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[2013] ZAGPPHC 42
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Corporate Money Managers (Pty) Ltd and Others v Kruger (77058/09) [2013] ZAGPPHC 42 (12 February 2013)
NOT
REPORTABLE
IN
THE NORTH GAUTENG HIGH COURT, PRETORIA
(REPUBLIC
OF SOUTH AFRICA)
CASE
NUMBER: 77058/09
DATE:12/02/2013
CORPORATE
MONEY MANAGERS (PTY) LTD
…................................
FIRST APPLICANT
PIETER
HENDRIK STRYDOM N.O
.
….....................................................
SECOND
APPLICANT
JOHN
RODERICK GRAHAM POLSON N.O
.
…......................................
THIRD APPLICANT
GRAHAM
LOUIS STRYDOM N.O
.
…........................................................
FOURTH
APPLICANT
and
EUGENE
KRUGER
….................................................................................
RESPONDENT
and
REGENT
BOND DISCOUNTING (PTY)
LTD
.............................................
INTERVENING
APPLICANT
JUDGMENT
MABUSE
J:
1.
These are the reasons that follow on the order that I made on 18
November 2012. On the said date I made the following order:
“
The
estate of the respondent is hereby finally sequestrated” and
because of time constraints promised that I would furnish
reasons
later.
By
notice of motion issued by the Registrar of this Court on 15 December
2011, the applicants sought the above order against the
estate of
respondent, an adult businessman of Lakeview Crescent, Kleinfontein
Office Park, who at that time resided at 356 Startling
Street,
Eldoraigne, Pretoria.
2.
The first respondent is a company duly registered in terms of the
Companies Act NO.61 of 1973 with its registered place of business
at
1 Phillip Road, Meyersdal, in the province of Gauteng. The first
applicant, together with other companies collectively known
as “the
CMM Group”, was placed under curatorship in terms of the
provisions of
s.5
of the
Financial Institutions (Protection of Funds
Act 28 of 2001
). In this application the first applicantwas
represented by the second, third and fourth applicants in their
collective capacities
as the trustees of CMM and the CMM Group. The
second applicant, who has deposed to the founding affidavit in his
capacity as a
duly appointed co-trustee of CMM, is an adult male
attorney and a director in Strydom & Bredenkamp Incorporated, a
firm of
attorneys, where he practices at Brooklyn, Pretoria. The said
applicant is a co-trustee of CMM and so is the fourth applicant.
3.
The applicants sought the sequestration of the respondent’s
estate on the following grounds, firstly, that the respondent
was
insolvent and unable to pay his debts; secondly, that the
respondent’s liabilities exceeded his assets; thirdly, that
the
respondent was part of the scheme to which the first applicant had
advanced large sums of money which sums of money were fraudulently
misappropriated and not used for the purposes for which they were
advanced; and fourthly and lastly, the respondent had contravened
the
provisions of s. 8(g) of the Insolvency Act 24 of 1936 (“the
Insolvency Act&rdquo
;) in as much as he was unable to satisfy the
judgment of the South Gauteng High Court in case no. 2008/37052
granted on 27 May
2009 in terms of which the respondent, Classic
Crown Properties 84 CC and one Nayager Ratha Krishnan, were ordered
to pay jointly
and severally a total sum of R21,011,736.37 or
thereabout, interest at 1.333% per day on the total sum of R
15,597,973.31 and interest
at 0.05% per day on the sum of Rl,
135,000.00, commencing on 21 October 2008 until date of full payment,
cost of the matter on
an attorney and client scale.
4.
The abovementioned judgment was granted in favour of Regent Bond
Discounting (Pty) Ltd, (“Regent”), the intervening
party
in this application. On 3 August 2009 by a deed of cession dated 3
August 2009, Regent transferred all its rights, title
and interests
in all its claims against the debtors, including Classic Crown
Property 84 CC, to the trustees of the said CMM. It
is apposite at
this stage to indicate that the application for intervention depended
on this court finding that the said cession
was invalid. What I do
not understand however, is that, having ceded its rights against its
debtors in favour of the trustees of
CMM, and having thus divested
itself of its rights, title and interest and having ceased to be a
creditor of the debtors why would
Regent still join in the
application for the sequestration of the respondent’s estate.
