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[2020] ZAWCHC 109
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Botha NO and Others v Van Zyl (16604/2019) [2020] ZAWCHC 109 (11 September 2020)
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
CASE
NUMBER: 16604/2019
In
the matter between:
THE
COMMISSIONER FOR THE SOUTH AFRICAN
REVENUE
SERVICE
Intervening Applicant
And
DEON
MARUIS BOTHA
N.O.
First Applicant
GERT
LOURENS STEYN DE WET
N.O
. Second
Applicant
BOITUMELO
MOTUMISENG NGUTSHANE N.O.
Third Applicant
MUSTAFA
MOHAMMED
N.O.
Fourth Applicant
(In
their capacity as joint liquidators of Greenbridge
Group
(Pty) Ltd (in Provincial Liquidation)
And
LOUIS
DANIEL VAN
ZYL
Respondent
JUDGMENT
HANDED DOWN ELECTRONICALLY ON FRIDAY, 11 SEPTEMBER 2020
KUSEVITSKY,
J
[1]
This matter concerns two applications. The first, an interlocutory
application for discovery in terms of Rule 35 of the
Uniform Rules of
Court and the second, a return day to confirm an interim order of
sequestration against the Respondent (“Mr
Van Zyl”).
[2]
This matter has a long history. The file comprises over a thousand
documents. I do not intend to set out the history of the
matter in
great detail. This exercise was done by Dolamo J in his very
comprehensive judgment in the opposed application for Mr
Van Zyl’s
provisional sequestration, which order was granted on 2 July 2020.
Suffice to say, that prior to the return day
of the extended rule
nisi
, Mr Van Zyl filed an application on Friday, 7 August
2020, requesting
inter alia
that the rules of discovery as
they relate to actions is declared
mutatis
mutandis
applicable to the application in terms of Rule 35(13) and that the
Intervening Applicant, (“SARS”) be ordered to comply
therewith in terms of the rules relating to discovery. Mr van Zyl
also requested that the main application be postponed and the
provisional order extended pending the return of the requested
documents.
[3]
Prior to the hearing of this matter, Mr Van Zyl’s attorneys of
record filed a notice of withdrawal as attorneys of record,
two days
before the matter was due to be heard. However, they had already
prepared concise heads of argument in respect of both
applications.
On the day of the hearing, Mr Van Zyl represented himself. I advised
him that I would adjudicate both the applications
on the papers,
together with whatever additional submissions he wished to make.
Rule
35 application
[4]
I will first deal with the application under rule 35 (13). The
sub-rule reads as follows:
“
(13) The
provisions of this rule relating to discovery shall mutatis mutatis
apply, in so far as the court may direct, to applications.”
[5]
It is well
established that a Court would ordinarily only direct that the
provisions of rule 35 relating to discovery be applicable
in
applications in
exceptional
circumstances.
[1]
In the Respondent’s heads of argument, reliance was placed on
Saunders
Valve Co Ltd v Insamcor (Pty) Ltd
[2]
where it was held that the fact that a permanent interdict was being
sought on motion, constituted exceptional circumstances justifying
an
order obliging the applicant to make discovery prior to the filing of
relying affidavits by the respondent. It was submitted
that the
notion of exceptional circumstances does not exist in a vacuum as it
is to be gauged within the broader context of values
of fairness
equity, openness and transparency.
[6]
SARS
relying on
Fargo
,
which held that strong grounds would have to be advanced to persuade
a court to act outside the powers provided for specifically
in the
rules,
[3]
contend that the
Respondent has not demonstrated any circumstances, let alone
exceptional circumstances, which would justify this
court issuing a
directive in terms of rule 35(13) in the exercise of its discretion.
[7]
In
Premier
Freight (Pty) Ltd v Breathetex Corporation (Pty) Ltd
[4]
, Plasket AJ (as he then was) outlined the factors which are to be
taken into account when a court has to determine whether exceptional
circumstances exist for the exercise of its discretion in terms of
rule 35. I will deal with each requirement in turn.
