IN THE HIGH COURT
OF LESOTHO In the matter of:
JACK YUDELMAN LESOTHO WHOLESALERS (PTY) LTD
vs L. G. TLALI
AND JACK YUDELMAN LESOTHO WHOLESALERS (PTY) LTD
vs LEFU WHOLESALERS
Delivered by the Hon. Acting Mr. Justice M. L.
Lehohla on the 12th day of January, 1987
For purposes of judgment the two applications above are
treated as one. On 2nd July 1986 applicant
sought and obtained a provisional order against
After the extension of the return date argument
was heard from counsel for both parties. The
petitioner's Counsel argued and prayed for confirmation of the
provisional order. The
application was opposed.
Mr. Koornhof the attorney for the petitioner
that the affairs of respondents in both applications were Interwoven.
Hence my preference to treat these matters as one.
/In his ...
In his heads of arguments the petitioner submitted that
respondent has committed an act of insolvency and is in fact
The petitioner has relied on the affidavit of one Gerard
John Williamson who in terms of a Resolution of the board of
27th June 1986 a copy of which is annexed to the
papers marked "A", is authorised to represent it (the
In para 3 of his affidavit the deponent avers that
Respondent Lefu Gilbert Tlali carries on business under the firm
names of Lefu Hotel and 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 judgments
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
He also avers that the petitioner holds no security for
payment of the amounts appearing loco citato.
In keeping with petitioner's attorney's heads of
argument the deponent Ad 6 further averred that respondent's affairs
are so closely
related 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 marked "B" 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
My perusal of the civil trials referred to by
petitioner's attorney regarding the difficulty of determining what
to 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.
In his opposing affidavit at page 34 of the record in
para 4.2 respondent has made reference to the petitioner's invoice
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
December 1985 and 29th November 1985 respectively. He
contends that the petitioner did not give him credit for those
submits through his attorney that in obtaining judgment
for the amount of M23,716.21 in respect of which certain payments
effected without any credit being shown and the effect of which
if it was given would be to reduce the above sum, the petitioner
so by fraud and therefore has not been honest with this Court.
The petitioner's attorney replied to these averments
by submitting that even where a debtor disputes the claim the Court
if satisfied that the opposition is not bona fide and that the
debt substantially exceeds the statutory amount, grant a
order although unable to decide the exact amount. See
Insolvency Proclamation 51/1957 Sections 9(1) and 12(1) a and
ESSACK vs DHOOMA 1932 NPD 301.
That petitioner obtained judgments fraudulently in
provisional sentence summonses in either or both of CIV/T/165/86 and
is a 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
is functus officio, and can sake no variation itself.
Any variation which may be made must be made by a court of appellate
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 mistake.
In opposition to Williamson's assertion that
Respondent trades under the firm names of Lefu Hotel
and Telang Store at Mokhotlong respondent in para 4 says
" (a) Since April 1985 I stopped to trade as Telang
Store and Lefu Hotel,"
Respondent avers that since that day these entities were
incorporated as companies with limited liability; and goes further to
the petitioner was fully aware of this fact am the respondent had
been trading closely with (petitioner) for a considerable time.
denying petitioner's averments in the passage just referred to
respondent lays stress on the fact that incorporation of a company
a public act and thereby implies that
/the petitioner ...
the petitioner must have been aware of the incorporation
of the two entities referred to above.
In reply however the petitioner ad para 3 has pointed
out that its attorneys of record made searches in the Companies
result of the search revealed that on 29th April 1986
two Companies with the names Lefu Hotel (Pty) Ltd and Telang Store
were registered under number 86/59 and 86/60 respectively.
Thus showing that it cannot be true that Respondent stopped trading
incorporated these companies in April 1985.
Relying on Section 8(o) of the Insolvency Proclamation
51/57 petitioner's attorney submitted that respondent has committed
of insolvency 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
of prejudicing his creditors or of preferring one creditor above
It casts a long shadow on respondent's intentions that
the incorporation of his two companies was effected just a day after
and 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.
