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[2017] ZAGPJHC 116
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Maree and Another v Bobroff and Another (2016/32219) [2017] ZAGPJHC 116 (7 March 2017)
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Certain
personal/private details of parties or witnesses have been
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IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
LOCAL DIVISION, JOHANNESBURG)
CASE
NO:
2016/32219
Reportable:
No
Of
interest to other judges: No
Revised.
7/3/2017
In
the matter between:
MAREE,
CHRISTINE
MARIE
First
Applicant
MORARA,
YASMIN
Second
Applicant
and
BOBROFF,
RONALD
First
Respondent
BOBROFF,
DARREN
RODNEY
Second
Respondent
JUDGMENT
THERON
AJ:
[1]
This is an opposed application for the provisional sequestration of
Ronald Bobroff and Darren Rodney Bobroff, both erstwhile
attorneys of
the High Court.
[2]
The Bobroffs' alleged indebtedness to the Applicants stems from the
consequences of the Full Bench decision in
De la Guerre v Ronald
Bobroff
&
Partners Inc
[2013] ZAGPPHC 33 (to be
found on the invaluable website of the South African Legal
Information Institute (SAFLll)) and the unsuccessful
appeal to the
Constitutional Court in
Ronald Bobroff
&
Partners Inc v
De la Guerre
2014 (3) SA 134
(CC).
[3]
After these judgments, various erstwhile clients of Ronald Bobroff &
Partners Inc ("the firm") sued for similar
orders to the
one sought by the Plaintiff and granted by the Full Bench in
De
la Guerre.
[1]
[4]
The Applicants sued for similar relief.
[5]
Against this background, I consider the issues arising from the
papers before me.
[6]
As the Respondents took issue with new matter in reply, and I refused
to entertain further sets of affidavits or an application
to strike
out certain matter, I disregarded all new matter in reply.
[2]
[7]
The Respondents contended that the joinder of both the Bobroffs in
one application for sequestration is a fatal misjoinder.
There is
some weighty authority in support of this proposition.
[3]
[8]
Although the findings in
Breetveldt
and Others v Van Zyl and Others
1972
(1) SA 304
(T),
Engen
Petroleum Limited v Multi_Waste (Pty) Limited and Others
2012
(5) SA 596
(GSJ) and );
Brack
v Front Runner Racks 2000 (Pty) Limited
(GSJ
case number 45084/2010) are
obiter
in relation to
sequestration proceedings, they accord with
Ferela
(Pty) Limited v Craigie and Others
1980
(3) SA 167
(W), from which I may only depart if convinced that it is
clearly or palpably erroneous.
[4]
[9]
Boruchowitz J in
Brack
quoted a portion of Kroon J's judgment
in
Business Partners Limited v Vecto Trade 87 (Pty) Limited and
Others
2004 (5) SA 296
(SE) at paragraph 34:
"/
have, however, some
difficulty with the stance that
a
complete identity of
interests is a sine qua non for the valid joinder of more than one
debtor in liquidation and/or sequestration
proceedings. One cannot
readily conceive of a situation where there would in fact be
a
complete identity of interests between debtors. Perhaps
a
preferable test would be that mooted by counsel for the Applicant,
vis.
a
sufficiently substantial coincidence of interests such
as
would practically or at least substantially place the
case outside the
objections to joinder that were averted to in
the three cases referred to above and properly bring the case within
the ambit of
Rule 10."
[10]
Boruchowitz J went on to find that the quoted dictum was persuasive
but insufficient to persuade him to depart from binding
authority in
his division.
[5]
[11]
I find the qualification of Kroon J persuasive and that the judgment
of
Ferela
is clearly wrong. The qualification of
Business
Partners
is to be preferred.
[12]
An applicant for an order of provisional sequestration must move the
court to form the opinion that
prima
facie:
[12.1] the Applicant has a claim
such as mentioned in subsection (1) of section 9 of the Insolvency
Act 24 of 1936 ("the
Act");
[12.2] the Respondent has
committed an act of insolvency or is insolvent; and
[12.3] there is reason to
believe that it will be to the advantage of creditors if the
Respondent's estate is sequestrated,
(see
section 10 of the Act).
