IN THE HIGH COURT OF SOUTH AFRICA
[WESTERN CAPE DIVISION, CAPE TOWN]
Case no: 12698/22
In the matter between:
CLYNTON HUGH MARKS First applicant
HENRY ROBERT HONIBALL Second applicant
and
HERMAN BESTER First respondent
ADRIAAN WILLEM VAN ROOYEN Second respondent
CHRISTOPHER JAMES ROOS Third respondent
JACOLIEN FRIEDA BARNARD Fourth respondent
DEIDRE BASSON Fifth respondent
CHAVONNE BADENHORST ST CLAIR COOPER Sixth respondent
MIRROR TRADING INTERNATIONAL (PTY) LTD
(In liquidation) Seventh respondent
THE MASTER OF THE HIGH COURT, CAPE TOWN Eighth respondent
and
THE SOUTH AFRICAN REVENUE SERVICE Intervening applicant
JUDGMENT DELIVERED (VIA EMAIL) ON 13 MARCH 2024
SHER, J:
1. The applicants seek an order removing the 1 st to 6 th respondent (‘the
respondents’) from their position as liquidators of the 7 th respondent, Mirror
Trading International (Pty) Ltd (‘MTI’) , a company that operated as an internet-
2
based cryptocurrency ‘club’, which pooled investor members’ cryptocurrency and
traded with it in speculative investments.
2. MTI was placed under provisional liquidation o n 29 December 2020. A final order
was granted on 30 June 2021 . It is one of the largest insolvencies in SA to date :
more than R 1 billion worth of bitcoin was held by the company on liquidation.
3. Pursuant to an application which the respondents launched ,1 on 26 April 2023
MTI’s business model was declared2 to have been an unlawful multi -level
marketing, or so-called ‘pyramid/Ponzi’, scheme.
The background
4. The 2nd applicant is a creditor who joined the 1st applicant in the application. The
1st applicant claims to be a 50% shareholder of MTI together with one Steynberg,
its sole director and CEO, who fled to Brazil when the scheme collapsed .
Steynberg is currently being sought by the authorities for extradition to SA . The
1st applicant strenuously opposed the liquidation of MTI and sought to appoint
himself as a director, for this purpose, in Steynberg’s absence. He also claims to
be a creditor of the company to the tune of R 135.5 million odd in respect of
bitcoin and other cryptocurrencies which he ‘loaned’ to it, in order that it could
repay investors when they tried to recoup their investments.
5. The respondents aver that together with Steynberg the 1 st applicant was
complicit in a massive , fraudulent scheme which the company operated, which
resulted in thousands of investors being defrauded of their cryptocurrency. They
deny that he is a shareholder of the company and that it is indebted to him in
respect of any ‘loan’ of cryptocurrency. They aver that the bitcoin which he
‘loaned’ to the company did not belong to him and w as merely ‘round-tripped’
bitcoin which the 1 st applicant had previously misappropriated from investors ,
which he returned to the company . The respondents contend that the 1 st
applicant is in fact one of the principal debtors of MTI, owing it millions.
The applicants’ case
1 Under case number 15426/21.
2 In Bester & Ors v Mirror Trading International (Pty) Ltd (in liquidation) [2023] ZAWCHC 83; [2023] 3 All SA 101
(WCC); 2024 (1) SA 112 (WCC).
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6. In the founding affidavit the 1 st applicant alleged that the respondent s had
breached their fiduciary duties towards creditors and interested parties , as they
had been ‘dishonest’ about the nature of a claim to the value of R 6 255 802 3
which MTI proved against a related entity in liquidation , JNX Online (Pty) Ltd
(which was placed in final liquidation at the instance of the respondent s on 3 1
August 2021 by order of the Limpopo High Court 4), and had shown ‘clear’ bias in
their treatment of the claims of ‘real’ creditors in the insolvent estate of MTI. The
respondents were also accused of being guilty of a serious dereliction of duty in
relation to the due and proper administration of the estate of MTI.
