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IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)
Not reportable
Case Number: 16432/2022
In the matter between:
FREDERICK CHRISTOFFEL GREEFF Applicant
and
JAMES OPENSHAW ZERVAS Respondent
Coram: Greig AJ
Heard: 25 November 2025
Delivered: 18 May 2026
Summary: Compulsory sequestration — act of insolvency in terms of s 8(b) of
Insolvency Act 24 of 1936 — nulla bona return — return referring only to
movable and not to disposable property — no act of insolvency established.
Factual insolvency — judgment debt unpaid — rescission proceedings
dismissed — onus on debtor to rebut prima facie case not discharged — factual
insolvency established. Advantage to creditors — respondent alleges he owns
no assets, earns only an income — director of eight companies and trustee of
various trusts — trustee would be empowered to investigate — advantage to
creditors established. Provisional sequestration order granted.
ORDER
(a) The estate of the respondent is placed under provisional sequestration,
and the respondent and all interested persons are called upon to show
cause on a date to be allocated by the Registrar why:
(i) The estate of the respondent should not be finally sequestrated.
(ii) Costs should not be costs in the insolvent estate of the respondent.
(b) The provisional order reflecting the date allocated by the Registrar for
the return day shall be served not less than 10 days prior to the return
day:
(i) On the respondent in terms of the Uniform Rules of Court;
(ii) By publication in the Cape Times newspaper and the Government
Gazette;
(iii) On employees and trade unions (if any) in terms of section 9 (4A)(a)
(i) and (ii) of the Insolvency Act 24 of 1936,
(iv) On the South African Revenue Service in terms of section 9 (4A)(a)
(iii) of the Insolvency Act 24 of 1936.
JUDGEMENT
Greig AJ
Introduction
[2] This is an application for the provisional sequestration of the respondent, Mr
Zervas, which was launched on 29 September 2022 and came before me for
hearing on 25 November 2025. The applicant, Mr Greeff, claims locus
standi based on the allegation that Mr Zervas is indebted to him in the
amount of R 590,384.67 arising from a default judgement granted against
Mr Zervas in the Pretoria High Court on 19 November 2021.
[3] Mr Greeff claims that Mr Zervas committed an act of insolvency in terms of
section 8(b) of the Insolvency Act on the basis of a nulla bona return from
the Sheriff.
[4] Mr Greeff further avers that Mr Zervas is in any event factually insolvent
based primarily on the default judgement against him which still remains
unpaid.
[5] Mr Zervas denies that he committed any act of insolvency, taking issue with
the Sheriff’s nulla bona which forms the basis of this allegation. He further
denies factual insolvency.
[6] The application was initially set down on 24 April 2025 and was, on that
date, postponed by agreement for hearing on 25 November 2025.
MASTER’S CERTIFICATE
[7] Mr Zervas took a point in limine at the hearing that the application should be
dismissed on the basis that no certificate of the master was lodged 10 days
before the petition in terms of section 9(3)(b) of the Insolvency Act.
[8] Counsel for Mr Greeff adopted the stance that the security bond sufficed,
and also offered to stand the matter down for two days until 28 November to
procure the certificate and continue with the argument then. I declined to
stand the matter down for this purpose and suggested that the document be
procured and placed on file, and that if the parties wished to make further
submissions in this regard, they could do so.
[9] The relevant Master’s certificate was placed on the file under cover of an
email from Mr Greeff’s correspondent attorneys stating that ‘both parties are
in agreement that a further appearance before Judge is not necessary’.
[10] It was held in Court v Standard Bank of SA Ltd; Court v Bester NO and
Others1 that what is required by the subsection is that security must have
been given before the matter is heard and that the security certificate shall
then accompany the application . In this regard the security required by the
subsection is not security for the costs of opposition incurred by the
respondent, but the costs of the Master and the Sheriff.
[11] My view is firstly that the bond of security should suffice for this purpose,
as submitted by counsel for Mr Greeff.
[12] Even if the above is not correct, I do not think that the provision of the
Master’s certificate in the circumstances described above, shortly after the
hearing and before judgement, alters the position. The purpose of the section
is nonetheless fulfilled.
