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[2018] ZAKZPHC 72
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Applemint Properties 45 (Pty) Ltd and Others v Master of the High Court, KwaZulu-Natal Division, Pietermaritzburg and Others (13377/13) [2018] ZAKZPHC 72 (21 December 2018)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
CASE
NO: 13377/13
In
the matter between:
APPLEMINT
PROPERTIES 45 (PTY)
LTD
First
Applicant
(registration
number: 2006/032086/07)
EMERALD
GREEN COMMUNICATIONS (PTY) LTD
Second
Applicant
(
registration
number: 2004/005796/07)
RIETSPRUIT
CRUSHES (PTY)
LTD
Third
Applicant
(registration
number: 1997/010711/07)
THE
WISHY FAMILY
TRUST
Fourth
Applicant
(IT
845/87)
PENGUIN
MINING & PLANT (PTY)
LTD
Fifth
Applicant
(registration
number: 2002/012794/07)
GIDEON
AIR (PTY)
LTD
Sixth
Applicant
(registration
number 2003/009339/07)
DARRYL
HENDRICKS
Seventh
Applicant
DKB
RESIDENCE
TRUST
Eighth
Applicant
(IT
T3781/97)
and
THE
MASTER OF THE HIGH
COURT,
First
Respondent
KWAZULU-NATAL
DIVISION,
PIETERMARITZBURG
FIRST
RAND BANK OF SOUTH AFRCA LIMITED
Second
Respondent
t/a
WESBANK
PIERRE
DE VILLIERS BERRANGE
NO
Third
Respondent
AND
in the matter of a review in terms of s 151 of the Insolvency Act,
1936 (Act 24 of 1936) of certain decisions by the Master
rejecting
the claims of the Applicants at the first meeting of creditors in an
insolvent estate and approving the claim of the
Second Respondent.
ORDERS
1. The decision of the
first respondent at the first meeting of creditors on 8 November 2013
to reject the first, second, third,
sixth, seventh and eighth
applicants’ claims is reviewed and is hereby set aside.
2. The matter is referred
back to the first respondent for reconsideration of the first,
second, third, sixth, seventh and eighth
applicants’ claims. In
reconsidering such claims the first respondent is to give
consideration to invoking the provisions
of
section 44(7)
of the
Insolvency Act 24, 1936
.
3. The decision of the
first respondent to approve the claim of the second respondent in the
amount of R32 132 884.95
is reviewed and set aside only to
the extent that the amount of the claim is reduced to the sum of R
22 132 884.95.
4. The second
respondent’s application to strike out is dismissed with costs.
5. The costs of this
application including the costs consequent upon the employment of two
counsel are to be paid by the insolvent
estate of Grant Logan
Wishart.
JUDGMENT
HENRIQUES
J
Introduction
[1]
This is an application in terms of s 151 of the Insolvency Act 24 of
1936 (‘the
Insolvency Act') to
review and set aside decisions
taken by the first respondent at the first meeting of creditors of
the insolvent estate of Grant
Logan Wishart (‘the insolvent’)
held in Pietermaritzburg on 8 November 2013.
[2]
The applicants seek to review and set aside the first respondent’s
decision to:
(a)
Reject
seven claims lodged by the eight applicants
[1]
;
and
(b)
Admit and approve a claim by the second
respondent, FirstRand Bank of South Africa Ltd trading as Wesbank
(‘FRB’).
[3]
In addition, they seek orders directing the first respondent to:
(a) Approve the claims of
the first to the eighth applicants; and
(b)
Reject the claim of the second respondent, FRB
(the “FRB claim”).
[4]
The application is only opposed by the second respondent, being FRB.
The basis for such opposition is set out in the answering
affidavit.
In addition FRB has challenged the
locus standi
of the
applicants to institute these review proceedings, to review the
approval of FRB’s claim and by way of notice had indicated
that
at the hearing of the application, it would seek to strike out
certain paragraphs of the applicants’ affidavits.
Issues
for determination
[5]
This court is required to determine whether the application to strike
out ought to succeed, whether the applicants have
locus standi
to
institute these review proceedings in terms of
section 151
,
locus
standi
to challenge the approval of FRB’s claim and the
costs of the review application.
Relief
Sought by the Applicants
[6]
The relief sought by the applicants as set out in the notice of
motion was the following:
‘
1. That the following decisions
made by the Master of the High Court, KwaZulu-Natal Division,
Pietermaritzburg at the first meeting
of creditors in the insolvent
estate of Grant Logan Wishart (Master’s Ref N156/13) (the
insolvent) on 8 November 2013 be
and are hereby reviewed and set
aside:
1.1
The decisions to reject the claims of each of the Applicants,
particulars of which are as follows:
1.1.1. The claim of the First
Applicant, in the amount of R 30 547,27
(Claim No 4)
1.1.2. The claim of the Second
Applicant, in the amount of R 1 602,40
(Claim No 5)
1.1.3. The claim of the Third
Applicant, in the amount of R 250 000
(Claim No 6)
1.1.4. The claim of the Fourth
Applicant, in the amount of R 350 000
(Claim No 7)
1.1.5. The claim of the Fifth
Applicant, in the amount of R 86 374,65
(Claim No 8)
1.1.6. The claim of the Sixth
Applicant, in the amount of R 475 000
(R 275 000 plus R 200 000)
(Claim No 9)
1.1.7. The joint claim of the Seventh
and Eighth Applicants, in the amount of
R 45 million
(Claim No 10)
1.2.
The decision to admit and approve the claim of the Second Respondent,
in the amount of R 32 132 884,95.
(Claim
No 2)
2. That the Master be directed to
admit and approve each of the claims of the Applicants, as set out in
paras 1.1.1 to 1.1.7, above,
as duly proved in the insolvent’s
estate in terms of the provisions of s 44 of the Insolvency Act, 1936
(Act 24 of 1936).
3. That the Master be directed to
reject the claim of the Second Respondent.
4. That the costs of the application
be paid by the estate of the insolvent as part of the costs of
administration thereof, alternatively
that such costs be paid by any
party opposing the application.
