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[2018] ZAWCHC 189
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Van Zyl NO and Another v Currin and Others (15047/2018) [2018] ZAWCHC 189 (15 October 2018)
IN THE HIGH COURT OF
SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case
No:
15047/2018
In
the matter between:
THOMAS
CHRISTOPHER
VAN ZYL
N.O.
First
Applicant
LEBOGANG
MICHAEL MOLOTO N.O.
Second
Applicant
and
WESLEY
AVIANT
CURRIN
First
Respondent
RICHARD
PAUL KRONK
Second
Respondent
MYLES
KRONK
Third
Respondent
CLOUD
CFO (PTY) LTD
Fourth
Respondent
JUDGMENT
DELIVERED ON 15 OCTOBER 2018
Vos,
AJ
Introduction
[1]
In this matter the applicants seek the following relief, based on the
provisions of section 424 of the Companies Act, No. 61
of 1973:
[1.1] That the first to
third respondents shall be personally liable, without any limitation
of liability, jointly and severally,
for all or any of the debts or
other liabilities of Company Worx Group (Pty) Ltd (in liquidation)
with registration number 2014/056263/07
(“Company Worx Group”).
[1.2] Alternatively, that
the first to third respondents be personally liable, jointly and
severally, for the debts of Company Worx
Group in respect of Shaun
Norman Currin (“Shaun Currin”).
[1.3] That the fourth
respondent be liable for all or any of the debts or other liabilities
of Company Worx Group, alternatively,
that the fourth respondent be
liable for the debts of Company Worx Group in respect of Shaun
Currin.
[1.4] That the respondent
or respondents opposing this application pay the costs of this
application on an attorney and client scale.
[2]
The parties are as follows:
[2.1] The first applicant
is Thomas Christopher Van Zyl, an insolvency practitioner, and he
acts in his capacity as the final liquidator
of Company Worx Group;
[2.2] The second
applicant is Lebogang Michael Moloto, and he is also an insolvency
practitioner, and he acts in his capacity as
the co-final liquidator
of Company Worx Group;
[2.3] The first
respondent is Wesley Aviant Currin, a chartered accountant, who was
previously a director of Company Worx Group.
I shall refer to the
first respondent as “
Wesley Currin
”;
[2.4] The second
respondent is Richard Paul Kronk, an adult male chartered accountant
who is a director of Cloud CFO (Pty) Ltd.
I shall refer to the second
respondent as “
Richard Kronk
” and to Cloud CFO
(Pty) Ltd as “
Cloud CFO
”;
[2.5] The third
respondent is Myles Kronk who works at Cloud CFO, 55 Short Market
Street, Cape Town. I shall refer to the third
respondent as “
Myles
Kronk”
. Myles Kronk is the father of Richard Kronk;
[2.6] The fourth
respondent is Cloud CFO, a company which has been duly registered and
incorporated under registration number 2016/051014/07.
It has its
registered office at 27 Oviston Way, Edgemead, Cape Town, and its
principal place of business is situated at 55 Short
Market Street,
Cape Town. Cloud CFO provides accounting services to the public.
Locus
Standi
[3]
The respondents contend that the applicants do not have locus standi
in this matter, as the applicants failed to allege in the
founding
papers that they were invested with the requisite authority to
commence these proceedings in terms of the provisions of
section 386
(3) (a) and (4) (a) of the Companies Act, No. 61 of 1973.
[4]
Section 386 of the Companies Act, 1973 deals with the powers of
liquidators, and subsection (3) (a) provides that the liquidator
of a
company “
in a winding-up by the Court, with the authority
granted by meetings of creditors and members or contributories or on
the directions
of the Master given under section 387…
”
shall have the powers mentioned in subsection (4).
[5]
In terms of section 386 (4) (a) the powers referred to in subsection
(3) are:
“…
to
bring or defend in the name and on behalf of the company any action
or other legal proceeding of a civil nature …”
[6]
In the founding papers it has not been alleged that the applicants
have instituted the proceedings with the authority of creditors
and
members, or on the “
directions of the Master
”.
Therefore, the respondents submit that the applicants lack locus
standi.
[7]
After the
respondents took the point that the applicants were not authorised to
institute the present proceedings, they made written
application to
the Master for an extension of their powers in terms of section 386
(4) (a) (b) (c) of the Companies Act.
[1]
At the same time a copy of the application papers was submitted to
the Master.
[8]
On 9
October 2017 the Master advised the applicants
[2]
that their “
extension
of powers in terms of section 386 (4) (a) (b) and (c) is hereby
granted
”.
[9]
A question that accordingly falls for determination, is whether the
subsequent authorisation by the Master to the present proceedings,
validates the proceedings and grants the applicants the necessary
locus standi. In the opposing papers the respondents have admitted
that the applicants are the final liquidators of Company Worx Group.
[10]
In
Herbstein
and Van Vincent, the Civil Practice of Superior Courts of South
Africa
[3]
the following is said:
“
It has been
held that documentary proof of authorisation may be supplied in an
answering affidavit. Where an application is made
by an agent on
behalf of a principal, an averment of the agent's authority is
essential, unless it appears from affidavits filed
in the application
that the principal is aware of and ratifies the proceedings. A
statement that the applicant is acting in the
capacity of agent for
the principal in question is a sufficient allegation of authority to
make the application. The case of an
artificial person, such as a
company or co-operative society, differs from that of a natural
person. As was pointed out in Mall(Cape)
(Pty) Ltd v Merino
Ko-operasie Bpk, since an artificial person, unlike an individual,
can function only through its agents, and
can take decisions only by
the passing of resolutions in the manner prescribed by its
constitution, it cannot be assumed, from
the mere fact that
proceedings have been brought in its name, that those proceedings
have in fact been authorised by the artificial
person concerned.”
[11]
Furthermore,
a defect in apparent authority may be cured by retrospective
authorisation. In
Nampak
Products Ltd t/a Nampak Flexible Packaging v Sweetcor (Pty) Ltd
[4]
the Court allowed ratification even though the person who signed the
power was not authorised to do so at the time when the action
was
instituted.
[12]
In
Fourways
Mall (Pty) Ltd v SA Commercial Catering & Allied Workers Union
[5]
the required allegations of due authorisation were in fact made in
the founding affidavit, but were not substantiated by documentary
proof thereof. In the replying affidavit, such documentary proof of
authorisation and/or ratification was supplied. The Court regarded
the case as being on all fours with the facts in
Moosa
and Cassim NNO v Community Development Board
[6]
,
in which the Supreme Court of Appeal approved such a procedure.
