REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG LOCAL DIVISION, JOHANNESBURG
Case Number: 049884/2023
(1) REPORTABLE: NO
(2) OF INTEREST TO OTHER JUDGES: NO
(3) REVISED: NO
_________________________ _________________________
DATE SIGNATURE
Summary
Insolvency Act 24 of 1936 —section 9(1) read with section 9(2) —contingency basis of
payment of counsel's fees does not on its own defeat liquidity where the claim has
accrued but is not yet due.
Sequestration application—applicant must make out his case in the founding papers —
pre-sequestration discovery against a third party, in motion proceedings,
impermissible—Uniform Rule 35(13) of the Uniform Rules of Court—discovery in motion
proceedings available only in exceptional circumstances.
Sequestration application —alternative relief sought against non -debtor third party in
motion proceedings for disclosure of records—incompetent—pre-sequestration access
by a private litigant to records of a public body is regulated, where applicable, by the
Promotion of Access to Information Act 2 of 2000, and post-sequestration interrogation
by sections 64 to 66 of the Insolvency Act.
In the matter between:
2
CLINT CHRISTIAN ASCAR Applicant
and
MAKJAMASHARE EMMANUEL MALEPE First Respondent
MALEPE ATTORNEYS Second Respondent
THE LEGAL PRACTICE COUNCIL OF SOUTH AFRICA Third Respondent
THE ROAD ACCIDENT FUND Fourth Respondent
JUDGMENT
CILLIERS AJ
ORDER
The following order is made:
1. The application for the provisional sequestration of the estate of the first
respondent, alternatively the estate of the second respondent, is dismissed.
2. The alternative relief sought against the fourth respondent is dismissed.
3. The applicant is directed to pay the costs of the first respondent, such costs to
include the costs of counsel on Scale B, where employed.
4. The applicant is directed to pay the fourth respondent's costs of opposition to the
alternative relief, such costs to include the costs of counsel on Scale B where
employed.
3
Introduction
[1] This is an opposed application for the provisional sequestration of the estate of
the first respondent and, in the alternative, that of the second respondent, brought in
terms of the Insolvency Act 24 of 1936. 1 Alternative relief is sought against the fourth
respondent for the disclosure of certain financial records relating to thirteen Road
Accident Fund matters in which the second respondent acted for the plaintiffs. The
applicant invokes section 10 of the Insolvency Act, relying primarily on section 8(c) (and,
less prominently, on section 8(g)), and in the alternative on factual or commercial
insolvency.
[2] The applicant is an advocate of the Johannesburg Bar. He alleges that, from in
or about May 2019, he was briefed on numerous occasions by the first respondent, who
conducts a litigation practice as a sole proprietor under the name and style of “Malepe
Attorneys”. The bulk of the briefs were claims against the Road Accident Fund. The
applicant claims an aggregate balance of R606 813.00 in respect of fees rendered and
not paid, with interest a tempore morae at 10 per cent per annum from 31 May 2019.
The first and second respondents oppose the application. Their answering affidavit was
deposed to, not by the first respondent, but by Mr Selaelo Malatji, an external attorney.
The fourth respondent's opposition is confined to the alternative relief sought against it.
The third respondent has played no active part in the proceedings. The applicant has
filed a replying affidavit.
The legal framework
[3] Sections 8, 9, 10 and 12 of the Insolvency Act govern compulsory sequestration.
Section 9(1) confers locus standi upon a creditor with a liquidated claim of not less than
the prescribed minimum2 against a debtor who has committed an act of insolvency or is
insolvent. Section 9(3) requires that the petition set forth the amount, cause and nature
1 Section 9(1) of the Insolvency Act 24 of 1936 (the Insolvency Act).
1 Section 9(1) of the Insolvency Act 24 of 1936 (the Insolvency Act).
2 R100, alternatively R200 in the aggregate where two or more creditors petition jointly: section 9(1) of the
Insolvency Act, read with the Decimal Coinage Act 61 of 1959.