5. That further or alternative relief
be granted to the Applicants.’
Common
Cause Facts
[7]
It is common cause that the estate of the insolvent was finally
sequestrated on 30 September 2013 in terms of orders made by
this
court under case number 9293/13 at the instance of FRB.
(a)
The first respondent duly convened the first
meeting of creditors by publication of a notice in the
Government
Gazette
in terms of
s 44(1)
of the
Insolvency
Act for
the proof of their claims against the insolvent estate and
for the election of a trustee or trustees.
(b)
The meeting was convened to take place on Friday,
8 November 2013 at the first respondent’s offices in Church
Street, Pietermaritzburg.
Each of the applicants lodged their claims
with the first respondent more than 24 hours before commencement of
the first meeting
of creditors and as a consequence met the
requirements of
s 44(3)
of the Insolvency Act.
(c)
The first meeting of creditors was presided over
by an assistant master, Ms K. Padayachee. All of the applicants were
represented
at the first meeting of creditors by attorney Andries
Geyser of Venns Attorneys, Pietermaritzburg.
(d)
Each of the claims was presented for proof and
each claim was assigned a number on a list of claims.
(e)
The second respondent’s claim was allocated
Claim No 2.
(f) The first applicant’s
claim was allocated Claim No 4.
(g)
The second applicant's claim was allocated Claim
No 5.
(h)
The third applicant’s claim was allocated
Claim No 6.
(i)
The fourth applicant’s claim was allocated
Claim No 7.
(j)
The fifth applicant’s claim was allocated
Claim No 8.
(k)
The sixth applicant’s claim was allocated
Claim No 9.
(k) The seventh and
eighth applicants’ claim was allocated Claim No 10.
(l)
The third respondent attended the meeting as
provisional trustee of the insolvent estate. The applicants’
claims were rejected
by the first respondent at the first meeting of
creditors held on 8 November 2013.
(m)
FRB’s claim was admitted by the first
respondent at the meeting of creditors on 8 November 2013. The claims
of the applicants
were opposed because of the close connection
between the insolvent and each of the applicants and it was submitted
that such claims
were not bona fide or genuine.
(n)
The applicants objected to the approval and proof
of the second respondent’s claim as the claim was in the sum of
R32 132
884.95. The applicants contend that FRB had a pledge
over an aircraft as security for its debt and such security was
realised for
an amount of R13 489 392 and this amount was not taken
into account when the claim was approved and admitted.
(o)
The reasons
for the rejection of the applicants claims and the approval of FRB’s
claims is set out in a letter of the first
respondent dated 21
November 2013
[2]
, received by
the applicants’ attorney of record in December 2013.The
first respondent recorded in such letter that
the ‘claims were
examined on the face of the documents submitted.”
[8]
At the outset it is necessary to deal with the application to strike
out. This application must be viewed in the light of the
fact that
these are review proceedings and the applicants supplemented their
founding affidavit on receipt of the record. In addition,
mention was
made of the fact that not all the relevant documentation formed part
of the review record submitted by the first respondent.
Application
to strike out
[9]
The second respondent gave notice of an application to strike out
dated 1 December 2014. The notice indicates that at the hearing
of
the main application, the second respondent would apply in terms of
rule 23(2) of the Uniform Rules of Court to strike out the
following
paragraphs, namely, paragraphs 11.3, 12.1, 13.1, 14.1, 15.1 and 15.2
of the applicants’ supplementary founding
affidavit and
paragraphs 9 and 10 of the applicants’ replying affidavit.
[10]
The basis proffered by the second respondent to have these paragraphs
struck out are two fold namely, that the paragraphs in
the
supplementary founding affidavit contained new allegations which were
not included in the affidavit of proof of claim filed
by the
applicants and secondly, that the applicants raise new matter in
paragraphs 9 and 10 of the replying affidavit.
[11]
Rule 23(2) reads as follows:
‘
Where any
pleading contains averments which are scandalous, vexatious, or
irrelevant, the opposite party may, within the period
allowed for
filing any subsequent pleading, apply for the striking out of the
matter aforesaid, and may set such application down
for hearing in
terms of paragraph
(f)
of
subrule (5) of rule 6, but the court shall not grant the same unless
it is satisfied that the applicant will be prejudiced
in the conduct
of his claim or defence if it be not granted.
’
[12]
The court has a discretion which must be exercised judicially and the
key consideration in the exercise of that discretion
is one of
prejudice. A matter which is scandalous or vexatious can at the
discretion of the court be struck out of a pleading only
if the court
is satisfied that the applicant for the striking out will be
prejudiced in the conduct of his defence if such strike
out would not
be granted.
[3]
[13]
In order to decide whether this court should exercise its discretion
and strike out the offending paragraphs it is necessary
to set these
out in detail. Paragraph 11.3 reads as follows:
[4]
‘
The claim comprises rentals or
residential space, the provision of lunches and the payment of
insurance premiums on behalf of the
insolvent. In para 28.1 I
erroneously refer to this claim as one for services rendered. I
apologise for such error. The claim is
for the items as set out in
the invoices.’
[14]
Paragraph 12.1 relates to the second applicant’s claim and
reads as follows:
[5]
‘
This claim comprises monies
lent and advanced and/or expenses paid on behalf of the insolvent by
the Second Applicant.’
[15]
Paragraph 13.1 reads as follows:
[6]
‘
This claim relates to an
advance of R 250 000 by the Third Applicant to the insolvent.’
[16]
Paragraph 14.1 reads as follows:
[7]
‘
This claim comprises a loan of
an amount of R 350 000 by the Wishy Family Trust to the
insolvent.’
[17]
Paragraph 15.1 reads as follows:
[8]
‘
This claim was for an amount of
R 86 374,65.’
[18]
Paragraph 15.2 reads as follows:
[9]
‘
The claim comprised or arose
from the monies lent and advanced by the Fifth Applicant to the
insolvent, alternatively was made up
of expenses paid on behalf of
the insolvent by the Fifth Applicant.’
