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[2004] ZAWCHC 19
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Fey N.O. and Another v Mackay (9142/2002) [2004] ZAWCHC 19; [2004] 4 All SA 50 (C) (30 April 2004)
IN THE HIGH COURT OF
SOUTH AFRICA
(HELD AT CAPE TOWN)
Case no.
9142/2002
In the matter between
EILEEN
MARGARET FEY N.O.
First Applicant
MICHAEL
JOHN LANE N.O
Second Applicant
and
NEVILLE
WILLIAM MACKAY
Respondent
JUDGEMENT
delivered on 30 April 2004
WAGLAY,
AJ:
1.
The plaintiffs who are the trustees in the
insolvent estate of Jürgen Harksen (Harksen) instituted this
action against the
defendant for payment of an amount of R271 290.63
together with interest and costs.
2.
The plaintiffs claim the aforesaid sum of
money on the basis that the money constituted property which in terms
of s20 alternatively
s23
(1) of the
Insolvency Act No 24 of 1936
, as
amended (“the Act”) vested in the Plaintiffs but which
money Harksen wrongfully concealed from them and paid over
to the
defendant, albeit pursuant to a lease agreement concluded between
Harksen and the defendant.
3.
The facts alleged in support of the above
claim can the summarised as follows:
3.1
The defendant represented by Accommodation Shop CC and Harksen
concluded a lease agreement
in terms of which Harksen hired a
dwelling from the defendant for a period of 10 months at a rental of
R25 000, 00 per month plus
other related charges;
3.2
That it was known to the defendant alternatively was known to the
defendant
’
s agent that Harksen was an
insolvent; and
3.3
That the amount claimed was paid from funds which formed part of the
insolvent estate and
was paid either directly by Harksen, or through
banking accounts of entities directly or indirectly controlled by
Harksen and used
by Harksen as vehicles to disguise payments of
monies which vested in the Plaintiffs.
4.
The defendant denies that he is liable to
the plaintiffs and does so on the basis that:
4.1
He did not conclude a lease agreement with Harksen but
that the lease
agreement was concluded with Janette Harksen, Harksen’s spouse;
4.2
That it was not in any event, known to him that Harksen was an
insolvent;
4.3
That monies received by him in respect of rental and ancillary
charges were not paid by
Harksen or on his behalf and even if they
were, such monies did not constitute funds belonging to Harksen
’
s
estate as contemplated by
s23
of the Act;
4.4
If it was found that the lease agreement was one between Harksen and
him, it was a valid
and binding agreement and as such performance of
the obligations in terms thereof did not involve:
(i)
the disposal of any of Harksen’s
property, nor was the Harksen estate or any contribution towards the
estate which Harksen
was obliged to make, adversely or likely to be
adversely affected by the performance of the obligation in terms of
the lease agreement;
(ii)
alienation for valuable consideration of
any property or a right to any property which Harksen acquired after
the sequestration
of his estate and which by such acquisition became
part of the Harksen estate as contemplated by
s21
of the Act.
4.5
If it is found that the lease agreement and performance
in terms
thereof constituted an alienation for valuable consideration as
contemplated by
s24(1)
of the Act then he was not aware nor did
he have reason to suspect: that Harksen was a true lessee; that
Harksen was an insolvent
and that the funds utilised to ensure
compliance of the obligation of the lease agreement constituted
property in the insolvent
estate.
5.
At the commencement of the trial the
defendant applied for a separation of issues in terms of r33 (4) of
the Uniform Rules of Court.
The defendant identified three
issues which it sought to be determined separately. I do not
intend setting out these issues.
I did not deem it expedient to
separate the issues as I was of the view that no purpose would be
served in dealing with the matter
on a piecemeal basis more
particularly when on the papers as they then stood all the issues
were related and connected to each
other to the extent that the
issues, where they did nor overlap, influenced each other. In
the circumstance the application
for separation of issues was
refused.
6.
Turning then to the nature of the claim
itself, in terms of s20 of the Act upon the sequestration of an
insolvent’s
estate, the insolvent is divested of his estate
which vests in the Master of the High Court until a trustee has been
appointed.
Subject to certain exceptions, the insolvent’s
estate consists of all of the insolvent’s property at the date
of the
sequestration; all property or the proceeds thereof in the
hands of the deputy sheriff or messenger under a writ of attachment,
and all property which the insolvent may acquire or which may accrue
to him during sequestration. (see
Meskin:
Insolvency Law
Issue 14 paragraph 5.2
at p 5-3)
7.
The word property in s20 of the Act refers
to property within the borders of South Africa and includes both
moveable and immoveable
property. Moveable property includes
every kind of property which is not an immoveable property including
“contingent
interest in property other than contingent interest
of a
fidei commissary
heir or legatee” (s1 of the Act”).
8.