[13] Moreover, to the extent that condonation is required, section 157(1) of the
Insolvency Act provides that:
‘nothing done under this Act shall be invalid by reason of a formal defect or irregularity,
unless a substantial injustice has been thereby done, which in the opinion of the court
cannot be remedied by any order of the court’.
1 Court v Standard Bank of SA Ltd; Court v Bester NO and Others 1995 (3) SA 123 (A)
[14] There is no prejudice to Mr Zervas, and no basis for prejudice was
advanced at the hearing; accordingly, condonation for the late filing of the
Master’s certificate is granted.
SEQUESTRATION: LEGAL PRINCIPLES
[15] For a sequestration order to issue in terms of the Insolvency Act 2 the
applicant must satisfy the Court that prima facie the petitioner has
demonstrated a liquidated claim of at least R100, that the respondent has
committed an act of insolvency or is insolvent, and that there is reason to
believe that it will be to the advantage of creditors if the respondent is
sequestrated.3
Act of Insolvency
[16] In the present matter Mr Greeff relies on section 8(b) of the Insolvency Act
which provides that a debtor commits an act of insolvency:
‘if a court has given judgment against him or her and he or she fails, upon the demand of
the officer whose duty it is to execute that judgment, to satisfy it or to indicate to that
officer disposable property sufficient to satisfy it or, if it appears from the return made by
that officer, that he or she has not found sufficient disposable property to satisfy the
judgment.’
[17] This subsection contemplates two separate acts of insolvency; the one with,
and the other without, presentation of the writ to the debtor.4
[18] The creditor must set out the facts necessary for establishing either of the
two acts of insolvency. Neither the words ‘ nulla bona’ nor the precise form
of the document on which they appear are of importance, however.5
2 Insolvency Act 24 of 1936
3 Section 9(1) and 10 of the Insolvency Act 1936.
4 Corner Shop (Pty) Ltd v Moodley 1950 4 SA 55 (T) 56
[19] A return that refers only to movables or movable property is not adequate
for the purposes of the section. If a return is to be relied on as proof of an act
of insolvency, it must indicate that the sheriff has found no disposable
property of any nature. 6 However (for example) words appearing after the
preamble in a return to the effect that the debtor answered that he or she had
no money, property, or assets with which to satisfy the writ or any portion of
it, would be sufficient to cover all disposable property, and returns
containing these or similar words have been held to be acceptable to
establish an act of insolvency in terms of the section.7
[20] If a debtor wishes to avoid the adverse results of a nulla bona return, they
should indicate the nature and whereabouts of any disposable assets.8
Factual insolvency
[21] Mr Greeff further relies on factual insolvency. Factual insolvency may be
proved by setting out such facts from which the inference can be drawn that
the respondent's liabilities exceed his assets. In ABSA Bank Ltd v
Rhebokskloof (Pty) Ltd 1993 (4) SA 436 (C) the Court held at 443E as
follows:
‘Even, however, where a debtor has not committed an act of insolvency and it is
incumbent on his unpaid creditor seeking to sequestrate the former's estate to establish
actual insolvency on the requisite balance of probabilities, it is not essential that in order
to discharge the onus resting on the creditor if he is to achieve this purpose that he set out
chapter and verse (and indeed figures) listing the assets (and their value) and the
liabilities (and their value) for he may establish the debtor's insolvency inferentially.
There is no exhaustive list of facts from which an inference of insolvency may be drawn,
5 Lotzof v Raubenheimer 1959 1 SA 90 (O) at 92
6 Natalse Landboukoöperasie Bpk v Moolman 1961 3 SA 10 (N) at 11.
7 Amalgamated Hardware & Timber (Pty) Ltd v Wimmers 1964 2 SA 542 (T) at 543.
7 Amalgamated Hardware & Timber (Pty) Ltd v Wimmers 1964 2 SA 542 (T) at 543.
8 Fairweather, Castignani & Holmes Motor Distributors Ltd v Grobler 1966 2 SA 326 (O) at 328
as for example an oral admission of a debt and failure to discharge it may, in appropriate
circumstances which are sufficiently set out, be enough to establish insolvency for the
purpose of the prima facie case which the creditor is required to initially make out. It is
then for the debtor to rebut this prima facie case and show that his assets have a value
exceeding the sum total of his liabilities.’
