IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE HIGH COURT, CAPE TOWN)
Case No: 8898/2023
In the matter between:
ABSA BANK LIMITED Applicant
versus
NIGEL OLIVER CUPIDO N.O. First Respondent
THERESA JOHANNA CUPIDO N.O. Second Respondent
In their capacities as sole trustees of the TJ & NO CUPIDO FAMILY TRUST
Registration number IT 2940/2009, 12 Kogelberg Close, Welgevonden Estate
Durbanville.
Coram: Adhikari AJ
Heard: 29 January 2024
Delivered: 31 January 2024
JUDGMENT DELIVERED ELECTRONICALLY ON 31 JANUARY 2024
Delivered: This judgment was handed down electronically by circulation to the
parties' legal representatives by email. The date for the hand- down is deemed
to be on 31 January 2024.
ADHIKARI, AJ
2
[1] This is an opposed application for the provisional sequestration of the
TJ & NO Cupido Family Trust (‘the Trust’). The application was on the roll for hearing
on 11 July 2023. It appears from the record that shortly before the hearing on
11 July 2023, the Trust delivered a notice of intention to oppose, and consequently the
matter was postponed by agreement between the parties to 29 January 2024, and a
timetable regulating the further conduct was agreed and made an order of court. In
terms of th at order, the Trust was required to deliver its answering affidavit by
31 August 2023.
[2] The Trust did not adhere to the agreed order , and instead delivered its
answering affidavit almost five months later, on 26 January 2024. The answering
affidavit contains perfunctory submissions in which the Trust seeks condonation for
the late delivery of its answering affidavit. In addition, the Trust delivered a formal
condonation application supported by an affidavit deposed to by the Trust’s instructing
attorney. The condonation application was also delivered on 26 January 2024.1 The
condonation application is opposed by the applicant (‘ABSA’).
[3] The issues which I am called upon to determine are first, whether condonation
should be granted for the late delivery of the answering affidavit and second whether
ABSA has made out a case for the provisional sequestration of the Trust.
1 It appears from email correspondence annexed to the founding affidavit in the condonation
application that the answering affidavit was served electronically on ABSA’s attorneys on
24 January 2024 and that the condonation application was served electronically on ABSA’s
attorneys on 26 January 2024. However, both the answering affidavit and the condonation
application were only placed in the court file late on 26 January 2024.
3
CONDONATION
[4] It is by now trite that condonation is not a mere formality, nor is to be had for
the asking. An applicant for condonation is required to set out fully the explanation for
the delay; the explanation must cover the entire period of the delay and must be
reasonable.
2 The factors which usually weigh with a court in considering an
application for condonation include the degree of non- compliance, the explanation
therefor, the importance of the case, the convenience of the court and the avoidance
of unnecessary delay in the administration of justice.
3
[5] In the founding affidavit in support of the application for condonation, deposed
to by the Trust’s instructing attorney, it is incorrectly contended that the Trust’s
answering affidavit ought to have been delivered on 31 October 2023 and is therefore
approximately two and a half months late. The postponement order, however,
required the Trust to deliver its answering affidavit by 31 August 2023, and
consequently the answering affidavit is in fact, as aforesaid, nearly five months out of
time.
[6] It is contended on behalf of the Trust that the delay was occasioned by the fact
that the Trust anticipated being awarded certain contracts alluded to in the answering
affidavit, and that it was only in the latter part of 2023 that these contracts were
awarded. It is further contended that the answering affidavit could only be prepared
once the Trust’s attorneys had been provided with “bone (sic) fide grounds and proof
of [its] intention and commitment to comply with its financial commitments” , and that
2 Van Wyk v Unitas Hospital and Another (Open Democratic Advice Centre as Amicus Curiae) 2008
(2) SA 472 (CC) at para [22].
3 Federated Employers Fire & General Insurance Co Ltd & Another v McKenzie 1969 (3) SA 360 (A)
at 362F-G.
4
this was only possible once the Trust’s financial pos ition had “reached a point of
significant improvement and it became abundantly clear that [the Trust would] be able
to meet [its] future commitments”.