In reply Mr. Koornhof submitted that it was not
necessary to issue any writs, basing himself on the
fact that a debtor can be sequestrated even before
summons is issued if debt is due and payable if the debtor is in
Furthermore it would appear that the submission that
judgments referred to above were taken without respondent's knowledge
means of dishonesty cannot stand in view of the fact that
summonses had been served on respondent and no appearance was entered
the service. It would seem therefore that before the
present attorney for the respondent represented him more water had
the bridge than meets the eye.
It would also seem that a concession that respondent
stopped trading not in April 1985 but in April 1986 would not afford
escape from the provisions of Sec. 34 of 51/1957 to the
effect that if a trader has alienated business belonging to him or
belonging to such a business within six months prior to
sequestration of his estate then such alienation would be void.
In order to support the submission that his enterprises
were solvent as at 31st March 1986 respondent has attached copies of
"EE" and "FF" the general purport of
which is rather disconcerting to the extent that the Accountants
Moleko and 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
correctness of what the accountants were in the first
place called upon to establish.
Reference to "GJW1" through "GJW4"
clearly lends support to petitioner's claim that respondent's
aware of the fact that he had disposed of his assets
to his limited liability companies.
In an 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
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
of the 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.
The 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
According to the petitioner all these creditors have
already instituted action against the Respondent.
Annexure "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 to liquidate
/the Respondent ...
the Respondent Company in terms of Section 172(c) of the
Reference was made by Mr.Koornhof to the fact that the
balance sheet in respect of Telang store was inadequate in so far as
not reflect that the respondent has a building which is
bonded. It was pointed out in argument that respondent committed a
disposition of his assets to his companies in as much as he
is the sole share-holder and transferred the assets to them without
to the creditors. It was also submitted that this was
disposition without value in as much as he divested himself of
did not receive any value for so doing in the process.
Indeed it is trite law that a debtor should pay his debt
and that his ability to do so is proof of his
See Langston vs Lambert 1948(4) 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
" Now, when a man commits an act of insolvency he
must expect his estate to be sequestrated. The matter is not sprung
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 his estate will be
sequestrated . I always look with
great suspicion upon, and examine very narrowly,the
position of a debtor who says, "I am sorrythat I cannot pay
my creditor, but my assetsfar exceed my liabilities." To my
mind the bestproof of solvency is that a man should pay
C/F, Jackson vs Smith 1928 T.P.D. 773.
/The petitioner ...
The petitioner referred me to page 46 of the record and
submitted that respondent's assets according to the balance sheet set
therein 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
equipment and machinery. The petitioner avers that this investment
has not been reflected in the balance sheets nor has
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
that one 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
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 "GJW7(a)" to GJW(c)
at page 76 of the record.
It has been further pointed out that respondent's assets
and liabilities at Leribe have not been reflected in the balance
/I have been ...
I have been referred to page 48 i.e. Telang Store
financial statements where motor vehicles for that concern are
reflected as fixed
assets. I agree with the petitioner that they
cannot be such but rather can only be moveable assets. It has also
been pointed out
that the balance sheets do not disclose that most of
the vehicles were purchased by respondent in terms of hire purchase
The deponent G. T. Williamson has drawn the Court's
attention to Annexures "GJW 10" and "GJW 11" in
to show that due to serious cash flow problems
experienced by the respondent he was not even able to meet his
in terms of hire purchase agreements entered into
with Barclays Western Bank Limited since April 1986 with the result
that the said
creditor has instructed its attorneys in Lesotho to
apply to Court for repossession of certain vehicles including a 1983
LDV referred to at page 58 of the record ad para 5(iv).
Accordingly the petitioner submitted that the Nissan Safari has
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
if he is sequestrated in order that the vehicle can fetch a
better price that would satisfy the hire purchase seller on the one
while the difference between the balance owed to the seller and
the higher value of the vehicle can be distributed amongst the
Petitioner through his counsel argued that respondent
cannot be said to be solvent as he has failed to settle his judgment
sell fixed assets because they are bonded, cannot sell
any vehicles because
has none; the ones in his possession being under hire
purchase agreement. The question which arises is how can
he trade without any stock. The danger is that if he is not finally
he will continue trading and thereby incur additional
debts. The likelihood is that there will be no control over his
The position favourable in law is that he be
sequestrated because the risk involved is far greater than if he is
At paragraph of his heads petitioner has pointed out
that in application 212 at pages 14 and 15 respondent does not deny
in favour of sequestration that would be to the
benefit of creditors. The position in law is that where an act of
been established, the onus is on respondent to show
that it is not in the interest of creditors to have respondent
Vide Hana vs Turner 1967(4) 368.
