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SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document in compliance with the law and SAFLII Policy

 

IN THE HIGH COURT OF SOUTH AFRICA

KWAZULU-NATAL DIVISION, PIETERMARITZBURG

                                                                                           Not Reportable

                                                                              Case No:5048/2020P

                                                                              

In the matter between:

FELIX KHULEKANI BUTHELEZI                                     1^ST APPLICANT

NONTOBEKO PRECIOUS ANGELA

BUTHELEZI                                                                            2^ND APPLICANT

ANTHONY ROWLAND FREEMAN                                    3^RD APPLICANT

NOMUSA ZETHU QUNTA                                                    4^TH APPLICANT

THINA LINDOKUHLE BARBARA DINGA                        5^TH APPLICANT

                                                                                  

and

 

EPHRAIM MFUNENI ZUNGU                                              1^ST  RESPONDENT

MABUTHO MIYA                                                                    2^ND RESPONDENT

LUCKY XOLANI CWELE                                                      3^RD RESPONDENT

NONDUMISO CEBISILE MHLONGO                                 4^TH RESPONDENT

CYNTHIA THEMBA KHUMALO                                         5^TH RESPONDENT

NOKUTHULA CLOTILDA SITHOLE                                  6^TH RESPONDENT

FIRST NATIONAL BANK LIMITED                                    7^TH RESPONDENT

MASTER OF THE HIGH COURT                                         8^TH RESPONDENT

 

Heard:         13 November 2020.

Delivered:   26 November 2020.

ORDER

a)       The order of this court of 20 August 2020 is varied to read as follows:

 ‘1.    The application under case numbers 5048/2020 and 5141/2020 are consolidated and adjourned sine die.

2.       The 8^th Respondent, the Master of the High Court, is requested to furnish a report on the necessity or not of causing an investigation to be carried out by some fit and proper person appointed by him, into the Trustees’ administration and disposal of Trust property as per Section 10(2) of Act 57 of 1989 and also to consider the validity of the appointment of the current Trustees and the amendment of the Trust Deed.

3.       Pending the finalisation of the application:

3.1     The First, Second, Third, Fourth, Fifth, Sixth Respondents and any person, other than the seventh respondent to the extent set out in paragraph 3.5 hereof, are interdicted and restrained from accessing, operating and transacting on the Ubunye be Afrika Development Trust demand deposit account (Platinum Business Account) held at FNB with account number numerals [….], with immediate effect;

3.2     The First, Second, Third, Fourth, Fifth, Sixth Respondents and any person, other than the seventh respondent to the extent set out in paragraph 3.5 hereof, are interdicted and restrained from accessing, operating and transacting on the Ubunye be Afrika Development Trust Notice account (48 hour cash accelerator) held at FNB with account number [….], with immediate effect;

3.3     The First, Second, Third, Fourth, Fifth, Sixth Respondents and any person, other than the seventh respondent to the extent set out in paragraph 3.5 hereof, are interdicted and restrained from accessing, operating and transacting on the Ubunye be Afrika Development Trust Notice account (Bus 32 day extension Account) held at FNB with account number [….], with immediate effect;

3.4     The First, Second, third, Fourth, Fifth, Sixth Respondents and any person, other than the seventh respondent to the extent set out in paragraph 3.5 hereof, are interdicted and restrained from accessing, operating and transacting on the Ubunye be Afrika development Trust TOA account (48 hour cash accelerator) held at FNB with account number [….], with immediate effect;

3.5     The Banking accounts mentioned in paragraphs 3.1, 3.2, 3.3 and 3.4 above be all frozen, but with the exception that the seventh respondent is authorised to:

3.5.1  Make payments to creditors of the Trust as follows:

3.5.1.1        On presentation to it by employees of the Trust of invoices from creditors which are due for payment;

3.5.1.2         On presentation to it by employees of the Trust of amounts due to SARS pursuant to the relevant legislation; and

3.5.1.3         To the second respondent of her salary in the monthly amount of R56 902.75;

3.5.1.4         To the two interns of their salaries in the monthly amount of R7 321.50 each.

3.5.2  Transfer monies from the most appropriate account referred to in paragraphs 3.2, 3.3 and 3.4 should it become necessary and for the sole purpose of ensuring that there are sufficient funds in the account referred to in paragraph 3.1 to meet the payments referred to in paragraph 3.5.1 hereof.

4.       The costs are reserved.’

b)      The costs of this interlocutory application are reserved for determination by the court hearing the main application.

