Bush and Others v B J Kruger Inc and Another (2009/36699) [2013] ZAGPJHC 4; [2013] 2 All SA 148 (GSJ) (8 February 2013)

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[2013] ZAGPJHC 4
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Bush and Others v B J Kruger Inc and Another (2009/36699) [2013] ZAGPJHC 4; [2013] 2 All SA 148 (GSJ) (8 February 2013)

REPORTABLE
SOUTH GAUTENG HIGH COURT, JOHANNESBURG
CASE NO
:
2009/36699
DATE:08/02/2013
In the matter between:
BUSH,
ANDREW
JAMES
...............................................................
First
Plaintiff
BEEVERS,
GAVIN ANTHONY
….............................................
Second
Plaintiff
PASSMORE,
BRIAN
........................................................................
Third
Plaintiff
ASTRUP,
GARY
LARS
..................................................................
Fourth
Plaintiff
and
B
J KRUGER
INC
...........................................................................
First
Defendant
KRUGER,
BAREND JOHANNES
..........................................
Second
Defendant
J U D G M E N T
Summary:
Attorney
receiving money in to trust account– factual dispute as to
purpose for which the money was so received. Attorney’s

version highly improbable having regard to the objective facts and
rejected. Attorney ordered to repay the amounts lent to him.
WEPENER, J
:
[1] Four golfing friends are
claiming the return of monies advanced by them to the first
defendant, a firm of attorneys, at the
instance of the second
defendant, the only member of the first defendant. The second
defendant is also joined in the proceedings
by virtue of the
provisions of section 53(b) of the Companies Act No. 61 of 1973 (the
Act), he having been a director of the first
defendant at all
relevant times. The memorandum of association of the first defendant
provides that all directors of the first
defendant shall be jointly
and severally liable with the first defendant for the debts and
liabilities of the first defendant,
contracted during their periods
of office. There is no dispute that the second defendant, qua
director, would be liable for the
debts of the first defendant,
should the first defendant be liable to compensate the plaintiffs.
[2] I refer to the four
plaintiffs by their surnames as Bush, Beevers, Passmore and Astrup.
The four claims of the plaintiffs arose
when one John Rogers (Rogers)
advised them during November 2007 that he was aware of a scheme in
terms of which the plaintiffs
could invest money with an attorney,
which turned out to be the second defendant practising under the name
and style of the first
defendant. The plaintiffs also discussed the
possible investment amongst themselves, in particular after Bush had
received information
regarding a bridging finance scheme offered by
the defendants, from Rogers.
[3] The plaintiffs all testified
that the understanding was that they would invest money with the
first defendant for a short-term
period of approximately four months
and receive a return of 3% interest compounded monthly. Although
Astrup testified that he
was investing with B J Kruger, using the
name of the second defendant, it is clear that the parties referred
to the first and second
defendants as BJ Kruger Inc, BJ Kruger and
Kruger interchangeably in evidence. There was no suggestion that any
investment or
loan was made with or to the second defendant in his
personal capacity and the evidence established that money was paid to
the
first defendant’s trust account as was the requirement of
the defendants. In order to obtain more information about the
bridging finance scheme, the plaintiffs (excluding Astrup) had
occasion to visit the defendants at the first defendant’s
office in Pretoria. Each of the three plaintiffs testified that they
thought that they were at the office of the first defendant.
Bush
testified that he first went to the office of the second defendant
and then to the boardroom which he thought was a shared
boardroom.
This was not challenged in cross-examination. The significance of
this is that the cross-examination was directed to
show that the
plaintiffs did not meet at the offices of the first and second
defendants but elsewhere in the offices of Rogers
or Real Africa
Estate and Travel (RAET). Nothing much turns on this and the
impression of the plaintiffs that they visited the
defendants at
their office is strengthened by the fact that the second defendant
gave them what was referred to as a power point
presentation during
their visit to the defendants in Pretoria. The power point
presentation contained the logo of the first defendant.
Bush
testified to this effect and so did Beevers and Passmore, who
attended the power point presentation at a different time than
Bush.
[4] Beevers testified that the
investment opportunity appealed to him – it was a good return.
The investment would be with
an attorney and consequently be quite
secure. The period of the investment also suited him as he had
provisional tax bills to
pay in August 2008. Had it not been for the
short-term investment he would not have considered to invest in the
scheme. Bush
gave similar evidence. He had not yet acquired a
business which he intended to acquire and a short term investment
would have been
suitable to him so that the funds could be available
when he acquired a business. This evidence of both Beevers and Bush
remains
unchallenged and there is no reason to doubt that they
intended to invest for a short term only for the reasons supplied by
them.
The evidence of Beevers was that the investment would be for a
period of four months with a possibility of a short extension –

but that a period of longer than six months was never contemplated.
Beevers was also the person who advised Passmore and Astrup
of the
scheme and it is not surprising therefore that they also formed the
impression that the investments would be for a relatively
short
period of time. Prior to attending the power point presentation
during late November 2007, Beevers and Passmore were required
to sign
a confidentiality agreement. Bush and Astrup testified that they too
were required to sign confidentiality agreements.
[5] Two of these agreements were
signed by the respective plaintiffs and by the second defendant on
behalf of the first defendant.
It is a document which covers a
relationship between the plaintiffs and the first defendant. Astrup
testified that his confidentiality
agreement was signed by Rogers as
a representative of the first defendant. The document proves so and
this evidence was not challenged.
The relevance of the role of
Rogers is the following: did Rogers act as a representative of the
defendants or did he act as representative
of the plaintiffs? –
the latter allegation which was made by the defendants in further
particulars and in an affidavit resisting
summary judgment.
[6] Beevers testified that
Rogers had been canvassing persons who could potentially become
involved in the scheme. Rogers was the
person who asked him to sign
the confidentiality agreement between himself and the first
defendant. Rogers was present at the
power point presentation to
which Beevers was invited but it was the second defendant who gave
the presentation. The reaction
of Beevers that it was pleaded that
Rogers represented him in any matter was ‘
rubbish
’.
This evidence of Beevers that Rogers did not represent him (despite
the allegations to the contrary in the further particulars
and
affidavit) remained unchallenged throughout the evidence. Under
cross-examination Beevers added that Rogers was the first
contact, he
solicited people, he organised a meeting and copied letters to the
second defendant. Beevers testified that Rogers
and the second
defendant were together in the scheme ‘
in
one way or another
’
in that they were parties in a business venture. There was also
evidence that Rogers received a commission from the first
defendant,
supporting the notion that he was in one or another way involved with
the defendants. The contention that Rogers represented
any of the
plaintiffs can be rejected and there exists no reason not to accept
the plaintiffs’ evidence in this regard. Indeed,
despite the
attempt to make out that Rogers represented the plaintiffs in further
particulars and an affidavit, the second defendant
never testified in
examination in chief that he indeed represented the plaintiffs. This
is significant and puts paid to such suggestion,
in my view, made
falsely in the further particulars and the affidavit.
[7] Despite Rogers being
available at the trial and still being on a good footing with the
second defendant, the defendants failed
to call Rogers to attempt to
support or establish, what I find to be a false version of the
defendants. This failure strengthens
the inference that Rogers was
associated with the defendants and never represented the plaintiffs.
Insofar as any inference is
to be drawn, he represented the
defendants and his conduct or activities can be ascribed to the
defendants. Also, there is no
evidence before me to show that Rogers
indeed represented any of the plaintiffs. The irresistible inference
is that he was indeed
the first line of contact for the defendants,
solicited the plaintiffs’ interest by outlining the scheme,
being present at
the power point presentations, signing at least one
document on behalf of the first defendant, taking part in numerous
emails between
the plaintiffs and the defendants and generally acting
on behalf of the defendants. An analysis of the documents written by
Rogers
and copied to the second defendant bears this out. I give
examples. The documents styled ‘
Investment
Account
’ which
were sent to each plaintiff by Rogers, were sent on a letterhead of
the first defendant. Although it was put to one
of the plaintiffs
that Rogers sent these accounts unauthorisedly, Rogers states in an
email to all the plaintiffs, and copied to
the second defendant, the
following:
‘
Barend
(the
second defendant)
has noticed that there is a difference between calculating the
interest on a daily versus monthly compound basis. The statements
we
sent you earlier actually use a daily compounding formula which
unfortunately gives the wrong amount as the investments are based
on
a monthly capital basis.
…
I
will re-send the statements tomorrow after he has re-calculated the
interest amounts using this formula rather than as was used
in error
which was compounded daily.
’
[8] It is clear that the second
defendant knew that Rogers alleged that they both (‘
we
’)
had sent the statements. After re-calculating the interest, new
investment accounts were forwarded to the plaintiffs.
These accounts
are similar in format to the first accounts and are all on the
letterhead of the first defendant. It becomes increasingly
clear that
Rogers acted on behalf of the first defendant with the full knowledge
and consent of the second defendant regarding
the investment scheme.
The second defendant’s evidence that the document was sent
without authority does not impress. The
document contains correct
information as well as the first defendant’s logo. The second
defendant did nothing or could show
nothing to support that he
advised the recipient that the document was sent without
authorisation. I reject the allegation regarding
the lack of the
authority of Rogers who was indeed a full participant from the point
of view of RAET and the defendants.
[9] The four plaintiffs all
understood that they would be advancing money to the first defendant
for a short period of approximately
four months and earn 3% interest
compounded monthly on these advances. The view was based on what
Rogers had told them and as
far as the first three plaintiffs were
concerned, what the second defendant told them during the power point
presentation where
Rogers was present. Bush, Beevers and Passmore,
who attended a meeting with the second defendant in Pretoria where he
gave a power
point presentation, testified that the presentation
contained the first defendant’s logo as is evident from the
documents
in the bundle pages 1-12 handed in during the hearing. It
was, however, put to them that the logo on the presentation was that
of RAET of which Rogers was the CEO (and the second defendant the
principal). Beevers was adamant that it was not so as he knew
Rogers
as a ‘
wheeler and
dealer
’ and if
the presentation showed an involvement of Rogers, he would never have
parted with money. The power point presentation
on a RAET letterhead
could not possibly be the presentation given to him.
[10] There is no explanation
before me why the second defendant would give a power point
presentation on the letterhead of RAET
– all other documents
emanating from the first and second defendants are on the letterheads
of the first defendant. The document
in the bundle displaying the
power point presentation on the RAET letterhead is in stark contrast
to every other document contained
in the bundle in this matter. It
is highly improbable that the second defendant presented the scheme,
which he and his companies
had an interest in, on the letterhead of
RAET. RAET could not offer the services contained in the power point
presentation. In
particular the complete conveyancing solution,
general legal assistance and advice, bond registration and the entire
conveyancing
process – all of which only the first and second
defendants could offer – would be out of place on a RAET
letterhead.
The contact details are those of the first and second
defendants and it include the second defendant’s email address.
The
entire document has nothing to do with RAET. During the
presentation it was explained to Beevers (and Passmore) that the
first
defendant would receive the money, and it would then be
utilised as bridging finance. All legal matters were to be handled by
the
first defendant and the first defendant would effectively be the
administrator of the investment. During cross-examination it was
put
to Beevers that the investment would either be through the B J Kruger
Property Group (Pty) Ltd (the Company) or SA Home Savers.
His
response was that he did not recall that these entities were
mentioned at all. Indeed, during evidence in chief the second

