Opinion / Columnist
Chiyangwa fights back
23 Jun 2016 at 06:51hrs | Views
I CONTEND that Section 3 of the Insolvency Act is applicable to the Applicant and that the application is properly before the (High) Court.
It must be noted right from the onset that the situation Applicant is grappling with is one of insolvency. It is one relating to the soundness and going concern capacity of the Applicant.
he definition of debtor is recorded in the Insolvency Act as follows:
"'debtor' in connection with the sequestration or assignment of the estate of a debtor, means a person or partnership, including a partnership which has been terminated but has not been wound up, which is a debtor in the usual sense of the word but does not include a body corporate or a company or other association of persons which may be placed in liquidation or which may be wound up in terms of the law relating to companies or any other law."
The definition I refer to above is pertinent in a number of ways. Firstly, it relates to sequestration, which places it squarely within the ambit of the relief sought herein. The word person, as clearly stated in the definition, is not limited to natural persons as the Act does not say so.
The wording of the provision admits both natural and juristic persons, which again places Applicant within the four corners of the definition of the word debtor in the act. In any case, there is no dispute as to the fact that Applicant is indebted to other entities in a number of ways. Further, there is no doubt, as accepted by the Master, that Applicant cannot be wound up in terms of any other law. It is not a company. It cannot be wound up or dealt with in terms of any other law. It is just not possible.
The argument by the Master, as clearly it is, suggests that the Act only relates to natural persons, which approach has no foundation in the Act. Further, if the argument is accepted, Applicant's situation cannot be redressed, which can never be the intention of the legislature.
Therefore, once it is accepted that Applicant is a debtor in the strict sense of the word and that it cannot be wound up in terms of any other law, the application of the Insolvency Act cannot be ousted. Further, once it is accepted that Applicant is a person, then the Application of the Insolvency Act cannot be ousted:
1.1 Thus, the provisions of the Insolvency Act are invoked in the case of the Applicant to cater for its winding up as it has been terminated by dissolution but needs to be wound up. The Act cannot be more applicable.
1.2 Thus, the word debtor in the Insolvency Act is not limited to the case of partnerships and natural persons.
1.3 The interpretation ascribed to section 3(2) of the Insolvency Act is just not spot on. In fact, it is just not correct. The provision states thus:
"3 Petition for surrender
(1) A petition for the acceptance of the surrender of the estate of the debtor may be made to the High Court by-
(a) the insolvent debtor or his agent;
(b) the person in whom is vested the administration of the estate of-
(i) a deceased insolvent debtor;
(ii) an insolvent debtor who is incapable of managing his own affairs."
1.4 Subsections (3) and (4) relate to the ancillary issues of the contents of the petition and service on the Master, which requirements are fully met herein.
1.5 An application like the present one can be made by the debtor or his agent. In casu, it is crystal clear that the insolvent debtor has brought the petition for surrender. The application is properly before the court. There can be no doubt.
1.6 The Master lost it when he took the approach that only businesses that are run for profits are covered by the Act. The absurdity is just too glaring if the Act was to be interpreted that way. For example, the key question he would not be able to answer if asked is, if the provision only covers for profit businesses, are natural persons covered by the Act? Are natural persons businesses?
1.7 I contend that even a person who does not operate for purposes of getting a profit is covered as long as he is a debtor. The provision does not mention profit as a qualification. The nature of business or activity is besides the issue of insolvency that is why even a natural person can be declared insolvent.
1.8 Thus, the application cannot fail as prayed for by the Master.
1.9 The Private and Voluntary Organisations Act is not applicable to the Applicant and it has never sought relief or redress in terms of that Act.
1.10 Further, the Companies and Associations Trustees Act does not apply to the Applicant and it has never sought to seek redress in terms of it.
1.11 The concession by the Master, of course of his own accord, bolsters the contention that the Insolvency Act is the one that applies for to do so would be tantamount to saying that Applicant has no way of dealing with its insolvency.
1.12 As such, the Act fully applies and relief should be obtained in terms thereof.
2 SEPARATE PERSONALITY AND
LOCUS STANDI
2.1 Applicant is formed in terms of its constitution. It is private but again, it is not owned by anyone, that is why its leadership is elected on the basis of certain qualifications.
2.2The Constitution is clear in that the Association is formed and that it is not one with its members or those that administer it. Article 1 of the Constitution is clear in that the Association is formed for an unlimited period and no human being can be in existence for an unlimited period.
