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[2013] ZAFSHC 60
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Koupis v Udumo Trading 225 CC t/a Plastic Rebuilders (731/2013) [2013] ZAFSHC 60 (25 April 2013)
FREE STATE HIGH
COURT, BLOEMFONTEIN
REPUBLIC OF SOUTH
AFRICA
Case No.: 731/2013
In the matter between:
NICOLAS KOUPIS
.......................................................................
Applicant
and
UDUMO TRADING 225
CC t/a PLASTIC
REBUILDERS
..........................................................................
Respondent
(Registration Number:
2004/099411/23)
_______________________________________________________
HEARD ON:
28 MARCH 2013
_______________________________________________________
JUDGMENT BY:
LEKALE, J
_______________________________________________________
DELIVERED ON:
25 APRIL 2013
_______________________________________________________
INTRODUCTION AND
BACKGROUND
[1] On 22
nd
February 2013 the applicant secured an order, on an
urgent basis, placing the respondent close corporation under
provisional liquidation
in the hands of the Master and, further,
caused a Rule
nisi,
returnable
on the 4
th
April
2013, to issue calling upon all interested parties to show cause, if
any, why a final order of liquidation should not be granted
against
the respondent.
[2] On the 15
th
March 2013 a notice was filed in terms of Rule 6(12)(c) of Uniform
Rules of Court (the Rule) setting the matter down for reconsideration
of the order in question on the basis that it was issued in the
absence of the respondent.
[3] Subsequent to the
grant of the order in question the applicant filed elaborate returns
of service explaining how copies of the
court order were served in
respect of,
inter alia
, the respondent’s employees and,
further, pointing out that no trade union is involved.
[4] No affidavits were
filed in support of the reconsideration and the applicant resists the
same on,
inter alia
, the grounds that the form of the
reconsideration required and the authority of the only member of the
respondent close corporation,
who could reasonably possibly be behind
the reconsideration, to trigger the process are not apparent
ex
facie
the notice filed. The applicant, further, contends, in the
heads of argument filed on his behalf, that the application for
reconsideration
should be dismissed with costs which should be borne
by such a member.
[5] In response to the
applicant’s contentions it is submitted that the authority of
such a member to represent the respondent
in the process can only be
challenged by invoking the provisions of Rule 7 of the Uniform Rules.
[6] Mindful of possible
costs implications on the respondent close corporation, which is
currently under provisional liquidation,
on the 5
th
April
2013 I caused a letter to issue calling on the respondent to furnish
proof that it authorised the member in question to subject
the
relevant order to reconsideration by not later than the 12
th
April 2013. I, further, invited the parties to submit additional
arguments, if so advised, on the authority of such a member to
act
for the respondent by no later than the 19
th
April 2013.
The parties have since obliged with the respondent having filed an
affidavit by the member concerned, one Mr MA Botes,
which encloses
resolutions
prima facie
authorising and appointing him to,
inter alia
, commence the current process and to run with it.
[7] In additional
submissions the applicant, effectively, attacks the validity of the
resolutions and points out that it is not
apparent
ex facie
the same that the formalities prescribed by Section 48 of the Close
Corporations Act 69 of 1984 (the CCA) were complied with when
they
were allegedly passed.
[8] In support of the
resolutions it is effectively submitted that the two members who hold
majority member’s interests of
40% each in the respondent took
the relevant decisions and are entitled, by virtue of such extensive
interests, to represent the
respondent in proceedings such as the
present.
[9] In the light of the
view I have taken of the matter, it is not necessary to deal with all
the issues raised by the parties and,
as such, this judgment is
confined to Mr Botes’ standing in the reconsideration process.
ISSUES IN DISPUTE
[10] The parties are
ante
omnia
in dispute over whether or not the respondent authorised
the present reconsideration process insofar as the applicant
questions
the process followed in passing the relevant resolutions.
APPLICANT’S
CONTENTIONS
[11] It is effectively
contended for the applicant that there exists no evidence that the
resolutions were taken in a properly convened
meeting of the
respondent’s members as contemplated by the CCA.
[12] The applicant,
further, submits that the extent of a member’s interest held by
the respective members in the respondent
is not relevant for the
purpose of convening a meeting and passing resolutions.
[13] In the applicant’s
view, where a corporation has four members, as the position is in the
instant matter, three of the
four members are required, as the
majority, to take a decision for the respondent to set the matter
down for reconsideration.
[14] The applicant’s
case is that the respondent in the present matter functions through
its members as provided by the CCA
insofar as the respondent does not
have an association agreement.
[15] In conclusion Mr
Snellenburg submits for the applicant that the application for
reconsideration should be dismissed and that
Mr Botes should bear the
costs.
