THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

JUDGMENT

Reportable

Case No: 20269/2014

In the matter between:

JONATHAN BRIAN GRIFFITHS
APPELLANT

and

JACOBUS HENDRIKUS
JANSE VAN RENSBURG NO                                    FIRST RESPONDENT

ROMANA BERNADETTE KNUTH NO              SECOND RESPONDENT

Neutral citation: Griffiths v Janse van Rensburg NO (20269/2014) [2015]
ZASCA 158 (26 October 2015)

Coram:
Shongwe, Pillay, Petse and Saldulker JJA and Gorven AJA

Heard:

1 September 2015

Delivered:
26 October 2015

Summary: Insolvency ─ dispositions ─ requirement in s 29 of the Insolvency
Act that dispositions must be made in the ordinary course of business ─ broad
test restated and applied ─ dispositions made pursuant to void contracts ─ test
not satisfied ─ dispositions correctly set aside ─ mora interest on an award
setting aside such disposition under s 32(3) of the Insolvency Act ─ debt arises
only on judgment ─ no amount due before judgment on which mora interest can
run ─ mora interest to run only from date of judgment.

___________________________________________________________________________

ORDER

On appeal from: Eastern Cape Local Division of the High Court, Port
Elizabeth (Brooks AJ sitting as court of first instance), judgment reported sub
nom Janse van Rensburg NO & another v Griffiths [2014] 2 All SA 670 (ECP).

1 The appeal is dismissed with costs.
2 The cross-appeal is dismissed with costs.

JUDGMENT

Gorven AJA (Shongwe, Pillay and Saldulker JJA concurring):

[1] This matter concerns four payments made to the appellant (Mr Griffiths)
by the Usapho Trust (the Trust), which was established in terms of the Trust
Properties Control Act.1 The payments followed two agreements to make what
the parties termed, and I shall term, investments with the Trust. These were, in
law, contracts of loan. The Trust was the vehicle through which Maureen
Clifford and her associates operated a pyramid scheme. The investments were
made in the scheme, which later collapsed. The Trust was sequestrated on
24 September 2000. The respondents are the trustees in insolvency of the Trust.
I shall refer to them as the trustees. To avoid confusion, I shall refer to actions
of the trustees appointed under the Trust Property Control Act to administer the
Trust and who did so prior to sequestration as actions of the Trust.2 Ms Clifford
and others were convicted in a criminal trial which followed the sequestration.

1 Trust Property Control Act 57 of 1988.
2 This is not strictly accurate since, except where provided for by Statute, a trust is not a legal person. „[I]t is an
accumulation of assets and liabilities‟ which vest in the trustees. A trust estate can therefore only act through the
trustees. Land and Agricultural Bank of South Africa v Parker & others 2005 (2) SA 77 (SCA) para 10.

In the court below, the trustees brought an action which included a claim based
on s 29 of the Insolvency Act (the Act)3 to set aside the four payments made to
Mr Griffiths.

[2] Section 29(1) reads as follows:
„Every disposition of his property made by a debtor not more than six months before
the sequestration of his estate or, if he is deceased and his estate is insolvent, before his death,
which has had the effect of preferring one of his creditors above another, may be set aside by
the Court if immediately after the making of such disposition the liabilities of the debtor
exceeded the value of his assets, unless the person in whose favour the disposition was made
proves that the disposition was made in the ordinary course of business and that it was not
intended thereby to prefer one creditor above another.‟4
The onus to prove all the issues dealt with in this section up to the proviso
introduced by the word „unless‟, rests on the party attempting to set aside the
disposition. If this onus is discharged, the onus then shifts to the person wishing
to retain the disposition to prove the last two issues.

[3] After a number of conferences were held in terms of rule 37 of the
Uniform Rules of Court, the following matters were agreed. The payments were
dispositions by the Trust. They were made less than six months before the Trust
was sequestrated. The payments had the effect of preferring Mr Griffiths above
other creditors. After each of the payments was made, the liabilities of the Trust
exceeded its assets. Agreement on these matters had the effect of discharging
the onus on all of the issues required to be proved by the trustees.

[4] The onus thus shifted to Mr Griffiths to prove both components of the
proviso. These were that the dispositions were made in the ordinary course of
business and that when the payments were made there was no intention to prefer

3 Insolvency Act 24 of 1936.
4 My emphasis.

Mr Griffiths over other creditors. The trustees admitted the second of these.
Accordingly, the only remaining issue at the trial was whether the payments
were made in the ordinary course of business.

