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2015
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[2015] ZAGPPHC 187
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Strydom N.O. and Others v Bakkes (33443/2014) [2015] ZAGPPHC 187 (6 February 2015)
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
PROVINCIAL DIVISION, PRETORIA)
CASE NUMBER:
33443/2014
DATE: 6 FEBRUARY
2015
NOT REPORTABLE
NOT OF INTEREST TO
OTHER JUDGES
In the matter
between:
PIETER
HENDRIK STRYDOM N.O.
…...............................................................................
First
Applicant
JOHN
RODERICK GRAEME POLSON N.O.
….............................................................
Second
Applicant
LOUIS
STRYDOM N.O.
…....................................................................................................
Third
Applicant
(In their
capacity as the Curators of Corporate Money Managers (Pty) Ltd)
And
JOHAN
HENDRIK
BAKKES
.......................................................................................................
Respondent
In re:
BHEKAMA
SWAZI MSHIZOBOMVU
MANANA
..............................................................
First
Applicant
In the application
for leave to intervene
VINCENT
TREVOR
SMITH
..............................................................................................
Second
Applicant
In the application
for leave to intervene
JUDGMENT
STRAUSS, AJ:
1.
This is the return date of a provisional order sequestrating the
estate of the respondent (hereinafter referred to as “
Bakkes”)
granted
on an urgent basis on 27 May 2014 by Makgoka J. Bakkes has withdrawn
his initial opposition to the sequestration application.
2.
The
rule nisi
was
extended on two occasions on the request of the interveners, Mr
Manana and Mr Smith. Mr Manana and Mr Smith launched an application
for intervention in the sequestration of Bakkes by way of motion
dated 18 July 2014. This application to intervene is opposed by
the
first to third applicants.
3.
Currently I have to decide whether the interveners should be granted
leave to intervene in the sequestration application and
give
directions in regards to the filing of affidavits, or grant a final
order of sequestration against Bakkes. The applicants
also seek a
cost order
de
bonis propriis
against
counsel and the attorney of the interveners. The applicant also seeks
striking out of vexatious and irrelevant matter from
the replying and
supplementary affidavit of the interveners.
4. Before I deal
with these issues, a discussion of the background to the
sequestration application is necessary.
5.
The applicants brought the application for sequestration in their
capacity as joint curators of Corporate Money Managers (Pty)
Ltd
(hereinafter referred to as “
CMM
”
)
duly appointed as such by orders of this Court granted during the
course of 2009. The curators are judgment creditors of Bakkes
in the
amount of R860 million plus interest and costs.
6.
Bakkes was previously a director of a number of companies, all
falling under the applicants’ curatorship including a company
Nzalo Financial Services (Pty) Ltd (hereinafter referred to as
“
Nzalo”)
and
Thunderstruck Investments 15 (Pty) Ltd (hereinafter referred to as
“
Thunderstruck"),
both
of which have since been liquidated on application of the curators.
7. The history of
the closure of CMF, Cash Management Fund (“CMF”) by the
Financial Services Board and the grant of
the curatorship orders are
set out in the main application for sequestration by the curators.
The conduct of those involved in
the management of CMM, including
Bakkes, led to a loss of approximately R1,5 billion of investors’
funds. The steps taken
by the curators in the recovery of investors’
funds are saliently the following:
7.1 The curators
instituted action against Bakkes and 21 other defendants, including
Manana and Smith, for various orders in terms
of Section 424 of the
Companies (Act 61 of 1973) and/or Section 218 of the Companies Act
(Act 71 of 2008) and for judgment against
those defendants personally
for the debts of CMM and a number of related companies.
7.2 Most of the
defendants settled with the curators and the other defendants all
consented to judgment, but on 17 March 2014 the
case proceeded
against Bakkes and three other defendants, including Mr Smith, one of
the current interveners.
7.3 The case
proceeded in front of Murphy J, and the trial proceeded for some
five-and-a-half weeks before Bakkes consented to judgment.
7.4 The relevant
findings of Murphy J, is set out in his judgment attached in the
papers.
