|The case before the High Court of South Africa, Limpopo Division, Polokwane concerns a written Acknowledgement of Debt (the “AOD”) entered into on 22 December 2017, between Mr. Barend Jacobus, representing Diesel Direct (Pty) Ltd (the “Applicant”), and Mr Delmar Nortje, representing Total Vaalwater (the “Respondent”), for the amount of R208 215. 97 for petroleum products provided by the Applicant to the Respondent. |
It was a material term of the AOD that the parties would reconvene on 15 January 2018 to discuss and agree upon a minimum monthly payment of R20, 000.00 (twenty thousand Rands) by the Respondent in settlement of the debt. It is uncertain whether or not the parties convened as planned, however on or about 7 February 2018, the Respondent sent a Whatsapp message to the Applicant enquiring about payment and the Applicant replied by stating that payment would be effected by the end of month.
During April 2018, stemming from the Respondent’s failure to effect payment as promised, the Applicant sent a letter of demand in terms of s345(1)(a) of the Companies Act 61 of 1973 (the “Old Companies Act”) stating that the Respondent had 21 (twenty-one) days within which to pay the full outstanding amount failing which the Applicant would institute liquidation proceedings. The Respondent failed to comply with the demand and liquidation proceedings were instituted.
The Respondent opposed the liquidation proceedings and contended, inter alia, that the AOD it had concluded with the Applicant was subject to a suspensive condition, being that the parties were meant to convene on 15 January 2018 to discuss and agree on the terms of payment, which suspensive condition had not been fulfilled. The Respondent further averred that the institution of liquidation proceedings by the Applicant was an abuse of court process in that it was quite capable of paying its creditors, its assets exceeded its liabilities and as such the Applicant should have issued a summons for the recovery of the outstanding amount.
As such, the questions before the court are whether or not the AOD, upon which the Applicant relies for its claim against the Respondent is materially flawed by the Parties’ failure to comply with the suspensive condition contained therein, and further whether or there are reasonable grounds for the court to refuse to grant the winding up order.
| From the outset, the court accepted that the impugned clause in the AOD did amount to a suspensive condition. The court in considering whether or not the suspensive condition had been adhered to considered the Supreme Court of Appeal case of G45 v Zandspruit Cash and Carry [815/2015] ZASCA 113, wherein the court stated that in order to determine whether or not delictual claims are time-barred, it is necessary to interpret the agreements and the particular clause. However, while the starting point to the interpretative process is the words used in the agreement, the court must bare in mind that the interpretive process is one of ascertaining the true intention of the parties, i.e. what they meant to achieve by incorporating the particular clause into the agreement. To this end, the court must examine the circumstances surrounding the conclusion of the agreements including, inter alia, the factual matrix or context, and subsequent conduct of the parties. |
In light of the above, the court held that while it is unclear from the affidavits of the respective parties whether or not they had convened on 15 January 2018 to discuss and agree on the minimum monthly payments by the Respondent, it is clear from their subsequent Whatsapp communications; being the subsequent conduct of the parties, that the suspensive condition had been complied with and the common intention of the parties was that the Respondent would start paying the Applicant by the end of the month of February. As such, the court held that the Applicant was therefore entitled to enforce the AOD due to non-compliance of its terms by the Respondent.
It was the Respondent’s failure to comply with the AOD which resulted in the Applicant sending the letter of demand in terms of section 345 of the Old Companies Act. The Respondent further failed to comply with the letter of demand. The court held that by demanding payment, the Applicant was informing the Respondent that the debt had become due and payable. The onus then rested upon the Respondent to, within the three-week period, either unconditionally settle the debt or to make reasonable payment arrangements to the satisfaction of the Applicant, failing which, the Respondent would be deemed to be unable to pay its debts.
In its answering papers to the liquidation application, in order to avoid liquidation, the Respondent had to show on a balance of probabilities that its indebtedness to the Applicant was disputed on bona fide and reasonable grounds. Instead, the Respondent denied being indebted to the Applicant despite having signed the AOD, further stated that it is quite capable of paying its creditors and that its assets exceeded its liabilities.
The court held that the Respondent’s averment, without substantiating evidence amounted to bare denials and bald statement, and therefore found that the Respondent had failed to prove on a balance of probabilities that its indebtedness to the Applicant is disputed on bona fide and reasonable grounds.
The court was therefore satisfied that the Applicant had established a liquidated claim and ordered the Respondent to be finally liquidated and placed in the hands of the Master of the High Court. by way motion proceedings.
The case provides significant value with regards to the liquidation of companies on the basis of an AOD, with the courts placing significant emphasis on the conduct of parties both at the time of entering into and subsequent to the conclusion of the AOD.
Written by Sean Buskin and Khotso Mmatli