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[2017] ZAGPJHC 13
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Vaal Bricks (Pty) Limited and Others v Van der Heever NO and Others (2824/2015) [2017] ZAGPJHC 13 (16 February 2017)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NUMBER: 2824/2015
In
the application of:
VAAL
BRICKS (PTY) LIMITED
(INLIQUIDATION)
First
Applicant
THEODOR
WILHELM VAN DEN HEEVER
N.O.
Second
Applicant
COLLIN
VELAPHI CHAKE
N.O.
Third
Applicant
MARNIC
DEVELOPMENTS (PTY LIMITED
(IN
LIQIUDATION)
Fourth
Applicant
THEODOR
WILHELM VAN DER HEEVER
N.O.
Fifth
Respondent
RICHARD
CASSIM
N.O.
Sixth
Respondent
MARNIC
CONSTRUCTION (PTY) LIMITED
(IN
LIQUIDATION)
Seventh
Respondent
CORNE
VAN DER HEEVER
N.O.
Eighth
Respondent
SIYASANGA
BATANDWA WOTSHELA
N.O.
Ninth
Respondent
and
RUI
MIGUEL ABRANTES RAIMUNDO NUNES N.O.
First
Respondent
NICOLE
CHANTAL FREITAS
N.O.
Second
Respondent
MARCIO
ALEXANDRE FREITAS
N.O.
Third
Respondent
Coram:
WEPENER J
Heard:
8 February 2017
Delivered:
16 February 2017
JUDGMENT
WEPENER
J:
[1]
This is the return day of a provisional sequestration order. After
the provisional order was granted on 26 November 2015 both
parties
filed extensive further affidavits from time to time and as a result
of the fact that, despite the non-compliance with
the rules of court,
neither party objected to the further filing, I allowed same.
However, sometime after commencing the respondents’
argument,
leave was sought to hand in a further affidavit by the respondents.
No proper explanation was forthcoming why the affidavit
was produced
at such a late stage and, as a result also of the objection by the
applicants to further evidence, I refused to receive
the additional
affidavit.
[1]
[2]
The applicants are three liquidated entities (Vaal Bricks)
(Proprietary) Limited (‘Vaal Bricks’), Marnic
Developments
(Proprietary) Limited (‘Marnic Developments’)
and Marnic Construction (Proprietary) Limited (‘Marnic
Construction’)
and their liquidators. The first respondent
(‘Nunes’), second respondent (‘Nicole’) and
third respondent
(‘Marcio’) are the trustees of the Flor
Trust. The respondents were so appointed on 10 December 2013.
[3]
Shortly before the hearing, the respondents caused the debt claimed
by the first applicant in the sum R27 833,75 to be paid
into trust
with their attorney. The respondents tendered the payment of the sum
of R27 833,75. The respondent further submitted
that the
remaining debt has not been proved nor that it has been shown that
the Flor Trust is insolvent. The applicants refused
to accept the
tender and should I find that the applicants established their claim,
the tender is of no consequence. It is common
cause that the funds
for the tender is to be made available by a family member. A tender
is of no value as it has been held that
conditional tenders could not
avoid a liquidation.
[2]
In
addition, there is no explanation as to the relationship of the
family member and the Trust and it is not possible to determine
whether the Trust has incurred or will incur an additional debt by
virtue of the family member’s monetary assistance to it.
The
tender is, in my view, consequently of no assistance to the
respondents.
[4]
In
Express
Model Trading 289 CC
,
Ponnan JA held:
[3]
‘
To the extent that
the full court held that the mere fact that a debt is paid by a third
party did not per se justify the inference
that a debtor is unable to
pay the debt — that may as a general proposition be
unobjectionable. But, the last sentence of
the quoted passage appears
to me to state the position rather too widely. An enquiry of this
kind, I do believe, is fact-based.
Thus, as important as the fact of
payment, may well be the source of payment. A debtor's ability to
raise a loan from a third party
may indeed be a demonstration of its
creditworthiness. On the other hand, it could conceivably demonstrate
the exact opposite,
where (as here) it amounts to no more than
borrowing from Peter to pay Paul. Unlike in Helderberg, where the
funds appear to have
been borrowed pursuant to an arm's-length
transaction from an unrelated entity, here Express Model's benefactor
initially remained
undisclosed. It subsequently emerged that
assistance was obtained from corporate entities, namely Billmont and
Class A Trading,
who as part of Mr Hassan's stable of corporate
entities enjoyed a fraternal relationship with Express Model. Mr
Bester explains:
“
The Corporation is
surety for the debts of Billmont No 104 CC to Rand Merchant Bank
(RMB). Billmont is a subsidiary of the corporation.
