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[2015] ZAGPJHC 61
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Dreyer And Nieuwoudt v Stephanus (2014/24159) [2015] ZAGPJHC 61 (11 March 2015)
REPUBLIC OF SOUTH
AFRICA
IN THE HIGH COURT OF
SOUTH AFRICA
GAUTENG LOCAL DIVISION,
JOHANNESBURG
CASE NO: 2014/24159
DATE: 11 MARCH 2015
In the matter between:
DREYER &
NIEUWOUDT
.....................................................................................................
Applicant
And
MARTIN,
STEPHANUS
.......................................................................................................
Respondent
J U D G M E N T
MAKUME, J:
INTRODUCTION
[1] This is an application for
sequestration of the estate of the respondent.
THE PARTIES
[2] The applicant is a firm of
attorneys which conducts business from 16 End Road, Linden Extension
in Randburg.
[3] The respondent is an adult male
businessman who conducts business as Sub-Tropical Garden and Pool
Services CC. He is married
out of community of property to one Erika
Martin Identity Number 7……………….
BACKGROUND
[4] The respondent became a client of
the applicant from approximately 1998 until October 2009 when the
respondent terminated the
applicant’s mandate to act as his
attorneys and legal advisers in various legal matters.
[5] On termination of the mandate the
applicant submitted to the respondent its final statement of account
for professional services
rendered for payment. The respondent failed
to make payment and on the 26th November 2010 the applicant obtained
default judgment
against the respondent for the following:
5.1 Payment of the sum of R82 277,57.
5.2 Interest at the rate of 15,5% per
annum calculated on the sum of R82 277,57 from 20th January 2010 to
date of payment.
5.3 Costs to be taxed.
[6] On the 29th November 2010 the
applicant had a warrant of execution issued against the respondent.
This resulted in the sheriff
attaching a large number of the
respondent’s movable assets from his home situate at 74 Second
Street, Linden, Johannesburg.
[7] On the 7th March 2011 an agreement
was negotiated between the applicant and the respondent’s
attorneys in terms of which
the applicant withheld the removal of the
attached goods on condition the respondent signed an agreement to
make payment of the
capital plus costs and interest at the following
rate:
7.1 R3 000,00 on the 1st March 2011.
7.2 R4 000,00 per month for twelve
months with effect the 1st April 2011 to 1st March 2012.
7.3 Payment of the balance of the
judgment debt, interest and taxed costs by 1st April 2012.
[8] The costs were taxed on the 4th
March 2011 in the sum of R4 389,39. The respondent did not sign the
agreement to regulate payments
but proceeded to make payments.
Despite his undertaking the respondent made irregular payments not in
accordance with his undertaking
and stopped payment in June 2012
having paid only R29 000,00.
[9] The balance owing by the respondent
to the applicant as on the 30th September 2013 stood at R101 819,30.
[10] When no further payments were
being received the applicant sent to the respondent sms reminders and
when these were not heeded
to the applicant re-issued the warrant of
execution and instructed the sheriff on the 2nd March 2012 to make a
first attachment
of the respondent’s assets at 74 Second
Street, Linden, Johannesburg.
[11] On the 27th August 2012 the
sheriff made a return which reads as follows:
“The warrant of execution in this
matter was not served at 74 Second Street, Linden, Johannesburg as
the premises were found
vacant and the executor debtor left. No
indication of the executor debtor or a possible new address could be
ascertained.”
[12] The applicant having failed to
successfully trace the whereabouts of the respondent launched this
application which was served
by substituted service. On the 19th
August 2014 Hiemstra JA granted a provisional sequestration order. On
the 2nd September 2014
the respondent entered appearance to oppose
the granting of a final sequestration order and in due course served
and filed his
answering affidavit.
THE APPLICANT’S CASE
[13] The applicant obtained judgment
against the respondent for a substantive amount of money. The
judgment debt plus interest
and taxed costs remains unpaid to date
hereof. The total amount presently owing is the sum of R101 819,80.
The applicant is accordingly
a creditor as defined in section 9(1) of
the Insolvency Act.
