Vincemus Investments (Pty) Ltd t/a Kempston Finance v Kaye and Another (20498/2012) [2013] ZAWCHC 15 (6 February 2013)

REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA WESTERN CAPE HIGH COURT

Case no: 20498/2012

In the matter between:

VINCEMUS INVESTMENTS (PTY) LTD T/A

KEMPSTON FINANCE ..........................................................................................................APPLICANT

AND

DENNIS HENRY KAYE .........................................................................................FIRST RESPONDENT

BERNICE KAYE ...............................................................................................SECOND RESPONDENT

Heard: 29 January 2013

Delivered: 06 February 2013

JUDGMENT

BOQWANA AJ

Introduction

[1] This is an application for provisional sequestration of the first respondent’s estate which is opposed.

[2] The applicant brought the application in respect of two separate causes of action, being an amount of R 12 010 589.84 and R 128 683.65 respectively. The second cause of action in the amount of R128 683.65 has since been abandoned in view of it being settled by the first respondent.

Facts

[3] The first respondent is a businessman and the managing director of the Taxi Trucks Parcel Express (Pty) Ltd, known as Sarepta Trading (Pty) Ltd (‘the principal debtor’).

[4] During the period between 25 March 2010 and 18 January 2012, the applicant entered into 29 lease agreements with the principal debtor in respect of the lease of trucks and other industrial type vehicles.

[5] On 23 March 2010 the first respondent signed a deed of suretyship binding himself as surety and co-principal debtor in solidium with the principal debtor for, inter alia, due and punctual payment by the principal debtor to the applicant. This is not disputed by the first respondent.

[6] The principal debtor defaulted with payments of the lease agreements and subsequently fell into arrears. As at mid September 2012, the principal debtor owed the applicant an amount of R1 059 744.51 as appears from annexure ‘C’ of the founding affidavit. Annexure ‘C’ details account numbers, vehicle descriptions and the arrear amounts in respect of each vehicle listed in that schedule.

[7] On 28 September 2012 the applicant’s attorneys addressed a letter to the first respondent advising him of the principal debtor’s failure to comply with the terms of the agreements in that more than 20 business days had passed since the principal debtor’s default. The letter advised the first respondent that he was indebted to the applicant in his capacity as surety. It also indicated that as at 06 September 2012 the principal debtor owed the applicant an amount of R 1 058 191.53.

[8] On 2 October 2012 the first respondent addressed an email to Tony Cotterell (‘Cotterell’), a managing director of the applicant which read, inter alia, as follows:

‘Hi Tony

This is the status of the account with Kempston Finance according to our records.

Since the strike we have been unable to affect (sic) deliveries and as a result unable to obtain POD’s which are required by Merchant Factors before we can obtain funding.

I will call you a little later to discuss the way forward.’

[9] The first respondent attached a list of items being, Kempston Debit orders met in September 2012, Kempston debit orders returned in September 2012 and Total arrears on personal vehicles in respect of him and Wellpick for August 2012 to this email.

[10] The applicant read this email to mean that the first respondent together with the principal debtor were unable to pay their debts. It is the inclusion of arrears in respect of his personal vehicles into the annexure to the email that the applicant understood to mean that the first respondent was unable to pay his debts. I deal with this issue later on in the judgement.

[11] It is common cause that the lease agreements were cancelled although their date of cancellation is not clear from the papers.

[12] On 16 October 2012 the applicant’s Administration Director, one Shirley Marcelle Gobey (‘Gobey’) prepared and signed a certificate of indebtedness certifying that the principal debtor was indebted to the applicant in the sum of R12 010 589.84.

[13] The certificate reads as follows:

“I, the undersigned, SHIRLEY MARCELLE COBEY

do hereby state that I am the Administration Manager of Vincemus Investments (Pty) Limited trading as Kempston Finance.

I have personal knowledge of this matter.

I hereby confirm that TAXI TRUCKS PARCEL EXPRESS (PTY) LTD as of date of signature hereof, is indebted to Vincemus Investments (Pty)

Limited trading as Kempston Finance in the sum of R1 2, 010, 589.84 including Vat being the total outstanding balance due in respect of an Lease Agreements no’s 02677113 to 02677141...”

