HIGH COURT OF LESOTHO
YUDELMAN LESOTHO WHOLESALERS (PTY) LTD
by the Hon. Acting Mr. Justice M. L. Lehohla on the 12th day of
purposes of judgment the two applications above are treated as one.
On 2nd July 1986 applicant sought and obtained a provisional
extension of the return date argument was heard from counsel for both
parties. The petitioner's Counsel argued and prayed
of the provisional order. The application was opposed.
Koornhof the attorney for the petitioner argued that the affairs of
respondents in both applications were Interwoven. Hence
to treat these matters as one.
heads of arguments the petitioner submitted that respondent has
committed an act of insolvency and is in fact insolvent.
petitioner has relied on the affidavit of one Gerard John Williamson
who in terms of a Resolution of the board of directors
June 1986 a copy of which is annexed to the papers marked "A",
is authorised to represent it (the petitioner).
In para 3
of his affidavit the deponent avers that Respondent Lefu Gilbert
Tlali carries on business under the firm names of Lefu
Telang Store at Mokhotlong.
Ad 4 he
avers that respondent is indebted to the petitioner in sums of
M100,000 and M23,716-21 with interest at 11% in terms of
dated 28th April 1986 granted in his favour in CIV/T/185/86 and
CIV/T/165/86 with costs amounting to M385-97 and M395-26
avers that the petitioner holds no security for payment of the
amounts appearing loco citato.
keeping with petitioner's attorney's heads of argument the deponent
Ad 6 further averred that respondent's affairs are so closely
and interwoven with the affairs of his comapny Lefu Wholesalers (Pty)
Ltd that it is extremely difficult to say which assets
belong to him
and, which to his company, or which liabilities are personal to him
and which are those of his company. In an annexure
the petitioner has filed a petition relating to Lefu Wholesalers PTY
Ltd and urges the court to order the
liquidation of that company on
papers filed simulteneously with the ones filed
perusal of the civil trials referred to by petitioner's attorney
regarding the difficulty of determining what property belongs
respondent personally as against to what to his business lends
credence to that attorney's observations that the two sets of
property are interwoven. In the premises the petitioner's prayer in
para 7 of the deponent G.T. Williamson is granted.
opposing affidavit at page 34 of the record in para 4.2 respondent
has made reference to the petitioner's invoice marked
showing the amount due as M23,020.00. He went further to show that in
terms of annexures "BB" "CC"
cheques were paid by him to the creditor in the sums of M5,998.00;
M5998.00 and M6,O66.OO during the dates 12th
March 1985, 16th
December 1985 and 29th November 1985 respectively. He contends that
the petitioner did not give him credit for
those payments and submits
through his attorney that in obtaining judgment for the amount of
M23,716.21 in respect of which certain
payments were effected
without any credit being shown and the effect of which if it was
given would be to reduce the above
sum, the petitioner did so by
fraud and therefore has not been honest with this Court.
petitioner's attorney replied to these averments by submitting
that even where a debtor disputes the claim the Court may,
satisfied that the opposition is not bona fide and that the debt
substantially exceeds the statutory amount, grant a sequestration
order although unable to decide the exact amount. See Insolvency
Proclamation 51/1957 Sections 9(1) and 12(1) a and
DHOOMA 1932 NPD 301.
petitioner obtained judgments fraudulently in provisional sentence
summonses in either or both of CIV/T/165/86 and CIV/T/185/86
matter that cannot be put right in these proceedings as this Court is
functus officio. See V.G.M. HOLDINGS LTD 1941 3 All
E.R. 417 where
the Editional Note reads as follows:- "....... It is settled
that the court can vary any order before it is
passed and entered.
After it has been passed and entered, the court is functus officio,
and can sake no variation itself. Any variation
which may be made
must be made by a court of appellate jurisdiction." See also
Mordue vs Palmer Ch. App 22; Henfree vs Bromley
6 East 389. There it
will be seen that an arbitrator or umpire who has made his award is
functus officio and could not by common
law alter it in any way
whatsoever; he could not even correct an obvious clerical
opposition to Williamson's assertion that Respondent trades under the
firm names of Lefu Hotel and Telang Store at Mokhotlong
para 4 says
" (a) Since April 1985 I stopped to trade as Telang Store and
avers that since that day these entities were incorporated as
companies with limited liability; and goes further to say
petitioner was fully aware of this fact am the respondent had been
trading closely with (petitioner) for a considerable time.
petitioner's averments in the passage just referred to respondent
lays stress on the fact that incorporation of a company
is a public
act and thereby implies that
petitioner must have been aware of the incorporation of the two
entities referred to above.
however the petitioner ad para 3 has pointed out that its attorneys
of record made searches in the Companies Registry.
