Bailey N.O. and Another v Enderstein Van Der Merwe Inc (9400/2022) [2023] ZAWCHC 251 (12 October 2023)

Bailey N.O. and Another v Enderstein Van Der Merwe Inc (9400/2022) [2023] ZAWCHC 251 (12 October 2023)

The court found that the Laumas Trust, as an insolvent third party, made payments to the respondent attorneys for legal fees incurred by Mr Massyn and related entities, not for the trust's benefit. The payments were not properly authorised under the trust deed and were made when the trust was insolvent. The respondent failed to prove that the trust's assets exceeded its liabilities immediately after each payment. The court held that the dispositions were not made for value and should be set aside under section 26(1)(b) of the Insolvency Act. The respondent, having benefited from the payments, was not a preferent creditor and could not claim priority over other creditors such as Octox. The...

Citation
[2023] ZAWCHC 251
Parties
Applicant: Renee Bernice Bailey N.O.; Applicant: Aviwe Ntandazo Ndyamara N.O.; Respondent: Enderstein Van Der Merwe Inc
Court
Western Cape High Court, Cape Town
Jurisdiction
South Africa
Judgment Date
12 October 2023
Case Number
9400/2022
Procedural Posture
Review Application / Application for Setting Aside Dispositions Under Section 26(1)(b) of the Insolvency Act
Outcome
Application granted; the dispositions by the Laumas Trust to the respondent are set aside under section 26(1)(b) of the Insolvency Act.
Judges
Mantame
Legal Topics
Insolvency Act Section 26, Disposition Without Value, Trust Liability, Preferent Creditors, Ponzi Scheme Liquidation
Banking and Finance Civil Procedure Insolvency Act Section 26 Disposition Without Value Trust Liability Preferent Creditors Ponzi Scheme Liquidation

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Parties

Renee Bernice Bailey N.O.

Applicant

Aviwe Ntandazo Ndyamara N.O.

Applicant

Enderstein Van Der Merwe Inc

Respondent

Procedural Posture

Review Application / Application for Setting Aside Dispositions Under Section 26(1)(b) of the Insolvency Act

Legal Issues

  1. 1 Whether payments made by the Laumas Trust to the respondent attorneys constituted dispositions not made for value under section 26(1)(b) of the Insolvency Act.
  2. 2 Whether the Laumas Trust was insolvent at the time of the payments.
  3. 3 Whether the respondent, as beneficiary of the disposition, could prove that the trust's assets exceeded its liabilities immediately after each payment.

Ratio Decidendi

The court found that the Laumas Trust, as an insolvent third party, made payments to the respondent attorneys for legal fees incurred by Mr Massyn and related entities, not for the trust's benefit. The payments were not properly authorised under the trust deed and were made when the trust was insolvent. The respondent failed to prove that the trust's assets exceeded its liabilities immediately after each payment. The court held that the dispositions were not made for value and should be set aside under section 26(1)(b) of the Insolvency Act. The respondent, having benefited from the payments, was not a preferent creditor and could not claim priority over other creditors such as Octox. The...

Court Disposition

Application granted; the dispositions by the Laumas Trust to the respondent are set aside under section 26(1)(b) of the Insolvency Act.

Orders

  • The dispositions by the Laumas Trust to the respondent in the sum of R1 505 000.00 are set aside in terms of section 26(1)(b) of the Insolvency Act 24 of 1936.
  • The applicants are declared entitled to payment of R1 505 000.00 in terms of section 32 of the Insolvency Act.