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[2016] ZAGPPHC 635
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Shackleton Credit Management (Pty) Ltd v Mashabane and Another (17571/2015) [2016] ZAGPPHC 635 (4 March 2016)
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REPUBLIC
OF SOUTH AFRICA
IN THE
HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE
NO: 17571/2015
DATE:
4/3/2016
(1)
REPORTABLE: NO
(2)
OF INTEREST TO OTHER JUDGES: NO
SHACKLETON
CREDIT MANAGEMENT (PTY)
LTD APPLICANT
AND
REXON
KHEGELE
MASHABANE FIRST
RESPONDENT
BONGEKA
ADELAIDE MASHABANE SECOND
RESPONDENT
JUDGMENT
THOBANE
AJ,
[1]
This matter came before me as an opposed application for a final
sequestration order of the respondents who are married to each
other
in community of property.
[2]
On 16 May 2012 BMW Financial Services obtained summary judgment
against the first respondent as well as a corporate entity known
as
Harraxel Enterprises CC. The order stated that judgment is granted
against both jointly and severally, the one paying the other
to be
absolved.
[3]
On 11 October 2012 BMW Financial Services ceded its right, title and
interest to the claim to Shackleton Credit Managment (PTY)
Ltd,
applicant in these proceedings. An attempt to execute against the
first respondent yielded a
nulla bona
return on 4 December
2014. I interpose to indicate that the execution proceedings were in
the name of BMW Financial Services.
[4]
On 10 March 2015 an application for sequestration was launched
against the respondents. It served before court on 22 April 2015,
on
which day a provisional sequestration order was granted returnable on
5 June 2015. The sequestration proceedings were instituted
in the
name of Shackleton Credit Management (PTY) Ltd to whom the rights,
title and interest to the claim had been ceded by BMW
Financial
Services who had obtained summary judgment.
[5]
On the return date, the respondents appeared in court with their
legal representatives and sought a postponement so as to be
able to
file opposing papers. Their request was acceded to. It was ordered
that they file their opposing affidavits by 19 June
2015. It was
further ordered that the respondents pay the costs of the
postponement jointly and severally the one paying the other
to be
absolved. The provisional sequestration order was extended to 22 July
2015. Both respondents failed to file their opposing
affidavits as
ordered.
[6]
The return date was extended a few more times until this matter came
before me in the opposed motion court f9r the week of the
25 to 29
January 2016. I heard the application on 26 January 2016 and extended
the return date until this judgment is delivered.
[7]
The applicant bases the application for sequestration of the
respondents on an act of insolvency. The applicant contends that
there was a warrant of execution served on the first respondent
personally
which yielded a
nulla bona
return (my
emphasis). This, the applicant submits, is an act of insolvency as
contemplated in section 8(b) of the Insolvency Act.
[8]
Further, in an endeavor to show that there is some advantage to
creditors, the applicant discloses that two things were done;
8.1.
A Windeed search was conducted to determine if the respondents were
members of any close corporation or directors of companies.
The
results were to the effect that the first respondent was a member of
nine close corporations and a director of two companies.
Four close
corporations and one company were found to be in business.
8.2.
Another Windeed search in respect of property ownership was
undertaken. The result thereof was that one of them, Makolele
Business Enterprises CC, owned immovable property known as […],
Pretoria. The first applicant was found to be the only member
of the
Close Corporation.
[9]
The applicant was able to establish that there is a bond registered
over the property in favour of Nedcor. Further, that although
the
registered bond was for the sum of R447 662-00, the applicant was of
the view that the estimated value of the property was
between R680
000-00 and R819 000-00 and that a trustee, in the event one is
appointed, would be able to yield a dividend that would
be to the
advantage of creditors.
[10]
In their opposition the respondents have raised four points
in
limine.
The second respondent has raised other points as the
basis on which the application is opposed. I will deal with them in
some detail
below. The points
in limine
raised are as follows;
10.1.
That since judgment was obtained in the name of BMW Financial
Services and subsequently ceded to Shackleton Credit Management,
the
applicant, there was an obligation to launch an application of
substitution. The right of the applicant to proceed in their
own name
in these proceedings is disputed.
