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[2019] ZAGPPHC 190
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Makgoba and Others v Klopper and Others (81488/15) [2019] ZAGPPHC 190 (29 April 2019)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
(1)
REPORTABLE:
YES
/NO
(2)
OF
INTEREST TO OTHER JUDGES:
YES
/NO
(3)
REVISED
CASE
NO: 81488/15
29/4/2019
In
the matter between:
HENDRICK
KHALIME MAKGOBA
1
st
APPLICANT
LERATO
JOYCE ELEANOR MAKGOBA
2
nd
APPLICANT
OCC.UPANTS
OF ERF 3709 ATTERIDGEVILLE
TSHWANE
METROPOLITAN MUNICIPALITY
GAUTENG,
REGISTRATION DIVISION JR
SITUATED
AT 2 NTJAPEDI STREET
ATTERIDGEVILLE,
PRETORIA
3
rd
APPLICANT
And
JOHANNED
FREDERICK KLOPPER
1
st
RESPONDENT
PHAHLAPHAHLAHUMPHREYLEBEDE
2
nd
RESPONDENT
AVIWE
NTANDAZO NDYAMARA NO
3
rd
RESPONDENT
(In
her capacity as the duly appointed
Trustee
of the HK and LJE Family Trust)
JUDGMENT
AE
ANDREWS, AJ
1.
In this matter the applicants seek an
order in the following terms:
a.
That
the eviction order granted against the applicants by Vorster AJ in
the North Gauteng High Court under case number 81488/2015
dated 30
January 2017 be rescinded and set aside;
b.
that to the extent necessary the
late filing of this application be condoned;
c.
that
any party who opposes this application be ordered to pay the costs of
this application.
2.
The
application is opposed by the third respondent in her capacity as the
duly appointed trustee of the HK and LJE Family trust
(in
sequestration).
3.
The
background to this matter is that according to the records of this
Court, an eviction order was granted by Vorster AJ on 30
th
January 2017 against the applicants, pursuant to an application
brought by the first and second respondents, as joint trustees
of the
insolvent estate of the HK and LJE Family Trust. The original order
under case number 81488/2015 is missing from the Court
file, but
copies thereof are annexed to both parties' respective papers . The
file itself appears to be a duplicate of the original
and no record
is made on the front of the cover as to the nature of the order
granted on 30th January 2017.
4.
The
third respondent annexed to her answering affidavit a copy of an
order before the Honourable Mr Justice Vorster AJ dated 30th
January
2017, ordering the eviction of the applicants (respondents in that
matter} from Erf 3709 Atteridgeville. The order states
that the time
allowed for the respondents to vacate is one (1) month. The third
respondent avers that the applicants were evicted
from the property
by the Sheriff of Court on 5
th
July 2017 pursuant to that order, which is referred to hereafter as
the "eviction order".
5.
The
applicants state that they were provided with a court order by their
attorneys after the hearing on 30th January 2017 and annex
it to
their founding affidavit. It differs from the order annexed to third
respondent's answering affidavit. The former postpones
the
application pending reports to be filed by the National Credit
Regulator (NCR) and the Master of the High Court, Pretoria.
It also
states: "The time allowed for the respondent to verate
(verbatim
transcript)
shall be one (1) month."
This shall be referred to hereafter as the "postponement order".
6.
The
applicant has corresponded with the registrar of this Court enquiring
as to the status of these two orders and was advised that
the only
order to be found on the Gauteng High Court system is the eviction
order.
7.
The
rescission application is brought in terms of the common law as the
grounds upon which applicants primarily rely late to new
material
evidence and/or information, as well as fraud and dishonesty.
Condonation
8.
Judgment
was granted on 30
th
January 2017. The application for condonation was brought on 25
th
April 2018. In order to assess whether it was brought within a
reasonable time, precise dates of relevant events are required.
These
are however not supplied by the applicants.
9.
They
do not state on what date their attorneys informed them of the order,
or when they wrote to the registrar of this Court, to
investigate the
issue of multiple judgments. Both versions of the order give them one
month to vacate the Premises. On their version
they W8l8 waiting for
the outcome of the NCR investigation, but this did not override the
order to vacate within one month contained
in the postponement order.
