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[2013] ZAFSHC 149
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Erasmus and Others v de Villiers Berrange NO and Others (3369/2013) [2013] ZAFSHC 149 (10 September 2013)
FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Case No.: 3369/2013
In
the matter between:-
JOHAN WILLEM
ERASMUS
...............................................
1
st
Applicant
HENDRINA MAGDALENA
ERASMUS
..............................
2
nd
Applicant
SCHALK WILLEM
JONKER
...............................................
3
rd
Applicant
JOHANNES
PETRUS VAN NIEKERK
................................
4
th
Applicant
and
PIERRE DE VILLIERS
BERRANGE N.O.
.......................
1
st
Respondent
TSUI VINCENT
MATSEPE N.O.
....................................
2
nd
Respondent
FIFEHEAD FARMING
PARTNERSHIP
..........................
3
rd
Respondent
DOWNIBROOKE
PROPERTIES (PTY) LTD
.................
.4
th
Respondent
THE TRUSTEES OF THE
EVERFAIR TRUST
...............
5
th
Respondent
BADEN MUNGO SMYTHE
.............................................
6
th
Respondent
THE
TRUSTEES OF THE VAUQULIN
FAMILY
TRUST
...............................................................
7
th
Respondent
_____________________________________________________
HEARD ON:
29 AUGUST 2013
_____________________________________________________
JUDGMENT BY:
DAFFUE, J
_____________________________________________________
DELIVERED ON:
10 SEPTEMBER 2013
_____________________________________________________
I
INTRODUCTION
[1] This is an opposed
urgent application concerning 86 Holstein cows (“the cows”).
The major role players are the four
applicants and in particular the
first applicant, Johan Willem Erasmus, a farmer of the farm
Weltevrede (also known as Rasdal)
district Koppies on the one hand
and the two provisional trustees of the insolvent estate of the
Kirkdale Trust (“the trust”),
cited as the first and
second respondents in this application on the other. For sake of
convenience I shall refer to these two
respondents as the trustees.
[2] Third to seventh
respondents were cited as such as applicants believed that they might
have a possible interest in the relief
sought in the circumstances
set out more fully herein. They have not given notice of their
intention to oppose the application
and no relief is sought against
them. The third respondent, the Fifehead Farming Partnership
(“Fifehead”) is mentioned
in particular insofar as it
played a role in the sequestration proceedings preceding the present
application and I shall refer
to its involvement later herein.
THE RELIEF CLAIMED
[3] On Wednesday, 21
August 2013, applicants issued their application claiming the
following relief:
3.1. That the
non-compliance with the rules regarding service, as well as
time-limits and any other non-compliance with the Court
Rules, be
condoned and that the matter be heard as urgent in terms of Uniform
Rule 6(12)(a);
3.2. That the first and
second respondents are ordered to immediately return the 56 Holstein
cows (identified with a specific brand)
and the 30 Holstein cows
(identified with a certain different brand) in their possession or
under their control to the first to
fourth applicants by delivering
the said cows to me (sic) at my (sic) farm “Weltevrede”
(more commonly known as “Rasdal”)
in the district of
Koppies, Free State Province;
3.3. That the first and
second respondents are ordered to pay the costs of this application
on a scale as between attorney and client;
3.4. In the event of any
of the Third to Seventh Respondents opposing this application, that
such a respondent is also ordered to
pay the costs of this
application on the scale as between attorney and client;
3.5 Further and/or
alternative relief as the Honourable Court may decide to be
appropriate.
I should add that the
applicants begged leave to hand from the Bar at the hearing of the
application an amended notice of motion
claiming that applicants
sought delivery of the said cows to the first applicant at his farm
Weltevrede, more commonly known as
Rasdal. No substantial amendment
was sought and it was not opposed. It is apparent from the papers and
the initial notice of motion
that first applicant is in fact the
driving force behind the application.
[4] The application
papers were served on the respondents by email and on Tuesday, 27
August 2013, answering affidavits were filed.
The following day
replying affidavits were filed and the next day, i.e. 29 August 2013,
the application was heard. Advocate P.
Zietsman SC appeared for the
applicants and Advocate G.M.E. Lotz SC for first and second
respondents. Not surprisingly, and due
to the time constraints, both
parties were forced to approach me in respect of certain housekeeping
matters, seeking my leave to
accept certain confirmatory affidavits
which came to hand late as well as the amended notice of motion
referred to above. There
was no objection and I accepted these
documents. I must also point out that although counsel presented
cogent arguments, I was
not provided with written heads of argument
and both counsel referred to the minimum of authority in support of
their arguments.
This necessitated extra research and consequently
this judgment will be delivered a few days later than anticipated.
