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[2019] ZAGPPHC 145
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Tissue World CC and Another v Kyriacou (32547/2017) [2019] ZAGPPHC 145 (6 May 2019)
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REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, PRETORIA
(1)
REPORTABLE:NO
(2)
OF
INTEREST TO OTHER JUDGES:NO
(3)
REVISED:YES
CASE NO: 32547/2017
6/5/2019
In
the matter between:
TISSUE
WORLD
CC
FIRST APPLICANT
EL-SAYED
ADBEL HAMID
HAFNI
SECOND APPLICANT
And
PAVLOS
KYRIACOU
(IDENTITY
NUMBER NO: [….])
RESPONDENT
(MARRIED OUT OF
CUMMUNITY OF PROPERTY)
JUDGMENT
COLLIS
J:
INTRODUCTION
[1]
In the present application, the
applicants are seeking an order for the provisional sequestration of
the estate of the respondent.
If so granted by this Court, and on a
return date to be determined by this Court, to call upon the
respondent and any other person
to advance reasons, if any, why the
Court should not order the final sequestration of the respondent's
estate.
[2]
The applicants are requesting that the
costs of the application be costs in the sequestration of the
respondent. The application
is opposed by the respondent.
[1]
BACKGROUND
[3]
The dispute between the parties
originates from a written sale agreement in terms of which the
respondent and Sphynx Trading CC
bought the business of the first
applicant as a going concern for the amount of R 57 000 000.00. As
per the founding affidavit
the applicants allege that on 17 October
2016, at Johannesburg, the respondent acknowledged indebtedness to
the applicants' in
writing for the sum of R 93 945 187.00. He
acknowledged that this sum was due, owing and payable. This
acknowledgement was recorded
in clause 2.2.1 of a written settlement
agreement. A copy of this settlement agreement is attached as
"FA2".
[2]
[4]
It was further agreed that the sum of R
93 945 187.00, was made up as follows-
4.1
an amount of R 57 000 000.00 being the
purchase price of the first applicant's assets, which amount had to
be paid on 24 November
2016. (Clause 2.2.2).
4.2
an amount of R 28 500 000.00 which was
to be paid within one year of signing the settlement agreement, being
17 October 2017.
[3]
[5]
On or about 6
December 2016, the respondent
addressed an email
correspondence to the
applicants, requesting that the purchase consideration for the
applicant's asset in the amount of R
57 000 000.00 be rendered VAT
exclusive and that payment of the sum would be split between: -
5.1
Industrial Development Corporation
("IDC"), from whom the respondent obtained finance for the
sum of R 30 334 500.00.
The IDC would also pay VAT on this amount, in
the sum of R 4 246 830.00 on a VAT exclusive basis;
5.2
that the respondent would pay the sum of
R 26 665 500.00 and VAT on this amount in the sum of R 3 733 170.00,
on a VAT exclusive
basis.
[4]
[6]
On 15 December 2016, the IDC duly paid
the amounts set out it in paragraph 5.1 above and the
respondent
thereafter proceeded
to pay the amount
of R
22 418 670.00, being the difference between the full
sum paid by the IDC and the R57 million. The respondent
however
has failed to pay the
remaining amount of R 7 980 000.00 which is the sum
of R
57 million plus VAT.
[5]
[7]
On 10 May 2017, the applicants applied
for the sequestration of the respondent on the basis that the
respondent did not pay VAT
in the amount of R 7 980 000.00. The
notice of motion was first served unsuccessfully so on 16 May 2017
and thereafter service
was effected although not personally on 18 May
2017 in terms of Rule 4(1) (a) (ii).
[6]
[8]
On 23 May 2017, the respondent gave
notice of his intention to oppose the relief sought in terms of the
notice of motion and as
a result thereof, a notice of removal from
the application on the unopposed roll was filed.
[7]
Thereafter the matter was enrolled on the opposed motion roll for
hearing on 4 December 2017, this after all affidavits and Heads
of
Arguments were exchanged between the parties.
[8]
[9]
It is common cause between them, that on
this date,
[9]
a provisional sequestration order was then granted by the Court in
favour of the applicants against the respondent who was absent
on the
4
th
December 2017.
[10] On 11
January 2018 , the urgent court, at the instance of the respondent,
rescinded the provisional
sequestration order under case number
86371/2017 with costs.
[10]
[11]
On 28 February 2018, the applicants once
again enrolled the sequestration application before me.
[11]
[12]
At the hearing, the respondent raised
two
points in limine.
Firstly,
placing reliance on the provisions of section 150 of the Insolvency
Act, Act 24 of 1936 and secondly, contending that the
matter is
res
judicata.
First
point: Section 150 of the Insolvency Act
[13]
The section is quoted hereunder for ease
of reference.
