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[2023] ZAGPJHC 821
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FirstRand Bank Limited v Mafuna (42356/2020) [2023] ZAGPJHC 821 (25 July 2023)

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Note:
Certain personal/private
details of parties or witnesses have been redacted from this
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IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG LOCAL
DIVISION, JOHANNESBURG
Case Number:
42356/2020
NOT
REPORTABLE
NOT OF INTEREST TO OTHER
JUDGES
NOT REVISED
25.07.23
In the matter between:
FIRST RAND BANK
LIMITED
Applicant
and
ERIC MALIGANA
MAFUNA
Respondent
JUDGMENT
FORD, AJ
Introduction
[2]
The applicant seeks a final sequestration
order against the respondent on the following grounds:
2.1
he
committed acts of insolvency as contemplated in sections 8 (e) and
(g) of the Insolvency Act
[1]
;
2.2
his liabilities exceed his assets by over
R3 million, based on the valuations on the farm Ndou and
[…]properties; and
2.3
he is factually insolvent.
[3]
The respondent opposes the application.
Brief factual matrix
[4]
The material facts in this matter are
largely common cause.
[5]
On 21 October 2016, at Woodmead, Janetha
Beleggings (Pty) Ltd (“Janetha”), represented by the
respondent, and the applicant,
represented by Ms. Nerissa Maharaj,
entered into a loan agreement.
[6]
The terms of that loan agreement are,
inter
alia
, as follows:
6.1
the applicant afforded Janetha a loan in
the amount of R5,000 000.00 (Five million rand);
6.2
the loan period was for 60 calendar months;
6.3
Janetha agreed to repay to the loan,
together with interest thereon, in 60 equal monthly instalments of
R103,806.65;
6.4
Interest on the outstanding loan would
accrue at an interest rate of prime plus 1.5%, and would be
calculated daily on the outstanding
balance on a normal annual
compounded monthly basis, capitalised in arrears;
6.5
that the security required, included
inter
alia
:
6.5.1
a cession of certain life assurance
policies held by the respondent in favour of the applicant; and
6.5.2
the registration of a covering mortgage
bond, in favour of the applicant by the respondent, over Farm Ndou No
68, Lephalale, Limpopo;
6.6
in addition to the above securities, the
applicant also required an unlimited suretyship to be executed by the
respondent, in favour
of the applicant for the obligations of
Janetha;
6.7
Janetha agreed to indemnify the applicant
against all costs and expenses (including legal fees and costs on the
attorney and own
client basis), together with any VAT incurred in or
in connection with the preservation and/or enforcement of the
agreement;
6.8
an event of default would occur if Janetha,
inter alia
,
failed to pay any amount due in terms of the loan agreement;
6.9
upon the occurrence of an event of default,
the applicant would, in addition to and without prejudice to any
other rights it may
have in terms of the loan agreement or in law,
including, without limitation, its right to claim damages, have the
right, without
further notice, to
inter
alia:
6.9.1
accelerate or place on demand payment of
all amounts owing, whether in respect of principal, interest or
otherwise, and all such
amounts shall immediately become due and
payable; and/or
6.9.2
call up and execute any security and
security documents which it holds.
6.10
a certificate signed by any manager of the
applicant (whose appointment or authority as such, shall not be
necessary to prove),
certifying any amount outstanding in terms of
the loan agreement which has become due and payable to the applicant,
as well as
the rates of interest and other charges applicable
thereto, shall be
prima facie
proof of matters therein stated for all purposes;
6.11
no latitude, extension of time or other
indulgence which may be given or allowed by either party to the
other. in respect of the
performance of any obligation under the loan
agreement, and no delay or forbearance in the enforcement of any
right of any party
under the loan agreement, shall in any
circumstances be construed to be implied consent. or election by such
party or operate as
a waiver or a novation of or otherwise affect any
of the party’s rights in terms of or arising from the loan
agreement or
estop or preclude any such party from enforcing at any
time and without notice, strict and punctual compliance with each and
every
provision or term thereof; and
6.12
no addition or variation, consensual
cancellation or novation of the loan agreement and no waiver of any
right arising from the
loan agreement, or its breach or termination
shall be of any force and effect unless reduced to writing and signed
by all of the
parties, or their duly authorised representatives.
