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[2014] ZAGPPHC 155
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Body Corporate of Graaf reinet Oord and Another v Masanabo and Others (36244/2012) [2014] ZAGPPHC 155 (20 March 2014)
IN THE HIGH COURT
OF SOUTH AFRICA
GAUTENG DIVISION,
PRETORIA
CASE
NO: 36244/2012
DATE:
20 MARCH 2014
In the matter
between:
BODY CORPORATE OF
GRAAF REINET
OORD
..............................................
Applicant
ADRIAN SYDOW
NO
.........................................................................
Intervening
Applicant
And
NORMAN MANDLA
MASANABO
......................................................
First
Respondent
LORAINE THOBILE
MASANABO
...................................................
Second
Respondent
ABSA
BANK
…....................................................................................
Intervening
Creditor
JUDGMENT
Tuchten J:
1 The applicant is
under administration. Its administrator, the intervening applicant,
seeks leave to intervene. That intervention
is not opposed The
intervening creditor, (“Absa”) similarly applies for
leave to intervene.
2 This is the much
extended return day of a provisional sequestration order in relation
to the estate of the respondents, who are
married in community of
property. A provisional sequestration order was granted by this court
on 21 November 2012. The respondents
have withdrawn their opposition
to the confirmation of the rule. Only Absa opposes. The only issue to
be decided is whether there
is, as contemplated ins 12(1 )(c) of the
Insolvency Act, 24 of 1936
, reason to believe that it will be to the
advantage of creditors of the respondents to sequestrate their
estate.
3 The respondents
own two units within the complex under the jurisdiction of the
applicant. They paid levies during a few months
in 2011 and 2012 but
have not paid levies since October 2012 although their monthly levy
obligation in respect of the two units
was as at May 2013, over R4
800 per month. They do not occupy either of the units. They have put
tenants into them. The tenants
do not pay levies either. Absa is the
bondholder in respect of the units. The amounts owed to Absa and
which are probably preferent
because they are owed under the security
of mortgage bonds exceed the probable proceeds of the units on a
forced sale. The respondents
do not on the face of it appear to have
any other assets which might be realised for the benefit of
creditors. Counsel for the
applicants argued the case on the footing
that there will probably be, on the facts presently known to the
applicants, no dividend
at all to concurrent creditors.
4 Although the
applicant took judgment against the respondents for its levies, its
attempts at execution were met by a return of
nulla bona. But in
their answering affidavit, the respondents claim that they owned
household furniture and a motor vehicle to
the total value of over
R100 000. In addition, the respondents themselves say that sold
certain properties registered in their
names after the application
for sequestration had been launched. They were unable to settle the
bondholder, Nedbank, in full upon
the sale of these properties.
Nedbank consented to the transfer and took acknowledgements of debt
for the unpaid balance which
the respondents say they started
repaying in September 2012. There is reason to believe that the
respondents have regularly been
paying amounts to Nedbank, on the
figures provided by the respondents themselves in excess of R3 000
per month, even after the
advent of the concursus.
5 In addition, and
importantly having regard to the position of ABSA in this litigation,
there is good reason to believe that the
respondents have been
preferring Absa and that Absa has continued to receive payments even
after the provisional sequestration
order was granted.
6 The respondents
reside, or did in May 2013, in Vosloorust where they conduct a
restaurant and butchery business. There were at
that stage numerous
assets on these premises. There is good reason to believe that the
respondents are or were receiving income
from this business or
elsewhere because in some months they paid the applicant sums
totalling as much as R7 000 while in other
months they paid nothing.
7 There is reason to
believe that the respondents, or the second respondent owned a
member’s interest in a close corporation
called Black Diamond
Properties CC which she sold shortly after the sequestration
application was served on her.
8 This is not the
usual case. Even though it unlikely that any dividend will accrue to
concurrent creditors, there is ample reason
to believe that
investigations by a trustee will show that the respondents have
concealed assets and routinely preferred creditors.
In this regard,
the applicant specifically alleged in its answer to Absa’s
affidavit justifying its intervention and opposition
to the
confirmation of the rule that Absa would not consent to any sale in
execution which fetched less than the full amount owed
to it by the
respondents and that Absa has routinely been in receipt of preferent
payments. Absa did not deny these allegations.
There is reason to
believe that Absa is opposing the confirmation of the rule because it
is presently in receipt of an income stream
from the respondents
which would cease on final sequestration of their estates and that
Absa, at a commercial level, wishes to
perpetuate the present regime
rather than have the units over which they hold bonds sold at a loss
to Absa. Furthermore, even if
the trustee were to be entirely unable
to recover preferent payments, the scale of the contraventions
alleged suggest that there
is reason to believe that criminal
prosecutions against the respondents and those who accepted their
preferent payments would be
justified. On these considerations, I
conclude that there is reason to believe that confirmation of the
rule will be to the advantage
of the general body of the respondents’
creditors.
9 I find additional
reason to believe that confirmation of the rule would be to the
advantage of creditors in the fact that sequestration
will terminate
the respondents’ liability for levies. In the case of Die
Regspersoon van Solitaire v JC Neeuwfan, a judgment
of this court
delivered on 7 August 2002 under case no. 22118/2001, the court found
that in a case where it was not suggested that
there was reason to
believe that investigation of the respondent’s dealings might
disclose further assets, the sui generis
position of a body corporate
was a factor which should weigh heavily in the present analysis.
10 I have
accordingly come to the conclusion that the rule must be confirmed.
Costs of the sequestration proceedings as such are
catered for in the
Insolvency Act themselves
. No order in that regard need be made.
There remains for consideration the intervention of Absa. It has
failed in the object of
its intervention. It contributed nothing of
value in the consideration of the issue I have identified. It is
entitled to intervene
in the application by virtue of its interest
but must pay the costs of the application for leave to intervene as
between itself
and the applicants. I do not, for the same reason,
intend to direct that Absa’s costs be costs in the
sequestration.
11 I make the
following order:
1 Leave is hereby
granted to Absa Bank Limited (“Absa”) to intervene in and
oppose the application launched by the applicant
against the
respondents;
2 Leave is granted
to Adrian Sydow NO to intervene as intervening applicant;
3 The provisional
order of sequestration granted on 21 November 2012 and extended from
time to time is hereby confirmed and made
final;
4 As between
(“Absa”) and the applicant, Absa must pay the applicant’s
costs arising from Absa’s application
for leave to intervene;
5 Absa’s costs
of opposition to the applicant’s application for the
sequestration of the respondents’ estate,
including the costs
of Absa’s application for leave to intervene shall not be costs
in the sequestration or administration
of the respondents’
estate.
NB TuchterT
Judge of the High
Court
19 March 2014