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[2014] ZAGPJHC 309
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Meyerowitz v Motsheka N.O and Others (2013/37016) [2014] ZAGPJHC 309 (31 October 2014)
REPUBLIC
OF SOUTH AFRICA
IN THE HIGH COURT
OF SOUTH AFRICA
GAUTENG LOCAL
DIVISION, JOHANNESBURG
CASE
NO. 2013/37016
DATE:
31 OCTOBER 2014
In
the matter between:
MEYEROWITZ:
MICHELLE LINDA
...................................
Applicant
And
MATHOLE
SEROFO MOTSHEKA N.O
.................
First
Respondent
MOSES
PETER SILINDA N.O
..........................
Second
Respondent
SECHABA
TRUST (PTY) LTD
...............................
Third
Respondent
FIRSTRAND
BANK LIMITED
..............................
Fourth
Respondent
JUDGMENT
NOCHUMSOHN AJ
1.
This is an application brought in terms of
Section 21(4) of the Insolvency Act, Act No. 24 of 1936, ("the
Insolvency
Act"), for the release from the operation
of her husband's
insolvent estate to the applicant of her immovable property,
comprising Erf 103 Silvamonte Extension 1 Township,
in extent 1019
square metres, held by the applicant under Deed of Transfer
T065746/2005, registered in her name by the Registrar
of Deeds, at
Johannesburg upon 14 November 2005 ("the property").
2.
The relief was initially brought against
the first respondent, Surmany A I and RMG Trust CC, in their
capacities as the joint provisional
trustees in the insolvent estate
of one Lesley Meyerowitz ("the insolvent"), who is the
husband of the applicant and
who was provisionally sequestrated by
order of this court upon 22 March 2013, and finally sequestrated by
order of this court on
14 May 2013.
3.
In terms of a Notice delivered in terms of
Rule 15 upon 27 October 2014, at the hearing, the aforesaid
provisional trustees,
were substituted with
Mathole
Serofo Motsheka N.O., Moses Peter Silinda N.O.
and
Sechaba Trust (Pty) Ltd,
in
their respective capacities as the final trustees. There were
no objections to this substitution and accordingly the respondents
are now the said Motsheko N.O., Silinda N.O. and Sechaba Trust (Pty)
Ltd, in their respective capacities as the first, second and
third
respondents and FirstRand Bank Ltd, who up until now was the third
respondent, now becomes the fourth respondent.
I will
accordingly refer to FirstRand Bank Ltd, who up until this time, was
the third respondent, as the fourth respondent throughout
the
remainder of this judgment.
4.
The fourth respondent, FirstRand Bank
Limited, is the bondholder over the property. The fourth
respondent had launched
a prior application through this division
under Case Number 25450/2013, for foreclosure proceedings.
5.
In the alternative, and only if the court
is unwilling to grant the main relief, the applicant sought to
interdict the first to
third respondents from alienating the
property, pending a referral of the application to oral evidence.
The relief sought
by the applicant against the fourth respondent, is
for the holding over of the foreclosure proceedings initiated by it,
pending
the finalisation of this application. As Mr
Hollander for first to third respondents pointed out, a court
cannot
mero motu
refer a matter to oral evidence. Ms Gordon for the
applicant thereupon made an election to cling to the main relief
sought and the parties were all
ad
idem
that the matter could be properly
determined on motion proceedings.
6.
The applicant and the insolvent are married
to one another, out of community of property, and have been so
married since 1990.
7.
Prior to the applicant having acquired
transfer of the property, the same had been held by her mother since
1964, under Deed of
Transfer T569/1964.
8.
At a time after the filing of:
8.1.
the first respondent's Answering Affidavit,
8.2.
the applicant's Replying Affidavit; and
8.3.
the first respondent's Heads of Argument;
the fourth
respondent served and filed an Answering Affidavit, which in its
words, was not strictly an Answering Affidavit but rather
an
Affidavit in which it supports the applicant's claim that the
property be released in terms of Section 21(4) of the Act.
Mr Meintjies for the fourth respondent presented the fourth
respondent in court upon the basis of it being a friend of the court,
without it seeking costs against the remaining litigants.
9.
From all the papers filed of record,
including the papers relating to the Application for the
Sequestration of the insolvent, which
were annexed to the Founding
Affidavit, it would appear that the only asset unearthed at this
point, which is of any significance,
is the property.
10.
The fourth respondent,
qua
bondholder, has a real interest over such asset, given that:
10.1.
foreclosure proceedings have been initiated
in this court;
10.2.
were the property to form part of the
insolvent estate, the fourth respondent would enjoy full preferential
rights to the proceeds
of the sale, after the costs of
administration, subject to the maximum amount secured under its bond;
10.3.
conversely, were the property not to form
part of the insolvent estate, the fourth respondent would remain
secured to the maximum
value of its mortgage bond.
11.
Given the fourth respondent's material
interest in the property, it is incumbent upon me to take its stance
carefully into account,
in determining whether or not the applicant
is entitled to the relief sought.
12.
