CONSTITUTIONAL COURT OF SOUTH AFRICA
Case CCT 160/21
In the matter between:
CHRISTIAN FINDLAY BESTER N.O. First Applicant
LEGADIMANE ARTHUR MAISELA N.O. Second Applicant
THOMAS CHRISTOPHER VAN ZYL N.O. Third Applicant
(in their capacities as joint trustees of the Insolvent Estate
of Petrus Serdyn Louw and Martha Maria Sophia Louw)
and
QUINTADO 120 (PTY) LIMITED Respondent
Neutral citation: Bester N.O. and Others v Quintado 120 (Pty) Ltd [2021] ZACC 49
Coram: Madlanga J, Madondo AJ, Majiedt J, Mhlantla J, Pillay AJ,
Rogers AJ, Theron J, Tlaletsi AJ and Tshiqi J
Judgment: Mhlantla J (unanimous)
Heard on: 26 August 2021
Decided on: This judgment was handed down electronically by circulation to
the parties’ representatives by email, publication on the
Constitutional Court website and release to SAFLII. The date and
time for hand-down is deemed to be 10h00 on 13 December 2021
Summary: Liquidation — factual enquiry — directing mind of the company
test — misapplication of legal test — no jurisdiction
2
ORDER
On appeal from the High Court of South Africa, Western Cape Division, Cape Town:
1. Leave to appeal is refused.
2. The applicants must pay the respondent’s costs, including the costs of two
counsel.
JUDGMENT
MHLANTLA J (Madlanga J, Madondo AJ, Majiedt J, Pillay AJ, Rogers AJ, Theron J,
Tlaletsi AJ and Tshiqi J concurring):
[1] This is an application for leave to appeal against a judgment and order of the
High Court of South Africa, Western Cape Division, Cape Town (High Court) 1 which
discharged the provisional order of liquidation in respect of the respondent,
Quintado 120 (Pty) Limited (Quintado).2
Background
[2] The applicants are the trustees of the insolvent estate of Mr Petrus Serdyn Louw
and Mrs Martha Maria Sophia Louw (Louw insolvent estate ). Mr Louw, a chartered
accountant, was the co -founder of Louw & Cronje Incorporated, a successful
1 Bester N.O. v Quintado 120 (Pty) Ltd , unreported judgment of the High Court of South Africa, Western Cape
Division, Cape Town, Case No 15274/2019 (18 August 2020) (High Court judgment).
2 This matter was heard at the same time as Burger N.O. v Bester N.O. Case No CCT 246/20 (HNP Trust).
MHLANTLA J
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accounting firm conducting its business in Porterville, Vredendal and Strand in the
Western Cape. He practised as an auditor and financial adviser for over 30 years and
had a very loyal client base.
[3] Mr Louw was the manager of Quintado while his brother-in-law, Mr Markram
Jan Kellerman, was the sole director. Louw & Cronje acted as Quintado’s accountants.
In 2010, an agreement was concluded between Mr Louw and Mr Kellerman, in terms
of which Mr Louw could conduct a “separate” farming enterprise in the name of
Quintado on its property, using its bank account and value added tax registration
number. This arrangement was, according to Mr Kellerman , not per se unlawful.
In 2013, Mr Louw was appointed as a co-director of Quintado , and he assumed full
control of the company.
[4] Mr Louw ran a fraudulent business of, amongst others, the bogus purchasing and
selling of livestock in order to perpetrate tax fraud. Email exchanges between Mr Louw
and Mr Kellerman with the subject matter of “smokkels”3 contained information about
the fraudulent business, but Mr Kellerman stated that he believed the company was in
fact selling and purchasing real livestoc k. Mr Louw defrauded his clients and
transferred their funds into the bank account of Quintado. During the period from
January 2015 to November 2018, money was transferred from Mr Louw’s bank account
to Quintado and vice versa.
