South African Securitisation Program (RF) Limited and Others v Leppan Beech Incorporated and Others (67751/2011) [2014] ZAGPPHC 483 (28 March 2014)

South African Securitisation Program (RF) Limited and Others v Leppan Beech Incorporated and Others (67751/2011) [2014] ZAGPPHC 483 (28 March 2014)

The court held that the defendants' argument that they are not liable for damages arising after their resignation is without merit. The relevant statutory provisions and the rental agreement establish that directors are liable for debts contracted during their period of office, which includes contractual damages arising from breach of an agreement entered into while they were directors. The liability for damages was foreseeable and agreed upon in clause 7.2 of the rental agreement. The resignation of directors does not absolve them from liability for debts contracted during their tenure. The defendants' plea does not constitute a valid defence to the plaintiffs' claim, and the exception...

Citation
[2014] ZAGPPHC 483
Parties
Plaintiff: South African Securitisation Program (RF) Limited; Plaintiff: Sasfin Bank Limited; Plaintiff: Sunlyn (Pty) Limited; Defendant: Leppan Beech Incorporated; Defendant: Megan Elizabeth Jarvis; Defendant: Sello Eugene Phajane; Defendant: Warren Robert Beech; Defendant: Deidre Venter (previously Bone); Defendant: Kevin Pietersen; Defendant: Wessel Johannes Jacobus Badenhorst; Defendant: Elizabeth Louw
Court
North Gauteng High Court, Pretoria
Jurisdiction
South Africa
Judgment Date
28 March 2014
Case Number
67751/2011
Procedural Posture
Civil Procedure / Exception to Plea; Interlocutory Judgment
Outcome
Exception upheld; paragraphs 6-11 of the defendants' pleas set aside; costs awarded against defendants jointly and severally; leave granted to amend plea within 15 days.
Judges
Makhubele AJ
Legal Topics
Director Liability, Suretyship, Breach of Contract, Liquidated Damages, Exception to Plea
Commercial and Corporate Civil Procedure Director Liability Suretyship Breach of Contract Liquidated Damages Exception to Plea

Case Brief

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Parties

South African Securitisation Program (RF) Limited

Plaintiff

Sasfin Bank Limited

Plaintiff

Sunlyn (Pty) Limited

Plaintiff

Leppan Beech Incorporated

Defendant

Megan Elizabeth Jarvis

Defendant

Sello Eugene Phajane

Defendant

Warren Robert Beech

Defendant

Deidre Venter (previously Bone)

Defendant

Kevin Pietersen

Defendant

Wessel Johannes Jacobus Badenhorst

Defendant

Elizabeth Louw

Defendant

Procedural Posture

Civil Procedure / Exception to Plea; Interlocutory Judgment

Legal Issues

  1. 1 Whether former directors of an incorporated law firm are jointly and severally liable for contractual debts incurred during their period of office, even if the damages claim arises after resignation.
  2. 2 Whether the defendants' plea that they were no longer directors when the damages claim arose constitutes a valid defence under section 23 of the Attorneys Act and section 53(b) of the Companies Act.
  3. 3 Whether the contractual damages claimed by the plaintiffs are debts 'contracted' during the directors' period of office within the meaning of the relevant statutes.

Ratio Decidendi

The court held that the defendants' argument that they are not liable for damages arising after their resignation is without merit. The relevant statutory provisions and the rental agreement establish that directors are liable for debts contracted during their period of office, which includes contractual damages arising from breach of an agreement entered into while they were directors. The liability for damages was foreseeable and agreed upon in clause 7.2 of the rental agreement. The resignation of directors does not absolve them from liability for debts contracted during their tenure. The defendants' plea does not constitute a valid defence to the plaintiffs' claim, and the exception...

Court Disposition

Exception upheld; paragraphs 6-11 of the defendants' pleas set aside; costs awarded against defendants jointly and severally; leave granted to amend plea within 15 days.

Orders

  • The exceptions are upheld.
  • The sixth, seventh, and eighth defendants are ordered to pay costs jointly and severally, one paying the other to be absolved, on the scale as between attorney and own client.