Lynn & Main Incorporated v Kruger and Others (2000/23938) [2007] ZAGPHC 342 (11 October 2007)

Lynn & Main Incorporated v Kruger and Others (2000/23938) [2007] ZAGPHC 342 (11 October 2007)

The court held that the liability of a member under section 26(5) of the Close Corporation Act only arises upon deregistration of the close corporation. Prior to deregistration, the member has no personal liability for the corporation's debts. The prescription period for the plaintiff's claim against the first defendant therefore commenced on 30 July 1999, the date of deregistration, not on the date of the last payment by the close corporation. The summons was served within the three-year prescriptive period. The defendant's argument that his liability was subsidiary to that of the close corporation and thus prescribed with the corporation's debt was rejected. The liability is a separate...

Citation
[2007] ZAGPHC 342
Parties
Plaintiff: Lynn & Main Incorporated; Defendant: Kruger, Johan David; Defendant: Beukes, Johannes George Frederik; Defendant: Beukes, Sandra Veronica
Court
High Courts - Gauteng
Jurisdiction
South Africa
Judgment Date
11 October 2007
Case Number
2000/23938
Procedural Posture
Civil Trial / Special Plea of Prescription
Outcome
Plaintiff's main claim against the first defendant has not prescribed. Action between plaintiff and first defendant postponed sine die. First defendant ordered to pay plaintiff's costs relating to the special plea.
Judges
Blieden
Legal Topics
Prescription Act, Close Corporation Liability, Section 26 5 Liability, Cause of Action Accrual
Civil Procedure Commercial and Corporate Prescription Act Close Corporation Liability Section 26 5 Liability Cause of Action Accrual

Case Brief

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Parties

Lynn & Main Incorporated

Plaintiff

Kruger, Johan David

Defendant

Beukes, Johannes George Frederik

Defendant

Beukes, Sandra Veronica

Defendant

Procedural Posture

Civil Trial / Special Plea of Prescription

Legal Issues

  1. 1 Whether the plaintiff's claim against the first defendant has prescribed under the Prescription Act.
  2. 2 When does liability under section 26(5) of the Close Corporation Act arise for a member of a deregistered close corporation.
  3. 3 Does the prescription period for the debt against the first defendant run from the date of deregistration or from the last payment by the close corporation.

Ratio Decidendi

The court held that the liability of a member under section 26(5) of the Close Corporation Act only arises upon deregistration of the close corporation. Prior to deregistration, the member has no personal liability for the corporation's debts. The prescription period for the plaintiff's claim against the first defendant therefore commenced on 30 July 1999, the date of deregistration, not on the date of the last payment by the close corporation. The summons was served within the three-year prescriptive period. The defendant's argument that his liability was subsidiary to that of the close corporation and thus prescribed with the corporation's debt was rejected. The liability is a separate...

Court Disposition

Plaintiff's main claim against the first defendant has not prescribed. Action between plaintiff and first defendant postponed sine die. First defendant ordered to pay plaintiff's costs relating to the special plea.

Orders

  • It is declared that the plaintiff's main claim against the first defendant has not prescribed.
  • The action between the plaintiff and the first defendant is postponed sine die.