2.3 Further, Applicant's creditors have already accepted that it has a separate existence and officials who were only cited in matters had given personal guarantees. Applicant has already demonstrated in the application that it has locus standi.
2.4 A fact which cannot be denied is that Applicant is a separate entity from its members in as much as it is not a company or any such entity.
2.5 Further, the issue of Applicant's right to approach the courts or be taken to court is a foregone conclusion. As long as there are orders against and for it, it can never be said that Applicant has no locus standi. Further, being a debtor in terms of the Act, it has the legal standing to approach the courts for relief in terms of the Insolvency Act.
2.6 Applicant, given how it comes into existence, cannot be said to be a collection of individuals. The question would be, which individuals is the Master talking about as there are term limits for all elected officials and they will leave office unless re-elected.
2.7 The conclusion is clear that Applicant has the right to surrender as it is a debtor in terms of the Act. Further, a reading of the constitution makes it clear that it has capacity to sue and be sued in its own name.
3 THE MASTER'S IDEAL APPROACH
3.1 The Master in his report suggests that the various members should have surrendered their respective estates as opposed to Applicant coming to court. The flaw in that argument is self-exposing. A reading of Article 10 mentions quite a number of entities that can be members of the Applicant.
3.2 They do not automatically become members as they have to affiliate or consciously join the Applicant.
3.3 It must also be noted that the members are not one with Applicant. As more fully appears from the constitution, the members are separate entities who have a separate existence. I am not aware of the status of their finances. I do not understand how the members can have brought the application on behalf of the Applicant. I again do not understand how a separate body, which is not insolvent, can make an application of the nature in this case on behalf of a body like the applicant. I am struggling to understand the logic and / or legal underpinning of the argument.
3.4 The suggestion, no matter how passionately or seriously it can be made, is just without a basis.
3.5 The argument is akin to contending that if a holding company becomes insolvent, then all the members of such holding company have to come to court on a petition for surrender.
3.6 I am unable to agree with the reasoning.
4 ALLEGATIONS OF FRAUD
4.1 Serious allegations have been made against the Applicant. It is being alleged to be seeking to defraud its creditors in coming to court on the present application.
4.2 I am glad the concession has been made that the resolution to dissolve Applicant was made in terms of its constitution and thus the procedure has a basis.
4.3 The allegation that it is only the name that has changed is just not correct.
4.4 I do not see how Applicant and NFAZ can be conflated. Further, I dispute that the membership and support staff is the same. The Master is challenged to prove his allegations. In any case, the forming of a new association cannot prove the solvency of the Applicant. It is insolvent.
4.5 The argument would have weight had assets been taken to the new Association. It is just an Association without even a single penny, not even a single piece of property was taken from the Applicant. I do not see the fraud here.
4.6 The issue here is not on evading the payment of debts. The issue is the admitted lack of capacity to pay the debts thus the surrender.
4.7 Again, the argument would have been more appealing if the Master was saying that Applicant has capacity but the leadership and membership has stolen or hidden the property.
4.8 The members of the Applicant have nothing to do with its debts. The argument is akin to contending that shareholders are liable for the debts or affairs of the company. That is just wrong.
4.9 Once it is accepted that where a court, from the objective facts presented, is satisfied that a debtor is insolvent, it must accept surrender.
5 THE FATE OF THE PROPERTY HELD BY ZIFA
5.1 Again, section 77(2) of the Constitution of the Applicant has been misinterpreted.
5.2 Yes there is a provision for the transfer of assets to the Sports and Recreation Commission.
5.3 However, Section 77(2) does not end there. The section expressly vests the congress of the Applicant with power to choose another recipient for its assets on the basis of a three quarters majority. Applicant has therefore lawfully exercised its right to choose another recipient for its assets and is properly seeking for the appointment of a Trustee to manage the sequestration.
5.4 Creditors cannot be duped that way.
5.5 Of course, in as much as there is provision of handing over of assets to ZIFA if it is re-established. But in this case, there is no re-establishment of the Applicant. Again, the assets cannot be transferred to the Sports and Recreation Commission as there are creditors to be paid out of the estate.
5.6 Further, there is no law or fact which links NFAZ to Applicant's debts. Such a contention just exposes a failure or refusal to accept certain facts and legal principles.
5.7 NFAZ has no right to the assets of the Applicant and has no obligation towards the Applicant's creditors. The position of the law is just that simple.
