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[2011] ZASCA 71
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Janse van Rensburg NO and Others v Steyn (66/10) [2011] ZASCA 71; 2012 (3) SA 72 (SCA) (25 May 2011)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case No: 66/10
In the matter between:
JACOBUS HENDRIKUS
JANSE VAN RENSBURG N.O.
.....................
1
ST
APPELLANT
PHILIP FOURIE N.O.
.............................................................................
2
ND
APPELLANT
JACOB LUCIEN LUBISI
N.O.
................................................................
3
RD
APPELLANT
LILY MAMPINA
MALATSI-TEFFO N.O.
................................................
4
TH
APPELLANT
ENVER MOHAMMED MOTALA
N.O.
....................................................
5
TH
APPELLANT
RABOJANE MOSES KGOSANA
N.O.
..................................................
6
TH
APPELLANT
(in their capacities as
joint-liquidators of
MP FINANCE GROUP CC [IN
LIQUIDATION])
and
SAREL JOHANNES
LODEWIKUS STEYN (18137/2005)
........................
RESPONDENT
Neutral citation
:
Janse van Rensburg v Steyn
(66/10)
[2011] ZASCA 71
(25 May
2011)
Coram:
NAVSA,
HEHER, SNYDERS, SHONGWE JJA and MEER AJA
Heard:
3 May 2011
Delivered:
25 May
2011
Updated:
Summary:
Practice
– default judgment – validity of order appointing
plaintiffs as liquidators – order preceded by published
rule
nisi
– order
res judicata
between liquidators and
investors of estate administered by them.
Insolvency –
voidable preference – application to set aside under s 29 of
Insolvency Act 24 of 1936
and to recover amount of disposition –
‘debtor’ – who is – consolidated estate in
which liquidators
unable to identify entity making the disposition –
interpretation of consolidation order.
____________________________________________________________________________________
ORDER
On appeal from:
North Gauteng High Court (Pretoria)
(Tuchten J sitting as court of first instance):
In the result the appeal
succeeds. The following order is made:
1. The appeal is upheld
with costs.
2. The order of the court
a quo is set aside and replaced with the following:
‘
1.
The payments totalling R117 100.00 made by the Krion Scheme to the
defendant are set aside in terms of
s 29
of the
Insolvency Act 24 of
1936
.
2. Judgment is entered
against the defendant for payment of R117 100.00 and interest thereon
at the prescribed rate from date of
judgment to date of payment.
3. Costs of suit.’
_______________________________________________________________________
JUDGMENT
_____________________________________________________________________
HEHER JA (NAVSA, SNYDERS,
SHONGWE JJA AND MEER AJA concurring):
[1] This is an appeal
from a judgment of Tuchten AJ sitting in the North Gauteng High Court
with leave of the learned judge.
[2] The six applicants,
professional liquidators, sued the respondent, a retired train
driver. They relied on
s 29
of the
Insolvency Act 24 of 1936
. They
asked the court to set aside as voidable preferences payments made to
the respondent by the consolidated estate of four corporate
entities
and a ‘partnership’ which estate they referred to in
their particulars of claim as ‘the Krion scheme’,
and for
payment of R117 100 as contemplated in
s 32(3)
of the Act.
[3] The respondent
(Steyn) did not oppose the action. The liquidators applied for
default judgment. The trial judge expressed doubts
about the validity
of their cause of action and required them to file an affidavit to
explain why more than one entity was being
liquidated under the same
name and why that entity was claiming payment of the alleged debt.
The liquidators duly provided such
an explanation by means of an
affidavit by their attorney, Mr Coetzee, supported by the application
papers in TPD case no 21098/2002
to which reference will be made
below.
[4]
The learned judge was not persuaded. Although he questioned the
locus
standi
of the
liquidators in his judgment, he left that matter open. Instead he
refused the application on the grounds that:
‘
Section
29
of the
Insolvency Act requires
a plaintiff to show that the
disposition in question was made by a specific debtor. A plaintiff
who relies on either
s 26
or
s 29
is further required to show that at
a decisive moment the liabilities exceeded the assets of that
specific insolvent debtor . .
. This is precisely what the plaintiffs
are unable to do: this is why no such allegation is made in their
particulars of claim
and the evidence presented through the affidavit
of the plaintiff’s attorney shows that this is why the court
order was sought.
1
’
Tuchten AJ accordingly
concluded that the liquidators’ claim disclosed no valid cause
of action and he dismissed the application
for judgment.