Is hence not credible that the applicants were surprised, as stated
In the founding affidavit, to hear
from the first
respondent that they. had one month to vacate. They also
do not Indicate to the Court in their affidavits that they were
evicted
in July 2017.
10.
There is therefore no reasonable
explanation given for why it took the applicants from January 2017,
(or at least from July 2017
when they were evicted), until March 2018
to start investigating the first respondent with the Companies and
Intellectual Property
Commission, and therereafter to bring the
application on 25
th
April 2018. The basis for condonation has not been established by the
applicants.
11.
Even if this conclusion is incorrect the
applicants must show that they have a reasonable prospect of success
in proving a
bona fide
defence
to the eviction application which they fail to do as set out
below.
[1]
Status
of the order
12.
The applicants state that they have
applied for the rescission of the eviction order of Vorster AJ
granted on 30
th
January 2017, because it was not the order granted on that day in
this matter. They submit that in circumstances where the parties
dispute the status of an order it should be rescinded, referring to
Erasmus Superior Court Practice.
[2]
They do not apply for both purported
orders to be rescinded
13.
The following factors have been
considered in determining the status of the eviction order.
a.
As it appears annexed to the
respondent's reply, the eviction order bears the hallmarks of an
order of this Court. It is stamped
and signed by the registrar of the
Court and correspondence with registrar confirms that it is
registered on the Court system.
It is an order that exactly mirrors
the relief sought in the notice of motion.
b.
The postponement order does not
appear on the Court system. It appears unlike an order of the High
Court. It contains a typological
error referring to “vacate”
as “verate”. The first sentence of the order makes no
sense. It is contradictory.
It purports to postpone the matter but
gives the respondents a month to vacate, which is an effective order
of eviction.
It is therefore not a credible
order of this Court.
c.
The eviction order was acted upon
by the respondents, shortly after it was signed by the registrar, as
is evident from the fact
that the applicants were evicted in terms of
it in July 2017. In an affidavit deposed to in March 2018 by Brad
Hutchinson, an attorney
acting for the respondents, he avers that he
was sent the eviction order in March 2017 by his correspondent. He
states that he
first saw the postponement order when advised of it by
the SAPS in 2018, almost seven months after the eviction.
The SAPS informed him that a case
relating to a fraudulent court order had been opened relating to the
eviction order. The applicants
aver no knowledge of when the
postponement order came to the knowledge of Hutchinson and baldly
deny these statements by him.
d.
Although the applicants state
that they were provided with the court order declaring that the
postponement was indeed granted, they
do not state when this took
place and no contemporaneous correspondence confirming that this took
place is annexed to their application.
There is indeed no
corroboration that this order was granted emanating from their legal
representatives who were presumably present
when the matter was heard
on 30th January 2017.
e.
The appearance of an order (that
is not on the Gauteng High Court system) does not necessarily
indicate that the initial eviction
order was not granted or that the
proceedings up to the granting of this order were tainted by fraud as
contended by the applicants.
There could be another explanation,
namely that the postponement order was a fabrication. Only copies of
the postponement order
appear in the pleadings and no original of
this order was tendered in this application, nor appears on the file.
a.
The
applicant's conclusion that the proceedings, by which I understand
the proceedings up to the granting of the order on 30 January
2017,
have been tainted by fraud, is not supported by evidence. At this
stage they are merely the subject of an investigation.
14.
Considering the above, the applicants
have failed to provide any evidence that the eviction order was not
granted on 30
th
January 2017, and· that the postponement order was. Their
averments are far-fetched, unsubstantiated and are disputed by
the
respondents who provide corroborating evidence of the granting of the
eviction order. The eviction order stands until set aside
by a
competent court. (see
Department of
Transport v Tasima
(Pty) Ltd.
[3]
The applicants have failed to establish any uncertainty as to its
status. The application for rescission on this basis must therefore
fail.
New
information
15.
