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[2005] ZAGPHC 71
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De Beer v Hamman NO and Others (A1290/04) [2005] ZAGPHC 71 (25 July 2005)
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(TRANSVAAL PROVINCIAL DIVISION) DATE: 25/07/2005 REPORTABLE HENNIE DE BEER APPELLANT (Respondent a quo ) And A V HAMMAN NO 1ST RESPONDENT E M MOTALA NO 2ND RESPONDENT WHEELS 5 CC (in liquidation) 3RD RESPONDENT 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
BERTELSMANN, J
1.
This matter comes before us on appeal.
2.
The first and second respondents were the first and second applicants in the court a quo.
3.
They are the duly appointed liquidators in the insolvent estate of a certain Michael Muller Otto. At the time the application for a warrant of attachment was granted by the court a quo in terms of section 69(3) of the Insolvency Act, Act 24 of 1936, first and second respondents had only been appointed as provisional liquidators.
4. The first respondent is a co-liquidator in the estate of the third respondent, which was joined as third applicant in the court a quo. The insolvent estate of the third respondent was joined in the proceedings because the liquidators of the third applicant and the trustees of the insolvent estate of the aforesaid Otto are not certain whether the assets involved in this matter belonged to the insolvent estate of the individual or of the corporate entity. 5. The appellant is Hennie de Beer, an adult businessman residing at Raptors’ View, Hoedspruit, Limpopo Province.
6.
The respondents approached the Magistrate’s Court for the district of Phalaborwa, held at Phalaborwa, on 20 October 2003 for a warrant in terms of section 69(3) of Act 24 of 1936, authorising them to attach goods which belonged to the aforesaid Otto,
alternatively the third respondent, and which were allegedly in the possession of the appellant.
7. The warrant was executed and goods allegedly belonging to the insolvent estate (s) were attached. 8. On the extended return day, the matter was opposed. The appellant requested the court a quo to release the attached goods, claiming that he was the lawful owner thereof, having allegedly acquired them by way of purchase from Mr Otto, hereinafter referred to as “the insolvent”. 9. From the papers, the following facts emerged:
9.1
The insolvent is married out of community of property to one Stephanie Otto;
9.2 On 3 September 2003, his estate was urgently sequestrated by an order of this court; 9.3 He had abandoned his home prior to the provisional order of sequestration being issued, allegedly on 15 August 2003; 9.4 Several criminal charges for fraud and theft have been laid against him; 9.5 The amount involved in these charges is said to run to some R15 million; 9.6 The insolvent and his wife have disappeared and have not been traced since 15 August 2003; 9.7 On 18 August 2003, three days after Otto disappeared, his motherinlaw gave an instruction to a transport operator to remove furniture and appliances from his residence, at 15 Jakaranda Street, Vanderbijlpark; 9.8 The goods were removed to a farm in the Hoedspruit district, known as Le Bamba;
9.9
The appellant claimed to be the lawful owner of the goods after they had been traced to the farm
and had been duly attached;
9.10 The list of goods which were removed appear to consist of furniture and appliances sufficient to furnish an average house. They include boat, a valuable Rolex wristwatch and a large TV-set;
9.11
The assets were found in a storeroom on the farm Le Bamba. They were not being used.
10.
In his answering affidavit the appellant lays claim to ownership of the assets on the following basis:
10.1
He describes himself as a South African citizen with permanent resident rights in Florida, USA.
10.2 In 1999, he purchased a business in Jacksonville and expanded his business interests there; 10.3 During 2002 he decided to sell 50% of his interests in this business and to return to South Africa; 10.4 During 2002 he made several trips to South Africa to investigate business opportunities; 10.5 On 25 October 2002 he arrived in Johannesburg with the intention to look at farms in the Lowveld and Botswana in order to start an ecotourism venture; 10.6 During 1999 he met a certain Mr Ian Cussens, who also purchased a business in Jacksonville and introduced the appellant to business opportunities in Jacksonville; 10.7 Mr Cussens allegedly returned at the end of 1999 to South Africa; 10.8 The appellant and Cussens had maintained contact since then. Cussens met the appellant on 25 October 2002 at the Johannesburg International Airport;
10.9
Cussens then informed the appellant that he knew of a certain Mr and Mrs Otto who were preparing to emigrate and were keen to sell the entire contents of their house;
10.10 Cussens introduced him to the insolvent and the insolvent’s wife; 10.11 The insolvent and his wife showed him the furniture and appliances, which were then sold to the appellant for a purchase price of R92 000.00;
10.12
A deed of sale was drawn up, in which it was agreed that the furniture and appliances would be stored on the appellant’s behalf
until such time as the appellant would return to South Africa to start his new business in this country.
11.
The agreement of sale was an exhibit during the proceedings in the court a quo. It records that the following was sold: (my translation)
“Furniture for three bedrooms Study furniture + PC and Printer 2 x Dining room suites + 1 x Buffet + 1 x Mirror
Microwave oven, fridge, washing machine and Tumbledryer
Living room suite
TV set Sound system 2 x sets of garden furniture Heating pump (presumably for a heated swimming pool) Trailer Rolex Watch Camping equipment + Paintings
The above will be stored until Hennie de Beer returns to South African and will then be delivered.”
