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[2015] ZASCA 183
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The Isibiya Fund v Visser & Another (20278/14) [2015] ZASCA 183 (27 November 2015)
THE SUPREME COURT
OF APPEAL OF SOUTH AFRICA
JUDGMENT
Not
Reportable
Case
No: 20278/14
In
the matter between:
THE
ISIBAYA FUND
APPELLANT
and
ERNUSTUS
JACOBUS VISSER
FIRST
RESPONDENT
VAUGHN
COETZEE
SECOND RESPONDENT
Neutral
citation:
The
Isibaya Fund v Visser & another
(20278/14)
[2015] ZASCA 183
(27 November 2015)
Coram:
Shongwe,
Tshiqi, Majiedt, Willis and Swain JJA
Heard:
20 November 2015
Delivered:
27 November 2015
Summary:
Civil
Procedure – s 424 of the Companies Act 61 of 1973 –
special plea in terms of s 11
(d)
of
Prescription Act 68 of 1969
– whether the appellant is the
‘State’ as contemplated in
s 11
(b)
of
Prescription Act – court
concluding that the three-year
period of prescription applies and not a fifteen-year period.
ORDER
On
appeal from:
Gauteng
Division of the High Court, Pretoria (Preller J sitting as court of
first instance):
The
appeal is dismissed with costs.
JUDGMENT
Shongwe
JA (Tshiqi, Majiedt, Willis and Swain JJA concurring)
[1]
This appeal arises from an action instituted by the appellant, The
Isibaya Private Equity Fund (the Fund), a fund governed by
the
provisions and in accordance with the Public Investment Corporation
Act 23 of 2004 (PIC Act) as amended, against the respondents.
The
Fund sought an order holding the respondents liable for dereliction
of their fiduciary duties to the Fund under the provisions
of s 424
of the Companies Act 61 of 1973 (the Companies Act), which reads as
follows:
‘
(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.’
The
Fund also demanded, in its particulars of claim, payment of a sum
of R80 million, jointly and
severally,
by the respondents for losses which had been suffered by the Fund,
under their watch.
[2]
The respondents were representatives of various companies which
entered into a joint venture with the Fund. The Fund invested
in the
holding company, Lesiba Healthcare Holdings (Pty) Ltd, the name of
which was subsequently changed to the Carewell Group
of South Africa
(Pty) Ltd (the holding company). The respondents were directors of
the holding company and were sought to be held
personally
responsible
for
recklessly
carrying on of the business
of
the holding company in terms of the above provision.
[3]
The respondents filed a special plea alleging that the Fund’s
cause of action arose more than three years before the service
of the
summons and had therefore prescribed in terms of s 11
(d)
of
the Prescription Act 68 of 1969 (the Act). At the hearing of the
matter, the court a quo made an order in terms of Uniform rule
33(4),
separating the determination of the special plea from the other
relief claimed and postponing the other relief
sine
die
.
The special plea was upheld by the court a quo. This appeal, with the
leave of this court, is against that determination.
[4]
It is opportune, at this stage, to briefly deal with the factual
background of this matter. On 22 February 1998, the Fund concluded
what was called a ‘shareholders agreement’, with the
first and second respondents and the third defendant a quo (who
did
not defend the action and who is not a party to the present appeal),
and other legal entities and individuals. The conclusion
of the
agreement was for the purpose of forming a healthcare group to
provide primary healthcare and to establish a network of
primary
healthcare clinics providing quality healthcare services at an
affordable price under the control of the holding company.
[5]
The Fund invested a sum of R35 million to purchase a 25 per cent
shareholding in the holding company and a further sum of R35
million
as a loan to the holding company. To protect its interests the Fund
was entitled to nominate and have two directors appointed
to the
board. The first directors were a representative of the Fund,
together with the respondents and the third defendant.
[6]
The Fund alleges that by the year 2001 the holding company was
dormant, did not trade actively, had lost its share capital,
had no
employees and was unable to repay its loan. The holding company was
finally wound up on 14 January 2005 at the instance
of the Fund. An
inquiry in terms of s 417 read with s 418 of the Companies Act was
thereafter held into the affairs of the holding
company. As a result,
the Fund instituted the present action in terms of s 424 of the
Companies Act.
