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[2014] ZAGPJHC 107
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Man Financial Services (SA) (PTY) Ltd v Barend (2013/11125) [2014] ZAGPJHC 107 (29 April 2014)
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REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT
OF SOUTH AFRICA
GAUTENG LOCAL
DIVISION, JOHANNESBURG
CASE
NO: 2013/11125
DATE:
29 APRIL 2014
In the matter
between:
MAN FINANCIAL
SERVICES (SA) (PTY)
LTD
..........................................
Applicant
And
BUYS, PIETER
BAREND
(Identity Number:
4……………………..)
..............................................
Respondent
J U
D G M E N T
MASHILE, J:
[1] This is an
application for the provisional sequestration of the Respondent
occasioned by his failure to honour payment of an
amount of R16 844
120.32. The amount owed by the Respondent was the result of a
judgment obtained by the Applicant against him
on 8 February 2012.
The Respondent admitted that he is financially embarrassed and that
he cannot satisfy the judgment debt.
[2] Prior to
embarking on the judgment itself, I intend to clear the way by
dealing with the preliminary matters. The Respondent
has without the
permission of the court filed a further affidavit. This is
unprecedented. I say so because it is generally prohibited
to do so
without the leave of the court. However, a party would be allowed to
file a further affidavit where a replying affidavit
contains new
matters which should otherwise have been raised in the founding
affidavit.
[3] I have perused
the replying affidavit with the objective of deciphering new matters
raised therein. I am struggling to spot
any matter that can be said
to be new and unfortunately the Respondent alludes thereto but then
sets out matters that are not new
at all. In the circumstances the
court sees no reason to depart from the general rule stated above.
[4] The Respondent
refers to the following as new matters raised in the replying
affidavit which prompted him to file the further
affidavit:
4.1 The Respondent
has constantly manipulated his financial affairs to frustrate his
creditors and in particular the applicant;
4.2 The Respondent’s
version that the proceeds of the sale of his assets were used to
sustain himself cannot be believed;
4.3 It is
inconceivable that the Respondent could not earn a rental income from
the properties;
4.4 That the
Respondent was attempting to hide assets.
[5] The only matter
that appears to be new is the allegation that the Respondent must
have earned rental from the properties. This
is not new as it was
raised in rebuttal to the Respondent’s allegation that he
utilised all the proceeds of the sales of
the properties to fund his
living expenses. The Applicant was entitled to show that the
Respondent’s averments in that regard
could not conceivably be
true.
[6] In this regard
it is appropriate to make reference to the following passage of
Hiemstra J in Registrar of Insurance v Johannesburg
Insurance Co Ltd
(1)
1962 (4) SA 546
(W):
“The rules of
procedure are made to facilitate litigation; they are always subject
to the over-riding discretion of the Court.
The Court will take into
account whether any of the parties is prejudiced if the rules are not
strictly observed. ....... I am
not prepared to allow the rules of
procedure to tyrannise the Court where an important matter has to be
thrashed out fully and
all the facts have to be put before the Court.
In this particular case, because the case is complex and it cannot be
fairly expected
from the petitioner to have all the facts at his
disposal before he launches his petition, which was in fact launched
in the public
interest, I will overlook the fact that an important
part of the petitioner's case was put in after his original
petition.”
[7] I am mindful
that the Applicant’s approach is somewhat indifferent in that
it has left it to the court to decide whether
or not to allow the
further affidavit. The general rule is clear and the purpose that it
serves is to avoid prolixity of papers,
which of course inexorably
culminates in a waste of crucial time. Accordingly, I decline to
accept the further affidavit.
[8] Similarly, the
Applicant served and filed its replying affidavit out of time. The
Respondent did not bar it and the Applicant
itself did not bring an
application to condone such late filing. While the Respondent did
not object to the late filing, he appears
to be using it as a
justification for the filing of the further affidavit. This is
unacceptable and accordingly I reject it.
[9] The conclusion
of the introductory matters clears the path for this court to turn to
the judgment itself. The background facts
to this matter are that in
1986 the Respondent started a transport business known as Coal Trans
(Pty) Ltd, which he operated until
its demise in 2006. As the main
shareholder in the company the Respondent stood surety for Coal
Trans. In 2005 the business changed
its name to Sawina Logistics
(Pty) Ltd. Coal Trans was a conglomerate of two companies and these
were Coal Trans itself and G
& L Parkin (Pty) Ltd.
[10] The transport
business as operated by the Respondent thrived and in 2003 he
purchased a dormant company whose name he changed
to Rhino Logistics
(Pty) Ltd. The Respondent alleges that he purchased the company for
his then 17 year old son, Pieter Barend
Buys. The Respondent was the
sole director of Rhino Logistics until his son attained majority and
took over from him.
