Standard Bank of SA Ltd v Danie Thomas Boerdery CC; Standard Bank of SA Ltd v Danie Thomas Boerdery CC and Another (4535/2012, 4534/2012) [2013] ZAFSHC 32 (21 February 2013)

About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Free State High Court, Bloemfontein
SAFLII
>>
Databases
>>
South Africa: Free State High Court, Bloemfontein
>>
2013
>>
[2013] ZAFSHC 32
|

|

Standard Bank of SA Ltd v Danie Thomas Boerdery CC; Standard Bank of SA Ltd v Danie Thomas Boerdery CC and Another (4535/2012, 4534/2012) [2013] ZAFSHC 32 (21 February 2013)

FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Case No. : 4535/2012
In
the case between:-
STANDARD
BANK OF SOUTH AFRICA LTD
........................
Applicant
v
DANIE THOMAS
BOERDERY CC
.......................................
Respondent
AND
Case No. : 4534/2012
In
the case between:-
STANDARD
BANK OF SOUTH AFRICA LTD
........................
Applicant
v
DANIEL BAREND
THOMAS N.O.
.................................
1st Respondent
PETRUS ALBERTUS VAN
SCHALKWYK N.O.
..........
2nd
Respondent
(in their capacities as
trustees of the DANIE
THOMAS TRUST, IT416/06)
_____________________________________________________
JUDGMENT BY:
DAFFUE, J
_____________________________________________________
HEARD ON:
14 FEBRUARY 2013
_____________________________________________________
DELIVERED ON:
21 FEBRUARY 2013
_____________________________________________________
INTRODUCTION
[1]
I am required to adjudicate two applications which are interwoven, to
wit applications for the provisional winding up of the
Danie Thomas
Boerdery CC and the provisional sequestration of the Danie Thomas
Trust, represented by its two trustees, Daniel Barend
Thomas and
Petrus Albertus van Schalkwyk.
[2]
The applicant in both applications is the Standard Bank of South
Africa Ltd. The one trustee, Mr Van Schalkwyk, played no role
in the
litigation and apparently also not in any of the business dealings
with applicant or the farming operations of Mr Thomas,
the close
corporation or the trust. As can be gathered from the names of the
close corporation and the trust as well as the affidavits
before me,
Mr Thomas was the key figure in both entities. In fact, it is
probably correct to refer to the Thomas group, consisting
of Mr
Thomas personally, his close corporation and his trust. The trust is
the owner of several farms in the Kroonstad district.
Initially Mr
Thomas farmed for his own account, but from August 2010 farming
operations were conducted on the farms through the
close corporation.
[3]
Full sets of papers have been filed in both applications and the
legal representatives agreed that the applications be argued

