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[2017] ZAGPJHC 430
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Registrar of Banks v Sambo (6676/2017) [2017] ZAGPJHC 430 (13 November 2017)
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REPUBLIC
OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG LOCAL DIVISION, JOHANNESBURG
CASE
NO:
6676/2017
Not
reportable
Not
of interest to other judges
Revised.
13/11/2017
In the matter between:
REGISTRAR
OF
BANKS
Applicant
and
SAMBO,
SIKHETO
SHADRACK
Respondent
(Identity Number: […], born […] February
1974, an adult male, married out of community of
property to Mankoko Agnes Sambo with identity number
[…],
born […] September 1973)
JUDGMENT
MODIBA,
J
:
[1]
This is an opposed application by the Registrar of Banks (“
the
Registrar
”), for
the provisional sequestration of the estate of
Sikheto
Shadrack Sambo (Sambo)
in terms of section 83(3)(b)
[1]
and section 84(1A)(c)
[2]
of the Banks Act 94 of 1990. Unless otherwise indicated, all
references to statutory provisions are to this Act.
[2] Sambo filed opposing papers. However, his counsel failed to file
heads of argument and a practice note as required by Chapter
9.8 of
the Practice Directive. On 17 October 2017, I addressed a directive
to his attorneys of record drawing their attention to
this occurrence
and affording them until 23 October 2017 to remedy it. They failed to
comply with the directive. They briefed counsel
to appear at the
hearing to request that the matter be postponed. I refused to
entertain this application for several reasons.
No formal
postponement application was filed. Sambo’s counsel sought to
move the application from the bar on unattested averments.
He was not
properly briefed in that he did not have papers filed in this matter.
This led to him making submissions contrary to
the state of affairs
as reflected in the papers. The Registrar’s attorneys
received no prior communication from Sambo’s
attorneys
regarding the proposed postponement.
[3] Given that Sambo’s counsel was only briefed to ask for a
postponement, after I refused to entertain that request, he
withdrew
from the matter. I proceeded to deal with the matter as an opposed
application given that despite there being no appearance
on his
behalf, Sambo had filed opposing papers.
[4] The facts underpinning the application are largely common cause.
Sambo participated both as a participant and solicitor of
deposits
from the public in the conduct of a scheme, known as the Travel
Venture International Scheme
(“the scheme”).
The
scheme was conducted internationally and in South Africa. In South
Africa participants have invested approximately R1.6 billion
in the
scheme. As part of his role in the scheme, Sambo collected
about R27, 755, 083 from investors. These monies
were deposited
into various bank accounts.
[5]
The Registrar alleges that Sambo’s participation in the scheme
contravenes section 11
[3]
read with section 17
[4]
of the Act in that the scheme is part of a deposit-taking pyramid
scheme. On 14 October 2011, the Registrar issued a written direction
in terms of section 83(1)
[5]
calling on Sambo to repay all monies that he obtained as part of the
scheme.
[6] The Registrar also relies on section 84(1A) (c). In terms of this
section, where the repayment administrator forms the opinion
that the
person subject to a repayment direction is insolvent, the Registrar
is empowered, notwithstanding anything contrary contained
in any law
relating to insolvency, to apply for the sequestration of that
person’s estate.
[7] Subsequent to the Registrar issuing the repayment direction,
repayment administrators were appointed to manage and control
the
repayment of the money Sambo obtained as part of the scheme. During
March 2014 the repayment administrators issued a report
concluding
that Sambo was insolvent. On 2 February 2016, the repayment
administrators issued a follow up report confirming that
Sambo was
both factually and commercially insolvent due to a significant
shortfall between his identified assets and liabilities.
