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APPROPRIATION OF CORPORATE OPPORTUNITIES BY DIRECTORS AND EMPLOYEES Phillips v Fieldstone (Pty) Ltd 2004 3 SA 465 (SCA); 2004 1 All SA 15 (SCA) 1 Introduction As fiduciaries, directors have to account to their companies for "secret profits" - advantages obtained in the course and execution of their office other than those to which the directors are entitled by virtue of holding that office. They also have an obligation not to usurp business opportunities that fall in the company's line of business and that they should be acquiring on its behalf, often described as "corporate opportunities", for their own personal gain. The circumstances in which these two obligations arise often overlap, but there are also clear differences between them. The distinction is important when it comes to issues like ratification (Havenga "Corporate opportunities: a South African update" Parts I and 11 1996 SA Merc LJ 40 and 233). The fundamental distinction between acquiring a corporate opportunity and making a secret profit is that in the latter instance the profit is not necessarily made at the expense of the company, but is obtained in some way as a result of the director's office. When a corporate opportunity is appropriated, it is deemed to be at the expense of the company, but the opportunity was not necessarily acquired by virtue of the director's position as such (eg, in IndustrialDevelopment Consultants Ltd v Cooley 1972 1 WLR 443, 1972 2 All ER 162 (Birmingham Assizes) the opportunity was offered to a director in his private capacity; see also Beck "The quickening of fiduciary obligation: Canadian Aero Services v O'Malley" 1975 Canadian Bar Review 771 782 and Prentice "Regal (Hastings) v Gulliver - the Canadian experience" 1967 MLR 450 453 who suggest that opportunities do not come to directors in any particular capacity). There are other differences. The secret profit rule extends beyond the taking of corporate opportunities to all kinds of fiduciary relationships, including non-commercial ones (in Boardman v Phipps 1967 2 AC 46 (HL) eg, the defendants were not company directors, but a trustee and the solicitor to a trust). It also extends to all kinds of collateral profits, whereas corporate opportunity matters are restricted to the exploitation of business opportunities. The principles underlying these two rules apply to other fiduciaries as well. In Phillips v Fieldstone (Pty) Ltd 2004 3 SA 465 (SCA); 2004 1 All SA 15 (SCA) the fiduciary was an employee. The court found that when he acquired shares in a company for which he was working on behalf of his employer in his own name and not for the company that had employed him he had created a conflict between his own interests and his obligations to the latter company. In the circumstances the employee was found to be in breach of his fiduciary obligations to the company. The decision by the supreme court of appeal is discussed below. 2 2.1 Phillips v Fieldstone (Pty) Ltd

The facts Safika Wireless (Pty) Ltd ("Safika"), a subsidiary of Safika Investment Holdings (Pty) Ltd, was incorporated as a South African company to pursue op-