7. In amplifying these grounds 1 st applicant alleged that the respondents ‘stood by’
whilst the Master laboured under a misapprehension as to the validity of a n
alleged ‘counterclaim’ in the amount of R 7 190 930, which the liquidators of JNX
had in turn proved at a meeting of creditors of MTI, on 4 February 2022 , which
claim the respondents knew was fraudulent. They had allowed it to be submitted
for proof before the Master because they had a ‘personal’ interest in it, and they
‘engineered’ a conflict of interest in re lation to the competing claims which JNX
and MTI had against one another.
8. According to the applicants, t he respondents deliberately allowed the ‘false’ JNX
claim to be admitted to proof, while motivating that the claims of ‘real’ creditors
(including the claim of the 1st applicant) should be rejected by the Master, in order
that they could then have a host of self -serving resolutions passed at the
instance of JNX, an entity which they knew was not a true creditor , to the
exclusion of those who were. This was done to ‘entrench’ the respondents’
position as liquidators. Thus, the respondents had manipulated the process and
had breached their fiduciary duties , which demonstrated their dishonesty and
bias.
9. The applicants contended that the respondents should have subjected the JNX
claim to scrutiny and interrogation before allowing it to be admitted to proof. The y
3 The applicants contend that this amount represents the difference between an amount of R 13 446 733
which JNX was paid by an entity known as Duppa & Duppa (as consideration for the purchase of bitcoin) and
an amount of R 7 190 930, which was paid by JNX to cover expenses owing by MTI.
4 Under case no. 5517/21.
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had been inconsistent and biased in their treatment of claims: whilst the ‘false’
JNX claim was not contested and was allowed to be admitted to proof on its
mere production, the claims of ‘real’ creditors were rejected outright, such as in
the case of the 1 st applicant, who the respondents had subpoenaed 5 to testify in
relation to his claim at an enquiry before the Master, on 11 and 12 October 2022.
10. The applicants alleged an improper, personal conflict of interest was present
because the liquidators of JNX, Ismail Dilshad and Elizna Lourens, were not
independent and were closely connected to the respondents: Lourens was a
director of Tygerberg Trustees (a company that has its principal place of business
in Bellville, Cape Town), together with the 1st respondent, and Dilshad and the 5th
respondent were employed by the Tshwane Trust Co . (which has its offices in
Tshwane, Gauteng). These close connections resulted in a reasonable
apprehension of bias.
11. As far as the respondents’ alleged failure to properly administer the estate of MTI
was concerned, the principal complaint which the applicants advanced was that
the respondents had failed to file the company’s tax returns for the 2020-2021 tax
years, which had triggered an audit by SARS , which in turn resulted in an
assessment of taxes owing in the amount of R 931 million odd: R 350 million in
respect of taxes due, R 580 million in respect of penalties and approximately R 1
million in lieu of interest. By their negligence the respondents had therefore
prejudiced the interests of creditors, as more than half of the R 1 billion in funds
which was available to MTI would have to be paid over to SARS in lieu of taxes.
12. The applicants accordingly submitted that the respondent s had demonstrated
they were incapable of dealing with MTI’s affairs with the requisite know -how and
dedication and were wholly unfit for the task.
The respondents’ case
13. The respondents filed a comprehensive answering affidavit, in which they dealt ,
at some length, w ith each of the a llegations which were made by the applicants
as to their alleged improper conduct.
5 In terms of s 44(7) of the Insolvency Act 24 of 1936.
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14. They averred, at the outset, that the application was an abuse of process : both
as to a lack of any urgency and as to its aims and objectives. They pointed out
that the applicants had previously brought the same application for the ir removal,
on an urgent basis, which they had set down 3 days before the hearing of the
application to declare the business of MTI an unlawful Ponzi scheme. That
application (which was in two parts viz part A for an interim interdict and part B for
substantive relief), had resulted in several postponements and undue delay in the
hearing of the application for the declarator, but was never moved. It was instead
withdrawn in parts: part A on 31 May 2022 and part B on 29 July 2022
respectively, on which date the current application was filed in its place. The
withdrawal was accompanied by punitive costs orders against the applicants on
the attorney-client scale, which included the costs of two counsel.
