to allow itself to be diverted from that course by technicalities which would have the effect of precluding a full ascertainment of all facts relevant to the issues in dispute."

I am accordingly of the view that no material prejudice will be suffered by the Applicant if the affidavits are admitted and accordingly exercise my discretion in favour of the Respondent. On the issue of an automatic right to furnish further evidence after a rule nisi calling on a party to show cause why the order should not be made final, to my mind it is only a logical conclusion that "showing cause" is by way of furnishing further evidence. I do not, however, wish to express any firm view on this point since I have exercised my discretion in favour of the Respondent.

3. Salient facts

This application arose from the indebtedness, which is conceded by the Respondent. The Applicant and the Respondent, both duly represented by their representatives, concluded a loan agreement in Durban on 27 February 2003. The capital amount of the loan was R1 319 957,39 with the interest rate of 17%. In terms of the loan agreement the Respondent agreed to repay the principal debt, finance charges and all other amounts due under the loan agreement to the Applicant in monthly instalments on the last day of each month, which instalments were to be calculated in accordance with the variations in the Applicant's prime overdraft rate until the principal debt, finance charges and any other amounts due to the Applicant in terms of the agreement were paid in full. The arrangements were that the Respondent would pay the principal debt, together with interest thereon, in 108 monthly instalments of R23 890,74.

In breach of the terms set out in the loan agreement, the Applicant alleges that the Respondent failed to punctually pay the monthly instalments so that as at 30 November 2003, the Respondent was indebted to the Applicant in the amount of R165 293,88, being the arrears. It was further alleged that notice was given to the Respondent to pay the said sum, but that the Respondent failed to oblige. The Respondent denies that the Applicant has a right in terms of the loan agreement to cancel the contract and claim the outstanding balance of the loan. The Respondent submits that it is the Applicant who breached the loan agreement by transferring to the loan account of Prime Dime CC the amount which was paid on behalf of the Respondent.

Clause 13.2 of the loan agreement provides thus:

13. Event of Default
13.2 If an Event of Default has occurred, then at once or at any time thereafter for so long as such Event of Default is continuing, the Lender may, without notice to the Borrower, elect to cancel the Loan and, without prejudice to any other rights it may have (including the right to specific performance and the right to claim damages), require that the Borrower immediately repay the Loan, which shall be deemed to be immediately due and payable notwithstanding the fact that the date for payment has not yet arrived. In addition to the repayment of the Loan pursuant to this clause 13 the Borrower shall pay:
13.2.1 all reasonable wasted costs and funding break costs incurred by the Lender in respect of the transactions contemplated by this Agreement

13.2.2 all other amounts outstanding under this Agreement by the Borrower, including but not limited to arrear Interest Amounts and any
default interest."

This is the provision which, Applicant argues, entitles it to the claim of R1 434 661,47 with interest as at the rate of 14% per annum on 30 November 2003 to date of final payment.

It is also common cause that the letter of demand on the aforementioned debt was delivered to the registered office of the Respondent on 9 December 2003. Part of the letter, as far as is relevant here, provided that:

"2. Our client hereby instructs us to notify the close corporation that our client claims immediate payment of the full balance outstanding in terms of the Medium Term Loan Agreement in the amount of R1 434 661,47 which is immediately due and payable as a result of the breach.
3. We advise that in terms of Section 69 of the Close Corporations Act 69 of 1984 (as amended), the close corporation has 21 (twenty one) days from date of service hereof to pay the aforesaid full balance, or to secure or compound for it to the reasonable satisfaction of our client. We hereby place it on record that should payment as aforementioned not be made within 21 (twenty one) days, or should the close corporation have failed to secure or compound for it to the reasonable satisfaction of our client, our client shall proceed to apply for the liquidation of the close corporation without further notice."

It is common cause that, notwithstanding the abovementioned letter, the Respondent failed to pay, secure or compound payment of the sum of its indebtedness in favour of the Applicant or any portion thereof. Hence the Respondent seeks an order for the winding-up of the Respondent.

4. Winding-up Application

The Applicant's case for the winding up of the Respondent is based upon the allegation that it is deemed to be unable to pay its debts in terms of the provisions of s 69(1)(a) or (c) of the Close Corporation Act, alternatively that it is just and equitable that the Respondent be wound up in terms of the provisions of s 68(d) of the Act. Sections 68 and 69 of the Close Corporations Act provide thus:

68. Liquidation by Court - A corporation may be wound up by a Court,

  1. members having more than one half of the total number of votes of members, have so resolved at a meeting of members called for the purpose of considering the winding-up of the corporation, and have signed a written resolution that the corporation be wound up by a Court;

  2. the corporation has not commenced its business within a year from its registration, or has suspended its business for a whole year;

  3. the corporation is unable to pay its debts; or

  4. it appears on application to the Court that it is just and equitable that the corporation be wound up.

