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[2010] ZAWCHC 484
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Trustees for the time Being of the Antheru Beleggings Trust v Fidentia Holdings (Pty) Ltd, Bramber Alternative (Pty) Ltd v Fidentia Holdings (Pty) Ltd (10318/10, 10350/10) [2010] ZAWCHC 484 (11 October 2010)
IN
THE HIGH COURT OF SOUTH AFRICA (WESTERN CAPE HIGH COURT, CAPE TOWN)
CASE
NO: 10318/10 & 10350/10
In
the matter between:
MARTIN
JAMES VAN SCHALKWYK
…................................
Intervening
Creditor
In
the application of
THE
TRUSTEES FOR THE TIME BEING
OF
THE ANTHERU BELEGGINGS TRUST
…........................................
Applicant
and
FIDENTIA
HOLDINGS (PTY) LTD
(Registration
no: 2001/022355/07) 1
st
Respondent
in case no: 6656/10
and
BRAMBER
ALTERNATIVE (PTY) LTD
(Registration
no: 2000/024137/07) 1
st
Respondent
in case no: 6655/10
and
FIDENTIA
ASSET MANAGEMENT (PTY) LTD
(Registration
no: 1998/024863/07) 1
st
Respondent
in case no: 6657/10
DINES
CHANDRA MANILAL GIHWALA N.O.
…........................
2
nd
Respondent
GEORGE
PAPPADAKIS N.O.
…..................................................
3
rd
Respondent
EXECUTIVE
OFFICER OF THE FINANCIAL
SERVICES
BOARD
….........................................................................
4
th
Respondent
JUDGMENT
DELIVERED ON 11 OCTOBER 2010
YEKISO,
J
[1]
On 1 April 2010 the Anthem Beleggings Trust ("the Trust")
launched three separate applications out of this Court under
case
numbers 6655/2010, 6656/2010 and 6657/2010 for the winding up of
Fidentia Holdings (Pty) Ltd ("Fidentia Holdings"),
Bramber
Alternative (Pty) Ltd ("Bramber"), and Fidentia Asset
Management (Pty) Ltd ("FAM"), each one of the
aforementioned companies being cited as the first respondent in the
aforementioned applications. Dines Chandra Manilal Gihwala
and George
Pappadakis ("the Curators"), in their capacities as
Curators of Fidentia Holdings, Bramber and FAM have each
been cited
as the second and the third respondent respectively, whilst the
Executive Officer of the Financial Services Board ("FSB")
has been cited as the fourth respondent in each such application.
[2]
The Trust is a trust duly registered as such by the Master of this
Court under reference IT1128/2002 and has its principal place
of
business at 3 Bugu Close, Plattekloof, Cape Town. The Trust seeks to
have the aforementioned companies wound up ostensibly on
the basis
that each one of the aforementioned companies are unable to pay their
respective debts, in the ordinary course of their
business, as and
when these become due and payable. The winding up order is further
sought on the basis that it is just and equitable
that a winding up
order in respect of these companies be made.
[3]
On 1 February 2007, somewhat three years before the institution of
the winding up proceedings, Fidentia Holdings, Bramber and
FAM were
placed under provisional order of Curatorship (per Louw J). The
provisional order of curatorship was confirmed on 27 March
2007 (per
Fourie J).
[4]
All the three applications referred to in paragraph [1] were launched
on urgency basis and were enrolled for hearing in the
Third Division
of this Court on Friday, 23 April 2010. Prior to the hearing of the
matter on the aforementioned date, the fourth
respondent gave notice
of its intention to raise and argue a point
in
limine
in
all the applications concerning Fidentia Holdings and Bramber. The
point
in
limine
was
based on a contention that the Trust is neither a creditor nor a
member of Fidentia Holdings and Bramber and that, therefore,
the
Trust lacks the necessary
locus
standi
to
bring about an application for the winding up of Fidentia Holdings
and Bramber. The judge presiding on 23 April 2010 declined
to deal
with the point
in
limine
and
all three applications relating to the winding up of Fidentia
Holdings, Bramber and FAM were consequently postponed to 2 August
2010 for hearing with a directive having been given relating to a
timetable for the filing of further affidavits and exchange of
heads
of argument.