Section 150(1) of the Insolvency Act states
that:
"Any person aggrieved by a final order of
sequestration or by an order setting aside an order of provisional
sequestration
may, subject to the provisions of section 20(4) and (5)
of the Supreme Court Act, 1959 (Act 59 of 1959) appeal against
such
order"
Section 150(2) of the Insolvency Act states
that:
"Such appeal shall be noted and prosecuted
as if it were an appeal from a judgment or order in a civil suit
given by the court
which made such final order or set aside such
provisional order, and all rules applicable to such last
mentioned appeal shall
mutatis mutandis
but subject to the
provisions of sub section (3) apply to an appeal under this
section."
[14]
In this regard the
respondent contends that where the
applicants are aggrieved
by the rescission of the
provisional order they ought to appeal such order in terms of
section 150
quoted
above, instead
of once again enrolling the
sequestration application
for adjudication.
[15]
It is common cause that the applicants
pursuant to the provisional order being rescinded did not appeal
against such order as required
by section 150 of the Insolvency Act.
It should be noted that the Supreme Courts Act, was repealed and
replaced by the Superior
Courts Act.
[12]
[16]
In the absence of an appeal against the
decision of the urgent court granted on 11 January 2018 which is
clear, unambiguous and
decisive, that order stands.
Second point: Res judicata
[17]
In addition to the first point raised,
the respondent contends that the matter for adjudication is also
res
judicata
in that it was premised on
the same cause of action where on 4 December 2017 the provisional
sequestration of the respondent was
in dispute and adjudicated upon
and where the same relief was claimed by the applicants under both
case numbers being 32547/2017
and 86371/2017.
[18]
In support of this contention the
respondent had placed reliance on the matter of National Sorghum
Breweries (Pty) Limited t/a Vivo
Africa Breweries v International
Liquor Distributors (Pty) Limited
[2000] ZASCA 159
;
2001 (2) SA 232
(SCA), where the
Olivier JA, expressed an opinion on the defence of res judicata or
the
"once and for all"
[19]
At para [2] thereof the Judge of Appeal
stated the following:
"The requirements for a successful
reliance on the exceptions were, and still are: idem actor, reus, and
eadem causa pendent.
This means that the exception can be raised by
the defendant in a later suit against a plaintiff who is "demanding
the same
thing on the same ground" (per Steyn CJ in African
Farms and Townships Ltd v Cape Town Municipality
1963 (2) SA 555
(A)
at 562A, or which comes to the same thing, "on the same cause
for the same relief' (per Van Winsten AJA in Custom Credit
Corporation (Pty) Ltd v Shembe 1972(3) SA 462."
[20]
At para [3] the Judge of Appeal stated
further:
"The fundamental question in the appeal is
whether the same issue is involved in the two actions: in other
words, is the same
thing demanded on the same ground, or, which comes
to the same, is the same relief claimed on the same cause or to put
it more
succinctly, has the same issue now before the court been
finally been disposed of in the first action?"
[21]
In support of this further argument, the
respondent also placed reliance on the matter of Prinsloo NO and
Others v Goldex 15 (Pty)
Ltd and Another
2014 (5) SA 297
(SCA). In
paragraph [10] of the said judgment Brand JA expressed an opinion as
follows:
[10] The
expression "res judicata" literally means that the matter
has already been decided...............According
to Voet 42.1.1, the
exception was available at common law if it were shown that the
judgment in the earlier case was in a dispute
between the same
parties, for the same relief on the same ground or on the same cause.
[22]
In paragraph [23] the Judge of Appeal
went on to state:
"In
our common law the requirements for res judicata are threefold: (a)
same parties, (b) same cause of action, (c) same relief...
... ....
That purpose, so it has been stated, is to prevent the repetition of
law suits between the same parties, the harassment
of the defendant
by a multiplicity of actions and the possibility of conflicting
decisions by different courts on the same issue
(see e.g. Evins v
Shield Insurance Co Ltd
1980 (2) SA 815
(A) at 835G."
[23]
In the Answering Affidavit, and more
specifically paragraph 3.6 thereof, the respondent referred this
Court to pending action proceedings
which he, together with Sphynx
Trading CC instituted against the second applicant and two others.
These action proceedings were
instituted on 17 March 2017, under case
number: 19536/17 and is pending before this Court, with the second
applicant having defended
same and having served his plea on the 10
th
May 2017. Significant to note, is that the action proceedings
were instituted during March 2017, whereas
the current
proceedings were launched during May 2017.
[24]
If one has regard to paragraph 16 and 17
of the said Particulars of Claim one of the claims relate to the very
same subject-matter,
i.e. the payment of the amount of R 7 980 000.00
which the applicants contend in terms of clause 2.2.2 of the
settlement agreement
attracted value added tax, whereas the
respondent contends that the payment of R 57 000 000.00 was value
added tax inclusive.
[25]
On point the
defendants/applicants had pleaded that
the amount
of R 7 980
000.00 was due and payable as the said amount represented payment on
the amount of R 57 000
000.00 VAT exclusive.
[13]
[26]
The action proceedings embarked upon by
the respondent clearly are illustrative that the payment of the
amount of R 7 980 000.00
is disputed by him. If this had not been the
position, no declaratory would have been sought by him from this
court that the said
amount should not be paid by him. As the action
proceedings is still pending, it is yet to be decided upon.
