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[2011] ZAECGHC 72
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Gilfillan and Another v Bowker (1746/2011) [2011] ZAECGHC 72 (27 October 2011)
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IN THE HIGH COURT OF SOUTH AFRICA
(EASTERN CAPE – GRAHAMSTOWN)
CaseNo: 1746/2011
In the matter between:-
PHILLIP MOUNSEY GILFILLAN ….........................................................First Applicant
CANCRI TROPICUS 144 CC
t/a GRAHAMSTOWN VETERINARY CLINIC …....................................First Applicant
and
LOUISE BOWKER ….......................................................................................Respondent
Coram: Beyleveld AJ
Date heard: 27 October 2011
Date Delivered: 27 October 2011
Summary: Provisional Sequestration - Respondent admits portion of debt - Tenders payment thereof - No tender for mora interest - Such interest not claimed as such in application papers - Tender of capital insufficient - Provisional order granted
JUDGMENT
BEYLEVELD AJ
[1] The Applicants seek the provisional sequestration of the Respondent.
[2] The test to be applied in considering whether a provisional order of sequestration should be issued is trite.1
[3] The Court's power to grant or refuse such an order is discretionary.2
[4] The Respondent was previously employed by the First Applicant, veterinarian. At some stage he transferred his practice to the Second Applicant.
[5] It is not disputed that the Respondent is indebted to the Applicants for monies unlawfully appropriated; it is the amount that it in dispute.
[6] The Applicants claim the amounts are R3 143 796.88 and R192 588.00, whilst the Respondent admits to an amount of Rl 287 715.91 of which she has repaid R732 294.61.
[7] This is not a case where the Respondent disputes a portion of the debt and, based solely on such dispute, contends that a provisional order is not appropriate, even where the admitted portion is not paid.
[8] There is no doubt that the Respondent is factually insolvent. Leaving aside the dispute as to whether or not she made an admission in this regard, the best proof of solvency is the actual payment of one's debts.3 The Respondent cannot pay from her own resources the amount she admits is owing.
[9] It is common cause that the Respondent at the latest on 3 February 2011, admitted to misappropriating Rl 260 000.00. In fact, prior to that day (the date when a meeting was held with retired attorney Poole) the Respondent had already effected payment to the Applicant of a portion of such admitted indebtedness.
[10] The crisp issue, as it appears to me, is whether or not the Respondent's tender, which is claimed to have been made prior to the application, and as contained in the answering and supplementary affidavits, constitutes a sufficient tender in respect of the admitted amount.
[11] Although it is not clear from the papers when the Respondent first made her tender,4 the Respondent's attorney records the following in a letter dated 26 May 2011, addressed to the State Attorney:
"Kindly note that we are in the process of considering and negotiating a plea bargain... and in terms of whereof (sic) our client will undertake to settle the full outstanding amount determined to be due to Dr Gilfillan together with interest thereon...." (my underlining)
[12] Mr. Pretorius, appearing for the Respondent, argued that the tender was sufficient and the amount in excess of the admitted liability is disputed on bona fide and reasonable grounds.5
[13] He further argues that mora interest should be disregarded on the basis that the issue of payment of mora interest was first raised in argument by Ms. Beard, who appeared for the Applicants.
[14] It is further argued on behalf of the Respondent that as all the accounting documents are in the possession of the Applicants, it would be onerous and difficult for her to quantify mora interest.
[15] The difficulty is perceived and not real. The Respondent herself has compiled a list (dated) indicating each and every unlawful transaction.6 Insofar as repayments are concerned, she must know when she caused these to be made.
[16] On any version, if mora interest is to be taken into account (even for one month), the additional indebtedness would exceed the jurisdictional threshold in terms of the Insolvency Act.7
[17] I do not agree that the issue of mora interest is to be ignored merely because it was not raised by the Applicants in the papers. Firstly, mora interest flows ex lege and in respect of the admitted indebtedness. The amount appropriated is not only "capable of prompt and ready ascertainment and of speedy and easy proof8 but in fact fixed by virtue of the admission of liability.
