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SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document in compliance with the law and SAFLII Policy

IN THE HIGH COURT OF SOUTH AFRICA

EASTERN CAPE LOCAL DIVISION, PORT ELIZABETH

Case no: 2919/2013

DATE: 03 MARCH 2015

NOT REPORTABLE

In the matter between:

CONCRETE 4 U (PTY) LTD...................................................................................................Applicant

And

WILLEM DU PLESSIS GREEFF SNR N.O,

In his capacity as trustee for The Time Being

of the Willie Greeff Trust (IT599/1998).......................................................First Intervening Creditor

VIAAN FRANCOIS VELLEMAN, N.O,

In his capacity as trustee for The Time Being

of the Willie Greeff Trust (IT599/1998)...................................................Second Intervening Creditor

WILLEM DU PLESSIS GREEFF JNR N.O,

In his capacity as trustee for The Time Being

of the Willie Greeff Trust (IT599/1998).....................................................Third Intervening Creditor

JUDITH JOHANNA GREEFF, N.O,

In his capacity as trustee for The Time Being

of the Willie Greeff Trust (IT599/1998)...................................................Fourth Intervening Creditor

vs

[K………] [B……..] [G………..]

(Identity number: 7……………)

In her capacity as trustee for The Time Being

of the WILLEM DU PLESSIS GREEFF

TRUST (IT599/1998) Date of Birth [2… J…. 1….]

Married in community of property.............................................................................First Respondent

[S……] [G…….]

(Identity number: 7……………….)

Date of birth: [5….. J……….. 1………..]...............................................................Second Respondent

Date of hearing : 30th October 2014

Date of delivery : 3rd March 2015

Summary: This case involves an application for rescission of a final order of sequestration. Evidence shows that the two respondents herein had in fact initiated the sequestration proceedings in co-operation with the applicant with a view to prevent the sale in execution of their membership interest in their close corporation. They did not oppose the interim order which was made final. The Court refused their application for rescission of the final order on various grounds including the fact that they had no bona fide defence to the main application for sequestration.

JUDGMENT

TSHIKI J:

[1] For the sake of convenience, the parties are to be referred to as in the main application for sequestration. In this matter the respondents seek in the main an order, inter alia, in the following terms:

[1.1] condonation of the respondents’ non-compliance with any rules of this Court, if any, consequent upon the fact that the respondents’ papers were prepared by lay persons;

[1.2] an order rescinding the confirmation of the rule nisi granted on the 3rd December 2013, which according to respondents was the day on which the respondents expected to be given a date for the hearing of their application for rescission which was filed on the 19th December 2013 to be agreed upon as a rule nisi and could not be confirmed on the 26th December 2013 due to the application for rescission aforesaid;

[1.3] that the order permitting the intervening creditors under case no 2919/2013 be rescinded;

[1.4] that an order compelling Concrete 4 U to honour an undertaking it gave to the applicants in case no 1089/2013 to wait the conclusion of the claims of the respondents against NMBM and WK Construction.

[2] The applicant and the four intervening creditors also referred to herein as the “Trust” have opposed this application. In their opposition of this application, they make common cause with each other, each relying not only on their own submissions but also on those of the other.

[3] In these proceedings the respondents have filed a lengthy founding affidavit whose contents are mainly irrelevant. The purpose of their affidavit is to persuade this Court to rescind the final sequestration against them which was granted on the 3rd December 2013. A perusal of their rescission application reveals multiple conspiracy theories and plots by each and every entity that has done business with the respondents’ close corporation (the “CC”) eg Penny Pincers and others.

[4] Respondents’ main contentions of note are:

[4.1] that they were taken by surprise when the applicant and the Trust sought a final order of sequestration on the 3rd December 2013 as they were of the view that a date would be arranged to argue their removed rescission application;

[4.2] that the intervening creditors have no locus standi in judicio because the respondents are not indebted to the Trust;

[4.3] that the applicant has no locus standi as the indebtedness of the respondents to the applicant is denied;

[4.4] that the second respondent was not alerted to the contents of a letter signed by him and relied upon by the applicant as an act of insolvency in the sequestration application, and accordingly, the applicant should not be permitted to rely on such act of insolvency.

