About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Western Cape High Court, Cape Town
SAFLII
>>
Databases
>>
South Africa: Western Cape High Court, Cape Town
>>
2010
>>
[2010] ZAWCHC 461
|
|
Filigro (Pty) Ltd v Kamfer and Another (11665/2010) [2010] ZAWCHC 461 (7 September 2010)
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE HIGH COURT, CAPE TOWN)
CASE
NUMBER :
11665/2010
DATE:
7 SEPTEMBER 2010
In
the matter between:
FILIGRO
(PTY) LIMITED
….............................................................................
Applicant
and
LOUIS
KAMFER
…........................................................................
1
st
Respondent
CHARMAINE
KAMFER
…..................................................................
2
nd
Respondent
JUDGMENT
BOZALEK.
J:
This
matter came before me in the 3 Division on Friday past as the return
day of a
rule
nisi
in
terms of which the estate of the respondents, a couple married to
each other in community of property, was placed under sequestration.
On the matter being called, the applicant's counsel sought a final
order, relying,
inter
alia,
on
the applicant's full compliance with the service provisions
contained in the
rule
nisi.
The
respondents appeared in person and in open court the first
respondent submitted that although he and his wife could not
presently effect full payment of the underlying debt owing to the
applicant, nevertheless their joint estate was by no means
insolvent. In addition the first respondent tendered, on several
occasions in open court, to immediately pay the applicant R10
000,00, which I understood him to be holding in cash, and the
balance of the debts, some R8 100,00, either in monthly instalments
or R1 000,00 commencing immediately, or alternatively one full
payment in December this year when he receives his salary bonus.
In
addition, first respondent was prepared in principle to pay the
applicant's legal costs. From the bar, the first respondent
advise
that he was an employee of the Department of Health of some 20 years
standing, that he had recently been transferred to
Knysna from Cape
Town and, although unable to afford legal representation, he and his
wife had travelled from Knysna to oppose
the granting of the final
order of sequestration. The first respondent advised furthermore
that the joint estate was the owner
of fixed a property in Mitchells
Plain presently being rented out. Although bonded, there was
substantial equity in the property
in the order of several hundred
thousand rand.
This
information was confirmed by the second respondent from the bar, who
added that she herself was not employed. I did not understand
Mr
Van
Zvl
.
who appeared for the applicant, to dispute the factual accuracy of
any of the submissions made by the first respondent from
the bar.
Indeed he confirmed that it was his instructions that the estate was
indeed the owner of a fixed property. Notwithstanding
the Court's
encouragement that his client engage positively with the
respondents' proposals and the standing down of the matter
for
several hours, Mr
Van
Zvl
advised
that his instructions were to reject the respondents' offer made in
court and to move for a final order. Counsel was then
afforded an
opportunity to address the Court on all aspects of the matter, in
response to which Mr
Van
Zvl
advised
that he relied simply on the case made out by the applicant in its
founding papers. Judgment was then reserved.
The
case made out by the applicant arises out of a debt of R18 120,74,
owing by the respondents to applicant, which in turn arises
out of a
loan of R20 000 made by the applicant to the respondents in December
2007 for a period of 62 days at an interest rate
of 44.2% per annum.
The applicant is in the business of providing bridging finance to
sellers of immovable property The respondents
have already paid R10
081,00 to the applicant. It appears further from the applicant's
papers that in April 2010 summons was
issued out by the applicant
and served on the respondents for recovery of the outstanding
balance of the loan and interest and
that no notice of intention to
defend was filed by the respondents.
Somewhat
strangely, no reference is made in the applicant's papers to whether
default judgment was taken or not, or why applicant
was not minded
to pursue that cause of action. Given the existence of fixed
property in the joint estate, it seems reasonably
clear that were it
to follow that path the applicant would, sooner rather than later,
obtain satisfaction of the debt. Instead
the applicant, in seeking
relief, relies on a written communication received from the first
respondent on or about 5 May 2010
in response to the summons,
stating that the respondents were unable to satisfy the debt and
offering to pay it off by way of
monthly instalments.
There
is nothing then to gainsay the applicant's case in this regard on
the papers and thus I am satisfied that the respondents
have
committed an act of insolvency as envisaged by the Act. Similarly, I
am satisfied that the applicant has satisfied what
I shall term all
the procedural requirements for a final order. What remains to be
determined is whether the applicant has proved
that a sequestration
order will result in an advantage to creditors and if so, whether
the Court should exercise its discretion
to grant such an order.
A
court may not grant a sequestration order, whether
provisionally
or finally, unless it is established that:
"there
is reason to believe that it will be to the advantage of creditors
of the debtor, if his estate is sequestrated."
The
applicant bears the onus of establishing that there is reason to
believe that sequestration will be to the advantage of creditors,
even where reliance is placed on an act of insolvency by the
respondent. See
Paarl
Wine & Brandy Company Limited v Van As
1955(3)
SA 558 at 559-560.
In
the present instance the only other debtor, apart from the
applicant, which can be identified on the papers is Nedbank No
details are furnished of the quantum or nature of this debt beyond
the fact that such debt apparently exceeds R5 000,00. One
possibility is that Nedbank is the mortgagee of the fixed property
in the respondents' joint estate. There is no suggestion that
Nedbank is not receiving its monthly instalments on the bond. In
fact the indications, if anything, are to the contrary. Nor
do I see
in what way the sequestration of the respondents' estate will be to
Nedbank's advantage.
