Nedbank Ltd v Norton

• Jurisdiction: South Africa
• Court: Natal Provincial Division
• Judge: Thirion J
• Judgment Date: 16 June 1986
• Citation: 1987 (3) SA 619 (N)
• Hearing Date: 23 May 1986

Thirion J:

On the ex parte application of the applicant, an order was granted provisionally sequestrating the estate of the respondent and a rule nisi was issued calling on the respondent to show cause why his estate should not be finally sequestrated. The applicant now applies for confirmation of the rule nisi.

The application is based on the allegation that the respondent J has committed an act of insolvency in terms of s 8(b) of the Insolvency Act 24

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of 1936. The applicant does not allege that the respondent is A in fact insolvent.

The respondent in his answering affidavit has raised the contention that the nulla bona return on which the applicant relies for the allegation that the respondent has committed an act of insolvency in terms of s 8(b), is not a return such as B would be capable of supporting that allegation.

Faced with this contention the applicant has applied to have an amended nulla bona return substituted and he has also applied to have an affidavit by the deputy sheriff admitted, explaining what transpired when he served the writ of execution in respect of the service of which the nulla bona return was rendered. The respondent objects to the admission of the amended nulla bona C return as well as the deputy sheriff's affidavit and he has also filed an affidavit disputing the correctness of the facts stated in the deputy sheriff's affidavit.

I deal immediately with the question of the efficacy or sufficiency of the nulla bona return. The return was rendered by the deputy sheriff in connection with his service on the D respondent of a writ of execution issued in respect of a judgment debt owing by respondent to the applicant. The writ directed the deputy sheriff to attach and take into execution the respondent's movable assets in satisfaction of the judgment debt. The nulla bona return reads:

'I certify that on this 27th day of November 1985, I duly E served upon the hereinnamed defendant personally at Greytown a true copy of this writ of attachment of movable property and, after exhibiting to him the original thereof, I explained the nature and exigency thereof to him. No disposable property or assets could be attached as all defendant's movable assets are hypothecated in favour of R M C Copland and M E Stevens under collateral notarial security bond No B/N 28156/1984. I therefore render a nulla bona return.'

Section 8(b) of Act 24 of 1936 provides that a debtor commits F an act of insolvency

'if a court has given judgment against him and he fails, upon the demand of the officer whose duty it is to execute the 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 has not found sufficient disposable property to satisfy the judgment'.

The subsection creates two acts of insolvency, the first of G which is committed by the debtor, if upon the demand of the officer whose duty it is to execute the judgment the debtor fails to satisfy the judgment or to indicate to the officer disposable property sufficient to satisfy the judgment, while the second is committed by the debtor if the execution officer fails to find sufficient disposable property to satisfy the H judgment and if he has certified that fact in his return.

Although the subsection creates two acts of insolvency they are not altogether independent of each other in the sense that the execution officer has a choice whether to make the demand or to conduct an enquiry into whether sufficient disposable property I to satisfy the judgment is to be found.

If it is possible for the execution officer to make the demand he should do so and he is not entitled to omit to do so and simply to make a return to the effect that he has not found sufficient disposable property to satisfy the judgment. The debtor is the person best situated to know what property he has and the whereabouts thereof and if the execution officer were J to fail

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A to enquire from the debtor, when it is possible to make such enquiry, what property he has and where it can be found, then he could hardly be said to have taken all the appropriate steps to ascertain what property the debtor has.

The nulla bona return in the present application does not B reflect that the deputy sheriff made the demand which he was required to make in terms of s 8(b ).

It appears furthermore from the return that the deputy sheriff was aware of the existence of movable property belonging to the respondent but that he did not attach such property because he considered that all the respondent's movables were hypothecated C in favour of Copland and Stevens in terms of a notarial bond. The return does not state the source of the deputy sheriff's information.

A further defect in the nulla bona return is that it plainly refers to movable assets only. The writ of execution in respect of the service of which the nulla bona return was made directed D the deputy sheriff to attach and take into execution the movable assets of the respondent. No mention is made of immovable assets. Perhaps because of the form which the writ took, the deputy sheriff made his return in respect of the respondent's movable assets only. The statement in the return to the effect that no disposable property could be attached as E all respondent's movable assets have been hypothecated can only mean that, because all the movable assets have been hypothecated, no movable disposable assets could be attached. The return therefore does not deal at all with immovable property. 'Disposable' property for the purposes of s 8(b), however, includes immovable property, irrespective of whether the writ is directed against movable property only). F Amalgamated Hardware & Timber (Pty) Ltd v Wimmers 1964 (2) SA 542 (T); Rodrew (Pty) Ltd v Rossouw 1975 (3) SA 137 (O).

Since the deputy sheriff's return has reference to disposable movable property only it is not a return complying with s 8(b). In all the respects mentioned above the return is deficient.

G When the nulla bona return is read in conjunction with certain other facts disclosed in the application a further issue emerges. 'The notarial bond referred to in the nulla bona return has been included among the application papers. It is a general notarial bond binding generally all the respondent's movable property 'of every description and wherever situate, both such as he is at present or may in future become possessed H of without any exception'.

The movables are not specially described and enumerated in the bond. The property hypothecated under the bond has all along remained in the possession of the respondent. The moneys, in connection with which the applicant obtained the judgment in I respect of which the writ of execution was issued, were advanced by the applicant to the respondent before the notarial bond was executed and registered. These facts give rise to the question whether a bona fide judgment creditor is entitled to attach and sell in execution the judgment debtor's movable property which has been hypothecated in terms of a duly registered general notarial bond but which has not been J delivered to the holder of the bond and which has remained in possession of the judgment debtor. If the answer to this question is in

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the affirmative then the movable property of the respondent in A this application would, despite having been hypothecated in terms of the general notarial bond, be disposable property for the purposes of s 8(b) which the deputy sheriff could have attached and consequently the deputy sheriff would not have been entitled to render a nulla bona return.

In the Cape it was decided in Mangold Brothers v Eskell (1884) B 3 SC 48, following In re Woeke; Cloete v Colonial Government (1832) 1 Menzies 554, that a...