Mulaudzi v Old Mutual Life Assurance Co (South Africa) Ltd and Others

• Jurisdiction: South Africa
• Judge: Ponnan JA, Cachalia JA, Theron JA, Mathopo JA and Mbatha AJA
• Judgment Date: 06 June 2017
• Citation: 2017 (6) SA 90 (SCA)
• Docket Number: 95/2016 and 210/2015 [2017] ZASCA 88
• Hearing Date: 06 June 2017
• Counsel: In SCA case No 95/2016: Mr Mulaudzi in person, as appellant. A Breitenbach SC (with H Cronje) for the first respondent (Old Mutual). S Olivier SC for the trustees of Mr Mulaudzi's insolvent estate. In SCA case No 210/2015: G Budlender SC (with T Mosikili) for the first appellant (the NDPP). A Breitenbach SC (with H Cronje) for the second appellant (Old Mutual). Mr Mulaudzi, the first respondent, represented himself, as well as the second to fifth respondents (Mrs Mulaudzi and three close corporations). S Olivier SCfor the trustees.
• Court: Supreme Court of Appeal

Ponnan JA (Cachalia JA, Theron JA, Mathopo JA and Mbatha AJA concurring):

[1] D On 26 May 2009 Mr Matthews Mulaudzi invested R33,5 million in a Fairbairn Capital Investment Frontiers Policy with No 15715207 (the policy). The policy, which was underwritten by Old Mutual Life Assurance Company (South Africa) Ltd (Old Mutual), was a five-year fixed-bond policy with a maturity date of 2 June 2014. On 24 March 2011 E Mr Mulaudzi concluded a written deed of cession with Nedbank Financial Planning, a division of Nedbank Ltd (Nedbank), in terms of which he ceded 'all rights, title and interest in and to all and any claims which exist in his favour now owing to him in the Insurance Policy.' On 13 April 2011 Nedbank notified Old Mutual of the cession and F requested the latter to 'send us confirmation that the policy has now been endorsed with this cession in favour of [Nedbank]'. Due to an error on the part of an employee, Old Mutual did not substitute Nedbank as the owner of the policy in the place of Mr Mulaudzi on its computer system. In the result Mr Mulaudzi continued to be reflected as the owner of the policy and to receive automatically generated quarterly statements G and notifications in respect of the policy from Old Mutual.

[2] On 9 August 2012 Mr Mulaudzi informed Nedbank in writing that he wanted to cancel the cession and to have his investment documents returned. Nedbank declined to cancel the cession. On 2 June 2014 Mr Mulaudzi submitted a disinvestment application form to Old Mutual H in respect of the policy in terms of which he sought payment of the full disinvestment value of the policy. On 6 June 2014 Old Mutual paid the full maturity value of the policy, namely R48 163 098,55, into an Absa Bank Ltd (Absa) account nominated by Mr Mulaudzi. Old Mutual did so in the mistaken belief that Mr Mulaudzi was still the owner of the I policy. On 28 July 2014 Nedbank sought payment of the proceeds of the policy from Old Mutual on the basis of the cession concluded on 24 March 2011 between it and Mr Mulaudzi. Old Mutual then realised that it had effected payment to Mr Mulaudzi in error. On 8 August 2014, Old Mutual paid Nedbank the full maturity value of the policy as it was obliged to in terms of the cession. Old Mutual thereafter sought J repayment from Mr Mulaudzi, who refused.

Ponnan JA

[3] On 15 August 2014 Old Mutual reported the matter to the A South African Police Services (SAPS) pursuant to the provisions of s 34(1)(b) of the Prevention and Combating of Corrupt Activities Act 12 of 2004. On 28 August 2014 the National Director of Public Prosecutions (the NDPP) applied ex parte to the Western Cape Division of the High Court, Cape Town, for a provisional restraint order in terms of s 26 of the B Prevention of Organised Crime Act 121 of 1998 (POCA). The application cited Mr Mulaudzi, his wife, Ms Violet Mabontsi Mulaudzi (Ms Mulaudzi), as the second respondent, and three close corporations of which he is a member, namely, Mulaudzi and Associates CC, Luvhomba Legal Edge CC and Luvhomba Financial Services CC (the three CCs), as the third, fourth and fifth respondents, respectively. The application C succeeded before Weinkove AJ, who issued a rule nisi returnable on 27 November 2014. The provisional order is a lengthy one. Its detailed provisions are not material for present purposes. It is sufficient to state that the order placed under restraint, and appointed a curator bonis to take charge of, property, save for such property as the curator may certify D to be in excess of R48 163 098,55. The assets subject to restraint included those then known to the NDPP. They included four investments made by Mr Mulaudzi using the proceeds of the policy, being two Old Mutual investment policies of R1 million each, an investment with Momentum Group Ltd of R6 372 474 and a R10 million investment with Absa (the four investments). E