Value
of the claim and Nature of the defences
[8]
It not in dispute that the amount of the claim is substantial. The
basis of the SARS claim against Mr Zyl was that he was held
personally liable for the debts of Greenbridge Future Trading
(“Greenbridge”) and Cheetah Trading (“Cheetah”)
in that he was the director of Greenbridge and the financial manager
or person in charge of the overall affairs of Cheetah. According
to
SARS, both of these companies amassed enormous tax debts which it was
not able to satisfy. SARS filed certified statements in
terms of
section 172 of the Tax Administration Act, 28 of 2011 (“the
TAA”) against Mr Van Zyl to the value of R 18
436 584.60 in
respect of Greenbridge and R 12 167 016.93 in respect of Cheetah. On
6 May 2019, the Gauteng High Court issued a
judgment against Mr Van
Zyl in the amount of R 126 529 098.50. According to the judgment of
Dolamo J who granted the interim order,
the claims against the
Respondent are sound.
[9]
Mr Van Zyl
filed an application to rescind the Gauteng High Court judgment.
SARS argues that in terms of section 100 of the
TAA, the assessments
on which the section 172 statements were based, are final and not
rescindable.
[5]
SARS also
contends that apart from their reliance on the judgment, there are
also other acts of insolvency purportedly committed
by the
Respondent, which they rely on. The Respondent in the heads of
argument, simply disputes his indebtedness, and in argument,
Mr Van
Zyl reiterated that the matter should be postponed pending the
adjudication of the rescission application.
The
relevance of the documentation sought
[10]
In the application, the Respondent seeks the return of 23 remaining
boxes of documents of the 181 boxes that were handed over
to SARS
during the course of their investigations, as well as the so-called
‘fictitious invoices’ that SARS relied
upon to obtain
their judgment against the Respondent. The Respondent contends that
once he has access to and possession of these
boxes, he will be in a
better position to substantiate his case and defend these
proceedings.
[11]
SARS on the
other hand contends that the fictitious invoices are not relevant to
these proceedings in light of the fact that the
audits and
assessments raised for the periods in respect of which the fictitious
invoices were submitted by the Respondent, are
final in terms of
section 100 of the TAA. SARS also rely on the fact that the
Respondent admitted that SARS was entitled to raise
the assessments.
They further contend pursuant to SARS acquiring the 181 boxes in
2018, that the return thereof was tendered to
Mr Van Zyl in October
2019, but were only collected on 4 February 2020. They argue
that this is the first time since being
placed in possession of the
boxes, that the Respondent alleges that the crucial information are
contained in the alleged missing
23 boxes, given that in two separate
affidavits
[6]
, two conflicting
versions arise regarding these documents. In any event, they say that
the documents that are sought are the Respondent’s
own
documents, and that he should in any event be able to retrieve them.
[12]
The other considerations to take into account, is the timing of the
application, whether it is well directed and whether the
documents
sought will be dispositive of the whole application.
[13]
If one purely has regard to the provisions of the TAA and the law as
it stands with regard to the status of judgments issued
pursuant to
the filing of certified statements in terms of section 172, that
should be dispositive of the question as to whether
this matter
should be postponed until the finalization of the rescission
application, as it is clear that those types of judgments
are not
rescindable. But even if I am wrong in that respect, there are other
factors which weigh heavily against the Respondent.
[14]
There is no dispute that Mr Van Zyl was placed in possession of the
boxes in February 2020. This was pursuant to an application
to compel
which was withdrawn by the Respondent in March 2020 after the return
of the boxes. There is no clear explanation as to
why, on the eve of
the return day, he deemed it imperative that these documents are
required. These are his own documents belonging
to his companies –
he does not explain why it is impossible for him to retrieve it from
its source. Mr Van Zyl argued that
these documents are not only from
his computer but also from external sources, yet the documents that
are supposedly available
from his computer he has failed to attach to
the application. The timing is therefore suspicious. Furthermore, it
is apparent that
the production of these documents will not be
dispositive of the matter, as it is clear that the Applicants,
including SARS, rely
on more that one act of insolvency committed by
him.
