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[2014] ZAGPPHC 186
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Afgri Bedryfs Beperk v Gribnitz (61152/2012) [2014] ZAGPPHC 186 (3 April 2014)
SAFLII
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Certain
personal/private details of parties or witnesses have been
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IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
HIGH COURT, PRETORIA)
CASE
NUMBER: 61152/2012
DATE:
3/4/2014
In the matter
between:
AFGRI
BEDRYFS
BEPERK APPLICANT
And
KAREL
JOHANNES GRIBNITZ
RESPONDENT
JUDGMENT
Fabricius
J,
1.
This
is the extended return date of a rule
nisi
granted on 14
October 2013 by Khumalo J. The Applicant herein rely on the actual
insolvency of the Respondent in the context of
the provisions of
s.
9 (1) read with 9 (3) (v)
. Applicant say that they have a
liquidated claim, and that the sequestration of the Respondent would
be to the advantage of the
creditors. In the founding affidavit
Applicant deals with numerous creditor agreements entered into
between the Respondent and
the Applicant and the Applicant’s
predecessor in title, which resulted in an amount of more than R9
million plus interest
being due to Applicant, which amount the
Respondent simply has failed to pay. It also relies on a number of
instalment sale agreements
(also referred to as hire-purchase
agreements) which resulted in the Respondent being indebted to
Applicant in a sum of some R4
million as at 31 August 2012 plus
interest. In addition Applicant says that Respondent is indebted to
it in a further sum of some
R17 000 as at 31 August 2012
together with interest thereon, advanced on a so-called “monthly
account”. There
is no doubt that the substantial amounts are
due to Applicant, that Respondent has not paid them, nor even made an
offer of payment.
Respondent denies that it is
de facto
insolvent,
and furthermore alleges that the provisional order was wrongly
granted inasmuch as no proper notice was given to its
employees, as
required by the provisions of
s. 9 (4) A (a) (ii)
. The
other defence is that Applicant has no
locus standi
to bring
this application and that it is also guilty of reckless lending in
the context of the provisions of
s. 80
of the
National Credit
Act no. 34 of 2005
.
2.
The
affidavits are voluminous and I intend to deal with the relevant
facts only in summary form having regard to the Respondent’s
defences relied on. In judging the application as a whole, apart from
the question of service on employees, I have regard to two
important
considerations:
2.1
“
The
Court has a large discretion in regard to making the rule absolute:
and in exercising that discretion the condition of a man’s
assets and his general financial position will be important elements
to be considered. Speaking for myself, I always look with
great
suspicion upon and examining very narrowly, the position of a debtor
who says “I’m sorry that I cannot pay my
creditor, but my
assets far exceed my liabilities”. To my mind the best proof of
insolvency is that a man should pay his
debts, and therefore I always
examine in a critical spirit the case of the man who does not pay
what he owes.” This was the
realistic approach of Innes J (as
he then was) in
De
Ward vs Andrew and Thienhaus Ltd
1907 TS 727
at 733
.
This
approach was also followed by Naidoo J in
Hellmut and Others in
re: Agri Bedryfs Bpk and Lotter N. O. and Others case number
4172/2013
, in the Free State Division of the High Court, the
judgment having been delivered on 27 February 2014.
2.2
In
numerous instances Respondent, in the answering affidavit simply
denied certain allegations made by Applicant. In this context
I have
kept in mind what was said in
Whightman T/A JW Construction vs
Head Four (Pty) Ltd
[2008] ZASCA 6
;
2008 (3) SA 371
SCA at 375 par 13
where
the following was said: “a real, genuine and bona fide dispute
of fact can exist only where the Court is satisfied
that the party
who purports to raise the dispute has in his affidavit seriously and
unambiguously addressed the fact said to be
disputed. There will of
course be instances where a bare denial meets the requirement because
there is no other way open to the
disputing party and nothing more
can therefore be expected of him. But even that may not be sufficient
if the fact overt lies purely
within the knowledge of the averting
party and no basis is laid for disputing the veracity or accuracy of
the averment.”
3.
