About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Kwazulu-Natal High Court, Durban
SAFLII
>>
Databases
>>
South Africa: Kwazulu-Natal High Court, Durban
>>
2013
>>
[2013] ZAKZDHC 14
|
|
Chiliza v Govender and Another (1603/2012) [2013] ZAKZDHC 14; 2013 (4) SA 600 (KZD) (29 April 2013)
IN THE
KWAZULU-NATAL HIGH COURT, DURBAN
REPUBLIC
OF SOUTH AFRICA
Case No: 1603/2012
In the
matter between:
NOMVULA
EFFIE CHILIZA
..........................................................................
Applicant
and
ASHENDRAN
GOVENDER
..............................................................
First
Respondent
INTEGER
MORTGAGE
...............................................................
Second
Respondent
JUDGMENT
Delivered on 29 April 2013
Vahed
J:
[1] An urgent application moved on 17 February 2012, on proper and
adequate notice by service of the papers upon the applicant,
brought
about the provisional sequestration of the estate of the applicant,
that very day, at the instance of the first respondent.
At the time,
and prior to the provisional Order being obtained, the application
papers (“the petition”) were also delivered
by hand to
the South African Revenue Service (“SARS”).After the
second respondent had intervened in the application,
and on the
extended return day of the provisional Order on 9 July 2012, the
Court (
Nkosi J
) granted an Order finally sequestrating the
estate of the applicant.
[2] In the present application, commenced on 23 July 2012, the
applicant seeks to rescind the final sequestration Order. She does
so
on the simple ground that when the Final Order was granted, the
Provisional Order had not by then been served on SARS as required
by
Section 11(2A)(c) of the Insolvency Act, 24 of 1936 (“the
Act”). The application for rescission is opposed by the
second
respondent.
[3] It is common cause that when the Final Order was granted the
Provisional Order had not by then been served on SARS. What is
in
dispute is whether that served as an absolute bar to the grant of the
Final Order.
[4] The history and background detail is important for a proper
consideration of the matter.
[5] The sequestration application was brought in obviously very
friendly circumstances. The petition reveals the following:
a. The first respondent (as applicant in the petition) simply
describes himself as a
businessman
without further detail
being disclosed.
b. The applicant (as the respondent in the petition) is described as
an adult female with the particulars of her identity number,
date of
birth and residential address being furnished. No details as to her
occupation are revealed.
c. Then the applicant is said to have been indebted to the first
respondent in an amount of R517 130,00, which amount was
alleged
to have been given to her in a series of payments, apparent proof of
which is put up in the form of mainly internet transfer
print outs
made principally to either
Serendipity Travel
or
bbb travel
in varying amounts spanning the period 20 July 2011 to 7 September
2011. There is no explanation of the relationship between the
applicant and these two entities. In addition, the first respondent
put up an acknowledgement of debt in which the applicant admitted
her
indebtedness to the first respondent in that sum. That document is
dated 21 September 2011 and contained an undertaking to
repay the
amount in full on or before 30 October 2011.
d. The petition does not disclose the reasons for the various
advances and neither does the first respondent indicate why he chose
to make those loans without any security for their repayment being
furnished to him.
e. The first respondent does not disclose what he did when the monies
were not repaid on 30 October 2011. His affidavit (deposed
to on 16
February 2012) simply records that he received a letter dated 1
December 2011 from the applicant. It is put up. The letter
is
typewritten on blank A4 sized paper and uses a typescript and style
reminiscent of the typescript and style of that contained
in the
acknowledgement of debt (for example the dates on both documents use
the identical form of superscript).
f. The letter discloses that the applicant had promised repayment on
15 November 2011. No mention of this is made in the petition
or of
what interactions had taken place. Concluding with an apology and an
indication of inability to pay (perhaps temporarily),
the letter
barely passes muster for the purposes of section 8(g) of the Act.
g. The first respondent then discloses that enquiries made of the
applicant have revealed that “…she is in dire financial
straits…”. Her immovable property was to be sold in
execution at the instance of the second respondent on 20 February
2012 and she furnished the first respondent with a copy of the Notice
of Sale. The first respondent does not disclose when all
of this took
place.
h. The petition was hand delivered to the first respondent and to
SARS on 16 February 2012. According to the Court File and the
Order
made, neither appeared at Court on 17 February 2012. The petition was
also served on the second respondent on 17 February
2012. In the
affidavit delivered on its behalf when it intervened the second
respondent disclosed that it “…intended
to oppose the
Application however before Counsel could be instructed to attend
Court, the Provisional Order was granted”.
