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					IN THE HIGH COURT OF SOUTH AFRICA

(WESTERN CAPE HIGH COURT, CAPE TOWN)




                                             Case Number: 27656/2010




In the matter between:

Groffler CC t/a Groffler Capital                     Applicant

and

Wilhelm Steenkamp                                    First Respondent

Jeanette Steenkamp                                    Second Respondent

ABSA Bank Limited (Pty)                              Intervening Creditor




JUDGMENT DELIVERED ON WEDNESDAY 16 FEBRUARY 2010




Baartman, J


[1] On 11 January 2011. Groffler CC t/a Groffler Capita! (the applicant)
applied for the provisional sequestration of Wilhelm Steenkamp (Steenkamp),
the first respondent in the sequestration application. The applicant had an
unsecured, liquidated claim for payment of R4 920 000 against Steenkamp.
At the time, Steenkamp was married to Jeanette Steenkamp (the second
respondent). Steenkamp initially opposed the application but withdrew that
opposition before the hearing.

[2] However. ABSA Bank (Absa)! Steenkamp's secured creditor in respect
     of a due mortgage loan agreement made application to intervene in the
     sequestration proceedings in order to oppose the application. The applicant
     opposed the intervention application. I deal below with the intervention
     application as well as the application for a provisional sequestration order.



     BACKGROUND


     Facts relied on in the provisional sequestration application

     [3] The applicant conducts business as a financier by providing bridging
     finance to property developers and in May 2008, had loaned to the applicant
     R1 500 000 and R7 000 000 on separate occasions. On 10 September 2008,
     the applicant and Steenkamp entered into a further loan agreement in terms
     of which the applicant loaned R750 000 to Steenkamp.

     [4] Sarel Boshoff (Boshoff) deposed to the founding papers in the
     sequestration application and said that R4 920 000 was due in terms of the
     various loan agreements. Despite demand, the debt was outstanding for 120
     days at the institution of sequestration proceedings. The applicant held no
     security for the debt.

     [5] Steenkamp is the owner of the immovable property situated at Erf 34904,
     Bellville (the immoveable property). Boshoff alleged that Steenkamp had, in
     2007. acquired the immoveable property for a purchase consideration of R10
     500 000. In August 2007. Auction Alliance valued the property at R11 000
     000 to R13 000 000. In June 2009. a prospective buyer, Lobari 73 CC.
     offered R14 500 000 for the property. That sale was not concluded because
     the prospective buyer could not obtain the required finance. On 3 September
     2009, auctioneers Jesse Van der Merwe and Johan Klopper valued the
     property at approximately R14 500 000.

     [6] In addition to the above valuations, the applicant obtained a current
     valuation from Vendu Cape Auctions, which valuation was done by Moses
     Gabe Langeveld (Langeveld) who valued the property at approximately R13
     000 000 Langeveld based his evaluation on 'comparative market analysis
     2010 value ..."
[7] In October 2008, Steenkamp indicated to the applicant that he was unable to
     repay the debt and pursuant to settlement negotiations agreed to sell the
      immoveable property to the applicant for R5 000 000. The applicant alleged
      that Steenkamp, in addition to the debt outlined, owed it a further R5 000 000
      for an unrelated debt which amount would be offset against the purchase
      price. It follows that Steenkamp would have sold the immoveable property to
      the applicant for R10 000 000.
[8]   However, that sale did not materialise because Absa had a bond registered
      over the immovable property in its favour and Steenkamp was in arrears with
      the bond repayments by R1 162 190.43. Absa's consent, as secured creditor,
      was necessary to conclude the sale. Absa refused.

      [9] Boshoff said that the applicants attorney had on 1 December 2010
      ascertained from Absa's attorney that the property was already sold and that
      the purchases price was less than the amount owing to Absa Boshoff
      therefore concluded that the purchase price was approximately R6 million to
      R6.5 million, an amount that in his opinion was much less than the actual
      value of the property.
[10] Consequently, Boshoff alleged that the Absa sale would prejudice
      Steenkamp's general body of creditors. He said that if sequestrated, a curator
      would be able to sell the immoveable property so as to benefit other creditors
      as well as Absa. He said that Absa would not be prejudiced by a
      sequestration order as it was a secured creditor. Advocate Daling, the
      applicant's counsel, stressed that the applicant was seeking a provisional
      order.

