Strydom N.O and Others v Brandt (4579/2019) [2021] ZALMPPHC 24 (6 May 2021)

Strydom N.O and Others v Brandt (4579/2019) [2021] ZALMPPHC 24 (6 May 2021)

The court found that Free Agape Enterprises (Pty) Ltd operated an unlawful pyramid scheme, with no legitimate business activity or profit generation. The defendant received payments from the insolvent company, which were not made for value, as investors did nothing to earn the returns. The company was insolvent at all material times, and the payments to the defendant occurred within two years of liquidation. The defendant admitted the key facts and did not discharge the onus required under section 26(1)(b) of the Insolvency Act. Therefore, the payments constituted dispositions without value and must be set aside. The defendant is ordered to repay the amount received.

Citation
[2021] ZALMPPHC 24
Parties
Plaintiff: Pieter Hendrik Strydom N.O; Plaintiff: Haroon Abdool Satar Moosa N.O; Plaintiff: Deon Marais Botha N.O; Defendant: Neil Peter Brandt
Court
Limpopo High Court, Polokwane
Jurisdiction
South Africa
Judgment Date
6 May 2021
Case Number
4579/2019
Procedural Posture
Civil Trial / Judgment After Trial; Defendant's Application for Absolution Dismissed
Outcome
Plaintiffs succeed; disposition set aside; defendant ordered to repay amount received.
Judges
Makgoba JP
Legal Topics
Insolvency Act Section 26, Dispositions Without Value, Liquidation, Pyramid Scheme, Onus of Proof
Civil Procedure Commercial and Corporate Insolvency Act Section 26 Dispositions Without Value Liquidation Pyramid Scheme Onus of Proof

Case Brief

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Parties

Pieter Hendrik Strydom N.O

Plaintiff

Haroon Abdool Satar Moosa N.O

Plaintiff

Deon Marais Botha N.O

Plaintiff

Neil Peter Brandt

Defendant

Procedural Posture

Civil Trial / Judgment After Trial; Defendant's Application for Absolution Dismissed

Legal Issues

  1. 1 Whether the payments made by Free Agape Enterprises (Pty) Ltd to the defendant constitute dispositions without value under section 26 of the Insolvency Act.
  2. 2 Whether the defendant is liable to repay the amount received from the insolvent company.
  3. 3 Whether the dispositions occurred within two years of liquidation, affecting the onus of proof.

Ratio Decidendi

The court found that Free Agape Enterprises (Pty) Ltd operated an unlawful pyramid scheme, with no legitimate business activity or profit generation. The defendant received payments from the insolvent company, which were not made for value, as investors did nothing to earn the returns. The company was insolvent at all material times, and the payments to the defendant occurred within two years of liquidation. The defendant admitted the key facts and did not discharge the onus required under section 26(1)(b) of the Insolvency Act. Therefore, the payments constituted dispositions without value and must be set aside. The defendant is ordered to repay the amount received.

Court Disposition

Plaintiffs succeed; disposition set aside; defendant ordered to repay amount received.

Orders

  • The disposition in terms of which Free Agape Enterprises (Pty) Ltd paid R304,300.00 to the defendant is set aside.
  • The defendant is ordered to repay the amount of R304,300.00 to the plaintiffs.