[5] It is necessary to set out the relevant facts concerning the payments. Mr
Griffiths made two investments of R100 000 each. The first was made on
15 December 1999. As seems to be customary in pyramid schemes, the first
loan was repaid on the due date of 23 March 2000. It was paid by a cheque in
the sum of R100 000 drawn on the account of the Trust and deposited by Mr
Griffiths into his account on 27 March 2000. Along with that payment, an
amount of R12 000 was paid in cash in respect of agreed interest. This
amounted to interest at a rate slightly higher than 42 percent per annum.  The
second investment was made by Mr Griffiths on 6 April 2000. That was repaid
on 3 June 2000, three days after the agreed date. The capital of R100 000 was
deposited by the Trust into the account of Mr Griffiths. Here, too, he was
separately paid cash of R12 000 in respect of agreed interest. This amounted to
interest at a rate higher than 74 percent per annum.

[6] The following was also agreed. The business being carried on by the
Trust prior to its sequestration was that of a pyramid scheme. The investments
were occasioned by the false and fraudulent representations of Ms Clifford and
her associates, who acted on behalf of the Trust. These included representations
to the effect that the scheme was viable, lawful, not in contravention of any
statutory or regulatory provisions, not a pyramid scheme and that the deposits
would be utilised by the Trust to purchase from certain estate agents their rights
to commissions which had been earned but not yet paid. These rights would be
purchased from the estate agents at a premium relative to the commissions to be
earned. The Trust would thus earn sufficient profits to enable it to repay the
investments and the agreed interest at rates which were, in certain cases,

usurious. However, Ms Clifford and her associates were aware that the
investments would be used to fund repayment to other investors together with
interest thereon. It was admitted that the scheme was unlawful as being a
pyramid scheme, that the business contravened the provisions of s 11(1) of the
Banks Act5 and that it constituted a harmful business practice as envisaged in
paragraph 2 read with paragraph 1.1 of the notice6 in terms of s 12(6)(iii) of the
Consumer Affairs (Unfair Business Practices) Act.7

[7] At the trial the parties agreed that a transcript of the evidence led in the
criminal trial could be admitted as evidence without formal proof. This also
applied to a transcript of the evidence given by Mr Griffiths at an insolvency
enquiry before the Master. In his evidence Mr Griffiths testified that he had
been referred to the Trust by a bank employee. He never actually met any of the
people involved. When he had contact with a person representing the Trust, he
was told to deposit R100 000 into a particular bank account and that he would
receive R12 000 in interest after three months. He struggled to obtain payment
on both occasions. For the first investment, he received no documentation. For
the second, he obtained an acknowledgement of debt which was only issued to
him after he had applied „considerable duress‟. Although he did not know the
details of the scheme, he was aware that it had something to do with estate
agents and, as he put it, decided to take a chance.

[8] In the particulars of claim, the trustees pleaded, and it was admitted, that
there were four separate dispositions: two of capital and two of interest. The
trustees alleged that Mr Griffiths was a creditor of the Trust and that the
dispositions in question should be set aside. His plea was to the effect that he

5 Banks Act 94 of 1990.
6 Notice 1135 of 1999 in Government Gazette No. 20169 of 9 June 1999.
7 Consumer Affairs (Unfair Business Practices) Act 71 of 1988. This was repealed by the Consumer Protection
Act 68 of 2008 but was in operation whilst the scheme was being conducted.

was a creditor „. . . based on an enrichment cause of action against the Usapho
Trust for repayment of capital monies paid to such trust by the Defendant in
terms of an illegal and void agreement (alternatively agreements).‟ He went on
to plead that the Trust had a legal obligation to repay the amounts because the
agreements were void and illegal and that the obligation to repay arose when Mr
Griffiths made the investment payments.

[9] Although the effect of the plea is that all four of the impugned
dispositions were made in the ordinary course of business, it was conceded on
appeal that this was not true of the two amounts of R12 000 representing
interest. Mr Griffiths accordingly acceded to an order setting these aside. What
thus remained in issue before us was whether Mr Griffiths proved that the two
dispositions of capital were made in the ordinary course of business and should
thus avoid the same fate. Since there is no issue relating to the interest amounts,
the payments of the two capital sums will henceforth simply be referred to as
the dispositions.

[10] Brooks AJ in the Eastern Cape Local Division, Port Elizabeth, found that
neither the dispositions nor the interest payments had been made in the ordinary
course of business. He set all four dispositions aside and ordered Mr Griffiths to
pay R224 000 along with interest from the date of judgment and costs. This
appeal is with his leave as is also the cross-appeal against his failure to order
interest to run from the date of service of the summons rather than from the date
of judgment.

[11] There has been much judicial comment on what is meant by the phrase
„the ordinary course of business‟. It is not necessary to rehearse all of it. This
court has been consistent over many years in the test to be applied. The test is
an objective one. The disposition should be evaluated in the light of all relevant

facts. This must be done on a case by case basis. Put traditionally, the
disposition „. . . must be one which would not to the ordinary [person] of
business appear anomalous or unbusinesslike or surprising.‟8 The question is
whether ordinary, solvent, businesspeople would, in similar circumstances,
themselves act as did the parties to the transaction.9 Consideration should not be
given to any intention to prefer or to the fact that the party making the
disposition was insolvent at the time since these are considered separately under
other parts of the section.10 The question to be answered is whether the
transaction is one „with conventional terms which ordinary businesspeople
would normally have concluded under the given circumstances‟.11 In other
words, the disposition in question should not cause wrinkled noses or raised
eyebrows among solvent businesspeople who know the circumstances in which
it was made.