4
of the claim, and the act of insolvency relied upon “or otherwise allege that the debtor is
in fact insolvent”. These averments must appear ex facie the founding papers.3
[4] Section 10 governs the provisional order. At that stage, the court must be
satisfied that the petitioning creditor has established a prima facie case that the
applicant has a claim of the kind contemplated in section 9, the commission of an act of
insolvency as defined in section 8 or the existence of actual insolvency, and reason to
believe that sequestration will be to the advantage of creditors. Section 12 governs the
final order, where the corresponding test is whether the court is satisfied of the same
three requirements on a balance of probabilities. The substantive content of the three
requirements is the same at both stages, and only the standard of proof differs. 4 The
applicant must establish either an act of insolvency or factual insolvency. Proof of an
act of insolvency is sufficient on its own, and where the applicant succeeds on that
ground it is unnecessary to consider factual insolvency. Where, however, no act of
insolvency is established, the applicant must prove factual insolvency. At the provisional
stage that proof need only be prima facie, but it remains necessary to establish, even
prima facie, that liabilities exceed assets, and that is not established by suspicion or by
the mere fact of non-payment of a particular creditor.
[5] Even where the requirements of section 10 are met, the court retains a
discretion whether to grant a provisional order, informed in particular by the requirement
of advantage to creditors as articulated in Meskin & Co v Friedman and approved in
Stratford.5
The citation of the second respondent
[6] The second respondent is cited as “Malepe Attorneys”. The applicant himself
avers, in the founding affidavit, that the first and second respondents are “for all practical
intents and purposes, one and the same individual person”, with the first respondent
intents and purposes, one and the same individual person”, with the first respondent
being “the sole proprietor of a law practice styled as Malepe Attorneys”. Nothing in the
3Bishop v Baker 1962 (2) SA 679 (N) at 682H to 683A.
4 Standard Bank of SA Ltd v Sewpersadh and Another 2005 (4) SA 148 (C) at [5] and [6]. For the prima facie
standard at the provisional stage, see Kalil v Decotex (Pty) Ltd 1988 (1) SA 943 (A) at 976F to G.
5 Meskin & Co v Friedman 1948 (2) SA 555 (W) at 559; Stratford and Others v Investec Bank Ltd and Others 2015
(3) SA 1 (CC) at [43] to [45].
5
founding papers suggests that the second respondent is incorporated or that it has any
other form of separate legal personality. On the applicant's own pleaded case, “Malepe
Attorneys” is the trading name of the sole proprietorship through which the first
respondent conducts his legal practice.
[7] It is trite that a sole proprietorship is not a legal persona. As Goldstein J held in
Simpson's Motors v Flamingo Motors, “a firm is not a legal persona and … a firm name
is really the alias of its sole proprietor”. 6 A trading name does not denote a separate
estate capable of sequestration. Rights and obligations arising from the conduct of the
business are those of the natural person who conducts it. The applicant's own reliance
on section 34(7)(c)(i) of the Legal Practice Act 28 of 2014, on the footing that the first
respondent is jointly and severally liable for the contractual debts of the second
respondent, fortifies rather than displaces that conclusion.7 On the applicant's own case
there is one debtor and one estate.
[8] It follows that the only estate susceptible to sequestration is the estate of the
first respondent. To the extent that the relief is sought against the “estate” of the second
respondent, that relief is incompetent.
The evidential status of the answering affidavit
[9] The answering affidavit of the first and second respondents was not deposed to
by the first respondent. It was deposed to by Mr Selaelo Malatji, an adult male legal
practitioner who practises under his own name and style at Sandton. Mr Malatji claims
to be the first and second respondents' “legal representative of record”, authorised to
oppose and to depose by virtue of a power of attorney and mandate documents. Neither
of those documents has been attached. No confirmatory affidavit has been filed by the
first respondent, nor by anyone within the practice of Malepe Attorneys.
