De Villiers NO and Another v BOE Bank Limited

BOE Bank Limited advanced R100 million to Intramed (Pty) Ltd under three written loan agreements concluded on 17 June 1999. Intramed was a wholly owned subsidiary within the Macmed group, created to acquire a pharmaceutical business. The loans were secured by a mortgage bond, notarial bond, cession of book debts and suretyship by Macmed. The agreements were signed on Intramed’s behalf by Alan Hiscock, the de facto financial head of the Macmed group, although he was not a director of Intramed and no formal Intramed board resolution authorising the loans was passed. The loan proceeds were paid into a Macmed rights offer account. Intramed paid instalments for three months, thereafter ceased payments, and was wound up. BOE sued the liquidators for repayment. The liquidators resisted liability, contending that the loans were unauthorised, that Intramed never received the money, and that the agreements lapsed due to non-fulfilment of suspensive conditions.

The appeal was dismissed. The order of the High Court was confirmed, holding the liquidators liable to pay the amounts claimed, declaring BOE Bank’s claims to be secured, and awarding costs against the appellants.

The case is significant for clarifying the application of the doctrine of unanimous assent in South African company law, confirming that a company may be bound without formal resolutions where all directors knowingly acquiesce. It also affirms that payment of loan proceeds to a nominated third-party account does not negate receipt by the borrower, and provides guidance on the enforcement and waiver of suspensive conditions in commercial loan agreements.