[19]
Paragraph 9 reads as follows and comprises various subparagraphs:
[10]
‘
9.1. I became a director of the
First Applicant on 5 August 2013.
9.2. The First Applicant is the
registered owner of the immovable property situated at 16 Hilton
College Road, Hilton.
9.3. The improvements on the property
include what is styled Brookfield Farm House. That comprises a number
of self contained cottages.
Each cottage has a name assigned to
it.
9.4. Mr Wishart hired from the First
Applicant three such units called Jade, Lavender and Terracotta.
9.5. The purpose of such tenancy was
to provide Mr Wishart and his family with a home to live in.
9.6. The terms of the tenancy included
an obligation on the part of Mr Wishart to pay a portion of the
electricity consumed at the
premises, as well as a levy.
9.7. In addition thereto Mr Wishart
would be provided with lunch by the establishment, Brookfield Farm
House, the cost of which
would be debited to him
and recouped from him together with the monthly rental.
9.8. The claim amount is made up as is
set out in the statement of account dated 31 August 2013 which was
attached to the claim.
The rental in respect of the premises as
explained in 9.6, was R8 500,00 per month, including VAT. The rental
for June and July
had been paid but the rentals for April, May and
August 2013 remained unpaid. The balance of the amount owed was
made up
of the other charges being lunches and insurance which were
separately invoiced.
9.9. The Master’s reason for
rejecting this claim was that the quantum of the claim could not be
established. The matters
raised on behalf of the Second Respondent,
clearly are misplaced and had nothing to do with the quantum of the
claim. The quantum
of the claim was fully documented in terms of the
statement of account and invoices attached to the claim which I
verified.
9.10. As is quite evident from the
claim as well as the supporting documents, this claim relates to
rentals and a lease and had
nothing to do with a loan.’
9.11. The attempt by the Second
Respondent to create some kind of confusion with regard to the claim,
is misplaced.
9.12. During the relevant period, that
is to say, from April to August 2013,I advised the First Applicant
with regard to its administration
and had first hand knowledge of
particularly the arrangements between it and Mr Wishart concerning
the letting of the particular
premises to Mr Wishart. With regard to
the preparation of invoices and statements of account rendered by the
First Applicant to
Mr Wishart, such invoices and statements of
account, were prepared under my supervision.
9.13. The First Applicant runs a
kitchen at Brookfield Farm House. It supplies meals including lunches
to visitors and guests. It
also in this instance, supplied lunches to
Mr Wishart. The amounts in respect of lunches relate to lunches
supplied to Mr Wishart.
These are charged out on a monthly basis as a
lump sum.
9.14. The amounts in respect of
insurance, relate to a portion of the insurance premiums paid by the
First Applicant to its insurance
brokers Graham Kippen Insurance
Brokers of Hilton in respect of the contents of the particular units
occupied by Mr Wishart and
his family.
9.15. The Eskom charges relate to a
fixed recovery for the electricity consumed in the three particular
units.
[20]
Paragraph 10 likewise comprises various subparagraphs and reads as
follows
[11]
10.1 The
Master’s reason for rejecting this claim was that on the face
of the documents before the
Master the amount on the affidavit and
the amount on the vouchers differed.
10.2 This
claim was for an amount of R 1 602,40.
10.3 Such
amount comprised payments in respect of an internet facility for the
period May 2013 to August
2013.
10.4. As
previously explained, the claim was made up of the following amounts:
Invoice 161
R 815,10
Invoice 171
R 763,80
Invoice 179
R 256,50
(less
payment of R 233 reflected on the Accounts Receivable Transactions
due)
_________
Balance
R 1 602,40
10.5 The Assistant Master’s
finding that the amount on the affidavit and the amount on the
vouchers differed, was therefore
manifestly wrong.
10.6 I was first appointed as director
of the Second Applicant on 12 June 2010. All the transactions on
which this claim is based
took place during the period of my
directorship of the Second Applicant.
10.7 Since I was appointed as director
of the Second Applicant, its administration was conducted under my
supervision. I also have
first hand knowledge of the nature of the
particular claim. The Second Applicant has internet facilities which
it in turn makes
available to Mr. Wishart. Mr. Wishart’s use of
such facilities, forms the subject of periodic invoices, copies of
which I
have already referred to. The claim constitutes the
outstanding balance of the amounts invoiced to him by the Second
Applicant.
10.8 The Second Applicant has paid
certain charges in respect of the internet facilities which it enjoys
from its service provider.
The amount forming the subject of the
claim, is in fact Mr. Wishart’s share of the use of such
facilities, which, as explained,
had been invoiced to him, on a
regular basis. “
Legal
principles relating to the application to strike out
[21]
In
Titty’s
Bar and Bottle Store (Pty) Ltd v ABC Garage (Pty) Ltd &
others
[12]
the following is stated regarding the application to strike out and
is relevant to this matter:
‘
Mr.
Van
der Spuy's
submission is
that this sub-rule was meant to be exhaustive and that no
striking out application which is brought on any ground
other than
those mentioned, can succeed. He submits that the word "may"
was not intended to empower the Court to entertain
a striking out
application on other grounds; the intention was merely to give the
Courts a discretion and not to make it obligatory
to strike out
matter which is scandalous, vexatious or irrelevant. I agree
with Mr.
Van der Spuy
that the use of the word "may" merely indicates that the
Court has a discretion but, in spite thereof, the sub-rule was,
in my
view, not intended to be exhaustive. The Court still has an inherent
jurisdiction to grant relief where the Rules of Court
make no
provision therefor.’
[13]
[22]
The Supreme Court of Appeal (‘SCA’) in
Beinash
v Wixley
[14]
held as follows:
‘
What is
clear from this Rule is that two requirements must be satisfied
before an application to strike out matter from any affidavit
can
succeed. First, the matter sought to be struck out must indeed be
scandalous, vexatious or irrelevant. In the second place
the
Court must be satisfied that if such matter was not struck out the
parties seeking such relief would be prejudiced
.’
