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[2018] ZANCHC 20
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Ga-Segonyana Local Municipality v Sulliman (1219/2017) [2018] ZANCHC 20 (16 March 2018)
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IN
THE HIGH COURT OF SOUTH AFRICA
(NORTHERN
CAPE HIGH COURT, KIMBERLEY)
C
ASE
NO.: 1219/2017
Date
heard: 01-12-2017
Date
delivered: 16-03-2018
In
the matter between:
GA-SEGONYANA
LOCAL MUNICIPALITY
Applicant
And
MOHAMMED
ISMAIL SULLIMAN
Respondent
(Identity
number:
[...])
CORAM:
WILLIAMS J:
J
U D G M E N T
WILLIAMS
J:
1.
On 6 March
2015 the applicant, the Ga-Segonyana Local Municipality (herein
referred to either as the applicant or the Municipality),
obtained
summary judgment against Sulliman Attorneys for payment of the amount
of R1 283 925, 90 together with interest
thereon a tempore
morae at the rate of 15.5% per annum. Upon failure to satisfy
the judgement the applicant caused a warrant
of execution to be
issued for payment of the above amount. The warrant of
execution was served on the respondent herein,
Mr M I Sulliman, on 25
May 2015. The sheriff’s return was one of
nulla
bona.
2.
This
application, launched on 31 May 2017, is for the sequestration of the
respondent on the basis that he has committed an act
of insolvency as
contemplated in
s 8(b)
of the
Insolvency Act 24 of 1936
, which reads
as follows:
“
A
debtor commits an act of insolvency – 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.”
3.
The
respondent opposed the application
inter
alia
on
the basis that the
nulla
bona
return
is stale and that the applicant had failed to provide any proof that
there was no material alteration in the respondent’s
financial
situation in the meantime.
4.
The above
proposition is not entirely correct. The applicant has in the
founding affidavit provided details of two immovable
properties
registered in the name of the respondent, his member’s interest
in two close corporations, as well as the fact
that the respondent is
the sole proprietor of the firm Sulliman Attorneys and that the
assets associated with the practice fall
within his personal estate.
The value of these assets have not been determined by the applicant,
but the allegation is made
that the immovable properties will in all
likelihood not realise proceeds by way of execution close to the
amount of the applicant’s
claim, bearing in mind that the
interest thereon at time of the application amounted to more that
R400 000,00.
5.
The
respondent has failed to deal with these allegations in his opposing
affidavit or to show otherwise that he in fact has sufficient
disposable assets to satisfy the judgment. Reliance on a
“stale”
nulla
bona
return
in these circumstances to fend off an application for provisional
sequestration is rather risky since it is but one of the
factors to
be taken into account in the exercise of the court’s discretion
not to grant a provisional order of sequestration.
(See
Investec
Bank Limited vs Le Roux
(575/2014) [2016] ZA GPJHC 11 (11 February 2016) )
6.
But be that
as it may, an issue which I found of more concern about the
application is the fact that the judgment had been obtained
against
the firm Sulliman Attorneys, without the procedures envisaged by
Rule
14(5)
for execution against the respondent personally having been
followed. I referred the parties in this regard to the judgment
of Nepgen J in S
tocks
vs Stocks Industrial Holdings (Pty) Ltd and Another vs Roberts t/a
Premier Timber & Trading [1998]4 All SA 231 (SE)
and asked them to address me on this aspect.
7.
In response
Mr Louw who appeared for the applicant, referred me to s 23 of the
Attorneys Act 53 of 1979 for the proposition that
a person trading
under an attorney’s name is held personally liable for the
contractual debts of the attorney. S 23
of the Attorneys Act
however relates to companies conducting attorneys practices and has
nothing to do with the position
in
casu
.
In any event it is not in issue that a firm name is regarded as the
alias of its sole proprietor and that the respondent
as sole
proprietor would be a debtor of the applicant. The issue is
that judgment was not obtained against the respondent
but against the
firm Sulliman Attorneys.
8.
The summons
under case no 1398/14 does not even contain the allegation that Mr
Sulliman is the sole proprietor of the firm neither
was a notice
delivered on the respondent in terms of Rule 14 (5) (c) which in
terms of Rule 14(5) (e) would deem the respondent
to be a party to
the proceedings, with the rights and duties of a defendant –
including being liable to have execution levied
against him should
the firm be found liable.