[11] In late 2004
the business of Coal Trans took a dip. For some unknown reason his
financiers, ABSA BANK, nudged him to resign
as a managing director.
He however, remained as a director and shareholder of the company.
At that stage Coal Trans underwent
a name change and became Sawina,
which was subsequently liquidated on 22 February 2006. The
Respondent, probably at the instance
of the liquidators, stayed in
the employ of Sawina until October 2006.
[12] Rhino Logistics
then run by Pieter Barend Buys junior, continued to conduct business
until 6 March 2006, shortly after the
winding-up of Sawina, when it
became a quiescent entity albeit that it still ran business through
Zingaro Trade 85 (Pty) Ltd, a
company created and run by the
Respondent’s former wife. From the time the Respondent left
the employ of the liquidators
of Sawina in October 2006, he was from
time to time employed by Rhino and/or Zingaro until at least October
2007.
[13] Shortly before
Sawina was liquidated on 22 February 2006, the Respondent sold and
registered transfer of 6 of his immovable
properties. Again, in July
2009 he sold and registered transfer of the last of his immovable
properties into the name of his son,
Pieter Barend Buys, for an
amount of R800 000.00. This sale happened to have occurred
approximately 9 months after the Applicant
had instituted proceedings
to claim the judgment debt amount, R16 844 120.32.
[14] Section 10 of
the Insolvency Act No 24 of 1936 (the
Insolvency Act) is
the
applicable section dealing with provisional sequestration and it
stipulates:
“If the court
to which the petition for the sequestration of the estate of the
debtor has been presented is of the opinion
that prima facie -
The petitioning
creditor has established against the debtor a claim such as is
mentioned in subsection (1) of section nine; and
The debtor has
committed an act of insolvency or is insolvent; and
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.”
[15] It is common
cause that the Applicant obtained a judgment in the sum of R16 844
120.32 against the Respondent and that the
latter has committed an
act of insolvency as envisaged in
Section 10(b)
of the
Insolvency
Act. In
view of that, the only pertinent issue that falls for
determination is establishing whether there is reason to believe that
it
will be to the advantage of creditors of the Respondent to
sequestrate his estate.
[16] It is apt to
begin by quoting Roper J in Meskin & Co v Friedman
1948 (2) SA
555
(W):
“In my
opinion, the facts put before the Court must satisfy it that there is
a reasonable prospect - not necessarily a likelihood,
but a prospect
which is not too remote - that some pecuniary benefit will result to
creditors. It is not necessary to prove that
the insolvent has any
assets. Even if there are none at all, but there are reasons for
thinking that as a result of enquiry under
the Act some may be
revealed or recovered for the benefit of creditors, that is
sufficient ......”
See also: Lynn &
Main Inc v Naidoo And Another
2006 (1) SA 59
(N) Dunlop Tyres (Pty)
Ltd v Brewitt
1999 (2) SA 580
(W).
[17] The Applicant
is persistent in its assertion that there is reason to believe that
it will be to the advantage of creditors
of the Respondent that his
estate be sequestrated. One cannot but view the actions of the
Respondent with suspicion. I refer
in this regard to the fact that
he sold six of his immovable properties just in time to avoid their
foreclosure by the liquidators
of Sawina in February 2006. None of
the funds realised from the sale went towards the part payment of the
creditors.
[18] In July 2007
the Respondent sold his only remaining immovable property to his son,
Pieter Barend Buys for an amount of R800
000.00. A question that one
cannot avoid to ask is, was it a happenstance that the 6 immovable
properties were sold shortly before
Sawina was liquidated and that
the last immovable property also happened to have been sold on the
face of the institution of the
action?
[19] It is common
cause that Sawina faced financial quandaries in late 2004 and that
the Respondent was consequent thereupon prodded
to resign as the
managing director of Sawina. It should therefore make perfect sense
that he had to redeem some of his properties
in order to survive his
likely bleak financial future. One can simply regard as coincidence
that the sale of his immovable properties
took place months before
the winding-up of Sawina, the company for which he stood surety for
some of the debts.
[20] It becomes
somewhat disquieting when the sale of his last property comes shortly
after the institution of an action against
him. The Respondent has
argued that judgment was granted in favour of the Applicant only in
2012 and that the sale could not therefore
have been impelled by the
judgment. That is not the point, the Respondent in all probabilities
knowing of the institution of proceedings
against him in October 2008
knew that he would not have a defence to withstand the action saw it
wise to dispose of his last property
to his son.
[21] Even more
disconcerting is the Respondent’s failure to give a full
account of the proceeds of the sale of all the properties.
