About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Eastern Cape High Court, Gqeberha
SAFLII
>>
Databases
>>
South Africa: Eastern Cape High Court, Gqeberha
>>
2024
>>
[2024] ZAECQBHC 72
|
|
Bester N.O and Others v Vosloo (1497/2024) [2024] ZAECQBHC 72 (6 November 2024)
IN
THE HIGH COURT OF SOUTH AFRICA
(EASTERN
CAPE DIVISION, GQEBERHA)
Case
No: 1497/2024
Date
Heard: 12 September 2024
Date
Delivered: 06 November 2024
In
the matter between:
LAMBERTUS
VON WIELLIGH BESTER N.O.
FIRST PLAINTIFF
JOHNNY
BASSON N.O.
SECOND PLAINTIFF
OCTOX
(PTY) LTD (IN LIQUIDATION)
THIRD PLAINTIFF
CHRISTIAN
FINDLAY BESTER N.O.
FOURTH PLAINTIFF
LALIA
ESSOP N.O.
FIFTH PLAINTIFF
IMAGINA
(PTY) LTD (IN LIQUIDATION)
SIXTH PLAINTIFF
and
ORGIE
VOSLOO
DEFENDANT
JUDGMENT
MULLINS
AJ:
[1]
This is an application for summary judgment, which has its genesis in
the liquidation
of two companies, Octox (Pty) Ltd and Imagina (Pty)
Ltd, in the Western Cape High Court.
[1]
The First and Second Applicants are the liquidators of Octox and the
Fourth and Fifth Applicants of Imagina.
[2]
Alleging that the Defendant was the recipient of monies from a
“
ponzi-type investment scheme
”, more commonly
known as a pyramid scheme, on 24 April 2024 the liquidators of the
Companies issued summons against the Defendant
claiming the following
relief:
“
WHEREFORE the
First and Second Plaintiffs
[2]
claim:
(a)
An order setting aside the dispositions in terms of Section 26 read
with
Section 32 of the Insolvency Act;
(b)
An order declaring First and Second Plaintiffs to be entitled to
payment
of the amount of R398,146.20;
(c)
Payment of the amount of R398,146.20;
(d)
Interest on the said sum at a rate and from a date which the court
deems
just in terms of the provisions of
Section 2A(5)
of the
Prescribed Rate of Interest Act, No. 55 of 1975
; alternatively a
temporae morae
in terms of the provisions of the
Prescribed
Rate of Interest Act No. 55 of 1975
;
(e)
Costs of suit;
(f)
Further and/or alternative relief.
WHEREFORE, and in the
alternative to the First and Second Plaintiffs’ claims, Fourth
and Fifth Plaintiffs’ claim:
(g)
An order setting aside the dispositions in terms of
Section 26
read
with Section 32 of the Insolvency Act;
(h)
An order declaring First and Second Plaintiffs to be entitled to
payment
of the amount of R398,146.20;
(i)
Payment of the amount of R398,146.20;
(j)
Interest on the said sum at the prescribed rate a
temporae morae
from date of judgment to date of payment;
(k)
Costs of suit;
(l)
Further and/or alternative relief.”
[3]
The Defendant defended the action on the merits and, in addition,
took two special
pleas, namely, prescription and lack of
locus
standi.
[4]
As a result of the plea the First to Third Plaintiffs
[3]
applied for summary judgment, the relief claimed being as set out in
(a) to (e) above, the claim for interest (d) being the alternative
option.
[5]
The Defendant opposed the application for summary judgment, raising
the same defences
as contained in the plea, plus taking an additional
point that the application is brought in the name of the First to
Third Plaintiffs
only (the liquidators of Imagina not being cited).
The late filing of a confirmatory affidavit is also objected to and
on
this basis alone the Defendant submits that summary judgment
stands to be dismissed as there is no application before court.
[6]
As is so often the case when it comes to pyramid schemes (and illegal
investment schemes
in general) the manner in which the Companies
presented their investment model to the public was complicated and
confusing.
Fortunately, as a result of certain undisputed
allegations and certain admissions made in the Defendant’s plea
and opposing
affidavit it is not necessary to unravel this spider’s
web. Suffice it to record that it is admitted by the Defendant
that:
(a)
Pursuant to an investment agreement concluded with Imagina he paid
R240,000.00 into the
bank account of Octox;
(b)
Octox paid him out R638,146.20;
(c)
The scheme was unlawful;
(d)
He accordingly received R398,146.20 in excess of what he had invested
in the scheme.
