CIV/APN/118/92

IN THE
HIGH COURT OF LESOTHO

In the
matter between:

OSMAN
SALLY MAHOMED MOOSA APPLICANT

vs

HOOSEN
KHAN RESPONDENT

Before
the Honourable Chief Justice B.P. Cullinan

For the
Applicant : Mr C. Edeling,

Mr S.L. Buys

For the
Respondent : Dr W.M. Tsotsi

JUDGMENT

Cases
referred to:

1. Rex
   vs Hohls (1959) 2 S.A.656 (N);

   
   

2. Kader
   vs Haliman (1958) 4 S.A. 31 (N);

   
   

3. Estate
   Logie vs Priest (1926) A.D. 312;

   
   

4. Van
   Vuuren vs Jansen (1977) 3 S.A. 1062 (T);

   
   

5. Mostert
   NO vs Van Hirschberq (1961) 1 S.A. 146 (0);

   
   

6. Benade
   vs Boedel Alexander (1967) 1 S.A. 648 (0);

   
   

7. Leadenhall
   Meat Market vs Hartman (1938) W.L.D. 99;

   
   

8. Cohen
   vs Jocobs (1949) 4 S.A. 474 (C);

   
   

9. Dunn
   & Co. vs Rehman (1938) N.L.R. 86;

   
   

10. In
    re Provincial Trading Co (1921) C.P.D. 781;

    
    

11. Lawclaims
    (pty) Ltd vs Rea Shipping Co. S.A. (1979) 4 S.A. 745 (N);

    
    

12. Kahn
    vs Shabodien 7 C.T.R. 315;

    
    

13. Abbatoir
    Meat Market vs Ismail (1922) C.P.D. 177;

    
    

14. Roodt
    vs Roodt 27 S/C. 122;

    
    

15. Jagger
    & Co vs Pachter (1915) C.P.D. 55;

    
    

16. Amod
    vs Khan (1947) 1 S.A. 150: (1947) 2 S.A. 432 (N);

    
    

17. Dal's
    Service Station (Pvt) Ltd vs Labuschagne (1962) 3 S.A. 723 (SR).

    
    

This is a
petition to sequestrate the respondent's estate. The Court per Molai
J. has already made an order of provisional sequestration
and granted
a rule nisi. calling upon the respondent to show cause why his estate
should be sequestrated finally. The respondent
has filed an opposing
affidavit and the petitioner a replying affidavit, Mr Edeling for the
petitioner and Dr Tsotsi for the respondent
have filed detailed heads
of argument and made extensive verbal submissions at the hearing.

The
petition is brought under section 8 (b) and (c) and section 9 (1) of
the Insolvency Proclamation, 1957, No.51 of 1957 ("the

Proclamation"). Those provisions and those of sections 8 (d) and
12 (1) read thus:

"8. (a) debtor commits an act of insolvency -

2. if a
   Court has given judgment against him and he fails, upon the demand
   of the officer whose duty it is to execute that judgment,
   to satisfy
   it or to indicate to that officer disposable property sufficient to
   satisfy it, or if it appears from the return made
   by that officer
   that he has not found sufficient disposable property to satisfy the
   judgment;

   
   

2. if
   he makes or attempts to make any disposition of any of his property
   which has or would have the effect of prejudicing his creditors
   or
   of preferring one creditor above another;./.....

   
   

2. if
   he removes or attempts to remove any of his property with intent to
   prejudice his creditors or to prefer one creditor above
   another.

   
   

9. 
   (1) A creditor (or his agent) who has a liquidated claim for not
   less than one hundred rands, or two or more creditors (or
   their
   agent) who in the aggregate have liquidated claims for not less
   than two hundred rands against a debtor who has committed
   an act of
   insolvency or is involvent, may petition the Court for the
   sequestration of the state of the debtor.

   
   

12. (1)
    If at the hearing pursuant to the aforesaid rule nisi the Court is
    satisfied that

    
    

1. the
   pertitioning creditor has established against the debtor a claim
   such as is mentioned in sub-section (1) of section nine:
   and

   
   

2. the
   debtor has committed an act of insolvency or is insolvent; and

   
   

3. there
   is reason to believe that it will be to the advantage of creditors
   of the debtor if his estate is sequestrated,

   
   

it may
sequestrate the estate of the debtor."

The
petitioner claims that the respondent is indebted to him In the
following liquidated amounts:

(i) M66,000.00, being a judgment debt arising from a judgment
obtained by the petitioner in this Court in case No.CIV/T/504/90,

with interest at 23% p.a. calculated from 30th January, 1991, plus
taxed costs in the amount of M2,670.79;

(ii) M26.495.25, which amount is claimed by the petitioner in a
defended action in this Court in case No. CIV/T/2/91 in respect
of
"monies lent and advanced by your Petitioner to the Respondent,
interest, and goods sold and delivered at the Respondent's
special
instance and request".

