Fourways Precinct (Pty) Ltd v Signal Capital Securities (Pty) Ltd in re: Signal Capital and Securities v Fourways Precinct (Pty) Ltd [2011] ZAFSHC 37 (24 February 2011)

Fourways Precinct (Pty) Ltd v Signal Capital Securities (Pty) Ltd in re: Signal Capital and Securities v Fourways Precinct (Pty) Ltd [2011] ZAFSHC 37 (24 February 2011)

The court held that section 13 of the Companies Act applies to the respondent, a company, and entitles the applicant to demand security for costs where there is credible reason to believe the respondent may be unable to pay adverse costs. The reference to a commanditarian partnership is irrelevant, as only the company is liable for costs, not its silent partners. The respondent's constitutional challenge to section 13 was rejected, as the provision serves a legitimate purpose and does not unreasonably limit access to courts. The respondent's concession to furnish security could not be withdrawn in the circumstances, and the registrar's determination of the quantum of security was not...

Citation
[2011] ZAFSHC 37
Parties
Applicant: Fourways Precinct (Pty) Ltd; Respondent: Signal Capital and Securities (Pty) Ltd; Plaintiff: Signal Capital and Securities (Pty) Ltd; Defendant: Fourways Precinct (Pty) Ltd
Court
Free State High Court, Bloemfontein
Jurisdiction
South Africa
Judgment Date
24 February 2011
Case Number
1565/2008
Procedural Posture
Civil Application / Application for Security for Costs Under Section 13 of the Companies Act and Rule 47; Counter Application for Review of Quantum
Outcome
Application for security for costs granted; respondent ordered to furnish security as determined by the registrar; counter-application dismissed.
Judges
S.P.B. Hancke
Legal Topics
Security for Costs, Companies Act Section 13, Commanditarian Partnership, Quantum of Security, Constitutional Challenge, Review of Registrar Determination
Civil Procedure Commercial and Corporate Security for Costs Companies Act Section 13 Commanditarian Partnership Quantum of Security Constitutional Challenge Review of Registrar Determination

Case Brief

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Parties

Fourways Precinct (Pty) Ltd

Applicant

Signal Capital and Securities (Pty) Ltd

Respondent

Signal Capital and Securities (Pty) Ltd

Plaintiff

Fourways Precinct (Pty) Ltd

Defendant

Procedural Posture

Civil Application / Application for Security for Costs Under Section 13 of the Companies Act and Rule 47; Counter Application for Review of Quantum

Legal Issues

  1. 1 Whether section 13 of the Companies Act applies to the respondent and entitles the applicant to demand security for costs.
  2. 2 Whether section 13 is unconstitutional as an unreasonable limitation of the right of access to courts under section 34 of the Constitution.
  3. 3 Whether the respondent may withdraw its concession to furnish security for costs.

Ratio Decidendi

The court held that section 13 of the Companies Act applies to the respondent, a company, and entitles the applicant to demand security for costs where there is credible reason to believe the respondent may be unable to pay adverse costs. The reference to a commanditarian partnership is irrelevant, as only the company is liable for costs, not its silent partners. The respondent's constitutional challenge to section 13 was rejected, as the provision serves a legitimate purpose and does not unreasonably limit access to courts. The respondent's concession to furnish security could not be withdrawn in the circumstances, and the registrar's determination of the quantum of security was not...

Court Disposition

Application for security for costs granted; respondent ordered to furnish security as determined by the registrar; counter-application dismissed.

Orders

  • The respondent is ordered to furnish security for the applicant’s costs in the pending proceedings under case 1565/2008, in the amount of R3,050,000.00 by way of a bank guaranteed cheque valid for two years to the applicant’s attorneys.
  • The respondent is ordered to furnish such security within one month of the granting of this order.