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[2021] ZAGPJHC 709
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Engen Petroleum Limited v Singh (2019/29582) [2021] ZAGPJHC 709 (24 June 2021)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, JOHANNESBURG
CASE
NO:
2019/29582
REPORTABLE:
NO
OF
INTEREST TO OTHER JUDGES: NO
REVISED.
24
June 2021
In
the matter between:
ENGEN
PETROLEUM
LIMITED
Applicant
Versus
SINGH,
VISHAL
Respondent
JUDGMENT
MATOJANE
J
[1]
This is an application for the provisional sequestration of the
respondent's estate
in terms of s 8 (b) of the Insolvency Act 24 of
1936 ("the Act").
[2]
The three main issues are whether an act of insolvency has been
shown, whether the
sequestration will be to the advantage of
creditors and whether the court should exercise its discretion in
granting the relief
sought.
[3]
An interlocutory issue is whether the applicant's application for
condonation for
the late filing of a supplementary founding affidavit
should be granted. I propose starting with the merits as the
consideration
of the condonation application that also invokes a
consideration of the merits.
[4]
It is common cause that the respondent is indebted to the applicant
in the sum of
R48,546,883.15 together with interest thereon at the
rate of 10% per annum from 1 October 2018 to the date of final
payment.
[5]
The applicant caused a writ of execution ("the writ") to be
issued against
the respondent and served at the registered address of
an entity of which the respondent is a director. The sheriff
attempted to
serve at the premises on four separate occasions without
success as it could not be ascertained if the respondent still
resides
at the premises.
[6]
The writ was eventually served on the respondent at his place of
employment on 21
May 2019 after leave to serve, by way of substituted
service which was granted on 20 July 2020.
[8]
Two points were argued by the respondent in this regard. The first,
was that the
nulla bona
return relied upon by the applicant in
the founding affidavit did not prove the Act of insolvency asserted.
Second, the respondent
disputes the applicant's contention that it
has discharged the onus of establishing advantage to creditors in
terms of section
10 (c) of the Act.
[9]
The return of service reads as follows:
"On
this 21" day of May 2019 at 13:17 I served the WRIT OF EXECUTION
AGAINST PROPERTY in this matter upon VISHAL SINGH
personally at 2
ROBINSON STREET ALRODE ALBERTON by handing to the abovementioned a
copy thereof after explaining the nature and
exigency of the said
process. (Rule 4(1) (a) (i)).
Subsequently,
after I demanded payment of the amount due, I was informed by the
PARTY SERVED that it was impossible to pay the amount
claimed or any
sum. Except property exempted by law in terms of Section 39 of Act 59
of 1959, as amended, no property or assets
could, after enquiry, be
pointed out to satisfy this writ. Despite a diligent search and
enquiry, I could not find sufficient disposable
property to satisfy
this writ. I, therefore, make a return of NULLA BONA.
Remarks:
Ask the debtor to point out assets that belong to him, he informed me
that he got no assets. He sign a "Nulla Bona".
[10]
Section 8(b) of the Act, envisages two separate acts of insolvency.
The first is committed when
upon demand the debtor is not able to
satisfy the judgment and is also unable to indicate sufficient
disposable property to satisfy
it. The second is where the execution
officer is unable to serve the writ upon the debtor personally and
the execution officer
is unable to find sufficient disposable
property to satisfy the judgment
[11]
In his answering affidavit, the respondent alleges, in response to
the
nulla bona
return that:
"I
admit that the writ was served on me at my place of employment. When
the writ was served on me, the sheriff particularly
asked me to point
out the property owned by me at my place of employment. I responded
to the sheriff that I have no assets at such
premises. I deny
advising the sheriff that I have "no assets" (as is averred
in the sheriff's return of service). The
sheriff then requested me to
sign the
nulla bona
. He failed to explain to me the import of
this document and signed it without properly reading or understanding
it."
[12]
In
Sussman Co (Pty) Ltd v Schwarzer
1960 (3) SA 94
(O) 94
Potgieter J held
'The
onus
is always on the applicant to prove that respondent has
committed an act of insolvency. If an act of insolvency in terms of
sec.
8 (b) is relied upon the
onus
is discharged if a return
is filed which on the face of it is valid and if the facts therein
contained are facts which the applicant
can rely upon in terms of
sec. 8 (b). If the respondent then wishes to impeach those facts then
the onus shifts to him to show
by clear evidence that although the
return shows that the requirements of sec. 8 (b) have been complied
with they were in fact
not complied with and that the return is not a
proper return. Where, however, the return itself does not show that
the requirements
of the sub-section have been complied with, then the
onus is not shifted, and it rests on applicant to show that in fact
the requirements
have been complied with and that the return is in
fact a
nulla bona
return.'
