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[2024] ZAKZPHC 17
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Kruger v Ithala Soc Ltd (19051/2023) [2024] ZAKZPHC 17 (14 March 2024)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
CASE
NO: 19051/2023
In
the matter between:
JOHANNES
GEORGE KRUGER
N.O.
Applicant
and
ITHALA
SOC LTD
Respondent
ORDER
(a)
The
respondent is given leave to deliver its supplementary affidavit.
(b)
The
order of Mossop J dated 22 December 2023 is reconsidered and
discharged under Uniform Rule 6(12)
(c)
.
It is replaced with the following order:
“
The
application is struck from the roll”
(c)
The
applicant is directed to pay the respondent’s costs of the
reconsideration application, such costs to include the costs
of two
counsel where employed.
JUDGMENT
Veerasamy
AJ
[1]
This
is an application brought on an urgent basis for the reconsideration
of the order granted by Mossop J on 22 December 2023 (‘the
PMB
order’). It was common cause during argument that the
reconsideration application was urgent.
[2]
Before
dealing with subject matter of the application there is the issue of
the respondent’s supplementary affidavit. Leave
for delivery of
same was sought at the hearing and in the affidavit.
[1]
The
supplementary affidavit was delivered a day before the applicant’s
replying affidavit. The applicant in his replying affidavit
advised
that he would respond in a separate affidavit to the any new
allegation raised, but no such supplementary replying affidavit
was
ever delivered.
[2]
[3]
It
is appropriate that all the facts be placed before the court, so that
the main application and this application for reconsideration
can be
determined on a complete and correct conspectus of the facts. That is
plainly in the litigants’ interests and in the
interests of
this court.
[3]
[4]
Accordingly,
the respondent is given leave to deliver its supplementary affidavit.
The
PMB order
[5]
I
do not intend to set out exhaustively the terms of the PMB order
[4]
but
it
inter
alia
:–
(a)
Ordered
that the application would be heard in camera in terms of section 32
of the Superior Courts Act 10 of 2013;
(b)
Directed
the Registrar of the Court keeps the content of the Court file
confidential unless otherwise directed;
(c)
Authorised
the applicant to instituted proceedings in terms of section
84(1A)
(b)
(ii)
of the Banks Act 94 of 1990 (‘the Banks Act’).
(d)
Empowered
the applicant and his representatives to serve and execute the PMB
Order in accordance with the
Superior Courts Act and
the Uniform
Rules
(e)
Empowered
the applicant to recover and take possession of the assets of the
respondent in terms of section 84(1A)
(b)
(i)
of the Banks Act;
(f)
Empowered
the applicant to act in accordance with section 84(4) read with
sections 84(5) and 84(8) of the Banks Act.
(g)
Directed
the respondent to declare under oath to the applicant within five
days of the service of the PMB order the whereabouts
of the assets of
the respondent wherever they may be situated and to identify these
assets with sufficient particularity in PMB
order to enable the
applicant to recover and take possession of those assets in terms of
section 84(1A)
(b)
(i)
of the Banks Act.
[6]
The
orders as foreshadowed in paragraphs 3 to 6 of the PMB order
(paragraphs 5(c) to 5(f) above) to would operate as interim relief
with immediate effect.
[7]
A
rule nisi
was issued calling
upon the respondent to show cause on 19 March 2024 at 9h30 as to why
any assets recovered and which are in the
possession of the applicant
in terms of paragraphs 5 and 7 of the PMB order (being paragraphs
5(f) and 5(g) above) should not remain
in the possession of the
applicant pursuant to the provisions of sections 83 and 84 of the
Banks Act.
[8]
This
is the order that is the subject of the reconsideration application.
The applicant in these proceedings is the respondent in
the interim
order but, for the sake of convenience the parties are referred to as
in the main application.
The
test for reconsideration
[9]
The
dominant purpose of Uniform rule 6(12)
(c)
is to afford an aggrieved party a mechanism to redress any imbalance,
injustice or repression flowing from an order which was granted
as a
matter of urgency in such party’s absence.
[5]
[10]
The
two jurisdictional facts, which must be available to a party seeking
to reconsider an order are that the main application was
heard as a
matter of urgency and that the impugned order was granted in the
aggrieved party’s absence. It is common cause
that both of
those jurisdictional facts exist in these proceedings.
[11]
The
court in
Sheriff
Pretoria North-East v Flink
(
Flink
)
[6]
described
the application of the above mentioned jurisdiction facts as follows:
‘
Once
these jurisdictional facts have been established, the court is free
to
reconsider
the order initially given in the widest sense of the word. By direct
implication, it is free to reconsider any
judgment
given in the urgent application, which led to the order. Thus it can
most certainly, in a proper case, issue an order o rescission
by way
of a final judgment which disposes of the case
en
toto
– as opposed to a rescinding order which merely restores the
procedural
status
quo ante
,
reinstating the parties to the position in which they were prior to
the rescinded judgment, with the merits of the main dispute
still to
be decided.’