The
petitioner claims that the respondent is further indebted to him "for
costs awarded in favour of your Petitioner by the
Court of Appeal,
which have not been taxed as yet". It is not not stated what
proceedings are there involved, but in any event,
the particular
claim is not liquidated. The petitioner also states that he holds no
security for claims (i) and (ii) above.

As will
be seen, the respondent, who admits all of the above claims, in turn
claims that the petitioner is indebted to him in a
total sum far in
excess of the petitioner's claims: thus, the respondent avers, the
petitioner holds security for all his claims.
Mr Elding points to the
definition of security in section 2 of the Proclamation, that is as

"property of (the debtor's) estate over which the creditor has a
preferent right by virtue of any special mortgage, landlord's
legal
hypothec, pledge or right of retention"

The
petitioner holds no such security and his claims are unsecured
therefore. In any event, section 9 (3) of the Proclamation requires
a
petitioner in his petition to,

"state whether the claim is or is not secured and, if it is, the
nature and value of security."

The
section, however, nor the Proclamation for the matter, contains, as
Mr Elding submits, no prohabition against the filling of
a petition
by a secured creditor. Indeed, section 9 (2) indicates that a secured
creditor may file a petition, and this has been
the law in the
Republic of South Africa since 1923, the Proclamation being vertually
a verbatim reproduction of the insolvency
legislation in that
country: see mars on The Law of Insovency in South Africa, 8 Ed. at p
79 and see also Rex vs Hohls (1).

The
petitioner then alleges that the respondent committed the following
acts of insolvency;

"1. He failed in terms of Section 8 (b) of the Insolvency
Proclamation to satisfy a Judgment granted against him and upon

demand by the Deputy Sheriff of this

'Your
Petitioner respectfully submits to the above Honourable Court that
the Respondent is the owner of at least two motor vehicle
which he
purchased from your Petititioner on the 25th April, 1990. The
registration numbers of the vehicles are A3786 and A0450,
the latter
being a Mercedes Benz 450 . Which I allege is worth a substantial
amount of money.

Your
Petitioner respecfully submits that if the Respondent is not in
possession of these vehicles and in the event he has disposed
of
these vehicles, he has done so with the intention to prejudice his
creditors.

The
Petitioner is also aware that the Respondent is a director and
shareholder of a company DYNAMIC INVESTMENTS (PROPRIETARY) LIMITED,

and his shares should at least be worth something. The Respondent
failed to point this out to the Deputy Sheriff, and your Petitioner

respectfully submits that the intention is to withhold these assets
from his creditors, to their prejudice.

Your
Petitioner further respectfully submits that the Respondent has
various business interests, and is also conducting a business
at Main
North 1 Maseru. He also took over certain stocks of building material
from a company BUILDING WORLD (PTY) LIMITED in an
amount of
R90,000.00 (NINETY THOUSAND RAND)

Honourable
Court who executed against the Judgment, the Responsdent failed to
satisfy the judgment and it appears from the return
of service of the
Deputy Sheriff that he has not found sufficient disposable property
to satisfy the Judgment. In this regard your
Petitioner attaches
hereto annex "A" being a copy of the return of service
filed by" the Deputy Sheriff indicating
that the Respondent
failed to point out sufficient assets to meet the Judgment.

2. The
   Respondent is disposing of his property, or has already disposed of
   his property which be to the prejudice of his creditors
   as envisaged
   in Section 8 (c) of the aforesaid Proclamation."

   
   

The
return of service annexed to the petition is specifically endorsed by
the Deputy Sheriff as being a Nulla Bona return. Therein
he states
that

"Defendant failed to show me whether he has any assets to
satisfy the demands of this writ but Defendant he got no assets.
He
got no any thing"

It proves
convenient to deal first with the second alleged act of insolvency.
In this respect the petition in part reads in paragraph
5:

Honourable
Court who executed against the Judgment the Responsdent failed to
satisfy the judgment and it appears from the return
of service of the
Deputy Sheriff that he has not found sufficient disposable property
to satisfy the Judgment. In this regard your
Petitioner attaches
hereto annex. "A" being a copy of the return the service
filed by the Deputy Sheriff indicating r^::-:::.
ryb2,. Respondent
failed to. point out sufficient asset to meet the Judgment.

2. The
   Respondent is disposing of his property, or has already disposed of
   his property which be to the prejudice of his creditors
   as.
   envisaged in Section 8 (c) of the aforesaid Proclamation."