[13]
In
Smith
v Kwanonqubela Town Council
[7]
an objection was taken to the authority of the person that brought
the application on behalf of the Town Council. In his founding
affidavit, the deponent alleged that he had been duly authorised to
act on behalf of the council by virtue of his appointment under
section 29A of the Black Local Authorities Act, 102 of 1982. In terms
of that section, the then administrator of the Cape Province,
could
authorise any person to exercise, perform or fulfil the rights,
powers and functions of a local authority if, due to the
number of
vacancies on the council, it was unable to act. The deponent’s
appointment in terms of section 29A, had expired
on 31 May 1994. The
proceedings were launched on 16 August 1994. The Town Council had
subsequently been incorporated into the Alexandria
Transitional
Council, and the rights and duties of the Town Council devolved upon
the transitional council. According to the minutes
of a meeting held
by the Transitional Council on 2 December 1994, the litigation
against the appellant was discussed in full, and
it was resolved that
it be proceeded with.
[14]
The Town
Council alleged in a stated case before a High Court that it
constituted sufficient authorisation of the deponent to represent
the
council. The Court concluded that the deponent to the founding
affidavit had the necessary locus standi. On appeal to the Supreme
Court of Appeal, it was held
[8]
that the launch of legal proceedings was not an administrative act,
but a procedural one open to any member of the public. Where
a person
(wrongly) believed that he had the necessary authority to act on
behalf of a Town Council and his intention had been to
act on behalf
of the Town Council, and not on his own behalf, the general rule of
agency, that such act of an “
unauthorised
agent
”
could be ratified with retrospective effect, applied.
[15]
In
Lynn
NO and Another v Coreejes
[9]
the Supreme Court of Appeal held as follows:
“
[12] Section
386(4)(a) empowers a liquidator to, inter alia, bring or defend legal
proceedings on behalf of the company. The section
requires a
liquidator to be duly authorised by a meeting of creditors or members
(s 386(3)) or by the Master in case of urgent
legal proceedings for
the recovery of outstanding accounts (s 386(4)) before he or she can
bring such proceedings on behalf
of the company. Our courts have
held that if a liquidator litigates without the prescribed authority,
the court may refuse to allow
him his costs out of the company's
assets and he may have to pay such costs himself. The litigation is
not a nullity, it merely
has potential adverse costs implications for
the liquidator. And there is ample authority that a person against
whom the unauthorised
liquidator is litigating may not object to such
lack of authorisation, for it is a matter between the liquidator and
the creditors.
Retrospective sanction of unauthorised litigation is
available to the liquidator in appropriate instances, either from the
creditors
or members under s 386(3) or, if refused, from the Master
under s 387(2) and, if the Master refuses, from the court under
s 386(5) read with s 387(3)
.”
[16] In this matter, the
applicants are similarly not acting in their personal capacity, but
in their representative capacities
as the joint liquidators of
Company Worx Group. In my view, the Master ratified the litigation
and by doing so, no substantive
rights of the respondents were
affected. They have also not shown any prejudice to them. A party to
litigation, does not have the
right to prevent the other party, from
rectifying a procedural defect.
[17]
In the premises, I am of the view that the applicants do have the
necessary locus standi.
The
legal principles: section 424 of the Companies Act, 1973
[18]
The applicants base their claim against the respondents on section
424 of the Companies Act, 1973, which reads as follows:
“
424.
Liability
of directors and others for fraudulent conduct of business:-
(1)
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 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.
(2)(a) Where the
Court makes any such declaration, it may give such further directions
as it thinks proper for the purpose
of giving effect to the
declaration, and in particular may make provision for making the
liability of any such person under the
declaration a charge on any
debt or obligation due from the company to him, or on any mortgage or
charge or any interest in any
mortgage or charge on any assets of the
company held by or vested in him or any company or person on his
behalf or any person claiming
as assignee from or through the person
liable or any company or person acting on his behalf, and may from
time to time make such
further orders as may be necessary for the
purpose of enforcing any charge imposed under this subsection.
(b) For the purposes
of this subsection, the expression "assignee" includes any
person to whom or in whose favour, by
the directions of the person
liable, the debt, obligation, mortgage or charge was created, issued
or transferred or the interest
was created, but does not include an
assignee for valuable consideration given in good faith and without
notice of any of the matters
on the ground of which the declaration
is made.
(3) Without prejudice
to any other criminal liability incurred, where any business of a
company is carried on recklessly or with
such intent or for such
purpose as is mentioned in subsection (1), every person who was
knowingly a party to the carrying on of
the business in the manner
aforesaid, shall be guilty of an offence.
(4) The provisions of
this section shall have effect notwithstanding that the person
concerned may be criminally liable in respect
of the matters on the
ground of which the declaration is made.”
[19]
In
Henochsberg
on the Companies Act 61 of 1973
[10]
the following is stated:
“
Liability
can be attached to any person, even if he is neither a member nor a
director nor an officer of the company, and also a juristic
person
(
Cooper NNO
v
SA Mutual Life Assurance
Society
[2000] ZASCA 153
;
2001 (1) SA 967
(SCA))
so long as he is found to have been
knowingly
a
party to the carrying on of the business recklessly etc. Persons
with
locus standi
to
bring
s 424
proceedings
may choose whom they wish to sue. In
Fourie
v
Newton
2010
JDR
1437
(SCA) the liquidators proceeded against only one of the directors of
a company in liquidation, not because his conduct was
any different
from the other directors, but (apparently) because he was the only
director with liability insurance, and the Court
held that there was
nothing improper in such a course.”
[20] Thus, the relief can
be sought against any party who was knowingly a party to the carrying
on of the business of the company
in the manner specified in section
424(1).
[21]
The
onus is on an applicant to establish his case on a balance of
probabilities
[11]
. However,
where the applicant has no means to adduce evidence
regarding
the operations of the company, because the facts lie exclusively
within the knowledge of the respondent, less evidence will suffice,
particularly where the respondent elects not to reveal the facts or
to furnish any explanation of the evidence placed before the
Court
[12]
.
[22]
With
regard to the “reckless” requirement of section 424, the
following is stated in
Henochsberg
on the Companies Act 61 of 1973
[13]
:
“
It
is submitted, carrying on any business of the company recklessly
means carrying it on by conduct
which
evinces a lack of any genuine concern for its prosperity
(
Anderson
v
Dickson
NO
(
Intermenua
(
Pty
)
Ltd intervening
)
1985 (1) SA 93
(N) at 110; and
cf L&P
Plant Hire BK
v
Bosch
2002
(2) SA 662
(SCA)
at 677);
Ebrahim
v
Airport Cold Storage (Pty)
Ltd
[2008] ZASCA 113
;
2008 (6) SA 585
(SCA) at 18). See further
Ex
parte Lebowa Development Corporation Ltd
1989 (3) SA 71
(T) at 111;
Heneways
Freight Services
(
Pty
)
Ltd
v
Grogor
2007
(2) SA 561
(SCA); and
Ozinsky
NO
v
Lloyd
1992
(3) SA 396
(C) at 413–414. In this latter case Van Deventer J stated (at
414): “If a company continues to carry on business and
to incur
debts when, in the opinion of reasonable businessmen, standing in the
shoes of the directors, there would be no reasonable
prospect of the
creditors receiving payment when due, it will in general be a proper
inference that the business is being carried
on recklessly. …”
[23]
With
regard to the
“
intention
to defraud
”
and “
fraudulent
purpose
”
requirements of section 424 (1),
Henochsberg
on the Companies Act 61 of 1973
state the following
[14]
:
“
It
is submitted that
the
intention is that the section is to apply irrespective of the nature
of the conduct provided in the light of it there was, or is,
a
carrying on of the business of the company with intent to defraud any
creditor of the company or anyone else’s creditor
or a carrying
on of the business for any fraudulent purpose, i.e. even if that
purpose does not involve the defrauding of any particular
creditor,
…”
“
It
is not the case that, merely because the company makes a disposition
of its property which constitutes the giving of a voidable
or an
undue preference, the business of the company has been carried on
with intent to defraud its other creditors or for a fraudulent
purpose (
Simon
case
supra
at
525–526): an intention to prefer is not
per
se
equivalent
to an intention to defraud ... However, a preference may be given in
circumstances where the giving of it would involve
a fraud on other
creditors ...”
