Venter NO en 'n Ander v Coetzee en Andere (916/2003) [2004] ZAFSHC 67 (17 June 2004)

Venter NO en 'n Ander v Coetzee en Andere (916/2003) [2004] ZAFSHC 67 (17 June 2004)

The court found that BSM Marketing Management (Pty) Ltd operated an illegal pyramid scheme, as evidenced by the unrealistic guaranteed returns (45% in 4-6 months, equating to 90% per annum), the absence of genuine underlying business activity, and the use of new investor funds to pay earlier investors. The respondents’ explanations were rejected as far-fetched and untenable. The court confirmed that the liquidators had locus standi to bring the application, as the requirement for Master’s authorisation is intended to protect creditors and members, not to bar proceedings against third parties. The court authorised the use of evidence from the Commission of Inquiry. Accordingly, the rule...

Citation
[2004] ZAFSHC 67
Parties
Applicant: CJ Venter NO; Applicant: JH Janse van Rensburg NO; Respondent: BB (Ben) Coetzee; Respondent: JJ (Kobie) Coetzee; Respondent: JE (Johan) Coetzee; Respondent: JA Huysamen; Respondent: JKB Finansiële Beleggings; Respondent: Spazago Management Services BK; Respondent: Tresso Trading 351 (Edms) Beperk; Respondent: Blueskeye Private Equity (Edms) Beperk; Respondent: BB (Ben) Coetzee NO (Jobenko Trust); Respondent: JJ (Kobie) Coetzee NO (Jobenko Trust); Respondent: JE (Johan) Coetzee NO (Jobenko Trust); Respondent: BB (Ben) Coetzee NO (Benjoko Trust); Respondent: JJ (Kobie) Coetzee NO (Benjoko Trust); Respondent: JE (Johan) Coetzee NO (Benjoko Trust); Respondent: BB (Ben) Coetzee NO (Coetzee Broers Familie Trust, IT5515/02); Respondent: JJ (Kobie) Coetzee NO (Coetzee Broers Familie Trust, IT5515/01); Respondent: JE (Johan) Coetzee NO (Coetzee Broers Familie Trust, IT5515/01); Respondent: BB (Ben) Coetzee NO (ESM Trust); Respondent: JJ (Kobie) Coetzee NO (ESM Trust); Respondent: JE (Johan) Coetzee NO (ESM Trust); Respondent: Coetzee Boerdery Vennootskap
Court
Free State High Court, Bloemfontein
Jurisdiction
South Africa
Judgment Date
17 June 2004
Case Number
916/2003
Procedural Posture
Urgent Application / Determination of Confirmation of Rule Nisi and Referral of Disputed Issues for Oral Evidence
Outcome
Rule nisi confirmed in respect of the declaration of an unlawful scheme; costs awarded against first and fourth respondents; remaining issues referred for oral evidence.
Judges
Beckley, R
Legal Topics
Illegal Pyramid Scheme, Banking Act Compliance, Unfair Business Practices, Liquidation Procedure, Rule Nisi Confirmation, Oral Evidence Referral
Commercial and Corporate Banking and Finance Civil Procedure Illegal Pyramid Scheme Banking Act Compliance Unfair Business Practices Liquidation Procedure Rule Nisi Confirmation +1 more

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Parties

CJ Venter NO

Applicant

JH Janse van Rensburg NO

Applicant

BB (Ben) Coetzee

Respondent

JJ (Kobie) Coetzee

Respondent

JE (Johan) Coetzee

Respondent

JA Huysamen

Respondent

JKB Finansiële Beleggings

Respondent

Spazago Management Services BK

Respondent

Tresso Trading 351 (Edms) Beperk

Respondent

Blueskeye Private Equity (Edms) Beperk

Respondent

BB (Ben) Coetzee NO (Jobenko Trust)

Respondent

JJ (Kobie) Coetzee NO (Jobenko Trust)

Respondent

JE (Johan) Coetzee NO (Jobenko Trust)

Respondent

BB (Ben) Coetzee NO (Benjoko Trust)

Respondent

JJ (Kobie) Coetzee NO (Benjoko Trust)

Respondent

JE (Johan) Coetzee NO (Benjoko Trust)

Respondent

BB (Ben) Coetzee NO (Coetzee Broers Familie Trust, IT5515/02)

Respondent

JJ (Kobie) Coetzee NO (Coetzee Broers Familie Trust, IT5515/01)

Respondent

JE (Johan) Coetzee NO (Coetzee Broers Familie Trust, IT5515/01)

Respondent

BB (Ben) Coetzee NO (ESM Trust)

Respondent

JJ (Kobie) Coetzee NO (ESM Trust)

Respondent

JE (Johan) Coetzee NO (ESM Trust)

Respondent

Coetzee Boerdery Vennootskap

Respondent

Procedural Posture

Urgent Application / Determination of Confirmation of Rule Nisi and Referral of Disputed Issues for Oral Evidence

Legal Issues

  1. 1 Whether BSM Marketing Management (Pty) Ltd operated an illegal pyramid scheme.
  2. 2 Whether the business activities contravened Regulation 1135 under the Consumer Affairs (Unfair Business Practices) Act 71 of 1988.
  3. 3 Whether the scheme was operated in contravention of section 11 of the Banks Act 94 of 1990.

Ratio Decidendi

The court found that BSM Marketing Management (Pty) Ltd operated an illegal pyramid scheme, as evidenced by the unrealistic guaranteed returns (45% in 4-6 months, equating to 90% per annum), the absence of genuine underlying business activity, and the use of new investor funds to pay earlier investors. The respondents’ explanations were rejected as far-fetched and untenable. The court confirmed that the liquidators had locus standi to bring the application, as the requirement for Master’s authorisation is intended to protect creditors and members, not to bar proceedings against third parties. The court authorised the use of evidence from the Commission of Inquiry. Accordingly, the rule...

Court Disposition

Rule nisi confirmed in respect of the declaration of an unlawful scheme; costs awarded against first and fourth respondents; remaining issues referred for oral evidence.

Orders

  • Paragraph 2.1 of the rule nisi is confirmed, declaring BSM Marketing Management (Pty) Ltd operated an unlawful pyramid scheme.
  • First and fourth respondents are ordered jointly and severally to pay the costs of the application.