IN THE HIGH COURT OF SOUTH AFRICA
WESTERN CAPE DIVISION,
CAPE TOWN
Case No.: 22301/2023
In the matter between:
THE STANDARD BANK OF SOUTH AFRICA LIMITED
and
RAYMOND LEONARD MOODY N.O.
(In his capacity as trustee for the time being of
Erf 10190 Femkloof Investment Trust)
GRANT GREGORY MACLENNAN PISTOR N.O.
(In his capacity as trustee for the time being of
Erf 10190 Femkloof Investment Trust)
MARK MICHAEL MACLENNAN PISTOR N.O.
( In his capacity as trustee for the time being of
Erf 10190 Femkloof Investment Trust)
CHRISTOFFEL JOHANNES ERASMUS N.O.
(In his capacity as trustee for the time being of
Erf 10190 Fernkloof Investment Trust)
Applicant
First Respondent
Second Respondent
Third Respondent
Fourth Respondent
IAN DE LANGE N.O.
(In his capacity as trustee for the time being of
Erf 10190 Fernkloof Investment Trust)
CLAYTON MICAEL LAUE N.O.
(In his capacity as trustee for the time being of
Erf 10190 Fernkloof Investment Trust)
PENELOPE ANNE LAUE N.O.
(In his capacity as trustee for the time being of
Erf 10190 Femkloof Investment Trust)
JUDGMENT
ANDREWS,AJ
Introduction
Fifth Respondent
Sixth Respondent
Seventh Respondent
[1] The Applicant initially sought the provisional sequestration of Erf 10190
Femkloof Investment Trust (the "Trust") on the basis that it was de facto insolvent and
further that it committed an act of insolvency as envisaged in Section 8(c) of the
Insolvency Act No . 24 of 1936 ("the Insolvency Act"). This matter concerns the issue
of costs in the sequestration application pursuant to the Trust having settled the full
outstanding balance together with accrued interest on the loan agreement in June
2024. The Trust, in a counter-application, seeks the dismissal of the sequestration
application and a cost order against the Applicant for not persisting with the
application.
2
Factual Background and Chronology
[2] The Applicant's claim against the Respondent's (hereinafter referred to as the
Trust) is predicated upon a written home loan agreement that was concluded between
the parties on or about March 2007 ("the loan agreement"). The Trust breached the
loan agreement by failing to make payment of the monthly instalments under the loan
agreement timeously or at all, which resulted in the Trust's facility with the Applicant
being called up.
(3] The full outstanding balance together with interest in terms of the loan
agreement became due and payable. The Applicant sought the sequestration of the
Trust's estate on the basis that it was de facto insolvent and further that it committed
an act of insolvency as envisaged in section 8(c) of the Insolvency Act in that it
preferred its other creditors above the Applicant.
[4] The application was served on the Second Respondent ("Mr Pistor'') during
December 2023. Subsequent to service of the application being affected on the
Second, Third and Seventh Respondent's, the Applicant's Attorneys of record were
contacted by an Attorney, acting on behalf of the Trust, who indicated that the Trust
wished to explore the possibility of settling the matter. The matter was initially enrolled
for hearing on 25 January 2024 and adjourned until 9 February 2024, for the parties
to enter into settlement negotiations.
(5] The Trust's erstwhile Attorneys did not formally oppose the application.
Settlement negotiations failed. On 5 April 2024, Mr Pistor delivered a "Notice of
Intention of Defend (sic)". On 9 February 2024, the matter was adjourned until 8 March
2024 to effect further and better service of the application. On 8 March the matter was
3
postponed for hearing until 19 April 2024, with service directions in respect of service
on the First, Fourth, Fifth and Sixth Respondent's. The Order also provided a timetable
for the exchange of pleadings. On 19 April 2024, the matter was adjourned until 30
July 2024 for hearing on the semi-urgent roll, with a further timetable regulating the
exchange of pleadings.
[6] Mr Pistor appeared in court on behalf of the Trust on 8 March 2024 and 19 April
2024, respectively. On both occasions, he indicated that the Trust intended to appoint
legal representation, but ultimately no legal representative was appointed. The Trust
delivered its Answering Affidavit on 29 April 2024. The Applicant's Replying Affidavit
followed on 3 June 2024. The Trust settled the full outstanding balance on the loan
agreement together with the accrued interest in June 2024.
Dismissal of the Application
[7] During June 2024, the Trust settled the full outstanding balance on the loan
agreement which founded the Applicant's locus standi in this application, together with
accrued interest. The Applicant no longer persists with its application for the
provisional sequestration of the Trust's estate and approaches this court to make a
determination on the limited matter of costs. The Trust seeks an order dismissing the
application, which is essentially founded on the basis that the application for its
provisional sequestration was not meritorious.
