Gazit Properties (Pty) Ltd v Botha NO and Others (873/2010) [2011] ZASCA 199; 2012 (2) SA 306 (SCA) (23 November 2011)

Gazit Properties (Pty) Ltd v Botha NO and Others (873/2010) [2011] ZASCA 199; 2012 (2) SA 306 (SCA) (23 November 2011)

The Supreme Court of Appeal held that the payments made by Malokiba to Gazit Properties were made in fulfilment of valid loan agreements, in accordance with their terms and by due date. The court found that the illegality of Malokiba's business model, specifically its contravention of the Banks Act, did not affect the ordinary course of business analysis under section 29(1) of the Insolvency Act. The contractual obligation to repay the loans remained valid and enforceable, and payment in terms of those contracts constituted a disposition in the ordinary course of business. The court rejected the liquidators' arguments that the source of repayment funds or the alleged misrepresentation to...

Citation
[2011] ZASCA 199
Parties
Appellant: Gazit Properties (Pty) Ltd; Respondent: Deon Marius Botha N.O.; Respondent: Izak Johannes Boshoff N.O.; Respondent: Wergele Stafford Mackenzie N.O.
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
23 November 2011
Case Number
873/2010
Procedural Posture
Civil Appeal / Appeal From First Instance Judgment
Outcome
Appeal upheld; order of the court below set aside and substituted with dismissal of the plaintiff's claim with costs.
Judges
Harms, Heher, Snyders, Shongwe, Majiedt
Legal Topics
Insolvency Act Section 29, Ordinary Course of Business, Unlawful Banking, Preferential Payment, Liquidation, Contractual Obligation
Land and Property Banking and Finance Civil Procedure Insolvency Act Section 29 Ordinary Course of Business Unlawful Banking Preferential Payment Liquidation +1 more

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Parties

Gazit Properties (Pty) Ltd

Appellant

Deon Marius Botha N.O.

Respondent

Izak Johannes Boshoff N.O.

Respondent

Wergele Stafford Mackenzie N.O.

Respondent

Procedural Posture

Civil Appeal / Appeal From First Instance Judgment

Legal Issues

  1. 1 Whether payments made by Malokiba to Gazit Properties within six months before liquidation were made in the ordinary course of business under section 29(1) of the Insolvency Act.
  2. 2 Whether the illegality of Malokiba's business tainted the loan agreements and affected the ordinary course of business analysis.
  3. 3 Whether the source of funds used for repayment is relevant to the disposition inquiry under section 29(1).

Ratio Decidendi

The Supreme Court of Appeal held that the payments made by Malokiba to Gazit Properties were made in fulfilment of valid loan agreements, in accordance with their terms and by due date. The court found that the illegality of Malokiba's business model, specifically its contravention of the Banks Act, did not affect the ordinary course of business analysis under section 29(1) of the Insolvency Act. The contractual obligation to repay the loans remained valid and enforceable, and payment in terms of those contracts constituted a disposition in the ordinary course of business. The court rejected the liquidators' arguments that the source of repayment funds or the alleged misrepresentation to...

Court Disposition

Appeal upheld; order of the court below set aside and substituted with dismissal of the plaintiff's claim with costs.

Orders

  • The appeal is upheld with costs.
  • The order of the court below is set aside and substituted with: 'The plaintiff's claim is dismissed with costs.'