THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case no: 053/2023
In the matter between:
VENATOR AFRICA (PTY) LTD APPELLANT
and
LLOYD MASON WATTS FIRST RESPONDENT
MARTIN BEKKER SECOND RESPONDENT

Neutral citation: Venator Africa (Pty) Ltd v Watts and Another (053/2023) [2024]
ZASCA 60 (24 April 2024)
Coram: MOTHLE, MABINDLA -BOQWANA and MOLEFE JJA and
BAARTMAN and KEIGHTLEY AJJA
Heard: 4 March 2024
Delivered: 24 April 2024
Summary: Company law – exception – s 218(2) read with s 22(1) of the
Companies Act 61 of 2008 – allegation that company carried on its business
recklessly – action proceedings by a creditor against directors of company.

2



ORDER

On appeal from: KwaZulu-Natal Division of the High Court, Pietermaritzburg
(Bezuidenhout AJ, sitting as court of first instance):
1 The appeal is dismissed with costs including the costs of two counsel, where
so employed.
2 The order of the high court is confirmed save for paragraph 3 of the order
which is substituted as follows:
‘3. The plaintiff is granted leave, if so advised, to file amended particulars of
claim within 10 days of the date of this order.’


JUDGMENT
Mabindla-Boqwana JA (Mothle and Molefe JJA and Baartman and Keightley
AJJA concurring):
Introduction
[1] This appeal, which arises from an exception upheld by the KwaZulu -Natal
Division of the High Court, Pietermaritzburg (the high court), concerns the
interpretation of s 218(2) of the Companies Act 71 of 2008 (the Act), which provides
for civil liability against any person who contravenes the provisions of the Act, read
with s 22(1) , prohibiting reckless trading by a company . These must be viewed
alongside provisions dealing with fiduciary duties of directors (s 76(3)),

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consequential liability (s 77(2)) and the longstanding principle that a company has a
legal personality separate from its directors and shareholders.

[2] The high court considered and upheld an exception to the particulars of claim,
wherein the question whether a creditor could claim against the directors of a
company personally, in terms of s 218(2) read with s 22(1) of the Act, was raised.
Section 214(1)(c) of the Act, which provides for criminal offences and an alternative
common law claim of fraud against the directors, were tangentially also raised before
it. The appeal is with the leave of the high court.

Background facts
[3] The appellant is Venator Africa (Pty) Ltd. It instituted action in the high court
against the respondents, Lloyd Mason Watts and Martin Bekker . The respondents
were the directors of a company known as Siyazi Logistics and Trading (Pty) Ltd
(Siyazi), which conducted business as a clearing and forwarding agent. Siyazi had a
contractual relationship with the appellant. In the action, Mr Bekker was cited as the
first defendant and Mr Watts as a second defendant, respectively. Mr Bekker
however does not participate in this appeal. I shall henceforth refer to the appellant
as ‘ the plaintiff’ and the respondents as ‘ the first and second defendants’,
respectively, as in the action.

[4] It was alleged in the particulars of claim:
‘7. As regards the relationship between Plaintiff and Siyazi:
7.1 the Plaintiff contracted with Siyazi for the performance of clearing and forwarding duties
by Siyazi on behalf of the Plaintiff;
7.2 the said agreement commenced during or around 2016 and was orally agreed between the
duly authorised representatives of Siyazi and the Plaintiff at Durban;