Do the facts contained
in the
nulla bona
return comply with
s 8(b)
of the
Insolvency
Act?
[13
]
An act of insolvency is committed if, as provided for in
s 8
(b)
of the
Insolvency Act, the
court has given judgment against the
debtor and he fails 'upon the demand of the officer whose duty it is
to execute that judgment,
to satisfy it or to indicate to that
officer disposable property sufficient to satisfy it, or if it
appears from the return made
by that officer that he has not found
sufficient disposable property to satisfy the judgment'.
[14]
Applied to the facts of the present matter, the question arises
whether the respondent, after
personal service on him of the writ,
indicated to the deputy sheriff disposable property sufficient to
satisfy the judgment debt
by informing him of having 'property
elsewhere' as well as 'banking accounts.
[15]
The return conveys that the respondent had no money or disposable
assets at his place of employment.
He alleges in his answering
affidavit that he responded to the sheriff that he has no assets at
such premises. However, he never
indicated to the sheriff the nature
of the property he asserts he has, its whereabouts, and bank
accounts. In
Wilken
and Others NNO v Reichenberg
[1]
it
was held that the execution officer is merely required to ask the
debtor to indicate sufficient property to satisfy the writ
and that
s
8
(b)
does not impose a duty on the execution officer to enquire from the
debtor what property he has and where it is situated. It is
for the
debtor, the court concluded, to point out the property or indicate
its whereabouts and describe it in order to demonstrate
its
sufficiency
[2]
.
[16]
The respondent further alleges that he was made to sign the
nulla
bona
return without the sheriff having
explained the content thereof to him.
When
a document containing contractual terms is signed, then, in the
absence of fraud, or, I will add, misrepresentation, the
party
signing it is bound, and it is wholly immaterial
whether he has read the document or not. The
principle of
the
caveat subscriptor
rule is that one's consent is indicated by one's signature to the
document, irrespective of one's true intentions. For this reason,
the
respondent, a businessman with interests in a number of companies and
Close Corporations, cannot succeed in arguing that he
did not read
what he signed or did not understand the import of the
nulla
bona
return.
[17]
The consequence for this matter is that the respondent's attack on
whether an act of insolvency
has been shown is not available as the
facts contained in the return
are facts that the
applicant can rely upon in terms of
sec—8
(b).
Advantage
to creditors
[18]
The threshold for advantage to creditors is relatively low in
arms-length sequestration. In Meskin
& Co v Friedman, Roper J
said:
"The
phrase "reason to believe", used as it is in both these
sections (sections 10 and 12 of the
Insolvency Act), indicates
that
it is not necessary, either at the first or at the final hearing, for
the creditor to induce in the mind of the courts positive
view that
sequestration will be to the financial advantage of creditors. At the
final hearing, though the court must be "satisfied",
it is
not to be satisfied that sequestration will be to the advantage of
creditors, but only that there is reason to believe that
it will be
so
[3]
."
[19]
The facts put before the court must satisfy it that there is a
reasonable prospect – not
necessarily a likelihood, but a
prospect which is not too remote – that some pecuniary benefit
will result to the creditors
[4]
.
The court need only be satisfied that there was reason to believe,
not even a likelihood but a prospect not too remote, that as
a result
of investigation and enquiry, assets might be uncovered that will
benefit creditors.
[20]
The respondent's case in its answering affidavit is that the
supposition that he is factually
insolvent is unsupported by any
evidence and that applicant has failed to discharge its onus of
establishing that he is, in fact,
de facto
insolvent.
[21]
Against this background, the following factors weigh with me. First,
t
he respondent is a registered owner of an immovable property,
namely unit 9, SS Avonlea Gardens, Oriel. The purchase price of this
property is recorded as R90 000.00, and a bond is registered
over the property in the amount of R1 600 000.00; there
is
a prospect that as a result of the investigation, it might be
discovered that there is equity in the property that could benefit
creditors if the property is sold.
[22]
Second, a trustee, if appointed, will be able to
investigate
whether the respondent has any claims on loan account against the
five companies and close corporations in which he
has an interest and
whether these companies are his alter ego. The applicant has not
annexed any evidence substantiating his income
level. He could have
provided his returns of income to SARS or other proof of income.
[23]
Third, in exercising discretion, I weigh up the fact that without
knowledge of the identity of
any other creditors which the respondent
may have, the respondent's liabilities to the applicant calculates to
R48 546 883.15,
which exceeds his assets, and he is
accordingly
de facto
insolvent.
