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[2012] ZAWCHC 196
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Nedbank Ltd v Fuls and Another (3804/2012) [2012] ZAWCHC 196 (12 November 2012)
REPORTABLE
JUDGMENT
IN
THE HIGH COURT OF SOUTH AFRICA
(CAPE
OF GOOD HOPE PROVINCIAL DIVISION)
Case No: 3804/2012
In the matter between:
NEDBANK LIMITED
.......................................................................................................
Applicant
and
JAN KURT FULS
................................................................................................
First
Respondent
ANITA
FULS
.........................................................................................
Second
Respondent
Counsel
for the Applicant
Adv. C W
Kruger
Counsel
for Respondents
Adv. A De
Wet
Date
of Hearing
1 November 2012
Date
of Judgment
12 November
2012
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE HIGH COURT, CAPE TOWN)
Case
No:3804/2012
In the matter between:
NEDBANK LIMITED
........................................................................................................
Applicant
Versus
FULS,
KURT JAN
...............................................................................................
First
Respondent
(identity
number: )
(married out of
community of property to)
FULS,
ANITA
.................................................................................................
Second
Respondent
JUDGMENT
DELIVERED ON 12 NOVEMBER 2012
MANSINGH,
AJ
[1]
This is an application for the provisional sequestration of the
first respondent.
[2]
The applicant has to convince the court that
prima
facie:
2.1.
it has a liquidated claim;
2.2.
that the debtor has committed an act of insolvency or is factually
insolvent, and
2.3.
that there is reason to believe that it will be to the advantage of
the first respondent’s creditors if his estate
is
sequestrated. (Section 10 of the Insolvency Act 24 of 1936, (“the
Act”).
[3]
Applicant’s case is based on a judgment it holds against the
first respondent for payment of R3 708 929, 49 in terms
of a
Confession to Judgment as contemplated in Rule 31 (1 )(c) of the
Uniform Rules of Court and that first respondent has committed
an
act of insolvency in terms of section 8(b) of the Act.
[4]
The first respondent raised three defences:
4.1.
Applicant’s
locus standi:
(i)
The monthly payments due in terms of the settlement agreement are
being paid punctually by co-sureties to the principal debt
and
consequently the account is not in arrears and therefore the
applicant lacks
locus standi.
(ii)
The provisions of Rule 31 (1 )(c) of the Uniform Rules of Court do
not apply to this judgment obtained under case no. 2011/32613.
4.2.
Advantage to Creditors:
The
sequestration of the first respondent’s estate will not be to
the advantage of his creditors because he has no assets.
4.3.
The Court’s Discretion:
(i)
First respondent will suffer prejudice if his estate is sequestrated
because as a result he
might
be deregistered as a chartered account and will then be unable to
practice his profession.
(ii)
First respondent is being treated unequally to the other signatories
to the ‘indulgence agreement’. That the
application is
vexatious.
(iii)
Applicant holds security for its claim. Again, that the application
is vexatious.
APPLICANT’S
LOCUS STANDI
:
(i)
Account not in Arrears
:
[5]
In order to have
locus standi
in a sequestration application a creditor must have a liquidated
claim, [s 9(1) of the Act]
[6]
For purposes of this application,
“
a
liquidated claim is one sounding in money, the amount of which is
fixed and determined either by agreement, judgment, or otherwise.
”
[7]
Section 9(2) of the Act provides that,
“
A
liquidated claim which has accrued but which is not yet due on the
date of the hearing...shall be reckoned as a liquidated claim...”
[8]
On 9 June 2011, the applicant launched an application for judgment
in the North Gauteng High Court, under case number 32613/11,
against
the respondents and three co-sureties, jointly and severally, the
one paying the other to be absolved, in their capacities
as sureties
and co-principal debtors with Blue Age Properties 28 Pty Ltd (“Blue
Age”), for the obligations of Blue
Age to the applicant,
arising
inter alia,
from a written loan agreement dated 2 December 2008. Before the
matter could be heard, the respondents and co-sureties entered
into
a written “indulgence agreement” with the applicant,
providing for payment in monthly instalments.