7.5 In the trial,
Murphy J, found in favour of the plaintiffs in every respect and in
particular held that the promissory notes
issued by the relevant
entities were not legal commercial paper and the issue of promissory
notes against the acceptance of monies
by the entities was in
contravention of the Banks Act. Further that the investment of CCM of
the funds in CMF and of its investors’
clients in the said
promissory notes was in contravention of legal provisions and their
mandate.
8.
Bakkes’ liability was inevitable and the judgment given against
Bakkes was that he was liable to the curators in the judgment
amount
of R860 million and costs to be taxed. Bakkes committed an act of
insolvency in terms of Section 8(b) of the Insolvency
Act (Act 24 of
1936) in that upon demand made by the Sheriff to satisfy the judgment
debt on 24 April 2014, he failed to satisfy
same or to indicate to
the Sheriff sufficient disposable property to satisfy it. He instead
signed a
nulla
bona
declaration.
Bakkes is thus factually insolvent. He has got no assets and on 8
August 2014, he completed a net worth calculator
form wherein he
estimated his personal net worth to be R1,670,000.00. This is
substantially less than the curators’ claim
against him. These
facts are not disputed by the interveners.
9. The applicants
submitted that it would be to the advantage of creditors if the final
sequestration of Bakkes’ estate is
ordered. They dispute the
claim of Bakkes that he is “man of straw” and they intend
investigating the financial means
and assets of Bakkes if a final
order of sequestration is granted. They argued that the criminal
activities of Bakkes yielded considerable
returns and it was
improbable that Bakkes could have managed to divest himself of all
his ill-begotten gains.
10. The applicants
argue that Bakkes claims to be entitled to a salary from CMM and
should his appeal to the Supreme Court of Appeal
in this respect be
successful and he is entitled to payment of R9 million as claimed,
this will constitute a considerable advantage
to creditors.
11. Bakkes has not
renewed his opposition to the application for sequestration and has
not filed an affidavit showing cause why
his estate should not be
placed under final sequestration. Thus, I find, the facts upon which
the curators’ application is
based is undisputed.
12.
The return date of the provisional sequestration was extended
subsequent to receipt of the application for leave to intervene
in
the sequestration application. The return date was extended to the
opposed roll of 1 December 2014 and heard by me on 4 December
2014.
After hearing full argument of counsel for the applicant and the
interveners, the Court extended the
rule
nisi
to
6 February 2015, for judgment in the matter.
13. The applicants’
argue that the provisional order would have been confirmed on the
original return date but for the application
for leave to intervene
by the two interveners. On 11 September 2014, by agreement between
the parties a order of court was granted
which set out that the
interveners had to file their replying affidavit within 10 days from
11 September 2014, and within 10 days
therefore file their heads of
argument. Time frames were also set for the applicants to deliver
their heads of argument.
14. The applicant
filed their heads of argument and also brought a striking out
application together with their heads of argument
which was filed
timeously on 14 October 2014.
15. The interveners
did not comply with the court order as to the time frames and
delivered their replying affidavit 4 days late.
The replying
affidavit was emailed by Adv Meyer the interveners counsel to the
attorney of the applicants on 29 September 2014.
Adv Meyer indicated
in the email that he did not attach any annexure’s due to the
volume therefore, and indicated that Mr
Smith who I can only assume
is the second intervener herein; would serve a hard copy the next
day.
16. The applicant’s
attorney took issue with the incomplete papers and the fact that the
reply was late as in terms of the
court order. Adv Meyer replied by
email to the attorney personally, and lodged a scathing personal
attack on the attorney, and
accused the curators of fraud, wasting
investors money and of being vexatious.
17. Adv Meyer also
approached the Court in chambers on 25 November 2014, and filed a
practice note as well as heads of argument
and also the answering
affidavit of the interveners to the striking out application.
18. In this
answering affidavit received by the court and the applicants three
days prior to the set down of the matter, the interveners
seek
condonation for the late filing of their replying affidavit and heads
of argument, and also seeks to supplement their replying
affidavit.
The applicants therefore had not been provided reasonable time to
oppose the condonation application or the application
to supplement
and they addressed these issues in their heads, and argued against
the court granting the relief sought by the interveners.
19.
