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[2016] ZAGPPHC 1033
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Standard Bank of South Africa v Costa; Standard Bank of South Africa v Costa (75020/2014; 74955/2014) [2016] ZAGPPHC 1033 (14 December 2016)
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Certain
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IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
15/12/2016
CASE
NO: 75020/2014
In
the matter between:
THE
STANDARD BANK
OF Applicant
SOUTH
AFRICA LIMITED
and
NORBERTO
JOSE DOS SANTOS COSTA
Respondent
Identity
number: […] (Married out of community of property to
ANA
PAULA RIBEIRO GONCALVES COSTA,
Identity
Number: […])
AND
CASE
NO: 74955/2014
In
the matter between:
THE
STANDARD BANK OF
Applicant
SOUTH
AFRICA LIMITED
and
ANA
PAULA RIBEIRO GONCALVES
Respondent
COSTA
Identity number: […] (Married out of
community
of property to NORBERTO JOSE
DOS SANTOS COSTA,
Identity
Number: […])
JUDGMENT
De
Kok, AJ
INTRODUCTION
1.
This judgment concerns the return day of 2
provisional sequestration orders. The applicant in each application
is Standard Bank
Ltd ("Standard Bank"). The respondent in
the application under case number 75020/2014 is Mr Costa. His wife,
Mrs Costa,
is the respondent in the application under case number
74955/2014. The parties are agreed that the facts and issues are
identical
in both applications. The applications were thus heard
together and I was requested to give one judgment relating to both
matters
2.
The applications were further heard together with
an application for rescission of a judgment under case number
63765/2012. In a
separate judgment I have today granted this
application.
3.
Subsequent to the hearing Mr Raubenheimer, who
appeared on behalf of Standard Bank, and Mr Kairinos SC, who appeared
on behalf of
the respondents, and at the request of the Court,
provided an agreed chronology of the relevant factual events. I am
indebted to
them for their assistance
4.
The following facts are common cause between the
parties:
4.1.
Mr and Mrs Costa are the sole members of a close
corporation, Kensington Construction CC ("Kensington").
4.2.
During or about 2004 Standard Bank concluded a
written agreement with Kensington. The agreement is not before me,
but it is common
cause that in terms thereof Standard Bank loaned to
Kensington an amount of money which was repayable over an agreed
term, in agreed
monthly instalments. I will refer to this as "the
term loan". As security for the term loan a mortgage bond was
registered
over certain immovable property. Pursuant to this
agreement monies were advanced to Kensington under an account with
number […]94
4.3.
During
November 2008 the balance then owing in terms of the term loan was
paid by Mercantile Bank to Standard Bank
[1]
.
The mortgage bond was cancelled on 21 November
4.4.
Subsequent
to the cancellation of the mortgage bond, further monies were paid by
Standard Bank to Kensington
[2]
.
They were paid "under" account number […]94 - i.e.
the number designating the term loan.
4.5.
During June 2009 Standard Bank instituted action
against Kensington for payment of the amount of R 1 310 564.44
together with
interest and costs.
On 13 October 2009 judgment by default was granted
against
Kensington in these amounts. I will refer to this as the
"Kensington judgement".
4.6.
Kensington was finally deregistered on 24
February 2011.
4.7.
During November 2011 Standard
Bank instituted action against Mr and Mrs Costa for
payment of
the amount of R1 310 564.44. It
relied on the judgment granted
against
Kensington and asserted that in terms of
section 26(5)
of the
Close Corporations Act, 69 of 1984
they were each jointly and
severally liable for this debt. In an ex parte application Standard
Bank sought and obtained leave,
on 8 May 2013, to serve the summons
by way of substituted service.
4.8.
Judgment was granted against Mr and Mrs Costa, by
default, on 19 August 2013. I will refer to this as "the
personal judgment".
4.9.
On 10 October 2014 Standard Bank launched
applications for the sequestration of Mr and Mrs Costa's estates. On
26 November 2014
provisional orders of sequestration were granted.
These orders were granted on an unopposed basis.
4.10.
On 22 January 2015 Mr and Mrs Costa gave notice
of their intention to oppose the sequestration applications.
4.11.
On some date prior to 11 November 2015 Kensington
was re-registered.
4.12.
On 11 November 2015 the Kensington judgment was
rescinded. This application was granted on an unopposed basis and
without Standard
Bank having filed any papers.
4.13.
On 1 June 2015 Mr and Mrs Costa brought an
application for the rescission of the personal judgment
5.
As set out above, the personal judgment has been
rescinded
THE
ISSUES
6.
The Kensington judgment, the personal judgment
and the provisional sequestration orders were all granted in default
of an appearance
by the defendants/respondents. Mr and Mrs
Costa contend that neither of the summonses, nor the applications for
sequestration,
came to knowledge of the defendant/respondents. In
their answering affidavits Mr and Mrs Costa went to great lengths to
attempt
to demonstrate that Standard Bank could easily have obtained
an address for effective service. It is not necessary for me to
consider
this issue as Mr Kairinos, on behalf of Mr and Mrs Costa,
has accepted that the lack of personal service of the applications
for
provisional sequestration would not impact on the decision as to
whether or not to confirm the provisional orders.