[22] In a similar vein Binns-Ward J in this division held:
‘it is not incumbent on an applicant relying on factual insolvency to adduce evidence that
would enable the respondent’s assets and liabilities to be finitely determined in rands and
cents. It would be a rare case, other than in the context of so -called friendly
sequestrations, for an applicant to be able to do that. It is well established that an
applicant can discharge the onus of establishing a prima facie case on the basis of factual
insolvency by adducing sufficient evidence to justify the inference as a matter of
probability that the respondent is insolvent. Once the applicant does that, the respondent
attracts an evidential onus to rebut the inference by showing that [they] possess sufficient
assets to be able to settle his liabilities… A strong and persuasive indicator of insolvency
is the failure by respondent to pay his debts…’9
Advantage to creditors
[23] The legal standard applicable to this enquiry is well settled. In Stratford
and Others v Investec Bank Ltd and Others 10 the Constitutional Court held
as follows:
‘The meaning of the term ‘advantage’ is broad and should not be rigidified… 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. Meskin et al state
that — ‘the relevant reason to believe exists where, after making allowance for the
anticipated costs of sequestration, there is a reasonable prospect of an actual payment
anticipated costs of sequestration, there is a reasonable prospect of an actual payment
being made to each creditor who proves a claim, however small such payment may be,
unless some other means of dealing with the debtor’s predicament is likely to yield a
9 Ullman Sails (Pty) Ltd and others v Jannie Reuvers Sails (Pty) Ltd and related matters [2022] 3 All
SA 290 (WCC).
10 Stratford and Others v Investec Bank Ltd and Others 2015 (3) SA 1 (CC)
larger such payment. Postulating a test which is predicated only on the quantum of the
pecuniary benefit that may be demonstrated may lead to an anomalous situation that a
debtor in possession of a substantial estate but with extensive liabilities may be rendered
immune from sequestration due to an inability to demonstrate that a not -negligible
dividend may result from the grant of an order.’11
ACT OF INSOLVENCY AND NULLA BONA RETURN
Section 8 (b) of the Insolvency Act
[24] The parties accept the authorities in paragraph [17] above which are to the
effect that in terms of section 8 (b) of the Insolvency Act two distinct acts of
insolvency are established, viz.:
(a) The debtor fails, upon the demand of the Sheriff, to satisfy the judgement
or indicate sufficient disposable property to satisfy the judgement; and
(b) It appears from the return made by the Sheriff that he has not found
sufficient disposable property to satisfy the judgement.
The nulla bona return in this case
[25] In this case the Sheriff’s return dated 20 July 2022 stated in relevant part as
follows:
‘On 20 July 2022 at 11:00 I, E Josias attempted unsuccessfully to execute the above Writ
…against JAMES OPENSHAW ZERVAS, the Second Defendant, at UNIT […], K[...]
W[...] B[...] ESTATE, […] K[...] CRESCENT, PLATTEKLOOF. This was due to the
fact that at service address I could not find any movable property to attach to satisfy the
writ amount, Mr James Openshaw Zervas could neither point out any movable assets that
I could attach. This was after I demanded the payment of the writ amount and Mr Zervas
was unable to pay it. Further be advised that Mr Zervas refused to sign the Nulla Bona
certificate. (please see attached Nulla Bona certificate)’.
11 At para 44.
[26] The ‘Nulla Bona certificate’ attached to the return stated:
‘I James Openshaw Zervas being the judgement debtor/ representative of the judgement
debtor* against whom the relevant judgement has been given, acknowledge that the
*sheriff / deputy sheriff served on me a copy of the warrant in the above matter after
exhibiting the original and explaining the nature and the contents thereof to me. He
demanded from *me / the judgement debtor payment of the amount due thereunder to
satisfy the judgement I informed him that *I / the judgement debtor did not process
(possess) any disposable property to satisfy die judgement
The consequences of signing the certificate, inter alia that - My I the judgement debtor’s
estate could be *sequestrated / liquidated…have been explained to me’.
[27] The above certificate was not signed by the respondent. The word ‘process’
is in typescript whilst the word ‘possess’ (possibly a correction, though the
papers do not mention that it is contemporaneous) is written in parentheses
in handwriting below.
Alleged execution of the writ at the incorrect address
[28] Mr Zervas states that the address in the writ is incorrect, as the respondent
resides at […] K[...] Crescent, B[...]. In reply, however, the applicant insists
that the respondent resides at […] K[...] W[...].
