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[2011] ZAGPPHC 165
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Naidoo and Another v Matlala NO and Others (67502/2010) [2011] ZAGPPHC 165; 2012 (1) SA 143 (GNP) (20 September 2011)
I
N
THE NORTH GAUTENG HIGH COURT, PRETORIA
(REPUBLIC OF SOUTH AFRICA)
REPORTABLE
Date: 2011-09-20
Case Number:
67502/2010
In the matter between:
SIVAPRAKASH
NAIDOO
............................................................
First
Applicant
IROOSHKA
GOVINSAMY
......................................................
Second
Applicant
and
NANA ABRAM
MATLALA N.O.
.............................................
First
Respondent
AMOS
NDLOVU
................................................................
Second
Respondent
ANNA
NDLOVU
.....................................................................
Third
Respondent
THE STANDARD BANK OF SOUTH AFRICA
LIMITED
...............................................................................
Fourth
Respondent
NEDBANK
LIMITED
...............................................................
Fifth
Respondent
MASTER OF THE NORTH GAUTENG HIGH
COURT,
PRETORIA
.............................................................................
Sixth
Respondent
JUDGMENT
SOUTHWOOD J
[1]
(1) On 4 March 2009 on the instructions of attorney, David
Johan Schoonraad of Schoonraad Attorneys, 955 Arcadia Street,
Arcadia, Pretoria, Mr. Altus Viljoen of Dominium Valuers, carried out
a valuation of the remaining extent of Erf 1494 Mondeor Township
situated at 12 Edward Place, Daylesford Road, Mondeor (‘the
property’) ‘to determine the forced value of the
subject
property for legal purposes’. Mr. Viljoen determined a ‘forced
value’ of R120 000 for the property;
(2) On 10 March 2009 the applicants
purchased the property for R761 000 at a sale in execution conducted
by the Sheriff on the instructions
of the judgment creditor, the
fourth respondent. The Sheriff had attached the property which
belonged to the second and third
respondents pursuant to a writ
issued on 17 August 2005 under case number 22647/2005;
(3) On 23 March 2009 Schoonraad
Attorneys served copies of the second and third respondents’
application for surrender on
the Master of the High Court and the
Receiver of Revenue;
(4) On 25 March 2009 (i.e. after
service of the application on the Master and the Receiver of Revenue)
the second and third respondents
signed the affidavit confirming that
the contents of their statement of affairs (attached to their
application for surrender) were
true and correct and that every
estimated amount contained therein was correctly estimated and on 26
March 2009 the second and
third respondents signed their affidavits
in support of the application. In the statement of affairs and the
second respondent’s
affidavit the (forced) sale value of the
property is reflected as R1 200 000. There is no explanation for the
difference between
this value and the value in the valuation of Altus
Viljoen (i.e. R120 000) which is attached to the application in
support of the
allegation that the value of the property is R1 200
000;
(5) Neither the statement of affairs
nor the affidavits deposed to by the second and third respondents
refer to the fact that on
10 March 2009 the property had been sold in
execution for a purchase price of R761 000;
(6
) On
27 March 2009 Mr. Schoonraad gave notice in the Government Gazette
and The Citizen newspaper that on 20 April 2009 the second
and third
respondents would apply for the acceptance of the surrender of their
estate in terms of the Insolvency Act 24 of 1936
(‘the Act’)
and on 3 April 2009 Mr. Schoonraad posted a copy of the second and
third respondents’ notice of surrender
to all their creditors.
He did not post a copy of the notice to either of the applicants;
(7) On 6 April 2009 the applicants and
the second and third respondents entered into a written lease
agreement in terms of which
the applicants leased the property to the
second and third respondents for a fixed period of one year from 1
June 2009 to 31 May
2010 at a rental of R9 000 per month. Neither
when they entered into the lease nor subsequently did the second and
third respondents
inform the applicants of their application for the
surrender of their estate;
(8) On 20 April 2009 the second and
third respondents’ application for surrender was postponed to 3
June 2009;
(9) On 3 June 2009 the second and
third respondents’ application for the surrender of their
estate was accepted by the court.