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7.3 the material terms of that agreement were:
7.3.1 from time to time and at the request of the Plaintiff, Siyazi would perform clearing services
in respect of the importation of goods by the Plaintiff into the Republic;
7.3.2 in the performance of those services, Siyazi would issue disbursement accounts to the
Plaintiff which represented the amounts due by Plaintiff to the South African Revenue Services
(“SARS”);
7.3.3 the Plaintiff would pay the amounts reflected on the disbursement accounts to Siyazi; and
7.3.4 Siyazi would pay the amounts received against the disbursement account to the respective
party entitled to payment (i.e. SARS).
8. During the period 2018 and early 2019, Siyazi delivered disbursement accounts to the
Plaintiff in respect of SARS in the total sum of R66,395,006.27.
9. The Plaintiff paid the full amount of R66,395,006.27 to Siyazi.
10. The disbursement accounts constituted a representation by Siyazi to Plaintiff that the
amounts reflected thereon were due by Plaintiff to SARS.
11. Siyazi caused only an amount of R31,353,697.27 to be paid to SARS on behalf of the
Plaintiff.
12. The difference between the amount paid by Plaintiff to Siyazi against the disbursements
accounts and the amount paid by Siyazi to SARS is R34,612,576.19.
13. Consequent upon that short payment, SARS has raised assessments as follows:
13.1 VAT due- R34,630.202.00;
13.2 penalties- R2,143,774.00; and
13.3 interest- R4,633,244.00.
14. The total damages suffered by the Plaintiff in consequence of the short payment by Siyazi
to SARS is therefore R41,407,220.00.
15. The short payment occurred as a result of fraud and/or theft by Siyazi ’s employees and/or
the Defendants.
16. Section 22(1) of the Companies Act 2008 provides:
“A company must not carry on its business recklessly, with gross negligence, with intent to defraud
any person or for any fraudulent purpose.”

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17. The conduct of Siyazi was reckless, alternatively grossly negligent, further alternatively the
business of Siyazi was conducted with the intention to defraud the Plaintiff or further alternatively
for a fraudulent purpose.
18. Section 218(2) of the Companies Act provides:
“Any person who contravenes any provision of this Act i s liable to any other person for any loss
or damage suffered by that person as a result of that contravention”.
19. As directors of Siyazi, the First and Second Defendants were:
19.1 the guiding minds behind the fraud; alternatively
19.2 reckless; further alternatively
19.3 grossly negligent;
in controlling the activities of Siyazi.
20. The recklessness or gross negligence manifested in:
20.1 A failure to maintain proper records and books of account;
20.2 A failure to maintain controls in respect of compilation of disbursement accounts;
20.3 A failure to reconcile disbursement accounts and accurately to report them to Applicant;
and/or
20.4 A failure to impose controls such that moneys paid against disbursement accounts were
paid over to the third parties entitled to same.
21. But for the First and Second Defendants’ fraud, alternatively recklessness, further
alternatively, gross negligence, the Plaintiff would not have been obliged to pay to SARS the
amount of R41,407,220.00.
22. In the premises, the First and Second Defendants are jointly and severally liable in terms
of Section 218(2) read with Section 22(1) of the Companies Act, 2008 for the amount of
R41,407,220.00.’ (Emphasis added.)

[5] The first defendant delivered a plea to the particulars of claim . The second
defendant, however, filed two exceptions. Only the first is relevant. In its terms:
‘4. Section 22(1) does not regulate what directors, such as the defendants, must do or not do.
(There is no allegation in the particulars of claim that section 22 regulates directors’ conduct).
5. Section 22 imposes duties upon the company and not its directors.

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6. Section 218(2) finds application where a person breaches a provision of the Act.
7. There is no allegation in the particulars of claim that the defendants breached a provision
of the Act.
8. The allegations in paragraph 19 (read with paragraphs 20 and 21) mirror the jurisdictional
requirements of section 22(1), with reference to fraud, recklessness and gross negligence.
However, section 22(1) does not impose obligations on, and cannot apply to, the defendants as
directors.
9. The obligations and duties of directors are set out in section 76 of the Act and the available
remedies for breaches in section 77. The plaintiff does not locate a claim in those sections. In
substance, the plaintiff seems to contend for a contravention of the obligations of a director
articulated in section 76(3) of the Companies Act. But any claim under that section is confined to
section 77(2) (and section 218(2) cannot be invoked – where a statute expressly and specifically
creates liability for a br each of a section, then a general section in the same statute cannot be
invoked to establish a co-ordinate liability). Section 77(3)(b) specifically deals with the liability of
directors in respect of section 22. It effectively provides that a director who is a party to the carrying
on of the business of the company contrary to section 22 is liable for any loss, damages or costs
sustained by the company.
10. The particulars of claim accordingly do not:
10.1 aver a breach by the defendants of an obligation imposed on them by the Act in order to
bring them and the alleged loss said to be caused by them within the purview of section 218(2);
10.2 sustain a cause of action.’