[8] The question to be answered is whether the Applicant was obliged to withdraw
its application in these circumstances or whether the Trust could approach the court
for the dismissal for want of prosecution. It is evident that the Trust does not approach
4
the court on the basis that the application was not prosecuted, but rather that the
application was unmeritorious.
[9] It is manifest that the Applicant, no longer persist with the application
on the basis that the relief it sought has become moot, by virtue ·of the Trust having
settled its indebtedness to the Applicant. The doctrine of mootness has been explained
by the Constitutional Court in Normandien Farms (Pty) Limited v South African
Agency for Promotion of Petroleum Exportation and Exploitation (SOC) Limited
and Others 1 as follows:
'Mootness is when a matter "no longer presents an existing or live controversy". 2 The
doctrine is based on the notion that judicial resources ought to be utilised efficiently and
should not be dedicated to advisory opinions or abstract propositions of law, and that
courts should avoid deciding matters that are "abstract, academic or hypothetical". 3'
[10] It is trite that a High Court does not have any discretion relating to
mootness which has been aptly demystified in Minister of Justice and Correctional
Services and Others v Estate Late James Stransham-Ford and Others 4:
The High Court is not vested with similar powers. Its function is to determine cases that
present live issues for determination. 6(my emphasis)
1 (CCT195/19) [2020] ZACC 5; 2020 (6) BCLR 748 {CC); 2020 (4) SA 409 {CC) (24 March 2020), at para 47.
2 National Coalition/or Gay and Lesbian Equality v Minister of Home Affairs (1999) ZACC 17; 2000 (2) SA 1 (CC);
2000 (1) BCLR 39 {CC) at para 21.
3 J T Publishing {Pty) Ltd v Minister of Safety and Security {1996) ZACC 23; 1997 {3} SA 514 (CC}; 1996 (12) BCLR
1599 (CC) at para 15. See also Loots "Standing, Ripeness and Mootness" in Woolman et al (eds) Constitutional
law of South Africa 2 ed (2014) at 7-19 and Du Plessis et al constitutional Litigation (Juta & Co Ltd, Cape Town
2013) at 39.
4 (531/2015) (2016) ZASCA 197; [2017) 1 All SA 354 (SCA); 2017 (3) BCLR 364 (SCA); 2017 (3) SA 152 (SCA) (6
December 2016), at para 25.
5 See also VINPRO NPC v President of the Republic of South Africa and Others (2021] ZAWCHC 261 para 42;
South African Breweries Proprietary Limited and Others v President of the Republic of South Africa and Another
(2022] 3 All SA (WCC} at para 36.
s
[11) It is therefore unequivocal that the function of a High Court is to
determine cases that present a live issue. Therefore, since the Trust settled the full
outstanding balance on the loan agreement it is apparent that there is no longer a live
issue for determination, other than the matter of costs.
Has the Trust committed an Act of Insolvency?
[ 12] As the only live issue remaining is the matter of costs, the question to be
answered is whether the Applicant would have succeeded to satisfy the Court that it
had made out a prima facie case for the sequestration of the Trust as envisaged in
Section 10 of the Insolvency Act which stipulates:
'If the Court to wh;ch 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 9; 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 sequestraUng the estate of the debtor provisionally.'
[13) Reliance is placed on an act of insolvency envisaged in Section 8(c) of
the Insolvency Act which states as follows:
'A debtor commits an act of insolvency-
(c) if he makes or attempts to make any disposition of any of his property which has
or would have the effect of prejudicing his creditors or of preferring one creditor
above another ... '
[14) It is not in dispute that a loan agreement was concluded between the
Applicant and the Trust. Evident from the Answering Affidavit, the Trust conceded that
it was in arrears in respect of the loan agreement in the amount of R1 081 493.68. In
6
augmentation of the Applicant's assertion that the Trust was factually insolvent, the
Applicant asserted inter a/ia that:
[14.1.] the Trust did not have a transactional / cheque account with the
Applicant in order for the Applicant to register or place a debit order for payment
of the monthly instalment in terms of the loan agreement;
[14.2.] in terms of the transaction history statement for the period from inception
to 31 July 2023, a total amount of R20 210 362.03 was paid into the account
by a third party/ies, whereas during the same period an amount of
R23 445 383. 78 was paid out of the account by the Trust;
(14.3.] despite the amount of R20 210 363.03, having been paid into the
account the Trust remained in arrears with the obligations towards the Applicant
in the amount of R1 081 493.68 as at 1 December 2023 and
[14.4.] the Trust failed to apply the funds received towards servicing the monthly
instalments of the loan agreement.