[18] In Nkengana & Another v Schnetler & Another9 the question was also raised as to whether a tender was sufficient without a tender for mora interest. This issue was first raised during argument on appeal and the Court held that as a result of a waiver mora interest was not claimable and therefore the tender was adequate.
[19] The claim in respect of the admitted liability is clearly a liquidated claim.10
[20] Mora interest is therefore, as a matter of law, payable from the date of each misappropriation.11
[21] In Joint Stock CO Vanvarinskaye v Absa Bank Ltd & Others12 mora interest was ordered from the date of the misappropriation of funds.
[22] In addition, and as previously alluded to, the Respondent, through her attorney, foresaw (and promised) the necessity of tendering mora interest.
[23] I am accordingly satisfied that prima facie the Applicants have established a claim at the very least for payment of mora interest. Although it is not necessary for me to decide whether the "disputed" amount is genuinely disputed, I tend to view that on the probabilities such amount is in fact due and payable.
[24] Insofar as advantage to creditors are concerned, the mere fact that from the proceeds of the sale of the house substantial amounts were paid to family members as "loan" repayments, which cries out for investigation by a Trustee, constitutes sufficient advantage. In addition the real possibility exists that a Trustee consequent upon an investigation, would uncover further assets.
[25] Even where sequestration is used as a form of execution, there may be enough merit in some circumstances for a Court to sanction it. This may
"consist of the possibility that, through the Act's machinery, impeachable
transactions, the concealment of assets and other irregularities are detected, exposed and remedied, with the result that the single creditor eventually recovers more than ordinary execution would have yielded. “13
[26] In the exercise of my discretion I therefore issue the following order:
[26.1] That the estate of the Respondent is hereby placed under an Order of Provisional Sequestration in the hands of the Master of the High court;
[26.2] That a Rule Nisi do issue calling upon the Respondent to show cause, if any, to this Court on 24 November 2011 why a final Order of Sequestration should not be granted against the Respondent's estate;
[26.3] That a copy of this Order be served personally upon the Respondent;
[26.4] That a copy of the Rule Nisi be published forthwith in the Herald Newspaper; and
[26.5] That a copy of the Rule Nisi be served on the Commissioner of the South African Revenue Services.
A BEYLEVELD
Acting Judge of the High Court of South Africa Appearances:
For Applicants: Adv. M Beard, instructed by NN Dullabh & Co, Grahamstown For Respondent: Adv. B Pretorius, instructed by Neville Borman & Botha, Grahamstown
1Mars: The Law of Insolvency, 9th Ed p 123
Provincial Building Society of South Africa v Du Bois 1966 (3) SA 76 (W)
2Epstein v Epstein 1987 (4) SA 606 (C)
3Fedco v Meyer 1988 (4) SA 207 (ECD) p 212F - H
4Annexure "LBRJL2" to the affidavit of Attorney Lawrence.
5See: Kalil v Decotex (Pry) Ltd & Another 1988 (1) SA 943 (A) p 980B - C
6Annexures "LB11" to "LB 14"
7Act 24 of 1936 as amended.
8robeit v Baker 1983 (3) 229 (D&CLD) p 237A
9 [2011] 1 All SA 272 (SCA) p 277 para 14
10Attorneys, Notaries and Conveyancers Fidelity Guarantee Fund v Tony Allem (Pty) Ltd and Another [1990] ZASCA 5; 1990 (2) SA 665 (AD) p 674A - E
11" Kleynhans v Van der Westhuizen NO 1970 (2) SA 742 (A) p 750A - B
12[2008] ZASCA 35; 2008 (4) SA 287 (SCA) p 299 para 48
13Gardee v Dhanmanta Holdings & Others 1978 (1) SA 1066 (NPD) p 1069A