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[2022] ZAKZPHC 13
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Knoop N.O. and Others v Boardware (Pty) Ltd (AR236/21) [2022] ZAKZPHC 13 (22 April 2022)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
CASE
NO. AR236/21
In
the matter between:
KURT
ROBERT KNOOP
N.O. FIRST
APPELLANT
THAMSANQA
EUGENE MSHENGU N.O.
SECOND APPELLANT
NTOMBIZETHU
THABILE NTANZI N.O. THIRD
APPELLANT
and
BOARDWARE
(PTY) LTD
RESPONDENT
ORDER
On
appeal from:
KwaZulu-Natal Division
of the High Court, Pietermaritzburg (Bezuidenhout J sitting as court
of first instance):
The
appeal is dismissed with costs, such costs to include the costs of
the application for leave to appeal.
JUDGMENT
Steyn
J (Chili et Hadebe JJ concurring):
[1]
The appellants appeal, with leave granted by the court a quo, against
the whole of the judgment of that court. The appellants
are the
liquidators of Evowood (Pty) Ltd (hereinafter ‘Evowood’),
a company in liquidation. The respondent is Boardware
(Pty) Ltd
(‘Boardware’) a company in George, Western Cape. The
respondent used to purchase materials from Evowood,
which conducted
its business in Estcourt, KwaZulu-Natal.
Background
[2]
The respondent owed Evowood money for goods delivered. It received a
notification from Evowood that if it paid the amount owed
immediately, a reduced amount of R333 495.90 would be payable, rather
than the full purchased amount of R338 573.80. The respondent
paid
the reduced amount on 27 May 2019. Erroneously, it paid Evowood again
the same amount of R338 573.80 on 31 May 2019. Evowood
was informed
of the erroneous payment that was made on 3 June 2019 at 07h03, and
was requested to transfer back the amount paid
in error. On the same
day at 07h47, Evowood sent a form, which is termed a bank indemnity
form, to the respondent to complete.
The respondent returned the
completed form on the same day at 12h29 to Evowood, together with a
letter from the bank. On 4 June
2019, Evowood did a weekly
reconciliation and acknowledged the overpayment and that there had to
be a refund of R338 573.80 to
the respondent. On 12 June 2019, the
respondent enquired from Evowood when payment would be received but
no response was received.
On 19 June 2019, a further email was sent
and again, no response was received from Evowood. On 4 July 2019,
after a further email
was sent, the response was that Evowood would
discuss the matter with its Chief Financial Officer. On 18 July 2019,
Evowood was
placed under liquidation by special resolution in terms
of the Companies Act 61 of 1973.
[1]
[3]
The appellants conceded that the amount that was claimed by the
respondent was claimed well before the winding-up of Evowood.
The
refund was claimed at a time when Evowood was still in business and
trading. The appellants, in their answering affidavit before
the
court a quo, contended as follows:
‘
5.
5.1.
The applicant’s duplicated payment was utilised by the
insolvent company prior to the winding
up and there are accordingly
no steps which the joint liquidators can take to obtain those funds
as they were utilised in Evowood’s
ordinary course of business;
5.2.
The joint liquidators have acted expeditiously and with due diligence
in tracing the payment and accordingly
there ought to be no order as
against the joint liquidators given that they are exercising their
duties as joint liquidators and
report to the Master of the High
Court.
6
The
Applicant would be entitled to lodge a claim in the estate of Evowood
so that if funds do became available in regard to winding
up, it
could receive a dividend. The Master of the High Court would
determine the nature of such a claim and its ranking as to
whether it
would be preferent or concurrent.’
[2]
[4]
The appellants were informed on 12 August 2019 that the payment of
R338 537.80 made to Evowood was not the property of
Evowood but
belonged to the respondent.
[3]
The appellants, however, only replied to the respondent on 15
September 2019 and informed it that it was required to lodge a claim
against the company in liquidation.
