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[2016] ZAKZDHC 19
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Nel N.O and Others v Bank of Baroda (11602/14) [2016] ZAKZDHC 19 (12 May 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
LOCAL DIVISION, DURBAN
CASE
NO: 11602/14
DATE:
12 MAY 2016
In
the matter between:
EUGENE
NEL
N.O
.............................................................................................................
First
Plaintiff
KURT
ROBERT KNOOP
N.O
......................................................................................
Second
Plaintiff
JUSTI
STROH
N.O
...........................................................................................................
Third
Plaintiff
And
THE
BANK OF
BARODA
......................................................................................................
Defendant
Coram: Koen J
Heard: 4 May
2016.
Delivered:
12 May 2016.
O
R D E R
The
Plaintiffs’ application for leave to amend their Particulars of
Claim in the manner contemplated by the Plaintiff’s
Notice in
terms of Rule 28(1) dated 21 July 2015, contained in the Notice of
Motion dated 18 August 2015, is dismissed with costs.
J
U D G M E N T
KOEN
J
:
[1]
This is an application in which the Plaintiffs, the joint liquidators
of Ludba Investments CC (hereinafter referred to as ‘Ludba’)
seek leave to amend their Particulars of Claim. The Defendant opposes
the proposed amendment on the basis that the Plaintiffs’
claim
is for the setting aside of a disposition in terms of the
Insolvency
Act 1936
,
[1]
that the proposed
amended Particulars of Claim do not plead any facts from which it may
be inferred or concluded that any asset
of the insolvent was disposed
of, alternatively any disposition was made by the insolvent Ludba to
the Defendant, alternatively
do not plead any particulars from which
it may be concluded or inferred that any disposition has been made
involving the Defendant
which might be set aside in terms of the
Insolvency Act, and
accordingly that the amendment seeks to introduce
pleadings which are excipiable on the basis that they disclose no
cause of action,
alternatively are vague and embarrassing.
[2]
It is well established in our law that, a
s
a matter of pleading, a Plaintiff must allege all the relevant facts
in his/her Particulars of Claim. Conclusions of law should
not be
pleaded. The requirements for proper pleading are explained
succinctly by the learned authors in Herbstein & Van Winsen
[2]
as follows:
‘
IV
PARTICULARITY
Subrules
18(4) and (5) provide as follows:
18(4)
Every pleading shall contain a clear and concise statement of the
material facts upon which the pleader relies for his claim,
defence
or answer to any pleading, as the case may be, with sufficient
particularity to enable the opposite party to reply thereto.
(5)…
The
requisites of good pleading are said to be “that it should
contain a statement of (1) fact, now law, (2) material facts
only,
(3) facts, not evidence, and (4) facts stated in a summary form”
and that “material facts” are all facts
which must be
proved in order to establish the ground of claim or defence.
Every
pleading must contain a clear and concise statement of the material
facts, preferably in chronological order, upon which the
pleader
relies for his claim, defence or answer to any pleading, as the case
may be, with sufficient particularity to enable the
opposite party to
reply to it. The necessity to plead material facts is in
accordance with the general requirement of the
common law. If a party
relies on a fact, and will fail in the claim or defence unless at the
trial that fact is proved, that fact
will be a “material fact”
…
A
pleading must allege the facts that are required in order to disclose
a cause of action or defence. A pleading that states
conclusions and opinions instead of material facts, or that draws a
conclusion without alleging the material facts which, if proved,
would warrant that conclusion, is defective.’
Buchner
and another v Johannesburg Consolidated Investment Co. Ltd
[3]
contains
a useful summary of what pleadings should contain:
‘
Court
Rule 18(4)
lays down:
”
Every
pleading shall contain a clear and concise statement of the material
facts upon which the pleader relies for his claim, defence
or answer
to any pleading, as the case may be, with sufficient particularity to
enable the opposite party to reply thereto.”
I
emphasise the words ”shall contain a clear and concise
statement of the material facts.”
The
necessity to plead material facts does not have its origin in this
Rule. It is fundamental to the judicial process that the
facts have
to be established. The Court, on the established facts, then applies
the rules of law and draws conclusions as regards
the rights and
obligations of the parties and gives judgment. A summons which
propounds the plaintiff's own conclusions and opinions
instead of the
material facts is defective. Such a summons does not set out a cause
of action. It would be wrong if a Court were
to endorse a plaintiff's
opinion by elevating it to a judgment without first scrutinising the
facts upon which the opinion is based.’