[12] The most recent judgment of this court dealing with the issue is Gazit
Properties v Botha & others NNO.12 In that matter, the principles summarised
above were accepted and some of the dicta were referred to. Despite this, the
trustees submitted in the court below, and in this court, that Gazit Properties
narrowed the test accepted by this court over the years. They submitted that
„. . . it appeared to apply a narrow test requiring a close scrutiny of the
disposition in question there, viewed against the background of its causa – this
despite earlier in the judgment referring with approval to the strong authority,
emanating from this honourable court, espousing a broad test.‟

8 Malherbe’s Trustee v Dinner & others 1922 OPD 18 at 22.
9 Hendriks NO v Swanepoel 1962 (4) SA 338 (A) at 345A-346A.
10 See Hendriks at 342F-H and 345A-B.
11 My translation of the dictum of FA Grosskopf JA in Amalgamated Banks of South Africa Beperk v De Goede
& 'n ander [1997] ZASCA 30; 1997 (4) SA 66 (SCA) at 78C-D: holding that the transaction there met the test
because it was one „met gebruiklike terme wat gewone besigheidsmense normaalweg onder die gegewe
omstandighede sou aangegaan het.‟
12 Gazit Properties v Botha & others NNO [2011] ZASCA 199; 2012 (2) SA 306 (SCA).

[13] The salient facts in Gazit Properties were as follows. A company,
Malokiba Trading 19 (Pty) Ltd, which contravened the Banks Act by procuring
loans from the public without being registered as a bank, had borrowed money
from Gazit Properties. Under the loan, Gazit Properties would be paid interest
of 2,5 percent of the loan capital monthly. The agreement would remain in force
indefinitely but, after three months, could be cancelled by either party on
45 days‟ notice. Gazit Properties gave the requisite notice and demanded
repayment, whereupon the capital and interest was paid. In contending that the
disposition had not been made in the ordinary course of business, the liquidators
originally relied on contentions that the business was irregular in three respects:
it contravened the Banks Act; it constituted a prohibited pyramid scheme; and
the interest rate paid was usurious. They ultimately relied only on the
contravention of the Banks Act.

[14] The trial court in that matter upheld the contentions of the liquidators,
which „laid heavy emphasis on the fundamental contamination . . . of the
transaction whereby Malokiba repaid the loans‟. In essence, the trial court there
found that a „tainted‟ business model of necessity had the result that no
dispositions of that business could be said to have been made in the ordinary
course of business.13 This court disagreed. Whilst accepting that the scheme
contravened the Banks Act, it held that Malokiba had made the payments in
accordance with its obligations arising from valid loan agreements.14 This
accords with the approach over the years that:
„. . . [I]t must necessarily be a paramount principle of “business” that . . . debts should be paid
according to the tenour of the contract.‟15

13 Gazit Properties para 7.
14 Ibid para 9.
15 Fourie’s Trustee v Van Rhijn 1922 OPD 1 at 5, approved in the minority judgment in Hendriks at 343A-D.

[15] In the present matter, Brooks AJ held that Gazit Properties had applied
the well-worn broad test. I agree with this. In my view, the submission that it
narrowed the test accepted by this court over the years holds no water.

[16] Brooks AJ went on to distinguish the facts in the present matter from
those in Gazit Properties. This was correct because the investment agreements
in the present matter were illegal and void whereas the loan in Gazit Properties
was valid and enforceable. However, he went on to find that, because of the
„illegality of the business operations, the manner in which participation therein
was secured and the exorbitant returns on “investment” alone‟,16 the dispositions
were not made in the ordinary course of business. In this he relied on a dictum
that for a disposition to be made in the ordinary course of business, it must be „a
lawful or valid disposition made in the ordinary course of lawful business‟. 17

[17] In my view, this dictum goes too far and fails to appreciate the true focus
of the enquiry. The need for a lawful disposition is uncontroversial. It is clear
that ordinary, solvent people of business do not conclude unlawful agreements,
or attempt to obtain unlawful dispositions. But when it comes to a requirement
that the disposition must be made in the course of a lawful business, I cannot
agree. The inadequacy of this approach may be illustrated by the following
example. In the present matter, the Trust was conducting an unlawful business.
If, as is possible, the Trust had leased premises and concluded an agreement
with the municipality for the provision of electricity, water and other services, it
could hardly be contended that all payments of rental to the landlord and those
under the agreement with the municipality would be impeachable as not having
been made in the ordinary course of business.

