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IN THE HIGH COURT OF SOUTH AFRICA

NORTH WEST DIVISION, MAHIKENG

CASE NO: M90/2017

In the matter between:

JOHANNES CHRISTIAAN VISSER                                                   APPLICANT

and

SUNSET POINT PROPERTIES 380 CC                              FIRST RESPONDENT

WILLEM HENDRIK LOMBARD                                   SECOND RESPONDENT

ANGELIQUE JANSE VAN RENSBURG                            THIRD RESPONDENT

WILLEM THEUNIS JANSE VAN RENSBURG            FOURTH RESPONDENT

 

JUDGMENT

 

LEEUW JP:

 

Introduction

[1] This is an application for provisional liquidation of the first respondent, Sunset Point Properties 380 CC (the Close Corporation).  The application is opposed by the second respondent, Willem Hendrik Lombard (Lombard) who is cited as an interested party by virtue of his occupation of the immovable property owned by the Close Corporation.

[2] The applicant, Johannes Christiaan Visser (Visser) 33% membership interest, together with the second respondent, Angelique Janse Van Rensburg (Mrs Van Rensburg) and the fourth respondent (Mr Van Rensburg), who each hold a 33.3% member interest in the Close Corporation.  Mr and Mrs Van Rensburg have been inactive members of the Close Corporation since 14 July 2014.  Service of these proceedings could not be effected on them since their whereabouts are unknown.

[3] The genesis of the Close Corporation stems from an idea initiated by Lombard and Mrs Van Rensburg during 2009, regarding an opportunity to embark on a property development project.  The parties orally agreed that Visser, who is a qualified attorney, would attend to the registration of the Close Corporation.  The main purpose of the Close Corporation was to develop and erect residential units at the property known as Portion 14 of Erf 2694 Sunset Point, situated at 53 Wolmarans Street in Rustenburg (the development property).

[4] Lombard, per agreement between the parties, sold his immovable property Portion 12 of Erf 2128 Cashan Extension 19, Rockcliff Estate to the Close Corporation for an amount of R2.5 million. This property was bought by Lombard on the 8 September 2009, and had paid a deposit of R365, 000, 00 towards the purchase thereof. Lombard could not afford to pay the balance thereof, which amount was payable before the end of February 2010 nor  could he secure a loan in his personal capacity for the purpose of paying the balance of the purchase price as well as provide for its development. It was for this reason that there was an oral agreement between Visser, Lombard and Mr and Mrs Van Rensburg that Lombard would sell his immovable property, Highcliff Road, Cashan, Extension 19 Rockcliff Estate (security property), to the Close Corporation, which property was subsequently registered in the name of the Close Corporation per deed of sale dated 29 June 2009.

[5] The security property was used to secure a loan obtained from ABSA Bank.  A mortgage bond was registered in the amount of R2 million in favour of ABSA Bank.  This property already had an existing mortgage bond, with a balance of approximately R387,000-00, which balance was settled from the lump sum received from ABSA Bank.  The balance of approximately R1,700,000-00 was paid into Visser’s attorney’s Trust account (Trust account).  Visser and Mrs Van Rensburg, who was his secretary, were responsible for handling the finances of the development project.

[6] Visser bound himself as surety and co-principal debtor for the repayment of all the amounts advanced by ABSA Bank towards the development project.  The monthly premium for the repayment of the mortgage bond was R15,455 at an interest rate of 8.05% per annum, which was subsequently increased to approximately R17,000-00 per month.

[7] The development of the property was divided into two phases and was to be financed from the funds held in the Trust account.  According to Visser, he was the funding mechanism of the project whilst Lombard was appointed as the building contractor and overseer of the building project.  He was not entitled to receive any remuneration but would ultimately share in the profits generated from the building project.  Lombard was to occupy the property and the municipal rates and other expenses related to the immovable property were to be paid by the Close Corporation.

 

The reasons for provisional liquidation

[8] I have already alluded above, to the fact that the purpose of the Close Corporation was to erect units on the development property and resell same individually at a profit.  The building project was supposed to have been completed within a period of six months.  This objective could not be realized since the project progressed into years resulting in dire financial consequences for Visser and the Close Corporation.

[9] The Close Corporation, at the commencement of its business, entered into a number of agreements relating to the sale of the units.  Initially, business was flourishing however, with time, business went down because of amongst others, similar competing property development businesses operating in the Rustenburg area, and further that various units in which the Close Corporation had invested amounts in excess of R4 million, collapsed due to faulty building and substandard workmanship under Lombard’s watch.

[10] The financial statement of the Close Corporation indicates that its liabilities exceed the assets.  The Close Corporation is thus not in a position to comply with its contractual obligations.  The Close Corporation has not been trading for more than a year since 14 July 2014, because of the high costs involved in conducting its business.  Of paramount importance and concern, is the fact that Lombard does not make any payments towards the levies prescribed by the Body Corporate for the Security Property occupied by him.  As at 22 January 2017, the Close Corporation was owing R90,581-44 in arrear levies.  The municipal accounts are also not being paid.  He has instituted eviction proceedings against Lombard in the lower court.

[11] As surety, Visser is obliged to pay all debts of the Close Corporation despite the fact that the Close Corporation has not operated from July 2014.  There is no income generated from the business and Visser made payments, in his personal capacity, towards the mortgage bond to a total of R1 390,740-54 and had to take out loans for the business in an attempt to rescue the Close Corporation from foreclosure proceedings.

