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[2013] ZAGPJHC 144
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Nedbank Ltd In re:Van Rhyn v Steyn (2012/34535) [2013] ZAGPJHC 144 (13 June 2013)
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SOUTH GAUTENG HIGH COURT
JOHANNESBURG
CASE NO: 2012/34535
DATE:13/06/2013
In the matter between:
NEDBANK LIMITED (formerly NEDCOR
BANK
LIMITED
.........................................................................................................
Intervening
Party
In re:
NICOLAAS ALBERTUS VAN
RHYN
..........................................................................
Applicant
and
DEAN
STEYN
................................................................................................................
Respondent
JUDGMENT
RATSHIBVUMO AJ:
1. Introduction. This is the
application for final sequestration order by the Applicant in respect
of the Respondent’s estate.
A provisional order was granted
unopposed on 28 October 2012 in the form of rule nisi. At the same
time the Intervening Party (Nedbank
Limited) applies for intervention
order; condonation for the late filing of the Intervening Party
opposing affidavit; the provisional
sequestration order to be
discharged and for costs against the Applicant on attorney and client
scale alternatively, party on party
scale.
2. The Intervening Party opposes the
application for sequestration on the basis that it would not be to
the advantage of the Respondent’s
creditors.
3. Background. The Applicant is the
Respondent’s creditor, having obtained a default judgment
against him for an amount of
R1 038 406.00. From the affidavit
deposed to by the Applicant in support of the application for
sequestration, it appears that
this amount accrued to the Applicant
following an agreement (both verbal and written) between him and MWC
Motors CC whereby he
would supply motor vehicles to be sold by the
later with the arrangement that they would share the proceeds of
sale. MWC Motors
CC has since been deregistered and at that time it
owed him R1 038 406.00. The Respondent became liable for the money
owed by virtue
of his membership in MWC Motors CC at the time of its
deregistration.
4. The sheriff served a writ of
execution on the Respondent at his place of work and found nothing
movable to attach. The Respondent
also indicated to him that he was
not in a position to pay the amount owed to the Applicant. His return
was therefore nulla bona.
5. The Intervening Party’s
calculation of the advantage of sequestration to the creditors. The
Applicant submits that the
sequestration of the Respondent would be
to the advantage of the Respondent’s creditors in that first,
he is the registered
owner of three immovable properties to wit, ERF
435, NR. 3
Antares Avenue, Morehill, Gauteng (property A); ERF 3377,
Rynfield Ext 62, Gauteng (property B) and ERF 590, Unit 49, Aspen
Creek,
Brentwood Ext 19, Gauteng (property C). Second, he is
currently employed by Hyundai East Rand and it is evident that he
earns a
substantial monthly income that falls into his estate.
Thirdly, there is a strong likelihood that there are movable assets
which
fall within the Respondent’s estate which can be realised
for the benefit of his creditors.
6. The Intervening Party became
interested parties in this application in that in 2007, it granted a
loan to the Respondent in the
amount of R1 200 000.00 together with
R300 000.00 as security for the payment of the capital amount,
interests and costs. The said
loan was secured over a mortgage bond
on property A at R900 000.00. Given the failure by the Respondent to
make payment to the
Intervening Party of the instalment due by him
under the mortgage bond, the full amount owing by the Respondent to
the Intervening
Party is R1 168 204.65.
7. There are two other creditors with
interest in this application although they did not apply to intervene
in the proceedings.
In 2005 and 2007, First Rand Bank Limited granted
loans to the Respondent at R525 000.00 and R1 025 000.00
respectively. These
loans were granted with additional R105 000.00
and R205 000.00 as security for the payment of the capital amount,
interests and
costs for the respective loan amounts. The said loans
were secured over a mortgage bond on property B at R1 350 000.00.
Lastly,
in 2008 Standard Bank of South Africa Limited granted a loan
in to the Respondent in the amount of 620 398.00 together with R155
099.50 as security for the payment of the capital amount, interests
and costs. The said loan was secured over a mortgage bond on
property
C at R500 000.00.
8. The Intervening Party did some
property valuation and calculated sequestration and related costs in
order to determine if the
sequestration of the Respondent’s
estate would be to its (or other creditors’) advantage, relying
on calculations done
by Mr. Wampach (Wampach), a registered
professional valuer. Wampach puts the forced value of property A at
R1 100 000.00, property
B at R1 350 000.00 and property C at R500
000.00. In determining the immovable property’s forced sale
valuation, Wampach
took into consideration the age and qualities of
the properties, current economic climate, condition of the properties
and their
locations.
