Court name
Supreme Court of Appeal of South Africa
Case number
1121 of 2015

Kruger v Joint Trustees of the Insolvent Estate of Paulos Bhekinkosi Zulu and Another (1121 of 2015) [2016] ZASCA 163 (10 November 2016);

Law report citations
[2017] 1 All SA 1 (SCA)
Media neutral citation
[2016] ZASCA 163
Coram
Mpati AP
Willis JA
Saldulker JA
Dambuza JA
Potterill AJA

THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA


JUDGMENT


Reportable


Case
No: 1121/2015


In
the matter between:


JOHANNES
GEORGE KRUGER                                   

                               

     APPELLANT


and


JOINT
TRUSTEES OF THE INSOLVENT ESTATE OF


PAULOS
BHEKINKOSI ZULU                                        

                     
FIRST RESPONDENT


THE
REGISTRAR OF DEEDS,


PIETERMARITZBURG                                                              

       SECOND RESPONDENT







Neutral
Citation:
     Kruger
v Joint Trustees
(1121/2015)
[2016] ZASCA 163 (10 November 2016).


Coram:         
          Mpati
AP, Willis, Saldulker, Dambuza JJA and Potterill AJA


Heard:          
           15
September 2016


Delivered:    
        
10
November 2016


Summary:
Banking Law: unregistered person conducting the business of a bank in
contravention of certain provisions of the Banks
Act 94 of 1990:
appointment of a repayment administrator in terms of s 84 of Banks
Act to recover and take possession of assets
of the unregistered
person: extent of powers of repayment administrator: unregistered
person subsequently sequestrated and trustees
appointed: effect of
powers of trustees on those of repayment administrator.


ORDER


On
appeal from:
KwaZulu-Natal
Division of the High Court, Pietermaritzburg (Radebe J sitting as
court of first instance):


The
appeal is upheld and the order of the court a quo is set aside and
replaced with the following:


1
The points
in
limine

are dismissed.


2
The costs shall be costs in the sequestration.’


JUDGMENT


Dambuza
JA (Mpati, Willis, Salduker JJA and Potterill AJA concurring):


[1]
This appeal concerns the interpretation of certain provisions in
Chapter VIII of the Banks Act 94 of 1990, (the Banks Act) relating
to
repayment of money obtained by unregistered persons who conduct the
business of a bank. The central issue is the extent of the
powers of
a repayment administrator under s 84(1A)
(b)(i)
of the Banks Act when recovering and taking possession of assets
belonging to the unregistered persons in managing the repayment

process. The appeal is against an order of the KwaZulu-Natal Division
of the High Court, Pietermaritzburg (Radebe J) (the high
court),
dismissing an application in which the
registrar
of banks (the registrar) sought to take possession of assets in the
estate of Mr Paulos Bhekinkosi Zulu, the first respondent
before the
court a quo, pursuant to a direction issued by the registrar of banks
in terms of s 83(1) of the Banks Act. The appeal
is with leave of the
high court.


[2]
Following an inspection conducted in terms of s 12 of the
Reserve Bank Act 90 of 1989,
[1]
the registrar concluded that an entity known as Travel Ventures
Marketing Agency (Newcastle) or Travel Ventures Institution (TVI),

controlled by Mr Zulu, had engaged in the business of obtaining money
by conducting the business of a bank without being registered
as such
in terms of s 17 of the Banks Act or being authorised to conduct
such a business under s 18A(1) of the Banks
Act.[2]
TVI was described on its website as: ‘an International Direct
Selling Company having Alliances and Channel partners all across
the
world’ and as ‘one of the fastest growing companies in
the Network Marketing Industry today’. It claimed
to operate in
over 160 countries across the globe and that its head office was in
London.


