Minnaar v Van Rooyen NO

• Jurisdiction: South Africa
• Judge: Lewis JA, Tshiqi JA, Majiedt JA, Dambuza JA and Baartman AJA
• Judgment Date: 10 September 2015
• Citation: 2016 (1) SA 117 (SCA)
• Docket Number: 20407/2014 [2015] ZASCA 114
• Hearing Date: 24 August 2015
• Counsel: N Davis SC (with CLH Harms) for the appellant. SG Gouws for the respondent.
• Court: Supreme Court of Appeal

Lewis JA (Tshiqi JA, Majiedt JA, Dambuza JA and Baartman AJA concurring): I

[1] Mr Casper Minnaar, the appellant, appeals against the refusal to grant the rescission of an order made against him by default. The order was made by Van der Merwe DJP (in the North Gauteng High Court) in terms of s 424(1) of the Companies Act 61 of 1973, applicable at the time when the default judgment was sought. It read: J

Lewis JA (Tshiqi JA, Majiedt JA, Dambuza JA and Baartman AJA concurring)

A 'When it appears, whether it be in a winding-up, judicial management or otherwise, that any business of the company was or is being carried on recklessly or with intent to defraud creditors of the company or creditors of any other person or for any fraudulent purpose, the Court may, on the application of the Master, the liquidator, the judicial manager, any creditor or member or contributory of the company, declare that any B person who was knowingly a party to the carrying on of the business in the manner aforesaid, shall be personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of the company as the Court may direct.' [My emphasis.]

[2] Default judgment, under s 424(1), was sought against Minnaar on C 22 February 2012 by the then liquidator of a company, Askari Mining and Equipment Ltd (Askari), who had instituted action against Minnaar and four other former directors, on the basis that they had acted recklessly in the conduct of the affairs of the company and should thus be liable for all the debts of the company. The respondent, Mr AW van Rooyen, is the current liquidator of the company.

D [3] The order sought by the liquidator, and granted by the court, read:

'After reading the papers filed and hearing counsel for the plaintiff, the court makes the following order (BY DEFAULT):

1.

It is declared, pursuant to the provisions of s 424(1) of the Companies Act . . . that the first defendant [Minnaar] is personally E liable without any limitation of liability, for all the debts of the company, Askari Mining and Equipment Ltd (in Liquidation).

2.

The first defendant shall pay the costs, including the costs occasioned by the employment of two counsel.'

[4] Some 10 months later Minnaar sought the rescission of the default F judgment in the Gauteng Division, Pretoria, in terms of rule 42(1)(a) of the Uniform Rules of Court and under the common law. Keightley AJ refused relief under the rule because she held that the order had not been erroneously sought, and refused relief under the common law on the basis that Minnaar was in wilful default.

G [5] Minnaar, a chartered accountant, was appointed as a consultant to Askari in 1999, and then as its financial director in 2000. He resigned as a director in November 2001. Askari was provisionally liquidated in June 2003, and finally liquidated in July 2008. In March 2004 Eloff JP, then retired, was appointed by the Master of the High Court to conduct an enquiry into the affairs of Askari in terms of s 417 of the 1973 Companies Act. H Eloff JP advised that the enquiry —

'achieved the purpose of identifying and establishing conduct on the part of the erstwhile directors of the company which could found an action under s 424'.

But, he pointed out —

I 'experience tells one that actions of that sort are often difficult to process to success, but at least enough was brought to light to enable the legal advisors of the creditors to advise whether such an action should be instituted'.

[6] The only passage in the report of the enquiry that is in the record, J and which deals with Minnaar's role, stated that he had testified about

Lewis JA (Tshiqi JA, Majiedt JA, Dambuza JA and Baartman AJA concurring)

the 'main financial transactions of the company while he was its financial A director. He contributed significantly to the establishment of the facts on the strength of which the main creditors of the company may be able to establish that the affairs of the company were conducted recklessly.' In May...