Stern and Ruskin, NO v Appleson

• Jurisdiction: South Africa
• Judge: Millin J
• Judgment Date: 11 May 1951
• Citation: 1951 (3) SA 800 (W)
• Court: Witwatersrand Local Division

Millin, J.:

The applicants who are the provisional trustees in the insolvent estate of Asher Swede, deceased, seek confirmation of a rule G granted on the 9th April calling on the respondent, Wolfe Appleson, to show cause why, pending action, he should not be interdicted and restrained from drawing upon his banking accounts, from disposing of or encumbering certain immovable property at Strathavon registered in his name, from dealing with or disposing of certain 2,900 shares in a company known as Victory Brick and Tile Co. Ltd. and from dealing with H any other assets, including two motor-cars. The proposed action on behalf of the estate of Swede is for transfer of the immovable property and the shares referred to in the rule and for a statement of account and payment of various sums of money in which the respondent is alleged to be indebted to the estate.

Asher Swede for many years carried on the calling of a bookmaker in Johannesburg and elsewhere in the Union. He died on

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August 5th, 1950. The respondent, his nephew, came to Johannesburg from England in 1946, bringing with him a sum of not more than £250. In 1947 he started to work for Swede and in 1948 Swede admitted him to a partnership in his business. According to the respondent, he was a A partner sharing in the profits and liable for the losses, to the extent of one-third, in Swede's business as conducted in the premises of Witwatersrand Tattersall's; and in addition he was entitled to one-third of Swede's profits, without being liable for any losses, on that part of the business which Swede conducted on race-courses. The statement of B account claimed is in connection with this partnership. The respondent was authorised to sign cheques on behalf of the partnership and, for some time before Swede's death, the funds of the partnership were with his consent paid into the respondent's personal banking C account and thus mixed with the respondent's own moneys. The respondent and one Isaac Cramer, Swede's attorney, received letters of administration as executors testamentary. The respondent was further mentioned in the will as heir to 871/2 per cent of the residue after payment of legacies. On the 8th February, 1951, the estate of Swede was D placed under provisional sequestration. On the 27th February the Master ordered an inquiry under sec. 152 of the Insolvency Act. The estate was finally sequestrated on the 22nd March. The inquiry under sec. 152 began before the granting of the final order - a procedure approved by the Court - and it is still in progress. The case in support of the E interdict is largely built up on material obtained from the respondent in the course of his examination at this inquiry.

So far as the fixed property at Strathavon is concerned there is no difficulty in confirming the interdict. The applicants claim to recover F it as a disposition without value by Swede. The respondent admits that it came to him by way of a donation from Swede. He explains that on the 15th June, 1948, the owner of this property, one Sussman, owed Swede a considerable sum of money. He agreed with Swede to discharge the debt by transferring the property and it was arranged that transfer should be G passed to the respondent. The respondent, on the day named, entered into a written contract with Sussman whereby Sussman purported to sell him the property for £6,000. But Sussman could not pass transfer as there was a bond of £2,500 which he was unable to meet. The respondent eventually himself raised a bond for £2,500 and took transfer on the 7th H February, 1950. The applicants allege that this is when the disposition without value took effect. It is not clear to me that it did not take effect on the 15th June, 1948, when Swede at his own expense procured for the respondent the right to get transfer from Sussman. In that case the onus would be on the applicants to prove that immediately after the disposition Swede's liabilities exceeded his assets (Act 24 of 1936 sec. 26 (1)). But the respondent makes no point of this and does not wish to contest the applicants' right to recover the property from him, provided

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that against transfer they pay him the amount of the bond. There can be no objection to the confirmation of this part of the interdict pending the result of an action in which the conditions, if any, against which the applicants are to get transfer can be exactly determined. The interdict is to this extent confirmed.

A In the matter of the shares in the Victory Brick and Tile Co. (Pty.) Ltd. the respondent admits that these were donated to him by Swede. He says, however, that they were pledged by Swede, with his consent, to a branch of Barclay's Bank as security for the company's overdraft which was guaranteed by Swede. He offers to relinquish all his rights to these B shares in favour of the applicants. Mr. Maisels, for the applicants, agreed that this being so no interdict is required. The interdict in so far as it affects these shares is discharged.