The applicants state that new
information has come to hand indicating fraud and dishonesty by the
first respondent, as he acted
both as a trustee of the insolvent
estate and business rescue practitioner for its creditor when the
application for eviction was
brought. They argue that this
constituted a conflict of interest between him and the trust, and
that he had an interest opposed
to the interest of the trust and its
creditors. His conduct was dishonest and, fraudulent, and constituted
perjury in failing to
disclose this conflict to the Court. They
contend that his intention in bringing the application for eviction
was ma/a
fide
and
that he intended to mislead the Court. Had the Court been provided
with this information it would have reached a different conclusion.
The failure to disclose these facts to the Court is thus causally
linked to it granting the order of eviction.
16.
The conflict of interest is explained by
the applicants to have arisen for the following reasons. Because
first respondent had multiple
interests, serving one interest meant
working against the other interest, in this case the Interests of the
trust and its beneficiaries.
He could not act in the Interests of a
creditor without acting to the detriment of the trust and its
beneficiaries. The duty of
the trustee is to act in good faith in
administering the trust property and this the first respondent failed
to do.
17.
The applicants also referred to three
provisions of Insolvency Act no 24 of 1936 (the Act), which they
argued demonstrated that
the roles occupied by first respondent
created a serious conflict of interest. The first is that he could
give himself permission
to institute proceedings against the
applicants as contemplated in terms of section 73(1) of the Act.
Secondly by being both trustee
and business rescue practitioner he could direct himself
as to what action to take as trustee as contemplated In section
·81(3)
of the Act.
Thirdly,
according to section 80(1) of the
Act a trustee shall not carry on the business of the insolvent
concerned or any part thereof unless
authorised thereto by creditors
of the insolvent estate or in the absence thereof by the Master.
18.
The eviction application was launched on
9
th
October 2015 and the matter was heard on 30
th
January 2017. It is common cause that there was only one proven
creditor, Bondro Finance (Pty) Ltd (Bondpro Finance) whose mortgage
bond had been proved in 2013. The first respondent became its
business rescue practitioner in 2014.
19.
The respondents deny fraud or dishonesty
or any conflict of interest as alleged by the applicants. They state
that the first respondent
did not manage or have any involvement with
the secured claim of Bondro Finance at the time of bringing the
eviction application
as it had ceded Its interests to other entities
before first respondent became its business rescue practitioner.
Hence there was
no basis to allege a conflict of interest, fraud or
dishonesty. This reply is baldly denied by the applicants.
20.
The matter is made more complex by the
fact that in 2015 first respondent stated under oath in the eviction
application that he
and his co-trustee were "obliged to alienate
the immovable properties for the benefit of the creditors
particularly that or
Bondpro Finance (Pty) Ltd." He now states
that at the time, Bondpro Finance had no further interest in the
insolvent estate,
having ceded its claims to other entities. This
apparent contradiction in the pleadings was not explained by the
respondents. I
therefore
regard
the
evidence
of
the respondent on this issue as unreliable, and will treat it as true
that at the time of bringing the eviction application Bondpro
Finance
held a mortgage bond over the property, and first respondent was its
business rescue practitioner.
21.
First respondent states in an affidavit
in the eviction application that in the discharge of their duties it
is incumbent upon the
joint trustees to market the immovable property
of the Trust and sell it to the benefit of the creditors of the Trust
at the highest
possible value. In order to give vacant possession of
the property to a prospective purchaser the applicants needed to move
out
of the immovable property. It was averred that the trustees are
obliged to alienate the immoveable properties for the benefit of
the
creditors particularly that of Bondpro Finance which held a covering
bond over the immoveable property in the amount of R875
000.
22.
The respondents argue that acting as
both trustee and business rescue
practitioner of the only creditor did not ate a conflict
of interest. They argue that the applicants misunderstand the
obligations
of the trustee in the insolvent estate.
Analysis
23.
Firstly the first respondent is one of
two trustees. He alone did not determine how the assets of the
insolvent estate would be
dealt with, and no evidence was provided
suggesting any conflict of interest in the case of the second
trustee. The concerns which
the applicants raise regarding the
potential consequences of playing two roles, and in particular
referring to sections 73(1) and
80(1) of the Act, would only have
arisen in a case where he was a sole trustee.