[3]
The business entailed the marketing and sale of a travel voucher,
mostly in electronic form. The voucher purportedly gave members

significant discounts for international travel and accommodation with
‘travel partners’ including the Hilton Hotels,
Lufthansa,
Swissair, South African Airways and many other reputable companies.
It had to be bought electronically at USD250[3]
via TVI’s website. Each had a unique number and a member
purchasing it was accorded a particular status, such as an
‘Associate’
or ‘Distributor’. The member
would be granted certain rewards such as a seven day holiday at a
partner’s three
to five star hotel or resort, a free companion
flight and a lifetime access to TVI’s promotions and discounts
in relation
to air travel, accommodation, car hire and travel
insurance.


[4]
The structure of the institution and its business was that of a
typical pyramid scheme. A member had to traverse two boards,
the
‘traveller’ and the ‘express’ boards. Upon
joining, members were initially given positions at level
one of the
traveller board and would thereafter travel across four levels until
they exited the first (traveller) board. On exiting
the first board
they received a reward of USD250 in cash and USD250 in vouchers
(‘double your investment’!). But to
qualify for the
rewards they had to ‘sponsor’ two new entrants. A member
exiting the traveller board would then go
on to the first level of
the express board where the exit reward was USD10 000.
Thereafter the member could go on to the next
express board,
ad
infinitum
.
A member would also earn five to ten per cent of sales made by his or
her ‘downline’ (those that he sponsored and
those
sponsored by them), and be eligible for numerous other prizes. As a
marketing gimmick, TVI’s presentation displayed
endorsements of
network marketing companies by Messrs Warren Buffet, Bill Clinton,
Robert Kiyosaki and Donald Trump.


[5]
Unsurprisingly, TVI was declared an illegal scheme in various
jurisdictions throughout the world.
[4]
In this country, the institution had brutally taken advantage of the
informal communal savings structures (the stokvels) through

distributors, some of whom were religious ministers, politicians, and
civil servants, including magistrates and prosecutors. The
total
investment into the institution, within the country, was estimated at
R1,6 billion. Mr Zulu, was one of the distributors.
He had opened
bank accounts in the name of TVI.


[6]
On 18 March 2011 the registrar appointed, amongst others, the
appellant, Mr Johannes George Kruger, as a temporary inspector
in
terms of s 11 (1), read with s 12(1), of the South African Reserve
Bank Act 90 of 1989, to conduct an inspection into the business

practices of, amongst others, TVI. After his appointment, Mr Kruger
identified numerous investments of R2 700 each, or multiples

thereof, as possible investment deposits in Mr Zulu’s bank
accounts opened in the name of TVI.  He also identified certain

assets owned by Mr Zulu, including four immovable properties situated
in Kwazulu-Natal and three motor vehicles registered in his
name. Mr
Kruger established that some of the investment funds received were
used to purchase Mr Zulu’s assets.


[7]
As a result of the inspection, the registrar was satisfied that TVI
and Mr Zulu had obtained money by conducting the business
of a bank
without being registered as such in terms of s 17 of the Banks Act,
or without being authorised in terms of the provisions
of s 18A(1) of
the same Act, to conduct the business of a bank. On 28 November 2012
the registrar issued a repayment direction
in terms of s 83(1) of the
Banks Act and appointed Mr Kruger as a repayment administrator in
terms of s 84(1), to ‘manage
and control’ repayment of
all the moneys obtained by Mr Zulu in contravention of the Banks Act.


[8]
Mr Kruger then brought an urgent, ex parte application in the high
court, for an order authorising him to recover and take possession
of
all of Mr Zulu’s assets, including certain identified fixed
properties, in terms of the provisions of

s 84(1A)(b)(i)
of the Banks Act. He also sought to have the title deeds of the
identified immovable properties endorsed by the registrar of
deeds
with
caveats.
On 18 January 2013 a rule nisi was granted and a search warrant was
issued in terms of s 5(1)
(b)
of the Inspection of Financial Institutions Act 80 of 1998,
authorising Mr Kruger to search Mr Zulu’s premises at 16
Mountford Street, Pioneer Park, Newcastle Extension 63 in Newcastle. 



