Murray N.O. and Others v Humansdorp Co-Operative Limited (1697/2019) [2021] ZAECGHC 70 (26 July 2021)

IN THE HIGH COURT

OF SOUTH AFRICA

EASTERN CAPE DIVISION, GRAHAMSTOWN

Case no. 1697/2019

In the matter between:

Cloete Murray N.O. 1st Applicant

Thomas Christopher van Zyl N.O. 2nd Applicant

Raphael Grant Brink N.O.

3rd Applicant

Caron-Ann Schroeder N.O. 4th Applicant

In their capacities as joint liquidators of

Cape Concentrate (Pty) Ltd (in liquidation)

and

Humansdorp Co-Operative Limited Respondent

JUDGMENT

STRETCH J:

[1] Cape Concentrate (Pty) Ltd (in liquidation) was registered and incorporated as a private company on 27 March 2006. During 2009 it established a tomato paste processing plant at Coega. During or about the same time a sister company, Rumibyte (Pty) Ltd (with the same shareholders as Cape Concentrate), was established to supply tomatoes to Cape Concentrate. Both companies became financially distressed as a consequence of, inter alia, a failure on Rumibyte’s part to secure enough tomatoes for processing, resulting in both companies having been unable to generate sufficient income to meet their commitments.

[2] By May 2013 it was evident that these companies were both factually and commercially insolvent, and it was resolved to commence business rescue proceedings. Mr Francois Vienings, a practising attorney, and at the time a director of attorneys Pagdens Incorporated, was appointed as the business rescue practitioner for both companies.

[3] From the outset, Vienings appeared confident that the companies were capable of being rescued. To this end he presented a joint first business rescue plan to affected persons in July 2013. It was approved. In August 2013 he presented an amended joint business rescue plan, which was also adopted.

[4] In December 2013, Vienings, in his capacity as business rescue practitioner for Cape Concentrate and Rumibyte, established the Tyefu Community Farming Trust, to involve the local communities in the planting of tomatoes. In April 2014 Vienings and Cape Concentrate’s directors engaged in discussions with the Africa Agriculture and Trade Investment Fund (“AATIF”) in a bid for funding for Cape Concentrate’s turnaround. During that same month the respondent, Humansdorp Co-operative Limited (hereinafter referred to as “HDC”), expressed its willingness to participate in the business rescue proceedings of Cape Concentrate and Rumybite by providing production loans and funding to tomato farmers.

[5] This resulted in the presentation of a further amended business plan in May 2014. During August that year an investment partner agreement was concluded between AATIF and HDC. During the same period a written term facility agreement was also concluded between AATIF and Cape Concentrate in liquidation (“the Company”), represented by Vienings, in terms of which the Company borrowed money from AATIF, for the primary purpose of repaying existing debts, financing working capital requirements and the payment of existing income tax debts.

[6] In a nutshell then, the Tyefu Trust would be utilised as a vehicle through which local farmers would engage with HDC and place orders with HDC for, inter alia, tomato cultivating tools in order to plant and grow tomatoes for delivery to the Trust. The Trust in turn would sell the tomatoes to Cape Concentrate for processing. On 12 August 2014 Vienings, on behalf of the Company, tendered securities for the Trust’s obligations to HDC. These securities included:

a. a cession (which HDC later cancelled because the production loan owed to it had been settled) of the proceeds of tomatoes supplied to Cape Concentrate;

b. a cession (which HDC later cancelled for the same reason) of what is referred to as the Santam crop insurance;

c. bank guarantees which would be backed with the loan obtained from AATIF.

[7] To this end funds received from AATIF were deposited into the Company’s account. From there the funds were transferred into Pagdens’ trust account to be held as security for bank guarantees in favour of HDC to secure the obligations of the Tyefu Trust to HDC.

[8] During August 2014 The Trust (again assisted by the business rescue practitioner) applied to HDC for a production loan to fund the tomato operation. HDC was urged to grant the loan against security in the form of the Company placing funds in a trust account as a guarantee, additional security in the form of the Company’s farming assets, a cession of the crop insurance, a cession of the crop, and a cession of the profits of the farming project.

[9] On 3 September 2014 the Trust furnished HDC with a cession for payment in respect of the Trust’s sales of tomato produce to the Company up to the extent of the Trust’s indebtedness to HDC. According to the affidavit of Mr Brett Weddell (a director of Pagdens), Vienings, on the Company’s behalf, enjoined Pagdens to cause on demand guarantees to be issued by a financial institution, which Pagdens agreed to do. The Company obtained the guarantees from Standard Bank by paying sums of money into Pagdens’ trust account against the security of which the bank issued the required guarantees.

[10] It is on the strength of this security that HDC advanced a production loan to the Trust. When further Standard Bank demand guarantees were provided, the Trust’s production loan facility was increased. The Trust used the production loan from HDC for the development and preparation of lands, the installation of irrigation, the purchase and planting of seedlings, and in general to do all things necessary to facilitate the harvesting of a crop of tomatoes

[11] Between September 2014 and January 2015, Vienings provided HDC with six Standard Bank demand guarantees, totalling R25-million, issued as follows:

a. R5-million on 5 September 2014

b. R2-million on 7 October 2014

c. R4-million on 6 November 2014

d. R3-million on 19 November 2014

e. R9-million on 19 November 2014

f. R2-million on 14 January 2015.

[12] But for the dates, amounts and reference numbers, the guarantees are identical. What follows is a reproduction of one of these guarantees, as I will be referring to them in due course. It reads as follows:

‘Electronically generated DEMAND GUARANTEE – only presentable and payable by electronic means.

[emblem) Standard Bank

TRN No. [inserted]

TPFA Guarantees Standard Bank

P O Box 61029

Marshalltown

2107

Beneficiary Name: HUMANSDORP KOOPERASIE BPK[1]

Account Number: 0001940000110

Beneficiary Reference: TYEFU[2]

Beneficiary Address: HUMANSDORP

Issue Date: [inserted]

DEMAND

GUARANTEE

We, the Standard Bank of South Africa Limited Registration Number 1962/000738/06 (“the Bank”) undertake to pay HUMANSDORP

KOOPERASIE BPK (“the Beneficiary”) the sum of [inserted in figures and words] (“the Guaranteed Amount”) on receipt of a first written demand for payment from the Beneficiary stating that the amount is due and payable by THE TYEFU COMMUNITY FARMING TRUST IN THE EVENT OF IT NOT

BEING ABLE TO MAKE PAYMENT OF THE PRODUCTION LOAN FROM THE BENEFICIARY WHEN IT BECOMES DUE AND PAYABLE (“the Principal”) (sic) in terms of an agreement (“the Agreement”) between the Principal and the Beneficiary,

The Bank’s liability under this guarantee is principal in nature and is not subject to any agreement. The Bank’s liability shall not be reduced, or in any way affected by any alteration of the terms of the Agreement, or any other arrangement made between the Principal and the Beneficiary.

