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[2021] ZAGPPHC 299
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Nedbank Limited v Katompa and Others (29675/20) [2021] ZAGPPHC 299 (12 May 2021)
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Return date as per Order dated 1 June 2021 is set for August 2,
2021
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE
NUMBER: 29675/20
In the matter between:
NEDBANK
LIMITED
Applicant
(REGISTRATION NUMBER:
1951/000009/06)
V
NZEBA TSHIBUMBU
KATOMPA
First Respondent
(IDENTITY NUMBER:
[….])
MWAMBA BERNARD
KATOMPA
Second Respondent
(IDENTITY
NUMBER: [….])
JUDGMENT
BAQWA J
Introduction
[1]
This is an application for the provisional sequestration of the
respondents joint
estate. The respondents have also lodged a counter
application for the setting aside of attachments made by the sheriff
which are
opposed by the applicant.
[2]
The applicant is a bank and the respondents are married in community
of property.
The applicant bases its claim on the fact that the joint
estate is factually insolvent, alternatively that the respondents
have
committed an act of insolvency and that there is reason to
believe that it will be to the advantage of creditors if the joint
estate
is sequestrated.
[3]
The application is being opposed by the respondents who have filed an
answering affidavit
which was responded to by way of a replying
affidavit.
Points in limine
[4]
At the commencement of these proceedings counsel for the respondent,
Mr Cohen, raised
points of law in
limine
which had not been
raised in the Heads of Argument.
[5]
Firstly, he submits that applicant’s Security for payment of
fees and charges
issued by the Master of this Court, submitted as
part of the sequestration application does not comply with the
provisions of Section
9(3) of the Insolvency Act, 2 of 1936 (“The
Act”) in that it has become “stale”. Secondly he
submits that
the
nulla bona
return upon which the applicant
inter alia
relies for the granting of the provisional order
for sequestration of the joint estate is open to challenge as it has
not been served
on the second respondent.
First Point in Limine
[6]
At the request of the Court counsel filed supplementary Heads of
Argument in which
they both refer to
Mars: The Law of Insolvency
in South Africa
, Tenth Edition, Bertelman et al, at paragraph 5.4
on page 127 regarding the first point in
limine
. Paragraph 5.4
reads thus:
“
A
creditor who commences sequestration proceedings against a debtor is
bound to prosecute them at his own expense until a trustee
is
elected, and is guilty of a punishable offence if he allows himself
to be induced by any valuable consideration to refrain from
so doing.
In view of this liability to proceed at his own expense, he must
deposit with the Master security for the payment of
all fees and
charges necessary for the prosecution of all costs of administering
the estate until the election of a trustee, or
if no trustee is
appointed, all fees and charges necessary for the discharge of the
estate from sequestration. A certificate from
the Master, given not
more than 10 days before the date of the application, that he has
done so must be attached to his application.
Such certificate need
not be attached to the application served up on the debtor but must
be produced in court at the hearing of
the application. The date of
the application is the date of signature thereof; the relevant date
is the date of the Notice of Motion,
not the affidavit. The
certificate of the Master may be dated after the application when it
is lodged with the court. It has been
held that failure to comply
with Section 9(3) is a fatal defect and cannot be condoned, see
further paragraph 5.5.4 below in respect
of service of the
application.”
[7]
It is common cause that the Security Bond which is dated 9 July 2020
and signed by
applicant’s attorney, Mr Hamman, was made
available on the morning the application was heard whilst the notice
of motion
had been signed by the attorney on 29 May 2020.
[8]
Evidently, the date of the notice of motion predates the date of the
Security Bond
by a measure of two months which means that the
Security Bond was not furnished within ten days of the date of the
application.
[9]
The requirement of furnishing security is to discourage frivolous or
vexatious proceedings
against solvent persons and to safeguard such
individuals against financial loss where such proceedings are
nevertheless embarked
upon. See
Arnawil Investments v Stamelman
and Another
1972(2) SA 13 (W) at 14.
[10]
The issue of furnishing security in terms of Section 9(3) of the Act
has been the subject of
numerous court decisions. In
De Wet NO
v Mandelie (Edms) Bpk
1983(1) SA 544(T) at 546 (C-E). The
following was said:
“
It
seems to be clear that the certificate need not be attached to the
application when it is signed. Indeed, it need not exist.