[23]
The offending paragraphs that the second respondent seeks to strike
out does no more than to elucidate and correct certain
errors in the
founding affidavit relating to the claims of the applicants that were
rejected.
[24]
In exercising my discretion as to whether or not to strike out the
offending paragraphs, consideration must be given to the
nature of
these proceedings and whether or not the offending paragraphs
prejudiced the second respondent. In light of the fact
that these are
review proceedings, a measure of latitude should be allowed to the
parties to ventilate the issues, provided there
is no obvious
prejudice to the other party if additional facts are incorporated in
the replying affidavit.
[25]
There is in my view no prejudice to the second respondent if the
offending paragraphs are not struck out. The second respondent
is
aware of the nature of the applicants’ claims that were
rejected, and the additional facts provided in the replying
affidavit,
sets out some background information regarding the claims.
At the end of the day, these additional facts are, in my view, not
prejudicial
to the second respondent. In addition, the applicants are
not pursuing the claims referred to in para 14.1 and 15.1
[15]
and there can thus be no prejudice to the second respondent.
Accordingly, the application to strike out is refused, with costs.
There is no reason to depart from the usual rule in relation to
costs, and the successful party is entitled to its costs.
Locus
standi and Grounds of Review
[26]
Before dealing with the grounds of review, it is necessary to deal
with two aspects raised. Firstly in relation the
locus
standi
of the applicants and the challenge
raised by both the applicants’ and the second respondent to the
respective knowledge of
the deponents to the affidavits and the
claims submitted.
[27]
The review is one in terms of
s 151
of the
Insolvency Act which
reads
as follows:
‘
Subject to the provisions of
section
fifty-seven
any person aggrieved by any decision,
ruling, order or taxation of the Master or by a decision, ruling or
order of an officer presiding
at a meeting of creditors may bring it
under review by the court and to that end may apply to the court by
motion, after notice
to the Master or to the presiding officer, as
the case may be, and to any person whose interests are affected…’
[28]
The SCA has authoritatively dealt with reviews in terms of s 151 of
the Act in
Nel
& another NNO v The Master
(
Absa
Bank Ltd & others intervening
).
[16]
In such judgment Van Heerden AJA writing for a full unanimous court
stated that the review envisaged by
s 151
of the
Insolvency Act is
the review recognised in
Johannesburg
Consolidated Investment Co v Johannesburg Town Council
[17]
namely, that a court could enter upon and decide the matter
de
novo,
and, it possesses not only the powers of a court of review in the
legal sense, but it has the functions of a court of appeal with
the
additional privileges of being able, after setting aside the decision
arrived at, to deal with the matter upon fresh evidence.
[18]
[29]
‘A person aggrieved’ for the purposes of
s 151
of the
Insolvency Act is
someone who is injured or wronged in his rights or
interests. The term a person aggrieved is capable of a wider meaning
in that
it also includes a person who has a legal grievance as well
as a trustee who may also institute review proceedings in terms of
this section.
[19]
[30]
In my view, having regard to the authorities referred to, the
applicants clearly fall within the category of a person aggrieved
and
are accordingly entitled to institute these review proceedings in
relation to the rejection of their claims by the first respondent.
However, I agree with the submission that in order for the
applicants’ to challenge the claim of FRB they have to succeed
in having at least one of their claims admitted in order to have
locus standi
to
challenge the admission and approval of FRB’s claim.
[31]
A further matter which warrants attention is whether the applicants’
are correct in the submission that the representative
of FRB did not
have personal knowledge of the facts deposed to nor did the
representative have personal knowledge of the claim.
FRB also takes a
similar view in relation to Sinclair.
[32]
As correctly pointed out by Galgut AJ in
R
v Varachia
:
[20]
‘
In my view the words “fully
cognizant” in
sec. 44
(4) do not mean that the deponent to
an affidavit of proof of claim must have personal knowledge of each
transaction. No firm
employing hundreds of employees could ever prove
a claim in an insolvent estate if a director or secretary or manager
could not
make the affidavit from the information contained in the
books. It would be impossible in proving claims in insolvent estates
to
file affidavits from all employees past and present and who
had been concerned in every portion of each transaction. I am of
the
view that the words “fully cognizant” in the section
should be read as “fully informed”, and therefore
in so
far as this aspect of the matter is concerned, that the claim has
been properly proved.’
[33]
The deponent to the affidavit on behalf of the applicants, Mr ML
Sinclair (Sinclair), sets out the basis upon which he acquired
knowledge in respect of each of the claims and the documentation he
had regard to when compiling the affidavits in respect of each
claim.
I am therefore satisfied that he is fully cognizant and has knowledge
of the claims as is required by
s 44(4)
of the
Insolvency Act. A
similar view pertains in relation to FRB’s deponent.
[34]
At the meeting of creditors, a claim must be proved to the
satisfaction of the presiding officer who, must either accept or
reject the claim.
[21]
The
presiding officer performs a quasi-judicial function and must
exercise an independent judgment as to whether or not to admit
or
reject a claim.
[22]
[35]
It is not the duty of the presiding officer to look at the claim
cursorily but to scrutinise it to see if ought to be admitted.
The
presiding officer should focus on the essential allegations of the
claim and not look for purely technical or formal defects.
The
claim need not to be proved on a balance of probabilities, prima
facie proof of the claim is sufficient.
[23]
[36]
If the claim on the face of it is bad, the presiding officer is
entitled to reject it; conversely if prima facie proof of the
claim
is produced the presiding officer should then admit the claim.
[24]
The presiding officer should not, unless the claim is bad, reject the
claim without hearing the evidence of the creditor in terms
of
s
44(7)
of the
Insolvency Act which
reads as follows:
‘
The officer presiding at any
meeting of creditors may of his own motion or at the request of the
trustee or his agent or at the
request of any creditor who has proved
his claim, or his agent, call upon any person present at the meeting
who wishes to prove
or who has at any time proved a claim against the
estate to take an oath, to be administered by the said officer, and
to submit
to interrogation by the said officer or by the trustee or
his agent or by a creditor or the agent of a creditor whose claim has
been proved, in regard to the said claim.’