The
locus standi
of the
liquidators
[5]
Because of the doubts expressed by the learned judge, and because
Fabricius AJ in his judgment in the
Botha
case – the
appeal in which was heard together with this appeal and in respect of
which judgment is also delivered today –
expressly approved of
those reservations, it will be convenient to deal first with the
question of
locus
standi
.
[6] According to the
liquidators’ particulars of claim:
‘
7.1
The First to Sixth Plaintiffs act herein in their capacities as the
duly appointed liquidators of the estate of MP Finance Consultants
CC
(in liquidation), Krion Financial Services Limited (in liquidation),
Marburt Financial Services Limited (in liquidation), Madikor
20 (Pty)
Ltd (in liquidation) and M&B Co-Operative Limited Partnership.
7.2
All of the estates referred to hereinabove have been consolidated
into a single estate by order of the High Court of South Africa
(Witwatersrand Local Division) under case number 21098/2002.
7.3
The consolidated estate is referred to as MP Finance Group CC (in
liquidation) and is referred to herein as the ‘Krion
Scheme’.’
Four matters of note
arise from the allegations made in para 7 of the claim:
1. The liquidators sue as
the joint liquidators of a consolidated estate.
2. The consolidated
estate is made up of the estates in liquidation of one close
corporation, three companies, and an entity which,
by description, is
a partnership that is not alleged to have been sequestrated.
3. The consolidated
estate is alleged to be that of a close corporation that bears a name
which is not that of one of the entities
whose estates have been
combined.
4. The authority relied
on for this, patently unusual, situation is an order of the High
Court.
[7]
There is, of course, a context to these allegations, disclosed to the
learned judge, that should not be lost sight of in the
procedural
mists. The liquidators are carrying out a public duty. They applied
for and received sanction for both the scope of
their administration
and the manner of its exercise.
2
Although I would not necessarily have
sought relief in the terms of the orders in case no 21098/2002 (or
granted it) that is, for
reasons which will appear, water under the
bridge. The liquidators have been carrying out their mandate for more
than seven years.
Before they applied for the authority conferred by
the two orders they were aware of complexities and uncertainties in
the administration
of the estates of the various entities. The
ramifications appear from the founding affidavit of the first
appellant in case no
21098/2002. In short, the Krion scheme was a
pyramid scheme operated by a Ms Marietjie Prinsloo almost entirely on
a cash basis
and dependent entirely upon procuring ‘investments’
from gullible members of the public sufficient to pay the fantastic
rate of return promised to every one. The scheme was operated under
various names including the four registered corporate entities
referred to in the particulars of claim. Although meticulous records
were kept of moneys received from and returns owing to investors,
none of the entities, incorporated or otherwise, kept books of
account or published financial statements and only Krion Financial
Services Ltd opened a bank account (and then only for a period of
about three months in 2002). The liquidators’ task was
especially complicated by the practice of Ms Prinsloo, as the driving
force
behind the operation of the scheme, of moving from one corporate
identity to another successively and as it suited her and,
particularly, during a period when there were official enquiries
being made into her affairs. On such occasions the assets and
liabilities of the discarded entity were simply taken over holus
bolus
by the one that
followed. As the first appellant deposed:
‘
Mev
Prinsloo het self getuig [in a
s 417
enquiry] dat dit ook vir haar
onmoontlik sou wees om vas te stel welke beleggers by welke entiteit
belê het en welke entiteit
die maandelikse rente en of kapitaal
terugbetalings aan beleggers gedoen het. Dit was egter nie vir haar
belangrik nie aangesien
sy al die aparte entiteite se besigheid as
net een besigheid beskou het en was die verskillende entiteite aldus
haar net nodig
om die skema te probeer wettig . . . So byvoorbeeld
blyk uit al die state dat MP Financial [a trading name utilized by Ms
Prinsloo]
die uitbetalings doen ten spyte van die feit dat dit gedoen
is met fondse van die ander entiteite soos en wanneer hulle begin
handel
dryf.’
[8] The first appellant
informed the court in the initial application (and likewise the
learned judge a quo) that
1. a minimum of 8 748
persons invested money in the scheme;
2. each investor
invested, on average, 3.1 times;
3. 26 885 separate
investments were made;
4. the total of all
investments was about R1.5 billion, represented by about R950 million
in new investments and about R625 million
in re-investments;
5. about R975 million was
returned to investors;
6. there was an
unexplained shortage of about R600 million.
[9]
In the circumstances that gave rise to the original application a
pragmatic, overall view was required, rather than one that
attempted
to tie loose ends. Since 2003 the liquidators have been before this
Court on three occasions in the bona fide administration
of the
consolidated estate.