THE ISSUES
[5] Before I deal with
the material background, it is apposite to indicate what the issues
are. At the onset I requested Mr Zietsman
to indicate the legal basis
or bases of applicants’ claim. He indicated that the answer was
quite simple and that applicants
rely on spoliation. Alternatively
and only insofar as I might find against applicants in this regard,
they rely on
rei
vindicatio
. I indicated to Mr Zietsman
that the notice of motion did not contain a prayer for the setting
aside of the warrant issued by the
Magistrate of Koppies in
accordance with the provisions of
s 69(3)
of the
Insolvency Act, 24
of 1936
, which was obtained by the trustees and in terms whereof
first applicant was dispossessed of the cows. He made it clear that
he
was not going to ask for such relief as he deemed it unnecessary.
[6] Mr Lotz was quite
surprised to learn that applicants relied on spoliation which he
regarded as a completely new
causa
. He was of the view that
the application was clearly couched to deal with the merits of
ownership in respect of the cows and that
procedurally speaking, I
should not even have allowed Mr Zietsman to argue spoliation. In a
nutshell applicants’ version
is that they have been in
undisturbed possession of the cows, that the trustees have
dispossessed them unlawfully and the trustees
are presently in
possession of the cows.
[7] Evidence was also
tendered by applicants to indicate that the cows were purchased by
each of them respectively on different
occasions and at different
purchase prices from the trust prior to its insolvency, that the
purchase prices were paid and that
the cows were delivered to them.
Although the cows were leased from different lessors by the trust
from time to time, the agreements
of lease provided in each case a
right to the trust as lessee to sell cows from time to time.
Consequently, so they aver, ownership
of the cows vests in them.
THE FACTUAL MATRIX
[8] The factual
background is contained in the application papers and to a certain
extent few issues are really in dispute. I refer
to the following:
8.1. First applicant is a
farmer of the farm Weltevrede (Rasdal) district Koppies. Second
applicant is his wife with whom he is
married out of community of
property. Third applicant is an adult male residing in the town of
Koppies. Fourth applicant is referred
to as a farmer, but is residing
in the town of Koppies.
8.2. The trustees are the
provisional trustees of the insolvent estate of the trust which was
provisionally sequestrated on 25 July
2013 on application of
Fifehead, the third respondent in this application. A final
sequestration order was issued on 22 August
2013.
8.3. At all relevant
times hereto the trustees of the trust were Cornelius Andries Petrus
Loggenberg (Loggenberg), his wife Mary-Jane
Loggenberg and a
so-called independent trustee, Mr Ebenhaézer Kriek (Kriek), an
attorney of Parys. On 22 July 2013, three
days prior to the granting
of the provisional sequestration order, Kriek resigned as trustee of
the trust. Loggenberg is a role-player
in other legal entities
referred to later herein and he is in particular the sole director of
a private company, Kirkdale (Pty)
Ltd, which also features in this
application.
8.4. Third to seventh
respondents have entered into written lease agreement with the trust
in terms whereof Holstein cows were leased
to it. Apparently, and
according to the investigations by the trustees so far, there are
many more cattle owners who leased cows
to the trust. It is not
necessary to deal with this aspect further, save to refer to my
remarks
infra.
Third respondent is a farming partnership,
fourth respondent is a private company, fifth and seventh respondents
are trustees of
family trusts and sixth respondent is a private
person. Applicants rely on these lease agreements, some of which have
not been
signed by all the parties thereto, or at all, for the
trust’s entitlement to sell the cows to them. The trustees deny
that
the trust was entitled to sell cows, particularly not wholesale
and in the circumstances evident from Loggenberg’s
modus
operandi
. They aver that the evidence overwhelmingly shows that
Loggenberg was the mastermind behind the trust’s fraudulent
conduct.
The ostensible purpose of the trust was to conduct a dairy
milking operation for which purpose these agreements were concluded
in terms whereof owners of cows (investors) were induced to part with
possession of their cows, but instead of utilising the cows
for the
purpose for which they were leased, these cows were sold, many of
them immediately after lease agreements were entered
into. I shall
deal with this aspect again
infra
.
8.5. Although applicants
aver that they received possession of the cows against payment of the
purchase prices to the trust, it
is apparent, even on their own
version that no payments were made to the trust, alternatively that
they failed to prove such payments
to the trust. Instead payments
were made into the bank account of Kirkdale (Pty) Ltd and an account
that has not been identified.
For instance, and to mention just one
example, first applicant’s version that he paid R300 000,00
to the trust in June
2012 in respect of the thirty cows purchased by
him is not supported by the documentation relied upon. Payments were
in fact made
to the bank account of Loggenberg’s company,
Kirkdale (Pty) Ltd. It is unnecessary to deal further with the
version pertaining
to the purchase of the cows by the various
applicants, save insofar as I shall consider these transactions again
infra
. Fact of the matter is that, as Mr Lotz has indicated,
applicants have endeavoured to make out a case on the merits that
they are
entitled to delivery of the cows based on their alleged
ownership.