(Rennies
Consolidated (Transvaal)(Pty) Ltd v Cooper 1975(1) SA 165(T);
Mafeking Creamery Bpk v Mamba Boerdery (Edms) Bpk; Mafeking
Creamery
Bpk v Van Jaarsveld 1980(2) SA 776(NC) at 780 F.) There is some
controversy, however, as to when, thereafter, the certificate
may be
taken out. At the extreme end of the scale in Franks and Another v
Hairdressers’ Supplies (Pty) Ltd
1934 CPD 92
, in which the
court, dealing with S 113(1) of the 1926 Companies Act, dismissed a
point in limine which was based on the security
certificate having
been filed after the presentation of the petition. Henochsberg (op
cit at 610) cites this case with approval
and goes on to say: “It
is submitted that this is still the position, despite the requirement
that the certificate is to
be issued by the Master not more than ten
days before the application, i.e, that the requirement, although
intended to be adhered
to, is directory, and not a condition
precedent to the court’s granting a winding up order, the
condition precedent being
the actual furnishing of the required
security (the most satisfactory proof of which, however, would be by
way of the Master’s
certificate even though the latter were
furnished at the hearing of the application). It is not required to
be lodged ten days
before the application.”
[11]
The above
dictum
fully addresses the point raised in limine in
the present application. The condition precedent, namely, the
master’s certificate
was furnished at the hearing after being
obtained two months after the lodging of the application. In the
circumstances I find
that there had been proper compliance with the
requirements of Section 9(3) and that the interpretation given to the
section by
counsel on behalf of the respondents is incorrect.
[12]
The conclusion I come to is that the respondents’ first point
in limine
is found wanting both in fact an in law and as such falls to be
dismissed.
Second Point in Limine
[13]
The second point in
limine
is that the
nulla bona
return was not served on the second respondent.
[14]
Section 8(b) of the Act on which the applicant bases its application
describes an act of insolvency
in the following terms:
“
If
a court has given judgment against him and he fails, upon the 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 made
by that officer
that he has not found sufficient disposable property to satisfy the
judgment.”
[15]
Counsel for the respondents bases the second point in limine on the
authority of
Ratilal v Dos Santos
1995(4) SA 117(W) which the
applicant disputes and submits should be distinguished from the facts
of the present case.
[16]
In Ratilal, the applicant who was relying on a
nulla bona
return,
sought and was granted a provisional sequestration order against the
respondent without the service of the application on
the latter. This
fact alone immediately positions the present case on a different
pedestal from Ratilal. In
casu
both respondents oppose this
application with the second respondent also having deposed to an
opposing affidavit.
[17]
The rationale behind the Ratilal decision is to be found at P119 H to
120C of that decision where
the following was said: “
The
problem that has risen in this matter is that a provisional order of
sequestration has been granted without notice to an interested
party.
The practice that allows the grant of such an order without notice
where a nulla bona return is relied upon arose before,
and does not
have regard to the statutory provisions which render it necessary to
serve an application for sequestration of a joint
estate on both
spouses. The logic that appears to be behind the grant of a
provisional sequestration order without service is the
existence of
satisfactory proof in the form of a return of service by a deputy
sheriff, that the respondent, when served with a
writ of execution,
has already intimated that he has no assets with which to satisfy the
judgment. In cases where there are two
respondents and the return of
service reflects that the writ has been served on one of them only,
it does not seem to me to be
appropriate that a provisional
sequestration order which may affect the rights of the other
respondent should automatically be
granted without notice.”
[18]
On a proper reading of the Ratilal judgment, so the applicant
submits, nothing prohibits this
court from granting a provisional
order for sequestration where the application was served on both
parties and where the nature
and content of the application came to
both spouses’ attention before the granting of a provisional
order.
[19]
In this application this court has had regard to the following facts:
Judgment was obtained against
the first respondent based on a deed of
suretyship executed by her in the applicant’s favour on 2 July
2013 and as part of
the Deed of Surety, the first respondent
completed a “Marital Status Declaration” stating that she
is married to the
second respondent in community of property.
[20]
Further, the second respondent also completed a “Marital Status
Declaration” and
he cannot be said to have been unaware that
the first respondent was binding herself and the joint estate as
surety and co-principal
debtor in favour of the applicant.
[21]
Summons was served on the first respondent on 4 November 2015 and the
matter was defended. On
5 September 2019 judgment was granted in
favour of the applicant against the first respondent.
[22]
The judgment having gone unsatisfied, the applicant caused a writ of
execution to be issued against
immovable property on 26 September
2019, and the said warrant was served on the first respondent on 2
October 2019.