[14] It is the applicant’s case
that the respondent has committed an act of insolvency in terms of
section 8(a) of the Insolvency
Act in that after becoming aware of
the judgment debt the respondent departed or left his dwelling at
which a warrant of execution
had been served with the intention to
evade or delay payment of his debt.
[15] In support of the above act of
insolvency the applicant relies on section 109(1) of the Magistrate’s
Court Act 32 of
1944 which reads as follows:
“Any person against whom a court
has in a civil case given any judgment or made any order who has not
satisfied in full such
judgment or order and paid all costs for which
he is liable in connection therewith shall if he has changed his
place of residence,
business or employment within 14 days from the
date of every such change notify the clerk of the court which gave
such judgment
or made such order and the judgment creditor or the
judgment creditor’s attorney or if his estate is under
administration
the administrator or his attorney, fully and correctly
in writing of his new place of residence, business or employment.”
[16] In conclusion the applicant argues
that there is reason to believe that it will be to the advantage of
creditors of the respondent
if his estate is sequestrated.
THE RESPONDENT’S CASE
[17] The respondent opposes the
granting of a final order of sequestration firstly on the basis that
the applicant does not have
a liquidator claim against the respondent
as required by sections 12 and 9(1) of the Insolvency Act. Secondly,
the respondent denies
that it has committed an act of insolvency and
lastly the respondent disputes that the sequestration of his estate
will be to the
advantage of his creditors.
THE LAW APPLIED TO THE FACTS
[18] Section 12 of the Insolvency Act
24 of 1936 (“the
Insolvency Act&rdquo
;) states as follows:
“If at the hearing pursuant to
the aforesaid rule nisi the court is satisfied that:
(a) the petitioning creditor has
established against the debtor a claim such as is mentioned in
subsection (1) of section nine;
(b) the debtor has committed an act of
insolvency or is insolvent;
(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
sequestrate the estate of the debtor.”
[19] The respondent’s first point
of opposition as I understand it is that whilst he admits that at
some stage he owed the
applicant money he paid it and secondly that
the judgment was obtained by technical default on his part because he
was opposing
same when the court granted the judgment. It is on this
basis that he argues that the amount claimed is not a liquidated
amount.
[20] There is absolutely no merit on
this argument for when the applicant issued a writ and had goods of
the respondent attached
the respondent did not attack the validity of
the judgment debt neither did he seek to apply for rescission
thereof.
[21] It is trite law that when a
sequestrating creditor relies on a judgment the court must in the
absence of any proceedings to
set it aside regard the judgment as
valid. In the matter of Behrman v Sideris and Another 1950 (2) SA
366 (T) at page 368 the
court had to deal with more or less a similar
defence raised by the respondent. In the last paragraph on page 36F
his Lordship
Roper J said the following:
“With regards to the first of
these grounds I am unable to see how I can treat the judgment debt in
question as null and void.
Under
section 36(b)
of the Magistrate’s
Court Act the court is given power to rescind or vary any judgment
granted by it which was void ab origin
and if the contention of the
respondent is that this judgment was void they should as it seems to
me have applied to the Magistrate’s
Court under that section
for an order rescinding the judgment on the ground alleged. That
step was not taken by the respondent
and the judgment therefore
stands unrescinded.”
[22] In the matter of Van Heerden v
Bester
1961 (3) SA 625
(OPD) the court held that a judgment for the
balance of the purchase price and interest a tempore morae against
transfer of the
property sold is not liquidated if it appears that
the seller has not tendered and probably will be unable to effect
transfer but
that taxed costs incurred in obtaining such judgment are
liquidated. At page 629 of the judgment Hofmeyer R writes as follows
in
paragraphs B-C:
“Aangesien die appellant verplig
en geregtig was om die gedingskoste aan te gaan ten einde sy vonnis
te verkry is ek van mening
dat hierdie toegewing tereg gemaak is. In
die omstandighede van hierdie saak moet die vordering vir koste van
geding as ‘n
selfstandige vordering gesien word. Die bedrag
hierby betrokke sou ook voldoende gewees het om die appellant as
applikant in die
sekwestrasie aansoek te kwalifiseer.”
