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IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)
REPORTABLE
CASE NUMBER: 18727/2024
In the matter between
ELIZNA LOURENS N.O. FIRST APPLICANT
AVIWE NTANDAZO NDYAMARA N.O. SECOND APPLICANT
and
ANTHEA NICOLETTE DE CERFF N.O. FIRST RESPONDENT
CRAIG DOUGLAS HOMAN N.O. SECOND RESPONDENT
DEON PEROLD & ASSOCIATES INCORPORATED THIRD RESPONDENT
MASTER OF THE HIGH COURT, CAPE TOWN FOURTH RESPONDENT
DEBRA VIRGINIA HEINRICH INTERVENING PARTY
JUDGMENT
Date of hearing: 17 October 2024
Date of judgment: 22 October 2024
BHOOPCHAND AJ:
1. This is an opposed application for the provisional sequestration of the ADC
Family Trust (“the ADC Trust”, “the Trust”) . The First and Second Applicants
are the joint Trustees of the insolvent estate of Alan Charles De Cerff (“De
Cerff”, “the insolvent”). The intervening party , Debra Virginia Heinrich
(“Heinrich”), is the sister of De Cerff. Heinrich has joined the application for the
sequestration of the Trust. De Cerff and his wife, Anthea Nicolette De Cerff
(the First Respondent), who were married out of community of property, were
the trustees of the ADC Trust , along with Carol Brenda De Cerff (“Carol”),
another sister of the insolvent . Carol has since resigned as a Trustee. The
Second Respondent, Craig Douglas Homan , was appointed as a Trustee by
the Fourth Respondent on 21 A ugust 2024 . The Third Respondent is the
Trust’s attorney.
2. Heinrich’s husband, Kevin Alexander Heinrich, was a joint shareholder in a
business with De Cerff until his death on 17 January 2009. De Cerff retained
an insurance policy intended for Heinrich on her husband’s death . Protracted
litigation, commencing in October 2012, ended when the Honourable
Pangarker AJ of this division awarded Heinrich R 5 847 000 on 13 September
2022. The award was made effective from 1 October 2009. An appeal to the
Supreme Court of Appeal was dismissed with costs. With interest, the amount
De Cerff owes to his sister has been estimated at R15 million. During the
litigation process, De Cerff’s businesses collapsed.
3. On 31 October 2023 , Heinrich obtained an anti-dissipation order from the
Honourable Baartman J (“the Baartman order”) to retain R7 million of the
proceeds of the sale of a property in Constantia owned by the ADC Trust ,
pending her application for the sequestration of De Cerff ’s estate . The
Constantia property was sold for R 8 750 000 in November 2023 , and
approximately R5 400 000 has been transferred recently to the trust account
of Heinrich’s attorney, Vaughan Ulyate Inc., following the Baartman order. The
final sequestration of De Cerff’s estate was granted by Nziweni J on 26 March
2024.
4. The Applicants were appointed joint Trustees of the insolvent estate on 15
May 2024. They investigated the circumstances of De Cerff’s insolvency and
tabled their section 81 report at the second meeting of creditors on 11 July
2024. They identified a loan account of approximately R9 152 000 as an asset
in favour of De Cerff in the ADC Trust. The insolvent’s concurrent liabilities
amounted to approximate ly R14 659 000, of which R14 494 000 was due to
Heinrich. Three other creditors were identified. Their investigations revealed
that De Cerff had been insolvent since October 2009.
5. The Applicants turned their attention to De Cerff’s financial contributions to the
ADC Trust. They identified from the Trust's annual financial statements that
De Cerff’s credit loan account stood at R3 598 008 in 2009, R3 668 459 in
2010, R3 996 034 in 2011, R3 691 823 in 2012, and R2 994 697 in 2013. The
Trust did not have a bank account. Apart from the rental allegedly paid by De
Cerff for the Constantia property , the Trust had no other source of income.
The Trust owned three properties , of which t he Constantia property was the
last remaining asset of value.