[7] The explanation for the delay is less than satisfactory. No attempt is made
either in the affidavit in support of the condonation application, or in the answering
affidavit, to comprehensively set out the Trust’s current financial position which was
allegedly materially affected by the award of contracts which apparently caused the
delay. Instead, t he contracts on which the Trust seeks to rely are described in the
vaguest of terms in the answering affidavit and copies of the contracts are not annexed
to the papers. I am thus unable to determine whether the contracts have in fact been
concluded (and when they were concluded), whether the Trust is a party to the
contracts, whether the contracts explain the delay, and more importantly whether the
contracts provide a basis on which to conclude that the Trust is in a position to meet
its financial obligations. Further, the Trust’s explanation for the delay does not cover
the entire period of the delay as there is no allegation in the affidavit in support of the
condonation application, or in the answering affidavit as to when the contracts were
concluded or when the financial position of the Trust “reached a point of significant
improvement” as alleged.
[8] At the commencement of the hearing, I enquired from Mr Wessels who
appeared for ABSA, whether ABSA sought an opportunity to deliver a replying
affidavit, and whether he was in a position to deal with the merits of the matter .
Mr Wessels confirmed that ABSA did not seek to deliver a replying affidavit and that
his instructions were to proceed to argue the matter on the papers before the court.
In light of the fact that ABSA has had sight of the answering affidavit and has elected
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not to deliver a replying affidavit and to argue the matter on the papers as they stand,
I must accept that ABSA does not deem itself to be materially prejudiced by the late
delivery of the answering affidavit. Further, given the consequences of a provisional
sequestration order, I am mindful of the fact that notwithstanding the Trust’s
recalcitrant conduct, it would not be in the interests of justice for this application to be
determined without reference to the Trust’s answering affidavit.
[9] For these reasons, I am prepared to condone the late delivery of the answering
affidavit.
[10] Before dealing with the merits, one further aspect bears mention. The Trust in
the application for condonation sought to rely on the fact that it had sought a short
postponement of the matter due to the late delivery of its answering affidavit in order
to allow ABSA the opportunity to deliver a replying affidavit and to allow for the parties
to deliver heads of argument, but that ABSA’s attorneys had declined the request
notwithstanding a tender of costs. The Trust’s conduct in delivering its answering
affidavit almost five months out of time, appears to have been designed to bring about
a postponement. Its conduct in this regard is manifestly self -serving. ABSA and its
attorneys cannot be faulted for their stance in refusing the postponement in these
circumstances. The tender of costs would in any event be meaningless, if as ABSA
contends, the Trust is unable to pay its debts and is insolvent.
THE MERITS OF THE SEQUESTRATION APPLICATION
[11] In an application for provisional sequestration, the court is called to determine
whether the applicant has made out a prima facie case that the respondent is
insolvent. As the Trust has introduced evidence i n rebuttal of ABSA’s claim , I am
6
called on to have regard to all the evidence adduced by both parties and in light of the
evidence decide whether a case for provisional sequestration has been made out.
Section 10 of the Insolvency Act 24 of 1936 (‘the Insolvency Act’) provides that a court
to which the petition for the sequestration of the estate of a debtor has been presented,
may make an order sequestrating the estate of the debtor provisionally if the court is
of the opinion that , prima facie, the petitioning creditor has established against the
debtor a claim such as is mentioned in s 9(1) of the Insolvency Act ;4 the debtor has
committed an act of insolvency or is insolvent; and there is reason to believe that it will
be to the advantage of creditors of the debtor if the debtor’s estate is sequestrated.
[12] Consequently, in order to obtain a provisional sequestration order, ABSA must
satisfy this court on a prima facie basis,5 that it has a liquidated claim in excess of
R100, that the Trust is factually insolvent or has committed an act of insolvency, and
that there is reason to believe that sequestration will be to the advantage of the Trust’s
creditors.6
[13] Where the allegations of fact relied upon by the petitioning creditor are disputed
by the respondent, it has been held that the dispute should not ordinarily be referred
to evidence, although it may be so referred where circumstances of an exceptional
nature show such a step to be appropriate. In proceedings for a provisional
sequestration order , the court is required to take the unusual step of considering
whether, so far as can be determined from the affidavits, there is a balance of
probabilities which favours the conclusion that the requirements of s 10 of the
4 Section 9(1) of the Insolvency Act refers to a claim of at least R100.00.
5 Mercantile Bank (A division of Capitec Bank Limited) v Ross [2021] ZAGPJHC 149 at para [41].
6 Investec Bank Ltd v Lambrechts NO and Others 2019 (5) SA 179 (WCC).
7
Insolvency Act have been satisfied. If so, the requirements of s 10 will have been
satisfied 'prima facie', and a provisional sequestration order may be issued.7
[14] There is no dispute between the parties that ABSA has established the
necessary locus standi to seek a provisional sequestration order (in that ABSA has a
claim against the Trust in excess of R100). The Trust is indebted to ABSA in terms of
a mortgage loan agreement, as well as in terms of a term loan agreement concluded
between ABSA and ATN Group (Pty) Ltd (‘ATN’) in respect of which the Trust stood
as surety for ATN’s obligations to ABSA (‘the suretyship agreement’).