   
   

The
return of service annexed to the petition is offically endorsed by
the Deputy Sheriff as being a Nulla Bona 3. Therein he states
that

"Defendant failed to show me whether he has any assets to
satisfy the demands of this writ but Defendant he got no assets.
He
got no any thing"

It proves
convenient to deal first with the second alleged and insolvency. In
this respect the petition in part reads paragraph
5:

Honourable
Court who executed against the Judgment, the Respondent failed to
satisfy the judgment and it appears from the return
of service of the
Deputy Sheriff that he has not found sufficient disposable property
to satisfy the Judgment. In this regard your
Petitioner attaches
hereto annex "A" being a copy of the return of service
filed by the Deputy Sheriff indicating that
the Respondent failed to
point out sufficient assets to meet the Judgment.

2. The
   Respondent is disposing of his property, or has already disposed of
   his property which be to the prejudice of his creditors
   as envisaged
   in Section 8 (c) of the aforesaid Proclamation."

   
   

The
return of service annexed to the petition is specifically endorsed by
the Deputy Sheriff as being a Nulla Bona return. Therein
he states
that

"Defendant failed to show me whether he has any assets to
satisfy the demands of this writ but Defendant he got no assets.
He
got no any thing"

It proves
convenient to deal first with the second alleged act of insolvency.
In this respect the petition in part reads in paragraph
5:

"Your Petitioner respectfully submits to the above Honourable
Court that the Respondent is the owner of at least two motor
vehicle
which he purchased from your Petitioner on the 25th April, 1990. The
registration numbers of the vehicles are A3786 and
A0450, the latter
being a Mercedes Benz 450 SLC. Which I allege is worth a subtantial
amount of money.

Your Petitioner respectfully submits that if the Respondent is not in
possession of these vehicles and in the event he has disposed
of
these vehicles, he has done so with the intention to prejudice his
creditors.

The Petitioner is also aware that the Respondent is a director and
shareholder of a company DYNAMIC INVESTMEMTS (PROPRIETARY) LIMITED,

and his shares should at least be worth something. The Respondent
failed to point this out to the Deputy Sheriff, and your Petitioner

respectfully submits that the intention is to withhold these assets
from his creditors, to their prejudice.

your Petitioner further respectfully submits that the Respondent has
various business interests, and is also conducting a business
at Main
North 1 Maseru. He also took over certain stocks of building material
from a company BUILDING WORLD (PTY) LIMITED in an
amount of
R90,000.00 (NINETY THOUSAND RAND) .

The respondent in his answering affidavit denies that he carries on
business in Lesotho or elsewhere, or that he has any snares
in
Dynamic investments (Proprietary) Limited: he maintains that he is
employed by that company as a Manager and that he "travels
to
the Republic of South Africa on his employer's business." With
regard to the two vehicles mentioned above, and also the
stock valued
M90,000, he averred that the parties had been co-directors in the
company Building World (Pty) Limited ("Building
World") and
that they had signed the following deed of agreement

"dissolving our partnership in the said company": -

"25/04/90

DEED OF
AGREEMENT

BETWEEN :
O.S.M. MOOSA and HOOSEN KHAN

It is
hereby agreed upon that:

1. Hoosen
   Khan resigns as Director of Building World.

   
   

2. H.
   Khan takes over stocks valued R90,000.00 (Ninety Thousands Rands)
   for which he has to pay O.S.M. Moosa.

   
   

3. H.
   Khan takes over 2 motor vehicles valued at R66,000.00 (Sixty-six
   Thousand) A 3786 and A 0450 for which he has to pay O.S.M.
   Moosa.

   
   

4. H.
   Khan is liable bo pay for drawings of R21,591.00 (Twenty-one
   Thousand, Five Hundred and Ninety-one Rands).

   
   

5. His
   Share (Hoosen Khan) in the N E T T worth amount R84,640.00
   (Eighty-four Thousand, Six Hundred and Forty Rands)

   
   

6. (f
   THAT N E T T Final balance owed to O.S.M. Moosa amounts to
   R93,000.00 (Ninety-three Thousand Rands).

   
   

7. Payment
   of the said R93,000.00 to be agreed upon on terms, from A R M C O
   NETT worth to him or from Q Construction or any other
   source."

   
   

To return
to the alleged second act of insolvency, I observe that even if it
were the case that the respondent were possessed of
all the property
alleged by the petitioner, his actions would amount to no more than a
failure to disclose such to the Deputy Sheriff.
There is however no
evidence whatever before me of any 'disposition', or attempted
'disposition' of property as. envisaged by the
provisions of sections
2 and 8 (c) of the Proclamation. Neither for the matter is there any
evidence of a removal or attempted
removal of property (see Mars op.
cit. at pp 71/72) under section 8 (d), even if those particular
provisions had been pleaded.
There is then no act of insolvency under
the provisions of section 8 (c) or (d).