RESPONDENT’S
SUBMISSIONS
[16] Mr van der Merwe
submits, in support of the authority of Mr Botes to trigger the
instant process, that it is apparent from
the affidavit filed that
the resolutions in question were made by the two holders of 80% of
member’s interests in the respondent.
[17] Members of a close
corporation are, in law, entitled to partake in the management of its
affairs, so the court is reminded
in support of the current process.
[18] In conclusion it is
contended, in support of Mr Botes’ standing in the instant
process, that members in his position
are as eligible for bringing
the process as the directors of a company which has been
provisionally liquidated are entitled and
have the residual power to
oppose its final liquidation and to appear for it on the return day
as well as to anticipate the same.
APPLICABLE LEGAL
PRINCIPLES
[19] Indeed members of a
close corporation are all entitled to participate in the carrying on
of the business of the corporation
as correctly pointed out by Mr van
der Merwe. (See section 46(a) of CCA).
[20] Any member of a
corporation has the right to call a meeting of members by giving
notice of the date, time and venue of such
a meeting to every other
member and every other person entitled to attend such a meeting of
members as effectively contended for
the applicant. (See section
48(1) of CCA).
[21] Section 48(3)(b) of
CCA provides as follows:
“
(b) A
resolution in writing, signed by all the members and entered into the
minute book, shall be as valid and effective as if it
were passed at
a meeting of the members duly convened and held.
”
[22] It is correct, as
submitted in support of Mr Botes’ authority to represent the
respondent, that the directors of a company
under provisional
liquidation retain at least the residual power to oppose its final
liquidation. (See
Wolhuter Steel (Welkom) (Pty) Ltd v Jatu
Construction (Pty) Ltd (In Provisional Liquidation)
1983 (3)
SA 815
(0) at 822G – 823H.)
APPLICATION OF
LEGAL PRINCIPLES AND FINDINGS
[23] Mr Botes relies on
resolutions allegedly passed by the respondent, acting through two of
its four members, in his contention
that he is authorised to
represent the respondent in the instant proceedings. He does not rely
on any association agreement in
support of his deposition that he and
his fellow holder of majority member’s interests
“
signed a
resolution stating that the respondent should oppose/defend …
all legal proceedings instituted against the respondent
by the
applicant
”.
Although, on his
affidavit, the inference that the resolutions were not passed by a
properly convened meeting of the members of
the respondent is
probable and irresistible, it is not evident from the papers that he
and his fellow member were entitled to sign
resolutions alone and
without any meeting of members having been held. In the absence of
any association agreement providing otherwise,
the statutory position
set out in the CCA prevails, as correctly contended for the
applicant. (See generally
Mall (Cape) (Pty) Ltd v Merino
Ko-operasie Bpk
1957 (2) SA 347
(C) at 351D.)
[24] The resolutions are
not signed by all the members of the respondent as contemplated in
section 48(3)(b) of the CCA and, as
such, cannot, as of law, be
regarded as
“
valid and
effective as if [they] were passed at a meeting of members duly
convened and held.
”
[25] As correctly and
effectively submitted for the applicant, the fact that a member holds
majority member’s interest in
the corporation does not
per
se
entitle him to take decisions for the corporation to the
exclusion of other members. Such a member is entitled to the number
of
votes that corresponds with the percentage of his interest in the
corporation at any meeting of members. (See section 46(d) of CCA).
[26] The onus is on Mr
Botes to establish his standing to represent the respondent in the
reconsideration process. Even a director
of a company, which has been
provisionally liquidated, needs the authority of the board of
directors to oppose final liquidation.
I am not satisfied from Mr
Botes’ affidavit and annexures thereto that he is authorised to
bring the instant process. The
application, therefore, falls to be
dismissed.
[27] The resolutions
cannot be attributed to the respondent insofar as they are not shown
to have been passed at a properly convened
meeting of the members of
the respondent where Mr Botes and his fellow holder of majority
member’s interest could have exercised
their combined massive
vote.
COSTS
[28] The applicant is
entitled to his costs in line with the practice relative to costs.
[29] The respondent
cannot, in all fairness, be saddled with costs where it has not
authorised the proceedings as correctly submitted
for the applicant.
[30] Mr Botes, as the
sponsor of the process, is responsible for such costs in my judgment.
ORDER
[31] The application for
reconsideration is dismissed.
[32] Mark Anthony Botes
shall pay the applicant’s costs.
______________
L. J. LEKALE, J
On behalf of applicant:
Adv N. Snellenburg
Instructed by:
Honey Attorneys
BLOEMFONTEIN
On behalf of respondents:
Adv H.A. van der Merwe
Instructed by:
Martins Weir-Smith
c/o Schoeman Maree Inc
100 Kellner Street
Bloemfontein
/spieterse