PIC hails rejection of sequestration appeal
The man who started a company from whom the Public Investment Company (PIC) wants nearly R800m has lost his appeal against sequestration.
The Supreme Court of Appeal (SCA) found that Eamonn Courtney, who became indebted to Absa for about R54m, was “hopelessly insolvent”.
The court also explained processes for sequestrations and set a precedent for what people can do to challenge them.
Courtney set up a company, Allied Mobile Communications, and in 2015 it entered into a deal with the PIC. According to an Allied Mobile press release, the company “signed a strategic finance and partnership agreement with the [PIC] for debt funding facility of [R800m]”.
But in 2018 Allied Mobile got into trouble with various partners, including the PIC, which sought to liquidate it to reclaim R767.5m. An order liquidating Allied Mobile was granted in 2020. Courtney failed in his obligations to Absa because he guaranteed payment for the companies amounting to R54m.
Absa began sequestration proceedings against Courtney. Less than a week later, Courtney and his wife left for Scotland. This led to a long legal battle. In 2020, the Johannesburg high court sequestrated his estate, appointing trustees to manage it.
He “ignored” obligations to assist the trustees, who claimed he was avoiding responsibilities by being in Scotland. The trustees alleged he took valuable assets, such as artworks, with him. In 2022, they went to court in Scotland to reclaim these assets.
Courtney launched a court application in SA, arguing it was wrong for a court in 2020 to grant a “final” sequestration order without first making a “provisional” order. A provisional order allows a person time to show a court they are not bankrupt and can pay their debts. A final order immediately liquidates the estate.
In 2022, acting judge Brad Wanless found that the 2020 final sequestration order was “a mistake” because courts could not grant a final order before a provisional order. But Courtney was not satisfied as he was still being sequestrated. He appealed to the SCA, which ruled against Courtney last week.
Writing for a unanimous court, SCA judge Caroline Nicholls said courts “can issue a sequestration order, whether provisional or final”. But “having chosen not to oppose the application for his sequestration, Mr Courtney was not free to thereafter ignore the [final] order”.
Nicholls criticised Wanless for declaring the final sequestration order a mistake, rendering a “confusing and contradictory” judgment.
Nicholls noted that “even an incorrect [court order] exists … until [another] court sets it aside”. Courtney’s “only option” was to seek a rescission of the final sequestration order.
She ordered Courtney to pay legal costs.
“The PIC welcomes the SCA judgment, which confirms Courtney’s sequestration,” PIC spokesperson Adrian Lackay told Business Day. “The PIC is working with the liquidator to recover as much money as possible from [Allied Mobile] and from related parties. The PIC supports all attempts by the liquidator to recover assets.”