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[2019] ZALMPPHC 58
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Augostine v Haywood N.O and Others (3635/2018) [2019] ZALMPPHC 58 (6 December 2019)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
(LIMPOPO
DIVISION, POLOKWANE)
(1)
REPORTABLE:
YES/
NO
(2)
OF
INTEREST TO THE JUDGES: YES/
NO
(3)
REVISED.
CASE
NO: 3635/2018
6/12/2019
In the matter between:
CORNELIA ALETTA
AUGOSTINE
APPLICANT
and
MARY HAYWOOD
N.O
FIRST
RESPONDENT
RENEE BERNICE BAILEY
N.O
SECOND RESPONDENT
[In their capacities as
the joint trustees in the Insolvent Estate
of Martin Riaan
Augostine]
[Master’s Reference
Number: T2702/16]
THE MASTER OF THE HIGH
COURT, PRETORIA
THIRD RESPONDENT
JUDGMENT
MAKGOBA
JP
[1]
In this matter the Applicant has launched an application in terms of
the provisions of section
21(4) of the Insolvency Act 24 of 1936
(“the Act”) wherein she claims the following relief in
her Notice of Motion:
1.
That the First and Second Respondents be ordered to release the
following property to the
Applicant pursuant to the provisions of
Section 21
of the
Insolvency Act, No. 24 of 1936
:
1.1.
Erf 1010 Groblersdal, Extension 22, held under Deed of Title
R52213/2012;
1.2.
Erf 47 Groblersdal, held under Deed of Title T9325/2013;
and
1.3.
The movable assets attached by the Sheriff of the High Court as
listed in the inventory attachment report
of the said Sheriff under
T2707/16 at Groblersdal on 7 December 2016.
2.
That the Applicant be declared the rightful owner with title against
all creditors of the
insolvent estate of Martin Riaan Augostine of
the following property:
2.1.
Erf 1010 Groblersdal, Extention 22, held under Deed of Title
R52213/2012; and
2.2.
Erf 47 Groblersdal, held under Deed of Title T9325/2013.
3.
That the costs of this application be costs in the insolvent estate
of the Respondent.
[2]
Section 21(1) of the Insolvency Act 24 of 1936 (“the Act”)
provides that upon the
sequestration of the separate estate of a
spouse (“the insolvent”) all the property of the other
spouse (“the
solvent spouse”) vests in the Master and
thereafter in the trustee. The insolvent in this case is Martin Riaan
Augostine
whose estate was finally sequestrated on 12 December 2016
is the Applicant’s husband. The solvent spouse, to whom I shall
refer as “the Applicant” is Cornelia Aletta Augostine.
Her application is based on section 21(2) of the Act, which
provides
that the trustee shall release any property of the solvent spouse
which is proved by that spouse to have been acquired
during the
marriage by a title valid as against the creditors of the insolvent.
[3]
In essence, the Applicant seeks an order for the release of certain
immovable and movable property
pursuant to the provisions of section
21 of the Act and further, for declaratory relief to the effect that
the Applicant is the
rightful owner with title against all creditors
of the insolvent estate of Martin Riaan Augostine.
The
Applicant seeks also an order for the release of movable assets
attached by the Sheriff.
[4]
The purpose of section 21 of the Act is to prevent or at least to
hamper collusion between spouses
to the detriment of creditors of the
insolvent spouse, and viewed from the other angle, to ensure that
property which properly
belong to the insolvent ends up in the
estate.
See
De Villiers NO v Delta Cables (Pty) Ltd 1992(1) SA 9 (A) at 131;
and
Harksen
v Lane NO and Others
[1997] ZACC 12
;
1998 (1) SA 300
(CC) at 318E
.
[5]
The Applicant is married to Martin Riaan Augostine (“the
insolvent”) out of community
of property. The insolvent was
previously a practicing attorney and was struck from the roll of
attorneys consequent upon trust
money shortages in his trust account.
The insolvent was finally sequestrated on 12 December 2016 and the
First and Second Respondents
(“the trustees) were appointed as
the joint trustees of the insolvent estate.
[6]
The trustees obtained a warrant as contemplated by the provisions of
section 69(3) of the Act
and compiled an inventory of the assets
believed to belong to the insolvent estate. Subsequently, the
Applicant presented an affidavit
for the release of the assets which
the trustees claimed, and alleged to be the rightful owner and
rightful title holder to the
immovable properties that form the
subject matter of this application, as well as the movable assets
situated at such immovable
property. An insolvency enquiry ensued
during August 2018 and the Applicant as well as the insolvent were
subpoenaed to testify
at the enquiry. A certified copy of the enquiry
Report is attached to the Respondents’ answering affidavit.
