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[2021] ZAGPPHC 298
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Baker N.O and Others v Investec Bank Limited and Another (14748/16) [2021] ZAGPPHC 298 (20 May 2021)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
(1)
REPORTABLE: NO
(2)
OF INTEREST TO OTHER
JUDGES: NO
(3)
REVISED.
20/05/2021
Case
Number: 14748/16
In
the matter between:
YUNUS
ABOO BAKER
N.O
1
st
Plaintiff
SOPHIE
THABANG KEKANA
N.O
2
nd
Plaintiff
ALLAN
DAVID PELLOW
N.O
3
rd
Plaintiff
JAN
LODEWIKUS PRETORIUS
N.O
4
th
Plaintiff
ISMASYS
(PTY)
LIMITED
5
th
Plaintiff
and
INVESTEC
BANK
LIMITED
1
st
Defendant
SMITH
TABATA BUCHANAN BOYES
INC.
2
nd
Defendant
JUDGMENT
MNGQIBISA-THUSI
J
[1]
The plaintiffs have instituted an action against the defendants in
which
they seek relief in the following terms:
“
1.1
As against the First Defendant:
1.1.1 An order
that the disposition in terms of which the insolvent paid an amount
of R 60 million to the First
Defendant to be set aside and that the
First Defendant be ordered to pay to the First to Third Plaintiffs
the sum of 60 million.
1.2
As against the Second Defendant:
1.2.1 An order that
the Second Defendant pay the amounts appearing in column 4 of
annexure “C” to the lenders
appearing in column 1 of
annexure ‘C”;
1.3
Interest on the amounts claimed at 9% per annum against the First and
Second Defendants,
1.4
Costs against the First and Second Defendants.
1.5
Further and/or alternative relief”.
[2]
The first to fourth plaintiffs are the joint liquidators of Bluecore
Investments
(Pty) Ltd (in liquidation) (“Bluecore”).
On 1 December 2009 Bluecore was placed under provisional liquidation
and was finally wound-up on 16 March 2010.
[3]
This action is brought by
the creditors of Bluecore in the stead of the liquidators after the
liquidators were indemnified as envisaged
under s 32(1)(b) of the
Insolvency Act
[1]
(“the Insolvency Act”).
[4]
At a pre-trial meeting held on 23 May 2019, the parties agreed that
there
should be a separation of issues in terms of Uniform rule 33(4)
and that the issue of merits be postponed
sine die
pending a
determination of the special plea of prescription raised by the
defendants.
[5]
Bluecore had intentions of developing a golf and eco estate to be
known
as ‘The Hills’ (“the development”).
The land earmarked for this development is situated at Portions
72
and 73, portions of Portion 1 of the farm Rietfontein, Gauteng
Province (“the development land").
[6]
During July 2006, Bluecore entered into a loan facility agreement
with
the first defendant, Investec Bank Limited (“Investec”),
in order to acquire the development land.
[7]
The loan facility provided,
inter alia
, that:
7.1
facility amount in the sum of R140 million;
7.2
Investec would be entitled to a 30% profit participation in the
development;
7.3
Bluecore would cede and pledge the money held by Investec Retail
Treasury in the trust account
of the second defendant, Smith Tabata
Buchanan Boyes Inc.
[8]
In pursuit of its intention and in order to acquire the development
land,
in March 2006 Bluecore concluded loan agreements with a number
of lenders (the creditors) who would, in turn, be prospective
purchasers
of stands within the development. In terms to the
individual loan agreements between Bluecore and the lenders, each
lender
undertook to provide Bluecore with a capital amount in the sum
of R374, 000.00. Further the loan agreements provided,
inter
alia
, that:
8.1
once the stands are transferable, the purchase price would be set-off
against the loan amounts
owing by Bluecore to the purchasers;
8.2
Bluecore was prohibited from selling the stands except with the
written consent of the lender
until the capital amount was fully
repaid;
8.3
the amounts provided by the were to be deposited into the trust
account of the second defendant;
8.4
the second defendant would only release the capital amount once the
relevant stands have become
registrable; and
8.5
should Bluecore become insolvent, the second defendant would pay back
to the lenders the amount
of the loans given to Bluecore.