In considering whether sequestration is to the benefit
of creditors the court was referred to the following factors:-
(a) The possibility of a payment of a dividend.
Vide Trust Bank of Africa Ltd vs Demmers 1968(2) PHC 13.
(b) Proof 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
(c) The fact that goods under a hire purchaseagreement
on which a substantial amount hasalready been paid off will
become availableto satisfy creditors' claims. Maree & Co.
vsWoods 1937 NLR 300.
Attacking these submissions Mr. Pheko pointed
that at page 3 Mr. Williamson goes no further than
pointing out that he is a director. He does not say
facts deposed therein are within his personal knowledge.
He referred to Annexure "C" on pages 24 and 25
which he submitted is an agreement entered into between petitioner
after judgment. He questioned the petitioner's
rationale in holding that because an agreement was entered into after
had obtained judgment then such circumstance amounts
to respondent having committed an act of insolvency. In this regard
was referred to page 13 of the record ad para 11 where the
petitioner has raised a complaint that respondent has breached the
Annexure "C" in respects set out in that
(a) that it had been ascertained that the chequefor
M112,500 handed to Mr. Koornhof on 25th
June 1986 would not be paid;
(b) that respondent has failed to implement
orfacilitate the registration of the mortgagebonds by
refusing to sign the relevantpowers of Attorney or deliver the
relevantTitle Deeds to petitioner's attorneys of record.
Mr. Koornhof sets out circumstances of this episode
adequately in his affidavit Annexure "B"
Mr. Pheko 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
could not 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
It was further submitted for respondent that petitioner
had compromised. It would not be proper to regard such act by
amounting to an act of insolvency by respondent.
The Court was referred to sets of balance sheets; two by
the petitioner and two by the respondent. Respondent submitted
Counsel in argument that it cannot lie in the
petitioner's mouth to query the global figure of liabilities given
by the respondent
while the petitioner in its balance sheet has done
the same. C/F "GJW8" and"GJW9" at 83 and 84.
He raised a further query that the argument cannot hold
that respondent failed to inform creditors in the light of the fact
petitioner councedes that the incorporation of the companies
was effected in April 1986: How then can the petitioner expect
auditors to make financial statements covering periods
which do not fall within the times raised by the petitioner?
Furthermore 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
received opposing affidavit on 25th July 1986 while para
1 to Annexure "GJW 1" refers to 2nd July 1986 the very day
the provisional sequestration was moved and granted. The purpose
of the foregoing is to illustrate that Mr. Koornhof and Mr. Buys
trying to use the Trustee uninvited to show that the respondent is or
was insolvent. Reference was made to page 63 where the
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).
Mr. Pheko having highlighted this fatal defect in the
petitioner's papers, i.e. that Mr. Buys uninvited sought to show that
is insolvent urged me to ignore all the affidavits which
are in response to the provisional trustee's abuse of. his office and
The thrust of his argument was particularly in opposition
to "GJW 6" an affidavit by John Zanetti appearing at page
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
must have been obtained by Mr. Buys in his capacity as the
trustee. He further contended that all the information
appearing ad para 6 on pages 59 and 60 was received from
Mr. Buys. See (aa) at page 58. He further pointed out that Webber
and Company were aware, after the granting of the order,
that respondent was placed under provisional sequestration yet they
continued to issue papers against respondent personally.
Reference was made to page 98 wherein Barclays Western Bank Ltd was
the return of a certain 1985 Mercedez Benz 508 Bus in terms
of a suspensive Sale Agreement entered into between L. Hyland and
and 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
On the 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 the clearest proof". My underlining.
