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[2010] ZAWCHC 209
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Investec Bank Ltd v Janse Van Rensburg (16798/2009, 19784/2009) [2010] ZAWCHC 209 (11 October 2010)
IN
THE HIGH COURT OF SOUTH AFRICA
WESTERN
CAPE HIGH COURT, CAPE TOWN
Reportable
CASE
NO: 19784/2009 16798/2009
In
the matter between:
INVESTEC
BANK
LTD
...........................................................................................
Applicant
and
JOHAN
CHRISTOFFEL JANSE VAN RENSBURG
(Born
on, having identity number
married
in community of property to
Berendina
Elizabeth Janse Van
Rensburg)
...........................................................
(First
Respondent
in
…
............................................................................................................................
case
no. 16798/2009)
BERENDINA
ELIZABETH JANSE VAN RENSBURG
(born
on, having identity number and
being
married in community of property
To
Johan Christoffel Janse van
Rensburg)
.................................................
(Second
Respondent
in
case
no. 16798/2009
…
............................................................................................................................
case
no. 16798/2009)
MORNe
JANSE VAN RENSBURG
(Identity
no)
(Address:)
(Marital status: Married
out
of community of propertyto Janine
Janse
Van Rensburg, Identity
number:)
.................................................................
(First
Respondent
in
case no. 19784/2009)
JANINE
JANSE VAN RENSBURG
(Identity
number)(Address:) (Marital status: Married out
of
community of property to Morne Janse van
Rensburg,
identity number
)
..............................................................................
(Second
Respondent
in
case no. 19784/2009)
coram:
m davis j
judgment:
by davis j
for the applicant: adv d
fisher sc
instructed
by: edward nathan sonneberg
for respondent: adv a
oosthuizen sc
instructed by:
schnetler's inc
date of hearings: 13
september 2010
date of judgment: 11
october 2010
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE HIGH COURT, CAPE TOWN)
Reportable
CASE
NO: 19784/2009 & 16798/2009
In
the matter between:
INVESTEC
BANK
LTD
..............................................................................................
Applicant
and
JOHAN
CHRISTOFFEL JANSE VAN RENSBURG
(Born
on, having identity number
married
in community of property to
Berendina
Elizabeth Janse Van
Rensburg)
............................................................
(First
Respondent
in
case
no. 16798/2009
…
............................................................................................................................
case
no. 16798/2009)
BERENDINA
ELIZABETH JANSE VAN RENSBURG
(born
on, having identity number and being married in
community
of property To Johan Christoffel Janse van
Rensburg)
...................
(Second
Respondent
in
case
no. 16798/2009
…
.........................................................................................................................
case
no. 16798/2009)
MORNe
JANSE VAN RENSBURG
(Identity
no )
(Address:)
(Marital status: Married
out
of community of property to Janine
Janse
Van Rensburg, Identity
number:)
.................................................................
(First
Respondent
in
case no. 19784/2009)
JANINE
JANSE VAN RENSBURG
(Identity
number)
(Address:)
(Marital status: Married
out
of community of propertyto Morne Janse van Rensburg,
identity
number)
.................................................................................................
(Second
Respondent
in
case
no. 19784/2009)
JUDGMENT:
11 October 2010
Introduction
[1]
First respondent ('Hekkie') in case no. 16798/2009 is a property
developer. To the extent that is relevant to the present dispute,
he
engaged in four property developments: "The Hills" near
Pretoria, Le Grand in George and Hartenbos Landgoed I and
Hartenbos
Landgoed II.
[2]
In each case, the development took place through a company: The Hills
development, in the name Bluecore Investments (Pty) Ltd;
Le Grand
through Broad Brush Investments 19 (Pty) Ltd and Hartenbos Landgoed I
through Hartenbos Landgoed (Pty) Ltd. Hartenbos
Landgoed II had not
yet been developed, at the time the papers were served but, to the
extent that it was intended to so develop
this land, the developing
company was Greentee Properties (Pty) Ltd.