[4]
The appellants thus knew since 12 August 2019 that the amount of
R338 578.80 was not due to Evowood and could not be utilised
by
Evowood. Despite this knowledge, the appellants delivered an interim
answering affidavit deposed to on 28 February 2020 requesting
an
adjournment to investigate the matter.
[5]
On 25 March 2020, the appellants deposed to another answering
affidavit and contended:
‘
There
are insufficient funds in the insolvent estate at present to effect
any payment to the Applicant and until the assets of the
business are
realised, the joint liquidators are simply not in a position to
refund the amount claimed by the Applicant. Further,
even when the
assets are sold, there are secured creditors whom payment must be
made and there will be no free residue in the insolvent
estate in
terms of which payment could then be made to the Applicant.’
[6]
[5]
The weekly reconciliation attached to the answering affidavit is a
reconciliation statement for the period from 31 May 2019
to 4 June
2019, which reflects that an amount of R439 395.07 was still in
the account. No reconciliation statement was attached
to the papers
for the period when Evowood was requested to refund the respondent.
The request was only made on 3 July 2019, one
month after respondent
requested the refund. Inasmuch as the appellants aver that there were
insufficient funds in the estate of
Evowood, no bank statements or
reconciliation statements were produced to support the averment that
the property of the respondent
was not realisable.
[6]
The court a quo, after hearing the application, was satisfied that
Evowood was unjustifiably enriched and issued the following
order:
‘
1.
Respondents in their capacity as joint liquidators of Evowood (Pty)
Ltd are ordered
to repay to Applicant the amount of R338 573,80.
2.
Respondents to pay the costs of the application.’
Grounds
of appeal
[7]
The appellants contend that the appeal against the judgment should
succeed on the following grounds:
‘
a. By
virtue of Evowood (Pty) Ltd (the insolvent company represented by the
appellants) having
been placed under winding up after the date of the
payment from which the respondent’s claim against it arose, the
respondent
is in the same position as any other pre-liquidation
creditor of Evowood, and its only recourse, should it wish to pursue
its claim,
is to lodge with the appellants in terms of section 44(1)
of the Insolvency Act 24 of 1936 (“the Act”).
b.
The laws of Insolvency preclude the respondent from bringing its
claim against
the appellants in the manner in which it did.
c.
The Learned Judge erred in relying on several case authorities in his
judgment
which, it is respectfully submitted, are distinguishable
from the facts of the present matter and irrelevant to the issues to
be
decided.
d.
The Learned Judge further erred in finding that it was just and
equitable that
the respondent be entitled to claim repayment of the
amounts owed to it immediately, and failed to consider the effect of
such
a decision on the other creditors of Evowood.
e.
No basis exists in law for the respondent to be treated any
differently to any
other pre-liquidation creditor of Evowood.’
Was
section 44 of the Act applicable?
[8]
It is necessary to start with the appellants’ submission that s
44(1) of the Insolvency Act 24 of 1936 (the Act) should
have found
application, and that it precluded the respondent from bringing its
claim against the appellants in the manner it did.
The section reads:
‘
(1)
Any
person
or the representative of any
person
who has a liquidated claim
against an insolvent estate, the cause of which arose before the
sequestration of that estate, may, at
any time before the final
distribution
of that estate in terms
of section
one hundred and
thirteen
, but subject to the
provisions of section
one
hundred and four
, prove that claim
in the manner hereinafter provided: Provided that no claim shall be
proved against an estate after the expiration
of a period of three
months as from the conclusion of the second meeting of creditors of
the estate, except with leave of the Court
or the Master, and on
payment of such sum to cover the cost or any part thereof, occasioned
by the late proof of the claim, as
the Court or Master may direct.’
(Underlining is my emphasis.)
[9]
The appellants have submitted that the respondent was a creditor, and
that it should form part of the
concursus creditorum
, and was
required to lodge a claim against the insolvent company.
[10]
The court a quo held that Evowood was well aware that it received an
amount that had to be repaid. It found that
‘
it
cannot be just and equitable that the company or person who receives
such payment incorrectly and without cause is then liquidated
or
sequestrated must benefit from such incorrect payment
and
that the person who made the incorrect payment must only have a claim
against the estate in terms of section 44 of the Insolvency
Act
’.