[24]
Blackman in
Commentary
on the Companies Act
[15]
says the following: “
The
words ‘defraud’ and ‘fraudulent purpose’
connote actual dishonesty involving, according to current notions
of
fair trading among commercial men, real moral blame.”
[25]
A person
(in the wide sense) is knowingly a party to the carrying on of the
business
if
there is proof “
on
a balance of probabilities, that the person sought to be held liable
had knowledge of the facts from which the conclusion is
properly to
be drawn that the business of the company was or is being carried on.
It would not be necessary to go further and prove
that the person
also had actual knowledge of the legal consequences of those
facts”
[16]
.
[26]
In respect
of a director of the company the position is more onerous. Goldstone
JA said the following in
Howard
v Herrigel
[17]
“
A
director has an affirmative duty to safeguard and protect the affairs
of the company. In my opinion, it follows that …
[a director]
may well be a ‘party’ to the reckless or
fraudulent
conduct of the company’s business even in the absence of some
positive steps by him in the carrying on of the company’s
business. His supine attitude may, I suppose, even amount to
concurrence in that conduct. Whether such an inference could properly
be drawn will depend upon the facts and circumstances of the
particular case.”
[27]
In
Ebrahim
and Another v Airport Cold Storage (Pty) Ltd
[18]
the Supreme Court of Appeal considered the application of
section 64
(1) of the
Close Corporations Act, 69 of 1984
when the appellants (a
father and son), were held personally liable for a payment of a debt
due by a close corporation.
Section 64
of the
Close Corporations Act
reads
as follows:
“
64.
Liability
for reckless or fraudulent carrying-on of business of corporation
(1)
If it at any time appears that any business of a corporation
was or is being carried on recklessly, with gross negligence or with
intent to defraud any person or for any fraudulent purpose, a Court
may on the application of the Master, or any creditor, member
or
liquidator of the corporation, declare that any person who was
knowingly a party to the carrying on of the business in any such
manner, shall be personally liable for all or any of such debts or
other liabilities of the corporation as the Court may direct,
and the
Court may give such further orders as it considers proper for the
purpose of giving effect to the declaration and enforcing
that
liability.
(2)
If any business of a corporation is carried on in any manner
contemplated in subsection (1), every person who is knowingly a party
to the carrying on of the business in any such manner, shall be
guilty of an offence.”
[28]
The Supreme
Court of Appeal held that the close corporations’ business
“…
appears
to have been conducted with blithe disregard of statutory
requirements. There were no conventional books of account
”
[19]
.
[29]
In
Ebrahim
the Court further dealt with the notion of reckless
conduct:
“
[13] On this
foundation, the plaintiff contended it had established that the
business of the CC was 'carried on recklessly' within
the meaning of
s 64 of the Act, and indeed that it had made out a case of fraudulent
trading. Section 64 is for all intents and
purposes identical to s
424 of the Companies Act 61 of 1973, 'at least as far as the
underlying philosophy is concerned'. The case
law on one provision
therefore illuminates the other. The Act adds 'gross negligence' to
the Companies Act's list of impugned business
methods. Whether there
is a meaningful difference between recklessness and gross negligence
in this context need not be decided
now.
[14] Acting
'recklessly' consists in 'an entire failure to give consideration to
the consequences of one's actions, in other words,
an attitude of
reckless disregard of such consequences'. In applying the
recklessness test to the running of a closed corporation,
the court
should have regard to amongst other things the corporation's scope of
operations, the members' roles, functions and powers,
the amount of
the debts, the extent of the financial difficulties and the prospects
of recovery, plus the particular circumstances
of the claim 'and the
extent to which the [member] has departed from the standards of a
reasonable man in regard thereto'.
[15] It need hardly be
added that the function of the statutory provision also shapes its
application. Although juristic persons
are recognised by the Bill of
Rights - they may be bound by its provisions, and may even receive
its benefits - it is an apposite
truism that close corporations and
companies are imbued with identity only by virtue of statute. In this
sense their separate existence
remains a figment of law, liable to be
curtailed or withdrawn when the objects of their creation are abused
or thwarted. The section
retracts the fundamental attribute of
corporate personality, namely separate legal existence, with its
corollary of autonomous
and independent liability for debts, when the
level of mismanagement of the corporation's affairs exceeds the
merely inept or incompetent
and becomes heedlessly gross or
dishonest. The provision in effect exacts a quid pro quo: for the
benefit of immunity from liability
for its debts, those running the
corporation may not use its formal identity to incur obligations
recklessly, grossly negligently
or fraudulently. If they do, they
risk being made personally liable.”
[30]
I am also
mindful that courts will not lightly disregard a corporation’s
separate entity
[20]
,
and more likely find that recklessness did not exist
[21]
.
The provisions of section 424 of the Companies Act have as objective,
that the application thereof is both compensatory
[22]
and punitive
[23]
, and “
play
an important role in reminding those who run corporations, and those
knowingly party to their business methods, that the shadow
of
personal liability can fall across their dealings
”.
[24]
[31]
In
Tsung
and Another v Industrial Development Corporation of South Africa Ltd
and Another
[25]
the respondents instituted an action to recover their investment in
the sum of R 35 000 000.00 against the appellants
in terms
of the provisions of section 424 of the Companies Act, on the basis
that the business had been carried on recklessly or
with the
intention to defraud creditors. The High Court found for the
respondents, declaring that the appellants’ conduct
fell within
the ambit of section 424, and that they were personally liable. On
appeal it was contended by the appellants that some
causal link
between their acts and the inability of the company to pay its debts,
was necessary in order to found liability under
section 424, and that
there had been no deliberate or reckless wrongdoing in the conduct of
the business.