With
regard to the deed of agreement between the partie's that is, when
the respondent withdrew from Building World, the latter
conceded that
the vehicle A 3786 had all along been registered in his name and in
his possession and that he had ultimately sold
it in June 1990. As to
the other vehicle, the Mercedes A 0450, there are issues of
credibility. The respondent maintains that it
is still,
contructively, in the petitioner's possession and that the latter has
failed to pay garage repairs fees therefore and
deliver it to the
respondent. The petitioner, in whose name the vehicle is still
registered, avers that the vehicle is in the respondent's
possession.
I observe that it was

in
respect of both vehicles that: the petitioner obtained judgment
(CIV/T/504/90) for M66,000 plus costs. In this respect, the
respondent, despite such judgment, has filed an action (CIV/T/111/92)
claiming delivery of the Mercedes or M50,000 in respect of
the
non-delivery thereof.

As to the
stock to be taken over by the respondent under the agreement, the
respondent denies that he took over any of such stock.
The
petitioner, in his replying affidavit. Avers in turn that the
respondent did take it over: he refers to an annexure ("D")

wherein the respondent apparently valued the stock. No such annexure
is attached to the affidavit, however, and another issue remains

unresolved. In. this respect, the respondent instituted an action
(CIV/T/36/92) claiming delivery of the stock, or alternatively

payment of the sum of M90,000.00, and obtained a judgment, apparently
in default of appearance. The petitioner maintains that summons
was
never served in that action: he has introduced much hearsay evidence,
alleging fraud of service. In any event, he applied for
a stay of
execution and an application for rescission of judgment is pending.

The
respondent has also instituted action (CIV/T/9B/92), against Building
World, claiming the amount of M84,640.00 as the nett value
of his
shares in that company on his resignation therefrom. I must confess
that an overall view of the actions filed by the respondent
is one of
some difficulty. It will be seen that the deed of agreement between
the parties gives rise to the following mathematical
situation:-

Purchase of motor vehicles by respondent : M66,000

Purchase of stock by respondent : 90,000

Repayment of drawings by respondent : 21,591

Total payment by respondent : M177,591

Less value of respondent's shares : 84,640

Net payment by respondent : M92,951

to petitioner

The
figure of M93,000 contained in paragraph (F) of the deed of agreement
is clearly a nounded figure, that is, of the net balance
owed to the
petitioner after the respondent had taken possession of the motor
vehicles and stock and paid the amount of drawings
outstanding.
Nowhere has the respondent, incidentally, averred that he duly paid
the petitioner M90,000 for the stock, or M66,000
for the vehicles. I
could well understand, if it is the case that the respondent did not
receive the Mercedes, that he should,
in the light of the judgment in
case no. CIV/T/504/90, seek delivery of that vehicle, of
alternatively payment of the sum of M50,000:
I do not, however,
appreciate, if he did not receive the vehicle, why non-delivery, if
advanced as a defence, did not apprently
succeed as such in case No.
CIV/T/504/90.

The
respondent has not, as I have said, averred in these proceedings that
he paid M90,000 to the petitioner in respect of stock.
I fail then to
appreciate why he should institute an action (CIV/T/36/92) for the
delivery of such stock, or alternatively payment
of the latter sum,
much less why he was

granted
judgment in the matter, though of course such judgment was in default
of appearance.

Further,
if the respondent were to receive stock to the value of M90,000, or
payment to him of the latter sum, and also delivery
of the Mercedes
or payment of the sum of M50,000, he clearly would not be entitled to
also receive the sum of M84,640, as representing
the value of his
shares in Building World. It will be seen from the deed of agreement
that the latter sum was only to act as a
set off against payment by
respondent in respect of the purchase by him of the stock and the two
motor vehicles, not to mention
his debt to the company in the amount
of M21,591.

The
respective court files are not before me, and it may be that the
claim for M84,640 was intended to depend on the outcome of
the other
claims. Suffice it to say however that the overall picture is not
without difficulty and it would seem that consolidation
of claims
would be advantageous. The three claimes by the respondent arising
out of the selling of his shares in Building World
total M224,640,
though as I have indicated, it would seem that they are overlapping.
But that is not the sum total of the respondent's
claims against the
petitioner. The respondent in fact filed an action against the
petitioner (CIV/T/168/91) sometime in 1991, claiming
the sum of
M707,000 plus interest at 24% p.a. with effect from 12th April, 1991.
The respondent refers to the court file in the
latter proceedings,
but neither that file, nor the other court files, nor even a copy of
the pleadings therein were placed before
me.

In his
replying affidavit the petitioner deposed:

"I specifically state that the amount of R707,000.00 (seven
hundred and seven thousand rand) claimed by the Respondent is
firstly
not the amount agreed upon with the Respondent, and secondly it is
not due and payable.