[29] The respondent argues that several factors militate against this version
being sustained. Firstly, Mr Zervas states that in the applicant’s particulars
of claim the address is listed as […] K[...] Drive. Though this is also not
correct (the correct address according to the respondent is K[...] Crescent),
Mr Zervas nonetheless submits that this shows that the applicant knew that
the respondent’s address was not K[...] W[...] , as was also conveyed via
email on 3 November 2021.
[30] Mr Zervas further disputes the correctness of the return on the basis that he
says the sheriff did not attend at this address at all, but instead met with the
respondent at an agreed location, whereupon the return was issued. Few
details as to this odd interaction with the Sheriff are, however, supplied.
Failure on demand to satisfy the judgement or to indicate sufficient
disposable property to satisfy the judgement
[31] Mr Zervas submits that the Sheriff’s return does not state that he demanded
that Mr Zervas point out sufficient disposable property, as is required by
section 8 (b), but instead merely records a demand for payment and the fact
that Mr Zervas could not point out movable assets for the Sheriff to attach.
[32] Mr Zervas submits that for the nulla bona return to serve as a basis for an
act of insolvency it was necessary that the Sheriff demanded sufficient
disposable property (i.e. not just movable property). Though mention of
such a demand is not required where Mr Zervas replied that he had nothing
to attach,12 the respondent submits that this is not the case where the demand
cannot be inferred from the return itself.
[33] I agree with this submission. I doubt that the document can be so
generously interpreted as Mr Greeff contends. As the extract quoted in
paragraph [26] above also makes clear, various options in the document,
evidently intended to be struck out by hand if not applicable, were simply
ignored. More significantly, the word ‘possess’ was inserted in handwritten
parentheses at some unspecified time to replace the word ‘process’; this
addition is not countersigned by the deputy sheriff or the respondent.
[34] It is so that the certificate does refer to ‘disposable property’. However, the
return states that ‘Mr Zervas refused to sign the nulla bona certificate’. If the
certificate had been duly completed and signed, it may have supplemented
the return’s incorrect reference to ‘movable property’, bearing in mind that
12 Lotzof v Raubenheimer 1959 (1) SA 90 (O) at 93C.
the precise form of the document is not decisive. 13 But I doubt that the
unsigned document can serve this purpose.
[35] It is further significant that no affidavit was filed by the deputy sheriff
attempting to explain these issues, and therefore the facts to exercise a
discretion in favour of the applicant are simply not available. In ABSA v
Collier14 the sheriff filed an affidavit confirming certain details in the return
of service after these were disputed by the respondent. The court, despite
this, held that the sheriff’s affidavit was not sufficiently clear or precise and
did not address the respondent’s challenge to the return. In this case, as the
respondent points out, ‘the applicant has not even bothered to procure an
affidavit from the sheriff.’
[36] On this first ground, therefore, I am inclined to the view that an act of
insolvency has not been established. The nulla bona return and the attached
‘certificate’ have manifold irregularities on their face. The return itself refers
only to ‘movable property’ and not to ‘disposable property’. Whilst the
certificate attached to the nulla bona return does refer to ‘property’ and not
merely ‘movable property’, it was unsigned and the word ‘process’ is used,
with the word ‘possess’ replacing it in handwriting at some unspecified
time.
[37] The value of this unsigned certificate as indicating that a demand for
‘disposable property’ was made is therefore negligible.
[38] Counsel for the respondent relied on Amalgamated Hardware & Timber
(Pty), Ltd v Wimmers 15 which confirmed that it is insufficient under section
8 (b) of the Act to establish an act of insolvency where the return establishes
13 Lotzof v Raubenheimer 1959 1 SA 90 (O) at 92
14 Absa Bank Ltd v Collier 2015 (4) SA 364 (WCC)
15 Amalgamated Hardware & Timber (Pty), Ltd v Wimmers 1964 (2) SA 542 (T)
a failure to find movables only. See further M Mendelsohn and Son (Pty) Ltd
v Kohler16 which is to the same effect.
[39] Accordingly on the first ground in section 8(b) I hold that no act of
insolvency has been established.
