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[2010] ZAGPPHC 110
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Ochse et uxor v Jacques and Others, Glass and Another v Van Zuydam and Others (67866/2009, 42873/10) [2010] ZAGPPHC 110 (3 September 2010)
IN
THE NORTH GAUTENG HIGH COURT,
PRETORIA
REPUBLIC OF SOUTH AFRICA
CASE
NO: 67866/2009
DATE:
03/09/2010
In
the matters between:
OCHSE
et uxor
Applicants
and
JACQUES
and OTHERS
Respondents
CASE
NO: 42873/10
GLASS
and NAIDU
Applicants
and
VAN
ZUYDAM and others
Respondents
JUDGMENT
1.
These two urgent matters were argued together before me. They relate
to an enquiry convened under s 417(1) of the Companies Act,
61 of
1973 by the Master. The cases were argued together before me on 3
September 2010. The urgency lies in the fact that the enquiry
is due
to resume on 7 September 2010. The respective sets of applicants, who
were separately represented, ask that the enquiries
be stayed until
certain litigation has been completed. In the case of the Ochse
applicants, the request is that the enquiry be
adjourned until after
the return day of the provisional winding up order which was granted
by Van der Bijl AJ in this court on
23 August 2010 in relation to
Forlife Holdings (Pty) Ltd. Applicants Glass and Naidu ask that the
enquiry be postponed, at least
in relation to their evidence, until
the completion of an application for their provisional sequestration
before Bertelsmann J,
in which the learned judge is presently hearing
oral evidence at his direction on a number of defined issues.
2
. The applicants locate the jurisdiction they ask me to exercise in s
354 of the Companies Act, which confers a general discretion
on the
court to stay proceedings "in relation to the winding-up".
I do not think this provision is applicable to the
present cases, for
reasons I shall give below.
3.
Glass
and Naidu were executives in Centurus (Pty) Limited. They dealt with
Forlife. Centurus used Forlife to procure contractors
to provide
services to Centurus. Forlife in its turn used several subcontractors
to render the services. In February 2009, Centurus
called Glass and
thereafter Naidu to a series of meetings at which they were accused
of having defrauded Centurus of many millions
of rands by submitting
invoices to Centurus which were not for Centurus' account and then
causing Centurus to make payment in terms
of these invoices to
Forlife.
4.
My
attention was directed, as a representative example, to one of the
invoices on which Centurus relies, VAT invoice no 461 dated
1 August
2007 in which Centurus is asked to make payment of R85 999,77 plus
VAT of R12 039, 97 for "Parktown North House:
Phase 2 Deposit as
per attached schedule". This debt was not a debt of Centurus but
of Glass. The invoice was directed to
the attention of Naidu and
required a cheque made out to Forlife. The VAT paid by Centurus could
never legitimately have been claimed
by Centurus as an output but was
so claimed, to the prejudice of SARS. Glass' answer to this, which is
disputed, is that by oral
arrangement he was allowed to do this and
have the amount paid debited to his loan account which was then in
credit.
5.
The
meetings between Glass, Naidu and the other directors were also
attended by Centurus' attorney, Mr May. During the period February
to
November 2009, Glass and Naidu signed a total of five statements
between them detaining the extent of the frauds they had committed
and giving over their assets to Centurus. In November 2009, however,
they changed tack: they claimed that all the statements had
been
induced by duress in which May played a prominent part, threatening
them with criminal prosecution, being locked up and being
raped in
prison if they did not cooperate with him in his efforts to recover
what Centurus said had been misappropriated. In addition,
they said,
the admissions of fraud were all untrue and they were entirely
innocent of any wrongdoing.
6.
Centurus
launched an application for the winding up of Forlife in November
2009. As I have said, Van der Bijl AJ granted a provisional
winding
up order on 4 June 2010, with return day 4 August 2010. The fault for
the long delay in getting the matter heard did not
rest with
Centurus. The return day of the liquidation order has been extended
until November 2010.
7.
In
late December 2009, Centaurus applied for the provisional
sequestration of Glass and Naidu. The matter came before Bertelsmann
J who, according to the papers before me, took the view that the
matter could not be determined without evidence on the question
of
duress in regard to the five statements and whether the admissions in
them were true. The matter could not be completed before
the
elevation of Bertelsmann J to an acting appointment in the Supreme
Court of Appeal and the part heard provisional sequestration
applications were postponed to December 2010 for completion of the
evidence and for final argument on the applications themselves.
8.
On
30 June 2010, on the application of the provisional liquidators
appointed to Forlife, in provisional liquidation, the Master
granted
the order for the enquiry. The respective applicants have been
subpoenaed as witnesses. Glass has commenced giving evidence,
under
protest and without prejudice.
9.
The
determination of the provisional liquidators to continue forthwith
with the enquiry has prompted these applications. Although
the
applicants in their notices of motion attacked the very foundation of
the enquiry and the validity of the subpoenas served
on them, this
relief has been abandoned and the only question before me is whether
the enquiry should be adjourned in its entirety
or in stayed in
respect of the applicants as witnesses at the enquiry.