defendant never mentioned SA Home Savers at all. During the evidence
of the second defendant, it became common cause that he never

mentioned SA Home Savers to the plaintiffs at all.
[11] Much of the
cross-examination of the plaintiffs concentrated on the fact that the
particulars of claim refer to a loan and
that they did not use the
word ‘
loan
’
in the evidence or in documents which emanated from them. I am of
the view that the use of the word ‘
loan
’
is irrelevant. To summarise the evidence of Beevers: He at no time
invested in property; he was soon going to need the
money for tax
purposes; he was quite happy for a lawyer to take his money for four
months; he did not care who the defendants
would finance; he gave
his money to the first defendant – it had to give it back; his
deal was with the first defendant.
However, the word ‘
lent’
was indeed also used by Beevers as indicated below. The
cross-examination of Beevers turned around the manner in which the
first
defendant applied the funds and the witness was unable to
comment thereon, because he testified that it was none of his concern

how the first defendant supplied the bridging finance to his clients.
During the power point presentation the second defendant
explained
that he would advance the money to third parties as bridging finance;
that he would earn 5% interest – the second
defendant would
take 2% and all other fees and charges which a conveyancer can make
on these deals. Despite cross-examination
on other issues, this
aspect of Beevers’ evidence was not challenged.
[12] The one thing that Bush,
Beevers and Passmore agreed on was that the second defendant
explained the manner in which he would
supply bridging finance and
secure the money advanced to third parties. Effectively he would only
advance 40% to 50% of the nett
equity the borrower had in property.
Thus he was secure in receiving his capital back. This, the
plaintiffs testified, together
with the fact that it was an attorney
who received their money into his trust account, gave them comfort in
advancing the money
to the first defendant. The plaintiffs, in
particular Bush, Beevers and Passmore, were clear in their evidence
that they would
advance money to the first defendant by paying it
into its trust account and that the funds would be repaid by the
first defendant
together with interest to them. In my view that is
nothing other than a loan to the first defendant. All the plaintiffs
testified
that they advanced money so that the first defendant could
supply bridging finance to third parties. Indeed, neither Bush nor
Beevers could have afforded to tie money up in properties as the
funds had been earmarked for other purposes. Yet, the
cross-examination
of the witnesses centered around the fact that they
had agreed to invest in properties and even acquire those properties
in the
event of the third parties not being able to repay the
bridging finance to the first defendant. Needless to say all of the
plaintiffs
denied this and such a course of conduct by Bush and
Beevers would be improbable having regard to the evidence regarding
the need
of their funds for identified purposes i.e. acquiring a
business and paying income tax. Beevers stated on a number of
occasions
that the money was solicited from him to pay to the first
defendant and in exchange for that, in the short term, he would be
receiving
the capital with interest back from the first defendant.
He stated that he was happy for a lawyer to take his money for four
months,
that the lawyer would then give bridging finance to third
parties and he would get his money back in that short period of time.

He was not interested or did not care who the lawyer gave the
finance to. He gave his money to the first defendant who was the