7.
In the
answering and supplementary answering affidavits 2 legal defences
were raised, namely that Mr and Mrs Costa's liability for
Kensington's debt to Standard Bank fell away when the
Close
Corporations Act was
amended in terms of the
Companies Act, 2008
[3]
or that it fell
away when Kensington was re-registered. Mr Kairinos has abandoned
reliance on both of these defences.
8.
In its founding affidavits Standard Bank relied
on the averment that Mr and Mrs Costa are actually insolvent as
envisaged in
section 9(1)
of the
Insolvency Act, 24 of 1936
. In the
alternative, or in addition, it relied on Mr and Mrs Costa having
committed an act of insolvency as envisaged in
section 8(a)
of the
Insolvency Act in
that they had departed from their dwelling or
otherwise absented themselves, with the intent by doing so to evade
or delay the
payment of their debts. In argument before me Mr
Raubenheimer abandoned any reliance on
section 8(a)
of the
Insolvency
Act.
9.
What
remains to be considered is whether Standard
Bank has proven, on a balance of probabilities:
9.1
Its
locus standi
in
terms of
section 9(
1
) of the
Insolvency Act;
9.2
That
Mr and Mrs Costa are actually insolvent; and
9.3
That the sequestration of their estates will be
to the benefit of their creditors.
10.
As far as
the issue of
locus
standi
is
concerned Brand J in
Payslip
Investment Holdings CC v Y2K Tee Limited
[4]
summarised the
test in
Kalil
v Decotex (Pty) Ltd
[5]
as follows:
"With reference
to disputes regarding the respondent's indebtedness, the test is
whether it appeared on the papers that the
applicant's claim is
disputed by respondent on reasonable and bona fide grounds. In this
event it is not sufficient that the applicant
has made out
a
case on
the
probabilities. The stated exception regarding disputes about an
applicant's claim thus cuts across the
approach to factual disputes in general."
11.
In
Hulse-Reutter
v HEG Consulting Enterprises (Pty) Ltd
[6]
Thring J held that
a respondent has a duty to adduce evidence only to the extent of
alleging facts which, if proved at a trial,
would constitute a good
defence to the applicant's claim.
12.
The
aforesaid authorities were recently referred to with approval by the
Supreme Court of Appeal in
Freshvest
Investments (Pty) Ltd v Marabeng (Pty) Ltd
[7]
.
The
Court stressed that winding-up proceedings are not designed for the
enforcement of a debt that the respondent disputes on
bona
fide
and
reasonable grounds. The same principle would, in my view, apply to
applications for sequestration.
STANDARD BANK'S LOCUS
STANDI
13.
In its founding affidavit Standard Bank relied on
the following allegations to prove its locus standi in terms of the
Act:
13.1.
The fact of the Kensington judgment;
13.2.
The fact of the deregistration of Kensington; and
13.3.
The fact of the personal judgment.
14.
Standard Bank did not rely on the underlying
indebtedness which gave rise to its cause of action against
Kensington. It was content
to rely on the Kensington judgment. This,
of course, it was entitled to do as this judgment, at the time,
constituted an independent
debt.
15.
On rescission of the Kensington judgment this
independent debt ceased to exist. Mr Raubenheimer however argued that
the rescission
did not disturb the underlying cause of action and
that Standard Bank retained
locus standi
in
terms of the underlying cause of action against Kensington, as read
with the provisions of
section 26(5)
of the
Close Corporations Act.
16.
It
must thus be considered whether Standard has
proven, on a balance of probabilities, that Kensington is indebted to
it in any amount
exceeding R100 or whether Mr and Mrs Costa dispute
this debt on
bona fide
and
reasonable grounds.
17.
The difficulty faced by Standard Bank is that the
references to the underlying cause of action in its affidavits are,
at best, oblique
and contradictory.
18.
In the founding affidavit the only reference to
the underlying cause of action is to be found in the particulars of
claim in the
action against Mr and Mrs Costa. These particulars of
claim are not specifically referred to in the founding affidavit, but
are
annexed to an application for substituted service which is in
turn annexed to the founding affidavit.
19.
The high-water mark of the description of the
underlying cause of action is to be found in paragraph 9 of the
particulars of claim
in which it is alleged that
"
Without the consent of the Plaintiff and with full knowledge that the
monies paid by Mercantile Bank Limited into the Bond
account were to
be utilized to settle the outstanding balance and cancel the mortgage
bond B92566/04, Kensington Construction
CC
or
its authorized agent proceeded to withdraw the funds paid by
Mercantile from the Joan account held under the account number […]94"
20.
It is somewhat difficult to see how the
withdrawal by Kensington of funds held by Standard Bank could have
occurred without the
consent of Standard Bank. Surely the
withdrawal could not have occurred without the participation of
Standard Bank in paying
out the monies withdrawn. Be that as it may,
the cause of action made out herein, if any, appears to be a claim
arising from a
breach of contract.
21.