[6] In her replying affidavit the applicant states that she did
indeed attend at Court on 17 February 2012 and that she consented
to
the Provisional Order being made. As I have indicated above, this is
not recorded anywhere. In addition, she denies that the
sequestration
was a
friendly
one. Given what I have set out above, that
denial is patently false. However, nothing turns on that score.
[7] The applicant goes on to say that between the dates of the
provisional and final Orders she had obtained a purchaser for her
immovable property and wanted to oppose the final Order on the basis
that a sale of the property by private treaty would have resulted
in
the debt to the second respondent being discharged in full. She said
nothing about the debt to the applicant which, on the papers
as they
then stood, remained one that appeared to be valid and due.
[8] Thus, in my view, the only issue before me is whether
Nkosi
J was precluded from granting the Final Order of sequestration
because the Provisional Order had not, by then, been delivered to
SARS.
[9] Section 11(2A)(c) of the Act says that a “…copy of
the rule
nisi
must be served on … the South African
Revenue Service”.
[10] The question that arises is whether in employing the word
must
in section 11(2A)(c) the legislature intended the provision to be
peremptory. That immediately brings to the fore a consideration
of
the provisions of section 9(4A) of the Act. They read as follows:
‘
(4A)
(
a
)
When a petition is presented to the court, the petitioner must
furnish a copy of the petition—
to
every registered trade union that, as far as the petitioner can
reasonably ascertain, represents any of the debtor’s
employees; and
to
the employees themselves—
(
aa
)
by affixing a copy of the petition to any notice board to which the
petitioner and the employees have access inside the debtor’s
premises; or
(
bb
)
if there is no access to the premises by the petitioner and the
employees, by affixing a copy of the petition to the front gate
of
the premises, where applicable, failing which to the front door of
the premises from which the debtor conducted any business
at the time
of the presentation of the petition;
to
the South African Revenue Service; and
(iv)
to the debtor, unless the court, at its discretion, dispenses with
the furnishing of a copy where the court is satisfied that
it would
be in the interest of the debtor or of the creditors to dispense with
it.
(
b
)
The petitioner must, before or during the hearing, file an affidavit
by the person who furnished a copy of the petition which
sets out the
manner in which
paragraph
(a)
was
complied with.’
[11] In
Standard Bank of SA Ltd v Sewpersadh&Ano
2005 (4)
SA 148
(C) at para 14 the provisions of section 9(4A) were held to be
peremptory.However, in
Hannover Reinsurance Group Africa (Pty) Ltd
&Ano v Gungudoo&Ano
2012 (1) SA 125
(GSJ) the provisions
were held to be directory. Both those decisions concerned the
application of section 9(4A)(i) & (ii);
ie the provisions
relating to service on a respondent’s employees. Both
Sewpersadh
and
Gungudoo
concerned the sequestration of a
private individual and in both matters the founding papers were not
served on the respondent’s
employees. In
Sewpersadh
it
was common cause that the respondent had employees while in
Gungudoo
the applicant was not aware of any employees, that being reinforced
by the fact that the respondent had, shortly prior to the
commencement of proceedings, been in the employ of the applicant.
[12] The difference in approach between
Sewpersadh
and
Gungudoo
is perfectly rational and understandable. The
difference, in my respectful view, demonstrates that an
interpretation as to whether
the provisions of section 9(4A) of the
Act are peremptory can only be made on a case by case basis,
depending of the facts of each
particular case.
[13] I pause to mention that on appeal in
Gungudoo&Ano v
Hannover Reinsurance Group Africa (Pty) Ltd &Ano
2012 (6) SA
537
(SCA) it was held that the provisions relating to service of the
petition on a debtor’s employees related only to business
employees. The question as to whether the provision was peremptory or
directory was left open.
[14] How then is one to interpret the provisions of section
11(2A)(c)? Are they peremptory?
[15] In
Nkisimane&Ors v Santam Insurance Co Ltd
1978 (2)
SA 430
(A) at 433H to 434E the following was said:
‘
Preliminarily
I should say that statutory requirements are often categorized as
"peremptory" or "directory".