      [11] The applicant further alleged that there existed a real possibility that a
      trustee would find other assets belonging to Steenkamp that could be
      liquidated to the benefit of the general body of creditors. This allegation was
      premised on the fact that in 2007, Steenkamp had been able to purchase a
      R10 000 000 property.

      Absa's application and opposition

      [12] The applicant conceded that Absa as a secured creditor had locus standi
      to intervene in these proceedings. However, the applicant disputed the
      authority of Petrus Jacobus Bosman (Bosman); the deponent to Absa's
      founding papers in the intervention application.

      [13] Bosman, in Absa's founding papers, said that he was "...employed as a
      Legal Officer in the Legal Recoveries Department of Absa Bank Limited" and:
     "I have been duly authorised to represent Absa in the Application for
     Intervention, with a view to opposing the main application as is
     apparent from the annexure attached hereto marked "Absa 1".

[14] However, the document annexed as Absa 1 was the applicant's notice of
motion and annexures filed in support of the provisional sequestration
application. The applicant pointed out the error and in response, Elizabeth
Oberholzer (Oberholzer), Absa's attorney, went on oath and said that the
notice of motion had been erroneously annexed in the haste to file Absa's
application. Oberholzer annexed the document intended as Absa 1 to her
affidavit. That document is a circular: 116/2008 dated 8 February 2008 from
which the following appears:




     "... The effect of the resolution is to withdraw the existing signing
     authorities document with immediate effect. ...

     The new signing authorities must be implemented by all branches,
     departments and divisions in Absa Bank Implementation includes
     recording the names and employee numbers of individuals of the
     correct level who are authorised to sign documents. This list must be
     retained internally and kept up to date with personal changes;

     It must be emphasised that the new resolution only specifies who is
     authohsed to sign documents binding Absa in agreements with third
     parlies and not who can approve transactions. Approval authorities are
     set out in the internal mandates belonging to each business area, and
     these are unaffected by the new resolutions. Employees must ensure
     that they obtain the necessary approval prior to the signing on behalf of
     Absa...

     (2) This document does not authorise, or purport to authorise, the
     relevant employees to approve the entering into of the said transactions
     or the performance of the said acts.'

[15] Mr Daling submitted that that document did not support Bosman's
allegation. Advocate Viviers. who appeared on behalf of Absa. submitted that
in the absence of documentary proof. Bosman's evidence was sufficient to
     satisfy the onus on Absa.



     [16] Henochsberg, on the Companies Act volume 2 Fifth Edition at 1023 said
     the following:

          "... There must be evidence before the Court that the person purporting
          to represent the company has been authorised accordingly with regard
          to the particular proceedings (Mall (Cape)(Pty) Ltd v Merino
          Ko-Operasie Bpk 1957(2) SA 347(C) at 351-352 and numerous other
          cases., while in motion proceedings the best evidence would be an
          affidavit by an officer of the company annexing a copy of the relevant
          resolution of the boards such

          evidence is not necessary in every case. Each case must be considered
          on its own merits and the Court must decide whether enough has been
          placed before it to warrant the conclusions that it is [the company] which
          is litigating and not some unauthorised person on its behalf.'

     [17] Mr Viviers submitted that Absa had placed enough evidence before the
     Court in that Bosman had said on oath that he was employed as a Legal
     Officer in the Legal Recoveries Department and that he had been duly
     authorised to represent Absa in the application for intervention with a view to
     opposing the main application I agree.



[18] Mr Daling submitted that in the event of this Court finding that Bosman was
     duly authorised to institute these proceedings, which he did not concede, the
     applicant would have no other objection to Absa's application to intervene. I
     am of the view that Bosman was duly authorised, therefore, Absa's
     application to intervene succeeds.