[15] The Applicant, submitted that there is reason to believe that it would be
to the advantage of the Trust's general body of creditors if the estate were to be
sequestrated. In this regard, the estimated market value of the Trust's immovable
property was in the amount of R10 050 000, which is the only tangible asset of the
Trust. The Trust's indebtedness to the Applicant was in the amount of R5 090 968.14
and the Trust's indebtedness to third party creditors was in the amount of at least
R20 210 362.03. It was argued that the Trust was factually insolvent in an amount of
7
R15 251 330.17. This conclusion was furthermore underscored by the balance sheet
prepared by Mr Pistor which reflected that the Trust held a cash amount of R558 which
is further suggestive that the Trust is also commercially insolvent.
Trust's Grounds of Opposition
[16] The Trust denied being factually insolvent and denied having committed
an act of insolvency. In an endeavour to demonstrate to the Court that the Trust is not
commercially or factually insolvent, various disputes of fact were raised, which
included inter alia:
(a) That there was a current account registered in the name of the Trust;
(b) That the Trust did not have any other debt, other than its indebtedness to the
Applicant;
(c) Whether the entire debt was due;
(d) Whether the Trust was solvent;
( e) Suspicious dealings with Mrs Pistor;
(f} The manner in which the account was conducted;
(g} Method of payment.
[17] It is trite that where the facts are disputed the court is not permitted to
determine the balance of probabilities on the papers, but must apply the Plascon
Evans rule6:
'It is correct that, where in proceedings on notice of motion disputes of fact have arisen
on the affidavits, a final order, whether it be an interdict or some other form of relief, may
be granted if those facts averred in the applicant's affidavits which have been admitted
by the respondent, together with the facts alleged by the respondent, justify such an
6 Plascon-fvons Paints v Von Riebeeck Paints 1984 (3) SA 623 (AD) at 634H-635C.
8
order. The power of the court to give such final relief on the papers before it is, however,
not confined to such a situation. In certain instances the denial by respondent of a fact
alleged by the applicant may not be such as to raise a real, genuine or bona fide dispute
of fact (see in this regard Room Hire Co. (Ply) Ltd v Jeppe Street Mans;ons (Pty) Ltd,
1949 (3) SA 1155 (T), at pp 1163-5; Da Mata v Otto NO . 1972 (3) SA 585 (A), at p 882
D -H).'7
[18] Corbett JA further held that a Respondent's version might not always be
accepted:
'There may be exceptions to this general rule, as, for example, where the allegations or
denials of the respondent are so far-fetched or clearly untenable that the court is justified
in rejecting them merely on the papers. '
[19] There are however two exceptions to the general rule. The one is where
a denial by Respondent of a fact alleged by Applicant is not such as to raise a real,
genuine or bona tide dispute of fact.8 It is now trite that a bare denial of Applicant's
material averments cannot be regarded as sufficient to defeat an Applicant's right to
secure relief by motion proceedings in appropriate cases.9
Other debt
[20] The Applicant asserted that .the third party/ies ''financier" was a creditor
of the Trust in an amount of at least R20 210 362.03 as suggested by the Applicant.
Mr Pistor refuted any reference to a third party or "financier", emphasising that the only
liability the Trust had was its debt to Standard Bank. The Applicant in its Replying
Affidavit stated that it came to the Applicant's knowledge that the Trust was indebted
to the Hillside Village Property Owner's Association in the amount of R54 000 as at 1
7 At para 8 - 9.
8 Rail Commuters Action Group v Transnet Ltd t/o M etroroil 2005 (2) SA 359 (CC) at para 35.
9Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd 1949 (3) SA 155 (T).
9
March 2023. The balance sheet upon which Mr Pisto places reliance, omits the Trust's
indebtedness to the Hillside Village Property Owner's Association.
[21] In addition, the Applicant illuminated that the Trust failed to disclose that
the claims of the trustees in respect of the payments made on the Trust's behalf,
exceeded R20 million. According to the Applicant, the Trust adopted a pattern of
preferring its other creditors according to the Applicant.
Linked current account
[22] Mr Pistor in the Opposing Affidavit explicated that the Trust was formed
16 years ago. The Trustees purchased the plot and built a home that they could visit
for holidays and rent it out over weekends, seemingly to generate an income. Mr Pistor
explained that the access bond facility was set up in 2007 and linked the current
account and the home loan account. The Trust did not opt for a debit order to be
signed and instead the trustees paid larger lump sums into the account from time to
time. In this regard, it was submitted that no debit order was in place or required for
16 years. Although Mr Pistor vehemently denied the assertion that payments were
received by way of Autobank Transfers since the inception of the Loan Agreement, he
confirmed the fact that there was no transactional account linked.
