Afrasia Special Opportunities Fund (Pty) Ltd v Royal Anthem Investments 130 (Pty) Ltd (18299/13, 12562/15) [2016] ZAWCHC 90; [2016] 4 All SA 16 (WCC) (28 July 2016)

Afrasia Special Opportunities Fund (Pty) Ltd v Royal Anthem Investments 130 (Pty) Ltd (18299/13, 12562/15) [2016] ZAWCHC 90; [2016] 4 All SA 16 (WCC) (28 July 2016)

AfrAsia failed to establish that Paget had actual, implied, or ostensible authority to bind Royal Anthem to the limited guarantee agreement. The evidence showed that the directors' resolution authorising the transaction was a forgery, and AfrAsia did not rely on any representation by Royal Anthem that Paget was authorised to communicate board decisions. AfrAsia's reliance on the rule in Turquand's case and section 20(7) of the Companies Act was misplaced, as these provisions do not relieve a party from proving the agent's authority. Without authority, Royal Anthem is not bound by the limited guarantee agreement, and the application for rectification of the mortgage bonds and enforcement...

Citation
[2016] ZAWCHC 90
Parties
Applicant: AfrAsia Special Opportunities Fund (Pty) Ltd; Respondent: Royal Anthem Investments 130 (Pty) Ltd
Court
Western Cape High Court, Cape Town
Jurisdiction
South Africa
Judgment Date
28 July 2016
Case Number
18299/13, 12562/15
Procedural Posture
Civil Application / Judgment After Hearing of Rectification Application and Counter Application
Outcome
Application dismissed. AfrAsia failed to establish Royal Anthem's liability under the limited guarantee agreement.
Judges
Binns-Ward
Legal Topics
Mortgage Bond Rectification, Ostensible Authority, Limited Guarantee, Companies Act Section 20 7, Deeds Registries Act, Suretyship Vs Guarantee
Commercial and Corporate Land and Property Mortgage Bond Rectification Ostensible Authority Limited Guarantee Companies Act Section 20 7 Deeds Registries Act Suretyship Vs Guarantee

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Parties

AfrAsia Special Opportunities Fund (Pty) Ltd

Applicant

Royal Anthem Investments 130 (Pty) Ltd

Respondent

Procedural Posture

Civil Application / Judgment After Hearing of Rectification Application and Counter Application

Legal Issues

  1. 1 Whether the mortgage bonds registered over Royal Anthem's properties can be rectified to reflect the correct principal debtor and underlying obligation.
  2. 2 Whether Royal Anthem is bound by the limited guarantee agreement executed in favour of AfrAsia.
  3. 3 Whether Paget had actual, implied, or ostensible authority to bind Royal Anthem to the limited guarantee agreement.

Ratio Decidendi

AfrAsia failed to establish that Paget had actual, implied, or ostensible authority to bind Royal Anthem to the limited guarantee agreement. The evidence showed that the directors' resolution authorising the transaction was a forgery, and AfrAsia did not rely on any representation by Royal Anthem that Paget was authorised to communicate board decisions. AfrAsia's reliance on the rule in Turquand's case and section 20(7) of the Companies Act was misplaced, as these provisions do not relieve a party from proving the agent's authority. Without authority, Royal Anthem is not bound by the limited guarantee agreement, and the application for rectification of the mortgage bonds and enforcement...

Court Disposition

Application dismissed. AfrAsia failed to establish Royal Anthem's liability under the limited guarantee agreement.

Orders

  • The application in case no. 18299/2013 is dismissed.
  • The application for rectification of the mortgage bonds in case no. 12562/2015 is dismissed.