entity to give the money plus 3% interest back to him.
[13] The three plaintiffs, who
attended the power point presentation, were adamant that the second
defendant explained the bridging
finance scheme to them – as
that is the reason that they went to him, and denied that they were
told that the funds would
be invested in property. Beevers testified
that the second defendant explained that he came across clients with
property-related
matters. Because of this, he lent money to people
and he was looking for people who could lend him money to lend to
third parties.
Each of the plaintiffs indicated to the second
defendant what amount they had to invest, except Astrup who advised
Rogers of the
amount that he had available for investment purposes.
Shortly after the power point presentation Bush, Passmore and Beevers
received
a document on the first defendant’s letterhead from
Rogers. The document indicated a deposit of some R2,5 million was
required.
As the plaintiffs all knew what they would commit to the
loan, Beevers telephoned the second defendant to confirm that the
loan
would be secured as was stated at the power point presentation
to which he received a positive answer. This evidence was not
challenged.
Beevers paid his share of the amount required i.e. R1
million. The payment document generated by him is marked
‘
Loan/Prop
’.
What is important is to note that the document received from Rogers
contained a reference at the top stating ‘
Investment:
The BJK Property Group (Pty) Ltd
’.
This, according to the pleadings and affidavit filed by the
defendants, was the party with whom the plaintiffs contracted
and not
with the first defendant. Each plaintiff expressed surprise at the
suggestion that they contracted with this company and
stated that the
reference in the letter meant nothing to them as they were reacting
to what was said by the second defendant at
the power point
presentation. They all denied knowing such a company, least of all
contracting with it. Beevers testified that
he received additional
documents which were attached to the letter requesting the deposit of
R2,5 million. One such document was
a valuation of a property in
Waterkloof. Significantly, the valuation was done on the instruction
of the first defendant and not
the instruction of the Company.
Beevers said that he was not concerned with the attachments as these
documents had a bearing on
how the defendants were going to secure
the loan made by the first defendant to the borrowers. During the
telephone call to the
second defendant, after receiving the
documents, Beevers was comforted by the second defendant’s
explanation that the security
would be as was explained at the power
point presentation. This evidence was not contradicted.
[14] Beevers received a second
opportunity to make a loan to the first defendant on 1 March 2008.
He knew of the additional loan
as a result of a communication from
Rogers. When he received the document requiring the deposit he
accepted it and paid the amount
of R400 000.00 into the first
defendant’s trust account. Again, on paying over the money,
the reference on the payment document
generated by Beevers is ‘
Br
Loan
’, for
bridging loan. A note appended by Beevers reads:
‘
Herewith
proof of transfer into your account of R400 000.,00 for the bridging
finance investment in Erf 991 Wonderboorm
.
’
(The details regarding the erf
are contained in a letter forwarded to Beevers, setting out the
particulars of the amount required.)
Beevers also asked for a
breakdown of his participation to date as per the email of Rogers.
The note was addressed to the second
defendant but a response was
received from Rogers, who gave a summary of the investment and stated
that: ‘
The
original investment was extended by a couple of months.
’
The only entity who could so extend it was the first defendant.
Beevers had no knowledge of such an extension prior to receiving
the
notification from Rogers. He was irritated by the one-sided action
and would not have invested a further R400 000.00, had
he known that
the first loan had been extended. Beevers further testified that he
paid the amounts loaned from his account in
Eastgate and expected
payment back into his account. He said that there was never a debate
that he had to be paid elsewhere.
[15] On 8 May 2008 Beevers
notified Rogers to ensure that ‘
neither
loan should be extended going forward though as the money is
earmarked for an upcoming tax bill
’.
The email confirms the fact that Beevers saw his investment as a
short term loan and that he required the money shortly
and would not
have invested in property.
[16] During July 2008, when
Beevers realised that he was not going to receive his money in the
short term, he was horrified. The
second defendant wrote to him that
there was a delay and offered for him to take over certain
properties. Beevers never intended
to invest in properties and he,
from then on, phoned the second defendant regularly to enquire as to
when he could expect payment.
He was continually promised that his
just had to wait two weeks or a month and the money would be paid. He
advised the second defendant
that it was money that he lent and that
it was not to be invested in property. Once again the telephone call
and contents of the
conversation was not challenged. The
correspondence received from the first defendant written by the
second defendant in the second
half of 2008 all gave him no hope of
receiving his money soon.
[17] Finally, Beevers reacted to
the allegations contained in the plea and an affidavit resisting
summary judgment. In the plea
the defendants aver that payments made
to the first defendant were made on behalf of the Company. It
further pleaded:
‘
20.3
The defendants plead that the second plaintiff made the payments
alleged pursuant to an oral agreement concluded between the
second
plaintiff personally and the B J K Property Group (Pty) Ltd (‘the
B J K Property Group’) represented by the
second defendant at
Pretoria during December 2007. In terms of such agreement:
the
second plaintiff invested monies with the B J K Property Group
from time to time;
the
second plaintiff would pay amounts payable in terms of the
agreement into the first defendant’s trust account from
time
to time;
the
first defendant would hold such monies in trust until the B J K
Property Group called for the funds or a portion thereof
due to an
investment becoming available and the first defendant would pay
out such funds or a portion thereof to the B J
K Property Group;
the
full amount received by the first defendant from the second
plaintiff was paid out to the B J K Property Group in terms
of the
agreement
.
’
Beevers was quite adamant that he
had no dealings with the Company, never heard of it during the power
point presentation and was
never made aware by the second defendant
of this alleged arrangement. His idea was to invest for the short
term and not become
involved in property investment. Most
importantly, the second defendant was at a loss during evidence to
explain when and where
each agreement between the plaintiffs and the
Company was entered in to. He also conceded that some of the terms of
the agreements
pleaded by the defendants did not exist at all.
Beevers also denied the version supplied by the second defendant in
an affidavit
resisting summary judgment. This version reads as
follows:
‘
11.
The plaintiffs and I came to be introduced to each other during
November 2007 when John Rogers (‘Rogers’) introduced
me
to the first plaintiff. Rogers and the first plaintiff explained to
me that they represented the plaintiffs who were all looking
to make
property-related investments.
The
introduction came about due to my involvement with BJK Property
Group (Pty) Ltd (“the BJK Property Group”).
The
BJK Property Group is primarily property related company and deals
in immovable property. For this purpose inter alia, the
BJK Property
Group is duly registered as an estate agency by the Estate Agency
Affairs Board. In its business the B J K Property
Group had come
across various third parties that were either:
looking to sell their
properties outright but were unable to find purchasers because
potential purchasers were not able to qualify
for a loan in respect
of the property; or
required funds for one
reason or another and were prepared to sell their property in order
to receive same.
In
either instance the BJK Property Group would be in a position to
acquire the property at a value less than the going market
rate if
it had the requisite finance. The BJK Property Group did not have
the requisite finance to buy properties itself and
accordingly
needed to bring in third parties such as the plaintiffs to provide
the necessary funding.
In
addition to the above, by the use of instalment sale agreements, the
BJK Property Group was able to stagger payment of the
purchase price
which was preferential to paying one large lump sum for the
acquisition of the property in question. As the BJK
Property Group
was only interested in properties insofar as they could in turn
generate an income, it was preferable to pay monthly
instalments in
terms of the instalment sale agreement whilst considering whether to
rent the property or on-sell it again for
a profit instead of having
to come up with the entire purchase price at the outset.
Investments
such as the ones aforesaid also had a number of safety aspects that
protected the investment itself:
the
Alienation of Land Act would protect the BJK Property Group insofar
as it could compel registration of the sale agreement
against the
title deed of the property so that the property could not be sold
under the BJK Property Group’s nose to
a third party; and
the
BJK Property Group could achieve transfer into its name if it paid
more than half of the purchase consideration.
In
the premises the BJK Property Group could acquire properties cheaply
in terms of instalment sale agreements that permitted
payment of the
purchase price over a period of time, which made it easier to
on-sell the property as there was no time pressure
to sell same
because monthly instalments were usually quite easily manageable.
Practically,
the BJK Property Group realised that certain third party potential
sellers only sold their properties to generate
sufficient funds to
overcome some other short term hurdle. In order to accommodate them,
most of the instalment sale agreements
provided for a four month
waiting period during which time the seller could negotiate the
cancellation of the instalment sale
agreement provided both the
seller and the BJK Property Group could agree to the terms of such
cancellation.
The
four-month waiting period was agreed to as the sellers who wanted to
negotiate the cancellation of the sale did not find themselves
in a
situation where the BJK Property Group had already proceeded to deal
with the property in an irreversible manner.
In
order to provide all parties with as much certainty as possible the
BJK Property Group indicated to sellers at the outset that
it would
charge an amount in respect of a cancellation so as to make a profit
off the cancellation if one happened. As the costs
to the BJK
Property Group was really the amount of the deposit paid in each
instance, the BJK Property Group would look to earn
a profit of
about 20% of the amount of the deposit in each instance where an
instalment agreement was cancelled. In each instance
it was for the
parties to agree a cancellation amount and if that could not be done
the sale would simply proceed.
I
informed the plaintiffs of the BJK Property Group’s business
and how it dealt with investments and they all became interested
in
making investments with the BJK Property Group as a result. It is
precisely because the plaintiffs knew how the BJK Property
Group’s
business functioned that made them interested in investing.
I
explained to them also that the BJK Property Group filled a
particular niche in the market-place and employed a business concept

that was working well at that stage.
All
the plaintiff’s were interested in making investments with the
BJK Property Group and this led to investment agreements
being
concluded between the plaintiffs and the BJK Property Group. Such
agreements were concluded orally between me on behalf
of the BJK
Property Group and the plaintiffs personally alternatively the
plaintiffs being represented by Rogers and Bush in
Pretoria during
the latter part of 2007.
Although
separate investment agreements were concluded with all the
plaintiffs and the BJK Property Group, the terms of the investment

agreements were all the same.
The material terms of the
investment agreements were, inter alia, as follows:
the
BJK Property Group would be presented with investment opportunities
from time to time;
the
BJK Property Group would present such opportunities to the
respective plaintiffs as it, the BJK Property Group, in its sole

discretion being fit;
if
the respective plaintiff was interested in involving himself in a
particular investment he would inform the BJK Property
Group of
same and pay an amount equal to the deposit required to be paid in
terms of the property that was available for purchase;
the
BJK Property Group would thereafter conclude an instalment sale
agreement with the seller concerned and proceed to pay the
deposit
in terms thereof;
from
that point onwards the investment would be operated and managed
jointly between the BJK Property Group and the respective
plaintiff
using the BJK Property Group as a vehicle;
if
the seller concerned wished at any time to cancel the instalment
sale agreement, the terms of such cancellation would have
to be
accepted by both BJK Property Group and the respective plaintiff,
once again with BJK Property Group being the vehicle;
any
income generated from the investment would normally be shared
between the BJK Property Group and the respective plaintiff
in the
ratio of 20%-80% respectively with the respective plaintiff to
receive the greater portion due to his financial contribution;
once
the four-month waiting period was over the BJK Property Group and
the respective plaintiff acting together would jointly
make
decisions as how to deal with the property, in other words they
would decide, inter alia, whether it should be on sold,
rented and
the terms thereof;
furthermore,
insofar as there were any expenses to be incurred in respect of the
investment such as, inter alia, protecting
the property from
further on-sale or proceeding with legal steps against recalcitrant
sellers, the BJK Property Group and the
respective plaintiff would
contribute to such expenses in the same ratio as they would
benefit;
in
general the investment would be managed by the BJK Property Group
and the respective plaintiff jointly; and
where
the respective plaintiff was an investor in respect of the
particular property together with other investors then they
would
hold their respective rights pro rata contributions to the
investment in each case.
At no stage was there any
agreement between any of the plaintiffs and the first or second
defendant. The first defendant’s
involvement in the
investments happened on two levels:
firstly,
because investors such as the plaintiff had to wait for the
requisite opportunity to come along, they would pay their

determined investment amount into the first defendant’s trust
account for allocation to an investment as and when one
arose and
as when the BJK Property Group called upon such funds – as
such the first defendant only ever held monies invested
either on
behalf of the investor, such as the plaintiffs, and/or on behalf of
the BJK Property Group, it never held monies
for its own sake; and
secondly,
the first defendant would attend to all the conveyancing they was
required as a result of each particular investment.
In
short there was never a contractual nexus between first and second
defendants and any one of the plaintiffs.
’
Curiously, the versions contained
in the defendants’ plea and affidavit resisting summary
judgment were not put to the plaintiffs
during cross-examination at
all but was commented on by the respective plaintiffs during their
evidence-in-chief. They all rejected
the aforesaid versions.
[18] I have thus far dealt with
the evidence of the second plaintiff, Beevers, with some references
to the evidence of the other
three plaintiffs and the second
defendant. I now turn to deal with the third plaintiff, Passmore’s
evidence. Passmore corroborated
the evidence of Beevers in every
material respect. He testified that he attended the power point
presentation with Beevers and
confirmed that the document in the
bundle of documents at pages 1 to 12 was indeed the power point
presentation which he had seen
– that is the document with the
logo of the first defendant. He confirms that they were addressed by
the second defendant
who explained that they would be able to make
deposits with, or loans to, the first defendant for a period of four
months, which
period could be shorter or occasionally longer. Their
return would be 3% interest compounded monthly. The second defendant
explained
that the money would be on-lent to sellers who needed
bridging finance i.e. temporary finance until they received the
proceeds
from the sales of their properties. Passmore explained that
a loan to the seller would be secured by the sellers giving to the