[27]
In terms of the Insolvency Act,
provisional sequestration is specifically dealt with in section 10.
The section reads as follows:
"If the court to which the petitioner for
sequestration of the estate of a debtor has been presented is of the
opinion that
prima facie-
(a)
the petitioner creditor has established
against the debtor a claim as such is mentioned in subsection (1) of
section nine; and
(b)
the debtor has committed an act of
insolvency or is insolvent; and
(c)
there is reason to believe that it will
be to the advantage of creditors of the debtor if his estate is
sequestrated, it may make
an order sequestrating the estate of a
debtor provisionally
It
may make an order sequestrating the estate of the debtor
provisionally."
[28]
A court in considering a sequestration
application, always has a discretion to grant or refuse a provisional
sequestration order,
even if all the requirements mentioned above
have been met.
[14]
[29]
Having regard to timelines, it is clear
that the respondent instituted the action proceedings prior the
sequestration proceedings
being launched. Therefore, at the time when
the applicants launched the sequestration proceedings they were aware
of the dispute
concerning the payment of the R 7 980 000.00.
Consequently, their initiation of the sequestration was wholly
inappropriate.
[15]
[30]
In the matter Kalil v Decotex
1988 (1)
SA 943
AD at 9808-0 the so-called "Badenhorst Rule" was
accepted by the Appellate Division, where Corbett JA (as he was then)
stated that:
"Consequently,
where the respondent shows on a balance of probability that its
indebtedness to the applicant is disputed on
bona fide and reasonable
grounds, the Court will refuse a winding-up order. The
onus
on
the respondent is not to show that it is not indebted to the
applicant; it is merely to show that the indebtednessis disputed
on
bona fide and reasonable grounds."
[31]
As per the founding affidavit, and more
specifically paragraph 17.1 thereof the applicants allege as follows:
"Kyriacou
(the respondent)
breached the provisions of the settlement as:
-
17.1 He paid the sum of R 57 million after 24
November 2016, and has failed to pay the remaining amount of R 7 980
000.00.
[32]
In reply the respondent denied the said
allegation and specifically denied that he does not have the money to
pay the applicants.
In paragraph 22.2 he specifically pleaded that on
the applicants own version, he is a financially sound and stable
person .
[33]
Consequently, not only has the
respondent disputed his indebtedness of payment of the amount of R 7
980 000.00 at the time when
he issued summons, but he has also
disputed his indebtedness to pay the said amount in his answering
affidavit.
[34]
At the hearing the applicants failed to
present any arguments on the
points
in limine.
Not only did the
applicants fail to present argument at the hearing, but none was also
presented in the Heads of Argument filed
on behalf of the applicants.
[35]
The applicant's failure to present any
arguments regarding the point
in
limine
deprived this Court of the
benefit of arguments regarding the applicants' stance as to their
election not to appeal the rescission
of the provisional order, but
instead to elect persisting with the re-enrolment of the same
application.
[36]
Having regard to what has been
postulated above and with specific reference to both, points
in
limine,
I am of the opinion that
both points have merit and as a result they stand to be upheld.
[37]
Furthermore, taking into consideration
the dispute in respect of the payment of the R 7 980 000.00 and
considering the fact that
this dispute is the subject-matter of
pending action proceedings between the parties, I am persuaded that
the respondent has discharged
his
onus
that his indebtedness is disputed on
bona fide and reasonable grounds. Therefore, I deem it unnecessary to
deal with the remainder
of the disputed issues.
ORDER
[38]
Consequently, the following order is
made:
38.1
The points in lime are upheld.
38.2
The application is dismissed.
38.3
with costs on a punitive scale
consequent on the employment of two counsel.
COLLIS J
JUDGE OF THE HIGH COURT OF
SOUTH AFRICA
Appearances:
For
the Applicant: Adv. N. Cassim SC and Adv. M. Desai
Attorney
of the Applicants: VALLY ATTORNEYS.
For
the First Respondent: Adv A.J. Louw SC; Adv R. De Villiers and Adv W.
Jungbluth
Attorney
for the Respondent: BERT SMITH INCOPORATED
Date
of Judgment: 6 May 2019
[1]
Notice of Motion p1
[2]
Founding affidavit para 7 & 8 p6 and Answering affidavit para
4.9, p126
[3]
Founding affidavit para 9 p6
[4]
Founding affidavit para 11 p8
[5]
Founding affidavit para 15 & 16 p9 & 10
[6]
Index Additional Documents p2
[7]
Index Additional Documents p7
[8]
Index Additional Documents p12 & 13
[9]
Index Additional Documents p14
[10]
Index Additional Documents p17
[11]
Index Additional Document s p18
[12]
Act 10 of 2013 assented to 12 August 2013 replaced the Supreme Court
Act 59 of 1959
[13]
Index Opposed Application for Sequestration -Defendant s Plea p 207
& 208
[14]
Epstein v Epstein
1987 (4) SA 606
(C) at para 612G
[15]
Badenhorst v Northern Construction Enterprises (Pty) Ltd
1956 (2) SA
346
(T) at 347H-348C