That
leaves the applicant as the only other creditor. On the papers it
has, at the very least, issued a summons against the respondents
for
its debt. Whether it has taken default judgment and proceeded to
execution, is unknown, but appears not to be the case. I
can see no
good reason why the applicant, having gone that far, namely issuing
summons in the magistrate's court, has not taken
those additional
steps. If it were to do so and the debt were to remain unsatisfied
upon presentation of execution of its writ,
it would be open to the
applicant to attach and sell the respondents' fixed property in
further execution of its judgment, and
failing unsuccessful
execution, would then be able to bring a sequestration application.
When
one has regard to the founding affidavit in this matter, the
question of an advantage to creditors is not addressed directly
at
all. At best for the applicant in this regard, are four generalised
averments to the effect that, it would be just and equitable
for the
respondents' estates to be wound up, in that:
1.
it would enable an impartial trustee to gain control of the
respondents' assets, realise same and distribute the proceeds.
2.
it will prevent certain of the respondents' creditors from incurring
unnecessary legal expenses in attempting to procure payments
from
the respondents.
3.
it will ensure that none of the respondents' creditors receive
payments from the respondents to the prejudice of other creditors.
4.
it will enable a duly appointed trustee to properly investigate the
affairs of the respondents.
None
of these allegations are supported by facts justifying their
invocation. The reference to "unnecessary legal expenses"
is ironic in view of the magistrate's court action on the part of
applicant to recover the amount, the debt outstanding, which
appears
to have been halted and replaced instead by this relatively much
more expensive application for a sequestration order.
In
Gardee
v Dhanmanta & Others
1978(1)
SA 1066 (NPD), the Court was concerned with a proposed sequestration
where there was a single creditor, which already
had a judgment
against the debtor and which had led to a
nulla
bona
return.
In that case
Didcott
.
J stated as follows at page 1068
et
sequor.
"There
is, I suppose, no reason in principle why a debtor with only one
creditor should not have his estate sequestrated,
but the potential
advantages of sequestration in that situation are inherently fewer
and the case for it is correspondingly weaker.
Then it is really
no more than an elaborate means of execution and, because of its
costs, an expensive one too. Perhaps it has
enough merit in some
circumstances for the Court nevertheless to sanction it. This may
consist of the possibility that through
the Act's machinery,
impeachable transactions, the concealment of assets and other
irregularities are detected, exposed and remedied,
with the result
that the single creditor eventually recovers more than an ordinary
execution would have yielded. No mention of
that possibility, and
far less any evidence elevating it to a real prospect
is, however
to be found in these papers. Straightforward execution is the aim of
the application Sequestration, it is true, has
been described on
occasions as a legitimate form of execution (see
Wilkens
v Pieterse
1937
(CPD) 165 at 170,
Moldenhauer
v De Beer
1959(1)
SA 890 (O) at 892F). That does not however mean that the judgment
creditor has the same automatic right to it which ordinarily
governs
execution of the routine kind. Like everyone else seeking
sequestration, he must first show the Court reason to believe
in its
advantages to creditors and then, having done so, await the Court's
exercise of its discretion in his favour. Nor even
has he ex
debito
justitiae
as
strong a claim for relief as the creditor of a company who applies
for its liquidation when it cannot pay its debts The grant
of a
winding up order is not absolutely dependent, in terms of the
Companies Act, on its advantages to the company's creditors.
That
the applicant for sequestration is himself convinced of its benefits
to him is not decisive, even when he is the only creditor.
It is for
the Court to decide the question
Applying
these criteria to the case of a single creditor who uses
sequestration proceedings as a mode of execution, one draws
the
following conclusions. He must satisfy the Court at the least that
there is reason to believe in all the circumstances that
after the
costs of sequestration are paid, he will recover an amount which is
not negligible. What is more, in my opinion, he
must demonstrate
some reasonable expectation that it
will
exceed the likely proceeds of an ordinary
execution. Unless he
does that, the laborious and
substantially more expensive remedy
of
sequestration, can hardly be thought
advantageous
The
notion of advantage to creditors is a relative and not an absolute
one. Sequestration cannot be said to be to the creditors'
advantage
unless it suits them better than any feasible and reasonably
available alternative course. It follows that the enquiry
necessarily postulates a comparison."
In
my view the principles enunciated by
Didcott
,
J in the matter which I have just quoted, are squarely applicable in
the present case. Applying these to the present matter,
one sees
that the applicant has presented absolutely no evidence that its
interests will be better served by a sequestration
order rather than
execution upon a judgment taken by it against the respondent in the
magistrate's court, nor has it explained
whether it has followed
that process to its logical conclusion or if not, why it has not
done so.
In
my view, having regard to all the facts, the applicant has failed to
establish that there is reason to believe that a sequestration
order
will be to the advantage of creditors. In the result the application
must fail. The question of cost does not arise in
view of the fact
that the respondents were not legally represented. The following
order is made: the
rule
nisi
issued
on 3 August 2010 is discharged and the application is dismissed.
BOZALEK,
J