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[2011] ZAGPPHC 208
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Smit v ABSA Bank Ltd, Smit v ABSA Bank Ltd (24086/10, 24088/10) [2011] ZAGPPHC 208 (8 November 2011)
REPORTABLE
I
N
THE NORTH GAUTENG HIGH COURT, PRETORIA
(REPUBLIC OF SOUTH AFRICA)
Date: 2011-11-08
Case Number:
24086/10
In the matter between:
NICOLAAS JACOBUS
SMIT
…..........................................................
Applicant
and
ABSA BANK
LIMITED
...................................
I
ntervening
Creditor/Respondent
And in the matter between:
Case Number: 24088/10
ESRE SMIT
….....................................................................................
Applicant
and
ABSA BANK
LIMITED
..................................
Intervening
Creditor/Respondent
JUDGMENT
SOUTHWOOD J
[1]
On
5 July 2010, the applicants, Nicolaas Jacobus Smit and Esre Smit, who
are married to each other out of community of property
and reside at
120 Lilian Ngoyi Street, Middelburg, Mpumalanga, each lodged with the
registrar of this court an application for
voluntary surrender in
terms of section 3 of the Insolvency Act 24 of 1936 (‘the
Act’). Each applicant gave notice
in the notice of motion that
application would be made on 8 July 2010 for the acceptance of the
surrender of the applicant’s
estate.
[2] For reasons
which are not apparent from the records, the applications were
postponed on 8 July 2010 (to 15 September 2010),
on 15 September 2010
(to 26 November 2010), on 26 November 2010 (to 1 March 2011) and on 1
March 2011 (to 3 May 2011). On 28 April
2011 the Intervening
Creditor, Absa Bank Limited, delivered to the applicants’
attorney a notice of motion in each matter
in which the Intervening
Creditor gave notice that on 3 May 2011 it would apply to intervene
in the application and that it would
seek leave to file an answering
affidavit. On 3 May 2011, without making an order that the
Intervening Creditor was permitted
to intervene or file an answering
affidavit, the court postponed each application
sine
die
.
On 8 July 2011 the Intervening Creditor filed an opposing affidavit
in each application. The applicants have not filed replying
affidavits and despite having received notice of set down for the
hearing of the applications in the opposed motion court on 7
November
2011 neither applicant has filed heads of argument. Neither
applicant is represented at the hearing.
[3] In order to
succeed in the application each applicant is required in terms of
section 6 of the Act to satisfy the court
inter
alia
that
he/she owns realisable property of a sufficient value to defray all
the costs of sequestration payable out of the free residue
of the
estate and that it will be to the advantage of his/her creditors if
his/her estate is sequestrated. It is well-established
that for
sequestration of an estate to be to the advantage of creditors the
applicant for surrender must show that a not negligible
dividend will
be paid to creditors – see
Ex
parte Anthony en ‘n Ander en Ses Soortgelyke Aansoeke
2000
(4) SA 116
(C)
para
11;
Ex
parte Matthysen et Uxor (First Rand Bank Ltd intervening)
2003
(2) SA 308
(T)
at
316B-C;
Ex
parte Kelly
2008
(4) SA 615
(T)
para
3;
Mars
The
Law of Insolvency in South Africa
9
ed Bertelsmann
et
al
paras
3.26 and 3.30. In this court it has been laid down that advantage to
creditors requires that a dividend of at least 20 cents
in the rand
will be paid – see unreported judgment by Bertelsmann J in
Samuel
Adeleke Ogunlaja
GNP
Case Number 53146/09 19 January 2010 para 9.
[4] Surprisingly
(in view of the case law and the passages in
Mars
)
neither applicant alleged that the sequestration of his/her estate
would result in a dividend of at least 20 cents in the rand.
According to Nicolaas Johannes Smit’s application (Case Number
24086/2010) his estate would pay a dividend of 16,33 cents
in the
rand and according to Esre Smit’s application (Case Number
24088/2010) her estate would pay a dividend of 10,84 cents
in the
rand. To arrive at these figures the applicants relied on a forced
sale valuation of their only asset, the property where
they reside,
of R900 000 and a mortgage bond balance of R744 864. In support of
the alleged forced sale value each applicant attached
to his/her
application a valuation by Altus Viljoen of Dominium.
