Burger N.O. and Others v Bester N.O. and Others

Mr Petrus Serdyn Louw, an auditor and director of Louw & Cronje Inc, defrauded clients of approximately R110 million through sham investment schemes. Around R70 million of the misappropriated funds were channelled to Pholaco (Pty) Ltd, sometimes via the HNP Trust, a family trust of which Mr and Mrs Louw and Mr Cronje were trustees. After the fraud was exposed, Mr and Mrs Louw were sequestrated and disqualified as trustees. The trustees of the Louw insolvent estate applied for the sequestration of the HNP Trust, alleging it was indebted to the insolvent estate and had been used as a vehicle to disguise the flow of fraudulent funds. The High Court granted a final sequestration order against the Trust. Appeals to the Supreme Court of Appeal failed, and the trustees of the Trust sought leave to appeal to the Constitutional Court.

Leave to appeal was refused. The applicants were ordered to pay the respondents’ costs, including the costs of two counsel.

The case confirms the strict limits of the Constitutional Court’s jurisdiction, particularly in matters dominated by factual disputes and settled principles of trust and insolvency law. It reinforces that alleged factual misdirections by lower courts do not, without more, amount to arguable points of law of general public importance.