I
am however also mindful of the caution expressed by Tebbut AJ (as he
then was) in
Crawford-Brunt v Kavnat and Another
1967 (4)
SA 308
(C) at 310G that:
'If
the pleading would appear to be possibly open to exception or even if
the Court is of opinion that the question of whether or
not the
pleading is excipiable is arguable, it would seem to be the more
correct course to allow the amendment.'
[3]
The material amendments to the Particulars of Claim sought to be
introduced by the Plaintiffs are as follows:
‘
DATE
OF LIQUIDATION
6.
On 1 February 2013 Ludba was provisionally wound up. The
provisional winding-up order was confirmed on 14 March 2013.
7.
Copies of the provisional and final winding-up orders are annexed
hereto marked “
POC2”
and “
POC3”
respectively.
8.
The winding-up of Ludba is deemed to have commenced on 16 July 2010
in terms of the provisions of section 348 of the Companies
Act, No.
61 of 1973 as read with item 9 of Schedule 5 and Schedule 3 of the
Companies Act, No. 71 of 2008
.
9.
At all material times hereto:
9.1
Lubda was the registered owner of Portion 1 of Erf 1231 New Germany,
Registration Division
FT, Province of KwaZulu-Natal, in extent 1,8349
hectares (“the property”);
9.2
Lubda disposed of the property to Bexstar Investments (Pty) Ltd for
the sum of R20 million,
with registration of transfer being effected
on 22 September 2010.
10.
On or about 22 December 2009, Bexstar, either directly or through the
agency of Crown Wheels CC, caused the sum of R1 600 000.00
to be paid to the liquidators of Gharafory Enterprises CC (in
liquidation).
11.
On or about 23 December 2009 the liquidators of Gharafory Enterprises
CC (in liquidation) paid the sum of R1 600 000.00
to the
defendant.
12.
The sum of R1 600 000.00 aforesaid was due by Bexstar to
Ludba as part of the purchase price of the property.
13.
The disposition of the sum of R1 600 000.00 to the
defendant constitutes a disposition as defined in section 2 of
the
Insolvency Act, No. 24 of 1936 (“the Act”).
DISPOSITION
WITHOUT VALUE
14.
The disposition of the sum of R1 600 000.00 was not made
for value and was made within two years of the winding-up
of Ludba.
15.
In the premises the disposition to the defendant is liable to be set
aside in terms of section 26 of the Act.
16.
In the alternative and in the event of it being found that the
defendant was a creditor of Ludba, the plaintiffs plead as set
out
hereunder.
VOIDABLE
OR UNDUE PREFERENCE
17.
At the time of the disposition of the sum of R1 600 000.00
to the defendant, the liabilities of Ludba exceeded the
value of its
assets.
18.
The disposition to the defendant had the effect of, alternatively was
made with the intention of, preferring one of its creditors
above
another and in fact had the effect of such preference.
19.
In the premises, the disposition to the defendant is liable to be set
aside in terms of section 29, alternatively 30(1) of the
Act, which
section is applicable by virtue of the provisions of section 340(1)
of the Companies Act, No. 61 of 1973, as read with
section 66
of the
Close Corporations Act, 1984
and item 7 of Schedule 3 of the
Companies Act, No. 71 of 2008
.
COLLUSIVE
DISPOSITION
20.
The disposition of the sum of R1 600 000.00 was made to the
defendant in collusion with one MOHAMED RAFIEK AHMED GHARAFORY,
the
former sole member of Ludba.
21.
The disposition aforesaid had the effect of prejudicing the creditors
of Ludba.
22.
In the premises the disposition is liable to be set aside in terms of
section 31 of the Act and the defendant:
22.1
is to pay the sum of R1 600 000.00 to the plaintiffs; and
22.2
pay by way of penalty to the plaintiffs such sum as the court may
adjudge, not exceeding the amount by which the defendant
would have
benefitted by such dealing if it had not been set aside; and
22.3
insofar as the defendant may be a creditor of Ludba, to forfeit its
claim against the estate.’
[4]
Whether the proposed amendments would indeed be excipiable is best
determined by identifying the relevant material events emerging
from
the averments in the proposed amendments in their correct
chronological sequence:
(a)
At all material times Ludba was the
registered owner of the property;
(b)
On or about 22 December 2009 Bexstar
Investments (Pty) Ltd directly or indirectly caused the sum of
R1 600 000.00 to paid
to the liquidators of Gharafory
Enterprises CC (in liquidation);
(c)
On or about 23 December 2009 the
liquidators of Gharafory Enterprises CC (in liquidation) paid the sum
of R1 600 000.00
to the Defendant ;
(d)
On 16 July 2010 an application was launched
for the winding up of Ludba;
(e)
On
22 September 2010 registration of transfer of ownership of the
property passed from Ludba to Bexstar;
[4]
(f)
On 1 February 2013 Ludba was provisionally
wound up which winding up order was confirmed on the 14 March 2013.