[13]
The Applicants contend that the Respondents are jointly and severally
liable for the debts arising from settlement agreements
which were
made orders of court against the firm because of the working of
section 19(3) of the Companies Act 71 of 2008 ("the
Companies
Act"
;) read with Section 23 of the Attorneys Act 53 of 1979 ("the
Attorneys Act").
[14]
The acts of insolvency relied on as against both Respondents are
those contained in Sections 8(a) and 8(b) of the Act.
[15]
The advantage to creditors relied upon is that there is reason to
believe - not necessarily a likelihood, but a prospect not
too remote
- that as a result of investigation and enquiry, assets might be
unearthed that will benefit creditors.
[6]
[16]
The Applicants also rely on the Respondents' actual insolvency. In
relation to this ground, there is not an identity of interests.
[17]
I find that there is a sufficiently substantial coincidence of
interests on the facts of this case to find that there is not
a
misjoinder.
[18]
In an opposed application for provisional sequestration, the
necessary
prima facie
case
is established when the Applicant can show that on a consideration of
all the affidavits filed a case for sequestration has
been
established on a balance of probabilities.
[7]
[19]
Section 19(3)
of the
Companies Act applies
to the firm which is a
personal liability company. The Section reads as follows:
"If
a
company is
a
personal
liability company, the directors and past directors are jointly and
severally liable, together with the company, for any
debts and
liabilities of the company
as
were
contracted during their respective periods of office."
[20]
It is common cause that the Respondents were directors of the firm
when the disputed settlement agreements were concluded and
made
orders of Court.
[21]
I am satisfied that the settlement agreements alone and in their
reinforced state (after being made orders of court) were
"contracted"
for the purpose of
Section
19(3).
[8]
[22]
Section 23(
1
) to Section 23(3) of the Attorneys Act reads as
follows:
"(1) A company
may, notwithstanding anything to the contrary contained in this Act,
conduct
a
practice if:
(a)
Such company is a
personal liability company
contemplated in the Companies Act, 2008 (Act 71 of 2008);
(b)
only natural persons who are practitioners and who are in
possession
of current Fidelity Fund certificates are members
or shareholders of the company or persons having any interest in the
shares
of the company;
(c)
…
(2) Every shareholder of the
company shall be
a
director of the company, and only
a
shareholder of the company shall be
a
director thereof.
(3) If
a
shareholder of the
company or
a
person having any interest in the
shares
of
the company, dies or
ceases
to conform to any requirements of
subsection (1)(b), he or she or his or her estate,
as the
case
may be, may,
as
from the date on which he or she dies or
ceases
to conform, continue to hold the relevant
shares
or
interest in the
shares
in the company for
a
period of
six
months or for such longer period
as
the Council of
the Society having jurisdiction in the area in which the company is
registered office is
situate, may approve."
[23]
The Applicants rely on settlement agreements and taxations settled by
one of the three directors of the firm with the participation
of the
attorney of record for the firm in the litigation between the firm
and the Applicants.
[24]
It seems to me that the Respondents are bound to the settlements,
although I do not have to decide this issue.
[9]
Neither the agreements nor the consent orders have been set aside.
[25]
The Respondents unsuccessfully sought rescission of the consent
orders before Foulkes-Jones AJ. They have filed a notice of
application for leave to appeal against her dismissal.
[26]
To the extent that it might be said that the rescission applications
are therefore still pending, which I doubt, I must deal
with the
debate whether a rescission application suspends a judgment.
[27]
The judgments in
Khoza and Others v Body Corporate of Ella Court
2014 (2) SA 112
(GSJ) and
Peniel Development (Pty) Limited
are
respectfully, clearly wrong, for the reasons set out in
Erstwhile
Tenants of Williston Court and Others v Sewray Investments (Pty)
Limited and Another
2016 (6) SA 466
(GJ).
[28]
I also agree with the judgment of Roux J in
United
Reflective Converters (Pty) Limited v Levine
1988 (4) SA 460
(W)
at 463 J to 464 B.
[29]
I also agree with Meyer J's reasoning and findings in
Tenants of
Williston Court,
paragraphs 17-21.
[30]
Even if I am wrong, the settlement agreements (and agreements to
settle the taxations) are not affected by the rescission
applications.
[31]
The Applicants' attorney raised an interim interdict granted by
Foulkes Jones AJ on 2 December 2016 in the following terms:
"The Respondents are
interdicted from taking any further steps to enforce the 9 settlement
agreements which were subsequently
made orders of court until the
final determination of
this application
."