[14] According to the applicant this certificate was issued in terms of clause 19.7 of the lease agreements and it is this certificate that the applicant alleges quantifies the amount of R12 010 589.84. An equivalent provision is also found in the deed of suretyship under clause 7 thereof.

[15] The applicant agrees that the cancellation of the lease agreements would ordinarily entitle the applicant to a damages claim it however submits that the certificate of indebtedness makes the claim readily quantifiable.

[16] Another important issue is that a provisional liquidation application of the principal debtor was lodged in this Court simultaneously with this application. That application was later withdrawn and lodged in the North Gauteng High Court.

[17] I understood it to be common cause that a final order of liquidation of the principal debtor has now been issued in the North Gauteng High Court.

Analysis

[18] It is trite that in order for the applicant to succeed in its application for provisional sequestration, it must establish a prima facie case before Court that:

1. It has a liquidated claim of not less than R100 against the first respondent;

2. The first respondent has committed an act of insolvency or is insolvent; and

3. There is reason to believe that it will be to the advantage of the creditors of the first respondent if his estate is sequestrated.

Liquidated claim

[19] Section 9(1) of the Insolvency Act1 requires the creditor’s claim to be liquidated. That is, the amount thereof must be fixed and determined either by agreement

(actual or implied), by judgment or otherwise.

[20] The applicant claims that the amount of R12 010 589.84 is liquidated by agreement by virtue of the certificate of indebtedness produced in terms of clause 19.7 of the lease agreement.

[21] Clause 19.7 reads as follows:

“19.7 A certificate signed by any of our managers, whose appointment need not be proved, will on its mere production be sufficient proof of any amount due and owing by you in terms of this agreement unless the contrary is proved.”

[22] Clause 7 of the deed of suretyship also states that the certificate of indebtedness shall be sufficient proof of the extent of the first respondent’s liability in terms of the deed of suretyship.

[23] The applicant’s argument is that the certificate served as sufficient proof in showing what was due and owing and once the certificate was produced it was incumbent upon the first respondent to prove the contrary. The first respondent did not.

[24] In fact the applicant makes a point that the entire answering affidavit neither provides any facts to the contrary nor denies any of the allegations made in the founding affidavit. According to the applicant the first respondent simply argues the law. In that regard the applicant submits that the contents of the founding affidavit should be taken as being admitted.

[25] The first respondent contends that the applicant does not have the necessary locus standi on the basis that its claim is not yet fixed or determined and therefore not liquidated. The first respondent’s proposition is that, having cancelled its 29 lease agreements with the principal debtor, the applicant’s claim against the principal debtor was no longer a claim for payment in terms of the lease agreements but a claim for the payment of damages, which the applicant suffered as a consequence of the debtor’s breach of the lease agreements and the applicant’s cancellation thereof. Accordingly, the applicant’s reliance on the certificate of indebtedness is misplaced and did not make the claim a liquidated one.

[26] The first respondent argues that on proper interpretation of the lease agreements and in particular clause 19.7, the certificate of indebtedness could only be utilised for amounts due and owing, whilst the agreements remained in existence. Once the contracts were cancelled the operation of that clause fell away and clause 12.2 dealing with remedies applicable upon cancellation kicked in. Consequently a sequestration order cannot be obtained at the instance of a person who has merely an unassessed claim for damages, or a claim for specific performance or alternatively damages.

[27] In Nedcor Bank Limited v Lisinfo 61 Trading (Pty) Ltd2 Moosa J held that to give a certificate of indebtedness the attributes of liquidity is highly questionable and does not conform

to the accepted definition of a liquid document. He went further to state that the certificate is not “an unconditional acknowledgement of indebtedness by the debtor, in an ascertained amount of money, the payment of which is due the creditor.”3

[28] The court went on further to state that:

‘It is settled law that extrinsic evidence cannot make a liquid document illiquid or an illiquid document liquid. A document cannot become liquid ex post facto. A written document is inherently liquid or illiquid depending upon its terms.’

[29] In the case of Wollach v Barclays National Bank Ltd4 the court held that despite an unqualified admission of indebtedness in a fixed amount, the covering bond was not a liquid document, by reason of the clause relating to future indebtedness and liability.

[30] It remains doubtful in my view that the certificate of indebtedness relied upon by the applicant produced in terms of clause 19.7 of the lease agreements, would apply in an instance where an agreement has been cancelled. Upon closer reading of the relevant clause, reference is made to amounts ‘due and owing’ ‘in terms of the agreement’.

