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IN THE HIGH COURT OF SOUTH AFRICA
(EASTERN CAPE DIVISION, GQEBERHA)
NOT/ REPORTABLE
Case no: 1710/2023
In the matter between:
ZOOMLION CAPITAL SOUTH AFRICA (PTY) LTD Applicant
and
BRUCE KENNETH FERREIRA First Respondent
ANETHEA FERREIRA Second Respondent
JUDGMENT
APPELS AJ
[1] This is an opposed application in terms of section 9(1) of the Insolvency Act
24 of 1936 ("the Insolvency Act") for the provisional sequestration of the joint estate
of the First and Second Respondents, who are married in community of property.
[2] The Applicant brought the application in its capacity as a creditor of the First
Respondent and on the basis that (a) the Respondents are financially insolvent; (b)
the First Respondent committed an act of insolvency; and (c) the sequestration of
the Respondents' joint estate will be to the benefit of the their creditors. It is alleged
that the First Respondent is indebted to the Applicant in the amount of
R17 657 658.02, in respect of damages flowing from the breach of an instalment
sale agreement which the First Respondent had signed as guarantor.
[3] The parties have filed two affidavits (a supplementary affidavit filed by the
Respondents and a surrebuttal affidavit filed by the Applicant) in addition to the
ordinary three affidavits that are permitte d in motion court proceedings. Mr. Vorster,
on behalf of the Applicant, submitted that both parties had ample opportunity to
consider the additional affidavits and that the court therefore ought to exercise its
discretion in terms of Rule 6(5)(e) of the Un iform Rules of Court to permit the
affidavits. Mr. Mullins, on behalf of the Respondents, agreed and submitted that the
additional affidavit should be permitted. The Respondents' supplementary affidavit
and the Applicant's su rrebuttal affidavit are therefo re permitted in terms of Rule
6(5)(e) and an order in such terms will ultimately form part of the order that will be
made at the end of this judgment.
[4] The issue to be decided in this matter is whether all the requirement s of
section 10, read with secti on 9(1), of the Insolvency Act have been met. These
requirements are that:
(a) the Applicant has a liquidated claim of at least R 100, i.e that it has the
necessary locus standi which entitles it, in te rms of section 9(1) of the
Insolvency Act, to apply for sequestration of the Respondents' joint estate;
(b) the First Respondent has committed an act of insolvency or is factually
insolvent; and
(c) there is reason to believe that it will be to the advantage of creditors if
the Respondents' joint estate is sequestrated.
THE FACTS
[5] During September 2012, Nexor 519 CC, trading as Protec Crane Hire (in
liquidation) ("Nexor"), purchased twelve cranes from Cranel ink Zoomlion SA (Pty)
Limited (now liquidated) ("Cranelink"). Th e Applicant is a financier that provides
financial assistance to purchasers of Zoomlion products in South Africa. Nexor
required financing to purchase the twelve cranes and consequently concluded twelve
instalment sale agreements with the Applicant for the purchase of the cranes. The
First Respondent was at all relevant times a director of Nexor and signed the
instalment sale agreements as guarantor.
[6] In May 2016, Nexor defaulted on all the instalment sale agreements and failed
to remedy its default, de spite demand by the Applicant. In July 2016, Nexor
purported to terminate the instalment sale agreements and instituted a High Court
action against the Applicant and Cranelink, which was referr ed to arbitration. In the
arbitration proceedings, the Applicant was cited as First Defendant and Cranelink as
Second Defendant.
[7] The Applicant caused a letter of demand to be sent to Nexor in which it
accepted repudiation of the instalment sale agreeme nts. The Applicant also
instituted a co unterclaim against Nexor and the First Respondent for damages
flowing from the breach of the instalment sale agreements. Therefore, in the
arbitration proceedings, Nexor was cited as the First Defendant i n reconvention and
the First Respondent was cited as the Second Defendant in reconvention.