[7]
(My emphasis.)
[11]
Importantly, the court applied the principles of interpretation as
set out in
Natal
Joint Municipal Pension Fund v Endumeni Municipality
[8]
and concluded that s 44 of the Act does not serve as a limitation for
the claim to be brought in the manner it did.
[9]
[12]
The approach to be followed in interpreting legislation has been well
established. The SCA in
Endumeni
stated it as follows:
‘
Interpretation
is the process of attributing meaning to the words used in a
document, be it legislation, some other statutory instrument,
or
contract, having regard to the context provided by reading the
particular provision or provisions in the light of the document
as a
whole and the circumstances attendant upon its coming into existence.
Whatever the nature of the document, consideration
must be given
to the language used in the light of the ordinary rules of grammar
and syntax; the context in which the provision
appears; the apparent
purpose to which it is directed and the material known to those
responsible for its production. Where more
than one meaning is
possible each possibility must be weighed in the light of all these
factors.
The
process is objective, not subjective. A sensible meaning is to
be preferred to one that leads to insensible or unbusinesslike
results or undermines the apparent purpose of the document.
Judges must be alert to, and guard against, the temptation to
substitute what they regard as reasonable, sensible or businesslike
for the words actually used. To do so in regard to a statute or
statutory instrument is to cross the divide between
interpretation
and legislation; in a contractual context it is to
make a contract for the parties other than the one they in fact made.
The “inevitable
point of departure is the language of the
provision itself”, read in context and having regard to the
purpose of the provision
and the background to the preparation and
production of the document.’
[10]
(My emphasis, and footnotes omitted).
[13]
It is evident from the judgment that the court a quo duly considered
the provision and interpreted the provision in accordance
with the
trite principles of interpretation. Nothing more was required.
Counsel for the appellants did not refer us to any rule
of
interpretation that was not observed.
[14]
When the matter was heard by the court a quo, it was submitted by the
appellants that the timing of the claim was of vital
importance. The
appellants claimed that the respondent was a pre-liquidation
creditor, and as such, the respondent was only entitled
to lodge a
claim against the liquidated company. It is accordingly necessary for
purposes of this appeal, to consider whether the
respondent was a
pre-liquidation creditor when it made the erroneous payment to
Evowood.
Who
is a creditor?
[15]
Generally a creditor is defined as a person ‘who gives credit
for money or goods; one whom a debt is owing’.
[11]
In
Pine
Village Home Owners Association Ltd and others v The Master and
others
[12]
the court confirmed that the Act does not contain a definition of a
creditor. It held that:
‘
The
Act does not define the term “creditor”, consequently it
shall be given its ordinary meaning viewed in the particular
context.
Under the Act a creditor could be a proved or unproved creditor or to
both, depending on the circumstances relevant to
the particular
provision.’
[13]
[16]
Conradie J in
Myburgh
v Walters NO
[14]
considered that a person without a claim against an insolvent estate
cannot be considered a ‘creditor’.
It
was held that:
‘
Just
as a plaintiff must have a claim to litigate, the person litigating
in the name of the trustee must have a claim.
If
he has no claim, he cannot be considered to be a “creditor”.
An agent for a “creditor” is not, by virtue of that
capacity, himself a creditor. The Act, moreover, provides
that a
trustee may demand indemnification from a “creditor”. It
does not provide that he may demand indemnification
from one who is
not a creditor. In my view, Davidson was not empowered to have
indemnified the respondent or to have taken proceedings
against the
applicant in his name.’
[15]
(My emphasis).
[17]
The authors of
Mars:
The Law of Insolvency in South Africa
[16]
state the following in relation to creditors:
‘”
Creditor”
is not defined in the Act, but it includes any person or any estate
of a person who is a creditor in the usual sense
of the word . . . As
a rule, a person whose claim was not in existence at the date of
sequestration is not a creditor of the estate
sequestrated.’
