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[2021] ZAGPPHC 292
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Medbond (Pty) Ltd v Meyer (55163/2019) [2021] ZAGPPHC 292 (22 April 2021)
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REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
(NORTH
GAUTENG HIGH COURT, PRETORIA)
Case
No.55163/2019
REPORTABLE:YES/NO
OF
INTEREST TO OTHER JUDGES:YES/NO
REVISED
DATE
:
22/04/2021
In
the matter between:
Medbond
(PTY)
Ltd
Appellant
(Registration
No.: […])
And
Devan
André de
Meyer
Respondent
(ID
No.: […])
JUDGMENT
Maumela
J.
INTRODUCTION
1.
In
this case, the Applicant, Medbond (PTY) Ltd, applied for the
sequestration of the Respondent’s estate. It seeks a rule
nisi
for
the provisional sequestration of the Respondent’s estate,
followed by a return date, (to be determined), for an order
confirming the rule
nisi
.
[1]
2.
The Respondent is indebted to the Applicant. The debt is premised on
a loan made by the Respondent to
the Applicant. The amount of the
loan is R 464 907.35. Applicant’s application for the
sequestration of the Respondent is
premised on the contention that
the latter has become factually insolvent. It is the contention of
the Applicant that it shall
be in the interests of creditors if the
Respondent is declared to be insolvent.
3.
The Respondent delivered his notice of intention to oppose the
sequestration application. He also filed
his answering affidavit,
whereupon the Applicant in return, filed a subsequent Replying
Affidavit. In opposing the application
for his sequestration, the
Respondent raised the following defences:
3.1.
That he, (the Respondent), is not factually insolvent, and
3.2.
Although he, (the Respondent), admits that he received money
from the Applicant, he denies that the
money he received was in the
form of a loan.
4.
The Applicant contends the adjudication of this application
has to involve a focus on the
following issues:
4.1.
The undisputed facts relevant to the present application.
4.2.
The requirements for relief in terms of section 10 of the
Insolvency Act.
4.3.
The defences raised by the Respondent and
4.4.
The relevant facts as appears from all affidavits filed by the
Applicant and the Respondent.
UNDISPUTED FACTS.
5.
The following facts are admitted; not dealt with by the Respondent,
or merely noted by him:
5.1.
The amounts as received by the Respondent which were paid over
to the Applicant;
5.2.
Financial difficulties, which the Respondent experienced when he
joined the Applicant;
5.3.
The relationship between the Applicant and the Respondent where
Respondent worked for the Applicant an as an independent broker;
5.4.
That this relationship terminated during the course of January 2019;
5.5.
That the Respondent wants to pay back the money he received from the
Applicant.
6.
In the background of the above facts, the Court is required to
consider granting the relief sought by
the Applicant. An applicant
who seeks an order for the provisional sequestration of a debtor’s
estate is required to
prima facie
establish the following:
6.1.
That he/she, it holds a claim against the debtor as intended in
Section 9 (1) of the Insolvency Act;
6.2.
That the debtor has committed an Act of Insolvency or is
factually insolvent;
6.3.
That there is reason to believe that it will be to the Advantage of
Creditors of the debtor, if the Respondent’s estate
is
sequestrated.
7.
The Applicant submits that through the uncontested facts, it has been
established that:
7.1.
The Respondent did receive, the amounts set out in paragraph 7.11 of
the founding affidavit; from the Applicant.
7.2.
That the Respondent, indicated that he wants to pay back the money to
the Applicant, (although he denies that the amount he
received was in
the form of a loan).7.3. The Respondent was indeed in a position of
financial difficulty when he joined the brokerage
firm of the
Applicants; and this became the underlying
causa
for the loan.
(If the Respondent were not in a situation of financial
difficulty, there would have been no underlying
causa
for the
loan.
8.
Applicant contends that the “defences” raised by the
Respondent are no more than an attempt
to delay payment which is in
any event inevitable. There is no
bona fide
, genuine or real
dispute of fact or defence disclosed by the Respondent.
9.
“A
bona fide
dispute” on “reasonable
grounds” is described as follows in LAWSA, Vol 4, part 3, par
69: “
A debt is not ‘bona fide disputed’ simply
because the respondent company says that it is disputed. The dispute
must
not only be bona fide or genuine but must be on good reasonable
and substantial grounds. The expression ‘genuine dispute’
connotes a plausible contention requiring the same sort of
consideration as a serious question to be tried. It is not sufficient
for the company to merely establish that there is a serious question
to be tried as to whether the dispute over the debt is genuine
in
that the debt is disputed on the basis of an honestly held belief
that it is not payable and is not disputed merely for the
purposes of
delay or obstruction. ‘Genuine’ in this context means not
fabricated for purposes of the proceedings or
not just thought up or
brought forward without genuine belief: There can be no genuine
dispute if there are no substantial grounds
for disputing the debt.”