[8] The arbitration was resolved in favour of the Applicant. Nexor's claim was
dismissed and the Applicant's counterclaim for damages flowing from the breach of
the instalment sale agreements succeeded. In terms of the arbitration award, whic h
was made an order of court on 6 December 2023, Nexor (the Plaintiff in the
arbitration proceedings) and the First Respondent (the Second Defendant in
reconvention in the arbitration proceedings) are indebted to the Applicant as follows:
"3. The Plaintif f and the Second Defendant in reconvention, Mr. Bruce
Ferreira, are ordered to pay jointly and severally the one to pay the other to be
absorbed damages caused by the Plaintiff's fail ure to pay the outstanding
instalments due and payable under each respect ive agreement and penalty
interest on such outstanding amounts to the First Defendant calculated as
follows:
a. In respect of the mobile crane referred to in 1a above: R3,904,429.87.
b. In respect of the mobile crane referred to in 1b. above: R3,904,429.87.
c. In respect of the mobile crane referred to in 1c above R750,489.00.
d. In respect of the mobile crane referred to in 1d above R567,036.21.
e. In respect of the mobile crane referred to in 1e above: R3,083,522.45.
f In respect of the mobile crane ref erred to in one 1f above:
R3,083,522.45.
g. In respect of the mobile crane referred to in 1g above: R2,025,357. 24.
h. In respect of the rough terrain crane referred to in 1h above:
R4,001,602. 85.
i. In respect of the rough terrain crane referred to in 1i above:
R3,024,752. 56.•
j. In respect of the rough terrain crane referred to in 1j above:
R3,024,752. 56.
k. In respect of the mobile crane referred to in 1k above: R2,084,528.35;
and
l. in respect of the mobile crane referred to in 1l above: R2,084,58.35.
4. Interest at the penalty interest rate of prime plus 4% upon each a mount
set out in 3a to 3 l, calculated from 5 August 2020 until the date of final
payment.
5. The amounts set out in 3a. to 1l above, plus the penalty interest
calculated upon each suc h amount ought to be reduced by the amount that
the First Defendant is able in each instance to realise through a bona fide sale
or properly arranged public auction of the crane concerned, to which amounts
the costs, expenses and/or charges related to any sale, public auction,
valuation, maintenance and safekeeping of the afor esaid crane incurred by
the First Defendant until the disposal of the said crane must be added.
6. Cost of suit on the scale of attorney and client, including the costs
incumbent upon the employment of two counsel as well as the costs of the
application launched by the First Defendant against the plaintiff and the case
number 22847/2017 in the Gauteng Division of the High Court of South Africa,
as agreed in those proceedings. "
[9] In accordance with the arbitration award, the cranes were returned to the
Applicant. As of 1 June 2024, ten of the twelve repossessed cranes have been sold
by the Applicant. It is alleged that the total amount due and payable by the First
Respondent to the Ap plicant in respect of those ten cranes, is R 17 657 658.62. The
amount of R17 657 658.62 is the sum total of the amounts due in respect of each
individual crane after deducting the proceeds of the sale of those cranes as depicted
in a table appearing in par agraph 17.7 of the Applicant's surrebuttal affidavit as
follows:
Model Chasis
Number
Amount due in
terms of the
award
Purchase
Price
Amount due
and owing after
sale
Zoomlion
QY25V
L[...]
D[...]
R 2,025,357.24 R 473,374.00 R1 ,551.983 .24
Zoomlion
QY25V
L[...]
D[...]2
R 750,489.00 R355,932.00 R394,557.00
Zoomlion
QY30V
L[...]
D[...]3
R2,084.528.35 R594,933.00 R1,489,595.35
Zoomlion
Q30V
L[...]
D[...]3
R2,084.528.35 R594,933.00 R1,489,595.35
Zoomlion
RT55
R[...] R4,001,62.85 R1,177,862.00 R2,823,740.85
Zoomlion
QY50V
L[...]2
D[...]4
R3,083,522.45 R933,814.00 R2,683,708.45
Zoomlion
QY50V
L[…]2
D[...]5
R3,083,522,45 R933,814.00 R2,683,708.45
Zoomlion
RT350
R[...]2 R3,024,752.56 R906,048.00 R 2118,704.56
Zoomlion R[...]3 R3,024,752.56 R906,048.00 R2,118,704.56
RT350
Zoomlion
QY16H
L[...]
