LEGISLATION – CLOSE CORPORATION ACT and COMPANIES ACT – THE JURISDICTIONAL FACTS THAT MUST BE PROVEN FOR LIQUIDATION. Bank WHK Ltd v Namibia Star CC and other cases NAHCMD.

The Bank launched four applications where it sought the provisional liquidation of the respondents on the grounds that they were unable to pay their debts and relied on section 68 (c) and (d) as well as section 69(1) of the Close Corporation Act 26 of 1988 and section 349 and s 350(1)(a) Companies Act 28 of 2004. The root of the application stemmed from several bank facilities advanced to the respondents. The respondents allegedly breached the payment obligations to the Bank.

The respondents opposed the application by raising three points, which are the failure by the deponent to the founding affidavits of the Bank to allege authority to institute the proceedings; the failure to serve a statutory notice at the registered office of the respondents and further that the application raised contentious factual disputes.

SIBEYA J considered the matter and held that:

1. The deponent to the founding affidavit was duly authorised to institute these proceedings as per the resolutions of the Bank annexed to the founding affidavit, read together with the resolution annexed to the replying affidavit filed on behalf of the Bank. The Bank further, in replying papers, ratified the steps and action taken including instituting the proceedings to wind up the respondents.
2. The Bank relied on the fact that the respondents were unable to pay their debts as per section 68(c) and (d) of the Close Corporations Act and s 350(1)(c) as well as section 349(f) of the Companies Act and on this premise the deeming provisions provided for in section 69(1)(a) of the Close Corporations Act and section 350(1)(a)(i) of the Companies Act does not find application. The Bank further, however, as a separate ground, relied on the deeming provision of being unable to pay their debts as provided for in section 69(1)(a) of the Close Corporations Act and section 350(1)(a)(i) of the Companies Act.
3. Held further that, that although the test was to establish a prima facie case, the Bank established on a balance of probabilities that the respondents are unable to pay their debts (service the loans) and further that it would be just and equitable that they are liquidated, therefore, the deeming provisions of section 69(1)(a) of the Close Corporations Act and section 350(1)(a)(i) of the Companies Act were not applicable.

As a result, the application of the Bank succeeded, and the respondents were placed under provisional order of liquidation in the hands of the Master of the High Court. The costs of the application would be costs in the liquidation, such costs to include the costs of one instructing and two instructed legal practitioners.

Bank WHK Ltd v Namibia Star CC and other cases (HC-MD-CIV-MOT-GEN-2019-00193) [2023] NAHCMD 63 (17 February 2023)