SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document in
compliance with the law and SAFLII Policy
IN THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL DIVISION, PIETERMARITZBURG
CASE NO: 9879/2021P
In the matter between:
THE PRUDENTIAL AUTHORITY APPLICANT
and
J[...] P[...] N[...] FIRST RESPONDENT
(Identity No. 7[...])
N[...] T[...] N[...] SECOND RESPONDENT
(Identity No. 8[...])
(Married to each other in community of property)
_____________________________________________________________________
ORDER
_____________________________________________________________________
The following order is granted:
1. The application is dismissed with costs.
_____________________________________________________________________
JUDGMENT
_____________________________________________________________________
PIETERSEN AJ:
[1] This is an application for leave to appeal against the whole of the judgment and
order handed down on 25 September 2024, in which I dismissed the respondents’
application for rescission of the provisional and final orders of sequestration of the joint
estate. The respondents in the application for sequestration, Mr J[...] P[...] N[...] and Mrs
N[...] T[...] N[...] (‘the N[...]’), are married to each other in community of property. The
applicant in the application for sequestration was the Prudential Authority ( ‘the
Authority’) and it fulfils the role of the Registrar of Banks and has the powers and
obligations to act in accordance with the provisions of the Banks Act 94 of 1990 ( ‘the
Banks Act’).
[2] The N[...] seek leave to appeal on the following grounds:
(a) The court erred in its failure to consider the issue of the mistaken date where the
N[...]’ attorney erred in assuming that the matter was set down for 13 January 2023 and
not on 21 November 2022;
(b) The court erred in its failure to consider the direct evidence of Mr N[...] that he
was not served with the provisional order and in not finding that the final sequestration
order was granted in error;
(c) The court erred in its analysis of the evidence regarding the service of the
provisional order on the N[...] and its finding that the N[...] have failed to provide a
reasonable explanation for their default in respect of the hearing for the final
sequestration order;
(d) The court erred in finding that the N[...] accepted liability for a minimum sum of
R129 600 and i n its failure to deal with the c ourt order of 7 February 2018 , which
provides at paragraph 1.2:
‘1.2 The applicant may not exercise his power t o liquidate assets in terms of s ection
84 of the Banks Act without the written consent of th e Second to Fifth Respondents or
an Order from this Honourable Court.’
(e) The c ourt erred in finding that there was actual insolvency in circumstances
where, if it is accepted that the amount owing is R129 600, the value of the N[...]’
Pinetown property exceeds the actual amount and insolvency was not proved; and
(f) The court erred in its analysis of Air Treatment Engineering and Maintenance CC
v Pat-Con Pharmaceuticals.1
[3] The N[...] submit that there are rea sonable prospects that another c ourt could
and would come to a different conclusion on appeal and, accordingly, they seek an
order granting them leave to appeal to the full bench of this division, or alternatively the
Supreme Court of Appeal.
[4] In terms of section 17(1) (a) of the Superior Courts Act 10 of 2013 (‘Superior
Courts Act’), leave to appeal may only be given where the judge concerned is of the
opinion that ‘the appeal would have a reasonable prospect of success ’ or if ‘there is
some other compelling reason why the appeal should be heard ’. Prior to the Superior
Courts Act, the test to be applied in an application for leave to appeal was whether there
were reasonable prospects that another court may come to a different conclusion .2
However, the position has changed in that section 17(1) (a)(i) of the Superior Courts Act
provides for leave to appeal to be given only where the judge is of the opinion that ‘the
appeal would have a reasonable prospect of success’.
[5] The Supreme Court of Appeal held in S v Smith 3 that ‘[m]ore is required to be
established than that there is a mere possibility of success, that the case is arguable on
appeal or that the case cannot be categorised as hopeless ’. Plasket AJA held that there
must ‘be a sound, rational basis for the conclusion that there are prospects of success
on appeal ’.4 This finding in S v Smith was again more recently confirmed by the
Supreme Court of Appeal in Four Wheel Drive Accessory Distributors CC v Rattan NO.5
1 Air Treatment Engineering and Maintenance CC v Pac -Con Pharmaceuticals [2016] ZAKZDHC 34 ( ‘Air
Treatment’).