The aforesaid "
Answering
Affidavit
" of the fourth
respondent, is most helpful and sets out a very detailed analysis and
synopsis of material facts and circumstances
relating to the matter.
I would have thought that the contents of the fourth respondent's
affidavit would have materially
altered the approach of the first to
third respondents. As Mr Hollander attacked such affidavit in
his argument, it is necessary
for me to set out in detail, all of
the submissions made in such affidavit. Such long and
detailed submissions by fourth
respondent, comprise the following:
12.1.
The purpose of the Affidavit is to ensure
that the court is possessed of all facts surrounding the acquisition
of the immovable
property so as to avoid a grave travesty of justice
to the applicant;
12.2.
As a result the fourth respondent does not
seek any costs order against any of the parties, as its involvement
is exclusively based
on its vested interest by virtue of its mortgage
bond, which it says could be prejudicially affected by an order of
court refusing
the applicant's relief;
12.3.
Having read all of the papers filed of
record, the fourth respondent avers this Affidavit is filed in order
to place all the relevant
and material facts before the court;
12.4.
The fourth respondent sets out the
following chronology of events:
12.4.1.
In 1964, the applicant's mother became the
owner of the property;
12.4.2.
In 1965, the applicant's parents executed a
joint Will which provided that should either of them pass away, the
entire estate of
the deceased would devolve upon the surviving spouse
and in the event of them both passing away, then the entire estate
would pass
to their children, being the applicant and her sister;
12.4.3.
During 1995, the applicant's mother, passed
a mortgage bond over the property in favour of Absa Bank, being Bond
No. B4108/1995,
securing a loan of some R160 000.00;
12.4.4.
The property constituted the applicant and
her sister's family home where they grew up;
12.4.5.
In 2005, the applicant's mother was no
longer able to maintain the property, neither was she able to
maintain the monthly bond instalments
to Absa Bank, who were owed at
the time the balance of some R140 217.59, in order to cancel the
Absa bond. Thus since
the inception of the loan, the
applicant's mother was merely able to reduce the capital by the sum
of R19 782.41;
12.4.6.
The entire family stood together in a time
of crisis and elected that the applicant would purchase the property
from her mother
for a purchase price of R850 000.00, which was
then market related. This was done in order to avoid
foreclosure against
the property by Absa Bank;
12.4.7.
The initial idea was that the applicant and
the insolvent and their children would move into the property,
together with the applicant's
parents and grandmother, for which
purpose they would build a cottage upon the property for the
applicant's parents and grandmother.
For this purpose, the
funds raised in order to purchase the property would be acquired by
way of mortgage loan finance, part of
which would be used for the
renovation of the property and to construct such cottage;
12.4.8.
At the time, the insolvent was desirous of
being a party to this plan. Thus a Deed of Sale dated 5
August 2007 described
the offerors as both the applicant and the
insolvent. The purchase price embodied therein was
R850 000.00 conditional
upon loan finance of R850 000.00
being obtained. The price was market related;
12.4.9.
The applicant's parents and grandmother did
not wish to continue with the sale on the basis that the insolvent
would be part thereof,
as it was their desire, as evidenced by the
mutual Will that the property was ultimately to be awarded to the
applicant and her
sister. The parents did not want the property
to be registered in the insolvent's name and should be free from the
insolvent's
estate in the event of his insolvency and free from any
accrual in the event of termination of the marriage subsisting
between
the insolvent and the applicant;
12.4.10.
The insolvent acquiesced and accepted that
he would not become an owner of the property;
12.4.11.
With the result, the intention of the
mother was to transfer ownership of the property to the applicant
with a corresponding intention
of the applicant to become the sole
owner thereof;
12.4.12.
The applicant had no knowledge of
renovations and therefore asked the insolvent to attend to the
construction of the cottage for
her parents. A quotation
was provided by Cetalia Projects on 5 September 2005 to the insolvent
and he signed same on
7 September 2005. From this quotation,
the amount payable for the renovation came to R650 000.00;
12.4.13.
The construction of the cottage would
commence on 12 September 2005 and be completed upon 30 April 2006;
12.4.14.
On 16 September 2005 the insolvent paid
R50 000.00 to Cetalia Projects by way of cheque;
12.4.15.
During August or September 2005, the
applicant applied for loan finance from the fourth respondent, who
granted to the applicant,
a loan, by virtue of her application per
the grant of loan letter annexed to the Founding Affidavit as
annexure
"FA10"
;
12.4.16.
The fourth respondent granted a loan of
R850 000.00 to the applicant against the security of a first
mortgage bond. In addition,
it was required that a suretyship be
obtained from the insolvent;
12.4.17.
Subsequent to the grant of the loan, the
insolvent made two further payments to Cetalia Projects, respectively
on the 8 and 18 October
2005, in cash, of R25 000.00 and R20 000.00.
These payments were towards the construction of the cottage;
12.4.18.