[32]
The Supreme Court of Appeal held that the carrying on of the business
of a company recklessly, meant carrying it on by conduct
which
evinced a lack of any genuine concern for its prosperity. It also
laid down the general principle that section 424 did not
require
proof of a causal link between the relevant conduct and the company’s
inability to pay the debt. It also said:
“
A
fortiori
if one deliberately depletes the company’s assets, or misuses
its corporate form for one’s own purposes, then
that conduct
will fall within the ambit of s 424”
[26]
[33]
I now turn
to consider some of the general duties that are cast upon employees
and directors of companies. In
Robinson
v Randfontein Estates Goldmining Co Ltd
[27]
,
part of the headnote reads as follows:
“
Where one man
stands to another in a position of confidence involving a duty to
protect the interest of that other, he is not permitted
to make a
secret profit at the other’s expense or to place himself in a
position where his interest conflicts with his duty
”
[34]
In
Phillips
v Fieldstone Africa (Pty) Ltd and Another
[28]
the law
relating to the breach of a fiduciary duty and its consequences, was
set out and explained. The Supreme Court of Appeal
held that the
position of an employee is to be approached in the same manner as any
other supposed fiduciary. The basic principle
was stated that a
person in a position of confidence involving a duty to protect the
interest of another, is not entitled to make
a secret profit at the
other’s expense nor place himself in a position where his
interest conflicts with such duty. The appellant
submitted that he
was a mere employee and should not be burdened with the strict and
extensive application of the doctrine of the
fiduciary duty that a
director owes to a company.
[35]
It was
held
[29]
that:
“
There is no
magic in the term 'fiduciary duty'. The existence of such a duty and
its nature and extent are questions of fact to
be adduced from a
thorough consideration of the substance of the relationship and any
relevant circumstances which affect the operation
of that
relationship ….”
[36]
The Court
stated that the fundamental question was “
not
whether the appellant appropriated an opportunity belonging to the
respondents, but whether he stood in a fiduciary relationship
to them
when the opportunity became available to him: if he did, it ‘belonged
to the respondents’.”
The
Court held that on the facts, the appellant stood in a position of
trust in relation to the business of the respondents and
he had the
duty to promote the interests of the respondents. It further
said
[30]
:
“
That the
appellant breached his duty is manifest. He failed to inform the
respondents of the offer to him or its terms; he took
it for himself
without their consent. In both respects he succumbed to a potential
conflict of interest between his duty and his
self-interest.”
[37]
Fairness
and honesty are also important values in business. In
Stellenbosch
Wine Trust Ltd v Oude Meester Group Ltd, Oude Meester Group v
Stellenbosch Wine Trust Ltd
[31]
Diemont J expressed himself as follows:
“
It must be
conceded that these phrases, fairness in competition and honesty in
trade, have an old-fashioned ring about them which
may cause the
cynic in business to smile, but it is right that the Courts should
have regard to and emphasise these virtues. Moreover
the phrases are
somewhat elastic, as difficult to apply in some cases as the
concept of the reasonable man is difficult to
apply. Nevertheless, if
our law is to develop and is to offer the commercial man protection
from unlawful interference in his business,
the Courts will not
disregard the words fairness and honesty.”
[38]
More than a
century ago an employee’s duty to his employer was described as
follows in
Rob
v Green
[32]
:
“…
In the
absence of any stipulation to the contrary, there is involved in
every contract of service an implied obligation, call it
by what name
you will, on a servant that he shall perform his duty, especially in
these essential respects, namely that he shall
honestly and
faithfully serve his master; that he shall not abuse his confidence
in matters appertaining to his service, and that
he shall, by all
reasonable means in his power, protect his master’s interest in
respect to matters confided to him in the
course of his service.”
[39]
Against the backdrop of the above legal principles, I now turn to
consider the relevant facts.
Background
facts
[40] The applicants
allege that the respondents have all been party to the carrying on of
the business of Company Worx Group in
a reckless manner with the
intention of defrauding the creditors of Company Worx Group. The
further contention is that Wesley Currin,
Richard Kronk and Myles
Kronk caused the business and assets of Company Worx Group to be
transferred to Cloud CFO, in order to
frustrate claims against
Company Worx Group, and in particular a claim of R 4 687 521.00 which
is owed by Company Worx Group to
the insolvent estate of Shaun
Currin.
[41]
Shaun Currin was an employee of ORO Africa (Pty) Ltd (“ORO
Africa”). He left the employment of ORO Africa after
allegations of fraud, and was sequestrated on the basis of an alleged
loan in terms of which ORO Africa advanced him money.
[42]
Company Worx Group was registered on 18 March 2014. At that date
Shaun Currin was its only director. It operated in Cape Town,
while
providing accounting services to its clients. Shaun Currin resigned
as director on 1 June 2015.
[43]
Wesley Currin is the brother of Shaun Currin, and on 1 June 2015 he
became a director of Company Worx Group. That was the same
day on
which Shaun Currin resigned. Wesley Currin has no accounting or
tertiary education qualifications.
[44] Richard Kronk is a
friend of Shaun Currin and Wesley Currin. He started working for
Company Worx Group in November 2014, and
he held the position of
general manager. He continued working for Company Worx Group until
May 2016. However, on 9 February 2016
Richard Kronk registered Cloud
CFO.
[45]
Myles Kronk is the father of Richard Kronk and he is employed at
Cloud CFO.
[46] Cloud CFO is a
company which operates at the same premises as Company Worx Group,
and it provides the same accounting services
to its clients, as the
accounting services that Company Worx Group offered. Richard Kronk is
the only director of Cloud CFO.
[47]
Company Worx Group was established by Shaun Currin and he described
himself as the “
entrepreneurial founder
” thereof.
Company Worx Group was a holding company and had 3 subsidiaries being
Company Worx Accounting (Pty) Ltd, Company
Worx Online (Pty) Ltd and
Company Worx Statutory (Pty) Ltd.
[48]
Shaun Currin was the chief financial officer of ORO Africa and
stopped working there in June 2015. On 15 July 2015 Shaun Currin
was
provisionally sequestrated.
[49] Shaun Currin opposed
the sequestration application on the return day. In his papers he
alleged that he was not insolvent, and
he had lent an amount of R
4 687 521.00 to Company Worx Group. Therefore, Company Worx
Group owed him that money. Wesley Currin
produced a loan certificate
evidencing that the amount of R 4 687 521.00 was payable by
Company Worx Group to Shaun Currin.
[50] Shaun Currin also
produced a written loan agreement between himself and Company Worx
Group which sets out the terms of the
loan. In essence, he granted a
loan facility of R 5 000 000.00 to Company Worx Group, and
that loan would not be demanded
prior to 1 March 2017. The loan also
involved the sale of certain intellectual property by Shaun Currin to
Company Worx Group for
the amount of R 3 500 000.00.
[51]
Richard Kronk deposed to an affidavit in the sequestration
application, in which he stated that Shaun Currin had given
intellectual
property to Company Worx Group and the “
online
strategy
” of Company Worx Group was valuable, and could
generate income from which the loan could be repaid.
[52]
On 17 December 2015 Shaun Currin was finally sequestrated by order of
the Western Cape High Court.
[53]
When Cloud CFO was registered on 9 February 2016, and Richard Kronk
became its sole director, Richard Kronk was still the general
manger
of Company Worx Group. He continued working at Company Worx Group
until about May 2016.