They are well-known,
concise, and convenient labels to use for the purpose of
differentiating between the two categories. But the
earlier clear-cut
distinction between them (the former requiring exact compliance and
the latter merely substantial compliance)
now seems to have become
somewhat blurred. Care musttherefore be exercised not to infer merely
from the use of such labels what
degree of compliance is necessary
and what the consequences are of non or defective compliance. These
must ultimately depend upon
the proper construction of the statutory
provision in question, or, in other words, upon the intention of the
lawgiver as ascertained
from the language, scope, and purpose of the
enactment as a whole and the statutory requirement in particular (see
the remarks
of VAN DEN HEEVER J in
Lion
Match Co Ltd v Wessels
1946
OPD 376
at 380). Thus, on the one hand, a statutory requirement
construed as peremptory usually still needs exact compliance for it
to
have the stipulated legal consequence, and any purported
compliance falling short of that is a nullity. (See the authorities
quoted
in
Shalala
v Klerksdorp Town Council and Another
1969
(1) SA 582
(T)
at
587A - C.) On the other hand, compliance with a directory statutory
requirement, although desirable, may sometimes not be necessary
at
all, and non or defective compliance therewith may not have any legal
consequence (see, for example,
Sutter
v Scheepers
1932
AD 165).
In between those two kinds of statutory requirements it
seems that there may now be another kind which, while it is regarded
as
peremptory, nevertheless only requires substantial compliance in
order to be legally effective (see
JEM
Motors Ltd v Boutle and Another
1961
(2) SA 320 (N)
at
327
in
fin
- 328B and
Shalala's
case
supra
at
587F - 588H, and cf
Maharaj
and Others v Rampersad
1964
(4) SA 638 (A)
at
646C - E). It is unnecessary to say anything about the correctness or
otherwise of this trend in such decisions. Then, of course,
there is
also the common kind of directory requirement which need only be
substantially complied with to have full legal effect
(see, for
example,
RondaliaVersekeringskorporasieBpk
v Lemmer
1966
(2) SA 245 (A)
at
257H - 258H).’
[16] In
Weenen Transitional Local Council v Van Dyk
2002 (4)
SA 653
(SCA)
OLIVIER
JA said the following at para 13:
‘
It
seems to me that the correct approach to the objection that the
appellant had failed to comply with the requirements of s 166
of the
ordinance is to follow a common-sense approach by asking the question
whether the steps taken by the local authority were
effective to
bring about the exigibility of the claim measured against the
intention of the legislature as ascertained from the
language, scope
and purpose of the enactment as a whole and the statutory requirement
in particular (see
Nkisimane
and Others v Santam Insurance Co Ltd
1978
(2) SA 430
(A)
at
434A - B). Legalistic debates as to whether the enactment is
peremptory (imperative, absolute, mandatory, a categorical
imperative)
or merely directory; whether 'shall' should be read as
'may'; whether strict as opposed to substantial compliance is
required;
whether delegated legislation dealing with formal
requirements are of legislative or administrative nature, etc may be
interesting,
but seldom essential to the outcome of a real case
before the courts. They tell us what the outcome of the court's
interpretation
of the particular enactment is; they cannot tell us
how to interpret. These debates have
a
posteriori
,
not
a
priori
significance.
The approach described above, identified as '. . . a trend in
interpretation away from the strict legalistic to the
substantive' by
Van Dijkhorst J in
Ex
parte Mothuloe (Law Society, Transvaal, Intervening)
1996
(4) SA 1131 (T)
at
1138D - E, seems to be the correct one and does away with debates of
secondary importance only.’
[17] Again, in
Unlawful Occupiers, School Site v City of
Johannesburg
2005 (4) SA 199
(SCA) it was held (at para 22) that
“…even where the formalities required by statute are
peremptory it is not every
deviation from the literal prescription
that is fatal. Even in that event, the question remains whether, in
spite of the defects,
the object of the statutory provision had been
achieved”.
[18] More recently, in
Mthimkhulu v S
[2012] ZASCA 53
(4 April
2013) it was held as follows:
‘
[9] In
Secretary
of Inland Revenue v Sturrock Sugar Farm (Pty) Ltd
1965
(1) SA 897
(A) Ogilvie Thompson JA said:
“
Even where the language is
unambiguous, the purpose of the Act and other contextual
considerations may be invoked in aid of a proper
construction.”
And in
Venter v R
1907 TS
910
at 914-5 Innes CJ expressed himself in these terms:
“
It appears to me that the
principle we should adopt may be expressed somewhat in this way ─
that when to give the plain words
of the statute their ordinary
meaning would lead to absurdity so glaring that it could lead to a
result contrary to the intention
of the Legislature, as shown by the
context or by such other consideration as the Court is justified in
taking into account, the
Court may depart from the ordinary effect of
the words to the extent necessary to remove the absurdity and give
effect to the true
intention of the Legislature.”
This approach entails that one
may:
“
(i) look at the preamble of
the Act or other express indications in the Act as to the object that
has to be achieved;
(ii) study the various sections wherein the purpose may
be found;
(iii) look at what led to the enactment (not to show the
meaning, but to show the mischief the enactment was intended to deal
with);
(iv) draw logical inference from the context of the
enactment.”