16 Paragraph 31, his emphasis.
17 Per Scott AJ in Klerck NO v Kaye 1989 (3) SA 669 (C) at 676B-D.

[18] It seems to me that what the cases primarily focus on, and what was
overlooked in Klerck v Kaye, is the nature of the business relationship between
the insolvent and the recipient at the time the disposition was made, rather than
the general nature of the business undertaken by the insolvent. Thus, in Gazit
Properties, although the manner in which the business in question was
conducted fell foul of the Banks Act, the relationship between the parties was
one constituted by an enforceable contract of loan. The disposition was the
repayment of the loan in accordance with the terms of the contract. Ordinary,
solvent, businesspeople would not shrink from such a transaction.

[19] Case law lends support to this approach. Two examples of dispositions
that failed the test will be referred to.18 Estate Wege v Strauss19 dealt with the
business of a bookmaker. A debt to a bookmaker was held not to be illegal but
could not be enforced in court.20 The bookmaker normally required immediate
repayment of a betting debt but allowed debts of the insolvent to stand over for
an indefinite period. When the insolvent paid the debt, this court held:
„It is not in the ordinary course of a bookmaker's business to allow the settlement of debts due
by a client to stand over for an unlimited period. If this is done, and a client whose liabilities
exceed his assets pays a betting debt long overdue, he does not do so in the ordinary course of
betting business . . .‟.21
What is apparent from this passage is that had the payment been made
immediately, which is the ordinary requirement of the business relationship
between a bookmaker and a client, it would have been accepted as having been
made in the ordinary course of business. Payment of a debt is, after all, what is
ordinarily required by a business. In view of the particular business relationship

18 There are numerous similar examples of judgments which focus on the particular business relationship. See
Hendriks (above note 7); Jacobson and Co’s Trustees v Jacobson and Co 1920 AD 75; Zeeman v Botha’s
Trustee 1923 AD 167.
19 Estate Wege v Strauss 1932 AD 76.
20 Ibid at 81.
21 Ibid at 85.

between the bookmaker and the insolvent, however, it was held that the
payment in question was not made in the ordinary course.

[20] In similar fashion, in Paterson NO v Trust Bank of Africa Ltd,22 an
insolvent attorney, a potential purchaser of his practice and a banker concluded
an agreement whereby the banker granted an overdraft facility to the purchaser
to provide the funds to purchase the practice. The overdraft facility was granted
on condition that the funds went into the overdrawn account of the insolvent
attorney held with the bank in question. This court accepted that a tripartite
agreement was, at face value, a normal banking transaction. The question was
whether the clause in the agreement requiring that the funds loaned to the
purchaser be paid into the insolvent‟s overdrawn account, was a clause arising
in the normal course of business. This court held that it was not. The disposal of
the practice was therefore set aside.

[21] The court below accordingly erred in applying the dictum in Klerck v
Kaye. This caused it to focus on the general nature of the business conducted by
the Trust. It therefore failed to fully analyse and to give due weight to the
relationship between Mr Griffiths and the Trust. As a result, it also
misconstrued the basis on which Mr Griffiths contended that he was entitled to
retain the two capital sums forming the dispositions.

[22] In Fourie NO & others v Edeling NO & others,23 it was held, in relation
to such a scheme:
„All loans made to the scheme were – in the light of at least the provisions of section
11 of the Banks Act 94 of 1990 and a prohibition under the Consumer Affairs (Unfair

22 Paterson NO v Trust Bank of Africa Ltd 1979 (4) SA 992 (A).
23 Fourie NO & others v Edeling NO & others [2004] ZASCA 28; [2005] 4 All SA 393 (SCA).

Business Practices) Act 71 of 1988 – illegal and therefore void; this proposition of law is
uncontested.‟24
The agreement by the parties to this matter, that the investments were illegal
and void, accords with that dictum. In those circumstances, „[t]he scheme never
had the least entitlement to retain investors‟ money until the date which had
supposedly been agreed as the due date for repayment.‟25 In Gazit Properties,
over and above its finding that the payment was made in terms of the loan
agreement and therefore in the ordinary course of business,  this court said that
if the loans in that matter had been void „the money had to be repaid by the
company on demand‟.26 That is in principle correct. Where payments are made
pursuant to void agreements, a claim for repayment would ordinarily lie under
the condictio ob turpem vel iniustam causam, which is one of the enrichment
actions.

[23] Mr Griffiths submitted that the dictum in Gazit Properties applies
foursquare to the facts of the present matter. As was clear from the plea, Mr
Griffiths contended that he was a creditor of the Trust by virtue of the condictio.
He disavowed being a creditor pursuant to the investment agreements. He
submitted that, on the basis of the condictio, the claims would have lain against
the Trust for immediate repayment of the two capital sums.