[7]
On even date (21 October 2016), the
respondent executed an unlimited suretyship, in favour of the
applicant for the debts and obligations
of Janetha. Prior hereto. and
on 8 September 2014, the respondent executed an unlimited suretyship,
in favour of the applicant
for the debts and obligations of African
Leadership Group (Pty) Ltd (“ALG”).
[8]
On 17 November 2016, a first covering
mortgage bond was registered by the respondent in favour of the
applicant over Farm Ndou.
In terms of the bond, the respondent
declared and acknowledged himself to be truly and lawfully indebted,
and firmly bound to and
in favour of the applicant in the sum of
R8,000 000.00 (Eight million rand), together with an additional sum
of R1,600 000.00 (One
million, six hundred thousand rand) arising
from and being in respect of various causes, including monies lent
and advanced and/or
to be lent and advanced,  and/or lent and
advanced by the applicant to, or on behalf of the respondent from
time to time.
[9]
On 4 August 2017, at Woodmead, Janetha
represented by the respondent, and the applicant represented by a
duly authorised employee,
concluded a written facility agreement.
[10]
On 15 November 2017, also at Woodmead, the
applicant represented by a duly authorised employee, and ALG,
represented by the respondent,
concluded a written overdraft
agreement.
[11]
On 8 August 2018, and at the specific
instance and request of ALG, the applicant agreed to grant ALG a
temporary increase to its
overdraft facility in the amount of
R700 000.00 (Seven hundred thousand rand) together with
interest. The temporary increase
would be effective until 8 November
2018, at which date the utilisation of the facility had to be
decreased to the original facility
sum of R1,300 000.00 (One million,
three hundred thousand rand).
[12]
The applicant contends that Janetha
breached the terms and conditions of its facility and loan agreement
in that it:
12.1
failed to pay the monthly installments in
accordance with the terms of the Janetha loan agreement;
12.2
failed to reduce the overdraft facility by
R15,000 per month, as contemplated in the Janetha facility agreement.
[13]
ALG breached the terms and conditions of
the ALG facility agreement, in that it failed to reduce the
R700 000.00 temporary
increase by November 2018.
[14]
As a result of the breaches listed above,
the applicant issued letters of demand, addressed to both Janetha and
ALG on 5 November
2018. Notwithstanding the demand, Janetha and ALG
failed to make payments of the amounts demanded and on 12 November
2018, the
accounts were handed over to its (the applicant’s)
commercial recoveries department.
[15]
Pursuant hereto, settlement negotiations
ensued on 8 August 2019, a memorandum of agreement was concluded
between the applicant
and the respondent (both in his personal
capacity and as the sole director of Janetha and ALG).
[16]
The agreement set out the respondent’s
indebtedness and acknowledgement thereof in favour of the applicant.
The parties undertook,
jointly and severally to make payment of the
total outstanding amounts owed by Janetha and ALG to the applicant,
on or before 15
January 2020, alternatively, to furnish the applicant
with acceptable guarantees in favour of the applicant for payment of
the
total outstanding debt on or before 15 January 2020.
[17]
The debt in respect of the Janetha facility
agreement was fully paid by 8 August 2019, and the account was
subsequently closed by
the applicant. The debts in respect of the
Janetha loan agreement and the ALG facility agreement, however remain
unpaid.
[18]
In October 2019, the respondent requested
an extension from 31 October 2019 to 30 November 2019, to make
payment of R1,000 000.00
(One million rand) as agreed to in the
settlement agreement. A further extension was subsequently sought to
31 January 2021. The
applicant agreed to the extension on condition
that, in the event of the respondent failing to make the payment as
agreed to, the
applicant would be entitled to:
18.1
market and sell the farm (farm Ndou) in
terms of a special power of attorney to be executed in respect of the
property; and
18.2
apply to a court of competent jurisdiction,
for judgment against the debtors for payment of the entire amounts of
the debts then
outstanding.
[19]
On 31 January 2020, the respondent in turn
sought a further extension to pay the R1,000 000.00 (One million
rand) by 31 March 2020.