[7]
[12]
In
these proceedings, the parties delivered a full set of affidavits.
[8]
Thus,
the ‘result is that the reconsideration of this application
needs to be done on the basis of a set of circumstances
quite
different to that under which the original
ex
parte
order was obtained.’
[9]
In
these new circumstances the order will be reconsidered in light of
the execution of the previous order, the variation of the
order and
the further affidavits file by the parties.
[10]
[13]
The
effect is that first, ‘the issues are to be reconsidered in
light of the fact that both sides of the story are now before
the
court’ and, second, that ‘the execution of the original
order may have had the effect that those issues are not
exactly the
same issues which were before Court when the original application was
heard.’
[11]
[14]
The
court is not confined only to the original application papers without
reference to anything else. Such an approach is in conflict
with the
various decisions relating to reconsideration applications.
[12]
[15]
A
court dealing with a reconsideration application does so with the
benefit not only of oral argument made on behalf of the party
absent
during the initial proceedings but also with the benefit of the facts
contained in all the affidavits filed in the matter.
[13]
[16]
There
is no exhaustive list or set of facts, which a court must take into
consideration when addressing a reconsideration application.
Each case will turn on its own facts and ‘the peculiarities
inherent therein’.
[14]
[17]
Of
importance, the court must consider the circumstances emanating from
the execution of the court order.
[15]
Analysis
of the reconsideration application
[18]
The
respondent submits that the applicant failed to place material facts
and evidence before Mossop J when he sought the PMB order.
These
omitted facts emanate from the following chronology of events as
described hereunder.
[19]
It
appears to be common cause between the parties that the Prudential
Authority
[16]
refused
a further extension of the respondent’s exemption, which
exemption permitted the respondent to provide its various
retail
banking services.
[20]
The
respondent argues that during the period of December 2023, before the
PMB order was granted, there were various meetings conducted
with the
Prudential Authority during which the Prudential Authority expressed
its intention to appoint the applicant as the repayment
administrator.
[17]
[21]
The
respondent submits that during such meetings the Prudential Authority
described the role and function of the repayment administrator
as
being a
‘
re-purposed
repayment administrator
’.
[18]
[22]
The
respondent argues that it was advised by the Prudential Authority
that the repayment administrator was merely a caretaker. It
further
submits that the Prudential Authority unambiguously acknowledged that
salaries and remittances that are currently paid
through the
respondent would suffer no disruption and that the repayment
administrator would ensure that such monies are received
and
released.
[23]
It
contends that the Prudential Authority assured the respondent that it
would not be required to stop taking deposits and thus
it continued
with its deposit taking activities whilst under the supervision of
the applicant as the repayment administrator.
[24]
The
applicant was appointed as the repayment administrator on 18 December
2023.
[19]
[25]
However,
despite the theme of the discussions as described by the respondent,
between itself and Prudential Authority, the respondent
ultimately
instituted an urgent application against the Prudential Authority in
the Gauteng Division of the High Court, Pretoria,
under case no.
2023/123161, in which it sought an order suspending the winding-down
of its deposit taking activities and the appointment
of the applicant
as repayment administrator.
[20]
[26]
Such
application was met by a counter urgent application from the
Prudential Authority, under case no. 2023/123199, in which it
sought
confirmation that the final exemption notice had lapsed and the
respondent be directed to cooperate with the repayment administrator
in respect of further depositing activities.
[21]
[27]
Both
of these applications were set down for hearing prior to the set down
of the applicant’s application for the PMB order.
[28]
Both
applications were consolidated and eventually a consent order was
taken between the respondent and the Prudential Authority
on 21
December 2023 (‘the Pretoria order’).
[22]
[29]
Before
me, the respondent argues that the Pretoria order was intended to
limit the powers of the applicant and, as such, when the
applicant
sought the PMB order he did so with the singular purpose to extend
his powers so he could act beyond the injunction created
by the
Pretoria order and imposed on him by consent with the Prudential
Authority.
[30]
The
respondent further argues that the PMB order was granted under the
umbrella of an
ex
parte
application
in circumstances where the applicant sought to deal with the role and
extent of the applicant’s powers in terms
of the Banks Act.
This the respondent argues was the subject of the issues in the
Pretoria litigation when the Pretoria order was
granted.
[31]
Thus,
the respondent submits that the applicant failed to disclose to
Mossop J the context and spirit under which the Pretoria order
had
been granted. The applicant kept the ‘
gist’
of the Pretoria order
a secret.