The result of the
search revealed that on 29th April 1986 two Companies with the names
Lefu Hotel (Pty) Ltd and Telang Store (Pty)
Ltd were registered under
number 86/59 and 86/60 respectively. Thus showing that it cannot be
true that Respondent stopped trading
and incorporated these companies
in April 1985.
on Section 8(o) of the Insolvency Proclamation 51/57 petitioner's
attorney submitted that respondent has committed an act
by disposing of his assets to his "so-called incorporated
company." The Section reads that a debtor commits
an act of
insolvency "(c) if he makes or attempts to make any disposition
of any of his property which has or would have the
prejudicing his creditors or of preferring one creditor above
a long shadow on respondent's intentions that the incorporation of
his two companies was effected just a day after default
provisional sentence judgments were obtained against him i.e. on 28th
April 1986. Mr. Pheko for respondent maintains that he
had no right
of audience in respect of matters preceding those judgments. He thus
cannot account for respondent's intentions in
that regard but
stressed the point that no writ of execution was levied on
respondent's property to satisfy those judgments.
Mr. Koornhof submitted that it was not necessary to issue any writs,
basing himself on the
a debtor can be sequestrated even before summons is issued if debt is
due and payable if the debtor is in insolvent circumstances.
it would appear that the submission that judgments referred to above
were taken without respondent's knowledge and by
means of dishonesty
cannot stand in view of the fact that summonses had been served on
respondent and no appearance was entered
following the service. It
would seem therefore that before the present attorney for the
respondent represented him more water had
flown under the bridge than
meets the eye.
also seem that a concession that respondent stopped trading not in
April 1985 but in April 1986 would not afford him any
escape from the
provisions of Sec. 34 of 51/1957 to the effect that if a trader has
alienated business belonging to him or property
belonging to such a
business within six months prior to sequestration of his estate then
such alienation would be void.
to support the submission that his enterprises were solvent as at
31st March 1986 respondent has attached copies of letters
and "FF" the general purport of which is rather
disconcerting to the extent that the Accountants Moleko
Associates in those letters indicate that their certification of the
soundness of the enterprises is "subject to the proprietor's
assurance that all business transactions have been reflected in
the records" where independent confirmation of the completeness
of the accounting records was not available. This is disatisfactory
in the sense that it begs the question by assuming and confirming
of what the accountants were in the first place called upon to
to "GJW1" through "GJW4" clearly lends support to
petitioner's claim that respondent's creditors were
aware of the fact
that he had disposed of his assets to his limited liability
affidavit ad para 6 Williamson has referred me to Annexure B a
petition wherein the Respondent Lefu Wholesalers (Pty) Ltd
is said to
be a company registered with limited liability and to have been
incorporated on the 19th January 1984 under No84/9 and
with a share
capital of M4,000.00.
Ad para 4
the petitioner avers that respondent is indebted to it in the sum of
M647,014.40 in respect of a judgment granted in favour
petitioner on 28th April 1986 in CIV/T/164/86. Petitioner avers that
it is owed interest at 11% per annum from 7th March
1986 plus taxed
costs amounting to M554.39.
petitioner has also indicated that Respondent is further indebted to
the following creditors'-
Lesotho Mills Co........... M 66,709.45
Maseru Roller Mills ........ ± M100,000.00
Lesotho Flour Mills ........ ± M100,000.00
Natal Canvas ............... ± M 963.60
to the petitioner all these creditors have already instituted action
against the Respondent.
"C" to this petition, it is submitted, is an acknowledgment
by the respondent and by Mr. Tlali that it is unable
to pay its debts
and that such acknowledgment is sufficient to entitle the court
Respondent Company in terms of Section 172(c) of the Companies Act.
was made by Mr.Koornhof to the fact that the balance sheet in respect
of Telang store was inadequate in so far as it did
not reflect that
the respondent has a building which is bonded. It was pointed out in
argument that respondent committed a collusive
disposition of his
assets to his companies in as much as he is the sole share-holder and
transferred the assets to them without
notice to the creditors. It
was also submitted that this was disposition without value in as much
as he divested himself of property
and did not receive any value for
so doing in the process.
is trite law that a debtor should pay his debt and that his ability
to do so is proof of his solvency. See Langston vs
S.A. 392 at 394 where Dowling,J. quoted with approval Innes C.J. in
De Waard vs Andrew and Thienhaus Ltd 1907 T.S.