8.6 It is applicants’
case that the cows purchased by second, third and fourth applicants
were thereafter leased to first
applicant and that these cows were
all in possession of first applicant ever since such transactions
until he was dispossessed.
8.7. On 14 August 2013,
i.e. after the provisional sequestration order was issued and the
appointment of the trustees as provisional
trustees, they
inter
alia
obtained a search warrant from the magistrate in Koppies in
accordance with the provisions of
s 69(3)
of the
Insolvency Act. The
same day the warrant was served on first applicant and the 86 cows,
the subjects of this application, were removed from his farm
Weltevrede (also known as Rasdal). Applicants elected not to attach
the founding affidavit filed with the Koppies magistrate in
support
of the application in terms of
s 69(2)
, but the founding affidavit
used in a similar application before the Vereeniging magistrate
pertaining to different cows and different
farms where cows were also
held. Mr Zietsman made certain submissions in this regard and I shall
deal with that
infra
. It is apposite to state at this stage
that although detailed averments were made in this affidavit
pertaining to the fraudulent
scheme embarked upon by the trust and
Loggenberg, applicants elected not to deal with these damning
averments at all. This is strange
insofar as Mr E.A.L. Muller, an
attorney of Potchefstroom, who was the legal representative of the
trust during July 2013, as will
be shown later herein, is now also
the applicants’ attorney of first instance in this application.
8.8. Applicants aver that
they have a clear right to the cows, emphasising that they rely on
their alleged ownership and the trustees’
infringement of this
right.
8.9. The trustees rely on
the fact that Kriek, as independent trustee, was never consulted
about the sale of cows and that the trustees
did not agree to or
authorise their sale. In reply applicants rely on the fact that Kriek
himself drafted agreements of lease,
which was presented in evidence,
but not signed by anyone, indicating that Loggenberg in his personal
capacity as lessee would
be entitled to sell cows under certain
conditions.
8.10. The founding
affidavit of Willem Andries Pretorius, (“Pretorius”)
Fivehead’s deponent in the sequestration
application, was
attached to the answering affidavit and confirmed upon oath by
Pretorius. He made serious and damning allegations
pertaining to the
fraudulent scheme embarked upon by Loggenberg and the trust.
Pretorius’ investigations indicated that up
to 5 000 herd of
cattle were involved and have gone “missing” resulting in
a potential loss to investors/lessors of
approximately R30 million.
In July 2013, a few days prior to the provisional sequestration
order, Pretorius met with attorney E.A.L.
Muller of Potchefstroom
acting on behalf of the trust. Muller advised Pretorius as follows:
The cows in the possession of the trust
had contracted contagious
abortion and had to be slaughtered, but the money was “gone”.
Also, a “payment plan”
agreement had been entered into
with another investor/lessor, one Vauqulin (a trustee of the seventh
respondent in this application),
who met with Muller earlier that
same day. Furthermore, neither Loggenberg, nor his trust had any
assets, but Loggenberg’s
family intended to set up a sheep
farming operation and offered to pay the Fifehead Farming Partnership
of Pretorius from the profits
of this farming venture and a written
proposal would be presented to Pretorius. Nothing came from this.
This version has not been
contested, either in the sequestration
application, or in reply in this application. In particular,
applicants failed to file any
affidavit from Loggenberg or his wife
in an effort to deny these serious allegations.
8.11. Jesaja Alexander
Erasmus (Erasmus), the farm manager of the trust, largely confirms
the version of Pretorius and the trustees.
According to him
approximately 1000 cows subject to lease agreements were sold during
the period May 2012 to July 2013.
8.12. It is indicated by
the trustees that on first applicant’s own version he purchased
30 Holstein cows from the trust,
which were the subject of lease
agreements entered into during May 2012. This purchase took place in
June 2012, barely one month
after the trust took possession of the
cows.
8.13. Just after the
provisional sequestration order the sheriff made his inventory. He
found a paltry 31 cows in possession of
the trust.
8.14. Approximately 90%
of the cows in possession of the applicant have been over-branded.
8.15. It is apparent that
representatives of the third and fourth respondents, namely Pretorius
referred to above and Shane Pinchen
respectively, visited or
attempted to visit the farm Kirkdale on a regular basis to inspect
their dairy cows. The manner in which
Loggenberg instructed his farm
manager, Erasmus, to tag random cows with identification tags of the
lessor who came to inspect
the cows, is hair-raising. Once the one
lessor would leave the farm, his tags would be removed and the cows
retagged in preparation
for the inspection by the other lessor. Care
was taken that lessors did not arrive at the farm simultaneously.
8.16. It is evident that
Loggenberg instructed the purchaser of milk, Tip Top Full Cream Milk,
to make payments for milk delivered
by the trust to entities such as
Kirkdale (Pty) Ltd., Millika (Pty) Ltd and the Andre Loggenberg
Trust. During February 2013 to
July 2013 the sum of R1,1 million was
so deposited into the bank account of this lastmentioned trust.
