Sackstein NO and Others v Benade (1959/2001) [2009] ZAECPEHC 37 (31 July 2009)

Sackstein NO and Others v Benade (1959/2001) [2009] ZAECPEHC 37 (31 July 2009)

The court found that the payments made to the defendant were not made in the ordinary course of business, as the trust operated an illegal pyramid scheme and the payments were made from funds obtained through fraudulent activity. The evidence established that the payments had the effect of preferring the defendant above other creditors, and there was no credible evidence to suggest that the payments were not intended to prefer him. The defendant failed to discharge the onus of proving that the payments were made in the ordinary course of business and without the intention to prefer. Consequently, the payments constitute voidable preferences under section 29 of the Insolvency Act and must...

Citation
[2009] ZAECPEHC 37
Parties
Plaintiff: Leslie Neil Sackstein N.O.; Plaintiff: Jacobus Hendrikus Janse van Rensburg N.O.; Plaintiff: Romana Bernadette Knuth N.O.; Defendant: Johannes Tobias Benade
Court
Eastern Cape High Court, Port Elizabeth
Jurisdiction
South Africa
Judgment Date
31 July 2009
Case Number
1959/2001
Procedural Posture
Civil Trial / Judgment After Trial
Outcome
The court set aside the payments made to the defendant as voidable preferences under section 29 of the Insolvency Act.
Judges
Pillay
Legal Topics
Insolvency Act Section 29, Voidable Preferences, Pyramid Scheme Liquidation, Fraudulent Dispositions
Civil Procedure Banking and Finance Delict Insolvency Act Section 29 Voidable Preferences Pyramid Scheme Liquidation Fraudulent Dispositions

Case Brief

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Parties

Leslie Neil Sackstein N.O.

Plaintiff

Jacobus Hendrikus Janse van Rensburg N.O.

Plaintiff

Romana Bernadette Knuth N.O.

Plaintiff

Johannes Tobias Benade

Defendant

Procedural Posture

Civil Trial / Judgment After Trial

Legal Issues

  1. 1 Whether the payments made to the defendant were made in the ordinary course of business as envisaged by section 29(1) of the Insolvency Act.
  2. 2 Whether the payments were made with the intention of preferring the defendant above other creditors.
  3. 3 Whether the payments constitute voidable preferences under section 29 of the Insolvency Act.

Ratio Decidendi

The court found that the payments made to the defendant were not made in the ordinary course of business, as the trust operated an illegal pyramid scheme and the payments were made from funds obtained through fraudulent activity. The evidence established that the payments had the effect of preferring the defendant above other creditors, and there was no credible evidence to suggest that the payments were not intended to prefer him. The defendant failed to discharge the onus of proving that the payments were made in the ordinary course of business and without the intention to prefer. Consequently, the payments constitute voidable preferences under section 29 of the Insolvency Act and must...

Court Disposition

The court set aside the payments made to the defendant as voidable preferences under section 29 of the Insolvency Act.

Orders

  • The dispositions made to the defendant are set aside as voidable preferences in terms of section 29 of the Insolvency Act.
  • The defendant is ordered to repay the sum of R549,500 to the insolvent estate of Usapho Trust.