[15]
Having considered all of the factors and reasons advanced, I can find
no justification in departing from the general practice
in this
application. I am of the view that this interlocutory application is
purely a mechanism to delay the matter, and that on
the conspectus,
no exceptional circumstances exist for me to exercise my discretion
in favour of the Respondent.
[16]
Accordingly the application must fail.
[17]
Now turning
to the requisites as to whether there has been compliance in terms
section 12 of the Insolvency Act
[7]
.
I do not intend to revisit the evidence which was advanced in the
opposed application for the interim sequestration application.
[18]
In opposing the final order of sequestration, Mr Van Zyl
inter
alia
argued that his admission of unlawful conduct to SARS
related to only nine invoices and that SARS has now used that
admission against
him in totality. He also laid the blame of the
indebtedness to SARS at the feet of his partner, Mr Grobler. I was
informed that
the estate of Mr Grobler has already been sequestrated.
However, this complaint and his written admission of unlawful conduct
to
SARS, as well as his other complaints regarding the disputed
authority of the agents of SARS was fully dealt with in Dolamo, J’s
judgment and there is no need for me to revisit this.
[19]
As stated before, it is common cause that the voluntary liquidation
of Greenbridge, which was converted into a court liquidation,
followed upon a transaction between Greenbridge and one Mr Johan
Steele which led to the insolvency enquiry being conducted. It
was
stated that in terms of the evidence collected at the enquiry, that
Greenbridge sold more than 16 000 tons of maize of Mr Steele
during
2016. In February 2017 when Greenbridge was called upon to repay the
proceeds of R52 million to Mr Steele for the sold tonnage
of maize,
Greenbridge had no trading capital left to pay the amount of the
claim to Mr Steele. SARS maintained that Mr Van Zyl
failed to record
such a large creditor in its financial records and that this
transaction was fraudulently hidden. Mr Van Zyl however
explained
there were two types of creditors, and that Mr Steele’s
transaction or liability fell into the category of an ‘extended
price creditor’, this by virtue of the fact that this
transaction, because it was the sale of maize, was zero rated for
tax. This argument however does not make sense. It is
inconceivable that such a transaction which constituted a large
liability
would not have been recorded in any company’s
ledgers. The fact of the matter is, that Greenbridge could not pay
this debt,
hence their application for voluntary liquidation and
following the enquiry pursuant to this transaction, Mr van Zyl was
held to
be personally liable for the debts in terms of section 424(1)
of the Insolvency Act.
[20]
The Applicants further submitted that, notwithstanding the rescission
application, they also rely on independent grounds for
sequestration,
in the form of a
nulla
bona
return of service and a
cost order, taxed in the amount of R 2 611 428.91, awarded
against Mr Van Zyl. This was pursuant
to a three week trial in which
his legal representatives withdrew, much like in this matter, on the
eve of the hearing, and the
Respondent failed to appear in court. Mr
Van Zyl explained that he was of the view that that matter would be
summarily postponed,
given the fact that his legal representatives
withdrew as attorneys of record. Whatever the explanation, the costs
order stands
and it is a valid claim against the Respondent.
[21]
With regard
to the
nulla
bona
return, Mr Van Zyl submitted that when the sheriff arrived at his
premises, the sheriff had asked him whether he had property to
the
value of R 126 million in order to satisfy the warrant of execution.
He stated ‘
absolutely
not’
,
which is the reason why he says there is the
nulla
bona
return.
The Applicants on the other hand argued that the sheriff’s
return state that the sheriff could not find
any
property to satisfy the debt, which is the basis of the
nulla
bona
return
[8]
.
I am of the view that had the sheriff found property worthy of
attachment – he or she would have done so. I say so because
if
one has regard to another warrant of execution which was served on Mr
Van Zyl on 1 November 2019
[9]
at
his residence in Hartenbos in order to satisfy a judgment debt of R
12 167 016.93, goods to the value of R 95 000.00 were pointed
out to
the sheriff and subsequently attached. In contrast, the warrant of
execution served on Mr Van Zyl on 17 May 2019, indicated
that
‘
despite
a diligent search and enquiry I could not find sufficient disposable
property
…’.
