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[2020] ZAGPJHC 428
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Mostert N.O v Sable Group Holdings (Pty) Ltd (2011/43945) [2020] ZAGPJHC 428 (10 December 2020)
REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA
GAUTENG LOCAL DIVISION, JOHANNESBURG
(1)
REPORTABLE: YES/
NO
(2)
OF INTEREST TO OTHER
JUDGES:
YES
/NO
(3)
REVISED. NO
DATE:
10 December 2020
CASE
NO: 2011/43945
In the matter between:
MOSTERT, ANTONY LOUIS N.O.
Applicant
And
SABLE GROUP HOLDINGS (PTY) LTD
Respondent
JUDGMENT
SIWENDU J
Introduction
[1]
The applicant, Antony Louis Mostert N.O. (Mr
Mostert) is an attorney of this Honourable Court, with the place of
business at The
Braes, Ground Floor, 193 Bryanston Drive, Bryanston,
Gauteng. He launched this application in his official capacity as
curator
and administrator of The Sable Industries Pension Fund (the
Fund), a pension fund registered in terms of s 5 of the Pension
Funds Act 24 of 1956 (the PFA).
[2]
The Fund was placed in curatorship under
the provisions of
s 5(2)(a)
of the
Financial Institutions
(Protection of Funds) Act 28 of 2001
in terms of the court order of 6
June 2006.
[1]
Mr Mostert also acts as the curator of at least nine other funds.
[2]
[3]
The respondent is Sable Group Holdings (Pty) Ltd
(the Sable Group), a company incorporated under the company laws of
the Republic
of South Africa and having its registered address at
Fairways Office Park, 52 Grosvenor Road, Bryanston, Sandton. It is a
wholly-owned
subsidiary of Sable Holdings Limited, a public company.
[4]
The applicant sought to recover R21 806 241
(twenty-one million eight hundred and six thousand two hundred and
forty-one
Rand) with interest at 15.5% a
tempore
morae
,
alternatively
from 31 September 2011 to date of payment, from the Sable Group. Mr
Mostert launched the application in November 2011 (the main
application) approximately five years and five months after his
appointment.
[5]
The reason for amplifying the date of the launch
of the application is that in August 2019, the Sable Group filed a
dismissal application,
seeking to have the main application dismissed
due to a delay in the prosecution of the legal proceedings (the
dismissal application).
This dismissal application was made in
addition to an application to strike out specific averments made by
Mr Mostert in the main
application and his replying affidavit in
terms of
Rule 23(2).
Mr Mostert opposed both the strike out and the
dismissal applications. He also counter-applied to strike out certain
paragraphs
of the Sable Group’s dismissal application.
[3]
[6]
The following applications are before this Court
for consideration, namely:
6.1.
The main application for the recovery of the sum
claimed.
6.2.
The Sable Group’s application to strike out
portions of Mr Mostert’s founding affidavit and replying
affidavit.
6.3.
Mr Mostert’s application to strike out
specific averments made by the Sable Group in the dismissal
application.
[4]
6.4.
The application to dismiss the main application.
6.5.
Mr Mostert's request to have the case referred to
trial and case management under the Commercial Court Practice
Directive.
[7]
For convenience, I will refer to the parties by
name, being Mr Mostert and the Sable Group.
Background
[8]
The Fund was provisionally registered on 19
February 1986, but finally registered on 12 February 1994. Subject to
the order for
curatorship, it remains under the jurisdiction and
supervision of the executive officer of the Financial Services Board.
[9]
Mr Mostert claims that the Fund is a victim of
the notorious Ghavalas scheme,
[5]
which directly caused his appointment and this application. Named
after the infamous Mr Peter Ghavalas, the illegal and fraudulent
scheme entailed stripping off numerous pension funds’ assets to
the prejudice of pension holders in the 1990s. The reverberating
effects of the scheme have been subject to multiple cases.
[10]
Mr Mostert fingers the Sable Group for stripping
and raiding the Fund assets, depriving fund members of Fund benefits.
As of 30
June 1995, the value of Fund assets held in various policies
with Sanlam, Liberty Life, and cash with RMB was approximately R91.4
million. From 1 November 1995, Fund assets had been reduced to about
R61 million. On 5 February 1996, a sum of R25 149 454
was encashed from the assets previously invested in Sanlam and paid
over by Wynne-Jones and Company (the then administrator of
the Fund),
and later to Old Mutual to purchase an Optiplus Category Level IV
Policy (the Optiplus Policy) for the Fund.
[6]
[11]
The common cause facts are that:
(a)
Because the Fund was the holder of the Optiplus
Policy, following Old Mutual’s demutualisation, 387 200
Old Mutual shares
(‘the Fund shares’) accrued to the Fund
in August 2000. Old Mutual incorrectly reflected the Fund in its
records as
the ‘Sable Pension Fund’. It issued the shares
in the name of Sable/Sabre Pension Fund instead of Sable
Industries
Pension Fund.
(b)
There was thus a similarity between the names of
Sable Group and the incorrect name on the policy. However, there is
no dispute
that the shares belonged to the Sable Industries Pension
Fund.
(c)
On 15 August 2000, Mr Ian Kemp, a director at the
Sable Group, signed a share transfer certificate (form CM42),
transferring the
allocated shares to Rice Rinaldi Stockbrokers,
Nominee Company. The stockbrokers sold the Fund shares through an
internal Nominee
Company, Rinric Nominees. Correspondence from the
stock brokerage’s successor in title, Imara SP Reid (Pty)
Ltd,
[7]
confirms that the Fund shares were lodged and booked into client
account number 141523 c/o Mr. Justin Nash, PO Box 786390, Sandton.