As the application of the provisions of the
Act in relation to any property is dependant upon it being within
South Africa it follows
that property acquired by an insolvent after
he is sequestrated but during the sequestration and situate outside
of South Africa
cannot vest in the trustee of his estate. The
exception is where the property is moveable property and the
insolvent is domiciled
within the area of jurisdiction of the
sequestrating Court (see Viljoen v Venter NO
1981 (2) SA 152
(w) and
Meskin
supra 5-3 and 5-4).
9.
Insofar as domicile is concerned the
ingredient of
animus manendi
or the intention to remain permanently or indefinitely, is, in
addition to residence, essential. The mere fact that the High
Court orders an insolvent’s sequestration does not mean that
the insolvent is domiciled in South Africa as local domicilium
is not
a pre-requisite for the Court to grant a sequestration order.
10.
In terms of s20 of the Act, therefore, all
immovable and movable property owned by an insolvent at the time of
his insolvency or
during his insolvency and situate within South
Africa vests with his Trustee. Moveable property situated
outside South Africa
also vests in the Trustee but only if the
insolvent was domiciled in South Africa at the time he was
sequestrated.
11.
Having defined the insolvent’s
property and the fact that such property vest in that insolvent’s
trustee, s23 of the
Act provides that where an insolvent enters into
a contract:
(i)
in terms of which he purports to dispose of
any property in his estate; or
(ii)
in terms of which his estate, or any
contribution towards his estate which he is obliged to make, is or is
likely to be adversely
affected and prior written consent of the
trustee was not obtained to conclude the contract; such contract
shall not be a valid
contract.
12.
However in terms of s24 (1) of the Act if
an insolvent alienates property which he acquired after the
sequestration of his estate
for valuable consideration without the
consent of his trustee such alienation will be valid if the party
receiving the property
“proves that he was not aware and had no
reason to suspect that the estate of the insolvent was under
sequestration.”
13.
s24 (1) is designed to protect a third
party acquiring assets from an insolvent as against creditors of the
insolvent but only if
the third party is bona fide. This
section places an onus upon a third party who has acquired assets
from an insolvent to
prove that he was neither aware nor had reason
to suspect that the insolvent with who he contracted was under
sequestration.
This very stringent requirement consists of more
than a mere suspicion. A third party acquiring assets from an
insolvent cannot
simply claim not to have a reasonable ground to
suspect insolvency, this is not enough, the third party must actually
have no reason
whatsoever to suspect that the estate of the person
with whom he is dealing is under a sequestration order.
14.
Having regard to the claim made and the
defences raised, for the plaintiffs to succeed they must satisfy this
Court: that Harksen
entered into a lease agreement with the defendant
without their consent; that Harksen complied with his obligations in
terms of
the said agreement in that he paid the rentals and other
charges; that the monies paid by Harksen were monies which vested in
them
and that there are entitled to recover the monies from the
defendant. If the plaintiffs discharge the onus in respect of the
above
issues the defendant is still able to avoid paying the amount
claimed by the plaintiffs if he can satisfy this Court that he was
neither aware nor had any grounds to suspect that Harksen was an
insolvent at the time the lease agreement was concluded and payment
received by him in terms of the agreement.
15.
Dealing then with the agreed facts, the
evidence presented and the chronology of events leading to the claim
can be summarised as
follows:
15.1
Ferguson, duly representing the business known as the Accommodation
Shop
CC first received a telephone call from a person who identified
himself as Peterson. Peterson informed Ferguson that he was looking
for accommodation for a Swiss national who would require a bungalow
at Clifton for a six month period;
15.2 In
response to that enquiry, the Accommodation Shop CC enquired of
Watson, the owner of a bungalow in Clifton,
which was on the books of
the Accommodation Shop CC, whether same would be available for hire.
15.3 On
receiving a positive response from Watson, Ferguson met with Peterson
and one Studer the Swiss national,
on 24 June 2000, took all of
Studer details, completed a data sheet for internal business
purposes. The bungalow was then shown
to Studer and Petersen and a
lease agreement was signed at the bungalow that day. Further, a
pro rata amount for June plus
the July rental was paid over in cash
on the same day. At the time the lease was concluded between
Studer and Watson (Ferguson
of the Accommodation Shop CC then
represented Watson the landlord) it was envisaged that although
Studer would be the lessee Petersen
and his family would enjoy access
to the bungalow on weekends and to this end, same was reflected in an
addendum to the lease agreement.
15.4
At the time of the conclusion of the
lease agreement, Ferguson had no
doubt that the lessee and principal tenant would be Studer, this is
confirmed in his letter to
Studer enclosing a copy of the lease.
15.5
Subsequent to the conclusion of the
lease agreement, Ferguson was
approached with an enquiry as to whether or not the bungalow was for
sale. Although the enquiry
vis-à-vis
the proposed
purchase of the bungalow emanated from Petersen, Ferguson was of the
view that the proposal to purchase the bungalow
was being made by
either or both Studer and Petersen. Ferguson testified that at the
time he believed that there was some business
relationship between
the Studer and Petersen. This belief was borne out by the fact
that the initial enquiry to rent the
bungalow had emanated from
Petersen; Ferguson had met Petersen and Studer together at the
bungalow and that Petersen and his family
could occupy the property
hired by Studer over the weekends when Studer was absent. Nothing
however came of this proposed purchase
primarily because Petersen
and/or Studer required the purchaser to be a juristic entity and it
was not possible for a juristic
entity to purchase the bungalow in
question due to the restriction contained in the Title Deed of the
property.