The applicant accepted the request and
advised, on 17 February 2020, that it was amenable to granting the
respondent a further
extension to 31 March 2020, on condition that
the respondent agrees to sign an addendum to the original settlement
agreement, and
that the applicant would not be granting the
respondent any further indulgences. Further that should the
respondent fail to make
the payment by 31 March 2020, the applicant
would invoke its rights in terms of the special power of attorney
signed by the respondent,
and sell the property.
[20]
On 19 February 2020, the respondent
accepted the applicant’s proposal. As the 31 March 2020 was
looming, the respondent’s
attorneys advised the applicant that
it was unlikely that the respondent would be able to pay the R1,000
000.00 (One million rand)
lumpsum by 31 March 2020.
[21]
A number of further discussions and
negotiations ensued. The respondent proposed to pay R4million in full
and final settlement of
all debts. The applicant rejected the
proposal, in turn requiring that the respondent pays the full
outstanding balances.
[22]
The applicant advised further, that in
respect of Janetha, it will accept a lumpsum payment in the amount of
R2.2million by no later
than 31 July 2020, and that the balance
remaining thereafter, be paid in 6 equal monthly payments of
R349 497.43. In respect
of ALG, the applicant advised that it
will accept a lumpsum of R1,5million by no later than 31 July 2020,
and that the remaining
balance be paid in 6 equal monthly instalments
of R208 296.74.
[23]
On 18 July 2020, the respondent advised
that it is not in a position to make payment as demanded by the
applicant.
[24]
No payment has been made by the respondent
to the applicant since October 2019, despite indulgences extended to
the respondent.
[25]
On 20 April 2022 Mudau J, granted an order
placing the estate of the respondent in provisional sequestration.
Pursuant hereto, Ms.
N.A. Choshane and Mr. T.W. van den Heever were
appointed by the Master as the Joint Provisional Trustees.
[26]
The Joint Provisional Trustees issued a
report which shows that:
26.1
the Farm Ndou (owned by the respondent)
suffers from severe neglect and is not income generating (with the
costs to preserve the
assets being required to be paid by the secured
creditor, the applicant);
26.2
there are very few assets in the insolvent
estate; and
26.3
there is no source of income which could be
used by the provisional trustees, to either preserve the assets or to
make payment of
the historical debt owed by the respondent.
Certified indebtedness
[27]
The respondent’s indebtedness to the
applicant is not in dispute and is computed as follows:
27.1
R4, 550 037. 39
plus
interest thereon at the rate of prime plus 1.5% per annum, calculated
daily and compounded monthly from 2 December 2020 until
date of
payment, in respect of suretyship obligations to Janetha and as
co-principal debtor in respect of that debt;
27.2
R2, 980 252.96
plus
interest thereon at the rate of prime plus 9% per annum, calculated
daily and compounded monthly in arrears from 1 December
2020 until
date of payment, in respect of suretyship obligations to Janetha and
as co-principal debtor in respect of that debt.
[28]
The
applicant contends, that the respondent has committed acts of
insolvency as contemplated in section 8(e) and (g) of the Act
[2]
in
that:
28.1
he has offered various arrangements to the
applicant (a creditor) to release him wholly or in part from his
debts; and
28.2
he has given notice in writing (to the
applicant) that he is unable to pay his debts.
[29]
On 2 April 2020, the respondent (as
stipulated in a letter from his attorneys) made the following written
offer of arrangement to
the applicant:
Recognising that adverse
circumstances have caught up with our client (and your client) would
it be possible that an amount of capital
can be agreed upon at this
stage and that this amount be paid by way of the deposit of
R1,3million referred to above and the balance
through the instalments
of R50,000 per month? That no further interest be charged on the
capital amount to be agreed?
[30]
This proposal as phrased by the
respondent’s attorneys, the applicant argued, constituted an
offer of arrangement to the applicant
to partially release the
respondent from his debts. The applicant argued, although the
respondent’s attorneys claimed that
the proposal was sent to
the applicant without the respondent’s approval, that the
surrounding circumstances suggest that
the respondent was aware of
the proposal. This is so, for the following reasons:
30.1
the respondent was copied in the email in
which the proposal was conveyed and as such had knowledge of the
proposal;
30.2
at no given time, after the proposal was
made, on his behalf, did the respondent express to the applicant,
either in writing or
verbally, that he did not agree with the
proposal.