8.17. In reply applicants
rely on the fact that the trustees brought their application in terms
of
s 69
of the
Insolvency Act for
the purpose of obtaining possession
of cows leased by the trust from various lessors. However, the
trustees were only entitled
to obtain possession of cows belonging to
the insolvent estate of the trust, but on the trustees’ own
version the cows never
belonged to the trust. However and although
applicants accept that the magistrate of Koppies granted the warrant,
they aver that
“this does not mean that they (the trustees) are
entitled to remain in possession of the relevant cows”.
8.18. Finally, applicants
reiterate in reply that the trust was entitled to sell cows in
accordance with the provisions of the various
agreements of lease.
SPOLIATION AND
SECTION 69(3)
OF THE
INSOLVENCY ACT 24 OF 1936
[9] As indicated
supra
,
Mr Zietsman, when confronted at the onset to explain the legal basis
of applicants’ claim, submitted that he relied on two
bases, to
wit
(a)
that the trustees obtained possession of the cows unlawfully and
therefore the mandament van spolie is applicable as spoliation
had
taken place. In order to substantiate this submission, he argued that
the trustees obtained the warrant in terms of
s 69(3)
of the
Insolvency Act unlawfully
.
(b)
Secondly, and only if it is found that no spoliation has taken place,
applicants rely on the
rei
vindicatio
as
it is submitted that a proper case has been made out that they
purchased the cows from the trust, paid the purchase price and
obtained possession thereof. I deal firstly with spoliation.
[10] It is common cause
that a total of 86 cows were in possession of first applicant until
their removal on 14 August 2013 in terms
of a warrant obtained by the
trustees in terms of
s 69(3)
which authorised the removal of the cows
belonging to the insolvent estate of the trust. These cows are
presently in possession
of the trustees. Innes CJ stated the rule
pertaining to spoliation in the followings terms in
Nino Bonino
v De Lange
1906 TS 120:
“
It is a
fundamental principle that no man is allowed to take the law into his
own hands; no one is permitted to dispossess another
forcibly or
wrongfully and against his consent of the possession of property,
whether movable or immovable.”
See also
Yeko v
Qana
1973 (4) SA 735
(AD) at 739B – G;
Makhubedu
and Another v Ebrahim
1947 (3) SA 155
(TPD) at 160 and 169 –
ejection following upon a judgment valid at the time was found not to
be spoliation - and
Ntai and Others v Vereeniging Town Council
and Another
1953 (4) SA 579
(AD) at 590 – no action can
be brought against messenger or the party instructing the messenger
for carrying out a writ as
long as the writ stands.
[11] The mandament van
spolie (spoliation order) is a possessory remedy which offers
temporary relief. The applicant must allege
and prove the following
only, i.e.
that he or she was in
possession of the property; and
that he or she was
illicitly ousted from such possession.
See: Badenhorst
et
al,
Silberberg and Schoeman’s
The Law of Property
, 5
th
ed, p 288 - 294; C G van der Merwe,
Sakereg
, 2
nd
ed, p 129.
[12] In Afrikaans the
type of possession is referred to as “vreedsame en ongestoorde
besit” and in English it is described
as “peaceful and
undisturbed possession”. The defences that may be raised are
limited, one being that the dispossession
was not unlawful or
illicit.
[13] The purpose of the
mandament van spolie is to restore the
status quo ante, i.e.
the
unlawfully deprived possession and to prevent a person who asserts
that he or she has a real right to particular property in
possession
of another to resort to self-help, instead of taking recourse to a
court of law. In deciding a spoliation application
proper, the merits
of the case, i.e. the rights of the parties pertaining to the
property, are never considered.
[14] In
Sillo v
Naude
1929 AD 21
at 26 the Appellate Division found that by
setting the machinery of the Pound Ordinance into motion in terms
whereof cattle of
the appellant were impounded, the respondent merely
invoked the aid of the law and could not be said to have taken the
law into
his own hands. Consequently appellant’s appeal was
dismissed as the Court found that no spoliation occurred.
[15] In order to develop
his argument Mr Zietsman relied on
s 18(3)
of the
Insolvency Act and
submitted that the trustees were not entitled to launch the
proceedings in terms of
s 69
as they did not have any authority from
the High Court to do so. In fact, he pointed out that the trustees
opposed the present
application and were represented by counsel
without authority from the Court contrary to the provisions of
s
18(3)
, although he did not want to make an issue of such lack of
authority pertaining to the present proceedings. I may add that this
caused me to consider the specific issue during argument and after
hearing Mr Lotz as well, and without objection from Mr Zietsman,
I
authorised the trustees belatedly to oppose applicants’
application. I shall deal
infra
with the argument pertaining
to court authorisation in relation to
s 69.