D[...]6
R 567,036.21 R263,676.00 R303,360.21
[10] The repossessed cranes were sold by the Applicant to an entity by the name
of ZLT Tower Cranes (Pty) Ltd ("ZLT"), of which Mr Robert Norm an Cook is the sole
director. ZLT is a dealer in heavy mobile cranes and is the exclusive distributor of
Zoomlion Mobile Cranes in South Africa. The Applicant made use of the services of
Mr Mark Bates ("Bates") to assist it with the sale of the cranes.
[11] The involvement of Bates in the sale of the repossessed cranes is one of the
main reasons why the Respondents dispute the Applicant's claim as creditor. The
Respondents contend that Bates has a " very close relationship" with the Applicant.
Bates was the sole director of Cranelink and is now a sales professional working at
ZLT. Cranelink was represented by Bates when Nexor purchased the twelve cranes
from Cranelink.
[12] In the arbitration proceedings, the Re spondents contended that Bates was
acting as an age nt for and on behalf of the Applicant in Nexor's dealings with the
Applicant. However, in terms of the award, the Arbitrator found that Bates was not
the Applicant's agent. The result of the arbitration p roceedings is not being
challenged by the Respondents.
THE FIRST REQUIREMENT OF SECTION 9(1): DOES THE APPLICANT HAVE
LOCUS STANDI?
[13] To prove that it has locus standi to bring this application, the Applicant must
prove that it has a liquidated claim o f not less than R 100 against one of the
Respondents. In terms of section 9(3)(a)(iii), the amount of the claim, the cause and
the nature of the claim must be stated by the Applicant.
[14] The amount of the claim stated by the Applicant in its papers is th e amount of
R 17 657 658.02 and is the sum total of the outstanding instalments payable under
each respective instalment sale agreement in terms of the arbitration award in
respect of the ten cranes sold, less the amount realised through the sale of those t en
cranes as set out in the table above.
[15] The Respondents do not contest the terms of the arbitration award or the First
Respondent's indebtedness in terms thereof. It was however argued that, until the
amount of the claim has been finally determined, the Applicant's claim is unliquidated
and therefore the first requirement of section 9(1) of the Insolvency Act, i.e. proof of
a liquidated claim, has not been met. Accordingly, the Respondent argue that the
Applicant lacks locus standi to bring the application.
[16] The bases on which the Respondents c ontend that the amount of the
Applicant's claim has not yet been determined (and is therefore unliquidated) are the
following:
(a) The sale of the ten cranes was not bona fide; and
(b) The application for sequestration is brought prematurely because not
all the cranes have been sold yet.
[17] Each of these contentions is dealt with separately hereunder.
Bona fide sale
[18] The amounts payabl e to the Applicant in terms of the arbitration award were
subject to the proviso in paragraph 5 of the arbitration award that the outstanding
amounts in respect of each crane ought to be reduced by the amount the Applicant
is able to realise through a bona fide sale or properly arranged public auction.
[19] It is common cause that the cranes were not sold through a p ublic auction.
The Applicant contends that the proviso in paragraph 5 had been met because the
cranes were sold in terms of bona fide sales.
[20] The Respondents dispute that the sale of the cranes was bona fide . They
contend that the transactions in term s of which the cranes were sold were not " at
arm's length". This contention is underpinned by the following allegations:
(a) The cranes were sold to ZLT with the assistance of Bates, who was
previously the director of Cranelink but is now an integral part of the business
of ZLT.
(b) ZLT operates from the same premises previously occupied by
Cranelink and ZLT took over Cranelink's equipment and staff.
(c) There is a "close relationship" between Bates and the Applicant.