[32]
The
further defences raised by the respondent in its affidavit and its
heads of argument were not persisted with vigorously before
me and
correctly so since this remains a live debate in an opposed
application in the Pretoria litigation which I was advised was
set
down for hearing on 8 March 2023.
[33]
Before
me, the respondent advanced the argument that if I concluded that the
application was defective on a procedural basis then
it follows that
the application for reconsideration should be successful.
[34]
The
first procedural defective highlighted was the failure by the
applicant to deliver a certificate for the matter to be heard
in
camera. This is different to a certificate of urgency.
[35]
The
application which was moved before Mossop J sought as specific relief
that the application
‘
should
not be heard in open court, in terms of section 32 of the Superior
Courts Act, 2013 (Act No. 10 of 2013 – “
Superior Courts
Act”
>)
’.
[23]
This
in fact was the very order granted in the PMB order.
[24]
[36]
During
the proceedings I enquired from the applicant’s counsel as to
whether such a certificate had been delivered. I was
advised that
such certificate had not been delivered but the applicant submitted
that such a certificate was not needed, since
the matter was
ultimately heard in open court. It was not disputed by the applicant
that such a certificate would be necessary
if the proceedings were in
fact
in
camera
and
that such certificate was a procedural requirement.
[37]
Where
an application is heard
in
camera
,
a certificate must be delivered by the counsel appearing expressing
the view that it is in the interests of justice that the matter
be
heard
in
camera
.
[25]
[38]
In
respect of
in
camera
applications
relating to Anton Piller orders, the absence of such certificate
disentitles the applicant to the relief which they
seek.
[26]
The
same would apply to any other proceedings which are intended to be
dealt with in camera.
[27]
Before
any relief was obtained on the 23 December 2023, for the urgent
application to be heard in camera, the filing of such a certificate
would have been necessary.
[39]
The
applicant purposefully sought direction from the court for these
proceedings to be carried out
in
camera
in
terms of
section 32
of the
Superior Courts Act. Before
me, the
applicant submitted that the proceedings before Mossop J were held in
a courtroom and it was recorded. The argument advance
by the
applicant was that the application was not heard
in
camera
.
[40]
The
mere fact that the application was heard within the confines of a
courtroom does not mean that it was heard in open court. Proceedings
in a courtroom are
in
camera
when
effectively members of the public are not permitted to enter the
court while it is in session.
[28]
[41]
In
accordance with the judgment of
Three
Cities
,
[29]
for
the proceedings before Mossop J to have been heard
in
camera
there
ought to have been a certificate filed for an
in
camera
hearing.
In
Three
Cities
the
court held that in the absence of an
in
camera
certificate
the applicant was not entitled to any relief. On this score alone the
reconsideration application should succeed.
[42]
However,
the difficulties that confronted the applicant when he instituted his
application
ex
parte
at
8h30 do not end with just the absence of the
in
camera
certificate.
[43]
When
the application was brought as an urgent
ex
parte
application,
the applicant relied upon a founding affidavit comprising 28 pages
and 69 paragraphs.
[30]
[44]
The
facts upon which the applicant relied upon for the application to be
heard urgently and
ex
parte
are
set out in paragraphs 64 to 69 of the founding affidavit under the
heading “NEED FOR THE APPLICATION TO BE HEARD URGENTLY,
EX
PARTE AND IN CHAMBERS”.
[31]
[45]
For
the purposes of this reconsideration application, it is important
that I set out exactly what the applicant states in these
paragraphs:
‘
64.
The reasons for applying for the relief on an urgent i basis and a
direction that this matter should be heard in chambers, in
terms of
section 32
of the
Superior Courts Act, should
be readily apparent. I
respectfully submit that this is a special case which necessitates
its hearing on an
ex parte
basis, as contemplated by
section 32.
1.
25cm; margin-bottom: 0cm; line-height: 150%">
65.
The reason for seeking such a direction is that the Respondent is
well-known in the KwaZulu-Natal province whereby any person
acquiring
knowledge of this application could forewarn any member of the public
that deposited money with the Respondent pertaining
to the subject
matter of this application.
66.
Such knowledge will in all probability cause a “
bank run
”
or “
run on the bank
” where depositors withdraw
their deposits from an institution if they believe they will be
unable to withdraw their deposits
or if they believe the institution
will cease to operate soon due to liquidity issues.
67.
An exchange of the pleadings in the registrar’s office which
will be the inevitable consequence of giving notice to the
Respondent
therefore poses an unacceptable risk. The Respondent has all the
protection afforded to a respondent against whom relief
is granted
ex
parte
.
68.