The Bank will pay on demand and will not determine the validity of the demand or the correctness of the amount demanded, or become party to any claim or dispute of any nature which any party may allege.

Escape clause The Bank reserves the right to withdraw from this guarantee at its entire discretion by giving the Beneficiary 3 (three) months’ notice of its intention to do so. The Beneficiary may, however, claim under this guarantee during the mentioned notice period from the date that such notice is given. The Bank’s liability shall cease on expiry of the notice period and no further claims will be considered.

The cancellation of, or any change to the terms and/or conditions of this guarantee, must first be agreed to in writing by the Beneficiary, the Principal and the Bank.

This Guarantee is neither negotiable, transferable or payable upon presentation at a Branch of Standard Bank and it must be returned to us either against payment of the abovementioned sum or in the event of our withdrawal from the undertaking in terms of the preceding paragraph.

TPFA Account Number: 080102956 Guarantee Number: [inserted]

Guarantee Reference: TYEFU [signed]]

[13] The guarantees which I have referred to are demand guarantees. The beneficiary is HDC. The beneficiary reference is the Tyefu Trust. The guarantees provide that on receipt of a first written demand from HDC for payment (stating that the amount is due and payable by the Trust in terms of an agreement between HDC and the Trust), Standard Bank undertakes to make payment of the amounts guaranteed. The demand guarantees guarantee payment on the Trust’s behalf to HDC in the event of the Trust not being able to meet the production loan.

[14] During March 2015 Vienings reported to HDC that 5 635 tons of tomatoes had been delivered to the Company[3], that in the region of R12-million worth of tomato paste had been produced, and that Cape Concentrate expected a further delivery of about 100 000 tons of tomatoes from the Trust. In the same report, Vienings undertook that the Company would make full payment of the Trust’s liability to HDC within 30 days of the harvest, which was anticipated to have been finalised during May 2015.

[15] According to HDC’s credit manager, Mr Louis Rautenbach, the Company had failed to pay for the tomatoes which the Trust had delivered to it, which payments were to be made to HDC in terms of the cession. The Company was accordingly in breach of its obligation in terms of the deed of cession which served as security for the Trust’s indebtedness to HDC, and which had been recognised in the supply agreement concluded between the Company and the Trust. What was more, Vienings now wanted HDC to release R3-million of the security, in the form of guarantees, against a cession of the tomato paste it was holding, for an interest payment due to AATIF.

[16] On 1 April 2015 HDC’s attorneys (De Jager & Lordan Inc.) wrote to Vienings, pointing out that HDC was exposed to the Trust through production loan facilities, and that HDC had obtained a cession of the crop proceeds, payable by the Company to the Trust, as security for this exposure. Vienings was asked to furnish the attorneys with a breakdown of the supplies which the Company had received, together with their value, and to confirm that payment would be effected in respect of the overdue amounts forthwith. On 2 April 2015 Vienings advised HDC’s attorneys that HDC would receive full settlement of the Trust’s debt by the end of May 2015, prior to finalisation of the harvest. Despite further requests, Vienings did not furnish the breakdown which HDC had requested.

[17] It is contended on HDC’s behalf that, as the production loan was due and payable, HDC was constrained to call up the bank guarantees for the payment. On 7 May 2015, Rautenbach sent an email to HDC’s attorneys, which reads as follows:

‘Subject: Tyefu Community Farming Trust: R22 268 845.85

Hallo Werner

Hiermee bevestig ons die uitstaande saldo van die bogenoemde klant se rekening:

Saldo soos op 30 April 2015 : R22 190 540.43

Rente vanaf 1 Mei tot : 47 896.26

Onafgehandelde faktuur (Bathurst tak) : 21 412.16

Totaal verskulding : R22 268 848.85

Die res van die oorspronklike waarborge is Desember 2014 in n kluis by Groenewalds Prokureurs geplaas, en het ons dit reeds in ons besit. Shaun Lindeque van ons kantoor ry nou om die waarborge by jou kantoor af te haal (die wat daar is) waarna hy dit na Rob Parker[4] sal neem.

Betaling van die bogenoemde bedrag moet dan geskied met verwysing ‘Tyefu Trust’.

Bevestig asseblief dat hierdie e-pos ontvang is, en waar Shaun die dokumente kan kom afhaal. Dit sal eers rondom 18h wees.

Ek hoor graag van jou.

Groete

Louis’[5]

[18] On the same day HDC’s attorneys (as per Mr Werner de Jager) emailed a letter of demand to Pagdens, for Rob Parker’s attention. It reads as follows:

‘RE: HUMANSDORP CO-OPERATIVE LIMITED (“the Co-op”) / TYEFU TRUST (“Tyefu”) PAGDENS CORPORATE SAVER

GUARANTEES

1. We refer to the abovementioned matter.

2. We act upon the instructions of the Co-op.

3. Tyefu is indebted to our client in the amount of R22, 268, 848.85. We annex hereto a copy of a letter received from the Co-op reflecting the aforesaid amount owing.

4. Our instructions are to demand, as we hereby do, immediate payment of the guarantees to the value of Tyefu’s exposure to our client.

5. We will present the original guarantees to your office this afternoon. The guarantees are payable upon presentation.

6. Our client’s bank account particulars are reflected on the annexure hereto.

7. Please confirm immediate settlement of the aforesaid guarantees.’

[19] On 8 May 2020 Parker caused correspondence to be hand-delivered to Vienings. The letter reads as follows:

‘Business Rescue Practitioner

Cape Concentrate (Pty) Ltd

PORT

ELIZABETH

Dear Francois

HUMANSDORP CO-OPERATIVE LIMITED/TYEFU COMMUNITY FARMING TRUST/

STANDARD

BANK DEMAND GUARANTEES

1. I refer to the six demand guarantees issued to Humansdorp Co-Operative Limited on the instructions of Cape Concentrate for the indebtedness of Tyefu Community Farming Trust to Humansdorp Co-Operative Limited.

2. Immediate payment of the guarantees to the value of Tyefu’s exposure to Humansdorp Co-Operative was demanded on 7 May 2015 and I enclose for your attention a letter of demand received from the attorneys of Humansdorp Co-Operative.

3. The amount of R22 268 848.85 has been paid by us to Humansdorp Co-Operative in terms of the guarantees.

4. We continue to hold in trust an amount of R839 180.08.

5. I await your instructions regarding these monies.’

[20] The following is significant about the exchange of correspondence on 8 and 9 May, which correspondence was annexed to the liquidators’ founding papers and appears to be common cause. Firstly, HDC wrote to its own attorney on 7 May referring to a debt which had become due (and which had already attracted interest as a result) to HDC by the Tyefu Trust. It is a letter reflecting HDC’s instructions to its attorneys, i.e. that the balance due to HDC had to be paid to HDC in terms of the guarantees under the reference “Tyefu Trust”.