[9]
Blue Age was not a party to the application for judgment as it was
deregistered on 16 July 2010 for failure to file the necessary
statutory returns with the Registrar of Companies, (as it then was).
Blue Age is the owner of immovable property, being vacant
land
situated in Trafalgar, KwaZulu Natal. The monies lent and advanced
by the applicant to Blue Age was utilised to purchase
the said
immovable property from second respondent.
[10]
On 24 August 2011, pursuant to the indulgence agreement the first
and second respondents signed a Consent to Judgment.
[11]
Respondents failed to comply with the indulgence agreement. First
respondent admits that he defaulted.
[12]
On 4 November 2011 judgment was granted in terms of Rule 31(1 )(c)
against the respondents for, inter alia, payment of R3
708 829,49.
[13]
The respondents do not deny that the aforesaid judgment still
stands.
[14]
Respondents at the hearing of the provisional sequestration
application, requested a postponement in order to launch an
application for the rescission of the judgment granted against them
on the basis set out and dealt with at paragraphs 21-30, hereunder.
[15]
Respondents in their answering affidavit in this application made
the bald allegation though, that they were forced to sign
the
indulgency agreement on the basis that failing which they would face
litigation on the suretyship agreement which they had
signed. This
constitutes due notice though, of the possible legal consequences.
[16]
The respondent is thus indebted to the applicant. His obligation in
terms of the indulgence agreement were replaced, or at
least
confirmed by the judgment.
[17]
In terms of the indulgence agreement, respondents and co-sureties
undertook joint and several liability to repay the debt.
[18]
In terms of the indulgency agreement, if any of the sureties who
signed the said indulgence agreement committed a breach
of the
terms, the applicant is entitled to apply for judgment against such
surety.
[19]
The co-sureties have subsequently entered into further indulgency
agreements of lesser monthly re-payments due to financial
difficulties. They are making payments punctually. However, despite
these payments, the principal debt has not been reduced,
but has in
fact increased.
[20]
Accordingly, the respondent is not entitled to rely on an allegation
that he is excused from paying the debt because the
other parties to
the indulgence agreement are making regular payments towards the
debt.
(ii)
Applicability of Rule 31(1)(c)
:
[21]
I turn then to turn deal with a second point on
locus
standi
raised for the first time in
Respondent’s Heads of Argument, that Rule 31 (1 )(c), (under
which the applicant applied for
judgment by consent) does not allow
for such an application if the consent to judgment is not founded on
the relief claimed in
the notice of motion but on a settlement
agreement unless the settlement agreement provides that its breach
entitles the applicant
to take judgment in terms of the original
cause of action.
[22]
Respondent submitted that the judgment obtained by the applicant was
founded on the cause of action contained in the settlement
agreement, namely the debt for R3 708 829,49, and not on the
original cause of action namely the suretyship agreement which
limited the liability of the sureties to R3 500 000,00. That
although the settlement agreement provides that its breach entitles
the applicant to take judgment in terms of the original agreement
the relief agreed to in the consent of judgment is based on
the
settlement agreement and not the original claim against the first
respondent.
[23]
First respondent relied on the case of Citibank NA v Thandroyen
Fruit Wholesalers CC
2007 (6) SA 110
(SCA), p113, paras H-J, which
reads as follows:
“
Rule
31(1) provides that a defendant may confess in whole or in part ‘the
claim contained in the summons’. In terms
of s 1 of the
Supreme Court Act 59 of 1959 ‘civil summons’ is defined
as including, inter alia, a notice of motion.
But in motion
proceedings the confession, in order to comply with Rule 31(1), must
be to the claim contained in the notice of
motion. If the claim is
founded not on the relief claimed in the summons or notice of motion
but on a settlement agreement, Rule
31(1) cannot be applied. ”
[24]The
said paragraph in Citibank
supra,
though
continues as follows,
“
The
position is different if the settlement agreement provides that its
breach entitles the plaintiff or applicant to take judgment
in terms
of the original cause of action contained in the summons or notice
of motion. See
Barbour v Herf
1986 (2) SA 414
(N) . ’’
[25]
Respondent’s argument is flawed for the following reasons:
25.1.