[7]
The Applicant relies on the provision of sub-sections 21(2)(c) and
21(2)(e) of the Act for the
relief claimed. In order to succeed in
terms of these subsections, the Applicant must prove:
7.1.
that the property sought to be released have been acquired by the
Applicant during the marriage with the
insolvent by a title valid as
against creditors of the insolvent
[1]
, or
7.2
that the property sought to be released have been acquired with any
such property or with the income
or proceeds thereof
[2]
.
[8]
The Applicant bears the onus of proving her entitlement to the
release of the property and the
Applicant must prove the true
transaction and that it is one which may confer a valid title. In the
decision of
Beddy N.O v van der Westhuizen
1999 (3) SA 913
(SCA)
the Supreme Court of Appeal held as follows:
“
As
far as onus is concerned s 21(2) expressly places the onus on the
solvent spouse, and I do not think that the onus is discharged
simply
by pointing to the ostensible transaction (in this case the sale) and
saying to the trustee: “it is now your turn
to do your worst
with it”. The onus is on the solvent spouse to prove the true
transaction and that it is a valid one which
as may confer a valid
title. Validity usually closely related to the parties’
knowledge of the alienator’s actual or
imminent
insolvency
[3]
.”
[9]
I proceed to set out hereunder the version of the Applicant. To do
justice to the Applicant, I
reproduce verbatim the contents of
paragraphs 47 to 67 of her founding affidavit.
The
contents of the affidavit read as follows:
“
47.
We
jointly applied for a bond which was in time approved, consequently
upon which the immovable property (our common home) was purchased
with the proceeds of the said loan. These properties that we owned
from time to time constituted our family home for the time being,
where both ourselves and our children resided, and were registered
either solely in my name, and previous property in the names
of the
insolvent and I, jointly.
48.
My
monthly income throughout, was deposited into our joint private
account, from which account our monthly bond installments and
other
private expenses were paid without exception.
49.
I
have been advised that for purposes hereof, it is not necessary to
deal with the financial detail of all the properties that I
had owned
since we were married and had sold and transferred by the date of the
sequestration of my husband’s estate.
50.
I
do however vividly recall that the first property that we acquired
was in 1996. We occupied this property for approximately 3
½
(THREE AND A HALF), to 4 (FOUR) years, whereafter this property too
was sold.
51
The
next property we purchased, approximately in the year 2000, was
occupied by our family for 4 (FOUR) years. The property was
again
sold.
52.
In
approximately 2004/5, we again purchased a property in Groblersdal
and stayed there for 11 (ELEVEN) years. The property was again
sold.
53.
When
we sold the last house aforesaid, we acquired a stand in Welgevonden
Estate. It was registered in both our names. We sold that
stand and
acquired Stand 1010, Groblersdal Ext 22 (also situated in the
Welgevonden development), which property has always been,
and still
is, registered in my name only.
54.
When
we acquired the property in Welgevonden, described as Stand 1010,
Groblersdal, Ext 22, I applied the accumulated profit which
accrued
over the years, since the first property was acquired and sold, to
in-part pay for the stand and improvements thereon
55.
In
order to supplement the initial shortfall on the purchase price of
this property I applied for a bond at Standard Bank who granted
further funding in the amount of +- R600 000.00 and was also
assisted financially by my mother, Anna Elizabeth Nel, in order
to
erect the buildings and improvements on the property as it is today.
I attach her affidavit hereto marked Annexure “
CAA2”
which affidavit accompanied my affidavit for release which I
submitted to the First Respondent.
56.
I
cannot with any measure of certainty recall the exact amount spent in
respect of the building activities from memory.
57.
I
do however recall appropriating the combined proceeds of the Standard
Bank Loan, the advances received from my mother from time
to time,
the proceeds the first stand that we own jointly in Welgevonden and
rental income from my other property, towards erecting
the dwelling
and other improvements on the stand.
58.
If
necessary and possible, and if required thereto, I will provide this
Honourable Court with greater detail in this regard.
59.
I
attach hereto in the interim as
Annexure
“CAA9”
,
a deed search conducted in the records of the Registrar of Deeds,
Limpopo, confirming my registered ownership of the immovable
property, referred to above. The details of the bond registered over
the property is evident from the deed search.
60.
I
respectfully refer the Honourable Court to the Windeed search
confirming the title particulars of the property referred to above,
as was purchased on 31 January 2012 and registered in my name on 19
July 2012.
61.