[31] In Mars’ Law of Insolvency in South Africa, Bertelsman et al states that: The creditor’s claim need not be actually payable at the date of institution of sequestration proceedings, but it must at least have accrued. Future monthly lease instalments not vet due and payable do not constitute a liquid claim.’5 (own underline)

[32] I am inclined to agree with the first respondent that the applicant cannot blow hot and cold. It cannot cancel the contract and yet seek to enforce its terms, at the same time. Moreover, the trucks and vehicles which are the subject matter of the lease agreements have not been valued. They remain unassessed.

[33] The applicant has in any event alleged that its claim, although notionally in respect of damages, such damages are readily

quantifiable and have in fact been quantified.

[34] In my view the cancellation of the contract and the production of the certificate are mutually exclusive.

[35] I therefore find that the amounts that the applicant would have recovered had the lease proceeded to term are not liquidated and the certificate does not make them liquidated.

[36] Quite apart from that, the applicant argues that part of the R12 010 589.84 claim, which is an amount of R 1 059 744 .51, is liquidated because it was due and payable as at September 2012.

[37] The first respondent contends that the amount of R 1 059 744 .51 was not the cause of action brought before this Court. According to the first respondent, the applicant brought only two causes of action and R 1 059 744 .51 was not one of those.

[38] Whilst the amount of R 1 059 744 .51 is not set out as a separate cause of action in the founding affidavit, the applicant has alleged in the founding affidavit that the amount of R12 010 589.84 is the total balance outstanding in respect of 29 lease agreements. In clause 9.3 of the founding affidavit it refers to an annexure ‘C’ which sets out the arrears of the principal debtor as at mid- September 2012 to be R 1 059 744 .51.

[39] This annexure C is not disputed by the first respondent in his answering affidavit. The only thing he alleges in respect of this annexure is that:

“I draw to the attention of this Honourable Court that both annexures “C” and “D” to Stephen’s affidavit do not take into account the amount to be realised by the sale of Sarepta’s trucks or re-lease of same. The alleged damages suffered by the applicant can only be said to have been quantified once Sarepta trucks have been sold or have been re-leased.”

[40] In the absence of any denial or facts to the contrary by the first respondent it must be accepted that annexure ‘C’ relates to arrear amounts which have already accrued. The annexure must therefore be accepted as prima facie proof of a liquidated claim.

[41] I am therefore satisfied that the amount of R 1 059 744.51 formed part of the R12 010 589.84 claim and is liquidated.

[42] In the circumstances the applicant has been able to show that it has a liquidated claim which is not less than R100.

[43] The first respondent’s counsel submitted that in the event this Court finds that that the R12 010 589.84 was a liquidated claim, then the applicant would concede that it is insolvent and the court need not consider other requirements necessary to prove for the purposes of the provisional sequestration application. He however submits that if only the R1 059 744.51 is found to be the liquidated amount, then no act of insolvency, actual insolvency and advantage to creditors have been shown.

[44] I do not see how this distinction is made. Nevertheless, for the sake of completeness, I will look at whether the other requirements have been satisfied.