[15] In respect of the term loan agreement, ABSA contends in the founding affidavit
that it issued summons out of this court against ATN and against the first and second
respondents, in their capacity as trustees of the Trust , based on the suretyship
agreement (‘the action’).8 The Trust does not dispute in the answering affidavit that it
is indebted to ABSA, but merely disputes the quantum of its indebtedness. I return to
this dispute below.
[16] ABSA contends in the founding affidavit that the Trust has committed an act of
insolvency as contemplated by s 8 of the Insolvency Act in that the Trust has made an
offer in writing to make payment of less than is currently due to ABSA in respect of the
debt owed to ABSA, and that the Trust acknowledged in writing to its creditor, ABSA,
that it was unable to pay the full debt due at the time. ABSA relies on a letter
addressed to its attorneys by the Trust’s attorneys, dated 24 April 2023, in which the
Trust offers to make payment of its obligations to ABSA in terms of the suretyship
7 Kalil v Decotex (Pty) Ltd and another 1988 (1) SA 943 (A) at 978D-E. See also Renyolds NO v
Mecklenberg (Pty) Ltd 1996 (1) SA 75 (W) at 80G – 81A.
8 The first and second respondents were also sued in their personal capacities in the action, as
sureties for ATN.
8
agreement, as the basis on which it contends that the Trust has committed an act of
insolvency.
[17] The letter contains a tender to make payment of the Trust’s obligations in terms
of the suretyship in increasing monthly instalments commencing on 31 July 2023 until
the full outstanding amount due to ABSA is paid. In particular the Trust offered to
make payment as follows:
[17.1] R180 000.00 for the period from 31 July 2023 to 31 December 2023 in
instalments of R30 000.00 per month;
[17.2] R210 000.00 for the period from 31 January 2024 to 30 June 2024 in
instalments of R35 000.00 per month;
[17.3] R240 000.00 for the period from 31 July 2024 to 31 December 2024 in
instalments of R40 000.00 per month;
[17.4] R600 000.00 for the period from 31 January 2025 to 31 December 2023
in instalments of R50 000.00 per month; and
[17.5] Thereafter payments of R50 000.00 per month “until full and final
settlement of the outstanding amount due to ABSA]” in respect the action
proceedings.
[18] ABSA relies on s 8(g) of the Insolvency Act which provides that a debtor
commits an act of insolvency if it gives notice in writing to any one of its creditors that
it is unable to pay any of its debts. In essence, ABSA contends that the letter of
24 April 2023 constitutes an act of insolvency in that the letter (and the tender
contained therein) constitutes a notice to a creditor of the Trust that it is unable to pay
9
a debt owed by the Trust. The Trust disputes that it has committed an act of
insolvency. In support of this contention, the Trust states in the answering affidavit
that it has made regular monthly payments since June 2023 totalling R207 000 in
respect of the mortgage loan agreement, and totalling R100 000 in respect of the term
loan agreement . The Trust, however, misapprehends the nature of the test to be
applied.
[19] It is trite that proof that any act of insolvency has been committed, as distinct
from proof of actual insolvency, is a sufficient ground for the purpose of obtaining a
sequestration order , provided that the other requisites for the grant thereof are
established. Further, a debtor that gives notice that it will only be able to pay its debt
in the future, gives notice in effect that it is unable to pay. A request for time to pay a
debt which is due and payable will ordinarily give rise to an inference that the debtor
is unable to pay a debt and such a request contained in writing will accordingly
constitute an act of insolvency as contemplated by s 8(g) of the Insolvency Act, this is
particularly so where the request is coupled with an undertaking to pay the amount
due and payable by way of instalments.9
[20] In cases where there is a request for time, the inquiry which the court is called
upon to engage in, is whether the content of the written statement viewed together
with the circumstances to which it may be permissible to have regard, is such as to
negative the inference arising from the request for time to pay and to justify the
conclusion that the debtor would be able to pay at once if pressed to do so.