Adv Meyer’s apologised for the late filing of the heads and
opposition of the striking out application. Counsel explanation
for
the lateness of all the documents mentioned was four fold. He had the
only copies of the application and annexures in the matter
in
causa,
he
had at some stage misplaced the only copy, the attorney of record had
no copies, and lastly that the interveners did not have
the funds to
make copies of all the papers. These facts stated by Adv Meyer were
confirmed in an affidavit of Mr Smit who also
in the affidavit stated
that Adv Meyer embarked on a series of consultations with traditional
and civic leaders and he was therefore
not available to file the
replying affidavit or the opposing affidavit to the striking out
application earlier.
20. Dealing with the
striking out application I find, that most of the averments in the
founding papers and replying affidavit as
well as in the
supplementary heads of argument filed by the interveners deal with
the same issues. They continue to accuse the
applicants of abuse of
the court process and collusion with Bakkes and that the applicants
had disregarded for the legitimate claims
of the interveners.
21.
In regards to the cost being sought
de
bonis propriis
against
Adv Meyer, his address to the court was that he had been put to task
in the matter and that he will take responsibility
for each and every
submission made in court and that although his heads and the
affidavit were late, he confirmed that it was due
to time
constraints, him having all the documents, and having misplaced them.
Even though he was aware of the applicants calling
for a
de
bonis propriis
costs
order against the attorney, Sandy Du Plessis, he made no attempt to
obtain an affidavit of Ms Du Plessis setting out the facts
as per her
and why a costs order should not be granted against her. He has thus
placed his attorney at peril and I will not find
against Ms Du
Plessis as to costs as she, i believe, has not received proper notice
of the cost order asked against her. It seems
to this court that Adv
Meyer unfortunately is a “lone ranger” in this matter and
has been running the litigation in
a very personal and subjective
manner and also without the assistance of an attorney.
22. One only has to
have regard to the personal emails to the attorney, the accusation
made therein against the curators, and the
fact that counsel was the
filing clerk together with one of the interveners and also held on to
all the documents in the matter.
23. The affidavits
filed by the interveners do not seem to me on the face of it to
emanate from an attorneys “office or pen”
so to say. The
reason I say so is that all the affidavits, heads of argument, all
supplementary affidavits and supplementary heads
were drafted in the
same irregular manner font and size, not properly spaced and not
indexed and paginated. Further counsel made
a written note to the
court on the supplementary heads wherein counsel tendered his apology
for typographical errors, I find, that
most probably all these
documents were drafted without the assistance of an attorney.
24. The authorities
provide guidance as to what conduct by an advocate would actually be
considered to be conduct more akin to that
of an attorney and could
be considered to be tantamount to the advocate acting without brief
of an attorney and taking instruction
directly from clients.
See:
Society of Advocates of Natal v de Freitas and
Another
1997 (4) SA 1124
( N) 1162 A - D and 1173 C- H
and
General Council of the Bar of South Africa v
Rosemann 2002(1) SA 235 ( C) at 241 H - 242 B 245
[At 246 H]
”
any responsible advocate knows
without having to ask, that certain work is normally performed by
attorneys, and that it would be
improper for him to accept a brief to
do such work instead of the attorney, thereby relieving the attorney
concerned of the responsibility
for it.”
25. Based on the
above and the fact that counsel sought the indulgence and condonation
from court in regards to the late delivery
and filing of the replying
affidavit and the heads of argument and all subsequent papers filed
by counsel, the tardiness and lateness
can only be lain before his
door. I will grant condonation for the late filing of the replying
affidavit and the heads and supplementary
heads, and for the
indulgence granted ! intend to saddle the counsel with the costs
therefore. The late filing of all these documents
where a
inconvenience to the court and the applicants, and was not due to the
fault of the interveners.
26. Dealing with the
striking out application I find, that most of the averments in the
founding papers and replying affidavit as
well as in the
supplementary heads of argument filed by the interveners deal with
the same issues. They continue to accuse the
applicants of abuse of
the court process and collusion with Bakkes and disregard of the
legitimate claims of the interveners. The
interveners in the same
breath and in the same application requested to supplement their
replying affidavit.
27. I will not
strike out the content thereof as it is simply more of the same and
must be seen in context and in conjunction with
the other affidavits
of the interveners.
28. As to the
supplementation of the replying affidavit I find, that there is no
basis set out by the interveners for seeking this
relief, there are
no sufficient reasons provided to supplement the papers, and there is
no allegation that the material contained
in the supplementary
affidavit was not available when the replying affidavit was drafted.
