THE SUPREME COURT OF APPEAL OF SOUTH
AFRICA
REPORTABLE
CASE NO: 293/2004
In the matter between
NAVY TWO CC APPELLANT
and
INDUSTRIAL ZONE LIMITED RESPONDENT
CORAM: SCOTT, MTHIYANE, JAFTA, PONNAN JJA and
MAYA AJA
HEARD: 6 SEPTEMBER 2005
DELIVERED: 28 SEPTEMBER 2005
Summary: Sole memb er of a close corporat ion seeking to represent it -
whether refusal to grant him au dience mi sdirection – w hether case fell w ithin
exception to rule barring a person who is not a practition er from representing a
corporate entity – whether refusal to grant postponement was justified – default
not adequately explained - bona fide de fence not disc losed - circu mstances in
which a court will grant indulgence discussed.
JUDGMENT
MTHIYANE JA:
2
MTHIYANE JA:
[1] This is an appeal against the judgment of Brassey AJ sitting in the
Johannesburg High Court, in which he refused to grant the appellant, a
close corporation, a postponement to file an answering affidavit and to
allow its sole member, Mr Ashum Ku mar Nannen, to represent it during
the hearing of the application for a postponement. The appeal is with the
leave of the learned judge.
[2] The background facts are briefl y the following. On 14 December
2001 the appellant and the respondent concluded an agreement of sale in
terms of which the appellant was requi red to make certain payments. The
appellant fell in arrears with those payments and various accommodations
were granted in order to assist it, which were ultimately fruitless. Notice
of cancellation was given in terms of the agreement of sale. The
cancellation clauses in the agreement provided for 14 days’ notice to be
given to the defaulting party to rectify the defect, failing which
cancellation would be permissible. The notice upon which the appellant
relies was issued on 4 March 2003 a nd expired accordingly on 18 March
2003. The notice appears to have been served on the appellant at its place
of business and signed for by one Kamal Singh. The respondent by
implication denies that it received the notice.
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[3] On 12 November 2003 the responde nt launched an application in
the Johannesburg High Court for an order declaring that the written
agreement concluded between the parties on 14 December 2001 had been
validly cancelled and that it was of no force and effect.
[4] A Notice of Intention to Oppose was filed and served on the
respondent on 14 November 2003 and th ereafter no further steps appear
to have been taken by the appella nt. On 3 February 2004 the respondent
set the application down for hearing on the opposed roll. The matter came
before Blieden J and th e appellant was represen ted by Mr Ashum Kumar
Nannen, who is not a le gal practitioner. The a pplication was stood down
until the following day (4 February 2004) to enable Mr Nannen to apply
for a postponement.
[5] At the hearing before Blieden J Mr Nannen was apparently told
that he would not be allowed to repr esent the appellant as he was not a
legal practitioner. However on the fo llowing day (4 Febr uary 2004) he
again appeared on behalf of the a ppellant and sought a postponement.
Blieden J directed that Mr Nannen prepare and file an affidavit in support
of his request for a postponement and indicated that he could himself
bring the affidavit to court, a sugge stion which counsel for the appellant
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submitted led Mr Nannen to think he could appear on behalf of the
appellant.
[6] At the next hearing the ma tter came before Brassey AJ. The
learned judge was prepared to receive the affidavit but refused to allow
Mr Nannen to represent the appellant as, reasoned the judge, a corporate
entity could only be represented by a legal representative.
[7] The judge then as a compromise, perhaps, devised and embarked
on some procedure whereby Mr Na nnen was permitted to relay his
submissions to the court through Mr Konstantinides, counsel for the
respondent. The proceedings continued in that vein up until their
conclusion when Brassey AJ made an order refusing the postponement
and granted the respondent the relief it sought.
[8] The issue on appeal is whether the present matter is not one of
those cases that fall within the excep tion to the rule barring a person who
is not a legal practitioner from representing a corporate entity, where the
court a quo should have exercised its disc retion in favour of allowing Mr
Nannen to represent the appellant. Th at the refusal to grant Mr Nannen
audience arose from an erroneous belief on the part of the judge a quo
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that he had no discretion in the matter leaves of no doubt. That much is
clear from what he said during the application for leave to appeal:
‘It is correct that I refused to give Mr Nannen an audience. I did so in the belief that a
corporate entity could only be represented before me through a legal representative’.
