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[2021] ZAWCHC 95
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Gore N.O and Another v Van Wyk Van Heerden Attorneys Incorporated (17897/2019) [2021] ZAWCHC 95; [2022] 2 All SA 178 (WCC) (10 May 2021)
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
CASE
NO:17897/2019
In
the matter between:
STEPHEN
MALCOLM GORE N.
O
First Applicant
SELBY
MUSAWENKOSI NTSIBANDE
Second Applicant
(In
their capacities as duly appointed joint liquidators
Of
Brandstock Exchange (Proprietary)Limited in Liquidation
Master’s
Reference No. C428/2018)
And
VAN
WYK VAN HEERDEN ATTORNEYS INCORPORATED
Respondent
(Registration
No. 1995/003663/21)
Heard
on 29 April 2021
Delivered
electronically to the parties’ legal representatives. The
judgment shall be deemed to have been handed down at 15h00
on 10 May
2021
JUDGMENT
ON LEAVE TO APPEAL
MAGONA,
AJ
1.
This
is an application for leave to appeal to the Supreme Court of Appeal
against the whole judgment and order of this court which
was handed
down on 11 February 2021.The relevant aspects of the order are as
follows:
“
IT
IS ORDERED that
-
1.
The
(interlocutory) application to strike out is dismissed with costs;
and
2.
The
main application succeeds and
2.1
It
is declared that the following payments made by Brandstock Exchange
(Proprietary) Limited, to the respondent on the stated dates:
2.1.1
On
23 February 2018 in the amount of R75 000.
2.1.2
On
23 February 2018 in the amount of R1 250 000.
2.1.3
On
30 April 2018 in the amount of R200 000.
Are dispositions
without value as contemplated by
section 26(1)
of the
Insolvency Act
25 of 1936
read with the section 340 of the Companies Act 61 of 1973
and they are set aside.
3.
The
respondent is ordered to pay the afore stated amounts totalling to R1
525 000, 00 to the applicants.
4.
Mora
interest on the afore said amount at the legal rate calculated from
21 December 2018 until the date of payment.
5.
The
respondent is ordered to pay the costs of this application...”
2.
Disgruntled
by the above order the Respondent now approaches this court for an
application for leave to appeal to the Supreme Court
of Appeal. I
shall proceed to refer to the parties as they were in the main
application.
3.
As
a brief background, the order emanates from an application brought by
the Applicants( as the duly appointed liquidators) to have
certain
payments made by Brandstock Exchange (Pty) Ltd (in liquidation) into
the Respondent’s trust account as dispositions
without value as
contemplated in
section 26(1)
of the
Insolvency Act 24 of 1936
read
with section 340 of the Companies Act, 1973.The order was granted in
favour of the Applicants whereby Respondent was ordered
to repay the
amounts totalling R1 525 000,00 plus interest. It is
therefore against this decision that the application
for leave to
appeal lies.
4.
In
terms of Section 17 of the Superior Courts Act
[1]
leave
to appeal may only be granted where the Judge is of the opinion that
the appeal would have reasonable prospects of success
or there is
some other compelling reason why the appeal should be heard,
including conflicting judgments.
[2]
5.
Respondent
stated in its notice for leave to appeal
that
the
‘
...
application
for leave to appeal is brought in terms of section 16(1)(a)(i) read
with
section 17(6)
of the
Superior Courts Act 10 of 2013
and on the
following grounds:
5.
Should leave to appeal be granted,
appeal
would have reasonable prospects of success; and
6.
One of the defences relied upon by the respondent, the scope of which
is subject
to conflicting judicial decisions, has not been directly
pronounced upon by South African Courts; meaning that the appeal is
one
which properly falls within the ambit of
section 17(1)(a)(ii)
of
the
Superior Courts Act 10 of 2013
.
7.
Another compelling reason why an appeal should be heard, as envisaged
in the
aforesaid sub-section, is the importance of the relevant issue
to the wider legal profession, in particular, the practice of
attorneys
and their employment of trust accounts in making payments
such as occurred in the present instance.”
6.
The
Respondent raised approximately 22 alleged errors made by the Court
in support of its application for leave to appeal, these
may be put
into categories as stipulated in the paragraphs that follow.
Ground
that the appeal would have reasonable Prospects of Success
7.
First
submission
made was that the Court erred in refusing to grant an Application to
strike out parts of the Applicant’s affidavits.
Second
submission
was that the court erred in making adverse findings against Mr Van
Heerden (Van Heerden) who was not a party to the dispute.
I have
already stated in the judgment why the court accepted the hearsay
evidence of Ms Pratt based on the hearsay rule, in the
interest of
justice whereby the Court applied the principle laid out also in the
Lagoon
Beach Hotel
case.