[5] In 2018, a newspaper arti cle reported that a liquidation application had been
brought against Louw & Cronje for the failure to pay its debts. After the publication of
the article, several clients of the accounting firm started enquiring about the status of
their investments and it became clear that Mr Louw had, unbeknown to his clients, been
operating, amongst others, an immense fraudulent investment scheme. Beyond
swindling his clients, Mr Louw also had a family trust4 and shares in several companies.
3 Being an Afrikaans term colloquially used to describe shams or deceits.
4 The sequestration of the family trust is the subject matter of the HNP Trust above n 2.
MHLANTLA J
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He used the family trust and the companies in the course of the fraudulent activities.
He confessed to the fraudulent schemes, and the joint estate of Mr and Mrs Louw was
provisionally sequestrated. The applicants, who are insolvency practitioners, were
appointed as trustees of the Louw insolvent estate.
[6] On the applicants’ version, approximately R31 million flowed from Mr Louw
into Quintado, and approximately R17 million was returned to Mr Louw. Ultimately,
the amount transferred back from Quintado to Mr Louw had a shortfall of approximately
R13.7 million. Therefore, Quintado owed the Louw insolvent estate R13.7 million.
[7] After the fraud came to light, Mr Kellerman had Quintado’s financial statements
restated for the period s from 2015 to 2019. According to Mr Kellerman, he had
previously only cast an eye over the farming operations and Mr Louw was in complete
control of the company. During the sequestration investigation into the Louw insolvent
estate, Mr Kellerman presented the redrawn financial statements which s howed that
Quintado only owed the Louw i nsolvent estate R606 047, and not the much larger
amount averred by the applicants.
Litigation history
High Court
Provisional liquidation order
[8] The applicants launched an urgent application in the High Court for an order
placing Quintado under provisional liquidation on the basis that Quintado was, by
definition, insolvent. 5 The applicants relied primarily on the provisions of
section 344(f) read with sections 345(1)(c) and 344(h) of the 1973 Companies Act.6 In
the alternative, and in the event Quintado was found to be solvent, the applicants argued
5 The applicants argued that the respondent was unable to pay its debts, its liabilities exceeded its assets and it
would be just and equitable for it to be wound up.
6 61 of 1973 (1973 Companies Act).
MHLANTLA J
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that it would be just and equitable for Quintado to be wound up in terms of
section 81(1)(c)(ii) of the Companies Act.7
[9] The High Court held that the applicants had standing to bring the application as
the Louw insolvent estate was a creditor of Quintado.8 It accepted, as common cause,
that Mr Louw had defrauded his clients of around R110 million over a period of
six years.9 Further, it accepted that Mr Louw used Quintado as well as other companies
to hide his fraudulent activities from his clients and the South African Revenue Services
and to launder money stolen from his clients . This was als o conceded by Mr Louw
under oath.
[10] The High Court, having considered the evidence before it, held that it was of no
moment whether Mr Kellerman was an executive or non -executive director of
Quintado.10 He still had the same fiduciary duties as any other director in the company.
This was despite his argument that due to their personal ties , he implicitly trusted
Mr Louw to conduct the affairs of the company with due diligence and in good faith.
The High Court held that the conduct of Mr Louw and Mr Kellerman could not be
divorced. Mr Kellerman had abandoned his fiduciary duties, and this could not be
excused.11 It further rejected Mr Kellerman’s contention that the practice of utilising
7 71 of 2008. Section 81(1)(c)(ii) of the Companies Act reads:
“Winding-up of solvent companies by court order
(1) A court may order a solvent company to be wound up if—
. . .
(c) one or more of the company’s creditors have applied to the court for an order
to wind up the company on the grounds that—
. . .
(ii) it is otherwise just and equitable for the company to be wound up.”
8 Bester N.O. v Quintado 120 (Pty) Ltd , unreported judgment of the High Court of South Africa, Western Cape
Division, Cape Town, Case No 1527/19 (25 February 2020) (provisional liquidation judgment) at para 4.
