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[2015] ZANCHC 15
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Ascendant Cashflow Solutions (Pty) Ltd v Heydenreich N.O. and Another (CA&R70/2012) [2015] ZANCHC 15 (3 July 2015)
IN
THE HIGH COURT OF SOUTH AFRICA
(Northern
Cape Division, Kimberley)
Saakno
/ Case number:
CA
& R 70/2012
Datum
verhoor/Date heard:
15
/ 06 / 2015
Datum
gelewer/Date delivered
03
/ 07 / 2015
In
the matter between:
ASCENDANT
CASHFLOW SOLUTIONS (PTY) LTD
Appellant
and
STEFANUS
PHILLIPUS LOU HEYDENREICH N.O.
First
Respondent
MARIËTTE
SOPHIA HEYDENREICH N.O.
Second
Respondent
Coram:
Pakati
,
J
et
Erasmus,
AJ
JUDGMENT
ERASMUS,
AJ
[1]
The appellant is the plaintiff in an action instituted in the
Magistrate’s Court, Douglas, under Case Number 301/2011.
The first and second respondents are the first and second defendants
in the magistrate’s court matter. I shall refer
to the
parties as the plaintiff and defendants. Both defendants were
cited in both their capacities as trustees of the Heydenreich
Family
Trust (hereinafter referred to as ‘the Trust’) and in
their personal capacities.
[2]
The plaintiff’s claim in the Magistrate Court is based on the
fact that a close corporation, previously known as “Wise-Up
Deals 156 CC”, owes the plaintiff certain monies. It is
alleged that the name of “Wise-Up Deals 156 CC”
was
changed to SPL Construction CC (hereinafter referred to as “the
close corporation”).
[3]
It is alleged in the Particulars of Claim that the Trust is the sole
member of the close corporation and that the first and
second
defendants, as trustees of the Trust, are liable, jointly and
severally, for the liabilities of the close corporation as
at the
time of its deregistration. The liability of the defendants is based
on the provisions of S26(5) of the Close Corporations
Act
[1]
(‘the Act’) in that the persons who are members of such
corporation shall be jointly and severally liable for the liabilities
of the Close Corporation at the time of its deregistration if that
close corporation is deregistered while having outstanding
liabilities.
[4]
The defendants, in terms of rule 19(1) of the Magistrates’
Court Rules, excepted to the Plaintiff’s Particulars
of Claim
on the basis,
inter
alia
,
that it lacks averments which are necessary to sustain an action
against the first and second defendants, both in their official
capacities as trustees and in their personal capacities.
[5] After having heard
argument in respect of the exception, the Magistrate upheld the
exception and made the following order:
“
Die
aansoek om eksepsie van die twee verweerders word gehandhaaf
insoverre hulle eksepsie aanteken dat die eis teen hulle persoonlik
ingestel word. Die eiser word verder gelas om sy stukke te wysig tot
die mate dat dit ‘n nexus of ‘n skuldoorsaak openbaar
ten
aansien van die twee verweerders, nomino officio in hul amptelike
hoedanighede.
Die
eksepsie word dus gehandhaaf met koste betaalbaar deur die eiser.
”
[6]
The Magistrate upheld the exception and provided reasons for doing
so. He found that s26(5) of the Act had been amended
to the
effect that the automatic liability of the members of a close
corporation has now fallen away. He also found that
if the
plaintiff intends instituting action against the members of the
deregistered close corporation, he should do so in terms
of other
sections of the Act. As a result of this interpretation, he
ruled that the Particulars of Claim did not contain
any allegations
establishing any
nexus
between the plaintiff and the defendants in their personal
capacities. He further found that the
nexus
between the plaintiff and the Trust also appears to be unclear in the
light of the amendments made to s26(5).
