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[2024] ZAFSHC 357
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Small Enterprise Finance Agency SOC Ltd v Notley (2927/2024) [2024] ZAFSHC 357 (14 November 2024)
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IN THE HIGH COURT OF
SOUTH AFRICA
FREE STATE DIVISION,
BLOEMFONTEIN
Reportable Yes/No
Case No: 2927/2024
In
the matter between:
THE
SMALL ENTERPRISE FINANCE AGENCY
SOC
LTD
Applicant
and
MARGARETHA
ALETTA NOTLEY
Respondent
CORAM:
Hefer AJ
Heard
:
31 October 2024
Delivered:
14 November 2024
Summary:
ORDER
1.
The Respondent’s estate is hereby
FINALLY SEQUESTRATED.
2.
The costs of this application to be costs
in the sequestration.
JUDGMENT
Hefer AJ
[1]
The applicant has obtained a provisional sequestration order in its
favour against respondent,
on an unopposed basis during July 2024.
Subsequent to the provisional order being granted, the respondent
filed her opposing affidavit,
approximately two months after the date
of such order.
[2]
The main grounds relied upon in opposition to the application for
final sequestration which now
serves before Court, are firstly that
it is respondent’s contention that the application, prior to a
provisional order being
granted, had not been served on her.
Secondly, the respondent denies that the Free State Division has the
necessary jurisdiction
to grant an order of sequestration against
her. Thirdly, it is respondent’s contention that the applicant
has not satisfied
the requirements for a final order of sequestration
in terms of section 12 of the Insolvency Act 24 of 1936 (the Act).
[3]
At the commencement of the hearing, Mr Reinders, appearing on behalf
of the respondent, indicated
that the respondent intends not to
pursue the point of non- or proper service any further. This judgment
will therefore only deal
with the remaining two grounds of
opposition.
Jurisdiction:
[4]
In its founding affidavit in support of the application, the
applicant relied upon the chosen
domicilium citandi et executandi
,
to be at 1[…] Dersley Street, Bayswater, Bloemfontein. In
answer to this allegation, the respondent responded and held
that
‘[t]his Court clearly does not have jurisdiction over me. I am
not domiciled here.’
[5]
In amplification of respondent’s denial of the Court’s
required jurisdiction, the
applicant made the following positive
allegation:
‘
I
am resident in Cape Town since 2022 and with address at Izra Towers,
Cape Town. In as far as it is alleged that I have chosen
a
domicilium
citandi
at Dersley Street in
Bloemfontein, I deny that. I have not chosen so for purposes of
sequestration and these are denied. As stated
in any event, I am not
resident in the Free State.’
[6]
In reply to this denial by the respondent, the applicant then,
correctly so, pointed out that
the respondent has failed to place any
evidence before Court of her alleged relocation. The applicant then
further in reply refers
to a certain tracing report from which it
appears that the residential address of the respondent is in fact not
in Bayswater, Bloemfontein,
but Langenhovenpark, Bloemfontein. This
report is dated 20 August 2024, therefore subsequent to the
provisional order being granted,
but prior to the filing of the
respondent’s answering affidavit.
[7]
From a return of service by the deputy sheriff, it appears, however,
that attempts to serve the
rule nisi
with accompanying papers
on 31 July 2024 at the Langenhovenpark address, had been
unsuccessful. It therefore shows that the applicant
had been aware of
the residential address in Langenhovenpark prior to the date of the
tracing report.
[8]
It is also evident from a further return of service by the deputy
sheriff that on 30 August 2024,
pursuant to the matter being
postponed by an order of court, the deputy sheriff had been
unsuccessful in his attempts in serving
the relevant
rule nisi
at 7 Chris Botha Street, Westdene, Bloemfontein. The following
appears from this return of service:
‘
A
certain Ms Charmone Corsettes, receptionist at Corsettes, present
occupant, informed me that service could not be accepted as
Retha
Honiball Accountants is not situated at given address and respondent
not present to accept service.’
7 Chris Botha Street also
appears in the August 2024 tracing report, already referred to, as
the business address of the respondent.