[21] Secondly, acting upon these instructions from HDC, its attorneys then wrote to a co-director and chairman of Pagdens (Mr Robert Parker). The headnote of the letter is in bold. It refers to Pagdens “corporate saver guarantees” with reference to the matter of HDC and the Tyefu Trust. It advises that HDC had instructed the writer to demand “immediate payment of the guarantees to the value of Tyefu’s exposure” to HDC. Indeed the word “guarantees” is used no less than five times in the letter.

[22] Thirdly, having received demand from HDC’s attorneys for payment in terms of the guarantees, Parker from Pagdens then hand delivered a letter to the business rescue practitioner. The headnote thereof refers to the same parties and the same subject matter as that referred to in the demand. It identifies the guarantees as the six demand guarantees issued to HDC on the Company’s instructions to secure the Trust’s indebtedness to HDC. It advises that Pagdens had made payment to HDC in terms of the guarantees in the sum of R22 268 848.85 (“the payment”). The word “guarantees” is referred to four times in the letter.

[23] Weddell, in his affidavit – which Parker has confirmed on oath – has explained the history of and the terminology used in the demand guarantees, as well as what transpired during the period 7 to 8 May 2015. According to Weddell, Pagdens entered into a third party fund administration agreement (“the TPFA agreement”) with Standard Bank during July 2009. In brief, a TPFA agreement is one in terms of which the bank offers a third party fund administration product to an investor principal through an agent in terms of which the agent, for and on behalf of the investor principal, would be entitled to transact on the accounts by way of electronic fund transfers, inter-account transfers and so on and so forth.

[24] In terms of this agreement, Pagdens was defined as the agent. Investor principals would be Pagdens’ clients who had nominated Pagdens as their agent to represent them in regard to the TPFA agreement. Ex facie the agreement, Pagdens was entitled to carry out various transactions on the TPFA accounts on behalf of investor principals. The Standard Bank would allocate separate accounts within the TPFA product for each investor principal that Pagdens introduced to it in terms of the TPFA agreement. The agreement itself makes it clear that Pagdens acts as an agent for the investor principal and not for the bank. If the agent is an attorney (like Pagdens) wishing to invest trust funds, these funds had to be paid into the attorney’s trust account/s first (which accounts in this case, Pagdens held with Nedbank and Standard Bank).

[25] During September 2014, Weddell received a call from Vienings (qua business rescue practitioner it would seem) requesting Pagdens to issue an undertaking in favour of HDC as part of security for the obligations of the Tyefu Community Farming Trust. Vienings mentioned that the proposed undertaking would be underwritten by payment of Cape Concentrate’s funds into Pagdens’ trust account, and that HDC would only accept on-demand guarantees. Shortly thereafter, Weddell received correspondence from HDC’s attorney, stating that HDC required a “corporate saver guarantee” in the amount of R5-million, which would be payable upon presentation of HDC’s invoices to Pagdens in respect of credit purchases done on behalf of the Tyefu Trust. HDC’s ABSA bank account was nominated as the payee account. According to Weddell, a corporate saver guarantee was the equivalent Nedbank product to Standard Bank’s TPFA guarantee.

[26] It came about then, that during August 2014, Cape Concentrate paid R6-million into Pagdens’ Nedbank trust account, whereafter the money was transferred into a TPFA account opened by Pagdens on behalf of Cape Concentrate. As HDC initially only required a guarantee of R5-million, Pagdens called on the Standard Bank to issue a demand guarantee for that amount, which it did. This was the first of the six demand guarantees which I listed earlier on.

[27] According to Weddell (and this is not in dispute) the guarantee bears the electronic signature of a Standard Bank official and can only be honoured by Standard Bank through the use of the TPFA system. Subsequently, and on five diverse occasions, the Company (as investor principal) paid funds into Pagdens’ trust account. These funds were systematically paid into the TPFA account, and Standard Bank issued five more demand guarantees, after the funds had been cleared. This is with the exception of the second last payment of R9-million on 19 November 2014, which the Company (as investor principal) paid directly into a separate TPFA account. The issued demand guarantees were then delivered to HDC.

[28] With respect to the events of 7 and 8 May 2015, Parker stated in his confirmatory affidavit, that demand for payment of the demand guarantees was made on HDC’s behalf. Vienings was informed of this and he “agreed that the demands had to be met”. The only logical and reasonable inference in the circumstances is that Vienings agreed in his representative capacity as the Company’s business rescue practitioner, although ex facie the guarantees, payment does not in any event, seem to be conditional upon the principal’s agreement.

[29] According to Weddell, it was then required of Pagdens to present the guarantees for payment electronically. Practically, this was achieved by Pagdens loading an authorised instruction for Standard Bank to pay the guaranteed amount into an account nominated by Pagdens on the TPFA system. The bank would then honour the guarantee by paying the guaranteed amount into the account nominated by Pagdens (in this case Pagdens’ trust account/s), which in turn paid the guaranteed amount to the payee (HDC). These steps then, according to Weddell, constituted Pagdens’ electronic presentment of the guarantees for payment, and their payment by Standard Bank.

[30] Parker, in his confirmatory affidavit, also spoke to matters of practicality discussed in the correspondence exchanged on 7 and 8 May. It was then so, that HDC’s attorney had to arrange for the demand guarantees to be returned before payment could be made. According to Parker, the guarantees were hand-delivered to him at about 18h00 on 7 May. The following day the payment was processed against the release of the guarantees. This was done by Pagdens’ accounting department loading the release of the funds from the two TPFA accounts, and authorising their transfer into Pagdens’ trust accounts, which transfers remained subject to Pagdens’ compliance with its obligations in terms of its agreements with Standard Bank, including that there were sufficient funds in the TPFA accounts to meet the demands. Accordingly it came about that R12 057 148,99 and R11 049 210,88 were paid from two TPFA accounts into Pagdens’ trust accounts. Thereafter Pagdens authorised payment of HDC’s claim to it on 8 May 2015, whereafter Vienings’ instructions (qua business rescue practitioner) were sought regarding the balance of R839 190,09 held in one of Pagdens’ trust accounts, as per the correspondence which I have already referred to.

[31] All of the above is summed-up very neatly in a letter written by Parker and addressed to one of AATIF’s investment managers in Germany, shortly after the payment was made. It reads as follows:

‘Dear Astrid

HUMANSDORP CO-OPERATIVE LIMITED / TYEFU TRUST / PAGDENS CORPORATE DEMAND

GUARANTEES

1. I refer to your e-mail dated 8 May 2015 addressed to Francois Vienings.

2. On the instructions of Cape Concentrate (Pty) Ltd, Pagdens issued six demand guarantees totallying R25 000 000.00. Copies of the demand guarantees are enclosed.

3. On the instructions of Cape Concentrate, the demand guarantees were issued for the indebtedness of Tyefu Community Farming Trust to Humansdorp Co-operative Limited.