The property was transferred from the
applicant's mother to the applicant on 14 November 2005, as more
fully appears from the title
deed annexed to the Founding Affidavit
as annexure
"FA11"
and, simultaneously with such transfer, the mortgage bond in favour
of Absa was cancelled, against payment of R140 217.59,
and, a
first mortgage bond was registered over the property in favour of the
fourth respondent for R850 000.00 under Mortgage
Bond No.
B89191/2005;
12.4.19.
The loan finance to the applicant was
granted on the basis of her credit standing and her application and
as security it was required
that a first mortgage bond be registered
over the property. Purely as additional security, the
insolvent signed a Suretyship,
as was the customary and usual
practice of the fourth respondent;
12.4.20.
As is apparent from annexure
"FA12"
to the Founding Affidavit, being the
document from Cuzen Randeree in their capacity as the transferring
attorney, the loan funds
from the first mortgage bond of R850 000.00
were applied in the following manner:
12.4.20.1.
R140 217.59 was utilised to pay Absa
in order to cancel their bond;
12.4.20.2.
The applicant could not finance the
attorney's costs and therefore same was financed by her mother in the
form of a loan of R21
136.40;
12.4.20.3.
R300 000.00 was paid directly to the
insolvent, on the instructions of the applicant's mother.
12.4.21.
The payment of R300 000.00 was made
directly to the insolvent as the insolvent had already expended
R95 000.00 on behalf of
the applicant from his own funds, for
the construction of the cottage;
12.4.22.
The insolvent was reimbursed and the
remainder of the funds of R205 000.00 was utilised by the
insolvent in order to fund the
continued construction of the cottage;
12.4.23.
In terms of the initial quote, an initial
payment of R200 000.00 had to be made and two interim progress
payments also had
to be made of R200 000.00.
R300 000.00 was then utilised to pay for the renovations and the
construction
of the cottage, the total of which amounted to
R650 000.00, leaving a balance still required in the sum of
R350 000.00
in order to finalise the construction;
12.4.24.
The loan advanced by the fourth respondent
was administered in the fourth respondent's books and records under
account 3 000 009
972 972. The monthly bond instalment
payable by the applicant by debit order and the credits originated
from an account
held by the insolvent with the fourth respondent,
being account number 54232401057. The applicant did not
have her
own savings account with the fourth respondent and
consequently deposited her salary into the insolvent's account number
54232401057;
12.4.25.
The debit orders were presented to account
number 54232401057 and honoured upon presentation as a result whereof
account 54232401057
would be debited and a corresponding credit entry
would be made in the home loan account administered under account
number 3 000
009 972 972;
12.4.26.
Applicant applied in January 2006 for a
further loan to be advanced in the sum of R250 000.00 and
pursuant thereto a second
loan agreement between the applicant and
fourth respondent was entered into on 12 January 2006
.
The terms of such agreement were
verbatim to that in respect of the first Grant of Loan letter, with
the difference being that the
loan sum would be the amount of
R250 000.00. The second mortgage bond was to be registered
and the monthly instalment
relative thereto would be R2 260.72.
The loan was granted, the R250 000.00 was advanced, making the
collective
loan sum the amount of R1 100 000.00 to the
applicant, which loans were consolidated and still administered under
account
number 3 000 009 972 972. Against this loan a
second mortgage bond was registered on 8 February 2006 under Bond No.
B9187/06.
12.4.27.
These funds were then utilised by the
applicant in order to pay Cetalia Projects;
12.4.28.
However, a further R100 000.00 was
needed for the construction to be completed;
12.4.29.
Again, the applicant approached the fourth
respondent for a further loan of R100 000.00 against the security of
a third mortgage
bond to be registered over the property, which loan
was approved on 21 February 2006;
12.4.30.
The third Grant of Loan letter was entered
into on 6 March 2006, again on verbatim terms, with the difference
that the third loan
was R100 000.00, which was advanced against
the security of a third mortgage bond, with a monthly instalment of
R907.02.
The third loan of R100 000.00 was also
consolidated with the two previous loans and is still administered
under account number
3 000 009 972 972;
12.4.31.
Ultimately, the fourth respondent advanced
funds totalling R1 200 000.00;
12.4.32.
A third mortgage bond in favour of the
fourth respondent was registered on 5 April 2006 under Bond
B25845/2006 to secure the sum
of R100 000.00;
12.4.33.
The further loan advances of R250 000.00
and R100 000.00 respectively were made upon the strength of
separate applications
made by the applicant to the fourth respondent,
who considered same upon the strength of the applicant's credit
record.
The fourth respondent took into account the fact
that the market value of the property had, with each advance
increased due to
renovations and that the ultimate value would be
sufficient to provide real security in the sum of R1 200 000.00.
In addition, by virtue of the fact that an unlimited Suretyship was
already held, it was decided that such advances be made to
the
applicant;
12.4.34.
The applicant's salary was paid into the
insolvent's account and debits were originated therefrom by virtue of
such debit orders.
Such debit orders were continuously
honoured;
12.4.35.
Only two years thereafter did the applicant
and the insolvent decide to consolidate their banking accounts and
financial indebtedness
owing to the fourth respondent, who offered a
facility known as a "
FNB One
Account Facility";
12.4.36.
