Moyo v Old Mutual Ltd and Others [2022] ZAGPJHC 336; [2022] 3 All SA 795 (GJ) (16 May 2022)

Peter Moyo, the former CEO of Old Mutual, was involved in a legal dispute with Old Mutual Limited and its board of directors, including the non-executive directors and the chairman, Trevor Manuel. The dispute arose after Old Mutual terminated Moyo's contract, leading to a series of legal battles concerning his reinstatement and the subsequent actions taken by Old Mutual and its board.

Moyo's contract termination was initially challenged by him on the grounds that it was unlawful. The court initially granted an interim order for his reinstatement, which Old Mutual contested, arguing that the order only reinstated the contract and did not require them to physically reinstate Moyo. Old Mutual also argued that their appeal against the reinstatement order suspended its effect, a position that was later upheld in an appeal.

During this period, Old Mutual refused to allow Moyo to resume his duties, leading to what were termed as "lockouts." Moyo argued that these actions constituted contempt of court. Additionally, public statements made by Old Mutual's chairman, Trevor Manuel, were alleged by Moyo to scandalise the court and contribute to the contempt.

Moyo further sought to have the directors declared delinquent under the Companies Act, arguing that their actions in handling his dismissal, the lockouts, and public statements amounted to gross negligence, willful misconduct, and breach of trust.

The court had to consider whether Old Mutual and its directors acted in contempt of court by not allowing Moyo to resume his duties and by their public statements. It also had to decide whether the directors' actions related to Moyo's dismissal and their public comments warranted them being declared delinquent directors.

The court ultimately found that Old Mutual and its directors did not act in contempt of court, as they were acting based on reasonable legal advice regarding the suspension of the court order due to their appeal. The court also found no basis for declaring the directors delinquent, concluding that they acted within their fiduciary duties and in the best interests of Old Mutual. The court dismissed both the contempt and delinquency applications filed by Moyo.

The ratio decidendi of the case revolves around the interpretation and application of legal principles concerning the duties and actions of corporate directors and the effect of legal advice on their decisions. The core legal principles underlying the decision are:

Legal Advice and Contempt of Court: The court determined that Old Mutual and its directors did not act in contempt of court when they refused to allow Moyo to resume his duties as CEO after his interim reinstatement by the court. The directors acted based on reasonable legal advice that suggested the interim court order was suspended by their application for leave to appeal. The court found that reliance on this legal advice negated any inference of mala fides (bad faith) or willfulness, which are necessary elements for establishing contempt of court.

Fiduciary Duties and Delinquency of Directors: The court addressed whether the actions of the directors in handling Moyo's dismissal and their public statements amounted to gross negligence, willful misconduct, or breach of trust under the Companies Act. The court concluded that the directors acted within their fiduciary duties owed to Old Mutual. They made decisions in the best interests of the company, based on thorough internal processes and legal advice, and therefore, there was no basis for declaring them delinquent directors.

Effect of Legal Advice on Directors' Decisions: The court emphasised that directors are entitled to rely on professional legal advice in making decisions, especially in complex corporate governance matters. This reliance, when based on advice from competent and experienced legal counsel, can shield directors from allegations of misconduct, provided the advice was followed in good faith and was not unreasonable.

These principles underscore the importance of directors acting on informed legal advice and highlight the protections offered to directors under corporate law when they fulfill their fiduciary duties responsibly. The decision reinforces the notion that courts will defer to the business judgment of directors when it is exercised in good faith, based on reasonable grounds, and within the bounds of the law.

S v Mamabolo (e-tv and others intervening) [2001] ZACC 17: This case was pivotal in discussing the principles surrounding contempt of court, particularly scandalising the court. The court in the Moyo case drew from Mamabolo to determine the threshold for what constitutes contempt by scandalising the court.

Fakie NO v CCII Systems (Pty) Ltd [2006] ZASCA 52: This case was referenced for the principles regarding the requirements to establish contempt of court, specifically the need to prove the elements of contempt beyond a reasonable doubt and the role of good faith in negating the willfulness required for contempt.

Multichoice Support Services (Pty) Ltd v Calvin Electronics t/a Batavia Trading and Another [2021] ZASCA 143: This case was discussed in relation to the effect of an appeal on interim orders and the ability of a company to exercise its contractual rights pending an appeal.

Secretary of the Judicial Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in the Public Sector including Organs of State v Zuma and Others [2021] ZACC 18: This recent case was used to further elaborate on the standards and implications of contempt of court, especially in high-profile and politically sensitive contexts.