6 Simpson's Motors v Flamingo Motors 1989 (4) SA 797 (W) at 798F.
6 Simpson's Motors v Flamingo Motors 1989 (4) SA 797 (W) at 798F.
7 Section 34(7)(c)(i) of the Legal Practice Act 28 of 2014.
6
[10] In the replying affidavit the applicant takes objection to Mr Malatji's authority
and, more importantly, to his lack of personal knowledge of the substantive matters in
dispute. In my view, the objection is well taken.
[11] Hearsay evidence is inadmissible in civil proceedings save where it is admitted
by agreement, where the person upon whose credibility its probative value depends
testifies, or where the court admits it in the interests of justice. 8 The probative value of
the substantive factual averments in the answering affidavit, which concern the terms
upon which the applicant was briefed in particular matters, the alleged contingency-fee
arrangements, the receipt of payments, the alleged overpayment in one of the matters,
and the alleged failure by the applicant to render the services in two of the matters in a
professional manner, does not depend on the personal knowledge of Mr Malatji. It
depends on the evidence of the first respondent and on the books and records of the
first respondent's practice, neither of which Mr Malatji can speak to from his own
knowledge.
[12] This is not to say that every averment in the answering affidavit is inadmissible.
The deponent may competently depose to matters within his own professional role, such
as authority to act, procedural steps taken in the litigation, the exchange of
correspondence in which he participated, and the fact that identified annexures are what
they purport to be. But those matters do not carry the substantive defence on
indebtedness. No application has been brought under section 3(1)(c) of the Law of
Evidence Amendment Act 45 of 1988 for the admission of hearsay in the interests of
justice. No satisfactory explanation is given for the absence of an affidavit by the first
respondent, who is the central witness on every contested factual issue. No
confirmatory affidavits from any bookkeeper, practice manager or member of staff have
confirmatory affidavits from any bookkeeper, practice manager or member of staff have
been filed. No comprehensive counter -reconciliation has been produced. No bank or
trust-account records have been adduced as evidence to substantiate the payments
alleged.
[13] Once the inadmissible material is excluded, what remains in the answering
affidavit are formal admissions, limited procedural averments within the deponent's
8 Section 3(1) of the Law of Evidence Amendment Act 45 of 1988.
7
personal knowledge, bare denials, and legal contentions. The affidavit is not a nullity,
but it does not place before this Court admissible factual material capable of sustaining
the respondents' substantive version on indebtedness. The general rule rest ated by
Corbett JA in Plascon-Evans presupposes admissible evidence. 9 A court does not
manufacture a genuine dispute of fact by treating hearsay as though it were competent
proof.
[14] The consequence is twofold. First, the respondents have not raised any
admissible bona fide dispute as to the applicant's claim. Second, the applicant must
still prove the requirements for sequestration on the admissible evidence adduced in
the founding affidavit . He cannot obtain a sequestration order merely because the
respondents have failed to put up admissible evidence. That second proposition is the
more important. Even where a creditor's claim is established, insolvency proceedings
are not designed to operate as machinery for the mere collection of a debt where the
rest of the statutory machinery is not engaged. 10 It is to the requirements to obtain a
provisional order for sequestration that I now turn.
The liquidated claim
[15] The applicant's case on indebtedness is supported by a running reconciliation
of accounts annexed to the founding affidavit, in which invoices, payments and shortfalls
are reflected on a matter-by-matter basis from May 2019 to April 2023, aggregating to
R606 813.00. The composition of that aggregate, and the basis upon which the
applicant says it is owing, are not entirely uniform across the matters reflected in the
reconciliation.
[16] In the Road Accident Fund matters, the applicant's own pleaded case is that his
fees would only be paid by the second respondent at a time when the second
respondent had received payment from the Road Accident Fund, and that the
underlying briefs proceeded on a contingency basis. The first respondent relies on
underlying briefs proceeded on a contingency basis. The first respondent relies on
those very arrangements pleaded by the applicant. The first respondent contends in this
regard that the fees are not yet due . and are subject to taxation. That contention
9 Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) at 634H to I.
