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REPUBLIC OF SOUTH AFRICA

IN THE HIGH COURT OF SOUTH AFRICA

(GAUTENG LOCAL DIVISION, JOHANNESBURG)

CASE NO: A5011/16

Reportable: No

Of interest to other judges: Yes

Revsed.

18 May 2017

In the matter between

LINDI ADELAIDE SITHOLE NO                                                                      APPELLANT

and

SELINA PETUNIA MAHLANGU                                                                   RESPONDENT

Insolvency - Act of insolvency - Section 8(b) of the Insolvency Act 24 of 1936 - Nulla bona return in respect of execution relied on - correctness and validity of - return made for a specific address only – further inconsistency in content - judgment debtor mentioning to sheriff that he had property elsewhere - sheriff and execution creditor aware of immovable property registered in the name of the debtor which was identified on a previous occasion during execution – held: nulla bona return a nullity and invalid - appeal upheld - sequestration order set aside – costs - considerations militating against applying general rule of costs to follow result - each party ordered to pay own costs.

 

JUDGMENT

VAN OOSTEN J:

Introduction

[1] At issue in this appeal is the validity of the execution process on 12 August 2014 pursuant to a warrant of execution as reflected in a nulla bona return issued by the deputy sheriff (the nulla bona return). The appellant is the duly appointed executor in the deceased estate of Jeremiah Boy Kunene, the erstwhile appellant/respondent in this matter, who died on 30 December 2016 (the deceased). Although this was placed in dispute by the deceased, the respondent, Ms Mahlangu, avers that she was married to the deceased according to customary law, on 31 July 2010. It is common cause that two minor children were born from the relationship between the deceased and Ms Mahlangu.  

[2] The appeal is with leave of the court a quo and directed against an order for the final sequestration of the deceased’s estate, granted by Masipa J, on 26 November 2016, which was the return day of a provisional order for sequestration granted by Van der Linde AJ (as he then was) on 5 June 2015.

Background facts  

[3] The sequestration application was premised on the deceased’s persistent failure to pay maintenance for the minor children in terms of an order of this court. The deceased’s maintenance obligation arose in the following circumstances. In 2011 Ms Mahlangu instituted divorce proceedings against the deceased. She subsequently launched an application in terms of rule 43, inter alia for payment of maintenance for the minor children pendent lite. An order was granted on 26 August 2011 by Carelse J, for the deceased to pay maintenance for the minor children in the sum of
R3 500.00 per month from 1 September 2011.

[4] A protracted sad history of failure to comply with the order followed. A warrant of execution against the property of the deceased was issued and served in response to which the deceased, in January 2012, paid the arrears in the sum of R15 975.00.  Thereafter the deceased made sporadic and erratic payments in regard to his maintenance obligation but again fell into arrears, which in June 2013 had accumulated to R110 025.00. On 14 June 2013 the deceased launched an application for the setting aside of the Rule 43 order. In response thereto Ms Mahlangu filed an application for the setting aside thereof as an irregular step. The matter came before Satchwell J, who on 10 September 2013, dismissed the deceased’s application with costs on a punitive scale and granted Ms Mahlangu leave for the issuing of a warrant of execution against the deceased in respect of the arrear maintenance.

[5] On application by Ms Mahlangu, a warrant of execution for payment of the sum of R110 025.00 was issued on 9 October 2013 and executed by the deputy sheriff on 15 October 2013. In the return of service the deputy sheriff states that the warrant could not be served at the deceased’s address as ‘the immovable property at address belongs to a Lindi Adelaide Sithole, including the moveable assets on premises’. A copy of a deed search, affidavit and deed of transfer, showing that the deceased is the registered owner of a property in Payneville, better known as 1031 Bafana Road, Payneville, was attached to the return (the October 2013 return).

[6] On 28 November 2013 Ms Mahlangu launched an application in this court for the committal of the deceased to prison for contempt of court and, in the alternative, sequestration of his estate. The arrear maintenance by then amounted to
R145 025-00. On 14 May 2014 Magardie AJ granted an order for the committal of the deceased to prison and suspended the order for one month on condition that payment of the amount of R132 025.00 was made. The deceased however, filed an application for leave to appeal against that order.

[7] On 12 August 2014 the deputy sheriff executed a warrant of execution at the    deceased’s residential address, in respect of which the nulla bona return was issued. In the return the execution of the writ is narrated as follows:

‘This is to confirm that on the 12th day of August 2014 and at 15h00, the abovementioned process was handled as follows by MR Khan at the above address of the respondent.

This is to certify that at the above address the amount of R110 025.00 in satisfaction of this warrant and my costs had been demanded from the defendant, who informed me that he has no money, disposable property or assets, inter alia, wherewith to satisfy the said warrant or any portion thereof.  No movable property were (sic) either pointed out or could be found by me, after a diligent search and enquiry at the above address.

Respondent has no attachable assets at given address.

Therefore my return is one of a nulla bona for given address only.  Respondent signed nulla bona form.’

