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[2020] ZASCA 174
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Bester and Others NNO v Gouws and Others (851/2019) [2020] ZASCA 174 (17 December 2020)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
Reportable
Case
no: 851/2019
In the matter
between:
LAMBERTUS VON
WIELLIGH BESTER NO
FIRST APPELLANT
RYNETTE PIETERS
NO
SECOND APPELLANT
BAREND PETERSON
NO
THIRD APPELLANT
(In their
capacities as joint trustees of the RVAF TRUST – RV IT
932/2004)
and
ANTON GOUWS
FIRST RESPONDENT
SCHALK W J
STEENKAMP
SECOND RESPONDENT
JOHAN
JOUBERT
THIRD RESPONDENT
SWARTLAND
MAKELAARS CC
FOURTH RESPONDENT
MARK
EISERMAN
FIFTH RESPONDENT
MARK ALEXANDER
INVESTMENTS CC
SIXTH RESPONDENT
JANNIE AUGUSTYN
SEVENTH RESPONDENT
ANDREA FREDERICKA
MOOLMAN
EIGHTH RESPONDENT
VAIDRO 172 CC
NINTH RESPONDENT
HENDRIK JANSE VAN
VUUREN
TENTH RESPONDENT
HENDRIK VAN
VUUREN MAKELAARS CC ELEVENTH
RESPONDENT
Neutral
citation:
Bester
and Others NNO v Gouws and Others
(851/2019)
[2020] ZASCA 174
(17 December 2020)
Coram:
PONNAN,
WALLIS, ZONDI and DLODLO JJA and WEINER AJA
Heard:
4
November 2020
Delivered:
This
judgment was handed down electronically by circulation to the
parties' representatives via email, publication on the Supreme
Court
of Appeal website and release to SAFLII. The date and time for
hand-down is deemed to be 10:00 am on 17 December 2020.
Summary:
Prescription
Act 68 of 1969
–
sections 12(1)
and
12
(3) – knowledge of
identity of debtor and basis of cause of action – when
knowledge acquired or deemed to have been
acquired through the
exercise of reasonable care.
ORDER
On
appeal from
:
Western Cape Division of the High Court, Cape Town (Meer J, sitting
as court of first instance):
The
appeal is dismissed with costs, including the costs occasioned by the
employment of two counsel,
save
that the costs of the preparation, perusal and copying of the record
shall be limited to 60% of the costs incurred in those
tasks.
JUDGMENT
Weiner AJA
(Ponnan, Wallis, Zondi and Dlodlo JJA concurring)
[1]
‘
If
something sounds too good to be true, it probably is.’ This
adage is particularly apt in situations where once hopeful
investors
are suddenly left with nothing, save for much remorse,
notwithstanding the extravagant returns promised. That is the
unfortunate lesson that investors in the RVAF Trust (the Trust)
learned from its demise and insolvency. Investors were promised
irresistible (but unsustainable) returns on their investment. The
Trust paid such returns for a period but when the predictable
collapse occurred, the total amount due to investors vastly exceeded
the total amount of money available.
[2]
This
judgment involves the more mundane question of whether claims,
brought by the trustees of the insolvent Trust to recover commissions
paid to brokers who solicited those investments, have prescribed. The
Western Cape Division of the High Court, Cape Town (Meer
J) held that
they had, and refused leave to appeal. This appeal is with the leave
of this court.
Background
[3]
From
the early 2000s, Mr Herman Pretorius began operating an investment
scheme (the scheme) through which he solicited investments
from the
public on a large scale. As part of the operation of the scheme, he
recruited a number of investment brokers (the brokers).
Together with
the brokers, he succeeded in enticing a considerable number of
investors to invest huge amounts in his scheme on
the basis that it
would yield returns far exceeding those achieved by conventional
established institutions. He promised returns
of between 14% and 25%
per annum.
[4]
These
promises were fulfilled during the early years of the scheme, and
both old and new investors appeared to have the utmost faith
in Mr
Pretorius and accepted the reported returns of the scheme at face
value. The funds raised by Mr Pretorius through his scheme
soon
escalated to approximately R200 million.
[5]
In
March 2004, Mr Pretorius created the Trust as part of an entity
styled the Abante Group (the Group). Mr Pretorius and Mr Eduard
Brand
were appointed as trustees of the Trust. It is common cause that the
Trust deed provided that a minimum of three trustees
were required
and that they had to act jointly in all events. It is also common
cause that Mr Pretorius took control of the Trust,
did not consult Mr
Brand on decisions, and operated the scheme on his own.
