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[2019] ZAFSHC 141
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Wealth4All Solutions (Pty) Ltd v Letaba and Others (5705/2018) [2019] ZAFSHC 141 (26 August 2019)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
number: 5705/2018
In
the matter between:
WEALTH4ALL
SOLUTIONS (PTY)
LTD Applicant
and
LETABA
LEHLOHONOLO 1
st
Respondent
EMMANUAL
SIAME 2
nd
Respondent
LEBOHANG
ZALI 3
rd
Respondent
MAPELI
MOSHOESHOE 4
th
Respondent
FIRST
NATIONAL
BANK 5
th
Respondent
NEDBANK
6
th
Respondent
HEARD
ON:
25 APRIL 2019
JUDGMENT
BY:
MATHEBULA, J
DELIVERED
ON:
26 AUGUST 2019
[1]
The applicant approached the court on an urgent basis on 13 December
2018, which interim order I granted in the following terms:
-
1.
The condonation
be granted to the Applicant for the non-compliance with the Rules of
the Court, in respect of the time frames, form
and service of this
application and that this application be heard as an urgent ex parte
application.
2.
The Respondents
be called upon to show cause, on or before the 6th December 2018 at
09h30, why an order in the following terms should
not be final.
3.
Ordering the
fifth Respondent to freeze and/or suspend the bank accounts of the
first, second and third Respondents and allowing
the Applicant or the
Sheriff of the High Court, Mr. Pule Foka, or his deputy, access to
obtain and retrieve bank statements of
the first, second and third
Respondents, with effect from May 2018, to date, pending
determination by the Court on the Applicant’s
intended
action/damage claim to be filed within 21 days, from the date of the
Order sought against the first, second and third
Respondents is
granted.
4.
Ordering the
sixth Respondent to freeze and/or suspend the bank account of the
fourth Respondent and allowing the Applicant or the
Sheriff of the
High Court, Mr. Pule Foka, or his deputy, access to obtain and
retrieve bank statements of the fourth Respondent,
with effect from
May 2018, to date, pending determination by the Court on the
Applicant’s intended action/ damages claim
to be filed within
21 days, from the date of the Order sought against the fourth
Respondent is granted.
5.
Alternatively,
the first, second, third and fourth Respondents each reimbursing the
Applicant’s liquidated amounts deposited
into their respective
accounts, wherein, they are employed by the Applicant in their
respective capacities as forex traders to
trade in forex markets on
behalf of the Applicant and with immediate effect thereof, upon
granting of this order, the Applicant
will agree to discharge the
rule nisi, thereof with immediate effect in respect of paragraph 5.1
and 5.2 above, whichever comes
first.
5.1 Such amount paid,
in respect of the first Respondent is the sum of R436 000.00(four
hundred and thirty-six thousand rand), excluding
the expected
profitable interest/proceeds accrued and still to be paid from the
Forex investment markets, as of the dates of such
investments made.
5.2 Such amount paid,
in respect of the second Respondent is the sum of R287 000.00 (two
hundred and eighty-seven thousand rand)
less R20 000.00 (twenty
thousand rand) paid to the Applicant and thereby the remaining
balance owing to the Applicant is R257 000.00
(two hundred and
fifty-seven thousand rand) excluding the expected profitable
interest/proceeds accrued and still to be paid from
the Forex
investment markets, as of the dates of such investments made.
5.3 Such amount paid,
in respect of the third Respondent is the sum of R490 000.00 (four
hundred and ninety thousand rand) less
R200 000.00 (two hundred and
eight thousand rand), reimbursed to the Applicant and thereby the
remaining balance owing to the Applicant
is R290 000.00 (two hundred
and ninety thousand rand) excluding the expected profitable
interest/proceeds accrued and still to
be paid from the Forex
investment markets, as of the dates of such investments made.
5.4 Such amount paid,
in respect of the fourth Respondent is the sum of R408 000(four
hundred and eight thousand rand), excluding
the expected profitable
interest/proceeds accrued from the Forex investment markets, as of
the dates of such investments made.
