Berrange NO v Hassan and Another

• Jurisdiction: South Africa
• Judge: Levinsohn J
• Judgment Date: 18 January 2005
• Citation: 2009 (2) SA 339 (N)
• Docket Number: 6795/2003
• Counsel: LB Broster SC (with him G Morley) for the applicant. N Singh SC for the first respondent. BM Slone for the second respondent.
• Court: Natal Provincial Division

Levinsohn J:

On 17 December 2003 Gyanda J granted the following ex parte:

1.

That Pierre de Villiers Berrangé NO, in his capacity as provisional liquidator of NRB Holdings Ltd (Registration No 1970/0120/06) H (the company), is authorised in terms of s 386(5) read with s 387(2) of the Companies Act 61 of 1973 (as amended) (the Companies Act) to apply to the above court to sequestrate the joint estate of the Respondents.

2.

That Dato Samsudin Bin Abu Hassan and Datin Melleney Venessa Samsudin (formerly Miller) (hereinafter called 'the respondents') I and all other interested parties be and they are hereby called upon to show cause to this court sitting at Pietermaritzburg on 29 January 2004 why the joint estate of the respondents should not be sequestrated.

3.

That this order operate as an order provisionally sequestrating the joint estate of the respondents. J

Levinsohn J

4.

A That should the respondents oppose the application, the respondents pay the costs of this application.

5.

That the costs of this application be costs in the sequestration of the joint estate of the respondents.

Both respondents have appeared to oppose the confirmation of the said B provisional sequestration order. They are represented by different attorneys and counsel. Apart from opposing the confirmation of the rule nisi both respondents have launched reconsideration applications in terms of rule 6(12)(c) of the rules of this court:

A person against whom an order was granted in his absence in an C urgent application may by notice set down the matter for reconsideration of the order.

The second respondent has also launched a substantive application to obtain a declaratory order in regard to the status of her marriage to the first respondent. Needless to say, the various proceedings in the course D of this year have resulted in the delivery of a veritable mountain of affidavits. The parties are agreed that all these be placed before me and be regarded as part of the evidentiary material in the case. There are several issues that fall to be decided. These have been fully argued before me on 20, 21, 22 October 2004 and 4 November 2004, respectively. E Before getting to grips with the specific issues I think it is necessary without further ado to briefly summarise the applicant's case as it emerges from the founding affidavit.

The applicant is the provisional liquidator of NRB Holdings Ltd (in provisional liquidation) (NRBH). NRBH was placed under provisional F winding-up by the Durban and Coast Local Division on 14 November 2003 on the basis that this company was unable to pay its debts. Because the applicant was a 'provisional liquidator' he sought this court's authority to bring the present application. The first respondent is a citizen of Malaysia who is alleged to be married in community of property to the second respondent. The first respondent immigrated to G South Africa in 1994 whereafter he regarded South Africa as his permanent base for his various businesses. It appeared from press reports that he returned to Malaysia to pursue his business interests there. In South Africa the first respondent lived at either 52 Oxford Avenue, Sandton, or at Unit 2, Chelsea Mews, Forester Road, Athol, in H Johannesburg.

The applicant sought the sequestration of the joint estate on the footing that NRBH had a liquidated claim against the first respondent in terms of s 9(1) of the Insolvency Act 24 of 1936. This alleged liquidated claim I is said to fall under two headings, namely:

(a)

an amount equal to the value of the Mitrajaya Holdings Berhad shares (Mitrajaya shares) in the sum of 25,7 Malaysian ringgits, equivalent to R43,7 million. It is alleged that the first respondent misappropriated the shares;

(b)

the sum of R7,3 million which is expressed thus in the founding J affidavit:

Levinsohn J

(A)ppropriated by the first respondent from the company's bank A account without authority, and not for the company's business and without giving consideration to pay the undisputed liability of R32,6 million due to New Republic Bank.

It is also said that he is personally liable to indemnify NRBH in terms of s 226 of the Companies Act for the sum of R3,8 million. B

The applicant relied on two acts of insolvency. First, it was alleged that he had committed an act of insolvency in terms of s 8(a) of the Insolvency Act in that he had left the Republic of South Africa and returned to Malaysia with the intent by so doing to delay, alternatively evade the payment of his debts. Secondly, that he had committed an act C of insolvency in terms of s 8(d) in that he had removed or was attempting to remove property to the prejudice of his creditors. In addition to the foregoing the allegation was made that the first respondent was in fact insolvent given that his liabilities exceed the value of his assets. In support of the inference that an act of insolvency in terms of s 8(a) had D been committed the applicant relied on what he termed the cumulative effect of seven factors. These are:

1.

