THE REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)
WCHC APPEAL N O: 114 /
2023
In the matter between:
RONNIE JACOBS First Appellant
SEROJINI JACOBS Second Appellant
and
MORNE ANDRE VAN NIEKERK N.O. First Respondent
CHRISTIAN FINDLAY BESTER N.O. Second Respondent
RENE BERNICE BAILEY N.O. Third Respondent
HERMIAS CORNELIUS VAN ZYL Fourth Respondent
THE MASTER OF THE HIGH COURT, CAPE TOWN Fifth Respondent
Coram: Ndita, Cloete et Wille, JJ
Heard: 22 January 2024
Delivered: 2 February 2024
___________________________________________________________________________
JUDGMENT
2
___________________________________________________________________________
WILLE, J:
Introduction
[1] This appeal places a rather unusual situation before this court regarding an
application to rescind final sequestration orders and some condonation applications .
The initial rescission application was dismissed, but the appellants sought leave by
way of application and were granted leave to appeal to this court.
[2] The appellants seek an order rescinding and setting a side the final
sequestration order concerning their respective estates. In the alternative, they seek
relief and a rescission on appeal under our common law. They say this because
they submit that exceptional circumstances exist to their extreme prejudice and
advance fraudulent conduct on behalf of the petitioning creditor. They also say that
it is in the interests of justice to set aside these final sequestration orders.
Overview
[3] The appellants are married out community of property and thus have two
separate estates. It is th ese estates that w ere the subject of final sequestration
orders. The first respondent was the executor of a deceased estate, and this estate
was the petitioning judgment creditor. The second and third respondents are the
joint trustees of the insolvent sequestrated estates. The fourth respondent is
described as a property investor who, together with the fifth respondent, takes no
part in this appeal. The fourth respondent was the purchaser of the immovable
property which previously vested in these sequestrated estates . He has since taken
transfer of this immovable property and the liquidation and distribution accounts of
the first and second appellant have since been finalized and confirmed by the fifth
respondent.
[4] The appellants’ case is based on misrepresentation by the petitioning creditor
and a failure to present then current financial facts to the various courts initially
seized with this matter. Primarily, the first appellant avers that at the time he was
both provisionally and finally sequestrated, he was gainfully employed and remains
3
so employed. Moreover, the sequestration of their estates was predicated upon the
reliance on a return of service that was obtained by irregular means and fraudulently.
[5] They say they provided credible evidence of sufficient movable assets to
satisfy the judgment debt when the sheriff’s return was fraudulently obtained and a
null bona was rendered. The appellants also charter for condonation application s
wherein they advance that they gave a satisfactory explanation for not opposing the
granting of the final orders of sequestration, for not pursuing their rescission
applications timeously and for not advancing their current appeal timeously . They
say that they were not in willful default. I will deal with th ese condonation
applications (in as much as this may be necessary) at the end of this judgment.
Consideration
[6] I will deal firstly with the common law read with our rules that indicate that a
court may, in addition to any other powers it may have, upon the application of any
party affected, rescind or vary an order or judgment erroneously sought or
erroneously granted in the absence of any party affected thereby.
1 The purpose of
this rule is to correct a wrong judgment or order expeditiously.2
[7] The rule provides for specified dis crete procedures whereby such orders can
be rescinded, including ‘an order or judgment erroneously sought or erroneously
granted in the absence of any party affected thereby’ (which is relevant to this
application).
[8] In general terms, a judgment is erroneously granted if a fact existed at the
time of its issue of which the court was unaware, which would have precluded the
granting of the judgment and would have induced the court not to grant the
judgment.
It follows that if fraud is committed and facts are misrepresented to the
court, such an order will have been erroneously granted. An order or judgment is
also erroneously granted if there is an irregularity in the proceedings. 3 At common
1 Rule 42 (1) of the Uniform Rules of the High Court.
2 Bakoven Ltd v GJ Howes (Pty) Ltd 1990 (2) SA 446 at 471 E-F
3 De Wet and Others v Western Bank Ltd 1979 (2) 1031 (A) at 593 F.
4
law, a judgment can be set aside for fraud.4 The onus to succeed based on a
fraudulently obtained judgment bears down on the party alleging the fraud.
[9] To succeed on a claim that a judgment be set aside on the ground of fraud,
the applicant must allege and prove: (a) that the successful litigant was a party to the
fraud; (b) that the evidence was , in fact, incorrect: (c) that it was made fraudulently
and with intent to mislead and, (d) that the court would, if the correct facts had been
placed before it, have given a judgment other than that which it was induced by the
incorrect evidence to give.
5
[10] In this case, the appellants also seek refuge in the provisions of our insolvency
laws through legislative intervention.6 The core issue for consideration in this appeal
is whether the court a quo erred in its findings that the appellants failed to meet the
threshold requirements for the setting aside of the sequestration orders.