In addition to the above I seek a direction from this Honourable
Court to the Registrar of this Honourable Court to keep the
content
of this court file confidential until otherwise directed by this
Honourable Court. The contents of this file should not
be shared with
any party unless written permission is obtained from this Honourable
Court and/or the Applicant.
69.
Full legal argument will be addressed at the hearing of this
application in this regard insofar as it may be necessary.’
[46]
No
reference is made directly to the any conduct which may be committed
by the respondent which the applicant wished to avoid by
giving
notice and why the respondent should not be given notice in some
form. The applicant’s complaints relate to the ‘bank
run’
or ‘run on bank’ risk which the applicant foresaw.
[47]
During
argument, the applicant leveraged on two reasons as to why he was
entitled to deal with the matter on an
ex
parte
urgent
basis. The first reason given was that there was a risk that notice
to the respondent might result in a divestment of its
assets and the
second reason was that the issues of notice and urgency were decided
with finality in favour of the application
in the case of
Kruger
v Joint Trustees of the Insolvent Estate of Paulos Bhekinkosi Zulu
and another
[2017] 1 All SA 1
(SCA).
[48]
On
the first reason proffered, when I asked the applicant to
direct my attention to where such allegation might be located
in the
founding affidavit, the applicant submitted that he relied upon
paragraph 24 of his affidavit and the annexure to which
such
paragraph refers.
[49]
Paragraph
24 of the founding affidavit reads as follows:
‘
I
attach the Notice of Motion and the founding affidavit in the PA
application as it summarises prior litigation and judgments as
annexure ‘JGK11’. I do not contend that all the
allegations are common cause.’
[32]
[50]
Annexure
‘GJK11’ is the affidavit delivered by the Prudential
Authority in the Pretoria litigation.
[33]
The
applicant contends that based on what has been alleged by the
Prudential Authority in its Pretoria affidavit, the applicant
was
justified in moving this application urgently and
ex
parte
against
the respondent.
[51]
The
Prudential Authority who actively relied on its allegations in the
Pretoria litigation did not move its application
ex
parte
.
Thus, those allegations alone are insufficient for an
ex
parte in camera
hearing.
[52]
The
application before Mossop J was 246 pages in volume. The application
was set down for hearing on 22 December 2023 at 8h30 and
issued on 21
December 2023. There is no indication as to what time the papers were
issued and when same were given to Mossop J
for consideration.
[53]
Under
such truncated timelines, the applicant bore a duty to place the
facts which he relied upon squarely in the body of the founding
affidavit rather than obliquely rely upon an annexure and expect the
judge hearing the application to have trawled through the
annexures
in order to find the material which the applicant relies upon. This
is equally important in respect of the further disclosures
which the
applicant ought to have engaged with in the affidavit. I deal with
those further on.
[34]
[54]
Thus,
the founding affidavit did not, in my view, deal with the issue of
why the application ought to be heard
ex
parte
as
against the respondent.
[55]
The
respondent submits that that there were various negotiations which
led to the Pretoria order. It argued that the applicant had
the
obligation to place these facts before Mossop J, especially in
circumstances where the application was brought
ex
parte
.
[56]
The
applicant contends that he was not a party to any of those
discussions in Pretoria and thus could not have known about those
discussion which the respondent contends are material.
[57]
The
respondent argues that what should have been placed before Mossop J
apart from the plethora of correspondence and negotiations
that had
been ongoing with the Prudential Authority was the fact that the
order sought and ultimately agreed to by consent in Pretoria
was a
pared down order.
[58]
The
respondent argues that the relief which was omitted by agreement in
the Pretoria order is the relief which the applicant sought
in the
PMB order.
[59]
The
respondent’s submission is that the Prudential Authority and it
had agreed that the powers sought by the applicant in
the PMB order
would not be conferred on the applicant.
[60]
I
am alive to the fact that the interpretation of the Pretoria order
and the issue regarding whether this agreement with the Prudential
Authority existed is a live dispute before the Pretoria High Court,
which had been set down to be heard on 8 March 2024. However,
these
facts more especially the alleged deliberately pairing down of the
Pretoria order was not placed before Mossop J when he
was asked to
grant the PMB order.
[35]
[61]
The
applicant’s argument is that he could not know about the
discussions between the Prudential Authority and the respondent
because he was not party to those discussions. Whilst his submission
being that he could not disclose those discussions to the
court is
inviting it is however somewhat divorced from the actual position the
applicant was placed in and is not an answer
to the question of
whether he could have ascertained such information prior to
moving his application before Mossop J.
[62]
The
applicant is correct in that he was not a party to the litigation
leading up to the Pretoria order and there is nothing in the
affidavits which indicate that he was aware of the discussions
between the respondent and the Prudential Authority.