(d) The First Respondent " verily belie ves" that three of the cranes
repossessed by the Applicant in terms of the arbitration award (or at least
similar cranes), are now advertised for sale by ZLT as follows: 2013 Zoomlion
QY50V for R2 700,000.00; 2013 Zoomlion RT35 for R2 575,000.00 and 2013
Zoomlion QY25V for R1 450,000.00. Cumulatively, the three cranes were sold
by the Applicant to ZLT for R2 313,236.00 but are now allegedly ad vertised
for a total amount of R6 725,000.00, which is a difference of R4 411,764.00.
(e) The stark difference betwe en the price for which the cranes were
purchased and the advertised price is, in the Respondents' view, evidence
that the cranes were sold be low their value. It is also, according to the
Respondents, evidence that ZLT stands to make a profit from the sale of the
cranes. That profit, so it is contended by the Respondents, should be for the
benefit of Nexor or the First Respondent, not ZLT.
[21] Based on the aforegoing allegations, the Respondents contend that the sales
of the cranes were not at arm's length and that ZLT colluded with the Applicant to the
detriment of the Respondents.
[22] The Applicant does not dispute Bates's involvement in the sales of the cranes,
nor does it dispute Bates's connection with Cranelink or ZLT. Instead, the
Applicant explains why there is nothing untoward in Bates’s involvement in the sales.
In its replying affidavit, the Applicant explains that Bates has been i nvolved in selling,
registering and repairing Zoomlion Cranes in South Africa since 2006 and is
therefore qualified to determine what repairs must be undertaken to the repossessed
cranes, to estimate the reasonable selling price and to find suitable buyers.
[23] The factual allegations pertaining to the connection between Cranelink and
ZLT is also not disputed. The Ap plicant explains why it decided to sell to ZLT and
states that ZLT is the exclusive distributor of Zoomlion Cranes in South Africa and is
therefore the most suitable to refurbish cranes and find suitable buyers for the
cranes. The Applicant stated that the repossessed cranes were in a poor condition
and required refurbishment. The Applicant explained that since it is a finance
provider, not a ma nufacturer of cranes, it does not have the expertise to refurbish
cranes to make them suitable to be sold. Therefo re, the cranes were sold to ZLT, an
experienced dealer in heavy mobile cranes.
[24] The Applicant states that the Respondents incorrectly assu me that the three
cranes advertised by ZLT are the same cranes repossessed by the Applicant. It
stated that the Z oomlion QY50V advertised for R2 700 000.00 belongs to a client of
ZLT, that the 2013 Zoomlion RT35 advertised for R2 575 000.00 previously
belonged to a company known as Axton Matrix and was acquired by ZLT, and that
the 2013 Zoomlion QY25V advertised for R1 450 000.00 previously belonged to a
business known as Cubenco and was bought by ZLT.
[25] The Respondents admit that they do not have any pe rsonal knowledge about
whether the three repossessed cranes are the same cranes advertised by ZLT. In
fact, the First Respondent states in his answering affidavit that " ...without the vin
numbers I cannot say with absolute certainty that these are the same cranes tha t
were repossessed by Zoo mlion, but given the timing I verily believe this to be th e
case."
[26] It should be noted that in application proceedings, affidavits take the plac e of
not only pleadings in an action but also the essential evidence which would be le at
trial. It follows that affidavits must contain admissible material, i.e. facts of whic h the
deponent has personal knowledge. 1 The allegation that the cranes advertised ar e
the same cranes sold by the Applicant is indeed mere speculation on the part of th e
Respondents. It is of no evidentiary value and cannot be considered as a fact whic h
has given rise to a factual dispute in this matter.
[27] There are therefore in effect no ge nuine factual disputes in this matter. The re
is only the assertion by the Respondents, which the Applicant disputes, that the sal e
of the cranes was not at arm's length. This asser tion should be examined based o n
the common cause facts.
