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[2011] ZAECPEHC 29
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Nedbank v Andrews and Another (240/2011) [2011] ZAECPEHC 29 (10 May 2011)
1
IN THE
HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE, PORT ELIZABETH)
CASE
NO: 240/2011
DATE
HEARD: 19 April 2011
DATE
DELIVERED: 10 May 2011
In the
matter between
NEDBANK
….................................................................................................................
Applicant
And
JON
GAVIN ANDREWS
…............................................................................
First
Respondent
VICKY
ANDREWS
….................................................................................
Second
Respondent
JUDGMENT
NEPGEN
J
[1] This is an application for the provisional sequestration of first
respondent. The application was initially brought against
first
respondent and second respondent, who are married to each other out
of community of property, but the applicant has since
withdrawn the
application against second respondent. The application is opposed by
first respondent.
[2] It is common cause that first respondent is indebted to the
applicant in the following amounts:
R 972 065.37 in respect of an agreement of loan (first
respondent’s liability for this indebtedness is joint and
several
with that of second respondent).
R 168 418.38 in respect of a deed of suretyship.
R 39 391.40 in respect of an outstanding credit card facility.
R 8125.63 in respect of an overdraft on his current account.
The aforesaid indebtedness of first respondent is currently subject
to a re-arrangement in terms of section 87 of the National
Credit
Act, No 34 of 2005 (the Act). There is a further amount which the
applicant alleges first respondent owes to it, but this
is disputed
by first respondent. It was in respect of this amount that first
respondent sought leave to file further affidavits.
This was not
opposed by the applicant and leave to file these affidavits was
granted. Nothing further need be said about this alleged
indebtedness
as it was accepted, during argument, that this alleged indebtedness
was to be excluded for purposes of deciding whether
or not to grant
the relief sought by the applicant.
[3] In its founding papers the applicant sought to rely on three
grounds for the sequestration of first respondent, namely, firstly,
an alleged act of insolvency in terms of
section 8
(g) of the
Insolvency Act, No 24 of 1936
; secondly, an alleged act of insolvency
in terms of
section 8
(e) of the aforesaid act; and, thirdly, the
alleged actual insolvency of first respondent. When the matter came
before me Mr Scott,
who appeared on behalf of the applicant, informed
me that the applicant was not relying on the alleged acts of
insolvency, and
that the only ground upon which it relied for the
relief it sought was the alleged actual insolvency of first
respondent. Despite
this, I consider it necessary to refer, albeit
briefly, to the applicant’s contentions as set out in the
founding papers
regarding the aforesaid alleged acts of insolvency as
well as the alleged actual insolvency of first respondent. I consider
this
necessary because of the submissions made on behalf of the
applicant in respect of the alleged insolvency of first respondent.
[4] Applicant’s contention was that by applying for and being
placed under debt review first respondent gave notice in writing
to
the applicant and other creditors that he was unable to pay his
debts, thus committing an act of insolvency in terms of
section 8
(g)
of the
Insolvency Act; and
that the re-arrangement of first
respondent’s debts constituted a further act of insolvency as
envisaged by
section 8
(e) of the aforesaid act. The allegations made
by the applicant in this regard, as well as the allegations relied
upon insofar
as the alleged actual insolvency of first respondent is
concerned, are set out in a single paragraph in the founding
affidavit.
This paragraph reads as follows (the reference to
respondents is due to the fact that it was initially sought to obtain
relief
against both first and second respondent):
“
The Respondents have committed an act of
insolvency by applying for, and being placed under debt review. In
this regard, I annex
hereto, marked annexure “L” a copy
of the court order for debt re-arrangement granted in terms of the
National Credit Act with
regard to the Respondents on the 9
th
June 2010, and of the documents
relating thereto...... As will, with respect, appear therefrom, and
as envisaged in
section 8
(g) of the
Insolvency Act, the
Respondents
gave notice to various of their creditors, including the Applicant,
to the effect that they are unable to pay their
debts. In addition, I
respectfully submit that the re-arrangement of the Respondents’
debts, constitute (sic) a further act
of insolvency committed by the
Respondents, being that envisaged in
section 8
(e) of the
Insolvency
Act. In
addition, I respectfully submit that, it is plain from
annexure “L” hereto that the Respondents are factually
insolvent,
that they cannot pay their debts, that the value of their
assets, fairly valued is less than the amounts owed by them, and that
they are, accordingly, factually insolvent.”
