Van Rooyen NO. v Mokwena NO.

• Jurisdiction: http://justis.com/jurisdiction/166,South Africa
• Judge: EM Makgoba JP
• Judgment Date: 18 July 2022
• Court: Limpopo Division, Polokwane
• Hearing Date: 30 May 2022
• Docket Number: 3797/2022

Makgoba JP:

[1]

The Applicants launched an urgent application against the Respondents seeking an order in the following terms [1] :

1.

That the non-compliance with the Rules be condoned and that the matter be heard as urgent in terms of Rule 6(12)(a);

2.

That the Dikwenanyana Trust (IT 255/2017L) ("the Trust") be, and is hereby, provisionally sequestrated returnable on a date to be determined by the Registrar of this Honourable Court, on which date the Respondents, or any interested party, should show cause why the Trust should not be finally sequestrated;

3.

That it be declared that the Trust veneer of the Trust be pierced and that the assets allegedly vesting in the Trust, or the trustees of the Trust, vest in the Trust, the estate of Morapedi Roy Mokwena and the estate of Tumi Mokwena Incorporated, jointly, and be applied to the satisfaction of the

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debts of the Trust, Morapedi Roy Mokwena and Tumi Mokwena Incorporated;

4.

That the costs of this application be costs in the administration of the estate of the Trust;

5.

Further and/or alternative relief.

[2]

In essence the Applicants, in their capacities as liquidators of the insolvent estate of Tumi Mokwena Incorporated ("TMI") of which Morapedi Roy Mokwena ("Mr. Mokwena") was the sole director, launched the present application for the sequestration of the Dikwenanyana Trust ("the Trust") and piercing of the Trust veneer because the Trust is the alter ego of Mr. Mokwena and TMI.

It is alleged that the Trust is indebted to TMI in an amount in excess of R 7 400 000.00. That TMI is the creditor of the Trust as the Trust was funded, entirely, and without any valid causa, by TMI.

[3]

The application is opposed by the Trust and Mr. Mokwena. They contend that the relief sought is incompetent in that the entire application is based on a vehemently disputed indebtedness for an illiquid debt or unliquidated amount of money. That to exacerbate matters, there was no demand for payment made to the Trust. The Trust became aware for the first time about the claim through the present application.

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[4]

Furthermore, the Trust contends that the founding affidavit of the liquidators is marred with opinions and conclusions drawn from the Applicants' interpretation of the documents obtained from the Section 417 and 418 enquiry [2] sanctioned into the affairs of TMI.

That these opinions and conclusions constitute irrelevant opinions that should be disregarded in the adjudication of this matter.

A further attack on the founding affidavit is that the allegations made against Mr. Mokwena are based on the excerpts of a transcription of the inchoate insolvency proceedings which took place more than a year ago, from 31 March 2021 to June 2021. It is contended on behalf of the Trust that the Applicants or liquidators also rely on inadmissible hearsay evidence which ought to be disregarded.

[5]

At the core of this application are the allegations by the Applicants/liquidators that the Trust improperly benefited from unlawful funds originating from TMI. As indicated above, the alleged indebtedness is disputed and has not been determined by any Court of law.

[6]

In the expansion of this narrative, the liquidators allege that TMI Trust funds were irregularly transferred to the Trust and as such the Trust's property is tainted rendering the Trust invalid and liable to sequestration.

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The Trust contends that the alleged indebtedness of the Trust is based on innuendos of an abandoned inquiry in terms of section 417 which was left incomplete and that no report has been issued by the Commissioner, retired Justice Bertelsman. The transcribed record relied upon by the Applicants in the present proceedings is that of an incomplete inquiry.

[7]

At the end of the day the issue for determination is that the Applicants, as liquidators of TMI, have to establish the necessary locus standi to apply for the sequestration of the Trust as a creditor. They need to prove that TMI is a creditor who has a liquidated and undisputed claim for not less than one hundred rands. [3]

Factual Background:

[8]

Tumi Mokwena Incorporated ("TMI") was registered during 2005 and traded as an attorneys practice focusing on a variety of litigation matters. Mr. Morapedi Roy Mokwena ("Mr. Mokwena") was the sole director of the law firm and was the controlling mind behind it.

[9]

During December 2019 TMI was liquidated as a result of its alleged inability to pay money deposited by a client, namely Majola Trust. This alleged inability to

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refund Majola Trust funds was regarded as a trust shortfall on TMl's trust account.