[9]
The loan agreements were also subject to certain suspensive
conditions
which were to be fulfilled by 31 August 2006 or at a later
agreed date. The suspensive conditions included, amongst
others,
that:
9.1
Bluecore obtains a Record of Decision from the Gauteng Department of
Agriculture,
Conservation and Environment and that Bluecore obtains
all necessary approvals, consents, authorisations and exemptions for
the
development to start and be completed;
9.2
Bluecore acquires the final rezoning the development land into erven;
9.3
Bluecore would obtain funding in the amount of R100 million in order
to buy
the development land;
9.4
In the event of the suspensive conditions are not fulfilled, the
agreement shall
be of no force and effect;
9.5
the second defendant was enjoined to release the capital amount to
Bluecore
provided by the lenders on the fulfilment of the specified
suspensive conditions and to confirm in writing to the lenders that
the funds have been released to Bluecore after deduction of its
administrative fee.
[10]
On 13 August 2006 the second defendant addressed a letter to the
lenders which reads, in
part, that:
“
We
are satisfied that the suspensive conditions as detailed in the
aforementioned agreements have been fulfilled and accordingly,
in
accordance with the provisions of the said agreement, we have
released the deposit to Bluecore”.
[11]
On 12 October 2006 the second defendant paid the proceeds from the
loan amounts in the
total amount of R60 million to Bluecore and in
turn Bluecore ceded the amount to the first defendant.
[12]
During 2015 the lenders ceded their right, title and interest into
any claims they may
have against the second defendant to the fifth
plaintiff, Ismasys (Pty) Ltd.
[13]
Summons was issued on 23 February 2016 and served on the first and
second defendants on
3 March 2016
and
23
February 2016
, respectively.
[14]
Relying on the provisions
of s 26(1) of the Insolvency Act
[2]
the first to fourth plaintiffs are seeking the setting aside the
transfer of the capital amount Bluecore transferred to the first
defendant, on the ground that it is a disposition without value.
[15]
The claim by the fifth plaintiff as against the second defendant is
based on the following
grounds:
15.1 that the
second defendant in transferring the sum of R60 million to the first
defendant was in breach of
clause 5 of the sale agreement in
contravention s 26(1)(a) of the Alienation of Land Act
[3]
.
15.2 that the
second defendant failed in its duty to the plaintiff and the lenders
to ensure that the proceeds
of the loan were not paid out contrary to
the statutory provisions and the agreements.
[16]
The defendants have raised the special plea of prescription, namely,
that the plaintiffs’
claims have prescribed and sought the
dismissal of the plaintiffs’ claims.
[17]
The first defendant’s special plea reads, in part, as follows:
“
12.
The first to fourth plaintiffs were appointed liquidators of Bluecore
on 29 June 2010 (“the
liquidators”).
13.
The first to fourth plaintiffs, as liquidators, had knowledge of the
identity of the first
and second defendants and the facts from which
the alleged disposition claim arose or should have acquired such
knowledge by the
exercise of reasonable care, as is provided for by
section 12(3)
of the
Prescription Act, 68 of 1969
.
14.
The liquidators did in fact acquire knowledge of the disposition in
or during 2010.
15.
Summons in this matter was served on the first defendant on 3 March
2016, being more than
5
1/2
years since the appointment of
the liquidators.
16.
In the premises, the plaintiffs’ claims have prescribed”.
[18]
In its special plea the second defendant alleges that:
“
1.
In terms of section 11(b) of the Prescription Act, 68 of 1969 (the
“
Prescription Act&rdquo
;), the applicable prescription period
for the plaintiffs’ claims (the “Claims”) against
the second defendant
is three years.
2.
In terms of
section 12(1)
of the
Prescription Act, the
prescription
period in respect of the Claims commenced on 13 October 2006 when the
second defendant paid the claim amount to the
first defendant without
the suspensive conditions referred to in paragraph 16 of the
particulars of claim having been fulfilled.
3.
The creditors concerned had knowledge of the identity of the second
defendant
and of the facts from which their debt arises on 13 October
2006, alternatively could they have acquired this knowledge by the
aforesaid date by exercising reasonable care.