Act of Insolvency

[45] Section 8(g) of the insolvency Act provides that: A debtor commits an act of insolvency if he gives notice in writing to any of his creditors that he is unable to pay any of his debts.’ [46] The test as to how the notice is to be construed is whether the reasonable man receiving the notice would construe it as being the act of insolvency alleged.6 [47] The applicant referred to the email written by the first respondent to one Cotterell of the applicant as being notice given by the first respondent that he was unable to pay for his debts. [48] I am not convinced that the email written by the first respondent to Cotterell on 2 October 2012 constituted notice of the first respondent’s inability to pay an amount he owed in respect of the lease agreements, within the meaning of section 8(g) of the Insolvency Act. [49] Inasmuch as the email referred to ‘we’, the context in which it was written was in relation to the principal debtor’s inability to effect deliveries and to obtain POD’s which were required by Merchant Factors, before funding could be obtained. In my view no reasonable man could understand from that email that the first respondent had, in his personal capacity, no means to pay his debts. [50] It is also common cause that the total arrear amounts on personal vehicles listed on the annexure to this email were paid by the first respondent. [51] I accept that a notice of one’s inability to pay does not cease to be an act of insolvency as a result of the payment made subsequent to the notice being given. I am however of the view that the email referred to by the applicant is too vague to be construed as an act of insolvency committed by the first respondent. Actual insolvency [52] Having failed to establish an act of insolvency on the part of the first respondent it remains to be determined whether any factual insolvency has been proved by the applicant. [53] In ABSA Bank Ltd v Rhebokskloof (Pty) Ltd and Others7 the court held as follows: ‘Even, however, where a debtor has not committed an act of insolvency and it is incumbent on his unpaid creditor seeking to sequestrate the former’s estate to establish actual insolvency on the requisite balance of probabilities, it is not essential that in order to discharge the onus resting on the creditor if he is to achieve this purpose that he set out chapter and verse (and indeed figures) listing the assets (and their value) and the liabilities (and their value) for he may establish the debtor’s insolvency inferentially. There is no exhaustive list of facts from which an inference of insolvency may be drawn, as for example an oral admission of a debt and failure to discharge it may, in appropriate circumstances which are sufficiently set out, be enough to establish insolvency for the purpose of the prima facie case which the creditor is required to initially make out. It is then for the debtor to rebut this prima facie case and show that his assets have a value exceeding the sum of his total liabilities.’8 (own emphasis) [54] A prima facie case has been made on the actual insolvency by the applicant in my view. Upon a search at the Cape Town Deeds Office the applicant

found that the first respondent owned no immovable property. The property that the first and second respondent resided in showed that it was owned by JGN Trust, a trust of which the first respondent, the second respondent and their attorney Mr I Vukic were the trustees. The first respondent and second respondent were beneficiaries of this trust. [55]The fact that the applicant was not able to find any assets registered in the name of the applicant against the liability of R R12 010 589.84 or R1 059 744.51 for that matter is in my view sufficient to show that prima facie there is actual insolvency. [56] The first respondent did not rebut the applicant’s prima facie case. Therefore the applicant has proved actual insolvency on the part of the first respondent. Advantage to creditors [57] The Court may not grant a sequestration order, unless it is established that “there is reason to believe that it will be to the “advantage of the creditors of the debtor if his estate is sequestrated”9 [58] The applicant refers to the case of Meskin and Company v Friedman 10where Roper J held: ‘In my opinion, the facts put before the court must satisfy it that there is a reasonable prospect - not necessarily a likelihood but a prospect which is not too remote - that some pecuniary benefit would result to creditors. It is not necessary to prove that the insolvent has any assets. Even if there are none at all there are reasons for thinking that as a result of enquiry under the Act some may be revealed or recovered for the benefit of creditors, that is sufficient.’11 [59] In the Dunlop Tyres (Pty) Ltd v Brewitt12 the Court held that in the case of an arm’s length transaction sequestrating creditor does not have to set out in its founding

affidavit the details and intensity of averments required when the nature of the claim is under scrutiny although a proper case should always be made out. [60] The Court went on to state that it will be sufficient if the creditor on an overall view of the papers can show for example that there is a reasonable ground for coming to the conclusion that upon a proper investigation by way of an enquiry the trustees may be able to unearth assets which might then be attached, sold and the proceeds disposed of for distribution amongst creditors. [61] In this instance, the applicant alleges in its founding affidavit that the first respondent may have taken care to ensure that his immovable property and movable assets are not readily accessible to the creditors, that there is every reason to believe that, were an enquiry to be conducted by the Master of the High Court assets held by the first respondent through trusts such as the JGI Trust and other conduit companies would be revealed and may well be subject to the attachment by the first respondent’s trustees through ‘piercing the corporate veil’. [62] It is also alleged by the applicant that it is inconceivable that the first respondent as the managing director of the business

employing 300 people has not himself been well remunerated and would no doubt be held to account for the proceeds derived from his business ventures. The applicant accordingly argues that the trustees would naturally call for the first respondent’s bank statements and other financial records immediately on his or her being appointed. [63] The applicant also attaches CIPC Director Report which it alleges reveals that the first respondent has interests and directorships in Blue Port Trade 121 (Pty) Ltd (‘Blue Port’) and Yubel (Pty) Ltd ('Yubel'), which interests in and of themselves indicate that there is a reason to believe that it would be to the advantage of the first respondent’s creditors if his estate is sequestrated. [64] The applicant introduces new averments in its replying affidavit which it alleges were in direct response to the first respondent’s