3
During those appeals no challenge was
raised to their
locus
standi
. They have
caused thousands of summonses to be issued in order to recover assets
of the consolidated estate for the equitable benefit
of creditors.
All these considerations were known to the court a quo. In such
circumstances a court should be slow to undermine
the process of
liquidation unless that consequence is unavoidable.
[10] A brief reference to
the entity, called M & B Co-Operative Limited Partnership in para
7.1 of the liquidators’ particulars
of claim, is necessary.
This entity was, according to the founding affidavit in case no
21098/2002, a vehicle used by Ms Prinsloo
to further the scheme, her
intention being to incorporate it as a co-operative society; that did
not happen and in consequence
it never matured beyond one of the
trading names of the Krion Scheme. Although the deponent describes it
as ‘regtens soos
‘n vennootskap’ and purports to
identify the partners, it is clear that he does not speak from
personal knowledge and
he does not provide any factual basis for his
legal conclusion. It may therefore be accepted simply as one of the
names used by
the corporate entities engaged in the scheme whose
recognition in the order of Hartzenberg J was probably superfluous.
[11]
I think that the answer to the perceived dilemma about the
locus
standi
of the
liquidators lies in the orders made by Hartzenberg J in case no
20198/2002 and the reasons for those orders, as well as the
order
that the same learned judge made in case no 1288/2003.
[12] The order in case no
20198/2002 was in so far as relevant to the present appeal, as
follows:
‘
2.
Dat dit verklaar word dat die boedels van MP Finance Consultants BK
(in likwidasie), Krion Financial Services Bpk (in likwidasie),
Martburt Finansiële Dienste (in voorlopige likwidasie), Madikor
Twintig (Edms) Bpk (in likwidasie) en M & B Koöperasie
Bpk
Vennootskap een entiteit is bekend as
die
MP Finance Group BK, welke saamgevoegde boedel vir alle doeleindes as
‘n gelikwideerde beslote korporasie beskou sal word
en dat
verklaar word dat die besigheid van die verskillende entiteite, die
besigheid van die saamgevoegde beslote korporasie was.
3.
Dat die voormelde gesamentlike boedel van die verskillende entiteite
as een beslote korporasie beredder en beskou sal word vir
doeleindes
van die voorafgaande en sal die feit dat daar aparte entiteite
opgerig is, verontagsaam word.
4.
Dat die voorafgaande nie afbreuk sal doen aan die regte van enige
skuldeiser wat ‘n eis bewys teen enige van die afsonderlike
entiteite hierbo na verwys nie, met dien verstande dat sodanige
skuldeiser se eis slegs ontmoet word uit ‘n bate wat bewys
word
die bate van sodanige afsonderlike entiteit is.
5.
Dat in die geval van Krion Financial Services Bpk (in likwidasie)
word verklaar dat die bepalings van Artikels 311, 312, 417,
418 en
424 van die Maatskappywet (Wet 61 van 1973) van krag bly, asof
hierdie bevel glad nie gemaak is nie, behalwe dat alle koste
hieraan
verbonde uit die saamgevoegde boedel betaal mag word en dat die
likwidateurs te enige tyd in die toekoms om gegronde redes
mag
aansoek doen aan hierdie hof dat enige ander bepalings van die
Maatskappyewet ook van krag sal wees, of dat hierdie bevel op
enige
gepaste wyse gewysig word om voorsiening te maak vir die meer
effektiewe administrasie van die boedel.
6.
Dat die likwidasie van die saamgevoegde boedel geag word ‘n
aanvang geneem het op 4 Junie 2002.
7.
Dat behalwe vir die voorafgaande uitsonderings word die Applikante
gelas om enige eise wat bewys word teen enige van die gemelde
entiteite te beskou as ‘n eis teen die saamgevoegde boedel.’
[13] The
order in case no 1288/2003 was, also to the extent relevant, and as
amended by this Court, in the
Fourie
matter,
as follows:
‘
1.
It is declared that the investment scheme by Marietjie Prinsloo
(formerly Pelser) during the period 1998 to June 2002 under various
names including MP Finance Consultants CC, Madikor Twintig (Pty) Ltd,
Martburt Financial Services Limited, M & B Ko-operasie
Beperk and
Krion Financial Services Limed (“the investment scheme”)
was at all material times from and after 1 March
1999 insolvent in
that its liabilities exceeded its assets.
2.
All contracts concluded between the investment scheme and investors
in the scheme were illegal and null and void.
3.
