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[2020] ZAGPPHC 25
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Muller N.O and Another v Fourie and Others (70852/18) [2020] ZAGPPHC 25 (19 February 2020)
IN THE HIGH COURT OF
SOUTH AFRICA
(GAUTENG DIVISION,
PRETORIA)
Case number: 70852/18
19/2/2020
In
the matter between:
JOHANNES
ZACHARIAS HUMAN MULLER N.O
1
ST
APPLICANT
LARISSA ARENDS
N.O
2
ND
APPLICANT
and
JOHAN ANDRE
FOURIE
1
ST
RESPONDENT
ESAIAS
JOHANNES JANSE VAN RENSBURG
2
ND
RESPONDENT
SANDILE OSBORN
BEAUCHAMP N.O
3
RD
RESPONDENT
JUDGMENT
VAN STADEN, AJ:
INTRODUCTION
[1]
This
application, like too many others, has its origins in gullible
members of the public being fleeced by the unscrupulous, resulting
in
the predestined insolvency proceedings fallout. In such fallout,
those who have received are called upon to explain their receipts.
[2]
In
the current matter application is made for the sequestration of the
first respondent’s unrehabilitated estate. The issues
in
dispute involve the respondent disputing his indebtedness and denying
that he is insolvent.
FOUNDING AFFIDAVIT
[3]
The
applicants, in their capacity as joint provisional liquidators of
Love and Let’s Live (Pty) Ltd (LLL), apply for the provisional
sequestration of the unrehabilitated estate of the first respondent.
The second and third respondents are the trustees of the first
respondent’s unrehabilitated estate.
[4]
LLL
came into existence in 2015 and purported to trade as an investment
company. A’Ri’El Theron (Theron Jr) was the
sole director
of LLL. Prior to LLL coming into existence, Theron Jr received funds
from investors for investment purposes in his
personal capacity. For
the entire period that LLL was in existence (approximately 20 months)
it received payments earmarked for
investment in the amount of
approximately R285 million. Theron Jr transferred a mere R11,475
million thereof into an online trading
account. This trading account
yielded a loss of approximately R1 million.
[5]
LLL
was run as a Ponzi scheme, where investors were promised unrealistic
returns and new investments were utilised to “
fund
”
returns to existing investors. LLL concluded a Memorandum of
Understanding (MOU) with potential investors to purportedly
justify
its activities.
[6]
The
first respondent did not have such an MOU with LLL. He concluded an
agreement with Theron Jr in his personal capacity during
2012,
predating the existence of LLL. The first respondent handed over an
amount of R500,000 to Theron Jr, to be invested for his
benefit.
[7]
After
the investors had demanded payment of their money a liquidation
application was presented to court against LLL on 6 December
2017.
The investors were met with a response by Theron Jr that the funds
were invested in Bitcoin but then “
stolen
by hackers
”.
Theron Jr conceded that all the funds were gone.
[8]
LLL
was finally wound up on 16 March 2018. Theron Jr, not unsurprisingly
so, fled the country.
[9]
There
were approximately 1,000 investors during the 20 months’ period
of LLL’s existence. Of the 1,000, approximately
300 received
some sort of repayment before Theron Jr absconded.
[10]
The
first respondent’s indebtedness to LLL’s insolvent estate
is premised on the fact that he never had any form of
a contractual
relationship with LLL. Despite same he received substantial amounts
from LLL.
[11]
An
amount of R4,8 million was paid from LLL to an attorney’s trust
account on behalf of the first respondent, for the acquisition
of
shares in a company, Brooklyn Chambers (Pty) Ltd (Brooklyn), which is
the owner of the house in which the first respondent resides.
Such
disposition occurred in the 2 years before LLL’s winding up.
During this time LLL’s liabilities exceeded its assets.
[12]
After
6 December 2017, the date of the issue of the liquidation
application, the first respondent received amounts totalling R500,000
originating from LLL, into his bank account. Said amount of R 500,000
was generated by Theron Jr utilising LLL’s funds to
purchase
Bitcoin, later on selling the Bitcoin, and utilising part of the
proceeds to pay the first respondent.