9 This period spanned from 2013 to 2018.
10 Provisional liquidation judgment above n 8 at para 32.
11 Id at para 41.
MHLANTLA J
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Quintado’s assets and bank accounts by agre ement was not unlawfu l, nor an abuse of
the company’s separate legal personality.
[11] The High Court held that it would be just and equitable to wind up Quintado in
terms of section 81(1)(c)(ii) of the Companies Act without having to turn to the other
ground raised by the applicants. Accordingly, it granted a provisional liquidation order.
A rule nisi was issued for interested parties to show cause why the order should not be
made final.
Discharge of provisional liquidation order
[12] On the extended return day of the rule nisi, the applicants applied for a final
winding up order. The High Court assessed the evidence before it in relation to the
bases upon which they asserted their claim as creditor against Quintado. The applicants
predicated their standing on three grounds: first, Mr Louw transferred approximately
R13.7 million more into Quintado’s bank account than Quintado transf erred back ;
therefore, Quintado wa s indebted to the Louw i nsolvent estate. Second, and in the
alternative, it was alleged that Quintado at least owed the Louw insolvent estate just
over R9 million, which was the amount reflected on Quintado’s general ledger for a
loan account . Lastly, Quintado’s financial statements for the year end ing
28 February 2019 reflected that Quintado at least owed the Louw insolvent e state
R606 047 for a “director’s loan”.
[13] On the first basis, the High Court held that a positive finding that the
Louw insolvent estate was a creditor of Quintado was a legal prerequisite to t he
applicants’ ability to seek a liquidation order. 12 As Quintado was not a party to the
receipt and disposal of the funds syphoned through its bank account , that claim for
standing could not be sustained.13 The High Court further held that the money which
had been channelled through Quintado belong ed to Mr Louw’s clients and not the
12 High Court judgment above n 1 at para 12.
13 Id at para 18.
MHLANTLA J
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Louw insolvent e state.14 Regarding the applicants ’ argument that , through the
directing mind doctrine,15 the actions of Mr Louw c ould be attributed to the actions o f
the company, the High Court considered the judgment of Canadian Dredge,16 and held
that the doctrine only applies when the action taken by the director was within the field
of the company’s operation, it was not a total fraud on the company and it was by design
or result partly for the benefit of the company. 17 The High Court went on to consider
these factors, and held that each case must of course be read in the context of its facts18
and a “pragmatic approach” is the appropriate approach to considering the application
of the doctrine. 19 In applying the three factors set out in Canadian Dredge, the
High Court held that the use of Quintado’s bank account for money laundering purposes
was in a sense a fraud on the company, the fraud c ould not be said to fall within the
operations assigned to Mr Louw, and the use of the company’s bank account for
nefarious purposes was not by design for the company’s benefit. 20 Therefore, the
High Court held that Mr Louw acted for himself and not for the company , and his
conduct could not be attributed to Quintado.21
[14] The High Court held that the applicants’ reliance on Dumas,22 to argue that they
had a claim against Quintado as money was paid from the Louw insolvent estate into
14 Id at para 23.
15 This doctrine or test is used to determine whether, in law, the acts of those who purport to represent a company
can be attributed to the company.
16 In Canadian Dredge & Dock Co v Her Majesty The Queen [1985] 1 SCR 662; 1985 CanLII 32 (SCC)
(Canadian Dredge), the Canadian Supreme Court wa s tasked with determining whether four corporations could
be held criminally liable for acts of tender collusion committed by their managers. The Court identified the three
elements of a test for determining the directing mind of a company. According to that test, the doctrine operates
only when the action taken by the so -called directing mind (a) was within the field of the company’s operation
assigned to him or her; (b) was not totally a fraud on the company; and (c) was by design or result partly for t he
benefit of the company.