JUDGMENT

GORVEN J 

 

[1]             In this application, the first to sixth respondents seek to vary an order of this court made on 20 August 2020 (the present order). They are the current trustees of the Ubunye be Afrika Community Trust (the Trust). I shall refer to these parties as the respondents unless it is necessary to distinguish them. The applicants were the erstwhile trustees of the Trust. Disputes have arisen as to the right of the applicants or the respondents to be the trustees of the Trust. The present order was:

‘1.        The application under case numbers 5048/2020 and 5141/2020 are consolidated and adjourned sine die.

2.         The 8^th Respondent, the Master of the High Court, is requested to furnish a report on the necessity or not of causing an investigation to be carried out by some fit and proper person appointed by him, into the Trustees’ administration and disposal of Trust property as per Section 16(2) of Act 57 of 1989 and also to consider the validity of the appointment of the current Trustees and the amendment of the Trust Deed.

3.         Pending the finalisation of the application:

3.1       The First, Second, Fourth, Fifth, Sixth Respondents and any other person are interdicted and restrained from accessing, operating and transacting on the Ubunye be Afrika Development Trust demand deposit account (Platinum Business Account) held at FNB with account number numerals [….], with immediate effect;

3.2       The First, Second, Third, Fourth, Fifth, Sixth Respondents and any other person are interdicted and restrained from accessing, operating and transacting on the Ubunye be Afrika Development Trust Notice account (48 hour cash accelerator) held at FNB with account number [….], with immediate effect;

3.3       The First, Second, Third, Fourth, Fifth, Sixth Respondents and any other person are interdicted and restrained from accessing, operating and transacting on the Ubunye be Afrika Development Trust Notice account (Bus 32 day extension Account) held at FNB with account number [….], with immediate effect;

3.4       The First, Second, third, Fourth, Fifth, Sixth Respondents and any other person are interdicted and restrained from accessing, operating and transacting on the Ubunye be Afrika development Trust TOA account (48 hour cash accelerator) held at FNB with account number [….], with immediate effect;

3.5       The Banking accounts mentioned in paragraphs 3.1, 3.2, 3.3 and 3.4 above be all frozen, but with the praise that the amount set out in Annexures “A” hereto shall be permitted to be paid from the account in paragraph 3.1.

4.         The costs are reserved.’

 

[2]             The order sought is to appoint what is termed an independent trustee of the Trust (the proposed interim trustee), one Benjamin Jacobus Vorster. This is for the purpose of empowering the proposed interim trustee to make distributions to beneficiaries, of which more later. The second purpose is to empower him to transfer monies from investment accounts of the Trust to the current account from time to time. This to ensure that the expenses allowed to be paid by the present order do not deplete the current account from which they are to be paid, resulting in non-payment of creditors. The third purpose is to address specific amounts which are authorised to be paid to creditors under the present order. The final aspect of relief is to direct the eighth respondent of this court to conduct an investigation into the affairs of the Trust and to report within three months of service of the order. The present order requests, rather than directs, the eighth respondent to conduct an investigation, and no time period is fixed for any resultant report.

 

[3]             Turning to the relief regarding distributions from the Trust to certain of the beneficiaries of the Trust. Most of the beneficiaries for whom funding was sought and obtained are small businesses and farmers in and around the KwaDukuza area who are now facing financial catastrophe and urgently require funding. This has resulted from, or been exacerbated by, the Covid-19 pandemic and its effects. It is pointed out that, on the date on which the present order was made, funding in the sum of R1.5 million was approved by the Peaker Trust. That money cannot be distributed to those beneficiaries if the present order is not varied. Specific beneficiaries were identified to the Peaker Trust and the resolution to award that funding to the Trust was for onward distribution to those specified beneficiaries. The distribution would be take place only of those funds and to those beneficiaries.

 

[4]             The applicants opposed all of the relief sought on the basis that the present order renders the matter res judicata. The effect of this is that this court is functus officio and has no power to vary the present order. I shall revert to this submission. They say that, in any event, all of the circumstances on which the respondents rely for the relief sought were known at the time.

 

[5]             Relying on cases which forbid the leading of further evidence once a party has closed their case, they say that the application should be disallowed. However, this situation differs from one where a party has closed its case or already has a judgment against it and wishes to lead further evidence. The respondents seek to vary an order on the bases set out above.

 

[6]             The applicants also complain that they were ‘dragged to court’ on three days’ notice when the matter is not urgent. The short answer to this complaint is that the matter has not been argued as an urgent application. The papers are complete and there was no submission that the applicants have in any way been prejudiced by lack of opportunity of advancing their case. This much was correctly conceded by the applicants in argument.

