Sonnenberg Mcloughlin Inc v Spiro (7277/2001) [2003] ZAWCHC 20; 2004 (1) SA 90 (C) (30 May 2003)

Sonnenberg Mcloughlin Inc v Spiro (7277/2001) [2003] ZAWCHC 20; 2004 (1) SA 90 (C) (30 May 2003)

The applicant failed to establish, on a balance of probabilities, the existence of any agreement binding the respondent to pay a proportionate share of company liabilities. The correspondence and affidavits reveal ongoing negotiations without consensus. The respondent consistently denied liability except as surety and insisted on indemnification and audited accounts before any payment. The alternative claim based on section 53(b) of the Companies Act is unsustainable, as the section does not provide the company with a right of recourse against directors for debts it has paid; it is intended to benefit creditors. Sequestration proceedings are not the proper forum for resolving such debt...

Citation
[2003] ZAWCHC 20
Parties
Applicant: Sonnenberg McLoughlin Inc; Respondent: Mark Spiro
Court
Western Cape High Court, Cape Town
Jurisdiction
South Africa
Judgment Date
30 May 2003
Case Number
7277/2001
Procedural Posture
Sequestration Application / Final Judgment
Outcome
Application dismissed with costs, including costs of two counsel.
Judges
HJ Erasmus
Legal Topics
Director Liability, Memorandum of Association, Section 53b Companies Act, Joint and Several Liability, Sequestration Procedure
Commercial and Corporate Director Liability Memorandum of Association Section 53b Companies Act Joint and Several Liability Sequestration Procedure

Case Brief

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Parties

Sonnenberg McLoughlin Inc

Applicant

Mark Spiro

Respondent

Procedural Posture

Sequestration Application / Final Judgment

Legal Issues

  1. 1 Whether the respondent is indebted to the applicant for a proportionate share of company liabilities incurred during his directorship.
  2. 2 Whether oral or written agreements exist binding the respondent to pay 43% of the applicant's liabilities.
  3. 3 Whether section 53(b) of the Companies Act provides the applicant with a right of recourse against the respondent.

Ratio Decidendi

The applicant failed to establish, on a balance of probabilities, the existence of any agreement binding the respondent to pay a proportionate share of company liabilities. The correspondence and affidavits reveal ongoing negotiations without consensus. The respondent consistently denied liability except as surety and insisted on indemnification and audited accounts before any payment. The alternative claim based on section 53(b) of the Companies Act is unsustainable, as the section does not provide the company with a right of recourse against directors for debts it has paid; it is intended to benefit creditors. Sequestration proceedings are not the proper forum for resolving such debt...

Court Disposition

Application dismissed with costs, including costs of two counsel.

Orders

  • The application is dismissed with costs, such costs to include the costs occasioned by the employment of two counsel.