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[2013] ZAGPJHC 401
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Executive Officer of the Financial Services Board (the FSB) v Cadac Pension Fund; InRe: Executive Officer of the Financial Services Board v Cadac Pension Fund and Others (2010/50596) [2013] ZAGPJHC 401 (13 December 2013)
REPUBLIC
OF SOUTH AFRICA
SOUTH
GAUTENG HIGH COURT, JOHANNESBURG
CASE
NO. 2010/50596
DATE:
13 DECEMBER 2013
In
the application of:-
EXECUTIVE
OFFICER OF THE FINANCIAL
SERVICES
BOARD (“the
FSB”)
...........................................................................................
Applicant
And
THE
CADAC PENSION
FUND
......................................................................................
Respondent
And
In
the urgent counter-application of:-
EXECUTIVE
OFFICER OF THE FINANCIAL SERVICES
BOARD
.....................................
Applicant
And
CADAC
PENSION
FUND
........................................................................................
First
Respondent
ANTONY
LOUIS MOSTERT N.O. (“the
curator”)
...........................................
Second
Respondent
IZAK
VAN
ROOIJEN
..............................................................................................
Third
Respondent
PAUL
HARMSE
...................................................................................................
Fourth
Respondent
PETER
GILBERT
....................................................................................................
Fifth
Respondent
SHAUNINE
BEKKER
............................................................................................
Sixth
Respondent
SIMON
JOHN
NASH
.......................................................................................
Seventh
Respondent
ELENA
FORNO-NASH
.......................................................................................
Eighth
Respondent
CHRISTO
ENGELBRECHT
...................................................................................
Nine
Respondent
KERRY
PROCTOR
..............................................................................................
Tenth
Respondent
JUDGMENT
NICHOLLS,
J
Introduction
1.
On 21 December 2010 pursuant to an ex parte
application brought by the Financial Services Board (“FSB”),
the Cadac Pension
Fund (“CPF”) was placed under
provisional curatorship. In terms of the provisional order Anthony
Louis Mostert (“Mostert”)
was appointed as the
provisional curator.
2.
The applicant, the FSB, seeks final
confirmation of the appointment of Mostert as curator. The first
respondent is the CPF, purportedly
represented herein by new trustees
who were appointed after the fund was placed under provisional
curatorship and after the original
trustees resigned. The second
respondent is Mostert in his capacity as provisional curator. The
sixth to eigth respondents were
trustees of CPF at the time CPF was
placed under provisional curatorship. They subsequently resigned. The
third to fifth and ninth
to tenth respondents were trustees of CPF at
various times after the fund was placed under provisional curatorship
and were deponents
to various affidavits on behalf of CPF.
3.
The need for curatorship has been conceded
and the real issue in dispute is the suitability of Mostert as
curator. The CPF has brought
a counter application in which it seeks
a variation of the provisional order, the appointment of alternative
curators, and an order
that the costs incurred in opposing the
appointment of Mostert be paid by the CPF and ultimately the FSB. In
addition I am
called upon to decide various interlocutory
applications, namely an application for the joinder of Mostert in his
personal capacity;
an application by Mostert as provisional curator
to strike out certain portions of the counter application and an
application by
one Machin for the removal of Mostert as
curator. The latter application was withdrawn at the eleventh
hour and all
that remains is the question of costs in respect of that
application. I am further called upon to decide the reserved
costs
of an urgent application on 15 February 2011 brought by Mostert
as provisional liquidator.
4.
On the face of it, this is a relatively
simple application which hardly warrants the 7000 – 8000 page
record and the days
spent in acrimonious argument. However the full
import of the matter must be viewed in context of the intense
animosity between
the two protagonists, Simon Nash (“Nash”)
and Mostert. Nash, the seventh respondent, was the chairman and
director
of the principal employer, Cadac Pty Ltd (“Cadac”)
and a trustee and chairperson of CPF with a casting vote at the time
it was placed under curatorship. His wife, Elena Forno-Nash, is the
eighth respondent and was a director of Cadac and a trustee
of CPF at
the time.
5.
This matter concerns the last of seven
pension funds placed under curatorship pursuant to the so-called
“Ghavalas transactions”,
an alleged pension fund surplus
stripping scheme devised by Peter Ghavalas. In essence this was a
scheme whereby a pension fund
would be divested of most of its active
members in favour of another pension fund, thereby leaving a specific
fund with large surplus
to be accessed by the principal employer and
other third parties who were not entitled thereto. This scheme was
described by Nash
in a radio interview in 2011 as “
a
mechanism where the pension fund surplus was accessible to a company
on a quick basis rather than a slow basis…”,
the
slow basis being the pension fund contribution holidays.
6.
In all of the other six pension funds
Mostert has been appointed as curator and has achieved, so we are
told by the applicant, a
considerable measure of success. His
competence is disputed by the respondents. What cannot be disputed is
Mostert’s tenacity
in delving into the Ghavalas transactions.
This has led to Nash accusing Mostert of having a personal
vendetta against him
and acting in cahoots with the FSB to destroy
him. The relationship between Nash and Mostert goes back
several years and
is inextricably bound to the fate of several other
pension funds.
Background and
Chronology
7.
The Sable Pension Fund (“Sable”)
is one of the seven pension funds implicated in the Ghavalas
transactions. Mostert
is also the curator of Sable. Nash was a
trustee of Sable until it was placed under curatorship. The
fundamental opposition to
Mostert’s appointment is “an
irresoluble conflict” between the interests of Sable and those
of CPF. The objection
is that Nash stands conflicted as a result of
an alleged claim that Sable has against CPF. Mostert and the FSB aver
that the issue
of a claim by sable is merely a red herring.
8.
Since 1994 various transfers in terms of
section 14 of the Pensions Fund Act 24 of 1956 (“PF Act”),
have taken place
between the implicated funds. Section 14 governs
amalgamations and transfers between funds and other entities, and
regulates the
transfer of assets and liabilities. To be of any force
and effect, any transfer must be approved by the FSB. This is
evidenced
by a certificate issued in terms of section 14. The
transactions most relevant to this matter are the following:
8.1.1
On 1 July 1994 Sable transferred 212
members to the Sukhulu Pension Fund. A section 14 certificate
was issued in respect of
the transfer on 13 April 1995.
8.1.2
Another transfer of 158 members from Sable
to CPF took place on 1 April 1995. On 10 November 1995 a
certificate was issued
approving a transfer in the amount of
R20804708 retrospectively from 1 April 1995.The transferring members’
liability was
valued at R10 763 842.
8.1.3
A further transfer of 4 members and 146
pensioners were transferred from Sable to the Lifecare Group Pension
Fund together with
assets of approximately R61 million. The members
and pensioners were not ultimately transferred although a section 14
certificate
was issued on 31 October 1995.
8.1.4
Only R36 million was paid over to Lifecare
and approximately R25 million was paid to Old Mutual to outsource the
pensions.
The amount in respect of the 4 members was retained
in Sable. The pensioners did not receive any portion of the R36
million
surplus.
8.1.5
The 4 members subsequently joined CPF
together with the other 148 members. There was no section 14
transfer submitted when
these members changed funds.
9.
At the time of the section 14 Sable/CPF
transfer Nash was the principal employer of both funds and acted as
trustee of both funds.
Nash became a member of Sable shortly before
the transfers took place and ended up a member of CPF without a
section 14 transfer
having been completed. Pursuant to the approved
transfer, the amount of R28 332 740 was transferred from
Sable to CPF.