The supplementary affidavit also introduces
new material. This is
objectionable and should have formed part of the interveners founding
affidavit, I will therefore not allow
the interveners to supplement
their replying affidavit and any new facts introduced by way of this
affidavit will not be considered
by this court, and is struck.
29. The only relief
thus to be determined is for leave to intervene in the sequestration
application.
30. The applicants
argue that the application is fatally defective in a number of
respects and that there is no merit in the application
for
intervention.
31. It was clear
from the outset that the application for intervention was in breach
of the normal rules. If one has regard to the
intervention
application’s format alone, it falls short of a proper
application. The application for intervention is drafted
in a very
shoddy manner. It deals with irrelevant matter and not with the
issues of intervention as such.
32.The
formal requirements for intervention in sequestration proceedings are
unique and they differ altogether from conventional
intervention. It
is neither a pure intervention nor a substitution of applicants and
is really
sue
generis
from
a procedural point of view as set out in
Fullard
v Fullard
1997 (1) SA 368
(T) at 372.
33.
It is further so that generally in an application for intervention in
pending legal proceedings, an applicant has to show a
direct and
substantial interest in the relevant proceedings, which
“
must
be a legal interest in the subject matter of the proceedings which
may be prejudicially affected by the Court's judgment in
the
proceedings concerned."
This
is set out in
Investec Bank Ltd v Mutimeri
2010
(1) SA 265
(GSJ) at p 38 & 39.
34.
Where the purpose of the intervention is for sequestration of the
respondent, it is not sufficient that the interveners merely
have an
interest in the proceedings. They must be creditors with a claim of
at least R100.00 and there must be a valid reason for
such
intervention. This is also set out in
Fullard
supra.
35. The claim of
course must be liquidated, i.e. the amount thereof must be fixed and
determined, either by agreement, judgment
or otherwise. Consequently
a Court cannot grant a sequestration order at the instance of a
person who has an unassessed claim for
damages, or a claim that is
disputed or a claim which is uncertain due to being dependent on a
contingency which may or may not
be fulfilled.
36. The valid reason
for intervention would probably be where the original applicant is
unable for any reason to pursue his application
or intends to
withdraw such and the interveners seeks to ensure that the estate is
sequestrated or to prevent the original applicant
from protracting
the proceedings to the prejudice of other creditors.
37.
Where the interveners seeks the sequestration of the respondent he
must in his affidavit establish all the elements including
furnishing
security. Where a provisional order of sequestration has already been
granted as in the matter
in
causa
the
existing order cannot be confirmed at the instance of an intervening
creditor. It must be discharged and a fresh order issued
with the
interveners as applicant. This is set out in
Fullard
supra.
38.
It is argued, that the interveners have failed to comply with the
Uniform Rules of Court and the established practice pertaining
to
intervention in sequestration proceedings. In particular the
applicants complain that the interveners have not established their
locus standi
to
seek the sequestration of Bakkes as they have not demonstrated that
they are creditors with liquid claims of at least R100.00
or provided
evidence of a valid reason for intervention.
39.
Mr Manana bases his
locus
standi
on
claims for damages that he and another instituted against Bakkes and
others during February 2014. He concedes that he will require
expert
evidence in respect of his claim, which he says is for approximately
R160 million.
40.
Smith bases his
locus
standi
on
damages claims against Corpfin, CMM and Bakkes for his salary, loss
of his reputation and earning capacity. Insofar as his claim
for
payment of his salary may not constitute damages, his claim is
conclusively dismissed in the applicants’ answering affidavit
as follows:
“
Smith’s
claim is yet to be formulated let alone proven. Smith’s
evidence under oath
was
that he was
employed by the CMM group in terms of an oral agreement and he could
not provide proof of any salary payments for those
months for which
he
was
paid and in any
event his claims have prescribed."
41. The main reason
by the interveners for intervention is that the curators have
colluded with Bakkes, and that the purpose of
the sequestration
application is somehow to protect Bakkes against Manana’s
claim. The interveners, however, I find, do not
provide, a single
fact in support of this contention.