However, in the applicant’s
founding affidavit the business address of the applicant is alleged
to be situated at 7 Chris
Hani
Street, Bloemfontein.
[9]
What is important in regards to the return of service under
discussion, is that the following
remark further appears in the
return of service:
‘
Corsettes
is believably situated at given address, which according to the
receptionist belong to the respondent. I was informed
by the
receptionist that the respondent rarely visit the office.’
The relevance is this
passage will be dealt with later herein.
[10] In
respect of the Court’s jurisdiction, the applicant further
relied upon a CIPC director report, dated
14 October 2024, which
according to the applicant, shows that the respondent is affiliated
with at least twenty-six different entities,
of which the registered
addresses of all such entities are situated in Bloemfontein. That
however, is not the case. The relevant
CIPC report only deals with
RETMIL Consulting. The information contended by the applicant, is
however not evident from such report.
[11] As
pointed out to Mr Van der Merwe, appearing on behalf of the applicant
during argument, the fact that such
registered addresses of all the
entities may be situated in Bloemfontein may merely serve as proof
that the respondent is conducting
business in Bloemfontein. It does
not show that she is domiciled here or is residing in Bloemfontein.
[12]
This CIPC report does however assist the applicant in that the
registered address of RETMIL Consultancy,
is indicated to be 7 Chris
Botha Street, Westdene, Bloemfontein. This is also the same address
where the receptionist at the particular
business has indicated to
the deputy sheriff that the respondent is the owner of the business
situated at the said address.
[13] On
the facts presented before Court, it shows in the first instance that
the
domicilium citandi et executandi
as referred to by the
applicant in its founding affidavit is not
chosen
. The chosen
domicilium citandi et executandi
is only applicable to the
deed of suretyship, signed by the respondent during 2012 and which
forms the subject of the summary judgment
granted against the
respondent, the relevance of which will be dealt with herein later.
For purposes of the present application
however, such address had not
been shown to be chosen.
[14]
The question remains whether the applicant has shown on a balance of
probabilities that this division of
the High Court has the necessary
jurisdiction over the respondent in the present application. In terms
of
s 21
of the
Superior Courts Act 10 of 2013
, a division of a High
Court has jurisdiction
inter alia
over all persons residing or
being in its area of jurisdiction.
[15] I
am in agreement with Mr Reinders that the information pertaining to
the respondent’s other business
interests in Bloemfontein and
the information contained in the August 2024 tracing report, are
actually new facts which may (but
not necessarily do) show that the
applicant is indeed resident in Bloemfontein for purposes of
s 21
of
the
Superior Courts Act. Because
it was only raised in reply, such
information should be disregarded to establish the court’s
jurisdiction.
[16]
What is, however, before Court are two returns of service. The first
is the one already referred to wherein
the remark was made by the
deputy sheriff, to the effect that he was informed that the business
of Corsettes, being conducted at
the premises of 7 Chris Botha
Street, Bloemfontein, belongs to the respondent. I do take into
account that the applicant
in its founding affidavit, referred to
Chris Hani instead of Chris Botha Street. However, this can be
attributed to misnomer on
the part of the applicant.
[17]
More importantly, forming part of the papers is a return of service
in respect of the service of the application
prior to the provisional
order being granted, namely during May 2024. From this return of
service, it appears that the person upon
whom service had been
affected, namely a certain Mr N Kruger, is being described as
co-occupant. This is in respect of the premises
at 1[…]
Dersley Street, Bayswater, Bloemfontein, being the chosen
domicilium
citandi et executandi
in terms of the deed of suretyship referred
to.
[18]
It is settled law that a return of service is regarded as
prima
facie
evidence of the contents thereof.
[1]
In the absence of evidence in rebuttal thereof, it can therefore be
accepted that the respondent is or was a co-occupant of that
premises
during May 2024, which shows that the respondent’s allegation
that she has been residing in Cape Town since 2022,
cannot be true
and correct. Coupled with this, as correctly argued by Mr Van der
Merwe, is the fact that apart from the
ipse
dixit
of
the applicant, she has not produced any evidence in support of the
fact to prove that she is in fact residing in Cape Town and
not
Bloemfontein.
