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[2010] ZAGPPHC 212
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keevy N.O and Others v Born Free Investments 364 (Pty) Ltd, Keevy N.O and Others v Born Free Investments 364 (Pty) Ltd (42316/10,42315/10) [2010] ZAGPPHC 212 (3 December 2010)
NOT
REPOERTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
(NORTH
GAUTENG HIGH COURT, PRETORIA)
Date:
2010-12-03
In
the matter between:
Case
Number: 42316/10
KAREN
KEEVY N.O.
…...........................................................................
First
Applicant
RISCHARD
CASSIM N.O.
….................................................................
Second
Applicant
LEBOGANG
MICHAEL MOLOTO N.O.
…...........................................
Third
Applicant
in
their capacities as joint liquidators of
CENTRAL
LAKE TRADING 256 (PTY) LTD (IN LIQUIDATION)
and
BORN
FREE INVESTMENTS 364 (PTY) LTD
…...........................................
Respondent
and
Case
Number: 42315/10
KAREN
KEEVY N.O.
…..............................................................................
First
Applicant
SOLOMON
STANLEY ISAKE BOIKANYO N.O.
…..............................
Second
Applicant
LEBOGENG
MICHAEL MOLOTO
N.O
.
...................................................
Third
Applicant
in
their capacities as joint liquidators of
SUMMER
SEASON TRADING 49 (PTY) LTD (IN LIQUIDATION)
and
BORN
FREE INVESTMENTS 364 (PTY)
LTD
...............................................
Respondent
_JUDGMENT_
SOUTHWOOD
J
[1]
In each application the applicants seek, in accordance with
section
26(1)(b)
of the
Insolvency Act 24 of 1936
read with section 340(1)
and (2) of the Companies Act 61 of 1973, an order setting aside the
cession by the relevant company (now
in liquidation) to the
respondent dated 6 June 2009 of the company's claims and rights of
action arising out of agreements with
Firstrand Bank ('FRB') or
misrepresentations made by
FRB.
[2]
Section 26(1 )(b) of the
Insolvency Act provides
-
'Every
disposition of property not made for value may be set aside by the
court if such disposition was made by an insolvent
(b)
within two years of the sequestration of his estate, and the person
claiming under or benefited by the disposition is unable
to prove
that, immediately after the disposition was made, the assets of the
insolvent exceeded his liabilities.'
The
relevant parts of section 340(1) and (2) of the Companies Act provide
-
'(1)
Every disposition by a company of its property which, if made by an
individual, could, for any reason be set aside in the event
of his
insolvency, may, if made by a company, be set aside in the event of
the company being wound up and unable to pay all its
debts, and the
provisions of the law relating to insolvency shall
mutatis
mutandis
be
applied to any such disposition.
(2)
For the purpose of this section the event which shall be deemed to
correspond with the sequestration order in the case of an
individual
shall be -
(a)
in
the case of a winding-up by the Court, the presentation of the
application ...
(b)
in
the case of a voluntary winding-up, the registration in terms of
section 200 of the special resolution to wind up the company.'
[3]
Accordingly, the applicants will be entitled to the relief sought
if the following requirements are satisfied:
(1)
the
company has been wound up (either by the court or voluntarily in
terms of the Companies Act);
(2)
the
company is unable to pay all its debts;
(3)
the
company made a disposition of property;
(4)
the
disposition was not made for value;
(5)
the
disposition was made within two years of liquidation; and
(6)
the
respondent is unable to prove that, immediately after the disposition
was made, the assets of the liquidated company exceeded
its
liabilities.
[4]
It is not in dispute that the companies in respect of which the
applicants were appointed the liquidators have been wound up
(Central
Lake Trading 256 (Pty) Ltd ('Central Lake') was wound up by the court
on 1 September 2009 and Summer Season Trading 49
(Pty) Ltd ('Summer
Season') was wound up by special resolution on 18 September 2009);
that the companies are unable to pay their
debts; that the companies
made the dispositions alleged (on 6 June 2009 each company ceded to
the respondent its claims and rights
of action against FRB arising
out of agreements between the company and FRB and FRB's breach of the
agreements and/or arising out
of misrepresentations made by FRB);
that such disposition was made within two years of the liquidation of
the company and that
the respondent has not attempted to prove that
immediately after the disposition was made the company's assets
exceeded its liabilities.