10.2.
That the applicant should have first executed against a co-defendant,
Harraxel Enterprises, in the summary judgment application.
Further,
that the company, which has a substantial interest in this matter,
has not been joined in these proceedings.
10.3.
That the applicant has not complied with the provisions of
section 9
of the
Insolvency Act 24 of 1936
, in that a certificate of security
signed by the Master, has not been obtained.
10.4.
That a close corporation, Makolele Business Enterprise CC, of which
the first applicant is the sole member, and which owns
immovable
property known as […], Pretoria, has not been joined in these
proceedings and further that these papers have not
been served on it.
[11]
The first respondent further denies that he signed the lease
agreement which is the subject matter of the cause of action and
sits
at the center of the dispute between the parties, further that he was
not aware that a business associate of his had sought
and obtained
vehicle finance without his knowledge. On the other hand the second
respondent's defence is that when the lease agreement
in respect of
the motor vehicle was entered into, she was no longer living with the
first respondent and further she is of the
view that her consent was
required.
[12]
The issues for determination are twofold;
12.1.
Whether the raised points
in limine
are sustainable;
12.2.
Whether a proper case has been made for a final sequestration order.
[13]
When the provisional sequestration order was granted, it was common
cause that the first two requirements for a sequestration
order had
been met, namely, the petitioning creditor's claim was established
and the debtor had committed an act of insolvency
or was insolvent.
The applicant based its application on the fact that there had been a
nulla bona
return. Then, as now, the element in dispute
between the parties was whether it would be to the advantage of the
creditors if respondent's
estate was sequestrated. In seeking a final
order a petitioning creditor must establish the same three elements
but, however, whereas
a provisional order can be granted where the
Court is
prima facie
of the opinion that such elements have
been established, a final order will only be granted where the Court
is satisfied that these
elements have been established. Failing such
proof it must dismiss the petition for final sequestration or require
further proof
of any such element and postpone the hearing to that
end.
[14]
However, the test to be employed is a secondary requirement regard
being had to the fact that there are points
in limine
to be
given attention.
FAILURE
TO SUBSTITUTE APPLICANT
[15]
The respondents hold the view that in light of the fact that judgment
was obtained in the name of BMW Financial Services, the
applicant,
in
casu,
ought to have applied for an order substituting it in these
proceedings. The result of the respondents grievance, is that the
locus standi
of the applicant is placed in dispute. The
respondents contend that the applicant should have proceeded in terms
of
Rule 15
which provide that;
"(1)
No proceedings shall terminate solely by reason of the death,
marriage or other change of status of any party thereto
unless the
cause of such proceedings is thereby extinguished."
The
rule in my view caters for and contemplates a scenario different to
the one encountered in this matter. The rule identifies
death,
marriage and "other change of status of any party". It is
clear that in this matter we are dealing with neither
death nor
marriage. What remains is to determine if there has been a "change
of status of a party". A cession does not
amount to a change in
status as contemplated in
Rule 15.
It is my view that
Rule 15
does
not find application.
[16]
The respondent further relies on a
dicta
from an old Cape
decision of
Guinsberg
&
Pencharz v
Associated Press.
I was referred to the following excerpts on
page 157;
".......
The general rule, of course, is quiet clear that any right of action
may be ceded, and the authorities are also clear that amongst
rights
which can be ceded are judgments ..................... but
the best exact process by which execution can issue by the cessionary
has not been settled
.....
........The
provision, however, in Sande apparently is that application should be
made to the judge,
so
that leave may be granted to issue
execution, and that
seems
to me on the whole the right
procedure. I do not think it is the right proceeding- it certainly
was
not the proceedings contemplated under Roman Dutch law,
that the cessionary should be able to go and, without any reference
to the
judge, have a writ of execution issued in his own name or
using the name of the original claimant.
