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[2021] ZAGPPHC 193
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Wilkinson v Magistrate Ramahanelo N.O and Others (14668/2021) [2021] ZAGPPHC 193 (6 April 2021)
HIGH
COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
CASE
NO: 14668/2021
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
REVISED
In
the matter between:
JOSEPH
JOSHUA
WILKINSON
Applicant
and
MAGISTRATE
RAMAHANELO N.O.
First
Respondent
GERDA
VAN TONDER
N.O.
Second Respondent
WILLBO
INVESTMENTS 4 (PTY) LTD
Third
Respondent
MASTER
OF THE HIGH COURT, PRETORIA
Fourth Respondent
J
U D G M E N T
This
urgent application was heard in open court and otherwise disposed of
in the terms of the Directives of the Judge President
of this
Division. The judgment and order are accordingly
published and distributed electronically.
DAVIS,
J
[1]
Introduction
This
is the judgment in a dispute regarding the continuation of an enquiry
in terms of
section 152
of the
Insolvency Act, 24 of 1936
, which
dispute came before the urgent court last week. At the time of
hearing the application, the parties were in agreement
that the
reservation of the judgment for the week would not prejudice any of
them.
[2]
The parties
2.1
The applicant is Mr
Wilkinson. He is an esrtwhile attorney of this court and he was
finally sequestrated on 11 June 2018.
2.2
The Second respondent is the co-trustee of Mr
Wilkinson’s insolvent estate and she acted in the matter with
the acquiescence
of her co-trustee.
2.3
The first respondent is a magistrate before whom
an insolvency enquiry in Mr Wilkinson’s insolvent estate is
pending.
2.4
The third respondent is Willbo Investments 4
(Pty) Ltd (“Willbo”). It is a company for which Mr
Wilkinson has
previously acted as an attorney when he was still
practicing as Wilkinsons Attorneys. The business relationship
between Willbo
and Wilkinsons Attorneys extended beyond the mere
attorney/client relationship and involved business dealings
negotiated between
Mr Wilkinson and Willbo’s controlling mind,
Mr Menno Parsons. It involved,
inter
alia
, the purchase and subsequent selling of
a farming property and various investments, which commenced more than
a decade ago.
2.5
The fourth respondent is the Master of this
Court.
[3]
The relief claimed
Mr Wilkinson claims the following
relief on an urgent basis:
3.1
That the magistrate and the trustees be interdicted and “prohibited”
from continuing with the enquiry in terms of
Section 152
of the
Insolvency Act, 24 of 1936
, until such time as the trustees are
“properly” authorized by the Master to do so.
3.2
That Willbo “
be interdicted and prohibited from
participating and being present
” at the enquiry pending the
delivery of the judgment under case number 26586/2013.
[4]
History of litigation between Mr Wilkinson and Willbo
In
order to understand the basis upon which Mr Wilkinson claims the
relief mentioned in paragraph 3.2 above and to determine whether
he
is entitled to such relief, it is necessary to have regard to the
litigation history between the said parties. This has
been set
out in the founding affidavit along the following terms:
4.1
In 2010, Mr Wilkinson, acting on instruction of Mr Parsons negotiated
the purchase of a farm in Zeerust which Absa Bank intended to sell in
execution. The farm was purchased in the name of Willbo,
of
which Mr Parsons was the majority, but not sole, shareholder.
He was the financier of prospective business ventures, including
the
purchase of the farm, for which he, through a company of which a
trust under his control was the shareholder, provided bond
cover to
secure the financing of the purchase price.
4.2
The farm was subsequently sold to the Department of Rural Development
and Land Reform pursuant to a land claim, for a substantial profit.
A dispute arose between the shareholders of Willbo and
Mr Wilkinson
regarding the distribution of the proceeds. Issues relating to
shareholding percentages, loan accounts, distribution
agreements,
fees and costs abounded. On 20 August 2012 Mr Wilkinson
rendered his version of the distribution account relating
to the
proceeds of the sale. This was followed by various meetings and
auditors’ scrutiny, still resulting in a disputed
claim in
excess of R 4,6 million.
4.3
Pursuant to the above dispute, on 2 May 2013, Willbo launched an
application in this court in case no 26586/13 for urgent relief in
camera against Mr Wilkinson and Wilkinsons Attorneys for payment
into
trust of the above amount pending a statement and debatement of
accounts (the “debatement application”).
4.4
Pursuant to the in camera application, a provisional order was
granted.