(my underlining)
as
a reason for the late filing of answering papers.
[32]
It is not raised again in the answering affidavits as a bar to these
proceedings. Even if it were, the order (an interlocutory
interdict
application itself pending the rescission application) did not
survive the refusal of the interlocutory interdict application
and
the refusal of the rescission applications and is not revived by a
notice of application for leave to appeal.
[33]
Sequestration proceedings are also not
"enforcement
of the agreements".
[10]
[34]
I, therefore, find that the Applicants have established that they are
prima facie
creditors of the Respondent jointly and severally
in the amounts of R1 334 980,00 and R1 872 757,52 respectively.
[35]
The Applicants rely on an act of insolvency created by Section 8(a)
of the Act:
''.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 the intent by
so
doing to evade or delay the payment of
his debts;"
[36]
The Respondents contend, that threats made by an attorney, Jeffrey
Katz, on 16 June 2015 (some 7 months before their hasty
departure
from the Republic) and a telephonic threat of arrest and assault
prompted their departure and that they intended to investigate
the
threats and return on 22 March 2016 (a couple of days after their
departure).
[37]
The Respondents do not indicate that the threats were indeed
investigated in a press release by a well-known firm of attorneys
on
their behalf on 23 March 2016 (after the date of their intended
return) denying that they are fugitives from justice and does
not
proffer the threats and their investigation as a reason for their
departure nor does it indicate their intention to return.
[38]
The alleged threats by Katz included the following:
"The Hawks are onto you and
will be arresting you
soon."
and
"You should pay back the
contingency
fees
money you stole from your clients to reduce
your sentence."
[39]
It is apposite to mention that on the 11th of March 2016, the firm,
represented by the Respondents, sold most of its clients
(using the
Respondents' words) to Attorney Rael Zimerman for R30 million.
[40]
The Respondents were thus attempting to liquidate one of their
largest assets days before hurriedly leaving the country. Their
fear
for their, and their families' safety, however, did not extend to the
First Respondent's wife who was left behind.
[41]
The threats made by Zimerman some 7 months before the Respondents'
departure are qualitatively little different from the alleged
threats
eventually prompting their departure.
[42]
On 25 August 2016 (some 5 months after their departure), the
Applicants sent a written demand for payment to the Respondents'
attorney which included the following statements:
"In the event that payment is
not made into our firm's Trust Account by 15h00 on Monday, 29 August
2016, we may without further
notice proceed with applications to
sequestrate the estates of both Ronald and Darren Rodney Bobroff.
In the event that we are to proceed
with such applications, kindly confirm that you are indeed, as their
attorney, authorised to
accept service of such applications at your
offices.
The costs of serving such
applications on your clients at either of their addresses in
Australia, aside the application to court
here in South Africa to
authorise such service are likely to be substantial and will only
serve to exacerbate what already seems
to be a dire financial
situation.
We would appreciate it if you as an
officer of Court (and bearing in
mind that your clients are
fugitives), and in the event that payment
is
not made
timeously, are prepared to confirm whether or not you hold any funds
in your Trust Account or are aware of anyone
else
within the
Republic holding funds for or on behalf of Ronald and Darren Rodney
which funds could be attached in order to satisfy
their legal
obligations to their former clients."
[43]
On the same day, the Respondents' attorney, Mr Cameron, responds in
writing saying
inter alia
that:
"Our clients have instructed
ourselves to record that:-
1. …
2. …
3. any application to sequestrate
the
estates
of the Bobroffs will be opposed; and
4. we are not authorised to accept
service of any sequestration applications.
In closing we record, which
recordal we are not obliged to convey to you, that the writer's firm
holds no funds in our trust account
on behalf of
the Bobroffs
and there are no circumstances under which the writer would be privy
to the relevant knowledge as to funds held by
any third parties on
behalf of the Bobroffs."
[44]
Intention is established by
a
process of inferential
reasoning and is not dependent upon the
ipse
dixit
of the debtor who may
well deny that he has any such intention. A court, in considering
whether there was such an intention, is
required to weigh up all the
relevant facts and circumstances to determine what, on the
probabilities, was the
'dominant,
operative or effectual intention in substance and in truth'
of
the debtor.