[9]
In opposing the application, Mr Zulu contended that it constituted an
abuse of court process and was unnecessary. He raised
three points
in
limine
.
The first was lack of urgency. The second was that he should have
been given notice of the application. The third was non-joinder
of
interested parties. With regard to lack of urgency, Mr Zulu argued
that, given that Mr Kruger had the powers he relied on as
far back as
22 March 2012, about nine months prior to approaching the court a
quo, there was no urgency in the matter. On that
date Mr Kruger, as a
temporary inspector appointed in terms of ss 11(1) and 12 of the
Reserve Bank Act, had obtained another warrant
in terms of s 5(1)(b)
of the Inspection of Financial Institutions Act which, for all
intents and purposes, was in the same terms as the one subsequently
issued on 18 January 2013. Further, Mr Zulu highlighted
that he had
readily made himself available previously, when requested to do so.
He had previously attended an inquiry held at the
offices of Mr
Kruger’s attorneys. The special pleas of a failure to give
notice and an unwarranted failure to observe the
prescribed filing
periods were based on this previous interaction. Mr Zulu contended
that the failure to disclose the previous
interaction constituted
non-disclosure of material information and, therefore,
an
abuse of court process. The non-disclosure was fatal to the ex parte
application, so it was contended.


[10]
With regard to non-joinder, the contention was that seven people (Mr
Zulu’s wife and her siblings), each of whom held
a 14 per cent
interest in three of the cited immovable properties, should have been
joined in the proceedings. Further, the financiers
of the motor
vehicles should also have been joined in the application. In any
event, so it was argued, Mr Zulu had sold one of
the vehicles as far
back as 2005, but transfer of ownership had not been registered with
the relevant licencing authorities.


[11]
On the merits of the application, Mr Zulu’s argument was that
,
the provisions of s 84(1A)
(b)(i)
of the Banks Act were limited to assets acquired from proceeds
obtained in contravention of the Banks Act or through activities

performed in contravention of the Act. The contention was that Mr
Zulu’s wife and her siblings had inherited the immovable

properties from their parents who had acquired them prior to the
contravention of the Banks Act. And, he had bought the fourth

immovable property in 2007, prior to the contravention of the
provisions of the Banks Act. Therefore, all these assets were not

liable to attachment under s 84. It was not in dispute, however, that
Mr Zulu and his wife were married in community of property
to each
other.


[12]
On the return date, in November 2013, the court a quo discharged the
rule nisi on the basis of the three points
in
limine
.
The court found that each point in limine was, on its own, fatal to
the application. However, the discharge of the rule nisi was
founded,
largely, on Mr Kruger’s failure to disclose certain material
information. The learned judge reasoned that because
Mr Kruger had
already obtained some of the information he sought from Mr Zulu,
without any resistance, pursuant to the search warrant
issued in
parallel proceedings (on 22 May 2012,under case no 4178/2012), the
matter had not been urgent. The learned judge also
found that there
had been non-joinder of the co-owners of the immovable properties.
The court found that Mr Kruger had been ‘highhanded’
in
the manner in which he handled the matter and awarded punitive costs
against him.


[13]
By the time the appeal came before us Mr Zulu’s estate had been
sequestrated and the trustees of his insolvent estate
had been
substituted in his stead. The trustees had filed a notice to abide by
the decision of this court. Mr Kruger’s legal
representative
was invited to make submissions as to whether, in the light of the
trustees having assumed authority over the assets
in Mr Zulu’s
insolvent estate, it would be competent for this court, on appeal, to
reverse the order of the court a quo and
thus also authorise Mr
Kruger to (also) take the same assets into his possession.


[14]
Mr Kruger accepts that the assets over which he seeks authority are
now correctly in the hands of the trustees of the insolvent
estate.
However, it was submitted, on his behalf, that although the issues
,
in this appeal
,
had become moot, confirmation of the rule nisi remained competent and
appropriate because of the incorrect findings made by the
court a
quo. It was submitted further that it was necessary for this court to
consider the appeal because if the findings of the
court a quo were
allowed to stand, the implications would be disastrous for future
attempts, by repayment administrators, to take
possession of assets
under s 84(1A)
(b)(i)
of the Banks Act.