"
The
respondents make the point that there is uncertainty in this area of
the law. Not according to the applicant. The applicant
referred me to
Byron
v
Duke Inc
2002 (5) SA 483
(SCA)
from which it is clear that that our procedural law
permits a cessionary of a judgment claim to obtain a warrant in the
name of
the cedent. The following
dicta
by Zulman JA, is
apposite;
"First,
where a judgment creditor has ceded his rights it is not absolutely
necessary for the cessionary to obtain his substitution
on
the
record before he may sue out
a
writ in the name of the cedent.
De Villiers J in Schreuder v Steenkamp
1962 (4) SA 74(0)
at
76H put the matter in these brief terms:
"
Volgens die outoriteite is dit egter nie nodig vir 'n sessionaris
om die naam van die sedent met sy naam te laat vervang nie: hy
kan 'n
lasbrief uitneem in die naam van die sedent."
Besides
the aforegoing, a simple narration of the history, in my view, puts
paid to the contention that substitution was a necessity
and
therefore failure to do so is fatal to the application. These are
sequestration proceedings. It is a matter of record that
a judgment
was obtained, an asset was attached and sold in execution and that
the first respondent was pursued for the balance.
In the process of
seeking to recover the balance, a
nulla bona
return was
rendered. In separate proceedings, the applicant launched an
application for the sequestration of the applicants. In
the
sequestration application the applicants sketch the history of the
matter as well as circumstances of the act of insolvency
relied upon.
This being a new cause of action and provided the history of the
matter which include the cession is laid bare, and
also in light of
the aforementioned authorities, I do not find it necessary for the
applicant to apply for substitution. Consequently
this point
in
limine
must fail.
EXECUTION
AGAINST A COMPANY
[17]
The first respondent contends that since judgment was obtained
against himself as a well as Harraxel Enterprises CC, the applicant
was under obligation to seek to recover the judgment amount from
Harraxel Enterprises CC before pursuing him. Further that the
nonjoinder of Harraxel Enterprises CC, who has a substantial interest
in these proceedings, is fatal to this application. The first
respondent however does no end there, he goes further to make
allegations of fraud, harassment as well as Constitutional
violations.
There are serious flaws in the first respondents
submissions. Those being the following;
17.1.
The submission by the first respondent that Harraxel should have been
contacted first with a view to seek to recover the judgment
debt, is
baseless. For the simple reason that the judgment was obtained
against both the first respondent and Harraxel "jointly
and
severally, the one paying the other to be absolved". Any
creditor is within his or her rights, where there are co-debtors,
to
pursue payment of the debt against any of the co-debtors. There is no
obligation on the creditor to pursue each co-debtor for
his or her
portion of the joint debt. Any of the co-debtors who ends up paying
has a claim against his or her co-debtors for their
portions of the
debt. This is trite.
17..2..
The second point the first respondent makes is that Harraxel has a
substantial interest in these proceedings and therefore
should have
been joined. Bearing in mind that this is an application for the
sequestration of the respondents, it is puzzling why
the first
respondent would be of the view that a Close Corporation of which he
is a member should be joined in an application for
his sequestration.
The
first respondent makes bald allegations that the applicant is
harassing and oppressing them in an unconstitutional manner.
What
is lacking are details of such harassment and/or oppression.
Further, an allegation is made that fraud is prevalent in
this
matter. I can only surmise that the first respondent is referring
to the alleged involvement of Mr. Muhanganei. His involvement
is
canvassed in detail in the papers. For purposes of the point
in
limine
his involvement is irrelevant.
MASTER'S
CERTIFICATE
[18]
Whereas the first respondent had raised a point that the master's
certificate had not been filed, in argument before me counsel
for the
respondent, correctly in my view, conceded that there was a
certificate filed and that the point is abandoned.
THE
MATRIMONIAL PROPERTY ACT
[19]
The second respondent opposes the application on two grounds;
19.1.
That on the 7 February 2002 she was, without her knowledge, resigned
as a director of Harrexel. Further, that during 2007
the first
applicant, with whom she is married in community of property, left
the common home and they have not been staying together
as husband
and wife since that time. Although still legally married,
communication was lost between the two of them and that such
loss of
communication persists to this day. The point being made is that when
the BMW motor vehicle was purchased or when the first
respondent
signed as surety, she was no longer staying with the first respondent
as husband and wife.