Whether it appears from the return that the Sheriff has not found
sufficient disposable property to satisfy the judgement
[40] As to the second ground in section 8 (b), the respondent submits that the
writ directed the sheriff to execute the judgement at the incorrect address, as
I have stated above. The submission amounts to a contention that the
execution of the warrant at an address other than that reflected in the writ,
where disposable property was not ‘found’ to satisfy the judgement, would
be insufficient to establish a ground of insolvency.
[41] Firstly, the sheriff’s return must be taken to be prima facie correct. It states
that the address was ‘Unit […], K[...] W[...] B[...] Estate, […] K[...]
Crescent, Plattekloof’. Whilst the reference to ‘ K[...] W[...] ’ may be
incorrect, as Mr Zervas contends, the return still refers to […] K[...]
Crescent, B[...] Estate, which the respondent says is correct. This error – the
inclusion of ‘ K[...] W[...]’ – to my mind does not deal a mortal blow to the
contention that the Sheriff attended at the Mr Zervas’ premises – especially
as the respondent’s version by no means displaces it, and raises more
questions than it answers.
[42] The version presented by Mr Zervas as to his interactions with the Sheriff
lacks plausible detail:
‘the Sheriff did call me on 8 July 2022 to ascertain my whereabouts and I advised him
that I would be back from Plettenberg Bay where I was on holiday at the time on 18 July
16 M Mendelsohn and Son (Pty) Ltd v Kohler 1979 (4) SA 839 (O).
2020 [sic: 2022]… On 20 July 2022, two days after returning from Plettenberg Bay, I
called the Sheriff and was informed that he was out serving documents, but could
provide me with the writ of execution. I then met him at a mutually agreed location
where he handed the writ of execution to me. The Sheriff did not attend the premises
known as Unit 1, K[...] W[...], B[...] Estate on 20 July 2022 as indicated on the return of
service.’
[43] If it was so that the sheriff arranged to meet Mr Zervas at ‘ a mutually
agreed location’, after which he (the Sheriff) reflected the wrong address in
his return, one would expect more details to have been provided by Mr
Zervas about these interactions, particularly as the version carries with it the
implication that the return of service was deliberately fabricated after the
fact by the Sheriff, an officer of this Court. Little of the substantiating detail
which one would expect to accompany a serious accusation of this nature is
provided by Mr Zervas. For instance, where was the ‘ mutually agreed
location’? What conversation took place there? Was anyone else present?
Why has this dishonest conduct not been reported to the Board of Sheriffs?
[44] These omissions are particularly stark given the fact that the respondent
was legally represented and would have been advised that it was incumbent
upon him to provide all the relevant detail in the answering affidavit. 17
[45] These factual issues, however, do not require to be determined. Section
8(b) of the Insolvency Act requires personal service only and it does not
state where such service has to take place.18
[46] In any event, the return, as I have mentioned, is at best equivocal as to
whether the Sheriff sought ‘disposable property’ or only movable property.
The applicant has not caused a clarificatory affidavit to be filed by the
17 Wightman t/a JW Construction v Headfour (Pty) Ltd and Another 2008 (3) SA 371 (SCA) at para
13.
18 See Beira v Raphaely-Weiner and Others 1997 (4) SA 332 (SCA) at 338.
deputy sheriff, E Josias, to address this issue, as one would expect.
Accordingly, I also find that on the second ground in section 8(b), no act of
insolvency is established on these papers.
FACTUAL INSOLVENCY
Is factual insolvency established?
[47] Mr Zervas admits that he does not own any immovable property in his
personal capacity but claims to earn a substantial income of approximately
R150,000.00 per month as a property developer.
[48] As to the debt owed to Mr Greeff, Mr Zervas at the time of deposing to the
answering affidavit stated that he was in the process of finalising the
application for rescission of the judgement, which rescission he suggested
held ‘excellent prospects of success’. On this basis, he stated that he did not
owe Mr Greeff anything.
[49] In reply, Mr Greeff pointed out that, on 10 January 2022, Mr Zervas, in a
letter from his attorneys, indicated that he would be launching an application
for rescission of the judgement. However, despite this, the rescission had not
been launched by the time of the deposition of the replying affidavit on 28
November 2022, and accordingly, the prospects of success of the rescission
were negligible.
[50] However, by the time that the matter came before me many of these issues
had been overtaken by events. In particular, in a judgement of the Gauteng
High Court, per Mooki AJ, Mr Zervas’ application for rescission was
dismissed on 31 August 2023.