For these reasons, for the intervening
party was not even party in
the original application because, according to Pieter Hendrik Strydom
(“Strydom”) who deposed
the founding affidavit,: “Regent
Bond Discounting (Edms) Beperk (“Regent”) het al sy eise
teen al sy debiteure
insluitend die respondent aan CMM gesideer. Ek
heg hierby aan, gemerk aanhangsel H83, en cn afskrif van die sessie
waama verwys
word. ”
5.
Strydom has, in the founding affidavit, set out the following
circumstances that led to Regent being the creditor of, among others,
the respondent. Regent was a company that conducted business as
financers by advancing financial loans, primarily bridging finances
and short term loans in respect of which it would obtain security as
cover for the refund of such loans. During the year 2007 a
close
co-operation known as Classic Crown Properties 84 CC (“Classic
Crown”), at that time duly represented by a certain
Ratha
Krishnan Nayager (“Nayager”) and the respondent,
approached Regent and applied for a short-term loan. At the
time
Classic Crown, it would seem, was involved in the development of a
new residential township in Benoni, which, when complete,
would have
become known as Norten Home Estates (“the development”).
This development would have taken place on the
property known as
Portion 401 (a Portion of Portion 30) of the Farm Vlakfontein Nr. 30
(“the property”), which property
was registered in the
names of Classic Crown. The primary purpose of the said short-term
loan was to provide Classic Crown with
bridging finances to enable it
to finance or to comply with the pre-proclamation requirements of the
property and to finance the
installation, on the property, of public
amenities so that the development could grow.
6.
Following the said application for loans, Regent made five short-term
loans (“loans”) to Classic Crown over the period
commencing in December 2007 and ending with March 2008. Regent made
the following loans to Classic Crown and the balances of such
loans
were, as at 20 to 21 October 2008, as follows:
6.1R2,026,080.00
with costs and interests reckoned on the sum of R 1,417,500.00 at
1.333% per day, commencing on 20 October 2008
to date of payment;
6.2
R16,674,968.69 together with costs and interests reckoned on the
capital amount of R12,261,006.39 at 0.1333% per day commencing
on 21
October 2008 to date of payment;
6.3
Rl,053,675.18 together with costs and interest calculated on the
capital amount of R789,466.92 at the rate of 0.1333% per day
reckoned
from 21 October 2008 to date of payment.
6.4
Rl,257,012.50 together with costs and interest computed on the
capital sum of Rl, 135,000.00 at the rate of 0.05% per day commencing
on 21 October 2008 to date of payment.
7.
Regent paid all the above loans to Classic Crown and in lieu of
security for the refund of the said loans the respondent and
the said
Nayager stood as sureties for the proper repayment of the loans made
by Regent to Classic Crown. Regent obtained additional
security for
the refund of the loans by Classic Crown in the form of registration
of the mortgage bond no. B051300/08 on the property.
8.
Classic Crown, the respondent and Nayager, all defaulted with the
refund of the loans with the result that Regent was forced
to launch
an
application
to the South Gauteng High Court on 30 October 2008 under Case No.
37052/2008 for the refund of the loans, payment of
interest and
costs. In his answering affidavit, the respondent admitted that he
had been served with a copy of the relevant application.
He
contended, however, that he intended opposing the application and
that he had instructed his then legal representatives to file
the
necessary papers in order to oppose the application by Regent. He
stated furthermore that he had wanted to oppose the application
because, firstly, he believed that Classic Crown had a defence
against the claim and, secondly, Classic Crown had a counter claim
in
excess of Regent’s claim against them for breach of contract. I
have dealt with these aspects in case no. 18192/2010 which
was a case
in which the respondent and Nayager had sought to rescind the above
judgment obtained against them in the South Gauteng
High Court and do
not therefore deem it necessary to deal with them again in this
judgment save to state that on 27 May 2009, and
not on 17 May 2009 as
stated by Strydom in paragraph 16.3 of his founding affidavit, Regent
applied for, and was granted, judgment
as set out in paragraph 3
above.