The indulgence agreement refers to the terms in the application
under case number 2011/32613, specifically the suretyship
agreements.
25.2.
The cause of action remains the application and not the indulgence
agreement. The terms of,
inter alia
the suretyship agreements remain the same.
25.3.
The amount acknowledged in the suretyship agreement is the same as
the amount claimed in the notice of motion. First respondent’s
liability does not stop at R 3, 5 million. Interest must be added to
that.
25.4.
The indulgence agreement clearly provided that applicant was
entitled to elect to take judgment in terms of the cause of
action
set out in the application. The clause reads as follows:
“
6.5.
The parties hereto expressly agree that this Agreement of Settlement
does not in any way novate the original cause of action
set out in
the Applicant’s founding affidavit in the Application. The
parties further agree that should the Respondents
fail to fulfil any
one or more of their obligations in terms hereof, the Applicant will
be entitled, or may elect, to take judgment
not in terms of this
Agreement, but in terms of Applicant’s cause of action as set
out in the Applicant’s founding
affidavit in the Application.
”
25.5.
The first respondent’s consent is expressly founded upon the
judgment sought by the applicant for R3 708 829, 49 and
not on the
acknowledgement of debt (for the same amount) contained in the
indulgence agreement.
[26]
The judgment was thus correctly granted as envisaged in the Citibank
case
supra.
[27]
Even in the absence of the judgment, it is clear that the first
respondent remains indebted to the applicant in the full
amount
because, (a) he acknowledged to be so indebted, (b) he acknowledged
that in the event of breach by him of his part of
the agreement he
would be liable for the full amount less payments already made and
he admitted to having fallen in arrears.
Blue Age (and therefore the
first respondent as surety), remains indebted to the applicant in a
substantial amount of money.
[28]
It must be borne in mind, that the applicant’s claim against
the first respondent is not for the total arrears amount
payable in
terms of the indulgence agreement, but for the whole amount owing to
the applicant.
[29]
Most significantly, the first respondent never disputes that he owes
the applicant a substantial sum of money. For the applicant
to have
locus standi
as a creditor, that amount need not be due.
[30]
I do not find any reason then to grant a postponement in this matter
as requested by the first respondent, in order for the
first
respondent to launch an application for the rescission of the
judgment granted under case no. 2011/32613.
ADVANTAGE
TO CREDITORS
:
[31]
First respondent relied on the case of
Meskin
& Co v Friedman
1948 (2) SA 555
(W) at 559,
that
the facts placed 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
the creditors.
[32]
First respondent submitted that the burden of proof lies with the
applicant to place sufficient facts before the Court, to
enable the
Court to exercise its discretion in favour of granting a
sequestration order. That to make bald and unsubstantiated
statements that the respondent has hidden assets due to the fact
that he was a chartered accountant etc does not help. The first
respondent’s reliance on Standard Bank van SA Beperk v Van Zyl
N.O. en n’ Ander
1999 (2) SA 221
(0) at 225A-C, was misplaced
as that case dealt with a deceased estate and the choice that the
Court was called upon to make
between sequestrating the deceased
estate or allowing it to be distributed in terms of the
Administration of Estates Act. The
determining factor was the
interest of the creditors, not the interests of the (deceased)
debtor.
[33]
The Supreme Court of Appeal decision of, Commissioner, South African
Revenue Services v Hawker Air Services (Pty) Ltd
[2006] ZASCA 51
;
2006 (4) SA 292
(SCA) para 29, is particularly instructive, that,
“
...a
Court need not be satisfied that there will be advantage to
creditors in the sense of immediate financial benefit. The Court
need be satisfied only that there is reason to believe
-
not
necessarily a likelihood, but a prospect not too remote
-
that
as result of investigation and inquiry assets might be unearthed
that will benefit creditors. ”
[34]
Applicant made out a compelling case for advantage to creditors.
