Cryoliving (Pty) Ltd v Farzee

The applicant (Cryoliving (Pty) Ltd) obtained a default judgment against the respondent (Amina Farzee) on 20 June 2019. Based on this default judgment, the applicant initiated sequestration proceedings against the respondent. On 24 November 2023, Gamble J granted a provisional sequestration order against the respondent's estate, with a rule nisi returnable on 31 January 2024. On 31 January 2024, Kusevitsky J postponed the matter to 20 May 2024 by agreement between the parties, with a timetable for filing pleadings. The respondent had previously launched a first rescission application (around April 2023) which was removed from the Wynberg Magistrates' Court roll in February 2024. On 14 May 2024, the respondent withdrew the first rescission application and on 15 May 2024 served a second rescission application together with an application to postpone the sequestration hearing pending the outcome of the second rescission application. The respondent argued she had recently received proper legal advice and had a bona fide defence to the default judgment. At the hearing on 20 May 2024, the respondent's counsel confirmed that no opposing papers had been filed against the sequestration application itself.

• Whether the respondent had locus standi to bring an application for postponement and a second rescission application during the currency of a provisional sequestration order.
• Whether the court should exercise its discretion to postpone sequestration proceedings pending the finalisation of a rescission application against the default judgment forming the basis of the sequestration claim.
• Whether the respondent had shown good cause for a postponement of the sequestration application.

The application for postponement was refused. The rule nisi was confirmed and the provisional sequestration order was made final.

A debtor whose estate has been placed under provisional sequestration lacks locus standi to bring applications for postponement or rescission during the currency of the provisional order, as the provisional order has the disabling effect of a final order, vesting the estate in the Master and staying civil proceedings by or against the insolvent under section 20(1) of the Insolvency Act 24 of 1936. A postponement of sequestration proceedings will not be granted merely because a debtor has launched a rescission application against the underlying default judgment, particularly where the rescission application appears to be a tactical manoeuvre and the outcome is speculative.

The court noted that even if it was wrong on the locus standi point, the applicant must still make out a clear case for postponement, and in this instance, no such case was made out. The court also remarked that the claim of the applicant did not appear genuinely in dispute given that the respondent had previously made settlement offers. The court observed that the respondent may be attempting to use court processes to frustrate the applicant and keep 'shifting the goal post'.

This case confirms the disabling effect of a provisional sequestration order under the Insolvency Act 24 of 1936, specifically that once a provisional order is granted, the debtor's estate vests in the Master and the debtor loses locus standi to institute or continue civil proceedings. It reinforces that postponements in sequestration proceedings, which are inherently urgent, are not granted merely for the asking and that a debtor cannot use successive rescission applications as a tactical means to frustrate sequestration proceedings. The judgment also affirms the principle from Tshwane City v Afriforum that ongoing or pending litigation does not constitute grounds for postponement.