first defendant a special power of attorney and the first defendant
would not make a loan of more than 50% of the equity in the
property.
Passmore also testified that the deal looked good as money was being
paid into a reputable attorney’s trust account
overseen by
auditors and the Law Society. He said that the name of the Company
was never mentioned to him and he had no dealings
with it. Passmore,
upon receipt of the letter requiring the deposit of R2,5 million,
paid over R350 000.00, the amount which he
indicated at the power
point presentation that he would have available.
[19] Passmore went through the
same experience as Beevers regarding the non-repayment of money and I
need not detail all the occurrences
testified to by him. By
September 2008, he too was extremely worried that the first defendant
had not repaid the money and he
too found the second defendant
evasive regarding answers to his inquiries. Passmore attended a
meeting to which the second defendant
eventually came at the Wimpy
Restaurant in Fourways. Bush also attended the meeting. At this
meeting the second defendant showed
them a cheque of R1,5 million,
the proceeds from which he claimed Bush was going to be paid R1
million i.e. his first investment.
[20] Despite all the evidence
showing that Rogers arranged for the plaintiffs to visit the second
defendant for the power point
presentation, it was strangely put to
Passmore (but not to Beevers) that Passmore was expecting to go to
the office of RAET and
not to the office of the first defendant.
Passmore was adamant that he expected to go to the second defendant
at the first defendant’s
office. I refer to this issue as
strange as nothing (save the document which the defendant says was
the power point presentation)
emanated from RAET. RAET had nothing to
do with the matter and does not feature in the defences raised by the
defendants. The defendants’
version that Passmore was expecting
to visit RAET and not the first defendant is without merit and
opportunistic and indicative
of the serious lack of credibility of
the defendants’ version as put to the witnesses. However,
Passmore confirmed that the
money would be repaid into the
plaintiffs’ accounts electronically. This was not challenged.
[21] The next plaintiff who
testified was Astrup who is currently residing in the United States
of America. Astrup was in South
Africa for a visit when he heard
from Bush of the scheme of lending money to an attorney in Pretoria,
but it was Rogers who explained
the scheme to him in more detail i.e.
that monies would be deposited with an attorney in a trust account as
a loan for a short
term period of three to four months. Astrup had an
amount of R500 000.00 available and was also required to sign the
confidentiality
agreement between himself and the first defendant.
This document at pages 62 and 65 of the bundle of documents was
signed by Rogers
as a representative of the first defendant. This
evidence of Astrup was never in dispute and reinforces the fact that
Rogers represented
the two defendants in the lending scheme from time
to time. After the payment of the amount of R500 000.00 into the
account of
the first defendant Astrup received a letter dated 9
January 2008 from the first defendant acknowledging receipt of the
funds.
(I may mention that a letter acknowledging receipt of the
funds was sent to all the plaintiffs). The letter continues to state

that the funds have been allocated and that the plaintiff will be
kept posted and it ends off with the words ‘
We
thank you for your assistance
’.
The context of the letter is clear. It is the first defendant
thanking the plaintiff for his assistance to it. Astrup testified

that he expected to receive his capital and interest back into his
South African Standard Bank account held at Boksburg, the latter