[11] The judgment in the court of first instance meticulously dealt with every one of
the complaints raised by the appellants. The estates of the appellants were finally
sequestrated almost three years before the matter was presented before the court of
first instance. Nearly six years have passed since the final sequestration order s
were granted.7 Undoubtedly, the first, second and third respondents possessed the
required standing to oppose the recission application in the court of first instance.
This must be so also considering the rights and interests of the general body of
creditors.
[12] Initially, the appellants were involved in a dispute about purchasing a property
from the deceased estate, as negotiated by the first respondent. The appellants
drew the short straw and faced a bill for the taxed legal costs incurred by this
litigation. This was the judgment debt owed to the first respondent.
[13] A sequestration application followed based on a ‘ nulla bona’ return of service
and was predicated on the positive averment that the appellants' did not have
sufficient movable assets to satisfy the judgment debt upon the execution of the
4 Makings v Makings 1958 (1) SA 338 (A).
5 Rowe v Rowe 1997 (4) SA 160 (SCA) at 680 B.
6 Section 149 (2) of the Insolvency Act, 24 of 1936.
7 The final order was granted on 2 October 2018.
5
warrant of attachment against movables . It was not the subject of any dispute that
proper service the provisional sequestration orders occurred before the granting of
the final sequestration orders.
[14] The provisional sequestration order s were served on both the appellants and
final orders followed with no opposition. The appellants averred that they made a
conscious decision not to oppose the final order s of sequestration of their respective
estates, knowing that, according to them, the information about their financial
position at the time needed to be supplemented and corrected. Undoubtedly, this
adopted stance must be that of willful default on their part. Consider that it is
undisputed that the appellants made a conscious decision not to oppose the final
sequestration order s. They did this because (a) they did not have the financial
means to cover the costs of legal representation, (b) according to them , the first
respondent had a legal obligation to put forward fresh details of their financial
position to the court before the final sequestration orders were granted and, (c) they
were able to satisfy the judgment debt , but according to them, they were unwilling to
do so at the time.
[15] Most importantly , even before the service of the warrant of execution, the
appellants paid an installment towards the settlement of the judgment debt and
requested to pay the remainder thereof through further instalments in the future.
Without anything more, this is an act of insolvency in that it is an unequivocal
indication in writing that the appellants could not settle their debts when they became
due and payable.
8 The appellants seem to have been under the misapprehension
that the first respondent was obliged to make a case for their solvency on the return
day of the provisional sequestration orders . This is a novel approach and does not
attach to our jurisprudence. The purpose of our insolvency legislation and the
regulations would be undermined if the appellants were now permitted to advance
their case for a rescission some five years later. One might be forgiven for thinking
that the court, when considering a ‘good cause’ rescission application, would only be
concerned with whether the act of insolvency had taken place before the
8 Section 8 (g) of the Insolvency Act 24 of 1936.
6
presentation of the petition rather than with a substantive challenge to the act of
insolvency itself in the sense of creating a reverse onus on the first respondent.
[16] Our insolvency legislation and rules are designed to provide a quick and
straightforward method for resolving questions related to insolvency matters. As far
as I can ascertain, regarding issues such as these, our courts have always taken the
view that if it can be demonstrated in a good cause application that the act of
insolvency is in some way defective or invalid, the court will hold that there has been
no act of insolvency.
[17] This is entirely different because the appellants claimed in their written
submissions that the first respondent bore the onus of disclosing that the ‘nulla bona’
return was allegedly invalid. The ‘nulla bona’ return was a defined act of insolvency
that needed to be squarely addressed by the appellants. A t the hearing, the
argument was whether the appellants could pay the judgment debt when demanded.
[18] Curiously, the resounding reply from the appellants on this score was that
they could pay judgment debt but were unwilling to do so, save by way of monthly
instalments. This is where the appellants held their feet to the fire. I say this
because one cannot simultaneously dance at two weddings. If the appellants were
financially able to pay the judgment debt but were unwilling to do so, this
demonstrates the act of insolvency.
[19] This goes to the very reason for these principles in our insolvency law . T he
consequence for the debtor of not discharging or compounding the demanded
amount is that he or she would then have committed an act of insolvency, which may
result in an adjudication of insolvency . The appellants should have demonstrated
they could satisfy the judgment when payment was demanded. Instead, they sought
to orchestrate an unworthy attack on the first, second and third respondents and
upon the credibility of an innocent court sheriff.
[20] The appellants advanced that the first respondent was guilty of fraud and
misrepresentation by not putting forward the then current financial details of the
appellants’ respective financial positions in support of the final sequestration orders.
This was not the basis for sophisticated reasoning because the first respondent’s
7
founding affidavit made the clear and positive averment that the appellants were
possessed of sufficient assets to satisfy the judgment debt.