[24] On the face of it, the only defence to such an action would have been if it
were shown that Mr Griffiths had acted ex turpi causa and if the court declined
to relax the rule in pari delicto potior est conditio defendentis. It is by no means
self-evident that a person in Mr Griffiths‟ place would have been aware of the
illegality. As has been stated, such schemes attract investors because
„history . . . teaches us that in the human breast greed and gullibility are often

24 Ibid para 13.
25 Loc cit.
26 Gazit Properties para 11.

partners. It is on these twin weaknesses that all confidence-tricksters trade; and
not a few flourish.‟27 The trustees readily conceded that there was no evidence
that Mr Griffiths acted ex turpi causa or had any knowledge that the
investments were tainted. The trustees did not seek to advance the case that Mr
Griffiths knew that the transactions were unlawful either in the court below or
in this court. There is therefore no issue concerning the relaxation of the par
delictum rule.

[25] Would a payment under the condictio qualify as one which was made in
the ordinary course of business? I am prepared to accept for present purposes
that had he made claims under the condictio they would have been enforceable.
Such claims would have arisen at the time that he made each of the investments.
If the directors of a company discover that employees are conducting a pyramid
scheme along with other legitimate business, the duty of the directors would be
to immediately halt the scheme and repay the amounts received pursuant to it.
Similarly, if a person has invested in an unlawful scheme and discovered this
fact the natural reaction would be to demand repayment of their investment, not
in terms of the unlawful scheme but under the condictio. If repayments were
made in those circumstances they would be dispositions arising from lawful,
enforceable, obligations on the part of the company to the investors in the
scheme. To my mind, ordinary, solvent, businesspeople, aware of the illegality
of the loans, would have seen nothing extraordinary or untoward about a
repayment on the basis of the condictio – indeed, they would have expected it.

[26] Mr Griffiths accepted that, if the capital and interest had been paid
together in a single payment, a single disposition would have been made which
would not have been enforceable under the condictio. He did so because the

27 Commissioner for Inland Revenue v Insolvent Estate Botha t/a ‘Trio Kulture’ [1990] ZASCA 2; 1990 (2) SA
548 (A) at 554D-E.

dispositions relating to interest were made without any legally enforceable
obligation for the Trust to make them. They could not fall under the condictio
and could only have derived from the void investment agreements. The
submission as regards the interest is correct, but illustrates the fallacy of Mr
Griffiths‟ approach. He focuses on what, properly conceived, might have been a
lawful basis for the dispositions if he had invoked it. In doing so he ignores and
thereby seeks to avoid the true basis upon which the payments were actually
made.

[27] The focus, however, must be on the dispositions themselves. As was said
in Fourie’s Trustee v Van Rhijn:28
„The disposition is either in the ordinary course of business, or it is not; the standard is
a concrete and objective one, and it has regard to the "disposition." The disposition is the
transaction taking place between payor and payee‟.
In regarding the dispositions, a court looks at the „substance and not the mere
description of the transaction‟.29

[28] What, then, were the „transactions‟ which took place between the Trust
and Mr Griffiths at the time the dispositions were made? Mr Griffiths was
unaware that the investment agreements were void when he demanded the
payments. He was, therefore, unaware that he had a valid claim under the
condictio. He accordingly did not invoke the condictio as the basis for
demanding the payments. The demands were made, and acceded to, for
payment of the agreed amounts under the void investment agreements. All four
payments were made within the same factual matrix. It is not open to Mr
Griffiths to argue that, if he had invoked the condictio, the payments would
have been made in the ordinary course. On a factual level, he did not do so. He
demanded the full amounts due under the void investments, which happened to

28 Fourie’s Trustee v Van Rhijn (note 13 above) at 5.
29 Per Kotze JA in Zeeman (note 17 above) at 174.

be paid in four, rather than two, sums. The payments, and hence the
dispositions, were made by the Trust as payments due in respect of the
repayment of the investments, not under the condictio.

[29] If, immediately before the payments were demanded and made, Mr
Griffiths had become aware of the illegality and demanded and received
payment of only the capital on the basis of the condictio, he would have been in
a different position. The business relationship between him and the Trust would
then have been one arising from the condictio. But it is impermissible to apply
an ex post facto, theoretical overlay to the dispositions. The „transactions‟
arising from the business relationship between Mr Griffiths and the Trust at the
time arose from the void agreements, not from the condictio.

[30] In Jacobson and Co’s Trustees v Jacobson and Co,30 De Villiers AJA
said the following:
„Now before the Court would be entitled to say that the disposition was in the
ordinary course of business it would have to be satisfied that it is in possession of all the
facts, for only then would it be in a position to decide whether the contracts themselves,
which form the basis of the transaction, are genuine; since a delivery that rests on a contract
which itself is open to question cannot be said to be a delivery in the ordinary course of
business.‟
The test is objective and considers whether, at the time and in the circumstances
in which they were made, the dispositions gave effect to a valid underlying
causa. The transactions in the present matter are hit by the dictum in Jacobson.
The payments were made under the investment agreements. The dispositions
must accordingly be treated on the same footing as the interest payments
because they were part of the same transactions.