(Own emphasis added)
10.
In the case of
Wightman t/a JW Construction v Headfour (Pty) Ltd
2,
the following was stated, in respect of a
bona fide
dispute: “
A real, genuine and bona fide dispute of fact can
exist only where the court is satisfied that the party who purports
to raise the
dispute has in his affidavit seriously and unambiguously
addressed the fact said to be disputed.”
11.
The Applicant submits that the “disputes” or “defences”
raised by the
Respondent are not
bona fide
or genuine. It
avers that such defences are not based on good, reasonable and
substantial grounds. It advances the following substantiation
of that
assertion.
11.1.
The Respondent admits that he received money from the Applicant
however, he denies that he received it as a loan.
11.2.
He does not advance any rebuttal, save for his contention to the
effect that the money which he received was not a loan.
11.3.
He says that he wishes to pay back the money which he received.
11.4.
It begs the question why a reasonable person would tender to pay
money of this magnitude if it is indeed not due owing and
payable?
12.
In
the case of Wightman t/a J W Construction v Headfour (Pty)
[2]
,
the court stated the following concerning a real, genuine and
bona
fide
dispute of fact:
“
A
real, genuine and a bona fide
dispute
of fact can exist only where the court is satisfied that parties who
purports to raise the dispute have in their affidavits
seriously and
unambiguous addressed the disputed facts. A bare denial may meet the
requirement if there is no other option. But
it may not be sufficient
if the averment is within the knowledge of the of the averring party
and a basis is not set for disputing
the veracity or accuracy of the
averment.”
13.
The
prevailing principles, in the assessment of a Respondent’s
defence, were summarised in the matter of
Ter
Beeck v United Resources CC and Another
[3]
,
where
the court stated the following: “
In
view of the aforementioned dispute between the applicant and the
first respondent, this matter can be decided on a consideration
of
the probabilities only if I am satisfied that there is no real and
genuine dispute of fact; that the first respondent’s
allegation is so farfetched or untenable that their rejection
merely on the papers is warranted; or that viva voce evidence
will not disturb the probabilities appearing from the affidavits.
Although it is undesirable to endeavour to resolve disputes of
fact
on affidavit without the hearing of evidence and seeing and hearing
witnesses before coming to a conclusion it is equally
undesirable to
accept disputes of fact at their face value, because if that were
done an applicant could be frustrated by the raising
of fictitious
issues of fact by a respondent. Accordingly, a court should in every
case critically examine the alleged issues of
fact in order to
determine whether in truth there is a dispute of fact that cannot be
satisfactorily determined without the aid
of oral evidence.”
14.
The
aforementioned principles were more recently further enunciated in
the anonymous judgment of the Supreme Court of Appeal in
PMG
Motors Kyalami (Pty) Ltd and Another v First Rand Bank Ltd, Wesbank
Division
[4]
.
when
the Honourable Court stated that: “
This
court has held that a real and genuine and bona fide dispute of fact
can only exist where the court is satisfied that the party
who
purports to raise the dispute has in his affidavit seriously and
unambiguously addressed the fact so to be disputed. It has
also held
that where a version consists of bald or uncreditworthy denials,
raises fictitious disputes of fact, is palpably implausible,
farfetched or … clearly untenable. The court is justified
in rejecting it merely on the papers.”
15.
The applicant submits that
in casu
, the court has to dismiss
the Respondent’s defences out of hand. If regard is had to the
principles mentioned above, it becomes
evident that the Respondent’s
defences simply do not pass muster and they fall to be rejected.
THE
RESPONDENT’S FACTUAL INSOLVENCY.
16.
The Applicant submits that actual insolvency denotes that a debtor’s
liabilities actually
exceed the value of his assets. It contends that
it is evident from the Respondent’s own estimation of its debts
that it
is most likely that its liabilities indeed exceed his assets.
Applicant submits that the Respondent did not properly quantify the
liabilities in its answering affidavit and that this is an attempt to
mislead the Court and to try and make his balance sheet or
current
financial outlook better than what it is in reality.
17.
In the case of
Ex parte Fouché,
it was held that it is
only when it is established that it is improbable that the debtor’s
assets will realise sufficient
proceeds to settle the amount of his
debts in full that it can truly be said that the Court ought to be
satisfied that the estate
of the debtor is insolvent.
18.
In his answering Affidavit, at paragraph 66.4, the Applicant submits
that the value of the Respondent’s
household furniture is about
R 500 000.00. It contends that this demonstrates that the Respondent
does not have sufficient assets
to satisfy his debts. It contends
therefore that it cannot be disputed that the Respondent is in fact
hopelessly insolvent.