I also deny the Respondent would be entitled to the payment of the
amount R707,000.00 (seven hundred and seven thousand) together
with
interest thereon at the rate of 24%per per annum as this is not the
nett value of the company under discussion. In an agreement
entered
into between the Respondent and I which is annexure "HKI"
to the opposing papers, the Respondent himself admitted
that the nett
value of his share in BUILDING WORLD (PROPRIETARY) LIMITED was R84
640.00 (eighty four thousand six hundred and forty
rand).

The agreement I had with the Respondent clearly states "Payment
of the said R93 000.00 (ninety three thousand) to be agreed
upon on
terms: from ARMCO debt worth to him or from Q CONSTRUCTION or any
other source".

The real interpretation of the agreement dated 25th April, 1990 is
not as stated by the Respondent. When we parted as shareholders
in
BUILDING WORLD and other companies that we were involved in together,
the Respondent stated that he

would establish a company in Swaziland similar to ARMCO and selling
the same products. We agreed that BUILDING WORLD or I would
not
become involved in competition with the Respondent. He would in turn
pay me from the nett profit he made in Swaziland. This
would also
apply to the company known as Q CONSTRUCTION. This did not in any way
mean that I would pay the net value of the assets
of ARMCO or
BUILDING WORLD to the Respondent." (Italics added)

I pause
here to observe that the deed of agreement of 25th April, 1990 seems
to have been misread by the petitioner, point not taken
at the
hearing. The deed is in manuscript, and reads, in my view, in
paragraph (G) thereof, "From ARMCO NETT worth to him....",

and not, as the petitioner has put it, "From ARMCO debtworth to
him." The word "NETT" is twice used elsewhere,
thus
providing a basis of comparison, in the agreement. In any event, if
the petitioner agrees that a debt is owed to the respondent
from the
proceeds of the ARMCO dealings, the point is semantic.

The
question is what exactly does the petitioner concede? As Dr. Tsotsi
submits, to state that the amount of M707,000.00 is,

"not the amount agreed upon with the Respondent, and secondly it
is not due and payable",

and again that such amount, "is not the nett value of the
company under discussion",

is not
exactly a model of clarity. The pleadings in case no. CIV/T/168/91
are not before me, but Dr Tsotsi has summarised the statement
of
claim, in his heads of argument, thus:

"(i) The parties purchased goods for resale from a company
called ARMCO superlite. They agreed that the nett profits of the

business would immediately accrue to the Respondent and the
Petitioner in the proportion of 40% to 60%.

(ii) The nett profits amounted to 2 million Maloti and the
Respondents 40% share thereof amounts to M800,000.

(iii) According to the agreement between the parties dated 25/04/90
the Respondent was indebted to the Petitioner in the sum of
M93,000
payable from his share of the ARMCO transaction profits i.e.
M800,000. This leaves a balance of M707,000 due to the Respondent
by
the Petitioner".

Dr Tsotsi
goes on to record in a fourth paragraph that "the allegation by
the Petitioner that the agreement between the parties
was that the
Respondent would pay the Petitioner from the nett profits he made
from operations of ARMCO in Swaziland is a

distortion
of the truth". But I presume that that statement of claim, and
that there Dr Tsotsi is but advancing his clients
position in the
matter, that is a his reaction to the

petitioner's
replying affidavit. There is of course no affidavit from the
respondent before me to advance such denial, and Mr Edeling
makes the
point that the respondent has not specifically varified his various
claims against the petitioner under oath. But it
seems to me
sufficient for the respondent to aver that the petitioner is indebted
to him in the various amounts: this he has done
in his answering
affidavit, referring to the particular court file in each case,
stating that he will ensure that the court files
are placed before
this Court.

That then
covers the situation concerning the various claims between the
parties: The respondent's claims are summarized thus:-

Proceedings Subject Amount

(i) CIV/T/168/91 Sale of ARMCO goods M707,000

(ii) CIV/T/36/92 Puchase of Stock 40,000

(iii)CIV/T/98/92 Sale of Shares 84,640

(iv) CIV/T/111/92 Delivery of Mercedes 50,000

M931,640

The last
three claims, relating to Building World may well, is I have
indicated, be overlapping, despite the deduction of M93,000
from the
"ARMCO nett worth", and bearing in mind also the
respondent's debt of M21,591 for drawings. But in any event,
the
total of the Building World claims represents but 24% of the total of
all four claims above. That then was the situation when

the
Deputy Sheriff sought to execute the writ of execution of the
judgment in the amount of M66,000, plus costs, obtained by the

petitioner. The question then arises as to whether the respondent
committed an act of insolvency under section 8 (b) of the
Proclamation,
or alternatively was insolvent. I propose to deal first
with the latter aspect. In brief, I cannot see how the petitioner can
succeed
thereon. Firstly, he blows hot and cold in the matter: while
he assests that the respondent is insolvent, in his attempt to
establish
an act of insolvency under section 8 (c) of the
Proclamation, he claims that the respondent is in possession of two
vehicles, one,
the Mercedes being "worth a substantial amount of
monwy, " that he is a director of and shareholder in Dynamic
Investments
(Proprietory) Limited that he has various business
interests, that he is conducting a business at Main North I Maseru,
that he
took over stock worth M90,000 from Building World, that he
regularly travels to South Africa on business and that accordingly he

"must therefore have assets".