9. The Intervening Party puts the
costs of the application for property A at R137 155.00, property B at
R165 480.00 and property
C at R69 175.00. These costs include 3 %
trustees fees on the value of the property plus VAT, 6 % auctioneers
commission on value
of the property plus VAT, provision for pro rata
Master’s fee, provision for pro rata bond of security and
advertising costs
in selling the property. Administration costs such
as estimated attorneys’ costs, notice to creditors and two
postponements
is estimated at R20 080.00. Other costs such as
advertisements in newspapers and in Government Gazette and related
costs are estimated
to be R1 319.33.
10. In the event of the sale of these
properties in the amount valued by Wampach, and after the costs
deductions in the figures
reflected above, the intervening creditor
would become a secured creditor for R962 845.00 and a concurrent
creditor for the remaining
portion of its claim in the amount of R205
359.65 in respect of property A. First Rand Limited would become a
secured creditor
for R1 184 520.00 and a concurrent creditor for the
remaining portion of its claim in the amount of R365 480.00 in
respect of property
B. Standard Bank of South Africa Limited would
become a secured creditor for R430 825.00 and a concurrent creditor
for the remaining
portion of its claim in the amount of R189 573.00
in respect of property C. The effect of this is that there would be
an amount
of R1 798 818.65 needing to be paid to concurrent creditors
after the sale of these immovable properties. This amount would be R1
778 419.32 after deducting the R20 399.33 for the other specified
costs.
11. The Intervening Party submits
therefore that presuming there are no other assets to be attached,
this would result in a very
real and likely fear of danger of a
contribution towards costs arising. Having put up these figures in an
attempt to demonstrate
that the sequestration of the Respondent’s
estate would not benefit the creditors, the Intervening Party applies
for the
dismissal of the application for the sequestration of the
Respondent’s estate.
12. Although the Applicant is still
adamant that there is a likelihood possibility that the creditors
could benefit from the sequestration
of the Respondent; he could not
meaningfully challenge the figures put up by the Intervening Party.
The short falls suggested by
the Intervening Party for all the
creditors remain therefore unchallenged.
13. Applicant’s notice to
withdraw the sequestration application. Faced with these figures, the
Applicant seems to have given
the sequestration application a second
thought and communicated its decision to withdraw its application to
the Intervening Party.
In a letter to the Intervening Party’s
attorneys dated 30 January 2013 sent by fax and by e-mail, the
Applicant’s attorneys
indicated that “[h]aving read the
contents of your client’s application; we confirm that we have
consulted with our
client and counsel… and we are instructed
to withdraw our client’s application…”
1
A copy of the said withdrawal notice was also attached. The
Intervening Party responded demanding that the Applicant should also
tender the costs, a demand that went unheeded. Costs were therefore
reserved for argument before the court.
14. Another letter was however sent to
the Intervening Party dated 20 February 2013 in which the Applicant’s
attorneys informed
the Intervening Party that after a conversation
with the liquidator appointed for the Respondent’s
sequestration, the liquidator
informed them that any withdrawal would
be vehemently opposed by her because the Respondent’s estate
is insolvent, sequestration
of the Respondent’s estate will be
to the advantage of his creditors and that her stance was supported
by the Master of the
High Court and other creditors of the
Respondent. Based on this, the Applicant’s notice of withdrawal
was withdrawn. The
Applicant proceeded therefore to file a Replying
Affidavit dated 20 March 2013.
15. Issues for determination. A: The
court is called upon to determine if the Applicant is at liberty to
withdraw a notice of withdrawal
that was served on the Intervening
Party. B: Would the sequestration of the Respondent’s estate be
to the advantage of his
creditors.
16. Notice of withdrawal. Once a party
withdraws an application, he or she would be barred from changing the
choice by the doctrine
of election which provides that once a choice
is made, a party should stay with that choice.
2
Any withdrawal of the application is instituted in terms of Rule 41
of the Uniform Rules of Court which provides,
(1) (a) A person instituting any
proceedings may at any time before the matter has been set down and
thereafter by consent of the
parties or leave of the court withdraw
such proceedings, in any of which events he shall deliver a notice of
withdrawal and may
embody in such notice a consent to pay costs; and
the taxing master shall tax such costs on the request of the other
party.
(b) A consent to pay costs referred to
in paragraph (a), shall have the effect of an order of court for such
costs.
(c) If no such consent to pay costs is
embodied in the notice of withdrawal, the other party may apply to
court on notice for an
order for costs.
…
(3) If in any proceedings a settlement
or an agreement to postpone or withdraw is reached, it shall be the
duty of the attorney
for the plaintiff or Applicant immediately to
inform the registrar accordingly.