4. Cape Concentrate deposited into the trust with Pagdens sufficient monies to enable Pagdens to honour the guarantees.

5. You will note from the guarantees that:

5.1 the bank’s liability under the guarantees is principal in nature and is not subject to any agreement;

5.2 the bank’s liability shall not be reduced, or in any way affected by any alteration of the terms of the agreement between HDC and Tyefu Trust, or any other arrangements made between Tyefu Trust and HDC; and

5.3 the bank will pay on demand and will not determine the validity of the demand or the correctness of the amount demanded, or become party to any claim or dispute of any nature which any party may allege.

6. Immediate payment of the guarantees to the value of Tyefu’s exposure to HDC was demanded on 7 May 2015.

7. Pagdens was obliged under the above contractual arrangements to make payment in terms of the demand guarantees.

Kind regards,

ROB PARKER

PAGDENS’

[32] Vienings resigned as business rescue practitioner that same month. I was advised from the bar that he has left the country. He was substituted by a Mr Terblanche, who concluded that the Company’s prospects for turnaround were not good.

[33] Terblanche applied for the Company’s liquidation on 15 December 2015. The Company was placed under a provisional winding-up order on 12 January 2016, whereafter the liquidators, who are the present applicants, were provisionally appointed. The Company was finally wound up on 26 March 2016. The present liquidators were finally appointed on 24 June 2016.

[34] Thus it came to pass, that on 7 June 2019 the duly appointed liquidators delivered an application for the setting aside of the aforementioned payment as a disposition without value, and for this money to be repaid to the applicants in their capacities as the liquidators of the Company. Together with their notice of motion, the applicants delivered the affidavit of Mr Cloete Murray, who is cited as the first of four joint liquidators, the others being Mr Thomas van Zyl, Mr Raphael Brink and Ms Caron-Ann Schroeder.

[35] HDC is opposing the application, relying on Rautenbach’s affidavit, to which affidavit the liquidators have duly replied. HDC was granted leave to deliver the affidavits of Weddell and Parker (referred to earlier on) and also that of one Mr Antonie Pick (a solution owner at Standard Bank). The applicants have replied consequentially.

[36] HDC’s attorney, in support of the motion to file Pick’s affidavit, said the following:

‘Amongst the issues arising in the application are:

the agreements between the business rescue practitioner of Cape Concentrate and Pagdens and Pagdens and the Standard Bank in terms of which the Respondent Co-op (the “Co-op”) was provided with Standard Bank guarantees securing the liability of the Tyefu Community Farming Trust (“the Trust”) in respect of a production loan advanced by the Co-op to the Trust in order for the Trust to cultivate a crop of tomatoes for supply to Cape Concentrate;

the manner in which money paid by Cape Concentrate to Pagdens for the purpose of serving as security for the Standard Bank was dealt with;

the issuing of Standard Bank guarantees in favour of the Co-op in respect of the liability of the Trust to the Co-op;

the payment in terms of the guarantees to the Co-op.

That which is a critical issue is who actually made the payment to the Co-op, which is the payment which the Applicant liquidators seek to have set aside in terms of Section 26 of the Insolvency Act.

The liquidators allege that the payment was a payment by Pagdens of Cape Concentrate’s money from its trust account.

The Co-op alleges that the payment was a payment either by the Standard Bank in terms of guarantees or a payment by Pagdens on behalf of the Standard Bank in terms of guarantees.

Neither the liquidators nor the Co-op were party or privy to the agreement between Pagdens and Cape Concentrate and Pagdens and the Standard Bank which led to the issuing by the Standard Bank of the guarantees.

The Co-op does not have any direct knowledge of the circumstances in which payment was made to the Co-op and nor do they have any direct knowledge as to who actually made the payment, Pagdens on behalf of Cape Concentrate or the Standard Bank in terms of the guarantees or Pagdens on behalf of the Standard Bank in terms of the guarantees.

When in reply, the liquidators were insistent that the payment was a payment made by Pagdens on behalf of Cape Concentrate I made enquiries of Pagdens and the Standard Bank so as to determine the true facts. . . .

I have been furnished with an affidavit deposed to by Mr Antonie Pick, of the Standard Bank …

What the affidavit discloses is:- …

It is highly relevant to the determination of this application that the true facts, which do not fall within the knowledge of either the liquidators or the Co-op, relating to the payment received by the Co-op, be established. …

It is plainly in the interests of fairness and justice that the Co-op be granted leave to file the affidavit [of Mr Pick from the Standard Bank] which deals with critical issues of fact and I accordingly pray for an order in terms of the Notice of Motion prefixed hereto. In the event that leave is granted to file the affidavit deposed to by Mr Pick it will obviously no longer be necessary for the Co-op to pursue its application to file the further answering affidavit or its application for leave to subpoena and call witnesses at the hearing of the application.’

[37] On 15 October 2020 Roberson J made an order allowing the hearing (inter alia) of the evidence of Brett Weddell, Robert Parker and Antonie Pick in respect of the facts and circumstances surrounding and involving the issuing, presentation and payment of the six Standard Bank demand guarantees. HDC subsequently abandoned the relief to present the oral testimony of Mr Pick, resulting in the liquidators called him as a witness instead.

[38] As I have said, Pick is a solution owner for savings and investment products employed by Standard Bank. TPFA property guarantees fall within his portfolio. He testified for the best part of two days in these proceedings. To my mind, his evidence did not add value (for want of a better description) to the determination of the three crisp issues identified on the papers, to wit, whether there was a disposition, whether it was for value and whether s 33 of the Insolvency Act is of application. He was unable (and said as much in his affidavit), to express any view at all on the merits of this application. What he said in his affidavit deposed to on 28 May 2020, and what he said when he testified at the insolvency hearing the next day, is by and large set forth in the Standard bank demand guarantees themselves. Pick stated in his affidavit that the TPFA system is an entirely automated online process. This much is also stated in the demand guarantees annexed to the founding papers. Although the name of the investor principal is not apparent ex facie the guarantees, it is obvious from the initial set of affidavits, that it was none other than the Company represented by Vienings (its business rescue practitioner at the time). The fourth paragraph of the demand guarantees is instructive in this regard. It refers to three parties: the beneficiary (which ex facie the document is HDC), the bank (which ex facie the document is Standard Bank) and the principal (which leaves only one other party, being the Company with Pagdens acting as its agent.

[39] The liquidators seem to suggest that Pick’s testimony supports a version that the guarantees were not cancelled (in the sense that they may be presented again for payment). The contention is neither logical nor relevant to the grounds upon which the applicants have relied in support of this application. The grounds for this application are that when the guarantees were paid there was a disposition without value (for the total sum of the six guarantees) on the part of the Company. Whether the guarantees were cancelled has no bearing on the claim of the liquidators. In any event, it was Pick’s evidence that the demand guarantees had indeed been cancelled. In his affidavit, below a heading which reads “Cancellation of the Demand Guarantees” he explained in detail why they were cancelled, and when they were cancelled. Indeed, he referred to the cancellation of all the demand guarantees on at least 12 occasions in this written statement on oath. In his evidence in chief, when led by counsel for the liquidators, he again confirmed that the guarantees had been cancelled. During cross examination he conceded that they could only have been cancelled against payment.