[54]
On 28 February 2017 Company Worx Group was provisionally liquidated
and on 28 April 2017 the order was made final. The liquidation
order
was obtained at the instance of the trustees of the insolvent estate
of Shaun Currin, and on the basis that Company Worx
Group was
indebted to Shaun Currin, and had ceased trading.
[55]
Shaun Currin, Wesley Currin, Richard Kronk and Myles Kronk gave
evidence at insolvency hearings. However, only the record of
the
evidence given by Wesley Currin and Richard Kronk, has been
introduced in this application.
[56]
It is
common cause that Company Worx Group owes R4 687 521.00 to
the insolvent estate of Shaun Currin. That is the only
liability.
[33]
The
defences
[57]
The respondents have raised the following defences to the applicants’
claim:
[57.1] Mr Gary Nathan,
who deposed to the main founding affidavit, does not have locus
standi. There is no merit in this point,
as Mr Nathan does not have
to be authorised to produce evidence.
[57.2] The application is
an abuse of process.
[57.3] The applicants
have failed to show that the business of Company Worx Group was
carried on recklessly or for any fraudulent
purpose, and the
applicants have also failed to show that anybody was knowingly a
party to such conduct.
[57.4] In his answering
affidavit, Richard Kronk stated that “…
I also rely on
the records of the insolvency inquiries that were held and at which
the first and third respondents and me testified
.” Short
confirmatory affidavits were filed by Wesley Currin and Myles Kronk
in which they inter alia confirmed the affidavit
of Richard Kronk.
The respondents further contend that the evidence produced at the
insolvency inquiries, is only admissible against
the specific
respondent who testified at the hearing, and not against other
respondents.
[57.5]
Section 65
(5) of
the
Insolvency Act, 24 of 1936
provides that:
“
Any
evidence given under this section shall, subject to the provisions of
subsection (2A), be admissible in any proceedings instituted
against
the person who gave that evidence.”
[57.6] In
Insolvency
Law
[34]
the following is stated with regard to
Section 65(5):
“
The
evidence which the witness gives is admissible in any subsequent
civil proceedings or criminal proceedings for perjury, etc
against
him (but no other criminal proceedings); it does not however
constitute proof of the facts revealed by such evidence. Such
evidence is not admissible against anyone else. In the
proceedings in which it is sought to be used, the evidence must be
regarded as a whole, ie, including any portions of it favourable to
the witness. But the weight, if any, to be attached to
such
portions must be determined by the Court in the light of a number of
factors. These will include the probabilities, the extent
to which
and the manner in which the deponent was cross-examined, and his
credibility, as far as it can be judged from the written
record of
what he said. Regard will be had to the motives which are likely to
have operated on the deponent’s mind at the
time when he made
the statement, and to the other relevant evidence in the trial at
which the statement was produced”.
[58]
Where there
are disputes of fact, I am obliged to apply the well-known test laid
down in
Plascon
Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[35]
:
“
It is correct
that, where in proceedings on notice of motion disputes of fact have
arisen on the affidavits, a final order, whether
it be an interdict
or some other form of relief, may be granted if those facts averred
in the applicant's affidavits which have
been admitted by the
respondent, together with the facts alleged by the respondent,
justify such an order. The power of the Court
to give such final
relief on the papers before it is, however, not confined to such a
situation. In certain instances the denial
by respondent of a fact
alleged by the applicant may not be such as to raise a real, genuine
or bona fide dispute of fact (see
in this regard Room Hire Co (Pty)
Ltd v Jeppe Street Mansions (Pty) Ltd
1949 (3) SA 1155
(T) at
1163 - 5; Da Mata v Otto NO
1972 (3) SA 858.
(A) at 882D - H). If in
such a case the respondent has not availed himself of his right to
apply for the deponents concerned to
be called for cross-examination
under Rule 6 (5) (g) of the Uniform Rules of Court (cf Petersen v
Cuthbert & Co Ltd
1945 AD 420
at 428; Room Hire case supra at
1164) and the Court is satisfied as to the inherent credibility of
the applicant's factual averment,
it may proceed on the basis of the
correctness thereof and include this fact among those upon which it
determines whether the applicant
is entitled to the final relief
which he seeks (see eg Rikhoto v East Rand Administration Board and
Another
1983 (4) SA 278
(W) at 283E - H). Moreover, there may be
exceptions to this general rule, as, for example, where the
allegations or denials of
the respondent are so far-fetched or
clearly untenable that the Court is justified in rejecting them
merely on the papers”
The
applicants’ claim against Wesley Currin and an evaluation of
the evidence given by him at the insolvency inquiry
[59]
On 1 June 2017 Wesley Currin gave evidence at the interrogation of
Shaun Currin. He confirmed that he had no tertiary or accounting
qualification. He was always the only shareholder of Company Worx
Group and on 18 March 2014 he became its director.
[60]
No financial statements were drawn up by or on behalf of Company Worx
Group since its inception and there were no audited financial
statements.
Section 30
of the
Companies Act, 71 of 2008
provides as
follows:
“
30.
Annual
financial statements
(1)
Each
year, a company must prepare annual financial statements within six
months after the end of its financial year, or such shorter
period as
may be appropriate to provide the required notice of an annual
general meeting in terms of
section 61
(7).”
[61]
There
should be no doubt that the financial statements of a company are
vitally important to everyone with an interest in that company
[36]
.
As its only director, Wesley Currin had the obligation to ensure that
financial statements were produced. He failed in that duty.
[62]
In a letter dated 5 June 2017, Wesley Currin informed the first
applicant
inter alia
as follows:
“
I have stated
to you very clearly there is no bank account for Company Worx Group
(Pty) Ltd
.”
[37]
[63]
It is strange that Wesley Currin did not ensure that Company Worx
Group had its own bank account into which its income was
deposited.
[64]
Company Worx Group moved from the 7
th
floor of 55 Short
Market Street, to the 2
nd
floor of the same building as it
required more space. Cloud CFO started operating from those same
premises, being the 2
nd
floor of 55 Short Market Street.
[65]
Almost all the staff of Company Worx Group were taken over by Cloud
CFO. That included Wesley Currin, as he started consulting
at Cloud
CFO.
[66]
Cloud CFO offers the same services which Company Worx Group offered
to those clients.
[67]
The website of Cloud CFO is similar to the website of Company Worx
Group.
[68] The telephone number
of Company Worx Group was taken over by Cloud CFO. Wesley Currin
stated that there was nothing that he
could do about Richard Kronk
leaving Company Worx Group and taking the business model,
intellectual property and phone number of
Company Worx Group.
[69]
Company
Worx Group had previously bought a business from Growth Accountants
CC for R 3 500 000.00. Wesley Currin confirmed
that he was
“…
the
one in charge of Company Worx Group (Pty) Ltd…
”
[38]
.