24.
The applicants argue that because the
first respondent had multiple interests, he worked against the trust
and its beneficiaries.
By advancing the interests of the sole proven
creditor he acted against the trust's interests. However no evidence
is provided
to support this claim, which is based purely on an
assumption by the applicants.
25.
The obligations of a trustee of an
insolvent estate are set out in the judgment in
Hobson
NO v Abib
[4]
as follows:
"Granted that the trustee
occupies a position of trust towards the insolvent, the object of the
Insolvency Act Is
to ensure the due distribution of the insolvent's
assets among his creditors in the order of their preference, and it
is the trustee's
function to achieve that object. As sequestration Is
intended to be to the advantage of creditors (see secs. 6 (1) and 12
of the
Act)
the trustee cannot be said to be acting improperly or
in breach of his trust if he takes all lawful steps in his power to
ensure
that it is the creditors rather than the insolvent who benefit
from the sequestration.
(emphasis added). In the present case the
trustee has stated that he intends to do just that, and says, in
effect, "If that
means I am biased or prejudiced in favour of
the creditor and against the insolvent, so be it." I consider
that to be a perfectly
proper attitude for him to adopt."
26.
The respondents argue that the only
grounds upon which the applicants could contend that the first
respondent was disqualified to
act as a trustee is in terms of
section 55(e)
of the
Insolvency Act, which
provides for the
disqualification of a trustee who has an interest opposed to the
general interest of the creditors. As there was
only one proven
creditor in this case this concern does not arise.
27.
The interpretation of the
disqualification provisions in our insolvency legislation sheds some
light on what types of conduct could
be regarded as unacceptable, in
particular conflict of interest, in a case where a trustee of an
insolvent estate is also closely
associated with a creditor.
28.
In
Pretoria
Estate
Co
Ltd
v Rood's Trustees
[5]
the Court considered facts similar
to the present case, in an application to remove a trustee. Here a
bank manager of a bank that
was a secured creditor of an insolvent
estate had been elected trustee of an insolvent estate. The
application for his removal
was based on the grounds that the bank's
interests were opposed to those of the remaining creditors. The Court
held that in the
absence of proof of some positive act of misconduct
or some act amounting to negligence on the part of the trustee, or in
the absence
of proof of some undue influence by the bank resulting or
likely to result in misconduct or negligence on the part of the
trustee,
the application must be refused.
[6]
The mere fact that he was the bank manager and the bank was to a
certain extent interested in the liquidation of the estate, was
not
enough, because, as stated by the Court
[7]
:
"Nowhere does the law say
that a person, who is the nominee of a creditor who has a particular
interest, shall be excluded
from the trusteeship, or that, having
been appointed, he can
be
dismissed from it. As our courts
have repeatedly held, a trustee in insolvency is personally
answerable to the Court.
Directly he obtains this Court's
confirmation of his appointment as trustee he no longer acts in any
representative capacity, he
is no longer regarded as the nominee of
the creditors who elected him, or as the secretary of a company, or
the manager of a bank."
29.
The Court went on to state that it would
require an extremely strong case, and would need to be fully
satisfied that it is impossible
or extremely unlikely that the
trustee will be able properly to perform his duties before it would
remove such trustee. The Court
would need to consider whether, upon
the facts brought to its notice upon the affidavits, there is a real
and substantial fear
that the creditor, may use its influence over
the trustee in such a way that he will not be able properly to
perform his duties
as a trustee. In considering this question the
Court asked whether the bank had done anything that it was not
justified in doing.
[8]
30.
As trustee the first respondent had a
duty to act in good faith towards the trust in liquidation. The
intention of the two trustees
in bringing the eviction application
was stated to be so as to render the property vacant so that they
could sell it at the highest
price for the benefit of the sole proven
creditor, Bondpro Finance which had proved its claim long before the
first respondent
became its business rescue practitioner. Selling its
sole asset as part of a decision by both trustees, for the highest
price,
is not conduct that demonstrates undue influence by Bondpro
Finance that would be likely to result in misconduct or negligence on
the part of the first respondent, to. the extent that he could not
properly perform his duties. There is no evidence that he conducted
the business of the insolvent trust. If he had intended to do so he
could in any event have obtained the authorisation of the Master
and
did not need the permission of the creditors.
