Fundstrust (Pty) Ltd (In Liquidation) v Van Deventer

• Jurisdiction: South Africa
• Citation: 1997 (1) SA 710 (A)

Fundstrust (Pty) Ltd (In Liquidation) v Van Deventer
1997 (1) SA 710 (A)

1997 (1) SA p710

Citation	1997 (1) SA 710 (A)
Case No	365/95
Court	Appellate Division
Judge	Hefer JA, Eksteen JA, Nienaber JA, Harms JA, Schutz JA
Heard	September 13, 1996
Judgment	November 8, 1996
Counsel	E Zar for the applicants; H S Epstein for the second and third respondents

Flynote : Sleutelwoorde F

Company — Directors and officers — Director — Liability of for debts of company — Companies Act 61 of 1973, s 53(b) — Section 53(b) providing for joint and several liability of directors with company 'for such debts and liabilities . . . as G are or were contracted during their periods of office . . .' — Such liability limited to company's contractual debts and liabilities — Statutory liability in respect of voidable or undue preferences not included.

Statute — Interpretation of — Use of dictionaries — Use of authoritative H dictionaries permissible and often helpful in determining ordinary meaning of words — Necessary, however, to give sufficient attention to contextual scene — Occasionally use of dictionary not helpful.

Statute — Interpretation of — Presumptions — Presumption that Parliament acquainted with existing and earlier judicial interpretation of legislation — Presumption only applicable if words in question had acquired settled and I well-recognised judicial interpretation before relevant legislation passed.

Statute — Interpretation of — Statute not to be given construction leading to anomalous results which could not have been intended by Legislature — Departure from plain meaning of statute on account of anomalous results only justifiable when Court satisfied such results not intended — Where statute capable of more than one meaning, fact that particular construction J

1997 (1) SA p711

would lead to anomaly not necessarily conclusive indication that such A construction not intended — If anomalies arise in about equal degree on either construction, they may be discarded as factors in interpretation.

Headnote : Kopnota

The joint and several liability of directors and past directors of a private company with the company in terms of s 53(b) of the Companies Act 61 of 1973 'for such debts and B liabilities of the company as are or were contracted during their periods of office . . .' is limited to the company's contractual debts and liabilites and does not include its statutory liability in respect of voidable and undue preferences. (At 726B-D, 735C-D and 735I-736C, paraphrased.)

Recourse to authoritative dictionaries is a permissible and often helpful method available to the Courts to ascertain the ordinary meaning of words in a statute. But C judicial interpretation cannot be undertaken by 'excessive peering at the language to be interpreted without sufficient attention to the contextual scene'. The task of the interpreter is, after all, to ascertain the meaning of a word or expression in the particular context of the statute in which it appears. As a rule every word or expression must be given its ordinary meaning and in this regard lexical research is useful and at times indispensable. Occasionally, however, it is not. (At 726H-727B.) D

The principle that Parliament is presumed to be acquainted with the existing law and with the interpretation of earlier legislation by the Courts can only be applied if the words in question had acquired a settled and well-recognised judicial interpretation before the relevant legislation was passed. (At 732B.)

The faithful avoidance of anomalies is not the lawgiver's forte. This is one of the reasons why it is often said that a departure from the plain words of a statute on E account of anomalous results is only justified when the Court is satisfied that such results were not intended. Similarly, where a statute is capable of more than one interpretation the fact that a particular construction would lead to an anomaly is not necessarily a conclusive indication that that construction was not intended. A construction leading to an anomalous result should accordingly only be rejected if the F conclusion is justified that the result could not have been intended. Of course, if anomalies arise in more or less equal degree on either construction, they may be discarded as factors in the interpretation. (At 733G-734B.)

The decision in the Cape Provincial Division in Fundstrust (Pty) Ltd (in Liquidation) v Van Deventer confirmed. G

Cases Considered

Annotations

Reported cases

The following decided cases were cited in the judgment of the Court:

Aron Salomon v A Salomon & Co Ltd[1897] AC 22 (HL)

Association of Amusement and Novelty Machine Operators and Another v Minister of Justice and Another1980 (2) SA 636 (A)

Constantia Insurance Co Ltd v Hearne1986 (3) SA 60 (A)

Dadoo Ltd and Others v Krugersdorp Municipal Council1920 AD 530

Hatch v Koopoomal1936 AD 190 H

Jaga v Dönges NO and Another; Bhana v Dönges NO and Another1950 (4) SA 653 (A)

Klerksdorpse Stadsraad v Renswyk Slaghuis (Edms) Bpk1988 (3) SA 850 (A)