The Applicants in this matter were duly appointed as liquidators of the insolvent estate of TMI on 12 December 2019.

The Respondents deny that the alleged inability of TMI to refund Majola Trust's money should be regarded as a trust shortfall on TMl's trust account and state that even during the liquidation proceedings the Court has not pronounced on such indebtedness.

The Respondents state that the deposit of funds by Majola Trust into TMI related to a separate business deal concerning a separate entity known as Tumi Mokwena Productions ("TMP") and not as a client of TMI. That the said deposit never found its way into the TMI trust account.

[10]

Furthermore, the Respondents state that the liquidation proceedings themselves were founded on a settlement agreement concluded by TMI pertaining to its business funds and unrelated to trust funds.

If the said indebtedness was related to TMI trust funds, any shortfall on trust funds would result in a claimant being entitled to claim from the Attorneys Fidelity Fund, which the Majola Trust never attempted to do and never claimed that the funds constituted trust funds claimable under the Fidelity Fund.

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[11]

In an effort to establish the indebtedness of the Trust to TMI, the Applicants alleged in the founding affidavit that from the financial investigations of TMI it appears that most of the TMI trust funds were irregularly transferred sine causa either directly from the trust account to Mr. Mokwena and the Trust, or from the trust account to the business account and from there to the Trust and Mr. Mokwena.

These allegations are denied by the Respondents as being without factual or legal basis.

The Respondents state that such investigations are incomplete and no report has been issued by the Commissioner, retired Justice Bertelsman in the section 417 enquiry. That the transcribed record attached to the present proceedings is that of an incomplete enquiry.

[12]

The Applicants allege that they have, since their appointment, discovered that there is a trust shortfall in TMI, and that most of the funds were paid to Dikwenanyana Trust. They further allege that according to the auditors of the Legal Practice Council, the shortfall in the TMI trust account is at least R 16 000 000.00 and that this amount is likely to increase as the investigations into TMI progress.

These allegations are refuted by the Respondents as being an attempt to insinuate that the Trust received the shortfall funds from the trust account of TMI and that they are simply disingenuous.

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The Dikwenanyana Trust was only formed in 2017 as is apparent from the Trust Deed Annexure "FA4". The Legal Practice Council ("LPC") investigations referred to herein related to the trust account of TMI as at 2016, before the Trust was formed.

The suggestion that the LPC investigation has any bearing on payments made to the Trust by TMI is, according to the Respondents, therefore unfounded as the two are unrelated.

[13]

The Trust, so the Applicants allege, was established for the sole purpose of being a conduit vehicle through which Mr. Mokwena could syphon TMI trust funds to purchase properties and other assets for his personal benefit and to conceal assets from his personal creditors and that of TMI.

The Respondents deny these allegations as baseless and unsubstantiated.

The Insolvency Inquiry of TMI:

[14]

On or about 2 February 2021 the Applicants obtained the necessary authority to convene an insolvency enquiry ("the enquiry") into the affairs of TMI as contemplated in sections 417 and 418 of the Companies Act 61 of 1973.

The Commissioner of the enquiry, retired Judge Bertelsmann as well as the Master of the High Court have consented to the publication of the transcription of the enquiry for purposes of the current application.

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However, the Commissioner did not finalise the enquiry in the sense that no final report on its findings was prepared and issued by retired Judge Bertelsmann.

[15]

Ms. Mokgadi Francina Mokwena ("First Respondent"), Mr. Floyd Legodi ("Legodi") and Ms. Diseree Chuene ("Chuene") were subpoenaed to testify at the enquiry. The First Respondent and Legodi completed their testimony at the enquiry whilst Chuene testified on 31 March 2021 but could not return to complete her testimony on the scheduled date of 24 June 2021. Mr. Mokwena was subpoenaed to testify on 24 June 2021 but the proceedings never took place since then.

For all intends and purpose the enquiry is inchoate in the sense that other subpoenaed parties did not complete their evidence and the Commissioner did not prepare and issue a final report of the enquiry.

[16]

The First Respondent testified that:

16.1

Mr. Mokwena made all decisions relating to the day-to-day management of the Trust;

16.2

Mr. Mokwena was the controlling mind of the Trust;

16.3.

She has no explanation as to how the Trust obtained the vast amount of funds to purchase the properties;

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16.4

Any funds that were received into the Trust was collected by Mr. Mokwena;

16.5

...