FirstRand Bank Limited Intervening Creditor v Furtak

• Jurisdiction: South Africa
• Judge: DTvR Du Plessis AJ
• Judgment Date: 10 May 2013
• Docket Number: 3085/13
• Court: South Gauteng High Court, Johannesburg
• Hearing Date: 03 May 2013
• Citation: 2013 JDR 1466 (GSJ)

DTvR Du Plessis AJ:

1.

The applicant is married out of community of property. He brought an ex parte application for the surrender of his estate in terms of the Insolvency Act, 24 of 1936 (as amended) ("the Act"). It is not in dispute that he has complied with all the formal requirements for voluntary surrenders as required in terms of the Act.

2.

The intervening creditor ("the creditor") brought an application to intervene and for the application for voluntary surrender to be dismissed. The creditor is the holder of a mortgage bond over the immovable property of the applicant, which mortgage bond was registered as security for monies lent and advanced by the creditor to the applicant in terms of a written loan agreement. The creditor has an obvious interest in the application.

3.

In their replying affidavit to the application to intervene, the applicant denied that the creditor had locus standi to intervene. Mr Kotze, who appeared for the applicant, could not provide any cogent reasons for this denial and did not persist therewith. In the premises I granted the creditor leave to intervene. The matter thereafter proceeded on the merits of the application for voluntary

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surrender.

4.

The applicant raised, as a point in limine, that the deponent to the creditor's affidavit lacked the necessary locus standi to sign documents on behalf of the bank. Much was said about this issue in the affidavits. However, it is the attorney acting for a party who must be authorised so to act. There is no need for any other person, whether a witness or not, to be additionally authorised. [1]

5.

It is irrelevant whether the deponent had been authorised to depose to the founding affidavit. [2] The proper remedy for a party who wishes to challenge the authority of a person allegedly acting on behalf of the applicant, is to dispute the authority in terms of Rule 7 (1) of the rules of this court. [3]

6.

Over and above these considerations the creditor showed the authority of the deponent in the replying affidavit. There is therefore no merit in this point and it is dismissed.

7.

The test for voluntary surrender applications is set out in section 6(1) of the Act which, apart from requiring compliance with section 4, provides as follows:

"If the court is satisfied … that the estate of the debtor in question is insolvent, that he owns realisable property of a sufficient value to defray all costs of the sequestration which will in terms of this Act be payable out of the free residue of his estate and that it will be to the advantage of creditors of the debtor if his estate is sequestrated, it may accept the surrender of the debtor's estate

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and make an order sequestrating that estate."

8.

The applicant has shown that he is factually insolvent. That leaves two issues for determination before the discretion granted by section 6 (1) can be exercised. The first is to determine whether the applicant owns realisable property sufficient to defray all costs of sequestration, and the second is to determine whether the sequestration of the applicant's estate will be to the advantage of creditors.

9.

Both of these aspects require the court to be satisfied. The applicant must discharge the onus to satisfy the court on a balance of probabilities. In particular, the test relating to advantage to creditors is more strictly framed than that for the provisional sequestration of a debtor's estate, which only requires the court to be of the opinion that prima facie there is reason to believe that it will be to the advantage of creditors if the estate is sequestrated. It is also more strictly framed than that for the final sequestration of a debtor's estate which only requires the court to be satisfied that there is reason to believe that it will be to the advantage of creditors if the estate is sequestrated. In terms of section 6 (1) the court must be satisfied that it will be to the advantage of creditors if the debtor's estate is sequestrated. [4]

10..

In this regard the value of the immovable property is crucial. The value thereof should be established by an independent valuator to persuade the court that

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there is a prospect that the free residue of the insolvent estate will render some real advantage to the insolvent's creditors. [5]

11..

In Ex parte Matthysen et uxor (First Rand Bank Ltd intervening) [6] Southwood J observed the following:

"It is well settled what an applicant for voluntary surrender must do to prove that his/her sequestration will be to the advantage of creditors. In Nell v Lubbe 1999 (3) SA 109 (W) at 111D – G Leveson J stated the position as follows:

'The purpose of furnishing a sworn valuation is therefore to establish the price that is likely to be realised from the sale of the property on what is called a forced sale so that it can be determined that there will be a free residue available for creditors and advantage to creditors is thereby established. A practice has therefore grown up in this Division (I cannot speak for others) whereby a sworn valuation is furnished by an expert witness, usually, as in the present case, an estate agent. He expresses an opinion with respect to the price that the property will fetch. Normally the opinion of a witness is not receivable in evidence. But the opinion of an expert witness is admissible whenever, by virtue of the special skill and knowledge he possesses in his particular sphere of activity, he is better qualified to draw inferences from the proved facts than the Judge himself. A Court will look to the guidance of an expert when it is satisfied that it is incapable of forming an opinion without it. But the court is not a rubber stamp for acceptance of...