[21] Precisely, one of the primary reasons for the sequestration of the appellants’
respective estates was for these assets to be realized to benefit the general body of
creditors. Thus, the respondents submitted that the court's decision a quo
constituted the exercise of ‘true’ discretion. They argued that none of the limited
grounds for interference on appeal with the exercise of ‘ true’ discretion were shown.
Accordingly, they contended that the appeal had to fail.
[22] It is trite that the scope for interference on appeal with the exercise of ‘ true’
discretion is limited. For present purposes, it suffices to say that interference would
be called for if discretion was based on a misdirection of fact or a wrong principle of
law.
9 A ‘true’ discretion provides a court with a range of permissible options. This
was eloquently articulated as follows in Florence.10
‘…Where a court is granted wide decision- making powers with a number of options
or variables, an appellate court may not interfere unless it is clear that the choice the
court has preferred is at odds with the law. If the impugned decision lies within a
range of permissible decisions, an appeal court may not interfere only because it
favours a different option within the range…’
[23] It must be so that the expression of broad decision-making powers in this
passage refers to the multitude of permissible options that characterize true
discretion. This must not be confused with a broad or loose discretion, which means
‘…no more than that the court is entitled to have regard to several disparate and
incommensurable features in coming to a decision…’
11 By elaboration, as is the
case here, where the setting aside of the final sequestration orders is sought based
on subsequent events the test is whether the facts show that the continuance of the
sequestration would be unnecessary or undesirable. The test for setting aside these
sequestration orders (based on subsequent events) is whether the appellant has
demonstrated that it is unnecessary or undesirable for their insolvency to continue.
9 Trencon Construction (Pty) Ltd v Industrial Development Corporation of South Africa Ltd and Another 2015 (5) SA 245.
10 Florence v Government of the Republic of South Africa 2014 (6) SA 456 (CC):
11 Knox D’Arcy Ltd and Others v Jamieson and Others 1996 (4) SA 348 AD.
8
This does not involve a choice between permissible alternatives. The test is either
satisfied or it is not.
[24] Despite anxious consideration, I cannot unearth any grounds upon which it
can be said that the court a quo misdirected itself on the facts and the law. Its
decision was based on undisputed facts before the court and the correct law
principles. Both the appellant’s estates have been finally wound up, the liquidation
and distribution accounts have been confirmed, and the creditors have been
satisfied. A court is enjoined not to exercise its discretion in favour of a rescission
application if undesirable consequences would follow.
12 I say undesirable
consequences would follow should these sequestration orders be set aside.
[25] I say this because the fourth respondent purchased the appellants’ immovable
property about four years ago. The appellants previously owned only one significant
asset in the form of an immovable property. This property has now been transferred
to the fourth respondent and registered in the relevant registry. The first and final
liquidation and distribution account for the appellants' insolvent estates was prepared
and filed with the f ifth respondent. The fifth respondent approved this account and
notified the joint trustees that it could be advertised.
13
[26] Last year, th is account was advertised as open for inspection at the fifth
respondent's offices and the lower court's relevant offices for the required statutory
period. No objections were received, the fifth respondent confirmed this account,
and the joint trustees were authorized to pay the award to the secured creditor .
Further, all subsequent distributions have been paid by the joint trustees. The
consequences of setting all these steps aside will not be undesirable but also
practically impossible.
[27] The final issue to address is the appellants’ claim that the sequestration
orders should be rescinded in the interests of justice. I am afraid I must disagree.
12 Section 149 (2) of the Insolvency Act 24 of 1936.
13 In terms of section 108 of the Insolvency Act, 24 of 1936.
9
The one-year period since the confirmation of the liquidation and distribution account
will expire towards the end of this year, and then the appellants will be permitted to
apply for rehabilitation.
[28] No exceptional circumstances exist for rescinding the sequestration orders,
and it will not be in the interests of justice to do so. The appellants have the
rehabilitation remedy at their disposal. Finally, I need to mention the applications for
condonation for the late filing of the appeal, the late filing of the notice of appeal and
the court record. Inextricably bound to these issues is the argument that the appeal
has lapsed. I find it unnecessary to deal with these issues and the determination
thereof given the result of this appeal and, most importantly, because this matter
must be brought to finality. For all these reasons, the appeal must fail.
Costs
[29] Given the result, there are no reasons why costs should not follow the result.
Further, these costs should include all the costs of and incidental to the various
applications for condonation.
Order
[30] I propose that the following orders be granted:
1. That the applications for condonation are granted.
2 That the appeal is dismissed.
3. That the appellants (jointly and severally), the one paying the other to be
absolved, shall be liable for the costs of and incidental to the appeal (including
the costs occasioned by the condonation applications) on the scale as
between party and party, as taxed or agreed.
________
WILLE, J
I agree, and it is so ordered:
________
10
NDITA, J
I agree:
_________
CLOETE, J