PERSONAL LIABILITY OF A DIRECTOR IN TERMS OF SECTION 424(1) OF THE COMPANIES ACT 61 OF 1973 IN RELATION TO DEFAULT JUDGMENT IN TERMS OF RULE 39 OF THE UNIFORM RULES OF THE HIGH COURT: AN ANALYSIS OF Minnaar v Van Rooyen NO [2015] ZASCA 114

Abstract

The Uniform Rules of the High Court regulate procedure to be followed from the beginning of the matter until it is settled or decided by the courts. The Rules provide for the procedure to be followed prior to the litigation process when the court is not yet involved. During the litigation process, when the court is involved, the court establishes whether proper procedure has been followed before the matter is heard. The court will then conduct the litigation process, either the application process or the action process, and make a determination. The Rules may again provide guidance to the court when granting an order in that specific matter. However, complications may arise when the Uniform Rules clash with the procedures to be followed by the court in terms of the Statute.
In Minnaar v Van Rooyen NO ([2015] ZASCA 114) the Supreme Court of Appeal was called upon to interpret section 424(1) of the Companies Act of 1973, in order to determine whether section 39(1) of the Uniform Rules allowed the court to grant a default judgment for a relief under section 424(1). The Supreme Court of Appeal upheld the appeal against the decision of the court a quo, that the court has the discretion to grant a default judgment for a relief under section 424(1), without evidence. The SCA held that there must be evidence establishing – on a balance of probabilities – that a former director of a company has acted recklessly before such an order can be granted. In the absence of that evidence an order granted under section 424(1) of the Companies Act is erroneously made, and had to be set aside. Since this is the first case decided by the Supreme Court of Appeal regarding the interpretation of Rule 39(1) and section 424(1), it is imperative that attention is drawn to the decision and how it has impacted on the Uniform Rules of the High Court. The aim of this paper is to interpret and determine how the court reached this conclusion, and how this conclusion has set out a new approach of interpreting Rule 39(1) of the Uniform Rules of the High Court and section 424(1) of the Companies Act.