[19]
This failure by the applicant is to be considered in view of what was
stated in
Wightman
t/a JW Construction v Headfour (Pty) Ltd and Another
[2]
at paras 12 and 13 where the court held:
‘
Recognising
that the truth almost always lies beyond mere linguistic
determination the courts have said that an applicant who seeks
final
relief on motion must, in the event of conflict, accept the version
set up by his opponent unless the latter’s allegations
are, in
the opinion of the court, not such as to raise a real, genuine or
bona fide dispute of fact or are so far-fetched or clearly
untenable
that the court is justified in rejecting them merely on the papers:
Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty)Ltd
[1984] ZASCA 51
;
1984 (3) SA
623
(A) te 634E – 635C . . .
A real, genuine and bona
fide dispute of fact can exist only where the court is satisfied that
the party who purports to raise the dispute has in his affidavit
seriously and unambiguously addressed the fact said to be disputed
.
There will of course be instances where a bare denial meets the
requirement because there is no other way open to the disputing
party
and nothing more can therefore be expected of him. But even that may
not be sufficient if the fact averred lies purely within
the
knowledge of the averring party and no basis is laid for disputing
the veracity or accuracy of the averment. When the facts
averred are
such that the disputing party must necessarily possess knowledge of
them and be able to provide an answer (or countervailing
evidence) if
they be not true or accurate but, instead of doing so, rests his case
on a bare or ambiguous denial the court will
generally have
difficulty in finding that the test is satisfied.’
[20]
What is also quite significant is the words used by the respondent’s
attorney in a letter addressed
to the applicant’s attorney
dated 15 November 2023 which stated
inter alia
, with my
emphasis:
‘
Our
client is
currently
in Cape Town.’
These words are not
indicative of the fact that the respondent is in fact residing in
Cape Town and not Bloemfontein, but taken
as a whole, rather appears
to mean that the respondent was indeed staying or visiting Cape Town
on a temporary basis but not residing
on a permanent basis.
[21]
Dealing with the matter on the basis of
Plascon-Evans
Paints (Pty) Ltd v Van Riebeeck Paints (Pty) Ltd
[3]
and taking into consideration all the above facts, I am satisfied
that the applicant has succeeded in proving on a balance of
probabilities that the respondent is indeed residing in Bloemfontein
and that the Court has the necessary jurisdiction in terms
of
s 21
of
the
Superior Courts Act to
adjudicate upon the matter.
Final sequestration:
[22] In
terms of s 12 of the Act, a final order of sequestration may be
granted if a Court is satisfied that:
(a)
the petitioning creditor has established
against the debtor a claim such as mentioned in subsec (1) of s 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.
[23] It
is common cause that the applicant has obtained summary judgment
against the respondent in the amount
of approximately R40 000
000.00. This is in respect of the capital amount plus interest which
the respondent has loaned from
the applicant in terms of a loan
agreement.
[24] It
needs to be mentioned that pursuant to the said summary judgment
being granted, the respondent, aggrieved
by the summary judgment,
applied to the Supreme Court of Appeal and later to the
Constitutional Court for leave to appeal such
order which
applications were summarily dismissed by both these Courts.
[25]
The dismissal of such applications resulted in a letter by
respondent’s attorney in which the following
was stated:
‘
Our
client had to find gainful employment and is employed as a
bookkeeper, and earns a salary of R15 000.00 per month. You
find
hereto attached her tax return to substantiate same. In the
circumstances our client is willing to make an offer of R5000.00
per
month in this regard.’
[26]
In
Lipworth
v Alexander & Barkhan
[4]
it was held that for a notice of one’s inability to pay to be
regarded as an act of insolvency, the notice must be such that
on its
receipt, any reasonable person or business would conclude that the
debtor was unable to meet his or her obligations or that
he or she
would no longer continue to pay the debts in the ordinary course of
business or that he or she would be unable to carry
on with business
unless creditors granted some sort of concession.
