CASE
NO: A 310/2011

IN THE HIGH
COURT OF NAMIBIA

In
the matter between:

EQUITY AVIATION
SERVICES (PTY) LTD

(IN
LIQUIDATION)
….......................................................................APPLICANT

And

EQUITY AVIATION
NAMIBIA (PTY) LTD …...................................RESPONDENT

BELETE
WORKU
…......................................................JUDGMENT
CREDITOR

CORAM:
UEITELE, AJ.

Heard on: 2012
03.06

Delivered:
2012.03.09

UEITELE A, J

Introduction

[1] On 01 December
2011 the applicant lodged an urgent application on an ex parte
basis for the provisional liquidation of the respondent. On that date
this court, per Swanepoel J, granted the provisional order with the
returned date set for 20 January 2012.

[2] On 16 January
2012 Mr. Belete Worku (in this judgment referred to as the judgment
creditor) brought an application also on an urgent basis claiming
inter alia the setting aside of the provisional liquidation
order granted on 01 December 2011.

[3] I was informed
by Mr. Strydom who appeared for the applicant that the judgment
creditor’s application of 16 January 2012 was, on 18 January
2012, dismissed with costs. I could not locate that order on the
court file. On 20 January 2012 the judgment creditor launched yet
another urgent application again claiming the setting aside of the
provisional liquidation and other alternative reliefs.

[4] On that day
(i.e. 20 January 2012) this court, per van Niekerk J, after hearing
submissions from the judgment creditor and counsel for applicant
extended the return date of the rule nisi to 02 March 2012 and
gave a written judgment on 03 February 2012.

[5] van Niekerk J
inter alia found that the locus standi of the judgment
creditor needs to be clarified she said “…it seems to
me advisable that the matter of the intervening creditor’s
locus standi is clarified. It seems to me that if there is indeed a
settlement agreement which has been adhered to, this may explain why
he is not considered by the applicant and the respondent to be a
creditor. If there is indeed a settlement on the basis mentioned
above, this fact should be brought to the attention of the Court in
the proper way, namely by way of affidavit. The intervening creditor
may then respond by way of a replying affidavit, where after the
matter may be properly considered on the papers…”
she accordingly ordered that:

“2 The
corrected order of this Court as made by Swanepoel, J on 1 December
2011 shall be served at the respondent’s registered address and
shall be published in one edition each of “Die
Republikein” newspaper
and of the Government
Gazette.

3 The applicant
shall file any answering affidavit to the application of the
intervening creditor by Monday, 20 February 2012.

4. 
   The intervening
   creditor shall file any replying affidavit by Tuesday, 28 February
   2012.”

   
   

[6] The applicant
provided prove that the corrected Court order was served at the
respondent’s registered address and published in one edition
each of “Die Republikein” newspaper and of the
Government Gazette. On 22 February 2012 Mr. Lebogang Michael
Moloto the appointed liquidator of the applicant filed an answering
affidavit to the application of the intervening creditor. In the
answering affidavit Mr. Moloto amongst others states that:

• 
  He has no
  knowledge of the settlement agreement and that he was not party to
  it; and

  
  

• 
  He has no
  knowledge of the day to day affairs of the respondent.

  
  

[7] The
intervening creditor did not file a replying affidavit to the
applicant’s answering affidavit. I consider it appropriate to,
at this juncture, pause here and
consider the position of the intervening judgment creditor.

The position
of the intervening judgment creditor

[8] The headnote
in the matter of Fullard v Fullard 1979
(1) SA 368 (T) reads as follows:

“There is a
well established practice with regard to intervention of third
parties in insolvency applications. The position can be briefly
summed up as follows: (1) A creditor can intervene at any stage (a)
to have a provisional sequestration order set aside or (b), where the
applicant does not proceed with the case, or drags his feet, to
obtain a fresh sequestration order in his own right and name. (2)
Where the applicant does not proceed the existing sequestration order
cannot be confirmed at the instance of any intervening creditor. It
must be set aside and a fresh order can be issued with the creditor
as applicant and not as a co-applicant. He alone thus becomes the
dominus
litis and
the original applicant drops out altogether thereafter. (3) The
intervening creditor must make out a case for sequestration, furnish
security, etc as though he had originally been the applicant, but he
can rely on facts which appear from the record in the existing
proceedings. (4) The Court "takes a practical view of these
matters and also bears in mind the interests of the general body of
creditors.