[7] The grounds for
appeal are that the learned Magistrate erred in upholding the
defendants’ exception and that he erred
in finding that the
Particulars of Claim lacked the necessary averments to sustain a
cause of action against the defendants. In
amplification, the
appellant specifically stated that the Magistrate erred in
7.1
finding that the trustees cannot become personally liable for the
debts of the Trust under circumstances where the trustees
are the
members of a close corporation and the close corporation was
deregistered,
7.2 finding that s26(5)
of the Close Corporations Act no longer finds application as it was
amended in 1986 by the Close Corporations
Amendment Act, No. 38 of
1986, without having due regard to the fact that the Close
Corporations Amendment Act, No. 38 of 1986
merely substituted s26(5)
with s6(1) of the said Act, and
7.3
not having due regard to the prevailing authority such as in the
matter of
MOUTON
v BOLAND BANK LIMITED
[2]
,
where the Supreme Court of Appeal held that s26(5) of the Close
Corporations Act, as amended, provided that if a corporation is
deregistered while having outstanding liabilities, the members are
liable therefor and that such liability is not extinguished
upon
re-registration of the corporation.
[8]
The defendants did not oppose the appeal.
[9]
The first issue to be considered is whether the decision of the
Magistrate is appealable in this instance. In terms of
s83 of
the Magistrate’s Court Act
[3]
,
a party to any civil suit or proceeding may appeal against:
9.1
any judgment of the nature described in s48 of the same Act,
9.2
any rule or order made in such suit or proceeding, having the effect
of final judgment, including any order under chapter 9
and any order
as to costs, and further; and
9.3
any decision overruling an exception, when the parties concerned
consented to such an appeal before proceeding further
in an action.
[10]
The order of the Magistrate in this instance does not fall within the
ambit of s48 of the Magistrate’s Court Act. The
question
that needs to be determined is whether it is a rule or order made in
a suit or proceeding, having the effect of final
judgment, as
envisaged in s83(b). The test in this regard is whether it is
such so as to ‘
dispose
of any issue or any portion of the issue in the main action or suit
’
or ‘
irreparably
anticipates or precludes some of the relief which would or might be
given at the hearing
’
[4]
.
It is not only the form of the order that is relevant, but more so
the effect of the order. If its effect is such
that it makes it
final to the extent that it is definitive of any issue or portion
thereof in the main action, it is appealable.
[5]
[11]
Ms Stanton, on behalf of the plaintiff, argued that at least the
first portion of the learned Magistrate’s order is final
and
thus appealable, because it is definitive of the relief sought
against the defendants in their personal capacity. I agree
as
the order upholding the exception in respect of the claim against the
defendants in their personal capacity precludes some of
the relief
which could or might be given at the hearing. The opportunity
to amend the Particulars of Claim appears to have
been granted in
respect of the claim against the trustees in their official
capacities only. The decision allowing the exception
on the
ground that no cause of action is disclosed against the defendants in
their personal capacity is fatal to the claim as pleaded
and
therefore final in its effect.
[6]
[12]
As the issue of the liability of the defendants in their capacities
as trustees of the trust and in their personal capacities
is closely
interwoven, I deem it necessary to deal with both aspects.
[13]
When deciding whether the Particulars of Claim lack averments which
are necessary to sustain an action, it should be kept in
mind that it
is required that
every
pleading must contain a clear and concise statement of the material
facts upon which the pleader relies for his claim.
In
McKenzie v Farmers' Co-operative Meat Industries Ltd
[7]
the following definition of 'cause of action' was adopted by the
Appellate Division:
`…
every fact which it would be necessary for the plaintiff to prove, if
traversed, in order to support his right to judgment
of the court. It
does not comprise every piece of evidence which is necessary to prove
each fact, but every fact which is necessary
to be proved.'
[14]
The
facta
probanda
(the facts which must be proved in order to disclose a cause of
action) must be distinguished from the
facta
probantia
(the facts which prove them).