19.
The
dicta of Innes CJ and in the case of De Waard v Andrew &
Thienhaus Ltd
[5]
remains
appropriate where he stated the following: “
The
Court has a large discretion in regard to making the rule absolute;
and in exercising that discretion the condition of
a man’s
assets and his general financial position will be important elements
to be considered. Speaking for myself I always
look with great
suspicion upon, and examine very narrowly, the position of a debtor
who says, “I am sorry that I cannot pay
my creditor, but my
assets far exceed my liabilities.”
1956 (2) SA 116
(O) at 326 F-G. To my mind the best proof of solvency
is that a man should pay his debts; and therefore I always
examine in
a critical spirit the case of a man who does not pay what
he owes.” The dicta of Innes CJ quoted supra were made in the
context
of liquidation proceedings, but Applicant submit that the
Respondent’s conduct and allegations are subject to similar
suspicions.
ADVANTAGE TO CREDITORS.
20.
Despite the Respondent’s allegation that it would not be
necessary for him to deal with
the aspect of advantage for creditors,
the Applicant submits that:
20.1.
The appointment of trustees who will invoke the machinery of the
Insolvency Act will reasonably unearth or recover assets
which will
yield a possible pecuniary benefit to creditors.
20.2.
Applicant is the owner of immovable property, which if sold will hold
some advantage to the creditors of the Respondent.
21.
The Applicant argues that, should Respondent’s estate be
sequestrated, his appointed trustees
will be in a position to
properly investigate any disposal of his assets they shall be able to
reclaim such assets and conduct
a disposition as intended in the
Insolvency Act. It also submits that in line with the quoted
authorities, it is not open to the
Respondent to deny the contents of
the founding affidavit without meaningfully and unambiguously
engaging with the evidence presented.
22.
It is trite that there is a duty upon the Respondent to go beyond the
mere formulation of disputes.
The respondent has to disclose the
grounds upon which he disputes the Applicant’s claim. He has
advance the material facts
underlying the disputes he raises.
Applicant charges that the Respondent only advanced a bare denial of
the allegations and this
does not suffice. The Applicant points out
that the Respondent has not provided any factual evidence that it
would not be to the
advantage of his creditors if his estate were to
be sequestrated.
23.
Applicant
submits that the creditors whose advantage is envisaged are all the
same collective body of creditors of the estate. In
the case of
Meskin
& Co v Friedman
[6]
,
Roper J held that: “
In
my opinion, the facts put before the Court must satisfy it that there
is a reasonable prospect – not necessarily a likelihood,
but a
prospect which is not too remote – that some pecuniary benefit
will result to creditors. It is not necessary to prove
that the
insolvent has any assets. Even if there are none at all, but there
are reasons for thinking that as a result of inquiry
under the
[Insolvency] Act, some may be Chairperson, Independent Electoral
Commission v Die Krans Ontspanningsoord (Edms) Bpk
[7]
,
1948 (2) SA 555
(W) at 559 revealed or recovered for the benefit of
creditors that is sufficient.”
24.
In
the case of
Stratford
and Others v Investec Bank Ltd and Others
[8]
,
the Constitutional Court held that: “
The
correct approach in evaluating advantage to creditors is for a Court
to exercise its discretion guided by the dicta outlined
in Friedman.
For example, it is up to a Court to assess whether the sequestration
will result in some payment to the creditors
as a body; that
there is a substantial estate from which the creditors cannot get
payment except through sequestration;
or that some pecuniary
benefit will be renowned to the creditors.”
ADVANTAGE
TO CREDITORS.
25.
The
phrase “advantage to creditors” refers to means that
there should be a reasonable prospect of some pecuniary benefit
to
the general body of creditors as a whole and that this requirement is
considered to be fulfilled where it was established that
there was
reason to believe that there will be advantage to a “substantial
portion” or the majority of the creditors
reckoned by value.
The Applicant submits that in the present circumstances it would be
to the advantage of the majority of creditors,
reckoned by value, if
the Respondent’s estate is sequestrated.
2015 (3) SA 1
(CC) at
19E-G. See:
Body
Corporate of Empire Gardens v Sithole and Another
[9]
,
and the authorities cited therein.
26.
The applicant submits that the defences advanced by the Respondent
notwithstanding; it has established
a proper case for an order to be
granted which provides for the provisional sequestration of the
Respondent’s estate.
STATUTORY REQUIREMENTS FOR AN ORDER
TOWARD THE CORPORATION.
27.
Section 9 of the Insolvency Act 24 of 1936, (“the Act”),
provides the following:
Section
9 Petition for sequestration of estate.
(1).