It
is further common cause that the stockbroker account belongs to and
is controlled by the Sable Group.
[12]
The disagreement between Mr Mostert and the Sable
Group concerns the transfer of the Fund shares and the proceeds from
the sale
of the shares in the amount of R6 377 617.53. Mr
Mostert claims that on 21 August 2000, the stockbrokers paid the
share
sale proceeds into a Standard Bank account in the name of Sable
Pension Fund/Momentum account, number 002322005, controlled by Sable
Group, held in Braamfontein. He bases the claim on information
reflected in a statement of account from Rice Rinaldi Securities
(Pty) Ltd.
[13]
Mr Mostert claims he subsequently established
from the Financial Services Board that the ‘Sable Pension Fund’
was a
non-existent pension fund. On 1 September 2011, he wrote
to Mr Justin Nash seeking information about the Fund share sale
proceeds,
stating amongst others, that:
‘
It
would also appear that shares were transferred from Sable Industries
Pension Fund via the nominee company to Sable Group Holdings,
ultimately to be sold on 15 August 2000 and the proceed of
R6,377,617.53, was paid on 21 August 2000 into a Standard Bank
account,
Braamfontein reference, 002322005.’
[14]
Mr Mostert alleges that ‘Mr. J Nash’
referred to in respect of the account is Mr Justin Nash. Mahons
Attorneys,
then representing Mr Justin Nash and the Sable Group,
confirmed
in a letter dated 19 September 2011
that the stock brokerage account 141523 and postal address, P.O. Box
number 786390, Sandton
2146, belonged to the Sable Group. The
attorneys disputed that Mr Justin Nash was a party to the transaction
or received the Fund
share sale proceeds. They undertook to
investigate within Sable Group Holdings, which they did.
[15]
In a subsequent letter dated 11 October 2011,
Mahons Attorneys advised Mr Mostert that the Sable Group had
established that:
(a)
the person who would have detailed knowledge of
the transaction was Mr John Nash, the then Executive Chairman of
Sable Group. He
died in 2010.
(b)
It identified a share certificate (number 060890)
in respect of Old Mutual PLC in the name of Sabre Pension Fund dated
12 July 1999,
and an Old Mutual PLC share certificate (number
00254190) in the name of Sable Pension Fund dated 15 October 1999.
(c)
Unbeknown to the Sable Group, the shares were
loaded onto its stockbroker account, number 141523, held with Rice
Rinaldi. The shares
were sold on 15 August 2000. Rice Rinaldi
paid the proceeds into a Momentum Life, Absa Bank Account No.
2890000307.
(d)
The preliminary investigation showed that the
Sable Group might have inadvertently received the proceeds from the
shares in error.
They would investigate how the error occurred, but
required confirmation of ownership of the shares and that the
proceeds indeed
belonged to the Fund, given that the shares were not
in the name of Sable Industries Pension Fund.
[16]
Old Mutual confirmed the ownership of the shares.
On 8 November 2011, Mr Mostert demanded payment of R21 806
241, alleging
that the amount was the present-day value of the Fund
shares. He based the quantum on a valuation certificate (as of 30
September
2011) from Fifth Quadrant Actuaries and Consultants (Pty)
Ltd (Fifth Quadrant). Mahons Attorneys disputed the value attached
and
later Sable Group’s liability, leading to the main
application being launched.
Merits Dispute
[17]
Mr Gavin Barry John Bowes, the Managing Director
of the Sable Group, attacks Mr Mostert’s claim on several
fronts. He contends
that it does not disclose an exact and complete
cause of action. The Sable Group is left guessing what the basis for
the claim
is, to its prejudice. Given this, the Sable Group states it
has assumed that the claim is premised on an unjustified enrichment.
[18]
Mr Bowes contends that even though Mr Mostert
refers to the Sable Group’s indebtedness and a deposit of
R6 377 617.53
into an account controlled by the Sable
Group, a fact he disputes, Mr Mostert has not alleged the Sable Group
was unjustly enriched
at the Fund’s expense. He denies
enrichment and, significantly, that the Sable Group received the
share sale proceeds in
its bank account.
[19]
The Sable Group also protests that the claim is
predicated on inadmissible hearsay evidence gathered from emails
between Old Mutual
and Imara SP Reid (Pty) Ltd as well as emails from
Computershare.
[8]
The emails are not confirmed on affidavit. It also disputes the
emails assist in making out a cause of action against it.
[20]
The Sable Group’s version is that:
(a)
Rice Rinaldi paid R6
377
617.53
by cheque drawn in favour of Momentum and into an ABSA bank account
held by Momentum Life. The Momentum Life bank account
number was
2690000307,
[9]
and not the Momentum Standard Bank account number 002322005 –
as alleged by Mr Mostert.
(b)
A wholly-owned subsidiary of Sable Holdings
Limited, Sabstra Financial Investments (Pty) Ltd (Sabstra),
[10]
since deregistered in May 2011, held various financial investments
from a series of transactions. In August 2000, Sabstra acquired
three
new endowment policies offshore through the Appleton International
Hedge Fund (Appleton) to the value of R15 250 500.00.
[11]
Momentum Life facilitated the acquisition.
(c)
There were tranches of payments made for the
acquisition. Sable Group paid R8 872 882.47; R6 377 617.53
was
paid to Momentum by Rice Rinaldi from the realised share sale
proceeds. The Sable Group also advanced an interest-free loan to
Sabstra in the amount of R10 167 000, paid to Momentum,
resulting in acquisition of R25 417 500 with Appleton.