6. De Cerff admitted that the First Respondent did not earn an income . He paid
all the expenses relating to the properties owned by the Trust , including the
payment of the ir mortgage bonds, municipal services, and maintenance. The
financial statements reflect that De Cerff and the First Respondent ha ve
donated R100 000 annually to the Trust since at least 2009. The Applicants
questioned how the First Respondent could have made the donations without
earning an income.
7. The Trust’s accountant explained that the De Cerffs paid the monthly
mortgage instalments, which increased the loan account , but then donated
R200 000 annually to reduce it. The Applicants contend that the loan account
was that of De Cerff, whereas the First Respondent owed money to the Trust.
De Cerff provided documentary evidence at the sequestration application that
his loan account in the Trust had decreased by 28 February 2023 to
R173 065. The Applicants dispute the correctness of the arithmetic emplo yed
in the document and several alleged reductions , including the terms of
repayment of the loan account, that are unexplained in the financials and
intend to investigate these aspects.
8. De Cerff's mortgage bond repayments amounted to approximately
R3 767 616. The annual financial statements from 2014 to 2021 were finalised
on 23 November 2021 . The Applicants allege that De Cerff and the First
Respondent defrauded the South African Revenue Service. As the amount
owing to Heinrich was effective from 1 October 2009, the Applicants contend
that all dispositions subsequently made were without value and strand to be
set aside.
9. The Applicants contended that De Cerff’s insolvent estate is the main creditor
of the Trust. They contend the Trust is prima facie insolvent as its liabilities
exceed its assets by over R3 million. The Trust has concurrent creditors for
about R1 096 437, and that payment to them would effectively amount to
preferential payments.
THE ANNUAL FINANCIAL STATEMENTS AND FINANCIAL INFORMATION
10. The Court considered the annual financial statements. The Court kept in mind
that the 20 09 to 20 13 financial statements were prepared by the Trust ’s
accountant during that period, Knoetze & Associates , and t he financial
statements from 2014 to 2021 were prepared by PKF Accountants. The latter
statements were finalised in one batch on 23 November 2021. They contained
the cautionary from the accountant that De Cerff and the First Respondent
had provided the inf ormation and that its accuracy and completeness were
their responsibility.
11. De Cerffs loan account to the Trust increased from 2009 to 2011 and then
decreased non -arithmetically from 2012. It had reduced to R2 994 697, a
reduction of R 697 126 in 2013 under the stewardship of the previous
accountant. The donations of R100 000 from De Cerff and the First
Respondent were constantly recorded each year between 2009 and 2013.
12. The 2014 financials show a reduction in the value of the Trust’s asse ts from
R12 048 120 in 2013 to R7 848 014. The rental income had reduced from
R144 000 in 2013 to zero. An asset sale of R2 703 000 was reflected for
2014. De Cerff’s loan account was reduced to R 2 414 373 in 2014 and
R1 745 777 in 2015 . The financial statements for 2016 to 2020 were not
included. De Cerff’s loan account had been reduced to R 573 065 by 2021. A
loan account of R471 960 attributed to Riodor Marine (Pty) Ltd appeared in
the 2015 financials and remained extant in the 2021 financials. A loan of
R183 170 to the DAK Trust has been reflected in the financials since 2014.
13. The mortgage bond repayments on the Trust property ceased on 17 February
2017. The Langebaan property was alienated sometime after 2021. Municipal
charges and homeowners' levies were allowed to accumulate. The last record
of rental income for the Trust occurred in 2013.
APPLICANTS AVERMENTS
14. After their section 81 report, the Applicants obtained further information, which
was incorporated into the First Applicant’s founding affidavit . In addition,
Heinrich’s taxed costs arising from the anti -dissipation order decided in her
favour was determined. She has a judgment debt of R 212 331.64 against the
Trust. Heinrich was inexplicably omitted as an Applicant in this application, but
that situation was rem edied on 12 September when her application to
intervene was granted. In addition, the parties agreed to certain relief in this
application. The Court understands that the issue of whether the Trust is a
sham or the alter ego of De Cerff is not for decision in this application. The
attorney for the Applicants confirmed this in oral argument. Regrettably, the
founding affidavit is replete with allegations that the Trust is either a sham
(unsustainable on the facts relating to its establishment) or the alter ego of De
Cerff. The Applicants and Heinrich relied on the latter allegations to bolster
their applications. The Applicants provided the requisite Master’s report, proof
of service, and proof of security for the sequestration costs.
