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[2021] ZALMPPHC 57
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Nolte v Greeff (HCAA12/2020) [2021] ZALMPPHC 57 (31 August 2021)
REPUBLIC OF SOUTH
AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
(LIMPOPO
DIVISION, POLOKWANE)
REPORTABLE:
YES/NO
OF
INTEREST TO THE JUDGES: YES/NO
REVISED.
CASE
NO: HCAA12/2020
Court
a quo
Case No: 5297/2018
In
the matter between:
MARIETTE
NOLTE
APPELLANT
And
LOUIS
FOURIE GREEFF
RESPONDENT
JUDGMENT
MAKGOBA
JP
[1]
This is an appeal to the Full Court against the judgment and order of
a single judge (Kganyago
J) of this Division in terms whereof the
Court a quo
dismissed the Appellant’s application for
the provisional sequestration of the Respondent’s estate. The
appeal is with
leave of the Supreme Court of Appeal.
[2]
The Appellant and the Respondent were
married, and their bonds of marriage were dissolved on the 26
July
2016 by order of the High Court of South Africa, Northern Cape
Division, Kimberley. The parties were also partners in a veterinarian
practice known as MediVet Animal Clinic and Wildlife Services
(“MediVet”) in Thabazimbi. MediVet owned cattle, game
and
property.
[3]
At the divorce court a settlement agreement
was made an order of Court and contained a full settlement
of all
patrimonial issues including the dissolution of MediVet between the
parties. The Respondent acquired MediVet and all its
assets and he
continued practising as a veterinarian through this entity. In terms
of the Court order and settlement agreement
the Respondent agreed to
pay the Appellant R13 000 000.00 (Thirteen Million Rand) in
four instalments and as follows:
(1)
First payment of R1 000 000.00 payable
within 10 days from date of the divorce order;
(2)
Second payment of R2 000 000.00 payable
on or before 31
st
October
2016;
(3)
Third payment of R5 000 000.00 on or
before 31
st
October
2017; and
(4)
Fourth and final payment of R5 000 000.00
on or before 31
st
October
2018.
[4]
The Appellant transferred all her rights, title and interest in
MediVet to the Respondent in compliance
with the provisions of the
Court order. However, the Respondent failed to comply with the terms
of the Court order in that he made
sporadic payments which amounted
to R2 056 000.00 between the period
25 July 2016
and 21 December 2017.
In
terms of the Court order, the Respondent was obliged to settle the
full indebtedness by October 2018 of which the Respondent
only paid
the amount of R2 056 000.00.
[5]
In terms of the express provisions of clause 4.3.3 of the settlement
agreement, the full outstanding
balance became immediately due and
payable against default of payment of any single instalment. The
Respondent’s failure
to comply with the terms of the Court
order led to the launching of the application for the sequestration
of his estate.
[6]
On the 31
st
December 2016 the Appellant issued a warrant
of execution against the Respondent. The Sheriff attempted to execute
the warrant
on the 31
st
January 2017 and also on the 30
th
March 2017. The
Respondent could not satisfy the debt upon demand by the Sheriff, nor
could he indicate to the Sheriff disposable
property sufficient to
satisfy the debt as stated on the warrant.
[7]
On the 15 February 2017 and 12 May 2017 the Respondent wrote letters
to the Appellant attempting
to renegotiate the terms of the debt
repayments. According to the Appellant, these letters and the
Sheriff’s returns of service
constitute acts of insolvency.
That resulted in the Appellant instituting an application against the
Respondent on the 30 August
2018 seeking an order for the provisional
sequestration of the Respondent’s estate.
[8]
The
Court a quo
essentially made two findings being the basis
on which the application for provisional sequestration was dismissed,
namely, that
the Respondent disputed his indebtedness towards the
Appellant on reasonable grounds and that on the facts of the case,
the Respondent’s
estate is not factually insolvent.
[9]
I proceed hereunder to set out the version of the Respondent to show
or establish whether he disputes
the indebtedness to the Appellant on
bona fide
and reasonable grounds.
[10]
The Respondent in his answering affidavit disputes that he is
indebted to the Applicant in the amount she
is claiming. The
Respondent stated that in terms of the settlement agreement, he was
placed in possession of the assets of MediVet
which included the
debts and loan accounts owed to the former partnership. According to
the Respondent the Appellant was indebted
to the partnership in a
substantial amount and that this debt passed to him and has to be set
off against any amount he may be
indebted to the Appellant. That at
the time of divorce the livestock and game were valued in excess of
R13 000 000.00
which was a common error which induced the
settlement agreement. That the settlement agreement does not reflect
the true intention
of the parties.