The court obviously relied on the
contents of the application and, in particular, the alleged forced
sale value of the property
(i.e. R1 200 000) and the calculation of a
dividend of 25 cents in the Rand based on that value;
(10) The second and
third respondents failed to pay the rental for the property for June
2009;
(11) On 30 June 2009, unaware that the
second and third respondents’ estate had been sequestrated, the
applicants took transfer
of the property and a mortgage bond for R689
944 was registered in favour of the fifth respondent;
(12) On 14 July 2009 the applicants’
attorney of record, Wayne van Niekerk of Wayne van Niekerk
Incorporated addressed letters
to the second and third respondents in
which he gave notice to them that the lease agreement was cancelled
because they had failed
to pay the June rental;
(13) On 14 July
2009, when he served the letters of cancellation on the second and
third respondents, the first applicant received
a letter dated 10
June 2009 on the letterhead of Schoonraad Attorneys addressed to ‘To
whom it may concern’ in which
it is stated that the second and
third respondents had been sequestrated on 3 June 2009 and that, in
terms of the Act, they may
not be evicted from the property until a
trustee has been appointed and instructed them to leave;
(14) On about 14
July 2009, in answer to his letter of 20 June 2009, Wayne van Niekerk
received a letter from Schoonraad Attorneys
in which Schoonraad
Attorneys confirmed that the second and third respondents had been
sequestrated on 3 June 2009 and that they,
Schoonraad Attorneys, had
now become aware that the property had been transferred on 30 June
2009. They also said –
‘We are presently awaiting the
appointment of the trustee and will then request the trustee to set
aside the sale and transfer
of the property’;
(15) On 23 July 2009 the first
respondent was appointed provisional trustee in the second and third
respondents’ insolvent
estate;
(16) On 28 July 2009 Wayne van Niekerk
addressed a letter to Schoonraad Attorneys in which he asked when the
second and third respondents
would vacate the property. This letter
was never answered;
(17) From the time
the property was sold to the applicants on 10 March 2009 the second
and third respondents have continued to live
and conduct a business
in the property;
(18) At all times,
as a
result of their dealings with representatives of the fourth
respondent, the applicants were aware that the fourth respondent
did
not wish to have the sale and transfer of the property set aside.
The fourth respondent considered that this was not in the
interest of
creditors because a higher price would not be realised on a second
auction;
(19) For a period
of about a year before they launched this application the applicants,
represented by Wayne van Niekerk, attempted
to ascertain the first
respondent’s intention with regard to the property. Wayne van
Niekerk addressed letters to the first
respondent in this connection
on 7 August 2009, 17 August 2009 and 26 August 2009. The first
respondent did not reply to these
letters. However, on 1 September
2009 Elmarie Booysen of Legae Trust (Pty) Ltd, acting on behalf of
the first respondent, telephoned
Wayne van Niekerk. She told him
that an offer of R900 000 for the property had been received but she
could not disclose the identity
of the offeror. She said she had
sent this offer to Lynne Nicholson of the fourth respondent;
(20) On 8 September 2009 Ms. Booysen
informed Wayne van Niekerk that it appeared that the fourth
respondent wanted to accept the
sale to the applicants on 10 March
2009 and on the same day the first applicant provided her with a copy
of the agreement;
(21) Since the
first respondent does not return telephone calls Wayne van Niekerk
followed up this information by telephoning Elmarie
Booysen. On 22
September 2009 she told him that she was awaiting further
instructions from the first respondent but that the fourth
respondent
had intimated that the applicants should retain the property as it
would serve no purpose to cancel the sale of 10 March
2009 and
auction the property again;
(22
) Thereafter,
Wayne van Niekerk communicated with Tsipiso Tshivase of the first
respondent’s office on 5 October 2009 and
15 November 2009. On
the second occasion Mr. Tshivase told Wayne van Niekerk that the
first respondent was awaiting final appointment
as trustee and that
the first respondent intended to ratify the sale of 10 March 2009 but
was entertaining an improved offer from
a potential purchaser. He
would not disclose the identity of the offeror but said that the
offer had been referred to the fourth
respondent. Wayne van Niekerk
addressed further letters to Mr. Tshivase on 17 November 2009, 27
November 2009 and 8 December 2009
but received no reply.