727 at 733 where the
following words appear:-
" Now, when a man commits an act of insolvency he must expect
his estate to be sequestrated. The matter is not sprung upon
first, a judgment is obtained against him then a writ is taken out,
and he must expect if he does not satisfy the claim, that
will be sequestrated............ I always look with
great suspicion upon, and examine very narrowly, the position of a
debtor who says, "I am sorry that I cannot pay my creditor,
my assets far exceed my liabilities." To my mind the best proof
of solvency is that a man should pay his debts; ................
C/F, Jackson vs Smith 1928 T.P.D. 773.
petitioner referred me to page 46 of the record and submitted that
respondent's assets according to the balance sheet set out
are exceeded by his liabilities by a sum in excess of Ml,000,000.
Pointing out that this balance sheet is inadequate he
referred me to
page 57 of the record which shows that respondent also conducts a
mining business at Kao where he has several items
of heavy equipment
and machinery. The petitioner avers that this investment has not been
reflected in the balance sheets nor has
the respondent's liabilities
in respect thereof. "GJW6 is an affidavit by one John Zanetti
whose claim for M10,000 preferred
against Mr. Tlali who drew the
cheque "JZ1" for M20,000 in favour of the deponent remains
unsatisfied as payment of the
cheque was stopped.
It is to
be gathered from Williamson's affidavit that respondent failed to
disclose in his balance sheet and in his opposing affidavit
L. Hyland of Ficksburg owes him (respondent) a sum of M535,215.00.
The deponent has adduced a number of reasons which
may account for
respondent's insolvency resulting from respondent's transactions with
L. Hyland. In this regard the court was informed
that respondent drew
cheques in favour of Mr. Hyland to a total value of approximately
M1,3 million and that most of the cheques
that Hyland drew in
purported repayment of Mr. Tlali were referred to drawer or not met
by his bank in Ficksburg. Vide Annexures
GJW(c) at page 76 of the record.
been further pointed out that respondent's assets and liabilities at
Leribe have not been reflected in the balance sheet.
been referred to page 48 i.e. Telang Store financial statements where
motor vehicles for that concern are reflected as fixed
agree with the petitioner that they cannot be such but rather can
only be moveable assets. It has also been pointed out
balance sheets do not disclose that most of the vehicles were
purchased by respondent in terms of hire purchase agreements.
deponent G. T. Williamson has drawn the Court's attention to
Annexures "GJW 10" and "GJW 11" in his attempt
show that due to serious cash flow problems experienced by the
respondent he was not even able to meet his monthly commitments
terms of hire purchase agreements entered into with Barclays Western
Bank Limited since April 1986 with the result that the
has instructed its attorneys in Lesotho to apply to Court for
repossession of certain vehicles including a 1983 Nissan
referred to at page 58 of the record ad para 5(iv). Accordingly the
petitioner submitted that the Nissan Safari
has a value far more
than M6,785.60 referred to in para 7 of "GJW 10" and
consequently it would be to the benefit of
respondent's creditors if
he is sequestrated in order that the vehicle can fetch a better price
that would satisfy the hire purchase
seller on the one hand while the
difference between the balance owed to the seller and the higher
value of the vehicle can be distributed
amongst the current
through his counsel argued that respondent cannot be said to be
solvent as he has failed to settle his judgment debt;
fixed assets because they are bonded, cannot sell any vehicles
because he has none; the ones in his possession being
agreement. The question which arises is how can he trade without any
stock. The danger is that if he is not finally sequestrated
continue trading and thereby incur additional debts. The likelihood
is that there will be no control over his assets.
position favourable in law is that he be sequestrated because the
risk involved is far greater than if he is not sequestrated.
paragraph of his heads petitioner has pointed out that in application
212 at pages 14 and 15 respondent does not deny reasons
favour of sequestration that would be to the benefit of creditors.
The position in law is that where an act of insolvency
established, the onus is on respondent to show that it is not in the
interest of creditors to have respondent sequestrated.
Vide Hana vs
Turner 1967(4) 368.
considering whether sequestration is to the benefit of creditors the
court was referred to the following factors:-
possibility of a payment of a dividend. Vide Trust Bank of Africa
Ltd vs Demmers 1968(2) PHC 13.
that the debtor is insolvent but possessed of considerable assets
whose realisation will yield a dividend. Realisations
Ltd vs Ager
1961(4) S.A. 10
fact that goods under a hire purchase agreement on which a
substantial amount has already been paid off will become available
to satisfy creditors' claims. Maree & Co. vs Woods 1937 NLR 300.
these submissions Mr. Pheko pointed out that at page 3 Mr. Williamson
goes no further than
out that he is a director. He does not say facts deposed therein are
within his personal knowledge.
referred to Annexure "C" on pages 24 and 25 which he
submitted is an agreement entered into between petitioner and
respondent after judgment. He questioned the petitioner's rationale
in holding that because an agreement was entered into after
petitioner had obtained judgment then such circumstance amounts to
respondent having committed an act of insolvency. In this
Court was referred to page 13 of the record ad para 11 where the
petitioner has raised a complaint that respondent has
agreement Annexure "C" in respects set out in that
it had been ascertained that the cheque for M112,500 handed to Mr.
