Amlin (SA) Pty Ltd v Van Kooij

• Jurisdiction: South Africa
• Citation: 2008 (2) SA 558 (C)

Amlin (SA) Pty Ltd v Van Kooij
2008 (2) SA 558 (C)

2008 (2) SA p558

Citation	2008 (2) SA 558 (C)
Case No	A39/2007
Court	Cape Provincial Division
Judge	Bozalek J and Dlodlo J
Heard	April 13, 2007
Judgment	October 30, 2007
Counsel	RB Engela for the appellant.; J Swanepoel for the respondent.

Flynote : Sleutelwoorde F

Company — Legal personality of — Separate identity of — Piercing the corporate veil — Courts having no general discretion to disregard company's G separate legal personality — Fraud, dishonesty, improper conduct or concealment of true state of affairs constituting sufficient grounds for piercing of veil — To be last resort where justice will not otherwise be done — Not to be resorted to if alternative remedy available.

Headnote : Kopnota

A H court has no general discretion simply to disregard a company's separate legal personality whenever it regards it as just to do so. It has, however, come to be accepted that fraud, dishonesty or improper conduct could provide grounds for piercing the corporate veil. 'Opening the curtains' or piercing the veil is rather a drastic remedy. For that reason alone it must be resorted to rather sparingly and indeed as the very last resort in circumstances where I justice will not otherwise be done between two litigants. It cannot, for example, be resorted to as an alternative remedy if another remedy on the same facts can successfully be employed in order to administer justice between the parties. The general criteria relied upon in determining whether the corporate veil should be pierced include instances of fraud, agency, evasion and abuse of the corporate form. The veil could also be J lifted where there is a facade, ie where the company is a mere facade

2008 (2) SA p559

concealing the true state of affairs. The guiding principle is that the veil is A lifted only in exceptional circumstances. (Paragraphs [22] and [23] at 567I - 568C.)

Cases Considered

Annotations

Reported cases

Southern African cases B

Banco de Mozambique v Inter-Science Research and Development Services (Pty) Ltd1982 (3) SA 330 (T): considered

Botha v Van Niekerk en 'n Ander1983 (3) SA 513 (W): considered C

Cape Pacific Ltd v Lubner Controlling Investments (Pty) Ltd1993 (2) SA 784 (C): applied

Lategan and Another NNO v Boyes and Another1980 (4) SA 191 (T): considered

Maitland and Kensington Bus Co (Pty) Ltd v Jennings 1940 CPD 489: considered

National Employers Mutual General Insurance Association v Gany1931 AD 187: dictum at 199 applied. D

Foreign cases

Australia

Briggs v James Hardie & Co (Pty) Ltd (1998) 15 NSWLR 549 (NSWCA): considered

Commissioner of Land Tax v Theosophical Foundation (Pty) Ltd (1966) 67 SR (NSW) 70: E considered.

Canada

Aluminium Co of Canada v Toronto (City)(1944) 3 DLR 609 (SC): considered

Clarkson Co v Zhelka [1967] 2 OR 565 (64 DLR (2d) 57): considered F

Lockharts Ltd v Excalibur Holdings Ltd et al (1987) 47 RPR 8 (Nova Scotia SC): considered

Toronto (City) v Famous Players Canadian Corp(1936) 2 DLR 129 (SC): considered.

England

Adams v Cape Industries plc[1990] Ch 433 ([1991] 1 All ER 929): applied G

City of Glasgow District Council v Hamlet Textiles Ltd; Atlas Marine Co SA v Avalon Maritime Ltd[1991] 4 All ER 769 (CA): considered

Salomon v Salomon & Co[1897] AC 22 (HL) (1895 - 9) All ER Rep 33): considered.

United States of America H

In re Elegant Custom Homes, Inc, Debtor. Elegant Custom Homes, Inc, et al, Appellants v Elaine M Dusharm, Appellee (US Dist Ct, Dist of Arizona, 14 May 2007): considered

Nassau County, Plaintiff v Richard Dattner Architect, PC 2007 WL 1529599 (NY Sup); 2007 NY Slip Op 51065(U): considered I

O'Donnell v Weintraub 67 Cal Rptr 274 (CA, 1968): considered.

Case Information

Appeal from a decision in a magistrates' court. The facts appear from the reasons for judgment.

RB Engela for the appellant.

J Swanepoel for the respondent.

