Minnaar v Van Rooyen NO

The liquidators of Askari Mining and Equipment Ltd instituted action against five former directors, including Casper Hendrik Minnaar, seeking an order under s 424(1) of the Companies Act 61 of 1973 declaring them personally liable for the company’s debts on the basis of reckless or fraudulent conduct. Although Minnaar had initially defended the action, he failed to attend the trial on 22 February 2012 and no legal representative appeared for him. The liquidators applied for default judgment, which was granted, declaring Minnaar personally liable for all the debts of the company, without any evidence being led. Minnaar later became aware of the order when a warrant of execution was served and applied for rescission under rule 42(1)(a) of the Uniform Rules of Court and the common law. The High Court refused rescission, holding that the judgment had not been erroneously granted and that Minnaar was in wilful default. Minnaar appealed to the Supreme Court of Appeal.

The appeal was upheld with costs. The order of the High Court was set aside and replaced with an order rescinding the default judgment granted on 23 February 2012. The costs of the rescission application were ordered to be costs in the cause.

The case clarifies that default judgment cannot competently be granted under s 424(1) of the Companies Act 61 of 1973 without evidence being led. It affirms the punitive nature of reckless trading liability and underscores that such liability must be proved, even in the absence of the defendant. The judgment is significant for civil procedure and company law, particularly in delineating the scope of rule 42(1)(a) and reinforcing the evidentiary burden in reckless trading claims.