15. The respondents submitted that the applicants had unreasonably and unduly
delayed in coming to Court on the second application, and it was v exatious.
Although the provisional winding -up order was granted in July 2021 and the
applicants knew of the JNX claim already in September 2021 , and the statutory
report of the liquidators as to the company’s affairs was published in November
2021, the applicants waited until July 2022 before launching the application , and
it was no coincidence that the date on which they set it down for hearing
coincided with the dates when the 1 st applicant was due to be interrogated, in
October 2022. The application was therefore mala fide and had been brought
simply to frustrate the winding -up process and to prevent the 1 st applicant’s
proposed interrogation. When the application was brought, the applicants must
have known that it would be resisted on the very same grounds that the previous
application had been resisted, and they must surely have known that there would
be material disputes of fact which, as in the case of the previous application,
were not capable of being determined on the papers. This alone justified that the
application should be dismissed.
16. As to the 1 st applicant’s locus standi the respondents were of the view that in all
likelihood he was neither a shareholder nor a creditor of MTI. No share
certificates evidencing his shareholding were produced at the time when the
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company went into liquidation , and the ones that were subsequently produced
were suspect: they were not signed by the company secretary but by Ste ynberg,
and the share register appear ed to have been manipulated by the 1 st applicant,
who had purportedly made entries there in in his favour, as a ‘director’ , after the
provisional winding -up order had been obtained. In this regard the resolution
which was allegedly adopted by Steynberg and the 1st applicant, whereby he was
appointed as a director, appeared to have been taken when Ste ynberg had
already left the country. A second share register which was compiled after a s
417 enquiry had been held was also problematic as it reflected different dates
and a different number of shares which had allegedly been allocated to the 1 st
applicant.
17. As to the 1 st applicant’s allege d status as a creditor, this too was placed into
question by the respondent s. They pointed out that he was the former head of
MTI’s so -called ‘referral’ program, and his wife was the company’s head of
communications and marketing , and both were paid extensive ‘referral’ bonuses
for each for the investments that were made by investors who ranked below them
in the ‘pyramid’ scheme. From the company’s records it appear ed that whereas
the 1 st applicant had only deposited 21 984 bitcoins into the MTI pool , he had
withdrawn in the order of 219 719 bitcoins from it to the value of R 74.9 million,
thereby making a profit, to the detriment of investors, of over R 65 million. The 1st
applicant was therefore indebted to the company for over R 67 million in total and
an action had been instituted against him for a declarator holding him liable for
payment of an amount of R 4.6 billion in lieu of damages.
18. As for the 400 bitcoins he allegedly loaned to the company between October and
December 2020 in terms of an oral agreement, for ensic examiners and
cybercrime investigators had found no records in MTI’s databases of any such
transaction and the 1st applicant had been unable to provide any binance account
statements which proved that he had acquired the bitcoin s from a crypto
exchange or a 3 rd party. Furthermore, the investigators had established that the
1st applicant had transferred bitcoins to Steynberg, and not to the company.
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19. As for the complaint that the respondents had acted unfairly by not permitting the
1st applicant’s claim, as a ‘real ’ creditor, to be put to the proof at the meeting of
creditors, the respondents pointed out that the claim had been rejected by the
Master twice before, at previous creditors’ meetings, and this was the 3rd time the
1st applicant sought to have it admitted. Although the 1 st applicant agreed to
testify in support of the claim, an offer which was welcomed by the liquidators, he
later retracted this and had as yet not submit ted the necessary document ary
proof in support of his claim, and he was unable to provide any evidence as to
the source of the bitcoins which he allegedly ‘loaned’ to the company.