See Ohlsson's Cape Breweries Ltd vs Totten 1911 T.P.D.
It was further submitted that the onus of proving that a
debtor is insolvent is on the petitioning creditor. Reference to
has by going a step further shown that what is involved
in this onus is not only that the debtor is insolvent but that
will be beneficial to creditors. See Corner Shop
(Pty) Ltd vs Moodley 1950(4) S.A. 55. Furthermore it is
that if applicant relies in his petition on an act of
insolvency and is unable to establish that it was committed. "but
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.
Regarding what approach to adopt in determining the
"advantage of creditors" I was referred to MESKIN &
CO. vs FRIEDMAN 1948 2 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 ultimate 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
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."
Arguing that in the instant case no indication has been
shown by petitioner as to what advantage creditors will receive from
Mr. Pheko referred me to page 60 of Catherine
Smith's Law of
Insolvency at the footnote of which is quoted De
J.P. illustrating this principle in Stainer vs Estate
Bukes 1933 OPD 86-89 with the following example:-
"Proceedings 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
for the body of creditors as a whole will benefit by
Mr. Pheko submitted that the Court should take into
consideration the cheques owed by Hyland to respondent on the
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 underlining)
In 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 such possibility.
The respondent's Counsel invited the Court to consider
the underlined phrase in the penultimate paragraph along with
all other assets against the petitioning creditor's
assertion that were
these assets sold in execution they would not satisfy or
meet the debt. He further called attention to the fact that sale as
in principles laid down in books of authority should be
understood to be sale of debtor's goods valued at cost price less
and not at what the goods would realise at forced sale.
See J.W. JAGGER & CO. (PTY) LTD vs MAHOMED 1932 NLR 350
On the question of urgency the Court was informed that
the petitioner was apprehensive that respondent was continuing to
consequently deplete the stock yet both the petition and
supporting affidavit do not place any value on the stock-in-trade on
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. Pheko, "if no value has
been placed on stock how could the Court say respondent
By way of showing how intimately acquainted with
respondent's business Williamson was I was referred to page 34 ad 4.1
which, it was suggested, shows that he had access to
respondent's books to the extent that he knew respondent's account
including the reason why appearance was not entered, namely
that negotiations were still apace as borne out at page 54.
Regarding 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
has been referred to as "large" or "wide",
(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). Thus respondent's counsel submitted that the Court
can exercise the discretion against granting the order even
elements in favour of sequestration are present.
Arguing in this vein Mr Pheko contended that
nothing in the papers has been demonstrated to the effect that unless
respondent pays the 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
were referred to where the Court refused to grant sequestration order
Amod vs Kahn 1947 (2) S.A. 432 at 439. Mr. Pheko
demurred at applicant approaching the Court ex parte
as a matter of urgency yet giving it false information.
He pointed out the replying affidavit is no longer based
on the act of insolvency as borne out in heads of
argument at 9 but now on disposition.
He 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 of probabilities.
See Mahomed vs Malk 1930 TPD
615 at 619. Accordingly Mr. Pheko applied for either the
dismissal of the petition or the discharge of the rule after
submitting that Mr. Buys has as provisional trustee
of the two businesses of the two companies.
In reply Mr. Koornhof referred to the objection which
had been raised to the effect that Williamison did not say averments
his knowledge and showed that such objection was baseless
when viewed against Williamson's averments at page 7. He referred
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
had ordered the Bank to stop payment and at that stage posed a
deliberative question to wit "If drawer of a cheque tells
himself how can that be hearsay?" and submitted
/that the ...
that the reason why an affidavit to that effect was not
filed is that Mr. Hyland had gone somewhere in the coast and could
In 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.
Conceding that Mr. Moleko the accountant would not have
been aware of the position as of 31st March 1986 he pointed out
the balance sheets were drawn in July 1986 i.e. 3 months
afterwards. Hence Mr. Moleko would have known and made reference in
notes to the existence of registered companies.
