Bester NO and Another v Wright, Bester NO and Another v Mouton, Bester NO and Another v Van Greunen (5781/2010, 6671/2010, 6673/2010) [2010] ZAWCHC 177; [2011] 2 All SA 75 (WCC) (15 September 2010)

Bester NO and Another v Wright, Bester NO and Another v Mouton, Bester NO and Another v Van Greunen (5781/2010, 6671/2010, 6673/2010) [2010] ZAWCHC 177; [2011] 2 All SA 75 (WCC) (15 September 2010)

The court found that the respondents' indebtedness under the loan agreements was not extinguished by the subsequent share buyback and cession agreements. These agreements did not comply with statutory requirements under the Companies Act and did not validly vary or set off the loan debts. The respondents, as directors, breached their fiduciary duties by participating in transactions that diverted investor funds for personal loans and attempted to write off these debts without benefit to the company. The rule in Wilken v Kohler does not apply where the underlying transaction is illegal or contrary to public policy, and the respondents cannot benefit from their own wrongful conduct. The...

Citation
[2010] ZAWCHC 177
Parties
Applicant: C F Bester N.O.; Applicant: Gaironesa Davids; Respondent: Allan William Wright; Respondent: Ina Mouton; Respondent: Charles Jacob van Greunen
Court
Western Cape High Court, Cape Town
Jurisdiction
South Africa
Judgment Date
15 September 2010
Case Number
5781/2010, 6671/2010, 6673/2010
Procedural Posture
Civil Application / Final Relief on Papers
Outcome
Application granted; respondents ordered to repay loan amounts with interest and costs.
Judges
M J Fitzgerald
Legal Topics
Company Liquidation, Director Fiduciary Duties, Illegal Loans, Share Buyback, Variation of Contract, Set Off
Commercial and Corporate Civil Procedure Company Liquidation Director Fiduciary Duties Illegal Loans Share Buyback Variation of Contract Set Off

Case Brief

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Parties

C F Bester N.O.

Applicant

Gaironesa Davids

Applicant

Allan William Wright

Respondent

Ina Mouton

Respondent

Charles Jacob van Greunen

Respondent

Procedural Posture

Civil Application / Final Relief on Papers

Legal Issues

  1. 1 Whether the respondents' indebtedness to the company was extinguished by subsequent agreements.
  2. 2 Whether the loan agreements were invalid or unenforceable due to statutory breaches.
  3. 3 Whether the respondents breached fiduciary duties as directors in relation to the loans.

Ratio Decidendi

The court found that the respondents' indebtedness under the loan agreements was not extinguished by the subsequent share buyback and cession agreements. These agreements did not comply with statutory requirements under the Companies Act and did not validly vary or set off the loan debts. The respondents, as directors, breached their fiduciary duties by participating in transactions that diverted investor funds for personal loans and attempted to write off these debts without benefit to the company. The rule in Wilken v Kohler does not apply where the underlying transaction is illegal or contrary to public policy, and the respondents cannot benefit from their own wrongful conduct. The...

Court Disposition

Application granted; respondents ordered to repay loan amounts with interest and costs.

Orders

  • In case 5781/2010, respondent to pay applicants R1,587,436.10 plus interest at 15.5% a tempore morae and costs.
  • In case 6673/2010, respondent to pay applicants R1,347,542.63 plus interest at 15.5% a tempore morae and costs.