15.6
On approximately 1 September 2000
an enquiry was received by Ferguson
from Petersen as to whether or not an upfront rental payment might be
made which would result
in a discount being granted by Watson on the
rental. This enquiry was conveyed by Ferguson to Watson, and
agreement reached.
Payment was then made by Petersen (although there
was nothing to suggest that the payment was not being made on behalf
of Studer)
in terms of the agreement. The only occupants
throughout the existence of the lease which was concluded between
Studer and
Watson appeared to be the Petersen family. They also
only occupied the bungalow over the weekends. Since the initial
enquiry
had emanated from Petersen on behalf of Studer and as Studer
was a real person (whose credentials as a Swiss lawyer had been
checked
by The Accommodation Shop CC) there appeared to be no reason
for the Accommodation Shop CC to be either alarmed or concerned at
the fact that Petersen and his family were occupying the bungalow and
all its dealings later seemed to be primarily with Petersen
as
opposed to Studer. This was particularly so as:
(i)
it was foreshadowed that Petersen and his family would be entitled to
occupy the bungalow
at weekends if they so wished; and
(ii)
there was no problem when it came to payment of the rental and
ancillary charges
or with the maintenance of the bungalow.
15.7
Further, because compliance with the lease agreement proceeded
smoothly, there was talk, in the absence of
the purchase of the
bungalow, of the lease being renewed in the following year. The lease
between Watson and Studer came to an
end in December 2000.
15.8
The bungalow was then sold by Watson to the defendant. The defendant
was then introduced to the Accommodation
Shop CC and his initial
meeting with Strickland of the Accommodation Shop CC related to the
possible letting of a flat owned by
him. This in turn led to an
enquiry emanating from the Accommodation Shop CC as to whether the
defendant would be interested
in letting the bungalow purchased from
Watson to the tenant who had previously occupied the bungalow.
This enquiry was made
in writing on 18 January 2001.
15.9 It
is important to note what was known to the parties as at 18 January
2001 when the written enquiry was
despatched by the Accommodation
Shop CC to the defendant:
(i)
After the bungalow had been sold to the
defendant, one Sylvai Dohne (Dohne), the estate agent met Strickland
of the Accommodation
Shop CC and enquired of her as to whether she
knew that the erstwhile tenant at the bungalow was “Harksen”.
Strickland
did not know who Harksen was and Dohne advised her that he
was a person who had swindled pension funds, whose wife had hired her
property and painted it purple which led to a dispute as a result of
which she (Dohne) was disliked by the Harksens. Strickland
in her
evidence stated that she did not pursue the matter further with
Dohne, but did in fact enquire from her father-in-law, who
is German
whether he knew who Harksen was. Her father-in-law had provided her
with information similar to that provided by Dohne
pertaining to
Harksen. It appears that it was only after Dohne had spoken to
Strickland did the Accommodation shop CC, who
were the agents for
Watson the landlord of the bungalow, realise that the person who had
introduced himself as Petersen was in
fact Jürgen Harksen;
(ii)
The defendant had no knowledge whatsoever
of who Harksen was, having not heard his name before; and
(iii)
Patsy Watson, the erstwhile owner of the
bungalow, only learnt after Harksen had moved out i.e. in December
2000 that he had been
her tenant. She informed the defendant that
Harksen had been the subject of a number of extradition attempts by
the German government
as he was wanted for massive bank fraud in
Germany; that he was the subject of many articles in
Noseweek
and that he was apparently widely believed to be a conman.
However, she had regarded him as a model tenant and emphasised
that
all these allegations were hearsay.
15.10
The defendant did not respond immediately to
the enquiry from
Accommodation Shop CC about letting the property. Instead,
later that day on 18 January 2001, he enquired
from Watson as to what
she could tell him about the former tenant of the bungalow. Watson’s
response resulted in a despatch
by the defendant of a further e-mail
where he requested further information from Watson as regards
Harksen. Watson responded
the following day, i.e. 19 January
2001. She provided details of what had happened with regard to
property hired by Harksen
previously. She alluded to the stories
about Harksen and his wife covered by both
Style
and
Newsweek
magazines adding the following: “None are relevant to
what kind of tenant he would make. Also they are all hearsay”.
Further, Watson went so far as to say to the defendant that she would
let the bungalow to Harksen again if the decision was hers
to make.