[17]
(Footnotes omitted.)
[18]
In my view, the application of s 44 of the Act is triggered if a
person is a creditor. Once the respondent has paid for the
goods
delivered, it was no longer a creditor of Evowood. The second amount
paid over to Evowood was not due nor did the money belong
to Evowood.
The court a quo was therefore not misdirected when it held that the
money was not the money of Evowood and that it
could not keep it in
its accounts. As the respondent was not a creditor of Evowood, the
question arises what other remedy was available
to the respondent
other than bringing this application.
Undue
enrichment
[19]
Evowood was unjustifiably enriched by the second amount paid to it.
Nissan
South Africa (Pty) Ltd v Marnitz NO and others (Stand 186 Aeroport
(Pty) Ltd intervening)
[18]
dealt
with such unjustified enrichment. The SCA held that ‘payment is
a bilateral juristic act requiring the meeting of two
minds’.
[19]
It
then proceeded to state the following:
‘
Where
A hands over money to B mistakenly believing that the money is due to
B, B, if he is aware of the mistake, is not entitled
to appropriate
the money.
Ownership
of the money does not pass from A to B
.
Should B in these circumstances appropriate the money such
appropriation would constitute theft (
R
v Oelsen
1950
(2) PH H198; and
S
v Graham
1975 (3) SA 569 (A)
at 573E–H).’
[20]
(My emphasis).
It
was further held that the position does not change in respect of a
transfer of money:
‘
The
position can be no different where A, instead of paying by cheque,
deposits the amount into the bank account of B. Just as B
is not
entitled to claim entitlement to be credited with the proceeds of a
cheque mistakenly handed to him, he is not entitled
to claim
entitlement to a
credit
because of an amount mistakenly transferred to his bank account.
Should he appropriate the amount so transferred, ie should
he
withdraw the amount so credited, not to repay it to the transferor
but to use it for his own purposes, well knowing that it
is not due
to him, he is equally guilty of theft
.’
[21]
(My emphasis).
[20]
It was held in
Nissan
that the liquidators of Maple Freight
(who were the first and second respondents) were not entitled to the
funds which were erroneously
transferred:
‘
[26]
In this case FNB, as agent of the appellant, intended to effect
payment to TSW, and Standard Bank, as agent of Maple, intended
to
receive payment on behalf of Maple. There was no meeting of the
minds. In these circumstances
, Maple, did not become entitled to
the funds credited to its account. Any appropriation of the funds by
Maple, with knowledge that
it was not entitled to deal with the
funds, would have constituted theft.
The transfer of the funds to
the receipts account and thereafter to the payments account of Maple
did not change Maple’s
position concerning those funds. Just
like Standard Bank, FNB received funds to which Maple was not
entitled. An appropriation
of these funds by Maple, with knowledge
that it was not entitled to the funds, would likewise have
constituted theft thereof. The
first and second respondents,
consequently, have no claim against FNB in respect of the
funds.
[27]
It was common cause that, in the event of it being found that the
first and second respondents were not entitled to the funds,
the
appellant was entitled to payment thereof.
’ (My emphasis).
[21]
Essentially, the SCA has held that a person, who receives money into
his account in his name, knowing that he is not entitled
thereto, and
who uses it, commits theft. Evowood, by using the credit to which it
was not entitled to, committed theft. More recently,
the SCA in
Firstrand
Bank Ltd v Spar Group Ltd
[22]
re-affirmed the principle stated in
Nissan
as follows:
‘
In
Perry
NO
the
funds deposited were stolen.
In Nissan the
funds were deposited in error.
The court in
Nissan
nevertheless
required that, since the account holder credited with the deposit had
no claim against the bank,
payment
must be made to the appellant who had paid in error. To do otherwise
would permit of the unjustified enrichment of the bank.
’
[23]
(My
emphasis).