[3]
Applicant advanced loans for the three developments in respect of
which construction had already commenced. The loans were secured
by
mortgage bonds over the alienated development land. In addition, it
secured its loans by way of suretyships which were furnished
by
Hekkie, third respondent his wife, Berendina and son, being second
respondent (Morne) together with Greentee. They were all
listed as
sureties and co-principal debtors
in
solidum.
The
papers indicate that Hekkie accepted that, as a result of what he
considered to be adverse business conditions, all of the companies
defaulted on their obligations under the development loans. The
sureties have also failed to comply with the demands of applicant
to
settle the outstanding indebtedness.
[4]
Pursuant thereto, a provisional winding order was granted in the
South Gauteng High Court against Bluecore, Investments (Pty)
Ltd and
a provisional order was granted against Hartenbos Landgoed (Pty) Ltd
in this court, with a returnable date of 30 March
2010. On 16 March
2010, Binns-Ward J granted an order in terms of which Broad Brush
Investments 19 (Pty) Ltd was provisionally
wound-up, and a further
order, placing the joint estate of Hekkie and his wife under
provisional sequestration in the hands of
the Master. In the case of
Morne, the application was postponed for a later hearing.
[5]
When the matter was heard by this court, the opposition to the
granting of a final winding-up order against Greentee Properties
(Pty) Ltd (case no. 19783/2009) Broad Brush Investments 19 (Pty) Ltd
and Hartenbos Landgoed (Pty) Ltd were withdrawn. In each case,
a
final order was granted on an unopposed basis. This left the court to
consider whether a final order should be granted against
Hekkie and
his wife as well as a provisional order against Morne. It is to these
matters that I must now turn.
The
case for a final order against Hekkie
[6]
The only real dispute in this matter is whether a benefit to the
creditors has been shown by applicant. In his careful and considered
judgment, Binns-Ward J said the following:
"The
assets and liabilities disclosed by Mr Hekkie van Rensburg show an
excess of assets over liabilities of just under R4,5
million. This,
on the face of it, suggests that a very paltry dividend of only a few
cents in the Rand would be available to creditors.
The applicant
contends that there is a reasonable prospect that an investigation
into the affairs of Mr and Mrs van Rensburg's
estate would reveal
hidden assets resulting in a significantly altered picture."
Accepting
applicant's argument, Binns-Ward J then held:
"
The assets consist primarily of luxury and exotic motor vehicles. The
liabilities consist primarily of the outstanding debt
owed in respect
of the acquisition of these vehicles. It seems to me improbable that
anyone who was the 'guiding mind' behind the
substantial property
developments involved in this case and who, by his own account, has a
long history of successful investment
in property development should
have so little to show in his personal estate. It might well be that
Mr van Rensburg has ordered
his affairs so as to ensure that assets
that might otherwise have been owned by him directly are held instead
by companies or in
trusts, but one would then expect the existence of
substantial loan account claims in his estate in respect of the
funding of such
entities for the purpose of their acquisition of the
assets in question."
(at
para 27)
[7]
In arriving at this conclusion, Binns-Ward J relied on the approach
adopted by Cameron JA (as he then was) in
CSARS
v Hawker Services (Ptv)Ltd
2006
(SA) 292 (SCA) at para 29:
"The
question is whether the Commissioner has established that
sequestration would render any benefit to creditors, given that
the
partnership is now defunct. The answer seems to lie in those
decisions that have held that a Court need not be satisfied that
there will be advantage to creditors in the sense of immediate
financial benefit. The Court need be satisfied only that there is
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."
[8]
Ms Fisher, who appeared on behalf of the applicant, submitted that
the disclosed assets, primarily consisting of luxury and
exotic motor
vehicles, was itself a pro-pointer in favour of a conclusion that
there was reason to believe that further assets
might be unearthed as
a result of an investigation by a trustee.