I
am also the registered owner of a property known as Portion 1 of Erf
47, Groblersdal. I attach hereto as
Annexure
“CAA10”
a copy of a Windeed search confirming that I have been the sole
registered owner of this property since date of registration thereof,
being 5 September 2013.
62.
I
explain the history of this property as follows:-
63.
Approximately
15 years ago, my husband, who at that stage was a practicing attorney
in Groblersdal, decided that it would make sound
financial sense for
us to invest in a number of immovable properties.
64.
At
that stage we acquired two immovable properties, being Portion 1 of
Erf 47, Groblersdal referred to above, as well as another
property
situated at the address known as 23 Grobler Avenue, Groblersdal. The
Deeds Office description and Deed of Transfer Number,
is
unfortunately not known to me.
65.
Portion
1 of Erf 47, Groblersdal was situated at 14 Grobler Avenue,
Groblersdal.
66.
My
husband thought it best to register this property in our names
jointly, as a result of which we became the registered owner of
an
individual half-share in the aforementioned immovable property.
67.
The
other property situated in Grobler Avenue, was registered solely in
my name and was acquired with financial support of a financial
institution who secured the debt with a bond.”
[10]
It is of particular importance to note the contents of
the Applicant’s affidavit where she states “
I have
been advised that for purposes hereof, it is not necessary to deal
with the financial detail of all the properties that I
had owned
since we were married and had sold and transferred by the date of the
sequestration of my husband’s estate”
.
This
is where the Applicant, unfortunately, missed the point, for the onus
is upon her to come out with evidence to prove that she
is entitled
to the release of the properties from the insolvent estate.
Furthermore in paragraph 56 of her affidavit she states
that “
I
cannot with any measure of certainty recall the exact amount spent in
respect of the building activities from memory
”.
Lastly, in paragraph 58 she states that “
if
necessary and possible, and if required thereto, she will provide
this Court with greater detail in this regard
”.
With
respect, I am astonished by the above statement because it is only in
the founding affidavit that it was expected of the Applicant
to
provide those greater details.
[11]
Ms Lottering, Counsel for the Respondents submitted that the founding
affidavit as a whole is lacking, evasive
and unpersuasive. She
furthermore submitted that the Applicant’s allegations are
shrouded in mystery and not at all capable
of objective demonstration
and proof. I agree.
The
evidence presented by the Applicant in the present case warrants the
same, if not more, criticism as expressed by the SCA in
Beddy
N.O v van der Westhuizen
[4]
where Schultz JA said:
“
When
the evidence is considered one is struck by the generality of much of
what is presented by the wife on important matters and
by the paucity
and patchiness of documentary support. It was not that she was not
forewarned. The trustee warned her at an early
stage that her duty
entailed that she had to be presented with sufficient evidence before
she could release assets. In her answering
affidavit the trustee
raised pertinently those things that troubled her and which in her
opinion required explanation. Yet in her
reply the wife went so far
as to say that she had already largely dealt with the real points of
dispute in her founding affidavit.
Although she did attempt to deal
with some of the points raised in the answer, her tendency was to be
dismissive and not face up
to them squarely. Perhaps that was because
it was not possible for her to do so.”
[12]
On the basis of what she has stated in her founding affidavit the
Applicant has failed to provide supporting
documents to sustain the
claim of ownership of the immovable property. No or insufficient
evidence of actual payments for the acquisition
of immovable property
is provided and the scarcity of information is accordingly telling.
One would expect from the Applicant to
set out fully and truthfully
the manner in which the immovable properties were acquired and how
they were dealt with.
[13]
In paragraphs 48 – 58 of the founding affidavit the Applicant
deals with the properties allegedly acquired
and subsequently sold by
her and the insolvent prior to acquisition of Erf 1010 which is
registered in her name.
In
this regard one is struck by the generality thereof and the absence
of details regarding purchase dates, purchase prices, method
of
acquisition, mortgage bond particulars and proof of payments. No
documentary evidence whatsoever is appended to corroborate
the
general and vague assertion that the “accumulated profit
accrued over the years” in respect of the other immovable
properties that had been utilised to “pay for the stand and the
improvements thereon”
[5]
.
The
Applicant merely states that “greater details” would be
provided to the Court “if necessary”. It is
not known at
what stage envisaged by the Applicant will this Court be furnished
with such greater details.
[14]
The scarcity of the information furnished in the founding affidavit,
the generality of the statements made
and the absence of details is
equally striking in respect of the transactions concerning Erf 47.