10.
The FSB and Mostert maintain that the
transfers from Sable to CPF were fraudulently devised as part of a
scheme to strip Sable of
its surplus and that the section 14
certificates were procured under false pretences. There are two
cases pending in this
division to set aside the section 14
certificates in other pension funds which were part of the Ghavalas
transactions.
11.
Nash and his company Midmacor Industries
Limited (“Midmacor”) have been criminally accused for
their alleged involvement
in the fraudulent surplus scheme, as have
approximately 25 other individuals. Six have pleaded guilty,
including Ghavalas. Nash’s
trial is currently underway
and Ghavalas is a state witness.
12.
Another of the key role players in the
unfolding saga is June Marks (“Marks”), the erstwhile
attorney of Simon Nash
and CPF until she withdrew as attorney of
record for both on 3 October 2010. She was instrumental in many of
the earlier transactions
and submitted fees in excess of R12 million
to CPF for the period from October 2005 to September 2010.
13.
Mostert, as provisional curator of CPF, has
successfully obtained judgment against Marks for these fees which
were paid to her on
the authority of Nash for his criminal and civil
litigation. Marks has unsuccessfully appealed the judgment on her
fees as far
as the Constitutional Court. Marks changed ‘sides’
whenever it suited her interests to do so. One of the few issues
not
in dispute in this matter is the unreliability of Marks.
14.
Vivian Cohen (“Cohen”), is the
actuary who was appointed by the CPF in May 2006. He stated in a
report dated 17 April
2011 that he previously provided an actuarial
valuation for CPF in February 2003 wherein, at the request of Marks,
provision was
made for a legal claim against the surplus of CPF. He
provided nil surplus scheme documentation on the assumption that the
surplus
in CPF would not be in the fund as a result of the legal
claim, following the advice of Marks. However, during investigations
which
he conducted in April and May 2007, documents became available
to him for the first time showing that other transfers from Sable
had
taken place just before and just after the Sable transfer to CPF in
1995 for no apparent reason other than to enable the removal
of some
R36 million surplus assets from Sable.
15.
According to Cohen, on the information now
available to him, the purpose and effect of these transfers was to
separate the members
and pensioners from a large portion of the
surplus that was identified by the 1995 valuation report. Having
considered the various
transfers from an actuarial perspective he
concluded that they were not isolated transfers but part of a scheme
devised to remove
all members and pensioners from Sable with the
ultimate objective to remove the surplus.
16.
On 22 September 2010 criminal
investigations commenced into Nash’s activities. Thereafter
events moved rapidly.
16.1
On the same day a resolution was passed by three of the four trustees
of CPF to make payment of R2 million into the trust account
of
Werksmans Attorneys (“Werksmans”) as a “retainer
fee” to oppose the FSB’s inspection into the
affairs of
CPF.
16.2
On 19 October 2010 an inspector appointed by the FSB commenced his
investigations into the R10 -12 million legal fees paid
to Marks by
CPF.
16.3
On 29 October 2010 a mandate was given to Werksmans by the CPF board
(which at that time included Nash and his wife) to obstruct
the FSB’s
investigation into the CPF.
18.4
On 5 November 2010 a resolution was taken by CPF to transfer an
amount R2.5 million to Leonard Cowan of Cowan Harper Attorneys,
who
represents Nash in his criminal trial.
18.5
As from 29 November 2010 Werksmans represented Nash and the trustees
of CPF.
17.
On 15 December 2010 Marks had a change of
heart (one of several) and approached the FSB accompanied by Advocate
Louw purportedly
to make a full and frank disclosure with regard to
the fraud taking place at CPF. This appears to have been
motivated by
a belief that by providing the FSB with information, she
could avoid prosecution in respect of her R12 million fees. When
it became apparent in April 2011 that the FSB inspectorate was
continuing with their investigation and issuing subpoenas, she had
another change of heart and told Nash that her co-operation with the
FSB was a set-up to expose the FSB to the advantage of Nash.
18.
After consultations with Marks in December
2010, the FSB launched the present application on an ex parte basis
in terms of section
5(1) of Financial Institutions (Protection of
Funds) Act 28 of 2001 (“FI Act”). It was brought by Dube
Phineas Tshidi,
(“Tshidi”) in his capacity as the
executive officer of the FSB and Registrar of Pensions. The following
day, 21 December
2010, the provisional order (“the order”)
was granted by this court.
19.
In late December 2010 Nash brought an
urgent application in the name of Cadac Pty Ltd but failed to pursue
it. Approximately
a month later on 21 January 2011 Nash and his
wife resigned as trustees and new trustees of CPF were elected.
Simultaneously
Weksmans received a mandate to act for the new
trustees in opposition of the curatorship.
20.
After the application was launched the
following occurred:
22.1On
8 February 2011 Mostert as provisional curator brought an urgent
application against the former and current trustees claiming
return
of the monies held in trust by Werksmans on behalf of the CPF and
seeking to interdict them from acting in breach of the
provisional
order. On 15 February 2011 the respondents consented to the
relief which was made an order of court by agreement.
22.2On
15 February 2011, the same day, the answering affidavit was filed and
an “urgent” counter-application was launched
by the new
trustees of CPF against the FSB.
22.3Thereafter,
and until the end of 2011, the parties filed various supplementary
affidavits without applying for condonation.
These included
lengthy affidavits by Mostert and an affidavit by Nash in support of
the CPF. At the commencement of this
hearing there was
consensus that all parties were equally ‘guilty’ and no
opposition to the filing of any of the affidavits
was raised.
22.4On
2 November 2011 CPF resolved to launch an application to join Mostert
in his personal capacity. The resolution also
ratified all
actions taken by Werksmans in respect of the counter application and
the urgent application. On 22 December 2011 the
CPF, as counter
applicants launched the joinder application. This was opposed.
22.5The
return day of the main application was extended on various occasions
until it was set down for the week of 12 August 2013.
22.6A
few days before the hearing, Mostert brought an application for the
admission of new matter. This was pursuant to another
change of
heart by Marks who had delivered an affidavit to the FSB offices to
which were annexed various emails allegedly detailing
the fraud that
Nash had committed on CPF. Prior to dealing with the main application
and the opposition thereto, it is necessary
to dispense with this
application.
Application
for the admission of additional information
23
On 29 July 2013 an affidavit was delivered
by Marks to the FSB, a couple of weeks before the hearing. In the
affidavit Marks purportedly
tells the truth to expose the manner in
which Nash abused, and continues to abuse, the CPF for his own
personal interest. Attached
to the affidavit are various emails,
including some authored by Nash, to verify her statement.
24
Pursuant to the delivery of the affidavit,
Mostert brought an application for the admission of the additional
documentation on 6
August 2013. The additional documents are
comprised of Mark’s affidavit as well as a further affidavit
and a provisional
curator’s report by Mostert. The CPF
oppose this application on the grounds that Marks is not a party to
the proceedings
and therefore has no entitlement to place evidence
before court by way of affidavit. There is no opposition to the
admission of
the curator’s report. It should be noted that when
the admissibility of these documents was raised in a meeting with the
acting Deputy Judge President van der Merwe shortly before the
hearing, the legal representatives of CPF indicated that they would
not file opposing papers and did not require further time to respond
thereto.
25
In
determining whether additional documents should be admitted, a court
must consider whether there was any male fide or remissness
on the
part of the party seeking their admission
[1]
.