SEPARATION
OF ISSUES
[5]
It appears on the basis of the record that no steps were taken by the
Trust to address the issues that gave rise to the point
in
limine
and,
consequently, so it would appear, the second and the third
respondents joined cause with the fourth respondent and launched
applications in the Fidentia Holdings and Bramber matters seeking the
following relief, namely:
[5.1.]
an order that the issue relating to the Trust's
locus
standi,
in
which is incorporated the issue as to whether Jan Joubert van Blerk
("Van Blerk"),
the
deponent to the founding affidavit of the Trust in each application,
had the necessary authority to institute winding up proceedings
against Fidentia Holdings, Bramber and FAM on behalf of the Trust in
the absence of such decision having been taken by both the
Trustees
of the Trust, be determined first and in advance of all other issues
in the matters concerned;
[5.2.]
an order dismissing the applications for the winding up order in the
event it being found that the trust lacks the necessary
locus
standi
and
Van Blerk not having had the necessary authority to bring about the
applications for orders for the winding up of Fidentia
Holdings,
Bramber and FAM. The order for the separation of the issues was
sought in terms of Rule 33(4) of the Uniform Rules
of Court.
[6]
The applications for separation of issues, both at the instance of
the first respondent in each such application, the second
and the
third respondents and the one at the instance of the fourth
respondents, served before Olivier AJ on Friday, 21 May 2010.
The
applications were opposed by the Trust, it having filed its
answering affidavit on the morning of the hearing. Simultaneous
with
the filing of the Trust's answering affidavit in the applications
for separation, there was filed on behalf of one Martin
James van
Schalkwyk ("Van Schalkwyk") an application for leave to
intervene as a creditor in the Fidentia Holdings
and the Bramber
matters on the basis that he is a creditor of those companies, thus
joining cause with the Trust in the relief
sought in respect of
those companies. After hearing argument, Olivier AJ ordered that the
interlocutory applications that served
before him on 21 May 2010 be
postponed for hearing on 2 August 2010 simultaneously giving a
directive for the further filing
of affidavits and exchange of heads
of argument. Olivier AJ ordered that all questions of costs to stand
over for later determination.
Thus the issues to be determined on 2
August 2010 were the merits of the applications for the separation
of issues as well as
the application by Van Schalkwyk for leave to
intervene as a creditor in the matters of Fidentia Holdings and
Bramber.
ARGUMENT
IN THE SEPARATION APPLICATIONS
[7]
As pointed out in paragraph [5.2] of this judgment the order for the
separation of issues is sought in terms of rule 33(4)
of the Uniform
Rules of Court which, on the face of it, appears to relate only to
pending actions. In
New
Clicks South Africa (Pty) Ltd v Minister of Health
2005
(3) SA 238
SCA para [15] at p252 the Supreme Court of Appeal held
that the power of a court to allow a separate determination of
issues
does not only relate to pending actions but that it also
applies to motion proceedings. This approach was confirmed by the
Constitutional
Court in
Minister
of Health v New Clicks SA (Pty) Ltd & Others
2006(2)
SA 311 at 356 para [56] where Chaskalson CJ made the observation
that the contention by the appellant that the Supreme
Court of
Appeal erred in refusing to separate the issue of jurisdiction from
the application for leave to appeal and in requiring
the matter to
be dealt with in accordance with the directions given earlier, ought
to be rejected.
[8]
In S
v
Malinde & Others
1990(1)
SA 57 (AD) at 68 B-D the then Appellate Division held that
substantial grounds should exist for the exercise of power
to grant
an order for the separation of issues. The Court went on to observe
that the basis of the power to grant an order of
separation is
convenience - the convenience not only of the parties but also the
convenience of the Court concerned. The advantages
and disadvantages
likely to follow upon the granting of an order must be weighed. If
overall, and with due regard to the divergent
interests and
considerations of convenience affecting the parties, it appears that
the advantages would outweigh the disadvantages,
the court would
normally grant the order of separation. Clearly, therefore, a matter
of consideration and the granting of an
order for the separation of
issues in motion proceedings, in the light of the authorities cited
in the preceding paragraph, is
not without precedent.