which is within the area of jurisdiction of this Court. He too was
not happy with the unilateral extension of the maturity date
by a
period of two months. He too was shocked when he received a
communication suggesting that the plaintiffs should take transfer
of
property as that was something that was never entertained by him or
Rogers. Astrup stated that he was promised that the loan
would be
settled after a relatively short period of time of three to four
months whilst 3% interest compounded monthly would be
paid on the
investment. He never consented to his funds being invested into
property. He testified that there was no logic in
what was being
presented to him at that stage and he had no intention of taking
transfer of properties as that was not the reason
why he loaned
monies. The only thing about property that he knew is that the
properties were secured by the defendants to protect
the investments
which he made with the first defendant. Astrup too, rejected the
contentions of the defendants as contained in
the plea and affidavit
resisting summary judgment. The witness repeated during
cross-examination that Rogers was acting as representative
or agent
for the defendants.
[22] After most of the evidence
of the plaintiffs had been led, Astrup applied to amend his
particulars of claim. I granted the
amendment and indicated that I
would give my reasons later. These are the reasons. Astrup sought
to amend its particulars of
claim in order to insert the fact that
the agreement was entered into in Johannesburg alternatively Pretoria
and further that the
first defendant was represented by John B Rogers
rather than the second defendant in entering into the agreement. The
defendants
object to the introduction of the reference to Mr Rogers
but not to the amendment of the place where the agreement was entered
into. Regarding amendments it is said that:
‘
In
the event of an objection, an application to the court may also be
made at any stage before judgment and can accordingly be granted
at
different stages of the proceedings.
’
See generally the cases cited at
page 675 of Volume 1 of Herbstein and Van Winsen,
The
Civil Practice of the High Courts and the Supreme Court of Appeal of
South Africa
(5
th
edition). Amendments may even be allowed on appeal.
[23] Mr Du Toit (on behalf of
Astrup) submitted that the purpose of the amendment is to allow the
pleadings to be in line with
the evidence of Astrup. Mr Roos
objected and stated that Astrup gave no such evidence. I disagree.
Astrup clearly testified that
in his mind Rogers was acting as
representative or agent for the second defendant. Again the name of
the second defendant and
his company was used interchangeably.
Indeed his evidence is supported by one of the documents which the
defendants required Astrup
to sign i.e. the confidentiality
agreement, which Rogers signed in his capacity as representative for
the first defendant in the
lending scheme. Having regard to the fact
that Rogers had represented, the first defendant has been
sufficiently dealt with in
the evidence of Astrup so that it can
indeed be said that the amendment is introduced to be in line with
the evidence. Astrup is
supported by the other plaintiffs as I have
demonstrated with the analysis of the evidence of Beevers.
[24] Mr Roos also criticised the
contents of the affidavit in support of the application for amendment
as containing insufficient
information to justify a reasonable cause
– but there is nothing before me to gainsay that which is
contained in the affidavit
i.e. that Astrup made an error as a result
of communications between him and his legal team being by telephonic
and electronic
means since he was residing in the United States of
America. He met his counsel the day before the trial and had no
proper opportunity
to carefully consult. That, to my mind, is
reasonable cause sufficient to allow an amendment particularly by
virtue of the fact
that Rogers had featured prominently in the case
and was referred to extensively by both parties. The defendants
referred to a
large number of documents emanating from the said
Rogers and his role must have been clear to both the plaintiffs and
the defendants.
The defendants cross-examined extensively on the
emails that emanated from Rogers and which the defendants had
knowledge of.
[25] In
Trans-Drakensberg
Bank Ltd (Under Judicial Management) v Combined Engineering (Pty) Ltd
and Another
1967 (3) SA 632
(D) at 638 Caney J said that the primary object of
allowing an amendment is to ‘
obtain
a proper ventilation of the dispute between the parties
’.
It is well-known that the pleadings are made for the court and not
the court for the pleadings. The present approach
by courts to
amendments has been stated by Flemming DJP in
Bankorp
Ltd v Anderson-Morshead
1997 (1) SA 251
(W) at 253 as follows:
‘
…
the increased realisation
that Court Rules, procedural principles and pleadings are not there
for their own sake or for any other
reason than to advance the good
order and the administration of justice. Accordingly the stream has
turned away from regarding
a document or procedural step as a
'nullity' and has come to manage that which previously was thought to
be unworkable or even
unthinkable. I mention a few examples. Many
cases of a summons being a 'nullity' have been discarded. Conditional
claims and conditional
counterclaims are managed. Conflicting
alternative claims are often tolerated. Arguments that amendments are
to be refused only
because of delay in seeking amendment repeatedly
fail. The overall pattern is ever firmer that, also in provisional
sentence cases,
an amendment is granted if a party deems it necessary
to bring his real case before the Court. The exceptions are really
limited
once the party is
bona
fide
and
is not attempting to gain time. An amendment is refused when it is
certain that the new view is untenable and will not assist
the party
or because of prejudice to another party or to the administration of
justice which cannot be adequately averted by, for
example, standing
a case down, postponing it, reimbursing wasted costs.
’
[26] In
Four
Tower Investments (Pty) Ltd v André’s Motors
2005
(3) SA 39
(N) at 44 it was stated as follows:
‘…
decisions
in the reported cases tend to show that there has been a gradual move
away from an overly formal approach. It is a development
which is to
be welcomed if proper ventilation of the issues in a case is to be
achieved, and if justice is to be done. In line
with this approach
courts should therefore be careful not to find prejudice where none
really exists.
’
The aforegoing are, therefore,
the reasons why I allowed the amendment applied for by Astrup.
[25] The first plaintiff, Bush,
who testified last on behalf of the plaintiffs also corroborated the
evidence of Beevers and Passmore
in every material respect. He was
the person who first heard of the scheme from Rogers who advised that
monies could be paid to
an attorney who would on-lend it and get 5%
interest – 3% to the lender, 1% to the attorney and 1% to
Rogers. The attorney
would also get conveyancing fees of properties
transferred by him. Rodgers arranged a meeting with the second
defendant who gave
a power point presentation. There he was told by
the second defendant, an attorney, that the latter would be handling
the money
– he would be lending it out on the short term for
purposes of bridging finance. The security for the loans made by the
first defendant was also explained and Bush was assured that he would
receive 3% interest compounded monthly on the monies advanced
by him.
He testified that Rogers was the agent or broker for the defendants.
During the power point presentation the only matter
that was
discussed was bridging finance. Bush was induced to get involved
because he knew that the trust account of an attorney
is, as he
stated, sacrosanct and that the money could not be misused. Upon
receipt of the first letter from the first defendant
regarding funds
he noted that it set out that the money was required for bridging
finance and there was no reference to the Company
at all. The letter
states:
‘
Bridging
Finance: Transfer Piek/Louw
Lynwood
Park
’
‘
We
confirm that we will keep you covered for you interest in the amount
of 3% per month and
hereby
undertake
to pay the capital and interest to you on the date of registration of
the property into the name of the purchaser.
’
The first defendant, and not the
Company as the defendants would have it, is consequently bound to
repay the capital and the interest
to Bush. As the letter accorded
with what Bush had been told the previous day at the power point
presentation, he paid the amount
of R1,5 million into the first
defendant’s trust account.
[28] When the second opportunity
to invest arose in January 2008 Bush, together with the other
plaintiffs, paid amounts over into
the first defendant’s trust
account as per the advices given at the power point presentation and
in the letter requesting
the funds. After paying the portion of the
amount that he could invest, Bush received a letter from the first
defendant which,
after acknowledging receipt of the funds, added: ‘
We
thank you for your assistance.
’
The impression is clear i.e. that Bush loaned the money to the first
defendant and so assisted it. Although the reference
at the top of
the letter changed from the previous letterhead to refer to
‘
Investment: B J
K Property Group (Pty) Ltd
’,
Bush testified that it made no impression on him and he conducted the
business on the basis of loans to the first defendant
who, in turn,
supplied bridging finance to clients.
[29] He also testified and showed
that the first defendant, on at least one occasion, paid 1% of the 5%
interest to Rogers. On
28 July 2008 the second defendant on behalf
of the first defendant wrote to Bush: ‘
Your
interest will keep running until transfer of the property takes
place
’. The
defendants thus assured Bush that he would earn his 3% interest
regardless of the manner in which they invested the
money. This
assurance was not given on behalf of the Company but in the first
defendant’s own name.
[30] A telling part of the second
defendants conduct was his scarceness when the plaintiffs started
seeking him out in order to
enquire about the failure to repay their
investments. He failed to take their calls and failed to respond to
enquiries, whilst
fobbing them off.
[31] Bush testified that when
the payments were not forthcoming he asked the second defendant for a
meeting at the latter’s
office, which request the second
defendant refused although the second defendant then agreed to meet
at a restaurant in Fourways.
After this meeting the first defendant
repaid R50 000,00 to Bush into his bank account. Bush too was
unimpressed, or as he said,
he was horrified when he was offered
properties instead of repayment of his capital and the full interest.
He said that the allegations
made by the second defendant that he had
paid a deposit ‘
on
the purchase of a property
’
was a complete and utter fabrication by the second defendant. At
some stage the first defendant also advanced money to
Rogers and it
was taking steps against Rogers. Rogers approached Bush with an
acknowledgement of debt in favour of Bush and a draft
letter to sign.
The letter requested the second defendant to cease taking steps
against Rogers. Bush obtained legal advice and
accepted the
acknowledgement of debt and signed the letter as he was desperate for
income and this would give him an additional
income of R3 500.00 per
month.
[32] During March 2008 the first
defendant paid an amount of R117 172.60 to Bush. This was exactly a
3% return on his investment
for the period December to June. It is to
be noted that this amount which was paid to Bush was indeed paid into
his account at
Fourways, within this Court’s area of
jurisdiction. Bush further testified that Rogers was earning a
commission from the
second defendant and was acting as agent for the
second defendant. The payment of a 1% commission to Rogers was also
shown to have
been made by the first defendant.
[33] Bush also stated that the
version of the defendants, as contained in the plea and affidavit
resisting summary judgment, was
completely untrue and a fabrication.
During the cross-examination of Bush it was stated that the second
defendant explained two
ways of making investments. One was a scheme
of investing in property and the other was by supplying bridging
finance. The witness
denied this and reiterated that only bridging
finance was discussed. Significantly, this version was never put to
Beevers or Passmore,
which leads to an inevitable conclusion that the
defendants fabricated this version as the trial proceeded whilst they
realised
that the first investment by Bush was categorised by the
defendants themselves as a bridging finance deal. In addition, the
second
scheme was not an investment in property but an alleged
investment in the Company.
[34] Eventually, after the
plaintiffs formed the view that second defendant was avoiding them,
they visited their attorney to obtain
legal assistance. From the
outset the attorney wrote to the second defendant and required
information regarding the bridging finance
deals of the plaintiffs.
The second defendant replied to the inquiry but now inserted the
subject-matter as ‘
investment
in immovable property
’
instead of the ‘
bridging
finance deal
’
which Mr Warrener, the attorney of the plaintiffs, had commenced the
correspondence with. This was clearly an attempt to
stay away from
bridging finance and to lure the plaintiffs into a situation where
the discussion was about investment in immovable
property, the
defence which the defendants have now raised. Once the attorney for
the plaintiffs did not receive the documents
requested from the
defendants, a demand was sent out on 26 January 2009. The demand is
clear in its terms: according to the plaintiffs
it was recorded
that:
‘
Our
abovementioned four clients were introduced by you to an investment
scheme. You assured our clients that their money would
be deposited
into your trust account and thereafter, and at all times material
thereto, sufficiently secured to the extent that
it would be
repayable upon demand or at fixed and predetermined dates, but not
exceeding a maximum period of four months at a time.
’
This means nothing more than an
advance that must be repaid. In a letter dated 6 February 2009 the
second defendant said as follows:
‘
The
relationship between your clients, the BJK Property Group and me does
not accommodate these notions. The agreement in place
between the
parties is, inter alia, that your clients would
advance
monies to the B J K Property Group by paying same in B J Kruger Inc’s
trust account …
’
[35] Having regard also to the
plea and affidavit referred to above it is clear that there is no
real dispute that the plaintiffs
advanced monies. The only dispute
raised by the defendants is to whom the advances were made. On the
evidence of the plaintiffs,
which I accept, the advances were made to
the first defendant. See the definition of the word ‘
advance
’
in the Concise Oxford Dictionary: ‘
hand
over (payment) to (someone) as a loan before it is due
’
and also ‘
amount
of money advanced
’.
Not even the defendants contend that these advances were not
repayable. The defendants’ stance is that the plaintiffs

invested in property – a contention which I reject having
regard to the totality of the evidence. I deal further with this