[51] The judgement of Mooki AJ relates how Mr Zervas sought rescission on
two bases: Rule 42(1)(a) and, in the alternative, the common law. As to Rule
42(1)(a), the court held that the application failed at the first hurdle: the
default judgment had not been granted in the applicant's absence. Mooki AJ
found that Mr Zervas had been informed of the application for default
judgment, and served with the application on 4 October 2021 at an email
address he himself had nominated. Mr Zervas was also informed that the
matter would be heard on 19 November 2021, and was in fact present in
court when default judgment was granted.
[52] As to the common law basis, Mooki AJ found that Mr Zervas had provided
no satisfactory explanation for his default, noting in particular that his
allegation of ignorance of the proceedings was contradicted by his own
conduct. His prescription defence was unsound as prescription had been
interrupted by the issue of summons, and the later amendment of the
particulars of claim had no bearing on the issue.
[53] Mr Zervas’ application for leave to appeal was likewise dismissed by
Mooki AJ on 14 August 2024.
[54] Despite the above Mr Zervas’ counsel submitted at the hearing that this
court is in the dark about what has happened since the leave to appeal was
dismissed in August 2024, and that Mr Greeff ought to have filed a
supplementary affidavit to address current circumstances. Reliance was
further placed on Corner Shop (Pty) Ltd v Moodley 19 for the proposition that
the mere failure to pay a debt, in the absence of an act of insolvency, does
not without more establish factual insolvency.
[55] I am not persuaded by these submissions. The passage in Corner Shop20 on
which the respondent relies must be understood in context: it cautions
against drawing an inference of insolvency too readily where the failure to
pay admits of an innocent explanation or merely some ‘temporary financial
19 Corner Shop (Pty) Ltd v Moodley 1950 (4) SA 55 (T)
20 Corner Shop (Pty) Ltd v Moodley 1950 (4) SA 55 (T)
embarrassment’. Before 14 August 2024, when judgement was handed
down in the application for leave to appeal, Mr Zervas’ explanation for non -
payment was that he was challenging his liability for the default judgement
by way of rescission proceedings. However, after his application for leave to
appeal against the unsuccessful rescission was dismissed on 14 August
2024, and no further steps were taken, that explanation fell away entirely.
[56] What the respondent's submission based on Corner Shop21 overlooks is that
it is not the applicant's burden to explain the respondent's continued failure
to pay. The applicant has established a prima facie case of factual
insolvency, grounded in the existence of an undisputed judgment debt and
Mr Zervas’ failure to pay it over a period that now spans several years. In
the passage from ABSA Bank Ltd v Rhebokskloof (Pty) Ltd 22 quoted in
paragraph [21] above , the court confirmed that, once a creditor has
established a prima facie case, it is then for the debtor to rebut this prima
facie case and show that his assets have a value exceeding the sum total of
his liabilities.
[57] The respondent has plainly not discharged that burden. His answering
affidavit contains no more than a bare assertion that he earns ‘a substantial
income of approximately R 150,000 per month as a property developer’, and
that the fact that ‘he does not own substantial movable and immovable
property’ does not render him insolvent, and that he is ‘able to pay all his
debts.’
[58] The above assertions are made without producing a single bank statement,
financial statement, or other documentary proof. In Wightman t/a JW
Construction v Headfour (Pty) Ltd 23 the Supreme Court of Appeal held that
21 Corner Shop (Pty) Ltd v Moodley 1950 (4) SA 55 (T)
22 ABSA Bank Ltd v Rhebokskloof (Pty) Ltd 1993 (4) SA 436 (C)
23 Wightman t/a JW Construction v Headfour (Pty) Ltd 2008 (3) SA 371 (SCA)
where the facts averred lie within the peculiar knowledge of the disputing
party, a bare denial will not suffice. The respondent’s financial position is a
matter peculiarly within his own knowledge, and his failure to place any
supporting evidence before the court is fatal to his opposition on this
ground.