Secondly,
Dr Tsotsi points to the respondent's claims before this Court and
submits that they are "contingent rights"
bringing them
within the definition of the word 'property' in section 2 of the
Proclamation. Such claims of course would all form
part of the
respondent's estate and could, if the estate were sequestrated, be
realised as to their value if prosecuted by the
liquidator, hearing
aside the claim for M707,000 the other three claims are certainly
contingent' in nature, but whether they involve
'rights' will only be
ascertained upon final judgment. In brief, the claims are disputed,
there are issues of

credibility
involved, and I cannot in these proceedings place a value upon such
claims.

The claim
for M707,000 however is in a different category. The deed of
agreement signed and acknowledged by the petitioner indicates
that
the ARMCO dealings had a "NETT worth" for the respondent,
or involved a debt owed to the respondent. Considering
the
respondent's specific allegation and reference to the pleadings in
CTV/T/168/91, nothing less than a specific categorical denial
would
suffice from the petitioner. He does not however, aver that he is not
indebted to the respondent in any amount. On the contrary,
we have
the vague statement that the amount of M707,000 is "not the
amount agreed upon with the Respondent" . That indicates
that
there was an agreement that the respondent was due an amount of
money. The petitioner does not stale however what amount was
agreed
upon. Again he stales that M707,000 "is not the nett value of
the company under discussion". He does not stale
what the net
value is: neither for that matter does he specify the company which
is "under discussion". He does stale
that the amount of
M707,000 "is not due and payable." He does not, however,
stale that "the amount agreed upon with
the Respondent,"
whatever that may be, is "not due and payable." Even if
that is what the petitioner intended to
say, he still did not say
when the amount agreed upon would be due and payable;

The
petitioner's replying affidavit is clearly reticent about the
parties' dealings. That is the course chosen by the

petitioner.
If he wishes to rebut the allegation of debt to the respondent,
however, he would need to specify such dealings. His
replying
affidavit falls far short of the necessary detail and indicates, as I
have said, that he is in debt to the respondent.
The parties'
Building World dealings pale into insignificance in contrast with
their ARMCO dealings. In particular, the petitioner's
three
liquidated claims totalling M95,166.04 (plus Interest) are but a
fraction of the respondent's claim for M707,000. The probabilities

are, therefore, that the amount owed by the petitioner to the
respondent, in respect of the ARMCO dealings, well exceeds the sum
of
M95,166.04, and that the respondents assets thus exceed his
liabilities. I am not satisfied therefore that the respondent is

insolvent.

I turn
then to the allegation of an act of insolvency under section 8 (b) of
the Proclamation. I have reproduced the contents of
the nulla bona
return of the Under Sheriff. When the Under Sheriff served the
respondent with the Court's order of provisional
sequestration,
however, he made the following return:

"..... when I served him this Order of Court he told me same
thing he told me that he has also got a judgement against the

Plaintiff Osman Mahomed Moosa for the sum of M90,000.00 he shown me
when I served him writ CIV/T/504/90 he showed me the writ for
the sum
of M90,000.00 he say he got no assets but if the Plaintiff he can pay
him he will try to pay his Judgement." (Italics
added)

In
addition to the above, the Under Sheriff has sworn an affidavit
deposing that

". . . . I have served Mr Hoosen Khan personally a Writ on
CIV/T/504/90 and he told me that he has also got a judgement against

the Plaintiff Mr O.S.M. Moosa by Order of the Court for the sum of
M90,000, CIV/T/36/92. I have read it personally. He says that
if the
Plaintiff O.S.M. Moosa pays him the M90,000 then he could pay him the
M66,000.00 plus costs. I spoke to him in a little
English and
Sesotho."

Mr
Edeling submits that nonetheless the act of insolvency under section
8 (b) is based upon the contents of the executing officer's
return,
and that return in this case is the nulla bona return to the writ of
execution. He submits that the wording of the return
should be
construed by the Court with a degree of sympathy, being in mind the
lack of sophistication thereof. If was held in the
case of Kader vs
Haliman (2) at p32 that where a nulla bona return is made, the
executing officer should state that,

(i) he explained the nature and exegency of the warrant;

(ii) he demanded payment;

(iii) the defendant failed to satisfy the judgments;

(iv) the defendant failed, upon being asked to do so, to indicate
sufficient disposable property to satisfy it;

(v) he (the executing officer) had not found sufficient disposable
property to satisfy the judgment, despite deligent search and

enquiry.