In this matter there is no suggestion of male fides by Mostert and
the FSB in producing them only at this late stage. The delay
was
because the documents were only recently disclosed to them. Marks, as
an officer of the court, deemed it necessary to put the
information
before court.
26
The authenticity of the emails is not
challenged. The reason being, according to Mr Watt-Pringle for CPF,
is that they are irrelevant
and it is on this basis that their
admission is opposed. I cannot agree with this proposition. The
importance of the new
matter cannot be under-estimated. On the face
of it the emails provide support for Mostert’s theory that Nash
fraudulently
concocted a claim on behalf of Sable in the books of
CPF. They also lend credence to the view that the trustees of CPF
were unduly
influenced by Nash.
27
In
considering whether to admit the additional documentation, a court
should take into consideration that the FSB is not an ordinary
commercial litigant but a statutory body whose role it is to protect
pension fund members from abuse.
[2]
No prejudice is suffered by the CPF as a result of the late
submission of the documents - all the emails fall within the
knowledge of the trustees or the knowledge of Nash on whom they have
chosen to rely. The issue of privilege was not pursued by
CPF. Any
privilege which would attach to these documents, is in any event,
that of the fund under curatorship and not the fund
as represented by
the new trustees.
28
Mark’s affidavit satisfies the
criteria set out by our courts for the admission of new material and
should accordingly be
admitted into evidence. While scant reliance
can be placed on the evidence of Marks, the emails attached to her
affidavit constitute
credible documentary evidence.
29
Before dealing with the main application
and the opposition thereto, it is necessary to set out the
legislative framework applicable
to the application.
LEGISLATIVE
FRAMEWORK
30.
Pension funds are creatures of statute
governed by, inter alia, the provisions of the
Pensions Fund Act 24
of 1956
, the Financial Services Board Act 97 of 1990 (“FSB
Act”), Financial Institutions (Protection of Funds) Act 28 of
2001
(“FI Act”) and the
Inspection of Financial
Institutions Act 80 of 1998
.
31.
The Financial Services Board is established
in terms the FSB Act. Pension funds approved and registered by the
FSB in terms of the
applicable legislation are required to comply
with all relevant statutory provisions to ensure that such entities
conduct their
business in such a manner that the assets of members
entrusted to them are protected. Section 13 of the FSB Act
provides
for the appointment of an executive officer. In terms of
section 3 of the PF Act the executive officer also serves as the
Registrar
of pension funds. The Registrar has a right to apply
to court for the appointment of a curator to take control of and
manage
the business of a pension fund.
32.
The appointment of a curator is brought in
terms of section 5(1) of the FI Act which provides that the Registrar
may, on good cause
shown, apply to court for the appointment of a
provisional curator to take control of, and to manage the whole or
any part of,
the business of an institution. A court may also
simultaneously grant a rule nisi calling upon the institution and
other interested
parties to show cause on a day mentioned in the rule
why the appointment of the curator should not be confirmed.
33.
Section 5(6) provides that the curator acts
under the control of the Registrar, and may apply to the Registrar
for instructions
with regard to any matter arising out of, or in
connection with, the control and management of the business of the
institution.
Section 5(8) provides that any person, on good cause
shown, may make application to the court to set aside or alter any
decision
made, or any action taken, by the curator or the Registrar
with regard to any matter arising out of, or in connection with, the
control and management of the business of an institution which has
been placed under curatorship. Section 5(9) provides that the
court
may, on good cause shown, cancel the appointment of the curator at
any time.
34.
The
test for “good cause” in terms of section 5(1) was held
by the Supreme Court of Appeal in
Executive
Officer of the Financial Services Board v Dynamic Wealth Ltd
[3]
to
be whether the circumstances provided legitimate concern on the part
of the Registrar, such as the existence of an adverse inspection
report, notwithstanding a possible dispute of fact arising from the
findings of the inspectors
.
The
court commented that one of the reasons why the legislature has seen
fit to grant extensive powers of supervision and control
to the
Registrar is that the members of pension funds often do not
have the knowledge, skill or resources to take adequate
steps to
protect themselves. The Registrar fulfils an important function
as the guardian of the interests of the members
of pension funds.
[4]
35.
Reference has already been made to section
14 of the PF Act Section 14 governing amalgamations and transfers
between funds, and
the transfer of assets and liabilities. This is a
regulatory provision wherein the Registrar, acting in the public
interest, or
in the interests of the fund or its members, can approve
or refuse a scheme. The Registrar may approve a scheme in the
interests
of the members of a fund or refuse the transaction if the
scheme is not reasonable or equitable and does not comply with
certain
conditions.
The
Main Application
36.
The main application was launched in terms
of section 5(1) of the FI Act. The basis of the curatorship as set
out in the founding
affidavit of Tshidi is that the CPF, under the
control of Nash and his wife, has been the victim of the Ghavalas
surplus stripping
transactions in that it received assets in excess
of R8 million, to which it was not entitled, from Sable. At the
time Nash
was the chairman of the principal employer of CPF, Cadac
(Pty) Ltd, and the chairman of CPF with the casting vote. He was also
a trustee of Sable until it was placed under curatorship.
37.
The other allegations are that Nash used
the resources of CPF for his direct and indirect benefit, namely
defending criminal charges
against him. For several years payments
were made to Marks in relation to the criminal charges against Nash
and Midmacor amounting
in excess of R10 million, and thereafter to
Harper Cowan attorneys. In September 2010 CPF made a payment of
R2 million to
Werksmans to oppose the FSB inspection into the affairs
of CPF. Nash also caused two mortgage bonds to be registered over
property
co-owned by CPF and by Cadac, thereby further encumbering
CPF.
38.
An order was granted on 21 December 2010 by
Claassen J. The order provided that Mostert be appointed as
provisional curator
and that CPF be placed under provisional
curatorship and management, subject to the supervision of the FSB. In
terms of the order
the trustees of the CPF were provisionally
divested of the management of the business. All actions,
proceedings and other
processes against the CPF were stayed, and, in
terms of the order, were not to be instituted or proceeded with
without the leave
of the Court.
39.
The order, inter alia, stated that Mostert
was:
“
5.1
authorised to take immediate control of the Fund, manage and
investigate, the affairs, business and operations of and concerning
the Fund, together with all assets and interests relating to the
business, such authority to be exercised under the control of
the
applicant;
5.2
vested with all powers of control and management which would
ordinarily be vested in, and exercised by, the board of management
or
trustees of the Fund, whether by law or in terms of the rules of the
Fund, and the present board of management, trustees, administrators
or principal officers of the Fund shall be divested of all such
powers;
5.3
directed to give consideration to the best interests of the
respective members (including the pensioners) of the Fund;
5.8
directed to investigate any irregularities committed by the Fund, its
board of management, principal officers, consultants,
actuaries,
auditors, participating employer or any other party presently or
previously involved in the affairs of the Fund, and
for that purpose
authorised to have access to any inspection report…or to any
other documentation or records, wheresoever
kept, in connection with
the Fund;
5.9
permitted to engage such assistance of a legal, accounting,
actuarial, administrative or other professional nature, as he may
reasonably deem necessary for the performance of his duties in terms
of this order, and to defray reasonable charges and expenses
thus
incurred from the assets owned, administered or held by or on behalf
of the Fund, including but not limited to the appointment
of AL
Mostert and Company Incorporated by virtue of its in depth prior
involvement with investigations relating to the affairs
of the Fund;
5.10
authorised to institute or prosecute any legal proceedings on behalf
of the Fund and to defend any action against the Fund.”