[9]
In support of this submission Ms Fisher pointed to Hekkie's answering
affidavit in whichthe following is stated:
"The
understanding was always that the money required to repay the
Applicant would be generated by the sale of properties in
the said
three developments. I might add that I am in the process of selling
certain of the properties and vehicles owned by my
family trust
and/or members of any family utilising the monies generated by such
sales to pay the creditors of Bluecore and Broad
Brush."
According
to Ms Fisher, the family trust, to which reference was made, could be
the Great White Trust which owns
inter
alia,
the
shares in Greentee. Applicant has apparently applied for the
sequestration of the Great White Trust. To date, applicant has
no
knowledge as to the nature and extent of the assets and investments
held by that trust nor by any other trust of which Hekkie
may have
been the settlor.
[10]
Significantly, in his supplementary replying affidavit, Mr Smith, on
behalf of the applicant, does reveal the following about
the Great
White Trust:
"The
Great White Trust is the owner of at least five immovable properties
in Cape Town. The properties are bonded but it appears
that there
will be a relatively substantial amount of equity in the properties
once the mortgage bondholder (the applicant and
Nedbank Limited) have
been paid, this equity being in an amount of approximately R2 030
000. Where there are loan claims (as one
would expect, the Great
White Trust not having generated any income itself with which to have
paid for its assets), this equity
will flow to the insolvent estate
once a duly appointed trustee has taken steps to recover same. I
point out that in the answering
affidavit under case number
13361/2010, it is averred that the Great White Trust has only two
creditors - a loan creditor in an
amount of R1.5 million and Greentee
in an amount of R23 000. I respectfully submit that, as the trust is
clearly vested with substantial
assets and does not trade or earn
income, this appears to be unlikely."
[11]
Ms Fisher also placed considerable emphasis on documentation which
Hekkie had generated with Mr Fernando Rueda, in which Hekkie
informed
Mr Rueda on 19 May 2009 that he was about to receive R5 million as a
result of a development deal. An earlier email of
6 April 2009
indicated that Hekkie expected to receive R1.7 million, that is
additional to the payment of the R5 million.
[12]
Some measure of debate took place between counsel concerning the
evidence given by Hekkie at an enquiry conducted in terms
of section
417 of the Companies Act 61 of 1973 into the affairs of Hartenbos
Landgoed (Pty) Ltd.
[13]
Ms Fisher referred in particular to the following passage:
"
MR
VAN RENSBURG
:
I wouldn't say that I received the amount of R5 million. I could have
done business with somebody and get a R5 million profit
from it, or
get a R5 million commission from it.
MS
FISHER
:
You said you will receive your R5 million outstanding from these type
of deals. What do you mean by 'these type of deals'?
MR
VAN RENSBURG
:
I cant remember. Ms Fisher: What type of deals?
MR
VAN RENSBURG
:
I can't remember."
In
Ms Fisher's view, this exchange illustrated that Hekkie had simply
been evasive in refusing to explain the source of significant
amounts
of money: R5 million and R 1.7 million respectively.
[14]
A further piece of evidence which was invoked by Ms Fisher in support
of the application was that Hekkie had been listed as
being a member,
former member, director or former director of fifteen corporate
entities, a number of which was not in liquidation.
[15]
Mr Oosthuizen, who appeared on behalf of the respondents, submitted
that, after the section 417 enquiry, a formal tender had
been made,
to the effect that all relevant accounting records pertaining to both
Hartenbos companies, Broad Brush, Bluecore, Greentee
and the Great
White Trust would be made available by Hekkie. In short, it was
incorrect to conclude that Hekkie had been obstructive,
had
unreasonably refused to answer questions put to him or endeavoured,
for no good reason, to limit the ambit of the section 417
enquiry.