[9]
In the instance of this matter, it is contended on behalf of the
Fidentia companies (Fidentia Holdings, Bramber and FAM) and
FSB that
it would be convenient that the matters relating to
locus
standi
on
the part of the Trust and the issue of authority on the part of Van
Schalkwyk be disposed of separately from the other issues,
which are
contended to be complex and wide ranging; that those complex and
wide ranging issues would inevitably give rise to
factual disputes
which, in turn, would require costly and time consuming expert
input. Finally, it is contended on behalf of
the applicants in the
separation applications that should the issue of
locus
standi
and
authority be upheld, they will be dispositive of the applications
for the winding up order in each application in their entirety.
In
order to determine these issues, I shall first deal with the issue
of
locus
standi
followed
by the issue of authority on the part of Van Blerk.
THE
ISSUE OF
LOCUS
STANDI
[10]
Section 346 of the Companies Act, 61 of 1973 provides for the
category of persons who may bring about an application for
the
winding up of a company. These categories are listed as the company
itself; one or more of its creditors (including contingent
or
prospective creditors); one or more of its members or jointly by any
or all of the persons referred to in paragraphs (a),
(b) and (c) of
subsection (1) to section 346 of the Companies Act.
[11]
The applicant's claim is set out in paragraphs 39 to 43 of the
founding affidavit in each application. In paragraph 39 of
the
founding affidavit, Van Blerk states that the Trust conducts the
business of an Investment Trust and that it invested substantial
sums of money with the Fidentia Group (without specifying any
specific company or companies within the Fidentia Group of companies
it invested these substantial sums of monies) including FAM during
the period 2002 and/or 2003 until about 2006. In paragraph
40 the
deponent to the founding affidavit states that FAM is indebted to
the Trust in an amount in excess of R27,929,772-08 which
is claimed
to be long overdue and payable. In neither of paragraphs 39 to 43 is
there any specific reference to an entity within
the Fidentia Group
of companies other than FAM which is alleged to be indebted to the
Trust.
[12]
In paragraph 10 of the founding affidavit Van Blerk states that the
assets and liabilities of all three companies have been
pooled
and/or intermingled to the extent that it is difficult to
differentiate between them. The deponent goes on further to
state
that this migration of resources between these companies included
funds invested by the Trust and assets purchased from
funds invested
by the Trust. Evidence seems to suggest that the Trust invested
funds on behalf of several investors with FAM
at the time when FAM
was a registered financial services provider in terms of the
provisions of the
Financial Advisory and Intermediary Services Act,
37 of 2002
.
[13]
There is evidence to suggest that funds invested with FAM on behalf
of several investors, including those investors who may
have
entrusted their funds with the Trust for investment purposes, were
advanced by the corporate governors of FAM to Fidentia
Holdings and
Bramber to purchase or acquire interests in private equity companies
and other fixed property and that these assets
are held by Bramber
and Fidentia Holdings in their respective names. In this regard
Mr
Khan,
for
the Trust, makes a point in his submissions and indeed in oral
argument before me that once the investors' funds were advanced
by
the corporate governors of FAM to Bramber and Fidentia Holdings to
acquire equity in private companies and fixed properties,
and once
such equity and assets were acquired, Bramber and Fidentia Holdings
merely held these assets and equities as nominees
for the investors
which would include the Trust. And its investors Based on this
contention
Mr
Khan
submits
further on behalf of the Trust that because Bramber and Fidentia
Holdings held such assets and equity in private companies
as
nominees for several investors including those investors who
invested in the Trust, the Trust thus became the creditor of
Bramber
and Fidentia Holdings and, as such, does have the necessary
locus
standi
to
bring about an application for the winding up of those entities.
[14]
In paragraph [12] of this judgment, I made a point that at the time
the Trust invested funds with FAM, the latter was a registered
financial service provider in terms of the
Financial Advisory and
Intermediary Services Act. As
such FAM was at the time entitled to
receive and deal with the investors' funds. As correctly pointed out
by
Mr
Mitchell
SC
in his submissions, the activities of FAM in this regard were
subject to and regulated by the provisions of the
Financial
Institutions (Protection of Funds) Act, 28 of 2001
. Once a
registered financial services provider, such as FAM at the time,
receives funds from the investors for purposes of investments,
the
funds so received constitute trust property as contemplated in the
definition of the term "trust property" in
section 1
of
the
Financial Institutions (Protection of Funds) Act. Such
funds,
being trust property as they should have been, enjoy protection from
creditors as opposed to funds invested with a non-registered
entity
which do not enjoy such protection.