Accordingly, the explanation by the Respondent is rejected and the
nulla
bona
return constitutes an act of insolvency in terms of section 8(b) of
the Insolvency Act.
[22]
The Applicants finally argued that it would be an advantage to
creditors for a final order of sequestration to be granted.
This is
in order for the liquidators to do the necessary investigations; to
secure Mr Van Zyl’s assets and to prevent a further
dissipation
of those assets to the prejudice of his creditors.
[23]
It was claimed that the Respondent disposed of a property in
circumstances where he was barred from doing so. Mr Van Zyl explained
that the property which he had bought and subsequently sold for a
profit – was done subsequent to an anti- dissipation order
which listed three separate properties and that the purchase and sale
of the property concerned
ante
dated the court order. His
explanation was that he did not know that he was barred from entering
into any transaction. I do not
accept this explanation. Mr Van Zyl is
not a lay person. He is financially qualified and holds a B-Comm
honours Degree as well
as an MBA of an international institution. He
would have known the consequences of an anti-dissipation order. So
too the complaint
that he disposed of his share in a company, worth
an estimated R6 million, for a value of R100.00 to his then wife.
[24]
It is trite
that an applicant has only to prove it has a claim of not less than R
100.00. In this instance, the Applicants and SARS
have proved that
they have valid claims against the Respondent. I am also satisfied
that Mr van Zyl has made himself guilty of
acts of insolvency over
and above that which he claims entitles him to a defence in the form
of the rescission of judgment application.
On his own admission, in
another instance, he signed off on financials statements and declared
them as having been audited, despite
not being qualified to do so by
virtue of section 37(3)(b) of the Auditing Profession Act
[10]
and having made himself guilty of contravening section 41 of that
Act.
[25]
It is also trite that on the return day of a provisional
sequestration, a court needs to satisfy itself that it will be to
the
advantage of creditors to issue a final order of sequestration. On
the cumulative evidence before me, I am satisfied that the
requirements have been met in order for a final order or
sequestration to be granted.
[26]
In the circumstances, I make the following order:
1. The application in
terms of R 35(13) of the Uniform Rules of Court is dismissed with
costs.
2. The rule
nis
i
issued on 2 July 2020 and extended to 8 September 2020 and 11
September 2020 respectively, is hereby confirmed.
3. The Respondent’s
estate is placed under final sequestration.
4. The cost of the
sequestration application, together with the costs of the Intervening
Applicant, which includes the costs attendant
upon the employment of
two counsel, is to be paid by the Insolvent estate.
________________________
D
S KUSEVITSKY
JUDGE
OF THE HIGH COURT
Counsel
for Applicant: Advocate MA BADENHORST SC
Correspondence:
Rochelle De Beer
Counsel
for the Intervening Applicant: Advocate RT WILLIAMS SC
Advocate
K KOLLAPEN
VDT
ATTORNEYS
Defendant:
SELF REPRESENTED (LOUIS DANIEL VAN ZYL)
[1]
See
Fargo Industries (Pty) Ltd v Niemcor Africa (Pty) Ltd and Others
(44140/18 [2019] ZAGPPHC 417 (6 September 2019) at para 13
[2]
1985
(1) SA 146 (T)
[3]
At
462H-463B
[4]
2003
(6) SA 190
(SE) at para 15 -22
[5]
Barnard Labuschagne Inc. v South African Revenue Service and
Another,
Case
No. 23141/2017 dated 15 May 2020.
This
follows a recent judgment handed down by this court by Mantame,J
[6]
In
the sequestration proceedings, it was stated that the Respondent
submitted that he was working through the boxes, but in the
rescission application (which post-dates the sequestration
application) he stated that he accepted the return of the boxes but
left them in the storage facility.
[7]
Act
24 of 1936
[8]
Annexure
“DMB19”
[9]
Annexure “MR10”
[10]
No.26
of 2005