[27]
In
Court
v Standard Bank of South Africa Limited
[5]
the Court adopted the aforesaid test and stated
inter
alia
:
‘
The
letter of course does not say in expressed terms, that the respondent
cannot pay. But a debtor who gives notice that he will
only be able
to pay his debts in the future gives notice in effect that he is
‘unable’ to pay. A request for time to
pay a debt which
is due and payable will, therefore, ordinarily give rise to an
inference that the debtor is unable to pay a debt,
and such a request
contained in writing will accordingly constitute an act of insolvency
in terms of s 8
(g)
.’
[6]
[28]
In
O’Shea
NO v Van Zyl and Others
[7]
the Court stated as follows:
‘
The
proper approach to determining whether a letter contains a notice of
inability to pay in terms of s 8
(g)
is to consider how it would be understood by a reasonable person in
the position of the creditor at the time he receives it, taking
into
account that creditor’s knowledge of the debtor’s
circumstances.’
Furthermore,
a debtor may commit an act of insolvency through an agent provided
the latter acts with the former’s knowledge
and consent.
[8]
[29]
With reference to the authorities relied upon by Mr Van der Merwe, I
am in agreement with his submissions
that the respondent has
committed an act of insolvency as contemplated in s 8
(g)
of
the Act.
[30]
The main point relied upon by Mr Reinders in his argument in
opposition to a final order of sequestration,
is the third requisite,
namely whether the applicant has shown that the sequestration would
be to the advantage of creditors. He
argued that there are no
allegations in the papers that should the respondent be finally
sequestrated there would at least be R0.10
advantage for unsecured
creditors.
[31]
In
Stratford
and Others v Investec Bank Ltd and Others
[9]
the Constitutional Court held that the meaning of the term ‘
advantage
to creditors
’
has a broad definition and should not be approached rigidly. The
Court stated:
‘
The
meaning of the term “advantage” is broad and should not
be rigidified. This includes the nebulous “not-negligible”
pecuniary benefit on which the appellants rely. To my mind,
specifying the cents in the rand or “not-negligible”
benefit
in the context of a hostile sequestration where there could
be many creditors is unhelpful.’
[32]
The applicant alleges that she has no assets. The Court can in this
regard however take cognisance of the
aliunde
evidence proffered by the respondent in reply to the effect that the
respondent appears to have interests in various other entities.
Therefore, contrary to what the respondent stated it appears that the
respondent does own assets. In this regard, in
Meskin
& Company v Friedman
[10]
the following was stated:
‘
[T]he
facts before the Court must satisfy it that there is a reasonable
prospect – not necessary a likelihood, but a prospect
which is
not too remote – that some pecuniary benefit will result to
creditors. It is not necessary to prove that the insolvent
has any
assets. Even if there are none at all, but there are reasons for
thinking that as a result of enquiry under the [Insolvency
Act] some
may be revealed or recovered for the benefit of creditors, that is
sufficient.’
[11]
[33] I
also agree with Mr Van der Merwe’s further contention that the
respondent’s denial that she
owns any assets constitutes a
reason enough for concluding that there is a reason to believe that
as a result of enquiry under
the
Insolvency Act more
assets may be
revealed or recovered for the benefit of the respondent’s
creditors, more in particular the applicant itself.
[34] In
the premises, there is reason to believe that on a balance of
probabilities, the sequestration of the
respondent will indeed be to
the advantage of the respondent’s creditors. In this regard,
the respondent alleges that apart
from having no assets, the claim by
the applicant against her is the only claim against her estate and
she has no other creditors.
[35]
I was referred to the matter of
Rodel
Financial Services Proprietary Limited v O’Callaghan
[12]
(
Rodel
).
In that matter, Windell J held that the applicant bears the onus of
establishing
prima
facie
that there is a reasonable belief that sequestration will be to the
advantage of creditors.
[36]
As in the present matter, in
Rodel
,
the applicant was the sole creditor of the respondent.
In her judgment, Windell J referred to the
matter of
Amod
v Khan
[13]
which also dealt with the matter in which the applicant was the
respondent’s sole creditor.
‘
The
Court observed that the proceedings therefore lacked resemblance to
the typical sort, in which the debtor has variety of creditors,
but
insufficient assets to meet all their competing claims, and
sequestration seems likely to benefit them as a group by ending
the
danger that some may be preferred to others and ensuring instead that
the proceeds are shared fairly. The Court held that there
was no
reason principle why a debtor with only one creditor should not have
its estate sequestrated, but the potential advantages
of
sequestration in that situation are inherently fewer, and the case
for it is correspondingly weaker. Then it is really no more
than an
elaborate means of execution and because of it costs an expensive
one.’
