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[2021] ZAGPPHC 91
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Mbatha v Body Corporate of Carswald Crest (94948/2015) [2021] ZAGPPHC 91 (28 January 2021)
IN THE HIGH COURT
OF SOUTH AFRICA
GAUTENG DIVISION,
PRETORIA
(1)
REPORTABLE:
YES
/NO
(2)
OF INTEREST TO OTHER
JUDGES:
YES
/NO
(3)
REVISED:
YES
/NO
28/01/2021
Case number:
94948/2015
In the matter
between:
SIFISO
MBATHA
APPLICANT
And
THE BODY
CORPORATE OF CARLSWALD CREST
RESPONDENT
JUDGEMENT
MOSOPA,
J
1.
This application is
brought by the applicant for leave to appeal against my judgment of
22 February 2019 in its entirety, to the
full court in this division,
alternatively to the Supreme Court of Appeal.
2.
The leave to appeal
application was initially filed on 4 June 2019 and I issued a
directive that the matter be heard on 30 September
2019. On that date
however, I realized that no condonation application for the late
filing of the leave to appeal was before me.
Thus, as the application
for leave to appeal was filed late, I struck the matter from the
roll, with costs.
3.
The amended leave to
appeal application was then filed on 4 February 2020, this time
accompanied by a proper application for condonation
of the late
filing of the leave to appeal.
4.
I intended to hear the
matter in March 2020, but the country was placed under lockdown due
to the COVID-19 pandemic and the matter
could not be heard.
5.
In the interim, I
tasked my clerk with retrieving the court file for this matter, but
it could not be located. An attempt was made
to have the parties
provide the court with the documents pertaining to this matter, but
to no avail. The matter was then set down
for hearing on 18 December
2020, but on that day the matter could not proceed as the court file
was still not available.
6.
The matter was then
postponed by agreement between the parties to 18 January 2021, with
the condition that the applicant must create
the matter on Caselines
and upload all documents. The matter could not proceed on 18 January
2021 however, as the applicant’s
counsel was engaged in another
matter where a preferential trial date was allocated. The leave to
appeal application was eventually
heard on 21 January 2021 and
judgment was reserved, to be delivered at a later stage.
CONDONATION
7.
The condonation
application was not opposed by the respondent and I was satisfied
with the reasons provided by the applicant for
the delay. As such,
the condonation for the late filing of the application for leave to
appeal was granted.
LEGAL
PRINCIPLE
8.
Section 17(1)(a)
- (c)
of the
Superior Courts Act, 10 of 2013
, provides:
“
17(1)
– Leave to appeal may only be given where the judge or judges
concerned are of the opinion that –
(a)(i) the appeal
would have a reasonable prospect of success; or
(ii)
there is some other compelling reason why the appeal should be heard,
including conflicting judgments on the matter under consideration;
(b) the decision
sought on appeal does not fall within the ambit of 16(2)(a); and
(c) where the
decision sought to be appealed does not dispose of all the issues in
the case, the appeal would lead to a just and
prompt resolution of
the real issues before the parties.”
9.
What emerges from
section 17(1)
is that the threshold to grant a party leave to appeal
has been revised. Leave to appeal can only be granted under the
circumstances
set out in
section 17(1).
In the matter of
The
Mount Chevaux Trust v Tina Goosen and 18 Others 2014 JDR 2325 (LCC)
at para 6,
Bertelsman J stated:
“
It
is clear that the threshold for granting leave to appeal against a
judgment of a High Court has been raised in the new Act. The
former
test whether leave to appeal should be granted was a reasonable
prospect that another court might come to a different conclusion,
see
Van Heerden v Cronwright and Others
1985 (2) SA 342
(T) at 343 H:
‘The use of the word “would” in the new statute
indicates a measure of certainty that another court
will differ from
the court whose judgment is sought to be appealed.’”
10.
The Supreme Court of
Appeal in the matter of
Minister
of Justice and Constitutional Development v Southern African
Litigation Centre
2016 (3) SA 317
(SCA)
,
when dealing with the issue of “there is some other compelling
reason why the appeal should be heard” stated at para
24,
“
That
is not to say that merely because the High Court determines an issue
of public importance, it must grant leave to appeal. The
merits of
the appeal remain vitally important and will often be decisive…”
11.
The applicant does not
specifically state under which leg of
section 17(1)
he brings this
application of leave to appeal, but the consistent use of the phrase
“another court will come to another conclusion”
in this
leave to appeal argument clearly demonstrates that the applicant is
relying on the provisions of
section 17(1)(a)
– that he “has
reasonable prospects of success.”.
DISCUSSION
12.