failure to provide facts in its answering affidavit. It also claims that those alleged facts came to its attention after it had filed the founding affidavit. [65] In the replying affidavit the applicant alleges that there are two bonds registered over the registered property, in which the first and second respondents reside. One bond is in favour of South African Home Loans in the amount of R2.5 million and another one is in favour of Merchant Commercial Finance (Pty) Ltd in the sum of R8 million. It also alleges that Cotterell has now ascertained that the first respondent had property in Plettenberg Bay which is also not registered in his name but presumably in a trust or company name as an attempt to evade creditors. It also avers that the applicant has interests in a private plane and offshore funds. [66] in response to the third respondent’s denial in the answering affidavit that the CIPC Director report did not show that he had an interest in any one of the company's listed, the applicant attaches to the replying affidavit CIPC Company Reports in respect of Blueport, Yubel, Seamo Investment (Pty) Ltd (‘Seamo’) and Taxi Trucks Logistics (Pty) Ltd (Taxi Trucks Logistics’) which reflect the first respondent as a director of those companies. [67] The first respondent submits that the applicant is not allowed to make out a case in the replying affidavit. It should stand and fall by its founding affidavit. The first respondent accordingly raises an objection to these new issues. [68] The applicant’s proposition is that if the first respondent wished to challenge or oppose averments of the replying affidavit, he should have filed a supplementary affidavit or an application to strike out those averments he was objecting to. The first respondent however has failed to do that. [69] I am loathed to take these new facts into account due to their relevance in the application before me, especially those which seem to amplify the facts regarding directorships and the first respondent’s residence. Those facts were raised in the

founding affidavit but the first respondent offered no explanation in his answering affidavit. [70] Even without taking the new issues into account I am satisfied that the applicant has been able to show in its founding affidavit, that prima facie there is reason to believe that it would be to the advantage of the creditors of the first respondent if the first respondent’s

estate is sequestrated. [71] I agree that it is not the first respondent’s duty to make out a case for the applicant. I am however of the view that it is upon the first respondent to respond to allegations made against him and in the absence of that I remain persuaded that the applicant has made out a prima facie case for provisional sequestration of the first respondent’s estate. [72] In the circumstances the application for provisional sequestration must succeed. [73] I see no reason why costs should not follow the result. The applicant has asked for costs including costs of two counsel. [74] In the result I make the following order: 1. Rule Nisi for provisional sequestration of the first respondent’s estate is granted; 2. First respondent is called upon to show cause on 12 March 2013 as to why; 2.1. the provisional order for sequestration should not be made final; 2.2. the costs of this application, including costs of two counsel should not be the costs in the sequestration. 3. That service of this Order be effected by Sheriff; 2.1. On the first and second respondents at 14 Beauvais Avenue, Constantia, Western Cape; 2.2. On the employees of first respondent at 14 Beauvais Avenue, Constantia, Western Cape; 2.3. On any registered trade union which may be found by the Sheriff to represent any of the employees of the first respondent; 2.4. On the South African Revenue Service (SARS) at 22 Hans Strijdom Avenue, Cape Town. Boqwana AJ Acting Judge of the High Court of South Africa APPEARANCES: For the Applicant: Adv ARG Mundell SC and Adv L Buikman Instructed by: Korbers Inc. For the First Respondent: Adv BJ Manca SC Instructed by: David Randles Attorneys

[45] Section 8(g) of the insolvency Act provides that: A debtor commits an act of insolvency if he gives notice in writing to any of his creditors that he is unable to pay any of his debts.’

[46] The test as to how the notice is to be construed is whether the reasonable man receiving the notice would construe it as being the act of insolvency alleged.6

[47] The applicant referred to the email written by the first respondent to one Cotterell of the applicant as being notice given by the first respondent that he was unable to pay for his debts.

[48] I am not convinced that the email written by the first respondent to Cotterell on 2 October 2012 constituted notice of the first respondent’s inability to pay an amount he owed in respect of the lease agreements, within the meaning of section 8(g) of the Insolvency Act.

[49] Inasmuch as the email referred to ‘we’, the context in which it was written was in relation to the principal debtor’s inability to effect deliveries and to obtain POD’s which were required by Merchant Factors, before funding could be obtained. In my view no reasonable man could understand from that email that the first respondent had, in his personal capacity, no means to pay his debts.