30 Note 17 above at 79.

[31] In my view, applying the broad, objective test to the facts of this matter,
the repayments of the capital amounts did not take place in the ordinary course
of business. Therefore, not only the dispositions relating to interest, but also
those relating to capital, were correctly set aside. The appeal must fail.

[32] As regards the cross-appeal, the trustees submitted that the order of the
court below ought to be varied „to allow for the payment of mora interest on the
judgment debt, from date of service of summons to date of payment (the proper
order, although not claimed, should have been interest from date of the
disposition)‟. They submitted that the court below erred in ordering interest to
run only from the date of judgment.31 Judgment was handed down on
25 March 2014.

[33] The trustees based this submission on s 32(3) of the Act which reads as
follows:
„When the Court sets aside any disposition of property under any of the said sections,
it shall declare the trustee entitled to recover any property alienated under the said disposition
or in default of such property the value thereof at the date of the disposition or at the date on
which the disposition is set aside, whichever is the higher.‟
The submission developed along the following lines. Property is defined in the
Act as movable or immovable property.32 This broad definition includes money.
Where the actual property cannot be restored, the greater of its value at
disposition and that at judgment must be restored. Where the property is money,
it was submitted, „. . . the money itself can no longer be recovered (unless the
money was enclosed in a receptacle or sealed in some way).‟ The payment of
mora interest is ordered so as to compensate a creditor for the loss suffered by

31 The prescribed rate of interest was varied from 15.5 per cent per annum to 9 per cent per annum as from
1 August 2014 (GN R554, GG 37831, 18 July 2014). Judgment was handed down in March 2014. As such, the
rate of 15.5 per cent per annum applied. The rate prescribed at the time when interest begins to run governs the
calculation of interest and does not vary if the prescribed rate is adjusted in the interim. Davehill (Pty) Ltd v
Community Development Board 1988 (1) SA 290 (A) at 300G-302A.
32 Section 2.

not receiving payment on the due date.33 The section therefore implicitly refers
to interest being recoverable on dispositions sounding in money from the date of
the disposition.

[34] In making this submission, the trustees sought to distinguish Janse van
Rensburg & others NNO v Steyn,34 where this court disallowed a claim for mora
interest from the date of service of the summons. In the alternative, they
submitted that Janse van Rensburg was wrongly decided and invited us to
depart from it.

[35] In Janse van Rensburg this court dealt with a prayer claiming interest a
tempore morae.35 The issue was when the mora period began to run. The
concept of mora relates to the time at which an obligation is due. If, for
example, a contract requires payment to be made by a certain date and the party
required to perform it fails to do so, that party is said to be in mora, or breach,
of that obligation. That is an example of mora ex re and interest a tempore
morae would run from that date. Where a contract does not fix a time and, after
a reasonable time has elapsed, one party demands payment, the demand places
the debtor in mora. This is an example of mora ex persona. When that demand
is made by the service of a summons, the mora ex persona would run from the
date of service. In either instance, the debtor is not in mora until the payment is
due. As regards unliquidated debts, the common law has been varied by s 2A of
the Prescribed Rate of Interest Act.36 This provides for interest to run from the
date of demand, subject to a court‟s discretion.37

33 Bellairs v Hodnett & another 1978 (1) SA 1109 (A) at 1145D.
34 Janse van Rensburg & others NNO v Steyn [2011] ZASCA 71; 2012 (3) SA 72 (SCA).
35 Paragraph 18.
36 Prescribed Rate of Interest Act 55 of 1975.
37 Section 2A(5) gives a court that discretion.

[36] Duet and Magnum Financial Services CC (in Liquidation) v Koster38
decided the issue of when an obligation to pay arises under the sections of the
Act in question, albeit in the context of prescription. This court there found that
the liquidators were „entitled to have a declaration made by a court that brings a
debt into existence‟.39 There is no debt in existence, and therefore no obligation
to pay, until an order is made. Therefore, Janse van Rensburg found, no interest
can run from before the date of judgment. This is because the term a tempore
morae cannot refer to a time prior to when the debt arises.

[37] The trustees relied on the principle articulated in Bellairs v Hodnett and
another,40 to the following effect:
„It may be accepted that the award of interest to a creditor, where his debtor is in
mora in regard to the payment of a monetary obligation under a contract, is, in the absence of
a contractual obligation to pay interest, based upon the principle that the creditor is entitled to
be compensated for the loss or damage that he has suffered as a result of not receiving his
money on due date . . .‟.41
But this does not apply to debt under s 29 of the Act. In Bellairs, the debtor was
in mora prior to judgment. In such a case, a creditor would suffer a loss if
interest were not to run from due date to date of judgment. Put simply, however,
in the present matter, the due date is the date of judgment. If interest runs from
that date, the loss envisaged in Bellairs cannot be suffered.