15. The Applicants state that their investigations of the insolvent and the Trust are
incomplete. They refer to the three immovable properties owned by the Trust,
two of which in Langebaan and Cape Town were already alienated . The
Constantia property had been transferred to the purchasers when this
application was heard. The Constantia property was purchased in March 2001
for R395 000, and improvements of R 3 005 000 were made to the property in
2006 and 2009. De Cerff paid for the purchase and the improvements,
totalling R3 400 000 . In addition, De Cerff paid bond instalm ents, levy
payments to the Homeowners Association, and municipal charges since 2010,
which amounted to R3 087 461.32. The amounts were extracted from
documents obtained duces tecum and attached as proof to the founding
affidavit.
16. The Applicants assert that the minimal value of De Ce rff’s loan account in the
Trust is R7 200 420.32. The only asset of value was the Constantia property.
The latter allegation has to be interpreted to mean the proceeds of the sale of
the Constantia property, which was alienated when the application was heard.
As disclosed by the Third Respondent, th e net proceeds realised from the
sale w as R5 639 431.89. The amounts ow ed to concurrent cr editors,
including the estate agent, the purchaser , the municipality, the homeowners
association, and the costs relating to compliance certificates , had been
deducted from the selling price of R8 750,000. The liabilities of the Trust
include the loan account of R7 200 420, capital gains tax of R1 721 925, and
other liabilities o f R3 470 945.69 totalling R12 393 291. Heinrich has a
judgment debt against the Trust for R212 331.64. The Trust also owes legal
fees that may be substantial.
THE LOAN ACCOUNTS
17. The Applicants premised De Cer ff’s loan account in the Trust on two bases.
The first component related t o the improvements made on the Constantia
property, which amounted to R3 598 008 in 2009. This loan is accounted for in
the financials and has been reduced by annual donations up to the
permissible limits tax-free from De Cerff and the First Respondent . The Court
understands this to be a permissible accounting practice in terms of section
56(2)(b) of the Income Tax Act 58 of 1962 for couples to reduce their loan
account in a Trust. De Cerff’s loan account is an asset in his estate, so he has
shielded it from creditors by reducing it through permissible accounting
means.
18. The Applicants contend that as the De Cerffs were married out of community
of property, the First Responden t could not use her donations exemption to
reduce De Cerff ’s loan account in the Trust. They allege further that as the
First Respondent was unemployed, she could not have donated R100 000 per
year since 2009 to the Trust to reduce De Cerff’s loan account. The Applicants
confuse the perception that actual payments need to be made as donations
with an accounting practice of a loan write -down disguised as a book entry.
The propriety or legality of this practice is b eyond the scope of this judgment
and is certainly an aspect that is subject to further investigation. The upshot of
this is that the latest financials of the Trust , as referred to by the Applicants ,
whether contrived or not, means that their computation of the loan account as
a liquidated claim cannot be accepted. The First and Second Respondent’s
Counsel accepted that R173 065, as reflected in the loan reduction document
till 28 February 2023, can be considered the balance of the loan account
owing to De Cerff, arising from the improvements he effected to the Trust’s
properties.
19. The second component of the loan account , stemming from the payment of
mortgage bonds, municipal services, and homeowners levies, amounts to
R3 531 961.201. This amount was extracted from credible source documents .
The latter amount is a liquidated claim that De Cerff’s insolvent estate has
against the Trust. The First Respondent did not challenge this aspect of the
loan account.
20. The Trust's minimal liabilities thus amount to R3 531 961.20, plus R1 721 925
(capital gains tax ), plus R 173 065 (loan amount admitted on behalf of the
Trustees) plus R2 12 331.64 (Heinrich’s judgment debt) , for a total of
R5 639 282.80. The amount remaining from the proceeds of the sale of the
Constantia property is R5 400 000. The Trust is insolvent , even without
considering its other liabilities, like legal costs.