[9] The question of representation of a corporate body by a natural
person who is not a legal practitioner has been the subject of discussion in
numerous cases. One such case is Yates Investment (Pty) Ltd v
Commissioner for Inland Revenue1 where a beneficial shareholder sought
to appear for a company to argue an appeal on its behalf. He was refused
permission to do so. Without any deta iled discussion of the rule and its
source, presumably because on the fact s of that case such discussion was
not warranted, Centlivres CJ held that an artificial person could not
appear in person and had to be represented by a duly admitted advocate.
[10] Following and applying the rule in Yates Investment (Pty) Ltd v
Commissioner for Inland Revenue , Hurt J held in Hallowes v The Yacht
Sweet Waters2 that a juristic person can only litigate and appear before a
court through a representative duly quali fied and admitted to practise as
such and that for practical purposes th e doors of the court were closed to
the close corporation.
1 1956 (1) SA 364 AD.
2 1995 (2) SA 270 D at 273 C-D.
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[11] The decision in Hallowes v The Yacht Sweet Waters has been
severely criticised in Lees Import & Export (Pty) Ltd v Zimbabwe
Banking Corporation Ltd 3 as having overlooked the caveat placed upon
the rule, recognising the court’s re sidual power to regulate its own
proceedings unless fettered by legislation. The caveat embodies a power
which a court has, in the exercise of its discretion and in the interests of
justice, to permit a person other than a legal practitioner to appear before
it on behalf of a corporate entity, but only if exceptional circumstances so
warrant it.
[12] There is a lot to be said for the above criticism. It is clear that the
rule limiting representation of a corpor ate entity to legal practitioners is
not inflexible. In Arbuthnot Leasing Internati onal Ltd v Havelet Leasing
Ltd & others 4, while accepting that the normal rule was that a body
corporate must appear by counsel or so licitor, the court recognised that in
certain exceptional circumstances, a director who is a party to litigation to
which a company is also a party may be allowed to appear in person for
purposes which are also those of the company.
31999 (4) SA 1119 ZSC at 1126 A-D.
4 [1991] 1 ALL ER (CH D), at 597 to 598 a-h 599 a e g.
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[13] In California Spice Marinade (Pty) Ltd and others in re: Bankorp v
California Spice and Marinade (Pty) Ltd v others; Fair O’Rama Property
Investments CC v others; Tsaperas; and Tsaperas 5 after tracing the
history of the rule in the English common law Wunsch J came to the
conclusion that a court should be en titled, in an appropriate case and to
avoid injustice, to allow at least a one-person company to be represented
at a court hearing by its alter ego. The learned judge said that the
inconvenience caused to the court as a result of an unqualified person
appearing before it had to be weighed up against the injustice of a juristic
person being denied access to the courts . In this regard I agree with the
reasoning of Wunsch J.
[14] Turning to the facts of this case it seems to me that very little of the
court’s time would have been take n up if Brassey AJ had allowed Mr
Nannen to address him on the merits of the application for a
postponement. The effect of his refusa l was that the appellant was denied
an opportunity to be heard. The defect was not remedied by the learned
judge receiving the appellant’s s ubmissions through the respondent’s
counsel, Mr Konstantinides. In my vi ew the refusal by Brassey AJ to
exercise a discretion of granting Mr Nannen audience was a misdirection
which entitles this court to interfere with his refusal to grant Mr Nannen
5 [1997] ALL SA 317 (W).
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audience and to consider the appli cation for a postponement afresh. We
have not been asked to remit the matte r to Brassey AJ but to deal with it
in this court. In this regard the appellant was require d to satisfy two
requirements: first, it had to show that the delay or failure to file an
answering affidavit was not wilful a nd secondly, that it has a bona fide
defence to the main application. I discuss the two requirements in turn.
[15] With regard to the question of delay Mr Nannen says upon
receiving the papers in the main application he handed them to the
appellant’s erstwhile attorneys, Ch ibabhai Jivan Inc. of Mayfair,
Johannesburg. The Notice of Inte ntion to Oppose was filed on 21
November 2003 and no further steps were taken. Mr Nannen says he paid
the attorneys R10 000 by way of fees and thereafter continued to pay a
retainer of R1 500 per week. He says further that he entertained ‘a serious
belief’ that the matter would be attended to by the at torneys. He also says
that before the papers in the present application were served he consulted
with an advocate, presumably arranged by his erstwhile attorneys. He
does not understand why the attorneys did not prepar e, file and serve the
opposing affidavits. No affidavit has been put up by any member of the
attorneys’ firm with whom he has ha d dealings, to corroborate his story.