69. Circumstances under which corporation deemed unable to pay debts - (1) for the purposes of section 68(c) a corporation shall be
deemed to be unable to pay its debts if -

(a) a creditor, by cession or otherwise, to whom the corporation is indebted in a sum of not less than two hundred rand then due has served on the corporation to pay the sum so due, and the corporation has for 21 days thereafter neglected to pay the sum or to secure or compound for it to the reasonable satisfaction of the creditor; or

  1. any process issued on a judgment, decree or order of any court in favour of a creditor of the corporation is returned by a sheriff, or a messenger of a magistrate's court, with an endorsement that he has not found sufficient disposable property to satisfy the judgment, decree or order, or that any disposable property found did not upon sale satisfy such process; or

  2. it is proved to the satisfaction of the Court that the corporation is unable to pay its debts.

(2) In determining for the purposes of subsection (1) whether a corporation is unable to pay its debts, the Court shall also take into account the contingent and prospective liabilities of the corporation."

Sections 68 and 69 are identical to the relevant provisions of sections 344 and 345 of the Companies Act 61 of 1973. Thus the views which have been expressed with regard to companies in this regard are applicable in respect of close corporations (see Ter Beek v United Rescources CC and Another 1997(3) SA 315 (C) at 326 J - 327 A and Kanakia v Ritzshelf 1004 CC t/a Passage to India 2003(2) SA 39 (D) at 45 A - D).

5. Proof

It is trite that the quantum of proof for the granting of a final winding up order is "a clear balance of probabilities." (per MARGO J in Wackrill v Sandton International Removals (Pty) Ltd and Others 1984(1) SA 282 (W) at 286 A and see Ter Beek v United Resources CC and Another (supra) at 328 I.)

It is also a well established principle of our law that the court's power to wind up the corporation is a discretionary power irrespective of the grounds upon which the application is founded. This discretion operates even in instances, like in casu, where application for winding up is based on a deemed inability to pay debts as envisaged by s 69(1) (Ter Beek v United Resources CC and Another (supra) at 331 I and cases cited therein; Kanakia v Ritzshelf 1004 CC t/a Passage to India (supra) at 44 I - J; and Meskin Henochsberg on the Close Corporations Act Vol. 3 at 212 para 68.1).

In what follows I will deal firstly with the application on the alleged deemed inability of the Respondent to pay is debts. If the Applicant is successful on this ground there will be no need for me to further decide the case on the just and equitable ground. The case for the Applicant that it is just and equitable that the Respondent be wound up is captured in paragraph 5.4 of the founding affidavit at page 14 of the papers thus:

"The Applicant humbly submits that it will be just and equitable to the general body of the creditors of the Respondent from (sic) the Respondent to be placed under winding up order and that a Liquidator duly appointed by the Master of the above Honourable Court to take immediate steps to collect its assets, to cause the same to be realized in the best possible manor (sic) in the interest of the general body of creditors, the proceeds of such realisation to be dealt with in accordance with the proper order of preference."
It appears from the papers lodged with the Court that the gravamen for the case of the Applicant is that the Respondent is unable to pay its debts. For this reason I consider it expedient to deal, firstly, with the deemed inability to pay. If it is not proved or if winding up cannot be granted on this ground I will proceed to deal with whether the case has been made out for the winding up of the Respondent in terms of s 68(c) By adopting this approach I do not intend to convey that matters relevant to the question whether it would be just and equitable for the corporation to be wound up would not be relevant under the ground of deemed inability to pay.1 Overlapping might to a certain extent occur. The approach I have decided upon seems to be convenient in the present case.

6. Respondent's inability to pay its debts

As far as the alleged inability of the Respondent to pay its debts is concerned, the Applicant submits that notwithstanding the expiry of the time period of 21 days referred to in the letter of demand, the Respondent has failed to pay, secure or compound payment of its sum of indebtedness in favour of the Applicant.