[59] The staleness argument, moreover, is a double -edged sword. The passage
of time since the founding papers were filed, in which intervening period the
rescission of judgement has now been finally dealt with adversely to Mr
Zervas, significantly deepens the inference of insolvency. If the respondent's
circumstances had changed for the better since 2022, and if he were now in a
position to pay the judgment debt or to demonstrate convincingly that his
assets exceed his liabilities, one would have expected him to say so, and
provide substantiation. He has not done so. It is therefore Mr Zervas whose
inaction has allowed the inference of insolvency to calcify into something
approaching certainty.
[60] There is thus now no dispute that the judgment debt is due and payable,
and not a cent of it has been paid. The respondent has offered no credible
explanation for this state of affairs now in existence for several years. On his
own version he has assets in his own name. In these circumstances, the only
reasonable inference is that the respondent’s liabilities exceed his assets and
that he is factually insolvent. This ground for his sequestration is
accordingly established.
Advantage to creditors
[61] Mr Zervas's opposition to this leg of Mr Greeff's case is, in substance, that
sequestration would disqualify him from holding directorships, thereby
eliminating the very income stream from which he claims to pay his debts,
and that the sequestration would accordingly harm rather than benefit
creditors. He further submits that no other creditors are identified as
standing to benefit from the order. Neither of these contentions survives
scrutiny.
[62] As held in Meskin & Co v Friedman24
‘The facts put before the Court must satisfy it that there is a reasonable prospect - not
necessarily 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’.25
[63] Applying those principles, the following matters are either common cause
or effectively uncontested on the papers. Mr Zervas is an active director of
at least eight private companies and is a trustee of various trusts. He accepts
that he generates income from his directorships and trustee appointments.
[64] That is precisely the situation which justifies the appointment of a trustee
armed with appropriate statutory powers to investigate. A trustee would be
in a position to investigate what has been done with Mr Zervas’ income, to
examine his interests in various trusts and in the companies of which he is a
director, and to lay hands on any assets properly recoverable for the benefit
of creditors. For instance, Mr Zervas states that certain assets were sold to
MJA Concepts (Pty) Ltd, but provides no elaboration.
[65] As Horwitz J observed in Chenille Industries v Vorster ,26 sequestration
places in the hands of creditors ‘superior legal machinery’ which in my view
is precisely what is required in the circumstances presented by these papers.
24 Meskin & Co v Friedman 1948 (2) SA 555 (W)
25 At 559.
26 Chenille Industries v Vorster 1953 (2) SA 691 (O) at 699F
[66] Mr Zervas's submission that his sequestration would eliminate his income
and thereby harm creditors is, in the final analysis, an argument that a debtor
who structures his affairs through companies and trusts can insulate himself
from sequestration by pointing to an income stream from such sources. That
argument cannot be correct. A debtor who says to the court, in effect, ‘trust
me to pay my creditors from my income’, while simultaneously refusing to
honour an undisputed judgment debt for several years, provides no basis for
confidence. In all the circumstances, there is ample reason to believe that the
sequestration of Mr Zervas's estate will be to the advantage of creditors.
Conclusion
[67] In short, the papers establish that Mr Greeff has the necessary locus standi
to bring these proceedings, that Mr Zervas is factually insolvent, and there is
sufficient advantage to creditors arising from his sequestration. Accordingly,
a provisional sequestration order should issue.
Order
[68] I accordingly make the following order:
(a) The estate of the respondent is placed under provisional sequestration,
and the respondent and all interested persons are called upon to show
cause on a date to be allocated by the Registrar why:
(i) The estate of the respondent should not be finally sequestrated.
(ii) Costs should not be costs in the insolvent estate of the respondent.
(b) The provisional order reflecting the date allocated by the Registrar for
the return day shall be served not less than 10 days prior to the return
day:
(i) On the respondent in terms of the Uniform Rules of Court;
(ii) By publication in the Cape Times newspaper and the Government
Gazette;
(iii) On employees and trade unions (if any) in terms of section 9 (4A)(a)
(i) and (ii) of the Insolvency Act 24 of 1936,
(iv) On the South African Revenue Service in terms of section 9 (4A)(a)
(iii) of the Insolvency Act 24 of 1936.
________________________
M GREIG
ACTING JUDGE OF THE HIGH COURT
WESTERN CAPE
Appearances:
For Applicant: Adv. N.G. Louw
Instructed by: Warrener De Agrela and Associates Inc.
For Respondent: Adv. P Gabriel
Instructed by: Neethling Attorneys