The ‘nulla bona form’ referred to in the return, is attached and is in the nature of an affidavit signed by the deceased, confirming that he informed the deputy sheriff that ‘I have no money or disposable property to satisfy the judgment’. The following three further questions and answers thereto are recorded below the deceased’s signature on the document:  

‘1. Do you have any property at above address?  No

2. Do you have any property elsewhere?  Yes

3. Do you have any banking accounts?  Yes’

[8] On 21 October 2014 Ms Mahlangu launched the sequestration application, premised on an indebtedness arising from arrear maintenance payments amounting to R202 025.00. Ms Mahlangu relied on the nulla bona return establishing an act of insolvency by the deceased, in terms of s 8(b) of the Insolvency Act 24 of 1936. The deceased opposed the application for sequestration.   

[9] On 5 June 2015 Van der Linde AJ granted a provisional sequestration order. The deceased filed an affidavit in opposition to the granting of a final order of sequestration in which he raised, and this was not disputed, that he had paid the judgment debt of R132 052.00 in full, on 13 July 2015, and thus after the date of the provisional sequestration order. For this reason the act of insolvency in any event, no longer availed Ms Mahlangu (Duchen v Flax 1938 WLD 119 at 125). Ms Mahlangu however, placed reliance on the further indebtedness of the deceased in regard to his failure to pay maintenance subsequent to the judgment debt.  

[10] The extended return date of the provisional sequestration order came up for hearing before Masipa J who, on 26 November 2015, granted a final sequestration order which is the subject matter of this appeal.

The judgments in the court a quo  

[11] The central issue in the court a quo, both before Masipa J and Van der Linde J as well as in this court turns on the validity and correctness of the nulla bona return. Van der Linde AJ having referred to the contents of the nulla bona return and the deceased’s answers to the questions I have quoted above, with reliance on the judgment of Goldstein J in Wilken and Others NNO v Reichenberg 1999 (1) SA 852 (W), held that it was necessary for the deceased ‘to have indicated not only the nature of the assets which he asserts he has, but also their whereabouts’. In similar vein, Masipa J, likewise with reliance on Wilken held ‘[T]he mere mention of property at another address is insufficient compliance with s 8(b) of the Insolvency Act’.

Discussion

The correctness of the nulla bona return on the face of it

[12] The deceased was entitled as he did, to put the correctness of the nulla bona return in issue. In Sussman Co (Pty) Ltd v Schwarzer 1960 (3) SA 94 (O) 94 Potgieter J held

‘The onus is always on the applicant to prove that respondent has committed an act of insolvency. If an act of insolvency in terms of sec. 8 (b) is relied upon the onus is discharged if a return is filed which on the face of it is valid and if the facts therein contained are facts which the applicant can rely upon in terms of sec. 8 (b). If the respondent then wishes to impeach those facts then the onus shifts to him to show by clear evidence that although the return shows that the requirements of sec. 8 (b) have been complied with they were in fact not complied with and that the return is not a proper return. Where, however, the return itself does not show that the requirements of the sub-section have been complied with, then the onus is not shifted and it rests on applicant to show that in fact the requirements have been complied with and that the return is in fact a nulla bona return.’

[13] The first question arising in deciding the onus is whether the nulla bona return, on the face of it, is valid. Upon closer examination of the content thereof, two prominent features deserve further comment. First, the return is ‘one of a nulla bona for the given address only’ [emphasis added]. The deputy sheriff was, in terms of the warrant of execution, tasked ‘to attach and take into execution the movable property and/or immovable property of the [deceased] who resides at Rooibekkie Street, President Dam, Springs’. A nulla bona return limited to a specific address where the debtor happens to reside, as is the case here, on the one hand, is irreconcilable with the duties of the deputy sheriff in executing the warrant of execution and on the other, in any event, legally invalid. For this reason alone the nulla bona return, on its face value, was invalid.

[14] Secondly, a clear inconsistency is readily apparent from the nulla bona return: the deceased informed the deputy sheriff that ‘he has no money, disposable property or assets’ juxtaposed to the answers furnished by the deceased in response to the questions posed to him by the deputy sheriff, where he indicated that he did own property elsewhere and that he had banking accounts.

[15] In conclusion, the nulla bona return, on the face of it, is invalid and Ms Mahlangu therefore failed to discharge the onus of proving an act of insolvency. 

Is the sheriff’s return in fact a nulla bona return?

[16] As I have already alluded to, the October 2013 return states that the deceased was the owner of the Payneville property. Not only was Ms Mahlangu made aware thereof, she also stated in the founding affidavit in the committal application, that the deceased ‘is a man of substantial means’; that he owns thirty five immovable properties as well as ‘other substantial assets’ and in addition referred to the deceased’s own version in the rule 43 application, where he maintained that he is ‘worth approximately R5m’.

[17] Regarding the immovable property at the deceased’s residential address where the writ was executed (described in the title deed as Erf 56 Presidentsdam Extension 1 Township), Ms Mahlangu stated that the deceased paid for the property out of his own funds and initially caused the property to be transferred into the name of Ms Sithole (who is referred to in the deputy sheriff’s return) with whom he alleged to have been married by customary union. The property, she further states, was later transferred to the BTL Kunene Family Trust, which was controlled by the deceased, merely in an attempt to thwart her claims for payment of maintenance.