[28] In Hicklin v Secr etary for Inland Revenue , 2 the court provided a usefu l
guideline in assessing whether an agreement was concluded at arm's length. Th e
court stated the following:
"For dealing at arms' length ... connotes that each party is independent of the
other and in s dealing will strive to get the utmost possible advantage out of
the transaction for himself."3
[29] The court stated further that:
“Hence in an arms' length agreement the rights and obligations it creates are
more likely to be regarded as normal than abnormal ... "4
[30] Therefore, in considering whether there is eviden ce that the sales were not at
arm's length, one should consider whether ZLT I Bates and the Applicant:
(a) are independent of each other;
1 Erasmus. Superior Court Practice Vol 2. D1 Rule 6-13
2 1980 (1) SA 481 (AD).
3 Hicklin, supra at p495A
4 Hicklin, supra at p495A - B
(b) each strived to get the utmost possible advantage out of the
transaction for itself; and
(c) the rights and obl igations created by the transacti ons are more likely
normal than abnormal.
[31] Furthermore, due regard should be had to the surrounding circumstances of
the matter.5
[32] The two contracting parties whose independence of each other ought to be
evaluated are ZLT and the Applicant. Nothi ng was alleged which proves that the
Applicant and ZLT are not independent of each other. There is for instance no
factual allegation to the effect that ZLT and the Applicant were so closely connected
to each other that they did not both intend to obtain th e best benefit for themselves
out of the transaction or that one has a controlling interest in the other. In fact, on the
papers it is clear that ZLT and the Applicant are two distinct and separate juristic
persons.
[33] There are vague allegations about a "close relationship" between Bates and
the Applicant, but the exact nature of the relationship and how it affects the
independence of the contracting parties are not stated. These allegations pertaining
to the the close relationship bet ween Bates and the Applicant and the Applicant and
ZLT appear to be a rehash of the same allegations that were made and rejected in
the arbitration proceedings regarding the relationship between Bates and the
Applicant or the Applicant and Cranelink (the S econd Defendant in the arbitration
proceedings). In this regard, the arbitrator stated the following in paragraph 89
regarding the allegations pertaining to the relationships between Bates, the Applicant
(the First Defendant in the arbitration proceedings) and Cranelink (the Second
Defendant in the arbitration proceedings):
"No evidence was therefore presented of an actual agreement between Mr.
Bates and/or the Second Defendant on the one hand and the First Defenda nt
5 Hicklin, supra at p495B-D
on the other in terms of which the Secon d Defendant and/or Mr. Bates was
appointed as an agent or representative of the Second Defendant, nor is there
any evidence to show that the First and Second Defendants were not distinct
and separate judicial pers onalities. There is consequentially no basi s for
finding that the Second Defendant was a duly authorised agent or
representative of the First Defendant."
[34] The fact that ZLT makes a profit from refurbishing and reselling the cranes is
not evidence of collusion or evidence that it is closely related to the Applicant. In fact,
it is evidence that ZLT strived to obtain the best advantage out of the deal for itself.
[35] The rights and obligations created by the transactions also appear more
normal than ab normal. The fact that cranes of the same make and model as the
repossessed cranes have been advertised by ZLT for much higher prices than for
what they have been sold to ZLT cannot be considered as abnormal in the
circumstances of this case. It is not disp uted that the cranes that were returned to
the Applicant by Nexor were in a poor condition and that many panels of the cranes
were rusted away completely. It is also not disputed that, for the cranes to be
suitable for reselling to users thereof, ZLT had to refurbish the cranes.
[36] In such circumstances, the difference between the advertised price of similar
cranes in make and model and the price for which the cranes were sold by the
Applicant to ZLT, is more likely normal and cannot be regarded as evid ence of
collusion or of e vidence of an agreement that is not at arm's length. The advertised
price is in any event only the asking price and is not necessarily the price for which
the cranes will eventually be sold.
[37] In fact, nothing about the circums tances regarding the repos session,
refurbishments and sale of the cranes as alleged by the Applicant nor any of the
allegations contained in the Respondents' papers regarding the surrounding
circumstances is suggestive of transactions which are not at arm' s length. There is
therefore no factual basis for the contention advanced by the Respondents that the
sales of the cranes were not bona fide.