simultaneously. Applicant was represented by Adv P Zietsman SC and
respondents by Adv J G Bergenthuin SC.
IDENTIFICATION
OF THE ISSUES
[4]
The issues to be determined are the following:
4.1.
Whether the requisites for a provisional sequestration order have
been proven. Applicant relies on actual insolvency as well
as certain
acts of insolvency in terms of sections 8(a), 8(c), alternatively
8(d) and 8(e) of the
Insolvency Act, 24 of 1936
. Respondent trust
denies this.
4.2.
Whether the requisites for a provisional winding up order have been
proven. Applicant relies on the close corporation’s
insolvency,
its inability to pay its debts and that it is just and equitable that
a winding up order be issued. Respondent close
corporation denies
this.
4.3.
Whether the applicant’s claims in respect of both applications
are
bona fide
disputed on reasonable grounds. These averments
by the respondents are denied by applicant.
FACTS
NOT IN DISPUTE
[5]
The following facts are not in dispute:
5.1.
That respondents were at all relevant times customers of applicant.
5.2.
That applicant advanced monies to respondents from time to time,
inter alia
by way of overdraft facilities, medium term loans
and in respect of the close corporation, also several vehicle and
asset finance
facilities.
5.3.
A general notarial bond was registered over the movable assets of the
close corporation in favour of applicant in the principle
sum of R10
million and an additional amount of R2,5 million.
5.4.
A mortgage bond was registered in favour of applicant in the amount
of R3,5 million over certain immovable properties of the
trust and a
further covering bond in the amount of R1.8 million was registered in
favour of applicant over another two farms purchased
by the trust
late in 2011. Applicant did not advance the amount of R1.8 million to
the trust to purchase the properties, but payment
was effected by the
close corporation which made use of its overdraft facilities with
applicant. An interim overdraft facility
in the amount of R1.1
million was granted to the close corporation in March 2012, but
called up on 21 July 2012 whereby the original
facility of R2.5
million was reinstated.
5.6.
Deeds of suretyship were entered into in terms whereof Mr Thomas, the
close corporation and the trust bound each other as sureties
in
favour of applicant for all the debts of the other entities within
the Thomas group.
5.7.
One of the managers of the Kroonstad branch of applicant, a certain
Mr Von Wielligh, acted as personal banker of the Thomas
group. On 3
August 2012 he was dismissed after being found guilty of conducting
business dealings for financial benefit with Mr
Thomas without
applicant’s knowledge. The investigations and disciplinary
hearing were direct consequences of a letter of
complaint written by
Mr Thomas to applicant earlier which letter contained several serious
accusations against Mr Von Wielligh.
5.8.
Mr Thomas and his family vacated their farmstead at the end of July
2012 and relocated to Pretoria, leaving a Mr Grobler and
other
employees in control of farming operations.
5.9.
On 3 August 2012, the very same day when the aforesaid disciplinary
hearing was conducted, applicant brought an
ex parte
application to perfect its security in terms of its general notarial
bond. Hereafter the close corporation’s live stock only
was
sold by agreement. The net proceeds of R3 135 506,21 were credited to
the current account of the close corporation with applicant.
The
remainder of the attached movables is still under the control of
applicant.
FACTS
IN DISPUTE
[6]
The following are in dispute:
6.1.
Applicant’s
locus standi
as creditor, i.e. whether its
claims are
bona fide
disputed on reasonable grounds.
6.2.
The amount of applicant’s claims and whether these were due and
payable when the applications were issued.
6.3.
The value of the two estates of the respondents, and in particular
the trust estate.
6.4.
Whether or not the trust is insolvent or has committed any of the
acts of insolvency alleged by applicant.
6.5.
Whether sequestration will be to the advantage of creditors.
6.6.
Whether the close corporation is unable to pay its debts and is
actually insolvent.
6.7.
Whether it is just and equitable that a winding up order be granted.
6.8
Whether the applications are an abuse of process.
RESOLVING
THE DISPUTED FACTS: CERTAIN LEGAL PRINCIPLES
[7]
Mr Bergenthuin, with reliance on
Tamarillo (Pty) Ltd v B N
Aitken (Pty) Ltd
1982 (1) SA 398
AD at 430H and
Plascon-Evans
Paints v Van Riebeeck Paints
[1984] ZASCA 51
;
1984 (3) SA 623
AD at 634 - 635
argued that insofar as there are factual disputes on the papers
before me, I should adjudicate the matters upon
the evidence of
respondent together with the admitted facts in applicant’s
affidavits. Contrary thereto, Mr Zietsman submitted
that the
principles enunciated in these two judgments are applicable to
application procedure in general, but do not apply to sequestration

and winding up procedure. He quoted
Kalil v Decotex (Pty) Ltd
and Another
1988 (1) SA 943
AD as authority. Both counsel are
wrong. The principles set out in the two judgments relied upon by Mr
Bergenthuin apply to the
adjudication of factual disputes to
establish whether
final
relief in application
proceedings, including sequestration and liquidation proceedings,
should be granted. This is clear from a
proper reading of
Kalil
v Decotex (Pty) Ltd and Another
loc cit
and
Paarwater
v South Sahara Investments (Pty) Ltd
[2005] 4 All SA 185
SCA
para [4] at 187. In the first judgment the Appeal Court dealt with
the dismissal of an application for
provisional
winding
up by the court
a quo
and the approach adopted is relevant to
the adjudication of applications for provisional winding up only.
(
loc cit
at 978 I - 980 C.)
[8]
In both applications respondents allege that they complied with all
obligations in terms of the several agreements and that
no
instalments were due and outstanding when the applications were
issued. Applicant’s deponent elected not to respond at
all to
these averments and it must therefore be accepted as correct. It must
also be emphasised that it is not applicant’s
case in both
founding affidavits that respondents breached any agreements and if
so, in what manner with reference to failure to
pay instalments. The
close corporation’s overdraft facility of R2.5 million was
never called up, whilst we know that the
present debit balance is
just over R660 000.00, leaving funds in excess of R1.8 million
available.
[9]
Applicant chose to selectively attach some of the agreements
allegedly relevant to this application. Its deponent alleges under

