Strydom N.O and Others v Le Roux - Reasons (2613/2022) [2023] ZAWCHC 244 (15 September 2023)
- Citation
- [2023] ZAWCHC 244
- Status
- Judgment
- Jurisdiction
- South Africa
- Court
- Western Cape High Court, Cape Town
- Panel
- Kusevitsky
- Case number
- 2613/2022
More details
- Court
- Western Cape High Court, Cape Town
- Panel
- Kusevitsky
- Case number
- 2613/2022
On this page
Professional case brief
Research organized from the available case record
01
Holding and result
The plaintiffs failed to establish a case for relief under section 26(1) of the Insolvency Act because their own version indicated that monies were only paid out after receipt of deposits. The plaintiffs did not provide sufficient evidence to show that the payments to the defendant were dispositions without value, nor did they adequately address the relevant time periods. The court found that the plaintiffs could not be selective about the time periods and must present a comprehensive factual basis for their claim. As a result, judgment was granted only on the alternative claim under section 29(1) for R 240 000.00.
Court disposition
Judgment granted in favour of the plaintiffs on the alternative claim under section 29(1) of the Insolvency Act for R 240 000.00; claim under section 26(1) dismissed.
Orders
- The defendant is ordered to repay R 240 000.00 to the plaintiffs in terms of section 29(1) of the Insolvency Act.
- The plaintiffs' claim under section 26(1) of the Insolvency Act is dismissed.
02
Material facts
Parties
Pieter Hendrik Strydom N.O
PlaintiffHaroon Abdool Satat Moosa N.O
PlaintiffDeon Marius Botha N.O
PlaintiffCeclilia Jacoba Le Roux
DefendantAmounts and remedies
- Amount Claimed Under Section 26(1): ZAR 1,044,500
- Amount Awarded Under Section 29(1): ZAR 240,000
03
Procedural history
Posture
Civil Judgment / Reasons for Default Judgment
04
Questions and positions
Legal issues
- 01
Whether the plaintiffs, as liquidators, are entitled to repayment of monies from the defendant under section 26(1) of the Insolvency Act.
- 02
Whether the payments made to the defendant constituted dispositions without value.
- 03
Whether the plaintiffs established the necessary factual basis for relief under section 26(1) of the Insolvency Act.
Party arguments
- Applicant
- The plaintiffs, acting as joint liquidators of Free Agape Enterprises (Pty) Ltd, alleged that the defendant received payments from the company that constituted dispositions without value under section 26(1) of the Insolvency Act. They argued that Free Agape operated an illegal investment scheme, using deposits from investors to pay out other investors as dividends, and that the defendant should be ordered to repay R 1 044 500.00, alternatively R 240 000.00 under section 29.
- Respondent
- The defendant contended that she had paid monies to Free Agape as an investment and was unaware that her actions were illegal. She further argued that she had already repaid some of the money claimed by the plaintiffs.
05
Court’s reasoning
Legal principles
- 01
Estate Jager v Whittaker 1944 (AD) 246 at 250
A disposition without value under section 26(1) of the Insolvency Act requires proof that the company made payments to the defendant without receiving value in return, and the onus is on the liquidators to establish the relevant time periods and factual basis.
- 02
Goode, Durante & Murray Ltd. v Hewitt & Cornell 1961 (4) SA 286 (N) at 291E-F
The liquidators cannot be selective about time periods when alleging dispositions without value; they must present a comprehensive factual matrix.
- 03
Strydom N.O and Another v Snowball Wealth (Pty) Ltd and Others (356/2021) [2022] ZASCA 91 (15 June 2022) at para 31
Where the company only paid out monies after receipt of deposits, the plaintiffs must show that the payments to the defendant were not linked to corresponding deposits.
06
Ratio, limits and disposition
Ratio decidendi
The plaintiffs failed to establish a case for relief under section 26(1) of the Insolvency Act because their own version indicated that monies were only paid out after receipt of deposits. The plaintiffs did not provide sufficient evidence to show that the payments to the defendant were dispositions without value, nor did they adequately address the relevant time periods. The court found that the plaintiffs could not be selective about the time periods and must present a comprehensive factual basis for their claim. As a result, judgment was granted only on the alternative claim under section 29(1) for R 240 000.00.
Obiter and limits
- Liquidators must ensure that their pleadings and evidence cover all relevant time periods when alleging dispositions without value.
- Claims under section 26(1) require a clear factual link between payments made and the absence of value received by the company.
Court disposition
Judgment granted in favour of the plaintiffs on the alternative claim under section 29(1) of the Insolvency Act for R 240 000.00; claim under section 26(1) dismissed.
