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[2015] ZAGPPHC 838
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The Body Corporate of Galloway v Johannes (Nedbank Ltd Intervening) (75535/2013) [2015] ZAGPPHC 838 (7 August 2015)
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IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
7/8/2015
CASE
NO: 75535/2013
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
REVISED
In
the matter between:
THE
BODY CORPORATE OF
GALLOWAY
APPLICANT
and
VAN
DYK
LUCASJOHANNES
RESPONDENT
NEDBANK
LIMITED
INTERVENING CREDITOR
JUDGMENT
COLLIS
AJ:
INTRODUCTION
[1] In
the present
application,
the
applicant is
seeking the
sequestration of
the
respondent's
estate.
On
14 August
2014
and
at
the
instance
of
the
applicant,
this
Court
granted
a
provisional
order
[1]
of
sequestration
against
the
estate
of
the
respondent.
The
return
date
for
final
sequestration
was
3 October
2014
and
subsequently extended on a few occasions until 31 March 2015.
BACKGROUND
[2] A brief history of
the matter is as follows: The applicant is the Body Corporate of
Galloway, a body corporate, duly established
in terms of
Section 36
of the
Sectional Titles Act, 95 of 1986
, to attend to the managing of
the sectional title scheme known as Galloway established under scheme
number S[...] 3[...] and
with chosen domicile situated at Kibo
Property Services (Pty) Ltd of 2[...] J[...] Avenue, J[...] P[...]
C[...] Building […],
Unit 2[…] Centurion.
[3] The respondent is the
registered owner of Unit 1[…] in the sectional title
development known as Galloway Unit 1[…],
situated at 2[...]
S[...] Avenue, Highveld, and as such is a member of the applicant.
[4] Pursuant to the
respondent falling
into
arrears with his levy contributions towards
the
applicant the latter
obtained
judgment
against
the respondent on
25 March
2013.
[2]
Thereafter
on
8
April
2013, the Sheriff made
an
attempt to
execute
the warrant
of
execution at the respondent's
unit
situated in Galloway.
Upon
performing a diligent search at the premises the Sheriff was
unable to
find any assets belonging to
the
respondent
which
he could
attach
in order
to
satisfy
the
judgment
debt.
It is then
that the
Sheriff
proceeded
to issue a nulla
bona
return.
[3]
It is
significant
to note,
that on
this day the sheriff found Ms. Slabbert to be the occupant of the
premises.
[5] Thereafter, on or
about 25 September 2013, a further attempt was made by the Sheriff to
execute against the movable property
at the unit of the respondent.
On this day similarly the Sheriff found no assets belonging to the
respondent and found one Mr.
Loubout to be the current occupier.
[6] It is on the above
outlined basis that the applicant alleges that the respondent has
committed
an act of
insolvency
in terms of
section 8 of the Insolvency Act,
[4]
and as a
consequence
it applied
for the sequestration of the respondent.
INTERVENING
CREDITOR'S GROUNDS OF OPPOSITION
[7] At the onset it
should be noted, that the respondent himself does not oppose the
sequestration of his estate.
[8] Such opposition is
forthcoming from the intervening creditor, in this instance Nedbank,
who opposes the application on the following
grounds:
8.1
that the respondent has not committed an act of insolvency and is not
insolvent;
8.2
that there would be no advantage to creditors, if the respondent's
estate
is sequestrated; and
8.3
that the applicant has failed to comply with the provisions of the
Insolvency
Act.
THE
LAW
[9] In order for the
applicant to succeed in placing the estate of the respondent under
sequestration, the applicant must comply
with both formal and
substantive requirements set out in the Insolvency Act.
[10] It is for this
reason that the result of this application will depend on the
interpretation and application of section 8(b),
and section 12(1)(c)
of the Insolvency Act. These sections are quoted hereunder for ease
of reference.
Section
8(b) reads as follows:
'A debtor commits an act
of insolvency- if a court has given judgment against him and he
fails, upon the demand of the officer whose
duty it is to execute
that judgment, to satisfy it or to indicate to that officer
disposable property sufficient to satisfy it,
or if it appears from
the return made by that officer that he has not found sufficient
disposable property to satisfy the judgment.'
