- October 11, 2022
- |Concise Law Reports (CLR), Legislation
LEGISLATION – COMPANIES ACT NO. 28 OF 2004 – LIQUIDATION OF – JURISDICTIONAL FACTS THAT MUST BE PROVED WHEN RELYING ON SECTION 350(1)(a)
The applicant has brought an application seeking an order to wind up the respondent in terms of s 350(1)(a)(i) of the Companies Act No. 28 of 2004. The basis of the applicant’s application is that the respondent was commercially insolvent and thus unable to pay its debts.
In 2016, the applicant and the first respondent were part of parties litigating against each other. The applicant alleges that on 14 March 2018, it and the first respondent concluded a settlement agreement, and which agreement was made an order of the court. In terms of the settlement agreement the applicant, amongst other terms, agreed that the first respondent will do all that was necessary and sign all papers required for the deregistration of two mortgage bonds. The deregistration of the mortgage bonds was subject to the condition that the payment of the amounts secured by the mortgage bonds was to be secured by way of a bank guarantee in favour of the applicant. In the alternative, the first respondent had to confirm that an amount of N$90 000 000 has been paid into the trust account of the Attorneys for the benefit of the applicant, and which amount will be paid over by the fifth respondent on behalf of the first respondent to the applicant on the date that the bonds are deregistered. The applicant attached both the settlement agreement and the mortgage bonds to the affidavit in support of its claim.
It was the case of the first respondent, that the applicant based its claim on a loan agreement and that it failed to annex a loan agreement to its founding affidavit. The first respondent further denied that the debt is due and payable. The first respondent based its denial on the contention that the agreement concluded between the parties was a property development loan agreement which would only be repayable after the property was subdivided, the township establishment approved, gazetted, and the subdivided erven sold to cancel the bonds. The first respondent proceeded in argument that, the property has not even been subdivided and the development has not commenced, and the debt is therefore not due and payable.
UEITELE J considered the matter and held that:
- The jurisdictional facts that must be proven to rely on section 350(1)(a)(i) are that the applicant must be a creditor of the respondent, the debt must be due and payable, and there must be proof that, despite the service of section 350(1)(a)(i) notice, the debtor has neither paid the amount claimed nor secured or compounded it to the reasonable satisfaction of the creditor.
- The parties, amongst other terms, agreed that the fifth respondent will on behalf of the first respondent pay to the applicant the amount of N$90 000 00, as such, the applicant is a creditor of the first respondent, for not less than N$100 – in terms of the settlement agreement, and that demand in terms s 350(1)(a)(i) was served on the first respondent, and that despite this demand, the first respondent has not paid any amount nor secured or compounded any amount to the reasonable satisfaction of the applicant.
In light of the above, the application of the applicant succeeded, and the first respondent was placed under provisional order of liquidation in the hands of the Master of the High Court.
China Harbour Engineering Co (Pty) Ltd v Indegenuos PBG 11 October 2022