[7]
In response to the allegations in the particulars of claim dealing
with the liquidation
of the Companies and the fraudulent nature
thereof the Defendant pleads “
no knowledge
” and
puts the Plaintiffs to the proof thereof.
[8]
However, in response to the allegation that the Defendant was one of
the investors
in the unlawful scheme which, as a result of the
unlawfulness thereof the agreements concluded with the Defendant were
void
ab initio,
the Defendant pleads:
“
The Defendant
pleads that he was an investor and admits that any agreement was void
ab
initio.
The
rest of the paragraph is not admitted and the Plaintiff is put to the
proof thereof.”
[4]
[9]
The Defendant pleaded that as the payments to him were based on
agreements that were
void
ab initio
the Plaintiffs are not
entitled to repayment and pleads further that the Plaintiff should
have summonsed him based on enrichment.
[10]
I turn now to the technical points raised by the Defendant. The
objection to the lateness
of the confirmatory affidavit can be
disposed of without difficulty. The founding affidavit, which
was attested to by the
Second Plaintiff was filed timeously, but due
to the fact that the First Plaintiff was abroad his confirmatory
affidavit was filed
a few days out of time. In paragraph 3 of
the founding affidavit the Second Plaintiff alleges that he is duly
authorised
to bring the application on the First Plaintiff’s
behalf. In response the Defendant merely “
notes
”
this allegation. In paragraph 6 the Second Defendant states
that as the First Plaintiff was in Spain at the time he
was unable to
file a confirmatory affidavit, but would do so on his return.
Again, in response the Defendant “
notes
” the
allegation.
[11]
Not only did the Second Applicant have the necessary authority to
represent the First Applicant,
the lateness of the First Applicant’s
confirmatory affidavit is fully explained. In addition, it does
no more than
confirm that the Second Applicant has his authorisation
to bring the summary judgment application, which the Defendant does
not
deny. Finally, the Defendant does not allege any prejudice,
nor is there any. In
SA
Metropolitan Lewensversekeringsmaatskappy Bpk v Louw NO
,
[5]
with regard to a failure to comply with the Rules the following was
stated (at 333H – 334D):
“
I have no doubt
that Rule 30(1) was intended as a procedure whereby a hindrance to
the future conducting of the litigation, whether
it is created
by a non-observance of what the Rules of Court intended or otherwise,
is removed. A party who takes a procedure
step which advances the
finalization of the case may not, unless he is unaware of the
irregularity, ask for the setting aside of
the relevant irregularity.
It may even be correct to infer that the situations which have
been regarded as beyond the scope
of Rule 30(1) were instances where
the relevant objection could be adequately raised at an appropriate
stage whilst the cause of
objection constituted no hindrance to the
ordinary course of the litigation process. Cf
Enslin
v Slabbert, Verster & Malherbe (Noord-Oos Kaap) (Edms) Bpk en 'n
Ander
1979
(2) SA 983 (O)
at 986D;
Boland
Construction Co (Pty) Ltd v Lewin
1977
(2) SA 506
(C)
at 508E. Even if this generalization
needs qualification, the exercise of the Court's discretion has been
consistently
led by the presence or absence of prejudice in relation
to the exercise of a party's procedural right or duty to respond to a
communication
received, or to the taking of a next step in the
sequence of permissible procedures to ripen the matter for
proper orderly
hearing.
Where
such prejudice is absent, a decision to set the irregular proceeding
aside will not be given. On the contrary, the irregularity
may be
overlooked.
Cf Herbstein and Van Winsen
The
Civil Practice of the Superior Courts in SA
3rd
ed at 386 and in particular the decisions in
Distins
Seed Cleaning and Packing Co (Pty) Ltd v Stuart Wholesalers
1954
(1) SA 283 (N)
;
Marais
v Century Insurance Co Ltd
1960
(3) SA 33
(W)
. In
Theron
v Haylett
1917
WLD 140
the Court, whilst emphasising the need for precision in
regard to a summons, said:
"the principle is
that unless the person on whom a summons is served can show he has
been prejudiced by formal defects the
summons should stand".