[6]
The
scheme was, however, a fraudulent and illegal pyramid style
investment scheme and the Trust was used as part of this fraudulent
Ponzi scheme. The scheme collapsed after its mastermind, Mr
Pretorius, killed his former business partner, Mr Williams and
committed
suicide on 26 July 2012. This incident triggered action by
investors against the Group, in particular the Trust. Investors began
clamouring for the return of their investments. These were not
forthcoming.
[7]
On 30
July 2012, Mr Morné Strydom, an investor, applied to
sequestrate the Trust. The provisional sequestration order was
granted on 1 August 2012. The appellants were appointed as
provisional trustees on 7 August 2012. On the same day, the Master
provided authority in terms of s 18(2) of the Insolvency Act 24 of
1936
[1]
(the Act) for the
provisional trustees to appoint attorneys to provide them with legal
advice. The Trust appointed Mostert &
Bosman Attorneys (MB). On
17 August 2012, the appellants also obtained an order granting them
the necessary power to institute
legal proceedings in terms of s
18(3) of the Act.
[2]
[8]
The
Trust was finally sequestrated on 3 September 2012. The appellants
were appointed final trustees on 23 October 2012. Summonses
were
instituted against the respondents on 9 November 2015, more than
three years later. The respondents are all brokers who introduced
investors to the scheme conducted by the Trust between October 2004
and June 2012. They received commission payments from the Trust
for
such referrals.
[9]
The
appellants, as trustees, instituted action against the respondents on
two bases: under the common law (on the basis of unjust
enrichment);
alternatively
,
under s 26 and s 32 of the Act. The appellants claimed that the
commissions that the respondents earned were repayable on the
basis
that:
(a)
at all
material times there were fewer than the minimum number of trustees
as specified in the trust deed holding office. The Trust
therefore
lacked capacity to make any payments to the respondents;
[3]
(b)
Mr
Pretorius acted unilaterally to the exclusion of his co-trustee, Mr
Brand;
(c)
The
trustees failed to exercise the powers in accordance with the trust
deed and the commission payments were made to the respondents
pursuant to the operation of an unlawful and fraudulent pyramid or
Ponzi type scheme;
(d)
In the
alternative, the payments were claimed on the basis that they were
impeachable transactions under s 32 of the Act (i.e. dispositions
without value).
[10]
The
respondents raised certain defences on the merits and two special
pleas of prescription. These pleas were heard separately by
the high
court in terms of rule 33(4) of the Uniform Rules of Court. The
separate actions against the brokers were consolidated
for the
purposes of the hearing and the case proceeded using the claim
against the tenth and eleventh respondents as the test case
applicable to all.
[11]
The
first prescription plea was that the appellants had, or should have
had the requisite knowledge under s 12(3) of the Prescription
Act 68
of 1969
[4]
(the
Prescription
Act) on
either 17 August 2012 (the date on which the appellants
obtained the order in terms of s 18(3) of the Act), or at the latest
on
23 October 2012, the date on which the appellants were appointed
as final trustees (the first prescription plea).
[12]
The
second prescription plea, raised in the alternative, and only in
respect of the common law enrichment claims, was that all of
the
debts arising from payments made to the respondents within three
years prior to the date of the Trust’s provisional
sequestration (i.e. before 1 August 2009) had prescribed. This plea
relates to portions of the claims against each of the respondents
(the second prescription plea). The basis for the plea was that each
payment made
sine
causa
gave
rise to a separate claim and that the running of prescription arose
when each payment was made.
[13]
The
appellants replicated to the first prescription plea by alleging
that:
(a)
they
had obtained authority to institute proceedings against the
respondents only at the second meeting of creditors on 14 June
2013;
and not in terms of the s 18(3) order on 17 August 2012; and
(b)
they
only acquired the requisite knowledge of the identities of the
respondents and the facts from which the individual claims against
the respondents arose, on conclusion of forensic investigations into
the reconciliation of the respondents’ transactions
with the
Trust, after August 2013.
[14]
In
regard to the second plea of prescription the appellants replicated
that:
(a)
at all
relevant times the Trust lacked capacity; and
(b)
the
knowledge of the individual trustees could not be ascribed to the
Trust because of the fraudulent role played by the controlling
trustee, Mr Pretorius.
[15]
The
court a quo found that the appellants obtained the necessary power to
institute proceedings in terms of the s 18(3) court order
on 17
August 2012. The appellants have not appealed that finding. Secondly,
it held that the appellants had, or could reasonably
have had, the
requisite knowledge to institute action against the respondents by 23
October 2012. The challenge to this finding
forms the basis of this
appeal. Having found as it did on the first prescription plea, the
court a quo did not make any findings
on the second prescription
plea.