[16] Mr Zietsman also
argued that in terms of
s 69
the trustees had to present evidence
upon oath that the relevant cows belonged to the insolvent estate of
the trust and that they
were in the district of Koppies. He argued
that these cows never belonged to the trust and that the trustees did
not have the power
to apply
s 69.
Finally, he argued that the
magistrate should have applied the
audi alteram partem
rule
and should not have granted the warrant without allowing the
applicants the opportunity to answer the allegations of the trustees.
On his version the cows were not hidden and the magistrate would
never have granted the warrant if applicants were given the
opportunity
to respond.
[17] On his appointment
the insolvent estate becomes vested in the provisional trustee and
remains so vested until the appointment
of a trustee. This is trite.
Subject to certain exceptions a provisional trustee has all the
powers and is subject to all the duties
of a trustee. Although a
provisional trustee is not in the business of winding-up of the
insolvent estate, or the sale of assets
or the institution of legal
action as his primary tasks, he is duty bound to take physical
control of the estate assets and to
preserve same for creditors until
a trustee is appointed.
See:
Goodwin Stable Trust v Duohex (Pty) Ltd and
Another
1998 (4) SA 606
(C)
at
620 F and Mars,
The
Law of Insolvency in South Africa
,
9
th
ed, p 316, Meskin,
Insolvency
Law,
par
5.6.7, p 5.24 and
s 69(1)
of the
Insolvency Act.
There
is no doubt that
s
69(3)
of the
Insolvency Act is
a valuable tool in the hands of the
trustee, including the provisional trustee, the primary object of
which is to enable such a
trustee to collect and take control of
assets reasonably believed to belong to an insolvent estate which are
being concealed or
withheld.
See:
Cooper NO v
First National Bank of SA Ltd
2001 (3) SA 705
(SCA) at paras
[22] and [23] p 713D – 713E and
s 69
of the
Insolvency Act.
[18]
S 69
of the
Insolvency Act reads
as follows:
“
69 Trustee
must
take charge
of
property of estate
A trustee
shall
, as soon as
possible after his appointment, but not before the deputy-sheriff
has made the inventory referred to in subsection
(1) of section
nineteen
,
take into his possession
or under his
control
all movable property
, books and documents
belonging
to the estate
of which he is trustee and shall furnish the
Master with a valuation of such movable property by an appraiser
appointed under
any law relating to the administration of the
estates of deceased persons or by a person approved of by the Master
for the purpose.
If the trustee has
reason to
believe
that any such property, book or document is
concealed
or otherwise
unlawfully withheld from him
, he may apply to
the magistrate having jurisdiction for a search warrant mentioned in
subsection (3).
If it appears to a magistrate to whom
such application is made, from a statement made upon oath, that
there are
reasonable grounds
for
suspecting
that any
property, book or document
belonging to an insolvent estate
is
concealed
upon any person, or at any place or upon or in
any vehicle or vessel or receptacle of whatever nature, or is
otherwise
unlawfully withheld
from the trustee concerned,
within the area of the magistrate's jurisdiction, he may issue a
warrant
to search for and take possession of that property
,
book or document. (emphasis added)
…”
[19] It is important to
note that a magistrate confronted with an application for a search
warrant, does not finally determine any
legal entitlement to any
property or item envisaged in
s 69
, as he is merely called upon to
apply his mind as to whether a warrant should be issued and not to
deal with the merits such as
ownership. In
Cooper NO v First
National Bank of SA Ltd
supra
at pp 714 B – 715
A the Supreme Court of Appeal found that although there is no express
provision in
s 69(3)
requiring notice to an affected person or
affording a right to be heard, one would need to have regard to the
facts of each particular
case to determine whether the
audi
alteram partem
principle should have application. I must point
out that the facts in that judgment differ completely from the facts
in casu
and in any event the Supreme Court of Appeal had to
deal with an appeal against an order of the High Court setting aside
a search
warrant, which is not the situation
in casu
, as I
have indicated from the onset. In order to enlighten the reader as to
the mischief that
s 69
is designed to combat, it is apposite to refer
to the minority judgment of Marais JA in
Cooper
,
loc
cit
, at paras [8] – [15], pp 720 – 722.
S 69(3)
does
not require the magistrate to make findings regarding e.g. ownership
or to decide a legal issue as he or she does no more
than to decide
whether there are reasonable grounds for suspecting that an asset is
concealed or otherwise unlawfully withheld
from the trustee. Marais
JA’s reliance on the
dictum
of Lord Devlin by Marais JA
in
Hussein v Chong Fook Kam [Shaaban Bin Hussein and Others v
Chong Fook Kam and Another]
[1970] AC 942
(PC) at 948 to the
effect that suspicion in its ordinary meaning is a statement of
conjecture or surmise where proof is lacking
for purposes of
considering
s 69(3)
is apposite. Again, and although I am not asked
to set aside the warrant obtained by the trustees, it is apparent
that in the present
circumstances the trustees were fully entitled to
approach the court without giving notice to applicants.
