Steyn t/a FJS Steyn Boerdery v Holtzhausen and Another (71672/16) [2017] ZAGPPHC 735 (17 November 2017)

IN THE HIGH COURT OF SOUTH AFRICA

(GAUTENG DIVISION, PRETORIA)

Case Number: 71612/16

2017/11/17

In the matter between:

DR FJS STEYN T/A FJS STEYN BOERDERY APPLICANT

and

CHRISTIAAN HENDRICK HOLTZHAUSEN FIRST RESPONDENT

ELIZABETH PETRONELLA JOHANNA SECOND RESPONDENT

HOLTZHAUSEN

Coram: HUGHES J

JUDGMENT

HUGHES J

[1] The applicant, Dr FJS Steyn conducts his farming operation under the style, FJS Boerdery. He seeks a final sequestration order of the communal estate of the respondents, Christiaan Hendrick Holtzhausen and Elizabeth Petronella Johanne Holtzhausen, who are married in community of property. The sequestration application is duly opposed.

[2] The applicant owns a farm in the Harrismith area known as Lincolnshire. Due to various commitments in Gauteng he is unable to

manage the farming operation. Hence, since 2003, he employed the first respondent as a farm manager. The first respondent was responsible for the day to day running and business component of the farming operation. In fact, the applicant submits that he entrusted

his entire farming operation of Lincolnshire with the first respondent.

[3] The applicant further submits that all went well for the first ten years, however, for the past three years he has been experiencing

problems with the first respondents' management of the farm. These problems came to a head in October 2015 when the first respondent

handed In his resignation.

[4] The applicant submits that the first respondent defrauded him during the course of his employment in the following respects:

4.1 The applicant alleges that the first respondent sold his livestock to a third party, Vleissentraal, for an amount of R750 000.00. In respect of this sale the first respondent issued invoices in his own name with fictitious VAT numbers. He also sold livestock to, CMW Elite, cashing in an amount of R1 500 000.00.

Hereto, he provided invoices in his name like the previous sale. Telling though, states the applicant, is the fact that in the latter sale he provided his personal banking details for payment to be effected;

4.2 Absent the consent of the applicant. the first respondent purchased "Hi. Q" tyres on the applicants' account to the value of R280 000.00;

4.3 The applicant alleges that cumulatively the first respondent has defrauded him in the amount of R2 500 000,00.

[5] The applicant contends that when the first respondent was confronted with these fraud allegations, on 11 June 2016, at the offices of the applicants' attorneys, he confirmed and acknowledged the debt. There and then an acknowledgement of debt was concluded. Notably, the acknowledgement of debt was only signed by the applicant and the first respondent, with the applicants' attorney signing as a witness. The debt alluded to in the acknowledgement of debt affects the communal estate of the respondents consequently the second respondent had to be a signatory. According to the applicant the first respondent undertook to ensure that the second respondent would sign the acknowledgement of debt. Evidently, this did not materialise as the acknowledgement of debt is absent the signature of the second respondent.

[6] The acknowledgement of debt sets out that the first respondent as debtor acknowledges that he is indebted to the applicant being the creditor, "in the amount of R500 000.00 (Five hundred thousand rand) (“the principal debt”) in respect of money payable by the debtor to the creditor as lessor for outstanding rent on specific instance and request ..." Emphasis add.

[7] At clause 13 of the acknowledgement of debt the first respondent puts up security, which security clause reads as follows :

"13. As security for proper performance in terms hereof the debtor will hand to the creditor or his attorney the original title deed for the following properties within 7(Seven) days:

13.1 11 Strachan Street

Leeudoringstad

13.2 17 Strachan Street

Leeudoringstad”

[8] The first respondent failed to honour the terms and conditions of payment set out in of the acknowledgement of debt. Having failed to do so the applicants' attorneys transmitted correspondence to him imploring upon him to comply. This resulted in the first respondent instructing an attorney on his behalf to advise the applicant that he denied liability. According to the applicant the non-adherence and non-payment in relation to the acknowledgement of debt amounted to the first respondent actually reneging on the acknowledgement of debt

[9] The applicant argues that in term of the acknowledgement of debt the first respondent made an arrangement, with him as the creditor,

'releasing him wholly or partially of his debt', as is contemplated in section 8 (e) of the Insolvency Act 28, of 1936 (the Act). This, he argues, was the act of insolvency committed by the first respondent together with his failure to make payment in terms of the acknowledgement of debt. Hence, a final sequestration order is sought.

[10] Section 8 (e) of the Act provides as follows: “8 A debtor commits an act of Insolvency

(e) if he makes or offers to make any arrangement with any of his creditors for releasing him wholly or partially from his debt;''

[11] In terms of section 15(2)(a) and (b) of the Matrimonial Property Act 88 of 1984 provides that a spouse married in community of property cannot alienate, mortgage, burden with a servitude or confer any other real right in immovable property forming part of the joint estate nor can the spouse enter into any contracts to do so without the consent of the other spouse. Thus, by virtue of the fact that the respondents are married in community of property the acknowledgement

of debt which also includes the conferring of the immovable property of the joint estates security for a debt Is such transaction as contemplated by section 15 (2)(a) and (b) and as such had to be signed by both respondents. Thus, the acknowledgement of debt does not comply with the prescripts above and consequently null and void. See Gaounder v Top Spee lnvestments (Pty) Ltd [2008] ZASCA 52; 2008 (5) SA 151 at 156 para [17]. The reliance on the acknowledgement to found an application for final sequestrate of the communal estate of the respondents is therefore flawed.

