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[2016] ZAGPPHC 758
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Cullinan Holdings Limited v Lezmin 2768 CC (51762/2016) [2016] ZAGPPHC 758 (26 August 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION. PRETORIA
CASE NO:
51762/2016
DATE:
26 AUGUST 2016
In
the matter between:
CULLINAN
HOLDINGS
LIMITED
................................................................................
APPLICANT
And
LEZMIN
2768
CC
..........................................................................................................
RESPONDENT
(REGISTRATION
NO. 2003/084144/23)
JUDGMENT
RANCHOD J
[1]
The applicant launched this
application on a semi-urgent basis in which it seeks the final
liquidation of the respondent.
[2]
In the founding affidavit
the deponent states the following:
1.
I am employed by Cullinan Holdings Limited, the applicant herein, in
the position of divisional executive, at Third Floor, The
Travel
House, No. 6, Hood Avenue, Rosebank, Johannesburg.
2.
I am duly authorised to
represent the applicant herein and to depose to this affidavit on its
behalf. I refer in this regard to
the resolution of the applicant’s
board of director’s annexed hereto marked “FAT.
3.
The facts herein contained
are within my personal knowledge, save where otherwise stated or the
contrary appears from the context,
and are to the best of my
knowledge and belief both true and correct/
[3]
In annexure “FA1 ”
the following appears:
'EXTRACT
FROM THE MINUTES OF A MEETING OF THE BOARD OF DIRECTORS OF CULLINAN
HOLDINGS LIMITED (“THE COMPANY”) HELD ON
THIS THE 29™
DAY OF JUNE 2016 RESOLVED:
1.
That the Company make
application to the High Court of South Africa, Gauteng Division,
Pretoria, against Lezmin 2768 CC (“Lezmin")
for:
1
.
1
...
1.2...
1.3...
2.
That Seymour Grawitzky in
his capacity as divisional executive of the Company, be and is hereby
authorised to bring this application
on behalf of the Company and to
sign all such documents and affidavits and to do all such things in
connection with the prosecution
of the application as she may deem
fit.
3.
That all steps that have
been taken thus far by Seymour Grawitzky in connection with the
prosecution of the application are hereby
approved, ratified and
confirmed.
THUS
DONE and SIGNED at Rosebank on this the 29
th
day of June
2016.
CERTIFIED
A TRUE EXTRACT (Sgd) DIVISIONAL EXECUTIVE SEYMOUR GRAWITZKY’.
[4]
In its answering affidavit
the respondent, inter alia, denies that the deponent to the Founding
affidavit, Mr or Ms Seymour Grawitzky
is duly authorised to depose to
the affidavit. (It is not clear whether the deponent is a male of
female as paragraph 2 of the
extract from the minutes refers to the
person in both the male and female pronouns). The respondent’s
member, Mr Ockert Theron
Smit says in answer to paragraphs 2 and 3 of
the founding affidavit (quoted above):
‘
AD
PARAGRAPH 2 THEREOF:
The content of this
paragraph is denied. The said resolution is not signed by the
directors of the Applicant; the resolution is
signed by the deponent
himself. 1 therefore respectfully submit that the deponent is not
duly authorised to depose to this affidavit.
AD PARAGRAPH 3
THEREOF:
The content of this
paragraph is denied, I respectfully submit that the deponent is not
truthful with this Honourable Court.’
[5]
The challenge to Grawitzky's
authority to act for the applicant is responded to in the replying
affidavit as follows:
‘
I
am indeed authorised to represent the applicant herein as appears
from annexure FA1\
[6]
During the hearing and in
written heads of argument handed up by respondent’s counsel the
thrust of the submissions related
to the alleged lack of authority of
Grawitzky whilst that of applicant’s counsel did not deal with
this issue. Judgment was
due to be handed down on 29
th
July 2016.
However,
on 28
th
July applicant’s counsel, Mr Rood SC, sent an email to my
registrar in which he sought to draw my attention to the reported
case of ANC Umvoti Council Caucus and Others v Umvoti Municipality
2010 (3) SA31 KZP at paragraph 28.
Mr
Rood SC also stated in the email that respondent’s counsel, Ms
Coetzee had informed him that her instructions were not
to consent to
the bringing of that case to my attention. I was of the view that
bringing to my attention a reported case which
may be relevant to the
adjudication of the application cannot be prejudicial to the
respondent if it is given an opportunity to
make further submissions
on the case law referred to and accordingly allowed it. Respondent's
counsel thereafter filed supplementary
heads of argument.