[7]
Initially, the Fund challenged the order of the court a quo, which
upheld the plea of prescription, on three grounds, namely
that: (a)
the 15-year prescriptive period contemplated in s 11
(b)
of the Act applied because the debt was one owed to the State; (b)
the Fund only acquired sufficient knowledge to formulate a claim
under s 424 of the Companies Act during or upon the completion of the
s 417 enquiry at the earliest around May 2006, and finally
(c) the
Fund relied upon a written acknowledgement of debt by the first
respondent which interrupted the running of prescription.
[8]
The respondents, on the other hand, contend that the Fund is not the
State, and therefore the relevant period for prescription
is three
years and not 15 years as provided for in s 11
(d)
of the Act. They contend further that the Fund was fully aware of the
alleged debtors and of the facts from which the debt arose
more than
three years prior to the institution of the action. In respect of the
acknowledgement of debt, the respondents aver that
it was not an
acknowledgement of liability and did not have the result of
interrupting the running of prescription. In any event
the offer was
also dated after the claim had already been extinguished by the
running of prescription.
[9]
At the hearing of this appeal, counsel for the Fund indicated that he
would not pursue the second ground of appeal and later
conceded the
third ground of appeal likewise would not be pursued. That left the
first ground of appeal as the only point this
court has to decide.
[10]
Counsel for the Fund contended that when interpreting a statute,
context is the key in determining the meaning of the words
‘debt
owed to the State’ in s 11
(b)
of the Act. He nevertheless conceded that the term ‘State’
does not have a universal meaning. This concession, in my
view, is
consistent with the finding of this court in
Holeni
v Land and Agricultural Development Bank of South Africa
2009 (4) SA 437
(SCA) para 11. Counsel attempted to find a
distinguishing factor between
Holeni
and
the present case, but, in my view, was unable to do so.
[11]
In
Holeni
this court had to decide whether the debts owed by
Mr Holeni to the Land and Agricultural Development Bank of South
Africa (the
Bank) were extinguished after the lapse of a period of 15
years or three years had passed. In essence this court had to
determine
whether, for purposes of s 11
(b)
of the Act, the
Bank could be classified as the ‘the State’ to enable it
to rely on the advantage provided in s 11
(b)
. Navsa JA
concluded (in para 38) that:
‘…
[the
Land and Agricultural Development Bank Act 15 of 2002
] makes it clear
that the bank is a separate juristic person acting in its own name
and right, … distinct from, although
not entirely independent
of, Government.’
Of
importance is that the main object of the PIC Act which governs the
Fund, is to be a financial service provider in terms of the
Financial
Advisory and Intermediary Services Act 37 of 2000 (s 4). It is a
juristic person, and is an institution falling outside
the public
service. In this context the Fund is controlled by the board
appointed by the Minister responsible for finance. The
board may
establish such committees, consisting of directors, as it considers
necessary (s 7 PIC Act). The board controls the business
of the
corporation (s 8 PIC Act), it may obtain authorisation as a financial
services provider (s 9 PIC Act), it may (as it did
in this case)
invest a deposit in the Fund (s 10 PIC Act). As in
Holeni
therefore,
the Fund cannot qualify as the State for the purposes of s 11
(b)
of the Act.
[12]
The appeal accordingly fails. I make the following order:
The
appeal is dismissed with costs.
_______________________
J
B Z SHONGWE
JUDGE
OF APPEAL
Appearances
For
the Appellant:
N Cassim SC with him A Farber
Instructed
by:
Nkosi
Sabelo Incorporated,
Bryanston;
Matsepe
Inc, Bloemfontein.
For
the First and Second Respondents: W F Pienaar (S D Wagner
SC having drafted the Heads
Instructed
by:
Coetzer &
Partners, Pretoria;
Honey Attorneys,
Bloemfontein.