A creditor (or his agent) who has a liquidated claim for not less
than (R100), or two or more creditors (or their agent) who in the
aggregate have liquidated claims for not less than (R200) against a
debtor who has committed an act of insolvency, or is insolvent,
may
petition the court for the sequestration of the estate of the debtor.
(2).
A liquidated claim which has accrued but which is not yet due on the
date of hearing of the petition, shall be reckoned as
a liquidated
claim for the purposes of subsection (1).
(3).(a).
Such a petition shall, subject to the provisions of paragraphs (c),
contain the following information, namely –
(i).
the full names and date of birth of the debtor and, if an identity
number has been assigned to him, his identity number;
(ii).
the marital status of the debtor and, if he is married, the full
names and date of birth of his spouse and, if an identity
number
has been assigned to his spouse, the identity number of such spouse;
(iii).
the amount, cause and nature of the claim in question;
(iv).
whether the claim is or is not secured and, if it is, the nature and
value of the security; and
(v).
the debtor’s act of insolvency upon which the petition is based
or otherwise alleged that the debtor is in fact
insolvent.
(b).
The facts stated in the petition shall be confirmed by affidavit and
the petition shall be accompanied by a certificate of
the Master
given not more than ten days before the date of such petition
that sufficient security has been given for the
payment of all fees
and charges necessary for the prosecution of all sequestration
proceedings and of all costs of administering
the estate until a
trustee has been appointed, or if no trustee is appointed, of all
fees and charges necessary for the discharge
of the estate from
sequestration.
(c).
The particulars contemplated in paragraph (a)(i) and (ii) shall be
set out in the heading to the petition, and if the creditor
is unable
to set out all such particulars he shall state the reason why
he is unable to do so.
(d).
In issuing a sequestration order the registrar shall reflect any of
the said particulars that appear in the heading to the
petition on
such order.
(4).
…
(4A)
.
(a)
.
When a petition is presented to the court, the petitioner must
furnish a copy of the petition-
(i).
to every registered trade union that, as far as the petitioner can
reasonably ascertain, represents any of the debtor's employees;
and
(ii).
To the employees themselves-
(aa).
by affixing a copy of the petition to any notice board to which the
petitioner and the employees have access inside the debtor's
premises; or
(bb).
if there is no access to the premises by the petitioner and the
employees, by affixing a copy of the petition to the
front gate of
the premises, where applicable, failing which to the front door of
the premises from which the debtor conducted any
business at the time
of the presentation of the petition;
(iii)
.
to the South African Revenue Service; and
(iv)
.
to the debtor, unless the court, at its discretion, dispenses with
the furnishing of a copy where the court is satisfied that
it would
be in the interest of the debtor or of the creditors to
dispense with it.
(b)
.
The petitioner must, before or during the hearing, file an affidavit
by the person who furnished a copy of the petition which
sets out
the manner in which paragraph (a) was complied with.
(5).
The court, on consideration of the petition, the Master's or
the said officer's report thereon and of any further affidavit
which the petitioning creditor may have submitted in answer to that
report,
may
act in terms of section ten or
may
dismiss the petition, or postpone its
hearing or make such other order in the matter as in the
circumstances appears to be just.
28.
The respondent avers that Applicant failed to comply with the
requirements of section 9(3)(a)
of the Act. It states that the
application does not contain his date of birth or his marital status;
neither does it reflect his
full names and date of birth of his
spouse, much as it does not reflect the full names and date of birth
and identity number of
his spouse. He states that the Applicant also
failed to comply with the requirements of section 9(3)(c) in that it
failed to state
the reason why it is unable to set out all such
particulars required in terms of section 9(3)(a)(i) and (ii).
29.
Respondent argues therefore that this application falls to be
dismissed with costs for this reason
alone. The onus is upon the
Applicant to satisfy the court at the hearing of the application that
the requirements of section 9(4A)
(a) and (b) of the Act have been
met.
ABUSE
OF SEQUESTRATION PROCEEDINGS.
30.
It
is common cause that the Act does not define ‘liquidated
claim’. In the case of
Kleynhans
v Van Der Westhuizen NO
[10]
it was held that a claim is the amount which has been determined by
agreement, order of court or otherwise. The Respondent disputes
that
the applicant has a liquidated claim against him in the form of a
verbal loan agreement.
31.
The
Respondent points out that sequestration proceedings are not designed
for resolution of disputes regarding the existence of
the debt or
otherwise. If the claim is disputed on
bona
fide
and reasonable grounds, an order ought not to be granted. Such an
application may amount to an abuse of the process of court.