[13]
The
applicants contend that the first respondent is factually insolvent,
bearing in mind their claims of R4,8 million and R500,000.
They
contend that it will be to the advantage of the first respondent’s
creditors that the first respondent’s unrehabilitated
estate be
sequestrated. If the first respondent’s stake in Brooklyn is
realised, it will generate a dividend of more than
20c in the rand.
The applicants contend that there is a more than reasonable prospect
that further assets will be uncovered.
ANSWERING AFFIDAVIT
[14]
The
first respondent opposes, essentially on the basis of disputing his
indebtedness to LLL and denying that he is insolvent.
[15]
The
first respondent denies that he is indebted to the applicants. He
contends that LLL was merely the alter ego of Theron Jr and
that he
received the money from Theron Jr through this alter ego. The
payments received by the first respondent were not a return
on
investment made with LLL, but payments received in terms of his
agreement with Theron Jr.
[16]
The
first respondent denies that the R500,000 received after commencement
of the winding-up of LLL was received from LLL. Said amount
was paid
to the first respondent after he had enquired from Theron Jr during
December 2017 about monies due to him. Theron Jr agreed
to sell
Bitcoin and pay the first respondent the amount of R 500,000.
[17]
The
first respondent contends that as he has no creditors he is solvent.
According to him the property owned by Brooklyn is worthless.
He also
contends that the R4,8 million was used for the acquisition of shares
in Brooklyn by his wife.
DISCUSSION
[18]
The
Insolvency Act 24 of 1936 (the Act) determines that a court may
sequestrate the estate of a respondent provisionally when it
is of
the opinion that prima facie the applicants have established a claim
against the respondent exceeding R100, the respondent
has committed
an act of insolvency or is insolvent, and there is reason to believe
that it will be to the advantage of the respondent’s
creditors
if his estate is sequestrated
[1]
.
[19]
A
debtor whose estate has been sequestrated may, during his insolvency,
acquire a new estate under a title valid against his trustee.
This
new estate may be sequestrated at the instance of a creditor
[2]
.
[20]
In
the matter of
Wightman
t/a JW Construction v Headfour (Pty) Ltd and Another
[3]
the Supreme Court of Appeal dealt with the issue of a factual dispute
in the context of motion proceedings as follows:
“
[13]
A real, genuine and bona fide dispute of fact can exist only where
the court is satisfied that the party who purports to raise
the
dispute has in his affidavit seriously and unambiguously addressed
the fact said to be disputed. There will of course be instances
where
a bare denial meets the requirement because there is no other way
open to the disputing party and nothing more can therefore
be
expected of him. But even that may not be sufficient if the fact
averred lies purely within the knowledge of the averring party
and no
basis is laid for disputing the veracity or accuracy of the averment.
When the facts averred are such that the disputing
party must
necessarily possess knowledge of them and be able to provide an
answer (or countervailing evidence) if they be not true
or accurate
but, instead of doing so, rests his case on a bare or ambiguous
denial the court will generally have difficulty in
finding that the
test is satisfied…
[16] The comparison between the
two approaches is striking. Whereas the appellant sets out chapter
and verse the second respondent
deals in generalisations. Each
material averment should have been met and answered appropriately not
enveloped in a fog which hides
or distorts the reality.”
[21]
It
is clear that the first respondent has no firsthand knowledge of the
inner dealings of LLL. The first respondent cannot seriously
and
unambiguously dispute that Theron Jr utilised LLL’s funds,
funds which were fleeced off unsuspecting investors. There
was no
real trading activity from which any other form of income could have
been generated.
[22]
It
is clear that the first respondent does not have the necessary
knowledge to dispute that the only funds generated by Theron Jr,
were
those received from investors in LLL. As such I cannot state that the
first respondent has seriously and unambiguously addressed
the facts
said to be disputed, and accordingly find that the first respondent
received the funds in question from LLL, including
the R 500,000
received from the sale of Bitcoin.
[23]
The
first respondent clearly had no entitlement to the receipt of the
amount of R4,8 million. Such disposition was made without
value
within the 2 years’ period prior to LLL’s liquidation
when LLL’s liabilities exceeded its assets. As such
it falls to
be set aside in terms of Section 26 (1) of the Act.