BACKGROUND
FACTS:
As
I have said, the Applicant (and Grow Capital Financial Services after
Applicant’s rights were ceded to it) entered into
various
credit agreements with the Respondent. These were all annexed to the
founding affidavit and indicate in some detail the
relevant
information provided by the Respondent himself for purposes of such
applications for credit and/or extensions of repayment
obligations.
In each such instance, so the documents show, a full evaluation and
assessment was conducted by Applicant and in the
2009 assessment of
Respondent’s financial position it was recorded that it had a
surplus of assets over liabilities in the
sum of R34.8 million.
Respondent is an experienced businessman on his own version and well
qualified academically as well. After
the said assessment, a credit
agreement was accordingly concluded between the Applicant and
Respondent on 1 August 2007. In terms
of this agreement, a production
credit of R1.25 million was advanced to the Respondent, which was
payable by no later than 31 August
2008. In September 2007,
Respondent applied to convert the production credit advanced to
revolving credit (“wentel krediet”).
Another
evaluation/assessment was conducted in this context and it was
recorded that Respondent had a surplus of assets over liabilities
of
about R39.5 million. After that a credit agreement was concluded on
18 October 2007. This credit was to be repaid within 12
months of the
date of conclusion of the agreement. In December 2007 Respondent
applied to have the credit facility increased from
R1.25 million to
R3 million. Another assessment/evaluation was conducted in this
regard. It was recorded at that time that Respondent
had a surplus of
assets over liabilities of some R38.4 million. Thereafter a credit
agreement was concluded on 20 December 2007.
In terms of this
agreement a credit facility of R3 million was made available to
Respondent which had to be repaid within 12 months.
In November 2008,
Respondent applied for an increase of this credit facility from R3
million to R8 million. Another assessment/evaluation
was conducted in
this context. Security in the form of surety-ships was required from
the Respondent, so it was noted. In this
evaluation report it was
recorded that Respondent had surplus assets over liabilities of some
R45 million. As part of this evaluation
process, Respondent provided
Applicant with a very comprehensive business plan. This was
Respondent’s “cash flow projection
for the grass business
for a period of three years with detailed 12 months projection”.
Further, Respondent provided Applicant
with a statement of assets and
liabilities. This reflected a surplus of R1.39 million. This document
did however not reflect any
of Respondent’s interests in other
companies which were repeatedly reflected in the credit
assessment/evaluations that had
been done to date. This statement was
clearly incomplete therefore. Pursuant to this credit assessment,
another credit agreement
was concluded on 2 December 2008. A facility
of R9.457 million was made available to Respondent which had to be
repaid by 31 January
2010. This repayment date was extended by
agreement to 31 March 2010.
4.
These
were the main agreements between Applicant and Respondent, and the
other agreements that followed thereafter were for an extension
of
re-payment time only.
5.
On
18 December 2008 Applicant and GRO Capital Finansiële Dienste
(Pty) Ltd entered into a written agreement in terms of which
Applicant ceded all its rights to GRO Capital. In November 2010, the
Respondent replied to this entity for an extension of time
for the
re-payment of the credit advanced to him previously, which extension
was granted. In August 2011 Respondent applied for
a further
extension which was again granted to 20 October 2011. It was
contended by Mr M. Maritz SC on behalf of Applicant that
in
accordance with the provisions of
s. 14
of the
Prescription Act
68 of 1969
, the running of prescription was interrupted by
this agreement in terms of which Respondent expressly, or at worst
tacitly, acknowledged
liability towards Applicant. On 27 September
2012 GRO Capital and Applicant entered into a further written
agreement in terms of
which all GRO Capital’s rights to certain
receivables, including the claims against the Respondent aforesaid
were ceded back
to the Applicant. Mr Kaplan on behalf of Respondent
had a number of problems with the cession and the re-cession between
Applicant
and GRO Capital. He pointed to a number of alleged defects
in this context, which I do not intend to discuss in any great
detail.
Firstly, Respondent’s denial of the pertinent
allegations in this context can have no evidential value in the light
of the
quoted
dictum
from the
Whightman-
decision
supra.