[38] The trustees contended that Janse van Rensburg was wrong in its finding
that „the ordinary incidence of demand by means of service of the summons
giving rise to mora ex persona must yield to the effect‟ of s 32(3) of the Act.42
All that this means, however, is that demand by service of a summons in an

38 Duet and Magnum Financial Services CC (in Liquidation) v Koster 2010 (4) SA 499 (SCA).
39 Duet and Magnum para 13.
40 Note 32 above.
41 Ibid at 1145D-F.
42 Paragraph 20.

action to set aside a disposition under one of these sections does not give rise to
mora ex persona. This is because, as was explained in Duet and Magnum, the
debt only comes into being at the time of a court‟s declaration to that effect. The
debt is not one arising from contract or delict. It is a statutory debt. A demand
does not place the person to whom a disposition has been made in mora since
there is, at the time of demand, no debt to enforce and no payment due. Janse
van Rensburg explained that „the debtor is in mora only from date of
judgment.‟43 Far from the finding in Janse van Rensburg being clearly wrong, it
was, in my respectful view, entirely correct.

[39] The trustees went on to submit that, in Janse van Rensburg, this court
should have found that the section „. . . implicitly enjoins a court to order the
payment of interest on restored monies in respect of an impeached transaction
as from the date of the disposition.‟ This submission rests on the assertion that
money must have lost value between the date of disposition and the date of
judgment. But this confuses two situations. The first claims „mora interest on
the judgment debt, from date of service of the summons‟. This is what was
relied on by the trustees and has been dealt with above.

[40] The second situation would arise where judgment is claimed in an
amount exceeding the amount of the disposition because of a reduction in the
value of money between the date of disposition and the date of judgment. It is
clear that the object of s 32(3) is to ensure that the property brought back into
the estate for the benefit of creditors has not diminished in value. It may be that
a case could be made out for an increased award in certain circumstances where
money forms the disposition. Judgment could then be granted for payment of a
higher amount. Interest would run on that higher amount from date of judgment
according to the principle in Janse van Rensburg. But the trustees did not

43 Ibid.

contend for this at the trial or on appeal. Whether such a case can be made out,
and the correctness of the reasoning of the trustees referred to in paragraph 32
hereof, must therefore be left for decision at a time when these issues arise
squarely. No finding on them can be made in this matter. The cross-appeal must
therefore be dismissed with costs.

[41] The following order is made:
1 The appeal is dismissed with costs.
2 The cross-appeal is dismissed with costs.

___________________

T R Gorven
Acting Judge of Appeal

________________________________________________________________

JUDGMENT
________________________________________________________________

Petse JA (dissenting)

[42] I have had the privilege of reading the judgment of Gorven AJA. On most
of his views I am in respectful agreement. I, too, agree that the cross-appeal
must fail for the reasons that he gives. But on some other issues relating to the
main appeal I respectfully disagree with my learned colleague. Regrettably, our
differences of opinion lead to divergent results.

[43] In what follows I deal with the points of disagreement. The facts of this
case have been summarised in the judgment of my learned colleague and will
not be repeated in this judgment save to the extent necessary to promote a better
understanding of this judgment.

[44] In his judgment, Gorven AJA readily accepts (in para 24 above): (a) that
there was no evidence that the appellant had acted ex turpi causa or had
knowledge that the investments were somehow tainted, hence the question of
the relaxation of the par delictum rule did not apply; (b) that had the appellant
made his claims under the condictio  such claims would have been enforceable
in relation to the capital amounts invested in the scheme; and (c) that had the
payment to the appellant been made in a single transaction a claim under the
condictio would not have been enforceable. And, despite the fact that the Trust
paid the interest separately from the payment of the capital amounts the
appellant could not succeed because all the payments made to him by the Trust
were made pursuant to the underlying agreements. Consequently, Gorven AJA
holds that the appellant could not, long after those payments were made, seek to
rely on the condictio for to do so would have the effect of avoiding „the true
basis upon which the payments were actually made‟. (Para 28-30 above.)

[45] Put differently, my learned colleague considers that since the appellant
was not aware that his investment agreements with the Trust were void, it was
not open to him ex post facto to fall back on the condictio when in actual fact he
had demanded „the full amounts due under the void investments‟ and not under
the condictio. For this conclusion my learned colleague relies on dicta in some
decisions of our courts which he cites in support of his finding.44 (Para 27 and
29 above.)