(23
) Wayne
van Niekerk wrote to Mr. Tshivase again on 6 January 2010 and, after
no response was received, did nothing further until
May 2010;
(24
) On
21 May 2010 the first respondent addressed a letter to Wayne van
Niekerk in which he requested the applicants’ bond account
number with the fifth respondent as he wished to obtain cancellation
figures as well as the total paid by the applicants;
(25
) On
21 May 2010 Wayne van Niekerk replied to the first respondent’s
letter of 21 May 2010 pointing out that his intention
to cancel the
sale of 10 March 2009 appeared to be irrational as the mortgagee
(i.e. the fourth respondent) was satisfied with
the situation. Wayne
van Niekerk requested an answer ‘as a matter of extreme
urgency’ and furnished the first respondent
with the number of
his cellular phone. The first respondent did not respond to this
letter and Wayne van Niekerk faxed another
letter to the first
respondent on the 1
st
of June 2010. He enclosed a copy of his letter of 21 May 2010 and
asked for the first respondent’s response ‘as a
matter of
urgency’. After no reply was received he faxed a third letter
to the first respondent on 7 June 2010 again attaching
a copy of his
letter of 21 May 2010 and requesting an answer as a matter of
urgency. On 24 June 2010 Wayne van Niekerk received
an answer from
the first respondent. He did not reply to the question raised in
Wayne van Niekerk’s letters and said he
was waiting for the
response to his letter of 21 May 2010 (i.e. the account number);
(26
) The
first respondent attached to his letter a copy of the minutes of the
second creditors’ meeting in the second and third
respondents’
insolvent estate but not the annexures to the minute: i.e. the first
respondent’s report and the proposed
resolution. On 1 July
2010 Wayne van Niekerk faxed a letter to the first respondent
requesting copies of these documents as a
matter of urgency. The
first respondent did not reply to this letter. On 6 July 2010 Wayne
van Niekerk faxed another letter to
the first respondent requesting
copies of the first respondent’s report and the proposed
resolution. This time Wayne van
Niekerk obtained confirmation from
the first respondent’s office that that fax had been received.
The first respondent did
not reply to this letter;
(27
) Wayne
van Niekerk’s enquiries at the Master’s office reflected
that there were two minutes for the same meeting of
creditors, one of
which reflects that no meeting was held and the other that a meeting
did take place;
(28
) The
first respondent has refused to disclose his report and the proposed
resolution to Wayne van Niekerk (and has not disclosed
them in these
proceedings);
(29
) On
19 July 2010 Wayne van Niekerk telephoned Elmarie Booysen. She told
him that the first respondent had decided to auction the
property
again as it had been transferred to the applicants after the
sequestration of the second and third respondents and the
applicants
had accepted the risk of the defective title;
(30
) The
news that the first respondent intended to sell the property again
came as a surprise to the applicants as the fourth respondent
was
satisfied with the sale on 10 March 2009 and no concurrent creditors
had proved claims against the estate;
(31
) On
20 September 2010 Wayne van Niekerk received a copy of a letter from
the first respondent to the fifth respondent in which
the first
respondent informed the fifth respondent that he intended to apply
for the setting aside of the sale in execution of
the property on 10
March 2009. He also informed the fifth respondent that he intended
to sell the property to a purchaser who
had already made him an offer
in the sum of R1 200 000;
(32
) On
21 September 2010 Wayne van Niekerk faxed a letter to the first
respondent to request a copy of the offer in the sum of R1
200 000.
The first respondent did not reply to that letter and did not furnish
a copy of an offer of R1 200 000.
(33
) The
applicants launched this application on 3 November 2010 and only the
first respondent gave notice of his intention to oppose.
(34) On 28 February
2011 the first respondent delivered his answering affidavit in which
he referred to a valuation of the property
by Aucor on 21 January
2010 in which the market value of the property is said to be R1 570
000;
(35
) On
28 March 2011 (i.e. after the first respondent filed his answering
affidavit) Wayne van Niekerk delivered a notice in terms
of Rule
35(12) requiring the first respondent to produce a number of
documents referred to in the first respondent’s answering
affidavit. Before the first respondent replied to the notice the
first respondent’s attorney of record, Ms. M.J. Ramagaga
of
Matshego Ramagaga Attorneys and Conveyancers addressed a letter dated
29 April 2011 to Wayne van Niekerk. On 3 May 2011 Ms.
Ramagaga
replied to the notice in a letter in which she referred
inter
alia
to
her letter of 29 April 2011;
(36
) The
letter dated 29 April 2011 related to the applicants’ request
that the first respondent produce for inspection a copy
of the offer
to purchase and a copy of the acceptance letter referred to in
paragraphs 4.13, 4.14 and 5.17.2 of the first respondent’s
answering affidavit. In these paragraphs, the first respondent
stated that during March 2010 he received an offer to purchase
the
property for R1 100 000 which he had accepted and, in that regard, he
referred the court to the annexed letter of acceptance
marked NNM4.
The relevant part of Ms. Ramagaga’s letter reads as follows:
‘
Kindly note
that there is no copy of Attachment “NNM4” to the First
Respondent’s answering affidavit at paragraph
4.13.
The First
Respondent has given an instruction to one of his professional staff
to accept Dimitri Monokandilos Mining CC’s
offer of R1 100 000
for the sale of Erf 1494 Mondeor, however, due to an oversight on the
part of the staff member, the acceptance
was not conveyed in writing
to the prospective buyer, though the staff did so verbally.