At that time, an amount of R 481 658,91
was all that was left in Wilkinson Attorneys’ trust account in
respect
of the transaction in question. Willbo consequently
launched a contempt application, which was dismissed with costs by
Potterill,
J on 30 May 2013.
4.5
Willbo also launched an application for discovery in terms of
Rule
35(12)
as well as an application to compel. Upon this becoming
opposed, these applications were abandoned.
4.6
The debatement application was heavily contested before Preller J
on
11 August 2014, during which the claim for payment of a specific
amount also fell by the wayside pending finalisation of the
application. After having heard the debatement application,
Preller J reserved judgment. To date hereof, some 6½years
later, judgment still hasn’t been delivered.
4.7
While judgment remained reserved, Willbo submitted a claim at the
Attorneys Fidelity Fund during 2016, to which Willkinson Attorneys
responded. Although there is no certainty as to what happened
with this claim, having regard to the further conduct of the parties,
it appears in all probability, that it was unsuccessful.
[5]
The
section 152
enquiry
5.1
On 17 February 2020, the Master sent a letter in the following terms
to Rautenbach Attorneys regarding Mr Wilkinsons’s insolvent
estate:
“
Your
letter of 29/11/2019 refers. Permission is granted to hold the
enquiry in terms of
section 152
of the
Insolvency Act 24 of 1936
.
The enquiry to be conducted at the office of the Master of the High
Court, Pretoria or the Magistrate Thabazimbi.
The costs to be
for the account of the creditor, Willbo Investments 4 (Pty) Ltd …
”.
5.2
It is common cause that neither at the time of the aforementioned
authorisation, nor to date of the present application, has Willbo
become a proven creditor of the insolvent estate. This
has been
confirmed by the trustee in writing to Mr Wilkinson.
5.3
The authorisation by the Master was apparently with the prior consent
of the trustees. This appears from the second
respondent’s confirmation as follows to Mr Wilkinson, upon a
request
from him for copies of certain documents: “
Ek weet
nie na watter kennisgewing jy verwys nie. Daar is
korrespondensie tussen die prokureur van Willbo en Skrywer.
Skrywer het toestemming verleen aan die prokureur om voort te gaan
met die belê van ʼn Artikel 152 ondervraging
” (I
don’t know to which correspondence you refer. There was
correspondence between Willbo’s attorney and
Writer.
Writer gave permission to the attorney to proceed with the
constitution of a
Section 152
enquiry).
5.4
More than a year later, on 15 February 2021 a summons addressed to
Mr
Wilkinson, was served on his then estranged wife, requiring him to
appear before the Magistrate, Pretoria on 25 February 2021.
There is no dispute that, for practical purposes, the initial enquiry
envisaged before the Magistrate, Thabazimbi has been substituted
by
an enquiry before the Magistrate, Pretoria. The master has also
issued a separated authorisation in this regard.
5.5
The summons required Mr Wilkonson to bring with and produce at the
enquiry all documents relating to trade “or dealings”
with Willbo, both between himself and between Wilkinson Attorneys
as
well as documents relating to “
the trade, dealings or
transactions
” between Mr Wilkinson and Mr Parsons.
Reference was also made to documents relating to the Department of
Rural Development
and Land Reform. In addition to a whole page
of references to the “dealings” and “transactions”
contained
in the summons and made in general terms, descriptions of
the required documents or sets of documents, listed in paragraphs (a)
to (w) followed. Paragraphs (a) to (n) referred to documents
relating to Wilkinson Attorneys’ asset registers, insurance,
trust accounts, SARS statements and audit reports, all relating to
transactions involving Willbo and Mr Parsons. From paragraphs
(o) to (q), documents relating to Mr Wilkinson’s bank
statements, SARS documentation and the like were required, while from
paragraphs (r) to (u) reference was made to the Jamie Joseph Family
Trust and its statements, trustee resolutions and the like.
I
interpose here to note that, in respect of the settlement of the bond
passed in respect of the financing of the purchase of the
farm
referred to in paragraph 4.1 above, a payment of R 4,2 million is
alleged to have emanated from the said trust. Paragraphs
(v)
and (w) of the summons, again refer to payments and transfers of
assets between Mr Wilkinson, Wilkinson Attorneys and the trust
in
general terms.
5.6
The summons was signed by Rautenbach Attorneys as “
attorney
for proven creditor
” and by the Magistrate, Pretoria.