[16]
The
appeal raises two issues: first, whether the appellants had actual or
deemed knowledge of all the facts necessary to institute
action
against the respondents by 23 October 2012; and second, if they did
not, whether the claim based on payments made before
1 August 2009
has prescribed. If the first prescription plea is upheld, the second
prescription plea becomes academic.
[17]
It is
common cause, or cannot reasonably be disputed, that the appellants
knew prior to 23 October 2012 that:
(a)
the
trust deed required three trustees;
(b)
only
two trustees had been issued with letters of authority;
(c)
Mr
Pretorius was the controlling mind of the Trust and took all
decisions to the exclusion of his co-trustee, Mr Brand;
(d)
the
trustees had not exercised their powers according to the trust deed;
(e)
the
investment scheme was a fraudulent Ponzi scheme;
(f)
the
Trust was insolvent from inception;
(g)
the
scheme was dependant, in part, on the participation of various
brokers/intermediaries, who had introduced their clients to the
scheme and had been paid commissions therefor.
[18]
This
knowledge to a large extent comprised the requisite facts upon which
the enrichment claim was based. The payment of commissions
to the
brokers was also the basis of the statutory claims.
[19]
The
appellants, however, claimed that, by 23 October 2012, they did not
have full knowledge of the following facts:
(a)
the
full amount paid to the respondents;
(b)
that
the sums were paid as commission;
(c)
that
the payments were made after commission statements had been issued.
(d)
that
the scheme was a Ponzi scheme and insolvent from the outset.
[20]
This
last contention was belied by the affidavits deposed to in the
sequestration application and various subsequent proceedings.
The
founding affidavit in the sequestration proceedings was deposed to by
a partner in MB and he said unequivocally that the liabilities
of the
Trust by far exceeded the assets. The receipt of claims from
investors wishing to withdraw their funds and the inability
to
satisfy their claims would have confirmed that. On no less than three
occasions Ms Pieters, the second appellant deposed to
affidavits in
which she described the scheme as a pyramid scheme.
[5]
[21]
It was
suggested that this did not satisfy the requirements for actual
knowledge of facts as discussed in
Gore
,
[6]
but it clearly did. In
Gore
it
was held that for the purposes of prescription, knowledge extends to
a conviction or belief that is engendered by or inferred
from
attendant circumstances. The appellants may not have been 100 percent
certain, but they believed on the basis of all the information
in
their possession, which was considerable, that this was a pyramid
scheme and that it had always been insolvent. That was sufficient
knowledge of these facts.
Chronology
of events
[22]
The
chronology of events presented by the appellants at the trial was
accepted by the respondents. This chronology was also succinctly
laid
out by the judge in the court a quo.
[23]
The
appellants had access to the Group premises from 8 August 2012. They
soon became aware that the files, relating to the brokers
and the
commissions earned by them, were kept by Ms Monica Goodman in a
cabinet behind her desk in the reception area at the Group
premises.
There were some documents relating to the brokers which had been
archived in boxes which were kept in a room behind the
reception
area.
[24]
When
the appellants began their investigations on 8 August 2012, they were
assisted by employees of the Trust and/or the Group.
Mr Brand, as a
co-trustee, (although apparently not involved in the fraudulent
conduct of the scheme) was aware of the scheme and
the parties who
were involved in it, including the brokers. On 12 August 2012, the
services of majority of the staff of the Trust
were terminated save
for Mr Brand, Ms Swart (who was Mr Pretorius’s personal
assistant), Ms Swanepoel, and Ms Goodman. Ms
Goodman remained at the
Group’s premises until 17 August 2012.
[25]
The
appellants appointed MB as lawyers
[7]
and BGR de Jager Accountants (the auditors) to assist in the
investigation of the affairs of the Trust and other related entities.
In mid-August 2012, they requested an analysis of payments made from
the Trust to other entities within the Abante group, and to
other
accounts held by Mr Pretorius and/or his family members. Mr
Bezuidenhout, who was working with the auditors, was charged
with a
forensic investigation on the financial affairs of the Trust with
initial focus on the SECA trust (SECA), the Trading Alpha
trust
(TAT), the Abante trust, Mr Pretorius, and the companies related to
him.
[26]
The
auditors were mandated to conduct investigations on the substantial
amounts paid out from the Trust and to determine the routes
of the
payments via the financial institutions. Nedbank and Standard Bank
were requested to confirm and verify account details
of approximately
39 entities/trusts and personal accounts of Mr Pretorius and his
family, and to furnish the appellants with
such documents for the
purposes of the investigation.