(d)
Sabstra held the investment for approximately six
years and liquidated it in December 2006. A realisation value of
R33 558 861
accrued to Sabstra. Sabstra made a
distribution, settling its loan account of R18 652 283.20
with the Sable Group,
declared and paid a dividend to its parent
company, Sable Holdings Limited, and retained R81 678. Sable
Holdings Limited declared
a dividend to its public shareholders. On
the other hand, the Sable Group redeployed the capital from its loan
repayment to other
property investments.
[21]
Faced with this version, Mr Mostert
disclaimed reliance on the unjustified enrichment claim in his
replying affidavit. He contended
that the disposal was an act of
theft and misappropriation by Sable Group and its directors. He also
claimed that the Sable Group
and its directors removed the Fund
shares unlawfully through a wilful, wrongful, alternatively negligent
conduct. They breached
a duty of good faith to the Fund in
contravention of
s 5
of the PFA to the Fund’s prejudice
and its members. He reaffirmed the allegations of asset stripping and
raiding of the Fund.
[22]
Mr Mostert claimed that the payment into the
Momentum account was on instruction from and an action of the Sable
Group, its holding
company Sable Holdings Limited, and its directors.
He claimed Mr Kemp acted with their knowledge and contended that
Sable Holdings
Limited and the Sable Group were the recipients of the
proceeds of the shares’ illegal removal and sale.
[23]
Mr Mostert dismissed the defences raised as
spurious and of a technical nature, asserting there was an admission
of a direct or
indirect misappropriation.
Strike Out Application
[12]
[24]
It befits that I first deal with the strike out
application. Sable Group seeks to strike out paragraphs 7, 9.3, 9.4,
14, 17, 18,
19, 20. 21, 22, 23, 24, 25, and 33 of the main
application’s founding affidavit. The assertions relate to the
asset-stripping
claims and the association with the Ghavalas
methodology. Mr Mostert had stated elsewhere that:
‘…
the
laundering of the proceeds of the Sable Fund shares is part of a
grand scheme whereby Simon John Nash (“Simon Nash”)
raided pension funds over which he or his family members exercise
control. The respondent is historically an entity associated
with or
controlled by the Nash family entities.’
[25]
The Sable Group contends the allegations are
scandalous, vexatious, and not connected with the pleaded case.
[26]
As far as paragraph 33 is concerned, regarding
the valuation certificate supporting the quantum claimed, the Sable
Group asserts
that this is an inadmissible opinion.
[27]
In addition, it seeks an order striking out
paragraphs 5, 7, 8, 9, 10, 11, 12, 14.1, 14.2, 14.3, 14.4, 14.5, 15,
16, 17, 17.1, 17.2,
17.3, 18, 19, 19.1, 19.2, 19.3, 19.4, 19.5, 20,
21, 22, 22.1, 22.2, 22.3, 23, 24.4, 24.5, 25, 26, 29, 30, 31, 32, 34,
37, 38, 39,
46, 55, 58, 61, and 64 of the replying affidavit. These
paragraphs introduce the cause of action of theft, misappropriation
referred
to in paragraphs [21]
to [23] above.
[28]
In an about-turn, Mr Mostert’s practice
note states that the averments were not material to the case, saying
that, ‘
The applicant does not seek to
rely on the substance of the relevant impugned paragraphs and will
abide the decision of the court
in regard to the strikeout.
’
In his answering affidavit to the dismissal application, Mr Mostert
conceded an element of ‘aggrandisement’
in the founding
affidavit. By parity of reasoning, the same view must apply to the
allegations of theft, misappropriation, and
wilful conduct and
negligence – given the about-turn and resurrection of the
unjustified enrichment claim, which I deal with
later in the
judgment.
[29]
Given that Mr Rome SC (who appeared for Mr
Mostert) came into the brief after much water had gone under the
bridge, understandably
also agreed during the argument that these
averments were not an essential aspect of the case. They were made in
the context of
extraneous factors and atmosphere brought by the
acrimonious litigation in matters not directly connected with the
current applications.
[30]
I have considered the offending paragraphs
in the main founding affidavit. They do not have a bearing or
connection with the
transfer of the Fund shares to the stockbrokers.
It is was not claimed that the share transfer, the subsequent sale,
and allocation
towards a repurchase of the three Appleton policies
were part of implementing the Ghavalas scheme. Yet, an adverse
portrait of
the Sable Group’s involvement or association with
the notorious Ghavalas plan is conveyed.
[31]
Mr Mostert persisted with the allegations that
there was misappropriation, theft and wilful conduct, negligence, and
breach of duty
by the Sable Group. The joinder application judgment
by my sister Dippenaar AJ (as she then was)
[13]
makes it clear that it would be impermissible for Mr Mostert to
discard a previous cause of action and raise a new one, or to raise
new matter, in his replying affidavit unless there were exceptional
circumstances.
[14]
[32]
Even though Mr Mostert filed his replying
affidavit in July 2017, after receiving the judgment in respect of
the joinder application,
he did not take heed and correct these
shortcomings or show extraordinary facts justifying the change.
[15]
On the contrary, he persisted in the same vein in his affidavit
opposing the dismissal of his application, which was launched in
August 2019. Mr Mostert alleged that the Fund shares were laundered
as part of the grand scheme of misappropriation by Simon Nash
and his
family. He claimed for the first time that the Sable Group is
historically associated with the Nash family.
[33]
There were no facts to support these allegations.
The allegations remained an impermissible abandonment of the initial
cause of
action. In any event, they no longer tally with the
resurrected cause of action of unjustified enrichment.
[34]
I am satisfied that the Sable Group would be
gravely prejudiced if these paragraphs are not struck out. In both
instances, the company
will be associated with improper and unethical
conduct without a clearly established basis. The negative portrayal
lingers because
of the reiteration in the replying affidavit and
later in the dismissal application. The Sable Group has been placed
in an impossible
position where they cannot effectively refute them.