It is clear that
this practice is a unique one which differs altogether from
conventional intervention. It is neither a pure intervention nor
substitution of applicants and is really sui
generis seen
from a procedural point of view. It is rather an independent
application which, naturally different from the usual one, is
introduced because the creditor only arrives in Court with his own
evidence, usually on the return day. Because he is the creditor he
has locus
standi to
be heard in a concursus
creditorum which
already exists and the so-called leave to intervene is actually a
formality…”

[9] I accept the
position as elucidated by Coetzee J in Fullard (supra) that
in insolvency applications a practice which is unique and to a
certain extent differs from conventional intervention has developed.
It is often said that the court hearing an intervention application
has discretion to allow or refuse it, which discretion obviously has
to be exercised on judicial grounds.

[10] In the
instant matter the intervention application is brought by the
intervening judgment creditor in his capacity as a judgment creditor
of the respondent. In this capacity he clearly has a legal interest
in the subject-matter of the application, which could be
prejudicially affected by the judgment of the court. In my view, the
intervention application is made seriously and bona fide. In
these circumstances, I allow the judgment creditor to intervene in
the winding-up proceedings.

Requirements
for the confirmation of a provisional liquidation order

[11] As I have
indicated above this is an extended return date of
a provisional liquidation order. It is an established principle in
our law that in an application for the sequestration of a respondent
the applicant must prove on a balance of probabilities that:

(a) the respondent
is insolvent.

(b) the respondent
has committed an act of insolvency; and

(c) the
sequestration of the respondent will be to the advantage of
creditors. See the case Barotti
Furniture (Pty) Ltd v Moodley
1996 NR 295 (HC)

[12] Also see
section 12 (1) of the Insolvency Act, 1936 (Act 24 of 1936) which
provides that:

“12
Final
sequestration or dismissal of petition for sequestration

(1) If at the
hearing pursuant to the aforesaid rule nisi the court is
satisfied that-

(a) the petitioning
creditor has established against the debtor a claim such as is
mentioned in subsection (1) of section nine; 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 sequestrate
the estate of the debtor.”

[13] Section 9(1)
of the Insolvency Act, 1936 reads as follows

“(9)
Petition
for sequestration of estate

1. A
   creditor (or his agent) who has a liquidated claim for not less than
   one hundred Namibia Dollars or two or more creditors (or their
   agent) who in the aggregate have liquidated claims for not less than
   two hundred Namibia Dollars against a debtor who has committed an
   act of insolvency, or is insolvent, may petition the court for the
   sequestration of the estate of the debtor.”

   
   

[14] It follows
that the issues that I have to consider on the extended return date
are those set out in paragraphs 11 and 12 above namely; whether the
applicant has a claim for more than One Hundred Namibia Dollars
against the respondent, and whether the respondent has committed an
act of insolvency or is insolvent; and whether there is reason to
believe that it will be to the advantage of creditors of the
respondent if his estate is sequestrated.

[15] There is the
intervening judgment creditor who wants the provisional liquidation
order set aside. For him to succeed he will thus need to establish
that the respondent is not indebted to the applicant or the
respondent is not insolvent or has not committed an act of insolvency
or that it is not in the interest of the body creditors for the
respondent’s estate to be liquidated. Barotti Furniture
(Pty) Ltd (supra).

Has
applicant satisfied the requirements?

[16] On the
extended return date (i.e. 02 March 2012) the rule
nisi was further extended to 06 March 2012 to
allow the parties to file heads of arguments. When the matter was
called on 06 March 2012 the judgment creditor initially objected to
the late filling of the heads of arguments by the applicant, but when
I indicted to the judgment creditor that the heads of arguments were
only late by thirty minutes and that if he so wishes I would further
extend the rule nisi to
allow the applicant to bring a substantive application for the
condonation of the late filing of the heads of arguments, the
judgment creditor withdrew his objection and asked for the matter to
be argued.

[17] I proceeded
to hear arguments from the judgment creditor and Mr. Strydom who
appeared on behalf of the applicant. The crux of the judgment
creditor’s arguments was that:

• 
  He had ten years
  (starting from 2001) legal battles for unfair dismissal with the
  respondent company and he obtained numerous judgments against the
  respondents and that those judgments were unsatisfied;

  
  

• 
  He obtained a
  warrant of execution issued out of the District Labour Court for the
  District of Windhoek against the respondent;

  
  

• 
  On 29 November
  2011 the respondent brought an application for the setting aside of
  the warrants of execution and the following day the applicant
  represented by the legal representatives who formerly represented
  the judgment creditor brought a provisional liquidation application.

