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[2012] ZAKZPHC 34
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Gracie v Cundill (10766/2011) [2012] ZAKZPHC 34 (8 June 2012)
IN THE KWAZULU-NATAL
HIGH COURT, PIETERMARITZBURG
REPUBLIC OF SOUTH
AFRICA
CASE NO. 10766/2011
In the matter between
:
ROBIN CLIVE GRACIE
…...........................................................
APPLICANT
and
SCOTT COLLIN CUNDILL
….................................................
RESPONDENT
JUDGMENT
Delivered on 08 June 2012
SWAIN J
[1] The applicant
originally sought the provisional sequestration of the estate of the
respondent, based upon an act of insolvency
committed by the
respondent in terms of Section 8 (b) of the Insolvency Act No. 24 of
1936 (the Act), as a result of a
nulla bona
return rendered by the
Sheriff dated 07 September 2011.
[2] It is common cause
that the judgment debt, payment of which was demanded by the Sheriff
from the respondent, was summary judgment
for payment of the sum of
R200,000.00, interest on this sum at the rate of 15.5% percent per
annum,
a tempore mora
to date of payment, together with costs.
[3] At the hearing of
this matter I referred Counsel to the averment made in the heads of
argument of Mr. Pretorious, who appeared
on behalf of the applicant,
that subsequent to the delivery of all of the affidavits, the
respondent had paid the sum of R200,000.00
into the trust account of
the applicant’s attorneys. I accordingly asked whether it was
common cause that the respondent
had paid the capital sum owing to
the applicant. Mr. Broster S C, who appeared on behalf of the
respondent, said this was not the
case as the payment had been made
subject to certain conditions, which were not acceptable to the
applicant. I then requested Counsel
to clarify this issue, the upshot
of which was that the respondent agreed that the payment was
unconditionally made. The respondent
also agreed to make payment of
the interest payable on this amount, together with the applicant’s
costs in the action, within
fourteen Court days of being presented
with a calculation of the interest payable, as well as the
Registrar’s
allocatur i
n respect of the applicant’s
taxed costs. The respondent also agreed to pay the applicant’s
costs in respect of the
application brought by the respondent to
rescind the summary judgment, within fourteen Court days of the
applicant presenting to
the respondent, the Registrar’s
allocatur
in respect of the applicant’s taxed costs.
[4] The only remaining
issue accordingly was the liability of the respondent for the costs
of the present application. Mr. Pretorious
submitted that the
respondent should be ordered to pay the applicant’s costs,
whereas Mr. Broster submitted that each of
the parties should pay
their own costs.
[5] The basis for Mr.
Broster’s submission was that the applicant had acted
unreasonably in pursuing the sequestration of
the respondent, because
it was clear on the papers, that the applicant could have obtained
satisfaction of the amount owing, by
executing against an immovable
property owned by the respondent. Mr. Broster pointed to the fact
that the applicant in his founding
affidavit alleged that the
respondent was the owner of a certain immovable property, which was
purchased by the respondent for
R3,780,000.00 and which was mortgaged
in favour of the Standard Bank in the sum of R1,8M. The applicant
also alleged that he had
obtained a valuation of the immovable
property in the sum of R3M. Mr. Broster’s argument was
therefore that there was clearly
sufficient equity in the immovable
property, to satisfy the applicant’s claim, which applicant
should have done by executing
against the immovable property, rather
than by seeking the sequestration of the respondent. When I asked Mr.
Broster whether he
was attacking the validity of the
nulla bona
return
,
he replied he was not.
[6] The latter aspect is
of importance in assessing the argument advanced by Mr. Broster,
because the return contains the following
statement by the Sheriff:
“
It is
further certified that Cundill Scott Collin was requested to declare
whether he owns any immovable property which is executable,
on which
the following reply was furnished ‘No’ “.
[7] The respondent’s
answer to the
nulla bona
return
was to state
that the address where
the Sheriff sought to execute the writ, was not the address of the
immovable property in question and was
done at an address where the
respondent did not have any assets. The respondent alleged that if
the attempt to execute had been
carried out at “
any
other place where I have assets, namely Five Streams farm, the result
would obviously be different”.
It is common cause that
the immovable property is the property which was sold by the
applicant to the respondent. It is also common
cause that the Sheriff
attempted to serve the warrant of execution upon the respondent at
the immovable property on 20 September
2011, but was unable to do so
as he found the premises locked. From the Sheriff’s return he
had attempted to serve the process
at the immovable property on 05
September 2011, but had on that occasion also found the premises
locked.
[8] The respondent’s
answer to the contents of the
nulla bona
return was that the address where the writ was served
upon him was that of his girlfriend, who leased the property and
“whose furniture and movable assets comprise the
contents of the household goods”.
The respondent
then added the following:
“
15.5 The
abovementioned six witnesses watched as the Sheriff asked if this was
my house, heard me say no, asked if I had any assets
here, heard me
say no again, and then said ‘don’t worry, I’ll take
care of it’ and left after tearing off
the warrant of
execution”.
[9] The applicant in
reply, obtained an affidavit from the Sheriff where he states:
“
I further
confirm the content of the writ as being true and correct in all
respects”.