[23] Mr Pistor took issue with the assertion by Mr Gouws that ''the Trust would
not hold a transactional I cheque account with the applicant in order for the applicant
to register I place a debit order for payment of the monthly instalments in terms of the
Joan statement." Mr Pistor was at pains to demonstrate the existence of the current
account, to the extent that it was checked for FICA compliance and email
correspondences associated therewith. In further augmentation, Mr Pistor
10
demonstrated, the link by way of connecting transactions using colour coding for each
statement linked to the Home loan transaction record and current account
transactional record.
[24) In the Applicant's Replying Affidavit, Mr Gouws confirmed that the Trust
holds a current account with the Applicant. He explained that there was a bona tide
misunderstanding on the part of Mr Lang, the Attorney who drafted the affidavit, who
understood his instructions to mean that there was no current account held in the name
of the Trust which to place a monthly debit order. Mr Gouws further explicated that he
in fact meant that there was no current account from which a monthly debit order was
being collected.
(25] To my mind, this does not change the admitted fact by the Trust that
there was no debit order in place against the Trust's current account for payment of
the monthly instalments under the loan agreement as and when they fall due. In my
view, the attack on Mr Gouws, insofar as it relates to the existence of a current account
is not fatal as the error was later corrected in the Replying Affidavit. The existence of
the two independent accounts can therefore be accepted as this is no longer in
dispute.
[26] The veracity of what Mr Gouws stated in his affidavit regarding the basis
on which an access bond works, was bought into question. Mr Pistor explained that
when the loan agreement was concluded, ''no repayment instalments were apparently
agreed. The borrower was merely obliged to open a so-called "cu"ent account".10
10 Second Respondent's opposing affidavit, para 35.
11
Terms of the repayment, whether the entire debt was due and the manner in
which the account was conducted
[27] The Applicant contended that the Trust failed to make regular and
timeous payment of the monthly instalments due. This was not disputed; however, Mr
Pistor raised a dispute regarding the repayment terms. Furthermore, Mr Pistor takes
issue with the fact that the Applicant stopped the Trust's access facility in July without
any notice. The Trust's access to funds on its access bond was indeed terminated
pursuant to its default. The Trust having been in arrears in respect of the access bond
account since at least July 2022.
[28] Mr Pistor however contended that the loan period was 240 months
and that it was not yet due at the time of the sequestration application. The terms of
the contract with the Applicant is clear:
'5. 3 Notwithstanding any other provision by the loan agreement the AccessBond Facility
is granted to the Borrower at the Bank's sole discretion. The Bank ma v. at any time,
cancel the Accessbond Facility (or any part thereof) and/or the right to the advancement
or transfer of any amount under the Accessbond Facili(v. without giving the Borrower
any notice or reasons. ,,1 [Emphasis added]
[29] In addition, there is an exit clause that allows the Applicant to withdraw
from the agreement at any time.12 The monthly instalments payable in respect of the
loan was in the amount of R59 220.75 as recorded in the loan agreement.13 The fact
that the agreement makes provision for a minimum instalment as well as an
acceleration clause in the agreement, underscores this court's conclusion that Mr
11 Application Bundle, page 46, para 5.3.
12 Application Bundle, page 49, para 16.
13 "Disclosure Annexuren, para 2.
12
Pistor's understanding of the agreement does not align with the terms of the written
contract. I am of therefore of the view that it is improbable that the bond account would
not require a minimum monthly instalment, as suggested by Mr Pistor. Thus, it is
apparent that the transaction schedule on the loan agreement demonstrated that there
was no effort made to reduce the Trust's indebtedness to the Applicant
[30] On Mr Pistor's own version, the payments towards the Trust's loan
indebtedness w ith the Applicant were made by the trustees by paying "larger lump
sums when [their] finances allowed or when [they] received a good booking for
example over December holidays." This was done in order to settle the minimum
payment due and then· shortly thereafter withdrawing the funds which would then be
utilized elsewhere.
[31] The Applicant submitted that the manner in which the accounts of the
Trust were conducted, had caused prejudice to the Applicant. The Applicant illustrated
this by way of example where an amount of R12 000 was transferred to the Trust's
access bond account in April 2021. The same amount of R12 000 was transferred
back into the Trust's current account from the access bond account and on the same
date paid to an entity called Fernkloof Construction.