15.11
As a result of the contents of Accommodation
Shop CC’s letter
of enquiry as also the information the defendant had received about
Harksen from Watson, the defendant wrote
to Accommodation Shop CC on
19 January 2001 advising them that he would be agreeable to giving a
rental contract for 12 months
to Harksen on certain terms and
conditions. He pointed out that he had another enquiry to rent
the bungalow but would prefer
a long-term tenant and would therefore
prefer to concluded a lease agreement with Harksen.
15.12
In response, Accommodation Shop CC addressed
a letter to the
defendant wherein it drew to the defendant’s attention that the
previous lease agreement had been signed
by what it called Harksen’s
advocate, Studer. This gave the defendant some cause for
concern. As a result he
addressed a letter to the Accommodation
Shop CC on 24 January 2001, where he asked it to advise him as to the
legality of Harksen’s
advocate signing the lease agreement.
The defendant was of the view that if some person other then Harksen
were to sign the
lease agreement and do so on behalf of Harksen, then
there should be a separate letter from Harksen saying that such other
person,(Studer
in this case) was authorised to contract on Harksen’s
behalf. The defendant’s concern was that someone had to
be liable in the event of a breach of the contract. In
response, Ferguson advised that Harksen’s advocate would be
signing the lease agreement, which would be in Studer’s name “
for diplomatic reasons as explained to you telephonically”,
the
defendant could not recall what these reasons were that were
explained to him, and Ferguson linked the reasons to what followed
in
the second paragraph namely “there was no problems with
Watson’s lease agreement which was also in the Studer’s
name, however it must be understood that Mr Harksen and his family
would be occupying the bungalow as before”
15.13
In response, the defendant on 26 January 2001
stated that if Harksen
wished someone else to sign the lease on his behalf, the defendant
required a power of attorney authorising
that person to sign on his
behalf. He also wanted to know more about Studer, namely
whether he was a South African citizen,
whether he was an accredited
member of the Law Society and whether he was creditworthy. His
motivation for the foregoing
enquiry was as follows: “ It
is vital in any agreement that both parties have identifiable
identifications and domiciles.
In the unlikely, though
possible, event that there is a dispute and litigation follows, I
would have difficulty with the parties
at my disposal to know who to
deal with. At least one of the parties – either Mr
Harksen or Mr Studer – be the
Principal and be domiciled in
South Africa (it would probably cost me more to sue in a Swiss Court,
than any damages suffered).”
15.14
The defendant also enquired as to the correct
spelling of Harksen’s
name adding, “On the basis of advice given by Patsy Watson, Mr
Harksen was an exemplary tenant
and therefore I am encouraged to
pursue this negotiation, but will not do so unless the above
questions are answered”.
Further, he concluded by stating
as follows: “ As I explained to you this morning, I am willing
to proceed with this lease,
since Mr Harksen eagerly wants the
property and Patsy Watson recommended him, but I must protect my
interest in the event of any
default. I certainly mean no
disrespect to him as I have never met him”.
15.15
In a letter dated the same date to Accommodation
Shop CC the
defendant records: “You have not addressed my question as to
who is legally liable to fulfil the contents of
this lease. For
whatever reason Mr Harksen does not wish to sign it, he is the
de
facto
tenant. If he wishes someone else to sign the lease
on his behalf, then I require from him a power of attorney
authorising
that person to sign on his behalf”.
15.16
It was agreed that Studer would sign the lease
agreement and do so on
behalf of Harksen. As at 6 February 2001, it was still
envisaged that Studer would sign the lease
agreement and that he
would do so on 8 February 2001. Studer failed to arrive which
prompted Accommodation Shop CC to address
a letter to Harksen on 13
February 2001 wherein it recorded its frustration and embarrassment
and indicated that it needed to know
urgently what Harksen’s
intention were so that it could convey same to the defendant. Harksen
responded immediately stating
that Studer would be arriving on 15
February 2001 to sign the lease agreement. He also gave details
of Studer in order that
Studer’s creditworthiness could be
checked.
15.17
The exasperation of the defendant appears from
the contents of the
letter which he sent to Ferguson on 14 February 2001. This letter
concluded by imposing a deadline of Monday
19 February 2001 for
either Harksen or Studer to sign the lease agreement, failing which,
negotiations would be at an end.
Paragraph 1.1 of the letter
makes it clear that unless a written agreement was signed there would
be no agreement in force despite
all the terms of the lease being
orally agreed. Thus although the terms of the lease agreement
were essentially agreed upon
before the end of January 2001, it was
understood that a written document had to be signed before the
parties regarded themselves
bound to the agreement.
15.18
The defendant’s deadline of 19 February
2001 was conveyed to
Harksen who then volunteered his wife Jenette Harksen as the party
who would sign the lease agreement.
15.19
The evidence of Ferguson of the Accommodation
Shop CC was to the
effect that he had taken the lease agreement to Jenette Harksen’s
shop in Burg Street for her signature
and he had left the
agreement there because neither Harksen nor Jenette Harksen were
present. His evidence further
was to the effect that Jenette
Harksen had brought the signed lease agreement, in an envelop to the
Accommodation Shop.
