Fellner-Feldeg v Worner (11692/2023P) [2025] ZAKZPHC 77 (1 September 2025)

Case Note

Fellner-Feldegg v Worner, No 11692/2023P, [2025] ZAKZPHC 87 (KZN)

Reportability

This case is reportable due to its significance in addressing the principles surrounding the provisional sequestration of a debtor's estate under South African insolvency law. It illustrates the court's interpretation of the concept of insolvency and the procedural requirements for initiating sequestration. The decision also outlines the obligations of creditors, the standard of proof required, and the implications of the sheriff's return of service in insolvency proceedings. Furthermore, it addresses the admissibility of "without prejudice" communications in showing acts of insolvency, contributing to a clearer understanding of the application of the Insolvency Act 24 of 1936.

Cases Cited

Absa Bank Ltd v Hammerle Group [2015] ZASCA 43; 2015 (5) SA 215 (SCA)

Boere Se Koöperatiewe Wol En Produkte Unie Bpk v Kruger [1969] (4) SA 215 (NC)

Cilliers and Loots, Herbstein and Van Winsen: Civil Practice of the High Courts and the Supreme Court of Appeal of South Africa 5th ed

Fellner-Feldegg v Skema Holdings (Pty) Ltd and Others [2021] ZAKZPHC 80

Gilliat v Sassin 1954 (2) SA 278 (C)

Johnson v Hirotec (Pty) Ltd 2000 (4) SA 930 (SCA)

SJC v TRC [2022] ZAWCHC 256

Legislation Cited

Insolvency Act 24 of 1936

Superior Court Act 10 of 2013

Companies Act 61 of 1973

Rules of Court Cited

Rules of Court as specified under General Notices and regulations for court procedures.

HEADNOTE

Summary

This case involves an application for the provisional sequestration of the estate of Friedrich Wilhelm Gerhard Worner, based on his failure to settle debts owed to Robert Fellner-Feldegg as a result of a loan agreement. The applicant contends that the respondent has committed acts of insolvency, as outlined in the Insolvency Act, and the court must determine whether provisional sequestration is warranted. The court ultimately granted the provisional sequestration order while setting a date for further proceedings.

Key Issues

The key legal issues addressed in this case include whether the applicant has established a valid claim under section 9(1) of the Insolvency Act, whether the respondent has committed acts of insolvency as defined in sections 8(b) and 8(g) of the Act, and whether the procedural requirements for the initiation of sequestration have been satisfied. The question of whether the sheriff had the jurisdiction to serve the warrant of execution was also raised, along with allegations regarding the abuse of court process by the applicant.

Held

The court held that the applicant had met the requirements for provisional sequestration under the Insolvency Act. It found that the respondent had indeed committed acts of insolvency, particularly by failing to satisfy debts upon demand and by not providing evidence of disposable assets to the sheriff. The court affirmed the validity of the sheriff's return of service and dismissed the respondent's objections regarding alleged jurisdictional issues and the claim of improper motives.

THE FACTS

The applicant, Robert Fellner-Feldegg, is a businessman residing in South Africa and Germany. He entered into a loan agreement with Skema Holdings for an amount up to €2,500,000, for which the respondent, Friedrich Worner, served as surety. Neither Worner nor Skema repaid the loan. The applicant obtained a judgment against both parties, declaring their liability for the principal debt and the interest. After various unsuccessful attempts at appeal, the applicant pursued sequestration against the respondent's estate, claiming acts of insolvency based on non-payment and insufficient asset declaration.

On several occasions, the applicant's attorneys issued letters of demand and a warrant of execution was served to Worner, only to find no assets available to cover the debt, resulting in a nulla bona return. The respondent maintained discussions regarding potential property sales that could cover the debt but ultimately failed to satisfy the demands presented.

THE ISSUES

The court was required to determine if the respondent had committed acts of insolvency as defined by the Insolvency Act and whether the applicant had valid grounds for seeking sequestration. The legitimacy of the service of the sheriff's warrant was called into question, along with the procedural integrity of the sequestration request. Furthermore, the court evaluated claims that the applicant was engaging in an abuse of court procedures for ulterior motives, rather than genuine creditor recovery.

ANALYSIS

The court's analysis emphasized that the applicant had established a prima facie case for provisional sequestration by demonstrating that the respondent had committed acts of insolvency, as the sheriff's return establishes the respondent's inability to satisfy the debt. The court highlighted that the “without prejudice” correspondence sent by the respondent's legal counsel, which admitted the respondent's lack of funds, could be used as evidence of insolvency, countering the argument that such correspondence lacked admissibility.

A critical aspect of the judgment was the reaffirmation of the sheriff's jurisdiction, which the court found valid despite the respondent’s assertions to the contrary. The court noted that unless there is substantial evidence to dispute a sheriff's return, it stands as prima facie evidence of the matters stated therein. Consequently, the assertion of an ulterior motive behind the sequestration application was found to lack sufficient grounds, leading the court to conclude that the applicant's actions were appropriate within the constraints of the law.

REMEDY

The court granted a provisional sequestration of the estate of Friedrich Worner. It provided a timeline for the respondent and interested parties to show cause why the estate should not be placed under final sequestration.

LEGAL PRINCIPLES

Key legal principles established in this judgment include the interpretation of acts of insolvency as defined by the Insolvency Act, the importance of sheriff's returns as prima facie evidence of the debtor's asset status, and the admissibility of “without prejudice” communications when they pertain to the insolvency status of a debtor. The court reinforced that creditors must demonstrate a substantial case for sequestration without the need for overwhelming evidence, thus allowing for greater access to creditors seeking redress through insolvency proceedings. Furthermore, the court clarified the standards surrounding the determination of jurisdiction by the sheriff in serving execution notices.