High Court of Namibia Main Division, Windhoek s24

13

REPUBLIC OF NAMIBIA

HIGH COURT OF NAMIBIA MAIN DIVISION, WINDHOEK

JUDGMENT

Case no: A 276/2014

In the matter between:

SERENGETTI TOURISM (PTY) LTD

t/a ETOSHA MOUNTAIN LODGE APPLICANT

and

STEPHEN GLENN BAARD FIRST RESPONDENT

BRIGGITTA BAARD SECOND RESPONDENT

Neutral citation: Serengetti Tourism (Pty) Ltd t/a Etosha Mountain Lodge v Baard (A 276/2014) [2016] NAHCMD 117 (21 April 2016)

Coram: PARKER AJ

Heard: 9 March 2016

Delivered: 21 April 2016

Flynote: Insolvency – Sequestration – Provisional order of sequestration – When granted – Applicant must establish to prima facie degree three matters – That applicant has established a claim against respondent in amount in excess of N$100, that respondent has committed act of insolvency or is insolvent and that there is reason to believe that it will be to advantage of creditors of the respondent if estate of respondent is sequestrated – In instant case court satisfied that the three matters have been established to prima facie degree – Consequently, application for provisional sequestration granted.

Summary: Sequestration – Provisional order of sequestration – When granted – Applicant must establish to prima facie degree three matters – That applicant has established a claim against respondent in amount in excess of N$100, that respondent has committed act of insolvency or is insolvent and that there is reason to believe that it will be to advantage of creditors of the respondent if estate of respondent is sequestrated – Applicant relying on Acting Assistant Deputy Sheriff’s nulla bona return – Upon service of writ of execution on first respondent and on second respondent through first respondent, and upon demand that they pay the debt, first respondent answered ‘they’ could not pay debt or part thereof – Court found that respondents’ answer unequivocably and unambiguously indicated respondents’ failure to satisfy the judgment – Court found further that there was evidence that debtors were in receipt of income of which substantial portion are likely to become available to creditors – Court found further that there is a reasonable prospect that the trustee, by invoking the machinery of the Insolvency Act 24 of 1936, will reveal or recover assets which will yield a pecuniary benefit for creditors – Court concluded it was satisfied that applicant has discharged the onus cast on it to establish the requirements for the grant of provisional sequestration order – Consequently, court granted a provisional sequestration order.

ORDER

(a) The estates of the first and second respondents are placed under provisional order of sequestration in the hands of the Master of the High Court.

(b) A rule nisi is issued calling on the respondents and all other interested parties to show cause, if any, to the court on 14 June 2016 at 10h00, why the respondents should not be placed under final order of sequestration.

(c) Service of this order be effected -

(i) by the deputy sheriff responsible for the District of Swakopmund on the respondents personally;

(ii) by way of publication in one edition of ‘Die Republikein’ and one issue of the Government Gazette.

(d) Costs of this application be costs in the sequestration, save for any costs of opposition thereto.

JUDGMENT

PARKER AJ:

[1] The applicant applies for provisional sequestration of the first and second respondents. The first respondent and second respondent are married to each other out of community of property, and they have moved to reject the application.

[2] It is common cause between the parties that applicant obtained judgment by default in the court against the respondents – jointly and severally – on 26 October 2012, that is, some three years and six months ago, for N$373062,71, plus interest a tempore morae on the amount at the rate of 20 percent per annum as from 20 November 2009. The total amount due to the applicant, including simple interest, is in excess of N$600 000.

[3] The respondents did not see it fit to make any payment or enter into some acceptable repayment arrangement with the applicant. They waited to be served with summons. They waited for applicant to obtain judgment by default against them, as aforesaid. And they did not bother to apply to the court to rescind the judgment. They did not bother to appeal from the judgment. They waited to be served with Writ of Execution. I should say that it is fitting for one to pay one’s debts or make acceptable repayment arrangement with one’s creditor. And it is important for one to respect orders of courts of law; and more important, an order of the court must be obeyed unless it has been set aside by a competent court. I make these statements to reject any feeble and unlawful attempt by the respondents to deny their indebtedness to the applicant. And yet again the respondents waited until the applicants brought the instant provisional sequestration application before waking up to resist the applicant’s choice of sequestration as the form of execution of the judgment obtained as long ago as 26 October 2012.

[4] Apart from the interpretation and application of the relevant provisions of the Insolvency Act 24 of 1936 (‘the Act’), the foregoing facts should have a bearing on the determination of the application. Before delving into the merits of the case, I should consider preliminary points raised by the respondents in the answering affidavit.

[5] The third point in limine is rejected as frivolous and vexatious and as having no merit, considering the holdings I have made previously in para 3. The judgment obtained by the applicant stands to be executed: it has not been set aside by a competent court.

[6] The first and second points in limine are unbreakably intertwined with the merits of the case; and so, I shall treat them as such. It remains to consider the question of authority raised in the answering affidavit. The respondents deny that ‘the said Leendert De Koster (the deponent of the founding affidavit) is duly authorized to depose to the Founding Affidavit and to have brought (to bring) this Application on behalf of the Applicant …’

[7] It is well settled that -

‘[T]he deponent to an affidavit in motion proceedings need not be authorised by the party concerned to depose to the affidavit. It is the institution of the proceedings and the prosecution thereof which must be authorized.’

(Wlotzkasbaken Home Owners Assoc v Erongo Regional Council 2007 (2) NR 799, (HC), para 13)

[8] This answers the first part of the preliminary point, namely, that the respondents ‘deny that Leendert De Koster is duly authorized to depose to the Founding Affidavit’. I proceed to determine the second part of the preliminary point which is that the respondents ‘deny that the said Leendert De Koster is duly authorized to have brought (to bring) this Application’.