aspect when I deal with the evidence of the second defendant.
[36] I have carefully observed
each of the plaintiffs while testifying and although there may have
been some answers to questions
that they did not always directly and
precisely supply, Beevers, Passmore and Bush appeared more advanced
in years and were subjected
to fairly lengthy cross-examination.
[37] Having regard to the fact
that the plaintiffs testified about occurrences three years prior to
the trial, there can be no
criticism levelled against them for not
remembering a number of smaller details precisely. There is no
reason why I should not
accept the evidence given by the plaintiffs.
S v Film Fun Holdings
(Pty) Ltd
and
Others
1977 (2) SA 377
(E) at 382H. The demeanour of the plaintiffs in the witness stand
fully complied with the remarks of Krause J in
R
v Momokela and Another
1936 OPD 23
at 24 where he said:
‘
After
all it is a common experience that the ‘demeanour’ alone
of a witness is but an unsafe guide in ascertaining the
truth,
because the nervousness of an honest witness may create a bad
impression, whereas the brazen and bold liar may easily deceive
the
observer into believing that the witness was telling the truth. In
addition to the demeanour of the witness one should be
guided by the
probability of his story, the reasonableness of his conduct, the
manner in which he emerges from the test of his
memory, the
consistency of his statements and the interest he may have in the
matter under inquiry.
’
[38] Three of the plaintiffs thus
corroborated each other regarding the agreement which they had
entered into with the first defendant
as represented by the second
defendant i.e. that they would lend money to it for utilisation in
lending transactions on the short
term whilst the first defendant
would secure the repayment of the their funds plus interest. There
was no suggestion that the witnesses
colluded to place the same
version before the court or to falsely incriminate the defendants.
Indeed, Mr Cohen, who argued the
matter on behalf of the defendants,
did not level any negative criticism against the evidence of any of
the plaintiffs.
[39] The only suggestion of
possible impropriety was made against Bush at the first hearing in
that it was suggested that the document
which he produced as being a
hard copy of the power presentation given to him by the second
defendant, had been tampered with and
that it was not a true copy of
the document which he received from the second defendant. The
insinuation of any untoward conduct
regarding the document was
unreservedly withdrawn by Mr. Cohen, who appeared for the defendants
at the resumed hearing. The evidence
of Bush that the document which
he received was the one testified to by him and contained on his
computer, can thus not be disputed,
nor did the second defendant
explain where that document could have come from. Its only source, of
course, was the second defendant.
The significance of the document is
that it contains the logo of the first defendant and there is no
reference to the Company at
all. It is a further indication that
there was no reference made to the Company or any investments into
properties envisaged as
the second defendant wished us to believe.
[40] The plaintiffs called a Mr
Du Preez, the auditor of both the first defendant and the Company, as
a witness. He testified
that none of the so-called property
investment transactions by the plaintiffs with the Company as alleged
by the defendants appeared
in the books of the Company and that there
were no transactions recorded in the trust account of the Company.
This evidence supports
the improbability of the defendants’
version that the plaintiffs invested in properties through the
Company or that the defendant
paid over money to the Company for
investment purposes. It is, in my view, a fabrication by the second
defendant.
[41] In addition, Mr Roos
extracted the following evidence from Du Preez: he advised the second
defendant that the Company could
not receive the deposits invested by
persons like the plaintiffs as it would be in contravention of FSB
Act (Financial Services
Board Act 97 of 1990); that deposits could be
received in the first defendant’s trust account and then paid
to the Company.
Since the case of
R
v Perkins
1920 AD 307
at 310 it has been trite that, in civil proceedings, a party cannot
object to hearsay answers which it has elicited under
cross-examination.
[42] Firstly, this is a very good
reason why the second defendant would not have disclosed the receipt
by the Company of the deposits
for investment purposes. It would be
illegal to receive deposits or at least, he was advised that to do so
would be a contravention
of the Financial Advisory and Intermediary
Services Act 37 of 2002 (FAIS). Secondly, and not surprisingly, the
second defendant
contradicted this evidence of Mr Du Preez without
his version being put to Du Preez. This telling piece of evidence
which explains
why a reference to the Company would have been avoided
rather than disclosed, was, as was argued by Mr Cloete on behalf of
the
plaintiffs, dropped like a hot potato when it was elicited. It is
another probability showing why the second defendant would not
have
advised the plaintiffs of the involvement of the Company as a
contracting party. On the face of it, the second defendant was
acting
in contravention of FAIS and, as an attorney, should have known so by
just glancing at FAIS. He would hardly have advertised
this
contravention.
[43] The version of the
defendants has been referred to throughout this judgment and I need
not repeat it in detail. It essentially
was that the plaintiffs
contracted with the Company and not with the first defendant. The
second defendant testified that this
was made clear to the plaintiffs
at the power point presentation.
[44] During the first portion of
the trial it was put to the plaintiffs that the document used at the
power point presentation was
not the document which was identified by
them and which contained the first defendant’s logo only, but
that a different document,
contained in the bundle of documents, was
used. The latter document (the second document) contained the logo of
RAET. When the
trial resumed, however, it became apparent that the
defendants made further discovery of an email to which it was alleged
that
an attachment, now produced a few days before the resumed
hearing (more than two years later), was indeed the correct version
of
the power point presentation. No explanation was offered of what
is to be made of the second document which was now abandoned but

remained a document which was put to the plaintiffs as being the
correct version of the power point presentation.
[45] The second defendant
conveniently changed his version regarding the power point
presentation to a third document, failing to
explain how this came
about and ignoring the fact that much emphasis was placed on the
second document when the evidence of the
plaintiffs was challenged
during cross-examination. The second defendant will have me believe
that he can produce documents as
if it is a deck of cards, pick any
document or card that suits him and I am to believe that that is the
correct document or card.
The wish of the second defendant is rather
fanciful and strengthens my view that he is a wholly unreliable and
untrustworthy witness
who fabricated evidence to suit his proposes as
the trial progressed.
[46] It was put to Beevers that
the first document was not a true copy of the power point
presentation. The reason is obvious, the
document contains the logo
of the first defendant only. The second document which it was said is
the correct version, contains
the logo of RAET only. Despite the
clear assertion to Beevers that the second document was the only
document ever to exist, a new
version containing both the logo of the
first defendant and RAET, was suddenly produced at the resumed
hearing. The evidence of
Beevers was also that he would never have
put money into a scheme if RAET had an interest in it as he has a
very negative perception
of Rogers as a businessman.
[47] It is also significant that
not one of the three documents refer to the Company as an interested
party. Having found the second
defendant to be inventive in his
evidence, it leaves me no doubt that the document produced by Bush as
being the hard copy of the
power point presentation supplied to him,
is indeed the correct version. It, like the other documents, supports
the evidence of
the plaintiffs; it refers to an investment
opportunity; it refers to the involvement of the first defendant and
there is no reference
whatsoever to the Company. It records as
follows on page 3:
‘
What
you ear, when and how
All
investments are based on specific opportunities
You receive 3% per month
compound on your investment
In order to participate in
each opportunity you will be given a summary of the deal which
encompasses all the documents described
in the previous slide
Basically we only advance to
the borrower up to 50% of the equity in the property in question
Your
investment is protected because the borrower actually completes a
formal agreement of sale but is given the opportunity to
cancel the
sale upon payment of the loan amount plus a cancellation fee from
which you receive your initial investment back plus
interest
Each
opportunity has a specific duration which is typically 4 months but
may vary
’
The important issue is that the first power point document contains
only the logo of the first defendant.
[48] This does not in anyway
suggest that the plaintiffs would have the opportunity to rather take
transfer of property as the second
defendant testified, which I found
to be highly improbable for persons who were seeking short term
investment opportunities. During
his evidence the second defendant
(albeit with some initial reluctance) agreed that the idea behind the
scheme was indeed a short
term investment for investors to earn a
high return and receive their money back plus interest (this is quite
opposite to the extensive
plea regarding investment in property). The
other strategies, such as the acknowledgment of debts obtained from
the persons who
were in need of funds and the signing of agreements
of sale of their properties, were purely back-up procedures which,
should the
borrowers fail to repay the monies lent to them, would be
utilised to secure repayment. Although these procedures were
partially
set in place by the defendants, I find as a fact, that it
was not disclosed to the plaintiffs as being the nature of their
investments.
In addition, the second defendant’s evidence could
not show how these alleged agreements between the plaintiffs and the
Company
came into existence. He was at a loss to explain the terms of
the agreements and continuously relied on the power point
presentation
which was held prior to any agreements being entered
into. The second defendant had to admit that some of the so-called
terms of
the agreement, as alleged by him, were not correct but were
also never implemented. The non-implementation of these terms, in my

view, supports the plaintiffs that these terms were never discussed,
negotiated or agreed upon. It appeared that the second defendant
and
the first defendant pleaded terms which, on the evidence of the
second defendant, were not terms between the parties at all.
Such
terms, as pleaded would accordingly be false.
[49] The care which Mr Roos took
when cross examining the plaintiffs appear from the following
paragraph as put to Mr Beevers in
cross examination:
‘
What
is envisaged in this first paragraph Mr Beevers is an investment into
a scheme which in turn will invest in certain deals and
repay after
four months or in four months and the money could then be reinvested
through the scheme into other deals if you chose
to do so. That is
all I am putting to you. That is what the words say.
’
Nothing is mentioned of the
Company.
[50] The probabilities are
further strengthened in the plaintiffs favour by the confidentiality
agreement which the second defendant
required them to sign. He
required of each of the plaintiffs to sign a document called an
‘Agreement of Confidentiality’
between the plaintiffs and
the first defendant. The document contains the first defendant’s
logo. There is no reference to
the Company in it and one would have
thought that it, as the investing entity, would require protection
and not the first defendant
who only acted as conduit for the funds
and as an attorney. The document belies the defendant’s version
that the Company
was the party who contracted with the plaintiffs.
Although counsel for the defendants cross-examined Beevers
extensively in an
attempt to show that the confidentiality agreement
also applied to other entities within the BJK Group (as opposed to
the Company),
the second defendant did not testify that the
confidentiality agreement is anything another than what is purports
to be i.e. an
agreement between the first defendant and each of the
respective plaintiffs. One is at a loss why time was spent in
cross-examination
regarding this issue.
[51] After the plaintiffs
advanced funds, a summary of investments was sent to each plaintiff.
It is a summary supplied by the first
defendant on its letterhead,
containing the first defendant’s particulars, reflecting the
advances and interest to be earned
as described by each plaintiff. It
refers to the different plaintiffs as ‘
Investor
’
and sets out particulars of an ‘
Investment
Account
’. There
is no reference to the Company at all and it is clear that the
investment was made with the first defendant. Although
it was put to
Beevers that the second defendant would testify that Rogers generated
the document without authority, he never testified.
Despite this,
Rogers advised Beevers that the second defendant had found some
calculation error in the document and that the second
defendant would
send a new corrected document. Such new document was indeed sent to
Beevers some time later. The dishonest attempt
by the defendants when
cross-examining Beevers by suggesting that the documents were sent
without authority, becomes clear. I was
to the avoid the clear
impression created by the documents that it emanated from the first
defendant and set out the investors
position
vis-a-vis
the first defendant with no reference to a Company. They forgot that
a second, corrected document was sent. The evidence that such
a
second document was sent is undisputed. The attempt to avoid the
document must fail.
[52] In a letter (email) dated 28
July 2008 signed by the second defendant on behalf of the first
defendant, it is said:
‘
The
instruction from John indeed came through not to reinvest the moneys
and we will immediately pay the money over to you as soon
as the
client pays over the monies into our trust account. This
unfortunately has not happened yet and we are in the process of