[63]
However,
when the applicant sought the PMB order, he did so almost in
conjunction with the Prudential Authority.
[64]
I
say this because I raised with the applicant a question about service
on the Prudential Authority and whether that statutory requirement
had been met. The applicant, in response, submitted that a similar
question had been raised by Mossop J at the initial hearing.
The
applicant’s response to Mossop J (as it was to me) was that the
Prudential Authority had delivered a confirmatory affidavit
in these
proceedings and was thus aware of same.
[36]
[65]
The
confirmatory affidavit serves as proof of discussions between the
applicant and the Prudential Authority in which the applicant
sought
support for this application, such discussions resulting in the very
confirmatory he relied upon to prove service.
[66]
The
applicant sought the confirmatory affidavit so that (on his own
version) could leverage off the Pretoria litigation to obtain
his
relief before Mossop J. In doing so he was obliged to ensure that he
elicited all information from the Prudential Authority
which he might
need to be placed before Mossop J when the matter was first heard.
[67]
Mr
Kerwin Martin
[37]
tendered
the ‘
Prudential
Authority’
confirmatory
affidavit which is intended to confirm the Prudential Authority’s
affidavit the Pretoria litigation marked annexure
‘JK11’
as referenced in paragraph 24 of the applicant’s founding
affidavit. Mr Martin is also the deponent to
annexure ‘JK11’.
[68]
As
the applicant contends in paragraph 24 of his founding, Mr Martin’s
affidavit in the Pretoria litigation details a litany
of ongoing
litigation in Pretoria and in particular the litigation which
eventually led to the Pretoria order being granted days
before the
PMB order was granted. Mr Martin’s confirmatory affidavit was
attested to on 20 December 2023.
[38]
‘
JK11’
was attested to by Mr Martin on 12 December 2023.
[39]
[69]
On
21 December 2023, prior to granting the PMB order, the applicant
delivered a supplementary affidavit
[40]
in
which it details the granting of the Pretoria order on 20 December
2023.
[70]
There
is no explanation as to why information had not been not sought by
the applicant from the Prudential Authority regarding basis
on which
the Pretoria order was obtained especially when a confirmatory
affidavit was sought from the Prudential Authority
by the applicant
for its urgent application.
[71]
When
an
ex
parte
order
is sought the utmost good faith must be observed which requires all
material facts
to
be disclosed which might influence a court in coming to its decision
.
The ‘withholding or suppression of material facts, by itself,
entitles a court to set aside an order, even if the non-disclosure
or
suppression was not wilful or
mala
fide
.’
[41]
[72]
Where
the law allows for a departure from the principle of
audi
alteram partem
,
such departure occurs in exceptional circumstances and when it is
sought the
ex
parte
applicant
assumes a ‘
heavy
responsibility to neutralise the prejudice the affected party suffers
by his or her absence
’
.
[42]
[73]
What
was required of the applicant when he came before Mossop J was to
speak for the respondent by ‘not only disclosing all
of the
relevant facts’ that he knew but also those which he could
reasonably expect the absent party would have wanted to
place before
the court. The applicant must disclose and deal fairly with any
defences which he is aware of or those he may reasonably
anticipate.
More importantly, the applicant must ‘exercise due care and
make
such enquiries and conduct such investigations as are reasonable in
the circumstances
’
before
seeking an order for
ex
parte
relief.
[43]
[74]
In
the present circumstances, the applicant made no investigation as to
why the consent order was taken and the ambit of the consent
order.
He conducted no investigation as to what defences the respondent
might wish to place before Mossop J.
[75]
The
submission by the applicant that he was not seized with the facts nor
was he a party to the Pretoria proceedings, would ignore
the fact
that the applicant was in direct communication with the Prudential
Authority and sought their involvement in these very
proceedings.
[76]
It
would have cost the applicant little to have enquired from the
Prudential Authority as to what the basis of the settlement was
and
the events leading up to same which resulted in the Pretoria order,
or at the very least, whether the Prudential Authority
foresaw any
opposition from the respondent and the basis for that opposition.
[77]
At
the very least, the applicant should have explained why he could not
conduct such investigations and make such enquiries and
why to do so
would be unreasonable in the circumstances, considering the fact that
on the applicant’s own version Prudential
Authority was an
active supporter of his application.
[78]
The
respondent contends that the omitted information regarding the
settlement discussion and the the relief which the Prudential
Authority and the respondent had agreed to exclude
[44]
from
the Pretoria order was material and a defence which the respondent
would have placed before Mossop J if it had been given notice.
The
initial draft of the Pretoria order included orders relating to the
powers to be given to the applicant and these proposed
orders were by
agreement (on the respondent’s version) excised from the draft
with the intention that the applicant’s
powers be limited.