[6] The second defendant further contended that , to the extent the claim was
predicated on fraud, the allegations in the particulars of claim were insufficient to
sustain a case. It is not necessary to detail the second exception as the high court only
dealt with the first.

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In the high court
[7] In upholding the first exception, t he high court went through a line of cases
dealing with the interpretation of s 218(2) read with s 22 and, in some instances,
s 214(1)(c) of the Act. The plaintiff’s case was based on the decision of Rabinowitz
v Van Graan and Others 1 (Rabinowitz) and related judgments. The court in
Rabinowitz held:
‘[A] person who is guilty of an offence in terms of the Act , must . . . be found to have
“contravened” a provision of the Act. If , therefore, a director is guilty of the offence created by
section 214, such director must therefore be found to have contravened a provision of the Act for
the purposes of s 218(2).’2
It further held, ‘a third party can hold a director personally liable in terms of the Act
for acquiescing in or knowing about conduct that falls within the ambit of s 22(1)
thereof.
’3

[8] The court in Rabinowitz found it hard to believe that the legislature could ,
despite the criminal liability contemplated by the Act in terms of s 214(1) (c), the
delinquency provided for in s 162(5)(c)(iv)(bb)
and the liability created in s 77(3)
against the directors, preclude a director from knowingly being a party in s 22 of the
Act. It took this view bearing in mind s 66(1) of the Act which brought the company
affairs under the direction of the board.
4 Rabinowitz’s reasoning was followed in
several cases.5 It is not necessary to discuss these cases as the thrust is largely the
same.

1 Rabinowitz v Van Graan and Others [2013] ZAGPJHC 151; 2013 (5) SA 315 (GSJ). See also Chemfit Fine
Chemicals (Pty) Ltd v Maake 2017 JDR 1473 (LP) ; Maake and Others v Chemfit Finechemical (Pty) Ltd [2018]
ZALMPPHC 71; Blue Farm Fashion Limited v Rapitrade 6 (Pty) Ltd and Others [2016] JOL 35613 (WCC) ;
Meatworld Factory CC v ET Trading House (Pty) Ltd 2019 JDR 1351 (GJ).
2 Ibid para 17.
3 Ibid para 22.
4 Ibid para 21.
5 Cases listed in fn 1.

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[9] The high court disagreed with Rabinowitz and the cases that followed it. It
observed the following:
‘One can sense the frustration some judges might feel when it is clear that a director was up to no
good and a creditor ended up suffering damages or a huge financial loss. The fact however remains
that the Companies Act does not make express provision for such liability. It could never have
been the intention of the legislator to provide for liability in a manner that would involve a
convoluted manner of interpreting various sections, and then to arrive at a conclusion that is still
open to doubt, based on how certain sections are interpreted.’
6

[10] The court embraced the approach adopted in De Bruyn v Steinhoff
International Holdings N.V. and Others7 (Steinhoff) which held that:
‘Section 218(2) should not be interpreted in a literal wa y. Rather, the provision recogni zes that
liability for loss or damage may arise from contraventions of the Companies Act. And so the statute
confers a right of action. But what that right consists of, who enjoys the right, and against whom
the right may be exercised are all issues to be resolved by reference to the substantive provisions
of the Companies Act.’
8

[11] The high court also referred to the judgment of this Court in Hlumisa
Investment Holdings (RF) Ltd and Another v Kirkinis and Others9 (Hlumisa) where,
with reference to ss 77(2)(b) and 77(3)(b) of the Act, the Court held:
‘These provisions of the Companies Act make it clear that the legislature decided where liability
should lie for conduct by directors in contravention of certain sections of the Act and who could
recover the resultant loss. It is also clear that the legislature was astute to preserve certain
common law principles. It makes for a harmonious blend.’
10