[11]
It is the Respondent’s contention that the livestock and game
were overvalued, the value of the partnership
assets was incorrect
and that the value of the Appellant’s share was also incorrect.
This resulted in him undertaking to
pay for assets which were not
worth R13 000 000.00 based on an incorrect reflection of
the assets value.
[12]
It is common cause that the Respondent has instituted an action
against the Appellant in the Northern Cape
Division of the High Court
of South Africa, Kimberley setting aside the relevant portions of the
settlement agreement on the ground
that the settlement agreement is
invalid due to a common error. This action is still pending.
[13]
On the issue of factual insolvency, the Respondent denies that he is
insolvent and stated that his assets
exceed his liabilities. He
stated that his personal assets excluding MediVet are valued at
R9 438 669.00 and has attached
a copy of his private
financial statement as at 28 February 2018. He stated that he is
presently the sole owner of MediVet which
has assets in the total
value of R10 338 591.60 and has attached the financial
statement to that effect. He stated that
the current value of
livestock and game is R3 186 500.00. He owns immovable
property valued at R780 000.00. His
close corporation of which
he is the sole member, Investgil Fifteen CC, owns two properties, one
valued at R980 000.00 and
the other at R3 850 000.00.
Valuation certificates in respect of all the aforementioned assets
have been attached to
his answering affidavit.
[14]
The total value of his aforementioned assets amount to
R28 573 760.50. According to the Respondent,
none of the
immovable properties or his interest in Investgil Fifteen CC were
ever taken into consideration by the Appellant when
the application
for his sequestration was launched.
[15]
The Appellant’s contention that she has a liquidated claim
against the Respondent in an amount of R10 944 000.00
is
countered by the Respondent’s contention that the said claim is
being disputed on
bona fide
and reasonable grounds.
[16]
The Respondent argued that the Appellant’s application for
provisional sequestration of his estate
is an attempt by the
Appellant to unfairly and unlawfully exact payment in terms of a
settlement agreement which has been made
an order of court. The
Respondent submitted that to the extent that the R13 000 000.00
was to be paid over a period of
time, the very basis of the agreement
was that the Respondent would sell livestock from time to time and
pay the periodic payments
from the proceeds of the sale of the
livestock. According to the Respondent, the Appellant does not
dispute that the undertaking
to pay R13 000 000.00 over a
period of time was entirely predicated on the sale of the
partnership’s assets to
raise sufficient funds to make payment.
The Respondent denies that the letters he wrote to the Appellant
indicate an inability
to pay, but was to bring it to the attention of
the Appellant of his intention to pay from the proceeds of certain
animals. With
regard to the sheriff’s returns dated 31
st
January
2017 and 30
th
March 2018 the Respondent argued that both
returns of service are unclear and contradictory. The first return
states that it was
handed over to a Ms Elize Kruis, a worker in
charge, whilst the second return states that the game was pointed out
by a certain
Mr Kobus, the farm manager. It is the Respondent’s
contention that the sheriff seems to have attached game that have
already
been sold, and seems also not to be based on what was pointed
out to him or found, but rather on a list that was provided to him.
This Court accepts the Respondent’s contention and submission
to be plausible.
[17]
The Respondent is of the view that some portion of the settlement
agreement are invalid due to a common error
between the parties. The
Appellant does not share the same sentiment with the Respondent.
It
would appear that even though the settlement agreement was made an
order of court, the parties are not in agreement in relation
to
interpretation of portions of the agreement. The Respondent contends
that the agreement must be interpreted to mean that in
the event of
events occurring after conclusion of the settlement agreement
materially affecting the market value of the assets,
the market value
of the relevant partnership assets have to be re-assessed and
appropriate adjustment be made. That will also apply
in the event of
material increase in the value of the assets.
[18]
This Court is not in a position to resolve the aforesaid
dispute between the parties. The Northern Cape Division
of the High
Court will be in a better position to resolve this dispute in the
pending action instituted by the Respondent.