THE FIRST AND SECOND RESPONDENTS ANSWER TO THE APPLICANTS
ALLEGATIONS
21. The First Respondent deposed to the answering affidavit on 11 September
2024. The answering affidavit is startlingly inadequate. Seasoned practitioners
represent the First and S econd Respondents. The First Respondent
answered the first forty paragraphs of the founding affidavit, providing
responses equivalent to bare denials. There is, inexplicably, no answer to
paragraphs 41 to 125 of the founding affidavit. The failure of the First
Respondent to answer 85 paragraphs of the founding affidavit is adversely
construed against the First and Second Respondents.
22. The First and Second Respondents challenge the legal standing of the
Applicants, their failure to prove a liquidated claim , or that the Trust is
insolvent or has committed an act of insolvency. The First and Second
Respondents allege that the Applicants have not proved even a prima facie
case, that they have inappropriately applied the provisions of the Act , and
have not made out a case for insolvency of the Trust.
1 Paragraph 42, Founding Affidavit
23. The First and Second Respondents have failed to e ngage the averments
made in the founding affidavit meaningfully. They have not displaced the
Applicant’s contention that the Trust is insolvent. The First and Second
Respondents did not challenge the assertion that De Cerff paid the expenses
of the Trust properties or that they could settle Heinrich’s judgment debt
against the Trust. The First Respondent failed to explain the loans she
received from the Trust or how they were discharged. She failed to deny any
of the Applicants ’ allegations that the Trustees and the Third Re spondent
intended to dissipate the proceeds from the sale or that the occupational
rental had been paid to De Cerff and her. She did not deny that De Cerff paid
the mortgage bonds and municipal charges for the Trust properties.
24. Counsel for the First and Second Respondents submitted that the failure to
address the allegations in the founding affidavit arose from the circumvented
time the Respondents had to provide an answer. The application was served
on the Third Respondent on 27 August 2024 and set for hearing on 18
September 2024. The Respondents were given till 2 September 2024 to file
their notice of opposition and till 13 September 2024 to file their answering
affidavits. The First and Second Respondents filed their answering affidavits
on 11 September 2024, and the parties agreed to settle certain aspects of the
orders sought by the Applicants on 12 September 2024. The First and Second
Respondents d id not arrange or attempt to augment their papers after 12
September 2024.
25. The First an d Second Respondents submitted further that the Applicants had
been aware of the judgment debt against De Cerrf since 13 September 2022,
of the proposed sale of the Constantia property since November or December
2023, and of his insolvency since 19 March 2024 . Despite having this
knowledge, the Applicants only raised this application in August 2024. This
argument has no merit as the Fourth Respondent formally appointed the
Applicants on 19 May 2024. The Applicants received their directions from the
creditors at the second meeting of the creditors held on 11 July 2024 .
Applicants then investigated the extent of the Trust’s indebtedness to De
Cerff. The Applicant's attorney discovered that the Third Respondent intended
to settle concurrent creditors of the Trust and reduce the sale proceeds
beyond that permitted in the Baartman order. It was also discovered on 14
August 2024 that the occupational interest had not been secured but paid to
the Trust. As the Trust had no bank account, it meant that the payments were
made to De Cerff and the First Respondent.
26. Urgency in terms of Rule 6(12) contains two requirements , form in subrule
6(12)(a), and substance in subrule 6(12)(b). The first part dispenses with
forms and service, and the second part requires an explicit rendition of the
circumstances triggering urgency and why the relief sought c ould not be
obtained at a hearing in due course. The Court accepts that the Applicants
have complied with the requirements. The Court rejects the proposition that
the circumvented periods caused the First Respondent to file an inadequate
answering affidavit.
27. The technical aspects raised by the First Respondent in the answering
affidavit shall be addressed, where necessary, in the following evaluation.