6 Venator Africa (Pty) Limited v Bekker and Another [2022] ZAKZPHC 50; [2022] 4 All SA 600 (KZP) (High Court
judgment) para 86.

judgment) para 86.
7 De Bruyn v Steinhoff International Holdings N.V. and Others [2020] ZAGPJHC 145; 2022 (1) SA 442 (GJ).
8 Ibid para 191.
9 Hlumisa Investment Holdings (RF) Ltd and Another v Kirkinis and Others [2020] ZASCA 83; [2020] 3 All SA 650
(SCA); 2020 (5) SA 419 (SCA).
10 Ibid para 50.

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[12] The high court concluded that:
‘. . .the so- called lacuna created by the legislature in not providing expressly for the liability of
directors to other persons, such as creditors, for loss or damage suffered, is a clear indication that
it was not its intention to do so, thereby continuing to recognise what has been referred to as a
foundation of company law.’11

[13] It consequentially upheld the second defendant’s exception, set aside the
particulars of claim, and granted leave to the plaintiff, if so advised, to file amended
particulars of claim within 10 days from the date of the granting of its order.

In this Court
[14] The plaintiff contend s that the high court did not conduct a discrete
interpretative analysis of s 218(2) . Rather, it opined on the correctness of the
judgments it identified and appea red to have adopted a prominent focus on s 22
rather than s 218(2).

[15] It further submits that it was unlikely to have been the purpose of the Act to
have intended to exclude liability for fraudulent or reckless trading by directors [to
creditors of the company]; this claim was permitted by common law, and it would
require clear language in the Act to preclude it. Neither the language of s 218, nor
the surrounding matrix of legislation suggest that revocation.

[16] Counsel for the plaintiff further submitted that the Court should prefer an
interpretation that promotes access to justice than one that denies any remedy. Thus,
it should be slow to accept the interpretation offered by the excipient.

11 High Court judgment fn 6 above para 88.

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[17] Secondly, he argued that the Court is not dealing with the breach of a fiduciary
duty which is owed to the company, but with a breach of a statutory duty. For
purposes of a creditor’s claim, the phrase ‘any person who contravenes the Act’ in
s 218(2) must be read to mean the director who is behind the company that
contravened s 22(1).

[18] According to the plaintiff, neither Hlumisa nor Steinhoff stand in the way of
this interpretation as these cases had to do with claims of shareholders against the
directors of the company, rather than with the claims of creditors; shareholders’
claims against directors are not permitted. In this instance, however, where the
allegation is that the company was used by the directors to perpetrate a fraud on a
creditor, the company neither suffers a loss nor is it likely to seek to recover from
the directors.

[19] As to s 214(1)(c), which creates a criminal offence, this was not specifically
pleaded. However, it was argued that sufficient facts have been pleaded which, if
proved, would render the second defendant guilty of an offence . The plaintiff
contends that the interpretation followed in Rabinowitz should be adopted in this
regard. Lastly, it contends that a common law claim of fraud or theft can be inferred
from the facts.

The test on exception
[20] It is trite that it is for an excipient to show that on e very reasonable
interpretation of the facts, the pleading is excipiable. On interpretation, ‘the question
is not whether the meaning contended for by the [plaintiff] is necessarily the correct

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one, but whether it is a reasonably possible one ’.12 The excipient must satisfy the
court that the conclusion of law set out in the particulars of claim is unsustainable
on every interpretation that can be put on those facts. It is important to note that ‘the
facts are what must be accepted as correct ; not the conclusions of law’.
13 What is
before us is a question of law. Either s 218(2), read with s 22(1) , permits what is
contended for by the plaintiff, or it does not.