17 High Court judgment above n 1 at para 24.
18 Id at para 25. The High Court relied on Consolidated News Agencies (Pty) Ltd (in liquidation) v Mobile
Telephone Networks (Pty) Ltd [2009] ZASCA 130; 2010 (3) SA 382 (SCA) (Consolidated News Agencies ) at
para 31; Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 3 All ER 918 (PC) at 928;
and H L Bolton (Engineering Co Ltd) v T K Graham & Sons Ltd [1957] 1 QB 159; [1956] 3 All ER 624 at 173.
19 High Court judgment id relying on El Ajou v Dollar Holdings Plc [1994] 2 All ER 684 (CA).
20 High Court judgment above n 1 at para 26.
21 Id at para 30.
22 Trustees, Estate Whitehead v Dumas [2013] ZASCA 19; 2013 (3) SA 331 (SCA) (Dumas).
MHLANTLA J
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the bank account of Quintado, was misplaced. It held that Mr Louw was not acting for
Quintado when he transferred money into its bank account, and Quintado did not have
a transactional relationship with Mr Louw’s clients.23
[15] Regarding the alleged R9 million owed, being the second basis for standing, the
High Court accepted the evidence of Mr Louw’s son who refuted this claim and
provided evidence that the consolidated position of the accounting books was in fact
that the Louw insolvent estate owed Quintado an estimated R7 million. As conceded
by counsel for the applicants, an attempt in formulating that claim was “an exercise in
futility”.24 Lastly, the High Court held that the third basis was premise d on a
reconstruction of the financial statements based on an incomplete investigation. 25
Further, Mr Kellerman alleged that he had the financial statements restated, and the
actual amount owed to the Louw insolvent estate was R209 977, which had since been
paid to the applicants.26
[16] The High Court held that the applicants had not, on a balance of probabilities,
established that they ha d an undisputed liquidated claim against Quintado, and the
admitted claim was paid before the provisional liquidation order was granted .27
Accordingly, the applicants did not have the necessary standing to bring the application.
The provisional order of liquidation was discharged, and the winding-up application
was dismissed.28
Supreme Court of Appeal
[17] Aggrieved, the applicants sought leave to appeal to the Supreme Court o f
Appeal. The Supreme Court of Appeal refused leave on the grounds that there were no
23 High Court judgment above n 1 at para 36.
24 Id at para 20.
25 Id at para 22.
26 Id at para 41.
27 Id at para 43.
28 Id at para 50.
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reasonable prospects of success on appeal. The applicants applied for a reconsideration
of the order refusing leave to appeal. 29 That application was also dismissed. The
applicants now approach this Court for leave to appeal against the order of the
High Court.
In this Court
Applicants’ submissions
[18] On jurisdiction, the applicants submit that establishing the correct test to identify
the directing mind of the company is a constitutional issue. Secondly, they submit that
an arguable point of law is raised, in that two High Court judgments – one granting the
provisional liquidation order and the other discharging that order – made findings in
relation to the doctrine of the controlling mind of the company that were fundamentally
opposed to one another.
[19] In terms of Canadian Dredge, the directing mind doctrine operates only when
the action taken by the so -called directing mind was: (a) within the field of the
company’s operation assigned to him or her; (b) not totally a fraud on the company;
and (c) by design or result partly for the benefit of the company. The applicants submit
that a more flexible approach to the Canadian Dredge test is appropriate in terms of
South African constitutional principles , and that the test should be developed in
accordance with section 39(2) of the Constitution . In support of thi s argument, the
applicants rely on this Court’s judgment in K30 to argue that the question whether the
common law rule of vicarious liability should be developed is a constitutional issue.31
They submit that the policy considerations underlying the direct ing mind of the
company doctrine are similar to those underlying vicarious liability.