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portunities in telecommunications. The second respondent in this case, Fieldstone Private Capital Group ("Fieldstone Capital"), operated from New York as a partnership. It conducted an international business, raising investment capital and advising on activities in the infrastructure sector (described at 470F as an area which includes public utilities, port and road construction and telecommunications). It frequently worked with small enterprises which acquired or hoped to acquire large opportunities for which they had neither the expertise nor the ability to raise capital beyond the means of their individual members. Fieldstone Capital often agreed to partial satisfaction of its fees in the form of equity participation in the client or in the investment acquired by the client. The first respondent, Fieldstone Africa (Pty) Ltd ("Fieldstone Africa"), was a South African company set up by Fieldstone Capital to provide a corporate face for its activities in South Africa and to render services on its behalf. The plaintiff ("Phillips") had been recruited by Fieldstone Capital in the United States because of his expertise in the field of telecommunications. Safika sought to raise the capital required to finance the acquisition of all or part of the ordinary shares in MTN Holdings (Pty) Ltd from SBC Communications Corporation. To this end Safika and Fieldstone Capital, represented by Fieldstone Africa, concluded a contract in 1997 in terms of which the latter company would render certain services in respect of the financing of the MTN deal to Safika. If Safika acquired the shares during the term of the agreement, Fieldstone Capital would be entitled to full payment of the agreed compensation, which consisted of a structuring fee of 1,5% of the total nominal face value of the financing and a placement fee of the same percentage. Phillips was seconded to South Africa to carry out this contract, which would run for one year or such extended period as would be negotiated by him. According to evidence led, he was employed on a fixed salary but would receive additional remuneration if the project was successfully executed (472F). During the period that the Fieldstone companies were working on the contract, Phillips mentioned to the managing director of Fieldstone Capital ("Capitman") that there might be an opportunity to acquire 10% of the shares in Safika. Capitman instructed Phillips to pursue the matter and to report to the company on the terms of the offer. Some months later when asked what progress he had made with this deal Phillips informed Capitman that Safika, which was a black empowerment company and wanted only black shareholders, did not want to sell the shares to the Fieldstone companies but would sell them to him personally. An argument arose and Capitman told Phillips that if he acquired the shares in his personal capacity there would be a conflict of interest and he would be appropriating an opportunity of the company. At about this time Phillips also informed Capitman that he had been invited to become a director of Safika. Capitman agreed to this on condition that Safika provided a letter to this effect and that any remuneration received would be handed over to the company. According to normal company policy, fees so received would be refunded to the payee on a dollar-for-dollar basis. The required letter was received and Phillips continued to work on the Safika project as well as other projects in which he was involved on behalf of Fieldstone Capital. Late in 1998 he did so without keeping the company informed of his whereabouts. He made contact in January 1999 and then disappeared until the end of February when he resigned from the employment of Fieldstone Capital. TSAR 2007. 1

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Safika's bid for an interest in MTN was successful and it obtained 10% of that company's shares. But, except for out-of-pocket expenses, Fieldstone Capital was not paid for its work on behalf of Safika because, although Phillips had ostensibly continued to work on the project until at least January 1999, he had not ensured that the contract was extended beyond the initial one-year period agreed upon. It gradually became apparent that Phillips had taken up a 10% share in Safika in 1997 against payment of R732 000 and that he had proposed to Safika to bring a team to work for it. To this end, he had recruited three other employees of Fieldstone Capital to work for Safika. Although his appointment as director of Safika only became official in February 1998, he had attended board meetings by invitation since August 1997. Around October 1999 he fell out with Safika and ceased his association with the group. During April 2000 he sold his shares back to the group for R12 250 000. The respondents instituted action against Phillips, claiming payment of the difference between what he had paid for the shares and the price he received when selling them. They alleged that Phillips had acted as their agent in dealing with Safika, that he owed them duties of loyalty and good faith, and that he had breached those duties in acquiring the shares and failing to account to them. Phillips denied any liability to account for profits, on the basis that he had not acted as agent for the Fieldstone companies in relation to the Safika contract. He contended that the offer of shares in Safika had been made to him in his capacity as a director of Safika and that, although it had been conveyed to both companies and had been accepted by him with their full knowledge, it did not represent a corporate opportunity of either of the companies. 2.2 The decision The court of first instance found in favour of the respondents and ordered Phillips to account to them for the profits made. Leave to appeal was granted by the supreme court of appeal after it had been refused by the trial judge. The findings of the trial court that were relevant to the appeal are summarized at 475F-476D of the judgment of the supreme court of appeal. Briefly, they are that no practical distinction could be drawn between Fieldstone Capital and Fieldstone Africa; that even if the Safika shares had been offered to Phillips personally and would not have been offered to the companies, it had been Phillips's duty to secure the benefit of the investment in those shares for the Fieldstone companies; by accepting the offer to acquire the Safika shares without Fieldstone's knowledge and consent, Phillips had placed himself in a position where his personal interest conflicted with his duties to the respondents; the respondents' case was based not only on a breach of contractual obligations, but on a breach of a fiduciary obligation and a consequent right to a disgorgement of profits secretly earned; whether such a fiduciary duty existed depended on the facts; and that an analysis of the relationship between the parties, the nature of the respondents' business and the role demanded from Phillips in promoting that business established that he indeed stood in such a fiduciary relationship towards Fieldstone Capital and Fieldstone Africa. Finally it was argued that the duty to acquire the Safika shares for the Fieldstone companies fell within the ambit of that fiduciary obligation and Phillips was therefore liable to account to the respondents for the profits made by him. On appeal, counsel for Phillips based their submissions on three main quesTSAR 2007-1