Accordingly, I find they fall to be struck off as scandalous,
vexatious material.
[35]
I deal with the request to strike out paragraph
33 in the section dealing with quantum, later in the judgment.
Dismissal application
[36]
On 27 August 2019, the Sable Group launched a
dismissal application because it claims an inordinate, inexcusable,
and prejudicial
delay by Mr Mostert in prosecuting the application.
The Sable Group contends that Mr Mostert has abused the court process
to its
prejudice.
[37]
The dispute involves a transaction that took
place in August 2000, 19 years before the launch of the dismissal
application. It is
common cause that it took five to six years after
Mr Mostert’s appointment to launch the main application in
November 2011.
The Sable Group filed its opposing answering affidavit
in February 2012. Mr Mostert filed his replying affidavit more
than
five years later, on 13 July 2017.
[38]
Part of the period between February 2012 and July
2017 was consumed by the failed attempt to join other respondents, as
already
stated. However, even that proceeded at a glacial pace.
[39]
Mr Mostert launched the joinder application
because of the Sable Group’s answering affidavit, but only did
so in March 2013,
a year after the answering affidavit was filed. The
interlocutory application by the Sable Group, launched in terms of
Rule 30(1)
, interrupted the period. However, this is of minimal
consequence in the broader scheme of the litigation. The Sable Group
launched
the interlocutory application on 27 March 2013, and it was
disposed of without much ado in a judgment by Ratshibvumo AJ on 13
June
2013.
[16]
[40]
It took three years to resolve the joinder
application. There was a delay of two and a half years before the
filing of heads of
argument in February 2016. It was finally heard in
November 2016. The judgment was delivered in February 2017. The court
dismissed
the application for leave to appeal in September 2017.
[41]
Cumulatively, it took approximately five and a
half years before Mr Mostert filed a replying affidavit in the main
application,
which he did on 12 July 2017. Nine months elapsed before
filing the heads of argument on 17 April 2018, and another year
elapsed
before the filing of Mr Mostert’s supplementary heads
of argument.
[42]
On this score, the Sable Group claims its right
to a fair trial is irrevocably compromised. It argues further that Mr
Mostert may
not have adequately secured the records of Sabstra.
Additionally, Mr John Nash, its Executive Chairman, who had direct
knowledge
of the transaction, died in 2010. Mr Kemp is of advanced
age and suffers from cancer and a heart condition. Witnesses will be
called
to recollect events that occurred 19 years ago.
[43]
The Sable Group challenges that the litigation
benefits the Fund or its members or that Mr Mostert acts in their
interest, based
on revelations indicating that he earned some R23.6
million as curator of the Fund. It alleges the continued litigation
only benefits
Mr Mostert, who has refused to disclose information
about the Fund membership and beneficiaries. There are only four
active members
of the Fund. I do not deem it necessary to deal with
these allegations. They are not central to the case.
[44]
Mr Mostert considered the dismissal application
as part of a calculated ‘lawfare strategy’ and a delaying
tactic used
by a Mr Simon Nash to avoid repayment, which frustrated
and delayed completion of the recovery process. He countered that the
Sable
Group, too, was content to let the case linger. From this, I
must infer that once the Sable Group received the applicant’s
supplementary heads, it recognised that finality was at hand and
resorted to the same tactic used by Mr Simon Nash.
[45]
Nevertheless, Mr Mostert conceded that
finalisation took some time, but claims this was not due to inaction
or of such a nature
that warrants the dismissal of the main
application. At worst, it can be attributed to ineptitude. He also
agreed that the joinder
application was ill-conceived and
inadvertently led to delays. He blames his erstwhile lawyers for
misadvising him. He claims that
prejudice is absent because the Sable
Group has not established that it is prejudiced. It is the recipient
of millions of Rands
to which it is not entitled, misappropriated
from the pension fund members. He claims much of the recoveries were
achieved in 2011,
but for the funds controlled by Mr Simon Nash.
According to Mr Mostert, the case will most likely turn on
documentary evidence
rather than witness testimony.
[46]
Numerous court decisions entrench the Court’s
inherent power to prevent an abuse of its process by frivolous and
vexatious
litigation.
[17]
As correctly pointed out by Ms Cane (for Sable Group), there are no
hard and fast rules defining the manner for the exercise of
the
Court’s discretion. Nevertheless, the requirements are that the
application must be vexatious or there must be an inexcusable
delay,
which seriously prejudices the other party.
[18]
[47]
On the authority in
Cassimjee
,
[19]
I am required to take a close and careful examination of all relevant
circumstances. As to the borders and nature of my discretion,
there
are two kinds – on the one hand, a discretion in the wide sense
or a ‘discretion loosely so-called’, and
‘a
discretion in the strict sense’ or ‘true sense’ on
the other. Because the court’s discretion is
in the ‘true
sense’ and it must be exercised judicially and not
capriciously.
[20]
[48]
I note the claim’s genesis arose in August
2000, five years and four months before Mr Mostert’s
appointment. Even though
it may be relevant when looking at the case
overall, I do not bring this period to the reckoning or attribute it
to Mr Mostert.
It may well indicate the length of time it took to
discover the malfeasance in the pension funds industry. The critical
period
informing the delay for which he must be accountable, is the
five years it took from the date of his appointment to commence the
proceedings. After that, the five and a half years delay before he
filed his replying affidavit, as well as the subsequent two-
year
delay before the case was heard. As already noted, the joinder
application played a part in the delay, taking approximately
three
years to resolve.