[20] I return briefly to
Mr Zietsman’s submissions pertaining to
s 18(3).
This
subsection reads as follows:
“
(3) A
provisional trustee shall have the powers and the duties of a
trustee, as provided in this Act, except that without the authority
of the court or for the purpose of obtaining such authority he shall
not bring or defend any legal proceedings and that without
the
authority of the court or Master he shall not sell any property
belonging to the estate in question. Such sale shall furthermore
be
after such notices and subject to such conditions as the Master may
direct.”
The main aim of
s 18(3)
is to protect creditors against liability for costs incurred by
provisional trustees and dissipation of assets by their ill-conceived
litigation.
See:
Lane and
Another NNO v Dabelstein and Others (Lane and Another NNO
Intervening)
1999 (3) SA 150
(CPD) at 163B – C and
Warricker and Another NNO v Liberty Life Association of Africa
Ltd
2003 (6) SA 272
(WLD) at para [5], p 276F – J;
Patel v Paruk’s Trustee
1944 AD 469
at 475.
[21] I
have asked counsel to provide me with authority as to whether a
provisional trustee needs to obtain authorisation from the
High Court
to launch proceedings in terms of
s 69
, as Mr Zietsman submitted, or
whether such authorisation is not required as Mr Lotz submitted.
Again the issue may be of academic
value insofar as a warrant was
indeed issued and there is no application before me for setting aside
same, but in my view logic
dictates that, bearing in mind the overall
duties of provisional trustees and the nature of the proceedings in
terms of
s 69
, the authorisation of the court in terms of
s 18(3)
is
not required. Consequently the trustees did not have to approach the
High Court for such authorisation before invoking
s 69.
Hefer J (as
he then was) made the following observation pertaining to
hire-purchase goods and
s 84
of the
Insolvency Act in
Hubert
Davies Water Engineering (Pty) Ltd v The Body Corporate of "The
Village" and Others
1981 (3) SA 97
(D
&
CLD) at 101G – H:
“
A
trustee who does not have possession of the assets of the estate has
not exercised the right nor indeed carried out the duty which
he has
in terms of
s 69
(1) of the Act to reduce all the movable property
belonging to the estate into his possession or under his
control. He may
exercise that right against anyone in respect of any
movable property belonging to the estate, and he may do so
specifically for
the purpose of being able to comply with a demand
for delivery of hire-purchase goods in terms of
s 84
(1). There is
thus no question of not being able to comply with such a demand: if
the trustee does not have possession,
he
can and must obtain it
.”
(emphasis added)
This judgment found
approval in the Free State in
Morgan en ‘n Ander v
Wessels NO
1990 (3) SA 57
(OPD) at 65D - G and
Venter
NO v Avfin (Pty) Ltd
[1995] ZASCA 156
;
1996 (1) SA 826
(AD) at 835A – G.
[22] The term “legal
proceedings” appearing in
s 18(3)
is not defined in the
Insolvency Act. It
is unthinkable that a trustee who is obliged to
take control of assets belonging to an insolvent estate, even by
obtaining a warrant
for that purpose, has to approach the High Court
as a matter of course for authorisation to apply
s 69.
The Appeal
Court found that generally speaking a party commences legal action
when he issues summons or starts motion procedure,
for the purpose of
obtaining a declaratory order, whether or not he also seeks
consequential relief.
See:
SZ Tooling
Services CC v SA Eagle Insurance Co Ltd
[1992] ZASCA 157
;
1993 (1) SA 274
AD at
278 A. Refer also to the Institution of Legal Proceedings against
Certain Organs of State Act, 40 of 2002 and
S v Sitebe
1965 (2) SA 908
(NPD). Therefore the application for a warrant in
terms of s 69 should not be regarded as the institution of legal
proceedings
referred to in s 18 (3).
[23] Finally I have to
deal with the allegation that the cows do not and did not belong to
the trust at any stage and that the trustees
could not utilise s 69.
Again the issue appears to be immaterial insofar as first applicant
was dispossessed based on the warrant
issued and there is no
application for setting aside same. However I deal with the issue as
follows: “
Movable property
” is defined in
s 2
of
the
Insolvency Act as
“
every kind of property and every
right or interest which is not immovable property
” and
“
property
” is defined as “
movable or
immovable property wherever situate within the Republic, and includes
contingent interests in property other than the
contingent interests
of a fideicommissary heir or legatee
”. The insolvent trust
conducted a dairy business and in order to operate this business it
inter alia
leased several hundreds of Holstein cows from
various lessors for periods ranging from eighteen months to five
years. The trust
had the right to utilise this herd of cows to
generate income through milking, but it was also entitled to the
offspring –
the progeny – born of the cows during the
lease agreements. Although the lessors retained ownership in the cows
leased, the
insolvent estate surely had an interest in the cows
insofar as it would be entitled to keep the cows as milk producing
assets during
the respective lease periods. As such, those rights in
the cows fall within the definition of property and movable property
referred
to above and afforded the trustees the opportunity to apply
for a warrant in terms of
s 69.