[22]
In my view, the appellants, as liquidators of the company in
liquidation, are duty bound in terms of s 391 read with s 342
of the
Companies Act 61 of 1973 to recover and realise all the assets of
Evowood. However, in light of the findings in
Nissan,
ownership
of the money erroneously paid to Evowood did not pass to it and the
utilisation of the money constituted theft. The appellants
ought to
have realised that the money belonged to the respondent, and that it
could not form part of the assets of Evowood. Consequently,
it could
also not be distributed to the creditors of Evowood. A prudent
liquidator would, in such an instance, have preserved the
money
pending a court order. The appellants are in a precarious position,
as should they use the money from the respondent (which
in applying
Nissan
would constitute stolen money), to pay creditors, it could possibly
be argued that the appellants might be complicit in committing
a
criminal offence like being in receipt of stolen property.
[24]
[23]
Counsel for the appellants submitted that
Nissan
is distinguishable from the present matter. I disagree. Counsel
argued that
Nissan
should
be distinguished because in
Nissan
a
preservation order was obtained. Whilst it is correct that the
respondent did not apply for a preservation order, the failure
to do
so will have to be considered against the following facts: Evowood,
by requesting the respondent to complete the bank indemnity
form,
implicitly undertook to repay the funds. It was never disputed that
such funds were owed to the respondent. Ex facie the
record, there
was no reason to doubt the bona fides of Evowood. There was no need
to bring a preservation order in circumstances
where there was an
undertaking, albeit implied, to pay. Furthermore, the presence or
absence of a preservation order does not change
the ratio in
Nissan
that
the utilisation of funds erroneously transferred, whilst knowing that
these funds were erroneously transferred, constituted
theft.
Counsel’s reliance on
Trustees,
Estate Whitehead v Dumas and another
[25]
is also misplaced.
Whitehead
is distinguishable since the money in
Whitehead
was
transferred pursuant to an agreement induced by misrepresentation
.
[24]
The court a quo, quite correctly in my view, held that Evowood was
aware of the fact that it had been unjustifiably enriched
and had a
duty to preserve the money that did not belong to it. It held that in
a situation as in the present matter, it was necessary
to determine
what would be just and equitable given the circumstances so as to
ensure that there is corrective justice and to restore
the position
that existed prior to the enrichment taking place. The only way it
could have been done was to repay the money to
the rightful owner,
which is the respondent.
[26]
[25]
In circumstances where the money was mistakenly paid to Evowood and
where Evowood was made aware of the fact, the ownership
of the money
did not pass to Evowood, and Evowood was not entitled to appropriate
the money. Accordingly, the court a quo was not
misdirected in its
finding that Evowood should not have used the money.
[26]
The court a quo considered the
condictio indebiti
and whether
it could be used in respect of a pre-liquidation payment. This was
considered as the appellants submitted that the
respondent was a
pre-liquidation creditor. It held that:
‘
The
money could not and should not have been used by Evowood.
They
were well aware that it was an overpayment and had to be repaid.
In this day and age where electronic payments are made daily it is
easy for a wrong digit, for example, to be placed in a bank
account
number causing an incorrect payment to be made.’
[27]
(My emphasis).
[27]
The court a quo dealt with the fact that it was not just to consider
the amount paid erroneously as part of the property of
Evowood. It
stated:
‘
In
my view the facts of this case are unique. It cannot, in my view, be
just and equitable that a
wrong
payment received, acknowledged and which should have been repaid and
could have been repaid at that stage as the money had
been received
from Nedbank was not done and the company liquidated about a month
later
,
that the person who made the incorrect payment should only have a
claim in terms of
section 44
of the
Insolvency Act merely
because the
repayment was not made when it should have been done. That money was
never the money of the company and they were well
aware that they
could not keep it but had to repay it.’
[28]
(My emphasis).
[28]
The respondent, as the owner of the money, is entitled to have its
own money back and cannot be labelled as a creditor of Evowood,
when
it is not. Counsel for the appellants argued that the other creditors
will be prejudiced if it is expected to pay the amount
back to the
respondent. This submission fails to acknowledge that the money never
belonged to Evowood and should not have been
utilised by it.