[3]
8.
I
have further dealt with the reasons why that interlocutory
application was dismissed based on the nature of the evidence of Ms
Pratt. Ms Pratt’s evidence was unrefuted by the Respondent and
remained valuable in that under oath she disavowed the Utexx
agreement and further that she did not know Van Heerden before the
date of the enquiry, in the interests of justice amongst others,
the
evidence was accepted.
[4]
This
is a discretionary approach which must be based in law
[5]
,
in my view the Court has given sufficient basis for its decision when
dismissing the application to strike out based on law
[6]
9.
I
am therefore of the view that these grounds hold no prospect of
success.
10.
Third
submission
was that the Court erred in not following or to have regard to the
decision in
Iprolog
[7]
as it made a finding that the respondent benefitted by the impugned
payments for the purpose of section 26(1)(b) of the Act.
11.
I
have also dealt with these points raised in detail in my Judgment,
[8]
most notably the important question to answer in
casu
was whether there was a benefit to the Respondent. Because “payment’’
of the impugned monies was made to the
bank in favour of the
Respondent where the latter had control over the funds, having the
right of disposal the “benefit”
element was fulfilled.
The issue of the intention of the payment or such disposition did not
arise.
12.
Further
to be clear it was based on the facts and the issue that was before
the court in
casu
which
included an enquiry whether the Respondent received the dispositions
with a benefit in terms of
section 26
of the
Insolvency Act as
was
held in
De
Villiers v Kaplan
and
Reynolds
v Mercantile
Bank
and
Others.
[9]
Both these decisions, the
full bench of this Division and the Supreme Court of Appeal (SCA)
respectively held that no question
of intent arises in the enquiry. I
deal with these cases further below.
13.
In
that regard and though the court might not have referred to the
Iprolog
case
such does not mean it was not considered. I understood the facts in
that case were distinguishable in that the disposition by Mr
M was
found to have been made from
a
collusion
with his wife Mrs M
in
terms of
Section 31
of the
Insolvency Act by
making
payments directly out of his own personal account
which were found to be dispositions within the meaning of the
Insolvency Act, that
the first payment was made into an attorney’s
trust account for the
credit
of Iprolog
[10]
.
(My emphasis)
14.
The
enquiry
in
casu
ended on who received the transferred “payments” or the
dispositions from Brandstock’s account (and not the intent
of
the payment), the answer remained, that it was the Respondent and
that it was not a mere
conduit
.
[11]
They were
dispositions
without value
in
terms of
section 26(1)(b)
of the
Insolvency Act.
15.
>
Accordingly,
as already stated in the Judgment the dispositions (in terms of
section 26(1)(b)
enquiry) were found to have been made to the
Respondent hence the relevant case law was applied.
[12]
Further
that the issue of who benefitted was held to have been to the
Respondent which was also based on the relevant case law.
[13]
16.
I
am therefore of the view that this ground holds no prospects of
success.
17.
Fourth
submission
made was that the court erred in finding that the impugned payments
were made without value. As stated in the judgment
the Respondent
failed to prove that Brandstock was left solvent after the
dispositions were made. The court went in detail and
through the
exercise of calculating the payments made, the assets and liabilities
of Brandstock before and after the dispositions
were made hence its
findings.
[14]
18.
I
was not convinced otherwise by the Respondent and in my view this
ground does not hold any prospects of success.
19.
Fifth
submission
made was that the court erred in finding that Van Heerden failed to
act prudently during the whole process. In my view
the hearsay
evidence was accepted by the court as admissible based on the Law of
Evidence Amendment Act.
[15]
The court considered the entirety of the evidence placed before it
and made a finding. The findings made against Van Heerden are
inferential based mostly on the evidence from the papers and the role
he played during the whole transaction (balance of probabilities).
I
cannot deal with this point any further than that stated in the
Judgment.
[16]
20.
In
that regard I am of the view that this ground does not hold any
prospects of success.
21.
Sixth
submissions
made were that the court erred in refusing the striking out
application whilst it then made adverse findings against
Van Heerden
who was not a party to the dispute. I have dealt with the reasons why
the interlocutory application was dismissed based
on the nature of
the evidence of Pratt. The evidence was valuable in that under oath
she disavowed the Utexx agreement and further
that she did not know
Van Heerden before the date of the enquiry, hence in the interests of
justice the evidence was accepted amongst
others.
[17]
22.
In
my view also this ground looking holistically to the facts in
casu
does not have prospects of success.
23.
It
is based on the above that in my view, the submissions made did not
cross the threshold in support of the ground that there are
reasonable prospects of success if leave were to be granted. The
application in my view should not succeed on this ground.
24.
I
now move to consider the other grounds placed before this Court.