20. As to the complaints which were raised by the applicants in relation to the JNX
claim, the respondents denied that it was either false or fraudulent, or that they
had stood by whilst it was admitted to proof , when it should not have been . They
pointed out that evidence supporting JNX’s claim against MTI had been
produced6 in testimony before a Commissioner (Fabricius J), and Lourens, one of
the liquidators of JNX, had ascertained from its records and bank statements that
it held a loan account with MTI , which reflected that MTI was indebted to it in the
amount of the claim which was admitted to proof. All the creditors had
participated in the meeting on 4 February 2022 , which was open to the public,
and the legal representatives that attended had represented thousands of
investors. The applicants’ senior counsel had not raised any objection to the JNX
claim at the time when it was p resented to the creditors in meeting and had not
called for an examination of it, as was allowed for in the Act.7
21. From what the respondent s were able to ascertain JN X’s case was that it had
advanced monies to MTI , by paying certain of its expenses , as was recorded in
the accounting records of both JN X and MTI, which re flected that they had
competing claims against one another. Whether the claims were valid still had to
be investigated and determined by the liquidators. In this regard , in terms of s 45
of the Insolvency Act the Master was required to deliver to the liquidators every
claim which had been proved at a meeting of creditors, together with every
6 By one Du Plessis of Duppa & Duppa and a ‘bookkeeper’, one Kritzinger.
7 Section 44(7).
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document which was submitted in support thereof, whereafter the liquidators
were enjoined to examine the available books and records of the company in
liquidation in order to ascertain whether it in fact owe d the amount (s) claimed.
Thus, there was no obligation on a liquidator to verify that a claim which was
submitted to a meeting of creditors, by a creditor, was authentic, before it was
admitted to proof, and it was settled law that the mere admission to proof of a
claim at a meeting of creditors did not ‘ratify’ it or make it ‘ res judicata’ .8 As a
matter of law liquidators were entitled to dispute the validity of any claim that had
been proved at a meeting of creditors , in which case the Master could either
uphold the claim or reduce or disallow it.
22. The respondents were in the process of establishing the legitimacy and validity of
the competing claims of MTI and J NX which had been proved at creditors’
meetings, and whether they could be set off against one another, and had
subpoenaed many of the parties to whom payments had allegedly been made by
JNX on behalf of MTI, to give evidence, so that it could be determined whether or
not JNX had a valid claim against MTI, or had simply existed as a conduit for it.
23. As for the resolutions which were passed after the JNX claim had been admitted
to proof, these were standard, run -of-the-mill resolutions which were normally
passed at such a meeting of creditors. The liquidators ’ powers had already
previously been extended by order of court.
24. In regard to the alleged close connection and conflict of interest between the
liquidators of JNX and MTI , the respondents pointed out that Dilshad had been
selected and appointed by the Master and was neither a director nor an
employee of the Tshwane Trust Co. and although Lourens and Bester were both
employed by the same corporate entity L ourens was based at its offices in
Pretoria, whilst Bester had offices in Cape Town, and both operated completely
independently of one another, as liquidators, for and in respect of the respective
entities they had been appointed to wind up.
8 Standard Bank of SA v The Master of the High Court & Ors 2010 (4) SA 405 (SCA) para 93.
9
25. In matters involving MTI the respondents acted collectively, as a group, and there
were extensive control measures in place to avoid any potential conflict of
interest between them and MTI, or between themselves.
26. As for the alleged failure to properly administer the tax affairs of MTI, the
respondents pointed out that the company had not kept proper financial and
accounting records from the time of its start -up to the date of its liquidation , and
when the respondent s took over as liquidators they found the company in a
completely dysfunctional state: there were no corporate governance structures in
place and Steynberg had fled the country.
27. As sole director Steynberg had failed to attend to the filing of the necessary tax
returns for the preceding 2020 and 2021 tax years. The respondents had to carry
out extensive and time -consuming investigations into the company’s affairs to
unravel what had happened . These enquiries included interviewing hundreds of
witnesses and employing forensic experts to retrieve and analyze the company’s
electronic client database. The respondents had to cause the company’s ‘books’
to be reconstructed and written up, an extremely time -consuming and difficult
exercise, as bitcoins can be fraction alized and passed through mixed accounts
and then distributed via the block chain ledger system.