[Own Emphasis]
The question as to whether there is a
withdrawal of the application by the Applicant is a question on
whether there is consent
between the parties in this application on
the withdrawal.
17. The notice of withdrawal of the
application by the Applicant was not served with the Registrar as it
is expected.
3
This was not due to short notice from the time of withdrawal to the
date of hearing since more than two months lapsed in between.
The
reason is because the Applicant changed his mind. The exchange in
e-mails between the Applicant and the Intervening Party does
not
reflect anything closer to “consent” as it is provided in
Rule 41.
4
Even as the parties argued before the court, there was no suggestion
that they agreed to a withdrawal. A party is permitted to
change his
mind until it is able to confirm its consent to a withdrawal in
court. Unless there is a clear confirmation of such
consent, there
cannot be a consent to withdraw upon which the court can order such a
withdrawal, a judgment of the court. Any withdrawal
without such
consent or at least the leave of the court would therefore be
invalid.
5
For the reason that there is no consent to withdraw the application
and no leave of the court was sought, the Applicant cannot
be said to
have withdrawn its application.
18. Requirements for sequestration.
Section 10 of the Insolvency Act 24 of 1936 (the Act) provides,
“
If the court to which the
petition for the sequestration of the estate of a debtor has been
presented is of the opinion that prima
facie—
…
(b) the debtor has committed an act of
insolvency or is insolvent; and
(c) there is reason to believe that it
will be to the advantage of creditors of the debtor if his estate is
sequestrated,
it may make an order sequestrating the
estate of the debtor provisionally.”
From the facts of the case, there is
no dispute that the Respondent has committed an act of insolvency as
required by section 10
(b) of the Act. The only dispute is on whether
the sequestration of his estate would be to the advantage of the
creditors. The
court must be satisfied that sequestration would be to
the advantage of the creditors before granting the final order.
6
19. It is trite law that the Applicant
is not required to show that the sequestration would definitely be to
the advantage of the
creditors. The Applicant should rather satisfy
the court that there is a reason to believe that the sequestration of
the Respondent
will be to the advantage of the creditors. In
interpreting the phrase ‘reason to believe’, Roper J
said,
“
[t]he phrase ‘reason to
believe’, used as it is in both these sections (section 10 and
12), indicates that it is not
necessary, either at the first or the
final hearing,
for the creditor to induce in the
mind of the Court a positive view that sequestration will be to the
financial advantage of creditors.
At the final hearing, though the
Court must be “satisfied”, it is not to be satisfied that
sequestration will be to
the advantage of creditors, but only that
there is reason to believe that it will be so.”
7
20. The Applicant in an attempt to
show that there is a reason to believe that the sequestration of the
Respondent’s estate
would be to the advantage of the creditors,
referred to the three properties, a belief that the Respondent earns
a substantial
income and the likelihood that movable properties could
be found. Again, in his Replying Affidavit, the Applicant alleges
that
the trustee established prima facie that it shall be in the best
interest of the creditors of the Respondent that his estate be
wound
up. An affidavit by the trustee was also attached.
21. From the affidavit compiled by the
trustee, it would appear that the only reason that makes her to hold
a view that it would
be in the best interests of the creditors for
the Respondent’s estate to be sequestrated is that the
Respondent has not been
able to pay his debts for the past 8 months.
Since the Applicant suggested the availability of the trustee in
court to give evidence
to substantiate her affidavit, on 3 May 2013
the court allowed the case to be postponed so the Applicant may file
a supplementary
affidavit to cover whatever the trustee was to give
evidence about.
8
The Applicant opted not to do so and there is therefore no other
reason advanced as to why the trustee alleges the sequestration
will
be in the best interests of the creditors.
22. While the Applicant insists that
there could be movable properties that may be uncovered, it is
important to note that the sheriff
returned a nulla bona return after
serving the writ of execution on the Respondent at his place of
employment. The Founding Affidavit
by the Applicant is silent on
where the writ of execution was served rather simply saying it was
served on him personally. While
there is nothing wrong in personal
service, the Applicant Founding Affidavit claimed to know the
Respondent’s place of residence.
He opted not to direct the
sheriff to the place of residence where the movable properties could
be found. Obviously such properties
could not be reasonably expected
to be at the Respondent’s place of work. The Applicant however
believes that movable items
could be found that might cover the short
fall exposed by the Intervening Party.
23. From the papers before the court,
there is clearly no basis to believe that movable items would be
uncovered. If the Applicant
genuinely believed in that assumption, he
would have redirected the sheriff to serve the writ of execution at
the place of residence
which he did not do.