[23]
The first respondent was unable to point out assets to the sheriff
(movable or immovable) of
sufficient value to satisfy the judgment
debt as a result of which the sheriff delivered a
nulla bona
return, the accuracy of which the second respondent has not taken
issue with.
[24]
It is not disputed that the second respondent received service of the
writ of Execution as well
as the
nulla bona
return through the
service of the Application for Sequestration to which those documents
were attached. The second respondent does
not take issue with the
validity of the judgment, the nature and amount of the judgment debt,
the content of the writ of execution
or the accuracy of the
nulla
bona
return of service. Absent the contestation of the validity
of these documents, it remains an enigma what the purpose of another
service of the
nulla bona
on the second respondent would
achieve.
[25]
Counsel for the applicant, Ms Schoeman, submits, and I accept that
the respondents are not only
being overly technical but also engaging
in stratagems and shenanigans to delay an inevitable sequestration
day.
[26]
In light of all the above, I come to the conclusion that the second
point in limine is not sustainable
and falls to be dismissed.
Background
[27]
The applicants’ claim arises from a written agreement entered
into on 31 May 2013 in terms
of which the applicant granted borrower
facilities to a close corporation known as Belfry Trading CC (“Belfry
Trading”)
of which the first respondent was a sole member.
[28]
All conditions precedent the banking facilities agreement were
fulfilled and the applicant lent
and advanced monies to Belfry
Trading through the said overdraft facilities.
[29]
Additionally to the aforesaid agreement the parties concluded a
further written agreement on
8 August 2013. In terms of the Term Loan
Agreement the applicant and Belfry Trading agreed that the applicant
would lend and advance
to Belfry Trading an amount of R 9 200 000.00
which Belfry Trading would repay together with interest, charges and
fees
which would be debited to its account in terms of the Term Loan
Agreement, in four instalments of R188 515.49 each.
[30]
The applicant complied with its obligations in terms of both
agreements referred to above but
Belfry Trading failed to comply with
its obligations in terms of the agreements resulting in the
outstanding amounts becoming due
and payable by Belfry Trading.
[31]
Belfry applied for Business Rescue resulting in a business rescue
plan in which the indebtedness
to the applicant as at 19 January 2015
was admitted.
[32]
On 2 July 2013 the first respondent bound herself as surety and
co-principal debtor with Belfry
Trading towards the applicant for the
repayment of all the amounts owed by the corporation to the applicant
in an unlimited amount.
[33]
Resultantly, the first respondent and the joint estate of the parties
became liable to the applicant
for the indebtedness of Belfry Trading
as a result of which summons was issued on 4 November 2015 and served
on the first respondent.
[34]
The first respondent defended the action on 22 June 2017. The case
was adjudicated by this court
on 5 September 2019 and judgment was
granted in favour of the applicant for payment of R235 519.08;
R388 435.45; R8 232 194.41
together with interest and
costs.
[35]
The said judgment has remained unsatisfied as a result of which a
warrant of execution was issued
by this court on 26 September 2019.
The warrant was for a total amount of R8 911 515.25.
[36]
On 2 October 2019 the sheriff served the warrant upon the first
respondent who declared to the
sheriff that she had no money,
property or assets with which to satisfy the warrant. Neither could
the sheriff locate any disposable
assets, movable or immovable, with
which to satisfy the judgment, debt. The sheriff’s return was a
nulla bona
return.
[37]
The first respondent’s action constituted an act of insolvency
as defined in the
Insolvency Act on
which the applicant bases these
proceedings for the sequestration of the joint estate.
[38]
It was established that the respondents are the registered owners of
two immovable properties
as a result of which warrants of execution
and notices of attachment were served upon the respondents. Despite
such service the
judgment debt remains unsatisfied.
Applicant’s
claim
[39]
As is evident from the applicant’s replying affidavit an
outstanding amount of R8 911 515.25
is still outstanding by
the respondents to the applicant.
[40]
Regarding the relief sought by the respondents in the counterclaim it
is apparent that they do
not seek to vary, rescind, set aside or
appeal the judgment granted on 19 September 2019. The judgment
constitutes irrefutable
evidence of a debt owed by the respondents to
the applicant. In the circumstances applicant’s
locus standi
to apply for sequestration of the respondent’s joint estate
cannot be disputed.
[41]
It is trite that in order to successfully defend an application for
sequestration the respondents
have to show on a balance of
probability that their indebtedness to the applicant is disputed on
bona fide
and reasonable grounds. See
Kalil v Decotex
(Pty) Ltd
1988(1) SA 943 A at 980 B-D.