[15]
FAM, as a registered financial services provider, could make use of
a nominees company to hold funds or assets in the name
of the
investors. But for such funds to enjoy protection from creditors of
such a nominee company, they ought and should be held
in the names
of the investors concerned. For a company to qualify as a nominee
company, it has to comply with the provisions
of
section 1
, read
with
section 4
of the
Financial Institutions (Protection of Funds)
Act. The
term "nominee company" is defined in
section 1
of
the
Financial Institutions (Protection of Funds) Act, which
defines
the term "nominee company" as follows:
'"nominee
company'
means
a company, controlled by a financial institution, which-
is incorporated under
the provisions of the Companies Act, 1973 (Act 6 of 1973);
has as its principal
object to act as nominee for, or representative of, any person in
the holding of any property in trust for
such person or persons;
is precluded by its
memorandum of association from incurring any liabilities other than
those to the persons on whose behalf it
holds assets, to the extent
of their respective rights to, and interest in, such assets; and
has entered into an
irrevocable written agreement with a financial institution which
controls the company, and in terms of which
such financial
institution has undertaken to pay all the expenses of, and
incidental to, its formation, operations and liquidation;"
[16]
Section 4
of the
Financial Institutions (Protection of Funds) Act
imposes
obligations on registered financial services providers and
their nominee companies in dealing with invested funds. A registered
financial services provider, such as FAM at the time the funds were
invested with it, may not cause such funds (trust property)
to be
invested otherwise than in a manner directed in any instrument
regulating the investment of such funds or any agreement
relating to
the investment of such funds; in the absence of any instrument or
agreement regulating the investment of such funds
(trust property),
such funds may not be invested otherwise than in the name of the
principal investor concerned; to invest such
funds in the name of
the financial institution concerned in its capacity as
administrator, trustee or agent of the principal
investor in respect
of the funds so invested; or in the name of a nominee company
provided the nominee company has as its principal
object to act as
nominee for, or representative of, any person in the holding of any
funds or property in trust for such person
or persons. In short, the
nominee company has to comply with all those requirements set out in
paragraph (a) to (d) in the definition
of a nominee company.
[17]
There is no evidence on record to suggest that Bramber or Fidentia
Holdings were nominees of FAM in its capacity as the registered
financial services provider or, for that matter, that Bramber and
Fidentia Holdings complied with all those requirements that
would
qualify them to be a nominee company. Consequently, whatever funds
were advanced by FAM to Bramber and Fidentia Holdings
did not enjoy
the protection afforded to investors such as the Trust, more so,
that whatever equity or fixed property may have
been acquired out of
such investor funds, was not acquired in the name of the investors
concerned, including the Trust but, were
acquired, instead, in the
names of Bramber and Fidentia Holdings.
[18]
In the light of the exposition of the legal position as set out in
paragraphs [14] to [17] above, there is no merit in the
contention
by
Mr
Khan
in
his submissions and argument in Court that Bramber and Fidentia
Holdings acted as nominees of several investors and the Trust
when
they acquired equity and fixed property out of the investors' funds.
This is because both FAM, on the one hand, and Bramber
and Fidentia
Holdings, on the other hand, did not comply with the statutory
regime as provided for in
section 1
, read with
section 4
, of the
Financial Institutions (Protection of Funds) Act when such funds
were advanced to Bramber and Fidentia Holdings. Moreover,
there is
no evidence on record to suggest any contractual relationship
between the Trust, on the one hand, and Bramber and Fidentia
Holdings, on the other hand. Bramber and Fidentia Holdings are not
"nominee companies" as defined, nor were whatever
equities
purchased from private companies or fixed assets acquired, acquired
in the names of the investors concerned or in the
name of the Trust.
[19]
The Trust invested its investors' funds with FAM. Whatever
contractual relationship there could have been was between the
Trust
and FAM with which it invested its investors' funds. The Trust thus
cannot, simply because there is evidence to suggest
that Bramber and
Fidentia Holdings utilised the investors' funds, advanced to these
entities by FAM, to acquire equity and fixed
property, that, purely
on that basis, it is the creditor of both Bramber and Fidentia
Holdings and, further on that basis, claim
to have
locus
standi
to
bring about an application to have those entities wound up. It
therefore follows that the applications of the Trust to have
both
Bramber and Fidentia Holdings wound up should be dismissed on the
basis that the Trust is not a creditor of the aforementioned
entities and, as such, lacks the necessary
locus
standi
to
have the aforementioned entities wound up.