29 In terms of section 17(2)(f) of the Superior Courts Act 10 of 2013.
30 K v Minister of Safety and Security [2005] ZACC 8; 2005 (6) SA 419 (CC); 2005 (9) BCLR 835 (CC).
31 Id at para 22.
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[20] The applicants submit that, when considering the application of the directing
mind of the company doctrine, each case must be read in context and a pragmatic
approach should be followed. According to the applicants’ more flexible interpretation
of the directing mind principle, Mr Louw ’s actions should be regarded as those of the
company and , therefore, the Louw insolvent estate has standing to apply for the
winding-up of Quintado. They contend that the test relied on by them is a more flexible
test, as in the Canadian case of Spadina.32
[21] The arguable points of law of general public importance that this Court ought to
consider, according to the applicants, are: (a) whether notionally the directing mind of
a company test can be met when one of only two directors is left to manage the
company, and that director is permitted to run his own “separate” business through the
company, and the other director has knowledge o f the tax fraud ; (b) whether, in the
circumstances of this case and considering the outcome in respect of the first question,
the legal test for the directing mind of the company is met; and (c) whether the fact that
some of Mr Louw’s actions were criminal acts places the actions beyond the confines
of what is attributable to the company on the basis that such acts do not fall within the
field of operation of the company assigned to that director.
[22] The applicants submit that there are three factual disputes . First, they submit
that the “smokkels” email exchanges between Mr Kellerman and Mr Louw were
evidence of Mr Kellerman’s knowledge of the schemes and tax fraud; therefore, the
High Court erred in holding that Mr Kellerman had no knowledge of the schemes.
Second, they submit that the company did benefit from the payments, as the funds
channelled through Quintado w ere used for legitimate purposes of the company in
extinguishing its debts, therefore the company had the intention to receive those funds
and Quintado was enriched by the payments. Last, the applicants argue that it is not
possible f or Quintado to be seen solely as a conduit for fraudulent activities as it
benefitted from the fraudulent activities. Several sources of monies were paid into the
32 DBDC Spadina Ltd v Walton 2018 ONCA 60 (Spadina).
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bank account of Mr Louw, and therefore commixtio (mixing) took place and it is
impossible to distinguish which sources were due to fraudulent activities.
Respondent’s submissions
[23] Quintado firstly submits that this is an enrichment claim and the only question
which is relevant is whether the company acted and if so, whether Mr Louw’s actions
can be attributed to it. The question regarding enrichment, according to the respondent,
is not an arguable point of law, but rather a factual dispute. The directing mind of the
company debate is wholly academic, as it is argued that Mr Louw was not impoverished
by the payments made to Quintado , and Quintado was not enriched by them. The
money transferred from Mr Louw to Quintado did not belong to Mr Louw, he had stolen
it from his clients, therefore , Mr Louw was not impoverished by the payments.
Quintado was not enriched, as it s bank account was used only as a conduit to syphon
money to another company owned by Mr Louw. Consequently, no cause of action was
made out on enrichment, as Quintado was merely used as a conduit.
[24] Regarding the development of the controlling mind of the company test,
Quintado argues that there is no precedent for the watering down of the test. In fact,
the Spadina judgment re lied on by the applicants was overturned in the
Canadian Supreme Court . In terms of Canadian law , the three requirements of
Canadian Dredge must always be met, and in some i nstances even if they are met,
public policy might demand that there be no attribution to the company. Further, the
applicants did not proffer any reasons why the requirements in Canadian Dredge
constitute a deviation from the spirit, purport and objects of the Bill of Rights.
[25] In so far as the dispute of facts were concerned, Quintado submits that, although
Mr Kellerman signed its financial statement s, Mr Louw manipulated the accounting
records and Mr Kellerman did not detect the falsity of the co ntents thereof.
Mr Kellerman trusted Mr Louw and did not suspect him, as his brother-in-law, of fraud.
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[26] Lastly, Quintado was merely used as a conduit to launder money to another
company owned by Mr Louw. Quintado relied on Vereins33 to argue that payment is a
bilateral transaction which requires the co -operation of a debtor and credito r. In this
regard, there was no evidence that Quintado intended to accept payments from
Mr Louw. The payment s from Mr Louw to Quintado w ere not underpinned by any
contractual or transactional basis. For these reasons, Quintado submits t hat leave to
appeal should be refused.