6 CONCLUSION
6.1 It must be noted that the legal issues taken by the Master do not hold.
6.2 As such, the relief sought must be granted as prayed for.
It must be noted right from the onset that the situation Applicant is grappling with is one of insolvency. It is one relating to the soundness and going concern capacity of the Applicant.
he definition of debtor is recorded in the Insolvency Act as follows:
"'debtor' in connection with the sequestration or assignment of the estate of a debtor, means a person or partnership, including a partnership which has been terminated but has not been wound up, which is a debtor in the usual sense of the word but does not include a body corporate or a company or other association of persons which may be placed in liquidation or which may be wound up in terms of the law relating to companies or any other law."
The definition I refer to above is pertinent in a number of ways. Firstly, it relates to sequestration, which places it squarely within the ambit of the relief sought herein. The word person, as clearly stated in the definition, is not limited to natural persons as the Act does not say so.
The wording of the provision admits both natural and juristic persons, which again places Applicant within the four corners of the definition of the word debtor in the act. In any case, there is no dispute as to the fact that Applicant is indebted to other entities in a number of ways. Further, there is no doubt, as accepted by the Master, that Applicant cannot be wound up in terms of any other law. It is not a company. It cannot be wound up or dealt with in terms of any other law. It is just not possible.
The argument by the Master, as clearly it is, suggests that the Act only relates to natural persons, which approach has no foundation in the Act. Further, if the argument is accepted, Applicant's situation cannot be redressed, which can never be the intention of the legislature.
Therefore, once it is accepted that Applicant is a debtor in the strict sense of the word and that it cannot be wound up in terms of any other law, the application of the Insolvency Act cannot be ousted. Further, once it is accepted that Applicant is a person, then the Application of the Insolvency Act cannot be ousted:
1.1 Thus, the provisions of the Insolvency Act are invoked in the case of the Applicant to cater for its winding up as it has been terminated by dissolution but needs to be wound up. The Act cannot be more applicable.
1.2 Thus, the word debtor in the Insolvency Act is not limited to the case of partnerships and natural persons.
1.3 The interpretation ascribed to section 3(2) of the Insolvency Act is just not spot on. In fact, it is just not correct. The provision states thus:
"3 Petition for surrender
(1) A petition for the acceptance of the surrender of the estate of the debtor may be made to the High Court by-
(a) the insolvent debtor or his agent;
(b) the person in whom is vested the administration of the estate of-
(i) a deceased insolvent debtor;
(ii) an insolvent debtor who is incapable of managing his own affairs."
1.4 Subsections (3) and (4) relate to the ancillary issues of the contents of the petition and service on the Master, which requirements are fully met herein.
1.5 An application like the present one can be made by the debtor or his agent. In casu, it is crystal clear that the insolvent debtor has brought the petition for surrender. The application is properly before the court. There can be no doubt.
1.6 The Master lost it when he took the approach that only businesses that are run for profits are covered by the Act. The absurdity is just too glaring if the Act was to be interpreted that way. For example, the key question he would not be able to answer if asked is, if the provision only covers for profit businesses, are natural persons covered by the Act? Are natural persons businesses?
1.7 I contend that even a person who does not operate for purposes of getting a profit is covered as long as he is a debtor. The provision does not mention profit as a qualification. The nature of business or activity is besides the issue of insolvency that is why even a natural person can be declared insolvent.
1.8 Thus, the application cannot fail as prayed for by the Master.
1.9 The Private and Voluntary Organisations Act is not applicable to the Applicant and it has never sought relief or redress in terms of that Act.
1.10 Further, the Companies and Associations Trustees Act does not apply to the Applicant and it has never sought to seek redress in terms of it.
1.11 The concession by the Master, of course of his own accord, bolsters the contention that the Insolvency Act is the one that applies for to do so would be tantamount to saying that Applicant has no way of dealing with its insolvency.
1.12 As such, the Act fully applies and relief should be obtained in terms thereof.
2 SEPARATE PERSONALITY AND
LOCUS STANDI
2.1 Applicant is formed in terms of its constitution. It is private but again, it is not owned by anyone, that is why its leadership is elected on the basis of certain qualifications.
2.2The Constitution is clear in that the Association is formed and that it is not one with its members or those that administer it. Article 1 of the Constitution is clear in that the Association is formed for an unlimited period and no human being can be in existence for an unlimited period.