During July 2007 the applicant applied for
the One Account Facility with the fourth respondent. In terms of
same, applicant and
the insolvent sought that the applicant's home
loan indebtedness under account 3 000
009
972 972 and the insolvent's overdraft Facility under account
54232401057 be consolidated into one account, whereby the applicant
alone would be liable and the insolvent would stand surety;
12.4.37.
At that stage, the insolvent owed
R72 508.77 to the fourth respondent under account 54232401057.
The applicant herself owed
R1 171 470.93 to the fourth
respondent in respect of the home loan indebtedness under account
number 3 000 009 972 972,
secured by the three mortgage bonds;
12.4.38.
The applicant herself took over the
insolvent's indebtedness, including her own indebtedness, in the form
of a single account;
12.4.39.
The account to be utilised for this purpose
was already an account in the name of the insolvent which was
utilised by them in the
form of depositing their salaries into the
account and then paying their usual and necessary expenses therefrom;
12.4.40.
Same was utilised to pay monthly bond
instalments. Furthermore, such account was already utilised by the
insolvent for his business
purposes in the form of receiving payments
from clients and to make corporate payments;
12.4.41.
In order to avoid the logistical
nightmares, occasioned from the cancellation of debit orders and
thereby creating a new account
with a new account number, it was
decided that the One Account Facility would still be administered
under account number 54232401057,
which would then be the account of
the applicant;
12.4.42.
The account would however still remain in
the name of the insolvent. Consequently on 23 August 2007, the
applicant and fourth respondent
entered into a written agreement
entitled FNB One Account Transaction and Facility Agreement. For this
purpose it was required
that the three existing bonds be cancelled
and a new mortgage bond be registered over the property;
12.4.43.
The applicant took over her own home loan
indebtedness, including the insolvent's indebtedness and the facility
would significantly
reduce bank charges and other costs, making
perfect commercial sense;
12.4.44.
On 24 October 2007 the three prior mortgage
bonds were cancelled, against the simultaneous registration of a
fresh mortgage bond
in favour of the fourth respondent, passed by the
applicant, under Bond No. B86897/07, securing the sum of R1 980
000.00.
12.4.45.
On 6 September 2007 the fourth respondent
and applicant gave expression to the One Account Application by
crediting the previous
Home Loan Mortgage Bond indebtedness under
Account No. 3 000 009 972 972 with the sum of R1171 470.93
and a corresponding
debit was passed in the same sum in respect of
the one account;
12.4.46.
The result was that the applicant's
previous home loan indebtedness under account 3 000 009 972 972 was
discharged and a corresponding
indebtedness created in the One
Account;
12.4.47.
The ultimate indebtedness owing by the
applicant to the fourth respondent by virtue of the One Account
Facility amounted to R1 243 636.77
as at 6 September 2007;
12.4.48.
Because applicant and the insolvent
previously utilised the One Account in which they pooled their income
and resources the effect
was that such position still continued, but
at this stage the account was that of the applicant, only in the name
of the fourth
respondent. Resultantly, the applicant continued to pay
her salary into the one account, which was then her account;
12.4.49.
The insolvent continued to receive deposits
into the account as was done previously, which was utilised for
monthly expenses and
liabilities and to discharge the home loan
indebtedness;
12.4.50.
Annexure
"JDL10"
comprises copies of account statements
administered under account number 54232401057 for the period 20
August 2007 until 7 October
2013. Such statements reveal
that prior to the One Account Facility being entered into, the
applicant paid the monthly
instalments by way of debit order which
was originated from the One Account as appears from the entry 3
September 2007. Within
the duration of the One Account Facility
from September 2007 until 13 December 2012, the applicant's salary
was deposited into
the account, starting from R6 000.00, usually
against the entry "
Salary
Elderberry",
which increased
throughout the years and by virtue of cheque deposits representing
the insolvent's salary of R25 000.00.
Various
credits appear which usually range between R3 000.00 to
R5 000.00, paid into the account by way of cheque, which
it is
suspected relate to rental paid by the parents and grandmother, in
cash, to the applicant and then handed over to the insolvent,
who
would then pay an equivalent sum by cheque or Internet transfer into
the account. The last payment to the account
was on 13
December 2012 in the amount of R19 200.00 and since then no
further payments have been made, with the closing balance
amounting
to R1 736 856.70 in debit as at 7 October 2013, it being
this sum for which the applicant is still liable to
the fourth
respondent;
12.4.51.
For a period in excess of seven years, the
applicant and the insolvent pooled their income, by depositing same
into the One Account
and utilised same to discharge the monthly bond
instalment and other liabilities. The One Account was
concluded two
years after the applicant acquired transfer of the
property, on 14 November 2005. Once the One Account was
concluded,
this
modus operandi
was followed without problems for at least another five years;
12.4.52.
It was only during March 2012 that the
applicant realised that the insolvent was in a financial predicament,
when she applied for
debt review which was ultimately terminated by
fourth respondent in terms of
Section 86(10)
of the
National Credit
Act 34 of 2005
;
12.4.53.