[15]
Section16(2)
(a)(i)
of the Superior Courts Act 10 of 2013
[5]
provides that where, at the hearing of an appeal, the issues are of
such a nature that the decision sought will have no practical
effect
or result, the appeal may be dismissed on this ground alone. The
underlying principle is that courts of law exist for settlement
of
concrete disputes and infringement of rights rather than pronouncing
upon abstract questions or advising on differing contentions.
[6]
However, where questions of law, which are likely to arise
frequently, are in issue, the court of appeal has a discretion, and

may hear the merits of an appeal and pronounce upon it. The test is
whether, notwithstanding that the issues between the parties
have
become moot, there remains a discrete legal issue of public
importance that will affect matters in future. Where the decision

contested on appeal will influence future litigants, this court has
generally exercised its discretion in favour of considering
the
appeal even when consideration of the issues will have no practical
effect. See: Centre
for Child Law v Hoërskool Fochville
[7]
in which this court examined a number of cases in which appeals were
considered in similar circumstances.


[16]
In this case, it is apparent that when considering the points
in
limine

the court a quo ignored the purpose of the application, which was,
essentially, to enable the exercise by the repayment administrator,

of powers bestowed under s 84(1A)(b)(i)
of the Banks Act. This erroneous approach and the consequent findings
of the court a quo will, in all probability, influence
how litigants
view the issues attendant in this appeal and similar matters in the
future.


[17]
Therefore, although Mr Zulu’s assets can no longer be placed in
Mr Kruger’s possession, it is, in my view, still
necessary for
this court to consider the appeal to clarify the powers and
obligations of a repayment administrator under s 84(1A)
(b)(i)
of the Banks Act and to set out the correct approach when considering
similar matters.  For a proper understanding of these
powers a
comprehensive examination of other provisions of the Banks Act, which
regulate the conduct of the banking business, is
required. The
following are the relevant provisions.


[18]
Section 11 of the Banks Act provides an entry point to companies
wishing to conduct business as banks. The section stipulates
that
companies must register with the office of the registrar of banks.
[8]
The process is rigorous. The section prescribes, as the first step,
an application by the company concerned, to the registrar,
for
authorisation to establish a bank.
[9]
Section 13(2) sets out numerous factors which the registrar must take
into account in considering the application. Upon satisfaction
of the
requirements the application is approved under s 13(1). A company to
whom authorisation has been granted under s 13
of the Act may
then apply to the registrar for registration as a bank. This
application must, in terms of s 16(1), be made within
the 12 month
period following the granting of authorisation (computed from the
date of the granting of authorisation). The application
for
registration of a bank may be granted in terms of s 17, subject
to conditions that may be set in terms of s 18. The
company may
then commence to conduct business as a bank.


[19]
In s 1 of the Banks Act the definition of ‘business of a
bank’ includes
:


(a)   the
acceptance of deposits from the general public (including persons in
the employ of the person so accepting
deposits) as a regular feature
of the business in question;


(b)   the
soliciting of or advertising for deposits;



(c)   the
utilisation of money, or of the interest or other income earned on
money, accepted by way of deposit as contemplated in paragraph
(a)-



(i)   for
the granting by any person, acting as lender in such person's own
name or through the medium of a trust
or a nominee, of loans to other
persons;


(ii)   for
investment by any person, acting as investor in such person's own
name or through the medium of a trust
or a nominee; or



(iii)   for
the financing, wholly or to any material extent, by any person of any
other business activity conducted
by such person in his or her own
name or through the medium of a trust or a nominee;


(d)   the
obtaining, as a regular feature of the business in question, of money
through the sale of an asset, to any person other than
a bank,
subject to an agreement in terms of which the seller undertakes to
purchase from the buyer at a future date the asset so
sold or any
other asset; or


(e)   any
other activity which the Registrar has, after consultation with the
Governor of the Reserve Bank, by notice
in the
Gazette
declared to be the business of a bank’.


[20]
For obvious reasons, the conduct of a business of a bank is subject
to stringent supervision of the registrar. Strict audit
requirements
are in place.
[10]
Section 70 stipulates maintenance of a minimum share capital and
unimpaired reserve funds requirements. Section 72 sets minimum
liquid
asset requirements. Section 75 provides for the filing of
returns to enable the Registrar to determine whether ss 70
and
72 are complied with.