[11]
It is an abuse of process to use sequestration proceedings to enforce
payment of a debt, the existence of which is disputed
bona
fide
by the debtor on reasonable grounds, (the onus being on the debtor to
establish such a dispute),
[12]
where the sole or predominant notable purpose of the application is
something other than the
bona
fide
bringing about of the sequestration of the debtor’s estate for
its own sake, but for some ulterior motive.
[13]
32.
Where
there is a genuine and
bona
fide
dispute regarding the respondent’s indebtedness to the
applicant the court should as a general rule dismiss the application.
The Constitutional Court recently reaffirmed this principle in
Trinity
Asset Management (Pty) Ltd v Grindstone Investments 132 (Pty)
Ltd
[14]
,
at paragraph [27], [86] and [145] which state as follows (footnotes
omitted):
“
[27].
As regards liquidation, there is a general principle that, where
there is a genuine and bona fide dispute concerning the respondent’s
indebtedness to the applicant, the application for liquidation should
be dismissed (Badenhorst principle). This principle acknowledges
that
liquidation proceedings are not the proper realm to determine debts,
and that the proceedings should not be abused in an attempt
To
enforce repayment.
[86].
…I also agree that the Badenhorst principle does not obstruct
a determination of the pointed issue here. That
principle is less of
a principle than a sensible rule of practice. It says that if you
want to claim a debt you know is disputed,
you should not bring
liquidated proceedings to do it. You should claim the debt by way of
action – and only once your claim
has been established may you,
if necessary, seek to liquidate or sequestrate.
[145].
Liquidation proceedings are designed to bring about a concurrence of
creditors to ensure an equal distribution of the insolvent
estate
between them, and are inappropriate to resolve a dispute as to the
existence of a debt. In order to prevent the possible
abuse of the
liquidation process, the rule was developed to the effect that where
there is a genuine and good faith factual
dispute concerning an
alleged insolvent debtor’s indebtedness to a creditor, the
application for provisional liquidation
should normally be dismissed.
APPLICANT’S
ALLEGED LIQUIDATED CLAIM – VERBAL LOAN AGREEMENT.
33.
The
applicant’s alleged liquidated claim is premised upon an
express verbal loan agreement
[15]
entered into between the applicant, duly represented thereto by the
deponent to the applicant’s founding affidavit Mr. Charl
Steenkamp and Mr Jaco Van Heerden, and the Respondent acting in
person.
[16]
34.
The
date and place of the verbal loan agreement are not stated by the
applicant.
[17]
A party relying
on a claim based on a loan agreement must allege and prove:
(a).
the loan agreement;
(b). that money was advanced under the
agreement; and
(c). the loan is repayable.
35.
The applicant asserts that the terms of the verbal loan agreement
were
inter alia
as follows:
35.1.
The applicant would borrow to the respondent, who in turn would
lend from the applicant, such amounts as were necessary to keep the
applicant operational for a period of six months.
35.2.
The respondent was to pay all amounts back once he broke even,
alternatively within a reasonable time.
36.
These
terms are in stark contrast and inconsistent with the following
preceding assertion by Steenkamp in his founding affidavit
[18]
:
36.1.
Realising that the respondent has taken a financial hit due to the
fact that he lost the majority of his client base, the applicant
offered to loan amounts to the respondent, until the respondent once
again established a client base, which loan offer the respondent
accepted (“the loan”).
37.
It is apparent from the foregoing that the applicant seeks to rely on
an express verbal loan agreement
as the basis for its liquidated
claim against the Respondent. It is further apparent from the
foregoing that the express terms
in regard to repayment of the loan
relied upon by the applicant are contradictory in that the Applicant
asserts that it offered
to loan money to the Respondent “
until
the respondent once again established a client base
” –
without any explanation as to what this entails – which the
Respondent would repay “
once he broke even, alternatively
within a reasonable time
”.
38.
In
his There is no allegation by the applicant in the founding affidavit
that the respondent ‘has broken even’ (whatever
‘broke
even’ is intended to mean) or that a reasonable time has lapsed
(whatever a reasonable time would be under the
circumstances)
[19]
which render the loan amount due and payable.
39.
The
applicant avoids dealing with this issue in its replying affidavit by
raising a bold denial coupled with a nebulous assertion
that:
[20]
39.1
.
The time periods for the repayment of the loan, should be seen
within the context within which the loan was advanced to the
respondent, and that it the sole purpose of the loan was to enable to
respondent to set up his business infrastructure in order
to be in a
position whereby he can be self-sufficient and generates income
(sic).
39.2.
Having regard to the fact that the repayment of the loan need be seen
in the broader context of the loan, it is denied that
as the
respondent claims in paragraph 36 that there are mutually
constructive versions in respect of a repayment of the loan
(sic).
