REPUBLIC OF SOUTH AFRICA
                                           
                            IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG LOCAL DIVISION, JOHANNESBURG 

	(1) REPORTABLE: NO 			
	(2) OF INTEREST TO OTHER JUDGES:  NO	

					
	4/5/2018				
	DATE		SIGNATURE		

							                Case Number: 42219/2016

In the matter between:

WOA FUELS AND OILS CC					                         Applicant
					                       
and
MZUMBE OIL (PTY) LTD							       Respondent
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                                       JUDGMENT
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FISHER J:

INTRODUCTION
[1]		The applicant seeks the liquidation of the respondent on the basis that it is unable to pay its debts in the sense which is  commonly known as “commercial insolvency”.

[2]		The respondent alleges that it has a bona fide and reasonable defence to the claim of the applicant. It contends that the liquidation procedure is not designed for the resolution of disputes as to the existence or non-existence of a debt (the “Badenhorst rule” - after Badenhorst v Northern Construction Enterprises (Pty) Ltd 1956 (2) SA 346 (T) at 347–348).

[3]		The applicant on the other hand denies that the respondent is able to pay the debt relied upon or any part thereof and invokes  Rosenbach & Co (Pty) Ltd v Singh’s Bazaars (Pty) Ltd 1962 (4) SA 593 (D) at 597 where  Caney J stated: 
“The proper approach in deciding the question whether a company should be wound up on this ground appears to me . . . to be that, if it is established that a company is unable to pay its debts, in the sense of being unable to meet current demands upon it, its day to day liabilities in the ordinary course of its business, it is in a state of commercial insolvency.” The fact that a company in such a state is solvent in the sense that the value of its assets exceeds its liabilities is, however, a factor to be taken into account in the exercise of the Court’s discretion whether or not to wind up; the “court has a discretion to refuse a winding-up order in these circumstances but it is one which is limited where a creditor has a debt which the company cannot pay; in such a case the creditor is entitled, ex debito justitiae, to a winding-up order” ( See also ABSA Bank Ltd v Rhebokskloof (Pty) Ltd 1993 (4) SA 436 (C) at 440F–441A.) 

FACTS
[4]		The applicant is a company which supplies fuel in the form of petrol and diesel to companies including Transnet SOC. The applicant is one of the respondent’s suppliers. It alleges that it has sold and delivered fuel to the applicant for the amount of R 4 497 935, which amount remains unpaid.

[5]		The applicant, in its answering affidavit, raised that it had been defrauded by an employee. It states that the employee, Mr Marundu, whom it concedes was the employee who dealt with the orders and who would have been authorized in the normal course to place such orders, placed orders where there was no customer to be supplied. Instead the fuel was ordered with the intention that it be misappropriated which duly occured. Mr Marundu had been employed by the applicant as a project controller since 2013. His job included placing orders with the respondent's suppliers, including the applicant. He would also instruct the respondent's drivers to collect the fuel and deliver it to customers on behalf of the respondent.

[6]		The high-water mark of the respondents opposition is that the applicant should have known that there was no order from the respondent’s customer. The respondent does not however allege that it was a requirement of the contractual relationship that there be proof of such order from the customer. Indeed, this would not be the usual approach in such a commercial relationship. It thus appears clear that Mr Marundu at least had the ostensible authority of the respondent to conclude the disputed transactions. 

[7]		The general rule relating to ostensible authority was set out in Monzali v Smith 1929 AD 382 at 385 where Stratford JA stated as follows:
“Where any person, by words or conduct, represents or permits it to be represented that another person has authority to act on his behalf, he is bound by the acts of such other person with respect to any one dealing with him as an agent on the faith of such representation, to the same extent as if such other person had the authority which he was so represented to have.”

[8]		It does not matter whether the employee or agents acts solely in his own self-interest. If the principal has made a representation that the employee/agent has the requisite authority to conclude a particular type of contract, then he is bound (if the agent/employee purports to act in terms of such authority), even if the employee is in reality acting exclusively in his own self-interest or even whilst perpetrating a fraud (see NBS Bank Ltd v Cape Produce (Pty) Ltd 2002 (1) SA 396 (SCA)).
[9]		The respondent, after having conducted further investigations in relation to the fraud and the applicant's account, sought leave to introduce a supplementary affidavit in which it stated that there were other defences as to at least some of the claims – ranging from duplicated invoices to failure to evidence delivery. Such leave  was granted by me in a separate order.

[10]	 The further affidavit however did not present a complete defence to the claim. At least R2 million was accounted for only by the alleged fraud “ defence” which  is in fact no defence at all. The respondent goes as far as to state that it has made a claim against its insurer in the amount of the loss, and that it will be in a position make payment in the event of such claim being successful.

[11]	  The applicant has, in the circumstances, established its claim and its case for liquidation. The respondent has attempted to assert, with reference to its balance sheets, that it is, in fact, solvent. Reference to such balance sheets shows that in relation to the latest balance sheet there is doubt as to the solvency of the respondent.  In any event, in light of what is stated in the Rosenbach case supra, this aspect is of limited relevance in relation to the weighing up of whether an order for liquidation should be granted.

ORDER

[12]	In the circumstances, I make the following order: 

1.	The respondent is placed under final liquidation.

2.	The costs of this application are to be costs in the liquidation.

				

                                       ________________________________
                                                    FISHER J
                                            HIGH COURT JUDGE 
                                       GAUTENG LOCAL DIVISION

Date of Hearing:   23 April 2018
Judgment Delivered: 4May 2018
APPEARANCES:
For the Applicant: Adv A Spiller Instructed by Tate, Nolan & Knight Inc.

For the Respondent: Adv C.A DA Silver SC with Adv T Masevhe Instructed by Rammutla-AT-Law Inc.