10
9 Standard Bank of SA Ltd v Court 1993 (3) SA 286 (C) at 293.
10 Id.
10
[21] It appears from the papers that the Trust’s obligations in terms of the suretyship
agreement arose as a consequence of ATN’s failure to pay the amounts due in terms
of the term loan agreement, and that the amount of R1 066 739.91 was due by the
Trust in terms of its obligations as surety at the time that summons was issued in the
action. Although the Trust disputes the quantum of ABSA’s claim, the basis on which
the quantum is disputed is not clearly set out in the answering affidavit. I t appears
from the founding affidavit that in response to a complaint about the calculation of the
quantum, ABSA in proceedings in terms of Rule 37 in the action, provided the Trust’s
attorneys with a detailed calculation of the quantum of the claim. The detailed
calculation is annexed to the founding affidavit and appears to show that the
outstanding amount due as at March 2020, was R1 126 536.05.
[22] ABSA contends that after receipt of the detailed calculation, the Trust’s
attorneys on 5 February 2023 responded, contending that the calculation was
outdated as it did not include all payments made by the Trust. Thereafter, on
14 April 2023 the letter on which ABSA relies , was sent. Despite delivering an
answering affidavit in these proceedings, no further detail as to the supposed basis on
which the quantum of ABSA’s claim is disputed has been provided to the court. It is
telling that nowhere in the answering affidavit does the Trust state what it contends
the quantum of ABSA’s claim is.
[23] It is clear from the letter of 14 April 2023, that the Trust accepted that it was
indebted to ABSA in an amount of at least R1 230 000; that it was unable to pay the
full amount at the time; and that it offered to make payment in instalments. Having
regard to all the relevant and admissible facts and circumstances, I am satisfied that
a reasonable person in the position of ABSA would not understand the letter to mean
11
that while Trust was unwilling to pay its debt forthwith, it could nonetheless do so if
pressed. Indeed, the letter demonstrates clearly that the Trust was unable to pay its
debt to ABSA at the time. Consequently, there is no basis on which to negative the
inference arising from the request for time to pay and or to justify a conclusion that the
Trust would be able to pay at once if pressed to do so.
[24] Further, the Trust’s contention that it subsequently made payments to ABSA ,
does not take the matter any further, in that a notice of inability to pay debts does not
cease to be an act of insolvency as a result of circumstances obtaining subsequent to
the giving thereof.
11
[25] In any event, it appears that to date, payment of R100 000 has been made in
respect of the Trust’s obligations with respect to the term loan agreement/suretyship
agreement since June 2023, in circumstances where the Trust offered to make
payment of a sum of R180 000 for the period 31 July 2023 to 31 December 2023.
Further, as Mr Wessels correctly pointed out, the proofs of payment annexed to the
answering affidavit do not demonstrate that the Trust has in fact made the payments
on which reliance is placed. It appears that the payments have been made by an
entity referred to as “ATNGROUP”. There is no explanation in the answering affidavit
as to what this entity is or what its relationship to the Trust is. Mr de Wet for the Trust
correctly accepted that the answering affidavit does not deal with the basis on whi ch
the payments made by “ATNGROUP” can be attributed to the Trust.
[26] Further, it is not disputed that as a consequence of the Trust having defaulted
on the mortgage loan agreement , the full amount due in terms of that agreement is
now due and payable . The certificate of balance annexed to the founding affidavit
11 Chenille Industries v Vorster 1953 (2) SA 691 (O) at 696D-E.
12
demonstrates that the full amount due in terms of the mortgage loan agreement as at
12 May 2023 was R2 393 887.26. On the Trust’s version as contained in the
answering affidavit, it is not in a position to pay this amount and is only able to make
payment in instalments.
[27] Further, the Trust has failed to set out its current financial position. It has not
placed any financial or income statements before the court. Save for vague
unsubstantiated allegations, it has not placed any evidence before the court that it is
generating an income or indeed has the ability to generate an income that will allow it
to repay the debt due to ABSA.
[28] On a conspectus of the evidence, I am satisfied that ABSA has demonstrated
that the Trust has committed an act of insolvency.