40.
A rule nisi was issued in terms of which
the fund, and any interested parties, were to show cause why the
appointment of Mostert
should not be confirmed, and why the trustees
should not pay the costs in their personal capacities. The curator
was further called
upon to file a progress report.
41.
In response thereto the CPF anticipated the
return day by filing an opposing affidavit and launching a counter
application for the
setting aside of the appointment of Mostert and
appointing Norman Klein and Gavin Gainsford as provisional curators.
Further orders
were sought in the counter application to direct CPF
to pay Weksmans’ fees for the opposition to the appointment of
Mostert;
the urgent application of Mostert of 8 February which had
been granted by consent; and two invoices dated 25 November 2010 and
20 January 2011 for R299 824.44 and R98 948.58
respectively. During the course of argument the claim for payment of
these
two invoices was abandoned. It seems difficult to refute that
these were in respect of Nash’s criminal charges, and unrelated
to CPF.
42.
The counter application was brought by
three new trustees elected on 21 January 2011. They stated at the
outset that in view of
their short involvement with affairs of CPF,
they had no personal knowledge of the serious allegations of
mismanagement and unlawful
conduct and had to rely extensively on the
advices received from the former trustees, in particular Nash.
Mostert and the FSB have
branded the trustees as puppets of Nash.
43.
The counter application elicited an
answering affidavit from the FSB as well as a 146 page affidavit from
Mostert which together
with annexures runs to well over 1000 pages.
Further affidavits were filed by Tshidi on behalf of the FSB.
Nash himself
filed an affidavit.
44.
It is appropriate to deal with the joinder
application before dealing with the opposition of the CPF to
Mostert’s appointment.
Application
to join Mostert in his personal capacity
45.
An application to join Mostert in his
personal capacity was launched by the new trustees of CPF on 22
December 2011, a year after
the granting of the provisional order
placing the fund under curatorship. The purpose of the application
was for Mostert to reimburse
the CPF for all legal costs incurred in
the course of this matter. It was conceded that such an application
was unnecessary as
such a costs order can be made irrespective of
whether Mostert had been joined in his personal capacity. The
authority of the applicants
to launch such proceeding was raised as a
point in limine.
46.
Mr Luderitz on behalf of Mostert submitted
that the new trustees had no authority to launch the joinder
application. He pointed
out that Paragraph 7 of the provisional order
specifically makes provision for “
the
fund or any other interested party”
to anticipate the return day. On the other hand paragraph 5 of the
order divests the CPF of the control and management of the fund
which
is placed in the hands of the provisional curator. In terms of
paragraph 5.10 it is the provisional curator who is
“
authorised
to institute or prosecute any legal proceedings on behalf of the Fund
and to defend any action against the Fund”.
47.
It was argued that the trustees, if they
wished to launch any legal proceedings, should have approached a
court to authorise such
proceedings. Alternatively they could
have applied to vary the court order. The resolution taken by the
trustees on 2 November
2011 for Werksmans to launch the joinder
application is insufficient. A resolution does not provide
CPF with the necessary
locus standi who, unless authorised by a court
to do so, have no authority to launch any legal proceedings.
48.
On the question of authority generally, Mr
van Nieuwenhuizen for the FSB averred that it was for the members to
anticipate the return
day, not the trustees of CPF, as the fund was
already placed in the hands of the provisional curator. The new
trustees were not
exercising their duties in terms of section 7D of
the PF Act and certainly not for the objectives set out in section 7C
of the
Act. They do not constitute a board of management and any
resolutions taken by them are ultra vires and invalid
49.
Mr Watt Pringle on behalf of the CPF
responded that it was inconceivable that the provisional curator
could be the interested party
as contemplated by the FI Act and the
rule nisi. Clearly “the fund” referred to in the
rule nisi was CPF as represented
by its board of trustees. Although
the trustees were divested of their authority in terms of the order,
the fund through its trustees
is the only possible candidate who
could possibly oppose the final appointment.
50.
It is correct that the fund, as represented
by its trustees, is an interested party, as contemplated by the rule
nisi. However,
although the fund as represented by its trustees,
clearly has the authority to oppose the final appointment of a
Mostert as curator,
this authority does not extend to launching any
other applications. A resolution to institute legal proceedings
cannot clothe CPF
with the necessary authority to launch the joinder
application. In my view, this authority is limited to opposing the
appointment
of the curator and the institution of any other legal
proceedings remains the preserve of the provisional curator in terms
of the
order.
51.
The authority that the CPF derives to
anticipate the return day and oppose the appointment is derived from
the express terms of
the court order, not from the resolution of 2
November 2011. The court order specifically divests the trustees of
the authority
to institute any other legal proceedings on behalf of
the fund which vests in the provisional curator from that day
forward. The
trustees were entitled to challenge the appointment of
Mostert but not entitled to bring a new application unless authorised
by
a court
52.
The consequence of my findings is that the
CPF, as represented by its trustees, has no locus standi to launch
any legal proceedings.
This means that the application for the
joinder of Mostert in his personal capacity falls to be dismissed as
a result of lack of
locus standi. As it was, in any event, launched
out of an “abundance of caution” Mostert should not
be out of
pocket as a result thereof and I intend to award costs on
the attorney and client scale.
53.
The counter application falls to be
dismissed on the same grounds. It is unnecessary to deal with the
striking out application.
Insofar as the trustees oppose the
appointment of Mostert this is dealt with hereunder.
Opposition
to Mostert
54.
In essence the main grounds of opposition
to the appointment of Mostert as curator are the following. Firstly,
Mostert
as curator of Sable is faced with an irresoluable
conflict between the interests of Sable and the interests of the CPF
in view
of the claim Sable has against CPF. The conflict is
exacerbated by the fact that Mostert has negotiated a contingency fee
agreement
with the FSB for all monies recovered on behalf of Sable.
This renders him totally unsuitable and unable to protect the
interests
of CPF. Although it was submitted that the contingency fee
was 33%, it is common cause that this was reduced by the FSB in 2008
to 16.6% which is 6.6% above the statutory fee of 10%.
55.
Secondly, Mostert has a conflict of
interest between the interests of CPF and his own interests as an
attorney of the firm AL Mostert
and Company Incorporated (“AL
Mostert”) who are the attorneys of record for the fund. The
firm also, until earlier
this year, acted for Mostert in the
application to join him in his personal capacity. This, it is
argued, is a further
indication of his conflicted position as
both a litigant and an attorney in the firm AL Mostert. It is alleged
that Mostert has
used the funds of the CPF as a war chest to fund the
opposition to the challenge to his appointment. While funding his own
firm
on a lavish basis he has starved the new trustees of necessary
funds to oppose his appointment.
56.
For the above reasons it is stated that the
trustees and members of CPF have no reasonable prospect of
independent, unbiased or
scrupulous treatment at the hands of
Mostert. He has branded the trustees as puppets of Nash and
made it very near impossible
for them to obtain funding to oppose his
opposition.
Conflict
between Sable and CPF
57.
I now deal with the main issue in this
matter, namely the allegation that Mostert is placed in an untenable
position as a result
of the claim Sable has against CPF which renders
him totally unsuitable to act as curator for both these funds. It is
alleged that
both Mostert and Tshidi should have known about these
claims and should have drawn same to the attention of the court when
they
brought the ex parte application. The failure to do so is a
further indication of Mostert’s unethical and unprofessional
conduct.
58.