Secondly, the Respondent’s contentions and
criticism in this context are in any event irrelevant in that it is a
well-known
that any obligationary agreement (an agreement creating
the respective obligations or “verbintenis-skeppende
ooreenkoms”)
must be distinguished from the transferring
agreement (“saaklike ooreenkoms”), being the cession
itself.
See:
Gaffoor N.O. vs Vangates Investments
2012 (4) SA 281
(SCA) at
par. 33 read with footnote 14
.
It
is clear that the invalidity of the former, does not in law affect
the validity of the latter. In any event, the actual cession
read
with annexure A thereto leaves one with no doubt as to what was ceded
and Respondent’s name was also reflected thereon.
Mr Kaplan did
not ask me to refer this dispute that was created in the answering
affidavit for the hearing of oral evidence. In
my view there is in
any event no merit in this defence of Respondent at all.
6.
RESPONDENT’S
INDEBTEDNESS:
In
the context of the credit agreements the amount due to Applicant is
R8.93 million as at 31 August 2012 and together with further
interest
to date of payment. The conclusion of the credit agreements
themselves has not been put in issue and neither the amount
of the
credit advanced.
In
addition to the production credit granted, Respondent is also
indebted to Applicant in respect of instalment sale agreements
in the
amount of R3.95 million as at 31 August 2012 together with interest
on such amount. Respondent’s denial of this allegation
is
unsubstantiated. Respondent’s own business plan supports
Applicant’s allegations in this context. The financial
statements that were annexed to the answering affidavit, for the year
ending 28 February 2011 also fully reflect the relevant instalment
sale agreements. It is also common cause that on 30 November 2011
Applicant addressed a formal notice of demand in terms of the
National Credit Act to
Respondent setting out Respondent’s
indebtedness under the various instalment sale agreements in great
detail, and in which
each and every contract was identified by a
contract number. The comparison between the instalment sale
agreements reflected in
this notice of demand were those listed and
identified in Respondent’s mentioned financial statements,
demonstrate that the
exact same instalment agreements were reflected
in Respondent’s own financial statements. I have referred to
s.
14
of
Prescription Act
in
this context and it is in my view
clear that prescription would have to commence afresh from 30 June
2011, which is the date of
Respondent’s financial statements.
On Respondent’s own version therefore there can be no dispute
about these amounts.
I may add that the formal notice of demand dated
30 November 2011 did obviously not deserve a reply according to
Respondent and
a reference to what was said in
McWilliams vs
First Consolidated Holdings (Pty) Ltd 1982 (2) 1 (AD)
is not
out of place: Quiescence is not necessarily acquiescence, it was
said, and the party’s failure to reply to a letter
asserting
the existence of an obligation owed by such party to the writer does
not always justify an inference that the assertion
was accepted as a
truthful. But in general, when according to ordinary commercial
practice and human expectation firm repudiation
of such an assertion
would be the norm if it was not accepted as correct, such party’s
silence and inaction, unless satisfactorily
explained, may be taken
to constitute an admission by him of the truth of the assertion, or
at least will be an important factor
tending against him in the
assessment of the probabilities and in the final determination of the
dispute.
(at 10 par. E – F)
Respondent
also sent an email dated 16 February 2011 in which he stated the
following: “I hereby confirm that I have not been
able to make
repayment of production account and have not been able to make the
outstanding payments on the instalment sale account
due to the
unexpected delay.” This was admitted in the answering affidavit
and Mr M. Maritz SC submitted that in the light
of all of the above,
Respondent’s denial of any indebtedness to Applicant in respect
of instalment sale agreements was simply
dishonest. It is my view
that this submission could reasonably have been made on the basis of
the documents referred to.
Applicant
also alleges that Respondent is indebted to it in the sum of R17 153
in respect of the “maandrekening”
(monthly account) as at
31 August 2012 together with interest thereon to date of payment.
Respondent also denied this allegation.
The notice of demand again
clearly reflected Respondent’s indebtedness under this heading.
