Standard Bank of SA Ltd v Sewpersadh and Another

• Jurisdiction: South Africa
• Judge: DlodloL J
• Judgment Date: 18 November 2004
• Citation: 2005 (4) SA 148 (C)
• Docket Number: 1056/2004
• Hearing Date: 23 August 2004
• Counsel: A G Walters for the applicant. P Tredoux for the respondents.
• Court: Cape Provincial Division

Dlodlo J:

Introduction

[1] This application was instituted on 16 February 2004. A provisional order of sequestration of the estate of both respondents was granted by J

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my Brother Selikowitz J on 18 February 2004. The respondents had not then filed any papers in opposition to the application. However, in the course of the various A interlocutory applications lodged by the respondents in terms of Rule 6(12)(c), the latter filed of record an affidavit purporting to serve both as a supporting affidavit in such Rule 6(12)(c) application as well as opposing affidavit to the grant of a final order of sequestration. The various applications in B terms of Rule 6(12)(c) as well as an application to strike out certain matters in the founding affidavit were, however, dismissed by the Court. This Court is seized only with the determination of the rule nisi issued and the question as to why the estate of the respondents, still under provisional order of sequestration, should not be placed under a final order of sequestration. C

Mr Walters appeared on behalf of the applicant whilst Mr Tredoux appeared on behalf of both respondents.

The factual background

[2] Two separate instalment sale agreements were concluded during the D year 2000 between the applicant and the first respondent. Both instalment sale agreements were in respect of Mercedes Benz buses. The first respondent fell into arrears in respect of payments due in terms of both instalment sale agreements. The applicant cancelled both agreements. It subsequently instituted action against the first respondent in respect of both agreements, seeking confirmation of E the cancellation of the agreements. Judgment was obtained confirming cancellation and directing that possession of the motor vehicles revert to the applicant.

[3] By agreement between the parties the execution of the judgment was stayed on the basis that: F

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an amount equal to the arrear instalments would be paid; and

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the respondents would continue to make payments in accordance with the provisions of the then cancelled instalment sale agreements. The first respondent did not make the payments due and applicant proceeded with the execution to enforce the judgment G obtained. As at the date of the founding affidavit the first respondent was indebted to the applicant in the following amounts:

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R48 828,64 on the one instalment sale agreement;

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R251 580,82 on the other instalment sale agreement;

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R90 960 in respect of a personal overdraft (as sole proprietor). H

[4] There is a dispute of fact between the parties on the issue of whether or not the first respondent frustrated the execution process and prevented the applicant from obtaining possession of the vehicles concerned. From the applicant's perspective the first respondent had failed to make payments due in respect of his indebtedness under the instalment sale agreements; had breached the I terms of the overdraft facilities and had failed to make the payments due in respect thereof; and had effectively acknowledged to the applicant that he was unable to meet his financial commitments to it. Further on from the applicant's perspective, the financial difficulties of the first respondent are not limited to his J

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relationship with the applicant but extended also to his relationship with Wesbank. There is also a dispute of facts between the parties as A to the existence or otherwise of what the applicant calls strong indications that the first respondent has dispossessed himself of certain of his assets and/or has encumbered same. Strong legal dispute exists regarding the involvement of the second respondent in these proceedings. B

Applicable law

[5] On the return day of the provisional order, the Court has a discretion to sequestrate the respondents' estate provided it is satisfied as to the three essential elements of the applicant's case, namely: C

(i)

that the applicant 'has established against (the respondents) a claim' upon the basis of which one is able competently to seek sequestration;

(ii)

that the respondents have committed an act of insolvency or are actually insolvent; and D

(iii)

that there is reason to believe it will be to the advantage of creditors of the respondents if their estate is sequestrated.

The facts relied on by the applicant in respect of each of the three elements of its case must be proved (at this level) on a balance of probabilities, the onus being on the applicant. (See Sacks Morris (Pty) Ltd v Smith 1951 (3) SA 167 (O) at 171; London Estates (Pty) Ltd v Nair 1957 (3) SA 591 (N) at 593; E BP Southern Africa (Pty) Ltd v Furstenburg 1966 (1) SA 717 (O) at 720; Mackay v Cahi 1962 (4) SA 193 (O) at 194; Meyer & Kie v Maree 1967 (3) SA 27 (T) at 30.)