Was the application brought prematurely?
[38] The Respondents contend that the application was premature because not all
the cranes have be en sold. Therefore, it is submitted that the First Respondent's
indebtedness to the Applicant had not yet finally been determined. The Respondents
also contend that if a claim is disputed, as in the present case, it cannot be reg arded
as a liquidated claim.
[39] The Insolvency Act does not define "liquidated claim". In Kleynhans v Van der
Westhuizen NO6 ("Kleynhans"), it was held that the amount claimed must have been
determined or fixed by agreement, or court order or otherwise. If the amount has not
yet b een determined or fixed when the application is heard by the court, the
application for sequestration cannot succeed. The court in Kleynhans further held
that by requiring that a creditor shou ld establish a "liquid ated claim", the Legislature
intended that there must be certainty in connection with the amount of the claim. This
means that to satisfy the requirements of section 9(1), there must be certainty, based
on the allegations in the Appli cant's papers that the amount of the claim is at least
R100.7
[40] In the heads of argument, it was submitted that the Applicant ought to have
issued summons and obtained a judgment sounding in money once the cranes have
been sold. It is for this reason t hat the Respondents allege that the Applicant's claim
is not liquidated as required by section 9(1) of the Act. As authority of the argument
that the debt is not liquidated, the Respondents cite the following passage from
Kleynhans:
"Liquidated claim" in section 9(1) of the Act 24 of 1936 means a claim whereof
the amount is fixed either by agreement, or by an order of court or otherwise.
The Legislature intended that there should be certainty in connection with the
amount of the claim; the legal basis and nature thereof do not af fect the
applicant's local standi to apply to Court."
6 1970 (2) SA 742 (A) at 749 D.
7 Kleynhans, supra at p749 F.
[41] The quoted passage does not assist the Respondents. Kleynhans does not
provide authority for the proposition that a creditor ought to issue summons and
obtain judgment sounding in money for a claim to be regarded as liquidated. What is
required is that there ought to be certainty that the amount of the claim is at least
R100.
[42] In terms of the arbitration award, the First Respondent was ordered to pay the
Applicant a stipulated amount outstanding in respect of each of the twelve individual
cranes as set out in paragraph 3 of the award. There is therefore a debt payable in
respect of each indivi dual crane. The fact that not all the cranes h ave been sold yet
is of no consequence.
[43] Furthermore, the amount due and payable in respect of each individual crane
that has been sold has been ascertained in accordance with paragraph 5 read with
paragraph 3 of the award. In this regard, the Applica nt has set out what the
outstanding amount is in respect of each of the ten cranes that was sold and what
the proceeds of the sale is in respect of each of those cranes.
[44] The amount owed in respect of the te n cranes has therefore been fixed or
determined and there is certainty, as contemplated in Kleynhans about the amount
owed by the First Respondent to the Applicant in respect of those cranes.
[45] The Respondents further argued that if the claim is disputed, as in the present
case, it cannot be reg arded as liquidated. In this regard, the Respondents relied on
the "Badenhorst principle", which is a principle named after one of the leading cases
on the subject, Badenhorst v Northern Construction Enterprises (Pty) Ltd.8
[46] In Trinity Asset Management (Pty) Ltd v Grindstone Investments (Pty) Ltd9 the
Constitutional Court stated the position, with reference to the "Badenhorst principle",
as follows:
8 1956 (2) SA 346 (T).
9 2017 (12) BCLR 1562 (CC).