[10] There is
consequently a direct dispute of fact as to whether the Sheriff asked
the respondent whether he owned any immovable
property which was
executable. In my view, it is not necessary to resolve this dispute,
because on the respondent’s version
it is quite clear that the
respondent appreciated that the Sheriff’s task was to find
property belonging to the respondent,
whether immovable or movable
wherever situated, which could be attached to satisfy the judgment.
The respondent was aware that
there was an immovable property, which
could be attached but nevertheless concealed its existence from the
Sheriff, purely on the
basis that the Sheriff had not served the writ
at the immovable property in question. Mr. Broster submitted that
even if the conduct
of the respondent had been misleading, this did
not affect the fact that the applicant was aware of the existence of
the immovable
property and that it could be attached in execution of
the applicant’s claim.
[11] Mr. Pretorious,
submitted that the availability of the immovable property for
attachment was not clear because the respondent
on 03 November 2011,
before the present proceedings were initiated sent an email to the
applicant’s attorneys advising them
that he was
“currently
involved in a High Court case with Standard Bank over the farm”.
He also drew attention to the failed attempts by the
Sheriff to serve the writ upon the respondent on 30 August 2011 and
02 September
2011, at the address where service was eventually
effected, as well as the failed attempts at service at the immovable
property,
referred to above. He also drew my attention to the fact
that the respondent alleged in reply that the reason the property was
purchased, was to establish a sustainable community and each
individual invested funds into the purchase of the property. The
respondent
alleged that the applicant was aware of this purpose
before the agreement was signed, and the applicant was aware of the
subsequent
activities on and development of the land, which was not
denied by the applicant in reply. Consequently, Mr. Pretorious
submitted
that the ability of the applicant to have the property
attached and sold in execution, was not as clear cut as the
respondent submitted.
[12] Mr. Broster in
reliance upon the decision of Didcott J (as he then was) in
Gardee v Dhanmanta
Holdings & others
1978 (1) SA 1066
(N) at 1069 I
submitted that the
following dictum was apposite on the facts of the present case:
“
Applying
these criteria to the case of the single creditor who uses
sequestration proceedings as a mode of execution, one draws
the
following conclusions. He must satisfy the Court, at the least, that
there is reason to believe in all the circumstances that,
after the
costs of sequestration are paid, he will recover an amount which is
not negligible. What is more, in my opinion, he must
demonstrate some
reasonable expectation that it will exceed the likely proceeds of
ordinary execution. Unless he does that, the
laborious and
substantially more expensive remedy of sequestration can hardly be
thought advantageous”.
However, it is clear that
these remarks were uttered by Didcott J in the context of whether the
applicant as a single creditor,
had established that the
sequestration would be to the advantage of creditors. The remarks of
Didcott J were never intended as
the sole criterion to determine
whether a single creditor was entitled to use sequestration
proceedings as a form of execution,
particularly where such creditor
had experienced great difficulty in executing, in the ordinary way.
This is particularly so in
the light of his remarks at 1069 C that
“
Sequestration,
it is true, has been described on occasions as a legitimate form of
execution”.
[13] In similar vein are
the remarks of Solomon J A in
Estate Logie v
Priest
1926 AD 312
at 319
“
It appears
to me that it is perfectly legitimate for a creditor to take
insolvency proceedings against a debtor for the purpose
of obtaining
payment of his debt. In truth that is the motive by which persons, as
a rule are actuated in claiming sequestration
orders. They are not
influenced by altruistic considerations or regard for the benefit of
other creditors, who are able to look
after themselves. What they
want is payment of their debt, or as much of it as they can get. And
more particularly would a creditor
be justified in taking proceedings
in a case like the present, where the greatest difficulty has been
experienced in extracting
money from the plaintiff, although it is
said that he never in fact was insolvent. What, in such
circumstances, is a creditor to
do in order to obtain payment of his
debt?”
[14] In the present case
the applicant has likewise experienced the greatest difficulty in
obtaining payment of the amount due by
the respondent, payment of
which was only made unconditionally by the respondent, when the
threat of sequestration loomed ominously
over him.
[15] When all of the
above is considered, I have no doubt that the applicant acted
reasonably in launching the present proceedings
and that the
respondent should be ordered to pay the applicant’s costs.
[16] As regards the
application for the sequestration of the respondent’s estate, I
am of the view that this should be adjourned
sine die.
In the
event that the respondent does not honour his undertakings to make
payment of the interest and costs referred to above,
the applicant
would be entitled to renew the present application, supplemented in
so far as may be necessary to deal with any such
breach on the part
of the respondent.
The order I make is the
following:
The application for the
provisional sequestration of the respondent’s estate is
adjourned
sine die.
The respondent is
ordered to pay the applicant’s costs.
__________
K. SWAIN J
Appearances
/
Appearances:
For the Applicant :
Mr. C. Pretorious
Instructed
by
:
Mason Incorporated
Pietermaritzburg
For
the Respondent :
Mr. L. B. Broster S C
Instructed
by :
Askew & Associates
Durban
Date of Hearing :
04 June 2012
Date of Filing of
Judgment :
08 June 2012