5.7
The day before the scheduled enquiry, 24 February 2021, Mr Wilkinson
suffered from acute gastroenteritis and produced a medical
certificate declaring him unfit until 26 February 2021. By
agreement,
the enquiry was postponed and Mr Wilkinson, through his
attorneys, per email undertook to appear at any postponed date.
Despite
this, a warrant for his arrest was authorized, but apparently
never issued, allegedly also by agreement. At the next date,
being 25 March 2021 Mr Wilkonson contrived to have the enquiry
postponed sine die.
5.8
In her answering affidavit, the second respondent stated that the
trustees have appointed their attorney to act as their agent “
to
interrogate witnesses who appear in response to summonses during the
enquiry
”. The trustees’ current attorney is
Rautenbach attorneys who also acted for them in opposition to the
urgent
application. They have also accepted service of the
application on behalf of Willbo, who did not file any affidavits and
did not oppose the application.
5.9
The second respondent, in a later supplementary affidavit, inter
alia, stated the following: “…
Wilkinson failed to
demonstrate that his insolvent estate has any assets. Claims
were proved against Wilkinson’s insolvent
estate, as he admits,
and therefore investigation must follow. This is basically the
purpose and working of the insolvency
procedure and law
”.
5.10
Apart from the above, the second respondent argued that an interdict
is not necessary
as the presiding officer will determine who might be
present at the enquiry and which questions or line of questions may
be relevant
and permissible. She further confirmed Rautenbach
attorneys’ mandate to act on behalf of the trustees in this
litigation
and denied that she was a mere puppet in the hands of
Willbo. For the remainder, she opposed the request made in the
replying
affidavit that she be liable on a
de bonis propriis
basis for the costs of the application. This last contention
was not pursued by the applicant at the hearing of the application.
5.11
Mr Wilkinson’s main objection against the continuation of the
enquiry is that
it is a stratagem instigated and sponsored by Willbo
to obtain documents and debatement thereof and thereby to pursue the
litigation
which is still pending in case no 26586/2013. This,
Mr Wilkinson contends, amounts to an abuse of process
[6]
Evaluation
6.1
The duties of trustees in insolvent estates are trite and prescribed
by the
Insolvency Act. In
short, the trustees, on their
appointment, have the duty to establish what the assets of the estate
are, as the estate from that
date vests in the trustees. This
includes establishing where the assets can be found and that they be
properly secured, stored
or insured, where applicable. See:
Sections 19
and
20
of the
Insolvency Act. The
trustees also
have the duty to call upon all the insolvent’s debtors to pay
their debts. In respect of claims against
the insolvent’s
estate, in particular in respect of those sought to be proven at a
meeting of creditors, the trustee has
the duty to impartially inquire
into the correctness and justice of such claims. Claims and the
disputes as to their validity
are regulated by
Section 45
and
Regulation 3
of the Regulations framed under the
Insolvency Act.
6.2
In
respect of pending legal proceedings, the trustees step into the
shoes of the insolvent. Such proceedings are temporarily
stayed
until the trustees have been appointed and thereafter, after
substitution, continue by or against the trustees in their
capacities
as such.
6.3
Regarding the position of Willbo, its position in the circumstances
of this case fall neatly into the following description of
circumstances contained in Juta,
Mars: The Law of Insolvency in
South Africa
at 8.7 “
Whenever the proceedings that have
been stayed by a sequestration order are against the insolvent in
respect of a liquidated claim,
the plaintiff may tender proof of
claim against the estate for the amount thereof, together with his
costs to date of sequestration,
which, if admitted, relieves him of
the necessity of continuing the proceedings.
But if
his claim is not liquidated, he must continue the proceedings in
order to have the amount thereof assessed by the court
”
(my underlining). In the present instance, not only is Willbo’s
claim against the insolvent estate not liquidated,
it has not been
otherwise proven as a claim in the estate. The litigation is
therefore to continue. Its only delay
or hold-up, is the
currently outstanding reserved judgment.
6.4
On behalf of Mr Wilkinson, Adv. Hershensohn, who appeared together
with Adv De Leeuw, submitted that, barring any judgment in Willbo’s
favour, any claim which it may have had against Mr Wilkinson
or
Wilkinson’s attorneys, would have been due and payable at the
end of 2012 and according would by now long have become
prescribed.
6.5
The further point made was that the documents listed in the witness
summons predominantly relate to aspects pertaining to Willbo’s
claim and are very similar to the list of documents which
featured in
the
Rule 35(12)
notice in the pending litigation, referred to in
paragraph 4.5 above.