I
Accordingly make a finding that the Applicant has failed to present
any evidence at all of entitlement to ownership and / or title
to the
immovable properties as contemplated by section 21(2)(c) and 21(2)(e)
of the Act.
[15]
On the evidence before me it is clear that in this case the insolvent
husband’s money had been used
to acquire the immovable
properties and caused the properties to be registered in the wife’s
name.
In
the decision of
Kilburn
v Estate Kilburn
[6]
the
Court found that “
the
money was the husband’s money and he caused the land to be
registered in his wife’s name with the deliberate intention
of
defeating the rights of creditors. It is a well-known principle of
our law that Courts of law will not be deceived by the form
of a
transaction: it will rend aside the veil in which the transaction is
wrapped and examine its true nature and substance
”.
[16]
The Applicant seeks also an order for the release of movable assets
attached by the Sheriff. Such attached
movable assets are the
household furniture and effects including household appliances found
in one of the immovable properties
which is the primary residence of
the Applicant’s family. The question that arises is whether
these movable properties should
be released to the solvent spouse
(Applicant) provided of course that the Applicant proved a valid
title as against the creditors
of the insolvent.
In
this instance the Applicant must show and prove that the property was
paid for with her own money.
[17]
The Applicant and the insolvent were married to each other out of
community of property on 10 April 1993.
When the insolvent was
sequestrated in December 2016 the parties had been married for 23
years.
The
Applicant matriculated in 1985, qualified as a teacher and obtained
BA Education degree and thereafter obtained an Honours Degree.
She
has been gainfully employed for the whole of her adult life. She has
been earning a fixed income throughout the subsistence
of her
marriage to the insolvent. As a teacher, the Applicant qualified for
a housing subsidy from the Department of Education
and at one stage
of their marriage the Applicant and the insolvent jointly owned
property utilising this subsidy. The Applicant’s
monthly income
was deposited into a joint private account from which account the
monthly bond instalments and other household expenses
were paid
without exception.
[18]
In paragraph 94 of her founding affidavit the Applicant states:
“
Throughout
our marriage, and irrespective of who make payment towards the
household items, it was our arrangement that I would become
the owner
of the household furniture, equipments and the other separate
household items”
Regarding
her jewelry, the Applicant stated in paragraph 96 of the affidavit
that throughout her marriage, she from time to time
acquired jewelry,
either from her husband as a gift, or by purchasing it herself with
her very own means.
[19]
It is against this backdrop that this Court has to determine whether
the Applicant has acquired the attached
movable assets by a title
valid as against the Creditors of the insolvent.
[20]
In the decision
Harksen
v Lane N.O and Others
[7]
the Constitutional Court in the majority judgment of Goldstone J said
that:
“
[58]
Since
the introduction of s 21 provision in 1926, the position of women in
our society has changed radically and for a number of
years s 21 of
the Act has served a much wider purpose than that referred by
Greenberg JP in the Maudsley case. More and more women
have become
economically active and contribute out of their own income or
investments to the property of a common household. The
consequence is
that nowadays, in the case of honest spouses, who are married out of
community of property, it is not infrequently
a matter of complexity
for the spouses themselves to determine which property in their
possession belonged to each of them; or,
indeed, which is held in
co-ownership because both contributed to the purchase price. Having
regard to the close identity of interests
between many married
couples, they do not always make nice calculations and keep accurate
records of their respective contributions
to property they acquire.
If it is difficult for them to do so, then so much more difficult and
complex is it for a trustee who
comes as a complete stranger to the
financial affairs of the spouses.
The
provisions of section 21 thus assist a trustee in the important
determination of which property in the possession of “spouses”
belongs to the insolvent estate, not only in cases of collusion but
also in the case of honest partners to a marriage or similar
close
relationship. This statutory mechanism is an appropriate and
effective one
.”
[21]
In
Janit
v van den Heever and Another NNO (No1)
[8]
it was held that the trustee of the insolvent estate is not without a
remedy in case he is unable to enforce the provisions of
section 21
of the Act. The trustee can, in an appropriate case, invoke section
26 (dispositions not made for value) section 29
(dispositions having
the effect of preferring one creditor above another creditor which
constitutes voidable preferences) section
30 (dispositions intended
to prefer one creditor above another which constitute undue
preferences) section 31 (dispositions made
in collusion with another
person and having the effect of prejudicing creditors or preferring
one above another).
In
addition, creditors have their common law right to have transactions
made in fraud of their rights set aside (
the
actio Pauliana
).