[79]
This
information was not immaterial and should have been placed before
Mossop J when the applicant moved for his order. At the very
least
the applicant should have made an attempt to investigate the
circumstances surrounding the granting of the Pretoria order,
especially since he had on his own version a legal representative at
court when the Pretoria order was taken.
[45]
He
simply didn’t and it is not unreasonable to expect him to have
made enquiries and conduct such investigations in these
circumstances.
[80]
The
applicant submits that the Supreme Court of Appeal in
Kruger
v Joint Trustees of the Insolvent Estate of Paulos Bhekinkosi Zulu
(
Kruger
v Joint Trustees
)
[46]
ruled
on the issues of urgency and notice in his
ex
parte
applications as a repayment administrator. He submits that the
findings of the Supreme Court of Appeal in
Kruger
v Joint Trustees
is dispositive of the respondent’s complaints in this
reconsideration application.
[81]
The
applicant directed my attention to the following passage in
Kruger
v Joint Trustees
where the Supreme Court of Appeal held:
[47]
‘
To
require the repayment administrator to approach a court on notice to
the person subject to the directive and to require adherence
to
normal filing times would defeat the purpose of the repayment
process.’
[82]
The
applicant’s submission is that this settles the issue regarding
whether he is obliged to give notice to the respondent
and whether he
institute his application urgently.
[83]
Kruger
v Joint Trustees
is
distinguishable from the facts in the present matter. In
Kruger
v Joint Trustees
,
Mr Kruger (who is also the applicant in these proceedings) tendered
an affidavit which demonstrated that the respondent was operating
a
Ponzi scheme. There was evidence that as a result of the Ponzi
scheme, Mr Zulu (the respondent in the appeal) had purchased various
assets and used his illicit gains to benefit his personal estate. Mr
Kruger sought to attach the assets.
[84]
In
Kruger
v Joint Trustees
,
it was held that the purpose of Kruger’s application remains a
central exercise of the discretion on whether notice ought
to have
been given and whilst a court should be mindful that the recommended
precautionary safeguards such as notice to the party
are intended to
limit abuse of courts processes caution should be exercised so
that a notice requirement is not imposed ritualistically
as a matter
of routine.
[48]
[85]
Whilst
the Supreme Court of Appeal held that the purpose of Mr Kruger’s
application was to prevent the dissipation of assets
which increased
after a wrongdoing or guilt of a person has been established,
[49]
the
facts in that matter are different to those presently before me. In
the present matter, the respondent contends that there was
an
agreement with the Prudential Authority in light of the ongoing
litigation regarding applicant’s powers as the repayment
administrator. This was not an issue before the Supreme Court of
Appeal in
Kruger
v Joint Trustees.
[86]
In
Kruger v
Joint Trustees
there
was no ongoing debate between Mr Zulu and the Prudential Authority
regarding the extent of the powers of the repayment administrator.
In
that case Mr Kruger approached the court on the basis that he had
investigated a Ponzi scheme, found that the money, which had
been
illicitly gained through the Ponzi scheme, had been used to purchase
assets to benefit Mr Zulu’s estate. In light of
these facts, Mr
Kruger sought
ex
parte
to
give effect to the attachment of those assets on the threat that Mr
Zulu would dissipate those assets.
[87]
In
these proceedings the applicant’s affidavits lay no factual
foundation for why he entertains the suspicion that the respondent,
which is a public entity and Provincial Government Business
Enterprises,
[50]
will
deliberately start dissipating its assets so as to avoid scrutiny of
a repayment administrator.
[88]
Quite
clearly in the matter before the Supreme Court of Appeal the
allegations of the author of a pyramid/Ponzi scheme using his
illicit
gains to fodder his personal estate was sufficiently weighty enough
for the matter to be heard urgently and
ex
parte
.
[89]
Allegations
of equal force and weight do not appear in the applicant’s
founding affidavit in these proceedings. Such allegations
would have
been able lend some support the applicant’s reliance
on his general experience as a repayment administrator.
In these
proceedings the applicant did not attempt to explain why the conduct
of the respondent in consenting to the Pretoria order
is insufficient
to allay any fears he may have had as at 21 December 2023.
[90]
The
applicant appears to have elevated the findings of the Supreme Court
of Appeal in
Kruger
v Joint Trustees,
to
a general right to instituted his applications
ex
parte
and
urgently, without having to say more than he is the appointed
repayment administrator, and his general experience supports the
application being instituted on such an basis. In my view it this is
incorrect. The applicant still has an obligation to set out
the facts
as to why he believes the respondent would fall within the ambit of
his general experience. In these proceedings he did
not do that.