The particulars of claim in the action against
Kensington are not annexed to the founding affidavit. They are to be
found as an
annexure to the respondents' supplementary answering
affidavits. Therein:
21.1.
It is alleged that once Mercantile Bank had paid
Standard Bank,
"the facilities"
that
Kensington had with Standard Bank automatically terminated.
21.2.
It is then alleged that
"Notwithstanding
the same the Defendant withdrew the sum of R1 310 564.44 on or after
the 21st of November 2008 from the facility
with the Plaintiff and
the Plaintiff allowed such withdrawal to the Defendant in the bona
fide and reasonable belief that the facility
was still in operation.
The amount was not owing to the Defendant and the Defendant was not
entitled to such monies. The Defendant
nevertheless appropriated the
monies."
This is recognisable as a claim
based on unjust enrichment.
21.3.
In the alternative it is alleged that
"On
the 21st November
2008
the Defendant fraudulently withdrew the sum of R1 310
564.44 from its account with the Plaintiff
notwithstanding the fact that the Defendant was aware that the
mortgage bond registered
over the Defendant's property situated at
[…] Linbro Park, Sandton had been cancelled and/or that the
facility was no longer
in operation."
22.
Standard Bank has not attempted to adduce any
evidence as to the nature of the error relied upon for its claim
based on unjust enrichment,
nor of the misrepresentation relied upon
for its claim based on fraud.
23.
In their answering affidavits Mr and Mrs Costa
contend that after the cancellation of the mortgage bond Standard
Bank did not withdraw
the loan facility and that Kensington loaned a
further amount against the facility. They further allege that
Kensington continued
to make monthly repayments in the agreement
amounts. Mr and Mrs Costa's defence is essentially that the term loan
survived the
cancellation of the mortgage bond and that Kensington
continued to comply with the terms of the term loan agreement.
24.
In
argument, Mr Raubenheimer did not press reliance on the causes of
action based on unjust enrichment or fraud. Instead he argued
that on
cancellation of the mortgage bond the term loan agreement
automatically terminated and that advances thereafter would be
on the
basis of an overdraft facility, which is repayable on demand. But,
absent any evidence as to the terms of the term loan
agreement, I
cannot conclude that this agreement terminated on cancellation of the
mortgage bond. It is clear from the decision
in
Penderis
& Gutman NNO v Liquidators, Short Term Business, AA Mutual
Insurance Association Ltd
[8]
that the
termination of the agreement is dependent on the specific terms of
the agreement.
25.
In a final effort, Mr Raubenheimer argued that on
Mr and Mrs Costa's own version, Kensington was indebted to Standard
Bank. This
is so because
section 9(2)
of the
Insolvency Act provides
that a liquidated claim which has accrued, but which is not yet due,
is to be considered as a liquidated claim for the purposes
of
section
9(1).
However, on the most charitable construction of Standard Bank's
founding and replying affidavits, this debt (being the amounts
advanced to Kensington which would in future become due and payable)
was never relied upon. It conflicts with Standard's Bank stance
that
after the cancellation of the mortgage bond there was no longer any
contractual relationship between it and Kensington. It
is a bridge
too far to hold that Standard Bank has proven its
locus
standi
on a basis which was not raised in
either the founding or replying affidavits and which in fact
conflicts with version put forthwith
in these affidavits
26.
I conclude therefore that Mr and Mrs Costa
dispute Kensington's liability to Standard Bank (and thus their
accessory liability in
terms of the former
section 26(5)
of the
Close
Corporations Act) on
reasonable and
bona fide
grounds.
27.
In the circumstances it is not necessarily to
deal with the remaining issues referred to in paragraphs 9.2 and 9.3
above.
ORDER
28.
I make the following order:
(1)
The provisional orders of
sequestration granted under case numbers 74955/2014
and 75020/2014
are discharged;
(2)
The applications under case numbers 74955/2014
and 75020/2014 are dismissed with costs.
_________________
A
DE KOK
Acting
Judge of the High
Court,
Gauteng Division,
Pretoria
Date
of hearing
:
30 November 2016
Date
of judgment
: 14 December
2016
Appearances
For
applicant: Mr R Raubenheimer instructed by Vezi de Beer Inc
For
respondents: Mr G Kairinos SC instructed by E Da C Luiz Attorneys
clo
Jansen and Jansen Inc.
[1]
It is not entirely clear at whose behest Mercantile made this
payment. Standard Bank refers to the immovable property being
expropriated, but also to it being sold.
[2]
I use the verb "paid" as opposed to "advanced"
deliberately, as it is very much in issue as to what, if any,
the
causa of the flow of monies from Standard Bank to Kensington was.
[3]
This amendment deleted
section 26(5)
of the
Close Corporations Act.
>
[4]
2001 (4) SA 781
(C) at 783H-I
[5]
1988 (1) SA 942
(A) at 980 B-D
[6]
1998 (2) SA 208
(C) at 219E-220A
[7]
[2016] ZASCA 168 (24 November 2016)
[8]
[1992] ZASCA 178
;
1992 (4) SA 836
(A)