[40] In this respect I agree with the contentions made on HDC’s behalf. This is not a matter which has been referred to trial, where the affidavits stand as pleadings and evidence must be adduced. A consent order was granted for affidavits to be obtained from Parker, Weddell and Pick. Thereafter, the matter was referred to oral evidence to clarify (insofar as the parties may have thought that clarification was still called for), certain limited issues traversed in those affidavits. At the end of the day HDC elected not to present oral evidence as well. Reference to such a possibility was made in the affidavit supporting the application to file Pick’s affidavit. Whatever the elections of the parties may have been, these affidavits stand as evidence as would any other affidavits in application proceedings. In any event, insofar as the affidavits of Parker and Weddell purport to deal with the question of whether the Company made a disposition, I have already answered that question in favour of the applicants.

[41] According to the liquidators’ founding papers, the information which appeared from Pagdens’ letter to Vienings[6] on 8 May 2015, was that Pagdens had paid HDC directly, utilising the Company’s funds, and that this was probably done to avoid the presentation of the guarantees and the concomitant cost implications. It is the contention of the liquidators that the funds that the Company had obtained from AATIF in terms of the AATIF agreement, were diverted for purposes other than what they were intended for, and amount to a disposition on the Company’s part, without the Company having received any value therefor. According to the liquidators, the Company’s provision of security for the debts of the Trust was in breach of the terms and the conditions of the AATIF loan and contrary to its purpose. It is contended that when the AATIF agreement was concluded, it must have been clear to HDC that the Trust and its members would not qualify for advancement of production credit in terms of HDC’s “usual” terms, and in terms of sound commercial practice. HDC could not, and did not, comply with its usual and statutorily imposed requirements in respect of the Trust members, when it agreed to advance credit to them. In particular, so it is argued, the Trust and its members could not comply with FICA requirements, had no trading record, were not tax registered and would not

have been able to provide the necessary “know your client” information. At the time that HDC received Pagdens’ payment from the Company’s funds, HDC knew that neither the Company nor the Trust and its members had any obligation to it. In particular, it knew that the Trust would not be in a position to reimburse the Company for the funds. It is also alleged that whilst HDC extended credit to the Trust of almost R23-million, the Trust could only produce a tomato crop worth about R2-million.

[42] The liquidators accordingly contend that the payment made to HDC from Cape Concentrate’s funds:

a. constitutes a disposition within the meaning of s 2 of the Insolvency Act 24 of 1936;

b. was made within two years of Cape Concentrate’s winding up;

c. was made in circumstances where HDC had rendered no services, nor had it provided any goods or any value to Cape Concentrate;

d. was accordingly without value to Cape Concentrate;

e. falls to be set aside in terms of s 26 of the Insolvency Act, and that HDC is liable to repay the applicants, as the Company’s liquidators.

[43] It is HDC’s contention, on the other hand, that, properly construed, the follow-up to the payment of the guarantees may be summarised as follows:

a. The Company contracted with the Trust for the Trust to produce and supply it with tomatoes in exchange for payment.

b. The Trust required funding in order to produce the tomatoes.

c. HDC made the funds available to the Trust on condition that the Trust ceded payment due to it from the Company, and also that the Company provided bank guarantees for the payment of funds equal to the amount which HDC was lending to the Trust.

d. The Trust used the funds it borrowed from HDC to cultivate the tomatoes.

e. The Trust was thus liable to HDC for repayment of these funds.

f. The Trust also delivered its crop of tomatoes to the Company.

g. The Company was accordingly liable to the Trust for payment for the tomatoes that it had received, but the Trust had ceded the payment due to it (by the Company) to HDC, and accordingly HDC was entitled to the money which the Company owed the Trust.

h. HDC demanded payment of this money from the Company’s business rescue practitioner, when the money was due and payable.

i. The business rescue practitioner undertook (on the Company’s behalf) to pay the demand.

j. The Company failed to pay the money (which it owed to the Trust for the tomato crop) over to HDC.

k. Consequent upon this failure, HDC called up the guarantees which the Company’s business rescue practitioner had provided it.

[44] That having been the case, so it is contended, the Company received a substantial volume of tomatoes from the Trust, which it would not otherwise have received, but for the production loan which HDC had made available to the Trust, which the Trust was under a contractual obligation to repay to HDC in terms of the cession, and which it paid by way of the guarantees which the Company had provided on the Trust’s behalf. The value which the Company had received was twofold. Firstly, it received the Trust harvest, and secondly, it received a commercial advantage in being able to continue trading as a result of having received the tomatoes. Finally, it is contended that the payment of the guarantees was, in effect, a payment to the Trust of the Company’s liability to it, which was required by virtue of the cession, to be paid to HDC. In the alternative, HDC in any event resists payment of the claim, relying on the provisions of s 33 of the Insolvency Act 24 of 1936.

[45] The crisp issues then which require determination in this application are three-fold. Firstly, the question is whether the payment on 8 May 2015 constituted a disposition as defined in s 2 of the Insolvency Act. If the answer is yes, the second issue is whether the disposition was made for value as contemplated by s 26 of the Insolvency Act. If the answer to both these questions is yes, the remaining issue is whether the liquidators are nevertheless, obliged to indemnify HDC in terms of s 33 of the Insolvency Act.

[46] Section 340 of the Companies Act 61 of 1973 (which applies to the Companies Act 71 of 2008 by virtue of item 9 of schedule 5 thereof) provides as follows:

‘Every disposition by a company of its property which, if made by an individual, could for any reason, be set aside in the event of his insolvency, may, if made by a company, be set aside in the event of the company being wound up and unable to pay its debts, and the provision of the law relating to insolvency shall mutandis mutandis be applied to any such disposition.’

[47] It is common cause that Cape Concentrate is a company unable to pay its debts. Therefore the applicability of the provisions of s 26 of the Insolvency Act must be considered. The section reads as follows:

‘Every disposition of property not made for value may be set aside by the court if such disposition was made by an insolvent . . . within two years of the sequestration of his estate, and the person claiming under or benefitted by the disposition is unable to prove that, immediately after the disposition was made, the assets of the insolvent exceeded his liabilities.’