[37]
In the founding affidavit, the applicants contend that the first
respondent should not have rejected the claims outright,
alternatively
,
in the event of uncertainty the first respondent ought not to have
rejected them without invoking
s 44(7)
of the
Insolvency Act. The
applicants’ further argue that the nature, amount and
particulars of each claim have been established for a court to
exercise
its powers of review and to admit the claims. The second
respondent on the other hand argues that each of the applicants’
claims on the face of it is bad and accordingly the first respondent
was entitled to reject each claim without having to invoke
the
provisions of
s 44(7)
of the
Insolvency Act.
[25
]
[38]
It is therefore necessary to look at each claim as it was submitted
to determine whether the first respondent was correct in
rejecting
the claim without invoking the provisions of s 44(7) of the Act.
The
first applicant’s claim (Claim 4)
[39]
In the affidavit in support of the claim, Sinclair records that he is
the director of the first applicant and has control of
the books and
records of the first applicant. On examination of the records it was
established that the insolvent was indebted
to the first applicant in
the sum of R30 547.27 which amounts were reflected on the ledger
sheet. In his founding affidavit
Sinclair records that these amounts
were owed in respect of services rendered to the first applicant.
[40]
In the supplementary affidavit, Sinclair records that he erroneously
referred to the claim as services rendered when in fact
it comprised
of rentals for residential space, provision for lunches and payments
for insurance premiums paid on behalf of the
insolvent.
[41]
The first respondent in rejecting the claim advanced the following
reasons for doing so:
[26]
‘
Claim 4: on the face of the
documents before me, the quantum of the claim could not be
established. The claim was rejected because
it appeared to be an
unliquidated claim.’
[42]
The first applicant contends that the amount is a liquidated claim
for a fixed sum of money which is supported by invoices
comprising a
breakdown as to how the amount is computed. The documents put up
supporting the claim sufficiently particularised
the substance and
nature of the amount claimed and accordingly the claim ought not to
be rejected.
[43]
The second respondent objects to the claim recording that the
property in respect of which the rent is claimed has not been
identified, likewise the insurance and other expenses. The first
respondent joins issue with the second respondent in respect of
the
inconsistency regarding the description of the claim. In addition,
there is no indication of how the rental is arrived at and
whether
the lease agreement was written or oral.
[44]
In respect of the amount allegedly owing to Eskom, it is unusual for
the amount to be ‘in such a round number’.
The rental
invoices do not refer to the insolvent but instead refer to ‘Rent
Jade, Lavender and Terracotta’. Insofar
as insurance is
concerned it is not suggested that the first applicant is an
insurance company and why the insolvent would be indebted
for
insurance. Likewise, it is not clear how the amount claimed for
lunches is calculated.
[45]
The second respondent also contends that the documentation of the
first applicant discloses that it is a VAT vendor. Notwithstanding
this, certain of the invoices on which it relies do not reflect VAT.
Those that do include VAT are for the same amount as
those that
exclude VAT and the same applies to the insurance invoices. The
second respondent accordingly contends that the first
respondent was
correct in rejecting the claim as same was badly formulated.
The
second applicant’s claim (Claim 5)
[46]
In the founding affidavit, Sinclair records that the claim is for an
amount of R1 602.40 in respect of monies lent and
advanced to
and/or expenses paid on behalf of the insolvent.
[47]
The first respondent in rejecting the claim advanced the following
reasons for doing so:
[27]
‘
Claim 5: On the face of
the documents before me, the amount on the affidavit and the amount
on the vouchers differed, the
claim was rejected.’
[48]
The second applicant explains the amount claimed as follows in the
heads of argument:
[28]
‘
Para 4.1 of the affidavit
deposed to by Mr Sinclair makes it clear that only R 23,50 in respect
of Inv 179, forms part of the claim.
That being the case, the sum
total of Inv 161, Inv 171 and a portion of Inv 179, makes up the
total amount of the claim, namely
R 1 602,40 (R 815,10 + R 763,80 + R
23,50).’
[49]
The second applicant therefore contends that the first respondent
committed a misdirection by rejecting the claim. The claim
relates to
monies advanced and/or expenses paid on behalf of the insolvent which
is perfectly ‘apt in the circumstances’.
The essence of
the claim is that the second applicant defrayed certain expenses on
behalf of the insolvent.
[50]
The second respondent objects to the claim and records that since
Sinclair cannot state what amount relates to monies lent
and what
amount relates to expenses paid confirms his lack of knowledge
regarding the claim. According to the second respondent
the claim the
second applicant sought to prove in the meetings of creditors was for
internet facilities and not for monies lent
and advanced.
[51]
According to the second respondent the certificate refers to the
principle business of the second applicant as relating to
retail
trade, except for motor vehicles and motor cycles, and repair of
personal and household goods. The second applicant is not
described
as conducting an internet business.
[52]
The second respondent also records that Sinclair has not produced any
contract in respect of providing internet services to
the insolvent.
There is also no allegation of how the amount is arrived at nor is
there any indication of the terms on which the
second applicant
provided internet facilities to the insolvent.
The
third applicant’s claim (Claim 6)
[53]
In the affidavit in support of the claim, Sinclair records that the
claim for R250 000 relates to a loan advanced by the third
applicant
to the insolvent. A Standard Bank statement is attached which records
that the amount of R250 000 was paid to the insolvent
on 19
June 2009 and the reference is recorded as
a ‘loan’.
[54]
The first respondent in rejecting the claim advanced the following
reasons for doing so:
[29]
‘
Claim 6: On the face of
the documents before me, the amount on the affidavit and the amount
on the vouchers differed, the
claim was rejected.’
[55]
The third applicant contends that the first respondent’s
rejection of the claim, namely that the amount in the affidavit
and
the amount in the vouchers differed is not intelligible. The reason
is that the claim is clearly recorded in the founding affidavit
for
the sum of R250 000, and, the detailed ledger account of the third
applicant and the bank account record the amount as a loan.