Issues
Jurisdiction
[27] The first issue to be determined is whether the application engages this Court’s
jurisdiction. This Court has jurisdiction to hear constitutional matters and any other
matter provided that it raises an arguable point of law of general public importance that
ought to be considered by this Court.34 If this Court’s jurisdiction is engaged, the next
question is whether it is in the interests of justice to grant leave to appeal.
[28] The applicants seek to establish jurisdiction on both legs of section 167(3)(b) of
the Constitution. They submit that the constitutional issue raised is that the directing
mind doctrine should be developed to a flexible test in line with the Constitution. This
doctrine or test is used to determine whether , in law, the acts of those w ho purport to
represent a company can be attributed to the company. In Boesak,35 where this Court
had to determine whether the applicant’s right to freedom and security of the person
and fair trial rights were infringed, it held that “the question whether the interpretation
of any legislation or the development of the common law promot es the spirit, purport
33 Vereins-Und Westbank AG v Veren Investments [2002] ZASCA 36; 2002 (4) SA 421 (SCA).
34 Section 167(3)(b) of the Constitution.
35 S v Boesak [2000] ZACC 25; 2001 (1) SA 912 (CC); 2001 (1) BCLR 36 (CC) (Boesak).
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and objects of the Bill of Rights” is a constitutional matter. 36 However, as held in
Loureiro:37
“[T]he mere fact that a matter is located in an area of the common law that can give
effect to fundamental rights does not necessarily raise a constitutional issue. It must
also pose questions about the interpretation and development of that law and not merely
involve the application of an uncontroversial legal test to the facts.”38
Therefore, this matter must pose questions concerning development of the common law
and not be a mere application or misapplication of a settled or uncontroversial legal test.
[29] The High Court held that the test developed in Canadian Dredge should be
applied in the context of a particular case and that a pragmatic approach is necessary.39
As mentioned, the Court also endorsed other decisions of foreign jurisdictions which
emphasise that a case by case, flexible approach to the doctrine ought to be followed.40
[30] The High Court also relied on El Ajo u, in which the plaintiff unknowingly
invested money into a fraudulent scheme, which ultimately ended up in the bank
account of Dollar Land Holdings Limited. The England and Wales Court of Appeal
held that to determine the directing mind of a company, it is nec essary to look beyond
the “formal position” – for example , who is the director of the company on
paper – which might not be decisive.41 It overturned the trial court’s order dismissing
the plaintiff’s claim for £1.3 million and remitted the matter for the determination of
quantum. The Court of Appeal recognised that the trial court, in determining the test,
36 Id at para 14.
37 Loureiro v Imvula Quality Protection (Pty) Ltd [2014] ZACC 4; 2014 (3) SA 394 (CC); 2014 (5) BCLR 511
(CC).
38 Id at para 33.
39 High Court judgment above n 1 at para 25, relying on Consolidated News Agencies above n 18. Regarding the
need to adopt a pragmatic approach to the doctrine, the Hig h Court seemingly endorsed dicta from the English
case of El Ajou above n 19.
40 See above n 18 and the cases cited therein.
41 El Ajou above n 19 at 696.
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adopted a “pragmatic approach” and held that although the two courts reach ed a
different conclusion, the trial court was “right to do so”.42
[31] In Simon N.O. ,43 the High Court endorsed an approach where the question is
“one of construction rather than metaphysics”.44 Our courts, by considering the useful
jurisprudence of foreign jurisdictions, have therefore recognised that to determine the
directing mind of the company, a rigid and inflexible test is inappropriate.45 Rather, a
test that is pragmatic and determined on a case by case basis is appropriate. In fact, the
applicants themselves have argued that in the application of the doctrine “each case
must be read in context ” and “it calls for a pragmatic approach” . This is exactly the
approach proposed and followed by the High Court in this matter. Accordingly, there
is no merit in the applicants’ argument for the development of the directing mind of the
company test into a “flexible test”, because the test is already flexible.