28. As the winding -up was opposed by the applicants the final liquidation order was
only granted on 22 June 2021. Notwithstanding this, t he respondents engaged
with SARS immediately after they were appointed and applied to it for an
extension for the fling of the tax returns . They assisted SARS by making
available to it the services of forensic investigators and digital experts they had
engaged, for the purpose of the audit which SARS wished to carry out, which
commenced in July 2021 . Although the outcome of SARS audits are normally
communicated to the parties who are the subject thereof and they are given an
opportunity to consider and to respond to their findings, when the audit was
concluded in June 2022 SARS did not afford the respondents such an
opportunity and proceeded directly to raise an assessment of a tax liability of R
931 million, and a claim in this amount was lodged and admitted to proof at a
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meeting of creditors on 22 June 2022, some 8 days after the audit was
concluded.
29. On 22 August 2022 t he respondent s informed SARS that the claim was being
examined in terms of s 45(2) of the Act and propose d that the part ies should
engage one another with a view to an exchange of information, in order that the
claim could be properly evaluated and the necessary tax returns for the 2020 and
2021 tax years could be lodged. This was acceded to, and the returns were duly
filed on 28 October 2022.
30. After extensive discussions and negotiations between the parties and after
having obtained legal and specialist tax advice, the respondents made an offer of
provisional settlement of the company’s tax liability which was accepted by SARS
on 25 April 2023 in an amount, in total (inclusive of penalties and interest) of R
283 428 110. Subsequent to the settlement the respondents made application to
the Court 9 for approval thereof.10 A rule nisi was granted on 23 May 2023 which
was made final on 2 November 2023.
31. In the circumstances the respondents denied that they had been remiss in any
way in relation to the company’s tax affairs. They pointed out that until the
records had been reconstructed and the SARS audit had been concluded, with
the assistance of the forensic experts which they ha d engaged, it had not been
possible for them to prepare and file proper and compliant tax returns.
The law
32. It has been held that t he removal of a liquidator is an ‘extreme step’ 11 and a
‘radical form of relief’12 which will not be granted unless the Court is satisfied that
a proper case for it has been made out. In considering such an application the
Court must assess the conduct of the liquidator in its ‘full’ context with reference
to all relevant facts and circumstances , and must be satisfied that the removal of
the liquidator will be to the general advantage of all parties interested in the
9 Under case no. 7682/23.
10 In terms of s 387(3) of the Companies Act.
11 Standard Bank n 8 para 135.
12 Ma-Afrika Groepbelange (Pty) Ltd & Ano v Millman & Powel NNO & Ano 1997 (1) SA 547 (C) at 566B.
11
winding-up.13 The relevant factors to be taken into account include the expense
which will be incurred and the inconvenience which will be suffered in having to
appoint a replacement, and the stage at which the application has been brought:
a Court will be less inclined to remove a liquidator at a late stage in the winding -
up process.14
33. Section 379 of the Companies Act15 sets out various grounds on which
liquidators may be removed from office by a Court. For the purposes of this
application the pertinent ones include a failure to satisfactorily perform any duty
which has been imposed on them, or because they are no longer suitable to act
as liquidators, or for any other ‘good cause’.16
34. As far as ‘good cause’ is concerned, as was pointed out in an extensive review of
the English and SA case law in Ma-Afrika 17 this has been interpreted to mean
‘sufficient grounds’ for removal and is not confined to instances of misconduct or
personal unfitness. Thus, there will be sufficient cause for the removal of a
liquidator where it is shown that it will be to the advantage of the parties
interested in the liquidation. 18 To this end, the cause must be ‘measured’ by
reference to the ‘real, substantial (and) honest’ interests of the liquidation.19
35. ‘Good cause’ for the removal of a liquidator will also be present where he/she has
not been independent in the discharge of their duty or has allowed their personal
or professional interests to conflict therewith. In this regard a liquidator is required
to maintain an ‘even and impartial hand’ 20 between parties to the liquidation i.e.
should have no ‘leaning’ for or against any of them and should not side with a
party or fact ion in any dispute and should be detached, independent and
impartial in their dealings.