2.3 Further, Applicant's creditors have already accepted that it has a separate existence and officials who were only cited in matters had given personal guarantees. Applicant has already demonstrated in the application that it has locus standi.
2.5 Further, the issue of Applicant's right to approach the courts or be taken to court is a foregone conclusion. As long as there are orders against and for it, it can never be said that Applicant has no locus standi. Further, being a debtor in terms of the Act, it has the legal standing to approach the courts for relief in terms of the Insolvency Act.
2.6 Applicant, given how it comes into existence, cannot be said to be a collection of individuals. The question would be, which individuals is the Master talking about as there are term limits for all elected officials and they will leave office unless re-elected.
2.7 The conclusion is clear that Applicant has the right to surrender as it is a debtor in terms of the Act. Further, a reading of the constitution makes it clear that it has capacity to sue and be sued in its own name.
3 THE MASTER'S IDEAL APPROACH
3.1 The Master in his report suggests that the various members should have surrendered their respective estates as opposed to Applicant coming to court. The flaw in that argument is self-exposing. A reading of Article 10 mentions quite a number of entities that can be members of the Applicant.
3.2 They do not automatically become members as they have to affiliate or consciously join the Applicant.
3.3 It must also be noted that the members are not one with Applicant. As more fully appears from the constitution, the members are separate entities who have a separate existence. I am not aware of the status of their finances. I do not understand how the members can have brought the application on behalf of the Applicant. I again do not understand how a separate body, which is not insolvent, can make an application of the nature in this case on behalf of a body like the applicant. I am struggling to understand the logic and / or legal underpinning of the argument.
3.4 The suggestion, no matter how passionately or seriously it can be made, is just without a basis.
3.5 The argument is akin to contending that if a holding company becomes insolvent, then all the members of such holding company have to come to court on a petition for surrender.
3.6 I am unable to agree with the reasoning.
4 ALLEGATIONS OF FRAUD
4.1 Serious allegations have been made against the Applicant. It is being alleged to be seeking to defraud its creditors in coming to court on the present application.
4.2 I am glad the concession has been made that the resolution to dissolve Applicant was made in terms of its constitution and thus the procedure has a basis.
4.3 The allegation that it is only the name that has changed is just not correct.
4.4 I do not see how Applicant and NFAZ can be conflated. Further, I dispute that the membership and support staff is the same. The Master is challenged to prove his allegations. In any case, the forming of a new association cannot prove the solvency of the Applicant. It is insolvent.
4.5 The argument would have weight had assets been taken to the new Association. It is just an Association without even a single penny, not even a single piece of property was taken from the Applicant. I do not see the fraud here.
4.6 The issue here is not on evading the payment of debts. The issue is the admitted lack of capacity to pay the debts thus the surrender.
4.7 Again, the argument would have been more appealing if the Master was saying that Applicant has capacity but the leadership and membership has stolen or hidden the property.
4.8 The members of the Applicant have nothing to do with its debts. The argument is akin to contending that shareholders are liable for the debts or affairs of the company. That is just wrong.
4.9 Once it is accepted that where a court, from the objective facts presented, is satisfied that a debtor is insolvent, it must accept surrender.
5 THE FATE OF THE PROPERTY HELD BY ZIFA
5.1 Again, section 77(2) of the Constitution of the Applicant has been misinterpreted.
5.2 Yes there is a provision for the transfer of assets to the Sports and Recreation Commission.
5.3 However, Section 77(2) does not end there. The section expressly vests the congress of the Applicant with power to choose another recipient for its assets on the basis of a three quarters majority. Applicant has therefore lawfully exercised its right to choose another recipient for its assets and is properly seeking for the appointment of a Trustee to manage the sequestration.
5.4 Creditors cannot be duped that way.
5.5 Of course, in as much as there is provision of handing over of assets to ZIFA if it is re-established. But in this case, there is no re-establishment of the Applicant. Again, the assets cannot be transferred to the Sports and Recreation Commission as there are creditors to be paid out of the estate.
5.6 Further, there is no law or fact which links NFAZ to Applicant's debts. Such a contention just exposes a failure or refusal to accept certain facts and legal principles.
5.7 NFAZ has no right to the assets of the Applicant and has no obligation towards the Applicant's creditors. The position of the law is just that simple.
6 CONCLUSION
6.1 It must be noted that the legal issues taken by the Master do not hold.
6.2 As such, the relief sought must be granted as prayed for.
Source - the herald
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