[35]
The applicant avers that it appears from the records of CIPRO,
conducted on 17 January 2012, that the first respondent is
a
director of no less than 15 active companies and close corporations.
[36]
First respondent alleges that the majority of these entities have
been deregistered on dates well prior to the date of applicant’s
enquiry. First respondent however, fails to attach copies of the
records that would substantiate his denial that the companies
are
active. In the premises, at least prima facie, the applicant’s
averment must prevail.
[37]
Some of first respondent’s averments in respect of the long
list of entities in which he is or was involved, deserves
further
attention.
[38]
Adfotect Properties
:
38.1.
According to the first respondent that company “
had”
assets but at the same time he seems to suggest that the company
still has immovable property.
38.2.
The first respondent fails to expand on his involvement with that
company. As director of an apparently property-holding
company one
would expect the first respondent to also hold shares and/or a loan
account in that company.
38.3.
In this regard it is significant that the first respondent does not
deny the applicant’s averments that a trustee
may find that he
does in fact hold shares in some of the companies of which he is a
director, and even in other companies.
38.4.
The first respondent is, however, very unforthcoming with details of
his involvement in the company and the exact financial
state of the
company.
38.5.
This is a good example of a situation that may well be investigated
with good results by the first respondent’s trustee
with a
view to establish the nature and value of the first respondent’s
interest in that company.
[39]
Argentor Incorporated
:
39.1.
No explanation for the fact that the first respondent is still a
director of that company and that the company is still
“active”
in the records of the CIPRO is provided.
39.2.
The first respondent does not allude to the terms of the alleged
dissolution of the business conducted by this company.
The company
seemed to have been doing business profitably just before the first
respondent left it. A trustee will be empowered
to investigate the
matter to see whether the first respondent has received any
consideration for his interest in the company
and if so, what he has
done with it.
[40]
Born Free Investments
:
401.
It is clear from what the first respondent says that the company is
conducting a business. It seems unlikely that the first
respondent
would act as a director of the company and not receive some monetary
benefit from its operations.
40.2.
However, once again the first respondent elects not to furnish any
particulars of his financial interest in the company
or the nature
of the business of the company or any assets that the company may
have.
40.3.
A trustee will have the power to investigate the nature of the first
respondent’s interest in this company and lay
claim to such
interest to the advantage of first respondent’s creditors.
[41]
Southern Palace
Investments
:
41.1.
From the respondent’s version, it seems likely that he has an
interest in the company over and above his directorship.
For all we
know, he may even be the sole shareholder and/or the holder of a
substantial loan account claim and the property of
the company may
either be unencumbered or represent sizeable equity that may be
dealt with by the first respondent’s trustee
for the benefit
of his creditors.
41.2
The fact that the first respondent is silent on the nature and value
of his interest in this company lends support to a strong
suspicion
that he is trying to obscure his true financial position.
[42]
Vertical Trading
:
42.1.
The first respondent admits that he has a claim against that company
and that the company has assets.
42.2.
The first respondent provides no facts supporting his speculative
statement that “
it is very
unlikely that there will be anything left”
from which his and his co-directors’ loans can be repaid.
42.3.
The first respondent does not say whether he is also a shareholder
of that company - something that seems to be likely from
what the
respondent does say.
[43]
Viko Trading
:
43.1.
Here, too, is an entity of which the first respondent is a member
and that is actively conducting business.
43.2.
Again the first respondent elects not to disclose the nature and
value of his member’s interest.
43.3.
The first respondent’s trustee will not suffer from the same
reluctance as the first respondent and will take charge
of the first
respondent’s member’s interest and realise it to the
advantage of his creditors.
[44]
The first respondent does not furnish any reason for becoming a
director of a host of companies that, according to him, became
deregistered and have no assets. Applicant contended that there must
have been some monetary incentive for the first respondent’s
involvement in those companies. A trustee should investigate these
aspects with a view to establishing the exact nature of the
first
respondent’s interest in those companies, whether they had any
assets and if so, what happened to those assets.