[27]
From 8
August 2012 to December 2012, the appellants’ requested the
auditors to prioritise the myriad of inter-group transactions
between
the entities within the Group. Over this period, several of these
entities were sequestrated or liquidated. An Anton Piller
order was
obtained on 27 September 2012 to obtain documents. An
anti-dissipation interdict was obtained against several of these
entities on 9 October 2012.
[28]
In
claiming that they could not reasonably have acquired knowledge of
the identity of the brokers and the facts from which their
claims
against the brokers arose, the appellants relied on the complexity of
the insolvent estate of the Trust. They stated that
they were
required to investigate more than fifty entities, in which Mr
Pretorius was involved, and the inter-group transfers of
monies both
locally and internationally between these entities. Over R2 billion
had been paid into the Standard Bank and Nedbank
accounts, which they
were obliged to reconcile through forensic investigations. To deal
with the complexity, the appellants obtained
two forensic reports
detailing the fraudulent nature of the scheme, the state of solvency
of the Trust, and the date that each
payment was made by the Trust
for the purposes of claims under the Act.
[29]
The
investors’ claims and the inter-group transfers were
prioritised by the appellants. There was no investigation into the
claims against the brokers during 2012. On 28 January 2013, the
auditors requested a meeting with the appellants to discuss the
investigations of the brokers.
[30]
On 25
February 2013, the appellants requested the auditors to prepare
schedules to reflect the commission payments that the brokers
received from the Trust and also the contracts concluded with the
brokers in terms of which the commissions were paid. The auditors
confirmed on the following day that they had perused the broker
files. They could not find any contracts in the files. However,
the
files contained statements and proof of payment of commissions to
each of the brokers. According to the auditors, the files
relating to
the brokers were, in some instances, incomplete and they were not in
chronological order. They also stated that they
only received the
missing bank statements from Nedbank on 18 March 2013.
[31]
In
December 2013, MB followed up on the previous correspondence of
February 2013 in relation to the schedules of the brokers’
commission, to enable them to address letters of demand to the
brokers for the repayment of the commissions and to issue subpoenas
for the insolvency enquiry. By 11 February 2014, the broker files
were returned to MB with the requisite details relating to the
claim
against each broker. From the contents of the brokers’ files,
schedules were prepared by the auditors which contained
a summary of
each claim against each broker. These were attached to subpoenas
issued to brokers to attend the insolvency enquiry
in April 2014.
Those schedules were utilised by the appellants to compile the
annexures to the particulars of claim in the present
action.
[32]
The
appellants contended that the findings by the court a quo failed to
recognise that the appellants’ actions fell to be
examined
against the duties and obligations required of provisional trustees
in the context of the sequestration of an extensive
and potentially
fraudulent investment scheme. They submitted that the court a quo’s
conclusion implied that the appellants
should have isolated and
prioritised the 37 broker files amongst the many thousands of files,
and targeted them first in the course
of the administration of the
estate. This, according to the appellants, ignored the scale of the
investigations required in the
affairs of an insolvent estate of this
complexity and nature. In order to evaluate these submissions, an
analysis of the evidence
presented at the trial is necessary.
Evidence
[33]
Mr
Janse van Vuuren (the tenth respondent) and Ms Goodman testified for
the respondents. Mr van Vuuren’s evidence was that
he would get
commission statements every month from the Trust. Ms Goodman dealt
with all broker related enquiries and Mr Brand
dealt with the
situation when claw-back payments were deducted.
[8]
From Mr van Vuuren’s evidence, it is clear that his file
contained a commission statement, a cheque and deposit slip for
every
entry on Annexure “E” to the particulars of claim, save
for one.
[34]
Ms
Goodman took over the responsibility of maintaining the brokers’
files from November 2008. She testified that if anyone
needed to know
how much commission any broker received, they only needed to look at
the broker files or the archive files containing
historic
information. The documents contained in the files relating to each
broker included one or more of the following: a deposit
slip, a
cheque, and/or a commission statement to evidence each payment made
to the particular broker. She and/or Mr Brand and/or
the other
employees of the Trust, could have assisted the appellants to find
any documentation required. The appellants did not
seek Ms Goodman’s
assistance in this regard – either whilst she was at the
Group’s premises in August 2012, or
when she returned to work
for them in February 2013.