oath that annexure C1 is proof of the medium term loan advanced to
the close corporation, the outstanding amount which is just
over R7
million according to a certificate by himself attached to his
affidavit. This is either blatantly false or at the best
for
applicant an indication what can go wrong if parties rely on the
evidence of people who do not have first hand knowledge of
facts.
Annexure C1 is not an agreement at all. The first seven pages thereof
is clearly a quotation with the intent to enter into
a loan and it is
dated 30 March 2012. The eighth to seventeenth pages are in English,
dated 1 July 2010 and apparently incorporating
applicant’s
standard terms applicable to a totally different agreement which is
not before me. This portion does not contain
any information
pertaining to the loan amount, interest, instalments etc. Applicant
has thus not placed reliable evidence before
me that the close
corporation owed it R7 383 436.71 as on 19 October 2012 in respect of
a medium term loan. It is true that the
financial statements relied
upon by the close corporation show certain liabilities towards
applicant as on 29 February 2012, e.g
the amount due under the
heading “oortrokke bankrekenings” was R8 442 827.00. This
and other historical figures cannot
be utilised to cure applicant’s
problems. Applicant has not proven the
quantum
of its claims.
[10]
The value of the close corporation’s movables attached earlier
and which were not disposed of is not disputed by respondents.
This
value is R757 950.00. We know that the financial statements reflect a
loan account in terms whereof the trust owes the close
corporation
R3.7 million. It is the respondent’s case that it has a claim
against applicant, which has not been quantified
yet, but that it is
not insolvent if that is taken into account. The close corporation’s
case is that due to the actions
of applicant’s officials and
its manager, Mr Von Wielligh in particular, the business was
effectively terminated. I must
say that the close corporation will
find it difficult to prove damages, bearing in mind the allegations
and calculations pertaining
to loss of income of R1 339 144.00
referred to in the answering affidavit. A much more convincing
complaint is Mr Von Wielligh’s
promise in 2011 that if the two
adjacent farms were purchased at the price of R1.8 million, applicant
would advance the amount
needed. It so transpired that applicant
indeed registered a covering bond over the properties purchased, but
failed to lend the
money as promised. Instead and after some time –
in March 2012 only - applicant granted an interim overdraft of R1.1
million
to the close corporation. The timing hereof is probably not a
co-incidence. Annexure C1, the quotation in respect of a proposed