[31]
On 19 May 2020, the respondent’s
attorneys, made a further written offer to the applicant, with the
object of partially releasing
the respondent from his indebtedness to
the applicant:
Without prejudice, would
your clients (the applicant) be prepared to consider a payment of
R4million in full and final settlement
of their claims if such
payment were made before say the end of October?
[32]
The applicant contends, that the aforesaid
offer was significantly less than the amounts owing to the applicant
at the time (approximately
R7million) and if accepted, would have
released the respondent of more than R3million from his indebtedness
to the applicant.
[33]
In terms of clauses 1.19 and 1.20 of the
memorandum of agreement, the respondent acknowledged that he is
unable to immediately pay
the debts as defined in clauses 1.4 and 1.8
of the agreement. In addition, in a number of correspondences
exchanged between the
applicant and the respondent’s attorneys,
it was expressly stated that the substantial interest rate being
charged over a
portion of the debt, increases the amount due so that
it is nearly impossible [for the respondent] to ever catch up.
Further, that
there is no chance of the applicant recovering all
their monies in the present situation. This is buttressed by a
correspondence
sent by the respondent’s attorneys in which it
is stated:
As
previously advised, with the best will in the world it is simply not
possible for our client to pay R2million by the end of this
month and
then to pay R349 497.43 for six months thereafter – and
that is only for Janetha Belegging’s liabilities!
The further
claim of R1.5milion and R208 297.74 per month makes it quite
clear that your client does not want to settle this
matter at all,
but is making demands that they know cannot be met
[3]
.
[34]
The applicant contends that all of the
above, coupled with the respondent’s non-payment of the debt,
and his repeated requests
for extensions to repay the debt, the
respondent has given written notice of his inability to pay his debts
to the applicant.
[35]
The applicant submitted further that the
respondent’s financial position is perilous. Apart from his
liabilities to the applicant
for more than R7,5million, he is also
indebted to other credits:
35.1
on 12 June 2019, Logetta Property
Investments (Pty) Ltd obtained judgment against the respondent for an
amount of R199 665
in the Randburg Magistrates Court;
35.2
the respondent is indebted to Firstrand
Bank Limited (acting through its Private Wealth Division) for an
amount of R3,728 943.16.
[36]
The applicant submits that the respondent’s
liabilities total an amount of R11, 488 967.30 and that he is
unable to make
payments to his creditors as and when payments are
due. The only inference to be drawn, according to the applicant, is
that the
respondent is insolvent.
[37]
The respondent submits that the applicant’s
attempt to prove the alleged insolvency of the respondent, is largely
drawn from
the fact the applicant places reliance on the selective
correspondence between, the respondent’s erstwhile attorney,
Mr.
van Der Watt and Ms. Kgame, but that those correspondences do not
convey the interpretation preferred by the applicant.
[38]
The respondent submits that some of the
correspondence was made without prejudice and without the approval of
the respondent. Further,
that the ground of insolvency based on
section 8(e) of the Act, is based on a complete misreading of email
correspondence and letters
between the applicant’s attorneys
and the respondent’s erstwhile attorneys. The respondent
submitted that the correspondence
must be read as a whole, and not in
a piece-meal fashion in order for one to understand the meaning and
the context of the correspondence.
[39]
According to the respondent, the
correspondence was about the prospects of investors buying the
property, and the proposal for settlement.
Further that it is clear
from a reading annexure “(FA24”) that the applicant’s
attorney of record noted that:
In
this regard,
please
take
note that the terms of settlement
as
proposed below are not financially
feasible and have been rejected by our client.
[40]
The above response, so it was submitted,
merely related to the issue of an indulgence which was granted by the
applicant up until
31 May 2020.
[41]
The respondent, in order to, counter the
claims raised by the applicant,
raised
the defense of
vis
major
as a
result of the outbreak of the COVID-19 pandemic, and prevailing bad
economic climate due mainly to the COVID outbreak. The
correspondence
between the parties, in its relevant parts provides as follows:
Mr
Mafuna has considered the option of selling some of the wild animals
on the game farm, but is currently prohibited from doing
so due to
the travel ban and other restrictions imposed by national lockdown.
Having
regard to the above, our client expressed it would be amenable to
pending legal action, provided your clients provide it
with a
palatable repayment proposal which could be presented to its credit
committee for consideration.