AUTHORITY
OF VAN BLERK
[20]
The authority of Van Blerk to bring about applications for the
winding up of Bramber, Fidentia Holdings and FAM was challenged
from
the inception of all those applications. The authority of Van Blerk
formed part of the issues that were to be determined
separately and
in advance of all other issues in the interlocutory applications
that were enrolled for hearing on 2 August 2010.
However, on 4
August 2010, being the second day of argument, a resolution was
produced by the Trust to the effect that Herman
Heydenrych
("Heydenrych"), a co-trustee of the Trust, authorised the
launching of the winding up applications at the
instance of the
Trust. The production of this resolution, belated as it was, brought
to an end the point
in
limine
that
the Trust did not have the necessary authority to proceed with the
applications for the winding up of the relevant companies.
Obviously, had the requested evidence of Van Blerk's authority been
produced at the outset, or when called for, the point
in
limine
would
not have been pursued.
THE
INTERVENTION APPLICATION
[21]
Now that I have found, in paragraph [19] of this judgment, that the
Trust's application for the winding up of Bramber and
Fidentia
Holdings cannot succeed, and as correctly pointed out by
Mr
Daniels
SC
in his submissions and in argument before me, Van Schalkwyk, as an
intervening creditor, must make out a case for the winding
up of
Bramber and Fidentia Holdings. Van Schalkwyk's claim, based it is on
an alleged employment contract, is heavily disputed
as
correspondence exchanged between the Curator's attorneys (letter
dated 20 August 2007) and Van Schalkwyk's then attorneys
(letter
dated 27 August 2007) tend to show. The dispute appears to have been
known to Van Schalkwyk prior to the institution
of the intervention
applications if the evidence of Van Schalkwyk on 12 August 2009 in
the insolvency enquiry of JAW Brown ("Brown")
is anything
to go by. At that enquiry Van Schalkwyk said in his evidence that he
would have had to issue summons against Fidentia
in order to recover
what was owed to him.
[22]
As pointed out in the preceding paragraph, the existence or
otherwise of Van Schalkwyk's employment contract is in dispute.
Van
Schalkwyk is unable to provide either the original or a copy of the
disputed employment contract. All that Van Schalkwyk
says in his
evidence about the whereabouts of the employment contract is that he
gave it to the Compliance Officer within the
Fidentia Group for
safekeeping. He does not say in his evidence precisely when and
where was such a contract concluded; he does
not say in whose
presence nor does he indicate the identity of witnesses to such a
contract; no proof has been produced, in the
form of an affidavit by
the Compliance Officer concerned, to confirm that the employment
contract was indeed given to him for
safekeeping; no affidavit of
any person who may have had knowledge of the existence of
the
employment contract has been produced other than a passing reference
to the existence thereof in the confirmatory affidavit
of Brown
deposed to on 20 May 2010; Van Schalkwyk does not state, either in
his founding affidavit or in his replying affidavit,
who the
draftsman of the employment contract was.
[23]
No person other than JAW Brown, within the Fidentia Group, has any
knowledge of the existence of the employment contract
Van Schalkwyk
relies on. Andrew Herbert Tucker ("Tucker"), an attorney
in the employ of the Fidentia Group at the time,
and who, in the
normal course of his duties, would have drawn the employment
contract, has no knowledge of the existence of the
employment
contract that Van Schalkwyk relies on. Tucker states in his
affidavit that he was never informed by Van Schalkwyk
of his
entitlement to any payment based on commission; according to Tucker,
he (Tucker) was materially involved in the discussions
relating to
the sale of shares in Boland Rugby and that Van Schalkwyk was not
responsible for the conclusion of the agreement
in terms of which
shares in Boland Rugby were sold to Fidentia Holdings. Sandra
Burger, who was prior to the curatorship of the
Fidentia Group
employed in the accounts department, states in her affidavit that
she never received an instruction to record
an indebtedness of
Bramber or Fidentia Holdings towards Van
Schalkwyk.