RMB registered
surety bonds over the remaining units of the corporation in
liquidation, which surety bonds were registered in the
capital amount
of R18 000 000 (excluding the additional amounts). The current
outstanding amount owing by Billmont to RMB amounts
to R25 300 000
(see A3). The full suretyship obligation forms a contingent liability
in the books of the corporation and must be
taken into consideration
in its liability statement. RMB has submitted two requisitions in the
provisional liquidation of the corporation
(see K1 and K2), and I
have established that Billmont is currently in arrears with its
payments to RMB.”
It follows that no
inferences favourable to Express Model's creditworthiness or its
ability to raise arm's-length funding can accordingly
be drawn.’
[5]
The issues before Masipa J were the same as to those in the matter
before me: firstly, whether the Flor Trust is indebted to
the
applicants and secondly, whether the Flor Trust is insolvent. Masipa
J concluded that on the evidence before her, the applicants
indeed
had the necessary locus standi to bring the application due to the
existence of a debt by the Flor Trust to the applicants.
She further
found that on the evidence placed before her, the Flor Trust was
indeed insolvent and that would be an advantage to
creditors for the
Flor Trust to be sequestrated.
[6]
In my view, despite the filing of further affidavits, the
difficulties encountered by the respondents in the matter when the
provisional order was issued have not been overcome.
[7]
One of the main reasons for this is the fact that the estate of the
controlling mind of the Flor Trust, a Mr Freitas (father
of two of
the current trustees), was, together with his wife’s estate,
sequestrated on 9 December 2013. His children and
Nunes, the current
trustees, had no knowledge of the business of the Flor Trust and were
appointed as trustees in the stead of
the sequestrated father and
mother a day later on 10 December 2013. But the father and mother who
could furnish the required evidence
remained uncannily silent.
[8]
It appears from the documentation that the three trustees acted as
mere fronts for the parents as they knew very little about
the
affairs of the Flor Trust. The fact that they so lacked knowledge was
candidly admitted during an enquiry in terms of ss 417
and 418 of the
Companies Act.
[4]
Despite this,
and despite the challenge of the applicants that the trustees had no
knowledge of the affairs of the Flor Trust,
they did little to
counter these allegations. Indeed the respondents’ entire case
is based on information which they could
never have had any knowledge
of and they failed to obtain supporting evidence for their say-so.
Everything they said and everything
they purportedly passed on to
others to compile financial statements are unconfirmed evidence.
These financial statements constitute
a conclusion based on
information provided to the compiler thereof by the respondents and
are not factually based. The respondents
having failed to put up any
credible version, the only question is whether the applicants showed
that the Flor Trust was indebted
to them in the amounts claimed.
[9]
The new statements provided by the respondents are not factually
based and are as worthless as those which they provided before
Masipa
J and which she did not accept to be correct. According to the
financial statements for the Flor Trust which were
prepared by
chartered accountants for the Trust and issued on 13 September 2013,
the liabilities of the Trust exceeded its assets
by R2,6 million. The
Trust did not generate any income and had operating expenses and
finance costs in excess of R500 000.
The respondents attempted
to create what the applicants’ counsel referred to as a ‘paper
income’ in their second
answering affidavit by referring to and
annexing new found lease agreements. These lease agreements were
never mentioned at the
enquiry; they never featured in the first
answering affidavit; the agreements are contradicted by the erstwhile
auditor of the
Flor Trust who testified that the Flor Trust did not
generate any income; the evidence of the auditor is borne out by the
financial
statements which he prepared. The mastermind, Freitas,
never once made mention of the alleged lease agreement. They are
indeed
a figment of the respondents’ imaginations as all
evidence prior to their production refutes their existence. If this
so-called
evidence is discarded, as it should be, there is no doubt
that the Flor Trust is insolvent and that its liabilities exceed its
assets. The only question that remains is whether the applicants are
owed a debt by the Flor Trust. In the absence of credible evidence,
the finding of Masipa J must be followed. She found:
‘
[10]
The applicants place reliance on a schedule prepared by Zeelie de
Kock Auditors (“Zeelie”). From this schedule
it appears
that the Flor Trust is indebted to Vaal Bricks, Marnic Developments
and Marnic Construction in the amounts referred
to in the letter of
134 August 2014 respectively.
[11]
Counsel for the respondents submitted that no reliance could be
placed on the schedule relied upon by the applicants as the
schedule
is disputed by the trustees of the Flor Trust and the schedule was
not accompanied by the relevant source documents. In
the absence of
source documents the schedule prepared by Zeelie was nothing but
inadmissible evidence, it was argued. There is
no merit in this
submission.