 

[7]             Dealing, first, with the argument that the present order renders the relief sought res judicata. There are highly limited circumstances in which a final court order can be varied. Rule 42(1) provides grounds:

‘The court may, in addition to any other powers it may have, mero motu or upon the application of any party affected, rescind or vary:

(a)        An order or judgment erroneously sought or erroneously granted in the absence of any party affected thereby;

(b)        an order or judgment in which there is an ambiguity, or a patent error or omission, but only to the extent of such ambiguity, error or omission;

(c)        an order or judgment granted as the result of a mistake common to the parties.’

The respondents say they do not rely on this rule. The common law also provides certain grounds for variation of an order. These are fraud, justus error, in certain exceptional circumstances when new documents have been discovered, where judgment was granted by default, and in the absence between the parties of a valid agreement to support judgment, on the grounds of a justa causa.[1] None of these applies in the present matter.

 

[8]             However, the prohibition of amendment or variation does not apply to interlocutory orders. In South Cape Corporation (Pty) Ltd v Engineering Management Services (Pty) Ltd,[2] Corbett JA said:

‘At common law a purely interlocutory order may be corrected, altered or set aside by the Judge who granted it at any time before final judgment; whereas an order which has final and definitive effect, even though it may be interlocutory in the wide sense, is res judicata’.

This dictum cited as authority, amongst others, the matter of Bell v Bell,[3] which says:

‘It follows what has been said that, if the order of the 30^th April were interlocutory, then not only the judge who pronounced it, but any other judge sitting in the same court exercising the same powers, had jurisdiction to vary it.’

It can be seen, accordingly, that this goes beyond the jurisdiction of the judge originally granting the interlocutory order to vary it. Any judge of that division may do so.

 

[9]             The first question is therefore whether the present order is an interlocutory one. In South Cape Corporation, a distinction was drawn between two kinds of interlocutory orders:

‘In a wide and general sense the term “interlocutory” refers to all orders pronounced by the Court, upon matters incidental to the main dispute, preparatory to, or during the progress of, the litigation. But orders of this kind are divided into two classes: (i) those which have a final and definitive effect on the main action; and (ii) those, known as “simple (or purely) interlocutory orders” or “interlocutory orders proper”, which do not.’[4]

 It is the latter of these two which is subject to variation. The test for distinguishing between them was set out by Schreiner JA in Pretoria Garrison Institutes v Danish Variety Products (Pty) Limited:[5]

‘. . . a preparatory or procedural order is a simple interlocutory order and therefore not appealable unless it is such as to “dispose of any issue or any portion of the issue in the main action or suit” or, which amounts, I think, to the same thing, unless it “irreparably anticipates or precludes some of the relief which would or might be given at the hearing”.’[6]

Approaching the matter from the opposite perspective, it has been clarified that ‘final in effect’:

‘[M]eans that an issue in the suit has been affected by the order such that the issue cannot be revisited either by the court of first instance or that hearing the action.’[7]

 

[10]         It cannot be said that the present order disposes of any issue or portion of the issue in the main application. It simply prevents both sets of contending trustees from operating the bank accounts of the Trust pending the outcome of the main application. As such, it seeks to maintain the status quo until the main application is decided. Neither does it preclude the grant of any relief sought in the main application. It is clearly not final in effect and can, accordingly, be termed a simple interlocutory order. This appears to be recognised by the applicants when they assert in their papers that, since it is an interim order, it is not subject to appeal.[8] As such, according to the authorities, the order may be varied by a judge of this Division. During argument, this was conceded by the applicants.

 

[11]         The crisp issue, then, is under what circumstances the present order may be varied. I was not referred to any authority bearing on this issue. Nor did I find any. The starting point must be that variation is not there simply for the asking. If that were so, it would spawn myriad such applications where one party is dissatisfied with an interlocutory order. It must be borne in mind that a court has considered the application as presented at the time and arrived at an order which is to govern the situation. It is trite that court orders should not be varied unless there is some compelling reason to do so.

 

[12]         Although tailored for final orders, variation could result from the common law grounds and those provided in Rule 42(1). If a final order is subject to variation on those grounds, it follows that they would apply equally to an interlocutory order. Secondly, where unforeseen results would follow from such an order, it seems to me that this may form the basis for variation. Thirdly, where variation is necessary to give effect to the clear intention of the order, this could form a basis.

 

[13]         As I have said, none of the common law grounds applies to the present order. Of the provisions of Rule 42(1), only one might apply. This is Rule 42(1)(b) providing a basis to vary:

‘an order or judgment in which there is an ambiguity, or a patent error or omission, but only to the extent of such ambiguity, error or omission’.

