Forgeweld Engineering (Pty) Ltd v Cronje (89569/2018) [2022] ZAGPPHC 176 (22 March 2022)

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[2022] ZAGPPHC 176
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Forgeweld Engineering (Pty) Ltd v Cronje (89569/2018) [2022] ZAGPPHC 176 (22 March 2022)

IN THE HIGH COURT
OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
REPORTABLE:
NO
OF
INTEREST TO OTHER JUDGES:
NO
REVISED
CASE
NO: 89569/2
018
Heard
on: 14 October 2021
Delivered on:
22 March 2022
In the matter
between:
FORGEWELD
ENGINEERING (PTY) LTD

Intervening Party
In
re
the
ex
parte
application of:
and
JACO
CRONJE                                                                                                    Applicant
JUDGMENT
VUMA,
AJ
INTRODUCTION
[1]
On 9 September 2018 the applicant launched the application for the
voluntary surrender of his estate as
insolvent.
[2]
On 25 January 2019 Forgeweld Engineering (Pty) Ltd (“the
intervening party”), in its capacity
as the applicant’s creditor,
applied under the same case number in order to intervene in the
applicant’s main application, to
oppose it and to procure an order
for the dismissal of the application for voluntary surrender. The
applicant did not oppose the
intervention nor file an answering
affidavit. On 10 July 2019 the intervening party procured an order to
be allowed to intervene
in the main application, with the applicant
being ordered to pay the wasted costs occasioned by the postponement
of the matter, with
the remainder of the relief sought by the
intervening party in the intervening application, namely, that the
main application be
dismissed with costs and that the applicant be
ordered to pay the costs of the application on an attorney and own
client scale being
postponed
sine die
.
[3]
Following the above, the applicant did not pursue
his application for voluntary surrender.
The intervening party caused
the heads of argument to be filed and the matter to be enrolled on
the opposed motion for 12 August
2021. On this day, the applicant
appeared in person before this very court and sought a postponement
to obtain legal representation.
The request for postponement was
opposed by the intervening party. I however granted the application
and postponed the matter
sine die
.
[4]
The matter was re-enrolled for 11 October 2021 with no attorney
formally noting its appointment
as attorney of record for the
applicant.
[5]
On 4 October 2021 the applicant caused the replying affidavit
to be filed, being:
5.1.
2 years and 9 months after the intervening party filed its
intervention and opposing papers;
5.2.
2 years and 3 months after an order was granted allowing the
intervention; and
5.3.
1 week before the matter was set down to be argued on the opposed
roll.
[6]
On 14 October 2021 this application served before me and the
applicant’s
counsel asked for a postponement of the application on
instruction by the applicant.
FACTUAL
BACKGROUND
IN RE
INTERVENING PARTY’S APPLICATION
[7]
In its intervening application, the intervening party states
the following:
7.1.
The applicant was once an employee and director of the intervening
party, but was dismissed as a result of fraud
which he perpetrated
against the intervening party.
7.2.
When the intervening party became aware of certain irregularities at
its Babalegi plant, it caused an investigation
to be executed. The
investigations revealed that the applicant embezzled substantial
funds from the intervening party. The investigations
also revealed
that the applicant channeled stolen funds to another company and
another business.
7.3
After the discovery of the fraud the intervening
party launched a preservation application under case number
79191/16
against nine respondents, of which the applicant was one, for an
order to prevent the applicant from dissipating assets
pending an
action to recover the damages caused as a result of the fraud and the
embezzlement of the funds.
7.4.
The applicant did not oppose the application and on 25 October 2016
the urgent court granted the relief requested in the
preservation
application. Having procured the preservation order the intervening
party then instituted an action against the applicant.
The defendants
in that matter failed to file a plea and the intervening party then
succeeded on 10 December 2018 to obtain default
judgment against,
inter alia
, the applicant. The judgment debt is for a capital
amount of R8.6 million.
PRELIMINARY
ARGUMENTS BEFORE THE HEARING OF THE MAIN APPLICATION
[8]
On the date of the hearing of the main application before me,
the applicant had not filed his heads
of argument. Mr Muller
appearing for the applicant informed the court that he holds
instructions to seek a postponement for purposes
of consultation with
the applicant and the filing of the heads of argument, given that he
only received the brief the day before
the hearing hereof. He stated
that he could not explain to the court why there was not a
substantive application before it.
[9]
Mr Richard for the intervening party opposed the postponement
application, arguing that same was supposed
to have been set out in
an affidavit substantively. He denied that Mr Muller was instructed
late, that is the day before the hearing
of the application, arguing
that as early as 23 September 2021, Mr Muller was already invited
onto Caselines. He further argued that
if Mr Muller was not in a
position to argue the application, maybe it would be better for him
to withdraw instead, arguing further
that given the fact that the
applicant had previously successfully argued a postponement before
this court, that that in itself should
spell the fact that this
matter had gone past the costs order stage. He therefore requested
that this court considers the founding
affidavit and dismiss the main
application on a punitive scale costs order.