[32] The applicants rely on K to argue that the issue relating to vicarious liability is a
constitutional issue. In K, the applicant sought damages in delict against the Minister
of Safety and Security a fter being raped by three police officers while they were on
duty. This violation gave rise to a grievous infringement of her constitutional rights.
The High Court and the Supreme Court of Appeal dismissed Ms K’s claim for damages.
The Supreme Court of Appeal held that on the existing principles of vicarious liability,
the Minister of Safety and Security was not liable for the damages suffered by Ms K.46
Before this Court , it was argued that if the Supreme Court of Appeal applied the
common law rule correctly, the rule should be developed by taking into consideration
the applicant’s constitutional rights.47 In K, the rights in the Bill of Rights that gave rise
to the necessity to develop the common law were the applicant’s right to freedom and
42 Id.
43 Simon N.O. v Mitsui and Co Ltd 1997 (2) SA 475 (W).
44 Id at 530F citing Lennard’s Carrying Company v Asiatic Petroleum Ltd [1915] AC 705 (HL).
45 See for example Simon N.O. above n 41 and Consolidated News Agencies above n 18.
46 K above n 30 at para 9.
47 Id at para 14.
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security of the person, her right to dignity, right to privacy and right to substantive
equality.48 Therefore, the need to develop the common law was undisputedly linked to
Ms K’s constitutional rights.
[33] During the hearing of this matter, counsel for the applicants contended that the
directing mind of the company test had to be developed in line with the Constitution,
specifically the right of access to court s in section 34. I do not agree that section 34
necessitates the development of t he doctrine. It cannot be said that the applicants did
not have access to the courts merely be cause the High Court applied the
Canadian Dredge test in a manner that excludes the application thereof in this case.
Further, the applicants’ reliance on K for the development of this rule is misplaced. As
stated above, in K there was a clear infringement of constitutional rights which
necessitated the development of the common law . In this matter , the applicants were
unable to direct this Court to any constitutional rights, other than the purported
infringement of section 34, which have been violated.
[34] Counsel for the applicants was invited to address this Court on the difference
between a pragmatic a pproach and a flexi ble approach. Counsel stated that the
High Court, relying on several authorities,49 acknowledged that the test was pragmatic,
however it failed to apply it flexibly. This concession does not assist the applicants as
it is trite that the wrong application of a settled or uncontroversial legal test does not
constitute an arguable point of law.50 Therefore, no constitutional issue is raised as the
directing mind of the company doctrine is already recognised as a flexible, pragmatic
doctrine. As held by this Court in Fraser,51 “[a]n issue does not become a constitutional
matter merely because an applicant calls it one”.52
48 Id.
49 Above n 18 for the authorities relied on.
50 General Council of the Bar of South Africa v Jiba [2019] ZACC 23; 2019 (8) BCLR 919 (CC) (Jiba) at para 59.
In Booysen v Minister of Safety and Security [2018] ZACC 18; 2018 (6) SA 1 (CC); 2018 (9) BCLR 1029 (CC)
at para 59 this Court also recognised that the application of an accepted legal test is not a constitutional matter.
51 Fraser v ABSA Bank Limited (National Director of Public Prosecutions as amic us curiae) [2006] ZACC 24;
2007 (3) SA 484 (CC); 2007 (3) BCLR 219 (CC).
52 Id at para 40.
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[35] Further, the issue regarding the development of the common law was raised for
the first time in this Court. Counsel for the applicants conceded that in the High Court,
this case was not approached from a constitutional perspective. If there was a need for
the development of the common law, this Court would have benefitted from the views
of the High Court and Supreme Court of Appeal. This Court is reluctant to entertain a
case involving the development of the common law as a court of first and last instance.
It is only in exceptional circumstances that this Court would do so.53 This case does not
fall into that category.