[5] In responding to these allegations first respondent, in his
opposing affidavit, contended that the applicant was not entitled
to
rely on the proceedings in terms of the Act as constituting acts of
insolvency. As stated above, when the matter came before
me it was no
longer sought to rely on the alleged acts of insolvency, and it is
therefore unnecessary to refer to the contentions
advanced by first
respondent in this regard. All that need be stated, in summary, is
that first respondent dealt at length with
the applicant’s
participation in the debt review application and also the fact that
the applicant had applied for a rescission
of the debt re-arrangement
order, which application was unsuccessful. First respondent did not
deal specifically with the allegations
made in the last sentence of
the paragraph referred to above.
[6] The only reference in the founding papers to first respondent’s
assets are to be found in paragraphs 14 and 15 thereof.
In paragraph
14 the applicant sought to establish that it would be to the benefit
of the creditors of first respondent and his
wife if they were
sequestrated. In this regard the applicant mentioned that first
respondent was a 50% member in a close corporation
which owned fixed
property in Port Elizabeth. Without going into any detail, it was
stated that the property had been sold and
that out of the nett
proceeds an amount of “approximately” R 322 875.00
would be due to first respondent and would
be available for
distribution amongst his creditors. In paragraph 15 of the founding
affidavit the applicant dealt with the security
it had for the
amounts due to it, and referred to three mortgage bonds which had
been registered over an immovable property in
Lorraine, Port
Elizabeth. The applicant annexed a valuation of the property, which
indicated that it was worth R 850 000.00.
[7] Nowhere in the papers is it stated that the two assets referred
to are the only assets first respondent has. In fact, this
is not
even suggested. What does appear from paragraph 14 of the founding
affidavit is that it was never the intention of the applicant
to
contend that these were the only assets belonging to first
respondent, for one finds, immediately prior to the applicant
mentioning
that first respondent is a 50% member in the close
corporation, the words “apart from such other assets as they
may have”
(referring to both respondents).
[8] Mr Scott contended that the assets referred to were the only
assets known to the applicant. Again, this is not stated, nor
is it
even suggested. The statement I have referred to indicates clearly
that the applicant does not consider these two assets
to be the only
assets first respondent has.
[9] It was further contended that because first respondent did not
deny the allegation in paragraph 12 of the founding affidavit
that he
was factually insolvent, this statement must be accepted as being
correct. I disagree. What the final sentence in paragraph
12 of the
founding affidavit states is that “it is plain from annexure
“L” hereto” that the respondents
are factually
insolvent. The said annexure, which as I have indicated deals with
the proceedings in terms of the Act, does not
in any way reflect
actual insolvency on the part of first respondent. In fact, the
documents annexed do not even mention the assets
of first respondent
nor, for that matter, of second respondent. It seems to me that what
the applicant intended to convey in the
sentence under discussion was
that because first respondent and his wife had applied for debt
review this indicated that they were
unable to pay their debts and
were therefore insolvent. As the annexure does not indicate actual
insolvency I do not consider that
any inference whatsoever can be
drawn from the failure on the part of first respondent to have denied
that he was factually insolvent.
[10] In order to establish insolvency it must be
shown that the liabilit
ies of first respondent, fairly
estimated, exceed the value of his assets, fairly valued (see
Ohlsson’s Cape Breweries, Ltd vs Totten
,
1911 TPD
48
at p50). The onus of proving this, at this stage
prima facie
,
rests upon the applicant and is discharged on a balance of
probabilities; see generally
Meyer & Kie. vs Maree
,
1967 (3) SA 27
(T) at p30 D – H. In the present instance there
has been no attempt whatsoever by the applicant to list all the
assets of
first respondent. Accordingly, it serves no purpose to
refer to the value of the only two assets mentioned; to state that
first
respondent’s liabilities exceed the value of those two
assets; and to contend further that this indicates actual insolvency
on the part of first respondent. In these circumstances it cannot be
said that the applicant has succeeded in establishing actual
insolvency on the part of first respondent. This being so, the
applicant is not entitled to the relief it seek.
[11] The application is dismissed, with costs.
J J NEPGEN
JUDGE OF THE HIGH COURT
Appearance:
For the plaintiff: Mr Pretorius, instructed by Greyvensteins
Attorneys
For the defendant: Mr Scott, instructed by Roland Meyer & Co