Such an approach would be
in accordance with the view that:
"objections to less
than perfect procedural steps should not be permitted, in the absence
of prejudice, to interfere with the
expeditious and, if possible,
inexpensive decision of cases on their real merits."
[Underlined for emphasis].
[12]
I should add that, in my view, the filing of a confirmatory affidavit
by the First Plaintiff
– which merely confirmed the Second
Plaintiff’s authority – was unnecessary.
[13]
In the circumstances there is no merit in the Defendant’s
contention that the late filing
of the confirmatory affidavit means
that there is no summary judgment application before the court.
Insofar as it is necessary,
the late filing thereof is
condoned.
[14]
Insofar as the objection to the application for summary judgment
being brought in the names of
the First and Second Plaintiffs only
(and the Third Plaintiff), it is not in dispute that although the
Defendant invested in Imagina,
the money he paid was to Octox and he
was refunded by Octox. The relief sought in the particular of
claim is framed in such
a way that either the First and Second
Plaintiffs (on behalf of Octox) or the Fourth and Fifth Plaintiffs
(on behalf of Imagina)
would be paid.
[15]
In the circumstances I am of the view that nothing turns on this
issue: Octox was a party
to an illegal scheme; Octox was the
recipient and payee of the monies: None of this is in dispute.
[16]
The Defendant also alleges that the claim has prescribed. The
basis for this defence is
the following:
(a)
Imagina and Octox were finally liquidated on 9 November 2020 and 22
January 2021 respectively;
(b)
The last payment to be received by the Defendant was on 18 November
2019;
(c)
Therefore summons should have been served on or before 18 November
2022.
[6]
It was, however,
served in April 2024.
[7]
(d)
As more than three years had elapsed since the last payment had been
received by the Defendant
the claimed had prescribed.
[17]
In both a replication to the Defendant’s plea and in the
founding affidavit the Plaintiffs
take issue with prescription.
They state:
(a)
The liquidators of Octox (the First and Second Plaintiffs) were
finally appointed on 3 June
2021; and/or
(b)
It was only at the second meeting of creditors on 27 August 2021 that
the liquidators of
Octox were granted the necessary authority to
institute legal proceedings. It was on this date that
prescription began to
run; and/or
(c)
The liquidators required time in which to investigate the matter and
only acquired
the requisite knowledge as envisaged in
section 12(3)
of the
Prescription Act, 68 of 1969
at a much later date.
[18]
Section 12(3) of the Prescription Act reads:
“
(3)
A debt shall not be deemed to be due until the creditor has knowledge
of the identity of the debtor
and of the facts from which the debt
arises: Provided that a creditor shall be deemed to have such
knowledge
if he could have acquired it by exercising reasonable
care
.” [Underlined for emphasis].
[19]
I will deal with the third contention first. According to the
replication the Plaintiffs
only acquired the requisite knowledge as
contemplated in section 12(3) “…
on conclusion of the
identification, forensic investigation into and reconciliations of
the transaction(s) of the defendant with
Octox, alternatively,
Imagina, during the course of 2023.”
[20]
The Plaintiffs do not elaborate as to what identification was
necessary, what the forensic investigation
consisted of and why the
reconciliation of the transactions took until August 2023 to
finalise. Bearing in mind that the
provisional appointment was
on 26 January 2021 and the final appointment on 3 June 2021 they
would have to do more than make bald
allegations that the matter was
being investigated. That prescription commenced running only in
August 2023 can be rejected.
[21]
The second contention is equally problematical. Taken to its
logical conclusion, if the
creditors never meet (for whatever reason)
prescription can never commence running. This argument must
also be rejected.
[22]
Fortunately for the Plaintiffs the first contention has merit.
Section 359(1)(a) of the
1973 Companies Act provides as follows:
“
359.
Legal proceedings suspended and attachments void. – (1) When
the Court has made an order for the winding-up
of a company or a
special resolution for the voluntary winding-up of a company has been
registered in terms of section 200-
(a)
all civil proceedings by or against the company concerned shall be
suspended until the appointment
of a liquidator;”
[23]
Ironically, in a very closely related matter Wille J stated the
following in
Bester
NO and Others v Massyn
:
[8]
“
[7]
The respondent contends and puts up a shield to the effect that any
portion of the applicant’s
claim, which related to payments
that were made to her, prior to the 4
th
of June 2018,
have since prescribed due to the effluxion of time.