42. The interveners
have also not provided security nor have they given notice of their
application to interested parties as prescribed
by Section 11(2)(a)
of the Insolvency Act. Although it appears that they gave notice of
the intervention application to Bakkes’
attorney by way of
e-mail, Bakkes is not cited as a respondent although he patently has
a material interest in the relief they
seek.
43. The intervening
parties argue that the basis for the intervention is that the
application for sequestration of Bakkes’
estate is an abuse of
process for several reasons, but principally since it was launched on
an urgent basis to prevent Mr Manana
to obtain a judgment against
Bakkes and that it was a collusion and unlawful.
44.
The sole basis on which the curators relay in respect of
locus
standi
to
have brought the application for sequestration is due to the fact
that there is a judgment by Murphy J. The intervening creditors
state
that this application is defective since an application for leave to
appeal against the judgment of Murphy J is pending.
They further
state that the curators who represent CMM are not in law capable of
being judgment creditors of Bakkes notwithstanding
the express
provisions of the order of Murphy J. They also argue that the other
plaintiffs in the action before Murphy J, have
not been joined as
co-applicants in the sequestration application.
45. They also state
that the sequestration of Bakkes cannot be in the interest of the
creditors, but if it was, the interest would
relate to the
investigation of the collusion between Bakkes and the curators, and
then such order should be granted at the instance
of the interveners
and not the curators.
46. It is so that in
the main action against Bakkes was heard by Murphy J, the matter
(claim) was withdrawn against Manana. In regard
to Smith the
proceedings were also withdrawn as a result of the consent order
against Bakkes.
47.
Counsel for the intervening parties also argued that the curators
have no
locus
standi
to
apply under Section 424 of the Companies Act for the sequestration of
a company due to the fact that a company cannot commit
fraud and in
terms of Section 424 if the directors are reckless, there may be an
application to liquidate a company, but it refers
to the directors of
a company and not the company itself.
48.
Counsel for the applicants argue that the
locus
standi
of
the curators emanates from the order of Southwood, J an order granted
in 2009, and that further there was no proper leave to
appeal noted
against the judgment of Murphy J, as the leave to appeal is not
accordance with the Rules of Court and should not
be entertained by
Murphy J. The leave to appeal appears at page 467 of the papers.
49. Mr Smith’s
applied for leave to appeal and leave is sought only against the
order granted by Murphy J, against Smith on
4 April 2014.
50. Having regard to
the leave to appeal, it is a notice of motion in regards to Mr Smith,
which indicates that the he intends to
make application to the court
determining whether Murphy J, directs that the relief claimed in Part
A should be heard separately
or together with the relief claimed in
Part B, C and D. This notice of motion called upon Murphy J, to
clarify and/or alternatively
to correct or set aside the judgment and
costs order.
51.
It also goes further to request that Murphy J, establishes whether he
is of the view that any order or judgment was granted
iniustus
error
or
establishing if Murphy J, is
functus
officio
in
the circumstances or whether he has jurisdiction to set aside the
judgment. This document is nonsensical and I doubt if any court
has
to have regard thereto, it purports to be a notice of motion together
with an application to the court to reconsider its own
judgment. This
can simply not be done.
52. I agree with the
applicants in this regard that there is no proper leave to appeal
currently in regards to the judgment granted
by Murphy J, and the
judgment, therefore stands.
53. The judgment
relied upon by the applicants against Bakkes is a judgment granted
against Bakkes and Nzalo. There is no appeal
pending against this
judgment, whether by Bakkes or anybody else. The statement therefore
of the intervening parties is simply
false. Smith, in any event, it
is argued has no interest whatever in this judgment which was granted
by agreement between the applicants,
Bakkes, Nzaio and Mrs Bakkes.
Smith is not affected by this order and it does not refer to him as
Smith was present in court when
the order against Bakkes, Nzalo and
Mrs Bakkes was granted.
54. It is evident
from the draft order handed up to court that was marked “X”
before Murphy J, that Smith was not a
party to the court order and
has never had an interest and it was not implied by the court order.
The applicants argue that they
are therefore entitled to proceed with
execution of their court order, and sequestration is the ultimate
form of execution.