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tions, namely whether the respondents' case was limited to a claim based on breach of contract and not on a breach of fiduciary duty as found by the trial court; whether a fiduciary duty attached to an employee in the position occupied by Phillips; and whether or not the offer of shares to Phillips was an opportunity which properly belonged to Fieldstone Capital or Fieldstone Africa and which they were able to and would have taken up. The parties agreed that the trial court had been correct in finding that no practical distinction could be drawn between the American and South African companies. Although Phillips had been employed by Fieldstone Capital, he knew that deals were concluded through Fieldstone Africa. The duties and obligations he owed to the American entity were, at least impliedly, also owed to the South African company (4751). In the appeal, the two respondents were therefore treated as one entity ("Fieldstone'; 4841). The supreme court of appeal found that the issues had been correctly decided in the lower court and dismissed the appeal with costs. 2.2.1 The nature of the claim

The particulars of claim did not contain any specific reference to a fiduciary obligation but the court found that this did not mean that the existence of such an obligation could not be implied from the contract of employment that Phillips had concluded with Fieldstone. Heher JA referred to Hodgkinson v Simms (1994 3 SCR 377 (SCC)), where the supreme court of Canada confirmed that the existence of a contract does not necessarily preclude the existence of fiduciary duties between the parties. Rather, the legal incidents of many contractual agreements are such as to give rise to a fiduciary duty (Hodgkinson 379). The relationships between trustee and beneficiary, agent and principal, solicitor and client, employee and employer, director and company and partners are often used as examples (see, eg, HospitalProducts Ltd v United States Surgical Corp 1984-1985 156 CLR 41 (High Ct of Australia)), but fiduciary duties can arise in many other relationships. The Hodgkinson case concerned a financial adviser. In Phillips v Fieldstone Heher JA confirmed (477H):
"There is no magic in the term 'fiduciary duty'. The existence of such a duty and its nature and extent are questions of fact to be adduced from a thorough consideration of the substance of the relationship and any relevant circumstances which affect the operation of that relationship."

The court took into consideration that the nature and extent of the relationship between the parties had been argued at length in the trial court and that the appeal on the merits had not been directed at a failure to prove the existence of a fiduciary duty, but only to what constitutes such a duty in relation to an employee in Phillips's position (478D). The true nature of the claim was therefore held to be the breach of the fiduciary position he held as an employee of Fieldstone. 2.2.2 Fiduciary duties of employees Fiduciary relationships typically arise in situations where there is some scope for a person to exercise a discretion or power unilaterally so as to affect the beneficiary's legal or personal interests. Often there is a certain vulnerability involved on the part of the beneficiary (Frame v Smith 1987 2 SCR 99 (SCC) 136), although this is not a strict requirement (The Hodgkinson case 405). Some
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relationships, like those between an agent and his principal, or between a director and his company, are always fiduciary in nature. Others, like joint ventures, often involve fiduciary obligations, but this is not an inevitable consequence of the relationship (News Limited v Australian Rugby FootballLeague Limited 1996 64 FCR 410 (NSW Distr Reg)). In these instances, the facts and circumstances of each case must be carefully scrutinized to determine whether or not a fiduciary relationship existed, and, if so, what duties it imposed on the fiduciary, and what the scope and ambit of those duties were. When the scope of those duties has been defined it can be ascertained whether the fiduciary has breached them. It is only at that stage that any question of accountability arises (Boardman v Phipps 1967 2 AC 46 (HL) 127). Contractual obligations are often also part of the relationship between parties and they operate in addition to whatever fiduciary duties there may be. A fiduciary relationship exists between an employer and an employee from the moment that an employment relationship is established between them (Jones v East Rand Extension Gold Mining Co Ltd 1903 TH 325; Premier Medical & Industrial Equipment (Pty) Ltd v Winkler 1971 3 SA 866 (W) 867; Sappi Novoboard (Pty) Ltd v Bolleurs 1989 19 ILJ 784 786). The employee's duty of good faith requires him to give priority at all times to the interests of his employer or otherwise to promote them. This implies that the employee should act exclusively in the interests of the employer when rendering his services. His own interests should never be in conflict with the interests of his employer, for example by carrying on a business in competition with the employer ("Labour law" by Van Jaarsveld, Fourie and Olivier in Joubert XIII. 1 LA WSA par 99). In Sappi Novoboard (787) the labour appeal court regarded the remarks made in Regal (Hastings) Ltd v Gulliver (1942 1 All ER 378 (HL) 386) in relation to the fiduciary duty owed by a director to his company as apposite to the duty an employee owes his employer:
"The rule of equity which insists on those, who by use of a fiduciary position make a profit, being liable to account for that profit, in no way depends on fraud, or absence of bona fides, or upon such questions or considerations as whether the profit would or should otherwise have gone to the plaintiff, or whether the profiteer was under a duty to obtain the source of the profit for the plaintiff, or whether he took a risk or acted as he did for the benefit of the plaintiff, or whether the plaintiff has in fact been damaged or benefited by his action. The liability arises from the mere fact of a profit having, in the stated circumstances, been made. The profiteer, however honest and well-intentioned, cannot escape the risk of being called upon."