Koornhof on 25th June 1986 would not be paid;
respondent has failed to implement or facilitate the registration of
the mortgage bonds by refusing to sign the relevant
Attorney or deliver the relevant Title Deeds to petitioner's
attorneys of record.
Koornhof sets out circumstances of this episode adequately in his
affidavit Annexure "B"
pointed out that the above-mentioned cheque was not presented for
payment and that it is not a sound argument to treat
it as if it had
been dishonoured, and in any event reasons for failure to present it
for payment are based on hearsay. In this
regard the Court was
referred to pages 55 to 56 of application 212. Mr. Pheko submitted
that doubts existed whether Mr. Hyland
was ultimately going to
confirm this hearsay. However petitioner submitted this
be hearsay because Mr. Koornhof personally spoke to the drawer of the
said cheque. In any event the agreement was not
entered into with the
intention that it would be utlised to execute judgment as alleged by
respondent. See para 6 at page 54 of
further submitted for respondent that petitioner had compromised. It
would not be proper to regard such act by petitioner
as amounting to
an act of insolvency by respondent.
was referred to sets of balance sheets; two by the petitioner and two
by the respondent. Respondent submitted through
his Counsel in
argument that it cannot lie in the petitioner's mouth to query the
global figure of liabilities given by the respondent
petitioner in its balance sheet has done the same. C/F "GJW8"
and"GJW9" at 83 and 84.
a further query that the argument cannot hold that respondent failed
to inform creditors in the light of the fact that
councedes that the incorporation of the companies was effected in
April 1986: How then can the petitioner expect
to make financial statements covering periods which do not fall
within the times raised by the petitioner?
Mr. Buyswho is appointed provisional liquidator comes from the same
firm of attorneys as counsel for the petitioner.
All references to
letters attached to the papers before Court arc in response to
letters written by Mr. Buys in the capacity of
a provisional trustee.
See page 62 Annexure "GJW 1" re: Insolvent Estate L. G.
TLALI; a letter dated 28th July 1985.
C/F page 33 where Mr. Koornhof
is shown as having
opposing affidavit on 25th July 1986 while para 1 to Annexure "GJW
1" refers to 2nd July 1986 the very day when
sequestration was moved and granted. The purpose of the foregoing is
to illustrate that Mr. Koornhof and Mr. Buys
were trying to use the
Trustee uninvited to show that the respondent is or was insolvent.
Reference was made to page 63 where the
letter "GJW2" by
the Credit Controller is to "Attention: Mr. Buys" in his
capacity as provisional trustee.
See pages 64 and 65. Having
developed the argument sufficiently to show the unwholesome
involvement of Mr. Buys in this matter
in his capacity as the
provisional trustee Mr. Pheko referred to Law of Insolvency in South
Africa by Mars page 104 of which reads:
"It is improper for
the provisional trustee to take sides uninvited and to try to
show that the debtor is in fact
insolvent:- Vide BREMEN MEULENS
(EDMs) BPK vs TZEREFOS 1978 (3) S.A. 892. (unfortunately this is in
Afrikaanse and I am not able
to read the whole text).
having highlighted this fatal defect in the petitioner's papers, i.e.
that Mr. Buys uninvited sought to show that the
debtor is insolvent
urged me to ignore all the affidavits which are in response to the
provisional trustee's abuse of. his office
and capacity. The thrust
of his argument was particularly in opposition to "GJW 6"
an affidavit by John Zanetti appearing
at page 67; and "GJW 7"
(a) through (r) being cheques drawn in favour of L. Tlali or L. G.
Tlali common through them
being the fact that either they have not
been cleared by the Bank or that they have been referred to drawer.