[35]
Mr
Bester (the first appellant), Mr Bezuidenhout (the auditor), Mr
Brand, and Mr du Toit (the attorney of MB, dealing with the estate)
testified for the appellants. Mr Bester stated that, as
provisional trustees (as opposed to finally appointed trustees) the
immediate work required was to safeguard assets and prevent the
dissipation of funds. It was not possible to deal with the claims
against the brokers until early 2013, because they were concentrating
on and prioritising other claims. He confirmed that the investigation
into the 37 brokers’ files was not an insurmountable task, and
when undertaken, it took a relatively short time to be completed.
Mr
Bester knew from the outset that the Trust had used brokers to
procure the investments. He conceded that whilst examining the
bank
statements for inter-group transactions in August 2012, the auditors
could simultaneously have accessed the payments made
to the brokers.
[36]
Mr
Bezuidenhout, the auditor appointed by the appellants, consulted with
Mr Brand, Ms Swanepoel, Ms Swart and Ms Pieters at the
Group’s
premises. Ms Goodman was also there. He did not enquire from any of
them as to the brokers’ files, which he
conceded he could have
done. He received bank statements from Standard Bank and an
incomplete set from Nedbank. They showed all
monies paid out by the
Trust, including amounts paid to the brokers. Mr Bezuidenhout was
working with five clerks. They prioritised
the inter-group transfers.
He conceded that, even without the full set of bank statements, there
were commission statements, cheques,
and deposit slips in the broker
files, which could have been reconciled and utilised to make the
claims against the brokers. Mr
Bezuidenhout conceded further that he
could have complied a schedule, similar to that attached to the
particulars of claim as Annexure
“E”, from the documents
in the broker files without a forensic investigation. In the case of
Mr van Vuuren, it would
have taken him approximately two hours to do
his.
[37]
Mr
Brand was fully aware of where the brokers’ files were kept and
that they contained the details of the brokers and the
commissions
paid to them. He knew many of the brokers personally and had their
email addresses. If asked, he could have pointed
out the brokers’
files and the archived files. He stated that he would have been able
to trace all the brokers quite easily
– if he would have been
asked.
[38]
Mr du
Toit, a partner of MB, who was the attorney charged with the
investigation into the Trust, testified that shortly after being
appointed as the appellants’ attorneys, he consulted with them
and Mr Pieters from Duvenhage and Cilliers attorneys, who
were also
assisting with the estate. The initial focus was on the recovery of
assets belonging to the Trust and not the brokers.
Mr du Toit
conceded that all the questions which Mr Brand was asked at the
insolvency enquiry in February 2013, relating to the
broker files
could have been asked of Mr Brand in August 2012. Had he enquired
from Mr Brand or Ms Goodman about the commission
claims of the
brokers, when first appointed in August 2012, that information would
have been forthcoming.
Mr
du Toit stated quite frankly that the information was all there in
the files and had he, the trustees or the auditors opened
the files
and looked at their contents, the information would have been
available to them.
[39]
As
will appear from what had been stated above, the respondents did not
rely upon actual knowledge. They contended that, through
the exercise
of reasonable care, the appellants could have established the
requisite facts in order to institute action.
The
Law
[40]
In
terms of
s 12(1)
of the
Prescription Act, prescription
begins to run
as soon as the debt is due. A debt is due when it is immediately
claimable or recoverable. If the debtor has knowledge
of the identity
of the debtor and of the facts from which the debt arises, the debt
is deemed to be due, as by that stage, the
creditor acquires a
complete cause of action for the recovery of the debt. In terms of
s
12(3)
of the
Prescription Act, the
creditor is deemed to have
knowledge of the identity of the debtor and of the facts from which
the debt arises if it could have
been acquired by the exercise of
reasonable care.
[9]
[41]
The
knowledge required relates to the factual ingredients giving rise to
the debt and not knowledge of the legal conclusions.
[10]
The requisites of such knowledge were described in
Gore.
[11]
Whilst mere ‘opinion and supposition’ is not
sufficient,
[12]
a belief that
is inferred from the circumstances of the case, as well as from
information received from employees and/or agents,
or those assisting
the trustees, can be imputed to the trustees.
[42]
Prescription
starts to run when the creditor has knowledge of the requisite facts
(whether actual or imputed) or when the creditor
is deemed to have
the requisite knowledge of the facts underlying the action. As stated
in
Gore
:
‘
The
running of prescription is not postponed until the creditor becomes
aware of the full extent of its legal rights, nor until
the creditor
has evidence that would enable it to prove the case comfortably.’
[13]
The
creditor is also not permitted to postpone prescription through his
own inaction. As stated by Van den Heever J in
Benson
and Another v Walters and Others
[14]
:
‘
Our
Courts have consistently held that a creditor is not able by his own
conduct to postpone the commencement of prescription.’