"...That principle is less of a principle than a sensible rule of practice. It says
that if you want to claim a debt you know is disputed, you should not bring
liquidation proceedings to do it. You should claim the debt by way of action -
and only once your claim has been established may you, if necessary, seek to
liquidate or sequestrate."10
[48] The crux of the Badenhorst principle is that liquidation proceedings are
inappropriate to resolve a dispute as to the existence of a d ebt. It was however
emphasised in Kleynhans that t he mere fact that a claim is disputed is not sufficient
to affect the liquidity of the claim. The claim must be disputed on reasonable and
bona fide grounds. One should have regard to the nature and extent of the dispute
that was raised. If no genuine fact ual disputes are raised regarding the amount due,
it cannot be said that there is a bona fide dispute.11
[48] The onus rests upon the Respondents to show on a balance of probabilities
that its indebtedness to the Applicant is disputed on bona fide and reas onable
grounds.12
[49] In this matter, the existence of the debt is not genuinely disputed. In
circumstances where there is an arbitration award which is unchallenged, (a) which
stipulates the amounts owed by the First Respondent to the Applicant; (b) to w hich
interest at a penalty interest rate still has to be added; (c) in terms of which the First
Respondent has been ordered to pay the legal costs of the Applicant on an attorney
and client scale; and (d) w hich to date hereof has remained unsatisfied; it i s
untenable for the First Respondent to contend that he is not indebted to the
Applicant at all.
[50] The Respondents have not made any factual allegations which created a
genuine dispute of fact or any unc ertainty about the amount that was owed in
respect of the sale of the ten cranes. The assertion that the sale of the cranes was
not bona fide is not a factual allegation, it is the Respondents' own conclusion for
10 Trinity, supra at para 86.
11 Kleynhans, supra at p750 E-F.
12 Kalil v Decotex (Pty Ltd and another 1988 (1) SA 943 (A) at 980 B-D.
which no factual foundation was provided. I t is trite that the evidence on which a
party relies must consist of factual allegations as opposed to " mere assertions" .13 It
is only when the assertion amounts to a conclusion which may reasonably be drawn
from the factual allegations that it can have any relevance.14
[51] The conclusion which the Respondents draw and which they assert in their
papers, i.e. that the sale was not bona fide, cannot be reasonably drawn from the
facts which they have alleged.
[52] The Applicant has therefore established on a prima facie basis that it has a
liquidated claim of at least R100 and has succeeded in establishing its standing.
FACTUAL INSOLVENCY OR ACT OF INSOLVENCY
[53] Where a debtor has not committed an act of insolvency, an unpaid creditor
seeking sequestration of the debtor's estate has to prove actual insolvency on a
balance of probabilities i.e. that his total liabilities (fa irly valued) exceed his total
assets (fairly valued). Therefore, to prove the second requirement of section 9(1) of
the Insolvency Act, the Applicant either has to show that the Respondents are
factually insolvent or that the First Respondent committed an act of insolvency.15
[54] Although the Respondents disputed that an act of insolvency has been
committed, no evidence was presented to genuinely dispute factual insolvency. In
fact, during oral arg ument, Mr Mullins on behalf of the Respondents conceded tha t
should the Applicant succeed in establishing locus standi, i.e. that it has a claim for
the amount alleged, it follows that the Respondents will find it difficult to dispute their
factual insolvency.
[55] The Applicant has set out the assets of the Respondents and their value, from
which it appears prima facie that the Respondents do not possess sufficient assets
to discharge the debt owed to the Applicant and that their liab ilities exceed their
13 Hulse-Reutter and Others v Godde 2001 (4) SA 1336 (SCA) at para 14.
14 Hulse-Reutter, supra at para 14.
15 ABSA Bank Ltd v Rhebokskloof (Pty) Ltd 1993 (4) SA 436 (C) at p443B-E
assets. It was incumbent on the Respondents to rebut this prima facie case and
show that their assets have a value exceeding their total liabilities. 16 The
Respondents have failed to do so.
[56] The Applicant has therefore succeeded i n establishing that the Respondents
are factually insolvent.
ADVANTAGE TO CREDITORS
[57] A court may only grant a sequestration order if it is satisfied that there is
reason to believe that it will be to the advantage of creditors if the debtor's estate i s
sequestrated.