[18] Against this background it is abundantly clear that the deceased, to the knowledge of Ms Mahlangu, and on her version, was possessed of sufficient assets to satisfy the maintenance claims. The deceased’s ability to pay moreover came to the fore when confronted with the provisional sequestration order and the looming possibility of a final sequestration, payment of the judgment debt was swiftly made. The nulla bona return, in the light of these considerations, pails into insignificance and in fact, limited as it was to a specific address, a nullity.

[19] For all these reasons both the provisional sequestration order and the final sequestration order were wrongly granted and on this further ground the appeal must succeed.

Do the facts contained in the nulla bona return comply with s 8(b) of the Insolvency Act?

[20] An act of insolvency is committed if, as provided for in s 8(b) of the Insolvency Act, the court has given judgment against the debtor 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’.    

[21] Applied to the facts of the present matter the question arises whether the deceased, after personal service on him of the writ, indicated to the deputy sheriff disposable property sufficient to satisfy the judgment debt by informing him of having ‘property elsewhere’ as well as ‘banking accounts’. 

[22] The return conveys that the deceased had no money or disposable assets at that address but property elsewhere, as well as bank accounts. In Wilken, relied upon in the court a quo, Goldstein J, having referred to and echoing the dicta in a number of decided cases but declining to follow the counter judgment of Thirion J in Nedbank Ltd v Norton 1987 (3) SA 619 (N) 621 D-F, held that the execution officer is merely required to ask the debtor to indicate sufficient property to satisfy the writ and that s 8(b) does not impose a duty on the execution officer to enquire from the debtor what property he has and where it is situate. It is for the debtor, the learned judge concluded, to point out the property or indicate its whereabouts and describe it in order to demonstrate its sufficiency (Generally see Mars The Law of Insolvency in South Africa 9 Ed para 4.3).

[23] I propose for present purposes, to accept the correctness of the dicta in Wilken to which I have referred. Applied to the facts of the present matter the nulla bona return in my view must be considered in conjunction with the October 2015 return. The reference by the deceased to property elsewhere, at least, it must therefore be assumed, included the Payneville immovable property, in respect of which the title deed confirming ownership was in possession of both the deputy sheriff and the execution creditor, Ms Mahlangu and her attorneys. The Payneville property was therefore properly indicated as provided for in s 8(b), both in regard to its identification and whereabouts, once the deceased had told the deputy sheriff that he had property elsewhere. Significantly, nothing has been put forward as to the reason why this property was not sold in execution. Had it been the case of the creditor that the value of the property was insufficient to satisfy the judgment, it bore the onus to prove that. In conclusion: the issuing of a nulla bona return on the one hand was inappropriate and the reliance thereon by Ms Mahlangu in an attempt to establish an act of insolvency, on the other, misplaced.

Costs

[24] Ms Mahlangu at all times acted in her capacity as mother and guardian of the minor children. The sole purpose in launching the sequestration proceedings was to enforce the maintenance order, after having exhausted all other legal remedies available to her, including obtaining an order for the deceased’s committal to prison. The committal order did not discourage the deceased to file an application for leave to appeal. The deceased’s continuous deliberate disregard of the interests of the minor children, his obstructiveness in frustrating a court order in regard to maintenance and the abortive opposition proffered to all prior legal steps taken by Ms Mahlangu, resulted in inordinate delays, bearing in mind that the maintenance order was granted as far back as in 2011. The accumulation of unnecessary costs of the continued litigation undoubtedly wore Ms Mahlangu down and adversely affected the minor children. The deceased, besides, was financially well off and seemingly capable of paying the maintenance he was ordered to pay. In any event, no sustainable reason for the non-payment of the maintenance was at any stage offered.

[25] A departure from the general rule of costs following the event, in the circumstances I have referred to, as a mark of this court’s disapproval in the deplorable conduct of the deceased, is warranted. In my view each party should pay its own costs, both in the court a quo and in the appeal.

Order

[26] In the result the following order is made:

1. The appeal is upheld.

2. The order of the court a quo is set aside and replaced with the following:

‘2.1 The provisional order for sequestration is discharged.

2.2 No order as to costs is made.’

3. Each party is to pay its own costs of the appeal.

 

________________________

FHD VAN OOSTEN

JUDGE OF THE HIGH COURT

 

I agree.

 

________________________

SSD MOSHIDI  

JUDGE OF THE HIGH COURT

 

I agree.

 

__________________________

MHE ISMAIL  

JUDGE OF THE HIGH COURT

 

COUNSEL FOR APPELLANT                        ADV R BEDHESI SC

ADV A TSHABALALA

APPELLANT’S ATTORNEYS                         MALEPE ATTORNEYS

COUNSEL FOR RESPONDENT                    ADV N SEGAL

RESPONDENT’S ATTORNEYS                     YOSEF SHISHLER ATTORNEYS

DATE OF HEARING                                       3 MAY 2017

DATE OF JUDGMENT                                   18 MAY 2017

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