6.
Ordering the
First, Second, Third and Fourth Respondents to be interdicted from
withdrawing money and/or payments from their Bank
accounts, pending
decision of the Court, on the return date, alternatively and at their
election, honouring the provisions of paragraph
5.1, 5.2, 5.3 and
5.4.
7.
Service of this
Order, together with the notice of this application, shall be
effected by the Sheriff on the Respondents or person
in charge of
their premises, on a period not less than 48hours.
8.
Prayers 3, 4, 5,
5.1, 5.2, 5.3, 5.4, 6 and 7 serve as an interim order with immediate
effect.
[2]
On 25 April 2019, I granted a final order against the second
respondent who had not filed any papers in opposition of the
application.
[3]
The applicant is now seeking a confirmation of the aforementioned
interim order against the third and fourth respondents. Before
me Mr.
MJ Ponoane appeared for the applicant while Ms. S Boonzaaier and Mr.
H J van der Merwe appeared for the third and fourth
respondent
respectively.
[4]
In a nutshell the applicant is a juristic person engaged in forex
investment and trading. It collects small to substantial deposits
from individuals in and around the Qwa-Qwa area with a promise of a
large turnover within a very short period. It appears that
the
respondents were either contracted or employed as forex traders to
trade in the forex markets on behalf of the applicant for
the benefit
of investors. I hasten to add that the parties had entered into an
oral agreement.
[5]
In pursuance of their business relationship the applicant deposited
the sum of R490 000.00 and R468 000.00 into the
accounts of
the third and fourth respondent respectively. Of this amount
R200 000.00 was repaid by the third respondent to
the applicant.
This was meant to be utilised by them to trade in the forex markets.
It stands to reason that these were funds sourced
from the investors.
It is common cause that these funds were not repaid to the applicant
by the respondents.
[6]
In the voluminous papers filed of record with annexures, the bulk of
which is totally unnecessary the applicant alleges that
the
respondents squandered the funds by living a high life using it to
purchase luxury motor vehicles, visiting holiday destinations
and
even bankrolling a sumptuous wedding. According to the respondents,
they operated in a high risk volatile environment and therefore
with
the financial markets characterised as down, they underperformed and
lost the money. The money that they received was used
exclusively for
the forex trading and in pursuit of the “high risk/ high
reward” strategy they suffered heavy losses.
[7]
Clearly the applicant is seeking an order in the nature of an
anti-dissipation order. The practical effect of such an order,
which
is an interdict, is to prevent the respondents from dealing with the
assets freely. These are the assets that the applicant
is laying
claim on them.
[8]
The primary difficulty with money is that it loses its identity when
it is in the bank account and obviously mixed with other
money. This
problem was clearly expressed by
Schutz JA
as follows: -
“
It might seem a
simple thing to recover stolen money from one found in possession of
it. But the matter is complicated by the rule
in our law, an
inevitable rule it seems to me, flowing from physical reality, that
once money is mixed with other money without
the owner’s
consent, ownership in it passes by operation of law.”
[1]
[9]
In order to succeed in matters of this nature, the applicant must
have some underlying legal right against the respondents who
have the
money in their accounts in order to lay a claim to it. It is
incumbent on the applicant to show that the respondents are
threatening to dissipate, wasting or secrete their assets to avoid to
satisfy a judgment that might be granted against them in
the future.
This form of relief is to guard against what might turn out to be a
worthless judgment because the assets may have
been depleted.
[10]
This form of relief is an interim one. Therefore the requirements
that the applicant must satisfy are those of an interim relief.
This
position was stated in
Erickson
Motors (Welkom) Ltd v Protea Motors, Warrenton and another
[2]
as
follows:-
“
The granting of
an interim interdict pending an action is an extra ordinary remedy
within the discretion of the court. Where the
right which it is
sought to protect is not clear, the Court’s approach in the
matter of an interim interdict was lucidly
laid down by INNES, J.A.,
in
Setlogelo
v.