[70]
With regard
to Cloud CFO taking the telephone number of Company Worx Group over,
Wesley Currin justified it as follows: “
Also
it was in my best interest because I was going to consult for
him”
[39]
.
[71]
The marketing brochure of Company Worx Group reads as follows:
“
Company Worx
offers a monthly Accounting and Tax Service; which provides a
professional accounting support team to process your
books, submit
your taxes and report on your business finances. This service
includes being assisted with the responsibility to
declare taxes to
SARS. We use the latest cloud-based accounting software; allowing you
to access, or upload your accounting and
financial information from
anywhere with an internet connection.
This accounting
software is included in your monthly price. Besides cloud-based
access and storage, other neat features include
allowing you to snap
a photo of invoices or slips and automatically upload these to the
cloud. All your documents are stored online
and your business
accountant receives, processes and updates your business expenses the
next morning or in real time.
”
[72]
The Cloud CFO brochure reads as follows:
“
Cloud CFO
offers a monthly Accounting and Tax Service; which provides a
professional accounting support team to process your books,
submit
your taxes and report on your business finances. This service
includes being assisted with the responsibility to declare
taxes to
SARS. We use the latest cloud-based accounting software; allowing you
to access, or upload your accounting and financial
information from
anywhere with an internet connection.
This accounting
software is included in your monthly price. Besides cloud-based
access and storage, other neat features include
allowing you to snap
a photo of invoices or slips and automatically upload these to the
cloud. All your documents are stored online
and your business
accountant receives, processes and expressly updates your business
expenses within 3 working days – moving
you closer to Real Time
financial reporting on your business.
”
[73]
It is clear that the two brochures are virtually identical.
[74]
At all relevant times Wesley Currin was the only director of Company
Worx Group. He therefore stood in a fiduciary position
and had to
promote its interests. That duty included the obligation to
reasonably preserve and protect its assets. The assets included
the
telephone number of the business, intellectual property, the business
model and the clients. The clients are very important,
because they
were the source of income for Company Worx Group. Now, it cannot be
said that Company Worx Group owned those clients,
or that the clients
were not permitted to take their business elsewhere. It is common
cause that virtually all the clients migrated
from Company Works
Group to Cloud CFO. The manner in which it occurred, is important.
[75] Wesley Currin
knowingly permitted the telephone number of Company Works Group to be
transferred to Cloud CFO. At the very least,
he did nothing to
prevent it. The telephone number is very valuable, because it
connects the clients with a business. He therefore
knew that he was
involved in a scheme to divert clients from Company Worx Group to
Cloud CFO. It was also in his best interests
to divert the clients to
Cloud CFO, because he was going to work there, and no longer work at
Company Worx Group. That conduct
was reckless, because it stripped
Company Worx Group of its assets and income base. With the income
stream gone, there was no money
to pay creditors.
[76]
With regard
to Wesley Currin’s active involvement in the transfer of the
business from Company Worx Group to Cloud CFO, his
evidence was
illuminating
[40]
:
“
Yes, I mean
obviously there is a big handover… you know there is a
starting to get Telkom lines all of that it all takes
time.”
(sic)
[77]
The “
big handover
” can only mean, properly
construed, that Wesley Currin had actual knowledge of the handover of
the business from Company
Worx Group to Cloud CFO.
[78]
His conduct
fell short of the statutory obligations imposed upon directors by
section 76
of the
Companies Act
[41
]
.
Subsection (3) provides as follows:
“
(3) Subject to
subsections (4) and (5), a director of a company, when acting in that
capacity, must exercise the powers and perform
the functions of
director-
(a)
in good faith and for a proper purpose;
(b)
in the best interests of the company; and
(c)
with the degree of care, skill and diligence that may
reasonably be expected of a person-
(i)
carrying
out the same functions in relation to the company as those carried
out by that director; and
(ii)
having
the general knowledge, skill and experience of that director.”
[79]
In my view Wesley Currin failed to act “
in good faith
”
and “
in the best interests of the company
”, as
meant in
section 76
of the
Companies Act, 2008
.
[80]
In the premises, I am satisfied that Wesley Currin was actively
involved in reckless conduct on behalf of Company Worx Group,
and he
had actual knowledge of that wrongful conduct.
The
applicants’ claim against Richard Kronk and an evaluation of
the evidence given by him at the insolvency enquiry
[81]
Richard
Kronk testified that he worked for Company
Worx Group as general manager from November 2014, to about May 2016.
He therefore had
the duty to promote and protect the accounting
business of Company Worx Group during that time. He also did not have
the right,
while so employed, to compete with the interests of
Company Worx Group.
[82]
On 9 February 2016, Richard Kronk registered Cloud
CFO and started to render accounting services to the clients of Cloud
CFO. By
providing those accounting services, while still working as
general manager at Company Worx Group, he was in direct competition
with Company Worx Group. That conduct was in my view reckless,
because he must have foreseen that his conduct would lure customers
and potential customers away from Company Worx Group. When those
customers were lured away, so too would the income be diverted
away
from Company Worx Group to Cloud CFO.
[83]
But
even before 9 February 2016, and while he was still general manager
at Company Worx Group, Richard Kronk was doing “…
side
work using the name Cloud CFO…
”
[42]
The period during which Richard Kronk was thus in direct competition
with Company Worx Group, was probably in excess of three months.
By
going into competition with his employer, Richard Kronk succumbed to
a conflict of interest between his duty to his employer,
and his
self-interest.
[84]
In his effort to successfully compete with his
employer, Company Worx Group, he also took the one telephone number
of Company Worx
Group over. That must have been beneficial to Richard
Kronk and to Cloud CFO, because when clients telephoned Company Worx
Group,
they would automatically have been diverted to Cloud CFO. By
taking the telephone number over, Richard Kronk acted recklessly. He
had little regard for its prosperity.
[85]
He must have foreseen that clients and potential
clients of Company Worx Group, who would telephone Company Worx
Group, would automatically
be diverted to Cloud CFO. Once the clients
have been diverted to Cloud CFO, the income stream would also have
been diverted away
from Company Worx Group to Cloud CFO. In such
manner, Richard Kronk would have succeeded in building his business
in competition
with his employer.
[86]
The
startling manner in which Richard Kronk rationalises that it is
perfectly in order to take a telephone number away from an employer,
is illustrated by the following evidence:
[43]
“
Mr van Reenen:
If we take the example that you have been developing is if I am an
attorney and leave my attorneys’ firm to
start my own little
thing on the side as you did. I don’t really take the number of
my old firm with me?
Richard Kronk: Why
wouldn’t you?
Mr van Reenen: Because
they would like to keep their clients and don’t give them to
me.
Richard Kronk: That is
their problem and not mine.”
[87]
With regard to taking the telephone number of the Company Worx Group
away from it, Richard Kronk rationalised that it is of
no
significance:
“…
In
terms of the telephone number to me it is the smallest thing…”.
[44]
[88]
I disagree. A telephone number of a business is usually its
lifeblood. But Richard Kronk did not only take the telephone number
over. He also took over other assets:
“…
Look
we took over rental we took over a couple of different things …
.”