[32] Despite significant amounts being transferred to and from the access
bond account, the outstanding indebtedness to the Applicant was not reduced. This,
it was argued, whilst the Trust's other creditors received substantial payments from
the Trust during the same period.
13
[33] Mr Pistor confirmed that over the last 16 years, around R20 million has
been paid into the bond account, while at least R23 445 383.78 has been drawn down,
however, Mr Pistor contended that this is exactly what an access bond facility allows.
Mr Pistor describes this as "an instrument of cash flow, which the borrower may
manage as he wishes , depending on whether he has a cash requirement at the time,
or whether he want to pay cash in again.
1
" 4 [Emphasis added]
[34] The history insofar as how the Trust operated the account for 16 years,
without a debit order facillty is furthem,ore, in my view, no justification for holding that
the Trust could operate to "manage as he wishes, depending on whether he has a
cash requirement at the time, or whether he just want to pay cash in again", is in my
view, clearly untenable, improbable and unrealistic.
Suspicious dealings with Mrs. KJ Pistor
[35] Mr Pistor highlighted a specific transaction dated 28 November 2020 in
the amount of R500 000 that was withdrawn from the bond and transferred to the
current account. He explained that his ex-wife had gained access to the bank accounts
without authority. This unauthorised transfer was reported to the Applicant's fraud
department and the South African Police Services. It was also reported, by way of
email correspondence to Adrion Gouws at Standard Bank. In essence the complaint
concerned the questionable behaviour on the part of a Senior Manager who allowed
Mr. Pistor's ex-wife to load herself as a beneficiary, despite Mr. Pistor having
withdrawn her former access by changing codes in July 2020. Allegations of purported
collusion was denied.
14 Second Respondent's Opposing Affidavit, para 55.
14
[36] According to Mr Pistor, Mrs. Pistor owes the Trust R676 427.28. He
averred that the R500 000 transferred by Ms KJ Pistor caused and/or contributed
towards the arrears. It appears that Mr Pistor accords a measure of blame onto the
Applicant for not assisting him with the reversal of the amount of R500 000 that was
unauthoratively withdrawn by his ex-wife. Mr Pistor, explained that this incident made
the Trust reluctant to put extra money into the account out of concern that it could be
stolen. Mr Pistor has indicated that action has been taken by the Trust against his ex
wife Mrs Pistor for the recovery of the R500 000.
(37] Mr Pistor also questioned why Mrs Pistor would be copied into an email
communication on 21 June 2023.15 It is noteworthy, that Mr Pistor submitted that the
withdrawal of the R500 000 by Mrs Pistor, had a direct bearing on why the account fell
into arrears, however, it is evident that the email correspondence alerted Mr Pistor to
an arrear amount of R298 205.76.
[38] According to the Applicant, the assessment or valuation of between
R8 000 000 and R8 500 000, was provided to Mr Lang by Mr Pistor's ex-wife, Mrs
Pistor. Mr Gouws confirmed that that he instructed a valuation to be conducted in
respect of the Trust's property which was done pursuant to the fact that the Trust was
significantly in arrears in respect of the instalments on its access bond account. It
appears that Mrs Pistor is a surety for the Trust's indebtedness to the Applicant and
engaged with Mr Lang regarding the pending litigation in his capacity.
l!> Annexure "RAS".
15
[39] While much has been made of the unauthorised withdrawal by Mrs Pistor
of the R500 000, this matter is being pursued by the Trust in separate proceedings. In
my view, this aspect does not affect the Trust's liability to the Applicant, nor does it
arm the Trust with a defence to this application, as has been pointed out by the
Applicant.
Method of payment
[40] Mr Pistor refuted any reference to A TM payments and stated that all
deposits and withdrawals on the home loan access bond were channelled through the
current account. The Applicant, has demonstrated that the payment of funds into the
account were made from third parties and not the Trust. These transactions are
referenced "AC", to denoted Autobank Transfers. Mr Pistor, vehemently challenged
this as being factually incorrect and went so far as to accuse Mr Gouws of pe~ury.
[41] This court, after being referred to Annexure "AG?" is able to take judicial
notice of the various transactions with a reference "AC" showing numerous deposits
of varying amounts, into the account. These credits are consistently referenced "AC".
It bears mentioning that the statement "AG7" is a bank generated document. Mr
Gouws, in referring to the reference term used "AC" was essentially transposing the
information from the statement as it appears thereon.
[42] To my mind, the reference to "AC", ("Autobank Transfer"), denotes
reference to a transfer that occurs between bank accounts. Mr Pistor demonstrated
that the payments were made from the Business current account to the Bond Account.