Furthermore, Hekkie had been questioned extensively on a wide range
of issues. He had answered the questions put him to
the best of his
ability but he had stressed that he had not, for the purposes of the
enquiry, prepared himself on the details of
transactions relating to
other companies. However he had volunteered to produce documents and,
had he been afforded the opportunity,
he would provide any of the
information sought by applicant pertaining to the other companies.
[16]
Mr Oosthuizen submitted that the term 'to the advantage of creditors'
meant to the advantage of the general body of creditors.
The
advantage of the general body of creditors did not equate necessarily
to the advantage of one or a majority of them.
Amod
v Khan
1947
(1) SA 150
(N). Accordingly, what might have been to an advantage to
the applicant was not necessarily despositive of the case.
Furthermore,
it had to be shown that the sequestration would result
in a pecuniary benefit to creditors which was not immaterial. Thus,
if the
phrase 'to the advantage to creditors' consists of a right
which the trustee would have to examine the affairs of the insolvent
estate, facts would have to be put up showing that such an
examination was at least likely, to result to the pecuniary benefit
of the creditors.
[17]
Mr Oosthuizen further submitted that there was no reason to assume
that the holding of an insolvency enquiry by a trustee would
procure
any information or achieve some end which could not be obtained or
acquired in terms of a section 417 enquiry. On the facts
available,
it was clear that the Hartenbos enquiry could be resumed at any
stage. Further, both Hekkie and Berendina had been subpoenaed
to
attend the Bluecore enquiry which was to commence on 27 September
2010. The liquidators of the other companies, namely Broad
Brush and
Greentee could also, if they so wished, convened enquiries and summon
the respondents to appear at those enquiries. The
ambit of questions
which could be put at such enquiries was wide and could include
questions regarding the personal assets and
finances of the various
respondents.
Evaluation
[18]
In my view, the fact that there may be enquiries held in terms of
section 417 of the Companies Act which dealt with the affairs
of the
various companies, through which the designated developments were to
take place, cannot, by itself, constitute an adequate
defence to the
question as to whether there is an advantage to creditors in the
granting of an order of sequestration against a
person who may have
utilized these companies for his/her development purposes. As soon as
possible after his or her appointment,
the trustee must take into his
or her possession and under his or control all movable property,
books and documents which belong
to the estate of the insolvent.
Section 69(1) of the Insolvency Act 24 of 1936 ('Act'). In terms of
section 23(12) of the Act,
the insolvent is required to assist the
trustee to the best of his or her ability in collecting, taking
charge of or realising
property belonging to the estate. These are
powerful weapons in the hand of a trustee who seeks to locate assets,
the realization
of which may be to the advantage of creditors.
[19]
Mr Oosthuizen submitted that the fact that the Hartenbos enquiry had
not unearthed any further assets was itself an indication
that the
appointment of a trustee of Hekkie's estate might be an exercise in
futility.
[20]
It must be accepted that the assets disclosed on the papers, on their
own, would not be sufficient to justify a conclusion
that it was to
the advantage of creditors to order the sequestration of Hekkie and
Berendina. But, this case is one which particularly
highlights the
importance of the
dicta
in
the
Hawker
Aviation
Par
tnership
supra.
In
order to explicate upon the
dictum
of
Cameron JA, it is useful to briefly examine the earlier judgments
which the learned judge of appeal cited in support of the approach
set out in
Hawker
Aviation Partnership
case.
In
Meskin
v Friedman
1948
(2) SA 555
(W) at 559 Roper J defined the applicable test as follows:
"In
my opinion, 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 creditors. It is not necessary to prove that
the insolvent
has any assets. Even if there are none at all, but there are reasons
for thinking that as a result of enquiry under
the Act some may be
revealed or recovered for the benefit of creditors, that is
sufficient."
In
Hillhouse
v Stott
;
Freban
Investments (Pty) Ltd v Itzkin
1990
(4) SA 580
(W)
at
585 Leveson J said:
"[t]he
Court need not be satisfied that there will be advantage to
creditors, only that there is reason to believe that that
will be so.