EVALUATION
28. The Applicants urgently seek the provisional sequestration of the ADC Family
Trust. Section 9 of the Insolvency Act of 1936 (“the Act”) applies to a petition
for the sequestration of an estate. The prerequisite is that one or more
creditors or their agents must have a liquidated claim of a relatively minor
amount (50 or 100 pounds) in current -day value against a debtor who has
committed an act of insolvency or is i nsolvent. The creditor may then petition
the Court to sequestrate the debtor's estate. Section 10 of the Act applies to
provisional sequestration. If the Court to which the petition for the
sequestration of the estate of a debtor has been presented believes that prima
facie:
28.1. The petitioning creditor has established against the debtor the
required claim referred to in subsection (1) of section nine, and
28.2. If the debtor has committed an act of insolvency or is insolvent, and
28.3. 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.
29. In opposed provisional sequestration proceedings , the requirements are
satisfied prima facie. They are determined by assessing whether the balance
of probabilities across all the affidavits favours the applicant’s case. 2 There is
a duty on litigants and their legal representatives to engage with disputed
facts and to reflect that dispute fully in the affidavit that denies the allegation. A
litigant who deposes to an affidavit is committed to the version contained
therein, inadequate though it may be.3
30. The Applicants rely on the dictum in Wightman to suggest that the Court adopt
a robust approach to determinin g the facts in dispute. The test for opposed
provisional sequestration is settled, i.e., a balance of probabilities across the
affidavits. The dict um in Wightman, amplifying the Plascon Evans rule in the
context of final relief, does not apply to interim or provisional orders being
sought. As alluded to, the answering affidavit fails to engage meaningfully with
the averments made in the Applicant's founding affidavit. To that extent, the
Court is inclined to accept the allegations made by the Applicants. The First
and Second Respondents speak of disputes, but there are none on scrutiny of
their incomplete affidavit.
31. The Court engaged t he Applicants' attorney, who represented them in
the argument, to determine whether the loan accounts , as constituted by
them, comprise a l iquidated claim for an application for sequestration. The
attorney responded in the affirmative. After careful ly considering the
arguments presented and the allegations supported by the documents , the
2 Reynolds NO v Mecklenburg (Pty)Ltd 1996 (1) SA 75 (W) at 80G -81A, Kalil v Decotex
(Pty)Ltd and another 1988 (1) SA 943 (A) at 978D-E
3 Wightman t/a JW Construction v Headfour and Another (Pty) Ltd 2008 (3)SA 371 (SCA) at
para 13
Court is persuaded that the loan account has two components , as canvassed
above. In addition, Heinrich has a judgment debt fixed by a taxed order of
costs against the Trust.4
32. The Applicant’s attorney holds approximately R5,4 million rand of the
proceeds of the sale of the Constantia property in his trust account. R1.7
million has to be paid as capital gains tax , reducing the remaining amount to
R3 700 000. The minimal value of the first component of the loan account, the
second component, and Heinrich’s judgment debt equates to R3 917 357.84.
Certain aspects of the Applicants ’ allegations need further investigation. The
Court accepts that the Trust’s liabilities exceed its assets , and it is factually
insolvent. The Applicants did not have to rely on any of the recognised acts of
insolvency contained in section 8 of the Insolven cy Act to prove that the Trust
is insolvent.
33. The third consideration concerns whether it is in the interest of the creditors
that the Trust is pr ovisionally sequestrated. Creditors encompass the body of
creditors taken as a single entity who would benef it from the Trust's
sequestration. Once the capital gains tax is paid, the remaining proceeds of
the sale of the Constantia property held by the Applicant 's attorney will, after
the costs of the sequestration have been paid, still yield a reasonable
prospect that some pecuniary benefit will accrue to its remaining creditors,
including the insolvent estate and Heinrich.5 Further investigation of the Trust
for concealed ass ets, particularly the alleged relocation of movables to the
DAK Trust, may benefit the Trust’s creditors.