19.2.
That the first applicant, as they were legally married at the time
the surety was signed, ought to have obtained her consent
in
accordance with the provisions of section 15(2)(h) of the Matrimonial
Property Act. The section provides as follows;
15.
Powers of spouses
(1)
Subject to the provisions of subsections (2), (3) and (7), a spouse
in a marriage in community of property may perform any juristic
act
with regard to the joint estate without the consent of the other
spouse.
(2)
Such a spouse shall not without the written consent of the
other spouse
-
………………………
.
………………………
.
(h)
bind himself as surety.
[20]
The applicant attacks the point
in limine
on two fronts.
Firstly, on the basis that the first respondent signed as surety in
the normal course of his trade, business or profession.
Therefore, so
it is argued, the provisions of section 15 do not apply. Secondly,
that in terms of the provisions of section 15(9),
where a party does
not know or is not reasonably expected to have known, that a
transaction is without the requisite consent, the
consent is deemed
to have been given. The aggrieved spouse will have recourse in the
joint estate. On the one hand section 15(6)
provides that;
"(6)
The provisions of paragraphs (b), (c), (f), (g) and (h)of subsection
(2) do not apply where an act
contemplated in those paragraphs is performed by
a
spouse
in the ordinary course of his profession, trade or business.
"
On
the other hand, the provisions of section 15(9) are as follows;
(9)
When
a
spouse enters into
a
transaction with
a
person contrary to the provisions of subsection (2) or (3) of this
section, or an order under section 16 (2), and
-
(a)
that person does not know and cannot reasonably know that the
transaction is being entered into contrary to those provisions
or
that order, it is deemed that the transaction concerned has been
entered into with the consent required in terms of the said
subsection (2) or (3), or while the power concerned of the spouse has
not been suspended, as the case may be;
(b)
that spouse knows or ought reasonably to know that he will
probably not obtain the
consent required in terms of the said
subsection (2) or (3), or that the power concerned has been
suspended, as the case may be,
and the joint estate suffers
a
loss as
a
result of that transaction, an
adjustment shall be effected in favour of the other spouse upon the
division of the joint estate.
[21]
The two lines of attack by the applicants are in my view dispositive
of the defence of the second respondent. However those
must be looked
at closely in context. The first applicant describes Mr Muhanganei,
whom it is alleged fraudulently purchased the
motor vehicle from BMW
Financial Services as "a
Trucking Transport Contractor and
business associate".
The first respondent also confirms that
he knew Mr Muhanganei and trusted him well enough to allow him free
access to his office.
The posture that the first applicant takes
infers that Mr Muhanganei, who was his business associate with clear
and free access
to their offices, unbeknown to him, gained access to
information and documents. Armed with these, he managed to approach
BMW Financial
Services and purchased a motor vehicle. He also managed
to sign on behalf of the first applicant as surety or to put it
differently
somehow misrepresented himself to BMW, which
misrepresentation has left him having to fight off liquidation
proceedings.I shall
later deal with the relationship between the
first applicant and Mr Muhanganei when I consider opposition of the
application on
the merits.
[22]
In casu,
it is more than plain that the first respondent
signed and when he signed the deed of suretyship and bound himself as
surety and
co-principal debtor for amounts owed to the applicant by
the first respondent, did so in the ordinary course of his business.
See
Amalgamated Banks of South Africa Bpk v Goede en 'n Ander
1997 (4) SA 66
(SCA).
(
cf
Nedbank Ltd v Van Zyl
[1990] ZASCA 12
;
1990 (2) SA 469
(A),
where it was the wife who stood surety
for the debts of her husband in a marriage in community of property.)
The defence raised
by the second respondent to the effect that she
had been married at the time and that her consent was not obtained,
is not available
to her in circumstances where a party, BMW, did not
know that consent was necessary or is not reasonably expected to have
had such
knowledge. This is so because the application for finance
presented to BMW stated that the first respondent was not married.