There is no cogent evidence on record to indicate what meaningful
steps Van Schalkwyk took in order to recover what
allegedly was due
to him.
[24]
As has already been pointed out, the very basis of Van Schalkwyk's
claim is a subject of a dispute. None of the persons employed
within
the Fidentia Group, other than Brown, has any knowledge of the
existence of the employment contract Van Schalkwyk relies
on. Van
Schalkwyk's alleged claim, which otherwise would have vested him
with the necessary
locus
standi
to
intervene as a creditor, is the subject matter of what appears to me
to be a dispute on reasonable and
bona
fide
grounds.
Liquidation proceedings are not designed for the resolution of
disputes as to the existence or otherwise of a debt. Based
on the
facts pertaining to Van Schalkwyk's alleged claim and the dispute
relating to the existence or otherwise thereof, I am
unable to
exercise my discretion in granting the relief sought by Van
Schalkwyk. Van Schalkwyk relies on a contract of employment
in an
attempt to enforce his claim. It is trite that a party who relies on
an agreement must prove the agreement and the terms
thereof. In the
instance of this matter, Van Schalkwyk has failed to do so.
[25]
I am thus unable to find, in the light of the dispute of facts
before me, which can only be resolved by oral evidence, that
Van
Schalkwyk was in the employ of either Bramber or Fidentia Holdings
and that he is a creditor of either of those entities
as he claims.
It therefore follows that the applications by Van Schalkwyk to
intervene as a creditor, in both the matters of
Bramber and Fidentia
Holdings, ought to fail. In the light of this finding, it is not
necessary for me to determine whether Van
Schalkwyk's claim has
become prescribed as contended by the respondents. The applications
for striking out at the instance of
the second and third
respondents, was not pursued in argument so that it is similarly not
necessary for me to determine that
issue nor, for that matter, the
issue of winding up on just and equitable grounds. To the extent
that Van Schalkwyk and the Trust
complain about the conduct of the
Curators in the course of the curatorship, their remedy does not lie
in the winding up procedure
but, rather, in
sections 5(8)
and
5
(9)
of the
Financial Institutions (Protection of Funds) Act.
[26
]
In as far as the applications for the separation of issues in the
matters of Bramber and Fidentia Holdings is concerned, in
my view,
there is merit for the separation of the issue concerned in that the
issue
concerned,
namely,
locus
standi,
is
dispositive of the entire applications in the aforementioned
matters. Consequently, the applications for an order for the
separation of the issue of
locus
standi,
in
both the matters of Bramber and Fidentia Holdings, should and is
hereby granted.
[27]
In the result, the following order is made:
[27.1.]
It is hereby determined, and it is accordingly so ordered, that the
issue of
locus
standi,
in
both the matters involving Fidentia Holdings (Pty) Ltd under case
no: 6655/2010 and Bramber Alternative (Pty) Ltd under case
no:
6656/2010 be determined in advance of all other issues. [27.2.]
Arising from such determination the applications of the Trustees
for
Time Being of the Antheru Beleggings Trust, for the provisional
winding up order of Fidentia Holdings (Pty) Ltd under case
no:
6655/2010 and of Bramber Alternative (Pty) Limited under case no:
6656/2010 are hereby dismissed.
[27.3.]
The Antheru Beleggings Trust is ordered to pay the respondents'
costs (Applicants in the separation applications) in the
applications for separation of issues in the matters of Fidentia
Holdings (Pty) Ltd, case no:
6655/2010
and Bramber Alternative (Pty) Ltd, case no: 6656/2010 on a party and
party scale, duly taxed or as agreed.
[27.4.]
In the case of the Fourth Respondent, the costs order referred to in
paragraph [27.3] of this Order shall include costs
consequent upon
employment of two counsel.
[27.5.]
The applications of Martin James Van Schalkwyk to intervene as a
creditor in both the matters of Fidentia Holdings (Pty)
Ltd, case
no: 6655/2010 and Bramber Alternative (Pty) Ltd, case no: 6656/2010,
are dismissed with costs on a party and party
scale, duly taxed or
as agreed, and, in the case of the Fourth Respondent in both such
matters, such costs to include costs consequent
upon employment of
two counsel
N
J YEKISO, J