The insolvent experienced financial
difficulty and could not repay unknown indebtedness owing to one Mr
Blank who launched the sequestration
application out of this division
under Case Number 45060/2012, in relation to which Acting Justice van
Eeden granted a provisional
order on 22 March 2013 and Madam Justice
Weiner granted a final sequestration order on 14 May 2013;
12.4.54.
The applicant delivered an Affidavit to the
first respondent confirming that the property constitutes an asset
during or about 17
June 2013 and her attorneys addressed a letter to
first respondent on 22 July 2013, demanding the release of the
property to her,
failing which she would launch an application in
terms of Section 21(4) of the Insolvency Act;
12.4.55.
On 8 August 2013, the first respondent,
through his attorneys, addressed an e-mail to the applicant's
attorney alleging that it
was abundantly clear that the applicant did
not acquire the property in question, nor was she able to have
acquired same based
on her income.The insolvent's contributions
clearly facilitated the acquisition of the property as well as the
subsequent renovations
and for this and other reasons the property is
regarded as an asset in the insolvent estate;
12.4.56.
This stance led to the ultimate issue of
this application upon 30 October 2013, wherein the applicant seeks
the release of the property
from the operation of the insolvency in
terms of Section 21(4) of the Insolvency Act;
12.4.57.
The applicant obtained loan finance from
the fourth respondent in order to become the owner of the property.
This was
based on her own credit standing and only additional
security in the form of a Suretyship was required. The fact
that their
income and/or funds were pooled does not detract from the
fact that she became the owner, whether or not the insolvent also
effectively
contributed thereto. The insolvent was not in
financial difficulties at the time and consequently the transactions
were
bona fide
;
12.4.58.
This is not a case where the insolvent
sought to protect his own assets by transferring same to his wife.
This is simply a
case where a family stood together in a time of
crisis. The mere fact that the insolvent also contributed to
the payment
of the monthly bond instalments throughout the duration
of both loan accounts does not detract from the fact that it was at
all
material times the intention that only the applicant be the owner
thereof;
12.4.59.
The mere joint contribution to the monthly
bond instalment does not invalidate or cast suspicion upon the
genuineness of the real
agreement;
12.4.60.
The mere fact that the quotation for the
renovation was made out to the insolvent does also not discredit the
veracity of the applicant's
version;
12.4.61.
The quotation relied upon by the first
respondent in the judgment of Van Eeden AJ was taken out of
context. The Honourable
Van Eeden AJ indicates that
"
investigations and inquiries"
MAY
result in the unearthment of assets.
In other words, Van Eeden AJ, was applying a legal principle in order
for a provisional
sequestration order to issue and did not finally
determine that assets and/or the property actually belonged to the
insolvent;
12.4.62.
Most importantly, the investigations by the
fourth respondent itself leads to no other conclusion but for the
fact that the insolvent
is not the owner of the property;
12.4.63.
The applicant became the owner of the
property as far back as November 2005. How can it
subsequently seven years thereafter
be contended that she did not
become the owner? The first loan was merely for R850 000.00, at
monthly instalments in excess
of R7 000.00. By virtue of the
applicant's own income at that stage and the fact that she received
rental income, she was
fully in a position and capable to pay the
monthly instalments on her own;
12.4.64.
It seems to be first respondent's case that
by virtue of the One Account, that her own income and rental would
not have been able
to pay the instalments and therefore the
contributions of the insolvent leads to the conclusion that it was
intended that both
of them should be the owner. This is
incorrect. There was a valid real agreement and the property
was actually
transferred a year or two prior thereto in November 2005
at a substantially reduced mortgage bond instalment.
13.
The aforementioned Affidavit of the fourth
respondent was very detailed and enormously helpful in clarifying the
background facts
and history, which Affidavit bolsters and lends
credence to the relief sought by the applicant.
14.
The fourth respondent's affidavit is
designed to demonstrate that the applicant's entitlement to the
property is correct in law.
Mr Hollander attacked such
affidavit for want of attachment of the applicant's loan application
form in respect of the three bonds
granted and for want of any form
of confirmation as to its contents on the part of the applicant.
Such attack was further
based upon the fourth respondent's inability
to speak first hand to the affairs of the applicant or to identify
with certainty
whose salary or monies had been paid into the bank
accounts attached to the affidavit and the exact nature and sources
of the various
credits to the bank account. For these reasons,
Mr Hollander argued that I am to ignore the affidavit on the basis of
it
being unsubstantiated.
15.
Such attack was countermanded by Mr
Meintjies for the fourth respondent, who raised with me that the
first to third respondents
had at no time called for any further
documents such as loan application forms, or salary advices of the
applicant under rule 35(12).
Mr Meintjies argued further
that the first to third respondents had not responded to the
allegation set out in the affidavit and
had not launched any
application to strike out.
16.
Mr Hollander responded to the effect that
it was not necessary for the first to third respondents to serve any
notices under Rule
35(12) or otherwise, calling for loan applications
and details of the applicant's source of income. He maintained
that applicant
should have adduced such evidence herself, without
which, he argued that the applicant is unable to discharge her onus
of proof.