10 Badenhorst v Northern Construction Enterprises (Pty) Ltd 1956 (2) SA 346 (T) at 347H to 348C.
8
misapprehends the test for liquidity. Section 9(2) of the Insolvency Act provides in terms
that a liquidated claim which has accrued, but is not yet due on the date of the hearing
of the petition, shall be reckoned as a liquidated claim for the purposes of section 9(1).11
The fact that payment of fees in a particular matter is contingent upon receipt of capital
by the attorney from the Road Accident Fund therefore does not, on its own, defeat the
applicant's locus standi. The issue is whether the claim has accrued and wh ether the
amount is sufficiently certain to be considered a liquid debt. The respondents place
reliance on Uniform Rule 69 and on Blakes Maphanga and Rabani & Schoeman in
support of the contention that an untaxed bill cannot found a liquidated claim.12 Whether
those authorities can avail an attorney resisting a claim by an advocate for fees, as
opposed to an attorney –own client dispute, is a question I need not decide. Section
9(2), and the conclusions reached below, render the issue academic.
[17] In Kleynhans, Wessels AJA held that a liquidated claim is one of which the
amount is fixed either by agreement, by an order of court, or otherwise. What matters
is certainty as to the amount, and not the legal basis of the claim, and the mere fact that
a claim is disputed does not in itself destroy liquidity.13
[18] Considered as such, the applicant has in my view established a liquidated claim
of an amount substantially in excess of the statutory minimum. In one of the matters,
the Botha matter, the indebtedness in the amount of R217 241.00 was reduced to a
written instalment plan in October 2022, of which no payment was made. That amount
is fixed by agreement and is liquidated. Another matter, the Collins matter, is a non -
contingency claim in the amount of R20 020.00 which has been only partially paid; that
amount too is fixed and liquidated. In addition, the founding papers identify a number
amount too is fixed and liquidated. In addition, the founding papers identify a number
of Road Accident Fund matters in which the contingency precondition has been
triggered by capital payments from the Road Accident Fund to the second respondent,
and the corre sponding fee components are sufficiently certain to qualify as liquidated
for purposes of section 9(1). Even on the most cautious view, the cumulative amount
11 Sections 9(1) and 9(2) of the Insolvency Act.
12 Blakes Maphanga Inc v Outsurance Insurance Co Ltd 2010 (4) SA 232 (SCA); Rabani & Schoeman Inc v Engela
(1022/2018) [2020] ZAGPPHC (20 April 2020); Uniform Rule 69 of the Uniform Rules of Court.
13 Kleynhans v Van der Westhuizen NO 1970 (2) SA 742 (A) at 749F to G.
9
of liquidated indebtedness comfortably exceeds the statutory minimum. I consider that
the applicant has accordingly established locus standi as a sequestrating creditor.
Acts of insolvency
[19] The next issue to be considered is whether an act of insolvency or factual
insolvency has been proved. If either section 8(c) or section 8(g), on which the applicant
relies, were established prima facie , it would not be necessary to consider factual
insolvency. If neither is established, the applicant must establish factual insolvency on
a prima facie basis. I take the alleged acts of insolvency first.
[20] Section 8(c) of the Insolvency Act requires proof that the debtor has made or
attempted to make a disposition of property which has had, or would have had, the effect
of prejudicing creditors or preferring one creditor above another. 14 A “disposition” is
defined in section 2 of the Insolvency Act as a transfer or abandonment of rights to
property, and includes a sale, lease, mortgage, pledge, delivery, payment, release,
compromise, donation or any contract therefor. Absent such a disp osition, the section
is not engaged. A failure to pay a creditor, even a persistent failure, does not in itself
constitute a disposition.15
[21] On the founding papers, no primary facts are pleaded which establish a
disposition, as defined. The averments are that the second respondent received, or
was entitled to receive, payments from the Road Accident Fund on behalf of clients, that
those funds were paid into the second respondent's trust account, and that the
applicant's invoices were not paid. Payment of trust monies , in accordance with the
client's mandate , to that client in whose name the trust account is held , is not a
disposition of the attorney's own property within the meaning of section 8(c). Where, by
contrast, an attorney draws on a trust account to discharge his own personal liabilities
or to benefit his own estate, that may constitute a disposition for purposes of the
or to benefit his own estate, that may constitute a disposition for purposes of the
impeachment pro visions in the Insolvency Act. 16 No such transaction has, however,
14 Section 8(c) of the Insolvency Act, read with the definition of “disposition” in section 2.
15 De Villiers NO v Maursen Properties (Pty) Ltd 1983 (4) SA 670 (T) at 676A to E; Mars The Law of Insolvency in
South Africa 10 ed (2019) at para 4.4. See also Stratford above n 5 at para 11.