The effect
thereof was retrospectively to deem the winding up of
Ludba to have commenced on 16 July 2010.
[5]
Central to the various alternative grounds upon which the Plantiffs’
claim is based, whether as a disposition without
value, avoidable
preference, an undue preference, or a collusive disposition, is the
need to allege (and at the trial, based on
such averments, establish)
a ‘disposition’. In each instance the prayer for
relief is then also for an order
‘setting aside of the
disposition of the sum of R1 600 000.00 by Ludba
Investments CC (in liquidation) to the defendant.’
[5]
[6]
‘Disposition’ is defined in
s 2
of the
Insolvency Act to
mean:
‘
any
transfer or abandonment of rights to property and includes a sale,
lease, mortgage, pledge, delivery, payment, release, compromise,
donation or any contract therefore but does not include a disposition
in compliance with an order of the court.
The
word ‘property’ is defined as:
‘
movable
or immovable property wherever situate within the Republic, and
includes contingent interests in property other than the
contingent
interest of a
fidei
commissary
heir or legatee.’
[7]
Meskin,
[6]
in dealing with the
‘meaning of disposition’ points out that in any case
seeking to impeach a transaction on the grounds
averred by the
plaintiffs ‘it is fundamental that the transaction should have
involved a disposition by the insolvent of
his or, in the case of a
company or of a corporation, of its property’. The definition
of ‘disposition’ is not
exhaustive.
[7]
A wide meaning must be given to the word ‘disposition’,
for very good reasons. It covers not only ‘any
conceivable means of disposing of property’ but ‘also the
conclusion of ‘any contract therefore’ i.e. a
contract
involving payment, delivery or transfer, for whatever reason, of
property.
[8]
Thus a contract of
sale of immovable property is a disposition on the date of the
conclusion of such contract,
[9]
and the transfer of immovable property is a disposition by the
transferor. But the repudiation of an inheritance by an heir or
legatee is not a disposition,
[10]
nor is a refusal to accept a benefit under an insurance policy, since
the insolvent’s competence to accept the benefit in
terms of a
will or insurance policy is not a ‘right’ which vests in
an insolvent’s trustee until such benefit
is accepted by the
insolvent. There is no disposition by an insolvent where it is
effected by another without the insolvent’s
authorisation or
ratification.
[11]
In a banker
customer relationship, the customer’s right of disposal in
respect of the amounts standing to his credit in the
account is
‘property’ within the meaning of the
Insolvency Act and
when the customer ‘issues a cheque drawn on his account he
transfers or abandons in favour of the other party his right of
disposal over the claim to that part of the amount in his account as
was represented by the amount of the cheque’; hence
it is ‘a
disposition’ of ‘property.
[12]
[8]
In short, ‘a disposition of property includes every act by
which an insolvent parts with an asset in his estate, whether
such
asset is a corpus, a sum of money or a right of action.
[13]
In order to found an action against a particular Defendant though,
the disposition must have been made to the Defendant or reached
the
Defendant, in the sense of being received or the benefit thereof
accruing to the Defendant. Thus Mars
[14]
continues that:
‘
Where
A instructs or requests his debtor B to pay the amount of that debt
directly to C, and B does so, there is a disposition of
A’s
property to C . . . It is also a disposition if, by
arrangement, a loan to the insolvent is paid into the bank
account of
another person to channel the funds to a creditor of the insolvent.
’
It
is significant that in both the aforesaid examples referred to by
Mars the disposition is preceded by an instruction or an agreement,
in terms whereof the disposition is made or intended to be made by
the insolvent to C or the bank account of the other person.
[9]
It is with that brief recount of some of the relevant legal
principles that I then return to the pleadings in this matter.
Ex
facie
paragraphs 10 and 11 of the proposed Particulars of Claim, the
successive payments of the amount of R1 600 000.00 first
by
Bexstar, whether directly or through the agency of Crown Wheels CC,
to Gharafory Enterprises CC (in liquidation) on 22 December
2009, and
by the payment of a similar amount on the following day, 23 December
2009, from the liquidators of Gharafory Enterprises
CC (in
liquidation) to the Defendant are separate, independent and distinct
payments which on the pleadings share nothing in common
[15]
other than the amount of the payment. There is no allegation
that the payment to the liquidators of Gharafory Enterprises
CC (in
liquidation) was made on the condition or for the purpose of the
latter paying that amount to the defendant.