[49]
The predominant explanation is that he became
mired in an avalanche of litigation to recover monies for pension
funds. When his
work is viewed collectively, the law reports are
replete with cases involving him and the Nash Family on behalf of
various pension
funds. However, Ms Cane asserted that I should
have regard to the decision
Berrange NO and
Others v Vorster and Other
.
[21]
She argued that the fact that he prioritised those cases over the
current one is no excuse for the delay.
[50]
I observe that in
Berrange
,
the cause of action arose in 1999. Proceedings were instituted in
2006. The plaintiffs failed to act at all, for an excessive
period of
five and a half years after pleadings closed. They first litigated
against other parties with the hope of recovering
their claim. Had
they been successful, they would not have resumed the litigation
against the defendants. The court found the plaintiffs
made a
reasoned choice not to proceed with the action. They arbitraged
proceedings based on probable outcomes of another case,
and in my
view, that would drive a court to conclude the conduct tantamount to
an abuse of its process. I agree with Mr Rome and
distinguish
Berrange
from the
current facts because the inconsistent action did not evidence an
abandonment and an abuse of court process.
[51]
I have also considered the prejudice alleged. It
centres on the deregistration of Sabstra, Mr Nash’s death, and
the Sable
Group’s submission that Mr Kemp is elderly and of ill
health. As I understand it, Sabstra lay dormant from 2007 and got
deregistered
in 2011, a few months before the application. On the
other hand, Mr Nash died in 2010, before the launch of the
application.
[52]
A dismissal application
is draconian in its effect.
[22]
It limits the right to have a dispute finally resolved by a court of
law. In
Sanford v Haley NO
,
[23]
the court stated that:
‘
The
Court will exercise such power sparingly and only in exceptional
circumstances because the dismissal of an action impacts seriously
on
the constitutional and common-law right of a plaintiff to have the
dispute adjudicated in a court of law by means of a fair
trial. The
Court will exercise such power in circumstances where there has been
a clear abuse of the process of court.’
[53]
A decision to dismiss a case on the basis of
delay is not one to be made lightly. Even though Mr Mostert’s
approach warrants
strong criticism, I am minded that the Fund remains
under the supervision of the FSB. The case involves a pension fund,
and fund
benefits which are long-term in nature. I am not persuaded
that the Sable Group is prejudiced because the facts it relies on
existed
before the launch of the application and are not a
consequence of the delay.
[54]
The unresolved dispute on the merits will leave a
lingering air of impropriety, which is not in the interest of all
parties concerned.
It is in the interests of justice and both parties
to finally determine the merits of the dispute. Accordingly, I
decline the application
for dismissal.
[55]
Given the dismissal, I do not deem it necessary
to deal with Mr Mostert’s application to strike out portions of
Sable Group’s
founding affidavit in the dismissal application.
Prescription
[56]
The Sable Group contends that the claim became
extinguished by prescription before Mr Mostert’s was
appointment. Mr Mostert
first made demand for payment some
five-and-a-half years after his appointment.
[57]
Mr Rome SC correctly argued that prescription
would run from the time the Fund knew, or ought to have known, about
the debt with
the Sable Group and the facts giving rise to that debt.
The requirements for the running of the prescription means that the
Sable
Group must show when the Fund knew, or ought to have reasonably
known, of the existence of the debt.
[58]
The defence has not been fully set out. Ms Cane
SC (for the Sable Group) correctly did not labour the issue. It falls
to be dismissed.
The Enrichment Claim
[24]
[59]
Our law recognises the right to recover payment
erroneously made to the another mistakenly without just cause by way
of an unjustified
enrichment claim.
[25]
A prerequisite is that there must have been an excusable error
[26]
for the payment, which caused the claimant’s impoverishment and
enrichment to the recipient.
[60]
Accordingly, Mr Mostert had to show a payment or
a benefit to the Sable Group, which resulted in the Fund’s
impoverishment
and the Sable Group’s enrichment.
[61]
At first, the Fund’s case seems to have
been premised on the earlier letter that reveals that the
stockbrokers credited a
Sable Group controlled account upon the
shares’ transfer. Mr Mostert placed reliance on a preliminary
investigation conveyed
in the earlier letter from Mahons Attorneys,
which intimated that Sable Group ‘
may
have inadvertently received the proceeds from
the shares in error
’ and would
investigate the matter. Mr Mostert also relies on the stockbroker’s
statement to assert that, by virtue
of this statement and the credit
allocation reflected therein, the Sable Group received the fund
shares and was enriched.
[62]
During argument, Mr Rome approached the
resurrected enrichment claim from a number of portals, contending
that the terms ‘impoverishment’
and ‘enrichment’
should not be edified above substance. He argued that the allocation
of the Fund shares by the stockbrokers
to the Sable Group’s
account leads to the enrichment conclusion. He contended further that
the Sable Group ‘seemingly
accepted’ that the payment of
the shares accruing to the Fund was made into a bank account
controlled by the Sable Group.
[63]
The Sable Group’s defence is that, even
though the stockbrokers credited its broker account with the shares
at the time of
the transfer for sale, the Sable Group did not receive
the share sale proceeds. The Sable Group injected funds through a
loan to
its sister company, Sabstra, to acquire and invest in the
endowment policies. Similarly, Momentum received the payment of the
Fund
share sale proceeds from Rice Rinaldi and facilitated the
acquisition of the Appleton endowment policies on behalf of Sabstra.
It was not a direct beneficiary of the Fund Shares either, given that
the Appleton acquisition was for the benefit of Sabstra.
[64]
The disclosed document trail confirms the above.