Legislative scheme
[21] It is important to recap the relevant principles underpinning the Act before
undertaking the interpretive exercise. Section 1 of the Act defines a company as a
juristic person incorporated in terms of the Act. Sections 19(1) (a) and (b), dealing
with the legal status of companies provide that a company is a juristic person and
that it has all the legal powers and capacity of an individual subject to certain
exceptions. Section 19(2) expressly states that:
‘A person is not, solely by reason of being an incorporator, shareholder or director of a company,
liable for any liabilities or obligations of the company, except to the extent that this Act or the
company’s Memorandum of Incorporation provides otherwise.’

[22] The situation is different where a company is a personal liability company. In
that case, the directors and past directors are jointly and severally liable, together
with the company, for any debts and liabilities of the company (s 19(3)). This
exception serves to highlight the importance of the director’s default immunity.

[23] In the case of unconscionable abuse of the juristic personality of the company
as a separate entity, s 20(9) provides that the court may declare the company not to

12 Fairlands Ltd v Inter-Continental Motors Ltd 1972 (2) 270 (A) at 275G-H.
13 Hlumisa fn 9 above para 22.

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be a juristic person in respect of any right, obligation or liability of the company and
make any further order it considers appropriate. It has been stated that this provision
does not disregard the company as a separate entity. It also does not do away with
the requirements for piercing the corporate veil. It ‘broadens the bases upon which
the courts in this country… have hitherto been prepared to grant relief that entails
disregarding corporate personality. Section 20(9) , therefore does not replace the
common law, it supplements the common law.’14

[24] These provisions emphasise the long-standing legal principles that the
company’s legal persona cannot be ignored at the choosing of a party. As this Court
said in Hlumisa, the separate personality is ‘no mere technicality. It is foundational
to company law.’15 A party cannot simply disregard the ‘corporate veil’; it must be
permitted by law to do so. Against these principles as the backdrop, I turn to the
interpretation of s 218(2) read with s 22(1).

Interpretation of the relevant provisions
[25] The plaintiff’s case is based on a statutory duty. Interpretation of statutes ‘is
an objective unitary process where consideration must be given to the language used
in the light of ordinary rules of grammar and syntax; the context in which the
provision appears; the apparent purpose to which it is directe d and the material
known to those responsible for its production. The inevitable point of departure is
the language used in the provision under consideration.’
16

14 Ex Parte Gore and Others N N O (Gore) 2013 (3) SA 382 (WC); [2013] 2 All SA 437 (WCC) (Gore) para 31, cited
with approval by this Court in Butcher Shop and Grill CC v Trustees for the time being of the Bymyam Trust [2023]
ZASCA 57; [2023] 3 All SA 40 (SCA); 2023 (5) SA 68 (SCA) para 40.
15 Hlumisa fn 9 above para 42 referring to this Court’s judgment in Itzikowitz v Absa Bank Ltd [2016] ZASCA 43;
2016 (4) SA 432 (SCA).

2016 (4) SA 432 (SCA).
16 Commissioner for the South African Revenue Service v United Manganese of Kalahari (Pty) Ltd [2020] ZASCA 16
para 8.

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[26] Section 218 (2) says:
‘Any person who contravenes any provision of this Act is liable to any other person for any loss or
damage suffered by that person as a result of that contravention.’ (Emphasis added.)
This section creates a right to recovery if there has been a breach of a provision of
the Act. ‘When a wrongdoer “contravenes” the Act and causes loss to a person, the
wrongdoer is liable to that person…t he word “ contravenes” in s 218(2) includes a
breach or an infringement of any provision of the Act, “which is by nature
prescriptive or which in some way regulates conduct”.’17