The applicant, despite
listing a large number of grounds which he intends to rely on in
seeking leave to appeal my judgment, Ms
Strauss, on behalf of the
applicant, only pursued two points in argument, being:
12.1.
That I relied on a
stale
nulla bona
return to
sequestrate the applicant; and further,
12.2.
I did not properly
apply the test as set out in the matter of
Body
Corporate of Empire Gardens v Sithole
,
in sequestrating the applicant.
13.
In contention, Ms
Strauss on behalf of the applicant, when dealing with the first leg
of her ground of appeal, referred me to the
matter of
Rodel
Financial Services Proprietary Limited v Ursula Madaleen O’Callaghan
case no 2016/23121 (GLD)
where,
Windell J, when dealing with the staleness of the
nulla
bona
return,
remarked as follows:
“
[14]
The second aspect impacting on the return of service relates to stale
service. It is common cause that at the time of the launching
of this
application, the return of service was 12 months old, and at the time
of hearing the application it was 19 months old.
[15] In Abel v
Strauss
1973 (2) SA 611
(W), the return of service relied upon was 7
months old. The court relying on the matter of Bhyat v Khubishi TPD
896, held that
there must be allegations supported by facts that the
debtor’s position remains unchanged.
[16] This
principle was reaffirmed in the matter of Nodrew (Pty) Ltd v Rossouw
1975 (3) SA 137
(O). In this matter, Steyn J found that he was unable
to rely on the return of service as proof of an act of insolvency
where it
was 18 months old in the absence if any allegations that the
debtor’s position remains unchanged.”
14.
In casu, a warrant of
execution was served on the applicant on 4 October 2014, when the
applicant informed the sheriff,
“
No,
I do not have any immoveable property which is executable.”
Judgment
against the applicant at the time was only for the amount of
R7 331,61. The main application was issued in 2015 and
only
served on the applicant in 2016, as he could not be located and as a
result thereof substituted service was sought. Thus,
when the matter
was heard in 2018, the service was two (2) years old.
15.
I must pause to mention
that the issue of the staleness of the
nulla
bona
return was
never raised in the applicant’s papers nor in oral argument.
This point was raised for the first time in the current
application.
No criticism was levelled against the
nulla
bona
return and
whether it is defective or not. Hence in my judgment I did not deal
with the staleness of the
nulla
bona
return.
16.
What can be gleaned
from the applicant’s answering affidavit in the main
application at paragraph 9.11 thereof is as follows:
“
[9.11]
The applicant refers to 18 default judgments obtained against me but
refrains to mention that the same default judgments
were also
obtained against the other co-owners of the properties and that they
were obtained in Pretoria Magistrates Court from
2010 to 2015. All
these were previously used and attached and used as a cause in no
less than 3 sequestration applications from
2012 until now set out by
the applicant in their one papers [sic].
[9.12] The
applicant uses the same old judgments and the same amounts and the
same amount to justify the bringing of sequestration
application. In
the meantime, I have made substantial payments towards the levies and
the outstanding amounts due.”
17.
What the applicant
neglected to address in his papers is the fact that he extinguished
the debt in respect of the
nulla
bona
return. It is
common cause that the respondent obtained default judgments against
the applicant and they relied on the
nulla
bona
return of 4
October 2014 to sequestrate the applicant. Whereas the applicant
maintains that the
nulla
bona
return of 2014
remains unsatisfied.
18.
Section 8(b)
of the Act
provides:
“
A
debtor commits an act of insolvency if a court has given judgments
against him and he fails, upon demand of the officer whose
duty it is
to execute that judgment, to satisfy it or to indicate to that
officer disposable property sufficient to satisfy it,
or if it
appears from the return by that officer that he has not found
sufficient disposable property to satisfy judgment."
19.
The applicant informed
the sheriff that he has no immoveable property and that was an honest
affirmation by the applicant. He is
a co-owner in the bonded unit
which I already found is not realizable property for the purpose of
satisfying the debt. I am therefore
of the view, contrary to what was
argued by Ms Strauss, that no other court could come to a different
conclusion and the applicant
on this point has no reasonable
prospects of success.
20.
I now turn to deal with
the applicant’s second leg of attack on my judgment. The
essence of
Body
Corporate of Empire Gardens v Sithole and Another
2017 (4) SA 161
(SCA)
is that a
body corporate of a sectional title scheme applying for the
compulsory sequestration of its members (as in this case)
is required
to prove that the order of sequestration sought would be to the
advantage of the general body of creditors, as contemplated
in
section 10(c)
of the
Insolvency Act, 24 of 1936
, or there should be a
reasonable prospect of some pecuniary benefit to the general body of
creditors as a whole.
21.