40.
The
applicant’s failure (and inability) to deal with the ambiguity
in its founding affidavit with regard to the terms for
repayment of
the loan, and its admission that the word ‘loan’ was
never mentioned on any of the four occasions on which
money was
advanced to the respondent, belies the fallacy of its alleged
liquidated claim, i.e. an express verbal loan agreement.
[21]
A creditor wishing to rely on the lapse of a reasonable time must
establish what that period was.
[22]
The applicant does not address this issue either in its founding
affidavit or in its replying affidavit despite a challenge in
regard
thereto by the respondent.
41.
It
behoves repeating that the Applicant relies on an express verbal loan
agreement in support of its alleged liquidated claim against
the
respondent. The Respondent denies that the word ‘loan’
was ever mentioned on either occasion when money was paid
to him. It
is telling to note that the applicant admits that “
the
word ‘loan’ was never mentioned by any party on each
occasion that the applicant paid money to (the respondent)
”.
[23]
The applicant does not rely on a tacit loan agreement.
[24]
The applicant avoids dealing with this aspect by raising a bare
denial in its replying affidavit.
[25]
The applicant’s reliance on an express verbal loan agreement
with the respondent is accordingly untenable.
IS
THE RESPONDENT IN
MORA
? (IE. DOES THE APPLICANT HAVE A
LIQUIDATED CLAIM AGAINST THE RESPONDENT)?
42.
A
debtor is in
mora
ex re
if
the contract stipulates a time for performance but the debtor fails
to perform within the time limit.
[26]
The Supreme Court of Appeal in
Scoin
Trading (Pty) Ltd v Bernstein NO
[27]
held at paragraph [11] and [12] as follows
[28]
(footnotes omitted):
[11].
The starting point is therefore an examination of the meaning of
mora. The term mora simply means delay or default. This concept
is
employed when the consequences of a failure to perform a
contractual obligation within the agreed time are determined.
The date may be stipulated either expressly or tacitly and there must
be certainty as to when it will arrive. Thus, when the contract
fixes
the time for performance, mora (mora ex re) arises from the contract
itself and no demand (interpallatio) is necessary to
place the debtor
in mora. The fixed time, figuratively, makes the demand that would
otherwise have had to be made by the creditor.
[12].
In contrast, where the contract does not contain an express or tacit
stipulation in regard to the date when performance
is due, a
demand (interpallatio) becomes necessary to put the debtor in mora.
This is referred to as mora ex persona. The
debtor does not
necessarily fall into mora if he or she does not perform
immediately or within a reasonable time. In this
situation mora
arises only upon failure by the debtor to comply with a valid demand
by the creditor. Mora ex persona is so referred
to since it requires
an act of a person (the creditor) to bring it into existence.
43.
The terms of the loan agreement relied upon by the applicant
expressly state that all amounts
loaned to the Respondent would be
repayable “
once the respondent broke even, alternatively
within a reasonable time
”, thereby stipulating the time for
repayment of the full loan amount by the respondent. When the
contract fixes the time
for performance
mora
is said to arise
from the contract itself (
mora ex re
) and no demand
(
interpellatio
) is necessary to place the debtor in
mora
because:
43.1.
Figuratively,
the fixed time makes the demand that would otherwise have to be made
by the creditor.
[29]
44.
This
principle also applies when the contract fixes the time for
performance by reference to the fulfilment of a suspensive condition
or suspensive time clause.
[30]
The Applicant places much score on the Respondent’s
acknowledgement that he was paid an amount of R235 000.00 on 31
August
2018 and a further amount of R200 000.00 on 21 September 2018,
(without any mention of a loan), “
despite
which he (the respondent) intended to repay to the applicant
”.
[31]
45.
This
assertion by the Respondent does not avail the Applicant who relies
on an express verbal agreement between the parties together
with
contradictory terms regarding the repayment of the loan. The
fallaciousness of the verbal loan agreement relied upon by the
applicant is further borne out by the applicant’s admission
that pursuant to the deterioration of the relationship between
the
parties it barred the respondent from returning to his office and
that the applicant retained possession of all the office
furniture
and equipment and fittings.
[32]
The applicant’s bare denial that the payment of the amounts of
R12 636.10 and R17 271.25 to the respondent were reimbursements
for
the purchase of the foresaid office furniture and equipment and
fittings is telling.
[33]
FACTUAL
INSOLVENCY / ACT OF INSOLVENCY.
46.
The
applicant relies on the bold assertion that the Respondent is
factually insolvent.
[34]
The
evidence presented by the Respondent in regard to the approximate
market value of his residential dwelling at R2 800 000.00
with an
outstanding balance of R1 521 441.54
[35]
with equity in an amount of R1 278 558.46 is admitted by the
Respondent.