[56]
The second respondent records that the description ‘LOAN’
does not indicate what this means and accordingly the
reference to
loan is not only hidden but is also unclear. The second respondent
also alleges that
ex facie
the claim affidavit and the supplementary affidavit, the claim became
prescribed by no later than 18 June 2012.
[57]
The business of the third applicant is described as mining and
quarrying and has nothing to do with money lending. Insofar
as the
interrupting of prescription by an acknowledgement of liability is
concerned, it is recorded that there is no indication
when the
acknowledgement occurred or whether it occurred before or after the
claim had prescribed.
[58]
Attached to the third applicant’s claim is a letter dated 5
November 2013 wherein the insolvent confirms his indebtedness.
The
second respondent submits that this letter is dated after the claim
had prescribed and therefore cannot interrupt the running
of
prescription and accordingly the first respondent correctly rejected
the claim.
The
fourth and fifth applicants’ claims (Claims 7 and 8)
[59]
In the heads of argument no submissions are made with regard to these
claims and accordingly the fourth and fifth applicants
have abandoned
these claims.
The
sixth applicant’s claim (Claim 9)
[60]
The claim is for a total amount of R475 000 in respect of money lent
and advance to the insolvent by the sixth applicant in
the sum of
R275 000 on 23 May 2013 and R200 000 on 19 August 2013 respectively.
The insolvent sent a letter, dated 5 November 2013,
in which he
confirmed his indebtedness to the sixth applicant for the total
amount of the claim.
[61]
The first respondent in rejecting the claim advanced the following
reasons for doing so:
[30]
‘
Claim 9: the claim was
rejected because the cause of action was not clearly stipulated and
the supporting documents were not
attached.’
[62]
The sixth applicant contends that the cause of action in respect of
the claim is clearly stated as a loan and that there is
no
requirement in s 44 of the Act that any document should be attached
to the claim.
[63]
The statement by Sinclair that he personally participated in the
granting of the loan is sufficient and cannot be ignored.
It is also
contended that the first respondent could have invoked the provisions
of
s 44(7)
of the
Insolvency Act if
it was not satisfied with the
claim and having not done so, the inference to be drawn is that the
first respondent was satisfied
with the claim.
[64]
The second respondent records that Sinclair does not state whether
the loan was effected orally or in writing, nor are there
any minutes
of meetings attached in support of the claim. On Sinclair’s own
version, he is not a director of the sixth applicant
and it is not
clear what he means when he says he personally participated in the
granting of the loans. Accordingly it was submitted
that the first
respondent correctly rejected the claim.
The
seventh and eighth applicants’ claim (Claim 10)
[65]
In the affidavit in support of the claim, it is recorded that the
claim relates to an agreement of sale of shares in a company
known as
Eurocoal (Pty) Ltd by the seventh and eighth applicants to the
insolvent for a total purchase price of R50 000 000.
[66]
The seventh applicant records that the insolvent paid the sum of
R48 062 500 to the trustees of the eighth applicant on
5 March
2007 and such payment was made by a company known as Borneo
Investment Group Incorporated. This payment was set aside as
being a
disposition without value and that the amount in the court order as
amended was reduced to R45 000 000. The insolvent failed
to pay the
purchase price of the shares to the eighth applicant and was
therefore indebted to Sinclair and the eighth applicant
in the sum of
R45 232 397.26.
[67]
The first respondent in rejecting the claim advanced the following
reasons for doing so:
[31]
‘
Claim 10: the claim was
rejected because the cause of action was not clearly stipulated and
the supporting documents were not attached.’
[68]
The seventh and eighth applicants contend that on a prima facie level
the claim has been adequately set out in the affidavit
deposed to by
the seventh applicant. The effect of the court order is that
liability for the amount of R45 000 000 accrued which
is contended
constitutes the insolvent’s indebtedness to the seventh and
eighth applicants, and accordingly the claim should
not have been
rejected.
[69]
The second respondent records that the claim is misconceived in that
there is no evidence that the proof of claim affidavit
is an
affidavit in that the commissioner of oaths did not print his/her
full name below the commissioner’s signature. Accordingly
there
has been a non-compliance with
s 10
of the Justices of the Peace and
Commissioners of Oaths Act 16 of 1963 and therefore there is no proof
of the claim.
[70]
The second respondent also questions the court order (annexure ‘C’)
and annexes a court order annexure ‘AA6’
to the answering
affidavit. The second respondent records that no judgment was granted
against the seventh applicant and that the
judgment was granted
against the joint trustees of the eighth applicant of which the
seventh applicant is one.
[71]
The second respondent also records that the allegation that 10 per
cent and 40 per cent shares in Eurocoal were sold is incorrect
and
that the sale related to 5 per cent and 45 per cent which allegations
are admitted by the seventh applicant. It is also recorded
that there
are conflicting affidavits regarding the sale of the shares and that
the monies are owed by the Logan Trust and not
the insolvent. The
second respondent also alleges that the claim prescribed by March
2010.
[72]
A rescission application is pending to rescind the judgment in
respect of the order setting aside the payment exceeding R45
000 000
as a disposition without value by Eurocoal and since this application
has not been finalised, the seventh and eighth applicants
are
precluded from seeking to prove this claim.
The
decision to admit and approve the Second Respondent’s claim
[73]
The applicants also seek to review and set aside the first
respondent’s decision to admit a claim by the second respondent
in an amount of R32 132 884.95.The second respondent had a
pledge over an aircraft as security for the debt and such security
was realised in the amount of R13 489 392 which was not taken into
consideration when the claim was admitted.
[74]
The second respondent admits it received an advanced dividend of R10
000 000 and claimed that such payment had taken place
in terms of a
practice designed to stop the generation of interest. The second
respondent further contends that the dividend was
paid on a
provisional basis and remains dependant on the claim being confirmed
in the liquidation and distribution account. Having
regard to the
authorities referred to in the heads of argument,(Mars) there appears
to be a sound basis for the practice. The second
respondent is
however prepared to have its claim reduced to R22 132 884.95 if
so required by the court.