The clear purpose of the present order is to suspend the operation of the Trust pending the outcome of the application. However, it was recognised that the Trust has obligations to creditors which must be met. If they were not met, creditors could sue the Trust and even sequestrate it. The present order thus sought to ensure that the Trust would remain in good standing with its creditors through payment of specified expenses. Where the present order was unclear on this or where patent errors appear in it, the parties agreed during argument that it could be varied so as to give effect to this intention of Bezuidenhout AJ.

 

[14]         It was agreed that two patent errors appear from the present order. The first was the incorrect reference in paragraph 2 of the order to s 10(2) of the Trust Property Control Act 57 of 1988. The reference should have been to s 16(2). The second was the omission of the third respondent from the interdict in paragraph 3.1. Paragraph 3.1 should be varied to include reference to him. The parties agreed during the hearing that these should be rectified.

 

[15]         Certain aspects of the present order are ambiguous. The annexure lists amounts which can be paid to creditors from the account referred to in paragraph 3.1. These are listed as follows:

a)       MTN subscription – R2 098;

b)      Nashua for printing services – R837.42;

c)       A&G account (insurances) – R2 344.65;

d)      Monthly account fees (bank charges) – R265;

e)       Salaries of two interns – R7 321.50 each;

f)       Second respondent’s salary as CEO – R56 902.75;

g)       SARS E-filing – R26 017.21;

h)      FNB account (bank charges) – R297.76;

i)       Rent as per lease agreement – R14 930;

j)       FNB statucor – R12 786.01; and

k)      Telkom – R201.25.

 

[16]         The present order provides only for payment of the creditors listed in annexure ‘A’. No other creditors are provided for. It also provides only for payment in the amounts set out there. It is not clear whether these can be paid only once-off or more than once. According to the respondents, difficulties have arisen as a result. This evidence was not challenged either on the papers or in argument. It is also not clear who is authorised to make those payments. During the hearing, I was informed, without challenge, that employees of the Trust present the amounts to the seventh respondent which then makes the payments. This seems to me to be a commendably practical solution. It does, however, strictly fall foul of the orders in paragraphs 3.1 to 3.4 inclusive which prohibit ‘any other person’ from operating the accounts in question.

 

[17]         The parties agreed that the present order should be varied so as to clarify matters. It was agreed that the seventh respondent should be authorised and directed to pay the requisite amounts to creditors from the account referred to in paragraph 3.1. This should be done on presentation by employees of the Trust of invoices from creditors. SARS does not render invoices. The requisite amounts should be paid when employees of the Trust show that the seventh respondent that they are due under the relevant legislation. In the case of the three employees listed, the sums reflected in annexure ‘A’ should be paid monthly.

 

[18]         It is clear that, unless the account in paragraph 3.1 has sufficient funds to meet the obligations of the Trust to its creditors, the purpose of the order would be negated. There are finite funds in that account and, according to the uncontested evidence of the respondents, it is likely to reach the point where it holds insufficient funds to meet these obligations. This will necessitate a mechanism whereby such amounts necessary to achieve that purpose can be transferred to it from one of the investment accounts of the Trust when needed. Again, it was agreed that the seventh respondent should be authorised and directed to do so.

 

[19]         None of these variations will require any action by the trustees; they can be attended to by the seventh respondent on production of the relevant invoices by officials employed by the Trust as has been done to date regarding the expenses. As for the reducing balance on the account in paragraph 3.1 of the present order, the seventh respondent is able to determine whether it would be sufficient to meet the obligations as and when they fall due. The variations dealt with thus far therefore do not require the appointment of the proposed trustee.

 

[20]         It was submitted that the order has had unintended consequences not brought to the attention of the judge dealing with the matter. This is the need to make distributions to beneficiaries in dire need as a result of the Covid-19 pandemic. In support of this, the respondents say that the resolution of the Peaker Trust to award the funds took place on the same day as the present order was granted. It could therefore not be brought to the attention of Bezuidenhout AJ.

 

[21]         But the learned judge was aware that amounts accrue to the Trust from time to time. Despite this, she chose not to provide for any distribution to beneficiaries. This was presumably because it is claimed in the main application that past distributions to beneficiaries were improperly made. One of the key points of contention is precisely that.

 

[22]         In addition, the present order was made on 20 August 2020. The pandemic and its effects on small businesses and financially vulnerable individuals were well-documented by then. As I have said, and as was conceded by the respondents in argument, the clear intent was to suspend the functioning of the Trust except for what is necessary to keep it in good standing with its creditors.

 

[23]         Finally, the respondents have not explained why certain specific beneficiaries and not others were identified to the Peaker Trust when applying for funding. Some form of discretion was clearly exercised in that choice. In the light of the contestation concerning distributions to beneficiaries in the past, allowing for distribution to those beneficiaries is inappropriate. This is unfortunately so even though those beneficiaries find themselves in dire straits. In the result, no case has been made out to vary the order in this respect to allow for the proposed distributions or for the appointment of the proposed trustee.