The First
R
espondent’s
Attachment “NNM4” (letter of acceptance) was based upon
the fact that the staff had fully carried
out his instructions.’
(37
) Ms.
Ramagaga’s letter dated 3 May 2011 is a reply to the
applicants’ notice in terms of Rule 35(12) and attaches a
number of documents. A copy of the offer to purchase (referred to in
paragraphs 4.13 and 5.17.2 of the first respondent’s
answering
affidavit) is attached. It is an undated Deed of Sale signed only by
the purchaser. There is no indication that it
was signed by or on
behalf of the first respondent. If it had been accepted it would
have been subject to a suspensive condition
that the purchaser was
able to obtain a loan of at least R990 000. In his answering
affidavit the first respondent did not refer
to this suspensive
condition or its fulfilment. Obviously it has not been fulfilled;
(38
) The
other documents show that only the fourth respondent submitted a
claim in the second and third respondents’ insolvent
estate.
This claim was submitted on condition that it would be lodged once
Legae Trust was satisfied that ‘there is no fear
of
contribution being levied against creditors’. None of the
concurrent creditors listed in the second and third respondents’
statement of affairs has proved a claim.
[2]
All
the facts set out above are not in dispute. The first respondent has
not shown any inclination to engage with the facts alleged
by the
applicants and has contented himself with raising technical points
and bald denials of most of the applicants’ factual
allegations. He has even denied his own letters and letters clearly
emanating from his firm, Maluleke Seriti Makume Matlala Inc.
In
dealing with the applicants’ allegations in this manner the
first respondent has ignored the requirement that a litigant
who
wishes to deny factual averments in the opposing party’s
affidavits of which the litigant has personal knowledge must
set out
the contrary facts – see e.g.
Wightman
t/a JW Construction v Headfour (Pty) Ltd and Another
[2008] ZASCA 6
;
2008
(3) SA 371
(SCA)
paras
12 and 13. It also appears from these undisputed facts that the
first respondent has not been truthful with regard to a material
fact
on at least two occasions both relating to the sale of the property.
On two occasions the first respondent alleged that he
had received an
offer to purchase the property:
(a) In his
letter dated 20 September 2010 (165 FA40) the first respondent said
that he intended to sell the property to the purchaser who
had
already made him an offer in the sum of R1 200 000. Immediately
after receiving that letter, on 21 September 2010, Wayne van
Niekerk
requested the first respondent in a letter (167 FA41) to make a copy
of the offer to purchase available. The first respondent
did not
reply to the letter or make a copy of the document available.
Obviously if he had received such an offer this would have
been easy
to do and would have put the matter beyond doubt. The first
applicant states that the first respondent did not make
a copy
available for self-evident reasons (i.e. that it does not exist which
means that the first respondent was untruthful).
The first
respondent does not even attempt to explain his failure to make the
offer available. He simply puts up a bald denial
(47 paras 86 and
87: 258 para 5.24).
(b) In paragraphs
4.13, 4.14 and 5.17.2 of his answering affidavit the first respondent
stated unambiguously that during March 2010
(i.e. almost a year
before he deposed to his affidavit) he had received an offer to
purchase the property in the amount of R1 100
000 which he had
accepted. (This was something the first respondent had not
previously mentioned). In that regard the first respondent
pertinently referred the court to his acceptance letter which was
annexed and marked NNM4 (244 para 4.13). He then submitted that
this
offer will benefit all the creditors in the estate because there will
be more money available for distribution than at the
time of the
acceptance of surrender and because all the creditors stand a chance
of receiving payment of their claims in full.
He also said that this
would be to the advantage of the insolvents when they applied for
their rehabilitation (244 para 4.14).
These averments were clearly
meant to convey that the first respondent had concluded an agreement
to sell the property for R1
100 000. It will be remembered that Ms.
Ramagaga’s letter of 29 April 2011, states that there was no
acceptance letter which
could be annexed as NNM4 and indicates that
there was no acceptance of the offer at all and accordingly no valid
agreement. Furthermore,
as already mentioned the deed of sale signed
by the intending purchaser was subject to a suspensive condition that
the purchaser
obtain a loan of at least R990 000. Clearly this
condition has not been satisfied.
In the absence of
any explanation by the first respondent the conclusion is unavoidable
that in his letter of 20 September 2010
and again in his answering
affidavit the first respondent was deliberately untruthful about a
material aspect of his case.
[3] In view of this
conclusion the first respondent’s allegation that he entered
into an agreement to sell the property for
R1 100 000 (or any other
price) is rejected. It is also found that it is doubtful that the
fourth respondent proved a claim against
the insolvent estate and
that no other creditor has proved a claim against the estate.
