Aspects of the application of issue Estoppel on directors' fiduciary duties in South Africa: possible lessons from the United Kingdom and related jurisdictions Royal Sechaba case

• Author: Howard Chitimira
• Position: Corporate and Financial Markets Law, Faculty of Law, North West University South Africa
• Pages: 136-152

Aspects of the application of issue Estoppel on directors’ fiduciary

duties in South Africa: possible lessons from the United Kingdom

and related jurisdictions Royal Sechaba case

1

Associate professor Howard CHITIMIRA

2

Abstract

The doctrine of estoppel pr ecludes a person (asserter) from asserting something

different or contrary to what is implied by a previous action, conduct or statement of that

person or by a previous pertinent judicial determin ation. While there are various types of

estoppel, this artic le is primarily focused on the application of issue estoppel in relation to

certain aspects of the directors’ fiduciary duties in South Africa (s 76 of the Companies Act

71 of 2008 (Companies Act 2008)), in light of the judgment in Ro yal Sechaba v Coote

(366/2013) [2014] ZASCA 85 (30 May 2014) (Royal Sechaba case). Issue estoppel could be

defined to include instances where a person is precluded from re-litigating or raising a

particular issue in a cause of action that was previously decided by a final judgm ent of a

competent court between the same parties in future cases that have a different cause of

action involving such parties. Issue estoppel is closely related to res judicata. For instance,

both issue estoppel and res judicata are gen erally aimed at preventing the re-litigation of

the same issues and same cause of actions that were previously decided by a final judgment

in the relevant courts between same parties. Nonetheless, it is widely ackno wledged that the

application these two concepts is quite dif ferent in practice. For instance, some

jurisdictions such as the United Kingdom (UK) and South Africa employs English law and

Roman-Dutch law (common law) principles respectively, to distingu ish between issue

estoppel and res judicata. Likewise, similar common law principles a re employed in the

United States of America (USA), Canada and Australia to distinguish res judicata and issue

estoppel in various ways. For example, issue estoppel is sometimes referred to as collateral

estoppel, issue preclusion, claim preclusion or cause of action estoppel in USA, Canada

and Australia. Despite this, it should be noted that a detailed discussion of the different

requirements, merits and demerits of issue estoppel and res judicata in various

jurisdictions is beyond the scope of this article. Put differently, this article provides a brief

discussion of the application of issue estoppel to commercial agreements (certain aspects o f

the directors’ fiduciary duties) in South Africa in accordance with the Royal Sechaba case.

This is done to investigate whether the requirements of issue estoppel were correctly

applied and enforced in Royal Sechaba case.

Keywords: issue Estoppel, res judicata, fiduciary duties, application, S outh Africa.

JEL Classification: K22, K41

1

This research article was supported in part by the National Research Foundation of South Africa

(NRF), Grant Number: 106056. In this regard, the author wishes to acknowledge and thank the

NRF for its valuable support.

2

Howard Chitimira - Corporate and Financial Markets Law, Faculty of Law, North-West University,

South Africa, howard.chitimira@nwu.ac.za.

Juridical Tribune Volume 7, Special Issue, October 2017 137

1. Introduction

The doctrine of estoppel precludes a person (asserter) from asserting

something different or contrary to what is implied by a previous action, conduct or

statement of that person or by a previous pertinent judicial determination. While

there are various types of estoppel, this article is primarily focused on the

application of issue estoppel in relation to certain aspects of the directors’ fiduciary

duties in South Africa,

3

in light of the judgement in Royal Sechaba v Coote

(366/2013) [2014] ZASCA 85 (30 May 2014) (Royal Sechaba case). Issue estoppel

could be defined to include instances where a person is precluded from re-litigating

or raising a particular issue in a cause of action that was previously decided by a

final judgement of a competent court between the same parties in future cases that

have a different cause of action involving such parties.

4

Issue estoppel is closely

related to res judicata. For instance, both issue estoppel and res judicata are

generally aimed at preventing the re-litigation of the same issues and same cause of

actions that were previously decided by a final judgement in the relevant courts

between same parties. Nonetheless, it is widely acknowledged that the application

these two concepts is quite different in practice.

5

For instance, some jurisdictions

such as the United Kingdom (UK) and South Africa employs English law and

Roman-Dutch law (common law) principles respectively, to distinguish between

issue estoppel and res judicata.

6

Put differently, the UK and other European Union

(EU) countries such as the Republic of Ireland, Cyprus and Northern Ireland

distinguishes between issue estoppel and res judicata through their relevant

English common law principles. Likewise, similar common law principles are

employed in the United States of America (USA), Canada and Australia to

distinguish res judicata and issue estoppel in various ways. For example, issue

estoppel is sometimes referred to as collateral estoppel, issue preclusion, claim

preclusion or cause of action estoppel in USA, Canada and Australia.

7

Despite this,

3

Section 76 of the Companies Act 71 of 2008 (Companies Act 2008).

4

Y. Sinai, ‘Reconsidering Res judicata: A Comparative Perspective’, 23 Duke Journal of Comparative and

International Law (2011), p. 353 358; B. Wunsh, ‘Is Issue Estoppel Part of our Law?’, 2 Stell LR (1990),

pp. 198 198-218 and C. Roodt, ‘Reflections on Finality in Arbitration’, 45 De Jure (2012),

p. 485 502-503.

5

M. Elvy, L. Hui and T. Gaffney, ‘A One-stop Shop? Issue Estoppel and the Limits to Forum

Shopping in Enforcement of Arbitral Awards’, volume unknown Ashurst Arbitration Update

(2014), p. 1 1-2; Diag Human Se v The Czech Republic [2014] EWHC 1639; S.S. Ruby, ‘Res

Judicata, Issue Estoppel and Abuse of Process by Relitigation’ volume unknown Davies

Publications (2012), p.1 2-36 and Royal Sechaba case pars 10-15.

6

Royal Sechaba case pars 11-13; R. Nazzini, ‘Remedies at the Seat and Enforcement of International

Arbitral Awards: Res Judicata, Issue Estoppel and Abuse of Process in English Law’, 7 Contemp.

Asia Arb. Journal (2014), p. 139 149-158.

7

M. Elvy, L. Hui and T. Gaffney, volume unknown Ashurst Arbitration Update (2014), p. 1-2; Y.

Sinai, 23 Duke Journal of Comparative and International Law (2011), p. 357-360; B. Wunsh, 2

Stell LR (1990), p.198 -203; M.T. Maniago and C. R. Chiasson, ‘Court Reaffirms Application of

Res judicata and Issue Estopp el to Commercial Arbitrations’, unknown volume Arbitration &

ADR, (2016) p. 1 1-2.