15.20
No one, on receipt of the lease agreement scrutinised
the signature
on the document. Had they done so it would have been noted that
the lease agreement was signed for and on behalf
of Jenette Harksen
and not by her. That someone who signed on behalf of Jenette
Harksen has subsequently been identified
as Harksen himself.
What was noticed however was that the commencement date on the lease
had been altered and this gave rise
to further correspondence and the
drawing and signing of an addendum to the lease agreement. The
addendum also was signed
not by Jenette Harksen but by Harksen.
This also went unnoticed at the time.
15.21
The lease came into operation on 20 February
2001 and terminated on
30 November 2001. The lessee met its obligations in terms of
the lease by making payment of the rental
and ancillary charges.
These payments were made to the Accommodation Shop CC who
administered the lease on behalf of the
defendant.
15.22
The payments made in respect of the lease were
made either in cash or
by cheque drawn on the bank account of Voyager Trust or Unitrade 463
(Pty) Ltd. The banking account
under the name of Voyager Trust
was a business account operated by one Karsten whilst the banking
account in the name of Unitrade
463 (Pty) Ltd was the business
account of the business operated by Jenette Harksen.
16.
Having regard to the relevant sections of
the Act as referred to above and the summary of the agreed evidence
and the documents
presented at the trial the issues that require to
be considered are:
(i)
whether or not the monies paid to the
defendant as rental and other charges constituted property as
contemplated in s20 of the Act
and as such assets in Harksen’s
insolvent estate which vested in the plaintiffs; and if it did
(ii)
whether the lease agreement was concluded
between Harksen and the defendant; and if so
(iii)
if the defendant liable to repay the monies
received in terms of said lease agreement.
17.
As recorded earlier monies due to the
defendant in respect of the letting of his property in Clifton was
paid either in cash or
by cheques drawn from the banking accounts of
Voyager Trust or Unitrade 463 (Pty) Ltd (“Unitrade”).
With regard
to the payments made in cash, Rossouw gave evidence that
he was the person who had delivered the cash and that the cash
emanated
from Harksen. Likewise cheques drawn from Voyager
Trust were drawn against monies which were that of Harksen, in this
regard
the evidence of Karsten was that only once Harksen made money
available to Voyager Trust were cheques drawn on behalf of Harksen
and payment made to the Accommodation Shop CC in respect of the
rental and other ancillary charges for the Clifton property.
With respect to cheques drawn against the Unitrade account, these
cheques were drawn on monies made available by Harksen.
Jenette
Harksen who ran the business of the Unitrade company gave evidence to
the effect that the revenue generated by the business
operated by
Unitrade was insufficient to cover the costs associated with
conducting its own business and that Harksen utilised
the banking
account of Unitrade for his own purposes; that Harksen deposited
monies into that account and made payments therefrom
as he pleased;
payments to the Accommodation Shop CC were made from monies deposited
by Harksen into the Unitrade account and cheques
were issued against
such deposits.
18.
All the evidence pointed to the monies
which were utilised to make payment in respect of the hiring of the
defendant’s bungalow
emanating from Harksen and the plaintiffs
thus claim that the money constitutes property in the insolvent
estate. The defendant
on the other hand disputes that the
monies paid in respect of the lease was the property of Harksen.
This the defendant does
so on the basis that:
18.1
it cannot be proved that the monies paid over to him did in fact
belong
to Harksen; and
18.2
if it did belong to Harksen, the monies did not vest in the Trustees
because Harksen was not domiciled in
South Africa and it (the money)
originated in a foreign jurisdiction and only became Harksen
’
s
while he was under a sequestration order.
19.
Defendant argues quite properly that the
plaintiffs must prove that the monies paid to him were monies
acquired by Harksen in a
manner that made Harksen the owner of the
monies. The defendant avers that plaintiffs have failed to
discharge this onus
because the
ipse
dixit
of the witnesses is not borne out
by the documentary evidence before this Court. Accordingly to
the defendant: the bank statements
of both Voyager Trust and Unitrade
does not evince that payments made to Accommodation Shop CC preceded
by like deposits; there
was only the
ipse
dixit
of Rossouw to indicate that the
cash he delivered to Accommodation Shop CC was given to him by
Harksen; all of the witnesses who
gave evidence for and on behalf of
the plaintiffs are those who have in the past lied under oath to
protect Harksen. Notwithstanding
the fact that all of he
witnesses who gave evidence for the plaintiffs had liberally lied in
the past, their evidence to the effect
that the monies paid to the
Accommodation Shop CC in respect of the hire of the defendant’s
bungalow belonged to Harksen,
cannot simply be rejected for that
reason. Their evidence must be examined with care and caution
and account must also be
taken of he circumstances under which they
gave false evidence and the circumstances that pertain at present.