[5] An application to rescind an order is either in terms of section 149(2) of the Insolvency Act 24 of 1936 (the “Act”) or in terms of common law. In terms of section 149(2) of the Act and in the absence of exceptional circumstances, the respondents are required to at least establish sufficient cause which in turn involves two essential elements which are:

[5.1] that the party seeking relief must present a reasonable and acceptable explanation for his default; and

[5.2] on the merits such party must have a bona fide defence which, prima facie, carries some prospect of success. (Storti v Nugent and Others 2001 (3) SA 783 (W) at 806D).

[6] It must, therefore, be established whether or not the respondents have succeeded in proving the existence of the two requirements. Section 149(2) of the Insolvency Act 24 of 1936 provides the following guidelines.. The Court may rescind or vary any order made by it under the provisions of this Act, under the following circumstances. Where a final order of sequestration has been granted and the insolvent wishes to have the order rescinded he or she must satisfy the following requirements:

[6.1] the Court has to consider that in such a case the applicant has to prove exceptional circumstances more so that the applicant is accorded an appeal right by section 150(1) of the Act and its provisions for obtaining rehabilitation;

[6.2] the Court has also to consider that there are interests additional to the insolvent’s interests that are involved where such a rescission is sought which includes the public interest;

[6.3] the Court will not be lightly persuaded under section 149(2) to set aside a final sequestration order solely on consideration affecting the merits of the original grant.;

[6.4] the Court, when considering the application for rescission of the final order of sequestration under section 149(2) must be satisfied that all interested parties have had notice of such application;

[6.5] where it is alleged that the order should not have been granted in the first place, the facts should at least support a cause of action for a common law rescission; and

[6.6] the Court will also not exercise its discretion in favour of the application in terms of section 149(2) if undesirable consequences would follow.

[7] In the first place the record shows that the sequestration proceedings were initiated by the respondents in co-operation with the applicant with a view to prevent the sale in execution of their membership interest in their close corporation. Confirmation of these allegations appear on page 279 of the affidavit by Gregory Roland Parker. Respondents signed the letter admitting that they were unable to pay the outstanding debt owing to the applicant. The applicant relied upon that letter in its application for the sequestration of the respondents. They, therefore, did not oppose the sequestration application. In my view, there could have been no other plausible reason for their failure to defend the application for sequestration other than that they initiated the sequestration proceedings. Annexure “WG3” also confirms the respondents’ indebtedness to the applicant and other creditors. In such circumstances, there can be no genuine or bona fide defence to the applicant’s claim against the respondents.

[8] Indeed, the aforesaid default was by design and not as a result of any excusable and bona fide oversight on the part of the respondents. The evidence submitted by the applicant proves clearly that the sequestration was initiated by the respondents. It could be that the respondents only changed their minds and challenged the confirmation of the sequestration after they realised the consequences of their earlier actions and decisions. The papers before me also show that the sequestration papers were all served and in fact received by the respondents on the 9th October 2013 as well as on other dates which the further notices were served on them.

[9] It also appears from the papers that the respondents were informed that if the indebtedness to the applicant was paid prior to the return date the rule nisi could be discharged, but if payments were not made, the rule nisi would have to be made final. I have no reason not to accept Mr Greg Parker’s affidavit contents. He is the officer of this Court and, therefore, there is no reason for me not to rely on his affidavit especially when there is no other reliable evidence on affidavit deposed to by the respondents.

[10] Mr Mkhuhlu who appeared for the respondents pro bono on the date of argument of this application did not advance his clients’ case any further. It also follows that when the sequestration application was called on 3rd December 2013, the removed rescission application was not before Court. For that reason, the Court was entitled to confirm the rule nisi. Probabilities which can be gleaned from the papers before me also show that the respondents could not pay their debts because their liabilities exceeded their assets in the sum more than R16 million. It follows that the respondents’ factual insolvency is a compelling independent ground justifying their final sequestration, this in addition to their various acts of insolvency they had committed.

[11] In my view, respondents have also not shown any usual or special or exceptional circumstances which justify the relief sought by them. There is also no valid basis justifying this Court’s rescission of the judgment on grounds of common law.

[12] It, therefore, follows that in view of the fact that the costs associated with opposing the rescission application should be paid by the Trustee of the respondents as a recoverable administration expense.

[13] In the result, the following order shall issue:

[13.1] The application for rescission of default judgment herein is hereby dismissed with costs which costs shall be paid by the Trustee of the respondents as a recoverable administration expense.

P.W. TSHIKI

JUDGE OF THE HIGH COURT

For the applicants : Mr Mkhuhlu

On pro bono basis

For the respondents : Mr JD Huisamen

Instructed by : Lexicon Attorneys

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