[19]
The Appellant sought an order for the provisional sequestration of
the Respondent. There is a duty on an
applicant in provisional
sequestration proceedings to only
prima
facie
show
that there is a liquidated debt owing. Whilst the threshold is low
for the applicant it is equally so that the threshold for
resistance
by the respondent is also relatively low. All the respondent needs to
show is that the alleged debt is disputed on
bona
fide
and
reasonable grounds. In
Kalil
v Decotex (Pty) Ltd and Another
[1]
the
principle was explicitly set out that a respondent who disputes
indebtedness in a provisional winding-up application must show
on a
balance of probabilities that its indebtedness to the applicant is
disputed on
bona
fide
and
reasonable grounds. The onus on the respondent is not to show that it
is not indebted to the applicant, but merely to show that
the
indebtedness is disputed on
bona
fide
and
reasonable grounds.
[20]
On the same principle in
Hulse-Reutter
v Heg Consulting Enterprises (Pty) Ltd
[2]
Thring
J said:
“
I
think it is important to bear in mind exactly what it is the trustees
have to establish in order to resist this application with
success.
Apart from the fact that they dispute the applicants’ claim,
and do so bona fide, which is now common cause, what
they must
establish is no more and no less than that the grounds on which they
do so are reasonable. They do not have to establish,
even on the
probabilities, that the company, under their direction, will, as a
matter of fact, succeed in any action which might
be brought against
it by the applicants to enforce their disputed claims. They do not,
in this matter, have to prove the company’s
defence in any such
proceedings. All that they have to satisfy me of is that the grounds
which they advance for their and the company’s
disputing these
claims are not unreasonable. To do that, I do not think that it is
necessary for them to adduce on affidavit, or
otherwise, the actual
evidence on which they would rely at such a trial. This is not an
application for summary judgment in which,
in terms of the Supreme
Court Rule 32 (3), a defendant who resists such an application be
delivering an affidavit or affidavits
must not only satisfy the court
that he has a bona fide defence to the action, but in terms of the
Rule must also disclose fully
in his affidavit or affidavits’
the material facts relied upon.”
[21]
An application for the liquidation of a company or sequestration of a
person’s estate should not be
resorted to, to enforce the
payment of a debt which is
bona
fide
disputed
by the company or the person. This is how far the “Badenhorst
Rule” goes. It is so because the liquidation
of a company or
sequestration of an individual affects the interests of all creditors
and shareholders, and thus an order for liquidation
or sequestration
should not lightly be granted on the application of a single
creditor. Hiemstra AJ (as he then was) in
Badenhorst
v Northern Construction Enterprises (Pty) Ltd
[3]
aptly
put it as follows:
“
Likwidasie
van ‘n maatskappy raak die belange van alle krediteure en
aandeelhouers, en behoort nie ligtelik beveel te word
op aansoek van
‘n enkele krediteur nie”.
[22]
On the other hand, as appears from this case, where it
prima facie
appears that a respondent is indebted to an applicant in an
application of this kind, the onus is on the respondent to show that
such indebtedness is disputed on
bona fide
and reasonable
grounds. This is not to say that the onus is on the respondent to
prove that it is not indebted to the applicant
– Such onus is
simply to show a dispute on
bona fide
and reasonable grounds.
See
Machanick Steel &
Fencing (Pty) Ltd v Wesrhodan (Pty) Ltd
1979
(1) SA 265
(T) at 269 A – B
.
[23]
If there is
prima
facie
a
valid claim by the applicant for a winding up or sequestration so as
to make it a creditor, then it is for the respondent to disturb
that
prima
facie
situation
by showing a dispute on
bona
fide
and
reasonable grounds. Overall, the position is that in order to
establish that the applicant has
locus
standi
to
bring the application, it must show, on a balance of probabilities,
that it is a creditor.
[4]
See
also
Helderberg
Laboratories CC and Others v Sola Technologies (Pty) Ltd
.
[5]
[24]
The principle laid down in
Kalil
v Decotex (Pty) Ltd
,
supra, and other authorities referred to above is also applicable in
applications for sequestration like in the present case.
This was
laid down by the Supreme Court of Appeal in the case of
Commissioner,
South African Revenue Services v Hawker Air Services (Pty) Ltd; South
African Revenue Services v Hawker Aviation Partnership
and Others
.