[11]
[45]
I agree with the authors of
Mars: The Law of Insolvency in South
Africa,
9th edition at pages 82-83 where they say:
"The cumulative effect of a
number of diverse factors taken together with several suspicious and
unusual acts by the debtor
before and at the time of his departure
may be sufficient to convince the court that he departed or absented
himself with the intention
of evading or delaying payment of his
debts."
[46]
The Supreme Court of Appeal in
Hassan and Another v Berrange
N.O
.
2012 (6) SA 329
(SCA), paragraphs 38 and 39, seems to
have considered the cumulative effect of a number of diverse factors
in line with the opinion
expressed in Mars.
[47]
Applying these tests, I find that the Applicants have established,
prima facie,
that the Respondents:
[47.1] left the Republic with
the intent to delay or evade payment; and/or
[47.2] remain absent from the
Republic with the intent to delay or evade payment; and/or
[47.3] departed from their
dwellings with the intent to delay or evade payment.
[48]
The Applicants also relied on the act of insolvency created by
Section 8(b) of the Act. Factually, demand was not made by the
Sheriff. This act of insolvency is therefore not proven.
[49]
The Applicants lastly rely on the Respondents' general, and actual,
insolvency.
[50]
The Applicants must, therefore, prove factual insolvency. To do so
they must allege, and indeed prove, that the Respondents'
liabilities
fairly estimated exceed their assets fairly valued. This must be
determined objectively.
[12]
[51]
The Applicants failed to put up admissible facts to prove factual
insolvency and did not press this ground in argument. The
Respondents, in turn, failed to put up admissible facts to prove
their solvency.
[52]
The Applicants put up evidence that the Respondents, after their
flight to Australia, registered a company, RES Properties
(Pty)
Limited under Australian law, and that the Second Respondent holds
its entire shareholding. The company owns immovable property
in St
Ives, Sydney (the current residential address of the First
Respondent).
[53]
They also pointed to further entities, a trust and companies, and
raised the possibility that these entities are in truth and
in fact
mere alter egos of the Respondents.
[54]
I am
prima facie
of
the opinion that there is, based on the evidence before me, reason to
believe - not necessarily a likelihood, but a prospect
not too remote
- that as a result of investigation and inquiry, assets might be
unearthed that will benefit creditors.
[13]
[55]
I see no reason why South African trustees would not be recognised in
terms of the Australia Cross-Border Insolvency Act 2008
(No. 24 of
2008) or in comity.
[56]
The obligation to furnish a copy of the application to employees and
any trade union representing them can only arise if there
are in fact
employees.
[14]
[57]
There is no evidence, not even in the Respondents' answer, that there
are any employees.
[58]
The requirement for a service affidavit would only arise if there
were employees and service of the application was effected
on them.
[59]
The Supreme Court of Appeal in similar circumstances and interpreting
similar provisions in the
Companies Act issued
a provisional
winding-up on appeal and found that such an order should have been
given in the Court a
quo
together with directions in
relation to the identification of employees and for service of the
application papers on them.
[15]
[60]
I intend giving such directions out of an abundance of caution in
circumstances where the Respondents did not allege non-service
on
employees in their answering papers.
In
the circumstances, I grant the following orders:
1. The estate of Ronald Bobroff with
South African identity number [...] is placed under provisional
sequestration;
2. Ronald Bobroff and any other party
who wishes to avoid such an order being made final, are called upon
to advance the reasons,
if any, why the Court should not grant a
final order of sequestration of the said estate on the 8th day of May
2017 at 10:00 or
as soon thereafter as the matter may be heard;
3. A copy of this order must forthwith
be served:
3.1
on Ronald Bobroff in the manner
and at the address or addresses already authorised for the service of
this application on him and
by e-mail at [...] and [...];
3.2
on any employees of the Respondents in terms of Uniform Rules 4(1)
and/or 4(2).
3.3
only employees disclosed in writing to the Applicants' attorneys by
Ronald Bobroff or his attorney within ten (10) days of this
order
need to be served at an address so disclosed;
3.4
on any trade union of employees so disclosed if the written
notification by Ronald Bobroff or his attorney indicates that the
employees are represented by a trade union; and
3.5
on the Master; and
3.6
on the South African Revenue Services.