[27] This section does not itself create liability. It imposes liability in the event of
a contravention of some other provision of the Act. As was held in Steinhoff:18
‘[T]he statute confers a right of action. But what that right consists of , who enjoys the right, and
against whom the right may be exercised are all issues to be resolved by reference to the
substantive provisions of the Companies Act.
Such an interpretation answers another difficulty that the literal interpretation of s 218(2) does not.
As Hlumisa19 observed, can s 218(2) be understood to impose liability without the regulating
concepts of fault, foreseeability and remoteness; and an undifferentiated conception of permissible
plaintiffs. Such an understanding would require an interpretation of s 218(2) that gives rise to
wholesale liability at the instance of all persons who sustained loss or damage as a result of the
contravention. That is to place a burden of liability and hence risk upon directors so great that it is
hard to imagine who would accept office on these terms. And if that is what the legislature intended
it would be expected to have made the imposition of so grea t a burden clear. The better
interpretation is that the legislature intended that the specific requirements of any liability are to
be found in the substantive provisions of the Companies Act. Section 218(2) has a different

be found in the substantive provisions of the Companies Act. Section 218(2) has a different
function. It determines the question posed in Steenkamp:
20 contraventions do permit a right of

17 Hlumisa fn 9 above para 45.
18 Steinhoff fn 7 above paras 191 and 192.
19 Hlumisa Investment Holdings RF Ltd and Another v Kirkinis and Others [2018] ZAGPPHC 676; 2019 (4) SA 569
(GP). This is the judgment that was later confirmed by this Court on appeal in Hlumisa fn 9 above.
20 Steenkamp v Provincial Tender Board of the Eastern Cape [2005] ZASCA 120; [2006] 1 All SA 478 (SCA); 2006
(3) SA 151 (SCA) paras 21 and 22.

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action. Whether there is a right of action, who enjoys the right, and on what basis of all matters
regulated by the substantive provision of the Companies Act.’

[28] The plaintiff relies on s 22(1) as the provision that it asserts has been
contravened and triggers the operation of s 218(2). Section 22(1) stipulates:
‘A company must not carry on its business recklessly, with gross negligence, with intent to defraud
any person or for any fraudulent purpose.’
This section plainly imposes a duty on the company, and not its directors, to refrain
from carrying on its business recklessly, among other things. To construe s 22(1) as
being capable of infringement by the directors is to read into the section a prohibition
that is not there.

[29] Sections 22(2) and 22(3) create remedies for the Commission21 when reckless
trading is suspected. These provisions as well, are directed at the company. The
section that deals expressly with directors’ liability is s 77(3)(b), which states:
‘(3) A director of a company is liable for any loss, damages or costs sustained by the company
as a direct or indirect consequence of the director having—
…
(b) acquiesced in the carrying on of the company’s business despite knowing that it was being
conducted in a manner prohibited by section 22(1)’ (Emphasis added.)


21 The sections stipulate: ‘(2) If the Commission has reasonable grounds to believe that a company is engaging in
conduct prohibited by subsection (1), or is unable to pay its debts as they become due and payable in the normal
course of business, the Commission may issue a notice to the company to show cause why the company should be
permitted to continue carrying on its business, or to trade, as the case may be.
(3) If a company to whom a notice has been issued in terms of subsection (2) fails within 20 business days to satisfy
the Commission that it is not engaging in conduct prohibited by subsection (1), or that it is able to pay its debts as

they become due and payable in the normal course of business, the Commission may issue a compliance notice to
the company requiring it to cease carrying on its business or trading, as the case may be. ’

15

[30] In Gihwala and Others v Grancy Property Ltd and Others 22 this Court ,
referring to s 77(3), held that:
‘That section . . . does not involve a declaration by the court, but creates a statutory claim in favour
of the company against a director , imposing liability on the latter for any loss, damages or costs
incurred by the company in certain circumstances, including whether the director acquiesces in the
company engaging in reckless trading. It is not a provision that can be invoked to secure payment
to a creditor or shareholder in respect of their claim against the company or a director.’ (Emphasis
added.)