This
approach was confirmed in
The
Master v I L, Back & Co Ltd
where Galgut AJA stated:
‘
A
creditor's right of action is not postponed until such time as he
may, either in his wisdom or when he thinks he ought to, bestir
himself.
’
[15]
[43]
In
regard to the requirement of reasonable care, this court stated in
Drennan
Maud & Partners v Pennington Town Board
[16]
:
‘…
[T]he
requirement “exercising reasonable care” requires
diligence not only in the ascertainment of the facts underlying
the
debt, but also in relation to the evaluation and significance of
those facts. This means that the creditor is deemed to have
the
requisite knowledge if a reasonable person in his position would have
deduced the identity of the debtor and the facts from
which the debt
arises.’
[44]
The
principles relating to prescription are applicable to trustees and
liquidators. The respondents contended that the appellants
should not
be treated any differently to any other creditor which, in terms of
Prescription Act, needs
to institute the action within three years of
the debt being due.
[17]
The
appellants did not suggest otherwise.
Discussion
[45]
The
appellants’ approach was not that the facts on which these
claims were based were inaccessible or hard to ascertain. It
was
that, given the size and complexity of the insolvency process in
regard to the Trust, their failure to investigate the claims
did not
amount to a failure to exercise reasonable care to acquire knowledge
of the identity of the brokers and the facts giving
rise to the
claims against them.
[46]
The
judge did not make any adverse credibility findings against Mr Bester
or Messrs Bezuidenhout and Du Toit concerning their actual
state of
knowledge. All conceded that they focussed on other matters and did
not come to deal with the brokers and the payment
of commissions
until 2013. As a result, it was only in 2013 that they acquired
actual knowledge of the details of these claims
and the identity of
the brokers. The question is whether by the exercise of reasonable
care this would have been ascertained at
an earlier stage prior to 23
October 2012.
[47]
In
regard to knowledge which might have been obtained from Mr Brand, Ms
Goodman, Ms Swanepoel or Ms Swart, the appellants contended
that, in
order for that knowledge to be imputed to them, the knowledge would
have to have been acquired by the agent in the course
of their
employment with the principal, and a duty must rest upon the agent to
communicate the information to his principal.
[18]
These persons undoubtedly had actual knowledge of the existence and
identity of the brokers and the whereabouts of detailed
information
concerning the commissions paid to them. The question is whether the
appellants should, in the exercise of reasonable
care have asked them
to provide that information in order to consider whether a claim for
recovery should be made. The question
must be answered in the
affirmative. The fact is that they did not do so for the simple
reason that they prioritised other issues.
[48]
The
prioritisation of other issues cannot be a reason for not exercising
reasonable care to ascertain the facts giving rise to a
debt.
Trustees and liquidators cannot select the issues on which to
concentrate in their administration, secure in the knowledge
that a
plea of prescription could be defeated by a claim of ignorance
accompanied by the excuse that they were prioritising other
more
important matters. That would be contrary to the principle that a
creditor cannot by their own actions postpone the commencement
of the
running of prescription.
[49]
The
appellants were well aware that the funds invested in the Trust had
been secured largely through the efforts of brokers who
were paid
commissions. Given the amount of money involved those commissions
would on any basis be substantial. The claim chosen
as the test case
was for over
R5
million. They were aware for the reasons already given that these
funds had been invested in a pyramid scheme and that the entire
edifice had collapsed when Mr Pretorius committed suicide and the
Trust was almost immediately sequestrated. They knew, because
they
had the trust deed, that there were only two trustees, whereas three
were required, and Mr Brand had told them that effectively
Mr
Pretorius was the sole decision-maker. Ms Pieters confirmed in an
affidavit that the appellants were aware of the provisions
of the Act
dealing with the dispositions and the potential to set these aside.
The commissions were manifestly dispositions by
the Trust.
[50]
These
facts were all known to the appellants and constituted the facts from
which the debts arose, whether the legal basis was a
condictio
sine causa
or
the dispositions under the Act. The appellants and those assisting
them had not opened the brokers' files; thus they did not
know the
names of the brokers or how much had been paid to each of them. The
moment the files were opened and examined, this information
was
available.
[51]
The
appellants’ explanation that they prioritised other matters
demonstrates that they could not show that they exercised
reasonable
care in ascertaining the information giving rise to the claims and
the identity of the debtors. It, in fact, shows a
deliberate decision
not to investigate and ascertain the existence of relatively obvious
claims. They chose to run a risk of not
being able to commence
proceedings timeously. As it happens in two cases to which we were
referred they did sue timeously and succeeded.
They simply did not do
that in relation to these claims.