4.
In the premises the Claims against the second defendant became
prescribed on
12 October 2009.
5.
Plaintiff’s summons was served on the second defendant on 23
February 2016,
after the Claims against the second defendant had
become prescribed”.
[19]
The
relevant provisions of the Prescription Act
[4]
("the Act") read as follows:
“
10
Extinction of debts by prescription
(1)
Subject to the provisions
of this Chapter and of Chapter IV, a debt shall be extinguished by
prescription after the lapse of the
period which in terms of the
relevant law applies in respect of the prescription of such debt.
…
11
Periods of prescription of debts
1.
The periods of
prescription of debts shall be the following:
…
(d)
save where an Act of Parliament provides otherwise, three years in
respect of any other debt.
12
When prescription
begins to run
(1)
Subject to the provisions
of subsections (2) and (3), prescription shall commence to run as
soon as the debt is due.
…
(3)
A debt shall not be deemed to be due until the creditor has knowledge
of the identity of
the debtor and of the facts from which the debt
arises: Provided that a creditor shall be deemed to have such
knowledge if he could
have acquired it by exercising reasonable
care.”
[20]
It is common cause that the defendants bear the onus of proving that
the claims against
them have prescribed.
[21]
In
Makate
v Vodacom (Pty) Ltd
[5]
,
the Constitutional Court held that the term ‘debt’ means
an "an obligation to pay money, deliver goods, or render
services”.
[22]
A debt prescribes, in this
case, after a period of three years
[6]
.
Further, s 12 of the Act provides that the period of prescription is
calculated and starts to run from the date on which
the debt becomes
due. In
Duet &
Magnum Financial Services CC (in liquidation) v Koster
[7]
the court held, in the case of a company liquidation, that
prescription starts to run no later than the date upon which a
liquidator
is appointed.
[23]
With reference to s 12(3)
of the Act, in
Links v
Member of the Executive Council, Department of Health, Northern Cape
Province
[8]
the court held that the onus is on a defendant to prove that the
claimant “had knowledge of all material facts from which
the
debt arose or which he needed to know in order to institute action”.
[24]
The issue to be determined is when prescription began to run.
[25]
It is the plaintiffs’ contention that their claims have not
prescribed in that the
debt only became due when summons was issued.
It was submitted that the lenders only became aware of the facts
giving rise
to their claim during November 2013 and it is at that
stage that prescription began to run. It was further submitted
that
even though the lenders were notified of the disposition on 13
August 2006, it is unreasonable to have expected the lenders at that
stage to have examined their loan and sale agreements and to make
enquiries about the payment.
[26]
The first defendant
correctly contends, contrary to the plaintiffs’ view, that the
liquidators are the actual ‘plaintiffs’
[9]
.
In
Reynolds and Others
NNO v Standard Bank of South Africa
[10]
the court stated that:
“
[13]
In the present case, and because of the provisions of s 32(1) and
32(3) of the Insolvency Act, it is
correct to describe the plaintiffs
as merely ‘nominal plaintiffs’. They are the
plaintiffs because they are the
only parties entitled to embark on
the litigation concerned. The fact that a creditor is given to
fund and direct such litigation
because of the provisions of s
32(1)(b), when the plaintiffs are not prepared to do so, does not
detract from the fact that it
is the plaintiffs to whom payment will
have to be made if the litigation is successful, and who will be
liable for costs if it
fails – hence the requirement of an
indemnity as stated in s 32(1(b)”.
[27]
On behalf of the first defendant it was submitted that since the
plaintiffs were appointed
as liquidators on 29 June 2010, they should
have acquired knowledge of the disposition during 2010. Since
summons was served
on the first defendant on 3 March 2016, it is the
first defendant’s contention that the plaintiffs’ claim
prescribed
three years after the liquidators were appointed.