Thus Mr. Pheko submitted
that these cheques must have been obtained
by Mr. Buys in his capacity as the provisional trustee. He further
contended that all
ad para 6 on pages 59 and 60 was received from Mr. Buys. See (aa) at
page 58. He further pointed out that Webber Newdigate
were aware, after the granting of the order, that respondent was
placed under provisional sequestration yet they nonetheless
to issue papers against respondent personally. Reference was made to
page 98 wherein Barclays Western Bank Ltd was claiming
the return of
a certain 1985 Mercedez Benz 508 Bus in terms of a suspensive Sale
Agreement entered into between L. Hyland and respondent
conditional upon the breach of which terms by respondent L. Hyland
trading as Ficksburg Autolot would cede his rights to Barclays
Western Bank Ltd. Respondent's counsel submitted in terms that
application for repossession is not an act of insolvency.
question of how to determine that a man is insolvent it was submitted
that it has to be shown that his liabilities exceed
his assets and
"not" in terms of a quotation from Mars supra at page 104
"................... merely that they might
do so". The
learned author however goes on to immediately say that "clear
proof of this must be adduced, but not necessarily
proof". My underlining. See Ohlsson's Cape Breweries Ltd vs
Totten 1911 T.P.D. 48
further submitted that the onus of proving that a debtor is insolvent
is on the petitioning creditor. Reference to authorities
has by going
a step further shown that what is involved in this onus is not only
that the debtor is insolvent but that sequestration
beneficial to creditors. See Corner Shop (Pty) Ltd vs Moodley 1950(4)
S.A. 55. Furthermore it is stated
applicant relies in his petition on an act of insolvency and is
unable to establish that it was committed. "but it
is clear that
the debtor is in fact insolvent, the Court may grant a final
sequestration order on the latter ground even if not
relied on in the petition". C/F Bhyat vs Kurishi 1929 TPD 896.
what approach to adopt in determining the "advantage of
creditors" I was referred to MESKIN & CO. vs FRIEDMAN
S.A. 555 and London Estates (Pty) Ltd vs NAIR 1957(3) S.A. 591
especially to a passage by Roper, J. which says:-
" The right of investigation is given, as it seems to me, not as
an advantage in itself, but as a possible means of securing
material benefit for the creditors in the form, for example, of the
recovery of property disposed by the insolvent or
the disallowance of
doubtful or collusive claims. 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 will result
to creditors. It is not
necessary to prove that the insolvent has any assets. Even if there
are none at all, but there are reasons
for thinking that as a result
of enquiry for the benefit of creditors, that is sufficient."
that in the instant case no indication has been shown by petitioner
as to what advantage creditors will receive from the
Mr. Pheko referred me to page 60 of Catherine Smith's Law of
at the footnote of which is quoted De Villiers : J.P. illustrating
this principle in Stainer vs Estate Bukes 1933 OPD
86-89 with the
are taken to sequestrate the debtor's estate compulsorily, and the
question arises whether it will be to the advantage
of creditors to
sequestrate. It is shown to the Court that a sequestration order will
benefit the large creditor to the extent
of some £200, but will
damnify the two small creditors to the extent of some £10. Now
it seems that in such a case
it would be to the advantage of
creditors' to sequestrate, for the body of creditors as a whole will
benefit by the sequestration."
submitted that the Court should take into consideration the cheques
owed by Hyland to respondent on the principle
set out in Mars
105 to wit "If the debtor's liabilities fairly valued exceed his
assets fairly valued he is insolvent, and
in assessing liabilities
merely contingent debts are not included, whereas debts accrued but
not yet payable are included. (my
response to head 7(a) of petitioner's heads of argument it was
submitted for respondent that the petitioner's submission that
sequestration would result in the possibility of a payment of a
dividend is not enough in the absence of any manifest basis for
respondent's Counsel invited the Court to consider the underlined
phrase in the penultimate paragraph along with respondent's
assets against the petitioning creditor's assertion that were
assets sold in execution they would not satisfy or meet the debt. He
further called attention to the fact that sale as envisaged
principles laid down in books of authority should be understood to be
sale of debtor's goods valued at cost price less depreciation,
not at what the goods would realise at forced sale. See J.W. JAGGER &
CO. (PTY) LTD vs MAHOMED 1932 NLR 350
question of urgency the Court was informed that the petitioner was
apprehensive that respondent was continuing to trade and
deplete the stock yet both the petition and supporting affidavit do
not place any value on the stock-in-trade on the
back of that is also
the fact that it is not denied that Mr. Buys came and took the stock
there in pursuance of the provisional
order. That stock should
have been and be valued at cost value less depreciation in keeping
with the authority of OHLSSON'S CAPE
BREWERIES LTD vs TOTTEN 1911 TPD
48 to 50; to wit " ........ The only procedure this Court knows
is where applicant shows
clearly that the respondent's liabilities
exceed his assets." (My underlining) "So", argues Mr.
no value has been placed on stock how could the Court
say respondent is insolvent?"
