Goosen v Minister of Trade and Industry and Others (EL 639/2024) [2024] ZAECELLC 28 (15 April 2024)

NOT REPORTABLE

IN THE HIGH COURT OF SOUTH AFRICA

(EASTERN CAPE DIVISION, EAST LONDON CIRCUIT COURT)

CASE NO. EL 639/2024

In the matter between:

GIDEON JOUBERT GOOSEN

Applicant

and

MINISTER OF TRADE AND INDUSTRY

First Respondent

MINISTER OF FINANCE

Second Respondent

BLUE LABEL DISTRIBUTION (PTY) LTD

Third Respondent

RECEIVER OF REVENUE

Fourth Respondent

COMPANIES AND INTELLECTUAL

PROPERTY COMMISSION

Fifth Respondent

JUDGEMENT (URGENT APPLICATION)

HARTLE J

[1] The applicant, acting as an interested party, sought an order before me on an urgent basis that Goosen Marketing CC (with registration number 1999/0513069/23), recently deregistered evidently due to a systematic annual return final deregistration process,[1] be re-registered and/or reinstated to the database of registered companies maintained by the registrar of the Companies and Intellectual Property Commission (“CIPC”).

[2] The clear purpose for the order is that he be placed in a position to continue with litigation that is underway in the trial court (“the trial”). By arrangement the trial which is part-heard before Gwala AJ was set down to be completed during the Easter recess.

[3] In that matter (Case No EL 763/14), the applicant is sued by the third respondent (“Blue Label”) as a co-surety together with the close corporation in a contractual dispute. The latter entity has a counterclaim against the third respondent which it self-evidently cannot presently prosecute through the applicant who, together with his wife as co-member of the close corporation, had initiated the counterclaim on its behalf and was conducting its defence (as well as his own) in the action.

[4] The action was commenced in 2014 but the actual trial, which as I have indicated is part-heard, only commenced in April 2023 when there was no impediment of the close corporation having been de-registered.

[5] The applicant claims to have been unaware of the de-registration which took effect on 20 January 2024. It was however brought to the attention of the trial judge on 9 April 2024 by Mr. Schultz (who appears on behalf of Blue Label in the trial and the present

application) that such impediment is now at play and affects the continuation of the trial.[2]

[6] It is common cause that the de-registration occurred due to a failure of those responsible on behalf of the close corporation to have submitted annual returns in respect of it to the CIPC.[3]

[7] The applicant launched these proceedings without reference to any provision of the Companies Act, No. 71 of 2008 merely contending that it was a simple matter to have the close corporation re-registered pronto and that all it requires is that the proposed order which I have been called upon to make is emailed to the CIPC using a specified designated email address. In the notice of motion he asks the court to condone his failure to comply with the time limits and forms prescribed by the rules of court, permitting the matter to be entertained on an urgent basis, and for further orders that the property of the close corporation be declared not to be bona vacantia and that it be re-registered and restored to the registrar of the CIPC.

[8] The applicant has made it clear that the only reason he asks for the order is so that he can continue to take the proceedings in the trial on behalf of the close corporation.

[9] The first, second, fourth and fifth respondents were served (albeit on very short notice) by electronic mail according to my first directive issued and via the office of the State Attorney (also by electronic mail) in a supplementary directive which I issued. There was no appearance on their behalf and indeed the fifth respondent (the CIPC) has acknowledged receipt of the application and indicated in effect that it will act on the order of the court provided that the unique identifier for its purposes (i.e. the registration number of the relevant entity concerned) is indicated so that it can effectively implement the terms of whatever order is issued by this court.

[10] The third respondent, Blue Label, vociferously opposed the application. Its concerns relate predominantly to matters that would concern the other respondents, the notional interests of third parties and creditors that would be impacted by the relief sought without having been served, and the form of the relief sought. Mr. Schultz contended on its behalf that it was inappropriate to apply for final relief pointing out that an “order of restoration” should, as a matter of practice, be preceded by a rule nisi calling upon all interested parties to show cause why the close corporation’s registration should be restored.[4] In making the latter submission the parties were ad idem that the applicant was intent on relying on the provisions of section 83 (4) of the Companies Act in respect of the order sought by him.

[11] It also objected to the applicant’s approach on the basis of urgency despite recognizing the stalemate in the trial court and Mr. Cole’s attempts to effectively utilise the opportunity that the trial judge has given them during recess to finalise the matter. The application was advanced on the basis that no costs order would be asked for and evidently it was not envisaged that it would be opposed by any of the respondents since the granting of the proposed relief, so the applicant’s argument went, would be in everyone’s best interest.