[28]
On behalf of the second defendant it was submitted that the
plaintiffs’ claim has
prescribed since the plaintiffs had
knowledge of the dispositions. According to the second
defendant, since the lenders were
informed by the first defendant on
13 August 2006 that it was paying over the capital amount to Bluecore
on the incorrect assumption
that the specified suspensive conditions
have been fulfilled, prescription began to run from the date the
lenders acquired knowledge
of the disposition. Since summons
was served on the second defendant on 23 February 2016, it is the
second defendant’s
contention that the plaintiffs’ claim
prescribed on 12 October 2009.
[29]
In the alternative, it was submitted on behalf of the second
defendant that the lenders
were aware that Bluecore was wound-up on
16 March 2010, the plaintiff failed to act reasonably by not
inquiring about the facts
surrounding the disposition.
[30]
It is common cause that Bluecore was finally wound-up on 16 March
2010 and that the liquidators
were appointed on 29 June 2010.
Following the
dictum
in the
Kotze
matter (
supra
),
the plaintiffs acquired the right to institute action to set aside
the disposition without value on 29 June 2010. Therefore,
the
plaintiffs’ claim prescribed three years from that date as
envisaged in terms of s 10(1) read with s 11(d) of the Act.
In
view of the fact that summons was only served on the first and second
defendants on 3 March 2016 and 23 February 2016, respectively,
the
three-year prescription period had by the time service of the summons
was effected, expired. Further, in view of the
fact that
Bluecore was finally wound-up on 16 March 2010, and as correctly
pointed out by counsel for the second defendant, the
lenders would
ordinarily have been informed about Bluecore’s liquidation.
Taking into account that the loan agreement
provides that in the
event of the liquidation of Bluecore the capital amounts loaned to
Bluecore should be repaid to the lenders,
by exercising reasonable
care, the lenders would have acquired knowledge of the facts
surrounding the disposition and could have
acted upon it.
[31]
I am satisfied that the defendants have shown sufficient cause why
their special plea of
prescription should be upheld and for the
plaintiffs’ action be dismissed.
[32]
In the result the following order is made:
1.
The first and second defendants’ special plea of prescription
is upheld.
2.
The plaintiff’s claim against the defendants is dismissed with
costs, including
costs of Senior Counsel.
NP
MNGQIBISA-THUSI
Judge
of the High Court
Appearances
For
Plaintiffs: Adv MH Van Twisk (instructed by DLBM Attorneys Inc)
For
First Defendant: Adv A E Bham SC (instructed by ENS AFRICA)
For
Second Defendant: Adv BH Swart SC (instructed by MR WIM CILLIERS)
[1]
Act 24 of
1936.
Section
32(1)(b) of the Insolvency Act provides that: “(b) If the
trustee fails to take any such proceedings they may be
taken by any
creditor in the name of the trustee upon his indemnifying the
trustee against all costs thereof”.
[2]
Section
26(1) of the Insolvency Act reads as follows: “Every
disposition of property not made for value may be set aside
by the
Court if such disposition was made by an insolvent— (a) more
than two years before the sequestration of his estate,
and it is
proved that, immediately after the disposition was made, the
liabilities of the insolvent exceeded his assets; (b)
within two
years of the sequestration of his estate, and the person claiming
under or benefited by the disposition is unable
to prove that,
immediately after the disposition was made, the assets of the
insolvent exceeded his liabilities: Provided that
if it is proved
that the liabilities of the insolvent at any time after the making
of the disposition exceeded his assets by
less than the value of the
property disposed of, it may be set aside only to the extent of such
excess.
[3]
Act 68 of
1981.
Section
26(1)(a) of the Alienation of Land Act reads as follows: “(1)
No person shall by virtue of a deed of alienation
relating to an erf
or a unit receive any consideration until—(a) such erf or unit
is registrable”.
[4]
Act 68 of 1969.
[5]
2016 (4) SA 121 (CC).
[6]
Section
10(1) read with section 11(d).
[7]
2010
(4) SA 499 (SCA).
[8]
2016(4) SA 414 (CC) at para [24].
[9]
Section
32
(1)(a) provides that: “Proceedings to recover the value of
property or a right in terms of section 25(4), to set aside
any
disposition of property under section 26, 29, 30 or 31
,
or
for the recovery of compensation or a penalty under section 31
,
may
be taken by the trustee”.
[10]
2011
(3) SA 660
(W).