Button N.O and Others v Akbur and Others (14600/2014) [2015] ZAKZDHC 84 (23 September 2015)

Button N.O and Others v Akbur and Others (14600/2014) [2015] ZAKZDHC 84 (23 September 2015)

The court found that the payments made by the Close Corporation to the First and/or Second Respondent within six months prior to liquidation were not made in the ordinary course of business, but rather constituted voidable preferences. The evidence showed that the Close Corporation had ceased trading, was insolvent, and that the payments were made to insiders, including the First Respondent and his alter ego, the Second Respondent, at a time when the major creditor was not paid. The Respondents failed to discharge the onus of proving the payments were made in the ordinary course of business, and the court inferred an intention to prefer from the surrounding circumstances. Disputes of fact...

Citation
[2015] ZAKZDHC 84
Parties
Applicant: Neil David Button N.O; Applicant: Kurt Robert Knoop N.O; Applicant: Surendra Naidoo N.O; Applicant: Ebrahim Aboobaker Moolla N.O; Respondent: Ashraf Akbur; Respondent: GSC Trading CC; Respondent: Deon Schaup N.O; Respondent: The Master of the High Court of South Africa (Kwazulu-Natal Division)
Court
Kwazulu-Natal High Court, Durban
Jurisdiction
South Africa
Judgment Date
23 September 2015
Case Number
14600/2014
Procedural Posture
Civil Application / Judgment on Opposed Motion
Outcome
Application granted; payments declared voidable preferences and Respondents ordered to repay amounts with interest and costs.
Judges
Mbatha
Legal Topics
Voidable Preference, Insolvency Act Section 29, Close Corporation Liquidation, Onus of Proof, Ordinary Course of Business, Collusive Dealing
Civil Procedure Commercial and Corporate Voidable Preference Insolvency Act Section 29 Close Corporation Liquidation Onus of Proof Ordinary Course of Business Collusive Dealing

Case Brief

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Parties

Neil David Button N.O

Applicant

Kurt Robert Knoop N.O

Applicant

Surendra Naidoo N.O

Applicant

Ebrahim Aboobaker Moolla N.O

Applicant

Ashraf Akbur

Respondent

GSC Trading CC

Respondent

Deon Schaup N.O

Respondent

The Master of the High Court of South Africa (Kwazulu-Natal Division)

Respondent

Procedural Posture

Civil Application / Judgment on Opposed Motion

Legal Issues

  1. 1 Whether payments made by the Close Corporation to the First and/or Second Respondent within six months preceding liquidation constitute voidable preferences under section 29 of the Insolvency Act.
  2. 2 Whether such payments were made in the ordinary course of business or with the intention to prefer certain creditors.
  3. 3 Whether the Respondents discharged the onus of proving the payments were made in the ordinary course of business.

Ratio Decidendi

The court found that the payments made by the Close Corporation to the First and/or Second Respondent within six months prior to liquidation were not made in the ordinary course of business, but rather constituted voidable preferences. The evidence showed that the Close Corporation had ceased trading, was insolvent, and that the payments were made to insiders, including the First Respondent and his alter ego, the Second Respondent, at a time when the major creditor was not paid. The Respondents failed to discharge the onus of proving the payments were made in the ordinary course of business, and the court inferred an intention to prefer from the surrounding circumstances. Disputes of fact...

Court Disposition

Application granted; payments declared voidable preferences and Respondents ordered to repay amounts with interest and costs.

Orders

  • The payments listed in paragraph 1.1 to 1.7, totalling R2,493,000.00, are declared voidable preferences under section 29 of the Insolvency Act.
  • The First Respondent, alternatively the Second Respondent, or both jointly and severally, are ordered to repay the amounts specified, together with interest at 9% per annum a tempore morae to date of payment.