Ex facie the papers, the Respondent opposes the application for its winding-up on the following grounds:

  1. that it is able to pay its debts;

  2. that certain payments made by the Respondent were wrongly allocated by the Applicant and that had they been allocated properly to the Respondent's account, the Respondent would have been in advance of its monthly obligations;

  3. that consequently the Respondent is not in arrears and that there is a bona fide dispute which precludes the Court from granting a final winding up order; and

(d) that the evidence placed before the Court was that the Respondent has no major creditor other than the Applicant; it is a property owning close corporation and does not trade in the usual sense and that it derives an income from rentals.

Relying on the decision in Ter Beek v United Resources CC and Another (supra) at 331 A - G, Mr Pammenter argued that in any event, and even if the provisions of s 69(1) had been satisfied, the deeming provision created thereby is not irrebuttable.

The Respondent is quite correct that where the Respondent disputes liability on the bona fide and reasonable ground, this Court is precluded from granting a final winding up order. (see Ter Beek case (supra) and Commonwealth Shippers Ltd v Mayland Properties (Pty) Ltd 1978(1) SA 70 (D) and Mayer N.O. v Bree Holdings (Pty) Ltd 1972 (3) SA 353 (T) at 354 - 5).

The approach to be followed when dealing with factual disputes in winding-up applications was laid down in Kalil v Decotex (Pty) Ltd 1988(1) SA 943 (A) at 976 A - 979 E. In Payslip Investment Holdings CC v Y2K TEC Ltd 2001(4) SA 781 (C) at 783 G - I, BRAND J, with respect, succinctly expressed approval of the Kalil case approach thus:

"According to these guidelines a distinction is to be drawn between disputes regarding the respondent's liability to the applicant and other disputes. Regarding the latter, the test is whether the balance of probabilities favours the applicant's version on the papers. If so, a provisional order will usually be granted. If not, the application will either be refused or the dispute referred for the hearing of oral evidence, depending on, inter alia, the strength of the respondent's case and the prospects of viva voce evidence tipping the scales in favour of the applicant. With reference to disputes regarding the respondent's indebtedness, the test is whether it appeared on the papers that the applicant's claim is disputed by respondent on reasonable and bona fide grounds. In this event it is not sufficient that the applicant has made out a case on the probabilities."
[Emphasis added].

6.1 Debt not due and payable

I propose firstly to deal with the issue that the Respondent is not in arrears and consequently that the debt is not due and payable. The Respondent in its answering affidavit does not pertinently deny the conclusion of the loan agreement with the Respondent. What is denied is that the amount is not due and payable because the Applicant breached the agreement by not crediting the Respondent's account with the R38 945,67 but crediting same to the account of Prime Dime CC. It was argued in the answering affidavit that had the Applicant complied with its obligation, as mandated by the Respondent, the Respondent would have been substantially in advance of its monthly instalment obligations.

The Respondent, as alluded to above, conceded the signing of the loan agreement and is therefore bound by the terms thereof. Clause 5 of the loan agreement provides thus:

"5. Repayment of the Loan
The Borrower shall repay the Loan in the amounts and on the dates (the 'Capital Repayment Dates") set out in Schedule 2. Under no circumstances shall the Borrower be entitled to repay the Loan or any part thereof prior to the respective dates set out in Schedule 2."
Clauses 19.2, 19.3 and 19.4 provide:

"19.2 entire contract
This agreement contains all the express provisions agreed on by the parties with regard to the subject matter of the agreement and the parties waive the right to rely on any alleged express provision not contained in this Agreement.
19.3 no representation
A party may not rely on any representation which allegedly induced that party to enter into this Agreement, unless the representation is recorded in this agreement.
19.4 variation, cancellation and waiver
No contract varying, adding to, deleting from or cancelling this Agreement, and no waiver of any right under this Agreement shall be effective unless reduced to writing and signed by or on behalf of the parties."
To my mind, the above provisions of the loan agreement, including the Default Clause2 are conclusive. The obligation referred to by the Respondent that the Applicant should have paid certain amounts of money towards its indebtedness is contrary to the payment structure agreed to in terms of Clause 5. There is also evidence of blatant disregard of Clause 19 of the loan agreement. In HNR Properties CC and Another v Standard Bank of South Africa Ltd 2004 (4) SA 471 (SCA) at 479 C - D, SCOTT JA said:

"In SA Sentrale Ko-op Graanmaatskappy Bpk v Shifren en Andere 1964(4) SA 760 (A) this Court held that a term in a written contract providing that all amendments to the contract have to comply with specified formalities is binding. The principle has been consistently reaffirmed, most recently by this Court in Brisley v Drotsky 2002(4) SA 1 (SCA)."

