Cooper NO and Others v South African Mutual Life Assurance Society and Others

Two companies, Supreme Holdings Ltd and Supreme Investment Holdings (Pty) Ltd, were liquidated after operating a fraudulent investment scheme. Their liquidators sought to use section 414(2) of the Companies Act 61 of 1973 to subpoena Mr JC Stassen, chief legal adviser of Old Mutual, to testify and produce extensive documentation at a creditors’ meeting. The purpose was to interrogate him in relation to claims the liquidators had instituted against Old Mutual and its brokers, alleging liability under section 424 of the Companies Act (reckless or fraudulent trading) and, alternatively, delictual liability for investors’ losses. The Deputy Master authorised the subpoena. Old Mutual and Stassen successfully reviewed and set aside the subpoena in the court a quo, and the liquidators appealed to the Supreme Court of Appeal.

The appeal was dismissed with costs, including the costs of two counsel, and the order setting aside the subpoena was confirmed.

The case clarifies the limits of sections 414(2) and 424 of the Companies Act, confirming that insolvency inquiry procedures may not be used as a tactical tool to advance delictual claims or exert settlement pressure. It reinforces a restrictive interpretation of who qualifies as a ‘party to the carrying on of the business’ for purposes of reckless or fraudulent trading liability and underscores judicial control over potentially oppressive insolvency subpoenas.