Respondent admitted that he failed
to react to this demand and failed
to dispute it. I agree that this justifies the inference that
Respondent has no defence and
that he is in fact indebted to
Applicant in this amount.
7.
ALLEGED
PRESCRIPTION OF DEBT:
This
is raised in the Respondent’s answering affidavit but was not
persisted in during argument. There is no merit in that
defence in
any event having regard to what I have already said about
Respondent’s own business plan and financial statements.
ALLEGED
RECKLESS CREDIT:
In
this context
s. 78
-
81
and
83
of the
National Credit Act 34 of
2005
,
are relevant. I have already dealt with the various
credit evaluations/assessments and the fact that all the information
contained
therein was provided by Respondent. The relevant
allegations in the founding affidavit are not disputed in the
answering affidavit
in this context. The various assessments
conducted in each instance show a substantial surplus of assets over
liabilities. The
business plan that I have mentioned must also be
kept in mind. It was a well-considered and well-prepared document in
which great
detail was supplied regarding the anticipated income and
anticipated expenses. This plan clearly demonstrates that there would
be sufficient cash flow to service the production credit applied for.
The statement of assets and liabilities which was provided
by
Respondent and which also reflects an access of assets over
liabilities of some R1.39 million, makes no mention of Respondent’s
interests in the Strider Holdings group of companies which in the
July 2007 credit assessment was reflected to be some R34 million.
On
the basis of all the detailed information supplied by Respondent, the
Applicant granted the credit that has now not been repaid.
I have
already mentioned that Respondent is an experienced businessman,
farmer and senior business rescue practitioner, with qualifications
[…………]. In his curriculum vitae it is
also stated that he was a director of numerous companies. In
each of
the credit agreements concluded Respondent acknowledged that he had
read the agreement and understood it and also confirmed
that he could
afford the repayment of the facility provided to him. The financial
statement ending February 2008 was not available
to Applicant at the
time of the earlier credit assessments and at the time of the
conclusion of the credit agreement on 2 December
2008. Respondent’s
reliance thereon during argument (which was later withdrawn) was in
my view unfortunate and certainly
not called for. The fact that
Applicant mentioned it in the founding affidavit was clearly an error
committed by the draftsman
thereof, and one would certainly not
expect Counsel to rely on that at all. It only came into existence on
3 February 2009 as an
objective fact.
On
the basis of all the facts before me there is no justifiable basis
for arguing that credit had been recklessly provided. According
to
the
Gumgudoo vs Hanover Re-insurance Group Africa
2012 (6) SA
537
SCA at 543 par. 18
decision, the Respondent is required,
in good faith, to adduce facts which, if proved at trial, would
constitute good defences
to each of the claims against him. The facts
relied upon by Applicant in the context of the assessments done prior
to the credit
agreements are not in dispute on the papers and it is
my view that Mr M. Maritz SC was correct in submitting that this
defence
was completely devoid of any merit, and could not in law give
rise to any valid defence. The Respondent’s assertion that he
was insolvent at the time of the various agreements is not borne out
by the reports and is in fact completely refuted thereby.
Alternatively, this defence must in any event fail having regard to
the provisions of
s. 81
(4) of the
National Credit Act
>.
If the relevant assessments do not correctly reflect the position,
then it follows that Respondent himself had completely misrepresented
his financial position to the Applicant and to GRO Capital in
applying for credit and in the course of their credit assessment.
According to the provisions of
s. 81
(4)
this would
establish a complete defence to Respondent’s assertion. As I
have said, the February 2008 financial statements
reflecting the
negative position of R1.772 million was only prepared and dated on 3
February 2009, some months after the assessment
had been concluded
and the relevant credit agreement had been concluded. Such financial
statements were obviously then not in Applicant’s
possession at
the time of conducting the assessment.
DE
FACTO INSOLVENCY:
During
argument Mr M. Maritz SC relied on actual insolvency and not on the
email dated 16 February 2011 as an act of insolvency
in terms of
s.
8 (g) of the Insolvency Act.