Enticement of other employees is a breach of the fiduciary obligation and may also amount to unlawful competition (Atlas Organic Fertilizers (Pty) Ltd v Pikkewyn Ghwano (Pty) Ltd 1981 2 SA 173 (T)). And the employee should not disclose confidential information or trade secrets to outsiders. What would constitute confidential information depends on the circumstances of each case. In this regard, the potential or actual usefulness of the information to a rival would be an important consideration (Coolair Ventilator Co (SA) Ltd v Liebenbergl967 1 SA 686 (W) 691B). In Phillips v Fieldstone the appellant was the main party, referred to in the judgment as the "lead principal" in the Safika assignment. He was not a director of Fieldstone, nor could he conclude contracts on their behalf. However, he acted with a considerable measure of independence, reporting to Fieldstone at his discretion. He was closely integrated with the client and its TSAR 2007-1

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business, and the expertise which he possessed in telecommunications was not shared by other employees or executives of Fieldstone. To that extent he was beyond their direction (482G). Against this background, the supreme court of appeal had no difficulty in finding that Phillips was
"at all times, covering the initial approach to him by Safika, his own proposal of September 1977 and the acquisition of the shares, in a position of trust in relation to the business of the respondents which required him to place their interests above his own whenever a real possibility of conflict arose" (482J-483A).

Some decisions indicate that less may be required of an employee than of other fiduciaries like company directors and agents. In CanadianAero Service Ltd v O'Malley (1974 40 DLR 3d 371 381), for example, the court indicated that members of the "top management" of a company may have a more stringent duty towards it than "mere employees whose duty to their employer, unless enlarged by contract, consisted only of respect for trade secrets and for confidentiality of customer lists". The court warned against the "imprecise ethical standard" that is used in American law to prohibit directors and officers from appropriating to themselves business opportunities which in fairness should belong to the corporation. In SA Historical Mint (Pty) Ltd v Sutcliffe (1983 2 SA 84 (C)) the court expressed its doubt whether South African law would accept an "imprecise ethical standard" measured by a norm as variable as the chancellor's foot. Upon analysis of the cases the court concluded that what is protected in both types of cases is the same sort of interest, but with acceptance of the fact that a member of top management may more easily have been aware of or even a party to the creation of facts aimed at benefiting the company and that were not intended for general consumption (90H). The court confirmed that there is no general duty burdening an employee, at whatever level, not to compete with the company that formerly employed him (a restraint of trade agreement may, of course, have been separately concluded). But in the process of competing he may not "steal" the company's trade secrets or confidential internal business information, or the energy expended in efforts, whether of research or negotiation, made to benefit the company (91A). I mentioned above that once it has been ascertained that a fiduciary obligation exists, the scope of that obligation must then be determined. The existence of a fiduciary relationship does not determine the content of the duties owed by one fiduciary to another (The News Limited case 539). It is possible that there may be circumstances that would warrant a less stringent duty being demanded of some employees than of employees more directly involved in the company's decision-making, or of other fiduciaries like company directors. It is recognized in company law that once a person accepts an appointment as a director, he becomes a fiduciary in relation to the company and is obliged to display the utmost good faith towards the company.and in his dealings on its behalf. The application of this general rule to any particular incumbent of the office of director must necessarily depend on the facts and circumstances of each case. One of the circumstances may be whether he is an executive or a non-executive director (Howardv Herrigel 1991 2 SA 660 (A) 678A-E). Similarly, the circumstances will determine the scope of an employee's fiduciary obligation in each case. But there can be little doubt that the important role played by the appellant in Phillips v Fieldstonejustified the court's finding that the promotion of the respondents' interests and the disclosure to them of such information as TSAR 2007.1