The
Respondent only dealt with this aspect as an afterthought in his
further affidavit whose admission into evidence I have rejected.
Even if this court were to assume that the proceeds were expended in
the manner delineated in the further affidavit, one can hardly
state
that all the amounts went towards his living expenses.
[22] Like any
experienced business man, the Respondent must have known the
significance of keeping records of his finances especially
as it was
obvious that his financial woes were not about to culminate in the
months and years that ensued. The question is why
did he not do so
when he clearly should have. It is rather convenient to state that
he has lost documents pertaining to how he
dealt with the funds. How
is the court supposed to believe that his reconstruction of how he
utilised the funds is correct without
records?
[23] It is
exceedingly improbable that a business person like the Respondent,
living in this modern day technologically advanced
world, would have
opted to keep cash of that amount at home than at the bank. If that
is correct, was it so difficult to request
such records from his
bankers to eliminate any seeds of doubt being planted in the mind of
any person and indeed this court? The
answer should be in the
negative. The Respondent does not want such information exposed to
the Applicant because it will show
exactly what happened to the
funds.
[24] Another aspect
of the sale of the last immovable property that should not escape
this court’s scrutiny is the amount
for which it was sold to
his son. The Respondent argued that the highest valuation that he
could obtain from four estates agents
involved in the sale of
properties in his area is an amount of R800 000.00. Barely a year
later, Tyco International (Pty) Ltd
registered a continued covering
mortgage bond over the property for an amount of R1 500 000.00.
[25] The Respondent
has passionately contended that Tyco International (Pty) Ltd
registered a covering mortgage bond and not a mortgage
bond and that
the amount of the covering mortgage bond bears no relation to the
value of the property itself. This argument is
preposterous. Does
this mean that Tyco International (Pty) Ltd could have elected to
register a covering mortgage bond of any
amount? Of course not, the
fact that it chose to register a covering mortgage bond of that
amount gives an indication of the value
of the property. A covering
mortgage bond is supposed to serve as security because its purpose is
to protect the financial interest
of the party registering it.
[26] The Respondent
has decided to leave the salvage of his Mercedes Benz at a panel
beater. It is rather aberrant that he has
to date, his financial
woes notwithstanding, chosen not to retrieve it from the panel
beaters. Who does something of the kind?
Could it be a person who
is facing a bleak financial future like the Respondent? Certainly
not.
[27] The doubling of
the value of the immovable property at 54 Charterland Street, a year
after it was sold, warrants that the business
relationship between
the Respondent and his son be investigated. This will include Rhino
Logistics (Pty) Ltd and Zingaro (Pty)
Ltd. Was he paid a salary or
not. If he was, what happened to the money.
[28] The following
remain obscure to this court:
28.1 The
unavailability of records of how much each of the 6 immovable
properties was sold;
28.2 No banking
records indicating how the funds were expended;
28.3 The
Respondent’s earnings during the period, October 2006 to
October 2007;
28.4 The
non-existence of any records dealing with the Respondent’s
earnings both as an employee and as shareholder of Coal
Trans prior
to 2004.
[29] It is precisely
in circumstances such as the present where the Respondent has
furnished very little information to enable the
court to properly
assess whether or not it will be to the advantage of creditors to
sequestrate him that the engagement of trustees
and/or liquidators
become extremely critical. They will be well disposed to employ the
provisions of the
Insolvency Act to
bring to surface assets that
could be distributed to the creditors. The Respondent’s
allegation that it will not be to the
advantage of creditors that he
be sequestrated cannot stand in view of the evidence presented by the
Applicant.
[30] Accordingly, I
conclude by referring to the statement of Levisohn J in Dunlop Tyres
(Pty) Ltd v Brewitt supra:
“In the
present case, in my view, the Court has good reason to believe, on
the basis of the facts relied upon in this judgment,
that assets
are likely to come to light when a proper interrogation is conducted
under the provisions of the Act. I consider therefore
that for
present purposes advantage to creditors under s 12(1)(c) of the Act
has been shown …”
[31] In the result I
make the following order:
1. Placing the
estate of the Respondent in sequestration in the hands of the Master
of the Honourable Court;
2. Costs of the
application.
B MASHILE
JUDGE OF THE HIGH
COURT OF SOUTH AFRICA
GAUTENG LOCAL
DIVISION, JOHANNESBURG
DATE OF HEARING :
31 October 2013
DATE OF
DELIVERY : 29 April 2014
COUNSEL FOR THE
APPLICANT : Adv. C Humphries
INTRUCTED BY :
Uys Matyeka Schwartz Attorneys
COUNSEL FOR THE
RESPONDENT: Adv. JW Steyn
INTRUCTED BY :
Brooks & Brand Inc.