[8] Sambo does not dispute any of the above. He disputes his
liability to repay the money. He contends that that scheme is not
unlawful. Sambo’s disputation of the unlawfulness of the scheme
constitutes a bare denial. He has failed to substantiate
it in his
answering affidavit. There is no basis for this court to consider his
contention that the scheme is not unlawful. I therefore
find that the
scheme is unlawful on the basis alleged by the Registrar. It follows
that Sambo is liable to repay the money to investors
in line with the
Registrar’s payment directive.
[9] Sambo’s second ground of opposition is that he intends
reviewing the Registrar’s decision to issue the repayment
direction. There are no prospects that the Registrar’s decision
to issue the repayment direction will be set aside on review.
The
Registrar’s decision to issue the repayment direction was made
in October 2011. Sambo unsuccessfully instituted an internal
review
to the board of review. The decision of the review board was
communicated to Sambo’s attorneys on 19 September
2012. The
180-day period in which he ought to bring a judicial review
application in terms of section 7(1) of the Promotion of
Administrative Justice Act 2000 (“PAJA”) expired in March
2013. To date he has not instituted that application. He
has not set
out the basis on which the court would allow him in terms of section
9 of PAJA to bring the judicial review application
five years after
the internal review was finalised. He has also not set out the basis
on which the repayment direction is liable
to be set aside on review.
[10] None of the grounds of opposition advanced by Sambo are legally
sustainable. They stand to be rejected.
[11] Sambo’s refusal to repay the money as well the repayment
administrators’ opinion that he is insolvent locates
him within
the ambit of section 83(3)(b) and section 84(1A)(c) of the Act.
Therefore the Registrar is entitled, notwithstanding
anything to the
contrary contained in any law, to bring this application.
[12] There is a huge disparity between Sambo’s identified
assets and the money he is found to have obtained as part of the
scheme. A substantial portion of this money remains unaccounted
for. People who invested this money are yet to be repaid
as per the
Registrar’s repayment directive. His provisional
sequestration will allow an investigation on the stream
of this money
with a view to satisfying investors’ claims.
[13] In the premises, I am satisfied that the Registrar has made out
a case for the provisional sequestration of Sambo’s
estate in
terms of both sections 83(3) (b) and section 84(1A) (c) of the Banks
Act.
[14] I therefore make the following order:
ORDER
1. The respondent’s estate
is placed under provisional sequestration in the hands of the Master
of the High Court, Johannesburg;
2. A rule
nisi
is issued calling upon the respondent and all other interested
persons to appear at 10 am on 4 December 2017 or soon thereafter
as
the matter may be heard to show cause why:
2.1
an order should not be
granted finally sequestrating the estate of the respondent in the
hands of the Master of the High Court,
Johannesburg;
2.2
the costs of the
application should not be costs in the sequestration.
3. The respondent is directed to
keep the investigation report and the solvency report annexed to the
applicant’s founding
affidavit as “FA7” and “FA8”
confidential and not to disclose it to any person other than his
professional
legal advisors for the purposes of this application.
________________________________________
MS.
L. T. MODIBA
JUDGE OF THE HIGH COURT
GAUTENG LOCAL DIVISION, JOHANNESBURG
APPEARENCES:
Applicant’s
Counsel:
B.M
Gilbert with Ms Phalane
Instructed
by:
Baker
Mckenzie
Respondent’s
Counsel:
E.
Sithole (only for the postponement application)
Instructed
by:
T.
Ngcobo Attorneys
Date
heard:
30
October 2017
Date delivered:
13
November 2017
[1]
83.
Repayment of money
unlawfully obtained
(3) Any person who refuses or fails to comply with a direction under
subsection (1)-
(b) shall for the purposes of any law relating to the winding-up of
juristic persons or to the sequestration of insolvent estates,
be
deemed not to be able to pay the debts owed by such person or to
have committed an act of insolvency, as the case may be,
and the
Registrar shall, notwithstanding anything to the contrary contained
in any law, be competent to apply for the winding-up
of such a
juristic person or for the sequestration of the estate of such a
person, as the case may be, to any court having jurisdiction
[2]
84.