4. The estate of Darren Rodney Bobroff
with South African identity number [...] is placed under provisional
sequestration;
5. Darren Rodney Bobroff and any other
party who wishes to avoid such an order being made final, are called
upon to advance the
reasons, if any, why the Court should not grant a
final order of sequestration of the said estate on the 8th day of May
2017 at
10:00 or as soon thereafter as the matter may be heard;
6. A copy of this order must forthwith
be served:
6.1 on Darren Rodney Bobroff in the
manner and at the address or addresses already authorised for the
service of this application
on him and by
e-mail at [...];
6.2 on any employees of the
Respondents in terms of Uniform Rules 4(1) and/or 4(2) disclosed in
writing to the Applicants' attorneys
by Darren Rodney Bobroff or his
attorney within ten (10) days of this order;
6.3 only employees disclosed in
writing to the Applicants' attorneys by Darren Rodney Bobroff or his
attorney within ten (10) days
of this order need to be served at an
address so disclosed;
6.4 on any trade union of employees so
disclosed if the written notification by Darren Rodney Bobroff or his
attorney indicates
that the employees are represented by a trade
union; and
6.5
on the Master; and
6.6
on the South African Revenue Services.
7. The costs of this application are
costs in the sequestration of the First and Second Respondents'
estates.
____________________
THERON AJ
[1]
See Wong v Ronald Bobroff & Partners Inc 2016 JDR 0203 (GJ);
Chetty NO v Ronald Bobroff & Partners Inc 2016 JDR 0210
(GJ)
[2]
See Titty's Bar and Bottlestore (Pty) Limited v ABC Garage (Pty)
Limited and Others
1974 (4) SA 362
(T) at 368 G-H
[3]
See Breetveldt and Others v Van Zyl and Others
1972 (1) SA 304
(T);
Ferela (Pty) Limited v Craigie and Others
1980 (3) SA 167
(W); Engen
Petroleum Limited v Multiwaste (Pty) Limited and Others
2012 (5) SA
596
(GSJ); Brack v Front Runner Racks 2000 (Pty) Limited (GSJ case
number 45084/2010).
[4]
See Bloemfontein Town Council v Richter
1938 AD 195
at 232
[5]
See Brack, paragraph 8
[6]
See Commissioner, South African Revenue Services v Hawker Air
Services (Pty) Limited; Commissioner, South African Revenue Services
v Hawker Aviation Partnership and Others
[2006] ZASCA 51
;
2006 (4) SA 292
(SCA)
("Hawker Air'')
[7]
See Schneider v Raikin
1954 (4) SA 449
(W) at 453; Provincial
Building Society of South Africa v Du Bois
1966 (3) SA 76
(W) and
Kalil v Decotex (Pty) Limited and Another
1988 (1) SA 943
(A) at 978
E-F
[8]
See Fundstrust (Pty) Limited (in liquidation) v Van Deventer
1997
(1) SA 710
(A); M v Ivory Tirupati: M v Ivory Tirupati and Another v
Sadan Urusan Logistik (aka Bulog)
2003 (3) SA 104
(SCA) at
paragraphs 28 to 30
[9]
See Hlobo v Multilateral Motor Vehicle Accidents Fund
2001 (2) SA 59
(SCA); One Stop Financial Services (Pty) Limited v Neffensaan
Ontwikkelings (Pty) Limited and Another
2015 (4) SA 623
(WCC) at
paragraphs 21-41
[10]
See Naidoo v ABSA Bank Limited
2010 (4) SA 597
(SCA) at paragraph 4;
Collet v Priest
1931 AD 290
at 299; and Investec Bank Limited and
Another v Mutemeri and Another
2010 (1) SA 265
(GSJ) at paragraphs
27-31
[11]
See Hassan and Another v Berrange N.O.
2012 (6) SA 329
(SCA) at
paragraph 37; Cooper and Another NNO v Merchant Trade Finance
Limited 2000 (3) SA 1009 (SCA) at paragraph 10
[12]
See Ohlsson's Cape Breweries Limited v Totten
1911 TPD 48
at 50; and
Bhyat v Khurishi
1929 TPD 896
at 900; and Venter v Volkskas
1973 (3)
SA 175
(T) at 178-9
[13]
See Hawker Air
[14]
See Section 9(4A) of the Act
[15]
See EB Steam Co (Pty) Limited v Eskom Holdings SOC Limited
2015 (2)
SA 526
(SCA)