- The defendant is ordered to repay R 240 000.00 to the plaintiffs in terms of section 29(1) of the Insolvency Act.
- The plaintiffs' claim under section 26(1) of the Insolvency Act is dismissed.
Source and reliance status
Western Cape High Court, Cape Town
This page organises the available record for research. Confirm quotations, current status, and subsequent treatment against the official source before relying on the case.
Judgment reading view
Judgment text
The complete available source text.
Western Cape High Court, Cape Town
Judgment
SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document in compliance with the law and SAFLII Policy
FLYNOTES: COMPANY – Winding up – Disposition – Liquidators seeking repayment of monies contended to be dispositions without value – Alleged that company used deposits from investors to pay out other investors as dividends – Claiming that no monies received from defendant – But on own version monies only paid out after receipt of deposits – Onus regarding time periods – Plaintiffs could not be selective about time periods – Not making out a case for relief under section 26(1) – Insolvency Act 24 of 1936.
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE DIVISION, CAPE TOWN)
REPORTABLE
CASE NUMBER: 2613/2022
In the matter between:
PIETER HENDRIK STRYDOM N. O
FIRST PLAINTIFF
HAROON ABDOOL SATAT MOOSA N. O
SECOND PLAINTIFF
DEON MARIUS BOTHA N. O
THIRD PLAINTIFF
And
CECLILIA
JACOBA LE ROUX
DEFENDANT
(Identity Number: 5[…])
REASONS
KUSEVITSKY J
Introduction
[1] On 9 June 2023 on the unopposed motion roll, an application for default judgment served before me in which the Plaintiffs, in their representative capacities as joint liquidators of Free Agape Enterprises (Pty) Ltd (In liquidation) (“Free Agape”), sought the repayment of monies from the Defendant in the amount of R 1 044 500.00 in terms of section 26(1) of the Insolvency Act, 24 of 1936, alternatively the amount of R 240 000.00 in terms of section 29 of the Insolvency Act.
3.1 she had paid monies to Free Agape as an investment (“belegging”) and had no knowledge that it was illegal for her to have done so;
3.2 she had already repaid some money.
[3] I granted judgment in favour of the Plaintiffs on the alternative claim in the amount of R 240 000.00 in terms of section 29(1), having been of the view that the Plaintiffs did not make out a case for relief sought in terms of section 26(1). The Plaintiffs have requested reasons as to why their claim under section 26(1) did not succeed. Here follows the reasons.
The summons
[4] The particulars of claim aver that on 12 June 2018, Free Agape was placed in final liquidation. In terms of s 348 of the Companies Act, 61 of 1973, the deemed date of commencement of the liquidation of Free Agape is 22 March 2018, which is the date when it is alleged that the application for winding up was presented to court.
[5] On 13 August 2019 under case number 11938/2019, an order was granted declaring that the investment scheme conducted under the name and style of Free Agape and various under trading names to be illegal, unlawful and void; and that all investment and related agreements entered into between Free Agape and third parties as investors, to be null and void.[1]
[6] The averments furthermore state that Free Agape did no business other than taking deposits from clients/investors, which was utilised to repay deposits received from other clients and/or to pay out money, described as dividends to other clients; the liabilities of Free Agape exceeded its assets; and Free Agape was unable to pay its debts as contemplated in s 339, read with s 340 of the 1973 Companies Act.[2]
Plaintiffs’ claim in terms of s 26(1) of the Insolvency Act
[1] Particulars of claim para 5 and the sub-paragraphs thereof
[2] Particulars of claim paras 6.1 to 6.3
[3] the schedule of payments is reflected in para 7.1
[4] Estate Jager v Whittaker 1944 (AD) 246 at 250
[5] Goode, Durante & Murray Ltd. v Hewitt & Cornell 1961 (4) SA 286 (N) at 291E-F
[6] subsection (a)
[7] subsection (b)
[8] Strydom N.O and Another v Snowball Wealth (Pty) Ltd and Others (356/2021) [2022] ZASCA 91 (15 June 2022) at para 31
[9] Para 6.1 of the Particulars of Claim
[10] of section 24 as it then was
[11] Estate Wege at 84
[12] Estate Jager v Whittaker and Another ibid at 247
[13] Particulars of claim para 5.1.1
[14] para 5.1.2
[15] Strydom supra at para 36
[16] at 250
[17] at 251
[18] at 252
[19] Eckhoff N.O and Another v Hartshorne and Another (13640/2020) [2022] ZAWCHC 68 (29 April 2022) at para 29
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