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[2015] ZAGPPHC 11
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Otto Krause Inc v Brandt and Another (74191/13) [2015] ZAGPPHC 11 (27 January 2015)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
DIVISION, PRETORIA)
CASE NO. 74191/13
DATE: 27 JANUARY
2015
In the matter
between:
OTTO KRAUSE
INC
......................................................................................
APPLICANT
And
HEINRICH JOHAN
BRANDT
..................................................................
RESPONDENT
ABSA BANK
LTD
...............................................................
INTERVENING
CREDITOR
JUDGMENT
MOSEAMO AJ
[1] The respondent
was provisionally sequestrated on the 18
th
February 2014.
The return date was extended to enable the intervening creditor,
ABSA, to file application to intervene and opposing
papers. On the
19
th
June 2014 the intervening creditor brought an
application in which it sought the leave to intervene in the
sequestration proceedings
brought by the applicant and the dismissal
of the application for sequestration.
[2] At the hearing
of this matter the parties addressed the court on the preliminary
point regarding the fact that the intervening
creditor’s
affidavit was not properly commissioned. The intervening creditor
handed up the original application with an affidavit
that was
properly commissioned. The applicant indicated that they are not
proceeding with their preliminary point and the main
application can
proceed. I accepted the affidavit and directed the parties to proceed
with the main application.
[3] Application to
intervene is not opposed. I am satisfied that the intervening
creditor has a real interest in the proceedings.
Application for
leave to intervene should therefore succeed.
[4] The intervening
creditor opposes the sequestration on the following grounds: (a) the
respondent is not factually insolvent as
he owns realizable property
sufficient to satisfy the applicant’s claim; (b) the
sequestration will not be to the advantage
of creditors; (c) the
applicant has failed to comply with certain formal requirements
prescribed by the Insolvency Act; (d) the
applicant and respondent do
not appear to be acting at arms-length and the application is a
“friendly sequestration”.
[5] Applicant
contends that the magistrates court ruled that the respondent is over
indebted and a rearrangement proposal was made
an order of court. The
respondent has committed an act of insolvency as he gave notice in
writing to the applicant that he is unable
to pay his debts.
Applicant contends that the sequestration will be to the advantage of
creditors. Further that there are no reasons
provided by the
intervening creditors why the provisional sequestration should not be
made final.
[6] It is submitted
on behalf of the intervening creditor that the applicant has not
exhausted all its remedies inter alia obtaining
judgment and
execution against the movable assets of the respondent. It is
contended that this is a friendly sequestration based
on a simulated
transaction between the parties with the sole purpose of putting an
end to the respondent’s financial obligations.
[7]
Section 12
of
the
Insolvency Act 24 of 1936
provides that the court may sequestrate
the estate of the debtor if at the hearing pursuant to a rule nisi
the court is satisfied
that (a) the petitioning creditor has
established against the debtor a liquidated claim for not less than
R100; (b) the debtor
has committed an act of insolvency or is
insolvent; (c) there is reason to believe that it will be to the
advantage of creditors
of the debtor if his estate is sequestrated.
Subsection 2 provides that if the court is not so satisfied it shall
dismiss the petition
for the sequestration of the debtor and set
aside the order of provisional sequestration or require further proof
of the matters
set forth in the petition and postpone the hearing for
any reasonable period but not sine die.
Has
the creditor established against the debtor a liquidated claim for
less than
R100?
[8] The applicant’s
claim is based on an untaxed attorney-and-own-client bill of costs.
It is submitted on behalf of the intervening
creditor that the
applicant’s claim does not constitute liquidated claim.
[9] The intervening
creditor referred to a number of cases where the court stated that an
untaxed bill of costs is not a liquidated
claim. In particular the
case of Tradoux v Kellerman
2010 (1) SA 160
(C) where the court held
that ‘a liquidated amount in money is an amount which is either
agreed upon or which is capable
of “speedy and prompt
ascertainment” or, put differently, where ascertainment of the
amount in issue is a ‘mere
matter of calculation’...
[10] In Hockley’s
law of insolvency 9
th
edition at 34 an untaxed attorney
and client bill of costs is an unliquidated claim. The authors
referred to the case of Simpson
& Liesching v Van Breda
1930
CPD 195
in this regard.