[23] Accordingly I have come to the
conclusion that the judgment debt obtained by the applicant against
the respondent is liquidated
and remain unpaid and suffices to clothe
the applicant with the necessary locus standi in accordance with
section 9(1)
of the
Insolvency Act.
[24
] This bring me now to the other
three grounds on which the applicant seeks a final sequestration
order. The applicant bears the
onus to show on a balance of
probabilities and taking into account the requirements as set out in
section 12
of the
Insolvency Act that
the provisional order should be
made final. There is no onus on the respondent only an evidentiary
burden to establish that confirmation
of the provisional order is
being resisted on bona fide and reasonable grounds. If the respondent
is able to do so the provisional
order must be discharged and the
application for final sequestration dismissed (see Hanover
Reinsurance Group Africa (Pty) Ltd
and Another v Gungudoo and Another
2012 (1) SA 125 (GSJ).
SECTION 8(a)
OF THE
INSOLVENCY ACT
[25
]
Section 8(1)
reads as follows:
“A debtor commits an act of
insolvency:
(a) if he leaves the Republic or being
out of the Republic remains absent therefrom or departs from his
dwelling or otherwise absents
himself with intent by so doing to
evade or delay the payment of his debts.”
[26] The key words in
section 8(a)
is
“the intention to defeat or delay creditors in obtaining
payment”. This is what must be clearly established by the
applicant in order to succeed with his application.
[27] It is not in dispute that after
the applicant had made attachment by way of a writ of execution of a
sizeable amount of the
respondent’s movables the respondent
vacated that dwelling. A year later when the applicant reissued the
writ it was discovered
that the respondent had vacated the premises
without having given notice to the applicant in terms of
section 109
of the Magistrate’s Court Act.
[28] In reply the respondent says that
he and his wife left the residence at 27 Linden because they were
just tenants and the owner
requested them to vacate as he was selling
the house. Secondly, he says that he stopped paying the debt because
according to his
calculation he had paid what was owing in full.
Thirdly, he says he did not give his new address to sheriffs as he
was protecting
his wife who was involved in a domestic dispute with
her ex-husband. The respondent further says that is type of business
does
not consist of a shop where clients come and buy products or
services. Instead clients would phone their offices and they go out
to render services at the client’s chosen premises.
[29] The question is does this conduct
suffice to fall within the definition of
section 8(a)
of the
Insolvency Act? There
must be evidence of an intention to evade
creditors that must exist and be established. Mere absence from
one’s residence
is not necessarily sufficient proof because
there may be a satisfactory explanation.
[30] In this matter shortly after the
applicant had caused attachment of the respondent’s movables,
the respondent addressed
a passionate letter to the applicant on the
22nd February 2011. That letter is attached to the founding
affidavit and is marked
“JLD6”.
[31] Extracts from that letter which
in my view do not support the applicant’s view that the
respondent’s intention
was to evade a delay payment are the
following:
“Johan ek is meer as bereid om al
die rekeninge te betaal. Ek voel net dis onregverdig en inkorrek om
die mandaat wat ek op
19 June 2009 geteken het op alle werk toe te
pas voor daardie datum. Dit was my dispuut van die begin af.
Jy weet vanself deur watter trauma ek
sedert Januarie 2006 is toe ek en Illana begin skei het. Ek het self
seker gemaak dat jy
die transfer attorney van ons woming was to
Illana Amy Ledger op die vorm wou invul.
Ek bid en glo dat jy bogenoemde aksie
sal staak sodat ons die uitstaande geld kwessies kan bylê en ek
jou kan terugbetaal
so spoedig moontlik.”
[32] The tone and contents of that
letter do not demonstrate a person who had an intention at that time
and when he vacated the
house number 74 Linden to evade paying his
longstanding attorney. The letter indicates that the relationship
between the applicant
and the respondent predates the year 2009 for
it appears that in the year 2006 applicant was instructed to attend
to the transfer
of the respondent’s house when he divorced his
former wife.
[33] The reality of the matter is that
the respondent was requested to vacate the house as it was sold.