The only apparent dispute is whether the
disposition was not made for value. The respondent alleges in respect
of each disposition
that it was made for value because the parties to
the cession agreed that the cession of the claims and rights of
action was made
for a value to be determined by the company's
auditor. This is not reflected in each written memorandum of cession
and it is disputed
by the applicants.
[5]
The applicants seek final relief on notice of motion and where there
are disputes of fact the principles set out in
Plascon-Evans
Paints (Pty) Ltd v Van Riebeeck Paints Ltd
[1984] ZASCA 51
;
1984
(3) SA 623
(A)
at
634E-635C must be applied. Thus, where the denial of a fact by the
respondent does not raise a real, genuine or
bona
fide
dispute
of fact the relief may be granted. So too where the allegations or
denials of the respondent are so far-fetched or clearly
untenable
that the court is justified in rejecting them merely on the papers.
See
Wightman
t/a JW Construction v Headfour (Pty) Ltd and Another
[2008] ZASCA 6
;
2008
(3) SA 371
(SCA)
paras
12 and 13:
National
Director of Public Prosecutions v Zuma
[2009] ZASCA 1
;
2009
(2) SA 277
(SCA)
para
26.
[6]
The applicants have to establish that the dispositions made (i.e. the
cessions on 6 June 2009) were not made for value. They
have attached
to each founding affidavit a copy of the relevant cession. With the
exception of the name of the cedent the cessions
are identical. The
Central Lake cession reads as follows:
'Memorandum
van
SESSIE
('hierdie
sessie')
deur
CENTRAL
LAKE TRADING 256 (EDMS) BPK
('die
sedent')
aan
BORN
FREE INVESTMENTS 364 (EDMS) BPK
('die
sessionaris')
1.
BOEKSTAWINGS
Die
sedent beskik oor vorderingsregte en eise teen Firstrand Bank Bpk
('FRB') voortspruitend uit ooreenkomste tussen die sedent
en FRB en
laasgenoemde se verbreking daarvan, en/of voortspruitend uit
wanvoorstellings deur FRB.
2.
SESSIE
Die
partye plaas op rekord dat die sedent alle en enige van sy
vorderingsregte en eise teen FRB aan die sessionaris sedeer het op
6
Junie 2009, wat sodanige regte en eise aanvaar het.
PRETORIA:
6 JUNIE 2009
D.
PERKINS
vir
sedent
D.
PERKINS
vir
sessionaris'
D
Perkins signed each cession on behalf of the cedent and the
cessionary and
ex
facie
each
document the cession was concluded on 6 June 2009 and no value or
quid
pro quo
(or
method of establishing value or a
quid
pro quo)
for
the claims and rights ceded is referred to.
[7]
In the affidavits it is common cause that the cessions were executed
by Perkins, acting on behalf of Central Lake and Summer
Season, and
on behalf of the respondent, on 6 June 2009; that each cession
recorded that the company concerned (i.e. Central Lake
and Summer
Season) was possessed of certain 'vorderingsregte en eise' against
FNB arising from the breach of an agreement between
the company and
FNB and/ or misrepresentation by FNB and that the company had ceded
all and any of its rights and claims against
FNB to the respondent
who accepted such cession of rights and claims.
[8]
On this evidence no value was given for the cessions. However, in the
respondent's answering affidavits (deposed to by a former
director of
the companies) the respondent alleges that the cession documents do
not reflect the whole agreement of cession and
that an agreement was
reached that value would be given for each cession, that the value
would be determined once there was more
clarity as to the nature of
any action to be instituted in pursuit of the claim ceded and that
the company's auditor would determine
the value. The respondent
annexes to its answering affidavits an affidavit by Perkins in which
he says -
'1.
I am an adult male and director of the respondent. I am duly
authorised to depose hereto.
2.
The
facts to which I depose herein fall within my personal knowledge save
where otherwise indicated and are both true and correct.
3.
I
confirm that the respondent opposes this application and that the
respondent's answer to this application is contained in the
affidavit
of Jacobus Cornelius Reyneke to which this affidavit is attached.'
The
question is whether these affidavits create a real, genuine or
bona
fide
dispute
of fact on the issue of whether value was given for the disposition.