Mr Meintjies correctly pointed out that the certificates
forming annexures "
JDL11"
at page 501 of the papers in terms of
Section 15(4)
of the
Electronic
Communications and Transactions Act 25 of 2002
has the effect of
adding probative value to the bank statements attached and that there
is no reason to reject the fourth respondent's
evidence relating to
the payments made allegedly by or on behalf of the applicant.
Whilst I agree that the applicant
bears the onus and for that reason
it was not in any way necessary for the first to third respondents to
call for further documents
under
Rule 35
, I cannot simply overlook
such a well formulated, structured and detailed affidavit, deposed
to, with (in the deponent's words)
books and records under her
control to which she had reference and which she says bears out
everything contained therein.
By this line of reason, I cannot
simply pass the affidavit off as hearsay evidence.
17.
Whilst the applicant does not confirm or
answer the affidavit of the fourth respondent, the contents of such
affidavit, by and large
bears out and expands upon the very case of
the applicant. In the absence of any application to strike out,
the affidavit
stands, side by side, with the papers of the applicant
and there is no reason for me to jettison its contents, as correctly
contended
by Mr Meintjies.
18.
The deponent to such affidavit confirms
that she is authorised to depose thereto and that the contents fall
within her personal
knowledge. She adds at paragraph 2.2
thereof that where such allegations do not strictly fall under her
personal knowledge
that they appear from the books and records of the
fourth respondent, which fall under her control and to which she has
had reference.
I must have regard to the words of Roux J in
Bernard v Klein N.O.
1990 (2) SA
306
(W),
in
a similar application:
"May
I add to pour scorn on a version or to simply doubt it or to rest by
saying it is suspicious does not create dispute of
fact.
Before a version, the only version before the court, can be rejected
because it is so inherently improbable,
must in each case depend upon
the particular version. I would hesitate to reject a version
which is, in accordance with human
experience, one capable of having
occurred. Only if it was fantasy or a demonstrable lie
would I be justified in rejecting
the only version before the court."
19.
In applying the words of my brother, Roux
J, the only real version before the court is the version of the
applicant and the version
of the fourth respondent. They are,
in essence, the same version. There is no conflict
between the two versions.
The first respondent's
rejection of the applicant's version, is a form of pouring scorn upon
such version, without true and substantial
facts to support such
rejection. If not scorn, the first respondent simply
doubts the veracity and truth of such version.
The
suspicion of the first respondent cannot create a dispute of act, as
envisaged by Roux J. The version, is the only
version
before me, which cannot be rejected. There is nothing
inherently improbable in such version. The
version before
me accords fully with "
human
experience"
and is fully "
capable
of having occurred".
There
is no "
fantasy"
or
"
demonstrable lie",
or
any lie which would justify the rejection of the only version before
the court. This version overwhelmingly supports
the
relief sought by the applicant.
20.
In terms of Section 21(1) of the Insolvency
Act, the effect of the sequestration of the separate estate of one of
two spouses, who
are not living apart under a judicial order of
separation shall be to vest in the Master, until a trustee has been
appointed, and,
upon the appointment of a trustee, to vest in him all
the property of the spouse whose estate has not been sequestrated as
if it
were property of the sequestrated estate and to empower the
Master or trustee to deal with such property accordingly.
21.
In terms of Section 21(2)(c) of the
Insolvency Act, the trustee shall release any property of the
solvent spouse which is
proved to have been acquired by that spouse
during the marriage to the insolvent, by a title valid as against
creditors of the
insolvent.
22.
In terms of Section 21(4) of the Insolvency
Act, the solvent spouse may apply to court for an order releasing any
property vested
in the trustee of the insolvent estate under
sub-section 1 or for an order staying the sale of such property, and
the court may
make such order on the application as it considers
just.
23.
The
applicant bears the onus to establish the true validity of her title
valid against creditors of the insolvent. The
incidence
of the onus requires that the applicant demonstrate that the
transaction under which she acquired the property was not
simulated,
or designed to defeat the rights of creditors.
[1]
24.
I am satisfied that the applicant has
validly explained the genuine nature of the transaction and did not
acquire the property as
a simulated transaction designed to defeat
the rights of creditors. This was not a case where the
applicant had acquired
transfer of the property from the insolvent,
to protect it against the creditors of the insolvent.
There was nothing
sinister or clandestine about the acquisition of
such property. The applicant had acquired the property for
herself from
her mother, by way of an arms-length sale, some seven
years prior to the insolvency of her husband, at the time, such
insolvency
was not in the minds of the parties.
25.