Most importantly, the
following can be gleaned from the
Sithole
judgment:
“
[9]
The purpose and effect of the sequestration process are ‘to
bring about a convergence of claims in an insolvent estate
to ensure
that it is wound up in an orderly fashion and that the creditors are
treated equally’ (see Investec Bank Ltd and
Another v Mutemeri
and Another 2009 ZAGPJHC 64;
2010 (1) SA 265
(GSJ) at 274-275). It
cannot fittingly be described as a mechanism to be utilized by a
creditor to claim a debt due by the debtor
to one single creditor
(see Collett v Priest
1931 AD 290
at 299). Once a sequestration order
is made, a consensus creditorum comes into being. This means that the
rights of the creditors
as a group are preferred to the rights of the
individual creditor.
[10] The phrase
‘advantage to creditors’ is not defined in the
Insolvency
Act, but
if the principle of consensus creditorum is taken into
account, it means that there should be a reasonable prospect of some
pecuniary
benefit to the general body of creditors as a whole (see
Lynn and Main Inc v Naidoo and Another
2005 (1) SA 59
(N) paras
33-35; Ex Parte Bouwer and Similar Applications
2009 (6) SA 382
(GNP)
para 13). This requirement is fulfilled where it is established that
there is reason to believe that there will be advantage
to a
‘substantial proportion’ or the majority of the creditors
reckoned by value… Although advantage to creditors
is not a
rigid concept (Stradford and others v Investec Bank Ltd and others
2015 (3) SA 1
(CC) para 44), it requires proof of a tangible benefit
to the general body of creditors.”
22.
The applicant, in his
answering affidavit in the main application, did not deny the fact
that several creditors, apart from the
respondent, obtained default
judgments against the applicant in a number of different cases
brought against the applicant. In argument,
the applicant contended
that despite all the default judgments obtained, the respondent
decided to apply for the applicant’s
sequestration in reference
to only one default judgment, in which the
nulla
bona
return of
October 2014 was obtained.
23.
In my judgment when I
dealt with this concept, the following is apparently clear;
“
[27.1.]
Turning to the last requirement, i.e., that it will be to the
advantage of the respondent’s creditors if his estate
is
sequestrated, the following are of importance.
[28] The
financial position of the respondent is not known, what is before me
is the undisputed fact that the respondent is gainfully
employed.
[29] It is clear
that the respondent has other creditors apart from the applicant and
some have already obtained default judgment
against the respondent.
[30] I am
therefore of the view that the general body of creditors of the
respondent will benefit if the estate of the respondent
is
sequestrated…”
24.
From the above, it is
clear that when sequestrating the applicant, I did not consider only
the respondent as a creditor but a general
body of the applicant’s
creditors. Evidence relating to default judgments obtained by other
creditors of the applicant remains
unchallenged. When the main
application was argued, the
Sithole
(supra)
judgment was already in place. The fact that I did not mention the
Sithole
judgment is in no way an indication
that I did not apply the principle as set out in that judgment. I did
not favour the body corporate
as the only creditor, but a body of
creditors.
25.
Even though it is not a
subject for determination from this current application, I also found
in my judgment that the applicant
committed a further act of
insolvency in terms of
section 8(c)
, in that he prefers some
creditors above the others (para 23.2 of the judgment).
26.
It is correct, as
argued by Ms Strauss on behalf of the applicant, that it was never
the case of the respondent to sequestrate the
applicant under this
subsection. The respondent did not have further information regarding
the applicant aside from the fact that
he was employed. The applicant
himself brought this aspect to the court’s attention when he
averred in his answering affidavit
(main application) that he pays
bonds held by various banks in properties of which he is a co-owner.
This was happening despite
being indebted to the respondent and other
creditors who obtained default judgments against him. It is therefore
my considered
view that he committed an act of insolvency as
contemplated by
section 8(c)
of the Act. Also bearing in mind that
the respondent struggled to reach the applicant so as to effect
service of the sequestration
application on him, until the order for
substituted service was sought by the respondent. This in itself
demonstrates that the
respondent could not possibly have attested to
the fact that the applicant prefers some creditors over other
creditors.
I
do not agree with the applicant that he has reasonable prospects of
success which requires leave to be granted to appeal his
final
sequestration. The application, in my view, stands to fail.
28.
Consequently, I make
the following order:
[1]
The application for leave to appeal is refused.
[2]
The applicant is ordered to pay the costs of the application.
MJ
MOSOPA
JUDGE OF THE HIGH
COURT, PRETORIA
Appearances:
For
the applicant: Adv S Strauss
Instructed
by: Scholtz
Attorneys
For
the respondent: Adv J Vorster
Instructed
by: EY Stuart
Inc.
Date
of hearing: 21 January 2021
Date
of judgment: Electronically delivered