[12] In opposing this application, Lombard submits that this application should be dismissed on the grounds that:

(1) Visser has not adequately accounted for the balance of the money received from ABSA Bank, which was deposited in his attorney’s Trust Fund for the purpose of financing the development project;

(2) That his (Lombard’s) immovable property was used as security for the loan obtained from ABSA Bank, which property was to be reregistered in his name through the proceeds of the first phase of the development project, which never happened because Visser solely controlled the funds of the Close Corporation; and that

(3) Visser is abusing the court process in that he is in the process of evicting him from the immovable property which he occupied in terms of their oral agreement.

 

Analysis

[13] It is common cause that Lombard was a fourth partner for the purpose of the development project together with Visser and Mr and Mrs Van Rensburg who were the members of the Close Corporation.  Furthermore, there is no dispute that Lombard was to occupy the security property without paying any rental or levies or any other utility services for his occupation of the property.

[14] However, there is a serious dispute of fact with regard to the following:

1) The R1,390,740-54 allegedly paid by Visser in his personal capacity for the benefit of the Close Corporation.  According to Lombard, Visser has failed to prove that he is a creditor of the Close Corporation because of the following items that appear in the ABSA mortgage bond statements of the Close Corporation:

(a) the 2014 statement is not attached;

(b) the second page of the 29 February 2012 statement is lacking;

(c) the source of the payments into this account is not recorded; and

(d) the amounts reflected in the statements is actually R1,008,243-00 and not R1,390,740-54.

He further submits that he has reason to believe that some repayments towards the bond account were made from the trust account of Jan Visser Attorneys held at ABSA Bank account number 4063199585.

[15] Visser alleges that he was forced to take out various loans to rescue the Close Corporation and keep the business afloat.  Lombard submits that Visser is conducting business as a credit provider under the name and style “Rustenburg Lenings”, without being registered in terms of the National Credit Act No. 75 of 2005.  He uses his office “Jan Visser Attorneys”, as the authorized attorneys to recover the loaned amounts on behalf of Rustenburg Lenings.  The transfers of some of the properties purchased from the Close Corporation, were handled by Visser’s firm of attorneys and the administrative costs, and interest “consisting of 3% per month for the first month or part thereof plus an additional “fee” of 1% per week or part thereof were “paid by Jan Visser Prokureurs to Rustenburg Lenings, care of Jan Visser Prokureurs Rustenburg” 

[16] The Close Corporation has not been trading for a period of more than 2 years and its main purpose was to develop housing units and sell same to third parties at a profit.  The Close Corporation ceased conducting business at the end of July 2014 when the last unit was registered.  Mr and Mrs Van Rensburg have not been active members of the Close Corporation since that day (14 July 2014) even though their status is recorded as active member at the Registrar of Companies Office.

[17] Visser submits that the liabilities of the Close Corporation exceed its assets and consequently, it is unable to meet its financial obligations.  However, he does not fully explain what those liabilities entail.  Some income was generated from the sale of the units during the first phase of the project, and yet this Court has not been given a detailed account of how the proceeds generated from the sold units could not be sufficient for the purposes of paying back the secured loan taken from ABSA Bank.  

[18] The position therefore is that Visser has been solely conducting the business of the Close Corporation.  The financial statements attached in support of this application have not been approved and signed in accordance with section 58(3) of the Close Corporation Act.[1]

[19] The balance of the loan money obtained from ABSA Bank in favour of the Close Corporation was not paid into the Close Corporation Bank Account but rather paid into the Trust account of Visser in his practice as an attorney. He was responsible for financing the project from the R1 700,000-00 paid into his Trust account.  In addition, he was apparently handling the transfers of the units to the various purchasers and even providing funding or loans for such purchasers.

[20] Visser has bound himself as surety in his personal capacity for the repayment of the loan amount obtained from ABSA Bank.  He does not explain why he is unable to meet that obligation.  His main complaint is that Lombard is occupying the security property for free and that he is presently responsible for its upkeep.  He has lodged an application for eviction of Lombard from the property.  A liquidation of the Close Corporation may result in Lombard loosing the security property.

[21] There is a serious dispute of fact with regard to the occupation of the security property, especially with regard to whether or not there was a subsequent agreement between Visser and Lombard that he should pay rental and other services for his occupational rights.  This issue must be resolved between Visser and Lombard.

[22] The immovable property could be one of assets of the Close Corporation and does not generate income by virtue of Lombard’s occupation thereof.  It would appear that from the initial agreement of the parties, this property was not intended or meant to generate income for the Close Corporation.  To the contrary, income of the Close Corporation was to be generated from the development project of selling residential units. It is important for this court to be provided with a full detail of the income and expenses of the Close Coporation.

[23] Furthermore because of the manner in which Visser was conduct the financial affairs of the Close Corporation, it is crucial for the Court to satisfy itself that from the financial status of the Close Corporation, its liabilities exceed its assets and that Visser, as a surety, is not in a position to honour this obligations towards payment of the mortgage bond.  I am not persuaded that that is the position with this Close Corporation.

[24] I accordingly make the following order:

The application for the provisional liquidation of Sunset Point Properties 380 CC is dismissed with costs.

 

 

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M M LEEUW

JUDGE PRESIDENT OF THE HIGH COURT

NORTH WEST DIVISION

 

 

Date of Hearing                              :         07 DECEMBER 2017

Judgment Handed Down on           :         01 FEBRUARY 2018

Counsel for the   Applicant            :     ADVOCATE MAREE

Instructed by                                  :         SMIT STANTON INC.

Counsel for the Respondent           :         ADVOCATE ZWIEGELAAR

Instructed by                                  :         NIENABER & WISSING ATT.

 

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