He nevertheless submitted that I
had to take this email into account, as on the Respondent’s own
version therein, he was
insolvent at the time when the various credit
agreements were concluded. In the founding affidavit it was alleged
that none of
the Respondent’s cash projections had realised as
he had envisaged and he had obviously not paid anything to Applicant
or
GRO Capital. Respondent also of course advised that he could make
no payments in respect of the instalment sale account. Nevertheless
Respondent now disputes the fact he is factually insolvent. He relies
on a balance sheet as at 31 October 2013 for the period 1
March to 31
October 2013. This reflects a surplus of some R4.6 million over
liabilities. This balance sheet however completely
ignores
Respondent’s indebtedness to the Applicant under the various
instalment sale agreements which amounted to R3.95 million
as at 31
August 2012 and which amount bares interest from that date at 12%. A
simple calculation will show that this indebtedness
would wipe out
the alleged surplus in any event. The balance sheet is clearly
incorrect and I agree with Mr M. Maritz SC in this
context that it is
a self-serving document which has no proper evidential value. I have
already mentioned in the introduction to
this judgment that
Respondent has failed to date to pay any of the outstanding and long
overdue amounts to Applicant. He has raised
defences which do not
relate to such indebtedness or to his insolvency. If he is not
insolvent why does he not pay? Why does he
not even make an offer?
The most probable inference to be drawn from such conduct is that he
is not in a position to pay and that
he is in fact insolvent.
8.
It
is therefore my view having regard to the totalities of the
undisputed facts that the Respondent is factually insolvent.
ADVANTAGE
TO CREDITORS:
It
is similarly clear from the documentation that Respondent is
possessed of assets, which would most probably yield a substantial
dividend to creditors. The threshold set by
s. 12 (1) (c) of
the Insolvency Act
in this regard is not a definite advantage
but it is sufficient “that there is reason to believe that it
will be to the advantage
of creditors of the debtor if his estate is
sequestrated”.
See:
Ex parte Matthyssen et uxor (First Rand Bank intervening)
2003
(2) SA 308
(T) at 316 B
.
ALLEGED
DEFECTIVE SERVICE OF THE APPLICATION AND ALLEGED NON-COMPLIANCE WITH
S. 9 (4A) OF THE INSOLVENCY ACT:
The
crux of this argument is that Respondent says that the application
was not served on the Respondent’s employees in accordance
with
the provisions of
s. 9 (4 A) (a) (ii) of the Insolvency Act.
The relevant return of service of the Sherriff states that
the notice of motion was effected on employees by serving a copy on a
Mrs L. Lewis, a person in charge … The provisional order was
served on 24 October 2013 on a “Mrs Lynn Curt-Lewis,
employee
of the Respondent.” It is common cause that the said Mrs L.
Lewis or Curt-Lewis is in fact Mrs Lynn Curlewis and
that she was an
employee of the Respondent at the time. Respondent also alleges in
his answering affidavit that the Sherriff attended
at his premises on
30 October 2012 and told him in the presence of his farm manager Mr
Tiaan Botha that he had with him papers
for his sequestration. The
farm manager is the most senior employee of all the employees. On the
probabilities I accept that what
was served on Mrs L. Lewis (it is
common cause that she is Mrs L. Curlewis) was in fact the notice of
motion, and although the
Respondent is coy about that, as Mr M.
Maritz SC put it, on the probabilities this must have occurred. Both
Mrs Curlewis and Mr
Botha filed a confirmatory affidavit saying that
they had read the answering affidavit. Obviously they were fully
aware of the
fact that the sequestration proceedings had been
instituted and were pending. The object of s. 9 (4A) of the
Insolvency Act is
clearly to ensure proper notification so as to
enable employees to explore possible solutions with their employer to
obviate a
need for dismissal or to limit the number of dismissals for
operational reasons.
See:
Gumgudoo vs Hanover Re-insurance Group Africa supra at par. 36
– 37.
The
Act requires service by affixing a copy to the gate or front door of
the premises or on the notice board if there is one. In
this context
I was referred to a recent judgment of the Supreme Court of Appeal
delivered 27 November 2013 in
E B Steam Company (Pty) Ltd vs
Eskom Holdings SOC Ltd
[2014] 1 All SA 294.