Referring to the harmlessness of the position where the
Trustee comes from the same firm he submitted that it is common
that this happens and further that it is necessitated by
the fact that it is only a handful of attorneys who accept such
He pointedly stated that Mr. Buys as Trustee did not
take sides in this matter. To illustrate this submission he referred
"GJW 1" at page 62 i.e. a letter written to Mr.
Koornhof'3 firm by Messrs Webber Newdigate and Co. dated 28th July
He further submitted that a provisional liquidator's
duty is to inform all Banks and find out if all accounts are in debt
or in credit.
Nowhere has it been demonstrated that Mr. Buys
illicited the information in a dishonourable manner. See page 63.
"GJW 3",at 64 as a letter in point it was
/the allegation ...
the 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.
Indeed it would be out of character for Mr. Buys to
behave otherwise than honourably for it was through him that a
certain L. Rottanburg
was brought to book and struck off from the
Johannesburg Roll of advocates when he had tried to persuade Mr. Buys
to join with him
in a dishonourable scheme to defraud their
respective clients in a case involving liquidation of a certain
company in Lesotho.
The significance of Rottanburg'a curious phrase
to wit "a punt up the arse" was laid bare in the
proceedings which led
to his 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 these proceedings.
It was submitted that the amount owed by Hyland is
M500,000 and not M1 million. Ml million represents the entire estate.
the figure given to Williamson and Mr. Buys by Mr. Tlali
In reference to the application moved by Webber &
Newdigate & Co. for repossession of vehicles it was illustrated
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
/so that ...
so that his vehicle can be realised to the best
advantage and the difference between the balance owing to the hire
and the value of the vehicle can then be distributed
amongst concurrent creditors. It was submitted that forced sale in
would realise less than the real value of the assets.
It would seem an intolerable situation where after
judgment has been entered against respondent on 28th April 1986 he
next day i.e. 29th April 1986 and registers two
companies with same names under which he traded i.e. Lefu Hotel and
known the following day as Lefu Hotel (Pty) Ltd and
Telang Store (Pty) Ltd and on receiving a petition for sequestration
off his creditors by saying he has no money so they should
look to the companies.
This appears to me to be prejudicial to the creditors.
It does seem also that respondent was in fact insolvent as of April
as shown on page 46 his current liabilities exceeded his
current assets by M1 million.
I find that it is not necessary to hear evidence on the
balance sheet. With regard to the submission on respondent's behalf
there should have been notice and that it seems nothing
warranted approaching the Court ex parte it seems the telegram on
of Application 212/86 provides an answer to that. This is
"GJW 7" and was sent to respondent or Lefu Wholesalers on
June 1986 advising the addressee of proceedings due to commence
on 2nd July 1986 at 9.30 a.m.
The right of investigation properly conceived
must lead to benefit of creditors. It does not seem to
conflict with the view that creditors must have an opportunity to
Indeed an investigation can be held should there arise
a feeling that there arc hidden assets.
" Proof that the debtor is insolvent but possessed
of considerable assets whose realisation will yield a dividend is of
sufficient to prove that sequestration would be to the
advantage of creditors, See Mara at 108.
It seems 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.
this matter to oral evidence will only amount to postponing
the evil day.
Regading application 212/86 which in part has
been touched upon in the foregoing judgment it was
submitted on behalf of the petitioner that respondent Company is
unable to pay
its debts and therefore should be wound up.
Had respondent bean able to pay its debts it would have
done so and that would have been the best proof of its solvency. See
of .1967 Sections 172 (c) and 173(f).
Of significance and what cannot be ignored is the fact
that respondent failed to pay judgment debt. See Prudential
Sluppers S.A. Ltd vs Tempest Clothing Co. (Pty) Limited
1976(2) S.A. 856 C/F Hugo No. vs Lipkie 1961(3)
Furthermore it was argued by the petitioning creditor
that on the authority of Langston vs Lambert 1948(4) S.A.
392 judgments that remain unpaid, though not conclusive, are
presumptive proof of insolvency. C/F Crumm vs Black 14 CTR 148.
