South Africa Case Law

Stewart NO and Another v Bekker and Others (2349/11, 3006/11, 3008/11)

Stewart NO and Another v Bekker and Others (2349/11, 3006/11, 3008/11) [2012] ZAFSHC 230 (4 December 2012)

Court

Free State High Court, Bloemfontein

Case number

2349/11, 3006/11, 3008/11

Judge

B.C. Mocumie

The court held that the payments received by the defendants from the illegal pyramid scheme operated by the Minnes constituted dispositions without value under section 26 of the Insolvency Act. Applying the principles from Fourie v Edeling, the trustees were entitled to recover only the excess amounts received by the defendants over their original investments, not the invested capital itself. The plaintiffs' initial claims for the full amounts were incorrect and contributed to the protracted litigation. Both parties were found to have contributed to the drawn-out proceedings by failing to mak…

Source excerpt

• Insolvency Act Section 26
• Illegal Pyramid Scheme
• Disposition Without Value
• Banks Act Section 11
• Harmful Business Practice
• Expert Witness Costs

Stewart and Another v Prinsloo and Others (1431/2011, 1430/2011, 1824/2011, 2196/2011)

Stewart and Another v Prinsloo and Others (1431/2011, 1430/2011, 1824/2011, 2196/2011) [2012] ZAECPEHC 30 (15 May 2012)

Court

Eastern Cape High Court, Port Elizabeth

Case number

1431/2011, 1430/2011, 1824/2011, 2196/2011

Judge

Revelas

After settlement of an insolvency action arising from an illegal investment scheme, the High Court ordered each party to pay its own costs and allowed expert witness fees.

• Insolvency Act Section 26
• Insolvency Act Section 30
• Illegal Pyramid Scheme
• Unlawful Dispositions
• Costs Award
• Banking Act Contravention

Oosthuizen and Another v Robberts (23669/2004)

Oosthuizen and Another v Robberts (23669/2004) [2008] ZAGPHC 274 (12 September 2008)

Court

High Courts - Gauteng

Case number

23669/2004

Judge

Seriti

The court found that the payments made by the liquidated close corporations to the defendant constituted voidable preferences under section 29 of the Insolvency Act. The payments were made within six months prior to liquidation, at a time when the corporations' liabilities exceeded their assets, and had the effect of preferring the defendant over other creditors. The defendant failed to prove that the payments were made in the ordinary course of business, given the usurious interest rates and the manner of payment, which included cash transactions and internet transfers from the corporations'…

Source excerpt

• Insolvency Act Voidable Preference
• Illegal Pyramid Scheme
• Unlawful Deposit Taking
• Creditor Preference
• Liquidation Procedure

Venter v Sackstein N.O and Others (9229/05)

Venter v Sackstein N.O and Others (9229/05) [2008] ZAECHC 75 (26 May 2008)

Court

High Courts - Eastern Cape

Case number

9229/05

Judge

Revelas

The court found that the Supreme Court of Appeal in Fourie v Edeling NO and Others, although not making an explicit order regarding reinvestments, accepted as a matter of law that book-entry reinvestments ('roll overs') do not constitute impeachable dispositions under the Insolvency Act. The judgment clarified that the repayment of an investor's capital, even if the underlying scheme was illegal, is not a disposition without value and is made in discharge of an obligation to return the illegal payment. The court rejected the defendants' artificial construction that the 'roll over' referred on…

Source excerpt

• Insolvency Act Section 26
• Insolvency Act Section 30
• Illegal Pyramid Scheme
• Settlement Agreement Interpretation
• Disposition Of Property
• Reinvestment Rollover

Venter NO en 'n Ander v Coetzee en Andere (916/2003)

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

Court

Free State High Court, Bloemfontein

Case number

916/2003

Judge

Beckley, R

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.…

Source excerpt

• Illegal Pyramid Scheme
• Banking Act Compliance
• Unfair Business Practices
• Liquidation Procedure
• Rule Nisi Confirmation
• Oral Evidence Referral