[10]
More significantly also on what has been pleaded, and assuming in
favour of the Plaintiffs that transfer of the property was
to occur
pari
passu
with payment, no payment of R1 600 000.00 ‘as part of the
purchase price of the property’ was as on 23 December
2009 ‘due
by Bexstar to Ludba’. The transfer of that property, pursuant
to whatever
causa
[16]
,
occurred
almost nine months later. If there was any other factual basis on
which that part of the purchase price was by then already
as an asset
to Ludba then that should be pleaded. No right or right of action
had, on what is pleaded, accrued to Ludba as property
in respect of
which an actionable disposition could exist against the Defendant at
that point in time.
[11]
It might be that there was a ‘contract therefore’ (in the
words of the definition of ‘disposition’)
in favour of
Ludba in December 2009 which would entitle Ludba once an agreement of
sale or an agreement establishing any other
cause leading to the
transfer and hence the right to payment of the sum of R1 600 000.00
or a right of action to such
payment, came into existence, but then
the facts giving rise thereto should be pleaded. The Plaintiffs
have contended that
paragraph 13 of the particulars of claim averring
that the disposition of the sum of R1 600 000.00 to the
Defendant ‘constitutes
a disposition as defined in
section 2
of
the
Insolvency Act&rsquo
;, is sufficient, because if proved that it
was a ‘disposition’ to the Defendant, the claim should
succeed. Paragraph
13 however pleads a conclusion of law.
The Defendant is entitled to be fully appraised of the factual basis
on which the
payment, or any right of action to claim payment, of the
sum of R1 600 000.00 not by Ludba, but by Gharafory
Enterprises
CC (in liquidation) to the Defendant could be said to be
a disposition or the exact same amount as subsequently became due by
Bexstar
to Ludba as part of the purchase price of the property in
September 2010 upon transfer.
[12]
There simply was no disposition of the sum of R1 600 000.00
to the Defendant. To the extent that the sum of R1 600.00
became
due by Bexstar to Ludbar as part of the purchase price of the
property upon transfer on 22 September 2010, Ludba would have
a claim
against Bexstar but not against the Defendant. In conclusion
the Plaintiffs submitted that the disposition lay in
the right of
Ludba to recover the sum of R1 600 000.00 against Bexstar.
That right however is a right of recovery against
Bexstar. It
is not a right of recovery as against the Defendant unless (possibly)
the successive payments of an amount of
R1 600 000 through Crown
Wheels, Gharafory Enterprises CC (in liquidation) to the Defendant
was in terms of a ‘contract’
in terms whereof Ludba’s
entitlement to the sum of R1 600 000.00 due by Bexstar was
transferred or abandoned to
the Defendant. But absent such
factual allegations the conclusion pleaded in paragraph 13 is not
justified and the proposed
amendment, certainly in so far as they
relate to a disposition without value or a voidable or undue
preference lack averments necessary
to sustain a valid cause of
action against the Defendant.
[13]
All that remains to be considered is whether the averments relating
to a collusive disposition suffer a similar fate.
Common with
the primary and earlier alternative causes of action the proposed
amendment in this regard also relies on a ‘disposition
of the
sum of R1 600 000.00’ made to the Defendant.
The Plaintiffs however pointed out correctly that
section 31(1)
provides that:
‘
(1)
After the sequestration of a debtor’s estate the court may set
aside any transaction entered into by the debtor before
the
sequestration, whereby he, in collusion with another person, disposed
of property belonging to him in a manner which had the
effect of
prejudicing his creditors or of preferring one of his creditors above
another.’
[14]
Section 31(1)
does not require ‘a disposition’ but merely
‘any transaction’. It was also argued by the Plaintiffs
with
reference to
section 31(2)
providing for ‘making good any
loss’ and/or a ‘penalty’ only from ‘any
person who was a party to
such collusive disposition’ that
section 31(1)
seemingly also does not require that the Defendant be a
party to such collusive disposition. I am not persuaded that the
remedy
of ‘making good’ or recovering a ‘penalty’
from ‘any person who was a party to such collusive dealings’
would mean that a valid claim for impeaching a disposition to a
Defendant will lie where the Defendant was not a party to the
collusive transaction. It is however not necessary to decide that
issue and I accordingly refrain from considering those issues
any
further.
[15]
The Plaintiffs aver that the ‘disposition’ or transaction
relating to the payment of the sum of R1 600 000.00
was
made to the defendant in collusion with one ‘Mohamed Rafiek
Ahmed Gharafory, the former sole member of Ludba’.