loan of R8 million, is dated 30 March 2012. The close corporation
paid the purchase price of the two farms on behalf of the trust
and
this had a negative effect on cash flow and working capital. Not only
did applicant receive extra security, but after some
time made
insufficient funds available, i.e. R700 000.00 less than promised and
also later than required.
[11]
Mr Thomas avers that he farmed all the years since leaving school for
his personal account until his personal banker, Mr Von
Wielligh
became involved in his farming operations and even his personal life.
He dictated when to buy and sell life stock and
urged him to borrow
more than the deponent believed was required. Von Wielligh went so
far to “force” his client to
register a close corporation
in order to conduct his farming operations through this entity. The
bank manager threatened to terminate
his overdraft facility if he
failed to adhere. In August 2010 he started farming through the close
corporation. Credit facilities
increased from just over R2 million to
about R10 million at a stage. Later on Mr Thomas learnt from his
legal representatives that
the advice of the bank manager might have
been motivated in order to escape the application of the National
Credit Act and the
Consumer Protection Act. Applicant’s
deponent merely denies this version in reply, but fails to rely on an
affidavit of Mr
Von Wielligh, the person being accused and the only
official that could shed any light on the topic. I shall deal
hereunder with
the particular issues and the possible relevancy of
the two Acts.
[12]
In order to consider the trust’s alleged insolvency as well as
the alleged acts of insolvency, it is necessary to evaluate
the
facts. Applicant relies on a Mr Snyman’s unsworn valuation of
certain of the trust’s properties in the amount of
R5 million.
This is not acceptable evidence. In any event the so-called
comparable properties relied upon range from selling prices
of as low
as R4 690.00 per hectare to R16 279.00 per hectare. Mr Snyman
neglected to indicate his experience at all and in particular
his
knowledge of farm values in the particular area. Mr De Hart, a senior
Kroonstad attorney and experienced sworn valuer, valued
all the farms
in the total amount of R 9 192 493.00. His valuations are properly
deposed to under oath. I have no difficulty to
accept his evidence.
[13]
It is applicant’s case that Mr Thomas left the farms in July
2012 and that he, the trust and the close corporation no
longer
intends to conduct any farming business. Further reliance is also
placed on a letter written by Mr Thomas’ attorney.
I shall deal
with the contents of the letter later. Suffice to say that Mr Thomas
made it clear that his departure to Pretoria
could never be regarded
as evading or delaying payment of the trust’s debts. In any
event, his version is that no trust assets
were dissipated with the
effect of prejudicing creditors or preferring one above the other.
The only indication to selling of the
farms is found in the letter to
applicant’s attorneys with which I shall deal later. There is
no reason to doubt or reject
Mr Thomas’ version in this regard.
[14]
I shall deal with the relevant law applicable to sequestration and
liquidation under the next heading and shall thereafter
apply same to
the facts
in casu
.
THE
APPLICABLE LAW
[15]
Generally speaking a creditor who wishes to obtain satisfaction of
his claim may avail himself to the institution of action
procedure
and once judgment has been obtained, an execution process may follow
in terms whereof the debtor’s assets are attached
and sold in
execution. Nothing prohibits a creditor from making use of the
machinery of the
Insolvency Act (in
respect of debtors who are
natural persons, partnerships and trusts), or the provisions of
Chapter 14 of the Companies Act, 61
of 1973, (“the 1973 Act”)
if applicable, or Part G of Chapter 2 of the Companies Act, 71 of
2008 (“the new
Companies Act&rdquo
;) read with Item 9 of
Schedule 5 thereto (in the event of solvent companies and close
corporations). Insofar as sequestration procedure
in accordance with
the
Insolvency Act is
relevant, it must be taken into consideration
that the main object of insolvency proceedings is to benefit
creditors, not one creditor
or some creditors, but the general body
of creditors. Insofar as a
concursus creditorum
comes into
being once a sequestration order is made, a further object of
insolvency proceedings is achieved insofar as creditors
are protected
against ‘the possible greed and mendacity of other creditors.”
See
Joubert
et al
LAWSA 2
nd
ed, vol 12, para
199 with reference to
Richter v Riverside Estates (Pty) Ltd
1946 OPD 209
at 223.
[16]
In accordance with
section 9(1)
of the
Insolvency Act, a
creditor
with a liquidated claim of not less than a R100 against a debtor who
has committed an act of insolvency or is insolvent,
may apply to the
High Court for the sequestration of the debtor’s estate.
Section 9(2)
of the
Insolvency Act reads
as follows:
“
A
liquidated claim which has accrued
but
which is not yet due on the date of hearing
of the petition shall be reckoned as a liquidated claim for the
purposes of subsection 1.” (
emphasis
added)
It is clear that in order
to qualify as a creditor for purposes of a compulsory sequestration
application, an applicant does not
have to prove that any amount of
his accrued claim is due and payable as at the date of hearing.
[17]
Section 10
of the
Insolvency Act deals
with the requirements for provisional
sequestration and unlike
section 12
applicable to final
sequestrations, an applicant for provisional sequestration does not
have to satisfy the court that the requirements
have been met, but
merely has to make out a
prima facie
case. The section reads
as follows:
“
If the court
to which the petition for the sequestration of the estate of a debtor
has been presented is of the opinion that
prima
facie
– (a) the petitioning creditor has established against the
debtor a claim as such as is mentioned in sub-section 1 of section