16
Whether the Trust was solvent
[43] The outstanding loan amount fluctuated over the years. Mr Pistor,
challenges the methodology used in deriving at the conclusion that the Trust is de
facto insolvent. In this regard, he suggested that the calculations ought to be simple
formula, namely assets minus liabilities. In this regard, it was submitted that the
estimated market value of R10 050 000 minus the amount owing to the Applicant
yields a positive balance of R4 959 031.86. I interpose to state that the Applicant in
the Replying Affidavit submitted that the market assessment that was conducted in
respect of the property in March 2023, indicated that the property had a market value
of R8 000 000 to R8 500 000. The figures do not appear to be consistent as at some
point it was suggested that the Trust's nett value was said to be R5 253 478 which is
based on the estimated windeed valuation report of the property, less the outstanding
amount then owed to the Applicant.
[44] It was argued that there is no plausible reason proffered by Mr Pistor
why the account fell into arrears. Although Mr Pistor challenges the assertion that the
Trust made payments to other creditors on the basis that the Applicant has not
provided any proof to this effect, the bank statements undoubtedly show amounts
moving out of the account frequently. This in my view, supports the Applicant's
contention that the Trust was utilising the account as a vehicle to facilitate various
payments to and from third parties. Furthermore, the Trust's balance sheet indicated
that the Trust was not generating an income by renting out the property or otherwise.
In fact, it did not refute that Mr Pistor permanently resides in the property.
[45] Therefore, how the monies found its way into the account is not of critical
importance, what is of importance is the fact that a significant amount of money had
17
passed through the account; sufficiently so to service the monthly instalment. The oft
quoted dictum of Innes CJ in De Waardt v Andrew & Thienhaus Ltd 16 is apt where
the following was stated:
'Now, when a man commits an act of insolvency he must expect his estate to be
sequestrated. The matter is not sprung upon him. .. . Of course, the Court has a large
discretion in regard to making the rule absolute; and in exercising that discretion the
condition of a man's assets and his general financial position will be important elements
to be considered. Speaking for myself, I always look with great suspicion upon, and
examine very naffowly, the position of a debtor who says, I am sorry that I cannot pay
my creditor, but my assets far exceed my liabilities. To my mind the best proof of
solvency is that a man should pay his debts; and therefore I always examine in a critical
spirit the case of a man who does not pay what he owes.
1
Conclusion
[46] After considering the version of the Respondent I am of the view that in
certain respects, it is clearly untenable, improbable or unrealistic to justify the rejection
thereof on the papers.17 The Trust's understanding of the terms does no align with the
terms of the loan agreement. Mr Pistor's assumption for the Applicant's underlying
reason for the drastic action being based on a failure to agree to a debit order, is also
not supported by way of evidence. Certain allegations made by Mr Pistor are highly
speculative.
[47] On a conspectus of the evidence, I am satisfied that the movement of
funds out of the account is demonstrative that payment was made to other creditors
to the detriment of the Applicant. This supports the Applicant's assertion that the Trust
appeared to have preferred one creditor above another. I interpose to mention that
1e 1907 TS 727 at 733.
17 Truth Verification Testing Centre CC v PSE Truth Detection CC 1998 (2) SA 689 {W) at 699F-G, NDPP v Geyser
[2008) 2 All SA 616 (SCA) (25 March2008) at para 11.
18
there are 8 different acts of insolvency upon which a creditor can rely. The creditor
merely has to prove one such act of insolvency.
(48] It bears mentioning that the granting of a provisional sequestration order
is based on a court exercising its judicial discretion. In my view, the conduct of the
Trust is indicative of an act of insolvency in terms of Section 8( c) of the Insolvency Act
and as such, the Application, would have had merit if regard is had to the requirement
that the Applicant merely had to show that prima facie, there was an act of insolvency.
[49] I am furthermore satisfied that prima facie, the Trust's own balance
sheet, demonstrated commercial insolvency. Moreover, I am satisfied that the
Applicant has shown that there was prima facie reason to believe that the
sequestration would have been to the advantage of the Trust's creditors if the estate
had to be sequestrated. Therefore, I am persuaded that the Application was
meritorious which is further underscored by the fact that the Trust elected to settle its
indebtedness to the Applicant under the loan agreement in full during 2024, after the
Applicant's Replying Affidavit was filed.
(50] Consequently, I find that the Trust had no bona fide defence to the relief
sought. The application for dismissal falls to be dismissed. The effect of this refusal
does not mean that the Trust was sequestrated as no order in this regard has been
made.
