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[2011] ZAGPPHC 90
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Kruger N.O and Others v Blue Dot Properties (Pty) Ltd (70273/2009) [2011] ZAGPPHC 90 (23 February 2011)
IN
THE HIGH COURT OF SOUTH AFRICA
(NORTH
GAUTENG HIGH COURT)
Case
number: 70273/2009
Date:23
February 2011
In
the matter between:
PAUL
DANEEL KRUGER
N.O.
...............................................................................
1st Applicant
ERNEST
LODEWYK BERWIAN
N.O.
....................................................................
2nd
Applicant
THEODOR
WILHELM VAN DEN HEEVER
N.O.
.................................................
3rd Applicant
(In their capacities as the joint liquidators
of
Spitskop Village Properties Limited (in liquidation))
and
BLUE
DOT PROPERTIES (PTY)
LTD
.....................................................................
Respondent
JUDGMENT
PRETORIUS
J,
A
provisional order of liquidation of the respondent was granted on 10
June 2010. The order was served on the respondent by the
Sheriff and
advertised in the Government Gazette and Beeld.
Mr
HC Lamprecht, one of the two directors of the respondent was
provisionally sequestrated on 5 October 2010. The applicants submit
that Mr Lamprecht has no locus standi to oppose the application for a
final liquidation order due to the fact that he is an unrehabilitated
insolvent. No further papers had been filed since the provisional
order had been granted and the court has to adjudicate the matter
as
it was when the provisional order was granted. Mr Badenhorst, for the
trustees, supports the application for the final liquidation.
Section
218(1)(d)(i) of the Companies Act 61 of 1973 provides: "218
Disqualifications of directors and others
(1)
Any of the following persons shall be disqualified from being
appointed or acting as a director of a company or, except for
a body
corporate, from being concerned or taking part, directly or
indirectly, in the management of a company:
(a)...
lb)...
(c)...
(d)
save under authority of the Court-(i) an unrehabilitated insolvent;"
This
disqualification arises as soon as an order for the provisional
sequestration of a person's estate is made, which in this instance
was 5 October 2010. Mr Gouws, for Mr Lamprecht, conceded that in this
matter mr Lamprecht could no longer oppose the application
for the
final liquidation of the respondent as he has no locus standi. His
only argument was that when the pleadings were complete
Mr Lamprecht
had not yet been provisionally sequestrated. This argument cannot be
entertained as the provisions of the Act are
quite clear.
The
facts that the applicants rely on for the final liquidation of the
respondent is related to previous applications relating to
companies
and entities which are related to the Spitskop syndication scheme.
The
property which is the subject matter of several applications and this
application is portions 6 and 7 of the farm Spitskop in
Mpumalanga.
These two properties were purchased on 23 April 2003 for the amount
of R1 057 000.00 by the respondent. The respondent
was a that stage a
close corporation with its' member, Mr Lamprecht. During 2003 it was
converted to a company with registration
number 2003/018195/07 and
was known as Blue Dot Properties 1330 (Pty) Ltd with directors Mr
Lamprecht and Mr van Zyl. Mr van Zyl
was the legal adviser of the
respondent and signed the deed of sale of Spitskop on behalf of the
respondent and Mr Lamprecht signed
on behalf of Spitskop for an
amount of R118 300 000.00 on 3 July 2006. They were both directors of
both entities and there was
no arms-length sale.
This
property formed the basis of a syndication scheme to the amount of
R425 million. No improvements had taken place on the property
since
the original sale in April 2003 for approximately R1 million.
The
Government Gazette of 13 March 2006 set out the requirements
pertaining to the minimum information that must be contained in
a
property syndication disclosure document. In terms of paragraph 2 the
investors' funds will, prior to finalization, be deposited
into a
trust account. Funds may only be withdrawn from the trust account to
pay for the transfer of immovable property into the
name of the
buyer.
Spitskops'
own documents indicated that millions of rand had been paid out
contrary to the provisions of the Government Gazette
before transfer
taken place. Spitskop had paid administration fees, audit fees, a due
diligence study, legal fees, promoters fees,
travelling - and
accommodation fees, unspecified professional fees and unspecified
services in the amount of R28 780 000 before
establishment of the
township had been approved. A further amount of approximately R32
million was paid to the brokers to promote
the syndication scheme.
Interest paid to investors in the amount of R15.8 million was paid
out of the capital amount paid by investors.
Spitskop
marketed the syndication scheme notwithstanding not disclosing that a
land claim existed on the land and that the Greater
Thubatsi
Municipality had certain requirements that had to be met before an
application to establish a township would be considered.