In
Kilburn
v Estate Kilburn
1931 A.D. 501
at 507 to 508
Wessels ACJ
said:
"The
trustee must release such property of the solvent spouse as shown to
have been acquired during the marriage of the insolvent
by a title
valid as against the creditors of the insolvent spouse. In
other words if property has been acquired by the spouse
who is not
insolvent by means of her own money or from a source other than her
husband, then she holds it by title valid as against
the creditors of
her insolvent husband. But if she obtains it from him during
marriage as a donation, or if the insolvent
gives money to his wife
to buy property and have it registered in her name, or if she buys
property with money provided by the
husband ostensibly for herself
but in reality for her husband's estate or event for the benefit of
both the spouses, then it is
his property and forms part of his
estate; and the property though registered in her name is not
acquired by the non-insolvent
spouse by a valid title as against the
creditors of the insolvent."
26.
It has been demonstrated that the property
was initially acquired by the applicant, by way of mortgage bond
finance, which she,
with her own earnings, coupled with the rentals
received from her family, as well as her husband's income, was able
to service
and did so service for several years. The
additional loans were raised over time, with the proceeds utilised
for the
improvements to the property, and the repayments continued to
be made, partly from the applicant's own resources.
However,
it is inescapable that the insolvent's monthly salary was
also utilised towards the joint discharge by the applicant and the
insolvent
of the loan obligations.
27.
Sight must not be lost of the fact that the
combined obligations comprised not only the loan obligations for the
house, but the
business and other obligations of the insolvent,
himself, all of which were consolidated into the One Account
Facility.
It thus becomes a difficult egg to unscramble,
as to who exactly paid what, as by and large, the combined income of
the insolvent
and her husband merged into one melting pot, for the
joint discharge of their respective obligations.
28.
This, notwithstanding, for seven years and
beyond, the applicant paid her full salary into the joint account,
which was utilised
for this purpose. It could hardly be
said that she sat back, without an income and was supported by her
husband, or
that she acquired the property solely with funds derived
from her husband.
29.
It is clear that her entire income was
utilised towards the discharge of the joint obligations, which in the
main comprised the
discharge of the home loan obligations.
Whilst the insolvent also applied his funds towards the discharge of
such obligations,
he could not be expected to have an entitlement to
a rent free life. Over all of those years, there
was surely
an obligation upon the insolvent to contribute towards the
roof over his head. By this line of reason, it could not be cogently
argued that his contribution towards the discharge of the home loan
obligation comprised the co-discharge of a purchase consideration,
entitling co-ownership. All of the evidence and factors,
point to the contrary. It is crystal clear from
the
papers that the intention was to pass transfer of the property to the
applicant to the exclusion of her husband, and, whether
or not his
income was partly utilised towards the discharge of the monthly bond
repayments, it could hardly be argued that such
payments would
entitle him to lay claim to co-ownership. Thus it could
hardly be said that the applicant received money
from the insolvent
to buy property and have it registered in her name, or that she
bought property with money provided by her husband
ostensibly for
herself but in reality for her husband's estate, as envisaged by
Wessels ACJ in
Kilburn supra.
Therefore, on the test set up in
Kilburn supra,
when
applied to the facts and circumstances of this case, the applicant
did acquire the property by a title valid as against the
creditors of
the insolvent spouse.
30.
Kriegler J, as he then was, set out the
position in a most profound manner in the case of
Snyman
v Rheeder N.O.
1989 (4) SA 496
,
where he speaks primarily to the alteration of the
status
quo
upon the impact of Section 21 of
the Insolvency Act, by the introduction of
Section 22
of the
Matrimonial Property Act 88 of 1984
, which serves to effectively
legitimise donations between spouses, which prior thereto were
considered to be illegitimate.
Whilst it is not necessary
to get bogged down with the concept of donations, as there is no
evidence on the papers before me to
the effect that the contributions
made by the insolvent were donations to the applicant, the facts of
the Snyman case nevertheless
are in alignment with the case in
question. At the letter
I
on
page 499 of the judgment, the court analysed the facts and found the
investigation as regards the house in Potgietersrust should
not be
aimed at determining whether the applicant had acquired the purchase
price from a source other than the insolvent or had
received it from
him other than as a gift, but should be aimed at determining whether
the payment of the purchase price from the
funds in the insolvent's
bank account was suspect for reason other than donation.
In answering this in the negative,
the court considered the nature of
the arrangement with the applicant's deceased father not to be
strange with persons from that
particular generation, the court
considered the non-existence of a separate bank account for that
applicant not to be strange and
the court found that it was probable
that the applicant and her husband would have agreed that she should
share in profit obtained
from the sale and re-sale of the Marble Hall
farm, since her inheritance was used towards the purchasing thereof.
The court found
that the registration of the house in that
applicant's name from the start was therefore relatively weighty
evidence of a real
and
bona fide
intention
at the time
(my emphasis) that it should
be the applicant's asset. The court therefore found that the
applicant had proved that
she was entitled to the release of the
house.
31.
In
Beddy
N.O. v van der Westhuizen
1999 (3) SA 913
(SCA) at 916A to C
,
it was asserted that the purpose of Section 21 of the Insolvency Act
is to prevent or at least to hamper collusion between spouses
to the
detriment of creditors of the insolvent spouse and to ensure that
property which belonged to the insolvent ends up in the
insolvent's
estate. There is no evidence before me in this matter of any such
collusion. Whilst Mr Hollander made much emphasis
upon the
offer to purchase having been submitted by the applicant and the
insolvent jointly, coupled with the fact that upon its
rejection and
subsequent transfer of the property to the applicant herself, there
was no attempt to remove the name of the insolvent
from such offer to
purchase, absolutely nothing turns on this. It is adequately
explained that the insolvent and her husband initially
intended to
jointly purchase the property, at the time that the offer was made.