Finally it is found that no creditor will
be prejudiced if the
sequestration order is set aside.
[4] A sequestration
order may be set aside in terms of s
ection
149(2) of the Act which provides:
‘The court may rescind or vary
any order made by it under the provisions of this Act’.
Since no grounds
are referred to the court must exercise its discretion in the light
of the circumstances disclosed to it –
see
Hoffenberg
& Co v Pearl
1952
SR 298;
Ex
parte Van der Merwe
1962
(4) SA 71
(O)
at
72F-G;
Mars
The
Law of Insolvency in South Africa
9
ed
Bertelsmann
et al
(‘Mars’)
at
24 para 2.4. The learned authors of
Mars
point
out that there is a long line of authority that section 149(2) may be
invoked both where the order should not have been granted
and where
it was properly made but supervening factors make its rescission
necessary or desirable. For present purposes I shall
accept the
statement of the relevant principles gleaned from the authorities by
Gautschi AJ in
Storti
v Nugent
2001
(3) SA 783
(W)
at
806D-G:
‘
(1) The Court’s
discretionary power conferred by this section is not limited to
rescission on common-law grounds.
(2) Unusual or special or exceptional
circumstances must exist to justify such relief.
(3) This section cannot be invoked to
obtain a rehearing of the merits of the sequestration proceedings.
(4) Where it is alleged that the order
should not have been granted, the facts should at least support a
cause of action for a common-law
rescission.
(5) Where reliance is placed on
supervening events, it should for some reason involve unnecessary
hardship to be confined to the
ordinary rehabilitation machinery, or
the circumstances should be very exceptional.
(6) A court will not exercise its
discretion in favour of such an application if undesirable
consequences would follow.’
[5] A sequestration
order may also be set aside at common law if the applicant satisfies
the common law requirements. These are
encapsulated in the
requirement that ‘sufficient cause’ for rescission must
be shown. This involves three essential
elements: the applicant
must (1) give a reasonable (and obviously acceptable) explanation for
his default; (2) show that his
application is made
bona
fide,
and
(3) show that on the merits he has a
bona
fide
defence
which,
prima
facie
,
carries some prospect of success – see
Colyn
v Tiger Food Industries Ltd t/a Meadow Feed Mills (Cape)
2003
(6) SA 1
(SCA)
para
11;
Chetty
v Law Society, Transvaal
1985
(2) SA 756
(A)
at
764J-765D:
De
Wet v Western Bank Limited
1979
(2) SA 1031
(A)
at
1042F-1043A;
Herbstein
& Van Winsen
The
Civil Practice of the High Courts of South Africa
5
ed
Cilliers
et al
(‘Herbstein
& Van Winsen’) Vol 1
938-9.
[6] A sequestration
order may also be set aside in terms of Rule 42(1) of the Uniform
Rules the relevant part of which provides:
‘The court
may, in addition to any other powers it may have,
mero
motu
or
upon the application of any party affected, rescind or vary:
(a) An order or judgment erroneously
sought or erroneously granted in the absence of any party affected
thereby.’
In general terms,
a
judgment is erroneously granted if there existed at the time of its
issue a fact of which the judge was unaware, which would have
precluded the granting of the judgment and which would have induced
the judge, if aware of it, not to grant the judgment –
see
Nyingwa
v Moolman NO
1993
(2) SA 508
(Tk GD)
at
510D-G;
Herbstein
& Van Winsen Vol 1
931.
It follows that if material facts are not disclosed in an
ex
parte
application
– see
Schlesinger
v Schlesinger
1979
(4) SA 342
(W)
at
348C-349E;
National
Director of Public Prosecutions v Basson
2001
(2) SACR 712
(SCA)
para
21;
United
Diamond Watch & Diamond Co (Pty) Ltd and Others v Disa Hotels Ltd
and Another
1972
(4) SA 410
(C)
at
414F-415C – or if a fraud is committed (i.e. the facts are
deliberately misrepresented to the court) the order will be
erroneously granted. It has been held that an order granted in an
application brought
ex
parte
without
notice to a party who has a direct and substantial interest in the
matter is an order erroneously granted – see
Clegg
v Priestly
1985
(3) SA 950
(W)
at
953I-954I.