[45]
The first respondent offers no explanation for his failure, as
director and member of the aforesaid entities and as an auditor,
to
present any financial statements of any of those entities. The first
respondent’s trustee will have the power to expose
the nature
and value of the first respondent’s interest, past and
present, in those entities.
[46]
It is significant that during 2006 the first respondent was earning
R99.000,00 per month on average from the entities in
which he had an
interest. Now, however, the first respondent is unable to account
for any assets or income. This lends support
to the applicant’s
statement in paragraph 17.6 of the founding affidavit, to wit that
the first respondent is hiding his
financial interest from his
creditors. Only a trustee will be able to find and realise these
assets and interests.
[47]
The Freedom Trust
:
47.1.
The respondents live in a rented house. Some of the furniture in the
house and one of the family’s motor vehicles
belong to this
trust.
47.2.
Applicant contended that the first respondent’s trustee must
investigate how it came about that the said furniture
and motor
vehicle ended up in a trust of which the first respondent may well
be a beneficiary, and what claims the first respondent
may have
against the trust.
[48]
The Fuls Family Trust
:
48.1.
During 2006 the second respondent had a small interest in the Fuls
Family Trust.
48.2.
The applicant voiced its concern over the possibility that this
trust may serve as a
"vessel
for the assets of the respondent and his spouse”.
48.3.
The first respondent’s reply is a terse denial. No details are
provided of his or his wife’s involvement with
the trust, be
it as creditors or as beneficiaries. No details of the Assets and
liabilities of the trust are provided.
48.4.
It was submitted that in view of the first respondent’s
business
modus operandi
it is necessary to appoint a trustee with the necessary power to
investigate the respondents’ connection with the Fuls
Family
Trust and to salvage assets (if any are found) for the benefit of
the first respondent’s creditors.
[49]
First Respondent’s Auditing Practice
:
49.1.
First respondent has been practicing as an auditor in Wellington
since July 2011. It was submitted by applicant that, the
first
respondent’s allegation that after a year’s practice he
still does not earn an income from the practice and
has to rely on
the help of friends and family to survive seems highly suspect.
49.2.
The first respondent does not offer any supporting evidence for his
allegation that he does not earn an income from his
practice. There
are no supporting affidavits from any friend or family member. The
first respondent, an auditor by profession,
fails to annex even the
most rudimentary statement of income and expenses to support his
plea of poverty.
49.3.
Applicant contended that a trustee will likely find a different
picture from the one that the first respondent is presenting.
50.
The first respondent’s spouse (second
respondent)
:
50.1.
The second respondent’s balance sheet of 30 June 2006
indicated that she had nett assets of R6 225 000,00, comprising
mainly of two immovable properties and motor vehicles.
50.2.
Once the first respondent’s estate is sequestrated the second
respondent’s assets vest in the Master and then
in the first
respondent’s trustee.
50.3.
However, according to the unsupported statement of the first
respondent, the second respondent now has no ‘‘
assets
that can be attached and sold”.
50.4.
No reason is offered why the second respondent could not confirm the
first respondent’s plea of poverty on the second
respondent’s
behalf.
50.5.
The respondents’ reluctance to make full disclosure of their
financial position in the circumstances of this matter,
is further
reason for a trustee to be appointed to conduct the necessary
investigation into their affairs.
50.6.
More importantly is the question as to how the second respondent
succeeded in amassing a nett estate of more than R6 million
(2006
values) while she "was a
housewife
looking after our children up to July
2011
”
.
50.7.
Applicant submitted that, there is a strong likelihood that the
first respondent caused some of his property to be registered
in the
second respondent’s name. Further, that such a
modus
operandi
would certainly be
compatible with the first respondent’s inclination to be
involved with a string of legal entities that
enabled him to earn
R99.000,00 per month yet now he has allegedly nothing to show for it
in the form of assets.
50.8.
According to the first respondent the second respondent’s
Lagoon Drive property that belonged to her in 2006, now
(still)
belongs to a company, Eagle Creek Investments 471 (Pty) Ltd, despite
having been on sale by Eagle Creek in 2010. No details
are provided
as to Eagle Creek’s shareholding or of any connection between
the respondents and Eagle Creek, and no reason
for the unusual
two-year delay in transfer of ownership is offered.