In the circumstances, reliance by the Respondent on the agreements which amounted to variations of the lease agreement is precluded by Clauses 19.2, 19.3 and 19.4. To hold otherwise would be to render the "Shifren principle" wholly ineffective.3 I further agree with counsel for the Applicant that parol evidence rule prevents the admission of extrinsic evidence. This rule was formulated as follows by WATERMEYER JA in Union Government v Vianini Ferro-Concrete Pipes 1941 AD 43 at 47:4

" when a contract has been reduced to writing, the writing is, in general regarded as the exclusive memorial of the transaction and in a suit between the parties no evidence to prove its terms may be given save the document or secondary evidence of its contents, nor may the contents of such document be contradicted, altered, added to or varied by parol evidence."
I therefore decide, ex facie, the papers, especially the loan agreement, that the amount claimed by the Applicant was due and payable as provided by Clause 13 of the loan agreement. I therefore proceed to deal with the question of the Respondent's ability to pay its debts.

6.2 Inability to pay

Mr. Finnigan submitted that it is not necessary for the Applicant to prove that the Respondent is in fact unable to pay its debts because winding up is sought on the basis that the Respondent is deemed to be unable to pay its debts. Indeed it has been opined that the conclusion that the company is unable to pay its debts is to be the conclusion of law; for the purposes of the exercise by the Court of the jurisdiction to wind up under the section:

"the company is, where any of such situations exist, in law unable to pay its debts even if it is able to pay them (as may, indeed, be the case, e.g. a company may ignore a demand under s 345(1)(a) but yet be able to pay all its debts.)"

(Meskin Henochsberg on the Companies Act (supra) at 707; Commonwealth Shippers Ltd v Mayland Properties (Pty) Ltd (supra) at 71 and S v Rosenthal 1980(1) SA 65 (A) at 75 -77).

Considering the question of failure of the company to pay its debts in ABSA Bank Ltd v Rhebokskloof (Pty) Ltd and Others 1993 (4) SA 436 (C) at 446 H - 447A BERMAN J said:

"A debtor's unexplained failure to pay his debt is, as was stated in Mackay v Cahi referred to above at 204 H, a fact to which the Court has always attached much weight in determining the question of solvency. The oft-repeated and, with respect, eminently commonsensical and practical assessment of INNES J in De Waard v Andrew & Thienhans Ltd 1907 TS 727 at 733 is singularly apt in the instant context, viz:
'To my mind the best proof of solvency is that a man should pay his debts; and therefore I always examine in a critical spirit the case of a man who does not pay what he owes'
words which were echoed by BRISTOWE J in his judgment in the same case, in which he said at 739:
'After all, the prima facie test of whether a man is insolvent or not is whether he pays his debts; and if he cannot pay them, that goes a long way towards proof that he is insolvent.'
Furthermore, this approach has been followed by our courts since its adoption by CANEY J in Rosebanch & Co (Pty) Ltd v Singh's Bazaars (Pty) Ltd 1962(4) SA 593 (D) that evidence that a company has failed to pay its debts is a cogent prima facie proof of inability to pay its debts. (See also Payslip Investment Holdings CC v Y2K TEC Ltd (supra) at 787 A - B).

As alluded to above, in its answering affidavit, Respondent denies that it is unable to pay its debts and it was further submitted in the same answering affidavit that:

"I point out to this Honourable Court that the Respondent is a property owning close corporation which does not trade in the usual sense. It derives an income from rentals received and has no other major creditors."
One must point out at this juncture that the Respondent did not provide any evidence to elaborate on the reasons to refute the allegation of inability to pay debts. One would have expected the Respondent to provide the value of the properties owned; the rentals received monthly and possibly other creditors which the Respondent has. By way of analogy I will refer to Payslip Investment Holdings CC v Y2K TEC Ltd (supra) at 787 F - H where the Respondent demonstrated its ability to pay debts by: presenting a bank guarantee in terms of whereof the bank bound itself to the Applicant as co-principal debtor with Respondent for payment of the full amount claimed by the Applicant in the founding papers; by filing an affidavit deposed to by the Respondent's auditors declaring that the Respondent is both legally and commercially solvent and by annexing Respondent's draft financial statement for the year ending 29 February 2000. The Applicant alleges that the Respondent is unable to pay its debts, this is the case the Respondent was required to answer by, one would imagine, showing that there are liquid assets or readily realizable assets available out of which, or from the proceeds of which, the company is in fact able to pay its debts. (See Meskin Henochsberg on the Companies Act (supra) at 698). The bare denial thereof and uncorroborated reference to the property owned by the Respondent and rentals received thereof is of no assistance to this Court.