[8]
The application for the liquidation of the third applicant was
presented to court
on the 30
th
of November 2020.
It is further trite in terms of the Companies Act, once a court has
made an order for the winding-up
of a company, all civil proceedings
by the company remain in abeyance and suspended until the appointment
of the liquidators of
the company, so liquidated.
[9]
Moreover, in terms of the
Prescription Act, a
debt shall not be
deemed to be due until the creditor has knowledge of the identity of
the debtor and of the facts from which the
debt arises. It is
trite law that prescription in respect of statutory claims in
liquidation can only start running from
the date of the appointment
of the liquidators and once the liquidators are appraised of all the
facts of the claim, or could reasonably
have been expected to have
known such facts.
[10]
The liquidators were provisionally appointed on the 16
th
of
October 2020 and finally on the 3
rd
of June 2021.
This application was launched and served on the 4
th
June
2021. The prescription defences are accordingly euthanized.”
[24]
The fact that the last payment to the Defendant occurred during 2019
is irrelevant. The
cause of action which the Plaintiffs rely on
is based on
section 26
, read with section 32, of the Insolvency Act,
which cause of action only arose on liquidation and, as already
stated, prescription
does not commence running until the liquidators’
appointment was made final.
[25]
The liquidators of Octox received their final appointment on 3 June
2021. Summons was served
on 26 April 2024, which is within the
three year period provided for in
section 11(f)
of the
Prescription
Act. Accordingly
I find that the claim against the Defendant
had not prescribed on the date upon which summons was served.
[26]
The final technical point taken by the Defendant is that because the
Plaintiffs have not proven
a claim
against
Octox they do not
have
locus standi
and any proceedings against the Defendant
are premature.
[27]
The Plaintiffs, who are the duly appointed liquidators of Octox,
represent that entities’
creditors, who comprise the
concursus
creditorum
. They step into the shoes of the directors of
Octox. It is their job to,
inter alia
, establish who is
indebted to Octox and who it is indebted to and to take whatever
steps they deem necessary to recover those debts,
where Octox is
owed, or to pay where Octox is found to be owing, or to dispute the
claim, as the case may be.
[28]
The liquidators’ function is to wind up the affairs of a
company. It is not their
function, and it is illogical to
suggest, that the Plaintiffs should have first proven a claim against
Octox before proceeding
against the Defendant. This point is,
likewise, without merit.
[29]
Although raised in passing in the plea, neither in his affidavit in
opposition to the application
for summary judgment nor in the heads
of argument is the enrichment issue raised by the Defendant.
Therefore no more need
be said in that regard. Suffice it to
state even if a claim based on unjustified enrichment was available
to the Plaintiffs
(and I express no view) that does not preclude the
claim based on
section 26.
[30]
I turn now to the merits of the Plaintiff’s claim. In
order to succeed with a claim
in accordance with section 26 of the
Insolvency Act the Plaintiffs must prove on a balance of
probabilities that the disposition
was made not for value, and:
(a)
if made more than two years prior to the liquidation it is proved
that immediately thereafter
the liabilities exceeded the assets; or
(b)
If within two years of the liquidation the beneficiary of the
disposition is unable to prove
that, immediately after the
disposition, the assets exceeded the liabilities.
[31]
There is a proviso to section 26 which neither party relied upon, and
is not relevant for present
purposes.
[32]
The effect of the two year cut-off date is that in the first scenario
the onus is on the Plaintiff
and in the second it is on the
Defendant.
[33]
In this regard the particulars of claim states that of the
R636,146.20 paid to the Defendant:
(a)
R466,633.40 was received more than two years prior to the
liquidation; and
(b)
R171,482.80 was received within two years of the liquidation.
[34]
The amount claimed, namely R397,146.20, is arrived at by subtracting
the payments to the Defendant
from his original “investment”
of R240,000.00.
[35]
The Defendant pleads as follows to these allegations:
“
The Defendant
admits that these monies were received and pleads that as these
payments were based on a void
ab
initio
agreement
the repayment is not enforceable. It is further pleaded that
the Defendant should have been summoned for enrichment.
[9]
The Defendant denies
being liable for any monies to the Plaintiffs and the Plaintiffs are
put to the proof thereof.”
[36]
Because of the conclusion I have come to the divided onus is of no
moment.