[4]
[42]
The respondent contends that the applicant
was willing to
consider
the settlement proposal, and recorded that the parties thereafter
agreed that the respondent would send the applicant a
settlement
proposal
for
its consideration.
[43]
The respondent denies that he is unable to
pay his debts as contended by the applicant.
Advantage to creditors
if the debtor if the debtor’s estate is sequestrated
[44]
The applicant submits that the respondent
is the registered owner of two properties, namely; the farm Ndou and
ERF […] Kleve
Hills Park. Both these properties are bonded to
the applicant.
[45]
The applicant contends that the
sequestration of the respondent’s estate will be advantageous
to the creditors for
inter alia
the following material reasons:
45.1
on 6 November 2020, the applicant procured
the services of WH Auctioneers, to conduct an auction value
assessment of the Farm Ndou.
And in terms of the auction valuation
assessment, the market value of Farm Ndou is approximately R17,
388 000.00 and the auction
value has been estimated at R11,302
200.00;
45.2
the estimated value of the Kleve Hill Park
property is R2,600 000;
45.3
despite the respondent’s contention
that the value of the game and the Ndou property have deteriorated to
such an extent that
it would be very difficulty to find value for
these assets in excess of R8million, it would appear that even on the
worst-case
scenario, the property can be sold on auction for an
amount of R11,302 200.00
45.4
the combined value of the Farm Ndou and the
Kleve Hill Park property is approximately R19,988 000.00;
45.5
the market value of the respondent’s
known assets exceeds that of his known liabilities of R11,4888
967.30. The properties
can therefore be sold by the appointed
trustees for the benefit of the creditors of the respondent’s
estate;
45.6
if the property is sold, the monthly
payments due in terms of the property will fall away. So too, other
expenses in respect of
the properties will no longer be payable;
45.7
a trustee can utilise the mechanisms of the
insolvency legislation, to investigate the financial affairs of the
respondent and unearth
assets to liquidate same for the benefit of
creditors.
[46]
The applicant argued that while Farm Ndou
is valued at an estimated auction value of R11,302 200.00, the
respondent has been unable
to sell the property privately and that
the respondent values the property at less than R8million. The
applicant contends further,
that it provided the respondent with
numerous extensions to make payment of his debts, but despite such
extensions the respondent
has been unable to make payment. Further
that the respondent incurred further debts and has been unable to
sell his properties
in order to satisfy his debts.
[47]
The applicant is of the view, having regard
to the respondent’s version, in respect of the Farm Ndou that
the respondent’s
assets decrease in value over time. And that
any further time extended to the respondent will only prejudice the
creditors.
[48]
The respondent in turn contends that it
would not be to the benefit of creditors to place his estate in final
sequestration, for
the following reasons:
48.1
before the provisional sequestration order
was granted, the respondent was in communication with a prospective
buyer who was prepared
to buy the Farm Ndou for R40million;
48.2
if the Rule
Nisi
is discharged, he will be able to sell the farm to Trophy Trackers
Africa (Pty) Ltd, and be able to pay his debt owed to the applicant

and other creditors;
48.3
a final sequestration order will render him
unable to continue with his lucrative consulting business, which
would enable him to
discharge all his debts in a reasonable time.
[49]
The applicant argues, in opposing the
defenses raised by the respondent, that the offer the respondent
relies upon was rejected
by the joint trustees owing to the
cumbersome and unrealistic conditions attached to them. Further, that
the respondent is not
the only director of ALD and that the business
would be able to continue without him as director.
Analysis
[50]
Section 12
of the
Insolvency Act 24 of 1936
sets out the requirements for a final sequestration order. The court
may grant a final sequestration order if satisfied that:
50.1
the petitioning creditor (the applicant in
this instance) has established a liquidated claim of at least R100
against the debtor;
50.2
the debtor has committed an act of
insolvency or is factually insolvent; and
50.3
there is reason to believe that it will be
to the advantage of creditors of the debtor if the debtor’s
estate is sequestrated.
[51]
In order for a final order to be granted,
these three elements must be established on a balance of
probabilities. The respondent’s
indebtedness to the applicant
and the extent thereof is not in dispute. This disposes of the first
requirement. This leaves the
remaining requirements, which I address
in sub-headings below.