 

[24]         The respondents conceded that they are able to have recourse to s 7(2) of the Trust Property Control Act 57 of 1988, which provides:

‘When the Master considers it desirable, he may, notwithstanding the provisions of the trust instrument, appoint as co-trustee of any serving trustee any person whom he deems fit.’

They can at any stage make such an approach to the Master.

 

[25]         During the hearing, it became clear that the present order was only served on the eighth respondent recently. There is no indication that the eighth respondent will not respond to the request to investigate and report in good time. In fact, indications are to the contrary. The eighth respondent provided a comprehensive, helpful, report for the purpose of this interlocutory application, indicating a keen appreciation for the issues in the main application. There is thus, in my view, no basis to amend the present order so as to direct, rather than request, the eighth respondent to furnish a report or to impose a time frame for doing so. It is clear to all concerned that the main application cries out for urgent resolution.

 

[26]         There remains the question of costs of this interlocutory application. It seems to me that the court hearing the main application will be best qualified to deal with these costs. It is thus appropriate to reserve these costs.

 

[27]         In the result:

a)       The order of this court of 20 August 2020 is varied to read as follows:

 ‘1.    The application under case numbers 5048/2020 and 5141/2020 are consolidated and adjourned sine die.

2.       The 8^th Respondent, the Master of the High Court, is requested to furnish a report on the necessity or not of causing an investigation to be carried out by some fit and proper person appointed by him, into the Trustees’ administration and disposal of Trust property as per Section 16(2) of Act 57 of 1989 and also to consider the validity of the appointment of the current Trustees and the amendment of the Trust Deed.

3.       Pending the finalisation of the application:

          3.1     The First, Second, Third, Fourth, Fifth, Sixth Respondents and any person, other than the seventh respondent to the extent set out in paragraph 3.5 hereof, are interdicted and restrained from accessing, operating and transacting on the Ubunye be Afrika Development Trust demand deposit account (Platinum Business Account) held at FNB with account number numerals [….], with immediate effect;

3.2     The First, Second, Third, Fourth, Fifth, Sixth Respondents and any person, other than the seventh respondent to the extent set out in paragraph 3.5 hereof, are interdicted and restrained from accessing, operating and transacting on the Ubunye be Afrika Development Trust Notice account (48 hour cash accelerator) held at FNB with account number [….], with immediate effect;

3.3     The First, Second, Third, Fourth, Fifth, Sixth Respondents and any person, other than the seventh respondent to the extent set out in paragraph 3.5 hereof, are interdicted and restrained from accessing, operating and transacting on the Ubunye be Afrika Development Trust Notice account (Bus 32 day extension Account) held at FNB with account number [….], with immediate effect;

3.4     The First, Second, third, Fourth, Fifth, Sixth Respondents and any person, other than the seventh respondent to the extent set out in paragraph 3.5 hereof, are interdicted and restrained from accessing, operating and transacting on the Ubunye be Afrika development Trust TOA account (48 hour cash accelerator) held at FNB with account number [….], with immediate effect;

3.5     The Banking accounts mentioned in paragraphs 3.1, 3.2, 3.3 and 3.4 above be all frozen, but with the exception that the seventh respondent is authorised to:

3.5.1  Make payments to creditors of the Trust as follows:

3.5.1.1        On presentation to it by employees of the Trust of invoices from creditors which are due for payment;

3.5.1.2         On presentation to it by employees of the Trust of amounts due to SARS pursuant to the relevant legislation; and

3.5.1.3         To the second respondent of her salary in the monthly amount of R56 902.75;

3.5.1.4         To the two interns of their salaries in the monthly amount of R7 321.50 each.

3.5.2  Transfer monies from the most appropriate account referred to in paragraphs 3.2, 3.3 and 3.4 should it become necessary and for the sole purpose of ensuring that there are sufficient funds in the account referred to in paragraph 3.1 to meet the payments referred to in paragraph 3.5.1 hereof.

4.       The costs are reserved.’

b)      The costs of this interlocutory application are reserved for determination by the court hearing the main application.

 

 

 

      GORVEN J  

DATE OF HEARING:             13 November 2020

DATE OF JUDGMENT:          26 November 2020

FOR THE APPLICANT:          WN Shapiro

                                                          instructed by Jacques Roos Attorneys, locally

represented by Viv Greene Attorneys.

FOR THE RESPONDENT:     SBR Lushaba

                                                         instructed by Mdledle Incorporated.

                      

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