This was the reason why the offer was made by them
jointly. Simply
because that was their intention, does not mean that the insolvent is
deemed to be a co-owner or was in any way
a co-owner. Quite on the
contrary, such intention was scuppered by the seller, who was the
applicant's mother, who insisted on
passing transfer to the applicant
alone to the exclusion of the insolvent, for the very fear of a
future insolvency, which did
come about, albeit as late as seven
years beyond the time of the acquisition of transfer into the
applicant's name.
32.
In
Mia &
others v Morrison N.O.
1962 (3) SA 756
(N)
it was held "
necessary for the
spouse, in order to obtain the release of the property which has
vested, in terms of Section 21(1) in the Master,
and thereafter in
the trustee, to show that the title,
AT
THE TIME IT WAS OBTAINED,
(my emphasis) was good as against the creditors of the insolvent"
(at 758A)
.
From the correct analysis and
interpretation of the facts and circumstances of this case, it is
abundantly clear that the applicant
demonstrates that her title to
the property,
at the time that it
was obtained
in November 2005
was certainly good as against the creditors of the insolvent and to
this end, the applicable test in Mia
supra
is adequately discharged.
33.
As was held in
Maudsley's
Trustees v Maudsley 1940 TPD
the
onus on proving validity in title as against creditors in order to
qualify for an order of release of property from the
operation of the
insolvency to the solvent spouse under Section 21(2)(c) of the
Insolvency Act, fairly and squarely rests upon
the shoulders of the
solvent spouse. This onus is created as one facing insolvency,
may wish to attempt to conceal the true
purpose of a transaction.
In this regard, the applicant is
bona
fide
and has clearly satisfied such
onus. The real transaction is that the mother of the
applicant wanted to transfer the
property to the applicant herself
and this is exactly what happened, some seven years prior to the
insolvency having taken place.
34.
Against this backdrop, the property was
transferred to the applicant on 14 November 2005. One is also
to take into account
the abstract theory of transfer of ownership of
immovable property, in accordance with which the validity of transfer
of ownership
is not dependent upon the validity of underlying
transactions such as contract of sale. For this reason alone,
Mr Hollander's
point to the effect that the agreement of sale was
never amended so as to strike the name of the insolvent as a joint
offeror,
cannot and does not hold any water.
35.
This maxim was held in the landmark
judgment of
Legator McKenna
Incorporated v O'Shea
2010 (1) SA 35
(SCA)
.
Accordingly, the validity or
invalidity of the Sale Agreement as the underlying transaction is
irrelevant to the validity of the
actual transfer of ownership. It
therefore becomes irrelevant that in the initial Offer to Purchase,
the insolvent was joined as
a joint purchaser. His "joint
purchase" was rejected out of hand by the seller, who was the
applicant's mother
and the transfer was passed to the applicant
alone, it being the intention to oust the insolvent from any form of
co-ownership
Accordingly, I agree with counsel for the applicant that
the acquisition of the property by the applicant was in no way
simulated
with a view to defrauding any creditors and such
acquisition was seven years prior to the insolvency, and, as such,
the applicant
derived valid title to the property, valid against the
creditors of the insolvent, certainly as at the time of its
acquisition.
36.
In the circumstances, I make the following
Order:
36.1.
That the first, second and third
respondents are hereby ordered to release the immovable property
described as Erf 103 Silvamonte
Extension 1, held under Deed of
Transfer T065746/05 to the applicant forthwith;
36.2.
The first respondent is ordered to pay the
costs of the applicant, as taxed on the tariff as between party and
party, with such
costs to exclude all or any costs relating to the
exchanging of any affidavits by and between the fourth respondent and
the other
parties. Similarly, on no account are any costs
awarded of whatsoever nature against the fourth respondent.
NOCHUMSOHN, G
ACTING JUDGE OF
THE HIGH COURT
On
behalf of the Applicant: Advocate C Gordon
Instructed
by: Jordaan & Wolberg Attorneys
On
behalf of the First, Second
and
Third Respondents: Advocate L Hollander
Instructed
by: Nowitz Attorneys
On
behalf of the Fourth Respondent: Advocate L Meintjes
Instructed
by: Rorich Wolmarans Luderitz Inc
Date
of Hearing: 27 October 2014
Date
of Judgment: 31 October 2014
[1]
Rends
v Gutman N.O. & others
2003 (1) SA 93
(C) at 97G
Beddy
N.O. v van der Westhuizen
1999 (3) SA 913
(SCA) at 916H to 917F
Snyman
v Rheeder
1989 (4) SA 496
(T) at 505H to 506A
Coetzer
v Coetzer
1975 (3) SA 931
(E) at 936A