55. It is argued
that the interveners are under the misconception that they had a
right to oppose the application for sequestration
without obtaining
leave to intervene. The purpose of a provisional order is to call
upon the provisionally sequestrated respondent
to appear and show
cause why his or her estate would not be finally sequestrated. No
general right to appear and object is granted
to other parties. An
interested party, a creditor with a valid liquidated claim may apply
for leave to intervene and so as to either
oppose the application or
to support the application.
56.
The applicants therefore simply argue that the interveners have no
locus standi
to
intervene or oppose the application. The interveners in any event
originally sought leave to intervene in order to obtain the
sequestration of Bakkes’ estate in terms of the application. In
the replying affidavit they changed track and then opposed
the
application for reasons contrary to the reasons they advised under
oath in their founding affidavit.
57. I find, that the
interveners are also incorrect in thinking that the sequestration
order will deprive them of their alleged
claim against Bakkes. A
sequestration order does not affect the claims of creditors, it
merely regulates the order of payment.
The claim of each creditor
must be dealt with as it existed at the issue of the order and all
creditors have a right to prove claims
in the insolvent estate. If
liquidated, it may be proven as a matter of course. If a claim is
unliquidated, it cannot be proven
until this amount has therefore
been fixed by a judgment or agreed to by the trustee.
58. I find that the
interveners can therefore enter the proceedings or continue
proceedings against the duly appointed trustees
of the insolvent
estate. The submission that the application for sequestration of
Bakkes is an attempt to obstruct the interveners
claims against
Bakkes, I find, is unfounded, and somewhat recklessly made. Further,
the interveners have not proven to this court
that there is a shred
of evidence of collusion between the applicants and Bakkes. The onus
to prove such collusion is in any case
on the interveners, which onus
I find, they have not met.
59. It was also
argued on behalf of the applicants that the intervening parties in
their first application did not apply for the
dismissal of the
provisional sequestration, but in their supplementary affidavit they
now seek dismissal in order for them to launch
a sequestration
application. It is trite that this cannot be allowed. A party may not
be allowed to introduce new material in a
supplementary affidavit or
in a replying affidavit. I have already found that I will not allow
the new material in the supplementary
affidavit and this second
avenue is therefore not open to the interveners.
60. The applicants
further argue that it does not assist the interveners to state that
they will make out a case once they have
been given leave to
intervene. They should have done so already. The interveners have not
relied on any allegations made in the
curators’ founding
affidavit and they make no allegation that Bakkes is in fact
insolvent or has committed an act of insolvency.
So no order can be
made in their favour. I agree with this argument as being the correct
legal position.
61. The interveners
have also not provided any basis for the opposition of the curators’
application for sequestration. There
are no such reasons given in any
of the affidavits of the interveners.
62. The applicants
further addressed me on the abuse of the court process by the
intervening parties in that the contents of all
the pleadings,
affidavits and notices filed on behalf of Manana and Smith were of
rhetorical nature, accusing the curators and/or
plaintiffs of
improper conduct instead of addressing the matter at hand.
63. I find,
therefore the interveners for the reasons set out have not
established a case for discharge of the provisional order
or for the
sequestration of Bakkes, they have also not demonstrated a valid
reason for intervention and why such an order should
be granted.
I therefore make the
following order:
1. The respondent,
Johan Hendrik Bakkes’ estate is hereby finally sequestrated.
2. The application
for leave to intervene by first and second interveners is dismissed
with cost against the interveners on an attorney
and client scale
including cost of senior and junior counsel.
3.
The interveners counsel Adv HJS Meyer is ordered to pay all and any
cost in relation to the late filing of the replying affidavit,
the
heads of argument, the supplementary heads of argument, the
supplemented replying affidavit,
de
boni propriss
on
a party and party scale excluding cost of counsel, but including any
costs of the applicants attorney’s.
STRAUSS, AJ
ATTORNEYS FOR
FIRST TO THIRD APPLICANTS:
ROESTOFF & KRUSE
ADVOCATE FOR
APPLICANTS:
ADV FH
TERBLANCHE, SC ADV HRFOURIE
ATTORNEYS FOR
FIRST AND SECOND APPLICANTS AS INTERVENING PARTIES:
DE JAGER DU
PLESSIS & ASSOCIATES
COUNSEL FOR FIRST
AND SECOND INTERVENING PARTIES:
ADV HJS MEYER