This evidence by the respondent
remains uncontested. The respondent’s
good were placed under attachment on the 10th December 2010 and he
only vacated the
premises during July 2012 some eighteen months
later. If it was the intention of the respondent to evade payment he
could have
left with the attached goods immediately after December
2010 he did not do so. The applicant if he was not satisfied that
the
respondent is able to pay the would have removed the goods and
sold same in execution.
[34] The evidence before me
demonstrates that the respondent is a businessman who has been plying
his trade as a garden service
in the area of Linden and Bryanston.
The tracing report indicates that he has moved from one place to the
other within the same
area. I do not believe that there is indication
of a person bent on avoiding his creditors.
[35] I am according not persuaded that
the respondent has committed any act of insolvency and the
application should be dismissed
on this aspect alone.
SECTION 8(g)
OF THE
INSOLVENCY ACT
[36
] This section reads as follows:
“A debtor commits an act of
insolvency:
(a) If he gives notice in writing to
any of his creditors that he is unable to pay any of his debts.”
[37] The applicant refers to a series
of letters that were exchanged between the applicant and the
respondent’s attorneys.
The letter commences with an offer on
the 9th June 2011 by the respondent to liquidate his indebtedness to
the applicant in monthly
instalments of R2 000,00 instead of R4
000,00 suggested by the applicant. It is when no agreement could be
reached that the applicant
comes to the conclusion at paragraph 101.6
when it says the following:
“The applicant submits that the
above correspondence from the respondent represented by Scott
Attorneys is evidence of the
respondent’s inability to pay the
applicant’s claim.”
[38] The conclusion arrived at by the
applicant and that the respondent is unable to pay the debt based on
correspondence that dates
3 years ago is untenable. Secondly, even
if correspondence had been written in 2014 in my view it will be
incorrect to ascribe
a meaning to the words used that an act of
Insolvency in terms of
section 8(g)
had been committed.
[39] In the matter of Du Plessis v
Tzerefos
1979 (4) SA 819
(C) it was held that it is not the
subjective intention which is important but the intention as it
appears from the words used.
The words used by the respondent in
this matter do not mean that he is unable to pay the judgment debt
quite to the contrary he
says he wants to pay the amount off in
particular instalments.
[40] In the matter of Shaban and Co
(Pty) Ltd v Plank
1966 (1) SA 59
(O) and Rodrew (Pty) Ltd v Rossouw
1975 (3) SA 138
(O) the court held that where a debtor has made
application for an administration order under
section 74
of the
Magistrate’s Court Act and where his assets exceeded his
liabilities and where he made arrangements to pay his creditors
that
such an application could not be relied on as an act of insolvency.
The application must be construed according to its tenor
as a whole
and not according to the meaning in isolation of certain words.
[41] In the Shaban matter (supra) De
Villiers AJP says the following at page 63E-G:
“The word ‘unable’ in
the sentence and I am unable to liquidate my liabilities forthwith
was obviously not meant
to be taken literally. What he in all
probability intended to convey was that although his assets
substantially exceeded his liabilities
and were largely of such a
nature that if he were forced to do so he would be able to liquidate
enough forthwith to pay his creditors
in the ordinary course of
business he was unwilling to do so because that would result in a
fairly good business being liquidated.
It was in that sense that he
used the word unable. For that reason he proposed that his creditors
should not oppose his application
to be allowed to pay R60,00 per
month for pro rata distribution between them under an administration
order. In other words the
allegations contained in paragraph 3 read
in the light of the surrounding facts was intended as no more than a
portion of a proposal
to his creditors by a solvent trader not
desirous of crippling himself to wait and was not a clear statement
that he could not
pay if they refused to assist him and demanded
payment. No reasonable creditor with the knowledge at his disposal
could have understood
from the words used that respondent had not the
means to pay or that he refused finally to pay if the creditors would
not allow
him to proceed with his application for an administration
order and resulted on payment of their claims forthwith.”
[42] In the Rodrew matter (supra) the
applicant sought to rely on a nulla bona return that was two and a
half years old. The court
at page 139B-C said the following:
“There is however a further
serious difficulty regarding the evidentiary value of the return in
proof of the commission of
the said act of insolvency. That
difficulty is occasioned by the fact that the return is two and a
half years old. When it is sough
to invoke the said of so venerable a
document these must at least be an allegation based on facts
mentioned in the application
that the debtor’s position is
unchanged. No such allegation is made by the applicant and there is
nothing to indicate that
the respondent’s position has in fact
remained unchanged from what it was on 15 June 1972. On this ground
also I find that
the applicant cannot rely on the return for proof of
the alleged acts of insolvency funded thereon.”