Information presented reveals that the proceeds were not paid in a
Momentum Standard
Bank account on 21 August 2000, as
alleged by Mr Mostert. The payment was made to a Momentum Absa Bank
Account. Mr Mostert
did not present bank statements to bolster his
claim but relied on the stockbroker’s computerised printout of
account (it
seems akin to a ledger and or journal entry).
[27]
On the other hand, the Sable Group presented an Absa Bank deposit
slip to show that ultimately, the funds did not flow directly
to it.
[65]
To counter these facts, Mr Rome contended that
the claim is for the payment of value received pursuant the sale of
the Fund shares.
It does not matter that the Sable Group did not
receive the proceeds of the sale. What matters is the common cause
fact that the
Fund shares were transferred to another entity as
nominee for the first respondent, under circumstances where the
unidentifiable
‘consideration’ – being the amount
(in figures) – that had to be paid to the Fund for the
securities. It
is common cause that no amount was ever paid to the
Fund in respect of the shares. He also faintly argued that the Court
can hold
the Sable Group liable on account of the lost benefit and
enrichment.
[66]
These assertions do not on their own create or
complete the cause of action of enrichment. Given the multiplicity of
parties involved
and the defence raised by Sable Groups, Mr Mostert
had to allege facts to show that a benefit, even if indirect, accrued
to Sable
Group to support the enrichment claim.
[67]
There are several shortcomings on the facts about
the evidence of the receipt of the benefit. Mr Mostert incorrectly
contended that
the Sable Group allowed the proceeds to be transferred
to one of its wholly-owned subsidiaries.
[28]
Sabstra was not a wholly-owned subsidiary of the Sable Group, but of
Sable Holdings Limited. Mr Mostert considered that the
Sable
Group and its directors exercised control, such that the proceeds
from the sale of the Fund shares did not find its way back
to the
Fund. He did not present facts to demonstrate how and through whom
Sable Group exercised the control. I observe, that throughout,
Mr
Mostert appears to have conflated the Sable Group and its parent
company Sable Holdings Limited.
[68]
Mr Rome blames the Sable Group for an incomplete
disclosure of how and why the ‘
monies
came to be transferred out of its account
.’
Circumstances pertaining to the transfer of the shares by Mr Kemp,
and details of who gave instructions to the stockbrokers
to deposit
the proceeds to the Momentum for the acquisition of the Sabstra
policy investment with Appleton, were not investigated
or disclosed.
The defence that after the disposal of the investment with Appleton,
Sabstra, made a distribution to the Holding
Company was not pursued
at all. It seems to me that these issues fell squarely into Mr
Mostert’s wide investigative powers.
He could have investigated
these issues forensically in 2012 to get to the root of the flow of
the share sale proceeds.
[69]
Viewed in the context of the complex group of
companies in which the Sable Group operated, Mr Mostert glossed over
the material
aspects of the Sable Group’s factual assertions.
More specifically, the Sable Group contended that it injected its
funds
through the loan account advanced to Sabstra, a sister company.
At the time of the disposal, it received a repayment of its loan
but
no benefits. The ultimate beneficiaries, for a while, were Sabstra
and Sable Holdings Limited. Mr Mostert did not jettison
the evidence
or show there was a direct or indirect benefit to Sable Group.
[70]
Mr Mostert claimed, after consideration of the
facts set out in the Sable Group’s answering affidavit, that it
become apparent
that other individuals and entities, for and on
behalf of, or under instruction or direction of the Sable Group,
participated in
the process of depriving the Fund of its shares. He
unsuccessfully applied to join Sable Holdings Limited, Mr Bowes, Paul
Harwood
Nash, and Ian Robert Kemp to these proceedings.
[29]
[71]
Surprisingly, Mr Mostert narrowed the joinder
application to the above parties and entities. The stockbrokers who
would have acted
on instructions and implemented the sale of the
shares, as well as make the payment to Momentum Life, were not
joined, nor was
Momentum Life.
[72]
I disagree with Mr Mostert’s contention
that Sable Group’s denial of liability is vague or has failed
to engage with
the facts. I find there is, on these facts, a defence
to the enrichment claim.
Dispute of Facts
[73]
The contested merits lead to the complaint about
the dispute of facts regarding the quantum claimed. Mr Mostert
foresaw early on
that a challenge was conceivable. First, he sought
to recover the present value of the proceeds of the Fund shares of
approximately
R21 million, based on a report by Fifth Quadrant,
authored by Mr Elrich Potgieter.
[74]
The Sable Group sought to have the valuation
certificate attached to support the quantum claimed struck off,
because it was irregular
and inadmissible. Mr Potgieter’s
expert qualifications were not disclosed and the valuation was not
confirmed on oath.
[75]
The Sable Group resisted the amount claimed on
account that it is based on a present day value of loss of growth,
underpinned by
a likely investment strategy not properly articulated,
as a matter of law and fact. It contends that this is unrealistic,
unsubstantiated,
and incorrect.
[76]
Faced with this, Mr Mostert made yet
another about-turn. Now, he no longer claims the projected value of
the growth, but the value
realised at the time of the sale,
R6 337 617.53, a flawed formulation of the enrichment
claim.
[77]
In my view, even though Mr Mostert approached
Sable Group’s liability as
a fait
accompli
, the application remained replete
with disputed facts central to the Sable Group’s defence from
inception. In my view, the
nature of the disputed of facts meet the
requirements laid by the court in
Room Hire Co
(Pty) Ltd v Jeppe Mansions (Pty) Ltd.
[30]
The disputed facts were evident at inception from its letter, dated
14 November 2011, in response to the demand for payment, and
after it
filed its answering affidavit in February 2012. They are not
resoluble on paper.