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came to his knowledge which might reasonably be thought to have a bearing on their business were inherent to their relationship (483B). In both failing to inform the respondents of the offer to him or its terms, and in taking the opportunity for himself without their consent, he succumbed to a potential conflict of interest between his duty and his self-interest, thereby breaching his fiduciary duty to them. 2.2.3 An opportunity which belonged to the company and its inability or refusal to take it up The third part of the appellant's appeal in Phillips v Fieldstone concerned whether the share offer to him was an opportunity which "properly belonged to the respondents" and which they "were able to and would have taken up" (476H). A director has a duty to acquire an opportunity for his company in various circumstances (Havenga "Corporate opportunities" 53). He could have a specific mandate to acquire the particular opportunity, or a general mandate to investigate or acquire specific types of opportunities. He may also not usurp an opportunity which the company is actively pursuing or an opportunity which the company would probably be interested in acquiring (Magnus Diamond Mining Syndicate v MacDonald and Hawthorne 1909 ORC 65 66). In this regard it is often said that the opportunity "belongs" to the company. The court's suggestions (the Phillips case 482E and 483D) that
"[tihe fundamental question is not whether the appellant appropriated an opportunity belonging to the respondents, but whether he stood in a fiduciary relationship to them when the
opportunity became available to him; if he did, it 'belonged to the respondents"' and that

"[i]t is irrelevant, on the authorities which I have cited, that the opportunity 'properly belonged to the company' unless this means no more than that it was an opportunity which arose in the context of the appellant's fiduciary duty to the respondents and of which he was required to inform them"

should be read in this context. They merely emphasize that the position in which the employee stood in relation to the company is the crucial factor in determining whether or not he was able to take that opportunity for himself (South African law does not recognize the "constructive trustee" and an opportunity does not "belong" to a company in any stricter sense; Havenga "Fiduciary duties of company directors with specific regard to corporate opportunities" 1998 Tran CBL 389). Heher JA referred to various authorities that suggest that it is of no relevance that the person or entity to whom the fiduciary duty is owed could not have made use of the information or opportunity, or probably would not have done so (479H-I). But on the facts he also considered it likely that some agreement could have been reached between Phillips, Fieldstone Capital and Safika which would have allowed the company to take up the opportunity (483E-G). His comments in this regard should therefore be regarded as obiter. Nonetheless, they raise the interesting question whether fiduciaries in the position of Phillips are precluded from taking all corporate opportunities, or whether a more limited restriction applies. Various reasons may be at the root of a company's inability to pursue an opportunity. They include restrictions in the company's constitution or separate contracts, other legal constraints, inability to finance the venture, absence

