Maxwell v Holderness and Others (15209/08) [2009] ZAKZPHC 27 (8 June 2009)

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[2009] ZAKZPHC 27
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Maxwell v Holderness and Others (15209/08) [2009] ZAKZPHC 27 (8 June 2009)

15
NOT REPORTABLE
IN THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL, PIETERMARITZBURG
15209/08
In the matter between:
WILLIAM GRAEME MAXWELL Applicant
and
IAN JAMES HOLDERNESS First Respondent
TRACEY HOLDERNESS Second Respondent
STEENKAMP WEAKLEY INCORPORATED Third Respondent
_______________________________________________________________
JUDGMENT
_______________________________________________________________
GORVEN J
This application was launched as an urgent application requesting a
provisional sequestration order against the estate of the
first
respondent and, as an alternative, an interdict relating to the
proceeds of the sale of immovable property pending the
hearing of
the sequestration application. On 19 November 2008 the application
was struck off the roll with costs.
The first respondent responded with two applications, one to strike
out certain paragraphs of the applicant’s founding affidavit
and
the other to condone the delivery of the first respondent’s
answering affidavit after the date set by the applicant for
such
delivery and that contained in the rules of court. The latter
application does not appear to have been dealt with but must
be
granted.
The application is for the provisional sequestration of the first
respondent. Accordingly, the provisions of sections 9 and 10
of the
Insolvency Act, No 24 of 1936 (as amended) (“the Act”) apply.
These are, in their material parts, to the following
effect:
9 (1) A creditor (or his agent) who has a liquidated
claim for not less than fifty pounds, or two or more creditors (or
their agent)
who in the aggregate have liquidated claims for not less
than one hundred pounds against a debtor who has committed an act of
insolvency,
or is insolvent, may petition the court for the
sequestration of the estate of the debtor.
10 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 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 make an order sequestrating the estate of the
debtor provisionally.
The essential dispute between the parties in this matter is whether
or not the first respondent is indebted to the applicant.
This is
required for the applicant to have
locus standi
to
sequestrate. The applicant bears the onus to show that the first
respondent is indebted to him in a sum not less than R100.00.
Since
there is a dispute on the papers, at the stage of a provisional
sequestration order, it is necessary to set out the approach
of the
courts in dealing with such a dispute.
The approach was summarised in
Payslip Investments Holdings CC v
Y2K TEC Ltd
1
,
where Brand J (as he then was) said the following:
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.
Milne J (as he then was) dealt with how to go about assessing this
in the following manner:
It is apparently a well-recognised principle that,
“
winding up proceedings ought not to be resorted to in
order by means thereof to enforce payment of a debt, the existence of
which
is
bona fide
disputed by the company: the procedure for winding up is not designed
for the resolution of disputes as to the existence or non-existence