     Opposition to the provisional sequestration application

     [19] In opposition to the provisional sequestration application, Bosman
     alleged that Steenkamp was indebted to Absa as described above and that
     on 20 July 2010 Absa had obtained summary judgment against Steenkamp
     for payment of R6 467 890.84 together with interest at 11 9% per annum
     from 20 February 2009 The debt remained unsatisfied.
[20] Therefore, Absa had arranged for the immovable property to be sold in
execution, which sale was scheduled for 24 November 2010. However, on 6
November 2010. Peter Stephen Meiring (Meiring) offered R6 3 million for the
property, which offer Absa had approved and Steenkamp had accepted
Bosman estimated the costs associated with the auction as well as the
accumulated interest due to Absa would amount to approximately R1 525
300.




[21] Bosman therefore alleged that even if the property was sold for R10.5
million, in line with Langeveld's valuation, the benefit to the concurrent
creditors would be negligible. He said that Steenkamp had the following
judgments noted in the Deeds Registry:

 (a) Absa -R7 674 695.96

 (b) Matthysen and Matta - R14 436

(C) CPB User-R50 930

 (d) Nedbank card division - R55 997

(e) Nedbank Amex card division - R15 629

(f) Vodacom service providers - R42 502

(g) Discovery Health - R4 595

 (h)   Absa Bank - R43 519 (This claim is not related to the mortgage
 debt in this matter)

 (i) American Express - R14 819

 (j) Nedbank Ltd-R53 041.

          Total R7 970 163.96

[22] In an attempt to facilitate the transfer of the immoveable property,
Meiring had, according to Bosman, already paid R300 521.36 in respect of
municipal rates. Bosman said that Steenkamp was indebted to Meiring in that
amount. In addition, Steenkamp had stood surety for the Wilhelm Steenkamp
Familie Trust when it had obtained a loan from Absa The Trusts debt in terms
of the loan was due, in the amount of R1 590 797.0. Steenkamp's debt
arising from the surety was R652 797.00.



[23] Bosman said that the immoveable property was in a state of neglect and
therefore Meiring s offer was market related. In support of that allegation he
annexed an evaluation from Auction Alliance dated 25 January 2011. from
which it appeared that Jared Gottschalk (Gottschalk) had done the valuation
on behalf of Auction Alliance and had found that:

     "... open inspection of the above property I notice this property is in
     need of renovations and maintenance. The areas of concern are the
     cracks throughout the home in particular the lower level of the home
     and damp has caused the plaster to erode away from the wall

     There was a major water leak from one of the upper level
     bathrooms., .general maintenance is required as the property has been
     neglected for an extended time., based on all of the above, it is our
     opinion that the market value of the subject property is between R7 000
     000.00 and R8 000 000.00. Considering the current economic
     conditions a value of R7 500 000.00 will be applied."

[24] Bosman criticised Langeveld's valuation because, so he said, Langeveld
was only authorised to value properties in disthct of Cape Town, and not in
the district of Bellville. Therefore, Mr Viviers submitted that I should disregard
Langeveld's valuation for the purpose of this application. However, Mr Daling
pointed out that the restriction on Langeveld was only in respect of valuation
done in terms of the Administration of Estates Act 66 of 1965 and because
his valuation in these proceedings was not in terms of that Act, it could be
considered. I accept that the valuations in these proceedings were not done
in terms of the Administration of Estates Act and therefore I can have regard
to Langeveld's evaluation. I deal below with the competing valuations done in
respect of the immoveable property

[25] Bosman alleged that since June 2006. the following offers had been
received in respect of the immoveable property;
         (a) On 6 June 2009 an offer for R14.5 million from Lobari 73 CC. which
               offer failed because Lobari was unable to obtain the required
               finance.