Of course this is not meant as a critic ism – it is just an observation. There
seems to have been a total lack of urgency on his part in attending to the
9
matter. This is evidenced by the fact that Mr Nannen did not at any stage
complain to the attorneys that th e matter was not being attended to
notwithstanding that he was presumably in constant contact with them on
a weekly basis, seeing that he made weekly payments to them of the
retainer of R1 500 at a time. It has b een held that litigants ‘cannot divest
themselves of their responsibilities in relation to the action and then
complain vis-à-vis the other party to the action that their agents, in whom
they have apparently vested sole responsibility have failed them.’ (See De
Wet and others v Western Bank6).
[16] During December 2003 he consulte d another firm of attorneys, SA
Ebrahim, of Pretoria. He duly paid fees for consultation but nothing could
be done as the attorneys were closing for the end of the year vacation.
During the last week of December 2003 he was advised that a notice of
set down of the present application had been served on his erstwhile
attorneys on 17 December 2003. But for a reason not disclosed in the
papers he waited until 31 January 2004 when he c onsulted a new firm of
attorneys, AS Cassim and Co of Pretoria, the appellant’s present attorneys
of record. Mr Cassim of this firm told him that he could only represent
the appellant if a postponement were granted. In his presence the attorney
6 1979 (2) SA 1031 (AD) at 1044 C.
10
telephoned the respondent’s attorneys requesting a postponement but this
was refused.
[17] Mr Nannen says he is not to bl ame for the delay, the fault of which
he places firmly at the door of the appellant’s erstwhile attorneys. He says
he does not understand the rules of c ourt and the procedures. He urges
that the appellant should not be prejudiced thereby.
[18] If Mr Nannen received notice of service of the papers in the present
application, as he says he did, during the last week of December 2003, it
is not clear why he only consulted hi s present attorneys of record on 31
January 2004. In paragraphs (a) and (b) of the Notice of Motion it is
clearly stated that notice of opposition has to be given within five days of
service of the application and the answering affidavit, within fifteen days
thereafter. The notification is pl ain and does not require any legal
knowledge to understand and to act upon it. Mr Nannen’s reliance on lack
of knowledge of the rules and proce dures does not assist. There is no
explanation of what Mr Nannen did for the entire month of January 2004
after becoming aware of the service of the app lication on the appellant.
The appellant sought the court’s indu lgence and yet did not see it fit to
place facts from which the court could determine whether or not it was in
wilful default in respect of the filing of an answering affidavit.
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[19] As to the appellant’s defence to the main application, there is yet
again a glaring paucity of information. Mr Nannen says before the present
application was served, he consulte d with an advocate arranged by his
erstwhile attorneys, who advised him th at in order to cancel the contract
of sale between the re spondent and the appellant , the respondent had to
serve notice of any breach. As far as the appellant was concerned the
contract would therefore not be cancelled. This is a conclusion of some
sort and the basis for it has not been disclosed. Finally Mr Nannen alleged
that the respondent, too, was not prep ared to perform certain contractual
obligations, despite requests to do so. We are not told what those
obligations are that were not complied with. That is the sum total of the
appellant’s defence. To my mind it is far from convincing. It is true that
at this stage the appellant was not exp ected to set out his defence in full.
But what was required of the appellant was to place facts from which the
court could say that there was a bona fide defence to the main application.
[20] Notwithstanding the misdirec tion on the part of Brassey AJ
occasioned by his refusal to permit Mr Nannen to address him on the
merits, the refusal to grant a postponement was correct.
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In the result the appeal is dismissed with costs, such costs to include the
costs occasioned by the application for condonation.
__________________
K K M T H I Y A N E
JUDGE OF APPEAL
CONCUR:
JAFTA JA
MAYA AJA
13
PONNAN JA:
[21] I have had the benefit of re ading the judgment of my brother
Mthiyane. Although I agree with the conclusion to which he comes I do
not endorse his approach.
[22] In my view the real issue is whether the appellant suffered any
prejudice as a result of Brassey AJ's failure to afford Mr Nannen the
opportunity to address the court on the issue of a postponement. In other
words, it is unnecessary to consider the circumstances in which the so-
called rule barring a non-legal person from representing a corporate entity
may be relaxed. Even if it is accep ted in the appellant’s favour that
Brassey AJ misdirected himself in this regard it does not follow that the
appellant would have been entitled to the postponement it now seeks on
appeal. The effect of such a misd irection on the part of the court a quo
would be that this Court would be free to consider whether in all the
circumstances a postponement should have been granted.