9.
Having
failed to invoke the provisions of Rule 14, the judgment stands only
against the firm as the judgment debtor. A judgment
in that
form limits to the assets of the business the source from which the
plaintiff (applicant) may recover the judgment debt
(see
Farm
Fare (Pty) Ltd v Fairwood Supermarket
1986(4) SA 258 CPD at 262D).
10.
As an act
of insolvency in terms of
s 8
(b) of the
Insolvency Act can
only be
committed by a judgment debtor, the applicant has failed to establish
that the respondent has committed the said act of
insolvency (see
generally
Stocks
& Stocks supra
).
The application for sequestration should therefore fail.
11.
What is
most troubling about this matter is the background to the institution
of the action against Sulliman Attorneys. It
is common cause
that the applicant Municipality had instructed Sulliman Attorneys to
represent it in an action instituted against
the Municipality by
attorneys Peyper Sesele Incorporated (Peypers) for the payment of
legal fees. The Municipality and Peypers
reached a settlement
in that matter on the basis
inter
alia
that the Municipality pay the amount of R2 508 000.00 (the
settlement amount) to Peypers on or before 31 January 2014.
12.
The
Municipality paid the full settlement amount into the Trust account
of Sulliman Attorneys, who in turn paid over to Peypers
only an
amount of R1 224 074,10.
13.
Peypers
thereafter instituted legal proceedings against the Municipality for
the recovery of R1 283 925,90, the balance
of the
settlement amount, which in turn led to the Municipality instituting
the action against Sulliman Attorneys for the above
amount.
14.
Mr Sulliman
has given various explanations for the retention of the balance of
the settlement amount – in the affidavit opposing
the summary
judgment application as well as in the opposing papers to the
sequestration application.
15.
The
explanation in the summary judgment application is the following:
That the Municipality had instructed Sulliman Attorneys not
to simply
pay over the entire settlement amount to Peypers, but to first
determine the actual outstanding amount. This Sulliman
Attorneys did and discovered that an amount of R1 283 925,90
had previously been paid by the municipality to Peypers
for legal
fees and had therefore only paid over to Peypers the balance of the
settlement amount. Mr Sulliman maintained that
the amount of R1
283 925,90 was still in the firm’s Trust account and would only
be paid out on instruction of the Court,
the Municipal Council or the
Mayor. The Municipality denies such an instruction, which is in
any event contrary to the settlement
agreement reached between the
Municipality and Peypers.
16.
In the
opposing affidavit to the sequestration application, the explanation
in the summary judgment application, to pay only to
Peypers what was
due, is repeated and in addition an oblique reference is made to
set-off. The allegation is made that the
Municipality is
indebted to Sulliman Attorneys on an account outstanding since
November 2014. No proof is however provided
of the outstanding
account and the Municipality denies such indebtedness.
17.
Mr Sulliman
who appeared in person in the sequestration proceedings, could give
no reasonable explanation for what had happened
to the amount of
R1 283 925,90 which the Municipality had entrusted Sulliman
Attorneys with and which is apparently not
in the Trust account of
Sulliman Attorneys anymore.
18.
In these circumstances I consider it imperative that this matter be
referred to the Cape Law Society for investigation.
19.
As far as
costs are concerned, Mr Louw has argued that even if the respondent
is the successful party in this application, I should
as a mark of
the court’s displeasure at the conduct of the respondent, order
that he pays the costs of the application.
I am of the view
however that there is no reason why costs should not follow the event
in this application and that the Cape Law
Society deal with the
professional conduct of Mr Sulliman.
The
following order is made:
a)
The
application is dismissed with costs.
b)
This
judgment is referred to the Cape Law Society for an investigation
into the conduct of Mr M I Sulliman of Sulliman Attorneys,
Kuruman in
the matter of Peyper Sesele Incorporated v Ga-Segonyana Local
Municipality held in the Magistrate’s Court, Kuruman
under case
number 355/2013.
________________________
CC
WILLIAMS
JUDGE
For
Applicant :
Adv. M Louw
Van De Wall Incorporated
For
Respondent: Mr M I Sulliman
Duncan & Rothman