[45]
[89] Richard Kronk
conceded that the website brochures of Company Worx Group and Cloud
CFO are very “similar”. In producing
his own website
brochure, he basically copied the one of Company Worx Group. Now, it
may possibly be argued that Company Worx Group
had no statutory or
other protection over their website brochure.
[90]
However, that is not the issue. The question is whether Richard Kronk
had the right, while standing in a fiduciary duty to
Company Worx
Group, to take the contents of the Company Worx Group brochure, and
create his own brochure by essentially copying
it for the benefit of
himself and Cloud CFO. While doing that, he was competing with his
own employer. In my view that conduct
falls short of the fiduciary
duty cast upon a general manager to protect the assets and business
of his employer, and not to use
the intellectual property of his
employer in order to compete with his employer, after utilising such
intellectual property (the
website brochure).
[91]
In
Employment
Law
[46]
the following is said:
“
Unless
otherwise agreed, the employee must do nothing to injure the
employer’s proprietory rights and interest. He must respect
the
goods and chattels of the employer, stock and trade, tools and
machinery, and land, buildings and other assets. To misappropriate
the things intrusted to him or to which he has access is both a
breach of contract and a delict for which the employee can be held
liable. He is equally liable whether he takes elicit possession of
the goods, improperly converts them to his own use, or unjustifiably
give them to another. That he was responsible for producing the goods
will be immaterial if he produces them in the course of his
employment with the employer”.
[47]
[92]
When Richard Kronk was questioned about whether he could lawfully
have appropriated the intellectual property of Company Worx
Group, he
justified his conduct by saying:
“…
As long
as the owners of that business don’t mind and they didn’t
mind …”
[48]
[93]
I turn to deal with the evidence regarding the “Business
Start-up Packages”. It was put to Richard Kronk
that the
Business Start-up Packages of Company Worx Group and Cloud CFO are
“precisely the same”. The Business Start-up
Packages are
identified as the “Spark Package”, the “Launch
Package”, the “Existence Package”,
the “Survival
Package”, the “Success Package” and the “Freedom
Package”.
[94]
Richard
Kronk conceded that the Business Start-up Packages of both Company
Worx Group and Cloud CFO are identical, but rationalised
that he was
allowed to use those packages for Cloud CFO “
because
I came up with those names
”
[49]
.
The test is not whether Richard Kronk came up with the names while he
was working at Company Worx Group, but whether he was permitted,
as
employee, to take that intellectual property and use it in direct
competition with his own employer. I do not think that the
law can
countenance such conduct.
[95]
The
applicants have contended in the founding papers that the costs of
starting Cloud CFO were minimal and that the setup of Company
Worx
Group “…
was
simply transferred over to Cloud CFO
”
[50]
.
Those allegations were not denied
[51]
.
[96]
In the premises, I am satisfied that Richard Kronk was also actively
involved in the reckless conduct on behalf of Company
Worx Group, and
he had actual knowledge of that wrongful conduct.
The
claim against Myles Kronk
[97]
The
applicants allege that Myles Kronk was employed by Company Worx
Group, but that is denied by him
[52]
.
As these are motion proceedings, I am bound to apply the
Plascon
Evans
principle. There is no reason to reject the version of Myles Kronk.
[98]
Further, no evidence has been produced to satisfy the requirements of
section 424 of the Companies Act, 1973 to find that Myles
Kronk was
knowingly a party to reckless or fraudulent conduct on behalf of
Company Worx Group.
The
claim against Cloud CFO
[99]
In paragraph 83 of the founding affidavit, it is alleged against
Could CFO as follows:
“
The fourth
respondent (represented by the second respondent) was clearly aware
that the source of its clients and assets was the
Company and the
manner in which the business was transferred was improper and without
any reason, other than to strip the Company
of assets. The fourth
respondent was a party to that scheme and also benefitted from it
”.
[100]
The
aforegoing contentions regarding the alleged unlawful conduct of
Cloud CFO, were specifically denied
[53]
.
[101]
In this application the applicants introduced the record of the
evidence given by Richard Kronk at the insolvency enquiry,
in order
to hold Richard Kronk and Cloud CFO liable. The evidence that Richard
Kronk gave at the insolvency enquiry, is admissible
against him
personally in these proceedings. For the reasons that follow, I am of
the view that the evidence of Richard Kronk,
is not admissible
against Cloud CFO.
[102]
Section 65
(5) of the
Insolvency Act, No. 24 of 1936
provides that
the evidence which is given, is admissible against the person who
gave that evidence.
[103]
In
Rhodesian
Corporation Ltd v Globe and Phoenix Gold Mining Cole Ltd
[54]
the following was held:
“
It is difficult
to see in principle why a distinction should be made in the case
where a person calls his agent as a witness
or a corporation calls
its officer to testify on its behalf. The witness who enters the
witness-box swears to speak the truth and
is not there to represent
his principal. The giving of evidence by an officer of a corporation
is not an act done in the course
of his employment. When once he is
in the witness-box the company has no control over him. What he
states in the witness-box may
bind the company in that particular
suit, but his evidence cannot be treated by a stranger as an
admission binding on the company.
No doubt in most cases the
principal knows more or less on what lines the witness will give his
evidence, but the witness may give
his testimony in direct opposition
to the interests of his principal. The fact that he speaks about
matters entrusted to him
by his principal who calls him, cannot alter
the fact that in the witness-box the witness represents no one but
himself, though
he states what he knows of his own knowledge acquired
whilst he was an agent. It is always difficult to foresee all cases
which
may arise and therefore it may be possible that in certain
special circumstances the Court may conclude that a witness was
authorised
to I make a particular statement in the witness-box
on behalf of his principal, but to hold simpliciter that statements
in
evidence made by an agent called by his principal in a suit to
which the latter is a party will bind the principal as a party in
a
later action by a stranger is not only a violation of the general
principle that the oral statements of a witness called by a
party
cannot be used by a stranger against such party in a subsequent trial
but it may lead to the gravest injustice
.”
[104]
In
O’Shea
NO v Van Zyl and others NNO
[55]
the Supreme Court of Appeal held that statements made by a trustee of
a trust before a Commissioner at an enquiry in terms of section
417
of the Companies Act, 1973, was inadmissible against the trust in
later sequestration proceedings in the absence of their confirmation
under oath by the trustee in those proceedings.
[56]
[105]
In applying the above principles to the claim made by the applicants
against Cloud CFO, it follows that the evidence that
Richard Kronk
gave at the insolvency enquiry, is inadmissible against Cloud CFO.
The same principle would apply in respect of the
evidence of Wesley
Currin. To the extent that the applicants have made claims of
wrongful conduct in the founding papers, same
have been denied. In
applying the
Plascon Evans
principle, I
have to accept
the version of Cloud CFO.
[106]
It therefore follows that the applicants have failed to prove their
case against Cloud CFO.