of a debt (
Badenhorst v Northern Construction
Enterprises (Pty.) Ltd.
,
1956 (2) SA 346
(T),
and cases there cited). The Court has a discretion as to whether or
not a winding up order is to be made and, in a case where
the
creditor's claim is disputed, the Court will generally exercise its
discretion against making an order at the instance of a
person
claiming to be a creditor if it is satisfied that the claim is
bona
fide
disputed on reasonable and substantial
grounds (
Badenhorst's
case, supra at p. 348;
Meyer, N.O. v Bree
Holdings (Pty.) Ltd.
,
1972 (3) SA 353
(T) ).”
See Henochsberg on the
Companies
Act
, 3rd ed., p. 607. In the
Bree
Holdings
case MARGO, J., considered various
dicta
as to the
onus
in matters of this nature, and at p. 355B said:
"Dit is dus op die kwessie van die bestaan van 'n
dispuut op
bona fide
redelike en wesenlike gronde, ten opsigte waarvan die bewyslas op die
respondent rus. Die bewyslas rus nie op die respondent op
die kwessie
van die respondent se aanspreeklikheid of die opeisbaarheid van die
skuld nie. Daar rus die bewyslas op die applikante."
There are, with respect, some logical difficulties about
these propositions. As ELOFF, J., pointed out in
Walter
McNaughtan (Pty.) Ltd. v Impala Caravans (Pty.) Ltd.
,
1976 (1) SA 189
(W) at p. 191G:
"The point is, however, that on whatever ground the
application is brought the applicant would only have
locus
standi
if it was in fact a creditor (sec. 346
(1) of the
Companies Act
)."
Perhaps it may be said that if there is
prima
facie
a valid claim by the applicant so as to
make it a creditor within the meaning of sec. 346 (1)(b) then it is
for the respondent
to disturb that
prima facie
situation by showing a dispute on
bona fide
and reasonable grounds. Overall, however, it seems to me that the
position must be that, in order to establish that the applicant
has
locus standi
to bring
the application, it must show, on a balance of probabilities, that it
is a creditor (where of course that is the ground
relied upon to
establish its
locus standi
).
2
These considerations apply equally to sequestration applications.
The case relied on by the applicant is that the first respondent is
indebted to him on two grounds,
viz.
by way of rent due under
a lease agreement and by way of monies lent to him by the applicant.
The application papers must therefore
be scrutinised to establish
whether, in the first place, the applicant has made out a
prima
facie
case for the indebtedness relied on. If not, the
application must fail. If he does so, the papers must be scrutinised
in order
to assess whether this indebtedness is disputed by the
first respondent on
bona fide
and reasonable grounds. If the
courts finds this to be the case, once again the application must
fail. If not, the remaining
considerations set out in section 10
come into play for the exercise of the court’s discretion.
In order to place these claims in context, it is necessary to
briefly traverse the history of dealings which have led to this