[8]
As stated in
MAKGAE
v SENTRABOER (KOÖPERATIEF) BPK
[9]
,
a plaintiff
'moet
toesien dat die wesenlike feite (dit wil sê die facta probanda
en nie die facta probantia of getuienis ter bewys van
die facta
probanda nie) van sy eis met voldoende duidelikheid en volledigheid
uiteengesit word dat, indien die bestaan van sodanige
feite aanvaar
word, dit sy regskonklusie staaf en hom in regte sou moet laat slaag
t a v die regshulp of uitspraak wat hy aanvra'
.
[15]
What the facts necessary to sustain an action in this case are, must
be considered against the backdrop of the substantive
law. If
evidence can be led which can disclose a cause of action alleged in a
pleading, that particular pleading is not excipiable.
[16]
As it is alleged that the Trust is the sole member of the close
corporation, it should first be determined whether a trust
can be a
member of a close corporation. Section 29 of the Act deals with
the requirements of membership. In terms of
subsection (1)
thereof only natural persons may be members of a corporation and no
juristic person or trustee of a trust
inter
vivos
in that capacity, shall directly or indirectly hold a member’s
interest. Section 2 of Act 25 of 2005 amended s29(1) by making
it
subject to subsection (1A). The amendment further amended subsection
(1A) by permitting a trustee of a trust
inter
vivos
to
be a member of the corporation subject to the limitations in
paragraphs (a) to (d) of that sub-section.
The
relevant section reads as follows:
‘
29
Requirements for membership
(1)
Subject
to subsection (1A) or (2) (b) and (c), only natural persons may be
members of a corporation and no juristic person or trustee
of a trust
inter vivos in that capacity shall directly or indirectly (whether
through the instrumentality of a nominee or otherwise)
hold a
member's interest in a corporation.
(1A)
A natural or juristic person in the capacity of a trustee of a trust
inter vivos may be a member of a corporation: Provided
that-
(a)
no
juristic person shall directly or indirectly be a beneficiary of that
trust;
(b)
the
member concerned shall, as between himself or herself and the
corporation, personally have all the obligations and rights of
a
member;
(c)
the
corporation shall not be obliged to observe or have any obligation in
respect of any provision of or affecting the trust or
any agreement
between the trust and the member concerned of the corporation; and
(d)
if
at any time the number of natural persons at that time who are
entitled to receive any benefit from the trust shall, when added
to
the number of members of the corporation at that time, exceed 10, the
provisions of, and exemption under, this subsection shall
cease to
apply and shall not again become applicable notwithstanding any
diminution in the number
of
members or beneficiaries.
[17]
In terms of subsection (1A) a natural or juristic person, in the
capacity of a trustee of a trust
inter
vivos,
may be a member provided that certain conditions are met. The
trustee is deemed to be the member of the close corporation
and not
the trust. The trustee is authorized to be the holder of the
member’s interest on condition that he personally
accepts the
obligations and rights of a member. In this instance it appears
that the criteria have been met as the certificate
issued by the
Registrar of Companies & Close Corporations and which is attached
to the Particulars of Claim, reflect the defendants
as trustees of
the Trust, as the members.
[18]
In the decision of
THE
SOUTH AFRICAN BANK OF ATHENS LTD v SALVADORA PROPERTIES NINETY NINE
CC
[10]
,
Boruchuwitz J stated the position as follows in paragraph [15]:
‘
As
a matter of law, the respondent’s assertion that the trust is
the holder of the member’s interest in the respondent
is
incorrect. That interest is held by Viviers in his capacity as the
authorised representative trustee. Section 1 of the
Act defines
a member as a person qualified for membership of a corporation in
terms of section 29, including “a trustee
”
or other legal
representative. That definition envisages membership of the person
representing the trust and not the trust itself.’
And
continues in paragraph [19]
‘
The
fiduciary capacity in which the member becomes a member is something
which has nothing to do with the close corporation. The
primary
fiduciary relationship which is owed is owed by the member personally
to the close
corporation.
This is apparent from the wording of sub-section 29(1A)(b).