Referral to Trial
[78]
The application for referral to trial and case
management comes late in these proceedings, and I understand is a
consequence of
the change of Mr Mostert’s attorneys. It is made
out in the Supplementary Heads of Argument filed by Mr Rome. The
Court is
requested to exercise its discretion and order the parties
to go to trial. The question is whether the dispute of facts was
foreseeable
and Mr Mostert’s conduct reprehensible in resorting
to the application procedure. The answer to the first question must
be
in the affirmative.
[79]
At first, Mr Mostert maintained there could be no
bona fide
material
dispute on any issue relating to the cause of action; and if
disputed, such dispute would not be
bona fide.
Yet, the presentation of the case has been
dogged by perplexing changes and inconsistencies on important
aspects, the most fundamental
of which is the exact cause of action
on which Mr Mostert relies. I observe that the first intimation of an
unjustified enrichment
claim was by the Sable Group based on an
assumption
and its
interpretation of the claim. Mr Mostert disavowed a reliance on
unjust enrichment in his replying affidavit.
[80]
Adding to the confusion, Mr Mostert persisted to
introduce new grounds, alleging that the Sable Group played a part in
a ‘
misappropriation
’
of the funds. Inexplicably, he made an about-turn in opposition of
the dismissal application and sought to revive the reliance
on the
rejected cause. He described the cause of action and ‘
as
an aegis of an unjust enrichment claim’
.
He stated that ‘…
despite all the
extraneous atmosphere, the founding affidavit in the main application
established a claim for unjust enrichment.
’
[81]
In Mr Mostert’s opposition (answering
affidavit) to the dismissal application, he maintained that the main
application can
be determined on the existing record and the only
matter that inexorably requires a referral to trial is the quantum of
the claim.
[82]
As shown above, Mr Mostert later made another
about-turn on the quantum for the first time in the supplementary
heads of argument,
now stating the claim is for the repayment of the
value received.
[83]
Significantly, Mr Mostert knew and ought to have
foreseen by February 2012, on receipt of the answering affidavit of
the respondent,
that there would be a dispute of fact on the merits –
but he proceeded regardless. Yet, again, the question of disputed
facts
formed part of the reasons for the dismissal of the joinder
application by Dippenaar AJ.
[31]
When he finally conceded the irresolvable dispute of fact, requesting
a referral to trial, it was seven years after the Sable Group’s
answering affidavit was filed.
[84]
The SCA has held that:
‘
An
application for the hearing of oral evidence must, as a rule, be made
in limine
and not once it becomes clear that the applicant is failing to
convince the Court on the papers or on appeal. The circumstances
must
be exceptional before a court will permit an applicant to apply in
the alternative for the matter to be referred to evidence
should the
main argument fail….’
[32]
[85]
He persisted that only the quantum stands to the
referred, and yet the supplementary heads of argument seem to
indicate (without
a clearly defined issue) that the even the merits
could be referred based on the defences raised. I find this wholly
unsatisfactory.
A referral to trial would be an abuse of the court
process. The application for referral falls to be dismissed.
Conclusion
[86]
I find nothing convoluted
about the defence raised. Mr Mostert dealt with the case in a
haphazard manner. He was granted wide powers
and resources were
placed at his disposal to forensically investigate the defence from
start to end. The application falls to be
dismissed on grounds stated
above.
Costs
[87]
The trite principle is that
costs follow the result, but they are nevertheless at the discretion
of the court. If follows that the
costs of the striking off
application must be borne by Mr Mostert because of the vexatious
nature of the offending material. Mr Mostert
is liable to pay
the costs of one junior counsel. However, insofar as the dismissal
application is concerned, I have exercised
my discretion against an
award of costs against the Sable Group. The dismissal application was
not ill-founded. Its failure was
solely due to the exercise of the
discretion by the Court. As to the main application, the cost must
follow the result. Mr Mostert
is liable to pay the costs of two
counsel, which include the costs senior counsel.
In the result, I make the following
order:
1.
Paragraphs 7, 9.3, 9.4, 14, 17 to 25 of the
applicant’s founding affidavit dated 15 November 2011 are
struck off in terms
of
Rule 6
(15);
1
.27cm; text-indent: -1.27cm; line-height: 150%">
2.
Paragraphs 5, 7, to 12, 14.1 to 14.5, 15 to 23,
24.4, 24.5, 25, 26, 29 to 32, 34, 37 to 39, 46, 55, 58, 59, 61 and 63
of the applicant’s
replying affidavit dated 10 July 2017
are struck off in terms of
Rule 6
(5);
1
.27cm; text-indent: -1.27cm; line-height: 150%">
3.
The applicant is ordered to pay the costs of one
counsel in respect of the striking out application;
4.
The dismissal application is fails, and, there is
no order as to costs;
5.
The main application is dismissed; and
6.
The applicant is ordered to pay the costs of two
counsel which include the costs of senior counsel.
T SIWENDU
JUDGE OF THE HIGH COURT
GAUTENG LOCAL DIVISION,
JOHANNESBURG
This judgement was prepared and authored by the Judge
whose name is reflected and is handed down electronically by
circulation to
the parties/their legal representatives by email and
by uploading it to the electronic file of this matter on CaseLines.
The date
for hand-down is deemed to be 10 December 2020.
Date of hearing:
7-8 September 2020
Date of
judgment:
10 December 2020
Appearances:
Counsel for the
applicant:
Adv. G Rome SC; M Cooke
Attorney for the
applicant:
Nicole Ross Attorneys
Counsel for the
respondent:
Adv. J Cane SC; G Cross
Attorney for the
respondent:
Eversheds Sutherland Attorneys
[1]
The order of 6 June 2006 by van der Merwe J, in terms of which Mr
Mostert was authorised to inspect and investigate any irregularities
committed by the Fund under the
Inspection of Financial Institutions
Act 80 of 1998
; recover any assets lost; he was vested with the
supervision and management of the business, 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 the order; and absolved
from furnishing security.