9.
Following the said judgment, Regent caused to be issued a writ of
execution against the movable assets of the respondent. The
sheriff
was unable to serve the said writ of execution against the movable
assets of the respondent by reason of his inability
to gain entry
into the respondent’s property. According to the sheriff’s
return of service, the relevant property where
he had been sent to
serve a copy of execution was walled and the gates were forever
locked. All his attempts at pressing the gate
bell of the property to
attract attention of the occupants of the said house in particular
the respondent bore no fruits. He left
a note for the respondent at
the given address so that the respondent could contact him but still
it served no purpose as the respondent
did not come back to him.
Consequently he returned the writ of execution together with his
report to Regent’s attorneys.
A deeds search to establish
whether or not the respondent was possessed of any immovable property
which could be attached and sold
in execution in order to satisfy the
judgment proved that the respondent did not have any immovable
property. The respondent has
admitted that for the reasons as set out
in his report, the sheriff was unable to have a copy of the writ of
execution served on
him. He also admitted that he had no immovable
property. It is accordingly for these two reasons that the applicants
contend that
the respondent does not have sufficient assets to
satisfy the judgment debt and had thus contravened the provisions of
s. 8(g)
of the
Insolvency Act.
10.
The
trustees obtained, in the meantime, a copy of the respondent’s
list of assets and liabilities dated 31 May 2007. The respondent’s
major asset, according to this list of assets and liabilities, was
his interest in Classic Crown which was at this stage of no
value.
During the insolvency enquiry into the affairs of Classic Crown, the
respondent testified that his only tangible asset was
a BMW motor
vehicle. The respondent did not challenge the correctness of the
statements of assets and liabilities dated May 2007
save to say that
they no longer represented his financial position. He did not,
however, state what his financial position was
or that it had
improved or that his financial position was favourable. The duty lay
on him to satisfy the court that he had sufficient
disposable assets
from which the judgment debt could be satisfied. According to the CMM
100 form which the respondent and Nayager
had completed for the
liquidation of Classic Crown, the only assets of Classic Crown was
the immovable property referred to in
paragraph 5 supra. Its value
was R300, 000.00. The said property, the only asset of Classic Crown,
was far less in value than the
amounts of loans advanced to it by
Regent. It was for this reason that the applicants contended that the
loans advanced to Classic
Crown were not used for the purposes for
which they were designed.
11.
Despite his vehement denials, I am satisfied that the applicants have
shown that the respondent did not have sufficient disposable
assets
from which the judgment debt could be satisfied. Accordingly they
were correct in their contention that the respondent is
insolvent.
12.
It was contended by the applicants that during an enquiry conducted
by the provisional liquidators of Classic Crown in terms
of the
provisions of s. 152 of the Act, during which the respondent
testified, the respondent’s evidence indicated quite
convincingly not only that the loans advanced by Regent had been
misappropriated but quite clearly so that he himself was factually
insolvent and unable to pay his debts. Although the respondent had
denied that the loans were misappropriated, he had not denied
that
had he admitted that he was factually insolvent and unable to settle
his debts. The respondent was unable to account for the
loans.
13.
I was satisfied that the applicants had made out a good case and that
it was in the interest of the creditors that the respondent’s
estate be sequestrated, hence the order that I made on 18 October
2012.
P.
M. Mabuse
JUDGE
OF THE HIGH COURT
Appearances:
Applicant’s
Attorneys: Roesthoff & Kruse
Applicant’s
Counsel: Adv. MA Badenhorst (SC)
Adv.
J Herschensohn
Respondent’s
Attorneys: David C Feldman
Respondent’s
Counsel:Adv. M. Smit
Intervening
Party’s Attorneys: Crouse Inc.
Intervening
Party’s Counsel: Adv. J Crouse
Date
Heard: 18 October 2012
Date
of Judgment:il Pthfv.cuj 2013