[22]
The Applicant submits that throughout her marriage, the insolvent
contributed towards the joint household
expenses and she is not in a
position to advise with any degree of certainty the exact amount that
the two of them contributed
towards the joint household. The
Applicant purchased certain furniture, appliance and household
effects from time to time and so
too did she receive and inherit
certain movable items from her parents over the years. I agree with
the Applicant’s submission
that no legal basis exists for the
suggestion by the Respondents that parties who are married to each
other cannot support each
other in the running of the family affairs
and also in each other’s affairs during the marriage.
[23]
It is trite that once the solvent spouse has discharged the onus of
showing that the property in question
was not acquired by improper
methods intended to prejudice the creditors, the trustee is obliged
to release such property from
the insolvency proceedings. That
property would have been acquired by the solvent spouse through her
or his resources during the
marriage and such acquisition would have
vested on her / him a valid title against the creditors of the
insolvent spouse
[9]
.
[24]
In the unreported decision of
Meyerrowitz
v Motsheka N.O and Others
[10]
Nochumsohn AJ said the following at the respective paragraphs of the
judgment:
“
12.4.57……
The fact that their
income and/or funds were pooled does not detract from the fact that
she became the owner, whether or not the
insolvent also effectively
contributed thereto”
“
12.4.58. This
is not a case where the insolvent sought to protect his own assets by
transferring same to his wife. This is
simply a case where a
family stood together in a time of crisis. The mere fact that
the insolvent also contributed to the
payment of the monthly bond
instalments throughout the duration of both loan accounts does not
detract from the fact that it was
at all material times the intention
that only the applicant be the owner thereof”
In
Meyerowitz
the applicant and the insolvent had for a period in excess of seven
years pooled their income by depositing same into one account
and
utilised same to discharge their monthly bond installments and other
liabilities.
As
the learned Judge correctly put it “
It
thus becomes a difficult egg to unscramble, as to who exactly paid
what, as by and large, the combined income of the insolvent
and her
husband merged into one melting pot, for the joint discharge of their
respective obligations”.
[25]
In the present case the Applicant has been in the marriage with the
insolvent for over twenty years. At all
material times she has been
employed as a teacher earning a fixed income. It can hardly be said
that she sat back, without an income
and was supported by her husband
or that she acquired those movable assets with the funds derived from
her husband.
In
my view the Applicant did acquire the movable assets by a title valid
as against the creditors of the insolvent spouse.
[26]
In the circumstances, I make the following order:
26.1.
The application for the release of the following property to the
Applicant is dismissed:
1.1.
Erf 1010 Groblersdal, Extension 22, held under Deed of Title
R52213/2012;
1.2.
Erf 47 Groblersdal, held under Deed of Title T9325/2013.
26.2.
The First and Second Respondents are ordered to release the
movable
assets attached by the Sheriff of the High Court as listed in the
inventory attachement report of the said Sheriff under
number
T2707/16 at Groblersdal on 7 December 2016 forthwith.
26.3.
It is declared that the aforesaid attached movable assets have been
acquired
by the Applicant by a valid title as against the creditors of the
insolvent
estate.
26.4.
Each party to pay his or her own legal costs of these proceedings.
E
M MAKGOBA
JUDGE
PRESIDENT OF THE HIGH COURT, LIMPOPO DIVISION, POLOKWANE
APPEARANCES
Heard
on
: 14
November 2019
Judgment
delivered on
: 06 December 2019
For
the Applicant
: Adv. A
J Schoeman
Instructed
by
: Strydom
& Bredenkamp Attorneys
c/o
Bosman Attorneys
For
the 1
st
& 2
nd
Respondents
: Adv. U Lottering
Instructed
by
:
J I Van Niekerk Inc
c/o
Pratt Luyt & De Lange Attorneys
[1]
Section 21(2)(c)
[2]
Section 21(2)(e)
[3]
At pages 916 – 917
See
also Maudsleys Trustees v Maudsley 1940 TPD 399
[4]
199 (3) SA 913
(SCA) at p. 918B-C. See also: Rends v Gutman NO &
Others
2003 (1) SA 93
(C) at 97G, Snyman v Rheeder
1989 (4) SA 496
(T) at 505H to 506A, Coetzer v Coetzer
1975 (3) SA 931
€ at
936A
[5]
Founding Affidavit par 54 page 21
[6]
1931 AD 501
at 507
[7]
[1997] ZACC 12
;
1998 (1) SA 300
(CC) at 326 para 58
[8]
2001
(1) SA 731
(WLD) at 736 para 16
[9]
See Kilburn v Estate Kilburn
1931 AD 501
at 507 to 508
[10]
[2014] ZAGPJHC 309 (31 October 2014)