Whether the debtor has
committed an act of insolvency or is factually insolvent
[52]
In terms of
section 8
of the
Insolvency
Act, 24 of 1936
, a debtor commits an act of insolvency, under the
following circumstances:
(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;
(b) if a Court has given
judgment against him 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;
(c)  if he makes or
attempts to make any disposition of any of his property which has or
would have the effect of prejudicing
his creditors or of preferring
one creditor above another;
(d) if he removes or
attempts to remove any of his property with intent to prejudice his
creditors or to prefer one creditor above
another;
(e) if he makes or offers
to make any arrangement with any of his creditors for releasing him
wholly or partially from his debts;
(f) if, after having
published a notice of surrender of his estate which has not lapsed or
been withdrawn in terms of
section 6
or
7
, he fails to comply with
the requirements of subsection (3) of
section 4
or lodges, in terms
of that subsection, a statement which is incorrect or incomplete in
any material respect or fails to apply
for the acceptance of the
surrender of his estate on the date mentioned in the aforesaid notice
as the date on which such application
is to be made;
(g) if he gives notice in
writing to anyone of his creditors that he is unable to pay any of
his debts;
(h) if, being a trader,
he gives notice in the
Gazette
in terms of subsection (1) of
section 34
, and is thereafter unable to pay all his debts.
[53]
In
Goldblatt's
Wholesale (Pty) Ltd v Damalis
the Court
held:
A
letter stating that a creditor is unable to pay his debts in full
unless his creditors are prepared to give him time and to accept

payment in instalments, is an intimation that he cannot pay his debts
in the ordinary course and amounts to a notice in writing
that he is
unable to pay any of his debts, in terms of
sec. 8
(g)” of the
Insolvency Act
[5
]
.
[54]
Even
if the papers disclose disputes of fact, as evinced in the matter
before me, an applicant will nevertheless succeed in establishing
a
prima
facie
case where it can show that “
on
a consideration of all the affidavits filed [that] a case for
sequestration has been established on a balance of probabilities
”,
though open to some doubt.
[6]
[55]
In
Standard
Bank of SA Ltd v Court
the Court held
“
A
debtor who gives notice that he will only be able to pay his debt in
the future gives notice in effect that he 'is unable' to
pay. A
request for time to pay a debt which is due and payable will,
therefore, ordinarily give rise to an inference that the debtor
is
unable to pay a debt and such a request contained in writing will
accordingly constitute an act of insolvency in terms of
s 8(g).
This
is particularly so where the request is coupled with an undertaking
to pay the amount due and payable by way of instalments”.
[7]
[56]
In
Optima
Fertilizers (Pty) Ltd v Turner
[8]
the Court considered the statement “
I
hereby acknowledge the sum of R5,610.64 (in words and figures) is at
present due, owing and payable by me to (the petitioner).
I am at
present unable to pay the said sum of R5,610.64 to (the petitioner)”
.
The debtor went further to undertake to pay off the debt by way of
instalments of R2,250.00 and further monthly instalments of
R700.00.
The Court held that:
The statement relied upon
in the present case, however, is a bald statement of inability to pay
the debt owing to the petitioner;
this is contained in an
acknowledgment of indebtedness in which the respondent undertakes to
make payments by instalments. Nothing
on the record, even if facts
and circumstances extrinsic to the document and known to the
petitioner can be taken into consideration,
indicates that the
petitioner should have construed the statement otherwise than as a
statement by the respondent that he was unable
to pay his debt to the
petitioner.
[57]
Our courts have found that a debtor has
committed an act of insolvency in terms of
section 8(g)
where:
57.1
a debtor’s attorney wrote to
creditors stating that his client had consulted him as to his
financial affairs, that he had
been instructed to advise creditors
that his client was not in a position to liquidate his debts at the
moment, that his client
was unable to meet the demands of creditors,
and offering to make monthly payments;
57.2
a statement by the debtor that he cannot
pay his debts and requires three to five years in which to effect
payment;
57.3
a
letter to creditors stating that the debtor was unable to pay in full
and offering to pay his debts in full in twenty monthly

instalments
[9]
.