From the outset the FSB and Mostert have
consistently denied the existence of a conflict. They have stressed
that the issue is not
that Sable has a claim against CPF but rather
that both Sable and CPF have been victims of a fraud perpetrated by
Nash. If there
is an “overpayment” then this will be
reversed by an administrative decision rather than constituting a
claim that
the one fund has against the other.
59.
The CPF’s version on the papers is
that Cohen‘s actuarial report makes mention of a possible
claim of R10 million
that Sable may have against CPF plus legal costs
in the sum of R3 million. On 9 July 2007 the FSB pended the 2003
actuarial report
and the nil surplus scheme until the Sable claim had
been resolved. In July 2008 Mostert informed the FSB that R28.8
million was
transferred from Sable to CPF in April 1995 when the
actuarial value placed in the members transferred was approximately
R10.6
million. This means, according to the CPF, that at that time
Mostert had formed the view that there was an overpayment of R18
million.
Tshidi also admits that in later affidavits that there is a
possibility of a conflict if Mostert were to institute action against
the CPF. All the above, it is stated, illustrate the extent of
Mostert’s conflict.
60.
What the above argument does not take into
consideration is that Cohen has since concluded that there were no
genuine claims and
any claims were part of a scheme devised to remove
surplus assets from Sable. Further, Mostert has categorically stated
that as
curator of Sable he has no intention of pursuing the claim
and that the only claims against CPF are those applicable to the
“statutory
regime”. This is a reference to the
setting aside of the section 14 transfers.
61.
Importantly, irrefutable evidence is
provided by the emails that there is no claim and never was one.
Instead Nash has fabricated
a claim in order to deceive the FSB and
to avoid an investigation into the affairs of CPF. This appears from
various emails Nash
sent to Marks during May 2011. In an email dated
15 May 2011 he states:
“
If
I believed that Sable genuinely had a claim against the CPF, I would
certainly not have been so stupid as to start a PF surplus
distribution exercise. ”
62.
Later the same day on 15 May 2011 he sent
Marks an email advising her that she was wrong in what she had
related to Darren Williams
of Werksmans and that:
“
We
effectively reverse calculated the R13 million as this was the
surplus calculated att hat
(sic)
time
and we had to return a nil surplus to prevent any legal action being
taken by FSB against the Fund to appoint a “tribunal”
to
distribute the surplus…. They could possibly have done this if
there was a surplus and we needed to get thru the next
3 years to the
next valuation. (little did we know the saga ahead!!) So, we had to
get them to accept a “nil surplus”.
So, we had to have
“liabilities” against the fund of R13 million. So, we had
the figure of R3m and the R10m for contingent
liabilities as this was
necessary to get the Nil Surplus situation.”
63.
In an email on 9 May 2011 Nash explained to
Marks:
“
Yes,
but I think the calculation was maybe a “reverse calculation”
in that we knew we had to submit a nil surplus and
therefore needed
at least R13m of contingent liabilities”.
64.
In relation to Cohen’s actuarial
report, Nash’s true intention is revealed in the email he
sent stating:
“
I
see that he does not confirm that we transferred out with the Minimum
Benefits. This may or may not increase the benefit to those
transferring out.
I
see he actually refers to a “surplus” in the comparative
table of R3m. I hope the FSB do not latch onto this and say
we need
to do a distribution”
65.
These
emails are indicative that Nash over a period of years fraudulently
devised a strategy whereby the business of CPF could be
transferred
with a nil surplus valuation. Any claim that existed was fictitious
and concocted for this purpose. Nash obviously
feared that the
submission of a surplus distribution scheme would have exposed his
involvement in the affairs of various funds
in which he acted as
trustee. The newly introduced surplus legislation obliged him to
distribute the surplus, in effect excluding
him, together with all
active members, from participation in the surplus distribution of the
surplus.
[5]
It is now well
established that pension fund monies are sacrosanct and generally
cannot be used for the benefit of the employer
[6]
.
Nash clearly used the resources of the CPF to fund his defence to any
possible criminal charges he may face and to ward off an
investigation into CPF which may expose his history of abuse of CPF
monies to bolster the cash flow of CADAC.
66.
Mr Watt-Pringle for the CPF was constrained
to argue that the real point regarding the conflict is that as long
as the possibility
exists that the section 14 transfer of members
from Sable to CPF could be set aside, with the consequence that funds
will also
have to be repatriated to Sable, Mostert remains in a
position of irresoluble conflict. Because of his 16% contingency fee
arrangement
in respect of Sable, he has no incentive to resist the
transfer. Nor will he have any incentive to ensure that that the
actuarial
adjustments are made to the best possible benefit of the
members of CPF. Even if the transfer is found to constitute a fraud,
there
are insufficient facts to anticipate the possible consequences
for the CPF, who must receive independent advice in this regard.
67.
It is correct that both Mostert and Tshidi
are of the view that the section 14 transfer from Sable to CPF falls
to be set aside,
as is being done in the cases of the other section
14 certificates arising out of the Ghavalas transactions. However,
this claim
in terms of the ‘statutory regime’ is the only
claim Sable could possibly have against CPF. This is not a claim in
the true sense but rather the reversal of an administrative decision
and any entitlement that Sable may have will be subject to
the
administrative decisions of the FSB being set aside. Both Mostert and
Tshidi state that should the section 14 transfer
from Sable to
CPF be set aside, it will be rectified in accordance with the
recommendations of independent actuaries, irrespective
of who is
appointed as curator. Mostert will be entitled to no fee in terms of
his contingency fee arrangement in respect of Sable.
The
rectification may consist of a transfer of assets or even transfer of
members. It has also been suggested that to allay any
fears that
members may have, this court make an order that the members of CPF
receive independent legal advice from a senior counsel
of their
choice when, and if, an application to set aside the section 14
transfer is launched.
68.
It is apparent that there has been a
complex and confusing web of transactions involving various corporate
entities over a period
of many years. It is not this court’s
role to attempt to unravel these complexities. These are primarily
the domain of the
criminal court. Reduced to its simplest terms it
appears that Nash wanted access to the considerable surplus funds in
Sable. To
do this he needed another co-operative pension fund to
accept the active members from Sable. CPF was a small fund with a
dormant
principal employer and provided Nash with the opportunity to
set his scheme into motion over a period of many years. To prevent
any FSB involvement it was necessary to submit a nil surplus
valuation. Hence a fictitious claim had to be created.
69.
As Mostert delved deeper into the Ghavalas
transactions the extent of Nash’s dishonesty became apparent.
Nash’s
counter strategy was to claim a corrupt
relationship between Mostert and Tshidi. In an email to Darren
Williams of Werksmans he
suggests how public perception about him
will be transformed and “
the press
will start to accuse Mostert and the FSB of corruption”.
This
will result in the NPA “
loosing
heart”,
presumably a reference to
the criminal charges Nash is facing. In relation to the present
matter he warns that this trial is “
high
risk and high publicity”
. It has
to be the “
one large fight we
have. It has to be the watershed fight.”
70.
Mention must be made of the callous
disregard that Nash displayed towards the pensioners. He viewed them
as an impediment to his
plans. On 29 April 2009 he wrote to Marks
that ‘
pensioners have entirely
different motives to current members so they must not be given the
right to a Trustee. I also frankly want
a situation where there are 4
trustees and the chairman has a casting vote in the situation of
deadlock-----------otherwise control
passes to an adjudicator
(fsb/Mostert!!).”
