Agreement on the papers, winding up curially rejected

Law and Courts II

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The honourable Judge cited three cases^ that dealt with the event where convergence of claims in liquidation would grant creditors equal treatment; sequestration was not an order for enforcement but rather for order; the restrictment of ordinary remedies and imposed liabilities came to an end; sequestration proceedings are instituted by a creditor against a debtor not for the purpose of claiming something from the latter, but for the purpose of setting the machinery of the law in motion to have the debtor declared insolvent as fittingly described in the judgment which meant that it was not an order for a debt due, succinctly held in the Appellate Division of 1931. The honourable Court held the Estoppel application would not stand. Res judicata it was held was unsubstantiated since the issue had not been adjudicated previously since the applications with the other Respondents were entirely separate matters. The Badenhorst principle held that liquidation proceedings should not be used as a mechanism to enforce payment of a debt and that nowhere on the papers or before the honourable Court was there an alleged dispute even where the Respondent had failed to apply for a defense and at para 22 it was pointed out that the concursus creditorum worked counter to resolving the existence of a debt. Having regard for the appropriate requirements in application for provisional liquidation, it was held that included in the application for provisional winding up of a company the onus was on the applicant to establish that he or she or it was a creditor. The claim for debt was not disputed in good faith and on reasonable grounds on the contrary, it was noted curially there had been agreement between the parties. The Respondent, it was held, sought instead to create a dispute merely to avoid being wound up and the Court stated it had not been persuaded that it would not be just and equitable to wind up the Respondent.
The Appellant had obtained a default judgment against the Respondent who had filed an application for recission of that judgment [but had done nothing further to prosecute], the two other defendants had been liquidated. The Appellant launched an application for the provisional liquidation of EC Diamonds however left the default order and further launched an application for provisional liquidation of the Respondent and application for condonation for late filing was curially refused [given that the response was 7 months overdue]. In argument the Respondent raised two 'defences' to the application for its provisional winding up - i) Estoppel/resjudicata; and ii) Badenhorst principle. In judgment the honourable Judge held on the doctrine of Estoppel two judgments had been granted in favour of the Appellant with the Appellant required to satisfy the Court of precise amounts it was creditor over.

Company Law Expertise

Company Law Today comment - The Appellant and all the creditors of the Respondent could have acted on a pro-rata basis versus executing a judgment already obtained, the proceeds of which would be for the sole benefit of the Appellant however only on a nulla bona return could the Appellant liquidate his debtor. Vide - Multipro Investments v EC Diamonds CC [2020] ZANCHC 1; [2020] JOL 46616 (NCK); ^Orestisolve (Pty) Ltd t/a Essa Investments v NDFT Investments Holdings (Pty) Ltd and Another 2015(4) SA 449 (WCC); ^Kyle and Others v Maritz and Pieterse Inc 2002(3) All SA 223 (T); ^Badenhorst v Northern Construction Enterprises (Pty) Ltd 1956(2) SA 347 (T); ^Collier v Priest 1931 AD 290 [para 17.3]; Naidoo v Absa Bank Ltd 2010($) SA 597 (SCA).



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