Abstract
In Big Catch Fishing Tackle Proprietary Limited v Kemp (17281/18) 2019 ZAWCHC 20 (5 March 2019) the Western Cape Division, Cape Town had to determine whether a former director of a company continued to owe fiduciary duties to the company after he had resigned, and if so, whether he could temporarily be interdicted from competing with the company until the main action was heard in court. The court dismissed the company's application for an interim interdict. This article critically analyses the judgment in regard to the post-resignation fiduciary duties of directors. The judgment is noteworthy as it sheds light on the post-resignation fiduciary duties of directors – an area of law which is still developing in South African law. This article contends that the court incorrectly conflated the legal principles relating to the appropriation of corporate opportunities with the misuse of confidential information. It is further argued that courts should not lay down a closed list of instances when directors' fiduciary duties will continue post-resignation, as the court attempted to do in this case. It is suggested that courts should adopt a flexible and pragmatic approach in determining when a director's fiduciary duties will survive after his or her resignation.
Highlights
In Big Catch Fishing Tackle Proprietary Limited v Kemp (17281/18) 2019 ZAWCHC 20 (5 March 2019) the Western Cape Division, Cape Town had to determine whether a former director of a company continued to owe fiduciary duties to the company after he had resigned, and if so, whether he could temporarily be interdicted from competing with the company until the main action was heard in court
The judgment is noteworthy as it sheds light on the post-resignation fiduciary duties of directors – an area of law which is still developing in South African law
The judgment is noteworthy for shedding light on the post-resignation fiduciary duties of directors – an area of law which is still developing in South African law
Summary
In Big Catch Fishing Tackle Proprietary Limited v Kemp (hereafter Big Catch v Kemp) the Western Cape Division, Cape Town had to determine whether a former director of a company continued to owe fiduciary duties to the company after he had resigned, and if so, whether he could temporarily be interdicted from competing with the company until the main action was heard in court. Australian company law, which is historically largely based on company law in the United Kingdom (hereafter the UK), is referred to in this article for guidance on ascertaining the post-resignation fiduciary duties of directors. This approach of considering foreign law is reinforced by section 5(2) of the Companies Act 71 of 2008 (hereafter the Companies Act), which provides that, to the extent appropriate, a court interpreting or applying the Companies Act may consider foreign law.. 497 (WCC) para 26, the court remarked that South African company law has for many decades closely tracked the English system and has taken its lead from the relevant English Companies Acts and jurisprudence, but s 5(2) of the Companies Act 71 of 2008 (the Companies Act) encourages our courts to look further afield and to have regard in appropriate circumstances to other corporate law jurisdictions, be they American, European, Asian or African, in interpreting the Companies Act
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