application and two related applications, one for the sequestration
of the first respondent’s father (“Holderness senior”)
and one
for the liquidation of Trade Avail 138 CC (“the CC”), a close
corporation of which the first respondent and his mother
were, at
all material times, the members.
On 31 August 2000 the applicant, as lessor, and Holderness senior,
as tenant, concluded a lease in respect of a farm known as
Yarrow
Farm. Although no mention is made of this in the lease, or the
extensions thereto, Yarrow Farm has, at all material times,
been
owned by WG Maxwell Investments (Pty) Ltd, a duly registered company
of which the applicant is the sole director and shareholder
(“the
company”). The applicant states that he leased Yarrow farm from
the company pursuant to an oral lease which included
the right to
sub-lease Yarrow farm. An option to extend the lease was exercised
during 2003 by Holderness senior and the lease
extended to 31 August
2005. On 20 July 2004, Holderness senior requested the right to
sub-lease Yarrow farm to the CC, stating
that “… our dairy
operation has always been in the name of Trade Avail – cc. The
land bank require (sic) a sub lease agreement
between myself and the
cc…” The applicant responded by letter dated 20 July 2004
stating “I hereby give permission to
Richard James Holderness to
Sublet the farm Yarrow to TRADE AVAIL 138 C.C. No.2000/059473/23”.
The applicant says that this
was the first intimation to him that
Holderness senior was not, himself, conducting the farming
operations but was doing so through
the CC. During August 2004 the
lease was extended in writing to 31 July 2009. Until May or June
2006 the only herd on Yarrow
farm was the one by means of which the
CC conducted the farming operations known as the Razzle Dazzle herd
which, apart from
being a dairy herd, was run as a stud herd until a
certain point. The applicant or the company did not own cattle at
that stage.
In May or June 2006 the applicant says “I purchased the Buckstone
herd and equipment from Mr Michael Roberts”. This herd
comprised
536 jersey cattle and was described by Holderness senior and the
first respondent as one of the top 15 jersey herds
registered with
the Jersey Dairy Society of South Africa. The applicant does not,
himself, engage in active farming since he
is a neurologist
practising in Bryanston, Gauteng whereas the farms are located in
the Karkloof area in KwaZulu-Natal. The applicant
claims that he and
the first respondent concluded an oral lease agreement in terms of
which the first respondent would lease
the Buckstone herd, it would
be merged for all intents and purposes with the Razzle Dazzle herd
and run as a single operational
dairy herd by the first respondent,
but would be maintained in profile and number. The first respondent
would be entitled to
all the milk produced by the Buckstone herd and
any increase in the number of animals in the herd and would pay rent
to the applicant
but the amount of the rent was not agreed upon. The
first respondent disputes this. He says that there were discussions
that
the CC would lease the Buckstone herd but that this would only
take place once the applicant had installed the necessary
infrastructure
to sustain the Buckstone herd which was never done.
As a result, he says, that it was orally agreed that the CC would
manage
the Buckstone herd on behalf of the applicant and monies
generated by sales would be used to fund the care of the herd. Since
all the parties knew that the Buckstone herd was not, at the time, a
profitable farming operation, the applicant would fund any
shortfall
where expenditure exceeded income.
In May 2007 the company purchased the farm adjoining Yarrow farm
known as Gala farm. Whilst he acknowledges being made aware
in 2004
that the CC was conducting the farming operations, he asserts that,
at this stage, the farming operation on Yarrow farm
was principally
conducted by the first respondent. He indicates that, in respect of
Gala farm, no express lease was concluded
between him and either
Holderness senior or the first respondent but goes on to assert that
during May 2007, “Holderness Senior,
alternatively
Holderness Junior, leased Gala Farm from me on terms and conditions
similar to that of the second Yarrow Farm lease…The Gala
Farm
lease was concluded tacitly”. He states that rental was at the
same randage per hectare as for the lease over Yarrow farm.
The
first respondent denies that any lease was concluded over Gala farm
as does Holderness senior. It is important to note that
the only
fact, as opposed to assertion, referred to by the applicant in
support of the tacit conclusion of the Gala farm lease
is that the
first respondent conducted farming operations on it from the date on
which the applicant obtained occupation until
12 June 2008. He does
not say why it was the first respondent, personally, who conducted
these operations which involved the
merging of the two herds rather
than the CC which, to his knowledge, was the only entity which
conducted the farming operation
overseen by the first respondent and
Holderness senior. It is not necessary to deal in detail with this
dispute since the applicant
recognises the dispute and does not rely
on any indebtedness arising from the Gala farm lease.
The first respondent began requesting monies from the applicant
after the purchase of the Buckstone herd. The basis for these

requests is disputed. The applicant says they were requests for
loans by the first respondent in his personal capacity whereas
the
first respondent says they relate to the undertaking by the
applicant to meet the shortfall arising from the CC’s management