[75]
As mentioned earlier, the first respondent performs a judicial duty
when she presides over a meeting of creditors and claims
are produced
before her. In each instance the first respondent is expected to
thoroughly scrutinise a claim to see whether prima
facie the debt
ought to be admitted. The duty of the first respondent is not merely
to look at the claim cursorily but to examine
it carefully and
establish whether or not it should be admitted.
[32]
[76]
In
Aircondi
Refrigeration (Pty) Ltd v Ruskin NO & others
[33]
Nicholas J said the following about a proof of a claim at a meeting
of creditors:
‘
From these provisions it
appears that there are two elements in the proof of a claim:
(a)
The submission of an affidavit in the prescribed form; and
(b)
the satisfaction of the officer presiding at the meeting that it is
valid
. . .In regard to
(b)
the
presiding officer performs a
quasi-
judicial function. . . .As
such he must exercise an independent judgment. Unless a claim is on
the face of it bad, he should not
reject it without hearing the
creditor’s evidence under ss (7).’
[77]
There is nothing in the reasons advanced by the first respondent to
suggest that she applied her mind and considered invoking
s 44(7)
of
the
Insolvency Act. It
is trite that the exercise of public power by
a functionary such as the first respondent should not be arbitrary.
The first respondent
performs an important function in the
consideration of claims and is in the best position to consider the
applicants’ claims
and in particular, whether an interrogation
of such claims should be called for in terms of
s 44(7)
of the
Insolvency Act.
[34
]
[78]
In my considered view, it is in the interests of justice that this
matter be referred back to the first respondent for proper
consideration. The papers contain numerous factual disputes which
dictate that this is the most expedient route to follow in this
matter. The first respondent can consider and apply her mind as to
whether
s 44(7)
of the
Insolvency Act should
be invoked.
[79]
If the first respondent considers invoking the provisions of
s 44(7)
of the
Insolvency Act, the
complaint of the second respondent
regarding the applicants claims referred to earlier in this judgment
can be fully ventilated.
This may or may not shed light on the nature
of the claims and may or may not clarify the complaints of the second
respondent regarding
the validity or otherwise of the applicants’
claims.
[80]
This is not a matter where this court should substitute its findings
regarding the applicants’ claims as to whether or
not the first
respondent correctly rejected the claims. The first respondent’s
reasons clearly indicate that she did not
apply her mind fully to
each of the claims and accordingly it is desirable to refer the
matter back to the first respondent for
reconsideration.
[81]
Insofar as the applicants’ objection to the admission of the
second respondent’s claim is concerned, for reasons
already
mentioned, I agree with the submissions that the admission and
approval of this claim was based on a judgment obtained.
There can be
no fault with this finding by the first respondent. In addition,
authorities appear to be ad idem that the applicants
are “persons
aggrieved” for purposes of establishing their
locus
standi
to institute review proceedings
against the refusal by the first respondent to admit and approve
their claims.
[82]
The next issue raised in opposition by the second respondent is the
issue of the applicants’
locus standi
to seek this relief. The second respondent submits that until such
time as a claim of the applicants is admitted, the applicants’
have no standing in the matter. In order for the applicants to
challenge the claim of FRB, they must succeed in having at least
one
of their claims admitted in order to have locus standi to challenge
the admission and approval of FRB’s claim. I agree
that until
such time as they are “creditors” they do not have the
necessary ‘
locus standi’
to
review and set aside the decision of the first respondent to admit
and approve the second respondent’s claim.
[83]
It must follow that I do not agree with the submission that to find
they have no
locus standi
in that respect negates the constitutional rights recognised in s 34
of the Constitution of access to the court. In any event this
is not
an appropriate matter given the facts to determine that issue.
[84]
I am of the view that the decision to admit the second respondents’
claim is unassailable despite the reasons advanced
by the
applicants’. There can be no complaint that the decision to
admit the claim was correct on the facts of the matter.
However, the
amount of the claim falls to be reduced to R22 132 884.95.
Despite the amount derived from the sale of the aircraft,
the
dividend advanced by the joint liquidators was in the sum of R10
million, this is not disputed.
[85]
The reduction in the amount of the admitted claim is not at the
behest of the applicants’ as I am of the view, there
are sound
reasons for doing so. This court can reduce the FRB claim to an
amount which is not disputed.
[35]
There is also the limited concession contained in the second
respondent’s answering affidavit
[36]
and further amplified in their heads of argument
[37]
and practice note
[38]
submitted.
Costs
[86]
Insofar as the costs occasioned by the unsuccessful application to
strike out, this has been dealt with in the judgment.
[87]
The applicants submit if successful, FRB ought to be mulcted in
costs. FRB on the other hand submits that the applicants ought
to
bear the costs of the application and the costs ought not to come
from the insolvent estate.
[88]
Section 151bis
of the
Insolvency Act reads
“
Costs of review
If the court reviewing any matter
referred to in section one hundred and fifty-one confirms any
decision, ruling, order or taxation
of the Master or officer referred
to in that section the costs of the applicant for the review of that
matter shall not be paid
out of the assets of the estate concerned
unless the Court otherwise directs.”
[89]
As regards the costs of the review application, the applicants have
been substantially successful in this matter although they
have
abandoned certain of the relief set out in the notice of motion. In
addition, likewise FRB has also been substantially successful
in that
this court has confirmed the ruling of the first respondent to admit
the claim. The review of the ruling relates to the
amount of the
claim only. There accordingly is no reason why costs should not
follow the result and such costs consequent on the
employment of two
counsel be paid by the estate of the insolvent. Given the facts of
the matter and the nature of the orders granted,
it seems to be the
fairest order to issue.
Conclusion
[90]
In the result, for the reasons dealt with hereinbefore, I make the
following orders:
[90.1] The decision
of the first respondent at the first meeting of creditors on 8
November 2013 to reject the first, second,
third, sixth, seventh and
eighth applicants’ claims is reviewed and is hereby set aside.
