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

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

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 USD2503 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

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.

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

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

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 20135 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 Fochville7 in which this court examined a number of cases in which
appeals were considered in similar circumstances.

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).

[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.

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.

[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.

10 Section 64 of the Banks Act.

[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 liquidators11, 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

11 Section 20 of the Insolvency Act 24 of 1936.

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 Prosecutions14, 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

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.

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

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.

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

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

THE SUPREME COURT OF APPEAL OF SOUTH AFRICA

MEDIA SUMMARY OF JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

FROM

The Registrar, Supreme Court of Appeal

DATE

10 November 2016

STATUS

Immediate

Please note that the media summary is for the benefit of the media and does not form part of
the judgment.

Kruger v Joint Trustees of the insolvent Estate of Zulu (1121/2015) [2016] ZASCA

163 (10 November 2016).

MEDIA STATEMENT

Today the Supreme Court of Appeal handed down a judgment overturning an order
of the Natal Division of the High Court, dismissing an application by Mr Kruger, a
repayment administrator appointed in terms of the Banks Act, to take possession of
assets of Mr Paulos Bhekinkosi Zulu, subsequent to a finding, by the Registrar of
Banks, that Mr Zulu had conducted the business of a bank without being registered
or authorised to do so under the Banks Act.

Mr Zulu had been a ‘distributor’ for an entity known as Travel Venture Institute (TVI)
or Travel Ventures Marketing Agency (Newcastle), which conducted the business of
obtaining money by marketing and selling electronic travel vouchers. The vouchers
purportedly
entitled
members
to
discounts
for
international
travel
and
accommodation with ‘travel partners’ such as the Hilton Hotels, Lufthansa, Swissair,
South African Airways and other reputable companies. The business was structured
along the lines of a typical pyramid scheme. Members joined by paying an amount of
USD250. On joining the business they became ‘Associates’ or ‘Distributors’.
Members had to traverse levels drawn on two boards, whilst recruiting new entrants.
On exiting each board they received rewards (USD250 for the first board and

USD10 000 for the second) but had to sponsor two new entrants to qualify for the
rewards.

TVI was declared an illegal scheme in many jurisdictions throughout the world. In
South Africa it had brutally taken advantage of the informal communal savings
structures (stokvels) through distributors, some of whom were ministers, politicians,
and civil servants, including magistrates and prosecutors. The total investment in
TVI within the country was estimated at R1.6billion. Mr Zulu, as one of the
distributors, had opened a bank account in the name of TVI wherein he deposited
moneys obtained by him from sales of the travel vouchers.

Following an investigation, the Registrar of Banks concluded that Mr Zulu had
obtained money by conducting the business of a bank without being registered as
such or authorised to do so under the Banks Acts. The Registrar issued a repayment
direction in terms section 83 of the Banks Act, in terms of which moneys paid to Mr
Zulu would be repaid to the persons from whom they had been obtained. The
Registrar also appointed Mr Kruger as a repayment administrator to manage and
control the repayment process. In terms of section 84(A)(b)(i) of the Banks Act part
of Mr Kruger’s duties, as a repayment administrator, was to take recover and take
possession of all Mr Zulu’s assets. Mr Kruger brought an urgent application in the
KwaZuluNatal Division of the High Court seeking a declarator that he was
empowered to take possession of certain assets and that Mr Zulu be ordered to
declare the whereabouts of all his assets.

In opposing the application, Mr Zulu contended that Mr Kruger’s powers to take
possession of his assets were limited to assets which had been acquired through the
conduct of the unlawful banking business. He argued that Mr Kruger had no
authority to attach fixed property which he co-owned with his wife and six other
persons. He also contended that there had been no reason for Mr Kruger to
approach the High Court as a matter of urgency and without giving him notice of his
intention to approach the court because the two of them had previously interacted on
the matter and he had co-operated with Mr Kruger during the earlier interaction. He
contended that there was no reason to fear that he would dissipate the assets. The

high court agreed with the argument based on previous interaction and dismissed Mr
Kruger’s application on the basis thereof.

In overturning the order of the high court the Supreme Court of Appeal held that a
court considering urgency of a matter and whether notice should be given to the
respondent must be mindful of the nature and purpose of the application. In this
case, because Mr Kruger sought an anti-dissipation order and had explained the
reasons why he anticipated resistance, the matter was urgent and notice to Mr Zulu
would have defeated the purpose of the application. The court also found that Mr
Kruger could have exercised his powers under section 84(A)(b)(i) of the Banks Act
without obtaining a court order as his powers derived from legislation. Regarding the
non-joinder of the co-owners of the fixed properties, the court found that because Mr
and Mrs Zulu were married in community of property to each other their joint interest
in the fixed assets was indivisible. Therefore it had been properly attached. But Mrs
Zulu should have been joined as a respondent in the application. On the other hand,
the interests of the other co-owners were divisible from that of Mr and Mrs Zulu and
were not liable to attachment.

Further the court found no merit in Mr Zulu’s argument that Mr Kruger’s powers were
limited to assets acquired through the conduct of the unlawful business as the
wording of section 84(A)(b)(i) was clear in this regard.

Finally, the Supreme Court of Appeal found that because Mr Zulu’s estate had since
been sequestrated and the trustees were in control of the insolvent estate it was not
open to the court to grant an order that Mr Kruger take possession of all Mr Zulu’s
assets. The court held that the powers of the trustees took precedence over those of
the payment administrator.

--- ends ---