[7]
Section 66(1)
of the
Companies Act 71 of 2008
provides as follows:
The business and
affairs of a company must be managed by or under the direction of its
board, which has the authority to exercise
all of the powers and
perform any of the functions of the company, except to the extent
that this Act or the company's Memorandum
of Incorporation provides
otherwise.’
[8]
Henochsberg on the
Companies
Act 71 of 2008
, Vol 1 [Issue 5] 253- 257 deals with the topic of
directors and legal proceedings involving companies. The learned
author says:
The
directors’ powers under
s 66
enable them to cause the company
to participate in legal proceedings. For this purpose they must
authorise the institution of the
proceedings and the prosecution
thereof (Ganes v Telecom Namibia Ltd
2004 (3) SA 615
(SCA) at 624).
They must also authorise one of
their number or someone else (eg a manager or the secretary) to
represent the company in such proceedings....
There must be evidence
before the Court that the person purporting to represent the company
has been authorised accordingly with
regard to the particular
proceedings.... While in motion proceedings the best evidence would
be an affidavit by an officer of the
company annexing a copy of the
relevant resolution of the board, such evidence is not “necessary
in every case. Each case
must be considered on its own merits and the
Court must decide whether enough has been placed before it to warrant
the conclusion
that it is [the company] which is litigating and not
some unauthorised person on its behalf (Mall (Cape) (Pty) Ltd v
Merino Kooperasie
Bpk
1957 (2) SA 347(C)
at 351-352]'.
[9]
In Ganes
case
supra,
at 624 F-J the
Supreme Court of Appeal held that it is irrelevant whether the
deponent to an affidavit filed in support of an application
on behalf
of a company is authorised to depose to the affidavit. What is
relevant is that it is ‘the institution of the proceedings
and
the prosecution thereof that must be authorised.’
[10]
In this matter before me
Grawitzky says he (or she) is an employee of the applicant as
‘Divisional Executive’. The ‘certified
extract’
of the minutes of the meeting of the Board of Directors where the
resolution was purportedly taken is signed by
Grawitzky. A copy of
the resolution signed by the directors has not been attached to the
founding affidavit and, also not to the
replying affidavit when the
applicant had the opportunity to do so. What is before the court is
an employee who says he is duly
authorised and who has also signed
the ‘certified extract’ of the minutes. In my view, the
latter is not sufficient
to show that Grawitzky is acting with the
necessary authority of the board of directors.
[11]
Applicant’s counsel
referred me to the ANC Umvoti
case
(supra). There, at paragraph 28 it is stated:
‘
[28]
I am therefore of the view that the position has changed since
Watermeyer J set out the approach in the Merino Ko-Operasie
Beperk
case. The position now is that, absent a specific challenge by way of
Rule 7(1)
, “the mere signature of the notice of motion by an
attorney and the fact that the proceedings purport to be brought in
the
name of the applicant” is sufficient. It is further my view
that the application papers are not the correct context in which
to
determine whether an applicant which is an artificial person has
authorised the initiation of application proceedings.
Rule 7(1)
must
be used. This means that I disagree with Mr Gajoo’s submission
that
Rule 7(1)
provides only one possible procedure and that, if a
respondent elects to challenge the matter of authority on the
application papers,
the applicant is required to prove such authority
on the papers.’ (Footnote omitted).
[12]
It is clear that what is
said there is in the context of Rule 7(1) of the Uniform Rules which
relates to the filing of a power of
attorney to act on behalf of a
party. The respondent has not disputed the power of attorney but the
authority to institute legal
proceedings on behalf of the applicant
company as is required in terms of
s66
of the
Companies Act.
[13
]
The applicant could have
ratified the institution of the action by filing a copy of the
resolution but did not do so. As I said,
there is only a (cryptic)
response in the replying affidavit that Grawitzky’s authority
stems from annexure FA1 to the founding
affidavit, which annexure is
signed by himself
[14]
What has been placed before
this Court by the applicant is in my view insufficient to meet the
challenge raised by the respondent
in the answering affidavit It
follows that the applicant has failed to demonstrate that it has
authorised the present proceedings.
[15]
In all the circumstances the
application falls to be dismissed with costs.
RANCHOD
J
JUDGBOF
THE HIGH COURT
Appearances:
Counsel
on behalf of Applicant: Adv P. Rood (SC)
Instructed
by: Fluxmans Inc
Counsel
on behalf of Respondent: Adv M. Coetzee
Instructed
by: Potgieter, Penzhorn &Taure
Date
heard: 29 July 2016
Date
delivered: 26 August 2016