[37]
At the end of the day, on a careful analysis of the Defendant’s
case, as set out in his
plea and opposing affidavit, he does not
place anything in dispute or, at least, not seriously so. His
defences are either
technical or bad in law. The common cause
facts are that the Defendant received the sum of R398,146.20 in
excess of the amount
he invested in the illegal pyramid scheme.
[38]
In
Fourie
NO and Others v Edeling NO and Others
,
[10]
dealing with a pyramid scheme, the following was stated (at para
[18]):
“
[18]
A
disposition, it has been decided on more than one occasion, is not
made for value if the payment is illegal
.
Estate
Jager v Whittaker and Another
1944
AD 246
dealt with the payment of usurious interest. ‘No
obligation of any sort,’ said Watermeyer CJ at 251-52, ‘to
pay a higher rate of interest than that permitted by the Act can
arise from a promise to pay a higher rate, and it therefore follows
that such a promise is a mere nullity, and any payment of such a
higher rate in pursuance of such promise is in effect a donation,
or
disposition not made for value, and is consequently liable to be set
aside under sec.
26 of the Insolvency
Act.’ In
Rousseau
en Andere v Malan en ‘n Ander
1989
(2) SA 451
(C) at 459I-J this dictum was applied to illegal
commission payments from a scheme found to have been a lottery.
In
Visser
en ‘n ander v Rousseau en andere NNO
1990
(1) SA 139
(A)
where the operators of a pyramid scheme paid participants for a
useless product such payments were (at 154I–156F)
found to be
dispositions without value
.”
[Underlined for emphasis].
[39]
In the same judgment (at para [13]), the observation is made that:
“
The nature of the
scheme dictated its insolvency.”
[40]
Fourie v Edeling
dealt,
inter alia
, with a claim for
the repayment of what was referred to as the “
actual payment
of the accumulated gains
”, in other words the amount which
an investor received over and above his/her investment (paragraph
[19]). In the present
matter it is common cause that that
amount is R397,146.20.
[41]
The grounds upon which summary judgment may be granted are trite and
need not be rehashed here.
I am satisfied that the Defendant
does not have a
bona fide
defence to the Plaintiff’s
claim and that summary judgment should be granted.
[42]
Insofar as costs are concerned, the matter was rendered more involved
by the many defences raised
by the Defendant. Accordingly, I
intend to order counsel’s fees to be taxed on scale B.
[43]
The following order shall issue:
1.
The dispositions to the Defendant in terms of Section 26 read with
Section 32
of the
Insolvency Act, 24 of 1936
are hereby set aside.
2.
It is declared that the First and Second Plaintiff’s are
entitled to payment
of the amount of R398,146.20.
3.
The Defendant is hereby ordered to pay the First and Second
Plaintiffs the amount
of R398,146.20.
4.
Interest shall be payable on the amount referred to in paragraph 3
above
a
tempore morae
from the date of judgment to the
date of payment.
5.
The Defendant is to pay the costs of this application, and costs of
suit, in
terms of scale B of Uniform
Rule 67A
, read with
Rule 69.
NJ
MULLINS
ACTING
JUDGE IN THE HIGH COURT
DATE:
APPEARANCES:
Plaintiff:
Adv. J.A. Van Der Merwe SC
Attorneys: MOSTERT &
BOSMAN
4
th
Floor,
Madison Square,
Cnr Carl Cronje &
Tyger Falls Blvd
Tyger Falls, Tygervalley
BELLVILLE
c/o SCHOEMAN OOSTHUIZEN
INC.
167 Cape Road, Mill Park
GQEBERHA
Defendant:
Mr
S.B. Laubscher
Attorneys: STUART
LAUBSCHER INC.
12 Buckingham Road, Mill
Park
GQEBERHA
[1]
Which will be
referred to as “Octox”, “Imagina”
or the
“Companies”, depending on the context.
[2]
The
liquidators of Octox.
[3]
The reference to the Third Plaintiff (Octox) is unnecessary.
Nothing turns on this.
[4]
As the entire
paragraph is admitted what is not admitted is unclear.
[5]
1981 (4) SA
329 (A).
[6]
Actually 17
November 2022.
[7]
Actually 26
April 2024.
[8]
Bester N.O
and Others v Massyn (9530/2021)
[2021] ZAWCHC 204
(15 October 2021).
[9]
As already
alluded to, enrichment is no longer an issue.
[10]
[2005] 4 All SA 939
(SCA)