nine; and (b) the debtor has committed an act of insolvency or is
insolvent; and (c) there is reason to believe that it will be
to the
advantage of the creditors of the debtor if his estate is
sequestrated, it
may
make an order sequestrating the estate of the debtor provisionally.”
(emphasis
added)
There is ample authority
that even if the three requirements referred to in
section 10
have
been met, a court is not obliged to issue a provisional sequestration
order, but has a discretion whether or not to grant
such order. See
Epstein v Epstein
1987 (4) SA 606
(C) at 612G,
LAWSA
loc cit
, para 226 and
Mars, The Law of Insolvency
in
South Africa,
9
th
ed, para 5.21 at 123 – 124.
[18]
Section 8(a)
of the
Insolvency Act insofar
as might be relevant here is concerned with
the departure of a debtor from his dwelling
with the intent
by
so doing to evade or delay payment of his debts.
Section 8(c)
is
applicable when a debtor makes or attempts to make any disposition of
his property which has or would have the effect of prejudicing
his
creditors or preferring one above the other.
Section 8(d)
applies
when a debtor removes or attempts to remove his property
with the
intent
to prejudice his creditors or preferring one above the
other. In terms of
section 8(e)
an act of insolvency is committed if
a debtor makes or offers to make any arrangement with any of his
creditors for releasing him
wholly or partially from his debts.
[19] Mr Bergenthuin at no
stage submitted that the application for winding up of the close
corporation should be considered in accordance
with Part G of Chapter
2 of the new
Companies Act which
is applicable to solvent companies
and close corporations. Thus the provisions of Chapter 14 of the 1973
Act applies to the close
corporation as provided for in the
aforementioned Item 9 of Schedule 5 to the new
Companies Act.
Therefore
and insofar as applicant relies on the close corporation’s
inability to pay its debts and that it is just and equitable to
be
wound up, subsections 344(f) and (h) of the 1973 Act should be
considered. No statutory demand was issued by applicant to the
close
corporation in accordance with section 69(1) of the Close
Corporations Act – see also section 345(1) of the 1973 Act
-
for the deeming provision that the close corporation is unable to pay
its debts, to come into play. An unpaid creditor who cannot
obtain
payment and who brings his claim within the parameters of the
particular subsection is entitled to relief, subject to the
limited
discretion of the court. See
Absa Bank Ltd v Rhebokskloof (Pty)
Ltd
1993 (4) SA 436
(C) at 440 - 441 and Meskin,
Henochberg
on the
Companies Act
vol
1 at 698 - 700.
[20] The ground for
liquidation based on the just and equitable principle, “postulates
not facts, but only a broad conclusion
of law, justice and equity, …”
See
Moosa NO v Mavjee Bhawan (Pty) Ltd
1967 (3) SA 131
(T) at 136. This expression and ground for liquidation have been
considered in numerous judgments. See
inter alia
Kia
Intertrade Johannesburg (Pty) Ltd v Infinite Motors (Pty) LTD
[1999] 2 All SA 268
(W), (where the respondent company closed a
number of its branches, engaged in large-scale retrenchments,
virtually closed its
head office and diverted funds to an overseas
concern),
Sunny South Canners (Pty) Ltd v Mbangxa
[2001] 1 All SA 474
(SCA) at 481 (the respondent company suspended
its business, has not been trading for three years and was factually
hopelessly
insolvent) and
Pienaar v Thusano Foundation
1992 (2) SA 552
(BGD), (the company’s workforce was discharged,
there were internal disputes and it was inconceivable that it would
be able
to finalise a number of projects as the Governments of South
Africa and Bophuthatswana which subsidised it, withdrew their
financial
assistance). Several other examples of e.g. the
disappearance of a company’s substratum can be provided, but in
essence,
if its business has closed down with no prospects to become
viable in future, the necessary conclusion should be arrived at that