Section
12(1)(c) reads as follows:
'If at the hearing
pursuant to the aforesaid
rule nisi
the Court is satisfied
that
(c) there is reason to
believe that it will be to the advantage of creditors of the debtor
if his estate is sequestrated'
[11]
In
Meskin & Co v Friedman 1948 (2) SA at 558 (W),
Roper J
stated as follows:
'Under sec. 12, which
deals with the position when the
rule nisi
comes up for
confirmation, the Court may make a final order of sequestration if it
is satisfied that there is such reason to believe.
The phrase
'reason
to believe',
used as it is in both these sections,
indicates that it is not necessary, either at the first or final
hearing, for the creditor
to induce in the mind of the Court a
positive view that sequestration will be to the advantage to
creditors. At the final hearing,
though the Court must be
'satisfied'
it is not to be satisfied that sequestration will be to the
advantage to creditors, but only that there is a reason to believe
that
it will be so.'
ONUS
[12] It is trite that the
onus
of establishing that all the requirements of the
Insolvency Act have been met rests upon the applicant. In order to
succeed, the
applicant has to show that the respondent (debtor) has
committed an act of insolvency and that there is reason to believe
that
when a final order is sought, the sequestration will be to the
advantage of the creditors of the respondent.
[13] A closer scrutiny of
the intervening creditor's grounds of opposition will next be looked
at.
ACT
OF INSOLVENCY
[14] The first ground
that the intervening creditor relies upon is the failure on the part
of the applicant to prove that the respondent
has committed an act of
insolvency. As previously mentioned, the returns of service which the
applicant places reliance upon were
produced by the Sheriff of the
Court pursuant upon executions which took place respectively during
April 2013 and September 2013.
[15] The said executions
took place at the
domicilium
address so chosen by
the respondent and which address is further made provision for in
terms of Regulation 3(2) of annexure 8 to
the Sectional Title Act.
[16] Upon perusal of the
Notice of Motion, it is apparent that the said notice was issued out
of this Court on 25 March 2014 exactly
six (6) months since the last
attempt to execute was made.
[17] In its opposing
affidavit, the intervening creditor did not place the time, place or
returns produced pursuant to such executions
in dispute, but rather
had placed in issue the failure on the part of the applicant, to
first have taken steps to execute against
the immovable property,
prior to taking steps to sequestrate the respondent. Therefore the
intervening creditor contends that the
application for sequestration
is not the last remedy available to the applicant.
[18] The Insolvency Act,
with specific reference to the provisions of section 8(b), places no
requirement that prior to reliance
being placed on a
nulla
bona r
eturn, or as per the present
matter, nulla bona returns. the
applicant in sequestration
proceedings would first be
obliged to obtain an order to execute against immovable
property of the debtor. The Act furthermore,
places no requirement
that the returns on which an applicant places reliance should be of
recent origin. However, it follows that
where the return relied upon
is not of recent origin, a Court would find it difficult to conclude
that it is satisfied that the
respondent's financial position has not
materially been altered, since date that execution of the writ had
taken place.
[19] In the present
matter the last execution date of the writ had taken place precisely
six months before the applicant launched
the present proceedings. As
such it could therefore not be contended, as it has been by counsel
for the intervening creditor, that
the applicants' position could
materially have been altered since date of last execution.
[20] As a consequence I
am satisfied, that the applicant has discharged it's onus in proving
that the respondent has committed an
act of insolvency.
ADVANTAGE
TO CREDITORS
[21] The applicant in its
founding affidavit as per paragraph 8 sets out that save for the unit
that the respondent has registered
in terms of the sectional title
scheme, it is unaware of any other assets or liabilities which the
respondent might have. Furthermore,
that the unit when it was
acquired during 2006, was purchased for an amount of R 430 000.00 and
that the applicant holds no security
for its claim against the
respondent.
[22] The applicant went
on to state that it has very little personal knowledge about the
financial circumstances of the respondent
but that in terms of
section 89 of the Insolvency Act read with
section 158
of the
Sectional Titles Act, it
is a preferential creditor for any unpaid
levies or contributions due to it. The judgment debt due to it as at
December 2013 amounted
to R 33 000.00.
'
.