[36] The arguable points of law of general public importance that this Court ought to
consider, according to the applicants, are all related to whether the directing mind of the
company doctrine has been met. Quintado submits that the arguable points of law fail
on a factual bas is, making the main basis for the application wholly academic and
abstract. It is trite that an arguable point of law must not be one based on facts, and a
totally unmeritorious point cannot be said to be arguable. 54 An arguable point of law
must be exactly that – it must be a point of law and it must be arguable.55
[37] This matter, on the applicants’ own version, contains three fundamental disputes
of fact. The disputes of fact are material to the issues, they concern whether Quintado
was in fact enriched by the payments or whether it was used as a mere conduit. This
Court’s jurisdiction cannot be established based on the necessity to determine facts. 56
To engage with the alleged arguable points of law, this Court wo uld be required to
determine the factual dispute : whether Quintado was enriched by the channelling of
53 Sarrahwitz v Maritz N.O. [2015] ZACC 14; 2015 (4) SA 491 (CC); 2015 (8) BCLR 925 (CC) at para 21 and
Carmichele v Minister of Safety and Security (Centre for Applied Legal Studies intervening) [2001] ZACC 22;
2001 (4) SA 938 (CC); 2001 (10) BCLR 995 (CC) at para 50. See also Amod v Multilateral Motor Vehicle
Accidents Fund [1998] ZACC 11; 1998 (4) SA 753 (CC); 1998 (10) BCLR 1207 (CC) at para 33.
54 Paulsen v Slip Knot Investments 777 (Pty) Limited [2015] ZACC 5; 2015 (3) SA 479 (CC); 2015 (5) BCLR 509
(CC) at para 21.
55 University of Johannesburg v Auckland Park Theological Seminary [2021] ZACC 13; 2021 (6) SA 1 (CC);
2021 (8) BCLR 807 (CC) at para 43.
56 Jiba above n 50 at para 50.
MHLANTLA J
17
money through its bank accounts, and whether the Louw insolvent estate was
impoverished. Therefore, this Court would first have to determine the factual disputes
before determining whether its jurisdiction is engaged. This will be putting the cart
before the horse.
[38] This is not to say that factual disputes can never be resolved by this Court. In
Rail Commuters57 this Court held that “[w]here, however, a separate constitutional issue
is raised in respect of which there are disputes of fact, those disputes of fact will
constitute ‘issues connected with decisions on constitutional matter s’”.58 The factual
disputes in this matter are not connected to a separate constitutional issue. Instead,
before this Court can even consider whether arguable points of law have been raised, it
will be required to consider material factual disputes. This matter, in reality, turns on
factual disputes and accordingly does not engage this Court’s jurisdiction.
Conclusion
[39] It follows that the applicants have failed to establish that this Court’s jurisdiction
is engaged. A s the threshold requirement has not been met, it is not necessary to
consider the second leg of the enquiry, that is, whether it is in the interests of justice to
grant leave to appeal. Accordingly, this Court is unable to determine the issues raised.
Leave to appeal must be refused.
[40] The applicants sought condonation for the late filing of this application. As this
Court lacks jurisdiction to entertain the matter, the condonation application does not
bear consideration.
Costs
[41] There is no reason to deviate from the ordinary rule that costs follow the result.
57 Rail Commuters Action Group v Transnet Ltd t/a Metrorail [2004] ZACC 20; 2005 (2) SA 359 (CC); 2005 (4)
BCLR 301 (CC) (Rail Commuters).
58 Id at para 52.
MHLANTLA J
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Order
[42] The following order is made:
1. Leave to appeal is refused.
2. The applicants must pay the respondent’s costs, including the costs of two
counsel.
For the Applicants:
For the Respondent:
J A Van Der Merwe SC, J P White and
M Adhikari instructed by Mostert and
Bosman Attorneys
P A Van Eeden SC and D W Baguley
instructed by Assheton-Smith Ginsberg
Incorporated