12.
The document purports to have been signed at Vereeniging on 27 October 2002 by the insolvent and his wife.
13 The document contains an acknowledgment by the insolvent and his wife of the receipt of R92 000.00.
14.
In the affidavit filed on behalf of the respondents in the proceedings a quo, it is recorded that Mr Verhoef (co-liquidator of the third respondent), Inspector Wolmarans of the South African Police Services and Mrs Smart, attorney of record for the respondents, proceeded to Le Bamba. They discovered the assets stored as aforesaid and met the respondent. The respondent, according to the affidavits, confirmed that he purchased the
movable property from Mr Otto, in a transaction that allegedly took place during November 2002. He stated that he paid R90 000.00 cash for the contents. The only proof of that transaction is the so-called deed of sale that has been referred to above.
15.
Mr Verhoef is alleged to have enquired from appellant whether he had bought a TVset from the insolvent, which the appellant denied.
16.
He remembered that he had purchased the item, said to be worth some R50 000.00, when his attention
was drawn thereto by Mr Verhoef. (The value of the TV-set is in dispute.)
17. The appellant was asked to identify a hi-fi set in the warehouse, which he could not do. He did not deny that there was a hi-fi set, however, but thought such hi-fi set was in storage. None is referred to in the deed of sale. 18. He could not place a value on the Rolex Watch.
19.
When the attorney of record, Mrs Smart, asked the appellant what his relationship with Mr Otto was,
he replied, according to her, that he had never met the insolvent, but that his friend Cussens concluded the purchase transaction with the Ottos while he was in the United States of America.
20.
In a duplicating affidavit, the appellant disputes Mrs Smart’s allegations, and in particular
that he informed her that it was Cussens who had purchased the property.
21.
The court a quo regarded the appellant’s version as improbable and confirmed the attachment of the property.
22.
On appeal, the respondents did not actively enter the lists, but informed the court that they abided
by the court’s decision. Only the appellant filed heads of argument.
23. This does not relieve this court of the task of deciding the issue.
24.
During his argument, Mr Shepherd on behalf of the appellant relied on the provisions of section 32 of the Insolvency Act for the submission that section 69(3) only authorises the attachment of goods allegedly belonging to, or being suspected on reasonable grounds of belonging to an insolvent estate, which are being concealed from the liquidator. The warrant, Mr Shepherd correctly submitted, only authorised the liquidator or trustee to search for and take possession of the property, book or document
concerned.
25.
In the light of the fact that the appellant laid claim to ownership of the goods concerned, so the argument ran, the magistrate was not empowered to confirm the attachment, nor were the respondents entitled to retain such property. They should
have relied on section 32 of the Insolvency Act to obtain possession thereof after the warrant of attachment was set aside.
26.
Section 32 entitles a trustee to claim or reclaim assets of an insolvent estate that have allegedly been disposed of. A creditor may also do so if the trustee fails to take steps to set aside any disposition in terms of section 26, 29, 30 or 31 of the Insolvency Act. These include dispositions made without value, or with an eye to conceal assets from the trustee, or dispositions made to grant a undue preference
to a creditor. Mr Shepherd emphasised that the court a quo should not have ignored the appellant’s claim to ownership, nor should the court have disregarded the agreement of sale entered
into between him and the insolvent, and should therefore have referred the matter to evidence. In this regard he relied on Cooper NO v First National Bank of South Africa Ltd 2001 3 SA 705 (SCA); Kerbyn 178 (Pty) Ltd v Van den Heever and Others NNO 2000 4 SA 804 (WLD); Advanced Mining Hydraulics (Pty) Ltd and Others v Botes NO and Others and Putter v Minister of Law and Order and Another NO 1988 2 SA 259 (T).
27.
In the last mentioned decision, ROUX, J, correctly emphasised that the magistrate issuing a warrant is enjoined to act after he has
been persuaded by the applicant for the warrant that some person is concealing property belonging to the insolvent estate, or that property is being held unlawfully that belongs to the insolvent estate.
28.
In the matter that ROUX, J was dealing with, the person holding the property laid claim to a lawful
pledge over the motor vehicle concerned. The existence of this claim was known to the liquidator of the insolvent company prior to applying for a warrant to be issued.
29.
Under these circumstances, the Court, with respect correctly, emphasised that the warrant should not have been issued without hearing the other party. It is under
those circumstances that the provisions of section 32 of the Insolvency Act or section 386(4)(a) of the Companies Act, Act 61 of
1973 apply. The ratio of the Putter decision appears on page 261I, where ROUX J states:
“My conclusion is that a liquidator is in law not permitted to use the provisions of s 69 of the Insolvency Act to establish
whether or not a person is lawfully or unlawfully withholding property allegedly belonging to the company in liquidation. The liquidator
is bound to rely on s 386 of the Companies Act.”