16 De Villiers NO v Kaplan 1960 (4) SA 476 (C); Wypkema v Lubbe 2007 (5) SA 138 (SCA); Van Wyk Van
Heerden Attorneys v Gore NO [2022] ZASCA 128.
10
been pleaded on the founding papers. The averments are confined to the receipt of
moneys from the Road Accident Fund into the second respondent’s trust account and
the non -payment of the applicant's invoices The applicant's complaints about an
asserted lavish lifestyle, an expensive lunch at a well -known hotel, and a luxury motor
vehicle are not pleaded as identifiable dispositions of the first respondent's property in
favour of any creditor. No specific tran saction is identified that has the effect of
preferring one creditor above another. The evidential material to support a conclusion
of an act of insolvency founded on section 8(c) is absent. T o reach a conclusion of
disposition on the present pleadings would require speculation. Section 8(c) has
therefore not been engaged.
[22] Section 8(g) of the Insolvency Act requires that the debtor “gives notice in writing
to any one of his creditors that he is unable to pay any of his debts”. 17 The applicant
invokes the provision in respect of a written communication received from the first
respondent in mid -December 2022, in which the first respondent is said to have
responded to a payment enquiry by suggesting that the festive period not be “ spoiled”,
and that the matter could be resolved in January 2023. An invitation, however informal,
to defer a payment discussion past the festive period is not a notice of inability to pay.
It is a request for forbearance. Section 8(g) is concerned with an unequivocal admission
of inability to pay any debts. The communication relied upon is neither unequivocal nor
an admission of inability to pay any debts. Section 8(g) has therefore not been engaged
either.
[23] In my view it follows that neither of the pleaded acts of insolvency under section
8 has been established. Because no act of insolvency has been proved, the applicant
must show factual insolvency, even if only on a prima facie basis at this provisional
stage.
17 Section 8(g) of the Insolvency Act.
11
Factual insolvency
[24] The applicant pleads, in the alternative, that the first respondent is factually or
commercially insolvent. At the provisional stage the applicant need only establish such
insolvency on a prima facie basis, but “factual insolvency” continues to mean that the
first respondent's liabilities exceed his assets. This is not a matter of inference lightly
drawn. As Caney J observed in Bishop v Baker, quoting Wessels J in Ohlsson's Cape
Breweries Ltd v Totten , “The Court must not be left to conjecture” and “the applicant
must show clearly that the [debtor's] liabilities exceed his assets”. 18 The point was put
in similar terms by Feetham J in Bhyat v Khurishi, as endorsed in Bishop v Baker: “There
may be grounds for suspicion, even strong suspicion that the respondent is insolvent,
but … before an order can be made against a respondent the facts must be clearly
proved.”19
[25] The applicant has not proved factual insolvency, even prima facie . The
applicant frankly concedes that he is not privy to the books, records or documents of
the first or the second respondent, and is left to speculate on the state in which they are.
He concedes also that he is unaware of the numeric value of the first and second
respondents' assets. There is no disclosure of the first respondent's assets, no
quantification of his liabilities, and no evidential material from which the Court can
assess his financial position. What is advanced is a pattern of non -payment, a
perceived pattern of evasive conduct, and inferences from a perceived affluent lifestyle.
These facts, taken at their highest, may give rise to suspicion, but they do not establish
that the first respondent's liabilities exceed his assets.