Applicable Legal Principles
[51) It is an accepted legal principle that costs ordinarily follow the result and
a successful party is therefore entitled to his or her costs.18 The fundamental rules
18 Meyer v Abramson 1951 (3) SA 438 (C) at 455.
19
pertaining to costs were stated as follows by the Constitutional Court in Ferreira v
Levin NO and Others19:
'The Supreme Court has, over the years, developed a flexible approach to costs which
proceeds from two basic principles, the first being that the award of costs, unless
expressly otherwise enacted, is in the discretion of the presiding judicial officer, and the
second that the successful party should, as a general rule, have his or her costs. Even
this second principle is subject to the first. The second principle is subject to a large
number of exceptions where the successful party is deprived of his or her costs. Without
attempting either comprehensiveness or complete analytical accuracy, depriving
successful parties of their costs can depend on circumstances such as, for example, the
conduct of parties, the conduct of their legal representatives, whether a party achieves
technical success only, the nature of litigants and the nature of proceedings. '
[52] The Applicant argued that it was put to the expense of prosecuting the
sequestration under circumstances where the Trust admitted its indebtedness to the
Applicant. In addition, the Applicant asserted that the Trust's opposition to the
sequestration was aimed at achieving a delay in order for it to arrange payment of the
Applicant's claim.
[53] The Trust laboured under the impression that it had paid off the debt in
full on 8 July 2024. An account in the amount of R116 000 for legal fees was received.
The Trust argued that the Applicant had other remedies at its disposal other than
following the process of sequestration. In this regard, it was argued that the Applicant
could have pursued the Sureties. Mr Pistor holds the view that Mrs Pistor's untoward
relationship with Standard Bank may have informed the Applicant's decision to pursue
the Trust by way of Sequestration proceedings.
19 1996 (2) SA 621 (CC) at 624B- C at par 3.
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[54] This court is mindful that these proceedings concerns the narrow issue
of whether the Applicant is entitled to costs in circumstances where it had applied for
the sequestration of the Trust consequent upon the Trust having fallen into arrears
with the repayment of the loan. I am alive to the fact that there is pending litigation
involving the allegations levelled against Mrs Pistor. I emphasise that this court is not
seized with the matter involving Mrs Pistor. There are a number of factual disputes
that were not fully ventilated that would have been dealt with had the sequestration
application proceeded.
[55) This court further takes into consideration that the notice to terminate the
bond was sent to the Applicant on 16 March 2024. These proceedings were launched
in December 2023. The Respondents engaged the Applicant's Attorneys requesting a
settlement amount, which according to Mr Pistor, turned out to be an arduous process
and took over a month. The settlement amount was received via email on 29 April
2024 after several reminders. The Trust made a payment in full and final settlement of
the Applicant's claim. After receiving the amount, the Trust is now being mulct with an
additional bill of R116 056.02 in respect of legal fees. This, it was contended, came as
a nasty surprise more especially as the Trust requested a settlement figure.
[56] In Fusion Hotel and Entertainment Centre CC v eThekwinl
Municipality and Another 20 the court held:
'It is common cause that in this matter the issues at hand remained undecided and the
merits were not considered. When the issues are left undecided, the court has a
discretion whether to direct each part to pay its own costs or make a specific order as to
costs. A decision on costs can on its own, in my view, be made irrespective of the non
consideration of the merits. I am stating this on the basis that an award for costs is to
20 (2015) JOL 32690 (KZD) at para 12.
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indemnify the successful litigant for the expense to which he was put through to
challenge or defend the case, as the case may be ... '
[57] The guiding principle is that ' ... costs are awarded to a successful party
in order to indemnify him for the expense to which he has been put through having
been unjustly compelled either to initiate or to defend litigation, as the case may be.
Owing to the unnecessary operation of taxation, such an award is seldom a complete
indemnity; but that does not affect the principle on which it is based. 121 It is also trite
that the award for cost is in the discretion of the court.22
[58] In circumstances where a litigant attempts to reach settlement and is
provided with a settlement figure, it would ordinarily be expected that the settlement
figure would be inclusive of legal costs. This court has a measure of understanding as
to why the Trust holds the view that it is being mulcted for costs. In as much as the
Trust is dissatisfied that the Applicant sought to pursue sequestration proceedings,
they were at liberty to choose which legal process to follow. There were various
aspects raised by the Trust, which did not advance their defence but in fact supported
the assertion that an act of insolvency was committed thereby satisfying the statutory
requirements for the sequestration by and large on their own version. It must further
be borne in mind that the threshold test is to persuade the court that prima facie, the
statutory requirement has been met. It bears mentioning that the Trust placed reliance
on a "balance sheet" and provided no credible evidence to show that it was in fact
factually solvent. There is no disputing that the Trust had breached the terms of the
Agreement. The highwater marl< of this matter is the fact that the Trust admitted its
21 Cilliers AC 'Law of Costs' Butterworths page 1-4; Agriculture Research Council v SA Stud Book and Animal
Improvement Association and Others; Thusi v Minister of Home Affairs and 71 Other Cases (2011) (2) SA 561
(KZP) 605-{:ill.