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of adequate physical facilities to make use of the opportunity, and unwillingness of the party offering the opportunity to deal with the company. In order to constitute a corporate opportunity, the opportunity should not only be in the line of business of the company, but the company should also be seen to have justifiably been relying on the fiduciary to acquire it or to assist in its acquisition for the company. This cannot be so in the case of a transaction which is ultra vires the company. A fiduciary should therefore be able to take that opportunity, provided that his obligation to act in the best interests of the company is not violated (Havenga "Corporate opportunities" 236). Where the company's inability to take up the opportunity hinges on financial factors, various views have been expressed. American law seems to have moved from the strict approach taken in Irving Trust Co v Deutch 73 F 2d 121 (2nd Cir 1934) that financial inability is never a defence for taking a corporate opportunity towards acceptance that the financial inability of a corporation to take up a corporate opportunity absolves directors from liability for making personal use of the opportunity, subject to certain restrictions which are quite broad in their scope. The financial inability should amount to insolvency, and the director's own lack of diligence should not have led to the corporation's fiscal position (Havenga "Corporate opportunities" 238-239; American Law Institute: Principles of Corporate Governance 5.12(b); Gevurtz Corporation Law (2000) 377-381). Most Commonwealth decisions refuse corporate inability, or rejection of the particular opportunity by the company as a defence (Furs Ltd v Tomkies (1936) 54 CLR 583 (High Ct Australia) 592; Green and Clara Pty Ltd v Bestobell Industries Pty Ltd 1982 WAR 1; (1982) 1 ACLA 1 (Sup Ct Western Australia); Warman International Limited v Dwyer (19941995) CLR 544 (High Ct Australia) 558; Natural Extracts Pty Ltd v Stotter (1997) 24 ACSR 110 (Fed Ct Australia) 138). The matter has not yet been decided in South Africa, but I believe that the principles at the root of fiduciary obligations suggest the answer, at least with regard to directors. Directors should not be subjected to a temptation to refrain from exerting their strongest efforts on behalf of the company, and they are usually handsomely compensated. So a strict approach should be taken and, if a conflict of interest is found to exist, rejection of the opportunity or the company's financial inability to pursue it should not allow the director to do so. If there is no potential conflict of interest, for example if it is illegal for the company to take up the opportunity, the director may do so because there is no breach of fiduciary obligation. But in other instances the director should obtain the approval of the company, after adequate disclosure, before taking up the opportunity. Where the fiduciary is an employee the same approach should, generally, be followed. Employees stand in a fiduciary position to the company and the scope of that duty depends on the circumstances and position of the particular employee. If they are such that the employee should not appropriate corporate opportunities for personal gain, I would suggest that the same principles that are applicable to directors would apply. Therefore the employee should disclose the opportunity to his employer, and obtain the employer's approval to pursue it for personal gain. 2.3 The relief Where a director has acquired a corporate opportunity, the law refuses to give effect to the director's intention and treats the acquisition as having been made
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on behalf of the company (African Claim and Land Co Ltd v WJ Langermann 1905 TS 494 505; Robinson v Randfontein Estates Gold Mining Co Ltd 1921 AD 168 179-190 and 200). Accordingly, the company may claim property thus acquired from the director (Magnus Diamond Mining Syndicate v MacDonald and Hawthorne 1909 ORC 65; Robinson v Randfontein Estates 241; Cook v GC Deeks 1916 1 AC 554 (PC)). In addition, or where such a claim is no longer possible, for example because it has already been sold on, the company may claim any profit made by the director as a result of his breach of duty, or damages in respect of any loss caused to the company (Robinson; Industrial Development Consultants 172; O'Malley 392). In appropriate circumstances an interdict may be obtained to prohibit an impending action. The director may be dismissed and will have no action for damages on the grounds of a breach of contract, if such contract exists (Havenga "Corporate opportunities" 42 and authorities cited). In Phillips v Fieldstone the amount claimed was said to be the value of the benefit which the respondents would have derived from the lost opportunity rather than a simple disgorgement of profits made by him. Although the method of calculation, namely the value of the shares taken up less the price paid for them, was in essence the measure of the appellant's profits, the court indicated (478A) that a disgorgement of profits would have been a more appropriate measure. In the circumstances, this is probably correct. But it should be borne in mind that where a fiduciary relationship exists, it is immaterial that the fiduciary himself may not stand to profit from the transaction he brings about between the parties. The prohibition is not against the making of a profit (although many cases of breach of fiduciary duty involve the wrongful acquisition of a profit, rather than the infliction of a loss) but of the avoidance of conflict of duties (Commonwealth Bank of Australia v Smith 1991 42 FCR 390 392; 102 ALR 453 477 (Fed Ct Australia); Humphris v Jenshol 160 ALR107 (Fed Ct Australia) 119). In Gemstone Corporation of Australia Ltd v Grasso 1994 13 ACSR 695 (Sup Ct South Australia) the court confirmed that there are real differences between liability for damages in tort and the award of compensation for breach of fiduciary duty in equity. In equity it is irrelevant speculation to enquire into what might have been the outcome had the breach of the fiduciary duty not occurred. Had the employee in Phillips not already resigned, the company would also have been able to dismiss him. 3 Conclusion Corporate opportunity cases often involve a fiduciary who is both a director and an employee of the company. Phillips v Fieldstone considers the appropriation of a corporate opportunity by an employee who is not a director. The decision by the court of appeal shows that the courts are willing to hold fiduciaries accountable if they do not adhere to the strict standards inherent to the special relationship their offices impose and sends out a warning to all persons who occupy a position of trust. The scope of the duties owed by a fidtciary depends on his position and circumstances. It is likely that less will be expected of an employee holding a non-managerial or inconsequential position, than of one who is obviously relied on by the employer to obtain certain benefits for it. TSAR 2007.1