[5] In seeking
leave to intervene to oppose the applications and in its opposing
affidavits the Intervening Creditor has pointed
out that according to
its own internal valuation the market value of the property was only
about R850 000 and that the outstanding
balance on the mortgage bond
over the property was R873 540,22 and that if these values were
applied to the applicants’ own
calculations there would be no
dividend paid at all. It is clear that even if the applicants’
valuation is accepted at face
value there will be no free residue and
therefore no dividend.
[6] The applicants’
valuation is completely defective and does not establish the value
contended for. The valuation does
not comply with the requirements
laid down in the case law – see e.g.
Nell
v Lubbe
1999
(3) SA 109
(W)
at
111D-G;
Ex
parte Anthony en ‘n Ander en Ses Soortgelyke Aansoeke supra
at
124F-I;
Ex
parte Matthysen et Uxor (First Rand Bank Ltd intervening) supra
at
311I-312G;
Ex
parte Samuel Adeleke Ogenlaja & Others supra
paras
13-16 and 24-26. In particular it purports to make use of a
comparable sales method to determine the market value of the
property
but does not identify any sales and show why they are comparable. It
also does not explain how the forced sale value
is arrived at on the
basis of any facts and circumstances set out in the valuation. It is
also astonishing that the applicants’
statements of affairs put
a value of R800 000 on the property and the difference between this
value and the value determined by
Dominium is not explained. It is
also difficult to believe that the applicants’ own no other
assets. The overall impression
is that the applicants have not taken
the court into their confidence. Finally, no attempt has been made
to explain how the costs
of five postponements have been taken into
account in calculating the dividend.
[7] It is clear
from the applications to intervene and the opposing affidavits that
for the reasons set out therein the applications
are fatally
defective. This was brought to the applicants’ attorney’s
attention on 28 April 2011. Notwithstanding
this clear intimation
the applicants did not withdraw the applications and tender the
costs. They forced the Intervening Creditor
to prepare for the
application and come to court to ensure that the application was
dismissed. In my view the applicants’
persistence with the
applications was vexatious and the court should mark its disapproval
with appropriate costs orders –
see
In
re Alluvial Creek Limited
1929
CPD 532
at
535;
Johannesburg
City Council v Television & Electrical Distributors (Pty) Ltd and
Another
1997
(1) SA 157
(A)
at
177D-F. However, the Intervening Creditor did not seek an order on
the scale as between attorney and client.
[8] It is also
clear that the applicants’ attorney has not attempted to comply
with the many judgments of this and other courts
and established
practice regarding what must be proved in applications for voluntary
surrender. There is no reason why the applicants
should be required
to pay the attorney’s costs and expenses and an order depriving
the attorney of his costs and expenses
will be made.
[9] The following
order is made in each application:
I The intervening creditor is granted
leave to intervene and file an opposing affidavit;
II The application is dismissed with
costs;
III It is ordered that the applicant’s
attorney, Johan Nel Attorneys of 19 Beyers Naude Street, Middelburg,
Mpumalanga, is
not entitled to charge any fee or recover any expenses
from the applicant for preparing the application and presenting it to
court.
____________________
B.R. SOUTHWOOD
JUDGE OF THE
HIGH COURT
CASE
NO: 24086/10
HEARD
ON: 8 November 2011
FOR
THE APPLICANT: No appearance
FOR
THE RESPONDENT: ADV. C. RIP
INSTRUCTED
BY: Van Zyl Le Roux
DATE
OF JUDGMENT: 8 November 2011
CASE NO:
24088/10
HEARD
ON: 8 November 2011
FOR
THE APPLICANT: No appearance
FOR
THE RESPONDENT: ADV. C. RIP
INSTRUCTED
BY: Van Zyl Le Roux
DATE
OF JUDGMENT: 8 November 2011