[50] It is also common cause that the total arrear amounts on personal vehicles listed on the annexure to this email were paid by the first respondent.

[51] I accept that a notice of one’s inability to pay does not cease to be an act of insolvency as a result of the payment made subsequent to the notice being given. I am however of the view that the email referred to by the applicant is too vague to be construed as an act of insolvency committed by the first respondent.

Actual insolvency

[52] Having failed to establish an act of insolvency on the part of the first respondent it remains to be determined whether any factual insolvency has been proved by the applicant.

[53] In ABSA Bank Ltd v Rhebokskloof (Pty) Ltd and Others7 the court held as follows:

‘Even, however, where a debtor has not committed an act of insolvency and it is incumbent on his unpaid creditor seeking to sequestrate the former’s estate to establish actual insolvency on the requisite balance of probabilities, it is not essential that in order to discharge the onus resting on the creditor if he is to achieve this purpose that he set out chapter and verse (and indeed figures) listing the assets (and their value) and the liabilities (and their value) for he may establish the debtor’s insolvency inferentially. There is no exhaustive list of facts from which an inference of insolvency may be drawn, as for example an oral admission of a debt and failure to discharge it may, in appropriate circumstances which are sufficiently set out, be enough to establish insolvency for the purpose of the prima facie case which the creditor is required to initially make out. It is then for the debtor to rebut this prima facie case and show that his assets have a value exceeding the sum of his total liabilities.’8 (own emphasis)

[54] A prima facie case has been made on the actual insolvency by the applicant in my view. Upon a search at the Cape Town Deeds Office the applicant

found that the first respondent owned no immovable property. The property that the first and second respondent resided in showed that it was owned by JGN Trust, a trust of which the first respondent, the second respondent and their attorney Mr I Vukic were the trustees. The first respondent and second respondent were beneficiaries of this trust.

[55]The fact that the applicant was not able to find any assets registered in the name of the applicant against the liability of R R12 010 589.84 or R1 059 744.51 for that matter is in my view sufficient to show that prima facie there is actual insolvency.

[56] The first respondent did not rebut the applicant’s prima facie case. Therefore the applicant has proved actual insolvency on the part of the first respondent.

Advantage to creditors

[57] The Court may not grant a sequestration order, unless it is established that “there is reason to believe that it will be to the “advantage of the creditors of the debtor if his estate is sequestrated”9

[58] The applicant refers to the case of Meskin and Company v Friedman 10where Roper J held:

‘In my opinion, the facts put before the court must satisfy it that there is a reasonable prospect - not necessarily a likelihood but a prospect which is not too remote - that some pecuniary benefit would result to creditors. It is not necessary to prove that the insolvent has any assets. Even if there are none at all there are reasons for thinking that as a result of enquiry under the Act some may be revealed or recovered for the benefit of creditors, that is sufficient.’11

[59] In the Dunlop Tyres (Pty) Ltd v Brewitt12 the Court held that in the case of an arm’s length transaction sequestrating creditor does not have to set out in its founding

affidavit the details and intensity of averments required when the nature of the claim is under scrutiny although a proper case should always be made out.

[60] The Court went on to state that it will be sufficient if the creditor on an overall view of the papers can show for example that there is a reasonable ground for coming to the conclusion that upon a proper investigation by way of an enquiry the trustees may be able to unearth assets which might then be attached, sold and the proceeds disposed of for distribution amongst creditors.

[61] In this instance, the applicant alleges in its founding affidavit that the first respondent may have taken care to ensure that his immovable property and movable assets are not readily accessible to the creditors, that there is every reason to believe that, were an enquiry to be conducted by the Master of the High Court assets held by the first respondent through trusts such as the JGI Trust and other conduit companies would be revealed and may well be subject to the attachment by the first respondent’s trustees through ‘piercing the corporate veil’.

[62] It is also alleged by the applicant that it is inconceivable that the first respondent as the managing director of the business

employing 300 people has not himself been well remunerated and would no doubt be held to account for the proceeds derived from his business ventures. The applicant accordingly argues that the trustees would naturally call for the first respondent’s bank statements and other financial records immediately on his or her being appointed.