[36]
It is not
ascertainable from the contents of the Applicant’s founding
affidavit on what basis it is contended that the Respondent
has
committed an act of insolvency.
BONA
FIDE
DISPUTE OF DEBT ON REASONABLE GROUNDS –
BADENHORST
RULE.
47.
The Respondent disputes that he entered into an express verbal loan
agreement with the applicant
or that he is liable for the repayment
of the alleged loan amount in terms thereof. The Respondent has dealt
fully with the circumstances
giving rise to the payment of various
amounts to him by the applicant – none of which were described
as a loan. The ambiguity
regarding the terms of repayment belies the
fallaciousness regarding the existence of an express verbal loan
agreement.
48.
The
principle regarding
bona
fide
disputed debts on reasonable grounds was succinctly captured in the
recent judgment of GAP Merchant Recycling CC v Goal Reach Trading
55
CC
[37]
by Rogers J at
paragraph [20] and [21] as follows:
“
Claim
bona fide disputed on reasonable grounds? The legal test —
disputed claims
[20]. The rule that winding-up proceedings should
not be resorted to as a means of enforcing payment of a debt, the
existence of
which is bona fide disputed on reasonable grounds, is
part of the broader principle that the court's processes should not
be abused.
Liquidation proceedings are not intended as a means of
deciding claims which are genuinely and reasonably disputed. The
rule
is generally known as the 'Badenhorst rule', after one of
the leading cases on the subject, subject, Badenhorst
v
Northern Construction Enterprises (Pty) Ltd
1956
(2) SA 346 (T)
at
347H – 348C. A distinction is thus drawn between factual
disputes relating to the respondent's liability to the applicant
and
disputes relating to the other requirements for liquidation. At the
provisional stage the other requirements must be satisfied
on a
balance of probabilities with reference to the affidavits. In
relation to the respondent's liability, on the other hand, the
question is whether the applicant's claim is disputed on reasonable
and bona fide grounds; a court may reach this conclusion, even
though
on a balance of probabilities (based on the papers) the applicant's
claim has been made out (Payslip Investment Holdings
CC v Y2K
Tec Ltd
[38]
).
However, where the applicant at the provisional stage shows that the
debt prima facie exists, the onus is on the company to show
that it
is bona fide disputed on reasonable grounds (Hülse-Reutter and
Another v HEG Consulting Enterprises (Pty) Ltd (Lane
and Fey NNO
Intervening)
[39]
[21]
There was some debate before me as to how far a respondent need go in
order to discharge the burden of proving that a
debt which is prima
facie due and payable is bona fide disputed on reasonable grounds.
Both parties referred me to statements made
by Thring J
in Hülse-Reutter supra.
It
is desirable that I quote fully what the learned judge said at
219F – 220C
:
“'I think that it is important to bear in mind exactly what it
is that the trustees have to establish in order to resist
this
application with success. Apart from the fact that they dispute the
applicants' claims, 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 they have to satisfy
me of is that the grounds which they advance
for their and their
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 Supreme Court Rule 32(3), a defendant who resists such
an application by 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 therefor. . . . It seems to
me to be sufficient
for the trustees in the present application, as
long as they do so bona fide, and I must emphasise again that their
bona fides
are not here disputed, to allege facts which, if approved
at a trial, would constitute a good defence to the claims made
against
the company. Where such facts are not within their personal
knowledge, it is enough, in my view, for them to set out in the
affidavit
the basis on which they make such allegations of fact,
provided that they do so not baldly, but with adequate particularity.
This
being the case, they may, in my judgment, refer to documents and
to statements made by other persons without annexing to their
affidavits such documents or affidavits deposed to by such
persons, subject of course to the qualifications which I have
mentioned
and, in particular, to the Court being satisfied, as it is
in this case, of their bona fides.”
49.
It bears mentioning that the authorities relied upon by the applicant
in its heads of argument
pertain to the existence of ‘factual
disputes’ in application proceedings which is quite distinct
from the test as
to whether a liquidated claim in insolvency
proceedings is
bona fide
disputed.
CONCLUSION.
50.
The
onus is on the applicant to establish the requisites for the grant of
a provisional sequestration order and the respondent is
not required
to disprove any element. The court is not bound to grant an order for
the sequestration of the respondent’s
estate even if the
requirements therefore have been met. Thus the court in
Chenille
Industries v Vorster
[40]
exercised
its discretion against sequestration, notwithstanding proof of an act
of insolvency (and the existence of a liquidated
claim), where the
debtor furnished independent evidence that his estate was solvent.
51.