[42]
In the opposing affidavits the respondents do not deny the Agreements
of Loan and that the applicant
performed in terms thereof. Neither do
they dispute that they failed to comply with their monthly repayment
obligations. Instead,
they raise a rather spurious defence that the
execution of the warrants of execution against both the movable and
immovable property
of the respondents are a nullity. In the face of
the documents filed and in particular annexure “L”
annexed to the
founding affidavit they claim that no
nulla bona
return from the sheriff is annexed. This statement under oath is
astounding and challenges the credibility of the respondents.
Strangely enough they do not even deal with the content of the return
of service nor do they challenge the accuracy thereof.
Factual Insolvency
[43]
With the challenge on the validity of the
nulla bona
return,
the respondents have failed to disclose any assets available with
which to satisfy the judgment debt. A logical inference
from that act
of insolvency can only be that they are unable to pay their debts.
[44]
It is abundantly clear from the founding affidavit Annexure “O”
that the respondents
have a number of creditors and that
ex facie
that report the first respondent alone has two judgments against
her totalling nearly R1.1 million rands. There is therefore a
reasonable
prospect which is not too remote, that some pecuniary
benefit will result for the creditors. See
Meskin & Company
v Friedman
1948(2) SA 555 W at 559.
Warrants of Execution
– a nullity
[45]
Whilst the respondents allege that the warrant of execution against
immovable property is a nullity,
they do not appear to submit that
the judgment granted in respect of monies owed by them to the
applicant is a nullity or that
it was granted in error. No
application for rescission or setting aside of the relevant order for
payment was made. Neither is
it correct that the warrant against
movable property was granted without passing judicial scrutiny. The
documents filed by the
applicants dispel those allegations.
Counterclaim
[46]
In an affidavit disposed to by the first respondent, the respondents
seek an order “setting
aside the attachments made by the
sheriff being annexures “K””L””M””N”
to the founding
affidavit at paragraphs 5.10.1 to 5.10.4 respectively
together with costs of suit.
[47]
Strangely enough the respondents do not seek the variation,
rescission or setting aside of the
judgment upon which the
nulla
bona
was based. Yet it is stated: “the basis to set aside
the warrant of execution is that no judicial supervision was obtained
by the applicant to execute against the movable property” and
further that: “the entire application for sequestration
is
predicated upon a
nulla bona
return which includes, legally
and by definition immovable property.”
[48]
What is confusing about the relief sought by the respondents is that
it is brought in the face
of a valid court order for the payment of
monies lent and advanced by the applicant to the respondents. That
judgment has neither
been satisfied, varied, rescinded or set aside.
It is not clear under what statutory provision Rule or principle of
common law
the counterclaim is brought. In the circumstances I am
compelled to accept the submission by the applicant that the relief
sought
by the respondents is ill-considered, bad in law and incapable
of being granted. There is neither a statutory provision, common
law
nor rule of this court that would justify the granting thereof.
ORDER
[49]
In the result, I make the following order:
49.1 The points
in
limine
raised by the Respondents are dismissed, with costs;
49.2 The
Respondents’ Counter Application is dismissed, with costs;
49.3 The
Respondents’ joint estate is placed under provisional
sequestration in the hands of the Master of the High
Court returnable
on
31
May 2021
to the unopposed motion court roll;
49.4
The Respondents, and all other interested parties, are called upon to
show cause, if any, why a final order
for the sequestration of the
Respondents’ joint estate should not be granted on the return
date mentioned in paragraph 49.3
above;
49.5
This order be served upon the Respondents at the residential address
by Sheriff, and that service on the
one Respondent shall be regarded
as proper service on the other;
49.6
This order be served upon the Master of the High Court and the South
African Revenue Services by way of filling
notice, by hand;
49.7
The Sheriff serving this order upon the Respondents is to enquire if
the Respondents have any employees in
their service. If so the
Sheriff is to serve a copy of this order on the employees of the
Respondents;
49.8
This order is to be published as follows:
a)
By publication in 1
(ONE) edition of Citizen Newspaper;
b)
By 1 (ONE) publication
in the Government Gazette.
49.9
The costs of this application shall be costs in the administration of
the insolvent joint estate
SELBY BAQWA
JUDGE OF THE HIGH
COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
Appearances
For the Applicant:
Adv AJ Schoeman
Instructed
by:
Snyman De Jager Attorneys
For the
Respondents: Mr SS
Cohen
Instructed
by:
Messrs Thomson Wilks Ink