selling the properties to recover our money. Your interest will keep
on running until transfer of the properties takes place. I
will
immediately advise as soon as the properties in question has been
successfully sold and thereafter transferred.
’
It is clear that the party (‘
we
’)
who will pay over the money is the first defendant. The entity
receiving money from the borrower was the first defendant,
not the
Company. The entity (‘
we
’)
who was selling the property was the first defendant in order to
recover the money of the first defendant (’
our
money
’). Again
the alleged investment by or of the Company is a fiction. I have
referred to a few documents, but there are a large
number of them
that support the involvement of the first defendant as the receiver
of the funds from the plaintiff in order to
on-lend it to third
parties.
[53] A blatant untruth contained
in the defendant’s pleadings and affidavit resisting summary
judgment is the following: the
defendants pleaded and alleged that
all monies were paid to the first defendant as conduit; that the
first defendant held the monies
until the Company called for it when
the first defendant would
pay out such sums to the company
for it to invest. It was pleaded that
‘…the
full amount received by the first defendant from the first plaintiff
was paid out to the BJK Property Group in
terms of the agreement
’
and ‘
The
defendants plead that the first defendant paid the amounts received
from the first plaintiff to the BJK Property Group in terms
of the
agreement pleaded above…
’
Similar allegations were made regarding each plaintiff. It is common
cause that no funds were ever paid out to the Company.
The pleading
is untrue and casts doubt as to the existence of the agreement as
alleged by the defendants. The version that the
Company was the
contracting party is a fabrication by the defendants.
[54] The second defendant
testified that he advised the plaintiffs that they would not be
involved in ‘normal bridging finance’
but that they will
be investing in immovable property. I have already stated that
persons looking for short term investments would
have taken flight
from the power point presentation at that time had it been so
explained. He stressed that the role of the Company
as recipient of
the funds and investor in property was elaborately explained to the
plaintiffs. I have referred to the fact that
the documents, whether
the first, second or third power point representation, made no
reference to the involvement of the Company
at all. The second
defendant testified that a set of documents referred to as the ‘PIEK’
documents were at hand during
the power point presentation and the
process of investing in property was explained by referring to the
PIEK documents as an example.
Although reference to a bundle of
documents was made to Beevers, the fact the PIEK documents were
produced during the power point
presentation was not put to either
Bush or Astrup during their cross-examination. These documents relate
to bridging finance and
not to investment in property.
[55] The second defendant, the
only witness who testified on behalf of the defendants, failed to
impress as an honest and reliable
witness. He failed to answer
questions directly and not only does his version fly in the face of
probabilities that exist on the
undisputed facts, he had to be
reminded on a number of occasions that he had to answer the questions
directly and not to digress
into irrelevancies. Simple questions were
not answered.
[56] I have in some instances
referred to some of the deficiencies in the evidence of the second
defendant when I referred to the
evidence of the plaintiffs. I do not
repeat them but supply further reasons for coming to the conclusion
that the second defendant
was a wholly unreliable and untrustworthy
witness.
[57] There is also his failure to
call Rogers as a witness, who was available to back up his version.
In the circumstances, it can
safely be assumed that this failure is a
result of the fact that Rogers would not have supported the version
given by the second
defendant. Rogers acted as canvasser to attract
participation in the scheme and acted also on behalf of the
defendants in doing
so. He was actively assisting the second
defendant. He wrote letters, albeit to on behalf of RAET, but these
letters confirm his
close involvement with the other defendants and
the investment scheme.
[58] There are further facts from
which probabilities are apparent or which indicate that the version
supplied by the second defendant
must be rejected. Rogers represented
RAET as well as the second defendant. It is clear that the defendants
failed to distinguish
between the first and second defendants, RAET
and others but that the defendants are now raising the different
entities in order
to attempt to dilinear their different functions.
In that sense, Rogers as interested person in RAET, assisted and
acted and represented
the defendants in conducting commercial deals
with the plaintiffs. Indeed Mr Cohen, during argument, conceded that
the defendants
do not take issue with what was said and done by
Rogers.
[59] The second defendant would
have the court believe that he explained the investment into property
fully to the plaintiffs. Had
he done so, and referred to the role of
the Company, the plaintiffs, who were interested in short term
investments, would have
realised that, once a deal was put together,
they would have absolutely no security for their funds whatsoever.
The only beneficiaries
(had the deal with the Company been
explained), would have been the borrower and, in the event of
default, the Company of which
the second defendant was the sole
director and shareholder. The plaintiffs would have a right of action
against the Company. They
would have no security for the return of
their funds and interest. I find it highly improbable that the
plaintiffs would have invested
in such a speculative and risky
investment, had it been explained to them. Indeed, the version put by
Mr Roos to Beevers i.e. that
he would be investing in property, was
not true. The plaintiffs would not have invested in property, even on
the defendants’
version which was that the plaintiffs invested
in the Company, the latter which intended to do business deals
relating to property.
[60] According to the second
defendant, he explained to the plaintiffs that, should the borrowers
default, they would become involved
with the Company and partake in
the management thereof as far as the acquisition of the properties
were concerned. The version
is belied by the fact that the plaintiffs
were never invited to participate in the management of the affairs of
the Company when
the borrowers did default. Nor did they have
anything in writing that would entitle them to participate in the
management of the
Company of which the second defendant was the sole
director and shareholder. If indeed the plaintiffs had been told of
this right,
it is inexplicable why the second defendant did not
invite them to participate in the management of the affairs of the
Company
when the borrowers defaulted. It too, is indicative that the
plaintiffs were never told of this so-called right.
[61] What is really astounding is
the evidence of the second defendant that, despite the detailed
business agreement entered into
between the plaintiffs and the
Company, which would result in the Company obtaining a 20% interest
and the plaintiffs 80% interest
in the properties, should the Company
acquire such properties, the second defendant offered the entire
property in a 100% share
to the plaintiffs, contrary to the alleged
agreement. This would obviously be to the detriment of the Company
and its shareholder.
Again, as in so many instances, the actions of
the second defendant were contrary to what the alleged agreement was.
As actions
speak louder than words, I am of the view, that this
conduct shows that the rather elaborate agreement alleged by the
second defendant
to have existed between the plaintiffs and the
Company, never existed. The second defendant’s actions were
contrary to such
alleged agreement and in my view, refute the
existence of any agreement between the plaintiffs and the Company.
The external manifestation
of the agreement, which support the
plaintiffs’ version, is destructive if the defendants’
version. The defendants’
counsel, correctly in my view,
conceded that:
‘
On
a conspectus of the evidence, the primary intention behind the
plaintiffs depositing money into the trust account of Inc was
to get
their money back within a short period of time after having made
money by interest being paid to them at 3% per month for
a period of
somewhere between four to five months.
’
Such intention was naturally
based upon what the second defendant had told them at the power point
presentation.
[62] Once it became clear that
the first defendant was not going to repay the monies advanced by the
plaintiffs, correspondence
was exchanged. It is significant that the
so-called involvement of the Company is not initially disclosed. If
regard is had to
the various letters written by the second defendant
on behalf of the first defendant, the non-existent role of the
Company becomes
more apparent. An example is the letter written by
the defendants on 31 March 2008 to Beevers. The letter is on the
first defendant’s
letterhead and is addressed to Beevers. It
requires the deposit which is to be invested, to be paid to the first
defendant. It
states: ‘
We
thank you for your assistance herein.
’
There is no reference that the letter is written on behalf of the
Company. It is clear that the first defendant acted as
principal. As
was the case of the letter that emanated from the first defendant,
the defendants continued to give the impression
that the first
defendant was the principal. As an example, in a letter of 8 July
2008, the second defendant, on a letterhead of
the first defendant,
records as follows:
‘
I
trust that you are well. I have to report on two matters namely
VAN011 and JOL003. In both instances the transaction was not
cancelled (i.e. the deposit paid was not refunded) and we therefore
have to proceed to sell the properties. In the first instance
the due
date for payment was 30
th
June 2008 and we have already instructed agents and auctioneers to
proceed with the sale. There is a good possibility that funds
will be
received from a major business transaction in the first week of
August and obviously if the full amount is paid, only then
the sales
process will stop.
’
Again, he was not writing on
behalf of the Company but on behalf of the first defendant. So he
also wrote on 28 July 2008:
‘
The
instruction from John indeed came through not to re-invest the moneys
and we will immediately pay the money over to you as soon
as the
client pays over the monies into our trust account. This
unfortunately has not happened yet and we are in the process of