[91]
The
respondent’s contention is that, confronted with all the facts
it has now caused to be placed before this court, the PMB
order might
not have been granted and that the reconsideration threshold is
sufficiently low for me to grant the reconsideration
application.
[92]
The
applicant cautions me that a discharge of the rule nisi would result
in the countenance of an illegality. Such submission would
require me
to ignore the Pretoria order which expressly prevents the respondent
from acting unlawfully and illegally. Further the
applicant may yet
prevail in these proceedings when the matter is heard on the merits
with the respondent present.
[93]
This
application at this stage merely seeks to address the question of
whether the respondent ought to be present when the applicant
seeks
the relief foreshadowed in his notice of motion.
[94]
Based
on the above, I am of the opinion that the existing order created an
injustice to the respondent because it was obtained in
its absence on
an urgent basis.
[95]
The
application ought to have been served on the respondent and
mechanisms could have been employed by the applicant to ensure that
the matter was heard
in
camera
, if
he wanted to prevent the risk of a “
bank
run
”
or
“
run
on the bank
”.
[96]
The
applicant failed to establish why the order had to be granted
ex
parte
to
the prejudice of respondent. There was no basis institute the
application without notice at 8:30am in the morning in circumstance
where the plight of respondent was already the subject of litigation
in the Pretoria High Court. Nothing could meaningfully be
achieved by
such urgency and absence of notice except the absence of the
respondent.
[97]
The
applicant would still have been able to obtain substantial redress if
the application was moved a later time and on notice to
the
respondent. The applicant could have built in safeguards for the
hearing of the application so that it would be heard to the
exclusion
of members of the public, but on notice to the respondent. I am of
the view that the application was not sufficiently
urgent to me moved
ex parte
at 8:30 on the
morning.
[98]
There
was a material nondisclosure of facts which might have influenced the
outcome of the application had the respondent been present.
It
accordingly follows that the reconsideration application must succeed
on the basis of the procedural regulatory complained of
by the
respondent.
[99]
It
follows that the respondent has been substantially successful in
these proceedings in which both parties utilised the services
of two
counsel. As such the respondent is entitled to it costs.
[51]
Order
[100]
Having
considered the papers and submissions before me, the following order
is made:
(a)
The
respondent is given leave to deliver its supplementary affidavit.
(b)
The
order of Mossop J dated 22 December 2023 is reconsidered and
discharged under Uniform
Rule 6(12)
(c)
.
It is replaced with the following order:
“
The
application is struck from the roll”
(c)
The
applicant is directed to pay the respondent’s costs of the
reconsideration application, such costs to include the costs
of two
counsel where employed.
I
VEERASAMY AJ
CASE
INFORMATION
Counsel
for the Applicant
:
Adv E L Theron
Adv L E Combrink
Attorneys
for the Applicant
:
Bowman Gilfillan
Inc
23 Bree Street
Cape
town
Tel:
021 480 7800
Fax:
021 480 3200
Email:
francois.trichardt@bowmanslaw.com
Ref:
6231946/FT
c/o
Austen Smith Attorneys
1
High Gate Drive, Redlands Estate
1
George Macfarlane Lane
Wembley
Pietermaritzburg
Tel:
033 392 0500
Email:
callumsmythe@austensmith.co.za
Ref:
Callum Smythe
Counsel
for the Respondent
: Adv
I Pillay
Adv
C Petersen
Attorneys
for the Respondent :
Malatji &
Co. Attorneys
5
th
Floor, The
Ridge
1
Discovery Place
Cnr
Katherine Street, Rivonia Road
Sandton
Johannesburg
Tel:
011 072 2600
Fax:
087 220 1075
Email:
tmalatji@mcinc.africa
Ref:
T Malatji/B Masia/M01881
c/o
Thabethe Cebekhulu Attorneys
Office
29/30/31/32, 20 Otto road
Pietermaritzburg
Email:
thabethecebekhuluattorneys@gmail.com
Ref:
Mr W Cebekhulu
Date
of Hearing
: 06 March 2024
Date
of Judgment
: 14 March 2024
[1]
The
record vol 5 at 450 – 458.
[2]
The
record vol 5 at 507, the replying affidavit para 110.
[3]
Khunou
and others v M Fihrer & Son (Pty) Ltd and others
1982 (3) SA 353
(W) at 355F-I;
Tantoush
v Refugee Appeal Board and others
[2007] ZAGPHC 191
;
2008 (1) SA 232
(T) para 51.
[4]
The record vol 3 at 299, Annexure ‘AA1’, the PMB order.
[5]
ISDN
Solutions (Pty) Ltd v CSDN Solutions CC and others
1996 (4) SA 484
(W)at 486H-487 (
ISDN
Solutions
).