34. The Applicants' concern that the Respondents would deplete the proceeds of
the sale of the Constantia property is no longer extant. The proceeds are in
the safekeep ing of the Applicants ’ attorney. Counsel for the Respondents
argued that transferring the sale proceeds to the Applicants ’ attorney is
4 Kleynhans v Van der Westhuizen NO 1970 (2) SA 742 (A), ex Parte Berson; Levin and Kagan
v Berson 1938 WLD 107 115-116
5 Trust Wholesalers and Woolens (Pty)Ltd v Makan 1954 (2) SA 109 (N) at 111, Meskin & Co v
Friedman 1948 (2) SA 555 (W) at 558 , ex Parte Bouwer and similar applications 2009 (6) SA 382
(GNP) at para 13
sufficient security for the Applicants pending the resolution of the outstanding
issues in the final sequestration of De Cerff ’s estate . Whilst the First and
Second Respondents rely upon the Baartman order to avoid the sequestration
of the Trust , they, together with the Third Respondent, have used the
proceeds of the sale of the Constantia property beyond that permitted by the
order. Although the Baartman order specified the retention of R7 million, only
R5 400 000 was transferred to the trust fund of the Applicant’s attorney . The
Third Respondent paid the property's occupational re ntal to the
Trust, meaning it was paid to the De Cerffs, as the Trust does not have a bank
account. A perusal of the counterclaim envisaged by the Third Respondent to
apply for the reduction of the amount set by Baartman J further bolsters the
Applicants’ case that the re was an o rchestrated attempt to exploit the sale
proceeds and disobey the court order . The correspondence between the
attorneys on this point bears testimony to the latter.
35. The fact that a creditor holds security for his claim does not prevent him from
applying for the debtor’s sequestration , even if the security value exceeds the
claim amount. It is also apparent that the outstanding issues in the final
sequestration of De Cerff’s estate, which includes whether the Trust is a sham
or the alter ego of De Cerff, concern the Trust and would be a prelude to a n
unnecessary further application for its provisional sequestration.
36. The First and Second Respondents contended that the Insolvency Act
primarily deals with the sequestration of the estates of natural persons . The
Applicants had not addressed the specific legal considerations that apply to
the sequestration of a trust as opposed to a natural person. The First and
Second Respondents did not elaborate on these specific legal requirements. It
is settled law that sequestration proceedings can be instituted against a trust ,
although it is not cited as the Respondent, but in the name of its Trustees. 6 A
trust falls within the definition of deb tor in section 2 of the Insolvency Act. 7
Nothing further needs to be said in this regard.
6 Magnum Financial Holdings (Pty) Ltd (in liquidation) v Summerly and Another NNO 1984(1)
SA 160 (W) at 162
7 Magnum Financial Holdings supra at 162
37. The Applicants have satisfied the requirements for obtaining a provisional
sequestration of the ADC Trust. The Court is satisfied that the order thus
granted will benefit the Trust’s creditors.
ORDER
38. The estate of the ADC Family Trust, number IT957/2001, represented by its
Trustees, namely Anthea Nicolette De Cerff (identity number 6 […]) and Craig
Douglas Homan (identity number 6[…]), is placed in provisional sequestration
under the Master of the High Court,
39. That a rule nisi does issue calling upon the Trustees of the ADC Trust and all
interested persons to appear and show cause, if any, to the Cape High Court
at 10h00 on a date to be allocated by the Registrar or so soon thereafter as
Counsel may be heard as to why:
39.1. The estate of the ADC Family Trust s hould not be placed under final
sequestration;
39.2. The costs of the application should not be costs in the sequestration of
the estate of the ADC Family Trust
40. That a copy of this order shall be served:
40.1. By email to the attorneys of the ADC Trust,
40.2. By hand on the Master of the High Court,
40.3. By the Sheriff, on the South African Revenue Services.
________________________
Ajay Bhoopchand
Acting Judge of the High Court
Western Cape Division
Cape Town
Judgment was handed down and delivered to the parties by e-mail.
Applicant’s Representative: V Ulyate
Instructed by Vaughan Ulyate Attorneys Inc.
Counsel for the Respondents opposing this application: P Tredoux
Instructed by Deon Perold &Associates INC.