Their oral
evidence must further be weighed against the documentary
evidence presented at the hearing. When proper consideration is
given to all of the surrounding circumstances the documentation that
was presented and the other relevant factors it cannot be said
that
the evidence of Karstens, in relations to the Voyager Trust; Jenette
Harksen, in relation to the Unitrade account (and her
other evidence
which I shall deal with later) and the evidence of Rossouw in
relation to the cash handed to him was such that the
Court should
reject it. In so far as defendant expects cheques drawn on
banking accounts to be matched with deposits this
is not necessary as
the evidence points to ongoing deposits and balances in these
accounts lying to the “credit” of
Harksen.
20.
Based on what I have said above I am
satisfied that the monies paid to the defendant in respect of rental
and other ancillary charges
were paid by Harksen and that they is no
reason to conclude that the monies did not belong to Harksen.
21.
Defendant’s further argument is that
even if the monies were that of Harksen it could not vests in
Harksen’s trustees
(the plaintiffs) because its origin is not
South African and Harksen was not domiciled in South Africa.
There was evidence
that most if not all of the monies paid to the
defendant pursuant to the lease agreement were monies which were
brought in from
outside of South African borders after Harksen’s
sequestration. Defendant argues that since these monies
emanated from
a foreign jurisdiction and after Harksen’s
sequestration the creditors in Harksen’s insolvent estate
cannot lay claim
thereto. This argument fails to appreciate the
very simple principle that once the money was brought within the
South African
border it was no longer in a foreign jurisdiction.
The fact that the funds were brought into this country from Germany
or
other countries after Harksen’s sequestration did not
insulate it from the provisions of s20(2)(b) of the Act. The origin
of the funds is for present purposes irrelevant. Once the monies were
brought into South Africa and Harksen took control of it
to the
extent that he exercised the right to do with the monies what he
pleased the monies became the property of the insolvent
estate and
the fact that he may not at the time been domiciled in this country
is therefore of no consequence. The monies received
by the defendant
in respect of rentals and other ancillary charges were thus property
belonging to Harksen’s estate as contemplated
by s23(2) of the
Act and vested with his trustees, the plaintiffs herein.
22.
As the monies paid to the defendant
constituted “property” in the insolvent estate of
Harksen, are the plaintiffs entitled
to recover this from the
defendant? The defendant states that his tenant was not Harksen but
the wife Jenette Harksen. Jenette
Harksen was the person who
concluded the lease agreement and that there was no impediment on her
from concluding such an agreement
and the payments received in
compliance of her obligation in terms of the lease agreement remained
payments received from Jenette
Harksen. If the payments emanated form
Harksen than the plaintiffs should seek to recover the monies from
Jenette Harksen so defendant
appears to argue, and not the
defendant. This argument may be of merit if it is found that
Jenette Harksen and not Harksen
was indeed the lessee. In this
respect the evidence of Jenette Harksen was clear. She said she
was not the lessee.
She had no intention to lease the bungalow
nor did she sign any lease agreement. The “written
agreement” presented
to this Court clearly displays that while
the lessee’s name is recorded as Jenette Harksen it was not
signed by her—this
was patently evident on perusal of the place
where she was required to sign. The document was in fact signed by
Harksen.
Defendant’s reliance on the fact that Jenette
Harksen dropped the envelop which contained the signed agreement at
the Accommodation
Shop CC cannot lead to the conclusion that she was
the lessee or that she was aware that she was entering into a lease
agreement
with the defendant to hire his bungalow. If
anything the correspondence between the Accommodation Shop CC and the
defendant
evinces the following:
22.1
The defendant was satisfied in having
Harksen as the l
lessee;
22.2
Before he would give occupation of the bungalow he required a written
lease agreement to be concluded;
22.3
He had no objection to one Studor signing the lease on behalf of
Harksen;
22.4
That when Studor failed to arrive in South Africa and the defendant
required the matter to be finalised,
the proposal by Harksen that his
wife sign the lease was not objected to.
23.
There is nothing
to indicate that Jenette Harksen was a new lessee
this notwithstanding defendant’s attempt to satisfy the court
that once
Jenette Harksen was proposed by Harksen, Harksen was no
longer a feature in the lease the agreement. I say this for the
following
reasons:
23.1
defendant knew that if Studer signed the lease he could do so as
Harksen’s “nominee”;
23.2
before agreeing to Studer signing as a nominee, the defendant
expressed disquiet to such an arrangement but
abandoned this line of
enquiry when informed by the Accommodation Shop CC that Studer was
signing the lease on behalf of Harksen
“
for
diplomatic reasons
”
;
23.3
that Jenette Harksen is proposed by Harksen not as a lessee but as
the person who would sign the lease in
the place of Studer, this was
the evidence of Ferguson who communicated with Harksen in respect of
the leasing of the defendant
’
s
bungalow;
23.4
that no checks or enquiries were made as to the creditworthiness of
Jenette Harksen when this was the standard
procedure and the
defendant who throughout his discussions with Accommodation Shop CC
sought to protect himself in the event of
litigation did not even
enquire if he was protected against Jenette Harksen;
23.5
the detailed discussions when agreeing to Harksen as a lessee were
totally absent with regard to Jenette
Harksen as a lessee so much so
that the clear indication on the signed lease agreement that
displayed that the lease was not signed
by Jenette Harksen seemed to
be overlooked by both the defendant and his agent Ferguson, of the
Accommodation Shop CC. An
addendum to the lease which similarly
indicated that it was not signed by Jenette Harksen was again
overlooked by the Accommodation
Shop CC and the defendant. The
addendum was signed on a different occasion to the lease.