All actual payments, whether as profit or interest, from and after
March 1999 by the aforesaid investment scheme to the second,
third,
fourth, fifth and further respondents, in so far as they exceed the
investments of each particular investor are set aside,
under
s 26
of
the
Insolvency Act as
dispositions without value by the scheme to
investors at times when its liabilities exceeded its assets, provided
that the right
of investors to rely on the provisions of
s 33
of the
Insolvency Act is
in no way affected by this order.’
[14] The
confirmation of both orders was preceded by the nationwide
publication of a rule
nisi
intended,
among other purposes, to serve as notice to all investors in the
Krion scheme. Neither the names or whereabouts of every
investor was
known to the liquidators and this, together with the substantial cost
of effecting personal service on all identifiable
investors,
obviously persuaded the court that substituted service should be
authorised. Publication of the terms of the rule in
the first
application was accompanied by a succinct summary of the application,
the rule and its effects intended for the enlightenment
of investors.
The summary was as follows:
‘
Marietjie
Prinsloo (voorheen Pelser) het haar beleggingskema bedryf deur
verskeie entiteite naamlik MP Finance Consultants BK, Martburt
Finansiële Dienste Bpk, Madikor Twintig (Edms) Bpk, M & B
Ko-operasie Bpk en Krion Finansiële Dienste Bpk.
Almal
behalwe M & B Ko-operasie Bpk, wat nooit geregistreer was nie, is
reeds gelikwideer en die voorlopige likwidateurs het
die
Hooggeregshof gevra om die verskeie boedels te konsolideer sodat dit
voortaan alles beskou sal word asof dit maar net een maatskappy
was,
wat bekend sal staan as die MP Finance (Groep) BK.
Die
redes vir konsolidasie is onder andere dat dit deurentyd dieselfde
besigheid was ten spyte daarvan dat verskeie name van tyd
tot tyd
gebruik was, dat die entiteite se sake nie afsonderlik bedryf was nie
en het hulle onder andere mekaar se skulde betaal
en was hul sake so
in mekaar ineengestrengel dat dit vir die likwidateurs onmoontlik sal
wees om afsonderlike bates en laste van
die verskeie entiteite te
identifiseer.
Belanghebbendes
mag die aansoek bestry en redes aanvoer waarom so ‘n
konsolidasie bevel nie finaal gemaak moet word nie. Afskrifte
van die
aansoek stukke is beskikbaar by prokureurs Strydom & Bredenkamp
Ing met Tel: (012) 342-0700, verwysing Judy Grobler.
Die
beleggers se verteenwoordiger ondersteun die aansoek aangesien baie
beleggers met meer as een entiteit sake gedoen het en dit
baie
moeilik sal wees om te bepaal hoeveel van elke entiteit ge-eis moet
word.’
[15]
No individual investor opposed confirmation of the rule in the first
application. The so-called ‘investors representative’,
Mr
C S Edeling, contested several aspects, but abandoned his opposition
before confirmation. The order was not appealed. It thus
became
binding on all investors including the respondents in the present
appeals.
4
The order in case 1288/2003 was the
subject of an appeal by Mr Edeling and certain investors. The appeal
was substantially unsuccessful.
5
Although the court stated that it was
open to any investor to challenge the enforceability of the order on
the ground that he had
not received notice or had not understood the
order, it is clear that the order was to remain prima facie binding
on all investor
who did not successfully challenge it on that basis.
Neither Mr Botha in this appeal nor the appellants Steyn and Zwarts
in the
other two
appeals
before us attempted to place evidence before the court which might
justify their release from the effects of the order.
As paragraphs 2
and 3 of the order in case no 21098/2002 expressly authorised and
instructed the liquidators to proceed with liquidation
of the four
corporate entities as a consolidated estate the issue of
locus
standi
was not one
that could arise between an investor such as Mr Steyn and the
liquidators. The orders are presumed to be correctly-made,
whether
they were or not.
6
The court a quo had no reason to
enter upon the issue
suo
moto
and could not
sit as a court of appeal on the order made in those proceedings.
Compliance with
s 29
of the
Insolvency Act
[16
]
The orders go beyond
locus
standi
. Properly
interpreted
7
they
1. deem the whole
operation of the Krion scheme to have been conducted under a single
corporate entity, MP Finance Group CC;
2. authorise that the
administration of the separate estates of the various corporate
entities be carried on as one consolidated
estate, MP Finance Group
CC (in liquidation);
3. declare the estates,
treated as one, to have been insolvent from 1999 because their
liabilities exceeded their assets;
4. relieve the
liquidators of the necessity of identifying assets and liabilities as
attaching to any of the individual constituents
of the consolidated
estate.
