Adimoolum v Nxumalo and Others (JR1447/22) [2023] ZALCJHB 84 (22 March 2023)

IN THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG

Not Reportable

Case No: JR 1447/22

In the matter between:

IDRAN ADIMOOLUM Applicant and VUSI NXUMALO Execution Creditor DREWACH BRANDING SOLUTIONS (PTY) LTD Execution Debtor LEBOHANG LEREKO MARUMO First Claimant HAREOIPHA MARUMO Second Claimant

Heard: 16 March 2023

Delivered: 22 March 2023

Summary: Interpleader proceedings – Assets found at the premises of the execution debtor are by law presumed to be the assets of the

execution debtor and execution may be levied upon those assets. A claimant claiming ownership of attached assets must provide the Court with satisfactory evidence of ownership. Absent satisfactory evidence of ownership the attached assets shall remain attached and liable to be sold in execution.

The claimant failed to provide satisfactory evidence of ownership of the attached goods. The commercial agreements entered into between brothers to circumvent execution are a facade. They are insufficient instruments to rebut the necessary legal presumption. Held: (1) The claim is dismissed. (2) The execution debtor and the claimants to pay the costs jointly and severally, which costs includes the sheriff’s fees of preparation of the interpleader proceedings and appearance fee.

JUDGMENT

MOSHOANA, J

Introduction

[1] It was never anticipated by the drafters of the Labour Court Rules that the Labour Court would occasionally entertain interpleader proceedings. As such, there is no rule equivalent to rule 58 of the Uniform Rules in the Labour Court Rules. Rule 11 (3) of the Labour Court Rules provides that if a situation for which the rules do not provide arise in proceedings or contemplated proceedings, the Court may adopt any procedure that it deems appropriate in the circumstances. Accordingly, in the present proceedings, this Court is adopting the rule 58 of the Uniform Rules process. The process in rule 58 is known as interpleader.

[2] Therefore, before me serves an interpleader initiated by Mr. Indran Adimoolum, sheriff Johannesburg West (sheriff). After having placed under judicial attachment the assets found at the premises of Drewmach Branding Solutions (Pty) Ltd (Drewmach) in order to satisfy a debt of R72 000.00 owed and payable to Mr. Vusi Nxumalo (Nxumalo), the claimant, Mr. Lebohang Lereko Marumo (Marumo) laid a claim upon the judicially attached assets. As a result of the claim, the sheriff invoked the provisions of rule 58 (1) of the Uniform Rules. The claim is duly opposed by Nxumalo.

Background facts

[3] The essential facts in this interpleader are that Nxumalo was employed by Drewmach as a graphic designer since 1 February 2020. Nxumalo was dismissed and he referred a dispute to the bargaining council and alleged unfair dismissal. The arbitration award was not annexed to the papers that served before Court, however, it is apparent that the appointed commissioner made a finding that the dismissal of Nxumalo was unfair and he was awarded six months’ compensation being an equivalent of R72 000.00. It is apparent that the arbitration award was made in default.

[4] Drewmach attempted without any success to rescind the arbitration award. Ultimately, Nxumalo obtained a certification of the arbitration award. Whereafter, he instructed the sheriff to demand from Drewmach payment of the compensation amount. On 27 May 2022, the sheriff visited the premises of Drewmach at 96 Main Reef Road, Crown Mines, Johannesburg. The sheriff demanded payment of the compensation amount. Upon failure to satisfy the demand, the sheriff levied execution upon the assets found at the premises in order to satisfy the judgment debt.

[5] Shortly after the execution, the director of Drewmach Mr. Hareoipha Marumo (director) deposed to an affidavit and specifically testified thus:

“5. Most of the said attached machines were not bought by the Respondent, but by several other companies, namely Footballers Investments (Pty) Ltd; Kgaebane Trading CC; Marutho Investments (Pty) Ltd; and Spyce Fit (Pty) Ltd. However, there may be some machines that were bought by the Respondent. Even if there are some machines that are owned by the Respondent, all these attached machines are subject to a lien in favour of Inri (Pty) Ltd for the debt owed to it by the Respondent.”