36. The fact that a liquidator has a fiduciary duty towards the company in insolvency
does not mean that he/she can always be ‘even -handed’ and there may be
13 Id, 566C-D.
14 Id, 566E.
15 Act 61 of 1973.
16 Section 379(2) rtw ss 379(1)(b) and (e).
17 Note 12.
18 Id, 561D-E.
19 Id, 561F.
20 Id, 562A-B.
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instances where the y are obliged, should the occasion warrant it , to dispute a
creditor’s claim or to impeach a transaction which took place. 21 In such
circumstances a creditor cannot object to the liquidator’s conduct on the grounds
of a perception of bias,22 and the liquidator may only be removed on this basis if
there is ‘sufficient suspicion’ of partiality or a conflict of interest. 23 In this regard a
Court may remove a liquidator if there is evidence that he/she is in a position of
actual or apparent conflict of interest because of some relationship, direct or
indirect, with the company , its management , or any person concerned in its
affairs.
37. Simple c omplaints or allegations of a perception of bias, partiality, lack of
independence or unfairness without more, will therefore not suffice, nor will it
ordinarily be sufficient to show simply that the liquidator made questionable
decisions or committed errors of judgement. Whilst these deficiencies may point
to a lack of competence or experience, they will not necessarily constitute good
or sufficient cause to justify the removal of a liquidator.24
An assessment
38. It is trite that on aspects on which there are disputes of fact the se are to be
determined on the respondents ’ version, on the basis of the principle which was
laid down in Plascon-Evans,25 unless the version is so fa r-fetched, improbable or
untenable that it falls to be rejected out of hand.26 On the papers before me that
is clearly not the case. The explanations which the respondent s put up for the
admission to proof of the competing claims in the insolvent estate s of JNX and
MTI are cogent and do not demonstrate that there was any conflict of interest in
the handling of such claims , or that the respondents lacked the necessary
independence or partiality required in dealing with them.
21 Id, 565C citing Receiver of Revenue, Port Elizabeth v Jeeva & Ors; Klerck & Ors NNO v Jeeva & Ors 1996 (2)
SA 573 (A) at 579F-G.
22 Id.
23 Hudson & Ors NNO v Wilkins NO & Ors 2003 (6) SA 234 (T) para 13.
24 Ma-Afrika n 12 at 566B-C.
25 Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A).
26 Id, at 634E-635C; Wightman t/a JW Construction v HeadFour (Pty) Ltd & Ano 2008 (3) SA 371 (SCA) para 12.
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39. Nor has it been shown that the respondents demonstrated any bias or undue
preference in their treatment of creditors ’ claims. Given the a ccusations which
have been levelled at the 1 st applicant as to his alleged complicity in a multi -
billion Rand fraudulent Ponzi scheme, the respondents would have failed to have
acted properly in the discharge of their fiduciary duties had they allowed his claim
of R135 million odd to be admitted to proof on his simple say -so, without a shred
of supporting evidence , and they were entirely correct and prudent in requiring
that it be subjected to interrogation. In contrast to this, the claim which was put
forward by the JNX liquidators was properly allowed to be admitted to proof as it
was one which was based on the accounting records of both JNX and MTI and
certain evidence which was presented before a Commissioner. The fact that it
was admitted to proof does not mean that the respondents were dishonest or
negligent in any way in their dealings with it: as they point out they are currently
in the process of establishing the veracity and legitimacy of the claim, as well as
of the claim which MTI proved against JNX.
40. Similarly, as for the respondents’ alleged failure to properly attend to the due and
proper administration of the estate of MTI either generally , or specifically , in
regard to its tax affairs, there is likewise also no basis to arrive at a finding that
the respondents were remiss or that they failed in the discharge of their duties. In
this regard the complaint that they failed to file tax returns is particularly
inappropriate. It was the company’s duty and that of its sole director Steynberg to
ensure that proper accounting and financial records were kept, from the time it
started trading, and it was their duty to ensure that tax returns were prepared and
filed.
41. As was previously pointed out the company was placed in provisional liquidation
in December 2020. The 1st to 5th respondents were only appointed as provisional
liquidators by the Master on 29 January 2021.