This
appeal dealt with the requirement contained in
s. 346 (4A) of
the Companies Act 61 of 1973
requiring that an application
for winding-up be furnished to employees. It also refers to notice to
the employees in this context
by affixing a copy of the application
to any notice board, or to the front gate of the premises. The
Insolvency Act
is of course similarly worded. They were
introduced into the
Labour Relations Act
by the
Labour
Relations Amendment Act 12 of 2002
. Their purpose was to
ensure, as far as reasonably feasible, that applications for
winding-up, voluntary surrender or sequestration
come to the
attention of the employees of the employer in question. In the
E
B Steam
judgment the Court held at par. 14 that the proper
interpretation of the requirement that application papers be
furnished to the
relevant employees, is that they must be made
available in the manner reasonably likely to make them accessible to
the employees.
It is not a requirement that the Court must be
satisfied that the application papers have as a matter of fact come
to the attention
of those persons. The methods for furnishing
employees with the application papers, as set out in the relevant
statutory provisions,
are no more than guides. If other more
effective means are adopted and reflected in the affidavit that has
to be filed in this
context then, provided that the Court is
satisfied that the method adopted was reasonably likely to make the
application papers
accessible to the employees, there has been
compliance with the section. The position is therefore that the
requirement that the
application papers be furnished to the persons
identified in the statutory provisions is peremptory. It is however
not peremptory
that this be done in any of the ways specified in the
particular sections. If those modes of service are impossible or
ineffectual,
another mode of service that is reasonably likely to
make them accessible to the employees will satisfy the requirements
of the
section.
9.
In
this context Mr M. Maritz SC submitted on behalf of Applicant that I
must take the following facts into account:
9.1
Service
of the Notice of Motion was effected on a “Mrs Curlewis”
an employee in charge of the Respondent’s farm;
9.2
In
addition the Notice of Motion was served on the Respondent by the
Sherriff who told him, in the presence of the farm manager,
Mr T.
Botha, that he had papers for the Respondent’s sequestration;
9.3
Both
Mrs Curlewis and Mr Botha deposed a confirmatory affidavit asserting
that each had read the Respondent’s answering affidavit.
It
must therefore be clear that both the farm manager, Botha, as the
most senior employee, and Curlewis, an employee in charge
of the
premises at the time of service, obtained full knowledge of the
application;
9.4
In
addition, the provisional order was again served on the said Mrs
Curlewis;
9.5
The
provisional order was also published in the Beeld newspaper and in
the Government Gazette.
10.
It
was therefore contended that it was reasonably likely that these
steps would have come to the knowledge of the bodies of employees
and
would have resulted in the application papers becoming accessible to
the body of employees. The steps that were taken under
circumstances
that I have mentioned, clearly satisfied the object of the section,
so it was contended. Neither Botha, nor Curlewis
stated in their
respective confirmatory affidavits that he or she did not notify or
inform other employees. In the absence of such
allegation, the most
reasonable inference to be drawn is that the body of employees would
have been notified of the present proceedings.
It is in my view
highly improbable that neither Botha nor Curlewis, or the Respondent
would have said anything about the present
proceedings and would not
have mentioned it to anyone else.
11.
In
my view, the purpose of the section in the
Insolvency Act
relating to service has been satisfied.
12.
Accordingly
Respondent has no
bona fide
defence to Applicant’s
application.
The
following order is therefore made:
The
provisional sequestration order is confirmed.
The
cost of the application is to be costs in the sequestration,
including the cost consequent on the employment of two Counsel.
_____________________________
JUDGE H.J FABRICIUS
JUDGE OF THE GAUTENG
HIGH COURT, PRETORIA DIVISION
Counsel for the
applicant:
Adv M Maritz SC
Adv Z Schoeman
Instructed
by:
Strydom & Bredenkamp Inc
Counsel for the
respondent:
Adv J Kaplan
Instructed
by:
Cowan-Harper Attorneys
Heard on:
03/03/2014 to 04/03/2014
Date of judgment:
03/04/2014