Advantage to creditors
[26] For completeness, however, I deal briefly with the requirement of advantage to
creditors. Even if the applicant had established the commission of an act of insolvency,
or factual insolvency, the application would in any event have failed because the
or factual insolvency, the application would in any event have failed because the
applicant has not proved an advantage to creditors, even prima facie.
18 Bishop v Baker at 683G to 684A, applying Ohlsson's Cape Breweries Ltd v Totten 1911 TPD 48 at 50.
19 Bishop v Baker at 684A to B, applying Bhyat v Khurishi 1929 TPD 896 at 901.
12
[27] This requirement has been considered in Friedman, and approved in Stratford.
The applicant must show, on a prima facie basis, that there is a reasonable prospect,
not necessarily a likelihood but a prospect not too remote, that some pecuniary benefit
will result to creditors.20 As Stratford makes plain, the meaning of “advantage” is broad
and is not to be rigidified, but the test still requires a rational evidential foundation, and
is not satisfied by speculation. 21 It is not necessary for the applicant to establish the
existence of presently identifiable assets. It may be enough that there are facts which
give rise to a rational inference that assets may be discovered, recovered or realised
through the processes o f sequestration. But the prospect of an advantage must be
grounded in objective primary facts.22The applicant pleads several grounds for inferring
advantage to creditors. They are that a trustee could enquire into the first respondent's
affairs, deal with pending litigation more effectively, invoke section 23(5) of the
Insolvency Act, realise the practice as a going concern, and impeach past dispositions.
These submissions are not anchored in primary facts on the present record. The most
concrete material is the assertion that payments of approximately R19.3 million in four
matters have been receiv ed into the trust account of the practice on behalf of clients.
Trust receipts of clients' damages are, however, not assets of the first respondent's
personal estate. They belong to the trust beneficiaries, namely the clients, save for any
contingency-fee component earned by the practice, which would constitute fee income
of the first respondent qua sole proprietor. The applicant has pleaded neither what has
become of that fee component, nor what the first respondent's personal estate consists
of, nor any primary facts pointing to impeachable transactions or to a realistic prospect
of, nor any primary facts pointing to impeachable transactions or to a realistic prospect
of recovery for the general body of creditors. What is advanced is, at best, a possibility
that further enquiry might reveal something of value. That is the very speculation
against which the Friedman standard guards. Advantage to creditors has accordingly
not been proved, even prima facie.
The relief against the fourth respondent
[28] The notice of motion seeks, in the alternative to relief against the first and
second respondents, an order directing the fourth respondent to disclose its financial
records reflecting all payments made in favour of, or received from, the Road Accident
20 Friedman at 559; Stratford at [43].
21 Stratford at [44] to [45].
22 Stratford at [44] to [45]; Friedman at 559.
13
Fund in thirteen identified matters. The pleaded basis for that relief is, in substance,
that the applicant has had no contact with the first respondent for some months, that he
is unable to verify whether the second respondent has in fact received funds from the
Road Accident Fund, and that the fourth respondent could “assist this Honourable
Court” by producing the relevant records. No statutory right to disclosure is invoked,
and no contractual or fiduciary nexus between the applicant and the fourth res pondent
is pleaded.
[29] I have come to the conclusion that the pleaded basis does not establish a legal
entitlement to the relief sought.
[30] First, discovery is generally not available in motion proceedings. Rule 35(13)
of the Uniform Rules of Court provides that the rules relating to discovery apply to motion
proceedings only insofar as the court may direct, and such a direction will be made only
in exceptional circumstances. 23 An applicant who selects motion proceedings to
vindicate his rights bears the consequences of that election, including the principle that
the applicant must make out his case in the founding papers and not by a fishing
expedition through documents in the possession of others. The principle applies a
fortiori where, as here, the disclosure is sought from a third party that is not a debtor
and against which no substantive relief is competent.
