Legion Lock & Cable CC and Another v Legion Computer Accessories (PTY) LTD and Another (72623/2016) [2018] ZAGPPHC 763 (5 October 2018)

Legion Lock & Cable CC and Another v Legion Computer Accessories (PTY) LTD and Another (72623/2016) [2018] ZAGPPHC 763 (5 October 2018)

The court found that Van der Merwe only became aware of the fraudulent agreements orchestrated by Fourie in November 2015, when they were disclosed in Fourie's plea in another action. Therefore, prescription had not run against her claim. On the merits, the court held that Fourie, acting as trustee and sole director, abused his positions to divert Legion Lock's assets and goodwill to his own company for a nominal value, with the intention to frustrate Van der Merwe's ability to enforce the arbitration award and court order against the Trust. This conduct constituted fraud and unconscionable abuse of the trust and corporate forms. The court pierced the trust veneer and held Fourie...

Citation
[2018] ZAGPPHC 763
Parties
Plaintiff: Legion Lock & Cable CC; Plaintiff: Sonia Van der Merwe; Defendant: Legion Computer Accessories (PTY) LTD; Defendant: Jaco Fourie
Court
North Gauteng High Court, Pretoria
Jurisdiction
South Africa
Judgment Date
5 October 2018
Case Number
72623/2016
Procedural Posture
Civil Trial / Judgment After Trial; Claim 1 Withdrawn, Claim 2 Determined
Outcome
Claim 2 is upheld; Fourie is held personally liable for the amounts due to Van der Merwe under the court order, with costs.
Judges
N V Khumalo
Legal Topics
Piercing the Trust Veneer, Personal Liability of Trustee, Fraudulent Conduct, Prescription Act, Sale of Business Assets
Commercial and Corporate Land and Property Piercing the Trust Veneer Personal Liability of Trustee Fraudulent Conduct Prescription Act Sale of Business Assets

Case Brief

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Parties

Legion Lock & Cable CC

Plaintiff

Sonia Van der Merwe

Plaintiff

Legion Computer Accessories (PTY) LTD

Defendant

Jaco Fourie

Defendant

Procedural Posture

Civil Trial / Judgment After Trial; Claim 1 Withdrawn, Claim 2 Determined

Legal Issues

  1. 1 Whether the claim against Fourie in his personal capacity has prescribed under the Prescription Act.
  2. 2 Whether Fourie, as trustee and director, acted fraudulently or recklessly to frustrate enforcement of the court order against the Trust.
  3. 3 Whether Fourie should be held personally liable for the amounts owed to Van der Merwe under the arbitration award and court order.

Ratio Decidendi

The court found that Van der Merwe only became aware of the fraudulent agreements orchestrated by Fourie in November 2015, when they were disclosed in Fourie's plea in another action. Therefore, prescription had not run against her claim. On the merits, the court held that Fourie, acting as trustee and sole director, abused his positions to divert Legion Lock's assets and goodwill to his own company for a nominal value, with the intention to frustrate Van der Merwe's ability to enforce the arbitration award and court order against the Trust. This conduct constituted fraud and unconscionable abuse of the trust and corporate forms. The court pierced the trust veneer and held Fourie...

Court Disposition

Claim 2 is upheld; Fourie is held personally liable for the amounts due to Van der Merwe under the court order, with costs.

Orders

  • The 2nd Plaintiff's claim against the 2nd Defendant is upheld with costs.
  • The 2nd Defendant is held personally liable for payment of R1,750,000.00 and R750,000.00 plus interest from 1 March 2012 and 1 September 2012, respectively, due to the 2nd Plaintiff in terms of the court order dated 1 November 2013, jointly and severally with JM Family Trust.