[52]
The
appeal involves, in the main, a challenge to the factual findings
made by the court a quo, namely that the court erred in its
assessment of the facts in concluding that the appellants could
reasonably have established, by 23 October 2012, that which was
required in order to institute action against the respondents. It has
been held by this Court that:
‘
The
approach to be adopted by a court of appeal when it deals with the
factual findings of a trial court is trite. A court of appeal
will
not disturb the factual findings of a trial court unless the latter
had committed a material misdirection. Where there has
been no
misdirection on fact by the trial Judge, the presumption is that his
conclusion is correct. The appeal court will only
reverse it where it
is convinced that it is wrong. In such a case, if the appeal court is
merely left in doubt as to the correctness
of the conclusion, then it
will uphold it. This court in
S
v Naidoo
&
others
reiterated this principle as follows:
“
In
the final analysis, a court of appeal does not overturn a trial
Court’s findings of fact unless they are shown to be vitiated
by material misdirection or are shown by the record to be
wrong.”’
[19]
(Footnotes omitted)
.
[53]
The
appellants did not point to any factual error in the judge's
reasoning. Instead they said that by not placing sufficient weight
on
their evidence concerning the complexity of the process of winding up
the Trust, the judge imposed an unreasonable burden on
them in
relation to the ascertainment of the facts giving rise to the claims
against the brokers. The conclusion reached by the
court a quo and
the findings of fact relied upon cannot be faulted. The appeal must
accordingly fail.
Costs
relating to the record
[54]
It is
unfortunately necessary to make certain comments about the record in
this matter. The record ran to some 1870 pages, a fair
portion of
which, as counsel conceded at the hearing of the matter, was
irrelevant to the issues in the appeal. In the appellant’s
practice note, the Court was advised that it was necessary to read
the entire record. The respondents, in their practice note stated
that the parties had attempted to restrict the record to that which
was relevant to the appeal. Both these statements were inaccurate.
This practice is not confined to the present appeal. The rules of
this Court, relating to the preparation of records by attorneys
and
the practice directive relating to the filing of a practice note by
counsel, specifying the portions of the record that counsel
regards
as necessary to be read, continue to be ignored.
[55]
In
Van
Aardt v Galway
[20]
this Court dealt with the persistent problem of legal representatives
failure to comply with the rules of this Court. Wallis JA
held:
‘
[34] Turning to the practice note, rule 10A(ix)
enjoins counsel to provide a list reflecting those parts of the
record that
in the opinion of counsel
are
necessary
for
the determination of the appeal. The purpose of this provision was
spelled out by Harms JA in
Caterham Car Sales
& Coachworks Ltd v Birkin Cars (Pty) Ltd and Another
[21]
:
“
The
object of the note is essentially twofold. First, it enables the
Chief Justice in settling the roll to estimate how much reading
matter is to be allocated to a particular Judge. Second, it assists
Judges in preparing the appeal without wasting time and energy
in
reading irrelevant matter. Unless practitioners comply with the
spirit of this requirement, the objects are frustrated and this
in
turn leads to a longer waiting time for other matters.” …
[35] …
[36] The practice note requires a statement of counsel’s
view, in the form of a list, of those parts of the record that need
to be considered in order to decide the case. The fact that his or
her opponent may disagree is neither here nor there. That will
emerge
from the opponent’s practice note. In addition, the list is to
be confined to those parts of the record that are ‘necessary’
for that purpose. ... The list should include only those parts of the
record that counsel is likely to refer to either in support
for the
argument, or for rebuttal, or to highlight flaws in the judgment
appealed against…’
[56]
In
the present matter, it appears that it was unnecessary for this Court
to read approximately 40% of the record.
In
my view, 40% of
the
costs incurred in the
preparation,
perusal and copying of the record should be disallowed. Despite
previous admonitions by this court, the rules continue
to be ignored.
It is hoped that these remarks, may serve as a warning to
practitioners in future proceedings.
[57]
The
following order is made:
The
appeal is dismissed with costs, including the costs occasioned by the
employment of two counsel,
save
that the costs of the preparation, perusal and copying of the record
shall be limited to 60% of the costs incurred in those
tasks.
______________________
WEINER AJA
ACTING
JUDGE OF APPEAL
APPEARANCES
For appellant: JA
Van Der Merwe SC (with him BC Wharton)
Instructed by:
Mostert & Bosman Attorneys, Bellville
Phatshoane
Henney Attorneys, Bloemfontein.
For Respondents: RGL
Stelzner SC (with him M Daling)
Instructed by: Laas
& Scholtz Incorporated, Durbanville
Webbers
Attorneys, Bloemfontein.