[21]
Unregistered institutions which conduct the business of a bank evade
supervision by the registrar, always with catastrophic
results. Hence
the powers granted to the registrar to conduct investigations where
there is suspicion of unauthorised conduct of
the business of a bank.
Obviously, where investigations reveal a contravention of the
provisions of the Banks Act, swift intervention
is necessary to limit
the damage.


[22]
Chapter V111 of the Banks Act, entitled ‘Control of Certain
Activities of unregistered persons’, empowers the registrar
to
deal with contraventions of the Act. Section 83(1) provides that:



83 
Repayment of money unlawfully obtained


(1)
If as a result of an inspection conducted under
s
12
of
the South African Reserve Bank Act, 1989 (
Act
90 of 1989
),
the Registrar is satisfied that any person has obtained money by
carrying on the business of a bank without being registered
as a bank
or without being authorized, in terms of the provisions of s 18A(1),
to carry on the business of a bank, the Registrar
may in writing
direct that person to repay, subject to the provisions of section 84
and in accordance with such requirements and
within such period as
may be specified in the direction, all money so obtained by that
person in so far as such money has not yet
been repaid, including any
interest or any other amounts owing by that person in respect of such
money.’


[23]
Section 84 regulates the repayment of the money pursuant to the
direction issued under s 83(1). The relevant portions provide
that:



84 
Management and control of repayment of money unlawfully obtained



(1)
Simultaneously with the issuing of a direction under section 83 (1),
or as soon thereafter as may be practicable, the Registrar
shall by a
letter of appointment signed by him or her appoint a person
(hereinafter in this section referred to as the repayment

administrator) to manage and control the repayment of money in
compliance with the direction by the person subject thereto: Provided

that the Registrar may afford the person subject to the directive a
reasonable period of time to devise and implement an alternative
plan
of action that is in the interests of the investors and to which the
Registrar has no objection.



(1A)
(a) The repayment administrator shall at the request of the
Registrar, as soon as may be practicable report to the Registrar
whether
or not the person subject to the relevant direction is, in
the repayment administrator's opinion, solvent, and if the repayment

administrator finds that the person subject to the direction is
insolvent, the repayment administrator shall comment on whether
such
person is technically or legally insolvent.



(b)
On
appointment of a repayment administrator and whilst the person is
subject to the relevant direction as contemplated in this section-



(i)   the
repayment administrator shall recover and take possession of all the
assets of the person subject to the
relevant direction
.
(My emphasis.)


[24]
Section 84(1A) regulates two steps in the management and control, by
the repayment administrator, of repayment of money obtained
in
contravention of the Banks Act. Firstly, as set out in s 84(1A)
(a),
as soon as possible after appointment, and at the request of the
registrar, she must report to the registrar whether the person
who is
subject to the directive is solvent or not. Secondly, as provided in
s 84(1A)
(b)(i),
she must recover and take possession of all the assets of the person
subject to the direction. This appeal relates to the second
of the
two functions.


[25]
It is also important to note that once the Registrar serves the
letter of appointment of the repayment administrator on the
person
subject to the directive, as she is obliged to do so under s 84(2)
of the Act, the latter is prohibited from dealing
with any assets
specified in the letter of appointment without the permission of the
repayment administrator.


[26]
In terms of s 84(4)
(a)
it is the duty of the repayment administrator to conduct such further
investigations into the affairs of the person subject to
the
direction as he or she may deem necessary, to establish the ‘true
amount of money unlawfully obtained’ by the person
under
direction, the identities of the persons from whom the money was
obtained, where such money or assets into which it was converted
are
kept, and any other fact which, in the opinion of the registrar or
the repayment administrator, needs to be established in
order to
facilitate repayment. It is important to note that up to this stage
the steps taken by the repayment administrator are
aimed at
investigating and collating information necessary to facilitate the
actual repayment.