By way of
showing how intimately acquainted with respondent's business
Williamson was I was referred to page 34 ad 4.1 of APN/211
was suggested, shows that he had access to respondent's books to the
extent that he knew respondent's account numbers,
reason why appearance was not entered, namely that negotiations were
still apace as borne out at page 54.
Court's exercise of discretion I had occasion to peruse Catherine
Smith's book at page 64 of which the learned author
says "If the
Court, in the case of a provisional order is prima facie of the
opinion and in the case of a final order, is
satisfied that the three
facta probanda, ...... have been established, it is empowered but not
obliged to grant either a provisional
or final order of sequestration
as the case may be. The Court has an overriding discretion to be
exercised judicially upon consideration
of all the facts and
circumstances of the particular case. This discretion
referred to as "large" or "wide", but .......
...... (it) is not to be exercised lightly. Accordingly,
when a sequestrating creditor has proved an act of insolvency and
there is reason to believe that sequestration will
be to the
advantage of the creditors, very special considerations are necessary
to disentitle him to his order." (my underlining).
respondent's counsel submitted that the Court can exercise the
discretion against granting the order even if all elements
of sequestration are present.
in this vein Mr Pheko contended that nothing in the papers has been
demonstrated to the effect that unless respondent pays
petitioning creditor is in appreciab le danger of losing money. See
REALIZATIONS LTD vs ACER 1961 (4) S.A. 10. Nothing has
been shown to
support the view that other creditors are pressing for payment. See
Catherine Smith's: The Law of Insolvency at page
65.In any Case it
was denied that any of the creditors listed at page 11 had brought
respondent to Court. Cases were referred to
where the Court refused
to grant sequestration order namely
Kahn 1947 (2) S.A. 432 at 439. Mr. Pheko
at applicant approaching the Court ex parte as a matter of urgency
yet giving it false information. That He pointed out
affidavit is no longer based on the act of insolvency as borne out in
heads of argument at 9 but now on disposition.
pointed out that there is disagreement on material facts namely on
whether or not balance sheets reveal fair market value of
respondent's assets and whether or not respondent has breached
conditions on which initial agreement was based. Indeed where there
are conflicting versions of fact viva voce evidence should be led and
not excluded unless calling it would not disturb the.balance
probabilities. See Mahomed vs Malk 1930 TPD 615 at 619. Accordingly
Mr. Pheko applied for either the dismissal of the petition
discharge of the rule after submitting that Mr. Buys has as
provisional trustee taken possession of the two businesses of
Mr. Koornhof referred to the objection which had been raised to the
effect that Williamison did not say averments were
knowledge and showed that such objection was baseless when viewed
against Williamson's averments at page 7. He referred
also to page 48
of application 212/86 in his attempt to show that the submission that
Williamson's averments were based on hearsay
could not hold water for
a moment. Referring to the M112,500 Mr. Koornhof stated that he
himself spoke to Mr. Hyland who informed
him that he had ordered the
Bank to stop payment and at that stage posed a deliberative question
to wit "If drawer of a cheque
tells me himself how can that be
hearsay?" and submitted
reason why an affidavit to that effect was not filed is that Mr.
Hyland had gone somewhere in the coast and could not be
response to the criticism levelled against the petitioner for
supplying a global figure also Mr. Koornhof indicated that the
figures are comparative and that it would be impossible for the
petitioner to be aware of each and evey debt the respondent has.
that Mr. Moleko the accountant would not have been aware of the
position as of 31st March 1986 he pointed out however
balance sheets were drawn in July 1986 i.e. 3 months afterwards.
Hence Mr. Moleko would have known and made reference
in his notes to
the existence of registered companies.
to the harmlessness of the position where the Trustee comes from the
same firm he submitted that it is common knowledge
that this happens
and further that it is necessitated by the fact that it is only a
handful of attorneys who accept such appointments.
stated that Mr. Buys as Trustee did not take sides in this matter. To
illustrate this submission he referred me to
"GJW 1" at
page 62 i.e. a letter written to Mr. Koornhof'3 firm by Messrs Webber
Newdigate and Co. dated 28th July 1986.
further submitted that a provisional liquidator's duty is to inform
all Banks and find out if all accounts are in debt or in
Nowhere has it been demonstrated that Mr. Buys illicited the
information in a dishonourable manner. See page 63. Referring
3",at 64 as a letter in point it was submitted that
allegation was not substantiated that letters addressed to Messrs Du
Preez Liebetrau and Company of which Mr. Koornhof is a
member were in
response to letters written by Mr. Buys. It was pointed out that it
is because Mr. Buys had not taken any sides
that the papers did not
contain or include his affidavit.