[7] The applicants
seek to set aside a sequestration order which was not made against
them. Whether they bring the application
in terms of section 149(2)
of the Act or in terms of the common law or in terms of Rule 42(1)(a)
they must have
locus
standi
:
i.e. they must show that they had and have a direct and substantial
interest in the order sought – see
Amalgamated
Engineering Union v Minister of Labour
1949
(3) SA 637
(A)
at
651. As pointed out in
United
Watch & Diamond Co v Disa Hotels
1972
(4) SA 409
(C)
at
414D-G:
‘Before it
is possible to consider these various arguments, it is necessary to
determine whether the applicants have
locus
standi
to
bring an application for the rescission, or setting aside, of para 4
of the Court’s order and for the further consequential
relief
claimed. … It is obvious that this is fundamental to the
whole application and that it is, therefore, the first
matter that
must be considered.
Whether the
application be founded upon Rule of Court 42(1)(a) or upon the common
law rule relating to the non-disclosure of material
facts in an
ex
parte
application,
it is clear that it is only a limited class of persons who are
entitled to bring an application of this nature. The
Rule of Court
specifically speaks of the application being brought by “any
party affected”; and it is manifest that
the Court would not
entertain an application under the common law at the instance of a
disinterested third party. This much is
transparently clear; but
what is not so clear is how that limited class of persons is to be
defined. In this connection neither
Mr. Friedman nor Mr. Grosskopf
appeared to draw any positive distinction between the Rule of Court
and the common law rule, and
I accept that the position as to
locus
standi
is
broadly the same under both.’
and
at
415A-B:
‘… an
applicant for an order setting aside or varying a judgment or order
of Court must show, in order to establish
locus
standi,
that
he has an interest in the subject-matter of the judgment or order
sufficiently direct and substantial to have entitled him
to intervene
in the original application upon which the judgment was given or
order granted.’
See also
Parkview
Properties (Pty) Ltd v Haven Holdings (Pty) Ltd
1981
(2)
SA 52
(T)
at
54H-55C.
[8] In my view the
applicants had and have such a direct and substantial interest in the
grant of the sequestration order. Having
bought the property at the
sale in execution on 10 March 2009 the applicants were entitled to
demand transfer from the Sheriff.
However, if the judgment debtors
(i.e. the second and third respondents) were to be sequestrated after
the sale in execution but
before the transfer of the property to the
purchasers in execution (i.e. the applicants), the effect of
insolvency would be to
vest the dominium of the property in the
second and third respondents’ insolvent estate and it would
have to be dealt with
in terms of section 20(1)(a) and (2)(a) of the
Act (i.e. it would first vest in the Master and then, on his
appointment the trustee)
– see
Simpson
v Klein NO
1987
(1) SA 405
(W)
at
412F-G;
Syfrets
Bank Ltd and Others v Sheriff of the Supreme Court, Durban Central
and Another
1997
(1) SA 764
(D)
at
772C-778D. If they had received notice of the application for
surrender they could have intervened to oppose the application
and
shown at the very least that there would be no advantage to
creditors. Now that the first respondent apparently wishes to
set
aside the sale and transfer of the property to the applicants, the
applicants have an interest in setting aside the sequestration
order
to prevent this from happening. Neither in his answering affidavit
nor in argument before this court does the first respondent
contend
that the applicants do not have
locus
standi
.
[9] Although the
affidavits and annexures did not establish two essential requirements
for the acceptance of the surrender (i.e.
that the second and third
respondents owned realisable property of a sufficient value to defray
all costs of the sequestration
payable out of the free residue of the
estate and that it would be to the advantage creditors if their
estate was sequestrated
– see section 6(1) of the Act) the
court was obviously satisfied that they did. According to the second
and third respondents’
affidavits the surrender of their estate
would not only see all costs paid out of the free residue of the
estate but payment of
a dividend of 25 cents in the Rand. These
allegations were based on the property having a forced sale value of
R1 200 000 and
the second and third respondents’ movable assets
(furniture and appliances) having a forced sale value of R2 100.
[10] To prove these
values the second and third respondents relied on two valuations by
Altus Viljoen of Dominium Valuers. Reference
has already been made
to the fact that the valuation of the property (repeatedly) states
that the forced sale value is R120 000
(not R1 200 000). But even if
it is accepted that Mr. Viljoen intended to say R1 200 000 his
valuation does not comply with the
requirements laid down in a number
of judgments. It has consistently been stated that it is not
sufficient for a valuer (assuming
that he or she is qualified to
express an opinion) to furnish a valuation which is, in effect, a
bald statement of opinion. The
valuer’s opinion must be based
on facts or data which have been established either by the valuer or
other witnesses, and
the process of reasoning by which the valuer
arrived at the particular valuation must be set out – see
Nel
v Lubbe
1999
(3) SA 109
(W)
at
111D-G;
Ex
parte Anthony en ‘n Ander en Ses Soortgelyke Aansoeke
2000
(4) SA 116
(C)
at
124F-I;
Ex
parte Mathysen et Uxor (First Rand Bank Ltd Intervening)
2003
(2) SA 308
(T)
at
311I-312G;
Ex
parte Bouwer and Similar Applications
2009
(6) SA 382
(GNP)
paras
11-18 and
Ex
parte Samuel Adeleke Ogunlaja and Five Other
case
number 53146/09 (Bertelsmann J, GNP, 19 January 2010). Mr. Viljoen
claimed to have used comparable sales to determine the
value of the
property. However he did not explain what this method entails and
there is no evidence of sales which are alleged
to be comparable.