That may
well be a counsel of perfection, extending perhaps beyond the
requirements of section 8 (b). 1 observe, for example, that
the
section requires, no more than that it should 'appear' from the
return made by the officer that he did not find sufficient
disposable
property to satisfy the judgment. The learned author of mass op cit.
After quoting section 8 (b) of the Insolvency Act
of South Africa,
section 8 (b) of the Proclamation being in verbatim terms, observed
at p 63.

"The question here is not whether the execution officer has
carried out the various duties imposed by the particular law under

which he is acting, but simply whether, in terms of the Insolvency
Act alone, here quoted, it can be founded that this particular
act of
insolvency has in fact been committed."

The
Deputy Sheriff's nulla bona return in the present case states that
the "nature and exigency" of the writ "was
explained
to him" (the respondent). Thereafter the return indicates
without expressly stating, that the Deputy Sheriff made
demand

of the
respondent and that the latter failed to satisfy the judgment.
Thereafter again, the return states that the respondent failed
to
show the Deputy Sheriff "any assets to satisfy the demands of
this writ". That is lantamount to saying that the respondent

failed "to indicate to (the Deputy Sheriff) disposable property
sufficient to satisfy (the judgment)". Thereafter again,
the
Deputy Sheriff does not say "that he has not found sufficient
disposable property to satisfy the judgment", "despite

deligent search and enquiry". But then it was held in the case
of Estate Logie vs Priest (3) that it is not necessary that
the
executing officer should actively search for disporable property
sufficient to satisfy the judgment, the mere failure to find
same
being sufficient. The is how 8 (b) . it sufficient, as I have
indicated, "if it appears from the return . . . that he
(the
executing officer) has not found sufficient disposable property to
satisfy the judgment". In the present case the Deputy
Sheriff
stated.

"...but the defendant he got no assets, he got no any thing."

That
statement, coming after the statement, "Defendant failed to show
me whether he has any assets to satisfy the demands of
this writ,"
indicates that the Deputy Sheriff took matters further and looked for
disposable assets. Certainly I can only
say that it appears from the
return that the Deputy Sheriff" has not found sufficient
disposable property to satisfy the judgment."
I agree therefore
with Mr Edeling's submission

that the
nulla bona return is, on the face of it, a valid return and that
prima facie an act of insolvency was committed. Thereafter
the onus
falls upon the respondent of proving the contrary : see the case of
Van Vuuren vs Jansen (4)

In this
respect, there is the affidavit from the Under Sheriff. The
petitioner submits that such affidavit may be false. He claims
indeed
that the respondent sought to influence a Deputy Sheriff in the
matter of a false affidavit in case no CIV/T/36/92, involving
the
default judgment against petitioner in the amount of M90,000. But the
allegations are hearsay in the matter.

In any
event, for my part, I observe that the Deputy Sheriff's affidavit in
these proceedings is somewhat vague. He does not stale
specifically
that when he served the writ of execution on the respondent, on 24th
February, 1992, the respondent then informed
him of the judgment for
M90,000 in CIV/T/36/92. The word "and" in the phrase, "and
he told me that he has also got
a judgment ...", no doubt
suggests that the service of the writ and the respondent's statement
were contemporaneous. Nonetheless,
in the circumstances of this case
I would have expected the Deputy Sheriff to have stated in
categorical terms that the respondent
showed him the judgment in
CIV/T/36/92 on 24th February, 1992, when he served the writ of
execution upon the respondent.

Furthermore,
the Deputy Sheriff's affidavit does not answer the question if he
thought fit when serving the order of provisional
sequestration upon
the respondent to record that the latter had shown him a judgment,
for a considerable sum of money, against
the petitioner, why he had
not seen fit to record the "same thing" when serviing the
writ of executiion. In brief, if
the Deputy Sheriff regarded the
possession of the judgment for M90,000 as being of some value,
sufficient for him to make record
thereof when he served the order of
provisional sequestration, why did he not record it when he served
the writ of execution: why
indeed did he then make a nulla bona
return, and why did he so emphatically record, "Defendant he got
no assets, he got no
any thing"?

To say
the least of it, on the papers before me, the suspicion is there that
the respondent showed the Deputy Sheriff the judgment
for M90,000
only when the latter served the order for provisional segrestration.
I am inclined to believe that the respondent,
not being aware of the
legal implications, simply resisted execution, by declining to show
any assets to the Deputy Sheriff, in
the belief that he could thus
frustrate the pretitioner, then a plaintiff: thereafter I suspect
that when the order of provisional
seguestration was served upon him,
it was only then that the legal implications crystallized and the
respondent revealed the judgment
for M90,000.