2 Section 20 of the Supreme Court Act 59 of 1959 and Commissioner of Inland Revenue v Tuck 1989 (4)
SA 888 (T) at 890B-C.
3 S v Smith [2011] ZASCA 15; 2012 (1) SACR 567 (SCA) para 7.
4 Ibid.
5 Four Wheel Drive Accessory Distributors CC v Rattan NO [2018] ZASCA 124; 2019 (3) SA 451 (SCA)
para 34.
[6] In Mont Chevaux Trust v Tim Goosen and others6 Bertelsmann J also held that
the threshold for granting leave to appeal has been raised in the Superior Courts Act.
He found that ‘[t]he use of the word “would” in the new statute indicates a measure of
certainty that another court will differ from the court whose judgment is sought to be
appealed against’.
[7] The N[...]’ explanation for their default of appearance on 21 November 2022 ,
when the provisional order of sequestration was granted, has been dealt with at
paragraphs 16 to 20 of the judgment. It was not disputed by the N[...] that the notice of
motion contained an unopposed hearing date of 13 January 2022 and that the
application papers were accompanied by a notice of set down , enrolling the matter for
hearing on 21 November 2022. Both Mr N[...] and his attorney of record overlooked the
notice of set down and failed to deliver a notice to oppose. The explanation by Mr N[...]
that the decision was made by him and his attorney to wait until Mrs N[...] was served
with the application papers before any steps would be taken to oppose the application is
not reasonable in the circumstances . It is also apparent from Mr N[...]’s founding
affidavit that no further communication regarding the application took place between him
and his attorney until the valuators appointed by the trustees contacted him during May
2023.
[8] The N[...]’ conduct in failing to instruct their attorney to deliver a notice to oppose
and their subsequent failure to contact their attorney regarding any developments in the
matter, are not reasonable. The argument that the judgment overlooked the explanation
provided regarding the issue of the mistaken date is, therefore, without merit.
[9] Service of the provisional sequestration order is dealt with at paragraphs 21 to
24 of the judgment. It was submitted on behalf of the N[...] that the analysis of the
evidence contained in the N[...]’ founding affidavit regarding service of the provisional
order is wrong. It was submitted by Mr Harrison, who appea red for the N[...], that the
court disregarded evidence and overlooked direct evidence indicating that there had not
6 Mont Chevaux Trust v Tim Goosen and others 2014 JDR 2325 (LCC) para 6.
been personal service on Mr N[...]. Mr N[...]’s evidence regarding the s heriff visiting his
personal assistant for purposes of service, according to the visitors’ gate book entry, as
well as Mr N[...]’s diary entry for 9 December 2022, being the day of service , and his
vehicle tracker print out, has been analysed in the judgment with the finding that this
evidence is insufficient to disturb the prima f acie evidence presented by the s heriff’s
return indicating personal service of the provisional order on the N[...]. Mr N[...]’s
evidence that he was not present at his place of employment and that his vehicle was
approximately 1km away but that he cannot recall where he was at the time , is not only
vague but also wholly insufficient. The return of personal service was accord ingly
properly accepted by the c ourt hearing the application for final sequestration and the
N[...] failed to provide a reasonable explanation for their default in respect of the hearing
for the final sequestration order.
[10] Mr N[...] at no stage denied having received the directive pertaining to the
repayment of funds issued by the Registrar of Banks. To the contrary, Mr N[...] invoked
the statutory process whereby the directive could be reviewed. Mr N[...] was
unsuccessful in this process.
[11] It is further clear from Mr N[...]’s founding affidavit that he does not dispute
receipt of the two sums of R43 200 and R86 400 as having been paid by investors into
his bank account. The finding at paragraph 28 of the judgment that Mr N[...] accepts the
report of the repayment administrator as reflecting a liability in the sum of R129 600 is
therefore correct. Regardless, as indicated at paragraph 28 of the judgment, the amount
Mr N[...] asserts is outstanding is of no consequence in light of the fact that his review of
the directive was dismissed and therefore the amount claimed by the Authority is
accepted as correct.