[31] Secondly, the access of a private litigant to information held by a public body is
regulated by the Promotion of Access to Information Act 2 of 2000. Section 11 of that
Act creates a right of access to records of a public body, subject to procedural
requirements set out in sections 18 to 22, and subject to the grounds for refusal set out
in Chapter 4. 24 The fourth respondent is a public body, and the records sought are
records of the fourth respondent. The Promotion of Access to Information Act provides
the statutory framework for access to such records, including the safeguards built in for
the statutory framework for access to such records, including the safeguards built in for
the protection of the personal information of third parties (the underlying claimants in
those matters). The applicant has not invoked that framework. He has elected, instead,
23 Rule 35(13) of the Uniform Rules of Court; Saunders Valve Co Ltd v Insamcor (Pty) Ltd 1985 (1) SA 146 (T) at
148I to 149H; Moulded Components and Rotomoulding South Africa (Pty) Ltd v Coucourakis 1979 (2) SA 457 (W)
at 470A to D.
24 Promotion of Access to Information Act 2 of 2000, section 11 (records of public bodies) read with sections 18 to
22 (procedural requirements).
14
to seek an order from this Court that the records be disclosed in motion proceedings, in
circumstances where neither he nor the underlying claimants have followed the
procedure that the Legislature has specifically provided. I do not think that a court would
lightly bypass the considered statutory regime by granting ad hoc disclosure in motion
proceedings, particularly where, as here, the rights and interests of third parties (the
underlying claimants) are at stake.25
[32] Thirdly, even within the four corners of the Insolvency Act, the applicant's
complaint is misconceived. Sections 64 to 66 of the Act provide for the interrogation of
the insolvent and others, and for the production of documents, after sequestration,
before the Master and the trustee. 26 Those provisions exist precisely because pre -
sequestration discovery is not the way to interrogate an alleged debtor's affairs. The
applicant has, in effect, sought to deploy the sequestration procedure as a vehicle for
pre-sequestration discovery. To conflate the requirements for sequestration, which the
applicant must meet on the founding papers, with the post-sequestration enquiry, which
becomes available only once the requirements have been met and an order for
sequestration has been made, is impermissible.
[33] For these reasons, the alternative relief against the fourth respondent must be
dismissed. In view of that conclusion, it is unnecessary to deal further with the additional
defences raised by the fourth respondent, including non-joinder of the affected plaintiffs
and the privacy and personal-information considerations advanced.
[34] The fourth respondent made certain observations adverse to the first and
second respondents, including the absence of proper accounting on their part. Those
observations do not alter the outcome. The fact that the first – and second respondents
may have explained themselves poorly, or may owe duties of accounting to the
may have explained themselves poorly, or may owe duties of accounting to the
applicant, does not create a right to sequestration where the statutory requirements are
not met.
25 Section 34 of the Promotion of Access to Information Act, read with the Protection of Personal Information Act 4
of 2013.
26 Sections 64 to 66 of the Insolvency Act.
15
Costs
[35] The ordinary rule is that costs follow the result. 27 The first and second
respondents, although their answering affidavit was materially defective in form, have
successfully resisted the sequestration application on the merits. There is no reason to
depart from the ordinary rule in their favour. The four th respondent, although not
represented at the hearing, was put to the cost of opposing the alternative relief, which
the applicant did not unequivocally abandon, and which therefore remained live on the
papers. It is entitled to its costs of opposition.
Conclusion
[36] The applicant has established locus standi as a creditor with a liquidated claim
against the first respondent for an amount well in excess of the statutory minimum. But
the citation of “Malepe Attorneys” as a separate juristic person was incompetent, as the
second respondent has no estate distinct from that of the first respondent. As against
the first respondent, the applicant has not established a disposition contemplated by
section 8(c), nor a notice of inability to pay any debts contemplated by sectio n 8(g).
Because no act of insolvency has been established prima facie , the applicant was
required to establish factual insolvency on a prima facie basis, and he has not done so.
Each of these failures, on its own, is fatal to the application for provisional sequestration.
Advantage to creditors has not been established either. The alternative relief against
the fourth respondent is also unsustainable.
[37] The application accordingly falls to be dismissed.
ORDER
The following order is made:
27 Ferreira v Levin NO and Others; Vryenhoek and Others v Powell NO and Others 1996 (2) SA 621 (CC) at [3].