50.9.
According to the first respondent the only other property of the
second respondent was the Marina Drive property. This was
allegedly
sold at a loss leaving an unpaid balance of an ABSA loan. Applicant
submitted that, in view of the fact that this property
was not
listed in 2006 as one of the second respondent’s assets, it
must be presumed that she subsequently acquired that
property, while
being occupied as a housewife looking after the respondents’
children.
50.10.
The second property listed by the second respondent in her balance
sheet of 2006, was sold by her to Blue Age (the principal
debtor for
whose liabilities
inter alia
the respondents bound themselves as sureties) about December 2008
and was financed with a loan amounting to approximately R3,5
million
by the applicant.
50.11.
The respondents do not account for the purchase price at all. In
this regard it is noted that the second respondent during
2006 owed
Investec bank only R500.000,00 against the property being valued at
R6.000.000,00.
50.12.
Applicant submitted, that bearing in mind that the first respondent
is a director of Blue Age, this sale by the second
respondent of her
most
substantial
asset to a company
of
which
her husband is a director, should
be
probed by a trustee with a view to establish the true ownership of
the property, the true intention of the parties to the transaction
and the flow of the purchase price obtained from the sale.
[51]
I am mindful of the fact that the first respondent is clearly
extremely loathe to provide full details of his financial position
and of his involvement in the numerous business vehicles employed by
him.
[52]
I am of the opinion that, it is the interest of all of the first
respondent’s creditors for his estate to be provisionally
sequestrated so as to enable a thorough investigation by a trustee
backed by the full authority of the insolvency law. That there
is a
prospect not too remote, that as a result of investigation and
enquiry, assets might be unearthed that will benefit creditors.
COURT’S
DISCRETION
:
[53]
First respondent submitted that the applicant holds security over
the immovable property of the principal debtor, Blue Age,
yet
applicant failed to disclose this, stating, “Applicant’s
claim against the Respondent is wholly unsecured”
and contends
in its Replying Affidavit that the first respondent caused the
principal debtor to be deregistered.
[54]
First respondent also submitted that the applicant failed to
disclose in its founding affidavit that the applicant entered
into
further indulgency agreements with the other co-sureties and the
latter are also paying lower monthly instalments than the
first
respondent. That the applicant is bias towards the first respondent
in bringing this application and that the application
is vexatious.
[55]
Firstrand Bank Ltd v Evans
2011 (4) SA 597
(KZN), para 27, held as
follows,
“
Once
the applicant for a provisional order of sequestration has
established on a prima facie basis the requisites for such an
order,
the court has a discretion whether to grant the order. There is
little authority on how this discretion should be exercised,
which
perhaps indicates that it is unusual for a court to exercise it in
favour of the debtor. Broadly speaking, it seems to
me that the
discretion falls within that class generally described as involving
a power combined with a duty. In other words,
where the conditions
prescribed for the grant of the provisional order of sequestration
are satisfied, then, in the absence of
special circumstances, the
court should ordinarily grant the order. It is for the respondent to
establish the special or unusual
circumstances that warrant the
exercise of the court’s discretion in his or her favour. ”
[56]
I am of the opinion that the first respondent’s failure to
provide full disclosure of his financial and business position
disqualifies him from appealing to this Court’s discretion to
refuse a sequestration order.
[57]
The first respondent is hopelessly insolvent.
[58]
The first respondent has submitted no proof that he will be
prohibited from earning an income if his estate is sequestrated.
[59]
In respect of, first respondent’s plea for equal treatment of
co-sureties. The applicant is under no obligation to
treat the
signatories to the indulgence agreement equally.
[60]
The indulgence agreement has in any event become irrelevant for
purposes of this application because the applicant subsequently
obtained judgment against the first respondent, which judgment is
still unsatisfied.
[61]
Then in respect of security, the applicant holds no security for its
claim against the first respondent.