[12]
Firstly, it is common cause that the respondents furnished the
applicants with the relevant documents contained in 72 lever
arch
files. The applicants can, therefore, not be blamed for not having
source documents in their possession. Secondly, the method
used to
prepare the schedule was transparent. Because of the practice
relating to the writing off of inter-company loans at each
financial
year Zeelie had to reconstruct the loan accounts of the various
entities. He did this by using the loan account balance
from the last
available audited statements and added and subtracted the
transactions obtained from the Pastel accounting system
of the Marnic
Group. No one from the Flor Trust objected to the method used.
[13]
Counsel for the respondents sought to argue that the Flor Trust was
not indebted to the applicants as the loans were written
off. He
submitted that the liquidators do not have the power or authority to
revive the loans unled there was a legal basis for
such a decision.
The submission loses sight of the fact that fraud was perpetrated in
the conduct of the affairs of the Marnic
Group and that all the
companies in the group were inextricably linked and therefore all
tainted. It can, therefore, not be said
that the “writing off”
of the loan accounts was genuine. In any event the schedule was
provided to the Flor Trust on
26 April 2014, and although its
correctness was disputed by Freitas he failed to provide reasons or
raise alternative calculations.
The evidence shows that the companies
in liquidation are creditors of the Flor Trust. The liquidators were
properly appointed and
granted powers to litigate on behalf of the
companies in liquidation. The applicants, therefore, have the
required locus standi.’
[10]
I respectfully agree with the findings of the learned judge. The
import hereof is that due to the inconsistencies in the evidence
of
Marcio, which evidence Masipa J said ‘can safely be
rejected’
[5]
, there is no
bona fide dispute of the Trust’s indebtedness to the applicants
or at least those applicants whose claims have
not been paid or
tendered to be paid.
[11]
The question of advantage for creditors was not seriously put in
issue and I adopt the findings of Masipa J in this regard
as to the
existence of an advantage.
[12]
Having regard to the aforegoing, I issue the following order:
1. The rule nisi dated 26
November 2015 in confirmed.
2. The estate of the Flor
Trust is placed under final sequestration.
3. The applicants’
costs of the application shall be costs in the administration of the
insolvent estate, including all reserved
costs.
4. The costs of
opposition shall not form part of the costs in the administration of
the insolvent estate.
__________
Wepener
J
Counsel
for Applicants: J.E. Smit
Attorneys
for Applicant: Werksmans Attorneys
Counsel
for Respondents: L.Hollander
Attorneys
for Respondent: Afzal Lahree Attorneys
[1]
Hano
Trading v JR209 Investments
2013 (1) SA 161
(SCA) at 164G-H.
[2]
See
Body Corporate of Fish Eagle v Group 12 Investments
2003 (5) SA 414
(W) at 426H-427B, where Malan J (as he then was)
held:
‘
The tender to pay
the aforesaid amount of R77 755,04 is clearly on the papers,
not an unconditional tender of payment, but
is tendered in full and
final settlement of the indebtedness of the respondent towards the
applicant. Should the applicant accept
this tender, the applicant
will buy doing so, waive its right to claim any other amounts from
the respondent. Since the
tender by the respondent to pay that
amount is conditional the tender by the respondent does not amount
in law to a payment of
the aforesaid sum of R77 755,04 and that
sum accordingly remains due and payable by the respondent to the
applicant.
A tender subject to a
condition does not constitute payment. The law distinguishes between
a payment and a conditional tender
(
Reilly v Seligson and Claire
Limited
1976 (2) SA 847
(W) at 849H-851C). Section 345(1) and
344f of the Companies Act intend that an unconditional payment must
be mad by a company
in order to avoid liquidation, not that
conditional tenders may be made and liquidation in that way
avoided’.
[3]
Express
Model Trading 289 CC v Dolphin Ridge
2015 (6) SA 224
(SCA) at 234.
[4]
Act 61 of 1973.
[5]
See
Wightman
t/a JW Construction v Headfour (Pty) Ltd and Another
[2008] ZASCA 6
;
2008 (3) SA 371
(SCA) at para 13.