[17] So understood, the
order disposes of all the perceived difficulties which moved the
learned judge to refuse the order. The
liquidators’ allegations
must be read as relating to a specific insolvent debtor, viz the
deemed corporate entity that embraced
all temporary corporate
vehicles and trade names used by Ms Prinsloo in implementing the
fraudulent scheme, whether to attract
investment or to discharge
debts or perceived debts.
Interest
[18] The
appellants claimed interest at the statutory rate of 15.5 per cent
per annum
a tempore morae
to
date of payment. In the application for default judgment the demand
relied on was the service of the summons on 30 May 2005.
There was
some debate in counsel’s heads of argument as to whether such
an order was permissible.
[19] In
Meskin’s
Insolvency Law and its
operation in winding up
, ed Magid
et
al
, Issue 33, the authors submit (at 5-121)
that
‘
the
fact that
section 32(3)
does not empower the Court to make any order
for the payment of interest does not preclude its awarding mora
interest to the judgment
creditor from the date of judgment. . . [A]n
award of such interest from some earlier date is not competent since
there is no obligation
to restore or pay until the Court orders
accordingly.’
That there
is no such obligation before the court sets aside an impeachable
disposition and makes an order for recovery has recently
been made
clear in
Duet and Magnum Financial Services CC
(in liquidation) v Koster
2010 (4) SA 499
(SCA) in which Nugent JA explained the operation of
s 32(3)
, pointing
out (at para 10) that the defendant sued for the setting aside of a
disposition under the sections and payment has no
present obligation
to pay the moneys that are claimed and only becomes obliged to pay
once the court has made a declaration to
that effect. Further (at
para 12):
‘
the
order obtained by the liquidator or trustee is one that brings a debt
into existence once it has been shown that a disposition
that falls
within the terms of
ss 26
to
31
has occurred. Once it is so shown the
liquidator is entitled to recover the property or its value . . .
[T]he declaration that
is made by the court brings into existence
debts that did not exist before and simultaneously enables the debts
immediately to
be enforced through the ordinary process of execution.
. .’
[20] Thus
the ordinary incidence of demand by means of service of the summons
giving rise to
mora ex persona
must
yield to the effect of the statute as explained in
Duet
and Magnum
because the debtor is in mora only
from date of judgment.
[21] It
would therefore appear that the order for payment of mora interest
from date of service of the summons made in analogous
circumstances
(although without motivation) in
Paterson NO v
Trust Bank of Africa Ltd
1979 (4) SA 992
(A)
at 1003G should be regarded as having been made
per
incuriam
.
[22] In the result the
appeal succeeds. The following order is made:
1. The appeal is upheld
with costs.
2. The order of the court
a quo is set aside and replaced with the following:
‘
1.
The payments totalling R117 100.00 made by the Krion Scheme to the
defendant are set aside in terms of
s 29
of the
Insolvency Act 24 of
1936
.
2. Judgment is entered
against the defendant for payment of R117 100.00 and interest thereon
at the prescribed rate from date of
judgment to date of payment.
3. Costs of suit.’
____________________
J A Heher
Judge of Appeal
APPEARANCES
APPELLANTS: F du Toit SC
Thys Cronje Inc, Pretoria
C/o Van der Merwe Sorour,
Bloemfontein
RESPONDENT: -
1
The
learned judge was referring to the rule issued in case no 21098/2002
as confirmed on 4 February 2003.
2
In
case no 21098/2002 and case no 388/2003 to which reference will also
be made below.
3
See
Fourie NO v Edeling NO
[2005]
4 All SA 393
(SCA);
MP Finance Group CC
(in liquidation) v Commissioner, South African Revenue Service
2007
(5) SA 521
(SCA);
Janse van Rensburg &
Others NNO v Steenkamp
;
Janse
van Rensburg & Others NNO v Myburgh
2010
(1) SA 649
(SCA
).
4
See
Insamcor (Pty) Ltd v Dorbyl Light & General Engineering (Pty)
Ltd
;
Dorbyl Light & General Engineering (Pty) Ltd v
Insamcor (Pty) Ltd
2007 (4) SA 467
(SCA) at 476F-477B, paras 28
and 29.
5
See
Fourie NO v Edeling
, above.
6
African
Farms & Townships Ltd v Cape Town Municipality
1963 (2) SA
555
(A) at 564B-F.
7
As
to which see
Firestone South Africa (Pty) Ltd v Gentiruco AG
1977
(4) SA 298
(A) at 304D-H. No judgments were delivered in either
application.