[9]
In
Wightman
t/a JW Construction v Headfour (Pty) Ltd and Another
[2008] ZASCA 6
;
2008
(3) SA 371
(SCA)
the
court considered how a real, genuine and
bona
fide
dispute
of fact arises:
[12]
Recognising that the truth almost always lies beyond mere linguistic
determination the courts have said that an applicant who
seeks final
relief on motion must, in the event of conflict, accept the version
set up by his opponent unless the latter's allegations
are, in the
opinion of the court, not such as to raise a real, genuine or
bona
fide
dispute
of fact or are so far-fetched or clearly untenable that the court is
justified in rejecting them merely on the papers:
[13]
A real, genuine and
bona
fide
dispute
of fact can exist only where the court is satisfied that the party
who purports to raise the dispute has in his affidavit
seriously and
unambiguously addressed the fact said to be disputed. There will of
course be instances where a bare denial meets
the requirement because
there is no other way open to the disputing party and nothing more
can therefore be expected of him. But
even that may not be sufficient
if the fact averred lies purely within the knowledge of the averring
party and no basis is laid
for disputing the veracity or accuracy of
the averment. When the facts averred are such that the disputing
party must necessarily
possess knowledge of them and be able to
provide an answer (or countervailing evidence) if they be not true or
accurate but, instead
of doing so, rests his case on a bare or
ambiguous denial the court will generally have difficulty in finding
that the test is
satisfied. I say "generally" because
factual averments seldom stand apart from a broader matrix of
circumstances all
of which needs to be borne in mind when arriving at
a decision. A litigant may not necessarily recognise or understand
the nuances
of a bare or general denial as against a real attempt to
grapple with all factual allegations made by the other party. But
when
he signs the answering affidavit, he commits himself to its
contents, inadequate as they may be, and will only in exceptional
circumstances
be permitted to disavow them. There is thus a serious
duty imposed upon a legal advisor who settles an answering affidavit
to ascertain
and engage with facts which his client disputes and to
reflect such disputes fully and accurately in the answering
affidavit. If
that does not happen it should come as no surprise that
the court takes a robust view of the matter'.
[10]
The salient facts pertaining to the cessions are that they were
entered into on 6 June 2009 and that Perkins concluded the
cessions
on behalf of both cedent and cessionary and that Perkins' affidavit
says nothing about what was agreed on 6 June 2009
(or at any other
time) about giving value and how value was to be determined. In these
circumstances the respondent has not even
raised a bare denial of the
applicants' allegations that the dispositions were made for no value.
[11]
The background to the cessions can be set out briefly. Jacques
Reyneke and his brother Petrus Johannes ('Pierre') Reyneke were
the
directors of Central Lake and Summer Season from 12 August 2006 until
12 March 2009 when they resigned. They were also the
directors of the
respondent until 12 March 2009 when they resigned. On that date
Perkins was appointed the sole director of all
three companies.
Through their family trusts Jacques and Pierre Reyneke held all the
shares in a group of companies including Central
Lake and Summer
Season. The Reyneke brothers and their companies were involved in
property development. In terms of a Commercial
Loan Facility
Agreement entered into with FRB on 27 February 2008 FRB undertook to
lend and advance to Central Lake the sum of
R23 210 000 which was
repayable over a period of 18 months. In terms of a similar agreement
entered into on 6 June 2007 FRB undertook
to lend an advance to
Summer Season the sum of R98 300 000 repayable over a period of 14
months. In January 2009 companies in the
Reyneke group, including
Central Lake and Summer Season, instituted an action against FRB,
First National Bank Ltd and Rand Merchant
Bank. In this action
Central Lake claimed payment of damages in the sum of R69 828 193,64
for breach of contract and Summer Season
claimed damages in the sum
of R118 306 214,49 on the same grounds. Both companies alleged
breaches of the Commercial Loan Facility
and other agreements which
the companies had entered into with the defendants. The defendants
successfully excepted to the companies'
particulars of claim and on
21 May 2010 the Reyneke companies, including Central Lake and Summer
Season, withdrew their action.
[12]
According to Jacques Reyneke he was 'instrumental in taking the
decision to cede the claim to the respondent'. (He does not
explain
how this was possible if he resigned as director on 12 March 2009 and
the cession was effected on 6 June 2009). Jacques
Reyneke says that
when the decision was taken to cede the claim (he does not say when
this was if it was not 6 June 2009 and he
does not say who took the
decision if it was not Perkins) he and Pierre Reyneke were convinced
that the merits of the claim were
good but that the value of the
claim at the time of the cession (i.e. 6 June 2009) would be
extremely difficult to calculate. (By
then the two companies had
already instituted an action against FRB claiming damages for breach
of contract: Central Lake claimed
about R69 million and Summer Season
claimed about R118 million). He does not explain why this would be.