The
promoter of Spitskop was Blue Zone Property Investments (Pty) Ltd. As
soon as Spitskop had collected R118 300 000.00 from investors,
this
amount was paid to the respondent as the full sale price of Spitskop,
although the disclosure document specified that only
a deposit would
be paid. This was done before the property was transferred. Blue Dot,
the respondent, thus made a profit on R1
million of approximately
R117 million without any right or improvements to Spitskop in a
period of 4 years.
Both
Mr Lamprecht and Mr van Zyl were directors of Blue Zone. On 21 August
2009 Spitskop was finally wound-up by court. It is clear
that there
was no arms length transaction when Spitskop was sold to the
respondent. This was in contravention of the provisions
of the
Government Gazette. An investigation was launched by the Financial
Services Board and the report forms part of the papers
before court.
According to the bank statements Spitskop received at least an amount
of R351 491 254.00 from investors in the period
3 May 2006 and 31
December 2007. An amount of R269 939 305.00 was paid towards non
recoverable costs or expenses.
This
contravened clause 2(b) of the Gazette which provides:
"Funds
shall only be withdrawn from the trust account in the event of
registration of transfer of the property into the syndication
vehicle; or under writing by a disclosed underwhter with details on
the underwriter, or repayment to an investor in the event of
the
syndication not proceeding."
No
transfer had taken place when the money was withdrawn from the trust
account for the full amount. No underwriting took place
and the
investors were not repaid at any stage. The document drafted by the
auditors of Spitskop demonstrates that investors' funds
had been paid
out unlawfully in contravention of the provisions of the Gazette.
Nowhere in the disclosure document was it disclosed
that Mr Lamprecht
and Mr van Zyl were to earn a profit of R117million from the sale of
Spitskop. The sale of land was not made
subject to the respondent
obtaining or having any rights to establish a township.
A
further problem attached to Spitskop was the land claim as it is set
out in the sale agreement:
"7.2
The purchaser acknowledges that (it will)
(iv)
Satisfy itself that no land claim has been lodged against the
property or a portion of the property in accordance wit the
provisions of the
Restitution of Land Rights Act, No 22 of 1994
, as
amended."
This
contrary to the fact that a land claim was lodged and published in
the Government Gazette on 21 May 2004, which was known by
Mr
Lamprecht. A further disturbing fact is that the sale price was paid
out of investors' funds before transfer of the farms had
taken place.
There is no disclosure in the disclosure document that no development
rights had been obtained when the disclosure
document was signed.
A
further problem was that Bluezone, of which Mr Lamprecht was a
director, was not authorized to promote the scheme in terms of
the
Financial Advisory and Intermediary Services Act 37 of 2002
. The
promoter agreement was signed by Mr Lamprecht on behalf of Spitskop
and on behalf of Bluezone by Mr Lamprecht. Once again
they were both
directors of both companies.
It
is obvious that Blue Dot received at least R117 million as profit
from the transaction which had not been at arm's length. The
affairs
of Spitskop and the respondent are inextricably linked and the
winding-up of the respondent will facilitate the investigation
as to
the flow of funds and ensure appropriate action to possibly retrieve
investers' funds.
Mr
Robinson, a forensic auditor appointed by the applicants,
investigated the claim that the business of the respondent was never
done in this court's jurisdiction. His conclusion is:
7
can confirm that the principle place of business of the respondent
was situated in the Castle Walk Building, Erasmuskloof, Pretoria,
also the offices from which the Bluezone portfolio was managed.
The
ledger and other accounting books of the respondent was held at the
said offices.
I
also confirm that Mr Lamprecht, who mainly attended to the management
of the Respondent was situated in the Bluezone offices in
Pretoria.
Furthermore all the other administrative duties, for instance Tax
Returns and alike were conducted from the offices of
Bluezone
situated in Pretoria."
In
Bison Board Ltd v K Braun Woodworking Machinery (Pty) Ltd 1991 (1)
SA
482 (A) at 496 A-B Hoexter JA held:
"...individually,
but it is convenient to acknowledge, in general terms, that it was
held in each of them that a company resides
at the place where its
general administration is located, ie at the seat of its central
management and control, from where the
general superintendence of its
affairs takes place, and where, consequently, it is said that it
carries on its real or principal
business. For the sake of brevity I
shall refer to this as the company's 'place of central control'. That
a company resides at
its place of central control was again accepted
in Vanderbijl Park Health Committee and Others v Wilson and Others
1950 (1) SA 447
(A) at 466 - 7. The principle is accordingly well
established in our law, and I can see no warrant for departing from
it."
A
further indication that the general administration of the respondent
took place in these offices are the attached letterheads
indicating
the address as in Pretoria and showing the Pretoria fax and phone
numbers for the respondent. The court is satisfied
that this court
has jurisdiction in the matter.
The
indebtedness of the respondent is premised on documentary evidence in
terms of which an amount of R134 million was paid by Spitskop
to the
respondent. The proof of payments from Spitskop to the respondent
emanates from Spitskops' bookkeepers.