[10]
Having stood the matter down for Mr Muller to take instructions, he
(Mr Muller) informed the court
that he was ready to argue the matter.
SUBMISSIONS
BY MR MULLER ON BEHALF OF THE APPLICANT
[11]
Mr Muller submits that the applicant’s replying affidavit was only
filed two weeks before the
hearing date and conceded that there was
no condonation application before the court regarding the late filing
of same. He submits
that the replying affidavit addresses what is
raised in the answering affidavit of the intervening party and even
raises allegations
that relate to the criminal charges faced by the
applicant.
[12]
Mr Muller argues that despite the default judgment in the
amount of R8.6 million being obtained
by the intervening party
against the applicant, there will still be a good dividend for the
creditors after the sequestration of
his estate. He further argues
that even the criminal trial pending against the applicant is
relevant given that it could have an
impact on the application and
further that until the applicant is convicted, he is presumed
innocent. He further argues that the
criminal charges have a huge
impact on the allegations by the intervening party and that the
sequestration should therefore stand
over until the finalization of
the criminal matter.
[13]
In regard to the arguments on the merits of the application, Mr
Muller argued that there was a dividend
of 42.18 cents and that this
means that there will still be sufficient dividend to the advantage
of the creditors, including the
intervening party. He further submits
that other than the intervening party, none of the other creditors of
the applicant oppose
the main application. Mr Muller further argues
that there was now a huge dispute of fact in regard to the value of
the shares and
the property. Lastly he submits that he stands by the
papers although he did not file any authority, arguing that
ultimately it is
the court that has the discretionary power to
exercise in deciding whether or not to grant the application.
SUBMISSIONS
BY MR RICHARD ON BEHALF OF THE INTERVENING PARTY
[14]
In regard to the applicant filing its
replying affidavit only a week before the hearing, the intervening
party submits that the applicant does not even attempt to seek
condonation for the non-compliance with the rules of court and argues
that the replying affidavit should thus not be accepted. The
intervening party further argues that the belated reply was filed way
out of time, that is, after 2 years of the parties’ agreed timeline
within which affidavits were to be exchanged. To this end the
intervening party argues that the delay is inordinate, flagrant and
gross and caused an unnecessary delay in the administration of
justice. The intervening party submits that what adds to its requests
that the court should not accept the replying affidavit is
due to the
fact that the replying affidavit’s allegations are mostly
irrelevant and do not sufficiently deal with the issue of
the
applicant’s insolvency. Relying
inter
alia
on
Bowman
N.O
below,
the intervening party further submits that all the necessary
allegations upon which the applicant relies must appear in his
or her
founding affidavit, as he or she will not generally be allowed to
supplement the affidavit by adducing supporting facts in
the replying
affidavit.
[15]
Regarding the main application by the applicant, the intervening
party submits the following as the grounds
on which it relies in
order to oppose the main application:
15.1
The applicant is not
bona
fide
in bringing the
application for voluntary surrender, and that he has made false
statements in the founding affidavit;
15.2
The blatantly false allegations contained in the founding affidavit
excludes the main application
from those applications in which the
court may exercise its discretion in favour of granting an order for
the surrender of an insolvent
estate. The applicant falsely alleged
that he became insolvent as a result of circumstances beyond his
control and further that his
insolvency was not as a result of any
fraud;
15.3.
The main application is fatally defective and
inter
alia
, fails to
establish the required advantage for creditors;
15.4.
Apart from the false statement in the founding affidavit, there was a
deliberate attempt to mislead
the court by falsely overstating the
value of the assets in the estate in order to artificially create an
advantage for creditors;
15.5.
An order for the voluntary surrender of the insolvent estate will not
be, on the particular facts of
the matter, to the general advantage
of creditors;
15.6.
The applicant has not complied with the duty which rests on the
applicant in an
ex
parte
application,
namely, to disclose to a court accurate facts, not only facts which
may enhance the prospects of receiving the relief,
but to also
disclose facts which may influence a court not to grant the relief.
15.7.
After the intervening party procured the ante-dissipation order
against the applicant he attempted,
in contempt of that order, to
sell his immovable property for a purchase consideration far below
market value.
15.8.
The applicant falsely alleged that he holds shares in the intervening
party, even furnishing a false valuation
in his founding affidavit
relating to the alleged value of the shares.
[16]
The intervening party submits that on evaluation of the application
on the correct facts, it is clear that
there is no advantage for
creditors, given that even the expenses which will have to be
incurred as part of the administration costs
have also not been
calculated correctly.
