Griffiths v Janse van Rensburg NO and Another

The Usapho Trust operated an unlawful pyramid scheme. Jonathan Brian Griffiths invested two amounts of R100 000 each with the Trust under agreements styled as investments but which were, in law, loans. The Trust repaid the two capital amounts and also paid R12 000 cash interest on each investment shortly before its sequestration. The Trust was sequestrated on 24 September 2000 and the respondents were appointed as trustees in insolvency. The trustees sought to set aside four payments (two capital and two interest payments) as impeachable dispositions under s 29 of the Insolvency Act, contending that they were not made in the ordinary course of business and had the effect of preferring Griffiths above other creditors.

The appeal was dismissed with costs, and the cross-appeal was also dismissed with costs. The setting aside of all four dispositions and the order for repayment with interest from the date of judgment were confirmed.

The case clarifies the application of s 29 of the Insolvency Act, particularly the meaning of dispositions made in the ordinary course of business. It confirms that courts must focus on the actual legal and factual basis of the disposition at the time it was made, and that payments made pursuant to illegal and void contracts will generally not satisfy the ordinary course requirement. The judgment also provides authoritative guidance on when mora interest begins to run on orders setting aside dispositions.