[27]
Once the necessary information is to hand, s 84(4)(b)(i) then
obliges the repayment administrator to:


.
. . take all reasonable steps (including the liquidation of assets
into which money unlawfully obtained as contemplated in section
83
(1) has been converted) which may serve to expedite and ensure the
repayment of money in accordance with the requirements of
and within
the period specified in the relevant direction.’


[28]
Turning to the facts of this case, in his founding affidavit Mr
Kruger correctly contended that he is generally entitled to
exercise
the powers bestowed on him under s 84(1A)
(b)(i)
and that he did not need a court order to do so. He explained that
his decision to approach the court was motivated by an expectation

that some of the assets he sought to attach might not be in Mr Zulu’s
possession. He also asserted that he had learnt from
previous
experience that individuals under a directive seldom willingly handed
over their assets for purposes of attachment. He
reasoned that if
need were to arise for him to approach a court after attempting to
use his powers, the provisions of s 84
were likely to be
defeated. For this reason he sought a declarator that he was
empowered to take possession of the specified assets,
and an order
that Mr Zulu be directed to declare, under oath, the whereabouts of
all his assets and to identify them with sufficient
particularity to
enable him to recover them. 


[29]
As already stated, the court a quo was of the view that because of
previous interaction between Mr Kruger and Mr Zulu, there
was no
basis for approaching the court on an urgent basis. The court ignored
the purpose of the application and the underlying
concern that the
assets might be dissipated. The court erred in this regard and also
in ignoring the fact that, generally, the
risk of dissipation of
assets increases after the wrongdoing or guilt of a person has been
established, particularly as Mr Kruger
had explained that this had
been his experience in previous similar matters. The fear he
entertained, that Mr Zulu could dissipate
the assets if given notice,
was well-founded.


[30]
The fact that Mr Kruger had previously interviewed Mr Zulu was
irrelevant to the attachment of assets under s 84(1A)
(b)(i)
of the Banks Act to facilitate investigations in preparation for
repayment of money in terms of s84. It must have been the intention

of the legislature that, once a contravention of the Banks Act has
been established, the process of repayment be executed promptly.
It
is for that reason that the person subject to the directive is
immediately prohibited from dealing with the assets listed in
the
letter of appointment from the date she is served with the letter of
appointment of the repayment administrator. For the same
reason the
duty on the repayment administrator to recover and take possession of
the assets of a person who is the subject of a
directive comes into
existence on
appointment
.
To require the repayment administrator to approach a court on notice
to the person subject to the directive and to require adherence
to
normal filing times would defeat the purpose of the repayment
process.


[31]
It was submitted, on behalf of Mr Kruger, that the relief he sought
was comparable to preservation orders provided for under
s 38 of
the Prevention of Organised Crime Act 121 of 1998 (POCA), rather than
the common law anti-dissipation relief. This
comparison was made to
illustrate that the law provides for applications for
anti-dissipation orders of this nature to be made
on an urgent, ex
parte basis. I agree with this analogy insofar as it demonstrates the
intrinsic urgency in attachments made in
terms of s 84(1A)
(b)(i).
 However, it seems to me that for a full appreciation of the
basic nature of the powers and duties of the repayment administrator

under that section a further analogy must be made. The powers and
duties of a repayment administrator are comparable with those
of
trustees or liquidators of insolvent estates. These powers and
obligations arise by operation of the law (ex lege), rather than
as a
result of a court order. Just as the assets in an insolvent estate
vest in the Master immediately on sequestration or liquidation
and
thereafter on the trustees or liquidators[11],
by operation of law, the assets of a person who is the subject of the
registrar’s directive vest in the repayment administrator

immediately on his or her appointment.  In the same manner that
a trustee, on appointment, assumes control of an insolvent
estate,
the repayment administrator, on appointment, forthwith takes control
and possession of the assets of a person under a directive.


[32]
Whilst caution is generally advised when considering applications
brought
ex
parte
,
courts should be mindful that recommended precautionary safeguards,
such as notice to the other party, are intended to limit abuse
of
court process and not meant for ritualistic imposition as a matter of
routine. The court has a discretion even when considering
urgent
ex
parte
applications. The purpose of the application remains central to the
exercise of that discretion.