[6] The law regulating the sequestration of a debtor's estate is contained substantially in the Insolvency Act 24 of 1936 as amended F (hereinafter referred to as 'the Act'). There are two grounds upon which it is competent for a creditor's application for the sequestration of his debtor's estate to be made, namely:

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that the debtor has committed an act of insolvency, ie within the meaning defined in s 8 of the Act; G

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that the debtor is insolvent, ie that his or her liabilities in fact exceed the value of his or her assets (s 9(1) of the Act).

In either of the above it is essential also for the applicant creditor to be able to prove that 'there is reason to believe that it will be to the advantage of creditors of the debtor if his estate is sequestrated' (s 10(c) and s 12(1)(c) of the H Act). Notwithstanding the establishment of all the elements of the case for sequestration set out supra, the Court still has a discretion as to whether or not to grant the sequestration order, whether provisional or final (s 10 and s 12(1) of the Act). I

[7] In the instant matter it is averred by the applicant that the respondents are married to each other in community of property. This is, however, disputed by the second respondent. The latter avers that she is married to the first respondent by way of Muslim rites. In the context of a marriage in community of property an act of insolvency committed by either spouse is an act upon which the joint estate may be sequestrated. J

Dlodlo J

(BP Southern Africa (Pty) Ltd v Viljoen en 'n Ander 2002 (5) SA 630 (O).) The legal position in a A marriage by Muslim rites remains unknown. The parties did not canvass same either.

Application of legal principles to the matter and evaluation of submissions B

[8] It is Mr Walters' submission that, in his view, the applicant has established, inter alia, an act of insolvency under s 8(d) of the Act, namely the removal and/or attempted removal of property by the respondents with the intent to prejudice their creditors generally, and the applicant in particular. According to Mr Walters, actual insolvency on the part of the respondents has been shown by the applicant by C adducing evidence of circumstances indicative thereof including the following:

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the fact that debts remain unpaid; and

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a continued and consistent failure to make payment of debts which are due and notwithstanding statements and undertakings that D payment would be made.

Before dealing with Mr Walters' submission set out above, it would be appropriate to hasten to mention that the respondents deny:

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the conduct relating to s 8(d) of the Act relied upon by the applicant; and E

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their actual insolvency; and

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the nature and extent of their indebtedness to the applicant; and

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the matrimonial regime applicable to them.

[9] It would probably be appropriate to first deal with what I regard as a peripheral issue before devoting my attention to the issues at hand in the matter. Pages 47 - 64 of the record contain an affidavit F by H N Wilson. According to the respondents, this affidavit did not form part of the application when it was launched. The date on which it was deposed to indeed show that it was never there when application was launched. The affidavit was deposed to on 18 March 2004 whilst the application itself was launched on 18 February 2004. I am told that the said affidavit was attempted to be placed on record before my G Brother Van Zyl J in Chambers and that such attempt was successfully resisted by the respondents. I consequently have been unable to find any Court order on record admitting this affidavit. Indeed, the practice relating to the number of affidavits is clear and settled in our law. This was well stated by the well known authors, Herbstein and Van Winsen The Civil Practice of the Supreme Court of South H Africa 4th ed at 359, as follows:

'The ordinary rule is that three sets of affidavits are allowed, sc supporting affidavits, answering affidavits and replying affidavits. The Court may in its discretion permit the filing of further affidavits.' I

The discretion of the Court to admit further affidavits is provided for in Rule 6(5) of the Uniform Rules of Court, namely:

'The Court may in its discretion permit the filing of further affidavits.'

This clear and well-settled practice enjoyed consideration in James Brown & Hamer (Pty) Ltd (previously named Gilbert Hamer & Co Ltd) v J

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Simmons NO 1963 (4) SA 656 (A) where at 660D - H the Court dealt with the filing of further sets of affidavits thus: A

'It is in the interests of the administration of justice that the well-known and well-established general rules regarding the number of sets and the proper sequence of affidavits in motion proceedings should ordinarily be observed. That is not to say that those general rules must always be rigidly applied; some flexibility, controlled by the presiding Judge exercising his discretion in relation to the facts of B the case before him, must...