of the Buckstone herd. In his heads of argument counsel for the
applicant relied heavily on an email sent by the first respondent
on
9 November 2006 in support of the applicant’s contention that he
loaned R130 000 to the first respondent. It is important
to set out
precisely what is said in the relevant parts of the email. These
read as follows:
“
Due to various excessive costs including purchased
feed (concentrates and roughage); medicines; building and
TLB-contractor costs
which we incurred together with the very low
milk price the farming business made a financial loss over the past 4
months (June
to September). Cash is extremely tight – we have, and
are, cutting costs in the summer to turn the ship around. Indications
are
that we are in the black for the month of October. We have
allocated the R130 000 as a loan and will be paid back in months of
profit. I have funded a further R430 000 loss through a personal loan
account through CRI South Africa and a portion through creditors.
The email is consistent with the version of the first respondent
that the CC was managing the herd, losses had been incurred,
these
were being dealt with by way of a loan (probably, although not
stated clearly, from the CC to the operation of managing
the
Buckstone herd and therefore the Applicant) of R130 000 which would
be repaid to the CC in months of profit. It is specifically
stated
that “the farming business made a financial loss” over the
months of June to September 2006, the first four months
of the
applicant’s ownership of the Buckstone herd. The farming business
is not specified but must relate to that of the Buckstone
herd. Had
the first respondent wanted to refer to his having made a loss he
would doubtless have said so. It is therefore certainly
not clear
from this that the first respondent is asking the applicant for a
loan. If he were doing so, why would he say that
“we have
allocated the R130 000 as a loan”. Even if it can be said that the
email is one seeking a loan from the applicant,
which I doubt, it is
even less clear that it is the first respondent personally who seeks
a loan. The email is not one which
one would expect to see arising
from a lease agreement over the herd. These are clearly early days,
the first four months after
the acquisition of the herd by the
applicant, where the first respondent is reporting to the applicant.
The submission in the
applicant’s heads that the letter refers to
personal matters of the first respondent does not mean that it
cannot have been
written on behalf of the CC. The email as a whole
certainly does not only bear the interpretation which the applicant
seeks to
place on it. On the contrary, the version of the first
respondent may well be more probable, and may be said to raise more
than
a
bona fide
and reasonable dispute.
This applies equally to the further written communications from the
first respondent. I will not deal with them in detail. They
are all
consistent with the first respondent’s version or can at least be
interpreted that way. The details of the farming
operation, lists of
expenses and trade creditors as well as whether it was making a
profit or loss would be irrelevant and a
matter of monumental
indifference to the applicant if they related to a simple lease
agreement. In none is a loan requested in
terms, only money. The
detail in annexures WG18 to WG21 and WG 23 are certainly consistent
with the applicant being responsible
for any expenses which exceed
income. The only aspect specifically relied on by Mr van Wyk, who
appeared for the applicant, apart
from the alleged loan for R130 000
was a loan of R250 000. However, annexure WG23, read in the light of
the other correspondence
and the version of the first respondent,
shows, in all probability that the first respondent made a personal
loan to fund losses
for which the applicant is responsible. Annexure
WG22 records that the applicant has agreed to pay R250 000.00 to CRI
South Africa
to liquidate this loan. Once again, the details of the
farming operations dealt with in this correspondence support the
version
that the requests for money were made pursuant to the
agreement contended for by the first respondent. If this were the
case,
the applicant would be entitled to reports of this nature
since he was obliged to fund shortfalls and would want to know that
the management was being done efficiently. In one of these emails, a
production loan of the applicant with Afgri is anticipated.
The
applicant does not explain why he would need a production loan if he
was simply leasing the herd to the first respondent.
In addition, he
does not say on what basis he contends for a personal lease of the
Buckstone herd by the first respondent in
the light of his being
aware that the CC was conducting the farming operation concerning
the Razzle Dazzle herd, that he was
unaware that the first
respondent was a member of the CC and assumed that it was
“Holderness Senior’s
alter ego”
and that the first
respondent was, at least until February 2007 on the applicant’s
version, in full time employment with Co-operative
Resources
International South Africa (CRI) and was for a period a director of
that entity. The first respondent says that from
2000 to January
2008 he was managing director of CRI South Africa and in full-time
employment with it. He assisted the CC and
Holderness senior who was
directly involved in the operation when his employment
responsibilities allowed for it and contradicts
the assertion of the
applicant that from June 2006 the first respondent became more
actively involved in the conduct of the farming
operations.
A third ground of indebtedness in the applicant’s heads of
argument bases, apart from the loans of R130 000.00 and R250 000.00,