That the first respondent had returned to Malaysia and that he had previously stated that he was 'bringing back his skills, expertise and capital'. E

2.

He had adopted a systematic approach of denuding NRBH of its assets and had in fact appropriated Mitrajaya shares as his own and all the cash in the company for his own benefit.

3.

He had refused to pay the undisputed debt owed by NRBH to New Republic Bank.

4.

That the first respondent had filed an affidavit opposing the F winding-up of NRBH. In that affidavit he had stated that NRBH was the owner of the Mitrajaya shares when in truth and in fact the ownership of these shares had been transferred to a company called Khidmas Capital Berhad, a Malaysian company of which he was a director owning 99,9% of the issued share capital. Khidmas had in G turn disposed of these shares in the open market and the remainder were pledged to a Malaysian bank called Southern Bank.

5.

First respondent acted unlawfully when he disposed of the Mitrajaya shares because these shares could not be disposed of without the permission of the South African Reserve Bank.

6.

In the first two weeks of December 2003 the first respondent H removed documentation belonging to the company in provisional winding-up.

7.

The first respondent removed R35 million which he indirectly received arising from the settlement of an arbitration involving Mawenzi Resources. It is alleged that he ought to have paid the I group's liabilities, more particularly the undisputed indebtedness of the R32,6 million due by NRBH to New Republic Bank.

The founding affidavit then goes on to set forth the relevant background which led to the winding-up of NRBH. NRBH was established as a registered bank in 1970 and it traded under the name of 'The New J

Levinsohn J

A Republic Bank Ltd'. In December 1995 the first respondent became the controlling shareholder of NRBH. In April 1997 NRBH transferred the business of the bank to New Republic Bank Ltd. A run on the bank resulted in New Republic Bank being placed under curatorship and thereafter a scheme of arrangement between New Republic Bank and its B creditors was sanctioned in terms of s 311 of the Companies Act. The effect of this was that the bank was discharged from curatorship and two receivers were appointed.

Other assets held by NRBH were shares in a company called Samrand Development Holdings Ltd and shares in Mitrajaya Holdings Berhad, a C company listed on the Malaysian Stock Exchange. It appears that NRBH had acquired the Mitrajaya shares and warrants for a purchase price of R32 658 649,35. The applicant quoted from an affidavit deposed to by the first respondent opposing the winding up of NRBH. In that affidavit the first respondent stated that NRBH was still the owner of the Mitrajaya shares which according to him were valued at R58,1 million. However, D following upon investigations made during November 2003, it appeared that the Mitrajaya shares were no longer registered in the name of the company through its nominee in Malaysia. These investigations reflected that 22 400 000 shares had been disposed of on or about 25 July 2002. They were purchased by a company known as Khidmas Capital Sdn E Bhd. It appears that the first respondent held 99 999 shares out of 100 000 issued shares in Khidmas Capital. These shares were sold to Khidmas Capital for the equivalent of R43,77 million. It also turned out that Khidmas had been disposing of Mitrajaya shares on the open market.

F The applicant points out that the Mitrajaya shares constituted the greater part of the assets of NRBH within the meaning of s 228 of the Companies Act. No resolution was passed which authorised the disposal of the said shares. The applicant states that none of the directors of NRBH authorised the specific sale of these shares to Khidmas. The applicant avers that the first respondent was fully aware of the fact that G he had no right to dispose of the shares and moreover he required the authority of Exchange Control to do so.

The applicant sets forth in tabular form the shares in Mitrajaya which were sold to Khidmas Capital and in turn disposed of on the open H market. This was between 28 October 2002 and 28 October 2003. The applicant tabulates the various prices at which these shares were sold. The total amount is R15 357 827,65.

The applicant avers that on 28 November 2003 he sought ex parte an urgent interlocutory injunction and discovery order from the High Court I at Kuala Lumpur, Malaysia.

A perusal of the Malaysian court order reveals that RC Nominees SDN BHD, the registered holder of 22 400 000 shares in Mitrajaya, was restrained from transferring, selling or disposing of these shares.

On 28 November 2003, the date of the hearing...