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South Africa decisions
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Badenhorst v De Kock (13372/2023) [2024] ZAWCHC 427; [2025] 1 All SA 597 (WCC); 2025 (4) SA 540 (WCC) (18 December 2024)
The High Court held a sole director personally liable under section 424 for a company debt incurred recklessly, but limited the amount to the sum in the court order.
Lutchman N.O and Another v Ferreira (15655/2014) [2018] ZAGPPHC 500 (3 July 2018)
The court found that the respondent's failure to institute legal action against Shiva Uranium for payment of monies due to the company was not reckless when measured against the standard of a reasonable director in the same circumstances. The evidence showed that all directors were involved in the decision to place the company in voluntary winding-up due to lack of funds and the impracticality of litigation. The respondent was not the sole director, and the directors collectively resolved that winding-up was the best option. The respondent's conduct did not amount to reckless trading under se…
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Noordman N.O. and Another v Bruin (3635/2013) [2016] ZAFSHC 9 (29 January 2016)
Liquidators sought to hold a former director personally liable under section 424 of the Companies Act. The High Court dismissed the claim and awarded costs against the plaintiffs.
Isibiya Fund v Visser & Another (20278/14) [2015] ZASCA 183 (27 November 2015)
The court held that the Isibaya Fund, although governed by the Public Investment Corporation Act and controlled by a board appointed by the Minister of Finance, is a separate juristic person acting in its own name and right. It is distinct from, though not entirely independent of, government and falls outside the public service. Therefore, it does not qualify as the 'State' for the purposes of section 11(b) of the Prescription Act. The three-year prescription period in section 11(d) applies to the Fund's claim. The Fund's arguments regarding delayed knowledge and interruption of prescription…
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Nampak Wiegand Glass (Pty) Ltd v Finlayson and Others (1074/2009) [2014] ZAWCHC 137 (8 September 2014)
The High Court upheld a special plea of prescription in a section 424 claim, finding the plaintiff had enough facts by 26 January 2006 to sue directors personally.
Corinth Trading (Pty) Limited v Greunen and Others (27635/2010) [2014] ZAGPPHC 101 (20 March 2014)
Liquidators failed to prove that the second defendant caused Corinth Trading to trade recklessly under section 424 of the Companies Act 61 of 1973.
Minaar v Van Rooyen N.O. (27788/04) [2013] ZAGPPHC 375 (20 November 2013)
The court held that the applicant failed to establish grounds for rescission under Rule 42(1)(a) or the common law. The applicant did not specify any critical fact that would have led the original judge to refuse the order, and his explanation for default was unreasonable given his knowledge of the trial date and lack of action. The court found that the judge exercised proper discretion under Rule 39(1) in granting a declaratory order without hearing evidence, as the claim fell within the category of debts or liquidated demands. The applicant did not demonstrate a bona fide defence with prosp…
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Gihwala and Others v Meyeridricks (2009/27949) [2013] ZAGPJHC 164 (27 June 2013)
The High Court granted leave to amend particulars of claim in a Companies Act section 424 matter, holding the changes merely quantified the original claim.
Cheng-Li Tsung and Another v Industrial Development Corporation of South Africa Ltd and Another (173/12) [2013] ZASCA 26; 2013 (3) SA 468 (SCA) (25 March 2013)
The Supreme Court of Appeal found that the Tsungs, as directors of Dynasty Textiles, engaged in a pattern of conduct that constituted reckless and fraudulent trading under section 424(1) of the Companies Act. The court held that the use of company funds to repay shareholders' loans, transfer substantial sums overseas using outdated invoices and exchange control approvals, and pay personal expenses, all at a time when the company was insolvent and unable to pay its creditors, amounted to a deliberate disregard for the company's prosperity and a misuse of the corporate form for personal benefit…
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Freidlein Company (Pty) Ltd v Simaan and Others (2009/45807) [2012] ZAGPJHC 16 (8 February 2012)
The court held that upon the sanctioning and implementation of a compromise and scheme of arrangement under section 311 of the Companies Act, in terms of which creditors are deemed to have ceded their claims against the company to the proposer, any rights they might have had against representatives of the company under section 424(1) are extinguished. The existence of debts or liabilities is a prerequisite for the operation of section 424(1), and once these are extinguished by the agreement of creditors and the sanction of the court, no further remedy under section 424(1) is available. The co…
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