This
court has regard to the nondisclosure of the land claim on the
property and the non-compliance with the Government Gazette
ruling
syndication schemes,by the respondent and this should be
investigated. This will be to determine the prejudice suffered
by the
general public and to investigate alf the agreements between the
different entities and parties to the entities and to ensure
an
equitable return of investors' funds, if any. The court finds that it
will be just and equitable to wind up the respondent in
these
circumstances.
The
evidence shows that the respondent is not involved in any business
and does not have any assets. The full amount of the purchase
price
of Spitskop had been paid to Mr Lamprecht, Mr van Zyl and Bluezone.
The respondent will not be able to pay its liabilities
even should
restitution take place and respondent become the owner of Spitskop
again. No case is presented by the respondent that
it will engage in
business in future. The court cannot but come to the conclusion that
the respondent is insolvent and should be
wound-up.
An
application to intervene was served on 22 February 2011 at 15h00. It
must
be
noted that the notice of motion reads:
GELIEWE
KENNIS TE NEEM dat die tussenbeitredende party, JACOB JOHANNES VAN
ZYL, tydens die likwidasie aansoek van die Respondent
BLUE DOT
PROPERTIES (EDMS) BPK, op 22 FEBRUARIE 2011 om 10h00..."
It
is clearly impossible that this could have taken place as it was only
served on 22 February 2011 at 15h00.
The
application is by Mr van Zyl, the director of the respondent. This
application was brought at the time that judgment would have
been
given in this matter on 23 February 2011 at 10h00. The prayers in the
notice of motion set out in prayer 2:
"Dat
die aansoek van die Applikante om likwidasie van die Respondent van
die hand gewys word met koste."
Mr
Gouws, counsel for the intervening creditor had to admit that this
prayer should be ignored. The affidavit by Mr van Zyl sets
out that
he is a director and shareholder of the respondent. He further states
that he had been told that due to the fact that
Mr Lamprecht has been
sequestrated and cannot oppose this application, he should intervene.
The court must mention that Mr Lamprecht
was provisionally
sequestrated on 5 October 2010. Mr van Zyl does not explain why he
had not intervened at an earlier stage. He
does not set out any
reason as to why he should be allowed to intervene at this late
otayu.
It
is clear from the dates and time of the notice of motion that it was
drafted after the court had indicated that a final order
would be
granted on 23 February 2011.
In
Shapiro v SA Recording Rights Association Ltd
2008 (4) SA 145
WLD
at
153 para 19 Gautschi AJ found:
"It
is furthermore required that an applicant for intervention show that
he or she has a prima facie case, that the application
is seriously
made and is not frivolous."
Mr
van Zyl does not set out that he has a prima facie case. The court
can only come to the conclusion that this application was
launched
after the court had indicated that Mr Lamprecht cannot oppose the
matter and that the court intended to grant a final
liquidation
order.The court finds that this application is not serious as Mr van
Zyl has had ample time from 5 October 2010 to
launch this
application, but has failed to do so.
Due
to this application being launched at this late stage it was
necessary for senior counsel to attend to the opposition of the
application in court. Mr Puckrin, for the applicant, has requested
the court to grant attorney and client costs against Mr van
Zyl. I
must agree that the manner in which this application was launched
indicates a degree of desperation which cannot be supported
by facts.
An
application for a cost order was filed by the previous attorneys of
the respondents, Strydom and Bredenkamp. They had withdrawn
as
attorneys of record of the respondents. In an affidavit it was set
out that notwithstanding demand by the attorneys the account,
although taxed, has not been paid by the respondent. The result is
that the attorneys are supporting the application for liquidation
on
the basis that the respondent cannot pay its' debts. The attorneys
had been paid by the liquidators until the Mareeva injunction
had
been granted. This application is not opposed and left to the
discretion of the court. The respondent opposed this application
vigorously and the court cannot find any reason why the taxed account
of the attorneys in this matter should not form part of the
liquidation costs.
The
following order is made:
1.
The provisional order for the winding-up of the respondent is
confirmed and the respondent is liquidated;
2.
The costs of the liquidation are costs in the liquidation including
the costs of two counsel for the applicant and the costs
of counsel
for the trustees as well as the costs of the attorneys, Strydom en
Bredenkamp.
3.
The application for intervention is dismissed with costs on an
attorney and client scale, including the costs of two counsel.
Judge
Pretorius
Case
number : 70273/2009
Heard
on : 22 February 2011
For
the Applicant : Adv CE Puckrin SC
:
Adv MA Badenhorst SC
: Adv J Hershensohn
Instructed by :
Schabort INC
For
the Respondent : Adv J Gouws
Instructed
by : Lombard en Vennote ING
Date
of Judgment : 23 February 2011