Setlogelo,
1914
A.D. 221
AT p. 227. In general, the re-quisites are-
a)
a right which,
“though primie facie established, is open to some doubt”;
b)
a well-grounded
apprehension of irreparable injury;
c)
the absence of
ordinary remedy.
In exercising its
discretion, the Court weighs, inter alia, the prejudice to the
applicant, if the interdict is withheld, against
the prejudice to the
respondent if it is granted. This is sometimes called the balance of
convenience.”
[11]
The approach, as I mentioned it, is to weigh the strength of the
applicant’s case against the balance of convenience.
In
R
S v M S
it was held that:-
[3]
“
But, even if
these jurisdictional requirements are present, then an applicant must
still show a well-grounded apprehension of irreparable
loss, should
the interdict pendent lite not be granted. It is perhaps apposite her
to point out that, because of the Draconian
nature, invasiveness and
conceivably inequitable consequences of such anti-dissipation relief,
the courts have been reluctant to
grant it, except in the clearest of
cases. See generally:
Knox
D’ Arcy Ltd and Others V Famieson and others
1196 (4) SA 348
(A) ([1996]
3 ALL SA 669
;
[1996] ZASCA 58)
at 372C; Mngadi v Beacon
Sweets & Chocolates Provident Fund and Others 20004 (56) SA 388
(D) ([2003]
2 ALL SA 279)
at 396E; Reeder v Softline supra at
849-851.”
[12]
It was argued on behalf of the applicant that bank statements of the
4
th
respondent
obtained from the 6
th
respondent indicated that the money was massively embezzled. The
money was used to fund a luxurious lifestyle and pay for personal
expenses this did not have anything to do with the core business
relationship between the parties namely forex trading and investment.
Substantial cash withdrawal transactions from the automated teller
machine were regularly conducted and in most cases shortly after
the
applicant had deposited the money, consumables like cellphone airtime
and motor repairs were paid for. These could not have
been for the
purpose of investing the funds as contemplated by the parties. In
fortifying its case, the applicant attached photos
of the assets that
have been purchased by the respondents and an invitation card to the
planned wedding. The logical conclusion
of the argument is that the
respondents are depleting their assets and that if the interim order
is not granted, then they will
be met with a hollow judgment in the
event of a successful action for damages.
[13]
The argument on behalf of the 3
rd
respondent is that the applicant has not met the requirements of the
interim relief and that the
rule nisi
should
be discharged. The primary contention of the 3
rd
respondent is that the money was paid into a forex trading account
and lost while pursuing a “high risk / high reward”
trading strategy. It was contended that the applicant has failed to
allege and establish
prima facie that
there were transactions made from the bank account of the 3
rd
respondents with the intention of undermining the claim that the
applicant intended to institute in the future. Another point raised
is that the applicant has not established any legal basis upon which
it would be entitled to reclaim the payment of the sum of
R290
000.00. In essence there is no basis for alleging that the 3
rd
respondent was under an obligation to repay the applicant any money
given to him to trade in the forex markets. further that there
are no
facts to sustain any conclusion that the 3
rd
respondent has embezzled the money. Lastly, it was submitted that the
3
rd
respondent
will be adversely affected in the event that the order is granted
because he had a
bona fide
defence to what is considered to bea spurious claim.
[14]
The crux of the 4
th
respondent’s version is that he traded with the money deposited
in his account and lost it because of the market volatility.
The
argument, so it goes, is that the parties entered into an oral
agreement with the terms not clearly defined in finer details.