[4] On 17 September 2014 Mr Mulaudzi and the other respondents anticipated the return day on 24 hours' notice to the NDPP in terms of s 26(3)(c) of POCA. They sought the discharge of the rule nisi, alternatively, a variation of the provisional restraint order to inter alia exclude F from its ambit the four investments. The application came before Hlophe JP on 18 September 2014, who discharged the provisional restraint order. The learned Judge President also dismissed an application by Old Mutual to intervene in the application. On 21 October 2014, and pursuant to requests therefor by both the NDPP and Old Mutual, Hlophe JP furnished reasons for his orders. G

[5] On 11 November 2014 both the NDPP and Old Mutual applied for leave to appeal the judgment. One of the grounds raised was that they reasonably apprehended that Hlophe JP was biased. As a result Hlophe JP allocated the applications for leave to appeal to Dolamo J, who, after hearing argument, delivered a written judgment on 16 March 2015 H granting leave to both the NDPP, as the first appellant, and Old Mutual, as the second appellant, to appeal to this court. Mr Mulaudzi was cited as the first respondent, Ms Mulaudzi as the second, and the three CCs as the third to fifth respondents.

[6] In the meanwhile, on 3 October 2014, Old Mutual launched an I urgent application out of the North Gauteng Division of the High Court, Pretoria, against Mr Mulaudzi (as the first respondent), the MMI Group Ltd (formerly Momentum) (MMI) and Absa, as the second and third respondents, respectively. Relief was sought in two parts. Under part A, it sought an order 'prohibiting the First Respondent [Mr Mulaudzi] from dealing in any manner with the [four investments] or any part thereof J

Ponnan JA

remaining A to his credit, pending the determination of the relief sought in part B'. In terms of part B, it sought payment from Mr Mulaudzi in the sum of R48 163 098,55, together with interest and costs on the attorney and client scale. No substantive relief was sought against MMI and Absa. Both were 'cited merely for the purposes of ensuring compliance with the B terms of any interim order that may be granted in [the] proceedings.'

[7] Mr Mulaudzi filed his answering affidavit to that application on 22 October 2014 and Old Mutual filed its replying affidavit on 30 October 2014. The parties agreed to deal with both Parts A and B when the matter came before De Vos J on 4 November 2014. He delivered his C judgment on 17 November 2014 ordering Mr Mulaudzi 'to make payment . . . in the amount of R48 163 098,55, together with interest thereon calculated at the prescribed rate as from the date of service of the Notice of Motion' and costs (including those consequent upon the employment of two counsel) as prayed on the punitive scale. Pending payment, the learned judge directed that the four investments be held in D trust.

[8] Mr Mulaudzi sought and obtained leave from De Vos J to appeal to this court. Old Mutual, who was cited as the first respondent, opposed the appeal. The MMI Group and Absa, who were cited as the second and third respondents, took no part in the appeal. Mr Mulaudzi delivered his E notice of appeal on 3 March 2015. His appeal lapsed on 4 June 2015 on account of his failure to timeously file the record of appeal with the registrar of this court. Some eight months later, on 9 February 2016, Mr Mulaudzi delivered the record together with an application for condonation and reinstatement of the lapsed appeal.

[9] F With the leave of the President of this court, Mr Mulaudzi's appeal against the judgment of De Vos J, under SCA case No 095/16 (the first appeal), was set down for hearing together with the appeal by the NDPP and Old Mutual against the judgment of Hlophe JP, under SCA case No 210/15 (the second appeal). On 4 May 2016, when both matters G were called in this court, we were informed by counsel, who then represented Mr Mulaudzi, that he was ill and in support thereof a medical certificate was handed up from the bar. In any event, according to counsel for the NDPP, an internet search by him the previous afternoon revealed that Mr Mulaudzi's estate had been provisionally sequestrated. H In the result both matters had to be adjourned sine die.

[10] It subsequently emerged that the joint estate of the Mulaudzis was provisionally sequestrated on 2 December 2015 and finally sequestrated on 27 May 2016. After an application for leave to appeal that order was dismissed by the High Court; a petition to this court met the same fate on 9 November 2016. An application to the Constitutional Court was I also dismissed on 30 January 2017. On 3 March 2017 a further application to the President of this court for a reconsideration of the dismissal of Mr Mulaudzi's petition also failed.

[11] On 2 December 2016 both the NDPP and Old Mutual duly gave notice to the Master of the High Court (the Master) in terms of s 75(1) J of the Insolvency Act 24 of 1936 (the Insolvency Act) of their intention

Ponnan JA

to proceed with the second appeal. On 20 February 2017, the Master A appointed Christopher Peter van Zyl, Selby Musawenkosi Ntsibande and Oscar Jabulani Sithole as the co-trustees of the joint estate of the Mulaudzis.

[12] On 24 February 2017 Old Mutual applied to join of the trustees as the sixth, seventh and eighth respondents, respectively (the Old Mutual B joinder application). In support of the Old Mutual joinder application it was stated:

'37.

As the joint trustees to the insolvent estate . . . have now been appointed, they are necessary parties in these proceedings in their capacities as such joint trustees. C

38.

In appeal proceedings other than appeal proceedings concerning a restraint order or preservation of property order made in terms of the POCA, an application for the substitution of the insolvent parties with the trustee(s) of their joint estate, as the...