Costs
[107]
On 28 November 2017 Andrews, J granted an order in terms of which the
costs pertaining to the applicants’ application
to compel the
respondents to deliver answering papers, and the respondents’
application to compel compliance with rule 35
(3) notices, stood over
for later determination. It is accordingly necessary to deal with
those costs.
[108]
On 21 November 2017 the applicants launched an application to compel
the respondents to deliver answering affidavits. That
was met by an
application on 24 November 2017, to compel the applicants to comply
with a rule 35 (12) notice of the respondents.
The respondents took
up the attitude that they could not deliver answering affidavits,
prior to the documents that they required
in term of rule 35 (12),
were produced.
[109]
After the documents were produced by the applicants, the respondents
filed their opposing papers on 15 December 2017.
[110]
In my view the application to compel the respondents to deliver
answering affidavits, before the applicants had complied with
the
rule 35(12) notice, was premature. In the circumstances I am of the
view that the applicants are not entitled to the costs
of the
application to compel the respondents to deliver answering
affidavits.
[111]
I am of the view that the respondents were entitled to launch their
application on 24 November 2017, to compel the applicants
to reply to
their rule 35 (12) notice. They are therefore entitled to the costs.
Order
[112]
In the premises I make the following order:
1. It is declared in
terms of section 424 (1) of the Companies Act No. 61 of 1973 that
Wesley Aviant Currin and Richard Paul Kronk
are, jointly and
severally, personally liable for the debt of R 4 687 521,00
which is owed by Company Worx Group Pty
Ltd (in liquidation) to the
insolvent estate of Shaun Norman Currin (reference C442/2015)
2. The application
against Myles Kronk and Cloud CFO (Pty) Ltd is dismissed.
3. Insofar as costs are
concerned:
3.1 Wesley Aviant Currin
and Richard Paul Kronk are ordered, jointly and severally, to pay the
costs of this application, including
the costs occasioned on 25 June
2018.
3.2 The applicants are
ordered to pay the costs of Myles Kronk and Cloud CFO (Pty) Ltd.
3.3 The applicants are
ordered to pay the costs of the respondents involving the application
to compel the delivery of answering
affidavits (dated 21 November
2017), and the application to compel the applicants to comply with
the respondents’ discovery
notices (dated 24 November 2017).
______________________
W.
VOS, AJ
ACTING
JUDGE OF THE HIGH COURT
[1]
The date of the letter to the Master is eligible
[2]
Represented by Mazars
[3]
3rd ed at page 437
[4]
1981 (4) 919 T
[5]
1999 (3) SA 752 (W)
[6]
1990 (3) SA 175 (A)
[7]
1999 (4) SA 947 (SCA)
[8]
At paragraph [10]
[9]
2011(6) SA 507(SCA at Para [12]
[10]
At page 912
[11]
Joh-Air
(Pty) Ltd v Rudman
1980
(2) SA 420
(T) at 426 427;
Philotex
(Pty) Ltd v Snyman
[1997] ZASCA 92
;
1998
(2) SA 138
(SCA)
at 142
[12]
Strut
Ahead Natal (Pty) Ltd v Burns
2007
(4) SA 600 (D) at 608
[13]
At page 916
[14]
At page 916 (1)
[15]
Juta at 14-538-1
[16]
Howard
v Herrigel
NO
[1991] ZASCA 7
;
1991 (2) SA 660
(A) at 673–674;
Ebrahim
v Airport Cold Storage (Pty) Ltd
[2008] ZASCA 113
;
2008
(6) SA 585
(SCA) at paras 23–24
[17]
2008 (6) SA 585
[18]
at 674
[19]
At paragraph [10]
[20]
Cape Pacific Ltd v Lubner Controlling Investments (Pty) Ltd and
Others
[1995] ZASCA 53
;
1995 (4) SA 790
(A) at 803 H
[21]
Philotex (Pty) Ltd v Snyman
[1997] ZASCA 92
;
1998 (2) SA 138
(SCA) at 142 H – I
and 143 F
[22]
MS Blackman & others Commentary on the Companies Act (2002, with
updates) vol 3 at 14-524.
[23]
Philotex (Pty) Ltd v Snyman
[1997] ZASCA 92
;
1998 (2) SA 138
(SCA) at 142H-I.
[24]
Ebrahim at paragraph [21]
[25]
2013 (3) SA 468
(SCA)
[26]
At paragraph [31]
[27]
1921 AD 168
[28]
2004 (3) SA 465
SCA
[29]
At paragraph [27]
[30]
At paragraph [39]
[31]
1972 (3) SA 152
(C) at 161 - 162
[32]
[1895] 2 QB 1
[33]
If there are other debts, they are not substantial. See paragraphs
46, record 21, and record 313.
[34]
By Meskin, at 8.4.1
[35]
[1984] ZASCA 51
;
1984 (3) SA 623
(A) at 634 - 635
[36]
See Pinfold and Others v Edge to Edge Global Investments Ltd 2014
(1) SA 206 (KZD)
[37]
Record P377
[38]
P179/16
[39]
71/2008
[40]
At P179 of the record
[41]
71 of 2008
[42]
See record P436/5
[43]
Record P474/2
[44]
Record P474
[45]
Record P454
[46]
Brassey D2:15
[47]
See also Sheffield Electro Cording Plating and Enamelling Works Ltd
v Metal Signs and Nameplates Pty Limited and Another
1949 (1) SA
1034
(W) at 1039
[48]
Record P444
[49]
Record P443
[50]
Record P26 Para 56.11
[51]
See Record P314 Para 69
[52]
Para 82, Record P42, Para 90, Record P319
[53]
See Para 91/Record 319
[54]
1934 AD 239
at 304
[55]
2012(1) SA 90 (SCA)
[56]
See further James Brown and Hamer (Pty) Ltd (Previously named
Gilbert Hamer and Co Ltd) v Simmons NO
1963 (4) SA 656
(A) at
661H-662A) where the Court said (at 913A): “In general it may
be said that a person who testifies as a witness speaks
for
himself; he tells of what he, himself, knows and by his oath vouches
for its truth. If he is an employee or agent in any
respect of
another and gives evidence in litigation to which that other is a
party, he does so, not as an employee or agent,
unless his
admissions bind that party, but as a person speaking on oath to the
facts in regard to which he testifies, and this
is so whether he is
called as a witness by his employer or principal or by the opposing
litigant. Similarly, if he gives evidence
in proceedings to which
his employer or principal is not a party, although in relation to
matters in which the latter has been
or is concerned, he speaks as
an individual; he is giving evidence, not taking part in the making
of a contract or the giving
of an undertaking on behalf of his
employer or principal. His evidence in that case is not admissible
against his employer or
principal in a later case in proof of the
facts stated in it. If called by his employer or principal, his
evidence may,
as that of any other witness called by that party, be
regarded as evidence for that litigant and, so far as adverse to
him, redound
to his disadvantage, but that is because it is accepted
as true, not because the witness is the employee or agent of the
litigant.”