[6]
[25]
It was submitted by Counsel for the Appellant that the Appellant had
made out a proper case for the provisional
sequestration of the
Respondent’s estate. That the Respondent failed and refused to
make payment of the agreed instalments
in satisfaction of the
judgment debt. That in the circumstances the Respondent committed
acts of insolvency as envisaged in
sections 8
(b),
8
(c) and
8
(g) of
the
Insolvency Act 24 of 1936
in that:
25.1. The Sheriff of the
High Court returned two
nulla bona
returns of service;
25.2. The Respondent
admitted in writing on more than one occasion that he cannot make
payment to Appellant of the full outstanding
balance or agreed
instalments;
25.3. The Respondent
dissipated most valuable assets without complying with the provisions
of the Court order; and
25.4. The Respondent’s
estate is insolvent but with sufficient assets to return a
substantial dividend in the Rand to the
Creditors in his estate.
[26]
The aforesaid submission by Appellant’s Counsel is misplaced.
For the Court to grant a provisional
sequestration order on the basis
of factual insolvency or an act of insolvency it must first be
established that the Creditor has
a liquidated claim which is not
disputed. The facts of this case as set out hereinabove show clearly
that the Appellant’s
debt is disputed by the Respondent on
bona
fide
and reasonable grounds. The findings of the
Court a quo
in this regard cannot be faulted.
[27]
The Appellant relied heavily on the “
prima facie
”
requirement, seemingly an attempt to argue that at the provisional
sequestration stage little is required of an applicant
to show a
qualifying claim. This must be put in a correct perspective. The
authorities are clear that once a respondent disturbs
that
prima
facie
situation by showing on
bona fide
and reasonable
grounds that the debt is disputed, an order for sequestration will
not be granted.
[28]
Counsel for the Appellant submitted that the application or action
brought by the Respondent to set aside
the settlement agreement is an
afterthought and merely an attempt to overcome the sequestration
application. I disagree. The Appellant
annexed to her founding
affidavit an affidavit deposed to by the Respondent as annexure “E2”.
This
affidavit was deposed to by the Respondent on 14 February 2017 for
purposes of bringing an application to set aside portions
of the
settlement agreement and Court order on the basis that the settlement
agreement was induced by an error common to the parties.
The present
application was only issued by the Appellant on 30 August 2018 (one
and a half years later).
Clearly,
this cannot be said to be an afterthought.
[29]
In our view this matter will only finally be resolved in the action
that is pending in the Northern Cape
High Court. The
Court a quo
was also alive to this fact.
This
Court is enjoined to make a prudent decision by not granting any
sequestration order under the circumstances. If the Respondent
is
successful in the matter pending before the Northern Cape High Court
and his interpretation of the settlement agreement is found
to be
correct, then a grave injustice would have been done if the
Respondent’s estate was sequestrated.
[30]
On the papers before this Court it is evident that the Appellant’s
claim is disputed on reasonable
and
bona fide
grounds. The
Court a quo
did not err in this regard.
Consequently the appeal
should fail.
[31]
In the result the appeal is dismissed with costs.
E
M MAKGOBA
JUDGE
PRESIDENT OF THE HIGH COURT,
LIMPOPO
DIVISION, POLOKWANE
I
agree
TC
TSHIDADA
ACTING
JUDGE OF THE HIGH COURT,
LIMPOPO
DIVISION, POLOKWANE
I
agree
LGP
LEDWABA
ACTING
JUDGE OF THE HIGH COURT,
LIMPOPO
DIVISION, POLOKWANE
APPEARANCES
Heard
on
20
August 2021
Judgment
delivered on
31
August 2021
For
the Appellant
Adv
M Naude
Instructed
by
Wessels
& Smith Inc
c/o
De Bruyn Oberholzer Attorneys
For
the Respondent
Adv
D Marais
Instructed
by
Marinus
Van Jaarsveld Attorneys
c/o
DDKK Attorneys
[1]
Kalil
v Decotex (Pty) Ltd and Another
1988
(1) SA 943
(A) at 980 B-C.
[2]
1998
(2) SA 208
(C) at 219 H.
[3]
Badenhorst
v Northern Construction Enterprises (Pty) Ltd
1956
(2) SA 346
at 349 D.
[4]
See
Commonwealth
Shippers Ltd v Mayland Properties (Pty) Ltd (United Dress Fabrics
(Pty) Ltd and Another Intervening)
1978
(1) SA 70
(D) at 72 D-E.
[5]
2008
(2) SA 627 (C).
[6]
[2006] ZASCA 51
;
2006
(4) SA 292
(SCA) at par 13.