[23] By sequestrating the
respondent it will result in the removal of the respondent as a
defaulting member in the scheme and in
that way will bring the
negative effect of his actions (by non-payments of his levies and
contributions) to an end.
[24]
In
opposition
the
intervening
creditor
avers
that
according
to
a valuation
conducted
on the
respondent's
property,
the forced sale value of the property would be an amount
of R 500
000.00,
[5]
and that this
is the only
known asset of value
in the
respondent's estate.
Furthermore,
that the outstanding
balance due
to it in respect of the
loan
agreement,
amounts
to
R
604
822.76.
[6]
That
by
mere
deduction
of
these two
amounts
there
already would
be a
shortfall
of
R 137
822.76, without
taking
into
consideration
the
costs
of
the
present
application,
in
addition
to
the
costs
of
the
administration process.
These
costs
it
tabulated
at
paragraph
21
to
its
opposing
affidavit, would at least amount to R 76 125.00. It
further
contends that sequestration would as a result not be to the advantage
of creditors, save for the applicant.
[25]
Counsel
appearing
on
behalf
of
the
intervening
creditor
further
submitted
that the
applicant
has failed
to establish that there is reason to believe that sequestration
will
be to
the
advantage
of
creditors,
which
is
established
if there
are
facts
proved
which indicate that there is a reasonable prospect--not
necessarily
a likelihood,
but a
prospect which is
not
too
far
remote--that some pecuniary benefit
will
result
to
creditors.
[7]
[26] In
Botha v Botha
1990 (4)
SA 580
(W) at 585C-F, Leveson J
said the
following:
" ....a Court need
not be satisfied that there will be advantage to creditors, only that
there is a reason to believe that
that will be so. That in turn, in
my opinion, leads to the conclusion that the expression 'reason to
believe' means 'good reason
to believe'. The belief itself must be
rational or reasonable and in my opinion, to come to such a belief
the Court must be furnished
with sufficient facts to support it. In a
broad sense it seems proper to say, on the basis of the cases, that
'advantage to creditors'
ought to have some bearing on the question
as to whether the granting of the application would secure some
useful purpose. I express
it thus because as Roper J has shown in the
Meskin case, there need not always be immediate financial benefit. It
is sufficient
if it be shown that investigation and enquiry under the
relevant provisions of the Act might unearth assets thereby
benefiting
creditors."
[27] Having regard to the
founding affidavit, one of the main purpose the granting of the
application would serve, would be to terminate
the membership of the
respondent from the scheme and thereby seizing his estates liability
for levies. That having been said, sequestrating
the respondent would
also result in all likelihood that assets will come to light when a
proper interrogation is conducted under
the provisions of the
Insolvency Act and herein also lies a further advantage to creditors.
[28] As per the Meskin
case cited above, at the final hearing a Court need not be satisfied
that sequestrating the respondent would
be to the advantage to
creditors, but that there is reason to believe that it will be so.
[29]
It is for this reason that I conclude that for present purposes
advantage to creditors under section 12(1)(c) of the Act has
been
shown.
ORDER
[30]
Accordingly the following order is made:
30.1. The intervening
party's opposition is dismissed;
30.2 the Rule nisi
granted on 14 August 2014, is hereby confirmed;
30.3 the estate of the
respondent is placed under final sequestration;
30.3 costs to be costs in
the sequestration.
C.
J. COLLIS
ACTING
JUDGE GAUTENG DIVISION PRETORIA
APPEARANCES:
FOR
APPLICANT:
ADV
J. MYBURGH
INSTRUCTED
BY:
STUART
van der MERWE
INCORPORATED
FOR RESPONDENT:
ADV
R. CARVALHEIRA
INSTRUCTED
BY:
EDELSTEIN
VAN DER MERWE INC.
DATE
OF HEARING:
2
JUNE 2015
DATE
OF JUDGMENT:
7
AUGUST 2015
[1]
See Index 2.2 page 116A.
[2]
See Index 2.2 page 27
[3]
See in this regard Founding affidavit para 6.1
[4]
Act 24 of 1936
[5]
See Opposing Affidavit para 18 Index page 128
[6]
See Opposing Affidavit para 20.3 Index page 129
[7]
See in this regard London Estates (Pty) Ltd v Nair
1957 (3) SA 591
(N)