The rest of this reasoning consists of vague generalisations which
are not based on facts. His conclusion is
therefore nothing more
than a bald statement of opinion. His valuation of the movable
assets is similarly unacceptable. He merely
lists the goods and
expresses his opinion.
[11
] It
will be remembered that the second and third respondents had already
consulted Schoonraad Attorneys before the sale in execution
on 10
March 2009. Mr. Viljoen’s valuation shows that on 4 March 2009
he valued the property on Schoonraad Attorneys’
instructions
‘to determine the forced value of the subject property for
legal purposes’. This clearly meant for the
purposes of an
application for the acceptance of the surrender of the second and
third respondents’ estate. Mr. Schoonraad
and the two
respondents therefore knew from a date prior to the sale that the two
respondents intended to apply for the surrender
of their estate. The
second and third respondents owned only one asset of substantial
value: the property. Consequently the
sale in execution of the
property for R761 000 on 10 March 2009 was an important fact which
would affect their application. They
also knew that sequestration
could prejudice the purchasers. These were material facts which
should have been disclosed to the
court in the
ex
parte
application.
In addition the papers should have been served on the applicants to
give them an opportunity to intervene in the application.
Even if
the applicants did not intervene it is clear that disclosure of the
sale in execution for R761 000 would have completely
destroyed the
applicants’ case. It would have shown that the forced sale
value of R1 200 000 alleged by the second and third
respondents in
their affidavits was unattainable and that neither the costs nor a
dividend would be paid from the free residue.
The fourth
respondent’s claim was R853 721,24, almost R100 000 more than
the sale price.
[12] The most
plausible conclusion from the facts – see
Skilya
Property Investments (Pty) Ltd v Lloyds of London
2002
(3) SA 765
(T)
at
781B-D – is that the second and third respondents decided to
conceal from the court the details of the sale and not to
give the
applicants notice of the application. The deliberate concealment of
the information pertaining to the sale in execution
was fraudulent
and clearly induced the court to grant the order on the 3
rd
of June 2009 – see
Schierhout
v Union Government
1927
AD 94
at
98;
Herbstein
& Van Winsen Vol 1
939-940.
The applicants have therefore established the facts necessary for
the court to set aside the sequestration order –
see
Swart
v Wessels
1924
OPD 187
at
189-190;
Herbstein
& Van Winsen Vol 1
940-941.
[13
] The
second and third respondents obviously wanted to use the
sequestration process to negate the sale of the property to the
applicants. If they had allowed the property to be transferred they
would have been no better off financially but they would have
had to
vacate the property. By surrendering their estate they have delayed
their eviction from the property where they have lived
and carried on
business by at least two years. This is borne out by the fact that
within a week after the sequestration order
was granted Mr.
Schoonraad prepared a letter dated 10 June 2009 ‘To whom it may
concern’ in which he said that in terms
of the Act the second
and third respondents could not be evicted until the trustee had
given instructions that they be evicted
and that on 14 July 2009 Mr.
Schoonraad addressed a letter to Wayne van Niekerk in which he said
that as soon as the trustee had
been appointed he would request the
trustee to set aside the sale and the transfer of the property. The
most plausible inference
on all the facts is that Mr. Schoonraad
advised the second and third respondents to apply for their
sequestration because of the
impending sale in execution and that he
advised them to withhold the facts relating to the sale in execution
and not give notice
to the applicants. It is inconceivable that he
did not know about the sale in execution.
[14
] The
first respondent has raised two preliminary points: the applicants’
delay in bringing these proceedings and the applicants’
failure
to join all interested parties. There is no merit in either point.
There was no need for the applicants to apply to set
aside the
sequestration order until it was clear that the first respondent
intended to apply to set aside the sale and transfer
of the property.
As appears from the undisputed facts, on this issue the first
respondent blew hot and cold. At first the first
respondent’s
representatives indicated that he would stand by the sale and then
there were suggestions that he would set
aside the sale and transfer
because he had another purchaser for a much higher price. Only in
September 2010 did the first respondent
unequivocally state that he
intended to apply for the setting aside of the sale and the transfer
of the property. This clearly
precipitated the application. The
applicants only have to join parties with an interest in the order
sought and they did so.
