SA Hyde (Pty) Ltd v Neumann NO and Another

• Jurisdiction: South Africa
• Judge: Hofmeyr J
• Judgment Date: 16 July 1970
• Citation: 1970 (4) SA 55 (O)
• Hearing Date: 11 June 1970
• Court: Orange Free State Provincial Division

B Hofmeyr, J.:

The applicant's claim is for the payment to it of a sum of R2,000 deposited by E.B. Construction (Pty.) Ltd. with its attorneys with instructions to offer the said sum to the applicant in settlement of an action instituted by the applicant against it in June, 1968, for goods sold and delivered and for services rendered to it. The first respondent was originally the provisional judicial manager of the C above-mentioned company appointed by the Master in pursuance of a provisional judicial management order granted on 4th September, 1969. It is common cause that the judicial manager of the company duly appointed after the confirmation of the provisional order has agreed to be substituted as first respondent and, in so far as it may be necessary, I D formally order that he be so substituted.

The second respondent is the firm of attorneys known as Symington and de Kok who acted for E.B. Construction (Pty.) Ltd. at all relevant times. No order is prayed for against the second respondent and an order for costs is only asked for against it in the event of the second respondent E opposing the application. It has not done so and it is now in the position of a stakeholder in respect of the R2,000.

It is common cause that the offer of settlement was duly communicated to the applicant by second respondent's letter of 13th May, 1969, and that the offer was duly accepted by the applicant on 18th August, 1969. No F point was made of the delay of some months before the offer was accepted and there may be perfectly satisfactory reasons therefor.

Despite the unequivocal offer of payment of the sum deposited and the equally unequivocal acceptance thereof the second respondent advised the applicant on 27th August, 1969, that it was unable to forward the sum of R2,000 without receiving further instructions from its principal. This G clearly implied that the second respondent had not up to that date received any instructions countermanding the mandate in pursuance of which the letter of 13th May, 1969, had been addressed to the applicant. This is indeed implicit in the admission that there has been a due and proper acceptance of the offer of settlement.

The refusal by the second respondent to implement the offer of H settlement is difficult to understand. No reason is advanced why a valid and standing instruction by its principal (in respect of which it had held itself out to the applicant to be a mere agent willing to carry out instructions) should have been frustrated on its own initiative.

The second respondent in so doing purported without any justification to act as an independent party.

The attitude of the second respondent becomes intriguing when it appears that it also acted as the attorney of the petitioning creditor in

Hofmeyr J

the ex parte application for placing the E.B. Construction (Pty.) Ltd. under provisional management. It is admitted by the present first respondent that the relevant application was No. 451 of 1969 which is filed of record in this Court.

A It appears (i) that this application was signed by the petitioning creditor on 30th August, 1969; (ii) that the petitioning creditor held 99 of the 100 shares issued by the company; (iii) that her husband held the remaining share; (iv) that he was the director, manager, 'secretary and/or (sic) public officer' of the company; (v) that the application was based upon a statement of the assets and liabilities of the company B as at 29th August, 1969; and (vi) that no mention whatever was made in the application of the R2,000 held by the second respondent, of the offer of the said sum to the applicant in settlement of an action, or of the fact that the offer had been duly accepted by the applicant on 18th August, 1969.

C This appears to me a case where the same situation has arisen as in Mutsi v Santam Versekeringsmaatskappy Bpk. en 'n Ander, 1963 (3) SA 11 (O), where it was held that two companies were so intimately bound up with each other that their admittedly separate legal personae should not be over-emphasised and that they should not be treated as 'strangers' D without any knowledge of each other's functions and organisation. Reference was made at p. 18 of the judgment to an article in the South African Law Journal, vol. LXXVI, February, 1959, at p. 89, dealing with cases where the Courts, especially in America, have considered it necessary and permissible to 'pierce the veil' of corporate personality and to take into account the individuals behind the company.

E If this approach is adopted in the present case it would be ingenuous to accept that the second respondent and the company, on whose behalf the protection of the moratorium obtained as a result of...