winding up is just and equitable.
[21]
I am mindful of the fact that applicant needs to establish a
prima
facie
case only in respect of both applications and in
adjudicating the applications I am bound to consider all the
affidavits placed
before me. See
Kalil v Decotex (Pty) Ltd and
Another
loc cit
at 979 B – H. I must add that
neither of the parties, and Mr Zietsman on behalf of the applicant in
particular, applied that
the matter be referred for oral evidence
notwithstanding the issues raised by me during oral argument.
[22] If an applicant’s
claim is
bona fide
disputed by the respondent on reasonable
grounds, an application for a sequestration or winding up order
cannot succeed. In terms
of the so-called
Badenhorst
Rule
(
Badenhorst v Northern Construction Enterprises (Pty) Ltd
1956 (2) SA 346
(T) at 347H – 348C) accepted by the Appeal
Court in
Kalil v Decotex
,
loc cit
, the
respondent must show the existence of a
bona fide
dispute on
reasonable grounds. Corbett JA (as he then was) puts it as follows in
Kalil v Decotex
,
loc cit
, at 980B – D:
“
Consequently,
where the respondent shows on a balance of probability that its
indebtedness to the applicant is  disputed on
bona
fide
and reasonable grounds, the Court will refuse a winding-up order. The
onus
on the respondent
is
not to show that it is not indebted to the applicant
:
it is merely to show that the indebtedness is disputed on
bona
fide
and reasonable grounds.”
(emphasis
added)
[23]
Brand, J (as he then was) summarised the approach to be adopted in
applications for provisional winding up where a respondent
disputes
its liability to the applicant, with reliance on the guidelines laid
down in
Kalil v Decotex (Pty) Ltd and Another
loc cit
and I quote:
“
Guidelines
as to how factual disputes should be approached in an application
such as the present were laid down by the Appellate
Division in
Kalil
v Decotex (Pty) Ltd and Another
1988 (1) SA 943
(A). According to these guidelines a distinction is
to be drawn between disputes regarding the respondent’s
liability to
the applicant and other disputes. Regarding the latter,
the test is whether the balance of probabilities favours the
applicant’s
version on the papers. If so, a provisional order
will usually be granted. If not, the application will either be
refused or the
dispute referred for the hearing of oral evidence,
depending on,
inter alia
,
the strength of the respondent’s case and the prospects of
viva
voce
evidence tipping the scales in
favour of the applicant. With reference to disputes regarding the
respondent’s indebtedness,
the test is whether it appeared on
the papers that the applicant’s claim is disputed by respondent
on reasonable and
bona fide
grounds. In this event it is not sufficient that the applicant has
made out a case on the probabilities.
The
stated exception regarding disputes about an applicant’s claim
thus cuts across the approach to factual disputes in general
.
“
(emphasis added)
See
Payslip Investment Holdings CC v Y2K Tec Ltd
2001 (4)
SA 781
(C) at 783 G – I and
Helderberg LaboratoriesCC v
Sola Technologies
2008 (2) SA 627
(C) paras 21 -23.
[24] The following dictum
of Thring J in
Hülse-Reutter and Another v Heg Consulting
Enterprises (Pty) Ltd (Lane and Fey NNO Intervening)
1998 (2)
SA 208
(C) at 219F – 220A demonstrates the current position of
the law in my respectful submission:
“
Apart from
the fact that they dispute the applicants' claims, and do so
bona
fide
,
which is now common cause, what they must establish is no more and no
less than that the grounds on which they do so are reasonable.
They
do not have to establish, even on the probabilities, that the
company, under their direction, will, as a matter of fact, succeed
in
any action which might be brought against it by the applicants to
enforce their disputed claims. They do not, in this matter,
have
to prove the company's defence in any such proceedings. All that they
have to satisfy me of is that the grounds which they
advance for
their and the company's disputing these claims are not unreasonable.
To do that, I do not think that it is necessary
for them to adduce on
affidavit, or otherwise, the actual evidence on which they would
rely at such a trial... It seems to
me to be sufficient for the
trustees in the present application, as long as they do so
bona
fide
,...
to allege facts which, if proved at a trial, would constitute a good
defence to the claims made against the company.”
[25] The issue was more
recently considered again by Griesel J in
Investec
Bank Ltd v Lewis
2002 (2) SA 111
(C)
insofar as a defence was raised that the bank’s restructuring
of a financial transaction prejudiced the sureties and
the respondent
in the sequestration proceedings in particular. The learned judge was
not prepared to grant a provisional sequestration
order and remarked
inter alia
as follows
at 119F - H:
“…there appears to be merit in the
argument on behalf of the respondents, namely that Investec, in
breach of its contractual
obligations, acted in a way that prejudiced
the sureties. However, bearing in mind the test to be applied at this
stage, it is
both unnecessary and undesirable to come to any final
conclusion as to the legal validity of the defence……It
is sufficient
to find …that the debt … is disputed on
bona fide
and reasonable grounds.”
See also
Standard
Bank of South Africa Ltd v Essop
1997 (4)
SA 569
(D) at 575 – 576D;
Millward v
Glaser
1950 (3) SA 547
(W) at 550 H –
551 B;
Amod v Khan
1947
(1) SA 150
(NPD) at 152 – 153.
[26]
In
casu
respondents
inter
alia
rely on the misconduct of at least one
senior employee of applicant, to wit Mr Von Wielligh. It is alleged
that reckless credit
was granted to the close corporation as defined
in section 80 of the National Credit Act, 34 of 2005 (“NCA”).
It is
furthermore respondents’ case that several transgressions
of the Consumer Protection Act 68 of 2008 (CPA) occurred for which

applicant is to be blamed and for which it must accept
responsibility. These include unconscionable conduct and absence of
fair
dealing. For these reasons, it is necessary to consider the
relevant sections in these Acts that might be applicable. Before I do

