South Africa Case Law

Selesho N.O and Another v Mangoejane and Others (1372/2024)

Selesho N.O and Another v Mangoejane and Others (1372/2024) [2024] ZAFSHC 302 (3 October 2024)

Court

Free State High Court, Bloemfontein

Case number

1372/2024

Judge

Daffue

The court found that the applicants, as trustees of the Leagang Family Trust and equal shareholders in the holding company, had locus standi to seek interim interdictory relief to protect the assets of the third respondent. The first respondent, as sole director, had made fraudulent and unlawful payments from the third respondent's bank account for her personal benefit, which were uncontested due to the absence of answering affidavits. The court accepted the applicants' allegations as established facts and held that the interim order was appropriate to maintain the status quo pending the inst…

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• Derivative Action
• Fiduciary Duties Of Directors
• Interim Interdict
• Locus Standi
• Protected Disclosures Act
• Reflective Loss

Land and Agricultural Development Bank of South Africa v Lazercore Eight(Pty) Ltd and Others (15688/2020)

Land and Agricultural Development Bank of South Africa v Lazercore Eight(Pty) Ltd and Others (15688/2020) [2024] ZAWCHC 109; [2024] 3 All SA 273 (WCC); 2024 (6) SA 267 (WCC) (24 April 2024)

Court

Western Cape High Court, Cape Town

Case number

15688/2020

Judge

Pillay AJ

The court held that the Trust and Mr Smith lacked locus standi to seek relief against the business rescue practitioner, as only the companies themselves could claim for loss or fees paid. The relief sought for forfeiture or repayment of business rescue practitioner fees was not competent in law, as the Companies Act does not provide for such orders absent gross negligence, which was not established on the evidence. The application for costs de bonis propriis was dismissed, as the prior settlement order resolved costs and no gross negligence was found. The application for rescission failed, as…

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• Business Rescue
• Locus Standi
• Remuneration Of Business Rescue Practitioner
• Costs De Bonis Propriis
• Reflective Loss
• Rescission Of Judgment

African Banking Corporation of Zambia Limited and Others v Mapula Solutions (Pty) Ltd (33936/2016)

African Banking Corporation of Zambia Limited and Others v Mapula Solutions (Pty) Ltd (33936/2016) [2024] ZAGPJHC 249 (11 March 2024)

Court

South Gauteng High Court, Johannesburg

Case number

33936/2016

Judge

M Victor

The High Court dismissed an application for leave to appeal against a damages judgment, finding no reasonable prospects of success and awarding costs.

• Leave To Appeal Threshold
• Debt Rescheduling Agreement
• Causation
• Locus Standi
• Reflective Loss
• Quantification Of Damages

Wolmer v Mastertrade 286 (Proprietary) Limited (2013/45428)

Wolmer v Mastertrade 286 (Proprietary) Limited (2013/45428) [2024] ZAGPJHC 146 (21 February 2024)

Court

South Gauteng High Court, Johannesburg

Case number

2013/45428

Judge

SC Mia

The High Court granted separation of a special plea on locus standi under rule 33(4) and stayed the remainder of the action pending that decision.

• Separation Of Issues
• Locus Standi
• Companies Act Liability
• Reflective Loss
• Alienation Of Land Act
• Locus-standi

Cudlipp N.O. and Others v Maitland N.O. and Others (15628/2015)

Cudlipp N.O. and Others v Maitland N.O. and Others (15628/2015) [2022] ZAWCHC 67 (3 May 2022)

Court

Western Cape High Court, Cape Town

Case number

15628/2015

Judge

Binns-Ward

The court found that the warranties in the sale of shares agreement related only to the shares and loan accounts in GWP 302, not to the property acquired by GWP 302 through a linked transaction. The seller trusts had no duty or knowledge regarding the servitude agreement affecting the Tradequick property. Any duty to disclose rested with Tradequick's directors, not the trustees. The plaintiffs' claim was for reflective loss, as the alleged damages were suffered by GWP 302, not directly by the plaintiffs. Under South African law, as endorsed by the Supreme Court of Appeal, shareholders cannot…

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• Reflective Loss
• Non Disclosure
• Warranties In Share Sale
• Servitude Agreement
• Damages
• Linked Transactions

Pathways Holdings (Pty) Ltd v Skyfi Internet Solutions (Pty) Ltd and Others (32429/2021)