[6] The above stated version was confirmed by Marumo. The director also alleged that some of the attached printing machines belonged to an entity known as Kasma Printing (Pty) Ltd. Owing to such claims, on 27 January 2023, the sheriff issued an interpleader. On that day, Acting Justice Mabaso postponed the interpleader to 16 March 2023. In the interim, Marumo served and filed particulars of his claim together with annexures. In the particulars of claim, Marumo alleged that in 2018, he and the director concluded, what he termed “a gentlemen’s agreement”. The terms of that agreement were that he shall provide Drewmach with financial assistance of a capital amount of R300 000.00. Drewmach agreed to repay Marumo monthly. Allegedly, having failed to honour the gentlemen’s agreement, a decision was taken to reduce the said agreement into writing.

[7] On 20 December 2019, a loan agreement was concluded between Inri Innovative Solutions (Pty) Ltd (Inri) and Drewmach. The terms of the loan agreement were that Inri (lender) will borrow Drewmach (borrower) an amount of R300 000.00. No interest shall be paid by Drewmach. The repayment amount was R15 000.00 payable monthly effective January 2020. For a period of time, the bank statements of Inri reflected a consistent amount of R12 500.00 being credited to the bank account Inri and described as Drewmach. Allegedly, that amount was paid towards the reduction of the loan amount.

[8] On 3 January 2022, Inri and Drewmach concluded a lease agreement. The terms of the agreement were to lease the attached assets and some other assets which included vehicles and printing machines to Drewmach, effective 01 January 2022 for a period of five years. On or about 30 September 2022, Drewmach acknowledged indebtedness to Inri for an amount of R131 500.00. Having acknowledged indebtedness, Drewmach agreed to make a payment of R15 000.00 towards the indebted amount. Based on all these commercial agreement, Marumo testified that he will suffer financial loss if the assets are sold in execution.

Evaluation

[9] With effect from 27 May 2022, the assets listed on the notice of attachment became part of what is known as judicial attachment. The assets under judicial attachment may not be removed from the premises or alienated. In terms of the law, when the sheriff attaches assets the sheriff does so not on behalf of the judgment creditor but on behalf of the law.

[10] In Syfrets Bank Ltd and Others v Sheriff of the Supreme Court Durban Central and Another: Schoerie N.O v Syfrets Bank Ltd and Other[1], the Court stated the following:

“[w]hen the sheriff attaches and sells the property in execution he does not act as agent of the judgment creditor or the judgment debtor but does so as an executive of the law…

[11] In South African Congo Oil Co (Pty) Ltd v Identiguard International (Pty) Ltd[2], the Court had the following to say:

“[20] The need to attach the debt is self-evident. An attachment in execution creates a pignus judiciale, the effect of which is that control of the property attached passes from the judgment debtor to the officer entrusted with the execution of the writ, the dominium of the debt remaining with the judgment debtor …””

[12] Therefore, in law, Inri was not entitled to lease out assets under judicial attachment. Regard being had to the notice of attachment inventory list and the items listed therein the asset are a split image of the leased assets tabulated in clause 1.3 of the lease agreement. The lease agreement was purportedly signed in January 2022. Based on the split image, this Court agrees with a submission made on behalf of Nxumalo that the lease agreement and the other commercial agreements are in fact a facade. The dramatis persona involved in all these facades are blood brothers. A probability exists that these agreements were put in place after the judicial

attachment as a means to circumvent the execution. The date of all these agreements are suspect. Having been signed and dated by people of affinity by blood, it would be convenient, as submitted, for them to misdate in an attempt to protect each other against the law. In July 2022, the director testified that some of the attached machines were owned by Drewmach. Thus, it is improbable for some of those attached machines to be leased from Inri. The fact that some of the attached machines are owned by Drewmach is confirmed by Marumo.

The true owner of the attached assets.

[13] The interpleader was prompted by the affidavit deposed to by the director in May and July 2022. He alleged that certain entities bought the attached machines. Notably, he does not list Inri as one of the entities that bought the machines. He only states that Inri has a lien over the attached machines. Accordingly, on the version of the director and confirmed in the supposed loan agreement, neither Inri

nor Marumo are owners of the machines. Inri allegedly, only advanced funds described as “financial facility (loan) required to operate the day-to-day business of the Borrower”. It was further recorded that the purpose of the loan was “The loan is being made available for the purposes of financing the day-to-day business of the Borrower but not limited to the payment of wages and salaries and the Borrower’s suppliers.”