[58] An applicant may establish advantage to creditors on the grounds that there
are reasonable prospects that assets may be revealed or recovered as a result of an
investigation into the insolvent's affairs. In Meskin & Co v Friedman ,17 the court held
that the right to an investigation is a possible means of sec uring ultimate material
benefit for the creditors, for example in the form of property disposed of by the
insolvent.18 In this regard, the Insolvency Act provides creditors with mech anisms for
the investigation of the affairs of the First Respondent pursua nt to the sequestration
of the joint estate. Therefore, a court needs only to be satisfied that there is reason
to believe - not necessarily a likelihood, but a prospect not too remo te - that as a
result of investigation and inquiry, assets might be recove red that will benefit
creditors.19
[59] The Applicant has alleged that the First Respondent is a member or a director
of several incorporated j uristic entities and that it is likely that he has a pecuniary
interest in those companies. Two of the companies mentioned by the Applicant of
which the First Respondent is a director were incorporated after the commencement
of the litigation that resulted in the arbitration awards. The Applicant has also
16 Absa Bank Ltd v Rhebokskloof (Pty) Ltd, supra at p443F
17 1948(2) 555 WLD.
18 Meskin & Co v Friedman, supra at 559.
19 Commissioner for SARS v Hawker Air Services (Pty) Ltd; In Re Commissioner for SARS v Hawker
Aviation Services Partnership and others, 2006 (4) SA 292 (SCA) at p306D
adduced facts to indicate that the First Respondent owned assets that were
disposed of. It is alleged that if the transactions surrounding the dispositions are
investigated it may lead to recoveries for th e benefit of the Respondents' creditors;
that those transactions may be impeached in terms of sections 26 to 31 of the
Insolvency Act and it may lead to the repayment of dissipated funds and assets.
[60] The Respondents did not gen uinely dispute the Applicant's factual allegations
pertaining to the advantage to creditors.
[61] The Applicant therefore succeeds in establishing the third requirement for
provisional sequestration.
CONCLUSION
[62] The Applicant has succeeded in proving the requirements of sect ion 10, read
with section 9(1), of the Insolvency Act and has established a prima facie case for
the provisional sequestration of the Respondents' joint estate.
The Order:
Accordingly, it is ordered that:
(a) The supplementary af fidavit of the Respondent s and the surrebuttal
affidavit of the Applicant are permitted in terms of Rule 6(5)(e) of the Uniform
Rules of Court.
(b) The joint estate of the F irst Respondent, Bruce Ferreira with identity
number 5 […], and the Second Respondent, An ethea Ferreira with identity
number 5[…], is hereby placed under provisional sequestration in the hands
of the Master of the High Court, Gqeberha.
(c) A rule nisi is issued calling upon all persons with a legitimate interest in
the affairs of the Resp ondents' joint estate to show cause, if any, at 09h30 on
28 January 2025, why the provisional order should not be made final.
(d) A copy of the provisional order of sequestration be:
i. Served by the Sheriff on the First and Second Respondents at
7[…], E[…], Drive, Summerstrand, Gqeberha;
ii. Served electronically on the South African Revenue Services via
email at l[…];
iii. Delivered to the Master of the High Court;
iv. Served by the Sheriff on any employees of the First and Second
Respondents by affixing a copy to a notice board to which the
employees have access or to the front gate or door of the First and
Second Respondents at 7[…], E[…], Drive, Summerstrand, Gqeberha;
v. Served by t he Sherrif on any registered trade unions
representing employees of the First and Second Respondents; and
vi. Published in the Government Gazette and in the Herald
Newspaper circulated in Gqeberha;
(e) That the costs o ccasioned by this application be cost in the
sequestration.
G APPELS AJ
ACTING JUDGE OF THE HIGH COURT
APPEARANCES:
Counsel for the Applicant: Adv J Vorster SC and Adv F Storm
lnstructed by: C/O Aukett·Attomeys
Gqeberha
Counsel for the Respondents: Adv N J Mullins SC
Instructed by: Gregory Clark & Associates Inc
Attorneys
Gqeberha
Date heard: 7 November 2024
Date delivered: 10 December 2024