[48] “Disposition” is defined in s 2 of the Insolvency Act as the following:

‘… any transfer or abandonment of rights to property and includes a sale, lease, mortgage, pledge, delivery, payment, release, compromise, donation or a contract therefor, but does not include a disposition in compliance with an order of court, and “dispose” has a corresponding meaning …’

[49] The liquidators have, in their heads of argument (correctly in my view) summed up the position to be, that according to the authorities, it appears that the question whether the disposition was without value must be determined with reference to the time of the disposition, taking into consideration all the circumstances, and taking into account whether a present or contingent advantage was obtained in return for the disposition. Thus it is the substance, and not the form of a transaction which determines if it is a disposition for value.[7] The respondent agrees in principle, but would have this court limit the question of the disposition itself to 8 May 2015 only, contending that no one ever made demand on the Company itself to pay the indebtedness of the Trust to HDC. Nor did the Company itself pay the money over to HDC on 8 May 2015 on which day the liquidators contend the disposition was made. Counsel for HDC has submitted in argument that there was most certainly a disposition by the Company as defined in s 2 of the Insolvency Act, in the form of the pledge of its money to the Standard Bank during August 2014,[8] but that that is not the disposition for which the applicants contend.

[50] Taking into consideration all the circumstances, I am unable to conclude that the fact of the disposition should be limited to the date on which HDC was physically paid with funds which ultimately came from the Company (i.e. 8 May 2015). That would be placing a far too simplistic interpretation on the circumstances viewed holistically. It is so that only dispositions made by the insolvent company are impeachable. A disposition made by the insolvent company’s bank without its authority is not a disposition within the meaning of section 2.[9] On the other hand, it is not necessary to constitute a disposition that the insolvent company should itself personally part with the asset. It is sufficient if its legal representative does so on its behalf.[10]

[51] Both Parker and Weddell have, in any event, deposed to statements on oath saying that on 7 May 2015 Vienings agreed that HDC’s demands had to be met. Vienings (who has always been best placed to confirm or deny that he was party to the agreement) is conspicuous in his absence as a party to, or a material witness in these proceedings. That being the case, neither of the parties can refute that there was an agreement. Such an agreement is certainly consistent with the facts and the probabilities.

[52] I must briefly return to the motivation behind applying for the introduction of the affidavits of Weddell, Parker and Pick. Whilst the affidavits of Weddell and Parker have by and large clarified the position surrounding the issuing of, the presentation of and the payment of the demand guarantees, it remains neither here nor there whether the payment was made by Pagdens using the Company’s funds in Pagdens’ trust account (as contended for by the liquidators), or whether the payment was either by Standard Bank in terms of the guarantees or by Pagdens (on behalf of Standard Bank) in terms of the guarantees.

[53] Taking into account what had transpired before the guarantees were issued (which is largely common cause otherwise HDC ought to have taken issue with the liquidators proceeding by way of application), as well as that which can be gleaned ex facie the guarantees themselves, it is clear that the guarantees formed part of the security which Vienings had tendered (on behalf of the Company as the investor principle) for Tyefu Trust’s obligations to HDC, and that the amounts guaranteed in terms of the guarantees were payable to HDC upon HDC’s first written demand stating that the Trust had not repaid its due and payable production loan.

[54] In the premises I cannot find that the disposition must be confined to the time when the Company pledged its money to Standard Bank, and simply ignore the actual time of the payment. The purpose of the pledge was to cater for what ultimately transpired, which was payment to HDC in the event of the Trust not honouring its debt with HDC. That, to my mind, was when the disposition effectively took place. The correctness or otherwise of the methodology employed or the mechanisms followed in effecting the payment is, in my view, irrelevant to the liquidators’ cause of action in the terms in which they have framed it. The point is that HDC was paid with the Company’s money. It is has not been suggested by either party that Pagdens simply embarked on a frolic of its own when payment was made, or that that there were some highly suspicious collusive and corrupt dealings between Pagdens and HDC (and/or the Company’s business rescue practitioner for that matter). Nor has such a suggestion been borne out by the applicants’ selection in its joinder of parties and causes of action.

The issue of value

[55] In order for the liquidators to succeed in their claim, they must also show that the disposition was without value. “Value” has not been defined in the Insolvency Act, but the term is used twice when the word “consideration” is defined in s 1 of the Companies Act, in the following context:

‘. . . “consideration” means anything of value given and accepted in exchange for any property, service, act, omission or forbearance or any other thing of value including –

(a) any money, property, negotiable instrument, securities, investment credit facility, token or ticket;

(b) any labour, barter or similar exchange of one thing for another; or

(c) any other thing, undertaking, promise, agreement or assurance, irrespective of its apparent or intrinsic value, or whether it is transferred directly or indirectly …’

[56] The author Mars[11] says that what constitutes a disposition “not made for value” in terms of s 26(1) may be a difficult question of fact. No technical meaning attaches to the word “value”, which must accordingly be interpreted in its ordinary sense.[12] In its ordinary signification, a disposition not made for value means a disposition for which no or inadequate benefit or value has been received or promised as a quid pro quo.’[13] “Value” is not confined to monetary or tangible material consideration. It may include any kind of consideration, for example, to promote the continued financial stability of a group of companies.[14] The question whether an insolvent has received value for a disposition of property must be decided by reference to all the circumstances surrounding the payment alleged to have been a disposition.[15] The value given must be adequate. Nominal value would not make the disposition one for value. But, by the same token, it seems that it is not open to the court to inquire with great “nicety” into the adequacy of the value given[16].

[57] The value may be speculative, and it may exist even though no legal action can be brought in respect thereof.[17] A disposition may be for value even though the recipient thereof has not itself given the value.’[18]

[58] Whereas HDC expressed the inclination to rely solely on the payment of 8 May 2015 in defining the term “disposition” (which contention this court has rejected), it has contended (correctly so in my view), that all the surrounding circumstances must be considered when it comes to defining “value”. The liquidators have argued the opposite. The law on this point is settled.[19] I accordingly intend taking into account all the relevant circumstances surrounding the payment (whether retrospective or prospective) in deciding whether it was for value.

[59] The frame of reference as applicable to the relevant facts and circumstances, is, to my mind, relatively simple. It looks something like this. Tomatoes are a vital ingredient for the production of tomato paste. This was Cape Concentrate’s business. It processed tomatoes into tomato paste. Cape Concentrate became financially distressed because Rumibyte was not supplying it with enough tomatoes to turn into tomato paste. Its business rescue practitioner, who was appointed in May 2013, came up with a plan. In December 2013 he formed the Tyefu Community Farming Trust. This was an innovative vehicle established as a community project and a worthy proactive cause involving local and commercial farmers which, at the same time, ensured that the Trust would produce and sell enough tomatoes to Cape Concentrate in order to rescue it. The problem was that the Trust needed funding in order to till the lands, plough the fields, plant the seeds, nurture the growing tomatoes, harvest them and transport them to Cape Concentrate. In short, the Trust needed funding in order to produce tomatoes. HDC having identified the problem, and having been a seemingly entrepreneurial Co-operative, agreed in principle to advance a production loan to the Trust in order to give effect to the plan to produce tomatoes. This was in April 2014.

[60] It is argued by counsel on behalf of the liquidators that HDC had two claims on 8 May 2015. The first was against Tyefu Trust for the production loan. The second was against Cape Concentrate for the tomatoes produced by the Trust and sold to the Company which claim was ceded out and out to HDC. To this end the liquidators have relied on a document signed on behalf of the Trust on 3 September 2014, reflecting a cession by the Trust of all its “cedent”, legal claims and interest in and to payment in respect of all tomato produce which the Trust sold to the Company up to the extent of the Trust’s indebtedness to HDC.