22 Ibid page 2-16(1).
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indebtedness to the Applicant and in my view, had no bona fide defence to the relief
sought.
[59] In the matter of Cooper N.O and Others v Markert Fisheries
(Oudtshoorn) CC ("Cooper")23 Kusevitsky J, stated:
'[23]The general rule in matters of costs is that a successful party should be given their
costs and this rule should not be departed from except where there are good grounds
for doing so. Various grounds have been advanced in circumstances where this has
been deviated from, such as misconduct on the part of the successful party in
exceptional circumstances. 24 The question that first needs to be asked is who is the
successful party? In this instance, the Respondent is of the view that they were the
success( ul party since it is the Applicants that are requesting the application for the
winding-up to be withdrawn. The Applicants on the other hand are of the view that the
winding-up application had the desired result of obtaining the repayment of monies from
the Respondent that it had unlawfully received from the insolvent.
[24} In my view, given the fact that by virtue of the declaratory orders, all monies claimed
therein, including the costs thereof, had been paid, there can be no question that the
success( ul party are the Applicants herein and there is no reason why the usual order
for costs should not follow in their favour. <l5
[60) What distinguishes this matter in casu to that of Cooper (supra) is the
Applicant's decision not to apply for a withdrawal of the application. That apart, the
matter appears to be on all fours with Cooper. Even without the withdrawal of the
application, the Applicant has achieved success as the Trust paid the debt in full prior
to the hearing, which left the only remaining issue being that of costs. I am of the view,
that the decision to pay the debt in full by the Trust, has rendered application moot
23 (13845/2022) [2023] ZAWCHC 56; 2023 (S) SA 212 (WCC) (9 March 2023) at para's 23 - 24.
24 Erasmus, Superior Court Practice; Costs in General, D5-7
25 See also Bidvest Bank Limited v Moeng 2022 JDR 3355 (GJ) at para's 32, 36, 37, 47 and 48.
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without a live issue to be argued apart from costs. For reasons already stated, I am
satisfied that the Applicant was substantially successful in this application.
[61] Although the Applicant argued that the Trust's conduct and spurious
opposition of the application constitutes an abuse of the court's process which is
worthy of sanction, I am not inclined to make a punitive costs order in circumstances
where the intention of the Trust was clear, namely to settle the matter in full. For
reasons unknown to the court, the full amount due was not provided. In the exercise
of my judicial discretion, cost must follow the result. However, it is my view that the
Trust should not be mulcted with unnecessary costs. Consequently, it is my view that
it will be just and equitable for the Trust to only pay the party and party costs of the
application, which costs are to be taxed.
[62] It is trite that Rule 67 A of the Uniform Rules requires that party and party
costs in the High Court be awarded on one of three scales. The scales set a maximum
recoverable rate for work having regard to the importance, value and complexity of the
matter. After having carefully considered the complexity of the matter, its value and
importance to the parties, in the exercise of my discretion, I am of the view that costs
on Scale A are justified.
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Order:
[63] In the result, the Court, after having heard counsel for the Applicant and
the Second Respondent in person on behalf of the Trust, and having read the papers
filed of record make the following orders:
1 . The Respondents, jointly and severally, the one paying the other to be
absolved, are to pay the cost of the application on a party and party scale, to
be taxed at scale A.
2. The Counter-Application brought by the Respondents to dismiss the Application
is refused w ith costs, on a party and party scale, the one paying the other to be
absolved, on a party and party scale, to be taxed at scale A.
APPEARANCES
For the Applicant:
Instructed by:
For the Second Respondent:
Instructed by:
P ANDREWS, AJ
Acting Judge of the High Court
Western Cape Division
Advocate L Van Dyk
Tim Du Toit & Company Inc.
Mr. G G M Pistor
In Person
(Representing the Trust)
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CASE NO.: 22301/2023
Date of Hearing: 28 August 2024
Date of Judgment: 25 September 2024
NB: The judgment is delivered by electronic submission to the parties and their legal
representatives.
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