[12] It was also argued on behalf of the N[...] that the c ourt erred at paragraph 25 of
the judgment in finding that the N[...] did not suggest that the c ourt granted the
provisional and final sequestration orders in error . This argument is also without merit.
The N[...] placed no reliance on the provisions of rule 42 of the Uniform Rules of Court
in support of the rescission application and no reference was made to this r ule or the
requirements of the r ule. There was no sug gestion by Mr N[...] that the c ourt made an
error when granting the provisional and final sequestration order s or that there was any
mistake or ambiguity in relation to the court orders granted.
[13] The N[...]’ reliance on the court order of 7 February 2018 is also misplaced. The
court order only deals with the applicant exercising its powers in terms of section 84 of
the Banks Act , whereas the Authority issued a directive in terms of section 83 of the
Banks Act , which Mr N[...] failed to com ply with and therefore constituted an act of
insolvency. The Authority was therefore entitled to rely on the N[...]’ deemed act of
insolvency alone in terms of section 83(3)(b) of the Banks Act , without any recourse to
section 84.7 The submission by Mr Smit SC, who appeared for the Authority , that upon
the N[...]’ unsuccessful review of the directive it became unassailable, is therefore
correct. The N[...]’ argument that the judgment contained an incorrect analysis of the ir
liability is therefore without merit.
[14] The repayment administrator indicates in his report that Mr N[...] unlawfully
obtained the sum of R1 125 323 and that he owns an immovable property value d at
R1 380 000, with an encumbrance over the property in the form of a bond in favour of
Nedbank in the outstanding sum of approximately R680 000. The conclusion is thus
drawn by the Authority that there is sufficient advantage to creditors for the N[...]’ joint
estate to be sequestrated.
[15] There is also no merit in the N[...]’ argument regarding the facts in Air Treatment
being incorrectly distinguished from the facts herein . The c ourt hearing the application
for sequestration during 2022 and 2023 had before it the draft solvency report of
November 2016 , as supplemented and updated to 30 October 2020 in terms of
annexure ‘FA4’ to the founding affidavit in the sequestration application . Whilst the
municipal valuation in respect of the N[...]’ immovable property stems from 2 016, it only
served before the court to establish an advantage to creditors and can be distinguished
7 Prudential Authority v Dlamini and another [2024] ZASCA 133 para 30.
from Air Treatment, where Masipa J dealt with a statutory notice in terms of section 345
of the Companies Act 61 of 1973, which was three years old. The facts in Air Treatment
were therefore correctly distinguished from the facts herein.
[16] It remains that the N[...] have not challenged the judgment where it was found
that the application for rescission was not bona fide made due to their failure to make a
full and complete disclosure of their assets, liabilities, income , and expenditure as well
as their failure to disclose the unsuccessful review of the directive.
[17] As a result, I am unable to find that an appeal would have a reasonable prospect
of success. The application therefore fails.
[18] The following order is made:
1. The application is dismissed with costs.
PIETERSEN AJ
Date of hearing: 27 November 2024
Date of Judgment: 13 December 2024
APPEARANCES
The Prudential Authority: Mr JE Smit SC
Instructed by: Werksmans Attorneys
E-mail: lsilberman@werksmans.com
Ref: L Silberman/SOUT3267/246
c/o Stowell & Co
295 Pietermaritz Street
Pietermaritzburg
Tel: 033 845 0500
E-mail: zeldas@stowell.co.za
(Ref: PL Firman/WER/0065)
Mr and Mrs N[...]: Mr G Harrison
Instructed by: Henwood Britter & Caney Attorneys
Tel: 031 304 3621
E-mail: rbd@henwoodbritter.com
Ref: Mr. R.B. Donachie
c/o Tatham Wilkes Inc
Office F008, First Floor
Athlone Circle
1 Montgomery Drive
Pietermaritzburg
Tel: 033 345 3501
E-mail: ureesha@tathamwilkes.co.za
(Ref: U Premduth/MP/15U021923)