SUMMARY
Osborne (the appellant) brought an application in the Eastern Cape High Court for the sequestration of the Cockin Trust. Shaun Cockin had committed suicide and it had come to light that he had defrauded a number of businessman, including Osborne. Osborne alleged that the Cockin Trust was nothing more than an alter ego of Shaun Cockin. Furthermore, Osborne had a claim in respect of the theft of 1501 head of cattle at an estimated value of R11 million. The court a quo dismissed the application, finding that Osborne did not have a claim against the Cockin Trust, that the claim was not liquidated and that there was no debt owed by the Cockin Trust.
The Supreme Court of Appeal (“the SCA”) had to determine whether the Cockin Trust should be regarded as Osborne’s debtor, given that the underlying claim was against Shaun Cockin (now his deceased estate) and whether the claim for the value of the cattle was liquidated.
The SCA referred to the judgment of the court a quo where it was pointed out that the predominant purpose of the sequestration of an estate is the bona fide achievement of sequestration, not the resolution of a dispute over a debt. Osborne failed to show that he had a claim against the Cockin Trust and that the claim was liquidated. The court a quo pointed out that the market value of cattle depends on a number of factors, for example the age, gender and condition of the cattle. Accordingly, even if a claim lay against the Cockin Trust, that claim was not liquidated and any damages that were claimable had to be proved.
The SCA found that there was insufficient evidence before the court to support Osborne’s claim that the Cockin Trust was a simulation.
The court a quo suggested that the appropriate procedure that Osborne should have followed was to make a claim against the trustees of the insolvent deceased estate and to insist on enquiries or an investigation in terms of sections 64, 65 and 66 of the Insolvency Act. Proper investigation might have established which of Cockin’s assets, if any, were on trust property and whether the trustees of the Cockin Trust were liable to return any cattle or pay damages.
HELD
The appeal is dismissed. Osborne failed to establish that the Cockin Trust was his debtor and was insolvent or had committed an act of insolvency.
VALUE
The value of this decision is that it cautions against attempting to sequestrate a trust that a party suspects of being an alter ego without sufficient proof of this. It indicates other steps that a party can take to prosecute their claim. Furthermore, it highlights the importance of crystallising a party’s claim to ensure that the appropriate steps are taken to prosecute it.
Written by Jan – Harm Swanepoel and supervised by Gary Boruchowitz, 6 June 2018