[43] The position is similar in the
present application. The correspondence relied upon is two years old
and cannot be relied upon
as proof of an act of insolvency in terms
of section 8(g) of the Act. The applicant has accordingly failed to
prove this act of
insolvency.
PREFERRING ONE GREATER ABOVE ANOTHER
SECTION 8(c)
OF THE
INSOLVENCY ACT
[44
] This section envisages two
situations an actual disposition and an attempted disposition of the
debtor’s property. The
applicant argues that the respondent
committed an act of insolvency under this section when his immovable
property was attached
and sold in execution by the bank. He added
that because there is still a shortfall due to the bank
notwithstanding the sale in
execution that therefore by making
payments in reduction of the payment of the shortfall the respondent
is prejudicing the applicant
and is thus preferring the bank over the
applicant and other creditors.
[45] This conclusion by the applicant
is not correct. It actually means the opposite. In his affidavit the
respondent says that
he is not arrears with his personal accounts and
has been making monthly instalments as required by the various
financial institutions
including Nedbank.
[46] In Mars The Law of Insolvency in
South Africa 9th Edition at pages 94-95 the learned writer says the
following:
“A debtor who allows judgment to
be given against him and his assets to be sold in execution with the
result that certain
of his creditors are preferred does not commit
any act of insolvency (see Ex Parte Garlick
2 SC 111
; Ex Parte
Grobbelaar
1915 CPD 13)
unless it is established that the debtor
colluded in a dishonest and fraudulent fashion with the creditor to
obtain a judgment
as art of a scheme to defeat the object of the
Act.”
[47] I remain unpersuaded that the
respondent committed any act of insolvency under this section.
ADVANTAGE OF BENEFIT TO CREDITORS
[48] Before a court can grant a final
order of sequestration it must be satisfied that there is reason to
believe that it will be
to the advantage of creditors if the debtor’s
estate is sequestrated. It was held in numerous cases that advantage
to creditors
means advantage to all or at least the general body of
creditors and not advantage of a mere majority of them.
[49] The applicant is the only creditor
who seeks sequestration the other known creditors namely Nedbank is
indifferent and has
shown no interest in participating in the
application for sequestration. The applicant has no mandate to speak
on behalf of other
creditors and can thus not conclude on their
behalf that a sequestration will be to their advantage.
[50] The onus of satisfying the court
that it will be to the advantage of creditors to grant a final
sequestration order rests with
the applicant. His Lordship Davis J
in the matter of Wilkins v Pieterse
1937 CPD 166
writes as follows:
“It is now clear that the onus of
establishing that there is reason to believe that sequestration will
be to the advantage
of creditors remains on the petitioning creditors
throughout even where an act of insolvency has been committed and
that if this
onus is not discharged the court cannot grant a final
sequestration order.”
[51] The applicant has failed to
demonstrate what advantage will the creditors get if the respondent’s
estate is sequestrated.
Accordingly this application will fail and I
make the following order:
(a) The rule nisi is hereby discharged.
(b) The provisional sequestration order
is set aside.
(c) The applicant is ordered to pay the
costs of this application.
DATED at JOHANNESBURG THIS 11th day
of MARCH 2015.
M A MAKUME
JUDGE OF THE HIGH COURT OF SOUTH
AFRICA
GAUTENG LOCAL DIVISION, JOHANNESBURG
COUNSEL FOR APPLICANT ADV A M VAN
WYK
INSTRUCTED BY MESSRS DREYER &
NIEUWOUDT
56 End Road
Linden
Johannesburg
Tel: (011) 782-3370
Ref: J L Dreyer
COUNSEL FOR RESPONDENT ADV C
HUMPHRIES
INSTRUCTED BY MESSRS TKI SCOTT
ATTORNEYS
548 Panther Road
Boskruin
Randburg
Tel: (011) 793-1870