[31] Section 76(3) imposes duties upon the directors to, inter alia, act in good faith
and in the best interest s of the company. These are common law principles which
have now been entrenched in the Act. 23 These duties are owed to the company. In
the event of a wrong done to the company in terms of any of the provisions of the
section, the company can sue to recover damages. ‘The company would be the
proper plaintiff. It is no coincidence, then, that s 77(2)(a) provides that a director of
a company may be held liable for breaches of fiduciary duties resulting in any loss
or damage sustained by the company. ’
24 Section 77(2)(b) similarly provides that a
director of a company may be held liable in accordance with the principles of the
common law relating to delict for any loss, damages or costs sustained by the
company as a consequence of any breach by the director of the duty contemplated
in s 76(3)(b); any provision of the Act, not otherwise mentioned in the section; or
any provision of the company’s Memorandum of Incorporation.


22 Gihwala and Others v Grancy Property Ltd and Others [2016] ZASCA 35; [2016] 2 All SA 649 (SCA); 2017 (2)
SA 337 (SCA) para 120.
23 P Delport Henochsberg on the Companies Act 71 of 2008 at 298(12M)-298(12N).
24 Hlumisa fn 9 above para 48.

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[32] As stated in Hlumisa , these provisions make it clear that ‘the legislature
decided where liability should lie for conduct by directors in contravention of certain
sections of the Act and who could recover the resultant loss. It is also clear that the
legislature was astute to preserve certain common law principles. It makes a
harmonious blend.’
25 Further, the Act abounds with provisions for recovery of loss
resulting from misconduct on the part of directors. There must clearly be a link
between the contravention and the loss allegedly suffered.26

[33] The plaintiff has been unable to identify a provision that has been contravened
by the directors in order to invoke s 218(2). As the court in Steinhoff observes:
‘The statutory scheme of liability under the Companies Act does not attach a singular consequence
for a contravention of the Act. Rather, the Companies Act attaches a regime of liability for
particular contraventions. I have already observed that this is so in respect of the contravention of
s 76 and s 22. This is a systemic feature of the Companies Act. A breach of duty may exact
compliance by the Commission (s22(3)); a breach may be an offence (s32(5)); and a breach may
give rise to liability to make good a loss as a consequence of the breach (s77). Certain breaches
are visited with more than one permissible consequence. Thus, s 22 permits the Commission to
issue a compliance notice. In addition, a director may be held liable to the company for reckless
trading (s22(1) read with s 77(3)(b)).
The more general point of interpretation is that the legislature has been careful to stipulate what
form of liability, civil, criminal, or regulatory, may result from different contraventions. There is
no coherent reading of the Companies Act that would subordinate this specification of
differentiated liability for the recognition under s 218(2) of general liability of all persons who
contravene the Companies Act in favour of all who suffer loss as a result thereof.’
27

contravene the Companies Act in favour of all who suffer loss as a result thereof.’
27


25 Hlumisa fn 9 above para 50.
26 Hlumisa fn 9 above para 51.
27 Steinhoff fn 7 above paras 213 and 214.

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[34] In the circumstances, Rabinowitz and other high court cases were wrongly
decided. It is irrelevant that Hlumisa and Steinhoff concerned claims brought by
shareholders against directors. While those facts are important to note, the relevant
principles in those decisions as well as Gihwala are instructive for present purposes.

[35] For these reasons, the high court cannot be faulted for upholding the first
exception. T he appeal must, accordingly, fail. Counsel for the second defendant
requested that the order allowing the amendment, be substituted to provide for a new
operative date. I agree.

[36] In the result, the following order is made:
1 The appeal is dismissed with costs including the costs of two counsel, where
so employed.
2 The order of the high court is confirmed save for paragraph 3 of the order
which is substituted as follows:
‘3. The plaintiff is granted leave, if so advised, to file amended particulars of
claim within 10 days of the date of this order.’



__________________________
N P MABINDLA-BOQWANA
JUDGE OF APPEAL

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Appearances

For the appellant: F Snyckers SC
Instructed by: Shepstone & Wylie Attorneys, Durban
Symington De Kok Attorneys, Bloemfontein

For the first respondent: A Annandale SC with J Miranda
Instructed by: Grant and Swanepoel Attorneys, Pietermaritzburg
Kramer Wiehmann Attorneys, Bloemfontein.