24. Although the Applicant’s
counsel argues against the findings and valuations done by Wampach, I
have already indicated
that there is nothing advanced by the
Applicant or any other person to discredit this registered
professional valuer’s calculations.
That is the only valuation
that is before the court and its credibility remains intact. By the
time the court granted the provisional
sequestration order against
the Respondent, it was not aware that once all the known immovable
properties registered in the name
of the Respondent are sold, there
would be R1 798 818.65 needing to be paid to concurrent creditors.
This means the sequestration
of the Respondent’s estate caused
by the Applicant’s debt of R1 038 406.00 would cause the
creditors to run short of
R1 798 818.65 after the sale of immovable
properties. If this figure is accepted, there is therefore no way
that this could be
interpreted as being to the advantage of the
creditors. It is in fact to their disadvantage. There is nothing
presented by the
Applicant to counter these figures.
25. A mere allegation to the effect
that a reason exists to believe that the creditors would be
advantaged by the sequestration
order is not sufficient. The
Applicant has a duty to show and demonstrate a reason to believe that
it would be to the advantage
of the creditors of the Respondent if
the estate was to be sequestrated.
9
26. While Annexures
RA2 to RA7 do not bind the Applicant to withdraw the application, the
contents thereof can clarify the disputed
issues. The Applicant does
not distance himself with the contents of the letters of
correspondence to the Intervening Party. It
therefore remains true
that after reading through the Intervening Party affidavit, he
learned what he did not know at the time
he initiated this
application. This caused him to consider withdrawing the application.
Again, the reason for reconsidering the
withdrawal was the result of
the conversation with the trustee who indicated that she would oppose
the withdrawal of the application.
While I do not have an affidavit
by the trustee to that effect, I can indicate that the trustee is not
a party to these proceedings.
The trustee would therefore lack
locus
standi
to oppose the said withdrawal if one
was to be made. Although it is alleged that the trustee claimed to
have the support of other
creditors, I equally to not have the
purported support in writing or otherwise.
27. It was held in Borchers v Kaehne
10
that “sequestration is an extraordinary process in execution –
if it can all be appropriately be regarded as such –
and each
creditor is presumed to be the best judge of what is to his benefit.
The Intervening Party in this case does not believe
that the final
sequestration of the Applicant’s estate will be to its
advantage.”
28. Having considered that although an
act of insolvency may have been proved in this matter, I am not
satisfied that the Applicant
has successfully proved that there is a
reason to believe that it would be to the advantage of the creditors
if the Respondent’s
estate is finally sequestrated.
29. For the reasons stated above, I
make the following order:
1. Leave is granted to the Intervening
Party to intervene in the application for sequestration of the
Respondent’s estate;
2. The provisional sequestration order
granted by this Court on 23 October 2012 is discharged;
3. The Applicant is ordered to pay the
wasted costs as a result of the postponement of the opposed
application on 3 May 2013; including
the costs of the Intervening
Party on a party to party scale.
4. The Applicant is ordered to pay the
costs of the Intervening Party on a party and party scale.
____________
T.V. RATSHIBVUMO
ACTING JUDGE OF THE HIGH COURT
Date Heard: 22 May 2013
Judgment Delivered: 13 June 2013
For the Applicant: Adv. S Stevens
Instructed by: Jurgen Bekker
Attorneys
Bedfordview
For the Respondent: Adv. HM Vermaak
Instructed by: Van Hulsteyn
Attorneys
Sandton
1
See paragraph 2 of Annexure RA2 attached to the
Replying affidavit by the Intervening Party.
2
See
Angern
and Piel v Federal Cold Storage Co limited
1908
TS 761
and
Public
Servants Association of South Africa obo Strydom v SARS
[2007] JOL 20040
(LC).
3
See Rule 41 (3).
4
See Annexures RA2 - RA7 attached to the
Intervening Party’s Replying Affidavit.
5
See
Protea
Assurance Co Ltd v Gamlase
1971
(1) SA 460
(E) at 465G
6
See Saber Motors (Pty) Ltd v Morophane
1961 (1)
SA 759
(W).
7
Meskin & Co v Friedman
[1948]
2 All SA 416
(W) at p. 419.
8
See the Applicant’s practice note.
9
See
Standard Bank of
SA Ltd v Sewpersadh & Another
2005
(4) SA 148
(C).
10
1933 SWA 105 at 108. See also
Fesi and another
v ABSA Bank Ltd
[1999] JOL 5634
(C)