         (b) On 6 November 2009. Meiring offered R8.5 million for the property,
               which offer Steenkamp refused. Absa had no input in that process
In February 2010. Meiring offered R7.5 million for the property which offer
    Steenkamp found unacceptable.
On 14 September 2010, the AGH Familie Trust offered R5.4 million for the
    property. Absa refused that offer because it was less than the current
    valuation.
On 8 November 2010, Meiring offered R6.3 million for the property. As indicated
    above, that offer found favour with both Steenkamp and Absa.

    [26] Boshoff was concerned that the trustees were unlikely to uphold the
    latest offer. He said that;

          ".. In my experience, in matters of this nature, especially if the trustees
          are in possession of a valuation much higher than the offer received, it
          is most likely that they will not up hold such an offer. In the premises,
          and assuming that a sequestration order is granted, I have reason to
          believe that the trustees would not ratify the present sale of the property
          to Meiring, given the present value of the property; the Nett proceeds of
          a further sale under forced circumstances would be insufficient to settle
          the indebtedness of the insolvent estate to Absa "



    THE APPLICABLE LEGAL PRINCIPLES

    [27] It is so that an applicant need not show actual advantage to creditors but
    need only establish that there is reason to believe that the sequestration
    would be to the advantage of creditors. In the matter of London Estates (Pty)
    Ltd v Nair 1957(3) SA 591(D). the Court said the following about reason to
    believe:
         '...'reason to believe', in my opinion is constituted by facts giving rise to
         such belief. Clearly they need not show advantage on a balance of
         probabilities - that would constitute proof, not belief. When do they give
         rise to such belief I respectfully adopt what was said by Roper, J in
         Meskin and Co v Friedman 1948(2) SA 555(W) at page 559.... the facts
         put before the Court must satisfy it that there is reasonable prospect -
         not necessarily a likelihood, but a prospect which is not too remote that
         some pecuniary benefit will result to creditors.' As all the relevant facts
         are usually not known, it would be extremely difficult to won\ with any
         more exacting standard

         Facts indicative of a prospect which is not too remote, that some
         pecuniary benefit will result to the creditors, may include the fact that a
         substantial estate exists... if no substantial estate is shown to exist,
         circumstances may yet establish a reasonable prospect a prospect that
         is not too remote, that concealed assets will be found or others
         recovered. The mere fact that sequestration enables an investigation of
         the insolvent's affairs is not sufficient... there must be additional facts
         establishing that not too remote possibility."

    [28] Van Reenen,    J   called this test "less demanding evidentiary norm" in the
    matter of Vincemus Investments (Pty) Ltd v Laher (Absa Bank as intervening
    creditor)[2008] JOL 22629 (C). Mr Daling submitted that the authorities
    envisaged an advantage to the general body of creditors not only one or
    some of them. I agree. I have indicated above that this is an application for
    Steenkamp's provisional sequestration. In this respect, section 10 of the
    Insolvency Act 24 of 1936 provides

         "If the court to which the petition for the sequestration of the estate of a
         debtor has been presented is of the opinion that phma facie:

         (a) The petitioning creditor has established against the debtor a claim
         such as mentioned in subsection (1) of section 9; and

         (b) The debtor has committed an act of insolvency or is insolvent; and
(c) There is reason to believe that it will be to the advantage of creditors of the
    debtor if his estate is sequestrated, it may make an order sequestrating the
    estate of the debtor provisionally."

    [29] Mr Viviers submitted that the applicant had to put up evidence to enable
a court to form the opinion that there was reason to believe that it would be to
the advantage of creditors if a debtor's estate was sequestrated. He
submitted that in these proceedings "the crisp" issue for decision was the
value to be placed on the immoveable property in a "forced sale'. I agree.

[30] There exists a dispute in respect of that value which can be resolved on
the papers. The applicant relied on Langeveld's valuation in terms whereof
the property was valued at approximately R13 million but would fetch R10.5
million in a forced sale. On the contrary. Absa relied on the 2010 Auction
Alliance valuation in terms whereof the property was valued at R7.5 million
and R6 million in the event of a forced sale.