Pathways Holdings (Pty) Ltd v Skyfi Internet Solutions (Pty) Ltd and Others (32429/2021) [2022] ZAGPPHC 45 (21 January 2022)

Court

North Gauteng High Court, Pretoria

Case number

32429/2021

Judge

Mbongwe

The applicant failed to establish locus standi as it did not prove direct shareholding in the first respondent, nor did it rebut the respondents' evidence regarding its lack of interest. The applicant's cause of action was unfounded, as it sought damages for reflective loss, which is not permissible; only the company may claim for wrongs done to it. The requirements for an Anton Piller order were not met, as the applicant did not have an existing cause of action and sought the order to scout for a claim rather than preserve vital evidence. The respondents provided cogent proof of the legitima…

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• Anton Piller Order
• Locus Standi
• Shareholder Claims
• Reflective Loss
• Urgent Interdict
• Company Director Liability

Hlumisa Investment Holdings (RF) Ltd and Another v Kirkinis and Others (1423/2018)

Hlumisa Investment Holdings (RF) Ltd and Another v Kirkinis and Others (1423/2018) [2020] ZASCA 83; [2020] 3 All SA 650 (SCA); 2020 (5) SA 419 (SCA) (3 July 2020)

Court

Supreme Court of Appeal

Case number

1423/2018

Judges

Navsa, Makgoka, Schippers, Mojapelo, Koen

The Supreme Court of Appeal held that the claims by the appellants, as shareholders, for damages arising from diminution in the value of their shares due to alleged misconduct by directors and auditors, are barred by the common law rule against reflective loss. The duties owed by directors under the Companies Act are to the company, not to individual shareholders, and section 218(2) does not override this principle. Similarly, auditors owe duties to the company and shareholders collectively, not to individual shareholders, and liability for pure economic loss is not established in this contex…

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• Reflective Loss
• Director Liability
• Auditor Negligence
• Companies Act
• Pure Economic Loss
• Wrongfulness

De Bruyn v Steinhoff International Holdings N.V. and Others (29290/2018)

De Bruyn v Steinhoff International Holdings N.V. and Others (29290/2018) [2020] ZAGPJHC 145; 2022 (1) SA 442 (GJ) (26 June 2020)

Court

South Gauteng High Court, Johannesburg

Case number

29290/2018

Judge

Unterhalter

The court found that the applicant's proposed class action did not raise a triable issue in law. Under South African company law, directors' fiduciary duties and auditors' statutory duties are owed to the company, not to shareholders, except in special circumstances not pleaded here. The common law does not recognize a direct claim by shareholders for pure economic loss resulting from misstatements in financial statements or audit reports. Statutory claims under the Companies Act, including sections 218(2) and 20(6), do not confer a right of action on shareholders for their own losses in thes…

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• Class Action Certification
• Shareholder Claims
• Directors Liability
• Auditor Liability
• Companies Act Interpretation
• Reflective Loss

Hlumisa Investment Holdings (RF) Limited and Another v Kirkinis and Others (100390/2015)

Hlumisa Investment Holdings (RF) Limited and Another v Kirkinis and Others (100390/2015) [2018] ZAGPPHC 676; 2019 (4) SA 569 (GP) (31 August 2018)

Court

North Gauteng High Court, Pretoria

Case number

100390/2015

Judge

Molopa-Sethosa

High Court exception upheld against shareholder claims for reflective loss and negligent audit misstatements.

• Reflective Loss
• Director Liability
• Fiduciary Duties
• Negligent Misstatement
• Auditor Liability
• Pleading Requirements

Itzikowitz v Absa Bank Ltd (20729/2014)

Itzikowitz v Absa Bank Ltd (20729/2014) [2016] ZASCA 43; 2016 (4) SA 432 (SCA) (31 March 2016)

Court

Supreme Court of Appeal

Case number

20729/2014

Judges

Ponnan, Cachalia, Willis, Saldulker, Fourie

The Supreme Court of Appeal held that the appellant's counterclaim A, seeking recovery for pure economic loss reflecting the diminution in the value of his shareholding, was misconceived. The loss alleged was suffered by AMU, and the appellant, as a shareholder thrice removed, had no personal claim against Absa for wrongs committed against the company. The court reaffirmed the principle that a shareholder cannot recover for reflective loss, and that only the company may sue for loss suffered by it. The court found no facts pleaded to establish a separate and independent duty owed by Absa to t…

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• Pure Economic Loss
• Shareholder Claims
• Reflective Loss
• Wrongfulness
• Company Separate Personality