The applicant has failed to demonstrate that it has a liquidated
claim against the respondent
in the form of an express verbal loan
agreement and that the full loan amount is due and payable, i.e. that
the respondent is in
mora
in that the agreed time period/s for
repayment of the loan (albeit contradictory) have lapsed and that the
amount of R464 907.35
is payable to the applicant. The applicant
has furthermore failed to demonstrate that the respondent is indeed
factually insolvent
or that the respondent has committed an act of
insolvency.
52.
The
applicant constitutes an abuse of the court process in regard to the
nature of the respondent’s employment and is instigated
by an
ulterior and improper motive which is premised upon a fictitious debt
in the circumstances where the respondent’s estate
is not
insolvent.
[41]
The respondent
will accordingly seek the dismissal of the application with costs on
an attorney and client scale as a mark of this
Honourable Court’s
disapproval of the applicant’s conduct.
53.
In the result, the following order is made:
ORDER.
The
application for the provisional sequestration of the Respondent’s
estate is dismissed with costs.
T.A.
Maumela.
Judge of the High Court of South Africa.
[1]
pg1, notice of motion, prayer 1
and 2; pp8, par 6.1, FA
[2]
.
[2008] ZASCA 6
;
2008
(3) SA 371
(SCA) (10 March 2008).
[3]
.
1997 (3) SA 315
C.
[4]
.
1997 (3) SA 315
(C), at page 336A;
2015 (2) SA 634
(SCA) at 23.
[5]
.
1907 TS 727
, at 733.
[6]
.
1948 (2) SA 555
(W) at 559.
[7]
.
1997
(1) SA 244
(T) at 249F-G.
[8]
.
CCT (62/14)
[2014] ZACC 38
;
2015 (3) BCLR 358
(CC),
2015 (3) SA 1
(CC); (2015) 36 ILJ 583
(CC) (19 December 2014).
[9]
.
2017 (4) SA 161
(SCA) at paragraph 10.
[10]
.
1970 (2) SA 742
(A) at 749F.
[11]
.
Laeveldse Koöperasie Bpk v Joubert
1980 (3) SA 1117
(T) at
1120H; Investec Bank Limited v Lewis
2002 (2) SA 111
(C) at 119C;
Sonnenberg McLoughlin Inc v Spiro
2004 (1) SA 90
(C) at 96C.
[12]
.
Badenhorst v Northern Construction Enterprises Limited
1956 (2) SA
346
(T) at 347-348; Kalil v Decotex (Pty) Ltd
1988 (1) SA 943
(A) at
980
[13]
.
Wackrill v Sandton International Removals (Pty) Ltd
1984 (1) SA 282
(W) at 293E-F
[14]
.
2018 (1) SA 94
(CC).
[15]
.
pp83, par 3.1, RA; pp85, par 6.5, RA; pp87, par 6.17, RA.
[16]
.
pp9, par 7.8 and 7.9, FA.
[17]
.
Ibid.
[18]
.
pp9, par 7.7, FA.
[19]
pp49-50, par 32 to 36, AA
[20]
pp89, par 6.37 and 6.38, RA
[21]
pp49, par 32, 33 and 34, AA
[22]
.
Rustenburg Platinum Mines Limited v Breedt
[1996] ZASCA 143
;
1997 (2) SA 337
(SCA) at
352-353.
[23]
.
pp49, par 30, AA; pp88, par 6.32, RA.
[24]
.
pp50, par 37, AA.
[25]
.
pp90, par 6.39, RA.
[26]
.
Laws v Rutherford
1942 AD 261.
[27]
.
2011 (2) SA 118 (SCA).
[28]
.
MV Snow Crystal Transnet Limited t/a National Ports Authority v
Owner of MV Snow Crystal
[2008] ZASCA 27
;
2008 (4) SA 111
(SCA) at par
[27]
[29]
.
Laws
supra
at 262.
[30]
.
Reping v Dacombe
1994 (3) SA 756E.
[31]
.
pp51, par 43, AA.
[32]
.
pp52, par 48 to 51, AA; pp91, par 6.48.
[33]
.
pp51, par 44, AA; pp52, par 47, AA; pp90, par 6.43, RA; pp90, par
6.46, RA.
[34]
.
pp8, par 6.4, FA; pp11, par 8.5, FA.
[35]
.
pp56, par 65, AA.
[36]
.
pp92, par 6.55, RA.
[37]
.
2016 (1) SA 261 (WCC).
[38]
.
2001
(4) SA 781 (C)
at
783G – I.
[39]
.
1998
(2) SA 208 (C)
at
218D – 219C).
[40]
.
1953 (2) SA 691
(O).
[41]
.
pp44, par 9, 10 and 11, AA.