6.6
It is trite that, apart from the obvious differences between the
winding-up of companies in liquidation and the finalization of
insolvent estates of natural persons, the principles in respect
of
enquiries under the two regimes are the same. See
Mars
(supra) at 452. These principles exclude the abuse of the
enquiry for an ulterior purpose.
6.7
Such an abuse would occur, for example, where the trustee or
liquidator,
seeks to obtain an improper advantage over a litigant
against which the estate is in litigation. A defendant cannot
therefore,
under the guise of an enquiry, be examined in order that
the trustee thereby obtain information to which it would not
otherwise
be entitled. The learned authors of
Henochsberg,
Commentary on the Companies Act
contend in this regard as
follows:
“
It
is submitted that there is a limitation on the right to interrogate
in relation to pending proceedings, namely that it may not
be
enforced where interrogation constitutes an abuse … . It
is submitted that interrogation will be such an abuse
where
proceedings have reached such a stage that the purpose of the
interrogation is no longer acquisition of information to enable
the
liquidator to determine his course of action about which he is
ignorant, but simply to have, as it were, a pre-trial enquiry
which
will be duplicated in the trial itself. Depending on the facts
of each particular case, it is submitted that e.g. where
a liquidator
has sued X who files a plea, interrogation of X on the content of the
plea … is an abuse …
”.
6.8
It would become even more egregious if the intention of an intended
enquiry, was not to provide the trustee with information about assets
(as the second respondent herein appears to contend), but
to enable a
litigant in pending litigation against the estate, to examine the
estate’s principal witness, the insolvent (as
Mr Wilkinson
contends is the situation here). Such conduct would clearly
constitute an abuse and be “improper”.
It has been
described as such by Wallis JA in
Roering and Another NNO. V
Mahlangu
(581/2015)
[2016] ZASCA 79
at paragraph
[36]
: “
What
constitutes an improper forensic advantage, will depend upon the
circumstances of each case. Summoning a witness in order
to
benefit a third party, such as a creditor, in pursuing proceedings
against that witness or an entity that they represent, would
be such
a case
”.
6.9
Of course, where the intended witness is the insolvent himself, the
second respondent as trustee may argue that examining a recalcitrant
insolvent would not be an abuse, and she would be right, if
those
were the facts: “
the first consideration is that the purpose
of the provisions is to enable the liquidator to reconstitute the
state of knowledge
of the company in order to make informed decisions
…
”.
Bernstein and Others v Bester and
Others NNO
.
[1996] ZACC 2
;
1996 (2) SA 751
(CC) at 768E.
6.10
Such examination or interrogation is, however to be conducted by the
Master, or the
magistrate in this case or the trustee. There is
no provision is section 152 for a creditor to interrogate the
insolvent
or other party subpoenaed to the enquiry. In fact,
the private nature of such an enquiry would generally prohibit a
creditor
from being present. See:
Roux v The Master
1997
(1) SA 815
(T), following
Appleson v Bosman NO. and Others
1951 (3) SA 515
(W). This is in contrast with interrogations
contemplated in section 65 at meetings of creditors.
6.11
In the present instance:
-
Willbo is not a proven creditor of Mr Wilkinson’s estate.
The only two claims proven, are those of Mr Wilkinson’s
ex-wife. There is no indication on the papers that the proven
creditor has required the trustees to request the Master to
authorize
the enquiry.
-
There is an absolute dearth of information from the second respondent
(being the only one of the two co-trustees who had deposed
to an
affidavit) as to what information the trustees are looking for or
seek to extract from the insolvent and even less information
about
what questions the insolvent refused to answer or in what respect he
can be found to be recalcitrant.
-
There is no information about the facts or circumstances upon which
the Master has formed the opinion contemplated in section 152.
This is a jurisdictional requirement about which the second
respondent, on her own version, should also have knowledge.
-
Willbo’s attorney has written to the second respondent (the
contents of the correspondence have not been disclosed) and,
based on
this, the second respondent has given the attorney the go-ahead to
approach the Master. If this has been done by
the attorney as
ostensibly representing a proven creditor in the insolvent estate,
that representation would have been false.
-
The Master has authorized Willbo’s attorney to go ahead with
the enquiry at its own costs and has signed the summons calling
on Mr
Wilkinson to appear, which summons has clearly been drafted by
Willbo’s attorney (this time not ostensibly, but expressly
falsely claiming to represent a proven creditor in the estate).