LEGAL
PRINCIPLES
[17]
In regard to the issue of condonation, the supreme Court of appeal
held in
Mtshali
& Others v Buffalo Conservative
97
(Pty) Ltd (250/2017) [
2017]
ZASCA 127
(28 September 2017)
that
factors relevant to the discretion to grant or refuse condonation
include:
“
the
degree of non-compliance, the explanation therefor, the importance of
the case, a respondent’s interest in the finality of the
judgment
of the court below, the convenience of this court and the avoidance
of unnecessary delay in the administration of justice
.”
[18]
Still on condonation, in
Darries
v Sheriff, Magistrate’s court, Wynberg & Another
1998
(3) SA 34
(SCA) at 40I – 41E
,
Plewman JA pointed out that condonation is not a mere formality. He
stated:
“
An
appellant should whenever he realizes that he has not complied with a
Rule of court apply for condonation as soon as possible.
Nor should
it simply be assumed that, where non-compliance was due entirely to
the neglect of the appellant’s attorney, condonation
will be
granted. In applications of this sort, the appellant’s prospects of
success are in general an important though not decisive
consideration. When application is made for condonation it is
advisable that the petition should set forth briefly and succinctly
such essential information as may enable the court to assess the
appellant’s prospects of success. But appellant’s prospect of
success is but one of the factors relevant to the exercise of the
court’s discretion unless the cumulative effect of the other
relevant factors in the case is such as to render the application for
condonation obviously unworthy of consideration. Where non-observance
of the Rules has been flagrant and gross an application for
condonation should not be granted, whatever the prospects of success
might be
.”
[19]
In
re
condonation, in the matter of
Van
Wyk v Unitas Hospital and Another
(CCT
12/07)
[2007] ZACC 24
;
2008 (2) SA 472
(CC);
2008 (4) BCLR 442
(CC)
(6 December 2007) at paragraph 22
,
the Constitutional court stated that:
“
an
applicant for condonation must give a full explanation for the delay.
In addition, the explanation must cover the entire period
of delay.
And, what is more, the explanation given must be reasonable
.”
[20]
In regard to the applicant standing or falling by his founding
affidavit, in
Bowman
N.O. v De Souza Raldao
1988
(4) SA 326
(TPD) at 327 H
,
the following was quoted with approval:
“
It
lies, of course in the discretion of the court in each particular
case to decide whether the applicant’s founding affidavit contains
sufficient allegations for the establishment of his case. Courts do
not normally countenance a mere skeleton of a case in the founding
affidavit, which skeleton is then sought to be covered in flesh in
the replying affidavit
.”
[21]
In
Minister
of Environmental Affairs & Tourism v Bato Star Fishing (Pty) Ltd
2003
(6) SA 407
(SCA) at 439 G – H
;
Schultz JA said:
“
There
is one other matter that I am compelled to mention – replying
affidavits. The great majority of cases the replying affidavit
should
be by far the shortest. But in practice it is very often by far the
longest – and the most valueless. It was so in these
reviews. The
respondents, who were the applicants below, filed replying affidavits
of inordinate length. Being forced to wade through
their almost
endless repetition when the pleading of the case is all but over
brings about irritation, not persuasion. It is time
that the courts
declare war on unnecessary prolix replying affidavits and upon those
who inflate them
.”
[22]
In
Van
Zyl v Government of the Republic of South Africa
2008
(3) SA 294
(SCA) at 307 G – H
,
Harms ADP, after quoting Schultz JA above said:
“
A
reply in this form is an abuse of the court process and instead of
wasting judicial time in analyzing its sentence by sentence and
paragraph, such affidavit should not only give rise to adverse cost
orders, but should be struck out as a whole. Mero motu
.”
[23]
In regard to
ex
parte
applications
disclosures, in
Powell
& Others v Van der Merwe & Others
2005
(5) SA 62
(SCA) at par. 42
,
the court stated what is trite that in an
ex
parte
application that all material facts which are within the applicant’s
knowledge should be disclosed.
[24]
In
Naidoo
v Matlala NO
2012
(1) SA 143
(GNP) at 153C – E
,
the court stated that if material facts are not disclosed in an
ex
parte
application, or if the facts are deliberately misrepresented and the
court makes an order, such an order would be one erroneously
granted.
THE
ISSUES FOR DETERMINATION
[25]
The issue for determination is whether the applicant has made
out a case entitling it to the relief it seeks.
ANALYSIS
[26]
Foremost the intervening party argues against the acceptance of the
applicant’s replying affidavit, arguing
that it was filed way out
of the parties’ agreed timeline, even the Uniform Rules of Court.
In considering whether or not to accept
the applicant’s replying
affidavit given its belatedness which the applicant concedes, the
following becomes relevant. For the
period between 22 November 2018
to 3 August 2021 the applicant enjoyed the representation of an
attorney. It is further common cause
that the applicant failed to
seek condonation for the extreme lateness in filing his reply with no
formal condonation application
before court to accept same.