The evidence to which I have referred
supra
entitled the trustees to apply for a warrant insofar as
there were at the very least reasonable grounds for suspecting that
the
cows, which for purposes of the relevant section belonged to the
insolvent estate, were concealed or unlawfully withheld from the
trustees.
[24] Having said all the
above, there is in my respectful submission no doubt that applicants
failed to prove the second requirement
for the mandament van spolie,
i.e. that first applicant, not to speak of the other three applicants
who were not even in possession
of the cows, was unlawfully deprived
of possession of the cows. The trustees did not take the law into
their own hands, but acted
as was expected of them and utilised the
proper procedure provided for in the
Insolvency Act by
obtaining a
search warrant in terms of
s 69.
THE RELIANCE ON THE
REI VINDICATIO
[25] As indicated above,
Mr Zietsman argued in the alternative, should I find that a lawful
attachment had taken place, that applicants
had proven that they were
entitled to be placed in possession of the cows based on the
rei
vindicatio.
He argued that a
prima facie
case had been
made out to the effect that the trustees of the trust had the
ius
disponendi
, the right to sell the cows and that ownership has
passed to the applicants based on the abstract system of ownership
transfer
in this country. He relied on CG van der Merwe,
loc cit
at pp 301 – 313.
[26] Mr Zietsman also
submitted that the trustees and third to seventh respondents ought to
be estopped from relying on a defence
that the trust did not give
valid title of ownership to applicants. He placed reliance on
Quenty’s Motors (Pty) Ltd v Standard Credit Corporation
Ltd
[1994] ZASCA 41
;
1994 (3) SA 188
(AD) and
Kia Motors (SA) (Edms) Bpk
v Van Zyl en ‘n Ander
1999 (3) SA 640
(OPD). In these
two matters the respective owners’ reliance on the
rei
vindicatio
to obtain possession of their motor vehicles from the
purchasers failed based on the principles of estoppel. They knew when
they
handed their vehicles to the particular second hand car dealers
that they would put them on the floor with the aim of selling them.
The trust was not in the business of auctioneer or cattle trader, but
operated a dairy farm. The facts in both judgments are totally
distinguishable from the facts
in casu
and as Mr Lotz argued,
applicants failed dismally to show that anyone or more of these
parties was or were negligent in the process.
It is not applicants’
case that they were handed copies of the lease agreements by
Loggenberg and that they established through
perusing these documents
that the trust had the right to sell the leased cows. I would be
surprised if that was their viewpoint,
especially insofar as the
reasonable person studying these lease agreements would not have come
to the conclusion that the trust
as lessee could sell milk producing
cows wholesale, as happened
in casu
.
[27] As indicated,
attorney Kriek who at all relevant times was an independent trustee
of the trust, was unaware of the various
transactions in which his
co-trustee, Loggenberg, sold cows destined to be utilised for
producing milk in the dairy business of
the trust wholesale and
probably in doing so settled outstanding rentals, the day to day
production costs of the operation and
also unlawfully channelled
funds to other entities controlled by Loggenberg. In doing this,
Loggenberg not only unlawfully utilised
capital to settle
expenditure, but probably committed fraud. It is clear that trust
income was channelled to Loggenberg’s
private company Kirkdale
(Pty) Ltd and at least two other entities. Applicants could not
legally become owners of the various cows
in the said circumstances
for the reasons set out
infra
. It is common cause that they
obtained possession of the 86 cows from Loggenberg. What is not
common cause is whether applicants
were totally innocent purchasers
unaware of Loggenberg’s financial predicament and his
fraudulent actions. The trustees should
be allowed proper opportunity
to conduct interrogations in this regard. This should be the case
even if my application of the law
as discussed and applied
infra
is wrong
.
Another aspect that appears to be clear from the
papers is that applicants failed to prove that the purchase prices in
respect of
the various transactions were paid to the trust. There is
nothing wrong with a seller instructing a purchaser to settle the
seller’s
debt with a third person and to make payment directly
to that third person.
In casu
and bearing in mind the onus of
proof, applicants failed to prove that the purchase prices were in
fact paid to the rightful entity,
to wit and on their version, the
trust.
[28] Trustees must act
jointly unless the trust deed otherwise provides.
See:
Nieuwoudt and
Another NNO v Vrystaat Mielies (Edms) Bpk
2004 (3) SA 486
(SCA) at paras [19] – [22], p 494 and
Thorpe and Others v
Trittenwein and Another
2007 (2) SA 172
(SCA) at para 9, p
176.
