Viljoen v Viljoen and Another (4793/2018) [2019] ZAFSHC 30 (21 February 2019)

Viljoen v Viljoen and Another (4793/2018) [2019] ZAFSHC 30 (21 February 2019)

The court found that the first respondent, as managing director, engaged in conduct detrimental to the company, including misrepresenting VAT liabilities to SARS, which constituted tax fraud, and receiving payments far in excess of legitimate loan repayments, amounting to misappropriation of company assets. These acts fell squarely within the grounds for delinquency under section 162(5) of the Companies Act. The respondent failed to adequately explain the discrepancies in the loan account and did not deny the aggregate payments alleged by the applicant. The court held that the requirements for a declaration of delinquency were met. However, the applicant failed to explicitly address the...

Citation
[2019] ZAFSHC 30
Parties
Applicant: Albert Johannes Viljoen; Respondent: Albert Johannes Viljoen; Respondent: Hencetrade 34 (Pty) Ltd.
Court
Free State High Court, Bloemfontein
Jurisdiction
South Africa
Judgment Date
21 February 2019
Case Number
4793/2018
Procedural Posture
Urgent Application / Judgment After Hearing on Merits
Outcome
The first respondent is declared a delinquent director of the second respondent. Leave to approach the court for relief under section 165(5) or (6) is granted on amplified papers. The first respondent is ordered to pay the costs of the application.
Judges
A.F. Jordaan
Legal Topics
Delinquent Director, Companies Act Section 162, Director Liability, Tax Fraud, Misappropriation of Company Assets
Commercial and Corporate Delinquent Director Companies Act Section 162 Director Liability Tax Fraud Misappropriation of Company Assets

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Parties

Albert Johannes Viljoen

Applicant

Albert Johannes Viljoen

Respondent

Hencetrade 34 (Pty) Ltd.

Respondent

Procedural Posture

Urgent Application / Judgment After Hearing on Merits

Legal Issues

  1. 1 Whether the first respondent should be declared a delinquent director under section 162(5) of the Companies Act.
  2. 2 Whether the applicant should be granted leave to institute proceedings on behalf of the company under section 165(6) of the Companies Act.
  3. 3 Whether the conduct of the first respondent constituted tax fraud and misappropriation of company assets.

Ratio Decidendi

The court found that the first respondent, as managing director, engaged in conduct detrimental to the company, including misrepresenting VAT liabilities to SARS, which constituted tax fraud, and receiving payments far in excess of legitimate loan repayments, amounting to misappropriation of company assets. These acts fell squarely within the grounds for delinquency under section 162(5) of the Companies Act. The respondent failed to adequately explain the discrepancies in the loan account and did not deny the aggregate payments alleged by the applicant. The court held that the requirements for a declaration of delinquency were met. However, the applicant failed to explicitly address the...

Court Disposition

The first respondent is declared a delinquent director of the second respondent. Leave to approach the court for relief under section 165(5) or (6) is granted on amplified papers. The first respondent is ordered to pay the costs of the application.

Orders

  • The first respondent is declared a delinquent director of the second respondent in terms of section 162(5)(c) of the Companies Act, 71 of 2008.
  • Leave is granted to the applicant to approach the court on the same papers, duly amplified, for an order in terms of section 165(5) or (6) of the Companies Act, 71 of 2008.