[62]
Section 2 of the Act provides, that,
1
"security”, in relation
to the creditor of an insolvent estate, means property of that
estate over which the creditor
has a preferent right by virtue of
any special mortgage, land lord’s legal hypothec, pledge or
right of retention. ’
[63]
Thus, a sequestrating creditor is under no obligation to disclose in
his application any security he may have over the assets
of a third
person,
(Van der Merwe v Kock
1930
CPD 320)
,
or any recourse he may
have against some person other than the debtor,
(Ringer
v Beckett & Co.
1927 TPD 714
at 720; Macket v Ballen
1939 WLD
183).
[64]
The recent case of
Muller v Kaplan
N.O. & Others, SGHC, case no 14732/10, (unreported), paras
71-73,
is directly in point in that
there too, the claim was secured by a suretyship and mortgage bond
over the fixed property of another
entity, Orange Grove 13
th
Street (Pty) Ltd, not the property of the insolvent or his Estate.
The court held, “
Accordingly,
as Total held no security over the assets of the estate as
contemplated by the Act, Total was not obliged to identify
the
security it held from a surety such as Orange Grove. ”
[65]
In any event it is not as if the applicant concealed the fact that
it had security over the principal debtor’s property.
In terms
of clause 17 of the indulgency agreement signed by the respondents
(the co-sureties), the applicant reserved the right
to proceed at
any time against the principal debtor upon the basis of the Loan
Agreement and the Mortgage Bond in its favour,
and only in the event
of the respondents defaulting in their indulgence agreement
obligations.
[66]
This does not oblige the applicant to proceed against the principal
debtor instead of its sureties. The proviso in the indulgency
agreement is a further concession to the signatories of the
agreement, of which the respondent was one. It is only in the event
of the respondents, (i.e. all of the co-sureties) being in default
that the applicant would have the right to proceed against
the
principal debtor.
[67]
Each of the respondents and co-sureties undertook joint and several
liability for the whole debt.
[68]
The fact that the applicant entered into further separate indulgency
agreements with the other co-sureties cannot be held
against the
applicant because the respondents and co-sureties expressly agreed
that the applicant would be entitled to show indulgency,
leniency or
extension of time to some of the respondents only.
[69]
The application can not be branded vexatious merely because
applicant is exercising its rights contractually agreed upon
with
the respondents.
[70]
In any event, the only security involved is the applicant’s
mortgage over the property of the principal debtor. The
applicant
has however being prevented from executing against the said property
because the first respondent was at least partially
responsible for
the principal to be de-registered.
[71]
Applicant contends, that even if the property concerned were to be
sold in execution, the proceeds would not be sufficient
to
extinguish the principal debt.
[72]
The first respondent, who appeals to this Court to exercise its
discretion favourably, must place sufficient facts before
the Court
in order for it to consider the first respondent's request. It is
noted, that while the property concerned is still
registered in the
name of a company of which the first respondent is a director, the
first respondent fails to submit any proof
at all of the likely
proceeds of the sale in execution.
[73]
Subsequent to this application being launched, the respondents were
granted a further opportunity to regularise their relationship
with
the applicant but did not make use of the opportunity.
[74]
A sequestration order should be granted unless special or unusual
circumstances exist that warrant the exercise of the discretion
in
the respondent’s favour. The onus is on the respondent, not on
the applicant to show circumstances that warrant the
exercise of the
discretion in favour of the respondent.
[75]
The only allegation put forward by the respondent is that he
“
might
be deregistered as a chartered accountant and auditor by IRBA and
SAICA".
[76]
The application must succeed and the following order is granted.
IT
IS ORDERED THAT:
1.
The estate of the first respondent is provisionally sequestrated.
2.
The respondents and all interested parties are called upon to appear
before this Court on Tuesday, 11 December 2012 at 10h00
to advance
reasons, (if any), why the estate of the first respondent should not
be finally sequestrated and why the costs of
this application should
not be costs in the administration of the sequestration.
3.
This Order shall be served upon the respondents personally and
further be dealt with in accordance with
section 11(2A)
of the
Insolvency Act, 24 of 1936
.
MANSINGH,
AJ