[24]
The
amount of R500,000, as it was disposed of after winding-up of LLL,
constitutes a void transaction in terms of section 341 of
the 1973
Companies Act.
[25]
As
such I find that prima facie the applicants have established their
claims of respectively R4,8 million and R500,000 against the
first
respondent, whether it is on the basis of the statutory provisions
referred to, or on the basis of the
condictio
indebite
.
[26]
The
first respondent claims that his unrehabilitated estate is solvent as
he has no creditors. He relies on the absence of debts
to contend
that his unrehabilitated estate is not insolvent. Concomitantly it
means that if I find that prima facie the applicants
have established
their claims against him, his unrehabilitated estate would prima
facie be insolvent. Furthermore, there is some
asset to show for the
amount of R4,8 million, the first respondent’s stake in
Brooklyn. However, there is no asset to show
for the amount of
R500,000. This means that even if one takes into consideration the
asset represented by the first respondent’s
stake in Brooklyn,
his liabilities would still exceed his assets.
[27]
I
am of the opinion that prima facie the sequestration of the first
respondent’s estate will be to the advantage of creditors.
The
sale of the share in Brooklyn will present a return in all likelihood
of more than 20c in the rand. The first respondent has
proved himself
as a person that takes steps to ensure that assets do not reflect in
his own name, as is evident from the amount
of R4,8 million being
used to acquire shares in Brooklyn for his spouse. I concur with the
applicants that there is a more than
reasonable prospect that further
assets will be uncovered.
[28]
I
also take cognizance of the authority of
Chenille
Industries v Vorster
[4]
,
in coming to the conclusion that prima facie the sequestration of the
first respondent’s unrehabilitated estate will be
to the
advantage of his creditors:
“
Apart
from the direct financial advantage resulting from sequestration, the
Court must have regard, inter alia, to the superior
legal machinery
which creditors acquire by sequestration, the right to control the
collection, custody and disposal of all the
assets through their
nominee, the trustee, the right to control similarly the sale of the
assets, the certainty that the insolvent
cannot contract further
debts and diminish the estate, and the assurance that all creditors
will be accorded the treatment prescribed
by law in the division of
the proceeds.”
[29]
The
first respondent’s defence of Theron Jr using LLL as his alter
ego and that the funds in question actually emanate from
Theron Jr,
does not serve to answer the applicants founding affidavit. It does
not, firstly as the applicants have pointed out
that the funds in
question originate from what the investors have entrusted to LLL, not
to Theron Jr. Secondly, as there is no
court order that I must pierce
the corporate veil and find that the funds originated from Theron Jr.
There is nothing which may
lead me to find that the funds did not
originate from LLL.
ORDER
1.
Accordingly,
I order as follows:
a.
The
estate of the first respondent is placed under provisional
sequestration.
b.
The
provisional sequestration order is to be published in the Citizen
newspaper and the Government Gazette.
c.
The
first respondent and any other party who wishes to avoid such an
order being made final are called upon to advance reasons,
if any,
why the court should not grant a final order of sequestration of the
said estate on
10
JUNE 2020
at 10:00 or as soon thereafter as the matter may be heard.
M VAN STADEN
ACTING JUDGE OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG DIVISION, PRETORIA
DATE OF
HEARING: 12 FEBRUARY 2020
DATE OF
JUDGMENT: 19 FEBRUARY 2020
ATTORNEY FOR
APPLICANT:
MATHYS KROG ATTORNEYS
ADVOCATE FOR
APPLICANT:
ADV VAN DER MERWE
ATTORNEY FOR
RESPONDENTS: NJ VAN RENSBURG
ATTORNEYS
ADVOCATE FOR
RESPONDENTS: ADV VILJOEN
[1]
Section
10(a), (b) and (c) of the Act.
[2]
Ex
Parte Geeringh
1980
(2) SA 788
(O) at 789.
[3]
[2008] ZASCA 6
;
2008
(3) SA 371
(SCA) at paras 13 and 16.
[4]
1953
(2) SA 691
at 699 F – G.