Cur adv vult. J

2008 (2) SA p560

Postea (October 30). A

Judgment

Dlodlo J:

Introduction

[1] This matter served before us as an appeal against the judgment of the B Tulbagh magistrate. The appellant issued summons against the respondent on 6 May 2005 for the payment of the sum of R70 000, allegedly being money lent and advanced by the appellant to the respondent at the latter's special instance and request. The document, purporting to be a loan agreement, appears on p 135 of the record. It is written on top 'FAX C MESSAGE' and is marked for the attention of Helmuth Luttig. It is dated 8 December 2003 and is signed by CR Kooij (the respondent). It reads as follows:

Dear Mr Luttig,

I herewith confirm reception of R70 000 received from Amlin SA (Pty) D Ltd as a loan (R20 000 in Week 41, R50 000 in Week 49).

[2] The respondent resisted the action by filing and serving notice of intention to defend. An unsuccessful application for summary judgment in terms of the Magistrates' Courts Rules was lodged. In an affidavit in opposition to the summary judgment application the respondent stated inter alia the following: E

2.1

I did not borrow any money from the applicant.

2.2

The applicant asked me during 2003 to give his representative in South Africa a letter confirming receipt of an amount of R70 000.

2.3

This amount was no loan but part payment of a total sum of h100 000 the applicant and his company Amlin Holdings owed F me. . . .

[3] In his plea the respondent denied the existence of a loan agreement and pleaded specifically as follows:

3.2.1

Amlin Holdings, a company registered in the Netherlands, owed defendant the sum of h100 000 which sum is due and payable to G defendant.

3.2.2

Part payment of the aforesaid amount to defendant was facilitated through plaintiff and hence the sum of R70 000 was paid to defendant.

3.2.3

In the premises the sum of R70 000 was not a loan but part repayment of a debt. H

Upon conclusion of the trial that ensued, the magistrate found in favour of the respondent. The appellant appealed to this court. Mr Engela and Mr Swanepoel appeared before us for the appellant and the respondent respectively.

The evidence I

[4] Mr Von Waesberghe testified that he is a director of the appellant company. According to his evidence the respondent was never an employee of the appellant. However, the respondent was in the employ of Amlin Holdings BV, which rendered professional services to the J appellant. Amlin Holdings BV at some stage owed the respondent an

2008 (2) SA p561

Dlodlo J

amount of €100 000. According to Mr Von Waesberghe at that time the A finance of Amlin Holdings BV was in a rather weak state. At a meeting on 16 August 2003, according to Mr Von Waesberghe, it was agreed that the respondent would continue to be employed by Amlin Holdings BV until 1 January 2004, whereafter he would be employed by the appellant. Mr Von Waesberghe testified further that on 8 October 2003 the B respondent received an amount of R20 000 from the appellant, as a loan, and on 1, 3 and 4 December 2003 he received the further amounts totalling R50 000 from the appellant company as a loan. The respondent signed a written document confirming the loan.

[5] Mr Von Waesberghe testified that the aforementioned amounts totalling R70 000 had never been repaid to the appellant company. C Under cross-examination, Mr Von Waesberghe clarified to the court a quo the relationship between Amlin Holdings BV, the appellant and the respondent. He told the court that the respondent's salary was paid by Amlin Holdings BV but the day-to-day expenses incurred by the respondent were paid by the appellant. In his testimony Amlin Holdings D BV 'assigned' respondent's services to the appellant. In his own words, on the salary and/or the commission of the respondent, Mr Von Waesberghe testified thus:

You cannot pay a person's bonus or commission from out a South African account, that is impossible. From out a complete other entity which is called Amlin SA, yes you cannot do that. E

Inasmuch as the respondent requested that the appellant make part payment to him of the debts owed to the latter by Amlin Holdings BV, Mr Von Waesberghe testified that:

. . . (N)o, he tries out as if I am willing to put out of Amlin SA which is complete other company to pay R250 000 I would never agree. I could never agree because it cannot happen like that. F

[6] In cross-examination it was constantly put to Mr Von Waesberghe that the amounts paid over to the respondent were not a loan, but were a 'part payment of a debt' and/or were paid 'in reduction of the debt' owed by Amlin Holdings BV to the respondent. Mr Von Waesberghe denied this and maintained that Amlin Holdings BV and the appellant G were two independent and separate entities, distinct from each other. The following portion of cross-examination of Mr Von Waesberghe deserves to be quoted:

Were you the sole director of Amlin Holdings? . . . . Yes.

Who own (sic) the shares in Amlin Holdings? . . . . Amlin Belgium, O! Amlin Vere Verena. H

Yes, but did you hold the shares? . . . . Yes

You hold the shares? . . . . Yes

So is it correct to say that you were in total control of Amlin Holdings. You were the sole director and you would control all the share holding in Amlin Holdings? . . . . Yes and Vere Verena.

. . . Is it fair to say Mr Von Waesberghe that you were in control of I Amlin Holdings and you were the managing director of Amlin SA, and you were also in total control of Amlin SA? . . . . I was, yes.

Mr Von Waesberghe it is not our case that Amlin Holding and Amlin SA is the same...