Muller (4808/09) [2009] ZAFSHC 117 (12 November 2009)

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[2009] ZAFSHC 117
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Muller (4808/09) [2009] ZAFSHC 117 (12 November 2009)

FREE
STATE HIGH COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Case
No. : 4808/09
In the
matter between:-
JACK
HARRY MULLER
Applicant
(Identity Number:
(Married out of community
of property)
(For the voluntary
surrender of his estate)
_____________________________________________________
HEARD
ON:
22
OCTOBER 2009
_____________________________________________________
JUDGMENT
BY:
RAMPAI,
J
_____________________________________________________
DELIVERED
ON:
12
NOVEMBER 2009
_____________________________________________________
[1]
These
were motion proceedings. The matter came before me by way of an
ordinary application in the unopposed motion court. The
applicant
applied for the voluntary surrender of his estate.
[2] The
notice of motion, supporting affidavit and annexures thereto, were
served on the Master of the High Court. On 25 September
2009 the
Master issued the certificate in terms of section 4(6),
Insolvency
Act, 24 of 1936
in which he certified that the statement of the
applicant’s affairs was lodged on 11 September 2009; that it lied
in that office
for 14 days for inspection and that no objections were
submitted.
[3] The applicant owes
the total sum of R248 396,26 to various creditors. The only asset he
appears to have is a 2002 Nissan LDV.
The approximate value thereof
is R100 000,00. He still owes Absa Bank R95 000,00 on the motor
vehicle. Therefore, the sum of
his total liabilities exceeds that of
his assets by R243 396,26 (R248 396,26 – R5 000,00). He has
virtually no source of income,
it would appear. He is, in fact,
clearly insolvent.
[4] At
paragraph 6.10 of his affidavit he stated:
“
Ek is adviseer
dat daar vir doeleindes van administrasiekoste ongeveer R20 000,00 in
my boedel beskikbaar moet wees. Ek beskik
nie oor sodanige vrye
oorskot nie.”
[5] The Master’s report
was filed on 25 September 2009. At paragraph 4 thereof the Master
stated:
“
4.
Volgens my berekening is hier R0-00
beskikbaar vir verdeling tussen skuldeisers en word hier nie aan die
praktyksreël van R0-10
voldoen nie.”
[
6] The
applicant averred that he desired to surrender his estate for the
benefit of his creditors. Paragraph 4 of his affidavit
reads:
“
4.
Ek is begerig om my boedel af te
staan vir die voordeel van skuldeisers en sal dit slegs tot voordeel
van die skuldeisers strek
indien my boedeloorgawe aanvaar word en wel
om die volgende redes:
4.1 Van my skuldeisers het reeds
dagvaarding teen my uitgereik vir die bedrae wat aan hulle verskuldig
is en sommige het reeds vonnis
teen my geneem.
4.2 Indien enige skuldeiser daarin sou
slaag om ‘n bate te vind en te verkoop, sal daardie skuldeiser bo
my ander skuldeisers
bevoordeel word.
4.3 Indien my boedeloorgawe egter
aanvaar word en ‘n kurator aangestel word, sal die kurator in staat
wees om toe te sien dat
geen skuldeiser bo ‘n ander bevoordeel word
nie.
4.4 Ek voorsien nie dat daar enige
finansiële voordeel vir enige bepaalde skuldeiser sal wees
hierin nie, maar bevat dit die
verdere voordeel vir skuldeisers dat
hulle nie onnodige verdere kostes aangaan en regsuitgawes aangaan ten
opsigte van ‘n skuld
wat hulle in elk geval nie kan verhaal nie.
Dit sal dus die voordeel hê dat daar minstens regsekerheid is
ten opsigte van
elke skuld.”
[7] The
question in the case is whether
,
in these circumstances, the court can accept the applicant’s
application for the surrender. Mr. Cillie contended, on behalf
of
the applicant, that although no dividend will be payable to the
creditors, the sequestration of the applicant in these circumstances

will be to the advantage of his creditors in the sense that they will
save valuable time, energy, resources and money by not endeavouring