[14] Strange clauses were inserted in the loan agreement. Those clauses 4 (c) and (d) read as follows:

“(c) The Lender will retain ownership of the property at the abovementioned business address of the Borrower until such time as the loan has been fully paid

(d) The Lender will extend the right of use to the Borrower to ensure that the Borrower operates and raises enough funds to be able to settle the loan.

[15] Having acknowledged that the machines belong to other entities, it then becomes strange for Inri to retain ownership of those machines in particular, when it was never an owner in the first instance. These are clauses that lends credence to a submission of the facade or phantasmagoria involved in these commercial agreements.

[16] During oral submissions, Mr. Khumalo, who appeared for the claimants, after incessant request for an opportunity to take instructions in a motion matter, submitted that Marumo, bought the attached machines and thereafter concluded a gentlemen’s agreement for Drewmach to use the machines for free. The agreement to pay for those machines bought came to light only two years later. With respect to Mr. Khumalo, this Court finds this submission to be preposterous to the extreme. On the version of the director, which version was confirmed by Marumo under oath, some machines were solely owned by Kasma Printing (Pty) Ltd. Further he testified that the machines were bought by other entities other than Inri or Marumo.

[17] The preposterousness is further demonstrated by the testimony of Marumo in the supplementary affidavit deposed to in September 2022. In that affidavit he testified thus:

“5.14 It is further worth mentioning that the purchase of the goods in question was done more ten years ago, that I am currently not in possession of the proof of purchase, and that it is more than a period of ten years and such documents after careful search, I therefore come to the conclusion that same is either lost and/or mislaid”

[18] It must follow that not having purchased the attached assets Marumo would not have found documents supporting a purchase despite a diligent and frantic search. The above testimony is a further demonstration of the facade conveniently created by the brothers.

There is no dispute that the assets so attached were found at the premises of Drewmach. Lord De Villiers CJ in Zandberg v Van Zyl[3] had the following to say:

“The principle, however, underlying the decision in that case appears to me quite in accord with our, law, namely, that possession of a movable raises a presumption of ownership, and that, therefore, a claimant in an interpleader suit, claiming the ownership on the ground that he has bought such movable from a person whom he allowed to retain possession of it, must rebut that presumption by clear and satisfactory evidence. The fact that he has bought a thing which he does not require himself, but allows the seller to use, requires full explanation, and in the absence of such explanation a Court is justified in drawing its own reasonable inferences…”

[19] The evidence presented by Marumo is so deficient in order to rebut a presumption of ownership. On the facts of this case, a reasonable inference to be drawn is that the attached assets belong to Drewmach and all the commercial transactions are and were a veneer aimed at avoiding execution. The claim that the attached assets belong to Marumo is indeed palliate and should be rejected by this Court outrightly.

Conclusions

[20] In summary, the claim of Marumo is not supported by adequate evidence to dislodge a presumption that Drewmach is the owner. An attempt to estrange the attached assets by way of a lease agreement, which appears to be phony, is inconsistent with the pignus judiciale principle. In the circumstances, the interpleader ought to be dismissed with costs, which costs must include the preparation and

appearance fees of the sheriff and Nxumalo.

[21] In the result the following order is made:

Order

1. The claim of ownership of the attached assets by Marumo is dismissed.

2. The execution debtor and both claimants must jointly and severally, the one paying absolving the other, pay the costs of the Sheriff and Nxumalo.

G. N. Moshoana

Judge of the Labour Court of South Africa

Appearances:

For the applicant: The Sheriff in Person For the Execution Debtor And Claimants: Mr S Khumalo Instructed by: Mathye, Chauke Inc, Pretoria. For the Execution Creditor: Ms M Ngobeni Instructed by: Legal Aid South Africa

[1] 1997 (1) SA 764 (D)

[2] 2012 (5 SA 125 (SCA)

[3] 1910 AD 302.