[58]
The respondent’s indebtedness in the
present matter is not in dispute. It is also not materially in
dispute that the respondent
has been unable to pay his debts as they
fall due. The respondent sought to distance himself from the
proposals made on his behalf,
by his erstwhile attorney on grounds
that he was unaware of such proposals and that the proposals were
communicated on a “
without
prejudice basis”
.
[59]
The above defenses raised by the respondent
are not absolvitory. The respondent was aware of the correspondence
exchanged on his
behalf and could at any stage have intervened if his
interests were not properly or adequately represented. This he failed
to do.
Moreover, the law of agency dictates that a party is entitled
to accept what is presented by an agent as if done with the full
knowledge of his principal.
[60]
In
ABSA
Bank Ltd v Hammerle Group
[10]
the
SCA held as follows:
It
is true. As a general rule, negotiations between parties which are
undertaken with a view to settlement of their disputes are
privileged
from disclosure. This is regardless of whether or not the
negotiations have been stipulated to be on a “without

prejudice”.
However,
there are exception to this rule. One of these exceptions is that an
offer made, even on a without prejudice basis, is
admissible in
evidence as an act of insolvency
.
Where a party therefore concedes insolvency, as the respondent did in
this case, public policy dictates
that such
admissions of insolvency should not be precluded from sequestration
or winding up proceedings, even if made on a
privileged occasion. The
reason for the exception is that liquidation or insolvency
proceedings are a matter which by its very
nature involves the public
interest.
[61]
Having considered the facts in this matter,
I am satisfied that the respondent has committed an act of insolvency
as contemplated
in
section 8(e)
and (g) of the Act, in that he has
been unable to pay his debts as they fall due and sought indulgences
to repay the debt, and
to lessen his liability in resect thereof.
Advantage to creditors
[62]
The
Act does not define the term, “
advantage
to creditors”.
It
is generally accepted that the phrase ‘advantage to creditors’
means that there should be a reasonable prospect of
some pecuniary
benefit to the general body of creditors as a whole.
[11]
Our courts have generally held that this requirement is fulfilled
where it is established that there is fair reason to believe
that
there will be advantage to a ‘substantial proportion’ or
the majority of the creditors.
[63]
In the present instance, I am persuaded,
having considered all the facts, that a final sequestration order
will be of benefit to
the applicant, who, on all accounts,
constitutes a substantial portion of creditors.
[64]
In the result, I make the following order:
Order
1.
The
estate of the respondent, Mr. Eric Maligana Mafuna, is placed under
final sequestration.
2.
The
respondent is ordered to pay the applicant’s costs on attorney
and client scale, such costs to include the costs of two
counsel.
B. FORD
Acting Judge of the High
Court
Gauteng
Division of the High Court, Johannesburg
Delivered: This judgment
was prepared and authored by the Judge whose name is reflected on 25
July 2023 and is handed down electronically
by circulation to the
parties/their legal representatives by e mail and by uploading
it to the electronic file of this matter
on CaseLines.  The date
for hand-down is deemed to be 25 July 2023
Date of hearing: 24
April 2023
Date of judgment:
25 July 2023
Appearances:
For the applicant:
Adv. J. Vorster
Heads of argument by:
Adv. C. Gibson
Instructed by: Werksmans
Incorporated
For the respondent: Adv.
S. Masimene
Instructed
by: J.L. Rahlagane Attorneys
[1]
Insolvency
Act 24 of 1936
[2]
Insolvency
Act 24 of 1936
[3]
[3]
Annexure
FA30 to the Founding Affidavit
[4]
Annexure
FA29 to the Founding Affidavit
[5]
1953
(3) SA 730
(O) at 732.
[6]
Kalil
v Decotex (Pty) Ltd and another
1988
(1) SA 943
(A)
at 978D-E
[7]
1993
(3) SA 286
(C) at p.132
[8]
1968
(4) SA 29
(D) at 33G
[9]
See:
Mars:
The Law of Insolvency in South Africa, p99 to 100.
[10]
2015
(5) SA 215(SCA)
[11]
See
Lynn
and Main Inc. v Naidoo & another
2006 (1) SA 59
(N) paras 33-35;
Ex
Parte Bouwer and Similar Applications
2009
(6) SA 382
(GNP) para 13.