(
footnotes
omitted
)
[10] Recently, in
Natal Joint
Municipal Pension Fund v Endumeni Municipality
2012 (4) SA 593
(SCA) para 18, this court, after an in-depth analysis of the
authorities relating to the interpretation of documents stated:
“
. . . Interpretation is the
process of attributing meaning to the words used in a document, be it
legislation, some other statutory
instrument . . . having regard to
the context provided by reading the particular provision or
provisions in the light of the document
as a whole and the
circumstances attendant upon its coming into existence. . . .
consideration must be given to the language used
in the light of the
rules of grammar and syntax; the context in which the provision
appears; the apparent purpose to which it is
diverted and the
material known to those responsible for its production. . . . A
sensible meaning is to be preferred to one that
leads to insensible
or unbusinesslike results or undermines the apparent purpose of the
document.
. . .
The “inevitable point of departure is the language
of the provision itself” read in context and having regard to
the
purpose of the provision and the background to the preparation
and production of the document.”
‘
[19] In applying those authorities to the facts and circumstances of
the present matter it seems to me that section 11(2A)(c) calls
for a
treatment different to that implied by section 9(4A).
[20] There is one striking difference between section 9(4A) and
section 11(2A) of the Act. It is this: when a Court considers a
petition, and before granting a provisional Order of sequestration,
there must be placed before it an affidavit which sets out
the manner
in which the provisions of the section have been complied with
(section 9(4A)(b)). Section 11(2A) of the Act does not
contain a
similar provision. In addition, section 12 of the Act is also
instructive:
‘
12
Final sequestration or dismissal of petition for sequestration
(1) If at the hearing pursuant
to the aforesaid rule
nisi
the court is satisfied that-
(a)
the petitioning
creditor has established against the debtor a claim such as is
mentioned in subsection (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 creditors of the debtor
if his estate is sequestrated,
it may sequestrate the estate of
the debtor.
(2) If at such hearing the court
is not so satisfied, it shall dismiss the petition for the
sequestration of the estate of the debtor
and set aside the order of
provisional sequestration or require further proof of the matters set
forth in the petition and postpone
the hearing for any reasonable
period but not
sine
die
.’
[21] Both section 9(4A) and section 11(2A) were introduced into the
Act by amendment in 2002 (Act 69 of 2002). When effecting those
amendments the legislature left section 12 of the Act in its original
form.
[22] The purpose of bringing the provisional sequestration of a
debtor’s estate to the attention of SARS seems reasonably
clear. It serves to provide SARS with an opportunity to intervene, if
it so chooses, so as to bring certain relevant facts to the
Court’s
attention or to ensure that a final Order does in fact eventuate. It
seems to me that that object is substantially
achieved by service of
the petition.
[23] In my view therefore, while service of the petition on SARS is
peremptory, the requirement of further service of the Provisional
Order is not. That conclusion, in my view, resonates with the
authorities referred to above and with the observation that section
12 of the Act does not oblige a Court to take the non-service of the
Provisional Order into account when exercising its discretion
whether
to grant a final Order.
[24] It needs to be stated however that on the given facts of a
particular case a Court remains at liberty, in the exercise of
its
discretion, and
ex abundanticautela
, to insist upon service of
the Provisional Order upon SARS before granting a Final Sequestration
Order. In practice therefore,
it would be salutary for petitioners
for the sequestration of a debtor’s estate to effect service of
the Provisional Order
upon SARS before seeking a final Order. This
would obviate the unnecessary delay and additional costs that would
ensue if a Court
were to subsequently insist upon such service being
effected.
[25] For those reasons and for present purposes I hold that the
failure to serve the Provisional Order upon SARS was not fatal
and
did not preclude
Nkosi
J from granting the Order finally
sequestrating the estate of the Applicant.
[26] The application is dismissed with costs.
____________
Vahed J
CASE INFORMATION
Date of Hearing: 29 January 2013
Date of Judgment: 29 April 2013
Applicant’s Counsel: D G Tobias
Applicant’s Attorneys: AshikaMaharaj &
Associates Attorneys
Suite 250, 2
nd
Floor, Mansion House
12 Field Street
DURBAN
2
nd
Respondent’s Counsel: D DNaidoo
2
nd
Respondent’s Attorneys: VinayYetwaru
Attorneys
Suite 1301, 13
th
Floor, Denor House
Cnr Smith & Field Streets
Durban
(Ref: Mrs Bayat/N*P/J127)