[11] There also
appears to be a long list of authorities in support of the fact that
an untaxed attorney and client bill does not
constitute a liquidated
claim.
In Hockley’s
insolvency law at 43 it is stated that ‘sequestration is, in a
sense, merely an elaborate means of execution
and because of its
costs an expensive one too’. In my view then the costs due to
the applicant should have been taxed by
the taxing master or agreed
to in writing by the respondent in a fixed sum. See Uniform
Rule
45(2)
Has
the respondent committed an act of insolvency alternatively is the
respondent
insolvent?
[12] It is common
cause that the respondent admitted in writing in an email to the
applicant that he is not in a position to pay
his debt. The
intervening creditor sought to support its contention that the
transaction was a simulated transaction but this is
not based on any
proven facts. I am satisfied that the respondent committed an act of
insolvency in terms of
section 8(g)
of the
Insolvency Act 24 of 1936
as amended.
Whether
there is reason to believe that the final sequestration order will be
to
the
best interest of the creditors?
[13] Before a court
can grant a final order of sequestration it must be satisfied that
there is a reason to believe that such sequestration
will be to the
advantage of creditors. Even where an act of insolvency has been
committed, the court cannot grant a final sequestration
order if the
applicant does not discharge the onus on it to establish that there
is reason to believe that sequestration will be
to the advantage of
the creditors.
[14] It is submitted
on behalf of the applicant that the sequestration of the respondent
will be to the advantage of the creditors
while the intervening
creditor denies this.
[15] The general
method used in assessing whether there is reason to believe that the
sequestration will be to the advantage of
the creditors is to (a)
make an allowance for the anticipated costs of sequestration and then
(b) determine if there is reasonable
prospect of an actual payment
being made to each creditor who proves a claim.
[16] The applicant
sets out the respondent’s financial position in its founding
affidavit to be as follows: (a) immovable
property with its forced
sale value as R 2 700 000 and market value of R 3 250 000; (b)
movable property, two motor vehicles, Isuzu
valued at R 87 200 and
Dodge valued at R 137 700. The applicant gives an estimate of the
respondents’ liabilities as R 3
200 000. He then makes an
allowance for administrative costs in the sum of R 103 490. The
applicant then contends that the creditors
will receive a benefit of
R 0.39 in the rand.
[17] In disputing
that the sequestration of the respondent will be to the advantage of
the creditors, the intervening creditor submitted
that the respondent
is indebted to the intervening creditor alone in the sum of R 3 302
479.49 and since the total amount owing
to creditors was as at August
2012 R 3 200 000 there will be no dividends to creditors.
[18] In disproving
the above the applicant submitted that the amount of liabilities in
the amount of R3 200 000 was based on the
information contained in
the debt restructuring order of August 2012. It was contended on
behalf of the applicant that the plaintiff
has in all probabilities
paid 15 installments towards his liabilities. Further that
approximately R183 300 was allocated to the
intervening creditor. I
however find that the above is based on speculation and conjecture.
It does not address the intervening
creditor’s contention that
the respondent is indebted to the intervening creditor in the sum of
R3 302 479.49.
[19] The onus of
establishing advantage to creditors remains on the sequestrating
creditor throughout even where it is clear that
the debtor has
committed an act of insolvency. See Hockley’s Insolvency Law at
45
[20] I am not
satisfied that the respondent’s sequestration will be to the
advantage of creditors.
In the result I make
the following order:
1. Leave is granted
to ABSA Bank Limited to intervene in this application;
2.
The Rule
Nisi
granted
on the 14
th
February 2014 is discharged;
3. The applicant is
ordered to pay the intervening party’s costs of the
application.
P D MOSEAMO
ACTING JUDGE OF THE
HIGH COURT
On behalf of the
applicant: Otto Krause Inc.
C/O Bares Basson
Attorneys
Ground Floor
Woltemade Building
Nr 1
118 Paul Kruger
Street
Pretoria
Adv. M.H. Van Twisk
On behalf of
Intervening Creditor: Snyman De Jager Inc.
Upper Level
Atterbury Boulevard
C/O Aterbury
& Manitoba Ave
Fearie Glen