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It is sometimes difficult to distinguish if a "secret profit" was made or if a corporate opportunity was taken, and in this case the court made no attempt to do so. It was probably not necessary here, but in some circumstances the distinction is important (eg when ratification is an issue) and it should therefore be kept in mind. MICHELE HAVENGA Unisa

TWEEVOUDIGE LEEMTE: BEVRYDENDE VERJARING EN DIE INTERNASIONALE PRIVAATREG Coutts & Co v Ford 1997 1 ZLR 440 (H) Society of Lloyd's v Price; Society of Lloyd's v Lee 2005 3 SA 549 (T) Society of Lloyd's v Romahn 2006 4 SA 23 (K) Society of Lloyd's v Price; Society of Lloyd's v Lee 2006 5 SA 393 (HHA) 1 In die Coutts-, Price- (T) en Romahn-uitsprake kom verskeie aspekte van bevrydende verjaring in die internasionale privaatreg ter sprake. (Sien par 1617 hieronder oor die Price-saak (HHA).) Die onderhawige bespreking fokus slegs op die oplossing deur die onderskeie regters van die probleem van tweevoudige leemte in hierdie konteks. (Sien vir 'n bespreking van die Price-saak (T) (hierna: "die Price-saak"):Forsyth 'Mind the gap': a practical example of the characterisation of prescription/limitation rules" 2006 Journal of Private InternationalLaw 113.) 2 In al drie die uitsprake was die lex causae van die tersake kontrakte die Engelse reg. (Sien oor die bepaling van die lex causae of "proper law" van 'n kontrak in die Suid-Afrikaanse internasionale privaatreg: Fredericks en Neels "The proper law of a documentary letter of credit" (deel 1) 2003 SA Merc LJ 63.) In die Zimbabwiese uitspraak ('n beslissing van die hooggeregshof van Harare) is die eisoorsaak gebaseer op die kontrak self; in die Suid-Afrikaanse uitsprake op 'n beslissing van 'n bevoegde Britse hof wat weer op die onderskeie kontrakte gebaseer was. In al die gevalle was die tersake Engelse verjaringstermyn ses jaar (a 5 en a 24(1) van die Limitation Act van 1980) en die Suid-Afrikaanse (a 11(d) van die Verjaringswet 68 van 1969) of Zimbabwiese termyn (a 14 van die Prescription Act (Chapter 8:11)) drie jaar. (Sou die buitelandse vonnis onder a 1I(a)(ii) van die Suid-Afrikaanse Verjaringswet val, is die toepaslike termyn dertig jaar - sien par 3.) Die eise is ingestel meer as drie jaar maar minder as ses jaar nadat verjaring begin loop het. Die howe het dus voor die taak gestaan om te beslis of die Engelse of die Suid-Afrikaanse, al dan Zimbabwiese, regstelsel verjaring sou beheers. 3 In hierdie bespreking word nie ingegaan op die vraag of die vonnis van 'n buitelandse hof onder die bepalings van artikel 1l(a)(ii) van die Verjaringswet (dit verwys na 'n vonnisskuld" / "any judgment debt") val nie. Die regters in TSAR 2007.1

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