[27]
When regard is had to the content of the replying affidavit, it
cannot be gainsaid that its content is
mainly irrelevant to the
adjudication of a voluntary sequestration application. The replying
affidavit appears to be nothing more
than an attempt to delay this
application, which view is supported by the request made for the
matter to be postponed pending the
determination of a criminal matter
against the applicant. This, despite the applicant not even
attempting to provide a reason to
this court as to why the voluntary
sequestration application launched in 2018 should be postponed
pending the result of criminal
proceedings. In any event, I fail to
appreciate the material effect, if any, the outcome of a criminal
trial will have on the sequestration
proceedings. In my view and to
the extent that there could be a bearing of sorts flowing from the
criminal trial outcome, the applicant
would still be able to launch
the voluntary sequestration application afresh, thereby identifying
the new cause for the sequestration
proceedings.
[28]
Taking into account the totality of the above in regard to the
belated replying affidavit, I am inclined
to agree with the
intervening party in its argument that the applicant’s failure to
seek condonation for the non-compliance with
the rules of court
should result in the non-acceptance of his replying affidavit. I find
such delay to be extreme and therefore untenable
under the
circumstances. Furthermore, taking into account what the Supreme
Court of Appeal held in
Mtshali
& Others
and
Darries
above, I am
therefore satisfied that the applicant’s replying affidavit stands
not to be accepted for the above-cited myriad of
reasons. In
amplification of my refusal, I may add in passing that all that the
replying affidavit attempts to do is to gregariously
amplify its
founding papers. This, despite the replying affidavit being
irrelevant given that it does not sufficiently deal with
the
applicant’s insolvency. At most, it attempts to convolute and
inflate the issues before the court.
[29]
On the merits in respect of the main application and relying on case
law, the intervening party raises
a number of reasons why this court
should dismiss the main application. Amongst those reasons is the
submission that the applicant
did not disclose all the material facts
which are within the applicant’s knowledge. Chief amongst this is
the applicant falsely
alleging in his main application that his
insolvency is not due to any fraud on his part despite being aware of
the default judgment
obtained against him by the intervening party in
the amount of R8.6 million. In my view, the non-disclosure of the
material facts
by the applicant in his founding papers was a
deliberate design and attempt on his part to mislead the court in his
favour. This
conduct by the applicant, in my view, shows no
bona
fide
on his part in bringing the application for voluntary
surrender, given the multiple false statements he made in the
founding affidavit
as appears in paragraphs 15.1 to 15.8 above, which
statements I am satisfied that they were designed to mislead this
court.
[30]
Regard being had to the conspectus of facts before me, I am satisfied
that the applicant has in the main
deliberately misrepresented the
facts in his founding papers. It should follow therefore that were
this court to grant the relief
the applicant seeks, such an order
would be one erroneously granted, as was held in
Naidoo
v Matlala
above. When
one considers the main application, there can be no doubt that at the
time of the launching of his voluntary sequestration
application, the
facts he withheld from the court were well within his knowledge yet
he gratuitously chose not disclose them. On
this factor alone it
would be reasonable for this court to dismiss the main application.
[31]
Lastly, on evaluation of the application on the correct facts, it is
clear that there is no advantage
for creditors, given that even the
expenses which will have to be incurred as part of the administration
costs have also not been
calculated correctly.
[32]
In regard to the punitive costs order sought by the intervening
party, I am satisfied that it has
made out a case entitling it to
same. When regard is had to the irrelevant allegations contained in
the applicant’s replying affidavit,
the extreme delay in filing his
replying affidavit; the neglect to accompany the belated replying
affidavit with a condonation application
for acceptance of same by
the court; and the blatant and flagrant abuse of the court processes
by the applicant and expecting the
court to grant another
postponement without even bringing a substantive application in
regard thereto, in my view, all of these justify
the punitive costs
order. These factors clearly demonstrate the applicant’s
indifference towards the fair administration of justice
at a broader
spectrum, and his indiscretions regarding judicial time.  This
notwithstanding, only entitles the intervening party
to costs on an
attorney and client scale and not costs on an attorney and own client
scale.
[33]
In the premises I make the following Order:
ORDER
1.
The application for voluntary surrender is dismissed.
2.
The applicant is ordered to pay the cost of the application on an
attorney and client scale,
including the cost of the intervening
party.
Livhuwani Vuma
Acting
Judge
Gauteng
Division, Pretoria
Head on:  14
October 2021
Judgment delivered:
22 March 2022
Appearances
For Applicant: Adv.
Muller
Instructed by: None
stated
For Intervening
party:
Adv. C. Richard
Instructed
by: Weavind and Weavind Attorneys