would be out of character for Mr. Buys to behave otherwise than
honourably for it was through him that a certain L. Rottanburg
brought to book and struck off from the Johannesburg Roll of
advocates when he had tried to persuade Mr. Buys to join with
a dishonourable scheme to defraud their respective clients in a case
involving liquidation of a certain company in Lesotho.
significance of Rottanburg'a curious phrase to wit "a punt up
the arse" was laid bare in the proceedings which led
removal from the Johannesburg Bar. I have not been able to find any
sinister motive readable from Mr. Buys's discharge of
his duty in
submitted that the amount owed by Hyland is M500,000 and not M1
million. Ml million represents the entire estate. This was
given to Williamson and Mr. Buys by Mr. Tlali the respondent.
reference to the application moved by Webber & Newdigate &
Co. for repossession of vehicles it was illustrated that the
affidavits relevant thereto ad 89 and 102 were made on 24th April
1986 long before the provisional order was made hence cannot
to uninvited soliciting of claims. Reasons for making the
afficavits "GJW 10" &"11" appear
on page 60
and the argument seems well founded that it would be to the benefit
of the creditors if respondent is sequestrated
his vehicle can be realised to the best advantage and the difference
between the balance owing to the hire purchase seller
and the value
of the vehicle can then be distributed amongst concurrent creditors.
It was submitted that forced sale in execution
would realise less
than the real value of the assets.
seem an intolerable situation where after judgment has been entered
against respondent on 28th April 1986 he proceeds the
next day i.e.
29th April 1986 and registers two companies with same names under
which he traded i.e. Lefu Hotel and Telang Store
known the following
day as Lefu Hotel (Pty) Ltd and Telang Store (Pty) Ltd and on
receiving a petition for sequestration he fobs
off his creditors by
saying he has no money so they should look to the companies.
appears to me to be prejudicial to the creditors. It does seem also
that respondent was in fact insolvent as of April 1986
for as shown
on page 46 his current liabilities exceeded his current assets by M1
that it is not necessary to hear evidence on the balance sheet. With
regard to the submission on respondent's behalf that
have been notice and that it seems nothing warranted approaching the
Court ex parte it seems the telegram on page
75 of Application 212/86
provides an answer to that. This is "GJW 7" and was sent to
respondent or Lefu Wholesalers on
30th June 1986 advising the
addressee of proceedings due to commence on 2nd July 1986 at 9.30
of investigation properly conceived
to benefit of creditors. It does not seem to conflict with the view
that creditors must have an opportunity to share equally.
investigation can be held should there arise a feeling that there arc
Proof that the debtor is insolvent but possessed of considerable
assets whose realisation will yield a dividend is of itself
sufficient to prove that sequestration would be to the advantage of
creditors, See Mara at 108.
to me that even if called viva voce evidence will not disturb the
balance of probabilities in this matter. It seems to
me also that all
material facts have been disclosed except where as was submitted by
Mr. Koornhof a mistake or two occurred. Referring
this matter to oral
evidence will only amount to postponing the evil day.
application 212/86 which in part has been touched upon in the
foregoing judgment it was submitted on behalf of the petitioner
respondent Company is unable to pay its debts and therefore should be
respondent bean able to pay its debts it would have done so and that
would have been the best proof of its solvency. See Act
25 of .1967
Sections 172 (c) and 173(f).
significance and what cannot be ignored is the fact that respondent
failed to pay judgment debt. See Prudential Sluppers S.A.
Tempest Clothing Co. (Pty) Limited 1976(2) S.A. 856 C/F Hugo No. vs
Lipkie 1961(3) S.A. 66..
it was argued by the petitioning creditor that on the authority of
Langston vs Lambert 1948(4) S.A. 392 judgments that
though not conclusive, are presumptive proof of insolvency. C/F Crumm
vs Black 14 CTR 148.
to respondent's resistance of the final order of liquidation on the
grounds that respondent claims that its assets exceed
applicant submitted that the respondent's opposing afficavit ad page
35 is misleading in so far as it reflected
the long term loan as an
asset instead of including it in the liabilities. This has been dealt
with ad page 50. See replying affidavit.
Furthermore it was pointed
out that the figure reflected as debtors is also misleading.
they are represented in the balance
sheet by a sum of M726,861. Taken
along with the fact that Telang Store owes approximately M650,000 on
the back of which is the
fact that Mr. Tlali is being sequestrated it
becomes clear that prospects of recovery of the amount in question
are reduced drastically.
income statement also refers to interest on an overdraft but the bank
account is reflected in the balance sheet as an asset
credit. See page 36.
ad page 8 para 12 avers that respondent continues to trade despite
the fact that it does not have sufficient cash to purchase
further stock-in-trade and the result is that the existing stock is
being depleted while it is not paying its creditors, thereby
prejudicing the rights and claims of all creditors.
it was submitted that even if for argument's sake it was said
respondent's assets exceed its liabilities it is still
unable to pay
its debts because it has used up its capital and does not have cash
resources to pay. This is at variance with Sec.