Loryan (Pty) Ltd v Solarsh Tea and Coffee (Pty) Ltd1984 (3) SA 834 (W)

Manjra v Desai and Another1968 (2) SA 249 (N)

Ex parte Minister of Justice: In re R v Bolon1941 AD 345 I

Olley v Maasdorp and Another1948 (4) SA 657 (A)

Park Geboubeleggings en Wynkelders Bpk v Stadsraad van Vanderbijlpark1965 (1) SA 849 (T)

Principal Immigration Officer v Hawabu and Another1936 AD 26

R v Landsman and Another 1939 TPD 336

Smith v Clark1935 AD 224 J

1997 (1) SA p712

South African Mutual Fire & General Insurance Co Ltd v Bali NO1970 (2) SA 696 (A) A

South African Transport Services v Olgar and Another1986 (2) SA 684 (A)

Suid-Afrikaanse Spoorweë en Hawens v Van den Berg en 'n Ander1983 (1) SA 964 (A)

University of Cape Town v Cape Bar Council and Another1986 (4) SA 903 (A)

Westinghouse Brake & Equipment (Pty) Ltd v Bilger Engineering (Pty) Ltd1986 (2) SA 555 (A). B

Statutes Considered

Statutes

The following statutes were considered by the Court:

The Companies Act 46 of 1926, ss 6(2)(a)(v), 6A, 101, 107, 149(1), 185bis(1)

The Companies Act 61 of 1973, ss 52(3)(b), 53(b), 66, 395(2)(a): see Juta's Statutes of South Africa 1995 vol 2 at 1 - 128, 1 - 130, 1 - 193 C

The Stock Exchanges Control Act 7 of 1947, s 8A(1).

Case Information

Appeal from a decision in the Cape Provincial Division (Tebbutt J and Van Deventer J), upholding an exception to the appellant's particulars of claim. The nature of the pleadings appears from the judgment of Hefer JA. D

M Seligson SC (with him S Olivier) for the appellant (the heads of argument having been prepared by L S Kuschke SC and S Olivier): The respondent is one of 13 directors whom the appellant seeks to hold liable, together with the incorporated partnership George Huysamer and Partners Incorporated ('GH Inc'), for payments E which the liquidators of Fundstrust (Pty) Ltd seek to impeach under the Insolvency Act 24 of 1936. The respondent (the thirteenth defendant) excepted to the particulars of appellant's claim.

The exception was twofold in nature: in the first instance, the respondent contended that: F

'The obligation to repay the amounts paid to the company (GH Inc) will only arise, if at all, on the exercise of the statutory discretion vested in the Court in terms of the provisions of s 29 and/or s 30 of the Insolvency Act 24 of 1936 and, as such, the obligation is not one "contracted during the period of office" of the thirteenth defendant (the respondent).' G

('The first exception'.) In the second instance, the respondent contended that the appellant had failed to plead any basis for its purported reliance on the memorandum of association of GH Inc. (The second exception.) The Court a quo, in its judgment handed down on 21 June 1995: H

(a) upheld the first exception, holding that the respondent would not be jointly and severally liable with GH Inc for the repayment by it to the appellant of the payments which the appellant is seeking to set aside as voidable or undue preferences in the actions already instituted against GH Inc; (b) dismissed the second exception. The Court a quo, in upholding the first exception, interpreted the words 'such debts and I liabilities of the company as are or were contracted' as they appear in s 13(1) of the Stock Exchanges Control Act 1 of 1985 and s 53(b) of the Companies Act 61 of 1973 and found that the aforesaid sections did not preserve the principles of partnership liability; found that the provisions of s 53(b) should be interpreted restrictively; found that the word 'contracted' did not include the liability arising from the impeachment of J

1997 (1) SA p713

payments under the relevant provisions of the Insolvency Act 24 of 1936; did not deal A with the argument that untenable absurdities would result from such interpretation; interpreted the provisions of s 66 of the Companies Act 61 of 1973 restrictively and thereafter equated the provisions of that section with s 53(b) of the Companies Act 61 of 1973; and found that the Afrikaans word 'aangegaan' as it appears in s 53(b) bears B a narrow meaning to connote only a positive and intentional assumption of debt or liability. The Court a quo was wrong in the findings made by it.

In determining the ambit and validity of the grounds of the first exception raised by the respondent, it seems, with respect, appropriate to refer to historical developments in C company law and further to the history of the legislation governing the personal liability of those who traditionally operated as partners but who sought, in modern times, to enjoy the benefits of incorporation as a statutory corporate entity. This history, in summary form, is the following: At common law, both here and in England, the partners of a partnership assumed the risk of...