30.
The decision in Advanced Mining Hydraulics, supra, is to the same effect. FABRICIUS, AJ, refers in his judgment to a decision by PLEWMAN J (as he then was) in Life Science (1994) (Pty) Ltd and Another v Powell NO and Another, case number 18821/95. In that judgment, PLEWMAN J said the following:
“Resort to s 69(3) would clearly be inappropriate where there was a clear and open and reasonable dispute between the possessor
and liquidator as to whether the goods were the company’s goods and where there was some adequate safeguard to there being
damage, loss or risk indeed or where there is no possibility of removal or concealment of the goods in question. (sic) The correct approach would then be to decide whether in such circumstances the service of the warrant had been justified. Circumstances
may also be present which would enable the magistrate to decide with justification that goods were being unlawfully withheld. The particular
situation will therefore dictate whether or not it was proper for the applicant to invoke the particular section.”
31.
The argument advanced by Mr Shepherd suggests that the mere raising of a claim to ownership by the appellant, coupled with the reliance on the alleged deed of sale,
is sufficient to compel the magistrate not to issue a warrant, or, alternatively, not to confirm the attachment of the goods.
32.
This approach is not supported by the authorities, nor is it a correct interpretation of section 69
of the Insolvency Act.
33.
A liquidator and/or a trustee is obliged to ensure that goods belonging to the insolvent estate are
found, secured and liquidated in accordance with the provisions of the Insolvency Act and/or the Company Act for the benefit of the creditors of the insolvent estate. A magistrate cannot issue a warrant in terms of section
69(3) of the Insolvency Act unless he or she is, at least prima facie, of the view that the assets to be attached are part of the insolvent estate.
34.
The mere fact that the person in whose possession they are found, claims to have acquired ownership thereof, cannot per se stand in the way of issuing a warrant for attachment, or confirming the attachment if it is challenged by the alleged owner.
35.
At the very least, the person claiming a right to possession must establish a bona fide claim thereto, which raises a bona fide dispute whether the trustee or liquidator is entitled to the return of the goods or not.
36.
This requires the magistrate to consider the bona fides of the claim made by the appellant in the instant case to ownership of the goods.
37.
When the appellant’s claim is considered, it is in my view clear that his case is replete with
improbabilities to the extent that I find it impossible to hold that his claim to ownership is bona fide. The most striking improbabilities in the appellant’s version are the following:
37.1
The appellant claims to have purchased the contents of the insolvents dwelling without any valuation of the goods concerned;
37.2
A global sum of R92 000.00 was allegedly agreed upon, without any indication of how the sum was arrived at;
37.3 The contents of the insolvent’s home were allegedly sold at a time when the appellant had not yet decided when he would be returning to South Africa;
37.4
At the time of the alleged sale, the appellant clearly had not acquired his own dwelling in South Africa;
37.5 There is no evidence why the appellant would have wanted to purchase used furniture and appliances at a stage when he was still contemplating his return to South Africa and had not yet established or determined a date nor found a home where he was going to stay; 37.6 The court a quo correctly underlined the improbability of the appellant’s decision to purchase used furniture from someone who was known only to a friend, namely Mr Cussens; 37.7 Mr Cussens has not confirmed the appellant’s version; 37.8 The term in the alleged deed of sale that the goods would be “stored” until the appellant required them;
37.9
The fact that the goods were continued to be used by the insolvent and his family until the insolvent’s
sudden departure;
37.10 The fact that the sale is alleged to have taken place for cash; 37.11 The failure by the appellant to indicate the source of the cash that allegedly changed hands;
37.12
The fact that the appellant was prepared to purchase used furniture for cash from a person allegedly unknown to him is in itself unusual
to the extent that it must raise serious doubts in the context of this particular matter;
37.13 All the goods were only removed after the insolvent took flight; 37.14 The appellant does not explain how he became aware of the fact that Mr Otto had vacated his premises; 37.15 The appellant does not explain why he then made arrangements, through the insolvent’s motherinlaw, to obtain possession of the furniture; 37.16 The appellant fails to explain why the goods were removed to the particular farm at which they were found; 37.17 The appellant does not even allege that he has now established a home in which the furniture will be used.
38.
Given the factual background of this case, the conclusion is unavoidable that the appellant’s
claim to the assets concerned is not bona fide. In the light of the grave improbabilities in appellant’s version, the court a quo was justified in rejecting his application for the release of the goods and the withdrawal of the warrant.
39. It follows that the appeal must be dismissed with costs.
E BERTELSMANN
JUDGE OF THE HIGH COURT I agree J POSWA JUDGE OF THE HIGH COURT A1290/2004 HEARD ON: 11/04/2005 FOR THE APPLICANT: ADV MT SHEPHERD INSTRUCTED BY: MESSRS EHLERS INC FOR THE RESPONDENT: ADV OJ VAN DER SCHYFF INSTRUCTED BY: MESSRS SMART ATTORNEYS DATE OF JUDGMENT: 25/07/2005 |