42. As sole director Steynberg should have ensured that the 2020 and 2021 tax
returns were filed and the tax that was due was paid. The applicants strenuously
opposed the company being placed in final liquidation, and an order in this
regard was only made at the end of June 2021, shortly before the SARS audit
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got underway. On 11 November 2021 the 1 st to 5th respondents were appointed
as final liquidators, together with the 6th respondent.
43. As was previously pointed out MTI’s financial and accounting records were either
non-existent or in complete shambles when the respondent s took over, and the
company’s books of account had to be written up. In such circumstances until the
records had been properly reconstructed with the help of forensic and digital
experts, and the results of the SARS audit (which was carried out with the
assistance of the forensic experts which the respondents engaged) were made
known, the respondents were hardly able to file proper and compliant tax returns.
They did so in October 202 2, within a matter of months after the audit was
concluded, after engaging SARS in a mutual exchange of information . In the
circumstances, in my view it cannot be said that the respondent s were remiss. In
fact, if anything, by properly examining SARS ’ R 9 31 million tax claim and
contesting aspects of it the respondent s succeeded in reducing and settling the
company’s tax liability to an agreed sum of R 238 million (inclusive of penalties
and interest), a figure which is approximately 25% of that which SARS originally
sought to claim. In doing so, the respondents clearly acted in the best interests of
the insolvent company and the general body of creditors.
Conclusion
44. In my view, for the aforegoing reasons the allegations of impropriety which were
levelled at the respondents have been shown to be wholly without substance and
the applicants have failed to show good and sufficient cause for the removal of
the respondents as liquidators. Even if there were to be some merit in the
complaints which the applicants raised, in my view g iven the length of time that
the company has been in winding -up and the considerable expense that has
been incurred, as well as the considerable work which has been done by the
liquidators to date ( more than 154 witnesses have been questioned in enquiries
before 2 Commissioners (a retired judge and a magistrate) , more than 60
summonses have been issued and various anti -dissipation applications have
been brought, and the respondents have participated in numerous applications
involving the company and the applicants and groups of investors), i t would in
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any event be wholly against the interests of creditors and interested parties for
the respondents to be removed from their positions at this stage.
45. In the result, the application must be dismissed. As for costs, given the
circumstances previously outlined as to how the application came to be brought
(as a matter of urgency when it was clearly not urgent, on grounds similar those
which were raised and refuted in a prior application, which was withdrawn after
the respondents filed their answering papers thereto ); it constituted an abuse of
process which appears to have been motivated by a desire to avoid the 1 st
applicant from being subjected to an interrogation. This conclusion is
substantiated by the fact that after the 1 st applicant’s interrogation could not be
proceeded with in October 2022, because the application was still pending, the
applicants took no steps to have the matter heard, and it was left to the
respondents to do so.
46. In addition, a punitive costs order is warranted because the allegations of serious
misconduct which the applicants levelled at the respondents in the papers
unfairly impugned their integrity and maligned their professional reputations and
were entirely spurious. The order must include the costs of the application by
SARS to intervene in the dispute, which was necessitated by the complaint which
was levelled at the respondents regarding their treatment of the company’s tax
affairs and its tax liability.
47. I make the following Order:
47.1 The application is dismissed.
47.2 The applicants shall be liable jointly and severally (the one paying the
other to be absolved) for the costs of the application (including the costs of
the interlocutory application by SARS to intervene) , on the scale as
between attorney and client, including the costs of two counsel where so
employed.
M SHER
Judge of the High Court
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Appearances:
Applicants’ counsel: JH Loots SC & PS Bothma
Applicants’ attorneys: Selzer Law (Durban)
First-Sixth respondents’ counsel: SC Kirk-Cohen SC & R Fitzgerald
First-Sixth respondents’ attorneys: Tintingers Inc (Tshwane)
Intervening applicant’s counsel: GW Woodland SC & KD Magano
Intervening applicant’s attorneys: Diale Mogashoa Attorneys (Tshwane)