The
form shows that on completion thereof he stated that he was
single. In applying the reasonable man test, BMW could not have known
in these circumstances. See
Distillers Corporation Ltd v Madise
2001 (4) SA 1071
(0)
and
Strydom v Engen Petroleum Ltd
2013
(2) SA 187
(SCA).
THE
INSTALLMENT SALE AGREEMENT AND SURETYSHIP
[23]
According to the applicant the first respondent presented a whole lot
of documents when applying for vehicle finance some of
which are the
following;
•
First
applicant's ID,
•
Harraxel
CK2 Certificate,
•
Harraxel
financial statements,
•
Harraxel
bank statements,
•
Insurance
confirmation form,
•
Debit
order confirmation form,
•
Harraxel
resolution,
The
documents listed above are of such a nature that whoever procured
them for purposes of presentation to BMW, must have had serious
criminal intent, if the version of the first appellant is anything to
go by. Financial institutions need current and mostly confidential
information for purposes of vehicle finance approval. Any business
person who becomes aware that their confidential information
was
effectively stolen and presented, fraudulently, to a banking
institution will first and foremost open a criminal case. Surely
fraud would have been easy to prove with Mr Muhanganei as the prime
suspect.He had access to the premises, he possessed the ill
gotten
loot, his entity instructed a firm of attorneys to defend summary
judgment proceedings and paid a deposit towards that end
and he
returned the vehicle to the first applicant when it was sought for
repossession. The first respondent, despite all the criminality
involving his name and that of his his entity, and further despite,
as he says in his affidavit,
"sharing a deep concern over the
entire
saga", did nothing of that sort.
[24]
At first the monthly instalments would have been paid by Herraxel, in
terms of the documents supplied during the application
for financing.
It is not clear from the papers whether the first few instalments
went though the bank account of Harraxel. What
is alleged is that on
20 August 2009 the debit order instruction was changed so that Tshifs
Transport, Mr Muhanganei's entity,
would be responsible for payment
of the monthly instalments. What I find painfully lacking in the
first respondent's affidavit
is a clear and unequivocal statement
that "my signature has been forged" or "it is not me
who signed the application
for finance". When one considers the
fact that the vague denial of the first applicant is contradicted by
the second respondent
who states in her affidavit that she was told
by the first respondent that he, first respondent,
bought
the
vehicle (my emphasis), for a friend who did not enjoy a good credit
record, it muddies the first applicant's allegation of
fraud.
[25]
When one considers the claim by the first applicant to the effect
that he was too far away from the place where the Installment
Sale
Agreement was concluded, therefore it is impossible that he could
have been able to do so. Further, if one considers the allegation
by
the first respondent that someone, other than him must have signed
the agreement, without the benefit of context of the matter,
then in
that event one would be forgiven for thinking that the first
respondent is a victim of an elaborate fraudulent scheme of
which he
had been totally unaware and from which he never derived any benefit.
On his version, first respondent was approached
during 2010 by
tracers who inquired about the vehicle. He knew nothing of it and
told them that much. He was approached the second
time and this time
around he was provided with copies of documents. First applicant does
not state what those documents are, however
one can assume that it
was the documents dealing with the financing of the vehicle and the
purchase thereof by Harraxel. Even after
the second approach, the
first applicant told them he had no knowledge of what they were
talking about.
[25]
Co-incidentally, around that time he was getting notices of speeding
violations and again thought nothing of them save that
he was of the
view that the traffic authorities were mistaken in sending the
notices to him. When he saw one of the traffic notices
it occurred to
him that Mr Muhanganei was driving a similar motor vehicle. He tried
making contact with him unsuccessfully. The
strange co-incidence is
that he had been contacted much earlier by a tracer employed by BMW,
as early as July 2010, and according
to Ms. Wassermann, acknowledged
indebtedness, admitted that he had placed the motor vehicle in the
hands of a third party and made
an undertaking to pay. In light of
this and the fact that according to the second respondent she had
been made aware that the vehicle
was purchased for a friend, the
allegations of fraud made by the first applicant are rejected. In any
event and most importantly,
the first respondent does not deny
signing the deed of suretyship being the foundation of the judgment
obtained.