[23] The respondent's claim against th e appellant is set out in detail in
its founding affidavit in the court a quo. It is alleged that the appellant
failed over a protracted period to meet its contractual obligations. The
affidavit catalogues repeated instances of the appellant's failure to effect
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payment in terms of the agreement timeously or at all. Dishonoured
cheques were the order of the da y. By 30 March 2003 the appellant
should in terms of the agreement have paid R797 065,79 (excluding
interest). The appellant had in fact only paid R450 000,00.
[24] In the face of these persistent breaches, the respondent, through its
attorney, delivered to the appella nt on 4 March 2003, a notice calling
upon it within 14 days of receipt to rectify its breach. In response the
appellant furnished to the respondent certain letters of undertaking.
According to investigations conduc ted by the respondent: the first,
emanating from FNB, contained una uthorised altera tions; and, the
second, emanating from Engen was a forgery. On 8 July 2003 the
respondent accordingly cancelled the agreement.
[25] These in a nutshell were the fact ual allegations that confronted the
appellant. The response of Nannen on behalf of the appellant was:
‘ … I was advised that the deed of sale between the applicant and the respondent, the
applicant had to serve notice of any breach of the contract in order to cancel the
contract. The contract could therefore not be cancelled.’
The language employed by Nannen is curious . It is not in dispute that the
respondent had to serve a notice of breach. Nor could it be. That flows
from the agreement. Nannen does not assert positively that no such notice
15
had been served. He likewise does not attempt to explain the signed
acknowledgment of receipt endorsed on the notice. It is expected of the
reader, it would seem, simply to infe r, despite the re spondent's detailed
allegations to the contrary, that no su ch notice had in fact been delivered
and consequently therefore ther e can be no cancellation. Nannen,
moreover, makes not attempt to deal with the repeated breaches by the
appellant detailed in th e respondent's founding a ffidavit. Nor for that
matter does he deal with the very serious allegations of fraud and forgery.
[26] He does confirm having receive d the application papers in the
matter. According to him those papers he forwarded to the appellant's
then attorney. Nothing appears to have been done. During December
2003, precisely when he does not say, he consulted S A Ebrahim, an
attorney in Pretoria. On 31 January 2004 he consulted with A S Cassim
also an attorney in Pretoria.
[27] He must undoubtedly have know n that the necessary papers in
opposition to the relief sought had not been served and filed. Why else
would he have changed attorneys not once but twice? And yet aside from
consulting with those attorneys he did nothing further. Nannen has
chosen to be deliberately vague . His coyness must redound to his
discredit. At the very latest by De cember 2003 when he consulted with
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attorney Ebrahim he must have known that no opposing affidavit had
been filed. He seeks to explain that failure in the following terms: ‘I
cannot understand why my previous attorneys did not prepare opposing
affidavits in this matter and did not in form me as to their reasons for not
preparing and filing same with the a pplicant's attorneys and at the above
honourable court’. That explanation is not only far from illuminating but
is unsatisfactory. He says : ‘[I]f anyone is to be blamed, it is certainly not
me on behalf of the respondent and we should therefore not be prejudiced
thereby. The above honourable cour t should look towards my previous
attorney's of records conduct in this matter’. This assertion rings hollow.
[28] In short, the appellant has faile d miserably to explain its tardiness.
A postponement was not there for the asking. The appellant had to make
out a proper case in support of its a pplication for a postponement. That it
failed to do. Not only did it fail to explain with sufficient candour why no
further steps had been taken by it in the matter but the affidavit ultimately
filed on its behalf falls far sh ort of establishing that it has a bona fide
defence to the respondent's claim.
[29] Senior counsel who appeared on behalf of the appellant in this
court sought to persuade us that on the basis of the affidavit filed by
Nannen a postponement was ju stified. Everything that could be said in
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support of a postponement was said and debated in this Court. The
appellant was undoubtedly placed in a better position than it would have
been had it been left to a lay person to argue the matter. Nothing that was
said in this court has caused me to believe that the circumstances were
such that the decision to refuse a postponement was not the correct one. It
follows that I agree that the appeal must fail.
V M PONNAN
JUDGE OF APPEAL
CONCUR:
SCOTT JA