[1]
Section 18 of the Act provides:
‘
Appointment
of provisional trustee by Master
(1)
…
(2) At any time
before the meeting of the creditors of an insolvent estate in terms
of section 40, the Master may, subject to
the provisions of
subsection (3) of this section, give such directions to the
provisional trustee as could be given to a trustee
by the creditors
at a meeting of creditors.’
[2]
Section
18(3) provides:
A provisional
trustee shall have the powers and the duties of a trustee, as
provided in this Act, except that without the authority
of the court
or for the purpose of obtaining such authority he shall not bring or
defend any legal proceedings and that without
the authority of the
court or Master he shall not sell any property belonging to the
estate in question. Such sale shall furthermore
be after such
notices and subject to such conditions as the Master may direct.’
[3]
Land
and Agricultural Bank of South Africa v Parker and others
2005
(2) SA 77
(SCA)
[4]
Section 12
of the
Prescription Act provides
that:
(1) Subject to the
provisions of subsections (2), (3), and (4), prescription shall
commence to run as soon as the debt is due.
(2) …
(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.
[5]
In her affidavit of 22 August 2012, when applying for the
appellants’ powers to be extended in terms of
Rule 18(3)
, Ms
Pieters stated: ‘By virtue of the nature of the business
conducted by Pretorius it is clear that he conducted what
appears to
be a “pyramid scheme”. Such a scheme pays interest and
dividends to investors by the consumption of their
own capital. This
practice renders the “scheme” insolvent from the
outset’. There are various other affidavits
by one or more of
the appellants confirming this view (dated 18 September 2012, 9
October 2012, and 10 October 2012).
[6]
See
Minister
of Finance and Others v Gore NO
[2006]
ZASCA 98
;
2007 (1) SA 111
(SCA).
[7]
The
appellants also appointed two other firms of attorneys to assist
them in winding-up the estate.
[8]
If an investor withdrew their investment before it was repayable,
the broker’s commission was adjusted.
[9]
Road
Accident Fund and Another v Mdeyide
(CCT 10/10)
[2010] ZACC 18
;
2011 (1) BCLR 1
(CC) ;
2011 (2) SA 26
(CC) (30 September 2010) para 13 (citations omitted);
Standard
Bank of South Africa Ltd v Miracle Mile Investments 67 (Pty) Ltd and
Another
[2016] ZASCA 91
;
2017 (1) SA 185
(SCA) para 24, citing
Truter
and Another v Deysel
[2006] ZASCA 16
;
2006 (4) SA 168
(SCA) para 16.
[10]
Truter
v Deysel
(note
9 above).
Van
Staden v Fourie
1989
(3) SA 200 (A) at 216B-F.
[11]
Gore
NO
(note
6 above).
[12]
Gore
NO
(note
6 above) para 18.
[13]
See
Gore
NO (note 6 above)
with
reference to Van Staden v Fourie
1989 (3) SA 200
(A) at 216B-F and
Nedcor
Bank Bpk v Regering van die Republiek van Suid-Afrika
2001 (1) SA 987 (SCA) paras 11 and 13.
[14]
Benson
and Another v Walters and Others
1981 (4) SA 42
(C) at 49G-H, as quoted in
Uitenhage
Municipality v Molloy
[1997] ZASCA 112
;
1998
(2) SA 735
(SCA) at 742A–C.
[15]
The
Master v I L, Back & Co Ltd
1983
(1) SA 986
(A)
at 1005G-H.
[16]
Drennan
Maud & Partners v Pennington Town Board
[1998] ZASCA 29
;
1998
(3) SA 200
(SCA) at 209F–G.
[17]
Duet
and Magnum Financial Services CC (in liquidation) v Koster
(168/09)
[2010] ZASCA 34
(29 March
2010); 2010 (4) SA 499
(SCA);
Off-Beat
Holiday Club and Another v Sanbonani Holiday Spa Shareblock Ltd and
Others
2017
(5) SA 9
(CC) para 10;
Makate
v Vodacom Ltd
[2016] ZACC 13
;
2016 (4) SA 121
(CC) para 196.
[18]
Wilkins
v Potgieter NO and Another
1996
(4) SA 936
(T) at 939F-H.
[19]
Mkhize
v S
[2014] ZASCA 52
para 14 (Citations omitted).
[20]
Van
Aardt v Galway
2012
(2) SA 312 (SCA) paras 31-39.
[21]
Caterham
Car Sales & Coachworks Ltd v Birkin Cars (Pty) Ltd & another
[1998] ZASCA 44
;
1998
(3) SA 938
(SCA) para 36.