Cape Town - The Western Cape High Court has dismissed a bid by investment and financial services scheme, Rockland Asset Management and Consulting (RAM), to get rid of the court-appointed curator of two trusts it founded and managed.
These two trusts are known as bewind beneficiary trusts and trade as the Rockland Targeted Development Investment Fund (TDI) and the Rockland Property Investment Fund (RIF).
In a bewind trust, the founder transfers the ownership of assets or property to beneficiaries of the trust, but control over the assets or property is given to the trustee, or curator as in this case.
RAM’s collective investment scheme business was placed into curatorship in 2012 and 2013 by the Financial Sector Conduct Authority (FSCA), formerly the Financial Services Board (FSB), after an investigation found the misappropriation of pension benefits of relatively low-paid working-class people.
Attorney Pierre du Plessis Kriel was appointed as the curator of the collective investment scheme “business” of RAM and of the two bewind beneficiary trusts.
As curator his job was to analyse the finances of the company and to prevent bankruptcy.
In the court in which the matter was first heard, it was alleged that the sole director and controlling mind of RAM was involved in the misappropriation of significant amounts of money entrusted to his businesses by various employee and trade union pension and provident funds.
It was further maintained that RAM was just one of these vehicles utilised in the alleged misappropriation of investors’ funds.
RAM’s holding company, Rockland Group Holdings (RGH), brought the appeal to remove Kriel, which was heard by the High Court with leave from the Supreme Court of Appeal.
RGH said it wanted the curatorship to come to an end, as RAM had since become insolvent under it.
The respondents in the case were the commissioner of the FSCA and Kriel, and their argument before the court was that the curator owed no fiduciary duties to RAM and those who benefit or benefited from its activities.
However, the respondents’ argument is that RAM already faced severe solvency problems prior to the curatorship application in 2012.
They also argue that RAM has a pending claim against RGH of approximately R32 million, which needs to be pursued to finality.
The matter was heard by judges Derek Wille, Chantel Fortuin and Mark Sher.
In his ruling, Judge Wille said: “The grounds of appeal contended for were also mostly defined by numerous logical fallacies.”
He said that logically a curator could not acquire any obligations towards any of the entities that were controlled by parties who took investor funds in the first place, particularly where those parties were the cause of the institution’s problems.
“In my view, this appeal has no basis in law or in fact and falls to be dismissed with costs, including the costs of two counsel.”