Over
a year later on 1 August 2010 he wrote to Marks: “
If
we settle with the State / FSB on the basis of a distribution o fthe
(sic)
Pension
Fund Surplus and we say 80% goes to company and 20% as a “perk
to employees/members ??? Would the pensioners be part
of this I
wonder?? This is why it may be relevant to outsource them now. ??
nThen
(sic)
the
complication is gone.”
71.
I
am satisfied that on a conspectus of all the evidence that the issue
of a claim that Sable may have against CPF is indeed “a
red
herring” and does not constitute an irresoluble conflict for
Mostert. Nash’s emails make that abundantly clear.
Insofar as there may be an application for the setting aside of a
section 14 certificate resulting in any form of restitution to
any of
the other pension funds involved in the Ghavalas transactions, then
this will be determined, not by Mostert, but by a board
of 3
independent actuaries. This is an administrative decision.
[7]
Should the members of CPF still feel uneasy then they have an option
of obtaining independent legal advice from the senior counsel
of
their choice.
The
bias of Mostert
72.
It
is alleged that the trustees believe that Mostert is incapable of
treating them in an independent and unbiased manner. Firstly,
they
say Mostert acted in an unethical manner in bringing the ex parte
application. It is trite that an applicant when bringing
an ex parte
application must make full disclosure and display the utmost good
faith.
[8]
The basis for this
submission is that at the time the ex parte application was brought,
Nash anticipated a claim by Sable. Even
if this was later found to be
a fictitious claim, it was improper to bring the application
believing that there was such a possibility.
Therefore he is rendered
completely suitable to be appointed as curator.
73.
This allegation is unfounded. Tshidi
referred to the relationship between CPF and the Sable fund in his
founding affidavit and
maintained that there was no genuine
Sable claim against the CPF. Subsequent revelations have
proven him correct.
74.What
is more disturbing is Mostert’s use of his own law firm, AL
Mostert, to litigate on his behalf. .Although this in
itself is not
prejudicial or necessarily results in a conflict, there is no
escaping the inference that this may create an incentive
to litigate
unnecessarily. Moreover, this litigation which has been
described as lavish, is at the expense of CPF. Undoubtedly
the
actions of Nash, in thwarting Mostert’s attempt to obtain
information, were a major contributing factor to the legal
costs.
However, Mostert’s affidavits in response to the counter
application were excessive. The affidavit of 144 pages with
approximately 1000 pages of annexures was unnecessary and
unwarranted. The perception of being motivated by self-interest is
aggravated.
The application was that of the FSB and it was for the
FSB to put up whatever evidence they saw fit, including an affidavit
from
Mostert if required. It was not for Mostert to enter the fray
using the resources of CPF to do so. The question remains whether
this renders him unsuitable to be curator of CPF.
75.
Mr Watt Pringle referred to several cases
which he said supported the removal of Mostert, who is in an
analogous position to the
liquidators in these cases.
76.
In
Ma-Afrika
Groepbelange (Pty) Ltd & Another v Millman Powell NNO and Another
[9]
the
court commented that good cause for the removal of a liquidator was
held to have been shown where the liquidator was not
independent. The
court in
Ma-Afrika
quoted from English case law
[10]
that unless the liquidator was wholly independent, it was in the
interests of everyone concerned to remove him. Even the
appearance of being one-sided was sufficient grounds for his
removal.
[11]
It was
argued that in this application not only is there an appearance of
bias, but Mostert has used the assets of CPF as
a war chest to fund
his opposition to the counterclaim, from which he has benefitted
personally.
77.
This
argument does not take into account that the court
in
Ma-Afrika
case
went on to say that the removal of a liquidator was a radical step
which could not be granted unless a proper case was made
out
therefor. It is not sufficient merely to show that there is an
apprehension or perception of bias, partiality, lack of
independence
or fairness on the part of the liquidator. Nor does it suffice to
establish, even prima facie, that the liquidator
had not performed
satisfactorily, had made questionable decisions or committed errors
of judgment.
[12]
This
does not constitute ‘good cause’. The conduct of the
liquidator must be assessed in its full context and
of cardinal
importance is whether the removal of the liquidator is to the general
advantage and benefit of all persons concerned.
The court held that a
relevant factor in determining whether it is to the general advantage
to remove the liquidator is the expense
and inconvenience caused by
the appointment of a new liquidator for the purpose of completing the
work already done by his predecessor.
Accordingly a court
should be far less inclined to remove a liquidator at a late stage of
the winding-up process than to replace
him at an early stage.
[13]
78.
In
Hudson
and Others NNO v Wilkins NO and Others
[14]
it
was held that a court will exercise its discretion to remove a
liquidator if it appears that he or she, through some relationship,
direct or indirect with the company or its management or any
particular person concerned in its affairs, is in a position of
conflict.
However, a mere suspicion does not lend credence to an
allegation that there was a conspiracy or collusion. This case
also
does not provide support for the removal of Mostert. There is no
evidence of anything more than a suspicion of bias. The collusion
alleged is with the FSB which has no financial interest in the
curatorship.
79.
In
Receiver
of Revenue, Port Elizabeth v Jeeva and Others; Klerck and Others v
Jeeva and Others
[15]
the
SCA found that in an inquiry in terms of section 417 and 418 of the
Companies Act no 61 of 1973, bias or perceived bias on the
part of
the liquidator does not infringe any rights of persons summoned for
such inquiry. Therefore relief against such bias is
not
competent.
[16]
80.
Standard
bank of South Africa v the Master of the High Court and Others
[17]
dealt
with the situation where Nel was liquidator of both Macmad and its
subsidiary, Intramed, although his co-liquidators were
not common to
both. The liquidators were removed for not disputing a R325 million
claim by Macmad and using estate funds to fund
their private
litigation which was aimed at reducing their fees. Navsa JA found
that it was “
distressing
that Nel did not appreciate the conflict situation that he found
himself in. As liquidator of Macmed he was, in seeking
to prove a
contentious claim in Intramed, motivated by the interests of a
creditor. As a liquidator of Intramed, together with
de Villiers, he
was obliged to consider the interests of the debtor
[18]
.
It
was further held that opposition to an application for the removal of
a liquidator on the basis of his conduct was self-evidently
a
personal one and should be borne by the liquidator in his personal
capacity.
[19]
81.
It should be noted that Nel and his
co-liquidator had previously been ordered to pay costs personally by
the Grahamstown High Court.
Despite this they continued to use
Intramed funds to pay for their legal costs, including their costs of
appeal to the Supreme
Court of Appeal. To the contrary, in the
present application, the provisional order specifically gives Mostert
the right to use
the services of his own firm, AL Mostert. The fact
that there is no genuine Sable claim further distinguishes this case
from the
Standard bank
case.
82.
In my view the above cases do not provide
unqualified support for the removal of Mostert as curator. More
specifically, it is difficult
to see how the removal of Mostert will
be to the general advantage of persons who have a legitimate interest
in the surplus of
the CPF, this being the test set out in the
Ma-Afrika
case.
Role
of the FSB
83.
The FSB has an oversight function over the
curator who, in terms of section 5(6) of the FI Act, acts under the
control of the Registrar.
The curator may apply for
instructions from the Registrar in respect of any matter related to
and arising from the business
and control of the fund. In terms
of section 5(8)(a) any person may make application to the court to
set aside any decision
made, or action taken, in connection with the
business of the fund, by the curator or .
84.