[61] The only debt however, that the Trust had with HDC, was for the production loan. In order to secure payment of that debt, Vienings pledged the demand guarantees, and the Trust ceded any money the Company owed it (in exchange for tomatoes), to HDC. Naturally, after payment in terms of the bank guarantees had settled the Trust’s liability at the time to HDC in terms of the production loan, it became necessary for the cession to be cancelled, which HDC duly did on 4 June 2015. In my view it is a circuitous argument to suggest that HDC had one claim against the Trust for the production loan, and another against Cape Concentrate for the proceeds of the sale of tomatoes by the Trust to Cape Concentrate. The second claim cannot simply exist in a vacuum. It may have been a second form of security but it was in respect of the same production loan. That is why HDC cancelled the cession after the production loan was settled.

[62] The submissions made by the deponent to HDC’s answering affidavit, although coming across as somewhat convoluted, once unravelled, seem to say exactly that. At the risk of repetition, I quote from Rautenbach’s affidavit:

‘Properly construed, the payment of the guarantees followed upon (my emphasis):

Cape Concentrate having contracted with the Trust for the Trust to cultivate and supply it with its requirement of tomatoes;

the respondent having contracted with the Trust to make a production loan facility available to it in order to fund its cultivation and supply of tomatoes to Cape Concentrate conditional upon the Trust ceding the payments due to it from Cape Concentrate for its delivery of its crop of tomatoes to the Respondent and (my emphasis) the provision of Bank guarantees in a sum equal to the sum advanced by the Respondent to the Trust in terms of the production loan;

Cape Concentrate having agreed with the Trust to provide the Bank guarantees required by the Respondent from the Trust on its behalf in order for the Trust to have the means with which to cultivate the crop of tomatoes for supply to Cape Concentrate;

Cape Concentrate having provided on behalf of the Trust guarantees by the Standard Bank in favour of the Respondent so as to enable the Trust to produce a crop of tomatoes for supply to Cape Concentrate;

the Trust having utilised the production loan advanced by the Respondent with which it cultivated a crop of tomatoes and, as a result, having accrued a liability to the Respondent for the repayment of the loan;

the Trust having delivered its crop of tomatoes to Cape Concentrate and Cape Concentrate having accrued a liability to the Trust for payment of the contract value of the tomatoes delivered;

the Trust, having ceded to the Respondent Cape Concentrate’s liability to the Trust, the proceeds due to the Trust were payable to the Respondent; and

Cape Concentrate having failed to make payment to the Respondent, in terms of the cession of the proceeds due to the Trust, the guarantees were called upon which then brought about the payment of Cape Concentrate’s liability to the Trust for its crop of tomatoes delivered to Cape Concentrate and the payment of the Trust’s liability to the Respondent.’

[63] The aforementioned is by virtue of the fact that whatever the Company was paying to the Trust (which as it turns out came to naught), had been ceded to HDC as payment towards the production loan. It goes without saying then, that once the production loan had been paid, the cession fell to be cancelled, which it was.

[64] The fact remains that the Company did receive a substantial volume of tomatoes from the Trust, which tomatoes the Trust would not have been able to produce but for the secured production loan from HDC. According to Vienings’ inventory report dated March 2015, the Trust had already managed to produce and deliver in the region of 5 635 tons of tomatoes to the Company and about R12-million worth of tomato paste had been made. It is not clear whether the tomato paste referred to had been processed from the 5 635 tons of tomatoes, or whether the latter had been received after the Company had already manufactured R12-million worth of tomato paste. The liquidators have not taken the respondent or this court into their confidence in this regard.

[65] Be that as it may, the liquidators have been prepared to concede that the Trust had produced a tomato crop of at least R2-million. At the other end of the scale, taking into account the price of tomatoes as anything between R880 and R1 446 per ton, 5 635 tons of tomatoes would be worth, at an average calculation of R1 000 per ton, just under R5-million.

[66] To my mind, the fact that the Trust was able to produce the tangible benefit of a harvest worth at least R2-million is directly attributable to the advance of the production loan that was used (inter alia) to set up farming operations and equipment, to prepare the lands, to correctly cultivate the tomatoes, and to harvest and convey them to the Company. Without these services and equipment, there would have been no tomatoes.

[67] In this context, as I have already pointed out with reference to the authorities and the case law, the value does not have to be commensurate with the disposition. It can be anything of value. Indeed, it can even be speculative value, to be taken into consideration at the time that the promise [to settle the production loan] was made.

[68] Taking all the relevant surrounding circumstances into consideration, the following, in my view is significant: The Tyefu Trust was established in December 2013. In September 2014 a business rescue report reflected that the Trust’s application for funding had been approved by HDC subject to securities. As a result the Trust was able to commence farming activities with the planting of one million tomato seedlings per week. On 26 March 2015 Vienings forwarded a production inventory to HDC. Therein it was reflected that Cape Concentrate had in the region of R12-million worth of final product on its factory floor, and that it anticipated receipt of at least 100 000 tons of tomatoes from the Trust.

[69] It also confirmed that HDC was holding R25-million in cash security as advanced by the Company for the Trust’s production loan from HDC. It confirmed that the Company would settle in full the balance due by the Trust to HDC, 30 days after harvest, either directly and/or by the calling in of the securities. Due to cash flow problems, which Vienings explained to a greater or lesser extent, he, on behalf of the Company, requested a short term loan facility from HDC in the sum of R3-m for an interest payment to AATIF, pledging the R12-million stock on hand as security, which loan would be repaid as soon as the stock was sold. Importantly, the letter confirmed that the pledge/cession of the paste would have no effect on the guarantees which the Company had furnished on the Trust’s behalf.

[70] The only reasonable inference to be drawn from the scenario sketched and the undertakings given by the Company’s business rescue practitioner during March 2015 is that, as a consequence of, or in return for the production loan, tomatoes had indeed been produced and were in an ongoing process of being produced, and had already been processed into R12-million worth of tomato paste, with high expectations for the next harvest. Although the Company was experiencing a slow turnover, it anticipated being able to settle the production loan from the proceeds of the sale of tomato paste and/or the release of the demand guarantees. The fact that the tomato paste on hand had been offered as a pledge or security for a direct loan between the Company and HDC, does not affect the overriding fact that it is the production loan which enabled the Company to have the value of the stock in trade in the first place.

[71] To this extent I am inclined to agree with HDC’s counsel. Not only did the production loan afford the Company the commercial advantage of having been able to continue trading as a result of having received the tomatoes. The tomatoes which had been processed into stock on hand also potentially served as a valuable bargaining tool for Cape Concentrate itself to apply for short term loan facilities and the like. Furthermore, the tomatoes provided were eminently capable of being turned into paste – which was exactly what Cape Concentrate intended to do in order to achieve a turnaround.