dealt with the applicant’s claim that the first respondent
accepted responsibility for rent for the lease of the Buckstone
herd
and loans to the first respondent at a meeting which took place at
the OR Tambo International Airport on 25 February 2008.
It is common
cause that this meeting took place between the applicant, his
attorney one Mr Dreyer, and the first respondent.
The applicant and
Mr Dreyer say that the first respondent confirmed the lease of the
Buckstone herd and suggested a rental. He
further confirmed that
amounts had been loaned to him, that these amounts were due and that
he was unable to repay them. He thereafter
made a proposal relating
to the formalisation of the Buckstone herd lease and arrear rental.
Mr Dreyer wrote a letter dated 3
March 2008 to the first respondent
recording the points covered at the meeting, indicating that the
applicant had agreed to the
first respondent’s proposal and that
an agreement reflecting those terms would be forwarded to him in due
course. The first
respondent replied by email on 5 March 2008 saying
“This is a start but there are points that need to be corrected.
Please
give me one week to respond”. Two letters dated 7 March and
17 March respectively were sent by the applicant’s attorneys

requesting the promised response. When none was forthcoming, a
letter dated 26 March 2008 was sent indicating that the applicant

had instructed his attorneys to sue for monies lent and advanced,
cancel the lease over the Buckstone herd and sue for damages

suffered by the applicant arising from the first respondent’s
mismanagement of the herd. When first respondent’s attorneys
dealt
with this letter, their letter of 31 March 2008 reserved the right
to deal with the contentions contained in the letter
of 3 March 2008
but focussed on an attempt to rescue the farming operation by
requesting that the parties meet at the farm with
a number of
experts to advise them. This meeting did not take place due to
disputed factors. Once again, this claim to indebtedness
is disputed
by the first respondent in his affidavit and, in the light of his
version, is disputed on
bona fide
and reasonable grounds.
I am not sure that, apart from his assertions, a careful reading of
the contemporaneous correspondence discloses even a
prima facie
case for the indebtedness relied on by the applicant. This is apart
from the letter dealing with the meeting at OR Tambo International

Airport. Even if he has made out a
prima facie
case, the
first respondent has, in my view, raised a
bona fide
and
reasonable dispute. This is particularly so of whether any of the
actions taken by the first respondent were taken on his
own behalf,
as contended by the applicant, or were done on behalf of the CC, as
the first respondent contends.
It can be seen from what I have said above that I am of the view
that, at best for the applicant, his
prima facie
claims as to
the first respondent’s indebtedness are disputed by the first
respondent on
bona fide
and reasonable grounds. Accordingly
the application must fail.
Due to the view I take of the main application, I shall not deal in
detail with that for the striking out of the paragraphs complained

of by the first respondent. I will also not accede to the request of
the applicant that it be dismissed with a punitive costs
order on
the basis that, whilst it alleged irrelevance, it did not allege
that the first respondent had been prejudiced thereby.
In my view,
many of the paragraphs which the first respondent seeks to have
struck out are indeed irrelevant. Had I granted the
relief sought by
the applicant, I would in any event have disallowed the costs of
certain irrelevant paragraphs. It is therefore
appropriate to
dismiss that application. As regards costs thereof, since I would
have disallowed costs of certain of the papers
in the event of the
applicant having been successful and as a mark of the displeasure of
the court that the papers were rendered
far more cumbersome than
necessary, I intend making no order.
In the result, I make the following orders:
The application of the first respondent for condonation for the late
delivery of the answering affidavit is granted.
The application for the provisional sequestration of the estate of
the first respondent is dismissed with costs.
The application by the first respondent to strike out certain
paragraphs in the applicant’s founding affidavit is dismissed.
Date of Hearing: 8 June 2009
Date of Judgment: 8 June 2009
For the Applicant/Plaintiff: Mr A M van Wyk SC, instructed by Geyser,
Du Toit, Louw & Kitching
For the Defendant/Respondent: Mr G M E Lotz SC, instructed by
Steenkamp, Weakley, Ngwane
1
2001 (4) SA 781 (C) 783 G-
2
Commonwealth Shippers Ltd v Mayland Properties (Pty) Ltd (United
Dress Fabrics (Pty) Ltd and Another Intervening)
1978 (1) SA 70
(D) at 72A-F