Browsing by Author "Stevens, Richard"

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    Circumventing veil piercing: possible delictual ability of a holding company to a creditor of its insolvent subsidiary
    (Juta, 2013) Stevens, Richard
    A holding company often issues a letter of comfort to a creditor of its subsidiary company. The subsidiary company often then defaults on its obligations to that creditor. The courts generally have held that a letter of comfort does not create binding contractual obligations between the holding company and the creditor. This article investigates whether the creditor could hold the holding company liable in delict for the losses that the creditor suffered due to the default of the contractual obligations by the subsidiary company to that creditor. The article specifically considers the element of wrongfulness and whether there could be a legal duty on the holding company not to cause pure economic loss to the creditor of its subsidiary in circumstances where the holding company issued a letter of comfort to the creditor. This article investigates the requirements of a legal duty in cases of pure economic loss as well as the nature of a letter of comfort. The article concludes that a legal duty could be placed on a holding company not to cause pure economic loss to the creditor of its subsidiary depending on the wording of the letter of comfort and without sacrificing the principle of separate juristic personality that exist between the holding company and subsidiary company.
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    The duty of care and skill, and reckless trading : remedies in flux
    (SA Mercantile Law Journal, 2016-06) Stevens, Richard; De Beer, Philip
    In terms of South African common law, directors of companies have two duties. First is fiduciary duties, which do not require fault for liability (a form of strict liability). Second is the duty of care and skill, which has always been accepted as delictual in nature. The rationale behind the duty of care and skill is to prevent those in charge of the management of the company from allowing it to act in a manner that could harm such a company. The law therefore utilises the law of delict to hold these company stewards to account, and to make good the harm suffered by the wronged party, being the company which such wrongdoers are managing. The Companies Act (‘the Act’) has to an extent codified the common law duty of care and skill of directors, and has confirmed that the liability for the breach of this duty is delictual in nature. South African company law further provides that a company’s business may not be conducted with gross negligence, ‘recklessly’ or fraudulently. In s 424 of the Companies Act 61 of 1973 (‘the 1973 Act’), any person could hold another person liable who essentially allowed the company to conduct business in a reckless manner. At face value, it appeared (and case law seems to have confirmed this) that the statutory remedy was intended primarily for creditors, and mostly utilised by such creditors when a company was in liquidation. Section 424 of the 1973 Act has been replaced by s 22(1), as read with section 77(3)(b) of the Act. The Act, however, also provides that Chapter XIV of the 1973 Act continues to apply in respect of the liquidation of insolvent companies.
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    Hockly's insolvency law : book review
    (Juta and Company, 2003-01) Stevens, Richard
    Insolvency has long been treated as the stepchild of commercial legislation. The current Insolvency Act stems from 1936. There are only a few (current) text books on the topic. The book under review is the seventh edition. The previous edition appeared in 1996. The structure of this edition does not differ from previous editions. The layout of the various chapters is logical although one could ask whether the chapters dealing with the appointment of the trustee as well as the meetings of the creditors should not precede the effects of sequestration. This would aid sequential logic, since the chapter would follow on the sequestration of the insolvent's estate. The chapters dealing with voluntary and compulsory sequestration are again well set out and the case law discussed is current. The discussion of ``friendly sequestrations'' (38-40) is thorough and very welcome since it is practically very relevant. A chapter on cross-border insolvency has been included in this edition as chapter 26 (from 249). This is a welcome addition. The chapter on cross- border insolvency provides a very brief overview of the South African common law pertaining to this subject. It also summarises the Cross- Border Insolvency Act 42 of 2000. The topic is, however, not really discussed, probably due to the fact that this area of insolvency law in South Africa is still in an embryonic stage. One wonders, however, whether the discussion could not have been included in chapter 5, which deals with the vesting of the assets of the insolvent. It does, however, make sense to have it included as a separate chapter since cross-border insolvency deals with more issues than the mere vesting of the assets of the insolvent.
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    Kuwait Asia Bank EC v National Mutual Life Nominees Ltd revisited : the possible vicarious liability of a holding company for the delicts caused by its nominee directors on the board of its subsidiary
    (Juta Law, 2019-01) Stevens, Richard
    In Kuwait Asia Bank EC v National Mutual Life Nominees Ltd is beslis dat ’n houermaatskappy nie middellik aanspreeklik gehou kan word vir die deliktuele skade, wat sy genomineerde direkteur (wat ’n werknemer van die houer is) op die direksie van sy filiaal vir die filiaal veroorsaak nie. Die outeur ondersoek of hierdie saak nog hedendaags dieselfde beslis sal word. In Van der Berg v Coopers & Lybrand Trust (Pty) Ltd skep die hoogste hof van appèl die indruk dat daar wel sodanige aanspreeklikheid in die gegewe konteks mag wees. Die outeur toon dat die hof in hierdie geval slegs die arbeidsregtelike verhouding tussen die houer/werkgewer en die direkteur/ werknemer oorweeg het om die vraag van middellike aanspreeklikheid te oorweeg sonder om die impak van ander regsnorme te oorweeg. In Public Investment Corporation Ltd v Bodigelo noem die hof dat ’n direkteur in sy hoedanigheid as werknemer deur die aandeelhouer aangestel is en skep dus ook die indruk dat sou sodanige direkteur skade vir die maatskappy, waar hy as direkteur dien, veroorsaak, die aanstellende maatskappy middellik aanspreeklik sou wees. Die gevolgtrekking wat gemaak word, is dat ’n hof nie die vraag van middellike aanspreeklikheid bloot op grond van die diensverhouding tussen die houer en die direkteur kan beantwoord nie. ’n Hof behoort ook, soos in die Kuwait Bank-saak, die maatskappyregtelike werklikheid, naamlik dat die houer nie ’n direkteur van die filiaal mag wees nie en dus genoop is om ’n natuurlike persoon as direkteur aan te stel, te oorweeg. Die verhouding is egter dan nie een van werkgewer/werknemer nie, maar die unieke verhouding t ussen ’n aandeelhouer en ’n direkteur wat deur die aandeelhouers verkies word. Die toets vir middellike aanspreeklikheid kan dus nie net vanuit ’n arbeidsregtelike oogpunt beskou word nie, maar ook vanuit ’n maatskappyregtelike oogpunt soos in die Kuwait Bank-saak.
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    Liability within company gr oups
    (Juta Law, 2016-12) Stevens, Richard
    In Bank of Tokyo Ltd v Karoon the court held that the law does not involve itself with economics but with the law. This view was confirmed by the English appeal court in Adams v Cape Industries plc. These views were expressed within the context of company groups and the possibility of holding companies liable for the acts of a subsidiary. However, company groups are commercial realities. The law, however, in many respects does not give effect to this commercial reality but instead still has as its point of departure the doctrines of separate juristic personality and limited liability. In DHN Food Distributors Ltd v Tower Hamlets London Borough Council, Bronze Investments Ltd v Tower Hamlets London Borough Council and DHN Food Transport Ltd v Tower Hamlets London Borough Council the relevant court recognised the economic reality of the group, but this view was rejected in the Adams case.