selling the properties to recover our money. Your interest will keep
on running until transfer of the properties takes place. I
will
immediately advise as soon as the properties in question has been
successfully sold and thereafter transferred.
’
A large number of letters in a
similar vein exists. They refute any involvement of the Company.
There is a notable absence of documents
which one would have expected
to find at a company which was receiving funds and paying them out.
[63] The so-called full
disclosure made by the second defendant during the power point
presentation, also lacks credibility as a
result of his
non-compliance with what he alleged he would do in cases where
investments in property by the Company would occur.
The second
defendant testified that he fully complied with his undertakings, in
particular by adhering to the process as explained
by him to the
plaintiffs: that is to ensure that the following documents are all in
place before an investment in property would
be made:
‘
Process
from an investment point of view
Section 20/OTP
Agreement
Special power of attorney
Cancellation agreement
ID/FICA
Rates and taxes
Cancellation figures
Solvency affidavit
Formal sworn valuation
Deed search
Acknowledgment of debt
Statement of assets and
liabilities
Income and expenses
Sect. 20 Recordal
Compliance
with all relevant legislation.
’
It is common cause however, that
the defendants failed to obtain or complete a large number of the
documents in each transaction.
I draw the inference that the second
defendant never undertook or explained to the plaintiffs that he
would obtain such documents
with the result that there was no need to
comply with his so-called obligations as it was never conveyed to the
plaintiffs that
there would be such compliance.
[64] In all the circumstances I
find that, whatever the manner in which the second defendant
structured the scheme which he and
Rodgers pursued, the plaintiffs
were advised that they would lend money to the first defendant, there
being no difference between
it and the second defendant attorney, as
far as they were concerned and the defendants would then lend the
money to third parties
by way of bridging finance. The defendants
further undertook that the monies lent by the plaintiffs would be
repaid with compound
interest of 3% per month within a relatively
short period of time of approximately 4 months by the first
defendant.
[65] The first defendant failed
to repay the amounts lent to it by the plaintiffs and the plaintiffs
are entitled to judgment in
their favour. The parties agreed that the
costs are to follow the event.
[66] The defendants pleaded that
this Court has no jurisdiction to hear this matter as the agreements
contended for by the plaintiffs
had to be performed in Pretoria
through the bank account of the first defendant at Pretoria. This
matter was argued before me
at the outset of the hearing – not
as a special plea but on the basis that there should be a separation
of the issue of jurisdiction
from the remainder of the issues in
terms of the provisions of Rule 33(4) of the Uniform Rules. The
ruling given by me gave the
reasons why the instruction for payment
in Pretoria is irrelevant to the fact that the payment had to be
effected in the bank accounts
within this Court’s jurisdiction.
I do not repeat my judgment refusing the separation of the issue
which was given at the
outset of the hearing. The evidence of
Beevers regarding the payment in Johannesburg was not challenged.
Passmore testified that
the plaintiffs’ money was to be repaid
electronically into the plaintiffs’ accounts. This was not
challenged. The evidence
of the two other plaintiffs who testified
that the repayment had to occur in Johannesburg was similarly left
unchallenged. There
is consequently no reason not to accept that the
repayment would have occurred within this Court’s area of
jurisdiction.
Indeed payments which the first defendant did make to
Bush were made into his account in Johannesburg. It has not been
suggested
by the defendants that payment to the plaintiffs would have
had to be made at any other place. The fact that the defendants were

required to make payment into the accounts which are within the
court’s area of jurisdiction was said to be irrelevant as,
it
was argued, payment occurs when the instruction for payment is given
by the defendants in Pretoria. For this proposition Mr
Roos relied
on
Salmon v Moni’s
Wineries Ltd
1932 CPD
127
and
Blumberg v
Sauer
1944 CPD 74
as
well as
Buys v Roodt
(nou Otto)
2000 (1) SA 535
(O). However, all three these cases dealt with
cheques and the place of payment being where the cheque was payable.
See the
Buys
matter
supra
at 540I. This is to be distinguished from payment “
into
an account
” as
testified by the plaintiffs. The cases based on cheques are
distinguishable from the present matter where payment into
bank
accounts within the court’s area of jurisdiction, was required.
See
Coloured
Development Corporation Ltd v Sahabodien
1981 (1) SA 868
(C);
Venter
v Venter
1949 (1) SA
768
(A);
Vereins-Und
Westbank AG v Veren Investments and Others
2002 (4) SA 421
(SCA).
[67] I agree with the argument
of Mr Du Toit that an act of effecting electronic transfer in
Pretoria does not in itself constitute
payment. It is the receipt of
money in the bank account of the recipient that would constitute
payment. Mr Roos referred to Pollak
on
Jurisdiction
at pages
64 to 65 and in particular to the matter of
Veneta
Mineraria Spa v Carolina Collieries
(Pty) Ltd
1985 (3) SA 633
(D) where it was said at 643B-D:
‘…
it
is well established that for breach of contract a plaintiff
may
sue in the Court of the place where the contract was entered into,
the
forum
contractus
,
which in the wide sense is understood to include the place where the
contract is to be performed. … In
Frank
Wright (Pty) Ltd v Corticas "BCM" Ltd at 463 it is pointed
out that
,
when the place of performance is relied upon for jurisdiction,
“
the
breach in respect of which the defendant is sued must be a breach of
a duty which he was bound to perform within the jurisdiction"
…
’
The passage supports the case for
the plaintiffs. I am of the view that payment by electronic transfer
can only occur when the party
entitled to receive such payment
receives it in his bank account. If the duty is to pay over so that
the recipient can have access
to the funds in his own account, a
failure to do so is a failure which occurs in Johannesburg i.e.
within the area of jurisdiction
of this Court
.
There is consequently no merit in the plea. Mr Cohen did not persist
with the argument regarding a lack of this court’s

jurisdiction, and the plea falls to be dismissed.
[68] In all the circumstances I
grant the judgment in favour of:
68.1 The first plaintiff against
the first and second defendants jointly and severally for:
68.1.1 Payment of the sum of R1
902 345.30;
68.1.2 Payment of the interest on
the sum of R1 500 000.00 at the rate of 3% per month compounded
monthly from 29 November 2007
to 10 January 2008;
68.1.3 Payment of interest on the
sum of R2 150 000.00 at the rate of 3% per month compounded monthly
from 11 January 2008 to 17
March 2008;
68.1.4 Payment of interest on the
sum of R2 032 827.40 at the rate of 3% per month compounded monthly
from 18 March 2008 to 24 June
2008;
68.1.5 Payment of interest on the
sum of R1 952 345.21 at the rate of 3% per month compounded monthly
from 25 June 2008 to 1 December
2008;
68.1.6 Payment of interest on the
sum of R1 902 345.21 at the rate of 3% per month compounded monthly
from 2 December 2008 to date
of final payment.
68.2 The second plaintiff against
the first and second defendants jointly and severally for:
68.2.1 Payment of the sum of R1
400 000.00;
68.2.2 Payment of the interest on
the sum of R1 000 000.00 at the rate of 3% per month compounded
monthly from 11 January 2008 to
date of final payment;
68.2.3 Payment of interest on the
sum of R400 000.00 at the rate of 3% per month compounded monthly
from 14 April 2008 to date of
final payment.
68.3 The third plaintiff against
the first and second defendants jointly and severally for:
68.3.1 Payment of the sum of R350
000.00;
68.3.2 Payment of the interest on
the sum of R350 000.00 at the rate of 3% per month compounded monthly
from 11 January 2008 to
date of final payment.
68.4 The fourth plaintiff against
the first and second defendants jointly and severally for:
68.4.1 Payment of the sum of R940
000.00;
68.4.2 Payment of the interest on
the sum of R500 000.00 at the rate of 3% per month compounded monthly
from 11 January 2008 to
date of final payment;
68.3.3 Payment of interest on the
sum of R440 000.00 at the rate of 3% per month compound monthly from
31 May 2008 to date of final
payment.
68.5 In addition, the first and
second defendants are ordered to pay the costs of all four the
plaintiffs. The costs are to include
the costs of two counsel where
two counsel were employed, one of which is a senior counsel.
[69] I request the Registrar of
this Court to forward a copy of all documents that served before this
court and this judgment, to
the Law Society of the Northern Provinces
as well as the Financial Services Board.
WEPENER
J
JUDGE OF THE HIGH COURT
COUNSEL
FOR THE PLAINTIFF:
Adv
Stephan du Toit SC
Adv
H F Oosthuizen
PLAINTIFF’S
ATTORNEYS:
Alan
E Warrener Attorneys
COUNSEL FOR THE
DEFENDANT:
Adv
J F Roos SC
Adv SS Cohen
DEFENDENT’S
ATTORNEYS:
Larry
Marks Attorneys
DATES OF HEARING:
16 - 22
November 2010
COUNSEL
FOR THE PLAINTIFF:
Adv
Deon Cloete
PLAINTIFF’S
ATTORNEYS:
Olivier
& Malan Attorneys
COUNSEL FOR THE
DEFENDANT:
Adv
S S Cohen
DEFENDENT’S
ATTORNEYS:
Michael
Salomon & Associates
DATES
OF HEARING:
28
- 31 January 2013
DATE
OF JUDGMENT:
8
February 2013