[12] As far as I can tell there is no real objection to the close corporation’s particulars being reinstated on the CIPC database vis-à-vis the third respondent and the applicant being placed in a position where the proceedings on behalf of the close corporation can continue to be taken.

[13] The question left begging though was what the route was that was required to be taken in the ordinary course and what the necessary requirements are in this respect. I was concerned that this was not spelt out in the application papers and I especially required the assistance of the parties in this connection.

[14] The wherewithal and the peculiar procedures lie in the provisions of sections 82 and 83 of the Companies Act,[5] read together with regulation 40 of the Companies Regulations[6] and the current Practice Note of the CIPC. Mr. Schultz also referred me to authorities applicable to applications for “restoration” generally and the requirement that the public at large should be given an opportunity to oppose relief sought under the caption of an application premised on the provisions of section 83 (4) of the Companies Act.

[1] See CIPC Notice 3 of 2024, which was foreshadowed by Notice 74 of 2023.

[2] It is a trite principle that the effect of the deregistration of a company is that all its property, including any claims it might have against third parties, thereupon vest in the State as bona vacantia. Thus without any need for an act of cession or anything of the like, the State has the right, should it so decide, to prosecute the action against the defendant. See Rainbow Diamonds EDMS Bpk en Andere v Suid-Afrikaanse Nasionale Lewensassuransiemaatskappy 1984 (3) SA 1 (A) at 10C-12G.

[3] See footnote 1. The CIPC website reports a systematic failure on the part of entities to have lodged annual returns for a period in excess of 3 years which, as of 19 January 2024, culminated in a final annual return deregistration process. Evidently the CIPC has as a result since then been inundated with requests by affected entities for reinstatement. This is reported in Notice 9 of 2024 on its website.

[4] Ex Parte Sengol Investments (Pty) Ltd 1982 (3) SA 474 (T), which was followed in Ex Parte Jacobson: In re Alec Jaconson Holdings 1984 (2) SA 372 (W).

[5] In terms of section 26 of the Close Corporations Act, No. 69 of 1984, sections 81 (1)(f), 81 (3), 82 (3) and (4), and 83 of the Companies Act, each read with the changes required by the context, apply with respect to the deregistration of a corporation.

[6] GNR.351 of 26 April 2011: Companies Regulations, 2011 (Government Gazette No. 34239), as amended

[7] Sub-regulation (4) by obvious import refers.

[8] The earlier Practice Note, which evidently attracted more onerous requirements, provided as follows:

“In order to re-instate a company or close corporation from 1 November 2012, the re-instatement application on an original signed form CoR40.5 must comply with the following requirements regardless of the cause or date of deregistration—

(1) Certified ID copy of the applicant (director/member);

(2) Certified ID copy of the customer filing the application;

(3) Deed search (reflecting ownership of immovable property or not);

(4) Letters from National Treasury and the Department of Public Works, indicating that such departments have no objection to the

re-instatement, if it has immovable property;

(5) Advertisement in a local newspaper giving 21 days’ notice of proposed application for re-instatement;

(6) Affidavit indicating the reasons for the non-filing of annual returns, if deregistration was due to non-compliance in relation to annual returns;

(7) Affidavit indicating the reason for the original request for deregistration, if the company or close corporation itself applied

for deregistration; and

(8) Sufficient documentary proof indicating that the company or close corporation was in business or that it had any outstanding assets or liabilities (e.g. property, intellectual property rights) at the time of deregistration.

Upon the successful processing of the re-instatement application, all outstanding annual returns must be filed in order to complete the process. If the close corporation or company fails to file all outstanding annual returns within 30 business days from date of the re-instatement, the company or close corporation will be finally deregistered, without any further notification.

It should be noted that the CIPC will no longer re-instate a company or close corporation solely based on a statement that the company or close corporation is in business or will be in business in the near future. The re-instatement process is reserved for companies and close corporations that can prove that it was in business at the time of deregistration, have outstanding assets and/or liabilities which must be transferred or liquidated.

For purposes of determining whether a company or close corporation is in business, it is sufficient to prove that the company or close corporation has been conducting business related activities at the time of deregistration, e.g. selling and buying of goods and services, leasing or renting property or equipment, marketing of goods and services, and/or an active bank account.”

[9] It further has the contingent liability which is the subject matter of the trial action and might have incurred costs in prosecuting its claim since 2014.

[10] [2013] 2 All SA 137 (WCC).

[11] [2013] JOL 30396 (KZP).