This of
course is speculation upon my part and such issues could only be
resolved by viva voce evidence. In the view I take

of this
case, that course will not be necessary. Mr Edeling submits that, in
any event, execution of the judgment for M90,000 had
been stayed,
that an application for rescission thereof was pending and that
accordingly that judgment did not constitute "disposable

property" for the purposes of section 8 (b) . I observe that in
the case of Mostert No vs Van Hirschberg (5) it was held that
where a
debtor produces to the executing officer sufficient incoporeal
assets, such as book debts, no act of insolvency is committed.
I
imagine however that in such a case the book debts are undisputed.
The question remains whether the property is disposable, that
is,
whether it can be sold or auctioned forthwith so as to satisfy the
judgment.

When it
comes to a judgment in which the petition itself is based, where it
is a default judgment and the petition is filed before
the time
within which to apply for rescission has expired, and the respondent
states that he intends to make such applicant, the
Court may postpone
or even dismiss the petition: see the case of Benade vs Boedel
Alexander (6) at p655. Again where an appeal
has noted against a
judgment, and a stay of execution is in force, such judgment may not
form the basis of a creditor's petition:
see Mars op. cit. at p 84.
In such cases the creditor's claim is dependent on a contingency and
is uncertain and hence cannot be
said to be "liquidated".
Similarly, I do not see that such a judgment, obtained by a
respondent to a petition in sequestration,
is disposable. Mr Edeling
submits that in the present case if the Deputy Sheriff were to attach
the judgment for M90.000 and attempt
to sell it on auction, that
would be unlawful, in view of the stay of execution. If the auction
was

expressly
effected subject to such stay and the application for rescision, I
cannot see that any such sale would be unlawful. 1
agree however with
Mr Edeling that any such auction would be the subject of an urgent
interdict. I observe that in any event the
value of the judgment
under such restrictive circumstances would be negligible and even if
it could be said to be disposable, and
I am satisfied it could not, I
am also satisfied that it could not be said to be sufficient in value
to meet the petitioner's judgment
of M66,000, plus interest of
approximately M85,000. I am accordingly satisfied that the respondent
committed an act of insolvency.

Two
aspects remain. Under section 12 (1) (c) of the Proclamation the
Court may now sequestrate the estate of the respondent if "satisfied

that ..... there is reason to believe that it will be to the
advantage of creditors". The respondent desposed that "the

Petitioner is the only creditor of the Respondent and there are no
other creditors". There is no averment from the petitioner
in
his replying affidavit to the contrary. The law of insolvency was
surely developed to protect creditors and of course their
debtor, to
prevent a race of the swiftest and preserve equality among creditors,
on the basis of the maxim par est condicio creditorum.
I cannot see
how those considerations apply when there is but one creditor.

The onus
is on the petitioner in the matter, even though an of an act of
insolvency has been committed (Leandenhall Meat Market
vs Hartsman
(7). Nonetheless, it was held in the case of Cohen vs Jacobs (8) that
where an act of insolvency is

proved,
very strong grounds would need to be adduced to cause the Court even
to doubt whether sequestration would be to the advantage
of
creditors: indeed in the case of a nulla bona return, it almost
necessarily follows that sequestration will be to the creditors'

advantage. Undoubtedly creditors must be taken to know better than
the Court whether sequestration would be to their advantage
or not,
and again each creditor surely knows what is best in his own
interests: see Dunn & Co vs Repman (9).

But it
has nonetheless benn held that the expression "to the advantage
of creditors" means to the advantage of all the
creditors, or at
least the general body of creditors, and not the advantage of a mere
majority of them: see e.g. the cases of in
re Provincial Trading Co
(10) and Lawclaims (pty) Ltd vs Rea Shipping Co. S.A. (11) at p 755.
Those decisions tend to indicate
that the insolvency legislation was
intended to benefit a body of creditors rather than a single
creditor. Nevertheless under section
4 (3) of the Interpretation Act,
1977, "words and expressions in the plural include the
singular", and strictly speaking
it seems that sequestration can
be ordered for the advantage of a single creditor: see e.g. the old
case of Kahn vs Shabodien (12).

I have
little doubt that the petitioner considers sequestration to his
advantage, hence

this
petition.. But the question then arises as to whether such is a bona
fide advantage, as that I believe is what the legislature
had in
mind. Suffice it to say that I am not satisfied that sequestration
would be to the bona fide advantage of the petitioner.

in
Lesotho at some time within that period, that is, for the purposes of
section 150 (1) (b) of the Proclamation.

As to
costs, I am not satisfied, as I have said, as to the bona fides of
the petition. Nonetheless, I am also satisfied that the
respondent
committed an act of insolvency. In all the circumstances therefore, I
consider it equitable that each party should pay
his own costs.

Accordingly
the rule nisi is discharged, the petition is dismissed and I order
that each party pay his own costs.

Dated
this 19th Day of September, 1995.

B.P.
CULLINAN (B.P. CULLINAN)

CHIEF
JUSTICE