24.
All the facts and circumstances point thereto that Jenette Harksen
simply replaced Studer
as a front for Harksen and that the
“
written
agreement
”
only reflected the name of
Jenette Harksen but that the lease agreement was in fact one between
Harksen and the defendant.
25.
The payments made to the defendant were therefore made pursuant to a
lease agreement between
the defendant and Harksen which agreement was
entered into by Harksen without the consent of his trustees.
Defendant however denies
that he is liable to repay the monies
received pursuant to the lease agreement because such monies did not
constitute disposal
of Harksen
’
s
property or the disposal did not affect Harksen
’
s
creditors. This argument is premised on the belief that since the
monies were brought into this country after Harksen
’
s
sequestration and from foreign countries and may have been
investments in some or other of Harksen
’
s
projects it could not utilised to liquidate debts owed to creditors
of his insolvent estate. The flaw in this argument is that
it fails
to take into account the import of s20 and s23 of the Act. These
sections specifically state what constitutes property
in the
insolvent estate after sequestration. Property which becomes that of
the insolvent estate includes a salary earned by the
insolvent from
his own labour. Therefore money earned or received by the insolvent
during the period of his insolvency constitutes
property which
becomes part of his estate and vests with his trustees.
26.
Defendant further argument is that the monies paid by Harksen is not
recoverable by the plaintiffs
because Harksen received valuable
consideration in return for the monies paid and which consideration
cannot be returned by the
plaintiffs. This argument is of no merit.
While the rental and charges levied in respect of the hire of the
bungalow was the normal
rental payable in respect of the property in
question it does not mean that the defendant is entitled to retain
the monies received
as rentals. It is always open to the trustees in
terms of the Act to ratify a contract entered into by an insolvent
without his
(trustee’s) consent. It is equally open to
the trustee not to be bound to a contract concluded by the insolvent
without
his consent and do this without providing any justification
for such action. I see no reason why a trustee should be called upon
to explain his refusal to ratify a contract entered into by the
insolvent without his consent when an insolvent is not entitled
to
enter such a contract in the first place. In so far as there is
an innocent party at the other end of the contract the
Act itself
provides sufficient safeguards for such an innocent party in terms of
s24 of the Act. In the present matter, however,
there was no reason
for the insolvent to hire the bungalow as he was already in
occupation of luxurious accommodation in one of
the more plush
suburbs in Cape Town. In the circumstances the plaintiffs are
entitled to claim repayment of the monies paid by
the defendant in
respect of rental for the bungalow although it cannot undo the
occupation enjoyed by the insolvent.
27.
Finally the defendant relies on the provisions of s24(1) of the Act
for refusing to repay the
monies received by him. S24(1) as recorded
earlier provides protection to a third party who has entered into a
contract with an
insolvent under sequestration but only if the third
party is able to prove that he had no grounds to suspect that the
contracting
party was an insolvent. In this regard I need to
reiterate that performance made by an insolvent in terms of an
agreement concluded
between the said insolvent while under
sequestration, without the consent of his trustee and a third party
and such performance
albeit for valuable consideration, may be
reclaimed by the trustee if the performance constitutes alienation of
any property of
the insolvent estate. As I have already found
that the monies paid to the defendant were the property of Harksen,
the fact
that Harksen may have received valuable consideration is
irrelevant. The Trustees are entitled to reclaim these monies unless
the
defendant can satisfy the Court that he had no reason whatsoever
to believe that Harksen was under a sequestration order when he
decided to hire his bungalow to Harksen or at the time he received
payment in respect of the aforesaid hire form Harksen.
28.
The defendant states that he had no reason to suspect let alone
believe that Harksen was insolvent
at any material time. In
support of this contention defendant refers to the following:
28.1
correspondence he received from Watson where she indicated that
Harksen was a conman but added that this
was a rumour based on
hearsay;
Watson indicated to him
that if the decision had been hers to let the bungalow she
would not hesitate to let it to Harksen,
as he was a model tenant;
28.2 he
was only prepared to allow Studer to sign the lease on behalf of
Harksen if a power of attorney had been
executed by Harksen in favour
of Studer;
28.3 he
was never informed, not even by the Accommodation Shop CC that
Harksen was an insolvent; and
28.4
representatives of the Accommodation Shop CC with whom he dealt,
themselves, were not aware that Harksen
was an insolvent.
29.
The above evidence is rather unconvincing when seen against the
background of an abundance
of signs pointing to the possibility and
probability that Harksen was an insolvent. More particularly
the following:
29.1
the defendant is informed that Harksen deliberately concealed his
identity when he hired the bungalow from
its previous owner Watson.