[29] Insofar as the benefit to creditors is concerned, it appears from the papers that
the Trust has a valuable asset, being the property in respect of which ABSA holds the
mortgage bonds as security for the Trust’s indebtedness in respect of the mortgage
loan agreement , and that the asset can be realised for the benefit of the Trust’s
creditors. On the papers as they stand it appears that ABSA is the only creditor. The
Trust, however, contends that it has other creditors although the identit ies and the
debts owed to th ose creditors is not set out in the answering affidavit . Further, the
Trust does not meaningfully dispute in the answering affidavit, ABSA’s contention that
the realisation of the property which it holds as security would be to the benefit of
creditors.
[30] Once the applicant for a provisional order of sequestration has established on
a prima facie basis the requisites for such an order, the court has a discretion whether
13
to grant the order. 12 Where the conditions prescribed for the grant of a provisional
order of sequestration are satisfied, then, in the absence of some special
circumstances, the court should ordinarily grant the order, and it is for the respondent
to establish the special or unusual circumstances that warrant the exercise of the
court's discretion in his or her favour.13
[31] Mr de Wet in argument urged me to exercise the discretion vested in the court
in favour of the Trust. The Trust sought to place reliance on the contention that the
sequestration of the Trust would not be to the benefit of creditors because (a) the Trust
is presently servicing its debts and its sustainable future income will allow it to continue
to do so and (b) the sale of the Trust’s immovable property at auction will not be to the
benefit of creditors since it will likely achieve a far lower sale price t han on the open
market.
[32] Given that ABSA case’s is based on the commission of an act of insolvency, at
the level of a provisional order of sequestration, it was incumbent on the Trust to place
evidence before the court that clearly establishes that its debts will be paid if a
sequestration order is not granted, and further if that contention is based on a claim
that the Trust is in fact solvent, then that should have been shown by acceptable
evidence.
[33] For the reasons already addressed t here is no evidence before the court that
establishes that the Trust’s debts would be paid within a reasonable time. On the
contrary, the evidence shows that the Trust is unable to do so, and that the Trust did
not comply with the terms of repayment that it proposed in the letter of 24 April 2023,
12 FirstRand Bank Ltd v Evans 2011 (4) SA 597 (KZD) at para [27].
13 FirstRand Bank Ltd v Evans at para [27].
14
and there is no evidence that the Trust has any sustainable income stream. The Trust
owns a property that is encumbered in favour of ABSA. There is no evidence before
the court that the Trust has sought to sell the property on the open market or what the
proceeds of a sale on the open market would be and consequently there is no
evidence before the court that a sale at auction will yield a lower sale price than a sale
on the open market.
[34] I am not satisfied, on the information placed before me, that the Trust is
commercially solvent as submitted by Mr de Wet. I am further satisfied that ABSA has
established a prima facie case as there is a reasonable prospect that it will be to the
advantage of creditors of the Trust if its estate is sequestrated. Further, there is no
basis on the papers for me to exercise my residual discretion in the Trust’s favour in
the face of ABSA’s fulfilment of the requirements of s 10 of the Insolvency Act.
[35] For these reasons I am satisfied that a proper case has been made out for the
granting of a provisional sequestration order.
In the result I make the following order:
1. The respondents’ estate is placed under provisional sequestration.
2. A rule nisi is issued calling upon the respondents and all other interested parties
to show cause to this Court on ___________________ 2024 why:
2.1. The respondents’ estate should not be placed under final sequestration;
and
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2.2. The costs of this application should not be costs in the sequestration of
the respondents’ estate.
3. Service of this Order shall be effected:
3.1. By one publication in each of the Cape Times and Die Burger
newspapers;
3.2. By the Sheriff delivering a copy of the application to:
3.2.1. The respondents at 12 Kogelberg Close, Welgevonden
Estate, Durbanville;
3.2.2. The Master of the High Court;
3.2.3. The South African Revenue Services;
3.2.3.1. Any employees that the respondents may have, as
prescribed in s 11(2A)(b) of the Insolvency Act 24 of 1936;
and
3.2.3.2. Any trade unions representing the respondents’
employees.
_______________
ADHIKARI, AJ
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APPEARANCES:
Applicant’s Counsel: Adv L Wessels
Instructed by: Sandenberg Nel Haggard
Respondents’ Counsel: Adv DR de Wet
Instructed by: HT De Villiers Attorneys