The Prudential Authority, acting as Registrar of Banks, sought the provisional sequestration of the joint estate of Mkhululi Noble Dlamini and Nosipho Prudence Dlamini, who were married in community of property. Following an inspection under s 12 of the South African Reserve Bank Act 90 of 1989, the Authority found that the Dlaminis had unlawfully obtained money by conducting the business of a bank through their participation in the Travel Ventures International (TVI) scheme, without being registered or authorised. A repayment directive was issued to them under s 83(1) of the Banks Act 94 of 1990, directing repayment of approximately R2.8 million. The Dlaminis neither complied with the directive nor sought its review. A repayment administrator was appointed under s 84. The Authority applied to the KwaZulu-Natal High Court for provisional sequestration on the grounds of a deemed act of insolvency under s 83(3)(b) and factual insolvency under s 84(1A)(c). The High Court dismissed the application, holding that factual insolvency had not been established. The Authority appealed to the Supreme Court of Appeal.
The appeal was upheld with costs. The High Court’s order was set aside and replaced with an order placing the joint estate of the respondents under provisional sequestration, appointing a provisional trustee, issuing a rule nisi for final sequestration, and directing that costs be costs in the administration of the insolvent estate.
The case clarifies the interpretation of ss 83 and 84 of the Banks Act and confirms the wide powers of the Prudential Authority in enforcing repayment directives. It establishes that non-compliance with a repayment directive constitutes a deemed act of insolvency sufficient to ground sequestration, without the need to prove factual insolvency. The judgment strengthens regulatory enforcement mechanisms against unlawful banking activities and pyramid schemes.