Reacting to respondent's resistance of the final order
of liquidation on the grounds that respondent claims that its assets
its liabilities applicant submitted that the respondent's
opposing afficavit ad page 35 is misleading in so far as it reflected
long term loan as an asset instead of including it in the
liabilities. This has been dealt with ad page 50. See replying
Furthermore it was pointed out that the figure reflected
as debtors is also misleading. they are represented in the
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
that Mr. Tlali is being sequestrated it becomes clear that
prospects of recovery of the amount in question are reduced
The income statement also refers to interest on an
overdraft but the bank account is reflected in the balance sheet as
an asset therefore
a credit. See page 36.
Applicant ad page 8 para 12 avers that respondent
continues to trade despite the fact that it does not have sufficient
cash to purchase
any further stock-in-trade and the result is that
the existing stock is being depleted while it is not paying its
prejudicing the rights and claims of all
Furthermore it was submitted that even if for argument's
sake it was said respondent's assets exceed its liabilities it is
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.
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
no prospects of its receiving any from anywhere.
Enough has been canvased ad para 13 page 8 et sequel by
way of showing that liquidation will be in the interests of
was also submitted that respondent's bare denial is
not buttressed by any reasons whatsoever. See page 30,
A vital point of law in the circumstances is that where
an act of insolvency has been established the onus is on respondent
that it is not in creditors'
interests to make a final order of liquidation C/F Hanan
vs Turner 1967(4) S.A. 368.
Petitioning creditor submitted that there were good
grounds for anticipating accrual of a dividend from which creditors
See Govender vs Naidoo 1959(2) S.A. 776
and Realisations Ltd supra.
Another matter worth taking into account is the
advantage creditors may have by reason of the fact that goods under
agreement on Which a substantial amount has been paid
off already, will on insolvency become available to satisfy
See Maree & Co. vs Woods 1937 NLR 300.
Failing this then the respondent will be free to dispose of the
/assets at ...
assets at will and without any form of restraint
and this will prejudice the creditors' interests. Because respondent
has not proves
its ability to pay its debts it was prayed that it be
finally liquidated as it is clearly insolvent.
In reply 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 that any
averment as to breach of the agreement
is hearsay whether this was told by the man who has himself drawn the
cheque or otherwise.
In 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 cost price.
He questioned the propriety of Mr. Buys letting
petitioner use in Court letters referred to him. This was of course
denied. It was
submitted that reference to those letters would lead
to an inference that respondent is insolvent. C/F with the
the phrase "trustee lending his hand ininvited."
As indicated earlier I firmly believe that Mr. Buys has
a soul above the insinuations made about his involvement in this
and ascription of impropriety to.
motives. Sinister motives for his involvement have been denied. The
mere fact that he happens to be working for the same firm
applicant's attorney is not
proof that he had lent his hand univited to show that
respondent is insolvent. Evan without such lending of hand if any,
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
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
an attorney in Lesotho and as a person slightly before
then, speak volumes for the basis of my reference to his unblemished
He pointed out for respondent that an agreement had been
entered into between the parties. No breach of that agreement was
and no proof of dishonour
has been shown. Nowhere did creditor claim the total
It is not necessary for creditor to have approached the
Court ex-parte, it was submitted, pointing out that notice would not
prejudiced the petitioning creditor and further that the
inflated figure must have influenced the court that allowed
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.
Mr. Pheko challenged creditor to show that
respondent had breached annexure C. In view of the fact that no
affidavit was filed by Mr. Hyland
then Mr. Koornhof's
allegation that the cheque would not be met is hearsay
and thus has to be avoided at all costs. He submitted further that
cannot be decided on papers. He showed that no reliance
should be put on balance sheet as at 31st March 1986 for it does not
that respondent company would nut have been solvent as of
them. Petitioner has not given value of stock as at
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
Replying briefly Mr. Koornhof showed that the fact that
acheque has been given to creditor does not mean that payment has
until that 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.
Having been of the view that the affairs of the
Respondent L. Tlali and those of his companies are closely interwined
I felt that
it would not be inappropriate for the same reasons
applied in Application 211/86 to order final liquidation of
Provisional Orders in. both applications are confirmed
M. L. LEHOHLA ACTING JUDGE
12th January, 1987
For the Applicant : For the Respondent :
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