[33]
Was there an obligation to join the co-owners of the immovable
properties and the creditors in Mr Zulu’s estate? Mr Zulu

alleged that Mr Kruger had failed to disclose the co-ownership. That
allegation was improperly made. In his founding affidavit
Mr Kruger
listed four properties in respect of which he sought a caveat. He
stated, in respect of three, that they were: ‘jointly

registered in the name of the first respondent (Mr Zulu) and six
others’.[12]
The title deeds of these properties, which show the names of the
co-owners, formed part of the founding papers.


[34]
It is apparent from the title deeds that each co-owner holds a 14 per
cent interest in each of the three properties. The legal
implications
are that because Mr and Mrs Zulu are married in community of property
to each other, their shares in the property
are combined and
indivisible, and may be attached and realised in respect of Mr Zulu’s
transgressions. Mrs Zulu (assuming
that she is an innocent party)
will be given her proportionate share of the proceeds if the interest
is realised to raise funds
for repayment. As to the rest of the
co-owners, the relevant principle is that ordinary co-ownership
rights are capable of being
separated because they are held
separately by the owners.
[13]
Our law in this regard is settled. Recently, in
Mazibuko
v National Director of Public Prosecutions
[14],
this court considered the effect of a preservation order made in
terms of s 38(2) of the POCA on the estate of the innocent spouse
who
was married in community of property to the guilty spouse. The court
distinguished between divisible and indivisible co-ownership
and
found that whereas ordinary rights of co-ownership are capable of
being separated from one another, because they are held separately
by
the co-owners, the co-ownership rights of spouses who are married in
community of property (‘tied co-ownership) are not

divisible.[15]


[35]
In this case the record only reveals that Mr Kruger sought an order
that the title deeds of the relevant properties be endorsed
with a
caveat.
The exact terms of the
caveat
are
not set out. The correct position is that only the indivisible
interest of Mr and Mrs Zulu should have been attached. Further,

although it does not necessarily follow that third parties, whose
rights and obligations are affected by an order sought, must

invariably be joined as parties to the application, the general
practice is that in cases such as this, where a party or spouse
has a
direct and substantial interest in the matter, the court will decline
to hear the matter until the joinder has been effected.[16]
Mrs Zulu should, therefore, have been joined as a respondent in the
application and the rule nisi should have been served on her.

However, her non-joinder was not fatal to the application. The court
has an inherent power to order joinder of further parties
in an
action which has already begun in order to ensure that persons
interested in the subject-matter of the dispute and whose
rights may
be affected by the judgment are before the court.[17]
The financiers of the motor vehicles are essentially creditors of Mr
and Mrs Zulu’s estate. It was not necessary to join
them. They
would be served with a copy of the order in the same manner as in
insolvency proceedings.
[18]


[36]
Regarding the contention, by Mr Zulu, that only assets acquired
through the operation of the illegal scheme were liable to

attachment, this argument flies in the face of the provisions of
s 84(1A)(b)(i)
of the Banks Act. The dictionary meaning of ‘all’ is:
‘The whole amount, extent, substance, or compass of;
all that
is possible; [t]he entire number of, without exception’.
[19]
The use of the words ‘all assets’ in s 84(1A)
(b)(i)
is conclusive on the issue.  There is no basis for
distinguishing between assets acquired through the operation of the

unlawful banking business and those acquired innocently. The source
and manner of acquisition is immaterial. In fact, it seems
to me that
even s 84(4)(b)
does not exclude honestly acquired assets from consideration for
realisation for purposes of raising repayment funds. The section

merely sets out, as one of the duties of the repayment administrator,
the taking of reasonable steps to expedite repayment of money.
Such
steps may include liquidation of the assets into which money
unlawfully obtained had been converted. But such a step may not
be
necessary where repayment funds are readily available.