The
averment is not that the transaction was in collusion with Ludba duly
represented by Mohamed Gharafory. The way it is
pleaded the
primary party to the collusion was Gharafory who incidentally
happened to be ‘the former sole member of Ludba’.
Whether he was the sole member at the relevant time is unclear.
[16]
However, even assuming that the reference to Gharafory being the
former sole member of Ludba necessarily implies that the collusion
was with Ludba represented by Mohamed Gharafory, and even accepting
that it is not necessary to prove that the Defendant was party
to any
collusion, collusion necessarily implies the involvement of at least
two parties namely Ludba and another. No averments
have been
made in this regard, specifically whether such collusion was with
Bexstar, Crown Wheels CC, the liquidators of Gharafory
Enterprises CC
(in liquidation) and possibly the Defendant, or any combination of
them.
[17]
Again even accepting contrary to the wording of the averment in
paragraph 20 that proof of a ‘disposition’ is not
necessary and that proof of ‘any transaction’ would
suffice, the simple averment that such ‘disposition of the
sum
of R1 600 000.00’ was ‘in collusion with one
Mohamed Rafiek Ahmed Gharafory’ is a conclusion of
law rather
than a factual averment which, if proved, would establish collusion,
or from which collusion can be inferred.
Accordingly, the
proposed amendments dealing with a ‘collusive disposition’
lack particulars necessary to sustain a
valid cause of action.
[18]
The objections by the Defendant are well founded.
[19]
The application for leave to amend their Particulars of Claim in the
manner contemplated by the Plaintiff’s Notice in
terms of
Rule
28(1)
dated 21 July 2015, contained in the Notice of Motion dated 18
August 2015 is accordingly dismissed with costs.
Appearances
Plaintiffs’
counsel: Adv. R M Van Rooyen
Plaintiffs’
attorneys: Edward Nathan Sonnenbergs Inc
Respondent’s
counsel: Adv. G D Goddard SC
Respondent’s
attorneys: Jackson and Ameen.
[1]
Read with the relevant provisions of s341(2) of the Companies Act 61
of 1973, as read with item 9 of Schedule 5 and Schedule
3 of the
Companies Act 71 of 2008
.
[2]
A
Cilliers et al
Herbstein
& Van Winsen: The Civil Practise of the High Courts and Supreme
Court of Appeal of South Africa
5 Ed (2009) at 565 – 566.
[3]
1995
(1) SA 215
(T) at 216 G – 216 J.
[4]
Presumably
in terms of some underlying
causa
such as a sale which preceded the transfer. The particulars of claim
are silent on this issue.
[5]
See
prayers 1, 2, 3 and 4 to the prayer). Prayer 5 is simply for payment
of the sum of R1 600 000.00, prayers 6 and
7 are for a
penalty of such amount as the court may adjudge and declaring the
Defendant to have forfeited his claim against the
estate in so far
as it may be a creditor (on the basis of the disposition
constituting a collusive disposition), prayer 8 is
for interest on
the sum of R1 600 000.00 calculated at 9% p.a., being the
mora
rate
from the date of judgment to the date of payment, and prayer 9
claims the costs of suit.
[6]
PM
Meskin
Insolvency
Law and Its Operation in Winding Up
at
page 5 – 99 in para 5.31.2
[7]
Langeberg
Koöperasie Bpk v Inverdoorn Farming and Trading Company Ltd
1965
(2) SA 597
(A) at 602.
[8]
Estate
Jager
v Whittaker and Another
1944
AD 246
at 250.
[9]
Sackstein
NO v Van der Westhuizen en ‘n Ander
1996
(2) SA 431
(0) at 435 – 436.
[10]
Wessels
NO v De Jager en ‘n Ander NNO
[2000] ZASCA 132
;
2000
(4) SA 924
(SCA)
[11]
Wessels
NO v De Jager en ‘n Ander NNO supra
[12]
Ensor
N.O. v Nedbank Ltd
1978
(3) SA 110
(D) at 113
[13]
Grobelaar
v Trustees Estate De Beer
1915
AD 265
at 273 and
Ensor
N.O. v Nedbank
Ltd
1978 (3) SA 110
(D)
[14]
E
Bertelsman et al
MARS
The
Law of Insolvency in South Africa
9
Ed para 13.3 at pg 251.
[15]
There is for example no averment that these payment were part of an
earlier agreement with or an instruction by Ludba.
[16]
In our legal system subscribing to the abstract theory of ownership
(Air-Kel (edms) Bpk h/a Merkel Motors v Bodenstein en ‘n
Ander
1980 (3) SA 917
(A)) ownership will pass even if an underlying causa
is lacking, putative or invalid.