The
Registrar has wide powers both as to placing a fund under curatorship
and whom it appoints as curator. The remedy of curatorship
is
primarily for the benefit and protection of members of a financial
institution and the Registrar has been described as ‘the
guardian of the interests of members of pension funds’.
[20]
85.
Given
the onerous duties that the Registrar discharges, a court should not
easily deviate from whom the Registrar has recommended.
[21]
The suitability of such a person has been informed by background
knowledge of the fund, the skills needed to manage the fund as
well
as the Registrar’s knowledge and confidence in the person
recommended. The appointment of a curator often results in
the
previous trustees losing control of the fund and sometimes in their
conduct being investigated. For this reason it is common
that the
Registrar will encounter resistance in applications for the
appointment of curators.
[22]
86.
The FSB avers that because of the number of
large and powerful reputable institutions involved, they need a
strong character like
Mostert to act as their “bloodhound”
to follow the money trail. He and his legal team have the tenacity
and ability
to trace and expose the dishonesty of the high profile
individuals who dominate the administration of pension funds. Mostert
has,
they say, more than fulfilled their expectations by recovering
hundreds of millions to date. They further claim that no individual
would be prepared to unravel the Ghavalas transactions for the normal
fee. In any event in this matter no contingency fee is applicable
and
Mostert will only earn the normal attorney’s fees.
87.
The CPF is a relatively small fund with an
asset value of R63 million as at 30 June 2013. According to the FSB
it cannot afford
the expense of a new curator at this stage. In
February 2011 Tshidi stated in an affidavit that the FSB were not
married to Mostert
as curator. However, some two and half years later
the expense of appointing a new curator who will have to acquaint him
or herself
with the issues and facts that have occupied Mostert for
years, is prohibitive.
Conclusion
88.
I agree that this matter is too far
advanced for the appointment of a new curator. Even a co-curator
cannot make any meaningful
contribution at this stage. It will merely
mean an added and unnecessary expense to a fund that already has been
over burdened
with legal costs. Mostert may not be the ideal
candidate in view of the suspicion and controversy surrounding his
appointment.
Under normal circumstances a totally neutral curator
would be preferable. But this is no ordinary matter. It involves a
history
of highly complex financial transactions. Mostert has been
instrumental in unravelling some of these transactions which, on the
face of it, are unlawful. It is in the interests of justice that this
matter be finaIised as soon as possible. In my view it is
to the
general advantage and benefit of all persons concerned, particularly
the pensioners, that Mostert’s appointment be
confirmed. He is
the choice of the regulator and they are empowered, and indeed are
enjoined, to oversee his functions. The FSB
have indicated that in
this matter there is no contingency fee applicable and they will
ensure that Mostert will be paid normal
attorney’s fees as
curator.
89.
It is disturbing that Mostert litigated in
what was described as a lavish scale, using the services of his own
law firm, AL Mostert
Inc at the expense of CPF. I am mindful that
paragraph 5.9 of the court order permitted him to do so on the
basis of the
firm’s depth of knowledge of the Ghavalas
transactions. While I accept Mostert is the repository of invaluable
information
regarding the CPF and should therefore not be removed as
curator at this late stage, I do not accept that only his law firm
can
litigate on his behalf. Mostert must be capable of transferring
his wealth of knowledge to another law firm in which he has no
financial interest. That his legal firm is best placed to deal with
Ghavalas transactions notwithstanding, the appointment
of a law
firm in which a curator has a direct interest, creates the perception
that the curator is benefitting twice, both a curator
and as lawyer.
This practice should be frowned upon. Accordingly the rule should not
be confirmed with regard to the use of the
services of AL Mostert
Inc.
Costs
90.
The costs follow the result and the
trustees should be liable to pay the costs of this application,
including the counter application.
Nevertheless, I am of the view
that Mostert’s lengthy affidavit, termed an answering affidavit
to the counter application,
was unjustifiable. It amounts to a
defence of his appointment which was the role of the FSB. It
was not for Mostert to defend
his own appointment. The costs of the
drafting of this affidavit must be specifically disallowed. No party
to these proceedings
should be burdened by these costs which Mostert
should pay personally.
91.
Counsel
for Nash argued that he came before this court purely as a witness
for the new trustees who requested his assistance in
the form of an
affidavit. It is trite that a court cannot award costs against a
party who is not before it, unless the circumstances
are exceptional
and an award is made bonis propriis.
[23]
It is argued, because no substantive relief is sought against Nash,
no costs can be awarded against him and that in respect of
Mrs Nash
there are no allegations of wrong doing against her; her
inclusion is indicative of the extent of the malicious
vendetta being
conducted by Mostert. An order is sought by Nash that the FSB and
Mostert pay the costs of Mr and Mrs Nash
on a punitive scale.
92.
What seems to have been overlooked is that
there was a joinder application in respect of Nash and his wife. They
are therefore not
only witnesses but have been joined as parties to
this action. The order provides that the trustees, which include Nash
and his
wife, should show cause why they should not be liable for
costs on a scale as between attorney and client. Nash and his wife
resigned
approximately a month after the grant of the provisional
order. Nash has been in de facto control of the CPF since 1995. It
was
his actions, together with that of the previous trustees, that
necessitated the appointment of a curator. The application to place
the fund under curatorship is not opposed which amounts to an
admission of mismanagement on the part of the previous trustees.
It
is clear that Nash was the driving force behind the opposition to
Mostert and the counter application. As the ultimate decision
maker,
Nash should be liable for the costs of this application on a punitive
scale together with the previous trustees.
93.
In respect of the new trustees it is
extremely difficult to ascertain exactly what independent knowledge
they had at any given time,
but it is apparent that they have been
influenced by Nash. At a time when the new trustees were ostensibly
acting totally independent
of Nash, there are emails from Nash
instructing Werksmans, acting on behalf of the trustees, what
strategy to adopt towards this
case. It could not have been put more
plainly than Nash’s own words in his email of 17 May 2011 to
Darren Williams of Werksmans:
“
So,
it is apparent that the current trustees are now operating the Fund
more or less on behalf of me the main beneficiary as well
as on
behalf of the beneficiaries of the Surplus (of which the company is
one as well).”
94.
The new trustees were the deponents of the
affidavits in the counter application and there is no compelling
reason why they should
not be made to pay the costs of this
application in their personal capacities jointly and severally with
Nash and the previous
trustees. However, there is no concrete
evidence of any wrong-doing on their part, other than to be unduly
influenced by Nash.
I do not deem it appropriate that they should pay
costs on a punitive scale.
Costs
of urgent application
95.
The launching of the urgent application by
Nash as provisional curator in February 2011 to get Nash and the new
trustees CPF to
comply with the court order, was solely as a result
of their non-co-operation. The respondents deliberately ignored the
provisional
order fully aware of their obligations in terms thereof.
The fact that they capitulated and agreed to an order by consent is
confirmation
thereof. Whether they even had the locus standi to
oppose the application is questionable. On whatever basis, it
is
entirely appropriate that the respondents cited in that
application pay the costs of the urgent application on a punitive
scale.
Machin
application
96.
Machin’s conduct was nothing short of
extraordinary. He instituted his action, presumably in consultation
with Nash, at a
time when the matter was about to be heard. This
resulted in a postponement. His action for the removal of Mostert was
premised
on an alleged cession of Marks’ claims for legal fees.
This claim was obviously unsustainable in light of judgment against
Marks in respect of her fees and the Supreme court of Appeal and the
Constitutional Court’s refusal of leave to appeal. Machin
withdrew his application on the eve of the hearing without tendering
costs. This amounts to nothing more than an abuse of the court
and he
should be obliged to pay costs on the attorney and client scale.