[6]
Sheriff
Pretoria North-East v Flink and another
[2005]
3 All SA 492 (T).
[7]
Flink
at 499e-f.
[8]
Founding
affidavit, supplementary founding affidavit, answering affidavit in
the reconsideration application and a replying affidavit.
[9]
The
Reclamation Group (Pty) Ltd v Smit and others
2004 (1) SA 215
(SE) at 418D (
Reclamation
Group
).
[10]
Reclamation
Group
at
218D–G.
[11]
Reclamation
Group
at
218D-F.
[12]
Oosthuizen
v Mijs
2009 (6) SA 266
(W) at 267E-F (
Oosthuizen
).
[13]
Oosthuizen
at 269-270.
[14]
ISDN
Solutions
at 487C-D.
[15]
Reclamation
Group
at
218D–G
[16]
The
Prudential Authority is a juristic person, and previously known as
the Registrar of Banks, is established in terms of section
32 of the
Financial Sector Regulation Act 9 of 2017. It is merely referred to
as ‘the Authority’ in the Banks Act,
in this judgment it
remains ‘the Prudential Authority’.
[17]
The
record
vol 3 at 269, the answering affidavit (“AA”) para 45 and
46.
[18]
The
record
vol 3 at 279/281, the answering affidavit paras 47, 54; and vol 4 at
364 – 404, annexure ‘AA8’.
[19]
The
record vol 1 at 27, founding affidavit para 36 -37.
[20]
The
record
vol 1 at 19. founding affidavit para 22.4.
[21]
The record vol 1 at 19, founding affidavit para 22.5.
[22]
The
record
v
ol
3 at 310 -302, annexure ‘AA2’, the Pretoria Order.
[23]
The
record
vol 1 at 1, notice of motion para 2.1.
[24]
The
record
v
ol
3 at 299, annexure ‘AA’ para 1 of the PMB order.
[25]
Jafta
v Minister of Law and order
1991 (2) SA 286 (A).
[26]
Three
Cities Investments Limited v Signature Life (Pty) Ltd
2011 JDR 1054 (KZD) para 32 (
Three
Cities
).
[27]
There
are Practice Directives in the other Divisions which permit in
camera proceedings to be embarked upon without a certificate.
No
such Practice Directive exist in the KwaZulu Natal Division and as
such the obligation to deliver a certificate remains.
[28]
Magqabi
v Mafundityala and another
1979 (4) SA 106
(E) at 109H-110A.
[29]
Three Cities
para 32
[30]
The record vol 1 at 9-36.
[31]
The
record vol 1 at 35.
[32]
The record vol 1 at 20, para 24.
[33]
The
record vol 2 at 152-188.
[34]
Recycling
and Economic Development Initiative of South Africa NPC v Minister
of Environmental Affairs
[2019] ZASCA 1
;
2019 (3) SA 251
(SCA);
[2019] 2 All SA 1
(SCA) paras
45 – 52 (
Recycling
and Economic Development
).
[35]
The
record vol 3 at 302.
[36]
The
record
vol 2 at 191, Prudential Authority’s confirmatory affidavit.
[37]
The
record
vol 2 at 191.
[38]
The
record
v
ol
2 at 192.
[39]
The
record
v
ol
2 at 188.
[40]
The
record
v
ol
3 at 240, this is the applicant’s supplementary affidavit,
which talks only to the granting of the Pretoria order.
[41]
National
Director of Public Prosecutions v Basson
2002 (1) SA 419
(SCA) para 21 with reference to
Schlesinger
v Schlesinger
1979
(4) SA 342
(W) at 348E - 349B.
[42]
Recycling
and Economic Development
para
46.
[43]
Recycling
and Economic Development
para
47.
[44]
The
record
v
ol
5 at 465 – This is the first draft order which was presented
by the Prudential Authority to the respondent. This includes
relief
relating to the powers of the applicant. This was paired down by
agreement and resulted in the Pretoria order (The record
vol 3 at
301-302). The pairing down was in respect of the powers to be
granted to the applicant.
[45]
The
record
v
ol
1 at 20, founding affidavit para 22.7.
[46]
Kruger
v Joint Trustees of the Insolvent Estate of Paulos Bhekinkosi Zulu
and another
[2017] 1 All SA 1 (SCA).
[47]
Kruger
v Joint Trustees
para 30.
[48]
Kruger
v Joint Trustees
para 32.
[49]
Kruger
v Joint Trustees
para 29.
[50]
Part
D of Schedule 3
Public Finance Management Act 1 of 1999
.
record vol 3 at 260, para 13
[51]
Ferreira
v Levin NO and Others; Vryenhoek and Others v Powell NO and Others
[1996] ZACC 27
;
1996
(2) SA 621
(CC)
Para 3