[2]
The Cadac Pension Fund; the Power Pack Pension Fund; the Mitchell
Cotts Pension Fund; the Prestolite Pension Fund; the Lucas
SA
Pension Fund; the Picbel Penson Fund; the Cortech Pension Fund; and
the Datakor Retirement Fund.
[3]
Paragraphs 15, 16, 28, 28 to 45 and 51 of Sable Groups affidavit in
the dismissal application.
[4]
Paragraphs 15, 16, 28, 38 to 45 and 51 of Sable Group’s
founding affidavit in the dismissal application.
[5]
In summary, the scheme involved a disguised or simulation of a
transfer of fund membership, assets and liabilities to Lifecare
Pension Fund pursuant to the sale of the shares in the principal
employer company. A
s 14
transfer certificate would be
fraudulently obtained from the Registrar of Pension Funds, and a
transaction different from that
which was submitted to the
Registrar. This facilitated the transfer of surplus assets of the
various funds out to a Ghavalas
company using Lifecare Pension Fund
as a conduit. There would be a distribution to the original
principal employer after Lifecare
Pension Fund, Ghavalas and his
company having taken a "commission" from the surplus.
[6]
The policy was in the form of a life policy. Its object was to
provide pension benefits to the Fund’s pensioners and other
beneficiaries. Benefits would be payable to the Fund. At the request
of the Fund Old Mutual could pay benefits directly to pensioners
or
beneficiaries as if payments were by the Fund
.
[7]
Letter from Isabel Rindel.
[8]
Email sent by Andre Van Wyk of Computershare to Henry Bosch of Old
Mutual on 13 December 2010.
[9]
An ABSA bank deposit slip Indicating that this payment was made by
Rice Rinaldi to Momentum Life was included in the papers.
[10]
I understand Sabstra to be a sister company of Sable Group as both
were wholly owned subsidiaries of Sable Holdings Limited
[11]
Three endowment policies (numbers 98170327, 96170333 and 96170340)
[12]
Rule 6(15) of the Uniform Rules of Court provides that a court
strike out portions of an affidavit which contains averments that
are scandalous, vexatious or irrelevant, the opposite party may
apply for the striking out of the objectionable matter.
[13]
The details of the joinder application brought by Mr Mostert are set
out later in the judgment.
[14]
In a judgment delivered on 14 February 2017 under the case number
2011/43945.
[15]
See also
Titty’s Bar & Bottle Store (Pty) Ltd v ABC
Garage (Pty) Ltd and Others
1974 (4) SA 362 (T)
[16]
Mostert NO v Sable Group Holdings (Pty) Ltd In re: Mostert NO v
Sable Group Holdings (Pty) Ltd and Others
(2011/43945) [2013]
ZAGPJHC 143 (13 June 2013).
[17]
Berrange N.O. and Others v Vorster and Others
(37718/2006)
[2016] ZAGPPHC 1105 (3 November 2016) where Louw J, drawing from
court decisions, ascribes the following meaning
to ‘vexatious’
at paragraph 26: ‘“obviously unsustainable” or
“frivolous, improper, instituted
without sufficient ground to
serve solely as an annoyance to the defendant”.’
[18]
Cassimjee v Minister of Finance
2014 (3) SA 198
(SCA).
[19]
Ibid.
[20]
Trencon Construction (Pty) Ltd v Industrial Development
Corporation of South Africa and Another
2015 (5) SA 245
(CC)
para 85;
Media Workers Association of South Africa and Others
v Press Corporation of South Africa Ltd
(‘Perskor’)
1992 (4) SA 791 (A).
[21]
Berrange N.O. and Others v Vorster and Others
(37718/2006)
[2016] ZAGPPHC 1105 (3 November 2016).
[22]
Allen v Sir Alfred McAlpine & Sons Ltd
[1968] 1 ALL ER
543
(CA) at 556.
[23]
Sanford v Haley NO
2004 (3) SA 296
(C) para 8.
[24]
Before retracting, Mr Mostert also made a misappropriation claim
which could be conceived as the
condictio furtiva
.
[25]
See
McCarthy Retail Ltd v Shortdistance Carriers CC
2001 (3)
SA 482 (SCA).
[26]
Although not in itself a hard and fast rule. See
Bowman, de Wet
and Du Plessis NNO and others v Fidelity Bank Ltd
1997 (2) SA 35
(A).
[27]
The annexure shows a transfer of a cash amount of R6 377 617.63
from the respondent's account at Rice Rinaldi to Momentum
Life. It
is not evidence of a deposit into Sable’s bank account or that
it received the payment.
[28]
Paragraph 10 to 35 and 12 of the answering affidavit.
[29]
In the joinder application it was set out that Mr Bowes, Mr Nash and
Mr Kemp were the directors of both the Sable Group and Sable
Holdings Limited at the relevant time.
[30]
Room Hire Co (Pty) Ltd v Jeppe Mansions (Pty) Ltd
1949 (3) SA
1155
(T).
[31]
Dippenaar J stated: ‘However, I cannot ignore the existence of
the substantial factual disputes which already emerge from
the
papers in considering the issue of convenience, also of the court in
due course seized with the main application.’
Mr Mostert
claims he took heed of this judgment (despite also seeking to appeal
it) and procured a referral to trial.
[32]
Law Society, Northern Provinces v Mogami and others
2010 (1)
SA 186
(SCA) para 23.