That in turn, in my opinion, leads to the conclusion that the
expression "reason to believe" means "good
reason to
believe". The belief itself must be rational or reasonable and,
in my opinion, to come to such a belief, the Court
must be furnished
with sufficient facts to support it.... In a broad sense it seems
proper to say, on the basis of the cases, that
'advantage to
creditors' ought to have some bearing on the question as to whether
the granting of the application would secure
some useful purpose. I
express it thus because, as Roper J has shown in the
Meskin
case,
there need not always be immediate financial benefit. It is
sufficient if it be shown that investigation and inquiry under
the
relevant provisions of the Act might unearth assets thereby
benefiting creditors."
See
also
Dunlop
Tyres (Pty) Ltd v Brewitt
1999
(2) SA 580
(W) at 585;
Epstein
v
Epstein
1987
(4) SA 606
(C) at 609
[21]
Mr Oosthuizen also referred to
Mamacos
v Davids
1976
(1) SA 19
(C), a judgment of Burger J of this Court in order to
support a more restrictive interpretation to the phrase 'advantage of
creditors'.
The learned judge said the following with reference, in
particular, to an earlier decision in
Wilkens
v Pieterse
1937
CPD 165
at 169:
"The
learned Judge clearly had in mind that there was a fair prospect that
assets might be revealed and that his would result
in some financial
advantage to creditors. This is no authority for the proposition that
creditors can insist on the sequestration
of a debtor by merely
alleging that he should be examined. It seems to me that a
petitioning creditor must go further and allege
facts which indicate
that such an examination has some prospect of revealing additional
assets, e.g., where it is shown that shortly
before the debtor had
valuable assets of which he has now disposed, or that there was a
large number of transactions which could
be challenged. When the time
comes for the appointment of a trustee, the creditor must know
whether an examination could result
in some financial advantage to
him; otherwise he would probably not file a claim."
In
my view, the judgment in
Mamacos
can
be read as being congruent with the approach developed in
Hawker
Aviation Partnership
supra
which,
in any event, is binding on this court. To the extent that the
dictum
in
Mamacos
was
invoked to interpret the approach adopted by Cameron JA in a narrower
way than that which has been set out above, I cannot agree.
In the
first place, as Cameron JA noted in his judgment, this approach has
been articulated in a number of decisions to which I
have already
made reference. In summary, it is sufficient if an applicant sets out
reasonable grounds to support a conclusion that
the granting of the
application has a plausible prospect of working to the advantage of
the creditors.
[22]
This case clearly is illustrative, in my view, of the commercial
pragmatism which underlines this test. In his judgment, which
culminated in the provisional order,
Binns-Ward
J found that a case had been made out that Hekkie may have secreted
assets away from the immediate guise of the creditors.
This
conclusion is justified on the basis of Hekkie's startling inability
to explain large transactions of which he boasted in
emails, in the
amounts of R1.7 million and R5 million which took place within but a
year of the section 417 enquiry. Hekkie would
have the court accept
that a plausible inference was that he had apparently completely
forgotten about these large transactions
when he was examined at the
Hartenbos enquiry!
[23]
The applicant has shown, by reference to the answering affidavit that
substantial assets are owned by the family trust the
beneficiaries of
which are members of Hekkie's family. Further, there is reason to
believe that further amounts might be owed to
Hekkie by the Great
White Trust, which is the owner of at least four immovable properties
in South Africa has. The trust apparently
had not generated any
income to be able to acquire these properties, save by way of loans
made to it by Hekkie and others.