so it is important to indicate that the close corporation, bearing in
mind its nature as a juristic person and the fact that its
turnover
exceeds the threshold provided for in the NCA and the definition of
“juristic person” in the CPA, is not entitled
to
protection under either Act. See
infra
for
the threshold applicable to juristic persons in the CPA. However and
based on the averments by Mr Thomas to the effect that
he was not
only influenced, but threatened to conduct his farming operations
through a close corporation whilst all the years prior
to that he
conducted same in his personal capacity, it may still be relevant to
refer to the applicable legislation as another
court may find that
the corporate veil should be lifted as submitted by Mr Bergenthuin.
The trust has two trustees only and therefore
qualifies for
protection under the NCA, bearing in mind the definition of “juristic
person” in this Act, but it does
not qualify for protection
under the CPA. See in this regard the definition of “juristic
person” which includes any
trust as defined in the Trust
Property Act, 57 of 1988, read with sections 5(2)(b) and 6 as well as
the Minister’s notice
GN 294 of 1 April 2011 pertaining to the
threshold determination issued in accordance with section 6, which is
presently R2 million.
[27] In terms of section
80 of the NCA, read with sections 83 and 84, a court finding that
reckless credit was advanced, may set
aside all or part of a
consumer’s rights and obligations under the agreement or
suspend the force and effect thereof. Section
40 of the CPA forbids a
supplier of services, which includes banking services, to
inter
alia
use undue influence, pressure, harassment, duress, unfair
tactics or similar conduct in connection with e.g. the supply of
services
or conclusion of an agreement pertaining to the supply of
services. In terms of section 41 it is forbidden to make false,
misleading
or deceptive representations in relation to
inter alia
the marketing of services. The powers of the courts to ensure
fair and just conduct, terms and conditions are wide and the reader

is referred to section 52(3) of the CPA. Courts may even order that
compensation be paid to the consumer for losses suffered relating
to
the impugned agreement.
APPLICATION OF THE
LAW TO THE FACTS
[28] I enquired from both
counsel whether they agreed with my proposition that, notwithstanding
the fact that the requirements differ
insofar as sequestration and
winding up applications are concerned, if the one application
succeeds, the other is bound to succeed
as well, and
vice versa,
if the one fails, the other should fail accordingly. Both agreed. I
was also invited to write one judgment only. This appears to
be a
sensible approach. No doubt the two applications are intertwined, but
furthermore, it is evident that not only did Mr Thomas
play a key
role in the affairs of the close corporation and the trust –
they were for all intents and purposes his
alter ego -
but
also that applicant in all probabilities advanced monies to the close
corporation based on the suretyships of the trust and
Mr Thomas as
well as the security it has insofar as the mortgage bonds over the
trust’s immovable property are concerned.
[29] Applicant knew long
before the institution of the two applications that its manager and
personal banker of the Thomas Group
not only had secret dealings with
Mr Thomas and/or his entities, but that several serious accusations
were made concerning him.
The paper trail starts with Mr Thomas’
written complaint and carries on with his attorney’s letters of
24 July 2012
and 25 October 2012 right through to his answering
affidavits. This lends support for the view that he has not now
suddenly made
up a version in order to avoid sequestration and
liquidation. Mr Thomas’ allegations contained in the two
answering affidavits
pertaining to Mr Von Wielligh, and also his
successor, Mr Van der Merwe, have not been denied by either of them.
Instead applicant
decided to rely on the allegations of Mr Pillay, a
manager based in Durban who I accept is overall in charge of
respondents’
accounts with applicant. However, he has no
personal knowledge of the factual situation in Kroonstad and could
not possibly and
responsibly respond to the serious allegations.
[30] As is apparent from
the case law it is not necessary for respondents at this stage to
prove their defence. I am of the view
that sufficient information has
been placed before me to show that applicant’s claims, or at
least a substantial portion
thereof, are
bona fide
disputed on
reasonable grounds. It is not the function of this court to
adjudicate respondents’ allegations in order to ultimately
find
whether or not reckless credit was given as defined in section 80 of
the NCA, and if so, whether the NCA could be applied
insofar as the
close corporation is the consumer, or whether applicant should be
sanctioned in accordance with the powers given
to courts to ensure
fair and just conduct, terms and conditions, as provided for in
section 52 of the CPA, again on the basis that
the consumer was in
reality Mr Thomas and not his close corporation or trust. At this
stage I am satisfied that if respondents
are able to prove the
allegations made herein at the eventual hearing of the matter in the
appropriate forum, the defences relied
upon might succeed.
[31] Insofar as I am of
the view that the financial position of the group as a whole should
be considered for the reasons stated
above, the net proceeds of the
immovable property registered in the name of the trustees of the
trust, which are valued in excess
of R9 million, might be sufficient
to ultimately settle all valid claims of applicant.
In
casu
applicant is in the fortunate position that it is the registered
mortgage bondholder over all the immovable properties of the trust