All other demands by the applicants upon the respondent are demands for C payment of money which cannot be identified with any fund in the possession of the respondent. The applicants claim to be entitled to an interdict over the general assets of the respondent to secure these demands. Before considering the validity of this claim it is convenient to inquire whether the applicants have made out a prima facie case in D respect of all of these demands. There is first the matter of certain 50 shares in a company Wembley Roadhouse (Pty.) Ltd. In 1946 Swede caused these shares to be transferred to the respondent. Thereafter they were pledged by Swede to Barclay's Bank (Rosettenville) as security for E Swede's overdraft. After Swede's death the respondent sold them for £4,000. It was suggested to him at his examination that he held the shares merely as Swede's nominee. He denied this, but admitted that some payments (evidently by way of profits distributed in respect of the shares) were made by the company to Swede and some to him. In his F affidavit in these proceedings the respondent stated that Swede donated the shares to him in 1946, and that he allowed Swede to pledge them to the bank, as he did not wish to interfere with Swede's overdraft facilities. With regard to the payments received from the company he explained that he, his wife and two children were living with Swede at G Swede's expense in his house at Turffontein and it was arranged that these payments should be regarded as going against the living expenses of the respondent and his family. The applicants answer that the inference to be drawn is that the shares were not donated by Swede but remained his property in spite of the transfer to the respondent. Mr. H Maisels, in argument, admitted that the trustees' claim was open to some doubt. If the shares were donated, there is no evidence that after the donation in 1946, Swede's liabilities exceeded his assets. The alternative to donation is that Swede for some reason neither known or suggested desired to have the shares registered in the respondent's name while himself retaining the beneficial ownership. I agree with Mr. Kuper that there is no good ground shown for inferring this merely from the facts that after

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the alleged donation, the shares were pledged to the bank for a liability of Swede's and some of the dividends were paid to Swede. I am of opinion that the applicants have not made out a prima facie case in respect of this transaction.

A The same must, I think, be held with regard to the bulk of a claim for £6,332 2s. 8d. which is an amount received by the respondent, after Swede's death, from the Transvaal Bookmakers' Association Co-operative Ltd. in terms of a request made by Swede in his lifetime to this company. Swede was a member of the company and paid an entrance fee of B £5,000. The regulations of the company provide, under the heading of 'Deceased Members', as follows:

62. The share registered in the name of a member who has died shall be transferred to a new member or be cancelled by resolution of the Board, and upon such transfer or cancellation the Association shall, C if funds are available, pay:

'(a)

to any person indicated in writing by the deceased member before his death, or

(b)

in the absence of such instructions from him to the surviving spouse of such deceased member or to his estate, in the discretion of the Board:

(i)

D the nominal value of the share so transferred or cancelled, plus (ii) a sum equal to the entrance fee payable by any person admitted as a member (whether such deceased member is immediately replaced or not), plus

(iii)

the deceased member's share in the assets of the Association calculated in accordance with reg. 102, plus

(iv)

E the amount due to the deceased member from the Benevolent Fund calculated in accordance with the by-laws of the Fund.

63. The amounts payable by the Association under reg. 62 shall first be applied to paying off any debt which may be owing by the deceased member and/or his estate to the Association and to paying off any amounts paid by the Association on behalf of the deceased member and/or his estate.

F 64. Nothing contained in reg. 62 shall be deemed to confer a legal right on the estate of the deceased member or on any of his dependants to obtain payment of the sums referred to in secs. (ii) and (iii) of reg. 62 and regarded as an ex gratia payment.

On the 8th June, 1949, Swede wrote to the company as follows:

'In the event of my decease I desire that any payment which may be G made by the Association as an ex gratia payment shall be paid to W. Appleson.'

It is common cause that this was an instruction to the company under reg. 62 (a) and that the company acted upon it. It was calculated that the sum of £7,229 2s. 7d. was due under reg. 62, against which there fell to be...