[72] HDC has not been enabled to accurately comment on the rand value of the tomatoes received by the Company in relation to the rand value of the paste which the Company produced/was producing. Only the liquidators, to some extent the Trust, and the erstwhile business rescue practitioner have been in a position to do so. As I have said, the liquidators have been prepared to concede a minimum crop value in the region of R2-million.

[73] I repeat that it matters not, for purposes of this enquiry, whether all the role players had complied with undertakings, or terms and conditions, when consideration is given to all the circumstances surrounding the payment. The applicants also have not claimed in their motion papers that the payment of Cape Concentrate’s funds to HDC constituted an undue preference. If that were the case, undertakings, terms, conditions and the like may well have been relevant. The applicants’ case is simply that there was a disposition, and that no value was received in return therefor. It is not in dispute that the funds held in terms of the demand guarantees were used to discharge the production loan.

[74] To sum up then, in contending that the Company did receive value, HDC seems to have relied on a type of “but for” test. But for the provision of the production loan, so it is argued, the Trust would not have been in a position to supply the Company with tomatoes. But for the Trust supplying the Company with tomatoes, it would not have been in a position to manufacture tomato paste. Simply stated, I am persuaded that the quid pro quo (ie the fair value) which the Company received in exchange for paying the production loan, was an ongoing and substantial supply of tomatoes, together with the concomitant commercial advantage of having been able to continue trading and continue meeting the demands that trading entailed. It also goes without saying that the payment has had the direct effect of reducing (by the value thereof), potential claims against the Company’s insolvent estate.

[75] Because of what I have found, it is not necessary to address the alternative argument with respect to indemnity.

Costs

[76] On 4 June 2020 Lowe J (by consent) granted HDC leave to file the affidavits of Parker, Pick and Weddell, subject to the liquidators’ rights of reciprocity. The main application (which had been set down for 4 June 2020) was postponed to 15 and 16 October 2020 and the costs occasioned by the postponement were reserved.

[77] Just short of a month prior to this, HDC had delivered an application in terms of rule 6(5)(g) for the oral evidence of Rob Parker and one Ayanda Ngebisa (from Standard Bank) to be heard regarding the issuing and the payment of the demand guarantees. The affidavit supporting the motion had been deposed to on 16 March 2020. It was envisaged that that application would be brought a week before the date on which the main application had been set down. The reasons stated for the application was that HDC were unable to establish from Pagdens or Standard Bank whether the Company’s funds had been pledged to the bank, and how exactly the payment had been effected. Part of the relief sought was for HDC to be authorised to serve subpoenas duces tecum on the proposed witnesses, calling on them to produce documents relating to the TPFA and the guarantees within ten days of receipt of the suppoenas. It goes without saying that if all went according to plan, the application would no longer have been ripe for hearing on 4 June 2020.

[78] I do not intend to traverse all that transpired between the parties shortly before 4 June 2020. It suffices to say that the wasted costs could have been avoided or mitigated by the removal of the main matter from the roll. According to the papers before me, such a suggestion was indeed made by the attorneys for the liquidators, but was rejected by HDC’s attorneys. In the circumstances an order, incorporating a costs order against HDC for 4 June 2020, would be appropriate.

Order

(a) The application is dismissed with costs, which costs shall include the costs of two counsel, and shall exclude the costs of 4 June 2020.

(b) The respondent (Humansdorp Co-operative Limited) is ordered to pay the wasted costs occasioned by the postponement of this application on 4 June 2020.

I.T. STRETCH

JUDGE

OF THE HIGH COURT

Counsel for the applicants: Mr J.E. Smit

Instructed by Werksmans Attorneys

Tel. 011 535 8160 / 082 404 9456

Email: avandermerwe@werksmans.com

Care of Netteltons Attorneys

Tel. 046 622 7149

Email: ilze@netteltons.co.za

Counsel for the respondent: D.H. de la Harpe SC and K.L. Watt

Instructed by De Jager & Lordan Inc.

Tel. 046 622 2799 / 083 407 8138

Email: marius@djlaw.co.za

Ref.: JJM Coetzee/as/H519

Dates heard: 8 to 12 February 2021

Transcript of evidence and respondent’s argument received on 26 February 2021

Transcript of applicants’ argument received on 11 July 2021

Judgment handed down electronically on 26 July 2021 by way of email to the attorneys

[1] The respondent

[2] The Tyefu Trust

[3] At a price of between R880 and R1 446 per ton.

[4] Rob Parker is an attorney and a director of Pagdens.

[5] Directly translated, the email reads as follows: ‘ We herewith confirm the outstanding balance of the abovementioned client’s account: . . . Total due R22 268 848.85. The rest of the original guarantees were placed in a safe at Groenewalds Attorneys during December 2014, and we already have it in our possession. Shaun Lindeque from our office is leaving now to collect the guarantees (those which are there) at your office, whereafter he will take it to Rob Parker. Payment of the abovementioned amount must then be effected with reference ‘Tyefu Trust’. Please confirm receipt of this email, and where Shaun can collect the documents. It will only be at around 18h00 . . . ‘

[7] Commissioner for Inland Revenue v Bowman NO [1990] (4) All SA 655 (AD) at 657

[8] A pledge is one of the transactions identified in s 2 of the Insolvency Act as a disposition.

[9] See Zamzar Trading (Pty) Ltd (in Liquidation) v Standard Bank of SA Ltd 2001 (2) SA 508 (W) at 515

[10] See Grobler v De Beer’s Trustee 1915 AD 265; Estate Hunt v De Villiers 1940 CPD 79 at 86

[11] Mars: The Law of Insolvency in South Africa: 9ed, 2012, page 254

[12] Estate Wege v Strauss 1932 AD 76 at 82

[13] Estate Jager v Whittaker 1944 AD 246 at 250

[14] Langeberg Kooperasie Bpk v Inverdoorn Farming and Trading Co Ltd 1965 (2) SA 597 (A)

[15] Swanee’s Boerdery (Edms) Bpk (In Liquidation) v Trust Bank of Africa Ltd 1986 (2) SA 850 (A); Umbogintwini Land and Investment Co (Pty) Ltd (in liquidation) v Barclays National Bank Ltd and another 1987 (4) SA 894 (A) at 912

[16] Goode, Durrant and Murray Ltd v Hewitt and Cornell NNO 1961 (4) SA 286 (N) at 291. Differently put, there is no requirement that the value given must be fair value. See Pro-med Construction CC v Botha [2012] ZAGPJHC 145 at paras 21-24.

[17] Estate Jager (above) at 250. See also Alley Cat Clothing (Pty) Ltd v De Lisle Weare Racing [2002] 1 All SA 123 (D) at 135 where this principle was applied to payment of a gambling debt.

[18] Goode (above) at 291

[19] See the cases referred to in fn 14 above.