31.
No evidence has thus been provided to
support the conclusion that the first respondent, in playing the two
roles, acted fraudulently
and dishonestly, and that failure to inform
the Court that he was the business rescue practitioner of Bondpro
Finance was fraudulent
or dishonest conduct. Further, no basis has
been provided to support the claim that the Court, had it known of
first respondent's
two roles, would have come to a different
conclusion regarding the decision to grant an eviction order, nor do
I think it would
have.
32.
Given the attitude of our courts
regarding disqualification of trustees under the
Insolvency Act
discussed
above, the Court would have had little interest in the
relationship between one of the trustees and the main creditor,
unless there
was some misconduct, or an interest opposed to the
general interest of the creditors involved, and none has been proved
to exist.
33.
The basis of an application for
rescission based on new information, fraud and dishonesty has
therefore not been established by
the applicants.
The
offer to purchase
34.
The applicants final contention is that
Mrs Tsie Ella Makgoba purchased the property from ClareMart Auction
Group on the 3
rd
February 2014 and paid R47 000 to this entity. Thereafter however the
property was sold to Mrs Bridgette Phaswane Maleka for R59
200 on the
instructions of the first and second respondents. This information
was not available to the applicants at the time of
the application
for eviction and would have constituted a defence to the eviction
application.
35.
These allegations are disputed by the
respondents who describe an auction type sale where a higher offer
than that of Mrs Makgoba
was agreed to be acceptable in the sale
process, after Mrs Makgoba failed to come up with an offer greater
than that of Ms Maleka.
Further, the offer to purchase was never
signed by the trustees and hence respondent argues it failed to give
rise to any binding
obligations.
36.
It is also disputed that the applicants
were unaware until after the eviction of her purchase of the property
as she is directly
related to the applicants. Finally the respondents
state that the applicants have failed to show how an agreement of
sale to Ms
Makgoba who is not one of the applicants would somehow
constitute a lawful defence in the eviction application.
37.
This basis for rescission was not
persisted with by the applicants in their heads of argument. The
respondent's arguments have merit.
I conclude that the applicants
have failed to establish a defence to their eviction based on Ms
Makgoba's offer to purchase the
property and payment of a deposit, in
the circumstances in which it took place.
38.
The applicants have therefore failed to
establish a
bona fide
defence
to the application for their eviction.
39.
Finally I pause to reflect on the
conundrum that if the eviction order is rescinded and the applicants
contend that the postponement
order was validly granted, it is not
clear what purpose will be served thereby, as the postponement order
gives the applicants
have one month to vacate the premises and they
have already been evicted. The applicants should have applied to
rescind both judgments
in order to secure any relief based on the
facts they allege but would still have had to satisfy the
requirements for rescission.
The
application for rescission is therefore dismissed with costs.
A
ANDREWS
ACTING
JUDGE OF THE HIGH COURT
GAUTENG
DIVISION, PRETORIA
DATE
HEARD
: 4
th
February 2019
DATE
DELIVERED
: 29
th
April 2019
FOR
THE APPLICANTS
:
ADV MG
SKHOSANA
INSTRUCTED
BY
: STEVEN
MAGORO ATTORNEYS
FOR
THE RESPONDENTS
:
ADV RJ
BOUWER
INSTRUCTED
BY
: GA
RANKUWA JUSTICE CENTRE
[1]
Condonation ought to be refused if the proceedings lack merit
See Harms, D
Civil Procedure in the Superior Courts Part B
at B 27.7
[2]
A2 -95 Vol 1 Service 6 2018
[3]
2017(2) SA 622 (CC).
[4]
[1981] 1 AU SA 198 (N) at
page
202
[5]
1910 TS 1085
[6]
At
page
1093
[7]
At
page
1090
[8]
id