The
Ground and submissions were made that leave to appeal be granted
because there are conflicting decisions, and the appeal properly
falls within the ambit of section 17(1)(a)(ii) of the Act
.
25.
In
casu
it is not in dispute that the dispositions were made to the trust
account of the Respondent, the court then made a finding that
the
enquiry ended there. The issue of intention never had to arise hence
the
De
Villiers v Kaplan
and
Reynolds
and Others
approaches were followed by this court as stated before. In my view
and as indicated before I understood the case and principle
applied
in
Iprolog
case such could find no application to the facts of the case in casu.
I deal with this more fully below.
26.
I
understood from the facts and case law mentioned above as being that
there are two approaches to the kinds of dispositions that
were
before those cases.
26.1
The
First approach is that
De
Villiers v Kaplan
and
Reynolds
and Others
[18]
dealt with dispositions which stood to be set aside in terms of
section
26 (as dispositions without value)
like those in
casu
and in both cases
the
question of intent for such dispositions was held not to arise
.
(my emphasis)
26.2
The
Second approach which I understood as that which was held in the
Iprolog
case, in that case the court dealt with a disposition which was found
to be in terms of
section
31 (as a collusive dealing before sequestration)
and was susceptible to be set aside. The court looked at who was the
money paid for (and I understood this to mean the intent of
the
payment) amongst others and it found it to have been to the credit of
Iprolog
[19]
to prove the collusion element. The case therefore was
distinguishable to that
in
casu.
(my
emphasis)
27.
In
that regard it is based on the above that I understood these two
distinct approaches and I am not persuaded that there are conflicting
judicial decisions on the points because the SCA is clear on the two
approaches and this Court clearly followed the first approach
hence
it did not even mention the second approach and its case law.
28.
In
that regard in my understanding of the case law it is my view that
there are no conflicting judicial decisions that need the
attention
of the Supreme Court Appeal on the facts
in
casu
.
The
ground that there are compelling reasons why leave should be granted
which includes the importance of the relevant issue to
the wider
legal profession, in particular the Attorneys and their employment of
trust accounts.
29.
In
my view and from the onset, sight must not be lost of the issues that
were before the court in
casu
and they related to the alleged dispositions of the impugned monies,
and the court made its findings based on the
De
Villiers v Kaplan
and the
Reynolds
and Others
as precedents regarding trust accounts,
[20]
. Further comments made pertaining to the Attorney’s profession
and trust accounts remain mere
obiter
dicta
and are not binding on the Attorney’s Profession as was
submitted.
[21]
30.
In
my view this ground also cannot stand as a compelling reason for
leave to be granted.
31.
In
the circumstances I am accordingly not persuaded that the Respondent
has reached the threshold as set out in the new Act for
leave to
appeal to be granted.
32.
In
that regard I would make the following order:
(a)
The
application for leave to appeal is dismissed with costs.
P. MAGONA
Acting
Judge of the High Court
APPEARANCES
For
the applicant :
Adv G Woodland SC
Instructed
by
:
Mr M
Oostenhuizen
Oostenhuizen
& Co
For
the respondent :
Adv R Goodman SC
Adv
A Brink
Instructed
by
:
Mr W van Heerden
[1]
Act 10 of 2013(the Act)
[2]
See also MEC for Health, Eastern Cape v Mkhitha
2016 JDR 2214 (SCA) paras [16] to [17-
[3]
Lagoon
Beach Hotel v Lehane (235/2015)
[2015]
ZASCA 210
(21
December 2015); Judgment para 54 and 61 to 70
[4]
Judgment para 57 to 70
[5]
McDonald’s Corporation v Joburgers
Drive-Inn Restaurant (Pty) Ltd; McDonald’s Corporation v Dax
Prop CC
1997 1 SA 1
(A) at 27D-E
[6]
Judgment para 63 to 69
[7]
M
[…]and Another v Murray and Others (251/2019) [2020] ZASCA
86(9 July 2020)
[8]
Paragraphs
93 to 102 of the Judgment
[9]
Reynolds
and Others NNO v Mercantile Bank Ltd 2004(5) SA 220
[10]
Iprolog para [30]
to [31]
[11]
Judgment para [93] to [100]
[12]
Judgment para [71] to [78]; para
[97] to [98]
[13]
Para [97] to [98]
[14]
Judgment para [103]to [110]
[15]
Act 45 of 1988
[16]
Judgment para and [57] to [69]
[17]
Judgment para [57] to [70]
[18]
SCA decision mentioned supra-Reynolds p224 [D] to [ J] p225 [A] to
[G]
[19]
SCA decision mentioned supra
Iprolog
case para [30]to [ 31], [34]to [37]
[20]
Judgment [93] to [99]
[21]
Judgment [111] to [116]