[63] The applicant also attaches CIPC Director Report which it alleges reveals that the first respondent has interests and directorships in Blue Port Trade 121 (Pty) Ltd (‘Blue Port’) and Yubel (Pty) Ltd ('Yubel'), which interests in and of themselves indicate that there is a reason to believe that it would be to the advantage of the first respondent’s creditors if his estate is sequestrated.

[64] The applicant introduces new averments in its replying affidavit which it alleges were in direct response to the first respondent’s

failure to provide facts in its answering affidavit. It also claims that those alleged facts came to its attention after it had filed the founding affidavit.

[65] In the replying affidavit the applicant alleges that there are two bonds registered over the registered property, in which the first and second respondents reside. One bond is in favour of South African Home Loans in the amount of R2.5 million and another one is in favour of Merchant Commercial Finance (Pty) Ltd in the sum of R8 million. It also alleges that Cotterell has now ascertained that the first respondent had property in Plettenberg Bay which is also not registered in his name but presumably in a trust or company name as an attempt to evade creditors. It also avers that the applicant has interests in a private plane and offshore funds.

[66] in response to the third respondent’s denial in the answering affidavit that the CIPC Director report did not show that he had an interest in any one of the company's listed, the applicant attaches to the replying affidavit CIPC Company Reports in respect of Blueport, Yubel, Seamo Investment (Pty) Ltd (‘Seamo’) and Taxi Trucks Logistics (Pty) Ltd (Taxi Trucks Logistics’) which reflect the first respondent as a director of those companies.

[67] The first respondent submits that the applicant is not allowed to make out a case in the replying affidavit. It should stand and fall by its founding affidavit. The first respondent accordingly raises an objection to these new issues.

[68] The applicant’s proposition is that if the first respondent wished to challenge or oppose averments of the replying affidavit, he should have filed a supplementary affidavit or an application to strike out those averments he was objecting to. The first respondent however has failed to do that.

[69] I am loathed to take these new facts into account due to their relevance in the application before me, especially those which seem to amplify the facts regarding directorships and the first respondent’s residence. Those facts were raised in the

founding affidavit but the first respondent offered no explanation in his answering affidavit.

[70] Even without taking the new issues into account I am satisfied that the applicant has been able to show in its founding affidavit, that prima facie there is reason to believe that it would be to the advantage of the creditors of the first respondent if the first respondent’s

estate is sequestrated.

[71] I agree that it is not the first respondent’s duty to make out a case for the applicant. I am however of the view that it is upon the first respondent to respond to allegations made against him and in the absence of that I remain persuaded that the applicant has made out a prima facie case for provisional sequestration of the first respondent’s estate.

[72] In the circumstances the application for provisional sequestration must succeed.

[73] I see no reason why costs should not follow the result. The applicant has asked for costs including costs of two counsel.

[74] In the result I make the following order:

1. Rule Nisi for provisional sequestration of the first respondent’s estate is granted;

2. First respondent is called upon to show cause on 12 March 2013 as to why;

2.1. the provisional order for sequestration should not be made final;

2.2. the costs of this application, including costs of two counsel should not be the costs in the sequestration.

3. That service of this Order be effected by Sheriff;

2.1. On the first and second respondents at 14 Beauvais Avenue, Constantia, Western Cape;

2.2. On the employees of first respondent at 14 Beauvais Avenue, Constantia, Western Cape;

2.3. On any registered trade union which may be found by the Sheriff to represent any of the employees of the first respondent;

2.4. On the South African Revenue Service (SARS) at 22 Hans Strijdom Avenue, Cape Town.

Boqwana AJ

Acting Judge of the High Court of South Africa

APPEARANCES:

For the Applicant: Adv ARG Mundell SC and Adv L Buikman

Instructed by: Korbers Inc.

For the First Respondent: Adv BJ Manca SC

Instructed by: David Randles Attorneys

1Act, 24 of 1936

2 2005 (2) SA 432

3Nedcor Bank Limited supro at para 12

41983 (2) 543 (A)

59th edition, 2003, at page 108 para 5.7

6Barlow's (Eastern Province) Ltd v Bouwer 1950 (4) SA 385 at 390 E-F

71993 (4) SA 436

8Absa Bank Limited supra at 443 D

9Sections 10(c) and 12 (l)(c) of the Insolvency Act

10 1948 (2) SA 555 at paragraph w

11Meskin supra at 559:

12 1999 (2) SA 580 at paragraph h