It is apparent that
attorney Kriek at least, did not act with Loggenberg when the
transactions were entered into and Loggenberg’s
wife probably
also did not act as such. It is not applicants’ case that Kriek
and Loggenberg’s wife acted with Loggenberg
when delivery of
the cows was effected. It is also not their case that Loggenberg
acted with their express or tacit authority,
although it was argued
that there was ostensible authority. It appears from the overall
evidence that Loggenberg acted on his own
at all relevant times. As
indicated, no affidavit was obtained from Loggenberg and the relevant
trust deed was not placed before
me. Consequently the necessary
deduction to be made is that the various sales entered into between
applicants and Loggenberg are
invalid. Such underlying transactions
being invalid, the next question to be answered is whether ownership
has passed when delivery
was effected based on the abstract system of
ownership transfer. The authorities are clear. The delivery of
movables and transfer
of immovable property can validly be effected
notwithstanding the invalidity of the underlying transactions.
See:
Legator
McKenna Inc and Another v Shea and Others
2010 (1) SA 35
(SCA) at parr 21 and 22, p 44 and
Meintjies NO v Coetzer and
Others
2010 (5) SA 186
(SCA) at parr 8 - 10, p 190 and
Oriental Products (Pty) Ltd v Pegma 178 Investments Trading CC
and Others
2011 (2) SA 508
(SCA) at par 12.
[29] Contrary to Mr
Zietsman’s submission that even if there was a defect in the
underlying transactions with specific reference
to the fact that all
the trustees did not act jointly, the validity of the various
transactions are beyond doubt insofar as ownership
has passed in
accordance with the abstract system when delivery took place, Mr
Lotz, on the other hand argued that there was not
a mere defect in
the underlying transactions, but that the very act of transfer of
ownership was defective in each case as the
transferor, Loggenberg,
did not have the required power. In my view Mr Zietsman’s
reliance on CG van der Merwe
loc cit
is not supported by the
author at all. Van der Merwe is clear that the transferor must be
legally competent to transfer the real
right of ownership as nobody
can transfer more rights than he or she has acquired. This is
described as the “golden rule”
of the law of property.
See: Badenhorst
et al
at p 72 and further where the authors also emphasise that
transfer must be effected by the holder of the real right or by a
duly
authorised agent on his or her behalf. I conclude this aspect in
finding that there was indeed a material defect in the real
agreements
insofar as Loggenberg acted without authority and
consequently, ownership in the cows did not pass to applicant
notwithstanding
delivery. See:
Legator McKenna
supra
at par 22.
[30] Mr Lotz submitted
that even if the applicants were innocent I cannot close my eyes for
the fraudulent scheme devised by the
trust and Loggenberg in
particular. However he submitted that bearing in mind the
over-branding of the cows as testified to by
Pretorius, which
occurred prior to the granting of the provisional sequestration
order, the applicants are not as innocent as they
allege to be. Mr
Lotz correctly argued that the nature of the proceedings, i.e.
application procedure, should be taken into consideration
and bearing
in mind the
Plascon-Evans
-rule, the application should
be adjudicated based on the facts stated by the respondents, together
with those facts stated by the
applicants which are not denied. I
have done so in arriving at the conclusions
supra.
RELIEF
[31] In summary, having
considered the application based on the version of respondents
together with the undisputed statements of
applicants and the
authorities quoted I am satisfied that applicants have not proven
that they are entitled to the cows, either
based on the Mandament van
Spolie, or the
rei vindicatio.
The application should be
dismissed and there is no reason why respondents’ costs should
not be borne by applicants jointly
and severally. Even if I am wrong
in this regard, it is apparent from the papers and the urgency with
which the application was
brought that further investigations will
have to be conducted to establish what exactly transpired here. Both
Muller and Loggenberg
will obviously have to be examined and the same
applies to applicants. In the meantime the trustees have a statutory
duty to keep
the cows in their custody and take care of them. No such
duty is cast upon anyone else, including the applicants. I must
mention
that Mr Lotz did not ask in the alternative for an order
staying the application pending the outcome of interrogations, but
merely
asked that the application be dismissed with costs and the
applicants be ordered to pay the costs jointly and severally, the one
to pay the others to be absolved.
ORDER
[32] Therefore the
following order is issued:
32.1. The application is
dismissed with costs, the applicants to pay the costs jointly and
severally, the one to pay the others
to be absolved.
_____________
J.P. DAFFUE, J
On
behalf of applicants: Adv P. Zietsman SC
Instructed
by:
EAL
Muller Attorney
c/o
Graham Attorneys
BLOEMFONTEIN
On
behalf of first and second
respondents:
Adv G.M.E. Lotz SC
Instructed
by:
Ven
Nemeth & Hart Inc
c/o
Kramer Weihmann Joubert
BLOEMFONTEIN
/spieterse