[14]
[37]
Windell J then came to the following conclusion:
‘
Where
execution is cheaper and more expeditious than sequestration and the
sole creditor already has a judgment, generally there
is no reason to
believe that the sequestration will be of an advantage to
creditors.’
[15]
[38] In
the present matter the applicant is armed with a judgment in its
favour. However, on face value, the respondent,
on her own version,
is hopelessly insolvent in that she has no assets while being
confronted with the claim by the applicant against
her in the amount
of approximately R40 000 000.00. On this basis alone it is quite
obvious that following the route of execution
will be fruitless to
the applicant. On the version of the applicant herself, there will
not be sufficient assets to satisfy the
judgment amount. In this
regard, the present matter is distinguishable from
Rodel
in
that, according to the respondent in the
Rodel
, her estate
consisted of considerable assets which could be used to satisfy the
claim by the sequestrating creditor.
[39] In
Rodel
, Windell J also, in respect of the requirement of an
advantage to creditors, stated as follows:
‘
A
Court need not be satisfied that there will be advantage to creditors
in the sense of immediate financial benefit. This requirement
will be
met if there is reason to believe, not necessarily a likelihood, but
a prospect not too remote, that as a result of investigation
and
enquiry, assets might be unearthed that will benefit creditors.’
[16]
[40]
Mention had already been made in regards to the various other
entities in which the respondent has interests.
Apart from that, a
further important factor is that the entity with regards to whose
obligations and liabilities signed as surety,
namely Retmil Financial
Services, is still to be regarded as a debtor of the respondent based
on its indebtedness towards the respondent
in her capacity as surety
of this entity. An enquiry into this indebtedness of Retmil towards
the respondent alone, coupled with
respondent’s alleged
interests in other entities, constitutes a reason to believe that as
a result of any investigation and
enquiry, assets might be unearthed
that will benefit the applicant.
[41] In
the result, I am satisfied that applicant has met the requirements of
s 12 of the Act and that a final
order of sequestration is be to
granted.
Order
[42]
Therefore, I make the following order:
1.
The respondent’s estate is hereby
FINALLY SEQUESTRATED.
2.
The costs of this application to be costs
in the sequestration.
HEFER, AJ
Appearances:
On
behalf of the applicant:
Adv
R van der Merwe
Instructed
by:
PH
Attorneys
Bloemfontein
On
behalf of the respondent:
Adv
SJ Reinders
Instructed
by:
Van
Wyk & Preller Attorneys
Bloemfontein
[1]
Van Loggerenberg
Erasmus:
Superior Court Practice
2 ed vol 2 at D1-40.
[2]
Wightman
t/a JW Construction v Headfour (Pty) Ltd and Another
[2008] ZASCA 6
;
2008 (3) SA 371
SCA.
3
Plascon-Evans Paints (Pty) Ltd v Van Riebeeck
Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A).
[4]
Lipworth
v Alexander & Barkhan
1927 TPD 785.
[5]
Court
v Standard Bank of South Africa Limited
1995 (3) SA 123 (A).
[6]
Ibid
at 134A-G.
[7]
O’Shea
NO v Van Zyl and Others
[2011] ZASCA 156
;
2012
(1) SA 90
(SCA) para 26.
[8]
Chenille
Industries v Foster
1953 (2) SA 691
(O).
[9]
Stratford
and Others v Investec Bank Ltd and Others
[2014]
ZACC 38;
2015 (3) SA 1 (CC).
[10]
Meskin
& Company v Friedman
1948
(2) SA 555 (W).
[11]
Ibid at 559.
[12]
Rodel
Financial Services Proprietary Limited v O’Callaghan
[2017] ZAGPJHC 467.
[13]
Amod v
Khan
1947 (2) SA 432 (N).
[14]
Footnote
12
para
33.
[15]
Ibid para 34.
[16]
Ibid
para
29.