to recover their various debts anymore from the debtor who is as poor
as a church-mouse.
[8] He
stressed that any civil attempts by the creditors to enforce their
claims against the applicant entailed further financial
losses in
pursuit of debts which they could not, in any event, recover.
Therefore he submitted that there would be a real financial
advantage
to the creditors if the applicant was voluntarily sequestrated.
[9] It
is incumbent upon a debtor who applies for the surrender of his
estate to prove, not only that his estate is insolvent but
in
addition that the sequestration thereof will be to the advantage of
his creditors. This is a basic principle of the Law of
Insolvency.
See Sharrock
et
al
:
Hockly’s
Insolvency Law
,
p. 15 sixth ed 1996.
“
For
sequestration to be to the advantage of creditors it must ‘yield at
the least, a not negligible dividend’ (per Selke J in
Trust
Wholesalers and Woollens (Pty) Ltd v Mackan
1954 (2) SA 109
(N) 111). If, after the costs of sequestration have
been met, there is no payment to creditors, or only a negligible one,
there
is no advantage (
London
Estates (Pty) Ltd v Nair
1957
(3) SA 591
(D);...”
[
10] In
HILLHOUSE
v STOTT; FREBAN INVESTMENTS (PTY) LTD v ITZKIN; BOTHA v BOTHA
1990 (4) SA 580
(W) a dividend of 1.6 cents in the rand was held to
be insufficient, in other words, too negligible to warrant the
compulsory sequestration
of the debtor.
In
casu
we are concerned with a voluntary surrender where the dividend is not
trivial but completely naught. In this division the practice
rule
requires an absolute minimum dividend of 10 cents in a rand to
validate the acceptance of a voluntary surrender. Anything

marginally less than this benchmark dividend is unacceptable. There
is no room for deviation, however small the shortfall may
be. The
practice rule has obviously not been met in the instant case.
[11] The
applicant acknowledged that the body of creditors, as a whole, will
derive no real financial benefit from the acceptance
of the
surrender. See paragraph 4.4. The difficulty I have with Mr.
Cillie’s submission is that the advantage to the entire
body of
creditors collectively taken as a single entity (
concursus
creditorum
)
has to be derived from the free residue of the debtor’s estate but
there is none
in
casu
.
Where creditors decide to write off such debts as irrecoverable bad
debts, they merely do damage control without actually deriving
any
real financial advantage from the debtor’s estate. The contention
is, therefore, fundamentally flawed.
In
the absence of a proven real pecuniary advantage which is not less
that the prescribed minimum, I am unable to come to the debt
ridden
applicant’s rescue, however penniless he may be.
[1
2] The
authors Sharrock
et
al
,
supra
,
on p. 15, paragraph 2.2.2 correctly state the legal position as
follows:
“
A logical result
of the requirement that the debtor must own sufficient property to
meet the costs of sequestration is that a debtor
who has no assets
and only liabilities cannot surrender his estate. In
Ex
parte Collins
1927 WLD 172
, the court refused to grant an application for surrender
because the debtor had only liabilities, in spite of the fact that
the
costs of sequestration had been guaranteed to the Master. An
estate comprising only liabilities may be
compulsorily
sequestrated (
Miller
v Janks
1944
TPD 127).”
[1
3] In
the instant case the applicant has paid nothing to the Master to
cover or guarantee the costs of administering the surrender.
This
court has held more than three decades ago that if the free residue
is insufficient to pay for the administration costs of
the
sequestration, then the court must refuse to grant an application for
the surrender. (
EX
PARTE SWANEPOEL
1975 (2) SA 367
(O)) No case has been made out to justify any
departure from that principle. I am therefore inclined to refuse the
application.
In the instant case the financial situation of the
applicant is very hopeless. The free residue is zero. Mr. Cillie
conceded
during the course of argument that he could find no
authority where there was no free residue whatsoever but the relief
granted.
[14] For
the reasons mentioned above, I have come to the conclusion that no
case has been made out for the grant of the relief sought.
[15] Accordingly,
the application for the voluntary surrender of the applicant’s
estate is refused.
________
______
M.H.
RAMPAI, J
On
behalf of
applicant: Adv.
H.J. Cillie
Instructed by:
Giorgi
& Gerber
BLOEMFONTEIN
/sp