Francis NO and Another v Alitori 1470 CC (6113/2009) [2010] ZAFSHC 80 (25 June 2010)

Francis NO and Another v Alitori 1470 CC (6113/2009) [2010] ZAFSHC 80 (25 June 2010)

The Applicants established on a balance of probabilities that there is reason to believe the Respondent will be unable to pay adverse costs. The Respondent's financial statements, including unsecured loans and assets in dispute, demonstrate that liabilities exceed assets and the Respondent is admittedly insolvent. The Court found no special circumstances to deny the Applicants' prima facie right to security. The argument that the amount of security must be determined by the Registrar before approaching the Court was rejected, as the Respondent contested its liability to provide security. The Court exercised its discretion in favour of the Applicants and ordered the Respondent to furnish...

Citation
[2010] ZAFSHC 80
Parties
Applicant: Peter Francis N.O.; Applicant: Hilary Barris N.O.; Respondent: Alitori 1470 CC
Court
Free State High Court, Bloemfontein
Jurisdiction
South Africa
Judgment Date
25 June 2010
Case Number
6113/2009
Procedural Posture
Security for Costs Application / Application for Security for Costs Under Section 8 of the Close Corporations Act and Section 13 of the Companies Act
Outcome
Application granted. The Respondent is ordered to furnish security for costs, with the amount to be determined by the Registrar. The Respondent is to pay the costs of the application.
Judges
J B Mthembu
Legal Topics
Security for Costs, Close Corporations Act, Companies Act Section 13, Balance Sheet Analysis, Court Discretion on Security
Civil Procedure Commercial and Corporate Security for Costs Close Corporations Act Companies Act Section 13 Balance Sheet Analysis Court Discretion on Security

Case Brief

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Parties

Peter Francis N.O.

Applicant

Hilary Barris N.O.

Applicant

Alitori 1470 CC

Respondent

Procedural Posture

Security for Costs Application / Application for Security for Costs Under Section 8 of the Close Corporations Act and Section 13 of the Companies Act

Legal Issues

  1. 1 Whether the Respondent, a Close Corporation, should be ordered to furnish security for the Applicants' costs.
  2. 2 Whether there is reason to believe that the Respondent will be unable to pay an adverse costs order.
  3. 3 Whether the financial statements of the Respondent demonstrate insolvency or inability to pay costs.

Ratio Decidendi

The Applicants established on a balance of probabilities that there is reason to believe the Respondent will be unable to pay adverse costs. The Respondent's financial statements, including unsecured loans and assets in dispute, demonstrate that liabilities exceed assets and the Respondent is admittedly insolvent. The Court found no special circumstances to deny the Applicants' prima facie right to security. The argument that the amount of security must be determined by the Registrar before approaching the Court was rejected, as the Respondent contested its liability to provide security. The Court exercised its discretion in favour of the Applicants and ordered the Respondent to furnish...

Court Disposition

Application granted. The Respondent is ordered to furnish security for costs, with the amount to be determined by the Registrar. The Respondent is to pay the costs of the application.

Orders

  • The Respondent is ordered to furnish security.
  • The Registrar must determine the amount of the security.