[24]
The law of insolvency needs to be commercially realistic. People who
cannot pay their debts, particularly in cases where the
debts run to
many millions of rands, are tempted to divest themselves of their
significant assets so as to alleviate the pressure
of a sum or
suretyship agreement into which they entered in better economic
times. Once an applicant puts up a plausible case,
to the effect that
there is a reasonable prospect that, as a result of an investigation
by an independent trustee, assets might
be unearthed to the benefit
of creditors, the law of insolvency should be congruent with this
reality. It is precisely within this
context that the
dictum
set
out by Cameron JA in the
Hawker
Aviation Partnership
case
should be viewed.
[25]
In my view therefore, the applicant has made out a case sufficient to
justify the granting of a final order of sequestration
against both
the estates of both Hekkie and Berendina.
The
case for a provisional order against Morne
[26]
Applicant's claim against Morne arises from the fact that the latter
bound himself as a surety and a co-principal debtor for
the debts of
his father and certain corporate entities in the group of companies
controlled by his father. He and his wife Janine
are married out of
community of property; hence the need to bring an application to join
Janine as a respondent in terms of Practice
Note 30 of this Court.
Morne is at present 27 years old. He concedes that he was appointed
as a director of Bluecore, Broad Brush
and Hartenbos. When he was 23
years old, he executed a written deed of suretyship, in terms whereof
he bound himself as surety
and co-principal debtor for the debts
which these companies owed to applicant. He now finds himself in a
position where three companies,
on his own papers, owe the applicant
an amount of approximately R327 million.
[27]
What is undisputed is that Morne owns no fixed property, that his own
assets are of a nominal value and that, at the time that
his
answering affidavit was completed, his sole source of income was
monthly remuneration of R40 000, earned from the property
companies.
[28]
Ms Fisher submitted that Morne was a beneficiary of the Great White
Trust, that his father remunerated him and other family
members
generously and that he had driven a Ferrari which had once been
funded out of the property developments. It was however
common cause
that the Ferrari had been sold. Furthermore, Ms Fisher contended that
there was no explanation as to why in June 2009,
Morne had
transferred membership in Bronzetique Tanning Studio CC to his wife.
Ms Fisher also referred to the fact that Morne had
an interest in
Boundary Developments (Pty) Ltd, an active company. No explanation
had been provided by Morne as to the value of
this company.
[29]
Mr Oosthuizen submitted that recourse to the Hartenbos enquiry
revealed that Morne had testified that Bronzetique Tanning Studio
CC
'owned his wife's business,' that Greentee had loaned money to this
business and that there were initially four members of the
close
corporation. In June of the previous year, three of the members had
relinquished their interest in the business, making Morne's
wife
Janine, the only member of the corporation. Morne explained that the
reason for this transaction was that the business was
not doing well.
None of this information was apparently challenged at the enquiry.
[30]
In testifying about his own current position, Morne stated that,
since January 2010, he had not been in possession of any funds
with
which to generate a monthly income and that, consequently he had been
living from loans received from friends and a small
profit generated
from his wife's business. This evidence was not effectively
challenged.
[31]
Unlike the case of Hekkie, the submissions made in support of the
provisional sequestration of Morne are either entirely speculative
or
open to significant doubt, such as the arguments, for example, sought
to be made out against the so called Bronzetique transaction.
[32]
While I accept that, when an amount of R327 million constitutes the
sum of the outstanding debt, even a few million rand, if
unearthed by
the trustee, would be of advantage to creditors. But no significant
sum can reasonably be divined from the arguments
which has been put
up by applicant or on the papers prepared by applicant in support of
the provisional order. At best, there is
a remote but certainly not a
reasonable prospect that some meaningful pecuniary benefit will be
detected by a trustee. Speculation
without any plausible evidential
substantiation of a benefit does not, of itself, pass muster.
[33]
In the result therefore, the following order is made:
1.
A final order is made, placing the joint estate of Johan Christoffel
Janse van Rensburg and Berendina Elizabeth Janse van Rensburg
under
sequestration in the hands of the Master.
2.
The application for the provisional sequestration of Morne Janse van
Rensburg is dismissed with costs.
DAVIS,
J