The applicants joined the first respondent
who is the proper person to sue on behalf of the estate – see
Mars
293
para 14.1;
339-341
paras 15.24-15.25.
The
applicants were not obliged to join creditors who had not proved
claims.
[15
] The
applicants have therefore made out a case for the relief which they
seek and the only issue remaining is the question of costs.
The
applicants seek an order
de
bonis propriis
against the first respondent that the first respondent pay the costs
on the scale as between attorney and client. The first respondent’s
counsel contends that this is not justified by the facts of the case
and refers to the fact that the notice of motion contains
no prayer
for an order for costs against the first respondent. The absence of
a prayer is no obstacle. In the applicants’
counsel’s
heads of argument notice was given that such an order would be
sought. The general rule is that the unsuccessful
party is mulcted
in costs and the failure to pray for costs is not sufficient reason
per
se
for
depriving a successful litigant of his costs where the other party
has appeared and opposed the claim – see
Sing
v Sing
1911
TPD 1034
at
1038-1039;
Afrisun
Mpumalanga (Pty) Ltd v Kunene NO and Others
1999
(2) SA 599
(T)
at
632J-633B.
[16
] In
my view there is no reason to depart from the general rule and there
is good reason to order the first respondent to pay the
costs in his
personal capacity on the scale as between attorney and client. These
reasons can be listed as follows:
(1) The first
respondent opposed the application without a
bona
fide
defence.
It will be remembered that the first respondent raised only
procedural issues (i.e. delay and non-joinder) and did not
engage
with the facts alleged by the applicants to show that they were
erroneous. The first respondent did not dispute the applicants’
locus
standi
but
denied that they were entitled to relief because the second and third
respondents had not misled the court in their application
for
sequestration. The first respondent’s denial flies in the face
of the facts. Finally, the allegation that the first
respondent had
entered into an agreement to sell the property for a much higher
price than the price for which the applicants bought
the property has
been shown to be devoid of truth. No agreement had been entered
into. The first respondent clearly knew that
he did not have a
bona
fide
defence;
(2) The decision to
persist in opposing the application is inexplicable unless the first
respondent had decided to assist the second
and third respondents as
alleged by the applicants. The first respondent did not deem it
necessary to dispute this contention
or the other even more serious
allegations that he had told deliberate untruths. The court must
conclude that the first respondent
cannot explain these matters.
(These have been dealt with in detail earlier);
(3) The first
respondent did not reply to numerous letters which substantially
protracted the dispute. Not only did this cause
prejudice to the
applicants but it is a contravention of Rule 89.23 of the Attorneys
Rules;
(4) At the very
least the first respondent’s opposition has been vexatious –
see
In
re Alluvial Creek Ltd
1929
CPD 532
at
535;
Johannesburg
City Council v Television and Electrical Distributors (Pty) Ltd and
Another
1997
(1) SA 157
(A)
at
177D-F;
(5) There is no evidence that the
first respondent is authorised in terms of section 73 of the Act to
oppose this application;
and
(6
) The
estate has no funds or other assets with which to pay the costs of
the application.
[17
] The
conduct of Mr. Schoonraad and the conduct of Mr. Matlala must be
investigated by the Law Society and, if necessary, appropriate
action
taken against them. Their misconduct appears from this judgment.
[18
] The
following order is made:
I The order of 3
June 2009 sequestrating
the
second and third respondents’ estate is set aside;
II The second and third respondents’
joint insolvent estate is discharged from administration by the first
respondent;
III Nana Abram Matlala in his personal
capacity is ordered to pay the costs of this application on the scale
as between attorney
and client;
IV The registrar is
requested and directed to send a copy of this judgment together with
the record and the heads of argument filed
to the President of the
Law Society of the Northern Provinces to investigate the conduct of
Mr. David Johan Schoonraad of Schoonraad
Attorneys and Mr. Nana Abram
Matlala of Maluleke Seriti Makume Matlala Inc. in the light of this
judgment and to take whatever
action against them which the Law
Society considers appropriate.
___________________
B.R. SOUTHWOOD
JUDGE OF THE HIGH COURT
CASE NO:
67502/2010
HEARD
ON: 24 August 2011
FOR
THE APPLICANTS: ADV. N. KRUGER-HECKROODT
INSTRUCTED
BY: Wayne van Niekerk Inc.
FOR
THE FIRST RESPONDENT: ADV. D. MTSWENI
INSTRUCTED
BY: Matshego Ramagaga Attorneys
DATE
OF JUDGMENT: 20 September 2011