173 (e) of the 1967
Act 25. In view of the fact that respondent does not say where its
cash will come from it was submitted
there were no prospects of
its receiving any from anywhere.
has been canvased ad para 13 page 8 et sequel by way of showing that
liquidation will be in the interests of creditors. It
submitted that respondent's bare denial is not buttressed by any
reasons whatsoever. See page 30,
point of law in the circumstances is that where an act of insolvency
has been established the onus is on respondent to show
that it is not
to make a final order of liquidation C/F Hanan vs Turner 1967(4) S.A.
creditor submitted that there were good grounds for anticipating
accrual of a dividend from which creditors could benefit.
Govender vs Naidoo 1959(2) S.A. 776 and Realisations Ltd supra.
matter worth taking into account is the advantage creditors may have
by reason of the fact that goods under hire purchase
Which a substantial amount has been paid off already, will on
insolvency become available to satisfy creditors' claims.
See Maree &
Co. vs Woods 1937 NLR 300. Failing this then the respondent will be
free to dispose of the
will and without any form of restraint and this will prejudice the
creditors' interests. Because respondent has not proves
to pay its debts it was prayed that it be finally liquidated as it is
Mr. Pheko pointed out that information appearing on page 5 is
misleading and urged that utmost good faith should be observed.
Referring to para 7 he urged that assets should be fairly valued and
pointed out that the agreement had not been breached. Indicating
any averment as to breach of the agreement is hearsay whether this
was told by the man who has himself drawn the cheque or
any event the cheque has not been dishonoured by any Bank. If the
petitioner agreed to a compromise his doing so
does not entitle
anybody to impute inability on the part of respondent to pay its
debts. Referring to para 12 Mr. Pheko pointed
out that no valuta was
attached to the assets and urged that what has to be looked at is the
questioned the propriety of Mr. Buys letting petitioner use in Court
letters referred to him. This was of course denied. It was
that reference to those letters would lead to an inference that
respondent is insolvent. C/F with the meaning of
"trustee lending his hand ininvited."
indicated earlier I firmly believe that Mr. Buys has a soul above the
insinuations made about his involvement in this matter
ascription of impropriety to. his motives. Sinister motives for his
involvement have been denied. The mere fact that he happens
working for the same firm as applicant's attorney is not
that he had lent his hand univited to show that respondent is
insolvent. Evan without such lending of hand if any, on independent
proof respondent has been shown to be insolvent.
It is not
wich misplaced or unwarranted satisfaction that I find myself
obliged to hold the brief for Mr. Buys and stress that
he is not that
type of attorney who cannot be trusted to act on the square.
untainted The many years I have known him since his
admission as an
attorney in Lesotho and as a person slightly before then, speak
volumes for the basis of my reference to his unblemished
pointed out for respondent that an agreement had been entered into
between the parties. No breach of that agreement was committed
proof of dishonour
shown. Nowhere did creditor claim the total amount owed.
It is not
necessary for creditor to have approached the Court ex-parte, it was
submitted, pointing out that notice would not have
petitioning creditor and further that the inflated figure must have
influenced the court that allowed provisional
order of liquidation.
Sharply contradicting the submission made earlier that long term loan
was referred to as an asset by respondent
Mr. Pheko referred to page
37 note 4 and for contrast refrred to page 38.
challenged creditor to show that respondent had breached annexure C.
In view of the fact that no affidavit was filed by
Mr. Hyland then
that the cheque would not be met is hearsay and thus has to be
avoided at all costs. He submitted further that this matter
decided on papers. He showed that no reliance should be put on
balance sheet as at 31st March 1986 for it does not mean
respondent company would nut have been solvent as of them. Petitioner
has not given value of stock as at that date despite
the onus being
on him to show respondent is insolvent. He accordingly prayed for the
dismissal of this application or for an order
for viva voce evidence.
briefly Mr. Koornhof showed that the fact that acheque has been given
to creditor does not mean that payment has been effected
cheque has been paid out, therefore it would not hold for respondent
to say the cheque has not been unpaid. He
accordingly prayed for
confirmation of the rule.
been of the view that the affairs of the Respondent L. Tlali and
those of his companies are closely interwined I felt that
not be inappropriate for the same reasons applied in Application
211/86 to order final liquidation of respondent
Orders in. both applications are confirmed with costs.
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