-
Willbo’s aforementioned attorney now act for the trustees,
represented by the second respondent.
-
Mr Wilkinson seeks an interdict that Willbo not be present or
participate in the enquiry pending finalization of the litigation
between Mr Wilkinson (and his insolvent estate) and Willbo. The
estate’s trustees, represented by the second respondent,
in
turn represented by Willbo’s attorney, opposed this relief
without a shred of evidence as to why this would be appropriate.
In fact, if Willbo’s attorney acts as the trustees’
“agent” at the enquiry, Willbo will by proxy and via
the
proverbial back door, in any event “participate” in the
enquiry.
6.12
In view of the above, I find that, on a balance of probabilities, the
section 152
enquiry, if it is to proceed with the intention to
interrogate the documents listed in paragraphs (a) to (n) and (r) to
(u) and
any aspect which form the subject matter of the litigation
with Willbo, will constitute an abuse of process instigated by Willbo
as driving force. Having reached this conclusion, I need not
determine whether the second respondent was a collusive or passive
participant. The abuse should simply be prevented and the
trustees can proceed with the remainder of the enquiry for other
(legitimate and proper) purposes, for which they might be the driving
force in the discharge of their statutory duties.
[7]
Conclusion
7.1
The section 152 enquiry has been authorized by the Master and the
relief claimed by Mr Wilkinson as referred to in paragraph 3.1 above
cannot succeed. Counsel for the second respondent, Adv
Klopper,
has stated that had Mr Wilkinson or his “very senior attorney”
(being the description used by Adv Klopper
and by the second
respondent, repetitively in her affidavits) simply picked up the
telephone, this would easily have been established.
At least,
so they argue, this should have been clear after the delivery of the
answering affidavit. I agree, but this does
not detract from
the remainder of the relief.
7.2
The remainder of the relief claimed by Mr Wilkinson is of a
(hopefully)
limited duration, that is, an interdict described in
paragraph 3.2 above, until such time as retired judge Preller
delivers the
judgment in the “debatement application” in
case no 26856/2013. I am of the view that, in order to prevent
an
abuse of the process envisaged by section 152 by Willbo, this
relief should be granted.
7.3
Although costs
de boniis propriis
were no longer pursued
against the second respondent, it was sought against her as opposing
party. Even if the result of
a costs order against her in her
official capacity will have the result of the insolvent estate being
liable, I find no reason
to depart from the general rule that costs
should follow the event. In the notice of motion, costs were
only claimed against
Willbo in the event of opposition. In its
absence and, having not opposed the application, it would be improper
to now grant
a costs order against it, even if it was, as indicated
above, the instigating party. Whether the costs should be
awarded
at a punitive scale is something else. In respect of
the opposition to the issue of whether the enquiry had been
authorized
by the Master or not, the opposition was justified.
In respect of the more important issue, namely that of abuse, not
only
was the opposition unreasonable, but there was an almost
deliberate failure to furnish the court with any particularity as to
the
status of the estate and its administration, the nature of the
outstanding information required, the extent of the trustees’
enquiries to date or whether and why they had been so hampered that
an enquiry was needed. Large portions of the answering
affidavits are vague and purely argumentative. As far as the
court has been informed, nothing of substance has been done
since the
first meeting of creditors in April 2019, save for correspondence
with Willbo’s attorneys which led to the current
application.
These lapses, omissions or apparent lackadaisical approach to both
the finalization of the estate or to litigation,
justify, in my view,
a punitive costs order.
[8]
Order:
8.1
The Third Respondent is interdicted and prohibited from participating
in and being present at the enquiry in terms of
Section 152
of the
Insolvency Act, in
the insolvent estate of J.J. Wilkinson T299/2017,
pending the judgment in case no 26586/2013 in this court.
8.2
The Second Respondent is ordered to pay the costs of this application
on the scale as between attorney and client, including the costs of
two counsel, where utilized.
N
DAVIS
Judge
of the High Court
Gauteng
Division, Pretoria
Date
of Hearing: 31 March 2021
Judgment
delivered: 6 April 2021
APPEARANCES:
For
the Applicant:
Adv J Hershensohn together with
Adv R de Leeuw
Attorney
for the Applicant:
Snyman de Jager Attorneys,
Pretoria
For
the 2
nd
Respondent:
Adv J C Klopper
Attorney
for the 2
nd
Respondent: Rautenbach Attorneys, Pretoria