[24]
In my view, the
investigation and
interrogation of the respondent and witnesses may reveal assets that
have been disposed of and, therefore, prove
advantageous to
creditors.
Condonation
for the late supplementary founding affidavit
[25]
Approximately two hours before the commencement of the hearing, the
respondent’s counsel
informed the applicant’s counsel
that he was considering raising a point of law which was not raised
in the founding papers.
That the applicant had not, in its founding
affidavit dealt with the requirement set out in
section 9(3)(a)(ii)
which requires amongst others that the petition for sequestration
should state whether or not the respondent is married or not
and if
so, his marital status.
[26]
Having been alerted to the fact, the applicant's attorney of record
embarked on searches to be
able to comply with the provisions of
section 9(3)(a)(ii) of the Insolvency Act, 24 of 1936 ("the
Act"). The results
of the relevant searches were recorded in an
affidavit in the said attorney's name and uploaded, without the leave
of the court
and the respondent to Caselines.
[27]
The supplementary affidavit deposed to by the applicant’s
attorney advised that subsequent
to the disclosure, she carried out a
CSi identity verification search which recorded that the respondent
was married on 5 August
2015 and that the marital status of the
respondent is not stated. She attached a Deed of Suretyship signed by
the respondent only.
[28]
At the hearing, counsel for the respondent took issue with the fact
that the supplementary founding
affidavit was uploaded to Caselines
without the leave of the court. The respondent submitted that
applicant failed to establish
in his supplementary affidavit
reasonable steps taken by it to establish the respondent’s
marital status, and has accordingly
failed to comply with section
9(3)(a)(ii).
[29]
In Khunou & Others v Fihrer & Son
[5]
1982 (3) SA (WLD) , the court stated the following:
"The
proper function of a Court is to try disputes between litigants who
have real grievances and so see to it that justice
is done. The rules
of civil procedure exist in order to enable Courts to perform this
duty with which, in turn, the orderly functioning,
and indeed the
very existence, of society are inextricably interwoven. The Rules of
Court are, in a sense merely a refinement of
the general rule of
civil procedure. They are designed not only to allow litigants to
come to grips as expeditiously and as inexpensively
as possible with
the real issues between them, but also to ensure that the Courts
dispense justice uniformly and fairly, and that
the true issues
aforementioned are clarified and tried in a just manner."
[30]
The supplementary affidavit places before court, material evidence
that came as a result of notice
given by counsel for the respondent
two hours before the commencement of the hearing that he intended to
argue a point not foreshadowed
in the founding papers or his heads of
argument. The applicant explains how he is not able to establish the
marital status of the
respondent after this issue was brought to his
attention and no prejudice to the respondent has been alleged or
shown except for
a loss of a tactical advantage. I am satisfied that
the respondent has taken reasonable steps to establish the marital
status of
the respondent without success, it was unable
[6]
.
I
accordingly grant the condonation application with no order as to
costs.
ORDER
I
thus make the following order:
1.
The estate of the respondent is provisionally sequestrated.
2.
All persons who have a legitimate interest
in the outcome of this application are called upon to put
forward
their reasons why this Court should not order the final sequestration
of the respondent on 10 August 2021 at 10h00 or so
soon thereafter as
the matter may be heard.
3.
The respondent is ordered to disclose his marital status to the
applicant
4.
The costs of this application are costs in the sequestration of the
respondent's estate.
K
E MATOJANE
JUDGE
OF THE HIGH COURT,
GAUTENG
LOCAL DIVISION,
JOHANNESBURG
Appearances
Counsel
for Applicant:
Advocate
S Aucamp
Attorney
for Applicant:
Mathapo Moshimane
Mulangaphuma Inc
Counsel
for Respondent:
Advocate JL Kaplan
Attorney
for Respondent:
Hirschowtiz Flionis
[1]
1999(1)
SA 852(WLD) at page 858-C
[2]
see
Mars
The
Law of Insolvency in South Africa
9 Ed para 4.3).
[3]
Meskin
& Co v Friedman
1948 2 SA 555
(W) 558, Epstein v Epstein
1987 4
SA 606
(C) 609.
[4]
Meskin
& Co v Friedman (note 3 above) 558,
[5]
1982
(3) SA (WLD
[6]
Section 17(4)(b) of the Matrimonial Property Act provides:
“
An
application for the sequestration of a joint estate shall be made
against both spouses: Provided that no application for the
sequestration of the estate of a debtor shall be dismissed on the
ground that such debtor’s estate is a joint estate if
the
applicant satisfies the court that despite reasonable steps taken by
him he was unable to establish whether the debtor is
married in
community of property or the name and address of the spouse of the
debtor”