Not only did Harksen lie about his name but that he used Studer as a
front for that purpose;
29.2
the defendant was informed that Harksen had defrauded others for
millions and that the German government
was seeking his extradition
in earnest;
29.3
the defendant was informed that Harksen already had luxurious
accommodation in Constantia an upmarket suburb
within 30 minutes
drive from the bungalow;
29.4
that Harksen was prepared to hire the bungalow at its normal rental
of R25 000,00 per month and pay for a
full time maid and other
charges only to
“
use it over the
weekends;
”
29.5
the excuse given for Studer to sign the lease as a front for Harksen
which excuse was not questioned by the
defendant was that it was for
“
diplomatic reasons
”
;
29.6
when Studer failed to arrive Harksen simply informed Ferguson that
his wife would sign the lease in the place
and instead of Studer and
then signed the lease himself;
29.7
the defendant took care in sorting out issues dealing with the date
of commencement of the lease; the other
charges payable including the
maid
’
s salary and the issue dealing
with the satellite decoder yet appeared totally unconcerned about who
had actually signed the lease;
and
29.8
finally the defendant
’
s request that
Harksen give written authority for Studer to sign on his behalf, was
a request for a separate document and not a
request that same be made
part of the lease agreement.
All of this evidence
which I accept, points to a deliberate desire on the part of the
defendant not to establish the true position
with regard to Harksen.
30.
I have little doubt that in Harksen the defendant had thought he had
secured an ideal tenant
and he thus went about finalising the tenancy
in a manner that was both careful and deliberate. Careful when it
came to the terms
and conditions of the lease, deliberate when it
came to the tenant itself. The defendant was deliberate in not making
any real
enquiries about Harksen. The only enquiry was directed to
Watson who by her own admission had little knowledge about Harksen
and
she in any event was resident abroad. Despite being informed that
Harksen was a fraudster, a crook, a conman, someone who had stolen
millions from investors and being confronted with a refusal by this
man to sign a lease agreement himself, defendant’s failure
to
enquire about Harksen other than the superficial enquiry referred to
above displays on the part of the defendant a rather studied
lack of
curiosity. Any landlord would have made some serious attempt to
establish details about a possible tenant such as Harksen
given the
information recorded above. In addition it should also have
engendered some curiosity when being advised that Harksen
was already
in occupation of luxurious accommodation and sought to hire the
bungalow at not an unsubstantial monthly rental only
to use over
weekends! Furthermore Harksen’s acceptance of Ferguson’s
advise that Harksen required the lease to
be signed by a person other
then Harksen for “diplomatic reasons” could only mean
that there must have been some underlying
strategy for Harksen to
avoid signing the lease and the defendant was prepared to be party to
such strategy by his failure to seriously
raise any questions in that
respect. The only inference that can be drawn from the defendant’s
action or lack of it is that
defendant knew that any serious enquiry
about Harksen would lead to information that may evince an impediment
to letting the bungalow
to Harksen. The most obvious impediment
must be that Harksen is probably avoiding his creditors. For the
above reasons I
cannot be satisfied that the defendant had “no
reason to suspect” that Harksen was under a sequestration
order.
31.
Furthermore representatives of the Accommodation Shop CC who
administered the lease for
the defendant and were thus the
defendant’s agent gave evidence to the effect that it would not
be unreasonable to expect
that Harksen was an insolvent.
Evidence was that at least half of the population of Cape Town
believed Harksen to be an insolvent
because the newspapers and
magazines were awash with Harksen’s antics. Harksen had
become known as the millionaire
insolvent, whose home was repeatedly
raided by the Trustees and millions of rands were found on such
raids.
32.
On the balance of probabilities despite their denial I am satisfied
that those at the Accommodation
Shop CC who dealt with the defendant,
knew at all material times that Harksen was an insolvent. As
the Accommodation Shop
CC was the defendant’s agent its
knowledge of Harksen must be imputed to the defendant particularly
since it had a duty to
communicate this to the defendant. In any
event I believe that this was communicated by them to the defendant
although not in terms.
33.
I am therefore satisfied that the defendant has failed to discharge
the onus placed upon
him to prove that he had no reasonable grounds
to suspect that Harksen was an insolvent as provided in s24(1) of the
Act.
34.
In the circumstances I am satisfied that the plaintiffs are entitled
to the order they seek
which includes costs occasioned in the
employment a senior council and the costs occasioned in opposing the
application brought
by the defendant in terms of r33 (4).
35.
In the result I make the following order:
35.1
Defendant is to pay Plaintiffs the amount of R271 290,63 together
with interest thereon at the rate of 15.5%
from the date of judgment
to date of payment.
35.2
Defendant is to pay plaintiffs costs of suit which costs to include
the costs in employment of a senior council
and costs relative to the
application in terms of r33 (4).
WAGLAY AJ