Strydom N.o and Others v Bakkes and Others (19428/11) [2014] ZAGPPHC 158 (4 April 2014)

Strydom N.o and Others v Bakkes and Others (19428/11) [2014] ZAGPPHC 158 (4 April 2014)

The court found that the promissory notes issued by Miro Capital, Four Rivers, Regent Group Capital/Two Ships, Escascape, Finpro, and Thunderstruck did not fall within the designated activity excluded from the definition of the business of a bank under the Banks Act and related notices. None of the entities had written authorisation from the Registrar of Banks to issue commercial paper, and the notes were not issued in compliance with the required conditions. The acceptance of money from the public against the issue of these notes constituted the business of a bank, which was unlawful under section 11 of the Banks Act. Investments in these notes by CMM and its clients breached GN1503 and...

Citation
[2014] ZAGPPHC 158
Parties
Plaintiff: Pieter Hendrik Strydom N.O.; Plaintiff: John Roderick Graeme Polson N.O.; Plaintiff: Louis Strydom N.O.; Plaintiff: Deon Marius Botha N.O.; Plaintiff: Tirhani Sitos de Sitos Mathebula N.O.; Plaintiff: Sean Christensen N.O.; Plaintiff: Gail Llyn Warricker N.O.; Plaintiff: Altron Group Pension Fund; Defendant: Johan Hendrik Bakkes; Defendant: Louis Kotze Venter; Defendant: Liesl Maré; Defendant: Bhekama Swazi Mshizobomvu; Defendant: Gerhardus Johannes van Zyl; Defendant: Hans Jurgens Brits; Defendant: Johannes Gerhardus du Toit; Defendant: Derrek John Ellerbeck; Defendant: Siyabonga Gqoli; Defendant: Frederick Vermaak; Defendant: Lucas Willem Viljoen; Defendant: Desré Paton; Defendant: Anna Jacoba van Heerden; Defendant: Mark David Arendse; Defendant: Ryan Mark Botha; Defendant: David Thomas Oosthuizen; Defendant: Vincent Revor Smith; Defendant: Ernest Philippus Sevenster; Defendant: Nsalo Financial Services (Pty) Ltd; Defendant: Martina Cornelius Bakkes; Defendant: Maricia Bakkes; Defendant: Rezanne Bakkes
Court
North Gauteng High Court, Pretoria
Jurisdiction
South Africa
Judgment Date
4 April 2014
Case Number
19428/11
Procedural Posture
Civil Trial / Separated Determination of Preliminary Legal Questions Under Rule 33(4)
Outcome
Declaratory orders granted in favour of the plaintiffs on all four separated questions. Costs awarded against the 1st, 17th, 19th, and 20th defendants, jointly and severally.
Judges
Murphy
Legal Topics
Promissory Notes, Business of a Bank, Collective Investment Schemes Control Act, Investment Mandate Breach, Commercial Paper Regulation, Securitisation Scheme Compliance
Banking and Finance Commercial and Corporate Civil Procedure Promissory Notes Business of a Bank Collective Investment Schemes Control Act Investment Mandate Breach Commercial Paper Regulation +1 more

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Parties

Pieter Hendrik Strydom N.O.

Plaintiff

John Roderick Graeme Polson N.O.

Plaintiff

Louis Strydom N.O.

Plaintiff

Deon Marius Botha N.O.

Plaintiff

Tirhani Sitos de Sitos Mathebula N.O.

Plaintiff

Sean Christensen N.O.

Plaintiff

Gail Llyn Warricker N.O.

Plaintiff

Altron Group Pension Fund

Plaintiff

Johan Hendrik Bakkes

Defendant

Louis Kotze Venter

Defendant

Liesl Maré

Defendant

Bhekama Swazi Mshizobomvu

Defendant

Gerhardus Johannes van Zyl

Defendant

Hans Jurgens Brits

Defendant

Johannes Gerhardus du Toit

Defendant

Derrek John Ellerbeck

Defendant

Siyabonga Gqoli

Defendant

Frederick Vermaak

Defendant

Lucas Willem Viljoen

Defendant

Desré Paton

Defendant

Anna Jacoba van Heerden

Defendant

Mark David Arendse

Defendant

Ryan Mark Botha

Defendant

David Thomas Oosthuizen

Defendant

Vincent Revor Smith

Defendant

Ernest Philippus Sevenster

Defendant

Nsalo Financial Services (Pty) Ltd

Defendant

Martina Cornelius Bakkes

Defendant

Maricia Bakkes

Defendant

Rezanne Bakkes

Defendant

Procedural Posture

Civil Trial / Separated Determination of Preliminary Legal Questions Under Rule 33(4)

Legal Issues

  1. 1 Whether the promissory notes issued by the specified entities were legal commercial paper under the Banks Act and related notices.
  2. 2 Whether the issue of promissory notes against acceptance of money from the public constituted the business of a bank in contravention of section 11 of the Banks Act.
  3. 3 Whether the promissory notes qualified as approved assets under GN1503 as determined by the Registrar under the Collective Investment Schemes Control Act.

Ratio Decidendi

The court found that the promissory notes issued by Miro Capital, Four Rivers, Regent Group Capital/Two Ships, Escascape, Finpro, and Thunderstruck did not fall within the designated activity excluded from the definition of the business of a bank under the Banks Act and related notices. None of the entities had written authorisation from the Registrar of Banks to issue commercial paper, and the notes were not issued in compliance with the required conditions. The acceptance of money from the public against the issue of these notes constituted the business of a bank, which was unlawful under section 11 of the Banks Act. Investments in these notes by CMM and its clients breached GN1503 and...

Court Disposition

Declaratory orders granted in favour of the plaintiffs on all four separated questions. Costs awarded against the 1st, 17th, 19th, and 20th defendants, jointly and severally.

Orders

  • The issuing of promissory notes by Miro Capital (Pty) Ltd, Four Rivers Trading 307 (Pty) Ltd, Regent Group Capital (Pty) Ltd t/a Two Ships 427 (Pty) Ltd, Escascape Investments (Pty) Ltd t/a Sakha iBlokho, CMM Finpro (Pty) Ltd, and Thunderstruck Investments 15 (Pty) Ltd did not fall within the designated activity...
  • The issue of promissory notes against acceptance of monies by Miro Capital, Four Rivers, Regent Group Capital/Two Ships, Escascape, and Finpro constituted the business of a bank and contravened section 11 of the Banks Act.