’
[18]
In the light of the position set out above, I agree with the
submissions by Mrs. Stanton that the trustees in their personal
capacities carry the rights and obligations of the close
corporation. The upholding of the exception on the basis that
the
defendants were cited in their personal capacities is wrong.
[19]
The cause of action is based on the provisions of s26(5) of the Act
in that the defendants are, jointly and severally liable
for the
liabilities of the close corporation at the time of its
deregistration.
[20]
Section 26(5) of the Act was amended by s6 of the Close Corporations
Amendment Act
[11]
by deleting
the phrase ‘
and
all other former members’.
After
this amendment, the relevant section reads as follows:
“
If
a corporation is deregistered while having outstanding liabilities,
the persons who are members of such corporation at the time
of
deregistration shall be jointly and severally liable for such
liabilities.
”
[21]
Section 26 of the Act was finally substituted by s224(2) of
Act
71 of 2008
and currently reads as follows.
“
26
Deregistration
Sections
81 (1) (f), 81 (3), 82 (3) to (4), and 83 of the Companies Act, each
read with the changes required by the context, apply
with respect to
the deregistration of a corporation, but a reference in any of those
provisions to a company must be regarded as
a reference to a
corporation for the purposes of this Act.
”
[22]
The relevant sections of the Companies Act
[12]
“
83
Effect of removal of company from register
(2)
The removal of a company's name from the companies’
register does not affect the liability of any former director
or
shareholder of the company or any other person in respect of any act
or omission that took place before the company was removed
from the
register.
(3)
Any liability contemplated in subsection (2) continues
and may be enforced as if the company had not been removed
from the
register.
”
[23]
Mrs. Stanton submitted that the amendments to s26(5) do not have any
effect with regard to the liability of the members
in
casu.
I
agree. A proper interpretation of the existing s26 read with
the provisions of s83 of the Companies Act, is that the removal
of a
close corporation’s name from the register does not affect the
liability of any former member of the close corporation
or any other
person in respect of any act or omission that took place before the
close corporation was removed from the register.
It follows
further that, any liability contemplated in s83(2) of the Companies
Act continues and may be enforced as if the close
corporation had not
been removed from the register.
[24]
In my view the plaintiff’s Particulars of Claim does not lack
averments which are necessary to sustain an action against
the
defendants. The exception should therefore not have been upheld
and the order of the Magistrate is to be set aside.
WHEREFORE
I MAKE THE FOLLOWING ORDER:
1.
THE APPEAL IS UPHELD;
2.
THE ORDER OF THE MAGISTRATE IS SET ASIDE AND REPLACED WITH THE
FOLLOWING:
“
THE
EXCEPTION IS DISMISSED WITH COSTS.”
_________________________
S L ERASMUS, AJ
ACTING
JUDGE
I agree.
_________________________
BM PAKATI, J
JUDGE
On
behalf of Appellant:
Adv. A.
Stanton (oio Duncan & Rothman Inc)
On
behalf of Respondents
:
No appearance
[1]
No.
69 of 1984
[2]
2001
(3) SA 877 (SCA)
[3]
No.
32 of 1944
[4]
Pretoria
Garrison Institutes v Danish Variety Products (Pty) Ltd
1948 (1) SA
839
(A) at 870
[5]
Zweni
v Minister of Law and Order
1993 (1) SA 523
(A) at 532H-I
[6]
Liquidators,
Myburgh, Krohne & Co Ltd v Standard Bank of SA Ltd
1924
AD 226
at
229; Trope v South African Reserve Bank
1993
(3) SA 264 (A)
at
270G
[7]
1922
AD 16
at 22
[8]
Dusheiko
v Milburn
1964
(4) SA 648
at 658
[9]
1981
(4) SA 239
(T) at 245D-E
[10]
(2009/41058) [2010] ZAGPJHC
37 (7 May 2010)
[11]
Act 69 of 1986
[12]
Act 71 of 2008