[12] However, it is not my intention to hold form over substance. As stated above the applicant seeks a final sequestration order under section 8 (e) of the Act. I must point out though that the applicant does not make out this case in his founding affidavit and the replying affidavit. The reliance on section 8 (e) only emerges from the applicants' heads of argument. It is trite let alone logic that an applicant must set out its case with particularity in the founding papers in order for the respondent to answer the case he ought to meet. See Herbstein & Van Winsen, The Civil Practice of the High Courts of South Africa, fifth Edition Vol. 1 pg. 440: "The general rule which has been laid down repeatedly is that an applicant must stand and fall by the founding affidavit and the facts alleged in it, and that although sometimes it is permissible to supplement the allegations contained in that affidavit, still the main foundation of the application is the allegation of facts stated there, because those are the facts that the respondent is called upon either to affirm or to deny.”

[13] In dealing with the applicants' founding affidavit paragraphs 49,50,51,52 and 53 sets out the merits of the application which I set out below:

"49. In consultation with my attorney on 1 August 2016 we decided to launch this application as it is evident that it will be impossible for me to ascertain the true extent of the fraud, theft and deceit committed against me by the First Respondent if a proper investigation into his financial affairs is not conducted.

50. It is further obvious and evident that the First Respondent has no assets to repay the amount due to me and whilst there are still 2(two) unencumbered immovable properties and an incoming claim I thought it wise to launch this application in order to secure the rights of creditors.

51. In light of the aforesaid I humbly submit that it is evident and obvious from the aforesaid that the First Respondent is indebted to me for an amount of at least R2 500 000.00 (Two million two hundred thousand rand) [Two million five hundred thousand rand] whilst the aforesaid figure can only grow with further investigation.

52. It is further evident that all my reasonable efforts to mitigate my damages and to persuade the First Respondent to settle with me failed since he reneged on the acknowledgement of debt we signed on 11 June 2016."

[14] In addition, paragraphs 82 and 83 in the replying affidavit is worth mentioning:

"82. As far as I am concerned this acknowledgement of debt is, in any event, of no consequence at the moment since I am not interested In the amount of R500 000.00 (Five hundred thousand rand) in settlement with the First Respondent.

83. The Respondents' estate should be sequestrated, a proper enquiry should be held and the authorities should be informed about what happened."

[15] From my reading of the preceding paragraphs I cannot conclude that the first respondent, as debtor, makes or offers to make any arrangement with the applicant, as creditor, for his release wholly of partially from his debt as is required. In addition, what is obvious, from the applicants' papers, is that the cause of action set out in the founding papers, is one of damages. In addition to the claim being one for damages it is evident that there is a huge discrepancy with regards to the amount due in respect of the debt, is it R2 500 000.00 as claimed in the founding affidavit or is it R500 000.00 as alluded to in the acknowledgement of debt. Clearly the amount claimed has neither been accessed nor verified. See Pillay v Frier 1913 CPD 433 and Ex Parte Bruce 1956 (1) SA 480 (SR) where the courts have held that a sequestration order cannot be obtained where an applicant seeks to assess a claim for damages.

[16] Turning to the acknowledgement of debt itself, the law on this instrument is clear that there ought to be an express or implied

acknowledgement by the debtor that he is unable to pay his debts in full. In these circumstances, this is not so, in fact the first

respondent has put up security for the debt, in the form of the two unencumbered immovable properties and monies in respect of a debt due to him. See Laeveldse Kooperasie Bpk v Joubert 1980 (3) SA 1117 (T) at 1125 - 1126.

[17] In the result, on the papers before me, besides the fact that the applicant does not make out a case on these papers but rather in his heads of argument. The first respondent, in my view, has committed none of the acts of insolvency, as contemplated as he did not make an offer nor arrange to do so, in order that he arrange to be release wholly or partially from the alleged debt. CO.l1pled with the fact that the acknowledgement of debt is absent, the signature of the second respondent, thus it is null and void, to found an act of insolvency as against the communal estate of the respondents. See Amber Falcon Debt Collectors (Pty) Ltd v Vos 2014 JDR 0118 (GNP) at 3 para [7].

[18] In the circumstances the following order is made:

[18.1] The application of Dr FJS Steyn t/a FJS Steyn Boerdery for a final sequestration order of the respondents is dismissed with costs.

____________________

W. Hughes

Judge of the High Court Gauteng, Pretoria

Appearances:

For the Applicant: Adv. F V n Der Merwe Instructed by: Van Der Merwe & Associates

For the Defendant Adv, Z. Schoeman

Instructed by: Theron, Jordaan & Smit Incorporated

Date heard: 11 October 2017

Date delivered : 28 November 2017