44 Fourie’s Trustee v Van Rhijn 1922 OPD 1 at 5; Jacobson and Co’s Trustees v Jacobson and Co 1920 AD 75
at 79.

[46] On the basis of the passages cited by my learned colleague he concludes
that on the facts of this case, the repayments of the capital amounts to the
appellant were not made in the ordinary course of the business of the insolvent
Trust. With respect I find myself unable to subscribe to this view. On the facts
of this case, I cannot discern anything which suggests that the two payments
made in respect of the capital amounts invested with the Trust were not made in
the ordinary course of the business of the Trust. And, there is, in my view,
nothing that suggests that „the contracts themselves, which form the basis of the
transactions‟, are not otherwise „genuine‟. Nor can it be said that the
dispositions „rest[ed] on a contract which itself is open to question‟. It is after
all trite that in applying the „ordinary-course-of-business‟ test, a court must have
regard not only to the terms of the disposition itself but also to the
circumstances in which such disposition was made. (See for example in this
regard Pretorius’ Trustee v Van Blommenstein 1949 (1) SA 267 (O) at 273 and
277.)

[47] Both in this court and the court a quo the appellant heavily relied on Gazit
Properties45 in contending that the two payments representing the capital
amounts were made in the ordinary course of business. There this court held
that the fact that Malokiba (that is the insolvent) had conducted the business of a
bank in contravention of s 11(1) of the Banks Act 94 of 1990 did not taint the
loan agreements. It went on to state that Gazit Properties „was vested with a
contractual right to be repaid as soon as it cancelled the loan agreements. . . ‟
and that Malokiba „concomitantly had a contractual obligation to make the
payment‟. And that the fact that Malokiba had „contravened the [Banks] Act
[did] not mean that the loan agreements were not normal agreements. . .‟

45 Gazit Properties v Botha & others NNO [2011] ZASCA 199; 2012 (2) SA 306 (SCA).

[48] How then, it may be asked, could the appellant be expected to invoke the
condictio when he demanded payment if he was unaware of the illegality of the
business conducted by the Trust? He would surely not have been aware that (to
borrow the phraseology adopted in the majority judgment) „the “transaction”
arising from the business relationship between [the appellant] and the Trust at
the time arose from void agreements, [and] not from the condictio‟. In my view
the fact that the appellant „misconceived‟ the nature of his causa in making
demand for repayment of the investment amounts is understandable for, as I
have already stated, he was not aware at that stage that his agreements with the
Trust were void.

[49] I am fortified in this view by what was stated by this court in Fourie NO v
Edeling NO [2004] ZASCA 28; [2005] 4 All SA 393 (SCA) para 13:
„The scheme never had the least entitlement to retain investors‟ money until the
date which had supposedly been agreed as the due date for repayment. The
perpetrators of the scheme knew the investments to be illegal. There is, on the
other hand, no evidence that any of the investors knew their investments to be
tainted, nothing from which to infer that any of them acted ex turpi causa. That
being so, no question arises of relaxing the [par delictum] rule. . . Upon receipt
of a payment the scheme was liable promptly to repay it to the investor who had
a claim for it under the condictio ob iniustam causam.‟46 (My emphasis.)

[50] Although these remarks were made in the context of a consideration of s
30(1) of the Insolvency Act 24 of 1936, they apply, by parity of reasoning, with
equal force to the facts of this case. The Trust upon receipt by it of the payments
made by Mr Griffiths, „was liable promptly to repay‟ to him such moneys under

46 This dictum was applied in Gazit Properties (above) para 11.

the condictio ob iniustam causam in respect of which he had a claim.47   It is
also instructive that in Gazit Properties, whose facts are comparable to the facts
of this case, this court said the following:
„Gazit was entitled, had it become aware of the misrepresentation to cancel the contracts. But
until cancelled, [they] remained valid and enforceable and payment in [their] terms
(especially by the guilty party) could never be regarded as not being in the ordinary course of
business.‟48

[51] Accordingly I would uphold the appeal with costs. As already stated at
the outset I am in respectful agreement with the order relating to the cross-
appeal.

_________________
X M Petse
Judge of Appeal

47 De Groot Inleidinge 3.1.15 (see also D 50.17.206); Pucjlowski v Johnston’s Executors 1946 WLD 1 at 6; see
also Wilken v Kohler 1913 AD 135 at 145; Daniel Visser Unjustified Enrichment (2008) at 16-24 and 85-90; J C
Sonnekus Unjustified Enrichment in South African Law (2008) at 27; Jacques du Plessis The South African Law
of Unjustified Enrichment (2012) at 1-3.
48 Para 13.

APPEARANCES:

For Appellant:

E A S Ford SC

Instructed by:

Pagdens Attorneys, Port Elizabeth

McIntyre & Van der Post, Bloemfontein

For Respondents:

S C Rorke SC (with him O R Ronaasen)

Instructed by:

De Villiers Inc, Port Elizabeth

Christo Dippenaar Attorneys, Bloemfontein