[37]
The court a quo therefore erred in discharging the rule nisi. Mr
Kruger had made out a proper case for the relief he sought.
In fact
he had been entitled, even without the court order he sought, to take
the steps in respect of which he sought the court’s

pronouncement. However, in the light of Mr Zulu’s sequestration
and the consequent appointment of trustees to assume control
of his
estate, it is not open to this court to grant an order the effect of
which would be to authorise Mr Kruger to also take
control of the
assets in Mr Zulu’s estate. The role of a repayment
administrator is essentially different from that of a
trustee. The
functions of the former are limited to repayment of money unlawfully
obtained in the conduct of an unregistered banking
business. The role
of a trustee is much wider. It entails the administration of all
different facets of an insolvent estate. In
this case, therefore,
once the order of sequestration or liquidation was granted, the
powers of the trustees, upon appointment,
took precedence over those
of the repayment administrator.   


[38]
Consequently, the
following order is made:


The
appeal is upheld and the order of the court a quo is set aside and
substituted with the following:


1
The points
in
limine

are dismissed.


2
The costs shall be costs in the sequestration.’


___________________


N
DAMBUZA


JUDGE
OF APPEAL


APPEARANCES:


 


For
appellants:                
A R Bhana SC and
A Friedman R Williams SC


                                            

A Platt SC


                                            

Instructed by:



                                            

Baker &
McKenzie Attorneys, Johannesburg


                                            

c/o, Lovius Block
Attorneys, Bloemfontein


                       


For
first respondent:        Usher
Attorneys, Pietermaritzburg


                                            

c/o, McIntyre &
Van Der Post, Bloemfontein





[1]
The
section deals with inspection of affairs of a persons and
businesses, by the registrar of banks, at the direction of the
governor or deputy governor, where there is a suspicion that the
person or business not registered in terms of the Banks Act is

carrying on the business of a bank or mutual bank. 




[2]
In
terms of s 17 of the Banks Act the Registrar of Banks considers
and grants an application made under s 16 of the
Banks Act to
register a business as a Bank where an applicant has been authorised
under s 13 of the Banks Act to establish
an institution as a
bank. In terms of s 18
the
registration under s 17 of an institution as a bank shall be
subject to the prescribed conditions and to such further
conditions,
if any, as the Registrar may determine.




[3]
United
States Dollars.




[4]
These
countries, according to the appellant, include Hungary, the United
States of America and Canada, to name a few.




[5]
See
also the predecessor to this section, s 21A(1) to (3) of the
now repealed Supreme Court Act 59 of 1959. The position
as
interpreted in case law in respect of s 21(A) still obtains:
see for instance,
Legal
Aid South Africa v Magidiwana & others

[2014] ZASCA 141; 2015 (2) SA 568 (SCA).




[6]
D
E van Loggerenberg
Erasmus;
Superior
Courts Practice
(Loose-leaf)
2 ed vol 1 at A2-49.




[7]
Centre
for Child Law v Hoërskool Fochville
 &
another
[2015]
ZASCA 155;
2016
(2) SA 121 (SCA)





[8]
The
section provides: ‘
Subject
to the provisions of section 18A, no person shall conduct the
business of a bank unless such person is a public company
and is
registered as a bank in terms of this Act.’




[9]
Section
12 of the Banks Act.




[10]
Section
64 of the Banks Act.




[11]
Section
20 of the Insolvency Act 24 of 1936.




[12]
It
seems that the number stated excludes Mr Zulu’s wife. See para
61 of the founding affidavit.




[13]
See
Mazibuko
& another v National Director of Public Prosecutions

[2009] ZASCA 52; 2009 (6) SA 479 (SCA) para 47.




[14]
See
Mazibuko
supra.




[15]
Para
48.




[16]
.Van
Loggerenberg
Erasmus;
Superior
Courts Practice (supra) at B1-96.




[17]
SA Steel
Equipment Co (Pty) Ltd v Lurelk (Pty) Ltd
1951
(4) SA 167 (T)




[18]
Regard may be had
to ss 83 and 84 of thee Insolvency Act 24 of 1936




[19]
The
Shorter Oxford English Dictionary; vol 1.