10.
In
Nedbank
Ltd v The Master ofthe High Court, WLD and Others,
1
the
court held that the powers of the court to intervene in matters such
as the present are located in
s 151
of the
Insolvency Act, 24 of 1936
read with s 339 of the Companies Act and that a court will not
intervene unless it is satisfied that the Master was clearly wrong.
I
am bound to follow this judgment unless I am satisfied that it is
clearly wrong. It was not argued that the case was wrongly
decided.
11.
This
conclusion undercuts much of the argument that was presented to me.
The submission on behalf of the Ochse applicants was that
it would be
more convenient if the enquiry were, in regard to their evidence,
stayed until it was determined whether the provisional
winding up
would be made final. The prejudice to the Ochse applicants was that
their time and money would be wasted if the enquiry
were to be
terminated as it would have to be if the provisional winding up order
was discharged.
12.
The
argument for Glass and Naidu was that although their actual evidence
given at the enquiry would remain private and confidential,
and thus
not be able to be used at the hearing before Bertelsmann J without
the leave of the learned judge
2
,
evidence obtained derivatively
from
any evidence given at the enquiry would be admissible and that this
could result in prejudice.
13.
I
have a fundamental practical problem with the approach of the
applicants. On their versions, they are all innocent of any
wrongdoing.
All the legal proceedings up to now, they say, have been
the result of a terrible misunderstanding. In these circumstances I
cannot
see how their giving evidence at the enquiry will prejudice
them at all. It is in their interests that the provisional
liquidators,
Centurus and Attorney May (who, they say has been
harassing them since the inception of the matter) should all be shown
that they
have got the wrong end of the stick. I should think that
the sooner the applicants can do this, the better for them.
14.
Furthermore,
it is clear from the evidence produced by the provisional liquidators
that there are good grounds for the enquiry to
proceed as soon as may
be lawfully possible. No statement of affairs of Forlife has yet been
delivered to the liquidators as required
by s 363(2) of the Companies
Act. As the Ochse applicants were the sole directors of Forlife when
its winding up commenced, they
bear the obligation to see that this
is done. Mr Ochse himself has admitted that the affairs of the
company are in a chaotic state.
I have referred to the
prima
facie
evidence
of fraud indicated by the invoice dated 1 August 2007.
In
addition, there is the fact of the five statements, whether or not
they were induced by duress and whether or not the admissions
of
fraud were correctly made and the fact that although many millions of
rands flowed through Forlife's bank account, nothing remains.
The
applicants, with the possible exception of Mrs Ochse, were at the
heart of the affairs which are sought to be investigated.
In
addition, Mr
van
der Merwe SC
on
behalf of the liquidators disavowed any intention of investigating
the duress question itself at the enquiry.
15.
The
concerns of Glass and Naidu that Bertelsmann J might allow derivative
evidence to be introduced to theirdetriment are, in my
view, not
matters on which I should pronounce byway of generalisations. Glass
and Naidu will be able to raise their objections
before the learned
judge who will be in a position infinitely better than I am to decide
what specific evidence should, or should
not, be admitted in
proceedings before him.
16
.
The
same goes for the inquiry before the Commissioner appointed by the
Master. He is a member of the Pretoria Bar and vested with
the duty
to ensure that the proceedings before him are fair and that the
questions he allows are relevant. Here again Glass and
Naidu are
adequately protected.
17.
lam satisfied that all the applicants will lose if the enquiry goes
ahead as planned are, at the most, certain ill-defined tactical
advantages. I respectfully agree with the conclusion in
Mitchell
and AnothervHodes and Others
3
which
translates in the present circumstances to the proposition that the
applicants ought not to be allowed to defer being examined
on matters
pertaining to the trade, dealings, affairs and property of Forlife,
even for the relatively short period sought by the
applicants.
Indeed, if the enquiry goes ahead they may benefit from disclosing
their versions from the witness box. On the other
hand, one knows
that the longer assets are concealed or dissipated, the more
difficult it becomes to recover them. Given the key
positions the
applicants occupied in the scheme which is alleged to have led to the
harm done to Centurus, there is no basis for
concluding that the
Master was clearly wrong. On the contrary, I am satisfied that the
Master had good grounds for directing that
an enquiry take place
immediately. In our country fraud is rampant. Where grounds are
produced which show that fraud may have been
committed, the sooner
and the more efficiently the notoriously slow wheels of justice are
propelled into motion, the better.
18.
It follows that neither application can succeed. Both applications
which are the subject of this judgment are dismissed with
costs.
Those costs are to include the costs of both senior and junior
counsel who appeared for the provisional liquidators.
NB
Tuchten
Judge
of the High Court
3
September 2010
1
2009
3 SA 403
W para 72
2
Sees
417(7)
3
2003
SA 176
C 209C