[31] I have indicated above that I accept that Langeveld was competent to
value the property for purposes of these proceedings I have to determine "to
what extent the opinion advanced by the experts was founded on logical
reasoning and how the competing sets of evidence stand in relation to one
another, viewed in light of the probabilities." {See Louwrens v Oldwage 2006
{2) SA 161{SCA) at 175 para 27)

[32] Auction Alliance blamed a marked deterioration in the upkeep of the
property as reason for the lower valuation. Oberholzer annexed photographs
to her affidavit in support of that allegation. The photographs depicted the
property on 26 January 2006 during an inspection. The following appears
from the photographs:

 (a) Damp and mould on some walls:

 (b) Broken wooden panels.

(c) Damp on the balcony;

(d) Cracked concrete;

(e) The pool in a state of neglect.

[33] As indicated above, Auction Alliance had in 2011 reduced its earlier
valuation because the property "... required general maintenance". I find the
R3 million reductions in value within 24 months in the circumstances of this
matter unnecessarily pessimistic. The property is situated in a sought after
estate and is probably the largest on the estate. It appears from the papers
that the exclusive free standing multi-storey dwelling on the property consists
     of:

           (a) The ground floor:

                 A double volume entrance hall, lounge, dining room. TV room,
                 guest toilet, kitchen-open plan with built-in cupboards and
                 appliances, scullery, servants quarters with en suite.

           (b) A lower ground level

                 Two large bedrooms with full en-suite bathrooms, bar area with
                 built-in cupboards, theatre room, living room, stoep with braai
                 facilities and jacuzzi.

           (c)        The upper level:

                 A main bedroom with dressing room and large en-suite bathroom
                 plus separate toilet, two large bedrooms with full en-suite
                 bathrooms, study with built-in cupboards and sunroom.

           (d) Garden cottage:

                 A living room and open plan kitchen, two bedrooms with en-suite
                 bathrooms.

           (e) One double garage and two triple garages and a landscape
                 garden with paved driveway and pathway.

     [34] Although Langeveld described the defects as minor, he attached a
     depreciation value of R500 000 to its presence. In the context of this property.
     I suppose "minor*' is not inappropriate. Langeveld based his valuation on
     "competitive market analysis 2010 values." (See Net v Lubber 1999 (3) SA
     109 at B-C). I am persuaded that his valuation is realistic in the
     circumstances of this matter.
[35] I am persuaded that even in the currently depressed property market the
     Auction Alliance valuation is unnecessarily pessimistic. I am of the view that
     there is reason to believe that the property could fetch a higher price than the
     one currently being offered by Meiring.

     [36] I am satisfied that the applicant has placed evidence before me
     indicating that there was reason to believe that it would be to the advantage
     of the general body of creditors to grant the provisional order sought.

     [37] The applicant also alleged that there was reason to believe that an
investigation by a trustee might lead to the discovery of further assets. Mr
Dating submitted that Steenkamp's involvement with the Trust should also be
investigated. In my view the evidence does not support that allegation. (See
the London Estates matter above)

[38] It is not in dispute that Steenkamp committed an act of insolvency.


COSTS

[39] In a separate note, handed to me after the hearing and with the
agreement of Mr Daling. Mr Viviers submitted that Absa's opposition related
to:

      "...the issue of whether the Court's discretion should be exercised
      against the applicant, and .. .has placed material before the court in
      respect of such opposition, which not only merited serious
      consideration ...in exercise ...of...discretion ...but assisted ..."

[40] He submitted that the costs occasioned by the intervention application
should be costs in the sequestration should that relief succeed. I agree.



ORDER

[41] I. for the reasons mentioned above, make the following order

      (a) ABSA Bank Limited (Pty), the Intervening Creditor, is given leave to
      intervene in these proceedings.

      (b) The first respondent. Wilhelm Jacobus Steenkamp, is placed under
      provisional sequestration in terms of the rule nisi issued in the order
      annexed hereto marked "X"




      Baartman, J

				
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