In
the result I make the following order:
In
the curatorship application (case no 50596/2010)
1.
The provisional order granted by Claassens
J on 21 December 2010, attached marked A, is confirmed and made final
in respect of paragraphs
1 to 4, 5.1 to 5.8 and 5.10 to 5.16, 6.3,
8.1 to 8.5 and 9 thereof.
2.
Paragraph 5.9 of the provisional order is
confirmed in the following terms:
“
permitted
to engage such assistance of a legal, accounting, actuarial,
administrative or other professional nature, as he may reasonably
deem necessary for the performance of his duties in terms of this
order, and to defray reasonable charges and expenses this incurred
from the assets owned, administered or held by or on behalf of the
Fund, with the exclusion of the services of AL Mostert and Company
Incorporated.
3.
Paragraph 6.2 of the provisional order is
confirmed, in the following terms:
“
the
costs of these proceedings and the opposition thereof, as between
attorney and client, as well as the costs of the curator and
the cost
of the inspection conducted into the affairs of the Fund in terms of
the
Inspection of Financial Institutions Act no 80 of 1998
, shall be
paid by the trustees of the Fund, in their personal capacity, jointly
and severally, the one paying the other to be absolved,
on the scale
as between attorney and client, including the costs of two counsel.
In this paragraph “the trustees” shall
mean the sixth,
seventh and eighth respondent.
4.
The curator shall under the control of the
Registrar of Pension Funds (Registrar) furnish the with
progress reports on the
curatorship on a six- month basis.
5.
The curator shall file a further report to
this court by no later than 28 February 2014 advising on the status
of the curatorship
as at 31 December 2013.
6.
On receipt of the curator’s report,
the shall re-enrol the matter for consideration of the report.
7.
Should the members so require, a counsel of
their own choice, including senior counsel, shall be appointed at the
expense of the
fund, in the event of an application for the setting
aside of any
section 14
transfers in terms of the Pension Funds Act.
In
the counter application (also case number 50596/2010)
8.
The counter application issued on 15
February 2011, purportedly in the name of the Cadac Pension Fund (but
which was itself cited
therein as the first respondent), is
dismissed.
9.
The third to tenth respondents are ordered,
jointly and severally, the one paying the other to be absolved, to
pay the applicant’s
costs of the counter application on the
scale as between party and party, including the costs of two counsel.
10.
The costs of the second respondent (cited
in the counter-application) are disallowed and the second respondent
is not entitled to
recover these costs from any party to these
proceedings.
Reserved
costs of the urgent application brought by the provisional curator on
15 February 2011
11.
The first, second, fifth, sixth and seventh
respondents cited in the court order attached marked B, are ordered
to pay the costs
of the urgent application jointly and severally, the
one paying the other to be absolved, on the scale as between attorney
and
client, including the costs of two counsel.
In
the application issued by Paul Matthew Machin on 10 August 2012 under
the same case number (for the removal of the provisional
curator and
to declare all litigation declared by him to be a “nullity”)
12.
Paul Matthew Machin is ordered to pay to
the Registrar and the Fund (represented by the curator) costs of suit
on the scale between
attorney and client, including in each instance
the costs of two counsel.
In
the application to join Mostert in his personal capacity (also case
number 50596/2010)
13.
The application is dismissed.
14.
The costs of this application, including
the costs of two counsel, shall be paid by the third to tenth
respondents jointly and severally,
the one paying the other to be
absolved, on the scale as between attorney and client, including the
costs of two counsel.
This
order shall lie for inspection by any member of the Fund at the
office of the Fund, being 193 Bryanston Drive, Cnr William
Nicol and
Bryanston Drive, The braes Office park, Ground Floor, Stemcor House,
until 31 January 2014, and thereafter at the Woodlands
Office park,
Building 14, First Floor, Woodlands Drive, Woodmead.
C.HEATON
NICHOLLS
JUDGE
OF THE
SOUTHGAUTENG
HIGH COURT
Appearances
Counsel
of the applicant : ADV. VAN NIEUWENHUIZEN SC
ADV.
MANCHU
Counsel
for the 1
st
respondent: ADV. WATT-PRINGLE SC
ADV.
T.D. PRINSLOO
Counsel
for the 2
nd
respondent: ADV. GAUNTLETT SC
ADV.
L. VAN TONDER
Counsel
for the 7
th
& 8
th
respondents: ADV. W. DE BRUYM
Date
of hearing : 12 – 16 AUGUST 2013
Date
of judgement : 13
TH
DECEMBER 2013
[1]
Transvaal
Racing Club v Jockey Club of South Africa
1958 (3) SA 599
(W);
Rhoode
v De Kock and Another
2013
(3) SA 123 (SCA)
[2]
Mostert
NO v Old Mutual Life Assurance Co (SA) Ltd
2001 (4) SA 159
(SCA)
[3]
[2012]
1 All SA 135 (SCA)
[4]
Executive
Officer of the Financial Services Board v Dynamic Wealth Ltd
[2012]
1 All SA 135
(SCA) Page 176
[5]
Section
15B of the Pension Funds Act no 24 of 1956 (as amended). See also
CPF’s former actuary’s report dated 1 March
2005
confirming the exclusion of Nash from distribution.
[6]
Tek
Corporation Provident Fund and Others v Lorentz
1999
(4) SA 884 (SCA)
[7]
Pepcor
Retirement Fund and Another v Financial Services Board and Another
2003
(6) SA 39 (SCA)
[8]
Thint
(Pty) Ltd v National Director of Public Prosecutions & Others:
Zuma v National Director of Public Prosecutions
2009
91) SA 1
CC para 102
[9]
1997
(1) SA 547 (C)
[10]
Re
London Flats Ltd
[1969] 2 All ER 744
(Ch) at 752
;In
re Contract Corporation: Gooch’s case
(1872) 7 Ch App 207
at 211
[11]
James
v Magistrate, Wynberg and Others
1995 (1) SA 1 (C)
[12]
Ma-Afrika
Groepbelange (Pty) Ltd &Another v Millman Powell NNO and Another
1997
(1) SA 547
(C) at p 566
[13]
Ma-Afrika
Groepbelange (Pty) Ltd &Another v Millman Powell NNO and Another
1997
(1) SA 547
(C) at p566
[14]
2003
(6) SA 234 (T)
[15]
1996
(2) SA 573 (A)
[16]
Receiver
of Revenue, Port Elizabeth v Jeeva and Others; Klerck and Others v
Jeeva and Others
1996
(2) SA 573 (A)
[17]
2010
(4) SA 405 (SCA)
[18]
2010
(4) SA 405
SCA para 101
[19]
2010
(4) SA 405
SCA para 73
[20]
Financial
Services Board v De Wet and Others
2002 (3) SA 525
(C);
Executive
Officer, Financial Services Board v Ovation Global Investment
Services (Pty) Ltd and Another
2008
(3) SA 60 (C)
[21]
Executive
Officer of the Financial Services Board v Dynamic Wealth Ltd
[2012]
1 All SA 135 (SCA)
[22]
Executive
Officer of the Financial Services Board v Dynamic Wealth Ltd
[2012]
1 All SA 135 (SCA)
[23]
Dowjee
Co Ltd v Waja
1929
TPD 66
;
Revielo
Leppa Trust v Kritzinger
[2007] 4 All SA 749
(SE)