[9] The important principles to guide the court in the determination of the challenge to the applicant’s authority to institute the application are trite, and they are as follows:

(a) ‘[11] The golden thread that runs through these cases, starting from Mall (Cape) (Pty) Ltd v Merino Ko-operasie Bpk 1957 (2) SA 347 (c)) is set out succinctly in the following passage, per Strydom J … from Tjozongoro and Others (1985 (1) SA 376 (SWA)) at 381E:

“In all these cases (ie cases the learned judge referred to) the Courts concluded that in motion proceedings by an artificial person, although prudent, it is not always necessary to attach to the application the resolution authorising the institution of proceedings and that a deponent’s allegation that he is authorized would suffice in the absence of a challenge to his authority”.’

(Wlotzkasbaken Home Owners Assoc (HC))

(b) ‘[52] It is now settled that in order to invoke the principle that a party whose authority is challenged must provide proof of authority, the trigger-challenge must be a strong one. It is not any challenge: Otherwise motion proceedings will become a hotbed for the most spurious challenges to authority that will only protract litigation to no end. This principle is firmly settled in our practice. It was stated as follows in Scott and Others v Hanekom and Others 1980 (3) SA 1182 (C) at 1190E-G:

“In cases in which the respondent in motion proceedings has put the authority of the applicant to bring proceedings in issue, the Courts have attached considerable importance to the failure of the respondent to offer any evidence at all to suggest that the applicant is not properly before the Court, holding in such circumstances that a minimum of evidence will be required from the applicant. This approach is adopted despite the fact that the question of the existence of authority is often peculiarly within the knowledge of the applicant and not his opponent. A fortiori is this approach appropriate in a case where the respondent has equal access to the true facts. [Own emphasis added and footnotes omitted.]”

‘[53] It is now trite that the applicant need do no more in the founding papers than allege that authorisation has been duly granted. Where that is alleged, it is open to the respondent to challenge the averments regarding authorisation. When the challenge to the authority is a weak one, a minimum of evidence will suffice to establish such authority: Tattersall and Another v Nedcor Bank Ltd 1995 (3) SA 222 (A) at 228J-229A.’

(Otjozondu Mining v Purity Manganese 2011 (1) NR 298)

[10] The respondents have challenged the authority of Koster, who they accept is a director of the applicant, to institute the instant application but they have failed ‘to offer any evidence at all to suggest that the applicant is not properly before the Court. Their failure offends the principle enunciated in Otjozondu Mining, which I accept as good law. Thus, I find that the challenge is a weak one; and so, a minimum evidence will suffice to establish such authority (Otjozondu Mining, para 53) and there is no rule of practice preventing the deponent from proving such of his or her authority by annexing the resolution authorising the institution of proceedings to his or her replying affidavit’. (See Wlotzkasbaken Home Owners Assoc (HC), para 12.)

[11] I find that the Resolution of Directors annexed to the replying affidavit establishes the authority of Koster to institute the instant application inasmuch as the Resolution ‘authorized and empowered’ Koster ‘to generally do any act for effecting the purpose as aforesaid’. The ‘purpose as aforesaid’ is that ‘the Company (ie applicant) institute and/or lodge an Application for Sequestration Order against Stephen Glenn Baard and/or Briggitta Baard (ie the respondents) ….’

[12] I therefore accept Mr Dicks’s submission that the point on lack of authority is spurious. Ganes v Telecom Namibia Ltd 2004 (3) SA 615 (SCA) tells us that such challenge is a worthless challenge. Consequently, I reject the challenge. The point in limine on challenge to Koster’s authority to bring the application is therefore dismissed. I now proceed to consider the merits of the case.

[13] At this stage, that is, the stage of application for provisional sequestration, the applicant ought to establish to a prima facie degree three matters, namely, that -

(a) the applicant has established a claim against the respondent in excess of N$100;

(b) the respondent has committed an act of insolvency or is insolvent;

(c) there is reason to believe that it will be to the advantage of creditors of the respondent if the estate of the respondent is sequestrated. (Bank of Windhoek v Andrew Joseph Jacobs (A 912/2013) [2013] NAHCMD 329 (13 November 2013); Robert Sharrock, et al, Hockly’s Insolvency Law, 6th ed, para 3.1).

[14] It has also been said that where a creditor alleges an act of insolvency, and proves his claim, he or she has the unfettered right to choose his form of execution, one of which is to sequestrate his debtor’s estate’. (Service Trade Supplies Ltd v Dasco & Sons Ltd 1962 (3) SA 424 (T) at 428B-F) Thus, the court may grant an application for provisional sequestration of the debtor’s estate if the applicant has satisfied the court to a prima facie degree on the three matters mentioned in subparas (a), (b) and (c) in para 13 of this judgment. I now proceed to consider those three matters to see if the applicant has so satisfied the court.

(a) The first matter: The applicant has established a claim against the respondent in an amount in excess of N$100

[15] It is not in doubt, as I have shown previously, that the applicant’s claim in excess of N$100 is established by the aforementioned judgment of 26 October 2012. I now proceed to consider the second matter (see para 13 above)

(b) The second matter: The respondent has committed an act of insolvency or is insolvent

[16] The matter under item (b) consists of two disjunctive elements: (i) the debtor has committed an act of insolvency; or (ii) the debtor is insolvent. The applicant relies primarily on an act of insolvency contemplated in s 8(b) of the Insolvency Act 24 of 1936 (‘the Act’) on the basis of a nulla bona return of service. The applicant relies also on acts of insolvency contemplated in s 8(c) and (d) of the Act.