FINAL
SEQUESTRATION
[26]
Applicant founded its case for a final order of sequestration, on the
dictum in
Commissioner SARS v Hawker Air Services (Pty) Ltd; In
re Commissioner for, SARS v Hawker Aviation Services Partnership and
others
[2006] 2 All SA 565
SCA
at para [29], namely, that a
benefit to creditors is established where the Court is satisfied
"only that there is reason to believe
-
not
necessarily
a
likelihood, but
a
prospect not too remote
-
that as
a
result of investigation and inquiry assets
might be unearthed that will benefit creditors".
That dictum
was in turn based on findings in
Meskin and Co v Friedman
1948
(2) SA 555
(W) at 559
and
Dunlop Tyres (Pty) Ltd v
Brewitt
[1999] 2 SA 580
(W) at 585.
The inevitable question
is whether applicant has managed to satisfy the Court that there is
reason to believe that as a result of
investigation and inquiry,
assets might be unearthed that will benefit creditors.
[27]
The applicant argues that;
27.1.
The first respondent is the sole member of Makolele Business
Enterprise CC;
27.2.
Makolele Business Enteprise CC owns immovable property situated at
Portion […], Pretoria;
27.3.
A bond was registered over the property in 2008 for the sum of R447
662-90;
27.4.
The estimated value of the property is R680 000-00 and has
appreciated to as much as R 810 000-00;
27.5.
A trustee will be better suited to make a determination whether to
sell the property, to yield maximum benefits for creditors
or to deal
with it as he deems fit for the benefit of the creditors, having
established among others, if there are loan accounts
due to the first
respondent.
[28]
In
Lynn
&
Main v Naidoo and,Another
2006 (1) SA 59
(N),
Tshabalala JP, quoted with approval the
following at paragraph 39;
"
I agree with Mr. Harcourt that evidence that there is a matter for
investigation or enquiry by
a
trustee can be an advantage to
creditors. Indeed, that
is
what BOTHA JP said in
Lotzof
v Raubenheimer 1959(1) SA90(0).
He said at 94A-B:
"The
fact that the debtor has no assets or not sufficient assets to pay
the costs of administration is generally sufficient
proof that
sequestration would not benefit creditors
.....
That however
is not always the case, especially where
a
reasonable case has
been made out on the papers for an inquiry into the debtor's affairs
which may be beneficial to the creditor's
interests."
See
also
Stockowners Cooperative v Rautenbach 1960(2) SA 123
(E)
at 128 F and v
Chenille Industries v
Vorster 1953(2) SA 691 (0)
at 699 F
-
H.
"
[29]
The first respondent does not deal in his papers with the contention
by the applicant that an enquiry into their affairs will
be of
benefit to creditors. Further, the respondents do not deal with the
remoteness or otherwise of the possibility of pecuniary
benefit for
creditors. The approach of the first respondent is that searching for
assets is ill advised and that, as argued during
the points
in
limine,
certain parties ought to have been joined in these
proceedings. The above refutation is coupled with the contention,
which is a
thread running through the first respondents submission,
that the entire transaction is laced with fraud therefore by
extension
these proceedings are tainted.
[30]
In my view, the applicant has identified a substantial asset which
may be of some pecuniary benefit to creditors. Such a prospect,
is in
my view, not too remote. The applicant has done more than to merely
allege that there could be assets and that trustees,
through powers
bestowed on them, will be able to do more. The applicant has been
able to make a reasonable case that creditors
will be benefited and
that what may be yielded will not be a negligible dividend.
ORDER
[31]
I therefore make the following order;
1.
The four points
in limine
are dismissed,
2.
A final sequestration order in respect of
Rexon
Khegele MASHABANE, ID: […] and
Bongeka
Adelaide MASHABANE, ID: […], is granted,
3.
The costs hereof will be costs in the sequestration.
______________
SA
THOBANE
ACTING
JUDGE OF THE HIGH COURT