Jacques Reyneke says that
he and Pierre Reyneke were mindful of the
effect of dispositions without value: they were in agreement that
value would be given
for the cession but at the time of the recordal
of the cession (i.e. 6 June 2009) they did not have clarity as to the
commercial
value of the claim ceded and how it should be determined
(despite the fact that the companies had formulated very large claims
in their particulars of claim). Jacques Reyneke says that in these
circumstances they agreed that the value would be determined
once
there was more clarity as to the nature of any claim (in pursuit of
the claim) to be instituted. (This makes no sense as the
summons
containing the claims had already been drawn up, issued and served).
They therefore agreed that the value would be determined
by the
auditor of the company (in liquidation). (Significantly, he does not
say precisely when or where the agreement was reached
and he does not
say who was to determine the value and when he was to do so.).
Jacques Reyneke claims that the details of the cession
were agreed
'well prior to the resignations of Pierre and I as directors'. (He
does not say when this was and he does not explain
why the claim was
not ceded then. He also does not explain why the details of the
cession were not immediately recorded.) Jacques
Reyneke says that
against that background their attorney was 'instructed to prepare a
brief written recordal of the fact of the
cession'; they 'did not
instruct him on the details of the cession' and the memorandum of
cession 'simply reflects the fact of
the cession and not the
agreement as a whole'. (If, as alleged by Jacques Reyneke, he and his
brother were concerned about making
a disposition without value and
had entered into an agreement as to how value would be determined, it
is inconceivable that:
(1)
they
would not have recorded the agreement as to value immediately;
(2)
they
would not have informed the attorney about this agreement and
instructed him to record the full agreement in the memorandum
- this
could have been done in one or two short sentences;
(3)
they
would not have informed Perkins about their agreement;
(4)
Perkins
would not have known about the agreement regarding value and would
not have insisted on this being recorded in the memorandum.)
[13]
In these circumstances the respondent's version simply cannot be true
and must be rejected on the papers. Furthermore, the
version as a
whole is 'inherently and seriously unconvincing' and it is averred in
a manner which is, in the circumstances 'needlessly
bald, vague or
sketchy' - see
Breitenbach
v Fiat SA (Edms) Bpk
1976
(2) SA 226
(T)
at
227G-228F. Accordingly, even if Jacques Reyneke's evidence was
relevant, it would not constitute a real, genuine or
bona
fide
dispute
of fact.
[14]
In view of the conclusion that the respondent's evidence does not
create a real, genuine or
bona
fide
dispute
of fact with regard to the question of whether the company (Central
Lake or Summer Season) made a disposition for no value
it is
unnecessary to decide whether the evidence given by Pierre Reyneke
and Perkins at the section 417 enquiry held in respect
of Central
Lake is admissible against the respondent. For purposes of this
judgment that evidence has not been taken into consideration
and the
respondent's version has been considered on its own merits.
[15]
The applicants are therefore entitled to the relief which they seek
and the following orders are made:
I
Under
case number 42316/10
1.
The cession by Central Lake Trading 256 (Pty) Ltd to the respondent
on 6 June 2009 of Central Lake Trading 256 (Pty) Ltd's claims
and
rights of action against FRB is set aside.
2.
The respondent is ordered to pay the costs of the application.
II
Under
case number 42315/10
1.
The
cession by Summer Season Trading 49 (Pty) Ltd to the respondent on 6
June 2009 of Summer Season Trading 49 (Pty) Ltd's claims
and rights
of action against FRB is set aside.
2.
The
respondent is ordered to pay the costs of the application.
B.R.
SOUTHWOOD
JUDGE
OF THE HIGH COURT
CASE
NO: 42316/10 and 42315/10
HEARD
ON: 17 November 2010
FOR
THE APPLICANT: ADV. D. VETTEN
INSTRUCTED
BY: Mr. G. Oertel of Edward Nathan Sonnenbergs
FOR
THE RESPONDENT: ADV. MvR POTGIETER SC
INSTRUCTED
BY: MP Koekemoer Attorneys
DATE
OF JUDGMENT: 3 December 2010