  
  

• 
  He was not ‘even’
  listed as one of the creditors of the respondent company.

  
  

[18] The judgment
creditor thus insinuated that the provisional liquidation was brought
simply to frustrate his claim against the respondent and to avoid
paying him. He accordingly prayed (and I will quote him verbatim);

“13.1 for the
making of the provisional liquidation as null and void and/or set
aside so that the messenger of the Court will continue to execute
according to the Supreme Court judgment of 7 July 2009, and his
Lordship Chief Justice Peter Shivute’s concretizing letter of
26 September 2011 would be fulfilled (sic!); alternatively.

13.2. if I allow the
provisional liquidation to be final to accord me “super
and de facto absolutely priority secured claimant”
payment for my overdue judgment awards since 4 February
2002, 09 August 2002, 03 December 2004 and 7 July 2009 at the
District Labour Court at Windhoek and the Supreme Court respectively.

13.3. or if the
above two alternates are not accepted this Honourable Court is prayed
to remit same and take it back to the Supreme Court for same super
prior payments from all other creditors.

13.4 If the argument
of all above three alternates does satisfy the Honourable Court,
asking the Hounarable Court to respond to me whether the appeal and
the judgment of the Supreme Court so much overdue to must have been
paid to me by now since 07 July 2009can be superseded by this Court
if so my appeal to be granted for the same to the Supreme Court.”

[18] Mr. Strydom
who appeared for the applicant argued that ‘most
if not all of the relief sought by the intervening creditor is bad in
law and/or excipiable, finding no basis in law for its award…”
and also that “…the
intervening creditor nowhere
in his affidavit contests that the respondent is indebted to trade
creditors in the amount of N$2 733 404-00 and intercompany creditors
in the amount of N$17 768 309-00. At best for him is the fact that
his alleged debt only adds up to the respondent’s miseries and
precarious financial position which only further confirms its
bankruptcy.”

[19] The facts
placed before the court can be discerned from the affidavit of Mr.
Lebogang Michael Moloto the appointed liquidator of the applicant who
made the following allegations in the affidavit supporting the
provisional liquidation of the respondent:

(a) The applicant
is a creditor of the respondent as envisaged by section 351(1)(b) of
the Namibia Companies Act by virtue of the fact that the Applicant
had advanced funds to the Respondent from time to time . As at 31
July 2011 the respondent was indebted to the applicant for an amount
of N$ 2 054 396-00.

(b) The respondent
has ceased trading since 30 September 2011;

(c) As at 30
September 2011 the respondent is indebted to trade creditors in the
amount of N$2 733 404-00 and intercompany creditors in the amount of
N$17 768 309-00.

(d) The respondent
owns assets valued at approximately N$2 868 946-00

[17] I must
confess that I had difficulties in making sense of judgment
creditor’s affidavit but what I could gather from the
documentation is the fact that there was a default judgment in favour
of the judgment creditor for an amount of N$ 240 295-52, a cost order
from the Supreme Court, a notice of attachment in execution under DLC
case No. 351/2003 (i.e. Belete
Worku v Equity Aviation) for an amount of N$ 985 292-00.

[18] In view of
the above allegations I am convinced that the applicant has
established on a balance of probabilities that the respondent is in
fact insolvent and that it is in the interest of the body creditors
for the respondent’s estate to be liquidated.

[19] In the result
I would make the following order:

(a) the
provisional liquidation order granted on 01 December 2011 is
confirmed;

(b) the
intervening creditor’s application to set aside the liquidation
order granted on 01 December 2011 and the alternative reliefs are
dismissed;

(c) cost to be
cost in the liquidation.

__________________________

UEITELE,
AJ

ON BEHALF OF
THE APPLICANT:
J A N STRYDOM

INSTRUCTED BY:
GF KÖPPLINGER LEGAL PRACTITIONER

ON
BEHALF OF THE RESPONDENT : NO APPEARANCE

ON BEHALF OF
THE INTERVENING

JUDGMENT
CREDITOR IN PERSON