As a
result, weighing the applicant’s case against the general
probabilities, it is unthinkable that a forex trader would
agree to
invest the money on behalf of investors and also assume the risk and
liability for losses that might be incurred. Given
the surrounding
circumstances, it was contended that there was no meeting of minds
between the applicant and the 4
th
respondent relating to the risk in the event that no profit was not
made. It was pointed out that Annexure “E” on page
415 of
the papers is a clear indication of proof that the risk did not lie
with the traders. On this basis, it was submitted that
the
application must be dismissed with costs
[15]
Certainly the parties concluded an oral agreement without clearly
defined terms and conditions. These are gleaned from many
sources in
the conduct of their relationship. Perhaps this aspect was given a
cursory look in pursuit of the returns. What is certain
between the
parties is that they were in the business of forex trading with the
primary objective to maximize the profits. After
all that is the
primary objective of any capitalist venture.
[16]
The argument that the applicant has not established a prima facie
right to be reimbursed the remainder of the capital sum falls
flat on
this aspect. Anybody in pursuit of profit will expect to increase the
capital outlay. It is logical that the capital invested
and the
maximum profit achieved from the venture less operating costs will
have to be repaid. To think otherwise it will be the
denial of what
is the norm in the commercial world. After all this money did not
belong to the applicant but investors. This was
well known to both
the applicant and the respondents. To demonstrate the falling of this
argument, the third respondent repaid
the R200 000.00 of the
R490 000.00 paid him. I am convinced that on this aspect the
applicant has discharged the necessary
onus on a balance of
probabilities.
[17]
It was argued that the applicant has failed to allege or establish a
prima facie intention that the respondents were spending
the money in
order to frustrate the future claim to be instituted. This failure
was deemed to be fatal and therefore the applicant
will not be
entitled to the relief. This submission in my view is without merit.
[18]
The transactions between the parties was conducted through personal
banking accounts of the respondents. The bank statements
point to a
litany of transactions which do not have anything to do with forex
trading. Automated teller machine withdraws of sizable
cash amounts,
purchases of fast food and other unidentified purchases. The pattern
created is that these generous purchases were
occurring immediately
after the applicant had deposited the money. This was the money that
ultimately belonged to the investors
spent on what is palpably
personal expenses. Weighing the probabilities, I am satisfied that
the applicant has demonstrated that
the respondents were dissipating
their assets which will adversely affect any future claim.
[19]
The bulky documents attached as annexures by the 3
rd
respondent did not advance his case. These documents purporting to be
statements from International Capital Markets Pty Ltd and
a proof
that the money was paid to them, are largely incomprehensible. I was
not directed to even one transaction that indeed the
3
rd
respondent deposited the money with them in advancing the business
venture with the applicant.
[20]
For all the reasons set out above, I conclude that the applicant has
discharged the necessary onus and that the respondents
had no answer
to the formidable case against them. I could do not find any reason
to depart from the general rule that the costs
follow the event.
[21]
Accordingly I make the following order: -
21.1 The rule nisi is
confirmed.
21.1.1
Pending the determination of an action to be instituted within
twenty-one (21) days of this order by the applicant against
the 3
rd
and 4
th
respondent
for payment of the amount of R290 000.00 and R408 000.00
respectively, the following interim interdict issues:
-
21.1.2
The third and fourth respondents are restrained from withdrawing
money or making payments from the accounts held with the
fifth and
sixth respondent.
21.1.3
The third and fourth respondents are directed to pay the costs of
this application, including all reserved costs, jointly
and
severally.
_____________
MATHEBULA,
J
On
behalf of applicant: Mr M J Ponoane
Instructed
by: Ponoane Attorneys
BLOEMFONTEIN
On
behalf of 3
rd
respondent: Adv. H.S. Van der Merwe
Instructed
by: Balden Vogel and Partners INC
BLOEMFONTEIN
On
behalf of 4
th
respondent: Adv. A.S. Boonzaaier
Instructed
by: N.S. Makwele Attorneys
BLOEMFONTEIN
[1]
First National Bank of
Southern Africa Ltd v Perry NO and others 2001(3) SA 960 (SCA) at 967
H-I
[2]
1973 (3) SA 685
(A) at
[3]
2014 (2) SA 511
(GJ) at
para 18