Hacker v Hartmann and Others (1415/2017) [2019] ZAECPEHC 22 (10 April 2019)

Hacker v Hartmann and Others (1415/2017) [2019] ZAECPEHC 22 (10 April 2019)

The court found that the first respondent, as director, extracted unauthorised payments from the second respondent, contravening section 45 of the Companies Act. These payments were not approved by the board or shareholders, and the company failed the solvency and liquidity test, causing financial harm. The respondent's defence that such practices were customary in family businesses was rejected, as compliance with statutory requirements is mandatory. The respondent admitted to receiving payments exceeding his remuneration, and failed to provide a valid defence or documentary support for his claims. The applicant demonstrated exceptional circumstances justifying direct application under...

Citation
[2019] ZAECPEHC 22
Parties
Applicant: Inge Joane Hacker; Respondent: Mark Keiser Hartmann; Respondent: Repocalyptic Trust (Trustees); Respondent: Hartmann Family Trust (HFT)
Court
Eastern Cape High Court, Port Elizabeth
Jurisdiction
South Africa
Judgment Date
10 April 2019
Case Number
1415/2017
Procedural Posture
Civil Application / Judgment on Main and Interlocutory Applications
Outcome
Application granted in favour of the applicant. The first respondent is declared a delinquent director, removed as director of the second and third respondents, and the applicant is authorised to institute proceedings for recovery of unauthorised financial assistance. Costs awarded against the first respondent.
Judges
Majiki
Legal Topics
Delinquent Director, Financial Assistance, Companies Act Section 45, Derivative Action, Board Authority, Striking Out Scandalous Matter
Commercial and Corporate Civil Procedure Delinquent Director Financial Assistance Companies Act Section 45 Derivative Action Board Authority Striking Out Scandalous Matter

Case Brief

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Parties

Inge Joane Hacker

Applicant

Mark Keiser Hartmann

Respondent

Repocalyptic Trust (Trustees)

Respondent

Hartmann Family Trust (HFT)

Respondent

Procedural Posture

Civil Application / Judgment on Main and Interlocutory Applications

Legal Issues

  1. 1 Whether the first respondent should be declared a delinquent director under section 162 of the Companies Act.
  2. 2 Whether the first respondent should be removed as director of the second and third respondents.
  3. 3 Whether the applicant should be authorised to institute proceedings in the name of the second respondent for repayment of financial assistance provided to the first respondent in contravention of section 45 of the Companies Act.

Ratio Decidendi

The court found that the first respondent, as director, extracted unauthorised payments from the second respondent, contravening section 45 of the Companies Act. These payments were not approved by the board or shareholders, and the company failed the solvency and liquidity test, causing financial harm. The respondent's defence that such practices were customary in family businesses was rejected, as compliance with statutory requirements is mandatory. The respondent admitted to receiving payments exceeding his remuneration, and failed to provide a valid defence or documentary support for his claims. The applicant demonstrated exceptional circumstances justifying direct application under...

Court Disposition

Application granted in favour of the applicant. The first respondent is declared a delinquent director, removed as director of the second and third respondents, and the applicant is authorised to institute proceedings for recovery of unauthorised financial assistance. Costs awarded against the first respondent.

Orders

  • The first respondent is declared a delinquent director as contemplated in section 162(5)(c) of the Companies Act 71 of 2008.
  • The first respondent is removed as a director of the second and third respondents.