Accordingly, the creditors will not be prejudiced in casu where the
asset (the money) was never part of the assets
of Evowood. In fact,
the respondent has already been prejudiced since Evowood has not
returned its money.
[29]
Conclusion
[29]
The court a quo was not misdirected on fact or law in granting the
relief that was sought by the respondent. The appellants
failed to
show that the respondent was a creditor of the insolvent estate. The
appeal cannot succeed.
Order
[30]
The following order is accordingly made:
1.
The appeal is dismissed with costs, such costs to include the costs
of the application
for leave to appeal.
_________________
STEYN
J
___________________
CHILI
J
___________________
HADEBE
J
APPEARANCES
Counsel for the
appellant
: Mr D
Aldworth
Instructed
by
:
Garlicle & Bousfield Inc.
7
Torsvale Crescent
La
Lucia Office Estate
REF:C
Seger/ma/E055
c/o Tatham Wilkens Inc
REF:
Mr H Drummond/Gisela/A1485
Counsel for the
respondent
:
Mr T
Lotz
Instructed by
:
Goussard Attorneys Inc.
33
Victoria Street
George
Central
George
REF:
DG/bb/AB782
c/o
Hay & Scott Attorneys
REF: J
Cappon/lm/029205001
Date of Hearing
: 04
March 2022
Date of Judgment
: 22
April 2022
[1]
See
annexure GAR13 at page 26 of the indexed bundle.
[2]
See
Vol 1 page 44, para 5 and 6 of the indexed bundle.
[3]
See
the content of the letter that was sent to the appellants on 12
August 2019 (annexure GAR 14) at page 27 et seq.
[4]
See
annexure GAR 15 at page 32
of
the indexed bundle
.
[5]
Vol
1 pages 33 to 36
of
the indexed bundle
.
[6]
Vol
1 page 43
of
the indexed bundle
.
[7]
Para
17 of the court a quo’s judgment.
[8]
Natal
Joint Municipal Pension Fund v Endumeni Municipality
[2012] ZASCA 13
;
2012 (4) SA 593
(SCA).
[9]
Para
18 of the court a quo’s judgment.
[10]
Ibid
para 18.
[11]
The
Shorter Oxford English Dictionary (1978) at 453.
[12]
Pine
Village Home Owners Association Ltd and others v The Master and
others
2001 (2) SA 576 (SE).
[13]
Ibid
at 581C-D.
[14]
Myburgh
v Walters NO
2001
(2) SA 127 (C).
[15]
Ibid
at 130H-I.
[16]
E
Bertelsmann
et
al
Mars:
The Law of Insolvency in South Africa
10 ed (2019).
[17]
Ibid
para 17.1 at 404.
[18]
Nissan
South Africa (Pty) Ltd v Marnitz NO and others (Stand 186 Aeroport
(Pty) Ltd intervening)
[2006]
4 All SA 120 (SCA).
[19]
Ibid
para 24.
[20]
Ibid.
[21]
Ibid
para 25.
[22]
Firstrand
Bank Ltd v Spar Group Ltd
[2021] ZASCA 20; 2021 (5) SA 511 (SCA).
[23]
Ibid
para 62.
[24]
See
CR Snyman
Criminal
Law
7
ed (2020) at 452, which defines the crime as:
‘
A
person commits the crime of receiving stolen property knowing it to
be stolen if he unlawfully and intentionally receives into
his
possession property knowing, at the time that he does so, that it
has been stolen.
’ (My emphasis.)
[25]
Trustees,
Estate Whitehead v Dumas and another
[2013] ZASCA 19; 2013 (3) SA 331 (SCA).
[26]
Para
20 of the court a quo’s judgment.
[27]
Para
17 of the court a quo’s judgment.
[28]
Para
19 of
the
court a quo’s
judgment.
[29]
In
my view, the appellants as liquidators of the company are duty bound
to expose the offences of any of the directors or officers
of
Evowood and ought to report the alleged theft of money to the Master
in terms of s 400 of the Companies Act 61 of 1973.