and has already perfected its notarial bond and attached the close
corporation’s movable property. As indicated all the live
stock
so attached has been sold for its benefit. It may be that applicant
is not fully secured in respect of all its debt, but
it is in any
event in a much better position than any other possible creditors of
the close corporation in particular.
[32] Although a strong
argument has been advanced that the close corporation, if regarded in
isolation, is hopelessly insolvent,
that it is unable to pay its debt
and that it is also just and equitable to be wound up, I still have a
discretion whether or not
to grant the provisional winding up
application. It must be considered why winding up instead of action
procedure was resorted
to. When the application was brought to
perfect the notarial bond, action procedure was anticipated and the
order obtained provided
for institution of action within a month. Mr
Zietsman supplied the answer. His client changed its mind in order to
prevent a situation
whereby it might take two years or longer to
finalise the litigation due to the defences raised. It seems that
applicant wanted
to side-step a defended action. This is exactly Mr
Bergenthuin’s argument. He submitted that applicant did not
want to be
embarrassed by a counterclaim. It brought the application
not to obtain a
concursus creditorem,
but for an ulterior
motive. He argued that the present proceedings were an abuse of
process. He also submitted that applicant had
not approach the court
with clean hands for the reasons set out above. There is merit in his
arguments.
[33] As indicated
earlier, at this stage applicant only has to prove on a
prima
facie
basis that the requisites for a provisional sequestration
of the trust have been met. I am not convinced that these have been
established.
Serious doubt has been cast upon a portion of
applicant’s claims and I am also not prepared to find that the
trust is either
insolvent or that it has committed any of the acts of
insolvency relied upon by applicant. In relocating to Pretoria Mr
Thomas
could not have any intention to evade or delay payment of the
trust’s debts. In fact there is no averment that any amounts

were payable at that stage. Furthermore the applicant is the
registered bondholder and could, if it so wished, institute action
in
order to obtain judgment and have the properties declared especially
executable. There is no averment that Mr Thomas removed
or attempted
to remove trust property (which are all immovable) with the intent as
set out in section 8(d). The letter relied upon
as proof of acts of
insolvency, in particular insofar as sections 8(c) and 8(e) are
concerned, must be seen in proper context.
When this letter was
written respondent already anticipated that action would be
instituted (or a counterclaim filed) to claim
damages from applicant.
It was merely conveyed that the group intended to sell all assets and
that the proceeds would be used to
settle applicant’s claims.
In the event that there is a shortage, applicant should write off the
balance in light of the
damages caused by its officials and which
were explained earlier in the same letter. It has not been shown that
the trust has any
other creditors except applicant and in the
circumstances and bearing in mind the expensive machinery of
insolvency procedure,
I am not convinced that sequestration would be
to the benefit of the body of the trust creditors, should it be found
that there
are such further creditors. In any event and even if I am
wrong in this regard and on the basis that applicant has prima facie
shown that all the requisites for a provisional sequestration have
been met, I still have a discretion to grant or dismiss the
application.
RELIEF
[34] This is not an
application for business rescue, but in exercising my discretion I
must consider the fact that the close corporation
which is clearly
financially distressed, might be saved, bearing in mind not only the
defences referred to above, but in particular
when the trust’s
immovable properties are eventually sold. Consequently I have decided
to exercise my discretion against
applicant for the reasons stated
herein. I also exercise my discretion in favour of the trust on the
same basis as set out above
and furthermore, as agreed to by both
counsel, the two entities should fall together or stand together. In
my discretion they should
not be allowed to fall and therefore the
applications are doomed to fail. There is no reason why applicant
should not be burdened
with the costs of both applications.
ORDER
[35] The following orders
do issue:
35.1. Application number
4534/2012 for the provisional sequestration of the Danie Thomas Trust
is hereby dismissed with costs.
35.2. Application number
4535/2012 for the provisional winding up of the Danie Thomas Boerdery
CC is dismissed with costs.
______________
J. P. DAFFUE, J
On
behalf of applicants: Adv. P Zietsman SC
Instructed
by:
Symington
& De Kok
BLOEMFONTEIN
On
behalf of respondents: Adv. J G Bergenthuin SC
Instructed
by:
Graham
Attorneys
BLOEMFONTEIN
/eb