Management and
control of repayment of money unlawfully obtained
(1A)
(c) If the report referred to in paragraph (a) concludes that the
person subject to the directive is insolvent, the Registrar
may,
notwithstanding anything contrary contained in any law relating to
liquidation or insolvency apply to a competent court
for the
winding-up in terms of the Companies Act or the sequestration in
terms of the Insolvency Act, 1936 (Act No. 24 of 1936),
as the case
may be, of the person subject to the directive, and the Registrar
shall have the right to oppose any such application
made by any
other person.
[3]
11.
Registration a
prerequisite for conducting business of bank
(1)
Subject to the provisions of section
18A, no person shall conduct the business of a bank unless such
person is a public
company and is registered as a bank in terms of
this Act.
(2) Any person who contravenes a provision of subsection (1) shall
be guilty of an offence.
[4]
17.
Granting or
refusal of application for registration
(1)
Subject to the provisions
of subsection (2), the Registrar shall, after considering all
information and documents furnished to
him or her in terms of
section 16 for the purposes of an application under that section,
grant such application if he or she
is satisfied-
(a)
that the business the
applicant proposes to conduct is that of a bank;
(b)
that the applicant does
not propose to adopt undesirable methods of conducting business; and
(c)
that the memorandum of
incorporation of the institution is consistent with this Act and is
not undesirable for any reason.
(2)
Notwithstanding the provisions of subsection (1), the Registrar may
refuse an application for the registration of an institution
as a
bank if he or she is of the opinion-
(a)
that any of the requirements specified in section 13(2) is no longer
complied with by or in respect of the institution concerned;
(b)
that the institution concerned, when registered as a bank, will
probably not be able to comply with a provision of this Act,
or is
likely to pursue a practice contrary to a provision of this Act;
(c)
that an interest which any person has in the institution concerned
is inconsistent with a provision of this Act;
(d)
that the interests of potential depositors with the institution
concerned will be detrimentally affected by the manner in
which the
institution proposes to conduct its business, or for any other
reason;
(e)
that the name of the institution concerned-
(i) is identical with a name under which an existing
bank or a mutual bank has already been registered;
(ii) so closely resembles the name of an existing bank
or mutual bank that the one is likely to be mistaken for the other;
(iii) is identical with, or closely resembles, the name
under which any bank or any other institution which was registered
under
any law repealed by this Act, or any mutual bank, was
previously registered and that reasonable ground for objection
against
the use of that name by the institution concerned exists; or
(iv) is likely to mislead the public; or
(f) that the application does not comply with a
requirement of this Act.
(3) When the Registrar in terms of this section grants or refuses an
application for registration, he or she shall give written
notice of
that fact to the applicant concerned.
(4) If the Registrar in terms of this section grants an application
for registration he or she shall, subject to the provisions
of
section 18, and on payment by the applicant of the prescribed
registration fee, provisionally register the institution concerned
as a bank and issue to the institution, on the prescribed form, a
certificate of registration as a bank.
(5)
An institution which is for the first time registered as a bank
shall not commence doing the business of a bank until it has
furnished proof to the Registrar that it complies with the
provisions of section
70.
(6) An institution which contravenes the provisions of subsection
(5) shall be guilty of an offence.
[5]
83.
Repayment
of money unlawfully obtained
(1)
If as a result of an inspection conducted under section 12 of the
South African Reserve Bank Act, 1989 (Act No. 90 of 1989),
the
Registrar is satisfied that any person has obtained money by
carrying on the business of a bank without being registered
as a
bank or without being authorized, in terms of the provisions of
section 18A(1), to carry on the business of a bank, the
Registrar
may in writing direct that person to repay, subject to the
provisions of section 84 and in accordance with such requirements
and within such period as may be specified in the direction, all
money so obtained by that person in so far as such money has
not yet
been repaid, including any interest or any other amounts owing by
that person in respect of such money.