[90.2] The matter
is referred back to the first respondent for reconsideration of the
first, second, third, sixth, seventh
and eighth applicants’
claims. In reconsidering such claims the first respondent is to give
consideration to invoking the
provisions of
section 44(7)
of the
Insolvency Act 24, 1936
.
[90.3] The decision
of the first respondent to approve the claim of the second respondent
in the amount of R32 132 884.95
is reviewed and set aside
only to the extent that the amount of the claim is reduced to the sum
of R 22 132 884.95.
[90.4] The second
respondent’s application to strike out is dismissed with costs.
[90.5] The costs of
this application including the costs consequent upon the employment
of two counsel are to be paid by the
insolvent estate of Grant Logan
Wishart.
HENRIQUES
J
Case
Information
Date
of hearing: 5 December 2014
Date
of judgment: 21 December 2018
APPEARANCES
For
the applicants: CJ Hartzenberg SC with LE Combrink SC
Instructed
by: Venns Attorneys
270
and 281 Pietermaritz Street
Pietermaritzburg,
3201
Tel:
033 355 3153
Fax:
033 345 3363 (Ref: Mr A.J.L.Geyser)
E-mail:
andries@venns.co.za
/
carmen@venns.co.za
For
the second respondent: J Suttner SC with A Eyles SC and P Cirone
Instructed
by: Hogan Lovells South Africa Incorporated as Routledge Modise
22
Friedman Drive
Sandton
Tel:
011 523 6146
Fax:
086 680 3004
E-mail:
wesselb@rmlaw.co.za
Ref:
WJJ/BADENHORST/MK/vk/32187
C/O
Austen Smith
Walmsley
House
191
Pietermaritz Street
Pietermaritzburg
Tel:
033 392 0500
Fax:
033 392 0555
Ref:
LINDY LOGIN/kn
Third
Respondent: Pierre De Villiers Berrange NO
Berrange
Incorporated
Suite
1, The Mews
Redlands
Estate
1
George MacFarlane Lane
Pietermaritzburg
Tel:
033 345 5331
Fax:
086 616 0043
Email:
tarryn@b-inc.co.za
[1]
The notice of motion refers to seven claims lodged by the eight
applicants. However, the applicants in paragraph [3] of their
heads
of argument have indicated that they are not pursuing the relief
sought in paragraphs 1.1.4 and 1.1.5 (the claims of the
fourth and
fifth applicants) read with paragraph 2 of the notice of motion.
[2]
Pages 209 to 210 and 225 to 226 of the record.
[3]
Swissborough Diamond Mines
(Pty) Ltd & others v Government of the Republic of South Africa
& others
1999 (2) SA
279
(T) at 337A-C.
[4]
See pages 214-215 of the Record.
[5]
See page 215 of the Record.
[6]
See page 216 of the Record.
[7]
See page 217 of the Record.
[8]
See page 219 of the Record.
[9]
See page 219 of the Record.
[10]
See pages 369–370 of the Record.
[11]
See pages 371–373 of the Record.
[12]
Titty’s Bar and
Bottle Store (Pty) Ltd v ABC Garage (Pty) Ltd & others
1974 (4) SA 362
(T) at 368F-H.
[13]
Neal v Neal
1959 (1) SA 828 (N).
[14]
Beinash v Wixley
[1997] ZASCA 32
;
1997 (3) SA 721
(SCA) at 733A-C.
[15]
Claim no 7 and no 8.
[16]
Nel & another NNO v The
Master
(
Absa
Bank Ltd & others intervening)
2005 (1) SA 276 (SCA).
[17]
Johannesburg Consolidated
Investment Co v Johannesburg Town Council
1903 TS 111.
[18]
Johannesburg Consolidated
Investment
supra at 117;
Nel v The Master
supra para 22.
[19]
Francis George Hill Family
Trust v South African Reserve Bank & others
1992 (3) SA 91
(A) at 102C-D;
Jeeva
& another v Tuck NO & others
1998 (1) SA 785
(SE) 792G-J;
Millman
& another NNO v Pieterse & others
1997 (1) SA 784
(C).
[20]
R v Varachia
1958 (4) SA 529
(T) at 532D-G.
[21]
Section 44(3)
of the
Insolvency Act.
[22]
Aircondi Refrigeration
(Pty) Ltd v Ruskin NO & others
1981 (1) SA 799
(W) at 804A-B.
[23]
Aspeling & another v
Hoffman’s Trustee
1917 TPD 305
at 307-8;
Hassim
Moti and Co. v Insolvent Estate M Joosub and Co.
1927 TPD 778
at 781;
Ben
Rossouw Motors v Druker, N O & others
1975 (1) SA 821
(W) at 825E-F.
[24]
Aspelilng
supra;
Ilsley v De Klerk, N.O. &
another
1934 TPD 55.
[25]
Ben Rossouw Motors
supra at 825E.
[26]
See letter dated 21 November 2013 at pages 209-210 of the Record.
[27]
See letter dated 21 November 2013 at pages 209-210 of the Record.
[28]
See para 21.3. of the Applicants’ Heads of Argument.
[29]
See letter dated 21 November 2013 at pages 209-210 of the Record.
[30]
See letter dated 21 November 2013 at pages 209-210 of the Record.
[31]
See letter dated 21 November 2013 at pages 209-210 of the Record.
[32]
Aspelling
supra.
[33]
Aircondi Refrigeration
supra
at 803H – 304B.
[34]
Steelnet
(Zimbabwe) Limited v Master of the High Court Johannesburg &
others
(2007/463)
[2008] ZAGPHC 185
(24 June 2008).
[35]
Section 45(3)
of the
Insolvency Act;
Garlicke
’s
Wholesale v Magistrate of Sutherland
1926
CPD 267
;
Rabinowitz v De
Beer NO
1983(4) SA
410 (T) at 412 E-F
[36]
See pages 270 to 272 of the record
[37]
Para 38
[38]
Para 7.5.