The Applicant further submitted that it is not necessary that it alleges or proves, in terms, that the Respondent does not hold security for the claim. In reply, the Respondent submitted that the court should refuse to exercise its discretion in favour of granting a winding up order for the reason that in the founding affidavit, the Applicant contended that it held no security for the indebtedness of the Respondent, whereas later on it was conceded that, in fact, it holds a mortgage bond over property of the Respondent. Although it is not necessary, as argued by the Applicant, for the Applicant in this case to prove that the Respondent holds, or does not hold, security for the Applicant's claim, it has been opined, correctly so, that ordinarily the creditor should disclose the position in this regard as this may be relevant to the exercise of the court's discretion. (See Meskin Henochsberg on the Companies Act (supra) at 714).

One should mention here that even if one can attach some value to the information that the Applicant holds security for the Respondent's claim, the Respondent did not provide any proof of the value of the property or indicate whether or not the property is readily saleable. In any event, according to the valuation commissioned by the Applicant in February 2002, the market value of the property at that time was R1 260 000,00 which is less than the amount of R1 434 661,47 being the capital debt owed to the Applicant. I have no reason to dismiss valuation commissioned by the Applicant since the Respondent tendered no evidence to prove the market value of the said property or any other property owned by it.

Now, given the fact that generally the Court will exercise its discretion in favour of the Respondent if it is shown that there are liquid assets or readily available assets out of which, or from the proceeds of which, the Respondent is able to pay its debts (see Rosenback v Singh Bazaars (supra) at 579 and Ebrahim v Pakistan Bus Service 1964(4) SA 146 (N) at 147), the fact that the Respondent has not done so, coupled with the absence of explanation for its failure to have done so is, to my mind, susceptible of only one reasonable inference, namely that the Respondent is unable to pay its debts. Mr. Pammenter pressed on me that even if it is proved to the satisfaction of the court that the corporation is unable to pay its debt, the deeming provision created thereby is not irrebuttable. I agree that the deeming provision is not irrebuttable,5 but my short reply to the case for the Respondent on this issue is that there was no evidence to rebut that deeming provision.

7. Conclusion

In view of the foregoing, I am satisfied that ex facie the papers the Applicant has proved on a balance of probabilities that the Respondent is unable to pay its debts in respect of the loan agreement signed by the parties.

I accordingly find that the Applicant has succeeded in proving that the Respondent is unable to pay its debts. As alluded to above, because of the decision I have just made on the inability of the Respondent to pay its debts, it is unnecessary to consider whether a case has been made out for winding up of the Respondent on the basis that it is just and equitable to do so in terms of s 68(1)(d) of the Act.

In the premises a final winding up order is granted with costs.


Date of Hearing: 25 November 2004

Date of Judgment: February 2005

Counsel for Applicant: Mr. D. Finnigan

Instructed by: Tate & Nolan Inc

Counsel for Respondent: Mr. CJ. Pammenter, SC

with him Mr. D. Woodhaymal
Instructed by: Sanjay Lorick & Partners

1 I adopt this approach fully aware that in Ter Beek v United Resources CC and Another (supra) VAN REENEN J considered the application on both the deemed inability to pay and just and equitable ground. On the first basis the learned Judge found for the Applicant and on the second one it was decided that the Applicant failed to discharge onus that the first Respondent should be wound up on the basis that it is just and equitable. To my mind, with respect, it seems convenient that if the Applicant discharges onus on one of the grounds it became unnecessary to deal with the other because the effect of the winding-up order is the same either under s 68(c) read with s 69(1)(a) and (c) or s 68(d). This approach which I follow was followed, albeit in a different format, by NEPGEN J in de Franca v Exhaust Pro CC (De Franca Intervening) 1997(3) SA 873 (SE at 891 G -I.

2See page 8 above.

3 Philmatt (Pty) Ltd. v Mosselbank Development CC 1996 (2) SA 15 (A) at 22 I - 23A; Muller v Coca-ola SABCO (SA) (Pty) Ltd 1998 SA 824 (SE) at 827 H - 828 C and First National Bank of South Africa Ltd v Myburg and Another 2002(4) SA 176 (C) at 183 G - H.

4 This principle has most recently been applied in Man Truck & Bus (Pty) Ltd v Dusbus Leasing CC and Others 2004(1) SA 454 (W) at 480E.

5 See page 1 -14 above and a case referred to.

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