Janse Van Rensburg and Another v Griffiths (2101/2002) [2014] ZAECPEHC 20; [2014] 2 All SA 670 (ECP) (25 March 2014)

Janse Van Rensburg and Another v Griffiths (2101/2002) [2014] ZAECPEHC 20; [2014] 2 All SA 670 (ECP) (25 March 2014)

The court found that the payments made by Usapho Trust to the defendant within six months prior to sequestration were voidable preferences under section 29 of the Insolvency Act. All elements required by section 29 were established, including that the payments constituted dispositions, were made within the relevant period, and preferred the defendant above other creditors. The only remaining issue was whether the payments were made in the ordinary course of business. Applying a broad, objective test and considering the illegal nature of Usapho Trust's business as a pyramid scheme, the court held that the payments were not made in the ordinary course of lawful business. The defendant...

Citation
[2014] ZAECPEHC 20
Parties
Plaintiff: Jacobus Hendrikus Janse Van Rensburg N.O.; Plaintiff: Romana Bernadette Knuth N.O.; Defendant: Jonathan Brian Griffiths
Court
Eastern Cape High Court, Port Elizabeth
Jurisdiction
South Africa
Judgment Date
25 March 2014
Case Number
2101/2002
Procedural Posture
Civil Trial / Judgment After Trial
Outcome
Plaintiffs' claims succeed. The defendant is ordered to repay the amounts received from Usapho Trust, with interest from the date of judgment, and to pay costs.
Judges
R W N Brooks
Legal Topics
Insolvency Act Section 29, Voidable Preferences, Pyramid Scheme Illegality, Ordinary Course of Business, Harmful Business Practices, Interest on Impeachable Dispositions
Banking and Finance Civil Procedure Commercial and Corporate Insolvency Act Section 29 Voidable Preferences Pyramid Scheme Illegality Ordinary Course of Business Harmful Business Practices +1 more

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Parties

Jacobus Hendrikus Janse Van Rensburg N.O.

Plaintiff

Romana Bernadette Knuth N.O.

Plaintiff

Jonathan Brian Griffiths

Defendant

Procedural Posture

Civil Trial / Judgment After Trial

Legal Issues

  1. 1 Whether the payments made by Usapho Trust to the defendant constituted voidable preferences under section 29 of the Insolvency Act.
  2. 2 Whether the dispositions were made in the ordinary course of business of Usapho Trust.
  3. 3 Whether the defendant was preferred above other creditors by the impugned payments.

Ratio Decidendi

The court found that the payments made by Usapho Trust to the defendant within six months prior to sequestration were voidable preferences under section 29 of the Insolvency Act. All elements required by section 29 were established, including that the payments constituted dispositions, were made within the relevant period, and preferred the defendant above other creditors. The only remaining issue was whether the payments were made in the ordinary course of business. Applying a broad, objective test and considering the illegal nature of Usapho Trust's business as a pyramid scheme, the court held that the payments were not made in the ordinary course of lawful business. The defendant...

Court Disposition

Plaintiffs' claims succeed. The defendant is ordered to repay the amounts received from Usapho Trust, with interest from the date of judgment, and to pay costs.

Orders

  • Each disposition made by or on behalf of Usapho Trust to the defendant, as set out in schedule 'A' to the particulars of claim, is set aside in terms of section 29 of the Insolvency Act.
  • The defendant is directed to pay the plaintiffs the total sum of R224,000.00 as reflected in schedule 'A'.